Core Viewpoint - The A-share market experienced a strong opening on the first trading day of July, driven by gains in the banking and power sectors, with the Shanghai Composite Index rising by 0.39% to 3457.75 points [1] Banking Sector - The banking sector rebounded after a brief correction, with notable gains from Suzhou Bank (up over 5%), Xiamen Bank (up about 4%), and others, including Construction Bank and Pudong Development Bank reaching new highs [3][5] - The Wind Banking Index has seen a year-to-date increase of nearly 20%, with a cumulative rise of approximately 70% since the end of 2023 [5] - Institutional investors indicate that the recent high-quality development policies for public funds have intensified short-term trading dynamics in bank stocks, suggesting potential volatility but maintaining a positive outlook for absolute return potential [7] Innovative Drug Concept - The innovative drug sector saw significant gains, with stocks like Frontier Bio reaching a 20% limit up and Shuyou Shen increasing by over 15%, marking new historical highs [9][11] - The National Healthcare Security Administration and the National Health Commission issued measures to support the high-quality development of innovative drugs, including increased support for R&D and encouraging commercial health insurance investments [11][12] Controlled Nuclear Fusion Concept - The controlled nuclear fusion sector experienced a strong surge, with stocks like Sichuan Electronics and Xuguang Electronics hitting the limit up, and others like Yongding Co. and Jiusheng Electric rising over 7% [14][16] - Recent agreements, such as Alphabet's purchase of power from a fusion project, highlight the commercial viability of nuclear fusion energy, suggesting a promising future for this sector [16]

Investment Rating - The industry investment rating is "Positive" (maintained) [4] Core Insights - The controllable nuclear fusion industry is experiencing accelerated progress, with increasing attention on core equipment suppliers due to recent industrial and financing catalysts [1] - Shanghai Superconductor's IPO application has been accepted, which is expected to accelerate the industrialization process of fusion. The company aims to raise 1.2 billion for the production of second-generation high-temperature superconducting tapes, with an expected annual output of 6,000 kilometers once fully operational [1] - China’s nuclear fusion roadmap indicates significant advancements, with the CFEDR engineering pile expected to be completed in the 2030s and the PFPP prototype power station in the 2050s [2] - Investment suggestions focus on core equipment suppliers benefiting from the ITER project delivery and new experimental pile construction, including companies like Lianchuang Optoelectronics, Guoguang Electric, and Xuguang Electronics [2] Summary by Sections Recent Developments - The controllable nuclear fusion industry is gaining momentum with significant financing activities and industrial advancements [1] - Shanghai Superconductor is one of the few manufacturers capable of producing over 1,000 kilometers of second-generation high-temperature superconducting tapes annually, holding over 80% market share domestically [1] Technological Progress - The current phase is the engineering feasibility verification stage, with a clear path from "fusion reaction" to "engineering" [2] - The CRAFT project is a key technological guarantee for the CFEDR engineering pile, which has achieved 70% overall progress [2] Investment Recommendations - Focus on midstream equipment suppliers and upstream material providers that are expected to benefit from the ongoing developments in the nuclear fusion sector [2]

Group 1: Fusion Industry Insights - The high-temperature superconducting material company Shanghai Superconductor has received approval for its IPO, indicating that China's technology in high-temperature superconducting tape is nearing or has reached international standards, with continuous capacity expansion [11] - The company aims to raise 1.2 billion yuan to build a second-generation high-temperature superconducting tape production facility, which is expected to add 6,000 kilometers of production capacity annually once fully operational [11] - Investment from China National Petroleum Corporation into Kunlun Capital for fusion projects highlights the financial backing for the fusion industry [11] Group 2: New Oriental Education Performance Forecast - New Oriental is expected to report revenue of $1.186 billion for Q4 FY25, a year-on-year increase of 4.4%, with the education segment (including cultural tourism) projected to generate $1.034 billion, up 13.3% [12] - The company anticipates a Non-GAAP net profit of $51 million, reflecting a 39.2% increase year-on-year, with a Non-GAAP net profit margin of 4.3%, expanding by 1.1 percentage points [12] - The growth of the study abroad business is slowing, with a forecasted revenue of $298 million for overseas exam training and consulting, representing a 5% increase, which is a slowdown compared to previous periods [12][13] Group 3: Strategic Adjustments and Future Outlook - New Oriental has adjusted its revenue forecasts for FY25-FY27 to $4.84 billion, $5.7 billion, and $7.03 billion, respectively, due to the slowdown in study abroad business growth [13] - The company has increased its Non-GAAP net profit estimates for the same period to $467 million, $575 million, and $710 million, respectively, due to cost control measures and improved operational efficiency [13] - The DCF target price has been raised to $76.3, corresponding to a PE ratio of 17.1 for FY25, indicating a positive outlook for the company's market valuation [13]

Overall Viewpoints - Wind Power: The issuance of Document No. 136 reshapes the logic of new energy installations. Due to the favorable output curve of wind power, sales of wind power stations are expected to recover, and profits from wind turbine manufacturing are likely to improve. Focus should be on wind turbine manufacturers, with Q2 performance potentially under pressure, while monitoring the degree of profit improvement in Q3-Q4 and the progress of power station sales [4]. - Solid-State Batteries: Companies like Winbond Technology, Leading Intelligent, and Xingyun Co. have completed the delivery of core equipment for solid-state batteries, significantly catalyzing the sector. The investment in solid-state battery equipment is 400-500 million per GWh, significantly higher than traditional liquid lithium battery equipment, with comprehensive upgrades in equipment requirements. The solid-state battery sector is seeing increased capital expenditure driven by policy support and the active promotion of semi-solid and all-solid experimental lines by battery manufacturers [4]. - Photovoltaics: After the anti-involution policy in Q4 2024 and the rush for installation in Q1 2025, the photovoltaic sector's debt repayment ability did not continue to deteriorate during Q1 2025. However, starting in May 2025, the decline in production and prices has led to further deterioration in the sector's debt repayment and profitability. It is expected that the next phase of supply or demand-side support policies will further strengthen the industry [4]. - Energy Storage: Recent adjustments in the stock price of Deye Technology are mainly due to European inventory factors leading to a downward revision of performance expectations. However, its valuation has entered a reasonable range, and it is still considered to have allocation value. Continuous monitoring of monthly data for household storage in July-August is necessary. The outlook for large-scale energy storage and commercial energy storage in Europe remains high, with a core focus on Q2-Q3 performance or order releases [5]. - Controlled Nuclear Fusion: The sector has seen significant adjustments recently, primarily due to changes in market style and a lack of catalytic factors. Future focus should be on domestic experimental pile bidding and the resonance of technological progress between China and the U.S. Controlled nuclear fusion remains an important thematic investment opportunity, with potential for repeated market speculation [6].

Market Overview - On June 19, major A-share indices declined, with the Shanghai Composite Index falling by 0.79% to 3362 points, the Shenzhen Component Index down by 1.21%, and the ChiNext Index decreasing by 1.36% [1][2]. Sector Performance - The controllable nuclear fusion sector led the decline, with stocks like Haheng Huatuo dropping over 13% [4]. - The multi-financial sector was weak, with Ruida Futures falling over 7% [6]. - The Chengfei concept sector also saw a drop, with stocks like Duopule and Huawu shares declining over 7% [7]. - The rare earth sector was sluggish, with Huayang New Materials hitting the daily limit down [8]. - Conversely, the oil and gas extraction and service sector was the top performer, with Shouhua Gas hitting the daily limit up [9]. - The short drama gaming sector experienced gains, with stocks like Bainaqiancheng hitting the daily limit up [10]. Notable Stocks - Haheng Huatuo saw a significant drop of 13.68%, closing at 35.54 yuan, with a total market value of 6.462 billion yuan [12][13]. - Ruida Futures fell by 7.64%, closing at 17.17 yuan [6]. - Shouhua Gas surged by 20%, closing at 13.38 yuan [9]. - Bainaqiancheng rose by 19.92%, closing at 6.14 yuan [11]. Geopolitical Impact - The geopolitical situation escalated with Israeli airstrikes on Iran, affecting energy facilities and driving oil prices up, with Brent crude futures increasing by 1% to $77.492 per barrel [9].

Market Overview - The A-share market shows a mixed performance with the Shanghai Composite Index closing at 3388.81, up 0.04%, while the Shenzhen Component Index rose by 0.24% to 10175.59 [2][4] - The overall market capitalization of the Shanghai Composite Index is 6547.43 billion, with a price-to-earnings (PE) ratio of 12.06 and a price-to-book (PB) ratio of 1.25 [3] Industry Dynamics - The National Healthcare Security Administration issued guidelines for the pricing of cosmetic surgery services, establishing 101 pricing projects to standardize the pricing behavior of medical institutions [23][25] - The controllable nuclear fusion sector received over 3 billion in new investments, indicating strong interest and growth potential in this area [26] - The advertising industry in China is experiencing robust growth, with a reported revenue increase of 17.9% year-on-year, driven by digital advertising [31] Company Tracking - Yahua Group is integrating its lithium mining business to enhance efficiency, with significant revenue contributions from its main lithium salt production bases [32] - Winbond Technology successfully delivered core solid-state battery equipment to a leading domestic client, marking a significant advancement in solid-state battery manufacturing technology [34] - Haitian Flavoring and Food Company set its H-share issuance price at 36.30 HKD per share, aiming to raise approximately 10.1 billion HKD for product development and capacity expansion [36] Economic Dynamics in Hunan - Hunan's exports of "new three samples" (electric vehicles, lithium-ion batteries, and photovoltaic products) surged by 55.5% in the first five months of 2025, with significant contributions from private enterprises [39][40]

Investment Rating - The report indicates a positive outlook for the controlled nuclear fusion industry, highlighting its potential as a strategic choice for achieving carbon neutrality goals [4]. Core Insights - Controlled nuclear fusion is seen as a revolutionary energy solution due to its abundant energy, zero emissions, and high safety [4]. - The industry is entering a critical phase with multiple technological pathways, primarily magnetic confinement and inertial confinement, both of which are advancing towards engineering validation [4]. - The development of the industry chain is emphasized, with a focus on materials and equipment as core challenges [4]. - Support from policies and capital is accelerating the commercialization process, with significant investments from both domestic and international entities [4]. Summary by Sections 1. Multiple Technological Pathways: Magnetic Confinement and Inertial Confinement as Mainstream - The report discusses the two main approaches to fusion research: magnetic confinement (e.g., Tokamak, stellarator) and inertial confinement (e.g., NIF in the US) [4][11]. - Both technologies are progressing towards engineering applications, with magnetic confinement focusing on steady-state operation and inertial confinement aiming for ignition efficiency [4]. 2. Collaborative Development of the Industry Chain: Focus on Materials and Equipment - The industry chain includes upstream superconducting materials and radiation-resistant tungsten alloys, midstream equipment for ITER and domestic experimental reactors, and downstream applications led by companies like China National Nuclear Corporation [4][5]. - Key companies in the upstream include Jingda Co., Yongding Co., and West Superconducting [5]. 3. Policy and Capital Support: Future Extension Space is Promising - China's 14th Five-Year Plan explicitly supports nuclear fusion research, with significant investments from state-owned enterprises and research institutions [4][29]. - International investments have exceeded $6.2 billion, indicating strong global interest in fusion technology [4]. 4. Beneficiary Companies in the Industry Chain: Focus on Long-Term Growth Potential - The report identifies several companies with long-term growth potential, including West Superconducting, Lianchuang Optoelectronics, and Yongding Co., which are involved in key materials and equipment for fusion projects [5][49][54]. - The report highlights the importance of these companies in advancing fusion technology and their roles in major projects like the "Spark One" hybrid reactor [4][5].

Investment Rating - The report suggests a "Strong Buy" rating for the mechanical equipment sector, with a focus on companies with strong performance certainty in the T-chain [2][4]. Core Insights - The mechanical equipment sector has shown a decline of 1.17% compared to the Shanghai Composite Index's decrease of 0.25% during the week of June 9-13, 2025, ranking 21 out of 31 in the Shenwan first-level industry classification [4][8]. - The energy and heavy equipment sub-sector performed the best with an increase of 1.69% [4][9]. - The report highlights advancements in humanoid robotics, emphasizing the integration of cognitive intelligence and motion control, which is accelerating commercialization [4][24]. - The semiconductor equipment sector is expected to benefit from domestic manufacturers taking over overseas DDR4 production capacity, as major global suppliers are reducing their DDR4 output [4][26][28]. Summary by Sections Investment Recommendations - Focus on core companies with strong performance certainty in the T-chain: Top Group, Zhenyu Technology, Longsheng Technology [3]. - Capture investment opportunities in cleaning equipment driven by technology upgrades and low valuations: Shengmei Shanghai, Zhichun Technology, and Northern Huachuang [3]. Market Performance - The mechanical equipment sector's overall PE-TTM valuation decreased by 1.71% during the week, with laser equipment and energy heavy equipment showing the highest increases [16][21]. - The report lists the top five gainers and losers in the mechanical equipment sector, with Beikong Technology leading with a 61.09% increase [14][15]. Technological Advancements - Meta's V-JEPA 2 model enhances robots' understanding of the physical world, marking a significant breakthrough in cognitive robotics [4][24]. - The establishment of the first humanoid robot 4S store in Beijing aims to provide comprehensive lifecycle services, potentially transforming consumer service models [4][25]. Semiconductor Equipment Insights - The DDR4 market is experiencing a price surge due to major manufacturers exiting the market, creating opportunities for domestic suppliers to expand production [4][26][28]. - Recent bidding data indicates a robust activity in semiconductor equipment procurement, with multiple projects awarded in the past week [29][30]. Macro Data - The manufacturing PMI for May was reported at 49.5%, indicating a slight contraction, while the equipment manufacturing PMI was at 51.2%, suggesting expansion [33][35]. - The report notes a year-on-year increase of 22.8% in global semiconductor sales for April, with China's semiconductor sales up by 14.4% [41][43].

Core Viewpoint - China's private enterprises in controllable nuclear fusion are leveraging diverse technological routes, rapid development, and relatively low costs to complement state-led efforts in scientific innovation, aiming to ignite their own "small sun" [2][3] Group 1: Technological Development - The controllable nuclear fusion technology aims to replicate the energy reactions occurring in the sun under extreme conditions, providing a clean and sustainable energy source [2][3] - Various private companies have emerged in the past three to four years, exploring multiple technological routes, with some achieving significant breakthroughs [6][7] - The main technological routes for controllable nuclear fusion include inertial confinement fusion and magnetic confinement fusion, with the latter being the global mainstream approach [4][5] Group 2: Advantages of Private Enterprises - Private enterprises in China are characterized by their diverse technological routes, speed, and flexibility, allowing them to complement the efforts of state institutions [7][8] - Companies like Energy Singularity have achieved rapid development, completing the construction of their "Honghuang 70" device in just two years, setting a record for superconducting tokamak development [8] - The use of new materials, such as rare earth barium copper oxide (REBCO), has made it feasible for commercial companies to enter the field, reducing construction costs significantly [5][8] Group 3: Current Challenges and Future Potential - Despite the rapid advancements, the industry is still in the early stages of development, with significant technical challenges remaining before commercial viability can be achieved [9][10] - Key challenges include achieving long-duration stable operation, enhancing energy gain and system efficiency, and improving the reliability of materials and components [10][11] - Increased funding and public awareness are essential for overcoming these challenges and fostering collaboration between state and private sectors in nuclear fusion research [11]

Group 1 - The mechanical equipment index experienced a decline of -0.67% during the week of June 9 to June 13, 2025, with a focus on technological innovation in humanoid robots, recovery in domestic engineering machinery sales, and strengthened demand for semiconductor equipment autonomy [1] - In the robotics sector, a cautious short-term outlook is advised, while a strong long-term optimism is maintained, as the current valuation increase is perceived to be outpacing actual industry progress [1] - The engineering machinery sector shows a cyclical recovery trend, with significant long-term investment value. In May 2025, the average working hours for major products was 84.5 hours (down 3.86% year-on-year, down 6.25% month-on-month), and excavator sales reached 18,202 units (up 2.12% year-on-year), with cumulative sales from January to May at 101,716 units (up 17.4% year-on-year) [1] Group 2 - In the low-altitude economy, accelerated industrial collaboration is expected to benefit the power system sector, enhancing core technology development and industrialization processes through deeper cooperation with eVTOL manufacturers [2] - In the controlled nuclear fusion sector, intensive bidding for fusion reactor components is anticipated to accelerate benefits for power supply and detection systems, supported by increased policy backing and technological breakthroughs [2] - In the export chain, consumer-grade export equipment companies with high demand certainty and low technical dependency are expected to benefit first from the backdrop of fluctuating trade tensions, with short-term order recovery and valuation boosts [2]