Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.

Author: Chen Ming.

China's target price for assets has been intensively raised again!

Morgan Stanley's latest research report, $POP MART (09992.HK)$ target price raised from 69 Hong Kong dollars to 81 Hong Kong dollars; Nomura $BYD COMPANY (01211.HK)$ H-share target price raised by 23% to 375 Hong Kong dollars; Daiwa Securities $FUYAO GLASS (03606.HK)$ H shares target price raised from 47 Hong Kong dollars to 68 Hong Kong dollars; UBS group will $CHINA LIFE (02628.HK)$ H shares target price raised from 14.5 Hong Kong dollars to 19 Hong Kong dollars; In addition, Lyon has raised $LENOVO GROUP (00992.HK)$ Hong Kong stock target price, Citigroup has raised $Bilibili (BILI.US)$ US stock target price.

Meanwhile, international investment banks JPMorgan and UBS have both raised their 2024 economic growth forecasts for China to 4.8%, citing stronger-than-expected growth in the third quarter. Just a few days ago, Goldman Sachs raised its 2024 China economic growth forecast from 4.7% to 4.9%.

What will be the next interpretation of the capital markets?

Intensive upward revisions

In recent days, foreign institutions have once again begun intensively raising their target prices for Chinese assets, involving listed companies such as Pop Mart, BYD, Fuyao Glass, China Life Insurance, Lenovo Group, Bilibili, and more.

Among them, the latest research report from Morgan Stanley stated, $POP MART (09992.HK)$ Sales in the third quarter increased by 120% to 125% year-on-year, far exceeding the bank's expectations in terms of both magnitude and speed. Morgan Stanley believes that the potential in overseas markets, the business still in its initial stage, and the improvement in consumer sentiment in the mainland are three factors that can drive Pop Mart's strong sales growth from 2025 to 2026. As a result, the bank has raised the company's earnings per share forecasts for this year to 2026 by 27%, 18%, and 14% respectively. They have raised Pop Mart's target price from HK$69 to HK$81, maintaining a 'buy' rating.

The latest research report released by Nomura Securities, $BYD COMPANY (01211.HK)$ The target price for the listed in hong kong shares has been raised by 23%, from HK$305 to HK$375, and reiterated the 'buy' rating on byd company limited H shares. Nomura Securities believes that as BYD implements its business strategy in 2024, including price reductions and launching the new plug-in hybrid power platform DM-i5.0, it is expected that its market share in China will further expand.

Nomura Securities expects BYD's electric vehicle shipments to reach 4 million units this year, further consolidating its leading position in the Chinese market. In addition, Nomura Securities' overseas expansion plan for BYD is expected to support its long-term growth. Nomura Securities also adjusted BYD's revenue expectations for 2024 to 2026, with an increase of 1.1% to 4.5%, and adjusted operating profit margins for the same period by 0.3% to 0.4%. Nomura Securities predicts that BYD's compound annual growth rate of shipments from 2023 to 2026 will be 26%, revenue compound annual growth rate will be 19%, and profit compound annual growth rate will be 23%.

A Citigroup analyst also wrote in a report that due to strong sales, effective cost control, and changes in revenue structure, BYD's profit momentum in the third quarter may be better. Based on investor feedback, they expect net income to be between 10.5 billion and 11.8 billion RMB. Citigroup stated that BYD's sales in the fourth quarter may also unexpectedly rise, with monthly sales in November likely to reach 0.5 million units.

$FUYAO GLASS (03606.HK)$ The target price for Fuyao Glass has also been significantly raised. Daiwa Securities released a research report, raising Fuyao Glass's target price from HK$47 to HK$68. Daiwa Securities believes that Fuyao Glass's third-quarter performance shows high-quality growth, with regular net profit exceeding expectations by 16%, and multiple catalytic factors are expected in the future. Fuyao Glass has benefited from the stimulus policy of vehicle replacement subsidies implemented since August, which has driven growth in new car sales. Additionally, although U.S. light vehicle sales in the third quarter decreased by 3% year-on-year, it is expected that US new car sales will bottom out next year due to lower car loan rates. Daiwa Securities raised Fuyao Glass's revenue forecast for 2024 to 2026 by 1% to 3%, and net profit forecast for the period was increased by 9% to 19%, reiterating its 'buy' rating.

$Bilibili (BILI.US)$ The target price for Bilibili stock in the USA has also been raised by Citigroup. Citigroup pointed out that bilibili is expected to announce its third-quarter performance in mid-next month, with the company's income and adjusted profits expected to meet market expectations. Due to the success of the game 'Three Kingdoms: Destiny Made', it is expected that game revenue in the third quarter will grow by 67% annually. The momentum of advertising may continue into the third quarter with fundamental improvements and continue to outperform peers in the fourth quarter.

Citigroup stated that as the revenue mix shifts towards gaming and advertising businesses, although more marketing expenses need to be allocated for new games, it is expected that Bilibili's non-GAAP operating profit will turn losses into gains, with profit forecasts for 2025 and 2026 raised by 3% and 1% respectively, reflecting the slightly better-than-expected performance of 'Three Kingdoms: The World is My Craft,' and raising the target price from $16 to $22, maintaining a 'neutral' rating.

Recently, UBS raised the target price of H shares from 14.5 Hong Kong dollars to 19 Hong Kong dollars, with a 'buy' rating. China Life Insurance recently released a performance forecast, expecting a net profit attributable to shareholders of approximately 101.135 billion to 108.767 billion yuan in the first three quarters, a year-on-year increase of about 165% to 185%. UBS believes that China Life's profit forecast significantly exceeds market expectations, with guidance for the first nine months 67% to 80% higher than market forecasts. UBS expects China Life's full-year net profit to increase by 1.33 times to 108 billion yuan, and has also raised its net profit forecasts for 2024 to 2026 by 2.34 times, 98%, and 94% respectively, while increasing its forecast for this year's new business value and implied value (EV) by 3% and 5% respectively. $LENOVO GROUP (00992.HK)$ Today, Credit Suisse's latest research report maintains

Credit Suisse raised the Hong Kong stock target price to 12.8 Hong Kong dollars. Credit Suisse expects Lenovo Group's net profit for the second quarter to reach $0.37 billion, higher than the earlier forecast of $0.331 billion, mainly due to robust growth in personal computers. According to IDC data, Credit Suisse expects Lenovo Group's PC shipments to outperform the market in the third quarter of this year, and the bank predicts that it will continue to expand its market share in the fourth quarter. Credit Suisse anticipates a strong performance in the third quarter by Lenovo Group, benefiting from further momentum in personal computers and AI server deliveries. Credit Suisse has raised its net profit forecast for Lenovo Group for the fiscal year 2025 from $1.2 billion to $1.3 billion and for fiscal year 2026 from $1.49 billion to $1.56 billion. The target price has been raised from 12.2 Hong Kong dollars to 12.8 Hong Kong dollars, reiterating an 'outperform' rating. $CHINA LIFE (02628.HK)$ In addition, Morgan Stanley raised

the recent results, expecting a more than doubling of net profit for the whole year of voice system integration. Rise by 2.34 times, 98%, and 94% for 2024, 2025, and 2026, respectively. At the same time, this year's new business value and EV forecasts have been revised upwards by 3% and 5%. $PING AN (02318.HK)$ "Buy" rating, maintaining a target price of 52 Hong Kong dollars. However, Goldman Sachs has raised its new business value forecast for China Ping An from 2024 to 2026. Goldman Sachs pointed out that China Ping An's third-quarter performance roughly meets the bank's full-year expectations. The new business value exceeded expectations, and the life insurance new business value significantly surpassed both the bank's and the market's expectations, mainly due to strong growth in new policy sales and profit margin expansion. The bank believes that China Ping An's fundamental operations are improving. For the company to drive further valuation reassessment, next year's sales need to show strong momentum, and the economic growth prospects need to improve.

Goldman Sachs has raised its new business value forecast for China Ping An from 2024 to 2026 by 9% to 13%, to reflect improvements in cost efficiency and profit margin expansion driven by pricing of products exceeding expectations; operating profit forecast increased by 2% to 5%.

Of note, in recent days, foreign capital has also intensively raised China's economic growth expectations. On October 21, international investment banks JPMorgan and UBS both raised China's economic growth forecast for this year to 4.8%, citing growth in the third quarter exceeding expectations. Just a few days earlier, Goldman Sachs raised its 2024 China economic growth forecast from 4.7% to 4.9%, and its 2025 economic growth forecast from 4.3% to 4.7%. Goldman Sachs stated that China's latest round of stimulus measures clearly indicate a shift in decision-makers' approach to cyclical policy management and a greater focus on stabilizing economic growth.

How will the capital markets play out in the future?

On October 23, A-shares and Hong Kong stock markets continued to be strong. As of around 1:20 p.m., $Hang Seng Index (800000.HK)$the increase was close to 2%. $Hang Seng TECH Index (800700.HK)$The increase is close to 3%, with the Shanghai Composite, Shenzhen Component Index, and ChiNext Price Index all rising by over 1%.

So, how will the market run next? Everbright Securities pointed out that after the intensive introduction of policies, it has temporarily entered an observation period, with a warming wait-and-see sentiment of on-site funds. The market has returned to a scenario of stock game with differentiated hotspots rotation. Beijing Stock Exchange, which surged the previous trading day, experienced a significant adjustment on the 22nd, dragging down the technology stocks' differentiated adjustment; while some previously stagnant sectors saw rotational speculation. Looking ahead, the index may continue the trend of shrinking volume oscillation adjustment, with structural market movements, and the style of diversified hotspots rotation expected to continue.

Central China Securities analyst Zhang Gang stated that the average P/E ratios of the Shanghai Composite Index and the ChiNext Price Index are 13.67 times and 33.57 times respectively, which are at the median average level in the past three years, suitable for medium to long-term layouts. With the continuous implementation of macroeconomic regulation and growth-promoting policies domestically, the future stock indices are expected to maintain a pattern of oscillating upward trajectory, while still needing close attention to changes in policies, funding, and external factors. Investors are advised to focus on investment opportunities in the short term in new energy, semiconductors, software development, military industry, and the automotive industry.

China You Securities analyst Huang Ziyin believes that looking ahead, passion will eventually return to rationality, and A-shares will shift to two-way fluctuations. In terms of allocation, short-term speculation on the TMT track, with a focus on reversal thinking in the medium to long term.

Sinolink analyst Zhang Chi believes that the significant 'broad money + broad fiscal policy' both operate on the 'liabilities side' of residents, enterprises, and local governments, by making up for the liability gap, reducing liability pressure, facilitating the improvement of the balance sheets of relevant departments, thereby fully preparing for future lightening, stimulating consumption, investment, and activating the domestic economy. They continue to hold an optimistic attitude towards this round of 'rebound' market, especially recommending to pay attention to 'technology bull' structurally.

China International Capital Corporation pointed out that in the initial stage of this round of the market, cyclical sectors with high policy relevance such as non-banking, real estate chain, and pan-consumption led the way, followed by the benefit of loose liquidity and rising market risk appetite, the market switched to the technology growth sector, especially in October when the A-share market as a whole entered a period of volatility, the technology field showed relative resilience.

Currently, investors are more concerned about whether the technology growth style will dominate in this round of the market and its sustainability. Analysts from China International Capital Corporation Li Qiusuo, Huang Kaisong, and others stated that looking at the industry trends, by 2025, AI consumer terminals are expected to gradually become ubiquitous, potentially driving demand upwards. In the future, attention will be paid to changes in the prosperity and structure of different sub-industries, such as in this round of the semiconductor upturn cycle, manufacturers' willingness to expand production may increase, and the supply-demand structure of some sub-industries next year may undergo changes. In the medium term, the technology growth style is still expected to dominate, but close attention is needed to changes in macro and industry trends at home and abroad, with a focus on semiconductors, consumer electronics, communications equipment, and others.

Editor/Rocky