Morgan Stanley China Equity Strategy: Focus List Changes - Hong Kong, China
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Key Views
- The M3 model drew negative feedback for its smaller scale, higher pricing and weaker code performance, but analysts view it largely as a test of the MiniMax Sparse Attention architecture.
- MiniMax's multimodal strength is underestimated; it ranks H3 among global video models and could become a second ARR growth engine.
- The firm maintains its 2026 ARR forecast of US$1bn, with growth expected to concentrate in the H3 and M3 Pro phases.
- A planned c.US$2bn equity/convertible bond raise will support model training and inference compute.
Outlook
The 2-3T-parameter M3 Pro, expected in September-October, is the key test of frontier performance and pricing power; successful scaling would be a core upside catalyst.
Recommended Securities
New: Minimax (0100.HK), Overweight. Other focus-list Overweight names include Alibaba Group Holding (BABA.N), Sinopec (0386.HK), China Shenhua Energy (1088.HK), CATL (300750.SZ), GigaDevice Semiconductor (603986.SS), HKEX (0388.HK), HKT Trust and HKT Ltd. (6823.HK), Jiangsu Zhongtian Technology (600522.SS), NARI Technology (600406.SS), NAURA Technology Group (002371.SZ), Ping An Insurance Group (2318.HK), Sinoma Science & Technology (002080.SZ) and Zijin Mining Group (2899.HK).