Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - Industrial enterprise profits are recovering at an accelerated pace, with the cumulative year - on - year growth of profits of industrial enterprises above designated size significantly increasing. The profit growth rate in September continued to be high, indicating an accelerated recovery of corporate profitability [4]. - Structurally, the year - on - year total profits of the three major sectors have all increased compared to the previous period, and the equipment manufacturing industry has provided strong support. Profits of enterprises of different types and scales have improved [5][6]. - In the bond market, it showed an independent trend on the day of the report. The central bank will resume open - market treasury bond trading. In the context of economic expectation correction, bond yields are expected to rise trend - wise [7][8]. 3. Section Summaries Industrial Enterprise Profit Situation - **Overall Profit Growth**: From January to September, the profits of industrial enterprises above designated size increased by 3.2% year - on - year, 2.3 percentage points higher than that from January to August, reaching the highest cumulative growth rate since August 2024. In September, the profits increased by 21.6% year - on - year, 1.2 percentage points higher than in August [4]. - **Factor Analysis**: From January to September, the added value of industrial enterprises above designated size increased by 6.2% year - on - year, remaining the same as from January to August; the PPI of all industrial products decreased by 2.8% year - on - year, with the decline narrowing by 0.1 percentage points; the operating income profit margin decreased by 0.19 percentage points year - on - year, with the decline recovering by 1.68 percentage points. Stable volume, slightly rising prices, and recovering profit margins led to a significant increase in the cumulative profits of industrial enterprises above designated size [5]. Structural Analysis - **By Sector**: From January to September, the total profits of the mining industry decreased by 29.3% year - on - year (previously - 30.6%), the manufacturing industry increased by 9.9% (previously + 7.4%), and the public utilities increased by 10.3% (previously + 9.4%). The profit decline of the mining industry narrowed by 1.3 percentage points, the manufacturing industry increased by 2.5 percentage points, and the public utilities increased by 0.9 percentage points. The profits of the equipment manufacturing industry above designated size increased by 9.4%, 6.2 percentage points higher than the average level of all industrial enterprises above designated size, driving the profit growth of all industrial enterprises above designated size by 3.4 percentage points [5]. - **By Enterprise Nature**: From January to September, the profits of state - owned enterprises decreased by 0.3% year - on - year (previously - 1.7%), joint - stock enterprises increased by 2.8% (previously + 1.1%), foreign - invested and Hong Kong, Macao, and Taiwan - invested enterprises increased by 4.9% (previously + 0.9%), and private enterprises increased by 5.1% (previously + 3.3%). The profit growth of private enterprises was 1.9 percentage points higher than the average level of all industrial enterprises above designated size, and 1.8 percentage points faster than from January to August. The profits of large, medium, and small enterprises all improved [6]. - **By Industrial Chain Position**: From January to September, the cumulative profit of upstream raw material mining accounted for 11.9% of the profits of industrial enterprises above designated size (previously 12.1%), the middle - stream material manufacturing accounted for 15.8% (previously 15.6%), the downstream equipment manufacturing accounted for 38.1% (previously 37.5%), the downstream consumer goods manufacturing accounted for 21.1% (previously 21.3%), other manufacturing accounted for 0.6% (unchanged), and public utilities accounted for 12.5% (previously 12.9%) [6]. Inventory and Asset - Liability Ratio - At the end of September, the nominal and real inventory year - on - year were 2.6% (previously + 2.1%) and 4.9% (previously + 5.0%) respectively, with changes of + 0.5 percentage points and - 0.1 percentage points compared to the previous period. The real inventory decreased year - on - year. The overall asset - liability ratio of industrial enterprises at the end of September was 58.0%, the same as the previous period [7]. Bond Market Situation - **Market Performance**: In the morning session, bond yields rose, possibly pricing in the positive outcome of China - US negotiations. Although the equity market performed well during the day, it did not suppress the bond market. The bond market showed an independent trend, and the yields of interest - rate bonds generally declined. After the central bank's statement on resuming open - market treasury bond trading, long - term yields dropped rapidly. The yield of the 10 - year treasury bond active bond dropped by about 3bp, and the yields of the 10 - year CDB active bond and the 30 - year treasury bond active bond dropped by about 4bp [7]. - **Market Outlook**: In the context of economic expectation correction, bond yields are expected to rise trend - wise. The report maintains its view on stock - bond allocation [8].

Report Industry Investment Rating - Not provided in the content Core Viewpoints - Despite the decline in economic and financial data in July 2025, a series of policies are expected to take effect, and the economy in the second half of 2025 is expected to remain stable, in the second half of the economic L-shaped curve [7]. - The current deviation between the stock-bond market trend and economic data may follow a similar logic to the first quarter of 2023. Policy signals have led to an upward revision of expectations, resulting in rising stocks and falling bonds [6]. - In the bond market, the target for the 10-year Treasury yield in the second half of 2025 is expected to be 1.9 - 2.2%. If inflation normalizes, the reasonable range of the 10-year Treasury yield may also rise accordingly [7]. - In the equity market, considering the upward revision of economic expectations and the continuous upgrading of the technology industry, the stock market is expected to continue its upward trend in the second half of the year [7]. Summaries by Related Content Economic Data Overview - In July 2025, the added value of industrial enterprises above the designated size increased by 5.7% year-on-year, the service production index increased by 5.8% year-on-year, and the total retail sales of consumer goods was 387.8 billion yuan, a year-on-year increase of 3.7%. From January to July, the national fixed - asset investment (excluding rural households) was 2.88229 trillion yuan, a year-on-year increase of 1.6% [3]. - In July 2025, RMB loans decreased by 5 billion yuan, the first decrease since August 2005 [4]. Market Performance - On August 15, 2025, the Shanghai Composite Index rose 0.83%, and the 10-year Treasury yield rose 1.2 BP, showing a trend of rising stocks and falling bonds [4]. Historical Comparison - In the first quarter of 2023, there was also a deviation between the fundamentals and market trends. The PMI in February - March reached 52.6% and 51.9% respectively, but the Shanghai Composite Index fluctuated and the 10-year Treasury yield declined [5]. Policy Impact - A series of policies since July 2025 have released positive signals, including promoting inflation recovery, boosting domestic investment, subsidizing childbirth, and promoting consumption and credit recovery [6].

Group 1 - The core viewpoint is that the resumption of value-added tax collection may lead to a rise in the yields of both new and old government bonds, necessitating close attention to investor sentiment towards newly issued government bonds [1] - It is anticipated that the target yield for 10-year government bonds in the second half of 2025 will be between 1.9% and 2.2% [1] - Economic growth is not expected to decline significantly in the second half of 2025, and with revised economic expectations, bond yields are likely to rise [1]