Core Insights - The report maintains a "Buy" rating for the food and beverage industry, consistent with previous ratings, indicating a positive outlook for the sector [4] - The report highlights the cautious inventory management in the liquor market, particularly in Henan, with the upcoming Spring Festival sales performance still uncertain [17][19] - The demand for frozen food in Henan is showing signs of improvement as preparations for the Spring Festival begin, with increased confidence among distributors [22] - In Shanghai, the "锅圈" (Guoquan) stores are undergoing significant renovations, leading to a notable increase in daily sales post-renovation [25][27] Weekly Focus: Henan & Shanghai Market Tracking - **Henan Liquor Market**: Inventory levels are low, and major brands like Moutai are seeing stable pricing, with the Spring Festival sales performance yet to be observed [17][19] - **Henan Food Supply Market**: Distributors are beginning to stock up for the Spring Festival, with a slight uptick in demand noted [22] - **Shanghai Guoquan Store Renovations**: The store renovations have led to a significant increase in daily sales, with new product categories contributing to revenue growth [25][27] Food and Beverage Sector Overview - The food and beverage sector experienced a decline of 2.1% in the week of January 12-16, underperforming compared to the CSI 300 index [29] - The valuation of the food and beverage sector stands at a PE-TTM of 21.2X, with the white liquor sector at 18.3X, indicating a relative valuation compared to the broader market [43][46] Recent Key Announcements & News - The report includes updates on major companies like Qianwei Culinary and Sanquan Foods, highlighting their strategic adjustments and product innovations aimed at enhancing competitiveness [23][24] - The report notes that the industry is moving away from price wars towards a focus on product innovation and quality assurance [24] Investment Recommendations - The report recommends key liquor brands such as Luzhou Laojiao, Shanxi Fenjiu, and Moutai, as well as consumer goods companies like Anjuke Foods and Tianwei Foods, indicating potential investment opportunities [8][12]

Group 1: Macroeconomic Effects of Technological Progress - The macroeconomic effects of technological progress can be divided into two phases: the "Installation Period" and the "Deployment Period" [8] - During the "Installation Period," there is often a temporary increase in total pressure, and the differentiation between new and old industries expands [9] - In the "Deployment Period," total pressure tends to ease, and the differentiation between new and old industries narrows as new technologies are widely applied [9] Group 2: Market Performance and Trends - Global equity markets experienced fluctuations, with U.S. stocks showing resilience in consumer, energy, and small-cap sectors, while technology stocks faced valuation pressure due to rising U.S. Treasury yields [12] - The S&P 500 fear and greed index dropped to 41.2, indicating a shift in market sentiment [12] - The A-share market saw a weekly increase of 0.49%, with the 10-year government bond yield decreasing by 3.6 basis points to 1.82% [19] Group 3: Commodity and Currency Movements - Gold prices rose by 2.61% to $4,611.05 per ounce, while silver prices surged by 16.2% [14] - The U.S. dollar index rebounded by 0.23% to 99.38, reflecting its safe-haven status amid market uncertainties [17] - Brent crude oil futures increased by 1.25%, while copper prices faced a decline of 1.5% [15] Group 4: Economic Indicators and Predictions - The Atlanta Fed's GDPNow model predicts a 5.3% annualized growth rate for Q4 based on resilient consumer spending and stable manufacturing data [3] - The probability of the Federal Reserve maintaining interest rates in March is estimated at 78.9%, with a 20.3% chance of a 25 basis point cut [52]

Investment Rating - The industry investment rating is "Buy" [3] Core Insights - The introduction of the first derivative trading regulations by the China Securities Regulatory Commission (CSRC) is expected to enhance the leverage capacity of brokerage firms, supporting the steady development of the derivatives market and encouraging risk management activities [7][10]. - The derivatives business is projected to optimize revenue structures and enhance the anti-cyclical capabilities of brokerage firms, as it is driven by client needs and capital intermediation rather than relying on directional market returns [7][10]. - The report highlights that the derivatives market in China has significant room for growth compared to overseas markets, with the scale of over-the-counter derivatives increasing from 0.32 trillion CNY in 2015 to 2.38 trillion CNY in 2023, reflecting a compound annual growth rate (CAGR) of 29% [7][10]. Summary by Sections Regulatory Developments - On January 16, 2026, the CSRC released the "Interim Measures for the Supervision and Administration of Derivative Trading (Draft for Comments)," which aims to regulate derivative trading venues and institutions, and implement counter-cyclical management [7][10]. - The regulations encourage the use of derivatives for hedging and resource allocation while limiting excessive speculation [10]. Market Opportunities - The derivatives business is expected to create a "stronger stronger" moat for brokerage firms that can provide high-level services, including trading pricing, hedging, and risk control capabilities [7][10]. - The report suggests that leading institutions have significant room to increase leverage, especially in the context of continuous inflows of new capital and favorable industry policies [7][10]. Investment Recommendations - The report recommends focusing on brokerage firms with strong balance sheets, outstanding trading capabilities, and extensive coverage of domestic and international institutional clients, such as Guotai Junan, Huatai Securities, CICC, and CITIC Securities [7][10].

Core Insights - The report highlights a rebound in pork prices during the consumption peak season, with the average price of lean pigs at 12.49 CNY/kg, up 2.6% week-on-week but down 22.7% year-on-year [6][14]. - The report emphasizes the growth potential of leading feed companies expanding overseas, suggesting a focus on their international business growth [6][16]. Livestock Farming - The average price of 6.5 kg piglets has risen to 330 CNY/head, reflecting a 7.5% week-on-week increase, indicating a positive outlook among farmers for pork prices in the second half of the year [6][14]. - Major recommended companies in the livestock sector include Wen's Food Group and Muyuan Foods, with attention also on Dekang Agriculture and New Hope [6][14]. - The report notes that the industry is in a "tug-of-war" state, with companies possessing cost advantages having a significant competitive edge [6][14]. Dairy Industry - The current price of fresh milk in major production areas is 3.02 CNY/kg, down 0.3% week-on-week and 3.2% year-on-year, while some regions see prices rebounding to 3.3-3.4 CNY/kg [15]. - The report anticipates a continued upward trend in beef prices due to supply constraints, recommending companies like Yuran Dairy and Modern Dairy [15]. Feed and Animal Health - Prices for common and specialty fish and shrimp have continued to rise, driven by tight supply and increased demand as the Spring Festival approaches [16]. - The report suggests that leading feed companies are likely to see market share growth due to their comprehensive advantages, with a focus on international expansion [16]. - In the animal health sector, companies are expanding into pet healthcare, with recommendations for companies like Keqian Biological and Princely Biological [16]. Agricultural Sector - The report indicates that the domestic corn price is 2364 CNY/ton, up 0.5% week-on-week, while soybean meal prices are at 3196 CNY/ton, down 0.9% [18][44]. - The report highlights the importance of biotechnology advancements and industry consolidation in the seed sector, recommending companies like Suqian Agricultural Development and Beidahuang [18]. Market Performance - The agricultural sector underperformed the market by 2.7 percentage points, with the animal health sector showing a 1.2% increase [22]. - The report notes that the livestock sector is experiencing a recovery in profitability, with self-bred pigs showing a profit of 7.39 CNY/head [24].

Core Insights - The report highlights the promising outlook for the commercial aerospace sector and increased attention on large aircraft and military trade [2][3] - The construction of a space power is accelerating, with a focus on breakthroughs in reusable rocket technology and the development of new industries such as commercial aerospace and low-altitude economy [5][13] - Airbus has set a record for civil aircraft orders, with a total of 8,754 aircraft in backlog by the end of 2025, indicating strong market demand [5][13] - Military trade is expected to improve, with significant defense export growth reported in the UK, reaching over £20 billion in 2025 [5][14] Investment Strategy - The report recommends focusing on companies that align with the "S-curve" evolution, emphasizing supply chain reform and automation trends, with specific recommendations for companies like Aero Engine Corporation and AVIC [5][15] - It also suggests targeting companies involved in military trade, large aircraft, and low-altitude economy, highlighting firms such as Guorui Technology and China Power [5][15] - New emerging industries such as commercial aerospace, AI, and quantum computing are also identified as key areas for investment, with recommendations for companies like Ruichuang Micro-Nano and Ziguang Guowei [5][15] Company Valuation and Financial Analysis - The report provides detailed financial metrics for key companies in the defense and aerospace sector, including expected earnings per share (EPS) and price-to-earnings (PE) ratios for 2025 and 2026 [6] - For instance, Aero Engine Corporation is projected to have an EPS of 0.22 CNY in 2025, with a PE ratio of 184.41x, indicating strong growth potential [6] - Other companies like AVIC Heavy Machinery and Guorui Technology are also highlighted for their expected profitability and market positioning [6][25][27]

Core Insights - The textile and apparel industry is experiencing a positive outlook due to rising wool prices and a tight supply-demand balance, with recommendations to focus on leading companies exploring new product lines for growth [5][6] - The report highlights the potential of companies like Li Ning, which is expected to benefit from its partnership with the Chinese Olympic Committee for the 2025-2028 period, leveraging the upcoming Los Angeles Olympics to enhance brand and performance [5] - The report also emphasizes the growth opportunities in the home textile sector, particularly for companies like Luolai Life and Mercury Home Textile, which are capitalizing on the rising sleep economy [5] Textile and Apparel Industry Review - During the period from January 10 to January 16, the Shanghai Composite Index fell by 0.45%, while the ChiNext Index rose by 1.29%. The textile and apparel sector (SW) decreased by 0.38%, ranking 22nd among 31 primary industries [13][15] - The report indicates that the latest PE (TTM) for the textile and apparel industry is 20.75X, with historical highs and lows of 57.80X and 14.44X, respectively [15][16] Key Company Valuation and Financial Analysis - Companies such as Mercury Home Textile (closing price: 20.25 CNY, target price: 23.08 CNY), and Nanshan Zhishang (closing price: 18.54 CNY, target price: 27.61 CNY) are highlighted for their strong growth potential [6] - The report provides detailed financial metrics for various companies, including EPS, PE ratios, and ROE, indicating a generally favorable investment outlook across the sector [6] Light Industry Manufacturing Review - The light industry sector is showing signs of recovery, with improved sales driven by real estate policy changes and consumer upgrades [5] - The report notes that the paper industry is expected to benefit from reduced production by leading companies, leading to a rebound in paper prices [5] Data Tracking in Textile and Apparel - The report tracks significant price movements in key materials, such as PA66 and PA6, with PA66 priced at 14,833 CNY/ton, reflecting a year-on-year decrease of 13.64% [5] - It also highlights the decline in textile exports from China, with a 4.10% drop in textile export value and a 10.10% drop in apparel export value in December 2025 [5]

Core Insights - The report analyzes the historical patterns of A-share market performance following significant trading volume increases, indicating that market sentiment often shifts after peak trading volumes, with only a few sectors maintaining strong momentum [3][4][5] - It highlights that sectors with robust fundamental expectations tend to sustain their strength post-volume spikes, such as construction during the Belt and Road Initiative in 2014 and AI-related sectors in 2025 [3][4][5] Historical Volume Analysis - A total of six significant volume spikes in A-shares have been identified, characterized by a trading volume increase of 1.5 times or more, with the most recent occurring on January 12, 2026, when the trading volume reached 3.6 trillion yuan [6][7] - Historical data shows that after these volume spikes, the market generally experiences a one-month period of limited risk, with an average return of 1.8% and a median return of 2.7% [26][27] - Over the subsequent three months, the market tends to enter a consolidation phase, with an average decline of 5.05% [26][27] Sector Performance Post-Volume - The report indicates that sectors leading in performance before a volume spike often do not maintain their positions in the following months, suggesting a shift in market focus [37][41] - For instance, sectors like construction and technology have shown varying degrees of performance continuity after volume spikes, with some sectors like food and beverage maintaining strength due to external factors such as foreign investment [41][42] Small vs. Large Cap Stocks - Historically, small-cap stocks tend to outperform large-cap stocks in the month following a volume spike, although this trend does not hold consistently over a three-month period [47][48] - The report emphasizes the importance of monitoring market sentiment and sector fundamentals to gauge future performance [55] Future Market Outlook - The report projects that the A-share market will likely experience a strong upward trend from late January to mid-March 2026, driven by seasonal effects and positive earnings forecasts [4][52] - Key sectors to watch include copper, energy storage, and semiconductor industries, which are expected to perform well in the upcoming months [4][55]

Power Generation and Industrial Activity - As of January 8, the cumulative power generation from coal-fired power plants increased by 2.6% year-on-year, compared to a decrease of 8.5% in December[3] - The cumulative heating supply from coal-fired power plants rose by 5.1% year-on-year[3] - The operating rate of 247 blast furnaces nationwide increased by 1.4 percentage points year-on-year, reaching 79.0%[3] - The average daily crude steel output from key enterprises increased by 11.8% month-on-month but decreased by 4.1% year-on-year, averaging 1.997 million tons per day[4] Construction and Real Estate - The funding availability rate for construction sites decreased by 0.3 percentage points to 59.6% as of January 13[5] - The average daily transaction area of commercial housing in 30 major cities fell by 38.6% year-on-year from January 1 to January 16[8] - The year-on-year decline in second-hand housing agency subscriptions in 80 cities was 20.8%[10] Consumer Goods and Retail - Retail sales of passenger vehicles from January 1 to January 11 dropped by 32% year-on-year, with wholesale sales down by 40%[10] - The average wholesale price of pork increased by 2.7% to 18.1 yuan per kilogram as of January 16[16] - The production of household appliances showed a positive growth of 6% year-on-year, with air conditioner production up by 11%[11] Economic Indicators - The Business Price Index (BPI) rose by 3.8% to 933 points as of January 16, indicating a broad price increase across various sectors[13] - The photovoltaic manager index (SMI) decreased by 1.3 percentage points to 133.0 points, reflecting a decline in upstream manufacturing activity[7]

Investment Rating - The investment rating for Tencent Holdings (00700.HK) is "Buy" with a current price of 617.50 HKD and a fair value estimate of 744.46 HKD [2]. Core Insights - The report emphasizes that advertising and gaming continue to show strong momentum, with significant investments in AI infrastructure [3][7]. - The forecast for Q4 2025 anticipates revenue of 1,947 billion RMB, representing a year-over-year growth of 13% [7]. - The report projects that Tencent's revenue will reach 7,522 billion RMB in 2025 and 8,290 billion RMB in 2026, with corresponding growth rates of 13.9% and 10.2% respectively [7][24]. Financial Projections - Revenue (in billion RMB): - 2023A: 6,090 - 2024A: 6,603 - 2025E: 7,522 - 2026E: 8,290 - 2027E: 8,973 - Growth Rates (%): - 2023A: 9.8% - 2024A: 8.4% - 2025E: 13.9% - 2026E: 10.2% - 2027E: 8.2% [4]. - Adjusted Net Profit (in billion RMB): - 2023A: 1,577 - 2024A: 2,227 - 2025E: 2,564 - 2026E: 2,929 - 2027E: 3,235 - Growth Rates (%): - 2023A: 36.4% - 2024A: 41.2% - 2025E: 15.1% - 2026E: 14.2% - 2027E: 10.5% [4]. Business Segment Performance - Gaming revenue for Q4 2025 is expected to reach 574 billion RMB, with a year-over-year growth of 17% [7]. - Social network revenue is projected at 324 billion RMB for Q4 2025, reflecting a 9% year-over-year increase [7]. - Marketing services revenue is anticipated to be 421 billion RMB for Q4 2025, showing a 20% year-over-year growth [7]. Valuation Methodology - The report employs a Sum-of-the-Parts (SOTP) valuation method, estimating the fair value of Tencent's core business at 6.35 trillion HKD, leading to a total fair value of 744.46 HKD per share [24][27].

Quantitative Models and Construction Methods 1. Model Name: Fixed Proportion + Macro Indicators + Technical Indicators Combination - **Model Construction Idea**: This model combines fixed proportion asset allocation with adjustments based on macroeconomic and technical indicators to optimize portfolio performance[35][36] - **Model Construction Process**: - Select seven asset classes, including equities, bonds, commodities, and currencies - Set a fixed proportion as the baseline allocation for each asset class - Adjust the weights of non-currency assets based on the latest monthly signals from macroeconomic and technical indicators, while correspondingly increasing or decreasing the allocation to currency assets[37] - **Model Evaluation**: The model effectively integrates macro and technical signals to enhance portfolio performance and reduce risk[36] 2. Model Name: Classic Asset Allocation Model + Macro Indicators + Technical Indicators Combination - **Model Construction Idea**: This model incorporates classic asset allocation strategies, such as risk parity and volatility control, with macroeconomic and technical indicators to achieve better risk-adjusted returns[43] - **Model Construction Process**: - Use the same seven asset classes as the previous model - Set baseline weights based on risk parity or a 6% annualized volatility control - Adjust weights monthly based on macroeconomic and technical signals - Impose constraints on asset allocation proportions (e.g., equity allocation capped at 30%, commodity allocation capped at 20%) and turnover rates (e.g., single asset monthly turnover capped at 20%, total monthly turnover capped at 30%)[43] - **Model Evaluation**: The model balances risk and return effectively, with constraints improving feasibility and stability[43] --- Model Backtesting Results 1. Fixed Proportion + Macro Indicators + Technical Indicators Combination - Annualized Return: 10.22%[40] - Maximum Drawdown: 9.34%[40] - Annualized Volatility: 6.24%[40] 2. Classic Asset Allocation Model + Macro Indicators + Technical Indicators Combination - **Volatility Control (6%) + Macro Indicators + Technical Indicators Combination**: - Annualized Return: 9.10%[47] - Maximum Drawdown: 5.06%[47] - Annualized Volatility: 4.94%[47] - **Risk Parity + Macro Indicators + Technical Indicators Combination**: - Annualized Return: 8.28%[47] - Maximum Drawdown: 4.47%[47] - Annualized Volatility: 3.40%[47] --- Quantitative Factors and Construction Methods 1. Factor Name: Macroeconomic Trend Factor - **Factor Construction Idea**: Analyze the impact of macroeconomic indicator trends (upward or downward) on asset returns[10] - **Factor Construction Process**: - Use historical moving averages to determine the trend of a macroeconomic indicator - Conduct a t-test to evaluate whether asset returns differ significantly under upward and downward trends - Formula: $ t = \frac{\overline{R_1} - \overline{R_2}}{\sqrt{\frac{(n_1-1)S_1^2 + (n_2-1)S_2^2}{n_1+n_2-2} \left(\frac{1}{n_1} + \frac{1}{n_2}\right)}} \sim t_{n_1+n_2-2} $ where $\overline{R_1}$ and $\overline{R_2}$ are the average monthly returns under upward and downward trends, $S_1$ and $S_2$ are the standard deviations, and $n_1$ and $n_2$ are the number of months in each trend[10] - **Factor Evaluation**: The factor effectively identifies significant differences in asset returns under different macroeconomic trends[10] 2. Factor Name: Trend Indicator Factor - **Factor Construction Idea**: Use historical price data to measure the trend of different asset classes[16] - **Factor Construction Process**: - For equities: $(\text{2-month LLT average monthly return} - \text{(T-12 to T-2) month average monthly return})$ - For bonds: $(\text{2-month closing price average monthly return} - \text{(T-12 to T-2) month average monthly return})$ - For industrial commodities: $(\text{2-month closing price average monthly return})$ - For gold: $(\text{6-month closing price average monthly return})$[16] - **Factor Evaluation**: The factor provides a robust method for identifying asset price trends[16] 3. Factor Name: Valuation Indicator Factor - **Factor Construction Idea**: Use the equity risk premium (ERP) to measure equity valuation levels[21][27] - **Factor Construction Process**: - Calculate ERP as the inverse of the CSI 800 Index PE (TTM) minus the 10-year government bond yield - Define the 5-year historical percentile of ERP as: $ \text{Percentile} = \frac{\text{Current ERP} - \text{5-year ERP Minimum}}{\text{5-year ERP Maximum} - \text{5-year ERP Minimum}} $ - Assign scores based on the percentile: - >90%: +2 - 70%-90%: +1 - 30%-70%: 0 - 10%-30%: -1 - <10%: -2[22] - **Factor Evaluation**: The factor effectively captures valuation levels, with higher percentiles indicating lower valuations[22] 4. Factor Name: Fund Flow Indicator Factor - **Factor Construction Idea**: Measure the net fund flow into the CSI 800 Index to assess market sentiment[27][32] - **Factor Construction Process**: - Calculate the monthly active net inflow as: $(\text{1-month active net inflow} - \text{6-month average monthly active net inflow})$ - Positive values indicate fund inflow, while negative values indicate fund outflow[27][32] - **Factor Evaluation**: The factor provides a clear signal of market sentiment based on fund flow dynamics[32] --- Factor Backtesting Results 1. Macroeconomic Trend Factor - Equity: PMI (3-month moving average) → Positive trend, score: +1[15] - Bond: PMI (3-month moving average) → Negative trend, score: -1[15] - Gold: US M2 YoY (12-month moving average) → Positive trend, score: +1[15] - Industrial Commodities: PMI (3-month moving average) → Positive trend, score: +1[15] 2. Trend Indicator Factor - Equity: 2-month LLT average return → 0.38%, upward trend, score: +1[21] - Bond: 2-month closing price average return → -0.15%, downward trend, score: -1[21] - Gold: 6-month closing price average return → 4.20%, upward trend, score: +1[21] - Industrial Commodities: 2-month closing price average return → -0.09%, downward trend, score: -1[21] 3. Valuation Indicator Factor - Equity: 5-year ERP percentile → 51.77%, neutral valuation, score: 0[27] 4. Fund Flow Indicator Factor - Equity: 1-month active net inflow → 1863 billion RMB, fund inflow, score: +1[32]