<Midday Update> HSI Ends Midday at 25,839, Gaining 205 Points; HSTI Reaches 5,813, Up 59 Points; ALI HEALTH Surges Over 6%; TENCENT, ALI HEALTH, CHINA RES MIXC, NTES, and NONGFU SPRING Achieve New Highs

The analyst rating for Geely Auto (00175.HK) is based on several positive factors highlighted in the article. The key reasons for the "Outperform" rating include: 1. Strong Sales Growth: Geely logged passenger car sales of approximately 3.0246 million units in 2025, exceeding its original target of 3 million units, with a year-over-year growth of 39%. The company has set an ambitious target for 2026, aiming for a 14% increase in sales to 3.45 million units. 2. Positive Forecasts: The broker raised Geely's net profit forecasts for 2025 and 2026 by 3.2% and 8.9%, respectively, indicating confidence in the company's financial performance. Additionally, a new net profit forecast of RMB24.9 billion for 2027 was introduced. 3. Synergy and Profitability: The integration of Geely's brands (Geely, ZEEKR, and Lynk & Co) is expected to enhance production management and profitability through multi-brand synergy, which is anticipated to release stronger profit elasticity. 4. Upward Product Cycle: The article mentions an upward product cycle, which suggests that Geely is positioned to benefit from improved product offerings and market conditions. These factors collectively support the analyst's decision to maintain an "Outperform" rating and a target price of HKD26 for Geely Auto.

The analyst rating from Citi Research is based on the updated trade-in subsidy policy for passenger vehicles in China, which is expected to accelerate market consolidation in the entry-level vehicle segment. The report highlights that the new subsidies for FY2026 will be calculated as a percentage of the vehicle price, differing from the fixed amounts in 2025. This change is anticipated to benefit larger automakers like BYD, Geely, and GWMotor, which have scale advantages and better cost control compared to smaller competitors. Additionally, the unchanged subsidies for commercial trucks and city buses are expected to benefit companies like Yutong Bus and Sinotruk. Overall, the analysis suggests a positive outlook for certain automakers in the context of the new subsidy structure.

The analyst rating is based on several key factors: 1. US Economic Outlook: The expectation of moderate growth in the US economy due to the Federal Reserve's rate cuts and investments in AI, which supports a bullish stance on US stocks. 2. Hong Kong Market Transition: The forecast for the Hong Kong stock market indicates a shift from valuation recovery to earnings growth leadership, suggesting that while valuation expansion may slow, loose liquidity will continue to support the market. 3. Earnings-Driven Growth: By 2026, a combination of earnings-driven growth and liquidity support is anticipated, which is expected to positively influence the Hong Kong stock market. 4. Demand Dynamics in China: The notion that "new supply creates new demand" is highlighted as a new driving force for the Hong Kong stock market, particularly in the context of insufficient effective demand in China's economy. Overall, the ratings reflect a strategic bullish outlook on US stocks and a positive transition for Hong Kong stocks, while advising caution regarding potential short-term risks.