Investment Rating - The industry investment rating is "Overweight" [2][22]. Core Viewpoints - The economy showed stable growth in the first half of 2025, with GDP increasing by 5.3% year-on-year. However, fixed asset investment growth weakened, with a cumulative year-on-year increase of 2.8%, down 0.9 percentage points from January to May [3][4]. - Infrastructure investment growth also weakened, with total infrastructure investment (including all categories) increasing by 8.9% year-on-year, a decrease of 1.5 percentage points compared to January to May. Notably, investment in transportation, warehousing, and postal services rose by 5.6% year-on-year, while investment in water conservancy, environment, and public facilities management increased by 3.5% [4][7]. - Real estate investment remained low, with a year-on-year decrease of 11.2% in the first half of 2025. The decline in construction starts and completions narrowed, with starts down 20.0% and completions down 14.8% year-on-year [7][8]. Summary by Sections Economic Overview - The first half of 2025 saw a GDP growth of 5.3%, with quarterly growth rates of 5.4% in Q1 and 5.2% in Q2. Fixed asset investment growth was at 2.8%, with manufacturing investment increasing by 7.5% [3][4]. Infrastructure Investment - Infrastructure investment (all categories) grew by 8.9% year-on-year, while investment excluding electricity increased by 4.6%. Transportation and postal services saw a 5.6% increase, while water and environmental management investment rose by 3.5% [4][5]. Real Estate Investment - Real estate investment decreased by 11.2% year-on-year, with construction starts down 20.0% and completions down 14.8%. The pace of investment recovery is expected to be slower than in previous cycles, highlighting the need for more supportive policies [7][8]. Investment Recommendations - The report suggests that the overall industry is currently weak, but regional investments may gain momentum due to national strategic initiatives. Recommended companies include state-owned enterprises like China Chemical, China Energy Construction, and China Railway Construction, as well as private firms like Zhi Te New Materials and Honglu Steel Structure [15].

Investment Rating - The report maintains an "Overweight" rating for the construction and decoration industry [1] Core Viewpoints - The issuance of new special bonds by various regions increased by 44.7% year-on-year in the first half of the year, with an issuance progress of 49.1%, indicating a faster pace compared to 2024 but slower than 2022 and 2023. The focus is on supporting infrastructure investment in the second half of the year [2][11] - The construction business activity index for June was 52.8%, up 1.8 percentage points from the previous month, indicating a recovery in the industry. The civil engineering business activity index has remained above 55.0% for three consecutive months, reflecting an acceleration in construction projects [2][11] - There is an increasing focus on urban renewal and major infrastructure investment projects, with the completion of the 800 billion yuan "two重" construction project list expected to accelerate the implementation of key projects and physical workload [2][11] - The report suggests focusing on state-owned enterprises and local state-owned enterprises with low valuations and stable performance, recommending companies such as China Communications Construction, China Electric Power Construction, and China Railway [2][11] Summary by Sections Industry Dynamics - The report highlights that the Ministry of Housing and Urban-Rural Development is accelerating the renovation of old urban residential areas, with over 50% of construction rates reported in several provinces by June. A total of 180 billion yuan has been allocated for the renovation of 120,000 old elevators [14] - The National Development and Reform Commission emphasizes a balanced approach to infrastructure investment, ensuring the completion of major projects while planning for future initiatives [15] International Expansion - In the first five months of 2025, China's overseas contracting projects saw a 5.4% increase in revenue and a 13% increase in new contracts. Notably, contracts signed in Belt and Road Initiative countries reached 84.93 billion USD, a 20.7% increase year-on-year [3][12] - The report suggests focusing on international engineering sectors, recommending companies such as China Materials International and Shanghai Port Construction [3][12] Demand Structure - There are promising investment opportunities in specialized manufacturing engineering sectors, energy conservation, and new energy-related infrastructure. Companies with relevant transformation layouts are expected to benefit, such as Honglu Steel Structure and Huayang International [3][12]

Investment Rating - The industry rating is maintained as "Outperform the Market" [5] Core Insights - The construction sector has seen a significant increase in attention towards urban renewal, with undervalued large-cap stocks showing signs of stabilization. The sector's performance is driven by improved demand-side policy expectations and a shift away from excessive competition, benefiting both large and small-cap stocks. The report suggests focusing on high-growth segments such as urban renewal, coal chemical, nuclear power, and steel structures, while also considering the beta opportunities in large-cap stocks [1][13][14]. Summary by Sections Urban Renewal - Urban renewal is accelerating, with policies from the central government outlining goals and support measures. The focus includes the renovation of old residential areas, establishing safety management systems for buildings, and creating resilient and smart cities. The report identifies four key categories for investment: design and testing, construction and decoration, urban infrastructure renovation, and resilient/smart city initiatives, highlighting specific companies in each category [2][15][17]. Market Performance - The construction index rose by 2.77% in the week of July 7-11, outperforming the Shanghai and Shenzhen 300 index by 1.76 percentage points. Notable performers included Guosheng Technology (+42.98%), New City (+34.73%), and Beautiful Ecology (+34.46%) [4][21][26]. Investment Recommendations - The report emphasizes the cyclical opportunities arising from improved physical work volume in infrastructure. It suggests focusing on high-demand areas such as water conservancy, railways, and aviation, particularly in regions like Sichuan, Zhejiang, Anhui, and Jiangsu. Recommended companies include Sichuan Road and Bridge, Zhejiang Communications, and major state-owned enterprises like China Communications Construction and China Railway Construction [27][28]. Emerging Business Directions - The report highlights the growing demand for computing power driven by AI applications, recommending companies like Hainan Huatie for their transition into computing power leasing. It also notes the potential in cleanroom sectors due to the ongoing domestic replacement in the semiconductor industry, suggesting companies like Baicheng and Shenghui Integration [29][30]. Major Projects and Themes - The report identifies significant investment opportunities in major hydropower projects, deep-sea economy, and low-altitude economy, recommending companies involved in these sectors, such as China Power Construction and China Energy Engineering [32][30].

Core Viewpoint - The article discusses the current state and outlook of the Chinese economy, highlighting the impact of external factors such as the US-China trade war and domestic policy measures that have contributed to economic stability and growth. Group 1: Economic Performance - The GDP growth rate for the first half of the year is expected to be around 5.3%, with a need for only 4.7% growth in the second half to meet the annual target [1] - The first quarter saw a GDP growth of 5.4%, while the second quarter is projected to be around 5.2% [2] - The overall economic performance is stable, with industrial value-added growth at 6.5% in the first quarter and service sector growth at 5.8% [5] Group 2: Export Dynamics - The export growth rate fluctuated due to the US-China tariff war, peaking at 12.3% in March before declining to 4.8% in May [2] - The share of exports to the US has decreased to the lowest level on record, impacting overall export performance [2] - The article anticipates a 2.0% growth in exports for the year, with various scenarios predicting outcomes ranging from 0% to 3.5% [10][11] Group 3: Domestic Demand and Policy Response - Domestic demand is gradually stabilizing due to proactive macroeconomic policies, including increased fiscal spending and monetary easing [3] - Social financing stock grew by 8.7% year-on-year in the first five months, with government bonds seeing a significant increase of 20.9% [3] - Retail sales growth reached 6.4% in May, driven by consumption policies such as the "old-for-new" program [3] Group 4: Investment Trends - Fixed asset investment grew by 3.7% in the first five months, with infrastructure investment increasing by 5.6% [13] - Manufacturing investment is expected to grow by 7.8% for the year, while real estate investment is projected to decline by 10.0% [23][16] - Infrastructure investment is anticipated to rebound in the second half, supported by ample funding and ongoing major projects [18][19] Group 5: Consumer Behavior - Consumer spending is expected to grow by 4.5% for the year, with retail sales showing a recovery trend [27] - The "old-for-new" subsidy program has significantly boosted consumption in various sectors [28] - However, consumer confidence remains low, and spending may decline in the second half due to reduced subsidy support and economic uncertainties [29] Group 6: Price Trends - CPI is projected to remain around 0% for the year, with a slight recovery expected in the second half [31][32] - PPI is anticipated to decline by 2.3% for the year, reflecting ongoing pressures from oversupply and weak demand [34][35] Group 7: Policy Outlook - The article suggests that macroeconomic policies will focus on stabilizing growth without significant new stimulus, emphasizing the implementation of existing policies [37][38] - Fiscal policies will prioritize the effective use of existing funds to support consumption and investment [40][41] - Monetary policy is expected to remain flexible, with a focus on structural support rather than aggressive easing [42][43]

Group 1 - The construction of major projects is accelerating across multiple regions, with significant infrastructure investment expected to stabilize the economy and promote qualitative and quantitative growth in the second quarter [1][2][3] - The National Energy Group has completed an investment of 35.95 billion yuan in the first quarter, with a year-on-year increase of 5.3 percentage points in wind power investment [1] - The Three Gorges Group's Zhejiang Tiantai pumped storage power station has successfully completed the rotor hoisting of its first unit, marking a significant milestone for the largest single-unit pumped storage machine in China [2] Group 2 - In Anhui, over 1,300 major projects have been launched this year with a total investment exceeding 800 billion yuan, more than half of which are in emerging industries [3] - The issuance of long-term special government bonds is accelerating, with 1.3 trillion yuan planned for this year, of which 800 billion yuan is allocated for supporting key projects [3][4] - Infrastructure investment grew by 5.8% year-on-year in the first quarter, contributing 1.3 percentage points to overall investment growth [3]

Core Insights - Infrastructure investment has shown positive trends this year due to proactive fiscal policies, accelerated government bond issuance, and the commencement of major projects, although some high-frequency data related to infrastructure and construction site funding rates indicate that the momentum for effective investment expansion still needs to be fully realized [1][4][5] Infrastructure Investment Trends - The issuance of new local government special bonds exceeded 440 billion yuan in May, marking a record high for the year, while the construction business activity index remained in expansion at 51% [1][2] - High-frequency indicators such as rebar apparent demand, cement dispatch rates, and asphalt plant operating rates weakened in May, with rebar demand at 248.91 million tons, cement dispatch at 41.25%, and asphalt plant operating rates at 27.7%, all lower than the same period last year [1][2] Construction Site Funding Rates - As of June 3, the funding rate for sample construction sites was 59.13%, below the critical threshold of 60%, with non-residential projects at 61.01% and residential projects at 49.85% [3][4] - The low funding rates may impact project construction progress, but the civil engineering business activity index rose to 62.3% in May, indicating a continued acceleration in project construction [3][4] Fiscal Policy and Investment Support - The acceleration of new special bond issuance and the initiation of ultra-long-term special treasury bonds are expected to enhance fiscal support for effective investment [4][5] - The proportion of new special bonds allocated to infrastructure is approximately 72%, showing a slight increase from the previous month [5][6] Future Outlook - The issuance of replacement bonds has exceeded 80%, and the slowing pace of these issuances will create space for subsequent special bond issuances, which are expected to provide stronger support for infrastructure [5][6] - Experts predict that the necessity of using infrastructure investment to support the economy is increasing, with expected growth rates for broad and narrow infrastructure investments at 7.2% and 4.8% respectively for the year [6]

1. Report's Industry Investment Rating - No information about the industry investment rating is provided in the report. 2. Core View of the Report - The real - demand for steel is weak, and steel prices are still in the process of finding a bottom [1][3] 3. Summary by Related Catalogs 3.1 Total Quantity Contradictions - Macro Policy - The 2025 government work report's GDP target is about 5%, the deficit is 4%, the inflation target is 2%, the local government special bond scale is 4.4 trillion, and the ultra - long - term special sovereign bond scale is 1.3 trillion. The Politburo meeting on April 28th did not issue any unexpected policies, and China will enter a policy window period. In May, the M1 - M2 scissors gap was - 5.6, and the decline continued to narrow [7] 3.2 Total Quantity Contradictions - Capital Supply - In March 2025, the ultra - long - term special sovereign bond scale was 1.3 trillion. On May 20th, the loan market quotation rate (LPR) was lowered for the first time this year. On May 15th, the deposit reserve ratio of financial institutions was lowered by 0.5 percentage points [11] 3.3 Total Quantity Contradictions - Capital Demand - Relevant data on new social financing scale, resident medium - and long - term loans, new RMB loans, and enterprise medium - and long - term loans are presented, but no specific conclusions are drawn from the data [13][14][15][16] 3.4 Real Estate 3.4.1 Sales - Housing prices show signs of stabilizing, and the decline in new home sales has narrowed. Rigid demand is related to population growth, urbanization rate, and resident leverage ratio. Investment demand is related to housing prices. Housing prices lead to second - hand housing sales, and second - hand housing sales lead to new home sales [17][20][22] 3.4.2 New Construction and Land Transactions - Land acquisition leads new construction by 6 months [24] 3.5 Infrastructure 3.5.1 Funds - Traditional funds include public fiscal expenditure, government - funded expenditure, and special bonds. Emerging funds involve quasi - fiscal policies, such as 700 billion yuan of the 1 - trillion - yuan ultra - long - term special treasury bonds in 2024 being used for "two major" construction projects, and a 1.3 - trillion - yuan ultra - long - term special sovereign bond in March 2025 [26][27][30][31] 3.5.2 Projects - Data on the construction industry PMI and the start - up investment amount of major projects are presented [33] 3.6 Manufacturing 3.6.1 General Situation - Supported by new factors, the production and sales of major industrial products maintain high growth, but exports face shocks [34] 3.6.2 Production and Sales of Major Industrial Products - The production and sales of automobiles, white goods, excavators, and other products are presented, with specific production data and year - on - year growth rates [39][40] 3.6.3 Production Enterprises' Orders and Sales - The planned and actual production of household appliances such as air conditioners, refrigerators, and washing machines, as well as their domestic sales data, are presented [43] 3.6.4 Automobile Production and Sales - The automobile industry operates on a production - based - on - sales model, with structural contradictions in production and sales by variety. Leading indicators include enterprise orders [57] 3.6.5 Machinery Production and Sales - The machinery industry operates on a production - based - on - sales model, and the export proportion of sub - varieties is increasing year by year. Leading indicators include enterprise orders [65] 3.6.6 Ship Production and Sales - Shipbuilding is driven by economic growth, manufacturing capacity changes, supply - demand patterns, renewal cycles, and transportation efficiency in different periods. Currently, shipyards have sufficient orders on hand, and new orders continue to grow at a high rate [70] 3.7 Steel Direct Exports - Steel exports are adjusting passively by trading price for volume. Vietnam's anti - dumping tax has a great impact on China's steel exports to Vietnam, and the traditional price - for - volume model is affected [71][74] 3.8 Steel Demand - Steel demand is gradually peaking, and negative feedback should be vigilant. Data on spot transactions and variety price difference structures are presented [83][89][91]

Group 1 - The infrastructure sector is leading the market, with the infrastructure ETF (159619) rising over 1.5%, supported by improved demand from the mid-western region and funding conditions [1] - Infrastructure investment is expected to show structural characteristics by 2025, with broad and narrow infrastructure growth rates projected at 8.69% and 4.03% respectively [1] - The issuance of special bonds has accelerated significantly, with 58% of the annual quota completed by May, and an additional 176 billion yuan issued in June [1] Group 2 - The mid-western region shows outstanding infrastructure activity, with special bond growth exceeding 100% in Sichuan and Shaanxi from January to April [1] - Coal chemical projects are expected to drive regional infrastructure demand, with total planned investments reaching 1,032.9 billion yuan and an average annual investment growth of 220.6% from 2025 to 2029 [1] - The water and electricity sectors remain highly active, with significant infrastructure needs arising from upcoming projects like the Tibet hydropower project [1] Group 3 - The funding environment has improved, with rapid progress in replacing hidden debts, and a narrowing decline in net financing of urban investment bonds expected to provide additional funding support for infrastructure [1]

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the current state of local government debt in China, which has exceeded 47 trillion yuan, with special debt accounting for over 30 trillion yuan and an average maturity of approximately 10 years at an interest rate of about 3% [1][2]. Core Insights and Arguments - **Debt Growth**: From 2014 to 2024, the local government leverage ratio increased from around 20% to over 35%, with significant regional disparities, particularly in Tianjin and Guizhou where debt ratios exceed 200% [2]. - **Explicit vs. Implicit Debt**: The existence of both explicit and implicit debts poses risks, with implicit debt being particularly difficult to quantify and regulate due to its hidden nature [2]. - **Historical Context**: The formation of implicit debt began in the 1990s and accelerated due to tax reform and GDP performance pressures, leading local governments to rely on land finance and financing platforms to cover funding gaps [1][3]. - **Debt Resolution Cycles**: Since 2015, there have been four cycles of resolving local government implicit debt, each characterized by central government-led policy design aimed at optimizing debt structure and preventing systemic risks [4]. Important but Overlooked Content - **Policy Shifts**: The approach to resolving debt has shifted from emergency measures to proactive solutions, balancing risk prevention with development promotion [5][6]. - **Market Impact**: The new policies have three main impacts on the market: 1. **Bond Market**: Improved market risk expectations and increased credit differentiation among urban investment bonds [7]. 2. **Equity Market**: Indirect effects through market preference recovery and redistribution of fiscal resources [7]. 3. **Infrastructure Investment**: Fiscal credit tightening may reduce infrastructure investment growth by 1.2 to 1.7 percentage points, potentially impacting GDP growth by approximately 0.1 to 0.6 percentage points [7].

首席联合电话会 - 周期专场 20250618 摘要 房地产市场呈现优质供给驱动销售的特点，整体销售量受优质供给影响 显著。尽管房企促销手段多样，但难以有效提升非优质产品的销售，市 场企稳回升时间尚不明确。 短期内，房地产板块存在 7 月份潜在博弈机会，预计三季度或有房地产 政策出台，并可能与其他金融政策配合。推荐关注绿城中国、越秀地产、 建发和滨江等估值偏低的优质标的。 2025 年 5 月基建投资增速放缓，财政支出对基建支持有限，专项债发 行进度滞后但全年额度预计用完，特别国债开始发行。下半年专项债应 用将带来工作量提升。 顺周期标的如鸿路钢构、金工、中国巨石、雨虹防水和三棵树估值已达 安全水平，可左侧布局。央企如中国建筑、隧道股份、四川路桥及水泥 企业塔牌集团、海螺水泥、华新水泥可作为配置选择。 有色金属板块中，贵金属方面长期看好黄金，短期宏观风险或致金价震 荡，关注紫金矿业、湖南黄金及山东黄金。工业金属方面，铜铝价格震 荡，关注五矿资源及宏发股份的扩产速度。 Q&A 房地产市场的当前状况如何？未来的投资机会在哪里？ 从基本面来看，房地产市场仍然由供给驱动。我们在重庆、成都、深圳和广州 等城市的调研显示 ...