Investment Rating - The industry investment rating is "Positive" and maintained [13] Core Insights - The privatization of Hang Seng Bank by HSBC reflects a significant undervaluation of quality domestic bank stocks [6][40] - The Longjiang Bank Index increased by 0.2% this week, outperforming the CSI 300 Index by 0.7% and the ChiNext Index by 4.1%, indicating a potential valuation recovery in the banking sector [2][21] - HSBC's core Tier 1 capital adequacy ratio was 14.6% at the end of June, with the privatization expected to have a one-time impact of approximately 125 basis points on capital metrics [6][40] Summary by Sections Market Performance - The Longjiang Bank Index saw a cumulative increase of 0.2%, with significant individual stock performances from Qilu Bank, Changsha Bank, and Shanghai Bank, which rose by 2.6% [2][21] - HSBC's stock fell by 5.8% due to market concerns over the premium paid for the privatization of Hang Seng Bank [8][21] Valuation Insights - The privatization acquisition is expected to provide critical guidance for the valuation of quality bank stocks, with a target price-to-book (PB) ratio of 1.8x for quality banks [7][43] - The report highlights that the return on equity (ROE) for leading domestic retail banks is generally between 10% and 15%, while Hang Seng Bank's projected return on tangible equity (ROTE) for 2024 is 11.3% [7][43] Convertible Bonds - There are opportunities for valuation recovery in convertible bonds of banks, with specific mention of the increasing distance to strong redemption prices for stocks like CCB and SPDB [9][27] - SPDB's convertible bonds are set to be delisted soon, with a current balance of 24.3 billion yuan and a conversion premium of 16.7% [9][27] Trading Activity - The trading activity of state-owned banks, city commercial banks, and rural commercial banks has decreased compared to the previous week, indicating a stabilization in trading density [10][32] - The average dividend yield of the six major state-owned banks in A-shares has risen to 4.16%, with a yield spread of 231 basis points over the 10-year government bond yield [23][26]

Investment Rating - The report maintains a "Positive" investment rating for the environmental industry [13] Core Insights - Since 2024, China has accelerated the establishment of a national carbon market regulatory framework, with significant progress in the CCER (China Certified Emission Reduction) methodology since October 2023. As of September 2025, the cumulative transaction volume of CCER is approximately 2.43 billion yuan, with an average transaction price of 86.41 yuan per ton [2][6][8] Summary by Sections Carbon Emission Control System - The carbon emission control system is gradually improving, with a unified national carbon market being constructed. The market includes both the national carbon quota trading market (CEA) and the voluntary greenhouse gas emission reduction trading market (CCER), which operate independently but are interconnected through a quota offset mechanism [6][19][21] CCER Methodology Expansion - The CCER methodology has been continuously expanded, with four batches of methodologies released since October 2023. The first batch includes forestry carbon sinks and offshore wind power, while subsequent batches cover various energy-saving and emission reduction projects. As of September 2025, 29 voluntary emission reduction projects have been registered, with an expected annual reduction of 10.438 million tons [7][26][27] CCER Market Performance - The average transaction price of CCER is currently higher than that of CEA, reflecting a temporary supply-demand imbalance due to strict project approvals and limited issuance. The report anticipates that as the issuance of CCER increases and market mechanisms mature, prices will gradually return to a reasonable relationship. The average transaction price of CCER from January to September 2025 is 86.41 yuan per ton, while CEA's average is 69.29 yuan per ton [8][34] Benefits of Agricultural and Forestry Biomass Projects - The report highlights the potential benefits of agricultural and forestry biomass projects under the CCER framework. For instance, assuming a CCER price of 80 yuan per ton, companies like Changqing Group and China Everbright Green Environmental Protection could see significant revenue contributions from CCER sales, amounting to 139 million yuan and 384 million HKD, respectively [9][44][45] Investment Logic for CCER - The investment logic for CCER emphasizes the importance of additionality in projects, focusing on profitability compensation rather than mere emission reduction. Key areas of interest include carbon monitoring equipment and consulting services, as well as the acceleration of related industries such as biomass power generation and hydrogen energy [10][49]

Investment Rating - The investment rating for the construction and engineering industry is "Positive" and maintained [11] Core Insights - The concept of "National Strategic Hinterland" has gained prominence, particularly in Sichuan, with emphasis on its role in supporting national development strategies [6][19] - Sichuan is highlighted as a key area for infrastructure development, with significant construction demand anticipated due to its economic strength and strategic location [8][30] - Shaanxi is positioned as a core area of the "Belt and Road" initiative, benefiting from its high proportion of infrastructure investment [9][22] - Chongqing is recognized for its ongoing development within the Chengdu-Chongqing economic circle, with several major projects expected to bolster regional economic growth [10][25] Summary by Sections National Strategic Hinterland - The "National Strategic Hinterland" serves as a concrete representation of the "Great Rear" concept, providing substantial support to frontier regions, primarily referring to inland urban clusters in central and western China [6][17] Key Regions: Focus on Sichuan, with Attention to Shaanxi and Chongqing - **Sichuan**: Identified as a national strategic hinterland with robust infrastructure needs, projected to accelerate construction progress in the near term [8][30] - **Shaanxi**: Expected to benefit from the "Belt and Road" initiative and strategic hinterland construction, with a significant focus on infrastructure investment [9][22] - **Chongqing**: Continues to advance the Chengdu-Chongqing economic circle, with major projects like the Three Gorges Waterway and Western Land-Sea New Corridor expected to support economic and construction demand [10][25]

Investment Rating - The report maintains a "Positive" investment rating for the industry [2] Core Insights - The report highlights the acceleration of industrialization in controllable nuclear fusion, with significant advancements in the BEST project, marking a new phase in construction [11] - The defense demand is steadily recovering, with AIDC accelerating construction, leading to a high prosperity cycle in the module power supply sector [33] - Bangladesh plans to procure 20 J-10CE fighter jets, emphasizing opportunities for high-end military trade manufacturers [74] Summary by Sections Section 1: Controllable Nuclear Fusion - The successful installation of the key component, the Dewar base, for the BEST device marks a critical breakthrough, with the project expected to demonstrate fusion energy generation by 2027 [11] - The current focus in the controllable nuclear fusion industry is on fusion devices and upstream material segments, which are expected to drive demand for upstream materials and midstream structural components [15] Section 2: Module Power Supply - Module power supplies are highly integrated power converters that offer flexibility, reliability, and efficiency, making them suitable for various high-tech applications [35] - The military module power supply market in China is projected to reach a total scale of 59 billion yuan from 2024 to 2028, with a compound annual growth rate of 14.7% [49] Section 3: Military Trade Opportunities - Bangladesh's procurement of J-10CE fighter jets represents a significant breakthrough in China's military trade, with a total contract value of $2.2 billion [74] - The report indicates that China's military aircraft have entered a new era of high-quality self-research equipment exports, with various models ready for international trade [78] - The report identifies key domestic companies involved in the nuclear fusion supply chain, including Shanghai Superconductor and West Superconductor, which are positioned to benefit from the growing demand in the fusion sector [21][24]

Investment Rating - The report maintains a "Positive" investment rating for the industry [9] Core Insights - The upcoming Q3 reports are expected to show continued high growth in brokerage performance, enhancing the sector's allocation value. The insurance sector reflects a trend of deposit migration, increased equity allocation, and improved new policy costs, leading to a higher certainty of long-term ROE improvement and accelerated valuation recovery. Overall, the cost-effectiveness of allocations is gradually increasing [2][6] - Recommendations include companies with stable profit growth and dividend rates such as Jiangsu Jinzu, China Ping An, and China Pacific Insurance, as well as firms with significant advantages in business models and market positions [6] - The report recommends specific stocks including Xinhua Insurance, China Life, Hong Kong Stock Exchange, CITIC Securities, Dongfang Wealth, Tonghuashun, and Jiufang Zhitu Holdings based on performance elasticity and valuation levels [2][6] Market Performance - The non-bank financial index increased by 0.5% last week, with a relative excess return of +1.0% compared to the CSI 300, ranking in the middle of the industry [7] - Year-to-date, the non-bank financial index has risen by 7.4%, but with a relative excess return of -9.9% compared to the CSI 300, indicating a lower ranking [7] - The average daily trading volume in the market has increased to 26,029.82 billion yuan, up 18.98% week-on-week, with a daily turnover rate of 2.71%, up 42.99 basis points [7] Key Industry News & Company Announcements - The China Banking and Insurance Regulatory Commission issued a notice on strengthening the regulation of non-auto insurance business [8] - China Pacific Insurance's Chief Actuary Zhang Yuanhan has resigned [8]

Investment Rating - The report maintains a "Positive" investment rating for the utility sector [8] Core Insights - The auction results for mechanism electricity prices in Yunnan show that the clearing prices for photovoltaic projects are 0.33 CNY/kWh and for wind projects are 0.332 CNY/kWh, both very close to the auction ceiling [2][10] - The market expectations for Yunnan's new energy market are relatively stable and rational, with strong auction results reinforcing previous weak profitability expectations for new energy, especially photovoltaic [2][10] - Multiple provinces have initiated auction mechanisms for 2025 electricity prices, indicating a divergence in regional development rhythms, with provinces facing significant consumption pressure or high photovoltaic ratios likely to slow down photovoltaic development [2][10] Summary by Sections Auction Results - Yunnan's first auction for incremental new energy projects had a high bid success rate of 96.22%, with 509 out of 529 projects winning bids [10] - The auction price ranges for photovoltaic and wind projects were 0.22-0.3358 CNY/kWh and 0.18-0.3358 CNY/kWh respectively, with the clearing prices very close to the upper limits [10] Regional Development - Several provinces, including Jiangxi, Shanghai, Heilongjiang, and Xinjiang, have released their 2025 mechanism electricity price auction plans, with varying total scales and auction price ranges [10] - The report suggests that provinces with high photovoltaic ratios may see a slowdown in development through mechanism electricity allocation [10] Investment Recommendations - The report recommends focusing on quality transformation coal power operators such as Huaneng International, Datang Power, and Guodian Power, as well as hydropower companies like Yangtze Power and State Power Investment [10] - In the new energy sector, it suggests investing in companies like Longyuan Power, Xintian Green Energy, China Nuclear Power, and Zhongmin Energy, indicating a potential recovery in the industry [10]

Investment Rating - The industry investment rating is Neutral, maintained [8] Core Views - The recent agreement between China Mineral Resources Group and BHP to implement RMB settlement for iron ore spot trading indicates a strengthening of domestic pricing power for iron ore. This is expected to lead to a more reasonable profit distribution within the black industry chain as iron ore prices may decrease due to an increase in supply from new projects like West Simandou [2][6] - The steel industry is currently experiencing a "weak reality, strong expectations" scenario, with a significant drop in apparent consumption due to holiday-related workday discrepancies. However, recent government announcements regarding price regulation and safety inspections may catalyze improvements in the industry's profitability [4][5] Summary by Sections Iron Ore Pricing Power - The proportion of iron ore settled in RMB is increasing, reflecting a strengthening of domestic pricing power. China’s annual iron ore trade exceeds $1.2 trillion, with about 80% settled in USD. The concentration of procurement power among state-owned enterprises is expected to enhance negotiation capabilities [5][6] Supply and Demand Dynamics - Apparent consumption of steel has decreased significantly, with a year-on-year drop of 21.14% and a month-on-month drop of 21.55%. Steel inventory has accumulated, indicating an oversupply situation [5] - Daily average pig iron production has slightly decreased to 2.4154 million tons, with total steel production showing a year-on-year decline of 0.16% and a month-on-month decline of 0.66% [5] Market Expectations - The steel market is currently characterized by strong expectations despite weak realities. Recent government measures aimed at regulating prices and ensuring safety in production may lead to a more favorable environment for profitability in the steel sector [4][5] Investment Opportunities - The report suggests focusing on four main investment lines: 1. Companies benefiting from the release of new capacities in iron and coke, such as Nanjing Steel and Baosteel [25] 2. Companies with low market value relative to their earnings, like New Steel and Fangda Special Steel [26] 3. Mergers and acquisitions in the context of state-owned enterprise reforms [26] 4. High-quality processing leaders and resource companies, particularly in the context of macroeconomic recovery expectations [26]

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [13]. Core Insights - The policy goal of stabilizing the market has somewhat boosted market expectations, but since April, marginal downward pressure has increased, leading to a higher probability of relaxed industrial policies. The rapid decline in industry volume and price may have passed, with structural highlights in core urban areas and quality properties. The current stock positions are not far from the bottom, providing room for rebound [3][7]. - The report emphasizes the importance of brand recognition and investment precision as key factors for success in the real estate sector. It suggests a "two-part" structured pricing approach for real estate companies, focusing on the proportion of old inventory and the strength of new land acquisitions [11]. Market Performance - The Yangtze River Real Estate Index decreased by 0.04% this week, with an excess return of +0.48% relative to the CSI 300. Year-to-date, the index has increased by 16.04%, with a relative excess return of -1.29% compared to the CSI 300 [8][17]. - The report notes mixed performance in the real estate sector this week, with development and property management companies showing varied results, while rental properties primarily declined [8]. Policy Updates - The Ministry of Housing and Urban-Rural Development reported achievements in high-quality development during the 14th Five-Year Plan, with approximately 5 billion square meters of new residential sales and over 11 million units of various types of affordable housing planned [9][19]. - Local regulations in cities like Chengdu and Shenzhen have been optimized to enhance housing standards and ensure safety in high-rise residential projects [9][19]. Sales Data - New home and second-hand home registrations in sample cities saw a significant year-on-year decline due to high base effects. The new home transaction area in 37 cities dropped by 20.5% year-on-year, while second-hand homes in 17 cities increased by 8.0% year-on-year [10][20]. - As of October 10, the new home transaction area in 37 cities for the month showed a year-on-year decrease of 40.0%, while second-hand homes saw a decline of 22.6% [10][20]. Investment Opportunities - The report identifies structural opportunities in the real estate market, particularly in core urban areas benefiting from price relaxation. It highlights companies with low inventory, strong product quality, and stable cash flows as key investment targets. Recommended stocks include Jianfa International for its low old inventory and high new product contribution, and Greentown China for its significant new product contributions despite some old inventory drag [3][11].

Group 1: Economic Impact of Tariffs - Trump's proposal to impose a 100% tariff on Chinese imports is expected to heighten market risk aversion, leading to a potential short-term correction in A-shares and a slight decline in bond yields[2] - Historical evidence from the 1930 Smoot-Hawley Tariff Act indicates that high tariffs do not effectively increase revenue and can hinder economic growth, exacerbate deflation, and increase unemployment[2][9] - The current tariff threat is more severe than past instances, with a larger trade deficit and deeper globalization ties, suggesting that reliance on tariffs for fiscal revenue is likely counterproductive[2][9] Group 2: Market Reactions and Asset Allocation - Following the tariff announcement, U.S. stock indices and the FTSE A50 futures declined, while U.S. Treasury yields fell and gold prices rose, indicating a flight to safety[9] - The market's reaction to Trump's tariff threats may be less intense than previous instances due to prior exposure to similar announcements, suggesting a degree of market immunity[9] - The long-term outlook for the U.S. dollar remains weak, reinforcing the value of gold as a strategic asset allocation amidst ongoing economic pressures and rising geopolitical risks[2][9]

Investment Rating - The report gives an investment rating of "Positive" for the agricultural products sector [11] Core Viewpoints - The swine breeding industry has transitioned from a rapid growth phase to a stable development phase, with medium to long-term capacity regulation becoming the new normal. High-quality breeding companies are expected to see significant improvements in profit margins and profitability levels [2][20] - The report highlights a divergence in profitability within the breeding sector, with leading companies still achieving good performance despite overall industry challenges. The poultry sector is experiencing a recovery in yellow-feathered chicken prices, which is gradually improving profitability [2][20] - The aquaculture feed industry continues to show strong performance, with leading companies like Haida Group expected to achieve simultaneous growth in volume and profit [2][20] - The pet food sector is experiencing sustained high growth in proprietary brands, with overseas factories demonstrating resilience in exports. Key recommendations include Guibao Pet and Zhongchong Co [2][20] Summary by Sections Swine Breeding Sector - The swine breeding sector is gradually entering a loss phase, with significant divergence in profitability among listed companies. The average price of live pigs in Q3 2025 is approximately 14.0 CNY/kg, down 4% quarter-on-quarter and 28% year-on-year. The average profit for self-bred pigs is about 42 CNY/head, while purchasing piglets incurs a loss of 118 CNY/head [7][21] - High-quality breeding companies have a complete cost below 12 CNY/kg, maintaining a profit of over 200 CNY/head, while companies with higher costs may still face losses [7][21] - Future pig prices are expected to rise in Q4 2025 and 2026 due to increased supply indicators and policy-driven capacity restrictions [26] Feed Sector - The feed industry maintains growth in production, with aquaculture feed demand recovering. Haida Group's feed sales are expected to grow by about 20% year-on-year in Q3 2025, with net profit in the feed sector expected to increase by 30%-40% year-on-year [8][43] - The report notes that the structure of feed products is improving, with higher-margin products gaining a larger share of sales [8][43] Poultry Sector - The yellow-feathered chicken prices have bottomed out and are recovering, which is enhancing the profitability of the poultry breeding sector [2][20] Pet Food Sector - The pet food sector continues to see high growth in proprietary brands, with Guibao Pet and Zhongchong Co recommended for their resilience in overseas sales. Online sales growth for the pet food industry is around 7.7%, with Guibao's proprietary brand growing by 21% [9][20]