Core Viewpoint - The convertible bond market is experiencing a significant reduction in supply, leading to increased scarcity and heightened interest from investors, particularly in bank convertible bonds [1][2][3]. Group 1: Market Dynamics - Since July, there has been a concentrated redemption and conversion of bank convertible bonds, resulting in a shrinking asset pool. As of July 10, the total market for convertible bonds has decreased to 668.08 billion yuan, down 65.54 billion yuan from the beginning of the year [1]. - The current market is undergoing a period of intensive adjustment, with 456 convertible bonds entering redemption and conversion phases, representing 95.36% of the total market size [1]. - The convertible bond market has shown strong upward momentum this year, with the Wind convertible bond index rising by 18.17% year-to-date as of July 10 [2]. Group 2: Performance of Bank Convertible Bonds - Bank convertible bonds are particularly attractive due to the strong credit quality of the issuing banks and the performance of bank stocks, which have seen significant increases due to institutional investments [2][3]. - Several bank convertible bonds have successfully triggered mandatory redemption and conversion, achieving high conversion rates, such as Chengdu Bank and Suzhou Bank with rates of 99.94% and 99.93% respectively [3]. Group 3: Investor Sentiment and Strategy - There is a growing concern among investors regarding the high valuation of convertible bonds, with some analysts suggesting that entering the market at this stage may not be wise [2][4]. - Despite the high valuations, there remains a demand for convertible bonds, particularly from institutional investors seeking to enhance their fixed-income portfolios [5][6]. - Investment strategies are shifting, with a preference for large-cap convertible bonds linked to major stocks, especially in sectors like banking, photovoltaic, and agriculture [6].

Group 1: Financial Performance - The bank's net interest margin at the end of Q1 2025 was 1.34%, a decrease of 4 basis points compared to the end of 2024, which is better than the industry average [1] - The bank aims to manage interest margins proactively through reasonable growth in volume and effective quality improvements [1] - The bank's fee and commission income showed good growth in Q1 2025, with plans to expand sources of non-interest income through wealth management and new business initiatives [2] Group 2: Capital Adequacy - As of the end of Q1 2025, the bank's core Tier 1 capital adequacy ratio was 9.80%, Tier 1 capital adequacy ratio was 11.62%, and total capital adequacy ratio was 14.54%, all meeting regulatory requirements [2] - The successful conversion of nearly 5 billion RMB in convertible bonds has strengthened the bank's capital base, supporting business development [2] - The bank will continue to optimize its business structure and enhance capital management to improve capital efficiency and risk resilience [2] Group 3: Investor Relations - The investor relations activity involved thorough communication between the company's representatives and investors, adhering to regulations without disclosing any undisclosed significant information [2]

Investment Rating - The industry investment rating is "Outperform the Market" [1][49]. Core Viewpoints - The report highlights a profound change in the funding structure, emphasizing a shift towards reallocation rather than trading. The changes in fund flows are crucial for the valuation recovery of the sector, with stable inflows driven by the continuous expansion of passive indices. The banking sector's characteristics of low volatility and high dividends make it attractive to long-term funds, with an average dividend yield of 3.86%. Regulatory measures aimed at guiding long-term funds into the market are expected to sustain the attractiveness of dividend allocation [3][16]. Summary by Sections Industry Investment Rating - The banking industry is rated as "Outperform the Market," indicating an expected performance that exceeds the market by more than 5% over the next six months [1][49]. Core Industry Insights - The report notes that the changes in fund flows are a significant force driving the valuation recovery of the banking sector. The continuous expansion of passive indices has led to stable fund inflows, and the sector's high dividend yield is appealing to long-term investors, particularly insurance funds. The average dividend yield in the sector is currently at 3.86% [3][16]. - The report expresses optimism about the A-share banking sector and certain high-quality regional banks (Chengdu, Beijing, Jiangsu, Shanghai, Suzhou, Changsha) based on dividend and potential long-term fund inflow considerations. It also highlights opportunities in Hong Kong's major banks with better dividend advantages [3][16]. Market Trends - In June 2025, the banking sector rose by 6.13%, outperforming the CSI 300 index by 3.63 percentage points, ranking 11th among 30 sectors in the CITIC index [25][19]. - The report tracks the trend of long-term funds flowing into the banking sector, with insurance funds increasing their allocation. Since 2024, the pace of insurance fund allocation has slightly increased, with 23 A-share listed banks having insurance funds among their top ten shareholders [4][8]. Macro and Liquidity Tracking - The report provides macroeconomic indicators, noting that the manufacturing PMI for June was 49.70%, with a slight month-on-month increase. The one-year and five-year LPR remained stable at 3.0% and 3.50%, respectively [27][38]. - In terms of credit, new RMB loans increased by 620 billion yuan in May 2025, with a year-on-year growth rate of 7.10%. The total social financing scale increased by 2.29 trillion yuan, with a year-on-year growth rate of 8.70% [39][42]. Individual Stock Valuation - The report includes a valuation table for individual banks, highlighting strong recommendations for several banks based on their expected performance and valuation metrics. For instance, Chengdu Bank and Suzhou Bank are rated as "Strong Buy" with projected PB ratios below 1.0 [45].

Group 1: Institutional Research on Popular Companies - The top twenty companies with the highest number of institutional research in the past 30 days include Ice Wheel Environment, Boshi Jie, Jun Ding Da, Huichuan Technology, and Dazhu Laser [2][8] - In the last five days, the most researched companies are Hu Dian Co., Guilin Sanjin, Ice Wheel Environment, Mankalon, and Xingrong Environment [2][8] - Among the top twenty companies in the past 30 days, five have received ratings from ten or more institutions, namely Ice Wheel Environment, Boshi Jie, Jun Ding Da, Huichuan Technology, and Dazhu Laser [2][8] - Jun Ding Da and Dazhu Laser are expected to achieve significant growth in net profit attributable to shareholders in 2024 compared to 2023 [2][8] Group 2: Shareholder Increase in A-Share Listed Companies - From June 30 to July 4, 2025, two companies announced significant shareholder increases, both rated by ten or more institutions: Renfu Pharmaceutical and Suzhou Bank [3][12] - From January 1 to July 4, 2025, a total of 234 companies announced shareholder increases, with 64 rated by ten or more institutions. Among these, 19 companies have proposed increases where the average proposed amount exceeds 1% of the market value on the announcement date [3][12][14] Group 3: A-Share Buyback Situation - From June 30 to July 4, 2025, 288 companies announced buyback progress, with 78 rated by ten or more institutions. Companies with an expected buyback amount exceeding 1% of the market value include Xiamen Xiangyu, Huafa Co., Changhong Meiling, Pingmei Co., and Mengbaihe [3][16] - From January 1 to July 4, 2025, 1,573 companies announced buyback progress, with 345 rated by ten or more institutions. Among these, 93 companies have a significant buyback ratio, and several are in the board proposal stage, including Changhong Meiling, Liugong, Sanor Biotech, and others [3][18]

Core Viewpoint - The surge in institutional research on listed banks in the first half of the year indicates a significant increase in market interest in bank stocks, particularly focusing on credit issuance, dividend plans, and asset quality [1][2]. Group 1: Institutional Research Trends - In the first half of the year, 19 A-share listed banks received over 1,000 institutional research visits, with Ningbo Bank, Changshu Bank, and Hangzhou Bank being the most popular [1][2]. - The focus of institutional research has been on key operational areas of banks, especially credit allocation and dividend strategies [2][3]. Group 2: Credit Issuance and Dividend Plans - Ningbo Bank, Changshu Bank, and Hangzhou Bank were the top three banks in terms of research visits, with 235, 192, and 153 visits respectively [2]. - Hangzhou Bank reported that its credit issuance has improved compared to the previous year, with a focus on strategic sectors such as technology and manufacturing [2]. - Chongqing Bank has maintained a high cash dividend level for 11 consecutive years since its H-share listing, with plans for a sustainable dividend strategy [3][4]. Group 3: Asset Quality and Net Interest Margin - Many banks expressed confidence in maintaining stable asset quality throughout the year, with measures in place to enhance risk management [5][6]. - Suzhou Bank reported a net interest margin of 1.34% at the end of Q1, which is a slight decrease compared to the end of 2024, but better than the industry average [6]. - The overall expectation is for a marginal improvement in asset quality, supported by policy measures and digital risk management [5][6].

Investment Rating - The report maintains a "Buy" rating for Suzhou Bank [7]. Core Views - The state-owned major shareholder has been continuously increasing its stake, indicating a strong long-term value outlook. The bank's fundamentals remain robust, with government-related business driving accelerated credit growth. The improvement in deposit costs alleviates net interest margin pressure, and the asset quality indicators are consistently excellent. The dividend payout ratio for 2024 is expected to increase by 1.4 percentage points to 32.5% of net profit attributable to the parent company, supporting a year-on-year increase in DPS. The completion of the convertible bond conversion in Q1 this year has bolstered capital, supporting credit issuance and ensuring stable future dividends. Currently, the 2025 PB valuation is 0.83x, PE valuation is 8.2x, and the expected dividend yield is 4.1% [5][9][10]. Summary by Sections Shareholder Actions - On June 30, it was announced that the major shareholder, Suzhou Guofa Group, increased its stake in Suzhou Bank, along with its concerted action partner, Dongwu Securities, to a total of 15.00%. The actual controller of Suzhou Bank has changed to the Suzhou Municipal Finance Bureau. The group plans to increase its holdings by no less than 400 million yuan over the next six months, with a commitment not to reduce its holdings within six months after the completion of this plan [5][10]. Business Performance - Suzhou Bank has shown steady growth in its core business, with total loans increasing by 8.9% year-on-year as of the end of Q1. The bank's asset scale is currently 727.2 billion yuan, with a clear path towards reaching a trillion yuan in assets. The bank's net interest margin has been under pressure due to declining loan rates, but the reduction in deposit costs is expected to stabilize this margin moving forward. The bank maintains a conservative risk appetite, with a low non-performing loan ratio and strong provisioning capabilities [9][10][11]. Financial Projections - The bank's total assets are projected to grow from 693.71 billion yuan in 2024 to 1,009.84 billion yuan by 2027. The net profit attributable to the parent company is expected to increase from 5.07 billion yuan in 2024 to 6.04 billion yuan in 2027. The bank's return on equity (ROE) is projected to be around 10.19% by 2027, with a non-performing loan ratio stabilizing at approximately 0.82% [24].

1. Company Events 1.1 Regulatory Actions - Xianyang Financial Holding Group Co., Ltd. was warned and ordered to rectify for non - market - oriented issuance of debt financing instruments in 2020, and Xianyang Finance and Investment Holding Co., Ltd., which provided convenience, was also warned [2] - Taixing Zhiguang Environmental Protection Technology Co., Ltd.'s subsidiary was fined 4 million yuan for financial fraud from 2021, and its executives were also fined [2] 1.2 Litigation - Mengzi New Urbanization Development Investment Co., Ltd. announced the progress of four lawsuits as of June 30, 2025, with a total involved amount of 54.3326 million yuan, and one case worth 5.592 million yuan was settled [2] 1.3 Ownership Changes - Zhejiang Hanghai New City Holding Group Co., Ltd.'s controlling shareholder changed from Haining State - owned Assets Office to Zhejiang Hanghai Asset Operation Co., Ltd. through a free transfer of 100% equity, while the actual controller remained unchanged [2] - After Suzhou International Development Group Co., Ltd. and its affiliated Dongwu Securities increased their holdings in Suzhou Bank, they became the controlling shareholders with 15.00% of shares, and the Suzhou Finance Bureau became the actual controller [2] - The Ministry of Finance transferred its shares in China Orient Asset Management Co., Ltd. to Central Huijin Investment Co., Ltd., which then held 71.55% of shares and became the actual controller of Orient Asset Management (China) Co., Ltd. [2] 1.4 Name Change - Hefei High - tech Urban Development Group Co., Ltd. changed its name from Hefei High - tech Co., Ltd., and the change did not affect its issued bonds, with all rights and obligations inherited [3] 1.5 Credit Rating Changes - Credit rating upgrades: Yueyang Urban Construction Investment Group Co., Ltd. was upgraded from AA+ to AAA; Xiamen Xiangyu Group Co., Ltd. was upgraded from BBB+ to A -; Ba Zhong State - owned Capital Operation Group Co., Ltd. was upgraded from AA to AA+; Qinhuangdao Bank Co., Ltd. was upgraded from AA to AA+; Chengdu Xiangcheng Investment Group Co., Ltd. was upgraded from AA+ to AAA; Chengdu Ronghe Investment Development Group Co., Ltd. was upgraded from AA to AA+ [3] - Credit rating downgrades: Heilongjiang Chuangda Group Co., Ltd. was downgraded from AA to A+; Shuangliang Energy - Saving System Co., Ltd. was downgraded from AA to AA -; Wenzhou Hongfeng Electrical Alloy Co., Ltd. was downgraded from A to BB+ [3] 1.6 Other Events - Qingdao Economic and Technological Development Zone Investment Holding Group Co., Ltd.'s subsidiary, Shanda Shenghua, received a warning letter from Shandong Securities Regulatory Bureau for insider information registration management violations [2] - Li Dong, the deputy general manager of Guangxi Liuzhou Urban Construction Investment Development Group Co., Ltd., is suspected of serious disciplinary violations and is under investigation, and the issuer has 12 outstanding bonds with a total balance of 8.654 billion yuan [2]

Group 1 - The China Banking Index (399986) has seen a strong increase of 1.14%, with notable gains from Shanghai Bank (601229) up 3.08%, Ningbo Bank (002142) up 2.44%, and Zijin Bank (601860) up 2.31% [1] - As of June 30, 2023, the total scale of the bank wealth management market reached 31.22 trillion yuan, an increase of 5.22% since the beginning of the year [1] - The decline in deposit interest rates and the regulatory halt on manual interest supplementation are expected to enhance the attractiveness of wealth management products, leading to increased capital inflow into the bank wealth management market [1] Group 2 - The China Banking ETF (512730) has risen by 0.90%, with the latest price reported at 1.79 yuan [1] - The top ten weighted stocks in the China Banking Index as of June 30, 2023, include China Merchants Bank (600036), Industrial Bank (601166), and ICBC (601398), collectively accounting for 65.64% of the index [2] - Short-term deposit rate cuts may create pressure on banks' liabilities, but in the medium to long term, the cost of bank liabilities is expected to decrease, particularly with the repricing of long-term deposits in the third quarter [1]

Market Overview - The A-share market experienced fluctuations, with the Shanghai Composite Index down 0.04% and the Shenzhen Component Index down 0.42% as of midday [2][3] - The total trading volume in the market was 867.48 billion yuan, showing a significant decrease compared to the previous day [4] Banking Sector - The banking sector saw a collective rise, with Zijin Bank increasing nearly 3% and several other banks like Lanzhou Bank and Ningbo Bank rising over 2% [8][10] - A total of 13 A-share listed banks have completed nearly 70% of their cash dividend distribution for 2024, with some banks already proposing mid-term dividends for 2025 [13] Solar Energy Sector - The rooftop solar concept stocks surged, with companies like Xiangqiang Co. and Yamaton hitting their daily limit up [15][17] - HJT battery concept stocks also saw significant gains, with Yijing Optoelectronics and Yaopi Glass reaching their daily limit up [18] - The silicon energy sector continued to rise, with *ST Xinyuan hitting the daily limit up and Daqo New Energy increasing over 11% [19][21] - Major photovoltaic glass companies plan to collectively reduce production by 30% starting in July, which is expected to decrease domestic glass output to around 45GW [22] Multi-Financial Sector - The multi-financial sector faced a downturn, with Aijian Group hitting the daily limit down and several other stocks like Hongye Futures and Guosheng Jinkong experiencing significant declines [26][28] - Aijian Group's stock was previously favored due to speculation about its involvement in stablecoin business, but the company clarified it has not engaged in such activities [29]

Market Overview - A-shares experienced a strong opening on July 1, with the Shanghai Composite Index rising significantly, driven by the banking and power sectors, and total market turnover around 1.5 trillion yuan [1] - The banking sector showed a robust rebound, with all stocks in the sector rising, and Shanghai Pudong Development Bank reaching a historical high with a market capitalization of 432.18 billion yuan [2] Banking Sector Performance - The banking sector index increased by approximately 20% year-to-date, with a cumulative rise of nearly 70% since the end of 2023 [2] - Notable individual stock performances included Suzhou Bank rising over 5%, Xiamen Bank nearly 4%, and Hangzhou Bank over 3% [2] - The overall banking sector closed up 1.84% on July 1, ranking fifth among industry sectors for the day [2] Innovative Drug Sector - The innovative drug sector saw significant gains, with a total increase of 3.01% by the end of the trading day, ranking third among industry sectors [4] - Key stocks in this sector included Frontline Bio, which hit the daily limit, and several others like Guizhou Bailing and Seer Medical also reaching their daily limits [4] - The sector has been active since mid-May, with a notable surge in trading volume and stock prices [4] Policy Support for Innovative Drugs - The National Healthcare Security Administration and the National Health Commission issued measures to support the high-quality development of innovative drugs, focusing on R&D, market access, and payment systems [5] - These measures aim to address key issues in the innovative drug sector and promote genuine innovation [5] International Transactions in Innovative Drugs - There has been a surge in international transactions for innovative drugs, with a total of $45.5 billion in authorized transactions by Chinese companies from January to May 2025, surpassing the total for the first half of 2024 [6] - The year 2025 is expected to be significant for domestic innovative drug companies as they transition from generic to innovative drugs, with some companies reaching breakeven and profitability [6]