Report Information - Report Title: 500 billion yuan of carry - over quota issued, local bond issuance may continue to soar in Q4 - Local Bond Weekly Tracking 20251017 [1] - Report Date: October 19, 2025 - Analysts: Huang Weiping, Yang Xuefang [1] 1. Investment Rating of the Reported Industry No investment rating information for the industry is provided in the report. 2. Core Views - The central government has allocated 500 billion yuan of carry - over quota to local governments, and local bond issuance may continue to increase in the fourth quarter. Compared with last year, this allocation has increased in scale and expanded in scope. The 500 billion yuan may be issued through both new special bonds and special refinancing bonds, and policy support will drive the growth of local bond issuance in Q4 [2]. - The current issuance progress of new bonds is slow, with the cumulative issuance progress lower than that of 2023 and 2024. The planned issuance scale of local bonds in October - November 2025 is 923.4 billion yuan, with 507.3 billion yuan for new special bonds [2]. 3. Summary According to the Directory 3.1 This Period's Local Bond Issuance Declined and the Weighted Issuance Term Lengthened - This period (October 13 - 19, 2025) local bonds totaled 32.301 billion yuan in issuance and - 19.781 billion yuan in net financing (last period was 82.528 billion yuan/39.784 billion yuan), and the next period (October 20 - 26, 2025) is expected to issue 247.228 billion yuan and have a net financing of 165.751 billion yuan [2][6]. - The weighted issuance term of local bonds this period was 16.21 years, longer than 12.93 years in the previous period (September 29 - October 12, 2025) [2][6][8]. - As of October 17, 2025, the cumulative issuance of new general bonds/new special bonds accounted for 83.9% and 83.4% of the annual quota respectively. Considering the expected issuance in the next period, it will be 84.1% and 86.0%. This progress is lower than that of 2023 and 2024 [2][10][12]. - As of October 17, 2025, 28 regions have disclosed a planned issuance scale of 923.4 billion yuan for local bonds in October - November 2025 (542.3 billion yuan in October and 381.1 billion yuan in November), including 507.3 billion yuan for new special bonds (366.3 billion yuan in October and 141 billion yuan in November) [2][17][18]. - As of October 17, 2025, the cumulative issuance of special new special bonds was 1206 billion yuan (3.1 billion yuan issued this period); the cumulative issuance of special refinancing bonds for replacing hidden debts was 1992.4 billion yuan (6.2 billion yuan issued this period), with an issuance progress of 99.6%. 32 regions including Zhejiang have completed issuance, and Hubei was added this period [2]. 3.2 This Period's 10 - year Local Bond - Treasury Spread Narrowed, 30 - year Spread Widened, and the Weekly Turnover Rate Rose - As of October 17, 2025, the 10 - year and 30 - year local bond - treasury spreads were 20.54BP and 17.98BP respectively, narrowing by 4.40BP and widening by 0.26BP compared to October 11, 2025, and were at the 58.80% and 70.20% historical quantiles since 2023 [2][22][24]. - This period's local bond weekly turnover rate was 0.56%, up from 0.35% in the previous period [2][30]. - This period, the 7 - 10 - year local bond yields and liquidity in regions such as Dalian, Qinghai, and Ningxia were better than the national average [2].

Valuation Summary - The current PE and PB ratios for major indices are as follows: - CSI All Share (excluding ST) PE is 21.3x, PB is 1.8x, at historical percentiles of 79% and 39% respectively - SSE 50 Index PE is 12.0x, PB is 1.3x, at historical percentiles of 65% and 43% respectively - CSI 500 Index PE is 33.4x, PB is 2.2x, at historical percentiles of 63% and 45% respectively - ChiNext Index PE is 41.3x, PB is 5.2x, at historical percentiles of 36% and 57% respectively - CSI 1000 Index PE is 45.7x, PB is 2.4x, at historical percentiles of 65% and 44% respectively - National 2000 Index PE is 58.9x, PB is 2.5x, at historical percentiles of 76% and 58% respectively - STAR 50 Index PE is 174.7x, PB is 6.1x, at historical percentiles of 98% and 67% respectively - North Exchange 50 Index PE is 67.4x, PB is 5.1x, at historical percentiles of 88% and 93% respectively - ChiNext Index relative to CSI 300 PE is 2.9x, PB is 3.5x, at historical percentiles of 22% and 56% respectively [1][2][4] Industry Valuation Comparison - Industries with PE valuations above the 85th percentile historically include: Real Estate, Steel, and IT Services (Software Development) - Industries with PB valuations above the 85th percentile historically include: Electronics (Semiconductors) and Communications - Industries with both PE and PB valuations below the 15th percentile historically include: White Goods [1][2][5] Industry Midstream Sentiment Tracking New Energy - Photovoltaics: Post-holiday, downstream spot prices slightly declined. Upstream polysilicon futures prices increased by 6.3%, while spot prices remained stable. Midstream silicon wafer prices remained consistent, with potential production increases in Q4. Downstream battery cell prices fell by 0.5% [1][2] - Batteries: Cobalt prices rose by 9.8%, while nickel prices fell by 1.1%. Lithium prices for lithium hexafluorophosphate increased by 10.2%, while carbonate and hydroxide prices fell slightly. Strong demand for electrolytes in energy storage is pushing core material prices up [1][2] - New Energy Vehicles: In September 2025, retail sales of narrow passenger vehicles increased by 6.3% YoY, with new energy vehicle sales up by 15.5% YoY, indicating a recovery in consumer demand [1][2] Real Estate Chain - Steel: Rebar prices fell by 1.7%, with futures down by 2.1%. Daily crude steel production increased by 7.3% in early October, while steel product output decreased by 1.7% [2] - Cement: National cement price index fell by 1.2%, with insufficient demand to support price increases despite supply-side intentions [2] Consumer Sector - Pork: Average price of live pigs fell by 0.1%, while wholesale pork prices dropped by 4.4% [2] - Alcohol: Wholesale prices for premium liquor slightly increased by 0.01% [2] Midstream Manufacturing - Excavators: Sales in September 2025 increased by 25.4% YoY, driven by domestic infrastructure projects and equipment upgrades [2] Cyclical Sector - Precious Metals: Gold prices increased by 5.8%, with silver prices up by 6.5% amid macroeconomic uncertainties [2]

Group 1 - The report indicates a continued decline in risk appetite, with the short-term trading indicators for the North Exchange reaching absolute lows. The North Exchange 50 index fell by 4.91%, which is less than the declines of the Sci-Tech 50 (-6.16%) and the ChiNext index (-5.71%) [7][12][13] - The market's risk appetite has significantly decreased, with major indices declining and trading volume shrinking. The banking and coal sectors showed strength, while TMT, robotics, and solid-state battery sectors experienced notable declines, with only AI computing leaders performing stably [7][12] - The report anticipates increased market volatility due to several significant events occurring in late October, including the release of third-quarter economic data, quarterly reports from listed companies, and key policy meetings [7][8] Group 2 - This week, one new stock, Changjiang Nengke, was listed on the North Exchange, with a first-day price increase of 254.03%. As of October 17, 2025, there are 279 companies listed on the North Exchange [22][24] - The North Exchange's trading volume for the week was 3.958 billion shares, with a total transaction amount of 92.582 billion yuan. The average daily transaction amount decreased by 2.57% [12][18] - The report highlights that 34 stocks rose while 244 stocks fell, resulting in a rise-fall ratio of 0.14. The top gainers included Litong Technology and Wantong Hydraulic, while the top losers included Aomeisen and Luchao Information [29][30] Group 3 - The report notes that the North Exchange's PE (TTM) average is 77.79 times, with a median of 45.06 times, indicating a decline in valuation metrics [19][20] - The report emphasizes the importance of monitoring companies with marginal changes and suggests maintaining focus on core assets within the North Exchange [7][8] Group 4 - The new third board saw 10 new listings and 1 delisting this week, with planned financing of 453 million yuan and completed financing of 166 million yuan [39][40] - The report provides insights into the financing activities of companies on the new third board, highlighting significant fundraising efforts by companies like Ziguang Guoxin [41][42]

Investment Rating - The report maintains a "Positive" outlook on the cosmetics and medical beauty industry [2]. Core Views - The cosmetics and medical beauty sector has shown stronger performance than the market, with the Shenwan Beauty Care Index declining by 2.5% from October 10 to October 17, 2025, which is better than the overall market performance [4][5]. - The Tmall Double 11 event has seen significant success for domestic brands, with brands like Maogeping experiencing high demand and sold-out products [10]. - The overall performance for Q3 2025 is expected to meet expectations, with a continued upward trend into Q4, driven by promotional events [11][12]. Summary by Sections Industry Performance - The cosmetics and medical beauty sector outperformed the market during the specified period, with the Shenwan Cosmetics Index down by 1.1%, which is 2.3 percentage points better than the Shenwan A Index [4][5]. - Key stocks in the sector included Jiaheng Jiahua (+35.0%), Yiyi Co. (+18.6%), and Yanjing Co. (+15.6%) [6]. Market Trends - The Tmall Double 11 event on October 15 attracted over 10 million viewers, with domestic brands like Maogeping experiencing supply shortages due to high demand [10]. - The overall sales performance is expected to improve in the coming weeks, particularly with the upcoming Douyin Double 11 event [10]. Q3 Performance Outlook - The demand for cosmetics remains robust, with retail sales growth in July and August outpacing the overall market [11]. - The total retail sales of cosmetics for the first eight months of 2025 reached 291.5 billion yuan, a year-on-year increase of 3.3% [11]. - Domestic brands are leveraging online channels effectively, with Han Shu achieving over 2 billion yuan in GMV in Q3 [12]. Company Highlights - Han Shu announced a global partnership with Wang Jiaer, enhancing its international presence and brand recognition [19][22]. - The report recommends focusing on companies with strong channel and brand matrices, such as Maogeping, Shanghai Jahwa, and Up Beauty [14]. E-commerce Data - The report highlights significant growth in e-commerce sales for various brands, with Han Shu achieving a 37% increase in GMV [15]. - The overall e-commerce landscape for domestic brands is expected to continue thriving, supported by promotional events and strategic partnerships [15][18]. Market Dynamics - The report notes that the Chinese skincare market is projected to reach 271.2 billion yuan in 2024, despite a slight decline in growth [26]. - Domestic brands are increasingly capturing market share, with a notable presence in the top ten rankings [26][27]. Investment Recommendations - The report suggests investing in companies with strong growth potential and robust product pipelines, particularly in the cosmetics and medical beauty sectors [14]. - Specific recommendations include Maogeping, Up Beauty, and Shanghai Jahwa for cosmetics, and Aimeike for medical beauty [14].

Investment Rating - The report does not explicitly provide an overall investment rating for the industry but highlights various sectors with their respective valuation metrics [1][2]. Core Insights - The report tracks A-share valuations and industry sentiment, indicating that the overall market is experiencing varied valuation levels across different indices and sectors [1][2]. - Key sectors such as real estate, steel, and IT services are noted for their high PE ratios, suggesting potential overvaluation, while white goods are highlighted as undervalued [1][2]. Valuation Comparisons - The report provides a detailed comparison of PE and PB ratios across major indices, with the CSI All Share (excluding ST) PE at 21.3x and PB at 1.8x, indicating historical percentiles of 79% and 39% respectively [1][4][5]. - The report identifies industries with PE ratios above the historical 85th percentile, including real estate, steel, and IT services, while white goods are noted for being below the 15th percentile [1][7]. Industry Sentiment Tracking - **New Energy**: The report notes a slight decline in downstream prices for photovoltaic products, while upstream polysilicon prices have increased by 6.3%. The demand for lithium materials remains strong due to stable orders in the traditional peak season [1][2]. - **Real Estate Chain**: Steel prices have decreased, with rebar prices down by 1.7% and iron ore prices down by 1.4%. Cement prices are also under pressure due to insufficient demand [2]. - **Consumer Goods**: Pork prices have seen a slight decline, while liquor prices have stabilized. Agricultural products like corn and wheat have mixed price movements [2]. - **Midstream Manufacturing**: Excavator sales have increased by 25.4% year-on-year, driven by infrastructure projects and equipment upgrades. Heavy truck sales have surged by 82.9% year-on-year, reflecting strong demand [2]. - **Cyclical Industries**: The report highlights fluctuations in metal prices due to geopolitical tensions and economic concerns, with precious metals seeing significant price increases [2]. Key Industry Valuations - The report lists specific industry valuations, with real estate at a PE of 120.0 and a PB of 16.6, indicating a high valuation relative to historical norms. In contrast, the white goods sector has a PE of 10.4, suggesting it is undervalued [1][7].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Recently, the central government has allocated 500 billion yuan in remaining quota to local governments, and local bond issuance may continue to increase in the fourth quarter. Compared with last year, this arrangement has increased in intensity and expanded in scope. Based on policy statements, the 500 billion yuan may be issued through both new special bonds and special refinancing bonds, and local bond issuance may continue to rise in the fourth quarter [2]. - The issuance and net financing of local bonds in the current period decreased compared to the previous period, but are expected to increase significantly in the next period. The weighted issuance term of local bonds in the current period has lengthened. As of October 17, 2025, the cumulative issuance progress of new general bonds and new special bonds is slower than in 2023 and 2024. The planned issuance scale of local bonds from October to November 2025 is 923.4 billion yuan, with new special bonds accounting for 507.3 billion yuan. Special new special bonds and special refinancing bonds for replacing implicit debts were issued in the current period, and the issuance progress of special refinancing bonds has reached 99.6%. The spread between 10Y local bonds and treasury bonds narrowed, while the spread between 30Y local bonds and treasury bonds widened, and the weekly turnover rate increased [3]. 3. Summary According to the Table of Contents 3.1 This Period's Local Bond Issuance Volume Decreased, and the Weighted Issuance Term Lengthened - The total issuance/net financing of local bonds in the current period (October 13 - October 19, 2025) was 32.301 billion yuan / -19.781 billion yuan, compared with 82.528 billion yuan / 39.784 billion yuan in the previous period. The expected issuance/net financing in the next period (October 20 - October 26, 2025) is 247.228 billion yuan / 165.751 billion yuan. The weighted issuance term of local bonds in the current period was 16.21 years, longer than the 12.93 years in the previous period [3][10]. - As of October 17, 2025, the cumulative issuance of new general bonds/new special bonds accounted for 83.9% and 83.4% of the annual quota respectively, and is expected to be 84.1% and 86.0% considering the next - period's expected issuance. The cumulative issuance progress in 2024 was 85.1%/90.1% and 87.6%/94.6%, and in 2023 was 90.1%/87.9% and 90.1%/89.0% [3][20]. - As of October 17, 2025, 28 regions have disclosed a planned issuance scale of local bonds of 923.4 billion yuan from October to November 2025 (542.3 billion yuan in October and 381.1 billion yuan in November), with new special bonds accounting for 507.3 billion yuan (366.3 billion yuan in October and 141 billion yuan in November). The issuance in the same regions and the whole country in the same period last year was 1424.8 billion yuan and 267.5 billion yuan, and 1997.2 billion yuan and 382.8 billion yuan respectively [3][24]. - As of October 17, 2025, the cumulative issuance of special new special bonds was 1206 billion yuan (3.1 billion yuan issued in the current period); the cumulative issuance of special refinancing bonds for replacing implicit debts was 1992.4 billion yuan (6.2 billion yuan issued in the current period), with an issuance progress of 99.6%. 32 regions including Zhejiang have completed the issuance (Hubei was added in the current period) [3]. 3.2 This Period's Spread between Local Bonds and Treasury Bonds Narrowed for 10Y and Widened for 30Y, and the Weekly Turnover Rate Increased - As of October 17, 2025, the spreads between 10 - year and 30 - year local bonds and treasury bonds were 20.54BP and 17.98BP respectively, narrowing by 4.40BP and widening by 0.26BP compared to October 11, 2025. They were at the 58.80% and 70.20% historical quantiles since 2023 respectively [3]. - The weekly turnover rate of local bonds in the current period was 0.56%, an increase from 0.35% in the previous period. The yields and liquidity of 7 - 10Y local bonds in regions such as Dalian, Qinghai, and Ningxia were better than the national average [3].

Investment Rating - The report maintains an "Optimistic" rating for the chemical industry [3][4]. Core Insights - The report highlights the global expansion of major titanium dioxide manufacturers, emphasizing the opportunity for industry recovery from the bottom of the cycle. The acquisition of Venator UK's titanium dioxide assets and the establishment of subsidiaries in Malaysia and the UK are key developments [4][5]. - The macroeconomic outlook for the chemical sector indicates stable oil demand despite a slight slowdown due to tariffs, with global GDP growth projected at 2.8%. The report also notes that coal prices are stabilizing and natural gas export facilities in the U.S. are expected to accelerate [4][5]. - The report suggests investment strategies across various sectors, including textiles, agriculture, and chemicals, with a focus on companies benefiting from the "anti-involution" policies [4][5]. Summary by Sections Industry Dynamics - The report discusses the current macroeconomic conditions affecting the chemical industry, including oil supply and demand dynamics, with a forecast of increased production from non-OPEC sources and stable global oil demand [5][6]. - It notes that the PPI for industrial products decreased by 2.3% year-on-year in September, indicating a stabilization in prices due to improved supply-demand structures [6]. Investment Analysis - The report recommends a diversified investment approach focusing on sectors such as textiles, agriculture, and export-oriented chemicals, highlighting specific companies for potential investment [4][18]. - Key materials for growth are identified, including semiconductor materials and packaging materials, with specific companies mentioned for each category [4][18]. Price Movements - The report provides detailed price movements for various chemical products, including titanium dioxide, fertilizers, and pesticides, indicating a mixed outlook with some prices stabilizing while others show slight declines [11][14][20]. - It highlights the impact of external factors such as raw material costs and international trade dynamics on pricing trends within the chemical sector [11][14].

Investment Rating - The report maintains a "Buy" rating for the industry, highlighting potential growth opportunities in the textile and apparel sector [20][25]. Core Insights - The textile and apparel sector has shown resilience, with the SW textile and apparel index outperforming the SW All A index by 3.3 percentage points during the period from October 13 to October 17, 2025 [3]. - Domestic demand is gradually recovering, while external demand remains volatile, emphasizing the value of globalized production capacity [10][11]. - The report suggests that companies with mature overseas capabilities and the ability to allocate production globally will benefit from the ongoing shifts in the supply chain due to U.S. tariff policies [8][11]. Summary by Sections Industry Performance - The SW textile and apparel index decreased by 0.3%, while the SW apparel and home textiles index increased by 0.4%, outperforming the SW All A index by 4.0 percentage points [3]. - Retail sales in the clothing, shoes, and textiles category reached 940 billion yuan from January to August, reflecting a year-on-year growth of 2.9% [10]. Export Data - In September, China's textile and apparel exports amounted to $24.42 billion, a year-on-year decline of 1.0%. However, textile yarn, fabric, and products saw an increase of 6.4% [10][44]. - Vietnam's textile exports grew by 9.1% in the same period, indicating a shift in production orders and competitive advantages for overseas production [8][11]. Cotton and Wool Prices - As of October 17, the national cotton price B index was reported at 14,683 yuan per ton, down 0.6% from the previous week [46]. - The Australian wool index showed a significant year-on-year increase of 30.7%, indicating strong demand in the wool market [10]. Company Performance - 361 Degrees reported a 10% year-on-year increase in retail sales for its main brand and children's line, while e-commerce sales grew by approximately 20% [16]. - Xtep International's main brand saw a low single-digit growth in retail sales, with online sales outperforming offline [22]. - The report highlights the strong performance of companies like Bosideng, Anta, and Li Ning, suggesting they are well-positioned to capitalize on the upcoming winter season [9][14]. Investment Recommendations - The report recommends focusing on high-quality domestic brands that are beginning to reverse their challenges, particularly in the sports and outdoor segments [14]. - Specific companies highlighted for investment include Bosideng, Anta, and 361 Degrees, with a suggestion to monitor Xtep and other emerging brands [14].

Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook for the sector compared to the overall market performance [10]. Core Insights - The report highlights the rising trend of "small happiness" self-consumption as a relative safe haven amid increasing risk aversion, with specific companies like Pop Mart and Damai Entertainment showing strong growth potential through innovative product offerings and expansion strategies [3][5]. - The gaming sector is experiencing significant adjustments, with major companies like Tencent and Century Huatong expected to maintain strong performance despite market volatility, while the AI video segment is emerging as a key area for growth [3][5]. Summary by Relevant Sections Consumer Sector - Pop Mart is ramping up production capacity and expanding product categories, with successful new IP launches and international expansion, achieving rapid sales growth during peak seasons [3]. - Damai Entertainment's core IP Chiikawa has seen high demand in mainland China, indicating strong market interest and potential for future growth [3]. Gaming Sector - Tencent Holdings is projected to have a market cap of 50,823 million RMB with a revenue growth of 13% year-on-year, while its PE ratio is expected to be 20 for 2025 [5]. - Century Huatong is also highlighted with a projected revenue increase of 21% year-on-year, indicating a positive outlook for its gaming products [5]. Cloud Computing and Entertainment - Alibaba's cloud computing segment is expected to grow at a rate of 11% year-on-year, with a market cap of 26,914 million RMB [5]. - Mango TV is anticipated to see a turnaround in its operations, benefiting from favorable policy changes in the long video sector [3]. AI and Technology - The report emphasizes the importance of AI in video production, with companies like Bilibili and Kuaishou positioned to leverage AI advancements for monetization [3]. - The technology sector has faced a 14% adjustment since October 2, but the report suggests that the fundamentals remain strong, driven by advancements in domestic models and chips [3].

Investment Rating - The report suggests a focus on companies with effective supply release capabilities, such as Geely, BYD, Great Wall, Li Auto, and NIO, while also recommending attention to "future industries" driven by technology [2][3]. Core Insights - The fourth quarter is expected to see a surge in market demand due to tightening subsidy limits, with a wave of new model launches anticipated to boost sales [2]. - The report emphasizes the importance of companies with strong performance support and relatively low valuations, particularly in sectors like robotics, AI, and low-altitude economy [2]. - The report highlights the ongoing reforms in state-owned enterprises, particularly in companies like SAIC and Dongfeng, which are expected to bring significant changes [2]. Market Situation Update - In the 40th week of 2025, retail sales of passenger cars totaled 469,000 units, a month-on-month decrease of 27.85% but a year-on-year increase of 16.64% [3]. - Traditional energy vehicle sales were 234,000 units, down 16.43% month-on-month but up 6.70% year-on-year, while new energy vehicle sales were 235,000 units, down 36.49% month-on-month but up 28.49% year-on-year, with a penetration rate of 50.11% [3]. - The automotive industry index fell by 5.99% during the week, underperforming compared to the Shanghai and Shenzhen 300 index, which dropped by 2.22% [14]. Company Performance - The report identifies key companies with strong growth potential, including Kobot, Xingyu, Jifeng, and Songyuan, as well as those with recovering performance and attractive valuations like Minshi and Ningbo Huaxiang [2]. - The report notes that 43 stocks in the automotive sector rose while 228 fell, with the largest gainers being Haima Automobile, Meichen Technology, and Fute Technology, which rose by 19.2%, 16.8%, and 13.0% respectively [19]. Industry Events - The 2025 World Intelligent Connected Vehicle Conference was held in Beijing, focusing on industry opportunities and future directions, highlighting China's advantages in policy support, infrastructure, and autonomous driving technology [11][12]. - The report mentions the launch of new models such as the Leapmotor D19 and the Gao Shan 7, which are positioned to capture market segments with advanced features and competitive pricing [4][8].