Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Views - Methanol: High imports are materializing, inventory accumulation is occurring, and the futures price is undervalued. It is in a period of negative factor realization. With unstable macro - environment and weak methanol prices in Europe and the US, the unilateral direction is hard to determine. Given the low valuation, a long - position strategy at low prices is preferred [2]. - Plastic (Polyethylene): The overall inventory of polyethylene is neutral. The 09 basis is around 0 in North China and +120 in East China. The import profit is around - 400 with no further increase. The non - standard HD injection price is stable, and other price spreads are fluctuating. The domestic linear production has increased month - on - month in June. Attention should be paid to the LL - HD conversion and US quotes, as well as the new device commissioning in 2025 [7]. - PP (Polypropylene): The upstream and mid - stream inventories of polypropylene are decreasing. The basis is +100, the non - standard price spread is neutral, and the import profit is around - 500. Exports have been good this year. The PDH profit is around - 1000, and the propylene price is fluctuating. The supply is expected to increase slightly in June. The downstream orders are average, and the raw material and finished - product inventories are neutral. In the context of over - capacity, the 09 contract is under moderate to excessive pressure, which can be alleviated if exports continue to expand or PDH devices undergo more maintenance [7]. - PVC: The basis has strengthened to 09 - 150, and the factory - pickup basis is - 420. The downstream has a strong willingness to hold goods at low prices due to seasonal factors. The mid - and upstream inventories are continuously decreasing. Attention should be paid to the commissioning and export sustainability in June. The near - term export orders are acceptable. The PVC comprehensive profit is - 500. Attention should be paid to factors such as exports, coal prices, commercial housing sales, terminal orders, and production starts [12]. 3. Summary by Product Methanol - **Price Data**: From July 1 - 7, 2025, the power coal futures price remained at 801. The Jiangsu spot price decreased from 2520 to 2437, the South China spot price decreased from 2480 to 2448. The import profit decreased from 125 to 58, and the main contract basis decreased from 90 to 25. The MTO profit on the futures market decreased from - 1208 to - 1219 [2]. - **Daily Changes**: The daily changes on July 7 compared to the previous period were 0 for power coal futures, - 18 for Jiangsu spot, - 17 for South China spot, - 10 for Lunan converted to futures price, 0 for Southwest converted to futures price, 0 for Hebei converted to futures price, - 25 for Northwest converted to futures price, 0 for CFR China, 0 for CFR Southeast Asia, 0 for import profit, - 10 for main contract basis, and 0 for MTO profit on the futures market [2]. Plastic (Polyethylene) - **Price Data**: From July 1 - 7, 2025, the Northeast Asian ethylene price remained at 850. The North China LL price fluctuated between 7150 - 7200 and then dropped to 7175 on July 7. The two - oil inventory decreased from 76 to 71, and the warehouse receipts remained at 5831 on July 4 and 7 [7]. - **Daily Changes**: On July 7 compared to the previous period, the changes were 0 for Northeast Asian ethylene, - 25 for North China LL, - 50 for East China LL, - 25 for East China LD, 0 for East China HD, 0 for LL in US dollars, 0 for LL in US Gulf, 0 for import profit, - 35 for the main futures contract, 30 for the basis, 0 for two - oil inventory, and 0 for warehouse receipts [7]. PP (Polypropylene) - **Price Data**: From July 1 - 7, 2025, the Shandong propylene price decreased from 6630 to 6420, the Northeast Asian propylene price remained at 745. The East China PP price decreased from 7060 to 7030, and the two - oil inventory decreased from 76 to 71. The warehouse receipts decreased from 7404 to 7232 [7]. - **Daily Changes**: On July 7 compared to the previous period, the changes were - 130 for Shandong propylene, 0 for Northeast Asian propylene, - 40 for East China PP, - 30 for North China PP, - 50 for Shandong powder, - 10 for East China copolymer, 0 for PP in US dollars, 0 for PP in US Gulf, 0 for export profit, - 21 for the main futures contract, 0 for the basis, 0 for two - oil inventory, and - 60 for warehouse receipts [7]. PVC - **Price Data**: From July 1 - 7, 2025, the Northwest calcium carbide price decreased from 2450 to 2250, the Shandong caustic soda price increased from 802 to 817. The calcium - carbide - based PVC price in East China fluctuated between 4770 - 4850 and then dropped to 4830 on July 7. The import price in US dollars (CFR China) remained at 700, and the export profit remained at 465 from July 3 - 7 [11][12]. - **Daily Changes**: On July 7 compared to the previous period, the changes were - 50 for Northwest calcium carbide, 15 for Shandong caustic soda, - 20 for calcium - carbide - based PVC in East China, 0 for ethylene - based PVC in East China, 0 for calcium - carbide - based PVC in South China, 0 for calcium - carbide - based PVC in the North, 0 for import price in US dollars (CFR China), 0 for export profit, 0 for Northwest comprehensive profit, 0 for North China comprehensive profit, and 0 for the basis (high - end delivery product) [12].

Market Performance - The northbound heavy positions outperformed the fund heavy positions, with a weekly return of 1.73% compared to 1.60% for the fund heavy index[10] - The overall market showed a slight acceleration in industry and style rotation[4] Sector Highlights - The healthcare sector led with a weekly increase of 3.63%, outperforming the overall A-share market by 2.42%[19] - The financial sector also performed well, with a weekly gain of 1.99%, exceeding the A-share benchmark by 0.77%[19] Investment Style - Low valuation stocks showed the highest gains, with the low valuation index rising by 3.23%[23] - Large-cap and low-volatility stocks dominated the performance, indicating a preference for stability in the current market environment[21] Thematic Trends - The Low Carbon Leaders 30 index was the top performer among themes, with a weekly increase of over 3%[25] - The carbon neutrality series also showed positive returns, with the Longjiang Carbon Neutral Index rising by 2.16%[25]

- Model Name: Style Rotation Model; Model Construction Idea: The model is built from basic style factors such as valuation, market capitalization, volatility, and momentum, gradually constructing a style timing and scoring system[1][6] - Model Construction Process: 1. Construct 640 micro features based on 80 underlying micro indicators[1][6] 2. Use common indices as style stock pools instead of absolute proportion division of style factors to construct new style returns as labels[1][6] 3. Use a rolling training random forest model to avoid overfitting risks, select features, and obtain style recommendations[1][6] 4. Construct a style rotation framework from style timing to style scoring and from style scoring to actual investment[1][6] - Model Evaluation: The model effectively avoids overfitting risks and provides a comprehensive framework for style rotation from timing to scoring and actual investment[1][6] Model Backtest Results - Style Rotation Model, Annualized Return: 21.63%, Annualized Volatility: 24.09%, IR: 0.90, Monthly Win Rate: 59.12%, Maximum Drawdown: 28.33%[7][8] - Market Benchmark, Annualized Return: 7.21%, Annualized Volatility: 21.56%, IR: 0.33, Monthly Win Rate: 56.20%, Maximum Drawdown: 43.34%[8] - Excess Return, Annualized Return: 13.35%, Annualized Volatility: 11.43%, IR: 1.17, Monthly Win Rate: 66.42%, Maximum Drawdown: 10.28%[7][8] Monthly Performance - June 2025, Style Rotation Model Return: 1.28%, Excess Return: -2.51%[13] - July 2025, Latest Style Timing Directions: Low Valuation, Small Market Cap, Reversal, Low Volatility[13] - July 2025, Latest Holding Index: CSI Dividend Index[13]

Group 1 - The market saw a significant increase in trading volume, surpassing 1.6 trillion, with the Shanghai Composite Index reaching a new high of 3450 points for the year [1] - The brokerage sector experienced a substantial rise, driven by the acquisition of a virtual asset license by Guotai Junan International, alongside industry consolidation, regulatory reforms, and low valuations as the main catalysts for the increase [1] - The outlook for the brokerage sector remains positive, with a focus on holding positions after valuations become reasonable [1] Group 2 - Attention is drawn to two key factors: the impending deadline of July 9 for US tariff negotiations, which may impact China based on outcomes with Europe and Japan, and the emphasis on technological independence and domestic demand in the "14th Five-Year Plan" [1] - There are multiple industry news, company earnings, and international developments that warrant attention [1]

Group 1 - The core point of the news is the performance and growth of the Hongli Low Volatility ETF (512890), which has seen significant increases in both its shares and scale in 2024 [1][4] - As of June 25, 2024, the Hongli Low Volatility ETF has a total of 158.73 billion shares and a scale of 190.56 billion yuan, reflecting a year-to-date increase of 29.45% in shares and 38.59% in scale [1][4] - The ETF's recent closing price was 1.206 yuan, with a trading volume of 3.30 billion yuan on June 26, 2024 [1] Group 2 - The ETF's performance is attributed to the strong performance of its top ten components, including Chengdu Bank, Shanghai Rural Commercial Bank, and Jiangsu Bank [3] - The fund was established on December 19, 2018, with a management fee of 0.50% and a custody fee of 0.10%, and has achieved a return of 140.10% under the management of Liu Jun [4] - The investment strategy for bank stocks emphasizes the importance of liquidity and the revaluation of net assets, which is expected to drive industry valuation upward by 2025 [2]

Report Summary 1. Report Industry Investment Rating No information provided regarding the industry investment rating. 2. Core Views - **Methanol**: High imports are materializing, and inventory accumulation has begun. The market is in a low - valuation state, waiting for the off - season expectations to be fully priced in. It is in a period of negative factor realization. With macroeconomic instability and weak methanol prices in Europe and the US, the unilateral direction is hard to determine, but due to the low valuation, a long - position strategy at low prices is preferred [1]. - **Plastic (Polyethylene)**: The inventory of two major oil companies is neutral compared to the same period. Upstream and coal - chemical industries are reducing inventory. Overall inventory is neutral. Import profit is around - 400 with no further increase for now. In June, maintenance is decreasing month - on - month, and domestic linear production is increasing. Attention should be paid to LL - HD conversion and new device commissioning [6]. - **PP (Polypropylene)**: The upstream and mid - stream of polypropylene are reducing inventory. The basis is + 100, non - standard price differences are neutral, and import profit is around - 500. Exports are performing well this year. In June, supply is expected to increase slightly month - on - month. Under the background of over - capacity, the 09 contract is under neutral to excessive pressure. If exports continue to boom or PDH device maintenance increases, supply pressure can be alleviated [6]. - **PVC**: The basis has strengthened to 09 - 150. Middle and upstream inventories are continuously decreasing. In June, attention should be paid to new device commissioning and export sustainability. The current static inventory is at a high level but decreasing. Attention should be paid to factors such as exports, coal prices, and terminal orders [10]. 3. Summary by Sector Methanol - **Price Changes**: From June 18 to June 24, the price of Jiangsu spot decreased by 100, South China spot by 133, and Northwest converted - to - futures price by 18. The import profit remained unchanged, and the main - contract basis increased by 30. The MTO profit on the futures market increased by 187 [1]. - **Supply and Demand**: High imports are being realized, and inventory accumulation has started. Iranian production has decreased, but non - Iranian supply has increased, and domestic supply has also risen [1]. Plastic (Polyethylene) - **Price Changes**: From June 18 to June 24, the price of Northeast Asia ethylene remained unchanged, North China LL decreased by 115, and East China LD decreased by 75. The import profit remained unchanged, and the main - contract futures price decreased by 194 [6]. - **Inventory and Supply**: The inventory of two major oil companies is neutral. Upstream and coal - chemical industries are reducing inventory. In June, maintenance is decreasing month - on - month, and domestic linear production is increasing [6]. PP (Polypropylene) - **Price Changes**: From June 18 to June 24, the price of Shandong propylene decreased by 90, and the main - contract futures price decreased by 188. The basis increased by 60 [6]. - **Inventory and Supply**: Upstream and mid - stream inventories are decreasing. In June, supply is expected to increase slightly month - on - month. Under over - capacity, the 09 contract is under pressure [6]. PVC - **Price Changes**: From June 18 to June 24, the price of Northwest calcium carbide decreased by 25, and the price of East China calcium - carbide - based PVC decreased by 80 [10]. - **Inventory and Supply**: Middle and upstream inventories are continuously decreasing. Summer seasonal maintenance of Northwest devices is ongoing, and the load is between the spring maintenance and Q1 high - production levels. In June, attention should be paid to new device commissioning and export sustainability [10].

Group 1 - Major insurance companies, including Ping An Insurance, have significantly increased their holdings in large domestic banks, betting that high dividend yields will offset the negative factors of narrowing profit margins and profit pressures in the banking sector [1][3] - As of June 24, Ping An Insurance has raised its holdings in several large banks listed in Hong Kong to a total of HKD 180 billion (USD 23 billion), increasing its stake in ICBC to 18% and in both China Merchants Bank and Agricultural Bank of China to over 15% [1] - The influx of insurance funds has led to a substantial rise in bank stocks, with the Hong Kong-listed Chinese bank index reaching a seven-year high, and individual stocks like CITIC Bank hitting historical highs [1][4] Group 2 - The average dividend yield of large Chinese banks listed in Hong Kong exceeds 4%, compared to a benchmark 10-year government bond yield of only 1.65%, making bank stocks more attractive for long-term investors seeking dividend income [3] - Ping An Insurance emphasizes that the low volatility and high dividends from bank stocks will contribute to considerable interest income, while also maintaining a balanced investment strategy between growth stocks and high-dividend value stocks [3] - Other insurance companies, such as Ruida Insurance and Xinhua Life Insurance, have also increased their stakes in bank stocks, indicating a broader trend among insurers to invest in this sector [3]

Market Performance - Financial sector leads in growth, with a slight excess return over industry benchmarks[2] - The low valuation index shows a return of 1.70%, outperforming the high valuation index which declined by 2.84%[25] - Year-to-date, the quantitative fund heavy positions have outperformed the fund heavy index[11] Style and Sector Analysis - Style rotation speed has significantly declined, indicating a shift in market dynamics[16] - Large-cap and low-valuation stocks are currently favored, with PB-ROE performance being notably strong[23] - The financial dividend index has shown a return of 1.40%, leading the industry dividend performance[20] Thematic Trends - REITs and digital currencies have seen notable gains, with the REITs index returning 0.81%[27] - The digital currency index has surged by 3.27%, indicating strong market interest[27]

Summary of Key Points from the Conference Call Industry Overview - The mechanical industry has seen significant growth in the first half of 2025, with a nearly 14% increase, ranking sixth among all A-share sectors [2] - The industry is influenced by themes such as robotics, reducers, and hard technology, with a focus on undervalued assets [1][5] Core Insights and Arguments - **Investment Trends**: The mechanical sector's investment opportunities are concentrated in hard technology (e.g., giant wheel intelligence, controllable nuclear fusion) and undervalued assets [1][5] - **Domestic Demand**: The recovery in domestic demand for engineering machinery is moderate, primarily driven by equipment upgrades. Excavator sales slowed in Q2, but large excavators continue to perform well [1][6][7] - **External Demand**: The external demand for engineering machinery is strong, particularly in Asia, Africa, and Latin America, with potential growth in the European and American markets [1][9] - **Industrial Control Sector**: The industrial control sector reversed its downward trend in Q1 2025, showing a 2.35% year-on-year growth, with rapid growth in HVAC and industrial robots [1][10] Important but Overlooked Content - **Overseas Expansion**: China's manufacturing direct investment abroad has grown from $19.108 billion in 2018 to $27.342 billion in 2023, with a CAGR of 7.43%. ASEAN's share in this investment is increasing [4] - **Market Dynamics**: The mechanical industry is closely tied to the performance of the manufacturing, real estate, and infrastructure sectors, which are currently showing signs of weakness [3] - **Future Outlook**: The second half of 2025 is expected to see a focus on hard technology and high-dividend, low-valuation stocks, particularly in the Hong Kong market due to ample supply and global capital inflow [5][52] Recommendations - **Key Companies**: Recommended companies in the mechanical sector include Haitan International, Sany International, and Jerry Holdings, among others, with a focus on hard technology firms like Aobi Zhongguang and Sikang Technology [53] - **Investment Opportunities**: Investors are advised to pay attention to the controllable nuclear fusion sector, which is expected to see significant investment opportunities in the latter half of 2025 [50][51]

Report Summary 1) Report Industry Investment Rating No investment rating information is provided in the report. 2) Core Viewpoints - **Methanol**: High imports are materializing, inventory accumulation has begun, and the futures market is undervalued. It's in a period of bearish factor realization. With the overall supply increasing and macro - instability, the unilateral direction is hard to determine. Given the low valuation, it's inclined to go long at low prices [1]. - **Plastic (Polyethylene)**: The overall inventory of polyethylene is neutral. The 09 basis is around 0 in North China and +120 in East China. Import profit is around -400 with no further increase for now. June maintenance is decreasing, and domestic linear production is increasing. Attention should be paid to LL - HD conversion and new device commissioning [5]. - **PP (Polypropylene)**: The upstream and mid - stream of polypropylene are de - stocking. The basis is +100, non - standard price difference is neutral, and import profit is around -500. Exports are good. In June, supply is expected to increase slightly. Under the background of over - capacity, the 09 contract is under medium to excessive pressure, which can be alleviated if exports continue to expand or PDH devices are frequently shut down for maintenance [5]. - **PVC**: The basis has strengthened. The mid - upstream inventory is continuously decreasing. Attention should be paid to production capacity commissioning and export sustainability in June. The current static inventory is at a high level but decreasing. Attention should be paid to factors such as exports, coal prices, and terminal orders [9]. 3) Summary by Product Methanol - **Price Data**: From May 29 to June 5, 2025, the power coal futures price remained at 801. The price of Jiangsu spot increased from 2245 to 2317, while the price of South China spot decreased from 2278 to 2300. The import profit remained at 261 on June 5, and the daily change was 0. The main contract basis was 42, with a daily change of -3, and the MTO profit on the futures market was -966, with a daily change of -4 [1]. Plastic (Polyethylene) - **Price Data**: From May 29 to June 5, 2025, the Northeast Asia ethylene price remained at 780. The price of North China LL remained at 7050, and the price of East China LD increased by 25. The import profit remained at -281, and the main futures price decreased by 15. The basis decreased by 20, and the two - oil inventory remained at 73 [5]. PP (Polypropylene) - **Price Data**: From May 29 to June 5, 2025, the Shandong propylene price decreased from 6350 to 6350, and the Northeast Asia propylene price remained at 745. The East China PP price decreased from 7020 to 7020, and the main futures price decreased by 37. The basis decreased by 20, and the two - oil inventory remained at 73 [5]. PVC - **Price Data**: From May 29 to June 5, 2025, the Northwest calcium carbide price remained at 2250 on June 5. The East China calcium carbide - based PVC price decreased from 4720 to 4710. The basis (high - end delivery product) decreased from -70 to -80 [8][9].