According to Zhitong Finance APP, Citigroup released the outlook report for the Chinese CAILIAOHANGYE in the first quarter of 2025, suggesting to focus on three major investment themes: 1) both Steel and Cement will undergo reforms, bullish on Steel rather than Cement; 2) potential corporate actions to enhance shareholder value; 3) the cyclical bottom reversal of the Battery industry. Citigroup lists stocks like CHINAHONGQIAO (01378.HK) as preferred stocks.

Specifically, Citigroup believes that the Steel Industry will once again welcome supply-side reforms in 2025, with more detailed production reduction plans likely to be introduced in the first quarter of 2025. Compared to the Cement industry, supply management in the Steel industry may be more challenging, but the oversupply problem in Steel is not as severe as in Cement. Citigroup anticipates that Steel supply may reduce by 4-5% in 2025, which will significantly increase Steel prices and profit margins. Under this theme, Citigroup recommends focusing on Baoshan Iron & Steel (600019.SH).

Citigroup expects that the State-owned Assets Supervision and Administration Commission will encourage more state-owned enterprises to enhance shareholder value through share buybacks and increased dividends. China Coal Energy (01898.HK) and CHINAHONGQIAO have the potential for dividend increases. Citigroup also anticipates that the State-owned Assets Supervision and Administration Commission will promote more merger and acquisition activities.

Currently, Battery pricing is at a cyclical bottom, and Citigroup expects that the utilization rate across the entire value chain will rise in 2025. Over the past few weeks, prices of high-end lithium iron phosphate (LFP) cathodes, copper foils, and anode materials have risen from low levels, and this trend is expected to continue. Under this theme, Citigroup recommends focusing on Contemporary Amperex Technology (300750.SZ), Henan Yuneng Holdings (001896.SZ), and Shenzhen Kedali Industry (002850.SZ).