Core Viewpoint - The issuance of local government bonds in August reached 977.6 billion yuan, maintaining strong momentum despite a decline compared to June and July, with new special bonds accounting for about half of the total issuance [1] Group 1: Bond Issuance and Utilization - From January to August, the cumulative issuance of new special bonds reached 3.26 trillion yuan, accounting for 74% of the annual quota of 4.4 trillion yuan, with a notable acceleration in issuance in recent months [2][1] - In August, over 40% of the new special bonds were allocated for government existing investment projects, termed "debt reduction" funds, with a total of 2.129 trillion yuan issued for this purpose [2] - The issuance of special bonds for land reserve reached 600 billion yuan in August, with ten provinces issuing over 320 billion yuan in land reserve special bonds [1][3] Group 2: Debt Reduction and Project Funding - The demand for "debt reduction" remains significant, with 30% of the new special bonds issued from January to August allocated for this purpose, totaling 9.68 trillion yuan [2] - The primary use of new special bond funds, excluding "debt reduction," was for project construction, including municipal infrastructure, transportation, and social projects [2] Group 3: Land Reserve and Housing Market Stabilization - The issuance of land reserve special bonds has increased, with a total of 3.24 trillion yuan issued by ten provinces from January to August, aimed at recovering idle land and alleviating financial pressure on developers [3] - Some provinces are also initiating projects to acquire existing residential properties, with 32 projects reported across four provinces, primarily funded by special bonds [4][5] Group 4: Support for Innovation and Emerging Industries - A significant trend in August was the issuance of special bonds to support government investment funds, enhancing support for local technological innovation and strategic emerging industries [6] - Various provinces, including Beijing and Shanghai, issued special bonds for government investment funds, indicating a shift in investment focus from traditional infrastructure to new infrastructure and emerging sectors [7][6] Group 5: Economic Impact and Future Outlook - Experts suggest that the increased investment in strategic emerging industries through special bonds is a necessary shift to adapt to high-quality economic development and innovation-driven growth [7][8] - The potential for growth in strategic emerging industries is highlighted, with expectations for positive contributions to GDP and tax revenue, indicating a favorable outlook for the effectiveness of these investments [8]

Core Viewpoint - Longfor Group has successfully completed the repayment of all bonds due in 2023, focusing on debt reduction and optimization of its debt structure amid industry downturns [2][3]. Group 1: Debt Repayment Details - On August 26, Longfor Group completed two fund transfers totaling over 3.6 billion RMB for the repayment of "22 Longfor Expansion MTN001" and the early repayment of "22 Longfor Expansion MTN002" [1]. - The total principal and interest for "22 Longfor Expansion MTN001" amounted to 1.5495 billion RMB, while "22 Longfor Expansion MTN002" totaled 2.0523 billion RMB [1]. - The issuance details for "22 Longfor Expansion MTN001" include a total issuance of 1.5 billion RMB with a coupon rate of 3.30% and a 3-year term, while "22 Longfor Expansion MTN002" had a total issuance of 2 billion RMB with a coupon rate of 3.00% [1]. Group 2: Debt Management Strategy - Longfor Group's management has emphasized the importance of reducing overall debt levels and optimizing financing structures, with 2025 being a critical year for debt conversion [2]. - The company aims to decrease short-term debt while increasing long-term debt, ensuring timely repayments without overdue or extended financing [2]. - Since July, Longfor has made several debt repayments, including 1.766 billion RMB for "22 Longfor 04" and 522.5 million RMB for "20 Longfor Expansion MTN001B" [2]. Group 3: Financial Health and Outlook - Following the recent bond repayments, Longfor Group has cumulatively repaid approximately 14.5 billion RMB in bond principal and interest in 2023 [3]. - DBS Bank noted that optimizing the balance sheet and maintaining cash flow for debt repayment are key operational focuses for Longfor, indicating positive progress in these areas [3]. - The expectation is that after repaying the December syndicated loans, Longfor will clear its recent offshore debts [3].

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, but showed signs of improvement in the second quarter, leading to a maintained "buy" rating. Group 1: Financial Performance - In H1 2025, the company achieved revenue of 105.04 billion yuan, a year-on-year decrease of 28.04%, and a net profit attributable to shareholders of 710 million yuan, down 14.07% year-on-year [1] - The Q2 2025 revenue was 64.73 billion yuan, representing a year-on-year decline of 9.14% but a quarter-on-quarter increase of 60.55%. The net profit for Q2 was 889 million yuan, up 65.94% year-on-year and 595.82% quarter-on-quarter [1] - The comprehensive gross margin for H1 2025 was 8.28%, an increase of 0.66 percentage points year-on-year, while Q2 gross margin was 8.74%, a decrease of 0.41 percentage points year-on-year but an increase of 1.20 percentage points quarter-on-quarter [2] Group 2: Cost and Cash Flow - The expense ratio for H1 2025 was 7.69%, an increase of 1.36 percentage points year-on-year, with sales, management, R&D, and financial expense ratios at 0.23%, 3.57%, 2.94%, and 0.94%, respectively [3] - The company recorded a net reversal of impairment of 315 million yuan in H1 2025, compared to an impairment loss of 235 million yuan in the same period last year [3] - The net operating cash flow for H1 2025 was -18.48 billion yuan, a reduction in outflow by 4.14 billion yuan year-on-year, with a cash collection/payment ratio of 126%/143%, up 7.6 and 10.8 percentage points year-on-year [3] Group 3: Contract and Market Activity - The new contract amount for H1 2025 was 130.2 billion yuan, a year-on-year decrease of 37%, with Q2 new contracts at 65.7 billion yuan, down 28% year-on-year but showing a narrowing decline [4] - The company actively expanded into emerging businesses, securing 30.2 billion yuan in new contracts from six emerging sectors, accounting for 23% of total new contracts [4] - In the Yangtze River Delta region, the company secured 84% of new contracts, with Shanghai alone accounting for 90.5 billion yuan, a year-on-year decline of 42% [4] Group 4: Profit Forecast and Valuation - The company maintains profit forecasts for 2025-2027 at 2.302 billion, 2.426 billion, and 2.543 billion yuan, respectively [5] - The average PE ratio for comparable companies in 2025 is projected at 14 times, leading to a target price adjustment to 3.63 yuan, up from 3.11 yuan, while maintaining a "buy" rating [5]

Core Viewpoint - The overall risk level in the market is showing a positive trend, transitioning from stability to strength, with the risk scoring of the CSI 300 index significantly increasing from 49.80 to 59.65 [2] Market Valuation - The valuation of the CSI 300 index has risen from 55.08 to 59.68, indicating a continuous upward movement in the overall market valuation [2] - Among 28 first-level industries, sectors such as steel, electronics, pharmaceuticals, real estate, and defense have valuations above the historical 60th percentile, while only agriculture has a valuation below the historical 10th percentile [2] Market Expectations - The market expectation score has increased from 56.00 to 60.00, reaching a six-month high, driven by positive fiscal revenue growth in July, although the budget completion rate remains slow [2] Market Sentiment - Market sentiment has improved significantly, with the score rising from 41.41 to 59.44, indicating a shift from cautious trading to a more neutral and positive state [3] - The scores for margin trading and public fund issuance have also increased, suggesting a recovery of retail funds into the equity market [3] Economic Data - July economic data shows a mixed picture, with industrial value-added growth at 5.7%, down 1.1 percentage points from the previous month, and significant declines in fixed asset investment and real estate [8][10] - The unemployment rate in urban areas rose to 5.2%, reflecting a slight increase of 0.2 percentage points from the previous month [8] Financial Indicators - The M2 money supply growth rate increased to 8.80%, while M1 growth rose to 5.60%, indicating a slight improvement in liquidity conditions [10] - New social financing in July was 1.16 trillion yuan, with a year-on-year growth rate of 9.0%, showing a slight increase from June [10] Structural Adjustments - The report highlights the need for diversification in investment strategies to mitigate structural volatility risks, as market recovery trends are accompanied by accelerated rotation among sectors [3]

Investment Rating - The report maintains a "Positive" investment rating for the industry [8] Core Insights - Recent guidance from the Ministry of Finance emphasizes the need for local governments to fulfill payment obligations for existing PPP projects, which is expected to improve cash flow for waste incineration and water services [4][14] - As of August 22, 2025, 95% of the 2 trillion yuan quota for replacing hidden debts has been implemented, accelerating the issuance of local government special bonds [5][19] - The National Development and Reform Commission has reiterated the importance of adjusting public utility prices, with water and waste disposal fees being gradually increased across various regions [30][29] Summary by Sections Government Payment Implementation - The recent guidance on existing PPP projects highlights the necessity for local governments to include related expenses in their budget management and ensure timely payments [4][14] - The funding sources for these projects can include local government special bonds, central transfer payments, and local self-owned funds, which may strengthen the repayment guarantees for future PPP projects [15][14] Debt Replacement and Special Bonds - The issuance of special refinancing bonds has significantly accelerated, with 1.91 trillion yuan issued from January to August 2025, primarily aimed at replacing hidden debts [5][19] - Local governments are actively addressing existing hidden debt issues, which is expected to enhance liquidity for affected parties [19][22] Public Utility Price Adjustments - The report notes that many regions have been slow to adjust water and waste disposal fees, leading to financial losses for water supply companies [30][29] - Recent adjustments in water prices have been observed in cities like Guangzhou and Shenzhen, with average increases of 15.8% for residential water rates [30][34] Investment Logic - The combination of government payment implementation, debt replacement, and price adjustments is expected to positively impact cash flow in the waste incineration and water sectors [36][38] - The industry is experiencing stable growth, with improved cash flow and increased dividends, driven by market reforms and a shift towards direct sales to industrial and commercial clients [38][39]

Core Viewpoint - The restructuring of urban investment (城投) debt is showing signs of improvement, with a shift towards lower-cost financing, although the overall debt scale remains high and the interest payment pressure is still significant in the short term [1][9]. Debt Structure Changes - As of March 2025, the total urban investment platform's interest-bearing debt reached 61.72 trillion yuan, a 9.4% increase from June 2023, with bank loans, bonds, and non-standard financing contributing 40.67 trillion, 15.41 trillion, and 5.63 trillion yuan respectively [2]. - The proportion of bank loans in the debt structure increased from 63.76% in June 2023 to 65.9% by March 2025, indicating a shift towards more stable financing sources [2][5]. - By the end of 2025, it is expected that the proportions of bank loans, bonds, and non-standard financing will be 68.11%, 23.71%, and 8.17% respectively [2]. Interest Payment Pressure - The overall interest payment pressure is expected to ease over time, despite the current high levels due to the lagging effect of past debt [1][9]. - The financing costs for banks, bonds, and non-standard financing have significantly decreased, with bank loan rates dropping to 3.26% and bond issuance rates to 2.61% by March 2025 [7]. - Interest expenses have decreased by over 190 billion yuan, with bank loan interest payments down by 284.38 million yuan and bond interest payments reduced by 1.355 billion yuan [8][9]. Provincial Variations in Debt Payments - All provinces except Beijing and Shanghai have seen a decrease in urban investment debt interest payments, with notable reductions in Jiangsu and Zhejiang, where interest payments decreased by 357.19 million yuan and 171.27 million yuan respectively [10]. - Some provinces, such as Henan, have not managed to control debt increments effectively, leading to smaller reductions in interest payments [10]. Market Outlook - The urban investment bond market is expected to see more certainty in the mid to short-term, with a lack of mainline logic in the market leading to fluctuations influenced by risk preferences [11]. - The supply-demand dynamics for urban investment bonds continue to be tight, with a net outflow of 21.784 billion yuan in July, indicating ongoing challenges in the market [11].

Report Summary 1. Report Industry Investment Rating The document does not mention the industry investment rating. 2. Core Viewpoints - Guizhou is a typical key province with relatively weak economic and fiscal strength, but the debt burden has been significantly relieved after debt resolution. The progress of debt resolution is approaching the end, and there is still a demand for new financing at the provincial, municipal, and high - tech district levels, mainly relying on industrialization entities [4][19][21]. - The debt pressure in Guizhou has been alleviated, and the public - market debt issuance is cautious. The debt structure is relatively balanced. The transformation progress of listed and second - type urban investment companies is not fast, and there is no clear provincial coordination time for delisting [4][19]. - For bond selection, short - term varieties of both traditional urban investment and newly emerged market - oriented entities can be considered. Traditional urban investment's standard - bond market is shrinking, and the remaining part has a stronger safety margin. Market - oriented entities are currently the key recommended targets in the region, with relatively controllable credit risks in the short term. A cautious attitude is still maintained towards medium - and long - term credit products [4][21]. 3. Summary by Relevant Catalogs 3.1 Economic and Fiscal Situation - In 2024, Guizhou's GDP was 2.266712 trillion yuan, ranking tenth from the bottom among provinces; the general budget revenue was 216.962 billion yuan, also ranking relatively low nationwide. However, the government - funded revenue was 231.528 billion yuan, ranking 8th in the country. Since 2020, Guizhou has had a government - funded revenue scale of over 200 billion yuan for four consecutive years [2][9]. - Among Guizhou's prefecture - level cities, Guiyang and Zunyi are in the first echelon. In 2024, their GDP exceeded 50 billion yuan, while other prefecture - level cities and autonomous prefectures were between 10 billion and 25 billion yuan. In 2024, the general budget revenues of Guiyang and Zunyi were 47.205 billion yuan and 34.776 billion yuan respectively, and the land transfer revenues were 64.325 billion yuan and 28.308 billion yuan respectively [3][13]. 3.2 Debt Situation - In 2024, Guizhou's government debt balance was 1.753709 trillion yuan, and the outstanding urban investment interest - bearing debt was only 1.590627 trillion yuan, with a relatively balanced debt structure [2][10]. - In 2024, the government debt balances of Guiyang and Zunyi were 376.955 billion yuan and 278.841 billion yuan respectively, and the outstanding urban investment interest - bearing debts were 385.355 billion yuan and 191.134 billion yuan respectively [3][13]. 3.3 Debt Resolution Progress - With limited financial resources in the province, the debt resolution support is strong. Substantial progress has been made in high - interest debt replacement with the help of special bond debt - resolution funds. Banks are more willing to participate in high - interest debt replacement, mainly replacing high - interest bank loans, while the progress of non - standard debt replacement is relatively slow [3][16]. - From 2024 to the present in 2025, Guizhou has issued 184.619 billion yuan and 105.944 billion yuan of special refinancing replacement bonds respectively, with the issuance scale always in the top five in the country. The scale of special new special bonds is also not small [16]. 3.4 Development and Bond Financing - Guizhou's debt resolution is approaching the end, and there is a demand for new financing at the provincial, municipal, and high - tech district levels, mainly relying on the subsequent appearance of industrialization entities in the capital market [4][19]. - The transformation progress of listed and second - type urban investment companies in Guizhou is not fast, and there is no clear provincial coordination time for delisting. Currently, the publicly - traded bond - issuing entities strongly recommended in the region are mainly state - owned enterprises that have successfully transformed into market - oriented operations [4][19]. 3.5 Industrial Situation - Guian New Area aims to build "three major industrial bases": a national computing power guarantee base, a new - energy power battery and material R & D and production base, and an important national industrial backup base. Many major projects have been put into production, but the contribution of data computing centers to tax revenue is not strong [14]. - Guizhou has established a "6 + 3" industrial system and a "3533" industrial cluster, with key support for industries such as new energy and aerospace high - tech industries, as well as other projects like urbanization, tourism, agriculture, and ecological environmental protection [20][21].

1. Report Industry Investment Rating No information provided regarding the report industry investment rating. 2. Core Viewpoints of the Report - After two years of debt resolution, there are improvement signals in the total amount of urban investment debt, with the proportion of bank loans increasing and the "stable quantity and falling price" of urban investment debt driving down interest - payment expenditures. The changes in fundamentals are consistent with the pricing trend of urban investment bonds. In July, the urban investment sentiment index improved, with a double - decline in the number of non - standard and private placement products. The issuance and review side improved month - on - month but remained tight overall, and the urban investment bonds continued to shrink. The trading sentiment in the secondary market warmed up, and the model pointed to going long. In the volatile market, the coupons of medium - and short - term bonds are more certain [1]. - The supply - and - demand pattern of urban investment bonds continues, and institutions still lack coupon assets. Although the registration scale and feedback days on the issuance and review side improved slightly month - on - month, the supply remained tight overall. In July, there was a net outflow of 21.784 billion yuan in urban investment bonds, and the outstanding scale continued to shrink. On the demand side, the net purchase volume of funds was not large in July due to subscription and redemption, while the allocation rhythm of wealth management was not significantly affected. With the relief of the redemption pressure on funds and the seasonal growth of wealth management scale after the quarter, the allocation power of credit bonds in the third quarter is expected to be strongly supported [2]. 3. Summary According to the Table of Contents 3.1 What Changes Have Occurred in Urban Investment Debt in Two Years of Debt Resolution? 3.1.1 Changes in Urban Investment Debt Structure - At the industry level, the scale of urban investment debt is still growing, and the proportion of bank loans has increased slightly. As of the end of March 2025, the total interest - bearing debt of urban investment platforms was 61.72 trillion yuan, a 9.4% increase from the end of June 2023. Among them, bank loans, bonds, and non - standard debts were 40.67 trillion yuan, 15.41 trillion yuan, and 5.63 trillion yuan respectively, with increases of 13.06%, 2.25%, and 4.97% respectively compared to the end of June 2023. The proportion of bank loans in the interest - bearing debt of urban investment platforms increased from 63.76% at the end of June 2023 to 65.9% at the end of March 2025 [14][15]. - There are differences among provinces. As of the end of March 2025, 18 provinces saw an increase in the proportion of bank loans, and 8 provinces including Ningxia, Hainan, Inner Mongolia, etc. had an increase of more than 3 percentage points. The financing structures of key provinces such as Gansu, Guangxi, Guizhou, etc. improved, with an increase in the proportion of bank loans and a simultaneous decrease in the proportion of bonds and non - standard debts [18][19]. 3.1.2 Has the Interest - Payment Pressure of Urban Investment Been Alleviated? - The costs of all channels have decreased. Since June 2023, the financing costs of bank loans and non - standard financing have decreased. In March 2025, the bank loan interest rate was 3.26%, a 69 - basis - point decrease from June 2023, and the non - standard financing cost was 5.14%, a 208 - basis - point decrease. The issuance coupon rate of urban investment bonds also decreased, reaching 2.2% in July 2025 [21]. - The annual interest - payment has decreased by over 190 billion yuan. The interest expenditure of bank loans decreased by 28.438 billion yuan, that of urban investment bonds decreased by 135.535 billion yuan, and that of non - standard debts decreased by 26.173 billion yuan [23][24]. - Except for Beijing and Shanghai, the interest - payment expenditures of urban investment bonds in all provinces have decreased. The interest - payment expenditures of urban investment bonds in some economically strong provinces and provinces that have received more debt - resolution support, such as Jiangsu and Zhejiang, have decreased significantly [29]. 3.2 Market Outlook: Medium - and Short - Term Urban Investment Bonds Are More Certain - In early July, the bond market adjusted due to the anti - involution policy. In the second half of the month, under the influence of multiple factors, the market sentiment eased, and the market started to repair and re - price funds and fundamentals. In the volatile bond market, medium - and short - term coupon assets are more certain, and the recovery of low - and medium - grade urban investment bonds is favored [32]. 3.3 Primary Issuance: Supply Remains Tight, and Issuance Enthusiasm Is High 3.3.1 Urban Investment Bond Issuance and Review Situation - The issuance and review rhythm improved month - on - month but remained tight overall. In July, the registration quota of urban investment bonds in the inter - bank market was 11.7091 billion yuan, a 52.69% month - on - month increase, but the registration completion ratio was only 11%. The number of feedbacks before the meeting decreased from 2.7 times in June to 2.28 times in July but remained at a relatively high level [34]. - The use of raised funds is still mainly for debt replacement, and it is difficult to break through new increments. In July, the proportion of debt replacement in the raised funds of urban investment bonds was 86.13%, and the proportion of other new uses was 3.62%, the lowest in 2025 [36]. 3.3.2 Urban Investment Dim - Sum Bonds: Increased Month - on - Month - The issuance of urban investment dim - sum bonds reached a new high in 2025 but was less popular than the same period last year. In July, 13 urban investment dim - sum bonds were issued, with a total scale of 8.273 billion yuan, significantly lower than 20.166 billion yuan in the same period of 2024. Henan and Shandong were the main issuers [42]. 3.3.3 The Issuance Enthusiasm Remains High, and the Coupon Rate Reached a New Low in the Year - The overall subscription enthusiasm in the primary market of urban investment bonds remained high. In July, the subscription multiple of urban investment bonds reached 3.67 times, and the "issuance coupon - lower limit of the range" was 34.75BP, lower than the same period last year [47]. - The issuance term of urban investment bonds was concentrated in 3 - 5 years, accounting for 46.48% in July. The weighted issuance coupon rate in July was 2.2%, a 7 - basis - point decrease from the previous month [49][50]. 3.3.4 Continued Net Outflow, and Urban Investment Bonds Further Shrunk - The net financing scale of urban investment bonds generally decreased, and the financing of key provinces tightened more significantly. In July, the cumulative net financing scale of urban investment bonds in key provinces was - 104.293 billion yuan, and that in non - key provinces was - 43.302 billion yuan [53]. 3.4 Secondary Market: Trading Sentiment Warmed Up, and the Model Pointed to Going Long 3.4.1 The Turnover Ratio of Each Term Declined Month - on - Month, and 3 - Year Urban Investment Bonds May Be More Suitable for Trading - Since the beginning of 2024, credit bonds have gradually moved towards the logic of liquidity pricing. The liquidity of bonds with a term of less than 1 year is better than that of medium - and long - term bonds. The turnover ratio of 3 - 5 - year bonds slightly recovered in June and July, and 3 - year high - grade urban investment bonds are more suitable for trading [54][55]. 3.4.2 Good Trading Sentiment, and More Low - Valuation Transactions - After a short - term adjustment, the weekly main - buying index began to rise, and the bullish sentiment quickly recovered. In the last week of July, the proportion of Bid transactions reached 34.52%, and the TKN proportion increased by 13.9 percentage points month - on - month [56]. - Low - valuation transactions of urban investment bonds reappeared, and the transaction term remained at a high level. On July 31, the deviation was - 2.40BP, and the weighted transaction term on the last trading day of July was 2.51 years, at the 82.2% quantile level since the beginning of 2024 [56].

Group 1 - The long cycle of real estate and the short cycle of the Chinese economy are interrelated, influencing the recent operation of the Chinese economy and market [1] - The comparison of housing price trends and household debt between China, Japan, and the United States has been a focus in the economic community, as all three countries have experienced significant real estate bubbles [1] - Japan's government implemented a comprehensive strategy to recover from its economic downturn, with its debt trajectory taking approximately 65 years to return to a low point after reaching a peak [1] Group 2 - China and Japan's debt trajectories are remarkably similar, both experiencing a 20 to 30-year expansion followed by a peak around 2021, after which a downward trend began [2] - The Chinese government's recent debt reduction initiatives represent a postponement of existing debt rather than a true resolution of the debt issue, with a three-year task of 10 trillion yuan for debt reduction [2]

Inflation Data Summary - July CPI decreased by 0.1 percentage points year-on-year to 0.0%, primarily due to weak food prices[3] - Core CPI improved for the third consecutive month, rising by 0.1 percentage points to 0.8%, driven by higher gold prices and strong service consumption[3] - July PPI remained at a near 23-month low, with a year-on-year decline of -3.6%[3] Food Prices Impact - July food CPI fell by 0.2% month-on-month, significantly below seasonal levels by 0.9 percentage points[4] - Year-on-year food CPI dropped by 1.6%, influenced by a high base from the previous year[4] - Fresh vegetable and meat prices increased by 1.3% and 0.4% month-on-month, respectively, but were still below seasonal averages[4] Core CPI Drivers - Service prices remained stable at 0.5% year-on-year, with significant increases in travel-related costs: airfares up 17.9%, hotel stays up 6.9%[5] - Gold and platinum jewelry prices surged by 37.1% and 27.3% year-on-year, respectively, due to rising gold prices[5] - Transportation fuel prices saw a reduced decline of 1.8 percentage points to -9.0% year-on-year[5] PPI Trends - PPI's month-on-month decline narrowed by 0.2 percentage points, reflecting the impact of "anti-involution" measures[6] - International oil prices increased, contributing to a 3.0% rise in oil and gas extraction month-on-month[6] - Investment demand remains weak, limiting PPI recovery to a gradual improvement[6]