GF Securities: Manufacturing PMI in August slightly decreased compared to the previous month, with a small decline in business sentiment, waiting for changes in the fundamental factors.

GF SEC released a research report stating that the August Purchasing Managers' Index (PMI) for the manufacturing sector was 49.1%, a decrease of 0.3 percentage points from the previous month, indicating a slight decline in manufacturing confidence. Looking at the classification index, the production index, new order index, raw material inventory index, employment index, and supplier delivery time index are all below the critical point, indicating an economic slowdown and suggesting waiting for fundamental signals. The supply pattern of upstream assets such as ships, rail transport, traditional energy equipment is excellent, with moderate demand recovery; while the engineering machinery and overseas consumer goods manufacturing industries, as well as the bottoming out of general automation domestic demand, are expected to stabilize at the bottom, driven by overseas growth. Market Performance Analysis: According to Wind data, the Machinery Industry Index (CITIC) fell by 2.89% during this period (September 2nd to September 6th), while the Shanghai and Shenzhen 300 Index fell by 2.71% and the ChiNext Index fell by 2.68%. The August PMI decreased by 0.3 percentage points. According to data released by the National Bureau of Statistics on August 31st, in August, the Purchasing Managers' Index (PMI) for the manufacturing sector was 49.1%, a decrease of 0.3 percentage points from the previous month, indicating a slight decline in manufacturing sentiment. By enterprise size, the PMI for large enterprises was 50.4%, a decrease of 0.1 percentage point from the previous month, still above the critical point; while the PMI for medium and small enterprises were 48.7% and 46.4%, a decrease of 0.7 and 0.3 percentage points from the previous month, respectively. Looking at the classification index, all five classification indices that make up the manufacturing PMI - production index, new order index, raw material inventory index, employment index, and supplier delivery time index - are all below the critical point, indicating an economic slowdown and suggesting waiting for fundamental signals. Mechanical Dynamics: According to data from the People's Bank of China, at the end of July, the broad money supply (M2) balance was 303.31 trillion yuan, a year-on-year increase of 6.3%. Narrow money supply (M1) balance was 63.23 trillion yuan, a year-on-year decrease of 6.6%. Currency in circulation (M0) balance was 11.88 trillion yuan, a year-on-year increase of 12%. Net cash injected in the first seven months was 539.6 billion yuan. Mechanical Industry Perspectives: (1) Assets with excellent supply pattern and moderate demand recovery: such as ships, rail transport, traditional energy equipment, and other upstream assets. (2) Areas where domestic demand is expected to stabilize at the bottom, driven by overseas growth: focus on engineering machinery and overseas consumer goods manufacturing industries, as well as the bottoming out of general automation. (3) Areas where short-term economic sentiment is changing and significant changes are occurring in the industry: focus on semiconductor equipment, 3C industry chain, humanoid Siasun Robot & Automation, etc. Recommendations: GF SEC provides several core themes for investment in the mechanical industry in the second half of 2024: (1) Varieties waiting for cyclical recovery: recommended companies include Sany Heavy Industry (600031.SH), XCMG Construction Machinery (000425.SZ), ZOOMLION (000157.SZ), Guangxi Liugong Machinery (000528.SZ), Jiangsu Hengli Hydraulic (601100.SH), Zhejiang Dingli Machinery (603338.SH); and focus on Shantui Construction Machinery (000680.SZ); for general automation, focus on Anhui Heli Co., Ltd. (600761.SH), Hangcha Group (603298.SH), Shenzhen Inovance Technology (300124.SZ), Shanghai BOCHU Electronic Technology Corporation (688188.SH), Hangzhou Oxygen Plant Group (002439.SZ), Yizumi Holdings (300415.SZ), Ningbo Haitian Precision Machinery (601882.SH), Neway CNC Equipment (Suzhou) Co., Ltd (688697.SH), and focus on HAITIAN INT'L (01882); for the export industry chain, focus on Hangzhou Great Star Industrial (002444.SZ), CHERVON (02285), Hangzhou Honghua Digital Technology Stock (688789.SH), Jack Technology (603337.SH), Zhejiang Meorient Commerce & Exhibition Inc. (300795.SZ) and other companies. (2) Assets with excellent supply pattern and upward cycles: focus on China CSSC (600150.SH), China Shipbuilding Industry Group Power (600482.SH), China International Marine Containers (000039.SZ), China Oilfield Services (600583.SH), Yantai Jereh Oilfield Services Group (002353.SZ), CNOOC Energy Technology & Services (600968.SH), Neway Valve(603699.SH) - E Fund Management Co., Ltd. Naipu Mining Machinery(300818.SZ) - Naipu Mining Machinery Co., Ltd. CRRC Corporation(601766.SH) - CRRC Corporation Limited Zhuzhou CRRC Times Electric(688187.SH) - Zhuzhou CRRC Times Electric Co., Ltd.Growth assets: It is recommended to focus on the 3C industry chain - Suzhou Secote Precision Electronic (603283.SH), Guangdong Dtech Technology (301377.SZ), Shenzhen United Winners Laser Co., Ltd (688518.SH), etc.; Semiconductor equipment Advanced Micro-Fabrication Equipment Inc. China (688012.SH), Beijing Huafeng Test & Control Technology (688200.SH), etc.; In the humanoid Siasun Robot & Automation sector, focus on Leader Harmonious Drive Systems (688017.SH), Shanghai Moons' Electric (603728.SH), Shanghai Beite Technology (603009.SH), Zhejiang XCC Group (603667.SH), etc. Risk warning: Macroeconomic changes lead to fluctuations in demand for mechanical products; Rising raw material prices suppress corporate profitability; Exchange rate fluctuations lead to profit fluctuations; Overcapacity reduction progress falls short of expectations, etc.