CMSC: Industrial profits turned negative year-on-year in May, while the cumulative year-on-year growth rate of photovoltaic power generation installed capacity expanded.

CMSC released a strategic research report stating that the improvement in the direction of sentiment this week is mainly in the areas of natural resources, consumer services, and some information technology. Due to slowing exports, inadequate effective demand, and drag from prices, industrial enterprise profits in May turned negative compared to the same month last year. In terms of structure, the TMT sector improved against the trend, while natural resources, essential consumption, and mid-stream equipment maintained positive growth. The equipment manufacturing industry remains the main support, but policy marginal effects are diminishing; the consumer goods manufacturing industry is boosted by the policy of trading in old for new, achieving double-digit growth in segments such as home appliances. It is expected that fiscal expansion in the second half of the year will drive profit "V"-shaped recovery. It is recommended to focus on sectors such as semiconductors, consumer electronics, automation equipment, agricultural and sideline food processing, beverages and dairy products, and home appliances. CMSC's main points are as follows: Focus of the Week Influenced by factors such as slowing exports, inadequate effective demand, and price drag, industrial enterprise profit margins weakened, with profits turning negative compared to the same month last year in May. When broken down, costs and expenses are rising, improving profit margins; prices continue to be a major drag. Profit growth in major sectors has slowed, while TMT has improved against the trend, and natural resources, essential consumption, and mid-stream equipment maintained positive growth. In the intermediate manufacturing sector, profits in the raw materials industry mostly declined, with steel and non-metal industries experiencing a narrowing year-on-year growth rate, and profits from non-ferrous metals turning negative year-on-year; equipment manufacturing remains the main support for growth, military orders are gradually increasing, the aerospace and shipbuilding industries are experiencing high profit growth, equipment renewal policies continue to strengthen, but with diminishing marginal effects, profits in special-purpose and general-purpose equipment as well as electrical machinery industries have slowed year-on-year; profits in the TMT sector continued to improve, consumer demand in the sector boosted by national policies, and the smart consumer electronics manufacturing industry leading in growth; the effect of the policy of trading in old for new continues to be evident, with other consumer goods manufacturing sectors such as home appliances and kitchen appliances achieving double-digit growth. With the weakening of export drive, profit is expected to experience temporary fluctuations; there is hope for further expansion in fiscal space in the second half of the year, driving profit "V"-shaped recovery. It is recommended to focus on the TMT sector and certain consumer goods manufacturing industries showing an improving trend in performance, such as semiconductors, consumer electronics, automation equipment, agricultural and sideline food processing, beverages and dairy products, and home appliances. Information Technology The Philadelphia Semiconductor Index and the Taiwan Semiconductor Industry Index rose this week, with the DXI Index rising; DDR4 DRAM memory prices rose month-on-month this week, while the NAND Index fell month-on-month, and the DRAM Index rose month-on-month. LCD TV panel prices fell in June, while LCD shipments rose month-on-month in May; the year-on-year growth rate of semiconductor equipment shipments in Japan in May narrowed, with North American PCB shipments turning positive year-on-year, though the growth rate narrowed; year-on-year growth in telecommunications main revenue expanded, while optical cable production volumes saw a larger decline year-on-year. Midstream Manufacturing Nickel electrolysis prices fell this week, while most cobalt products' prices rose. Silicon wafer prices declined this week, while thin film component prices remained stable. From January to May, the national CECEP Solar Energy installed capacity saw an expanding year-on-year growth rate; the three-month rolling year-on-year growth rate of packaging special equipment and metal forming machine tools production fell, while port cargo tons and containers' weekly throughput four-week rolling mean year-on-year growth rate narrowed. CCFI and CCBFI rose, while BDI and BDTI fell. Consumer Demand Fresh milk prices remained steady compared to the previous week, while overall sugar prices declined; pig prices, piglet wholesale prices, and average pork prices rose. In terms of profit from pig farming, profits from breeding and raising piglets increased; in terms of chicken farming, chick prices declined. Vegetable price indexes rose, corn futures settlement prices fell, cotton futures settlement prices rose; the ten-day moving average of box office revenue rose; traditional Chinese medicine price indexes fell. Natural Resources The ten-day moving average of building steel transaction volume declined; billet prices remained stable, while rebar prices fell; domestic iron ore port inventories and major steel stocks declined, with Tangshan billet stocks rising; in terms of coal prices, Qinhuangdao blended coal and Jingtang port Shanxi prime coking coal prices remained stable; coking coal and coke futures settlement prices rose; in terms of inventories, Qinhuangdao coal port inventory and Jingtang port coking coal inventory declined, while Tianjin Port coke inventory rose. National cement price index declined. Brent international crude oil prices fell; China's chemical products price index showed a week-on-week decline, with most chemical prices falling, fuel oil and methanol leading in declines, while xylene and ethanol led in increases. Most industrial metal prices rose this week, with most inventories declining. Financial and Real Estate Net injection in the money market. A-share turnover rate and daily turnover rose. Land transaction premium rate and residential transaction area rose. National second-hand housing listings volume index declined, while listing price index rose. Utilities China's natural gas factory price rose. The three-month rolling year-on-year growth rate of total social electricity consumption narrowed in May.