Group 1 - The S&P 500 index achieved a five-day consecutive rise, reaching a new high [1] - Crude oil and gold futures fell by over 1% [1] - Domestic double焦 (coke and coal) futures experienced a significant drop after intervention from exchanges [1] Group 2 - The US and EU reached a trade agreement that will impose a 15% tariff on most EU goods exported to the US [1] - In June, US durable goods orders saw a preliminary month-on-month decline of 9.3%, marking the largest monthly drop since the pandemic, primarily due to a decrease in aircraft orders [1] - Reports suggest that following an agreement between Japan and the US, the Bank of Japan may resume interest rate hikes within the year [1] Group 3 - In June, China's industrial enterprises above designated size saw a year-on-year profit decline narrow to 4.3%, with significant support from the equipment manufacturing sector [1] - The automotive industry experienced a remarkable profit growth of 96.8% [1] - The China Securities Regulatory Commission emphasized efforts to consolidate the market's recovery and enhance multi-level market vitality through reforms [1] Group 4 - The State Council of China announced measures to gradually implement free preschool education [1] - The Chinese Foreign Ministry clarified its stance on issues such as "overcapacity" and industrial subsidies in the context of China-EU disagreements [1] - The Prime Minister of Cambodia is set to lead a delegation to Malaysia for discussions with Thailand [1]

Group 1: Industrial Profit Trends - In June, industrial enterprise profits decreased by 4.5% year-on-year, a narrowing of 4.6 percentage points from May, but still in a contraction zone[3] - Cumulative year-on-year profit decline was 1.8%, widening by 0.7 percentage points compared to May[3] - The main reason for the narrowing monthly decline was a reduction in operating cost drag, with its negative contribution decreasing from 9.7 percentage points in May to 3.9 percentage points in June[3] Group 2: Revenue and Demand Dynamics - June operating revenue grew by 1.0% year-on-year, remaining flat from May and marking a near 7-month low[4] - This contrasts sharply with the industrial added value, which saw a year-on-year increase of 6.8%, the second-highest growth in 16 months[4] - The Producer Price Index (PPI) fell by 3.6% year-on-year in June, the deepest decline in nearly 23 months, indicating intensified price competition[4] Group 3: Profit Pressure and Cost Dynamics - Profit pressure is transmitted upstream, forcing the mining industry to pass on profits to downstream sectors[5] - Cumulative profit margins for mining, utilities, and manufacturing were 16.95%, 6.79%, and 4.46% respectively, showing marginal improvements due to falling coal prices[5] - The overall expense ratio for industrial enterprises rose to 8.38% in June, up 9 basis points from May, highlighting intensified competition[5] Group 4: Policy Recommendations - To alleviate excessive competition, monetary policy should stabilize real estate expectations, and fiscal policy should expand effective domestic demand[6] - The central government is expected to issue special bonds to support durable consumer goods subsidies and infrastructure investments if export growth declines[6] Group 5: Risk Factors - Risks include potential underperformance of monetary easing and fiscal expansion measures[7]

Core Viewpoint - The profits of large-scale industrial enterprises in China from January to June decreased by 1.8% year-on-year, compared to a previous decline of 1.1% [1] Summary by Category Profit Trends - The year-on-year profit decline of 1.8% indicates a worsening trend in profitability for large-scale industrial enterprises in China [1] - The previous value of -1.1% suggests that the industrial sector is facing increasing challenges in maintaining profitability [1]

Core Insights - The report highlights a decline in the total profit of industrial enterprises in China, with a year-on-year decrease of 1.1% for the first five months of 2025, indicating a slowdown in industrial profitability [6][8] - High-tech manufacturing continues to support the profitability of industrial enterprises, suggesting a potential area for investment [6][7] - The report notes that while operating income for industrial enterprises grew by 2.7%, the growth rate has narrowed, indicating cost pressures that may affect profitability [6][7] Macroeconomic Overview - The total profit of industrial enterprises reached 27,204.3 billion yuan in the first five months, with a significant drop in May, where profits fell by 9.1% year-on-year [6][7] - The operating income for industrial enterprises showed a slight increase, with a profit margin of 5.0%, which is a marginal improvement from the previous month [6][7] - The report emphasizes the need for demand-side policies to stimulate growth, particularly in the real estate sector, which remains a significant shortfall in domestic demand [7][8] Industry Performance - The report provides a snapshot of various industry performances, with the non-ferrous metals sector showing a positive growth of 2.17%, while the banking sector experienced a decline of 2.95% [5] - The overall industrial production activity remains active, with an industrial added value growth of 6.3% year-on-year, although price pressures persist due to weak demand [7][8] - The report indicates that the prices of key commodities such as crude oil and iron ore have decreased, impacting the profitability of domestic industrial enterprises [8]

Profit Trends - In May, the profit growth rate of industrial enterprises fell to -9.1%, a decrease of 12.1 percentage points from April[3] - Cumulative profit growth from January to May was -1.1%, down from 3.2% in the previous four months[4] - The profit margin for May was 5.3%, slightly down from April, indicating a significant year-on-year decline due to high profit margins last year[5] Industry Performance - The share of profits from midstream industries dropped from 54% to 49%, reflecting weaker demand compared to upstream and downstream sectors[6] - Upstream industries faced profit declines primarily due to falling prices and volumes, while midstream sectors, particularly export-oriented ones, struggled to pass costs downstream[10] - Specific sectors like specialized equipment and electrical machinery saw profit growth rates drop by over 20 percentage points due to changing export dynamics[10] Economic Outlook - Active inventory reduction has continued for two months, with finished goods inventory growth at 3.5%[16] - Future profit recovery for enterprises will depend on the effectiveness of domestic demand policies amid ongoing external uncertainties[16] - The report anticipates that proactive policies will support domestic demand improvement, aiding in profit recovery for businesses[3]

1. Report Industry Investment Rating No information provided in the given content. 2. Report's Core View - In May, the year - on - year profit of industrial enterprises above designated size dropped to -9.1%, a significant decline from April. The year - on - year decline of PPI in May was 3.3%, and the drag on profits increased compared to April. After excluding price factors, the growth rate of single - month operating income declined marginally, indicating that the support from quantity factors also weakened in May. The resonance of internal and external demand fluctuations and the widening decline of PPI under the influence of tariffs led to a further decline in the profit growth rate in May [2][25]. - Looking ahead, the "rush - to - export" effect has weakened since June. The internal driving force of the economy in the second quarter shows obvious off - season characteristics, and the economy in the second half of the year faces high - base disturbances, so the necessity of domestic demand policy stimulus increases. The lower price base and the gradual expenditure of fiscal funds may help repair the price side of corporate profits. The importance of domestic demand stimulus becomes prominent as the export elasticity may weaken and the external tariff policy environment faces uncertainties in August [2][28]. - In the third quarter, the existing domestic demand policies such as consumption and investment may be further strengthened, and the quantity factors may improve marginally. At the same time, the PPI base will be lower in the second half of the year. Coupled with the stimulus of domestic demand and the formation of project expenditures and physical work volume by previous fiscal funds, the drag of prices on corporate profits is also expected to narrow [28]. 3. Summary According to the Directory 3.1 Industry Perspective: Downstream Consumption Policy Support Catalyzes, while Upstream and Mid - stream Face Disturbances - **Upstream**: Mining industry profits are still under pressure, with most industries seeing an expansion of profit decline, but the energy supply industry continues to grow positively. For example, the profit decline of coal mining and washing, oil and gas extraction, and ferrous metal ore mining industries widened; the profit of non - ferrous metal ore mining industry increased, and the profit of the power, heat, gas, and water production and supply industry increased slightly [8][16]. - **Mid - stream**: Equipment manufacturing is better than material processing, and it continues to grow slightly. The pressure on the material processing industry persists, with the year - on - year decline expanding. The profit growth rate of mid - stream equipment manufacturing decreased, with the cumulative year - on - year growth rate at +0.1% [17]. - **Downstream**: There is a structural differentiation between essential and optional consumption, and the electronics equipment industry still performs strongly. The profit of essential consumption turned negative year - on - year, while the profit of agriculture, forestry, animal husbandry, and fishery and the beverage industry maintained growth. Most of the optional consumption industries had weak year - on - year profits, but the electronics equipment industry still performed well [18]. 3.2 Cost Side: Slight Increase in Expenses, Marginal Slight Improvement in Profit Margin - From January to May, the cost per 100 yuan of operating income of industrial enterprises above designated size was 85.61 yuan, an increase of 0.24 yuan year - on - year and 0.07 yuan compared to January - April. The expense per 100 yuan of operating income was 8.29 yuan, a decrease of 0.14 yuan year - on - year but an increase of 0.01 yuan compared to January - April, indicating a slowdown in the pace of cost reduction. The cumulative operating income profit margin from January to May was 4.97%, a decrease of 0.22 percentage points year - on - year but an increase of 0.10 percentage points compared to January - April. Although the profit efficiency is still a drag compared to the same period last year, it has improved marginally [1][20]. 3.3 Inventory: Actual Inventory May Increase Passively - As of the end of May, the finished - product inventory of industrial enterprises above designated size was 6.65 trillion yuan, with a year - on - year growth rate of 4.1%, a decrease of 0.4 percentage points compared to the end of April, and the nominal inventory growth rate declined slightly. After considering price factors, the actual inventory growth rate after excluding PPI was 6.8%, an increase from 6.6% in April. Since the sales - to - production ratio slowed down in May, indicating weak actual demand recovery, the actual inventory may have increased passively. The turnover days of finished - product inventory from January to May were 20.8 days, an increase of 0.1 days year - on - year but a decrease of 0.2 days compared to January - April, indicating a slightly faster turnover rhythm. The average collection period of accounts receivable was 70.5 days, an increase of 3.7 days year - on - year but a decrease of 0.2 days compared to January - April, indicating that the policy of promoting the settlement of arrears has compressed the collection period [23].

Core Viewpoint - The industrial enterprises' profits in May showed a significant decline, with a year-on-year decrease of 9.0%, compared to a previous increase of 2.9% [14][15]. Group 1: Revenue Changes - In May, the revenue growth rate for industrial enterprises was 0.8%, down from 2.6% in April, indicating a low level of growth [3][6]. - Cumulative revenue growth from January to May was 2.7%, with an expected annual growth rate of 2.1% for 2024 [3][6]. - Factors contributing to the decline include insufficient effective demand, falling industrial product prices, and fluctuations in short-term factors [3][6]. - The export delivery value growth rate fell to 0.6% in May, and the production and sales rate showed a year-on-year decline of 0.8% [3][6]. - Revenue growth varied across sectors, with mining showing a decline of 15.9%, while upstream manufacturing had a growth of 3.06% [3][6]. Group 2: Profit Margin Analysis - The profit margin for industrial enterprises in May was under pressure, with a year-on-year decrease of 9.72%, compared to a previous increase of 0.28% [10][14]. - The manufacturing sector's midstream profit margin fluctuated significantly, with a May margin of 5.38%, down from 5.74% in April [10][14]. - The midstream manufacturing profit growth rate in May was -3.18%, a stark contrast to the previous growth of 21.23% [10][14]. Group 3: Industry Performance - In May, the mining industry experienced a growth rate of -36.7%, while manufacturing saw a decline of 4.0% [17]. - The electricity, heat, gas, and water production and supply sector had a growth rate of 0.95% [17]. - Within manufacturing, upstream growth was -8.82%, midstream was -3.18%, and downstream was -3.9% [17]. - Notable sectors with higher profit growth included non-ferrous metal mining (24.5%), agricultural and sideline food processing (14.9%), and transportation equipment (47.6%) [17].

Group 1: Profit and Revenue Trends - In May, industrial enterprises' profits decreased by 9.0% year-on-year, compared to a previous increase of 2.9%[2] - Revenue growth in May was 0.8%, down from 2.6% in April, indicating a low level of growth[3] - Cumulative revenue growth from January to May was 2.7%, with a projected annual growth of 2.1% for 2024[3] Group 2: Price and Inventory Analysis - The Producer Price Index (PPI) fell to -3.3% in May from -2.7% in April, reflecting declining industrial product prices[2] - As of May, inventory levels increased by 3.5% year-on-year, slightly down from 3.9% in the previous month[2] Group 3: Sector Performance - Mining sector profits plummeted by 36.7% in May, while manufacturing profits decreased by 4.0%[2] - In the manufacturing sector, upstream revenue fell by 8.82%, midstream by 3.18%, and downstream by 3.9%[2] Group 4: Profit Margin Insights - The overall profit margin in May was 5.33%, down from 5.91% in the same month last year[2] - Midstream manufacturing profit margin dropped to 5.38% in May, down from 5.74% in April, indicating significant volatility[4]

Summary of Key Points Core Viewpoint - In May, industrial enterprise profits experienced a year-on-year decline of 9.1%, a significant drop of 12.1 percentage points compared to April, driven by falling volume, price, and profit margins due to disruptions in both domestic and external demand, as well as a decrease in commodity prices [1][2][4]. Group 1: Profit Trends - Cumulative profit growth for industrial enterprises from January to May was -1.1%, down from 3.2% in the previous period, with May's profit growth at -9.1% [2]. - The profit margin for May was reported at 5.0%, slightly up from the previous month, but the monthly figure of 5.3% showed a decline from April, indicating increased pressure on overall profits [4][9]. - The upstream sector faced significant profit margin declines due to falling international commodity prices, while the midstream sector struggled to pass on costs to downstream industries [9]. Group 2: Sector Performance - The share of profits from the midstream sector decreased from 54% to 49%, reflecting weaker demand compared to upstream and downstream sectors [5]. - In the upstream sector, only the chemical industry showed a narrowing profit decline, while other sectors experienced profit growth declines [7]. - The automotive sector saw a significant drop in profit growth, similar to trends in the midstream sector, while the pharmaceutical industry experienced a profit growth rebound [7][9]. Group 3: Inventory and Demand - Active inventory reduction has continued for two months, with a 3.5% increase in industrial product inventory from January to May [11]. - The overall revenue growth for enterprises from January to May was 2.7%, with May's growth at 0.8%, both showing a decline from previous months [11]. - Future profit recovery for enterprises will depend on the effectiveness of domestic demand policies amid ongoing external uncertainties [11].

Group 1 - The total profit of industrial enterprises above designated size in China from January to May reached 2.72 trillion yuan, a year-on-year decrease of 1.1%, with a decline in growth rate of 2.5 percentage points compared to January to April [1][3] - The operating revenue for the same period was 54.76 trillion yuan, showing a year-on-year growth of 2.7%, but the growth rate decreased by 0.5 percentage points from the previous value [1][3] - In May alone, the profit of industrial enterprises fell by 9.1% year-on-year, marking the largest decline since October of the previous year, indicating increased operational pressure on industrial enterprises [3][4] Group 2 - Factors contributing to the decline in profits include insufficient effective demand, falling industrial product prices, and short-term fluctuations, with investment income from the previous year’s high base dragging down profit growth by 1.7 percentage points [3][4] - The Producer Price Index (PPI) is identified as the main constraint on the recovery of profit growth for industrial enterprises, with expectations of declining external demand necessitating a rebound in investment and consumption to support profit growth [3][5] Group 3 - Despite the overall profit decline, the gross profit of industrial enterprises increased by 1.1% year-on-year, contributing to a 3.0 percentage point increase in total profits [4] - The equipment manufacturing sector and industries related to the "Three New" policies maintained high profit levels, with equipment manufacturing profits growing by 7.2% year-on-year, contributing 2.4 percentage points to total industrial profits [4][5] - The "Three New" industries, including aerospace and maritime sectors, saw significant profit increases, with aerospace manufacturing profits rising by 120.7% and shipbuilding profits increasing by 85.0% [4][5] Group 4 - The internal demand has accelerated due to large-scale equipment updates and the "Two New" policies, with profits in general and specialized equipment sectors growing by 10.6% and 7.1% respectively, contributing 0.6 percentage points to overall industrial profits [5] - The average collection period for accounts receivable increased to 70.5 days, indicating pressure on asset turnover and affecting production investment expansion [5] - Looking ahead, the production situation in the industrial sector is expected to remain below expectations due to the need for improved internal demand and low price levels, with potential widening of supply-demand gaps in traditional industries [5]