Investment Rating - The report maintains a "Positive" investment rating for the real estate industry in China [4] Core Insights - The real estate market showed resilience in May, with new home sales improving month-on-month and a narrowing year-on-year decline [6][29] - The report anticipates a continued downward pressure on sales in the second half of the year due to potential uncertainties from U.S.-China trade negotiations [6][29] - The report highlights the importance of high-quality land reserves and product strength for real estate companies to achieve alpha attributes [6][29] Summary by Sections Market Performance - In the 23rd week, the real estate sector index underperformed compared to the CSI 300 index, with a relative return of -0.1% [6][9] - The CSI 300 index closed at 3874.0 with a weekly increase of 0.9%, while the real estate index (Shenwan) closed at 2174.1 with a weekly increase of 0.8% [10][11] Policy Developments - National policies include central government support for urban renewal actions, with 20 cities including Beijing and Guangzhou selected [13][15] - Local policies from Jiangsu and Hunan aim to boost consumption and support the acquisition of existing homes for affordable housing [13][21] Sales Data - In the 23rd week, new home sales in 44 major cities were 14,000 units, a decrease of 33.1% from the previous week, while second-hand home sales in 21 major cities were 15,000 units, down 23.0% [6][16] - Inventory levels decreased, with 18 major cities holding 825,000 units, down by 21,000 units from the previous week [6][23] Company Announcements - Key companies such as Chengjian Development and Haitai Development announced significant asset restructuring and share transfer plans [28][29] - The report notes that several companies are engaging in share buybacks and dividend distributions [28][29] Investment Recommendations - The report recommends buying Poly Developments (600048) and China Merchants Shekou (001979), while suggesting to pay attention to companies like China Resources Land (01109) and Yuexiu Property (00123) [6][29]

Investment Rating - The report maintains a "Positive" outlook on the Chinese defense and military industry [5] Core Insights - The military trade is expected to become a second growth curve for the industry, with Indonesia considering the procurement of Chinese J-10 fighter jets due to their high performance and cost-effectiveness [27] - The report highlights that the recent geopolitical tensions have increased military spending globally, creating new opportunities for China's military exports [6][27] - The domestic aviation industry is expected to accelerate the localization of aircraft engines due to U.S. export restrictions on key technologies [6] Summary by Sections Market Trends - The defense and military industry index rose by 0.41% during the week, underperforming compared to the Shanghai Composite Index, which increased by 1.13% [10][11] - The defense and military industry ranked 24th out of 31 sectors in terms of weekly performance [13] News and Announcements - Indonesia is evaluating the feasibility of purchasing Chinese J-10 fighter jets to modernize its air force while considering budget constraints [27] - The U.S. has restricted the export of commercial engines, which is expected to accelerate the domestic development of aviation engines in China [6] Investment Recommendations - The report suggests focusing on upstream components and key materials as they are crucial for weapon development and production, with potential for significant performance improvements [6] - Specific stocks recommended include Zhihua Technology, Aerospace Electric, and others in the upstream components and key materials sectors [6]

Investment Rating - The report gives a "Buy" rating for the company, with a target price of HKD 43.37 based on a 26x P/E ratio for 2025 [3][5]. Core Insights - The company is a leading player in the traditional Chinese medicine (TCM) chain service sector in China, with a strong focus on AI integration and a robust growth trajectory [9][14]. - Revenue is projected to grow significantly, with estimates of HKD 30.2 billion in 2024, representing a 30.1% year-on-year increase, and a net profit of HKD 3.1 billion, up 21.6% [9][27]. - The TCM market is expected to expand, with a projected market size of HKD 2.97 trillion by 2030, driven by increasing demand for TCM services [38][42]. Financial Projections - The company forecasts earnings per share (EPS) of HKD 1.53, 1.81, and 2.24 for 2025, 2026, and 2027 respectively [3]. - Revenue is expected to reach HKD 5.72 billion by 2027, with a compound annual growth rate (CAGR) of 25% from 2025 to 2027 [3][9]. - The gross margin is projected to stabilize around 28% in the coming years, while the net profit margin is expected to slightly decline to 9.44% by 2027 [3][36]. Business Model and Market Position - The company operates a comprehensive OMO (Online-Merge-Offline) business model, integrating online and offline services to enhance customer engagement and service delivery [17][31]. - The TCM industry is characterized by high growth potential and low market concentration, with the top five players holding only 1.5% market share, indicating significant room for expansion [56]. - The company has established a strong network of renowned TCM practitioners, enhancing its competitive edge and service quality [9][38]. AI and Innovation - The company has been investing in AI since 2019, focusing on developing AI-assisted TCM solutions to improve service delivery and expand its market reach [9][38]. - Collaborations with institutions like West China Hospital and Baidu aim to accelerate the development of clinical applications for TCM [9][38]. Market Trends - The TCM market is benefiting from favorable policies and increasing public awareness of traditional medicine, with a projected CAGR of 12.9% from 2023 to 2028 [42][56]. - The demand for TCM services is driven by factors such as an aging population, rising chronic diseases, and a growing preference for natural and holistic treatment options [42][42].

Investment Rating - The report assigns a "Buy" rating for the company, with a target price of HKD 43.37 based on a 26x P/E ratio for 2025 [3][5]. Core Insights - The company is a leading player in the traditional Chinese medicine (TCM) chain service sector, with a strong AI strategy and significant growth potential. The revenue is projected to grow at a CAGR of 26.8% from 2018 to 2024, with 2024 revenue expected to reach HKD 30.2 billion, representing a 30.1% year-on-year increase [9][38]. - The TCM market in China is expected to grow significantly, with the market size projected to reach CNY 2.97 trillion by 2030, driven by factors such as an aging population and increasing public awareness of TCM [38][42]. Summary by Sections Company Overview - Established in 2010, the company has expanded its offline presence in major cities and developed an online platform, becoming a comprehensive TCM healthcare service provider [14][9]. - The company has achieved a stable business model integrating online and offline services, focusing on patient acquisition, consultation, diagnosis, and follow-up care [17][31]. Financial Performance - Revenue is forecasted to grow from HKD 2.32 billion in 2023 to HKD 5.72 billion in 2027, with a projected net profit of HKD 538.88 million in 2027 [3][4]. - The company has shown a consistent increase in adjusted net profit, with a forecasted growth of 31.4% in 2024 [27][36]. Market Potential - The TCM service market is characterized by high growth and low concentration, with the top five players holding only a 1.5% market share. The company currently holds a 0.2% market share, indicating significant room for growth [56][38]. - The demand for TCM services is driven by demographic changes, lifestyle diseases, and increasing cultural acceptance of TCM practices [42][38]. AI and Innovation - The company has been investing in AI since 2019, aiming to enhance TCM services and facilitate the internationalization of TCM products [9][3]. - Collaborations with institutions like West China Hospital and Baidu are underway to develop AI-assisted TCM solutions, which could revolutionize the delivery of TCM services [9][3]. Competitive Landscape - The TCM industry is fragmented, with many small players, creating opportunities for consolidation and growth for established companies like the one in the report [56][53]. - The regulatory environment is becoming increasingly favorable for private TCM institutions, promoting high-quality development in the sector [46][47].

Investment Rating - The report maintains a "Positive" outlook on the Chinese defense and military industry [5] Core Insights - The military trade is expected to become a second growth curve for the industry, with Indonesia considering the procurement of Chinese J-10 fighter jets due to their high performance and cost-effectiveness [27] - The report highlights that the recent geopolitical tensions have increased military spending globally, creating new opportunities for China's military exports [6][27] - The domestic aviation industry is expected to accelerate the development of indigenous engines due to U.S. export restrictions on commercial engines [6] Summary by Sections Market Trends - The defense and military industry index rose by 0.41% during the week, underperforming compared to the Shanghai Composite Index, which increased by 1.13% [10][11] - The defense and military industry ranked 24th out of 31 sectors in terms of weekly performance [13] News and Announcements - Indonesia is evaluating the feasibility of purchasing Chinese J-10 fighter jets to modernize its air force while considering budget constraints [27] - The U.S. has restricted the export of key technologies, which is expected to accelerate the domestic development of aviation engines in China [6] - The report notes that military trade could drive performance in various segments of the supply chain, including core subsystems and components [6] Investment Recommendations - The report suggests focusing on upstream components and key materials, highlighting specific companies such as Zhihua Technology, Aerospace Electric, and Xibu Superconductor for potential investment [6]

1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report - Previously, the research team suggested paying attention to the opportunities in the bond market in June due to market expectations outpacing reality. Last week, the market's concerns about the capital side faded, leading to a decline in bond market interest rates. The team recommends continuing to focus on the possibility of changes in the curve shape [7]. - Since 2024, the term spreads of treasury bonds and credit bonds have diverged. The core reason lies in the differentiation of institutional behaviors, including banks' unstable liquidity expectations and the preferences of wealth management products [7]. - The shape of the interest rate curve and credit curve in 2024 and 2025 is related to central bank operations and the scale of wealth management products. Looking forward, the central bank's operations may improve banks' expectations of future liquidity, leading to an increase in the purchase of medium - and short - term treasury bonds. Therefore, the report suggests paying attention to the bull - steepening trade of the interest rate bond curve [8]. 3. Summary According to the Directory 3.1 Fixed Income Market Observation and Thinking: Consider Bull - Steepening Trade - The research team previously proposed two reports, hinting at bond market opportunities in June. Last week, the easing of capital - side concerns pushed down bond market interest rates, and the team suggests focusing on curve shape changes [7]. - Since 2024, the term spreads of treasury bonds and credit bonds have diverged. Banks' liquidity expectations and the preferences of wealth management products are the main reasons [7]. - The shape of the interest rate and credit curves in 2024 and 2025 is related to central bank operations and wealth management product scale. The central bank's operations may improve banks' expectations, and the report recommends the bull - steepening trade of the interest rate bond curve [8]. 3.2 Fixed Income Market Outlook: Multiple Domestic Data Releases 3.2.1 This Week's Attention Points and Important Data Releases - This week, China will release May CPI, export, and financial data, while the US will release May inflation data [14]. - The specific data release schedule includes China's May CPI on Monday, and the US's May unadjusted CPI monthly rate on Wednesday [15]. 3.2.2 This Week's Estimated Supply Scale of Interest - Bearing Bonds - This week, it is expected to issue 862.8 billion yuan of interest - bearing bonds, at a high level in the same period. Among them, treasury bonds are expected to be issued with a scale of 655 billion yuan, and local bonds are planned to be issued with a scale of 107.8 billion yuan [15]. 3.3 Interest - Bearing Bond Review and Outlook: Yield Bull - Steepening 3.3.1 Central Bank's Operations and Capital - Side Situation - At the beginning of the month, the central bank's reverse repurchase volume decreased, with a net withdrawal of 671.7 billion yuan in open - market operations. However, the early announcement of the outright reverse repurchase boosted market confidence [18]. - The capital - side pressure eased significantly at the beginning of the month. The trading volume of inter - bank pledged repurchase increased, and the capital interest rate declined. The overnight and 7 - day DR and R interest rates all decreased [19]. - The secondary yields of medium - and long - term certificates of deposit (CDs) declined rapidly. The net financing of CDs was - 80.4 billion yuan this week, and the proportion of 9M and 1Y CDs decreased. The issuance and secondary yields of CDs also changed [24]. 3.3.2 Rising Expectations of Easing - Last week, the bond market sentiment recovered due to the central bank's favorable attitude. The easing of capital pressure and the large - scale banks' purchase of short - term bonds led to expectations of further central bank easing [36]. - On June 6, the yields of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year treasury bonds decreased, and the yield curve showed a bull - steepening trend [39]. 3.4 High - Frequency Data: Significant Negative Year - on - Year Growth in Commercial Housing Sales - On the production side, the operating rates of various industries were differentiated. The operating rates of blast furnaces, semi - steel tires, petroleum asphalt, and PTA changed, and the year - on - year growth rate of daily average crude steel production in late May further declined [48]. - On the demand side, the year - on - year growth rates of passenger car manufacturers' wholesale and retail sales declined from high levels. The year - on - year growth rate of commercial housing transaction area fluctuated greatly, with a - 33% growth rate in the week of June 8. The SCFI and CCFI composite indices changed by 8.1% and 3.3% respectively [49]. - On the price side, crude oil prices rose, copper and aluminum prices diverged, coal prices were also differentiated, and the prices of building materials, steel, and downstream consumer products changed to varying degrees [49].

Investment Rating - The report maintains a "Positive" investment rating for the mechanical equipment industry [5] Core Viewpoints - The financing situation in the robot primary market remains strong, indicating an upward trend in industry prosperity. Vertical application scenarios are still crucial, with a focus on regional concentration. Short-term advantages lie in components, while the overall machine landscape is moving towards concentration [4][8][9] - The report suggests paying attention to segmented application fields, key regional companies, short-term components, and medium to long-term complete machine manufacturers [4][28] Summary by Sections Financing Trends - In the first five months of 2025, the number of financing projects in the robot sector showed a slight decline in May but remained at a good level. The financing for specialized robots accounted for over 50%, with humanoid and quadruped robots following closely [8][9][12] - Hardware financing is predominant, with a focus on hardware manufacturing. The number of hardware component financing projects exceeds that of software [8][20][27] Regional Analysis - The financing distribution shows that Shenzhen leads, with significant increases in Shanghai's financing in April and May 2025. This indicates a concentration of the humanoid robot industry chain in regions with existing advantages [8][9][24] Component vs. Complete Machine Dynamics - The report highlights that components currently hold a relative advantage, with supply still tight. However, the financing for complete machines is beginning to concentrate, suggesting a potential shift in industry dynamics [8][27][28] Recommended Companies - The report recommends focusing on the following companies: - Complete Machines and Assemblies: UBTECH, Yujian, Estun, Topstar, Efort-U, Zhongjian Technology, Yijiahe, Yongchuang Intelligent, Jack, Liyi Intelligent Manufacturing, Top Group, Sanhua Intelligent Control, Xinzhi Group [4][28] - Components: Wuzhou Xinchun, Beite Technology, Zhenyu Technology, Jinwo Shares, Green Harmonic, Siling Shares, Jiechang Drive, Zhaowei Electromechanical, Xiangxin Technology, Buke Technology, Nanshan Zhishang, Hanwei Technology, Lingyun Light [4][29] - Scenarios and Applications: Zhongyou Technology, Dema Technology, Yinfeng Storage, Anhui Helix, Hangcha Group, Noli Shares [4][29]

Market Performance - The A-share market experienced a rebound with the Shanghai Composite Index, CSI 300, CSI 500, and ChiNext Index rising by 1.13%, 0.88%, 1.60%, and 2.32% respectively during the week of June 2-6[5] - The PE (TTM) for CSI 300 is currently at 12.56 times, with a risk premium of 6.31%, which is above one standard deviation[5] - The PE (TTM) for ChiNext is at 30.92, below one negative standard deviation[5] Economic Indicators - The OECD has downgraded the U.S. economic growth forecast for 2025 from 2.2% to 1.6% and for 2026 to 1.5% due to tariff policies and increased uncertainty[5] - The global growth forecast for 2025 has been reduced from 3.10% to 2.9%[5] - The U.S. non-farm payrolls increased by 139,000 in May, above the market expectation of 130,000, while the unemployment rate remained at 4.2% for the third consecutive month[5] Policy Developments - The People's Bank of China conducted a 100 billion yuan reverse repo operation to maintain liquidity in the banking system[5] - The Shanghai Stock Exchange plans to encourage listed companies to increase dividend payouts and enhance market value management tools[5] Investment Strategy - The report suggests focusing on value dividend sectors and domestically supported technology industries such as AI, semiconductors, and defense[5] - The market is expected to maintain a wide fluctuation and structural trend, with short-term upward momentum lacking due to weak domestic economic fundamentals[5]

Quantitative Models and Factor Construction Factor Name: DELTAROE - **Construction Idea**: Measures the change in return on equity (ROE) over a specific period, reflecting the company's profitability dynamics[6][19][46] - **Construction Process**: - Calculate the difference in ROE between the current period and the previous period - Formula: $\Delta ROE = ROE_{current} - ROE_{previous}$[19][46] - **Evaluation**: Demonstrates strong performance across multiple indices, indicating its effectiveness in capturing profitability trends[6][46][49] Factor Name: Standardized Unexpected Earnings (SUE) - **Construction Idea**: Quantifies the deviation of actual earnings from expected earnings, standardized by the standard deviation of forecast errors[19] - **Construction Process**: - Formula: $SUE = \frac{E_{actual} - E_{expected}}{\sigma_{forecast\ errors}}$ - Where $E_{actual}$ is the actual earnings, $E_{expected}$ is the consensus forecast, and $\sigma_{forecast\ errors}$ is the standard deviation of forecast errors[19] - **Evaluation**: Effective in identifying earnings surprises, with positive performance in various market conditions[6][19] Factor Name: Trend - **Construction Idea**: Captures momentum by comparing short-term and long-term exponential weighted moving averages (EWMA) of stock prices[14] - **Construction Process**: - Two variations: - $Trend_{120} = \frac{EWMA_{halflife=20}}{EWMA_{halflife=120}}$ - $Trend_{240} = \frac{EWMA_{halflife=20}}{EWMA_{halflife=240}}$ - Where $EWMA$ is the exponentially weighted moving average with specified half-life[14] - **Evaluation**: Exhibits strong positive returns, indicating market preference for momentum strategies[9][11] Factor Name: Liquidity - **Construction Idea**: Measures stock liquidity through turnover rates and regression-based liquidity beta[14] - **Construction Process**: - Average log turnover over 243 days - Regression of individual stock turnover against market turnover to derive liquidity beta[14] - **Evaluation**: Mixed performance, with sensitivity to market conditions[10][14] Factor Name: Volatility - **Construction Idea**: Captures price fluctuations using various measures of historical volatility[14] - **Construction Process**: - Standard deviation of daily returns over 243 days - Range-based volatility: $Range = \frac{High_{243} - Low_{243}}{Low_{243}}$ - Maximum and minimum return averages over six days within 243 days[14] - **Evaluation**: Underperforms in high-volatility environments, indicating reduced investor appetite for risk[10][14] --- Factor Backtesting Results DELTAROE - **Performance**: - CSI 300: Weekly return 0.41%, monthly return 1.59%[6][22] - CSI 500: Weekly return 0.95%, monthly return 1.19%[6][26] - CSI 800: Weekly return 1.08%, monthly return 1.62%[6][30] - CSI 1000: Weekly return 1.79%, monthly return 1.54%[6][34] - CNI 2000: Weekly return 4.71%, monthly return 7.07%[6][37] - CSI All Share: Weekly return 1.84%, monthly return 2.41%[6][46] Standardized Unexpected Earnings (SUE) - **Performance**: - CSI 500: Weekly return 1.20%, monthly return 1.59%[6][26] - CSI 800: Weekly return 0.34%, monthly return 0.98%[6][30] - CNI 2000: Weekly return 1.65%, monthly return 14.68%[6][37] - CSI All Share: Weekly return 0.96%, monthly return 1.14%[6][46] Trend - **Performance**: - Weekly return 1.15%, monthly return 4.58%, annualized return 19.73%[9][11] Liquidity - **Performance**: - Weekly return -0.43%, monthly return -3.25%, annualized return 37.53%[10][11] Volatility - **Performance**: - Weekly return -0.95%, monthly return -2.71%, annualized return 31.87%[10][11] --- MFE Portfolio Construction - **Optimization Model**: - Objective: Maximize single-factor exposure - Formula: $\begin{array}{ll}max&f^{T}w\\ s.t.&s_{l}\leq X(w-w_{b})\leq s_{h}\\ &h_{l}\leq H(w-w_{b})\leq h_{h}\\ &w_{l}\leq w-w_{b}\leq w_{h}\\ &b_{l}\leq B_{b}w\leq b_{h}\\ &0\leq w\leq l\\ &1^{T}w=1\\ &\Sigma|w-w_{0}|\leq to_{h}\end{array}$[61][62] - Constraints: - Style and industry exposure limits - Stock weight deviation limits - Turnover rate limits[64][65] - **Backtesting**: - Monthly rebalancing - Transaction cost: 0.3% per side - Metrics: Historical returns, risk-adjusted performance[65]

Investment Rating - The industry investment rating is "Buy" for companies with strong fundamentals and low correlation to oil prices, suggesting a bottom-fishing strategy [10][18]. Core Viewpoints - The report indicates a recovery in macro expectations, with a notable increase in oil prices due to supply risks from geopolitical tensions and seasonal demand [10][14]. - The report emphasizes the importance of focusing on domestic demand and opportunities in new material substitutions, particularly in the agricultural chemical sector during the spring planting season [10][18]. Summary by Sections 1. Core Viewpoints - Oil prices have risen this week, with a focus on companies that have strong fundamentals and are less affected by oil price fluctuations [10][18]. - Recommendations include companies like Wanhua Chemical, Huamao Technology, Runfeng Co., Guoguang Co., and Hualu Hengsheng, highlighting their unique market positions and growth potential [10][18]. 2. Oil and Chemical Price Information 2.1 Oil - As of June 6, Brent oil prices increased by 4.02% to $66.47 per barrel, driven by supply risks and seasonal demand [14]. - U.S. crude oil commercial inventories decreased by 4.3 million barrels to 436.1 million barrels [14]. 2.2 Chemicals - Among 188 monitored chemical products, the top three price increases this week were for liquid chlorine (up 11.8%), natural gas (up 9.3%), and hydrochloric acid (up 4.6%) [15]. - The report notes significant monthly price changes, with hydrochloric acid increasing by 54.5% [10][15]. 3. Price and Spread Changes - The report highlights the top three products with the largest weekly spread increases: R410a spread (up 200.0%), acrylic acid butyl ester spread (up 58.2%), and PTA (up 45.9%) [10][20]. - Monthly spread changes show significant increases in the electric stone method PVC spread (up 216.9%) [10][20].