Morning Brief

MarketResearch MorningBrief [October11th,2024] MorningBrief ZHOUJinyu021‐38674924zhoujinyu011178@gtjas.comS0880516080007 Contents TopRecommendations ●ASML(ASML.O):OW,TP@USD1,100.00 ●ConstructionSector:UpdateReport ●Vatti(002035):OW,TP@RMB9.50 ●Active(Passive)AssetAllocation:GIC ●MajorAssetAllocation:MonthlyReportOctober2024 LatestReports ●EastrocBeverage(605499):OW,TP@RMB249.50↑ 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 ASML(ASML.O):OW,TP@USD1,100.00 WeforecasttheCompany’sFY2024E‐2026ErevenueofEUR27.2bn,34.9bnand38.1bn,andGAAPnetprofitofEUR7.3bn,10.8bnand12.1bn.WesuggestFY2025EPEof36xandcorrespondingTargetpriceofUSD1,100.“Overweight”rating. ConstructionSector:UpdateReport Becausethenewpolicystimulusisstrongerthanmarketexpectationsandtheposition,valuationandexpectationoftheconstructionsectorareallatthebottom,weadvisetoincreasethepositionoftheleadingSOEsofrisingbusinessclimate,better‐than‐expected2024Q3results,highdividendandlowPE,includingChinaEnergyEngineering(601868),ChinaChemicalEngineering(601117),PowerChina(601669), ChinaRailway(601390),TunnelEngineering(600820),ShanghaiConstruction(600170)andJangho(601886).Otherhigh‐dividendcompanieswhosedividendyieldsareabove2.25%includeSinosteelEngineering(000928),SinomaIntlEngineering(600970),HongluSteelConstruction(002541),ATCDI(603357)andChinaDesignGroup(603018). Vatti(002035):OW,TP@RMB9.50 [Rating:OW(Prv:N/A);TP:RMB9.50(Prv:N/A);MP:RMB7.41;Mkt‐Cap:RMB6281mn] WeforecasttheCompany’s2024‐2026EPSofRMB0.56(+6%yoy),0.60(+8%yoy)and0.66(+9%yoy).Basedonthelowerofabsoluteandrelativevaluationsandalsotakingintoaccounttheuncertaintiesoftherealeffectsoftherealestatepolicystimulusonthesales,wesuggesttargetpriceofRMB9.5.“Overweight”rating. Active(Passive)AssetAllocation:GIC TheGovernmentofSingaporeInvestmentCorporation(“GIC”),oneoftheworld’soldestsovereignwealthfundswithassetsofmorethanUS$700bn,isamodelexampleofbigsovereigninstitutionalinvestorsinAsiaandtheworld.Overthepast20years,GIC’snominalandrealinvestmentreturnswere5.8%and3.9%,whichhasachievedthegoalofpreservingandincreasingtheinternationalpurchasingpowerofitsforeignexchangereserves.Facedwiththechallengesofthecurrentinvestmentenvironment,GIChastakenactiveactionsintermsofinvestmentportfolio,organizationalstructureandinvestmentteamtorealizelong‐horizonstableinvestmentreturns. MajorAssetAllocation:MonthlyReportOctober2024 OursuggestsforOctober2024: (1)A‐Shares:Weadvisetheridewiththetide,withmoreemphasisonthehigh‐elasticityopportunities; (2)USStocks:Weadvisetoholdontothecurrentpositionandstandby,inviewoftheshort‐termneutralfluctuationsofUSstocksduetotheuncertaintiesabouttheUSeconomicsoft‐landingandthepresidentialelection. (3)JapaneseStocks:Althoughtheinterestratehikeexpectationscooleddown, thepoliticaluncertaintiesandtheloweconomysuggestshort‐termdangerofmarketcorrections.Weanticipatethemarkettostayinneutralweakfluctuationsonthewholeintheshortrun. (4)IndianStocks:BecauseoftheuniqueresilienceandgrowthpotentialoftheIndianeconomy,IndiamayattractglobalfundinflowduringtheinterestratecutofFedReservelater,whichwillhighlighttheinvestmentvalueofIndianstocks. (5)Gold:GoldmayturnweakintheshorttermfollowingthedescendinginterestratecutexpectationsandthereboundofUST‐bondrates.Butinthemediumandlongrun,goldassetwillremainarelativequalityassetduringtheinterestratecutcycleoftheFedReserve. LatestReports EastrocBeverage(605499):OW,TP@RMB249.50↑ [Rating:OW(Prv:OW);TP:RMB249.50(Prv:RMB206.78);MP:RMB217.00;Mkt‐Cap:RMB112843mn] BecausetheCompany’sproductrangeextensionanddistributionchannelexpansionwerebothbetterthanourexpectation,weraiseourforecastsoftheCompany’s2024‐2026EPSfromRMB5.44,7.01and8.86toRMB6.31(+60.8%yoy), 8.20(+7.01%yoy)and10.48(+27.8%yoy).WithreferencetothevaluationsofcomparablecompaniesincludingNongfuSpring(9633.HK),YanjingBrewery(000729)andAnjoyFoods(603345),wesuggest2025PEGof1.01xandraisethecorrespondingtargetpricetoRMB249.5(from206.78).“Overweight”ratingmaintained. SectorRatingsoftheMonth RatingSector OW BuildingMaterials,ComprehensiveFinance,Insurance,CommercialBanking,Coal,Food&Drink, Pharmaceutical,RealEstate,MachineryManufacturing,Transportation,ConstructionEngineering,NonferrousMetals HouseholdAppliances,TransportationEquipment,MassMedia&Cultural,Agriculture,Textile& 4386277 NT UWInformationTechnology,InformationScience Garments,Retailing,PowerEquipment,SocialServices,PublicUtilities,Iron&Steel Note:TheratingsabovearemadebyGTJAStrategyTeam,whichmaynotalwaysbeinlinewiththeopinionsofGTJAindustryanalystsduetodifferentemphasesandtimerangeswhentheseratingsaremade. MarketStrategyWeeklyViewpoint(LastUpdate:October7th,2024)A‐ShareStrategyWeekly:KeepClimbing A‐shareindicesmaykeepclimbing,andgrowthstocksmayoutperformothers.A‐sharemarketwitnessedahistoricbigrisebeforetheNationalDay(October1st,2024)andHSIgainedanother10%duringtheNationalDayholidays(October1st—6th,2024),makingChinastockmarketthebeststockmarketintheworldsofarthisyear.Aswesaidi