Report Industry Investment Rating No relevant content provided. Report's Core View - The release of the Fixed Income and Money Market Development Roadmap in Hong Kong is beneficial to the dim - sum bond market. Policy support may boost the issuance activity of dim - sum bonds, and attention should be paid to the allocation opportunities of new supplies in 1 - 3 years [1][23] Summary According to Related Catalogs Hong Kong Releases Fixed Income and Money Market Roadmap, Beneficial to Dim - sum Bonds - On September 25, 2025, the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority jointly released the "Fixed Income and Money Market Development Roadmap", aiming to make Hong Kong a global fixed - income and currency hub [8] - The roadmap proposes ten measures around four aspects: bond issuance, liquidity, offshore RMB business, and infrastructure. For example, in bond issuance, it includes issuing government bonds, promoting Hong Kong's advantages to target markets, and expanding the investor base [8] - As of September 22, 2025, the issuance amount of Chinese dim - sum bonds this year was 4879.85 billion yuan, basically the same as the same period last year. The first - time issuance scale of dim - sum bonds was 966.69 billion yuan, accounting for about 20% of the total issuance scale [11] - Newly issued dim - sum bonds are mainly industrial bonds, followed by urban investment bonds. About half of the maturities are 3 - year bonds, and the issuance amount of ESG dim - sum bonds accounts for nearly 20%. The coupon rate is mostly between 1 - 3%, and the short - term coupon rate is higher [13][16][17][19] Market Review: Bond Funds Sell Medium - and Long - Term Credit Bonds, Credit Bond Yields Rise Across the Board - From September 19 to September 26, 2025, the new regulations on bond fund redemption fees were negative for the bond market. Bond funds sold 110 billion yuan of 1 - 5Y credit bonds throughout the week, and the yields of credit bonds rose across the board, with the supplementary decline of secondary and perpetual bonds being more obvious [2][24] - The yields of general credit bonds rose by 4 - 12BP, and the yields of medium - and long - term bonds rose by more than 6BP. The yields of secondary and perpetual bonds generally rose by 5 - 18BP, and the yields of medium - and long - term bonds rose by more than 10BP [2][24] - Last week, the buying demand weakened. Wealth management products had a net purchase of 166 billion yuan, and funds had a net purchase of 70 billion yuan. The scale of credit bond ETFs was 3642 billion yuan, a 2.22% increase compared with the previous week [2][24] Primary Issuance: Net Financing of Credit Bonds Declines Month - on - Month, and Most Issuance Interest Rates Rise - From September 22 to September 26, 2025, the total issuance of corporate credit bonds was 428.4 billion yuan, a 25% month - on - month increase; the total issuance of financial credit bonds was 132.8 billion yuan, a 36% month - on - month decrease [3][52] - The total net financing of corporate credit bonds was 69.5 billion yuan, a 35% month - on - month decrease. Among them, urban investment bonds had a repayment of 9.1 billion yuan, and industrial bonds had a net financing of 74.2 billion yuan. Financial credit bonds had a total net repayment of 84.6 billion yuan [3][52] - In terms of issuance interest rates, the average issuance interest rate of medium - and short - term notes showed an upward trend except for AAA, and the average issuance interest rate of corporate bonds showed an upward trend except for AA [3][52] Secondary Trading: Medium - and Short - Term Maturities Are Actively Traded, and Long - Term Maturities Remain at a Low Level - Active trading entities are mainly medium - and high - grade, medium - and short - term, central and state - owned enterprises [4][62] - For urban investment bonds, active trading entities are mainly from strong economic and financial provinces and relatively high - spread areas in large economic provinces. Real estate bonds and private enterprise bonds' active trading entities are still mainly AAA, and the trading maturities are mostly medium - and short - term [4][62] - There were no transactions of urban investment bonds with a maturity of more than 5 years among actively traded bonds, which was the same as the previous week [4][62]

Group 1: Macroeconomic Insights - The Japanese Liberal Democratic Party's presidential election is set for October 4, with significant implications for Japan's political and economic landscape, especially given the current loss of majority seats in both houses [2] - In August, industrial enterprise profits in China rebounded significantly to 20.4% year-on-year, up from -1.5% in July, primarily due to a low base effect from the previous year [2][3] Group 2: Fixed Income and Market Strategy - The current market environment suggests a shift towards mid-cap styles and a focus on sectors with high win rates, such as undervalued traditional sectors and non-bank varieties, as the appeal of chasing tech stocks diminishes [4] - The bond market is experiencing volatility, with the ten-year government bond yield surpassing 1.8%, indicating a critical juncture for the bond market [5] Group 3: Oil and Chemical Industry - The "Stabilization Growth Work Plan for the Petrochemical Industry (2025-2026)" aims to enhance high-end supply and regulate major project construction, which is expected to optimize supply and improve industry conditions [6] - The oil and gas sector is anticipated to see a decline in upstream profitability due to increased production by OPEC+, while downstream sectors are expected to benefit from improved demand and cost conditions [7] Group 4: Utilities and Environmental Sector - The profitability of major thermal power companies is expected to improve in Q3 2025, driven by increased electricity generation during peak summer months [8] - The green electricity sector is poised for growth as national subsidies accelerate, with a focus on cash flow and water price adjustments for environmental companies [8] Group 5: Key Companies - HSBC Holdings is positioned favorably due to its strategic focus on Asia and the recovery of the Hong Kong capital market, benefiting from anticipated interest rate cuts and increased capital inflows [10] - Hengrui Medicine is advancing its international strategy and innovation pipeline, with a target price set at 103.21 CNY for A shares and 114.27 HKD for H shares, reflecting strong growth potential [11]

Investment Rating - The report maintains an "Overweight" rating for the banking sector [2] Core Views - The cost-effectiveness of bank allocations has improved, with a significant number of quality banks offering dividend yields exceeding 5% for 2025 [5][10] - The banking sector is expected to see a recovery in market allocation demand in Q4, driven by calendar effects and a potential shift towards safer investments [5][10] - Core business profitability is improving under supportive policies, with a narrowing decline in net interest income for listed banks [6][10] Summary by Sections Investment Rating - The banking sector is rated as "Buy" for several key banks, including Industrial and Commercial Bank of China (ICBC) with a target price of 7.88 HKD, Chengdu Bank at 23.33 CNY, and Shanghai Bank at 12.02 CNY [4] Market Trends - The banking index has experienced a maximum drawdown of approximately 15% since July, with the PB ratio falling to 0.62x, indicating a favorable valuation compared to historical levels [5][11] - The report highlights that 37 A-share banks have fallen below their six-month moving average, with 14 below their annual moving average, suggesting a potential buying opportunity [5] Performance Outlook - The report anticipates that insurance capital, industrial capital, and foreign investment will become significant incremental allocation sources for the banking sector [7] - The report notes that the banking sector's dividend payout capabilities are stable, making them attractive to long-term investors [7] Economic Indicators - The report discusses the impact of interest rate increases on bank performance, suggesting that banks may buffer non-interest income pressures through realized gains [8][10] - It emphasizes that if the economy enters an upward cycle, rising interest rates could positively impact net interest income and overall bank profitability [8][10]

Investment Rating - The report maintains an "Overweight" rating for the petrochemical and basic chemical sectors [6]. Core Insights - The petrochemical industry is expected to experience a recovery in prosperity due to the implementation of the "Stabilization Growth Work Plan" for 2025-2026, which aims to enhance high-end supply and optimize capacity in various sub-sectors [1][2]. - The report highlights the importance of controlling new capacity for key products such as refining, ethylene, PX, and coal-to-methanol, which is anticipated to improve the supply structure [2]. - The focus on fertilizer production stability and the development of new types of fertilizers is expected to continue, with recommendations for companies in this sector [3]. - The report emphasizes the acceleration of new materials and emerging technologies in the chemical industry, driven by policy support for high-end supply and digital transformation [4]. Summary by Sections Section 1: Industry Growth Policies - The Ministry of Industry and Information Technology and other departments have issued a plan to stabilize growth in the petrochemical industry, focusing on high-end supply and project management [1]. - The plan includes measures to enhance supply optimization and support the development of high-end chemical materials in electronics, new energy, and medical equipment [1]. Section 2: Capacity Control and Supply Optimization - The plan specifies strict control over new refining capacity and reasonable planning for the addition of ethylene, PX, and coal-to-methanol capacities, supporting the replacement and upgrading of old facilities [2]. - In 2024, China's refining, PX, and methanol capacities are projected to decrease by 1%, remain unchanged, and increase by 2% respectively, indicating a significant slowdown in capacity growth [2]. Section 3: Fertilizer Production Stability - The plan aims to optimize the production management of key fertilizer companies and ensure stable raw material supply through long-term contracts [3]. - The report notes that the prices of some upstream raw materials have risen significantly, which may impact fertilizer production [3]. Section 4: Development of New Materials and Technologies - The report anticipates accelerated development of high-end chemical materials and emerging technologies, including carbon capture and green ammonia applications [4]. - It encourages the development of new materials in sectors such as integrated circuits, new energy, and medical devices, with a focus on innovation and domestic substitution [4]. Section 5: Company Recommendations - The report recommends several companies based on their potential to benefit from the outlined policies, including: - **Buy**: Yun Tianhua, Dongcai Technology, Hualu Hengsheng, and Luxi Chemical [7]. - **Overweight**: Hengli Petrochemical, Huayi Group, Tongkun Co., Guangwei Composite, Xinfeng Group, and Wanwei High-tech [7].

- Profitability and turnover rate factors showed positive performance across all stock pools, delivering positive returns this month[1][10] - Valuation factors demonstrated positive returns outside the CSI 300 stock pool, while growth factors performed well in CSI 300 and CSI 500 but experienced pullbacks in other pools[1][10] - Small-cap factors showed mixed results, achieving positive returns in CSI 300 and CSI 1000 stock pools but pulling back in others[1][10] - Expectation-related factors, such as the "exceed expectations" factor, only delivered positive returns in the CSI 300 stock pool, while "expected valuation" and "expected growth rate" factors showed varied performance across different pools[1][10] - Turnover rate factor led the average long-short portfolio returns this month, especially in CSI 1000 and All-A stock pools[2][15] - Expected net profit growth factor ranked second in long-short portfolio returns, followed by profitability and growth factors, which also delivered positive average returns[2][15] - Other factors, including reversal, valuation, and small-cap factors, showed negative average long-short portfolio returns[2][15] - CSI 1000 index-enhanced funds maintained leading excess returns this month, with median performance significantly ahead of other index-enhanced funds[3][25] - CSI 1000 index-enhanced funds also led in excess returns year-to-date, followed by CSI A500 index-enhanced funds[3][25]

Quantitative Models and Construction Methods - **Model Name**: A-Share Multi-Dimensional Timing Model **Model Construction Idea**: The model evaluates the directional judgment of the A-share market using four dimensions: valuation, sentiment, capital, and technical indicators. Valuation and sentiment dimensions adopt a mean-reversion logic, while capital and technical dimensions use trend-following logic. The model combines these dimensions to provide a comprehensive view of market trends [2][9][15]. **Model Construction Process**: 1. The model uses the Wind All A Index as a proxy for the A-share market. 2. Each dimension generates daily signals with values of 0, ±1, representing neutral, bullish, or bearish views. 3. Valuation indicators include equity risk premium (ERP). 4. Sentiment indicators include option put-call ratio, implied volatility, and futures member position ratio. 5. Capital indicators include financing purchase amount. 6. Technical indicators include Bollinger Bands and the difference in the proportion of individual stock trading volume [11][15]. 7. The final multi-dimensional score is calculated as the sum of the scores from the four dimensions, determining the overall market view [9][15]. **Model Evaluation**: The model effectively captures market trends and provides actionable insights for timing decisions [9]. - **Model Name**: Style Timing Model **Model Construction Idea**: The model evaluates timing for dividend and size styles using trend-based indicators and crowding metrics [3][17][22]. **Model Construction Process**: 1. **Dividend Style Timing**: - The model uses three indicators: relative momentum of the CSI Dividend Index vs. CSI All Index, 10Y-1Y term spread, and interbank pledged repo transaction volume. - Each indicator generates daily signals with values of 0, ±1, representing neutral, bullish, or bearish views. - The final score is the sum of the three indicators, determining the overall view on dividend style [17][21]. 2. **Size Style Timing**: - The model uses the crowding degree of small-cap and large-cap styles, calculated based on momentum difference and trading volume ratio between the Wind Micro-Cap Index and CSI 300 Index. - Crowding degree is determined by averaging the top three results of six different window lengths for small-cap and large-cap styles. - High crowding is triggered when small-cap crowding exceeds 90% or large-cap crowding falls below 10%. - In high crowding zones, a small parameter double moving average model is used to capture short-term reversals. In low crowding zones, a large parameter double moving average model is used to follow medium- to long-term trends [22][24][26]. **Model Evaluation**: The model provides effective timing signals for style rotation, especially in different market conditions [22][24]. - **Model Name**: Industry Rotation Model **Model Construction Idea**: The model uses genetic programming to directly extract factors from industry index data, focusing on price-volume and valuation characteristics. It employs a dual-objective genetic programming approach to enhance factor diversity and reduce overfitting [4][29][32]. **Model Construction Process**: 1. The model uses 32 CITIC industry indices as underlying assets. 2. Factors are updated quarterly, and the model rebalances weekly. 3. The dual-objective genetic programming approach evaluates factors using |IC| and NDCG@5 metrics to assess monotonicity and performance of long positions. 4. Factors are combined using a greedy strategy and variance inflation factor to reduce collinearity. 5. The highest-weight factor is constructed as follows: - Perform cross-sectional regression of standardized monthly trading volume against the rolling 4-year percentile of price-to-book ratio (P/B). Take residuals as variable A. - Sum the smallest 9 values of variable A over the past 15 trading days to obtain variable B. - Standardize variable B using z-score, reverse values greater than 2.5, and sum the standardized values over the past 15 trading days [29][33][37]. **Model Evaluation**: The model effectively identifies industry rotation factors with strong monotonicity and performance, while reducing overfitting risks [29][33]. - **Model Name**: China Domestic All-Weather Enhanced Portfolio **Model Construction Idea**: The model adopts a macro factor risk parity framework, emphasizing risk diversification across underlying macro risk sources rather than asset classes. It actively allocates based on macro expectation momentum [5][38][41]. **Model Construction Process**: 1. **Macro Quadrant Division and Asset Selection**: Divide growth and inflation dimensions into four quadrants based on whether they exceed or fall short of expectations. Determine suitable assets for each quadrant using quantitative and qualitative methods. 2. **Quadrant Portfolio Construction and Risk Measurement**: Construct sub-portfolios with equal weights for assets within each quadrant, focusing on downside risk. 3. **Risk Budgeting Model for Quadrant Weights**: Adjust quadrant risk budgets monthly based on "quadrant views" derived from macro expectation momentum indicators, which consider buy-side expectation momentum and sell-side expectation deviation momentum [38][41]. **Model Evaluation**: The model effectively balances macro risks and enhances portfolio performance through active allocation [38][41]. --- Model Backtesting Results - **A-Share Multi-Dimensional Timing Model**: - Annualized Return: 25.23% - Maximum Drawdown: -28.46% - Sharpe Ratio: 1.17 - Calmar Ratio: 0.89 - Year-to-Date (YTD): 40.98% - Last Week's Return: 0.15% [14] - **Style Timing Model**: - **Dividend Style Timing**: - Annualized Return: 16.04% - Maximum Drawdown: -25.52% - Sharpe Ratio: 0.87 - Calmar Ratio: 0.63 - YTD: 21.75% - Last Week's Return: 0.23% [20] - **Size Style Timing**: - Annualized Return: 26.25% - Maximum Drawdown: -30.86% - Sharpe Ratio: 1.09 - Calmar Ratio: 0.85 - YTD: 65.89% - Last Week's Return: 1.07% [27] - **Industry Rotation Model**: - Annualized Return: 32.60% - Annualized Volatility: 17.95% - Sharpe Ratio: 1.82 - Maximum Drawdown: -19.63% - Calmar Ratio: 1.66 - Last Week's Return: 0.27% - YTD: 36.44% [32] - **China Domestic All-Weather Enhanced Portfolio**: - Annualized Return: 11.53% - Annualized Volatility: 6.16% - Sharpe Ratio: 1.87 - Maximum Drawdown: -6.30% - Calmar Ratio: 1.83 - Last Week's Return: 0.66% - YTD: 9.02% [42]

- The report discusses the absolute return ETF simulation portfolio, which has increased by 7.47% year-to-date as of September 26, 2025. The portfolio's asset allocation weights are calculated based on recent trends, with stronger assets receiving higher risk budgets. Equity asset internal allocation weights are determined using a monthly industry rotation model and timing views on dividend assets[36][37] - The backtesting results of the absolute return ETF simulation portfolio from May 5, 2016, to September 26, 2025, show an annualized return of 6.61%, annualized volatility of 3.81%, maximum drawdown of 4.65%, Sharpe ratio of 1.73, and Calmar ratio of 1.42[37] - The report highlights the performance of domestic gold ETFs, which have seen a resurgence in net inflows since domestic gold prices broke previous highs. As of September 26, 2025, the total scale of 14 domestic gold ETFs reached 1629 billion yuan, an increase of nearly 160 billion yuan compared to the end of August, approaching the high point of April 24, 2025[12][14][16]

Investment Rating - The report maintains an "Overweight" rating for the Electric Equipment and New Energy sector and the Public Utilities sector [1][4]. Core Views - The report highlights China's new carbon reduction targets announced by President Xi Jinping, aiming for a 7%-10% reduction in greenhouse gas emissions by 2035, with non-fossil energy consumption exceeding 30% of total energy consumption [8][10]. - The transition from the "peak" phase to the "decline" phase in carbon emissions is emphasized, indicating a clear path towards carbon neutrality [8][10]. - The report identifies key beneficiaries in the energy transition, including leaders in the energy storage industry and companies like Sany Heavy Energy and Guodian NARI [8][11]. Summary by Sections Investment Recommendations - Sany Heavy Energy (688349 CH) is rated "Buy" with a target price of 38.01 CNY, reflecting a significant growth potential [4][15]. - Guodian NARI (600406 CH) is also rated "Buy" with a target price of 26.00 CNY, supported by its strong market position in secondary equipment [4][15]. Market Outlook - The report anticipates that by 2030, the cost parity of solar and storage will unlock new capacity for renewable energy installations, with a projected increase in installed capacity to 6,816 GW by 2035 [12][14]. - The need for a higher electrification rate and increased green energy proportion is highlighted to meet the carbon reduction targets without sacrificing energy consumption [11][12]. Company Performance - Sany Heavy Energy reported a revenue of 8.594 billion CNY for H1 2025, a year-on-year increase of 62.75%, with a significant improvement in profitability expected due to higher-margin product sales [16][17]. - Guodian NARI achieved a revenue of 15.348 billion CNY in Q2 2025, reflecting a year-on-year growth of 22.50%, indicating robust demand in the new power system construction [17][18].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group with a target price of HKD 65.4 [5][7]. Core Insights - Xiaomi's recent product launch includes the Xiaomi 17 series smartphones, Pad 8, smart home appliances, routers, and a customized service for its automotive line, indicating a strong focus on innovation and ecosystem development [1][2]. - The company emphasizes its ongoing investment in hard technology, particularly in self-developed chips and smart vehicles, which are expected to support the development of a comprehensive "people-vehicle-home" ecosystem [1][4]. Summary by Sections Mobile Phones - The Xiaomi 17 series features competitive pricing and significant improvements in battery life, with the standard version priced at HKD 4,499 and the Pro version at HKD 4,999, which is a reduction of HKD 300 from the previous model [2]. - The new series utilizes Qualcomm's Snapdragon 8 Elite chip, manufactured with TSMC's 3nm process, and boasts a battery life improvement of 109% for the standard model compared to the iPhone 17 [2]. Automotive - Xiaomi introduced a customization service for its automotive line, allowing for personalized options for the SU7 Ultra and YU7 Max models, which is expected to attract high-end users and enhance brand prestige [3]. - The gross margin for Xiaomi's automotive and AI innovation business reached 26.4% in Q2 2025, an increase of 11 percentage points year-over-year, indicating a positive trend in profitability [3]. Annual Presentation - Founder Lei Jun highlighted the company's advancements in self-developed chips and electric vehicles since 2021, showcasing the successful launch of the Xuanjie SoC chip and the SU7 Ultra model, which has achieved notable performance metrics [4]. Profit Forecast and Valuation - The report projects Xiaomi's net profit for 2025-2027 to be RMB 443.1 billion, RMB 526.3 billion, and RMB 671.2 billion respectively, maintaining a target price of HKD 65.4 based on a sum-of-the-parts (SOTP) valuation method [5][42].

Group 1: Petrochemical Industry - The PTA industry in China is showing signs of a turning point as the expansion cycle ends, with production capacity increasing by 80% since 2020 and maintaining a healthy operating rate due to growing demand in textiles and consumer goods [2] - The industry has faced low profitability for 13 years, primarily due to the promotion of new technologies leading to increased competition since 2018 [2] - By 2025, the CR5 of the PTA industry in China is expected to reach 70%, with leading companies having a high proportion of new technology capacity, and no new capacity expected to be added in 2026-2027, indicating potential for industry optimization [2] Group 2: Nonferrous Metals - The Grasberg copper mine, the second largest globally, has ceased operations due to an accident, which is projected to reduce copper output by 200,000 tons in 2025 and 270,000 tons in 2026 [3] - Additionally, the Kamoa-Kakula mine's shutdown may also impact copper production in 2026, leading to a significant improvement in the supply-demand balance for copper in Q4 2025 and 2026 [3] - As a result, copper prices are expected to strengthen [3] Group 3: Construction Materials - The Ministry of Industry and Information Technology of China has issued a plan for stable growth in the construction materials industry for 2025-2026, emphasizing the resolution of structural contradictions rather than specific growth targets [3] - The plan includes detailed measures for capacity regulation and management across different sub-industries, with increasing demands for digitalization and greening in the industry [3] - The report remains optimistic about breakthroughs in the cement industry and recommends companies such as Huaxin Cement A, Shangfeng Cement, and Conch Cement A [3] Group 4: Key Companies - Micron Technology reported FY25Q4 revenue of $11.3 billion, a 46% year-over-year increase, exceeding Bloomberg's expectations, with adjusted net profit of $3.47 billion and adjusted EPS of $3.03 [4] - The company anticipates FY26Q1 revenue between $12.2 billion and $12.8 billion, with a non-GAAP gross margin of 50.5%-52.5% [4] - Despite the positive earnings report, concerns about increased competition in HBM technology may pressure Micron's market position [4] Group 5: Other Companies - Nine Dragons Paper achieved FY2025 revenue of 63.24 billion yuan, a 6.3% year-over-year increase, and a net profit of 1.77 billion yuan, reflecting a 135.4% increase due to its integrated pulp and paper layout [5] - The company is expected to continue solidifying its cost advantages as it advances its integrated pulp and paper strategy [5] - Wanhua Chemical anticipates a net profit of 340-420 million yuan for the first three quarters, representing a 70%-110% year-over-year increase, driven by strong demand for PVA optical films and automotive-grade PVB films [5]