Investment Rating - The report maintains a "Positive" investment rating for the construction and engineering industry [9]. Core Insights - In October, narrow infrastructure investment decreased by 8.7%, with a month-on-month decline of 4.1 percentage points, while broad infrastructure investment fell by 8.1%, also with a month-on-month decline of 4.1 percentage points [2][6]. - The marginal weakening of infrastructure investment is evident, with the single-month growth rate for narrow infrastructure investment reaching its lowest since July 2021 [11]. - The report highlights that despite the current downturn, there remains fiscal space for potential growth in infrastructure investment by the end of the year [11]. Summary by Sections Economic Data - In October, narrow infrastructure investment saw a month-on-month decline of 8.7%, while broad infrastructure investment decreased by 8.1% [2][6]. - Year-to-date, narrow infrastructure investment has declined by 0.1%, while broad infrastructure investment has grown by 3.0%, with a month-on-month decrease of 1.6 percentage points [11]. Project Analysis - All project categories experienced year-on-year declines in investment for the month, with notable decreases in power (down 6.3%), transportation (down 10.1%), and water management (down 19.0%) [11]. - The report indicates that the construction industry’s PMI for October was 49.1%, reflecting a contraction for three consecutive months [11]. Fiscal Outlook - As of November 14, 2023, special bonds issued totaled 41,492 billion yuan, with a year-on-year increase of 2,476 billion yuan, indicating room for further issuance [11]. - The report emphasizes the government's focus on high-quality development and the need to optimize investment structures to stimulate private investment [11].

Investment Rating - The investment rating for the company is "Buy" for both A and H shares, maintained from previous assessments [7]. Core Insights - The company reported a narrowing decline in revenue and profit for Q3 2025, with total revenue of 776.06 billion RMB (down 5.39% year-on-year) and net profit attributable to shareholders of 17.49 billion RMB (down 14.97% year-on-year) [1]. - The company has seen a positive growth in new contracts since Q2, indicating a potential improvement in fundamentals due to the implementation of policy financial tools and accelerated issuance of special bonds [1][4]. - The overall gross margin improved in Q3 2025, with a gross margin of 8.85%, up 0.13 percentage points year-on-year [2]. Revenue and Profitability - For the first three quarters of 2025, the company achieved a revenue of 776.06 billion RMB, with a net profit of 17.49 billion RMB, reflecting a year-on-year decline of 14.97% [1]. - The Q3 2025 revenue was 263.56 billion RMB, down 4.43% year-on-year but up 0.13% quarter-on-quarter, with a net profit of 5.66 billion RMB, down 9.98% year-on-year [1]. - The company’s gross margin for Q3 2025 was 8.85%, showing an improvement compared to previous quarters [2]. Contract and Order Growth - The new contract amount for the first nine months of 2025 was 1,584.9 billion RMB, an increase of 3.7% year-on-year, with Q3 alone contributing 476.2 billion RMB, up 6.0% year-on-year [4]. - The company’s backlog of uncompleted contracts reached 7,544.1 billion RMB, representing a growth of 9.6% compared to the end of the previous year [4]. Financial Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2027 is 23.8 billion RMB, 22.9 billion RMB, and 22.6 billion RMB respectively [5]. - The target price for A shares is set at 7.41 RMB and for H shares at 5.08 HKD, based on a price-to-earnings ratio of 8.0x for A shares and 5.0x for H shares for 2026 [5].

Group 1 - The core viewpoint of the articles highlights the significant growth of special bonds for urban village renovation, which is becoming an important financial tool for urban renewal and stabilizing the real estate market [1][2] - In the first three quarters of 2025, approximately 640 billion yuan of special bonds related to real estate were issued, marking an 89% year-on-year increase [1] - The issuance of special bonds for urban village renovation reached 81.6 billion yuan, representing a year-on-year growth of 140% [1] Group 2 - The Ministry of Housing and Urban-Rural Development plans to implement 1 million new urban village and dilapidated housing renovations through monetary compensation methods in October 2024 [2] - Several cities are reducing the proportion of physical resettlement for returning residents, opting for monetary or housing ticket compensation policies [2] - The combination of special bonds and monetary compensation is positively impacting local real estate markets in cities like Guangzhou, Wuhan, Chengdu, Xi'an, and Zhengzhou [2] Group 3 - Many cities, including Shenzhen and Shanghai, have already implemented urban renewal-related documents this year, exploring self-renewal of old housing through policy optimization [2] - There is potential for broader promotion of self-renewal and original reconstruction models in more cities, indicating significant room for improvement in old community renovations [2]

Core Viewpoint - The article discusses the challenges faced by local governments in securing special bonds for 2026, highlighting issues related to limited quotas and difficulties in obtaining funds [1] Group 1 - Many local projects are struggling due to the tight availability of special bond quotas for 2026 [1] - Both consultants and clients are experiencing significant stress regarding the procurement of these funds during the holiday period [1]

Core Insights - National general public budget revenue for the first three quarters reached 163,876 billion yuan, a year-on-year increase of 0.5%, with the growth rate expanding by 0.2 percentage points compared to the first eight months [1] - Tax revenue for the first three quarters was 132,664 billion yuan, up 0.7% year-on-year, while non-tax revenue decreased by 0.4% to 31,212 billion yuan [2] - General public budget expenditure for the first three quarters was 208,064 billion yuan, a year-on-year increase of 3.1%, with central government expenditure rising by 7.3% and local government expenditure increasing by 2.4% [2] Revenue Breakdown - Central government general public budget revenue was 70,837 billion yuan, down 1.2% year-on-year, while local government revenue was 93,039 billion yuan, up 1.8% [1] - Government fund budget revenue for the first three quarters was 30,717 billion yuan, a decrease of 0.5% year-on-year, with central government fund revenue increasing by 0.7% and local government fund revenue decreasing by 0.6% [5] Expenditure Insights - Social security and employment expenditure, agricultural and forestry expenditure, and energy conservation and environmental protection expenditure saw significant growth, increasing by 10%, 9%, and 8.8% respectively [3] - The Ministry of Finance plans to expedite the use of special bonds and other financial tools to support major project construction and address issues like debt defaults [5][6] Policy Considerations - The Ministry of Finance will continue to advance the 2026 new local government debt limit, focusing on major strategic projects and addressing hidden debt issues [6] - Market expectations for growth stabilization policies have increased, with a focus on fiscal priorities beyond infrastructure, including childcare subsidies and urban renewal [5]

Investment Rating - The report maintains a "Positive" investment rating for the construction and engineering industry [11]. Core Insights - The construction industry continues to experience a downward trend, with a focus on the government's fiscal efforts in the fourth quarter [2]. - The Purchasing Managers' Index (PMI) for the construction sector fell below 50, indicating contraction, primarily due to a decrease in new orders and weakened market demand [6][18]. - Fixed asset investment (FAI) has shown a continued decline, influenced by a significant drop in real estate and infrastructure investments [7][21]. Summary by Sections Investment & Orders - The construction PMI for August was reported at 49.1%, down 1.5 percentage points year-on-year and month-on-month, with the new orders index at 40.6%, reflecting a decrease of 2.9 percentage points year-on-year and 2.1 percentage points month-on-month [6][18]. - Fixed asset investment in August was 3.8 trillion yuan, a year-on-year decrease of 7.1%, with manufacturing investment also declining by 1.8% [22][36]. - Infrastructure investment for August was 1.5 trillion yuan, down 5.8% year-on-year, with a cumulative investment of 12 trillion yuan for the first eight months, reflecting a 2.0% increase year-on-year [23][36]. Physical Workload - August saw a seasonal slowdown in construction activities due to high temperatures, with cement production declining by 6.2% year-on-year [8][50]. - The construction workload is expected to rebound in September as the industry enters its peak season [8][50]. Project Funding - As of September 16, the funding availability rate for construction sites was 59.39%, with non-residential projects at 61.21% and residential projects at 50.58% [58]. - In August, new special bonds issued exceeded 485.6 billion yuan, with a total issuance progress of 80% by September 19 [60].

1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints of the Report - Bonds remain a weak asset currently. At the end of September, first focus on changes in the funding situation and the equity market, and approach with a cautious mindset. Also, look ahead to the main - line switching process in the fourth quarter. In 2025, the bond market switched to a relatively clear main - line logic each quarter, and the main - line logic weakened at the end of each quarter. The trading main - line in the fourth quarter may switch to institutional behavior changes and interest - rate cut expectations successively, and the yield curve may show a pattern of steepening first and then flattening [17][18][19] 3. Summary by Relevant Catalog 3.1 Funds Price: Tightening of Quarter - End Funding - From September 19th to September 25th, the central bank made a net open - market injection of nearly 60 billion yuan. On September 22nd, it conducted 30 billion yuan of 14 - day reverse repurchase operations. During the statistical period, the overall funds price increased, with the DR007 rising to 1.6%, the R007 rising to 1.8%, and the 1 - year inter - bank certificate of deposit yield rising to 1.7%, the highest since early June [8] 3.2 Primary Market: Increase in Special Bond Issuance Scale - From September 19th to September 25th, 119 interest - rate bonds were issued in the primary market, with an actual issuance total of 708.6 billion yuan and a net financing amount of 77.2 billion yuan. On September 19th, 82 billion yuan of 30 - year special treasury bonds were re - issued at a price of 99.67 yuan, with an annual yield of 2.17%, higher than the secondary - market transaction price. The issuance scale of local special bonds increased seasonally at the end of the month. As of September 25th, 1.23 trillion yuan of ultra - long - term special treasury bonds had been issued in 2025, with about 70 billion yuan remaining to be issued; 3.66 trillion yuan of new local special bonds had been issued, with about 240 billion yuan remaining to be issued [10][11] 3.3 Secondary Market: Uptick in Yield Curve - From September 19th to September 25th, the treasury bond yield curve rose again, with increased intraday volatility. The main constraint on the bond market during this statistical period came from the news front. The market expected that the redemption fee adjustment for public bond funds was imminent, which led institutions to actively redeem bond funds. Additionally, the stock - bond seesaw effect still existed, and the relatively strong and volatile equity market also dampened bond market sentiment [12] 3.4 Market Outlook - **Fundamentals**: The bond market currently has low sensitivity to fundamentals. From an asset - allocation perspective, weak fundamentals imply a low return rate in the real economy. However, in the stage of low bond coupons and capital losses, bond - type assets also struggle to provide higher comprehensive returns, so the bond market's sensitivity to fundamentals has declined [17] - **Policy**: Incremental policies will mainly cover three directions. First, after the release of August economic data, market expectations for pro - growth policies have increased, with promoting consumption and expanding infrastructure likely to be key areas. The real - estate sector may also see partial relaxation. Second, the fund redemption fee adjustment plan will be officially implemented. Third, there is still a high expectation that the central bank will restart open - market bond purchases to maintain liquidity and stabilize the bond market, which may occur alongside the redemption fee adjustment to smooth out bond market fluctuations. Based on 2024 experience, the central bank mainly buys short - term bonds, so the yield curve is likely to steepen, and caution is needed for long - term bonds [17] - **Funds**: There is still pressure on the cross - quarter funding situation [18]

Core Viewpoint - The United States leverages its position as the world's largest consumer market to exert pressure on other countries through tariffs, as highlighted by Liu Xiaochuan during the recent Economic Development Forum [1][4]. Group 1: Economic Policies and Domestic Demand - Expanding domestic demand is crucial for economic growth, and effective policy measures, including fiscal, monetary, and trade policies, are essential to achieve this goal [1][4]. - Tax reduction is often considered a primary method to stimulate demand, but experts suggest a more targeted approach, focusing on direct taxes like corporate and personal income taxes to effectively boost domestic consumption [4][5]. - The relationship between fiscal policy and macroeconomic conditions is vital, as factors like inflation can significantly impact consumer spending and overall economic health [4][5]. Group 2: Innovation and Supply-Side Dynamics - High-quality supply can drive consumption, with consumers increasingly demanding better quality products, especially in the context of technological advancements and new industries [7][8]. - Fiscal policies should encourage innovation on the supply side to create demand, while also avoiding pitfalls such as excessive competition and fraudulent practices [7][8]. - A balanced approach is necessary, where fiscal policies do not disproportionately favor large enterprises, ensuring fair competition and fostering innovation across the market [8]. Group 3: Special Bonds and Employment - Special bonds issued by local governments are a significant tool for fiscal policy, capable of stimulating infrastructure investment and job creation [10][11]. - Research indicates that approximately 50,800 yuan of special bond investment can create one job, highlighting the potential of these bonds to enhance domestic demand through employment [10]. - As of this year, 2.78 trillion yuan in new local government special bonds have been issued, with a focus on supporting local debt management and infrastructure projects [11][12].

Group 1 - The core viewpoint of the report indicates a marginal narrowing of the year-on-year decline in infrastructure investment, with a recommendation to focus on investment opportunities in the central and western regions of China [2][3] - From January to August 2025, real estate development investment decreased by 12.9%, while narrow infrastructure and broad infrastructure investments increased by 2% and 5.4% respectively [2][3] - In August 2025, the year-on-year decline in real estate development investment was 19.9%, with narrow infrastructure and broad infrastructure investments declining by 5.9% and 6.4% respectively [2][3] Group 2 - The cumulative new special bonds issued from January to August 2025 reached 32,641.37 billion yuan, representing a year-on-year increase of 26.9% [2] - The report highlights that the issuance of special bonds is expected to accelerate in the second half of the year to support major engineering projects [2] - The real estate sector continues to show weakness, with a year-on-year decline in sales area of 4.7% from January to August 2025 [3] Group 3 - Cement production from January to August 2025 was 1.105 billion tons, a year-on-year decrease of 4.8% [4] - In August 2025, the average cement price increased to 349 yuan per ton, although it remains 38 yuan lower than the previous year [5] - The report notes that the demand for cement is expected to improve seasonally, which may lead to a gradual recovery in the profitability of cement companies [5] Group 4 - The production of flat glass from January to August 2025 was 64,818 million weight cases, down 4.5% year-on-year [6] - The report indicates that there is a potential for demand improvement in the glass market as inventory levels are being digested [6] - The overall operating rate of the flat glass industry was reported at 82.04% as of the end of August 2025 [6]

Group 1 - The report indicates that the A-share market has shown strong performance in August, with major indices such as the Shanghai Composite Index breaking through 3800 points, reaching a ten-year high, and significant trading volumes exceeding 2 trillion yuan for 13 consecutive trading days [7][12][47] - The report highlights that sectors such as telecommunications, electronics, and non-ferrous metals performed well, while banking, coal, and steel sectors lagged behind [12][48] - The report suggests that the market has room for further upward movement in September, driven by favorable liquidity conditions and potential policy support from the government [7][43][47] Group 2 - The report emphasizes the importance of the financial, TMT (Technology, Media, and Telecommunications), and power equipment sectors for investment in September, recommending an overweight position in these industries [48][49] - The TMT sector is particularly highlighted due to the strong performance of major tech companies, with significant capital expenditures directed towards cloud computing and AI, indicating robust growth potential [53] - The financial sector is noted for its resilience, with insurance companies like Ping An increasing their stakes in other firms, reflecting a positive outlook for long-term value in the insurance industry [49][52]