Investment Rating - The report maintains a rating of "Follow the Market" for the steel industry [2] Core Views - The steel market is experiencing a weak downward trend, characterized by a dual weakness in supply and demand during the off-season, with a decline in molten iron production and increased contradictions in the raw material sector. Market confidence is low, and there is a lack of enthusiasm for steel inventory accumulation [7][17] - The average daily molten iron output has decreased to 2.294 million tons, down 1.32% week-on-week. The production of five major steel products is 8.499 million tons, down 1.25% week-on-week and 6.17% year-on-year, with significant declines in hot-rolled and medium-thick plate production [7][17] - Steel inventory has decreased to 1,118.4 thousand tons, down 1.82% week-on-week and 15.16% year-on-year, indicating a continued decline in inventory levels [7][17] Summary by Sections Industry Performance - The steel industry has a PE (TTM) valuation of 27.55 times, which is at a mid-level among all industries. The PB (LF) valuation is 0.97 times, indicating a low level compared to other industries [22] Supply and Demand Situation - Iron ore shipments from Australia and Brazil reached 25.78 million tons, up 20.1% week-on-week. However, iron ore arrivals at ports decreased to 22.68 million tons, down 9.9% week-on-week. Port iron ore inventory stands at 149.74 million tons, down 0.6% week-on-week but up 26% year-on-year [7][17] - The coking coal mining operating rate is 90.6%, down 0.59 percentage points week-on-week but up 4.89 percentage points year-on-year. Coking coal inventory is 28.56 million tons, up 2.25% week-on-week and 16.43% year-on-year [7][17] Market Outlook - The report suggests that the steel sector has the potential for upward rebound due to the lack of significant supply-demand contradictions and the implementation of incremental policies. The steel sector has seen significant declines and many stocks are trading below net asset value, with low institutional holdings [7][17] - Five main investment lines are recommended: 1. Companies with optimized product structures and stable high dividends, such as Hualing Steel and Baosteel [7][17] 2. Companies with high technical or cost barriers, such as CITIC Special Steel [7][17] 3. Companies with significant performance elasticity, such as Fangda Special Steel [7][17] 4. Long-term undervalued state-owned enterprises, such as Shandong Steel [7][17] 5. Industry leaders in high-temperature alloys and military-civilian dual-use sectors, such as Steel Research Institute [7][17]

Investment Rating - The report maintains a positive outlook on the defense and military industry, indicating that the sector is at an inflection point with potential beta opportunities ahead [3][11][20]. Core Insights - The defense and military sector is expected to benefit from the realization of demand transmission, with the industry fundamentals approaching a turning point. The investment focus should be on traditional ground combat equipment and engine sectors, as well as high-elasticity directions that can cross the "14th Five-Year Plan" cycle [3][20][22]. - The report highlights that the military industry index has shown a relative underperformance compared to the broader market, but it is anticipated that the fundamentals will drive future performance as demand recovers in 2024 and 2025 [11][12][22]. Summary by Sections Weekly Market Review - The military industry index decreased by 0.83% during the week, while the CSI 300 index fell by 0.14%, resulting in a relative underperformance of -0.69 percentage points. The military index has increased by 19.63% since May 2024, outperforming the CSI 300 index by 10.66 percentage points [11][24][42]. - The report notes that the engine sector performed slightly better, primarily due to significant gains from specific component stocks [31][41]. Stock Performance - The top-performing stocks included Western Materials (16.91%), Phoenix Optical (13.49%), and Fuguang Shares (9.65%), benefiting from external factors and trends in the electronic communication sector [41][48]. - Conversely, the worst-performing stocks were led by Hezhong Shizhuang (-14.73%) and Sikui (-14.52%), which experienced profit-taking after significant gains in previous weeks [41][61]. Funding and Valuation - As of December 20, the military industry index's TTM price-to-earnings ratio stands at 60.6, indicating a high valuation level. However, the report suggests that the current valuation is justified given the expected recovery in industry fundamentals in 2024 and 2025 [12][14][16]. - The report indicates a slight decrease in financing buy-in amounts and balances, reflecting a temporary decline in leveraged interest in the military sector. However, there is an expectation for a rebound in financing activity as demand strengthens [32][67].

Investment Rating - The report maintains a rating of "Outperform" for the industry [73]. Core Views - The 2025 annual electricity transaction volume and price in Jiangsu province are expected to decline by 9% year-on-year, indicating intense competition among market participants [40][41]. - Jiangsu province has initiated a competitive allocation for 7.65GW of offshore wind projects, which is anticipated to contribute to the increase in offshore wind capacity in the region [45]. - In November, the output from hydropower and wind power decreased year-on-year, while the overall electricity consumption growth rate has slowed down [49]. Summary by Sections Industry Dynamics - The total electricity generation in November was 7,495 billion kWh, showing a year-on-year growth of 0.9%, which is a decline compared to previous months [27][49]. - Hydropower generation decreased by 1.9% year-on-year, while thermal power generation increased by 1.4% [27][49]. Company Announcements - Longyuan Power issued a mid-term note with a total amount of 2 billion yuan and a coupon rate of 1.85% [1]. - Zhaoxin Co. is engaging in a financing lease with a maximum amount of 50 million yuan for a term of 120 months [2]. - The company Tianfu Energy has projects that are expected to reduce revenue by approximately 78.61 million yuan due to changes in subsidy eligibility [2]. Investment Recommendations - The report suggests focusing on companies in the hydropower sector such as Changjiang Power and Qianyuan Power, while being cautious with companies like Guotou Power and Huaneng Hydropower [53]. - In the thermal power sector, it recommends attention to Sheneng Co. and Funeng Co., while being cautious with Huadian International and Jiangsu Guoxin [53]. - For nuclear power, China Nuclear Power is recommended, while China General Nuclear Power is advised with caution [53].

Investment Rating - The report maintains an "Outperform" rating for the home appliance industry [3]. Core Insights - The introduction of the "gift-giving" feature by WeChat Mini Store simplifies the gifting process, potentially creating new opportunities in social e-commerce. This feature eliminates the need to ask for the recipient's address or preferred style, significantly reducing the complexity of the gifting process. The timing of the feature's gray testing aligns with the upcoming Spring Festival, which could leverage WeChat's extensive social resources to drive growth in social e-commerce, marking a transformation following community and live-streaming e-commerce [1][39]. - Companies with products that have strong gifting attributes are expected to benefit from this trend, with recommendations to focus on Feike Electric, Beike, Bear Electric, Edifier, XGIMI Technology, and Beiding Co. [39]. Summary by Sections Weekly Investment View - The home appliance sector experienced a weekly decline of 0.7%, with specific segments showing varied performance: white goods +0.0%, black goods +0.1%, small appliances -3.7%, and kitchen appliances -5.2%. In terms of raw material prices, LME copper and aluminum decreased by 2.18% and 3.29% respectively compared to the previous week [10][64]. Policy Support and Market Recovery - The report suggests that domestic demand is expected to recover due to policy support. Key areas to watch include: 1. Major appliances benefiting from trade-in programs, with a focus on Midea Group, Haier Smart Home, Gree Electric, Hisense Home Appliances, TCL Electronics, and Hisense Visual [11]. 2. The pet industry, seen as resilient during economic downturns, with recommendations for Guibao Pet, Zhongchong Co., and Petty Co. [11]. 3. Small appliances and branded apparel, which have been significantly impacted by weak consumer demand, are expected to see a rebound next year, with a focus on leading small appliance brands like Bear Electric, Feike Electric, Supor, and Xinbao [11]. 4. The electric two-wheeler market is anticipated to improve, with recommendations for leading companies like Yadi Holdings, Aima Technology, and Ninebot [11]. Global Manufacturing and Export Opportunities - The report highlights the ongoing theme of international expansion, suggesting that: 1. Leading brands in cleaning appliances are expected to benefit from global product strength and increasing penetration rates, with a focus on Stone Technology and Ecovacs [42]. 2. Major appliance leaders are pushing brand transformations and gaining market share globally, with recommendations for Haier Smart Home, Midea Group, Hisense Home Appliances, TCL Electronics, and Hisense Visual [42]. 3. Motorcycle brands are still in the early stages of international expansion, with significant growth potential, recommending Chuanfeng Power, Qianjiang Motorcycle, and Longxin General [42]. 4. Tool categories are expected to benefit from potential recovery in the real estate sector, with recommendations for Juxing Technology, Techtronic Industries, and Ousheng Electric [42]. Market Trends and Data - The report includes various market data and trends, indicating that the textile and apparel sector also faced a decline of 3.17% this week, with specific segments showing different performance metrics [24].

Industry Investment Rating - The industry maintains a "Stronger than the Market" rating [47] Core Views - The automotive industry is experiencing significant growth in new energy vehicle (NEV) sales, with NEV penetration rates reaching 45.6% in November [70] - The industry is benefiting from government policies such as "large-scale equipment updates and consumer goods replacement," which have driven sales of vehicles, home appliances, and other consumer goods [21] - The sector is also seeing rapid development in the electric vehicle (EV) ecosystem, particularly in battery swapping technology led by CATL [27][28] Market Performance - From December 16 to December 20, 2024, the automotive sector underperformed the CSI 300 index by 0.9 percentage points, with a decline of 1% compared to the CSI 300's 0.1% drop [40] - Year-to-date, the automotive sector has risen by 18%, ranking 7th among the 31 Shenwan sectors [40] Key Data Highlights Sales Data - In November, total vehicle sales reached 3.316 million units, up 11.7% year-over-year (YoY) and 8.6% month-over-month (MoM) [69] - NEV sales in November were 1.512 million units, a 47.4% YoY increase, with a market penetration rate of 45.6% [70] - From December 1-15, passenger vehicle retail sales were 1.083 million units, up 34% YoY and 14% MoM, while NEV retail sales were 536,000 units, up 71% YoY and 6% MoM [87] Inventory and Export - The dealer inventory coefficient in November was 1.11, below the warning line, indicating improved inventory management [69] - Vehicle exports in November were 490,000 units, down 9.5% MoM but up 1.6% YoY [69] Industry News - CATL launched its "Chocolate Battery Swap" ecosystem, aiming to build 1,000 self-operated swap stations by 2025 and expand to 30,000 stations through partnerships [28] - NIO unveiled its third brand, Firefly, targeting the high-end smart compact car market, with the first model set to launch in April 2025 [31] - Avita Technology completed its Series C funding round, raising over 11 billion yuan, with investments from Changan Automobile and other strategic investors [18] Key New Vehicle Launches - NIO ET9, a premium electric sedan, was launched with a starting price of 788,000 yuan, featuring advanced technologies such as a 900V high-voltage architecture and a 100 kWh battery pack [50][39] - Other notable launches include the iCAR V23, Fengyun A8L, and Mercedes-Benz GLC PHEV, catering to various segments from compact SUVs to luxury vehicles [60] Valuation and Sector Performance - The automotive sector's PE-TTM is 25.77x, at the 61.33% historical percentile, while the PB ratio is 2.43x, at the 67.65% historical percentile [86] - Sub-sectors such as passenger vehicles and commercial vehicles are trading at higher valuations compared to historical levels [86]

Investment Rating - The report maintains a strong rating for the pharmaceutical and biotechnology sector, indicating a positive outlook for investment opportunities in this industry [26]. Core Insights - The report highlights the significant growth potential in the stem cell market, with an estimated market size of approximately 26.5 billion yuan in 2024, driven by advancements in stem cell collection, preparation, and storage [11]. - The FDA's recent approval of the first mesenchymal stem cell (MSC) therapy marks a pivotal moment for the industry, suggesting a growing acceptance and potential for stem cell treatments in addressing unmet clinical needs [28]. - The report emphasizes the importance of innovation, recovery, and policy support as key drivers for the pharmaceutical sector, suggesting that companies focusing on innovative drugs and medical devices are likely to outperform [29]. Summary by Sections 1.1 Pharmaceutical Mid-term Investment Strategy - The report suggests gradually increasing allocations in the pharmaceutical sector, anticipating excess returns post semi-annual reports [50]. - Key policies impacting the sector include the comprehensive promotion of DRG/DIP, which will lead medical institutions to prioritize cost-effectiveness [50]. 1.2 Weekly Performance of Recommended Portfolio - The report provides insights into the performance of recommended stocks, indicating that the weekly portfolio outperformed the pharmaceutical index by 1.7 percentage points [17]. - The monthly performance showed a slight underperformance against the pharmaceutical index by 0.5 percentage points [18]. 2 Stem Cell Drug Focus - The stem cell industry is segmented into upstream (reagents, biomedical materials, and equipment), midstream (transportation, collection, storage, and drug development), and downstream (clinical treatment and consumer applications) [10]. - The report notes that while no stem cell drugs have been approved in China yet, the number of related drug development projects is increasing, with 45 IND applications accepted in 2023 [14][21]. 2.1 FDA Approval and Domestic Developments - The FDA's approval of Ryoncil for treating steroid-refractory acute graft-versus-host disease (aGVHD) is a significant milestone, with expectations for similar approvals in China [28]. - The report mentions that the first domestic stem cell drug application for aGVHD has been accepted, indicating a promising future for stem cell therapies in China [59]. 3 Market Review and Trends - The report reviews the recent performance of the pharmaceutical sector, noting a decline in the index and suggesting that the sector is not currently a market leader [33]. - It highlights the potential for recovery in the medical device sector, driven by improved bidding conditions and consumer spending [34]. 4 Recommended Stocks - The report recommends focusing on companies with strong innovation capabilities and those positioned to benefit from policy changes, including Huahai Pharmaceutical, Kunming Pharmaceutical, and Zhongyuan United [35].

Investment Rating - The report maintains an "Outperform" rating for the light industry sector [10]. Core Insights - The furniture retail sales in November showed a year-on-year increase of 10.5%, driven by national subsidies and a recovery in the real estate sector, indicating a continuous improvement in home demand [1][49]. - The cultural paper industry is expected to see a recovery in profitability, with leading companies announcing price increases for January and February 2025 [3][62]. - The report highlights the positive performance of exports in insulated cups and pet food, with significant growth in U.S. home sales, suggesting potential investment opportunities in related sectors [11]. Summary by Sections Furniture Industry - In November, furniture retail sales increased by 10.5% year-on-year, with a month-on-month growth of 3.1 percentage points [1]. - The construction area in November decreased by 40.1% year-on-year, while residential sales area increased by 4.2% year-on-year, indicating a recovery trend in the housing market [2]. - Companies like Mousse Holdings are expanding their overseas production and sales channels, enhancing their market presence in Southeast Asia [2]. Paper and Packaging - As of December 20, 2024, prices for various paper products showed slight increases, with white card paper at 4,240 RMB/ton (+10 RMB/ton) and corrugated paper at 2,918.13 RMB/ton (+41.88 RMB/ton) [3][56]. - The report suggests focusing on companies with integrated supply chains and diverse paper products, such as Sun Paper and Huawang Technology, which are expected to benefit from improved domestic demand [3]. Textile and Apparel - The textile and apparel sector experienced a year-on-year decline of 4.5% in retail sales for November, but cumulative sales from January to November showed a slight increase of 0.4% [7]. - The report anticipates a gradual recovery in consumer demand for branded apparel and home textiles due to government subsidy policies [7]. Export Trends - Exports of insulated cups and pet food showed strong performance in November, with year-on-year increases of 12% and 16%, respectively [11]. - The U.S. housing market is showing signs of recovery, with a notable increase in home sales, which may positively impact related export businesses [11].

Economic Data - In November, the industrial added value of large-scale industries grew by 5.4% year-on-year, a slight increase of 0.1 percentage points from the previous month[10] - Retail sales maintained growth, with a slight slowdown in commodity retail but an acceleration in catering revenue[10] - Fixed asset investment growth slightly declined year-on-year, while manufacturing investment continued to maintain high growth[10] Monetary Policy - The Federal Reserve lowered the federal funds rate by 25 basis points to a range of 4.25%-4.5%, aligning with market expectations[2] - The latest dot plot from the December FOMC indicates a reduction in the expected rate cut space for 2025 from 100 basis points to 50 basis points due to increased inflation expectations[2] - The Bank of Japan maintained its benchmark interest rate at 0.25%, marking the third consecutive pause in rate hikes, amid rising inflation and economic recovery[11] Market Outlook - Despite short-term market volatility and a significant drop in U.S. stocks, a long-term positive outlook for U.S. stocks and bonds remains[2] - Real estate sales showed improvement, with year-on-year sales turning positive for the first time in over a year, and a narrowing decline in housing prices[10]

Core Concept: Certainty Growth - The report introduces the concept of "certainty growth," which refers to companies that can maintain solid growth even under the most pessimistic performance expectations, indicating high confidence and certainty in future performance [2] - Certainty growth companies are expected to benefit from policy effects and economic recovery, with their growth attributes allowing them to fully capitalize on development dividends [2] - These companies are also seen as having strong defensive capabilities in the face of overseas disturbances and risk aversion [2] - The report identifies certainty growth companies primarily in industries such as electronics, pharmaceuticals, power equipment, defense, and machinery, which are aligned with strategic emerging industries and the cultivation of new productive forces [2][36] New Productive Forces: Low-Altitude Economy and Autonomous Control - The low-altitude economy is highlighted as a trillion-dollar industry with broad application scenarios and high technological content, expected to exceed 1 trillion RMB by 2026 [98][127] - Autonomous control is emphasized as a critical area, particularly in semiconductors and IT infrastructure, driven by external sanctions and the need for domestic substitution [108][116] - The report notes that the low-altitude economy is transitioning from policy-driven to practical implementation, with local governments actively participating in its development [101][133] AI and Computing Infrastructure - AI is driving significant capital expenditure from major global and domestic companies, with a focus on computing infrastructure to meet the growing demand for AI capabilities [7][91] - The report predicts that global AI PC shipments will exceed 100 million units by 2025, accounting for 40% of total PC shipments, with a CAGR of 44% from 2024 to 2028 [7] - Communication equipment, including optical modules, servers, and switches, is expected to benefit from the AI-driven demand for computing infrastructure [90][153] Wind Power Industry - The global wind power market is projected to grow by 125% from 2024 to 2035, with China's wind power industry benefiting from cost competitiveness and export opportunities [13][16] - China's wind power exports are concentrated in "Belt and Road" regions, with significant potential for expansion into Europe and other high-margin markets [19][67] - Domestic wind power demand is supported by large-scale base construction, with offshore wind power expected to enter a new growth cycle [40][82] Semiconductor and IT Infrastructure - The report highlights the ongoing challenges in the semiconductor industry due to US sanctions, with a focus on AI-related chips and advanced manufacturing equipment [112][140] - Domestic substitution in semiconductors is progressing, with notable advancements in etching, cleaning, and thinning equipment, as well as the rise of domestic chip manufacturers [116][140] - The IT infrastructure sector is entering a phase of "real replacement and real use," with significant market potential driven by the need for secure and autonomous systems [143][145] Low-Altitude Economy - The low-altitude economy is seen as a new growth engine, with local governments establishing industrial funds and investment companies to drive regional economic growth [103][133] - The report introduces the concept of "low-altitude fiscal policy," which could provide a sustainable revenue source for local governments by leveraging low-altitude airspace resources [135] - Low-altitude economic industrial parks and experimental zones are emerging, with key enterprises driving the development of the industry [133][134]

Investment Rating - The report assigns a "Buy" rating for the industry, indicating a projected increase in stock prices relative to market benchmarks over the next 6 months [25]. Core Insights - Micron Technology has shown a strong year-on-year revenue growth of 84.1%, achieving $8.71 billion in FY25Q1, but has provided a weaker revenue guidance for the next quarter, estimating between $7.7 billion and $8.1 billion, which is significantly below market expectations [3][6]. - The HBM (High Bandwidth Memory) market is expected to grow from $16 billion in 2024 to over $100 billion by 2030, highlighting Micron's strategic advantage in this segment [3][6]. - ByteDance's advancements in AI, particularly with its Doubao model, are expected to drive significant demand for computing power, with projections indicating a daily token consumption of over 4 trillion by 2027 [8][10]. Summary by Sections Market Performance - The Nasdaq Composite Index fell by 1.78% and the Philadelphia Semiconductor Index dropped by 3.59% during the week [2]. - Micron's stock experienced a significant decline of over 17% in after-hours trading following its earnings report [3][5]. Company Performance - Micron's revenue from its computing and networking segment reached $4.4 billion, a record high, driven by demand for cloud server DRAM and HBM products [6]. - The mobile business segment saw a revenue decline of 19% due to inventory destocking by mobile customers [6]. Industry Trends - The report emphasizes the importance of the computing hardware supply chain, particularly in light of ByteDance's increased investment in AI, which is projected to reach $80 billion in 2024 and $160 billion in 2025 [10]. - Key companies to watch in the supply chain include those involved in optical modules, copper connections, switches, and server components [10].