Investment Rating - The industry investment rating is "Overweight" [2][22]. Core Viewpoints - The economy showed stable growth in the first half of 2025, with GDP increasing by 5.3% year-on-year. However, fixed asset investment growth weakened, with a cumulative year-on-year increase of 2.8%, down 0.9 percentage points from January to May [3][4]. - Infrastructure investment growth also weakened, with total infrastructure investment (including all categories) increasing by 8.9% year-on-year, a decrease of 1.5 percentage points compared to January to May. Notably, investment in transportation, warehousing, and postal services rose by 5.6% year-on-year, while investment in water conservancy, environment, and public facilities management increased by 3.5% [4][7]. - Real estate investment remained low, with a year-on-year decrease of 11.2% in the first half of 2025. The decline in construction starts and completions narrowed, with starts down 20.0% and completions down 14.8% year-on-year [7][8]. Summary by Sections Economic Overview - The first half of 2025 saw a GDP growth of 5.3%, with quarterly growth rates of 5.4% in Q1 and 5.2% in Q2. Fixed asset investment growth was at 2.8%, with manufacturing investment increasing by 7.5% [3][4]. Infrastructure Investment - Infrastructure investment (all categories) grew by 8.9% year-on-year, while investment excluding electricity increased by 4.6%. Transportation and postal services saw a 5.6% increase, while water and environmental management investment rose by 3.5% [4][5]. Real Estate Investment - Real estate investment decreased by 11.2% year-on-year, with construction starts down 20.0% and completions down 14.8%. The pace of investment recovery is expected to be slower than in previous cycles, highlighting the need for more supportive policies [7][8]. Investment Recommendations - The report suggests that the overall industry is currently weak, but regional investments may gain momentum due to national strategic initiatives. Recommended companies include state-owned enterprises like China Chemical, China Energy Construction, and China Railway Construction, as well as private firms like Zhi Te New Materials and Honglu Steel Structure [15].

Core Viewpoint - The Central State-Owned Enterprises Innovation-Driven Index (000861) experienced a slight decline of 0.21% as of July 15, 2025, with mixed performance among constituent stocks, indicating a volatile market environment for state-owned enterprises focused on innovation [3] Group 1: Market Performance - The Central State-Owned Enterprises Innovation-Driven ETF (515900) decreased by 0.40%, with the latest price at 1.48 yuan [3] - Over the past week, the ETF has seen a cumulative increase of 1.50%, ranking 2nd among comparable funds [3] - The ETF's trading volume was 14.53 million yuan with a turnover rate of 0.43% [3] Group 2: Financial Metrics - The ETF's latest scale reached 3.408 billion yuan, marking a three-month high and ranking 1st among comparable funds [4] - The ETF's net value increased by 6.00% over the past year, with a maximum monthly return of 15.05% since inception [4] - The longest consecutive monthly gain was 5 months, with a total increase of 24.91% [4] - The average return for months with gains was 3.97%, and the annual profit percentage was 80.00% [4] - The probability of profit over a three-year holding period is 97.52% [4] Group 3: Tracking Accuracy - The ETF has a tracking error of 0.037% over the past five years, the highest accuracy among comparable funds [5] - The index reflects the performance of 100 representative listed companies evaluated for innovation and profitability quality [5] - The top ten weighted stocks in the index account for 34.87% of the total, including companies like Hikvision and China State Shipbuilding [5]

Core Insights - The real estate market in Hefei has experienced significant price fluctuations and differentiation following the removal of price limits, leading to the emergence of luxury properties alongside a market downturn [1][35] - The average prices of new homes in Hefei have increased from 15,000 to over 60,000 yuan per square meter, reflecting a substantial shift in the pricing structure [1] Price Summary by District - **Binhai District**: - Chengjian Huayun: Average price ranges from 28,566 to 34,966 yuan per square meter, with a price difference exceeding 22% [3] - Gaosu Yipin Senjing: Average price is 32,300 yuan per square meter [3] - **Provincial Government West**: -招商玺: Average price is 49,600 yuan per square meter, with a range from 39,000 to 66,000 yuan [5] - 越秀观樾: Average price is 46,700 yuan per square meter, with a range from 33,000 to 57,000 yuan [5] - **Provincial Government East**: - 远大九庐: Average price is 34,900 yuan per square meter [7] - 越秀和樾府: Average price is 32,800 yuan per square meter [8] - **Financial District**: - 远大璟庭里: Average price is 26,000 yuan per square meter [10] - 高速壹品: Average price is 37,000 yuan per square meter [10] - **High-tech Zone**: - 星遇光年: Average price is 22,700 yuan per square meter [12] - 城建星启时代: Average price is 19,500 yuan per square meter [12] - **Shu District**: - 金隅中交山湖云筑: Average price is 24,700 yuan per square meter [15] - 绿城咏溪雲庐: Average price is 38,900 yuan per square meter [15] - **Other Districts**: - Prices in various districts such as 包河区, 庐阳区, and 瑶海区 range from 18,800 to 35,000 yuan per square meter, with significant variations based on location and property type [21][27][31] Market Trends - The introduction of new pricing regulations and product iterations has not led to a uniform price increase; instead, many areas have seen price reductions, prompting older properties to offer larger discounts to attract buyers [35]

Investment Rating - The report maintains a "Buy" rating for major construction enterprises, indicating a significant demand for rebound in the construction sector compared to the banking sector [8][31]. Core Insights - The domestic construction industry has evolved into a model with financial attributes similar to banks, where construction companies provide financing to clients, thus resembling "shadow banks" [1][14]. - The construction sector has lagged behind the banking sector in terms of stock performance, with a 76.1% increase in the banking sector since December 20, 2023, compared to only 13.5% in the construction sector, indicating a clear need for catch-up [2][15]. - The dividend yield of leading construction state-owned enterprises (SOEs) is attractive, with several companies offering yields above 3% in A-shares and over 5% in H-shares, making them appealing for long-term investors [3][22]. Summary by Sections Section 1: Industry Overview - The construction industry operates with a business model that has financial characteristics, requiring companies to provide upfront financing to secure projects, which has led to a high-leverage, asset-heavy structure [1][14]. - Major assets of construction firms include cash and receivables, which are akin to financial assets, while liabilities are primarily operational debts, similar to bank deposits [1][14]. Section 2: Market Performance - The construction sector's performance has been hindered by concerns over slow repayments from government and real estate developers, but these pessimistic expectations are now largely priced in, suggesting a potential for valuation recovery [2][15]. - The report highlights that the construction sector's valuation has been stabilizing, indicating a potential for upward movement as market conditions improve [2][15]. Section 3: Dividend Appeal - A-shares of leading construction SOEs show a competitive dividend yield, with companies like China Railway, China Railway Construction, and China Communications Construction yielding over 3% [3][22]. - In H-shares, the average dividend yield for construction SOEs matches that of leading banks, reflecting strong investment attractiveness [3][22]. Section 4: Policy Impact - Upcoming policies are expected to accelerate infrastructure project implementation, which, combined with a low base effect, may lead to improved revenue and performance for construction SOEs in the latter half of the year [4][26]. - The report anticipates that fiscal policies will be enhanced, with an increase in the issuance of special bonds and other financing tools to support infrastructure development [4][26]. Section 5: Competitive Landscape - The construction industry is witnessing a push against "involution" or excessive competition, with major players advocating for a focus on sustainable growth and innovation rather than aggressive expansion [7][30]. - This initiative aims to improve project profitability and stabilize the competitive environment within the industry [7][30]. Section 6: Investment Recommendations - The report recommends investing in undervalued construction SOEs, highlighting companies such as China Energy Engineering, China State Construction, and China Communications Construction as key targets for investment [8][31]. - The expected recovery in earnings and the attractive dividend yields position these companies favorably for long-term investment [8][31].

Investment Rating - The report maintains an "Overweight" rating for the construction and decoration industry [1] Core Viewpoints - The issuance of new special bonds by various regions increased by 44.7% year-on-year in the first half of the year, with an issuance progress of 49.1%, indicating a faster pace compared to 2024 but slower than 2022 and 2023. The focus is on supporting infrastructure investment in the second half of the year [2][11] - The construction business activity index for June was 52.8%, up 1.8 percentage points from the previous month, indicating a recovery in the industry. The civil engineering business activity index has remained above 55.0% for three consecutive months, reflecting an acceleration in construction projects [2][11] - There is an increasing focus on urban renewal and major infrastructure investment projects, with the completion of the 800 billion yuan "two重" construction project list expected to accelerate the implementation of key projects and physical workload [2][11] - The report suggests focusing on state-owned enterprises and local state-owned enterprises with low valuations and stable performance, recommending companies such as China Communications Construction, China Electric Power Construction, and China Railway [2][11] Summary by Sections Industry Dynamics - The report highlights that the Ministry of Housing and Urban-Rural Development is accelerating the renovation of old urban residential areas, with over 50% of construction rates reported in several provinces by June. A total of 180 billion yuan has been allocated for the renovation of 120,000 old elevators [14] - The National Development and Reform Commission emphasizes a balanced approach to infrastructure investment, ensuring the completion of major projects while planning for future initiatives [15] International Expansion - In the first five months of 2025, China's overseas contracting projects saw a 5.4% increase in revenue and a 13% increase in new contracts. Notably, contracts signed in Belt and Road Initiative countries reached 84.93 billion USD, a 20.7% increase year-on-year [3][12] - The report suggests focusing on international engineering sectors, recommending companies such as China Materials International and Shanghai Port Construction [3][12] Demand Structure - There are promising investment opportunities in specialized manufacturing engineering sectors, energy conservation, and new energy-related infrastructure. Companies with relevant transformation layouts are expected to benefit, such as Honglu Steel Structure and Huayang International [3][12]

Investment Rating - The industry investment rating is "Positive" [1] Core Viewpoints - The report indicates that the total investment in the industry is expected to stabilize, with a focus on advancing modern infrastructure systems without excessive preemption [1][3] - The National Development and Reform Commission (NDRC) has stated that all 102 major projects outlined in the "14th Five-Year Plan" are expected to be completed by the end of the year [11] - The report highlights that regional investments are likely to gain significant elasticity as national strategic layouts deepen [3] Industry Performance - The construction industry saw a weekly increase of 2.59%, outperforming major indices such as the Shanghai Composite Index (+1.09%) and the Shenzhen Component Index (+1.78%) [4][6] - The best-performing sub-industries for the week were Ecological Landscaping (+5.49%), International Engineering (+5.34%), and Design Consulting (+4.20%) [6][9] - Year-to-date, the top three sub-industries are Ecological Landscaping (+27.48%), Decorative Curtain Walls (+15.98%), and Design Consulting (+15.74%) [6][9] Key Company Developments - Anhui Construction won contracts for the S27 Hohhot to Ordos Expressway and G4212 Hefei to Anqing Expressway, totaling 8.085 billion yuan, which represents 8.38% of its 2024 revenue [13] - Zhejiang Communications won a contract for the G2531 Hangzhou to Shangrao Expressway, valued at 4.222 billion yuan, accounting for 8.84% of its 2024 revenue [13] - The report recommends low-valuation state-owned enterprises such as China Chemical, China Railway, and China Railway Construction, while also highlighting private companies like Zhite New Materials and Honglu Steel Structure [3][11]

Investment Rating - The report rates the construction and decoration industry as "Overweight" [2][8] Core Viewpoints - The overall investment growth rate is weak, with infrastructure investment providing relative stability amidst pressures in manufacturing and real estate. Infrastructure investment (excluding electricity) grew by 5.6% year-on-year from January to May 2025, while total infrastructure investment increased by 10.4% [2] - The report predicts that corporate profits will face pressure in the first half of 2025 due to slowing fixed asset investment growth and a focus on project quality. The expected net profit growth rates for key companies are categorized into various ranges, with some companies projected to see declines [2][3] - The report suggests that low valuations of state-owned enterprises in the construction sector may recover due to ongoing economic stimulus policies and management's market value management methods. The current PE and PB ratios for the construction industry are at 11.2X and 0.76X, respectively, indicating a bottom position [2] - Investment recommendations include state-owned enterprises such as China Chemical, China Railway, and China Railway Construction, as well as private companies like Zhi Te New Materials and Shenzhen Ruijie [2] Summary by Relevant Sections Profit Growth Predictions - Companies with a net profit growth rate below -10%: China Railway, China Railway Construction, China Metallurgical Group, China Power Construction, Shanghai Construction, Honglu Steel Structure, Southeast Network Framework [3] - Companies with a net profit growth rate between -10% and 0%: China Communications Construction, Sichuan Road and Bridge [3] - Companies with a net profit growth rate between 0% and 10%: China Energy Engineering, China Steel International, Anhui Construction, Donghua Technology [3] - Companies with a net profit growth rate between 10% and 20%: China Chemical [3] - Companies with a net profit growth rate above 20%: Zhi Te New Materials, Shenzhen Ruijie [3] Valuation Table - The report includes a valuation table for key companies in the construction industry, detailing their stock prices, EPS, PE ratios, and projected net profit growth rates for 2024A, 2025E, and 2026E [3]

Investment Rating - The industry rating is maintained as "Outperform the Market" [5] Core Insights - The construction sector has seen a significant increase in attention towards urban renewal, with undervalued large-cap stocks showing signs of stabilization. The sector's performance is driven by improved demand-side policy expectations and a shift away from excessive competition, benefiting both large and small-cap stocks. The report suggests focusing on high-growth segments such as urban renewal, coal chemical, nuclear power, and steel structures, while also considering the beta opportunities in large-cap stocks [1][13][14]. Summary by Sections Urban Renewal - Urban renewal is accelerating, with policies from the central government outlining goals and support measures. The focus includes the renovation of old residential areas, establishing safety management systems for buildings, and creating resilient and smart cities. The report identifies four key categories for investment: design and testing, construction and decoration, urban infrastructure renovation, and resilient/smart city initiatives, highlighting specific companies in each category [2][15][17]. Market Performance - The construction index rose by 2.77% in the week of July 7-11, outperforming the Shanghai and Shenzhen 300 index by 1.76 percentage points. Notable performers included Guosheng Technology (+42.98%), New City (+34.73%), and Beautiful Ecology (+34.46%) [4][21][26]. Investment Recommendations - The report emphasizes the cyclical opportunities arising from improved physical work volume in infrastructure. It suggests focusing on high-demand areas such as water conservancy, railways, and aviation, particularly in regions like Sichuan, Zhejiang, Anhui, and Jiangsu. Recommended companies include Sichuan Road and Bridge, Zhejiang Communications, and major state-owned enterprises like China Communications Construction and China Railway Construction [27][28]. Emerging Business Directions - The report highlights the growing demand for computing power driven by AI applications, recommending companies like Hainan Huatie for their transition into computing power leasing. It also notes the potential in cleanroom sectors due to the ongoing domestic replacement in the semiconductor industry, suggesting companies like Baicheng and Shenghui Integration [29][30]. Major Projects and Themes - The report identifies significant investment opportunities in major hydropower projects, deep-sea economy, and low-altitude economy, recommending companies involved in these sectors, such as China Power Construction and China Energy Engineering [32][30].

Group 1: ASEAN Foreign Ministers' Meeting - The 58th ASEAN Foreign Ministers' Meeting took place in Kuala Lumpur, Malaysia, focusing on regional and international issues, particularly the impact of US tariffs [1][3] - The meeting emphasized the importance of ASEAN unity in responding to external pressures and challenges, including trade tariffs imposed by the US [3][4] Group 2: Economic Cooperation and RCEP - ASEAN's role as a pillar of globalization is highlighted, with the Regional Comprehensive Economic Partnership (RCEP) playing a crucial role in enhancing regional economic cooperation [1][4] - RCEP aims to lower tariffs, coordinate rules of origin, and promote seamless cross-border supply chains, providing a buffer against external shocks [6][7] - The agreement has significantly improved trade facilitation, with commitments to reduce non-tariff barriers and streamline customs processes [7][8] Group 3: Digital Economy and Technology Collaboration - Malaysia is leading in digital economy cooperation within ASEAN, particularly in areas like artificial intelligence and green development [2][12] - Chinese tech companies, such as Huawei, are actively involved in Malaysia's digital transformation, providing education and training opportunities for local students [12][13] Group 4: Green Development Initiatives - ASEAN countries, including Malaysia, are committed to green development, focusing on renewable energy and carbon reduction [14] - Collaboration with China in green technology and infrastructure is seen as essential for achieving sustainability goals [14] Group 5: Future Prospects and Strategic Partnerships - The Greater Bay Area in China presents significant opportunities for Malaysia, particularly in sectors like food and beverage, tourism, and education [15][16] - There is potential for deepening multi-layered cooperation between Malaysia and the Greater Bay Area, enhancing economic, educational, and cultural exchanges [16]

Market Overview - The Shanghai Composite Index fell by 0.13% on July 9, with 17 out of the 28 sectors rising, led by Media and Agriculture sectors, which increased by 1.35% and 0.65% respectively [1] - The construction and decoration sector rose by 0.37% [1] - The main funds in the market experienced a net outflow of 38.536 billion yuan, with only three sectors seeing net inflows, including Media with 1.055 billion yuan, Retail with 864 million yuan, and Construction with 40.34 million yuan [1] Construction and Decoration Sector - The construction and decoration sector saw a net inflow of 40.34 million yuan, with 157 stocks in the sector, of which 79 rose and 66 fell [2] - Three stocks hit the daily limit up, while one stock hit the limit down [2] - Among the stocks with net inflows, 65 had positive cash flow, with seven stocks receiving over 30 million yuan, led by Guosheng Technology with 72.21 million yuan [2] Top Gainers in Construction and Decoration Sector - Guosheng Technology (603778) increased by 10.13% with a main fund flow of 72.21 million yuan [3] - China Communications Construction (601800) rose by 2.02% with a fund flow of 69.04 million yuan [3] - New City (300778) surged by 20.03% with a fund flow of 62.74 million yuan [3] Top Losers in Construction and Decoration Sector - Baicheng Co. (601133) fell by 3.36% with a net outflow of 51.36 million yuan [5] - Zhonghua Rock and Soil (002542) decreased by 1.94% with a net outflow of 38.88 million yuan [5] - Hangzhou Garden (300649) rose by 3.24% but still had a net outflow of 29.79 million yuan [5]