Morning Brief

Morning BriefContents TopRecommendations ●ConstructionSector:UpdateReport●Food&BeverageSector:SpecialReport●EzvizNetwork(688475):OW,TP@RMB46.52●Textile&ApparelSector:SpecialReport●SMEMarket:UpdateReport●Active(Passive)AssetAllocation:UpdateReport LatestReports ●JD.com(9618.HK):OW,TP@HKD176.00●XindeNewMaterial(301349):OW,TP@RMB46.58↑ SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint TopRecommendations ConstructionSector:UpdateReport CSRCpromulgated“No.10SupervisoryGuidelineforListedCompanies:MarketValueManagement”.Thefeatured construction companies which are thecomponentstocksofCSI300indexincludeChinaConstructionEngineering(601668)(PB/DividendYield:0.5x/4.5%),China Railway Construction(601186)(0.5x/3.7%),ChinaRailway(601390)(0.5x/3.2%),ChinaCommunications Construction(601800)(0.6x,2.7%),PowerChina(601669)(0.7x/2.4%),ChinaChemicalEngineering(601117)(0.8x/2.1%),Metallurgical Corp of China(601618)(0.7x/2.1%),China EnergyEngineering(601868)(0.97x/1.1%)andSichuanRoad&Bridge(600039)(1.4x/7.4%). Thefeatured companies involved in“Belt&Road Initiative”include CAMCEngineering(002051)(PB/DividendYield:1x/1.4%),NorincoIntl(000065)(1.3x/0.8%),SinosteelEngineering(000928)(1.3x/3.6%),Sinoma Intl Engineering(600970)(1.4x/3.7%),Longjian Road&Bridge(600853)(1.3x/0.9%)and XinjiangCommunicationsConstruction(002941)(2.4x/1.3%).4377705 Food&BeverageSector:SpecialReport Bymeansofcontinuedproductinnovationsfollowingthetrendofliquorindustry,TAKARASHUZOmanagedtooccupythebiggestsharesofboththeSakeandShochuliquormarketsinJapan.Intheearly21stcentury,thecompanystartedtoexploreoverseasmarketactively.DuringthestructuralpolarizationoftheliquorindustryinChina,theleadingbrandsenjoybigadvantages,capableofoccupyingbiggermarketsharesbymeansofdistributionchannelupgrading.OfthefeaturedChineseliquorcompanies,wepreferthoseofstablebusinessperformances,includingWuliangye(000858),LuzhouLaojiao(000568),FenWine(600809),KweichowMoutai(600519),YingjiaDistillery(603198),King’sLuckBrewery(603369),GujingDistillery(000596)andZJLD(6979.HK). EzvizNetwork(688475):OW,TP@RMB46.52 [Rating:OW(Prv:N/A);TP:RMB46.52(Prv:N/A);MP:RMB32.11;Mkt‐Cap:RMB25287mn] Basedonitstwomainbusinessesofintelligenthouseholdappliancesandcloudservice,theCompanykeepsonexploringnewbusinessfrontiers.WeforecasttheCompany’s2024‐2026 EPS of RMB0.72(+0.1%yoy),0.89(+24.9%yoy)and 1.15(+28.2%yoy).Basedonbothrelativeandabsolutevaluationmethods,wesuggestFY2025targetpriceofRMB46.52.“Overweight”rating. Textile&ApparelSector:SpecialReport InOctober2024,thebrandedgarmentscompaniesrealizedbetterGMVthanthepreviousmonth.Andthe PEs(excludingnetcash)ofsome leadingbrands maybottomout later,upon the implementation of consumption‐stimulating policies.Besides,theleadinghometextilecompanieswithrichcash flow andlowcapitalexpendituresmaycontinuetoofferthehighestdividendyieldsamongtheindustry.Offeaturedcompanies,wepreferLuolai(002293),Fuanna(002327)andShuixing HomeTextile(603365). SMEMarket:UpdateReport Bythe3rdanniversaryoftheBeijingStockExchange(“BSE”),thenumberofBSE‐listedcompanieshasrisento257,ofwhich,50%belowto“Specialized,Refined,DifferentialandInnovative”enterprises.Theliquidity‐drivenbullishrunofBSEisexpectedtolastforsometime.InthesecondweekofthisNovember,thetradingvolatilitiesofallBSEsectorswentdown.AsforthethematicinvestmentinBSE,wepreferthecompaniesinlinewiththetrendoftechnologicaliterationorbenefitingfromevent‐drivenopportunities. Active(Passive)AssetAllocation:UpdateReport Wemaintain“Standard Position”for US stocks.Despitethe marginalcontractionofUSeconomy,thelateststatisticsshowstrongresilienceandrelativelysoundoperation of US economy.Of broad‐base indices,DJI and S&P 500 mayoutperformNasdaqintheshortrun. Wemaintain“StandardPosition”forUST‐bonds.Thecontinuousriseofthere‐inflationaryexpectationsafterTrumpwaselectedpresidentmayresultinhigherUST‐bondinterestratesandsteeperyieldcurve.Ontheotherhand,becauseofthemarginalcontractionandcooling‐downofUSeconomy,thepivotalinterestratestillhashighpossibilitytogodowninfuture,whichwillenhancethetacticalholdingvalueoflong‐durationUST‐bonds. LatestReports JD.com(9618.HK):OW,TP@HKD176.00 [Rating:OW(Prv:OW);TP:HKD176.00(Prv:HKD166.00);MP:HKD137.40;Mkt‐Cap:HKD437404mn] WeslightlyadjustourforecastsoftheCompany’sFY2024E‐2026ErevenuefromRMB1,120.9bn,1,177.1bnand1,237.7bntoRMB1,128.2bn,1,183.2bnand1,243.0bn,andadjustednetprofitfromRMB40.3bn,42.4bnand46.8bntoRMB44.8bn,48.0bnand51.7bn.BasedonSOTPvaluationmethod,weraisetargetpricetoHKD176(from166).“Overweight”ratingmaintained. XindeNewMaterial(301349):OW,TP@RMB46.58↑ [Rating:OW(Prv:OW);TP:RMB46.58(Prv:RMB36.29);MP:RMB34.22;Mkt‐Cap:RMB3490mn] WemaintainourforecastsoftheCompany’s2024‐2026EPSofRMB0.01,0.72and1.16.TheCompanyisaleadingcathodecoatingmaterialproduceraswellastheonlylistedcompanyinthisindustry.TakingintoaccountthedeficitoftheCompanyatpresent,andalsowithreferencetothevaluationsofsomeleadinglithiumbattercompanieswhosebusinessearningsareatbottomplace(includingthoseindeficit),wesuggest2024PBof1.