On August 23, Caixin reported that the market fluctuated throughout the day yesterday, and the Chinext Index hit a new low for the year. Overall, stocks fell more than they rose, with over 4,400 stocks in the entire market declining. The turnover of Shanghai and Shenzhen stock exchanges was 549.1 billion, an increase of 39.6 billion compared to the previous trading day. In terms of sectors, banks, outfits, and ST performed well, while gaming, robots, civil explosives, and baijiu performed poorly. At the close of trading yesterday, the Shanghai Composite Index fell 0.27%, the Shenzhen Component Index fell 0.82%, and the Chinext Index fell 0.76%.

At today's brokerage morning meeting, HTSC believes that globalization and digitization have opened up opportunities for bottom-fishing in the auto parts sector; China Securities Co., Ltd. pointed out that sectors such as commercial aviation and aerospace are growing rapidly and are bullish on the structural recovery of the military industry sector; Citic Sec expressed that the industrialization of solid state batteries has begun and China's lithium batteries will lead the world.

HTSC: Globalization and intelligence initiate the bottom-fishing opportunity for auto parts.

HTSC believes that the pessimistic sentiment may have been fully reflected, and the valuation of the auto parts sector is relatively low since 2019. Reviewing the period from 2017 to August 2024, the main factors affecting the sector are economic cycles, breakthroughs in supply chain support, and price factors. The current PE ratio valuation is already at a relatively low point since 2019, and it may have already included pessimistic sentiment. In the medium to long term, "globalization and intelligence" may open up growth opportunities for auto parts companies and bring about performance and valuation improvements. Recommended focus: 1) Companies with the ability to expand customers globally, taking into account the iterative development of the whole vehicle E/E architecture and having Tier 0.5 capabilities, leading enterprises in leading global automakers such as Volkswagen and Toyota, and companies expanding globally based on excellent products and customer capabilities; 2) Industrial chains of leading new forces, supporting the "Huawei system" and Chery, the leader in global expansion.

CSCL: Fast growth in sectors such as commercial aerospace and aviation, bullish on structural recovery in the military industry.

CSCL pointed out that sectors such as commercial aerospace and aviation are growing rapidly, and they are bullish on the structural recovery of the military industry. Currently, the military industry is at a turning point between old and new cycles, with turning points in performance and orders this year, and it is at a low valuation point with significant investment value. CSCL predicts that with the gradual implementation of military personnel adjustments and related institutional reforms, orders in the later stage of the 14th Five-Year Plan are expected to be gradually issued, and the backlog combined with new demand is expected to stabilize and rebound in industry orders and performance growth rates after Q3 2024, opening up a second round of structural recovery. In terms of allocation, it is recommended to focus on three investment themes: 1) Traditional military equipment industry, focusing on aircraft engine industry and shipbuilding industry with expectations of order recovery and performance support, as well as the aerospace industry; 2) New domain and new quality equipment, focusing on industries that have the characteristics of low cost, intelligence, and systematization, including low-cost precision guided ammunition, unmanned systems, and new-generation intelligent combat pedestals; 3) New quality productivity, focusing on industries with wide application market space, rapid growth period, and low domestic substitution rate, mainly including commercial aerospace, low-altitude economy, big planes, and additive manufacturing. In addition, military trade and going global are also worth paying attention to.

CSCL: Industrialization of solid state batteries begins, and China's lithium batteries will be the world leader.

Citic Securities stated that solid-state batteries are expected to usher in a new round of electrification innovation due to their high safety and high energy density. Since 2024, the solid-state battery industry in China has seen marginal changes such as the launch of semi-solid-state mass-produced models and a penetration rate of 1% for semi-solid-state batteries, indicating industrialization. Citic Securities estimates that consumers are willing to pay a premium of 0.1-0.15 million yuan for long-endurance batteries, which will help solid-state batteries penetrate the power battery field. It is estimated that the global demand for solid-state batteries will reach 643GWh in 2030, with a CAGR of 133% from 2024 to 2030, and a total market space of 1.2 trillion. Looking at the world as a whole, Japan is currently more advanced in the research and development of solid-state batteries, but China has advantages such as low technical risk, a good pace of "small steps and fast running," and abundant conditions for industrialization, which is expected to emerge as the winner in the second half of the industrialization of both semi-solid-state and solid-state batteries. China's lithium-ion industry will continue to lead the world, ushering in a new golden age.