From high-frequency tracking of various market funds, recent important changes include: ① Foreign capital has shown net inflows into A-shares and H-shares for three consecutive weeks, ② New account openings continued to rise in August, ③ Net inflows into non-broad-based equity ETFs, and ④ Some recovery in new issuances of fixed income plus funds and equity-oriented hybrid funds.
With the completion of A-share interim report disclosures, this week we updated three stock selection models, detailed analysis of A-share interim reports across three financial statements, and the "outperforming expectations" model from a financial perspective.
Among these updates, one noteworthy positive change in the interim report's aggregate dimension is that companies have ended a four-year deleveraging cycle, with asset-to-liability ratios stabilizing. The interest-free liability ratio structure remains healthy, with growth rates of contract liabilities plus advance receipts rising for three consecutive quarters.
**Order Indicators as Business Barometers**
Advance receipts plus contract liabilities can approximately represent a company's order situation. "Advance receipts" may involve payments before contract signing (such as earnest money), while "contract liabilities" require contract establishment as a prerequisite (performance obligations). These two indicators combined can be understood as advance payments received by companies for order intentions, making their trend changes partially explanatory of the scale of goods or services companies will deliver in the future, serving as trackable order indicators.
Historically, among A-shares and typical manufacturing industries, there has been a positive correlation between the year-over-year growth rate of advance receipts plus contract liabilities and profit growth rates. Furthermore, this has indicative significance for A-share overall and manufacturing sector stock price performance.
In the first quarter report, industries we screened out based on significant improvement in 2025Q1 order indicators (advance receipts + contract liabilities), such as components, wind power equipment, and computer equipment, demonstrated strong fundamentals and market performance in Q2, with generally improving revenue growth rates and leading stock price performance, validating the forward-looking guidance role of order indicators for business prosperity.
**Industries Contributing to A-Share Order Indicator Improvements**
A-share advance receipts plus contract liabilities year-over-year growth rate continued significant improvement in the interim report. Primary industries with high H1 year-over-year growth rates and high growth contribution rates include: computers, basic chemicals, defense & military, power equipment, and automobiles.
Beyond the market's well-recognized high-growth AI computing power orders, we further examined other industries, screening for industries with high year-over-year order growth in 25H1: wind power (cables/turbines/tower foundations), lithium batteries, lithium battery equipment, motorcycles, semiconductors (equipment), CXO, automation equipment (such as 3C equipment), other power equipment, IT services, and computer equipment.
These industries have shown order improvements for 2-3 consecutive quarters, and this indicator has positive correlation with stock price performance, making it a validation approach for industry comparison in the next phase.
**Structural Highlights in A-Share Interim Reports**
The continuous recovery of contract liabilities represents one of the structural highlights in interim report analysis. The leverage ratio has ended its continuous decline cycle from 2020-2024, indicating that companies' confidence in future operations is undergoing positive transformation. The alleviation of accounts receivable pressure and the rise in contract liabilities (representing future orders) jointly point to improving operating cash flow trends.
Contract liabilities, introduced with the new revenue standard (CAS 14) in 2017, refer to obligations undertaken by companies to transfer goods or services due to received or receivable customer consideration. Key characteristics include: 1) Performance obligation relevance: must be based on signed contracts with corresponding clear performance obligations; 2) Recognition conditions: not dependent on actual receipt of payment, but can be recognized as long as performance obligations exist in contracts and companies have the right to collect consideration.
In Q2 2025, A-share non-financial contract liabilities plus advance receipts totaled 5.5 trillion yuan, accounting for approximately 18% of revenue scale (revenue of 30.3 trillion yuan). Contract liabilities now occupy the dominant position (5.4 trillion yuan), with advance receipts at only 126.4 billion yuan.
**Industry-Specific Order Improvements**
Primary industries with high H1 year-over-year growth rates and high growth contribution rates include computers, basic chemicals, defense & military, power equipment, and automobiles. Specific industries showing high year-over-year order growth in 25H1 include wind power components, lithium batteries, lithium battery equipment, motorcycles, semiconductor equipment, CXO services, automation equipment, other power equipment, IT services, and computer equipment.
**Weekly Market Changes**
**Mid-stream Manufacturing**: Steel rebar spot prices fell 1.89% week-over-week to 3,210 yuan/ton, while stainless steel spot prices rose 0.44% to 13,355 yuan/ton. Rebar futures closed at 3,143 yuan/ton as of September 5, up 1.72% from the previous week.
**Chemical Industry**: As of August 31, styrene prices fell to 7,277.90 yuan/ton, methanol prices dropped to 2,228.80 yuan/ton, PVC prices declined to 4,809.50 yuan/ton, and butadiene rubber prices fell to 11,697.60 yuan/ton.
**Upstream Resources**: WTI fell 3.34% to $61.87, Brent dropped 2.65% to $65.67, and the CRB commodity index declined 1.51% to 297.77.
**Stock Market Performance**: The Shanghai Composite Index fell 1.18% for the week. Top-performing sectors included power equipment (+7.39%), diversified (+5.38%), and non-ferrous metals (+2.12%). Worst-performing sectors were defense & military (-10.25%), computers (-7.27%), and non-bank financials (-4.96%).
**Liquidity**: During September 1-5, the central bank conducted reverse repo operations totaling 206.84 billion yuan against 327.31 billion yuan in maturities, resulting in net withdrawal of 120.47 billion yuan from open market operations.
**Overseas Markets**: S&P 500 rose 0.33% to 6,481.50 points, London FTSE gained 0.23% to 9,208.21 points, German DAX fell 1.28% to 23,596.98 points, Nikkei 225 rose 0.70% to 43,018.75 points, and Hang Seng gained 1.36% to 25,417.98 points.
**Upcoming Data Releases**
Key data to watch next week includes: China's August trade data and financial data, Japan's Q2 GDP data, US August PPI and CPI data, Eurozone September benchmark interest rate, and US September Michigan Consumer Sentiment Index.
**Risk Warnings**
Geopolitical conflicts exceeding expectations could drive oil and commodity prices higher than anticipated, creating renewed significant upward inflation pressure globally. Overseas inflation persistence and US economic resilience could slow global liquidity easing below expectations, particularly Federal Reserve rate cut timing and US Treasury yield declines. Domestic growth stabilization policies falling short of expectations could lead to weak economic recovery, prolonged corporate earnings at bottom levels, and further market risk appetite deterioration.