Guotai Haitong: Emerging industries have vast space and are optimistic about China's industry leaders.

Guotai Haitong released a research report stating that currently, China's emerging technology industries (such as semiconductors, innovative drugs, and communication equipment) are still in the early stages of development. There is still a gap in revenue scale and profitability compared to international industry leaders, but the capital market has given them a high valuation, reflecting optimistic expectations for technological independence and industrial catch-up. In the future, industries with technological barriers and large room for domestic substitution will benefit more. In comparison, profit forecasts for leading companies in the Internet and other application sectors are not weaker than those of overseas leaders, and their valuation levels are more attractive. Guotai Haitong's main points are as follows: Looking from a global perspective, there are revaluation opportunities for Chinese leading companies. Against the backdrop of deep adjustments in the global economic landscape and intensified technological competition, China's emerging industries are experiencing a historic shift from "catching up in scale" to "revaluing in value." This article systematically analyzes the basic positions and valuation levels of nearly a hundred leading companies in the three major areas of advanced manufacturing, technology, and consumer goods at home and abroad. In the field of advanced manufacturing, Chinese companies have shown higher industry maturity and stronger global competitiveness, with outstanding profitability and more cost-effective valuation; hard technology is undergoing a critical stage from "lagging behind" to "keeping pace," and application ends have better valuation and growth potential. Despite having strong profitability, the globalization of consumer goods still needs to be improved, while service consumption is still in its early stages of development, with broad room for growth under the transformation of economic structure. Emerging technology: Hard technology is accelerating catch-up, and application valuation is significantly cost-effective. Currently, China's emerging technology industry (such as semiconductors, innovative drugs, and communication equipment) is still in the early stages of development. There is still a gap in revenue scale and profitability compared to international leaders, but the capital market has given them a high valuation, reflecting optimistic expectations for technological independence and industrial catch-up. In comparison, profit forecasts for leading companies in the Internet and other application sectors are not weaker than those of overseas leaders, and their valuation levels are more attractive. With the acceleration of large-scale models and the landing of AI applications, Internet platform companies, as traffic entrances, are expected to fully benefit from the AI industry trend dividend, ushering in valuation restoration and growth resonance. Advanced manufacturing: Industry maturity and global competitiveness, with vast revaluation space. Domestically, the advanced manufacturing industry is relatively mature, and with a complete industrial system and significant efficiency cost advantages, it has established a solid competitive position globally. In new energy, the scale and profitability of lithium-ion batteries lead globally, and the valuations of top companies are generally lower than overseas leaders, highlighting cost-effectiveness advantages; while wind power profitability is weaker than overseas, valuations are also low; high-end equipment and new materials industries have profitability comparable to overseas leaders, with valuation at a reasonable level, but there is still significant room for global expansion. In the future, we can focus on the revaluation of leading companies with outstanding profitability and deep global layout, as well as investment opportunities for quality manufacturing companies to expand overseas. Consumer goods: Strong profitability in consumer goods, potential waiting to be unleashed in service consumption. In the consumer goods sector, Chinese leading companies (such as high-end liquor, beverages, etc.) have demonstrated strong profitability, but their growth still heavily depends on domestic demand markets, and the lack of globalization results in revenue and market value volume gaps compared to international leaders. Service consumption overall is in the early stages of development, with scale and profitability lower than overseas leaders. From a valuation perspective, the consumer goods sector as a whole is cost-effective, and in the future, we can focus on the growth opportunities of leading service consumption companies brought about by the transformation of China's consumption structure, as well as unique consumer brands with global potential. Investment recommendations: Recommended leading companies in the new energy/transportation equipment/communication equipment/electronics/service consumer industries. Leading companies in emerging industries with significant innovative advantages and strong capabilities in going global will accelerate their catch-up with international leaders or further maintain their leading advantages. With China's capital market continuing to open up to the outside world, leading companies in China's emerging industries are expected to see their valuations rise. Recommendations: 1) Leading companies in advanced manufacturing industries such as new energy/automobiles/machinery/military industries, benefiting from outstanding profitability and global competitive advantages, have the potential for valuation growth; 2) Leading companies in emerging technology industries such as communication equipment/electronics/innovative drugs/Internet, benefiting from China's rapidly improving innovation capabilities and the potential for rapid profit growth; 3) Leading companies in service consumption/mass consumer goods industries, benefiting from the transformation of consumption structure and the potential for industry scale growth. Risk warnings: Business commercialization of new technologies falls short of expectations; China's leading companies' overseas expansion progress falls short of expectations; macroeconomic fluctuations.