Report Industry Investment Rating No information provided in the content. Core Viewpoints - The number and probability of forced redemptions have been increasing year by year, and the arbitrage opportunities and risks have attracted attention. In the bull market, more convertible bonds trigger and choose forced redemptions, and investors and institutions focus on whether there are arbitrage opportunities and how to time the market [1]. - The valuation adjustment of convertible bonds shows an obvious forward - moving feature. The main pricing process of forced redemption risk is completed at an earlier stage before the announcement, and the valuation compression is basically completed when approaching the announcement [1]. - In 2026, the forced redemption of convertible bonds may be more frequent, and the forced redemption game opportunities will increase. The operation idea of "entering the market close to the announcement and exiting opportunistically after the announcement" is more suitable [3]. Summary by Directory I. Strong Redemption Case Review - From 2018 - 2025, there were 1,178 cases of forced redemption triggers in the market, and the proportion of those finally choosing to implement forced redemptions was about 29.5%. In 2025, the number of forced redemption cases reached 132, and 47.3% of the issuers chose forced redemptions, with the probability hitting a record high [1][9]. - The trend of the stock market dominates the occurrence of convertible bond forced redemption events. Since 2024, the monthly trading volume of the Shanghai - Shenzhen All - A Index has significantly increased, and the number of forced redemptions has risen synchronously. The change in the convertible bond stock structure is closely related to the forced redemption probability. The median remaining term of convertible bonds has been decreasing, and the proportion of old bonds in the market has increased significantly [14]. - In 2026, 190 convertible bonds will mature, and if the stock market remains strong, the number of convertible bonds meeting the forced redemption conditions may increase, and the proportion of forced redemption cases may rise [18]. II. How Does the Valuation of Convertible Bonds Converge Before the Forced Redemption Announcement? 2.1 Typical Convergence Path of Valuation - The identification of forced redemption risk promotes the early compression of the conversion premium rate. The conversion premium rate starts to compress unilaterally from T - 20 and gradually converges to around 0%. The compression mainly occurs in the early stage before the forced redemption announcement. From T - 20 to T - 15, the median conversion premium rate drops from 2.33% to 0.98%, accounting for about 56.7% of the overall compression [19]. 2.2 The Forced Redemption Game Continues to "Involve", and the Valuation Convergence Rhythm Advances - The time rhythm of the forced redemption game shows a forward - moving trend. The compression of the conversion premium rate has advanced to an earlier time window before the announcement. Different stages have different convergence rhythms, and the main compression stage has gradually advanced [23]. 2.3 The Valuation Compression of High - Par Convertible Bonds is More Obvious - High - par convertible bonds have more obvious premium compression. The high - par and high - premium convertible bonds are more likely to experience a rapid decline in the conversion premium rate when the forced redemption condition approaches. At T - 20, the premium rate of high - par convertible bonds is 45.96%, about 54 percentage points higher than that of low - par convertible bonds, and both converge to near 0 at T - 1 [27]. 2.4 Before the Announcement, the Market has Formed a Significant Differentiated Expectation for Convertible Bonds with and without Forced Redemption - Before the announcement, the conversion premium rate of non - forced - redemption convertible bonds remains in the positive premium range, about 4% around T - 1. In contrast, the premium rate of forced - redemption convertible bonds converges to 0. Investors need to be vigilant about the price adjustment risk caused by the change in forced redemption expectations [33][34]. III. Is There Still an Opportunity to Participate After the Forced Redemption Announcement? 3.1 After the Forced Redemption Announcement, the Convertible Bond Price Performance and Its Characteristics: "Rapid Compression, Partial Rebound" - After the forced redemption announcement, the conversion premium rate of convertible bonds quickly compresses and turns negative. In some strong stock market stages, the valuation of individual bonds may rebound from T + 10 to T + 30. The stronger the stock market, the more obvious the rebound feature [36][41]. 3.2 After the Non - Redemption Announcement, the Conversion Premium Rate Gradually Returns to Normal - After the non - redemption announcement, the conversion premium rate of non - redeemed convertible bonds shows obvious repair, rising from about 7% to about 10%, and the market pricing gradually returns to the normal valuation range [46]. 3.3 After the Non - Redemption Announcement, is There a Difference in the Valuation Repair of Convertible Bonds with Different Par Values? - Before the non - forced - redemption announcement, the compression paths of the conversion premium rates of convertible bonds with different par values are similar in the early stage, but they gradually diverge later. After T + 15, the conversion premium rate of high - par convertible bonds is significantly lower than that of low - par convertible bonds [48][49]. 3.4 The Investment Win - Rate of Non - Redeemed Convertible Bonds is Higher - In the forced redemption announcement game, it is better to enter the market close to the announcement and exit opportunistically after the announcement. The game space of non - redeemed convertible bonds is more prominent, and different buy - sell window combinations can obtain positive returns. In the case of a redemption announcement, the short - term trading value is relatively limited [53][54]. IV. In 2026, the Game Opportunities Increase Further, and the Participation Strategy Needs Key Attention 4.1 In 2026, the Forced Redemption of Convertible Bonds May be More Frequent, and the Forced Redemption Game Opportunities Increase - In 2026, the environment for forced redemptions is more mature. Some convertible bonds are more likely to meet the forced redemption conditions, and the issuer's willingness to implement forced redemptions is higher. There are already some convertible bonds approaching the forced redemption trigger conditions, and the forced redemption trigger may enter a concentrated stage [57][58]. 4.2 2026 Forced Redemption Game Trading Window and Operation Suggestions - Based on the 2025 trading window sensitivity analysis, the operation idea of "entering the market close to the announcement and exiting opportunistically after the announcement" is still more suitable in 2026. The appropriate participation interval is T - 3 to T - 1 before the announcement, and the exit strategy around T + 10 after the announcement performs better. Pay attention to high - β stocks and non - redeemed convertible bonds in the valuation repair process [61][63].

Economic Overview - In January-February 2026, the total retail sales of consumer goods increased by 2.8% year-on-year, up from 0.9% in the previous period[2] - Fixed asset investment (FAI) showed a cumulative year-on-year increase of 1.8%, reversing from a decline of 3.8% previously[2] - The industrial added value of enterprises above designated size grew by 6.3% year-on-year, surpassing the previous value of 5.2%[2] Investment Insights - The rebound in investment growth is a key highlight, supported by policies from the last quarter of the previous year and early implementation of this year's policies[2] - Infrastructure investment surged to 11.4% growth, driven by major projects and fiscal policies[3] - Manufacturing investment returned to positive growth at 3.1%, with equipment updates and high-tech manufacturing leading the way[3] Consumption Trends - Service consumption showed strong performance with a cumulative year-on-year growth of 5.6%, benefiting from the Spring Festival effect[2] - Excluding automobiles, retail sales of consumer goods showed resilience, with significant growth in categories like communication equipment (17.8%) and office supplies (5.8%)[2] - The retail growth of gold and jewelry reached 13.0%, indicating a recovery in luxury consumption[2] Risks and Considerations - Potential risks include the possibility of policy implementation falling short of expectations and geopolitical tensions affecting market stability[3]

Investment Rating - The industry investment rating is "Buy" with a previous rating of "Buy" as well [2]. Core Insights - The relative cost advantage of composite copper foil is becoming increasingly prominent, with accelerated industrialization progress [5]. - The average copper price has risen significantly from less than 50,000 CNY/ton in 2020 to an average of 80,800 CNY/ton in 2025, and has exceeded 100,000 CNY/ton in 2026, highlighting the cost advantages of composite copper foil over traditional battery copper foil [5]. - Companies like Shengli Precision are beginning close collaborations with battery manufacturers, which is expected to drive equipment demand [5]. - The Anmaite composite fluid project is nearing completion, with an investment of approximately 5 billion CNY and a designed annual production capacity of 1 billion square meters of composite fluid materials [5]. - Yinglian Co. has partnered with LG to develop innovative polymer substrates for composite fluids and solid-state batteries, accelerating their entry into the global market [5]. - The report recommends focusing on equipment manufacturers such as Sanfu Xinke and Dongwei Technology, as well as material companies like Shengli Precision and Yinglian Co. due to the low penetration rate and rapid development slope of the composite copper foil industry [5]. Summary by Sections Industry Overview - The composite copper foil industry is experiencing a shift with increasing demand and a focus on equipment capacity as a critical factor for industrialization [5]. Key Companies - Shengli Precision is actively engaging with leading enterprises for product validation and expansion plans [5]. - Anmaite's project aims to meet the production needs of approximately 100 GWh of power, energy storage, and 3C new energy batteries [5]. - Yinglian Co. is collaborating with LG to explore new materials for the battery market [5]. Financial Analysis - The report includes a valuation table for key companies, indicating a "Buy" rating for Jiao Cheng Ultrasonic with a reasonable value of 80.61 CNY per share and projected PE ratios for 2025 and 2026 [6].

Group 1: Macro Overview - The midstream manufacturing sector is a key driver of economic stability, with 8 out of 10 tracked prices rising this year, indicating a positive trend[1] - The PPI weight of midstream manufacturing has increased by approximately 6 percentage points over the past decade to 41%[1] - Midstream manufacturing is expected to benefit from technological upgrades and global supply chain restructuring, marking a strategic era for the sector[1] Group 2: Price Tracking Indicators - In the computer and communication electronics sector, the PPI weight is projected to be around 12.5% in 2025, with DDR5 prices rising by approximately 33% this year[1] - The electrical machinery sector, with a PPI weight of about 8.5%, has seen a 7% increase in photovoltaic component prices this year[2] - The automotive manufacturing sector, accounting for 8.1% of PPI, is experiencing a marginal improvement in vehicle prices, with some companies indicating potential price increases due to rising costs[5] Group 3: Material Costs - The metal products industry, with a PPI weight of 3.4%, has seen steel prices decrease by about 2% this year, while copper prices have increased by 2%[6] - The new shipbuilding price index in the railway, shipbuilding, and aerospace sector, which has a PPI weight of 1.3%, has risen by 1% this year[7] - The price of battery-grade lithium carbonate, crucial for battery manufacturing, has surged by approximately 34% this year, reflecting its significant cost share in lithium batteries[3]

Group 1: Macro Overview - The midstream manufacturing sector is a key driver of economic stability, with 8 out of 10 tracked price indicators showing an upward trend this year[1] - The PPI weight of midstream manufacturing has increased by approximately 6 percentage points over the past decade to 41%[15] - Midstream manufacturing is expected to benefit from technological upgrades and global supply chain restructuring, marking a strategic era for the sector[10] Group 2: Price Tracking Indicators - In the computer and communication electronics sector, the price of DDR5 memory chips has risen by about 33% this year, while NAND Flash prices have also increased by 33%[1] - The price of battery-grade lithium carbonate has surged by approximately 34% this year, reflecting its significant cost share in lithium batteries[3] - The average price of air conditioners has increased by around 13% this year, with some manufacturers planning price hikes of 2% to 12% due to rising copper costs[3] Group 3: Industry-Specific Insights - The automotive manufacturing sector, which has a PPI weight of about 8.1%, is experiencing marginal improvements in pricing due to rising costs of chips and raw materials[5] - The steel price index has decreased by approximately 2% this year, while copper prices have risen by 2%[6] - The new shipbuilding price index has increased by 1% this year, indicating a slight recovery in the maritime sector[7]

Report Summary 1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints - The company expects its 2026 annual revenue to be between RMB 8.2 billion and RMB 8.8 billion, and aims to maintain an average gross - margin level of 42% - 48% and a R & D investment ratio of 14% - 19% [32]. - The company is optimistic about the future development of the semiconductor industry, especially in the storage and logic fields, and is confident in the growth of new products such as furnace tubes, panel - level advanced packaging, PECVD, and Track [34][35]. - The company will continue to expand overseas markets, aiming to increase overseas sales and contribute to global semiconductor industrial development [31]. 3. Summary by Directory 3.1 Research Basic Information - Research object: Shengmei Shanghai [16] - Industry: Special - purpose equipment [16] - Reception time: March 10, 2026 [16] - Reception personnel: Chairman HUI WANG, General Manager Wang Jian, Financial Officer LISA YI LU FENG, and Board Secretary Luo Mingzhu [16] 3.2 Detailed Research Institutions A large number of institutions participated in the research, including asset management companies, securities companies, fund management companies, insurance companies, and investment companies. Some of the institutions are Oxbow Capital Management (HK) Limited, Pleiad Investment Advisors Limited, Southeastern Asset Management, Inc., WCM, and Aijian Securities [17]. 3.3 Main Content Information - **Panel - level Packaging Equipment**: Current panel - level packaging equipment is mainly for large - area AI chips. The company has launched three new panel - level advanced packaging devices and has achieved product verification and production application in Chinese leading enterprises. It is also promoting their application in the Taiwan market [30]. - **Overseas Market Expansion**: The company adheres to the development strategy of "technological differentiation, product platformization, and customer globalization". Its products have global independent intellectual property rights and competitive advantages. It expects to make breakthroughs in the Southeast Asian market this year and enter the Taiwan market with panel - level equipment [30][31]. - **2026 Order Outlook**: Based on business trends and current orders, the company expects 2026 annual revenue to be between RMB 8.2 billion and RMB 8.8 billion [32]. - **Gross Margin and R & D Investment**: The company aims to maintain an average gross - margin level of 42% - 48% in 2026 and a R & D investment ratio of 14% - 19% [32]. - **Asset Impairment**: The company made asset impairment provisions in 2025 based on actual business and market changes, which will not affect normal operations [32]. - **Component Price Fluctuations**: The company has taken measures such as increasing the proportion of domestic components and diversifying supply channels. Component price fluctuations have not had a substantial impact on the gross margin [33]. - **Domestic Component Import**: The company has made progress in localizing core components. Non - standard parts are fully localized, and some standard parts have achieved partial localization. It has also designed and assembled two test devices using all domestic components [33]. - **Track Equipment**: The company has launched a KrF process pre - coating and developing (Track) device, which was delivered to a Chinese leading logic wafer factory in September 2025 and is expected to complete full - production - process testing this year. It also expects to accelerate the R & D of ArF Immersion equipment [34]. - **Industry Development and Growth Points**: The company is optimistic about the future development of the semiconductor industry, especially in the storage and logic fields. New products such as furnace tubes, panel - level advanced packaging, PECVD, and Track are expected to enter a period of rapid growth [34][35]. - **Revenue Proportion of Cleaning and New Equipment**: In 2025, cleaning equipment accounted for 66.40% of the company's revenue. The proportion may decline slightly with the introduction of new equipment, and the long - term goal in the cleaning equipment market is to achieve about 60% market share [35]. - **PECVD Business**: The company has made breakthroughs in PECVD technology. The Ultra PmaxTM PECVD device has completed a demo test on the R & D line. The company is confident in its technology and market prospects and will increase R & D investment [35][36].

Group 1: Research Basic Information - Research object: Honghua Digital Technology Co., Ltd. [16] - Industry: Special Equipment [16] - Reception time: March 02, 2026 [16] - Company reception staff: Board secretary Yu Jianli, Securities affairs representative Hu Jing [16] Group 2: Detailed Research Institutions - Fund management companies: China - Europe Fund, Huatai - PineBridge Fund, China Asset Management [17] - Asset management companies: Dunhe Asset [17] - Others: Yi'an Capital, Yuanxin Investment, Peiyi Investment [17] - Securities companies: Guotai Haitong Securities, Huachuang Securities, Huazheng Securities, Yongxing Securities [17] Group 3: Main Content Data 3.1 Visit - Investors visited the company's exhibition hall and main products [24] 3.2 Business Performance Analysis - In 2025, the company focused on the development of the intelligent manufacturing equipment industry, with rapid growth in order volume and continuous expansion of business scale [24] - The company's digital printing equipment achieved rapid growth compared with the same period of the previous year, with continuous growth in operating income and continuous improvement in profitability [24] - The company achieved an operating income of 2,307,757,600 yuan in 2025, a year - on - year increase of 28.90%, and a net profit attributable to the owners of the parent company of 528,901,900 yuan, a year - on - year increase of 27.63% [25] 3.3 Q&A Session 3.3.1 Business Development Strategy - In the field of book and periodical digital printing equipment, the company will expand product matrix and sales channels [27] - In the field of automatic sewing equipment, the company will promote the coordinated development of its German subsidiary and domestic department, and increase R & D efforts [27] - In the field of spraying and dyeing equipment and digital micro - spraying core components and equipment, the company will promote product docking with target customers [27] - In the field of decorative material digital printing equipment, the company will promote product launch to open up new business growth points [28] 3.3.2 Industry M&A - The company focuses on endogenous development, and is open to cooperation. M&A will be based on multiple factors [28] 3.3.3 Tianjin Ink New Factory Construction Progress - The infrastructure of the "Printing Industry Integration Base Project" of Tianjin Honghua Digital New Materials Co., Ltd. is basically completed, and equipment selection, installation and commissioning are in progress [29] 3.3.4 Ink Product Pricing - Due to scale effect and market competition, the company may adjust ink prices [29] 3.3.5 Future Dividend Plan - The company has implemented a cash dividend policy for three consecutive years, with a ratio of not less than 30%. It will continue to provide stable cash dividends [29] 3.3.6 Impact of RMB Exchange Rate Fluctuation - Exchange rate fluctuations may affect the company's profitability, and the company will carry out hedging business [29][30] 3.3.7 New Equity Incentive Plan - The company will launch an equity incentive plan according to the plan and operation [31] 3.3.8 Shareholding Changes of Major Shareholders - As of now, the company has not received a new share - reduction plan notice and will disclose new progress in time [31]

Investment Rating - The investment rating for the company is "Buy" [4] Core Insights - The company has established a joint venture with Lidefu to develop isostatic pressing equipment, which is a core incremental device for solid-state batteries, addressing the solid-solid interface impedance issue [2] - The company is a leader in the domestic metal pressure vessel industry and is positioned to benefit from the growth in controlled nuclear fusion, leveraging its deep technical expertise in high-end pressure vessels [3] - The company is expected to achieve a compound annual growth rate (CAGR) of 11% in net profit attributable to shareholders from 2024 to 2027, with projected net profits of 255 million, 248 million, 310 million, and 353 million yuan for the years 2024 to 2027 respectively [4] Financial Summary - Projected revenue for 2024 is 1,533.74 million yuan, with a year-on-year growth of 22.85%. Revenue is expected to decline by 10.83% in 2025, followed by a recovery of 10% in 2026 and 2027 [6] - The projected net profit for 2024 is 255.16 million yuan, with a significant increase of 54.64% compared to the previous year. The net profit is expected to decrease slightly by 2.64% in 2025, then increase by 25.03% in 2026 and 13.62% in 2027 [6] - Earnings per share (EPS) are projected to be 2.32 yuan in 2024, decreasing to 2.25 yuan in 2025, and then increasing to 2.81 yuan and 3.19 yuan in 2026 and 2027 respectively [6]

Investment Rating - The investment rating for the company is "Buy" [4] Core Insights - The company has established a joint venture with Lidefu to develop isostatic pressing equipment, which is a core incremental device for solid-state batteries, addressing the solid-solid interface impedance issue and potentially opening up growth opportunities in this sector [2] - As a leader in the domestic metal pressure vessel industry, the company is well-positioned to benefit from the growth in controlled nuclear fusion, leveraging its deep technical expertise and capabilities in metallurgy, welding, forging, heat treatment, and mechanical design [3] - The company is expected to achieve a compound annual growth rate (CAGR) of 11% in net profit attributable to the parent company from 2024 to 2027, with projected net profits of 255 million, 248 million, 310 million, and 353 million yuan for the years 2024 to 2027 respectively [4] Financial Summary - Projected revenue for 2024 is 1,533.74 million yuan, with a year-on-year growth of 22.85%. Revenue is expected to decline by 10.83% in 2025, followed by a recovery with growth of 10% in both 2026 and 2027 [6] - The projected net profit for 2024 is 255.16 million yuan, reflecting a significant increase of 54.64% compared to the previous year. The net profit is expected to decrease slightly in 2025 before increasing again in the following years [6] - Earnings per share (EPS) is projected to be 2.32 yuan in 2024, decreasing to 2.25 yuan in 2025, and then increasing to 2.81 yuan and 3.19 yuan in 2026 and 2027 respectively [6]

Core Insights - The report discusses the current dynamics between the "Technology + Overseas" and "Resource" sectors, highlighting an inherent contradiction that may lead to a decisive outcome between AI technology and traditional resource commodities [2][3] - The report emphasizes that the ongoing geopolitical tensions, particularly the military conflict between the US and Iran, have led to a surge in oil prices, disrupting the previously balanced relationship between the two sectors [2][3] - It suggests that the current "HALO" trading strategy, which is based on AI technology's creative destruction, may lead to a disconnection between asset values and fundamentals, driven by emotions rather than cash flow [3][4] Summary by Sections Current Market Dynamics - The report notes that the "Technology + Overseas" sector has recently faced challenges, with the rise in oil prices contributing to a narrative of "secondary inflation" that disrupts the previous balance with resource sectors [2][3] - It highlights that the current market is characterized by a shift from growth chasing to embracing certainty and scarcity, particularly in sectors less likely to be replaced by AI [7] HALO and TACO Trading Strategies - "HALO" trading is defined as a strategy focusing on heavy assets and low obsolescence, which seeks to hedge against uncertainties exacerbated by geopolitical tensions [7] - "TACO" trading, originating from Trump's tariff policies, is viewed as a short-term trading strategy that capitalizes on market volatility and is expected to lead to a recovery in oil prices, which could benefit the "Technology + Overseas" sector [4][7] Future Outlook - The report concludes that 2026 will not be a year dominated by either technology or cyclical sectors, but rather a period of coexistence, termed "New and Old Dance Together," emphasizing the importance of balanced portfolio management [4][15] - It identifies four key sectors for investment: non-ferrous resources, cyclical chemicals, AI applications, and overseas engineering machinery, advocating for a strategy that balances these sectors [4][15]