Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Wangsu- WangsuScience & TechnologyScience(300017.SZ)& Technology (300017.SZ)

Gross margin continues to deteriorate; Valuation unjustified.

PRICE TARGET Rmb7.30 UNDERWEIGHT THESIS

We find EV/EBITDA is the most appropriate methodology and apply an 10x one-year forward ▪We believe Wangsu is once again facing

EV/EBITDA, in line with the five-year average NTM EV/EBITDA for Akamai (US-based comp, growth and margin challenges in the CDN

6x EV/EBITDA). We cite Wangsu's improving profitability and recovering revenue run-rate as market after a short recovery.

valuation support. ▪We rate the stock UW, as valuation is

much higher than global peers after China’s Rmb16.08

beta rally.

Consensus Price Target Distribution Rmb6.70 Rmb22.20

MS PT

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates Consensus Rating Distribution

75% Overweight

RISK REWARD CHART 0% Equal-weight

25% Underweight

MS Rating

CNY

Source: Refinitiv, Morgan Stanley Research

Rmb19.60Rmb19.60(+48.15%)Rmb19.60(+48.15%)(+48.15%)

20 Risk Reward Themes

Contrarian: Negative

15 Pricing Power: Positive

Rmb13.23Rmb13.23Rmb13.23 View descriptions of Risk Rewards Themes here

Rmb7.30Rmb7.30(-44.82%)Rmb7.30(-44.82%)(-44.82%)

Rmb5.80Rmb5.80(-56.16%)Rmb5.80(-56.16%)(-56.16%)

JUL '25 JAN '26 JUL '26 JUL '27

Key: Historical Stock Performance Current Stock Price Price Target

BULL CASE Rmb19.60 BASE CASE Rmb7.30 BEAR CASE Rmb5.80

40x 2026e bull-case EV/EBITDA 10x 2026e base-case EV/EBITDA 6x 2026e bear-case EV/EBITDA

Better competition dynamics in the CDN Stable operations: Intensifying competition in the CDN

business: business:

CDN revenue growth: 2/6/6% in 2026-28E

CDN revenue growth: 15/12/10% in 2026-28E CDN revenue growth: 0% in 2026-28E