Core Viewpoint - The A-share market indices experienced a rebound, with the Hong Kong Dividend ETF Guangfa (520900) rising by 1.55% and achieving a trading volume of 85.86 million yuan, indicating a positive market sentiment towards dividend stocks [1] Group 1: Market Analysis - The valuation of dividend stocks, represented by the dividend sector, remains at historically low levels, reflecting the asset revaluation potential brought by the appreciation of the RMB and the defensive value of stable earnings during economic structural transformation [1] - The Hong Kong dividend sector is recommended as a long-term strategic base, enhancing defensiveness and providing continuous dividend returns [1] Group 2: Investment Strategy - It is suggested to focus on undervalued central state-owned enterprises and non-bank financial institutions [1] - The combination of low long-term interest rates and continued overseas easing is expected to attract long-term capital, such as southbound funds and insurance capital, to increase allocation in Hong Kong dividend stocks [1] - The Hong Kong Dividend ETF Guangfa (520900) and its offshore connections (022719/022720) provide investors with a convenient entry point to invest in Hong Kong dividend assets, allowing for stable returns and long-term value [1]

Investment Rating - Industry Rating: Outperform the market (maintained rating) [5] Core Viewpoints - The construction index rose by 0.32% this week, while the Shanghai and Shenzhen 300 index increased by 1.07%, indicating that the construction sector underperformed the market by 0.75 percentage points. Professional engineering, architectural design, and infrastructure sectors showed stronger gains [1][33] - Infrastructure investment continued to support the economy, with energy-related and water conservancy investments maintaining strength, while transportation infrastructure showed signs of recovery. For the first half of 2025, real estate development investment, narrow infrastructure, broad infrastructure, and manufacturing grew by -11.2%, +4.6%, +8.9%, and +7.5% year-on-year, respectively [1][13] - Recent disclosures of second-quarter orders from central state-owned enterprises (SOEs) indicate a recovery trend, with China Railway's second-quarter orders showing a year-on-year growth of 20.08%. The overall order situation for central SOEs is optimistic, suggesting a rebound in physical workload [2][27] Summary by Sections Macro and Micro Verification of Infrastructure Recovery - Infrastructure investment in June continued to provide support, with energy and water conservancy investments remaining strong, while transportation infrastructure showed signs of recovery. The year-on-year growth rates for real estate development investment, narrow infrastructure, broad infrastructure, and manufacturing from January to June 2025 were -11.2%, +4.6%, +8.9%, and +7.5%, respectively [1][13][14] Recent Order Disclosures from Central SOEs - Central SOEs such as China Railway, China Energy Construction, China Chemical, and China Nuclear Engineering reported a recovery in second-quarter orders. For instance, China Railway's first-half orders showed a year-on-year growth of 2.8%, with a significant increase in the second quarter [2][27][28] Valuation Perspective - As of July 18, the construction sector's PE (TTM) and PB (LF) ratios were among the lowest across all primary industries, indicating significant room for valuation improvement. The construction sector's PE (TTM) was 11.12 times, with a historical percentile of 48.50%, compared to the Shanghai and Shenzhen 300's PE of 13.39 times [3][30][32]