Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The demand for spandex is expected to continue growing due to increasing penetration rates in the textile industry and rising consumer preferences for comfort [5][13] - The spandex industry is currently facing severe overcapacity, with outdated production capacity gradually being eliminated [6][22] - The supply-demand dynamics are expected to improve as outdated capacity is cleared, benefiting leading companies in the industry [7][44] Summary by Sections Demand Side - Spandex is primarily used in the textile and apparel sector, with 76% of spandex consumption in 2024 dedicated to clothing production, resulting in an apparent consumption volume of 1.0269 million tons [5][14] - The compound annual growth rate (CAGR) for spandex apparent consumption from 2020 to 2024 is 9.21%, significantly higher than other mainstream fibers [14] - The retail sales of clothing, shoes, and textiles in China increased by 3.10% year-on-year in the first half of 2025, further driving spandex demand [14][19] Supply Side - The spandex industry has been experiencing significant overcapacity, with an average gross profit margin of -5,217 yuan/ton as of August 13, 2025, indicating prolonged losses [6][25] - In 2024, new spandex production capacity is expected to increase by 135,000 tons, with a year-on-year growth rate of 10.88%, continuing a trend of over 10% growth for three consecutive years [25][39] - The industry concentration ratio (CR5) stands at 79.53%, indicating a high level of market concentration among leading companies [33][35] Future Outlook - Leading companies such as Huafeng Chemical and Xinxiang Chemical Fiber are expected to benefit from their cost advantages, with unit costs significantly lower than the industry average [7][39] - The anticipated new production capacity for spandex in 2025 is only 111,000 tons, indicating a slowdown in capacity growth [33][48] - Recommended stocks include Huafeng Chemical, with other beneficiaries being Xinxiang Chemical Fiber and Taihe New Materials [45][48]

Core Viewpoints - The current market concerns do not pose significant downside risks, with expectations for supply-demand improvements in 2026 remaining intact despite a macroeconomic downturn in the second half of 2025 [2][4][5] - The structural mainline related to the bull market narrative has yet to establish a trend, but this will not hinder the performance of Q4 2025 compared to Q3 2025, as certain sectors like pharmaceuticals and overseas computing still show potential [2][5][6] - The impact of US-China tariffs is expected to diminish over time, with any adjustments likely to result in only temporary fluctuations in the A-share market [2][8] Summary by Sections Section 1: Market Concerns - The macroeconomic combination in the second half of 2025 is not expected to affect the anticipated supply-demand improvement in 2026, as the key verification period for demand may not occur within 2025 [4][5] - The structural mainline directly associated with the bull market narrative has not yet established a trend, but this is not expected to impact the performance of Q4 2025 positively compared to Q3 2025 [5][6] - The potential for a bull market remains, with the possibility of a strong performance in Q4 2025 driven by early positioning ahead of the 14th Five-Year Plan and ongoing policy adjustments [6][7] Section 2: Investment Focus - Attention should be directed towards sectors such as brokerage, insurance, military industry, and rare earths, with pharmaceuticals and overseas computing expected to maintain momentum [2][9] - The focus on structural investments should consider high market share manufacturing sectors in China, which may form price alliances to support domestic and international pricing [9][10] - The Hong Kong stock market is seen as a high-value opportunity compared to A-shares, with recent net purchases indicating a shift in investor interest [10][12]

Group 1 - The overall market is rising, with traditional manufacturing sectors like coal, non-ferrous metals, and steel leading the gains, each with an increase of over 1% [1] - The coal ETF has seen a net inflow of over 1.8 billion in the past 10 days, with a current increase of over 1%, and its constituent stock, Yunmei Energy, has hit the daily limit [1] - The "anti-involution" policy is expected to eliminate outdated production capacity and restrict new capacity, potentially driving up coal prices and restoring corporate profits [3] Group 2 - From January to June, the cumulative raw coal output reached 2.405 billion tons, a year-on-year increase of 5.4%, with a slowing growth rate; coal imports decreased by 11.1% year-on-year [3] - Manufacturing and infrastructure investments have grown by 7.5% and 4.6% respectively, indicating strong non-electric demand and marginal improvement in electricity demand [3] - The summer of 2025 is expected to be significantly warmer than last year, which may lead to increased daily coal consumption at power plants, further reducing high coal inventory levels [3] Group 3 - The coal ETF tracks the China Securities Coal Index, which is the only ETF product focused on the coal industry, with a dividend yield exceeding 6% [4] - The coal industry is characterized by high profitability, strong cash flow, high barriers to entry, high dividends, and a strong margin of safety, making it resilient and valuable for investment [4] - Investors interested in the coal sector can consider the coal ETF (515220) for exposure [4]

Group 1 - The report indicates that the A-share market is showing clearer signs of a significant upward trend, with two key changes to focus on: 1. The "anti-involution" policy is leading to a more proactive selection of midstream manufacturing stocks, with fundamental expectations shifting towards 2026, creating more short-term elastic investment opportunities [3][4][7] - The passage of the "Beautiful America Act" by the U.S. Congress, which increases fiscal stimulus, significantly reduces the risk of a deep recession in the U.S. in the medium term, enhancing the visibility of China's supply-demand turning point in 2026 [3][4][8] Group 2 - The report describes a "bull market atmosphere" emerging in the short term, with the Shanghai Composite Index's breakthrough directly boosting risk appetite and expanding the profit-making effect across the market [4][8][9] - The necessary conditions for a bull market starting in Q4 2025 are accelerating, with optimistic expectations for the improvement of the supply-demand structure in 2026, and the low base and high growth of A-share Q4 2025 reports creating favorable conditions for a preemptive rally [9][10] Group 3 - Structural selection remains unchanged: 1. Insurance companies are increasing their allocation to banks, but this cannot be maintained in the medium term; it is recommended to wait for lower market attention before reallocating [10][11] - In Q3 2025, opportunities in the computing power chain may arise from the results of U.S.-China negotiations and improvements in capital expenditure by internet platforms [10][11] - The report maintains a positive outlook on Hong Kong stocks, particularly in new consumption and leading innovative pharmaceuticals for Q3 2025 [10][11]