Morning Brief

MarketResearch MorningBrief [October17th,2024] MorningBrief ZHOUJinyu021‐38674924zhoujinyu011178@gtjas.comS0880516080007 Contents TopRecommendations ●WarIndustrySector:UpdateReport ●ConstructionSector:UpdateReport ●Naura(002371):OW,TP@RMB495.60↑ LatestReports ●361Degrees(1361.HK):OW ●CommoditiesCity(600415):OW,TP@RMB14.79↑ ●ChinaWaterAffairs(0855.HK):OW ●Amlogic(688099):OW,TP@RMB87.30 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 WarIndustrySector:UpdateReport At8:25U.S.Easterntime(20:25Beijingtime)onOctober13,theU.S.SpaceExplorationTechnologyCompany(“SpaceX”)launcheditsstarshipfromitsbaseinBocaChica,Texas.Thiswasthefifthtestflightofthestarship.Thestarshipsuccessfullycompletedthescheduledmissionthistime,andthelaunchtower’sroboticarmcapturedandrecoveredtheboosterofthestarshipinmid‐airforthefirsttime. Liquidrocketsaremoresuitableformassandlarge‐scalelaunchmissions.Drivenbythehugedemandforlow‐orbitInternetconstellationconstruction,therewillbeavarietyofChinesecommercialrocketstostarttestflightoverthenexttwoyears.WebelievethattheChineselargecommercialrocketscanbettercaterfortheneedsoflow‐orbitInternetconstellationconstruction.AndthecomingdebutofmanymodelsofChinesecommercialrocketswillbeakthecurrentbottleneckofinsufficientshippingcapacityandhighcost,fromwhich,thefeaturedcommercialairspacecompanieswilltakebenefit. Offeaturedcompanies,werecommendAVICOptronic(002179),SpaceAppliance(002025)andGuangweiComposites(300699). ConstructionSector:UpdateReport DuringtheSichuanprovincialgovernment’slatestpromotionofmajorinfrastructureprojects,ChengduisdefinedasakeycityinWestChina.Inthenexttwoorthreeyears,thetotalplannedinvestmentinmajorprojectsinSichuanisaroundRMB2.15trn,ofwhich,theinvestmentininfrastructureprojectsisRMB1.31trn. Offeaturedcompanies,weprefertheleadinglocalconstructioncompaniesinSichuan,includingSichuanRoad&Bridge(600039),ChongqingConstructionEngineering(600939)andChengduRoad&Bridge(002628). OfthefeaturedSOEswhosebusinessescoversSichuanandChongqingareas,werecommendChinaConstructionEngineering(601668),ChinaRailway(601390),ChinaCommunicationsConstruction(601800)andChinaRailwayConstruction(601186). Naura(002371):OW,TP@RMB495.60↑ [Rating:OW(Prv:OW);TP:RMB495.60(Prv:RMB420.80);MP:RMB363.20;Mkt‐Cap:RMB193488mn] TheCompanyisaleadingsemiconductorequipmentmanufacturerwhichtakesbenefitfromthegrowingproductioncapacitiesoffabricationplantsandtherisingpenetrationratioofChina‐madeproducts.BecausetheCompany’sbusinessordershaveexceededitsproductioncapacities,andalsotakingintoaccounttheCompany’sfastrevenuegrowth,weraiseourforecastsoftheCompany’s2024‐2026EPSfromRMB10.52,14.75and21.18toRMB11.80,15.48and22.21.Withreferencetothevaluationsofsectorvaluation(2024PEof41.7x)andinviewoftheCompany’sleadingpositioninsemiconductorfront‐endequipmentindustry(whosecoreproductsofetching,filmdepositionandcleaningequipmenttakecloseto50%totalcostoffront‐endequipmentpurchase)anditsexpansionintoadvancedprocessequipment includingCVD,ALDandetchingequipment,wesuggest2024PEof42xandraisethecorrespondingtargetpricetoRMB495.6.“Overweight”ratingmaintained. LatestReports 361Degrees(1361.HK):OW [Rating:OW(Prv:OW);TP:N/A(Prv:N/A);MP:HKD4.12;Mkt‐Cap:HKD8519mn] TheCompanytakestheleadintheretailingsalesofsportsshoesandsportswearinlower‐tiermarketinChina.Sincethebeginningof2024,theCompanyhasrealizedthefastestsalesgrowthinindustry,inlinewithourexpectation.Andtheoutlookofspringandsummerorderingfairsin2025isalsogood.WemaintainourforecastsoftheCompany’s2024‐2026netprofitofRMB1.09bn,1.27bnand1.46bn.Currentstockpricecorrespondsto2024‐2026PEof7x,6xand6x.Wemaintain“Overweight”rating. CommoditiesCity(600415):OW,TP@RMB14.79↑ [Rating:OW(Prv:OW);TP:RMB14.79(Prv:RMB11.46);MP:RMB10.55;Mkt‐Cap:RMB57860mn] WemaintainourforecastsoftheCompany’s2024‐2026EPSofRMB0.51(+5%yoy),0.58(+14%yoy)and0.73(+25%yoy).Withreferencetothevaluationsofcomparablecompanies,wesuggest2024PEof29xandraisethecorrespondingtargetpricetoRMB14.79(from11.46).“Overweight”ratingmaintained. ChinaWaterAffairs(0855.HK):OW [Rating:OW(Prv:OW);TP:N/A(Prv:N/A);MP:HKD4.89;Mkt‐Cap:HKD7982mn] BasedontheCompany’slatestfinancialstatements,welowerourforecastsoftheCompany’sFY2025E‐2027EnetprofittoHKD1.628bn(from1.973bn),1.712bn(from2.062bn)and1.804bn,andcorrespondingEPStoHKD1.00,1.05and1.10.InviewofthefastgrowthoftheCompany’spipeddrinkingwaterbusiness,wemaintain“Overweight”rating. Amlogic(688099):OW,TP@RMB87.30 [Rating:OW(Prv:OW);TP:RMB87.30(Prv:RMB87.30);MP:RMB66.89;Mkt‐Cap:RMB27993mn] Beforetheexchangeloss,theCompanystillrealizedpositiveqoqrevenuegrowthin2024Q3.Therefore,wemaintainourforecastsoftheCompany’s2024‐2026EPSofRMB1.94,2.44and3.22.WithreferencetotheaveragevaluationofdigitalSoCindustry(2024PEof63x)andalsotakingintoaccounttherisingmarketcompetitionsafterthereturnofHuawei,wesuggest2024PEof45xandmaintaintargetpriceofRMB87.3.“Overweight”ratingmaintained. SectorRatingsoftheMonth RatingSector OW BuildingMaterials,ComprehensiveFinance,