Core Insights - The report from Zhejiang Securities indicates that the recovery of the upstream life sciences sector in the first half of the year is primarily driven by a stable improvement in the supply-demand balance, with expectations for further profit elasticity and rapid valuation digestion in the fourth quarter and next year [1][2] - The overseas demand recovery has been more pronounced compared to domestic demand, but there is a significant acceleration in domestic business growth for many companies, with improved accounts receivable turnover rates for reagents and consumables [1] - The firm is optimistic about the performance of upstream companies benefiting from a combination of commercial project expansion, accelerated domestic import substitution, and international market expansion [1] Industry Trends - Despite some stocks in the sector returning to their 2022-2023 valuation levels, there is still potential for upward movement based on the recovery of fundamentals and investment opportunities [2] - The industry is entering a new phase characterized by breakthroughs in biotechnology, local innovation, favorable liquidity conditions (with the Federal Reserve's interest rate cuts), and a recovery in the capital cycle, which is expected to enhance the valuation of the innovation chain [2] - The positive trends in the domestic new drug research and development environment, along with successful commercialization pathways, are anticipated to sustain the acceleration of demand for chromatography fillers, culture media, and synthetic reagents [1]