GF Securities: Mechanical industry's external demand resilience stronger, recommends three major investment portfolios for the second half of the year.

GF SEC released a research report stating that the overall characteristics of the machinery industry are weak internally and strong externally, with the domestic demand foundation still not solid. There are bright spots in the structure, and external demand is relatively strong. In the second half of 2025, the machinery industry proposes two main investment themes: first, the relatively prosperous basic fundamentals of engineering machinery, upstream assets, and export links; second, areas where significant changes are occurring in the industrial end, such as humanoid Siasun Robot & Automation. The firm provides three recommended combinations for the machinery industry in the second half of 2025: (1) cycle assets with stable and upward fundamentals; (2) assets with turning points in prosperity; (3) assets for long-term growth. GF SEC's main points are as follows: The domestic demand foundation is still not solid, there are bright spots in the structure, and external demand is relatively strong. The machinery industry exhibits a weak internal and strong external characteristic. In terms of domestic demand, real estate investment continues to decline, coupled with weak manufacturing demand, downstream investment enthusiasm is not strong, and manufacturing capital expenditure is still trending downward. In the field of special equipment, lithium battery equipment has transitioned from an order inflection point to an income and performance inflection point, onshore wind power installation has strong certainty, offshore wind power has better sustainability, and the supply-demand relationship in the photovoltaic field is weakening in the short term and facing significant pressure. In terms of external demand, driven by the recovery of the Belt and Road region, the overall performance is better than expected. The opening of the interest rate reduction channel has significant implications for driving global terminal demand. Industrial capital goods overseas market share continues to rise, consumer goods are starting to rebuild from a low base, both showing relatively eye-catching performance, with significantly higher overseas profit margins, making a greater contribution to performance. Outlook for the second half of 2025 Real estate investment is under pressure, general infrastructure is strengthening, the overall willingness of the manufacturing industry to expand is not strong, but there are structural bright spots; while the potential opening of the interest rate reduction channel in overseas markets is a positive guide for both demand and investment. We recommend two main investment themes: first, the relatively prosperous fundamentals of engineering machinery, upstream assets, and export links, with steady performance on the earnings end; second, areas where significant changes are occurring in the industry end, such as humanoid Siasun Robot & Automation, controllable nuclear fusion, and low-altitude economy are all investment opportunities generated by industrial changes, while special equipment follows their respective industry cycles showing elasticity (such as the asymmetric recovery of lithium batteries, the certainty of wind power installations, etc.). Follow-up closely on global trade environment changes, special bond landing situations, real estate policy changes, and other core variables. Stock selection approach (1) Assets with stable and upward fundamentals: engineering machinery, upstream assets, export consumer assets. (2) Assets entering a new cycle of prosperity, reaching a turning point in fundamentals: focusing on lithium battery equipment and new technology fields, wind power, AIDC diesel engines, etc. (3) Accelerated industrial progress, generating major industry opportunities: focusing on sectors such as humanoid Siasun Robot & Automation, controllable nuclear fusion, and low-altitude economy. Risk factors: weakening demand for infrastructure and real estate investment; macroeconomic changes; increased competition in segmented fields; declining profitability; uncertainty in enterprise innovation business and expansion development.