According to a research report from Shenwan Hongyuan Group Co.,Ltd. (ASX: 000166), the firm selected "new phase of technology" recommended targets based on the operating quality reflected in 2026H1 interim reports. Companies in this new phase should possess these characteristics: chain leader attributes, strong operational resilience, and a corporate culture and strategy oriented toward long-termism. Regarding operating quality, the firm primarily focuses on the cash collection ratio, net cash ratio, and cash flow conditions. Recommended areas of focus include: 1) semiconductor supply chain companies; 2) leaders in software-hardware integration; 3) securities firm IT-related plays; 4) select software technology leaders; 5) optical module leaders (worth watching).
The main views of Shenwan Hongyuan Group Co.,Ltd. (ASX: 000166) are as follows:
The global AI ROI problem is a key reason for the collective correction in tech stocks. 1) In July-August 2025, MIT's "Generative AI Divide" report, the Bank of England meeting in October 2025, the World Economic Forum in November 2025, and authoritative domestic media in November 2025 all flagged risks. 2) The issues may be concentrated in: sunk costs, circular financing, commercial profitability paths, and capital leverage risks. 3) Recently, the operating conditions of CoreWeave/OpenAI/Anthropic have intensified these concerns.
China's AI industry has a higher floor. 1) China's AI ROI is not the same. Although AI ROI must also be considered, given the broad and comprehensive manufacturing base, simply considering manufacturing AI (using AI to help broad manufacturing create new opportunities, reduce costs, and accelerate turnover) yields clear results. 2) According to authoritative industry data, the digital transformation coverage rate of industrial enterprises above designated size is 92%, the penetration rate of digital production equipment is 63%, the numerical control rate of key processes is 69.5%, and the penetration rate of digital R&D and design tools is 86.3%, further proving the foundation for industrial AI.
Same cycle, two narratives: understanding tech stock rallies and corrections. 1) In this environment, the firm has identified a cycle of "healthy industry - many suppliers - competition exists - short-term profits may be unstable - valuation multiples decline when market sentiment is cold." 2) When market sentiment is high, a healthy industry with many suppliers often accompanies tech stock rallies; when market sentiment is subdued, short-term profit instability may bring stock price corrections. 3) Recent changes in US Treasury yields have made this situation more concrete. On one hand, investors can understand that the recent decline in A+H tech stocks may be related to changes in US Treasury yields, and historical patterns support this. On the other hand, the extreme values of US Treasury yields also mean that "things will reverse when they reach an extreme," and investors should begin looking for opportunities in A+H tech stocks.
Tech company valuations are now significantly more attractive. 1) Since July, the PE valuation multiple percentiles of tech leaders have fallen rapidly. The PE-TTM of TMT50 is at the 25th percentile over 10 years and the 22nd percentile over 3 years. In just 3 months, these indicators quickly fell from over 90% (even 99%) to below 30%. The PE-TTM of the Hang Seng Tech Index is at the 24th percentile over 10 years, and its PS-TTM percentile is below 1%. 2) Currently, the relative valuation multiple of A-share TMT50 is similar to that in early April, while Hong Kong stocks' relative valuation multiple is even lower. This indicates that even if fundamentals still need to be observed, the amplification effect of investor sentiment has already run far ahead. This ushers in "a new phase of A+H tech opportunities."
Risks come from: 1) the risk of valuation fluctuations. 2) competitive risks in the technology sector. 3) the risk of relatively high tracking difficulty.
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