Report Industry Investment Rating - Not provided in the content Core Viewpoints - After the implementation of reciprocal tariffs, RMB exchange rate fluctuations have intensified, and the RMB has also depreciated against some non - US currencies such as the euro and the yen. The subsequent interest rate cut may be slow, and the window period may appear in the middle of the year [2][4] - Since 2023, external balance has significantly affected the domestic interest rate cut rhythm. The central bank's exchange rate management aims for stability, and the step - by - step increase in the central parity rate reflects the gentle and orderly release of exchange rate pressure [4][7] - In the medium term, there are signs of a slowdown in the US economy, and there may be a window period for an interest rate cut in mid - 2025 [4][14] Summary by Relevant Catalog 1. How will the interest rate cut rhythm evolve after the increase in exchange rate flexibility? - **Exchange rate fluctuations after reciprocal tariffs**: After the implementation of reciprocal tariffs on April 3, the on - shore RMB exchange rate has been rising for 4 consecutive trading days, with the central rate moving up from 7.27 to 7.35. The offshore RMB exchange rate has also depreciated, breaking through 7.4 on April 9. The US dollar index has been weak, and the RMB has depreciated against some non - US currencies [4][6] - **Impact of external balance on interest rate cut rhythm**: Since 2023, external balance has significantly affected the domestic interest rate cut rhythm. In 2024, the first policy interest rate cut was in late July, mainly due to exchange rate pressure [4][7] - **Exchange rate management and interest rate cut prediction**: The central bank's exchange rate management aims for stability. The step - by - step increase in the on - shore central parity rate to over 7.2% reflects the orderly release of exchange rate pressure. The central bank will likely maintain its stance in exchange rate regulation, with reserve requirement ratio cuts taking precedence over interest rate cuts, and the latter may be slow [4][12] - **Medium - term interest rate cut window**: There are signs of a slowdown in the US economy. The market has priced in a more than 50% probability of a Fed interest rate cut in May, and mid - year may be a good time for a domestic interest rate cut [4][14]

Investment Rating - The investment rating for the company is "Accumulate" [1][16]. Core Views - The company's performance in 2024 is expected to meet market expectations, with short-term pressure on testing equipment, while environmental testing services and integrated circuit testing are expected to maintain steady growth. Orders in special industries are anticipated to improve in 2025, and integrated circuit testing is expected to accelerate [3][9]. Financial Summary - For 2023, the company reported a revenue of 2,117 million yuan, with a year-on-year growth of 17.3%. In 2024, revenue is projected to decline to 2,026 million yuan, a decrease of 4.3%. The net profit attributable to the parent company is expected to drop to 229 million yuan in 2024, down 27.0% from the previous year. The earnings per share (EPS) for 2024 is estimated at 0.45 yuan [7][10]. - The company’s revenue for the fourth quarter of 2024 is expected to be 6.19 billion yuan, showing a year-on-year increase of 4.93% and a quarter-on-quarter increase of 26.60% [9]. - The company’s net profit for the fourth quarter of 2024 is projected to be 0.83 billion yuan, reflecting a year-on-year decrease of 11.64% but a significant quarter-on-quarter increase of 90.10% [9]. Product Performance - In 2024, revenue from testing equipment is expected to be 6.23 billion yuan, a decrease of 17.25% year-on-year, primarily due to weakened capital expenditure demand from special industry clients and intensified competition in the downstream market. Environmental reliability testing services are projected to generate 10.09 billion yuan, a slight increase of 0.64% year-on-year. Integrated circuit verification and analysis services are expected to achieve 2.88 billion yuan, a year-on-year growth of 12.33% [9][10]. Future Outlook - In 2025, the company anticipates an improvement in orders from special industries, supported by a projected defense budget of 1.81 trillion yuan, which is a year-on-year increase of 7.2%. The demand for equipment sales and environmental testing services is expected to improve as special industries enter a phase of accelerated order release [9][10].

Group 1: Pharmaceutical Industry Insights - The recent tariff environment has limited short-term disruptions to the pharmaceutical industry, with domestic innovative drugs expected to continue gaining market share[3] - Domestic innovative drug companies hold significant market shares, with local BTK inhibitors capturing 75% and PD-1/PD-L1 monoclonal antibodies over 70% of the domestic market[3] - In 2024, the sales of the innovative drug Zebutini reached $2.6 billion, marking a 105% year-on-year increase, positioning it as the leading treatment in the U.S. for new CLL patients[3] Group 2: Investment Banking and Brokerage Sector - In Q1 2025, the total equity financing scale reached CNY 103.6 billion, reflecting a 32% year-on-year increase[8] - March saw a significant rise in IPOs, with 14 new listings raising a total of CNY 7.9 billion, a 105% increase from the previous month[8] - The demand for mergers and acquisitions remains strong, with 134 major restructuring events disclosed since the second half of 2024[8] Group 3: Engineering Machinery Sector - In March 2025, domestic excavator sales reached 19,517 units, a 28.5% year-on-year increase, contributing to a total of 61,372 units sold in Q1, up 22.8% year-on-year[18] - The average working hours for major engineering machinery products improved by 6.53% year-on-year, with excavators averaging 86.9 hours[19] - The overall risk from trade friction is manageable, as most major Chinese engineering machinery manufacturers have minimal exposure to the U.S. market[19] Group 4: Insurance Sector Developments - The recent regulatory changes allow insurance companies to increase their equity asset allocation, potentially enhancing their investment returns[21] - The new guidelines raise the equity allocation cap for insurers with a solvency ratio above 250% from 35% to 40%, providing more room for investment[22] - The insurance sector is expected to benefit from improved asset allocation, with major companies likely to enhance their market support capabilities[21]

Quantitative Models and Construction Methods 1. Model Name: GRU(10,2)+NN(10) - Model Construction Idea: This model uses a combination of GRU (Gated Recurrent Unit) and Neural Networks to capture high-frequency trading patterns. - Model Construction Process: The model is constructed by first applying a GRU layer with 10 units and 2 layers, followed by a Neural Network layer with 10 units. This combination helps in capturing temporal dependencies and complex patterns in high-frequency data. - Model Evaluation: The model shows stable performance with notable returns. - [3][4] 2. Model Name: GRU(50,2)+NN(10) - Model Construction Idea: Similar to the previous model but with a larger GRU layer to capture more complex patterns. - Model Construction Process: The model uses a GRU layer with 50 units and 2 layers, followed by a Neural Network layer with 10 units. - Model Evaluation: This model also demonstrates strong performance with higher returns compared to the smaller GRU model. - [3][4] 3. Model Name: Multi-Granularity Model (5-day label) - Model Construction Idea: This model uses multi-granularity labels to capture different trading patterns over a 5-day period. - Model Construction Process: The model is trained using a bi-directional AGRU (Attention-based GRU) to capture both past and future dependencies in the data. - Model Evaluation: The model shows significant returns and is particularly effective in capturing short-term trading patterns. - [3][4] 4. Model Name: Multi-Granularity Model (10-day label) - Model Construction Idea: Similar to the 5-day label model but with a 10-day period to capture longer-term patterns. - Model Construction Process: The model is trained using a bi-directional AGRU. - Model Evaluation: This model also shows strong performance, capturing longer-term trading patterns effectively. - [3][4] Model Backtesting Results 1. GRU(10,2)+NN(10) - Multi-Period Return: 0.84% (last week), 0.84% (April 2025), 9.81% (YTD 2025) - [3] 2. GRU(50,2)+NN(10) - Multi-Period Return: 0.87% (last week), 0.87% (April 2025), 11.21% (YTD 2025) - [3] 3. Multi-Granularity Model (5-day label) - Multi-Period Return: 1.43% (last week), 1.43% (April 2025), 22.01% (YTD 2025) - [3] 4. Multi-Granularity Model (10-day label) - Multi-Period Return: 1.28% (last week), 1.28% (April 2025), 19.89% (YTD 2025) - [3] Quantitative Factors and Construction Methods 1. Factor Name: Intraday Skewness Factor - Factor Construction Idea: This factor captures the skewness in intraday returns to identify potential trading opportunities. - Factor Construction Process: The factor is calculated based on the distribution of intraday returns, focusing on the skewness measure. - Factor Evaluation: The factor shows mixed performance with some periods of negative returns. - [3][4] 2. Factor Name: Downside Volatility Proportion Factor - Factor Construction Idea: This factor measures the proportion of downside volatility in intraday trading. - Factor Construction Process: The factor is calculated by decomposing realized volatility into upside and downside components and focusing on the downside proportion. - Factor Evaluation: The factor shows relatively stable performance with positive returns in most periods. - [3][4] 3. Factor Name: Post-Open Buy Intention Proportion Factor - Factor Construction Idea: This factor measures the proportion of buy intentions after the market opens. - Factor Construction Process: The factor is calculated based on the proportion of buy orders in the initial trading period after the market opens. - Factor Evaluation: The factor shows consistent positive returns, indicating strong buy signals. - [3][4] 4. Factor Name: Post-Open Buy Intensity Factor - Factor Construction Idea: This factor measures the intensity of buy intentions after the market opens. - Factor Construction Process: The factor is calculated based on the intensity and volume of buy orders in the initial trading period after the market opens. - Factor Evaluation: The factor shows stable performance with positive returns. - [3][4] Factor Backtesting Results 1. Intraday Skewness Factor - Multi-Period Return: -0.12% (last week), -0.12% (April 2025), 11.2% (YTD 2025) - [3] 2. Downside Volatility Proportion Factor - Multi-Period Return: -0.36% (last week), -0.36% (April 2025), 8.82% (YTD 2025) - [3] 3. Post-Open Buy Intention Proportion Factor - Multi-Period Return: 0.41% (last week), 0.41% (April 2025), 6.53% (YTD 2025) - [3] 4. Post-Open Buy Intensity Factor - Multi-Period Return: 0.76% (last week), 0.76% (April 2025), 7% (YTD 2025) - [3]

Investment Rating - The report maintains an "Overweight" rating for the building materials industry [4] Core Viewpoints - The external environment is expected to positively influence the fundamentals of the building materials sector, with a focus on the keyword for 2025 being "tortoise and hare," indicating a gradual release of profits as supply optimization accumulates alongside stabilizing demand [3][4] - The building materials industry is primarily driven by domestic demand, which is expected to hedge against external environmental changes. Additionally, a decline in commodity prices, particularly oil, is anticipated to reduce raw material costs, benefiting the industry [4] Summary by Relevant Sections Cement - Cement is a pure domestic demand-driven commodity, with successful staggered price increases. The report predicts a high certainty of reduced pressure on cement demand this year, supported by key ongoing projects contributing to domestic demand [4] - The report highlights that the cement industry's demand resilience and structure have been tested, with coal price reductions providing opportunities for profit improvement. Earnings recovery is expected as early as Q1 2025 [4] - Recommended stocks include Conch Cement, Huaxin Cement, TPI Cement, China Resources Cement Technology, Shangfeng Cement, and Jinju Group [4][5] Consumer Building Materials - The main focus for consumer building materials is profit margin recovery, aided by expected declines in raw material prices due to OPEC+ production increases [4] - The report suggests that the biggest highlight for 2025 will not be price growth but rather the elasticity of net profit margin recovery, with expectations of a more cautious approach to revenue growth and cost management [4] - Recommended stocks include Oriental Yuhong, Beixin Building Materials, Weixing New Materials, Sankeshu, Rabbit Baby, China Liansu, Keshun Shares, Dongpeng Holdings, and Mona Lisa [4][5] Fiberglass - The fiberglass industry shows strong expectations for price pass-through capabilities despite concerns over tariff impacts. Major companies like China Jushi have established production capacities in key overseas markets, mitigating potential negative effects [4] - The report indicates that the industry's major players have a high willingness and ability to increase prices, with strong certainty of profit recovery [4] - Recommended stocks include China Jushi and China National Materials [4][5]

Investment Rating - The report maintains a "Buy" rating for the company [6][15] Core Views - The company's profit meets expectations, driven by new products and online channel expansion, with category expansion poised for future growth [3][13] - For 2024, the company achieved revenue of 26.9 billion yuan, a year-on-year increase of 9.5%, and a net profit of 6.34 billion yuan, up 12.8% year-on-year [13][15] - The company plans to distribute a cash dividend of 8.60 yuan per 10 shares, resulting in a dividend payout ratio of 75.2% [13] Financial Summary - Revenue and net profit projections for 2025-2027 are 29.68 billion yuan, 33.01 billion yuan, and 36.85 billion yuan respectively, with year-on-year growth rates of 10.3%, 11.2%, and 11.6% [5][15] - The company’s gross margin improved to 47% in 2024, an increase of 2.27 percentage points year-on-year, primarily due to lower raw material prices [14] - The net profit margin for 2024 increased by 0.66 percentage points to 23.63% [14] Product and Channel Performance - In 2024, revenue from soy sauce, seasoning sauce, oyster sauce, and other categories increased by 8.9%, 10%, 8.6%, and 16.8% respectively [13] - Online sales grew significantly by 39.8%, attributed to supply chain reforms and enhanced new retail strategies [13] Distributor Network - The company added 116 new distributors in 2024, bringing the total to 6,707, indicating a recovery and expansion of its distributor network [13][14] Future Outlook - The company is focusing on enhancing its overall supply chain capabilities, aiming for double-digit revenue and profit growth as part of its "Four-Five Plan" [14][15]

Investment Rating - The investment rating for the company is "Buy" [1][8] Core Insights - The company's performance in the fiscal year 2024 slightly exceeded expectations, driven by brand momentum, continuous product innovation, and channel network expansion. The expectation of rising gold prices is anticipated to accelerate terminal sales, with high growth continuing into fiscal year 2025 [3][8]. - The operating leverage has significantly improved the net profit margin, with a gross margin of 41.16% (down 0.73 percentage points) and an adjusted net profit margin of 17.66% (up 4.29 percentage points). The period expense ratio decreased by 6.08 percentage points to 18.32% [5][8]. - The company is focusing on enhancing its brand's international presence, leveraging successful operations in the Hong Kong and Macau regions to accelerate store expansion in Singapore and Japan, thereby opening up growth opportunities overseas [5][8]. Financial Summary - In fiscal year 2024, the company achieved revenue of 85.06 billion RMB, representing a year-on-year increase of 167.5%. The net profit reached 14.73 billion RMB, up 253.9% year-on-year, with adjusted net profit at 15.02 billion RMB, also up 253.4% [7][8]. - The company’s revenue from physical stores was 74.50 billion RMB (+164.3%), while online platforms contributed 10.55 billion RMB (+192.2%), indicating a slight increase in the proportion of online sales [8]. - The company’s domestic business generated 76.51 billion RMB (+152.95%), while revenue from Hong Kong and Macau reached 8.55 billion RMB (+451.41%) [8].

Group 1: Tariff Measures Overview - The new tariff measures announced by the U.S. on April 2, 2025, involve "reciprocal tariffs" affecting over $2.3 trillion in imports, accounting for 72% of U.S. total imports[8] - Tariffs on China are set to increase by 34%, while ASEAN countries will see an average increase of 34%, and the EU will face a 20% increase[6] - The current tariff rate on Chinese goods is 31.6%, with the new measures expected to raise it to an effective rate of 32.3%[15] Group 2: Economic Impact - The tariffs are projected to reduce China's total exports by approximately 4.7 percentage points, and considering re-export trade, the total impact could be around 6.3 percentage points[21] - U.S. inflation is expected to rise by 2.6 percentage points due to these tariffs, with consumer goods contributing 2.1 percentage points and capital goods contributing 0.5 percentage points[30] - The average tariff rate on U.S. imports is expected to increase by 18.2 percentage points as a result of these measures[27] Group 3: Trade Dynamics - The "exemption list" for tariffs includes products like copper, pharmaceuticals, and semiconductors, which collectively represent about 20% of U.S. imports[13] - The impact on net exports is expected to be limited, as a decline in exports may also lead to a decrease in imports, creating a "natural hedge" on trade surplus[23] - There is potential for alternative trade opportunities, particularly with the EU, as it may increase imports of Chinese consumer electronics and electrical equipment in response to U.S. tariffs[21]