1. Report Industry Investment Rating There is no information provided regarding the report's industry investment rating in the given content. 2. Core Viewpoints of the Report - Investing in ultra - long credit bonds is challenging due to high volatility. Since 2024, their yields have gone through multiple stages including rapid decline, adjustment, and oscillation [11]. - To improve the allocation win - rate, one can measure the cost - effectiveness of extending duration through credit spreads, understand institutional allocation behavior patterns, decide entry based on trading sentiment, and select high - liquidity value entities [4]. - The long - term stable market of ultra - long credit bonds generally requires continuous buying from trading accounts such as funds and wealth management products. Insurance mainly helps stabilize prices during market adjustments [50]. 3. Summary by Relevant Catalogs 3.1 High - Volatility Ultra - Long Credit Bonds - **Yield Fluctuation Stages**: Since 2024, the yields of ultra - long credit bonds have experienced 3 bull markets, 2 adjustments, and 1 oscillation. For example, from January to March 2024, the yields declined slightly at first and then increased due to various events; from April to July 2024, the demand for ultra - long credit bonds increased under institutional under - allocation pressure [11]. - **Volatility and Investment Difficulties**: Although the volatility of ultra - long credit bonds in the second quarter of 2025 was lower than the same period last year, it was still higher than most of 2024 from January to April. The high volatility provides capital gain opportunities but is difficult for band - trading due to liquidity issues [16]. 3.2 How to Improve Allocation Win - Rate 3.2.1 Measure the Cost - Effectiveness of Extending Duration through Credit Spreads - **Credit Spread Channels**: By using the 30 - day average of credit spreads to form upper and lower tracks, when the credit spread touches the upper track, there is a large compression space, and when it touches the lower track, it may rebound. However, this indicator has some limitations and should be combined with other factors [21]. - **Term Spread Channels**: Similar to credit spreads, term spread channels can also be used to predict market trends. But they also have limitations in considering factors such as institutional behavior and policy changes [24]. - **Credit Spread Quantiles**: As of July 4, 2025, the credit spreads of some long - term bonds are at relatively low quantiles, indicating limited further compression space [27]. 3.2.2 Grasp the Laws of Institutional Allocation Behavior - **Insurance**: Ultra - long credit bonds match the duration of insurance products and can alleviate the asset shortage problem. Insurance is a stable buyer, but its buying volume is affected by the supply rhythm of interest - rate bonds and the "good start" seasonal pattern [32]. - **Wealth Management**: Due to bank quarterly assessments and fund repatriation, wealth management scale usually declines at the end of the quarter and rebounds at the beginning. In recent four years, there have been relatively large month - on - month increases in April and July, leading to an increased demand for credit bonds [38]. - **Public Funds**: Ultra - long credit bonds are attractive for their coupon income and duration offensive. Funds tend to extend duration in a bull market but increase selling during market adjustments [42]. - **Credit Bond ETFs**: Since late May, credit bond ETFs have expanded rapidly. By July 4, 2025, the scale of 8 benchmark - making market - making credit bond ETFs had increased to 13.22 billion yuan, which has promoted the bull market of ultra - long credit bonds [45]. 3.2.3 Decide Entry Based on Trading Sentiment - Currently, the sentiment of bond market investors participating in long - term credit bonds is over - heated. The trading deviation of credit bonds over 10 years has approached the levels during the strongest rising periods in 2024. However, the over - crowded market is increasing potential adjustment risks [53]. 3.2.4 Layout High - Liquidity Value Entities - When the ultra - long credit bond market starts, one can focus on the outstanding bonds of entities with large outstanding ultra - long bond scales and ratings of AA+ or above. For example, State Grid, Chengtong Holdings, and Sinochem Group have relatively large outstanding scales [60]. - Further, one can select entities with higher term spreads than the market average, indicating potential for long - term bond interest rate compression [61].

Core Viewpoint - The establishment of a normalized electricity trading mechanism between China's State Grid and Southern Power Grid marks a significant step towards a unified national electricity market, breaking through regional operational limitations and enhancing cross-province electricity trading efficiency [1][2]. Group 1: Market Development - The Southern Regional Electricity Market transitioned to continuous settlement trial operation at the end of June, indicating a shift from trial verification to normalized operation [1]. - The trading scope of the Southern Regional Electricity Market includes five provinces: Guangdong, Guangxi, Yunnan, Guizhou, and Hainan, allowing for daily, uninterrupted cross-province electricity trading [1][2]. Group 2: Mechanism and Implementation - The National Development and Reform Commission and the National Energy Administration issued a plan to establish a normalized electricity trading mechanism across grid operating areas, addressing the last barrier to a unified national electricity market [2]. - The new trading mechanism will enable the Beijing and Guangzhou electricity trading centers to collect cross-grid trading demands and facilitate precise supply-demand matching through information exchange [2]. Group 3: Benefits and Future Outlook - The cross-regional electricity market is expected to enhance energy supply stability, reduce dependence on fossil fuels, and improve the overall efficiency of electricity assets [3]. - The plan outlines that by the end of this year, China will implement normalized trading across grid operating areas, with future goals of increasing trading frequency and achieving continuous trading on working days [3].

国家发展改革委 国家能源局关于跨电网经营区常态化电力交易机制方案的复函 发改体改〔2025〕915号 国家电网有限公司、中国南方电网有限责任公司： 你公司报送的《关于报请批复国家电网、南方电网跨经营区常态化交易机制方案的请示》收悉。现 批复如下 。 2025年7月1日 （来源：国家发展改革委） ▼点击阅读原文，查看附件详情 三、国家电网公司、南方电网公司要在2025年迎峰度夏期间，依托跨电网常态化交易机制实现电 力资源优化配置，更好支撑电力保供。年底前，进一步统一市场规则、交易品种和交易时序，实现 跨电网交易常态化开市。 四、国家电网公司、南方电网公司要落实主体责任，按照有关政策要求，持续完善跨电网交易规 则，强化技术平台互联互通和信息共享互认，尽快实现电力市场成员"一地注册、全国共享"。要完 善跨省跨区应急调度价格机制和结算管理，及时跟踪市场运营状况，加强信息披露和报送，做好应 急预案，切实防范市场风险，保障电力系统安全稳定运行。重大问题及时向国家发展改革委、国家 能源局报告。 五、国家发展改革委、国家能源局将持续强化对跨电网常态化交易的指导，健全配套政策，及时协 调解决问题，进一步完善全国统一电力市场体系 ...

Group 1: Photovoltaic Silicon Material Industry - The photovoltaic silicon material industry is expected to accelerate capacity consolidation, with the Ministry of Industry and Information Technology emphasizing the need for high-quality development in the solar industry [1] - By 2027, the industry is projected to enter a stable development phase, with significant advantages in the silicon material segment due to differences in capacity costs and financial strength among companies [1] - Key companies to watch include GCL-Poly Energy, Xinte Energy, Tongwei Co., and TBEA [1] Group 2: Solid-State Battery Industry - The solid-state battery industry is witnessing continuous advancements, with equipment from Winbond Technology successfully delivered to major domestic clients [2] - Material production is ramping up, with significant capacity in oxide electrolytes and expectations for sulfide electrolytes to achieve ton-level shipments by 2025 [2] - Companies of interest in this sector include Xiamen Tungsten, Tianqi Lithium, and others involved in the solid-state battery supply chain [2] Group 3: Offshore Wind Power Development - The central government is promoting the orderly development of offshore wind power, with a focus on enhancing the marine economy and encouraging private investment [3] - Goldwind Technology has secured over 7.7GW of international orders for 2024, with significant revenue growth reported for its international subsidiary [3] - Key players in the wind power sector include Goldwind Technology, Oriental Cable, and Dajin Heavy Industry [3] Group 4: Data Center Investment - Global data center investments are accelerating, with Amazon planning to invest AUD 20 billion (approximately USD 13.1 billion) in Australia and SK Telecom collaborating with Amazon Web Services for a significant data center project in South Korea [4] - The deployment of NVIDIA's GB300 AI systems is underway, indicating a growing demand for AI computing resources [4] - Companies to monitor in the AIDC power equipment sector include Jinpan Technology, Xinte Electric, and others [4] Group 5: Key Company Earnings Forecasts - The report provides earnings forecasts and investment ratings for several companies, with Goldwind Technology rated "Outperform" and projected to have an EPS of 1.28 in 2025 [5] - Jinpan Technology and other companies also received "Outperform" ratings, indicating positive market sentiment [5] Group 6: Industry Performance Overview - The electric power equipment sector outperformed the market in June, with a 6.68% increase compared to a 2.5% rise in the CSI 300 index [13] - The sector's PE ratio at the end of June was 30.3, reflecting a slight recovery in valuations [13] - The report highlights that the electric power equipment industry has shown strong performance across various sub-sectors, including lithium battery materials and wind power [23]

Core Viewpoint - The China Securities Index for the Belt and Road Initiative has shown a mixed performance, with a recent increase in value but a slight decline year-to-date, reflecting the overall market sentiment and sector performance [2]. Group 1: Index Performance - The China Securities Belt and Road Index rose by 0.38% to 2082.94 points, with a trading volume of 69.818 billion yuan [1]. - Over the past month, the index has increased by 5.16%, and over the last three months, it has risen by 9.56%. However, it has decreased by 0.31% year-to-date [2]. Group 2: Index Composition - The index is composed of representative listed companies from five major industries: infrastructure, transportation, high-end equipment, power communication, and resource development, based on four dimensions including average market capitalization and overseas business proportion [2]. - The top ten weighted companies in the index include: Zhongji Xuchuang (3.87%), Xinyi Sheng (3.77%), China State Construction (3.1%), Zijin Mining (3.05%), Sany Heavy Industry (3.01%), Wanhua Chemical (2.93%), ZTE Corporation (2.92%), CRRC Corporation (2.87%), China Petroleum (2.87%), and Guodian NARI Technology (2.81%) [2]. Group 3: Market and Sector Breakdown - The index's holdings are primarily listed on the Shanghai Stock Exchange (71.92%) and the Shenzhen Stock Exchange (28.08%) [2]. - In terms of industry distribution, the index shows an allocation of 55.40% in industrials, 20.01% in materials, 14.91% in communication services, 8.65% in energy, and 1.03% in utilities [2]. Group 4: Index Adjustment Mechanism - The index samples are adjusted quarterly, with changes implemented on the next trading day following the second Friday of March, June, September, and December, with a sample adjustment ratio not exceeding 20% [3]. - Weight factors are adjusted in line with sample changes, and special circumstances may lead to temporary adjustments [3].

Core Viewpoint - The China Securities 800 Capital Goods Index has shown a mixed performance, with a recent increase in the short term but a decline year-to-date, reflecting the overall market conditions and sector performance [2]. Group 1: Index Performance - The China Securities 800 Capital Goods Index rose by 5.14% over the past month and 10.47% over the last three months, but has decreased by 0.94% year-to-date [2]. - The index is designed to reflect the performance of listed companies in the capital goods sector, with a base date of December 31, 2004, set at 1000.0 points [2]. Group 2: Index Composition - The top ten weighted companies in the index include CATL (15.72%), China State Construction (2.95%), and others, with the total weight of these companies significantly impacting the index [2]. - The index's holdings are split between the Shanghai Stock Exchange (50.88%) and the Shenzhen Stock Exchange (49.12%) [2]. Group 3: Sector Allocation - The sector allocation of the index shows that electrical equipment constitutes 46.13%, machinery manufacturing 28.22%, aerospace and defense 12.37%, construction decoration 12.30%, and environmental protection 0.97% [2]. Group 4: Index Adjustment Mechanism - The index samples are adjusted biannually, with changes implemented on the next trading day following the second Friday of June and December [3]. - Weight factors are generally fixed until the next scheduled adjustment, with provisions for temporary adjustments in special circumstances [3].

Group 1: Event Overview - Hunan government announced an adjustment to electricity pricing policy to promote the construction of a new power system and ensure stable economic operation, effective from August 1 [1] Group 2: Time-of-Use Pricing Mechanism - Time-of-use pricing is designed to guide electricity users in managing peak and off-peak demand, ensuring the safety and stability of the power system [2] - The need for frequent adjustments in time-of-use pricing is driven by increasing electrification and significant fluctuations in power load, as well as the growing share of renewable energy in the power system [2] - Traditional pricing mechanisms fail to reflect real supply-demand relationships due to the volatility of renewable energy output, leading to adjustments in pricing periods to address issues like midday solar energy curtailment [2] Group 3: Virtual Power Plants - Virtual power plants have the capability to scale and address short-term power supply-demand imbalances and renewable energy absorption challenges, offering economic advantages over traditional coal-fired power [3] - The market-level virtual power plant is seen as an effective means of comprehensive energy operation, requiring operators to optimize various strategies and manage green assets [3] - The successful testing of cross-provincial computing power transfer technology for virtual power plant peak-shaving response was reported by the State Grid Shanghai Pudong Power Supply Company [3] Group 4: Market Potential of Virtual Power Plants - The domestic virtual power plant market is projected to grow significantly, with installed capacity expected to increase from 3.7 GW in 2022 to 39 GW by 2025, representing a compound annual growth rate of 108.1% [4] - The global share of China's virtual power plant capacity is anticipated to rise from 17.5% in 2022 to 67.2% by 2025, indicating a substantial opportunity for large-scale development in the industry [4] Group 5: Historical Performance of Leading Companies - The National Energy Administration initiated pilot projects for the construction of a new power system, focusing on advanced directions such as virtual power plants and smart microgrids [5] - Leading company Shun Sodium Co. experienced a significant stock increase, with a maximum rise of nearly 30% over five trading days [5] Group 6: Related Concept Stocks - High-tech scheduling and platform segments, as well as resource-intensive load-side segments, are expected to see new development opportunities, with potential stocks including Dongfang Electronics and Guodian Nari [7]

Market Overview - The FTSE China A50 Index components showed varied performance, with the liquor sector rising throughout the day while the semiconductor sector experienced a decline in the afternoon [1] Insurance Sector - China Life Insurance, China Pacific Insurance, and Ping An Insurance had market capitalizations of CNY 376.78 billion, CNY 356.91 billion, and CNY 1,017.95 billion respectively, with trading volumes of CNY 0.75 billion, CNY 2.22 billion, and CNY 0.84 billion [3] - The stock prices changed as follows: China Life Insurance decreased by CNY 0.73 (-1.93%), China Pacific Insurance decreased by CNY 0.55 (-0.97%), and Ping An Insurance decreased by CNY 0.14 (-1.62%) [3] Liquor Industry - Kweichow Moutai, Shanxi Fenjiu, and Wuliangye had market capitalizations of CNY 1,782.39 billion, CNY 217.50 billion, and CNY 472.00 billion respectively, with trading volumes of CNY 3.95 billion, CNY 2.00 billion, and CNY 2.48 billion [3] - Stock price changes included Kweichow Moutai increasing by CNY 2.38 (+1.35%), Shanxi Fenjiu increasing by CNY 0.82 (+0.68%), and Wuliangye increasing by CNY 2.77 (+0.20%) [3] Semiconductor Sector - Northern Huachuang, Cambricon Technologies, and Hygon had market capitalizations of CNY 238.96 billion, CNY 223.82 billion, and CNY 314.69 billion respectively, with trading volumes of CNY 1.47 billion, CNY 1.23 billion, and CNY 2.64 billion [3] - The stock prices changed as follows: Northern Huachuang decreased by CNY 7.77 (-1.43%), Cambricon Technologies decreased by CNY 1.51 (-1.10%), and Hygon decreased by CNY 2.82 (-0.84%) [3] Automotive Sector - BYD, Great Wall Motors, and Beijing-Shanghai High-Speed Railway had market capitalizations of CNY 187.27 billion, CNY 1,790.16 billion, and CNY 280.83 billion respectively, with trading volumes of CNY 3.97 billion, CNY 0.31 billion, and CNY 0.56 billion [3] - Stock price changes included BYD decreasing by CNY 1.08 (-0.33%), Great Wall Motors decreasing by CNY 0.08 (-0.36%), and Beijing-Shanghai High-Speed Railway increasing by CNY 0.03 (+0.53%) [3] Shipping and Oil Sector - COSCO Shipping Holdings, Sinopec, and PetroChina had market capitalizations of CNY 235.91 billion, CNY 688.67 billion, and CNY 1,570.32 billion respectively, with trading volumes of CNY 0.77 billion, CNY 1.08 billion, and CNY 0.76 billion [3] - The stock prices changed as follows: COSCO Shipping Holdings remained unchanged, Sinopec decreased by CNY 0.09 (-0.59%), and PetroChina increased by CNY 0.01 (+0.12%) [3] Coal and Battery Sector - China Shenhua, Shaanxi Coal and Chemical Industry, and CATL had market capitalizations of CNY 185.95 billion, CNY 745.07 billion, and CNY 1,234.66 billion respectively, with trading volumes of CNY 0.79 billion, CNY 0.69 billion, and CNY 7.95 billion [3] - Stock price changes included China Shenhua increasing by CNY 7.49 (+2.84%), Shaanxi Coal and Chemical Industry decreasing by CNY 0.22 (-0.58%), and CATL increasing by CNY 0.03 (+0.16%) [3] Other Sectors - Various sectors such as food and beverage, electronics, and pharmaceuticals showed mixed performance in terms of market capitalization and stock price changes [4]

Financial Sector - The banking sector showed a general upward trend with notable performances from major banks such as China Life Insurance and Ping An Insurance, with market capitalizations of 380.77 billion and 1,023.96 billion respectively [4] - China Life Insurance experienced a slight decline of 0.29% while Ping An Insurance decreased by 0.58% [4] Semiconductor Sector - The semiconductor sector displayed mixed results, with North Huachuang's market capitalization at 241.30 billion and a decrease of 0.32% [4] - Cambrian's stock price increased slightly by 0.13%, while Haiguang Information saw a decline of 0.49% [4] Automotive Sector - The automotive sector, led by BYD with a market capitalization of 1,790.49 billion, experienced a minor decline of 0.31% [4] - Great Wall Motors and China Railway High-speed also showed slight increases of 0.41% and 1.05% respectively [4] Energy Sector - In the energy sector, China Petroleum and China Petrochemical had market capitalizations of 1,588.62 billion and 693.52 billion respectively, with China Petroleum increasing by 1.28% [4] - China Shipping Development remained stable with no change [4] Coal Industry - The coal industry saw Shaanxi Coal and China Shenhua with market capitalizations of 750.83 billion and 185.66 billion respectively [4] - China Shenhua's stock price increased by 4.03% while Shaanxi Coal remained unchanged [4] Food and Beverage Sector - The food and beverage sector included major players like Haitian Flavor Industry with a market capitalization of 228.10 billion, which increased by 0.46% [5] - Other companies in this sector showed stable performances with minor fluctuations [5] Electronics and Pharmaceuticals - The electronics sector, represented by Hon Hai Precision Industry, had a market capitalization of 365.78 billion and a slight increase of 0.34% [5] - In pharmaceuticals, Hengrui Medicine's market capitalization was 529.06 billion, with a notable increase of 0.99% [5] Logistics and Medical Devices - The logistics sector, led by SF Holding, had a market capitalization of 2,415.92 billion, experiencing a decline of 0.88% [5] - In medical devices, Mindray Medical's market capitalization was 172.94 billion, with a minor decrease of 0.02% [5] Metals and Construction - The non-ferrous metals sector included Zijin Mining with a market capitalization of 247.51 billion, which saw a decline of 3.38% [5] - China State Construction had a market capitalization of 1,700.78 billion, with a slight increase of 0.67% [5]

Investment Rating - The report maintains a "Positive" investment rating for the power equipment industry [4] Core Insights - The dual carbon strategy emphasizes the coexistence of highly clean power generation and highly electrified power consumption, with the grid serving as a crucial link between the two [4][7] - The development of ultra-high voltage (UHV) technology is essential for achieving carbon neutrality, but progress has been slower than expected [4][8] - The distribution network is critical for renewable energy consumption, yet investment during the 14th Five-Year Plan period has fallen short of expectations [4][39] Summary by Sections Ultra-High Voltage (UHV) - UHV is a key component of the dual carbon strategy, with a planned investment of 380 billion yuan for over 30,000 kilometers of lines and a capacity of 340 million kilovolt-amperes [8] - The actual progress of UHV projects has been below expectations, with only eight projects likely to be completed by 2025 [16][18] - The shift towards flexible direct current technology is noted, as it allows for higher proportions of renewable energy to be transmitted [22][24] Distribution Network - The distribution network's role has evolved significantly post-dual carbon strategy, requiring upgrades to accommodate distributed energy resources [39][40] - Despite a consensus on the need for increased investment in the distribution network, actual investment levels have been lower than anticipated during the 14th Five-Year Plan [47] - The rapid growth of distributed solar power has led to challenges in the capacity of the distribution network, necessitating further enhancements [50]