Report Industry Investment Rating No investment rating information provided in the report. Core Views of the Report - Although the convertible bond valuation is becoming increasingly frothy and the allocation cost - effectiveness is low, the long - term and slow - bull pattern of the equity market remains unchanged. With potential incremental funds in the future, the A - share market's long - term and slow - bull market is expected to continue. Against this backdrop, the convertible bond valuation may have room for further upside and still holds trading value, but with high volatility. In trading, avoid high - price and high - premium and near - call convertible bonds, and focus on industries with continuous upward momentum and high performance realization [1][25]. - Specific investment suggestions include: (1) Pay attention to convertible bonds in the AI technology field such as Aiwei Convertible Bond, Luwei Convertible Bond, Huamao Convertible Bond, and Chun23 Convertible Bond; (2) Focus on large - scale chemical, coal, and precious metal sectors, and suggest paying attention to Naipu Zhuan02 and Pingmei Convertible Bond; (3) Consider individual bonds at relatively low levels and on the verge of rising from the cycle bottom, such as Huitian Convertible Bond and Huakang Convertible Bond [1][25]. Summary by Relevant Catalogs 2.1 26 - year 1 - month Market Review - Equity Market - The equity market had a strong start in January 2026, driven by the continuation of the bullish sentiment at the end of 2025 and the capital allocation demand at the beginning of the year. The Shanghai Composite Index reached 4190.9 points on January 14, hitting a new high since September 24, 2024. The main market trends were driven by commercial space, AI, and the pro - cyclical market spurred by record - high precious metal prices. The market was cooled down by the increase in the minimum margin ratio for margin trading, but the bullish sentiment remained strong, and the index fluctuated upward. The monthly returns of the CSI 300, CSI 2000, and Wind Micro - cap Index were + 1.7%, + 8.2%, and + 10.6% respectively, and the Shanghai Composite and ChiNext Index rose by + 3.8% and + 4.5% respectively. The average daily trading volume of the Shanghai, Shenzhen, and Beijing stock exchanges was 3.04 trillion yuan, a significant increase from December 2025 [26]. - Most industry sectors in the equity market closed higher in January. The non - ferrous metals sector led the rise due to the sharp increase in COMEX gold, silver, and copper prices. The pro - cyclical sectors such as petrochemicals, chemicals, coal, and steel also performed well. The media and computer sectors were boosted by the development of AI applications. The electronics, power equipment, and military industries also showed some performance, while the consumption and large - scale financial sectors underperformed [29]. 2.2 26 - year 1 - month Market Review - Convertible Bond Market - In January, the convertible bond market was driven by both the underlying stocks and valuation, with the CSI Convertible Bond Index rising 5.8%, the same as the Wind All - A Index. Structurally, high - price, small - cap, and low - rating convertible bonds outperformed, and the high - price and low - premium convertible bonds significantly outperformed the double - low index. The average daily trading volume of the convertible bond market was 920.3 billion yuan, an increase from December 2025. In terms of industries, most of the 29 Shenwan industry convertible bond indexes rose, with machinery and communication leading the way. Among individual bonds, semiconductor - related convertible bonds such as Jingce Zhuan2, Huayi, and Dinglong Convertible Bond had the highest monthly returns [36][38]. 3. Convertible Bond Valuation - In January, the convertible bond valuation became more frothy. The 100 - yuan premium rate of the convertible bond market at the end of the month was 42.6%, up 4.45 percentage points from the end of December 2025, reaching the 99.5% and 99.3% quantiles since 2018 and 2021 respectively. The conversion premium rates for different par values of 40, 60, 80, 90, 110, 120, and 130 yuan increased by varying degrees compared to the end of December 2025 and were at high quantile levels [40]. - Measured by the median price of the whole market, the median price of convertible bonds at the end of the month was 140.0 yuan, up 6.3 yuan from the end of December 2025, and the median par value was 108.6 yuan, up 6.9 yuan. The median conversion premium rate and pure bond premium rate also changed compared to the end of December 2025 [47]. 4. Convertible Bond Supply and Demand 4.1 Convertible Bond Supply - In January 2026, the issuance scale of convertible bonds increased slightly year - on - year and month - on - month. Five new convertible bonds were issued, with a total scale of 57.8 billion yuan. Eight convertible bonds with a total scale of 55.87 billion yuan obtained registration approval, and 11 public convertible bond board proposals were announced, with a to - be - issued scale of 137.99 billion yuan. Thirteen convertible bonds announced call redemption and two matured and were redeemed [55][59][60]. 4.2 Convertible Bond Demand - In the context of the A - share market's trend, the share of convertible bond ETFs stopped falling and rebounded, and public funds further increased their positions in convertible bonds. Insurance funds continued to reduce their positions in convertible bonds due to the high valuation. The enterprise annuity's holdings of convertible bonds on the Shanghai and Shenzhen stock exchanges showed different trends, but overall, it was expected to maintain a slight reduction trend [61]. 5. Clause Tracking 5.1 Redemption - As of January 30, 13 convertible bonds were confirmed for call redemption, 21 were likely to be called, and 14 were not to be called [64]. 5.2 Downward Revision - As of January 30, four convertible bonds confirmed downward revisions, five proposed downward revisions, five were likely to trigger downward revisions, and 18 announced no downward revisions for the time being [67].

Group 1: Core Investment Strategies - The report recommends focusing on dividend strategies with companies like China National Offshore Oil Corporation (CNOOC), China National Petroleum Corporation (CNPC), and China Petroleum & Chemical Corporation (Sinopec), expecting Brent oil prices to stabilize between $60-70 per barrel in 2026 [2] - CNOOC is committed to increasing reserves and production while reducing costs, promising a dividend payout ratio of no less than 45% from 2025 to 2027 [2] - CNPC is expected to benefit from the domestic natural gas market reform, while Sinopec is monitoring the progress of domestic refining and chemical industry competition [2] Group 2: Chemical Sector Investment - The report suggests investing in undervalued chemical leaders such as Wanhua Chemical, Baofeng Energy, Satellite Chemical, and Hualu Hengsheng, as they are expected to benefit from industry barriers related to cost, technology, and market [2] - The chemical sector is anticipated to see a bottoming out of performance due to market influx of funds, including quantitative investments prioritizing chemical ETFs [2] Group 3: Demand-Driven Price Increases - Traditional demand areas include food additives, pesticides, and fertilizers, with stable growth expected in vitamin and methionine demand, focusing on companies like New Hope Liuhe and Adisseo [3] - The pesticide market is expected to see price increases due to overseas demand and limited domestic supply, with companies like Yangnong Chemical and Jiangshan Chemical being highlighted [3] - In fertilizers, potassium supply and demand are expected to remain tight, supporting price increases, with a focus on companies like Asia Potash International and Dongfang Iron Tower [3] Group 4: Emerging Demand in Phosphate and Fluorine Chemicals - The phosphate chemical sector is expected to benefit from increased demand for lithium iron phosphate and hexafluorophosphate lithium driven by the new energy battery and energy storage sectors, with companies like Chuanheng Chemical and Xingfa Group being monitored [3] - The fluorine chemical sector is seeing increased demand for liquid cooling driven by AI applications, with attention on companies like Juhua Co., Sanmei Chemical, and Yonghe Chemical [3] Group 5: Domestic Price Increases Driven by Competition - In the large refining sector, domestic PTA and filament industries are experiencing competition, with companies like Hengli Petrochemical and Rongsheng Petrochemical being of interest [3] - The organic silicon sector is nearing the end of its expansion cycle, with major domestic companies reducing operational rates, focusing on companies like Sinan Chemical and Dongyue Silicon Material [3] - The soda ash industry is facing regulatory controls on existing and new capacities, with older capacities under assessment for elimination, highlighting companies like Boyuan Chemical [3]

Group 1 - The China Securities Regulatory Commission (CSRC) has issued supplementary material requirements for 10 companies, including Guoen Technology, regarding their overseas listing application [1] - Guoen Technology submitted its listing application to the Hong Kong Stock Exchange on June 26, 2025, with CMB International as the sole sponsor [1] - The CSRC has requested Guoen Technology to clarify the debt repayment capability of its actual controller and whether its projects are classified as "high energy consumption" or "high emissions" [1] Group 2 - Guoen Technology is a comprehensive enterprise group driven by technological innovation, focusing on long-term scale efficiency [3] - The company implements a "one body, two wings" development strategy, establishing a vertically integrated industrial platform in the large chemical and health industries [3] - In the large chemical sector, Guoen Technology focuses on the chemical new materials industry chain, building a "new materials+" ecological circle and extending upstream to green petrochemical materials [3] - In the health sector, Guoen Technology concentrates on the natural collagen industry, developing a vertically integrated product layout from animal collagen to end products [3]