Core Viewpoint - The report highlights the phenomenon of "involution" in various industries within the A-share market, particularly emphasizing the midstream manufacturing sector's more pronounced competition compared to upstream resource industries. It notes that the willingness to expand production has significantly decreased across most industries, with over half showing strong capacity for expansion [1][2]. Existing Capacity Utilization Level - The industry capacity utilization rate is calculated using the Cobb-Douglas production function, measuring the ratio of actual output to potential maximum output under given capital and labor factors. As of Q1 2025, most industries are operating at historically low capacity utilization levels, with only the home appliance and electronics sectors showing upward trends [1]. Potential Incremental Capacity Level - The marginal changes in industry capacity will influence capacity utilization trends, particularly the timing of turning points. The willingness to expand production is assessed through the historical ratio of capital expenditures to depreciation. As of Q1 2025, most industries are at historically low levels of expansion willingness, except for utilities, coal, and non-ferrous metals, which show relatively stronger willingness. The expansion capacity is primarily determined by current cash reserves and cash flow, with most primary industries at historically high levels of expansion capacity [2]. Historical Capacity Clearing in Different Industries - In emerging industries, the clearing signal is linked to cash capability and a drop in expansion willingness. For instance, the solar industry experienced a rapid decline in capacity utilization from 2011 to 2015, reaching a low point in Q1 2013, followed by two years of low-level fluctuations until significant relief in overcapacity occurred in Q2 2014 when both cash capability and expansion willingness dropped to 0%. In traditional industries like steel and coal, the clearing signal is an improvement in cash capability, with both industries undergoing a prolonged decline in potential incremental capacity, leading to a "V" shaped trajectory in capacity utilization [3]. Current Capacity Clearing Trajectory - Drawing from past experiences, the report discusses the current capacity clearing trajectory. In the renewable energy sector, lithium battery and solar capacity utilization rates have reached historical lows, with lithium's potential incremental capacity and utilization rates declining earlier than solar. Both sectors' expansion willingness is nearing 0% for the first time in a decade, while cash capability remains around historical median levels. Traditional industries, such as steel and coal, are not facing severe overcapacity issues like in previous cycles, with current capacity utilization rates approaching 19-year lows, and signs of improving cash capability in basic chemicals and steel [4].

Group 1 - The chemical sector continues to rise, with the Chemical ETF (516020) showing a maximum intraday increase of 1.83% and closing up 1.53% [1] - Notable stocks in the sector include lithium battery, soda ash, and fluorine chemical companies, with significant gains from Hebang Biological (up 4.76%) and Tianci Materials (up 4.03%) [1] - The chemical sector has attracted significant capital, with a net inflow of 26.418 billion yuan over the past five days, ranking second among 30 sectors [1][3] Group 2 - The "anti-involution" policy is benefiting the lithium battery sector, as it leads to project delays and a healthier supply-demand balance [3] - The chemical industry is currently at the bottom of the cycle, facing challenges from increased competition, but supply-side reforms are expected to optimize the industry structure [4] - The current valuation of the Chemical ETF (516020) is at a low point, suggesting a good opportunity for long-term investment [4] Group 3 - The chemical sector is expected to undergo a re-pricing based on cost factors, focusing on green and low-carbon initiatives [5] - Domestic policies frequently emphasize supply-side requirements, while international uncertainties in chemical supply are increasing [5] - The Chemical ETF (516020) provides a diversified investment opportunity across various sub-sectors, with a significant portion allocated to large-cap leading stocks [6]

Group 1 - Lithium carbonate prices have recently rebounded, with futures contracts experiencing an 8% increase on July 24, marking the first significant rise of the year [1] - The average price of battery-grade lithium carbonate reached 70,150 yuan/ton on July 24, up 14.9% from the beginning of the month [1] - The increase in lithium carbonate prices has led to a 10% rise in downstream battery cell product prices [1] Group 2 - The recent price surge is largely driven by market sentiment rather than fundamental factors, influenced by expectations surrounding "anti-involution" policies in the lithium battery industry [2][4] - The "anti-involution" initiative aims to shift competition focus from price wars to quality and innovation, although no substantial policies have been implemented yet [2] - Supply-side uncertainties, such as stricter compliance checks on mining rights, have also contributed to the price increase [2][3] Group 3 - The lithium industry is currently experiencing its second major price fluctuation cycle since 2020, with prices previously peaking at nearly 600,000 yuan/ton in 2022 [4] - Despite the recent price recovery, the fundamental supply-demand imbalance remains, with expectations of continued oversupply in the second half of the year [4][5] - Future price fluctuations for lithium carbonate are projected to remain within the range of 56,000 to 72,000 yuan/ton by the second half of 2025 [5]

Market Overview - The A-share market saw all three major indices reach new highs for the year, with the Shanghai Composite Index rising by 0.65% to surpass 3600 points, the Shenzhen Component Index increasing by 1.21%, and the ChiNext Index climbing by 1.5% [1] - The total market turnover was approximately 1.87 trillion yuan, a decrease of 24.5 billion yuan compared to the previous trading day, with over 4300 stocks rising [1] Sector Performance - The Hainan sector led the gains, with concepts related to the Hainan Free Trade Zone, horse racing, and duty-free shops showing significant increases [3] - The energy metals, minor metals, and new metal materials sectors ranked among the top three in terms of growth, with stocks like Shengxin Lithium Energy, Tibet Mining, and Zhongtung High-tech hitting the daily limit [3][13] Commodity Futures - Most domestic commodity futures closed higher, with coking coal futures hitting the daily limit, lithium carbonate rising over 7%, glass increasing over 6%, polysilicon up more than 5%, and soda ash rising over 4% [4] Company Highlights - Zhongshe Co., Ltd. (002883) experienced a rapid increase, hitting the daily limit within 9 minutes at the end of trading, marking its fourth consecutive day of limit-up [5][8] - Industrial Fulian saw its stock price rise by over 8% during the day, reaching a historical high, and closing up 7.04% with a total market capitalization of 565 billion yuan [6] Industry Insights - Zhongshe Co., Ltd. focuses on providing comprehensive engineering design consulting and general contracting services across four major business areas: transportation, municipal, construction, and environment [10] - According to Guosen Securities, the infrastructure sector is expected to see new development opportunities driven by policy support and market demand, particularly in major projects that optimize energy structure and enhance regional coordinated development [11] Film and Entertainment Sector - The film and cinema sector showed strong performance, with stocks like Happiness Blue Sea hitting the daily limit, and China Film and Golden Screen Films also seeing significant gains [18] - Recent initiatives, such as the issuance of movie vouchers in multiple regions, are expected to boost cinema attendance and revenue, with Beijing planning to invest 10 million yuan in subsidies for moviegoers [20] - The total box office for the summer season has already surpassed 4.4 billion yuan, with major films leading the box office [21] - Analysts predict a significant year-on-year improvement in box office performance due to a recovery in supply and an increase in the number of films released [22]

Report Industry Investment Rating - No relevant content provided Core Viewpoints of the Report - On July 23, 2025, the 2509 contract of lithium carbonate futures dropped 4.07% to 69,380 yuan/ton. The average price of battery-grade lithium carbonate rose 1,350 yuan/ton to 70,450 yuan/ton, the average price of industrial-grade lithium carbonate rose 1,350 yuan/ton to 68,800 yuan/ton, and the price of battery-grade lithium hydroxide (coarse particles) rose 1,100 yuan/ton to 59,820 yuan/ton. The warehouse receipt inventory increased by 665 tons to 10,754 tons [3]. - In terms of supply, the production in July is expected to increase 3.9% month-on-month to 81,150 tons, and the weekly production increased by 302 tons to 19,115 tons. Among them, lithium extraction from spodumene increased by 330 tons to 9,324 tons, lithium extraction from lepidolite increased by 25 tons to 5,100 tons, lithium extraction from salt lakes increased by 17 tons to 3,282 tons, and lithium extraction from recycled materials decreased by 70 tons to 1,409 tons. In June 2025, China's lithium carbonate import volume was 17,700 tons, a month-on-month decrease of 16.3% and a year-on-year decrease of 9.6%. In terms of demand, the production schedule in July increased slightly month-on-month, and the consumption of lithium carbonate by the two major main materials increased by 3% month-on-month to about 80,800 tons. In terms of inventory, the weekly inventory increased by 1,827 tons to 142,620 tons, among which the downstream inventory increased by 506 tons to 41,271 tons, the intermediate link inventory increased by 1,880 tons to 43,310 tons, and the upstream inventory decreased by 559 tons to 58,039 tons [3]. - Yesterday, the positions decreased and the lithium price fell. In the market, the news continued to ferment. The warehouse receipts increased slightly for two consecutive days, but the total inventory level was still low, and the lithium ore price was running strongly. In the short term, the price may still fluctuate strongly. Pay attention to the warehouse receipt inventory and the situation of mines in Jiangxi [3]. Summary by Relevant Catalogs 1. Daily Data Monitoring - The report provides price data of various products in the lithium - battery industry chain on July 23 and 22, 2025, including futures, lithium ore, lithium carbonate, lithium hydroxide, lithium hexafluorophosphate, precursors, cathode materials, cells, and batteries. For example, the closing price of the main futures contract dropped from 72,880 yuan/ton on July 22 to 69,380 yuan/ton on July 23, and the price of lithium hexafluorophosphate rose from 50,750 yuan/ton to 51,000 yuan/ton [5]. 2. Chart Analysis 2.1 Ore Prices - Charts show the price trends of lithium - containing ores such as spodumene concentrate (6%, CIF China), lepidolite (Li2O: 1.5% - 2.0%, 2.0% - 2.5%), and amblygonite (Li2O: 6% - 7%, 7% - 8%) from 2024 to 2025 [6][8]. 2.2 Lithium and Lithium Salt Prices - Charts present the price trends of metal lithium, battery - grade and industrial - grade lithium carbonate, battery - grade and industrial - grade lithium hydroxide, and lithium hexafluorophosphate from 2024 to 2025 [9][11][13]. 2.3 Spreads - Charts display the spreads between battery - grade lithium hydroxide and battery - grade lithium carbonate, battery - grade and industrial - grade lithium carbonate, CIF Japan - South Korea battery - grade lithium hydroxide and domestic battery - grade lithium hydroxide, and the basis from 2024 to 2025 [16][17][18]. 2.4 Precursors & Cathode Materials - Charts show the price trends of ternary precursors (523, 622, 811), ternary materials (523, 622, 811), lithium iron phosphate (power - type, medium - high - end energy storage, low - end energy storage), lithium manganate (power - type, capacity - type), and lithium cobalt oxide from 2024 to 2025 [21][24][27]. 2.5 Lithium Battery Prices - Charts present the price trends of 523 square ternary cells, square lithium iron phosphate cells, cobalt - acid lithium cells, and square lithium iron phosphate batteries from 2024 to 2025 [29][31]. 2.6 Inventory - Charts show the inventory trends of downstream, smelters, and other links of lithium carbonate from November 2024 to July 2025 [34][36]. 2.7 Production Costs - The chart shows the production profit trends of lithium carbonate from different raw materials such as purchased ternary pole piece black powder, lithium iron phosphate pole piece black powder, lithium mica concentrate, and spodumene concentrate from 2024 to 2025 [38][39].

Group 1 - The company announced a stock suspension due to the planning of a change in control, which may lead to a change in the actual controller [1] - The actual controllers, Zhu Jun and Lu Shunmin, are in discussions regarding the control change, but no formal agreements have been signed yet [1] - Industry insiders speculate that the potential acquirer may be interested in the company's rich lithium mineral resources [1] Group 2 - The company disclosed that its wholly-owned subsidiary, Yichun Yinli New Energy Co., Ltd., will initiate a comprehensive production suspension for maintenance starting July 25, lasting approximately 26 days [1] - The main purpose of the maintenance is to reduce production costs and ensure the safe and stable operation of production equipment [1] - During the maintenance period, a technical team will conduct a thorough inspection and maintenance of production equipment, along with technical upgrades to improve production line efficiency [1]

Core Insights - The report highlights that most primary industries in the A-share market are experiencing intense competition, particularly in the midstream manufacturing sector compared to upstream resource products [1] - It notes that the willingness to expand production has dropped to a low point across most industries, with over half showing strong capacity for expansion [1] - The report emphasizes different signals for capacity clearance in traditional versus emerging industries, focusing on improving expansion capabilities for traditional sectors and low expansion willingness for emerging sectors [1] Existing Capacity Utilization Levels - The methodology for measuring industry capacity utilization is based on the Cobb-Douglas production function, assessing the ratio of actual output to potential maximum output under given capital and labor conditions [8] - As of Q1 2025, most industries are at historical low levels of capacity utilization, with only the home appliance and electronics sectors showing upward trends [8][9] Potential Incremental Capacity Levels - The report evaluates potential new capacity based on two dimensions: willingness to expand and capacity to expand. The willingness is measured by the historical ratio of capital expenditures to depreciation, indicating active investment in expansion [9] - As of Q1 2025, most industries are at historical low levels of expansion willingness, with only utilities, coal, and non-ferrous metals showing relatively strong willingness [9] - The capacity to expand is primarily determined by current cash reserves and cash flow conditions, with most primary industries at historical mid-high levels of expansion capacity [9] Historical Capacity Clearance Patterns - Emerging industries signal clearance through cash capability and low expansion willingness. The report references the solar industry's overcapacity from 2011 to 2015, where capacity utilization rapidly declined and remained low until cash capability and expansion willingness dropped to zero [10][12] - Traditional industries signal clearance through improvements in cash capability. The steel and coal industries experienced a prolonged decline in potential incremental capacity, with capacity utilization showing a "V" shape trajectory [12] Current Capacity Clearance Trajectories - In the current cycle, the lithium battery and solar sectors have reached low capacity utilization levels, with both showing expansion willingness near the 0% percentile over the past decade, while cash capability remains around historical median levels [25] - Traditional resource sectors are not facing severe overcapacity issues as seen in previous cycles, with steel and coal industries nearing 2019 low points in capacity utilization, although signs of cash capability improvement are emerging in basic chemicals and steel [25]

Core Viewpoints - The A-share market is experiencing a new trend driven by policy measures aimed at "anti-involution," expanding domestic demand, and stimulating demand in the hydropower sector, with the Shanghai Composite Index reaching a new high of 3613.02 in 2023 [1] - The "anti-involution" policy is expected to positively impact both PPI and CPI, benefiting traditional industries like steel and new sectors such as photovoltaics and automobiles [1][4] - The market sentiment has improved significantly in the short term, leading to a substantial rebound in commodity prices and a notable recovery in related industry indices, reflecting optimistic expectations for economic recovery [1][4] Policy Evolution of "Anti-Involution" - The concept of preventing "involution" was first introduced in a Politburo meeting on July 30, 2024, and has since been reiterated in subsequent economic work meetings and government reports [2][3] - The Ministry of Industry and Information Technology (MIIT) plans to implement a new round of growth stabilization work for ten key industries, focusing on structural adjustments and the elimination of outdated production capacity [3][4] Key Areas of Focus in "Anti-Involution" - The current "anti-involution" initiative covers a broader range of industries compared to previous supply-side reforms, addressing both traditional industries facing demand shortages and emerging sectors experiencing supply expansion [4][5] - Specific industries affected include: - **Petrochemicals**: Facing demand contraction and supply shocks, with profitability under pressure [4][5] - **Non-ferrous Metals**: Overcapacity in copper smelting leading to sustained losses [5] - **Automobiles**: Structural contradictions between traditional fuel vehicles and new energy vehicles, with increasing price competition [5] - **Lithium Batteries**: Low-price competition stemming from aggressive capacity expansion in previous years [5] - **Photovoltaics**: Market demand shrinking due to external trade barriers and domestic subsidy reductions, leading to widespread losses [5] - **Steel**: High fixed costs and weak terminal sales resulting in increased production to lower average costs, further depressing prices [5][6] - **Construction Materials**: Weak demand due to the downturn in real estate, with prices continuing to decline [6] Short-term and Long-term Strategies - Short-term measures such as eliminating outdated production capacity and limiting production can help improve supply-demand structures and boost commodity prices [7] - Long-term strategies involve establishing a systematic reform mechanism to ensure a balanced market environment, focusing on the gradual elimination of excess capacity while controlling new capacity [7] Key Products - **Petrochemical ETF (159731)**: Tracks the performance of petrochemical industry stocks [8] - **Non-ferrous Metals ETF (516650)**: Reflects the overall performance of non-ferrous metal industry stocks [8] - **New Energy Vehicle ETF (515030)**: Represents the performance of companies involved in the new energy vehicle sector [9] - **New Energy ETF (516850)**: Tracks companies in the renewable energy sector [10] - **Entrepreneur Board New Energy ETF (159368)**: Focuses on high-quality companies in the new energy sector listed on the Growth Enterprise Market [10] - **Free Cash Flow ETF (159201)**: Reflects the price changes of companies with high and stable free cash flow [11]

Summary of Key Points from Conference Call Records Industry or Company Involved - The discussion primarily revolves around the **A-share market** and **infrastructure investment**, particularly focusing on the **Yaxi Water Conservancy Project** and its implications for various sectors including **construction**, **resources**, and **new energy**. Core Points and Arguments 1. **Market Catalysts and Fund Flows**: The A-share market has seen a surge due to significant catalysts such as the announcement of a **1.2 trillion yuan** investment in the Yaxi Water Conservancy Project and the Ministry of Industry and Information Technology's new growth stabilization plan for key industries. This has led to increased investor interest in undervalued sectors like infrastructure and cyclical goods [2][4][5]. 2. **Impact of Yaxi Water Conservancy Project**: Although the Yaxi project is estimated to contribute only **0.15%** to GDP, it has generated strong market sentiment as it is perceived as part of a broader anti-involution policy. This has led to a notable rally in related sectors despite the limited actual economic impact [5][6]. 3. **Investment Strategy Conflicts**: There is a noted conflict between short-term and long-term investment strategies. Short-term strategies may focus on following the price movements of upstream resource futures, while long-term strategies should align with anti-involution policies and sectors like photovoltaics, lithium batteries, and automotive [9][10]. 4. **Market Risk Appetite**: The easing of US-China relations and a decrease in the VIX index to its lowest level since February have contributed to a heightened risk appetite among investors. This has resulted in a significant inflow of new capital into the market, with margin financing exceeding **10%** [10][11]. 5. **Performance Disparity in Earnings**: There is a significant disparity in earnings forecasts, with **42%** of companies expected to report negative net profits. Traditional sectors are under pressure, while high-end manufacturing and new sectors like renewable energy and AI show potential for growth [3][14][15]. 6. **Sector Performance**: High-end manufacturing sectors, including small metals and marine equipment, are performing well, while traditional sectors like coal and real estate are struggling. The proportion of companies with profit growth exceeding **50%** has increased from **8%** to **18%** year-over-year [15][16]. 7. **New Investment Opportunities**: Emerging sectors such as renewable energy, humanoid robotics, artificial intelligence, and innovative pharmaceuticals are expected to attract continued investment. This trend mirrors past market behaviors where low-valuation sectors were replaced by stronger growth sectors [17][19]. 8. **Dividend Strategy Focus**: The dividend strategy should emphasize individual stock rotation rather than a single sector focus. Stocks with stable dividend yields, such as those in food and beverage, are currently more favorable [18]. 9. **Future Market Trends**: The market is expected to maintain a strong upward trend, with a potential shift from growth to value stocks. Short-term fluctuations may present buying opportunities, particularly in sectors like innovative pharmaceuticals and semiconductors [13][19]. Other Important but Possibly Overlooked Content - The market's current sentiment is influenced by a combination of fundamental factors and liquidity conditions, with a notable lack of overheating or rapid corrections in the market [10][12]. - The potential for retail investor participation is anticipated to increase as previous losses are recouped, leading to a more favorable environment for market entry [12].

Group 1: Market Overview - The Hong Kong stock market continues to reach new highs, with the Hang Seng Index closing at 25,130 points, up 135 points or 0.54% [2] - The total trading volume on the main board was HKD 266.1 billion, an increase of 1.2% compared to the previous day, with the Stock Connect trading accounting for 30.6% of the total [2] - Northbound capital saw a net inflow of HKD 2.717 billion, a decrease of 61.5% from the previous day, with the most net purchases in China Life, CCB, and SMIC [2] Group 2: Sector Performance - Among the 12 Hang Seng Composite Industry Indices, 11 rose while 1 slightly declined, with materials, industrials, and utilities leading the gains [3] - The lithium battery sector performed well, with Ganfeng Lithium and Tianqi Lithium both rising over 6% [3] - The healthcare sector recorded a minor decline of 0.004% [3] Group 3: Company Insights - JD.com announced a HKD 4 billion acquisition of a 70% stake in Jia Bao Supermarket, which will be managed by the founder for three years before transitioning to JD.com [4] - The acquisition is expected to enhance JD.com's retail network and property holdings, with Jia Bao operating around 90 stores in Hong Kong [4] Group 4: Netflix Performance - Netflix reported Q2 revenue of USD 11.1 billion, a year-on-year increase of 16%, benefiting from subscriber growth and price increases [6] - The company raised its 2025 revenue guidance to USD 44.8 billion - USD 45.2 billion, reflecting a year-on-year growth of 15% - 16% [8] - Netflix's operating profit for Q2 increased by 45% to USD 3.8 billion, with a profit margin of 34.1%, up 7 percentage points year-on-year [6][8] Group 5: Future Outlook for Netflix - Netflix is expected to enter a strong content cycle in the second half of the year, with significant new releases planned [7] - The company anticipates an increase in content amortization costs but expects overall operating profit margins to remain robust [7] - The stock price target for Netflix has been raised to USD 1,379, reflecting a 48.3x/40.3x P/E ratio for 2025E/2026E [8]