CMSC: The revenue side of the annual report disclosed by the Sci-Tech Innovation Board is better than the profit side, with AI hardware and some mid-to-high-end manufacturing industries leading in profit margin recovery.

CMSC released a research report stating that in terms of performance expectations, in the major sectors of the Sci-Tech Innovation Board, the sectors with high expected growth rates by 2025 mainly include mid-stream manufacturing, finance, real estate, etc. In the past month, profit expectations for 2025 have been adjusted upwards for sectors such as media, beauty care, textiles and apparel, machinery equipment, transportation, basic chemicals, etc. Looking ahead, policies continue to increase support for domestic substitution, digital economy, and high-tech manufacturing, with emerging technological innovations such as AI, intelligent manufacturing, and autonomous driving. As previous high investment in research and development gradually enters the commercialization stage, the performance of the Sci-Tech Innovation Board is expected to recover from a low level. The main points of CMSC are as followed: Overall performance of the Sci-Tech Innovation Board is still under pressure Based on currently disclosed stocks, using a consistent comparable basis calculation, the overall revenue growth rate of the Sci-Tech Innovation Board in 2024 is -0.9%, with profit growth rate slightly turning negative; cumulative operating profit growth rate at -36.1%, and the year-on-year net profit attributable to the parent company further decreasing to -40.5%. In terms of structure, revenue growth is generally better than profit growth 65.8% of Sci-Tech Innovation Board companies have positive revenue growth, with 46.5% of them achieving positive growth in net profit attributable to the parent company. Companies with large market capitalization perform relatively well, with approximately 43.8% of companies with a market capitalization of over 500 billion having revenue growth rates exceeding 20%, and approximately 33.3% having net profit growth rates exceeding 20%; among companies with market capitalization below 50 billion, only 26.9% have revenue growth rates exceeding 20%, and 23.2% have net profit growth rates exceeding 20%. Median performance growth rate Among the primary industries, communication, household appliances, basic chemicals, electronics, etc. have higher median net profit growth rates; in the single fourth quarter, the calculation results show that household appliances, communication, electronics, etc. have higher median net profit growth rates. Among the secondary industries, motorcycle and parts, small household appliances, ground armaments, aerospace equipment, communication equipment, optoelectronics, power grid equipment, black home appliances, wind power equipment have higher median net profit growth rates; in the single fourth quarter, black home appliances, aerospace equipment, aviation equipment, electronic chemicals, wind power equipment, engineering machinery have higher net profit growth rates. Outperformance scenario In the primary industries, communication, home appliances, computers, electronics, basic chemicals, etc. have a relatively high percentage of stocks outperforming in terms of net profit; in the secondary industries, medical services, communication equipment, biological products, software development, semiconductors, general equipment, etc. have a relatively high percentage of stocks outperforming in terms of net profit. Referring to the past few years, industries with high annual performance forecast growth rates have a higher probability of outperforming in the following year. It is recommended to focus on sectors with outperforming performance and turning points, mainly focusing on: AI hardware (electronic chemicals II, semiconductors, other electronics II, communication equipment), some mid-to-high-end equipment (power grid equipment, wind power equipment, special equipment, engineering machinery, aerospace / aviation equipment II, high-value consumables), some pharmaceuticals (chemical pharmaceuticals, biological products), as well as new metallic materials, etc. Risk alert: The support for industries may be lower than expected, and macroeconomic fluctuations may occur.