CMBC International: BATELAB (02149) is expected to benefit from being included in the Hang Seng Semiconductor Index. Reaffirming a "buy" rating.

China Merchants Securities International released a research report stating that the Hang Seng Index officially renamed the "Hang Seng Information Technology Index" to "Hang Seng Semiconductor Industry Theme Index" and included BATELAB (02149) as a constituent stock, effective from November 7, 2025. The bank believes that this will bring structural positives to BATELAB, as the company is expected to benefit from potential passive fund inflows to enhance market liquidity and attract the attention of actively managed funds. The bank reiterated a "buy" rating, maintaining a target price of HK$93, based on a forecasted 26.6 times price-to-earnings ratio for 2025. The bank believes that the company's valuation is expected to benefit from positive drivers such as the reclassification of the Hang Seng Semiconductor Index, providing an opportunity for reassessment. Investors are advised to closely monitor potential passive fund inflows related to the inclusion in the index. The bank points out that during the previous industry downturn cycle, the company's high profitability demonstrated resilience, highlighting its unique business model and excellent operational capabilities. The bank expects the company's net profit to grow by 21% in 2025, with a net profit margin of over 25%. The company's current valuation is at a significant discount compared to A-shares and global peers, at 14.7 times and 11.6 times forecasted price-to-earnings ratios for 2025/26.