Investment Rating - The report maintains an "Outperform" rating for the industry, indicating expected performance above the market benchmark by more than 10% [5][12]. Core Insights - The commercial space sector is expected to experience significant growth, driven by SpaceX's ambitious goal of producing 10,000 Starships annually and achieving a launch frequency exceeding once per hour within three years [2][19]. - OpenAI is actively seeking domestic hardware suppliers in the U.S. for its expansion into consumer devices, robotics, and cloud data centers, highlighting the critical role of hardware in supporting software development [3][19]. Summary by Relevant Sections Commercial Space - The report emphasizes the long-term investment opportunities in the commercial space sector, particularly focusing on key suppliers and the Blue Arrow Aerospace industry chain. Recommended companies include: 1. Rocket components: Huazhu High-Tech, Yingliu Co., Longxi Co. 2. Satellite assembly and testing: Guangdian Measurement, Sushitest, Shanghai Huguang. 3. Other relevant companies: Zhongtai Co., Icewheel Environment [2][9]. AI Infrastructure - The report highlights the importance of hardware support for AI development, noting that China's hardware supply chain is more complete and cost-effective. Key areas of focus include: 1. Gas turbines as primary and backup power sources for overseas data centers, with companies like Yingliu Co. and Wanze Co. recommended. 2. Liquid cooling solutions for data centers, with a shift from air cooling to liquid cooling being a significant trend. Key companies include Icewheel Environment, Hanzhong Precision, and Linde Co. [3][9]. Key Company Earnings Forecasts - The report provides earnings forecasts and investment ratings for several companies, all rated as "Outperform": 1. Green's Harmony (688017.SH): Target price of 220.50, market cap of 40.4 billion, EPS of 0.33 for 2024A. 2. Mingzhi Electric (603728.SH): Target price of 73.65, market cap of 30.9 billion, EPS of 0.19 for 2024A. 3. Huichuan Technology (300124.SZ): Target price of 80.85, market cap of 218.9 billion, EPS of 1.60 for 2024A [12][25].

Investment Rating - The report maintains an "Outperform" rating for the livestock industry, indicating a positive outlook for the sector [4]. Core Insights - The implementation of import beef restrictions through a "quota + tariff" system is expected to reduce the volume of imported beef while increasing prices, signaling strong protection for the domestic beef industry [1][12]. - Global beef prices are entering an upward cycle due to reduced supply in major producing regions and strong demand in consuming areas, with a projected price increase of nearly 60% from the bottom by the end of 2025 [2][52]. - Domestic beef supply and demand dynamics indicate a price increase trend that may continue until 2028, driven by a significant reduction in cow numbers and subsequent tightening of beef supply [3][19]. Summary by Sections Import Beef Policy Analysis - The Chinese government has implemented protective measures for the domestic beef industry, with a quota and additional tariffs on imported beef starting January 1, 2026, for a duration of three years [1][12]. - The expected import volume for 2026 is projected to be approximately 2.34 million tons, a reduction of nearly 20% compared to 2024 [1][15][42]. Overseas Beef Price Cycle Outlook - Global beef prices are expected to maintain an upward trend due to supply reductions in major producing areas and strong demand in consuming regions [2][44]. - The FAO reports that global beef prices have increased by nearly 60% from their lowest point as of December 2025 [2][52]. Domestic Beef Supply and Demand Analysis - The domestic beef industry is experiencing a turning point, with a significant increase in prices anticipated until 2028 due to a reduction in cow numbers and a tightening supply [3][19]. - The report highlights that the beef production cycle has a lag effect, with the impact of cow culling expected to be felt from early 2026 through 2028, leading to a widening supply gap [3][20].

Investment Rating - The report maintains an "Outperform" rating for the pharmaceutical and biotechnology sector [4] Core Insights - The pharmaceutical sector underperformed the overall market, with a TTM P/E ratio of 38.70x, which is at the 84.85th percentile of the past five years [1][31] - The report highlights the recent IPO of RiboBio, a leading company in the small RNA drug development sector, which has established a proprietary delivery platform, RiboGalSTAR, focusing on cardiovascular, metabolic, renal, and liver diseases [2][9] - RiboBio has seven products in clinical research, with four advancing to Phase II trials, demonstrating the effectiveness and safety of its delivery system [2][17] Summary by Sections Market Performance - The overall A-share market increased by 0.03%, while the biopharmaceutical sector declined by 0.68%, with chemical pharmaceuticals dropping by 2.40% [1][26] - The report notes significant individual stock movements, with some companies experiencing substantial gains and others facing steep declines [26][30] Company Focus: RiboBio - RiboBio has formed strategic partnerships with Boehringer Ingelheim and Qilu Pharmaceutical, with a total transaction value exceeding $2 billion, validating the platform's value [2][17] - The core asset, RBD4059, is in Phase IIa trials in Sweden for treating thrombotic diseases, showing promising results in reducing thrombus formation without increasing bleeding risk [2][21] - RBD4059's clinical data indicates a significant reduction in FXI activity, with a maximum percentage change of 91.6% at the highest dosage [22] Investment Recommendations - The report suggests focusing on investment opportunities in the CXO sector and the clinical progress of innovative drugs overseas [2] - Specific companies recommended for investment include Mindray Medical, WuXi AppTec, and Aier Eye Hospital, all rated as "Outperform" [3][36]

Investment Rating - The investment rating for the banking industry is "Outperform the Market" (maintained) [3][30]. Core Insights - The expansion of the deposit-loan gap (存差) reflects the natural mapping of the economic transformation phase, characterized by a decline in credit demand and increased fiscal efforts. This phenomenon has deeply impacted the profitability and balance of the banking sector. The core drivers of high credit growth over the past decade were industrialization and urbanization, but the natural decline in traditional credit demand is an inevitable result of the economy's shift from "investment-driven" to "consumption and innovation-driven" [4][7]. - The banking sector's response to the expanding deposit-loan gap is to enhance intermediary business development. Due to significant differences in resource endowments and customer structures between large and small banks, small banks should focus on wealth management, while large banks should enhance their comprehensive service capabilities to adapt to high-quality economic development [5][19]. Summary by Sections Industry Overview - The banking sector is currently experiencing a transition towards high-quality development, with fiscal policy becoming a key support for stabilizing growth and promoting transformation. The new landscape of "weak credit, strong fiscal" has led to a continuous expansion of the deposit-loan gap, which is projected to reach approximately 58 trillion yuan by 2025, up from about 40 trillion yuan in 2019 [4][7]. Impact of Deposit-Loan Gap - The trend of expanding deposit-loan gaps is not merely a signal of liquidity accumulation but has deeply penetrated the operational and systemic balance of the banking industry. This is primarily reflected in two aspects: low bond yields dragging down overall profitability and an imbalanced distribution of deposit-loan gaps between large and small banks, with small banks facing greater pressure [11][12]. Strategies for Addressing the Gap - The core strategy for large banks is to shift their business focus from the bank's balance sheet to the client's balance sheet, providing diversified and comprehensive services. This shift is essential for reducing reliance on credit and addressing the expanding deposit-loan gap. For small banks, the focus should be on wealth management to meet the strong demand for wealth preservation among their primary clientele, which consists of county residents and small enterprises [22][19]. Investment Recommendations - It is anticipated that the decline in net interest margins will significantly converge by 2026, marking the likely end of the current downtrend cycle. The fundamental stabilization of the banking sector is expected to drive a valuation premium for quality stocks. Long-term investment strategies should focus on nationwide banks with strong comprehensive capabilities and small banks with significant wealth management business potential. Recommended stocks include China Merchants Bank, CITIC Bank, Ningbo Bank, Changsha Bank, and Chongqing Rural Commercial Bank [6][24].

Investment Rating - The investment rating for Tencent Holdings is "Outperform the Market" (maintained) [2][8][23] Core Views - Tencent is expected to achieve revenue of CNY 194.6 billion in Q4 2025, representing a year-on-year growth of 13%. The network advertising sector is anticipated to perform steadily, benefiting from the release of advertising inventory and AI integration. The gaming business is expected to show strong performance, particularly with the game "Delta Operation" [4][9] - The company is increasing its investment in AI, which is expected to offset some operational leverage release. The AI investment will primarily manifest in R&D expenses, projected to grow by 28% in Q4 2025 [4][10] - The gaming segment is projected to generate revenue of CNY 58 billion in Q4 2025, with a year-on-year growth of 18%. Domestic game revenue is expected to grow by 16%, supported by established titles like "Honor of Kings" and "Peacekeeper Elite" [5][15][21] - Marketing services revenue is expected to reach CNY 41.3 billion in Q4 2025, reflecting an 18% year-on-year increase, driven by AI enhancements in advertising efficiency [6][19] - Financial technology and enterprise services are projected to grow by 9% year-on-year, with revenue expected to reach CNY 61.2 billion in Q4 2025, primarily driven by payment services [20] Summary by Relevant Sections Financial Performance - Q4 2025 revenue is expected to be CNY 194.6 billion, with a 13% year-on-year increase. Non-IFRS operating profit is projected at CNY 68.1 billion, up 15% year-on-year, and net profit is expected to be CNY 65.2 billion, reflecting an 18% increase [4][10][11] - The expected Non-IFRS net profit margin is 34% for Q4 2025 [10] Gaming Business - The gaming revenue forecast for Q4 2025 is CNY 58 billion, with an 18% year-on-year growth. Domestic game revenue is expected to grow by 16%, while overseas game revenue is projected to increase by 22% [5][21] Marketing Services - Marketing services revenue is anticipated to be CNY 41.3 billion in Q4 2025, marking an 18% year-on-year growth. AI-driven enhancements are expected to improve advertising efficiency significantly [6][19] Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services is expected to reach CNY 61.2 billion in Q4 2025, with a 9% year-on-year growth, primarily driven by payment services [20]

Macro and Strategy - The bond market saw the 30-year to 10-year government bond yield spread rise to 46.2 basis points, the highest level since September 2022, driven by structural interest rate cuts signaling a dovish stance from the central bank [6] - The Ministry of Finance initiated the issuance of 30-year government bonds with a competitive bidding total of 32 billion yuan, raising concerns about supply pressure in the long-term bond market [6] - The increase in yield spread indicates a normalization of the bond market from extreme deflationary trading conditions, suggesting that the long-term bond's "scarcity" has been replaced by "scale" [6] Industry and Company Public Utilities and Environmental Protection - Shanxi Province has launched a bidding mechanism for the electricity price of new energy projects for 2026, with a total bidding scale of 9.576 billion kWh, including 3.527 billion kWh for wind power and 6.049 billion kWh for solar power [12] - The public utilities index rose by 0.06%, while the environmental index increased by 0.27%, indicating a relatively stable performance in these sectors [11] - Recommendations include large thermal power companies and national renewable energy leaders, as well as companies involved in nuclear power and water utilities [14] Home Appliances - The home appliance sector is experiencing pressure, with a significant decline in domestic retail sales of major appliances, down over 20% in December [15] - Exports of home appliances also fell by 8% in December, with air conditioning exports particularly affected due to high base effects [16] - Recommendations focus on leading white goods companies, anticipating a recovery in sales driven by continued government subsidies and improved export conditions in 2026 [18] Food and Beverage - The food and beverage sector is expected to benefit from cost reductions, particularly in sunflower seed prices, which are projected to decline by over 10% in 2026, benefiting companies like Qiaqia Food [20] - The report highlights the importance of effective cost transmission to improve profitability, emphasizing the need for stable competitive environments and strong cost control capabilities [19] - Recommendations include companies that can leverage cost advantages and maintain strong market positions [19] Beverage Industry - Dongpeng Beverage is projected to achieve revenue of 20.76 to 21.12 billion yuan in 2025, reflecting a year-on-year growth of 31.07% to 33.34% [21] - The company is expected to face some profit pressure in Q4 2025 due to pre-holiday inventory adjustments and upfront freezer costs [22] - The issuance of H-shares aims to support strategic initiatives, including supply chain improvements and overseas market expansion [22] Technology Sector - Haopeng Technology anticipates a revenue increase of 12% to 17% in 2025, driven by growth in AI-related battery applications [27] - The company is actively expanding its production capacity for energy-dense batteries to meet rising demand in AI applications [28] - The strategic focus on AI positions the company for sustained revenue growth in the coming years [27]

Macro and Strategy - The bond market saw the 30-year to 10-year government bond yield spread rise to 46.2 basis points, the highest level since September 2022, driven by structural interest rate cuts signaling a dovish stance from the central bank [6] - The Ministry of Finance initiated the issuance of 30-year government bonds with a competitive bidding total of 32 billion yuan, raising concerns about supply pressure in the long-term bond market [6] - The increase in yield spread indicates a normalization of the bond market from extreme deflationary trading conditions, suggesting that the long-term bond's "scarcity" has been replaced by "scale" [6] Industry and Company Public Utilities and Environmental Protection - Shanxi Province has launched a bidding mechanism for the electricity price of new energy projects for 2026, with a total bidding scale of 9.576 billion kWh, including 3.527 billion kWh for wind power and 6.049 billion kWh for solar power [12] - The public utilities index rose by 0.06%, while the environmental index increased by 0.27%, indicating a relatively stable performance in these sectors [12] - Recommendations include large thermal power companies like Huadian International and national renewable energy leaders such as Longyuan Power and Three Gorges Energy [14] Home Appliances - The home appliance sector is experiencing pressure, with a significant decline in domestic retail sales of major appliances, down over 20% in December [15] - Exports of home appliances decreased by 8% in December, primarily due to high base effects and tariff impacts [16] - Recommendations for investment include leading white goods companies such as Midea Group and Haier Smart Home, as well as small appliance leaders like Roborock Technology [18] Food and Beverage - The food and beverage sector is expected to benefit from cost reductions, particularly in sunflower seed prices, which are projected to decline by over 10% in 2026, benefiting companies like Qiaqia Food [20] - The report highlights the importance of effective cost transmission to improve profitability, emphasizing the need for stable competitive landscapes and strong cost control capabilities [19] - Recommendations include companies with strong market positions and the ability to manage costs effectively [19] Beverage Industry - Dongpeng Beverage is projected to achieve revenue of 20.76 to 21.12 billion yuan in 2025, with a year-on-year growth of 31.07% to 33.34% [21] - The company is expected to face some profit pressure in Q4 2025 due to pre-holiday inventory adjustments and upfront freezer costs [22] - The issuance of H-shares aims to enhance overseas market supply chain capabilities and explore investment opportunities [22] Technology Sector - Haopeng Technology anticipates a revenue increase of 12% to 17% in 2025, driven by growth in AI-related battery applications [27] - The company is focusing on expanding its production capacity for energy-dense batteries to meet rising demand in AI applications [28] - The strategic direction includes significant investments in AI and energy storage projects to capitalize on market growth [28]

Investment Rating - The investment rating for Tencent Holdings is "Outperform the Market" (maintained) [2][8][23] Core Views - Tencent is expected to achieve revenue of CNY 194.6 billion in Q4 2025, representing a year-on-year growth of 13%. The network advertising sector is anticipated to perform steadily, benefiting from the release of advertising inventory and AI integration. The gaming business is expected to show strong performance, particularly with the game "Delta Action" [4][9] - The company is increasing its investment in AI, which is expected to offset some operational leverage release. The R&D expenses related to AI are projected to grow by 28% in Q4 2025 [4][10] - The gaming revenue is projected to reach CNY 58 billion in Q4 2025, with a year-on-year growth of 18%. Domestic game revenue is expected to grow by 16%, supported by established titles like "Honor of Kings" and "Peacekeeper Elite" [5][21] - Marketing services revenue is expected to be CNY 41.3 billion in Q4 2025, reflecting an 18% year-on-year increase, driven by AI enhancements in advertising [6][19] - Financial technology and enterprise services are projected to grow by 9% year-on-year, with revenue expected to reach CNY 61.2 billion in Q4 2025 [20] Summary by Sections Financial Performance - For Q4 2025, Tencent's Non-IFRS operating profit is expected to be CNY 68.1 billion, a 15% increase year-on-year. The Non-IFRS net profit is projected to be CNY 65.2 billion, reflecting an 18% year-on-year growth, with a net profit margin of 34% [10][11] - The overall revenue for 2025 is forecasted to be CNY 752 billion, with a year-on-year growth of 14% [11][30] Gaming Sector - The gaming business is expected to generate CNY 58 billion in revenue for Q4 2025, with a year-on-year growth of 18%. The domestic gaming revenue is projected to grow by 16% [5][21] - Upcoming game releases, including "Delta Action" and "Future of Counterattack," are anticipated to enhance revenue streams [21] Marketing Services - Marketing services revenue is expected to reach CNY 41.3 billion in Q4 2025, with an 18% year-on-year increase. AI-driven advertising solutions are expected to improve operational efficiency for advertisers [6][19] Financial Technology and Enterprise Services - Financial technology and enterprise services are projected to grow by 9% year-on-year, with expected revenue of CNY 61.2 billion in Q4 2025. The growth is primarily driven by payment services and the introduction of AI applications in WeChat mini-programs [20]

Investment Rating - The report maintains an "Outperform the Market" rating for the home appliance industry [5][6][12]. Core Views - The home appliance sector is expected to recover in 2026, driven by the continuation of national subsidies and stabilization of exports, suggesting a positive outlook for leading white goods companies [1][12][18]. - December retail performance for home appliances showed signs of bottoming out, with significant declines in major appliances but a relatively stable performance in small appliances [1][19]. - The report highlights the resilience of leading companies in the home appliance sector, with a focus on white goods, which are expected to maintain steady growth despite high base effects [12][13]. Summary by Sections 1. Key Recommendations - Recommended companies include Midea Group, Haier Smart Home, TCL Smart Home, Gree Electric Appliances, and Hisense Home Appliances for white goods; Hisense Visual for black goods; and Roborock, Bear Electric, and Ecovacs for small appliances [4][12][13]. 2. December Retail Performance - In December, the retail sales of major appliances saw declines exceeding 20%, while small appliances showed slightly better demand, with air fryers experiencing growth [1][19]. - The offline sales channels for major appliances faced declines of over 40%, while kitchen small appliances remained relatively stable [1][19]. 3. Export Performance - In December, China's home appliance exports decreased by 8.1% year-on-year, with air conditioners facing a significant decline of 20.7% [2][37]. - Other categories like refrigerators and washing machines showed modest growth, indicating a mixed performance across different product lines [2][37]. 4. U.S. Market Insights - U.S. retail sales for home appliances showed a slight increase of 0.8% in November, indicating a gradual return to stable growth despite challenges such as tariffs and inflation [3][43]. - The inventory levels in U.S. appliance stores are returning to normal, suggesting improved market conditions [3][43]. 5. Company Earnings Forecasts - The report provides earnings forecasts for key companies, indicating expected EPS growth for Midea Group, Gree Electric Appliances, and Haier Smart Home, among others, with all rated as "Outperform the Market" [5][76].

Investment Rating - The report maintains an "Outperform" rating for the public utility and environmental sectors [6][8]. Core Views - The report highlights that coal and electricity prices are declining simultaneously, which is expected to maintain reasonable profitability for thermal power companies. Recommendations include major thermal power companies such as Huadian International and Shanghai Electric [4][20]. - Continuous government policies supporting the development of renewable energy are anticipated to lead to stable profitability in renewable power generation. Recommended companies include Longyuan Power, Three Gorges Energy, and regional offshore wind power companies [4][20]. - The report notes that the growth in installed capacity and power generation will offset the downward pressure on electricity prices, with nuclear power companies expected to maintain stable profitability. Recommended companies include China Nuclear Power and China General Nuclear Power [4][20]. - The report emphasizes the defensive attributes of hydropower stocks in a global interest rate decline environment, recommending Jiangsu Yangtze Power as a stable and growth-oriented hydropower leader [4][20]. - The environmental sector is entering a mature phase, with significant improvements in free cash flow. The report suggests focusing on "utility-like investment opportunities" in the environmental sector, recommending companies such as China Everbright Environment and Shanghai Industrial Holdings [21]. Summary by Sections Market Review - The Shanghai Composite Index rose by 0.57%, while the public utility index increased by 0.06% and the environmental index by 0.27%. The relative returns for public utilities and environmental sectors were 0.63% and 0.84%, respectively [13][22]. Important Events - Shanxi Province initiated a bidding process for the 2026 incremental renewable energy project mechanism, with a total bidding scale of 9.576 billion kWh, including 3.527 billion kWh from wind power and 6.049 billion kWh from solar power. The bidding price range is set between 0.2 and 0.32 yuan/kWh [2][14]. Special Research - The report outlines that over 26 cities in China have raised water prices in 2025, with adjustments primarily between 10% and 30%. The report emphasizes the necessity of price adjustments due to rising costs faced by water supply companies [3][17][19]. Investment Strategy - The report recommends various companies across different sectors, including thermal power, renewable energy, nuclear power, hydropower, and environmental services, based on their expected performance and market conditions [4][20][21].