The stock price performance of Inspur International (Wave) lagged behind its peers, which we think is partly due to concerns about its associated companies.

The signing of the first phase of the trade agreement between China and the US is expected to dispel concerns about joint ventures.

We believe digital transformation will continue to be the main investment theme in 2020, and the wave will continue to be a beneficiary of the localization trend.

We revised our earnings forecast because profitability fell short of expectations, but we think the negative factors have been reflected.

We maintain our “increase” rating, and the latest target price is HK$4.00 (based on a price-earnings ratio of 21 times 2019, close to the average of the past 5 years, 20.9 times).