Macro Strategy - The report concludes that China's service sector employment and wage levels are not low compared to 43 economies, but there are three areas for improvement: the employment share in the service sector is still low compared to high-income economies, particularly in health and social work and real estate; the construction sector's employment is close to saturation, while the real estate sector has room for growth; and there is a significant income disparity across different service industries, with telecommunications and finance having higher wages compared to education and real estate [4][5][6]. Fixed Income Analysis - The report discusses the phenomenon of "deflation," characterized by a continuous decline in money supply and prices, leading to economic recession. It highlights that the main causes of deflation include supply-demand imbalances and a decrease in nominal money supply or circulation speed. Historical examples from Japan and the US illustrate how these countries responded to deflation through fiscal expansion and monetary easing [7][8]. - As of the first half of 2025, China's CPI showed a slight decline, averaging -0.07%, while PPI remained in negative territory, averaging -2.77%. The report attributes the low CPI to declines in food and transportation costs, while PPI is affected by weak real estate and infrastructure investment [7][8]. Company Analysis - 聚星科技 (Juxing Technology) is identified as a "small giant" in the electrical contact products sector, with a strong focus on technological innovation. The company was established in November 1996 and went public on the Beijing Stock Exchange in November 2024, becoming the first company from Wenzhou to list there. In 2024, it achieved a net profit of 116 million yuan, a year-on-year increase of 51.12%, and in Q1 2025, the net profit was 23 million yuan, up 44.97% year-on-year [2][10]. - The electrical contact products industry is expanding, with a compound annual growth rate of 10.98% from 2015 to 2023. The low-voltage electrical equipment market is also growing, driven by increasing fixed asset investments and rising demand in household appliances and industrial control sectors [10]. - 聚星科技 emphasizes core product focus and technological innovation, holding a competitive gross margin compared to peers. The company has established strong relationships with major low-voltage electrical manufacturers, enhancing customer loyalty [10]. - The report forecasts that the company's net profit will reach 130 million, 158 million, and 194 million yuan in 2025, 2026, and 2027, respectively, reflecting year-on-year growth rates of 12%, 21%, and 23%. The company is rated as "overweight" due to its strong growth potential and sufficient production capacity [3][10].
东吴证券晨会纪要-20250725