Report Highlights - 2025 Dec 15 - 19, the central bank's short - term reverse repurchase had a small net withdrawal of funds. From Dec 15 - 21, the net payment scale of government bonds increased compared with the previous week, most of the maturity yields of inter - bank certificates of deposit (CDs) declined, and the average leverage ratio of the inter - bank bond market increased. From Dec 22 - 28, the expected net payment of government bonds is 30.66 billion yuan, and the maturity scale of inter - bank CDs is about 88.22 billion yuan. On Dec 19, the median durations of medium - long - term and short - term interest - style pure bond funds decreased by 0.20 years and increased by 0.04 years week - on - week respectively [2]. Core Viewpoints - The central bank carried out a small - scale net withdrawal of reverse repurchase funds and restarted the 14 - day reverse repurchase to deal with the cross - year funds. The decline in DR001 weighted average interest rate was supported by year - end fiscal expenditures, and the decline in bond yields was related to the pricing of loose funds. The net financing scale of government bonds increased slightly, and the net payment of government bonds will have a greater impact on the capital side in the future. Most of the maturity yields of inter - bank CDs declined, and the net financing amount remained negative. The average leverage ratio of the inter - bank bond market increased, and the durations of medium - long - term and short - term pure bond funds changed in different directions [6][7][8]. Summary by Section Funds - **Central Bank Operations**: From Dec 15 - 19, the central bank's 7 - day and 14 - day reverse repurchases had a net withdrawal of 1.1 billion yuan. From Dec 22 - 26, 7 - day reverse repurchases worth 45.75 billion yuan, medium - term lending facilities (MLF) worth 30 billion yuan, and treasury cash fixed deposits worth 12 billion yuan will mature [6]. - **Fund Interest Rates**: From Dec 15 - 19, the average values of DR001 and R001 were 1.27% and 1.35% respectively, down 1.5 and 1.0 basis points compared with Dec 8 - 12; the average values of DR007 and R007 were 1.44% and 1.51% respectively, down 1.1 and up 1.4 basis points compared with Dec 8 - 12. The continuous decline of DR001 was supported by fiscal expenditures, and the decline of bond yields on Dec 18 and 19 might be due to the lagged pricing of loose funds [7]. - **Government Bond Financing**: From Dec 15 - 21, the net payment scale of government bonds was about 1.606 billion yuan, an increase of about 130 million yuan compared with Dec 8 - 14. From Dec 22 - 28, the expected net payment scale of government bonds is 30.66 billion yuan, and the impact on the capital side will increase [7]. Inter - bank Certificates of Deposit - **Maturity Yields**: As of Dec 19, the maturity yields of 1M and 3M inter - bank CDs were 1.6125% and 1.5950% respectively, down 0.2 and 2.0 basis points compared with Dec 12; the 1Y maturity yield was 1.6350%, down 2.5 basis points compared with Dec 12. The decline was due to previous adjustments, expectations of interest rate cuts in early 2026, and the pricing of continuous loose funds [8]. - **Net Financing Amount**: From Dec 15 - 21, the net financing amount of inter - bank CDs was about - 6.71 billion yuan. From Dec 22 - 28, the expected maturity repayment amount is 88.22 billion yuan, and the scale of rolling over at maturity decreased marginally but remained at a high level [8]. Institutional Behavior - **Leverage Ratio**: From Dec 15 - 19, the average leverage ratio of the inter - bank bond market was 107.92%, higher than 107.54% in Dec 8 - 12 [9]. - **Duration of Bond Funds**: On Dec 19, the median duration of medium - long - term interest - style pure bond funds decreased by 0.20 years week - on - week to 4.71 years, at the 87.3% quantile since early 2022; the median duration of short - term interest - style pure bond funds increased by 0.04 years week - on - week to 1.54 years, at the 22.1% quantile since early 2022 [9].

Report Summary 1. Report Industry Investment Rating No investment rating for the industry is provided in the report. 2. Core Viewpoints The report mainly focuses on the issuance of local government bonds, including actual and forecasted issuance amounts, progress of new - bond and refinancing - bond issuance, and the issuance details of special bonds. It provides a comprehensive overview of the local government bond market situation from December 15 to December 28, 2025, and the long - term issuance status of special bonds [1][5]. 3. Summary by Directory 3.1 Local Bond Actual and Forecasted Issuance - 12/22 - 12/28 local bond forecasted issuance is 204 million yuan, including 204 million yuan of new bonds (0 yuan of new general bonds and 204 million yuan of new special bonds) and 0 yuan of refinancing bonds [1][5]. - 12/15 - 12/21 local bond actual issuance is 4.004 billion yuan, including 3.522 billion yuan of new bonds (596 million yuan of new general bonds and 2.926 billion yuan of new special bonds) and 482 million yuan of refinancing bonds [1][5]. 3.2 Special Bond Issuance Progress - As of 12/21, the fifth - round second - batch special refinancing bonds total 200 billion yuan, and the sixth - round special refinancing bonds total 28.81 billion yuan, with 0 yuan newly disclosed next week. The top three regions in the fifth - round second - batch disclosure scale are Jiangsu (251.1 billion yuan), Hunan (128.8 billion yuan), and Henan (122.7 billion yuan) [5]. - As of 12/21, 2025 special new special bonds total 136.6808 billion yuan, and since 2023, a total of 255.4672 billion yuan has been disclosed. The top three regions in the disclosure scale are Jiangsu (24.4035 billion yuan), Hubei (13.7769 billion yuan), and Henan (13.2534 billion yuan). In 2025, the top three regions are Jiangsu (128.9 billion yuan), Guangdong (123.928 billion yuan), and Henan (75.96 billion yuan) [6]. 3.3 Local Bond Net Supply - 12/15 - 12/21 local bond net supply is 2.81 billion yuan, and 12/22 - 12/28 local bond forecasted net supply is - 320 million yuan [13]. 3.4 New Bond Issuance Progress - As of 12/21, the issuance progress of new general bonds is 95.81%, and that of new special bonds is 99.96% [24]. 3.5 Refinancing Bond Net Supply The report provides a chart showing the cumulative scale of refinancing bonds minus local bond maturities from 2020 to 2025 as of 12/21 [26]. 3.6 Special Bond Issuance Details - Special Refinancing Bond Issuance Statistics: The report details the issuance amounts of special refinancing bonds in different rounds for various regions from 2019 to 2025, including first - round to sixth - round issuances [30]. - Special New Special Bond Issuance Statistics: It shows the issuance amounts of special new special bonds in different years for various regions as of 12/21 [33]. 3.7 Local Bond Investment and Trading - One - and Two - Level Spreads: The report presents the one - level and two - level spreads of local bonds on 12/14 and 12/21 [37]. - Regional Two - Level Spreads: It provides the two - level spreads of different regions from 9/12/2025 to 12/19/2025 [38]. 3.8 New Special Bond Investment Direction The report mentions the investment direction of new special bonds, but specific details are not elaborated, only indicating that the latest month's statistics only consider issued new bonds [40].

Investment Rating - The industry investment rating is "Positive" and maintained [12] Core Viewpoints - Real estate data continues to show weakness, with a focus on potential policy expectations in the future [6] - Cement shipments are experiencing seasonal declines, and glass prices are decreasing month-on-month [8] - For 2026, three main lines of focus are identified: stock chain, Africa chain, and AI chain [9] Summary by Relevant Sections Real Estate and Construction Data - From January to November, the sales of commercial housing decreased by 11.1% and the sales area by 7.8% year-on-year. In November alone, the sales value and area dropped by 25.1% and 17.3% respectively. The weak performance is attributed to a high base effect from last year's policy releases and weak actual demand [6][7] - New construction and completion data are also weak, with new housing starts down by 20.5% and completions down by 18.0% year-on-year from January to November [7] Cement and Glass Market - In December, cement demand weakened due to air pollution warnings, with an average shipment rate of 42% across key regions, down 1.7 percentage points month-on-month and 2.3 percentage points year-on-year. The average price of cement decreased by 0.2% month-on-month [8][25] - The domestic float glass market is seeing a downward price trend, with production capacity stable at 265 lines and daily melting capacity at 155,105 tons. Inventory levels are also being monitored closely [37][40] Future Outlook for 2026 - The stock chain focuses on optimizing demand and clearing supply, with a significant shift towards renovation demand expected to rise from 50% to nearly 70% by 2030. Recommended companies include Sanke Tree and Rabbit Baby [9] - The Africa chain highlights undervalued growth opportunities in the African market, with recommendations for companies like Keda Manufacturing and Huaxin Cement [9] - The AI chain emphasizes the upgrade of special electronic fabrics, with a focus on domestic leaders like Zhongcai Technology [9]

Group 1 - The report highlights the transition of China's outbound strategy from "product export" to "capital export," focusing on investments in overseas resource sectors such as mining and oil and gas, which will reshape global trade patterns [7][20][25] - The report recommends prioritizing investments in three sub-sectors of the shipping industry: dry bulk shipping, which is approaching a supply-demand inflection point; the tanker sector, which is entering a strong earnings period; and regional container shipping with favorable supply-demand structures [4][7][20] Group 2 - In the dry bulk shipping sector, iron ore is the largest single commodity, accounting for 27% of shipping volume in 2024. The West African Simandou iron ore project, with a projected annual capacity of 120 million tons by 2028, is expected to significantly alter China's iron ore import landscape and drive a 2.2% increase in global dry bulk shipping demand [8][44][48] - The tanker sector is experiencing a recovery as previous demand constraints are lifted, with a projected fleet growth of only 0.5% for VLCCs in 2026, indicating a tight supply environment. Factors such as increased oil production from South America and stricter sanctions on Russia are expected to boost demand [9][70] - The container shipping industry is entering a pressure testing phase due to the end of export rush effects from trade tensions and ongoing geopolitical conflicts. However, there are still structural growth opportunities in regional markets, particularly in Asia and emerging markets [10][70] Group 3 - The report provides forecasts for the shipping industry, predicting a demand growth rate of 3.5% in 2026 and 3.8% in 2027 for dry bulk shipping, while supply growth is expected to be 3.4% and 2.4% respectively, indicating a tightening market [8][62] - The report emphasizes the importance of the Simandou project and potential post-war reconstruction in Ukraine as key drivers for increased dry bulk shipping demand, with estimates suggesting an additional 1.3% demand growth from Ukraine's reconstruction efforts [52][54] - The report identifies key investment targets, including Haitong Development and China Merchants Energy, which are positioned to benefit from the anticipated recovery in the shipping market [62][70]

Investment Rating - The report maintains a "Positive" investment rating for the software and services industry [7] Core Insights - The computer sector experienced a rebound after hitting a low, with an overall decline of 1.08%, ranking 29th among primary industries in the Yangtze River region [2][4] - The report highlights the approval of two L3 autonomous driving models in China, marking a significant step towards mass production applications in smart connected vehicles [21][27] - Ant Group's AI health application "AQ" has been rebranded to "Antifuku," achieving 15 million monthly active users, leading the health management AI application sector [30][34] - The report emphasizes the release of Google's Gemini 3.0 Flash, focusing on cost reduction and commercialization progress in large models [6][51] Summary by Sections Market Performance - The computer sector's trading volume accounted for 6.51% of the total market, with notable activity in vehicle-road-cloud related stocks [2][15] - The Shanghai Composite Index slightly increased by 0.03%, closing at 3890.45 points [4][15] Key Developments - The approval of L3 autonomous driving models positions China as the second country after Germany to allow such vehicles, with specific operational conditions [12][21] - Ant Group's "Antifuku" aims to address user retention and trust issues in healthcare, leveraging a robust network of medical resources [30][34] - The launch of Gemini 3.0 Flash aims to provide advanced intelligence at lower costs, enhancing the competitive landscape in AI [51][63] Recommendations - The report suggests focusing on the commercialization of AI products and the progress of AI agents, particularly in domestic AI chains and computing power chains [6][63] - Continued emphasis on companies with significant positioning advantages in the AI sector is recommended [6][63]

Investment Rating - The industry investment rating is "Positive" and maintained [6]. Core Insights - The U.S. government is enhancing its space policy to ensure leadership in space exploration, security, and commercial sectors, aiming to attract at least $50 billion in private investment by 2028 [2][8]. - The importance of space resources is increasing globally, with multiple countries competing to develop their commercial space industries, particularly benefiting satellite manufacturing and rocket launch sectors [2][8]. - China's advancements in reusable rocket technology are expected to drive the comprehensive development of its commercial space industry, with a focus on core suppliers in the satellite application sector [2][8]. Summary by Sections Event Description - On December 18, the U.S. White House announced an executive order to establish a vision for a "America First" space policy, ensuring U.S. leadership in space exploration and commercial activities [4]. Event Commentary - The U.S. aims to return humans to the Moon by 2028 and establish a permanent lunar outpost by 2030, linking efficient launch capabilities to national security [8]. - The competition in space policy between the U.S. and China indicates that space may become a significant arena for technological competition [8]. - The rapid advancements in space technology, including successful rocket recovery by companies like SpaceX, highlight the industry's high growth potential [8].

Group 1: Core Insights - The communication industry continues to focus on AI computing power, driven by the resonance of AI training and inference demand, with overseas CSPs continuously investing in computing power infrastructure [2][6] - The demand for optical interconnects is expected to increase significantly as the scale-up architecture evolves from in-cabinet to cross-cabinet and cluster designs [2][7] - Liquid cooling is transitioning from optional to a necessity due to rising cabinet power density, with overseas markets entering a realization phase and domestic commercialization accelerating [2][7] Group 2: Operators - The three major operators maintain stable performance, with a slight increase in profits despite revenue pressure, and improved cash flow quality [6][20] - Dividend payout ratios are steadily increasing, providing stable returns and valuation support for the sector, highlighting its attractiveness as a low-volatility defensive asset [6][24] Group 3: AI Computing Power - AI computing power remains in high demand, with both training and inference needs growing, leading to a clearer inflation logic in the network side [7][27] - The cost advantages of ASICs are accelerating their penetration, which is expected to enhance the share of optical modules in overall IT capital expenditures [7][45] - The growth of AI-related revenue is projected to continue, with significant increases in user engagement and request volumes for applications like Google's Gemini [27][30] Group 4: IDC (Internet Data Centers) - IDC valuations and positions are currently at the bottom range, with signs of marginal improvement in the industry [8][79] - Major internet companies are expected to significantly increase their capital expenditures in AI, which will positively impact the IDC market supply-demand dynamics [8][76] Group 5: Copper Connections - The acceleration of cabinet penetration is enhancing the outlook for copper connections, which are being integrated into high-end cabinet systems due to their low latency and power consumption advantages [8][82]

Investment Rating - The report maintains a "Positive" investment rating for the industry [8]. Core Insights - On December 19, Meituan held a significant event in Shanghai to launch its 2025 drone low-altitude air network, showcasing various new drone products and systems, marking the entry of drone delivery into a phase of scaled operations [2][6]. - Drone delivery is gradually becoming a more efficient resource distribution method, attracting major players like Meituan, Shansong, Taobao, JD.com, and SF Express to invest in this sector. As technology matures, low-altitude delivery is expected to become an important supplement to future logistics [12]. - The establishment of a comprehensive logistics system for urban low-altitude delivery is anticipated to redefine logistics by expanding the physical boundaries of urban logistics and transitioning from ground to aerial delivery [12]. Summary by Sections Event Description - The report details the launch of Meituan's integrated logistics system for urban low-altitude delivery, which signifies the transition to large-scale operations in drone delivery [6]. Event Commentary - Meituan's drone delivery service has expanded significantly since its inception in 2017, now operating 65 routes across multiple cities and completing 740,000 commercial orders. The company aims to increase the number of routes to over 200, with daily order volumes exceeding 10,000 [12]. - The operational cost of Meituan's fourth-generation drone can be as low as 1,400 yuan per month, representing a 75%-90% reduction compared to human labor costs. The efficiency of drone delivery is significantly higher, with a reported 7-fold increase in delivery speed in complex scenarios [12]. - The report suggests that the low-altitude delivery industry is poised for rapid development, with a recommendation to focus on the entire low-altitude economy supply chain, particularly in the fields of aviation information and air traffic management [12].

Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Views - The company is expected to pay a total consideration of 133.598 billion yuan for the asset acquisition, with a corresponding PE ratio of 14.17x for the non-deductible net profit attributable to the parent company in 2024. The payment structure includes approximately 93.519 billion yuan in cash (70%) and about 40.080 billion yuan in shares (30) [2][11]. - The asset injection is anticipated to strengthen the company's leading position in the coal industry, enhancing its scale and integrated advantages [2][11]. - The company’s coal reserves are projected to increase by 64.72% to 68.49 billion tons, while its recoverable coal reserves will rise by 97.71% to 34.5 billion tons. Additionally, coal production is expected to grow by 56.57% to 512 million tons, and installed power generation capacity will increase by 27.82% to 60.88 GW [11]. Summary by Relevant Sections Transaction Price & Valuation - The acquisition price is set at 133.598 billion yuan, with cash payments of 93.519 billion yuan and share payments of 40.080 billion yuan. The issuance price for A shares is 29.40 yuan per share, with approximately 1.363 billion shares issued, representing 6.42% of the total share capital [2][11]. - The net asset value of the acquired assets is approximately 94.995 billion yuan, resulting in a PB ratio of 1.41x, which is considered reasonable compared to the company's PB of 1.94x as of December 19 [2][11]. Performance Commitment - The performance commitment for most assets is set for three years (2026-2028), with extended commitments for certain assets until 2031. Expected contributions to net profit for 2026, 2027, and 2028 are 29.58 billion yuan, 45.45 billion yuan, and 66.43 billion yuan, respectively [11]. Financial Analysis - The company is expected to maintain a strong cash flow, with a projected operating cash flow of 93.3 billion yuan in 2024, ensuring the ability to meet the cash payment obligations [11]. - The transaction is expected to enhance the earnings per share (EPS), with a projected increase from 1.47 yuan to 1.54 yuan for the first seven months of 2025, and from 2.97 yuan to 3.15 yuan for 2024 [11].

Investment Rating - The industry investment rating is "Positive" and is maintained [5]. Core Insights - The Ministry of Commerce announced preliminary findings of a countervailing investigation against imported dairy products from the EU, confirming that these products are subsidized and have caused substantial harm to the domestic dairy industry in China. A temporary countervailing duty will be implemented starting December 23, 2025 [2][4]. Summary by Sections Event Description - The Ministry of Commerce's announcement (Document No. 83 of 2025) revealed that imported dairy products from the EU are subsidized, leading to significant harm to the domestic dairy industry. The State Council Tariff Commission will impose temporary countervailing duties starting December 23, 2025 [4]. Event Commentary - The countervailing investigation was initiated following a request from the China Dairy Industry Association and the China Dairy Products Industry Association in July 2024. The investigation confirmed that the subsidization of EU dairy products has resulted in increased inventory and a shift from profit to loss for domestic producers. The subsidy rates for sampled companies ranged from 21.9% to 42.7% [4]. Market Opportunities - The reliance on EU imports for various dairy products presents opportunities for domestic alternatives. In 2024, the B-end market for cheese, cream, and butter is projected to reach approximately 27.4 billion yuan, with a CAGR of 13.6% over the past decade. Key recommended companies include Miaokelando, Yili, Mengniu, New Dairy, and Lihai Foods [4]. Raw Milk Price Outlook - There is an expectation for a turning point in raw milk prices, as domestic fresh milk prices have decreased significantly while international prices for bulk powder have shown an upward trend. The supply-demand balance for raw milk is anticipated to stabilize by 2026, with recommendations for companies like Youran Dairy and Modern Dairy [4].