Group 1: Economic Policy and Fiscal Measures - Since the press conference on September 24, China has implemented unexpected relaxations in monetary finance, capital markets, and real estate, with a focus on fiscal policy as the next key area of concern[6] - The estimated actual public fiscal revenue for 2024 is 20.9 trillion yuan, which is 1.5 trillion yuan less than the budgeted revenue, indicating significant fiscal pressure[15] - The public fiscal expenditure from September to December 2024 is expected to decline by approximately 6.1% year-on-year, a sharp drop from the 1.5% increase observed in the first eight months of the year[15] Group 2: Economic Growth and Challenges - Due to high base effects from price reductions, the contribution of exports to GDP growth is expected to weaken in the fourth quarter of 2023, with actual export growth at 12.5% year-on-year for the first eight months[7] - The Producer Price Index (PPI) has been negative for 23 consecutive months, with a projected further decline in September, reflecting ongoing low price pressures in the economy[9] - The broad fiscal deficit rate in China increased from 0.73% in 1997 to 2.59% in 2002, highlighting the need for proactive fiscal measures to combat low price levels[13] Group 3: Recommendations for Fiscal Policy - Future fiscal efforts may include adjusting budgets to issue more government bonds, with a focus on the upcoming National People's Congress meeting in October[17] - There is a significant opportunity to activate existing fiscal deposits, which reached 6.8 trillion yuan as of August 2024, to enhance fiscal liquidity[17] - Optimizing the fiscal expenditure structure to increase support for consumption is crucial, as China's public consumption rate was only 16.1% in 2022, below the global average[18]

Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical industry [1] Core Viewpoints - The pharmaceutical sector is expected to be a leading force in the market rebound, driven by recovery and growth dynamics. The report highlights a significant market reversal in September 2024, with the pharmaceutical sector rising by 21.34%, outperforming the CSI 300 index by approximately 0.38% [2][11][26] - The report emphasizes the importance of recent fiscal and monetary policies that have stimulated market confidence and liquidity, suggesting that the pharmaceutical sector is poised for substantial capital inflow [4][12] Summary by Sections Investment Highlights - The report recommends increasing positions in the pharmaceutical sector, particularly in companies like WuXi AppTec, Aier Eye Hospital, and others, due to their strong growth potential and market recovery prospects [5][16] - Key recommended stocks for October include WuXi AppTec, Aier Eye Hospital, Zhifei Biological Products, Kangfang Bio, Dong'e Ejiao, Betta Pharmaceuticals, and others [16][18] Market Performance - In September 2024, the pharmaceutical sector saw a significant increase, with sub-sectors such as medical services and biological products showing impressive gains of 37.04% and 22.85%, respectively [11][26] - The overall valuation of the pharmaceutical sector is currently at 23.7 times PE, which is a premium of 26.1% compared to the overall A-share market (excluding financials) [27][28] Policy Impact - The report discusses the positive effects of government policies aimed at stimulating consumption and investment, which are expected to benefit the pharmaceutical sector, particularly in areas like consumer healthcare and innovative drugs [4][12][20] - Recent initiatives, such as the "Guidance on Promoting Healthy Rural Construction," are anticipated to enhance healthcare access in rural areas, further supporting growth in the pharmaceutical market [20][21] Company Analysis - WuXi AppTec is highlighted for its leadership in the contract research organization (CRO) space, with a strong growth outlook supported by global financing improvements [15] - Aier Eye Hospital is noted for its dominant position in the ophthalmology market, with significant growth potential in its service offerings [15] - Zhifei Biological Products is recognized for its strong vaccine portfolio and potential for valuation recovery [15] Market Outlook - The report suggests that the pharmaceutical sector is likely to attract significant investment due to its strong recovery narrative and the ongoing innovation in drug development [4][12][11] - The anticipated continuation of favorable policies and market conditions is expected to sustain the upward momentum in the pharmaceutical sector [4][12]

Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical and biotechnology industry [1] Core Viewpoints - The pharmaceutical sector is expected to be a leading force in the market rebound, driven by recovery and growth dynamics. The report highlights a significant market reversal in September 2024, with the pharmaceutical sector rising by 21.34%, outperforming the CSI 300 index by approximately 0.38% [2][11] - The report emphasizes the importance of macroeconomic policies, including fiscal and monetary stimulus, which are anticipated to enhance market confidence and risk appetite, leading to increased investments in the pharmaceutical sector [4][12] Summary by Relevant Sections Market Performance - In September 2024, the pharmaceutical sector experienced a notable increase of 21.34%, while the CSI 300 index rose by 20.97%. This performance places the pharmaceutical sector 18th among 31 sub-industries [11][26] - Key sub-sectors such as medical services, biological products, and medical devices showed impressive gains, with increases of 37.04%, 22.85%, and 20.44% respectively [11][26] Investment Recommendations - The report recommends increasing positions in the following companies: WuXi AppTec, Aier Eye Hospital, Zhifei Biological Products, Kangfang Bio, Dong'e Ejiao, Betta Pharmaceuticals, Nuotai Bio, NuoVas, Dean Diagnostics, and Jiutian Pharmaceutical [5][16] - The report notes that the average increase for the recommended companies in September was 16.91%, with Kangfang Bio and Betta Pharmaceuticals showing particularly strong performances of 39.71% and 29.49% respectively [18][19] Valuation Metrics - The current valuation of the pharmaceutical sector is approximately 23.7 times PE based on 2024 earnings forecasts, which represents a premium of 26.1% compared to the overall A-share market (excluding financials) [24][27] - The TTM valuation for the pharmaceutical sector stands at 28.2 times PE, which is below the historical average of 35.4 times PE, indicating potential for valuation recovery [24][27] Policy and Market Dynamics - The report highlights several recent policy initiatives aimed at enhancing healthcare services in rural areas, which are expected to stimulate demand for medical services and products [20][21] - The report also discusses the significance of the 2024 European Society for Medical Oncology (ESMO) annual meeting, where several key research findings related to domestic new drugs were presented, potentially impacting market dynamics [21]

Manufacturing PMI Insights - In September 2024, the official manufacturing PMI was reported at 49.8%, an increase of 0.7 percentage points from the previous value, indicating a seasonal recovery in economic sentiment, surpassing the 5-year average improvement of 0.3%[1] - The production index rose to 51.2%, up 1.4 percentage points, contributing 0.35 percentage points to the PMI increase, primarily due to the end of high-temperature weather[1] - The new orders index increased to 49.9%, up 1.0 percentage points, contributing 0.3 percentage points to the PMI, likely supported by the accelerated implementation of the "two new" policies[1] Sector Performance - High-tech manufacturing and equipment manufacturing led the sectors with PMIs of 53.0% and 52.0%, respectively, both showing improvements of 1.3 and 0.8 percentage points, supported by external demand and policy implementation[5] - The consumer goods sector showed significant recovery, likely driven by back-to-school and Mid-Autumn Festival consumption[7] - The high-energy consumption industries saw a slight recovery, but real estate remains a major drag on performance[7] Price and Inventory Indicators - The new export orders index fell to 47.5%, down 1.2 percentage points, attributed to the fading "export rush" effect and the impact of tariffs implemented on September 13[7] - The raw material purchase price index and factory price index were reported at 45.1% and 44.0%, respectively, both remaining in contraction territory, with a month-on-month increase of 1.9 and 2.0 percentage points[10] - The raw material inventory and finished goods inventory indices were 47.7% and 48.4%, indicating a slight increase and decrease, respectively, suggesting that manufacturing firms are in a phase of passive replenishment and active destocking[11] Non-Manufacturing PMI Overview - The non-manufacturing PMI stood at 50.0%, a decrease of 0.3 percentage points, primarily affected by the service sector[13] - The construction sector PMI improved to 50.7%, while the service sector PMI dropped to 49.9%, reflecting a mixed performance across industries[13] Economic Outlook and Risks - The overall economic landscape shows a seasonal recovery in manufacturing PMI, with a narrowing gap in operational performance among large, medium, and small enterprises[14] - However, the persistent weakness in domestic demand continues, with heightened market focus on potential fiscal policy adjustments, including the possibility of increased government bond issuance in Q4 to stimulate economic recovery[14] - Risks include domestic and international policy changes and the potential for economic recovery to fall short of expectations[14]

Investment Rating - The report maintains a rating of "Hold" for the industry [1]. Core Insights - The report indicates a clear signal of recovery in the "Xinchuang" (信创) sector, with targeted funding support accelerating its advancement [3][8]. - The issuance of special long-term bonds is expected to boost capital expenditure in the Xinchuang field [11][14]. - Market confidence is recovering, and a resurgence in the growth rate of the Xinchuang sector is anticipated [16]. Summary by Sections 1. Recovery Signals in Xinchuang - The deadline for the transformation of state-owned enterprises by 2027 is approaching, prompting accelerated implementation of Xinchuang initiatives [8]. - National standards for the safety and reliability of Xinchuang products have been introduced, enhancing the development of self-controlled technologies [9][10]. - The market is expected to see a recovery in capital expenditure in the Xinchuang sector due to favorable macroeconomic policies introduced since September 24 [11][16]. 2. Rapid Launch of Bidding in September - Government departments are actively promoting hardware upgrades and the application of domestic operating systems, reflecting a strong emphasis on information security [18]. - Major procurement activities include the purchase of desktop operating systems and servers by various sectors, including government, telecommunications, and finance, with significant budget allocations [20][22]. - The report highlights that the total bidding amounts for Xinchuang-related projects have reached several tens of millions [24]. 3. Investment Recommendations - The report suggests that the approaching timeline for comprehensive replacements, combined with recent favorable policies, will likely lead to increased capital expenditure in the Xinchuang sector [23][24]. - Key companies to watch include those involved in infrastructure, basic software, and application software, which are expected to benefit from the Xinchuang initiatives [25].

Investment Rating - The report maintains a "Hold" rating for the industry [1][38]. Core Insights - HarmonyOS NEXT is set to officially launch on October 8, 2024, with the Mate70 series being the first to commercialize it in Q4 2024. The beta version has received over a million feedback suggestions, leading to the release of 10,000 applications across 18 major fields, covering 99.9% of user usage time [1][11]. - The OpenHarmony 5.0 version has been released, aligning with HarmonyOS, enhancing user experience, data security, and entertainment capabilities, facilitating more efficient development for developers [3][24]. - The report emphasizes the necessity and urgency of self-developed operating systems, highlighting the challenges and strategies for Huawei's HarmonyOS to break through in a competitive market [3][26][27]. Summary by Sections HarmonyOS NEXT Launch - HarmonyOS NEXT is expected to officially launch on October 8, 2024, with the Mate70 series being the first to utilize it commercially in Q4 2024. The beta version has been tested since June 2024, leading to significant improvements based on user feedback [1][11][8]. OpenHarmony 5.0 Update - The OpenHarmony 5.0.0 Release version was launched on September 30, 2024, enhancing alignment with HarmonyOS and improving user experience, data security, and entertainment features [3][24]. Self-Developed Operating Systems - The report discusses the necessity of self-developed operating systems, citing external risk minimization, alignment with domestic trends, and the need for improved software performance as key reasons for Huawei's focus on HarmonyOS [3][26][27]. - Challenges include the high initial investment and long development cycles typical of operating systems, as well as the difficulty in disrupting established market monopolies [3][27]. Huawei's Strategy - Huawei's HarmonyOS aims to achieve technical independence through distributed architecture, enabling seamless cross-device collaboration and enhanced security [3][28][31]. - The report highlights the importance of ecosystem rebuilding, leveraging Huawei's hardware advantages and fostering partnerships with application developers to drive innovation [3][31][32]. Investment Opportunities - The report suggests that the maturation of the HarmonyOS native application ecosystem in 2024 will lead to significant commercial opportunities, recommending attention to partners in the operating system, application, and hardware integration sectors [3][36].

、 市场反弹，通信板块如何配置？ -中泰通信行业周报（0 9 2 3 - 1007） 通 信 证券研究报告/行业 周报 2024 年 1 0 月 7 日 评级：增持（维持） [Table_Finance] 重点公司基本状况 分析师：陈宁玉 执业证书编号：S0740517020004 Email：chenny@zts.com.cn 分析师：杨雷 执业证书编号：S0740524060005 Email：yanglei01@zts.com.cn 研究助理：佘雨晴 Email：sheyq@zts.com.cn [Table_Profit] 基本状况 | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------|---------------|---------|--------------|---------------|-------|--------|-------|--------------|-------|-------|-------| | 简称 | 股价 \n( 元 ) | 2023 | 202 ...

Investment Rating - The report maintains an "Overweight" rating for the construction materials industry [1]. Core Insights - The report highlights that recent policy adjustments are aimed at stabilizing the real estate market, which is expected to positively impact the construction materials sector. The Long Triangle region has initiated significant price increases for cement, indicating a recovery in bottom valuations [1][2]. - The demand for glass fiber is projected to grow steadily, driven by wind energy and infrastructure projects, with leading companies in the sector recommended for investment [2][3]. - The report emphasizes the importance of supply-side adjustments, including production cuts and inventory management, to enhance pricing power in the cement market [1][2]. Summary by Sections Cement Industry Tracking - The report notes that the cement price has been raised significantly in various regions, with a focus on the Long Triangle area, where prices have increased by 20 yuan per ton [1]. - It mentions that the industry is experiencing a recovery in demand, with a reported increase in cement sales rates in key areas [1][2]. - The report indicates that the overall market sentiment is improving, with expectations for further price increases as supply constraints are managed [1][2]. Glass Fiber Industry Tracking - The report states that the glass fiber market is witnessing stable demand growth, particularly from the wind energy and infrastructure sectors, with leading companies like China Jushi and Zhongcai Technology recommended for investment [2][3]. - It highlights that the pricing for electronic yarn remains stable, with expectations for potential price increases in the near future due to supply constraints [2][3]. General Market Performance - The construction materials sector has shown a positive performance, with an 8.73% increase in the sector's index over the past week, outperforming the broader market [10][11]. - The report identifies key companies that have performed well, including Feili Hua and Keshun Shares, while also noting those that lagged behind [10][11].

Investment Rating - The report maintains an "Overweight" rating for the communication industry [2] Core Insights - The communication industry index has remained stable, with significant policy support leading to a bullish trend in the A-share market. The Shanghai Composite Index increased by 21.37%, while the communication sector saw a rise of 25.05% from September 24 to September 30, 2024 [5][10] - The report highlights a sustained high demand for AI computing power, with leading companies in the sector expected to benefit from this trend. The demand for optical modules in telecommunications is showing signs of recovery, with a projected stabilization in demand in the second half of 2024 [5][7] - The report emphasizes the recovery of the optical and submarine cable sectors, with significant projects approved that are expected to drive demand in the coming years. The report suggests focusing on companies like Hengtong Optic-Electric and Zhongtian Technology [7][10] Summary by Sections Key Company Status - The report provides a detailed overview of key companies in the communication sector, including their stock prices, earnings per share (EPS) forecasts, and price-to-earnings (PE) ratios. For instance, Zhongji Xuchuang has a stock price of 154.86 CNY with an EPS forecast of 6.41 CNY for 2024 [3][10] Market Trends - The report notes that the total market capitalization of the communication industry is approximately 4.45 trillion CNY, with a circulating market value of about 1.52 trillion CNY. There are 122 listed companies in this sector [3][10] Policy and Economic Environment - Recent government policies aimed at supporting economic growth have positively impacted the communication sector, leading to increased investor confidence and market performance [5][10] Stock Selection Strategy - The report suggests a stock selection strategy focusing on leading companies in AI computing and optical modules, recommending stocks such as Zhongji Xuchuang, Tianfu Communication, and Yuanjie Technology for potential investment [5][7][10]

Investment Rating - The report assigns an "Invest Buy" rating to the company, marking its first coverage [1] Core Views - The company is a leader in precision temperature control and energy-saving solutions, benefiting from the growth in AI computing power and energy storage installations, with potential for accelerated performance expansion [7] - The company has end-to-end liquid cooling solution capabilities, with its electronic cooling products opening up new growth opportunities [4] - The report forecasts the company's net profit for 2024-2026 to be 552 million, 754 million, and 982 million yuan, respectively, with EPS of 0.75, 1.02, and 1.33 yuan [4] Financial Projections and Valuation - Revenue is projected to grow from 2,923 million yuan in 2022 to 8,469 million yuan in 2026, with a CAGR of 32% [1] - Net profit is expected to increase from 280 million yuan in 2022 to 982 million yuan in 2026, with a CAGR of 30% [1] - The P/E ratio is expected to decrease from 68.7 in 2022 to 19.6 in 2026, indicating a more attractive valuation over time [1] Industry and Market Analysis - The AI-driven demand for liquid cooling is expected to grow significantly, with the domestic liquid cooling data center market projected to exceed 100 billion yuan by 2027, with a CAGR of 76% [3] - The energy storage temperature control market is also expected to grow, with the domestic market size for liquid cooling in energy storage projected to reach 16.4 billion yuan by 2025, with liquid cooling accounting for 45% [3] - The company has delivered 900MW of liquid cooling projects as of March 2024, with its Coolinside full-chain solution covering various liquid cooling schemes [4] Company Strengths and Strategy - The company has a comprehensive product matrix and a strong customer base, including major internet companies, telecom operators, and energy storage system integrators [3] - The company has a robust R&D capability, with 1,279 R&D personnel as of the end of 2023, accounting for 33.19% of the total workforce [25] - The company has a nationwide production layout, with seven manufacturing bases and a new headquarters base in South China that began production in 2024 [26] Technological Advancements - The company has developed a full-chain liquid cooling solution, including cold plate liquid cooling, single-phase/phase-change immersion liquid cooling, and other schemes [4] - The company has also introduced the BattCool solution for the energy storage field, demonstrating its capability in end-to-end liquid cooling solutions [4] - The company is actively expanding into the electronic cooling market, with products such as GPU/CPU liquid cooling plates, server liquid cooling modules, and heat pipes [4]