Morning Brief

Morning BriefContents TopRecommendations ●RealEstateSector:UpdateReport●SmarterMicroelectronics(688512):OW,TP@RMB18.24↓●DurableConsumerGoodsSector:UpdateReport●YouyouFoods(603697):OW,TP@RMB13.40●WarIndustrySector:UpdateReport LatestReports ●Ruoyuchen(003010):OW,TP@RMB26.56↑●XindeNewMaterial(301349):OW,TP@RMB46.58↑●JD.com(9618.HK):OW,TP@HKD176.00●Alibaba(9988.HK):OW,TP@HKD121.00 SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint TopRecommendations RealEstateSector:UpdateReport OnNovember18th,ShanghaiMunicipalGovernmentpromulgatedthe“CircularontheMattersRelatingtotheCancellationofOrdinaryHousingStandards”,whichclearlycanceledthestandardsforordinaryhousingandnon‐ordinaryhousingrecognition.Besidesthe previouscontract taxcut,thiscancellationwill reduce theindividualincometaxandvalue‐addedtaxonhousingtransactions.Otherfirst‐tiercitiesareexpectedtofollowShanghailater.Nowtherealestateindustryhasenteredanewstage,duringwhich,assetrestructuringandreorganizationwillbecomethekeypoints.Thedomesticdebtrestructuring,whichisalsoameansofriskreduction,mayspeedup.Meanwhile,consideringtheimpactsfromthecurrentpopulationgrowth,resourcerestructuringwill become the main trend of the real estate industry,which willhighlighttheadvantagesoftheSOEsinfirst‐tiercities. SmarterMicroelectronics(688512):OW,TP@RMB18.24↓ [Rating:OW(Prv:OW);TP:RMB18.24(Prv:N/A);MP:RMB12.90;Mkt‐Cap:RMB5944mn] TheCompanyisaleadingRFmodulesupplierwhosebusinessperformancemaybottomoutthankstothesalestomobilephoneandIoTclients.AstheCompany’s2024Q1~3businessresultswerelowerthanexpectation,welowerourforecastsoftheCompany’s2024‐2026 revenue to RMB558mn(from 1,108mn),1,295mn(from1,570mn)and2,292mn,andEPStoRMB(‐0.85)(from‐0.25),0.01(from0.23)and0.48.TheCompany’sL‐PAMiDhasrealizedsmall‐scaleproduction.Withreferencetotheaveragevaluationofsemiconductordesignindustry,wesuggest2026PEof38xandlowerthecorrespondingtargetpricetoRMB18.24.“Overweight”ratingmaintained. DurableConsumerGoodsSector:UpdateReport OnNovember1st,2024,ChinaimplementedtheChinaCompulsoryCertification(“3C”)standardsontwo‐wheeledelectricvehicles.Becauseoftheslowcertificationprogressofsomesmall‐andmedium‐tierbrands,thecontractionoftheirsupplywillfavorthesalesoftheleadingbrands.Offeaturedcompanies,werecommendtheleadingproducers,includingAima(603529)andYadea(1585.HK). YouyouFoods(603697):OW,TP@RMB13.40 [Rating:OW(Prv:N/A);TP:RMB13.40(Prv:N/A);MP:RMB10.58;Mkt‐Cap:RMB4525mn] NewproducttypesandnewdistributionchannelswillspeeduptheprofitgrowthoftheCompany.WeforecasttheCompany’s2024‐2026EPSofRMB0.36(+33%yoy),0.46(+30%yoy)and0.58(+26%yoy).BasedonbothPCFFandPEvaluationmethods,wesuggesttargetpriceofRMB13.4(2025PEof29x).“Overweight”rating. WarIndustrySector:UpdateReport ShenzhenMunicipal Government publicized the progress of its low‐altitudeeconomyinfrastructure,announcingtobuild over1,200 low‐altitudetake‐offandlandingpoints for manned flight,logistics,community distribution and urban governanceservicesbytheyear2026.Thepotentialandqualityoflow‐altitudeeconomydevelopmentarebothpromising.Offeaturedcompanies,werecommendGeovis(688568)andAerospaceNanhu(688552).OtherbeneficiariesincludeLesInfoTech(688631)andSunCreateElectronics(600990). LatestReports Ruoyuchen(003010):OW,TP@RMB26.56↑ [Rating:OW(Prv:OW);TP:RMB26.56(Prv:RMB22.35);MP:RMB21.40;Mkt‐Cap:RMB3639mn] InviewoftherisingsalesoftheCompany’sownbrandLYCOCELLE,weraiseourforecastsoftheCompany’s2024‐2026EPStoRMB0.59(+0.06),0.83(+0.04)and1.11(+0.03).Withreferencetothesectorvaluation,andalsotakingintoaccountthefasterprofitgrowthoftheCompanythanitspeers’,wesuggest2025PEof32xandraisethecorrespondingtargetpricetoRMB26.56(+4.21).Wemaintain“Overweight”rating. XindeNewMaterial(301349):OW,TP@RMB46.58↑ [Rating:OW(Prv:OW);TP:RMB46.58(Prv:RMB36.29);MP:RMB34.22;Mkt‐Cap:RMB3483mn] WemaintainourforecastsoftheCompany’s2024‐2026EPSofRMB0.01,0.72and1.16.TheCompanyisaleadingcathodecoatingmaterialproduceraswellastheonlylistedcompanyinthisindustry.TakingintoaccountthedeficitoftheCompanyatpresent,andalsowithreferencetothevaluationsofsomeleadinglithiumbattercompanieswhosebusinessearningsareatbottomplace(includingthoseindeficit),wesuggest2024PBof1.72xandraisethecorrespondingtargetpricetoRMB46.58.“Overweight”ratingmaintained. JD.com(9618.HK):OW,TP@HKD176.00 [Rating:OW(Prv:OW);TP:HKD176.00(Prv:HKD166.00);MP:HKD137.20;Mkt‐Cap:HKD436767mn] 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. Alibaba(9988.HK):OW,TP@HKD121.00 [Rating:OW(Prv:OW);TP:HKD121.00(Prv:N/A);MP:HKD85.25;Mkt‐Cap:HKD1631822mn] WeslightlyadjustourforecastsoftheCompany’sFY2025E‐2027ErevenuefromRMB1,039.2bn,1,138.9band1,227.2bntoRMB1,021.8bn,1,123.4bnand1,204.9bn,andadjustednetprofitfromRMB163.4bn,173.7bnand188.0bntoRMB144.1bn,182.5bnand190.5bn.WesuggestFY