CAITONG SECURITIES·2025-10-19 10:28Report Industry Investment Rating There is no information regarding the report's industry investment rating provided in the content. Core Viewpoints - As of October 18, 2025, 117 listed companies have disclosed their Q3 earnings forecasts, the lowest in the past five years. About 84% of them announced positive news, similar to 2024. Most companies issued pre - increase announcements (60% of all forecasts). Only 10 convertible bond companies disclosed Q3 earnings forecasts, half the number of 2024, with 9 announcing positive news [2][6][14]. - Basic chemicals, electronics, non - ferrous metals, and machinery industries had more positive news. The non - ferrous metals and media industries showed significant improvement compared to 2024. Seven non - ferrous metal companies announced pre - increase, and 2 announced turnaround; 1 media company announced turnaround and 1 pre - increase [2][8]. - Four convertible bond listed companies, Luxshare, Limin, Bojun, and Downtow, reported positive Q3 earnings for two consecutive years. Luxshare expects a 20% - 25% net profit increase in Q3, Limin may see a year - on - year net profit increase of over 600%, Bojun expects a 50% - 80% net profit increase, and Downtow's Q3 profit may increase by over 30% [2][13][14]. - The market style may be switching, and geopolitical uncertainties increase market volatility. The risk appetite in the convertible bond market may have declined. Selecting high - quality convertible bonds during the earnings season may be a key strategy, especially those with consistently excellent performance [2][14]. Summaries by Directory 1. Q3 Earnings Forecasts: How to View the Convertible Bond Market - The number of listed companies disclosing Q3 earnings forecasts in 2025 is the lowest in the past five years, with a similar structure to 2024. The proportion of companies with positive news is about 84%, the same as in 2024. In the convertible bond market, only 10 companies disclosed forecasts, half the number of 2024, with 9 announcing positive news [2][6][14]. - Basic chemicals, electronics, non - ferrous metals, and machinery are industries with more positive news. Non - ferrous metals and media industries improved significantly compared to 2024. 15 companies mentioned AI contributions in their earnings forecasts, with 14 reporting positive results and most planning to increase AI investment [2][8][11]. - Four convertible bond listed companies had positive Q3 earnings for two consecutive years, with specific reasons for profit growth provided for each company [2][13][14]. 2. One - Week Market Performance - As of Friday's close, the Shanghai Composite Index closed at 3839.76, down 1.47% for the week; the CSI Convertible Bond Index closed at 474.22, down 2.35% for the week. The top - three rising industries in the stock market were banks (+4.99%), coal (+4.27%), and food and beverages (+0.85%), while electronics (-7.10%), media (-6.28%), and automobiles (-6.24%) declined [15]. - No new convertible bonds were listed this week. 45 convertible bonds rose, accounting for 11%. The top - five and bottom - five in terms of price changes are listed. 266 convertible bonds' conversion premium rates increased, accounting for 64%, and the top - five and bottom - five in terms of valuation changes are also listed [17]. 3. Major Shareholders' Convertible Bond Reductions - Nanjing Pharmaceutical announced a convertible bond reduction this week. A table shows the convertible bonds with high major shareholder holding ratios and their reduction status [25][26][27]. 4. Convertible Bond Issuance Progress - The primary - market approval process remains fast. Zhongqi Co., Ltd. (1.039 billion yuan), Mankun Technology (760 million yuan), and Huatong Cable (800 million yuan) have board proposals. Haitian Co., Ltd. (801 million yuan) has passed the shareholders' meeting, and Tianzhun Technology (872 million yuan) has received CSRC approval [27][28]. 5. Private EB Project Updates There were no progress updates on private EB projects this week [28]. 6. Style & Strategy: Large - Scale High - Rating Bonds Prevailed This Week - Using month - end rebalancing for back - testing and excluding bonds rated below A - and those with announced forced redemptions, large - scale high - rating convertible bonds prevailed this week. High - rating bonds had a 2.63pct excess return over low - rating bonds, large - scale bonds had a 1.89pct excess return over small - scale bonds, and equity - biased bonds had a - 8.24pct excess return over debt - biased bonds [29]. 7. One - Week Convertible Bond Valuation Performance: Convertible Bond Valuations Declined - The convertible bond market's 100 - yuan premium rate declined. As of the last trading day of the week, it closed at 29.31%, down 0.29% from the previous week, at the 86.5% historical percentile in the past six months and 93.6% in the past year. The median full - scope conversion premium rate increased by 0.78pct to 28.61%, and the market - value - weighted conversion premium rate (excluding banks) increased by 1.69pct to 41.46% [40]. - For equity - biased convertible bonds, the median conversion premium rate closed at 10.58%, down 1.12pct from the previous week, at the 80.6% historical percentile in the past six months. For debt - biased convertible bonds, the median pure - debt premium rate closed at 10.78%, down 1.43pct from the previous week, at the 71.4% historical percentile in the past six months [40]. - In terms of extreme pricing, as of the last trading day of the week, there was 1 convertible bond below par value, 0 below the bond floor, and 2 with a YTM greater than 3, at the 9.2%, 0%, and 6.7% historical percentiles since 2016 respectively. The median YTM of bank convertible bonds was - 3.97%, 5.84pct lower than the 3 - year AAA corporate bond yield; the median YTM of AA - to AA+ debt - biased convertible bonds was - 1.48%, 3.59pct lower than the 3 - year AA corporate bond yield [44]. - The adjusted 100 - yuan premium rate remained flat. After excluding factors such as bond nature and remaining term, it was at the 84.3% historical percentile in the past six months and 68.9% since 2018. Considering only the bond floor, it was at the 82.6% historical percentile in the past six months and 34.8% since 2018 [56].