Midstream CapitalTraded Goods， New Infrastructure Outperformed

Investment Rating - The report indicates an "OVERWEIGHT" rating for the midstream capital/traded goods and new infrastructure sectors, suggesting these sectors are expected to outperform the benchmark [22]. Core Insights - The business climate in the A-share market showed a slight improvement in July 2024, with some sectors experiencing increased sales volume but decreased selling prices, indicating ongoing demand challenges [2]. - Structural highlights in new infrastructure are noted, with recommendations for A50 assets that exhibit robust return on equity (ROE), stable dividends, and low valuations for medium-term positions [2]. - The report emphasizes the importance of sectors with better-than-expected earnings during the interim results season, particularly in shipbuilding, general equipment, and consumer electronics [2]. - A+H pharmaceuticals are highlighted as being sensitive to interest rates, with valuations not fully reflecting expectations for rate cuts [2]. Sector Summaries Export and Consumption Sectors - The report notes a divergence in China's export chain, with certain products like inverters and shipbuilding showing resilient growth, while others like textiles and furniture experienced moderated growth [3]. - Inverters saw a narrowing year-over-year decline in export value, reaching a 12-month high, driven by demand from various international markets [3]. - Shipbuilding orders grew year-over-year in Q2 2024, indicating a widening supply/demand gap [3]. Agriculture and Equipment - The agriculture sector showed improved profitability, particularly in hog-grain price ratios, although challenges remain in piglet breeding profitability [4]. - Investment growth in power grid equipment accelerated year-over-year, while rail transit equipment investment remained high despite a slight decline [4]. - Communications equipment revenue growth indicates a positive business climate for data centers, with upstream optoelectronic devices output rebounding [4]. Consumer Goods - The chemical drugs sector saw a year-over-year increase in industrial output, with prices stabilizing or rebounding [5]. - Dairy product output rebounded in June, while beer and baijiu outputs showed mixed results, with some price adjustments noted [5]. - E-commerce logistics faced challenges, with declines in retail sales growth and express delivery volumes [5]. Other Key Changes - Cement prices showed year-over-year growth, while the aviation equipment sector saw a narrowing decline in certain material prices [6]. - Photovoltaic installations increased year-over-year, although industry-chain prices faced downward pressure [6]. - Battery sales volume and power battery installations contracted, with expectations for a potential inflection point in capacity utilization in the second half of 2024 [6].