Investment Rating - The industry investment rating is maintained at "Outperform the Market" [7] Core Viewpoints - The REITs market in China has shown signs of cooling, with the CSI REITs Index down by 3.8% in September-October, underperforming other asset classes such as equity indices and gold [2][21] - The recent weakness in the REITs market is attributed to high previous valuations, capital being diverted to better-performing assets, and disappointing cash flow recovery in certain sectors [2][21] - The second public heating REIT in Shanxi has been submitted for approval, highlighting its resource and location advantages, stable revenue sources, and a reasonable pricing model [4][45] Summary by Sections REITs Market and Asset Comparison - The overall REITs market has experienced a downturn, with the average turnover rate at 0.44%, which is 65% of the annual average [2][18] - The CSI REITs Index has underperformed compared to other major indices, with a cumulative decline of 2.3% [13][21] - The market is facing pressure from rising government bond yields, which compress the yield spread of REITs [21][22] Sector Performance - The IDC sector shows high trading activity, while sectors linked to economic recovery, such as logistics and consumption, are under pressure [23][24] - Defensive sectors like affordable rental housing and environmental services have demonstrated strong anti-drawdown characteristics [23][24] - The highest trading volumes in September-October were seen in highways, industrial parks, and affordable rental housing, with respective average transaction volume shares of 21.8%, 17.1%, and 14.3% [25][36] Monthly Special: Shanxi Heating REIT - The Shanxi heating REIT is notable for its low heat source costs and stable pricing, benefiting from the region's energy advantages [4][45][46] - The pricing model includes a two-part fee structure that allows for effective recovery of fixed costs [52][55] - The project has a high proportion of residential users, ensuring stable and diversified revenue [58][63] Market Dynamics - The National Development and Reform Commission has issued a document supporting the expansion of the REITs market, indicating a favorable policy environment [5][64] - Recent project dynamics show several REITs in various stages of approval, indicating ongoing market activity [68] Investment Recommendations - The current REITs market presents both opportunities and risks, with a focus on stable cash flow assets in the defensive sector [6][69] - It is recommended to explore undervalued sectors such as logistics and industrial parks for potential rebounds, given their low valuations and high yield spreads [70][71]

Investment Rating - The report maintains a "Buy" rating for C-REITs, indicating a positive outlook for investment opportunities in the sector [6]. Core Insights - The C-REITs market is experiencing a valuation recovery, with significant interest in policy-driven themes and quality undervalued projects. The report highlights the resilience of high-energy city consumption and the recovery in logistics and factory leasing demand as key areas of focus [6]. - The C-REITs total market capitalization is approximately 218.53 billion yuan, with an average market value of about 3 billion yuan per REIT. The overall market showed a weekly average increase of 1.49% [3][13]. - The report notes that the C-REITs full return index has increased by 10.90% year-to-date, reflecting a strong performance compared to other indices [2][11]. Summary by Sections REITs Index Performance - The CSI REITs full return index rose by 1.06% this week, closing at 1073.3 points. The index has shown a year-to-date increase of 10.90% [1][2][11]. REITs Secondary Market Performance - The secondary market for C-REITs is showing signs of recovery, particularly in municipal water conservancy and consumer REITs, while energy infrastructure and ecological environmental REITs have seen smaller recoveries. A total of 65 REITs increased in value this week, with an average weekly increase of 1.49% [3][13]. REITs Valuation Performance - The internal rate of return (IRR) for listed REITs shows significant differentiation, with the top three being Huaxia China Communications REIT (9.6%), Ping An Guangzhou Guanghe REIT (8.6%), and Zhongjin Hubei Keti Guanggu REIT (7.5%). The price-to-net asset value (P/NAV) ratio for these REITs ranges from 0.7 to 1.8 [5][6]. Investment Recommendations - The report suggests focusing on three main investment strategies: 1. Emphasizing policy themes and quality undervalued projects with recovery potential. 2. Considering the timing of investments in weak-cycle assets that have already reflected market expectations. 3. Monitoring the expansion of REITs alongside new issuances, particularly those with strong asset reserves and quality projects [6].