Economic Overview - In January, the manufacturing PMI was 49.1%, a slight decrease of 1 percentage point from the previous month, indicating a decline in manufacturing sentiment[2] - The composite PMI output index stood at 50.1%, down 2.1 percentage points from last month but still above the critical point, suggesting continued economic expansion[2] Price Indicators - The production index and new orders index for January were 49.8% and 49.2%, respectively, down from 52.1% and 51% in the previous month, indicating a slowdown in production and market demand[3] - The main raw material purchase price index and factory price index were 49.5% and 47.4%, rising by 1.3 and 0.7 percentage points from last month, respectively[3] Inventory and Supply Chain - The finished goods inventory and raw materials inventory indices were 46.5% and 47.7%, decreasing by 1.4 and 0.6 percentage points, indicating a continued reduction in inventory levels[3] - The supplier delivery time index was 50.3%, down 0.6 percentage points but still above the critical point, suggesting faster delivery times from suppliers[3] Business Activity by Company Size - Large enterprises had a PMI of 49.9%, down 0.6 percentage points from last month, while medium and small enterprises recorded PMIs of 46.5% and 49.5%, down 2.0 and 1.2 percentage points, respectively[4] - The manufacturing business activity expectation index rose significantly to 55.3%, an increase of 2 percentage points from the previous month[4] Non-Manufacturing Sector - The non-manufacturing PMI for the construction sector was 49.3%, down 3.9 percentage points, while the service sector PMI was 50.3%, down 1.7 percentage points but still in the expansion zone[5] - The business activity expectation indices for construction and services were 56.5% and 56.8%, respectively, both above the critical point despite slight declines[6] Risk Factors - Potential risks include unexpected macroeconomic changes and significant fluctuations in overseas markets[7]

Profit Trends - In 2024, the total profit of industrial enterprises above designated size reached CNY 74,310.5 billion, a decrease of 3.3% compared to the previous year[3] - In December 2024, profits increased by 11.0% year-on-year, reversing the previous month's decline of -7.3%[3] - The total revenue for these enterprises was CNY 137.8 trillion, reflecting a year-on-year growth of 2.1%[4] Sector Performance - Mining sector profits totaled CNY 11,271.9 billion, down 10.0% year-on-year, but the decline rate has slowed compared to the first 11 months of 2024[5] - Manufacturing sector profits were CNY 55,141.1 billion, a decrease of 3.9%, with a reduced decline of 0.7 percentage points from the previous 11 months[5] - The electrical and water sector saw profits of CNY 7,897.6 billion, marking a year-on-year increase of 14.5%[5] Profitability Metrics - The operating profit margin for industrial enterprises was 5.4%, remaining stable compared to the previous 11 months[4] - The gross profit margin for these enterprises was 14.8%, showing a slight recovery from earlier months[4] Financial Health - The asset-liability ratio for industrial enterprises decreased to 57.5% by the end of December 2024, down 0.4 percentage points from November[5] - The asset-liability ratios for manufacturing and electrical/water sectors were 56.9% and 60.4%, respectively, both showing slight declines[5] Risks - Potential risks include unexpected geopolitical tensions, macroeconomic downturns, and significant fluctuations in overseas markets[6]

Investment Rating - The industry rating is "Outperform the Market" [7][63]. Core Viewpoints - The report emphasizes that the active promotion of urban renewal is expected to lead to a marginal recovery in the building materials sector. In 2024, over 60,000 urban renewal projects are planned, with an investment of approximately 2.9 trillion yuan [3][11]. - The report highlights that the easing of monetary and fiscal policies in China, alongside the government's commitment to stabilize the real estate market, is likely to enhance homebuyer sentiment and purchasing power, thereby stabilizing the real estate market fundamentals [3][5][11]. - The report suggests that the building materials sector has limited room for further deterioration compared to the end of 2022, as the sales volume and price levels of real estate are at lower points, and the reliance of leading companies on large B-channel sales has decreased [5][11]. Summary by Sections Weekly Insights - A national video conference on urban renewal was held, emphasizing the need for effective implementation of key tasks. The report notes various supportive measures for the real estate market, including tax reductions and financing support for housing construction [3][11]. High-frequency Data - As of January 24, 2025, the average price of bulk P.O 42.5 cement in China is 391.0 yuan/ton, showing a week-on-week decrease of 2.1% but a year-on-year increase of 11.4% [4][12]. - The average price of glass (5.00mm) is 1325.7 yuan/ton, with a week-on-week increase of 0.4% but a year-on-year decrease of 34.2% [4][19]. Sector Review - The Shanghai Composite Index rose by 0.33%, while the Shenzhen Composite Index increased by 1.05%. However, the building materials index fell by 1.31%, indicating underperformance compared to the broader market [4][50]. - The report identifies key investment themes, including high-quality companies benefiting from stock transformation, undervalued stocks with long-term alpha attributes, and leading cyclical building materials companies showing signs of bottoming out [5][11].

Investment Rating - The industry investment rating is "Outperform the Market" (maintained) [1] Core Viewpoints - The overall fund holdings in the pharmaceutical sector have continued to decline, with a significant decrease in the heavy holdings of pharmaceutical funds and a notable underweight in non-pharmaceutical funds [3][10] - The proportion of passive funds has been steadily increasing, indicating a shift in investment strategy within the sector [4][14] - The total scale of pharmaceutical funds as of Q4 2024 is 286.7 billion yuan, reflecting a quarter-on-quarter decrease of 9.4% [21] Summary by Sections Overall Holdings - In Q4 2024, the heavy holdings in the pharmaceutical sector accounted for 8.8% of all public funds, down 1.2 percentage points from the previous quarter [10] - The heavy holdings in all public active funds were 9.3%, also down 1.2 percentage points [10] - Non-pharmaceutical funds showed a heavy holding of 4.0%, down 1.0 percentage points, with an increased underweight ratio of 2.26% [10] Fund Structure - The proportion of passive funds in the pharmaceutical sector has increased to 26%, up 1.8 percentage points from the previous quarter [14] - The total number of shares in pharmaceutical funds reached 598.5 billion shares, with a quarter-on-quarter increase of 1.4% [21] Sub-industry Analysis - The proportion of holdings in innovative drugs decreased by 0.03 percentage points, while the holdings in CXO and chemical drug formulations also saw declines of 0.47 and 0.57 percentage points, respectively [22][29][32] - Conversely, the holdings in upstream sectors increased by 0.39 percentage points [36] Fund Type Analysis - Active pharmaceutical funds have increased their holdings in CXO, innovative drugs, and chemical drug formulations, while reducing their exposure to medical services and biological products [63] - Non-pharmaceutical funds have increased their holdings in medical devices and CXO, while decreasing their investments in medical services and chemical drug formulations [87] Heavy Holdings - The top five holdings in all public funds include Mindray Medical (31.3 billion yuan), Heng Rui Medicine (29.8 billion yuan), WuXi AppTec (21.4 billion yuan), United Imaging (11.2 billion yuan), and Aier Eye Hospital (8.9 billion yuan) [100] - The top three active increases in holdings were in Renfu Medicine (+1.5 billion yuan), Betta Pharmaceuticals (+0.7 billion yuan), and Kunming Pharmaceutical (+0.6 billion yuan) [100]

Group 1 - The market experienced a slight upward trend with an overall increase of 0.88%, led by the ChiNext Index, CSI 1000, and Shenzhen Component Index, while the SSE 50 and CSI Dividend Index declined [2][10] - The technology and advanced manufacturing sectors outperformed, while cyclical and consumer sectors lagged behind [2][10] - The report highlights the significant performance of the communication, computer, and electronics industries, while coal, food and beverage, and oil and petrochemicals faced declines [2][10] Group 2 - Market sentiment has improved, with a decrease in industry rotation intensity, indicating a preference for small-cap stocks [3][20] - The stock-bond yield spread has decreased to 1.7%, indicating a shift in market valuation dynamics [20] - The five-dimensional market sentiment index increased by 17.6% to 55.9, reflecting a recovery in overall market sentiment [22] Group 3 - The report identifies key industry trends, including the launch of the Doubao real-time voice model and the Doubao 1.5 Pro model, which enhance AI capabilities [4][42] - The introduction of the Guangzhou Low Altitude Economy Development Regulations, effective February 2025, is expected to promote the low-altitude economy [4][44] - The establishment of the first heterogeneous humanoid robot training ground in China is anticipated to accelerate technological breakthroughs and application [4][45] Group 4 - The report suggests focusing on the low-altitude economy and state-owned enterprise dividends as key investment opportunities [5][50] - The low-altitude economy is highlighted as a significant new productive force, with expectations for regulatory frameworks to support its growth [5][50] - The report recommends investing in technology sectors centered around AI, humanoid robots, and intelligent driving, alongside opportunities in state-owned enterprises [5][50] Group 5 - The report emphasizes the importance of mergers and acquisitions, debt reduction, sustained demand growth, and certainty in growth as long-term investment directions [5][51] - It notes that policies supporting mergers and acquisitions are expected to enhance industry consolidation and market management [5][51] - The report highlights the potential for growth in sectors like wind power and communication equipment, driven by increasing demand [5][51]

Group 1 - The report highlights that Trump has pressured Saudi Arabia and OPEC to lower oil prices, which has led to a significant drop in oil prices and a decline in the energy sector by 1.93% [2][9] - The S&P 500 index reached a new historical high due to positive expectations surrounding tax cuts and deregulation, alongside a general rise in U.S. risk assets [2][9] - Economic indicators show a slight increase in the U.S. manufacturing PMI from 49.4 to 50.1, while the services PMI decreased from 56.8 to 52.8, indicating mixed signals in the economy [3][10] Group 2 - The report notes that the Nikkei 225 index had the highest increase of 3.85% among global equity markets, while the NYMEX light crude oil saw the largest decline of 4.41% [3][36] - In the U.S. labor market, initial jobless claims rose to 223,000 from 217,000, indicating a slight increase in unemployment claims [3][10] - The report indicates that the healthcare sector in the U.S. saw a rise of 3.46%, while the energy sector experienced the largest decline of 1.93% [48] Group 3 - The report provides insights into the global economic data, noting that the Eurozone economic sentiment index has shown signs of recovery [67] - The consumer confidence index in the UK has also seen an uptick, reflecting improved consumer sentiment [74] - Japan's CPI has shown a month-on-month decline, indicating potential deflationary pressures [83] Group 4 - The report tracks major asset price movements, with the CAC40 index in France rising by 2.83% and the Hang Seng index in Hong Kong increasing by 2.46% [36][41] - The report highlights that the commodity market experienced mixed results, with CBOT soybeans rising by 1.86% while NYMEX light crude oil fell by 4.41% [55] - The liquidity section notes varied movements in long-term interest rates, with Germany's 10-year bond yield rising by 5 basis points to 2.58% [60] Group 5 - The report outlines upcoming important economic data releases, including the U.S. manufacturing PMI and consumer confidence index, which are expected to provide further insights into economic conditions [91][94] - It also mentions the anticipated release of the Eurozone's GDP growth rate, which will be closely watched for signs of economic recovery [94]

Investment Rating - The industry rating is "Outperform the Market" [5] Core Views - The report highlights the EU's plan for electric vehicle incentives, which is expected to boost demand in Europe [13][14] - The distributed photovoltaic policy has been implemented, with expectations for stable prices in the industry chain before the holiday [22][24] - The offshore wind power sector is experiencing high demand, with competitive allocation results in Jiangsu and Liaoning [33][34] - The energy storage sector is projected to see over 100GWh of new installations in 2024, with CATL supplying the world's largest energy storage project [41][44] - The power equipment and industrial control sector anticipates over 600 billion yuan in domestic grid investment in 2024 [51][52] - The hydrogen energy sector is witnessing significant developments, including the release of a green technology promotion directory and new projects in Indonesia [64][65] Summary by Sections 1. New Energy Vehicles and Lithium Battery Sector - The EU's electric vehicle incentive plan is expected to restore demand in Europe [13] - Nissan is establishing a new LFP battery plant in Japan with a capacity of 5GWh [14] - Companies with cost advantages and those expanding overseas are recommended for investment [15] 2. New Energy Generation Sector 2.1 Photovoltaic Sector - The National Energy Administration released a management method for distributed photovoltaic power generation, aiming for growth in both quantity and quality [22][24] - The report anticipates steady progress in the domestic distributed market by 2025 [24] 2.2 Wind Power Sector - Competitive allocation results for offshore wind projects in Jiangsu and Liaoning indicate sustained high demand [33][34] - Investment opportunities are suggested for companies involved in offshore wind power [38] 3. Energy Storage Sector - In 2024, new energy storage installations are expected to exceed 100GWh, with a significant increase in capacity [41] - CATL is launching a 19GWh energy storage project in the UAE, marking a major milestone in the sector [44] 4. Power Equipment and Industrial Control Sector - Domestic grid investment is projected to exceed 600 billion yuan in 2024, with a focus on optimizing the main grid and supporting new energy development [51][52] - The report highlights significant contracts awarded in the power equipment sector [52][53] 5. Hydrogen Energy Sector - The release of the green technology promotion directory by the National Development and Reform Commission indicates a push for hydrogen energy projects [64] - New projects in Indonesia for hydrogen production and refueling stations are being developed [65]

Investment Rating - The industry rating is "Outperform the Market" [4] Core Insights - The pig price has shown a rebound due to increased demand ahead of the Spring Festival, with the price on January 26 reaching 15.85 CNY/kg, a week-on-week increase of 0.39 CNY/kg [2][7] - The white feather broiler industry is experiencing a decline in prices for both broilers and chicks due to seasonal factors and supply chain disruptions caused by avian influenza outbreaks in the U.S. and New Zealand [3][36] - The release of the "Rural Revitalization Plan (2024-2027)" aims to enhance agricultural modernization and food security, with significant investments in seed industry revitalization and technological innovation [46][48] Summary by Sections Pig Farming - The supply and demand have both increased, leading to a fluctuation in pig prices. The average daily slaughter volume rose to 253,400 heads per day, a week-on-week increase of 33.56% [2][13] - The willingness to sell among farmers remains strong, with the average weight of pigs sold being 121.51 kg, a decrease of 1.45 kg week-on-week [19][29] - The price of piglets has continued to rise, with an average price of 505.71 CNY per head for 7 kg piglets, reflecting a week-on-week increase of 4.96% [24][29] White Feather Broilers - The price of white feather broilers has decreased to 7.22 CNY/kg, a week-on-week decline of 0.12 CNY/kg, influenced by a decrease in slaughter rates as processing plants begin to close for the holiday [31][36] - The price of chicks has also dropped to 2.51 CNY per chick, a decrease of 0.07 CNY week-on-week, due to an oversupply in the market [31][36] Seed Industry - The "Rural Revitalization Plan" outlines key goals for agricultural modernization, including enhancing grain production and promoting seed industry innovation [46][48] - The plan emphasizes the importance of biotechnology in ensuring food security, suggesting a potential acceleration in the adoption of genetically modified crops [48]

Investment Rating - The industry rating is "Outperform the Market" [4][43][85] Core Viewpoints - The defense and military industry index decreased by 1.18% this week, while the Shanghai and Shenzhen 300 index increased by 0.54%, resulting in an underperformance of -1.72 percentage points [3][43] - As of January 25, 2025, a total of 122 companies in the military stock pool have disclosed earnings forecasts, with 28 companies (23%) expected to turn profitable or show positive growth. The shipbuilding sector performed the best, with a 57.1% rate of profitability or growth [3][43] - The military sector's overall performance is expected to slow down due to personnel adjustments, with several companies explicitly mentioning reduced revenue and profit in their forecasts [3][43] - Positive signals of industry demand recovery are observed, with companies like Zhongjian Technology and Beimo Gaoke showing better-than-expected market performance and demand for new products [4][43] Summary by Sections Industry Performance - The military index has shown a 9.56% increase since May 2024, outperforming the Shanghai and Shenzhen 300 index by 3.23 percentage points [8][16] - The engine sector performed relatively well, while the aerospace sector faced challenges due to poor earnings forecasts from key companies [20][22] Earnings Forecasts - The earnings forecast disclosure period is nearing completion, with expectations for a recovery in demand in Q4 2024 and into 2025, coinciding with the transition from the 14th Five-Year Plan to the 15th [4][44] - The military industry is anticipated to have reached a bottom, with production tasks expected to be assigned in 2025 [4][44] Investment Opportunities - Investment recommendations focus on traditional main battle equipment and high-elasticity sectors that will span the 15th Five-Year Plan, including aircraft, engines, and missiles [7][52] - Specific companies to watch include AVIC Shenyang Aircraft, AVIC Electromechanical, and AVIC Xi'an Aircraft [7][52] Financing and Valuation - The financing buy-in amount has significantly increased, indicating a stable confidence from leveraged funds in the military sector [4][33] - As of January 24, the military sector's current TTM price-to-earnings ratio is 60.09, with a percentile rank of 76.38%, suggesting a high cost-performance ratio for investment at this time [4][49]

Investment Rating - The industry rating is "Outperform the Market" [54] Core Viewpoints - The new policy in Beijing allows state-owned land use rights to be contributed as capital for urban renewal projects, effectively lowering the threshold for enterprises to participate in urban renewal and stimulating their motivation to revitalize existing land resources [3] - The "white list" project loan amount has increased to 5.6 trillion yuan, significantly exceeding expectations, and has supported the construction and delivery of 14 million housing units [4] - The market recovery path is expected to go through stages of alleviating liquidity pressure, continuous supply contraction, stabilization of housing prices, and recovery in sales and construction [5] Sales Review (1.18-1.24) - Total transaction volume in 34 monitored cities reached 16,000 units, a week-on-week increase of 1.2%, with a cumulative total of 54,000 units for 2025, representing a year-on-year increase of 4.9% [11] - First-tier cities saw a transaction of 4,570 units, a week-on-week decrease of 14.4%, with a cumulative total of 18,000 units for 2025, a year-on-year increase of 16.5% [11] - Second-tier cities recorded 9,730 units, a week-on-week increase of 7.2%, with a cumulative total of 30,000 units for 2025, a year-on-year decrease of 2.4% [11] - Third-tier cities had 1,939 units, a week-on-week increase of 18.4%, with a cumulative total of 6,000 units for 2025, a year-on-year increase of 14% [11] Land Supply (1.13-1.19) - Planned residential land supply in 100 cities is 1.15 million square meters, with a cumulative supply of 8.47 million square meters for 2025, a year-on-year increase of 0.5% [25] - The average floor price of land in 100 cities is 8,060 yuan per square meter, with a recent four-week average of 6,679 yuan per square meter, reflecting a week-on-week increase of 7.9% and a year-on-year increase of 39.7% [25][27] Land Transaction (1.13-1.19) - The planned residential land transaction area in 100 cities is 3.71 million square meters, with a cumulative transaction area of 13.89 million square meters for 2025, a year-on-year increase of 24.4% [37] - The average transaction floor price for residential land in 100 cities is 5,298 yuan per square meter, with a week-on-week increase of 57.4% and a year-on-year increase of 57.9% [37]