Quantitative Models and Construction Methods 1. Model Name: Optimal Factor Timing Portfolio - **Model Construction Idea**: The model integrates numerous factors and predictors to construct a timing strategy, leveraging shrinkage techniques to avoid overfitting to historical data and spurious opportunities[2][3][17] - **Model Construction Process**: 1. Use the Ledoit and Wolf (2003) covariance matrix shrinkage estimator to ensure robustness even with thousands of timing portfolios. The shrinkage intensity is calculated following Schäfer and Strimmer (2005)[3][25] 2. Apply a modified version of Kozak, Nagel, and Santosh (2020) shrinkage method to estimate portfolio weights, introducing skepticism toward unrealistically high Sharpe ratio opportunities. The weight formula is: $$ \hat{W}_{t}=\left(\hat{\Sigma}_{t}+\hat{\overline{t}}_{t}\left[\begin{array}{cc}0&0\\ 0&\hat{D}_{t}\end{array}\right]\right)^{-1}\hat{\mu}_{t} $$ where $\hat{\Sigma}_{t}$ is the covariance matrix, $\hat{\mu}_{t}$ is the mean return vector, and $\lambda$ controls the shrinkage degree[27][28][29] 3. Rescale portfolio weights to ensure the absolute sum of weights equals 1 in each period, focusing on factor rotation while avoiding extreme leverage[3][30] - **Model Evaluation**: The shrinkage techniques effectively mitigate estimation errors and prevent overfitting, ensuring robust out-of-sample performance even in high-dimensional settings[3][30][80] --- Model Backtesting Results 1. Optimal Factor Timing Portfolio (Fama-French Factors) - **Mean Return**: 4.71% - **Standard Deviation**: 5.81% - **Sharpe Ratio**: 0.81 - **Appraisal Ratio**: 0.79 - **Worst 12-Month Return**: -5.62%[40][41] 2. Optimal Factor Timing Portfolio (Large-Cap Fama-French Factors) - **Mean Return**: 3.65% - **Standard Deviation**: 6.49% - **Sharpe Ratio**: 0.56 - **Appraisal Ratio**: 0.54 - **Worst 12-Month Return**: -13.70%[40][41] 3. Optimal Factor Timing Portfolio (Jensen Factors, Small Predictor Set) - **Mean Return**: 2.97% - **Standard Deviation**: 2.01% - **Sharpe Ratio**: 1.48 - **Appraisal Ratio**: 1.51 - **Worst 12-Month Return**: -1.79%[40][41] 4. Optimal Factor Timing Portfolio (Jensen Factors, Large Predictor Set) - **Mean Return**: 2.73% - **Standard Deviation**: 1.91% - **Sharpe Ratio**: 1.43 - **Appraisal Ratio**: 1.46 - **Worst 12-Month Return**: -3.17%[40][41] --- Quantitative Factors and Construction Methods 1. Factor Name: Interaction of Factors and Predictors - **Factor Construction Idea**: Factor timing portfolios are constructed by interacting lagged predictors with factor returns, transforming the time-series prediction problem into a cross-sectional mean-variance optimization problem[17][19][23] - **Factor Construction Process**: 1. Define factor timing portfolios as: $$ G_{t}=X_{t-1}F_{t} $$ where $X_{t-1}$ are lagged predictors and $F_{t}$ are factor returns[19][20] 2. The expected return of the timing portfolio is: $$ E\left[G_{t}\right]=\mathrm{Cov}\left(X_{t-1},F_{t}\right) $$ indicating that timing returns depend on the predictive power of $X_{t-1}$ for $F_{t}$[21][22] 3. Construct $KJ$ timing portfolios for $K$ factors and $J$ predictors, always including the original factors as a baseline[22][23] - **Factor Evaluation**: The interaction approach effectively captures time-varying factor exposures, enabling robust timing strategies across diverse factor-predictor combinations[23][80] --- Factor Backtesting Results 1. Fama-French Factors (Standard Version) - **Mean Return**: 4.71% - **Standard Deviation**: 5.81% - **Sharpe Ratio**: 0.81 - **Appraisal Ratio**: 0.79 - **Worst 12-Month Return**: -5.62%[40][41] 2. Fama-French Factors (Large-Cap Version) - **Mean Return**: 3.65% - **Standard Deviation**: 6.49% - **Sharpe Ratio**: 0.56 - **Appraisal Ratio**: 0.54 - **Worst 12-Month Return**: -13.70%[40][41] 3. Jensen Factors (Small Predictor Set) - **Mean Return**: 2.97% - **Standard Deviation**: 2.01% - **Sharpe Ratio**: 1.48 - **Appraisal Ratio**: 1.51 - **Worst 12-Month Return**: -1.79%[40][41] 4. Jensen Factors (Large Predictor Set) - **Mean Return**: 2.73% - **Standard Deviation**: 1.91% - **Sharpe Ratio**: 1.43 - **Appraisal Ratio**: 1.46 - **Worst 12-Month Return**: -3.17%[40][41]

证券研究报告•深度/专题 影石创新投资探讨 ——25年前瞻专题之影石创新（688775.SH） 2025. 06. 11 华安证券研究所 分析师：邓 欣 S0010524010001 dengxin@hazq.com 分析师：成浅之 S0010524100003 chengqianzhi@hazq.com 联系人：唐楚彦 S0010124070002 tangchuyan@hazq.com 核心要点 影石创新坐拥三重产品壁垒全景优势+软件突出+迭代领先，以强产品力逐步抢占GoPro全球份额，最新销量已超越手持影 像设备昔日龙一GoPro；我们认为：从投资逻辑看，公司未来在产品外延、海外抢占、成本优化三方面皆有成长空间。 定价探讨：我们看好影石创新未来产品拓展空间与全球份额空间，我们测算25-26年公司收入78/101亿元（同比 +40%/+29%），利润13.4/16.5亿元（同比+35%/+23%），参考科技消费可比标的26年平均估值21X，公司当前价格存成 长性溢价空间（远期更存云增值、第二曲线等额外长期空间），关注公司长期价值。同步建议关注产业链标的：弘景光电、 韦尔股份、虹软科技、迅雷等（详见正文）。 ...

Group 1 - The overall situation of "fixed income +" funds shows a structured risk-return layering, with low-wave funds dominated by bonds (equity position <10%), providing stable but limited returns; medium-wave funds balanced between stocks and bonds (equity position 10%-20%), showing moderate volatility and robust performance in bull markets; high-wave funds with aggressive equity exposure (equity position >20%), exhibiting significant return elasticity but high drawdown risks [2][3][6] - The market is concentrated in mixed bond secondary funds, accounting for 45.33% of the total, reflecting investors' preference for a "steady progress" strategy, while bond-mixed funds attract high-risk capital through diversified asset allocation, although they represent a smaller scale [2][3][12] Group 2 - In the bond segment, low, medium, and high-wave "fixed income +" funds exhibit distinct risk-return characteristics: low-wave funds focus on high-rated, short-duration bonds, maintaining low drawdown days (<40 days) across market environments; medium-wave funds adopt a "coupon-focused, duration-adjusted" strategy, with drawdown days (40-80 days) and return volatility reflecting a "middle route" characteristic; high-wave funds employ aggressive duration management and credit downshifting, leading to significant drawdowns during bear markets [3][6][28] - The bond holdings of low-wave funds are primarily high-rated bonds, while medium-wave funds balance between high-rated credit bonds and 3-5 year interest rate bonds, and high-wave funds focus on cyclical and growth sectors, using bonds to control drawdowns while pursuing return elasticity [4][5][20] Group 3 - The stock allocation of low, medium, and high-wave "fixed income +" funds shows significant differences: low-wave funds maintain extremely low stock positions, with convertible bond allocations generally below 3%, focusing on high-rated credit bonds for stable coupon income; medium-wave funds allocate 10%-20% to stocks and convertible bonds, targeting stable sectors for excess returns; high-wave funds allow 20%-25% equity exposure, focusing on cyclical and growth sectors [4][5][6] - The performance of these funds during bull and bear markets reveals a clear differentiation in stock allocation strategies, with low-wave funds emphasizing stability, medium-wave funds focusing on dynamic balance, and high-wave funds pursuing return elasticity [6][20] Group 4 - The risk-return characteristics of the three types of funds vary significantly, with low-wave funds showing the least volatility and drawdown, medium-wave funds maintaining a balanced approach, and high-wave funds experiencing the highest volatility and drawdown during bear markets [6][22][23] - The analysis of bond holdings and duration strategies indicates that low-wave funds maintain a conservative duration profile, medium-wave funds adjust duration based on market conditions, and high-wave funds exhibit the most aggressive duration management [28][39][42]

Report Industry Investment Rating - The report maintains a neutral view on 50Y treasury bonds [7] Core View of the Report - In the current volatile market with increasing bullish bond market catalysts, the duration advantage of 50Y treasury bonds can be considered, but due to liquidity factors and changes in demand - side institutional behavior, and limited downward space for interest rates, a neutral view is maintained [7] Summary by Related Content Market Conditions and Opportunities for 50Y Treasury Bonds - Since June, trading opportunities in the bond market have gradually increased. Market reaction to Sino - US negotiations has dulled, May's fundamental data is likely to be favorable for the bond market, large banks have increased short - bond purchases, and the upcoming Lujiazui Forum may bring trading opportunities in the capital market [2] - Compared with other bonds, 50Y treasury bonds have a duration advantage in a bull market. Their supply and liquidity are weaker than 30Y bonds. The balance of treasury bonds with a remaining maturity of 45Y - 50Y is about 50.2 billion yuan, while that of 25Y - 30Y is over 2.2 trillion yuan. The current yield - to - maturity of 50Y treasury bonds is lower than that of 30Y local government bonds [2] - Another trading opportunity for 50Y treasury bonds is the interest rate elasticity after primary issuance. Since 2017, in nearly half of the 50Y treasury bond issuances, the primary issuance rate was higher than the secondary rate, often occurring in volatile or bear markets and related to the behavior of long - term bond - allocating institutions such as insurance companies [3][6] Demand - Side Analysis - Insurance institutions are the main buyers of ultra - long - term bonds. They have steadily increased their allocation of ultra - long - term bonds over the years, while funds may extend their duration at certain times for trading purposes [6] - June is a key time for insurance institutions to potentially increase their allocation of 50Y treasury bonds, but the allocation intensity this year may be lower than in previous years. The reasons include lower premium growth from January to April this year, high government bond issuance since the first quarter leading to more primary - market bond purchases by allocation funds, and insurance institutions' preference for 30Y local government bonds due to their higher coupon rates [6]

Group 1: Report Industry Investment Rating - Not mentioned in the provided content Group 2: Core Views of the Report - In May, the year-on-year CPI was -0.1%, with the decline remaining unchanged for three consecutive months, and the month-on-month CPI decreased by 0.2%, showing a seasonal decline. The year-on-year PPI was -3.3%, with the decline widening by 0.6 pct compared to April, and the month-on-month PPI decreased by 0.4%, with the decline remaining unchanged for three consecutive months [2]. - CPI is dragged down by the energy item, while core CPI continues to rise, indicating that demand may be warming up. The consumption structural improvement is still in the transition period, and service CPI continues to grow [3]. - International crude oil import factors, energy transformation, and insufficient demand for real estate and infrastructure lead to a decline in production material prices, dragging down the year-on-year negative growth of PPI to expand. However, PPI continues to show price improvement in high-tech industries, and the recovery impact gradually spreads from policy-driven areas to other consumer goods areas [3][4]. - From the perspective of residents' income, the year-on-year decline in rent has remained at -0.1% for three consecutive months since March, indicating that the income improvement trend may have stagnated. From the perspective of corporate activity signs, the year-on-year decline in pork prices for two consecutive months and the decline in liquor prices may indicate a decrease in corporate business activity [5][6]. - In the short term, CPI may face fluctuations, but in the long term, if external interference factors decrease marginally, CPI may break through upward. PPI is in a supply-side dilemma, but the effect of domestic demand pulling has initially appeared, and the "rush to export" of external demand may bring a phased rebound in industrial product prices [7][8]. Group 3: Summary by Relevant Catalogs Data Observation: Characteristics of May Inflation Data - CPI: Affected by the energy item, the year-on-year upward trend has stagnated below the critical line, but core inflation has risen to 0.6% year-on-year, showing that consumer demand continues to warm up. The consumption structure is improving, and service CPI has continued to grow for four months, reaching 0.5% year-on-year [2][3]. - PPI: Affected by international crude oil import factors, energy transformation, and insufficient demand for real estate and infrastructure, the year-on-year negative growth has expanded. However, PPI continues to show price improvement in high-tech industries, and the recovery impact gradually spreads from policy-driven areas to other consumer goods areas [3][4]. In - depth Perspective: Implications of March Price Data - Residents' income: The year-on-year decline in rent has remained at -0.1% for three consecutive months since March, indicating that the income improvement trend may have stagnated [5]. - Corporate activity: The year-on-year decline in pork prices for two consecutive months and the decline in liquor prices may indicate a decrease in corporate business activity [5][6]. Future Outlook: Trends Seen Through May Inflation Data - CPI: In the short term, it may face fluctuations due to external uncertainties, but in the long term, if external interference factors decrease marginally, it may break through upward [7]. - PPI: It is in a supply-side dilemma, but the effect of domestic demand pulling has initially appeared, and the "rush to export" of external demand may bring a phased rebound in industrial product prices, but attention should be paid to the negative impact of low - price competition among enterprises during the rush to export [8].

Investment Rating - Industry Investment Rating: Overweight [1] Core Views - The report highlights a significant increase in domestic large-scale energy storage tenders, indicating a growing market opportunity in the virtual power plant segment [1][5] - The photovoltaic sector is experiencing a decline in production in June, with intensified competition among various segments, suggesting a cautious outlook for the second quarter of 2025 [12][14] - The offshore wind sector is entering a favorable phase, with steady progress in offshore wind projects, particularly in Jiangsu and Fujian [20][21] - The hydrogen energy industry is developing positively, with an accelerated establishment of a supporting system for its growth [30][33] - The report emphasizes the importance of virtual power plants and new power system construction as key areas for investment [37][38] Summary by Sections Photovoltaics - Production in June is declining, leading to increased competition among different segments [12][14] - The overall price trend in the photovoltaic supply chain is stable, but there is downward pressure due to expected weak demand in the second half of the year [14][19] - Investment suggestions include focusing on companies with a strong position in the BC technology sector, such as Longi Green Energy and Aiko Solar [14][19] Wind Power - The offshore wind sector is seeing project approvals and progress, with significant projects in Jiangsu and Fujian [20][21] - Investment recommendations include focusing on undervalued stocks and those benefiting from offshore wind projects [23] Energy Storage - Domestic energy storage tenders exceeded 20 GWh in May, indicating a robust market [7][24] - The report suggests monitoring the recovery of large-scale energy storage market conditions [7][24] - The average price for two-hour energy storage systems reached a historical low of 0.55 yuan/Wh in May [28] Hydrogen Energy - The hydrogen energy sector is experiencing positive development, with a focus on transitioning from gray hydrogen to green hydrogen [30][33] - The report outlines plans for significant advancements in hydrogen energy technology and infrastructure by 2035 [33] Electric Grid Equipment - The report discusses the initiation of pilot projects for new power system construction, emphasizing the role of virtual power plants [37][38] - Investment opportunities are identified in companies involved in smart microgrids and virtual power plant technologies [37][38] Electric Vehicles - The potential cancellation of electric vehicle subsidies in the U.S. could negatively impact demand [39] - The report advises continued investment in high-profit companies within the electric vehicle supply chain [39] Humanoid Robots - The report notes significant developments in the humanoid robot sector, including leadership changes at Tesla's Optimus project and new product launches by various companies [42][46]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The Huaxi Securities view is that the cost - performance of certificates of deposit has increased. It is recommended to maintain the duration and wait for the opportunity of interest rate decline. The overall view of fixed - income buyers is neutral to bullish, and the sentiment of sellers and buyers is approaching a new high for the year. The interest rate view remains unchanged, and three variables need to be focused on in the follow - up [3][4][6]. Summary by Directory 1. Seller and Buyer Markets 1.1 Seller Market Sentiment Index and Interest - rate Bonds - The weighted sentiment index this week is 0.37, and the unweighted index is 0.41, up 0.13 from last week. The overall institutional view is neutral to bullish, with 13 bullish, 16 neutral, and 1 bearish. 43% of institutions are bullish, believing that the bond market starts a new round of easing expectations and short - term interest rates have downward space; 53% are neutral, stating that the bull - bear forces are balanced, trading opportunities are limited, and the market will continue to fluctuate; 3% are bearish, thinking that the bond market has over - priced the interest - rate cut expectation and yields may rise [12]. 1.2 Buyer Market Sentiment Index and Interest - rate Bonds - This week's buyer sentiment index is 0.35, up 0.25 from last week, with a neutral - to - bullish view. 14 institutions are bullish and 11 are neutral. 56% of institutions are bullish due to the central bank's reverse - repurchase operations, loose funds, and increased non - bank allocation demand; 44% are neutral because of Sino - US relations, abundant market liquidity, and potential impacts of growth policies on the bond market [13]. 1.3 Credit Bonds - Market hot topics include end - of - quarter wealth management redemptions and tariff policies. End - of - quarter wealth management redemptions lead to weak buying of credit bonds, and tariff policies may cause the credit bond market to fluctuate narrowly due to the approaching expiration of tariff exemptions [17][18]. 1.4 Convertible Bonds - Institutions' overall view this week is neutral to bullish, with 3 bullish and 13 neutral. 19% of institutions are bullish as the economy stabilizes, the equity market has limited downside, and the "asset shortage" in the bond market drives a shift to the convertible bond market; 81% are neutral because the equity market has a bottom and resistance, and the convertible bond market may fluctuate [21]. 2. Treasury Bond Futures Tracking 2.1 Futures Trading - Futures prices have risen across the board. As of June 6, the prices of TS/TF/T/TL contracts are 102.45 yuan, 106.14 yuan, 108.93 yuan, and 119.78 yuan respectively, up 0.06 yuan, 0.12 yuan, 0.20 yuan, and 0.37 yuan from last Friday. - Open interest has increased across the board. As of June 6, the open interest of TS/TF/T/TL contracts is 117,000 lots, 145,000 lots, 177,000 lots, and 97,000 lots respectively, an increase of 5,449 lots, 7,503 lots, 12,481 lots, and 3,311 lots from last Friday. - Trading volume has decreased for all contracts except TS. As of June 6, the 5 - day moving average trading volume of TS/TF/T/TL contracts is 79.4 billion yuan, 61.8 billion yuan, 65.8 billion yuan, and 85.9 billion yuan respectively, an increase of 4.2 billion yuan for TS and decreases of 2.5 billion yuan, 13.8 billion yuan, and 11.7 billion yuan for TF, T, and TL respectively from last Friday. - The trading - to - open - interest ratio has decreased across the board. As of June 6, the 5 - day moving average trading - to - open - interest ratio of TS/TF/T/TL contracts is 0.35, 0.44, 0.39, and 0.91 respectively, down 0.01, 0.05, 0.09, and 0.13 from last Friday [23][24]. 2.2 Cash Bond Trading - The turnover rate of 30 - year treasury bonds has decreased, with a rate of 3.19% on June 6, down 0.02 percentage points from last week and up 0.21 percentage points from Monday. The weekly average turnover rate is 3.19%. The weekly average turnover rate of interest - rate bonds has increased, reaching 0.99% on June 6, up 0.21 percentage points from last week and 0.15 percentage points from Monday. The turnover rate of 10 - year China Development Bank bonds has decreased, with a rate of 0.92% on June 6, up 0.65 percentage points from last week and down 0.53 percentage points from Monday [32][35]. 2.3 Basis Trading - The basis of the main contracts has widened. As of June 6, the basis (CTD) of TS/TF/T/TL main contracts is - 0.07 yuan, - 0.03 yuan, + 0.03 yuan, and + 0.53 yuan respectively, up 0.01 yuan, 0 yuan, 0.30 yuan, and 0.01 yuan from last Friday. - The net basis of the main contracts has widened. As of June 6, the net basis (CTD) of TS/TF/T/TL main contracts is - 0.09 yuan, - 0.08 yuan, - 0.05 yuan, and + 0.07 yuan respectively, down 0.03 yuan, 0.04 yuan, 0.03 yuan, and 0.07 yuan from last Friday. - The IRR of the main contracts has decreased. As of June 6, the IRR (CTD) of TS/TF/T/TL main contracts is 1.84%, 1.80%, 1.68%, and 1.34% respectively, down 0.02%, 0.01%, 0.05%, and 0.09% from last Friday [40][44]. 2.4 Inter - delivery Spread and Inter - variety Spread - For the inter - delivery spread, except for the TS contract which has widened, the spreads of other main contracts have narrowed. As of June 6, the near - far spreads of TS/TF/T/TL contracts are - 0.13 yuan, - 0.29 yuan, - 0.19 yuan, and - 0.73 yuan respectively, up 0.04 yuan, 0 yuan, 0.03 yuan, and - 0.06 yuan from last Friday. - For the inter - variety spread, except for the 2*TS - TF contract which has narrowed, the spreads of other main contracts have widened. As of June 6, 2*TS - TF, 2*TF - T, 4*TS - T, and 3*T - TL are 98.77 yuan, 103.35 yuan, 300.89 yuan, and 206.98 yuan respectively, down 0.02 yuan, up 0.06 yuan, up 0.01 yuan, and up 0.25 yuan from last Friday [52][53].

Investment Rating - Industry Investment Rating: Overweight [1] Core Views - The report highlights a significant increase in domestic large-scale energy storage tenders, indicating a growing market opportunity in this sector [1][7] - The offshore wind power sector is entering a favorable phase, with ongoing projects and approvals, suggesting potential growth [4][20] - The hydrogen energy industry is developing positively, with an accelerating construction of the supporting system, indicating a favorable investment window [5][30] - The report emphasizes the importance of virtual power plants in the new power system construction, which could enhance flexibility and efficiency in energy management [5][37] Summary by Sections Photovoltaics - June production is declining, and competition among various segments is intensifying, with a notable drop in terminal demand as the "430/531" deadlines pass [12][14] - The overall price trend in the photovoltaic supply chain is stable, but there are downward pressures due to expected weak demand in the second half of the year [14][19] - Investment suggestions include focusing on companies with a strong position in the BC technology sector, such as Longi Green Energy and Aiko Solar [14][19] Wind Power - The offshore wind power sector is progressing, with several projects receiving approvals and moving forward, indicating a positive outlook for future developments [4][20][21] - Investment recommendations include focusing on undervalued stocks and those benefiting from offshore wind projects [23] Energy Storage - Domestic energy storage tenders exceeded 20GWh in May, indicating a robust market environment [7][24] - The report suggests monitoring the recovery of large-scale energy storage market conditions, especially with the introduction of new pricing policies [25][28] - Companies like China Energy Construction are expected to play a significant role in the upcoming energy storage system procurement [27][29] Hydrogen Energy - The hydrogen energy sector is experiencing favorable development, with initiatives to transition from gray hydrogen to green hydrogen [30][33] - The report outlines plans for significant investments in hydrogen infrastructure and technology, indicating a strong growth trajectory [30][34] Electric Grid Equipment - The National Energy Administration has initiated pilot projects for the new power system, focusing on virtual power plants and smart microgrids [37] - Investment opportunities are identified in companies involved in the construction and management of these new energy systems [38] Electric Vehicles - The potential cancellation of electric vehicle subsidies in the U.S. could negatively impact demand, suggesting a cautious approach to investments in this sector [39][40] - Companies with stable profitability in the lithium battery and structural components sectors are recommended for continued investment [39] Humanoid Robots - Developments in humanoid robotics are highlighted, with significant corporate restructuring and new product launches indicating a growing market [42][46] - Investment opportunities are suggested in companies that are solidly positioned in the core business of robotics and AI [42][46]

Investment Rating - Investment Rating: Buy (Maintain) [3] Core Views - The company reported a revenue of 3.045 billion yuan in 2024, representing a year-on-year growth of 16.77%, and a net profit attributable to shareholders of 615 million yuan, up 80.75% year-on-year, primarily due to significant gains from fair value changes of financial assets and disposal of financial assets [6][12] - In Q1 2025, the company achieved a revenue of 985 million yuan, a year-on-year increase of 75.76%, with a net profit of 312 million yuan, up 224.90% year-on-year [7][12] - The domestic insulin market is experiencing both volume and price increases, with domestic revenue in Q1 2025 reaching 889 million yuan, a growth of 80.07% year-on-year [8] - The company is expanding its overseas business, with overseas revenue in 2024 reaching 528 million yuan, a year-on-year increase of 23.89% [9] Financial Performance Summary - Revenue for 2025 is projected to be 4.393 billion yuan, with a year-on-year growth of 44.2%, and net profit is expected to reach 1.113 billion yuan, growing by 81.0% [12][14] - The company’s gross margin is expected to improve to 77.7% in 2025, with a return on equity (ROE) projected at 9.5% [14] - Earnings per share (EPS) for 2025 is estimated at 1.85 yuan, with a price-to-earnings (P/E) ratio of 30 times [12][14]

Investment Rating - Industry investment rating: Overweight [1] Core Viewpoints - The core investment logic highlights that lysine and threonine, as major feed amino acids, are expected to benefit from the rise of "low-protein diets" and "reduced soybean meal," which are gaining attention in the aquaculture industry. The downstream demand remains stable, with high reliance on overseas markets, while supply and raw material impacts are significant. The continuous decline in corn and soybean meal prices over the past two years has closely correlated with amino acid prices, and if agricultural products enter an upward cycle, it will support lysine and threonine prices. Additionally, domestic lysine production is expanding, while threonine expansion is slowing, creating a favorable market structure. The increasing competition domestically and deteriorating export environment are raising industry entry barriers, prompting companies to seek opportunities abroad. The future of the industry is expected to see a "scale + internationalization" collaborative layout, potentially forming a second growth curve for amino acid performance [4][5][8]. Summary by Sections 1. Importance of Feed Amino Acids and Industry Expansion - Amino acids are essential nutrients for biological life, with significant applications in the feed industry. The global feed amino acid market is projected to grow at a CAGR of 5.8% from 2024 to 2032, driven by policies promoting reduced soybean meal usage [4][44]. - The global supply of the four major feed amino acids (lysine, methionine, threonine, and tryptophan) is expected to reach 6.986 million tons in 2024, a year-on-year increase of 13.5%, with lysine and threonine in China growing by 10.3% and 15.4%, respectively [4][44]. 2. Market Structure and Competitive Landscape - The lysine and threonine markets are highly concentrated, with domestic production accounting for approximately 76.5% and 95% of global capacity, respectively. The CR4 for lysine and threonine in China is 60.31% and 77.48%, indicating a strong competitive advantage among leading companies [4][5]. - The increasing concentration of production capacity and the strategic push for international expansion by leading companies are expected to enhance market dynamics and create new growth opportunities [4][5]. 3. Price Trends and Profitability Outlook - The prices of feed amino acids are anticipated to rise in 2024, with the global market value for feed amino acids reaching $15.21 billion, a year-on-year increase of 24.9%. The recovery of corn prices is expected to support lysine and threonine prices, while the relationship between soybean meal and feed amino acids will drive demand [5][7]. - As of May 2025, 70% of lysine prices have rebounded, and threonine prices have stabilized, indicating a positive trend for profitability in the industry [5][7]. 4. Investment Recommendations - The report suggests focusing on companies such as Meihua Biological, Fufeng Group, and Xinghuo Technology, which are well-positioned to capitalize on the growth in lysine and threonine markets due to their strong production capabilities and strategic international expansion plans [8].