Investment Rating - The report suggests increasing allocation to defensive sectors [2] Core Insights - The report highlights the risk of stagflation trading and recommends focusing on commodities and gold while reducing stock allocations [2] - The A-share technical scoring model indicates a cautious approach to market participation [3] - The style timing model continues to recommend a barbell strategy, favoring small-cap stocks [4][19] - The industry rotation model favors consumer services, retail, insurance, coal, and beverages, maintaining a value-oriented style [5][26] - The all-weather enhanced portfolio in China has achieved an absolute return of 5.22% year-to-date [6][35] Summary by Sections A-share Technical Scoring Model - The model aims to capture market conditions through various dimensions such as price, volume, volatility, trend, and crowding, resulting in a neutral score indicating cautious market participation [3][10] Style Timing Model - The model suggests maintaining a bullish outlook on small-cap stocks while keeping a neutral stance on dividend styles, with recent signals indicating a low crowding environment [4][19][24] Industry Rotation Model - The model utilizes genetic programming to identify top-performing sectors, currently favoring consumer services, retail, insurance, coal, and beverages, with a focus on value [5][26][29] All-Weather Enhanced Portfolio - The portfolio employs a macro factor risk parity framework, achieving a year-to-date return of 5.22%, with recent adjustments favoring commodities and gold while reducing non-defensive stocks [6][35][36]

Investment Rating - The report maintains an "Overweight" rating for the construction and building materials sectors [9] Core Insights - In March, the price of electronic yarn/fabric has increased, highlighting the transmission of rising oil and gas prices to the building materials sector. The construction PMI fell to 48.2% in February but showed slight recovery in new orders and business activity expectations [12][14] - The report emphasizes the potential for price increases in traditional building materials such as waterproofing, coatings, gypsum boards, cement, and glass due to rising raw material costs driven by oil price increases [12][18] - The government report from the Two Sessions introduced new infrastructure projects, which are expected to benefit leading companies in energy and coal chemical infrastructure [12][13] Summary by Sections Price Trends - The price of ordinary electronic yarn G75 increased by 6.98% to 11,000-11,700 CNY/ton, while the price of 7628 electronic fabric rose by over 10% to 5.4-6.0 CNY/m [22][33] - The average price of domestic float glass was 63 CNY/weight box, down 0.2% month-on-month and down 13.3% year-on-year [2][29] Company Dynamics - Shenghui Integration reported a preliminary revenue of 2.99 billion CNY and a net profit of 154 million CNY for 2025, reflecting a year-on-year increase of 48.85% and 34.91% respectively [3] - Key recommended companies include Yaxiang Integration, China Chemical, COFCO Technology, China National Materials, Sichuan Road and Bridge, Oriental Yuhong, Rabbit Baby, China Liansu, Xinyi Glass, China National Building Material, and Kaisheng Technology [12][38] Market Performance - The construction and building materials indices outperformed the CSI 300 index, with the building materials index rising by 8.15% in February compared to the CSI 300's 0.09% increase [16] - The report notes that the construction sector is expected to see a "spring rally" due to increased project investment expectations [16][18] Future Outlook - The report suggests that the construction and building materials industry must accelerate transformation while maintaining stable core business development. Companies that can increase their share of modern industrial services and explore second main business opportunities are likely to gain long-term growth opportunities [13] - The report continues to favor companies with strong technological attributes in niche sectors, particularly those benefiting from high demand in AI technology and cleanroom engineering [13]

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The new regulations on science - innovation bonds are beneficial for scale expansion and structural improvement. With the optimization of rules in the inter - bank and exchange markets, along with support from the central bank's risk - sharing tools and local incentives, the scale of science - innovation bonds is expected to continue to expand this year, and the structure of issuers and maturities is likely to improve further [1][23]. - Last week, credit bond yields generally declined, and most credit spreads widened passively. The net financing of general credit bonds started to increase, while financial bonds maintained net repayment. In the secondary market, medium - and short - duration bonds were actively traded, and the trading of long - duration bonds increased slightly [1][42][68]. 3. Summary by Directory Credit Hotspots: New Regulations on Science - Innovation Bonds Benefit Scale Expansion and Structural Improvement - On March 2, 2026, the National Association of Financial Market Institutional Investors optimized the inter - bank science - innovation bond mechanism, broadening the scope of technology - based enterprises, strengthening patent requirements, and implementing hierarchical and classified management of the use of raised funds [1]. - Since the launch of the "technology board" in the bond market, the issuance of science - innovation bonds as a proportion of credit bonds has significantly increased. As of March 6, 2026, the outstanding amount of science - innovation bonds has exceeded 3.6 trillion yuan [1][22]. - With the optimization of rules and the improvement of supporting mechanisms, along with policy support, the scale of science - innovation bonds is expected to continue to expand this year, and the issuer and maturity structures are expected to improve [23]. Market Review: Credit Bond Yields Generally Declined, and Most Spreads Widened Passively - From February 27 to March 6, 2026, due to the end of the Two Sessions and the fermentation of the Iran situation, interest - rate bonds declined overall, credit bond yields generally decreased, and most credit spreads widened passively. The spreads of 5 - 10Y general credit bonds declined [42]. - The yields of secondary perpetual bonds also generally declined, with the yields of medium - and short - term varieties decreasing by about 4BP, and the spreads widening slightly by about 2BP [42]. - Last week, wealth management products had a net purchase of 7.7 billion yuan, and funds had a net purchase of 61.2 billion yuan. The scale of credit bond ETFs was 524.5 billion yuan, an increase of 1.8 billion yuan from the previous week [42]. Primary Issuance: Net Financing of General Credit Bonds Started to Increase, and Financial Bonds Maintained Net Repayment - From March 2 to March 6, 2026, the total issuance of corporate - type credit bonds was 100.2 billion yuan, a 220% increase from the previous week; the total issuance of financial - type credit bonds was 22.1 billion yuan, a more than 1000% increase from the previous week [2][68]. - The total net financing of corporate - type credit bonds was 40.3 billion yuan, a 134% increase from the previous week. Among them, the net financing of urban investment bonds was 4.4 billion yuan, and that of industrial bonds was 34.3 billion yuan [2][68]. - In terms of financial - type credit bonds, commercial bank bonds had a net repayment of 10.3 billion yuan, commercial bank sub - bonds had no net financing, and insurance and securities company bonds had a net financing of 3.5 billion yuan [2][68]. Secondary Trading: Medium - and Short - Duration Bonds Were Actively Traded, and the Trading of Long - Duration Bonds Increased Slightly - Active trading entities were mainly medium - and high - grade, medium - and short - term, and central and state - owned enterprises [77]. - For urban investment bonds, active trading entities were mainly divided into two types: mainstream high - grade platforms in economically strong provinces and core platforms in regions with relatively high spreads in large economic provinces [77]. - For real - estate bonds and private - enterprise bonds, active trading entities were mainly AAA - rated, with trading maturities mostly in the medium - and short - term [77]. - Among actively traded urban investment bonds, the proportion of bonds with a maturity of more than 5 years increased slightly from 2% to 3% compared with the previous week [77].

Investment Rating - The report maintains a "Buy" rating for key companies in the defense industry, including AVIC Shenyang Aircraft Corporation, Guorui Technology, Ruichuang Micro-Nano, Western Superconducting Technologies, Aerospace Intelligence Manufacturing, Guotai Group, and North Navigation [8][40]. Core Insights - In 2026, China's defense budget is set at 1,909.561 billion RMB, reflecting a 7% year-on-year increase, slightly down from 7.2% in 2025. This growth is consistent with the principle of "moderate" increase in defense spending [11][12]. - The ongoing conflict between the U.S. and Iran is expected to drive demand for military trade, particularly in missile and drone technologies, enhancing the international military trade market's activity [11][13]. - The "14th Five-Year Plan" is anticipated to shift the focus from quantity to quality in military modernization, with significant structural opportunities emerging in new domains, unmanned systems, advanced weaponry, and low-cost equipment [16][17]. Summary by Sections Defense Budget - The defense budget for 2026 is projected at 1,909.561 billion RMB, with a 7% increase compared to the previous year, indicating a stable growth trend [11][12]. - The report emphasizes that the growth rate is in line with the "moderate" principle, balancing national defense needs with economic development [11]. Military Trade Opportunities - The report highlights the potential for increased overseas demand for military equipment, as China is one of the few suppliers capable of providing comprehensive solutions [13][19]. - The international military trade market is expected to remain active, driven by geopolitical tensions and increased defense spending globally [11][19]. Key Companies to Watch - Recommended companies include AVIC Shenyang Aircraft Corporation, Guorui Technology, Ruichuang Micro-Nano, Western Superconducting Technologies, Aerospace Intelligence Manufacturing, Guotai Group, and North Navigation, all rated as "Buy" [8][40]. - The report suggests that these companies are well-positioned to benefit from the anticipated growth in military trade and modernization efforts [19][20]. Emerging Trends - The report identifies significant opportunities in new equipment construction, particularly in unmanned systems and advanced weaponry, as part of the military modernization strategy [16][18]. - The focus on military-civilian integration is expected to create new market spaces in commercial aerospace, low-altitude economy, deep-sea technology, and nuclear energy [20].

Investment Rating - The report maintains an "Overweight" rating for the commercial aerospace industry, indicating an expectation for industry stocks to outperform the benchmark [5]. Core Insights - The commercial aerospace capital market and industry have seen a significant increase in attention, likely driving the formation of an industry closed loop. Since 2025, the economic and social value of commercial aerospace has "broken the circle," entering mainstream investment visibility, with notable increases in capital market investment activities. More private enterprises and cross-industry tech companies are strategically entering satellite manufacturing and rocket launch segments, supported by local government policies and projects [2][4]. - Reusable rocket technology has entered a critical phase, becoming a core lever for scaling the industry. The focus of the global commercial rocket competition is on reducing launch costs, enhancing payload capacity, and achieving rapid response. Several Chinese commercial rocket companies have made significant progress in key technologies such as vertical landing recovery and engine reuse, entering a phase of intensive flight verification. A "singularity moment" for reusable technology is expected in 2026-2027, transitioning from principle verification to high-frequency, reliable operations [2][3]. - Satellite payload and platform technologies are rapidly iterating, marking a new industrialization phase in satellite manufacturing. The quick iteration of satellite technology, including generalized satellite platforms, modular payloads, and flexible production lines, has significantly improved design and manufacturing efficiency. The maturity of the supply chain and the localization of components are driving down the cost per satellite. To meet the demands of large satellite constellations, scalable and mass production capabilities have become core barriers for satellite manufacturing companies [3]. - The application of satellite internet continues to deepen, with emerging areas such as space computing and space mining opening up long-term growth potential. Mature applications like satellite internet are evolving from ubiquitous connectivity to high-value scenarios in aviation, maritime, emergency services, and government private networks. Additionally, innovative applications are being explored, such as the technical possibilities of space data centers for in-orbit data processing and computation, as well as future applications for extraterrestrial resource utilization [3][4]. Summary by Relevant Sections - The commercial aerospace industry is experiencing accelerated development opportunities driven by three major turning points: policy, performance, and technology. The "14th Five-Year Plan" has highlighted the goal of building a strong aerospace nation, positioning the commercial aerospace industry as a focal point. Companies like China Star Network and Yuanxin Satellite are accelerating their launch schedules, which is expected to boost performance in upstream satellite manufacturing and rocket launch segments. Furthermore, commercial rocket companies are advancing breakthroughs in reusable technology and financing, leveraging China's terrestrial cellular network industry advantages to empower NTN technology development [4].

Investment Rating - The investment rating for JD Logistics is maintained as "Buy" with a target price of HKD 17.10 [7][5]. Core Insights - JD Logistics reported a total revenue of RMB 217.1 billion for 2025, representing an 18.8% year-on-year increase. The net profit attributable to the parent company was RMB 6.65 billion, with a Non-IFRS profit of RMB 7.71 billion, reflecting a year-on-year growth of 7.2% and a decline of 2.6% respectively, which was below expectations due to higher costs from new business investments [1][5]. - The growth in revenue is primarily driven by the increase in JD Retail revenue, the addition of JD's takeaway and instant retail delivery services, accelerated overseas market expansion, and growth in external customer business [1][2]. - The gross margin and Non-IFRS profit margin for 2025 were 9.1% and 3.6% respectively, both showing a decline compared to the previous year, mainly due to increased resource investment in new businesses and higher employee compensation costs [3][5]. Revenue Breakdown - In 2025, revenue from JD Group reached RMB 80.31 billion, a significant increase of 45.9% year-on-year, accounting for 37.0% of total revenue, while external customer revenue was RMB 136.8 billion, growing by 7.1% and representing 63.0% of total revenue [2]. - The integrated supply chain business generated RMB 116.2 billion in revenue, a 33.0% year-on-year increase, reinforcing its core position in the business [2]. Future Outlook - For 2026, it is anticipated that the logistics infrastructure capacity utilization will improve, and the application of automation technology will enhance scale effects, leading to significant profit growth [1][3]. - The expansion of the instant delivery market is expected to further contribute to the company's revenue and profit in 2026 [2]. International Expansion - JD Logistics is accelerating its global strategy, having established nearly 200 bonded warehouses and direct mail warehouses by the end of 2025, and launched its self-operated express brand "JoyExpress" in key regions such as Saudi Arabia, the UK, France, Germany, and the Netherlands [4]. Profit Forecast Adjustments - The net profit forecast for 2026 and 2027 has been raised by 8% and 4% to RMB 8.35 billion and RMB 9.77 billion respectively, with an additional forecast for 2028 of RMB 11.43 billion [5].

Investment Rating - The report maintains a "Buy" rating for the company [5][6] Core Insights - The company reported a total revenue of 6.15 billion RMB for the full year 2025, representing a year-on-year increase of 35% [1] - In Q4 2025, revenue reached 1.685 billion RMB, up 21.4% year-on-year, exceeding the consensus estimate of 1.634 billion RMB [2] - The adjusted net loss for Q4 2025 was 76.83 million RMB, a reduction of 37.8% year-on-year, which was better than the expected loss of 132 million RMB [1][3] - The company is transitioning from scale expansion to efficiency-driven growth, with profitability improvement expected in 2026 [1][5] Financial Performance - Q4 2025 cash collections were 2.574 billion RMB, up 19.1% year-on-year, also surpassing the consensus estimate [2] - The adjusted operating loss for Q4 2025 was 112 million RMB, a year-on-year reduction of 18% [3] - The gross margin remained high at 67.1%, with continuous improvement in cost efficiency [3] - The company reported a healthy cash flow with operating net cash inflow of 965 million RMB in Q4 2025, a 23.1% increase year-on-year [4] Future Projections - Revenue forecasts for 2026 and 2027 have been slightly adjusted to 7.02 billion RMB and 7.85 billion RMB respectively, with a new forecast for 2028 set at 8.56 billion RMB [5] - The target price is set at 4.70 USD, based on a price-to-sales ratio of 1.14x for 2026 [5][12] - The company is expected to prioritize profitability improvement in 2026 while controlling customer acquisition costs [5]

Investment Rating - The report maintains a "Buy" rating for DISCO with a target price of 79,000 JPY [5]. Core Insights - The demand for equipment driven by generative AI has led to a significant supply-demand imbalance in DISCO's factories, prompting the company to restart its "production support" measures for the first time in three years to meet urgent customer needs [1][2]. - DISCO is leveraging its scale advantage to actively invest in precision processing equipment required for various technology routes such as PLP, HBF, and CPO, positioning itself to benefit from the upcoming chip upgrade cycle [1][3]. - Despite the global trend of wafer manufacturing becoming more decentralized, DISCO is committed to maintaining a highly concentrated production and R&D approach in Japan, which helps sustain its competitive edge [1][3]. Financial Projections - The report forecasts DISCO's net profit for FY2025, FY2026, and FY2027 to be 127.8 billion JPY, 178.5 billion JPY, and 212.3 billion JPY respectively, reflecting year-on-year growth rates of +3.1%, +39.7%, and +18.9% [4]. - Earnings per share (EPS) are projected to be 1,178 JPY, 1,646 JPY, and 1,957 JPY for FY2025, FY2026, and FY2027 respectively [4][7]. - The report anticipates a significant increase in operating revenue, with estimates of 420.8 billion JPY for FY2025 and 524.9 billion JPY for FY2026, representing growth rates of +7.0% and +24.7% [7]. Market Position - DISCO holds over 80% market share in the cutting and grinding sector, which positions it favorably to benefit from the expansion of AI capital expenditures [1][3]. - The company’s scale is reported to be more than eight times that of its nearest competitor, allowing it to adopt a "full bet" strategy across various technology processes without the need for trade-offs [3].

Investment Rating - The report maintains a "Buy" rating for the company [8][15]. Core Views - The company is expected to experience a 27% year-on-year decline in revenue for Q4 2025, amounting to 22.8 billion RMB, with significant declines in existing homes, new homes, home decoration, and rental income [1]. - Adjusted net profit is projected to decrease by 64% year-on-year to 4.8 billion RMB for Q4 2025, leading to a downward revision of revenue and profit forecasts due to a slowdown in the real estate industry's recovery [1]. - The company anticipates marginal improvement in its brokerage business in Q1 2026, driven by a decrease in second-hand housing listings, which may alleviate downward pressure on housing prices [1]. - For 2026, the company expects a market share expansion of 1-2.5 percentage points in its brokerage business, with significant profit margin recovery through personnel optimization and targeted marketing strategies [1][3]. Revenue and Profit Forecasts - Revenue forecasts for 2025-2027 have been adjusted to +0.1%/-6.2%/-9.6%, primarily due to limited upside in the brokerage business's take rate and a slight slowdown in market share expansion [11]. - Adjusted net profit estimates for 2025-2027 have been reduced by 12.9%/14.3%/20.9% to 5.02 billion RMB, 6.3 billion RMB, and 7.39 billion RMB respectively, reflecting increased personnel optimization costs and revenue adjustments [11][13]. Business Segment Insights - The existing home and new home revenue is expected to decline by 34% and 37% year-on-year respectively for Q4 2025, while the rental business is projected to see a smaller decline of 2% [3]. - The rental business is expected to show resilience, with a projected increase in the number of rental units by 200,000 to 300,000 in 2026, which may enhance profit contributions [4]. - The home decoration segment is undergoing structural adjustments, with a focus on optimizing store structures and reallocating personnel from brokerage to decoration services to improve efficiency [5]. Valuation - The target prices for the company's US and Hong Kong stocks are set at 21.85 USD and 56.07 HKD respectively, corresponding to a 27.8 times PE ratio for 2026, which is above the global comparable company's average of 22.8 times PE [15][16].

Investment Rating - The report maintains a "Buy" rating for the company [8][15]. Core Insights - The company is expected to see a 27% year-on-year decline in revenue for Q4 2025, amounting to 22.8 billion RMB, with significant declines in existing homes, new homes, home decoration, and rental income [1]. - Adjusted net profit is projected to decrease by 64% year-on-year to 4.8 billion RMB [1]. - The report anticipates a marginal improvement in the brokerage business in Q1 2026, driven by a decrease in second-hand housing listings, which may alleviate downward pressure on housing prices [1]. - For 2026, the brokerage business is expected to expand its market share by 1-2.5 percentage points, with significant profit margin recovery anticipated [1][3]. Revenue and Profit Forecast - Revenue forecasts for 2025-2027 have been adjusted to +0.1% for 2025, -6.2% for 2026, and -9.6% for 2027, primarily due to limited upside in the brokerage business's take rate and a slight slowdown in market share expansion [11][13]. - Adjusted net profit estimates for 2025-2027 have been revised down by 12.9%, 14.3%, and 20.9% to 5.02 billion RMB, 6.3 billion RMB, and 7.39 billion RMB respectively [11][13]. Business Segment Performance - The existing home transaction services are expected to see a revenue decline of 34% year-on-year in Q4, while new home transaction services are projected to decline by 37% [3][12]. - The rental business is expected to show resilience, with a revenue decline of only 2% in Q4, and an anticipated addition of 200,000 to 300,000 rental units in 2026 [4]. - The home decoration segment is undergoing structural adjustments, with a revenue decline of 8% expected in Q4 [5]. Market Conditions - Recent policy changes in Shanghai are expected to boost market confidence, with the second-hand housing market showing resilience despite a 4% decline in transaction area across 22 cities [2]. - The new home market is showing signs of marginal improvement, with a 32% year-on-year decline in transaction area for 44 cities, a slight improvement from the 37% decline in Q4 [2]. Valuation - The target prices for the company's stock are set at 21.85 USD for the US market and 56.07 HKD for the Hong Kong market, corresponding to a 27.8 times PE ratio for 2026, which is above the global comparable company's average of 22.8 times [15][16].