Investment Rating - The report maintains a "Strong Buy" investment rating for the company [3] Core Insights - The company has integrated its self-developed digital twin platform, AISWare Digital Gemini, with NVIDIA Omniverse to empower the digital transformation of the manufacturing industry [1][7] - The company is recognized as one of the top six "large model application delivery suppliers" in China, showcasing its capabilities across various sectors [7] - The company aims to enhance its AI capabilities to address fluctuations in BSS business and increase OSS business share, focusing on three growth engines: AI large model applications, 5G private networks, and digital operations [7] Financial Data and Valuation - Total revenue is projected to decline from 7,913 million in 2023 to 6,646 million in 2024, followed by a recovery to 7,141 million in 2025, with a growth rate of 7% [2][13] - The net profit attributable to shareholders is expected to decrease from 533 million in 2023 to 453 million in 2025, with a significant rebound to 706 million in 2026 [2][13] - The company's PE ratio is forecasted to rise from 19.7 in 2023 to 23.3 in 2025, before decreasing to 12.9 by 2027 [2][13] Stock Performance - The company's stock has shown strong absolute performance, with a 40% increase over one month, 141% over six months, and 181% over twelve months [5] Key Financial Ratios - The company’s gross margin is projected to remain stable around 35.8% to 37.6% from 2023 to 2027 [13] - The return on equity (ROE) is expected to improve from 8.1% in 2023 to 10.5% in 2027 [13] - The asset-liability ratio is forecasted to decrease from 41.5% in 2023 to 39.5% in 2027, indicating improved financial stability [13]

Quantitative Models and Construction Methods 1. Model Name: Interest Rate Price-Volume Multi-Cycle Timing Strategy - **Model Construction Idea**: This strategy uses kernel regression algorithms to identify support and resistance lines in interest rate trends. It combines signals from long, medium, and short investment cycles to form a composite timing view[10][22] - **Model Construction Process**: 1. **Signal Generation**: - Use kernel regression to capture the shape of interest rate trends and identify breakout signals for long, medium, and short cycles[10] - Long-cycle signals switch monthly, medium-cycle signals switch bi-weekly, and short-cycle signals switch weekly[10] 2. **Portfolio Allocation Rules**: - If at least two cycles show downward breakouts and the trend is not upward, allocate fully to long-duration bonds - If at least two cycles show downward breakouts but the trend is upward, allocate 50% to medium-duration bonds and 50% to long-duration bonds - If at least two cycles show upward breakouts and the trend is not downward, allocate fully to short-duration bonds - If at least two cycles show upward breakouts but the trend is downward, allocate 50% to medium-duration bonds and 50% to short-duration bonds - In other cases, allocate equally across short, medium, and long durations[22] 3. **Benchmark**: Equal-weighted duration strategy (1/3 short, 1/3 medium, 1/3 long duration)[22] 4. **Stop-Loss Mechanism**: Adjust to equal-weight allocation if daily excess return falls below -0.5%[22] - **Model Evaluation**: The strategy demonstrates strong robustness with consistent positive returns and high win rates over an 18-year backtest period[22][23] --- Model Backtest Results 1. Interest Rate Price-Volume Multi-Cycle Timing Strategy - **Long-Term Performance (2007.12.31 to Latest Report Date)**: - Annualized Return: 6.15% - Maximum Drawdown: 1.52% - Return-to-Drawdown Ratio: 2.25 - Excess Annualized Return: 1.66% (relative to equal-weighted duration benchmark) - Excess Return-to-Drawdown Ratio: 1.17[22] - **Short-Term Performance (Since 2023 End)**: - Annualized Return: 6.93% - Maximum Drawdown: 1.52% - Return-to-Drawdown Ratio: 5.94 - Excess Annualized Return: 2.2% - Excess Return-to-Drawdown Ratio: 2.31[22][23] - **Win Rates (2007-2025)**: - Annual Absolute Return > 0: 100% - Annual Excess Return > 0: 100%[23] - **Yearly Performance Statistics**: - Example Years: - 2008: Absolute Return 17.08%, Excess Return 4.41% - 2014: Absolute Return 13.47%, Excess Return 2.67% - 2024: Absolute Return 9.35%, Excess Return 2.52%[26] --- Quantitative Factors and Construction Methods 1. Factor Name: Interest Rate Structure Indicators (Level, Slope, Convexity) - **Factor Construction Idea**: Transform yield-to-maturity (YTM) data of 1-10 year government bonds into structural indicators to analyze the interest rate market from a mean-reversion perspective[7][9] - **Factor Construction Process**: 1. **Level Structure**: Average YTM across all maturities 2. **Slope Structure**: Difference between long-term and short-term YTM 3. **Convexity Structure**: Second derivative of the yield curve to measure curvature[7][9] - **Factor Evaluation**: The current readings indicate a low level structure, low slope structure, and neutral-to-low convexity structure, suggesting a relatively bearish outlook for the interest rate market[9] --- Factor Backtest Results 1. Interest Rate Structure Indicators - **Current Readings**: - Level Structure: 1.6% (17th percentile over 3 years, 10th percentile over 5 years, 5th percentile over 10 years) - Slope Structure: 0.35% (18th percentile over 3 years, 11th percentile over 5 years, 14th percentile over 10 years) - Convexity Structure: 0.09% (32nd percentile over 3 years, 21st percentile over 5 years, 21st percentile over 10 years)[9]

Domestic Economic Insights - High-frequency data indicates a year-on-year improvement in export volumes, but a potential slowdown is expected if the RMB appreciates in the second half of the year[2] - Industrial enterprise profit growth in June shows a narrowing decline, highlighting the need for structural adjustments[2] - The issuance of special bonds has accelerated, reaching a peak in June and July, preparing for a potential rise in interest rates and RMB appreciation[6] Factors Supporting RMB Appreciation - Economic growth exceeded targets in the first half, with a focus on structural adjustments in the second half[2] - Anticipated meetings between European and American leaders with Chinese counterparts in Q3 may influence market dynamics[2] - The depreciation of the USD could lead to increased domestic prices, making Chinese assets more attractive to foreign investors[2] International Trade Developments - Several countries have reached trade negotiation agreements with the US, with tariffs not exceeding 20%, which is more sustainable compared to previous threats[6] - The progress in tariff negotiations has alleviated some pressure on the US, allowing for greater leverage over countries that have not yet reached agreements[6] - The third round of US-China negotiations in Sweden is likely to pave the way for a future meeting between the two nations' leaders[6] Monetary Market Trends - The liquidity environment experienced fluctuations, with a shift from tight to neutral conditions, influenced by significant demand for funds and central bank operations[21] - The average weekly rate for DR001 decreased by 2.556 basis points to 1.443%, while DR007 increased by 0.226 basis points to 1.535%[21] - The net issuance of government bonds is projected to decrease significantly next week, with a planned issuance of approximately 517.75 billion CNY[22]

Investment Rating - The report maintains a "Recommended" rating for the automotive industry, indicating a positive outlook for the sector's fundamentals and expectations for the industry index to outperform the benchmark index [5]. Core Insights - The automotive industry experienced an overall increase of 1.2% from July 20 to July 26, with significant developments in smart connected vehicles as Shanghai issued new operational licenses for several companies [1][9]. - Key new vehicle launches include the Wanjie M8 electric version with a starting price of 378,000 yuan, and the Li Auto i8, expected to be priced between 350,000 and 400,000 yuan, set to launch on July 29 [1][32]. Market Performance Overview - The automotive sector's performance was positive, with the CS automotive index rising by 1.2%, while the broader market indices also showed gains, with the Shanghai A index up by 1.7% and the Shenzhen A index up by 2.2% [2][10]. - Among the automotive sub-sectors, commercial vehicles saw the most significant weekly increase of 4.3%, while automotive services and motorcycles also experienced notable gains [13]. Individual Stock Performance - Notable stock performances included Fucai Technology (+28.0%), Tianpu Co. (+23.7%), and Shenchi Electromechanical (+22.8%), while Shanghai Wumao (-18.1%) and Jiuling Technology (-10.5%) faced declines [3][18]. - Coverage of key stocks showed similar trends, with Shenchi Electromechanical leading the gains at +22.8%, followed by Guansheng Co. (+15.6%) and Jianghuai Automobile (+9.3%) [21]. Recent Industry Developments - The report highlights the rapid expansion of Li Auto's charging network, which has surpassed 2,900 stations, indicating a strong commitment to infrastructure development [27]. - Tesla reported a decline in Q2 revenue and net profit, with total revenue dropping 12% year-on-year to $22.5 billion, primarily due to decreased vehicle sales [29]. - Longhua Automobile achieved record Q2 results, with total revenue reaching 52.348 billion yuan, a year-on-year increase of 7.78% [30].

Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for the sector's fundamentals and expectations for the industry index to outperform the benchmark index [5]. Core Insights - The industrial market is in an upward cycle, with automotive terminal revenues expected to improve quarter-on-quarter [1]. - In Q2 2025, the company reported revenues of $2.77 billion, a year-on-year decline of 14.4% but a quarter-on-quarter increase of 9.9%, exceeding the midpoint of guidance [1][13]. - The gross margin was 33.5%, down 6.6 percentage points year-on-year but slightly up 0.1 percentage points quarter-on-quarter [1][13]. - The net profit was a loss of $97 million, a significant decline from a profit of $353 million in the same period last year [15]. Summary by Sections Financial Performance - Q2 2025 revenue was $2.77 billion, with a year-on-year decline of 14.4% and a quarter-on-quarter increase of 9.9%, surpassing guidance [1][13]. - The gross margin was 33.5%, with a year-on-year decrease of 6.6 percentage points and a slight quarter-on-quarter increase [1][13]. - Net profit was a loss of $97 million, compared to a profit of $353 million in the previous year [15]. Business Segments - Automotive revenue was $1.11 billion, down 24% year-on-year but up 14% quarter-on-quarter, driven by demand in Asia-Pacific and the Americas [2][16]. - Personal electronics revenue was $640 million, down 5% year-on-year and up 3% quarter-on-quarter [2]. - Industrial revenue was $610 million, down 8% year-on-year but up 15% quarter-on-quarter, indicating a recovery in the market [2][18]. Inventory and Orders - Inventory at the end of Q2 2025 was $3.27 billion, with a turnover period of 166 days, slightly exceeding expectations [15]. - The backlog-to-billings (BB) ratio for automotive business declined below 1 due to specific customer dynamics [2][16]. - The company expects inventory turnover days to significantly improve in Q3 2025, with a target of around 140 days [3][23]. Future Guidance - For Q3 2025, the company guides revenue to a midpoint of $3.17 billion, representing a year-on-year decline of 2.5% but a quarter-on-quarter increase of 14.6% [3][23]. - All end markets, except automotive, are expected to show year-on-year growth [3][23]. - The gross margin is expected to remain around 33.5%, with potential fluctuations due to capacity underutilization costs and currency effects [3][23]. Market Trends - The automotive sector is approaching a market inflection point, with expectations for revenue growth in Q3 and Q4 2025 [3][16]. - The industrial sector is experiencing an upward cycle, driven by real end-user demand in smart industrial and energy sectors [3][18][36]. - The company is actively pursuing opportunities in electric vehicle electrification and digitalization, with significant design wins in the automotive sector [16][17].

Investment Rating - The investment rating for the aviation industry is "Maintain" with a recommendation to "Increase Holdings" for specific companies such as China Southern Airlines and Air China [3][7]. Core Insights - The aviation industry is experiencing a slight narrowing of supply-demand differences due to normalization and increased base figures, yet passenger load factors remain high and continue to improve year-on-year. Domestic routes show low growth, while international routes support supply-demand growth [1][7]. - Key financial indicators for major airlines indicate a mixed performance, with significant improvements in passenger load factors for the three major airlines. Spring Airlines has shown a leading capacity deployment in June [1][3][7]. Industry Overview - As of June 2025, the civil aviation passenger transport volume reached 61.22 million, a year-on-year increase of 14.6% compared to 2019 and 4.4% compared to 2024. Domestic routes accounted for 54.64 million passengers, while international routes saw 658,000 passengers, reflecting a recovery trend [7][22]. - The number of flights executed in June was 448,000, up 5% from 2019 and 2.9% from 2024. Domestic flights totaled 384,000, while international flights reached 64,200, recovering to 81.7% of 2019 levels [7][22]. - The average ticket price for domestic routes decreased by 4.9% year-on-year, while the base ticket price increased by 0.7% [7][22]. Company Performance - Major airlines' operational data for June 2025 shows that China Southern Airlines had an ASK (Available Seat Kilometers) growth of 4.4% and an RPK (Revenue Passenger Kilometers) growth of 6.7%, with a passenger load factor increase of 1.8 percentage points [41][45]. - Air China's ASK grew by 2.5% and RPK by 3.9%, with a load factor increase of 1.1 percentage points. Eastern Airlines reported an ASK growth of 6.5% and RPK growth of 10.0% [41][45]. - The overall performance of listed airlines indicates a combined ASK growth of 5.1% and RPK growth of 6.9%, with domestic ASK growth at 1.1% and RPK growth at 3.1% [45]. Market Trends - The aviation industry index showed a performance of 6.1% over one month, 12.2% over six months, and 26.5% over twelve months, indicating a positive trend compared to the Shanghai Composite Index [5][11]. - The total market capitalization of the aviation industry reached 319.95 billion, with a circulating market capitalization of 295.20 billion [3][11]. Investment Recommendations - Recommended stocks include China Southern Airlines, Air China, Spring Airlines, and others, with a focus on maintaining a watch on China Eastern Airlines [7].

Investment Rating - The report maintains a "Recommended" rating for the transportation industry [2] Core Insights - The report highlights the acquisition of Daniao Logistics by Shentong, emphasizing the focus on the express delivery and civil aviation sectors to mitigate internal competition [1] - The express delivery sector is expected to see a demand growth of over 20% in 2024, with a 19.3% increase in business volume in the first half of 2025 [23] - The report suggests that the "anti-involution" policy may ease price competition and facilitate valuation recovery in the express delivery industry [23] Summary by Sections Shipping - The dry bulk market is showing signs of improvement, with a focus on the impact of the US-China trade talks on the shipping sector [6] - The report notes that the shipping rates for the East US route have decreased by 6.5% this week, while the European route has seen a slight increase of 0.5% [10][11] - The report recommends monitoring companies such as COSCO Shipping and Yang Ming Marine Transport [6] Infrastructure - The report indicates that the yield on 10Y and 30Y government bonds is 1.7% and 2% respectively, suggesting that there is still value in dividend assets [18] - It highlights the stable performance of leading highway assets and recommends stocks like China Merchants Highway and Anhui Expressway [18] Express Delivery - The express delivery business volume reached 16.87 billion pieces in June 2025, reflecting a year-on-year growth of 15.8% [19] - The report mentions that Shentong's acquisition of Daniao Logistics is expected to enhance market share and optimize competition [22] - The report emphasizes the potential for valuation recovery due to the "anti-involution" policy and the easing of price competition [23] Aviation - The report notes a decrease in passenger traffic due to adverse weather conditions, with a 1.4% drop in the week of July 18-24 [24] - It highlights the importance of the "anti-involution" policy in the aviation sector, which aims to stabilize competition and improve valuations [25] - Recommended stocks include Air China and China Southern Airlines [25] Logistics - The report states that the average daily traffic at the Ganqimaodu port increased by 16.6% week-on-week [26] - It mentions that the logistics company China National Foreign Trade Transportation Group is expected to confirm significant non-recurring gains from asset sales [26]

Quantitative Models and Construction Methods 1. Model Name: Short-term Quantitative Timing Model - **Model Construction Idea**: The model integrates macroeconomic fundamentals, valuation, sentiment, and liquidity indicators to generate short-term market timing signals[24][25][26] - **Model Construction Process**: - **Macroeconomic Fundamentals**: - Manufacturing PMI: Current value at 49.70, 44.92% percentile over the past 5 years, indicating neutral sentiment[24] - Long-term RMB loan growth: 0.00% percentile, indicating weak credit growth and cautious signals[24] - M1 growth rate: 94.92% percentile, indicating strong growth and optimistic signals[24] - **Valuation**: - PE median: 43.18, 97.19% percentile, indicating high valuation and neutral signals[25] - PB median: 2.85, 86.77% percentile, indicating high valuation and neutral signals[25] - **Sentiment**: - Beta dispersion: -0.59%, 40.68% percentile, indicating neutral sentiment[25] - Volume sentiment score: 0.98, 99.59% percentile, indicating strong sentiment and optimism[25] - Volatility: 7.53% (annualized), 0.17% percentile, indicating optimism[25] - **Liquidity**: - Monetary rate: -0.10, 33.90% percentile, indicating relative ease and optimism[26] - Exchange rate expectations: -0.09%, 40.68% percentile, indicating neutrality[26] - 5-day average financing: 50.66 billion RMB, 95.53% percentile, indicating neutral leverage signals[26] - **Model Evaluation**: The model demonstrates strong performance with significant excess returns and reduced drawdowns compared to benchmarks[26][30] 2. Model Name: Growth-Value Style Rotation Model - **Model Construction Idea**: The model evaluates growth and value styles based on macroeconomic fundamentals, valuation, and sentiment indicators to recommend allocation[35] - **Model Construction Process**: - **Macroeconomic Fundamentals**: - Profit cycle slope: High, favoring growth[37] - Interest rate cycle: High, favoring value[37] - Credit cycle: Weak, favoring value[37] - **Valuation**: - PE difference: 19.57% percentile, favoring growth[37] - PB difference: 38.03% percentile, favoring growth[37] - **Sentiment**: - Turnover difference: 38.13% percentile, favoring value[37] - Volatility difference: 17.73% percentile, favoring balanced allocation[37] - **Model Evaluation**: The model has historically delivered significant excess returns over benchmarks, though recent performance has been mixed[36][39] 3. Model Name: Small-Cap vs. Large-Cap Style Rotation Model - **Model Construction Idea**: The model assesses small-cap and large-cap styles using macroeconomic fundamentals, valuation, and sentiment indicators to suggest balanced allocation[40] - **Model Construction Process**: - **Macroeconomic Fundamentals**: - Profit cycle slope: High, favoring small-cap[42] - Interest rate cycle: High, favoring large-cap[42] - Credit cycle: Weak, favoring large-cap[42] - **Valuation**: - PE difference: 78.86% percentile, favoring large-cap[42] - PB difference: 96.59% percentile, favoring large-cap[42] - **Sentiment**: - Turnover difference: 72.56% percentile, favoring small-cap[42] - Volatility difference: 62.60% percentile, favoring large-cap[42] - **Model Evaluation**: The model has consistently outperformed benchmarks, delivering significant excess returns over time[41][44] 4. Model Name: Four-Style Rotation Model - **Model Construction Idea**: Combines insights from growth-value and small-cap-large-cap models to allocate across four styles: small-cap growth, small-cap value, large-cap growth, and large-cap value[45] - **Model Construction Process**: - Allocation recommendation: Small-cap growth (12.5%), small-cap value (37.5%), large-cap growth (12.5%), large-cap value (37.5%)[45] - **Model Evaluation**: The model has historically generated significant excess returns, though recent performance has been slightly below benchmarks[45][46] --- Model Backtest Results 1. Short-term Quantitative Timing Model - Annualized return: 16.98% - Annualized volatility: 14.55% - Maximum drawdown: 27.70% - Sharpe ratio: 1.0138 - Excess return (2024 onwards): 2.26%[26][30][33] 2. Growth-Value Style Rotation Model - Annualized return: 11.82% - Annualized volatility: 20.79% - Maximum drawdown: 43.07% - Sharpe ratio: 0.5457 - Excess return (2025 YTD): -2.32%[36][39] 3. Small-Cap vs. Large-Cap Style Rotation Model - Annualized return: 12.38% - Annualized volatility: 22.69% - Maximum drawdown: 50.65% - Sharpe ratio: 0.5408 - Excess return (2025 YTD): -5.11%[41][44] 4. Four-Style Rotation Model - Annualized return: 13.29% - Annualized volatility: 21.53% - Maximum drawdown: 47.91% - Sharpe ratio: 0.6001 - Excess return (2025 YTD): -3.25%[45][46]

证券研究报告 | 公司点评报告 2025 年 07 月 27 日 西部矿业（601168.SH） 玉龙驱动利润增长 三期打开未来增长空间 周期/金属及材料 公司公布 2025 年中报。2025 年上半年收入和归母净利润分别 316.19、18.69 亿元，分别增长 26.59%、15.35%。Q2 单季度净利润 10.62 亿元，同比、环比 分别增 20.1%、31.4%。 铜量增价涨贡献主要利润增长：2025H1 主要矿产金属产量全面增长，且产量 全面超预期。矿产铜、锌、铅、钼产量分别 9.2 万吨、6.3 万吨、3.5 万吨、 2525 吨，分别同比增 7.65%、18.61%、24.63%、31.1%。其中铜精矿全年 产量目标 16.8 万吨，上半年产量超预期。其中玉龙铜矿产量 8.3 万吨，获各 琦铜矿 0.7 万吨。上半年电解铜价格 77770 元/吨，同比上涨 4.3%。 2025Q2 矿产铜产量 4.8 万吨，同比环比分别增 2.1%、8.1%；矿产锌产量 3.3 万吨，同比环比分别增 19%、9.9%；矿产铅产量 1.8 万吨，同比环比分别增 14.3%、10.4%；矿产钼产量 1277 吨， ...

Investment Rating - The report maintains a recommendation for the chemical industry, indicating a positive outlook due to the anticipated benefits from anti-involution policies [2]. Core Insights - The chemical industry is expected to benefit from the implementation of anti-involution policies, which aim to reduce unhealthy competition and improve pricing structures [13][14]. - The report highlights that certain chemical products are currently at historical low prices, suggesting potential for price recovery as market conditions improve [15]. - The focus is on eight specific products with significant price recovery potential: spandex, organic silicon, PVC, titanium dioxide, soda ash, propylene oxide, glyphosate, and TDI [15]. Summary by Sections Anti-Involution Policies - The government is committed to addressing "involution-style" competition, with plans for new policies to stabilize key industries including chemicals [13][14]. - The aim is to eliminate low-cost sales practices that have led to unsustainable pricing and profitability issues within the industry [14]. Spandex Market - Spandex prices have reached historical lows, with a steady increase in production and inventory pressures [19][22]. - The spandex market is dominated by major players such as Huafeng Chemical and Xinxiang Chemical Fiber, which hold significant market shares [29][40]. Organic Silicon Market - Organic silicon prices are at a five-year low, with a diverse range of applications across various industries [44][49]. - The industry is characterized by limited new capacity additions, with major producers like Hoshine Silicon and Dongyue Group leading the market [55]. PVC Market - PVC is a widely used plastic, primarily in the real estate sector, and is expected to benefit from the consolidation of production capacity [6][19]. - Key companies in the PVC market include Zhongtai Chemical and Xinjiang Tianye, which are positioned to capitalize on market recovery [6]. Titanium Dioxide Market - Titanium dioxide prices have hit five-year lows, with high inventory levels impacting profitability [6][19]. - Major players in this sector include China Nuclear Titanium Dioxide and Longbai Group, which are expected to navigate the challenging market conditions [6]. Soda Ash Market - The soda ash market is facing high inventory levels, with significant applications in real estate and photovoltaic industries [6][19]. - Key companies include Boyuan Chemical and Shandong Haihua, which are well-positioned to benefit from future demand recovery [6]. Propylene Oxide Market - Propylene oxide has a low concentration of production capacity, with broad applications across various sectors [6][19]. - Key players include Binhai Chemical and Weiyuan Chemical, which are expected to benefit from market dynamics [6]. Glyphosate Market - Glyphosate is the most widely used herbicide globally, with increasing demand driven by rising agricultural output [6][19]. - Major companies in this space include Xingfa Group and Jiangshan Chemical, which are positioned to benefit from a favorable market environment [6]. TDI Market - TDI supply-demand dynamics remain tight due to production disruptions, with significant barriers to entry for new players [6][19]. - Key companies include Cangzhou Dahua and Wanhua Chemical, which are expected to maintain strong market positions [6].