Investment Rating - The report maintains a "Recommended" rating for the securities industry, indicating an expected performance that exceeds the benchmark index by more than 10% [6]. Core Insights - The central economic work conference emphasizes the importance of capital market reform and aims for a stable growth trajectory in 2025, focusing on enhancing domestic demand and integrating technological and industrial innovation [3][4]. - The report highlights that the capital market will be a key area for reform, with a focus on improving both investment and financing aspects, and enhancing the inclusiveness and adaptability of capital market systems [3][4]. - The report suggests that the securities sector is expected to benefit from a relatively loose liquidity environment, ongoing capital market improvements, and the restoration of investor confidence [10]. Summary by Sections Economic Work Conference - The conference recognized the achievements of 2024 and outlined key tasks for 2025, emphasizing the need for proactive macroeconomic policies and the stabilization of the real estate and stock markets [3]. - It also highlighted the importance of addressing risks in key areas and ensuring a solid foundation for the "15th Five-Year Plan" [3]. Capital Market Reform - The conference identified capital market reform as a priority, focusing on comprehensive reforms in investment and financing, and the need to facilitate long-term capital inflows [4]. - The report indicates that the China Securities Regulatory Commission (CSRC) will focus on maintaining market stability and enhancing regulatory effectiveness [4]. Investment Recommendations - The report expresses optimism about the securities sector, particularly for leading brokerage firms, those likely to enhance competitiveness through mergers and acquisitions, and firms excelling in digital transformation [10].

Investment Rating - The report maintains a "Recommended" rating for the non-ferrous metals industry, indicating an expected relative performance increase of over 10% compared to the benchmark index [6]. Core Viewpoints - The Central Economic Work Conference held from December 11 to 12, 2024, emphasized a proactive macroeconomic policy to stimulate domestic demand and support high-quality economic development, which is expected to positively impact the non-ferrous metals sector [2][3]. - The meeting highlighted the need for stronger counter-cyclical adjustments and a shift to a more aggressive fiscal policy, including increased fiscal deficit rates and the issuance of special bonds, which will enhance liquidity and support the demand for non-ferrous metals [3]. - Improved macroeconomic expectations are anticipated to drive up the prices of non-ferrous metals, as the domestic economic recovery is expected to accelerate, benefiting sectors such as real estate, construction, and automotive [3][4]. Summary by Sections Policy Impact - The report notes that the government's commitment to expanding domestic demand and implementing supportive policies will likely lead to a recovery in the non-ferrous metals industry, particularly in copper and aluminum [3][4]. Market Outlook - The report suggests that the combination of domestic policy support and favorable international liquidity conditions will stabilize and potentially increase non-ferrous metal prices, enhancing the overall market sentiment [3][4]. Investment Recommendations - Key investment opportunities highlighted include leading companies in the copper and aluminum sectors such as Zijin Mining (601899), Luoyang Molybdenum (603993), and Western Mining (601168), among others [4].

Industry Investment Rating - The report maintains a **"Recommended"** rating for the defense and military industry [5] Core Views - The integration of **AI + military** is leading a profound transformation in the defense industry, with AI technologies being applied across various military fields such as intelligence analysis, command decision-making, and autonomous systems [2][29] - The global AI in military market is expected to grow from **$9.2 billion in 2023 to $38.8 billion by 2028**, with a CAGR of **33.3%** [31][35] - The defense sector's valuation is slightly below the historical median, with a TTM PE of **57.21x** compared to the median of **59x**, indicating potential upside [3][50] AI + Military Applications - AI is being applied in four key areas in the military: 1. Replacing repetitive tasks, such as missile trajectory calculations [2][29] 2. Real-time decision-making for situational awareness, such as target identification [2][29] 3. Operations in extreme environments, such as extreme cold or heat [2][29] 4. Integration into unmanned systems for tasks like enemy identification and attack [2][29] - Major military powers, including Russia and the US, are accelerating AI deployment in defense, with projects like the US **"Venom"** program and contracts with companies like **Palantir Technologies** [2][30] Market Performance and Valuation - The defense sector's valuation is currently at **57.21x TTM PE**, below the historical median of **59x**, with a valuation percentile of **52.8%**, suggesting room for growth [3][50] - The sector has seen a **34% increase** in the CSI Defense Index since mid-September, but the order inflection point has not yet appeared, indicating potential for continued volatility [4] - As of December 15, 2024, the defense sector's total market cap is **2.72 trillion yuan**, accounting for **2.83%** of the total A-share market cap [42] Investment Recommendations - **Short-term**: The sector may continue to fluctuate, with small and mid-cap stocks remaining active. Investors are advised to **buy on dips** as the weak 2024 earnings expectations are already priced in, and orders are expected to pick up [4][69] - **Medium-term**: The sector's valuation percentile is around **53%**, with significant upside potential. The sector is expected to outperform the broader market in 2025, driven by a reversal in earnings and rising global defense spending [4][69] - **Long-term**: The sector is expected to maintain high growth momentum leading up to the **100th anniversary of the PLA in 2027**, with capital operations such as M&A and asset injections remaining key investment themes [4][69] Key Companies to Watch - **Short-term recovery + medium-term growth**: Chujiang New Materials, Unigroup Guoxin, Xinjigang, AECC Aviation Power, Feilihua, Zhimingda, Aerospace CH UAV [4][69] - **Short-term positive changes + long-term growth**: Huaru Technology, China Satellite, AECC Aero-Engine, Sichuan Jiuzhou, Guorong Technology, Aerospace Electronics, Corelink, Jingpin Special Equipment [4][69] - **Capital operation beneficiaries**: AECC Aero Material, China Shipbuilding Industry, AECC Engine Control, Lucky Film [4][69] Sector Dynamics - As of December 13, 2024, the sector has repurchased **2.116 billion yuan** of shares, accounting for **58%-96%** of the planned repurchase amount, reflecting strong confidence in the industry's future [3][60] - Key developments include **AVIC High-Tech** establishing a new subsidiary, **Guangyunda**'s private placement, and **China Shipbuilding Industry**'s asset restructuring [56][58]

Investment Rating - The report assigns a "Recommended" rating for the pharmaceutical sector, indicating a positive outlook for the industry [4]. Core Insights - The Central Economic Work Conference highlighted safety, innovation, and openness as key development directions for the pharmaceutical industry. It emphasized boosting consumption, enhancing investment efficiency, and expanding domestic demand through improved healthcare subsidies and the promotion of new economic sectors [3]. - The investment focus for 2025 includes: 1. Pharmaceutical innovation as the core growth driver, with First-in-class (FIC) and First-in-class (FF) pipelines expected to grow faster than Me-too pipelines [3]. 2. Increased overseas exports anticipated under a backdrop of US dollar interest rate cuts, with high pricing levels leading to substantial market returns, particularly in innovative drugs, injectables, and high-end medical devices [3]. 3. Policy pressures driving cost reduction and efficiency improvements across the industry, with a focus on optimizing production processes, digital marketing, and smart logistics [3]. 4. Pharmaceutical consumption is expected to recover due to policy stimuli, with macroeconomic improvements likely benefiting consumer healthcare first [3]. Summary by Sections - **Investment Suggestions**: The pharmaceutical sector has undergone a prolonged adjustment period, resulting in low overall valuations and underweight public holdings. The report suggests that the sector may see a recovery in 2025 driven by policy support, presenting a favorable long-term investment opportunity, particularly in the innovative drug supply chain, overseas medical devices, and leading companies in niche markets [4]. - **Company Earnings Forecasts and Valuations**: - Kelun Pharmaceutical (002422.SZ): 2023A EPS 1.5, 2024E EPS 1.87, 2025E EPS 2.13, 2023A PE 21.13, 2024E PE 16.94, Investment Rating: Recommended [5]. - Mindray Medical (300760.SZ): 2023A EPS 9.6, 2024E EPS 10.94, 2025E EPS 12.99, 2023A PE 27.00, 2024E PE 23.69, Investment Rating: Recommended [5]. - Antu Bio (603658.SH): 2023A EPS 2.1, 2024E EPS 2.37, 2025E EPS 2.79, 2023A PE 21.51, 2024E PE 19.09, Investment Rating: Recommended [5]. - Shanghai Pharmaceuticals (601607.SH): 2023A EPS 1, 2024E EPS 1.36, 2025E EPS 1.52, 2023A PE 21.74, 2024E PE 15.95, Investment Rating: Recommended [5].

Investment Rating - The report maintains a "Neutral" rating for the home appliance industry [5]. Core Insights - The home appliance sector has shown resilience, with the sector index rising by 1.07% from December 9 to December 13, outperforming the CSI 300 index, which fell by 1.01%. The cumulative annual return for the home appliance index stands at 27.85%, surpassing the CSI 300 by 11.70 percentage points [2][14]. - The central economic work conference emphasized the need for more proactive fiscal policies to boost consumption and domestic demand, which is expected to positively impact the home appliance market. The "trade-in" policy has significantly stimulated sales, with retail sales growing by 4.0% year-on-year from January to October 2024 [3][40]. - The report highlights that while the air conditioning market remains strong, other segments like refrigerators and washing machines are experiencing a decline in sales and volume. The small appliance market is also showing weakness, with several categories seeing a drop in sales [2][33]. Summary by Sections 1. Market Review - The home appliance sector index has outperformed the broader market, ranking 11th among primary industries. The white goods, black goods, small appliances, kitchen appliances, lighting equipment, and appliance components have shown varying returns, with lighting equipment seeing the most significant rebound [2][19]. 2. Industry Data Tracking and Latest Views - Retail data for the home appliance industry indicates a mixed performance, with air conditioners showing positive growth while refrigerators and washing machines face declines. The "trade-in" policy has had a notable impact, with significant sales increases reported in recent months [3][40]. 3. Investment Recommendations - The report suggests focusing on leading companies in the white goods sector, such as Midea Group and Haier Smart Home, as well as kitchen appliance leaders like Robam Appliances and Vatti Corporation, which are expected to benefit from improved domestic and international sales [4][54].

Investment Rating - The report maintains a "Recommended" rating for the banking sector, highlighting its dividend value [4]. Core Insights - The report indicates that the improvement in long-term loans for residents continues, supported by favorable housing policies, while corporate loans are under pressure due to weak demand and debt repayment factors [4]. - The growth of M1 has stabilized and rebounded, while M2 growth has declined, primarily due to a significant decrease in non-bank deposits [4]. - The report emphasizes that government bonds are expected to continue supporting social financing, with a notable increase in government bond issuance in November [3][4]. Summary by Sections Financial Data Overview - In November, new social financing amounted to 2.34 trillion yuan, a year-on-year decrease of 119.7 billion yuan, with a total social financing stock growth of 7.76% [2]. - The increase in RMB loans was 522.3 billion yuan, a year-on-year decrease of 589.7 billion yuan, with government bonds contributing significantly to social financing growth [3]. Loan Performance - By the end of November, the growth rate of financial institution RMB loans was 7.7%, with new loans in November totaling 580 billion yuan, a year-on-year decrease of 510 billion yuan [3]. - Resident long-term loans showed a continued increase, with new long-term loans reaching 300 billion yuan, a year-on-year increase of 66.9 billion yuan [3]. M1 and M2 Analysis - M1 and M2 growth rates were -3.7% and +7.1%, respectively, with M1's decline showing signs of improvement due to positive real estate sales [4]. - The M1-M2 gap narrowed to -10.8%, indicating a potential recovery in cash flow [4]. Investment Recommendations - The report suggests that the positive accumulation of fundamental factors will benefit bank credit issuance and asset quality, maintaining a favorable outlook for the banking sector [4]. - Specific stock recommendations include Industrial and Commercial Bank of China, China Construction Bank, Postal Savings Bank of China, Jiangsu Bank, and Changshu Bank [4].

Investment Rating - The report maintains a "Buy" rating for the automotive industry [5] Core Insights - The automotive industry is experiencing a significant boost from the vehicle trade-in policy, with over 5.2 million vehicles sold through this program, contributing to more than 25% of domestic demand [2][12] - The report anticipates a decrease in wholesale vehicle sales in December compared to November due to the pre-purchase demand ahead of policy deadlines, estimating December sales between 2.45 million and 2.55 million units [3][13] - The penetration rate of new energy vehicles (NEVs) in the domestic market has seen a slight decline, but the long-term trend remains positive, with expectations for continued growth in NEV supply by 2025 [3][12] Weekly Market Review - The automotive sector's performance was ranked 12th among 30 industries, with a weekly increase of 0.54% [4][14] - The sub-sectors showed varied performance, with motorcycles and others leading at +2.77%, while passenger vehicles remained flat [4][14] - Notable stock performances included significant gains for companies like Construction Industry (+53.90%) and Jinlong Automobile (+32.62%) [14][19] Investment Recommendations - Recommended stocks include BYD and Li Auto for complete vehicles, with Geely and Longxin General as beneficiaries [4][19] - For components and smart technology, recommended stocks are Huayu Automotive, Bertley, Desay SV, and others [4][19]

Investment Rating - The textile and apparel industry maintains a "Neutral" rating [5] Core Insights - The Central Economic Work Conference has emphasized expanding domestic demand and boosting consumption as key policy focuses for 2025, aiming to enhance overall consumption capacity and efficiency [2] - The apparel sector has shown weaker consumption compared to overall retail but is expected to exhibit stronger elasticity in response to policy support, indicating a potential turning point in 2025 [2] - Demand in the home textile sector has improved due to subsidy policies, with significant sales growth reported by participating companies [3] Summary by Sections Policy Impact - The government is implementing measures to boost consumption, including increasing pensions and promoting diverse consumption scenarios [2] - The apparel industry has historically lagged behind overall retail growth but is expected to benefit from upcoming policy initiatives [2] Demand Recovery - Home textile subsidies have led to notable sales increases, with specific companies reporting year-on-year growth of 39% to 71% [3] - The demand for sportswear, mid-to-high-end menswear, and home textiles is anticipated to improve due to supportive policies [3] Investment Recommendations - Companies to watch include: - Apparel: Baoxiniao, Bi Yin Le Fen, Bosideng, Hailan Home, Semir Apparel [4] - Sportswear: Anta Sports, Xtep International, Li Ning, 361 Degrees [4] - Home Textiles: Luolai Life, Mercury Home Textiles, Fuanna [4] - Quality textile leaders with international capacity: Huali Group, Weixing Shares, Kairun Shares, Shenzhou International, Jian Sheng Group, Xin'ao Shares [4]

Industry Investment Rating - Maintains a "Recommended" rating for the transportation industry [6] Core Views - The 2024 Central Economic Work Conference outlined nine key tasks for economic and policy directions in 2025, focusing on deepening state-owned enterprise (SOE) reforms, reducing logistics costs, and expanding high-level opening-up [2] - Railway reform is a key area of SOE reform, with a focus on separating natural monopoly infrastructure from competitive transportation services, promoting the "network-operation separation" model [2] - Logistics cost reduction and efficiency improvement are emphasized, with China's logistics costs accounting for a higher percentage of GDP compared to global averages, indicating significant room for improvement [3] - High-level opening-up policies, particularly in cross-border logistics and infrastructure, are expected to drive growth opportunities for the logistics sector [4] - Domestic demand stimulation, especially in the aviation sector, is expected to benefit from policy support, leading to increased demand and profitability for airlines [5] Investment Recommendations - Recommended stocks include China Southern Airlines, China Eastern Airlines, Spring Airlines, and Sinotrans [5] - Other stocks to watch include Guangzhou-Shenzhen Railway, Tielong Logistics, and China Railway Special Cargo Logistics [5] Industry Analysis - Railway reform is entering a deep-water zone, with a focus on separating monopoly and competitive functions, introducing market mechanisms, and allowing private capital participation [2] - The logistics industry has significant potential for cost reduction and efficiency improvement, with current logistics costs in China being twice as high as those in developed countries like the US [3] - Cross-border logistics and infrastructure projects under the Belt and Road Initiative are expected to benefit from continued policy support, creating a second growth curve for the logistics sector [4] - The aviation sector is poised for a cyclical upturn, driven by increased domestic demand, international flight resumptions, and favorable fuel and exchange rate conditions [5]

Investment Rating - The report maintains a "Recommended" rating for the banking sector, highlighting its configuration value [5][58]. Core Insights - The banking sector outperformed the market slightly, with a decline of 0.54% compared to the 1.01% drop in the CSI 300 index. Notably, state-owned banks saw a rise of 0.42%, while other categories experienced declines [3][30]. - Positive macroeconomic policies are accumulating favorable factors for the banking sector, with a focus on expanding domestic demand and supporting bank credit through more proactive fiscal policies [4][19]. - The implementation of the personal pension system is expected to benefit bank deposits and middle-income revenue, as it allows for low-cost deposit absorption and expansion of wealth management services [5][29]. Summary by Sections Latest Research Insights - The Central Political Bureau meeting on December 9 emphasized the need for more proactive fiscal policies and moderately loose monetary policies to support bank credit. The projected increase in special bonds could leverage an additional 925 billion yuan in credit [4][19]. - The monetary policy is shifting towards easing, with expected reductions in reserve requirements and interest rates, which will impact bank interest margins [18][23]. Weekly Market Performance - The banking sector's PB ratio stands at 0.66, with a dividend yield of 5.05%, indicating a significant discount compared to the overall A-share market [44][58]. - Individual bank performances varied, with notable increases in shares of banks like Ruifeng Bank and Bank of China, while others like CITIC Bank and Xiamen Bank saw declines [30][44]. Investment Recommendations - The report suggests that the banking sector's configuration value remains attractive, with specific recommendations for stocks such as Industrial and Commercial Bank of China, China Construction Bank, and Postal Savings Bank [5][58].