Investment Rating - The report maintains an "Accumulate" rating for the industry [5]. Core Insights - The urgency for domestic software innovation (信创) has significantly increased due to the U.S. imposing export controls on critical software and announcing a 100% tariff on Chinese imports starting November 1 [1][10]. - The domestic software market is projected to reach a scale of 2.66 trillion yuan by 2026, with a steady replacement rhythm of "2+8+N" in 2023 [2][20]. - Companies in the software sector have shown a recovery in Q2 2025, with notable revenue and profit growth, indicating a potential bottoming out of performance [3][22]. Summary by Sections Section 1: U.S. Export Controls and Domestic Urgency - The U.S. has announced export controls on all critical software, which has heightened the urgency for domestic software innovation in China [1][10]. - The specific details of the export controls are still pending, but they are expected to primarily affect foundational and high-end industrial software [1]. Section 2: Policy and Financial Tools - The "14th Five-Year Plan" emphasizes technological self-reliance, with significant financial tools being introduced to support emerging industries and infrastructure [2][16]. - A new policy financial tool with a scale of 500 billion yuan is being directed towards sectors like digital economy and artificial intelligence [16]. Section 3: Industry Performance and Positioning - Q2 2025 performance of key software companies indicates a recovery, with revenue growth rates such as 25% for China Software and 151% for Taiji Co. [22][23]. - Despite being a core area for AI, the computer sector has seen lower institutional allocation and growth compared to other TMT sectors [3][22]. Section 4: Companies to Watch - Recommended companies include China Software, Kingsoft, Dameng Data, and Taiji Co. in the critical software space, and Cambrian, Haiguang Information, and Zhongke Shuguang in domestic computing power [4][25].

- The report introduces a timing radar framework based on six dimensions: liquidity, economic fundamentals, valuation, capital flow, technical signals, and crowding. It selects 21 indicators to generate a comprehensive timing score ranging from [-1,1][2][7][9] - **Liquidity Factors**: - **Monetary Direction Factor**: Measures the direction of monetary policy using central bank policy rates and short-term market rates. Formula: average change over 90 days. If >0, monetary policy is considered loose, scoring 1[12][14] - **Monetary Strength Factor**: Based on the "interest rate corridor" concept, calculated as deviation = DR007/7-year repo rate - 1, smoothed and z-scored. If <-1.5 standard deviations, predicts a loose environment for 120 trading days, scoring 1; if >1.5, scores -1[15][16] - **Credit Direction Factor**: Uses long-term loan data to measure credit transmission. Formula: monthly long-term loans -> 12-month increment -> YoY comparison. If upward trend compared to 3 months ago, scores 1; otherwise -1[18][20] - **Credit Strength Factor**: Captures unexpected credit changes using formula: (new RMB loans - median forecast)/forecast standard deviation. If >1.5 standard deviations, scores 1; if <-1.5, scores -1[21][22] - **Economic Factors**: - **Growth Direction Factor**: Based on PMI data (manufacturing, non-manufacturing, Caixin manufacturing). Formula: PMI -> 12-month average -> YoY comparison. If upward trend compared to 3 months ago, scores 1; otherwise -1[23][25] - **Growth Strength Factor**: Measures unexpected growth using formula: (PMI - median forecast)/forecast standard deviation. If >1.5 standard deviations, scores 1; if <-1.5, scores -1[26][28] - **Inflation Direction Factor**: Combines CPI and PPI data. Formula: 0.5 × CPI YoY smoothed + 0.5 × PPI YoY raw. If downward trend compared to 3 months ago, scores 1; otherwise -1[30][34] - **Inflation Strength Factor**: Measures unexpected inflation changes using formula: (CPI/PPI disclosed value - median forecast)/forecast standard deviation. If <-1.5 standard deviations, scores 1; if >1.5, scores -1[31][33] - **Valuation Factors**: - **Shiller ERP**: Uses inflation-adjusted average earnings over 6 years to calculate Shiller PE, then Shiller ERP = 1/Shiller PE - 10-year government bond yield. Scores are z-scored over the past 6 years[35][36][39] - **PB Factor**: PB is multiplied by -1 and z-scored over the past 6 years, with 1.5 standard deviation truncation normalized to [-1,1][37][38] - **AIAE Factor**: Measures aggregate investor allocation to equities. Formula: AIAE = total market cap/(total market cap + total debt). AIAE is multiplied by -1 and z-scored over the past 6 years[41][42] - **Capital Flow Factors**: - **Margin Financing Increment**: Measures market leverage using financing balance - short selling balance. Formula: 120-day average increment compared to 240-day average increment. If 120-day > 240-day, scores 1; otherwise -1[43][45] - **Trading Volume Trend**: Measures market activity using log trading volume. Formula: moving average distance = ma120/ma240 - 1. If max(10)=max(30)=max(60), scores 1; if min(10)=min(30)=min(60), scores -1[46][47] - **China Sovereign CDS Spread**: Represents foreign investors' pricing of China's economic and credit risk. Formula: smoothed 20-day difference of CDS spread. If <0, scores 1; otherwise -1[49][51] - **Overseas Risk Aversion Index**: Captures foreign market risk appetite using Citi RAI Index. Formula: smoothed 20-day difference. If <0, scores 1; otherwise -1[52][54] - **Technical Factors**: - **Price Trend Factor**: Measures price trends using moving average distance (ma120/ma240 - 1). Trend direction scores 1 if >0, otherwise -1. Trend strength scores 1 if max(20)=max(60), otherwise -1. Composite score = (direction + strength)/2[55][56][57] - **New Highs and Lows Factor**: Measures reversal signals using the difference between new highs and lows of index constituents. Formula: past year new lows - new highs, smoothed with ma20. If >0, scores 1; otherwise -1[58][60] - **Crowding Factors**: - **Option Implied Premium**: Derived from put-call parity, measures market sentiment. If 50ETF 5-day return <0 and percentile <30%, scores 1; if 50ETF 5-day return >0 and percentile >70%, scores -1[61][66] - **Option VIX Index**: Measures expected volatility. If 50ETF 5-day return <0 and percentile >70%, scores 1; if 50ETF 5-day return >0 and percentile >70%, scores -1[62][64][65] - **Option SKEW Index**: Measures expected skewness. If 50ETF 5-day return <0 and percentile >70%, scores 1; if 50ETF 5-day return >0 and percentile <30%, scores -1[67][68] - **Convertible Bond Pricing Deviation**: Measures market sentiment using formula: deviation = bond price/model price - 1, z-scored over past 3 years. Higher deviation indicates higher crowding, scoring lower[69][71] - **Factor Testing Results**: - **Liquidity**: Monetary direction (1), monetary strength (-1), credit direction (1), credit strength (0)[12][15][18][21] - **Economic**: Growth direction (1), growth strength (-1), inflation direction (-1), inflation strength (0)[23][26][30][31] - **Valuation**: Shiller ERP (0.03), PB (-0.56), AIAE (-0.90)[35][37][41] - **Capital Flow**: Margin financing increment (1), trading volume trend (0), CDS spread (1), risk aversion index (-1)[43][46][49][52] - **Technical**: Price trend (0), new highs and lows (-1)[55][58] - **Crowding**: Option implied premium (-1), VIX (-1), SKEW (-1), convertible bond deviation (-1)[61][62][67][69]

Investment Rating - The report maintains an "Overweight" rating for the real estate industry [4][6] Core Viewpoints - The report highlights that the current real estate policies are under pressure from the fundamental market conditions, suggesting that the policy response may exceed the measures taken in 2008 and 2014 [4] - Real estate is viewed as an early-cycle indicator, making it a key economic barometer [4] - The competitive landscape in the industry is improving, with leading state-owned enterprises and select mixed-ownership and private companies performing well in land acquisition and sales [4] - The report continues to favor investment in first-tier and select second- and third-tier cities, which have shown better performance during sales rebounds [4] - Supply-side policies, including land storage and management of idle land, are critical areas to monitor for future developments [4] Summary by Sections New Housing Transactions - In the week covering the National Day holiday, new housing transaction volume in 30 cities was 835,000 square meters, down 55.3% week-on-week and 53.4% year-on-year [11] - The decline in new housing transactions is attributed to a combination of last year's high base and the current market's sluggishness [11][12] - The report anticipates continued pressure on year-on-year data for the fourth quarter due to elevated bases from the previous year [11] Secondary Housing Transactions - In the same week, secondary housing transactions in 14 sample cities totaled 843,000 square meters, reflecting a 27.9% decrease week-on-week and a 47.9% decrease year-on-year [21] - Year-to-date, secondary housing transactions have reached 80.2 million square meters, showing a 16.1% increase compared to the previous year [21] Market Performance - The report notes that the Shenwan Real Estate Index decreased by 0.8%, underperforming the CSI 300 Index by 0.30 percentage points, ranking 23rd among 31 Shenwan primary industries [32] - The report identifies a total of 64 stocks that increased in value during the week, while 43 stocks decreased [32] Credit Bond Issuance - During the week, two credit bonds were issued by real estate companies, totaling 940 million yuan, a decrease of 11.28 billion yuan from the previous week [3]

Investment Rating - The report maintains an "Increase" rating for the construction decoration industry, indicating a potential for allocation in the fourth quarter [6][9]. Core Viewpoints - The construction sector is expected to benefit from a "high-cut-low" market style in the fourth quarter, driven by factors such as the need for institutional portfolio adjustments and a shift in market risk preferences due to rising trade tensions [1][11]. - The construction sector has significantly lagged behind other sectors, with a year-to-date increase of only 10.1%, ranking 19th among 30 industries, compared to the Shanghai Composite Index's 16.3% and the ChiNext Index's 45.4% [1][11]. - The current price-to-book (PB) ratio for the construction sector is 0.84, placing it in the 18th percentile over the past decade, indicating historical low valuations [1][11]. Summary by Sections Market Performance - The construction sector has underperformed this year, with a cumulative increase of 10.1%, significantly lower than major indices [1][11]. - The sector's PB ratio is currently at 0.84, which is historically low [1][11]. Earnings Outlook - The performance of major construction state-owned enterprises (SOEs) is showing signs of marginal improvement, with a total new order signing of 77,859 billion yuan in the first half of 2025, a year-on-year increase of 0.2% [2][17]. - The second quarter of 2025 saw new orders of 38,900 billion yuan, reflecting a 2% increase year-on-year and a 4 percentage point acceleration from the first quarter [2][17]. Dividend Yield and Valuation - Several leading construction SOEs have attractive dividend yields, with expected yields exceeding 3% for companies like China State Construction (4.9%) and China Railway Construction (3.6%) [3][24]. - The report highlights low valuations for key companies, recommending investments in those with strong dividend yields and potential for revaluation [4][25]. Investment Recommendations - The report recommends focusing on undervalued SOEs such as China Metallurgical Group and China Railway Group, which have significant revaluation potential [4][25]. - Other recommended stocks include China State Construction, China Communications Construction, and China Railway Construction, all of which exhibit low PB ratios [4][25].

Report Industry Investment Rating - Not provided in the report Core Viewpoints - Instead of predicting, it's better to respond. Different response strategies should be formulated based on different policy scenarios in the China-US trade conflict [1][14] - The current conflict is closer to the first scenario, but the future scenario evolution is uncertain. Specific response measures should be taken according to the actual development of the economic and trade conflict [3][16] - For interest rates, the variable lies in the downward space rather than the direction. 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds are expected to benefit from both the overall interest rate decline and the spread contraction, and are more worthy of allocation [4][17] - It is recommended to actively allocate using a barbell strategy, increasing the allocation of high-elasticity varieties such as 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds [24] Summary by Related Catalogs China-US Trade Conflict Situation - Recently, the China-US economic and trade conflict has escalated again, leading to significant fluctuations in the global capital market. On October 10, the Nasdaq index fell 3.56%, and the Nasdaq Golden Dragon China Index fell 6.1% [1][8] - Similar to the situation in early April, bond interest rates have also significantly declined. On October 11, interest rates across all maturities generally declined significantly, with the 30-year treasury bond dropping 5.01bps and the 10-year treasury bond dropping 2.54bps compared to the previous day [1][8] - The current China-US economic and trade conflict is significantly less intense than in early April this year, in terms of both the magnitude of tariff implementation and the scope involved [13] Different Scenarios of China-US Trade Conflict and Their Impact on the Bond Market - **Scenario 1**: The US exerts extreme pressure but the measures are not implemented or have limited impact, and China remains restrained. The impact on the market is relatively limited. The significant decline of 3 - 5bps in long-term interest rates on October 11 may have already reflected the policy impact, and then the bond market will return to being dominated by fundamentals and the asset shortage, with interest rates showing a fluctuating downward trend [14] - **Scenario 2**: The US significantly implements tariff increases and other policies, and China conducts effective countermeasures. The conflict intensifies, and domestic policies remain on the sidelines in the short term. In this case, long-term interest rates are expected to decline by about 10 - 20bps, similar to the decline in April [2][15] - **Scenario 3**: The China-US trade conflict escalates, and China promptly responds with active macro policies, especially loose monetary policies. Interest rates are expected to decline more significantly, and long-term interest rates may hit new lows [2][15] Bond Investment Recommendations - 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds are expected to benefit from both the overall interest rate decline and the spread contraction, and are more worthy of allocation [4][17] - It is recommended to use a barbell strategy, maintaining a duration above neutral and actively increasing the allocation of high-elasticity varieties such as 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds [24]

Investment Rating - The industry investment rating is maintained as "Buy" for several key companies [6]. Core Insights - The steel industry is experiencing a slight decline in daily molten iron production, with an average of 241.5 thousand tons, down by 0.3 thousand tons [12]. - Total steel inventory is showing seasonal accumulation post the National Day holiday, with a week-on-week increase of 8.7% [24]. - Apparent consumption of steel products has decreased seasonally, with a notable drop in rebar demand [37]. - Iron ore prices have risen, influenced by changes in shipping volumes from Australia and Brazil [46]. - Steel prices are stable with slight improvements in immediate profit margins, indicating a potential for continued industry recovery [70]. Summary by Sections Supply - Daily molten iron production has slightly decreased to 241.5 thousand tons, with a decline in rebar and hot-rolled coil production [12][17]. Inventory - Total steel inventory has increased by 8.7% week-on-week, with steel mill inventories rising more than social inventories [24][26]. Demand - Apparent consumption of the five major steel products has decreased by 17.0% week-on-week, with rebar consumption down by 36.5% [48][37]. Raw Materials - Iron ore prices have increased, with the Platts 62% iron ore price index at $107.4 per ton, up by 3.4% week-on-week [58]. Prices and Profits - The comprehensive steel price index remains stable at 122.7, with slight improvements in immediate profit margins for long-process steel products [70][71].

Investment Rating - The report indicates a positive outlook for the banking sector, particularly highlighting the increased mid-term dividend distributions from listed banks, with state-owned banks leading the way with over 200 billion yuan in dividends [2][3]. Core Insights - The report emphasizes that the mid-term dividend plans from listed banks reflect their stable profitability and capital adequacy, which is crucial in the current low-interest-rate environment. High dividend policies are expected to boost market confidence and enhance the defensive value of bank stocks for long-term investment [3][4]. - The report suggests that while short-term export impacts may arise from tariff policies, long-term domestic policies aimed at stabilizing the real estate market, promoting consumption, and enhancing social welfare are likely to support economic growth. The banking sector is expected to benefit from these policy catalysts [4]. Summary by Sections Dividend Distribution - Several banks have completed their mid-term dividend plans, with notable distributions including: - Industrial and Commercial Bank of China: 0.1414 yuan per share, totaling 50.396 billion yuan - China Construction Bank: 0.1858 yuan per share, totaling 48.605 billion yuan - Agricultural Bank of China: 0.1195 yuan per share, totaling 41.823 billion yuan - Bank of China: 0.1094 yuan per share, totaling 35.250 billion yuan - Bank of Communications: 0.1563 yuan per share, totaling 13.811 billion yuan - Postal Savings Bank: 0.1230 yuan per share, totaling 14.772 billion yuan [2][3][14]. Sector Performance - The report notes that the banking sector is expected to see a positive performance due to policy support and economic recovery, with specific banks like Ningbo Bank, Jiangsu Bank, Chengdu Bank, Shanghai Bank, and Hu'nong Commercial Bank recommended for investment based on their improving fundamentals [4][8]. Key Data Tracking - The average daily trading volume for stocks reached 26,032.76 billion yuan, an increase of 4,154.20 billion yuan from the previous week [8]. - The balance of margin financing increased by 0.70% to 2.44 trillion yuan [8]. - The issuance of non-monetary funds decreased significantly, with a total of 11.30 billion yuan issued this week, down 56.07 billion yuan from the previous week [8].

Investment Rating - The report maintains an "Increase" rating for the food and beverage industry [5] Core Views - The upcoming autumn sugar festival is expected to provide insights into brand strategies, product matrices, and channel transformations in the liquor sector, particularly focusing on new channel developments [2] - The report highlights that the white liquor sector is currently at a double bottom in terms of fundamentals and expectations, with further sales improvements anticipated during the Mid-Autumn Festival and National Day [2] - The beverage sector is seeing significant competition and innovation, with companies like East Peak Beverage accelerating their listing process on the Hong Kong Stock Exchange [3] Summary by Sections White Liquor - The autumn sugar festival will focus on terminal sales dynamics, inventory pricing, channel changes, and category expansion [2] - The report anticipates that Q3 financial results will show continued pressure release, with expectations for gradual improvement in sales and channel performance [2] Beer and Beverages - The report notes organizational changes at Lanzhou Yellow River, which has established a beverage division to seek higher growth [3] - The beer sector is entering a low season, and the report suggests focusing on stable growth leaders and key products [3] - East Peak Beverage's renewed application for a public listing indicates a fast-tracking of its dual listing strategy [3] Food Sector - The Mid-Autumn Festival and National Day have been identified as critical periods for consumer spending, with online sales leading the growth [4] - The report mentions that the sales of mooncakes reached 13.98 million boxes, a year-on-year increase of 1.75% [4] - Wanchen Group has received clearance from the State Administration for Market Regulation regarding its anti-monopoly review, allowing it to recover minority shareholder rights [4]

Investment Rating - The industry investment rating is maintained as "Increase" [4] Core Viewpoints - After the double holiday, pig prices have rapidly declined to below 12 yuan/kg, with self-breeding and self-raising profitability dropping to -152.15 yuan/head, a decrease of 47.2 yuan/head from the previous week. The pressure from high supply is expected to continue to weigh on pig prices, leading to increased market pessimism and a potential for further price declines. However, there is an expectation for a mid-to-long-term price reversal driven by policy and proactive production cuts [1][15][19] - The average selling price of lean pigs nationwide is 11.39 yuan/kg, down 6.1% from last week. The current valuation remains relatively low, suggesting investment opportunities in low-cost pig farming companies such as Muyuan Foods, Wens Foodstuff Group, and others [2][16] - In poultry farming, the price of white feather chickens is 6.88 yuan/kg, down 0.1% from last week, while the average price of chicken products remains stable at 8.65 yuan/kg. The price of meat chicken chicks has increased by 0.6% to 3.22 yuan each. There are expectations for a price rebound in the chicken market [2][16][34] Summary by Sections Livestock - The average weight of pigs sold is 128.48 kg, showing a 0.5% increase from the low point in early August. Feed prices have also increased, indicating a gradual rise in pig inventory since July [1][15] - The profitability of self-breeding and self-raising pigs is -152.15 yuan/head, while the profitability of purchased piglets is -301.04 yuan/head, indicating significant losses in the sector [19][20] Poultry - The price of yellow feather chickens has seen a week-on-week increase of 1.9%, with the current price at 14.18 yuan/kg. This suggests seasonal price elasticity opportunities [2][16][40] - The profitability of parent breeding chickens is 0.47 yuan/head, while the profitability of meat chickens is -2.23 yuan/head, reflecting challenges in the poultry sector [38][44] Agricultural Products - The approval of genetically modified varieties is expected to lead to commercial sales, with potential growth for industry companies as prices and profit distribution become clearer [2][16] Feed and Vaccines - The volatility in agricultural product prices is increasing, and leading feed companies are expected to replace smaller competitors due to their advantages in procurement and scale [2][16]

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Insights - The company is a leading global provider of digital content asset protection and transaction SaaS services, leveraging AI technology and Web3 infrastructure to enhance digital rights management and transaction capabilities [15][18] - The company achieved significant revenue growth in its two core business segments, with subscription service revenue reaching HKD 610 million in the first half of 2025, a year-on-year increase of 11.8%, and value-added service revenue reaching HKD 846 million, a year-on-year increase of 33.3% [27][28] - The company has developed two major platforms, VobileMAX and DreamMaker, to enhance its competitive edge in the AI era, facilitating content registration, rights management, distribution, and revenue tracking [50][52] Summary by Sections Business Performance - The company reported a robust growth trajectory, with subscription services benefiting from partnerships with major platforms and an increase in active assets managed on social media platforms, which reached 4.29 million, up over 25% year-on-year [27][23] - The acquisition of audio recognition company PEX in April 2025 has strengthened the company's capabilities in music copyright protection, integrating over 23 billion audio fingerprint data into its system [28][15] Market Trends - The report highlights the transformative impact of multi-modal AI technology on the media and entertainment industry, with significant opportunities arising from the growing demand for copyright management and monetization solutions [32][45] - The shift towards fragmented monetization models is expected to drive demand for platforms like the company that possess strong copyright management and transaction capabilities [45][44] Financial Projections - The company is projected to achieve revenues of HKD 30 billion, HKD 37.9 billion, and HKD 49.9 billion for the years 2025, 2026, and 2027, respectively, with corresponding net profits of HKD 2.37 billion, HKD 3.51 billion, and HKD 5.3 billion [8][9] - The report maintains its earnings forecasts, reflecting confidence in the company's growth trajectory and market positioning [8][56]