Broker: CGS International
Date of Report: June 5, 2025

Hong Kong Retail Research: Bullish Momentum Returns for CMOC Group, NIO Faces Profitability Hurdles

Market Recap: Macro Backdrop and Investor Sentiment

Global markets have seen a notable shift, with Treasuries extending gains on softer-than-expected US economic data. This has fueled speculation of at least two Federal Reserve rate cuts by the end of 2025, with the first likely in October. US service sector contraction, sluggish hiring, and persistent trade uncertainty have weighed on sectors like healthcare, technology, and construction, while retailers and financial services firms have identified pockets of growth. Investors are advised to allocate capital carefully amidst highly varied sector outlooks.

Company Coverage and Analysis

CMOC Group Ltd (3993 HK): Bullish Technicals Signal Opportunity

Last Price: HK\$6.66 Sector: Non-ferrous Metal Mining Description: CMOC Group Ltd is a leading player in mineral mining and exploration, specializing in the mining and trading of base and rare metals.

Technical Snapshot & Investment Thesis

• After a corrective downtrend since May 2024, CMOC’s selling pressure has been corrective rather than structural, with a recent breakout from a diamond bottom pattern and a bullish flag.
• Bearish gaps have been filled and the stock has closed above those levels, confirming robust bullish momentum.
• On the Ichimoku indicator, CMOC is trading above all levels, a clear bullish signal.
• MACD histogram remains positive and both MACD and signal lines are well above zero, indicating sustained upward pressure.
• The Stochastic Oscillator has crossed above its 50-midpoint, supporting a bullish outlook.
• The 23-period Rate of Change (ROC) has moved above zero, reflecting renewed momentum.
• Directional Movement Index (DMI) is showing strong bullish strength.
• Volume is expanding healthily, adding further conviction to the bullish case.

Trade Recap: A prior buy call on March 11, 2025, was stopped out at HK\$5.04. However, a strong rebound followed from HK\$4.94, justifying a renewed bullish stance. Technicals now favor re-entry, as the stock exhibits robust positive signals across multiple indicators.

NIO Inc (HKG: NIO): Intensifying Competition Squeezes Margins

• 1Q25 Non-GAAP Net Loss: RMB 6.3 billion (widened from RMB 4.9 billion in 1Q24)
• The increase in loss was attributed to higher operating expenses (OPEX).
• NIO continues to invest in a strong pipeline across its core NIO, ONVO, and Firefly brands, which are expected to support future sales growth.
• Nevertheless, heightened competition in the electric vehicle sector is expected to temper shipment growth going forward.
• Valuation: Recommendation remains ‘Hold’ with a revised discounted cash flow (DCF)-based target price of HK\$30.62.

While NIO’s long-term product strategy remains compelling, the near-term environment is challenging due to margin pressure from rising competition and operational costs.

Rating Methodology and Distribution

CGS International employs a clear and transparent rating framework:

• Add: Expected total return exceeds 10% over the next 12 months.
• Hold: Total return between 0% and +10% over 12 months.
• Reduce: Total return expected to be negative over the next 12 months.

Sector and country ratings are similarly structured, ranging from Overweight (above-benchmark positioning) to Underweight (below-benchmark).

As of March 31, 2025, there were 551 companies under coverage.

Important Disclosures and Risk Considerations

This research has been prepared for informational purposes and is intended for distribution only to qualified clients of CGS International. The analysis reflects the analyst’s independent view and is not tailored to any individual investor’s objectives or financial situation. Investors are encouraged to independently evaluate the information, consult professional advisers, and consider local regulations before making any investment decisions.

CGS International and its affiliates may own, trade, or seek to do business with companies covered in this report. Conflicts of interest may exist, and further details are available upon request.

This report is distributed in accordance with the regulations and disclosures applicable to each jurisdiction, and is strictly for professional, institutional, or sophisticated investors.