Investment Rating - The report maintains a bullish outlook on the pharmaceutical sector for Q4 2024, indicating a positive investment sentiment towards the industry [1]. Core Viewpoints - The pharmaceutical and biotechnology index rose by 28.14% in the week before National Day, outperforming the CSI 300 index by 2.62 percentage points. However, the sector has declined by 7.18% year-to-date, lagging behind the CSI 300 index by 22.19 percentage points [2][3]. - The current valuation level for the pharmaceutical sector is at 28 times PE-TTM, with a premium of 85.4% relative to all A-shares and 122.82% relative to the CSI 300 index. The best-performing sub-sectors this week include hospitals, vaccines, and medical R&D outsourcing, with increases of 46.9%, 38.5%, and 33.5% respectively [2][3]. - The significant rise in the pharmaceutical sector is attributed to recent macroeconomic policy support, including a reduction in the reserve requirement ratio and interest rates, as well as structural monetary policy tools aimed at enhancing capital market support [2][3]. Summary by Sections Market Review - The pharmaceutical sector has shown a mixed performance in 2024, with a notable decline in the first half of the year, but recent policy changes have bolstered investor confidence [2][3]. - The report highlights the importance of macroeconomic policies and their impact on the sector's performance, particularly in Q4 [2][3]. Innovation Drugs and Formulations - The report emphasizes the significance of high-quality innovation and commercialization achievements, with a focus on the supportive policies for innovative drug development [4][6]. - The revenue for the drug sector in the first half of 2024 reached 200.3 billion yuan, reflecting a 2.1% increase, while net profit grew by 11.1% to 25.51 billion yuan [4][6]. - The report notes that the global sales of domestic innovative drugs are increasing, with significant sales growth in overseas markets [4][8]. Medical Devices - The medical device sector reported a revenue of 1,013 billion yuan in the first half of 2024, marking a 3.9% increase, with a net profit of 223 billion yuan [13][15]. - The report identifies three main directions for growth in the medical device sector: international expansion, recovery in essential medical needs post-anti-corruption measures, and innovation in medical devices [14][15]. - The report anticipates a recovery in demand for medical devices due to the implementation of new policies and the normalization of hospital procurement processes [15][19].

Investment Rating - The report maintains a positive outlook on the pig farming industry, suggesting that the current market conditions are not overly pessimistic [1]. Core Insights - The breeding stock of sows has decreased, alleviating the pressure of oversupply in the market. As of the end of Q2 2024, the breeding sow inventory was 40.38 million heads, a year-on-year decrease of 2.59 million heads, or 6.0% [2]. - Pig prices have stabilized at high levels, with prices maintaining above 18 yuan per kilogram since June and peaking above 20 yuan in August [2]. - The price of piglets has rapidly declined, dropping below the cost price of 350 yuan, which may suppress further capacity growth [2]. - The total pig inventory at the end of Q2 was 415.33 million heads, a year-on-year decrease of 1.98 million heads, or 4.6% [6]. - The average profit per pig sold reached 608 yuan in August, indicating improved cash flow for farming households [19]. Summary by Sections Supply Side Analysis - The breeding sow inventory peaked at 43.90 million heads in December 2022 and has been on a downward trend since then, with a notable decrease in Q4 2023 [2]. - The national pig inventory showed a slight increase in Q2 2024, but overall levels remain low compared to previous years, limiting the potential for increased market supply in the latter half of the year [6]. - The market is expected to see a supply gap in mid-2024 due to significant disease outbreaks affecting pig populations [6]. Price Trends - The wholesale price of pork has shown resilience, with a notable increase in consumer prices reflecting a recovery in demand [19]. - The report indicates a cautious optimism regarding consumer confidence, which may improve as the peak pork consumption season approaches [19]. Financial Health of Companies - The report highlights that listed pig farming companies are facing high debt levels, which may restrict their capacity for growth [15]. - Despite the financial pressures, the overall profitability in the pig farming sector has shown signs of recovery, with major companies reporting improved operational conditions [19].

Investment Rating - The report suggests a positive outlook for the electronic industry, indicating a transition from recovery to prosperity in the second half of 2024, recommending holding stocks and minimizing trading activity [3]. Core Insights - The electronic index's PB valuation has risen above the historical -1 standard deviation, with a PEG of 0.81 for the next three years, indicating a high safety margin for investments [3]. - Global demand for consumer electronics is expected to continue, driven by AI, with significant expectations for a replacement cycle [3]. - The report emphasizes the importance of semiconductor materials, equipment, and components in the upcoming demand cycle [3]. - AI and XR will be the focal points of global electronic innovation investments in 2024, with opportunities identified in AI smartphones, smart driving, humanoid robots, and advanced packaging [3]. - The report highlights the ongoing trend of domestic semiconductor localization and the expected growth in the CCL (Copper Clad Laminate) industry due to the recovery in demand from consumer electronics, automotive, and home appliances [6][9]. Summary by Sections Copper Clad Laminate (CCL) Industry - The CCL industry is entering a recovery phase, with demand from consumer electronics and automotive sectors expected to improve [6]. - High-speed CCL is anticipated to grow due to the increasing requirements from Nvidia's AI accelerator cards [7]. - The industry is expected to see a significant EPS recovery in 2024 as production rates improve [8]. PCB Industry - The scarcity of data communication PCB capacity is highlighted, driven by AI server demands [9]. - The PCB industry is experiencing a recovery in production rates, with AI server and switch demands contributing to this trend [10]. - The report predicts that PCB manufacturers with significant exposure to AI servers will see substantial performance elasticity in 2024 [11]. Digital SoC - The AIoT market is showing positive demand trends, with significant growth expected in wearable devices and personal audio products [12]. - Domestic SoC manufacturers are beginning to penetrate the high-end automotive market, gaining market share from foreign competitors [12]. Power Semiconductors - A notable recovery in mid-to-low voltage power semiconductors is observed, with strong demand from consumer and automotive electronics [16]. - The report indicates that the overall market for SiC power devices is expected to grow significantly by 2025 [16]. Analog IC - The analog IC market is projected to recover in 2025, driven by demand from consumer electronics and automotive sectors [20]. - The report notes that the domestic analog industry is likely to consolidate, improving the supply landscape [20]. OLED Industry - Korean manufacturers currently dominate the OLED market, but domestic manufacturers are increasing their market share in AMOLED smartphone panels [22][25]. - The report anticipates a significant increase in demand for flexible OLED panels in the coming years [25]. Consumer Electronics - The report suggests that AI may initiate a new innovation cycle for Apple, with the iPhone 16 expected to be a leading AI smartphone [26]. - A series of new Android devices are set to launch in Q4 2024, which may lead to a recovery in the Android supply chain [26].

通信行业2024Q4投资观点 AI连接需求旺盛，通信技术持续迭代 www.swsc.com.cn 西南证券研究发展中心 通信研究团队 2024年10月 投资要点 1 AI浪潮催生算力要求，推理侧连接需求持续提升。AIGC带来的超大算力需求拉动通信基础设施建设 及扩容，光模块作为数据传输的基础部件，需求首先迎来爆发。同时随着光连接高速率、大密度方 向发展，22年为800G元年，市场出货量约为万只级别，23年逐步起量，24年随着大模型厂商加速 AI建设，加单意愿强烈、节奏频繁，预计将迎来爆发式增长。同时随着芯片速率翻倍，英伟达的 B100和H200等产品将逐步标配1.6T光模块，光模块更新迭代也将加速。中国光模块企业占据全球 60%以上的市场份额，进入市场较早，先发优势显著，拿下北美订单具有高确定性，同时业绩能见 度高、落地性强，建议持续关注。 卫星互联网建设序幕拉开，将带来新一轮资本投入。卫星互联网建设需求具有较高确定性：其一， 卫星互联网在国家安全领域的重要作用已得到充分显现，建设自主可控的宽带卫星星座刻不容缓； 其二，低轨轨道资源和通信频段资源稀缺，在国际电联"先占先得"规则下，我国需要快速抢占低 轨卫星资 ...

Investment Rating - The report recommends the liquor sector, particularly favoring leading brands in the mass market [1]. Core Views - The long-term investment value of the liquor industry is highlighted, with a strong performance expected in high-end and local liquor sales during the 2024 Spring Festival, while the mid-range segment faces pressure [2]. - The overall revenue of large-scale liquor enterprises reached 756.3 billion yuan in 2023, with a profit total of 232.8 billion yuan and a production volume of 6.29 million tons, indicating a robust market despite short-term challenges [2]. - The competitive landscape of the liquor industry is characterized by a "stronger becoming stronger" trend, with leading brands increasing their market share through brand culture and consumer recognition [2]. - The valuation of liquor companies is currently at historical lows, with leading brands expected to see double-digit growth in revenue and profit [2]. Summary by Sections Section 1: Liquor - The consumption performance in the second quarter of 2024 is under pressure, but the long-term outlook remains positive due to stable drinking demographics and ongoing market dynamics [2]. - High-end liquor prices serve as a key indicator of industry health, with recent trends showing a weakening in the second quarter but stabilizing in the third quarter [11]. - Inventory levels have increased but remain manageable, with manufacturers focusing on sustainable growth and careful inventory management [14]. Section 2: Mass Market Products - Beer: Despite a slowdown in consumption upgrades, the product structure continues to improve, with leading brands seeing price increases [15]. - Dairy Products: Short-term profit elasticity has been released, and long-term profitability is expected to rise due to stabilized raw milk prices and ongoing consumption upgrades [15]. - Condiments: The recovery of the restaurant sector and health trends in consumer preferences are expected to enhance industry dynamics [15]. - Frozen Foods: Leading companies are anticipated to maintain double-digit growth, benefiting from their scale advantages [15].

Investment Rating - The report suggests a positive outlook for the home furnishing and paper industries, indicating a potential recovery in demand and profitability [1][12]. Core Viewpoints - The investment focus is on consumer goods, particularly essential items showing strong growth resilience, with domestic brands gaining market share from foreign brands [2]. - In the home furnishing sector, while short-term growth is hindered by real estate demand contraction, recent policy stimuli are expected to support a rebound in demand [3][8]. - The paper industry is anticipated to see improved profitability as demand recovers and paper prices rise due to low inventory levels and easing cost pressures [12]. Summary by Relevant Sections Home Furnishing - Recent real estate policies have slightly improved sales momentum, with a reduction in the decline of sales area in July and August [3]. - The implementation of favorable financial policies, such as lowering down payment ratios and interest rates, is expected to enhance consumer confidence and benefit the home furnishing sector [8]. - Various local governments have introduced "old-for-new" policies to stimulate consumption in home furnishings, providing subsidies for renovations and new purchases [11]. Paper Industry - The paper industry faced significant pressure in the first half of the year due to low prices and high raw material costs, but a recovery in demand is expected to stabilize profitability [12]. - The report highlights that cultural paper shows strong performance stability, while white card paper and corrugated paper have higher profit elasticity due to their consumption correlation [12].

Investment Rating - The report gives a "Buy" rating for the gaming sector, indicating that individual stocks are expected to outperform the relevant market indices by over 20% in the next six months [19]. Core Insights - The report emphasizes the recovery of game asset valuations, driven by favorable policy support and technological advancements [1][3]. - The gaming industry is positioned as a key component in promoting domestic consumption, reflecting a shift in government policy from strict regulation to active encouragement [4][5]. - Two core driving factors for the gaming sector's growth are identified: the expansion of content delivery platforms and advancements in technology, particularly in artificial intelligence and autonomous driving [7][8]. Summary by Sections Policy Support - The Chinese government has shown a clear shift in policy towards supporting the gaming industry, recognizing it as vital for economic growth and consumer engagement [3][4]. - Recent initiatives include collaborative events between popular games and public safety campaigns, enhancing the visibility and acceptance of gaming in society [5][6]. Core Driving Factors - The gaming industry has historically evolved through various platforms, and the emergence of autonomous vehicles is expected to create new opportunities for in-car entertainment, enhancing user engagement [7]. - Technological advancements, especially in artificial intelligence, are set to revolutionize game development and user experience, allowing for personalized gaming experiences [8][9]. Performance Outlook - The report notes that the performance of leading gaming companies is expected to rebound in the third and fourth quarters of 2024 due to a low base effect from 2023, which experienced unusual market conditions [10].

Investment Rating - The report suggests a positive outlook for the shipping and shipbuilding industry, indicating a strong recovery phase with potential for price increases and improved profitability [1]. Core Views - The dry bulk shipping market is expected to see a slowdown in capacity supply over the next 2-3 years, leading to increased demand and rising freight rates. As of September 30, the Baltic Dry Index (BDI) was at 2084 points, with a weekly increase of 4.3%, and a year-to-date average increase of 334.1% compared to 2023 [2]. - The shipbuilding sector is experiencing a rotation of prosperity among different shipping sub-sectors, with shipowners' capital expenditure significantly improving. Limited capacity and environmental regulations are driving the demand for new ship orders, which is expected to further increase new ship prices [2][11]. - The report emphasizes the importance of monitoring global economic recovery and geopolitical events, such as the Israel-Palestine conflict, which may impact supply chain efficiency [2]. Summary by Sections Demand - China's iron ore imports are shifting, with Australia and Brazil being the main sources. In 2023, China imported 74 million tons from Australia (62.5% of total imports) and 25 million tons from Brazil (21.1% of total imports) [3][6]. - The potential for increased iron ore supply from the West African region, particularly from the Simandou project in Guinea, is highlighted. The project is expected to produce 120 million tons annually by 2026, which will significantly impact shipping distances and demand [5][6]. - The report predicts that Guinea could become a major alternative to Australian iron ore, with transportation distances being three times longer, thus increasing dry bulk shipping demand [6][7]. Supply - The report notes that the supply of dry bulk shipping capacity is expected to slow down, with only 9.8% of the fleet currently on order. The global dry bulk fleet increased by 3.1% in 2023, but growth is projected to decelerate to 2.3% by 2025 [8]. - The aging fleet is a concern, with 21.9% of vessels over 15 years old. Stricter environmental regulations are expected to limit effective supply below nominal capacity [8]. Shipbuilding - The recovery in shipping trade has led to increased order placements for new ships, particularly in the container and LNG sectors. New ship prices have remained high, with significant increases noted across various ship types [11][12]. - The number of active shipyards is declining, with only 300 operational globally, which is about 40% of the peak in 2007. This limits the growth of shipbuilding capacity despite the recovery in the shipping market [15]. - Environmental regulations are pushing for the modernization of fleets, with shipping companies needing to adapt to stricter carbon emission standards [18][20].

Investment Rating - The report suggests a positive outlook for the chemical sector, indicating potential for a "Davis Double" effect, which refers to both earnings growth and valuation expansion [1]. Core Insights - The chemical industry has shown mixed performance, with the Shenwan Chemical Index down 0.4% as of September 30, 2024, underperforming the CSI 300 Index by approximately 19 percentage points [2]. - In the first half of 2024, listed companies in the basic chemical sector achieved revenue of 1,078.7 billion yuan, a year-on-year increase of 2%, while net profit attributable to shareholders decreased by 5.1% to 66.6 billion yuan [2]. - The report emphasizes the importance of focusing on cyclical sectors and high-barrier new materials in the second half of 2024 [2]. Summary by Relevant Sections Industry Review - The report highlights the performance of various chemical sub-sectors, with chemical products, raw materials, and agricultural chemicals showing positive growth rates of 3.7%, 2.5%, and 1.9%, respectively, while chemical fibers, plastics, and rubber experienced declines of -8.9%, -10.1%, and -12.0% [2]. Investment Strategy - Key areas of focus within the basic chemical industry include: - **Soda Ash**: Prices are at a low point with limited downside potential; a rebound is possible if supply decreases or demand recovers unexpectedly [3]. - **Phosphate Rock**: The industry remains tight with high prices and expected profitability improvements in the second half due to seasonal demand [3]. - **New Coal Chemical**: Significant potential for import substitution and reduced reliance on petrochemical raw materials [3]. - **Light Hydrocarbon Integration**: This process is gaining traction due to its economic and environmental advantages [3]. - **Tire Industry**: Recovery in demand, particularly in the semi-steel market and exports, is noted [3]. - **Synthetic Biology**: This sector is highlighted for its potential to reduce reliance on petroleum and lower emissions [3]. - **Wind Power and Container Coatings**: These areas are characterized by high barriers to entry and long validation cycles [3]. - **Electronic Chemicals**: This strategic emerging industry has high technical barriers and strong domestic demand [3]. Profit Trends - The report provides insights into the profit trends within the chemical industry, indicating a need for companies to maintain cost advantages to navigate market fluctuations effectively [11]. Market Dynamics - The tire industry is noted for its increasing export opportunities, with significant production capacity established in various countries, including Vietnam and Cambodia [13]. - The synthetic biology sector is projected to contribute significantly to the chemical industry by 2030, with a forecast that 35% of chemicals will come from bio-manufacturing [14]. Emerging Opportunities - The report identifies the electronic chemicals sector as having substantial growth potential, driven by rapid downstream growth and strong policy support [23].

Investment Rating - The report suggests a positive outlook for the home appliance industry, driven by the "old-for-new" policy and strong export demand, indicating a potential for significant growth in the coming months [2][3]. Core Viewpoints - The "old-for-new" policy has effectively boosted domestic demand for home appliances, with notable increases in sales volumes for air conditioners, refrigerators, and washing machines, showing year-on-year growth of 0.8%, 1.1%, and 3.1% respectively for domestic sales from January to July 2024 [2]. - Export sales have also seen substantial growth, with air conditioner exports increasing by 31.4%, refrigerators by 21.9%, and washing machines by 20.8% during the same period [2]. - The market sentiment has shifted positively, with expectations for strong performance during the upcoming Double Eleven shopping festival, supported by favorable policies and promotional activities [3]. Summary by Sections Domestic Sales - The "old-for-new" policy is a key driver for short-term growth in domestic sales, with the government providing subsidies of 15% for energy-efficient appliances and an additional 5% for top-tier products, capped at 2000 yuan per item [4]. - The home appliance market is approaching saturation, but there remains potential for growth in air conditioning due to multi-unit ownership [6]. Export Sales - China's home appliance manufacturing capacity leads globally, with significant export production planned for air conditioners, projected to reach 644 million units in mid-2023, reflecting a 51% increase year-on-year [9]. - The export production for air conditioners is expected to continue growing, with forecasts of 767 million units in November and 816 million units in December 2023, indicating a robust demand for overseas markets [9]. Emerging Trends - The report highlights a shift towards globalization, high-end, and diversified development among home appliance companies, with new product categories like multi-functional cookers and air fryers gaining traction [12]. - The small appliance sector is anticipated to maintain a positive growth trend as consumer preferences evolve and product offerings expand [12].