Investment Rating - The industry investment rating is "Overweight" [1] Core Viewpoints - In October 2025, the total retail sales of consumer goods reached 46,291 billion yuan, with a year-on-year growth of 2.9%, exceeding the Wind consensus expectation of 2.7% [4][9] - The growth in retail sales is driven by the coordinated development of new urbanization and rural revitalization, enhancing the potential of county and rural markets [11] - Online retail continues to grow rapidly, while physical retail remains stable [12][14] - The consumer price index (CPI) rose by 0.2% year-on-year in October, while the producer price index (PPI) saw a narrowing decline for three consecutive months [34][37] Summary by Sections Overall Retail Sales - The total retail sales of consumer goods in October 2025 increased by 2.9% year-on-year, higher than the Wind consensus of 2.7% [9] - Urban retail sales were 40,021 billion yuan, growing by 2.7%, while rural retail sales reached 6,270 billion yuan, with a growth rate of 4.1% [11] By Category - Restaurant services saw a year-on-year increase of 3.8%, while retail sales of goods grew by 2.8%, affected by weaker automobile sales [22] - Essential and discretionary categories showed marginal improvements, while the real estate-related category turned negative [28] Price Performance - CPI increased by 0.2% year-on-year, with core CPI rising by 1.2% [34] - Food prices fell by 2.9% year-on-year, significantly impacting the CPI [36] Employment Situation - The urban unemployment rate in October 2025 was 5.1%, stable compared to previous months [43] Investment Recommendations - The report suggests focusing on high-end liquor and regional leaders in the liquor industry, as well as companies like Yanjing Beer and Anjui Foods in the restaurant supply chain [51]

Core Viewpoint - The article highlights the steady growth of fiscal revenue in China, particularly tax revenue, which has shown a positive trend in recent months, indicating an improving economic environment [4][5]. Fiscal Revenue Overview - In the first ten months of the year, China's general public budget revenue reached approximately 18.65 trillion yuan, a year-on-year increase of 0.8%. Tax revenue accounted for about 15.34 trillion yuan, growing by 1.7% [4]. - Tax revenue has shifted from a decline to growth, with significant increases noted in July and August, and a year-on-year growth of 8.7% in September and 8.6% in October [4][6]. Factors Contributing to Tax Revenue Growth - The increase in tax revenue is attributed to several factors, including an improving economy, a narrowing decline in the Producer Price Index (PPI), and a low base from the previous year [6]. - The active capital market has also contributed to tax revenue growth, with the total market capitalization of A-share companies surpassing 100 trillion yuan in August and the Shanghai Composite Index reaching a ten-year high in September. Daily trading volumes in August and September averaged 2.3 trillion yuan and 2.4 trillion yuan, respectively [6]. - Notable increases in personal income tax and securities transaction stamp duty were observed, with the latter reaching 162.9 billion yuan, a year-on-year increase of 88.1%, and personal income tax at 1.3363 trillion yuan, up 11.5% [6]. Sector-Specific Tax Revenue Performance - Certain industries have shown strong tax revenue performance, including: - Computer and communication equipment manufacturing: 12.7% growth - Electrical machinery and equipment manufacturing: 7.9% growth - Scientific research and technical services: 14.8% growth - Cultural, sports, and entertainment industries: 5.7% growth [7]. Non-Tax Revenue and Government Fund Income - Non-tax revenue for the first ten months was approximately 3.31 trillion yuan, reflecting a year-on-year decline of 3.1% [8]. - Government fund revenue, primarily from land sales, also saw a decline, with total revenue of about 3.45 trillion yuan, down 2.8%. Specifically, income from land use rights fell to approximately 2.49 trillion yuan, a decrease of 7.4% [8]. Fiscal Expenditure Trends - Fiscal expenditure has been maintained at a certain intensity to stabilize the economy, with total general public budget expenditure reaching about 22.58 trillion yuan, a year-on-year increase of 2% [9]. - Expenditure related to social security and employment grew by 9.3%, amounting to approximately 3.77 trillion yuan [9]. - The government has allocated 500 billion yuan from local government debt limits to support local fiscal capacity and effective investment [9].

Group 1: Tax Revenue Performance - In the first ten months of the year, national general public budget revenue reached approximately 18.65 trillion yuan, a year-on-year increase of 0.8%, with tax revenue accounting for about 15.34 trillion yuan, up 1.7% year-on-year [1] - Tax revenue growth has been robust, with significant increases in July and August exceeding 5%, and September and October showing year-on-year growth rates of 8.7% and 8.6% respectively [1] - The active capital market has contributed to tax revenue growth, with securities transaction stamp duty revenue reaching 162.9 billion yuan, an increase of 88.1% year-on-year, and individual income tax revenue at 1.3363 trillion yuan, up 11.5% year-on-year [1] Group 2: Sector-Specific Tax Revenue Growth - The computer and communication equipment manufacturing industry saw tax revenue growth of 12.7%, while the electrical machinery and equipment manufacturing industry grew by 7.9% [2] - The scientific research and technical service industry experienced a tax revenue increase of 14.8%, and the cultural, sports, and entertainment industry grew by 5.7% [2] - The narrowing decline in the Producer Price Index (PPI) has reduced the negative impact on tax revenue, with PPI showing a month-on-month increase of 0.1% in October [2] Group 3: Government Fund Revenue - National government fund budget revenue for the first ten months was approximately 3.45 trillion yuan, a year-on-year decrease of 2.8%, with land use rights transfer revenue falling by 7.4% to about 2.49 trillion yuan [3] Group 4: Fiscal Expenditure - National general public budget expenditure reached approximately 22.58 trillion yuan in the first ten months, a year-on-year increase of 2%, although this growth rate has slowed by 1.1 percentage points compared to the previous nine months [4] - Government fund budget expenditure was about 8.09 trillion yuan, reflecting a year-on-year growth of 15.4%, but this growth rate has decreased by 8.5 percentage points compared to the previous nine months [5] - To maintain fiscal expenditure strength, the Ministry of Finance allocated 500 billion yuan from local government debt limits to support local government financial capacity and expand effective investment [5]

Report Overview - The report mainly analyzes the basic overview of China's PPI data, the composition of PPI weights, core driving industries, and forecasts the PPI trend in 2026 [1][4] Industry Investment Rating - Not mentioned in the report Core Viewpoints - China's PPI trend is determined by the combined effect of weights and price change amplitudes of various categories, with upstream resource and basic material industries as the core drivers [1] - Two methods are used to predict that the year - on - year decline of PPI in 2026 will narrow and turn positive, with the base effect contributing significantly to the year - on - year recovery [2] Summary by Directory 1. China PPI Data Basic Overview - China's PPI only includes the commodity production field, different from the US PPI which also covers services [7] - China's PPI uses two parallel classification systems: the dichotomy (production and living materials) and the industry - based method, with production materials dominating the PPI trend [11] - The weights of both classification systems are determined by the sales output value method, and they are adjusted every five years, with the current base period being 2020 [13] 2. PPI Weight's Composition and Core Driving Industries - PPI is calculated by weighted average of price indices of surveyed industries, and market generally uses "operating income" to estimate industry weights [16] - Industries like computer, electrical machinery have high weights but limited impact on PPI due to stable prices, while upstream resource industries such as coal, oil have significant influence [20] - In October 2025, the year - on - year decline of PPI production materials was 2.4%, with the mining industry having the largest decline, and among living materials, durable consumer goods had the largest decline [22][24] 3. PPI Trend Calculation - Based on the assumption of key commodity prices remaining stable in 2025 November, 2026 PPI year - on - year will turn positive in Q2, driven by non - ferrous metals, coal, and black/chemical industries successively [28] - Using the method of calculating year - on - year from month - on - month, it is predicted that the average monthly - on - month PPI in 2026 will be 0.02%, the annual PPI will be - 0.44%, and the year - on - year reading will turn positive in Q3 [30]

Group 1 - Tax revenue in China showed a significant recovery, with total public budget revenue reaching approximately 18.65 trillion yuan, a year-on-year increase of 0.8% [1] - Tax revenue specifically amounted to about 15.34 trillion yuan, reflecting a year-on-year growth of 1.7% [1] - The growth in tax revenue has been driven by a narrowing decline in the Producer Price Index (PPI) and a low base from the previous year, with tax revenue growth rates of 8.7% in September and 8.6% in October [1][2] Group 2 - The securities transaction stamp duty reached 162.9 billion yuan, marking an impressive year-on-year increase of 88.1% [2] - Personal income tax collected was approximately 1.3363 trillion yuan, showing a year-on-year growth of 11.5% [2] - Several industries, including computer and communication equipment manufacturing, saw tax revenue growth rates of 12.7%, 7.9%, and 14.8% respectively [2] Group 3 - Non-tax revenue for the first ten months of the year was about 3.31 trillion yuan, reflecting a year-on-year decline of 3.1% [3] - Government fund revenue, primarily from land sales, decreased by 2.8% year-on-year, with land use rights revenue dropping by 7.4% [3] Group 4 - Total public budget expenditure reached approximately 22.58 trillion yuan, with a year-on-year growth of 2% [4] - Expenditure related to social security and employment was about 3.77 trillion yuan, increasing by 9.3% year-on-year [4] - The government allocated 500 billion yuan from local government debt limits to support local fiscal capacity and effective investment [4]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report updates the high - frequency data of fixed - income fundamentals from November 10th to November 16th, 2025. The overall high - frequency index of fundamentals is stable, with changes in various sub - indices such as production, demand, prices, inventory, transportation, and financing. For example, the industrial production high - frequency index shows a narrowing increase, the real estate sales high - frequency index has a stable decline, and the infrastructure investment high - frequency index has an expanding increase [1][9]. 3. Summary by Relevant Catalogs 3.1 Total Index - The current Guosheng fundamental high - frequency index is 128.7 points (previous value: 128.6 points), with a week - on - week increase of 6.1 points (previous value: 6.1 points), and the year - on - year increase remains unchanged. The long - short signal of interest - rate bonds is downgraded, with a signal factor of 4.1% (previous value: 4.4%) [1][9]. 3.2 Production - The industrial production high - frequency index is 127.5, with a week - on - week increase of 5.2 points (previous value: 5.3 points), and the year - on - year increase narrows. The electric furnace and PX operating rates increase. The electric furnace operating rate is 60.9% (previous value: 59.6%), and the PX operating rate is 90.5% (previous value: 89.9%) [1][9][15]. 3.3 Real Estate Sales - The high - frequency index of commercial housing sales is 41.5, with a week - on - week decrease of 6.2 points (previous value: 6.2 points), and the year - on - year decline remains unchanged. The transaction land premium rate drops. The 100 - large - city transaction land premium rate is 1.4% (previous value: 3.6%) [1][9][28]. 3.4 Infrastructure Investment - The high - frequency index of infrastructure investment is 122.5, with a week - on - week increase of 9.1 points (previous value: 9.0 points), and the year - on - year increase expands. The operating rate of petroleum asphalt continues to decline, with a current operating rate of 29.0% (previous value: 29.7%) [1][9][42]. 3.5 Export - The high - frequency index of exports is 143.6, with a week - on - week increase of 0.9 points (previous value: 1.0 points), and the year - on - year increase narrows. The container freight rate index rises continuously. The CCFI index is 1094.0 points (previous value: 1058.2 points) [1][9][44]. 3.6 Consumption - The high - frequency index of consumption is 120.7, with a week - on - week increase of 3.5 points (previous value: 3.6 points), and the year - on - year increase narrows. The average daily box office of movies rises, reaching 54410,000 yuan (previous value: 29640,000 yuan) [1][9][54]. 3.7 CPI - The monthly - on - monthly CPI forecast is 0.1% (previous value: 0.1%). The price of white - striped chickens rises slightly, with an average wholesale price of 17.8 yuan/kg (previous value: 17.6 yuan/kg) [1][9][60]. 3.8 PPI - The monthly - on - monthly PPI forecast is 0.0% (previous value: 0.0%). The spot prices of coal and copper rise slightly. The ex - warehouse price of thermal coal in Qinhuangdao Port is 832 yuan/ton (previous value: 798 yuan/ton), and the LME copper spot settlement price is 10841 US dollars/ton (previous value: 10704 US dollars/ton) [1][9][62]. 3.9 Transportation - The high - frequency index of transportation is 132.6, with a week - on - week increase of 10.5 points (previous value: 10.4 points), and the year - on - year increase expands. The highway logistics freight rate index rises slightly, reaching 1051 points (previous value: 1050 points) [2][10][74]. 3.10 Inventory - The high - frequency index of inventory is 163.0, with a week - on - week increase of 7.9 points (previous value: 8.0 points), and the year - on - year increase narrows. The inventory scale of electrolytic aluminum and soda ash increases. The electrolytic aluminum inventory is 122,000 tons (previous value: 116,000 tons), and the soda ash inventory is 1,707,000 tons (previous value: 1,703,000 tons) [2][10][82]. 3.11 Financing - The high - frequency index of financing is 242.2, with a week - on - week increase of 30.5 points (previous value: 30.4 points), and the year - on - year increase expands. The net financing of local bonds turns from negative to positive, with a net financing of 242.8 billion yuan (previous value: - 36 billion yuan) [2][10][93].

Investment Rating - The report maintains an "Outperform" rating for the coal industry [7]. Core Views - The report emphasizes that the fundamental goal is to reverse the Producer Price Index (PPI) decline, which has narrowed to a year-on-year decrease of 2.1% in October. The stability of coal prices is crucial for stabilizing the PPI, and the lowest coal prices in 2025 may represent a policy bottom. The report anticipates more supply-side policies to be introduced, given the ongoing "involution" competition [5][6]. - The coal industry is viewed as being in a golden era due to energy transformation demands and strict capacity controls under carbon neutrality goals. The supply of coal is expected to be rigid, with increasing extraction difficulties and regional supply disparities. Despite weak macroeconomic conditions affecting demand, the report suggests that coal prices will maintain a fluctuating upward trend [5][6]. Summary by Sections Coal Consumption and Supply - As of November 14, 2025, the average daily production of 462 sample coal mines is 5.495 million tons, a slight increase of 0.2 million tons week-on-week but a year-on-year decrease of 6.8% [3][37]. - The daily consumption of coal by six major power plants surged to 804,000 tons, up 6.7% week-on-week and 4.8% year-on-year, while their inventory decreased to 13.873 million tons, down 2.4% week-on-week [39][40]. Price Trends - The Qinhuangdao 5500K power coal price increased to 834 RMB/ton, a week-on-week rise of 2.1% [3][24]. - The long-term contract price for Qinhuangdao power coal (Q5500) is 684 RMB/ton, reflecting a month-on-month increase of 1.2% but a year-on-year decrease of 15.0% [24]. Focus on Investment Opportunities - The report suggests focusing on companies with strong resource endowments and stable operating performance, such as China Shenhua, China Coal Energy, and Shaanxi Coal and Chemical Industry [6]. - Companies with production growth potential benefiting from the coal price cycle, such as Yanzhou Coal Mining, Huayang Co., and Gansu Energy, are also highlighted [6]. Coking Coal Insights - The average daily production of 523 sample coking coal mines is 757,000 tons, with a week-on-week increase of 2.59% [66]. - The price of coking coal at the Jing Tang Port remains stable at 1860 RMB/ton, while the Shanxi production price increased to 1650 RMB/ton, reflecting a week-on-week rise of 3.13% [67].

Group 1 - The Consumer Price Index (CPI) in October 2025 increased by 0.2% year-on-year, indicating a potential shift in economic conditions despite a previous decline of 0.3% in September [1] - The core CPI, excluding food and energy, rose by 1.2%, marking the largest increase since March 2024 and suggesting a recovery in industrial and service consumption [1] - The improvement in CPI reflects a stabilization in consumer spending and may positively impact employment in the service sector, addressing key economic challenges [1] Group 2 - The Producer Price Index (PPI) decreased by 2.1% year-on-year but showed a narrowing decline compared to September, with a month-on-month increase of 0.1%, the first rise this year [2] - The narrowing of the PPI decline and its month-on-month increase may signal the end of the current downtrend, potentially enhancing corporate profitability and production enthusiasm [2] - A positive shift in PPI could lead to a stronger upward movement in CPI and an improvement in the Purchasing Managers' Index (PMI), fostering optimistic investor sentiment [2] Group 3 - The positive changes in price indices in October may have seasonal factors, and one month of data is insufficient for trend analysis, indicating that demand and production recovery is still in its early stages [3] - The improvement in price conditions provides room for fiscal and monetary policy actions in the last two months of the year, suggesting a likely enhancement in market confidence and economic conditions [3] - The stock market's recent upward trend, hovering around 4000 points, is attributed to improved liquidity, but sustainable growth will depend on corporate earnings recovery alongside capital inflows [3]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - In 2026, the inflation center is expected to rise moderately, with the CPI year - on - year center at about 0.6%, PPI at about - 1.9%, and the deflator at an average of about - 0.25%. The inflation pattern will transition from weak deflation to moderate recovery, and the price system will enter a stable repair stage [2]. - Food prices will turn from continuous decline in 2025 to moderate repair, and will change from a negative contribution to a weak support for the inflation center in 2026 [2]. - Energy prices are likely to be in a pattern of "strong supply and weak demand, oscillating weakly", with limited direct support for inflation and mainly transmitting moderately through cost and expectation channels [15]. - Core CPI is expected to continue to rise moderately in 2026, with the annual center between 0.8% - 1.2% [4]. - PPI is expected to show a structural repair trend in 2026, with the year - on - year decline gradually narrowing and approaching zero growth in the third quarter [5]. 3. Summary According to the Catalog 3.1 Price Review - In 2025, the overall price level was low. The CPI cumulative year - on - year was - 0.1%, showing signs of bottoming in October. Food was the main drag, while service items provided support. The PPI cumulative year - on - year was - 2.7%, and the month - on - month turned positive in October, mainly due to the effective reduction of supply in some industries [10]. 3.2 Food Prices - In 2026, food prices are expected to show a trend of "stable first and then rising, with converging fluctuations". The turning point of the pig cycle may be the key factor. The pig price cycle is about 48.5 months, and a new cycle in 2026 may drive the pig price to bottom out and stabilize. In the first quarter, the negative contribution of pork to food prices may increase, and it will gradually narrow from the second quarter [13][14]. 3.3 Energy Prices - In 2026, energy prices will probably be in a "strong supply and weak demand, oscillating weakly" pattern. On the supply side, production expansion has significantly lowered the current oil price center. On the demand side, the global energy consumption has slowed down cyclically, and the rapid penetration of new - energy vehicles has continuously weakened the demand elasticity of gasoline and diesel [15][16]. 3.4 Core Inflation - Since 2025, core inflation has continued to recover. In 2026, it is expected to continue to rise moderately under the combined effects of continued consumption - promotion policies, income improvement, and consumption structure upgrading. The annual core CPI center may be between 0.8% - 1.2%. Service consumption, precious metals and high - price durable goods, and housing - related prices will all contribute to the rise of core CPI [19][20]. 3.5 Industrial Product Prices - In 2026, with the deepening of supply - side reform and the continuous advancement of the "anti - involution" policy, the PPI decline is expected to narrow. The upstream prices are expected to stop falling and rise, the mid - stream prices will stop falling and stabilize, and the downstream manufacturing will still be weak. The PPI year - on - year center is expected to be around - 1.95% [21]. 3.6 Inflation Outlook - In 2026, macro - policies will continue to be positive. The CPI is expected to rise moderately, showing a trend of low in the front and high in the back, with an annual growth rate of about 0.66%. The PPI annual decline is expected to narrow to - 1.95%. The inflation center's downward inertia will weaken, and the endogenous economic momentum will gradually recover. The quarterly price operation will show the characteristics of "low in the front, stable in the back, and moderately repaired" [26][31].

Group 1: CPI Analysis - In October 2025, the national consumer price index (CPI) increased by 0.2% year-on-year, with urban areas rising by 0.3% and rural areas declining by 0.2%[12] - Food prices decreased by 2.9%, while non-food prices increased by 0.9%[12] - Core CPI rose by 1.2%, marking the highest increase since March 2024, indicating steady demand growth[15] Group 2: PPI Trends - The producer price index (PPI) fell by 2.1% year-on-year in October 2025, but the decline narrowed by 0.2 percentage points compared to the previous month[14] - PPI showed a month-on-month increase of 0.1%, marking the first rise in 2025[20] - Key industries such as black metal mining and coal mining saw price declines narrow or recover, indicating ongoing improvement in PPI[22] Group 3: Policy Implications - The low CPI and PPI levels create room for more aggressive macroeconomic policies, including proactive fiscal measures and moderate monetary easing[5] - Continuous improvement in industrial product prices suggests a stable economic recovery trend[30] Group 4: Risks - Potential risks include worsening geopolitical events, changes in international financial conditions, and unexpected shifts in China-U.S. policies[6]