Sectors:

Automobile & Air (Zhang Jing)

Utilities, Commodity & Banking (Margaret Li)

TMT, Semiconductors (Megan Tao)

TMT, Semiconductors, Consumer & Healthcare (Eric Li)

Automobile & Air (Zhang Jing)

This month I released 3 updated reports of Minth(425.HK), Tuopu (601689.CH) and Wanfeng(002085.CH). Among which, we prefer Minth(425.HK) and Tuopu (601689.CH).

In 2024, Minth Group reported total revenue of RMB23.15 billion (RMB, the same below), up 12.8% yoy; net profit attributable to the parent company was RMB2.32 billion, up 21.9% yoy. This was mainly attributable to the scale effect from increased turnover, the continued improvement in capacity utilisation of the battery house product line, and cost reduction and efficiency enhancement measures across various product lines, which led to a yoy increase in gross profit compared to 2023, enabling the Company to maintain a sound overall level of profitability.

During the period, the gross margin was approximately 28.9%, up 1.5 ppts yoy. It was mainly driven by the increase in segment margin of plastic products and battery house by 1.1 ppts and 2.1 ppts, respectively. Specifically, the segment gross margin of the battery house business reached 21.4%, one step closer to the 25% target.

The Company continued to optimise the operational efficiency of its global factories, strengthened the vertical integration capabilities of manufacturing processes at each site, and established benchmark factories while promoting their management models. For example, with the comprehensive capabilities of factories in Mexico and Thailand having significantly improved and stabilised, the Company has leveraged the advantageous resources of North America, Thailand, and China to reduce local operating costs in North America. It is worth noting that the Company has continued to improve the localisation rate of production in North America and Europe, thereby keeping the impact and uncertainties arising from tariffs and geopolitical factors within a controllable range and enhancing the competitiveness of its products in those regions.

The Company is actively exploring new tracks and has made forward-looking deployments in wireless charging for electric vehicles, bionic robots, and low-altitude aircraft (eVTOL), including core components such as electronic skin, smart visors, integrated joints, fuselages, and rotors. Small-batch sample deliveries were completed within the year, and cooperation agreements were reached with several leading enterprises. The cultivation of new tracks and expansion into new markets are expected to create a second growth curve, driving the Company's sustainable development in the medium to long term.

The Company's cash flow also improved, leading to the resumption of dividend payments after a one-year suspension and share buyback, signalling the management's confidence in the Company's future development.

We revised the expected EPS for 2025/2026 to 2.43/2.89（from 2.35/2.78）yuan, and introduce 2027 EPS forecast at 3.30yuan.

We believe that it is reasonable to give the Company a valuation of 10.3/8.6/7.6x P/E and 1.3/1.1/1.0x P/B for 2025/2026/2027, equivalent to target price of HK$ 27.8 and BUY rating.

In 2024, Tuopu Group reported revenue of RMB26.60 billion (RMB, the same below), up 35.02% yoy; net profit attributable to the parent company was RMB3.001 billion, up 39.52% yoy; and net profit attributable to the parent company excluding non-recurring items was RMB2.73 billion, up 35.0% yoy. In Q4 alone, the Company recorded revenue of RMB7.248 billion, up 30.63% yoy, and net profit attributable to the parent company of RMB767 million, up 38.47% yoy. For the full year 2024, gross margin was 20.8% (down 2.2 ppts), and net profit margin was 11.3% (up 0.4 ppts yoy). Despite a decline in gross margin due to intensified competition among automakers, raw material price fluctuations, and capacity expansion, the Company's net profit margin improved against the trend, supported by strict cost control (period expense ratio dropped to 8.6%, down 0.9 ppts yoy) and increased government subsidies (RMB280 million, up RMB130 million yoy).

In Q1 2025, the Company recorded revenue of RMB5.77 billion, up 1.4% yoy, and net profit attributable to the parent company of RMB570 million, down 12.3% yoy. This was mainly due to increased expenses related to the development of new factories and businesses, as well as the impact of declining sales from downstream customers - Tesla and Seres saw their Q1 2025 sales drop by 13% and 47%, respectively.

In 2025, the Company will continue to advance its capacity expansion plans. Domestically, it plans to complete the construction of Phase 9 and Phase 10 factories in the Qianwan New District. Overseas, planning has begun for Phase 2 of the Mexico project; the Phase 1 factory in Thailand, covering 185 mu, is scheduled to commence production in early 2026; and the Poland factory is being prepared for capacity expansion to further scale up production. Seizing the rapid development opportunities in the robotics industry, the Company established an independent electric drive division to focus on the robotics business. It began cooperation with customers on linear actuators and has since launched the development of rotary actuators and dexterous hand motors. Relevant products have been sampled to customers multiple times. The Company is also actively deploying products such as robotic body structural components, sensors, foot shock absorbers, and electronic flexible skin, aiming to establish a platform-based product layout for robotics. In 2025, the Company will launch a robotics industrial base project covering approximately 150 mu. Robot products are expected to undergo rapid iteration and enter mass production based on customer demand. The robotics business is set to create a new growth curve for the Company, laying a solid foundation for sustaining rapid development.

Tuopu Group is deeply integrated with new energy vehicle manufacturers through its Tier 0.5 collaboration model. On one hand, it continues to expand its product lines through sustained R&D investment; on the other hand, it benefits from the high-growth dividends of the new energy vehicle sector. Additionally, the Company is developing electric drive actuators and other products for the robotics segment—an emerging track with trillion-level future potential—offering vast development prospects. Overall, we believe the Company possesses sustainable growth capability. We expect the EPS for 2025/2026/2027 to be 1.97/2.46/3.15. So, we revise the Company's target price to RMB 59.1 yuan, respectively 30/24/19x P/E for 2025/2026/2027, a "Accumulate" rating.

In 2024, Tuopu Group reported revenue of RMB26.60 billion (RMB, the same below), up 35.02% yoy; net profit attributable to the parent company was RMB3.001 billion, up 39.52% yoy; and net profit attributable to the parent company excluding non-recurring items was RMB2.73 billion, up 35.0% yoy. In Q4 alone, the Company recorded revenue of RMB7.248 billion, up 30.63% yoy, and net profit attributable to the parent company of RMB767 million, up 38.47% yoy. For the full year 2024, gross margin was 20.8% (down 2.2 ppts), and net profit margin was 11.3% (up 0.4 ppts yoy). Despite a decline in gross margin due to intensified competition among automakers, raw material price fluctuations, and capacity expansion, the Company's net profit margin improved against the trend, supported by strict cost control (period expense ratio dropped to 8.6%, down 0.9 ppts yoy) and increased government subsidies (RMB280 million, up RMB130 million yoy).

In Q1 2025, the Company recorded revenue of RMB5.77 billion, up 1.4% yoy, and net profit attributable to the parent company of RMB570 million, down 12.3% yoy. This was mainly due to increased expenses related to the development of new factories and businesses, as well as the impact of declining sales from downstream customers - Tesla and Seres saw their Q1 2025 sales drop by 13% and 47%, respectively.

In 2025, the Company will continue to advance its capacity expansion plans. Domestically, it plans to complete the construction of Phase 9 and Phase 10 factories in the Qianwan New District. Overseas, planning has begun for Phase 2 of the Mexico project; the Phase 1 factory in Thailand, covering 185 mu, is scheduled to commence production in early 2026; and the Poland factory is being prepared for capacity expansion to further scale up production. Seizing the rapid development opportunities in the robotics industry, the Company established an independent electric drive division to focus on the robotics business. It began cooperation with customers on linear actuators and has since launched the development of rotary actuators and dexterous hand motors. Relevant products have been sampled to customers multiple times. The Company is also actively deploying products such as robotic body structural components, sensors, foot shock absorbers, and electronic flexible skin, aiming to establish a platform-based product layout for robotics. In 2025, the Company will launch a robotics industrial base project covering approximately 150 mu. Robot products are expected to undergo rapid iteration and enter mass production based on customer demand. The robotics business is set to create a new growth curve for the Company, laying a solid foundation for sustaining rapid development.

Tuopu Group is deeply integrated with new energy vehicle manufacturers through its Tier 0.5 collaboration model. On one hand, it continues to expand its product lines through sustained R&D investment; on the other hand, it benefits from the high-growth dividends of the new energy vehicle sector. Additionally, the Company is developing electric drive actuators and other products for the robotics segment—an emerging track with trillion-level future potential—offering vast development prospects. Overall, we believe the Company possesses sustainable growth capability. We expect the EPS for 2025/2026/2027 to be 1.97/2.46/3.15. So, we revise the Company's target price to RMB 59.1 yuan, respectively 30/24/19x P/E for 2025/2026/2027, a "Accumulate" rating.

TMT, Semiconductors (Megan Tao)

In this month, I published two research reports on SY Holdings (6069.HK) and Meituan (3690.HK).

SY Holdings is the first "AI + industrial supply chain" digital intelligence technology company listed on the Hong Kong Main Board. While deeply rooted in national pillar industries such as infrastructure engineering, healthcare, and bulk commodities, the company is actively expanding into strategic emerging sectors like e-commerce, robotics, and intelligent computing services. Adopting a differentiated "transaction-focused, asset-light" model, SY Holdings strengthens industrial ecosystems and data connectivity through its platform-based technology services, enabling SMEs to access working capital, reduce costs, and improve efficiency. The company provides comprehensive sales and supply chain management solutions, including order and marketing management, intelligent goods receipt verification, digital inventory systems, and payment cycle optimization. As of December 31, 2024, SY Holdings has established strategic partnerships with over 10 major core enterprises and collaborated with more than 160 financial institutions. With over a decade of sustained investment in technology and talent development, the company has facilitated over 18,100 SMEs in securing cumulative orders and financing services exceeding RMB 249 billion.

In 2024, the company reported total operating income and revenue of approximately RMB 919 million, a 4.6% year-on-year decrease, primarily due to the impact of one-off transactions, partially offset by growth in its platform-based technology services. Net profit rose 36.9% to RMB 391 million, with the net profit margin increasing from 30.0% in 2023 to 42.5% in 2024. By segment, platform technology services revenue surged 103.6% to RMB 347 million, driven by strengthened ecosystem integration and rapid expansion of off-balance-sheet operations. However, digital financial solutions revenue fell 27.8% to RMB 522 million from RMB 723 million in 2023, as SMEs increasingly met their supply chain financing needs through external funding partners linked via the platform. Supply chain asset refinancing generated recognized revenue of RMB 50.9 million as of year-end 2024, down 27.8% from RMB 70.5 million in 2023. Committed to shareholder returns, the company proposed a 2024 dividend of RMB 0.35 per share, representing a 90.0% payout ratio, and announced a special dividend for 2025, with total dividends for the year expected to exceed RMB 940 million.

In 2025, the company will further accelerate its platform-driven transformation to unlock profit growth potential. We forecast 2025–2027 operating revenues of RMB 1,128/1,258 /1,299 million, with platform services expected to contribute 50.0% of total income. Net profit is projected at RMB 566 million/656 million/684 million, translating to EPS of RMB 0.59/0.68/0.71, with a current P/E ratio of 20x/18x/17x for 2025–2027. Given the company's successful platformization strategy, we assign a 28x 2025 forward P/E, deriving a target price of HK$17.50 per share, and give a “Buy” rating for the first time.

Meituan (03690.HK) was founded in 2010 and merged with Dazhong Dianping in 2015 to become China's largest comprehensive local life service platform, offering a one-stop "eat, drink, play, and entertainment" service. Through products such as Meituan, Meituan Delivery, and Dazhong Dianping, Meituan serves over 10 million annual active merchants, nearly 700 million annual active users, and over 7 million active delivery riders. The broad and deep coverage of merchants, accumulation of user data assets, and efficient delivery network form a solid moat for Meituan's business.

In the fourth quarter of 2024, Meituan reported total revenue of RMB 88.5 billion (Chinese yuan, same below), representing a year-on-year increase of 20.1% but a quarter-on-quarter decline of 5.4%. In terms of profitability, operating profit surged to RMB 6.7 billion, up 280.7% year-on-year, while adjusted net profit reached RMB 9.8 billion, marking a 125.1% year-on-year growth. By segment, core local commerce revenue in Q4 2024 rose 18.9% year-on-year to RMB 65.6 billion, with operating profit climbing 60.9% to RMB 12.9 billion. The new business segment generated revenue of RMB 22.9 billion, up 23.5% year-on-year, while its operating loss narrowed significantly to RMB 2.2 billion, reflecting a 55.0% year-on-year reduction in losses.

Meituan is a leading internet services platform that adopts a "Retail + Technology" strategy. The company has maintained its leading position in food delivery, achieved manageable competition with Douyin in local in-store services, expanded through its comprehensive city-level business model, and possesses a strong balance sheet. We project the company's 2025-2027 operating revenues to reach 393.7/440.7/494.8 billion yuan respectively, with net profits attributable to shareholders of 45.3/54.7/66.0 billion yuan, corresponding to EPS of 7/9/11 yuan.

Based on our SOTP valuation methodology, we estimate Meituan's total target market capitalization at 1,106.2 billion yuan for 2025, with a target price of HK$193. At current share price, the implied 2025-2027 P/E multiples are 17x/14x/12x. We initiate coverage with a "Buy" rating. The company's segment valuation comprises the following components:

1) Core Local Commerce is valued at 872.8 billion yuan, using an 8% weighted average cost of capital and 5% perpetual growth rate;

2) New Initiatives are valued at 102.2 billion yuan, applying a 1x 2025 P/S multiple;

3) Net cash amounts to 131.2 billion yuan.

TMT, Semiconductors, Consumer & Healthcare (Eric Li)

This month I released report of Stella International (1836.HK), China Mobile (941.HK) & China Unicom (762.HK).

Stella International (1836 HK) reported FY2024 results that again exceeded market expectations, underscoring management's strong execution under its 2023–2025 Three-Year Strategic Plan. Total revenue rose 3.5% YoY to USD 1.545 billion, with shipment volume increasing by 8.2% to 53 million pairs, despite a 4.4% decrease in average selling price (ASP) to USD 28.4 due to product mix shifts and raw material cost normalization. Gross profit grew 4.7% to USD 384 million, with gross margin expanding to 24.9%. Operating profit rose 15.7% to USD 185 million, and the operating margin widened from 10.7% to 11.9%. Net profit reached USD 170 million, up 21.2% YoY, translating to a net margin of 11.0%. The company maintained prudent capital management, with net cash rising to USD 424 million. A final dividend of HKD 0.50 and a special dividend of HKD 0.56 were proposed, bringing the full-year distribution to HKD 1.71 per share, sustaining a ~70% payout ratio with additional shareholder returns on top.

By the end of 2024, Stella had essentially achieved the core financial targets set in its 2023–2025 plan. Operating margin surpassed the 10% target ahead of schedule, and net profit CAGR exceeded the original low-teens guidance. Capacity expansion is on track, and the client base continues to diversify, with several new boutique athletic and premium fashion brands added during the year. The company remains focused on enhancing ROIC through disciplined investment and operating efficiency.

In line with its shareholder return policy, the company proposed a final dividend of HKD 0.50 and a special dividend of HKD 0.56 per share, bringing the full-year payout to HKD 1.71, or approximately USD 113 million, maintaining a ~70% payout ratio. Under its capital return program announced in August 2024, Stella also reaffirmed its commitment to return up to an additional USD 60 million annually to shareholders during 2024–2026.

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