Market Overview: Influenced by the Middle East conflict, both mainland and Hong Kong markets showed little positive momentum. The Hang Seng Index opened with a gap down and moved sideways, closing 0.57% lower today. The positions of Iran and the US in negotiations have not changed significantly, with talks making almost no progress. On Tuesday, US time, former President Trump stated that the US might launch another "heavy strike" against Iran. On the same day, a US military refueling aircraft was spotted on the runway of Ben Gurion International Airport near Tel Aviv, Israel, sharply increasing external concerns about potential joint US-Israel military action. Iran responded in kind with a stern warning on Wednesday, stating that if attacked again, the conflict could spread beyond the Middle East. Essentially, both sides are buying time; a conflict is inevitable later, though the exact timing remains uncertain. As mentioned yesterday, the stock market fears this kind of uncertainty.
On May 20, the May Loan Prime Rate (LPR) was announced: the over-5-year LPR remained at 3.5%, unchanged from the previous month, and the 1-year LPR stayed at 3%, also unchanged. This marks the 12th consecutive month without a change in the LPR, aligning with market expectations. The primary reasons for the unchanged rates are stable policy interest rates and pressure on banks' net interest margins. It is anticipated that the central bank will focus more on targeted measures, providing stronger support for key areas such as technological innovation, consumption stimulation, and small and micro enterprises through structural tools, while enhancing coordination with fiscal policy. However, the possibility of reserve requirement ratio cuts or interest rate reductions within the year still exists.
Technology continues to be a catalyst. According to Yonhap News, Samsung Electronics' labor and management held a third round of post-mediation talks on the 20th regarding the upper limit for bonus payments, but the parties failed to reach an agreement, leading to a breakdown in negotiations. The Samsung union announced it would proceed with a general strike as scheduled tomorrow. Samsung Electronics is the world's largest memory chip manufacturer, holding a 36% market share in DRAM chips as of late last year. Samsung's chip factories in Pyeongtaek and Hwaseong, South Korea, operate 24/7 with three shifts. A one-day production halt could result in economic losses of up to 1 trillion won (approximately $667.6 million); if the strike leads to wafer scrapping, the total economic loss could potentially surge to 100 trillion won. A-share memory chip concept stocks surged significantly, with the sector index rising over 2%. The Hong Kong-listed memory leader, GigaDevice (03986), was further catalyzed, soaring over 17%. Currently, wafer fab utilization rates are high, prices are optimizing upwards, and the yield & capacity ramp-up of advanced processes is a definitive trend. Stocks mentioned in yesterday's individual stock analysis, such as SMIC (00981), a May top pick, surged nearly 10%, and Hua Hong Semiconductor (01347) jumped nearly 14%. Other stocks mentioned yesterday, like Naxin Micro (02676), rose over 8%, while Biren Technology (06082), Montage Technology (06809), packaging-related ASML (00552), and PCB leader Kingboard Laminates (01888) all gained over 5%. PCB equipment makers like Guanghe Technology (01989) and HANS CNC (03200) increased over 3%. These are all domestic substitution plays.
Another catalyst is expected. After the US market closes on Wednesday, NVIDIA is set to release its Q1 FY2027 earnings. Bank of America expects NVIDIA's revenue for the quarter to reach $83-84 billion, exceeding management guidance by about 7%. However, beating expectations has become routine. Market focus is primarily on the following aspects for the Q2 guidance: whether the $1 trillion data center revenue forecast will be revised upward again, the mass production schedule for Vera Rubin, whether gross margins can maintain 75%, how the AI accelerator market size forecast will be updated, and whether the competitive threat from Google's TPU and CPU is exaggerated. Pre-market trading indicates an opening up 1.83%. Today, the market preemptively rallied NVIDIA concept stocks. For instance, Tianyue Advanced (02631): NVIDIA's SiC supply chain mainly includes Infineon, ON Semiconductor, STMicroelectronics, Navitas, etc., all of which procure SiC substrates from the company. According to a Fuji Keizai report, the company's gross margin in Q1 2026 improved by 25 percentage points quarter-on-quarter compared to Q4 last year, with a global market share of 51.3% for 8-inch SiC substrates. The stock rose over 7% today. Innoscience (02577): It is the only domestic Chinese company on NVIDIA's 800V system supplier list and has recently successfully supplied Google. Its monthly production capacity for 8-inch GaN wafers has increased from 13,000 to 20,000 pieces. The stock gained over 5% today.
The AIDC concept performed strongly today. Severe AIDC shortages in North America have led to the adoption of gas turbines. With overseas giants' capacity saturated, Shanghai Electric (02727), as the only full-lifecycle supplier of heavy-duty gas turbines domestically, is experiencing a surge in AIDC orders for 2026, with production scheduled through 2028. Institutional estimates suggest the company has gas turbine orders worth approximately 15-20 billion yuan, accounting for about 6%-8% of the group's total order backlog (260 billion yuan). Revenue is estimated at 4-5 billion yuan for 2025, potentially doubling to 8-10 billion yuan in 2026. Additionally, the company's robotics business is a significant positive, with enhanced capabilities following the acquisition of a 50% stake in Fanuc (China operations). Future performance depends on order intake. The stock rose over 7% today. Another company, Morimatsu International (02155), primarily builds modular factories, focusing on six core industries: biopharmaceuticals, daily chemicals, power batteries, oil & gas refining, chemicals, and electronic chemicals, with a key emphasis on pharmaceuticals. New orders signed last year reached 8.569 billion yuan, a year-on-year increase of 43.6%, with the pharmaceutical sector contributing 5.3 billion yuan, accounting for 62% of new orders. This year, the company is focusing on the AIDC field, as the technology can be transferred—similar to how many automakers are venturing into robotics. Securing large orders could undoubtedly become a new profit growth driver. The stock rose nearly 8% today.
The 2026 FIFA World Cup is set to kick off in the US, Canada, and Mexico. Sponsor-related concepts are worth watching. Hisense (00921) has officially become the official VAR (Video Assistant Referee) display technology partner for the 2026 World Cup. Hisense RGB-Mini LED TVs will be fully deployed in the 2026 World Cup video referee centers. Additionally, Lenovo Group (00992) is an official technology partner of FIFA. FIFA will deploy 10,000 Lenovo computers and over 200 engineers across all 16 stadiums for event logistics support. The stock rose nearly 4% today.
The Middle East conflict has also triggered anxiety among major banks regarding the aluminum industry. Citigroup recently noted in a report that the Middle East conflict has pushed the aluminum market into an extreme tightness with "the lowest inventory in 55 years." JPMorgan similarly warned clients that the global aluminum market is experiencing its largest supply deficit in over 25 years, with aluminum prices expected to break through $4,000 per ton, characterizing the current situation as the market formally entering a supply "black hole." Domestically, according to a CCTV Finance report on May 19, the aluminum processing industry has shown a booming trend of both production and sales this year. Data shows that from January to April 2026, China's cumulative exports of unwrought aluminum and aluminum products reached 2.053 million tons, a year-on-year increase of 8.9%. Today, Aluminum Corporation of China (02600) and China Hongqiao (01378) rose over 5% and nearly 3%, respectively.
In the pharmaceutical sector, WuXi XDC (02268) announced plans to repurchase up to $100 million worth of shares, stating that the current trading price does not reflect its intrinsic value or actual business prospects. The stock gained over 4% today.
Sector Focus: The Yichun Natural Resources Bureau recently released a notice soliciting public opinions on the "Notice on Further Strengthening the Supervision and Management of Lithium Resource Mines (Draft for Comment)." The notice clarifies the continuation of the strategic action for mineral exploration breakthroughs; strictly manages mining rights granting authorities, mineral resource reserve reporting, strengthens supervision of mining rights, enhances mine ecological restoration, and strictly investigates illegal exploration and mining activities. In 2025, China's dependence on foreign lithium resources remained as high as 60%. Import sources are highly concentrated, with approximately 60% of lithium concentrate (in lithium carbonate equivalent) coming from Australia, and imported lithium carbonate primarily from Chile and Argentina, easily forming a "tri-polar monopoly" structure. Therefore, there is a need to enhance domestic mineral resource development and accelerate supply source diversification. Data from Shanghai Nonferrous Metals Network shows that the current price of lithium hexafluorophosphate is 113,500 yuan per ton, up about 15% from 98,000 yuan per ton in early May. Industry insiders indicate that lithium hexafluorophosphate is expected to have further room for price increases. Key Hong Kong-listed stocks in this sector include Tianqi Lithium (09696), Ganfeng Lithium (01772), and Longpan Technology (02465).
Individual Stock Analysis: HANS CNC (03200): AI Computing Power Drives High Prosperity in PCB Equipment; Impressive Performance. The company reported Q1 revenue of 1.955 billion yuan, a year-on-year increase of 103.69%; net profit attributable to shareholders of 323 million yuan, a year-on-year surge of 176.53%; gross margin increased by 11.81 percentage points year-on-year. The strong performance is mainly attributed to robust demand for AI server PCB equipment. Analysis: Driven by AI computing power, the PCB equipment sector is highly prosperous. HANS CNC is a global leader in PCB专用设备, demonstrating impressive performance with continuously improving profitability. In 2024, it held a 6.5% global market share in PCB equipment and ranked first in China's CPCA equipment list for 16 consecutive years. Its domestic market share in drilling equipment exceeds 30%, and over 35% in laser drilling; it serves 80% of the global PCB top 100 customers. High-end substitution is accelerating, with the company holding over 40% domestic market share in the AI server high-layer board segment, with prices only 60% of imported equipment. It leads globally in drilling technology: mechanical drilling precision reaches ±15 μm; CO2 laser drilling breaks the 35 μm极限孔径 barrier; UV激光 achieves 25 μm精密加工. Delivery advantages include large-scale production capacity and a完善供应链, with delivery cycles significantly shorter than those of欧美日 manufacturers. Global布局: The company has established subsidiaries/service centers in Southeast Asia. In 2024, overseas revenue accounted for 13%, benefiting from产能外迁. With PCB capacity expansion in Thailand/Vietnam, the company's本地化服务 is capturing incremental markets. It has initiated cooperation验证 with downstream mainstream manufacturers, completed送样 with most, and some验证 processes are advancing rapidly. In 2025, the performance of products like the third-generation positioning system automated mechanical drilling machine, four-beam dual-table CO2 laser drilling machine, and automated forming machine will be further enhanced, significantly improving PCB manufacturing工序稼动率 and reducing comprehensive production costs. The laser drilling machine配套 for the M9 solution has passed NVIDIA certification, with mass shipments expected in 2026. A wave of PCB manufacturer capacity expansion is about to begin. Benefiting from leading PCB厂扩产, management expects the proportion of AI business revenue to increase from about 30% in 2025 to about 60% in 2026 (with Shenghong Technology contributing 20% and other manufacturers 40%). HANS CNC has sufficient orders on hand and is in orderly production and delivery. The company is fully focused on the AI computing power scenario产业链 while also布局前沿赛道 like advanced packaging and optical modules/CPO, with related products achieving批量供货 at several leading AI computing power PCB enterprises.
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