Wuxi Autowell Technology (688516.SH): Navigating the Photovoltaic Winter – Diversification into Lithium and Semiconductor Equipment Offers a Path to Resilience

Date: September 12, 2025
Rating: BUY (Maintained)
Current Price: CNY 45.59
Target Price Implied Valuation: ~21x 2025E P/E
Analysts: Tu Yueting, Zhang Zhibang (Huaan Securities)

Executive Summary

Wuxi Autowell Technology Co., Ltd. ("Autowell" or the "Company"), a leading provider of intelligent equipment for the photovoltaic (PV), lithium-ion battery, and semiconductor industries, released its interim financial results for the first half of 2025 on August 25, 2025. The report reveals a company in transition, grappling with the severe cyclical downturn in the global photovoltaic sector while simultaneously demonstrating robust growth and strategic breakthroughs in its non-PV segments, specifically lithium-ion battery equipment and semiconductor packaging/testing machinery.

In H1 2025, Autowell reported total operating revenue of CNY 3.379 billion, representing a year-over-year (YoY) decline of 23.57%. Net profit attributable to shareholders of the parent company stood at CNY 308 million, a significant YoY decrease of 59.54%. Gross margin contracted to 27.71% (down 6.1 percentage points YoY), and net profit margin fell to 8.49% (down 9.7 percentage points YoY). These headline figures reflect the intense pressure exerted by the ongoing consolidation and capacity clearance in the PV industry, which has led to delayed equipment acceptance, intensified price competition, and reduced order volumes from downstream clients.

However, a deeper granular analysis of the business segments reveals a diverging trend that underpins our maintained "BUY" rating. While PV equipment revenue declined by 31.64% YoY to CNY 2.665 billion, the Company’s diversification strategy is yielding tangible results. Lithium-ion battery equipment revenue grew by 33.79% YoY, and semiconductor equipment revenue surged by an impressive 726.63% YoY, albeit from a smaller base. Crucially, new order intake in the semiconductor sector exceeded CNY 90 million in H1 2025, with key products such as aluminum wire bonders and Automated Optical Inspection (AOI) devices securing batch orders from reputable domestic and international clients. Furthermore, the Company’s expansion into overseas markets continues to accelerate, evidenced by the official commissioning and shipment of equipment from its Malaysia facility.

From a valuation perspective, we have adjusted our earnings forecasts to account for the prolonged PV downturn and slower-than-expected acceptance cycles. We now project 2025-2027 revenues of CNY 7.216 billion, CNY 6.411 billion, and CNY 5.939 billion, respectively, with corresponding net profits of CNY 684 million, CNY 682 million, and CNY 728 million. At the current share price of CNY 45.59, the stock trades at approximately 21x, 21x, and 20x forward P/E for 2025, 2026, and 2027, respectively. We believe this valuation adequately prices in the near-term headwinds in the PV sector while offering an attractive entry point for investors seeking exposure to the Company’s long-term growth drivers in semiconductor localization and energy storage. The Company’s strong balance sheet, consistent R&D investment, and successful product iteration in high-barrier sectors provide a defensive moat and a clear pathway for value recovery as the industry cycle turns.

This report provides a comprehensive analysis of Autowell’s H1 2025 performance, dissecting the structural challenges in the PV segment, highlighting the emerging growth engines in lithium and semiconductor equipment, evaluating the Company’s technological competitiveness and global footprint, and outlining the revised financial projections and associated investment risks.

Key Takeaways

1. Financial Performance: Cyclical Headwinds Dominate H1 2025 Results

The first half of 2025 was characterized by significant operational pressure, primarily driven by the macroeconomic environment within the photovoltaic industry. The Company’s top-line and bottom-line metrics reflect the lagging impact of reduced downstream capital expenditure (CapEx) and extended verification periods.

Revenue and Profitability Analysis:
* Total Revenue: H1 2025 revenue reached CNY 3.379 billion, a 23.57% YoY decline. In Q2 2025 alone, revenue was CNY 1.845 billion, down 24.91% YoY but showing a sequential quarter-over-quarter (QoQ) growth of 20.28%. This QoQ improvement suggests a potential stabilization in delivery schedules, although the YoY comparison remains stark due to the high base effect from the previous year’s peak cycle.
* Net Profit: Net profit attributable to the parent company was CNY 308 million in H1 2025, down 59.54% YoY. Q2 2025 net profit was CNY 166 million, down 61.08% YoY but up 17.8% QoQ. The disproportionate decline in profit compared to revenue indicates operating leverage working in reverse, where fixed costs and R&D expenditures remain rigid despite lower sales volumes.
* Margin Compression: Gross margin declined to 27.71% in H1 2025, a drop of 6.1 percentage points YoY. Net profit margin fell to 8.49%, down 9.7 percentage points YoY. This compression is attributed to several factors:
1. Price Competition: Intense bidding wars in the PV equipment sector as manufacturers vie for a shrinking pool of new orders.
2. Product Mix Shift: A temporary shift in revenue recognition towards lower-margin legacy PV products or early-stage semiconductor projects which typically carry lower initial margins during the validation phase.
3. Impairment Charges: The Company recorded credit impairment losses of CNY 98 million (up 22.33% YoY) and asset impairment losses of CNY 58 million (down 33.45% YoY). While asset impairments decreased, the rise in credit impairments reflects heightened caution regarding receivables collection in a stressed industry environment.

Table 1: H1 2025 vs. H1 2024 Financial Highlights

Source: Company Reports, Huaan Securities Institute

The resilience in R&D spending, which increased by 3.88% to CNY 201 million despite the revenue decline, underscores management’s commitment to long-term technological leadership. This counter-cyclical investment is critical for maintaining competitive advantage in next-generation technologies such as perovskite-silicon tandem cells and advanced semiconductor packaging.

2. Segment Analysis: Divergence Between PV Struggles and Non-PV Growth

The core investment thesis for Autowell has evolved from a pure-play PV equipment supplier to a diversified platform company. The H1 2025 data vividly illustrates this transition, with stark contrasts between the mature, cyclical PV business and the emerging, high-growth lithium and semiconductor segments.

A. Photovoltaic Equipment: Navigating the Downcycle

The PV segment remains the largest contributor to revenue but is currently the primary drag on growth.
* Revenue: CNY 2.665 billion in H1 2025, down 31.64% YoY.
* Gross Margin: 25.12%, down 8.18 percentage points YoY.
* Market Context: The global PV industry is undergoing a painful period of capacity clearance. Overcapacity in silicon wafers, cells, and modules has led to plummeting prices across the supply chain, forcing downstream manufacturers to delay or cancel new capacity expansions. Consequently, demand for new stringers and lamination equipment has softened.
* Strategic Response: Autowell is mitigating this downturn by focusing on technology upgrades rather than pure capacity expansion. The Company is actively promoting equipment for N-type TOPCon and Heterojunction (HJT) cells, which offer higher efficiency and are replacing older PERC lines. Additionally, the development of vacuum process equipment for crystalline silicon/perovskite tandem cells positions Autowell at the forefront of the next technological revolution in PV. While current revenues are down, the Company’s market share in high-end stringers remains dominant, providing a stable cash flow base even in a downturn.

B. Lithium-Ion Battery & Energy Storage Equipment: Steady Growth Amidst Consolidation

The lithium segment is demonstrating resilience, benefiting from the sustained growth in energy storage systems (ESS) and the gradual recovery in electric vehicle (EV) production.
* Revenue: CNY 176 million in H1 2025, up 33.79% YoY.
* Gross Margin: 21.35%, down 12.73 percentage points YoY.
* Analysis: The significant drop in gross margin for this segment is notable. It likely reflects the competitive nature of the lithium equipment market, where players are aggressively pricing to secure orders from major battery makers who are also facing margin pressure. However, the revenue growth indicates that Autowell is successfully gaining traction. The Company’s focus on modular and flexible manufacturing solutions for ESS is aligning well with market trends. As the EV market stabilizes and ESS demand continues to outpace expectations, this segment is poised to become a more significant profit contributor, provided margins can stabilize through scale and product optimization.

C. Semiconductor Equipment: The High-Growth Engine

The semiconductor segment is the most compelling aspect of Autowell’s current narrative, representing a successful execution of its diversification strategy into high-barrier, high-value markets.
* Revenue: CNY 72 million in H1 2025, up 726.63% YoY.
* Gross Margin: 16.11%, down 31.84 percentage points YoY.
* Order Book: Semiconductor equipment orders exceeded CNY 90 million in H1 2025.
* Product Breakthroughs:
* Aluminum Wire Bonders: Have secured batch orders, indicating successful customer validation and transition from pilot to mass production phases.
* AOI (Automated Optical Inspection) Equipment: Has expanded its application scope from semiconductor power devices to optical communication devices/modules. This expansion is critical as it opens up new addressable markets beyond traditional power semiconductors. The Company has secured batch orders from renowned domestic and overseas customers, validating the technical competitiveness of its inspection algorithms and hardware integration.
* Dicing Machines & Die Attach Machines: Currently undergoing client verification and optimization. Successful commercialization of these tools would further broaden the Company’s product portfolio in the back-end packaging process.
* Margin Context: The low and declining gross margin in the semiconductor segment is typical for early-stage entrants. Initial batches often involve higher customization costs, rigorous testing requirements, and introductory pricing to penetrate established supply chains. As volume scales and standardization increases, margins are expected to improve significantly, following the trajectory seen in the PV business during its growth phase.

Table 2: Segment Performance H1 2025

Source: Company Reports, Huaan Securities Institute

The "Renovation and Other" category, which includes service and upgrade revenues, showed strong growth (+23.22%) and a significant margin expansion (+8.14 ppt to 46.26%). This highlights the recurring revenue potential of Autowell’s installed base. As the global fleet of Autowell machines grows, service, spare parts, and retrofitting opportunities will provide a more stable, high-margin income stream that is less susceptible to cyclicality than new equipment sales.

3. Order Book Dynamics: Signals of Future Revenue Visibility

The order book is a leading indicator for future revenue, particularly in the capital equipment industry where recognition lags booking by 6-12 months.

• Total Orders on Hand: As of June 30, 2025, the Company held orders worth CNY 10.569 billion (tax inclusive), a YoY decline of 26.32%.
• Interpretation: The decline in total orders mirrors the revenue trend, confirming that the PV downturn is impacting new bookings. However, the composition of new orders is shifting favorably.
• Structural Shift in New Orders:
  • PV: New orders declined, consistent with industry-wide CapEx cuts.
  • Energy Storage/Lithium: Maintained slight growth over 2024 levels, indicating steady demand.
  • Semiconductor: Achieved rapid growth, with H1 2025 orders breaking through the CNY 90 million mark. This trajectory suggests that the semiconductor segment could contribute meaningfully to revenue in 2026 and 2027, partially offsetting the PV decline.

The fact that the order book decline (-26.32%) is roughly in line with the revenue decline (-23.57%) suggests that the Company is not experiencing a sudden collapse in demand but rather a synchronized contraction with the industry cycle. The stability in non-PV orders provides a floor for future performance.

4. Technological Innovation and R&D: Building the Moat

Autowell’s ability to navigate the current downturn and capture future upside depends heavily on its R&D capabilities. The Company continues to invest aggressively in innovation, ensuring it remains at the cutting edge of multiple technology curves.

Photovoltaic Innovations:
* Perovskite-Silicon Tandem Cells: Autowell has launched vacuum process equipment tailored for crystalline silicon/perovskite tandem layers. This includes equipment for tunneling layers, transport layers, and functional layers. By offering a one-stop solution for vacuum processes, particularly in dry-process steps, Autowell is positioning itself as a key enabler of the next generation of high-efficiency solar cells. This technology is critical as the industry seeks to break the theoretical efficiency limits of single-junction silicon cells.
* TOPCon and HJT: Continued optimization of equipment for N-type technologies ensures relevance in the current transition phase away from PERC.

Semiconductor Innovations:
* Wire Bonding & AOI: The continuous optimization of wire bonders and AOI equipment based on client feedback is crucial. The expansion of AOI applications into optical communications is a strategic win, leveraging the Company’s vision and algorithm expertise into a high-growth adjacent market driven by AI and data center infrastructure build-outs.
* Verification Progress: The successful validation of dicing and die attach machines indicates a broadening of the Company’s technological toolkit. Success in these areas would allow Autowell to offer a more comprehensive suite of back-end packaging solutions, increasing stickiness with semiconductor clients.

R&D Investment:
* H1 2025 R&D expense: CNY 201 million (+3.88% YoY).
* R&D as % of Revenue: Approximately 5.9%, up from ~4.4% in H1 2024 (due to denominator effect). This increased intensity demonstrates management’s resolve to innovate out of the cycle.

5. Global Expansion: Mitigating Geographic Concentration Risk

Autowell is actively reducing its reliance on the domestic Chinese market by expanding its global footprint. This strategy is twofold: following Chinese PV manufacturers overseas and directly penetrating international supply chains.

• Global Reach: Products are now sold in over 40 countries and regions, serving more than 600 production bases worldwide.
• Malaysia Facility: A significant milestone was achieved in H1 2025 with the official completion and commissioning of the Company’s Malaysia foundation/facility. Equipment shipments have already commenced from this location.
• Strategic Importance:
  1. Tariff Avoidance: Localized production helps mitigate risks associated with trade barriers, tariffs, and geopolitical tensions (e.g., US/EU restrictions on Chinese-made goods).
  2. Customer Proximity: Many leading PV and battery manufacturers are establishing factories in Southeast Asia, India, and the Middle East. Having a local presence allows Autowell to provide faster after-sales service and technical support, enhancing customer satisfaction and retention.
  3. Brand Building: Successful execution in international markets enhances the Company’s brand reputation as a global tier-1 equipment supplier, potentially opening doors to non-Chinese clients in Europe and North America.

Risks / Headwinds

While the long-term outlook remains positive, investors must be cognizant of several significant risks that could impact short-to-medium term performance.

1. Photovoltaic Industry Cycle and Clearance Pace

• Risk: The primary risk remains the duration and depth of the PV industry downturn. If the clearance of excess capacity proceeds slower than expected, downstream manufacturers may continue to defer CapEx, leading to further declines in equipment orders and delayed acceptance of existing orders.
• Impact: Prolonged weakness could lead to additional inventory write-downs, higher credit impairments, and sustained margin pressure. Our revenue forecasts assume a gradual stabilization; a deeper trough would necessitate further downward revisions.

2. Customer Concentration and Contract Execution

• Risk: The Company relies on a relatively concentrated base of large PV and battery manufacturers. Any adverse financial or operational developments at key customers (e.g., bankruptcy, severe liquidity crunch) could lead to contract cancellations, delayed payments, or bad debts.
• Impact: This directly affects revenue recognition and cash flow. The increase in credit impairment losses in H1 2025 is a warning sign that receivables risk is elevating.

3. Margin Volatility and Pricing Pressure

• Risk: Intense competition in both the PV and lithium equipment sectors is driving down prices. Additionally, the ramp-up of the semiconductor business involves initial low-margin projects.
• Impact: Gross margins may remain under pressure for longer than anticipated. Failure to pass on cost increases or achieve economies of scale in new segments could erode profitability.

4. Technological Obsolescence and R&D Misalignment

• Risk: The PV and semiconductor industries are characterized by rapid technological change. If Autowell’s R&D efforts do not align with the prevailing industry trends (e.g., if a different tandem cell architecture becomes dominant, or if semiconductor packaging shifts away from wire bonding), its products could become obsolete.
• Impact: Loss of market share, stranded R&D investments, and inability to compete for new orders. Core personnel loss or technology leaks could also compromise competitive advantage.

5. Geopolitical and International Trade Risks

• Risk: As Autowell expands globally, it becomes more exposed to international trade policies, tariffs, export controls, and inflationary pressures in foreign markets. Trade tensions between China and Western economies could restrict access to certain markets or technologies.
• Impact: Potential loss of overseas revenue streams, increased compliance costs, and supply chain disruptions. The success of the Malaysia facility is contingent on a stable geopolitical environment in Southeast Asia.

6. Acceptance Cycle and Inventory Risks

• Risk: Equipment revenue is recognized upon acceptance. If customers delay acceptance due to technical issues, production ramp-up delays, or financial constraints, revenue recognition is pushed out. This leads to bloated inventory levels and tied-up working capital.
• Impact: Cash flow strain, increased storage costs, and risk of inventory obsolescence or impairment. The current high level of inventory (CNY 5.34 billion in 2024A, projected to decrease but still significant) requires careful monitoring.

Rating / Sector Outlook

Investment Rating: BUY (Maintained)

We maintain our BUY rating on Wuxi Autowell Technology. While the near-term financial performance is undeniably impacted by the PV cycle, the current share price of CNY 45.59 reflects a significant portion of this negativity. The valuation multiples of ~21x 2025E P/E are reasonable for a company with Autowell’s technological pedigree, market leadership, and diversification potential.

The decision to maintain the Buy rating is based on three core pillars:
1. Resilience in Core Business: Autowell remains the undisputed leader in PV stringer equipment. Even in a downturn, it retains pricing power and market share better than smaller competitors. The service/renovation business provides a high-margin cushion.
2. Successful Diversification: The rapid growth in semiconductor orders and steady growth in lithium/ESS equipment demonstrate that the Company is not a one-trick pony. The semiconductor segment, in particular, offers a high-ceiling growth story that is just beginning to materialize.
3. Valuation Support: The downside risk appears limited at current levels given the Company’s strong balance sheet (net cash position, low debt ratios) and the expectation that the PV cycle will eventually bottom out. The market is arguably underappreciating the optionality provided by the semiconductor and overseas expansion initiatives.

Sector Outlook

• Photovoltaics: Neutral to Cautiously Optimistic (Long-term). The sector is in a necessary but painful consolidation phase. We expect the worst of the order declines to be reflected in 2025 numbers, with a potential stabilization in late 2025 or 2026 as inefficient capacity exits and new technologies (TOPCon, HJT, Perovskite) drive replacement demand.
• Semiconductor Equipment: Positive. Driven by national security concerns and supply chain localization trends in China, there is robust demand for domestic equipment suppliers. Autowell’s entry into wire bonding and AOI places it in a favorable position to capture market share from foreign incumbents.
• Lithium/ESS: Stable. Growth rates have moderated from the explosive levels of 2021-2022, but the long-term trend towards electrification and renewable energy storage remains intact. Equipment suppliers with cost advantages and technological flexibility will survive the consolidation.

Investment View

1. Revised Financial Forecasts

Based on the H1 2025 results and our assessment of the industry landscape, we have adjusted our financial models. We anticipate a contraction in total revenue over the next two years as the PV headwinds persist, followed by a modest recovery in 2027 driven by non-PV segments and industry normalization.

Key Assumptions:
* PV Revenue: Declines in 2025 and 2026 due to reduced CapEx, stabilizing in 2027. Margins remain compressed but improve slightly as product mix shifts to higher-efficiency technologies.
* Semiconductor Revenue: High double-digit growth annually, contributing increasingly to the top line. Margins expand gradually as volume scales and product maturity increases.
* Lithium/ESS Revenue: Moderate single-digit to low double-digit growth, supported by ESS demand. Margins stabilize as competition intensifies but scale efficiencies kick in.
* Expenses: R&D expenses remain elevated in absolute terms to support innovation. Selling and administrative expenses are managed tightly to protect the bottom line.

Table 3: Revised Earnings Estimates (2025-2027)

Source: Huaan Securities Institute Estimates

Analysis of Adjustments:
* Revenue Downgrade: We have lowered our 2025 revenue estimate from CNY 7.949 billion to CNY 7.216 billion, reflecting the sharper-than-expected decline in H1 and the likelihood of continued weakness in H2. Similarly, 2026 and 2027 estimates have been trimmed to account for a slower recovery trajectory.
* Profit Downgrade: Net profit estimates have been cut more significantly (e.g., 2025 from CNY 985 million to CNY 684 million) due to the combination of lower revenue, persistent margin compression, and higher-than-expected impairment charges.
* Margin Trajectory: We forecast gross margins to bottom out in 2025 at 27.9% and gradually recover to 29.4% by 2027 as the high-margin semiconductor and service businesses gain proportionate weight and PV pricing stabilizes.

2. Valuation Analysis

At the current price of CNY 45.59, the stock’s valuation metrics are as follows:

Table 4: Valuation Multiples

Source: Wind, Huaan Securities Institute

• P/E Context: The jump in P/E from 10.7x (2024A) to ~21x (2025E) is purely a function of the earnings drop, not a multiple expansion. Historically, leading equipment suppliers in growth phases trade at 25-35x P/E. The current 21x multiple suggests the market is treating Autowell as a mature, cyclical company rather than a growth stock. We believe this is overly pessimistic given the semiconductor growth optionality.
• P/B Support: The P/B ratio of 3.14x is reasonable for a high-ROE technology company. The gradual decline in P/B to 2.54x by 2027 reflects the accumulation of retained earnings and book value growth.
• Comparables: Compared to peers in the PV equipment space (which are trading at depressed multiples due to sector-wide issues) and semiconductor equipment peers (which trade at premium multiples due to growth), Autowell sits in a middle ground. Its valuation does not fully reflect the sum-of-the-parts value, particularly the emerging semiconductor business.

3. Strategic Investment Thesis

Why Buy Now?

1. Contrarian Play on PV Recovery: Investing in equipment suppliers at the trough of the cycle has historically yielded superior returns. While the timing of the PV recovery is uncertain, the direction is inevitable. Autowell’s dominant market position ensures it will be a primary beneficiary when CapEx resumes.
2. Optionality on Semiconductor Breakout: The market is largely valuing Autowell as a PV company. The semiconductor business, with its >700% revenue growth and expanding order book, is essentially a "free call option." If Autowell successfully scales this business to CNY 500 million+ in annual revenue with 25%+ margins (a realistic medium-term target), it will materially re-rate the stock.
3. Strong Balance Sheet and Cash Flow: Despite the profit decline, the Company maintains a healthy balance sheet with substantial cash reserves (projected CNY 2.7 billion in 2025E) and manageable debt levels. This financial strength allows it to weather the downturn, continue R&D investment, and potentially pursue strategic M&A or capacity expansion when competitors are constrained.
4. Global Diversification Reduces Risk: The expansion into Malaysia and other international markets reduces dependence on the domestic Chinese market, mitigating policy and concentration risks. This global footprint is a competitive advantage that many smaller peers lack.

Catalysts for Re-rating:

• Signs of PV Stabilization: Any data indicating a halt in the decline of PV module prices or an uptick in downstream utilization rates could trigger a sector-wide rebound.
• Semiconductor Order Announcements: Large-scale contracts from major international semiconductor IDMs or OSATs would validate the Company’s technological prowess and accelerate margin expansion in this segment.
• Margin Improvement: Quarter-over-quarter improvements in gross margin, particularly in the lithium and semiconductor segments, would signal that the Company is successfully navigating the pricing pressure.
• Overseas Revenue Growth: Acceleration in revenue from outside China, demonstrating the success of the global expansion strategy.

4. Conclusion

Wuxi Autowell Technology is a high-quality manufacturing enterprise navigating a challenging macroeconomic and industry-specific environment. The H1 2025 results, while weak on the surface, reveal a company that is actively managing the downturn through diversification, innovation, and global expansion. The sharp decline in PV-related metrics is a reflection of industry-wide conditions rather than company-specific failures. Meanwhile, the robust growth in semiconductor and lithium equipment orders provides a clear visibility into future growth drivers that are independent of the PV cycle.

We believe the market has over-penalized the stock for the near-term PV weakness and under-valued the long-term potential of its semiconductor and global businesses. At current levels, the risk-reward profile is favorable for long-term institutional investors. We recommend accumulating shares on weakness, with a 12-18 month horizon for the realization of value as the PV cycle turns and the semiconductor business matures.

Final Recommendation: BUY

Appendix: Detailed Financial Statements

Income Statement Forecast (CNY Million)

*Note: R&D expenses are estimated based on H1 trends and annual guidance, included within Admin/Operating expenses in some reporting formats but broken out here for clarity.

Balance Sheet Forecast (CNY Million)

Cash Flow Forecast (CNY Million)

Analyst Certification and Disclosures

Analyst Certification:
The analysts responsible for this report, Tu Yueting and Zhang Zhibang, hereby certify that all of the views expressed in this research report accurately reflect their personal views about the subject securities or issuers. They also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Important Disclosures:
* Huaan Securities Co., Ltd. holds a license for securities investment consulting business approved by the China Securities Regulatory Commission.
* This report is intended for distribution only to professional investors in the People's Republic of China (excluding Hong Kong, Macau, and Taiwan).
* The information contained herein is derived from sources believed to be reliable, but Huaan Securities does not guarantee its accuracy or completeness.
* Huaan Securities and its affiliates may hold positions in the securities mentioned in this report and may engage in trading activities or provide investment banking services to the companies covered.
* Past performance is not indicative of future results. Investors should consider this report as only one factor in making their investment decision.

Rating Definition:
* BUY: Expected return > 15% above the benchmark (CSI 300) over the next 6-12 months.
* OUTPERFORM: Expected return 5% to 15% above the benchmark.
* NEUTRAL: Expected return within +/- 5% of the benchmark.
* UNDERPERFORM: Expected return 5% to 15% below the benchmark.
* SELL: Expected return > 15% below the benchmark.

Benchmark: CSI 300 Index for A-share market.

End of Report