Core Viewpoint - The article suggests that asset revaluation pricing is more suitable for the Chinese stock market as it enters a period of macroeconomic stability, shifting focus from net profit growth to asset revaluation growth, particularly in a low-growth environment [2][3]. Group 1: Effectiveness of Asset Revaluation Strategy - In 2024, the explanatory power of asset revaluation growth on industry performance is expected to increase, making it a more effective fundamental indicator than net profit and net asset growth [3]. - Among the top five industries in terms of growth, only the electronics sector has an asset revaluation growth rate below the median level, indicating a selective effectiveness of this strategy [3]. Group 2: Drivers of Asset Revaluation Strategy - The effectiveness of the asset revaluation strategy will be driven by several factors: 1) The rapid decline in opportunity costs in a low-interest-rate environment, making asset revaluation growth more favorable for investment decisions [4]. 2) The need for ROE optimization, where industry leaders focus on cash cycle efficiency, as seen in the improvement of the asset revaluation of the CSI 300 index due to reduced cash cycles [4]. 3) Continuous CAPEX investment is essential for future growth, with the total CAPEX of the CSI 300 index increasing over the past three years, supporting technological advancements and international competitiveness [4]. Group 3: Investment Opportunities under Asset Revaluation Pricing - Based on the asset revaluation pricing approach, three investment directions are recommended: 1) Financial sector: The asset revaluation growth rate in the financial industry exceeds the overall market average, indicating potential for revaluation beyond just banks [5]. 2) Large-cap stocks: The value of large-cap stocks is expected to recover over a longer time frame, with recent weakness in this style potentially leading to accumulated excess returns [5]. 3) CAPEX advantage: Companies with strong CAPEX investment and cash recovery capabilities should be prioritized for maintaining or enhancing international competitiveness [5].

Investment Rating - The report suggests that the asset revaluation pricing model is suitable for the current macroeconomic environment in China, indicating a positive outlook for investment in this context [3][4]. Core Insights - The report emphasizes that the asset revaluation pricing model is more effective in a low-growth macroeconomic environment, drawing parallels with Japan's market experience [3][4]. - It recommends a shift in focus from net profit growth to asset revaluation growth, particularly for mature industry leaders [4][9]. - The report identifies three key sectors for investment: financial stocks, large-cap stocks, and companies with strong CAPEX and cash return capabilities [3][4]. Summary by Sections Asset Revaluation Pricing - The asset revaluation pricing model is deemed more appropriate for the future performance of A-shares as the Chinese economy transitions to stable growth [4][13]. - The model focuses on retained earnings growth and its impact on net asset value, which is more relevant in a low-growth environment [9][10]. Effectiveness of Asset Revaluation Strategy - The report highlights that the explanatory power of asset revaluation growth for industry performance has increased, making it a more effective fundamental indicator than net profit growth [19][22]. - In 2024, only three industries showed a failure in this logic, indicating a strong correlation between asset revaluation growth and stock price movements [19][22]. Financial Sector Insights - The financial sector is expected to see a broader revaluation beyond just banks, with non-bank financial institutions also having significant revaluation potential [29][33]. - The report notes that the asset revaluation growth for financial stocks is significantly higher than for non-financial sectors, driven by their lower dividend payout ratios [29][33]. Market Trends and Economic Outlook - The report discusses the ongoing market style shifts influenced by economic growth and policy expectations, suggesting a long-term trend towards stability in financial performance [19][22]. - It predicts that the Chinese economy will maintain a growth rate above the global average, despite challenges in the real estate sector and fiscal stimulus [14][15].