Investment Rating - The report maintains a "Positive" investment rating for the banking industry in China [5]. Core Insights - The report highlights that the social financing growth is stabilizing marginally, with government bonds continuing to contribute incrementally against the backdrop of accelerated debt resolution [2][9]. - It notes that the loan growth rate is still declining, but there is a year-on-year improvement in residential medium and long-term loans [12][16]. - The M1 growth rate continues to recover, with a significant year-on-year increase in corporate deposits [18][21]. Summary by Sections Social Financing and Government Bonds - In November 2024, social financing grew by 7.8% year-on-year, with an increment of 23,357 billion yuan, which is a decrease of 1,197 billion yuan compared to the previous year [2][9]. - The report indicates that the main drag on social financing increment was a year-on-year decrease of 5,897 billion yuan in RMB loans, attributed to weak effective demand and local debt resolution processes [9][10]. - Government bonds increased by 1,589 billion yuan year-on-year, supported by rapid implementation of replacement bonds [9][10]. Loan Growth Trends - The report states that the loan growth rate in November 2024 was 7.7%, with a month-on-month decrease of 0.3 percentage points, and a new RMB loan increment of 5,800 billion yuan, which is a year-on-year decrease of 5,100 billion yuan [12][16]. - Residential short-term loans decreased by 964 billion yuan year-on-year, while medium and long-term loans increased by 669 billion yuan, indicating a potential recovery in real estate sales [12][16]. M1 Growth and Corporate Deposits - M1 showed a year-on-year decline of 3.7% in November 2024, but the growth rate improved by 2.4 percentage points compared to October [18][21]. - Corporate deposits saw a significant year-on-year increase of 4,913 billion yuan, suggesting a shift of fiscal deposits towards corporate deposits following government bond issuance [21][18]. Investment Recommendations - The report suggests focusing on three investment themes: 1. Improvement in risk expectations, recommending stocks like Chongqing Rural Commercial Bank and Ping An Bank [29][30]. 2. Cyclical stocks, with recommendations for banks such as China Merchants Bank and Jiangsu Bank [29][30]. 3. High dividend stocks, particularly state-owned banks, as the yield on government bonds is expected to decline further [29][30].

Investment Rating - The report maintains a "Positive" outlook for the New Energy Vehicle (NEV) industry [5] Core Insights - The overseas demand for NEVs contains unexpected potential, indicating that the NEV industry remains a high-quality growth sector. In 2024, domestic market demand is expected to show impressive growth despite a high base, while the European and American markets are experiencing a slowdown. However, positive changes in policies and supply are being observed, such as stricter carbon emission standards in Europe, which stimulate electrification, and a decrease in traditional vehicle supply due to declining profits for traditional automakers. The report suggests that the European market is on the verge of a significant demand increase as the competitiveness of electric vehicles improves globally [2][3] - Profitability trends are improving, with price increases in the materials sector becoming apparent. The lithium battery supply chain has seen continuous performance declines since early 2022, but has entered a recovery phase since Q1 2024. The report anticipates that certain segments of the materials sector are now positioned for price increases, particularly copper foil, lithium iron phosphate, and lithium hexafluorophosphate, which are expected to stabilize or increase in price [2][3] - Solid-state batteries represent a significant technological advancement, opening up valuation opportunities across the sector. Solid-state batteries are gaining attention for their applications in NEVs, eVTOLs, and robotics, and are being prioritized by leading companies like CATL and Huawei. The report emphasizes that solid-state batteries could drive technological upgrades in lithium battery materials over the long term, suggesting investors should focus on new materials and supply chain opportunities during the industrialization process [2][3] Summary by Sections Market Performance - The lithium battery sector has shown significant performance improvement since September 24, 2024, with the SW lithium battery index rising by 41.5% year-to-date, outperforming the CSI 300 index by 27.4 percentage points [30] Production and Sales Growth - In the first ten months of 2024, China's power battery production, sales, and installed capacity reached 847.5 GWh, 626.2 GWh, and 405.9 GWh respectively, representing year-on-year growth of 48%, 29%, and 38% [34][39] Material Prices and Profitability - Material prices have continued to decline, but the rate of decline has significantly slowed. By the end of November 2024, the price of lithium carbonate had decreased by 19% since the beginning of the year, with various materials experiencing different levels of price reductions [44] - The report indicates that the overall revenue of 57 listed companies in the lithium battery supply chain totaled 1,248.5 billion yuan in the first three quarters of 2024, reflecting a year-on-year decline of 4% [54] Investment Recommendations - The report suggests focusing on companies within the lithium battery supply chain that are currently undervalued, including leading firms and those expected to benefit from price increases in the short term, as well as companies positioned to gain from solid-state battery advancements [3]

Economic Outlook - The Central Economic Work Conference held on December 11-12, 2024, set the tone for macroeconomic policies in 2025, emphasizing employment, income, and prices[7] - The meeting identified current challenges as insufficient domestic demand, operational difficulties for some enterprises, and pressure on employment and income, with a heightened focus on these issues compared to the previous year[7] Policy Measures - The conference proposed five key areas for coordination, including effective markets and proactive government, total supply and demand, and enhancing quality while expanding total volume, indicating a shift towards macro-level growth strategies[7] - Fiscal measures will be intensified, with plans to increase the fiscal deficit ratio and issue long-term special bonds, signaling a proactive approach to fiscal policy[7] Monetary Policy - The meeting reiterated the implementation of a moderately loose monetary policy, with indications of potential interest rate cuts and reserve requirement ratio reductions to boost market confidence[7] - The central bank aims to expand its macro-prudential and financial stability functions, suggesting more innovative financial tools may be introduced in 2025[7] Domestic Demand and Consumption - Emphasis on expanding domestic demand through improved social security, such as increasing basic pensions and healthcare subsidies, and promoting diverse consumption scenarios[7] - The conference addressed the need to mitigate "involution" in competition, aiming to regulate local government and enterprise behaviors to improve industry order and resource allocation[7] External Trade and Investment - The meeting highlighted the importance of stabilizing foreign investment and trade, with a commitment to increasing openness despite global geopolitical risks[7] - A focus on establishing mechanisms that enhance proactive engagement and address core concerns of residents was emphasized, aiming for timely and effective responses to social issues[7]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 12.88 CNY based on a 28x PE valuation for 2025 [2][3]. Core Views - The company plans to acquire a 66.46% stake in Jiangsu Keda through a combination of convertible bonds and cash, aiming to expand its automotive business [1]. - Jiangsu Keda has a diverse customer base, including major automotive manufacturers such as Chery, SAIC, BYD, and Geely, and has established multiple production bases to support its clients [1]. - The acquisition will enhance the company's capabilities in automotive component design, manufacturing, and sales, further strengthening its product and customer matrix in the automotive sector [1]. - The company is positioned to benefit from the growth in AI-driven hardware innovation, particularly in the North American market, where it supplies precision components for major clients [1]. Financial Summary - The company forecasts earnings per share (EPS) of 0.30 CNY, 0.46 CNY, and 0.56 CNY for 2024, 2025, and 2026, respectively [2][7]. - Revenue is projected to grow from 34.12 billion CNY in 2023 to 41.29 billion CNY in 2024, reflecting a 21% increase [2][11]. - Net profit is expected to rise from 2.05 billion CNY in 2023 to 2.08 billion CNY in 2024, with a net profit margin improvement [2][11]. - The company’s gross margin is projected to be 17.7% in 2024, with a net margin of 5.0% [2][11].

Consumption - The introduction of special bonds to support "old-for-new" policies indicates a shift in fiscal strategy, balancing long-term benefits with immediate consumer demand, with fiscal costs estimated at around 404 billion CNY[2] - Retail sales growth is projected to reach 5.1% in 2025, driven by the expansion of "old-for-new" programs and increased fiscal support[2] - In September 2024, the consumer spending tendency reached 62%, the highest since 2020, indicating potential for improved consumption despite income growth slowing[2] Export - Export growth is projected at approximately 0.2% in 2025 if trade tensions with the US stabilize, while a significant escalation could lead to a decline of about -3.8%[2] - China's export share reached a historic high of 15.7% in June 2024, outperforming the global average[2] Manufacturing - Manufacturing investment growth is expected to be around 7.6% in 2025, supported by policies favoring equipment upgrades and a shift in investment dynamics[2] - As of September 2024, manufacturing investment growth was recorded at 9.2%, with equipment purchases significantly outpacing construction investments[2] Infrastructure - Infrastructure growth is anticipated to be around 10.2% in 2025, bolstered by increased fiscal leverage and ongoing projects related to urbanization and maintenance of aging infrastructure[2] - The fiscal space for infrastructure projects remains significant, with local governments expected to play a crucial role in funding[2] Real Estate - Real estate investment is projected to decline by -10% in 2025, reflecting ongoing challenges in the sector despite signs of stabilization in sales in major cities[2] - The overall fixed asset investment growth is expected to improve to around 3.8% in 2025, aided by fiscal and monetary policy adjustments[2]

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry in China [1]. Core Viewpoints - The policy effects since September 24 have been stronger than those from May 17, but weaker than those from 2023 [2]. - The real estate sector index outperformed both the CSI 300 index and the ChiNext index, with a relative return of 1.8% compared to the CSI 300 index [3][18]. - New housing sales in 44 major cities decreased by 15% week-on-week to 30,000 units, while second-hand housing sales in 21 major cities increased by 33.2% [4][26]. - The land market activity increased, with land transfer fees in 36 major cities rising to 68.265 billion yuan, an increase of 64.641 billion yuan from the previous week [4][41]. Summary by Sections Market Performance - In the 49th week, the real estate sector index closed at 2470.44, with a weekly increase of 3.3%, outperforming the CSI 300 index which closed at 3973.14 with a 1.4% increase [3][19]. Policy Developments - Local policies include the issuance of management measures for affordable housing in Guangzhou, the implementation of a capped pre-sale system in Taiyuan, and new housing fund policies in several cities [21][22]. Sales Data - New home sales in 44 major cities were 30,000 units, down 15% from the previous week, while second-hand home sales in 21 major cities were 29,000 units, up 33.2% [4][26]. Land Market Activity - The land market saw increased activity with 94 plots sold in 36 major cities, and the average premium rate for land transactions rose to 2.6% [4][41][49]. Company Announcements - Key companies such as Binjiang Group and Vanke A have made announcements regarding guarantees and related transactions [5][56]. Investment Recommendations - The report emphasizes the strong sustainability of policy effects in Shanghai, highlighting measures aimed at improving cash flow for residents and stabilizing market expectations [6][60].

Economic Overview - Global stock markets have rebounded, with the Nasdaq and S&P 500 indices reaching new historical highs, reflecting a continued high risk appetite among investors[4] - The U.S. added 227,000 non-farm jobs in November, slightly above the expected 220,000, while the unemployment rate rose to 4.2% from 4.1%[4][14] - Average hourly earnings increased by 0.4% month-on-month, indicating a labor market that, while showing signs of weakness, still demonstrates resilience[4][21] Market Dynamics - The U.S. dollar index fell to 106.06 but later rebounded, indicating a potential shift into a consolidation phase for the strong dollar[4][8] - Energy prices are under pressure due to concerns over supply excess, with crude oil prices dropping to $67.2 per barrel, the lowest in three weeks[4][8] - Bitcoin continues its upward trend, reflecting a favorable liquidity environment for risk assets[4][8] Future Projections - The strong dollar's tightening phase may enter a temporary pause, with expectations of a range-bound movement around the 104 level in the short term[4][26] - U.S. Treasury yields are expected to trend downwards, with year-end targets set between 4% and 4.1%[4][27] - The market anticipates a potential interest rate cut by the Federal Reserve in early 2025, with projections for the policy rate to drop to 3.3% by the end of that year[4][27] Investment Insights - The current market environment favors both equities and bonds due to improved liquidity conditions, despite mixed economic data[4][21] - Non-U.S. equity markets are expected to catch up in performance as risk appetite remains high, with recent rebounds in European stocks signaling a shift in capital flows[4][38] - Risks include potential hard landing scenarios for the U.S. economy and inflationary pressures that could alter market expectations[4][39]

Policy Outlook - The Central Political Bureau's meeting on December 9, 2024, indicates a shift towards more proactive macroeconomic policies for 2025, focusing on boosting domestic demand[3] - The meeting confirmed that the main economic and social development goals for the year will be achieved, reinforcing confidence in the effectiveness of current growth policies[3] Monetary and Fiscal Policy - The report highlights a significant change in monetary policy, with the one-year Loan Prime Rate (LPR) reduced by 35 basis points and the five-year LPR by 60 basis points in 2024, marking the largest cuts since the LPR reform[2] - The upcoming fiscal policy is expected to be more aggressive, with an emphasis on enhancing consumption and investment efficiency, supported by measures such as long-term special government bonds for consumer upgrades[3] Consumption and Investment - The government aims to stimulate consumption through fiscal measures, with a notable example being the "trade-in" program for household appliances, which has generated approximately 19.97 billion yuan in sales with a subsidy cost of around 40.4 billion yuan[3] - Investment strategies will focus on optimizing industrial layouts and directing resources towards new productive capacities, with potential measures including lowering project thresholds and promoting special bond projects[3] Reform Initiatives - The meeting emphasized the importance of implementing significant reform measures in 2025, including the establishment of a maternity subsidy system and the gradual implementation of retirement age adjustments[3] - The focus on local government empowerment to set tax rates and enhance growth incentives is expected to be a key highlight for the upcoming year[3] Risk Considerations - The report warns of potential risks from global conflicts impacting supply chains beyond expectations, which could affect domestic economic stability[3]

工业消费品推动核心 CPI 上升——11 月通 胀数据点评 研究结论 事件：2024 年 12 月 9 日统计局公布最新通胀数据，2024 年 11 月 CPI 同比 0.2%，前值 0.3%，环比-0.6%，前值-0.3%；PPI 同比-2.5%，前值-2.9%，环比 0.1%，前值-0.1%。 ⚫ 食品 CPI 同比增幅显著收窄。11 月食品项 CPI 同、环比分别为 1%、-2.7% （2.9%、-1.2%，后同）。食品 CPI 同比涨幅收窄主要是受鲜菜、鲜果价格涨幅回 落带动，11 月鲜菜、鲜果 CPI 同比分别为 10%、-0.3%（21.6%、4.7%）；猪肉同 比增长 13.7%（14.2%）。 ⚫ 工业消费品价格企稳支撑核心 CPI 同比增幅上升 0.1 个百分点。非食品项和核心 CPI 同比增速分别为 0%、0.3%（-0.3%、0.2%）：（1）能源对消费品价格的拖累 有所减轻，同时其他消费品的同比读数也由负转平。据统计局，能源价格下降 3.8%，降幅比上月收窄 1.3 个百分点，其中汽油价格下降 8.2%。扣除能源的工业 消费品价格由上月下降 0.2%转为持平，其中通信工具价格由上月下降 ...

Investment Rating - The report maintains a "Positive" investment rating for the basic chemical industry [2]. Core Viewpoints - Despite the uncertainty in oil price expectations following Trump's election, the market remains cautious towards the petrochemical industry. The report highlights a shift in market sentiment with a lower risk appetite, favoring leading companies with strong fundamentals and low correlation to oil prices. The importance of food security has increased due to global instability, leading to a more rigid demand in the agriculture and food supply chain, which is expected to sustain the industry's recovery and upward elasticity [19][6]. Oil and Chemical Price Information - As of December 6, Brent oil price decreased by 2.5% to $71.12 per barrel. Early in the week, oil prices were slightly supported by geopolitical uncertainties and strong expectations for OPEC+ production cuts. However, concerns about future supply-demand imbalances and an unexpected increase in U.S. refined oil inventories pressured prices downward. As of November 29, U.S. commercial crude oil inventories stood at 423.4 million barrels, a weekly decrease of 5.1 million barrels [22][3]. - Among the 188 monitored chemical products, the top three price increases this week were for dichloromethane (up 5.0%), DMF (up 4.9%), and petroleum coke (up 4.2%). The top three price decreases were for liquid chlorine (down 7.9%), natural gas (down 7.8%), and anthracene oil (down 6.2%) [23][4]. Price Spread Changes - This week, the top three products with the largest price spread increases were the maleic anhydride BDO spread (up 91.3%), PTMEG spread (up 26.3%), and carbon black spread (up 23.1%). The largest decreases were seen in the hydrogen peroxide spread (down 100.0%), butyl acrylate spread (down 60.2%), and styrene (down 33.7%) [5][27]. - Monthly, the top three products with the largest price spread increases were the MTO spread (up 111.4%), lithium hexafluorophosphate spread (up 88.7%), and glycine-chloroacetic acid spread (up 44.2%). The largest decreases were in PTA (down 43.3%), ethylene glycol spread (down 33.9%), and hydrogen peroxide spread (down 33.3%) [5][28]. Investment Recommendations - The report recommends several companies: - Wanhua Chemical (600309, Buy): Core product MDI shows recent profit improvement, with upcoming petrochemical and new material projects expected to launch [19]. - Royal Technology (603181, Buy): A leading special polyether company that has entered a growth phase again after addressing previous macro demand pressures [20]. - Jinhui Industrial (002597, Buy): A leader in maltol and sucralose, with signs of marginal changes at the bottom of its main product cycle [20]. - Yuntianhua (600096, Not Rated): A leading company in the domestic phosphate chemical industry, with sustainable phosphate ore market conditions [21].