Investment Rating - The industry investment rating is "Overweight" [1] Core Views - The biopharmaceutical investment and financing environment has shown significant recovery since the second half of 2025, with a total financing amount of USD 30.32 billion from July to November 2025, representing a year-on-year increase of 30.90% [4] - The number of new drug IND applications stabilized in 2025, with approximately 1,897 applications from January to November, reflecting a year-on-year growth of about 7.91% [4] - The demand for CRO services has shown a clear turning point, and the report continues to recommend opportunities in the innovative drug industry chain (CXO + research services) for 2026 [4] Summary by Sections Industry Performance - The biopharmaceutical sector experienced a decline of 0.14% in the third week of December 2025, outperforming the CSI 300 index by 0.14 percentage points, ranking 22nd among 31 sub-industries [7][14] - The offline pharmacy sector saw the highest increase, rising by 5.59%, while the chemical preparation sector had the largest decline at 2.1% [18][22] Investment Opportunities - The report highlights the strong performance of leading CXO and research service companies, with many exceeding earnings expectations. Companies like WuXi AppTec and Tigermed have raised their earnings guidance for 2025 [5] - The report recommends a valuation switch opportunity for leading CXO and research service companies, given the continuous improvement in demand [5] Clinical Research Organizations (CRO) - There has been a notable improvement in orders for preclinical and clinical CROs, with expectations for significant improvements in financial statements for 2026 [6] - The report anticipates that the market demand will continue to focus on leading companies as the capacity of clinical CROs is expected to be streamlined [6] Monthly and Weekly Recommendations - The report recommends a monthly investment portfolio including companies such as Sanofi, Innovent Biologics, and others, focusing on innovative drug opportunities and valuation switch [8]

Quantitative Factors and Construction Methods 1. Factor Name: Minute Capital Flow Segmentation Residual Factor - **Factor Construction Idea**: Based on the "Factor Segmentation Theory," the minute-level capital flow is segmented using specific indicators (price, return, and amplitude) to extract residual factors with differentiated information[13][14][27] - **Factor Construction Process**: - Segmentation indicators include minute price, minute return, and minute amplitude - Segmentation objects are the net inflow of large and small orders over the past 20 days - For price segmentation, the high-price (head) and low-price (tail) segments are compared, with the 50% segmentation ratio showing optimal performance - For return segmentation, the high-return segment is selected - For amplitude segmentation, the high-amplitude segment is selected - The residual factors are constructed by reprocessing the segmented variables[13][14][27] - **Factor Evaluation**: The amplitude segmentation residual factor outperforms the price and return segmentation factors, showing the best performance in stock selection[27] 2. Factor Name: Minute Capital Flow Time Period Residual Factor - **Factor Construction Idea**: Different types of investors exhibit distinct preferences for intraday trading periods, and the capital flow information in specific periods contains unique signals[30][31][36] - **Factor Construction Process**: - Intraday trading periods are divided into the first hour, second hour, third hour, fourth hour, first half-hour, and hourly intervals - The capital flow information of specific periods over the past 20 days is extracted - Residual factors are constructed for large and small orders in each period - The first half-hour period is selected as the optimal time period for constructing the residual factor due to its superior stock selection performance[30][31][36] - **Factor Evaluation**: The first half-hour residual factor demonstrates robust stock selection performance, with a stable long-short curve since 2021[34][36] 3. Factor Name: Minute Capital Flow Scenario Residual Factor - **Factor Construction Idea**: Market scenarios are divided based on specific indicators (e.g., 5-minute return), and the capital flow information under similar scenarios is used to construct residual factors[42][43][45] - **Factor Construction Process**: - Market scenarios are defined using indicators such as amplitude, 1-minute return, 5-minute return, and signed transaction volume - The top 50% of trading minutes based on the selected scenario indicator are identified - The corresponding capital flow information for individual stocks is extracted - Residual factors are constructed for large and small orders under the selected scenario - The 5-minute return indicator is chosen as the optimal scenario for constructing the residual factor due to its ability to effectively capture market trends[42][43][45] - **Factor Evaluation**: The 5-minute return scenario residual factor shows the best stock selection performance among all scenario-based factors, with stable performance since 2021[45] --- Factor Backtesting Results 1. Minute Capital Flow Segmentation Residual Factor - **Large Order (Amplitude)**: IC mean = 0.041, RankIC mean = 0.045, ICIR = 3.23, RankICIR = 3.34, Annualized Long-Short Return = 15.9%, IR = 3.39[27][30] - **Small Order (Amplitude)**: IC mean = -0.047, RankIC mean = -0.054, ICIR = -2.96, RankICIR = -3.32, Annualized Long-Short Return = 17.7%, IR = 3.02[27][30] 2. Minute Capital Flow Time Period Residual Factor - **Large Order (First Half-Hour)**: IC mean = 0.043, RankIC mean = 0.049, ICIR = 3.41, RankICIR = 3.47, Annualized Long-Short Return = 16.8%, IR = 3.64[36][42] - **Small Order (First Half-Hour)**: IC mean = -0.061, RankIC mean = -0.07, ICIR = -3.47, RankICIR = -3.82, Annualized Long-Short Return = 23.3%, IR = 3.65[36][42] 3. Minute Capital Flow Scenario Residual Factor - **Large Order (5-Minute Return)**: IC mean = 0.037, RankIC mean = 0.04, ICIR = 3.88, RankICIR = 3.86, Annualized Long-Short Return = 14.1%, IR = 4.04[45][50] - **Small Order (5-Minute Return)**: IC mean = -0.054, RankIC mean = -0.059, ICIR = -3.99, RankICIR = -4.15, Annualized Long-Short Return = 21.2%, IR = 4.22[45][50] 4. Scenario Residual Factor Performance in Different Index Samples - **Large Order (CSI 300)**: IC mean = 0.027, RankIC mean = 0.028, ICIR = 1.45, RankICIR = 1.53, Annualized Long-Short Return = 6.7%, IR = 1.14[55][60] - **Large Order (CSI 500)**: IC mean = 0.034, RankIC mean = 0.037, ICIR = 2.16, RankICIR = 2.45, Annualized Long-Short Return = 9.4%, IR = 1.83[55][60] - **Small Order (CSI 300)**: IC mean = -0.04, RankIC mean = -0.039, ICIR = -1.68, RankICIR = -1.59, Annualized Long-Short Return = 11.1%, IR = 1.63[55][60] - **Small Order (CSI 500)**: IC mean = -0.048, RankIC mean = -0.049, ICIR = -2.77, RankICIR = -2.77, Annualized Long-Short Return = 15.1%, IR = 2.48[55][60]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - Domestic demand policies empower consumption, and the liquor industry is entering a deep adjustment period. The food and beverage index increased by 1.0% from December 15 to December 19, ranking 11th among primary sub-industries, outperforming the CSI 300 by approximately 1.3 percentage points. Sub-industries such as baked goods (+8.0%), snacks (+7.5%), and pre-processed foods (+5.6%) performed relatively well. The recent emphasis on expanding domestic demand as a long-term strategy provides clear policy guidance and support for the consumption and food and beverage industries. The current consumption sector is entering a strategic opportunity period with intensive policy support, and the food and beverage industry, as a core sector of essential consumption, is expected to benefit directly from the domestic demand boost. Health, quality, and cost pressure alleviation are core trends, with leading companies showing resilient profitability. The liquor sector is currently in a bottoming phase, with strong brand power and multi-price range layouts expected to see valuation recovery. Dairy products and beer are also expected to experience a bottom reversal due to policy relief and low base effects. The current consumption sector shows bottom characteristics, with policy dividends and fundamental recovery resonating, presenting configuration value [3][10][12]. Summary by Sections Weekly Viewpoints - Domestic demand policies empower consumption, and the liquor industry is entering a deep adjustment period. The food and beverage index increased by 1.0%, outperforming the CSI 300 by approximately 1.3 percentage points. The sub-industries of baked goods, snacks, and pre-processed foods performed well [10][12]. Market Performance - The food and beverage index increased by 1.0%, ranking 11th among 28 industries, outperforming the CSI 300 by approximately 1.3 percentage points. Leading individual stocks included Huanlejia, Zhuangyuan Pasture, and Huangshi Group, while ST Xifa, Richen Shares, and Jinzi Ham saw declines [12][14]. Upstream Data - Some upstream raw material prices have declined. For instance, the price of whole milk powder fell by 18.7% year-on-year, and fresh milk prices decreased by 2.9% year-on-year. The domestic milk price is expected to continue its downward trend in the short term [17][21]. Liquor Industry Data - The international market for Wuliangye has shown strong growth in 2025, with the company focusing on global expansion and local operations. The liquor industry is currently in a deep adjustment phase, with demand decline driving price reductions. Companies are shifting from scale expansion to stock competition, realigning market shares based on actual consumer demand [45][46]. Recommended Portfolio - Recommended stocks include Guizhou Moutai, Shanxi Fenjiu, Ximai Food, Weilong Delicious, and Bairun Shares. Guizhou Moutai is focusing on sustainable development despite short-term demand pressures. Shanxi Fenjiu has high mid-term growth certainty, while Ximai Food is experiencing stable growth in its main business [4][50].

Group 1 - The report highlights the performance of the North Exchange in 2025, indicating a significant rise in the North Index 50 to around 1400 points, with three distinct phases of market movement: rapid increase, oscillating rise, and a correction phase [2][12][15] - In the rapid increase phase (January 1 - March 11, 2025), the North Index 50 surged from 1,037.81 to 1,418.65 points, achieving a cumulative return of 36.70%, while the specialized index rose from 1,683.33 to 2,421.50 points, with a return of 43.85% [15][16] - The oscillating rise phase (April 7 - September 5, 2025) saw the North Index 50 increase from 1,044.07 to 1,647.01 points, yielding a cumulative return of 58.70%, and the specialized index from 1,759.64 to 2,806.39 points, with a return of 66.72% [16][17] Group 2 - The correction phase (September 15 - December 19, 2025) stabilized the North Index 50 and specialized index around 1400 and 2400 points, respectively, with the North Index 50 declining to 1,445.84 points and the specialized index to 2,440.21 points, resulting in cumulative returns of 39.32% and 44.96% [17][23] - The report emphasizes the performance of small-cap stocks, indicating that companies with market capitalizations of 0-20 billion, 20-40 billion, 40-80 billion, and above 80 billion had average returns of 54.08%, 38.60%, 18.26%, and 30.59%, respectively [26][31] - The report identifies that national and provincial-level "little giant" companies outperformed non-little giant firms, with average returns of 48.26%, 38.06%, and 39.19% for national, provincial, and non-little giants, respectively [27][29] Group 3 - The report highlights that national and provincial-level single champion companies achieved average returns of 59.27% compared to 39.61% for non-single champion companies [32][34] - In terms of industry performance, high-end equipment and new chemical materials sectors showed higher returns, with average returns of 50.20%, 28.67%, 48.49%, 40.43%, and 43.56% for high-end equipment, information technology, new chemical materials, consumer services, and biomedicine, respectively [34][36] - The report also notes that companies with new productive forces, ESG attributes, high scarcity, and high dividends had average returns of 50.49%, 48.44%, 49.14%, and 57.51%, respectively, indicating a strong performance in these categories [37][43]

Group 1 - The first batch of L3 level autonomous driving vehicle access permits has been approved in China, marking a significant step towards commercial application in the industry. Two models will be tested in designated areas in Beijing and Chongqing, with specific speed capabilities of 50 km/h and 80 km/h respectively [11][12][18]. - There are 31 automotive-related companies listed on the North Exchange, with a total market value of 81.626 billion yuan as of December 19, 2025. Key companies include Aodiwei, Huanxin Technology, and others [18][20]. - Aodiwei has developed a new generation of AKII vehicle-mounted ultrasonic sensors, which have been delivered in bulk to both joint venture and domestic brands. The company reported a revenue of 502 million yuan for the first three quarters of 2025, with a year-on-year growth of 12.31% [25][27]. Group 2 - The five major industries on the North Exchange, including high-end equipment, information technology, chemical new materials, consumer services, and pharmaceutical biology, all experienced average gains in the week of December 15 to December 19, 2025, with consumer services leading at +4.75% [2][33]. - The average price-to-earnings (PE) ratio for the high-end equipment industry rose to 36.9X, while the information technology sector reached 68.6X, indicating a positive trend in investor sentiment [2][35]. - The technology sector, comprising 154 companies, saw a median price increase of 1.61% during the same period, with notable performers including Tianli Composite and Huanxin Technology, which rose by 41.42% and 40.59% respectively [3][46]. Group 3 - The median PE ratio for the electronic industry increased to 48.6X, while the automotive sector's median PE ratio rose to 34.2X, reflecting a growing valuation in these sectors [3][63][66]. - Huanxin Technology, a provider of integrated solutions for smart cities, has signed a cooperation agreement with Huawei for comprehensive collaboration in smart connected vehicles and V2X infrastructure [28][30]. - The total market value of companies in the smart city and smart transportation sectors reached 21.592 billion yuan, with eight companies listed in this category [24].

Group 1 - The core viewpoint of the report indicates that the leading carbon fiber companies are raising prices, with high-end product demand expected to recover first. Toray announced a price increase of 10%-20% for its TORAYCA™ carbon fiber products starting January 2026, while Jilin Chemical Fiber plans to raise prices by 5,000 RMB and 10,000 RMB per ton for its 12TK and 3K carbon fibers respectively, also effective January 2026 [1][10] - The current carbon fiber market shows a clear differentiation, with general and large tow products facing strong competition, while high-performance products have stabilized in price, with some specifications experiencing tight supply and demand [1][10] - The report highlights that the carbon fiber industry in China is expected to continue expanding, with production capacity projected to reach 135,500 tons by 2024, and a production volume of approximately 59,000 tons, reflecting an 8.2% year-on-year growth [16][17] Group 2 - The report notes that the chemical new materials sector on the North Exchange has seen a weekly increase of 2.53%, with the metal new materials segment performing particularly well, rising by 11.31% [3][30] - Jilin Carbon Valley has established itself as a major player in the carbon fiber market, with a full range of products from small to large tow fibers, and has achieved stable large-scale production of high-quality products [2][27] - The report provides insights into the performance of individual stocks within the chemical new materials sector, with notable increases in stock prices for Tianli Composite (+41.42%), Jilin Carbon Valley (+9.17%), and others [34][37] Group 3 - The report includes a detailed analysis of chemical product price trends, highlighting fluctuations in prices for various materials such as MDI, TDI, and natural rubber, with MDI priced at 18,900 RMB per ton and TDI at 14,800 RMB per ton [38] - The carbon fiber demand distribution in China for 2023 shows that the top three application areas are sports and leisure (26.1%), wind power blades (24.6%), and aerospace and military (11.6%) [20][21] - The report emphasizes the strategic investments by companies like Hechang Polymer, which aims to enhance resource integration and business synergy through the introduction of strategic investors [4][66]

Group 1 - The brain-computer interface (BCI) is recognized as a future industry in China's 14th Five-Year Plan, with policies aimed at fostering its development, including a target for core technology breakthroughs by 2027 and achieving global leadership by 2030 [3][12][16] - The global BCI market was valued at $1.5 billion in 2021 and is projected to reach $3.3 billion by 2027, while the domestic market is expected to grow from 3.2 billion yuan in 2024 to 4.6 billion yuan by 2026, reflecting an 18.81% year-on-year growth in 2024 [3][17][19] - Non-invasive BCIs dominate the market, accounting for 86% of the total, with medical applications being the primary focus, representing 56% of the downstream enterprises [18][23][25] Group 2 - The 2024 national pharmaceutical circulation market is projected to reach 2.947 trillion yuan, with the wholesale market accounting for 77.94% of total sales, and the retail market contributing 22.06% [4][40][46] - The pharmaceutical distribution industry is characterized by a continuous optimization of structure, enhanced professional service capabilities, and a growing focus on health services, driven by aging populations and increased health awareness [52][53] - The North Exchange has 11 listed companies related to pharmaceuticals, with significant profit margins reported, including companies like Deyuan Pharmaceutical and Xinghao Pharmaceutical, which have shown substantial growth in net profits [4][51][68] Group 3 - The North Exchange's pharmaceutical and biotechnology sector saw a weekly increase of 1.91%, with medical devices leading the growth at 6%, while 80.95% of the sector's stocks experienced an increase in market value [5][58][61] - Notable stock performances include Lude Medical and Beiyikang, which saw weekly increases of 20.61% and 10.46%, respectively, indicating strong market interest in these companies [5][67] - As of December 19, 2025, there are 13 pharmaceutical and biotechnology companies queued for listing on the North Exchange, with an average revenue of 382 million yuan and net profits exceeding 100 million yuan for several firms [68][69]

Investment Rating - The investment rating for the retail industry is "Positive" (maintained) [1] Core Insights - The retail industry index rose by 6.66% in the week of December 15-19, 2025, outperforming the Shanghai Composite Index by 6.63 percentage points, ranking first among 31 primary industries [6][15] - The launch of the Hainan Free Trade Port has shown promising initial results, with duty-free sales reaching 118 million yuan on the first day and a significant increase in the number of zero-tariff goods [4][25][26] - The report emphasizes the importance of consumer sentiment and the potential for high-growth sectors within the retail space, particularly in jewelry, offline retail, cosmetics, and medical aesthetics [7][30][31] Summary by Sections Retail Market Review - The retail industry index closed at 2458.79 points, with a weekly increase of 6.66% [6][15] - The supermarket sector saw the highest weekly increase of 14.18%, while the commercial property sector led with a year-to-date increase of 22.51% [17][19] Industry Dynamics - The Hainan Free Trade Port officially commenced operations on December 18, 2025, with a focus on "one line open, two lines controlled, and free trade within the island" [4][25] - The proportion of zero-tariff goods increased from 21% to 74%, covering approximately 6,600 items, which is expected to reduce import tax burdens by about 20% for related enterprises [26][25] Investment Themes - Investment Theme 1: Focus on high-end jewelry brands with differentiated product offerings, recommending companies like Chow Tai Fook and Lao Pu Gold [7][30] - Investment Theme 2: Emphasize offline retail companies adapting to trends and AI-enabled cross-border e-commerce leaders, recommending Yonghui Supermarket and Aiying Room [7][30] - Investment Theme 3: Highlight domestic cosmetics brands that meet emotional value and safety ingredient innovations, recommending brands like Maogeping and Proya [7][31] - Investment Theme 4: Focus on differentiated medical aesthetics product manufacturers and leading chain medical institutions, recommending Aimeike and Kedi-B [7][31] Company-Specific Insights - Chow Tai Fook reported a revenue of 38.986 billion HKD for FY2026H1, with a slight decline of 1.1% year-on-year, while net profit increased by 0.1% [37] - Lao Pu Gold achieved a revenue of 12.354 billion HKD for FY2025H1, marking a significant increase of 250.9% year-on-year, with net profit rising by 285.8% [36] - Yonghui Supermarket's revenue for the first three quarters of 2025 was 42.434 billion yuan, down 22.2% year-on-year, with net profit showing a significant loss [44]

Investment Rating - Industry investment rating: Positive (maintained) [1] Core Views - The report highlights the potential recovery in fiber optic cable prices driven by increased demand from AI applications and the acceleration of domestic AI bidding processes [6][19] - The AI ecosystem is continuously evolving, with significant advancements in models and infrastructure, particularly from major players like ByteDance and Google [15][16] - The demand for fiber optic cables is expected to rise due to the increasing requirements for internal network connectivity in AI model training and application deployment [18] Summary by Sections 1. Weekly Investment Insights - The opening of the Volcano Engine FORCE conference showcased advancements in AI agent technology and cloud-native architecture [13] - The daily token usage of the Doubao model has surpassed 50 trillion, indicating rapid industry adoption [15] - Google is enhancing its AI ecosystem, with new TPU chips expected to drive demand for liquid cooling solutions [16] - Companies are increasingly interested in renting TPU chips, which will further stimulate ASIC demand [17] - AI is driving the demand for fiber optic cables, with prices expected to recover [18] - Investment recommendations focus on key sectors such as optical networks, liquid cooling, and domestic computing power [19] 2. Communication Data Tracking - As of October 2025, the total number of 5G base stations in China reached 4.758 million, with a net increase of 507,000 from the end of 2024 [28] - The number of 5G mobile phone users reached 1.184 billion, reflecting a year-on-year growth of 18.99% [28] - The shipment of 5G mobile phones in September 2025 was 24.106 million units, representing an 8.02% year-on-year increase [28] 3. Operator Performance - The revenue from cloud services for major operators showed strong growth, with China Mobile's cloud revenue reaching 56.1 billion yuan, up 11.3% year-on-year [47] - China Telecom's cloud revenue for the first half of 2025 was 57.3 billion yuan, a 3.8% increase [47] - The ARPU values for major operators remained stable, with slight decreases noted for China Unicom [47][52]

Report Information - Report Date: December 19, 2025 [1] - Report Title: 2025 November Fiscal Data Review - Research Team: Fixed Income Research Team [2] - Analysts: Chen Xi, Wang Shuaizhong [3] - Event: The Ministry of Finance announced the fiscal data for November 2025 [4] Industry Investment Rating - Not provided in the report Core Viewpoints - In 2025 H2, the economic growth rate may not decline significantly [8] - Structural issues such as prices are expected to improve trend - wise [8] - The bond - stock allocation continues to shift, and bond yields are expected to rise continuously [8] Summary by Relevant Catalog 11 - month Fiscal Data Focus - Tax revenue continued positive growth, and the decline of non - tax revenue narrowed. In November, tax revenue increased by 2.8% year - on - year, and has maintained positive growth for 8 consecutive months. The decline of corporate income tax and individual income tax in November may be the main reason for the slowdown in tax revenue growth. The securities trading stamp tax increased by 2.3% year - on - year in November, with a slower growth rate. The importance of investing in people is highlighted, and attention should be paid to fiscal expenditures in related industries. [5] - The decline in land transfer income continued to drag down government fund revenue. From January to November, government fund revenue decreased by 4.9% year - on - year, with land transfer income down 10.7%. The real estate market is in a transition period, and the ebb of land finance may still drag down government fund revenue. [5] - Government fund expenditures turned positive year - on - year in November, reaching 2.8%, up 41 pct from October. Central government fund expenditures increased significantly to 31.5%, up 25.2 pct from the previous value. In October, the central government allocated 500 billion yuan from the local government debt balance limit. The issuance of new special bonds accelerated in November, and the issuance progress reached 101.3% by the end of November, up 11.2 pct from October. [6] General Public Budget - **Income**: In November, general public budget income decreased by 0.02% year - on - year. Central income decreased by 4.2% year - on - year, while local income increased by 4.1%. Tax revenue items such as foreign - trade enterprise export tax rebates, property tax, deed tax, land value - added tax, urban land use tax, and environmental protection tax increased compared with October. Non - tax revenue decreased by 10.8% year - on - year. [7] - **Expenditure**: In November, general public budget expenditure decreased by 3.7% year - on - year. Central expenditure increased by 4.9% year - on - year, and local expenditure decreased by 5.1%. Infrastructure expenditure items such as urban and rural community affairs and agriculture, forestry, and water affairs decreased year - on - year, and the increase in central expenditure drove the year - on - year increase in fiscal expenditure in November compared with the previous value. [7] Government Fund Budget - **Income**: In November, government fund income decreased by 15.8% year - on - year. Central income decreased by 9.1% year - on - year, and local income decreased by 16.1%. Land transfer income decreased by 26.8% year - on - year. [7] - **Expenditure**: In November, government fund expenditure increased by 2.8% year - on - year. Central expenditure increased by 31.5% year - on - year, and local expenditure increased by 1.7%. Land transfer expenditures decreased by 7.5% year - on - year. The growth rate of government fund expenditures in November increased compared with October. [7] Bond Market Viewpoint - With the revision of economic expectations, bond yields are expected to rise trend - wise [8]