Report Industry Investment Rating No information provided in the content. Core View of the Report - This year, credit bond ETFs have attracted significant market attention, with a structural rush to buy the component bonds of relevant indices. In July, the first batch of 10 science - innovation bond ETFs were officially listed, expanding the market and boosting the decline in the yields of index component bonds. Recently, the scale growth of credit bond ETFs has slowed down, and the overall bond market has shown weakness due to the stock - bond seesaw effect, causing the market for component bonds to slow down. The report will continuously track the performance of relevant indicators of credit bond ETFs from multiple dimensions [1][6]. Summary by Relevant Catalogs Credit Bond ETF Indicators and PCF Lists - The daily subscription and redemption list of credit bond ETFs is announced before the opening of the exchange. It includes data on component securities, cash substitution, fund share net value, etc. The report conducts daily tracking of the PCF lists of credit bond ETFs, observes changes in PCF component bonds, and calculates indicators such as the duration, changes in the estimated yields of component bonds, static yields of funds, and the proportion of perpetual bonds of each credit bond ETF [2][7]. - The basic situation and market performance of multiple credit bond ETFs are presented, including information on redemption mechanisms, the number of bonds, cash substitution premium ratios, durations, static yields, proportions of perpetual bonds, average changes in the estimated values of component bonds, closing price changes, and cumulative unit net value growth rates [10]. - The important indicator information of some PCF list component bonds is provided, including cash substitution signs, cash substitution premium ratios, fixed substitution amounts, bond issuance volumes, estimated full prices, subscription and redemption unit market values, market value weights, estimated modified durations, estimated yields, and changes in estimated yields [11]. - The share change data of credit bond ETFs from June 16, 2025, to July 25, 2025, are presented, covering various types of ETFs such as science - innovation bond ETFs, Shanghai - based benchmark - making corporate bond ETFs, Shenzhen - based benchmark - making credit bond ETFs, corporate bond ETFs, urban investment bond ETFs, and short - term financing ETFs [12]. Index Component Bond Market Performance - The component bonds of credit bond ETF - related indices are selected, and the excess spreads of individual bonds are obtained by dynamically matching the estimated yield curves of corporate bonds with the same remaining term and implied rating and then subtracting them. The credit spreads, excess spreads of component bonds, and the credit spreads of comparable corporate bonds are compared to observe the market performance of component bonds from multiple dimensions. Non - perpetual bond index component bonds are also analyzed separately [3][13]. - Multiple charts are used to show the excess spreads of benchmark - making bonds on the Shanghai and Shenzhen Stock Exchanges and the excess spreads and spreads of component bonds of the China Securities AAA Science - Innovation Bond Index under different time - to - maturity ranges [5][16][25].

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - This year, credit - bond ETFs have attracted significant market attention, with a structural rush for related index component bonds. In July, the first batch of 10 science - innovation bond ETFs were officially listed, expanding the market, boosting institutional trading, and further driving down the yields of index component bonds. Recently, the growth rate of credit - bond ETF scale has slowed, and the overall bond market has been weak due to the stock - bond seesaw effect, causing the component bond market to slow down. The report will continuously track the performance of credit - bond ETF - related indicators from multiple dimensions [5][9]. 3. Summary by Directory Credit - bond ETF Indicators and PCF Lists - The daily subscription and redemption list of credit - bond ETFs is announced before the opening of the exchange, including data on component securities, cash substitution, fund share net value, etc. The report conducts daily tracking of the PCF list of credit - bond ETFs, observes changes in PCF component bonds, and calculates indicators such as duration, component bond valuation yield changes, fund static yield, and perpetual bond ratio of each credit - bond ETF based on the PCF component bonds [2][12]. - The basic situation and market performance of various credit - bond ETFs are presented, including subscription and redemption mechanisms, number of bonds, cash substitution premiums, duration, static yields, perpetual bond ratios, component bond valuation average changes, closing price changes, and cumulative unit net value growth rates. For example, the static yield of the China Securities AAA Science - Innovation Corporate Bond Index is 1.91%, and the closing price change rate is - 0.11% [13]. - The important indicators of some PCF list component bonds are shown, including cash substitution marks, cash substitution ratios, fixed cash substitution amounts, bond issuance volumes, valuation full prices, T - 1 day valuation yields, subscription and redemption unit market values, valuation changes, whether they are index bonds, and current bond yields [15]. - The share changes of credit - bond ETFs are presented, covering science - innovation bond ETFs, Shanghai Stock Exchange benchmark - market - making corporate bond ETFs, Shenzhen Stock Exchange benchmark - market - making credit - bond ETFs, and other types of ETFs from July 3, 2025, to July 25, 2025 [16]. Index Component Bond Market Performance - The report selects the component bonds of credit - bond ETF - related indexes, dynamically matches the enterprise - bond valuation yield curves with the same remaining term and implied rating, calculates the excess spread of individual bonds, and compares the credit spreads, excess spreads of component bonds, and the credit spreads of comparable enterprise bonds to observe the market performance of component bonds from multiple dimensions. It also conducts a separate analysis of non - perpetual index component bonds [6][18]. - Multiple charts show the excess spreads of benchmark - market - making bonds on the Shanghai and Shenzhen Stock Exchanges, including different time - period (such as 3 - 5 years, 7 years and above) and different bond - type (such as excluding perpetual bonds) excess spreads, as well as the excess spreads of science - innovation bond index component bonds (including benchmark - market - making and non - benchmark - market - making) and the credit spreads of component bonds in different time - periods [19][20][22][31][33].

Investment Rating - The report maintains a "Strong Buy" rating for the company, with a target price of 22.01 CNY, compared to the current price of 17.14 CNY [4]. Core Views - The company has shown steady performance with record high earnings, achieving a revenue of 31.619 billion CNY in the first half of 2025, a year-on-year increase of 26.59%. The net profit attributable to shareholders reached 1.869 billion CNY, up 15.35% year-on-year [2][4]. - The increase in revenue is primarily driven by rising prices of copper, zinc, and molybdenum, with the average domestic copper price rising by 4.2% year-on-year [7][4]. - The company’s core performance is largely attributed to the Yulong Copper Mine, which reported a profit of 3.49 billion CNY, a 37% increase [7][4]. Financial Performance Summary - In Q2 2025, the company reported a revenue of 15.08 billion CNY, a year-on-year increase of 7.7% but a quarter-on-quarter decrease of 8.8%. The net profit for the same period was 1.06 billion CNY, up 20.1% year-on-year and 31.4% quarter-on-quarter [2][4]. - The company’s total assets are valued at 54.94 billion CNY, with a debt-to-asset ratio of 58.97% [4][8]. - The company expects to achieve net profits of 3.75 billion CNY, 4.15 billion CNY, and 4.54 billion CNY for the years 2025, 2026, and 2027 respectively, with growth rates of 27.8%, 10.8%, and 9.5% [8][4]. Production and Project Development - The Yulong Copper Mine produced 83,000 tons of copper and 2,525 tons of molybdenum in the first half of 2025, with significant improvements in recovery rates [7][4]. - Key projects are progressing, including the upgrade of the Xinyuan Mining 800,000 tons/year processing plant and the technical upgrade of the Su Bei Bolun iron ore processing plant [7][4]. Market Comparison - The company’s stock performance over the past 12 months shows a comparative increase against the CSI 300 index, indicating a positive market sentiment [6][4].

Investment Rating - The report maintains a "Buy" rating for GF Securities with a target price of 26.25 CNY [1] Core Views - GF Securities is considered undervalued, with significant potential for earnings recovery and valuation expansion in the context of the growing ETF market and the company's strategic positioning [6][39] - The company has a stable governance structure and a professional management team, which enhances its long-term strategic execution [9][12] - The report highlights the company's strong performance in the investment banking sector, with a projected net profit growth of 38% in 2024, significantly outperforming the industry average [34] Financial Summary - Total revenue projections for GF Securities are as follows: - 2024: 27,199 million CNY - 2025: 33,517 million CNY (23% YoY growth) - 2026: 35,280 million CNY (5% YoY growth) - 2027: 37,867 million CNY (7% YoY growth) [1] - Projected net profit figures are: - 2024: 9,637 million CNY - 2025: 11,014 million CNY (14% YoY growth) - 2026: 11,801 million CNY (7% YoY growth) - 2027: 12,795 million CNY (8% YoY growth) [1] - Earnings per share (EPS) estimates are: - 2024: 1.15 CNY - 2025: 1.45 CNY - 2026: 1.55 CNY - 2027: 1.68 CNY [1] Governance Structure - GF Securities has a stable and decentralized ownership structure with no controlling shareholder, which has remained consistent since its listing in 2010 [9][12] - The top three shareholders collectively hold approximately 40% of the shares, providing a stable foundation for the company's governance [9] ETF Market Positioning - The report emphasizes GF Securities' strategic positioning in the ETF market, highlighting its three-dimensional approach: 1. Issuing and managing ETFs through its public fund subsidiaries [15] 2. Participating in ETF market-making, ranking second in the industry [29] 3. Utilizing ETFs as a core tool for investment advisory services, enhancing asset allocation efficiency [33] - The ETF market in China has seen explosive growth, with total assets reaching 4.31 trillion CNY in mid-2025, reflecting a 74% YoY increase [15][21] Investment Management Contribution - The investment management segment is a significant revenue contributor, accounting for nearly 30% of GF Securities' total revenue [21][25] - The company has maintained a strong market position in asset management, with its public fund subsidiaries holding substantial market shares [21][27] Valuation and Market Outlook - The current price-to-book (PB) ratio for GF Securities is significantly lower than the industry average, with H-shares at 0.98x and A-shares at 1.26x [39] - The report suggests that GF Securities has considerable room for valuation recovery, especially in light of the ongoing trends in passive investment and the anticipated recovery in its investment banking business [39]

Group 1: Liquidity and Fund Flow - The supply side of funds is expanding, with net inflows of leveraged funds remaining high, and the issuance of equity public funds returning to high levels, with 172 billion units newly established[6] - Southbound funds have maintained a weekly average net inflow of over 10 billion for ten consecutive weeks, with a cumulative net inflow of nearly 200 billion[6] - The net inflow of margin financing last week was approximately 446.1 billion, marking a 97% percentile over the past three years, and the total margin financing balance reached 1.93 trillion[13] Group 2: Trading Activity and Market Sentiment - The trading heat for the mechanical industry increased by 55 percentage points to 67%, while the banking sector decreased by 20 percentage points to 51%[2] - Retail investor net inflow in the A-share market reached 132.6 billion, an increase of 539.8 billion from the previous value, marking a new high since April this year[2] - The Shanghai Composite Index reached a year-to-date high of 3600 points on July 23, driving an increase in A-share search heat on platforms like Kuaishou and Douyin[2] Group 3: Sector Performance - The net inflow for the pharmaceutical sector was 48.5 billion, while the petrochemical sector saw a net outflow of 8.0 billion[22] - The net inflow for the non-ferrous metals sector was 45.4 billion, and the machinery sector recorded a net inflow of 38.7 billion[22] - The stock-type ETF experienced a net outflow of 60 billion, which is at the 20.5% percentile over the past three years[23]

National Level - The central financial committee proposed to "legally govern low-price disorderly competition by enterprises" by July 2025[2] - Key legal tools include the Anti-Unfair Competition Law, Anti-Monopoly Law, Price Law, Fair Competition Review Regulations, and Guidelines for the Construction of a Unified National Market[3] - The revised Anti-Unfair Competition Law, effective from October 15, 2025, prohibits platform operators from forcing sellers to sell below cost[3] Industry Level - The 2024 Industrial Structure Adjustment Guidance Catalog categorizes projects into encouraged (352 items), restricted (231 items), and eliminated (422 items) categories[18] - The Cement and Glass Industry Capacity Replacement Implementation Measures (2024) prohibit new capacity for cement clinker and flat glass projects without a replacement plan[19] - The draft Network Transaction Platform Rules aims to prevent unreasonable restrictions on platform operators' pricing autonomy[20] Product Level - National mandatory standards are being raised to phase out outdated production capacity, focusing on energy consumption limits and equipment efficiency standards[6] - By 2025, 25 products, including cement and glass, must complete upgrades or phase-outs, while 11 products, including urea and PVC, must do so by 2026[21][24] - New mandatory national standards have been issued since 2024, impacting various industries, but specific compliance timelines are still unclear[25]

Report Industry Investment Rating No relevant content provided. Report's Core View - In Q2 2025, the overall default rate of credit bonds showed a downward trend, with a new first - time defaulting entity. The default repayment rate was stable with a slight increase, mainly driven by Sunac's repayment. There were 20 newly - added default bonds, mostly in the real - estate industry with many secondary extensions. The number of urban investment non - standard risk events decreased, while the number of commercial paper overdue entities remained high. Two hot credit events were the failure of AVIC Industry Finance's off - site repayment plan and the extension of a Zhejiang construction private enterprise's debt [2][4][14]. Summary According to the Table of Contents 1. Q2 2025: Overall Default Rate Continued to Decline, Repayment Rate Showed No Obvious Increase (1) Bond Default Rate - The overall default rate of credit bonds declined. There was one new first - time defaulting entity, Xinjie Investment Holding Group Co., Ltd. The default scale in Q2 was 5.938 billion yuan, and the default rates from April to June were 1.02%, 1.02%, and 1.00% respectively, showing a downward trend. The default rate of private - enterprise credit bonds also decreased, with the default amounts from April to June being 4.588 billion yuan, 1.35 billion yuan, and 0 yuan respectively, and the default rates being 9.02%, 9.00%, and 8.92% respectively, lower than that in Q1 [14]. (2) Default Repayment Rate - The cumulative default repayment rate in Q2 2025 was stable with a slight increase. The repayment rate in April was higher than that in the previous quarter, mainly due to Sunac's repayment. The principal repayment scale in Q2 increased compared with the previous quarter, with the repayment amounts from April to June being 3.561 billion yuan, 0.266 billion yuan, and 0.016 billion yuan respectively. Sunac had the largest repayment amount, reaching 3.247 billion yuan in Q2, with a repayment progress of 29%. Many real - estate enterprises were promoting debt restructuring, but the cash repayment for investors was limited [20][24][25]. (3) Credit Event Statistics - In Q2 2025, there were 20 newly - added default bonds in domestic bonds, with a total balance of 14.049 billion yuan. Among them, 18 bonds reached extensions, mostly secondary extensions of real - estate industry bonds, and 2 bonds had substantial defaults. Other industries involved included communication equipment, non - bank finance, and medical [28]. (4) Urban Investment舆情 - The number of urban investment non - standard risk events decreased by 12 from Q1 to Q2 2025, mainly distributed in Shandong. In terms of administrative levels, district - level and prefecture - level entities accounted for 86% and 14% respectively. The number of urban investment commercial paper overdue entities remained high, with 57, 55, and 56 entities in April, May, and June respectively, mainly distributed in Shandong and Yunnan [31][33]. 2. Hotspot Analysis: AVIC Industry Finance's Off - site Repayment Plan Rejected, Zhejiang Construction Private Enterprise's Debt Extension (1) AVIC Industry Finance - AVIC Industry Finance planned to transfer off - site for orderly repayment but was not approved by the bondholders' meeting. Its stock was delisted, and it failed to disclose its 2024 annual report. As of July 23, 2025, it had 19 outstanding bonds, with a domestic bond balance of 20.47 billion yuan and overseas bonds of 300 million US dollars. With the support of AVIC Industry Group and its own equity assets that can be realized, the bond default risk was relatively controllable [39][40][49]. (2) Xinjie Holdings - Xinjie Holdings is a Zhejiang private construction enterprise. Its only outstanding bond, "23 Xinjie 01", with a balance of 350 million yuan, had its interest payment and maturity dates extended. The company's construction business income has been declining for three years, and it faces risks such as shrinking housing construction business, large asset restrictions, concentrated short - term debt repayment pressure, and increased guarantee compensation pressure [53][58][59].

Economic Data Review - U.S. durable goods orders in June fell by 9.3% month-on-month, the largest decline since April 2020[1] - July manufacturing PMI in the U.S. dropped to 49.5, the lowest since December 2024[7] - Eurozone manufacturing PMI in July reached 49.8, the highest since July 2022[7] U.S. Economic Indicators - The WEI index for the U.S. decreased to 2.22% from 2.34% in the previous week[10] - The Redbook retail sales year-on-year growth in the U.S. fell to 5.1%, down from 5.2%[12] - The 30-year mortgage rate in the U.S. decreased to 6.74% from 6.75% the previous week[15] Financial Conditions - Bloomberg financial conditions index for the U.S. rose to 0.644 from 0.549 a week earlier[29] - The offshore dollar liquidity improved, with the 3-month basis swap for JPY/USD at -22.3589bp, up from -24.6876bp a week prior[31] - The 10-year bond yield spread between the U.S. and Eurozone narrowed to 167.7bp from 168.3bp[33]

Economic Indicators - The Huachuang macro WEI index decreased to 5.84% as of July 20, down 0.12% from July 13[6] - The land premium rate rose to 7.8% for the week of July 20, with a three-week average of 6.5%[10] - Container throughput at Chinese ports increased by 2.6% week-on-week as of July 20, with a four-week cumulative year-on-year growth of 4.3%[23] Price Trends - Domestic resource prices continued to rise significantly, with Shanxi thermal coal price up 1.7%, coking coal up 16.7%, and rebar price up 5.5%[41] - The South China Glass Index surged by 26% during the same period[41] Real Estate Market - The transaction area of commercial housing in 67 cities decreased by 20.5% year-on-year for the first 25 days of July, compared to a 17.6% decline in June[8] Infrastructure and Production - The operating rate of asphalt plants fell to 28.8%, down 4% week-on-week but up 4% year-on-year[17] - The average operating rate for asphalt plants from June 26 to July 23 was 31.5%, roughly stable compared to June[17] Trade Dynamics - The number of container ships from China to the U.S. dropped by 5.5% year-on-year as of July 26, compared to a 16.4% increase at the end of June[30] - U.S. imports from China saw a decline of 20.2% year-on-year for the 22 days leading up to July 22[30]

Group 1: Capital Market Insights - The China Securities Regulatory Commission (CSRC) emphasized the importance of stabilizing the market and enhancing the vitality of multi-level markets, including the Sci-Tech Innovation Board[1] - The CSRC's focus includes promoting long-term capital inflow and improving the investment value of listed companies[11] - The CSRC aims to deepen reforms and enhance regulatory efficiency to ensure a stable market environment[11] Group 2: Hainan Free Trade Port Developments - The Hainan Free Trade Port is set to officially start its closure operations on December 18, 2025, with significant tax reforms planned[8] - The proportion of zero-tariff goods for "first-line" imports will increase from 21% to 74%, enhancing trade facilitation[9] - The government will continue to implement the duty-free shopping policy for outlying islands, optimizing it to meet diverse consumer needs[9] Group 3: Policy Updates - The National Development and Reform Commission (NDRC) released a draft amendment to the Price Law, focusing on regulating unfair pricing behaviors and addressing "involution" competition[2] - The Ministry of Finance announced the allocation of 69 billion yuan in special bonds to support consumption initiatives, with a total of 162 billion yuan allocated in 2025[12] - The NDRC introduced new measures for energy-saving reviews and carbon emission evaluations for fixed asset investment projects, targeting projects with annual energy consumption of 50,000 tons of standard coal or more[12]