Investment Rating - The report maintains an "Accumulate" rating for the company [5] Core Viewpoints - The company is positioned to benefit from the booming demand for optical modules driven by AI and data center construction, with expected revenue growth from 2025 to 2027 [5] - The company has established a comprehensive global presence with multiple production and R&D bases, enhancing its competitive edge in both domestic and international markets [5] - The company has a strong self-research capability in core optical components, ensuring supply chain stability and cost advantages [5] Summary by Sections 1. Company Overview - The company is a pioneer in the optical electronics field, with three main business segments: intelligent manufacturing, connectivity, and sensing [13] - It has deep integration into the optical electronics industry, leveraging resources from Huazhong University of Science and Technology [13] 2. Company Governance - The company completed a separation reform in 2021, enhancing its market competitiveness and establishing a multi-level incentive system [17] - The management team has a strong background in the optical electronics industry, which aids in aligning with industry trends [19] 3. Company Performance - The company's revenue increased from 61.38 billion to 120.11 billion from 2020 to 2022, driven by the growth of 400G optical modules and products for new energy vehicles [25] - In 2025, the company expects to achieve revenues of 152.38 billion, 226.25 billion, and 298.97 billion for the years 2025, 2026, and 2027 respectively [5] - The gross profit margin has improved, with a notable increase in net profit margin to 11.90% in the first three quarters of 2025 [27] 4. Market Demand and Product Development - The demand for optical modules is expected to surge due to the rapid growth of AI and data centers, with a significant increase in capital expenditure from major cloud service providers [5] - The company is focusing on high-end optical modules, with a complete product system that includes 1.6T optical modules, which are expected to gain market share [5] 5. Financial Forecast - The company forecasts a net profit of 18.49 billion, 25.82 billion, and 33.76 billion for the years 2025, 2026, and 2027 respectively, indicating strong growth potential [5][6]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [5]. Core Views - The company is positioned as the leading coal producer in Mongolia, with a strong geographical advantage near the Chinese market. It is diversifying beyond coal into gold and copper, which are expected to contribute significantly to future profits [5][13]. - The gold business, initiated with the BKH gold mine, is projected to generate over $100 million in net profit by 2026, marking a substantial second growth curve for the company [5][6]. - The copper business, through the acquisition of UCC, is seen as a long-term growth opportunity, with plans for feasibility studies on the White Hill copper deposit [5][6]. Summary by Sections Company Overview - The company is the largest private mining enterprise in Mongolia, primarily engaged in coal production and export, with ongoing diversification into gold and copper [13]. - It was the first Mongolian company to list on the international capital market, with significant assets located in the Tavan Tolgoi coalfield [13][15]. Coal Business - The company operates two major coal mines, UHG and BN, with substantial coal reserves of 340 million tons and 272 million tons respectively, primarily producing high-quality hard coking coal [24][25]. - In 2024, the company achieved a peak raw coal production of 16.34 million tons, with a significant increase in sales through competitive bidding [39][41]. - The average selling price of coal is influenced by domestic market trends, with recent prices at $106 and $121 per ton for 2023 and 2024 respectively [44]. Gold Business - The BKH gold mine commenced commercial production in September 2025, with expectations to reach full production of 85,000 ounces by 2027 [5][6]. - The low All-In Sustaining Cost (AISC) of the gold business positions it as a high-margin contributor to the company's overall profitability [5]. Copper Business - The acquisition of a 50.5% stake in UCC provides access to the White Hill copper-gold project, which contains approximately 185,000 tons of copper and 52,000 ounces of gold [5][6]. - The company plans to conduct feasibility studies on the copper deposit to further reduce reliance on coal [5]. Financial Projections - The company forecasts net profits of $0.93 million, $2.63 million, and $3.77 million for the years 2025, 2026, and 2027 respectively, with a PE ratio of less than 7 for 2026 [5][6].

Investment Rating - The report maintains an "Outperform" rating for the construction materials sector, indicating a positive outlook compared to the broader market [2] Core Views - A new round of urban renewal is beginning, which is expected to provide significant opportunities in the consumer building materials sector, effectively countering the decline in new housing market demand [8] - The report highlights that after a prolonged downturn in the real estate sector, profitability in various segments of the construction supply chain is starting to recover, particularly for leading companies that have undergone strategic adjustments [8] - The report emphasizes the potential for price increases in certain segments, such as waterproofing and coatings, as companies respond to improved market conditions [8] Summary by Sections Cement - The cement market is entering a seasonal downturn, with demand expected to decline. The average shipment rate for major regions has dropped to 29%, a decrease of approximately 10 percentage points [27][34] - The national average price for cement remains stable at around 353 RMB per ton, with minor fluctuations observed in specific regions [28][34] - The report suggests that after the Spring Festival, demand may recover as new key projects are expected to commence, potentially stabilizing prices [34] Glass - The glass market is also experiencing a decline in demand, with production capacity decreasing to approximately 14.95 million tons, the lowest in recent years [53] - The average price for float glass has increased slightly to 1,139 RMB per ton, with inventory levels decreasing [38] - The report indicates that the glass industry is facing profitability challenges, leading to accelerated production line cold repairs, which may help stabilize the market [53] Fiberglass - The fiberglass market is seeing stable pricing for both roving and electronic fabrics, with the price of 7628 electronic fabric currently at approximately 4.4-4.85 RMB per meter [55] - The report anticipates continued high demand for electronic fabrics, supported by structural adjustments and a shortage of high-end products [55] - Key recommendations include focusing on leading companies like China Jushi, with additional attention on International Composite Materials and Zhongcai Technology [55] Carbon Fiber - Carbon fiber prices are expected to remain stable in the short term, with the rapid development of commercial aerospace potentially driving new demand [55] - The report notes that the current price stability is a necessary step for increased market penetration, with significant growth expected in the aerospace sector [55] Consumer Building Materials - The report highlights the resilience of consumer building materials, with leading companies like Sanke Tree and Rabbit Baby showing strong growth potential as they emerge from profitability challenges [8] - The urban renewal initiative is expected to create substantial market opportunities, particularly for high-quality consumer building materials [8]

Group 1: National Unified Market Construction - The construction of a national unified market has been elevated to a core economic strategy, emphasizing the need to eliminate market barriers and facilitate economic circulation[8] - The central economic work conference in 2025 highlighted the importance of deepening the construction of a unified market, marking a transition from framework establishment to systematic implementation[9] - The construction process has seen significant progress, with improvements in property rights protection, market access, fair competition, and social credit systems[9] Group 2: Key Areas and Policies - The modern service industry is expected to be a crucial driver in the unified market construction, with coastal regions likely to be the first to pilot reforms[1] - Tax incentives and government subsidies have been adjusted, primarily affecting key industries such as electronics, automotive, and pharmaceuticals, which may accelerate industry restructuring[1] - The establishment of a unified market will require reforms in the fiscal and tax systems, as well as optimization of local performance evaluation systems[1] Group 3: Economic Impact and Participation - The participation of different provinces in the unified market varies significantly, with coastal provinces showing higher engagement levels[1] - The share of external factors in total inputs is over 50% for resource-related and some high-tech manufacturing industries, indicating smoother domestic flow of factors[14] - Service industries show lower external factor input ratios, with public administration, accommodation, and comprehensive technical services at 7.23%, 11.54%, and 11.99% respectively, suggesting potential bottlenecks in factor circulation[14]

Investment Rating - The report maintains an "Outperform" rating for the commercial aerospace and construction sectors, indicating a positive outlook for these industries [3]. Core Insights - The report highlights that fixed asset investment (FAI) in 2025 is under pressure, with a total of 485,186 billion yuan, representing a year-on-year decline of 3.8%, which is a worsening of 1.2 percentage points compared to the previous 11 months [15]. - Infrastructure investment, excluding power and water supply sectors, decreased by 2.2% year-on-year, also reflecting a larger decline than earlier in the year [15]. - Real estate development investment reached 82,788 billion yuan in 2025, down 17.2% year-on-year, with new construction area dropping by 20.4% [15]. - The report emphasizes the potential for a rebound in the construction and real estate markets driven by supportive macro policies, particularly in urban renewal initiatives [16]. Summary by Sections 1. Industry Outlook and Investment Recommendations - The report suggests focusing on high-quality cyclical stocks in the construction sector, particularly those benefiting from urban renewal policies and major infrastructure projects [16][19]. - Key companies such as China State Construction and China Energy Engineering reported year-on-year increases in new contracts, indicating a positive trend in capital expenditure among leading firms [16]. 2. Market Performance Review - The construction decoration index rose by 1.88%, outperforming the overall A-share index, which increased by 0.83% [14]. - Notable performers in the sector included chemical engineering (+10.70%) and steel structure (+7.71%) [14]. 3. Key Company Dynamics - Roman Holdings is projected to achieve a profit of 1.8-2 billion yuan in 2025, marking a turnaround from previous losses, driven by strong demand for computing power in major cities [19]. - The report also notes the increasing importance of satellite remote sensing applications in the commercial aerospace sector, with new policies aimed at developing a comprehensive resource utilization system [19]. 4. Financing and Debt Issuance - As of January 23, 2026, special bond net financing reached 1,704.9 billion yuan, with new issuances totaling 1,746 billion yuan, indicating a stable financing environment compared to previous years [20][21]. - The report highlights that city investment bonds have seen a net financing contraction of 219 billion yuan, with no special government bonds issued so far in 2026 [21].

Investment Rating - The report maintains an investment rating of "Outperform the Market" for the coal industry, indicating an expected relative performance that exceeds the benchmark index by over 10% [2][14]. Core Insights - The report highlights a significant rebound in daily coal consumption due to a cold wave, with a focus on pre-holiday inventory replenishment needs [1]. - It notes that while coal prices have seen a decline, they are expected to stabilize as demand is projected to rise, particularly leading up to the Spring Festival [9]. - The supply side remains constrained due to "anti-involution" policies and strict safety regulations, which are likely to limit production increases [9]. Summary by Sections Production and Demand - In December, national raw coal production was 437 million tons, showing a year-on-year decrease of 1% and a slight month-on-month increase of 2.4%. The total annual production reached 4.832 billion tons, up 1.2% year-on-year [7]. - The report indicates that electricity generation, pig iron, and cement production saw year-on-year declines of 3.2%, 9.9%, and 6.6% respectively in December [7]. Price Trends - As of January 23, the Qinhuangdao coal price was 686 RMB/ton, reflecting a decrease of 11 RMB/ton year-on-year [7]. - The average daily coal consumption across 25 provinces was 6.59 million tons, up 12.1% year-on-year, while average inventory levels decreased by 5% [7]. Market Outlook - The report anticipates that coal prices may face upward pressure as the demand season approaches, despite recent price declines [9]. - It suggests that companies such as Lu'an Environmental Energy, Yanzhou Coal Mining, and Shanxi Coal International are worth monitoring for potential investment opportunities [9].

Strategy Insights - The report highlights a strong spring market driven by active trading in small-cap and thematic investments, with A-share trading volume exceeding 3 trillion, indicating robust market confidence and capital inflow [3][8][22] - The report identifies key themes for investment, including commercial aerospace, AI applications, and the price increase chain, which are expected to attract medium-risk capital [3][22] - The report notes a shift in market structure, with increased focus on real estate, resource products, and price increase chains, reflecting a rebalancing of investment styles [3][22] Market Dynamics - The A-share market has shown a recovery with the Shanghai Composite Index stabilizing and trading volumes rebounding, indicating a restoration of investor confidence [8][13] - Small-cap indices such as the CSI 500 and CSI 1000 have outperformed large-cap indices, suggesting a growing interest in mid and small-cap stocks [11][22] - The report emphasizes the importance of supply-demand mismatches in driving price increases across various sectors, particularly in the semiconductor and resource sectors [3][22][27] Sector Focus - The report suggests that the real estate sector is a critical area for investment, driven by recent policy signals aimed at boosting domestic demand, with leading companies in this sector likely to see revaluation opportunities [3][24] - The cyclical resource sector is expected to benefit from rising PPI and inflation expectations, with a notable increase in prices for industrial metals and chemicals [27][28] - Communication stocks, particularly in the optical communication segment, have faced downward pressure, indicating a need for cautious investment in this area despite overall market optimism [29][41]

Macroeconomic Data Review - The GDP for 2025 reached 14,018.79 billion yuan, growing by 5.0% year-on-year, with a fourth-quarter growth of 4.5% [1][4] - The overall economic performance in 2025 showed a trend of high growth at the beginning of the year followed by a decline, with external demand outpacing internal demand [4][6] - The fixed asset investment for the year decreased by 3.8% year-on-year, indicating a continued downward trend in investment [4][5] - The industrial added value for December increased by 5.2% year-on-year, with high-tech manufacturing maintaining robust growth [4][32] - The service sector production index grew by 5.0% year-on-year in December, reflecting an improving overall economic climate [4][38] Consumption Trends - The retail sales of consumer goods in December grew by 0.9% year-on-year, a decline of 0.4 percentage points from the previous month [4][19] - The performance of service retail was better than that of goods retail, with significant increases in categories such as cosmetics and sports entertainment [4][21] - The consumption growth rate for basic living goods showed a decline, while the "two new" products experienced a narrowing of the year-on-year decline [4][21] Investment Insights - Fixed asset investment saw a further decline, with December showing a continued decrease across all three major investment categories [4][5] - The construction and installation projects remained weak, while equipment and tool purchases continued to drive investment growth [4][24] Industrial Performance - The industrial sector showed stable growth, with the added value of industries above designated size increasing by 5.2% year-on-year in December [4][32] - High-tech manufacturing industries led the growth, with a year-on-year increase of 11% in December [4][32] Real Estate Market - The real estate sector continued to show weakness, with new construction, construction area, completion area, and sales area all declining [5][38] - The price index for new residential properties in 70 large and medium-sized cities fell by 3.0% year-on-year in December, indicating a widening decline [5][44] Outlook for 2026 - Several factors are expected to support a strong start for the economy in 2026, including proactive macro policies and the potential for significant project traction [6][11] - The upcoming local government elections may also contribute to improved economic performance, as historically, such years have seen better growth [6][11]

Investment Rating - The report maintains an "Outperform" rating for the non-bank financial sector, indicating a positive outlook compared to the market [2]. Core Insights - The implementation of new regulations for public fund performance benchmarks aims to reshape the industry towards long-term value creation, moving from a "scale-oriented" to a "capability-oriented" approach [14][16]. - The insurance sector shows high efficiency in claims processing, with claim acceptance rates generally above 99%, driven by technology such as AI and big data [43][44]. Summary by Sections 1. Securities Business Overview and Weekly Review - The new public fund performance benchmark regulations will take effect on March 1, 2026, addressing issues like benchmark ambiguity and style drift, thereby enhancing the accountability of fund managers [14][15]. - The report highlights a mixed performance among major indices, with the Shanghai Composite Index at 4,136.16 points, up 0.84% week-on-week, while the non-bank financial index fell by 1.70% [16][19]. 2. Insurance Business Overview and Weekly Review - Recent claims reports from various insurance companies indicate a high claim acceptance rate, with companies like Ping An Life achieving 99.2% [43]. - Despite high acceptance rates, consumer perceptions of "claim difficulties" persist, primarily due to misunderstandings regarding policy terms and inadequate preparation of claim materials [44]. - The average payout for critical illness insurance is around 100,000 CNY, while the average treatment cost for severe illnesses can reach 400,000 CNY, highlighting a significant coverage gap [44]. 3. Market Liquidity Tracking - The central bank's net injection in the open market was 9,795 billion CNY for the week of January 19-23, 2026, indicating ongoing liquidity management efforts [49].

Group 1 - The bond market sentiment has improved, with the long-end yields reaching a temporary low, as the 30Y active bond yield broke through 2.25%, down approximately 9 basis points from the monthly high [7][9] - Economic data for December was largely in line with expectations, having a limited impact on the bond market, while the equity market showed a slight slowdown [7][9] - The People's Bank of China announced an excess rollover of MLF, injecting liquidity into the market, which contributed to the overall downward trend in bond yields [7][9] Group 2 - The issuance of government bonds in Q1 2026 is expected to continue to be front-loaded, with a higher proportion of long-term bonds [13][14] - In January 2026, local government bond issuance significantly exceeded the same period last year, with 773.4 billion yuan issued, an increase of 215.9 billion yuan year-on-year, and a high proportion of long-term bonds [28][29] - The demand for long-term bonds remains weak, with institutional enthusiasm for new bonds not particularly high, although there is still some demand for new issues [33][38] Group 3 - The financial institutions' asset allocation pressure has eased, indicating a gradual weakening of the "asset shortage" in the bond market, which corresponds to fluctuations in the 10Y government bond yield [46] - The attractiveness of equity assets remains high, and the new margin policy is not expected to have a significant disruptive effect on the market [47][49] - The overall performance of long-term pure bond funds has been significantly lower compared to equity-related funds, indicating a lack of profitability in the bond market [49][51]