Core Viewpoints - High-end new materials COC/COP are amorphous, high-value-added thermoplastic engineering plastics, with COP having better optical and mechanical properties mainly used in optical fields, while COC has superior thermal properties mainly used in medical consumables and packaging [2][3][4] - Due to the high technical difficulty of COC/COP, there are few production enterprises, and the global market is still seller-dominated; as of January 2025, the total global production capacity is 93,000 tons/year, mainly from Japanese companies [2][5][6] - China's demand for COC/COP is steadily growing, expected to increase from 21,000 tons in 2021 to 29,000 tons in 2025, with over half of the demand coming from the optical field; as of January 2025, China's COC production capacity is 4,000 tons/year, with planned capacity of 58,080 tons/year, and no COP production facilities or investment plans [2][25] Industry Overview - The core technologies of the entire industry chain are mainly concentrated in the production technology of cycloolefin and COC/COP, which are "bottleneck" technologies in the industry [2][12] - Domestic production capacity of cycloolefin is far from the raw material requirements for COC/COP production, severely restricting the development of the COC/COP industry, necessitating breakthroughs in core cycloolefin technologies [2][24][27] Market Dynamics - As of January 2025, the global COC/COP total production capacity is 93,000 tons/year, with COP capacity at 52,600 tons/year (56.6% of total capacity) and COC capacity at 40,400 tons/year (43.4% of total capacity), all produced by Japanese companies [6][8] - The global COC market is projected to reach 1.1848 million tons/year with significant changes in supply dynamics, with China's share in global COC supply expected to increase from 10% to 52% [8][10] - The global COC/COP market size is approximately $5.1 billion in 2023, expected to reach $10.7 billion by 2030, with a compound annual growth rate of 11.2% [10] Domestic Development - China's COC/COP industry urgently needs to break through core technologies; as of January 2025, China's COC production capacity is 4,000 tons/year, with planned capacity of 58,080 tons/year, while there are no COP production facilities or investment plans [25][27] - The optical field is the most important consumption area for COC/COP, with domestic replacement demand continuously increasing; the optical components market in China is expected to grow from 300 billion yuan in 2016 to 1.5 trillion yuan in 2021, with a compound annual growth rate of 37.97% [26][27] - The pharmaceutical packaging industry in China is also growing rapidly, with the market size expected to reach 153.7 billion yuan in 2023, driven by the increasing number of registered COC/COP pharmaceutical packaging companies [26][27]

Core Viewpoint - The announcement by Jizhi Technology (300566) highlights the successful recognition of three subsidiaries as high-tech enterprises, which will enable them to benefit from tax incentives, thereby enhancing the company's innovation capabilities and long-term profitability in the new materials sector [1] Group 1: Company Achievements - Jizhi Technology's subsidiaries Jiangbei Jizhi, Zhejiang Xinzhi, and Ningbo Tianyuan have all successfully obtained high-tech enterprise certification, with Jiangbei Jizhi undergoing re-certification and the other two achieving this status for the first time [1] - With this recognition, all nine subsidiaries of Jizhi Technology have now been awarded national high-tech enterprise status, reflecting the company's comprehensive R&D system and core technological competitiveness [1] Group 2: Product Development and Market Position - Jiangbei Jizhi focuses on the R&D and production of optical enhancement films, quantum dot films, and composite films, successfully breaking the long-standing monopoly of companies from the US, Japan, and South Korea in the optical film sector [2] - Zhejiang Xinzhi and Ningbo Tianyuan have established robust R&D systems, achieving key breakthroughs in high-performance functional films and optical adhesive films, respectively [2] - The company has positioned itself as a leader in the domestic optical film market, with products meeting international quality standards and a strong capability for mass production [3] Group 3: Industry Trends and Future Prospects - The "14th Five-Year Plan" emphasizes the development of emerging industries, with new materials identified as a strategic sector, suggesting ongoing policy support and market expansion potential [4] - Jizhi Technology is well-positioned to capitalize on the growing demand for high-end products, particularly in the context of the domestic shift towards lightweight display products and the increasing penetration of advanced display technologies [3][4] - The company aims to enhance its market share and profitability through its advanced product matrix and leading production capabilities, benefiting from the ongoing growth in downstream demand [4]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **foreign exchange (FX) market** and the **cross-border flows** as analyzed by BofA Global Research. Core Insights and Arguments 1. **Consolidation of FX Flows**: The FX flows in Q3 are characterized by consolidation, particularly after significant positioning adjustments in the first half of the year. Investors have favored USD, CHF, and emerging market (EM) currencies against JPY, GBP, and CAD [1][7][8]. 2. **Investor Positioning**: Among BofA investors, USD short positions are relatively light compared to historical levels, indicating a cautious approach towards USD selling [4][5]. 3. **Hedge Fund Activity**: Hedge Funds have shown a notable demand for Brazilian Real (BRL) and have been net sellers of EURGBP, while also supporting GBP recently [7][8][13]. 4. **G10 Currency Trends**: GBP has benefitted the least from USD supply year-to-date, with Hedge Funds primarily supporting it, joined by Asset Managers in the last week [9][10]. 5. **Emerging Market (EM) Focus**: Latin American currencies have seen strong demand in Q3, with BRL demand highlighted. In Asia, there was notable demand for Indonesian Rupiah (IDR), while in EMEA, Hungarian Forint (HUF) demand was significant amid geopolitical developments [13][20]. 6. **FX Options and Futures**: The report includes a snapshot of FX options and futures flows, indicating varied positioning across different currencies, with USD options showing a positive z-score recently [22]. Additional Important Details 1. **Aggregate Positioning Data**: The report provides detailed aggregate positioning data for various currencies, indicating shifts in investor sentiment and positioning over time [24][32]. 2. **Risk Considerations**: The report emphasizes that trading ideas and investment strategies discussed may involve significant risks and are not suitable for all investors, highlighting the need for experience and financial resources to absorb potential losses [6]. 3. **Future Reports**: The next report on Liquid Cross Border Flows is scheduled for release on September 1st, indicating ongoing monitoring of FX flows and positioning [6]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state of the FX market and investor behavior.

Investment Rating - The report maintains a positive outlook on Emerging Markets (EM), indicating a favorable investment environment due to the depreciation of the USD and supportive local currency bond flows [1][19]. Core Insights - The depreciation of the USD is expected to continue benefiting EM local debt returns, with significant inflows into EM local currency funds observed recently [1][19]. - The report highlights the importance of upcoming US Treasury auctions as potential indicators for EM performance, particularly in the context of equity and fixed income returns [14][19]. - Structural international positions are not shifting significantly, which is likely to sustain inflows into EM credit and local currency bonds [19][20]. Summary by Sections Emerging Markets Overview - The report discusses the ongoing depreciation of the USD and its implications for EM, suggesting that tariffs-related issues may continue to limit USD strength [1][14]. - Local currency bond flows are expected to be supported by both external and internal factors, with recent performance tracking positively [19]. Asia Focus - In China, the USDCNY is below fixing levels, and upcoming fixings will be crucial for assessing policy bias, with expectations for lower rates from the PBoC [2][32]. - Indonesia is highlighted as a bullish opportunity, with expectations for the IDR to appreciate due to returning portfolio inflows and a favorable economic backdrop [37][38]. - The Philippines is expected to see a gradual decline in yields, with current underperformance likely to be short-lived as supply dynamics improve [42][44]. CEEMEA and LatAm Insights - In Israel, economic fundamentals are becoming more relevant as the conflict nears resolution, with inflation and growth trajectories under scrutiny [3][48]. - Colombia's fiscal rule suspension and labor reform efforts are noted, with macroeconomic data showing resilience despite a cautious outlook on cash positions [3]. - The report maintains a neutral stance on rates in CEEMEA while expressing a positive outlook on duration in Mexico and Brazil [29][30].

Group 1 - The core project focuses on high-end optical materials with a total investment of 740 million yuan and a construction period of 3 years, aiming to increase production capacity for polarizer protective films, OLED process protective films, and OCA optical adhesive films, which is expected to generate annual revenue of 1.392 billion yuan upon reaching full production [3] - The company has achieved import substitution in the optoelectronic display module materials sector, with clients including major enterprises like Samsung and BOE, indicating a strategic move to further penetrate the high-end market [3] - The company plans to enhance its core competitiveness through an innovation center project located in Shanghai, focusing on technology research and talent acquisition [3] Group 2 - In 2024, the company reported a 55% year-on-year revenue growth, reaching 795 million yuan, with a net profit of 280 million yuan, marking a 44% increase [4] - The high-performance optical materials segment saw a remarkable revenue increase of over 400%, totaling 218 million yuan, while functional electronic materials maintained a steady growth of 22% [4] - The growth trend continued into 2025, with Q1 revenue and net profit increasing by 92% and 111% year-on-year, respectively, validating the effectiveness of the company's strategic initiatives [4] Group 3 - The project faces certain risks and challenges, particularly with OLED process protective films and OCA optical adhesive films still in the customer certification phase, leading to uncertainties [5] - Upon reaching full production, the project will incur an additional annual depreciation expense of 42.39 million yuan, which could impact net profit if orders fall short of expectations [5] - To mitigate these risks, the company is increasing R&D investment, with R&D expenses accounting for 6.32% of total revenue in 2024, and plans to utilize 880 million yuan of idle funds for cash management to optimize financial efficiency [5] Group 4 - The company aims to leverage new projects and the Shanghai innovation center to deepen collaborations with universities and industry partners, striving to overcome technological barriers set by companies from the US, Japan, and South Korea in the high-end materials sector [6] - Future plans include actively expanding into upstream areas such as functional adhesives, creating material solutions that cover various scenarios including consumer electronics and new energy vehicles, thereby building a comprehensive material ecosystem [6] Group 5 - The Chinese optical film industry is steadily developing, supported by favorable policies, with companies like Yuxing Co. reporting a 71.27% year-on-year revenue growth in electronic optical polyester film business [7] - The demand for high-end composite optical films remains strong, with companies like Jizhi Technology reporting a 42.78% increase in sales for high-end display optical film products [7] - Despite domestic companies enhancing production capacity through technological upgrades, the overall supply-demand gap in the industry remains significant, highlighting ongoing reliance on imports for high-end optical films [7] Group 6 - The domestic optical film market is characterized by intense competition between local and foreign companies, with local firms holding a share in the mid-to-low-end market but facing challenges in the high-end sector due to technological barriers from foreign companies [8] - Companies like Changyang Technology have made significant breakthroughs in reflective film performance, challenging the long-standing monopolies of foreign manufacturers and driving industry technological advancement [8] - The high-end optical film and core raw materials still require substantial imports, while domestic exports are primarily concentrated in the mid-to-low-end segment, indicating a need for improvement in the competitive landscape of high-end optical films [8]