Brokerage Morning Meeting Highlights | Domestic substitution logic is clear, focus on the two main lines of optical modules.

Yesterday, the market opened lower, rebounded, and then fluctuated downward again, with the ChiNext Index falling more than 1%. Trading volume shrank noticeably, with combined turnover on the Shanghai and Shenzhen stock exchanges at 1.63 trillion yuan. On the board, sectors such as computing power hardware, cybersecurity, automobiles, and pharmaceuticals were active. On the decline side, high-flying popular stocks fell broadly. As of the close, the Shanghai Composite Index fell 0.07%, the Shenzhen Component Index fell 0.64%, and the ChiNext Index fell 1.1%. Huatai believes that oil supply and demand face a risk of continued deterioration; CITIC SEC believes that the logic of domestic substitution is clear, and investors should focus on the two main lines of optical modules; KAIYUAN SEC believes that the operating profitability of companies in the gold mining industry may steadily improve. Huatai: Oil supply and demand face a risk of continued deterioration Since September, the impact of the U.S.-Iran conflict has continued to escalate, shipping capacity in the Bab-el-Mandeb Strait has also been affected, the global oil supply-demand balance has continued to deteriorate, international oil prices have once again broken through the $100 mark, and shortages in the refined oil market have become more prominent. In our previous analysis, we predicted that a second blockade of the Strait of Hormuz could be more damaging. Given the spread of the conflict's impact, the deterioration of the Russia-Ukraine situation, and the continued depletion of previous "buffers" such as inventory drawdowns and delayed demand, the impact on refined oil and other key materials (including Shenzhen Agricultural Power Group) may be greater. This article updates the relevant data and analysis. The trend of deterioration in the oil supply-demand balance may further escalate and is difficult to reverse in the short term. CITIC SEC: The logic of domestic substitution is clear, focus on the two main lines of optical modules At the 2026 CIOE, China's domestic optical interconnect industry achieved leapfrog upgrading, officially moving from capacity-based contract manufacturing to a new stage of technology leadership and full-chain autonomy. The iteration of computing power networks is driving the tiered rollout of optical modules, with 800G and 1.6T shipping at scale, while cutting-edge solutions such as 3.2T/6.4T NPO and 12.8T XPO have entered pilot testing. The industrial chain has made breakthroughs at multiple points, industrialization of thin-film lithium niobate is accelerating, and OCS all-optical switching has attracted layout by global giants, with market space expanding significantly. Domestic optical chips and silicon photonics technology continue to catch up and upgrade, while NPO/CPO/OCS drive passive components toward high-end iteration and value enhancement. Overall, the logic of domestic substitution is clear, and investment can focus on two main lines: first, leading optical module companies with deep technical barriers; second, new technology tracks involving TFLN, OCS, high-end optical chips, and upgrades in passive components. KAIYUAN SEC: The operating profitability of companies in the gold mining industry may steadily improve From 2022 to 2025, as black swan events such as the Russia-Ukraine conflict and other geopolitical developments continued to emerge and the Federal Reserve began its rate-cutting cycle, international gold prices continued to rise. Sample companies in the gold mining industry generally saw sustained revenue growth, significantly stronger profitability, and considerable improvement in both operating cash generation capacity and debt repayment capacity. Some companies increased capital expenditure due to the need to expand production and reserves, resulting in large net outflows of investing cash flow, but the overall operating pace remained stable, and this is not expected to pose major risks to the operations of the sample companies. High-grade gold bond issuers generally have good credit quality. In 2026, it is expected that under a trend of relatively high gold prices, the operating profitability of companies in the gold mining industry may steadily improve, and the overall credit level of the industry will remain stable. In particular, companies with high-quality mining resources and strong cost control capabilities will have more stable credit quality, but it is necessary to be alert to the differentiated impact of potential risks such as cost inflation and geopolitics on individual companies. This article is reprinted from "Cailian Press", edited by GMTEight: Jiang Yuanhua.