Core Viewpoint - The research process is iterative and requires continuous denial and reconstruction to approach the truth, emphasizing the importance of diligent and practical research in the investment banking sector [22]. Group 1 - The year 2025 is marked as a year of comprehensive upgrade for the research team, focusing on restructuring the research framework and systematically displaying research results [22]. - The new development phase of the economy is characterized by a shift in policy focus towards "people-centered" strategies, emphasizing long-term strategies for expanding domestic demand rather than short-term stimuli [25]. - The "new three drivers" of the economy, including service consumption, service industry investment, and service exports, have shown significant acceleration, indicating an approaching transformation opportunity [24]. Group 2 - The "anti-involution" movement is seen as a new phase of supply-side structural reform, with increased government and industry attention, broader coverage, and stronger coordination between policies and market mechanisms [26]. - The global macroeconomic landscape is expected to experience significant changes, particularly with the "American exceptionalism" narrative being challenged, leading to a rebalancing of global funds [29]. - Geopolitical risks have become a crucial factor in global macroeconomics and asset pricing since the Russia-Ukraine conflict, with ongoing developments in geopolitical tensions influencing market narratives [32].

Economic Development - The core argument suggests that China's economic growth targets should not be based solely on estimates of "potential economic growth rates" due to considerable uncertainty in these estimates [4][5][6] - The estimation of China's potential economic growth rate varies widely among scholars, ranging from 5% to 8%, and there is a lack of official estimates from authoritative government bodies [5][6] - The article emphasizes the importance of using a trial-and-error approach in setting economic growth targets, advocating for expansionary fiscal policies when indicators such as inflation and employment are low [7] - Long-term factors influencing economic performance should not be used to explain short-term economic changes, as many intermediate factors affect current economic growth [8][9] - Macroeconomic regulation and structural reform are not mutually exclusive; both are necessary to address complex economic issues [10][11] - The article discusses the significance of the "Four Trillion Yuan Stimulus Plan" and its long-term effects on China's economic growth and financial stability [17][18] - It highlights the relationship between monetary policy and real estate regulation, noting that fluctuations in monetary policy often correlate with changes in housing prices [29][31] - The article critiques the belief that inflation is always a monetary phenomenon, presenting evidence of instances where inflation rates did not align with monetary supply growth [22][23][24] - It concludes that the lessons learned from over 20 years of macroeconomic regulation in China emphasize the importance of maintaining growth as a fundamental objective [33]

Group 1 - The report emphasizes the importance of addressing "involution" in the context of China's economic development, highlighting the negative impacts of disorderly expansion and price competition on high-quality growth [2][4][12] - The report notes that China's industrial capacity utilization has been declining since 2021, with the Producer Price Index (PPI) showing negative year-on-year growth for 34 consecutive months as of July 2025 [2][4][12] - The "15th Five-Year Plan" period is expected to see a continuation and deepening of policies aimed at countering involution, focusing on capacity governance and preventing vicious competition [2][12] Group 2 - The report compares the current "anti-involution" policies with previous supply-side structural reforms, noting that both aim to address structural issues in the economy and enhance long-term competitiveness [2][13] - The previous round of supply-side reforms successfully boosted the coal and steel industries, with significant reductions in excess capacity and improvements in profitability [2][17] - The report outlines that the current anti-involution policies cover a broader range of industries, including both traditional sectors like steel and coal, as well as emerging industries such as photovoltaics and electric vehicles [2][12][10] Group 3 - The report discusses the financial indicators of related industries, indicating that revenue growth rates and profit margins are critical metrics for assessing the impact of anti-involution policies [3][4] - It highlights that since July 2025, many commodities related to anti-involution have seen price increases, driving up the performance of relevant sector indices [2][12] - The report suggests that the anti-involution policies are expected to improve gross margins and capacity utilization, thereby enhancing the long-term investment value of related sectors [2][12]

投资建议：维持"优于大市"评级 新疆神火盈利能力依然最强，2025H1 净利润达到12.4 亿元，如果销量是40万吨，那么吨净利润3088 元；云南神火迎来投产后首个满产年度，2025H1净利润9.83 亿元，如果销量是47 万吨，那么吨净利润 2091 元。 风险提示：氧化铝涨价风险，铝价下跌风险，煤炭价格下跌风险。 2025H1 公司归母净利润下降17%。2025H1实现营收204.3亿元（同比+12.1%），归母净利润19 亿元 （同比-16.6%），扣非归母净利润20.1 亿元（同比-6.8%），经营活动产生的现金流量净额44.3 亿元。 公司盈利下降主因煤炭价格下跌。2025H1 煤炭产量371 万吨恢复正常，产量增加，成本下降，2025H1 煤炭业务生产成本682 元/吨，比2024 年862 元/吨有明显下降。但是煤炭价格下降更多，2025H1 煤炭售 价773 元/吨，比2024年下降260 元/吨。2025H1 煤炭单吨毛利润91 元，比2024 年下降78 元。自6 月底 开始，焦煤价格触底反弹，截至8 月中旬，永城无烟煤和许昌贫瘦煤价格已反弹200-300 元/吨，三季度 公司煤炭版块盈 ...

Investment Rating - The investment rating for the company is "Outperform the Market" [4][23]. Core Views - The company's net profit attributable to shareholders decreased by 17% in the first half of 2025, with revenue reaching 20.43 billion yuan, a year-on-year increase of 12.1%. The net profit was 1.9 billion yuan, down 16.6% year-on-year, while the net profit excluding non-recurring items was 2.01 billion yuan, down 6.8% year-on-year. The net cash flow from operating activities was 4.43 billion yuan [5][6]. - The decline in profitability is primarily due to falling coal prices. In the first half of 2025, coal production was 3.71 million tons, returning to normal levels, with production costs decreasing to 682 yuan per ton from 862 yuan per ton in 2024. However, coal prices fell more significantly, with an average selling price of 773 yuan per ton, down 260 yuan per ton from 2024. The gross profit per ton of coal was 91 yuan, a decrease of 78 yuan from 2024. Starting from the end of June, coking coal prices have rebounded, and the profitability of the coal segment is expected to improve in the third quarter [5][6]. - The electrolytic aluminum segment showed stable profitability, with production reaching 870,000 tons in the first half of 2025, marking the first full production year since the establishment of Yunnan Shenhuo. The operating cost for electrolytic aluminum was 12,283 yuan per ton, with a gross profit of 3,986 yuan per ton, remaining stable compared to the full year of 2024 [2][5]. Financial Forecasts and Key Indicators - Revenue forecasts for 2025-2027 are 39.606 billion yuan, 39.827 billion yuan, and 39.827 billion yuan, respectively, with net profits of 4.56 billion yuan, 4.78 billion yuan, and 4.84 billion yuan, reflecting year-on-year growth rates of 5.9%, 4.9%, and 1.2% [3][21]. - The diluted EPS for 2025-2027 is projected to be 2.03 yuan, 2.13 yuan, and 2.15 yuan, with corresponding PE ratios of 9.5x, 9.0x, and 8.9x [2][21]. - The company is positioned as a leading player in the domestic electrolytic aluminum market, benefiting from structural reforms in supply-side management and is currently in an industry upcycle. With the end of large-scale capital expenditures, there is potential for increased dividends [2][21].

Company Performance - In the first half of 2025, Tianshan Co. reported operating revenue of 35.98 billion, a year-on-year decrease of 9.4% [1] - The company experienced a net loss of 0.922 billion, which represents a reduction in losses compared to the previous year [1] - Cement sales reached 80.62 million tons, down 14.63% year-on-year, while clinker sales were 9.9 million tons, down 14.59% [1] Cost Management - Tianshan Co. implemented significant cost control measures, benefiting from a decrease in coal prices, which led to a substantial reduction in production costs for cement and commercial concrete [1] - The company reported improvements in cement sales prices and gross profit margins year-on-year due to price recovery and cost optimization efforts [1] Industry Context - The national cement market demand continued to shrink in the first half of the year, primarily due to a deep adjustment in the real estate market [2] - The commercial concrete industry saw a total profit decline of 26.4% compared to the previous year, although the decline rate narrowed compared to earlier months [2] - Tianshan Co. acknowledged the complex competitive landscape and the impact of declining water demand on operational performance [2] Strategic Initiatives - The company plans to deepen supply-side structural reforms and promote healthy development within the industry [2] - Tianshan Co. aims to enhance its e-commerce platform "Jucaitong" and develop special cement products to seek new growth opportunities [2] - The company will optimize procurement strategies and strengthen supply chain management to address challenges related to raw material price fluctuations and fixed cost increases [3] Market Outlook - The industry is expected to face continued downward pressure on demand, with profitability largely dependent on supply changes and the execution of supply-side policies [3] - If companies adhere to production capacity regulations, there is potential for a significant reduction in supply and an increase in capacity utilization rates from 53% to around 70% [3]

Group 1: National Unified Market Construction - The core of the national unified market construction is to establish a fair and transparent institutional environment, with a focus on accelerating the development of a unified capital market by early 2025 [1] - The implementation of a unified regulatory framework will enhance the effectiveness, sustainability, coordination, and consistency of supervision, reducing compliance costs for financial institutions and fostering innovation in financial products and services [1] - The construction of a unified capital market is expected to shift risk preferences towards rationality and value, improving the valuation system, with companies that have cross-regional operational capabilities likely to benefit [1] Group 2: Industry-Specific Benefits - The logistics, consumption, and electricity sectors are expected to significantly benefit from the construction of the national unified market [2] - The logistics sector will see improved cross-regional operations and reduced logistics costs through enhanced infrastructure networks and multi-modal transport, leading to substantial circulation dividends [2] - The electricity sector is currently experiencing a period of policy benefits, with advancements in the national unified electricity market and new breakthroughs in cross-grid trading mechanisms, enhancing the sector's valuation [3] - Leading companies in the consumption sector are anticipated to enjoy market expansion benefits, with domestic demand being a key driver for economic growth and consumption valuation enhancement [3]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - Steel: Although adverse weather conditions such as high temperatures and heavy rainfall in many areas still occur frequently, the real - time terminal demand for steel may remain under pressure, and the inventory accumulation pressure of coils and rebar may continue. However, after the "severe flood period from late July to early August", with the start of large - scale "two major" projects like the Yajiang Hydropower Plant and the continuous implementation of "two new" policies, the terminal demand for steel may remain resilient, and steel futures prices may have downward support [1][41]. - Iron ore: Although the Ministry of Industry and Information Technology will release a new round of steel industry stability - growth work plan, and the China Iron and Steel Association has proposed to strictly implement the deployment of crude steel production control, and there may be production restrictions for steel mills in North China near the September 3rd parade, the demand - side pressure on iron ore may gradually emerge, and there is still a risk of inventory accumulation at iron ore ports. But due to the policy expectation difference in supply - side structural reform and the implementation of demand - side management policies, the replenishment demand of traders and terminal steel mills before the production restrictions in North China in late August may still be released, and the production enthusiasm of steel mills is still relatively high, so the demand for iron ore may remain resilient, and iron ore futures prices may have downward support [2][42]. Summary by Directory 1. Expected Boost but Weak Reality Dominates, Steel and Iron Ore Futures Prices Rise and Then Fall - Last week, the futures prices of steel and iron ore main contracts showed a trend of rising and then falling. The main contracts of hot - rolled coils and iron ore performed slightly stronger, both rising 0.32% week - on - week, while the futures price of the rebar main contract fell 0.78% week - on - week. In the first two trading days of last week, policy expectations led to a strong - side oscillation of steel and iron ore futures prices. However, starting from Wednesday, the prices began to fall. One reason was the expected pressure on China's macro - economic data in July, and the actual data of investment, consumption, industry, and real estate were indeed under pressure. The other reason was the significant decline in the apparent demand for rebar and the continuous inventory accumulation of rebar and hot - rolled coils [4]. 2. Supply - Demand Marginally Loose but Terminal Demand Resilience May Gradually Appear, Steel and Iron Ore Inventory Accumulation Pressure May Be Limited Overall (1) Steel: The Window of Supply - Demand Mismatch in Loose Conditions Remains, but Terminal Demand Resilience May Gradually Appear, and Futures Prices May Have Downward Support - **Terminal Demand**: Last week, the consumption of rebar significantly declined to below the level of the same period last year, while the consumption of hot - rolled coils increased month - on - month and was higher than that of the same period last year. The impact of off - season adverse weather on the consumption of building materials such as rebar was more significant. In July, the year - on - year growth rates of investment, consumption, industry, and real estate indicators all declined. Although the year - on - year decline in new housing starts in the real estate sector continued to narrow slightly and the year - on - year growth rate of automobile sales increased, the year - on - year decline in real estate investment still widened, and the year - on - year growth rates of narrow - sense infrastructure and manufacturing investment also slowed significantly. This week, although the adverse weather still exists, the terminal demand for steel may remain resilient with the start of "two major" projects and the implementation of policies [9]. - **Supply**: Last week, the profitability rate of steel enterprises decreased for the first time after continuous increases, and the profits of rebar blast furnaces, electric furnaces, and hot - rolled coils continued to decline. The capacity utilization rate of steel mill blast furnaces and the output of rebar and hot - rolled coils remained basically stable. This week, the expected "one - size - fits - all" administrative production cuts have decreased, and steel production may still have room for release. However, with the upcoming new round of steel industry stability - growth plan and production control policies, as well as the possible production restrictions in North China near the September 3rd parade and off - season factors, the overall steel supply may be under pressure [18]. - **Inventory**: Last week, the total inventories of rebar and hot - rolled coils continued to accumulate. This week, although the terminal demand for steel shows resilience, the expected reduction of "one - size - fits - all" production cuts and the overall pressure on off - season real - time demand may lead to a continuation of the inventory accumulation pressure for coils and rebar [30]. (2) Iron Ore: Although the Expectation of Steel Mill Production Restrictions and Supply - Side Structural Reform Remains, the Demand Side May Have Resilience, and Futures Prices May Have Downward Support - **Demand**: Last week, the iron ore port clearance volume at 45 ports significantly increased to the highest level in recent years, and the port transactions were active. The daily iron ore consumption of steel mills and the average daily molten iron output increased slightly. This week, although there may be production restrictions for steel mills, the replenishment demand of traders and terminal steel mills before the production restrictions in North China in late August may still be released, and the production enthusiasm of steel mills is still high, so the demand for iron ore may remain resilient [34]. - **Supply**: Last week, the iron ore shipment volume from 19 ports in Australia and Brazil increased by 242,000 tons, and the arrival volume at 45 ports increased by nearly 95,000 tons. This week, the iron ore shipment from overseas mines may transition from the off - season to normal, and new production capacity is expected to be released. The overall supply of iron ore may be relatively loose [35]. - **Inventory**: Last week, the iron ore inventory of steel mills increased significantly, and the port inventory continued to accumulate. This week, there is still a risk of inventory accumulation at iron ore ports, but the replenishment demand of steel mills may limit the degree of inventory accumulation [38]. 3. Supply - Demand Marginally Loose but the Implementation Effect of Demand - Side Management Policies May Gradually Appear, Steel and Iron Ore Futures Prices May Have Downward Support - **Steel Operation Suggestions**: Steel producers and traders with high inventory levels can temporarily slow down the sales rhythm; traders with low inventory levels, downstream, and terminal procurement enterprises can appropriately speed up the procurement rhythm or establish short - term buying hedging positions on the futures market. Investors are advised to adopt a range - trading strategy of high - selling and low - buying, paying attention to profit - taking and stop - loss [41]. - **Iron Ore Operation Suggestions**: Steel mills or traders with low inventory levels can appropriately speed up the procurement rhythm or establish short - term buying hedging positions on the futures market; traders with high inventory levels can temporarily slow down the sales rhythm. Investors are advised to adopt a range - trading strategy of high - selling and low - buying, paying attention to profit - taking and stop - loss [43].

Group 1 - The report highlights the focus on key industries such as new energy vehicles, new energy batteries, and photovoltaic industries, with recent regulatory measures from various government departments leading to price increases in some industry segments [1][14][15] - The report outlines three observation points for capacity governance: guidance from the State Council, implementation of target responsibility letters by provincial governments, and the need for financial and tax support during execution [2][22][23] - Historical experiences from the 2016 supply-side structural reform are referenced to inform current strategies for managing overcapacity and promoting orderly competition in key industries [9][11][22] Group 2 - The credit bond market is experiencing fluctuations, with short to medium-term bonds performing better, while the overall sentiment remains weak due to a lack of new funding and policy incentives [3][4] - The report suggests focusing on high-quality, high-liquidity credit bonds, particularly AAA+ rated bonds with yields above 1.85%, and recommends considering longer durations for AAA and AA+ rated bonds [4][29] - The report emphasizes the importance of monitoring the impact of government policies on local government performance assessments, especially in areas heavily affected by capacity reduction [25][30]

Group 1: Dividend Investment Insights - Dividend investment arises from the pursuit of safety margins in uncertain macroeconomic environments, especially as asset returns decline during economic plateau phases[2] - For equity investors, constructing a "safety margin" relies on selecting high-yield assets or "ticket assets" in undervalued areas[2] - For fixed-income investors, yield elasticity comes from the "+" in "fixed income +", traditionally achieved by increasing equity assets, including relatively low-volatility "ticket assets"[2] Group 2: Market Trends and Stock Selection - Since August 2025, insurance companies have intensified their stock purchases, with 28 instances recorded this year, including 20 in H-shares[18][20] - The pricing formula for dividend assets follows: [Dividend Yield + Earnings Certainty] ≥ [Long-term Bond Yield + Risk Premium], with market risk preference being a core influencing factor[6] - Traditional stable dividend sectors like utilities and banks maintain relatively high dividend yields, with banks showing lower EPS volatility compared to utilities[25] Group 3: Sector Performance and Rotation - The high-dividend sector has experienced rotation, with coal dividends leading in 2021, followed by operators in late 2022, and a resurgence of coal, highways, and hydropower in 2023[7][49] - By 2025, traditional dividend assets have shown a decline, with banks maintaining relative returns, while the demand for high-dividend quality and Hong Kong stocks has increased[60] - The "反内卷" (anti-involution) theme is expected to benefit cyclical dividend assets, with static dividend yield representing an important valuation safety dimension[62]