Group 1 - The CSI Hong Kong-Shanghai-Shenzhen Interconnection Small Comprehensive Materials Index reported a value of 4406.56 points, showing a monthly increase of 7.39%, a three-month increase of 14.25%, and a year-to-date increase of 15.75% [1] - The index is categorized into 11 industries based on the classification standards of the CSI Hong Kong-Shanghai-Shenzhen Index Series, which includes the CSI 500, CSI Hong Kong-Shanghai-Shenzhen Interconnection Small Comprehensive Index, and the CSI Hong Kong-Shanghai-Shenzhen Comprehensive Index [1] - The top ten weighted stocks in the index include Chifeng Jilong Gold Mining (1.53%), Zhaojin Mining Industry (1.28%), China Rare Earth (1.16%), and others, indicating a diverse representation of companies in the materials sector [1] Group 2 - The market share of the index's holdings shows that Shenzhen Stock Exchange accounts for 49.61%, Shanghai Stock Exchange for 38.62%, and Hong Kong Stock Exchange for 11.76% [2] - In terms of industry composition, non-ferrous metals represent 40.64%, chemicals 37.39%, non-metallic materials 9.51%, steel 8.03%, and paper and packaging 4.43% [2] - The index samples are adjusted biannually, with adjustments occurring on the next trading day after the second Friday of June and December, ensuring that the weight factors are updated accordingly [2]

Group 1 - The ChiNext Index experienced a significant rise, with the ChiNext ETF Tianhong (159977) increasing by 0.55%, and notable stocks like Feilihua rising nearly 14% [1] - The ChiNext Index, which consists of 100 representative companies listed on the ChiNext board, reflects the operational status of the ChiNext market, characterized by a high proportion of emerging industries and high-tech enterprises [1] - The recent surge in the domestic overseas computing power industry chain is attributed to multiple factors, including Nvidia's market capitalization stabilizing at $4.2 trillion, boosting market confidence [2] Group 2 - The market capitalization of Zhongji Xuchuang surpassed 200 billion, with a weekly increase of 24%, while Xinyi Sheng's market cap exceeded 180 billion, achieving a 39% weekly increase [2] - The four major CSP giants' capital expenditure exceeding $300 billion over 25 years, with a structural tilt towards AI, indicates sustained high demand for computing hardware [2] - Financial institutions suggest that while short-term attractiveness may decline in the consumer and technology sectors, there remains long-term investment potential due to valuation improvement in A-shares [3]

Summary of Key Points Core Viewpoint - The financing balance of the ChiNext board has reached 372.37 billion yuan, marking a continuous increase for ten trading days, with a total increase of 13.16 billion yuan during this period [1]. Financing Balance and Changes - As of July 18, 2025, the total margin balance of the ChiNext board is 373.52 billion yuan, an increase of 0.695 billion yuan from the previous trading day [2]. - The financing balance specifically is 372.37 billion yuan, which is an increase of 0.698 billion yuan from the previous day, continuing a streak of ten consecutive days of growth [1][2]. Individual Stock Performance - During the period of increasing financing balance, 548 stocks saw an increase, with 114 stocks experiencing an increase of over 20%. The stock with the highest increase is Feiliwa, with a financing balance of 36.67 million yuan, reflecting a growth of 296.47% [2][3]. - Conversely, 393 stocks experienced a decrease in financing balance, with 85 stocks declining by over 10%. The largest decrease was seen in Zhongying Electronics, with a financing balance of 54.33 million yuan, down by 33.81% [2][3]. Sector Analysis - Among the stocks with an increase of over 20% in financing balance, the majority are concentrated in the computer, power equipment, and pharmaceutical industries, with 15, 14, and 14 stocks respectively [4]. Market Performance - Stocks with a financing balance increase of over 20% averaged an increase of 11.30%, outperforming the ChiNext index. The top gainers include Tongguan Copper Foil, Dongtian Micro, and Fusa Technology, with increases of 60.84%, 52.28%, and 49.16% respectively [5]. - The stocks with the largest increase in financing balance include Xinyi Sheng, with a balance of 5.764 billion yuan, increasing by 1.519 billion yuan, followed by Zhongji Xuchuang and Guiding Needle, with increases of 0.997 billion yuan and 0.750 billion yuan respectively [5][6].

Summary of Conference Call on Quartz Fiber Electronic Fabric and Philihua Investment Value Analysis Industry Overview - The high-end PCB market is expected to benefit from the growth in server storage demand, with a projected market value of $10.9 billion in 2024, representing a 33% year-on-year increase, and a compound annual growth rate (CAGR) of 12% over the next five years, driven primarily by strong demand from the AI computing sector for high-end copper-clad laminates and PCBs [1][3][4]. Company Insights: Philihua - Philihua is one of the few manufacturers globally capable of mass-producing quartz fiber, possessing an integrated supply chain from quartz materials to finished products. The acquisition of Zhongyi New Materials has strengthened its competitiveness in the electronic fabric sector, leading to explosive growth in its business [1][5]. - The company has significant growth potential in the electronic fabric business, with projected revenues of 200-300 million yuan in 2026, and the potential to reach a scale of 700-1,000 million yuan in the coming years, possibly achieving a market value of 20 billion yuan [3][25]. Product Advantages - Quartz fiber electronic fabric exhibits significant advantages over traditional glass fiber fabric, particularly in dielectric constant (approximately 3.78) and dielectric loss (theoretically up to 1/10,000), making it more suitable for high-speed data transmission, especially in 224G high-speed interconnect applications [1][2][8][12]. - The high-end copper-clad laminate market is projected to grow from over $4 billion in 2024 to nearly $7 billion by 2029, with an annual increment of about $3 billion. If fully covered by quartz fiber electronic fabric, this would create an additional market space of approximately $1 billion (around 10 billion yuan) each year [1][14]. Market Dynamics - The special electronic fabric market is highly competitive, with Philihua's subsidiary Zhongyi New Materials having a full order book and actively expanding production since launching its quartz fiber electronic fabric project in 2017 [1][16][17]. - The global top ten copper-clad laminate manufacturers hold a high market concentration, accounting for about 75% of global sales. The market for AI server copper-clad laminates is primarily dominated by Taiwanese companies, which have been conservative in their expansion plans, leading to a persistent supply-demand imbalance in high-end copper-clad laminates [15]. Future Outlook - The demand for high-end PCBs is expected to enter a new growth cycle from 2024 to 2029, driven by high-end requirements such as high multilayer boards, HDI, and packaging substrates [13]. - Philihua's traditional semiconductor and aerospace businesses are expected to maintain steady growth, with aerospace demand anticipated to recover strongly in 2026 [3][19][24]. - The company’s new electronic fabric business is projected to achieve significant revenue growth, potentially reaching 700-1,000 million yuan in the next few years, with a market valuation of 20 billion yuan being a reasonable expectation [25][26]. Investment Considerations - Philihua's overall investment strategy indicates a strong outlook for its electronic fabric segment, with the potential for substantial market share and revenue growth in the quartz fiber sector, supported by its leading position in the domestic and global markets [27].

Group 1 - The rapid development of AI computing power is driving the upgrade of PCBs towards high-frequency and high-speed applications, leading to an explosion in demand for specialty electronic fabrics [3][5] - Specialty electronic fabrics are high-performance woven materials that optimize chemical composition and manufacturing processes to achieve specific electrical, thermal, or mechanical properties, supporting high-frequency signal transmission and reducing energy loss [3][10] - The market for AI/HPC server PCBs (excluding packaging substrates) is expected to grow at a CAGR of 32.5% from 2023 to 2028, significantly higher than other sectors [3][10] Group 2 - Low-DK electronic fabrics, characterized by low dielectric constant (DK) and low dielectric loss (DF), are crucial for AI servers and data center switches, enhancing signal efficiency in high-frequency environments [10][11] - The demand for Low-DK fabrics is projected to grow rapidly in 2024, driven by the transition to low-dielectric PCBs in AI server architectures and the global data center upgrade [10][11] - The global Low-DK electronic fabric market is expected to exceed $200 million by 2025 and reach $530 million by 2031, with a CAGR of 18.7% [11][16] Group 3 - Quartz fiber fabric (Q fabric), a high-performance material, is expected to see strong demand growth due to its application in advanced packaging technologies for AI hardware and data center switches [12][19] - The third-generation low-dielectric electronic fabric, Q fabric, utilizes high-purity silica to achieve ultra-low dielectric constant and loss, presenting significant technical barriers to mass production [12][19] - The core mission of Low-CTE electronic fabrics is to address thermal management issues in advanced chip packaging, with demand surging due to the explosive growth of AI computing power [19][20] Group 4 - Domestic manufacturers are accelerating capacity expansion in the specialty electronic fabric sector, responding to the growing demand from AI computing power upgrades [22][24] - Key suppliers of specialty electronic fabrics include Japanese, Taiwanese, and mainland Chinese companies, with domestic firms rapidly increasing production capabilities to meet market needs [22][24] - The competitive advantage of specialty electronic fabric suppliers lies in their ability to quickly innovate product performance and scale up production [22][24]

Investment Rating - The report maintains a positive outlook on the defense and military industry, suggesting an increase in focus on military investments [4][5]. Core Insights - The military trade supply and demand are strongly resonating, creating a new industry landscape, with expectations for continuous progress [5]. - The military industry is entering an upward cycle, driven by domestic demand from military construction, particularly in the transition to "mechanization + informationization" and the upcoming "intelligent + unmanned" equipment [5]. - The global geopolitical changes are expanding military trade demand, with China's military products gaining recognition, leading to a strong resonance between supply and demand in military trade [5]. - The growth cycle in the military sector is expected to enhance industry valuations, with a recognition of "technological equity" in military advancements [5]. - Recommendations include increasing attention to military investments, focusing on next-generation equipment and precision-guided weapons, which are expected to see initial growth by 2025 [5]. Market Review - Last week, the Shenwan Defense and Military Index rose by 2.26%, while the CSI Military Leaders Index increased by 3.68%, outperforming the Shanghai Composite Index, which rose by 0.69% [6][4]. - The top five performing stocks in the defense and military sector were Beihua Co. (23.37%), Yingliu Co. (20.37%), Feilihua (15.98%), AVIC Shenyang Aircraft (12.78%), and Aerospace Power (11.37%) [6][13]. - The bottom five performing stocks included Changchun Yidong (-9.36%), Rongfa Nuclear Power (-6.6%), Rainbow Co. (-6.14%), Guorui Technology (-5.02%), and Galaxy Electronics (-4.66%) [6][13]. Valuation Changes - The current PE-TTM for the Shenwan Military Sector is 83.84, placing it in the upper range historically, with a valuation percentile of 71.57% since January 2014 [14]. - Valuations are slightly differentiated among sub-sectors, with aerospace and aviation equipment at a relatively high valuation since 2020 [14][19]. Key Valuation Targets - The report lists key valuation targets in the military sector, including companies like AVIC Shenyang Aircraft, AVIC Chengfei, and others, with projected net profits and PE ratios for the coming years [21].

Core Viewpoint - The report highlights significant adjustments in the heavy holdings of Liu Gesong's six funds managed by GF Fund, particularly in the new energy vehicle and semiconductor sectors, with a notable shift towards new consumption, internet, and military industries [1][2]. Fund Holdings Adjustment - Liu Gesong's funds have reduced their positions in several previously favored stocks, including: - North Huachuang: Holdings decreased by approximately 17.69% to 161,240 shares [2]. - Seres: Holdings reduced by 9.14% [6]. - EVE Energy: Holdings decreased by 4.16% [6]. - JinkoSolar: Holdings down by 10.77% [6]. - Conversely, there has been a significant increase in holdings of stocks such as: - DeYe Co.: Increased by 40% [3][8]. - Xichuang Data: Increased by nearly 76% [3]. - Xiaomi Group-W: Increased by 25.66% [7]. Fund Performance - The overall performance of Liu Gesong's funds in Q2 was underwhelming, with all funds experiencing net redemptions: - The best-performing fund, GF Multi-Dimensional Emerging, recorded a net value growth rate of 7.91% [4]. - Other funds, such as GF Small Cap Growth A and C, reported growth rates of 2.38% and 2.28%, respectively [4]. - GF Innovation Upgrade and GF Technology Pioneer recorded negative returns [4]. Market Context - The A-share market saw mixed performance in Q2, with the Shanghai Composite Index rising by 3.26% and the Shenzhen Component Index slightly declining by 0.37% [5]. - Key sectors such as military, banking, and telecommunications showed significant gains, while sectors like food and beverage, home appliances, and steel performed poorly [5]. - Liu Gesong remains optimistic about the domestic economy's resilience, citing factors such as the easing of geopolitical tensions and supportive domestic policies [5].

Investment Rating - The report assigns a "Buy" rating to the company, with a market price of RMB 60.71 and a sector rating of outperforming the market [1]. Core Insights - The company, Hubei Feilihua Quartz Glass Co., Ltd., is positioned to benefit from the growing demand for quartz fiber electronic cloth, which is expected to become a core material in the computing era [3]. - The semiconductor and optical materials sectors are anticipated to benefit from domestic substitution trends, while the aerospace, photovoltaic, and optical communication businesses are expected to maintain a stable foundation [3]. - The report highlights the company's comprehensive industrial chain capabilities, which include quartz sand, quartz fiber, and quartz fiber electronic cloth production [3]. Summary by Sections Financial Performance - The company is projected to achieve EPS of RMB 1.16, 1.65, and 2.45 for the years 2025, 2026, and 2027 respectively, with a total market capitalization of approximately RMB 31.7 billion as of July 16, 2025 [5]. - Revenue forecasts indicate a growth trajectory with expected revenues of RMB 2,318 million in 2025, RMB 3,366 million in 2026, and RMB 5,052 million in 2027, reflecting growth rates of 33.1%, 45.2%, and 50.1% respectively [7]. Industry Positioning - The company is recognized as a leading supplier of quartz glass fiber in the aerospace sector, benefiting from the growth of China's aerospace industry [8]. - The report emphasizes the importance of low dielectric electronic cloth as a core material for printed circuit boards (PCBs), with quartz fiber expected to stand out due to its superior properties [8][30]. Market Trends - The global semiconductor quartz products market is projected to grow significantly, with the market size expected to increase from USD 3.226 billion in 2024 to USD 7.321 billion by 2031 [8]. - The demand for low dielectric electronic cloth is driven by advancements in 5G communication, automotive electronics, and aerospace applications, which require high-speed signal transmission and low energy loss [8][42]. Competitive Advantages - The company has established a full industrial chain from high-purity quartz sand to downstream applications, enhancing its competitive edge in the market [22]. - Feilihua has been actively expanding its production capacity to capture the emerging market opportunities in quartz fiber electronic cloth [8][27].

Core Insights - The total margin financing balance of the ChiNext market reached 371.67 billion yuan, marking a continuous increase for nine trading days, with a cumulative increase of 12.46 billion yuan during this period [1][2] Financing Balance Changes - As of July 17, 2025, the total margin financing balance was 372.82 billion yuan, an increase of 2.48 billion yuan from the previous trading day [2] - The financing balance specifically was 371.67 billion yuan, which increased by 2.45 billion yuan from the previous day [2] - During the nine-day increase, 553 stocks saw an increase in financing balance, with 99 stocks experiencing an increase of over 20% [2] Top Gainers and Losers - The stock with the highest increase in financing balance was Feiliwa, with a latest balance of 41.78 million yuan, reflecting a 351.84% increase [3] - Other notable gainers included Fosa Technology and Mingyang Electric, with increases of 182.02% and 134.65%, respectively [3] - Conversely, the stock with the largest decrease was Oulutong, with a financing balance of 38.11 million yuan, showing a decline of 32.55% [3] Sector Performance - Stocks with financing balance increases of over 20% were primarily concentrated in the machinery, computer, and pharmaceutical industries, with 13, 13, and 12 stocks respectively [4] - The average increase for stocks with over 20% financing balance growth was 11.55%, outperforming the ChiNext index [5] Notable Financing Changes - The stock with the largest total increase in financing balance was Xinyi Sheng, with a latest balance of 5.48 billion yuan, increasing by 1.24 billion yuan [6] - Other significant increases were seen in Zhongji Xuchuang, with an increase of 902 million yuan, and Guiding Needle, with an increase of 682 million yuan [6] - Stocks with the largest decreases included Sifang Jinchuan, Zhongying Electronics, and Shenzhou Taiyue, with decreases of 331 million yuan, 266 million yuan, and 211 million yuan, respectively [6]

Investment Rating - The report rates the defense and military industry as "Overweight" indicating that the industry is expected to outperform the overall market [2][11]. Core Insights - The report highlights that orders are being transmitted in an orderly manner, signaling an impending performance inflection point for the industry [3]. - It selects 48 key companies across the military industrial chain, with a total market capitalization of 1,320.52 billion, accounting for approximately 48.4% of the total market capitalization of the Shenwan Defense and Military Industry Index [3]. - The expected total performance for these 48 companies in Q2 2025 is approximately 6.768 billion (down 11.2% year-on-year), and for H1 2025, it is expected to be around 11.336 billion (down 17.7% year-on-year) [3]. - The report notes performance differentiation across various segments due to customer structure and revenue recognition timing [3]. - The military industry is entering a significant upward cycle driven by domestic demand, particularly due to military modernization efforts [3]. - The report anticipates a strong resonance between supply and demand in military trade, driven by global geopolitical changes and increased recognition of Chinese military products [3]. - The growth cycle in the military sector is expected to enhance industry valuations, with a focus on technological equity and recognition of military advancements [3]. - The report suggests increasing attention to the military sector, particularly in areas such as next-generation equipment and precision-guided weapons, which are expected to enter a growth phase in 2025 [3]. Summary by Sections Performance Expectations - The report provides performance forecasts for key companies, indicating significant variances in growth rates across different segments [4][5]. - For example, Torch Electronics and Hongyuan Electronics are expected to see growth rates of 61% and 49% respectively in H1 2025, while companies like Zhihua Technology and Aerospace Electric are projected to decline by 69% and 78% respectively [3][4]. Market Dynamics - The report emphasizes that the core driver of domestic demand in the military sector is military construction, with a transition towards a new cycle characterized by "intelligent and unmanned" capabilities [3]. - It also notes that the military trade landscape is evolving, with increased global demand and recognition of Chinese military capabilities following recent geopolitical events [3]. Investment Opportunities - The report identifies key investment targets within the military sector, including high-end combat capabilities and new quality combat combinations [3]. - Specific companies highlighted for potential investment include AVIC Shenyang Aircraft, AVIC Chengdu Aircraft, and others involved in advanced materials and electronic components [3].