I. Weekly review of the Chinese securities market performance

1. Overall performance of the China Securities Index

Since its establishment on January 1, 2015, China Securities and other weight indices have risen 3.27%, continuing to outperform the benchmark S&P 500, with a relative return of -8.02% and an annualized yield of 10.88%. The yield performance since its establishment is clearly superior to that of the US stock market.

The index is up 3.27% year-to-date and up 4.47% this week. Recently, market sentiment has clearly picked up, but due to the large adjustments made by China Securities in the early period, it has still outperformed the S&P 500 index since the beginning of the year.

The US stock Chinese securities picked up this week, and there was less pressure to fall. The industry sectors that saw the biggest gains and losses this week were all optional consumer, information technology, and finance industries. Among them, RLX Technology (RLX TECHNOLOGY), Daquan New Energy, and YATSEN (YATSEN) all rose more than 20% to 33.19%, 27.40%, and 20.00%, respectively.

Note: Weighted index constituent stocks such as China Securities include 75 companies that form equal-weight Chinese securities portfolios, screen China securities with a market value of 1 billion US dollars or more (excluding multi-listed state-owned enterprise stocks) and adjust them every six months.

2. Top 10 ups and downs in China Securities

1) Yixian e-commerce's gross revenue and profit increased significantly year-on-year in 2020, ahead of the industry average

This week, YSG.US (YSG.US) reported $10.97 per share. On April 21, Yixian E-commerce disclosed its 2020 annual performance report. The company changed its revenue from profit to loss, reaching 5.23 billion yuan, an increase of 72.6% over the same period; it achieved gross profit of 3.36 billion yuan, an increase of 74.5% over the previous year. The net loss reached 2,688 million yuan, including the cost of equity incentives previously paid to employees and partners of nearly 2 billion yuan. After adjustment, Yixian E-commerce's net loss in 2020 was 787 million yuan. Additionally, sales and marketing expenses reached $3.41 billion, squeezing profit margins. The number of DTC consumers reached about 32.3 million, an increase of 38.0% over the previous year; the annual customer unit price of DTC consumers was 139.9 yuan/person, an increase of 22.61% over the previous year, reflecting that the audience coverage of the company's products has expanded, the user repurchase rate has further increased, and product stickiness is expected to increase.

2) Alibaba dropped nearly 3% this week, making valuations even more attractive after the antitrust fine

Alibaba, a high-quality company with a large market capitalization, fell 2.77% this week, or was affected by huge anti-monopoly fines of 18.228 billion yuan. On the morning of April 21, Ali invested 350 million US dollars in Trendyol, a well-known online fashion retailer in Turkey, accounting for 86.5% of the shares. Trendyol announced last year that it would explore the European market, including the United Kingdom, Italy, and Spain. On the same day, international research institute Gartner released 2020 global cloud computing IaaS market tracking data. Alibaba Cloud ranked third in the world and first in the Asia-Pacific region, with a market share of 9.5%, surpassing Google's 6.1%. Historical data shows that in the past five years, Alibaba Cloud's market share has nearly tripled, overtaking Microsoft's growth rate.

We believe that this unanticipated fine will not have a substantial negative impact on Alibaba Group. It may promote healthy competition within the industry over a long period of time and spawn more high-quality enterprises and services. Alibaba occupies a leading position in various industry segments (such as e-commerce and cloud business industries) and has strong mergers and acquisitions capabilities, which is conducive to driving performance growth and gradually achieving new revenue growth.

II. Key Company News

1. TSMC will increase the monthly production capacity of the 5nm process to a maximum of 150,000 wafers by the end of the year

According to some sources, TSMC will expand the output of the 5nm process starting with Q2, and the monthly production capacity will increase to a maximum of 150,000 wafers by the end of the year, close to the production capacity of the fourth quarter of last year. In October of last year, there were media reports that TSMC expects to increase shipments of 5nm process chips by at least 150,000 wafers in 20Q4.

2. Good Future Q4 revenue increased 58.9% year over year, and enrollment increased 44% year over year

Good Future's decline this week was relatively small (-0.94%), and the education sector continues to be under pressure due to unclear domestic policies. In terms of financial reports, Good Future's revenue for the fourth fiscal quarter of FY2021 increased 58.9% year-on-year, from US$857.7 million in the same period last year to US$1,362.7 million. The total number of students (long-term regular courses) increased from about 4,646,040 in the same period last year to about 6,690,950 this season, an increase of 44.0% over the previous year. The net loss for non-US accounting standards attributable to Good Future (not considering equity incentive expenses) was 88.7 million US dollars, and the net loss for non-US accounting standards attributable to Good Future for the same period last year was 57.2 million US dollars.

3. NIO products are about to go overseas and have now set up the first European market team

On April 19, Qin Lihong, co-founder and president of NIO, said in an interview during the 2021 Shanghai Auto Show that NIO has built the first European market team, that NIO House, the flagship store in Europe, is being renovated, the power exchange station has been moved to Europe, the vehicle has passed EU collision safety regulations, and plans to hold a press conference in early May to announce the European strategic plan.

4. Xiaopeng Motor is considering developing autonomous driving chips to maintain its competitive advantage.

On April 22, Wu Xinzhou, vice president of autonomous driving R&D at Xiaopeng Motor, said in an interview that the company is studying various technologies, including autonomous driving chips, and is considering manufacturing self-developed autonomous driving chips to maintain the competitiveness of the industry. Earlier, it was reported that Xiaopeng Motor has formed a small team to develop chips. Currently, the P5's autonomous driving technology uses Nvidia chips, and the digital cockpit in the car uses Qualcomm chips. The self-developed chip will enable Xiaopeng Motor to better control the integration of hardware and software. Wu Xinzhou also said that the P5's hardware, software and overall functional usability are more advanced than competitors, which will bring many advantages to the product.

5. Baidu CTO Wang Haifeng: Kunlun 2 chip will be launched in the second half of this year

Wang Haifeng, Baidu's chief technology officer, said that Baidu's self-developed cloud AI general-purpose chip, Kunlun 2, is scheduled to be launched in the second half of this year. This product will provide better basic computing power support for intelligent clouds. In March of this year, Baidu's Kunlun chip business had just completed independent financing, with a post-investment valuation of about 13 billion yuan. In addition, Reuters reports that the joint venture of Baidu and Geely Auto plans to invest 50 billion yuan (7.7 billion US dollars) in the next five years to develop smart car technology, and the car brand will be announced in the third quarter of 2021. The plan will recruit around 2,500 to 3,000 employees over the next two to three years, of which about 20% will be software engineers.

III. Summary and Overview

Weighting indices such as China Securities rose sharply this week. The industry sectors with large increases and decreases were concentrated in the optional consumption, information technology, and finance industries. Among them, Wuxin Technology, Daquan New Energy, and Yixian E-commerce led China Securities, with gains of more than 20%, at 33.19%, 27.40%, and 20.00% respectively.