Morning Brief

MarketResearch MorningBrief [September20th,2024] MorningBrief ZHOUJinyu021‐38674924zhoujinyu011178@gtjas.comS0880516080007 Contents TopRecommendations ●MacroEconomy:UpdateReport ●AirlinesSector:UpdateReport ●Kingsemi(688037):OW,TP@RMB93.50↓ ●ComputingPowerIndustry:In‐depthReport LatestReports ●Micro‐Tech(688029):OW,TP@RMB77.04 SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint 本报告内容译自同日发布的简体中文报告《国泰君安晨报》，报告观点及内容如有任何不一致的地方，一律以该简体中文版报告为准。 TopRecommendations MacroEconomy:UpdateReport Bymeansofa50bpinterestratecut,theFedReservetendedtofocusmoreoneconomyandemployment,andaggressiveinterestratecutsmayfollow.AstheFedReservefavorspreemptiveandaggressivepoliciesatpresent,weanticipate75bpinterestcutsintherestoftheyear,asalsoindicatedbytheFederalFundfutures. Thisinterestratecuthasnobigstimulustoshort‐termliquidityeasingandexport.Butoncetheinterestratecutcyclehasstarted,itsshort‐terminfluenceonbondmarketwillbebiggerthanonstockmarket.Inthemediumandlongrun,betterstockmarketliquidityfavorsmainlyA‐sharegrowthstocks,butthestockmarketperformanceisstillsubjecttothedomesticeconomicexpectations. AirlinesSector:UpdateReport Inthelongrun,theprofitmarginofairlinescompaniesisontherise,becauseofthehugeaviationdemand,limitedairspaceschedulingresources,market‐basedpricingandrationalgrowthofairfleetsize.In2024,thedemandkeptonrecovering,withhigherairfaresinthehighseasonandhigherpassengerloadinthelowseason.Takingintoaccountthecurrentlowmarketexpectations,thelong‐termvalueofairlinescompanies,thelimitedexchangeriskandthedescendingfuelprice,weadvisetomakecontrarianinvestmentintheairlinessector.Offeaturedcompanies,wemaintain“Overweight”ratingforAirChina(601111),JuneyaoAirlines(603885),SouthernAirlines(600029),EasternAirlines(600115)andSpringAirlines(601021). Kingsemi(688037):OW,TP@RMB93.50↓ [Rating:OW(Prv:OW);TP:RMB93.50(Prv:N/A);MP:RMB59.20;Mkt‐Cap:RMB11891mn] TheCompanyenjoyedfastgrowthofbusinessordersfollowingtherecoveryofdownstreamdemandandtheproductioncapacityexpansionofchip‐fabricationplants.Butinviewoftheunsatisfactory2024Q1resultsandtheincreaseoftotalequity,welowerourforecastsoftheCompany’s2024‐2026EPSfromRMB2.52,3.76and5.23toRMB1.70,2.55and3.78.Withreferencetothesectorvaluation(2024PEof38.57x)andalsotakingintoaccounttheCompany’sstatusastheonlysupplierofmedium‐andhigh‐endmass‐productionglue‐coateddevelopersinChinaanditsrisingproductioncapacitiesofpre‐coatingdevelopment,chemicalcleaningandtemporarybondingandun‐bondingequipment,wesuggest2024PEof55xandlowerthecorrespondingtargetpricetoRMB93.50.“Overweight”ratingmaintained. ComputingPowerIndustry:In‐depthReport Basedontechnicalprinciples,thecapabilitiesofcurrentAIarchitecturesareclosetothebottleneck,andthe“intelligence”cannotbeachievedbymeansofincreasingthenumberofspecificalgorithms,parameters,ordataresources. Inthemediumterm,thenetwork,memoryandotherhardwarehaveseenacleartechnicalceiling.Becauseofthelowcost‐efficiencyfortheexistingarchitecturetoimprovetheirperformances,medium‐sizedmanufacturersmayresorttothereasoning sideforasolution,whichwillgiverisetobiggeruncertainties. LatestReports Micro‐Tech(688029):OW,TP@RMB77.04 [Rating:OW(Prv:OW);TP:RMB77.04(Prv:RMB77.04);MP:RMB59.24;Mkt‐Cap:RMB11128mn] TheCompanydiscloseditsplantopayEUR36.72mn(equivalenttoRMB289mn)ofitsownfundstopurchase51%stakesofCMEfromCreo.BasedonCME’s2023netprofitofEUR3.468mn,thispurchasepricecorrespondsto2023PEof21x.Beforethisdealiscompleted,wemaintainourforecastsoftheCompany’s2024‐2026EPSof3.21, 3.91and4.77.WemaintaintargetpriceofRMB77.04(2024PEof24x)and“Overweight”rating. SectorRatingsoftheMonth RatingSector OW BuildingMaterials,ComprehensiveFinance,Insurance,CommercialBanking,Coal,Food&Drink, Pharmaceutical,RealEstate,MachineryManufacturing,Transportation,ConstructionEngineering,NonferrousMetals HouseholdAppliances,TransportationEquipment,MassMedia&Cultural,Agriculture,Textile& NT UWInformationTechnology,InformationScience Garments,Retailing,PowerEquipment,SocialServices,PublicUtilities,Iron&Steel Note:TheratingsabovearemadebyGTJAStrategyTeam,whichmaynotalwaysbeinlinewiththeopinionsofGTJAindustryanalystsduetodifferentemphasesandtimerangeswhentheseratingsaremade. MarketStrategyWeeklyViewpoint(LastUpdate:September17th,2024)A‐ShareStrategyWeekly:PlayItSafe Inabsenceofactivechangeofmarketexpectationsorbeforethestockvaluationissafeenough,weadvisetoremainpatient.Recently,Chinastockmarketkeptonfallingwithsmallermarketturnover,andlong‐endinterestrateshityearlylow.Exceptforexport,theeconomicdatathisAugust,includinginflation,credit,consumptionandinvestment,allreflectedslackdomesticdemand.However,theNPCStandingCommitteedidnotmentionanyadditionalfiscalstimulusatitsmeetingthisSeptember.Intermsofstockvaluationandtrading,thePEofShanghaiCompositeisnowat26%quantilesince2010(c.f.15%‐20%quantileatclassicmarketbottomin2012/2014/2018)andthelowestA‐shareturnoverratioisnow0.75%(c.f.0.5%~0.6%atclassicmarketbottomin2012/2014/2018).Undersuchcircumstance,itisadvisabletostandbyandplayitsafe. FedReserve’sprecautionaryinterestratecutfavors