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rising consumer preferences for comfort [5][13] - The spandex industry is currently facing severe overcapacity, with outdated production capacity gradually being eliminated [6][22] - The supply-demand dynamics are expected to improve as outdated capacity is cleared, benefiting leading companies in the industry [7][44] Summary by Sections Demand Side - Spandex is primarily used in the textile and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]

Market Overview - As of August 7, the mainstream price of Wuxi Hongwang's 304 cold-rolled coil is between 12,950-13,050 CNY/ton, a slight increase of 50 CNY/ton or 0.39% from the end of July, but down 5.80% year-on-year [1] - The Shanghai Futures Exchange reported a total of 103,226 tons of stainless steel warehouse receipts, an increase of 423 tons from the previous trading day [1] - A significant reduction in production has been announced by a Shandong hot-rolled steel plant due to provincial production control requirements, with a target of reducing annual output by 5% and halting long-term delivery obligations signed in August [1] Institutional Insights - New Lake Futures notes that while downstream demand for stainless steel remains weak and inventory levels are high, there is strong market expectation for production cuts by stainless steel companies, leading to anticipated price volatility in the short term [2] - Ruida Futures highlights that the Indonesian government's PNBP policy has increased nickel resource supply costs, but the rapid release of nickel pig iron capacity has led to a noticeable recovery in production and a decline in nickel pig iron prices, reducing raw material cost support [3] - The production profits for steel mills have improved significantly due to rising steel prices and weaker raw material cost increases, with expectations of increased production in August [3] - The end of the traditional consumption off-season is approaching, and optimistic expectations for the "Golden September and Silver October" season, along with favorable domestic fiscal investment policies, are likely to improve the supply-demand balance and market purchasing willingness [3] - Recent domestic stainless steel inventory reduction has alleviated market pressure, leading to an increase in spot prices [3] - Technical analysis indicates a strong bullish sentiment with a slight increase in positions and price rise, suggesting a light long position strategy [3]

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]