1. Report Industry Investment Rating No information provided regarding the industry investment rating in the given report. 2. Core Viewpoints of the Report - With the expansion of global AI demand and the capital expenditure on computing power by North American cloud - computing giants, the domestic computing hardware supply chain is expected to continue its high - growth trend. Domestic large - models are predicted to iterate rapidly in the second half of the year, and the AIDC scale is expected to further expand. The pan - AI sector is a relatively scarce high - growth area, and investment opportunities in this sector are recommended to be focused on in Q3 [1][10]. - Currently, convertible bond valuations are at a relatively high historical level due to the continuous inflow of fixed - income funds and the recovery of stock market expectations. The idea of achieving excess returns in the high - valuation range is to bet on the elasticity of the underlying stocks of convertible bonds. When the capital situation of convertible bonds is stable and the stock market expectations do not change significantly, the valuation of the convertible bond market is unlikely to shrink actively. Buying convertible bonds corresponding to high - elasticity underlying stocks (such as those in the AI sector) at a high - risk preference position can easily generate excess returns during an upward wave [1][10]. 3. Summary by Relevant Catalog 3.1 Overall Logic and Layout Ideas - The domestic computing hardware supply chain is expected to maintain high growth due to global AI demand expansion and North American cloud - computing giants' capital expenditure on computing power. Domestic large - models will iterate quickly in the second half, and AIDC will expand. The pan - AI sector is a high - growth area, and Q3 investment opportunities are recommended [1][10]. - For convertible bond investment, with high valuations, the strategy is to invest in convertible bonds of high - elasticity underlying stocks to gain excess returns in an upward market [1][10]. 3.2 Individual Bond Selection 3.2.1 Unex Electronics/Unex Convertible Bond - Unex is a global leader in electronic design and manufacturing services, leading in the SiP module field. It has 30 manufacturing service sites across four continents, providing comprehensive services to global brand customers [16]. - In 2024, its revenue was 60.691 billion yuan, almost flat year - on - year. Cloud and storage product revenue increased by 13.35% due to AI - driven server demand [16]. - In 2025, it aims to accelerate business in AI accelerator cards. It is also developing power modules and motherboards for AI servers. It participates in providing Wi - Fi SiP modules for a North American AI glasses customer's third - generation product and has obtained an order for N - in - one motherboard modules, expected to bring significant revenue in 2026 [2][22][24]. 3.2.2 Huamao Technology/Huamao Convertible Bond - Huamao is a leader in the automotive passive safety field, with products covering airbags, seat belts, etc. In 2024, it released an action plan, strengthening its automotive parts business and entering the semiconductor and computing manufacturing fields [25]. - In 2024, its revenue was 2.213 billion yuan, up 7.67% year - on - year. Net profit was 277 million yuan, up 14.64%. It plans to expand in the semiconductor and computing manufacturing sectors by increasing investment and integrating the supply chain of Fuchuang Youyue [25][30]. - Fuchuang Youyue provides one - stop electronic manufacturing services, especially in high - speed optical module manufacturing for global computing industry chains. It has shipped to 7 of the top 20 global optical module manufacturers in 2024, with over 3.5 million 800G optical module PCBA shipments [31][32]. 3.2.3 Bowei Alloy/Bo 23 Convertible Bond - Bowei's main businesses are new materials and international new energy. Its new materials are high - performance non - ferrous alloy products, widely used in AI, 6G, etc. In 2024, its alloy strip business sales increased by 42.23% and net profit increased by 171.12% [33]. - Its high - speed connector, shielding, and lead - frame materials are crucial for computing servers and data centers. Products like boway19920 and boway70318 meet the requirements of high - computing servers [35]. 3.2.4 Sangfor Technologies/Sangfor Convertible Bond - Sangfor focuses on enterprise - level network security, cloud computing, and IT infrastructure. Its network security business uses cloud security and AI for active monitoring and protection [36]. - It has been developing cloud computing since 2012, launching multiple products. In 2024, it released the AICP platform for large - model development, aiming to lower the threshold of using AI technology [37]. 3.2.5 Minglida/Mingli Convertible Bond - Minglida's products are mainly used in photovoltaic, energy storage, new - energy vehicles, and security. In 2024, its sales declined due to the inventory reduction in the photovoltaic and energy - storage industries. However, demand is recovering in 2025 [39]. - It has made breakthroughs in the new - energy vehicle business with leading global customers. It plans to expand in the robot and liquid - cooling industries and expects increased revenue from server and automotive liquid - cooling [39][43][44].

Market Overview - The market continued to rise in July, supported by both policy and liquidity[5] - Policies aimed at "anti-involution" have led to higher elasticity in commodity prices, driving cyclical industries to lead the market[5] - Future focus will remain on liquidity support and the gradual increase in risk appetite, although the likelihood of market adjustments is rising[5] Investment Recommendations - The "Golden Stock Portfolio" has achieved a year-to-date return of 30.37%[15] - Key recommended stocks include: - China Pacific Insurance (601601.SH) - Innovent Biologics (1801.HK) - Bairun Food (002568.SZ) - Muyuan Foods (002714.SZ) - Filihua (300395.SZ) - CATL (300750.SZ) - Hubei Yihua (000422.SZ) - Luoyang Molybdenum (603993.SH) - Conch Cement (600585.SH) - North Huachuang (002371.SZ)[12] Risk Factors - Risks include macroeconomic performance falling short of expectations, policy implementation delays, and overseas expansion not meeting projections[12]

Investment Rating - The report maintains a "Recommended" rating for the company, considering its stable profitability and global technological leadership [4]. Core Insights - The company reported a revenue of 178.886 billion yuan for the first half of 2025, a year-on-year increase of 7.27%, and a net profit attributable to shareholders of 30.485 billion yuan, reflecting a growth of 33.33% [1]. - The overseas business has shown strong performance, generating 61.208 billion yuan in revenue, a 21.14% increase year-on-year, with a gross margin of 29.02%, significantly higher than the domestic business [2]. - The company has accelerated its development in the battery-swapping ecosystem, planning to build at least 500 battery swap stations by 2025, with a long-term goal of expanding to 10,000 stations [3]. Summary by Sections Financial Performance - The company achieved a total battery system production of 310 GWh in the first half of 2025, with Q2 output expected to be close to 150 GWh, showing a continuous increase [1]. - The gross margin for the power battery system was 22.41%, while the energy storage battery system gross margin was 25.52%, indicating strong profitability [1]. Overseas Business - The company's global market share for power batteries reached 38.1% from January to May 2025, maintaining a leading position [2]. - The company has secured large-scale energy storage project orders in emerging markets such as the Middle East and Australia, particularly in high-growth scenarios like AI data centers [2]. Technological Innovation - The company has launched several innovative products, including the second-generation supercharging battery and a large-capacity energy storage system solution, reinforcing its industry leadership [2]. Future Projections - Revenue projections for 2025-2027 are estimated at 406.5 billion, 497.9 billion, and 600.1 billion yuan, with year-on-year growth rates of 12.3%, 22.5%, and 20.5% respectively [3]. - The net profit attributable to shareholders is projected to be 68.2 billion, 80.4 billion, and 98.6 billion yuan for the same period, with corresponding growth rates of 34.4%, 17.9%, and 22.6% [3].

Quantitative Models and Construction Methods 1. Model Name: Deep Learning Stock Return Prediction Model - **Model Construction Idea**: This model is based on a deep learning framework tailored to the current market environment. It integrates daily and minute-frequency inputs to predict stock returns and generate trading signals based on historical rolling thresholds[1][10][22] - **Model Construction Process**: - **Input Layer**: Combines 51 technical/sentiment daily features, 7 basic daily price-volume indicators, 10 enhanced style factors, and 52 minute-frequency features aggregated to daily frequency[22] - **Training Layer**: Utilizes meta-learning to adapt to new market data dynamically, avoiding overfitting to historical data[14] - **Output Layer**: Employs LinSAT neural networks to impose constraints on the output, ensuring specific objectives like controlling style and industry exposures[18] - **Loss Function**: Multi-period mean squared error (MSE) is used to stabilize predictions for timing strategies[22] - **Formula**: Multi-period return prediction as \( y = (n, 1) \), where \( n \) represents the number of stocks[22] - **Model Evaluation**: Demonstrates robustness in adapting to market changes and controlling exposures, with significant predictive power for timing strategies[10][22] 2. Model Name: SimStock - **Model Construction Idea**: SimStock uses self-supervised learning to predict stock similarities, incorporating both static and dynamic correlations. It leverages contrastive learning to dynamically capture time-series information beyond traditional industry and style classifications[2][47][48] - **Model Construction Process**: - **Input**: Past 40-day price-volume data, Barra style factors, and capital flow indicators[52] - **Positive and Negative Sample Construction**: Positive samples are generated as \( X_{pos} = X + (1-\alpha)X_{rand} \), where \( \alpha = 0.75 \) and \( X_{rand} \) is a random feature sample[52] - **Embedding**: LSTM initializes dynamic attention weights, and CLS tokens aggregate sequence information into stock attribute vectors[52] - **Similarity Calculation**: Stock similarity is measured using cosine similarity between attribute vectors[52] - **Model Evaluation**: Effectively identifies stocks with high similarity, primarily within the same industry, but without clear patterns in market capitalization or sub-industry[56] 3. Model Name: Improved GRU Model with SimStock Integration - **Model Construction Idea**: Enhances the GRU-based stock return prediction model by initializing hidden states with SimStock-generated stock attribute vectors, improving stability across different stock types[57][59] - **Model Construction Process**: - **Initialization**: SimStock attribute vectors replace the GRU model's initial hidden state[57] - **Training**: Retains the same training setup as the baseline GRU model, with adjustments to incorporate the new initialization[59] - **Model Evaluation**: Demonstrates improved predictive performance and stability, particularly in timing strategies across diverse stocks[60][63] 4. Model Name: Index Timing Model - **Model Construction Idea**: Aggregates individual stock signals into index signals using weighted predictions based on market capitalization, followed by threshold-based signal generation[77] - **Model Construction Process**: - **Aggregation**: Combines stock return predictions into index return predictions using market-cap weights[77] - **Signal Generation**: Uses the 60th percentile of past-year predictions as the buy threshold and the 40th percentile as the sell threshold[77] - **Holding Period**: Maintains positions for at least 5 trading days to reduce turnover[77] - **Model Evaluation**: Effective in generating excess returns, particularly in high-volatility sectors[79][82][84] --- Model Backtest Results 1. Deep Learning Stock Return Prediction Model - **Cumulative Excess Return**: 77% over 5 years[33] - **Annualized Return**: 27%[33] - **Excess Return vs. Stocks**: 11.3% (pre-cost)[33] 2. SimStock - **Cumulative Excess Return**: 109% over 5 years[60] - **Annualized Return**: 30%[60] - **Excess Return vs. Stocks**: 14.8% (pre-cost)[60] - **Daily Win Rate**: 57.4%[60] - **Holding Probability**: 45.7%[60] 3. Index Timing Model - **HS300**: Annualized Return 5.1%, Excess Return 5.6%, Max Drawdown 7.7%[79] - **CSI500**: Annualized Return 12.4%, Excess Return 12.2%, Max Drawdown 7.1%[82] - **CSI1000**: Annualized Return 15.1%, Excess Return 14.9%, Max Drawdown 11.3%[84] 4. Sector Timing - **Best Sector**: Electric Power Equipment & New Energy, Annualized Return 36%, Excess Return 31.1%[101] --- Quantitative Factors and Construction Methods 1. Factor Name: Reinforced Style Factor (PPO Model) - **Factor Construction Idea**: Uses PPO reinforcement learning to predict market style preferences, generating more interpretable and robust risk factors compared to traditional deep learning[12] - **Factor Construction Process**: - **Input**: Traditional style factors and recent stock price-volume data[12] - **Reward Function**: Stability-penalized market return goodness-of-fit[12] - **Output**: Enhanced style factor representing AI market preferences[12] - **Factor Evaluation**: Provides a stable and interpretable representation of market style dynamics[12] --- Factor Backtest Results 1. Reinforced Style Factor - **RankIC**: Weekly average of 4.5% since 2019[36] - **Annualized Return**: 23.2% for long-only portfolios, Excess Return 18.3% vs. CSI800[36]

Group 1: PMI Overview - The manufacturing PMI for July 2025 is reported at 49.3%, a decrease of 0.4 percentage points from the previous month[3] - The non-manufacturing business activity index and composite PMI output index are at 50.1% and 50.2%, respectively, both down by 0.4 and 0.5 percentage points from last month[3] - The decline in July's PMI is attributed to both temporary and structural factors, including extreme weather and natural disasters[3] Group 2: Factors Influencing PMI - Extreme weather conditions, such as high temperatures and natural disasters, have negatively impacted PMI readings, contributing to a seasonal decline in manufacturing[4] - The "anti-involution" trend may cause a temporary slowdown in production, but it is expected to improve price expectations significantly[5] - The new export orders index fell to 47.1%, indicating a slowdown in export demand, reflecting the effects of previous strong export activities[6] Group 3: Price Indicators - The PMI raw material purchase price index increased by 3.1 percentage points to 51.5%, while the PMI factory price index rose by 2.1 percentage points to 48.3%[5] - The marginal improvement in price expectations does not indicate a substantial recovery in prices, as the transition from negative to positive PPI growth is still pending[5] Group 4: Non-Manufacturing Sector - The construction PMI and service PMI recorded values of 50.6% and 50.0%, with respective declines of 2.2 and 0.1 percentage points[6] - The construction sector is expected to face less downward pressure due to ongoing policy support for infrastructure projects[8]

Investment Rating - The report maintains a "Recommended" rating for the company [4][6]. Core Views - The company's performance in Q2 2025 met expectations, with significant growth in the automotive seat business anticipated [2][4]. - The company achieved a revenue of 4.83 billion yuan in Q2 2025, representing a year-on-year increase of 15.6% and a quarter-on-quarter increase of 11.6% [2]. - The net profit attributable to shareholders for Q2 2025 was 0.45 billion yuan, reflecting a year-on-year growth of 50.7% [2]. Summary by Sections Financial Performance - In H1 2025, the company reported a revenue of 9.16 billion yuan, down 7.2% year-on-year, while the net profit attributable to shareholders was 0.78 billion yuan, up 26.0% year-on-year [1]. - The gross margin for Q2 2025 reached 18.4%, an increase of 0.9 percentage points year-on-year [3]. Business Development - The company has established a dedicated team for automotive seats and has launched a high-standard R&D laboratory, engaging in negotiations with several leading automotive manufacturers for customized seat solutions [2]. - The company has expanded its customer base significantly, with new projects expected to contribute approximately 60.59 billion yuan in revenue over five years, which would account for 53.2% of the company's total revenue in 2024 [3]. Growth Opportunities - The company is diversifying into the railway sector, having won a bid for a railway container project worth 5.87 billion yuan, set to commence production in October 2023 [4]. - The company is also preparing to supply high-speed train seats, having obtained the necessary supply qualifications [4]. Financial Projections - Revenue projections for 2025-2027 are 31.39 billion yuan, 40.91 billion yuan, and 51.14 billion yuan, respectively, with net profits of 2.07 billion yuan, 2.97 billion yuan, and 3.86 billion yuan [4][5]. - The expected earnings per share (EPS) for the same period are 0.98 yuan, 1.41 yuan, and 1.83 yuan, respectively [5].

Group 1: Market Liquidity - In July, the overnight funding rate rose significantly to 1.53% and then to 1.65% on July 24, raising concerns about liquidity[1] - The People's Bank of China (PBOC) injected a net amount of 601.8 billion yuan through 7-day reverse repos on July 25, indicating a supportive stance on liquidity[1] - By the end of July, the overnight funding rate decreased to 1.36%, with the balance of 7-day reverse repos significantly higher than seasonal levels[1] Group 2: Government Debt Supply - It is estimated that in August 2025, government debt issuance will be between 2.17 trillion and 2.39 trillion yuan, with net financing close to 1.17 trillion to 1.39 trillion yuan[5] - From January to July 2025, net financing from ordinary government bonds reached 2.56 trillion yuan, with various types of bonds contributing to a total of 9.02 trillion yuan utilized, accounting for 65% of the annual quota of 13.86 trillion yuan[5][27] - The issuance of local government bonds is progressing slightly faster than that of national bonds[5] Group 3: Interbank Certificates of Deposit - The 1-year interbank certificate of deposit (CD) rate rose slightly after reaching around 1.6% in early July, with the market beginning to see price increases[6] - The maturity scale of CDs in August increased to 3.07 trillion yuan, indicating heightened renewal pressure[6] - The 1-year CD rate is expected to fluctuate between 1.6% and 1.7%, with rates above 1.65% considered to have certain allocation value[6]

Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core View of the Report - The capital market in August does not have a basis for tightening. Although the bond market has become desensitized to capital and fundamental information recently, it will eventually return to these two concerns. Currently, the Sino - US tariff negotiations have not released more positive information, and the latest economic data does not support a shift in monetary policy [2][9] Group 3: Summary by Relevant Catalogs 1. Overall Judgment of August Capital Market - In July, after the capital interest rate dropped to nearly 1.3% at the beginning of the month, there were two significant increases. On July 25, the central bank immediately made a large - scale net investment of 601.8 billion yuan in 7 - day reverse repurchase to support the capital market, indicating that the central bank's attitude of supporting the capital market has not changed. The overnight capital interest rate has dropped to 1.36%, and the balance of 7 - day reverse repurchase is significantly higher than the seasonal level, similar to the situation in the second quarter [2][9] 2. Open Market - In August, the maturity of MLF is 300 billion yuan, and the maturity of outright reverse repurchase is 900 billion yuan, totaling 1.2 trillion yuan, less than the 1.5 trillion yuan in July. Since May, the combined caliber of these two tools has been net investment, so there is no need to worry too much. Starting from August, the maturity time and operation time of MLF will change from misaligned to consistent, solving the problem of affecting market expectations for medium - term liquidity [3][14] 3. Government Bond Supply - It is expected that in August 2025, the government bond issuance will be 2.17 - 2.39 trillion yuan, and the net financing will be 1.17 - 1.39 trillion yuan, close to the 1.25 trillion yuan in July. From January to July 2025, a total of 9.02 trillion yuan of the annual quota has been used, accounting for 65% of the annual 13.86 trillion yuan, with the local bond issuance progress slightly faster than that of national bonds. There are new policy tools to be launched, and they are expected to be implemented in the third quarter [4][17][18] 4. Inter - bank Certificates of Deposit - Recently, the increase in market risk appetite has not only pressured the bond market but also disturbed the inter - bank capital market. The 1 - year CD interest rate started to rise slightly after reaching around 1.6% at the beginning of July. The maturity scale of CDs in August will rise slightly to 3.07 trillion yuan, increasing the pressure on renewal. Before the policy interest rate is further lowered, the 1 - year CD interest rate is likely to fluctuate between 1.6% - 1.7%, and there is a certain allocation value at 1.65% and above. Unless the central bank tightens liquidity investment, the probability of a significant price increase for issuance is not high, and the CD interest rate in August will mainly fluctuate seasonally [5][25]

Investment Rating - Investment recommendation: Outperform the market (maintained) [7] Core Insights - The further popularization of AI applications is driving a new wave of data center construction. The domestic data center construction demand is categorized into six major areas: internet, operators, IDC manufacturers, finance, government, and others. It is estimated that from 2024 to 2027, the three-year CAGR for newly added data center power in China will be 37.0%, creating investment opportunities in supporting equipment such as liquid cooling, HVDC, and server power supplies [4][8]. Summary by Sections 1. AI Driving a New Wave of Data Center Construction - The overall scale of data centers in China continues to grow, with the number of standard racks exceeding 9 million by 2024, a year-on-year increase of over 11%. The PUE value has been decreasing, reaching approximately 1.48 in 2023 [17][19]. - The AI data center constitutes a significant portion of the growth, with an expected addition of 3.6GW in 2025, representing a year-on-year increase of 220%, and 9.9GW in 2027 [8][75]. 2. Multi-Industry Demand Resonance Enhancing Computing Infrastructure Space - Internet capital expenditure is on the rise, with Alibaba and Tencent's combined capital expenditure reaching approximately 52.1 billion yuan in Q1 2025, a year-on-year increase of about 112% [10][51]. - The three major telecom operators are increasing their computing-related investments, with a total of approximately 85.9 billion yuan in 2024, a year-on-year growth of 25% [11][54]. - IDC manufacturers are ramping up project construction and resource reserves, with five key companies' capital expenditures totaling approximately 17.2 billion yuan in 2024, a year-on-year increase of 17.8% [12][63]. 3. Investment Recommendations: Focus on Leading Companies in Each Segment - As the shipment of next-generation high-performance computing chips accelerates, the penetration rate of AI data centers is expected to rise rapidly, leading to increased demand and technological iterations in multiple areas such as liquid cooling and HVDC [13][78].

Investment Rating - The report maintains a "Recommended" rating for the company [6] Core Views - The company demonstrated stable operations in H1 2025, achieving revenue of 1.368 billion yuan, a year-on-year increase of 11.88%, and a net profit attributable to shareholders of 305 million yuan, up 12.24% year-on-year [1] - The company has a strong order backlog, with new orders signed in H1 2025 amounting to 1.627 billion yuan, representing an 8.31% year-on-year growth [2] - The company's overseas business is growing, with overseas revenue reaching 283 million yuan in H1 2025, accounting for 20.82% of total revenue, and a year-on-year increase of 25.75% [2] - The company launched 36 innovative products and solutions in H1 2025, generating revenue of 642 million yuan, which constitutes 47% of total revenue [3] - The company is expected to achieve revenues of 3.135 billion yuan, 3.841 billion yuan, and 4.739 billion yuan for the years 2025, 2026, and 2027, respectively, with growth rates of 14.2%, 22.5%, and 23.4% [3] Summary by Sections Financial Performance - In H1 2025, the company reported a net cash flow from operating activities of 178 million yuan, an 11.12% improvement year-on-year [2] - The company's return on equity (ROE) for H1 2025 was 9.18%, and the debt-to-asset ratio was 34.83% [2] Product Development - The company is actively responding to market opportunities and challenges, achieving breakthroughs in chip and module technologies [3] - New products include multi-mode communication chips and various communication modules, which are expected to drive future growth [3] Market Position - The company is focusing on the integration of IoT, chips, and artificial intelligence as its core competitive advantage, with ongoing developments in the power IoT and smart city sectors [3]