Key Points - The official manufacturing PMI for China in July is 49.3, a decrease of 0.4 percentage points month-on-month, while the non-manufacturing PMI is at 50.1, with a composite PMI output index of 50.2 [5][9] - The value added of China's "three new" economy (new industries, new business formats, and new models) is projected to reach 24.3 trillion yuan in 2024, reflecting a growth of 6.7% compared to the previous year [5][9] - The photovoltaic industry index rebounded significantly in July, with a 9.73% increase, outperforming the CSI 300 index [15][16] - The new energy vehicle (NEV) market in China remains the largest globally, with sales expected to reach 11.3 million units in 2024, a year-on-year increase of 40% [19][20] - The new energy storage market is experiencing rapid growth, with China's new energy storage capacity expected to reach 500,000 kilowatts by 2025 [26][27] - The engineering machinery and industrial robotics sectors are showing signs of recovery, with the machinery sector index rising by 7.35% in July [29][30] - The brokerage sector saw a significant increase in performance in June, with the brokerage index rising by 8.85%, outperforming the CSI 300 index [35][36]

Group 1: Macro Data Insights - In July, economic data showed a mixed trend, with industrial value-added maintaining stability, while retail sales growth slowed down, particularly in the home appliance and communication sectors [4][17] - Investment in infrastructure, real estate, and manufacturing saw a decline compared to the previous month, with CPI remaining low and PPI continuing negative growth [4][17] - Financial data indicated insufficient demand for real economy financing, despite growth in social financing stock supported by government bond issuance [4][17] Group 2: Policy Insights - July's macro policy focused on structural adjustments and industrial upgrades, emphasizing the need to regulate competition, optimize supply, and eliminate outdated production capacity [4][17] - These policy measures are expected to accelerate the clearing of the production capacity cycle and support price data recovery, laying a foundation for high-quality economic development [4][17] Group 3: Industry Allocation Recommendations - The market may face short-term technical adjustment pressure, but the medium-term upward trend remains intact, with a continued positive outlook on technological innovation and domestic consumption [4][17] - For August, it is recommended to focus on industries benefiting from medium to long-term policy support, particularly in sectors with lower emotional crowding, such as food and agricultural products [4][17] - The real estate sector is expected to gradually improve under policy guidance, while certain dividend assets like electricity, oil equipment, and transportation also warrant attention [4][17] Group 4: Monthly Stock Recommendations - The recommended stocks for August 2025 include: - 300207.SZ XINWANDA - 600109.SH GUOJIN SECURITIES - 688303.SH DAQUAN ENERGY - 002624.SZ PERFECT WORLD - 688122.SH WESTERN SUPERCONDUCTOR - 688041.SH HAIGUANG INFORMATION - 000988.SZ HUAGONG TECHNOLOGY - 603993.SH LUOYANG MOLYBDENUM - 000625.SZ CHANGAN AUTOMOBILE - 601233.SH TONGKUN CO., LTD [5][18][20] Group 5: Performance Review - In July 2025, the CSI 300 Index rose by 3.55%, while the ChiNext Index increased by 8.33%. The monthly stock combination achieved a return of 6.03%, outperforming the CSI 300 Index by 2.48 percentage points but underperforming the ChiNext Index by 2.31 percentage points [6][9][13] - The cumulative return of the monthly stock combination as of July 31, 2025, was 16.40%, surpassing the CSI 300 Index by 12.74 percentage points and the ChiNext Index by 7.44 percentage points [13][15] Group 6: Stock Valuation and Earnings Forecast - The earnings per share (EPS) and price-to-earnings (PE) ratios for the recommended stocks in August 2025 are as follows: - 300207.SZ XINWANDA: 2025 EPS 1.21, 2026 EPS 1.50, 2025 PE 17.86, 2026 PE 14.39 - 600109.SH GUOJIN SECURITIES: 2025 EPS 0.53, 2026 EPS 0.57, 2025 PE 17.64, 2026 PE 16.17 - 688303.SH DAQUAN ENERGY: 2025 EPS -0.22, 2026 EPS 0.76, 2025 PE -116.40, 2026 PE 34.13 - 002624.SZ PERFECT WORLD: 2025 EPS 0.38, 2026 EPS 0.76, 2025 PE 38.41, 2026 PE 19.20 - 688122.SH WESTERN SUPERCONDUCTOR: 2025 EPS 1.54, 2026 EPS 1.86, 2025 PE 35.32, 2026 PE 29.37 - 688041.SH HAIGUANG INFORMATION: 2025 EPS 1.35, 2026 EPS 1.94, 2025 PE 102.83, 2026 PE 71.83 - 000988.SZ HUAGONG TECHNOLOGY: 2025 EPS 1.70, 2026 EPS 2.14, 2025 PE 29.69, 2026 PE 23.58 - 603993.SH LUOYANG MOLYBDENUM: 2025 EPS 0.71, 2026 EPS 0.78, 2025 PE 12.51, 2026 PE 11.42 - 000625.SZ CHANGAN AUTOMOBILE: 2025 EPS 0.81, 2026 EPS 1.00, 2025 PE 15.96, 2026 PE 12.88 - 601233.SH TONGKUN CO., LTD: 2025 EPS 0.90, 2026 EPS 1.28, 2025 PE 13.70, 2026 PE 9.66 [21][22]

Market Overview - On July 31, the A-share market opened lower and experienced wide fluctuations, with the Shanghai Composite Index finding support around 3580 points[2] - The Shanghai Composite Index closed at 3573.21 points, down 1.18%, while the Shenzhen Component Index closed at 11009.77 points, down 1.73%[7] - Total trading volume for both markets was 19,621 billion yuan, above the median of the past three years[3] Sector Performance - Strong performers included banking, software development, internet services, and consumer electronics, while coal, steel, energy metals, and shipbuilding sectors lagged[3] - Over 70% of stocks in the two markets declined, with chemical pharmaceuticals, software development, and internet services showing the largest gains[7] Valuation Metrics - The average price-to-earnings (P/E) ratios for the Shanghai Composite and ChiNext indices are 14.81 times and 41.76 times, respectively, indicating a mid-level valuation compared to the past three years[3] - The market is currently in a dual-driven phase of policy and capital, establishing a slow upward trend despite short-term technical adjustment pressures[3] Economic Context - China's economy continues to show moderate recovery, with consumption and investment as core drivers[3] - Long-term capital inflows are increasing, with steady growth in ETF sizes and continuous inflow from insurance funds, providing significant support[3] Investment Recommendations - It is suggested to focus on technology growth and cyclical manufacturing as dual main lines for investment, while also considering high-dividend banks, public utilities, and strategic emerging industries[3] - Short-term market expectations lean towards steady upward fluctuations, with close monitoring of policy, capital, and external market changes advised[3]

Investment Rating - The report maintains an "Outperform" rating for the power equipment and new energy sector [1]. Core Insights - The photovoltaic index saw a significant rebound in July, with the index rising by 9.73%, outperforming the Shanghai and Shenzhen 300 Index, which had a return of 5.47% during the same period [4][9]. - All sub-sectors within the photovoltaic industry experienced growth, with polysilicon, silicon wafers, and photovoltaic glass leading the gains [12][15]. - The report emphasizes the importance of policy measures aimed at addressing low-price competition in the photovoltaic industry, which is expected to lead to the orderly exit of outdated production capacity [6][16]. Summary by Sections Industry Performance Review - The photovoltaic index showed a strong upward trend in July, with a daily average transaction amount of 29.935 billion yuan, marking a significant increase [9]. - All sub-sectors within the photovoltaic industry reported gains, with polysilicon prices increasing by 33.00%, silicon wafers by 23.38%, and photovoltaic glass by 16.95% [12][15]. Industry and Company Dynamics - The central government has initiated measures to regulate low-price competition in the photovoltaic sector, aiming to enhance product quality and phase out outdated capacity [6][16]. - Domestic demand for photovoltaic installations saw a sharp decline after the end of the installation rush, with June's new installations dropping to 14.36 GW, a year-on-year decrease of 38.45% [19]. - The export of photovoltaic components showed signs of improvement, with a month-on-month increase in May [22]. Investment Recommendations - The report suggests focusing on the "capacity clearance" and "new technology iteration" themes, particularly in polysilicon, photovoltaic glass, BC cells, and perovskite cell leading companies [6][4]. - The photovoltaic industry is currently valued at historical lows, and as capacity reduction progresses, supply and demand dynamics are expected to improve [6].

Key Points - The report highlights the ongoing recovery of the Chinese economy, with consumption and investment being the core drivers, and suggests a gradual upward trend in the A-share market supported by policy and capital [6][10][12] - The report emphasizes the strong performance of the financial and consumer sectors, with specific recommendations to focus on technology growth and cyclical manufacturing as dual main lines for investment [6][10][12] - The report notes the significant growth in the new energy vehicle (NEV) industry, with global sales expected to reach 20 million units by 2025, and China maintaining its position as the largest market [15][16][17] - The new energy storage industry is also highlighted, with a projected global installed capacity of over 30 million kilowatts by 2025, driven by advancements in technology and supportive policies [18][19][20] - The engineering machinery and industrial robotics sectors are experiencing a recovery, with a recommendation to focus on companies with stable earnings and high dividend yields [24][25] - The report discusses the media and gaming sectors, indicating a positive outlook due to strong demand and favorable policy environments, particularly with the integration of AI technologies [36][38]

Key Points - The report highlights a moderate recovery in the Chinese economy, with consumption and investment as core drivers [8][12][18] - The A-share market is experiencing a gradual upward trend, supported by long-term capital inflows and favorable policies [5][9][12] - The report suggests focusing on technology growth and cyclical manufacturing sectors for investment opportunities [8][12][21] Domestic Market Performance - The Shanghai Composite Index closed at 3,609.71 with a slight increase of 0.33% [3] - The Shenzhen Component Index closed at 11,289.41, rising by 0.64% [3] - The average P/E ratios for the Shanghai Composite and ChiNext are 14.78 and 41.32, respectively, indicating a suitable environment for medium to long-term investments [8][9] International Market Performance - Major international indices such as the Dow Jones and S&P 500 experienced declines of 0.67% and 0.45%, respectively [4] - The report notes that global risk appetite may improve if the Federal Reserve signals a clear path towards interest rate cuts [8][12] Industry Insights - The machinery sector showed a 7.35% increase in July, outperforming the CSI 300 index [13] - The report emphasizes the importance of focusing on sectors with stable fundamentals and high dividend yields, such as engineering machinery and high-speed rail equipment [14] - The electric power and public utilities sector is rated as "stronger than the market," with a focus on large hydropower companies [18] Sector Analysis - The automotive industry continues to grow, with June production and sales figures showing increases of 5.50% and 8.12% month-on-month [22][23] - The gaming and publishing sectors are expected to perform well, driven by strong demand and favorable policy environments [26][27] - The food and beverage sector is facing challenges, with a decline in most sub-sectors except for health products [33][34] Investment Recommendations - The report recommends maintaining a focus on sectors with strong fundamentals and high dividend yields, particularly in engineering machinery and high-speed rail [14][18] - It suggests monitoring the automotive sector for potential growth driven by policy support and consumer demand [25] - The gaming and publishing sectors are highlighted as having strong growth potential, particularly with the integration of AI technologies [27][28]

Investment Rating - The industry is rated as "stronger than the market," indicating an expected increase of over 10% in the industry index relative to the CSI 300 index over the next six months [17]. Core Viewpoints - The A-share market experienced a slight upward trend after an initial decline, with significant performance in the pharmaceutical, communication equipment, aerospace, and semiconductor sectors, while insurance, banking, agriculture, and precious metals lagged behind [2][3][7]. - The average price-to-earnings ratios for the Shanghai Composite Index and the ChiNext Index are currently at 14.78 times and 41.32 times, respectively, which are at the median levels of the past three years, suggesting a suitable environment for medium to long-term investments [3][16]. - The market is characterized by a dual driving force of policy and capital, with a gradual upward trend established despite short-term technical adjustment pressures [3][16]. Summary by Sections A-share Market Overview - On July 29, the A-share market showed a pattern of initial decline followed by a slight recovery, with the Shanghai Composite Index finding support around 3587 points and closing at 3609.71 points, up 0.33% [7][8]. - The total trading volume for both markets was 18,296 billion, slightly lower than the previous trading day [7][16]. Future Market Outlook and Investment Recommendations - The report suggests focusing on technology growth and cyclical manufacturing as the main investment themes, while also keeping an eye on high-dividend banks, public utilities, and strategic emerging industries [3][16]. - Short-term investment opportunities are recommended in the pharmaceutical, communication equipment, aerospace, and semiconductor sectors [3][16].

Investment Rating - The mechanical industry maintains a "Market Perform" rating, in line with the overall market performance [1] Core Views - The mechanical sector saw a 7.35% increase in July, outperforming the CSI 300 index by 2.28 percentage points, ranking 10th among 30 major sectors [4][10] - Key sub-sectors such as laser processing equipment, engineering machinery, and elevators showed significant gains, with increases of 15.53%, 13.87%, and 12.52% respectively [4][10] - The report suggests a focus on domestic demand-driven sectors with stable fundamentals and high dividend yields, particularly in engineering machinery, high-speed rail equipment, and mining metallurgy equipment [5] Summary by Sections 1. Mechanical Sector Performance - The mechanical sector's performance in July was strong, with a 7.35% increase, surpassing the CSI 300 index's 5.07% rise [4][10] - The sector's valuation is at a 69.6% percentile compared to the last decade, indicating it is above the average valuation level [16] 2. Engineering Machinery - Excavator sales in June reached 18,804 units, a year-on-year increase of 13.3%, with domestic sales growing by 6.2% [20][29] - The report highlights a sustained recovery in the engineering machinery sector, driven by equipment upgrades and favorable policies [34] 3. Robotics - Industrial robot production in June surged by 37.9%, with a total production of 74,764 units, reflecting a strong upward trend in the industry [35][43] - The report emphasizes the investment potential in the robotics sector, particularly in humanoid robots and core components [43] 4. Shipbuilding - The shipbuilding sector is experiencing a decline in new orders, with a 18.2% year-on-year drop in new orders for the first half of 2025 [45] - Despite this, companies like China Shipbuilding Industry Corporation are expected to see significant profit growth, with projected net profits increasing by 182% to 238% [45]

Investment Rating - The report maintains an "Outperform" rating for the power and utilities sector [6][10]. Core Insights - In June 2025, the total electricity consumption reached 867 billion kWh, a year-on-year increase of 5.4%, with a cumulative total of 4841.8 billion kWh for the first half of 2025, reflecting a 3.7% growth [2][18]. - The report highlights a continuous increase in electricity consumption from urban and rural residents, with the first and third industries showing higher growth rates compared to the second industry [2][19]. - As of June 2025, the installed capacity of wind and solar power accounted for 45.85%, while the share of thermal power decreased to 40.42% [2][34]. Summary by Sections Market Review - The power and utilities index underperformed the market in July 2025, with a 2.12% increase compared to a 5.07% rise in the CSI 300 index, resulting in a 2.95 percentage point underperformance [5][10]. - The sub-industry performance in July ranked as follows: environmental and water services (4.43%), thermal power (4.16%), gas (3.51%), heating or others (3.32%), other generation (2.91%), grid (2.33%), and hydropower (-1.98%) [10]. Industry Supply and Demand - In June 2025, the industrial electricity generation was 796.3 billion kWh, a 1.7% year-on-year increase, with the first half of 2025 showing a total of 4537.1 billion kWh, up 0.8% [2][26]. - The report notes a slowdown in growth for thermal and wind power, while nuclear and solar power generation saw accelerated growth rates [2][26][27]. Coal and Gas Market Conditions - In June 2025, the industrial raw coal output was 420 million tons, a 3.0% year-on-year increase, while coal imports decreased significantly by 25.8% [3][40]. - The price of thermal coal at northern ports was 650 RMB/ton, with a monthly increase of 5.69% but a yearly decline of 15.58% [3][42]. - Natural gas production in June 2025 was 21.2 billion cubic meters, a 4.6% year-on-year increase, while imports showed a slight increase of 1.15% [4][53]. Hydropower and Water Conditions - As of July 24, 2025, the inflow and outflow rates at the Three Gorges Dam were 20,000 and 15,800 cubic meters per second, respectively, with both rates showing a decrease compared to the same period in 2024 [6][60]. Provincial Electricity Supply and Demand - In June 2025, Henan province's total electricity consumption was 40.319 billion kWh, a year-on-year increase of 1.79%, while the total generation was 33.531 billion kWh, showing a slight decline of 0.53% [6][64].

Core Insights - The report highlights the need for further counter-cyclical policies to achieve the annual economic growth target due to pressures from tariffs, real estate, and limited fiscal capacity [5][8] - The implementation of a national childcare subsidy program starting January 1, 2025, aims to support families with children under three years old, providing an annual subsidy of 3,600 yuan per child [5][8] - The report indicates a moderate recovery in the Chinese economy, with consumption and investment as core drivers, and suggests a favorable environment for medium to long-term investments in the A-share market [5][8] Domestic Market Performance - The Shanghai Composite Index closed at 3,597.94 with a slight increase of 0.12%, while the Shenzhen Component Index rose by 0.44% to 11,217.58 [3] - The average P/E ratios for the Shanghai Composite and ChiNext are at 14.76 and 40.96, respectively, indicating a suitable environment for medium to long-term investments [5][8] International Market Performance - Major international indices such as the Dow Jones and S&P 500 experienced declines of 0.67% and 0.45%, respectively, while the Nikkei 225 saw a slight increase of 0.62% [4] Industry Analysis - The report notes a significant increase in the securities sector, with the securities index rising by 8.85% in June, outperforming the Shanghai Composite Index by 6.35 percentage points [14] - The report anticipates a steady increase in brokerage firms' performance in July, driven by a recovery in trading volumes and an increase in margin financing [15] - The automotive industry continues to show growth, with June production and sales figures reflecting increases of 5.50% and 8.12% month-on-month, respectively [17][18] Investment Recommendations - The report recommends focusing on sectors such as technology growth and cyclical manufacturing, as well as high-dividend banks and public utilities for stable returns [5][8] - In the automotive sector, it suggests monitoring policies that promote sustainable development and the impact of new energy vehicle incentives on consumption [19] - The report emphasizes the potential of the gaming, publishing, and IP sectors, highlighting their strong performance and growth prospects [20][21]