Group 1: Market Strategy and Economic Outlook - The current market is transitioning from a "technology bull" to a "wealth bull," indicating a favorable time to invest in cyclical sectors [6][10] - The third quarter of 2025 shows a recovery in profitability, with A-share cumulative profit growth expected to reach 11% in 2026, marking a shift to an earnings-driven bull market [14] - The "15th Five-Year Plan" suggests a need for GDP growth of at least 4.1% annually, indicating a supportive environment for cyclical industries [7] Group 2: Industry Performance Insights - The computer industry experienced a revenue increase of 10.5% year-on-year in the first three quarters of 2025, with net profit rising by 47.77% [19] - The materials and manufacturing sectors showed a significant improvement in free cash flow, with a year-on-year increase of 1,100 million yuan in the third quarter [16] - The TMT sector's capital expenditure (CAPEX) expansion is impacting cash flow, with a notable decrease in free cash flow by 928 million yuan in the third quarter [15] Group 3: Company-Specific Analysis - Huada Jiutian reported a revenue of 8.05 billion yuan in the first three quarters of 2025, with a significant decline in net profit due to reduced government subsidies [46][47] - Jiuzhou Pharmaceutical achieved a revenue of 41.60 billion yuan, with a net profit increase of 18.51%, driven by a stable CDMO business [50][51] - New Dairy's revenue for the first three quarters reached 84.34 billion yuan, with a net profit increase of 31.48%, indicating strong operational performance [53][54]

Core Conclusions - The bull market is entering its second phase, transitioning from a "technology bull" to a "wealth bull" [1] - After the "super macro month" in October, the market is expected to favor cyclical stocks as a better allocation choice due to high valuations and potential adjustments if EPS does not improve [1][5] - Current market conditions present an optimal window for investing in cyclical stocks, supported by five key reasons [1] Reason 1: Cyclical Stocks as "Friends of Time" - Since Q3, the market has begun to trade based on changes in profitability (△ROE), indicating a return to investment in economic recovery [21] - Cyclical stocks have lagged behind in price compared to improvements in fundamentals, making them more favorable during market adjustments [21][24] Reason 2: Potential Requirements of the "14th Five-Year Plan" - The "14th Five-Year Plan" suggests that by 2035, per capita GDP should reach the level of moderately developed countries, requiring an annual growth rate of 4.1% plus inflation and currency appreciation [2][30] - Achieving this goal necessitates a combination of moderate inflation and currency appreciation to establish a growth baseline for cyclical industries [2][31] Reason 3: Cross-Border Capital Inflow, Repeating 2019-2021 - Recent reports emphasize that cross-border capital inflow will effectively support domestic demand, with signs of cyclical improvement already emerging [3][33] - The return of cross-border capital is expected to drive a revaluation of global commodities and domestic manufacturing, similar to the core asset bull market seen post-pandemic [3][36] Reason 4: New Regulations for Public Funds Guiding "Rebalancing" - The introduction of new regulations for public funds is expected to lead to a rebalancing of holdings between TMT and cyclical stocks [4][39] - As public funds have not significantly increased new issuances, the shift from cyclical to TMT stocks has resulted in a decrease in the pricing power of TMT stocks [4][40] Reason 5: Slowdown in Incremental Capital Inflows, Entering a Competitive Phase - Since September, there has been a noticeable slowdown in the inflow of various types of capital, indicating a shift in market dynamics [5][44] - The market is transitioning into a phase of competition, with cyclical stocks likely to benefit from this change [5][51] Investment Recommendations: Transitioning from "Technology Bull" to "Wealth Bull" - The report suggests continuing to invest in cyclical stocks, particularly in sectors such as non-ferrous metals, new consumption, and high-end manufacturing, as these areas are expected to benefit from the current economic conditions [5][54]