Manufacturing PMI Insights - June manufacturing PMI slightly improved by 0.2 percentage points to 49.7%, remaining below the expansion threshold[2] - New export orders index rose by 0.2 percentage points to 47.7%, indicating ongoing export challenges despite temporary easing in US-China trade tensions[3] - New orders index increased by 0.4 percentage points to 50.2%, with consumer goods PMI improving by 0.2 percentage points to 50.4%[3] Inventory and Production Trends - Finished goods inventory index surged by 1.6 percentage points to 48.1%, but annualized index fell by 0.1 percentage points to a low of 47.6%[4] - Production index rose by 0.3 percentage points to 51.0%, reflecting a temporary improvement in production driven by consumption and export demand[4] Economic Outlook and Risks - The rebound in manufacturing PMI is attributed to subsidies stimulating durable consumption and a second wave of export efforts[4] - Future uncertainties hinge on the domestic real estate market's recovery and the potential impact of the US tax reduction plan on local production and consumption[4] - There is a risk of additional interest rate cuts if the real estate market continues to struggle, with potential for increased subsidies for durable goods[4]

Investment Rating - The report maintains a rating of "stronger than the market" for the industry [6] Core Viewpoints - The draft of the Medical Security Law focuses on financing mechanisms, the division of responsibilities among stakeholders, and management supervision, indicating a clearer boundary of responsibilities in future medical insurance operations [5] - The overall number of articles in the draft has been reduced from 70 to 50, with significant changes in expression, deletions, and additions [3][4] Summary by Sections Changes in Expression - Article 2 removes content related to price management, bidding procurement, and medical services - Article 12 adds that the standards for basic medical insurance benefits should support the development of a hierarchical diagnosis and treatment system - Article 15 encourages employers to establish supplementary medical insurance for employees - Article 20 introduces principles of balancing income and expenditure, timely adjustments to financing or benefit policies in case of payment difficulties, and promotes provincial coordination of basic medical insurance [4] Deletions - Several articles related to commercial health insurance, charitable medical assistance, long-term care insurance, and drug collection functions have been removed [5] Additions - New articles emphasize the responsibility of citizens for their health, the establishment of a long-term mechanism for insurance participation, and the need for evidence-based medicine and economic evaluations for drugs in the insurance catalog [5]

Investment Rating - The industry rating is "Outperform the Market" indicating that the overall return of the industry is expected to exceed the market benchmark index by more than 5% in the next 6 to 12 months [50]. Core Insights - The Wind New Materials Index closed at 3795.82 points, up 5.12% week-on-week, with significant gains in various sub-indices, particularly the lithium battery index which rose by 9.05% [3][9]. - EVE Energy plans to launch a solid-state battery with an energy density of 350Wh/kg and 800Wh/L by 2026, followed by a high-energy solid-state battery exceeding 1000Wh/L by 2028 [4][27]. - Xiaomi officially launched the YU7 model on June 26, 2025, with three configurations priced at 253,500 CNY, 279,900 CNY, and 329,900 CNY [4][31]. Market Overview - The semiconductor materials index rose to 6144.52 points, up 4.01%, while the organic silicon materials index reached 5880.86 points, up 4.85% [3][9]. - The carbon fiber index increased by 8.85%, indicating strong performance in this sub-sector [3][9]. - The domestic manufacturing upgrade is expected to drive demand for high-standard and high-performance materials, leading to rapid growth in the new materials industry [4][27]. Key Companies to Watch - The report highlights several companies with strong growth potential, including Tongcheng New Materials for its progress in import substitution in the photoresist sector, and Huate Gas for its integrated industrial chain in electronic specialty gases [4][27]. - Guocera Materials is noted for its rapid growth across three major business segments, particularly in the dental sector and explosive growth in the new energy business [4][27]. - The report also emphasizes the importance of polymer additives in enhancing polymer material performance, with a focus on domestic leaders like Lianlong and Zhuhai New Base [4][27].

Group 1 - The report highlights the focus on policy improvement, risk prevention, and efficiency enhancement in key industries, aiming to solidify the operational foundation and governance capabilities of these sectors [2][12]. - The establishment of national standards for brain-computer interface medical devices has been initiated, indicating a regulatory push towards enhancing safety and technical standards in the medical device sector [2][12]. - The draft of the Medical Security Law has been reviewed for the first time, aiming to construct a legal framework for the medical insurance system, which is expected to improve the protection of insured individuals' rights [2][14]. Group 2 - In the automotive industry, there is a call for manufacturers to optimize rebate policies and shorten the rebate payment period to enhance dealer support and operational efficiency [13]. - The food safety law amendment focuses on enhancing regulation in high-risk areas, particularly concerning the transportation of liquid foods and the management of infant formula [18]. - The trust industry is moving towards standardizing insurance trust business practices, which is anticipated to improve the institutionalization and transparency of wealth management tools [2][19]. Group 3 - The A-share market showed mixed performance, with software services and defense industries leading the gains, while oil and telecommunications sectors experienced declines [3][23]. - Popular concepts this week included stock trading software and financial technology, which saw significant increases, while oil and gas extraction faced notable declines [3][26]. - Monthly performance highlights included substantial gains in optical modules and digital currencies, indicating strong investor interest in these sectors [3][27].

Group 1 - The report indicates a clear trend of supply recovery in China, with a long-term focus on core asset styles and free cash flow combinations [2][3] - The gradual disintegration of the dollar capital cycle suggests a potential long-term depreciation of the dollar, with global capital likely to flow back to China [3] - Under the influence of both internal and external factors, Chinese assets are expected to undergo systematic restructuring, with a trend of rising Price-to-Book (PB) ratios being a main theme of the current bull market [3] Group 2 - The report expresses optimism towards core asset styles, highlighting sectors such as the ChiNext 50, large financials, Hang Seng China Enterprises, Hang Seng Technology, oil shipping, gold, energy, and non-ferrous metals, while also noting the need to monitor micro risks [3] - Industrial enterprise profit growth in May showed a significant decline, with a year-on-year growth rate of -9.1%, down 12.1 percentage points from April, primarily due to a decrease in profit margins [8] - The report emphasizes that the weakness in profit margins may reflect external disturbances, particularly from tariffs affecting operational costs, and suggests that the resilience of midstream manufacturing prices is crucial, with signs of a bottoming out in new energy prices [8] Group 3 - In the U.S., the PCE inflation rate rose to 2.3% in May, with core inflation at 2.7%, indicating persistent inflationary pressures despite weakening consumer spending [13][15] - The report notes that the Hong Kong stock market saw gains, with the Hang Seng Index rising by 4.27% and the Hang Seng Technology Index increasing by 3.31% [16] - The report highlights that the financial and high-end manufacturing sectors performed well, while consumer sectors showed weakness, with the ChiNext index leading the gains at 6.58% [19][32]

Investment Rating - The report maintains a strong rating for the pharmaceutical and biotechnology sector, indicating it is expected to outperform the market [6]. Core Insights - The report highlights the breakthrough therapy of TRS005, an ADC targeting CD20, which shows potential to outperform existing treatments for DLBCL [4][40]. - The DLBCL market is projected to grow significantly, with the Chinese market expected to increase from RMB 58 billion in 2019 to RMB 186 billion by 2024, and further to RMB 369 billion by 2030, reflecting a CAGR of 26.2% [21][24]. - The report emphasizes the importance of innovative drugs and suggests focusing on companies with strong performance and potential catalysts in the upcoming quarters [4][5]. Summary by Sections 1. Market Review - The CITIC Pharmaceutical Index rose by 1.5% during the week of June 23-27, 2025, underperforming the CSI 300 Index by 0.5 percentage points [3][49]. - The top five performing stocks included Shenzhou Cell (+30.5%), Haooubo (+27.1%), and Huaren Health (+26.0%) [3][63]. 2. DLBCL and ADC Treatment - DLBCL accounts for approximately 30-40% of all NHL cases, with a significant portion of patients remaining untreated despite existing therapies [4][17]. - The report discusses the transition from traditional chemotherapy to targeted therapies, highlighting the introduction of ADCs as a promising treatment avenue [24][27]. - TRS005 has shown promising results in early trials, with an overall response rate (ORR) of 59.4% in the 1.8 mg/kg dosage group [42][46]. 3. Investment Recommendations - The report suggests a focus on innovative drugs as a long-term investment strategy, particularly in companies that are expected to report strong Q2 earnings [4][5]. - Recommended stocks include Innovent Biologics, Kintor Pharmaceutical, and Zhenbao Island, among others [5][13]. 4. Industry Trends - The report notes that the ADC sector is gaining traction, with TRS005 being a key focus due to its potential advantages over existing therapies [40][47]. - The overall pharmaceutical sector is experiencing a shift towards innovative treatments, driven by advancements in technology and an aging population [21][24].

Investment Rating - The report maintains an "Outperform" rating for the light industry sector, indicating a positive outlook compared to the broader market [5]. Core Insights - The easing of US-China tariff negotiations is expected to improve sentiment in the export chain, with a focus on companies with global supply chain layouts [4][8]. - Xiaomi's launch of its first AI glasses has generated significant consumer interest, with sales exceeding 10,000 units within 12 hours, highlighting potential investment opportunities in related companies [6][8]. - The report emphasizes the importance of companies in the home furnishing sector, particularly those poised to benefit from industry improvements and consumer demand recovery [6][8]. Summary by Sections Light Industry Manufacturing - The light industry manufacturing sector outperformed the market, with an index increase of 3.64% compared to a 1.95% rise in the CSI 300 index during the week ending June 27, 2025 [14]. - Sub-sectors such as packaging and home goods showed strong performance, with packaging printing up 5.97% and home goods up 3.36% [14]. Home Furnishing - The report notes a narrowing decline in real estate construction and a potential recovery in demand for home furnishings, with companies like Oppein Home and Sophia expected to benefit [6][31]. - Retail sales of furniture showed a significant increase of 25.6% year-on-year in May, although exports declined by 7.8% [35][36]. Paper and Packaging - Prices for various paper products, including double glue paper and white cardboard, have seen a decline, with double glue paper priced at 5,125 CNY/ton [41][47]. - The report highlights the importance of companies like Nine Dragons Paper and Shanying International in the waste paper sector, which are expected to benefit from improved capacity and supply chain management [6][8]. Consumer Goods - The report indicates a strong performance in the consumer goods sector, particularly in personal care products, with companies like Kangnai Optical and Mingyue Lens recommended for investment [6][8]. - The introduction of new products, such as the natural cotton sanitary napkin by Nice Princess, reflects ongoing innovation in the consumer goods market [8]. New Tobacco Products - BAT Japan's launch of the Glo Hilo product is anticipated to drive growth in the heated tobacco market, with a focus on companies like Smoore International that have strong partnerships and product offerings [6][8]. Textile and Apparel - The textile and apparel sector has shown resilience, with a reported revenue increase of 0.6% year-on-year for the first five months of 2025, despite a profit decline of 13.9% [6][23]. - Key brands such as Hailan Home and Bosideng are highlighted as potential investment opportunities within this sector [6][23].

Investment Rating - The report maintains a rating of "Outperform" for the chemical industry, indicating a positive outlook compared to the broader market [6]. Core Insights - The report highlights the successful completion of China's largest offshore gas field, "Deep Sea No. 1," which is expected to produce over 4.5 billion cubic meters of gas annually, enhancing energy supply to the Guangdong-Hong Kong-Macao Greater Bay Area [3]. - A significant coal comprehensive utilization project in Xinjiang has commenced, with an investment of 27.4 billion yuan, projected to generate an annual revenue of 15.4 billion yuan and create approximately 2,000 jobs [3]. - The report identifies several investment themes, including the competitiveness of domestic tire manufacturers, the potential recovery in consumer electronics, and the resilience of certain chemical sectors [4][5][10]. Summary by Sections Chemical Sector Market Overview - The Shanghai Composite Index rose by 1.91%, while the CSI 300 increased by 1.95%. The CITIC Basic Chemical Index and the Shenwan Chemical Index saw gains of 4.15% and 3.11%, respectively [16]. - The top-performing sub-industries included membrane materials (11.79%), other plastic products (6.72%), and nylon (6.51%) [19]. Key Industry Dynamics - The report emphasizes the strong competitive position of domestic tire companies, suggesting a focus on companies like Sailun Tire and Linglong Tire due to their growth potential in a global market [4]. - In the consumer electronics sector, a gradual recovery is anticipated, benefiting upstream material companies involved in the panel supply chain [4]. - The phosphoric chemical sector is highlighted for its tightening supply-demand dynamics due to environmental regulations and increasing demand from the new energy sector [5]. - The fluorochemical sector is expected to stabilize as production quotas for refrigerants are reduced, supporting profitability [5]. Investment Themes - Investment Theme One: Domestic tire manufacturers are positioned strongly, with recommended stocks including Sailun Tire and Linglong Tire [4]. - Investment Theme Two: The consumer electronics sector is expected to recover, with a focus on upstream material companies like Dongcai Technology and Stik [4]. - Investment Theme Three: Resilient sectors such as phosphoric and fluorochemical industries are recommended for investment due to favorable supply-demand conditions [5]. - Investment Theme Four: The recovery of leading chemical companies is anticipated as economic conditions improve, with recommendations for companies like Wanhua Chemical and Hualu Chemical [10]. - Investment Theme Five: Attention is drawn to vitamin products due to supply disruptions, with companies like Zhejiang Medicine and New Heavens being highlighted [10].

Investment Rating - The report maintains an "Outperform" rating for the defense and military industry [5]. Core Viewpoints - The upcoming military parade on September 3 is expected to showcase the latest advancements in military capabilities, including traditional and new combat forces, reflecting China's strong ability to adapt to technological developments and evolving warfare [3][46]. - The defense and military index has shown strong performance, with a 6.90% increase from June 23 to June 27, outperforming the Shanghai and Shenzhen 300 index by 4.95 percentage points [3][12]. - The report highlights a strong demand recovery expected in the military industry by 2025, driven by multiple catalysts such as the "14th Five-Year Plan" and the "Centenary of the Army" goals, suggesting significant growth in both domestic and foreign demand [4][47]. Summary by Sections 1. Weekly Market Review - The military industry index (801740) increased by 6.90% during the week of June 23-27, while the Shanghai and Shenzhen 300 index rose by 1.95%, ranking second among 31 first-level industries [12][17]. - The military industry index has risen by 8.28% since 2025, while the Shanghai and Shenzhen 300 index has decreased by 0.33%, indicating a relative outperformance of 8.61 percentage points [19]. - The aviation sector showed the most significant gains, with notable increases in specific stocks such as Zhimin Da and Hangfa Technology, which rose by 19.62% and 18.91%, respectively [23]. 2. Investment Opportunities - The report recommends focusing on three main lines of investment: domestic trade, foreign trade, and self-sufficiency [47]. - For domestic trade, suggested companies include Tianqin Equipment, Bai'ao Intelligent, and Gaode Infrared [47]. - In the foreign trade sector, companies like Guangdong Hongda and Aerospace Rainbow are highlighted [48]. - For self-sufficiency, companies involved in commercial engines and nuclear fusion, such as Hangyu Technology and Guoguang Electric, are recommended [51]. 3. Funding and Valuation - The report notes a slight increase in passive fund sizes and leverage funds, indicating a positive outlook for the military sector's funding environment [30][36]. - As of June 27, the military industry index's price-to-earnings ratio (TTM) stands at 86.67 times, suggesting a high configuration value given the expected recovery in the industry by 2025 [47][37]. - The report emphasizes that most companies in the military sector are expected to have valuations below 30 times by 2026, indicating potential for performance improvement [41].

Investment Rating - The report maintains an "Outperform" rating for the industry [7] Core Insights - The report highlights the expansion of the largest thermal power base in East China, which is expected to strengthen energy security during the peak summer load period [3][18] - The report notes a record high in new photovoltaic installations in May, alongside significant growth in wind power installations [4][23] - China's waste incineration capacity has been certified as the highest in the world, with a significant increase in operational capacity since 2014 [4][43] Summary by Sections Market Review - From June 23 to June 27, the environmental sector rose by 4.05%, while the water sector increased by 1.88%. The electricity and gas sectors saw declines of 0.11% and 1.15%, respectively, with the Shanghai Composite Index rising by 1.95% [2][12] Industry Perspectives - The Zhejiang Energy Jiaxing Power Plant's Phase IV Unit 9 has officially commenced operations, increasing the total installed capacity to 6.3 million kW, which will alleviate electricity pressure in the Yangtze River Delta region during peak summer [3][18] - The National Development and Reform Commission anticipates a nationwide peak electricity load increase of approximately 100 million kW during the summer, reaching a historical high of 1.45 billion kW in 2024 [3][19] - In May, new installations of photovoltaic power reached 9,292 MW, marking a year-on-year growth of 388.03% [4][24] - The waste incineration capacity in China has increased from 186,000 tons per day in 2014 to 861,800 tons per day in 2023, with a projected design capacity of 1,166,000 tons per day by 2024 [4][43] Investment Recommendations - The report recommends Jiangsu Guoxin in the thermal power sector, with cautious recommendations for Sheneng Co. and Zhejiang Energy. It suggests attention to Funiu Co. and Huadian International [5] - In the nuclear power sector, it cautiously recommends China National Nuclear Power and China General Nuclear Power [5] - For the green energy sector, it suggests focusing on Three Gorges Energy and Jiangsu New Energy, with cautious attention to Longyuan Power and Zhejiang New Energy [5]