Investment Rating - The report rates the industry as "Outperforming the Market" [5] Core Insights - Gold prices have reached new highs, with COMEX gold surpassing $4,500 per ounce, and a projected increase of 63% for the entire year of 2025. Domestic brands like Chow Tai Fook and Lao Pu have seen their gold prices rise to around 1,400 RMB per gram [1][13] - The new VAT policy effective from November has reduced the input tax deduction rate from 13% to 6%, putting pressure on both costs and demand for domestic gold jewelry brands. This has led to a shift from "seeking scale" to "improving quality and efficiency" [1][14] - Major brands such as Lao Pu, Jun Pei, and Chow Tai Fook have entered a cycle of frequent and significant price increases, with high-end fixed-price products seeing price hikes of 10%-30% multiple times throughout the year [1][15] Summary by Sections Gold Price Trends and Brand Pricing Strategies - The gold price reached a new high of $4,546.2 per ounce on December 26, 2025, marking a 63% increase from the beginning of the year. Domestic gold jewelry prices have also surged, with average retail prices rising from 805 RMB per gram to around 1,410 RMB [13][14] - Major brands have implemented multiple price adjustments throughout 2025, with Lao Pu leading the way. The average price increase across top brands has ranged from 30% to 60% [15][19] Inventory and Turnover Analysis - Chow Tai Fook has the largest inventory, while Lao Pu has seen a significant increase in stock levels. Other brands have shown stable growth, with Lao Feng Xiang notably reducing inventory [2][26] - Inventory turnover rates have generally declined, but brands like Chao Hong Ji and Cai Bai have seen significant improvements year-on-year [2][26] Key Company Announcements and Industry News - Six brands, including Liu Fu Group and Kid King, reported substantial profit increases, with Liu Fu's profit rising by 44.1% to 600 million HKD [2][28] - The National Development and Reform Commission and the Ministry of Finance announced a new policy for large-scale equipment updates and consumer goods exchange, with a subsidy of up to 15% on the first batch of 625 billion RMB in special bonds [2][31] Investment Recommendations - The report recommends focusing on high-quality jewelry brands such as Lao Pu and Chao Hong Ji, which have a strong brand presence and craftsmanship barriers. The long-term outlook for gold prices remains bullish due to ongoing central bank purchases and a favorable interest rate environment [3][33]

Investment Rating - The report assigns a "Buy" rating for the company [7] Core Insights - The company achieved total revenue of 20.38 billion yuan in Q3 2025, a year-on-year increase of 101.8%, with net loss significantly narrowing to 0.38 billion yuan. Total deliveries reached 116,007 units, up 149.3%, marking a historical high. The comprehensive gross margin exceeded 20% for the first time, reaching 20.1%, indicating a notable improvement in profitability [1][4] - The company has launched a "dual power" strategy combining pure electric and range-extended vehicles to address user range anxiety. The first range-extended model, X9 EREV, was launched in November 2025, featuring a 63.3 kWh battery and a conversion efficiency exceeding 3.6 kWh/L, achieving a pure electric range of 452 km. Additional range-extended versions of key models are expected in Q1 2026, alongside four new models in 2026, including two SUVs based on the MONA platform [2] - The company is transitioning from "smart cars" to a "physical AI" company, showcasing its commitment and specific path at the 2025 Technology Day. The core technology, VLA 2.0, enhances reasoning efficiency by 12 times and improves average takeover mileage in complex scenarios by 13 times. The model is set to be fully deployed in Ultra models by Q1 2026 and is expected to extend to robotics and other embodied intelligence fields [3] - The company forecasts revenues of 75.8 billion yuan, 132.1 billion yuan, and 166.3 billion yuan for 2025, 2026, and 2027, respectively, with year-on-year growth rates of 85.4%, 74.3%, and 25.9%. The net profit attributable to the parent company is projected to be -1.55 billion yuan, 2.00 billion yuan, and 6.13 billion yuan for the same years [4][5]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [4][6]. Core Insights - The company, Hehe Information, is a leading player in AI and big data technology, focusing on intelligent recognition and commercial big data applications, serving both C-end and B-end customers [1][17]. - The company's flagship product, "Scan All-in-One," boasts a recognition rate of 99% for standard multilingual datasets, significantly outperforming competitors [2][49]. - The SaaS business model provides stable recurring revenue, with a notable increase in paid user numbers and retention rates [2][72]. Summary by Sections Company Overview - Hehe Information is positioned as a leader in the AI and big data sector, with a strong focus on intelligent text recognition and commercial big data services [1][17]. - The company has a stable shareholding structure, with a management team that has a strong technical background in the field [24][27]. Intelligent Text Recognition - The "Scan All-in-One" app is the core product, with a rich product matrix and clear monetization points [2][70]. - The app has achieved a significant user base, with 1.45 billion average monthly active users in 2023, far exceeding competitors [3][56]. - The company has a high user retention rate, with a VIP renewal rate of 51.62% in 2023, reflecting strong user loyalty [2][62]. Financial Performance - The company has shown robust revenue growth, with projected revenues of 1.84 billion, 2.35 billion, and 2.97 billion yuan for 2025, 2026, and 2027, respectively [4][5]. - The net profit attributable to the parent company is expected to reach 490 million, 585 million, and 739 million yuan in the same years, indicating a strong profit trajectory [4][5]. - The gross margin has remained high, around 84%, showcasing the company's strong profitability [37][40]. Market Potential - The intelligent text recognition market in China is expected to grow at a CAGR of 27.3% from 2022 to 2027, indicating significant growth opportunities for the company [42][43]. - The company is expanding its presence in overseas markets, with low penetration rates in countries like Brazil and Indonesia, suggesting room for growth [3][19].

Investment Rating - The report rates the industry as "Outperforming the Market" [4] Core Insights - The domestic information technology application innovation (信创) industry is rapidly developing, driven by both policy and market forces, with a market size of 20,961.9 billion yuan in 2023, reflecting a year-on-year growth of 25.6% [1][22] - The 信创 industry encompasses IT infrastructure, basic software, application software, and information security, forming a complete industrial chain and ecosystem [1][16] - The strategic layout of the 信创 industry is characterized by a "2+8+N" model, focusing on key sectors such as government, finance, telecommunications, energy, and education [1][28] - The growth drivers for the 信创 industry include economic factors, technological advancements, and security concerns, particularly in response to external pressures on high-tech sectors [1][25] Summary by Sections 1. Policy and Market Dynamics - The 信创 industry is supported by a comprehensive policy framework that includes top-level design, special support, and standard regulations [22] - The market for traditional cybersecurity in China has grown steadily from 47.8 billion yuan in 2019 to 69.4 billion yuan in 2023, with a CAGR of 9.77% [2][38] - The 信创 security market is projected to grow from approximately 5 billion yuan in 2023 to 16.6 billion yuan by 2027, with a CAGR of 35% [2][66] 2. 信创 Security Overview - 信创 security is a comprehensive security assurance system aimed at ensuring stability and safety against threats such as viruses and data breaches through domestic software and hardware products [2][61] - The distribution of 信创 security products is primarily in endpoint security, boundary security, and security management, with boundary security products accounting for the largest share at 29.9% [3][78] 3. Key Companies in the Industry - Notable companies in the 信创 security sector include Qi An Xin, Inspur, and Sangfor, which are actively developing and adapting their products to meet the needs of the 信创 environment [3][69] - The report highlights the importance of collaboration between security vendors and 信创 enterprises to enhance the security capabilities of the 信创 ecosystem [86] 4. Future Outlook - The 信创 security market is expected to see significant growth, driven by the need for enhanced security measures and the integration of AI technologies [88] - The industry is moving towards a more integrated and systematic approach to security solutions, adapting to various application scenarios and enhancing product performance [84][83]

Investment Rating - The report maintains an "Outperform" rating for the real estate industry [8] Core Insights - The report emphasizes the financial attributes of real estate, highlighting its significant impact on the macro economy and the necessity for strong policy support from the central government [16][18] - It suggests that policies should be implemented in a decisive manner to stabilize market expectations, avoiding gradual measures that have proven ineffective [17] - The report anticipates a shift towards a new model of "affordable housing + quality housing + services," with an acceleration in the acquisition of existing properties to alleviate inventory pressure [18] Summary by Sections 1. Market Trends - The real estate market is expected to stabilize with policies that support both demand and supply, particularly in major cities where restrictions may be eased [16][18] - The report notes a significant decline in new and second-hand housing transaction volumes, with year-on-year decreases of 22.39% and 28.04% respectively [72] 2. Stock Market and Credit Bonds - The A-share real estate sector underperformed the market, with a weekly decline of 0.69%, trailing the broader market by 0.10 percentage points [21][22] - The issuance of real estate credit bonds totaled 1.514 billion yuan, with a net financing amount of -2.527 billion yuan [21] 3. REITs Market - The REITs index experienced a decline of 0.36%, with the property REITs index down 0.39% and the operating rights REITs index down 0.33% [41][54] - The total transaction volume for REITs was 0.551 billion yuan, reflecting a significant decrease of 59.30% compared to the previous period [56] 4. Land Market - The report indicates a decrease in land supply across major cities, with a 66.43% drop in supply and a 132.09% increase in transaction area, alongside a rise in premium rates [5] 5. Policy Outlook - The report outlines expectations for more robust housing policies in 2026, including the removal of restrictive measures and a focus on meeting diverse housing needs [18][19]

Quantitative Models and Construction Methods Model Name: mHC-MLP - **Model Construction Idea**: The mHC-MLP model introduces manifold-constrained hyper-connections (mHC) into the traditional MLP framework to address issues such as low signal-to-noise ratio, non-stationarity, and extreme tail behavior in financial data. It achieves this by incorporating multi-stream residual channels, gated fan-in/fan-out mappings, and doubly stochastic manifold projections (via Sinkhorn-Knopp) to enhance numerical stability and extrapolation resistance[1][16][22]. - **Model Construction Process**: 1. **Multi-Stream Residual Channels**: The model expands the single residual channel in traditional ResNet to multiple parallel sub-streams, allowing independent feature representations and dynamic routing between streams[19][20]. 2. **Manifold Constraints**: - Residual mixing matrices are constrained to the Birkhoff polytope (doubly stochastic matrices), ensuring non-negativity, row sums of 1, and column sums of 1. This is achieved using the Sinkhorn-Knopp algorithm during training[22][23][54]. - Fan-in and fan-out mappings are constrained to non-negative values using sigmoid functions, ensuring that output features remain within the convex hull of input features[24]. 3. **Dynamic Routing Mechanism**: The model uses a combination of linear mixing (via residual matrices) and non-linear transformations (via MLP blocks) to balance feature interaction and noise suppression[49][50][51]. 4. **Deep Stacking**: The mHC-MLP extends the network depth to six layers, leveraging the numerical stability provided by manifold constraints to capture higher-order interactions[56][57]. 5. **Initialization and Regularization**: Parameters are initialized with minimal values (e.g., alpha = 0.01) to ensure stable gradient flow during early training stages. Regularization is achieved through manifold constraints rather than traditional dropout or L2 regularization[25][55]. - **Model Evaluation**: The mHC-MLP model demonstrates improved numerical stability, reduced overfitting, and enhanced robustness against noise. However, it may underperform in short-term, high-volatility scenarios due to its conservative nature[2][75][86]. --- Model Backtesting Results mHC-MLP Model - **Cumulative Return**: 49% (compared to 56% for the unconstrained MLP model)[75] - **t-Statistic**: Not explicitly mentioned for mHC-MLP - **IC_IR**: Not explicitly mentioned for mHC-MLP - **Turnover**: Lower than the unconstrained MLP model, indicating better stability[2][75] - **Maximum Drawdown**: Lower than the unconstrained MLP model, reflecting reduced risk exposure[2][75] --- Quantitative Factors and Construction Methods Factor Name: Barra MLP Factor - **Factor Construction Idea**: The Barra MLP factor leverages neural networks to capture non-linear interactions and complex relationships between Barra style factors and residual stock returns, overcoming the limitations of traditional linear factor models[30][31]. - **Factor Construction Process**: 1. **Baseline Risk Model**: A long-term risk model is constructed using the Barra CNE6 framework, incorporating one country factor, 31 industry factors, and 15 style factors (e.g., size, beta, momentum, value)[36][37][38]. 2. **Residual Return Extraction**: Stock returns are decomposed into common factor contributions and residual returns via cross-sectional regression. The residual returns serve as the prediction target for the MLP model[40]. 3. **Rolling Training**: The MLP model is trained using rolling windows of 24, 36, and 72 months to balance bias and variance. Features include the 15 style factors, and the target is the next-period residual return[41]. 4. **Multi-Period Signal Synthesis**: Predictions from the three training windows are standardized (Z-score) and combined using equal weighting or IC-based weighting to generate a composite factor[42][43]. 5. **Orthogonalization**: The composite factor is regressed against the 15 style factors to remove linear correlations, ensuring it provides incremental information[44]. 6. **Pure Factor Return Calculation**: The orthogonalized factor is incorporated into an enhanced Barra risk model, and its pure factor return is estimated via cross-sectional regression[45]. - **Factor Evaluation**: The Barra MLP factor effectively captures non-linear alpha signals and demonstrates significant cumulative returns and IC_IR values, validating its utility in quantitative strategies[46]. --- Factor Backtesting Results Barra MLP Factor - **Cumulative Return**: Over 15%[46] - **t-Statistic**: 2.8[46] - **IC_IR**: 0.45[46] - **Turnover**: Not explicitly mentioned - **Maximum Drawdown**: Not explicitly mentioned --- Composite Model: mHC-Enhanced Barra MLP Factor - **Model Construction Idea**: The mHC-enhanced Barra MLP factor integrates the mHC architecture into the Barra MLP framework to improve robustness and stability while retaining the ability to capture non-linear interactions[48]. - **Model Construction Process**: The MLP core in the Barra MLP factor is replaced with the mHC-MLP architecture, maintaining the same input features, target variables, and training framework. This modification introduces manifold constraints and dynamic routing to enhance numerical stability and reduce overfitting[48][49][50]. - **Model Evaluation**: While the mHC-enhanced factor demonstrates superior stability and robustness, it may lag in short-term, high-volatility markets due to its conservative design[75][86]. --- Composite Model Backtesting Results mHC-Enhanced Barra MLP Factor - **Cumulative Return**: Not explicitly mentioned - **t-Statistic**: Not explicitly mentioned - **IC_IR**: Not explicitly mentioned - **Turnover**: Lower than the original Barra MLP factor[2][75] - **Maximum Drawdown**: Lower than the original Barra MLP factor[2][75]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The target price of Shuangle Convertible Bond on its first trading day is expected to be between 133 and 138 yuan, and investors are advised to actively subscribe. The conversion premium rate on the first listing day is estimated to be in the range of 42% - 47% [3][18]. - The estimated first - day new - bond subscription winning rate is around 0.0038% - 0.0054% [4][19]. 3. Summary According to the Directory 3.1 Shuangle Convertible Bond New - Bond Analysis and Investment Suggestions 3.1.1 Convertible Bond Basic Terms Analysis - The issuance methods of Shuangle Convertible Bond are priority placement and online issuance. The bond and issuer ratings are both AA-. The issuance scale is 800 million yuan, the initial conversion price is 36.7 yuan. As of December 31, 2025, the convertible bond parity is 93.73 yuan, the pure bond value is 91.12 yuan. The game terms (downward revision, redemption, and put - back clauses) are normal. Overall, the bond issuance scale is average, the liquidity is average, the rating is acceptable, and the bond floor protection is good. It is not difficult for institutions to include it in their portfolios, and there is no objection to primary participation [2][14]. 3.1.2 New - Bond Initial Listing Price Analysis - The company's main business is the R & D, production, and sales of phthalocyanine series and chromium - based pigments. The funds raised will be used for high - performance blue - green pigment projects, high - performance yellow - red pigment projects, high - performance functional pigment product R & D centers, and working capital replenishment, aiming to expand the production capacity of advantageous products and improve profitability [3][17]. - Based on the current market environment and parity level, referring to similar convertible bonds, the conversion premium rate of Shuangle Convertible Bond on the first listing day is expected to be in the range of 42% - 47%, corresponding to a first - day listing target price around 133 - 138 yuan [3][18]. 3.1.3 Convertible Bond New - Bond Subscription Winning Rate Analysis - As of the end of September 2025, the top two shareholders held a combined 39.42% of the shares, and the top ten shareholders held a combined 57.2%. Assuming the old - shareholder placement ratio is 39% - 57%, the scale available for the market is 342 million - 485 million yuan. Assuming the online effective subscription volume is 8.93 million households, the winning rate is estimated to be around 0.0038% - 0.0054% [4][19]. 3.2 Underlying Stock Fundamental Analysis 3.2.1 Company's Main Business and the Upstream and Downstream of the Industry - The company is mainly engaged in the R & D, production, and sales of phthalocyanine series and chromium - based pigments. It is a leading enterprise in the domestic phthalocyanine pigment segment, with the first domestic market share and high market reputation. The company focuses on technological innovation and process optimization, and its products are becoming more diversified and specialized [20]. - The upstream of the pigment industry mainly includes the petrochemical and non - ferrous metal industries. The prices of raw materials such as phthalic anhydride and electrolytic copper fluctuate. Currently, the low price of phthalic anhydride helps reduce costs, while the high price of electrolytic copper increases costs. The downstream consumption of pigments is mainly in the ink, coating, and plastic fields, and new application demands in emerging industries are growing, which promotes the development of the pigment industry and raises higher requirements for product quality and performance [21][22]. 3.2.2 Company's Operating Conditions - The company's annual revenue has shown slight fluctuations in recent years. From 2022 to the first three quarters of 2025, the revenues were 1.271 billion yuan, 1.433 billion yuan, 1.575 billion yuan, and 1.11 billion yuan respectively, with year - on - year growth rates of - 4.89%, 12.8%, 9.9%, and - 4.94%. The revenue in 2023 and 2024 increased due to the large increase in sales volume, while in the first nine months of 2025, the revenue decreased due to the decline in raw material prices, intensified competition, and the decrease in both price and sales volume of phthalocyanine pigments. The sales volume and price of chromium - based pigments changed little during the reporting period [25]. - The company's comprehensive gross profit margin first increased and then decreased. From 2022 to the first three quarters of 2025, it was 10.2%, 13.09%, 16.95%, and 14.11% respectively. The net profit margin was 2.2%, 3.3%, 7.66%, and 4.46% respectively. The gross profit margin of phthalocyanine pigments was affected by cost changes, while that of chromium - based pigments decreased slightly due to high environmental protection costs [28]. - The company's recent period expenses and R & D expenses have shown little fluctuation. The accounts receivable turnover rate has slightly decreased, but the company has good control over accounts receivable. The net profit attributable to the parent company has fluctuated greatly, and the profitability has also been volatile [30][35][39]. 3.2.3 Company's Equity Structure and Major Controlling Subsidiaries - As of September 30, 2025, the equity structure was relatively concentrated. Yang Hanzhou was the largest shareholder, and the top two shareholders held a combined 39.42% of the shares, and the top ten shareholders held a combined 57.2%. As of December 23, 2025, Yang Hanzhou was the controlling shareholder and actual controller, directly and indirectly controlling the company [44]. 3.2.4 Company's Business Characteristics and Advantages - The company has brand, technology, environmental protection, industrial chain, standard - setting, and marketing and service network advantages. It has well - recognized brands, a complete core technology and process system, a good environmental management system, stable upstream production, participation in standard - setting, and a professional marketing and service network [46][48][51]. 3.2.5 Allocation of the Current Fund Raising - The company plans to issue convertible bonds to raise no more than 800 million yuan. After deducting issuance fees, 166 million yuan will be used for high - performance blue - green pigment projects, 416 million yuan for high - performance yellow - red pigment projects, 38 million yuan for high - performance functional pigment product R & D centers, and 180 million yuan for working capital replenishment [12][53]. - The high - performance blue - green pigment project aims to upgrade and expand the production capacity of phthalocyanine pigments, with expected annual production increases of 1,000 tons of phthalocyanine blue series and 2,000 tons of phthalocyanine green series. The high - performance yellow - red pigment project will add yellow - red organic pigment products, with an expected annual production increase of 4,000 tons. The R & D center project will improve the company's R & D and technology level [53][54][55].

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - The issuance of Jin 05 Convertible Bonds is recommended for active subscription. The target price on the first day of listing is expected to be between 131 - 136 yuan, with an estimated conversion premium rate on the first day of listing in the range of [29%, 34%]. The estimated first - day new - bond lottery winning rate is around 0.0085% - 0.0109% [3][17][18]. 3. Summary According to the Directory 3.1 Jin 05 Convertible Bond New - Bond Analysis and Investment Suggestions 3.1.1 Convertible Bond Basic Terms Analysis - The issuance methods of Jin 05 Convertible Bonds are priority allotment and online issuance, with a bond and issuer rating of AA+. The issuance scale is 1.672 billion yuan, the initial conversion price is 89.28 yuan, the convertible bond parity on December 31, 2025, is 101.19 yuan, the pure bond value is 97.45 yuan, and the game terms are normal. The bond has high issuance scale, good liquidity, good rating, and good bond - floor protection. It is easy for institutions to include it in their portfolios, and there is no objection to primary participation [13]. 3.1.2 New - Bond Initial Listing Price Analysis - The company's main business is the R & D, production, and sales of transformer series, complete set series, and energy storage series products. The raised funds after deducting issuance fees will be used for projects such as data center power module and high - efficiency energy - saving power equipment intelligent manufacturing, high - efficiency energy - saving liquid - immersed transformer and amorphous alloy core intelligent manufacturing, R & D office building construction, and supplementary working capital. The implementation of these projects will expand the company's production capacity and enhance its profitability. The target price on the first day of listing is estimated to be between 131 - 136 yuan [16][17]. 3.1.3 Convertible Bond New - Bond Lottery Winning Rate Analysis - The estimated first - day new - bond lottery winning rate is around 0.0085% - 0.0109%. Assuming the old shareholders' allotment ratio is 45% - 57%, the scale left for the market is 714 million - 917 million yuan. Assuming the online effective subscription quantity is 8.41 million households, the lottery winning rate when subscribing to the maximum is around 0.0085% - 0.0109% [18]. 3.2 Analysis of the Underlying Stock's Fundamental Aspects 3.2.1 Company's Main Business and the Upstream and Downstream Situations of the Industry - The company is a global power equipment supplier, mainly engaged in the R & D, production, and sales of transformer series, complete set series, and energy storage series products. It provides power supply solutions and electrical equipment for various scenarios. The upstream industries include non - ferrous metals, steel, etc., with sufficient market supply. The downstream industries include power systems, new energy, etc., and their demand growth drives the development of the industry [19][20]. 3.2.2 Company's Operating Conditions - The company's operating income has been rising in recent years, with domestic sales being the main source. In 2024, the domestic sales revenue of transformer series products in the "new energy - photovoltaic" field decreased significantly, while that in the "new infrastructure - data center" field increased. The company's comprehensive gross profit margin and net profit margin have been rising, mainly due to the growth of the gross profit margins of transformer and complete set series products. The company's R & D expenses have fluctuated slightly, and the accounts receivable turnover rate has slightly decreased. The net profit attributable to the parent company has fluctuated greatly, and the weighted ROE has also fluctuated [24][27][40]. 3.2.3 Company's Equity Structure and Main Subsidiaries - As of June 30, 2025, the company's equity structure is relatively concentrated. The largest shareholder is Yuanyu Investment, and the second - largest is Jingtian Investment. The actual controllers are Li Zhiyuan and YUQING JING [43]. 3.2.4 Company's Business Characteristics and Advantages - The company has international competitive advantages in the transformer industry, with advantages in technology R & D, production manufacturing, market and brand, management team, and marketing and service system [46][47][48]. 3.2.5 Allocation of the Raised Funds - The company plans to issue convertible bonds to raise no more than 1.672 billion yuan. After deducting issuance fees, the funds will be used for four major projects: data center power module and high - efficiency energy - saving power equipment intelligent manufacturing, high - efficiency energy - saving liquid - immersed transformer and amorphous alloy core intelligent manufacturing, R & D office building construction, and supplementary working capital [11][50].

1. Report Industry Investment Rating No relevant content provided. 2. Report's Core View The report presents the top ten convertible bonds in January 2026, including their credit ratings, closing prices at the end of December, conversion premium rates, and the trailing twelve - month price - to - earnings ratios (PE - TTM) of their underlying stocks. It also details the business profiles, financial performance, and key highlights of the companies corresponding to these convertible bonds [2][4][6]. 3. Summary by Company 3.1 Zhongte Convertible Bond - **Company Overview**: A globally leading specialized special - steel material manufacturer with an annual production capacity of about 20 million tons of special - steel materials. It has multiple production and raw - material bases, forming a coastal and riverside industrial chain layout [11]. - **Financial Performance**: In 2024, its operating income was 109.203 billion yuan (YoY - 4.22%), net profit attributable to the parent company was 5.126 billion yuan (YoY - 10.41%). In the first three quarters of 2025, operating income was 81.206 billion yuan (YoY - 2.75%), and net profit attributable to the parent company was 4.33 billion yuan (YoY + 12.88%) [11]. - **Company Highlights**: It is one of the world's most comprehensive special - steel enterprises in terms of variety and specification. It has a complete industrial chain, leading cost - control ability, and is seeking external expansion opportunities [12]. 3.2 Shanlu Convertible Bond - **Company Overview**: Focuses on road and bridge engineering construction and maintenance, and is expanding into other fields. It has a complete business and management system [29]. - **Financial Performance**: In 2024, its operating income was 71.348 billion yuan (YoY - 2.3%), net profit attributable to the parent company was 2.322 billion yuan (YoY + 1.47%). In the first three quarters of 2025, operating income was 41.354 billion yuan (YoY - 3.11%), and net profit attributable to the parent company was 1.41 billion yuan (YoY - 3.27%) [29]. - **Company Highlights**: It has the concept of China - specific valuation, potential for improvement in balance sheet and orders, benefits from regional infrastructure plans, and is exploring overseas markets [30]. 3.3 Hebang Convertible Bond - **Company Overview**: Has advantages in resource supply and has completed a basic layout in the chemical, agricultural, and photovoltaic fields, with four major business segments [44]. - **Financial Performance**: In 2024, its operating income was 8.547 billion yuan (YoY - 3.13%), net profit attributable to the parent company was 31 million yuan (YoY - 97.55%). In the first three quarters of 2025, operating income was 5.927 billion yuan (YoY - 13.02%), and net profit attributable to the parent company was 93 million yuan (YoY - 57.93%) [44]. - **Company Highlights**: Its phosphate mines and salt mines contribute profits, and its liquid methionine production is a major profit - contributor [45]. 3.4 Huayuan Convertible Bond - **Company Overview**: Focuses on building a complete vitamin D3 upstream - downstream industrial chain, with products in the vitamin and chemical - preparation fields [56]. - **Financial Performance**: In 2024, its operating income was 1.243 billion yuan (YoY + 13.58%), net profit attributable to the parent company was 309 million yuan (YoY + 60.76%). In the first three quarters of 2025, operating income was 936 million yuan (YoY - 0.2%), and net profit attributable to the parent company was 234 million yuan (YoY - 3.07%) [56]. - **Company Highlights**: It has leading products in the market, is expanding its product matrix, and has a strong layout in the pharmaceutical manufacturing field [57]. 3.5 Xingye Convertible Bond - **Company Overview**: One of the first joint - stock commercial banks in China, evolving into a modern financial service group with multiple financial licenses [70]. - **Financial Performance**: In 2024, its operating income was 212.226 billion yuan (YoY + 0.66%), net profit attributable to the parent company was 77.205 billion yuan (YoY + 0.12%). In the first three quarters of 2025, operating income was 161.234 billion yuan (YoY - 1.82%), and net profit attributable to the parent company was 63.083 billion yuan (YoY + 0.12%) [70]. - **Company Highlights**: It has stable asset quality and scale growth, with a large number of customers [71]. 3.6 Aima Convertible Bond - **Company Overview**: The leading enterprise in the electric two - wheeled vehicle industry, producing and selling electric bicycles, scooters, and motorcycles [80]. - **Financial Performance**: In 2024, its operating income was 21.606 billion yuan (YoY + 2.71%), net profit attributable to the parent company was 1.988 billion yuan (YoY + 5.68%). In the first three quarters of 2025, operating income was 21.093 billion yuan (YoY + 20.78%), and net profit attributable to the parent company was 1.907 billion yuan (YoY + 22.78%) [80]. - **Company Highlights**: It may benefit from government subsidies, new national standards, and has potential for improving gross margins [81]. 3.7 Chongyin Convertible Bond - **Company Overview**: The earliest local joint - stock commercial bank in the upper reaches of the Yangtze River and Southwest China, listed on the Hong Kong Stock Exchange and included in the "Leading Sheep" plan [90]. - **Financial Performance**: In 2024, its operating income was 13.679 billion yuan (YoY + 3.54%), net profit attributable to the parent company was 5.117 billion yuan (YoY + 3.8%). In the first three quarters of 2025, operating income was 11.74 billion yuan (YoY + 10.4%), and net profit attributable to the parent company was 4.879 billion yuan (YoY + 10.19%) [90]. - **Company Highlights**: It benefits from the regional economic development, has stable asset - scale growth, and actively adjusts its business strategies [91][94]. 3.8 Tianye Convertible Bond - **Company Overview**: The first industrial enterprise of the Xinjiang Production and Construction Corps, a leading enterprise in the chlor - alkali chemical industry with an integrated circular economy industrial chain [103]. - **Financial Performance**: In 2024, its operating income was 11.156 billion yuan (YoY - 2.7%), net profit attributable to the parent company was 68 million yuan (YoY + 108.83%). In the first three quarters of 2025, operating income was 7.97 billion yuan (YoY + 2.2%), and net profit attributable to the parent company was 7 million yuan (YoY - 28.79%) [103]. - **Company Highlights**: It has cost - advantage in caustic soda production and plans to increase dividend frequency and has coal - mine projects in progress [106]. 3.9 Aorui Convertible Bond - **Company Overview**: A company focusing on the R & D, production, and sales of complex APIs and preparations, leading in several technical fields [119]. - **Financial Performance**: In 2024, its operating income was 1.476 billion yuan (YoY + 16.89%), net profit attributable to the parent company was 355 million yuan (YoY + 22.59%). In the first three quarters of 2025, operating income was 1.237 billion yuan (YoY + 13.67%), and net profit attributable to the parent company was 354 million yuan (YoY + 24.58%) [119]. - **Company Highlights**: It is optimizing its distribution network, expanding its overseas market for preparations, and has high - quality customer resources [120]. 3.10 Yushui Convertible Bond - **Company Overview**: The largest water supply and drainage integrated enterprise in Chongqing, with a monopoly position in the local market [133]. - **Financial Performance**: In 2024, its operating income was 6.999 billion yuan (YoY - 3.52%), net profit attributable to the parent company was 785 million yuan (YoY - 27.88%). In the first three quarters of 2025, operating income was 5.568 billion yuan (YoY + 7.21%), and net profit attributable to the parent company was 779 million yuan (YoY + 7.1%) [133]. - **Company Highlights**: It has a high market share, is expanding its business regionally, and has achieved cost control through intelligent applications [134].

Investment Rating - The report maintains an "Outperform" rating for the communication industry, consistent with the previous rating [5]. Core Insights - The report highlights that CPO (Co-Packaged Optics) is expected to have significant applications in scale-up networks, addressing transmission bottlenecks associated with copper cables and meeting bandwidth density requirements. It is noted that CPO offers a more favorable total cost of ownership (TCO) and performance/TCO ratio compared to scale-out networks [2][3]. - The report discusses the recent investment by Seagate Technology in Guangcai Xincheng, acquiring a 20% stake for 275 million yuan, indicating confidence in the optical communication sector's market prospects [2][29]. - China Telecom's AI subsidiary successfully completed its first round of financing, attracting major strategic investors, which underscores the recognition of its technological capabilities and growth potential [3][32]. Summary by Sections Market Review - During the week of December 29, 2025, to January 4, 2026, the Shenwan Communication Index fell by 1.41%, while the Shanghai Composite Index rose by 0.13%. The communication sector ranked 23rd among 31 Shenwan primary industries [13]. - Among the communication sub-sectors, communication application value-added services saw the highest increase of 1.41%, while other communication equipment and network devices experienced declines of 0.10% and 2.12%, respectively [16][19]. Industry Dynamics - The SemiAnalysis report elaborates on CPO technology, analyzing its advantages and challenges from multiple perspectives, including TCO, technical principles, marketization, vendor strategies, and supply chain dynamics [23]. - It is emphasized that CPO will not rapidly penetrate scale-out networks in large data centers due to limited cost and power savings. However, it is positioned as the best application scenario for scale-up networks, where it can significantly enhance performance and scalability [24][26]. - Seagate Technology's investment in Guangcai Xincheng is seen as a strategic move to leverage the company's existing capabilities and market position in the optical communication field [29][30]. - The successful financing round for China Telecom's AI subsidiary reflects strong confidence from national and industrial capital in its technological advancements and future growth [32][33].