Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The commencement of the trillion - level Yaxia Hydropower Project serves as a core catalyst for the construction machinery industry, bringing clear and continuous growth momentum [3]. - The CSI Construction Machinery Theme Index allows for one - click allocation of core construction machinery assets, with strong industry representativeness, high investment concentration, and a significant small - and medium - cap style [3]. - Since the base date in 2016, the index has outperformed mainstream broad - based indices such as the CSI 300 in the long term, and its constituent stocks' performance is expected to continue to benefit from the Yaxia Hydropower Project, with a predicted 12.18% year - on - year revenue growth rate in 2025 [3]. - The GF CSI Construction Machinery ETF (560280) closely tracks the CSI Construction Machinery Theme Index, aiming to minimize tracking deviation and error. The fund manager has rich experience in index product management [3]. Summary by Directory 1. Yaxia Hydropower Project Commencement, Trillion - Dollar Investment Creates a Century - Long Project - The Yaxia Hydropower Project's conception dates back to 2007, and it officially started in 2025 after years of planning and research [7]. - Compared with the Three Gorges Project, the total investment of the Yaxia Hydropower Project may exceed 2 trillion yuan, and the proportion of the main investment is higher [9]. 2. Straightening Bends and Tunnel Water Diversion, Multiple Construction Machinery Products Benefit - The project adopts an innovative development method of "straightening bends and tunnel water diversion", with a core focus on hydropower generation and minimal impact on the ecological environment [14]. - High - altitude canyon operations in the project significantly boost the demand for high - end construction machinery. Assuming a 10% demand for construction machinery in the total investment, the static investment in construction machinery is about 120 billion yuan, involving general construction machinery, tunnel boring machinery, and cable - supported hoisting machinery [18]. 3. CSI Construction Machinery Theme Index: One - Click Layout of the Construction Machinery Track 3.1 Sampling Method: Representative Companies in the Fields of Construction Machinery Whole - Machine Manufacturing and Spare - Parts Manufacturing - The index selects 50 listed companies' securities related to construction machinery as samples, with a semi - annual adjustment [26]. 3.2 Index Components: Focus on Important Enterprises in the Construction Machinery Field, with a Relatively Obvious Small - and Medium - Cap Style - The index focuses on the machinery and equipment and automotive industries, with high concentration in construction machinery stocks. The top ten component stocks account for 69.03% of the weight, and stocks with a total market value of less than 30 billion yuan account for 82% of the weight [27][32]. 3.3 Index Return - Risk Characteristics: Long - Term Outperformance of Broad - Based Indices, Obvious Index Gains Driven by Events - Since the base date in 2016, the cumulative return of the index has reached 132.47%, outperforming the CSI 300 and other broad - based indices. After the news of the Yaxia Hydropower Project commencement, the index rose sharply. The predicted revenue of the constituent stocks in 2025 and 2026 will reach 1,169.287 billion and 1,221.761 billion yuan, with year - on - year growth rates of 12.18% and 4.49% respectively [34][35]. 4. GF CSI Construction Machinery ETF (560280) - The fund is an ETF product under GF Fund, managed by fund manager Yao Xi. Its investment goal is to minimize tracking deviation and error, with a management fee of 0.50% and a custody fee of 0.10% [39]. 5. Fund Manager Information 5.1 Fund Manager Introduction - GF Fund was established in 2003, is a leading all - around asset management institution in China, and as of the end of 2024, its management scale exceeded 1.88 trillion yuan [40]. 5.2 Fund Manager Introduction - Yao Xi, a business master, has rich experience in index product management and currently manages 14 funds with a total scale of 6.23 billion yuan [41].

Investment Rating - The industry investment rating is "Overweight" [12] Core Viewpoints - The commencement of the Yarlung Zangbo River downstream hydropower project is expected to significantly benefit the engineering machinery sector, with a total investment of approximately 1.2 trillion yuan, making it the highest investment project in a single country [5][6] - The project will require a high degree of mechanization, with a projected demand for engineering machinery equipment amounting to about 120 billion yuan, which is estimated to be 10% of the total investment [5][6] - The geological conditions favor the use of tunnel boring machines (TBM), leading to an expected increase in the proportion of TBM construction methods [4][5] Summary by Sections General Engineering Machinery - General engineering machinery such as excavators, cranes, concrete machinery, and aerial work platforms will see increased demand due to the project's construction cycle and local conditions [4] - The demand for larger and electric equipment is anticipated to be higher, reflecting greater profitability for companies [4] Tunnel Boring Machinery - The project will utilize TBM and other drilling equipment, with expectations of more extensive tunnel construction compared to previous projects [4][5] - The average length of tunnels in similar projects has been noted to be around 16.7 kilometers, with the Yarlung Zangbo project expected to have even longer tunnels [4][5] Large Cable Cranes - Large cable cranes will be essential for transporting concrete and installing metal structures in the challenging mountainous terrain [4] Key Beneficiaries - Core companies to focus on include Sany Heavy Industry, XCMG, Zoomlion, LiuGong, and others for general engineering machinery; China Railway Engineering Corporation and others for tunnel boring machinery; and Farlantech for cable cranes [6]