Morning Brief

Morning BriefContents TopRecommendations ●TourismSector:SpecialReport●CosmeticsSector:UpdateReport●ElectronicComponentsSector:UpdateReport●PetFoodSector:UpdateReport●Active(Passive)AssetAllocation:SpecialReport●ChemicalSector:SpecialReport●AuGroup(2519.HK):OW,TP@HKD18.20 LatestReports ●ChinaEducation(0839.HK):OW,TP@HKD8.98●BeiGene(6160.HK):OW●Shenma(600810):OW,TP@RMB9.25↑●AmerSports(AS.N):OW SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint TopRecommendations TourismSector:SpecialReport ThelatestadjustmentofholidaytimebytheChinesegovernmentisinlinewithexpectation.Thisadjustmenthasprolongedstatutoryholidaytimeandmaycreate“super‐long”vacationswhencombinedbytheannualleavetime,whichwillhelptoboostthedomesticsuperstore,departmentstoreandrestaurantbusinesses,aswellastheoutbound travel and domestic long‐distance travel services.Offeaturedcompanies,werecommendYonghuiSuperstores(601933),ChongqingDepartmentStore(600729),Yun China(9987.HK),Haidilao(6862.HK),UTour(002707),Miniso(9896.HK)and Dingdong Limited(DL.N).HongqiChain(002697)is anotherbeneficiary.Andothercompaniesinthetourismsectormayalsotakebenefit. CosmeticsSector:UpdateReport Weconcludethefollowingfourkeypointsandsuggest“Overweight”ratingforthecorrespondingfeaturedcompanies:(1)FastProfitGrowth:Ruoyuchen(002010),Runben(603193),Marubi(603983)andJinbo(832982);(2)StrongBrandPower:Proya(603605),GiantBiogene(2367.HK)andChicmax(2145.HK);(3)TurnaroundofBusinessPerformance:Dencare(001328),Botanee(300957),Freda(600223),Jahwa(600315),Bloomage(688363),SYoung(300740),Fuerjia(301371)andBeautyFarm(2373.HK);(4)OverseasExpansionandAcquisition:Cabio(688089). ElectronicComponentsSector:UpdateReport Werecommend the“Indigenous&Controllable Tech”companies in thesemiconductorsector,including(1)(semiconductormanufacturing)SMICS(688981);(2)(lithography)CIGU(688448)andMLOPTIC(688502);(3)(semiconductorequipment)NAURATech(002371),AMEC(688012),Piotech(688072),Kingsemi(688037)andSkyverseTech(688361). PetFoodSector:UpdateReport Startinglaterthaninthewesterncountries,thepetfoodindustryisnowinthestageoffastdevelopment.TheyounggenerationisnowthemainstreampetownersinChina,leadingto continued increase of petpopulation andper pet spending.Althoughforeignbrandshavefirst‐moveradvantage,theleadingChinesebrandshavemanagedto increase their market shares by means of continued innovationscorrespondingtotheneedsofpetowners.Infuture,productinnovationfor“pethealth”willbeapermanentcomponentofthecompetitivepowerofpetfoodbrands.Offeatured companies,we recommend Gambol Pet(301498),China Pet Foods(002891),PetpalPetNutrition(300673)andRingpuBio‐tech(300119). Active(Passive)AssetAllocation:SpecialReport Oursuggestionforassetallocationthismonth: (1)ChinaA‐Shares.WeadvisetoremainconfidentonChina’sdomesticdemandandindigenous and controllable tech development.Thesecond Trump AdministrationwilldirectlycurbChina’sexport,butitwillatthesametimeforceChinatoupgradeitsindustryandenhanceitsindigenoustechnologies; (2)US Stocks.The confirmation of the US presidential election result hasreducedtheuncertaintyofUSeconomicpolicies.Meanwhile,FedReserve’s25bpinterestratecutthisNovemberhasalsohelpedtoboosttheriskappetiteinUSstockmarket; (3)Japanese Stocks.Ishiba’ssuccessful reelection as the Japanese primeministerhasreducedtheuncertaintyofmacropolicies.AndthemarketspeculationsonTrumpmayalsocreatesomeshort‐termopportunities.Inthemediumterm,thekeyfactoristhespeedofJapan’seconomicrecovery; (4)IndianStocks.Indianstockmarketisunderthepressurefromforeigncapitaloutflowatpresent,andweadvisetokeepclosewatchonthetrendofforeignfundflow; (5)Gold.ThoughdepressedbystrongUSdollarandthereboundofUST‐bondrates,goldisstillofmedium‐andlong‐terminvestmentvalue. ChemicalSector:SpecialReport Wemaintain“Overweight”ratingforthechemicalsector.AlthoughthesalesinthehighseasonofSeptember‐October2024werenotsatisfactory,theprofitmarginofsomechemicalsofrigidsupplyremainedstable,suchasMDI,Titaniumconcentrate,phosphateoreandsucralose.Theindustrialclimatemaygetoutofbottomandrecovermildly in 2025.Offeatured companies,we recommend the leadingwhite‐horsecompaniesandthoseofgrowthpotential,suchasWanhuaChemical(600309),Hualu‐HengshengChemical(600426),LBGroup(002601),Juhua(600160),YangnongChemical(600486),Sunresin(300487),SinoceraMaterial(300285),RichfulLubeAdditive(300910),Explosive(002096),XingfaChemicals(600141)andSailun(601058). AuGroup(2519.HK):OW,TP@HKD18.20 [Rating:OW(Prv:N/A);TP:HKD18.20(Prv:N/A);MP:HKD12.54;Mkt‐Cap:HKD5207mn] Smallerdisruptionfromexternalfactorsandbiggereffectofhouseholdproducttransformation,togetherwiththediversificationofdistributionchannelsandsupplychain,areexpectedtohelptheCompanytorealizebusinessexpansioninfuture.WeforecasttheCompany’s2024‐2026netprofitofRMB500mn(‐6%yoy),656mn(+31%yoy)and 815mn(+24%yoy).With reference to the PE and PB of comparablecompanies,wesuggesttargetpriceofHKD18.2and“Overweight”rating. LatestReports ChinaEducation(0839.HK):OW,TP@HKD8.98 [Rating:OW(Prv:OW);TP:HKD8.98(Prv:HKD8.98);MP:HKD3.9