Report Industry Investment Rating No information provided in the content. Core Viewpoints of the Report - From December 22 - 26, the A - share market was active with continuous gains for five days. The commercial aerospace and precious metals sectors performed well. The bond market was weak on Monday but improved on Tuesday, with the 10 - year Treasury bond rate at 1.84% on Friday, up 0.68bp from the previous week. The convertible bond market was strong, with the CSI Convertible Bond Index rising 1.64% and the price median increasing 1.52%. [1][7][8] - From December 29 - 31, the convertible bond market was still strong, with the CSI Convertible Bond Index hitting a new high. The market price median was close to the August high, and the premium rates in all price - range convertible bonds were above the 95% historical percentile. In the future, the convertible bond market has support from the expected spring rally and institutional buying, but risks from annual report disclosures and high - gain hot - topic bonds should be noted. [3][17] Summary by Related Catalogs Market Focus (December 22 - 26) Stock Market - The A - share market had five consecutive days of gains. The commercial aerospace sector was boosted by policies and industry development, and precious metals were strong. The trading volume increased, and different sectors were active on different days. By industry, most Shenwan primary industries rose, with non - ferrous metals, national defense and military industry leading, and beauty care, social services lagging. [7][8] Bond Market - On Monday, the bond market was weak due to the disappointment of LPR cut expectations and the strong equity market. On Tuesday, Treasury bond futures and spot bonds improved. The central bank's Q4 monetary policy meeting had little impact. The 10 - year Treasury bond rate closed at 1.84% on Friday, up 0.68bp from the previous week. [1][7][8] Convertible Bond Market - Most convertible bond issues rose. The CSI Convertible Bond Index rose 1.64%, the price median increased 1.52%, and the arithmetic average parity increased 2.42%. The overall conversion premium rate decreased by 0.21%. By industry, national defense and military industry, building materials led in gains, while commercial retail, beauty care led in losses. In terms of individual bonds, Jiamei, Zai 22, etc. had large gains, while Huati, Saili, etc. had large losses. The total trading volume was 3928.17 billion yuan, with an average daily volume of 785.63 billion yuan, higher than the previous week. [2][8][11] Views and Strategies (December 29 - 31) - The convertible bond market was strong last week, with the CSI Convertible Bond Index hitting a new high. The market price median was close to the August high, and the premium rates in all price - range convertible bonds were at high historical levels. [3][17] - In the future, the convertible bond market has support from the expected spring rally and institutional buying in January. However, in January, with the annual report disclosures and high - gain hot - topic bonds, some individual bonds with performance pressure may face challenges. [3][17] - Currently, the convertible bond market valuation is at a historical high, and overall opportunities are scarce. Relative - return investors are advised to allocate small - position, well - balanced non - redeemable and appropriately - priced equity - biased convertible bonds in sectors such as power, storage, etc. Absolute - return investors are advised to focus on high - volatility underlying stocks below 130 yuan or industry leaders with historically low valuations. [3][17] Valuation Overview - As of December 26, the average conversion premium rates of equity - biased convertible bonds in different price ranges were at high historical percentile levels. The average YTM of debt - biased convertible bonds with a parity below 70 yuan was - 4.44%, at a low historical percentile. The average implied volatility of all convertible bonds was 44.43%, at a high historical percentile, and the difference between the convertible bond implied volatility and the long - term actual volatility of the underlying stock was 3.3%, also at a high historical percentile. [18] Primary Market Tracking Last Week (December 22 - 26) - Shuangle Convertible Bond and Jin 05 Convertible Bond announced issuance, and Pulan Convertible Bond was listed. Shuangle Convertible Bond is from the basic chemical industry, with an issue size of 800 million yuan. Jin 05 Convertible Bond is from the power equipment industry, with an issue size of 1.672 billion yuan. Pulan Convertible Bond is from the computer industry, with an issue size of 243 million yuan. [25][26][27] Next Week (December 29 - 31) - Tianzhun Convertible Bond and Shenyu Convertible Bond are expected to be listed. Tianzhun Convertible Bond is from the machinery and equipment industry, with an issue size of 872 million yuan. Shenyu Convertible Bond is from the communication industry, with an issue size of 500 million yuan. [29][30] Overall Situation - As of December 26, there are currently 93 convertible bonds to be issued, with a total scale of 146.86 billion yuan. Among them, 3 issues with a total scale of 3.43 billion yuan have been approved for registration, and 10 issues with a total scale of 8.52 billion yuan have passed the listing committee. [31]

Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [1][10][18] Core Viewpoints - The State Council has approved the "Artificial Intelligence +" action plan, which is expected to create new development opportunities for manufacturing companies undergoing digital transformation [2][4] - The domestic AI investment is anticipated to maintain high intensity, with strong demand for AI infrastructure such as data centers, leading to performance realization in the AIDC power equipment industry chain [3][4] - The company is positioned as a leading global power equipment supplier, focusing on various transformer series, energy storage products, and providing energy supply solutions across multiple sectors including renewable energy and new infrastructure [4][5] Summary by Relevant Sections Company Overview - The company has been at the forefront of integrating AI with manufacturing since 2019, establishing several digital factories that enhance production efficiency and reduce operational costs [5] - It offers comprehensive digital factory solutions to manufacturing clients, including planning consulting and automation production lines [5] Financial Forecasts - The profit forecasts for 2025 and 2026 have been revised down to 710 million and 1.06 billion respectively, from previous estimates of 830 million and 1.09 billion, while a new forecast for 2027 is set at 1.33 billion, reflecting year-on-year growth of 23.8%, 49.0%, and 25.3% [3][10] - The current stock price corresponds to a PE ratio of 26.2, 17.6, and 14.0 for the years 2025, 2026, and 2027 respectively [10] Strategic Developments - The company is expanding its global footprint, with the completion of a base expansion in Mexico and the establishment of a factory in Poland, along with plans for a production base in Malaysia and the initiation of a U.S. production base [5][6]