Investment Rating - The report maintains a "Recommended" rating for the construction industry [1] Core Viewpoints - Infrastructure investment growth remains robust, with special bond issuance accelerating to support major projects [3][6] - Real estate investment and sales are under pressure, but the decline in new construction and completion has narrowed [3][44] - The construction sector is experiencing a slight increase in fund holdings, indicating a low allocation compared to standard benchmarks [3][65] Summary by Sections Special Bond Issuance - The pace of special bond issuance has accelerated in 2025, with a total of 2.16 trillion yuan issued in the first half of the year, a 45% year-on-year increase [6] - The government plans to issue 4.4 trillion yuan in new local government special bonds this year, focusing on infrastructure and housing projects [6] Infrastructure Investment - Fixed asset investment (excluding rural households) reached 24.87 trillion yuan in the first half of 2025, with a year-on-year growth of 2.8% [3][27] - Broad infrastructure investment growth was 8.9%, while narrow infrastructure investment growth was 4.6% [30] - Investment in electricity, heat, gas, and water supply grew by 22.8%, while transportation and storage investment increased by 5.6% [3][35] Real Estate Market - Real estate development investment totaled 46.66 billion yuan, down 11.2% year-on-year, with sales area declining by 3.5% [44] - New construction area decreased by 20.0%, but the decline rate has narrowed [46] - The policy measures are expected to improve the supply-demand structure in the real estate market [3][44] Fund Holdings in Construction - As of Q2 2025, the fund holdings in the construction sector accounted for 0.43% of the total market, slightly up from the previous quarter [65] - The construction sector remains underweight compared to the standard allocation ratio of 1.77% [65] - Institutional investors are increasingly favoring segments such as housing construction, decoration, and engineering consulting [65][71]

Group 1 - A-shares opened lower on July 30, 2025, with the Shanghai Composite Index rebounding, while Hong Kong stocks experienced fluctuations, particularly in high-dividend sectors such as steel, petrochemicals, and coal [1] - The Hong Kong Stock Connect Central State-Owned Enterprises Dividend ETF (520660) reached a new high of 1.142 billion yuan as of July 29, with continuous net inflows over the past three days [1] - The Low Volatility Dividend ETF (515450) achieved a record high of 13.259 billion yuan, with a total net inflow of 3.019 billion yuan over the past 16 days [1] Group 2 - China Galaxy Securities noted that adjustments to the long-term assessment of insurance funds by the Ministry of Finance will encourage insurance capital to increase equity asset allocation, benefiting bank stocks due to their stable dividends and low valuations [2] - Guosen Securities (Hong Kong) indicated that despite recent pullbacks in the banking sector, long-term funds like insurance still face asset scarcity, making high-quality retail banks attractive defensive assets [2] - The Low Volatility Dividend ETF (515450) closely tracks the S&P China A-Share Large Cap Low Volatility Dividend Index, which measures the performance of the 50 least volatile high-dividend large-cap stocks in the A-share market [2] Group 3 - The Hong Kong Stock Connect Central State-Owned Enterprises Dividend ETF (520660) tracks the CSI National New Hong Kong Stock Connect Central State-Owned Enterprises Dividend Index, reflecting the performance of high-dividend state-owned enterprises [3] - The Cash Flow ETF (159232) tracks the CSI All Index Free Cash Flow Index, which selects 100 companies with high free cash flow rates to represent the overall performance of companies with strong cash flow generation capabilities [3]

Core Viewpoint - The company has announced a shareholder return plan for the next three years (2025-2027) with a minimum dividend payout ratio of 80% or 0.45 CNY per share, whichever is higher, indicating a strong commitment to high dividends [1] Financial Performance - The company reported a net operating cash flow of 1.63 billion CNY in 2024, which is 2.5 times the net profit attributable to shareholders, and a total of 11.7 billion CNY in operating cash flow over the past decade [2] - The company has a low interest-bearing debt ratio of 9.8% as of Q1 2025, with cash and cash equivalents plus trading financial assets amounting to 4.51 billion CNY, which is 7.1 times the net profit for the previous year [2] Order Growth - The company achieved a 10.2% year-on-year growth in new orders in Q2, with total orders amounting to 8.5 billion CNY, driven by strong demand in the Middle East [3] - The company has a backlog of orders worth 33.3 billion CNY, which is 1.5 times the expected revenue for 2024, ensuring stable future performance [3] Product Strategy - The company is implementing a productization strategy, customizing curtain wall products for developed countries and has secured significant orders in Australia and for BIPV products [4] - The productization strategy is expected to drive profit growth, with sales orders for BIPV components already signed and international certifications obtained [4] Investment Outlook - The company forecasts net profits attributable to shareholders of 690 million CNY, 740 million CNY, and 790 million CNY for 2025-2027, with corresponding PE ratios of 12.2, 11.4, and 10.6 [4] - If the dividend yield shifts to 5%, the target market values for 2025-2027 are projected to be 11 billion CNY, 11.8 billion CNY, and 12.6 billion CNY, indicating significant market potential [4]

Group 1 - The core viewpoint is that after the "peak summer" period, there may be adjustments in the pace of coal price recovery, but with the heating season starting in October, coal price support is expected to strengthen again, indicating that the low point of coal prices in June may be the lowest for the year [1][5] - The coal industry is expected to see a rational release of supply in the second half of the year, combined with marginal improvements in demand, leading to an overall rebound in coal prices, which will aid in the recovery of industry profitability [1][2] - The domestic electricity demand is projected to grow steadily, with a forecasted year-on-year growth rate of 5-6% by 2025, and an expected improvement in coal demand in the second half of the year compared to the first half [3] Group 2 - Policy adjustments are expected to lead to a more rational coal supply, reducing the "quantity compensates for price" situation and enhancing safety and sustainability in the industry [4] - Coking coal prices are anticipated to rebound, but the sustainability of this rebound will depend on whether production cuts are realized and if iron and steel production meets expectations [6] - The report recommends focusing on high-dividend stocks and those with high profit elasticity in the short term, while favoring companies with strong resource endowments and cost advantages in the long term, including China Shenhua (601088), China Coal Energy (601898), and others [7]

Macro Overview - The overall fiscal data for the first half of 2025 shows a continuous improvement trend in both total and structural aspects, with broad fiscal spending increasing significantly, providing important support for economic growth [2][3] - The general public budget revenue decreased by 0.3% year-on-year, while expenditure increased by 3.4%, indicating a limited fiscal revenue gap [4][6] Industry Insights Food and Beverage: Baijiu Sector - The proportion of heavy holdings in the Baijiu sector by public funds has fallen below the standard allocation level, with a market value of 209 billion yuan, accounting for 2.9% of stock investment [28][31] - Major Baijiu companies are becoming high-dividend stocks, providing support for fund allocation despite a decline in overall holdings [31][30] Chemical Industry - The chemical industry is expected to recover from its cyclical bottom due to the "anti-involution" wave, which aims to eliminate low-price competition and improve product quality [33][34] - Supply-side structural contradictions are anticipated to ease, with capital expenditure growth slowing down, indicating potential for improved profitability in the sector [35][36] Public Utilities: Renewable Energy - The first half of 2025 saw significant growth in renewable energy installations, with wind and solar power showing year-on-year increases of 98.9% and 107.1%, respectively [39][40] - Despite a decline in new installations in June, the overall outlook for renewable energy remains positive, with substantial growth expected in the second half of the year [40][43] Robotics and Energy Storage - The company is positioned as a leader in the reverse Carnot cycle industry chain, with significant growth potential in humanoid robots and energy storage thermal management systems [22][25] - The automotive parts business is also expected to grow rapidly, particularly in the context of the increasing demand for new energy vehicles [24][25]

Group 1 - The banking sector's short-term adjustments do not alter the long-term positive outlook, with incremental capital inflows driving valuation recovery [1] - The banking sector's price-to-book (PB) ratio has increased from 0.66 to 0.73 since the beginning of the year, indicating further recovery potential towards a PB of 1 [1] - The high dividend yield of 4.47% as of July 18 ranks second among 35 Wind secondary industries, while the PB ratio remains at 0.73 [1] Group 2 - There is a clear expectation of marginal improvement in fundamentals, with net interest margins stabilizing due to easing credit supply-demand conflicts and a gradual decline in loan rates [1] - Non-interest income is continuously improving, driven by a recovery in wealth management and a narrowing decline in middle-income, benefiting from the recovery in the bond market [1] - Asset quality pressure is alleviating, contributing to the overall positive outlook for the banking sector [1] Group 3 - In a low-interest-rate environment, the high dividend and quasi-fixed income attributes of banks are particularly attractive, suggesting that the valuation recovery driven by capital flows is likely to continue [2] - The 180 Financial Index, which tracks representative securities in the financial sector, reflects the overall performance of listed companies in banking, insurance, and securities [2] - Investors without stock accounts can consider the Guotai CSI 180 Financial ETF Connect C and A for exposure to the financial sector [2]

Group 1 - In Q2 2025, actively managed equity public funds continued to increase their holdings in Hong Kong stocks, with the proportion of Hong Kong stocks in their portfolios rising to 20% [1] - The concentration of holdings among actively managed public funds decreased, indicating a shift towards mid and small-cap stocks in Hong Kong [1] - The investment strategy involved increasing allocations to both growth assets like pharmaceuticals and consumer sectors, as well as dividend-paying assets such as non-bank financials and banks [1] Group 2 - Passive index funds also saw continued inflows into Hong Kong stocks, with approximately 280 billion yuan flowing in during Q2 2025, although at a slower rate compared to Q1 [2] - The total inflow through the Hong Kong Stock Connect for public funds in the first half of 2025 reached nearly 200 billion yuan, with a projected total for the year between 300 billion and 450 billion yuan [2] - The potential for further inflows remains significant, with an estimated theoretical allocation space of about 300 billion yuan for actively managed public funds [2] Group 3 - The momentum for southbound capital inflows is recovering, suggesting that Hong Kong stocks may outperform A-shares in the second half of the year [3] - The technology sector in Hong Kong is expected to become a key focus, driven by advancements in AI and easing of trade restrictions between China and the US [3] - Other sectors such as high-dividend stocks, new consumption, and innovative pharmaceuticals are also highlighted as areas of interest for investment in the latter half of the year [3]

Core Viewpoint - The key driver for the rise of the Chinese stock market in 2025 is the decline in the risk-free interest rate, which will lead to an overall increase in the valuation of A/H shares [2][5]. Summary by Sections Market Valuation Logic - The main contradiction in market expectations has shifted from economic cycle fluctuations to the decline in discount rates, particularly the risk-free interest rate [2]. - The high opportunity cost over the past three years has hindered investors' willingness to enter the market [2]. Historical Context and Comparisons - Historical examples from Japan and the United States show that when interest rates fall to a certain level, investor interest shifts from fixed-income products to stocks and equity products [3]. - In China, each major market rally has been accompanied by a decline in risk-free interest rates, leading to increased capital inflow into the stock market [4]. Current Market Conditions - The current environment indicates that the conditions for a new round of capital inflow into the Chinese stock market are forming, driven by the decline in long-term bond yields [4]. - The anticipated decline in risk-free rates will likely lead to a broad-based increase in valuations across A/H shares, benefiting both blue-chip and growth stocks [5]. Future Outlook - The research suggests a strategic bullish outlook on China, emphasizing the importance of recognizing the shift in the main contradiction affecting market expectations [2][5].

Group 1: Metal Sector - China Hongqiao's net profit forecast for 2024 is CNY 223.72 billion, with a PE ratio of 8.14[12] - Hualing Steel's net profit is projected to increase from CNY 20.32 billion in 2024 to CNY 28.54 billion in 2025, with a PE ratio of 19.72[12] - Xiamen Tungsten's net profit is expected to rise from CNY 17.28 billion in 2024 to CNY 21.01 billion in 2025, with a PE ratio of 22.97[12] Group 2: Construction and Transportation - Sichuan Road and Bridge's net profit is forecasted to grow from CNY 72.10 billion in 2024 to CNY 82.86 billion in 2025, with a PE ratio of 10.35[12] - YTO Express's net profit is expected to decrease from CNY 40.12 billion in 2024 to CNY 35.39 billion in 2025, with a PE ratio of 13.03[12] - China Merchants Highway's net profit is projected to be CNY 55 billion in 2025, with a PE ratio of 14.56[12] Group 3: Chemical and Energy Sector - Yara International's net profit is expected to rise from CNY 9.50 billion in 2024 to CNY 17.94 billion in 2025, with a PE ratio of 30.56[12] - Funiu Power's net profit forecast for 2025 is CNY 28.95 billion, with a PE ratio of 9.18[12] - Huajin's net profit is projected to recover to CNY 0.92 billion in 2025 after a loss of CNY 27.95 billion in 2024[12] Group 4: Strategic Metals and New Materials - Xiamen Tungsten's strategic metal segments are expected to contribute 79% to profits in 2024, with a focus on tungsten and rare earths[21] - Zhongcai Technology's special glass fiber is projected to see significant demand growth due to AI hardware requirements, with expected profits of CNY 0.2 billion in 2024[30] - The company anticipates a profit contribution from special glass fiber of CNY 7.2 billion by 2026[30]

Core Viewpoint - Insurance funds are showing a strong enthusiasm for allocation in the capital market, with significant increases in stock holdings and a rise in equity asset allocation ratios [1][5]. Group 1: Insurance Fund Holdings - As of the end of Q1 2025, the stock market value held by the life insurance industry reached 2.65 trillion yuan, an increase of 377.5 billion yuan from the end of 2024, representing a growth rate of 16.65% [1]. - The stock allocation ratio for insurance funds is now 8.43%, up by 0.86 percentage points from the end of 2024 [1]. - In 2025, insurance funds have made 21 stake acquisitions, surpassing the total for 2024 and marking a four-year high [1][2]. Group 2: Investment Trends - Major insurance companies have indicated plans to moderately increase their equity asset allocation in 2025, highlighting the growing importance of equity investments in a prolonged low-interest-rate environment [1][5]. - The focus of insurance funds is shifting from short-term speculation to long-term investments, acting as a stabilizing force in the capital market [5]. Group 3: Sector Focus - The banking sector has been the most frequently targeted for stake acquisitions, followed by public utilities, energy, and technology sectors [4]. - Insurance funds are increasingly interested in high-dividend and technology sectors, with a strategy that combines defensive and growth-oriented investments [8][9]. Group 4: Policy Impact - Recent policies have opened up more space for insurance funds to enter the market, including a new long-cycle assessment mechanism for state-owned commercial insurance companies [7][8]. - The adjustment in performance evaluation criteria for insurance companies aims to promote long-term stable operations and sustainable development [8]. Group 5: Research and Engagement - Over 190 insurance institutions have conducted more than 9,800 research engagements with over 1,400 A-share listed companies, indicating a significant increase in research activity compared to previous years [9][10]. - The focus of these research activities includes high-dividend sectors like banking and emerging technology sectors such as artificial intelligence and semiconductors [9][10].