Market Overview - The oil service engineering sector experienced a decline of 2.09% on July 31, with Tongyuan Petroleum leading the drop [1] - The Shanghai Composite Index closed at 3573.21, down 1.18%, while the Shenzhen Component Index closed at 11009.77, down 1.73% [1] Individual Stock Performance - Notable declines in individual stocks include: - Beiken Energy (002828) down 3.98% to 10.13 [1] - PetroChina Engineering (600339) down 2.56% to 3.43 [1] - Sinopec Oilfield Service (600871) down 1.96% to 2.00 [1] - The trading volume and turnover for these stocks indicate significant market activity, with Beiken Energy having a turnover of 2.82 billion [1] Capital Flow Analysis - The oil service engineering sector saw a net outflow of 149 million from institutional investors, while retail investors contributed a net inflow of 93.17 million [2] - The capital flow for individual stocks shows: - Haiyou Engineering (600583) with a net inflow of 17.39 million from institutional investors [3] - Zhongyou Engineering (600339) with a net inflow of 15.79 million from institutional investors [3] - Beiken Energy (002828) faced a net outflow of 16.96 million from institutional investors [3]

Core Insights - The oil service engineering sector experienced a rise of 0.91% on July 30, with Qianeng Hengxin leading the gains [1] - The Shanghai Composite Index closed at 3615.72, up 0.17%, while the Shenzhen Component Index closed at 11203.03, down 0.77% [1] Stock Performance - Qianeng Hengxin (300191) closed at 21.00, up 11.82% with a trading volume of 350,000 shares and a transaction value of 712 million yuan [1] - Keli Co., Ltd. (920088) closed at 40.80, up 9.59% with a trading volume of 111,900 shares [1] - Tongyuan Petroleum (300164) closed at 5.79, up 7.22% with a trading volume of 2,382,700 shares and a transaction value of 1.367 billion yuan [1] - Other notable stocks include Zhunyou Co. (002207) up 6.22% and Beiken Energy (002828) up 2.53% [1] Capital Flow - The oil service engineering sector saw a net inflow of 104 million yuan from institutional investors, while retail investors experienced a net outflow of 155 million yuan [2] - The main capital inflow was led by Tongyuan Petroleum with a net inflow of 84.5 million yuan [3] - Qianeng Hengxin had a net inflow of 67.5 million yuan from institutional investors, but a net outflow of 60.4 million yuan from retail investors [3]

Market Overview - On July 29, the oil service engineering sector rose by 0.05% compared to the previous trading day, with Renji Co., Ltd. leading the gains [1] - The Shanghai Composite Index closed at 3609.71, up 0.33%, while the Shenzhen Component Index closed at 11289.41, up 0.64% [1] Stock Performance - Key stocks in the oil service engineering sector showed varied performance: - Renji Co., Ltd. (002629) closed at 8.20, up 2.37% with a trading volume of 257,200 shares and a turnover of 207 million yuan [1] - Zhongman Petroleum (603619) closed at 19.74, up 0.41% with a trading volume of 118,100 shares and a turnover of 232 million yuan [1] - Potential Energy Trust (300191) closed at 18.78, up 0.37% with a trading volume of 65,500 shares and a turnover of 123 million yuan [1] - Other notable stocks included: - CNOOC Engineering (600583) at 5.63, up 0.36% [1] - PetroChina Engineering (600339) at 3.52, down 0.28% [1] Capital Flow - The oil service engineering sector experienced a net outflow of 30.52 million yuan from institutional investors, while retail investors saw a net inflow of 50.04 million yuan [2] - The overall capital flow indicates a mixed sentiment among different investor types, with institutional investors pulling back while retail investors showed interest [2] Individual Stock Capital Flow - Specific stocks showed varied capital flow dynamics: - Tongyuan Petroleum (300164) had a net inflow of 14.32 million yuan from institutional investors, while retail investors had a net outflow of 35.93 million yuan [3] - CNOOC Development (600968) saw a net inflow of 8.49 million yuan from institutional investors, with a net outflow of 12.53 million yuan from retail investors [3] - Renji Co., Ltd. (002629) experienced a net outflow of 4.61 million yuan from institutional investors, but a net inflow of 7.77 million yuan from retail investors [3]

Core Viewpoint - Zhongman Petroleum has signed a significant exploration and development contract for the Zerafa II natural gas block in Algeria, which is expected to positively impact the company's future performance [2][4]. Group 1: Company Performance - As of July 25, 2025, Zhongman Petroleum's stock closed at 19.86 yuan, reflecting a 2.53% increase from the previous week's 19.37 yuan [1]. - The company's total market capitalization is 9.182 billion yuan, ranking 6th out of 13 in the oil service engineering sector and 1867th out of 5148 in the A-share market [1]. Group 2: Contract Details - On July 21, 2025, Zhongman Petroleum signed a 30-year exploration and development contract for the Zerafa II natural gas block with the Algerian National Oil Company, with a potential 10-year extension [2]. - The Zerafa II block covers an area of 38,697.73 square kilometers, with geological reserves and resources estimated at 140 billion cubic meters, while the company's preliminary assessment predicts 109.257 billion cubic meters [2]. Group 3: Dividend Distribution - Zhongman Petroleum announced a cash dividend of 0.30 yuan per share, with the A-share registration date set for July 29, 2025, and the dividend payment date on July 30, 2025 [3][4]. - The total cash dividend distribution amounts to 137,503,248.30 yuan based on 458,344,161 shares [3].

Core Insights - The report highlights the resilience and growth potential of the logistics and procurement sector in China, with a total social logistics volume of 138.7 trillion yuan in the first five months of the year, reflecting a year-on-year growth of 5.3% [2] - The monetary policy committee of the People's Bank of China emphasizes the need for a moderately loose monetary policy to support stable economic growth and maintain reasonable price levels [2] - China's foreign trade shows unique resilience, with a total import and export value of 17.94 trillion yuan in the first five months, marking a 2.5% year-on-year increase [2] - The industrial sector's profit has seen a slight decline, with profits totaling 2.72 trillion yuan in the first five months, down 1.1% year-on-year, influenced by insufficient effective demand and declining industrial product prices [2] - The small and medium-sized enterprises (SMEs) sector is rapidly developing, with over 60 million SMEs expected by the end of 2024, and significant growth in revenue for large-scale industrial SMEs [2] Industry Analysis - The pet food industry shows strong consumer resilience, with pet food sales reaching 7.5 billion yuan during the 618 shopping festival, indicating a robust growth trend [7][8] - The report identifies a shift towards health-oriented and refined pet food products, with emerging categories like air-dried and baked food experiencing rapid growth [7] - The export of pet food has faced challenges due to tariff disruptions, with a 5.52% year-on-year decline in export volume in May, but the long-term impact is expected to be manageable [9] - The oil service engineering sector is experiencing high demand due to increased capital expenditure in the upstream oil and gas sector, with significant revenue growth projected for companies like CNOOC [11][12][15] - The report forecasts that CNOOC's capital expenditure will range from 125 billion to 135 billion yuan in 2025, driving further growth in oil service engineering business [14][15]

Investment Rating - The report maintains a "Positive" investment rating for the oil and petrochemical industry, indicating an expectation of performance that exceeds the market benchmark by more than 5% [2]. Core Insights - The oil service engineering sector is experiencing significant profitability growth due to high upstream capital expenditure in the global oil and gas industry, driven by improving demand and easing inflation pressures [4][5]. - Domestic oil and gas resource dependency is high, with consumption increasing annually, suggesting a strong potential for future demand growth that will drive upstream exploration and development [5][23]. - Global upstream oil and gas investments are projected to remain robust, with expected expenditures of $474 billion, $538 billion, and $590 billion from 2022 to 2024, reflecting year-on-year growth rates of 18.2%, 13.5%, and 9.67% respectively [6][29]. - The report highlights that companies like CNOOC are expected to increase capital expenditures, which will further stimulate oil service engineering business volumes [7][36]. Summary by Sections Section 1: Economic Environment and Performance - Since 2024, the easing of inflation in the U.S. and gradual recovery of the domestic economy have positively impacted the profitability of the oil service engineering sector, with revenues reaching 310.84 billion yuan in 2024, a 4.7% increase year-on-year, and net profits of 10.916 billion yuan, up 10.79% [4][15]. - In Q1 2025, the sector achieved revenues of 63.406 billion yuan, a 4.08% increase year-on-year, with net profits of 2.713 billion yuan, reflecting a 20.77% growth [4][15]. Section 2: Future Demand and Capital Expenditure - China's crude oil production is projected to increase from 204.72 million tons in 2022 to 212.89 million tons in 2024, while imports are significantly higher, indicating a dependency ratio exceeding 250% [5][23]. - Natural gas production is also on the rise, with consumption reaching 394.49 billion cubic meters in 2023, suggesting a strong upward trend in demand [5][25]. - The report anticipates that domestic crude oil demand will rise to 17.10 million barrels per day in 2024, a 4.46% increase year-on-year [5][25]. Section 3: Investment Recommendations - The report recommends focusing on companies with high growth potential, such as CNOOC and its subsidiaries, which are expected to benefit from increased capital expenditures and favorable market conditions [8][43]. - CNOOC's capital expenditure for 2025 is projected to be between 125 billion and 135 billion yuan, with expected revenue growth of 11% and net profit growth of 50.7% for its oil service engineering subsidiary [7][36].

Quantitative Models and Construction Methods 1. Model Name: Broad-based Index Heat Rotation Strategy - **Model Construction Idea**: The strategy is based on the weekly heat change rate (MA2) of broad-based indices. By identifying the index with the highest heat change rate, the strategy aims to capture short-term market sentiment shifts[7][13][16] - **Model Construction Process**: 1. Group all A-share stocks into five categories: CSI 300, CSI 500, CSI 1000, CSI 2000, and "Others" 2. Calculate the total heat indicator for each group by summing the heat indicators of constituent stocks 3. Compute the weekly heat change rate for each group and apply a 2-week moving average (MA2) for smoothing 4. At the end of each week, invest in the index with the highest heat change rate (MA2). If the "Others" group has the highest rate, remain in cash[8][11][13] - **Model Evaluation**: The strategy demonstrates the ability to capture short-term sentiment-driven opportunities in the market[13] --- Backtesting Results of Models 1. Broad-based Index Heat Rotation Strategy - **Annualized Return**: 8.74% since 2017[16] - **Maximum Drawdown**: 23.5%[16] - **Cumulative Return (2025)**: 9.6%[16] --- Quantitative Factors and Construction Methods 1. Factor Name: Total Heat Indicator - **Factor Construction Idea**: The total heat indicator is used as a proxy for market sentiment, aggregating the attention metrics of individual stocks[7] - **Factor Construction Process**: 1. Define the total heat indicator for individual stocks as the sum of browsing, watchlist additions, and click counts 2. Normalize the indicator by dividing it by the total market value on the same day 3. Multiply the normalized value by 10,000 to scale the indicator within the range [0, 10,000][7] - **Factor Evaluation**: The factor effectively captures market sentiment at the stock level and can be aggregated to broader categories like indices, industries, or concepts[7] 2. Factor Name: Weekly Heat Change Rate (MA2) - **Factor Construction Idea**: This factor measures the short-term change in market sentiment by tracking the weekly variation in the total heat indicator[13] - **Factor Construction Process**: 1. Calculate the weekly change rate of the total heat indicator for each stock or group 2. Apply a 2-week moving average (MA2) to smooth out short-term fluctuations[13][20] - **Factor Evaluation**: The MA2 smoothing enhances the stability of the factor, making it suitable for identifying trends in market sentiment[13] 3. Factor Name: Concept Heat Ranking - **Factor Construction Idea**: This factor identifies the hottest and coldest concepts based on their weekly heat change rates, enabling the construction of sentiment-driven portfolios[31] - **Factor Construction Process**: 1. Rank concepts by their weekly heat change rates 2. Select the top 5 concepts with the highest heat change rates 3. Construct two portfolios: - **TOP Portfolio**: Select the top 10 stocks with the highest total heat within each concept - **BOTTOM Portfolio**: Select the bottom 10 stocks with the lowest total heat within each concept[31] - **Factor Evaluation**: The factor highlights the potential for excess returns by exploiting sentiment-driven mispricing in concept stocks[31] --- Backtesting Results of Factors 1. Total Heat Indicator - **No specific backtesting results provided** 2. Weekly Heat Change Rate (MA2) - **No specific backtesting results provided** 3. Concept Heat Ranking - **BOTTOM Portfolio Annualized Return**: 15.71%[33] - **BOTTOM Portfolio Maximum Drawdown**: 28.89%[33] - **BOTTOM Portfolio Cumulative Return (2025)**: 18%[33]

Core Viewpoint - The recent geopolitical tensions between Israel and Iran have triggered a risk-off sentiment in global capital markets, impacting the A-share market, which experienced a sudden decline on June 13, 2025 [2][20]. Market Reaction - On June 13, sectors such as oil, gold, and military industries saw gains, disrupting the upward momentum of other sectors like finance, new consumption, gaming, and media [4][10]. - The market's trading tone on the following Monday will depend on whether the conflict escalates or de-escalates, with historical patterns suggesting potential outcomes [4][20]. Historical Context - A comparison is drawn to the initial phase of the Russia-Ukraine conflict in February 2022, where the A-share market reacted similarly to geopolitical tensions, with a notable decline followed by a brief recovery [6][8]. - On February 24, 2022, the A-share market saw a significant drop, with the ChiNext index falling by 2.11% as panic set in [6][8]. Sector Performance - In the wake of the Russia-Ukraine conflict, sectors such as oil service and precious metals initially surged before experiencing a pullback, while military-related sectors peaked and then declined [10][18]. - The data shows that on February 24, 2022, oil service engineering and precious metals sectors rose by 7.13% and 7.06%, respectively, while consumer and technology sectors faced declines [9][11]. Investment Trends - The article identifies three main trends in the A-share market during geopolitical conflicts: 1. Risk-off sentiment leads to capital flowing into defensive sectors like oil, gold, and military [15][16]. 2. A quick rebound occurs within a week as the market digests negative news [17]. 3. Significant sector differentiation, with energy and military sectors performing well while consumer and tech sectors decline due to reduced risk appetite [18][19]. Future Outlook - Analysts suggest that the A-share market may not replicate the downturn seen in March-April 2022, as the market is expected to return to its original rhythm over time [20][21]. - The upcoming week will see significant economic data releases, including industrial production and fixed asset investment reports, which could influence market sentiment [27][28].

Group 1 - CNOOC Services (中海油服) closed at 14.26 yuan on June 13, 2025, up 4.85% from the previous week, with a market cap of 68.043 billion yuan, ranking 1st in the oil service engineering sector and 206th in the A-share market [1] - The company provided a guarantee of 200 million USD for its wholly-owned subsidiary COSL Middle East FZE, with a guarantee period until June 8, 2026 [1][2] - As of the announcement date, the total external guarantees by the company and its subsidiaries amounted to approximately 51.36 billion yuan, accounting for about 115.6% of the latest audited net assets [1] Group 2 - COSL Middle East FZE signed a USD revolving loan agreement with Agricultural Bank of China Hong Kong Branch, with the company providing a guarantee for the borrower [2] - As of March 31, 2025, COSL Middle East FZE had total assets of 3.17256 billion yuan and total liabilities of 2.74031 billion yuan, resulting in a net asset of 432.25 million yuan [2] - The board of directors believes that the guarantee is in compliance with relevant laws and regulations and does not harm the interests of the company and its shareholders, especially minority shareholders [2]

Group 1: Oil and Petrochemical Industry - OPEC+ is continuing to increase production, which may put pressure on oil prices. The report suggests that despite short-term bearish sentiment due to trade wars, the domestic petrochemical industry maintains a cost advantage due to improved cost structures [6][7]. - The report recommends focusing on upstream resource companies like China National Petroleum and China National Offshore Oil Corporation, as oil prices are expected to recover after hitting seasonal lows in Q2 [6][7]. - The marine oil service industry is projected to maintain stable capital expenditures, with domestic reserves and production continuing to grow. Companies like CNOOC Engineering and Bohai Drilling are highlighted for their low valuations and advanced technology [7]. Group 2: Automotive Industry - Changan Automobile reported a wholesale sales volume of 224,300 units in May 2025, reflecting a month-on-month increase of 8.47% and a year-on-year increase of 17.65%. The cumulative sales volume for the first five months of 2025 reached 1.1202 million units, up 1.00% year-on-year [8][9]. - The indirect controlling shareholder, China Ordnance Equipment Group, has received approval for a restructuring plan, which is expected to enhance Changan's strategic position and operational efficiency [10][11]. - The report anticipates significant growth in Changan's electric vehicle segment, with a projected increase in sales driven by new model launches and international expansion [9][11]. Group 3: Employment and Economic Indicators - The U.S. non-farm payrolls added 139,000 jobs in May 2025, slightly above expectations, but the report notes a downward revision in previous months' data, indicating potential underlying weaknesses in the labor market [12][13]. - The service sector remains the primary contributor to job growth, while the manufacturing sector shows signs of cooling, likely due to declining retail demand [14][15]. - Despite stable unemployment rates, the report highlights rising wage growth, which may complicate the Federal Reserve's decision-making regarding interest rate cuts [15]. Group 4: Macro Economic Outlook - The report expresses optimism for the recovery of the consumer services sector, technology, and cyclical leaders, suggesting a potential reversal in these areas [16][19]. - Global asset performance shows a rebound in stock markets, with commodities like oil and gold also experiencing price increases due to improved trade relations and monetary policy adjustments [16][17]. - The report emphasizes the importance of monitoring macroeconomic indicators, including manufacturing PMI and industrial output, to gauge future economic trends [19].