Weekly performance of

the sector: The Shanghai Composite Index rose 2.31% this week, and the CJ Machinery and Equipment Index rose 5.8%, with the sector outperforming the broader market. Thereinto. The top five sectors were: textile and garment equipment/mechanical basic parts/oil and gas services III./printing and packaging machinery/other special machinery, up 12.8%/10.3%/8.0%/7.7%/7.0% respectively. The median PE (TTM) of the machinery sector reached 29.7x, from the historical data in 10 years, the TTM P/E ratio of the machinery sector is at 38.5%, and the GDP and forklift data corroborate each other, and the level is higher in December: according to the Construction Machinery Association, in December 2024, China's sales of excavators increased by 19,369 units year-on-year, of which 9,312 domestic sales increased by 22.1%, and exports of 10,057 units increased by 10.8% year-on-year, and China's sales of industrial vehicles in December were 111329 units, The year-on-year increase was 11.7%, of which domestic sales increased by 9.71% to 67,283 units, and exports increased by 14.9% to 44,046 units. Construction machinery and forklifts have achieved a good growth rate in domestic sales, reflecting good domestic demand. According to the Bureau of Statistics, China's GDP will increase by 5.0% year-on-year in 2024, of which Q4 will increase by 5.4% year-on-year, the secondary and tertiary industries will achieve good growth, and the GDP of the manufacturing industry will increase by 6.2% in the fourth quarter. China's overall economic level and manufacturing GDP will increase in 2024, and at the same time, the domestic sales of excavators and forklifts have also achieved rapid growth, which corroborates each other.

U.S. inflation data is stable, waiting for the situation to stabilize: (1) On January 15, local time, data released by the U.S. Bureau of Labor Statistics showed that CPI rose by 2.9% year-on-year in December 2024, and core CPI rose by 3.2% year-on-year in December, which has fallen. The steady pullback in US CPI data revised some inflation expectations. (2) According to Xinhua News Agency, on January 17, President Xi Jinping had a telephone conversation with US President-elect Donald Trump. Xi Jinping congratulated Trump on his re-election as US president, pointing out that we all attach great importance to mutual interaction, hope that China-US relations will have a good start in the new term of US president, and are willing to promote China-US relations to make greater progress at a new starting point. According to the government's official website, at the invitation of the US side, President Xi Jinping's special representative and Vice President Han Zheng will go to Washington, D.C., to attend President Trump's inauguration ceremony on January 20. With the landing of the new president of the United States, the international situation, especially tariffs, is also expected to land, and the long-pending overseas investment and overseas production capacity construction will also land, and the equipment overseas chain is expected to obtain new development opportunities.

It is recommended to pay attention to: (1) Construction machinery: Sany Heavy Industry (600031, not rated), Zoomlion (000157, buy), Hengli Hydraulics (601100, not rated), Construction Machinery (600984, not rated), Eddie Precision (603638, not rated); (2) Industrial equipment:

Hangcha Group (603298, not rated), Anhui Heli (600761, Buy), Haitian Precision (601882, overweight), Neway CNC (688697, not rated), Kede CNC (688305, not rated), Qinchuan Machine Tool (000837, not rated), Yizumi (300415, Buy), Eston (002747, not rated); (3) Logistics automation: Yinfei Storage (603066, not rated), Nuoli (603611, not rated), CIMC Vehicles (301039, not rated), Paislin (600215, not rated); (4) Energy equipment: Pilot Intelligent (300450, not rated), Jiejia Weichuang (300724, not rated), Jereh (002353, Buy), Dewell (688377, not rated), Zheng Coal Machinery (601717, Buy), Tiandi Technology (600582, not rated); (5) Rail transit equipment: CRRC (601766, not rated), China Railway Industry (600528, not rated), Traffic Control Technology (688015, not rated); (6) Services & Consumption: Anche Testing (300572, not rated), CTI (300012, not rated), Jack (603337, not rated), Jiecang Drive (603583, not rated), Kaidi (605288, not rated), Yongchuang Intelligent (603901, Buy); (7) Laser equipment: Dier Laser (300776, not rated), Innova Laser (301021, not rated), Hymson (688559, not rated);

Risk warning: the macro economy is less than expected, real estate investment is less than expected, infrastructure investment is less than expected, raw material prices are rising, overseas demand is slowing down, geopolitical conflicts, and humanoid robots are not progressing as expected.