Huatai Securities: The industry's short cycle continues to differentiate, with TMT and advanced manufacturing actively replenishing inventory expected to continue

Huatai Securities' research report indicates that the interim performance of A-shares has been fully disclosed, and the quarterly financial reports basically continue the characteristics of bottoming out seen in the first quarter, with significant sector differentiation still evident: 1) Short cycles continue to bottom out but initial improvements are emerging, with a rebound in overall inventory replenishment efforts; it takes time for balance sheet and order recovery to translate into revenue recovery; 2) Structural differentiation remains apparent, with advanced manufacturing and TMT expected to continue dual improvements in supply and demand, and the income inflection point for the infrastructure chain approaching; 3) Medium cycles continue to decline, but the number of cleared and "quasi-cleared" subcategories is increasing; 4) The mid-term dividend payout of A-shares has reached a historical high. In terms of allocation insights, considering the position of inventory and capacity cycles, it is recommended to focus on industries with dual improvements in new supply and demand, such as power grid equipment, construction machinery, basic chemicals, and steel. Additionally, given that high-frequency prosperity data still shows resilience, the lithium battery, communication equipment, minor metals, and packaging printing sectors selected in the first quarter can still be continuously monitored