SWHY(SZ:000166) Shenwan Hongyuan Securities·2025-05-16 09:11Key Insights - The core viewpoint indicates that after the verification period in April, the main contradiction in the fundamentals has shifted, with concerns about external demand still present. The domestic actual hedging strength has become the primary contradiction. Since May, two important catalysts have emerged: the press conference on May 7 and the Sino-US Geneva trade talks on May 12, leading to an upward adjustment in the A-share market's fluctuation range [2][3] Short-term Outlook - The market is expected to test the upper limit of the fluctuation range following key changes. The financial policy is fully relaxed, directly related to stabilizing capital market expectations. The central bank has implemented various tools to support the market, which is anticipated to maintain short-term risk appetite and overall market activity [2][12] Medium-term Supply and Demand Outlook - The supply and demand structure has not yet systematically improved, and the judgment of a fluctuating market remains unchanged. Concerns about the impact of Trump’s policies persist, and the absolute pressure on domestic supply remains high. The demand side shows that the support for import demand from US inventory replenishment has peaked, with further pressure expected in the second and third quarters of 2025 [2][19][33] Earnings Forecast Update - The earnings forecast for A-shares in 2025 has been updated, reflecting a slight increase from the bottom but not confirming effective improvement. The net profit growth rate for the entire A-share market was -55% in Q4 2024, significantly below expectations, while Q1 2025 showed a growth of 6.3%, exceeding expectations. However, the logic behind these changes remains unclear [2][48][54] Sector Performance Insights - The first quarter of 2025 saw a slight recovery in demand, but the supply-demand structure remains weak. Key sectors showing clear performance improvement include consumption, pharmaceuticals, and AI computing power. The consumer sector is mainly benefiting from durable goods, while the pharmaceutical sector is seeing growth in innovative drugs and blood products. AI computing revenue growth has also shown signs of recovery [3][5][22] Policy and Market Dynamics - The recent policy changes by the China Securities Regulatory Commission (CSRC) aim to enhance the quality of public funds and strengthen the binding of interests with investors. The focus is on improving the stability of fund investment behavior and enhancing the ability to serve investors. The impact of these policies is expected to resonate with the long-term trend towards passive equity products [3][5][12] Structural Recommendations - Both short-term and long-term structural recommendations favor technology sectors. The first quarter earnings expectations for technology have strengthened, indicating a relative advantage in cost-effectiveness. The long-term outlook for A-shares requires significant catalysts from key technology industries to restart a structural bull market [3][5][6]