1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The government work report in 2026 emphasizes "new - quality productivity" and "artificial intelligence +", proposing to build emerging pillar industries and cultivate future industries. It also focuses on AI underlying computing power infrastructure [1][10]. - The overall position of convertible bonds should be maintained with prudent neutrality. It is expected that there will be better allocation opportunities after the equity and convertible bond markets fully digest the high valuations in the second quarter. Attention should be paid to individual bonds with strong conversion demands and conversion capabilities, and high - price and high - premium convertible bonds should be avoided unless the underlying stocks have sufficient short - term elasticity [3][27]. - The convertible bond market declined last week, and the valuations of low - rated and small - scale convertible bonds increased significantly. The market is in the process of digesting high valuations, and the valuations of high - price and newly issued convertible bonds have declined more significantly [25][40]. 3. Summary According to the Table of Contents 3.1 From the Two Sessions, Which Sectors in the Convertible Bond Market Are Worth Paying Attention To? - **Policy Focus**: The Two Sessions' policy orientation shows that emerging expenditure industries and future industries are still the policy focus. The government work report in 2026 emphasizes "new - quality productivity" and "artificial intelligence +", proposing to build emerging pillar industries such as integrated circuits, aerospace, biomedicine, and low - altitude economy, and cultivate future industries such as future energy, quantum technology, embodied intelligence, brain - machine interface, and 6G. It also focuses on AI underlying computing power infrastructure [1][10]. - **Integrated Circuit Sector**: There are many convertible bond targets in the integrated circuit sector, covering the upstream and mid - stream. However, some individual bonds are about to leave the non - call commitment period, and some are about to trigger the call, which may be a disturbing factor [12]. - **Aerospace Sector**: Convertible bond targets in the aerospace sector are concentrated in materials and parts, mainly involving core component manufacturing, complete machine matching, and operation services. The policy of "encouraging central and state - owned enterprises to take the lead in opening up application scenarios" may drive private aerospace entities [14]. - **Biomedical Sector**: The trading in the biomedical sector has cooled down. The conversion premium rate of the pharmaceutical sector is at the 63.70% quantile since 2023, and the trading congestion is relatively low. Attention can be paid to the performance realization of innovative drug - related targets [15]. - **Future Industries**: There are few targets in future industries. Future energy and embodied intelligence - related targets are relatively abundant. The 6G concept includes Ruike Convertible Bond and Hongtu Convertible Bond. Attention can be paid to the progress of convertible bonds in the pre - issuance stage [2][17]. 3.2 Convertible Bond Strategy: Maintain a Prudent and Neutral Position and Shift Elastic Allocation to Balance - **Market Trends**: The trading mainline of the equity market this week is concentrated on geopolitical conflicts and the Two Sessions. Geopolitical conflicts in the Middle East have strengthened the expectation of rising oil and gas prices, and some chemical, energy, and shipping sectors have shown obvious high - volatility rises. The technology - growth sectors that performed well at the beginning of this year have adjusted significantly this week [22]. - **Investment Strategy**: As the impact of geopolitical conflicts reaches a climax, participation in relevant sectors should focus on trading thinking. Although the technology - growth sectors have adjusted in the past two weeks, their long - term logic remains unchanged. Attention should be paid to the performance - realization directions during the performance disclosure period. Overall, the position should be maintained with prudent neutrality, and better allocation opportunities may appear after the second quarter [22][27]. 3.3 Market Review: The Convertible Bond Market Declined Weekly, and Valuations Rose - **Weekly Market Conditions**: Most major stock indexes declined last week. The CSI 300 index fell 1.07%, the CSI 500 fell 3.44%, the CSI 1000 fell 3.64%, the CSI 2000 fell 3.00%, and the CSI Convertible Bond Index fell 2.07%. Small - cap stocks and convertible bonds performed weakly overall. Different concepts showed different performances [36][37]. - **Valuation Performance**: The closing prices of equity - biased, bond - biased, and balanced convertible bonds all declined. The proportion of convertible bonds in the range above 150 decreased significantly. The median price decreased by 1.09%. The premium rates of low - rated and small - scale convertible bonds increased significantly, while the conversion premium rate of convertible bonds in the 120 - 130 (inclusive) parity range decreased by 3.06 percentage points [40]. 3.4 Terms and Supply: Three Convertible Bonds Announced Call, and the Total Newly - Promoted Scale Is Approximately 6.993 Billion - **Terms**: As of March 6, Zhonghuan Zhuan 2, Hengyi, and Anji Convertible Bonds announced early redemption; no convertible bonds announced non - early redemption; Fenggong, Hangxin, Liyang, Baichuan Zhuan 2, and other convertible bonds announced that they were expected to meet the call conditions. Qiaoyin, Hongtu, and Wentai Convertible Bonds proposed downward revision of the conversion price by the board of directors; Bairun Convertible Bond announced the downward revision result; Xianle Convertible Bond announced no downward revision; four convertible bonds announced that they were expected to trigger downward revision [4][56]. - **Primary Market**: Last week, Changgao, Xianghe, and Tonglian Convertible Bonds were issued, with a total scale of 173.5 million yuan, and no convertible bonds were listed. Two companies added board of directors' pre - plans, one company passed the shareholders' meeting, two companies passed the review by the issuance review committee, and no new companies were approved by the CSRC. As of March 6, five listed companies obtained approval for convertible bond issuance, with a planned issuance scale of 3.828 billion yuan; two companies newly passed the review by the issuance review committee, with a total scale of 1.79 billion yuan; two companies newly added board of directors' pre - plans, with a total scale of 1.375 billion yuan [5][59][70].

Investment Rating - The industry investment rating is "Recommended" (maintained) [1] Core Viewpoints - The new materials sector is a crucial direction for the future development of the chemical industry, currently experiencing rapid growth in downstream demand. With policy support and technological breakthroughs, domestic new materials are expected to accelerate their long-term growth. The report emphasizes that "one generation of materials leads to one generation of industries," highlighting the foundational nature of the new materials industry for other sectors [5][16]. Summary by Relevant Sections 1) Electronic Information Sector - Focus on semiconductor materials, display materials, and 5G materials [6] - The demand for high-speed transmission in data centers is increasing due to the rise of generative AI, with Micro LED CPO solutions expected to significantly reduce energy consumption compared to traditional copper cable solutions [7][25]. 2) Aerospace Sector - Key areas of interest include PI films, precision ceramics, and carbon fibers [8]. 3) New Energy Sector - Focus on photovoltaic materials, lithium-ion batteries, proton exchange membranes, and hydrogen storage materials [10]. - In January 2026, there were 5,690 new renewable energy projects registered, with 5,618 being photovoltaic projects [11]. 4) Biotechnology Sector - Key areas of interest include synthetic biology and scientific services [12]. - Recent government opinions indicate a push for technology insurance to support high-risk R&D in fields like synthetic biology, highlighting its strategic importance [13]. 5) Energy Conservation and Environmental Protection Sector - Focus on adsorbent resins, membrane materials, and biodegradable plastics [14]. - The government aims to promote green and low-carbon economies, with plans for a national low-carbon transition fund [15]. 6) Key Companies and Profit Forecasts - The report lists several key companies with their stock prices and earnings per share (EPS) forecasts for 2024, 2025, and 2026, along with their investment ratings [17]. - Notable companies include: - Ruihua Tai (688323.SH) with a projected EPS of 0.26 in 2026 and a rating of "Increase" [17]. - Guangwei Composite (300699.SZ) with a projected EPS of 1.09 in 2026 and a rating of "Buy" [17]. - Wanrun Co. (002643.SZ) with a projected EPS of 0.58 in 2026 and a rating of "Buy" [17].

Group 1 - The report emphasizes the development of six emerging pillar industries and six future industries, including integrated circuits, aerospace, biomedicine, low-altitude economy, new energy storage, and intelligent robotics [13][16] - The total market value of integrated circuit-related companies on the North Exchange is 81.57 billion yuan, with 19 companies listed [18] - The aerospace and low-altitude economy sectors have a total of 16 related companies, with a combined market value of 79.26 billion yuan [22] Group 2 - The biomedicine sector includes 27 companies with a total market value of 80.00 billion yuan, highlighting the performance of companies like Deyuan Pharmaceutical, which reported a net profit of 236.93 million yuan, a year-on-year increase of 33.87% [28][30][32] - The new energy storage sector consists of 22 companies with a total market value of 105.24 billion yuan, featuring companies like Better Ray, which specializes in lithium battery anode materials [35][36] - The intelligent robotics sector comprises 22 companies with a total market value of 71.25 billion yuan, showcasing companies like Dingzhi Technology, which focuses on servo motors and related products [39]

Core Insights - The defense budget is set to increase by 7% year-on-year, with a total of 1,909.561 billion RMB allocated for 2026, slightly down from 7.2% in 2025. Aerospace has been designated as a new emerging pillar industry for the first time [5][13] - The report emphasizes the growth potential in sectors such as large aircraft, commercial aerospace, and the overall defense industry, driven by government initiatives and strategic planning [5][14] Industry Overview - The government aims to develop emerging pillar industries including integrated circuits, aerospace, biomedicine, and low-altitude economy, with projections indicating that the output of six major emerging industries could reach 6 trillion RMB by 2025 and potentially double by 2030 [5][13] - The report highlights the importance of the C919 aircraft and other models in enhancing China's aerospace capabilities, alongside the establishment of a space data center as part of the national strategy [5][14] Investment Recommendations - The report suggests focusing on companies that align with the "S-curve" evolution, emphasizing supply chain reforms, maintenance, and trends towards automation and intelligence. Key companies include AVIC Engine, AVIC Xi'an Aircraft, and others [5][15] - It also identifies opportunities in military trade, large aircraft, and low-altitude economy, recommending companies like Guorui Technology and China Power for their growth potential in these areas [5][15] Company Valuations and Financial Analysis - AVIC Engine (600893.SH) has a target price of 44.47 RMB per share for 2025, with an expected EPS of 0.34 RMB and a PE ratio of 278.09x for 2025 [6] - China Power (600482.SH) is projected to have a target price of 26.55 RMB per share for 2025, with an expected EPS of 1.33 RMB and a PE ratio of 47.88x for 2025 [6] - Other companies such as AVIC Heavy Machinery and AVIC Xi'an Aircraft are also highlighted for their strong market positions and growth prospects in the defense sector [6][23][24]

Core Insights - The defense budget is set to increase by 7% year-on-year, with a total of 1,909.561 billion RMB for 2026, slightly down from 7.2% in 2025. Aerospace has been designated as a new emerging pillar industry [5][13] - The six emerging industries are projected to reach a combined output of nearly 6 trillion RMB by 2025, with expectations to double by 2030 [5][13] - The commercial aerospace sector, including large aircraft and space data centers, is experiencing significant growth, with government support for projects like the C919 and C929 aircraft [5][14] Investment Strategy - Focus on companies that align with the "S-curve" evolution, emphasizing supply chain reform and automation trends. Key companies include AVIC Engine, AVIC Xi'an Aircraft, and Aerospace Electronics [5][15] - Target companies in the expansion phase of the "S-curve," particularly those involved in military trade and commercial aerospace, such as Guorui Technology and China Power [5][15] - Explore new cycles in emerging industries, focusing on commercial aerospace, AI, and quantum computing, with companies like Ruichuang Micro-Nano and Fuhua [5][15] Company Valuation and Financial Analysis - AVIC Engine (600893.SH): Current price 61.18 CNY, target value 44.47 CNY, with an expected EPS of 0.22 for 2025 [6] - AVIC High-Tech (600862.SH): Current price 26.58 CNY, target value 31.53 CNY, with an expected EPS of 0.90 for 2025 [6] - Aerospace Materials (688563.SH): Current price 69.48 CNY, target value 67.74 CNY, with an expected EPS of 1.40 for 2025 [6] - Plittech (688333.SH): Current price 102.15 CNY, target value 96.65 CNY, with an expected EPS of 0.73 for 2025 [6] - Unisoc (002049.SZ): Current price 75.16 CNY, target value 80.52 CNY, with an expected EPS of 2.01 for 2025 [6] Market Trends - The defense sector is seeing a shift towards high-end aerospace equipment production, with significant opportunities in the civil aviation market for engine localization [5][23] - The aerospace industry is expected to benefit from modernization efforts, with companies like AVIC Xi'an Aircraft positioned to capitalize on both military and civilian aircraft production [5][24] - The carbon fiber market for aerospace applications is projected to grow, with companies like Guangwei Composite Materials leading in supply [5][26]

Group 1 - The report highlights that the GDP increment for 2026 is expected to exceed 6 trillion yuan, with a growth target of 4.5%-5% [5][6] - The six emerging pillar industries in the technology sector (integrated circuits, aerospace, biomedicine, low-altitude economy, new energy storage, and intelligent robotics) are projected to reach a combined output of over 10 trillion yuan by 2030, doubling from nearly 6 trillion yuan in 2025 [6][15] - The service industry is anticipated to surpass 100 trillion yuan during the "14th Five-Year Plan" period, indicating significant growth potential in the consumption sector [6][15] Group 2 - The report emphasizes the importance of expanding domestic demand, with a focus on service consumption and new consumption models, including a special bond issuance of 250 billion yuan to support the replacement of consumer goods [7][17] - Key areas for service consumption include transportation, housekeeping, online audio-visual services, tourism, automotive aftermarket, and inbound consumption, along with potential growth in performance arts and experiential services [7][17] - The report suggests that the government will encourage consumption in lower-tier markets, promoting innovative consumption experiences and enhancing local cultural brands [7][17] Group 3 - The report recommends a focus on sectors aligned with the "14th Five-Year Plan," particularly in technology industry revolutions, national security, and the expansion of domestic demand [8] - Specific investment themes include the impact of geopolitical tensions on metal resources and energy transitions, as well as opportunities in AI infrastructure and hard technology sectors [8] - The report advises monitoring industries that are expected to benefit from policy support for service consumption and market expansion [8]

Economic Goals - The "15th Five-Year Plan" emphasizes flexible economic growth targets, aiming to maintain growth within a reasonable range and adjust annually based on circumstances[2] - R&D investment growth targets remain unchanged, reflecting a commitment to innovation-driven development[2] - New quantitative goals include the digital economy's core industry value-added ratio, energy production capacity, and aging-related indicators, addressing technological, energy, and demographic challenges[2] Policy Orientation - The policy tone for 2026 is characterized by stability and progress, focusing on quality and efficiency, with an emphasis on balancing domestic and international dynamics[3] - Fiscal policy is more proactive, prioritizing "investment in people" to boost consumption, while "investment in things" focuses on major projects[3] - Monetary policy remains moderately loose, with a goal to promote reasonable price recovery, reinforcing inflation expectations in the market[3] Consumption and Investment - Domestic demand is prioritized, with measures to boost consumption and investment, including a special fund of 100 billion yuan to stimulate demand[4] - Investment focuses on new productivity, new urbanization, and comprehensive human development, with a commitment to support "dual heavy" construction[4] - The issuance of 800 billion yuan in new policy financial instruments aims to attract more social capital for investment[4] New Growth Drivers - Traditional industries will be optimized with unchanged fiscal support for equipment upgrades, while smart manufacturing and construction will be expanded[5] - Emerging and future industries are prioritized, including integrated circuits, aerospace, biomedicine, and low-altitude economy, with new focus areas like future energy and brain-computer interfaces[5] - The digital economy is transitioning to an intelligent economy, with comprehensive support for AI initiatives and new infrastructure projects[5] Green Transition - The target for carbon dioxide emissions per unit of GDP is set to decrease by approximately 3.8%, emphasizing carbon reduction over energy consumption reduction[6] - Establishment of a national low-carbon transition fund to foster new growth points in hydrogen energy and green fuels[6] - Development of a new energy power system and acceleration of smart grid construction are key initiatives[6] Market Reforms - The report emphasizes the need for a unified national market, with measures to combat "involution" competition through capacity regulation and quality supervision[8] - Financial and tax reforms are highlighted, with a focus on expanding private equity and venture capital exit channels[8] - Efforts to enhance the vitality of business entities include addressing overdue payments to enterprises[8] Real Estate and Urbanization - The focus in real estate has shifted from stabilizing the market to ensuring market stability, aligning with previous central economic work conference discussions[9] - Urbanization strategies emphasize a people-centered approach, with plans for the renovation of old urban areas potentially increasing demand in related industries[9]

Group 1 - The government work report emphasizes a comprehensive approach that connects short-term and long-term goals, focusing on the integration of annual targets with the 14th Five-Year Plan and the 2035 vision [5][18] - Key tasks such as expanding domestic demand, strengthening innovation, promoting reform, improving people's livelihoods, and preventing risks are systematically planned within the same framework, reflecting a stronger overall coordination [5][19] - The report introduces a 100 billion yuan fiscal-financial collaborative fund to promote domestic demand, showcasing a granular and actionable policy tool [5][20] Group 2 - The economic growth target for 2026 is set at 4.5%-5%, indicating a balance between stable growth and structural adjustment, with a focus on long-term development [6][24] - The fiscal deficit rate is maintained at around 4%, with a deficit scale of 5.89 trillion yuan, reflecting a proactive fiscal policy stance [32][36] - The emphasis on building a strong domestic market is highlighted as the top priority among the government's ten major tasks, indicating a shift towards a more systematic and long-term approach to domestic demand [33][34] Group 3 - Fiscal policy continues to support both "material" and "human" investments, with significant allocations for technology, education, and social welfare [7][45] - The monetary policy remains moderately loose, with potential for further reductions in reserve requirements and interest rates, aimed at stabilizing economic growth and guiding prices [47][48] - Structural tools are significantly expanded, with a focus on precise financial support for key sectors, including consumption and small and medium-sized enterprises [48][49] Group 4 - The industrial policy emphasizes stabilizing the manufacturing base while nurturing new pillar industries, reflecting a dual approach to industrial upgrading [8][51] - The report identifies emerging pillar industries such as integrated circuits, aerospace, biomedicine, and low-altitude economy, indicating a strategic focus on these sectors [53] - The concept of an "intelligent economy" is introduced, highlighting the government's commitment to promoting large-scale applications of artificial intelligence across various industries [54]

Group 1 - The economic growth target for 2026 is set at 4.5%-5%, with a focus on achieving better results in practice. This growth rate is expected to generate significant economic increments as China's GDP surpasses 140 trillion yuan [1] - The government will implement a more proactive fiscal policy and moderately loose monetary policy to support this growth target. The fiscal budget expenditure is projected to exceed 30 trillion yuan for the first time this year [2] - Key emerging industries will be prioritized, including integrated circuits, aerospace, biomedicine, low-altitude economy, new energy storage, and intelligent robotics. Future industries such as quantum technology, biomanufacturing, green hydrogen energy, and 6G will also be developed [1][2] Group 2 - The capital market will focus on supporting technological innovation, with two new inclusive reform measures being introduced: deepening the reform of the ChiNext board and optimizing the refinancing mechanism to simplify processes and improve convenience [1] - The central bank will flexibly use tools like reserve requirement ratio cuts and interest rate reductions, with a focus on expanding domestic demand, supporting technological innovation, and aiding small and micro enterprises [2] - The consumption market in China is expected to grow steadily, with policies aimed at further releasing consumer spending and promoting the purchase of automobiles and mobile phones through national subsidies [2]

Core Viewpoint - The article discusses the challenges and successes of BMW as a pioneer in the automotive industry, emphasizing its resilience and ability to adapt through various historical crises, including two world wars and market fluctuations. It highlights BMW's evolution from a manufacturer of aircraft engines to a symbol of "sporty luxury" in the automotive sector, while also addressing the criticisms and changes in its product line over the years [1][64]. Group 1: Historical Background - BMW was founded in 1916 as the Bavarian Aircraft Factory, initially focusing on aircraft engines before transitioning to motorcycles and eventually automobiles due to historical circumstances [5][14]. - The company faced significant challenges during and after both World Wars, including being forced to pivot from luxury vehicles to basic industrial products and suffering extensive damage to its facilities [24][25][29]. - BMW's survival through these crises was marked by strategic decisions, such as acquiring existing production lines and focusing on motorcycle manufacturing before entering the automotive market [14][29]. Group 2: Product Evolution - BMW's first motorcycle, the R32, launched in 1923, set the stage for its dominance in the motorcycle industry, leading to a successful transition into car manufacturing [12][14]. - The introduction of the 320 series in 1932 marked BMW's first major foray into automobiles, followed by the iconic 328 sports car, which established BMW's reputation in motorsports [15][17]. - The 1500 sedan, launched in 1962, initiated the "New Class" platform, which differentiated BMW from competitors by emphasizing sporty luxury and performance [34][36]. Group 3: Market Position and Strategy - BMW's strategy has evolved to focus on a balance between luxury and sportiness, appealing to a broad consumer base while maintaining a distinct brand identity [34][36]. - The introduction of the 3 Series in 1975 became a cornerstone of BMW's lineup, with multiple generations adapting to market demands while retaining core performance characteristics [39][41]. - Recent models, including the seventh generation of the 3 Series, have faced criticism for shifting towards comfort over sportiness, yet they continue to perform well in sales, indicating a successful adaptation to consumer preferences [59][63]. Group 4: Innovation and Future Directions - BMW has a history of innovation, being an early adopter of electric vehicle technology and continuously evolving its product offerings to include hybrid and fully electric models [66][68]. - The upcoming "Neue Klasse" platform aims to further enhance BMW's electric vehicle lineup, showcasing the company's commitment to sustainability and technological advancement [66][68]. - The article suggests that BMW's ability to adapt while maintaining its core values serves as a lesson for new entrants in the automotive industry, emphasizing the importance of innovation and resilience [68].