Today’s Focus

1. Galaxy Securities: Core PCE inflation has fallen, and the U.S. inflation inflection point has reached

2. Zhongyuan Securities: In the future, the overall stock index is expected to continue to fluctuate upwards

3. CITIC Construction Investment: The main line in the second half of the year can follow three steps – short-term oversold rebound, medium-term stable growth, and long-term consumption recovery

4. CICC: Lithium prices are expected to usher in a rebound inflection point in the third quarter, and focus on targets with more structural growth capabilities

5. CICC: The prosperity of rare earth magnetic materials is expected to rebound, and the rare earth sector will usher in allocation opportunities

6. CLSA: ETF interconnection is not expected to be an important catalyst for HKEX

7. UBS: The inclusion of ETFs in China Connect meets market expectations, maintains HKEX’s “buy” rating

8. Furui: Raise the target price of BYD shares to HK$329, with a “buy” rating

9. Goldman Sachs: “Sell” rating on Sunny Optical Technology, target price of HK$105

10. DBS: Downgrade Alibaba-SW target price to HK$157, maintain “buy” rating

11. Goldman Sachs: Cut Ganfeng Lithium’s target price to HK$160, and removes the buy list

12. CITIC Securities: Maintain a long-term optimistic view on the three complete machine companies of Apple, Xiaomi and Transsion Holdings

13. Morgan Stanley: “Overweight” rating on Li Ning, target price of HK$89

14. Morgan Stanley: Expect Meilan Airport’s share price to rise within 15 days, rating “overweight”

Selected Research Viewpoints

1. Macro market

• Galaxy Securities: Core PCE inflation has fallen, and the U.S. inflation inflection point has reached

According to a research report released by Galaxy Securities, the US Bureau of Economic Research (BEA) announced the PCE prices in April. The growth rate of PCE prices was significantly lower than that of the previous month, mainly due to the slowdown in the growth rate of energy prices. Core PCE, the Fed’s favorite measure of inflation, held steady month-on-month, while year-over-year growth slowed due to lower prices for motor vehicles and parts. The market inflation expectations index has begun to fall, and the dollar’s decline continues. At the same time, U.S. bonds may reach highs, and U.S. stocks may stop falling.

• Zhongyuan Securities: In the future, the overall stock index is expected to continue to fluctuate upwards

Zhongyuan Securities pointed out that the overall trend of the number of new cases nationwide and in Shanghai is expected to continue to decline, and the process of orderly resumption of production and work has been accelerated in various places. In the future, the overall stock index is expected to continue to fluctuate upwards. At the same time, it is still necessary to pay close attention to changes in policies, funds and external factors. Investors are advised to pay attention to investment opportunities in industries such as automobiles, new energy, computers and semiconductors in the short-term, and continue to pay attention to investment opportunities in low-valued blue-chip stocks in the middle.

• CITIC Construction Investment: The main line in the second half of the year can follow three steps

CITIC Construction Investment believes that the main line in the second half of the year can be followed in three steps: short-term oversold rebound, medium-term stable growth, and long-term consumption recovery. Since the beginning of the year, TMT, high-end manufacturing, medicine, liquor, home appliances, etc. have experienced large declines. If the market stabilizes in stages, these oversold sectors are prone to short-term rebound opportunities, and appropriate games can be played. In the medium term, the main positioning is still the main line of the economy. This round of epidemic prevention and control has achieved phased results, production and logistics are expected to return to normal, and the effect of the stabilizing growth policy will gradually be seen. Related infrastructure, manufacturing, and real estate may still take the lead. Make efforts to hedge against downward pressure, and continue to pay attention to relevant directions under the support of performance. In the long run, the epidemic will have the biggest impact on the consumption and service industries, and related sectors will also experience the biggest decline. In the future, when consumption is fully recovered, there will be certain opportunities in these directions.

2. Industry sectors

• CICC: Lithium prices are expected to usher in a rebound inflection point in the third quarter, and focus on targets with more structural growth capabilities

CICC pointed out that the essence of the early lithium sector correction lies in the downward shift of the industry growth center in the “green stagflation” stage, superimposed on the negative impact of short-term factors, which is now fully reflected in the valuation. Considering that the epidemic is expected to ease in the third quarter, the demand for lithium has entered the traditional peak season, and the increase in supply is limited. In this context, attention should be paid to the targets with more structural growth capabilities. The leaders of the lithium industry are expected to cross the cycle by accelerating the volume and the self-sufficiency rate of resources, and the second-tier targets with larger marginal changes are expected to accelerate their evolution, reflecting the growth beyond the industry.

• CICC: The prosperity of rare earth magnetic materials is expected to rebound, and the rare earth sector will usher in allocation opportunities

The CICC Research Report believes that the essence of the early rare earth sector correction lies in the policy suppression caused by the high rare earth prices and the poor transmission of downstream costs, and the superimposed impact of the epidemic has led to pressure on fundamentals and valuations. However, considering the strong demand for energy conservation and environmental protection of new energy vehicles and industrial motors in the long-term, the short-term downstream demand is expected to recover, the upstream of rare earth is expected to benefit from the price recovery and the increase in production and sales, and the downstream magnetic material companies benefit from the recovery of high-end magnetic material production and sales and the transfer of cost pressure. With the reset of the magnetic material price contract, it is expected to usher in a rise in volume and price.

Third, individual stocks

• CITIC Lyon: ETF interconnection is not expected to be an important catalyst for HKEX (00388.HK)$ , maintain its “buy” rating, target price of HK$460

CITIC Lyon released a research report saying that it believes that ETF interconnection will not become an important catalyst for the Hong Kong Stock Exchange. According to the preliminary plan, only ETFs that track interconnected stocks are eligible to be included, which is believed to be helpful only to those who prefer to buy ETFs rather than individual stocks for risk management purposes. However, most of the companies listed in Hong Kong are Chinese companies, making such ETFs unattractive if investors need to diversify their allocations at the country level. The bank believes that if it is to increase its influence, the design of ETF interconnection should include ETFs that are listed in Hong Kong and track foreign markets, but believe this will not happen because China is establishing a country-to-country focus on the Shanghai Stock Exchange or Shenzhen Stock Exchange. basic interconnection. The bank maintains its “buy” rating with a target price of HK$460.

• UBS: The inclusion of ETFs in China Connect is in line with market expectations, maintains HKEX (00388.HK)$ “Buy” rating, with a target price of HK$520

UBS issued a research report that the Hong Kong Stock Exchange announced the details of the inclusion of exchange-traded funds (ETFs) in the Connected Connect earlier. The bank believes that this is an important milestone in the Hong Kong Stock Exchange’s strategy for China. The target price is HK$520, and the “Buy” rating is maintained. The bank said that stock ETFs account for 8-10% and 3-4% of the year-to-date trading volume of the Hong Kong and mainland markets respectively. Assuming that the trading volume of Shanghai-Shenzhen-Hong Kong Stock Connect increases by 5-10%, the revenue growth of the Hong Kong Stock Exchange is expected to be within 1%. Think that the eligibility of overseas ETFs may be expanded in the future to further unleash southbound demand, or help to position Hong Kong as a channel for Chinese investors to make global investments, and think that the long-term growth views of the HKEx on asset class expansion are not fully reflected in the price . The stock is now at HK$338, with a total market value of HK$428.5 billion.

• Furui: Raise the target price of BYD shares (01211.HK) to HK$329, with a “buy” rating

Furui issued a report stating that Premier Li Keqiang of the State Council had earlier pushed to cut the vehicle purchase tax by 60 billion yuan. Although there were no details, considering the potential purchase tax reduction for gasoline vehicles, the recent increase in oil prices and the manufacturer’s suggested retail price, the bank will reduce the purchase tax of gasoline vehicles. A study was conducted on the affordability of new energy vehicles to see whether consumers would continue to buy new energy vehicles, and concluded that there was no change in the transition to new energy vehicles. The bank believes that BYD and $Xpeng Motors-W(09868.HK)$ are the forerunners in the mass market of new energy vehicles, while BYD’s low-cost and high-performance hybrid car “DM-i” and marine series are expected to continue to grow. Taking market share, the target price of its shares was raised from HK$295.1 to HK$329, and the rating was maintained at “Buy”. The stock is now at HK$275, with a total market value of HK$800.6 billion.

• Goldman Sachs: “Sell” on Sunny Optical Technology (02382.HK)$ , target price HK$105

Goldman Sachs issued a research report saying that it gave Sunny Optical Technology a “sell” rating to reflect the growing concern about smartphone camera competition, which may affect its shipments, with a target price of HK$105. The company held a management meeting on May 27, where investors focused on smartphone market demand, competition for mobile cameras, automotive business and gross profit prospects.

According to the report, management expects a weak smartphone market outlook in the first half of this year, but with the release of new smartphone models, it is believed that market demand will recover in the second half of this year or 2023, driven by increased market share from new customers. , to maintain the company’s guidance forecast of a year-on-year growth of 5%/10% to 10%/15% for mobile phone lens/mobile phone camera modules this year. In addition, management also expects the continuous increase in the number of cameras per vehicle, coupled with specification upgrades for advanced driver assistance systems or autonomous driving, maintains a positive view on the vehicle lens market and maintains a 20% year-on-year growth in vehicle lens shipments to 30% of the guidance forecast.

• DBS: Downgrade $Alibaba-SW(09988.HK)$ target price to HK$157, maintain “Buy” rating

DBS released a report stating that Alibaba’s operating income in the fourth fiscal quarter ended March 2022 increased by 9% year-on-year to 204 billion yuan, and its adjusted net profit fell by 24% year-on-year, which was better than market expectations, due to reduced investment losses. The bank lowered its adjusted net profit forecasts for Alibaba in fiscal 2023 and 2024 by 5% and 2%, respectively, to reflect the impact of the epidemic. The bank lowered Alibaba’s target price from HK$182 to HK$157 and maintained a “buy” rating. . DBS pointed out that it is optimistic about Alibaba’s profit growth, and believes that Alibaba will pay more attention to improving costs and slow down the pace of investment. The bank’s adjusted net profit forecasts for Alibaba in fiscal 2023 and fiscal 2024 are 3% and 1% higher than consensus, respectively.

• Goldman Sachs: Cut $ Ganfeng Lithium (01772.HK) $ target price to 160 Hong Kong dollars, remove the list of convinced buys

Goldman Sachs lowered the target price of Ganfeng Lithium from HK$250 to HK$160, and removed Ganfeng Lithium’s H-shares from the list of sure buys, based on the bank’s cautious outlook on lithium prices. The bank raised its recurring EPS forecast for Ganfeng Lithium by 126% this year, but lowered its forecast for next year to 2025 by 24% to 45% to reflect the bank’s revision of its lithium price forecast and updated company expansion project plans. The bank pointed out that even though the spot price of lithium will recover from the current level, it is estimated that the market has roughly reflected the relevant short-term risks and long-term supply risks, and estimated that Ganfeng Lithium’s stock price will be 14 to 17 of the forecast price-earnings ratio of the industry in 2024 and 2025. Therefore, we maintain our “buy” rating on Ganfeng Lithium.

• CITIC Securities: Maintain a long-term optimistic view on Apple, $Xiaomi Group-W(01810.HK)$ , and Transsion Holdings three complete machine companies

Xin Securities pointed out that Apple’s brand power and product power are still leading, and the user stickiness is strong. 5G new phones are expected to drive replacements, and the long-term upward trends such as wearables and software services have not changed; Xiaomi’s high-end smartphones continue to advance, although short-term mobile phone sales Under pressure, but we are still optimistic about the company’s medium and long-term investment value; Transsion Holdings has a solid position in the African market, and its share in other markets including India, Bangladesh, Pakistan, Indonesia, and the Philippines is increasing, and global expansion is accelerating; Long-term bullish view of the machine company.

• Morgan Stanley: “Overweight” rating on Li Ning (02331.HK)$ with a target price of HK$89

According to a report issued by Morgan Stanley, it is believed that Li Ning’s share price will rise in the next 15 days, with a probability of 70% to 80%, and an “overweight” rating with a target price of HK$89. The bank pointed out that Li Ning’s stock price has fallen 16% since May 18, and believes that sales in April and May cannot be used as an explanation, because it has noticed that its online sales have resumed double-digit growth, and offline sales pressure has gradually eased. . At the same time, Morgan Stanley does not believe that the stock price decline is caused by the market’s concerns about the epidemic. The main reason is that Li Ning’s stock price underperforms other brands and retailers, but its basic growth momentum is still strong, so I believe the stock price is supportive at the current level.

• Morgan Stanley: The stock price of Meilan Airport (00357.HK) is expected to rise within 15 days, and the rating is “overweight”

Morgan Stanley published a strategic research report, predicting that the share price of Meilan Airport will rise by 70% to 80% in the next 15 days, pointing out that Shanghai will gradually reopen from June 1, and the epidemic situation in various places has been gradually controlled recently. The demand for air travel in China will recover somewhat, which may trigger positive sentiment towards the relevant shares, with a target price of HK$21 and an investment rating of “overweight”.

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