Report Overview - Report Date: July 28, 2025 [1] - Research Team: Fixed Income Research Team [2] - Analysts: Chen Xi, Liu Rui [3] Investment Rating - The report does not mention the industry investment rating. Core Views - Credit bond issuance and net financing have recovered, and trading activity has increased [1][4] - The science and technology innovation bond market is in the second half, with room for spread compression [4] - Credit strategy focuses on balancing coupon and risk, increasing allocation to short - term high - coupon city investment bonds and 3Y/AAA - secondary capital bonds [6] Summary by Directory Policy and Market Trends - On July 18, 2025, the Shenzhen Stock Exchange issued a notice on pilot corporate bond re - issuance and asset - backed securities expansion business, aiming to enhance market depth and optimize financing efficiency [4] - The science and technology innovation bond market is in the second half. Driven by the expansion of underlying assets and policy guidance in the second half of the year, there is still room for spread compression [4] Primary Issuance - From July 21 - 25, the issuance amount of general credit bonds was 351 billion yuan, a week - on - week increase of 70.9 billion yuan; net financing was 128 billion yuan, a week - on - week increase of 83 billion yuan [4] - Among them, the issuance amount of urban investment bonds was 107.7 billion yuan, a week - on - week increase of 10.9 billion yuan; net financing was 29.8 billion yuan, a week - on - week increase of 27.5 billion yuan [4] - The issuance amount of industrial bonds was 243.2 billion yuan, a week - on - week increase of 60.1 billion yuan; net financing was 98.2 billion yuan, a week - on - week increase of 55.8 billion yuan [4] - The weighted issuance term of general credit bonds was 4.21 years, a week - on - week increase of 0.88 years; the weighted issuance interest rate was 1.75%, a week - on - week decrease of 0.09 pct [4] Secondary Trading - The turnover rates of general credit bonds with maturities of less than 1 year and 1 - 3 years increased, while those of other maturities decreased [5] - The turnover rate of bank Tier 2 and perpetual bonds increased overall, with a significant increase in the AAA - level, and a decrease in the AA+ and AA levels [5] Spread Tracking - As of July 25, the average yields of medium - and short - term notes, urban investment bonds, secondary capital bonds, and perpetual bonds with AAA ratings at various maturities were at historically low levels [5] - For urban investment bonds, most spreads widened, except for some 3 - year and 5 - year varieties [5] - For bank Tier 2 and perpetual bonds, the spreads of 3Y and 5Y levels widened, while the 1Y spread narrowed [5] - Regionally, most provincial urban investment bond spreads widened, with Heilongjiang having the largest widening amplitude of 11BP [5] - In the industrial bond sector, most industry spreads narrowed or remained flat, except for the AA - level chemical and AA - level building materials industries [6] Credit Strategy - Balance coupon and risk, and give priority to short - term high - rating varieties. Pay attention to liquidity premium opportunities at the ultra - long end and beware of policy and credit event disturbances [6] - Increase allocation to short - term high - coupon urban investment bonds and industrial bonds with a duration of less than 3 years [6] - Enter the ultra - long - term credit bond market after interest rate adjustments, and focus on the liquidity premium of insurance sub - debt and science and technology innovation bond ETF component bonds [6] - For bank Tier 2 and perpetual bonds, pay attention to changes in the capital market and the overall sentiment of the credit bond allocation end when considering sector games [6]

Key Insights - The report highlights the importance of high-quality urban renewal and the need for a new model of real estate development as emphasized by national leaders [3][4] - It notes a significant increase in broad fiscal spending intensity, with public budget expenditures reaching 28,318 billion yuan in June, reflecting a year-on-year growth of 0.4% [8][10] - The report discusses the ongoing transformation in the banking sector regarding interest rate risks and the expected upward trend in bond market yields due to increased volatility in funding rates [29][51] Macro Economic Analysis - The focus on urban renewal and domestic circulation is expected to enhance economic growth, with policies aimed at boosting consumption and diversifying supply [3][4] - The government is pushing for a balanced housing system through the newly released housing rental regulations [4] - The report indicates that the fiscal revenue growth rate has slowed, with a marginal improvement in tax revenue, while non-tax revenue continues to decline [10][11] Industry Insights - The AI application sector is highlighted as a growth area, with companies like Tuolisi and Songlin Technology positioned to benefit from advancements in AI and robotics [40][41] - The dietary supplement industry is projected to grow significantly, driven by increasing health awareness and an aging population, with global sales expected to reach 223 billion dollars by 2026 [42][43] - The report identifies opportunities in the liquor sector, particularly low-valuation white liquor stocks, as they are seen as defensive assets amid economic uncertainties [45][46] Financial Sector Overview - The report notes a significant increase in trading volume, with daily transactions surpassing 20 trillion yuan, indicating a recovery in market activity [49][50] - The insurance sector is experiencing a reduction in preset interest rates, which is expected to lower liability costs and support the transition of traditional insurance products [51][52] Energy and New Materials - The solid-state battery industry is making progress with breakthroughs in materials and acceleration in pilot production, indicating a positive outlook for the sector [54]

Investment Rating - Investment rating for the media industry is "Positive (Maintain)" [1] Core Insights - The report emphasizes the ongoing development and commercialization of AI applications, particularly in the fields of AI companionship, creation, e-commerce, marketing, and education, suggesting continued investment in these areas [3][4] - The report highlights the success of domestic animated films and their related merchandise, particularly focusing on the IP of "The King's Avatar 2" and "Wang Wang Mountain Monster," which are expected to drive revenue growth [3][4] - The upcoming ChinaJoy 2025 event is anticipated to showcase new games and IP-related products, with a positive outlook on the gaming industry's continued growth and the potential for significant promotional activities [3][4] Industry Data Overview - "Delta Operation" ranked first on the iOS free chart, while "Honor of Kings" topped the iOS revenue chart as of July 26, 2025 [10][15] - The film "Chang'an's Lychee" achieved a weekly box office of 2.79 billion, with a cumulative box office of 4.41 billion [26] Industry News Summary - AIGC technology continues to advance, benefiting various sectors including marketing and music, with the expected launch of GPT-5 in early August [33] - The report notes the high performance of domestic animated films and the ongoing demand for related IP merchandise, indicating a robust market for these products [3][4]

Investment Rating - The industry investment rating is "Positive" (maintained) [3] Core Insights - The report highlights the focus on weight management and healthy eating, driven by the "Weight Management Year" initiative, with significant market potential in the low-sugar, low-fat, and high-fiber food segments [5][20][25] - The tourism sector is expected to see a significant increase in traffic following the official closure of Hainan Free Trade Port on December 18, 2025, which will implement favorable tax policies [15][18] - The AI-enabled social platform, ZhiZi City Technology, is projected to achieve a revenue growth of 38.0% to 41.5% in the first half of 2025, indicating strong performance in the social business segment [28][30] - The health food market in China is anticipated to grow significantly, with the market size expected to exceed 800 billion yuan by 2027, driven by rising health awareness among consumers [22][23][33] Summary by Sections 1. Travel and Tourism - Hainan will officially close its borders at the end of 2025, leading to a potential surge in visitor numbers post-closure [15] - The implementation of "zero tariff" policies and low tax rates will enhance Hainan's position as a key processing and value-added base [15][16] 2. Weight Management and Healthy Eating - The prevalence of overweight and obesity in China has surpassed 50%, with over 140 million diabetes patients, creating a sustained demand for low-sugar and low-fat foods [23][26] - The Chinese nutrition and health food market is projected to grow from 3.796 trillion yuan in 2017 to over 8 trillion yuan by 2027 [20][21] 3. AI and Social Platforms - ZhiZi City Technology expects total revenue of 31.35 to 32.15 billion yuan in the first half of 2025, reflecting a growth of 38.0% to 41.5% compared to the same period in 2024 [28][30] - The company's social business is anticipated to generate revenue of 28.00 to 28.60 billion yuan, marking a year-on-year increase of 35.4% to 38.3% [28] 4. Health and Wellness - The global health food market is expected to reach 191.5 billion USD by 2024, with China's health food market projected to grow to 260.2 billion yuan [37][39] - The demand for dietary supplements is increasing, with 64% of health-conscious individuals opting to purchase health products [33][41]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The retail industry is experiencing a recovery, with significant growth in specific segments such as beauty and jewelry, driven by consumer sentiment and innovative business models [8][30] - The launch of the AI model by Yiwu Small Commodity City is expected to enhance operational efficiency and empower merchants, indicating a shift towards technology-driven business practices [25][26] Summary by Sections Retail Market Review - The retail industry index rose by 3.28% during the week of July 21-25, outperforming the Shanghai Composite Index by 1.61 percentage points [7][14] - The brand cosmetics sector saw the highest weekly increase of 5.94%, while the jewelry sector led the year-to-date performance with a 28.93% increase [17][20] Industry Dynamics - Yiwu Small Commodity City partnered with Alibaba to initiate the AI model testing, which is expected to transform traditional trade practices and enhance global trade linkages [25][26] - Over 30,000 merchants in Yiwu are utilizing AI tools, with deep users experiencing over 30% growth in orders, showcasing the impact of AI on operational efficiency and brand enhancement [26] Investment Recommendations - Focus on high-quality companies in sectors benefiting from emotional consumption themes, including: - Gold and jewelry brands with differentiated product offerings, such as Laopuhuang and Chaohongji [8][30] - Retail enterprises adapting to trends, like Yonghui Supermarket and Aiyingshi [8][30] - Domestic beauty brands with strong growth potential, including Maogeping and Pola [8][30] - Medical beauty product manufacturers with unique pipelines, such as Aimeike and Kedi-B [8][30] Company-Specific Insights - Laopuhuang reported a revenue increase of 167.5% and a net profit increase of 253.9% in FY2024, indicating strong brand expansion [32] - Chaohongji achieved a revenue growth of 25.4% in Q1 2025, driven by its focus on fashionable jewelry targeting younger consumers [40] - Maogeping's revenue grew by 34.6% in FY2024, reflecting its position as a leading domestic high-end beauty brand [32] - Pola's revenue increased by 21.0% in FY2024, supported by a robust product lineup [32]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The new housing transaction area has increased year-on-year, promoting urban construction and quality improvement. The overall real estate market in China is moving towards stabilization, with potential for slight fluctuations in housing prices during this process [5][63] - The land transaction area has decreased year-on-year, while the premium rate has increased month-on-month. The domestic credit bond issuance scale has increased compared to the previous month [5][51] - The Shanghai land auction market is active, with significant transactions and high premium rates observed [5][41] Summary by Sections 1. Urban Construction and Quality Improvement - The central government is focused on creating a comfortable living environment and improving urban governance systems. Local governments are also implementing policies to lower down payment ratios and stimulate housing demand [6][15][16] 2. Sales Performance - In the 30th week of 2025, the total residential transaction area in 68 cities was 1.88 million square meters, a year-on-year decrease of 16% but a month-on-month increase of 19%. Cumulatively, the transaction area from the beginning of the year to date is 70.76 million square meters, down 9% year-on-year [7][18][29] - The second-hand housing transaction area in 20 cities was also 1.88 million square meters, with a year-on-year growth of 2% [35] 3. Investment Performance - In the 30th week of 2025, 100 major cities released land planning areas of 2.03 million square meters, with a transaction area of 1.75 million square meters, down 8% year-on-year. The premium rate for land transactions was 7.8% [41][43] 4. Financing Performance - In the 30th week of 2025, the issuance of credit bonds reached 14.6 billion yuan, a year-on-year increase of 208% and a month-on-month increase of 300% [8][51] 5. Market Review - The real estate index rose by 4.07% in the week of July 21-27, 2025, outperforming the CSI 300 index, which increased by 1.69% [56][58]

Group 1 - The report highlights the encouragement of mergers and acquisitions (M&A) by policies, with a recent acquisition event involving Donghe New Materials acquiring 51% of Anshan Fuyou Mining [1][10] - The M&A market is expected to see positive signals from the "New National Nine Articles" and "M&A Six Articles," which will drive industrial integration and cross-border mergers [1][10] - Donghe New Materials aims to enhance its raw material supply security and profitability through the acquisition of Fuyou Mining, which has a production capacity of 500,000 tons of magnesite per year [2][44] Group 2 - The acquisition transaction is valued at 255.3 million yuan, with a significant discount of 88.26% compared to the assessed value of the mining rights [2][24] - Donghe New Materials plans to optimize its financing structure by applying for a merger loan of 158 million yuan, which will cover up to 60% of the acquisition price [2][27] - The acquired company, Fuyou Mining, has a total asset value of 646.57 million yuan and is expected to generate a net profit of approximately 67 million yuan per year [3][46] Group 3 - The report indicates that the North Exchange is focusing on supporting innovative small and medium-sized enterprises, particularly in advanced manufacturing and modern services [17][18] - The characteristics of current acquisitions include a focus on "strong chain and supplementary chain" objectives, with cash acquisitions being the primary method [18][19] - The report emphasizes the importance of securing low-cost and stable raw material resources for sustainable development in the industry [31][40]

AI and Market Trends - AI applications are entering a rapid growth phase, supported by mature infrastructure and decreasing costs of large model calls, enhancing commercial potential[3] - China possesses significant data reserves and a broad demand scale, providing a competitive advantage for AI development[3] Market Performance - The A-share market experienced a general rise, with the Shanghai Composite Index up by 1.67% and the Shenzhen Component Index up by 2.33% during the week[15] - Mid-cap indices such as the CSI 500 and CSI 1000 outperformed large-cap indices, with increases of 3.28% and 2.38% respectively[17] Dietary Supplements Industry - The global dietary supplement market is projected to reach $223 billion by 2026, driven by population growth and increasing health awareness[5] - HMB, a key nutrient for muscle health, is expected to see global production reach 3,572 tons by 2030, indicating strong market potential[5] Investment Recommendations - Recommended stocks include Toris (拓尔思), which has a robust open-source intelligence data resource, and Songlin Technology (松霖科技), focusing on health robots[3] - Other notable mentions are Rongxin Culture (荣信文化), which is expanding into AI+ education scenarios[3] Corporate Actions - This week, two companies listed on the A-share market, with C Shanda and C Jiyuan seeing first-day gains of 356% and 274% respectively[33] - There were six new public offerings announced, with an average discount rate of 18.9% and an average return of 40.7% on recent fundraising projects[34][40]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The low valuation of the liquor sector presents layout opportunities, while new consumption valuations are returning to rational levels. The food and beverage index increased by 0.7% from July 21 to July 25, ranking 23rd among 28 sectors, underperforming the CSI 300 by approximately 0.9 percentage points. The sub-sectors of processed food (+2.0%), health products (+1.9%), and beer (+1.1%) performed relatively well [3][11][12]. Summary by Sections Weekly Insights - The liquor sector has shown a rebound, primarily driven by trading factors. In a volatile market with frequent rotation of hot sectors, the liquor sector has experienced a notable rebound, with some leading liquor companies seeing stock price increases of over 10%. This rebound is attributed to funds seeking certainty in assets amid a slowing economic recovery and high uncertainty in some industries. Liquor, as a low-valuation and high-dividend traditional defensive sector, has attracted funds [3][11]. Market Performance - The food and beverage index's performance was below the market average, with a 0.7% increase, ranking 23rd out of 28 sectors. The processed food, health products, and beer sectors outperformed, while individual stocks such as ST Xifa, Huang Shang Huang, and Jia Bi You saw significant gains, whereas companies like Huang Shi Group, Xi Mai Food, and Liang Pin Pu Zi faced declines [10][13]. Upstream Data - Recent data indicates a decline in some upstream raw material prices. For instance, the price of fresh milk was 3.0 yuan per kilogram, down 5.9% year-on-year, while the price of pork was 20.7 yuan per kilogram, down 17.5% year-on-year. The price of full-fat milk powder increased by 25.0% year-on-year [20][25][22]. Liquor Industry News - The national liquor price index remained stable, with the overall price index at 100.00. The premium liquor price index increased by 10.38%, indicating a positive trend in the premium segment [40]. Recommended Portfolio - The report recommends focusing on low-valuation liquor stocks such as Guizhou Moutai, Shanxi Fenjiu, and Ximai Food, as well as companies like Wancheng Group and Bairun Co. These companies are expected to perform well due to their strong market positions and growth potential [5][47].

Economic Growth - President Xi Jinping emphasized seven key tasks for urban development, including optimizing modern urban systems and promoting high-quality urban renewal[9] - Premier Li Qiang highlighted the importance of strengthening domestic circulation and enhancing consumer demand through diversified supply[9] Infrastructure and Industry - The Yarlung Tsangpo River downstream hydropower project has commenced with a total investment of approximately CNY 1.2 trillion[10] - 16 central enterprises signed investment agreements for 75 industrial projects in Tibet, amounting to CNY 317.5 billion[10] Consumer Policy - The National Development and Reform Commission revised the Price Law for the first time in 27 years, addressing issues related to irrational price wars and unfair pricing practices[14] - Regulatory bodies have urged major platforms like Ele.me, Meituan, and JD.com to standardize promotional activities and engage in rational competition[14] Financial Regulation - The China Securities Regulatory Commission is pushing for listed companies to enhance investment value and implement major asset restructuring management[16] - The People's Bank of China and the State Administration of Foreign Exchange proposed a unified currency pool policy framework[16] Trade Relations - New high-level economic talks between China and the U.S. are set to begin, focusing on mutual economic concerns[18] - The Hainan Free Trade Port will implement zero-tariff policies for certain goods starting December 18, 2025[19] Risk Warning - There is a persistent divergence in domestic and foreign monetary policies, with domestic policy execution falling short of expectations[25]