Investment Rating - The report maintains a "Positive" investment rating for the agriculture, forestry, animal husbandry, and fishery industry [2]. Core Insights - In October 2024, the average prices for piglets, live pigs, and pork were 36.37 CNY/kg, 18.25 CNY/kg, and 29.85 CNY/kg respectively, showing year-on-year increases of 32.15%, 14.79%, and 14.74%, but month-on-month declines of -12.24%, -7.39%, and -4.98% [11][26]. - The supply side is relatively loose due to increased slaughtering activity as profitability declines, while the demand side shows weak capacity to absorb supply pressure, leading to a continuous decline in pig prices [11][29]. - The report predicts a potential rebound in prices due to seasonal demand increases and the release of pent-up supply from large enterprises [12][33]. Summary by Sections Supply and Demand Performance - October saw a rise in the number of pigs slaughtered, with a slight increase in the slaughtering rate to 28.04%, up by 0.58 percentage points [11][29]. - The number of breeding sows showed a slight increase, with data indicating a 0.56% and 0.39% rise in two different samples [12][33]. Sales Data - In October, the average sales prices for major pig farming companies decreased, with Muyuan, Wens, and New Hope reporting prices of 17.17 CNY/kg, 17.64 CNY/kg, and 17.37 CNY/kg, reflecting month-on-month declines of 7.94%, 7.40%, and 7.66% respectively [39]. - The total number of pigs slaughtered by 17 listed companies in October was 14.15 million, a month-on-month increase of 14.61% and a year-on-year increase of 12.21% [41][44]. Profitability - Major pig farming companies reported significant profit growth in the third quarter, with Muyuan achieving a net profit of 10.481 billion CNY, up 668.90% year-on-year, and Wens achieving a net profit of 6.408 billion CNY, up 241.47% year-on-year [14][51]. - The report emphasizes the competitive advantage of leading companies in maintaining profitability and suggests continued monitoring of their performance [12][51].

Core Insights - Economic stimulus policies are expected to positively impact corporate profitability in the food and beverage industry, primarily driven by changes in demand rather than supply [2] - Historical analysis shows that food and beverage stock prices tend to reach new highs 6-12 months after economic stabilization policies are implemented, correlating with an increase in social financing [2][3] - The market is currently in a phase of observing fundamentals, where the ability of food and beverage companies to recover from economic downturns will determine future asset price movements [3] Industry Overview - The food and beverage industry's profitability is largely influenced by demand changes, with macroeconomic stimulus expected to significantly boost demand and consumer spending [2] - The report highlights the importance of upcoming consumption peaks during the New Year and Spring Festival as critical periods for demand recovery in the food and beverage sector [3] - The report recommends focusing on cyclical segments such as liquor and condiments, specifically highlighting companies like Kweichow Moutai, Qianwei Culinary, and Anjiexin Foods as key investment opportunities [3] Market Dynamics - The report indicates that the current phase of asset price recovery will be characterized by increased volatility due to short-term pressures on corporate earnings [3] - The food and beverage sector is expected to see a divergence in performance, with companies demonstrating faster recovery and better earnings likely to lead the market [3] Company Insights - The report mentions significant corporate developments, such as Enjie Technology's strategic partnership with EVE Energy for battery separator procurement, indicating growth opportunities in related sectors [4] - The analysis of the pig farming sector shows a decrease in average prices for pigs and pork, with a notable increase in slaughter rates, suggesting a shift in supply dynamics [14][15] - Major pig farming companies like Muyuan Foods and Wens Foodstuffs have reported substantial profit increases, indicating strong performance amidst fluctuating market conditions [16]

Banking Sector - M1 growth rate improved month-on-month, with fiscal funds accelerating their usage [3] - Social financing in October increased by 1.4 trillion yuan, a year-on-year decrease of 448.3 billion yuan, with government bonds contributing 75% of the new social financing [3] - Resident housing loans showed improvement due to supportive policies, with new medium and long-term loans increasing by 39.3 billion yuan year-on-year [4] - Corporate loan demand remains weak, with new corporate loans decreasing by 386.3 billion yuan year-on-year, indicating insufficient corporate leverage willingness [5] - M1 growth rate improved by 1.3 percentage points month-on-month, driven by accelerated fiscal fund disbursement and improved real estate sales [5] - Bank investment recommendations focus on stable net interest margins and improved asset quality, with expectations of gradual profit improvement [8] Securities Sector - Capital market reforms and macroeconomic recovery trends are expected to drive industry value regression [9] - M&A and restructuring remain the main themes for the year, with head institutions benefiting from innovative development models and external M&A trends [13] - Three factors influencing securities valuations: marketization of state-owned enterprise reforms, wealth management transformation, and business structure innovation [13] Insurance Sector - Insurance product demand is expected to rise in 2024 due to increased consumer awareness and declining deposit rates [14] - Life and property insurance are expected to drive performance recovery, with investment value gradually returning [14] Electronics Sector (Smart Driving Chips) - Smart driving SoC chips are becoming mainstream due to their advantages in computing power, data transmission efficiency, and cost reduction [15] - The global penetration rate of autonomous vehicles reached 69.8% in 2023, with China's SoC market size expected to reach 102 billion yuan by 2028 [19] - Domestic SoC suppliers are expected to benefit from the growing demand for autonomous driving, with significant market potential [20] Metals Sector (Jincheng Mining) - Jincheng Mining's Q3 2024 revenue increased by 32.73% year-on-year, driven by strong growth in mining resource development [22] - Mining resource development business revenue surged by 343.56% year-on-year, contributing 28.8% of total revenue [27] - The company plans to increase copper production capacity to 50,000 tons per year by 2025, supported by ongoing technical upgrades [27] Transportation Sector (Airlines) - Airlines maintained cautious capacity deployment in October, with passenger load factors improving month-on-month [33] - Domestic passenger load factors increased by 2.1 percentage points compared to September, while international load factors slightly declined [33] - The industry is expected to see improved profitability as domestic and international demand gradually recovers [37] Food & Beverage Sector - Catering industry revenue grew by 3.2% year-on-year in October, with further recovery expected due to economic stimulus policies [39] - Seasoning industry valuations are at 38x, below the 10-year average of 51.3x, indicating potential for valuation recovery [40]

Investment Rating - The report maintains a "Positive" investment rating for the mechanical industry, particularly focusing on humanoid robots as a solution to customization challenges [2]. Core Insights - Humanoid robots are expected to address the pain points of customization in manufacturing. They leverage high flexibility and interactivity to integrate traditional production lines into various manufacturing processes, thus meeting personalized consumer demands [2][17]. - The market for humanoid robots is projected to grow significantly, with a forecasted increase from $1.5 billion in 2022 to $13.8 billion by 2028, representing a compound annual growth rate (CAGR) of approximately 44.75% [19]. - The humanoid robot industry is anticipated to evolve through three stages: initial applications in automotive factories, broader penetration in manufacturing, and eventual integration into everyday life [19]. Summary by Sections 1. Why Humanoid? - Traditional manufacturing faces a "trilemma" where it can only satisfy two of the three goals: reducing costs, improving production efficiency, and meeting customization demands [16]. 2. Four Core Components of Humanoid Robots 2.1 Sensors: Strong Differentiated Profitability - The sensor industry requires high customization and has a low degree of generalization, leading to strong differentiated profitability. Major players include both domestic and international firms [22]. 2.2 Motors: High Customization Required - The motor market is characterized by numerous participants and complex models, with a significant need for customization, particularly for hollow cup motors used in humanoid robots [23]. 2.3 Lead Screws: High Standardization - Lead screws are highly standardized components with significant market presence, primarily dominated by foreign manufacturers [24]. 2.4 Gearboxes: Broad Space for Domestic Substitution - Gearboxes serve as precision transmission devices in robots, with increasing domestic market share and potential for further localization [25]. 3. Humanoid Robots Relying on Established Industrial Robot Supply Chains - The report highlights that the humanoid robot sector can leverage the existing industrial robot supply chain, which has a wealth of experience and established players [28].

Investment Rating - The report maintains a positive outlook on the food and beverage industry, indicating a "Look Favorably" investment rating for the sector [1][60]. Core Insights - Economic stimulus policies are expected to significantly boost demand in the food and beverage sector, leading to improved corporate profitability. The demand is primarily driven by changes in consumer behavior rather than supply factors [1][14]. - Historical analysis shows that the stock performance of the food and beverage sector is closely linked to economic growth policies and social financing scale changes. Typically, stock prices reach new highs 6-12 months after the implementation of such policies [2][15]. - The report emphasizes the importance of observing the fundamental performance of food and beverage companies as the market transitions from initial price recovery to confirming economic recovery [2][45]. Summary by Sections 1. Our View - The food and beverage industry's profitability is mainly influenced by demand changes, with supply changes having a lesser impact. Economic stimulus policies are expected to enhance consumer spending and improve corporate earnings [14][1]. - The recovery of profitability in the food and beverage sector is anticipated to outpace revenue recovery, aligning closely with overall economic recovery [17][15]. 2. How Long Will Stimulus Policies Take to Affect Consumption - Demand changes in the food and beverage sector are expected to precede revenue changes, with a lag in revenue response to social financing growth [17][15]. - The report indicates that the net profit changes in the food and beverage sector are closely aligned with social financing growth, suggesting a synchronized recovery pattern [17][15]. 3. Which Sectors Will Follow the Upsurge - The food and beverage sector has shown resilience during past economic stimulus periods, with its growth positioned in the middle range compared to other sectors [28][15]. - The report highlights that sub-sectors such as liquor, condiments, and dairy are likely to experience significant growth due to their correlation with social demand fluctuations [38][15]. 4. Pro-Cyclical Priority Strategy - The report suggests a pro-cyclical investment strategy for the food and beverage sector, particularly focusing on liquor and the restaurant industry, which are expected to benefit first from economic recovery [40][15]. - The upcoming holiday seasons are identified as critical periods for validating the recovery in food and beverage demand [16][15]. 5. Key Recommendations - The report recommends specific companies such as Kweichow Moutai, Qianwei Yangchun, and Anjuke Foods as key investment opportunities within the food and beverage sector [3][16].

Investment Rating - The report maintains a "Strong Buy" rating for ZTO Express (02057.HK) [6][10]. Core Insights - ZTO Express reported a business volume of 8.723 billion pieces in Q3 2024, representing a year-on-year growth of 15.9%, although its market share decreased by 0.7 percentage points to 20.0% [1]. - The company adjusted its annual business volume guidance for 2024 to between 33.7 billion and 33.9 billion pieces, with a projected Q4 volume of 9.35 to 9.55 billion pieces, indicating a growth rate of 7.5% to 9.8% [1]. - The increase in low-value e-commerce packages poses challenges to the company's strategy of achieving synchronized growth in service quality, business volume, and profits [1]. Summary by Sections Business Performance - In Q3, ZTO's single-package revenue was CNY 1.19, up 1.9% year-on-year, driven by an increase in direct customer revenue, particularly in the parcel business, which saw over 40% growth [2]. - The company’s single-package core cost decreased by approximately CNY 0.06 year-on-year, with transportation costs down 9.7% and sorting costs down 6.4% [2]. Profitability Metrics - The gross margin improved by 1.4 percentage points year-on-year to 31.2% in Q3, attributed to revenue growth and cost optimization [3]. - However, the net profit margin slightly declined due to increased operating expenses and tax fees [3]. Financial Forecast and Valuation - The report forecasts ZTO's net profit for 2024-2026 to be CNY 93.83 billion, CNY 117.18 billion, and CNY 133.70 billion, respectively, with corresponding P/E ratios of 12.5X, 10.0X, and 8.8X [3][7]. - ZTO's strong brand recognition and customer satisfaction allow it to maintain a premium on revenue, avoiding the pitfalls of industry cost competition [3].

Investment Rating - The industry investment rating is "Positive" [2][41] Core Insights - The report highlights that the logistics industry is experiencing a significant increase in business volume due to the extended Double Eleven shopping festival, with a year-on-year growth of 24.0% in October [8][14] - The report notes that the average industry price per package has decreased, indicating ongoing price competition, with a year-on-year decline of 15.3% [28][29] - The report suggests that the competitive landscape is evolving, with a focus on service quality becoming increasingly important for profitability, leading to a recommendation to pay attention to leading companies like Zhongtong and Yuantong [10][41] Summary by Sections Industry Overview - The logistics industry has a market capitalization of approximately 326.5 billion yuan, with a circulation market value of about 288.2 billion yuan [5][6] - The average price-to-earnings ratio for the industry stands at 17.71 [7] Business Volume Insights - In October, the total business volume for express delivery services reached 16.31 billion packages, marking a 24.0% increase compared to the previous year [16][22] - The growth in business volume is attributed to the early start of the Double Eleven shopping festival, which has led to a shift in seasonal peaks [14][25] Company Performance - The Tongda system companies, including Yunda, Yuantong, and Shentong, reported business volume growth rates exceeding 30%, outperforming the industry average by 6-8 percentage points [9][15] - SF Express also saw a notable increase in business volume, with a growth rate of 26.9% in October, surpassing the industry average [9][15] Pricing Trends - The report indicates that the average revenue per package for the industry has decreased, with specific declines noted for Tongda system companies: Shentong at 3.8%, Yunda at 11.4%, and Yuantong at 2.9% [29][31] - Despite the year-on-year declines, there are signs of a potential recovery in package revenue for Tongda system companies [35] Market Structure Changes - The report notes a slight increase in the concentration ratio (CR8) of the industry, indicating that leading companies are gaining market share [38][39] - There is a notable shift in regional performance, with the central and western regions showing increased demand and reduced costs due to improved logistics networks [38][40]

Core Insights - The report indicates that domestic consumption is gradually recovering, supported by a series of consumption policies, with stable growth in the catering sector. The recovery of the catering industry chain is expected to be a key investment theme in the food and beverage sector next year, particularly focusing on the condiment segment [2][16][17]. Consumption Data - In October, China's total retail sales of consumer goods reached 45,396 billion yuan, a year-on-year increase of 4.8%, with the growth rate accelerating by 1.6 percentage points compared to the previous month. This marks the highest growth rate in the second half of the year and has shown a continuous acceleration over the past two months [2][16]. - The catering industry generated a total revenue of 4,952 billion yuan in October, reflecting a year-on-year growth of 3.2%, which is an increase of 0.1 percentage points from the previous month. Although the monthly growth rate is slower than at the beginning of the year, overall catering consumption remains stable [2][16]. Industry Recovery - As catering consumption recovers, the demand across the upstream and downstream sectors related to the catering industry, including liquor, condiments, and beer, is also expected to gradually recover. The condiment industry, in particular, is anticipated to see robust growth as the peak season for consumption approaches during the New Year and Spring Festival [3][17]. - The current overall valuation of the condiment industry stands at 38 times, significantly lower than the 10-year average of 51.3 times, indicating potential for valuation recovery. Key beneficiaries in this sector include companies like Haitian Flavoring and Fuling Zhacai [3][17]. Market Performance - Last week, various sub-sectors within the food and beverage industry experienced declines, with the following weekly performance: Huangjiu (Changjiang) -1.26%, beer -1.89%, other alcoholic beverages -3.38%, meat products -3.39%, soft drinks -3.40%, fermented condiments -4.05%, liquor -4.81%, dairy products -6.94%, and other foods -8.05% [4][18]. - In the liquor sector, the top five performing companies were Jin Feng Jiu Ye +2.87%, ST Tongpu +1.01%, and Weilang Co. +0.36%, while the bottom five included China Resources Beer -13.22%, Budweiser APAC -11.66%, and Huangtai Jiu Ye -10.22% [4][18]. Hong Kong Market Review - The Hong Kong essential consumer index fell by 7.12% last week, with key companies showing the following performance: China Feihe -5.88%, Zhou Hei Ya -5.11%, and Nongfu Spring -8.45% [5][19].

Core Insights - Huawei's Euler operating system has evolved into a key player in the domestic server operating system market, achieving significant growth in installed capacity and maintaining the largest market share in 2023 [2][12] - The openEuler community has attracted over 20,000 contributors globally, with downloads spanning 152 countries and 1,973 cities, showcasing its extensive reach and collaborative innovation [2][12] - The integration of openEuler with AI technologies is a focal point, highlighted by its participation in the OSSUMMIT EU 2024, where discussions on the intersection of open-source operating systems and AI will take place [2][12] Summary by Questions Q1: Development of Huawei Euler - Huawei Euler originated from internal R&D and has transitioned through various stages, including commercial deployment of cloud products and the establishment of the openEuler open-source community, solidifying its position in the market [2][12] Q2: Features and Advantages of Huawei Euler - The system supports multiple mainstream computing architectures and covers all major application scenarios, ensuring versatility across various fields [2][12] - The openEuler community's global integration fosters innovation and collaboration, enhancing the system's capabilities [2][12] - Key enhancements include improved security, customizable integration, and long-term support [2][12] Q3: Latest Highlights of Huawei Euler - The acceleration of openEuler's integration with AI technologies is a significant development, with new products being introduced at major global events [2][12] Q4: Relationship Between Huawei Euler and HarmonyOS - Both systems share capabilities and ecosystems, aiming to create a comprehensive operating system platform that simplifies interconnectivity and promotes cross-domain innovation [3][13] Q5: Impact of Huawei Euler's Growth on Industry Ecosystem - The rise of Huawei Euler is expected to benefit upstream technology providers and downstream software developers, cloud service providers, and security solution providers [3][13] - The discontinuation of CentOS has led to increased migration interest towards Euler, ranking fourth in user migration surveys in 2023 [3][13] - Government policies continue to support the development of the domestic innovation industry, creating a favorable environment for server operating systems as a strategic core software [3][13] - The domestic operating system market has significant potential for growth due to its relatively low current adoption rates [3][13]

Investment Rating - The industry investment rating is "看好" (positive outlook), indicating a relative performance stronger than the benchmark index by more than 5% [81]. Core Insights - Huawei's Euler operating system has become a key player in the domestic server operating system market, with a significant increase in installed capacity from 1.03 million units in 2022 to 6.1 million units in 2023, achieving a market share of 36.8%, an increase of 11.1 percentage points year-on-year [17][67]. - The openEuler community has attracted over 20,000 contributors and has a download reach across 152 countries and 1,973 cities, showcasing its global integration and collaborative innovation [28][29]. - The discontinuation of CentOS is expected to drive migration towards domestic operating systems, with openEuler ranking fourth in user migration willingness in 2023 [67][70]. Summary by Sections 1. Background of Huawei Euler - Huawei Euler was developed as an enterprise-level operating system, evolving through internal product commercialization and the establishment of the openEuler open-source community [3][6]. - The system has become a crucial component in China's digital transformation, driven by the need for secure and unified operating systems in various sectors [6][7]. 2. Features and Advantages of Huawei Euler - openEuler supports a wide range of application scenarios, covering major computing architectures and ensuring 100% compatibility with mainstream applications [21][24]. - The community has established connections with upstream and downstream ecosystems, enhancing collaboration and innovation [28]. - The system emphasizes security, integration, and long-term support, making it suitable for stable operational environments [30][31]. 3. Latest Developments - openEuler is accelerating its integration with AI technologies, highlighted at the OSSUMMIT EU 2024, where discussions on the convergence of open-source operating systems and AI took place [35][36]. - The introduction of new versions targeting edge computing and embedded systems reflects its adaptability to emerging technological trends [24][35]. 4. Relationship with HarmonyOS - openEuler and HarmonyOS are designed to work together, sharing capabilities and fostering an ecosystem that supports various application scenarios [38][39]. - The collaboration aims to simplify interconnectivity and promote cross-domain innovation [41][42]. 5. Development Opportunities for Huawei Euler - The discontinuation of CentOS presents a significant opportunity for openEuler, as many users are looking to migrate to alternative operating systems [67]. - The Chinese government's policies are increasingly supportive of domestic software development, creating a favorable environment for the growth of the domestic operating system market [72][73]. - The low current domestic operating system penetration rate indicates substantial room for growth and replacement opportunities in the market [73].