Investment Rating - The report initiates coverage with a "Buy" rating for the company [4]. Core Views - The company is positioned as a leading player in the outbound group travel industry, with ongoing business recovery and an expanding layout [3][14]. - The domestic and outbound/inbound tourism industries are experiencing steady growth, with significant recovery following unconventional cycles [10][34]. - The company benefits from a robust supply chain, strong cash reserves, and a comprehensive online and offline channel strategy [3][10]. Summary by Sections Industry Overview - The outbound tourism penetration rate in China has been increasing, reaching 11.0% in 2019, but still lags behind developed countries like the US and South Korea [2]. - The outbound tourism market is characterized by a predominance of young, highly educated travelers who prefer personalized and customized experiences [2][10]. - The inbound tourism sector is supported by favorable policies and increased payment facilitation measures, enhancing the willingness of foreign tourists to visit China [1][10]. Company Positioning - The company operates in the midstream of the outbound tourism industry, primarily benefiting from industry growth and its leading market position [2][10]. - The company has maintained its core team and supply chain, enabling a swift recovery post-pandemic [3][10]. - The company has a strong brand value and resource integration capability, with plans to expand its retail business through a franchise model [3][10]. Financial Projections - Revenue is projected to grow significantly, with estimates of CNY 75.00 billion, CNY 87.35 billion, and CNY 103.39 billion for 2025, 2026, and 2027 respectively [3][8]. - The company is expected to achieve a net profit of CNY 1.16 billion, CNY 1.55 billion, and CNY 1.94 billion for the same years, reflecting a strong recovery trajectory [3][8]. - The projected P/E ratios for 2025, 2026, and 2027 are 67.2X, 50.4X, and 40.2X respectively, indicating a favorable valuation outlook [3][8].

Core Insights - The report discusses the recently published draft amendment to the pricing law, emphasizing the concept of "anti-involution" and prohibiting dumping prices below cost [2] - The focus is on the recovery of prices within the photovoltaic industry, with expectations for polysilicon prices to return above industry cost levels due to supply-side reforms [2] - The report highlights potential price recovery opportunities across various segments of the photovoltaic supply chain, including silicon materials, solar glass, wafers, cells, and modules [2] Industry Performance - The report provides a performance overview of different industries, noting that the steel industry saw a 20.7% increase in January, 19.1% in March, and 38.2% over the past year [1] - The construction materials sector experienced increases of 18.5% in January, 15.5% in March, and 33.0% year-on-year [1] - The non-ferrous metals industry reported a 14.7% increase in January, 22.1% in March, and 40.3% over the past year [1] - The telecommunications sector had a performance of 13.0% in January, 29.1% in March, and 51.5% year-on-year [1] - The pharmaceutical and biotechnology sector saw increases of 11.6% in January, 18.7% in March, and 33.0% over the past year [1] Key Focus Areas - The report identifies three main focus areas for investment opportunities: 1. Price recovery opportunities in the supply chain driven by supply-side reforms, particularly in polysilicon, solar glass, wafers, cells, and modules [2] 2. Long-term growth opportunities arising from new technologies, specifically monitoring the progress of perovskite GW-level production lines and the expansion of BC [2] 3. The recovery trends in profitability for lithium battery components, including lithium iron phosphate, lithium hexafluorophosphate, and copper foil [2]

Group 1: Fund Positioning Insights - In Q2 2025, the scale of actively managed funds declined again, with redemption pressure remaining high [3] - Hong Kong stock positions reached a new high, but the pace of increase slowed and divergences emerged [3] - The configuration of innovation and entrepreneurship showed a reversal, with the ChiNext index's position regaining upward momentum [3] - There was a noticeable increase in allocation towards growth sectors and large financials, while dividend configurations narrowed [3] - The trend of diversification and market capitalization sinking continued [3] Group 2: Industry Performance - The steel industry showed a performance increase of 34.0% over the past year, leading among industries [1] - The communication sector experienced a significant annual growth of 51.5%, indicating strong market dynamics [1] - The banking sector lagged with a slight decline of -0.2% in January, but showed a recovery of 30.3% over the year [1] Group 3: Company-Specific Insights - Kuaishou (01024.HK) is expected to achieve revenues of 140.6 billion, 154.5 billion, and 166.6 billion RMB from 2025 to 2027, with a net profit growth of 11%, 27%, and 14% respectively [5] - Bilibili (09626.HK) is projected to generate revenues of 30 billion, 32.9 billion, and 36.2 billion RMB from 2025 to 2027, with a year-on-year growth of 12%, 9%, and 10% [8] - GoerTek (002241.SZ) plans to acquire two precision manufacturing companies for approximately 95 billion RMB, enhancing its vertical integration capabilities [9] - Kingsoft (03888.HK) is forecasted to have revenues of 11.4 billion, 12.9 billion, and 14.6 billion RMB from 2025 to 2027, driven by dual growth from office and gaming sectors [10] - Chow Tai Fook (01929.HK) reported a 1.9% decline in same-store sales for FY2026Q1, with expectations for improvement due to strong e-commerce growth [11]

1. Report Industry Investment Rating No information provided regarding the report industry investment rating. 2. Core Viewpoints of the Report - The recent rise in commodity prices and the stock market is mainly driven by expectations. The increase in commodity prices has a limited impact on bond market funds due to the limited scale of the commodity market and large differences among investors. The focus is on the impact of the stock market rise on the bond market [4][12]. - The flow of funds from the bond market to the stock market is limited. The impact of the stock market on the bond market through changes in residents' asset allocation and financial institutions' asset structure is not significant, and the bond market does not face direct capital outflow pressure [4][6][7]. - The risk of further significant adjustment in the bond market is limited. It is recommended to hold bonds for observation. The stock market rise is more driven by valuation recovery and requires a low - interest - rate environment, making a simultaneous rise in stocks and bonds more likely [7][40]. 3. Summary by Related Catalogs 3.1 Impact of Stock Market on Residents' Asset Allocation - **New Savings**: There is no significant correlation between the residents' savings rate and the stock market. The stock market has neither an obvious wealth effect nor a significant crowding - out effect on consumption. For example, during the 2014 - 2015 bull market and the stock market rally from September to October last year, the residents' savings rate did not decrease significantly [4][13]. - **Stock of Assets**: In the distribution of residents' financial and non - financial assets, the stock market bull market generally does not significantly squeeze non - financial assets such as real estate. The stock market trend and the sales volume of commercial housing are often positively correlated, indicating that there is no obvious behavior of selling real estate to invest in stocks [5][13]. - **Financial Asset Structure**: During the stock market bull market, funds may flow from residents' deposits to the stock market. There is a significant negative correlation between residents' deposits and the rise and fall of the Shanghai Composite Index. For every 1000 - point increase in the Shanghai Composite Index, the growth rate of residents' deposits drops by 3.5 percentage points. However, this is just a change in the form of deposits, not a net decrease in deposits, so it does not bring direct pressure on bond market capital outflow [6]. 3.2 Impact of Stock Market on Financial Institutions' Asset Allocation - **Funds**: When the stock market is strong, funds will increase the proportion of equity assets, and institutions will increase the subscription of equity - linked funds and reduce the subscription of pure - bond funds. In the past, during stock market rallies, bond funds faced certain redemption pressure. For example, during the stock market rally from September to October last year, the bond fund share decreased by 700 billion shares. But this time, the pressure on bond fund scale may be less than last year [7][16]. - **Insurance**: The rise of the stock market has limited impact on insurance premium income. It mainly affects the asset allocation structure of insurance. Although the investment in stocks increases, the investment in bonds does not necessarily decrease. For example, during the stock market rally from September to October last year, the stock investment of life insurance in the fourth quarter of last year increased by 84.1 billion yuan, while the bond investment increased by 822.6 billion yuan [7][20]. - **Wealth Management**: The scale of funds transferred from wealth management products to the stock market is relatively limited due to the inconsistent risk preferences of investors. The proportion of equity assets in wealth management assets decreased in the second half of last year, while the proportion of bond assets increased significantly. The share of equity assets decreased from 2.8% in June last year to 2.6% in December, and the share of bond assets increased from 55.6% to 57.9% [26]. 3.3 Market Negative Feedback Redemption Pressure Currently, funds and wealth management products do not show obvious redemption pressure. Wealth management products did not experience large - scale net - value breakage, and in March 2025, about 23% of wealth management assets were in cash and deposits, with strong redemption - coping ability. Bond funds are mainly held by institutional investors, and if their liabilities are stable, the redemption pressure is relatively limited [7][38].

Investment Rating - The report maintains a "Buy" rating for the company [6] Core Views - The company is set to enhance its vertical integration capabilities through the acquisition of precision manufacturing firms, which aligns with its strategic development needs [1] - The XR field is positioned for growth, particularly with the integration of AI and AR technologies, indicating a promising market outlook [2] - The TWS earphone market is expected to see significant growth, driven by advancements in AI technology, which will enhance user interaction experiences [3] - The company is expected to achieve revenue growth in the coming years, with projected revenues of 101.1 billion, 115.1 billion, and 130 billion RMB for 2025, 2026, and 2027 respectively [4] Financial Projections - The company is projected to achieve revenues of 101,051 million RMB in 2025, with a year-on-year growth rate of 0.1% [5] - The net profit attributable to the parent company is expected to reach 3,306 million RMB in 2025, reflecting a year-on-year growth of 24.0% [5] - The projected P/E ratios for 2025, 2026, and 2027 are 25, 20, and 17 respectively, indicating a favorable valuation trend [4][5]

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].