Investment Rating - The report maintains a "Positive" investment rating for the defense industry [2]. Core Insights - The 2026 national defense budget is projected to grow by 7% year-on-year, reflecting a steady increase in defense spending [11]. - The "14th Five-Year Plan" outlines 109 major engineering projects, which are expected to support economic growth and development [12]. - The domestic gas turbine industry is witnessing a trend towards self-sufficiency, with significant advancements in the development of heavy-duty gas turbines [26]. - The commercial aerospace sector is anticipated to grow significantly, with a projected market size of approximately 10 trillion yuan over the next 20 years [42]. Summary by Sections National Defense Budget - The 2026 national defense budget is set at 19,095.61 billion yuan, marking a 7% increase from the previous year, maintaining a consistent growth rate since 2021 [11]. Major Engineering Projects - The "14th Five-Year Plan" includes 109 major engineering projects aimed at bolstering economic stability and growth, emphasizing the importance of these projects in the implementation of national strategies [12]. Gas Turbine Industry - The domestic gas turbine sector is progressing towards self-sufficiency, with the first domestically designed and manufactured heavy-duty gas turbine achieving a significant milestone in 2023 [28]. - The industry is expected to benefit from increased demand driven by various sectors, including mechanical, petroleum, and electricity [28]. Commercial Aerospace - The domestic commercial aircraft market is projected to reach around 10 trillion yuan over the next 20 years, with an expected demand for over 400 new aircraft annually by 2029 [46]. - The C919 aircraft has achieved a composite material usage rate of 12%, with future models like the C929 expected to exceed 50% [74]. - The report highlights the potential for domestic aircraft manufacturers to break the oligopoly currently held by Airbus and Boeing, as they ramp up production [53].

Investment Rating - The report maintains a "Positive" investment rating for the industry [3] Core Insights - The report emphasizes the ongoing trend of AI-driven electricity shortages, which is expected to create significant market opportunities, particularly in energy storage due to rising natural gas prices [15] - The focus is on the space photovoltaic sector as a new investment direction, with strong recommendations for companies involved in this area [15] Summary by Sections Market Overview - The CJ Electric New Index increased by 1.44% this week, with other power sources and equipment benefiting from the North American AI electricity shortage narrative, rising by 6.67% and 6.14% respectively [8] - Energy storage saw a significant increase of 4.56% due to rising oil prices [8] Important Events Review - SpaceX is preparing to submit an IPO registration to the SEC, aiming for a June listing, with a new generation Starship V3 flight test scheduled for March 2026 [12] - Major tech companies signed a commitment for self-supply of electricity, opening a new market for power equipment [12] - The U.S. has approved $75 billion in transmission expansion projects across three major regional grid operators [12] Sector Strategies and Recommendations - The report recommends focusing on the AI electricity shortage trend, particularly in transformer exports and AI storage valuations [15] - In the photovoltaic sector, the cancellation of export tax rebates is expected to boost overseas shipments, although end-user demand remains low [15] - For energy storage, the report highlights strong domestic project reserves and the potential for demand recovery supported by national capacity pricing [15] - In the lithium battery sector, demand expectations are strengthening, with a focus on battery segments and companies like CATL and EVE Energy [15] - The wind power sector is expected to benefit from a new cycle of growth, with recommendations for companies involved in offshore wind and related components [15] - In the power equipment sector, the report highlights the potential for significant export demand driven by AI self-supply agreements [15] New Directions - The report suggests monitoring developments in humanoid robotics and domestic chip production, as well as advancements in AI applications [15]

1. Report Industry Investment Rating No information is provided regarding the industry investment rating in the given content. 2. Core Viewpoints of the Report - In late February, the bond market showed an oscillatory recovery, with short - end credit products outperforming long - end ones. Credit bonds outperformed interest - rate bonds and Tier 2 capital bonds, and the short - end credit market was stronger [5][10]. - Amortized bond funds are shifting their allocation from interest - rate bonds to credit bonds. In March 2026, there will be a large - scale concentrated opening, releasing continuous credit bond allocation demand [5][11]. - The development of participating insurance is reshaping the asset allocation pattern of insurance funds. Insurance funds are expected to increase their net purchases of credit bonds and optimize their asset structure in 2026 [5][12]. - In March, bond market allocation should seize the structural opportunities, focus on the short - end credit products brought by the amortized bond fund's position - building window. The recommended priority is 1Y AAA medium - short - term notes > 1Y AAA commercial financial bonds > 1Y AAA inter - bank certificates of deposit [5][13]. 3. Summary According to the Directory 3.1. Amortized Bond Funds: Allocation Preference Migration and Yield Calculation - **Amortized Bond Fund Holdings: From Interest - rate to Credit**: As of the end of 2025, the scale of amortized bond funds was 150.8182 billion yuan. In Q4 2025, the market value of credit bond holdings increased by 56.74% quarter - on - quarter, and the proportion rose to 21.36%. Medium - term notes were the main increased bond type [23]. - **Allocation Preference Differentiation of Amortized Bond Funds with Different Fixed - Open Cycles**: Amortized bond funds with a cycle of less than 36 months prefer credit bonds, while those over 36 months prefer policy - financial bonds. Short - term and 63 - month funds are the main drivers of the shift from interest - rate to credit bonds [29]. - **Bond Type Allocation of Amortized Bond Funds with the Same Fixed - Open Cycle**: Some closed - cycle amortized bond funds show certain commonalities in bond type allocation, but there are also significant structural differentiations. Short - term and long - term funds have higher similarity in bond type allocation, while medium - and long - term funds have higher differentiation [35]. - **Amortized Bond Funds Build Positions after Entering the Closed - end Period**: Amortized bond funds usually build positions gradually after the closed - end period starts. In March 2026, there will be a large - scale maturity of amortized bond funds within 1 year and over 5 years (expected open scale over 9.6 billion yuan), and the new position - building demand is expected to drive the credit bond allocation demand [40]. - **The Remaining Term of Amortized Bond Fund Assets Should Match the Closed - end Period Requirement**: The remaining term of amortized bond fund assets is restricted by the length of the closed - end period. The actual position data at the end of Q4 2025 verifies the configuration logic of holding to maturity [46]. - **The Concentrated Opening of Amortized Bond Funds Compresses Credit Spreads**: The concentrated opening of amortized bond funds is beneficial to credit, pushing down the yields of corresponding - term credit products and narrowing credit spreads. In March 2026, the credit spreads of 1 - year and 5 - year credit bonds may be further compressed [50]. - **Comparison of 1 - year Amortized Bond Funds with Bonds of the Same Maturity**: Among the 12 sample 1 - year amortized bond funds, 11 have higher yields than national development bonds, 8 can outperform AAA - rated inter - bank certificates of deposit and AAA - rated commercial financial bonds, and 5 can outperform AAA - rated medium - short - term notes [55][57]. - **Estimation Logic and Validity Verification of Amortized Bond Fund Expected Yields**: Based on the heavy - position bond details disclosed in the quarterly reports, the expected yields of amortized bond funds can be reasonably predicted. The correlation coefficient between the estimated expected yields and the actual yields is 0.92, with good fitting results [60]. - **Future Yield Forecast of Amortized Bond Funds: Long - term Fixed - Open Cycle Products Have More Advantages**: In March 2026, the expected annualized yields (after fees) of amortized bond funds are concentrated in the range of 1.1% - 1.6%, and long - term fixed - open cycle funds such as 63 - month and 66 - month ones show obvious yield advantages [64]. - **Can Tier 2 Capital Bonds Continue to Be Allocated?**: From a historical perspective and considering the yield safety cushion, the allocation value of Tier 2 capital bonds has weakened. The "shrinking volume and rising price" trend in the market is a signal that the rising market is difficult to continue [69]. 3.2. Development of Participating Insurance: Reshaping the Insurance Asset Allocation Pattern - **Reducing the Duration Gap: The Development of Participating Insurance Benefits Medium - and Long - term Credit Bonds**: In early 2026, to reduce the duration gap, insurance funds showed an obvious term preference for credit bond allocation, and the trend of increasing medium - and long - term credit bonds is expected to continue in March [78]. - **New Accounting Standards: The VFA Model Drives Insurance to Increase Allocation of Tier 2 and Perpetual Bonds**: The VFA model can smooth the impact of asset price fluctuations on current profits. In January 2026, insurance institutions actively allocated Tier 2 and perpetual bonds, and this trend is expected to continue in March [85]. - **Clear Trend: The Increase in the Proportion of Participating Insurance Boosts Equity Allocation**: In 2026, the insurance industry's increase in equity asset allocation is a clear long - term trend, driven by the development of participating insurance. In March, the proportion of participating insurance is expected to further increase, and the demand for equity assets will continue to strengthen [90]. - **Outlook for March: The Deepening of "Fixed - Income +" Drives Insurance Funds to Increase Allocation of High - Coupon Assets**: In March 2026, insurance funds are expected to further increase their allocation of medium - and long - term credit bonds and Tier 2 and perpetual bonds, while reducing the allocation of national bonds and moderately increasing the allocation of local government bonds [93]. - **Variety Allocation Strategy: Seize the Amortized Bond Fund Position - Building Window and Focus on Short - end Credit Allocation**: In March 2026, the recommended priority for credit bond allocation is 1Y AAA medium - short - term notes > 1Y AAA commercial financial bonds > 1Y AAA inter - bank certificates of deposit [97].

Report Industry Investment Rating - Not provided in the document Core Viewpoints - From March 2 - 6, 2026, the central bank net - withdrew 136.34 billion yuan through short - term reverse repurchases and conducted an 80 - billion - yuan 3M outright reverse repurchase operation on March 6. From March 2 - 8, 2026, the net payment scale of government bonds increased, most of the maturity yields of inter - bank certificates of deposit (CDs) declined, the net financing of inter - bank CDs turned positive, and the average leverage ratio of the inter - bank bond market rose slightly. From March 9 - 15, 2026, the expected net payment scale of government bonds is - 20.21 billion yuan, and the maturity scale of inter - bank CDs is about 100.82 billion yuan. On March 6, 2026, the median durations of medium - long - term and short - term interest - rate style pure bond funds increased by 0.12 years and decreased by 0.06 years week - on - week respectively [2]. Summary by Related Catalogs Funds - **Central bank's open - market operations**: From March 2 - 6, 2026, the central bank's short - term reverse repurchase investment was 16.16 billion yuan, and the withdrawal was 152.5 billion yuan, achieving a net withdrawal of 136.34 billion yuan. On March 6, an 80 - billion - yuan 3M outright reverse repurchase operation was carried out, with a maturity volume of 100 billion yuan this month and a net withdrawal of 20 billion yuan. From March 9 - 13, 2026, 27.76 billion yuan of open - market reverse repurchases and 15 billion yuan of treasury cash fixed - term deposits will mature [6]. - **Funding rates**: From March 2 - 6, 2026, the average values of DR001 and R001 were 1.29% and 1.36% respectively, down 6.9 and 4.8 basis points compared with February 24 - 28, 2026. The average values of DR007 and R007 were 1.43% and 1.51% respectively, down 7.2 and 5.4 basis points compared with February 24 - 28, 2026. The weighted average rate of DR001 first decreased and then increased from March 2 - 6. The initial increase in the banking system's fund lending ability at the beginning of the month promoted a stable and loose funding situation, while the net withdrawal of 20 billion yuan from the 3M outright reverse repurchase in March and the central bank's withdrawal of short - term reverse repurchases at the beginning of the month caused market concerns about the marginal tightening of the funding situation [7]. - **Government bond net financing**: From March 2 - 8, 2026, the net financing of government bonds was about 28.2 billion yuan, an increase of about 9.16 billion yuan compared with February 23 - March 1, 2026. Among them, the net financing of treasury bonds was about - 3.5 billion yuan, and that of local government bonds was about 31.7 billion yuan. From March 9 - 15, 2026, the expected net financing of government bonds is about - 20.21 billion yuan, with treasury bonds having a net financing of about - 33.29 billion yuan and local government bonds about 13.08 billion yuan [8]. Inter - bank Certificates of Deposit - **Maturity yields**: As of March 6, 2026, the maturity yields of 1M and 3M inter - bank CDs were 1.4916% and 1.5050% respectively, up 1.7 and down 4.8 basis points compared with February 28, 2026. The 1Y inter - bank CD maturity yield was 1.5500%, down 2.5 basis points compared with February 28, 2026. The decline in inter - bank CD rates was driven by the loose funding situation and the pricing of the expected tightening of inter - bank deposit management [9]. - **Net financing**: From March 2 - 8, 2026, the net financing of inter - bank CDs was about 12.92 billion yuan. From March 9 - 15, 2026, the expected maturity repayment volume of inter - bank CDs is 100.82 billion yuan, up from 58.8 billion yuan in the previous week, increasing the pressure of maturity renewal [9]. Institutional Behavior - **Leverage ratio**: From March 2 - 6, 2026, the average leverage ratio of the inter - bank bond market was 107.62%, up from 107.39% in February 24 - 28, 2026. On March 6 and February 28, 2026, the estimated leverage ratios of the inter - bank bond market were about 107.61% and 106.99% respectively [10]. - **Duration of bond funds**: On March 6, 2026, the median duration (MA5) of medium - long - term interest - rate style pure bond funds was 4.62 years, up 0.12 years compared with February 28, 2026, at the 87.0% quantile since the beginning of 2022. The median duration (MA5) of short - term interest - rate style pure bond funds was 2.03 years, down 0.06 years compared with February 28, 2026, at the 79.0% quantile since the beginning of 2022 [10].

Investment Rating - The report indicates a positive outlook for the natural uranium industry, highlighting a potential supply-demand mismatch due to increasing nuclear power construction and rising global demand for natural uranium [3]. Core Insights - The natural uranium supply is highly concentrated in a few countries, with Kazakhstan, Canada, and Namibia expected to account for approximately 75% of global production by 2024. The demand for natural uranium is primarily driven by nuclear power generation, which constitutes about 99% of its usage [6][20]. - The report predicts that by 2030, the annual demand for natural uranium will increase to 84,400 tons (tU), with a compound annual growth rate (CAGR) of approximately 4.09% [3][9]. - The supply side faces challenges due to long expansion cycles for uranium mining projects and a decline in secondary supply, leading to a tight supply situation in the future [7][42]. Supply Summary - The supply of natural uranium is expected to remain rigid due to the long lead times for uranium mining projects and a decrease in exploration and development investments following the Fukushima disaster. The number of new mines under construction is limited, and existing mines are facing declining ore grades [7][46]. - The report emphasizes that the existing mines are aging, and many are experiencing a decline in production capacity. Without significant new projects, uranium production could be halved by the 2030s [46][50]. - Secondary supply sources, such as government and commercial inventories, are also diminishing, further exacerbating the supply constraints [54]. Demand Summary - The demand for natural uranium is closely linked to the construction cycle of nuclear power plants. China is expected to be a major driver of global nuclear power capacity growth, with an estimated addition of 42.6 million kilowatts of nuclear power capacity from 2026 to 2030 [8][9]. - Globally, there is a renewed interest in nuclear power, with several countries moving towards more positive nuclear policies, indicating a collective entry into a favorable cycle for nuclear power construction [8][9]. - The report forecasts that by 2030, the operational nuclear power capacity worldwide will increase to 469 million kilowatts, leading to a significant rise in natural uranium demand [9][40].

Investment Rating - The investment rating for the utility sector is "Positive" and maintained [8] Core Insights - The report emphasizes the characteristics and rhythm of the green electricity market during the "policy year," highlighting the three phases of the 2021 green electricity market: pre-meeting, during the meeting, and post-meeting. It suggests that the green electricity sector will continue to be a focal point in the upcoming years, particularly in 2026, with a renewed focus on "green and low-carbon" initiatives [2][11] - The report identifies four key points to watch for the future of the green electricity sector, based on the experiences from 2021, including the impact of policy clarity, the role of leading companies, and the importance of financial reporting periods [11] Summary by Sections Market Performance - The utility sector has shown a significant increase, with a 20.09% rise over the past year, and a 10.52% increase since the beginning of the year [31] - The report notes that the green electricity sector has been influenced by policy expectations and market sentiment, with notable stock performances from companies like Longyuan Power and Xinneng Green Energy [11][37] Policy and Market Dynamics - The report discusses the cyclical nature of the market, particularly how policy announcements during the "Two Sessions" can catalyze market movements. It highlights the importance of policy implementation and the timing of financial disclosures in shaping market trends [11] - The report anticipates that the green electricity sector will be a major theme in 2026, driven by technological advancements and policy support, particularly in the context of carbon neutrality goals [11] Company Recommendations - The report recommends focusing on quality thermal power operators such as Huaneng International, Datang Power, and Guodian Power, as well as hydropower companies like Yangtze Power and State Power Investment Corporation [11][14][15] - It also highlights the potential of renewable energy companies, particularly Longyuan Power and Xinneng Green Energy, which are expected to benefit from favorable policy changes and market conditions [11][17]

Investment Rating - The industry investment rating is "Positive" and maintained [11] Core Viewpoints - Domestic civil aviation is experiencing a recovery with ticket prices turning positive during the Two Sessions, indicating a shift from weak balance to tight balance in the market. The report remains optimistic about high elasticity stocks, particularly in the context of international routes [5][8] - Short-term stock prices are significantly impacted by rising fuel costs due to geopolitical conflicts, particularly in the Middle East. Future improvements in fundamentals depend on the resolution of these conflicts and potential recovery in oil prices [6][7][8] Summary by Sections Spring Festival Data - As of March 6, domestic flight volume, passenger volume, seat occupancy rate, and oil-inclusive ticket price growth rates are +3.5%, +6.6%, +1.7 percentage points, and -0.2% respectively. International flight metrics show +0.5%, +6.3%, and +3.2 percentage points [5] - On March 6, domestic flight volume, passenger volume, seat occupancy rate, and oil-inclusive ticket price growth rates are +1.4%, +5.6%, +2.5 percentage points, and -4.9% respectively. International metrics are -2.7%, +3.8%, and +4.9 percentage points [5] Oil Price Impact - The outbreak of the US-Iran conflict has led to a significant increase in oil prices, with Brent crude reaching $90 per barrel, a more than 30% increase compared to mid-February. Jet fuel prices have surged to $200 per barrel, raising airline operational costs [6] - Jet fuel costs account for approximately 30%-40% of total airline costs, and sustained high oil prices could compress profit margins. Airlines are likely to pass on some costs through fuel surcharges, which may limit the impact on profits [6] Middle East Route Recovery - Airlines are gradually resuming Middle East routes after safety assessments, focusing on stable areas like Riyadh and Dubai. However, operations remain tentative, with some high-risk airspace still closed, leading to increased costs and uncertainty in profitability [7] - Future improvements in airline profitability are contingent on the resolution of the conflict and the reopening of the Strait of Hormuz, which could lead to a recovery in oil prices and a significant resumption of flights [7]

Investment Rating - The report maintains a "Positive" investment rating for the coal industry [9] Core Insights - The ongoing conflict between the US and Iran is expected to drive up coal demand due to rising oil and gas prices, which have increased by 36% and 66% respectively since the conflict began [7][16] - Global coal consumption could increase by approximately 167 million tons, accounting for 2.2% of the total global thermal coal consumption in 2025, while China's coal consumption may rise by about 59 million tons, representing 1.4% of its total thermal coal consumption in 2025 [6][16] Summary by Sections Market Performance - The coal index (Yangtze) rose by 3.94%, outperforming the Shanghai and Shenzhen 300 index by 5.01 percentage points, ranking 2nd out of 32 industries [6][41] - As of March 6, the market price for thermal coal at Qinhuangdao was 743 RMB/ton, a slight decrease of 2 RMB/ton week-on-week [6][36] Demand and Supply Analysis - The report highlights that the increase in oil and gas prices has led to a heightened focus on energy security, making coal a key alternative energy source [7][16] - The report anticipates that the ongoing geopolitical tensions will lead to panic buying of coal, potentially causing prices to rise beyond expectations [6][16] Coal Demand Drivers - The report estimates that the coal chemical and coal power sectors could see increased demand, with coal chemical consumption potentially rising by 49.57 million tons in China, which is 1.1% of its 2025 thermal coal consumption [24][27] - For global coal power demand, the report suggests that disruptions in LNG supply through the Strait of Hormuz could lead to an increase in coal consumption by approximately 8.486 million tons, which is 1.1% of global thermal coal consumption in 2025 [27][28] Investment Recommendations - The report suggests focusing on coal sector investment opportunities, particularly in companies like Yancoal Energy (H+A), China Shenhua (H+A), and Shaanxi Coal and Chemical Industry [8]

Investment Rating - The industry investment rating is "Positive" and maintained [8] Core Insights - The surge in Brent crude oil prices from $61.76 per barrel at the beginning of the year to $83 per barrel in March presents significant development opportunities for the coal chemical industry due to rising energy costs driven by geopolitical conflicts [2][12] - The hydrogen energy sector is entering a policy window, with the establishment of a national low-carbon transition fund and the cultivation of hydrogen and green fuel as new growth points highlighted in the 2026 Two Sessions work tasks [2][12] Summary by Relevant Sections Oil Price Impact - Brent crude oil prices have increased rapidly, with a notable single-day increase of 13%, leading to higher domestic fuel prices and increased costs for downstream chemical industries [12] - Resource provinces such as Xinjiang, Shanxi, and Inner Mongolia are accelerating the layout of modern coal chemical projects, transitioning coal from a "fuel" to a "raw material" and "material" [12] Hydrogen Energy Policy - The hydrogen energy industry is receiving comprehensive policy support, with the National Energy Administration holding discussions on green fuels and the inclusion of hydrogen energy in government work reports as a key emerging industry [12] - Local initiatives, such as Shanxi's focus on the coke-gas-hydrogen industry chain and Inner Mongolia's green hydrogen production, are positioning these regions as leaders in the hydrogen sector [12] Company Developments - China Chemical is expected to benefit from rising oil prices, with its nylon industry chain poised for growth due to increased prices of key chemicals [12] - China Energy Engineering Corporation is advancing its hydrogen energy market position with significant investments in large-scale green hydrogen projects, including a total investment of 69.46 billion yuan for a green hydrogen and ammonia project [12]

Investment Rating - The investment rating for the banking industry is "Positive" and maintained [10] Core Insights - The banking sector has shown resilience amid increased market volatility due to geopolitical conflicts, with dividend assets rising and bank stocks achieving excess returns. Notably, Chongqing Bank and Xiamen Bank have led the gains, while H-shares of foreign banks have lagged. The current market conditions suggest that it is an important buying opportunity for bank stocks this year, especially after a prolonged adjustment period [2][8][18] - In January 2026, the national credit growth rate continued to decline to 6.0%, with significant regional disparities. Sichuan and Jiangsu provinces exhibited high loan growth rates of 9.9% and 9.3%, respectively, which are well above the national average. The trend indicates that large provinces are taking the lead in credit issuance [6][40] - Corporate loans in major provinces are growing at rates above 11%, with Jiangsu and Sichuan reaching 13.8% and 13.2%. This reflects the effectiveness of local governments in promoting new productive forces and increasing investment. Retail loans, however, show a contrasting trend with larger provinces experiencing declines while smaller provinces see growth [7][41] Summary by Sections Market Performance - The banking index rose by 1.6% this week, outperforming the CSI 300 and ChiNext indices by 2.7% and 4.0%, respectively. The market is experiencing a divergence in style, with bank stocks showing low PB-ROE valuations and improving performance trends [8][18] - The average dividend yield for the six major state-owned banks in A-shares is 4.23%, which is attractive compared to the 10-year government bond yield spread of 245 basis points. The average yield for H-shares has increased to 5.35%, with a discount rate of 21% compared to A-shares [9][26] Credit Growth Analysis - The credit growth in January 2026 indicates a continued downward trend, with significant contributions from Sichuan and Jiangsu provinces. The corporate loan growth reflects the ongoing transition to new economic drivers, while retail loan growth varies significantly across regions [40][41] - The market is witnessing a shift in funding styles, with bank-related index funds experiencing a net inflow of 400 million yuan after two weeks of outflows, indicating a potential change in investment strategy [20][18] Investment Recommendations - The report recommends focusing on high-quality city commercial banks in Zhejiang, Jiangsu, and Shandong provinces, including Hangzhou Bank, Jiangsu Bank, and Nanjing Bank. It also suggests paying attention to low-valuation, high-dividend banks like Industrial Bank, which has significant potential for convertible bond conversion [18][31]