Investment Rating - The report maintains an "Overweight" rating for the communication industry [5] Core Insights - PCB demand continues to improve, leading to enhanced profitability in the sector. The recovery trend in PCB is driven by sustained demand from the computing and automotive electronics markets, with manufacturers operating at high capacity utilization rates. The supply side is shifting towards high-speed and high-end production due to the accelerated evolution of AI technology, increasing the demand for large, high-layer, high-frequency, high-density interconnect (HDI), and high-heat dissipation PCB products. Additionally, rising upstream material prices may lead to price increases for some companies. Capacity expansion is underway, with ShenNan Circuit progressing on its Nantong Phase IV project and a total investment of 1.274 billion RMB for its Thailand factory. Victory Technology reports a full order book, indicating a favorable outlook for the PCB sub-industry driven by robust capital expenditure guidance from North American cloud providers [3][15][16]. - The demand for 800G optical modules is expected to grow significantly, with the release of 1.6T modules contributing to margin improvements. Demand is rising as North American CSP customers show strong interest, and equipment vendors are providing computing and cloud data services to government and enterprise clients, leading to increased demand for optical modules. The strong demand from computing rental operators is anticipated to drive substantial growth in 800G next year. The 1.6T optical modules have already started shipping in Q2, with expectations for increased shipments in the second half of the year, and the profit margins for 1.6T are projected to be higher than those for 800G. The upcoming earnings season presents an opportunity for investors to position themselves ahead of performance validation or better outcomes [3][16]. Summary by Sections Market Review - The communication sector index increased by 1.43%, ranking third among 30 primary industries. The sub-sectors of communication equipment and telecom operations saw increases of 2.11% and 1.69%, respectively, while value-added services and communication engineering services experienced declines of -3.63% and -5.45% [10][11]. Recommendations - Companies to watch in the PCB sector include Victory Technology, ShenNan Circuit, and Huadian Electronics. In the optical module sector, recommended companies are Zhongji Xuchuang, Xinyi Sheng, Tianfu Communication, Changguang Huaxin, Bochuang Technology, Shijia Photon, Taicheng Light, and Yuanjie Technology [4][16].

Investment Rating - The industry investment rating is "Overweight (Maintain)" [2] Core Views - The report emphasizes the potential growth in the electronics sector, particularly driven by advancements in AI and new consumer applications [6][7] - The report highlights the recent launch of Meta's third-generation AI glasses, which marks a significant move into the high-end market [6] - The report suggests focusing on sectors such as PCB, ODM, AIOT, and AIDC for investment opportunities following recent market corrections [7] Market Review - The Shanghai Composite Index closed at 3359.9 points with a weekly decline of -0.51% [5] - The Shenzhen Component Index and the ChiNext Index also experienced declines of -1.16% and -1.66%, respectively [5] - The AI Index showed a slight increase of +0.11%, outperforming the broader market [5] Technology Industry Insights - Meta's new AI glasses, Oakley Meta HSTN Performance, are set to retail at $399 and feature capabilities such as photo capture, music playback, and voice control [6] - Huawei's developer conference showcased advancements in HarmonyOS and AI cloud services, indicating a strong push towards AI integration in various sectors [6] Investment Recommendations - The report recommends focusing on specific companies within the AI new consumption scene, AIDC, and semiconductor sectors for potential growth [7] - Suggested companies include 泰凌微, 恒玄科技, and 潍柴重机 among others, indicating a strategic approach to capitalize on market trends [7]

Investment Summary - The innovative pharmaceutical and medical device sectors are entering a commercialization phase, with significant reductions in losses for many companies in 2024. Research and development in dual/multi-antibody drugs, radiopharmaceuticals, antibody-drug conjugates (ADC), and gene therapies are gaining momentum [5][16] - The medical device sector is experiencing a substantial growth trend in bidding and procurement, with a reported increase of approximately 67% in the first quarter of 2025 compared to the previous year [22] - The rise of health-conscious consumer behavior is creating new opportunities in traditional Chinese medicine, pharmacies, and healthcare services, with the health consumption market expected to grow rapidly [5][24] Sector Performance Review - As of June 10, 2025, the pharmaceutical and biotechnology sector has seen a year-to-date increase of 10.65%, outperforming the CSI 300 index by 12.42 percentage points [9][12] - The chemical pharmaceutical sub-sector led the gains with a 26.71% increase, while traditional Chinese medicine saw a decline of 1.29% [12][13] Innovative Pharmaceuticals - The Chinese pharmaceutical industry is witnessing a surge in the number of innovative drugs developed domestically, with a total of 3,575 active innovative drugs as of December 31, 2024, surpassing the United States [18] - The commercialization phase for innovative drugs is marked by significant revenue growth for companies like Baiyi Tianheng, which reported a revenue increase of 936.31% in 2024 [18][19] - The trend of licensing-out agreements is on the rise, with a total of 76 transactions reported in 2024, reflecting the growing international competitiveness of Chinese biotech firms [20] Medical Devices - The medical device sector is experiencing structural differentiation, with a market value decline from 1.54 trillion yuan to 1.31 trillion yuan in 2024, a decrease of nearly 15% [22] - The introduction of policies aimed at promoting innovation and updating equipment is expected to revitalize the medical device industry [22][23] New Health Consumption - The Chinese government has introduced policies to promote health consumption, which is expected to drive rapid growth in the health consumption sector [24] - The health consumption market is characterized by low spending levels and rapid growth, with the total revenue of the health industry reaching 9 trillion yuan in 2024 [24][25] - AI technology is enhancing medical services, improving patient experiences and diagnostic efficiency, particularly in traditional Chinese medicine [25][26]

Investment Rating - The industry investment rating is "Overweight" (Maintain) [1] Core Insights - The report highlights the emergence of new consumption trends driven by youth, brand value, and technology, indicating a shift towards a more personalized and innovative market landscape [1][4] Section Summaries New Consumption - The rise of brand value is crucial in tapping into the young consumer demographic, which is becoming increasingly influential in the market [4][5] Gold Consumption - Gold consumption is showing significant structural differentiation, with rising demand for gold as a safe-haven asset driving prices higher. The introduction of traditional gold and small-weight gold items is leading the new trend [5][10] - Young consumers aged 18 to 34 account for over one-third of gold jewelry sales, prompting brands to innovate in design and product offerings to cater to this demographic [10] Trendy Toys Consumption - The trendy toy market is supported by three main drivers: the rising purchasing power of Generation Z, accelerated IP commercialization, and technological innovation. The market is expected to reach 110.1 billion yuan by 2026, with a CAGR of 33% from 2015 to 2021 [11][14] - The "Guzi economy," which refers to merchandise derived from various IPs, is experiencing rapid growth, with a market size of 168.9 billion yuan in 2024, reflecting a 40.63% year-on-year increase [14] Outdoor Consumption - The outdoor sports market is expanding rapidly, with retail sales projected to reach 271.1 billion yuan in 2023. The penetration rate of outdoor activities in China is still low compared to over 50% in other countries, indicating significant growth potential [20] - Key trends include the rise of "light outdoor" products, increased popularity of trail running, and a growing interest in cycling and pet-friendly outdoor activities [20] Technology Consumption - The integration of AI in consumer products is transitioning from exploration to large-scale commercialization, with humanoid robots and smart home devices becoming core growth areas. The report anticipates that 2025 will mark a significant year for humanoid robot production [25] - The development of smart home technology is evolving from individual products to comprehensive ecosystem solutions, enhancing consumer experience and engagement [25]

Quantitative Models and Construction Methods - **Model Name**: A-Share Industry Rotation Model **Model Construction Idea**: The model uses six factors—funds, valuation, sentiment, momentum, overbought/oversold, and profitability—to build a scoring system for evaluating industry performance comprehensively [4][18] **Model Construction Process**: - **Funds**: Calculated using industry main fund net inflow rate - **Valuation**: Based on the industry’s valuation percentile over the past year - **Sentiment**: Derived from the proportion of stocks with positive returns within the industry - **Momentum**: Measured using the MACD indicator - **Overbought/Oversold**: Assessed using the RSI indicator - **Profitability**: Based on the consensus forecast EPS percentile of the industry over the past year [18] **Model Evaluation**: The model provides a comprehensive scoring mechanism to identify high-performing industries and low-performing ones [4][18] - **Model Name**: Consensus Stock Selection Model **Model Construction Idea**: The model combines momentum, valuation, and price factors with high-frequency fund flow data to select stocks with the highest similarity between fund flow trends and price trends [5][21] **Model Construction Process**: - **Step 1**: Identify high-performing secondary industries over the past 30 days - **Step 2**: Calculate momentum, valuation, and price increase frequency for stocks within these industries - **Step 3**: Use high-frequency fund flow data to compute fund inflow/outflow changes for each stock - **Step 4**: Select stocks with the highest similarity between fund flow trends and price trends within the top-performing secondary industries [21] **Model Evaluation**: The model effectively identifies stocks with strong alignment between fund flow and price trends, aiding in stock selection [5][21] --- Model Backtesting Results - **A-Share Industry Rotation Model**: - **Funds**: Non-bank financial (-), Food & Beverage (++), Electronics (+) - **Valuation**: Non-bank financial (+++), Food & Beverage (+++), Electronics (++) - **Sentiment**: Non-bank financial (+++), Food & Beverage (+++), Electronics (+++) - **Momentum**: Non-bank financial (+++), Food & Beverage (+++), Electronics (---) - **Overbought/Oversold**: Non-bank financial (+++), Food & Beverage (+++), Electronics (+) - **Profitability**: Non-bank financial (+++), Food & Beverage (+++), Electronics (+) - **Overall Score**: Non-bank financial (6), Food & Beverage (5), Electronics (4) [19][20] - **Consensus Stock Selection Model**: - **Selected Stocks**: - **Components**: Fullsun Technology, Huizhou Crystal, Hongxin Electronics, Dongshan Precision - **Oil Service Engineering**: Tongyuan Petroleum, China Offshore Oil Services, Potential Energy Trust, Zhongman Petroleum - **Accessories**: Deep China A, D&A Shares, Zhou Dasheng, Mingpai Jewelry, Laishen Tongling [22] --- Quantitative Factors and Construction Methods - **Factor Name**: Funds **Construction Idea**: Measure industry fund inflow/outflow to assess capital movement [18] **Construction Process**: Use net inflow rate of main funds within the industry [18] - **Factor Name**: Valuation **Construction Idea**: Evaluate industry valuation percentile over the past year [18] **Construction Process**: Calculate the percentile of industry valuation within the past year [18] - **Factor Name**: Sentiment **Construction Idea**: Assess the proportion of stocks with positive returns within the industry [18] **Construction Process**: Calculate the percentage of stocks with positive returns in the industry [18] - **Factor Name**: Momentum **Construction Idea**: Use MACD indicator to measure industry momentum [18] **Construction Process**: Apply MACD formula to industry-level data [18] - **Factor Name**: Overbought/Oversold **Construction Idea**: Use RSI indicator to evaluate industry overbought/oversold conditions [18] **Construction Process**: Apply RSI formula to industry-level data [18] - **Factor Name**: Profitability **Construction Idea**: Assess consensus forecast EPS percentile over the past year [18] **Construction Process**: Calculate the percentile of consensus forecast EPS within the past year [18] --- Factor Backtesting Results - **Funds**: Non-bank financial (-), Food & Beverage (++), Electronics (+) - **Valuation**: Non-bank financial (+++), Food & Beverage (+++), Electronics (++) - **Sentiment**: Non-bank financial (+++), Food & Beverage (+++), Electronics (+++) - **Momentum**: Non-bank financial (+++), Food & Beverage (+++), Electronics (---) - **Overbought/Oversold**: Non-bank financial (+++), Food & Beverage (+++), Electronics (+) - **Profitability**: Non-bank financial (+++), Food & Beverage (+++), Electronics (+) [19][20]

Economic Indicators - China's industrial capacity utilization rate was only 74.1% as of Q1 2025, below the 15-year average of 77.0% from 2006 to 2022[3] - China's goods export share increased from 12.76% in 2017 to 14.64% in 2024, while the U.S. share decreased from 8.72% to 8.45% during the same period[4] - China's trade surplus grew from $419.6 billion in 2017 to $991.4 billion in 2024, more than doubling[4] Consumer Spending - In 2023, China's resident consumption accounted for only 40% of GDP, compared to 68% in the U.S., 53% in the EU, and 54% in Japan, indicating significant room for growth[7] - If China's resident consumption share increases by 15-20%, it could generate an additional consumption of 20-27 trillion RMB, comparable to the total export value of $3.6 trillion in 2024[8] Service Sector Development - In 2024, China's service consumption was estimated at 33.6 trillion RMB, while the U.S. service consumption was approximately 99 trillion RMB, indicating a potential for substantial growth in China's service sector[9] - The report emphasizes that enhancing the service industry is crucial for boosting resident consumption and overall economic growth[9] Trade Uncertainties - The rise of anti-globalization sentiments and protectionism poses uncertainties for China's foreign trade, particularly with investigations like the EU's anti-subsidy probe into Chinese electric vehicles[5] - The report forecasts that China's foreign trade growth may face challenges in 2025 due to these external pressures[5]

Group 1: Market Performance - The NASDAQ, S&P 500, and Dow Jones Industrial Average changed by 0.21%, -0.15%, and 0.02% respectively, while the NASDAQ China Technology Index fell 1.26% and the Hang Seng Index dropped 1.52% from 20250616 - 20250622 [2] - Most A - share sectors declined, with the banking sector leading the gain. The wind All - A Index changed - 1.07%, and among 30 CITIC industries, only 4 rose and 26 fell, with the banking sector having a weekly gain of over 3% [3] - Interest - rate bond prices rose slightly and the yield curve shifted downward. The 10 - year Treasury bond futures rose 0.12%, and the yield of the 10 - year Treasury bond active bond fell 0.44 BP to 1.6396% [4] - The US Treasury bond yield decreased and the curve shifted downward. The 10 - year US Treasury bond yield dropped 3 BP to 4.38% as of June 20, 2025 [7] - The US dollar appreciated and the gold price fell. The US dollar index increased 0.63%, and the London gold spot price dropped 1.95% to $3,368.25 per ounce [8][9] Group 2: Market Liquidity and Policy - The capital price was divided, and the central bank's open - market operations had a net injection of 102.1 billion yuan from 20250616 - 20250622 [5] - The bond market leverage level increased, with the 5 - day average of inter - bank pledged repurchase volume rising from 7.95 trillion yuan on June 13 to 8.32 trillion yuan on June 20, 2025 [6] - The Fed's June FOMC meeting did not cut interest rates, maintaining the rate in the 4.25 - 4.50% range. The median forecast for the 2025 interest rate is 3.9%, equivalent to two rate cuts [10] - The loose monetary policy at the Lujiazui Forum did not materialize. The central bank governor announced eight financial opening - up measures but no specific monetary policy operations [11] Group 3: Geopolitical Situation - The conflict between Israel and Iran may continue, which could affect the improvement of market risk preference [12] - The US attacked Iranian nuclear facilities on June 21, 2025. The conflict may be limitedly escalated, and its duration may be extended [13][14] Group 4: Investment Outlook - The report is optimistic about the oil and gas and banking sectors in A - shares, as well as opportunities in the bond market and gold. A - shares are at a relatively high level in the shock range, and the yield of domestic interest - rate bonds has limited decline [15][16]

Group 1 - The report highlights that index funds, mixed funds, and bond funds are the key focus areas for fund companies in the future, with the top three fund types in May being 65 index funds, 54 mixed funds, and 17 bond funds [1][4][6] - The first batch of the Shanghai Stock Exchange AAA Technology Innovation Company Bond Index Funds is progressing, which aims to provide more financing support for technology innovation companies and create more investment opportunities for investors [1][9] - The report indicates a decrease in the total number of fund applications in May to 154 from 166 in the previous month, with notable changes in various fund types [4][6] Group 2 - The report mentions that Qatar Holding LLC has become a significant shareholder of Huaxia Fund, acquiring a 10% stake, which is expected to enhance the fund's international perspective and bring advanced management experience [2][18] - The report details that three fund companies received approvals for changes in major shareholders from January to May 2025, indicating ongoing consolidation and strategic shifts within the industry [14][17] - The first batch of the Shanghai AAA Technology Innovation Company Bond Index Funds includes 11 funds, with 10 being initiated funds, reflecting strong confidence and support from fund companies in this investment category [9][11]

Core Insights - The report indicates a mixed performance in the stock market, with the Shanghai Composite Index declining by 0.51% and the Shenzhen Component Index falling by 1.16% during the period from June 16 to June 20, 2025 [2] - Among various fund types, actively managed equity funds decreased by 1.63%, while actively managed bond funds saw a slight increase of 0.09% [2] - The banking and telecommunications sectors showed relatively strong performance compared to other industries [8] Equity Funds - The banking sector outperformed other sectors during the reporting period, with notable performance from funds heavily invested in telecommunications and electronics [13] - Representative equity funds such as Tianhong Zhongzheng Bank ETF and Fuguo Zhongzheng 800 Bank ETF both achieved a return of 3.10% [14] - The report highlights that the average return of actively managed equity funds was lower than that of bond funds during this period [2][16] Fixed Income Funds - Long-term pure bond funds led the performance in the bond market, with an average return of 0.14% for the period [16] - The report notes that the average return for convertible bond funds was 4.25% year-to-date, indicating strong performance in this category [16] - The bond market indices showed a slight increase, with the China Bond Index rising by 0.29% [16] QDII Funds - Alternative asset QDII funds focused on energy commodities reported an increase of 4.03% during the period, outperforming other QDII categories [18] - The report indicates that the average return for alternative asset QDII funds focused on gold was significantly high at 27.55% year-to-date [18] - Overall, QDII funds experienced a mixed performance, with various categories showing different levels of returns [18][20]

Investment Rating - The industry investment rating is "Overweight (Maintain)" [1] Core Viewpoints - The report highlights the significant rise in the global obesity population, with the adult overweight/obesity rate reaching 46% in 2025 and projected to rise to 54% by 2035. In China, the overweight/obesity population aged 25 and above reached 402 million by 2021, expected to exceed 627 million by 2050 [2] - The report emphasizes the increasing demand for treatments related to metabolic diseases, particularly the GLP-1 class of drugs, which is projected to surpass $50 billion in global sales by 2024, with semaglutide contributing $25 billion and tirzepatide $16 billion [2] - Domestic pharmaceutical companies are actively developing GLP-1 drugs, with several clinical research results expected to be presented at the upcoming ADA conference, showcasing advancements in obesity and diabetes treatments [3] Summary by Sections Industry Overview - The report notes that the ADA conference is expected to elevate the focus on GLP-1 drugs, with long-acting, oral, multi-target combination therapies, and fat loss without muscle loss being key areas of interest [4] Market Trends - The report indicates that the prescription volume of GLP-1 drugs in the U.S. has been rapidly increasing, with GLP-1 drugs accounting for over 50% of the total market share for weight loss medications as of April 2025 [2] Company Focus - The report suggests monitoring companies such as Heng Rui Medicine, Zhong Sheng Pharmaceutical, and Innovent Biologics, as they are well-positioned in the GLP-1 drug market [4]