Quantitative Models and Construction Methods 1. Model Name: Quantitative Market Trend Judgment Framework - **Model Construction Idea**: The model aims to address the systematic rotation of market styles by identifying the dominant asset characteristics that represent the future mainstream market style. It evaluates assets based on the priority of "g > ROE > D" to determine whether there are good assets and whether they are overvalued[5][8][12] - **Model Construction Process**: 1. Define five style stages based on the industry lifecycle: external growth, quality growth, quality dividend, value dividend, and bankruptcy value[8] 2. Use the "g > ROE > D" priority to compare assets, focusing on growth (g), profitability (ROE), and dividend yield (D)[5][8] 3. Incorporate factors such as expected growth (gf), actual growth (g), profitability (ROE), and valuation metrics (PB, DP, BP) to classify and evaluate assets[9][12] 4. Apply the framework to select industries and allocate them equally within each strategy[19] - **Model Evaluation**: The framework has demonstrated strong explanatory power for A-share market style rotation since 2009, achieving an annualized return of 27.06%[19] --- Model Backtesting Results Quantitative Market Trend Judgment Framework - **Annualized Return**: 27.06% since 2009[19] - **Excess Returns by Year**: - 2017: 27% - 2020: 44% - 2022: 62% - 2024: 52% - 2025 (YTD): 8%[22] --- Quantitative Factors and Construction Methods 1. Factor Name: Expected Growth (gf) - **Factor Construction Idea**: Measures the expected growth rate of industries based on analysts' forecasts, regardless of the lifecycle stage[9] - **Factor Construction Process**: 1. Calculate the expected growth rate (gf) for each industry 2. Rank industries based on the highest expected growth rates 3. Select top-performing industries for allocation[9][38] - **Factor Evaluation**: The factor has shown significant excess returns since 2019, with notable performance in 2014-2015 and 2025[38] 2. Factor Name: Actual Growth (g) - **Factor Construction Idea**: Focuses on industries with the highest earnings momentum (△g), particularly during transition and growth phases[9] - **Factor Construction Process**: 1. Use △g to represent earnings momentum 2. Rank industries based on △g and select the top-performing ones 3. Incorporate additional factors such as SUE, SUR, and JOR for refinement[40] - **Factor Evaluation**: The factor has consistently delivered significant excess returns, especially in growth-dominant environments[40] 3. Factor Name: Profitability (ROE) - **Factor Construction Idea**: Targets industries with high ROE and low valuation under the PB-ROE framework, focusing on mature stages[9] - **Factor Construction Process**: 1. Calculate PB-ROE residuals for each industry 2. Rank industries based on residuals and select the top-performing ones[43] - **Factor Evaluation**: The factor performed strongly from 2016 to 2020 but has weakened since 2021[43] 4. Factor Name: Quality Dividend (DP + ROE) - **Factor Construction Idea**: Combines dividend yield (DP) and ROE to identify industries with the highest scores, focusing on mature stages[9] - **Factor Construction Process**: 1. Calculate DP and ROE for each industry 2. Combine the two metrics into a composite score 3. Rank industries and select the top-performing ones[46] - **Factor Evaluation**: The factor has shown significant excess returns in 2016, 2017, and 2023[46] 5. Factor Name: Value Dividend (DP + BP) - **Factor Construction Idea**: Combines dividend yield (DP) and book-to-price ratio (BP) to identify undervalued industries, focusing on mature stages[9] - **Factor Construction Process**: 1. Calculate DP and BP for each industry 2. Combine the two metrics into a composite score 3. Rank industries and select the top-performing ones[49] - **Factor Evaluation**: The factor has delivered significant excess returns in 2009, 2017, and 2021-2023[49] 6. Factor Name: Bankruptcy Value (PB + SIZE) - **Factor Construction Idea**: Targets industries with the lowest PB and SIZE scores, focusing on stagnation and recession stages[9] - **Factor Construction Process**: 1. Calculate PB and SIZE for each industry 2. Combine the two metrics into a composite score 3. Rank industries and select the lowest-scoring ones[52] - **Factor Evaluation**: The factor has shown significant excess returns in 2015-2016 and 2021-2023[52] --- Factor Backtesting Results Expected Growth (gf) - **Recent Performance**: - Lithium: +51.15% (3 months) - Frozen Food: +14.08% (3 months)[38] Actual Growth (g) - **Recent Performance**: - Lithium Chemicals: +51.88% (3 months) - Other Home Appliances: +14.93% (3 months)[41] Profitability (ROE) - **Recent Performance**: - Network Equipment: +12.18% (3 months) - Buses: +10.46% (3 months)[43] Quality Dividend (DP + ROE) - **Recent Performance**: - Timber Processing: +145.24% (3 months) - Lithium Equipment: +21.95% (3 months)[46] Value Dividend (DP + BP) - **Recent Performance**: - Network Equipment: +12.18% (3 months) - Security: -2.24% (3 months)[49] Bankruptcy Value (PB + SIZE) - **Recent Performance**: - Gas: +15.88% (3 months) - Building Renovation: +16.42% (3 months)[52]

Core Viewpoint - The article discusses the strategic asset divestiture by *ST Baoying, which aims to improve its financial health and operational efficiency following a change in control from state-owned to private ownership [1][2][4]. Group 1: Asset Divestiture - *ST Baoying plans to sell its investment property in Shenzhen for 86.8725 million yuan to its controlling shareholder's subsidiary, marking a move to "recover" and "reduce burden" [1][2]. - The transaction is expected to positively impact the company's financial status, with an estimated loss of approximately 42 million yuan after accounting for taxes [1][2]. Group 2: Change in Control - The change in control involves a series of transactions that result in a new private entity, Shitong Niu Investment, becoming the largest shareholder with a 25.74% stake, replacing the state-owned Zhuhai State-owned Assets Supervision and Administration Commission [2][3]. - The total consideration for this acquisition exceeds 1.1 billion yuan, indicating a significant investment scale by the new controlling party [2]. Group 3: Historical Context and Challenges - Since the state-owned Zhuhai government took control in 2018, *ST Baoying has faced continuous annual losses, with net assets turning negative by the end of 2024 and a debt ratio exceeding 100% [3]. - The company's operational difficulties stem from broader industry pressures and specific client-related issues, particularly following the Evergrande debt crisis in 2021 [3]. Group 4: Future Strategy and Transformation - The new controlling party plans to pivot *ST Baoying's business focus from traditional construction to the photonics and silicon-based semiconductor sectors, with a commitment to achieve a net profit of 400 million yuan from these new ventures over the next three years [5][6]. - The transaction structure includes a combination of share transfers and voting rights arrangements, allowing the former state-owned entity to retain some influence while enabling the new shareholders to drive the company's transformation [5][6]. Group 5: Market Implications - This case exemplifies a "shell protection" strategy where state-owned assets are divested to private entities to preserve value and stimulate growth, potentially serving as a replicable model for other distressed companies in the market [4][6].

Core Viewpoint - Tianan Health (00383) has announced a renovation agreement for the second phase of Kunming Tongren Hospital, with a total cost of RMB 130 million [1] Group 1: Agreement Details - The renovation agreement is between Kunming Tongren Hospital Co., Ltd. and Zhejiang ShunJie Construction Group Co., Ltd. [1] - The scope of the renovation includes the Thyroid Center, Comprehensive Inpatient Building, and Rehabilitation Medicine Building, covering a total construction area of approximately 48,357 square meters [1] Group 2: Management's Perspective - The board believes that the transaction under the renovation agreement is conducted on normal commercial terms [1] - The terms of the renovation agreement are considered fair and reasonable [1] - Entering into the renovation agreement is in the overall interest of the company and its shareholders [1]

Investment Rating - The investment rating for the company is "Accumulate" with a target price of RMB 4.12 [7][5]. Core Views - The company reported a significant decrease in revenue and net profit for Q3 2025, primarily due to slower project execution influenced by tight funding from downstream government investments. However, new orders have been consistently growing since Q2 2023, indicating an increase in market share and a solid competitive position [1][5]. - The gross margin has declined year-on-year, and the expense ratio has increased due to a significant drop in revenue. Despite this, the company has managed to reduce accounts receivable significantly, indicating improved cash flow management [2][3]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved revenue of RMB 13.275 billion, down 9.20% year-on-year, and a net profit of RMB 382 million, down 18.47% year-on-year. In Q3 2025, revenue was RMB 3.747 billion, down 29.62% year-on-year and 20.98% quarter-on-quarter, with a net profit of RMB 23.67 million, down 80.87% year-on-year [1][2]. - The gross margin for the first nine months of 2025 was 12.64%, a decrease of 0.29 percentage points year-on-year, while the Q3 gross margin was 9.92%, down 1.73 percentage points year-on-year [2]. Cash Flow and Balance Sheet - The company reported a negative operating cash flow of RMB 619 million for the first nine months of 2025, but the cash collection ratio improved, with accounts receivable and contract assets significantly reduced [3]. - As of Q3 2025, the company had a healthy balance sheet with interest-bearing liabilities of only RMB 730 million and cash reserves of RMB 4.912 billion, resulting in a debt ratio of 2.16% [3]. Order Book and Future Outlook - The company signed new orders worth RMB 19.11 billion in the first nine months of 2025, representing a year-on-year increase of 2.4%. The order book as of Q3 2025 stood at RMB 19.3 billion, providing a safety cushion for future revenues [4]. - Future revenue growth estimates have been revised downwards due to slow project execution, with net profit forecasts for 2025-2027 adjusted down by 16.37% to 18.48% [5].

Group 1 - The infrastructure ETF (159619) is showing positive performance, indicating a potential recovery cycle in the industry [1] - The cement sector is experiencing pressure on prices due to a decline in demand, despite policy-driven supply-side reforms that prohibit new capacity and promote the replacement of excess capacity [1] - Overall, the building materials sector is at a "policy bottom + profit bottom + valuation bottom," suggesting an opportunity for a recovery cycle in profitability as the market structure improves [1] Group 2 - The CSI Infrastructure Index (930608), which the infrastructure ETF tracks, selects listed companies involved in infrastructure construction, specialized engineering, and housing construction to reflect the overall performance of the infrastructure sector [1] - The CSI Infrastructure Index focuses on sub-industries such as construction and engineering, showcasing a high degree of industry concentration and a clear "infrastructure" attribute [1]

Group 1 - The core viewpoint of the article highlights that the infrastructure ETF (159619) has risen over 2%, driven by the construction materials sector benefiting from a "high-low switch" in funding and an optimized industry structure [1] - The consumption building materials sector is experiencing a slowdown in price wars in areas such as coatings and waterproofing, with leading companies gradually recovering profitability through price increases, while smaller firms exit the market due to declining demand, leading to a significant increase in market concentration among leading enterprises [1] - The cement sector is being supported by policy-driven supply-side reforms, which prohibit new capacity and promote the replacement of excess capacity, but there are divergences among companies due to declining demand, causing resistance to price increases during peak seasons and short-term price pressure [1] Group 2 - Overall, the building materials sector is at a "policy bottom + profit bottom + valuation bottom," and the optimization of the structure in sub-sectors is expected to initiate a profit recovery cycle [1] - The infrastructure ETF (159619) tracks the CSI Infrastructure Index (930608), which selects listed companies involved in infrastructure construction, professional engineering, and housing construction from the Shanghai and Shenzhen markets to reflect the overall performance of related listed companies in the infrastructure sector [1] - The CSI Infrastructure Index focuses on sub-industries such as construction and engineering, and building decoration, characterized by a strong "infrastructure" attribute and high industry concentration, capable of comprehensively reflecting the overall performance of enterprises in the infrastructure sector [1]

Group 1 - The core viewpoint of the article highlights the recent board meeting of Allwinner Technology, where various management system proposals were discussed [1] - Allwinner Technology's revenue composition for the year 2024 is as follows: public construction accounts for 49.94%, furniture business for 29.19%, design services for 14.59%, home decoration construction for 3.2%, and other businesses for 3.09% [1] - As of the report, Allwinner Technology has a market capitalization of 4 billion yuan [1] Group 2 - The article also mentions a competitive scenario in the beverage industry, where Nongfu Spring's new green bottle product has led to a significant market share decline for Yibao, dropping nearly 5 percentage points [1]

Core Viewpoint - South China Vocational Education (06913.HK) announced a renovation and construction agreement with Lingnan Vocational Technical College and contractor Guangdong Jisheng Construction Co., Ltd. for a new dormitory, with a contract price of RMB 66.97 million [1] Group 1 - The agreement is set to be executed by September 22, 2025 [1] - The contractor is responsible for providing renovation, installation, and construction services for the new dormitory [1] - The total contract value is approximately RMB 66.97 million, which is a significant investment for the company [1]

Quantitative Models and Construction Methods Model Name: Quantitative Market Trend Analysis Framework - **Model Construction Idea**: The model aims to solve the systematic rotation problem of styles by conducting a bottom-up quantitative market trend analysis. It identifies the dominant asset characteristics that represent the future market's mainstream style through a comprehensive comparison of assets[1][5] - **Model Construction Process**: - The model considers five style stages based on the asset's industry lifecycle: external growth, quality growth, quality dividend, value dividend, and bankruptcy value[1][5] - The priority for asset comparison is based on the sequence: growth (g) > return on equity (ROE) > dividend (D)[1][5] - The model uses the spread of asset advantage differences to capture the trend changes of top assets, similar to factor timing[20] - **Model Evaluation**: The framework has shown good explanatory power for past A-share style rotations, achieving an annualized return of 27.25% since 2009[15] Model Backtesting Results - **Quantitative Market Trend Analysis Framework**: - 2009: Asset Comparison Strategy 133%, Wind All A 82%, Excess Return 51%[18] - 2010: Asset Comparison Strategy 7%, Wind All A -7%, Excess Return 14%[18] - 2011: Asset Comparison Strategy -33%, Wind All A -22%, Excess Return -11%[18] - 2012: Asset Comparison Strategy 5%, Wind All A 5%, Excess Return 0%[18] - 2013: Asset Comparison Strategy 41%, Wind All A 5%, Excess Return 36%[18] - 2014: Asset Comparison Strategy 48%, Wind All A 52%, Excess Return -4%[18] - 2015: Asset Comparison Strategy 55%, Wind All A 38%, Excess Return 16%[18] - 2016: Asset Comparison Strategy -14%, Wind All A -13%, Excess Return -1%[18] - 2017: Asset Comparison Strategy 32%, Wind All A 5%, Excess Return 27%[18] - 2018: Asset Comparison Strategy -21%, Wind All A -28%, Excess Return 7%[18] - 2019: Asset Comparison Strategy 41%, Wind All A 33%, Excess Return 8%[18] - 2020: Asset Comparison Strategy 69%, Wind All A 26%, Excess Return 44%[18] - 2021: Asset Comparison Strategy 47%, Wind All A 9%, Excess Return 38%[18] - 2022: Asset Comparison Strategy 44%, Wind All A -19%, Excess Return 62%[18] - 2023: Asset Comparison Strategy 5%, Wind All A -5%, Excess Return 10%[18] - 2024: Asset Comparison Strategy 62%, Wind All A 10%, Excess Return 52%[18] - 2025 (Aug): Asset Comparison Strategy 27%, Wind All A 23%, Excess Return 4%[18] Quantitative Factors and Construction Methods Factor Name: Expected Growth (gf) - **Factor Construction Idea**: The factor focuses on the highest analyst forecasted growth rates, regardless of the cycle stage[6] - **Factor Construction Process**: - The factor is constructed by selecting industries with the highest expected growth rates as forecasted by analysts[6] - The spread of expected growth advantage differences (Δgf) is used to capture the trend changes in top assets[20] - **Factor Evaluation**: The factor has shown significant excess returns since 2019, with notable performance in 2014-2015[34] Factor Name: Actual Growth (g) - **Factor Construction Idea**: The factor focuses on industries with the highest actual growth rates, particularly during transition and growth periods[6] - **Factor Construction Process**: - The factor is constructed by selecting industries with the highest actual growth rates (Δg)[6] - The spread of actual growth advantage differences (Δg) is used to capture the trend changes in top assets[24] - **Factor Evaluation**: The factor has shown significant excess returns in growth-dominant environments[36] Factor Name: Profitability (ROE) - **Factor Construction Idea**: The factor focuses on industries with high ROE and low valuation under the PB-ROE framework, concentrated in mature periods[6] - **Factor Construction Process**: - The factor is constructed by selecting industries with high ROE and low PB-ROE residuals[6] - The spread of ROE advantage differences is used to capture the trend changes in top assets[26] - **Factor Evaluation**: The factor has shown significant excess returns from 2016 to 2020, with weaker performance since 2021[39] Factor Name: Quality Dividend (DP+ROE) - **Factor Construction Idea**: The factor focuses on industries with the highest DP+ROE scores, concentrated in mature periods[6] - **Factor Construction Process**: - The factor is constructed by selecting industries with the highest DP+ROE scores[6] - The spread of DP+ROE advantage differences is used to capture the trend changes in top assets[42] - **Factor Evaluation**: The factor has shown significant excess returns in 2016, 2017, and 2023[43] Factor Name: Value Dividend (DP+BP) - **Factor Construction Idea**: The factor focuses on industries with the highest DP+BP scores, concentrated in mature periods[6] - **Factor Construction Process**: - The factor is constructed by selecting industries with the highest DP+BP scores[6] - The spread of DP+BP advantage differences is used to capture the trend changes in top assets[45] - **Factor Evaluation**: The factor has shown significant excess returns in 2009, 2017, and 2021-2023[46] Factor Name: Bankruptcy Value (PB+SIZE) - **Factor Construction Idea**: The factor focuses on industries with the lowest PB+SIZE scores, concentrated in stagnation and recession periods[6] - **Factor Construction Process**: - The factor is constructed by selecting industries with the lowest PB+SIZE scores[6] - The spread of PB+SIZE advantage differences is used to capture the trend changes in top assets[48] - **Factor Evaluation**: The factor has shown significant excess returns in 2015-2016 and 2021-2023[49] Factor Backtesting Results - **Expected Growth (gf)**: - Cable: 12 stocks, largest weight stock Zhongtian Technology, average market cap 21.791 billion yuan, 3-month performance 49.62%[34] - Cement: 19 stocks, largest weight stock Conch Cement, average market cap 17.929 billion yuan, 3-month performance 12.71%[34] - Glass Fiber: 6 stocks, largest weight stock China Jushi, average market cap 26.657 billion yuan, 3-month performance 63.67%[34] - Rare Earth and Magnetic Materials: 17 stocks, largest weight stock Northern Rare Earth, average market cap 31.018 billion yuan, 3-month performance 98.77%[34] - White Goods III: 10 stocks, largest weight stock Midea Group, average market cap 113.675 billion yuan, 3-month performance -1.21%[34] - **Actual Growth (g)**: - Integrated Circuits: 104 stocks, largest weight stock Cambricon-U, average market cap 45.058 billion yuan, 3-month performance 42.93%[37] - PCB: 38 stocks, largest weight stock Shenghong Technology, average market cap 27.163 billion yuan, 3-month performance 112.10%[37] - Tungsten: 4 stocks, largest weight stock Xiamen Tungsten, average market cap 30.523 billion yuan, 3-month performance 69.26%[37] - Lithium Battery Equipment: 12 stocks, largest weight stock Lead Intelligent, average market cap 11.731 billion yuan, 3-month performance 60.15%[37] - Weapons and Equipment III: 12 stocks, largest weight stock Great Wall Military Industry, average market cap 21.307 billion yuan, 3-month performance 80.22%[37] - **Profitability (ROE)**: - Beer: 7 stocks, largest weight stock Tsingtao Brewery, average market cap 26.758 billion yuan, 3-month performance -3.94%[39] - Liquor: 20 stocks, largest weight stock Kweichow Moutai, average market cap 162.722 billion yuan, 3-month performance 4.12%[39] - Non-dairy Beverages: 7 stocks, largest weight stock Eastroc Beverage, average market cap 32.754 billion yuan, 3-month performance -4.45%[39] - Network Connection and Tower Setup: 19 stocks, largest weight stock Zhongji Xuchuang, average market cap 64.299 billion yuan, 3-month performance 202.29%[39] - Building Decoration III: 28 stocks, largest weight stock Gold Mantis, average market cap 3.436 billion yuan, 3-month performance 4.42%[39] - **Quality Dividend (DP+ROE)**: - Automotive Motor Control: 15

Investment Rating - The investment rating for the company is maintained at "Buy" [1] Core Views - The company has shown continuous improvement in orders, indicating a turning point in operations. The revenue for 1H25 reached 9.528 billion RMB, a year-on-year increase of 2.49%, with a net profit attributable to shareholders of 358 million RMB, up 3.95% year-on-year [1] - The company’s decoration business revenue grew, with a notable recovery in the scale of income, attributed to a continuous increase in order growth over the past nine quarters [2] - The company achieved new signed orders of 12.46 billion RMB in 1H25, marking a year-on-year increase of 2.5%, with significant growth in orders from Guangdong and Sichuan regions [4] - The company maintains a target price of 4.31 RMB, reflecting a 20x PE valuation for 2025, with projected net profits of 574 million RMB for 2025 [5] Summary by Sections Financial Performance - In 1H25, the company reported a total revenue of 95.28 billion RMB, with a net profit of 3.58 billion RMB and a non-recurring net profit of 3.31 billion RMB, showing a year-on-year increase of 14.19% [1][2] - The comprehensive gross margin for 1H25 was 13.71%, a slight increase of 0.04 percentage points year-on-year, with the decoration and design business gross margins at 12.52% and 31.26%, respectively [2] Cost and Efficiency - The expense ratio for 1H25 was 7.68%, a decrease of 0.20 percentage points year-on-year, with improvements in accounts receivable turnover ratio to 0.74 times [3] - The company reported a net cash flow from operating activities of -1.023 billion RMB, which was a reduction in outflow by 167 million RMB year-on-year [3] Order and Market Dynamics - The company has signed new orders for nine consecutive quarters, with a significant increase in overseas revenue by nearly 29% year-on-year [4] - The company’s order growth is driven by enhanced regional focus and optimization of business structure, including urban renewal and clean technology development [4] Profit Forecast and Valuation - The company’s projected net profits for 2025-2027 are 574 million, 602 million, and 624 million RMB, respectively, with a CAGR of 4.28% [5] - The company is valued at a PE of 20x for 2025, with a target price set at 4.31 RMB, indicating a potential upside from the current market price [5]