Investment Rating - The report maintains an "Outperform" rating for the chemical industry as of July 15, 2025 [1] Core Insights - The potassium fertilizer prices are experiencing a continuous recovery, benefiting companies with abundant resources [2] - Domestic production of potassium chloride has decreased year-on-year, while inventory levels remain low, indicating a tightening supply [3] - The potassium fertilizer market is characterized by an oligopoly, with geopolitical conflicts introducing uncertainties that may affect supply and pricing [4] Summary by Sections Potassium Fertilizer Price Trends - As of July 11, 2025, domestic prices for potassium chloride have risen significantly, with prices at 3339 CNY/ton and 3000 CNY/ton, marking increases of 823 CNY/ton and 450 CNY/ton since the beginning of the year [2] - In Q2 2025, the average price for domestic potassium chloride was 2993.95 CNY/ton, reflecting a quarter-on-quarter increase of 105.50 CNY/ton and a year-on-year increase of 597.50 CNY/ton [2] Domestic Production and Inventory - In the first half of 2025, China's potassium chloride production totaled 2.53 million tons, a decrease of 17.1% year-on-year, with June's production at 416,300 tons, down 27.9% year-on-year [3] - Domestic market inventory stands at 1.768 million tons, down 820,000 tons since the beginning of the year, indicating a tight supply situation [3] Market Structure and Geopolitical Risks - The global potassium fertilizer market is dominated by a few countries, primarily Canada, Russia, and Belarus, creating an oligopolistic structure [4] - Recent geopolitical tensions, such as the U.S. imposing tariffs on potassium fertilizer imports from Canada and Mexico, and conflicts involving Israel, pose risks to supply and pricing stability [4] Investment Opportunities - The report highlights that companies with rich potassium resources are likely to benefit from the ongoing market recovery, with specific companies mentioned as potential investment targets [9]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Market has likely fully priced in policy expectations. In May 2025, both reserve requirement ratio cuts and interest rate cuts were fully implemented, and with a 90 - day exemption for Sino - US tariff issues, Q2 economic data may be good. There is little possibility of the market trading monetary policy easing in the short term. Fiscal policy is adopting a "debt resolution + development" dual - wheel drive strategy, and the synergy between fiscal and monetary policies will likely continue. For real estate policies, although comprehensive stimulus measures have been introduced, the key lies in the substantial recovery of consumer demand, and the policy transmission efficiency may be in the stage from "quantitative change" to "qualitative change" [5][38]. - In 2025, an abundant liquidity environment will be maintained. Since 2025, the monetary policy's statement on liquidity has changed from "maintaining reasonable and abundant liquidity" to "maintaining abundant liquidity". After correcting the bond market's over - reaction in Q1, the money market was relatively loose in Q2. The central bank ensured market liquidity through various measures during special periods. With the downward trend of bank - based fund lending last week, the central bank may use outright reverse repurchases to ease market liquidity next week [5][39]. - The supply shock in Q3 may be relatively controllable. The net financing rhythm of national debt in 2025 is faster than the same period. As of July 11, its net financing accounted for 56.66% of the whole year. Local debt supply may impact the market, and the new special bond issuance scale in Q3 may be large. However, due to the market's increased adaptability to supply shocks and the alleviation of the pumping effect by accelerated fiscal expenditures, fiscal supply may not be the core factor causing the bond market to weaken [5][40]. - In 2025, external interference factors have increased, but the impact of tariffs on pricing has marginally weakened. Although the external environment is more complex, the RMB exchange rate has stabilized after the Fed's interest rate cuts. The impact of tariffs on the domestic market's pricing may become dull, and the constraints of overseas factors on the bond market will be better than previous years [7][43]. - The traditional factors causing the "seasonal weakness" of the bond market in Q3 may have limited impact on the Q3 2025 bond market. Currently, the market trading sentiment is active. With institutions like state - owned banks and rural commercial banks supporting the market and the possible decline of insurance companies'预定利率 in Q3, the bond market may show a trend of "easy to fall, hard to rise". But the downward space of long - term interest rates may need more factors to catalyze. The investment portfolio of "short - term credit + long - term local bonds" can be considered for allocation, and the 10 - year and 30 - year treasury bond active bonds can be selected for trading [7]. 3. Summary According to Relevant Catalogs 3.1 "Seasonal Weakness" of the Bond Market in Q3 - From 2021 - 2024, the bond market in Q3 showed intensified fluctuations. From 2021 - 2023, it presented a typical "V - shaped" trend, while in 2024, it had multiple staged rebounds in a downward trend [2][11]. - In 2021, the bond market in Q3 had a "first down, then up" pattern, affected by "RRR cut driving interest rates down → economic data and policy expectation correction → supply pressure disturbance" [2][12]. - In 2022, the core logic of the bond market's weakness in Q3 was "economic expectation improvement + marginal tightening of the money market + Fed's interest rate hikes" [2][19]. - In 2023, the bond market in Q3 was mainly affected by "exchange rate pressure + neutral liquidity + stabilization of the fundamentals", leading to increased volatility [2][29]. - In 2024, the core driving factor for the multiple staged rebounds of the bond market in Q3 was "policy expectation changes" [2][33]. 3.2 Traditional Factors May Have Limited Impact on Q3 2025 Bond Market - Market has fully priced in policy expectations. Monetary policy easing is unlikely to be traded in the short term. Fiscal and real estate policies are in a stage of effectiveness accumulation [5][38]. - An abundant liquidity environment will be maintained. The central bank will ensure market liquidity through various measures, and may use outright reverse repurchases next week [5][39]. - Supply shock in Q3 may be controllable. National debt net financing rhythm is faster, and local debt supply may impact the market, but overall, fiscal supply may not be the core factor for the bond market's weakness [5][40]. - External interference factors have increased, but the impact of tariffs on pricing has weakened. The RMB exchange rate has stabilized, and the constraints of overseas factors on the bond market will be better [7][43]. 3.3 Important Matters - In June 2025, CPI turned from a decline to an increase year - on - year, mainly due to the recovery of industrial consumer goods prices. PPI continued to decline year - on - year [44]. - The Ministry of Finance extended the assessment cycle of state - owned commercial insurance companies' performance indicators, adjusting the "net asset yield" assessment method [45]. 3.4 Money Market - Last week, the central bank's net open - market reverse repurchase operation was - 226.5 billion yuan, and 100 billion yuan of MLF will mature next week. The money market was relatively loose, with DR001 below the policy rate [46][47]. - In the inter - bank certificate of deposit (NCD) market, city commercial banks had the largest issuance scale last week. Except for rural commercial banks, other commercial banks were net lenders. The term spread between 1Y and 3M NCD issuance rates widened, and the 1Y state - owned bank NCD issuance rate reached around 1.6% [46][59]. 3.5 Bond Market - At the beginning of July, the issuance and net financing of national debt were stable, while local debt net financing was slow. New 20 - year and 30 - year special treasury bonds will be issued next week [67]. - Last week, the bond market was in an adjustment stage under the stock - bond seesaw effect. The yield spreads of 1 - year, 3 - year, 5 - year, 7 - year, 10 - year, and 30 - year treasury bonds and national development bank bonds changed, and the implied tax rate of 10 - year national development bank bonds increased slightly [78]. - The liquidity premium of the 10 - year treasury bond active and sub - active bonds returned to 2 - 3BP. The term spread of 10 - 1 year treasury bonds narrowed slightly, and the long - term and ultra - long - term treasury - local bond spreads narrowed [81][85][88]. 3.6 Institutional Behavior Tracking - Last week, the scale of leveraged trading decreased but remained at around 8 trillion yuan. In the cash bond market, state - owned banks and rural commercial banks increased their positions, while securities firms and funds reduced their positions [92][101]. - In May 2025, the overall leverage ratio of institutions in the inter - bank market was basically flat month - on - month and slightly increased year - on - year [92].

Investment Rating - The report maintains a "Buy" rating for Zhujiang Beer (002461) with a target price of —— yuan over the next six months [1]. Core Views - The company reported a strong profit growth in Q2, with the flagship product 97 Pure Draft showing robust momentum. The overall beer industry demand has been recovering well since Q2, with a 2.9% year-on-year increase in domestic beer production from April to May 2025. Zhujiang Beer, as a leading player in Guangdong, is expected to outperform the industry [7]. - The company has solidified its leading position in the Guangdong market, with a market share that has been steadily increasing despite competition. The non-draft channel accounts for over 70% of sales, significantly above the industry average, indicating a successful adaptation to the trend of high-end upgrades in the beer market [7]. - There is substantial room for product structure upgrades, with a clear "3+N" brand strategy aimed at enhancing high-end offerings. The company is expected to capture market share in higher price segments while maintaining its position in the 8 yuan and above price range [7]. Financial Summary - For the fiscal years 2024A to 2027E, the projected revenue growth rates are 6.56%, 8.88%, 9.34%, and 9.09%, respectively. The net profit attributable to the parent company is expected to grow from 8.10 billion yuan in 2024 to 14.22 billion yuan in 2027, with growth rates of 29.95%, 25.42%, 20.15%, and 16.48% [2][8]. - The earnings per share (EPS) are projected to increase from 0.37 yuan in 2024 to 0.64 yuan in 2027, with corresponding price-to-earnings (PE) ratios decreasing from 31 to 18 over the same period [2][8]. - The return on equity (ROE) is expected to rise from 7.85% in 2024 to 11.24% in 2027, indicating improving profitability and efficiency [2][8].

Domestic Developments - As of June 2025, China's foreign exchange reserves reached $3,317.4 billion, an increase of $32.2 billion (0.98%) from May[8] - The People's Bank of China has increased its gold reserves for eight consecutive months, with reserves reaching 73.9 million ounces (approximately 2,298.55 tons) by the end of June, up 70,000 ounces from May[9] - The State Council introduced 19 measures to stabilize employment, aiming to support businesses and market expectations amid a declining urban unemployment rate of 5% in May[15][16] International Developments - On July 7, 2025, President Trump signed a tariff order imposing tariffs of 25% to 40% on products from 14 countries, effective August 1, which may impact international trade confidence[18] - Eurozone retail sales grew by 1.8% year-on-year in May, surpassing expectations but slowing from a revised 2.7% in April, indicating a weakening consumer spending momentum[20] - The U.S. Treasury plans to increase its cash reserves from approximately $313 billion to $500 billion by the end of July, with further increases expected in September, raising concerns about debt sustainability[22] Market Trends - Brent crude oil prices increased by 2.70% week-on-week, while iron ore prices rose by 2.22%, and copper prices fell by 1.49%[27] - The price of rebar rose by 0.56% week-on-week, while cement prices decreased by 1.23%[33] - The unemployment rate for the 16-24 age group remains high at 14.9%, indicating ongoing challenges in the job market despite overall improvements[16]

Core Viewpoints - In the first half of 2025, the profitability of thermal power companies improved due to a decrease in coal prices from 765 RMB/ton to 621 RMB/ton, leading to an 11% recovery in stock prices since late January [4] - The thermal power sector is expected to see positive factors in electricity volume, price, and costs in 2025, indicating growth potential [4] - Hydropower and nuclear power sectors remain stable with strong cash flows and high dividend yields, while the deepening of domestic electricity reforms is likely to create diverse investment opportunities [4] Thermal Power - The comprehensive electricity price for thermal power is expected to remain stable in 2025, with coal prices trending downward, leading to further profit recovery in the industry [7] - It is recommended to focus on thermal power companies with smaller declines in electricity prices and lower proportions of long-term coal contracts [7] - The implementation of capacity pricing and auxiliary service income is expected to stabilize thermal power profitability [61] Hydropower - High dividend yields attract incremental capital, with the dividend yield of Changjiang Electric Power remaining between 3.2% and 4.4% from 2017 to 2024 [80] - The hydropower sector is expected to see growth due to the commissioning of new projects, with over 25 million kW of hydropower capacity under construction [73] Nuclear Power - The approval of 11 new nuclear units in 2024 marks a significant acceleration in nuclear project approvals, indicating a stable growth trajectory for the sector [82] - By the end of 2024, China Nuclear Power and China General Nuclear Power have substantial capacities under construction, ensuring future growth [86] Renewable Energy - The installation of wind and solar power is expected to maintain high growth rates, with cumulative installed capacity reaching 1.41 billion kW by the end of 2024 [92] - The implementation of the 136 Document is expected to promote the full market entry of renewable energy, leading to a surge in installed capacity [99] Waste Incineration - The waste incineration sector is entering a mature phase, with operating cash flow and free cash flow both increasing by 18% year-on-year in 2024 [119] - Companies in this sector are expanding overseas, establishing a competitive advantage in countries along the Belt and Road Initiative [122]

Group 1: Global Economic Outlook - The report highlights the exposure of fiscal risks, indicating potential global liquidity shocks [3][7][18] - A shift from globalization to confrontation has disrupted the stable state of the global economy, with the long-term downward trend of 10-year US Treasury yields being broken [7][18] - The divergence between US Treasury yields and the dollar reflects an extreme pricing of fiscal risks [9][14] Group 2: Domestic Economic Conditions - Domestic deflation expectations are easing, activating a persistent accumulation of excess liquidity [3][57] - The report notes that actual interest rates are declining from high levels, which alleviates the financing costs for various economic sectors [78] - The report indicates that the actual dollar index is building a mid-term top, which may relieve external pressures on the economic cycle [82] Group 3: A-Share Market Dynamics - The A-share market is experiencing rapid rotation within a narrow range, driven by excess liquidity [3][57] - Small-cap stocks are expected to outperform due to the accumulation of excess liquidity since 2024 [118][121] - The report identifies key sectors for investment, including AI, robotics, and military industries, which have shown resilience amid trade tensions [117] Group 4: Industry Allocation Insights - The report emphasizes the correlation between excess liquidity and sectoral excess returns, particularly in sectors like electrical machinery and chemical materials [121][124] - The report suggests that the market is not driven by improved economic expectations but rather by key technological breakthroughs that shift deflation expectations [91] - The report indicates that the speed of industry rotation has increased, suggesting a dynamic market environment [104]

Core Insights - The household appliance industry experienced a decline of 1.2% in the Shenwan household appliance index from the beginning of 2025 until June 29, ranking 26th among Shenwan industries [4][13] - The overall performance of the household appliance industry in 2024 and Q1 2025 was good, but the index showed weakness compared to the strong performance in 2024 [4][6] - Factors contributing to the weak index performance include reduced demand elasticity from national subsidies, uncertainty from U.S. tariff policies, low real market demand, and a shift in market style towards new consumption trends [4][6][12] Outlook for H2 2025 - The implementation of more proactive fiscal policies and moderately loose monetary policies is expected to stimulate household appliance consumption, which remains a crucial part of domestic demand [6] - China, as the largest global manufacturer and exporter of household appliances, holds significant production capacities, with 81.3% for air conditioners, 57.6% for refrigerators, and 52% for washing machines in 2023 [6] - Emerging markets in Asia, Africa, and Latin America may present important opportunities for growth, while global leading companies are expected to enhance industry concentration through their advantages in design, manufacturing, and supply chains [6][8] Investment Recommendations - Focus on sectors that still have demand under normalized national subsidy policies, such as air conditioning and kitchen small appliances [8] - Pay attention to export-oriented companies targeting emerging markets or those with overseas production capabilities to mitigate U.S. exposure [8] - Consider companies that are diversifying into new industries such as electric vehicles and robotics [8] - Look for significantly undervalued high-dividend stocks, as a shift in funding styles or rising risk aversion may create favorable market conditions [8] H1 2025 Review - The household appliance index's performance was weak, with the appliance parts sector leading with a 16.3% increase, while the white goods sector saw a decline of 4.7% [15][19] - The average price-to-earnings (PE) ratio for the household appliance industry is currently at 14.3X, ranking 28th among 31 Shenwan primary industries, indicating a relatively low valuation level [19][25] - The dividend yield for the household appliance industry stands at 3.7%, ranking 4th among 31 Shenwan primary industries, supported by strong cash flow [25][26] Sales and Production Trends - In the first five months of 2025, air conditioner domestic sales reached 54.236 million units, a year-on-year increase of 7.8%, while external sales were 49.25 million units, up 11.4% [31] - Refrigerator domestic sales for the first four months of 2025 were 14.414 million units, down 1.4% year-on-year, while external sales were 17.362 million units, up 9.2% [36] - Washing machine domestic sales for the first four months of 2025 were 14.925 million units, up 8.4% year-on-year, with external sales at 15.198 million units, also up 8.5% [41] - Television domestic sales for the first four months of 2025 were 11.62 million units, a slight increase of 0.2%, while external sales reached 32.35 million units, up 2% [46] Cost and Pricing Pressures - From January to July 2025, LME copper and aluminum prices increased by 4.4% and 7.1%, respectively, indicating ongoing cost pressures for appliance manufacturers [48] - The average exchange rate of the U.S. dollar to the Chinese yuan remained stable at 7.17, presenting a neutral impact on companies engaged in overseas business [54] - High shipping costs continue to compress profit margins for exports, with ongoing geopolitical tensions and tariff policies contributing to this pressure [58]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The research value of the scheduled interest rate in July may be around 2%. The decline in the scheduled interest rate may boost insurance premium income, and the adjustment is likely to occur in the third quarter with an expected reduction of 50BP [4][8][9]. - The growth of premium income may increase insurance allocation demand and alleviate the supply pressure of government bonds. The scheduled interest rate cut will also help insurance change its preference for ultra - long - term bond interest rate points, supporting the downward movement of long - end interest rates [4][24][33]. - The bond market in July is expected to continue to be volatile with a bullish bias. The capital side remains optimistic, and institutional behavior may contribute to the strengthening of the bond market. However, the downward space for long - end interest rates may require more catalysts. The recommended investment strategy is a combination of "short - term credit + long - term local bonds" [5][114]. 3. Summary by Relevant Catalogs 3.1 Insurance Configuration Point Breakthrough - **July Scheduled Interest Rate Research Value**: The research value is related to three major interest rates (5 - year LPR, 5 - year fixed - deposit rate, and 10 - year Treasury bond yield) and the insurance asset - liability management level. Assuming the adjustment coefficient in July is the average of the first and second quarters, the research value is estimated to be about 2.00% [8]. - **Impact of Scheduled Interest Rate Cut on the Bond Market**: It may increase insurance premium income, boost insurance allocation demand, and alleviate government bond supply pressure. It also helps insurance change its preference for ultra - long - term bond interest rate points, supporting long - end interest rate decline [4][24][33]. 3.2 Important Matters - In June, the manufacturing PMI rose by 0.2 percentage points to 49.7%. The production and new order indexes were in the expansion range, and the price indexes improved [35]. 3.3 Money Market - **Open Market Operations and Capital Interest Rate Trends**: From June 30 to July 4, the central bank's net capital injection was - 137.53 billion yuan. After the quarter - end, capital interest rates dropped significantly, and overnight capital interest rates fell below the policy rate [38][39][40]. - **Certificate of Deposit Interest Rate Trends and Repurchase Transaction Volume**: Last week, the net financing of inter - bank certificates of deposit was 1.87 billion yuan. The issuance interest rate decreased, with state - owned and joint - stock banks seeing a more significant decline. The 1 - year average issuance interest rate was about 1.60% [46][50]. 3.4 Bond Market - **Primary Market**: In the first week of July, the net financing of local government bonds was slow. As of July 4, the cumulative net financing of various national debts in 2025 was about 3.58 trillion yuan, and that of local bonds was about 4.41 trillion yuan. The issuance of special refinancing bonds reached 1.73 trillion yuan [57][69]. - **Secondary Market**: The yield curve steepened slightly. The yields of 1 - year, 3 - year, 5 - year, 7 - year, 10 - year, and 30 - year Treasury bonds changed by - 0.90BP, - 1.40BP, - 1.36BP, 0.02BP, - 0.29BP, and 0.20BP respectively. The spreads between 10 - year Treasury bonds and their sub - active bonds continued to narrow, and the spreads between long - term and ultra - long - term local bonds and Treasury bonds narrowed [71][78][86]. 3.5 Institutional Behavior Tracking - After the quarter - end, the leveraged trading volume quickly recovered to the 8 - trillion - yuan level. State - owned banks continued to increase their holdings of Treasury bonds within 5 years, rural commercial banks mainly bought policy - financial bonds and local bonds, securities firms reduced their holdings of interest - rate bonds, and funds were the main buyers of long - term Treasury bonds. The average cost of major trading desks for adding positions was between 1.64% - 1.65% [87][99][102]. 3.6 High - Frequency Data Tracking - Last week, the settlement prices of rebar, wire rod, and cathode copper futures increased, while the cement price index decreased. The CCFI and BDI indexes declined. Food prices showed mixed trends, and crude oil prices rose. The central parity rate of the US dollar against the RMB was 7.15 [111]. 3.7 Market Outlook - The bond market in July is expected to be volatile with a bullish bias. The capital side remains optimistic, and institutional behavior may strengthen the bond market. However, the downward space for long - end interest rates needs more catalysts. The recommended investment strategy is a combination of "short - term credit + long - term local bonds" [5][114].

Domestic Highlights - China's Caixin Manufacturing PMI for June recorded at 50.4, up 2.1 percentage points from the previous month, indicating a return to expansion[10] - The Ministry of Finance announced a tax credit policy for foreign investors reinvesting profits in China, effective from January 1, 2025, to December 31, 2028, allowing a 10% tax credit on eligible reinvestments[9] - The National Development and Reform Commission allocated over 300 billion yuan to support the third batch of "two重" construction projects, which are expected to stabilize domestic demand growth in the second half of 2025[14][15] International Highlights - The U.S. Senate passed the "Big and Beautiful" tax and spending bill, projected to increase the national debt by approximately $3.3 trillion over the next decade[19] - The U.S. non-farm payrolls increased by 147,000 in June, with the unemployment rate dropping to 4.1%, leading to reduced expectations for interest rate cuts in July[23][25] - The Hong Kong Monetary Authority purchased 20.02 billion HKD to defend the local currency as it hit the weak end of its peg against the U.S. dollar[21][22] Market Trends - Brent crude oil prices decreased by 2.13% week-on-week, while iron ore and copper prices increased by 1.73% and 1.95%, respectively[26] - Rebar prices rose by 0.72%, while cement prices fell by 1.37% week-on-week, indicating mixed trends in the construction materials market[32]

Investment Rating - The report indicates a positive investment outlook for the C-end application industry, particularly highlighting subscription platforms as leading performers and advertising platforms showing continuous improvement [1]. Core Insights - The report emphasizes the importance of AI in enhancing user engagement and optimizing recommendation algorithms, which are crucial for building competitive barriers in C-end applications. Companies like Duolingo and Spotify are leveraging AI to improve user experience and increase subscription conversion rates, while advertising platforms like Snapchat and Pinterest are enhancing ad automation and recommendation systems to drive revenue growth [2][3]. Summary by Sections C-end Applications - Subscription platforms are outperforming advertising platforms, with significant improvements in user engagement and revenue generation [5][8]. - Duolingo and Spotify have successfully integrated AI features, leading to increased product value and resilience in growth. Duolingo's new subscription tier, Duolingo Max, has seen a rise in eligible users from under 10% to over 60%, while Spotify has implemented price increases supported by AI functionalities [3][17]. Subscription Platforms - AI capabilities have significantly enhanced the value of subscription products, with Duolingo's subscription revenue share increasing from 79% to 83% and Spotify reaching 90% [17][30]. - The introduction of AI-driven features has led to substantial revenue contributions, with Duolingo Max and Spotify's price adjustments driving user growth and average revenue per user (ARPU) increases [30]. Advertising Platforms - AI has improved advertising conversion efficiency, with Snapchat's ad revenue growth shifting from negative to positive, and Pinterest's revenue growth accelerating from single digits to over 20% [30]. - Snapchat's subscription service, Snapchat+, has contributed to revenue growth, with its user base expanding significantly [27][30]. Performance Metrics - The report highlights the stock performance of C-end application companies, with Duolingo and Spotify showing substantial gains compared to Snapchat and Pinterest, particularly in the context of AI advancements [7]. - Active user growth and revenue metrics indicate a recovery and stabilization trend across major platforms, with ARPU showing positive growth from Q1 2024 onwards [10][30].