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[Zheshang Metal + Auto Shi Yi] Changan Automobile (000625): Beware of the pro-cyclical vehicle plate, the model cycle upward, recommended Changan Automobile.

[Zheshang Light Industry Shi Fanke/Mary] Pet overseas benchmarking (I): participating in overseas markets & leading growth process, optimistic about the breakthrough of high-quality domestic brands.

[Zhejiang Commercial Electric New Zhang Lei/Huang Huadong] Rongbai Technology (688005): Material price fluctuations affect performance, South Korea base construction accelerated.

[Zheshang fixed income Gao Yu] in August suggested the allocation of 15% equity + 15% convertible bonds + 90% bonds (including 20% leverage), the allocation of pro-cyclical plate.

1, general trend:

On August 1, the Shanghai Composite Index fell 0.003 per cent, the CSI 300 fell 0.41 per cent, the CRE 50 rose 0.07 per cent, the CSI 1000 fell 0.13 per cent, the GEM index fell 0.58 per cent and the Hang Seng Index fell 0.34 per cent.

The industry sectors that rose yesterday included gold, steel, new metal materials, communications equipment, coal, electricity, consumer electronics, oil, gas, refining, industrial metals, etc., especially the room temperature superconducting sector. The falling industry sectors include hotel catering tourism, pig raising, photovoltaic, real estate chain and so on. We have seen a style switch from AI to procyclical and large financial sectors in the market after the Politburo meeting. However, after Monday's surge, the large financial and procyclical sectors still showed a correction yesterday. In essence, the fundamentals have not changed continuously since this year. Overseas, the Federal Reserve is still on a continuous and slow interest rate hike channel, so these two core factors lead to the market is actually repeatedly trading liquidity changes and policy changes. So we judge that this round of pro-cyclical and big finance is likely to be in the form of a pulse, with investors' take-profit moves and subsequent policy details rolling out repeatedly. Subsequent performance We still expect the subsequent landing of policy details and the substantial impact on the economy after landing, which will take time to verify. This is our general judgment on the current market situation.

Secondly, we see that the steel, new metal materials, coal, consumer electronics and other sectors that performed better yesterday are actually extensions of pro-cyclical logic, especially in the commodity market, we see copper, glass, soda ash, methanol, and coke. Have a good performance. We find that the common feature of these pro-cyclical extension plates is the inventory cycle. Therefore, we believe that once the domestic policy continues to exert force, and superimposed on the end of overseas interest rate hikes to form a resonance, the follow-up space will be very large, this logic is also reflected in yesterday's market. Secondly, the performance of the precious metal sector, which we continue to be optimistic about, is also exceeding expectations. We believe that the precious metal market may enter the right side of the big market before the start of the interest rate cut channel. Secondly, we can see that the high passenger flow of tourism is still continuing, and we are optimistic about the air transportation sector, which benefits from the recovery of consumption and the logic of the cycle, in the future.

Yesterday's hottest plate, room temperature superconductivity, drove the superconducting plate to soar by more than 8 points. Once room temperature superconductivity can be realized, it will mean that ultra-long-distance lossless power transmission can be realized, superconducting magnets, Superconducting cables, superconducting maglev trains and other aspects will all make breakthroughs.

2, industry:

The industries that performed best on August 1 were steel (+2.00 per cent), communications (+1.34 per cent), utilities (+1.32 per cent), petrochemicals (+1.02 per cent), non-ferrous metals (+0.72 per cent), the worst performing industries were beauty care (-1.48 per cent), agriculture, forestry and fisheries (-1.21 per cent), construction materials (-1.05 per cent), household appliances (-0.94 per cent) and retail trade (-0.89 per cent).

3, funds:

on August 1, the total turnover of all a was 957.61 billion yuan, with a net inflow of 4.854 billion yuan from the north and 9.48 billion hong kong dollars from the south.

4, risk tips:

The actual technological progress of room temperature normal pressure superconducting is not as good as expected; industry applications are not as good as expected.

Analyst: Lu Yue S1230523060005

02 Important recommendations

[Zhejiang metal + automobile Shi yi] Chang 'an automobile (000625) company depth: dawn: 100-year-old automobile enterprise, electric + hybrid + intelligent three-wheel drive

1. Automobile-Changan Automobile (000625)

2, recommended logic:

Chang'an automobile hybrid reform, pure electric launched a new brand.

1) Exceeding expectations:

New energy penetration exceeded expectations.

2) Drivers:

Hybrid new architecture launched, pure electric new models launched.

① pro-cyclical vehicle performance flexibility, intelligent reshaping of vehicle valuation, Davis double-click. A. Real estate recovery + economic upturn is good for vehicle consumption; B. At the same time, because the fixed cost of car companies accounts for a large proportion, so the increase in sales volume brings a significant increase in marginal profit; C. The overall valuation of the vehicle sector is low.

② New car cycle + transformation determination, optimistic about Chang'an Automobile. A. New car cycle, taking into account the subsequent Chang'an Qiyuan, Avita 12, hybrid P13 architecture and other new car launch, Chang'an Automobile welcome car cycle. B. Transformation determination, optimistic about Chang'an Automobile's transformation determination in electric intelligence.

3) Target price, current price space:

in 2022, the company's gross profit margin has exceeded 20%. in 2023, due to the price war in the industry and the low pricing of new cars, we expect the gross profit margin to decline. however, after 2024, as the industry tends to be normal, we expect the gross profit margin to increase slowly with the scale-up in 2025.

4) Earnings Forecast & Valuation:

it is estimated that from 2023 to 2025, the company's operating income will be 1410/1639/190 billion, the operating income growth rate will be 16.31/16.25/15.89, the net profit attributable to the parent will be 92/91/11.4 billion, the net profit attributable to the parent will be 17.7/-1.4/25.9, the earnings per share will be 0.93/0.91/1.15 yuan, and the PE will be 17.3/17.6/14.0 times.

3, catalyst:

New car launches, new car orders exceed expectations, etc.

4, risk factors:

Car sales fell short of expectations; new car launches fell short of expectations.

Report Date: 31 July 2023

Report details:

03 Important Comments

[Zhejiang light industry Shi fanko/Mary] pet overseas benchmarking (I): Japan and the United States industry-leading development review

1, the main event:

Japan and the United States pet food industry and related leading development of the recovery.

2, brief comments:

At present, China's pet and pet food penetration rate is low, and the market competition pattern is more scattered, compared with the Japanese, the United States pet food market development stage, China's pet food industry is still in the early stage. In the future, with the continuous development of China's economy and the intensification of aging problems, the pet track is expected to have more than double the growth space. Judging from the competition pattern of the industry, overseas enterprises have achieved market share improvement through continuous mergers and acquisitions. China's leading enterprises are still in the stage of gradual expansion from single brand to multi-brand. In stages, more attention should be paid to leading enterprises with α in single brand. Such enterprises should have explosive production capacity of strong research and development + strong marketing in combination with the market environment, and are optimistic about the increase in the share of domestic leading enterprises.

3. Investment opportunities, catalysts and investment risks:

1) Investment opportunities:

good treasure listing in the immediate, pet sector attention continues to improve, consumer downgrade trend, domestic leaders fully benefit, recommended in the pet, Petty.

2) Catalyst:

Guaobao pet and other domestic enterprises to develop their own brands smoothly.

3) Investment risk:

independent brand expansion is not as expected, raw material prices fluctuate, exchange rate fluctuations.

Report Date: 31 July 2023

Report details:

[Zhejiang commercial electric new Zhang lei/Huang huadong] rong bai science and technology (688005) company comments: the pace of sailing accelerated and the introduction of new products went smoothly

1, the main event:

In the first half of 2023, the company achieved operating income of 12.894 billion yuan, an increase of 11.61 percent over the same period last year; net profit attributable to the parent was 0.379 billion yuan, down 48.46 percent from the same period last year; and net profit after deducting non-parent was 0.325 billion yuan, down 55.06 percent from the same period last year.

2, brief comments:

1)23Q2 performance under pressure, mainly due to the impact of material prices. In the first half of 2023, the company's net profit attributable to the parent company was 0.379 billion yuan, down 48.46 percent year-on-year, while the net profit of non-parent company was 0.325 billion yuan, down 55.06 percent year-on-year. In the second quarter, the company's net profit attributable to the parent company was 68.3604 million yuan, down 84.58 percent from the same period last year, while the net profit of non-parent company was 27.4926 million yuan, down 93.55 percent from the same period last year. Profits declined to a large extent in the second quarter, mainly due to large fluctuations in raw material prices, occasional mismatches in procurement and sales prices, and heavy inventory valuation losses.

2) South Korea base layout accelerated. According to battery network data, in the first half of 2023, the company's domestic market share of ternary cathode materials was 18.3, up 4.3 percentage points from the same period last year, ranking first in a row. The company in South Korea has built 20000 tons/year positive and 6000 tons/year front-drive production capacity, to build a new front-drive annual production capacity of 80000 tons of notice.

3) New material products to promote mass production. In the first half of 2023, the company shipped nearly 100 tons of sodium and electric cathode materials. Lithium manganese iron phosphate shipped nearly 1,000 tons, and lithium manganese iron phosphate is expected to carry out winter standard testing at the power end in the third quarter of 2023. A new product M6P (a mixed material of high nickel ternary and LMFP) is introduced, and the watt-hour cost of this material is more than 15% lower than that of medium nickel ternary.

4) Earnings forecasts and valuations. The company's 2023-2025 net profit was reduced to 10.19, 16.71 and 2.276 billion yuan (17.09, 22.01 and 2.645 billion yuan respectively before the reduction), corresponding to EPS of 2.26, 3.70 and 5.05 yuan/share, and the current share price corresponding to PE of 20, 13 and 10 times respectively. Maintain a "buy" rating.

3. Investment opportunities, catalysts and investment risks:

1) Investment opportunities:

Overseas customer volume accelerated, management capacity continued to improve, etc.

2) Catalyst:

The price of lithium carbonate is stable and the overseas market is progressing smoothly.

3) Investment risk:

Risk of large fluctuations in material prices, low capacity utilization, changes in laws and policies for overseas operations, etc.

Report Date: 31 July 2023

Report details: