Morning Brief

MarketResearch MorningBrief [October30th,2024] MorningBrief ZHOUJinyu021‐38674924zhoujinyu011178@gtjas.comS0880516080007 Contents TopRecommendations ●WarIndustrySector:UpdateReport ●ElectronicComponentsSector:UpdateReport ●AutomobileSector:SpecialReport ●WahlapTech(301011):OW,TP@RMB27.00↑ LatestReports ●TianyuanEnvironProtection(301127):OW,TP@RMB16.20↑ ●HengliHydraulic(601100):OW,TP@RMB71.10↑ ●GeovisTech(688568):OW,TP@RMB50.72 ●Dun’anEnviron(002011):OW,TP@RMB17.40↓ ●CNOOCEnergyServices(600968):OW,TP@RMB5.55 ●HangzhouOxygen(002430):OW,TP@RMB30.36↑ ●NorthkingInfoTech(002987):OW,TP@RMB25.00↑ ●HualiIndustrial(300979):OW,TP@RMB81.40↑ 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 Weconcludethefollowingfourmajorinvestmentthreadsandfeaturedcompanies:(1)finalassembly:AVICShenyangAircraft(600760);(2)componentsandparts:AVICOptronic(002179)andSpaceAppliance(002025);(3)subsystems:AVICAirborneSystems(600372)andNorthNavigationControl(600435);(4)materialsandprocessing:FushunSpecialSteel(600399),AVICHeavyMachinery(600765),FeilihuaQuartzGlass(300395),ToLandAlloy(300855),HuaqinTech(688281)andBrightLaser(688333). Therelatedfeaturedcompaniesinclude(1)finalassembly:AerospaceCHUAV(002389)andAVICXi’anAircraft(000768);(2)componentsandparts:UnigroupGuoxinMicroelectronics(002049),HongyuanElectronic(603267),ZhenhuaTech(000733)andTorchElectron(603678);(3)sub‐systems:AECCAviationPower(600893),ZhonghangElectronicMeasuring(300114)andJianghangAircraftEquipment(688586);(4)materialsandprocessing:AvicAviationHigh‐Tech(600862),SinofibersTech(300777),WesternSuperconducting(688122),GuangweiComposites(300699)andAviationTech(688239). ElectronicComponentsSector:UpdateReport Thefourmajorcloudplants(i.e.Microsoft,Google,AmazonandMeta)areallthewinnersoftheAIEra.FollowingthestableadvanceofcloudbusinessandAImonetization,thedemandforAIcomputingpowerandthehighbusinessclimatewillcontinue.Wemaintainourrecommendationsofthefourmajorcloudplantsabove.AndwealsorecommendAPPLE(terminaluser),andhardwaresuppliersincludingNvidia,AMD,MicronandSMIC. AutomobileSector:SpecialReport Wemaintain“Overweight”ratingfortheautomobilesector,inviewoftherisingdemandforlarge‐roomfamilycars.Thegovernmentpromotionof“3kidsfamily”recentlyyearsmayincreasethenumberofmulti‐kidfamiliesinfuture,givingrisetothedemandforlarge‐roomSUVsandMPVs,whichwillinturnbenefittherelatingautomanufacturersandautopartssuppliers.Offeaturedcompanies,weprefer(1)(automanufacturers)JianghuaiAutomobile(600418),LiAuto(2015.HK),BYD(002594),GreatWallMotor(601633),Seres(601127),XPeng(9868.HK)andGeelyAutomobile(0175.HK);(2)(Chinese‐brandautopartssuppliers)Xingyu(601799),Keboda(603786),DesaySV(002920),Foryou(002906),Tuopu(601689),Zhenhua(605319),Shuanghuan Driveline(002472),Huguang(605333),Xinquan(603179)andIKD(600933). WahlapTech(301011):OW,TP@RMB27.00↑ [Rating:OW(Prv:OW);TP:RMB27.00(Prv:N/A);MP:RMB20.62;Mkt‐Cap:RMB3025mn] TheCompanyreported2024Q3revenueofRMB290mn(+24.1%yoy)andnetprofitofRMB33.60mn(+23.5%yoy),inlinewithexpectation.WemaintainourforecastsoftheCompany’s2024‐2026EPSofRMB0.60,0.90and1.10.With referencetothevaluationsofcomparablecompanies,wesuggest2025PEof30xandraisethecorrespondingtargetpricetoRMB27.“Overweight”ratingmaintained. LatestReports TianyuanEnvironProtection(301127):OW,TP@RMB16.20↑ [Rating:OW(Prv:OW);TP:RMB16.20(Prv:RMB10.69);MP:RMB11.20;Mkt‐Cap:RMB6878mn] WemaintainourforecastsoftheCompany’s2024‐2026netprofitofRMB414mn,497mnand593mn,andEPSofRMB0.67,0.81and0.97.Besidesitsmainbusinessofenvironmentalprotection,theCompanyisexpandingintophotovoltaicoperationandhydrogenpowerindustries.Withreferencetothevaluationsofcomparablecompanies,wesuggest2025PEof20xandraisethecorrespondingtargetpricetoRMB16.20.“Overweight”ratingmaintained. HengliHydraulic(601100):OW,TP@RMB71.10↑ [Rating:OW(Prv:OW);TP:RMB71.10(Prv:RMB67.47);MP:RMB53.00;Mkt‐Cap:RMB71064mn] Thebusinessclimateofconstructionmachineryindustryisyettohitbottom,buttheCompanyisabletosustainstableprofitgrowthbymeansofinternationalization,businessdiversificationandmotorization.WeslightlylowerourforecastsoftheCompany’s2024‐2026EPStoRMB2.05(‐0.09),2.37(‐0.17)and2.67(‐0.22).TakingintoaccounttheCompany’sleadingpositionindomestichydraulicpartsindustry,wesuggest2025PEof30xandraisethecorrespondingtargetpricetoRMB71.1.“Overweight”ratingmaintained. GeovisTech(688568):OW,TP@RMB50.72 [Rating:OW(Prv:OW);TP:RMB50.72(Prv:RMB50.72);MP:RMB40.20;Mkt‐Cap:RMB21842mn] TheCompanytakestheleadin“DigitalEarth”navigation.WeforecasttheCompany’s2024‐2026netprofitofRMB482mn,716mnand972mn,andEPSofRMB0.89,1.32and1.79.BasedonbothPEandPSvaluationmethods,wesuggesttargetpriceofRMB50.72(2025PEof38.5x,market‐capofRMB27.557bn).“Overweight”ratingmaintained. Dun’anEnviron(002011):OW,TP@RMB17.40↓ [Rating:OW(Prv:OW);TP:RMB17.40(Prv:RMB20.37);MP:RMB10.95;Mkt‐Cap:RMB11667mn] TheCompany’s2024Q3resultswerelowerthanexpectationduetohugeamountofcreditimpairmentincludingtheRMB60mnbaddebtp