1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - The REITs market continued to decline in the first half of October 2025, with liquidity dropping to a historical low. The IDC sector rose slightly, while the consumer and rental housing sectors led the decline. The market showed a rotational style, and the turnover rate of individual bonds continued to fall [4]. - The valuation of REITs has fallen below the 50th percentile, and the dividend - spread relative to the dividend yield of the CSI Dividend Index has widened. The internal rate of return (IRR) of various assets has increased [4]. - The offline quotes of institutional investors have become more cautious, and the discount rate of the initial offering of REITs has decreased. The difference between the initial offering valuation and the secondary - market valuation has converged [4]. - The China Merchants Shekou Rental Housing REIT will have a large - scale restricted - share lifting, and the operating data of two REITs in Q3 2025 have declined [4]. - The expansion of China Resources Commercial REIT has been accepted, and the valuation of the expansion assets of China Resources Youchao REIT has been lowered by 4.6% [4]. 3. Summary According to the Directory 3.1 Market Continues to Decline with Structural Differentiation, and Liquidity Drops to a Historical Low - **Market Performance**: In the first half of October 2025, affected by external shocks, the CSI 300 fell 0.74%. Due to risk - aversion sentiment, funds flowed into safe assets, causing the CSI Dividend Index to rise 2.91% and commodities to rise 3.83%. The yield of the 10 - year Treasury bond declined, and the bond index showed a warming trend. The CSI REITs Index fell 0.93%, similar to the decline in September [14]. - **Sector Performance**: Only the IDC sector rose (0.10%) in the first half of October, while the consumer (-1.48%) and rental housing (-1.26%) sectors led the decline. The decline of the industrial park and public utilities sectors narrowed compared to September, while the decline of other sectors widened [18]. - **Turnover Rate**: Since September, the trading volume of the Shanghai and Shenzhen REITs markets has decreased. In the first half of October, the average daily turnover rate was 0.29%, reaching a historical low but showing a recovery trend after the holiday. The IDC, warehousing and logistics, and rental housing sectors had relatively high average daily turnover rates, while the consumer sector showed a trend of declining trading volume and price [26]. - **Dividend and Valuation**: As of October 15, 2025, the dividend yield of equity - type REITs was 3.94%. The spread relative to the 10 - year Treasury bond yield was 2.10% (at the 42nd percentile), and the spread relative to the CSI Dividend Index was - 0.52% (at the 70th percentile). The dividend yields of rental housing and public utilities were the only ones below the historical 50th percentile. The valuations of both equity - type and concession - type REITs have fallen below the historical 50th percentile [32]. - **IRR**: The latest IRR of equity - type REITs was 4.1% (at the 56th percentile), and that of concession - type REITs was 3.6% (at the 28th percentile). The IRR of various assets has increased, and the IRR of industrial parks, warehousing and logistics, and IDC has reached above the 50th percentile [39]. 3.2 Offline Institutional Quotes Tend to be Cautious, and the Discount Rate of REITs Initial Offering Declines - **Initial Offerings**: In the first half of October 2025, China Huarong CCB Shenyang International Software Park REIT and China Huarong CCB China Overseas Commercial REIT were issued offline, with issuance scales of 1098 million yuan and 1584 million yuan respectively. As of October 15, 2025, there were 75 listed REITs in Shanghai and Shenzhen, with a total market value of 219.1 billion yuan [43]. - **Subscription Funds**: The issuance scales of the two recent REITs were relatively small, and the average offline top - up subscription funds were 282 million yuan. The offline top - up subscription funds for China Huarong CCB China Overseas Commercial REIT were 333 million yuan, and those for China Huarong CCB Shenyang International Software Park REIT were 231 million yuan [46]. - **Subscription Multiples**: The subscription periods of the two REITs overlapped. China Huarong CCB China Overseas Commercial REIT had a record - high offline effective subscription multiple of 320.47 times, with over 1000 products participating in the offline inquiry. China Huarong CCB Shenyang International Software Park REIT had an offline effective subscription multiple of 83.31 times, with relatively low subscription enthusiasm [51]. - **Quoting Attitudes**: The trend of top - price quoting to "secure participation" has cooled down. 84% and 61% of the products of China Huarong CCB China Overseas Commercial REIT and China Huarong CCB Shenyang International Software Park REIT quoted at the upper limit of the inquiry price respectively. The latter had a record - high concession margin [52]. - **Valuation Difference**: The difference between the initial offering valuation and the secondary - market valuation has converged. The predicted dividend yields of China Huarong CCB Shenyang International Software Park REIT and China Huarong CCB China Overseas Commercial REIT in 2026 were 5.24% and 4.21% respectively, with differences of 0.45 pcts and 0.32 pcts compared to comparable REITs [62]. - **Subscription Rate and Listing Performance**: Affected by the lower offline quotes, the participation rates of the two REITs have declined. The offline winning rate of China Huarong CCB Shenyang International Software Park REIT reached 1.2%. The increase in the listing price of REITs has narrowed, and in September, the average increase on the first listing day and the cumulative increase in the first four trading days of newly - listed REITs decreased [66][73]. - **Subscription Yield**: Excluding extreme values, from January to September 2025, the absolute returns of 50 million yuan and 100 million yuan of funds participating in the offline subscription of REITs were 1.7484 million yuan and 3.4967 million yuan respectively, corresponding to an offline yield of 3.50% [74]. 3.3 Shekou Rental Housing REIT to Have a Large - Scale Restricted - Share Lifting, and the Operating Data of Two REITs in Q3 Decline - **Dividend and Operating Data**: Three REITs announced dividend plans, and the operating data of two REITs in Q3 2025 declined. The average daily natural traffic volume of E Fund Shenzhen Expressway REIT in Q3 2025 decreased by 20.43% year - on - year, and the power generation, on - grid electricity, and settlement electricity of CITIC Construction Investment State Power Investment New Energy REIT decreased by 24.66%, 24.85%, and 25.90% respectively [77][79]. - **Restricted - Share Lifting**: China Merchants Shekou Rental Housing REIT will lift restrictions on 48% of its total shares on October 23, 2025. After the lifting, the tradable shares will account for 75% of the total shares. The public offering of China Huarong CCB Shenyang International Software Park REIT and China Huarong CCB China Overseas Commercial REIT ended ahead of schedule, and Guotai Junan Dongjiu New Economy REIT held a general meeting of fund unit holders for its expansion project [84]. 3.4 China Resources Commercial REIT Expansion Accepted, and the Valuation of China Resources Youchao REIT Expansion Assets Lowered - **Queuing Projects**: In the first half of October 2025, the expansion of China Resources Commercial REIT was accepted, and China Resources Youchao REIT announced the feedback response materials for its expansion. As of October 15, 2025, there were 9 initial offering projects in the queue, and China AMC Anbo Warehousing and Logistics REIT has been registered [89]. - **Asset Valuation**: The latest assessment value of the expansion assets of China Resources Youchao REIT was 989 million yuan, a decrease of 4.6% compared to the application draft. The expansion of China Resources Commercial REIT was accepted, and the assessment value of its new assets was 2.444 billion yuan [93]. - **Valuation Pressure in the Under - Review Projects**: The assessment value of the expansion assets of China Resources Youchao REIT has a relatively large downward pressure among similar assets. The rental housing of the Youchao Maqiao project has high occupancy and relatively low rent [94]. - **Tendering and Potential Projects**: In late September and the first half of October 2025, Lanzhou High - tech Investment (Holding) Group Co., Ltd. publicly tendered for a financial advisor for the issuance of a public REIT for the Lanzhou National Biomedical Industry Base Innovation Park [99].

Core Insights - The report highlights the adjustments in China's tariff strategy in response to U.S. non-tariff measures, including export controls on rare earths and threats of increased tariffs by Trump, indicating a growing division in U.S. political circles regarding tariff strategies [2][10] - It discusses the strategic flaws in Trump's tariff approach, emphasizing the need for a more nuanced strategy that includes non-tariff barriers and targeted measures rather than broad high tariffs [3][10] - The report suggests that U.S. policymakers are more focused on strategic and security issues rather than just economic outcomes, indicating a potential shift in how trade agreements with China may be structured [3][10] Summary by Sections Section 1: Adjustments in China's Tariff Strategy - The uncertainty surrounding tariffs has increased due to U.S. non-tariff measures since September, including expanded sanctions and new export controls on rare earths [2][10] - China has adopted a more proactive approach compared to the previous tariff phase, utilizing tactical agreements to gain strategic space without compromising core interests [10] - The U.S. political landscape shows bipartisan concern over China's export control measures, indicating a significant shift in strategy [10] Section 2: Flaws in Trump's Tariff Strategy - Trump's historical pattern of releasing strong pre-meeting signals to pressure opponents is noted, with a critique of the economic viability of reciprocal tariffs [3][10] - Recommendations for a refined approach include maintaining conditional tariffs and focusing on targeted export control lists to minimize collateral damage to domestic supply chains [3][10] Section 3: Desired Trade Agreements with China - U.S. policymakers express a preference for smaller, more manageable trade agreements rather than large-scale deals, which may require geopolitical concessions [3][10] - The urgency for Trump to secure a trade agreement is highlighted, as the economic costs of a non-agreement primarily impact the U.S. [3][10] - The report indicates that while formal agreements may not be reached, the ongoing negotiations have already led to some tariff easing effects for China [3][10]

Group 1: Market Overview - The Shanghai Composite Index closed at 3916 points, with a slight increase of 0.1% over one day, but a decrease of 0.45% over the past month [1] - The Shenzhen Composite Index closed at 2464 points, showing a decline of 0.57% over one day and 3.37% over the past month [1] - Large-cap indices have shown a 22.72% increase over the past six months, while mid-cap and small-cap indices have increased by 31.69% and 26.41%, respectively [1] Group 2: Industry Performance - The coal mining industry saw a daily increase of 2.36%, with a 9.26% rise over the past month and a 12.65% increase over the past six months [1] - State-owned large banks increased by 2.28% daily, with a 1.76% rise over the past month and a 7.61% increase over the past six months [1] - The wind power equipment sector experienced a decline of 2.77% daily, with a 14.13% drop over the past month and a 55.28% decrease over the past six months [1] Group 3: Trade Policy Insights - The report highlights adjustments in China's tariff strategy, particularly in response to U.S. non-tariff measures introduced since September [10] - The U.S. political landscape shows increasing concerns regarding export control measures, particularly related to rare earth elements [10] - The report suggests that the U.S. should consider smaller trade agreements rather than large-scale deals, as the latter may not align with U.S. interests [10][11] Group 4: Economic Indicators - The report indicates that the Producer Price Index (PPI) improved in September, primarily due to rising commodity prices, particularly copper [14] - The Consumer Price Index (CPI) showed a 0.1% increase in September, with core CPI rising to 1.1%, driven by higher gold prices [14] - The report anticipates that inflation will maintain a weak recovery trend, with commodity prices continuing to influence PPI positively [14]

Investment Rating - The investment rating for the aviation industry is "Outperform" [7]. Core Views - The aviation industry is experiencing a golden era with continuous growth in capacity and passenger volume, driven by a recovery in demand and increased operational efficiency among airlines [4][6]. - Airlines are increasing capacity deployment, with passenger turnover growth outpacing capacity growth, indicating strong demand recovery [4]. - The report highlights that the average aircraft utilization rate has improved, with wide-body aircraft averaging 9.0 hours and narrow-body aircraft at 7.9 hours per day [4]. Summary by Sections Industry Overview - In September 2025, civil aviation passenger transport volume reached approximately 62.7 million, a year-on-year increase of 4.6% compared to 2024 [4]. - Domestic capacity increased by 1.0% year-on-year, while domestic passenger flow grew by 3.6% [4]. Airline Performance - Major airlines reported varying growth rates in capacity (ASK) and passenger turnover (RPK): - Air China: ASK +1%, RPK +6% - China Eastern Airlines: ASK +4%, RPK +9% - Southern Airlines: ASK +4%, RPK +5% - Spring Airlines: ASK +21%, RPK +23% - Hainan Airlines: ASK +6%, RPK +7% [4][5]. Domestic Market - The domestic market shows a balanced growth in supply and demand, with Spring Airlines experiencing significant growth in both capacity and passenger volume [4]. - The report indicates that the overall ASK and RPK for major airlines have shown modest growth compared to 2024, with some airlines like Spring Airlines showing substantial increases [5]. International Market - The international flight market is recovering, with airlines like Spring Airlines and China Eastern Airlines exceeding pre-pandemic levels in terms of capacity and passenger turnover [4]. - The report notes that international flights have seen a significant recovery, with the number of flights reaching 85.7% of the levels seen in 2019 [4]. Investment Recommendations - The report recommends focusing on the aviation sector due to strong supply-side logic and elastic demand, with potential for significant performance improvement in airlines [4]. - Specific airlines recommended for investment include China Eastern Airlines, Hainan Airlines, Air China, Southern Airlines, Spring Airlines, and Cathay Pacific [4].

Group 1: M1 and Financial Data Insights - M1 growth increased by 1.2 percentage points year-on-year to 7.2% in September 2025[1] - The decline in credit balance was 0.2 percentage points year-on-year, reaching 6.6%[1] - Social financing stock decreased by 0.1 percentage points year-on-year to 8.7%[1] Group 2: Fiscal Policy and Economic Impact - September saw a reduction in fiscal deposits by 840 billion RMB, a decrease of 604.2 billion RMB compared to the same period last year[2] - Despite a net decrease in government bond financing by 345.7 billion RMB, fiscal spending remained active[2] - Corporate deposits improved significantly with a monthly increase of 919.4 billion RMB, up 149.4 billion RMB year-on-year[2] Group 3: Loan Performance and Consumer Behavior - New household loans amounted to 389 billion RMB, down 111 billion RMB year-on-year, indicating weak consumer demand[3] - The consumer loan interest subsidy policy has had limited impact on stimulating household loans[3] - The BCI employment outlook index remains low, correlating with slow growth in household loans due to employment uncertainties[3] Group 4: Corporate Loan Trends - In September, corporate short-term loans and bill financing saw a year-on-year growth rate decline of 0.4 percentage points to 9.3%[4] - Corporate medium to long-term loan growth also decreased by 0.1 percentage points to 7.8%[4] - Despite improvements in PPI and PMI indices, corporate investment attitudes remain cautious[4] Group 5: Future Outlook - The introduction of 500 billion RMB in new policy financial tools aims to support project capital and enhance leverage effects[5] - These tools are expected to facilitate faster capital deployment and contribute to economic stability[5]

Investment Rating - The report maintains a positive outlook on the aluminum recycling industry, driven by resource supply security and dual carbon goals, indicating a favorable investment environment for recycled aluminum [1]. Core Insights - The recycled aluminum industry is becoming a significant growth area in China's aluminum supply, with an expected production of approximately 10.5 million tons in 2024, accounting for about 19% of total aluminum supply. The target is to exceed 15 million tons by 2027, reflecting a CAGR of 13% from 2024 to 2027 [2][11]. - The demand for resource supply security is increasing, with recycled aluminum seen as a key solution to reduce reliance on imported bauxite, which had a dependency rate of over 77.6% in the first eight months of 2025. The domestic supply of recycled aluminum is primarily sourced from social waste aluminum, which is expected to exceed 80% in 2024 [2][4]. - The dual carbon constraints and the establishment of a carbon market are accelerating the visibility of the green premium associated with recycled aluminum. The carbon emissions from producing one ton of electrolytic aluminum are approximately 11.2 tons, while recycled aluminum only emits 0.23 tons, making it a significantly lower carbon option [2][4]. - The potential of urban mining is substantial, with accelerated development of recycling systems. Policies are being implemented to support small recycling enterprises, and a national recycling platform is being established to enhance the recycling infrastructure [2][5]. Summary by Sections 1. Recycled Aluminum as a Key Supply Source - Recycled aluminum, derived from waste aluminum through melting and refining, is a crucial component of the aluminum supply chain, with a short industrial chain and high recovery value [2][11]. - The industry is expected to grow significantly, with a target of 15 million tons by 2027, supported by government policies promoting high-quality development in the aluminum sector [2][11]. 2. Resource Supply Security and Dual Carbon Goals - The increasing demand for resource supply security positions recycled aluminum as a critical strategy to mitigate reliance on foreign bauxite, especially as domestic bauxite reserves are limited [2][4]. - The green value of recycled aluminum is becoming more apparent, with the anticipated tightening of carbon quotas in the national carbon market expected to drive up carbon prices and enhance the green premium for recycled products [2][4]. 3. Urban Mining Potential and Recycling System Development - The recycling system is being rapidly developed, with policies favoring small recycling enterprises and the establishment of a national recycling platform to improve the efficiency of aluminum recovery [2][5]. - The peak of automobile scrappage is expected to occur around 2026, which will significantly increase the supply of waste aluminum, alleviating raw material bottlenecks [2][5]. 4. Investment Recommendations - The report suggests focusing on companies with high raw material security, advanced recycling technologies, and the ability to produce high-premium products, such as Ming Tai Aluminum, Shunbo Alloy, Yiqiu Resources, Lizhong Group, and Yongmaotai [2][3].

Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook compared to the overall market performance [3][27]. Core Insights - The report highlights a decrease in new social financing (社融) in Q3 2025, with a total of 7.23 trillion yuan, a year-on-year decrease of 335.2 billion yuan. The M1 growth rate reached 7.2%, the highest since March 2021, indicating improved business activity [3][4][7]. - The report notes a shift from "scale priority" to "efficiency-oriented" lending, with banks focusing on quality over quantity in credit issuance. This trend is expected to create a divergence in performance among banks, particularly benefiting those in economically developed regions or those with strong local government financing needs [3][4]. - The report emphasizes the need to monitor the sustainability of M1 growth and the impact of retail deposit trends on overall liquidity [3][4]. Summary by Sections Social Financing and Credit Growth - In September, new social financing amounted to 3.53 trillion yuan, a year-on-year decrease of 229.7 billion yuan, with total social financing growing at 8.7% year-on-year [3][4][6]. - New loans in September were 1.83 trillion yuan, down 920 billion yuan year-on-year, with corporate loans showing a mixed performance [3][4][14]. Monetary Indicators - M1 growth increased by 1.2 percentage points to 7.2%, while M2 growth decreased by 0.4 percentage points to 8.4% [7][12]. - The M1-M2 spread narrowed to -1.2 percentage points, the lowest since 2021, indicating a shift towards more liquid deposits [3][4]. Bank Performance and Valuation - The report includes a comparative analysis of listed banks, highlighting their market capitalization, P/E ratios, and ROE metrics, indicating varying levels of performance and valuation across the sector [19]. - Banks with strong fundamentals and favorable policy environments, such as Chongqing Bank and Suzhou Bank, are expected to outperform [3][4].

Group 1: Financial Data Overview - In September 2025, M1 increased by 1.2% year-on-year to 7.2%, while credit balance decreased by 0.2% to 6.6%[1][7] - Social financing stock declined by 0.1% year-on-year to 8.7%[1][7] - New credit in September was 12,900 billion RMB, a decrease of 3,000 billion RMB year-on-year[4][22] Group 2: M1 and Fiscal Policy - The improvement in M1 is attributed to accelerated fiscal spending, with fiscal deposits decreasing by 840 billion RMB, a reduction of 604.2 billion RMB compared to the previous year[2][8] - Corporate deposits saw a significant increase, with a monthly addition of 919.4 billion RMB, up by 149.4 billion RMB year-on-year[2][8] - Non-bank deposits decreased significantly, which may have contributed to the marginal support for M1 growth[2][8] Group 3: Loan Performance - Resident loans added 389 billion RMB in September, down by 111 billion RMB year-on-year, indicating a cautious attitude towards debt[2][10] - Corporate loans remained primarily short-term, with short-term loans and bill financing growth declining by 0.4% to 9.3%[3][13] - Despite a recovery in PPI and PMI indices, corporate investment attitudes have not shifted positively[3][13] Group 4: Future Outlook - The collaboration of fiscal and monetary policies is expected to support the stability of social financing, with 500 billion RMB in new policy financial tools launched to leverage more credit and social capital[3][19] - The new policy tools are designed to enhance project capital and are expected to have a strong leverage effect on credit funding[3][19]

Investment Rating - The report maintains an "Overweight" rating for the aviation industry, indicating a positive outlook for the sector [4][7]. Core Insights - The aviation industry is experiencing a recovery, with September data showing a 4.6% year-on-year increase in passenger transport volume, reaching approximately 62.7 million passengers [4]. - Domestic capacity increased by 1.0% year-on-year, while domestic passenger flow grew by 3.6% [4]. - The average aircraft utilization rate in September was 7.8 hours per day, reflecting a 0.6% increase year-on-year [4]. - Airlines are increasing capacity, with passenger turnover growth outpacing capacity growth [4]. - The report highlights significant growth in low-cost carriers, particularly Spring Airlines, which saw a 21% increase in capacity [4]. - The international market is recovering, with some airlines exceeding pre-pandemic levels in flight frequency [4]. Summary by Sections September Data Overview - In September, the total passenger transport volume was approximately 62.7 million, a 4.6% increase from the previous year [4]. - Domestic capacity (ASK) for major airlines showed varied growth: China Eastern Airlines (+4%), Southern Airlines (+4%), and Spring Airlines (+21%) [4]. - The average passenger load factor for Spring Airlines was the highest at 91.8%, with a year-on-year increase of 1.3 percentage points [4]. Domestic Market Analysis - The domestic market is balanced in terms of supply and demand, with major airlines showing single-digit growth [4]. - Year-on-year changes in RPK for major airlines included: China Eastern Airlines (+6%), Southern Airlines (+4%), and Spring Airlines (+23%) [4]. International Market Analysis - The international market is seeing further recovery, with significant growth from Spring Airlines and China Eastern Airlines [4]. - Year-on-year changes in ASK compared to 2019 showed China Eastern Airlines (+5%) and Spring Airlines (+131%) [4]. Investment Recommendations - The report suggests that the aviation industry is at a turning point, with airlines expected to see significant improvements in profitability [4]. - Recommended stocks include China Eastern Airlines, China Southern Airlines, Spring Airlines, and others, based on strong supply and demand dynamics [4][7].

Investment Rating - The report maintains an "Overweight" rating for the banking sector, indicating a positive outlook for the industry compared to the overall market performance [3][25]. Core Insights - The financial data for September 2025 shows a decrease in new social financing (社融) by 335.2 billion year-on-year, with a total of 7.23 trillion added in the third quarter, reflecting a slowdown in credit demand [3][5]. - M1 growth reached 7.2% year-on-year, the highest since March 2021, suggesting increased business activity, while M2 growth was 8.4%, indicating a slight decline [4][8]. - The shift from "scale priority" to "efficiency-oriented" lending is a clear trend in the industry, with banks focusing on quality over quantity in their loan portfolios [4][3]. Summary by Sections Financial Data Overview - In September 2025, new loans totaled 1.29 trillion, a decrease of 300 billion year-on-year, with the total for the first nine months at 14.75 trillion, down 1.27 trillion from the previous year [4][3]. - The M1-M2 spread narrowed to -1.2 percentage points, the lowest since 2021, driven by increased liquidity in both corporate and personal deposits [4][8]. Loan Dynamics - Corporate loans saw an increase of 1.62 trillion in September, with short-term loans contributing significantly to this growth [4][3]. - Residential loans remained stable, but short-term loans showed a notable decrease, indicating weak demand for leverage among consumers [4][18]. Social Financing and Government Bonds - The contribution of government bonds to social financing turned negative, with a significant drop in new government bonds issued in September, totaling approximately 1.2 trillion, down 347.1 billion year-on-year [4][3]. - The overall social financing growth rate was 8.7% year-on-year, but this reflects a slowdown compared to previous periods [5][7]. Investment Recommendations - The report suggests a focus on leading banks and quality regional commercial banks, highlighting the potential for value recovery in the banking sector [4][20]. - The current dividend yield for the banking sector has returned to an attractive range, supporting the outlook for stable earnings growth [4][20].