Report Industry Investment Rating The document does not provide the industry investment rating. Core Viewpoints of the Report The report, as a continuation of AI - empowered bond market investment research, focuses on the current application of AI technology in the bond market and vertical large - models in the frontier fixed - income field. It details AI applications in bond investment research, such as curve construction, investment research process optimization, and structured product pricing. Future reports will cover the practical application of quantitative means in the bond market [1]. Summary by Relevant Catalogs 1. Introduction In 2025, with the popularity of DeepSeek, AI represented by large language models has evolved rapidly, changing the research and practice paradigms in the financial market. In the fixed - income and asset allocation fields, AI introduction has more challenges and value due to the large market capacity, diverse tools, and complex trading chains. Traditional fixed - income investment methods have limitations, and large - model technology can help market participants break information barriers and improve research depth and decision - making efficiency [11]. 2. Current Development Trends of Large Models In 2025, large - model development trends are "flagship - oriented, ecological, and embedded". Flagship models like GPT - 5, Claude 4, Gemini 2.0, and Llama 4 have become mature products. The ecological trend shows parallel open - source and closed - source paths. The embedded trend is reflected in models like BondGPT, which have penetrated the whole process of investment research, trading, and risk control. For the bond market, fixed - income vertical models like BondGPT Intelligence can directly embed generative AI into bond trading, promoting the shift from "human - machine separation" to "human - machine collaboration" [13][18]. 3. Application of AI Large Models in Fixed - Income Investment BlackRock Aladdin, a global leading asset management platform, has entered the "production - level implementation" stage. In investment research, it can process non - structured text information, extract key information, and generate summaries. In investment portfolio construction and rebalancing, it can generate scenario analyses and optimization tools. In trading execution, it scores and ranks bond market liquidity, improving trading efficiency. In risk control, it can detect potential risks and generate reports. The development path of BlackRock Aladdin provides a paradigm for other financial institutions, and the future Aladdin may become an AI - driven investment operating system [19][30]. 4. Vertical Large Models in Fixed - Income and Asset Allocation Fields - **BondGPT**: Driven by GPT - 4 and bond & liquidity data from LTX, it is used for pre - trading analysis of corporate bonds, including credit spread analysis and natural language queries for illiquid securities. It can assist in key pricing decisions, etc., with advantages such as instant information access, an intuitive user interface, and fast result return, and it can increase transaction file processing speed by 40% [32]. - **BondGPT+**: As an enterprise - level version of BondGPT, it allows customers to integrate local and third - party data, provides various deployment methods and API suites, and can be embedded in enterprise applications. It has functions like real - time liquidity pool analysis and automatic RFQ response, significantly improving the matching efficiency between dealers and customers [35]. 5. Implemented AI Applications in Fixed - Income and Asset Allocation Fields - **Curve Building**: It transforms discrete market quotes into continuous and interpolatable discount/forward curves. Generative AI has brought significant changes to traditional interest - rate modeling, with AI - based models showing better accuracy and adaptability than traditional methods. For example, a new deep - learning framework has 12% higher accuracy than the Nelson - Siegel model, and the error of the improved Libor model for 1 - 10 - year term interest rates is less than 0.5% [40]. - **Reshaping the Bond Investment Research Ecosystem**: Large language models and generative AI are reshaping the fixed - income investment research ecosystem. In trading, they provide natural - language interfaces and generation capabilities for bond analysis. They can summarize market data, policies, and research. For example, they can conduct sentiment analysis, generate summaries, and complete bond analysis tasks. BondGPT+ can improve trading counter - party matching efficiency by 25% [41]. - **ABS, MBS, Structured Products**: In structured product markets, AI - driven valuation frameworks can achieve automated cash - flow analysis, improve prepayment speed prediction accuracy by 10 - 20%, and reduce pricing errors of complex CMO tranches. Generative AI can simulate over 10,000 housing market scenarios, predict default rates with 89% accuracy, and help investors optimize portfolios and strategies [44][45].

Core Insights - Since July 2023, after a round of technology-driven market performance, the speed of industry rotation has decreased, yet it remains at a historical median level over the past decade. The proprietary macro-friendly indicator system indicates a correlation of 0.7 with industry rotation speed, suggesting strong explanatory power. For Q4 2025, the macro drivers of industry rotation are expected to slightly increase, with rotation speed projected to be lower than in 2024 but higher than in 2021, indicating a potential for moderate levels of rotation. A relatively balanced allocation strategy may be a better choice under the expectation of continued structural market conditions [1][4]. Group 1 - The current industry rotation speed is at a historical median level, with the indicator based on the rolling cumulative excess returns of 30 primary industries relative to the Wind All A index. Since July 2023, following a technology-led market rally, the rotation speed has declined, with market consensus expectations gradually strengthening. The current indicator is near the 50th percentile, indicating a moderate level of industry rotation [2][11]. - The macro-friendly indicator system has been developed to construct the industry rotation macro driver indicator. This indicator is defined as the difference between the Chinese financial cycle friendliness and inventory cycle friendliness, adjusted by the US macro friendliness. The correlation between the Chinese financial-inventory cycle and industry rotation speed exceeds 0.6, while the US macro friendliness has a correlation close to -0.6. The combined industry rotation macro driver shows a correlation of 0.7 with industry rotation speed, which is at a historical median as of August 2025 [3][18]. Group 2 - For Q4 2025, the macro drivers of industry rotation are expected to slightly increase, with both the Chinese financial cycle and inventory cycle friendliness anticipated to rise to varying degrees. The US macro friendliness is also expected to increase slightly due to a more favorable financial cycle and a recovery in the inventory cycle. Overall, the macro drivers of industry rotation are projected to experience slight fluctuations, with rotation speed expected to be lower than in 2024 but higher than in 2021, suggesting a moderate level of rotation. A relatively balanced allocation strategy may be more favorable in the context of ongoing structural market expectations [4][21][22].

Group 1: Federal Reserve Actions - The Federal Reserve lowered interest rates by 25 basis points (BP) and indicated the possibility of two more rate cuts within the year[1] - Powell described the rate cut as a "risk management" decision, suggesting a more hawkish stance and uncertainty about future rate cuts[1][3] - The dot plot indicates two potential rate cuts remaining this year, but the actual implementation may be uncertain[6] Group 2: Economic Indicators - The GDP growth forecast for 2025 was slightly revised up from 1.4% to 1.6%, driven by investment rather than consumption[3][17] - The unemployment rate is projected to remain stable at 4.5% for 2025, indicating a weak supply-demand balance in the labor market[4][17] - The year-end PCE inflation forecast is maintained at 3.0%, with core PCE inflation also stable[6][17] Group 3: Market Implications - The current economic transition from consumption to investment may lead to structural changes in employment data, with a potential decline in non-farm employment central tendency[7] - The tightening liquidity in the dollar system may prompt the Fed to end balance sheet reduction earlier than expected, with a potential threshold reached by Q4[8][9] - The outlook for major assets suggests a bullish trend for both the RMB and the USD index, with expectations of continued appreciation for the RMB against the USD[10]

Market Overview - On September 17, the Shanghai Composite Index rose by 0.37%, the CSI 300 increased by 0.61%, the STAR 50 gained 0.91%, the CSI 1000 was up by 0.95%, the ChiNext Index climbed 1.95%, and the Hang Seng Index increased by 1.78% [4][5] - The best-performing sectors on September 17 were power equipment (+2.55%), automotive (+2.05%), home appliances (+1.64%), coal (+1.62%), and comprehensive sector (+1.38%). The worst-performing sectors included agriculture, forestry, animal husbandry, and fishery (-1.02%), retail (-0.98%), social services (-0.86%), food and beverage (-0.5%), and textiles and apparel (-0.41%) [4][5] - The total trading volume for the A-share market on September 17 was 24,029.24 billion yuan, with a net inflow of 9.44 billion HKD from southbound funds [4][5] Important Recommendations - The report highlights Fudan Microelectronics (688385) as a leading domestic integrated circuit company, with expectations for FPGA and MCU products to drive performance beyond expectations. The recommendation is based on the significant market potential in emerging applications such as AI, 5G, data centers, and national defense [6] - The target price for Fudan Microelectronics is set at 83.79 yuan, indicating a potential upside of 39.65% from the current price [6] - Revenue projections for Fudan Microelectronics from 2025 to 2027 are 4,046.51 million yuan, 4,840.94 million yuan, and 5,825.18 million yuan, with growth rates of 12.71%, 19.63%, and 20.33% respectively. Net profit estimates are 657.26 million yuan, 983.28 million yuan, and 1,296.78 million yuan, with growth rates of 14.79%, 49.60%, and 31.88% respectively [6] Important Commentary - The coal industry is facing supply constraints due to capacity replacement policies, which may lead to a tighter supply-demand balance. If capacity indicators for coal mines are not met, there is a risk of capacity revocation [7] - Investment opportunities in the coal sector are expected to gradually balance supply and demand, with coal prices projected to rise steadily. Key companies to watch include China Shenhua, Shaanxi Coal and Chemical Industry, and Yanzhou Coal Mining [8] - Catalysts for the coal industry include potential revocation of capacity increases, while risks include a slowdown in overseas economic growth, significant capacity releases, and safety incidents in coal mines [8]

Investment Rating - The investment rating for the company is "Buy" (maintained) [4] Core Insights - The company reported significant growth in its performance for the first half of 2025, with a total revenue of 94.773 billion yuan, a year-on-year decrease of 7.83%, while net profit attributable to shareholders reached approximately 8.671 billion yuan, an increase of 60.07% year-on-year, marking a historical high for the same period [1] - The copper and cobalt business showed both volume and price increases, with the company planning to achieve an annual copper production capacity of 800,000 to 1,000,000 tons and cobalt production of 90,000 to 100,000 tons in the future [2] - The acquisition of Lumina Gold for 581 million Canadian dollars (approximately 3 billion yuan) added gold resources to the company's portfolio, with the Cangrejos Project expected to have a lifespan of 26 years and an annual production of about 11.5 tons of gold starting in 2028 [3] - The molybdenum and tungsten sectors performed well, with molybdenum gross profit increasing by 11% and tungsten gross profit increasing by 33% year-on-year in the first half of 2025 [4] Summary by Sections Financial Performance - In H1 2025, the company achieved a revenue of 94.773 billion yuan, with a net profit of approximately 8.671 billion yuan, reflecting a significant increase in profitability [1] - The company expects revenues of 216.6 billion yuan, 223.1 billion yuan, and 231.7 billion yuan for 2025, 2026, and 2027 respectively, with net profits projected at 17.4 billion yuan, 19.4 billion yuan, and 21.8 billion yuan for the same years [9] Business Segments - The copper and cobalt segment saw a revenue of 25.7 billion yuan in H1 2025, with a gross profit margin of 54%, benefiting from increased production and favorable market conditions [7] - The molybdenum and tungsten segments reported a gross profit increase of 1 billion yuan and 2 billion yuan respectively in H1 2025, with improved recovery rates and reduced costs [4][8] Future Outlook - The company is focused on expanding its copper and cobalt production capabilities, with ongoing projects in the Democratic Republic of Congo expected to enhance operational efficiency and product quality [2] - The acquisition of gold resources is anticipated to strengthen the company's resource base and contribute to long-term growth [3]

Fiscal Performance - In August 2025, the national general public budget revenue reached 12,359 billion CNY, a year-on-year increase of 2.0%[3] - The national general public budget expenditure in August was 18,587 billion CNY, showing a year-on-year growth of 0.8%[8] - From January to August 2025, the completion rate of the general public budget revenue was 47.8%, consistent with the same period in 2024[1] - The completion rate of general public budget expenditure was 57.3%, which is higher than the same period in 2024[1] Tax Revenue Insights - Tax revenue in August 2025 was 10,152 billion CNY, with a year-on-year increase of 3.4%[3] - Cumulative tax revenue from January to August 2025 achieved a positive growth of 0.02%, marking the first positive growth since December 2023[4] - Individual income tax grew by 8.9% from January to August 2025, reflecting improved tax collection efforts[4] Non-Tax Revenue Trends - Non-tax revenue in August 2025 was 2,207 billion CNY, declining by 3.8% year-on-year, continuing a negative growth trend since May 2025[3] - The decline in non-tax revenue is attributed to high base effects from 2024 and improved management of non-tax revenue[5] Government Fund Budget Analysis - The government fund budget revenue in August 2025 recorded a year-on-year decrease of 5.7%, primarily due to a drop in land transfer income[10] - Government fund budget expenditure in August 2025 increased by 19.8% year-on-year, indicating strong spending in infrastructure and public projects[10] Policy Recommendations - The report suggests focusing on the implementation of new policy financial tools to support fiscal stability and economic recovery[1] - It highlights the importance of maintaining a balance between fiscal revenue and expenditure to ensure sustainable economic growth[1]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [7]. Core Insights - The company aims to become a comprehensive AI service provider by integrating software and hardware through the acquisition of Jintai Storage, enhancing its capabilities in AI computing and applications [4][5]. - The company’s revenue for 2024 is projected to be 620 million yuan, with a year-on-year decrease of 11%, while the net profit is expected to be 20.59 million yuan, down 50% from the previous year, primarily due to increased equity payment expenses [2][5]. - The company’s three main business segments are AI large models and computing, AI industry applications, and AI content security, with expected revenue contributions of 20%, 64%, and 15% respectively in 2024 [2][3]. Summary by Sections Business Overview - The company focuses on a full-stack AI strategy encompassing AI computing, intelligent agents, and smart applications, providing integrated solutions across various sectors including media, government, energy, and education [15][17]. - The company has developed proprietary products such as the "KAIWEN" AI large model and "KAIWEN Magic Box" edge AI integrated machine, which combine computing power and industry applications [2][19]. Acquisition of Jintai Storage - The company plans to acquire 100% equity of Jintai Storage, a leading domestic storage module manufacturer, to enhance its AI integrated solutions [4][5]. - Jintai's market share in global SSD and DRAM modules ranks fourth, and the acquisition is expected to significantly boost the company's market position and capabilities [4]. Financial Projections and Valuation - The company’s estimated market value post-acquisition is projected to be 20 billion yuan, with a reasonable market value of 6.2 billion yuan for 2025 [5]. - Revenue forecasts for 2025-2027 are 720 million, 800 million, and 890 million yuan, reflecting year-on-year growth rates of 16%, 11%, and 12% respectively [5]. Market Trends - The AI large model and computing market is expected to experience explosive growth, with the general computing market in China projected to reach 140.1 EFLOPS by 2028, growing at a compound annual growth rate (CAGR) of 18.8% [42]. - The data element market in China is also expanding rapidly, with a projected market size of 196.8 billion yuan by 2025, driven by policy support and technological advancements [46]. Competitive Position - The company has established a strong foothold in the digital government sector, serving over 2,100 government clients and covering more than 80% of provincial governments [62][63]. - The company’s AI content security product "Jiumozhi" has been deployed for comprehensive risk control in large model applications, enhancing its competitive edge in the market [67].

Investment Rating - The investment rating for the company is "Buy" [3] Core Insights - The company has established an inflection point in performance, with significant improvements in profitability and cash flow. In H1 2025, revenue reached 6.61 billion yuan, a year-on-year increase of 14.92%, and net profit attributable to shareholders was 740 million yuan, up 61.19% year-on-year [1] - The solid-state battery business presents a new growth opportunity, with the company being the only global provider of a complete solid-state battery production line solution. The market for new equipment is expected to grow from 2.06 billion yuan in 2025 to 33.62 billion yuan by 2030, with a compound annual growth rate of 74.8% [2] - The company is expected to achieve net profits of 1.75 billion yuan, 2.26 billion yuan, and 2.98 billion yuan for the years 2025, 2026, and 2027 respectively, with a three-year compound growth rate of 30.3% [3] Financial Summary - In H1 2025, the company reported a net cash inflow from operating activities of 2.353 billion yuan, a significant turnaround of 231.33% year-on-year [1] - The revenue forecast for 2025 is 14.087 billion yuan, with a year-on-year growth of 19%, and net profit is projected to be 1.752 billion yuan, reflecting a 512% increase [5] - The company’s gross margin is expected to stabilize around 36% from 2026 onwards, with a return on equity (ROE) projected to reach 17% by 2027 [5]

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company continues to experience growth in its performance for the first half of 2025, with a revenue of 162.63 billion yuan, representing an 18.91% year-on-year increase, and a net profit of 21.10 billion yuan, which is a 39.31% increase compared to the previous year [8] - The company is actively expanding into liquid cooling and robotics, with a focus on mechatronic actuators for robotics, which is expected to open new growth avenues [2][8] - Revenue forecasts for 2025-2027 are projected at 319 billion yuan, 367 billion yuan, and 428 billion yuan, with year-on-year growth rates of 14%, 15%, and 17% respectively, while net profit is expected to reach 38.8 billion yuan, 45.6 billion yuan, and 52.3 billion yuan, with growth rates of 25%, 18%, and 15% respectively [3][4] Financial Summary - For the first half of 2025, the company's revenue from the refrigeration and air conditioning components business was 103.89 billion yuan, a 25.49% increase year-on-year, accounting for 63.88% of total revenue [8] - The automotive components business generated revenue of 58.74 billion yuan in the first half of 2025, reflecting an 8.83% year-on-year increase, with an optimized customer structure [8] - The company is focusing on the IDC liquid cooling market, which is becoming mainstream due to increasing power demands in data centers [8]

Investment Rating - The industry investment rating is "Positive" (maintained) [7] Core Insights - The domestic new energy storage action plan has been launched, with a clear installation target set at over 180GW by 2027, leading to direct project investments of approximately 250 billion yuan [1] - The market mechanism for new energy storage is expected to improve marginally, with various provinces implementing capacity compensation and pricing policies to enhance investment returns [2] - Domestic energy storage bidding reached a historical high in August, with a total of 25.8GW/69.4GWh of systems and equipment contracted, indicating a significant year-on-year growth of 131% in bidding scale [3] - Internationally, energy storage demand is also experiencing high growth, particularly in the U.S. and emerging markets, driven by urgent needs for flexible resources and improved economic viability [4] Summary by Sections Domestic New Energy Storage Action Plan - The action plan outlines a target of over 180GW of new energy storage installations by 2027, with an estimated investment of around 250 billion yuan [1] - By the end of 2024, the installed capacity is projected to reach 73.76GW, with an average annual installation of 35GW/142GWh expected from 2025 to 2027 [1] Market Mechanism Improvement - The action plan encourages new energy storage to participate in energy markets and auxiliary service markets, aiming to establish a reliable capacity compensation mechanism [2] - Capacity pricing policies have been introduced in several provinces, with standards set at 330 yuan/kW·year in Gansu and 165 yuan/kW·year in Ningxia starting January 2026 [2] Domestic Bidding and Demand - In August, the domestic energy storage market saw a record high in bidding, with 80GW/272GWh contracted from January to August, reflecting a year-on-year increase of 131% in scale [3] - The shift from policy-driven to market-driven demand is anticipated as profitability models become clearer [3] International Market Trends - The U.S. has extended tariff exemptions, accelerating the installation pace of energy storage projects, while Europe and other emerging markets are also witnessing robust demand [4] Recommended Focus Areas - Attention is recommended for energy storage system integrators and manufacturers, battery cell producers, thermal control manufacturers, and companies related to power intelligence [5]