Source: CITIC SEC Research

The attractiveness of China's Assets is gradually increasing, and the investment logic in Technology manufacturing has been revitalized.

In the long term, key breakthroughs in China's cutting-edge Technology are expected to reshape the Global Technology landscape, with DeepSeek's successful emergence symbolizing the strength of China's technological innovation, domestic investor confidence is experiencing a revival, and the industry is accelerating its transformation towards high added value.

In the short term, the valuations of Hang Seng Technology and Nasdaq are converging, as Global funds favor high-cost-performance Chinese Technology Assets due to AI catalysis and the weakening economy in the USA.

The investment logic is shifting from short-term themes to the medium and long-term deep cultivation of Industries, with Technology R&D transitioning from 'negative valuation' costs to 'positive valuation' Assets, which triggers a systematic reevaluation. DeepSeek leads domestic Technology breakthroughs with excellent performance, low cost, and an open-source ecosystem, changing global expectations of Chinese Technology.

On the industry side, various Industries are accelerating the integration of AI with traditional industrial foundations to solve practical problems and create economic value. On the market side, the Technology manufacturing Sector shows aggressive tendencies this spring, driving the reevaluation of asset values.

On the policy side, encouraging central and state-owned enterprises in Technology manufacturing.Mergers and Acquisitions.Promote high-quality development of the Industry.

Looking to the future, during the transition period between old and new driving forces, opportunities for medium- and long-term investments should be grasped, focusing on technology manufacturing fields such as AI+, intelligent driving, humanoid robots, low-altitude economy, commercial space, bio-manufacturing, future energy, and advanced processes in Semiconductors.

▍Attraction of China’s Assets increases, reshaping the investment logic in Technology manufacturing.

Amid severe challenges posed by external technological blockades, China has achieved a series of key breakthroughs in cutting-edge technology, which are reshaping the Global development pattern of Technology. The successful 'breakthrough' of DeepSeek has not only significantly enhanced the medium- and long-term risk appetite of domestic investors but also serves as a strong endorsement for the upgrade of China’s Industry towards high value-added transformation. With the continuous catalysis of AI narratives and the weakening economy in the USA, the trends in global capital allocation are undergoing significant changes. China's Technology Assets, with their high cost-effectiveness, potential for upward adjustment of performance expectations, and solid safety margins, are becoming a new direction favored by global capital. As new technologies like AI mature and new business models become clear, many emerging Industries are making a crucial leap from the introduction stage to the growth stage, pushing China's Technology investment logic from short-term theme-driven to long-term deep cultivation of the Industry. In this process, R&D spending in technology has also shifted from being viewed as a 'negative value' cost to a 'positive value' asset that drives growth. Technological innovation is not only expected to reconstruct the underlying operational logic of traditional industries but also to potentially trigger systemic changes in organizational forms, value networks, and even social contracts, creating entirely new opportunities for Industrial development.

▍DeepSeek leads domestic technological breakthroughs, promoting positive changes in market style and sentiment.

DeepSeek, with its outstanding performance, significantly reduced costs, and open-source ecosystem, has triggered a 'butterfly effect', becoming the hottest AI large model globally, single-handedly changing the expectation of 'cliff-like lead' of the USA in AI and prompting a re-evaluation of the value of China’s AI assets.

It is believed that we are still in the early stage of the AI era and at the beginning of the re-evaluation of China’s Technology assets; DeepSeek will bring significant industrial impacts: various industries are accelerating the exploration of vertical AI applications, leading to 'pulse-like' growth in demand for training computing power, as well as rapid growth in demand for reasoning computing power and local deployment of large models by large enterprises.

Looking ahead, it is expected that the USA will continue to enhance the technical limits of AI, while China’s greater opportunity lies in integrating AI technology with traditional industrial foundations to solve practical problems and create economic value. It is currently the spring bustling window, with the Technology Sector demonstrating exceptional high growth and innovation, showcasing extreme aggressiveness.

This shift in market sentiment and style is expected to become a strong driving force for the Technology Sector and the reevaluation of underlying Assets in China, leading to a new chapter in the value reassessment of Chinese Assets in the Technology manufacturing field.

▍Policies empower central state-owned enterprises to engage in Technology mergers and acquisitions, aiding in Market Cap management and a strong Technology nation.

Since 2024, the M&A restructuring policies in our country have been continuously strengthened, with various levels of government increasing support to promote high-quality development in Capital Markets. The proactive encouragement of policies, combined with the context of high-quality industrial development, positions M&A restructuring as the "greatest common divisor" that meets the current interests of the government, the primary market, and the secondary market. Central state-owned enterprises are actively participating in M&A restructuring, leveraging their resource integration and financial advantages to drive Technology innovation and industrial upgrades.

Empirical data shows that M&A restructuring has a significant positive effect on improving the Market Cap of technology state-owned enterprises. In the future, driven by policy support and market demand, the A-share market is expected to welcome a new wave of mergers and acquisitions, further promoting the implementation of the strong Technology nation strategy.

▍The development of new quality productive forces is accelerating, focusing on long-term industrial investment.

Our country is currently in a period of transitioning from old to new driving forces, with a strong demand for industrial upgrades, and should pay attention to breakthroughs in emerging industries from a medium to long-term perspective. The maturity of new technologies such as AI and the clarity of new business models are catalyzing the integration of traditional industries and the simultaneous acceleration of the development of new quality productive forces. In light of the current key development areas in domestic and international Technology and our national conditions, we believe that the Technology manufacturing directions worthy of significant investment and attention are:

①AI+: Continuous optimization of model reasoning and costs, clear trends in computing power, applications, and edge development;

②Smart driving: It is expected that by 2025, NOA will accelerate penetration, and the intelligent driving equality wave led by BYD continues.

③ Humanoid Robots: Technical breakthroughs resonating domestically and internationally are expected to reach the industrial singularity by 2025;

④ Low-altitude Economy: By 2025, policy infrastructure will accelerate implementation, and the vehicle chain will enter to create a business closed loop;

⑤ Commercial Aerospace: The satellite launch will enter an explosive period in 2025, with a competitive upgrade in satellite constellation construction between China and the USA;

⑥ Biomanufacturing: An important pole of new productive forces, expected to welcome policy catalysis in 2025;

⑦ Future Energy: Multiple technology paths continue to land, expected to blossom in multiple places;

⑧ Advanced Semiconductor Processes: External restrictions force domestic manufacturers to actively expand production, and the logic of self-control and domestic substitution continues to strengthen.

▍Risk Factors:

Risks of macroeconomic recovery not meeting expectations; intensified geopolitical frictions; industry policies falling short of expectations; increased competition within various industries; further escalation of China and USA conflicts; risks of core technologies, such as AI, not developing as expected; tightening regulatory risks in the Technology field; risks of macroeconomic fluctuations leading to lower-than-expected corporate IT spending; risks of industrial safety accidents; slower-than-expected progress in corporate AI applications; and domestic substitution processes not meeting expectations; advanced process technology development falling short of expectations.

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