Investment Rating - The report maintains an "Outperform" rating for the telecommunications industry, indicating an expected increase in performance relative to the benchmark index [1][32]. Core Insights - The report highlights the synergy between overseas industry developments and domestic policy, suggesting a favorable environment for investment as companies prepare for the upcoming quarterly reports [1][11]. - A significant transaction involving Anthropic and Google, where Google will supply up to 1 million TPU units, is expected to enhance AI infrastructure and drive growth in the AI sector [3][11]. - The "14th Five-Year Plan" emphasizes the construction of a "strong aerospace" and "strong network" nation, suggesting increased investment opportunities in commercial aerospace and domestic computing power supernodes [4][12]. Summary by Sections Industry Dynamics - Anthropic's deal with Google is valued at several billion dollars and will add over 1GW of computing power by 2026, indicating a robust growth trajectory for AI applications [3][11]. - The report notes a trend of increasing bandwidth allocation, leading to higher demand for 1.6T optical modules and expansion in supernode projects [3][11]. Market Overview - The overall market saw significant gains during the week of October 20-24, 2025, with the Shenwan Communications Index rising by 11.55% and the top-performing sectors being optical modules (+29.56%), controllers (+12.13%), and connectors (+10.24%) [6][14]. - Leading stocks included Source Technology (+38.00%), Zhongji Xuchuang (+32.23%), and New Easy (+17.91%) [6][24]. Investment Recommendations - The report suggests focusing on specific companies within key sectors: - 1.6T Optical Modules: Zhongji Xuchuang, Tianfu Communication, New Easy, Cambridge Technology, Source Technology, Shijia Photon, Guangku Technology [5][14]. - Domestic Computing Power Supernodes: ZTE, Unisplendour, Huafeng Technology, Yihua Technology, Huakong Technology, Huiju Technology, Shengke Communication [5][14]. - Commercial Aerospace: Xinke Mobile, Fenghuo Communication, Tongyu Communication, Fujida, Jinxin Nuo, Aerospace Power, Chaojie Technology, Gaohua Technology [5][14].

Core Viewpoint - The article emphasizes the importance of building a modern industrial system as the material and technological foundation for Chinese-style modernization, focusing on strengthening the real economy [1] Group 1: Modern Industrial System - The modern industrial system is identified as a key component of Chinese-style modernization, highlighting the need for a robust material and technological base [1] - The focus is on maintaining a reasonable proportion of manufacturing while constructing a modern industrial system centered around advanced manufacturing [1] Group 2: Economic Development Focus - The development of the economy should prioritize the real economy, with an emphasis on intelligent, green, and integrated directions [1] - There is a call to accelerate the construction of a manufacturing powerhouse, quality powerhouse, aerospace powerhouse, transportation powerhouse, and cyber powerhouse [1]

Core Points - The article discusses the release of the "Suggestions on Formulating the 15th Five-Year Plan for National Economic and Social Development" by the Central Committee of the Communist Party of China, emphasizing the importance of building a modern industrial system and strengthening the foundation of the real economy [1] Group 1 - The modern industrial system is identified as the material and technological foundation for Chinese-style modernization [1] - The focus of economic development is to be placed on the real economy, with an emphasis on intelligent, green, and integrated directions [1] - The plan aims to accelerate the construction of a manufacturing powerhouse, quality powerhouse, aerospace powerhouse, transportation powerhouse, and cyber powerhouse, while maintaining a reasonable proportion of manufacturing [1] - The goal is to establish a modern industrial system with advanced manufacturing as its backbone [1]

Core Insights - The overall valuation of A-shares has expanded this week, with the communication industry leading the gains. Market sentiment has improved due to expectations surrounding US-China negotiations and significant meetings, resulting in a strong performance from the technology sector, particularly communication equipment [1][8] - The "14th Five-Year Plan" emphasizes the construction of a strong network nation and the forward-looking layout of future industries, promoting sectors such as sixth-generation mobile communications as new economic growth points, indicating a positive outlook for the technology industry [1][8] - The current dynamic PE of the communication equipment industry is at the historical 97.3 percentile, suggesting high valuations that will test performance delivery capabilities [1][8] Valuation Overview - The overall PE (TTM) of A-shares increased from 22.00 times last week to 22.61 times this week, while the PB (LF) rose from 1.77 times to 1.82 times [10][14] - The PE (TTM) of the ChiNext board expanded from 75.51 times to 77.94 times, and the PB (LF) increased from 4.15 times to 4.35 times [19][20] - The PE (TTM) of the Sci-Tech Innovation Board rose from 246.87 times to 252.05 times, with the PB (LF) increasing from 5.14 times to 5.44 times [21][22] Relative Valuation Expansion - The relative PE (TTM) of computing infrastructure, excluding operators/resources, increased from 5.09 times to 5.52 times, while the relative PB (LF) rose from 4.74 times to 5.11 times [22][23] - In terms of static PE (TTM), major industries such as consumer discretionary, midstream manufacturing, and cyclical sectors have absolute and relative valuations above historical medians, with consumer discretionary and midstream manufacturing exceeding the 90th percentile [27][28] Industry Valuation Levels - From a static PE (TTM) perspective, industries like steel, computers, retail, and textiles have absolute and relative valuations above the 90th percentile, while industries such as real estate and comprehensive services are below the 10th percentile [38][39] - In terms of PB (LF), sectors including electronics, machinery, non-ferrous metals, and utilities have absolute and relative valuations above historical medians, with electronics exceeding the 90th percentile [41][43] Performance and Yield Comparison - The current comparison of odds (PB historical percentiles) and win rates (ROE historical percentiles) indicates that industries such as oil and petrochemicals, agriculture, communication, and public utilities exhibit characteristics of low valuation and high profitability [52] - The comparison of odds (dynamic PE) and win rates (expected compound growth rate of net profit for 2025-2026) shows that industries like building materials, power equipment, and media possess both low valuations and high performance growth [56]

Core Viewpoint - The technology sector is experiencing significant activity, particularly in the communications sector, driven by strong performance in various sub-sectors such as optical communication, copper cable high-speed connections, and AI [1] Group 1: Market Performance - The communications equipment ETF (159583) saw an intraday increase of 6.77%, while the ChiNext AI ETF (159246) rose by 5.69% [1] - Key stocks within the communications equipment ETF, such as Aerospace Zhizhuang and China Satellite, reached their daily limit, with Aerospace Hanyu increasing by over 15% [1] Group 2: Policy and Future Outlook - The Fourth Plenary Session approved the "Central Committee's Proposal for the 15th Five-Year Plan," emphasizing the construction of a strong network nation and the need to strategically position future industries [1] - The plan highlights emerging economic growth points, including quantum technology, biomanufacturing, hydrogen energy, nuclear fusion, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communications [1] Group 3: Industry Projections - Institutional research indicates that by the first half of 2025, the communications industry is expected to see a 2.8% year-on-year revenue growth and a 7.8% increase in net profit attributable to the parent company [1] - Continued high growth is anticipated in sectors such as optical modules and liquid cooling in Q3 2025, with a trend expected to persist into Q4 2025 [1] Group 4: Investment Opportunities - The communications equipment ETF (159583) tracks the CSI Communications Equipment Theme Index (931271), with a high proportion of leading companies in optical modules and computing hardware, accurately reflecting the development trends in these industries [1] - Investors without on-site accounts can explore investment opportunities through linked funds (Class A 021933; Class C 021934) [1]

Core Insights - The national market regulation technology and information work conference was held in Hangzhou, Zhejiang from October 16 to 17, emphasizing the importance of technology and information in market regulation [1] Group 1: Strategic Emphasis - The conference highlighted the need to deeply implement the Central Committee's strategic deployment regarding a technology-powered nation, a cyber power, and a digital China [1] - It stressed the importance of adhering to the Party's comprehensive leadership and enhancing the level of top-level design [1] Group 2: Technological Innovation - The meeting called for collaborative efforts to leverage technological innovation as a leading force [1] - There is a push to accelerate the application of new technologies to gradually improve the quality and efficiency of smart regulation [1] Group 3: Development and Innovation - The conference aimed to cultivate a solid development foundation and continuously stimulate innovation vitality [1] - It seeks to provide stronger technological and informational support for the modernization of market regulation, contributing to high-quality economic and social development [1]

Core Viewpoint - The event at Beijing University of Posts and Telecommunications highlighted the importance of technological talent in advancing China's communication and semiconductor industries, emphasizing the need for core technology mastery to overcome challenges and enhance national security [1][2][3]. Group 1: Wireless Communication Development - The journey of China's wireless communication standards from lagging to leading was shared by Sun Lixin, who participated in the development of the TD-SCDMA standard, filling a significant gap in the mobile communication sector [2][3]. - Sun Lixin emphasized that intellectual property is crucial for communication companies to enter global markets, advocating for the acquisition of patents and robust networking solutions [2][3]. Group 2: Semiconductor Industry Progress - A representative from the integrated circuit industry discussed the strategic importance of DRAM chips, describing them as the "industrial grain" of the digital age and a key area in national competition [2][3]. - The representative highlighted the successful domestic production of memory chips as a significant step towards self-sufficiency in China's semiconductor industry, attributing this progress to the "new type of national system" that integrates government, market, and society [3]. Group 3: Cybersecurity Initiatives - Liu Qi, a young expert from China Telecom, shared his experiences in cybersecurity, focusing on intercepting network attacks and building a robust defense system to protect digital communications [3][4]. - Liu Qi's management philosophy emphasizes collective growth and practical training, leading a team to develop a comprehensive cybersecurity framework and training young talents in the field [4]. Group 4: Educational and Industry Collaboration - The vice president of the Scientific Research Institute at Beijing University of Posts and Telecommunications stressed the importance of aligning educational programs with national strategic needs and industry demands to cultivate effective technological talent [5]. - Students expressed a clearer understanding of the communication industry's evolution and the importance of contributing to China's technological advancements through their research and training [5][6].

Group 1 - The core viewpoint emphasizes the significant advancements in China's digital economy and technology innovation during the "14th Five-Year Plan" period, highlighting a shift from following to leading in certain areas of network information technology [1][2]. - The number of artificial intelligence patents in China accounts for 60% of the global total, with domestic models like DeepSeek and Tongyi Qianwen leading the global open-source ecosystem, indicating a qualitative change in innovation capabilities [1]. - The establishment of over 3.5 million high-quality data sets and a national integrated data market is transforming data into a core asset that can be traded and create value, with data production reaching 41.06 ZB, a 25% year-on-year increase [3]. Group 2 - The deep integration of the digital economy with the real economy is crucial for enhancing productivity across various industries, with 35,000 basic-level and over 230 excellent-level smart factories emerging, and the digital design tool adoption rate among key industrial enterprises reaching 82.7% [2]. - The industrial robot installation volume in China accounts for over half of the global total, showcasing the rapid growth of smart home and wearable technology as new consumption trends [2]. - The digital economy's core industries now contribute 10.4% to GDP, reflecting a significant leap in production efficiency and the creation of over 100 new job types [2]. Group 3 - The development of a unified and active national data market is accelerating, with over 1 million data trading companies and a total data transaction volume exceeding 22 billion yuan, marking an 80% year-on-year growth [3]. - The construction of a trusted data space and the use of privacy computing technologies ensure that data can be utilized securely, allowing for value release while maintaining safety [3]. - Future challenges include advancing in high-end chips and industrial software, addressing the difficulties faced by small and medium-sized enterprises in digital transformation, and promoting more efficient data circulation [3].

Group 1: Digital Economy Development - The digital economy is entering a phase of comprehensive expansion, with competitiveness and influence steadily increasing [1] - The core industry value added of the digital economy has reached 10.4% of GDP, indicating significant economic integration [2] - Over 35,000 basic-level and more than 230 excellent-level smart factories have emerged, with a digital R&D tool penetration rate of 82.7% among key industrial enterprises [2] Group 2: Technological Advancements - China has achieved a historic leap in network information technology, with 60% of global AI patents held domestically [1] - The number of 5G base stations has reached 4.598 million, establishing the largest network infrastructure globally [1] - The domestic operating system ecosystem has surpassed 1.19 billion devices, showcasing rapid growth [1] Group 3: Data as a Core Asset - Data production in China reached 41.06 ZB, a 25% year-on-year increase, with over 35,000 high-quality datasets established [3] - The total data transaction volume exceeded 22 billion yuan, reflecting an 80% year-on-year growth [3] - A unified and active national integrated data market is being accelerated, supported by a national data registration platform covering 78 economic categories [3] Group 4: Future Challenges - Continued efforts are needed in key areas such as high-end chips and industrial software to overcome existing challenges [3] - There is a need to address the difficulties faced by small and medium-sized enterprises in digital transformation [3] - The goal is to promote more efficient circulation of data elements across broader and deeper levels [3]

Group 1 - The core viewpoint emphasizes the significant advancements in China's digital economy and technology innovation during the "14th Five-Year Plan" period, highlighting a shift from following to leading in certain areas of network information technology [1][2]. - China's artificial intelligence (AI) sector has seen remarkable growth, with domestic patents accounting for 60% of the global total, and major AI models like DeepSeek and Tongyi Qianwen leading the global open-source ecosystem [1]. - The number of 5G base stations has reached 4.598 million, establishing the largest network infrastructure globally, which supports the digital economy's expansion and enhances the stability of supply chains [1]. Group 2 - The integration of the digital economy with the real economy is crucial for enhancing productivity across various industries, with over 35,000 basic-level and 230 outstanding smart factories emerging nationwide [2]. - The digital economy's core industries now account for 10.4% of GDP, reflecting a significant increase in production efficiency and the creation of over 100 new job types [2]. - The average reduction in research and development cycles for key industrial enterprises has been nearly 30%, driven by the widespread adoption of digital design tools [2]. Group 3 - During the "14th Five-Year Plan" period, China's data production reached 41.06 ZB, a 25% year-on-year increase, with over 35,000 high-quality datasets established [3]. - The total data transaction volume exceeded 22 billion yuan, marking an 80% increase, indicating the rapid development of a unified and active national data market [3]. - The implementation of privacy computing and the establishment of a trusted data space ensure the secure and efficient flow of data, allowing it to be a core asset that creates value [3].