Investment Rating - The report initiates coverage on the company with a "Buy" rating and sets a target price of 20.20 RMB, based on a 20x PE for 2025 [6][8]. Core Views - The company is a leader in the domestic secondary equipment industry for power grids, with a solid technical foundation and stable growth in its core business, while also having the potential to expand its market presence outside the grid [15][21]. - The company has demonstrated a robust revenue growth rate, with a CAGR of 11.8% from 2018 to 2024, significantly outpacing the 1.9% growth rate of grid infrastructure investment [22]. - The report anticipates a continued increase in ROE, which has risen from 4.76% in 2019 to 16.25% in 2024, alongside a consistent dividend yield above 4.2% for the past three years, projected to reach 5.0% in 2025 [4][18]. Summary by Sections Power Grid Sector - The main grid's secondary equipment market is expected to grow at a CAGR of 10.1% from 2024 to 2026, with the company increasing its market share in recent bidding rounds [2][20]. - The company has secured a growing share of the secondary equipment market, with bidding shares of 14.2%, 15.1%, and 16.2% for 2023, 2024, and 2025 respectively [2][31]. Generation Sector - The company maintains a leading position in offshore wind and large-scale renewable energy projects, with a significant order growth of over 40% year-on-year in the renewable sector since 2025 [3][17]. - In traditional energy, the company is actively involved in major projects in thermal, hydro, and nuclear power, expecting steady revenue growth alongside the traditional energy sector [3][17]. Financial Performance - The company’s net profit is projected to reach 845 million RMB, 988 million RMB, and 1.15 billion RMB for 2025, 2026, and 2027 respectively, with an EPS of 1.01 RMB, 1.19 RMB, and 1.38 RMB [6][11]. - The report highlights strong cash flow management and a commitment to shareholder returns, with a dividend payout ratio expected to remain around 80% [4][19]. Market Insights - The report identifies a gap in market understanding regarding the potential of source-grid-load-storage projects, which are crucial for the efficient integration of renewable energy [5][19]. - The company is well-positioned to benefit from the growth of the source-grid-load-storage market due to its comprehensive technical capabilities across the entire industry chain [5][19].

Report Industry Investment Rating - Not provided in the content Core View of the Report - Last week, the overall liquidity was balanced, with an upward trend in capital interest rates, a downward trend in certificate of deposit (CD) rates, an upward trend in IRS yields, a downward trend in repurchase trading volume, an upward trend in bill rates, and a downward trend in the US dollar to RMB exchange rate. After the end of the quarter, it is expected that the liquidity will ease and the capital interest rates will decline [1][2][3][4][5] Summary by Related Catalogs Capital Supply and Demand - Last week, the open - market had 960.3 billion yuan in maturities (all reverse repurchase), and 2327.5 billion yuan in investments (2027.5 billion yuan in reverse repurchase and 300 billion yuan in MLF), with a net investment of 1367.2 billion yuan. The balance of outstanding reverse repurchases increased compared to the previous week [1] - This week, the open - market has 2027.5 billion yuan in capital maturities, all reverse repurchase. After the end of the quarter, it is expected that the liquidity will ease and the capital interest rates will decline [5] Interest Rates - Affected by the end - of - quarter factor, the average DR007 was 1.65%, up 13BP from the previous week; the average R007 was 1.82%, up 24BP from the previous week; the average DR001 and R001 were 1.37% and 1.44% respectively. The average GC007 was 1.92%, up 31BP from the previous week [1] - Last week, the 1 - year FR007 interest rate swap average was 1.54%, up from the previous week. The market's expectation for the liquidity is stable [2] - As of the last trading day of last week, the yield to maturity of 1 - year AAA CDs was 1.64%, down from the previous week. This week, the single - week maturity of CDs is about 245.79 billion yuan, with less maturity pressure than the previous week [2] - Last Friday, the 6M national stock bill transfer quotation was 1.15%, up from the previous week's last trading day [4] Repurchase Market - Last week, the volume of pledged repurchase trading was between 6.6 and 8.5 trillion yuan, and the average volume of R001 repurchase trading was 6.5011 trillion yuan, down 961.1 billion yuan from the previous week. As of the last trading day of last week, the balance of outstanding repurchases was 12.7 trillion yuan, up from the previous week [3] - In terms of institutions, the lending scale of large - scale banks decreased, while that of money market funds increased. The borrowing scales of securities firms and wealth management increased, while that of funds decreased [3] Exchange Rate - Last Friday, the US dollar to RMB exchange rate was 7.17, slightly down from the previous week, and the Sino - US interest rate spread narrowed [4] This Week's Key Points of Attention - This week, the open - market has 2027.5 billion yuan in capital maturities, all reverse repurchase [5] - On Monday and Tuesday, China's official and Caixin PMI for June will be announced respectively, and on Tuesday, the US ISM manufacturing index for June will be announced. On Thursday, the US unemployment rate and non - farm payrolls change for June will be announced, and the minutes of the Eurozone's monetary policy meeting for June will also be announced [5] - This week, the net maturity of interest - bearing bonds is 6.34 billion yuan [5]

Report Industry Investment Rating - Not provided in the report Core Viewpoints - The launch of Science and Technology Innovation Bond ETFs is imminent, which will enrich the credit bond ETF product line and institutional investment tools. Their approval, listing, and scale expansion will help compress the liquidity premium of science and technology innovation bonds, benefiting the performance of this bond type. Investment opportunities are worth attention, but there are also disturbing factors such as valuation distortion, redemption pressure, and changes in risk preference [1][50] - Last week, the stock market's consecutive gains pushed up market risk appetite, leading to an upward trend in most credit bond yields. The issuance of corporate credit bonds increased, with urban investment bonds turning to net financing. In the secondary market, medium - and short - duration bonds were actively traded, and long - duration bond trading increased slightly [2][3][4] Summary by Directory Credit Hotspots: How to View the Imminent Launch of Science and Technology Innovation Bond ETFs - Policy support encourages the launch of science and technology innovation bond ETFs. On June 18, the first batch of 10 science and technology innovation bond ETFs were collectively submitted, and they are expected to be approved and issued soon [10] - The science and technology board in the bond market has promoted the rapid expansion of science and technology innovation bonds. As of June 27, the balance of the science and technology innovation bond market reached 2.45 trillion yuan, with exchange - listed science and technology innovation corporate bonds accounting for 57.39% [11] - The first batch of science and technology innovation bond ETFs tracks three types of indexes. The underlying assets are mainly high - grade state - owned enterprise bonds, with a medium - to short - term maturity structure. The index performance shows stable returns and low volatility [13][16][32] - Due to institutional pre - arrangement for ETF construction, the valuation of science and technology innovation bond index component bonds and non - component bonds has diverged. Component bond yields have declined faster than those of general credit bonds, exchange - traded science and technology innovation bonds have declined faster than inter - bank ones, and component bond yields of the same issuer have declined faster than non - component bonds [37][38][44] Market Review: The Consecutive Gains in the Stock Market Pushed Up Market Risk Appetite, and Most Credit Bond Yields Rose - From June 20 to June 27, 2025, the central bank maintained a stable end - of - quarter capital market. The stock market's breakthrough of the previous high increased market risk appetite, causing a slight adjustment in the bond market. Interest - rate bond yields at the short end declined, while those at the long end rose. Most credit bond yields also increased, with the yields of AAA - rated bonds rising by about 2BP, and medium - and short - term notes performing better than urban investment bonds. The yields of secondary perpetual bonds generally rose by about 2BP, with a relatively larger adjustment in the 7 - 10Y segment [2] - Most median industry spreads of public bonds and urban investment bonds in each province increased, with the spread in Yunnan rising by more than 4BP [2] Primary Issuance: The Issuance of Corporate Credit Bonds Increased, and Urban Investment Bonds Turned to Net Financing - From June 23 to June 27, 2025, the total issuance of corporate credit bonds was 413.9 billion yuan, a 24% increase from the previous period. The total issuance of financial credit bonds was 67.5 billion yuan, a 61% decrease. Corporate credit bonds had a total net financing of 103.9 billion yuan, with urban investment bonds having a net financing of 16.9 billion yuan, turning from continuous net repayment to net financing [3][75] - In terms of issuance interest rates, the average issuance interest rates of medium - and short - term notes increased slightly except for AA +, and the average issuance interest rates of corporate bonds decreased except for AAA [3] Secondary Trading: Medium - and Short - Duration Bonds Were Actively Traded, and Long - Duration Bond Trading Increased Slightly - Active trading entities are mainly medium - to high - grade, medium - and short - term, central and state - owned enterprises. Urban investment bond trading entities are 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. Real estate bond trading entities are mainly AAA - rated, with a trading term of 1 - 3 years. Private enterprise bond trading entities are also mainly AAA - rated, with medium - to short - term trading terms [4][85] - Among actively traded urban investment bonds, the proportion of bonds with a maturity of more than 5 years increased slightly from 2% to 4% compared to the previous week [4]

Manufacturing PMI Insights - June manufacturing PMI improved slightly from 49.5% in May to 49.7%, slightly above Bloomberg consensus of 49.6% but still below seasonal levels[1] - Production index rose by 0.3 percentage points to 51.0%, while new orders index increased from 49.8% to 50.2%[3] - New export orders index saw a minor increase from 47.5% to 47.7%, remaining below seasonal averages[5] Non-Manufacturing Sector Performance - Non-manufacturing business activity index rose by 0.2 percentage points to 50.5%, with the construction sector showing significant recovery[6] - Service sector index slightly declined to 50.1%, indicating mixed performance across industries[6] Price Trends and Economic Outlook - Both purchasing prices and factory prices showed signs of recovery, with raw material prices index rising by 1.5 percentage points to 48.4%[7] - The uncertainty surrounding tariff policies post July 9 may disrupt future export and production activities, necessitating stronger monetary and fiscal policies[2] Employment and Business Expectations - Employment index in manufacturing fell by 0.2 percentage points to 47.9%, indicating ongoing challenges in labor market stability[3] - Business activity expectations index decreased by 0.5 percentage points to 52%, reflecting cautious outlook among manufacturers[3]

证券研究报告 5 月宏观数据回顾：1）5 月社零同比较 4 月的 5.1%回升至 6.4%，而工业 增加值/固定资产投资同比回落至 5.8%/2.9%；2）5 月出口同比增速从 4 月 的 8.1%回落至 4.8%，对美出口进一步回落，对东盟、欧盟出口维持高增； 进口同比从 4 月的-0.3%回落至-3.4%；3）5 月新增人民币贷款 6,200 亿， 同比少增 3300 亿元；新增社融 2.29 万亿元，低基数下同比多增 2,247 亿元； M1 同比增速从 4 月的 1.5%回升至 2.3%，M2 同比增速从 4 月的 8%小幅回 落至 7.9%。4）5 月 CPI 同比持平于 4 月的-0.1%；PPI 同比降幅走阔至 3.3%。 宏观 多重因素推动需求增长环比回落 2025 年 6 月 30 日│中国内地 图说中国月报 6 月宏观走势几何? 季调后财政支出力度在二季度以来环比回落，关税对企业利润率的影响逐步 凸显，同时 6 月高频指标显示地产销售走弱，消费或受购物节提前、补贴退 坡及违规吃喝监管等影响回落。但 6 月政府融资有所提速，有望对基建开工 形成支撑。整体而言，低基数下经济同比指标或维持韧性， ...

Group 1: Passenger Vehicles - The report anticipates a strong performance in Q3 2025, with a projected wholesale volume of 16.25 million units, reflecting a year-on-year increase of 5% and a month-on-month increase of 21% [1] - The sales of new energy vehicles (NEVs) are expected to reach 9.3 million units, with a year-on-year growth of 23% and a month-on-month growth of 42% [1] - The market share of domestic brands is projected to increase from 62% in 2024 to 69% in 2025, driven by strong performances from BYD, Geely, and Chery [20][24] Group 2: Motorcycles and Electric Two-Wheelers - The motorcycle industry is focusing on overseas expansion, particularly in Europe, where a high growth period is expected from January to October [2] - The electric two-wheeler market is anticipated to see strong sales growth in Q3, supported by policies and a demand upgrade, with a cumulative replacement volume of 6.5 million units by May 2025 [2][12] - The report highlights that the high-end electric two-wheeler market is becoming increasingly competitive, while the mid-to-low-end market is expected to consolidate, benefiting leading companies like Aima and Yadea [2] Group 3: Auto Parts - The report notes that tariffs are accelerating the globalization of domestic auto parts companies, with a focus on capacity relocation to regions like Mexico and Southeast Asia [3] - The optimization of supplier payment terms to within 60 days is expected to improve the health of the industry chain, particularly benefiting leading auto parts suppliers [3] Group 4: Intelligent Driving and Robotics - The Robo X initiative is gaining momentum, with significant advancements in logistics cost reduction and the commercialization of Robotaxi services [4] - The report emphasizes the importance of technological iterations in the intelligent driving sector, with a notable increase in the penetration rate of high-end driving assistance features in vehicles priced below 200,000 yuan [4][19] - In the robotics sector, the investment paradigm is shifting towards companies that can deliver real orders and have a strong technological and production capacity [5]

Investment Rating - The report maintains an "Overweight" rating for the transportation and logistics industry [5]. Core Insights - The commercialization of unmanned logistics vehicles is driven by industry demand, technological advancements, policy support, and new business models. The last mile delivery in the express delivery sector, which accounts for about 60% of total costs, presents significant cost reduction opportunities compared to other logistics segments [12][22]. - The current primary application scenarios for unmanned logistics vehicles include last-mile delivery from distribution points to collection stations, which corresponds to a market space of approximately 36.6 billion RMB. The report anticipates that by 2030, the incremental market value for various autonomous driving scenarios will reach 745.9 billion RMB [2][13]. Summary by Sections Industry Demand - The express delivery industry is experiencing a prolonged price war, with average prices dropping by 8.2% year-on-year in the first five months of 2025, leading companies to seek cost reductions in last-mile delivery, which constitutes over 50% of total costs [23][26]. Policy and Technology - The report highlights that national strategies and local policies are increasingly supportive of unmanned logistics vehicles, with road rights being opened up for testing and application. This regulatory environment is crucial for the growth of unmanned logistics vehicles [39][41]. - Technological advancements in autonomous driving are making unmanned logistics vehicles more viable, with successful mass production by leading companies driving down costs [12][22]. Cost Reduction Potential - If 30% of delivery volume is handled by unmanned logistics vehicles, express delivery companies could see a cost reduction of approximately 4%. The cost of using unmanned vehicles for delivery is significantly lower than traditional methods, with a cost of 0.067 RMB per delivery compared to 1 RMB for manual delivery [13][34]. Market Size and Growth - The potential market size for unmanned logistics vehicles in the express delivery sector is estimated at around 36.6 billion RMB, representing only 4.9% of the total market. The report projects substantial growth in the overall market for autonomous driving applications, with various segments contributing to a total incremental value of 745.9 billion RMB by 2030 [12][13]. Competitive Landscape - The report suggests that the automation of last-mile delivery could lead to a redistribution of profits within the express delivery industry, favoring well-capitalized and well-managed leading companies. The competitive landscape is expected to shift as companies leverage unmanned logistics vehicles to enhance efficiency and service quality [4][14].

Investment Rating - The report initiates coverage on Dongfang Electronics with a "Buy" rating and sets a target price of RMB 12.6, corresponding to a 20X PE for 2025 [1][7][5]. Core Views - Dongfang Electronics is a pioneer in power automation in China, achieving a revenue CAGR of 14.4% from 2008 to 2024, and is expected to maintain a revenue growth rate of 12% to 20% from 2025 to 2027 due to steady domestic grid investment and overseas expansion [1][15][5]. - The company is well-positioned in its core business segments, including smart distribution, scheduling, and transmission automation, which collectively account for 80-90% of its revenue [2][15]. - The virtual power plant segment presents significant growth potential, with expected revenue growth rates of 30%, 50%, and 50% from 2025 to 2027, driven by favorable policies and the company's technological advantages [4][20][19]. Summary by Sections Business Overview - The basic business segments of smart distribution, scheduling, and transmission automation are expected to benefit from steady growth in domestic grid investment, with revenue growth projected at 12% to 20% from 2025 to 2027 [2][15]. - The company holds a leading position in various sub-segments, including smart meters, where it ranks fourth in market share, and in scheduling, where it has a high market position and technical barriers [2][15]. Financial Performance - The company's contract liabilities have shown significant growth, reaching RMB 3.632 billion by the end of Q1 2025, indicating strong future performance support [3][15]. - Return on equity (ROE) has improved from 7.2% in 2018 to 14.1% in 2024, with expectations to reach 16.2% by 2027 due to scale effects [3][15]. Market Differentiation - The report highlights a market underestimation of the virtual power plant space and the company's advantages, suggesting substantial growth opportunities [4][19]. - The company has established itself as a leader in power automation, with a comprehensive product offering across the power sector, including smart grid and renewable energy solutions [21][15]. Growth Projections - Forecasted net profits for the parent company are RMB 8.40 billion, RMB 9.99 billion, and RMB 11.80 billion for 2025, 2026, and 2027, respectively, with corresponding EPS of RMB 0.63, RMB 0.75, and RMB 0.88 [5][11]. - The company is expected to maintain a stable gross margin of around 32%-34%, benefiting from its high barriers to entry and strong market position [26][15].

Investment Rating - The report maintains a "Buy" rating for the company [7][5]. Core Views - The report highlights that Kangyuan Pharmaceutical, as a leader in innovative traditional Chinese medicine, is expected to stabilize its revenue in Q2 2025 due to the easing of compliance impacts and a return to normalcy in seasonal flu incidence [1][4]. - The acquisition of 100% of Zhongxin Pharmaceutical is anticipated to enhance the company's value through the development of innovative biopharmaceuticals, with significant data readouts expected from ongoing projects in 2025 and 2026 [1][3]. Summary by Sections Company Overview - Kangyuan Pharmaceutical acquired Zhongxin Pharmaceutical for 270 million RMB, with Zhongxin currently not profitable and having a net asset of -423 million RMB as of 9M24 [2]. - Zhongxin's clinical pipeline includes four core products, with an estimated funding requirement of 400 million RMB for clinical trials [2]. Financial Performance - The company's revenue is projected to recover in 2025, with expected revenue growth of 8.4% in 2025 and 10.48% in 2026 [11]. - The net profit attributable to the parent company is forecasted to be 4.4 billion RMB in 2025, 5.1 billion RMB in 2026, and 5.8 billion RMB in 2027, reflecting a growth rate of 12.26% and 15.43% respectively [11][5]. Valuation - The target price for the company is set at 17.09 RMB, based on a 22x PE ratio for 2025, which reflects a premium over the average PE of comparable companies at 15x [5][12]. - The report anticipates that the company's innovative pipeline and product portfolio will drive high growth potential post-compliance challenges [5][3].

Consumption Overview - As of 2023, China's final consumption expenditure accounts for approximately 56.8% of nominal GDP, significantly lower than developed economies like Japan and the US, which range from 65% to 81%[1][9]. - The contribution of government consumption to GDP in China is relatively close to developed countries, recorded at 17.2% in 2023, higher than the US at 13.4%[1][9]. Service Consumption Insights - Service consumption in China constitutes about 52-53% of total household expenditure, which is lower than the 56%-69% seen in the US, Japan, and South Korea[2][17]. - The value added by the accommodation and catering industry in China is only 1.8% of GDP, compared to 3.3% in the US and 2% in Japan[2][18]. Demand-Side Factors - To boost total demand, increasing disposable income and consumer expectations is crucial; the growth of disposable income is closely tied to nominal GDP growth[2][39]. - Short-term subsidies, such as those for food delivery services, are expected to have a significant impact, with estimates suggesting over 10 billion yuan in subsidies could increase daily orders by 30-40%[2][47]. Supply-Side Considerations - There is substantial room for investment in service-related sectors, with China's per capita railway kilometers at only 20% of that in developed countries and airport numbers at about 10%[3][17]. - The healthcare sector's value added is only 2.6% of GDP, significantly lower than the 5.3%-8% range in developed nations, indicating a need for improvement in healthcare services[3][18]. Long-Term Consumption Trends - Long-term consumption rates are influenced by factors such as population structure, economic growth, and institutional reforms, with a high savings rate acting as a slow variable in the economy[3][5]. - The current economic environment has led to a rise in the savings rate, with household savings increasing from 81.3 trillion yuan in 2021 to 159 trillion yuan in April 2023[5][42].