1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - The REITs market rebounded this week, with transportation and affordable housing leading the gains. The National Development and Reform Commission (NDRC) has recommended 105 REITs projects to the China Securities Regulatory Commission (CSRC), of which 83 have been successfully listed. Although the issuance scale this year has decreased compared to 2024, the market supply will still be supported next year [2]. - The subscription enthusiasm for the public offering of the Anbo Warehouse REIT has significantly declined this week, with the subscription multiple dropping to the lowest level this year and the allocation ratio significantly increasing to 5.8% [2]. - The CSI REITs Total Return Index closed at 1050.45 points this week, up 0.86%, outperforming the CSI 300 by 1.94 percentage points and the CSI Dividend by 0.60 percentage points. The index has increased by 8.53% since the beginning of the year, underperforming the CSI 300 by 9.09 percentage points but outperforming the CSI Dividend by 5.20 percentage points [2]. 3. Summary by Relevant Catalogs 3.1 Primary Market: One Newly Issued Public Offering REITs Made Progress - As of November 14, 2025, 19 REITs have been successfully issued this year, with a total issuance scale of 387.9 billion yuan, a year-on-year decrease of 20.8%. This week, the Huaxia Anbo Warehouse Logistics REIT completed its fundraising, with offline and public effective subscription multiples of 147 and 17 times respectively [2]. - Currently, there are 8 newly issued REITs in the approval process, 1 has been questioned and responded to, 1 has passed the review, and 1 has been registered and is awaiting listing. There are 5 REITs applying for expansion, 3 have been questioned and responded to, and 3 have passed the review [2]. 3.2 Secondary Market: Index Rebounded This Week 3.2.1 Market Review: CSI REITs Total Return Index Rose 0.86% - The CSI REITs Total Return Index closed at 1050.45 points this week, up 0.86%, outperforming the CSI 300 by 1.94 percentage points and the CSI Dividend by 0.60 percentage points. The index has increased by 8.53% since the beginning of the year, underperforming the CSI 300 by 9.09 percentage points but outperforming the CSI Dividend by 5.20 percentage points [2]. - By project attribute, equity REITs rose 0.81% this week, and concession - based REITs rose 1.11%. By asset type, transportation (+1.55%), affordable housing (+1.50%), consumption (+1.17%), and warehousing logistics (+0.85%) sectors performed well [2]. 3.2.2 Liquidity: Liquidity in the Environmental Protection and Water Services and Data Center Sectors Increased Significantly - The average daily turnover rates of equity and concession - based REITs this week were 0.59% and 0.47% respectively, a decrease of 1.53 basis points and an increase of 2.26 basis points compared to last week. The trading volumes were 573 million shares and 138 million shares respectively, a week - on - week decrease of 1.66% and an increase of 6.62% [2]. - The data center sector was the most active [2]. 3.2.3 Valuation: The Affordable Housing Sector Had a Higher Valuation - According to the ChinaBond valuation yield, the yields of equity and concession - based REITs were 3.85% and 3.92% respectively. The warehousing logistics (5.45%), transportation (4.74%), and park (4.64%) sectors ranked in the top three [2]. 3.3 This Week's News and Important Announcements - **News**: On November 11, the deputy director of the Investment Department of the NDRC stated that the NDRC has recommended 105 REITs projects to the CSRC, of which 83 have been successfully listed. The total issuance scale this year is 41.5 billion yuan, including 19 newly issued REITs (38.8 billion yuan) and 2 expansion offerings (2.67 billion yuan), showing a decrease compared to 2024 [2]. - **Announcements**: Multiple REITs announced dividends this week, and the strategic placement shares of the China Merchants Expressway REIT will be lifted on November 21, 2025 [30].

Investment Rating - The report indicates a positive outlook for the green certificate market, suggesting it is entering a high-quality development phase [3][6]. Core Insights - Green certificates are the only proof of the environmental attributes of renewable energy electricity in China, with a market mechanism that allows for flexible trading [3][4]. - The development of the green certificate market is strategically significant, emphasizing the environmental value of green electricity and imposing mandatory consumption ratios on high-energy-consuming industries [3][4]. - The report forecasts a substantial increase in the trading scale of green certificates, estimating a market size of 132 billion yuan by 2026 [4][6]. Summary by Sections 1. Green Certificate Market Development - The green certificate market is expected to undergo high-quality development, with a significant increase in issuance and trading volume [3][6]. - The average price of green certificates is projected to rise in the future due to increasing demand from both domestic and international markets [4][6]. 2. Trading Mechanism and Scale - The report outlines a closed-loop operation mechanism for green certificates, including issuance, trading, application, and cancellation [3][4]. - As of September 2025, a total of 70.62 billion green certificates have been issued, with a notable increase in trading volume [4][41]. 3. Mandatory Consumption Requirements - Each province and high-emission industry has established mandatory consumption ratios for green electricity, which are set to increase annually [3][54]. - The report highlights that regions with abundant renewable energy resources have higher mandatory consumption ratios compared to coastal areas [57]. 4. International Recognition and Future Outlook - The report emphasizes the need to enhance the international recognition of China's green certificates, especially in light of the EU's carbon tariff set to take effect in 2026 [3][4]. - By 2027, the green certificate market is expected to have a well-established trading system, combining mandatory and voluntary consumption mechanisms [21][22].

Investment Rating - The report recommends a "Buy" rating for the aviation sector, highlighting strong supply logic and elastic demand, with specific recommendations for several airlines and global aircraft leasing companies [4][104][105]. Core Insights - The global aviation market is experiencing steady recovery, with passenger turnover (RPK) increasing by 4.8% year-on-year in the first three quarters of 2025, driven by international routes [4][7]. - The report emphasizes the ongoing constraints in the aircraft manufacturing supply chain, predicting that the trend of aging aircraft will continue for the next 5-10 years, leading to significant supply limitations [4][104]. - Airlines are expected to see substantial improvements in profitability as they approach a pivotal moment in the industry, with a notable increase in international passenger traffic anticipated [4][104]. Summary by Sections Global Aviation Market Overview - The global aviation market is stabilizing, with RPK growth of 4.8% and ASK growth of 4.7% in the first three quarters of 2025, resulting in an overall passenger load factor increase to 83.5% [4][7]. - The Asia-Pacific region leads in RPK growth at 7.7%, while North America shows minimal growth [4][13]. U.S. Aviation Market Tracking - In Q3 2025, U.S. airline ticket sales saw a rebound with domestic passenger volume up by 7.4% and average ticket prices increasing by 4.1% [4][43]. - The report notes a divergence in performance among major U.S. airlines, with Delta Airlines showing significant profit growth while American Airlines reported losses [4][61][69]. European Aviation Market Tracking - The European aviation market has shown steady recovery, with passenger volumes returning to pre-pandemic levels and ticket prices experiencing slight increases [4][74][83]. - Lufthansa reported a 4% increase in revenue for Q3 2025, driven by strong demand for leisure travel [4][83]. Asian Aviation Market Tracking - Major airports in Southeast Asia and Japan are experiencing continued growth, with passenger volumes surpassing pre-pandemic levels [4][88][94]. - The report highlights the strong recovery in passenger traffic at key transit airports, benefiting from robust demand [4][94]. Investment Analysis - The report suggests that the aviation sector is at a turning point, with airlines likely to experience a "golden era" of profitability due to increasing international travel and effective capacity management [4][104]. - Specific airline recommendations include China Eastern Airlines, China Southern Airlines, and Spring Airlines, among others, with a focus on companies showing continuous improvement in performance [4][104][105].

Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook for the sector [2][28]. Core Insights - Fixed asset investment growth has further declined, with a cumulative year-on-year decrease of 1.7% for January to October 2025, a drop of 1.2 percentage points compared to the previous period [4][5]. - Traditional infrastructure investment growth has turned negative, with infrastructure investment (excluding electricity) showing a year-on-year decrease of 0.1% [5]. - Real estate investment remains low, with a year-on-year decline of 14.7% for January to October 2025, indicating a weak recovery trajectory [11]. Summary by Sections Fixed Asset Investment - The cumulative year-on-year growth rate for fixed asset investment is -1.7%, with manufacturing investment at +2.7% [4]. - Infrastructure investment (all-inclusive) shows a year-on-year increase of 1.5%, but infrastructure investment excluding electricity is down by 0.1% [5]. Infrastructure Investment - Transportation, water conservancy, and public utility investments are under pressure, with transportation and postal services showing a slight increase of 0.1% year-on-year, while water and environmental management investments are down by 4.1% [5]. - Regional investment varies, with the eastern region down by 5.4% and the northeastern region down by 11.7% [5]. Real Estate Investment - Real estate investment has decreased by 14.7% year-on-year, with construction starts down by 19.8% and completions down by 16.9% [11]. - The report anticipates a slow recovery in real estate investment due to challenges in supply and inventory replenishment [11]. Investment Recommendations - The report suggests that in 2026, industry investment will stabilize, with emerging sectors expected to benefit from national strategic implementations [18]. - Specific companies to watch include Sichuan Road and Bridge, China Chemical, and others in the new infrastructure and overseas markets [18].

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Insights - The company reported a revenue of 128.88 billion yuan for the first three quarters of 2025, representing a year-on-year increase of 69.56%. The gross profit was 10.1 billion yuan, up 37% year-on-year, and the net profit attributable to the parent company was 3.1 billion yuan, reflecting a year-on-year growth of 51.17% [7] - The company has upgraded its strategy to a "3+N+3" smart hardware platform, focusing on three core mature businesses: smartphones, personal computers, and data center operations, while also expanding into emerging fields such as automotive electronics, software, and robotics [7] - All four major business segments achieved over 70% growth in the first three quarters of 2025, with the smart terminal business revenue reaching 45 billion yuan, up 84.4% year-on-year [7] Financial Data and Profit Forecast - The total revenue forecast for 2025 is 165.49 billion yuan, with a year-on-year growth rate of 50.6%. The net profit attributable to the parent company is projected to be 4.04 billion yuan, reflecting a growth rate of 38.2% [6] - The company expects to maintain a capital expenditure of approximately 3 billion yuan annually over the next three years, primarily for production equipment investments [7] - The projected earnings per share for 2025 is 3.98 yuan, with a price-to-earnings ratio of 22 [6][7]

Economic Overview - In October, the year-on-year growth of social retail sales was 2.9%, slightly above the expected 2.7% but down from the previous 3%[1] - Fixed asset investment showed a cumulative year-on-year decline of 1.7%, worse than the expected -0.7% and previous -0.5%[1] - Real estate development investment fell by 14.7% year-on-year, slightly worse than the expected -14.5% and previous -13.9%[1] Production and Investment - Industrial value-added growth dropped to 4.9% in October, down from 6.5% in September, reflecting a decline of 1.6 percentage points[5] - Fixed asset investment saw a significant decline of 3.6 percentage points to -10.7% year-on-year in October[3] - The decline in investment was influenced by land acquisition costs, which fell by 18.8 percentage points to -14.3%[3] Real Estate Market - The sales area of new commercial housing decreased by 6.8% year-on-year, worsening from a previous decline of 5.5%[1] - The average down payment ratio for home purchases increased to 68.4%, indicating a trend of reduced leverage among buyers[24] - The year-on-year decline in housing prices across 70 cities continued, with sales volume down 15.1% and sales value down 17.1%[24] Consumer Behavior - The decline in retail sales was primarily driven by weak commodity retail, with a notable drop in "old-for-new" product sales such as automobiles and home appliances[2] - Service consumption showed resilience, with restaurant income improving by 2.9 percentage points to 3.8% year-on-year[12] - E-commerce promotions helped mitigate some declines, particularly in categories like communication equipment and textiles[12] Future Outlook - Short-term economic disruptions are expected to weaken but remain manageable, with policies in place to support growth[4] - Potential risks include overdrawn consumer demand and inter-company debt settlements affecting investment[4] - The introduction of 500 billion yuan in special bonds and policy financial tools is anticipated to bolster economic resilience in the fourth quarter[4]

Investment Rating - The report maintains a positive outlook on the Physical AI industry, indicating it as a key driver for the next wave of AI development [3][4]. Core Insights - Physical AI is a systematic engineering approach that integrates spatial intelligence and world models, enabling AI to interact with the physical world [3][11]. - The implementation of Physical AI relies on three technological pillars: world models, physical simulation engines, and embodied intelligent controllers [17][21]. - NVIDIA has established a comprehensive ecosystem in the Physical AI space, leveraging its "chip-algorithm-platform" strategy to create a competitive advantage [3][4]. - Digital twins represent the most mature application of Physical AI, allowing industries to optimize production lines and reduce costs through high-fidelity virtual models [3][48]. - The most promising applications of Physical AI are in intelligent driving and embodied intelligence, with various models like end-to-end, VLA, and world models being explored [3][60]. Summary by Sections 1. Physical AI: The Next Wave of AI - Physical AI signifies a transition from virtual to real-world applications, focusing on understanding and interacting with physical laws [11][12]. - The core structure of Physical AI can be simplified into spatial intelligence, world models, and Physical AI as an integrative system [12][16]. 2. Applications of Physical AI: Understanding the World and Predicting the Future - Physical AI is rapidly moving towards large-scale commercial applications, enhancing efficiency and creating new business models across various industries [47]. - Digital twins serve as a critical tool for industrial digital transformation, enabling real-time simulation and control of physical assets [48][52]. - Intelligent driving and embodied intelligence are identified as key areas where Physical AI can significantly impact [47][60]. 3. Physical AI Industry Chain Analysis - The industry chain of Physical AI shows clear value distribution, with significant changes across various segments including chips, data supply, algorithms, and applications [4][3]. - Key players in the industry include NVIDIA, Qualcomm, and various companies involved in data acquisition and algorithm development [3][4]. 4. Core Targets and Related Companies - Core targets in the Physical AI industry include companies like Zhiwei Intelligent, Tianzhun Technology, and Desay SV [3][4]. - Companies involved in data supply and algorithm development are also highlighted, indicating a diverse investment landscape [3][4].

Investment Strategy Overview - The report emphasizes a fundamental-driven style factor switch, awaiting confirmation of trend movements for 2026 [1][4][8] Factor Performance - Growth factors have shown strong performance, while low volatility and momentum factors have retreated, indicating a rapid rotation among market sectors and themes this year [4][10][12] - Year-to-date performance of various factors in different indices shows growth at 37.93% in CSI 300, while low volatility and liquidity factors have negative returns [10][12] Macro Quantitative Framework - The macroeconomic cycle has shifted more frequently in the past three years, with leading indicators suggesting a downturn in the first half of 2025, followed by a recovery signal towards the end of the year [4][38][43] - The liquidity indicators have shown a weak overall trend, with market trading rates rising, indicating a correction in liquidity for the second half of 2025 [50][54][60] - Credit indicators have shown a preference for expansion in the first half of 2025, transitioning to contraction by November [65][66] 2026 Equity Quantitative Outlook - The report anticipates a fundamental-driven style switch, with a focus on economic fundamentals becoming the key driver, transitioning from liquidity concerns to economic and inflation factors [4][86][91] - Market trends indicate a shift to a consolidation phase since August, with an increasing probability of trend confirmation from late October [92][97] - Emotional indicators have shown a supportive trend since July, with overall sentiment remaining warm and moderate [102][105] Industry Rotation and Focus - The speed of industry rotation has slowed down in 2025, with potential for a main trend to form, particularly in sectors with lower crowding and emerging trends [106][112] - Key sectors to watch include electronics and computing, which have shown lower crowding and are in a trend initiation phase [113][116]

Core Insights - The report highlights a decline in the year-on-year growth rate of social financing (社融) to 8.5% in October 2025, down from 8.7% in September 2025, indicating weakened credit demand from the real economy [3][4] - New RMB loans in October 2025 amounted to 0.22 trillion yuan, significantly lower than the 0.50 trillion yuan recorded in October 2024, reflecting a decrease in both corporate and household loan demand [3][4] - The report suggests that the current financial data indicates a temporary reduction in fiscal support for the real economy, with improvements in credit demand requiring further policy support [4] Financial Data Analysis - The year-on-year growth rate of social financing has decreased, attributed to weak credit demand from the real sector and a high base effect from last year's government bond net financing [4][5] - Government bond net financing has slowed down, with the Ministry of Finance indicating a reduction in local government bond issuance limits, which may lead to concentrated issuance in November and December [4][8] - Corporate short-term loans and new loans have weakened, with some short-term loans being replaced by bill financing, indicating a shift in corporate financing strategies [4][10] Household Financing Trends - Household short-term and long-term loans have both declined, driven by weak consumer sentiment and housing demand, particularly due to a cooling real estate market [4][16] - The report notes that the overall household financing demand remains subdued, necessitating stronger fiscal and monetary policy support to stimulate growth [4][28] Market Dynamics - The report observes a continued trend of household deposits moving into the equity market, with the balance of margin financing in the A-share market increasing, suggesting a recovery in market sentiment [4][29] - The M1 growth rate has decreased, while the M1-M2 spread has expanded, indicating a weakening correlation between these metrics and economic activity, with a stronger link to equity market performance [4][33][35] - The report emphasizes that the current state of the bond market is characterized by uncertainty, with the 10-year government bond yield fluctuating around 1.8% and limited short-term downward potential [4][36]

Group 1 - The report highlights the focus on innovative drugs and the opportunities within the pharmaceutical industry chain, indicating a positive outlook for the Hong Kong pharmaceutical sector by 2026 [1][3] - Multiple policies are supporting the development of the innovative drug industry, with record highs in both transaction amounts and numbers for domestic innovative drugs going overseas [3][6] - The report notes a rebound in valuations for the sector, with leading companies achieving profitability through increased commercialization and licensing revenues [3][6] Group 2 - Key companies such as BeiGene and Innovent Biologics are experiencing significant sales growth, with BeiGene's global sales exceeding $1 billion in Q3 2025, marking a 51% year-on-year increase [3][4] - Innovent Biologics is expanding its pipeline and is expected to achieve positive non-IFRS net profit and EBITDA in 2024, with continued growth projected for 2025 [3][4] - The report emphasizes the strong performance of the CXO sector, driven by a recovery in investment and demand for early-stage research, particularly in emerging fields like peptides and ADCs [3][6] Group 3 - The report provides a detailed earnings forecast and valuation for key companies, indicating significant revenue growth for companies like BeiGene and Innovent Biologics, with projected revenues of $5.1 billion and $2.7 billion respectively for 2025 [4][6] - The pharmaceutical sector is noted for its robust performance, with companies like Sihuan Pharmaceutical and Hengrui Medicine showing strong revenue contributions from innovative products [4][6] - The report also highlights the increasing competitiveness of domestic innovative drugs on a global scale, with successful international collaborations and licensing agreements [3][6] Group 4 - The report indicates that the Hong Kong pharmaceutical market has shown impressive performance year-to-date, with the Hang Seng Healthcare Index significantly outperforming other markets, achieving an approximate 82% increase [15][16] - Valuations for Hong Kong pharmaceuticals are noted to be lower than those in A-shares and overseas markets, with a median PE of 17x for 2025 [15][16] - The report mentions a notable increase in the number of IPOs in the Hong Kong pharmaceutical sector, with over 20 new companies listed in 2025, raising substantial capital [40][41]