Investment Rating - The report maintains a "Buy" rating for Chow Tai Fook [6] Core Views - Chow Tai Fook's FY2026 Q1 same-store sales decline continues to narrow, with expectations for ongoing improvement [1] - The company is focusing on optimizing product structure and closing underperforming stores, which is expected to enhance sales performance [2] - E-commerce sales have shown strong growth, with a 27% year-on-year increase in FY2026 Q1 [2] - The company anticipates a 3% revenue growth for FY2026, with a slight decline in operating profit [3] Summary by Sections Financial Performance - For FY2026 Q1, Chow Tai Fook's overall RSV decreased by 1.9%, with mainland China RSV down by 3.3% [1] - The company closed 311 underperforming stores, bringing the total to 5,963 stores in mainland China [1] - The retail sales of gold products increased by 20.8%, contributing to the improvement in same-store sales [1] E-commerce Growth - Chow Tai Fook's e-commerce sales in mainland China grew by 27% year-on-year, accounting for 7.6% of total sales [2] - The company is leveraging promotional events like the 618 sales to boost e-commerce performance [2] Regional Performance - In FY2026 Q1, sales in Hong Kong and Macau increased by 7.8%, with Macau showing a notable 9.5% growth in same-store sales [2] Revenue and Profit Forecast - The company expects FY2026 revenue to grow by approximately 3%, while operating profit is projected to decline by 2% to HKD 14.4 billion [3] - Chow Tai Fook's net profit for FY2026 is forecasted to increase by 26% to HKD 7.45 billion [3]

Investment Rating - The report maintains a "Buy" rating for Kingsoft Software [3][5] Core Views - Kingsoft Software continues to experience steady revenue growth, with Q1 revenue reaching 2.34 billion RMB, a year-on-year increase of 9%. The office and gaming segments contribute 56% and 44% to the total revenue, respectively [1] - The company's gross margin for the quarter is approximately 82%, reflecting a 1 percentage point increase year-on-year [1] - R&D expenses for the quarter are around 830 million RMB, up 16% year-on-year, primarily due to investments in AI capabilities and new game categories [1] - The report forecasts revenue growth driven by both office and gaming segments, estimating revenues of 11.4 billion, 12.9 billion, and 14.6 billion RMB for 2025, 2026, and 2027, respectively [3] Summary by Sections Office Segment - Kingsoft Office recorded Q1 revenue of 1.301 billion RMB, a year-on-year increase of 6.22%. The personal business segment generated 857 million RMB, growing by 10.86% [2] - WPS 365 business revenue reached 151 million RMB, marking a significant year-on-year growth of 62.59% [2] - WPS software business revenue declined by 20.99% to 262 million RMB, mainly due to new procurement processes affecting sales [2] Gaming Segment - The gaming and other business revenue for Q1 was approximately 1.04 billion RMB, a year-on-year increase of 14%, driven by contributions from games like "Dust White Zone" and "Jian Wang 3" [2] - The new game "Limitless Machine" launched on July 2, has received positive feedback, ranking fifth on Steam's global wishlist [2] Financial Projections - The report projects net profits for 2025, 2026, and 2027 to be 1.88 billion, 2.46 billion, and 2.85 billion RMB, respectively, with corresponding growth rates of 21%, 31%, and 16% [4][3] - The estimated P/E ratio for 2026 is 17.4, with a target valuation of approximately 49.1 billion RMB, corresponding to a target price of around 40 HKD [3]

Quantitative Models and Construction Methods 1. Model Name: Interest Rate Bond Expected Return Model - **Model Construction Idea**: This model decomposes the expected return of interest rate bonds into several components and uses Monte Carlo simulations to predict the expected return for bonds of any maturity over a one-year holding period [8] - **Model Construction Process**: The expected return of interest rate bonds is decomposed into the following components: - Coupon yield - Roll yield - Duration yield - Convexity yield The formula for the expected return is: $ R \approx r_{N} + roll~yield + Dur \cdot (-\Delta r) + \frac{1}{2} Cx \cdot \Delta r^{2} $ Where: - $ r_{N} $ represents the coupon yield - $ roll~yield $ represents the roll-down return - $ Dur $ represents the duration - $ \Delta r $ represents the change in interest rates - $ Cx $ represents the convexity Based on this, the "interest rate bond odds" is defined as: $ Interest~Rate~Bond~Odds = 10Y~Bond~Expected~Return - 1Y~Bond~Expected~Return $ As of July 18, the expected return difference between 10Y and 1Y bonds was -3.2%, indicating extremely low odds for 10Y bonds [8] 2. Model Name: Short-Term Momentum Model - **Model Construction Idea**: This model predicts the short-term (1-month) price movement of interest rate bonds based on three key characteristics of interest rate movements: mean reversion around the interest rate center, 1-month short-term momentum, and 12-month long-term momentum [14] - **Model Construction Process**: The formula for the short-term momentum model is: $ \Delta r_{t+1} = \beta_{1}(\mu - r_{t}) + \beta_{2}(r_{t} - r_{t-1}) + \beta_{3}(r_{t} - r_{t-12}) + \sigma \sqrt{r_{t}} \cdot \varepsilon $ Where: - $ \mu $ represents the interest rate center - $ r_{t} $ represents the current interest rate - $ r_{t-1} $ and $ r_{t-12} $ represent the interest rates 1 month and 12 months ago, respectively - $ \beta_{1}, \beta_{2}, \beta_{3} $ are coefficients - $ \sigma $ represents volatility - $ \varepsilon $ represents random noise The model suggests that the 10Y bond may face short-term downward pressure, and recommends defensive allocation to 1Y bonds [14] 3. Model Name: Trading Heat Monitoring Model - **Model Construction Idea**: This model uses turnover rate and transaction proportion to measure the trading heat of long-term bonds, identifying risks of overcrowded trading [17] - **Model Construction Process**: - Turnover rate = (Trading volume of bonds with maturity >10 years) / (Outstanding balance of bonds with maturity >10 years) - Transaction proportion = (Trading volume of bonds with maturity >10 years) / (Total trading volume of all bonds) Historical data shows that when these indicators exceed 2 standard deviations, the future 1-3 month returns of long-term bonds are negative. When they exceed 4 standard deviations, the risk of significant drawdowns increases [17][18] --- Model Backtesting Results 1. Interest Rate Bond Expected Return Model - **10Y-1Y Expected Return Difference**: -3.2% (as of July 18, 2025) [8] 2. Short-Term Momentum Model - **Annualized Return**: 6.6% - **Maximum Drawdown**: 2.3% - **Q1 Avoided Drawdown**: Approximately 2.2% [14] 3. Trading Heat Monitoring Model - **Turnover Rate**: 1.0 standard deviation - **Transaction Proportion**: 2.2 standard deviations [18]

Group 1: Market Overview - In June, the national electricity consumption increased by 5.4%, with thermal power continuing to show positive growth [15] - The packaging water industry in 2025 is expected to maintain intense competition, with leading companies like Nongfu Spring and China Resources Beverages likely to gain market share [17][19] Group 2: Financial Engineering Insights - In Q2 2025, the average return of active equity funds decreased compared to the previous quarter, but over 60% of these funds still achieved positive returns, with a median quarterly return of 1.95% [3] - The scale gap between active and passive funds has widened, with active equity fund size at 3.28 trillion yuan, smaller than the passive index fund size of 3.60 trillion yuan [3] Group 3: Chemical Industry Analysis - The chemical sector has shown continuous strength, driven by government policies aimed at reducing low-price competition and promoting the exit of outdated production capacity [8] - The basic chemical index has risen by 5.2% since July 17, 2025, indicating a positive market sentiment [9] Group 4: Electricity Sector Insights - The electricity supply side has seen a slowdown in growth for thermal and wind power, while nuclear and solar power generation have accelerated [15] - Recommendations include increasing allocation to the electricity sector, particularly focusing on companies with resilient quarterly performance in thermal power [15] Group 5: Beverage Industry Dynamics - Nongfu Spring is expected to see steady growth in its packaging water business, with strong brand and channel capabilities [18] - China Resources Beverages is positioned to benefit from improved profit margins due to increased self-production and reduced outsourcing costs [19]

Investment Rating - The report maintains an "Increase" rating for the beverage industry, indicating a positive outlook for leading companies in the sector [5]. Core Insights - The beverage industry is expected to continue experiencing intense competition, with leading companies like Nongfu Spring and China Resources Beverage likely to benefit from increased market share [3]. - Nongfu Spring is projected to see steady growth in its bottled water business and sustained high growth in its beverage products, supported by strong brand, channel, and product capabilities [1]. - China Resources Beverage, as a leader in the purified water sector, is focusing on channel expansion and product development, which is expected to enhance its market share and profitability [2]. Summary by Sections Nongfu Spring - The company is expected to recover its bottled water market share and potentially exceed previous highs due to its strong brand and product capabilities [1]. - The beverage segment is diversified with high-growth products like sugar-free tea "Oriental Leaf" and functional drinks "Scream" and "Power Emperor Vitamin Water," which align with health trends [1]. - As of July 21, 2025, the company's PE(TTM) is 38.01X, with a five-year average of 54.25X, indicating potential for valuation recovery [1]. China Resources Beverage - The company is solidifying its position in the purified water market while expanding into new channels such as dining and family segments [2]. - The introduction of sub-brands focusing on natural and mineral water is expected to drive market share recovery [2]. - The company's PE(TTM) is 17.97X, suggesting a significant valuation gap compared to Nongfu Spring, with potential for both performance and valuation improvement [2]. Investment Recommendations - The report recommends focusing on Nongfu Spring and China Resources Beverage due to their competitive advantages and growth potential [3]. - Additionally, it suggests monitoring Eastroc Beverage for its strong growth attributes and Uni-President China for its high dividend yield [3].

Investment Rating - The report maintains an "Accumulate" rating for the industry [6] Core Insights - The current state of China's raw milk and beef industries is at the bottom of the cycle, with the dairy industry gradually clearing capacity towards a balance in supply and demand [1] - The beef industry has seen a price recovery, with live cattle prices rebounding since February 2025, driven by reduced imports and a tightening supply [2] - The report indicates that the dairy cycle's darkest moment is expected to end within 1.5 years, with signs of marginal improvement in the first half of 2025 [1] Summary by Sections Raw Milk Industry - As of July 10, 2024, the price of fresh milk is 3.04 CNY/kg, down 6.17% year-on-year, with over 90% of the dairy industry experiencing losses [1] - The China Dairy Association forecasts a 4.5% year-on-year decrease in dairy cow inventory for 2024, with further price declines expected in 2025 [1] - There are indications of a narrowing decline in raw milk prices in the first half of 2025, with a significant reduction in milk powder spray volume [1] Beef Industry - The beef industry is entering a replenishment phase, with a 2.9% growth in cattle inventory in 2023, but a projected 4.4% decline in 2024 [2] - Live cattle prices and market averages have increased by 8.3% and 7.4% respectively since February 2025 [2] - The industry is experiencing a culling cycle for breeding cows, leading to a decrease in the number of calves born [2] Company Performance YouRan Agriculture - In 2024, YouRan achieved revenue of 20.1 billion CNY, a year-on-year increase of 7.5%, with fresh milk production rising by 24.1% to 3.747 million tons [3] - Despite a decrease in average selling price of fresh milk to 4.1 CNY/kg, the company managed to improve its gross margin [3] - The company reported a loss of 690 million CNY for the year due to declining raw milk and beef prices [3] Modern Farming - Modern Farming's revenue decreased by 1.5% year-on-year to 13.25 billion CNY, with fresh milk production increasing by 13.6% [4] - The average selling price of fresh milk fell by 10.3% to 3.6 CNY/kg, resulting in a loss of 1.47 billion CNY for the year [4] - Future price increases in milk and beef are expected to positively impact the company's core business [4] China Shengmu - China Shengmu reported a revenue decline of 7.6% to 3.13 billion CNY in 2024, with fresh milk sales price down by 6.1% [7] - The company is positioned to benefit from the rising beef prices due to its dual focus on dairy and beef production [7] Tianrun Dairy - Tianrun's revenue for 2024 is projected at 2.8 billion CNY, a 3.3% increase, but net profit is expected to drop by 69.3% due to losses from cattle disposal [8] - The company is expected to improve its operations as it reduces cattle disposals in subsequent quarters [8]

Group 1: Earnings Forecast and Historical Comparison - The pre-disclosure phase of mid-year reports focuses on profitability characteristics, with a low disclosure rate and potential for significant subsequent revisions. The estimated earnings growth for the entire A-share non-financial sector in 2025 is 13.2%, showing a quarter-on-quarter improvement of 8.9 percentage points [1][16] - The proportion of companies experiencing earnings growth is 62.4%, exceeding the 50% threshold, while the proportion of companies with improved growth rates is 50.3%, slightly above the central tendency [1][16] - Compared to Wind's consensus expectations, 47.8% of companies in the entire A-share non-financial sector have exceeded these expectations, with only 2.4% of companies seeing their stock prices open more than 5% higher [1][16] Group 2: High Prosperity Industries and Earnings Guidance - High-prosperity industries identified for the 2025 mid-year reports include securities, precious metals, specialized equipment, rail transit equipment, power grid equipment, aquaculture, education, components, gaming, and communication equipment [3][29] - In the securities industry, companies have reported revenue growth across various business lines, including secondary market investments, brokerage services, and investment banking [32][34] - The precious metals industry is driven by a consensus on rising gold prices, which is expected to positively impact earnings [35] - The specialized equipment sector has noted business expansion and project delivery improvements, although non-recurring impacts such as asset restructuring and investment income have also been mentioned [3][29] - The rail transit equipment sector has seen improvements in the production and sales of railway vehicles and related business deliveries [3][29] - The power grid equipment sector's growth is driven by new power systems, smart grids, and overseas orders [3][29] - In aquaculture, increased pig slaughtering and reduced breeding costs are key factors for performance improvement, with companies expanding into retail channels [3][29] - The education sector has shown performance improvements across various educational models, including personalized education and AI education [3][29] - The components sector's growth is significantly driven by structural demand related to AI, leading to improved gross margins [3][29] - The gaming industry shows a divergence among companies, with some benefiting from overseas business and new game launches, while others focus on cost control and non-recurring investment income [4][29] - The communication equipment sector has experienced a notable increase in demand for high-end optical modules due to the construction of computing infrastructure [4][29]

Group 1: Market Overview - The report highlights that the market is expected to reach a new level, with a focus on the performance of various sectors and companies [2] - The A-share market has shown resilience, with indices rebounding after a pullback, indicating a return of positive sentiment [3] - The report notes that global equity markets have mostly risen, with Asian markets leading the gains [3] Group 2: Industry Insights - The food and beverage sector is experiencing a cyclical bottom, with the dairy industry moving towards supply-demand balance and beef prices recovering [4] - In the retail sector, companies are actively positioning themselves for growth, with a focus on new consumption trends and improving performance in the restaurant and tourism industries [6] - The C-REITs market is witnessing strong interest, particularly in data center REITs, with a positive outlook for the low-interest environment and macroeconomic recovery [8] Group 3: Company Performance - Zhongwei Company (688012.SH) is projected to achieve a revenue of 4.96 billion yuan in H1 2025, reflecting a year-on-year growth of 43.9%, driven by significant increases in etching equipment sales [10] - The company has increased its R&D investment to approximately 1.49 billion yuan in H1 2025, representing a growth of about 53.7%, which is significantly higher than the average R&D investment level of companies listed on the Sci-Tech Innovation Board [11] - Zhongwei Company aims to cover over 60% of semiconductor front-end equipment categories through both acquisitions and internal R&D, positioning itself as a leading supplier in the etching, film deposition, and measurement sectors [12][13]

Investment Rating - The industry investment rating is maintained as "Add" [5] Core Viewpoints - The retail sector shows a stable overall performance in 2025, with some companies demonstrating positive trends. The second quarter earnings forecasts are being disclosed, and companies are actively positioning themselves for growth [8] - The new consumption landscape remains vibrant, with key players such as Gu Ming, Cha Bai Dao, and others expected to perform well [8] - Retail transformation continues, with traditional retailers like Yonghui Supermarket and others making significant adjustments to their operations [8] Summary by Sections Retail Sector - In June 2025, the total retail sales of consumer goods reached 42,287 billion yuan, with a year-on-year growth of 4.8%, which is in line with expectations. Excluding petroleum and automotive factors, the retail sales of consumer goods amounted to 35,702 billion yuan, with a year-on-year growth of 4.1% [1] - Various categories showed different growth rates, with essential goods like food and beverages increasing by 8.7%, while optional categories like furniture and automobiles experienced a slowdown [1] Tourism and Hospitality - The tourism sector is expected to see a decline in visitor numbers and revenue growth in Q2 due to various factors, but companies are improving their capabilities through IP, products, and marketing [2] - The hotel sector is showing signs of improvement, with Jin Jiang Hotels forecasting a net profit of 3.2-3.6 billion yuan for Q2, despite a year-on-year decline of 50.7%-44.7% [2] Food and Beverage - Some restaurant brands have shown positive performance in June, with Guoquan expecting a core operating profit of 1.8-2.1 billion yuan for H1 2025, reflecting a year-on-year increase of 44%-68% [3] - The tea beverage sector is anticipated to benefit in Q3, maintaining relatively high growth rates [3] Retail Transformation - Traditional retail companies are undergoing significant transformations, with Yonghui Supermarket adjusting 124 stores and closing 227 in the first half of 2025 [4] - Specialized chains like mother and baby stores and Miniso are expected to see improved growth rates in Q2 [4] Cross-Border Trade - The small commodity city in Yiwu has seen strong demand in the潮玩 and skincare sectors, with bidding results exceeding expectations [7] - The overall growth rate of the cross-border sector may experience a slight decline due to varying tariff impacts [7] Investment Recommendations - Key companies to watch include Yonghui Supermarket, Chongqing Department Store, and others in the retail transformation space [8] - In the tourism sector, companies like Xiangyuan Cultural Tourism and Songcheng Performance are expected to perform well [8]

Investment Rating - The report maintains a positive outlook on the C-REITs market, suggesting that the low interest rate environment and ongoing macroeconomic recovery will continue to support the REITs market in 2025 [5]. Core Insights - The C-REITs market is experiencing a high level of interest, particularly with the successful subscription of the first batch of data center REITs [5]. - The C-REITs total market capitalization is approximately 204.59 billion, with an average market cap of about 3 billion per REIT [12]. - The report highlights the strong performance of the industrial park and consumer infrastructure REITs, while energy and transportation infrastructure REITs have seen a pullback [12]. Summary by Sections REITs Index Performance - The CSI REITs total return index increased by 0.06% this week, while the closing index decreased by 0.09%, settling at 875.8 points [10]. - Year-to-date, the CSI REITs total return index has risen by 14.12%, ranking third among various indices [2][10]. REITs Secondary Market Performance - The secondary market for C-REITs has shown high volatility, with 40 REITs rising and 28 falling this week, averaging a weekly increase of 0.06% [12]. - The best-performing sectors this week were industrial parks and consumer infrastructure, with respective increases of 0.46% and 0.45% [12]. REITs Valuation Performance - The report notes a continued divergence in the internal rate of return (IRR) among listed REITs, with the top three being Huaxia China Communications REIT (11.1%), Ping An Guangzhou Guanghe REIT (10.5%), and Zhongjin Anhui Transportation Control REIT (8.3%) [5]. - The price-to-net asset value (P/NAV) ratio for listed REITs ranges from 0.7 to 1.9, with the highest being Zhongjin Xiamen Anju REIT at 1.9 [5].