Investment Rating - The food and beverage industry is rated as "stronger than the market" [1][3] Core Views - The food and beverage sector has shown a weekly increase of 0.74%, underperforming the Shanghai Composite Index which rose by 1.67% [1][7] - The industry is currently at a historical low valuation, with a PE-TTM of 21.41x, placing it in the 16th percentile over the past 15 years [14][17] - The white liquor sector is experiencing a rebound driven by external economic and policy factors, particularly the Ya River hydropower project, which is expected to boost consumption [4][22] - The beer sector faced slight pressure in June, with production down by 0.2% year-on-year, but Qingdao Beer is diversifying into the water market [29][30] - The dairy sector shows a mixed performance, with production up by 4.1% in June, but prices for fresh milk are still under pressure [34][36] - The soft drink market is shifting towards health and functionality, with electrolyte drinks seeing significant sales growth [40][41] Summary by Sections Market Review - The food and beverage sector increased by 0.74% in the week of July 21-25, ranking 26th among 31 sub-industries [1][7] - The sector's performance was better from Monday to Thursday, gaining 2.44%, but saw a significant drop of 1.65% on Friday [1][7] White Liquor - Public funds have significantly reduced their allocation to white liquor, with a heavy reliance on stable pricing and dividends from leading companies like Kweichow Moutai and Wuliangye [3][22] - The Ya River hydropower project is expected to stimulate white liquor consumption due to increased infrastructure investment [22][24] Beer - In June, beer production was 4.12 million kiloliters, a slight decrease of 0.2% year-on-year, attributed to weak dining consumption [29][30] - Qingdao Beer is expanding into the health drink market, leveraging celebrity endorsements to boost sales [30][41] Dairy Products - Dairy production in June reached 254.6 thousand tons, up 4.1% year-on-year, while the average price of fresh milk is stabilizing [34][36] Soft Drinks - The trend towards health and functionality is reshaping the soft drink market, with significant growth in electrolyte drink sales, which increased from 476 million yuan to 1.493 billion yuan year-on-year [40][41]

Core Viewpoint - The commencement of the "Yaxia" hydropower station construction, with a total investment of 1.2 trillion, is expected to boost infrastructure investment growth and enhance economic stability expectations [1]. Market Performance - The stock market continued to rebound, with the Shanghai Composite Index showing a five-week upward trend and reaching a recent high during the week [1]. - Daily trading volume in both markets exceeded 1.8 trillion, indicating a significant increase compared to the previous week [1]. - The Shenzhen Component Index accelerated its gains, achieving a new high for the year [1]. Sector Focus - Market hotspots were primarily concentrated in construction and building materials sectors related to infrastructure [1]. - Investment styles favored small-cap and technology sectors, which experienced larger gains [1]. Technical Analysis - The Shanghai Composite Index has accelerated its upward movement after breaking through a consolidation range from the previous year [1]. - The main technical resistance level is at the high point from early October of last year, which also represents the top of a weekly large box range [1].

Core Viewpoint - The article highlights China's significant investment in infrastructure, particularly the completion of a 750 kV ultra-high voltage power line in the Taklamakan Desert, showcasing the country's long-term vision and strategic planning in energy and resource management [1][3][11]. Group 1: Infrastructure Development - The 750 kV ultra-high voltage power line spans nearly 4,200 kilometers, encircling the Taklamakan Desert, and represents a monumental engineering achievement in a challenging environment [3][5]. - The construction involved laying 480,000 square meters of grass grids to protect the power network from shifting sands, demonstrating a meticulous approach to infrastructure development [5][7]. Group 2: Economic Impact - The project is expected to generate significant economic benefits, with one small county projected to increase its tax revenue by 200-300 million yuan annually from selling electricity, effectively acting as a "money printing machine" for the local economy [5][7]. - The availability of stable and affordable electricity in southern Xinjiang, where industrial electricity costs only 0.45 yuan per kilowatt-hour, is anticipated to save companies over 100 million yuan in production costs each year [5][7]. Group 3: Resource Potential - The Taklamakan Desert, often referred to as a "sea of death," is rich in resources, including over 5,600 billion cubic meters of shale gas, 136 million tons of crude oil, and various minerals, which can now be accessed due to the new power infrastructure [7][9]. - The investment is projected to attract over 28.3 billion yuan in industrial investment and create more than 8,000 jobs, indicating a substantial economic transformation in the region [7][9]. Group 4: Strategic Positioning - Xinjiang's geographical location at the center of the Eurasian continent and its role as a key point in the China-Europe Railway Express and the China-Pakistan Economic Corridor enhance its strategic importance for trade and logistics [9][11]. - The ±1100 kV ultra-high voltage transmission project enables electricity to be delivered from Xinjiang to Anhui in just 0.01 seconds, further integrating the region into national and global energy networks [9][11].

Core Insights - The overall fiscal performance in China for the first half of 2025 shows a slight decline in public budget revenue and an increase in expenditure, indicating a stable fiscal environment despite economic pressures [1][2]. Revenue Summary - Total public budget revenue reached 115,566 billion yuan, a year-on-year decrease of 0.3% [2]. - Tax revenue amounted to 92,915 billion yuan, down 1.2% year-on-year, while non-tax revenue increased by 3.7% to 22,651 billion yuan [2]. - Central government revenue was 48,589 billion yuan, a decline of 2.8%, while local government revenue rose by 1.6% to 66,977 billion yuan [2]. - Monthly tax revenue has shown a recovery since April, with growth rates of 1.9% in April, 0.6% in May, and 1% in June [2]. Expenditure Summary - Total public budget expenditure was 141,271 billion yuan, reflecting a year-on-year increase of 3.4% [4]. - Central government expenditure grew by 9% to 19,914 billion yuan, while local government expenditure increased by 2.6% to 121,357 billion yuan [4]. - Key areas of expenditure included social security and employment (up 9.2%), education (up 5.9%), and science and technology (up 9.1%), while spending on urban and rural communities, agriculture, and transportation saw declines [4]. Future Outlook - Analysts expect favorable conditions for fiscal revenue in the second half of the year, driven by policies aimed at economic recovery and infrastructure investment [3]. - The introduction of new policy financial tools is anticipated to accelerate infrastructure recovery, benefiting sectors with significant accounts receivable [3]. - The government has substantial room for borrowing, with manageable debt levels and a large deficit space compared to international standards [3]. Key Areas of Focus - The government issued 26,000 billion yuan in new local government bonds to support major projects in the first half of the year [4]. - The upcoming "15th Five-Year Plan" will focus on tax system reforms, which may include adjustments to consumption tax collection and local government incentives to improve the consumption environment [5].

Investment Rating - The report maintains a "Positive" investment rating for the construction and engineering industry [11] Core Insights - The report highlights a slowdown in fixed asset investment growth, with a marginal improvement in the PMI for the construction sector, indicating a potential recovery in business activity expectations [6][19] - The report notes a significant decline in narrow infrastructure investment in June, with a year-on-year increase of 2.0% but a month-on-month decrease of 3.1 percentage points [7][26] - The report emphasizes the steady funding for infrastructure projects, with a notable increase in special bond issuance aimed at debt replacement [9][60] Summary by Sections Investment & Orders - Fixed asset investment growth continues to slow, with June's manufacturing PMI showing a slight improvement, while the construction PMI increased to 52.8%, up 0.5 percentage points year-on-year and 1.8 percentage points month-on-month [6][19] - In June, narrow infrastructure investment reached CNY 2.5 trillion, a year-on-year increase of 2.0%, while broad infrastructure investment was CNY 3.4 trillion, up 5.8% year-on-year [7][26] - The report indicates that overseas orders for construction companies remain robust, with a 17.34% year-on-year increase for China Energy Engineering in Q2 [7][41] Physical Workload - June saw a decline in cement production, with a year-on-year decrease of 5.3%, although the decline rate has narrowed compared to May [8][50] - Data for July shows improvements in construction material supply and asphalt operation rates, indicating a potential recovery in physical workload [8][50] Project Funding - The funding availability for construction projects remains stable, with a funding rate of 58.89% as of July 15, showing a slight decrease from the previous week [9][58] - Special bond issuance exceeded CNY 500 billion in June, with over CNY 200 billion in new special bonds aimed at debt replacement [9][60] - The report outlines that the issuance of special refinancing bonds is progressing well, with plans to issue CNY 18,246 billion for debt replacement in 2025 [9][69]

1. Report Industry Investment Rating - The report gives a bullish rating for both coke and coking coal [1] 2. Core Viewpoints - The current market is mainly influenced by domestic macro - policies. The release of the Politburo meeting notice and the expiration of overseas tariff extension on August 12 are important time points. In the short - term, a bullish approach is recommended, but beware of callback risks if the market accelerates [5] - For coking coal, mine production recovery is slow, while downstream replenishment enthusiasm is high. Inventory is shifting from mines to downstream. For coke, the first round of price increase has been implemented, and there is still an expectation of further increases. The overall supply - demand of coke is tight, and if steel prices continue to rise, industrial chain profits may be transmitted upstream [6] - The news of the National Energy Administration's verification of coal mine over - production has heated up the market. The market sentiment is positive, and the monthly spread has started to go into positive arbitrage, indicating a reversal of industrial expectations [7] 3. Summary by Related Catalogs 3.1 Coking Coal 3.1.1 Market Conditions - Spot prices have increased, and futures are rising rapidly. Mongolian 5 prime coking coal is reported at 1029 yuan/ton (+0), and the active contract is reported at 1135.5 yuan/ton (+87). The basis is - 86.5 yuan/ton (-87), and the September - January spread is - 60 yuan/ton (+28.5) [2] 3.1.2 Supply - Mine production recovery is below expectations. The operating rate of 523 mines is reported at 86.07% (+0.55), and the operating rate of 110 coal washing plants is reported at 62.85% (+0.53) [2] 3.1.3 Demand - The productivity of 230 independent coking enterprises is reported at 72.9% (+0.18), showing flat demand [2] 3.1.4 Inventory - Upstream inventory is decreasing, and downstream inventory is increasing. The clean coal inventory of 523 mines is reported at 339.07 million tons (-38.11), the clean coal inventory of coal washing plants is 191.54 million tons (-5.53), the inventory of 247 steel mills is 791.1 million tons (+8.17), the inventory of 230 coking enterprises is 790.19 million tons (+37.75), and the port inventory is 321.5 million tons (-0.14) [3] 3.2 Coke 3.2.1 Market Conditions - Spot prices have increased, and futures are rising rapidly. The quasi - first - grade coke in Tianjin Port is reported at 1320 yuan/ton (+50), and the active contract is reported at 1707.5 yuan/ton (+10). The basis is - 288 yuan/ton (+43.76), and the September - January spread is - 35.5 yuan/ton (+19) [4] 3.2.2 Supply - The productivity of 230 independent coking enterprises is reported at 72.9% (+0.18), and supply recovery is limited due to high raw material costs and delayed price increases [4][6] 3.2.3 Demand - Demand has increased more than expected, and the supply - demand gap has widened. The capacity utilization rate of 247 steel mills is reported at 90.89% (+0.99), and the daily average pig iron output is 242.44 million tons (+2.63) [4] 3.2.4 Inventory - Upstream inventory is decreasing, and downstream inventory is increasing. The inventory of 230 coking enterprises is 55.55 million tons (-4.03), the inventory of 247 steel mills is 638.99 million tons (+1.19), and the port inventory is 199.11 million tons (-0.97) [4]

Group 1 - The core viewpoint of the news is that there is a significant inflow of funds into infrastructure assets, particularly through the infrastructure ETF (159619), which saw a net inflow of over 40 million units today [1] - The Yarlung Tsangpo River downstream hydropower project, which involves the construction of five cascade power stations with a total investment of approximately 1.2 trillion yuan, has been officially launched [1] - The project is a national strategic initiative that encompasses multiple industry chains, including hydropower construction, infrastructure development, ultra-high voltage transmission, equipment manufacturing, civil explosives, and cement supply, indicating a gradual release of demand across the upstream and downstream industry chains [1] Group 2 - The Chinese government is implementing more proactive macro policies this year, with solid progress in the construction of "dual-weight" projects, leading to a steady increase in infrastructure investment [1] - As special bonds are gradually allocated to projects and relevant policies from the Central Urban Work Conference are being implemented, it is expected that fiscal policy support and improvements in financing will gradually manifest in investment and physical output [1] - The infrastructure ETF (159619) tracks the CSI Infrastructure Index, which includes representative companies from the construction, building materials, and engineering machinery sectors, reflecting the overall performance of the infrastructure industry [2]

Summary of the Conference Call on Yaxia Motuo Hydropower Project Industry Overview - The Yaxia Motuo hydropower project is a significant infrastructure initiative with a total investment of 1.2 trillion yuan, which is expected to have a substantial impact on related investment targets, particularly in the blasting, cement, and tunnel equipment sectors [1][9][5]. Key Points and Arguments - **Project Progress**: The construction of the Yaxia Motuo hydropower project has accelerated significantly, with major infrastructure such as roads, bridges, and tunnels nearly completed. This has led to increased demand in the construction industry [3][4]. - **Market Reaction**: The market has reacted positively to the project, with high liquidity and a strong focus on related sectors such as construction materials. The project has garnered attention similar to the real estate policies at the end of 2022, with frequent roadshows and discussions among various market participants [1][10]. - **Investment Opportunities**: Recommended companies include: - **Iron Construction Heavy Industry**: High participation in hydropower projects and strong global competitive advantage [3][18]. - **Subote**: Noted for its strong market share in the additives sector [3][16]. - **China Electric Power Construction**: Involved in design and construction, though with relatively lower earnings elasticity [5][18]. - **Demand and Supply Dynamics**: The construction industry is experiencing high demand, estimated between 100 billion to 400 billion yuan. Supply is concentrated among a few companies, creating a favorable supply landscape [15]. - **Institutional Interest**: There is significant interest from institutions and market participants, with discussions and inquiries reflecting a high level of engagement similar to previous market events [10][13]. Additional Important Insights - **Regional Investment**: Central enterprises are increasing investments in Tibet, not limited to the Yaxia Motuo project, which may be linked to the 60th anniversary of the Tibet Autonomous Region [12][21]. - **Future Catalysts**: Key construction milestones, such as the initiation of the Meiying Dam and the use of TBM hard rock tunneling machines, are expected to be critical points of interest for investors [20]. - **Market Sentiment**: The recent news regarding the project has exceeded market expectations, particularly due to the direct involvement of high-level government officials, which has enhanced confidence in the investment [7][9]. Conclusion The Yaxia Motuo hydropower project represents a significant investment opportunity within the construction and infrastructure sectors, with strong institutional interest and positive market sentiment. The ongoing developments and future milestones will be crucial for investors to monitor.

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Group 1 - The China Infrastructure Engineering Index (399995) has seen a strong increase of 4.24%, with constituent stocks such as China Energy Engineering (601868), Tunnel Co. (600820), and China Power Construction (601669) hitting the 10% daily limit up [1] - The Infrastructure 50 ETF (516970) has risen by 5.05%, marking its fourth consecutive increase, with a trading volume of 7.32 billion yuan and a turnover rate of 23.73% [1] - As of July 21, the Infrastructure 50 ETF has achieved a net inflow of 5.98 billion yuan, with its latest scale reaching 2.978 billion yuan, a six-month high [1] Group 2 - The Infrastructure 50 ETF closely tracks the China Infrastructure Engineering Index, which includes listed companies in the construction and engineering sectors, reflecting the overall performance of these companies [2] - The top ten weighted stocks in the China Infrastructure Engineering Index account for 61.81% of the index, with major companies including China State Construction (601668) and China Railway (601390) [2] - The commencement of the Yarlung Tsangpo River downstream hydropower project, with a total investment of approximately 1.2 trillion yuan, is expected to boost demand for construction materials and services in the hydropower sector [2] Group 3 - In the first half of the year, infrastructure investment in China grew by 4.6%, outpacing overall investment growth by 1.8 percentage points, contributing to a 1.0 percentage point increase in total investment [3] - The ongoing construction of major regional projects is anticipated to further stimulate infrastructure investment growth in China [3] - Investors can access the infrastructure sector through various off-market connection products linked to the Infrastructure 50 ETF [3]