1. Report Industry Investment Rating No relevant information provided. 2. Core Viewpoints of the Report - The focus of observation has shifted to the government bond issuance in January 2026. The government bond issuance in January 2026 is in line with expectations. The long - end bonds are at the upper limit of the expected range and are worth participating in. For equities, the style is generally balanced with growth slightly dominant before the significant increase in government bond issuance. The report recommends a portfolio of the Shanghai Composite 50 Index (40% position), the China Securities 1000 Index (40% position), and the 30 - year Treasury Bond ETF (20% position) [2][8][21] - In the deleveraging cycle, the stock - bond ratio favors equities to a limited extent, and the value style is more likely to be dominant. The report recommends an A + H dividend portfolio of 13 stocks and an A - share portfolio of 20 stocks, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation [9][55] 3. Summary by Relevant Catalogs 3.1 National Asset Balance Sheet Analysis - **Liability Side**: In November 2025, the liability growth rate of the real - economy sector was 8.6% (previous value: 8.7%), in line with expectations. It is expected to decline to around 8.3% in December 2025, lower than the 8.8% at the end of 2024, consistent with the goal of stabilizing the macro - leverage ratio. The government debt growth rate is expected to decline to around 12.4% in December 2025 from 13.1% at the end of November 2025. The central bank's stance on stabilizing the macro - leverage ratio remains unchanged, and the quantitative fiscal targets are awaited from the Two Sessions in 2026 [2][16][17] - **Monetary Policy**: Last week, the capital market tightened marginally. The one - year Treasury bond yield rose to 1.34% at the weekend. It is estimated that the lower limit of the one - year Treasury bond yield is about 1.3%, with a central value around 1.4%, and a 10 - basis - point interest rate cut is expected in 2026. The term spread between the ten - year and one - year Treasury bonds narrowed to 51 basis points. The spreads between the ten - year and one - year Treasury bonds and between the thirty - year and ten - year Treasury bonds are expected to be in the range of 20 - 50 basis points, and the future yield ranges of the ten - year and thirty - year Treasury bonds are expected to be around 1.6% - 1.9% and 1.8% - 2.3% respectively [3][17] - **Asset Side**: In November 2025, the physical volume data showed signs of stabilizing at a low level compared to October. The full - year real economic growth target for 2025 was set at around 5%, and the nominal economic growth target was around 4.9%. It remains to be seen whether a nominal economic growth rate of around 5% will become the central target for China's nominal economic growth in the next 1 - 2 years [4][18] 3.2 Stock - Bond Cost - effectiveness and Stock - Bond Style - **Macroeconomic Background**: Since 2011, China has entered a period of declining potential economic growth, which seems to have ended in Q4 2024. Subsequently, China's profit cycle has entered a state of narrow - range oscillation at a low level. The government's policy goals of stabilizing the macro - leverage ratio, having the financial sector benefit the real economy, and ensuring that housing is for living in rather than speculation are still in effect, and the deleveraging on the liability side has limited room for further contraction. If the valuation of the technology sector in the US is re - evaluated, global funds may flow from the US to China, and attention should be paid to whether the RMB exchange rate will enter an appreciation channel. The risk appetite may also oscillate within a certain range [6][19] - **Market Performance**: Last week, the capital market tightened marginally, resulting in a double - kill of stocks and bonds, with the growth style still dominant. The yields of both long - and short - term bonds rose, and the stock - bond cost - effectiveness favored stocks. The ten - year Treasury bond yield rose by 1 basis point to 1.85%, the one - year Treasury bond yield rose by 5 basis points to 1.34%, and the thirty - year Treasury bond yield rose by 4 basis points to 2.27%. The broad - based rotation strategy outperformed the CSI 300 Index by 0.03 pct last week but has underperformed the CSI 300 Index by - 5.34 pct since its establishment in July 2024, with a maximum drawdown of 12.1% (compared to 15.7% for the CSI 300 Index) [7][20] 3.3 Industry Recommendations - **Industry Performance Review**: This week, the A - share market rose with increased trading volume. The Shanghai Composite Index rose 0.13%, while the Shenzhen Component Index fell 0.58% and the ChiNext Index fell 1.25%. Among the Shenwan primary industries, petroleum and petrochemicals, national defense and military industry, media, automobiles, and machinery and equipment had the largest increases, with weekly changes of 3.9%, 3.1%, 2.1%, 1.4%, and 1.3% respectively. Public utilities, food and beverages, power equipment, pharmaceuticals, and non - bank finance had the largest declines, with weekly changes of - 2.7%, - 2.3%, - 2.2%, - 2.1%, and - 1.8% respectively [26][27] - **Industry Crowding and Trading Volume**: As of December 31, the top five industries in terms of crowding were electronics, power equipment, machinery and equipment, national defense and military industry, and computers, with values of 15.5%, 9.4%, 8.9%, 8%, and 6.8% respectively. The bottom five were comprehensive, beauty care, coal, steel, and petroleum and petrochemicals. The top five industries with increased crowding this week were media, machinery and equipment, household appliances, computers, and national defense and military industry. The trading volume of the entire A - share market rebounded this week. Media, petroleum and petrochemicals, computers, beauty care, and national defense and military industry had the highest year - on - year growth rates in trading volume [28][30] - **Industry Valuation and Earnings**: This week, among the Shenwan primary industries, the PE (TTM) of petroleum and petrochemicals, national defense and military industry, media, machinery and equipment, and automobiles had the largest increases, while public utilities, food and beverages, power equipment, pharmaceuticals, and non - bank finance had the largest declines. Industries with high full - year 2024 profit forecasts and relatively low current valuations compared to historical levels include banking, insurance, coal, public utilities, transportation, pharmaceuticals, beauty care, new energy, and consumer electronics [34][35] - **Industry Prosperity**: Externally, there was a marginal decline in demand. The global manufacturing PMI decreased from 50.5 to 50.4 in December. Internally, the second - hand housing price remained flat in the latest week, and the quantity indicators showed mixed trends. The capacity utilization rate of ten industries showed a fluctuating upward trend from May to December 2025 [39] - **Public Fund Market Review**: In the fifth week of December (December 29 - 31), most actively managed public equity funds outperformed the CSI 300 Index. As of December 31, the net asset value of actively managed public equity funds was 3.95 trillion yuan, slightly up from 3.66 trillion yuan in Q4 2024 [52] - **Industry Recommendations**: In the deleveraging cycle, an A + H dividend portfolio of 13 stocks and an A - share portfolio of 20 stocks are recommended, mainly concentrated in industries such as banking, telecommunications, petroleum and petrochemicals, and transportation [55]

- The report mentions an A-share timing model, specifically the "wave model," which turned bullish on November 14, 2025, and has maintained a high position since then. This model is used to determine optimal market entry and exit points based on market trends and signals[1][29] - Another timing model, the "short-term model," is highlighted for its bullish signal on the CSI 1000 index, while the bullish signals for the CSI 300 and CSI 500 indices have ended. This model focuses on short-term market movements and provides directional signals for specific indices[1][29] - The report also discusses a "Hong Kong stock timing model," which indicates a high certainty of a liquidity-driven bullish trend post-New Year. This model is used to assess market conditions and timing for Hong Kong stocks, with a focus on buy-side activity confirmation[4][29] - A "gold timing model" is mentioned, which has been adjusted to a higher position. This model evaluates the market conditions for gold investments, considering factors like the U.S. dollar index and short-term trading opportunities[5][29] - The report includes a "small-cap A-share timing model," which suggests a bullish outlook for small-cap stocks in January 2026. This model is used to analyze and predict trends in small-cap segments of the A-share market[6][29] - The "dividend growth A-share timing model" is also highlighted, which has been adjusted to favor growth stocks in January 2026. This model focuses on identifying opportunities in dividend-paying growth stocks within the A-share market[6][29]

Group 1 - The report indicates that geopolitical tensions, particularly the U.S. actions in Venezuela, are expected to boost oil and gold prices, while the impact on equity assets is manageable. Attention should be paid to the Federal Reserve chair nomination, liquidity, and the CES conference, with U.S. stocks showing signs of recovery. [4][12][13] - Domestic PMI for December showed a significant rebound, driven by new subsidies, major projects, and proactive real estate policies. The report anticipates a positive start for A-shares, supported by policy initiatives, increased capital inflow, and technological catalysts. [4][18][19] - The report emphasizes a focus on technology and cyclical industries, particularly in sectors like commercial aerospace, robotics, AI, and semiconductors, as well as lithium batteries, non-ferrous metals, and chemicals. [4][20] Group 2 - The report lists the top ten stocks for January, including companies from various sectors such as electronics, automotive, and healthcare, with no specific ranking provided. [5][10] - Semiconductor company SMIC (688981.SH) is highlighted as a leader in integrated circuit manufacturing, with a projected revenue growth from 574.77 billion to 742.45 billion from 2024 to 2026, reflecting its critical role in the industry. [21][22] - Tianfu Communication (300394.SZ) is noted for its strong revenue growth driven by high-speed optical module demand, with a forecasted revenue increase from 57.33 billion to 106.87 billion from 2025 to 2027. [23][26] - New energy company Haopeng Technology (001283.SZ) is focusing on AI applications and has begun mass production of AI-related products, with projected net profits increasing from 2.47 billion to 5.50 billion from 2025 to 2027. [44][46] - Zhongmin Resources (002738.SZ) is expanding its lithium salt production capacity and has significant projects underway, with revenue expectations of 56.91 billion to 97.27 billion from 2024 to 2026. [48][52] - China Aluminum (601600.SH) reported a revenue increase of 13.95% in Q1 2025, with a focus on improving cash flow and reducing debt levels, indicating a strong operational performance. [54][56]

Overview - The report discusses the performance of the Chinese economy and financial markets, highlighting a stable liquidity environment and a potential slight improvement in profitability in early 2026 [2][5]. Group 1: Overall Debt Situation - As of November 2025, China's total social debt reached 502.7 trillion, with a year-on-year growth rate of 8.6%, slightly down from 8.7% in the previous month [16][22]. - The debt growth rates for households and government sectors were lower than previous values, while non-financial enterprises saw an increase, with their debt balance growing by 9.3% [22][24]. Group 2: Financial Institutions' Assets and Liabilities - By the end of November 2025, the broad financial institution debt balance was 166.5 trillion, reflecting a year-on-year growth of 5.9%, which is lower than the previous 6.5% [30]. - The banking sector's debt balance was 136.6 trillion, with a year-on-year growth of 7.4%, down from 7.7% [30]. Group 3: Asset Allocation - The report indicates that the domestic stock market is bullish while the bond market remains stable, with liquidity conditions exceeding previous expectations [2][5]. - In November 2025, the year-on-year growth rate of bank bond investments was recorded at 17.3%, slightly lower than the previous 17.5% [42]. Group 4: Economic Outlook - The report anticipates that profitability may see a slight improvement in January 2026, with the debt side remaining stable and risk appetite at a high level [5][14]. - The expected fluctuation range for ten-year bond yields in 2026 is projected to be between 1.6% and 1.9% [5][6].

Investment Rating - The report assigns a "Buy" investment rating for the company, marking its first coverage [2][6]. Core Insights - The company is focusing on mobile game development and IP-driven business models, leveraging AI technology to enhance operational efficiency and reduce development cycles [3][4]. - The introduction of AI-powered products, such as the emotional companion brand "Warm Star Valley Dream Journey," aims to expand into new emotional companionship and cultural consumption markets [4]. - The company is exploring a community-based box product model centered around legendary games, which supports various derivative services and extends the value of game IPs into a comprehensive ecosystem [5]. Financial Projections - Revenue forecasts for 2025, 2026, and 2027 are projected at 48.23 billion, 52.30 billion, and 56.77 billion yuan respectively, with net profits expected to be 19.79 billion, 23.77 billion, and 27.31 billion yuan [6][10]. - Earnings per share (EPS) are anticipated to be 0.93, 1.11, and 1.28 yuan for the years 2025, 2026, and 2027, respectively, with corresponding price-to-earnings (PE) ratios of 23.6, 19.7, and 17.1 [6][10].

Investment Rating - The report maintains a "Buy" investment rating for Wanda Film [1] Core Insights - Wanda Film is focusing on enhancing its content and leveraging AI and IP to deepen its entertainment space strategy [5][6] - The company has a robust content pipeline for 2026, with various films and series scheduled for release, indicating strong content reserves [4] - The integration of technology in cinema experiences is expected to attract users and transform theaters into cultural social platforms [4] Summary by Sections Market Performance - The report highlights the performance of Wanda Film compared to the CSI 300 index, indicating a relative performance trend [2] Business Operations - Wanda Film has completed an investment in the interactive entertainment brand "Pailifang," which will enhance its cinema offerings and social engagement [5] - The company is actively embracing AI and IP innovations, including the launch of a digital rights platform and the development of AI interactive chips for toys [6] Financial Forecast - Revenue projections for 2025, 2026, and 2027 are estimated at 140.3 billion, 153.1 billion, and 166.9 billion yuan respectively, with net profits expected to reach 9.78 billion, 12.67 billion, and 15.20 billion yuan [7][10] - The earnings per share (EPS) are forecasted to be 0.46, 0.60, and 0.72 yuan for the same years, with corresponding price-to-earnings (P/E) ratios of 24.5, 18.9, and 15.7 [7][10]

Investment Rating - The report maintains a "Buy" rating for the companies mentioned, including Weike Technology (301196.SZ), Nengke Technology (603859.SH), and Hehe Information (688615.SH) [9][58]. Core Insights - The AI industry is experiencing significant advancements, particularly with the release of MiniMax M2.1, which has achieved state-of-the-art performance in multilingual code evaluation and enhanced problem-solving capabilities [2][6][30]. - The introduction of TurboDiffusion by Tsinghua University marks a breakthrough in AI video generation, reducing generation time from minutes to seconds while maintaining video quality [3][32][39]. - The financing landscape for AI startups is robust, exemplified by LemonSlice's $10.5 million seed round aimed at developing interactive video avatars, indicating a shift towards multimodal AI interactions [4][44][48]. Summary by Sections 1. Computing Power Dynamics - MiniMax released the M2.1 model, achieving 72.5% in the SWE-bench Multilingual evaluation, surpassing competitors like Gemini 3 Pro and Claude Sonnet 4.5 [23][24]. - The rental prices for computing power remain stable, with specific configurations priced at approximately 28.64 CNY/hour for Tencent Cloud and 31.58 CNY/hour for Alibaba Cloud [22][23]. 2. AI Application Dynamics - Discord's weekly traffic increased by 9.44%, indicating growing engagement in AI applications [31]. - TurboDiffusion has accelerated AI video generation significantly, achieving up to 200 times faster processing without compromising quality [32][36]. 3. Financing Trends - LemonSlice secured $10.5 million in seed funding to enhance its real-time interactive avatar technology, showcasing the potential for AI to evolve from text-based to multimodal interactions [44][46]. 4. Market Review - The AI application index and AI computing power index showed positive performance, with notable gains in specific companies like Yingwei Technology and Shengyi Technology [50][56]. 5. Investment Recommendations - The report highlights the strategic acquisition of Groq by NVIDIA for approximately $20 billion, reinforcing NVIDIA's leadership in the AI chip sector and emphasizing the high demand for efficient computing solutions [6][56].

Group 1: Overseas Macro - The U.S. economy is experiencing a K-shaped divergence, with strong AI investment coexisting with weak consumer spending among low-income households [5][48][49] - The Federal Reserve is expected to lower interest rates 2-3 times due to weak non-farm payrolls and cooling inflation, with a dovish new chair expected after Powell's term ends [4][5] - The U.S. stock market remains attractive under a soft landing scenario, with a focus on small-cap tech themes and value in healthcare and finance [4][5] Group 2: Domestic Macro - The domestic economy shows resilience with positive signals such as the activation of existing funds and a potential recovery in PPI, which is expected to turn positive [6][7] - The "14th Five-Year Plan" is expected to bring about proactive policies, with structural tools and fiscal measures being emphasized [6][7] - Key areas of focus include infrastructure investment acceleration and the recovery of consumer spending supported by government incentives [6][7] Group 3: A-Share Market Trends - The A-share market is expected to experience a rebound driven by improved earnings and valuation, with a focus on the relationship between A-share performance and fundamentals [7][8] - Three main drivers for profit improvement include new production capabilities, recovery from internal competition, and strong overseas demand [7][8] - The market is anticipated to shift from valuation-driven to a dual drive of valuation and earnings, with a focus on PPI trends in Q2 [7][8] Group 4: Sector and Style Analysis - Investment styles are expected to evolve from tech growth to upstream resources and downstream consumption as PPI trends improve [8] - Key sectors to watch include tech growth (AI, storage, military), cyclical recovery (energy, machinery), and consumer recovery (food, home appliances) [8] - The market is likely to see a shift from small-cap to large-cap balance as economic conditions stabilize [8]

Group 1 - The core investment theme for the pharmaceutical industry in 2025 is the overseas expansion of innovative drugs, which is expected to yield excess returns compared to the broader pharmaceutical sector and the CSI 300 index [2][21] - The innovative drug index has shown a significant increase, outperforming the pharmaceutical biological index by 37.48 percentage points, with a year-to-date increase of 65.99% [21] - Major transactions in the ADC and dual antibody fields are anticipated to continue, while there is a need to avoid repetitive competition in areas like small nucleic acids and focus on unmet clinical needs [3][4] Group 2 - The report emphasizes the importance of overseas markets for both innovative drugs and medical devices, suggesting that companies should seek growth opportunities beyond domestic market saturation [4][5] - The Chinese pharmaceutical industry is gradually becoming a global innovation center, with significant advancements in dual antibodies and ADCs, while also making strides in emerging fields like small nucleic acids and inhalation formulations [5][6] - The report highlights that the overseas authorization revenue has become a crucial funding source for innovative drug development, with a total upfront payment of $4.551 billion in the first three quarters of 2025 [29][32] Group 3 - The medical device sector is experiencing a shift towards overseas expansion, with a focus on high-value consumables and IVD products, as Chinese companies enhance their market share [7][55] - The export growth of high-value consumables is significant, with a recorded increase of 10.75% in the first half of 2025, particularly in the North American and European markets [57][66] - The report notes that the certification and market establishment processes for high-value consumables are long-term investments, requiring compliance with stringent regulations in the EU and the US [60][61] Group 4 - The recovery of financing in the domestic innovative drug sector has been robust, with a total of 324 financing events amounting to $5.51 billion in the first three quarters of 2025, marking a 67.6% increase year-on-year [70][72] - The CXO industry is experiencing varied recovery rhythms across different segments, with some areas like CDMO seeing order growth due to overseas financing recovery [74]

Report Overview - The report is a fixed - income review report focusing on the PMI data in December 2025 [1] Industry Investment Rating - No industry investment rating is provided in the report Core Viewpoints - In December, the manufacturing PMI reached 50.1, rising by 0.9 and returning to the expansion range for the first time since April; the non - manufacturing PMI was 50.2, up 0.7 month - on - month. The PMI data shows that under the influence of pre - holiday effects, domestic demand expansion policies, and price transmission due to anti - involution deepening, enterprises' operating pressure, production expectations, demand side, and production expansion willingness have all improved. It is necessary to continuously monitor the sustainability of domestic demand improvement and policy strength [2][4] Section Summaries Manufacturing - **Business Conditions**: The production index increased significantly by 1.7 to 51.7, and the new order index rose by 1.6 to 50.8, with the new export order index up 1.4 to 49. Enterprises' production and operation enthusiasm increased notably, with the raw material inventory rising 0.5 to 47.8, the procurement volume up 0.6 to 51.1, and the production and operation activity expectation up 2.4 to 55.5. From an industry perspective, industries such as农副 food processing, textile and clothing, and computer communication and electronic equipment had both production and demand above 53, while industries like non - metallic mineral products and ferrous metal smelting and rolling processing had both indexes below the critical point [3] - **Profitability**: The purchase price of raw materials decreased by 0.5, and the ex - factory price index increased by 0.7, indicating marginal improvement in corporate profits [3] - **Enterprise Size**: The business conditions of large enterprises rebounded above the boom - bust line. In December, the PMIs of large, medium, and small enterprises changed by 1.5, 0.9, and - 0.5 respectively, reaching 50.8, 49.8, and 48.6 [3] - **Key Industries**: The PMIs of high - tech manufacturing, equipment manufacturing, consumer goods industries, and raw material industries changed by 2.4, 0.6, 1.0, and 0.5 respectively, reaching 52.5, 50.4, 50.4, and 48.9 [3] Non - manufacturing - **Construction Industry**: In December, the business activity index of the construction industry was 52.8, up 3.2 month - on - month, and returned above the boom - bust line, showing strong resilience [3] - **Service Industry**: The business activity index of the service industry was 49.7, up 0.2, indicating some pressure [3] Investment Suggestions - The December PMI data shows comprehensive improvement in enterprises' operating pressure, production expectations, demand side, and production expansion willingness. It is recommended to continuously monitor the sustainability of domestic demand improvement and policy strength [4]