The Chinese stock market is currently witnessing a surge in performance forecasts from listed companies, particularly in the semiconductor and energy sectorsAs 2024 approaches, many companies have announced optimistic earnings projections, leading the market to experience a notable rally in annual report stocksOn January 17, several key players like Sandhi Technology and Huayuan Holdings saw their stocks hit the upper trading limit, indicating strong investor confidence and market momentum.

Investment managers have identified a trend where certain companies, particularly in the semiconductors and computing sectors, are favored by public funds and foreign institutional investorsNotably, many of these stocks were heavily accumulated as early as the third quarter of the previous yearAs their prices increased, these funds saw substantial returns, showcasing a strategic foresight that has paid off.

As annual earnings reports begin to flood the market, analysts are keen to predict which sectors will maintain high growth into 2025. Fund managers have indicated a strong likelihood for continued performances in technology, manufacturing, and consumer sectors—areas that have been bolstered by favorable policies and escalating market demand

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It is anticipated that these sectors might achieve dual enhancements in performance and valuation, setting a solid foundation for future growth.

Recent announcements from semiconductor and computing companies show remarkable anticipated growth for 2024. For instance, Cambrian's stock has reached impressive heights, peaking at 777.77 CNY at one pointOther companies such as Sandhi Technology, Huayuan Holdings, and Lianhua Technology also enjoyed significant gains on the same dayCambrian is expected to generate between 1.07 billion to 1.2 billion CNY in revenue for 2024—a staggering increase of up to 69.16% from the previous yearDespite a projected net profit loss narrowing between 10.34% and 26.64%, the company remains a focal point for investment due to its growth prospects.

Another prominent stock, Haiguang Information, has also released positive forecasts, suggesting a net profit between 1.81 billion to 2.01 billion CNY for the upcoming year, representing a growth of at least 43.29% compared to the previous 12 months

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Passive index funds are major stakeholders in Haiguang, with numerous ETFs holding prominent positions among the top ten circulating shareholdersThis heavy investment reflects growing confidence in the company's ability to generate substantial profits amidst the competitive landscape.

Northern Huachuang has gained significant traction among fund managers as well, being a part of multiple public fund portfoliosThe presence of public funds such as Huatai-PB's CSI 300 ETF and others indicates strong institutional supportFund use in Northern Huachuang reached as high as 14.76% of total shares, underlining the bullish sentiment surrounding this stock.

According to fund managers Lei Tao and Lu Yang, the optical modules sector has proven its capacity to benefit from the global AI construction wave, with a previously validated ability for performance releaseAs demand for computing power escalates alongside AI applications, new product demands are expected to arise

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This surge in demand is complemented by China’s continuously emerging supply chains, fostering an environment where manufacturers can cater to diverse and evolving needs.

Emphasizing the ongoing race for computing capabilities, the fund managers observed that investing in computing resources remains a critical infrastructure for technological advancementNot only does it ensure the vitality of current business operations, but it also solidifies a competitive edge for the futureAs technology giants scramble for dominance, the investment in computing power has become a precondition for success in the AI landscape, leading to a competitive environment wherein no manufacturer is willing to relinquish their position in this pivotal sector.

Turning to the energy and chemical sector, several companies are also announcing promising fiscal outcomes, solidifying their positions among the most sought-after stocks by foreign investors

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For example, Zhengdan Coprojects a net profit of 1.1 billion to 1.3 billion CNY for 2024, which marks an astronomical increase of over 11,000% year over year, earning itself the title of “performance king” in recent disclosuresMajor investment banks have recognized this potential, with Morgan Stanley, Goldman Sachs, and UBS taking up significant stakes in the company.

Moreover, the leading lithium phosphate producer, Chuanjin Nuo, anticipates a staggering increase in net profits of 235.39% to 268.90% for 2024, further underscoring the attractiveness of the chemical sector to investorsFunds such as Huayuan Holdings and their projected profit growth of over 730% reflect a broader enthusiasm from institutional investors, emphasizing the robust investment climate in these segments.

Fund analysts at Jinying Funds have pointed out that the machinery and electronic sectors have reported commendable performances as well

While the machinery equipment category faced overall performance pressure in the first three quarters of 2024, improvements are expected in the latter half, driven by policy support and global inventory actionsWith expected continued growth in net profit, these segments show promising potentials for recovery and growth.

Looking ahead, experts stress the importance of adhering to leading firms with technological innovations and cost advantages in the chemical sectorThe confluence of supportive policies and rising market demands suggests that investments in these fields could yield substantial returns, albeit with underlying risks associated with market volatility and industry competition.

Lastly, a focus on consumer performance is projected for 2025, as the appetite for recovery and improvements in valuations appears strongAlthough the performance forecasts have only begun to emerge, sectors like machinery, electronics, and chemicals demonstrate a solid prospect moving forward