**【Key Focus】** AI compute leasing prices have surged. Senior executives from TENCENT stated at a recent earnings conference that demand for AI-related services continues to grow, and capital expenditure in this area is expected to increase compared to last year, particularly in the second half. On the same day, the CEO of Alibaba indicated that nearly every server card within Alibaba's infrastructure is currently in use. Based on projected demand over the next 3-5 years, he expressed high confidence in the return on investment for the company's substantial commitments to AI data centers. Considering the immense capital required for building compute centers, expenditures may exceed the initially announced 380 billion yuan. From a consolidated institutional perspective, internet clients are the primary drivers of demand in the compute leasing market. The continuous upward revision of capital expenditure by global cloud service providers is driving substantive growth in the performance of related listed companies. A Guosheng Securities research report points out that the rise of AI agents and AI coding is driving a structural leap in compute demand, with global AI compute leasing prices already revised upwards by over 40%. According to data from Kezhi Consulting cited in the report, China's intelligent compute leasing market size is projected to reach 377 EFlops in 2024 and 632 EFlops in 2025. The market is expected to continue growing, with forecasts of 984 EFlops and 1346 EFlops for 2026 and 2027, respectively. Hong Kong-listed companies involved in the compute leasing supply chain include: GD-HKGBA HLDGS (01396), GDS-SW (09698), KINGSOFT CLOUD (03896), and SUNEVISION (01686).

**【Market Outlook】** Overnight, U.S. stock markets all closed higher, with NVIDIA extending its rally for a seventh consecutive session to a fresh record high. At the close, the Dow Jones Industrial Average rose 370.26 points, or 0.75%, to 50,063.46. The S&P 500 gained 56.99 points, or 0.77%, to 7,501.24. The Nasdaq Composite advanced 232.88 points, or 0.88%, to 26,635.22. Most major tech stocks rose, with NVIDIA closing up 4.39% at a new all-time high, marking its seventh straight day of gains and bringing its total market capitalization to $5.71 trillion. AI chipmaker Cerebras Systems surged over 68% on its market debut. U.S.-listed AI optical interconnect leader POET Technologies soared over 43%. Commercial space stocks generally gained, with AST SpaceMobile up nearly 11% and Rocket Lab rising over 6%. Most popular Chinese ADRs declined, with the Nasdaq Golden Dragon China Index falling 3.37%. Canadian Solar dropped over 11%. The Hang Seng Index ADRs rose, with the proportional calculation indicating a close at 26,414.21, up 25.17 points or 0.1% from the Hong Kong close. NYMEX WTI crude oil futures for the front-month contract rose $1.00, or 0.99%, to settle at $102.02 per barrel. COMEX gold futures for the front-month contract fell $51.30, or 1.09%, to $4,655.40 per ounce.

**【Hotspot Preview】** China's Ministry of Agriculture and Rural Affairs has revised and issued the Implementation Plan for Comprehensive Regulation of Hog Production Capacity (2026 Revision). This plan, considering factors such as pork market supply and demand and improvements in hog production efficiency, sets the national target for the normal inventory of breeding sows at approximately 37.5 million head. This marks another downward adjustment to the normal inventory target since February 2024. The plan specifies appropriately tightening the upper limits of the green and yellow zones, as well as the lower limit of the yellow zone, for breeding sow inventory. It establishes a tiered and coordinated capacity regulation mechanism, strengthens guidance on production and market expectations, and aims to better match hog market supply and demand. Involved Hong Kong-listed stocks include MUYUAN (02714), WH GROUP (00288), COFCO JOYCOME (01610), and DEKON AGR (02419).

Canada has unveiled a C$1 trillion grid expansion plan. On Thursday, Canada announced a C$1 trillion strategy aimed at doubling the national power grid capacity by 2050, citing rapid growth in electricity demand and rising energy security needs. As part of this strategy, the Canadian government plans to amend clean electricity regulations to allow for greater use of credible carbon offset mechanisms and grant existing natural gas power units more operational flexibility to maintain grid stability and power supply reliability. Involved Hong Kong-listed stock: DONGFANG ELEC (01072).

The easing of restrictions on NVIDIA's H200 chips has been implemented, with LENOVO GROUP confirming its approval for distribution. On May 14, 2026, news sent ripples through the global tech and capital markets. According to a Reuters report, the U.S. Department of Commerce has approved approximately 10 Chinese companies, including Alibaba, TENCENT, ByteDance, and JD.com, to purchase NVIDIA's H200 AI chips. LENOVO GROUP (00992) and Foxconn, as distributors and server-related companies, were also included in the approved list.

LONGCHEER (09611) plans to invest $41 million to subscribe to an overseas cloud computing-focused investment fund. LONGCHEER (09611) announced that its wholly-owned subsidiary, Guolong Technology, entered into a Share Subscription Agreement on May 14, 2026, relating to Technological Overseas Capital 3 Limited. Guolong Technology intends to invest $41 million of its own funds to participate in the fund, which has a target size of $64 million (subject to final subscription amounts).

China Ping An Life Insurance Co., Ltd. increased its stake in CHINA LIFE (02628) by 14.381 million shares at an average price of approximately HK$31.48 per share. Latest data from the Hong Kong Stock Exchange shows that on May 11, China Ping An Life Insurance Co., Ltd. purchased an additional 14.381 million shares of CHINA LIFE (02628) at an average price of HK$31.4767 per share, totaling approximately HK$453 million. Following the purchase, its total shareholding reached approximately 976 million shares, representing a 13.12% stake.

SMIC (00981) announced its Q1 results, reporting a profit attributable to the company's owners of approximately $197 million, representing a sequential increase of 14.2% and a year-on-year increase of 5%. SMIC (00981) announced its Q1 2026 results, with sales revenue reaching $2.5055 billion, up 0.7% sequentially and 11.5% year-on-year. Gross profit was approximately $504 million, up 5.3% sequentially but down 0.4% year-on-year. Profit attributable to the company's owners was about $197 million, up 14.2% sequentially and 5% year-on-year. For Q2, the company provided revenue guidance of 14% to 16% sequential growth and gross margin guidance of 20% to 22%, representing a 2 percentage point increase from the previous quarter's guidance.

HUA HONG SEMI (01347) released its Q1 results. HUA HONG SEMI (01347) announced its Q1 2026 results, with revenue reaching RMB 4.625 billion, a year-on-year increase of 18.22%. Net profit attributable to shareholders was RMB 140 million, surging 513% year-on-year, primarily driven by increased gross profit due to higher average selling prices and wafer shipments, coupled with a foreign exchange gain in the current period compared to a loss in the same period last year. For Q2 2026, the company expects sales revenue to be between $690 million and $700 million, with an estimated gross margin between 14% and 16%. The company's Q1 net profit was RMB 140 million, compared to RMB 125 million in Q4 2025, indicating an 11% sequential increase. The significant boost in global semiconductor demand from AI is evident. In Q1, the company's 12-inch capacity ramp-up progressed steadily, with its revenue contribution rising to 62.7%. The 8-inch production line maintained strong profitability. Meanwhile, the proposed acquisition of Huali Microelectronics has been accepted by the Shanghai Stock Exchange and entered the substantive review stage, progressing according to plan and expected to be completed in the second half of this year.

ALI HEALTH (00241) reported adjusted annual net profit of RMB 2.3262 billion, up 19.3% year-on-year. ALI HEALTH (00241) announced its full-year results for the period ending March 31, 2026. Total revenue was approximately RMB 34.255 billion, a year-on-year increase of 12.0%. Net profit was approximately RMB 1.9363 billion, up 35.2% year-on-year. Adjusted net profit was RMB 2.3262 billion, a 19.3% increase year-on-year, with the adjusted net profit margin improving from 6.4% to 6.8%. The company proposed a final dividend of 5.95 cents per share and a special dividend of 13.52 cents per ordinary share.

**【Stock Spotlight】** AAC TECH (02018): Poised to enter the UQD market for a US cloud service provider. Recently, AAC TECH's subsidiary, Yuandi Technology, achieved mass production of its ATAHORAN series 2.2MW/2.6MW centralized liquid-cooled CDUs and simultaneously commenced global batch deliveries. Citi expects that through the integration of Yuandi Technology, the liquid cooling business will contribute approximately RMB 200 million. Yuandi Technology has completed mass production of its Atahoran 2.2MW/2.6MW CDU products, with current monthly CDU capacity reaching 400 units. Furthermore, the bank anticipates that AAC TECH may enter the UQD market of a US cloud service provider later this year by supplying components to an existing vendor. Citi added that it expects Apple's iPhone 18 production in the second half of 2026 to reach 84 million units, all being premium models, which will drive AAC TECH's touch and VC cooling businesses. Simultaneously, the bank is optimistic about the company's data center liquid cooling business, believing it holds long-term potential to diversify risks associated with its consumer electronics segment.