- The report tracks industry prosperity signals for sectors such as coal, livestock farming, steel, structural materials, and fuel refining based on recent industry operating indicators[9] - **Coal Industry Model**: The model estimates monthly revenue and profit growth rates for the coal industry based on changes in price factors and production capacity factors. The pricing mechanism is determined by the last price index of the previous month, which sets the sales price for the following month[10][14] - **Livestock Farming Factor**: The "outbound coefficient method" is used to calculate the supply-demand gap for pigs six months in advance. The formula is: $ \text{Outbound Coefficient} = \frac{\text{Single Quarter Pig Outbound}}{\text{Breeding Sow Inventory lag6m}} $ $ \text{6-month Potential Production Capacity} = \text{t-month Breeding Sow Inventory} \times (\text{t+6-month Last Year Outbound Coefficient}) $ $ \text{6-month Potential Pig Demand} = \text{t+6-month Last Year Single Quarter Pig Outbound} $ This method effectively identifies pig price upward cycles[15][16] - **Steel Industry Model**: Monthly profit growth and per-ton profit are predicted using a model that incorporates comprehensive steel prices and cost indicators such as iron ore, coke, pulverized coal, and scrap steel[18] - **Structural Materials and Construction Engineering Model**: Profit changes in the glass and cement manufacturing industries are tracked using price and cost indicators. Configuration signals are designed based on profitability changes. Manufacturing prosperity and real estate sales data are analyzed to assess the likelihood of infrastructure investment expectations[25] - **Fuel Refining and Oil Services Model**: Industry profit growth and cracking spreads are calculated using changes in fuel oil prices and crude oil prices. Configuration signals are designed based on oil prices, cracking spreads, and new drilling changes[27] Backtesting Results - **Coal Industry**: Profit growth is predicted to continue declining in November 2025 due to coal prices being lower than the previous year[14] - **Livestock Farming Factor**: The breeding sow inventory at the end of September 2025 was 40.35 million heads, slightly down month-on-month. The potential pig supply for Q1 2026 is estimated at 19.347 million heads, with demand forecasted at 19.476 million heads, indicating a slightly tight supply-demand balance[17] - **Steel Industry**: Profit growth for October 2025 is predicted to be negative. The rolling 12-month PMI average decreased month-on-month, maintaining a neutral configuration view for the steel industry[23] - **Structural Materials and Construction Engineering**: Flat glass profitability continued to grow year-on-year in October 2025, maintaining a positive signal for the glass industry. Cement industry profits turned negative year-on-year in October 2025, with no positive signals from new housing starts, maintaining a neutral view. Manufacturing PMI and real estate sales data suggest potential infrastructure investment expectations, leading to a positive signal for the construction decoration industry[26] - **Fuel Refining and Oil Services**: Fuel refining industry profits are predicted to grow slightly year-on-year in October 2025. Oil prices were lower than the previous year, maintaining a neutral view for the fuel refining and oil services industries[34][35]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong outlook based on the recovery in coking coal prices and the company's competitive advantages in the industry [6]. Core Views - The company's performance in Q3 2025 showed signs of recovery due to a rebound in coking coal prices, with a sequential improvement in operations [6]. - The report highlights that the company achieved a revenue of 27.175 billion yuan in the first three quarters of 2025, a year-on-year decline of 17.88%, and a net profit attributable to shareholders of 1.434 billion yuan, down 49.62% year-on-year [6][7]. - The report anticipates continued high coal prices due to historical underinvestment in the coal industry and tight supply conditions, which should support the company's profitability moving forward [6]. Financial Data and Profit Forecast - Total revenue projections for 2024 and 2025 are 45.290 billion yuan and 42.380 billion yuan respectively, with expected year-on-year growth rates of -18.4% and -6.4% [2]. - The net profit attributable to shareholders is forecasted to be 3.108 billion yuan in 2024, decreasing to 2.182 billion yuan in 2025, with a projected recovery to 2.875 billion yuan in 2026 [2]. - The report notes a gross margin of 30.6% for the first three quarters of 2025, down 1.4 percentage points year-on-year, with a slight improvement in Q3 2025 to 31.7% [6][7]. Market Position and Comparables - The report compares the company with four other coking coal companies, indicating that the average PE valuation for these peers in 2025 is 23 times, suggesting that the company has strong competitive advantages in terms of scale and coal quality [6]. - The current market capitalization corresponds to PE ratios of 19X, 14X, and 13X for the years 2025 to 2027, indicating potential for valuation upside [6].

Group 1: Overall Economic Trends - The year-on-year growth rate of social retail sales in September narrowed further, primarily due to a high base from the previous year and diminishing effects of consumption expansion policies [2][20] - In the first nine months, the total retail sales of consumer goods reached 365,877 billion, with a year-on-year growth rate of 4.5%, down by 0.1 percentage points [12] - The retail sales growth in first-tier cities remains a major drag, with a year-on-year decline of 3.9% in August, continuing a nine-month negative trend [12][20] Group 2: Consumer Demand Insights - Essential consumption categories generally improved, with staple food demand remaining stable, clothing and textile products showing increased growth, and alcoholic beverages turning positive [20][21] - The new product cycle has started, leading to an increase in the year-on-year growth of communication equipment, while the "trade-in" policy effects are diminishing, causing a slowdown in home appliances and furniture [20][21] - Online retail sales growth outpaced overall retail sales, indicating strong new consumer demand, particularly in cosmetics and traditional Chinese medicine categories [20][21] Group 3: Information Technology Sector - The Philadelphia Semiconductor Index, Taiwan Semiconductor Industry Index, and DXI Index all showed upward trends this week [6] - The price of DDR5 DRAM memory increased month-on-month, while the production of integrated circuits saw a year-on-year growth expansion [6][7] - The revenue of Taiwanese LED chip manufacturers saw a larger year-on-year decline, while MLCC manufacturers experienced a year-on-year revenue increase [6][7] Group 4: Midstream Manufacturing Sector - Prices in the new energy supply chain generally increased, and major companies in engineering machinery saw improved year-on-year sales in September [6][7] - The production of industrial robots showed a rolling three-month year-on-year growth decline, while the production of metal cutting machine tools increased [6][7] - The nationwide solar cell production saw a rolling three-month year-on-year growth decline [6][7] Group 5: Resource Products Tracking - The transaction volume of construction steel showed a ten-day average decline, while rebar prices decreased [8] - The price of coal at Qinhuangdao and the main coking coal at Jingtang Port increased, with coking coal inventory rising at Tianjin Port [8] - The Brent crude oil price decreased, while the prices of most chemical products declined [8]

Core Viewpoint - Liu Zhihui emphasizes a rational approach to investment amidst market volatility, focusing on macroeconomic cycles and industry allocation to achieve steady returns [2][3] Investment Philosophy - Liu's investment framework consists of three core elements: understanding macro cycles, assessing odds, and respecting market signals [3] - The investment philosophy includes "Investment Way," "Investment Method," and "Investment Technique," focusing on market trends, macro and industry analysis, and specific trading strategies [4] Multi-Asset Framework - Liu's investment strategy spans fixed income, equities, and convertible bonds, aiming for absolute returns through flexible allocation and odds thinking [5] - In bond investment, Liu adjusts duration and leverage based on macro analysis, credit environment, and market sentiment [6] Stock and Convertible Bond Strategy - Liu captures industry trends and cyclical turning points through sector rotation and concentrated allocation, focusing on both intrinsic value and market pricing signals [6] - For convertible bonds, Liu only allocates when they exhibit characteristics of downside protection and upside potential, guided by macroeconomic fundamentals [6] Recent Market Actions - In response to market adjustments, Liu increased exposure to sectors like innovative pharmaceuticals and AI, while also considering undervalued sectors such as machinery and real estate [7] - Liu maintains a neutral stance on the bond market, focusing on short-duration government bonds and high-rated credit bonds due to low yield levels [7]

Core Viewpoint - The current market trend is driven by "industry prosperity," characterized by continuous performance improvement and solid growth logic in sectors supported by policy, demand expansion, and technological breakthroughs [1] Group 1: Industry Prosperity - Industry prosperity is defined as a state where multiple factors resonate to create a visible and tangible improvement in performance [1] - The second half of 2025 is expected to showcase a typical "industry prosperity-driven" market, with sectors like high-end manufacturing, AI, new energy, and healthcare being central to national strength enhancement [1] - The ongoing bull market reflects a selection process influenced by "era prosperity," where only sectors aligned with national strength enhancement and backed by real performance can lead the market [1] Group 2: Investment Philosophy - The investment philosophy emphasizes adapting to the times, with a focus on selecting industries and companies that address significant issues of the era [3] - The manager has experienced a complete market cycle, which has led to a greater emphasis on long-term certainty and risk awareness in investment operations [3] - The manager's approach is characterized by a commitment to performance while maintaining responsibility towards investors, emphasizing reflection and adaptability in both favorable and unfavorable market conditions [3] Group 3: Market Outlook - The manager expresses strong confidence in the long-term potential of sectors like semiconductors and AI, driven by observable advancements in military and technological capabilities [4] - Despite general market concerns about the continuation of the bull market, there is optimism that financial market performance will gradually reflect the rapid improvements in military and technology [4]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a favorable outlook compared to comparable companies in the coal industry [6]. Core Views - The company experienced a slight increase in raw coal production in September 2025, with expectations of benefiting from rising coal prices in the fourth quarter, leading to both volume and price growth [1]. - The report highlights a downward adjustment in coal price assumptions for 2025 from 703 RMB/ton to 544 RMB/ton, impacting revenue and profit forecasts for 2025 and 2026 [6]. - Despite the challenges, the coal industry is expected to maintain a high level of profitability due to historical underinvestment and tight supply conditions [6]. Financial Data and Profit Forecast - Total revenue projections for 2025 are estimated at 31.194 billion RMB, reflecting a year-on-year decline of 13% [2]. - The net profit attributable to the parent company is forecasted to be 2.650 billion RMB for 2025, with an expected growth of 8.2% in 2026 [2]. - Earnings per share (EPS) is projected to be 0.89 RMB in 2025, increasing to 1.01 RMB by 2027 [2]. - The gross margin is expected to improve from 36.0% in 2025 to 38.5% in 2027 [2]. Market Data - As of October 16, 2025, the closing price of the company's stock was 15.93 RMB, with a price-to-book ratio of 1.0 and a dividend yield of 2.57% [3]. - The company's market capitalization is approximately 47.653 billion RMB [3]. Operational Data - In the first three quarters of 2025, the company achieved a raw coal production of 42.55 million tons, a slight increase of 0.19% year-on-year [6]. - The company reported a coal sales volume of 37.65 million tons, down 1.10% year-on-year, with a notable decline in Q3 sales [6].

Group 1 - The coal industry is expected to see a year-on-year profit decline in October 2025, maintaining a neutral outlook due to coal prices being lower than the same period last year [4] - In the livestock breeding sector, the number of breeding sows was reported at 40.38 million at the end of August 2025, with a slight month-on-month decrease, indicating potential stability in meat prices until Q1 2026 [4] - The general steel industry is projected to experience positive year-on-year profit growth in September 2025, with the PMI rolling average remaining stable [5] Group 2 - The float glass industry is expected to see a positive gross profit year-on-year in September 2025, leading to an upgrade in its economic signal [5] - The cement industry is forecasted to maintain flat profits year-on-year in September 2025, with a continued neutral outlook while waiting for positive signals from new housing starts [5] - The fuel refining industry is anticipated to have positive year-on-year profit growth in September 2025, while the oil service sector maintains a neutral outlook due to the absence of an upward trend in oil prices [5]

- The report utilizes a methodology from the industry rotation series to track the configuration signals and business indicators of various industries, including coal, livestock farming, steel, structural materials, and fuel refining industries [9] Quantitative Models and Construction Methods Coal Industry Model - **Model Name**: Coal Industry Profit and Revenue Growth Estimation Model - **Model Construction Idea**: The model estimates monthly revenue and profit growth of the coal industry based on the changes in price and production capacity factors [10] - **Model Construction Process**: - The long-term contract mechanism for thermal coal determines the sales price for the next month based on the price index of the last month - Monthly revenue and profit growth are estimated using the year-on-year changes in price factors and production capacity factors [10] - **Model Evaluation**: The model predicts that the coal industry profit for October 2025 will continue to decline year-on-year due to coal prices being lower than the same period last year [14] Livestock Farming Model - **Model Name**: Livestock Supply and Demand Gap Estimation Model - **Model Construction Idea**: The model uses the relationship between the number of breeding sows and the quarterly pig slaughter rate to estimate the supply-demand gap for pigs six months later [15] - **Model Construction Process**: - The model assumes a stable proportional relationship between quarterly pig slaughter and the number of breeding sows six months prior - Formula: $ \text{Slaughter Coefficient} = \frac{\text{Quarterly Pig Slaughter}}{\text{Breeding Sow Inventory (lagged 6 months)}} $ [15] - Potential production capacity after 6 months is calculated as: $ \text{Potential Production Capacity (6 months later)} = \text{Breeding Sow Inventory (current month)} \times \text{Slaughter Coefficient (6 months prior)} $ [16] - Potential demand after 6 months is calculated as: $ \text{Potential Demand (6 months later)} = \text{Quarterly Pig Slaughter (6 months prior)} $ [16] - **Model Evaluation**: Historical experience shows that the slaughter coefficient method effectively identifies pig price upward cycles [16] Steel Industry Model - **Model Name**: Steel Industry Profit and Unit Profit Estimation Model - **Model Construction Idea**: The model predicts monthly profit growth and calculates unit profit for the steel industry by considering comprehensive steel prices and cost indicators such as iron ore, coke, pulverized coal, and scrap steel [18] - **Model Construction Process**: - Comprehensive steel prices and cost indicators are used to predict monthly profit growth - Unit profit is calculated based on the difference between steel prices and costs [18] - **Model Evaluation**: The model predicts that the steel industry profit for September 2025 will grow year-on-year, but the PMI rolling 12-month average remains flat, maintaining a neutral configuration viewpoint [23] Structural Materials and Building Engineering Model - **Model Name**: Glass and Cement Industry Profit Tracking Model - **Model Construction Idea**: The model tracks profitability changes in the glass and cement manufacturing industries using price and cost indicators, and designs configuration signals based on profitability changes [25] - **Model Construction Process**: - Price and cost indicators are used to track profitability changes - Configuration signals are designed based on profitability changes [25] - **Model Evaluation**: - Glass industry profit turned positive year-on-year in September 2025, leading to an upgrade to a positive configuration signal [30] - Cement industry profit remained flat year-on-year, and no positive signals were observed in new housing starts, maintaining a neutral configuration viewpoint [30] Fuel Refining and Oil Services Model - **Model Name**: Fuel Refining and Oil Services Profit and Configuration Signal Model - **Model Construction Idea**: The model estimates industry profit growth and cracking spreads based on changes in refined fuel prices and crude oil prices, and designs configuration signals based on oil prices, cracking spreads, and new drilling changes [31] - **Model Construction Process**: - Refined fuel price changes and crude oil price changes are used to estimate industry profit growth and cracking spreads - Configuration signals are designed based on oil prices, cracking spreads, and new drilling changes [31] - **Model Evaluation**: - The model predicts that the fuel refining industry profit for September 2025 will grow year-on-year due to lower inventory costs from recent low oil prices [31] - Observations show that oil prices in September 2025 were lower than the same period last year, maintaining a neutral configuration viewpoint for the fuel refining and oil services industries [37][38] Model Backtesting Results Coal Industry Model - **Profit Growth**: Predicted to continue declining year-on-year in October 2025 due to lower coal prices compared to the same period last year [14] Livestock Farming Model - **Breeding Sow Inventory**: 4,038 million heads as of August 2025, slightly decreased month-on-month [17] - **Potential Production Capacity (26Q1)**: 19,361 million heads [17] - **Potential Demand (26Q1)**: 19,476 million heads [17] - **Supply-Demand Balance**: Slightly tight [17] Steel Industry Model - **Profit Growth**: Predicted to grow year-on-year in September 2025 [23] - **PMI Rolling Average**: Remained flat for 12 months, not exceeding the threshold [23] Structural Materials and Building Engineering Model - **Glass Industry Profitability**: Turned positive year-on-year in September 2025 [30] - **Cement Industry Profitability**: Remained flat year-on-year in September 2025 [30] - **Manufacturing PMI Rolling Average**: Remained flat for 12 months [30] - **Housing Sales Area**: Observed a year-on-year decline in August 2025 [30] Fuel Refining and Oil Services Model - **Fuel Refining Industry Profitability**: Predicted to grow year-on-year in September 2025 due to lower inventory costs [31] - **Oil Price**: Observed to be lower than the same period last year in September 2025 [37] - **New Drilling Activity**: No significant year-on-year changes observed in the US [38]

Group 1 - The stock price of Jiantao Laminates (01888) has increased by over 6%, currently at 12.79 HKD with a trading volume of 237 million HKD, driven by macroeconomic factors and copper price fluctuations [1] - In August, Jiantao Laminates announced a price increase of 10 HKD per sheet for CEM-1/22F/V0/HB and FR-4 products, reflecting an approximate 8% increase due to rising costs of copper, glass fabric, and chemical raw materials [1] - CITIC Securities noted that the high levels of raw material prices and utilization rates are prompting copper-clad laminate manufacturers to push for price increases, with leading manufacturers' net profit margins rising to about 10% in Q2 2025 [1] Group 2 - Guotai Junan Securities indicated that during periods of rising traditional copper-clad laminate prices, limited supply expansion benefits the market structure, with historical trends showing optimism during copper and glass fiber price upcycles [2] - The industry is expected to initiate a new round of price increases in the second half of 2025, supported by improved demand from AI and limited expansion of mid-range production capacity [2] - The overall demand for copper-clad laminates is anticipated to grow positively, with major companies focusing on high-end products, leading to a favorable supply-demand balance in the traditional mid-range segment [2]

Group 1 - The stock price of Jiantao Laminates (01888) increased by over 6%, reaching HKD 12.79 with a trading volume of HKD 237 million [1] - In August, Jiantao Laminates announced a price increase of HKD 10 per sheet for CEM-1/22F/V0/HB and FR-4 products, reflecting an approximate 8% increase due to rising costs of copper, glass fabric, and chemical raw materials [1] - CITIC Securities noted that the high levels of raw material prices and utilization rates are prompting copper-clad laminate manufacturers to push for price increases, with leading manufacturers' net profit margins rising to about 10% in Q2 2025 [1] Group 2 - Guotai Junan Securities indicated that during periods of rising traditional copper-clad laminate prices, limited supply expansion benefits the market structure [2] - The demand for copper-clad laminates is expected to grow positively alongside improvements in AI demand, with major companies focusing their expansion plans on high-end boards [2] - Since the profitability bottom in 2023, the expansion of mid-range production capacity has been relatively limited, while global demand is anticipated to rise moderately, suggesting an optimistic outlook for the traditional copper-clad laminate market [2]