CICC DAILY FOCUS：TODAY’S KEY TOPICS

　　Technology Hardware: Automotive displays: Adoption of HUDs accelerates; VPDs to innovate interactive experiencesAmid the ongoing penetration of automotive intelligence, automotive display technologies, as the core component for human-machine interaction in intelligent cockpits, are experiencing rapid technological iteration and large-scale application. The penetration rate of head-up display (HUD) products continues to rise, with Chinese manufacturers capturing industry growth opportunities to increase market share. Virtual panoramic displays (VPDs), another major innovation in automotive displays, are poised for accelerated adoption following the unveiling of Xiaomi's HyperVision panoramic display system introduced with the YU7 model. We are optimistic about investment opportunities in leading automotive display and HUD manufacturers.

    　　Shiwen LI, Analyst, SAC Reg. No.: S0080521070008, SFC CE Ref: BRG963; Jingyu ZHU, Associate, SAC Reg. No.: S0080523070002; Hao CHEN, Analyst, SAC Reg. No.: S0080520120009, SFC CE Ref: BQS925; Ruochen ZANG, Analyst, SAC Reg. No.: S0080522070018, SFC CE Ref: BTM305; Chengning LI, Analyst, SAC Reg. No.: S0080522050003, SFC CE Ref: BSM544; Hu PENG, Analyst, SAC Reg. No.: S0080521020001, SFC CE Ref: BRE806; Xinyi ZHENG, Associate, SAC Reg. No.: S0080524070006https://research.cicc.com/report/pdf/1195589-1Internet & Media: Online music sector: Stable competitive landscape; expanding profitabilityTencent Music Entertainment (TME) and NetEase recently released their 1Q25 results, and NetEase Cloud Music (NCM) disclosed quarterly revenue and GM. Their earnings performance has heightened investors' focus on the online music sector. We summarize key market concerns and feedback and present our views on the online music industry. Due to rising sector valuations, we raise our TPs for Tencent Music-H and Tencent Music-US by 23% to HK$80 and US$20.7 and by 18% for the TP of NetEase Cloud Music to HK$233.

    　　Xueqing ZHANG, Analyst, SAC Reg. No.: S0080517090001, SFC CE Ref: BNC281; Shan JIAO, Analyst, SAC Reg. No.: S0080521070012, SFC CE Ref: BRQ187; Tong WU, Analyst, SAC Reg. No.: S0080124060006, SFC CE Ref: BVQ300https://research.cicc.com/report/pdf/1195657-1Xiaomi Corp (01810.HK): 1Q25 results beat; IoT and EV gross margin strong -- Maintain OUTPERFORMXiaomi Corp announced that in 1Q25, its revenue rose 47.4% YoY to Rmb111.29bn, 1.8% higher than our expectations. Adjusted net profit rose 64.5% YoY to Rmb10.68bn, beating our expectations by 7.8%. We raise our 2025 and 2026 adjusted net profit forecasts 19.9% and 3.4% to Rmb48.19bn and Rmb56.60bn, given strong gross margin of the IoT business and EVs. Considering the adjustments to profit forecasts and the lower sector valuation, we maintain OUTPERFORM and a TP of HK$70.0, offering 35.8% upside.

    　　Hu PENG, Analyst, SAC Reg. No.: S0080521020001, SFC CE Ref: BRE806; Shunhe JIA, Associate, SAC Reg. No.: S0080522060002; Hanjing WEN, Analyst, SAC Reg. No.: S0080521070003, SFC CE Ref: BSJ666; Yujie ZHA, Associate, SAC Reg. No.: S0080524110001; Chengning LI, Analyst, SAC Reg. No.: S0080522050003, SFC CE Ref: BSM544; Xinyi HE, Associate, SAC Reg. No.: S0080123070095https://research.cicc.com/report/pdf/1195600-1Zhihu Inc (ZH.US): Actively exploring AI-driven growth paths; watch potential turnaround of businesses -- Maintain OUTPERFORMIn 1Q25, Zhihu’s revenue fell 24% YoY to Rmb0.73bn, largely in line with our expectation. The firm’s adjusted net income was Rmb6.94mn, better than our expectation (a loss of Rmb54.96mn). Given the firm’s effective expense control, we revise our 2025 adjusted net loss forecast from Rmb153mn to Rmb72.86mn and leave our 2026 adjusted net profit forecast unchanged at Rmb136mn. We maintain OUTPERFORM ratings and keep our target prices unchanged at HK$16 for H-shares and at US$6.1 for ADRs.

    　　Xueqing ZHANG, Analyst, SAC Reg. No.: S0080517090001, SFC CE Ref: BNC281; Yang BAI, Analyst, SAC Reg. No.: S0080520110002, SFC CE Ref: BGN055; Xinyao YU, Analyst, SAC Reg. No.: S0080523060010, SFC CE Ref: BSX518; Yanyan XIAO, Analyst, SAC Reg. No.: S0080521010001, SFC CE Ref: BIL686; Meng WEI, Analyst, SAC Reg. No.: S0080524070011, SFC CE Ref: BVB685