Investment Rating - Industry rating is "Outperform the Market" (maintained rating) [5] Core Viewpoints - Increased focus on cyclical infrastructure and international engineering sectors, with significant improvement in funding sources such as special bonds. The physical volume of infrastructure is expected to accelerate, particularly post the Two Sessions, which may drive market performance in these sectors [1][14] - The construction industry is showing signs of recovery, with a construction PMI of 52.7%, indicating expansion. The physical workload in infrastructure is improving, supported by favorable weather and project commencement [14][20] - The report suggests focusing on central state-owned enterprises in infrastructure and cyclical engineering products, as well as international engineering opportunities due to geopolitical developments [1][14] Summary by Sections Section 1: Current Market Conditions - As of February 27, 2025, the funding availability rate for 13,532 construction sites is 49.1%, showing a year-on-year increase. The construction PMI has risen by 3.4 percentage points from the previous month [2][14] - The issuance of new special bonds has reached 589.11 billion yuan, an increase of over 180 billion yuan compared to the same period last year, with infrastructure being the primary focus [2][13] Section 2: Market Performance - The construction index rose by 1.25% during the week of February 24-28, while the Shanghai and Shenzhen 300 index fell by 1.89%. Notable stock performances included HanJia Design (+32.74%) and Chengbang Co. (+22.71%) [3][17] Section 3: Investment Recommendations - Three main investment themes are highlighted: 1. Focus on infrastructure, debt reduction, and value enhancement opportunities [20] 2. Attention to cyclical engineering sectors with potential high elasticity [21] 3. Investment opportunities in low-altitude economy, Belt and Road Initiative, and construction transformation [24][25]

Global Economy and Inflation - Global economic activity is on the rise, with the Baltic Dry Index (BDI) averaging 894.6 points as of February 21, 2025, an increase of 103.00 points from the previous week [3][14] - The CRB Commodity Price Index averaged 314.99 points for the week, up by 2.53 points, indicating rising inflation levels [3][18] Domestic Economy and Inflation - China's official manufacturing PMI for January 2025 is at 49.1%, a decrease of 1.0 percentage points from the previous month, indicating economic contraction [4][23] - The average price of pork in China was 27.58 yuan per kilogram as of February 13, 2025, down by 0.66 yuan from the previous week, reflecting stable inflation [4][31] Industrial Production - The operating rate of high furnaces in China was 77.66% as of February 21, 2025, a decrease of 0.34 percentage points from the previous week [5][40] - The operating rate for rebar steel mills increased to 39.68%, up by 4.92 percentage points, indicating a mixed trend in industrial production [5][41] Consumption - Essential goods consumption remains stable, with the Keqiao Textile Price Index at 104.07 points, down by 0.24 points [6][53] - The average daily sales of passenger cars in China increased to 52,700 units as of February 16, 2025, up by 28,300 units from the previous week, indicating a rise in discretionary spending [6][58] Investment - Real estate transactions in 30 major cities averaged 21.49 million square meters per week as of February 23, 2025, an increase of 4.35 million square meters [7][62] - The domestic sales of excavators in January 2025 were 5,405 units, a slight decrease of 16 units year-on-year, indicating stabilization in infrastructure investment [7][67] Exports - The export container freight index was 1,318.71 points as of February 21, 2025, a decrease of 68.45 points, reflecting challenges in the export sector [8][76] - The foreign trade cargo throughput at major Chinese ports was 21,956.2 million tons, an increase of 3,246 million tons from the previous week [8][77] Emerging Industries - The Philadelphia Semiconductor Index averaged 5,251.19 points as of February 21, 2025, an increase of 137.04 points, indicating rising sentiment in the semiconductor sector [9][79] - The sales of new energy vehicles in China reached 943,703 units in January 2025, an increase of 214,386 units year-on-year, reflecting growth in the new energy sector [9][88]

Global Economy and Inflation - Global economic activity is on the rise, with the Baltic Dry Index (BDI) averaging 791.6 points as of February 14, 2025, an increase of 17.60 points from the previous week [3][14] - The CRB Commodity Price Index averaged 312.46 points during the same period, up by 4.23 points week-on-week, indicating rising inflation levels [3][18] Domestic Economy and Inflation - China's official manufacturing PMI for January 2025 is at 49.1%, down 1.0 percentage points from the previous month, indicating a contraction in manufacturing activity [4][23] - The average price of pork in China was 28.24 yuan per kilogram as of February 6, 2025, a decrease of 0.06 yuan from the previous week, reflecting stable inflation [4][31] Industrial Production - The operating rate of high furnaces in China was 78% as of February 14, 2025, unchanged from the previous week, indicating stable industrial production [5][39] - The operating rate for rebar in major steel mills increased by 0.64 percentage points to 34.76% [5][40] Consumption - Essential goods consumption remains stable, with the Keqiao Textile Price Index at 104.07 points as of January 27, 2025, down 0.24 points from the previous week [6][52] - The average daily sales of passenger cars in China decreased to 24,400 units as of February 9, 2025, down by 40,700 units from the previous week, indicating a decline in discretionary spending [6][57] Investment - Real estate transactions in 30 major cities averaged 164,900 square meters per day as of February 16, 2025, an increase of 71,000 square meters from the previous week [7][61] - The operating rate of PTA in China was 82.33% as of February 13, 2025, up by 1.04 percentage points, indicating a strengthening manufacturing sector [7][43] Exports - The export container freight index was 1,387.16 points as of February 14, 2025, down by 27.87 points, reflecting a slight decline in export activity [8][75] - The foreign trade cargo throughput at major Chinese ports was 18,710.3 million tons for the week ending February 9, 2025, an increase of 3.46 million tons from the previous week [8][76] Emerging Industries - The Philadelphia Semiconductor Index reached an average of 5,114.15 points as of February 14, 2025, an increase of 95.19 points, indicating a rising sentiment in the semiconductor sector [9][78] - The production of integrated circuits in China for the year ending December 2024 was 45,142,296.5 million pieces, up 22.20% year-on-year, reflecting strong growth in the electronics sector [9][83]