CITIC Securities: The current industrial capacity cycle is still exploring the bottom, and individual industries are expected to achieve capacity clearance or expansion first.

On January 4th, Jinshi Data reported that CITIC Securities stated in a document that the industrial capacity cycle is fundamentally driven by the supply and demand pattern and can guide investment direction. Currently, the industrial capacity cycle is still bottoming out, and some industries under midstream manufacturing are facing significant overcapacity pressure. Certain industries are expected to achieve capacity clearance or capacity expansion first. Against this background, follow two types of investment opportunities: the transition from supply-demand imbalanced industries to supply-demand balanced industries through capacity clearance and the maintenance of supply-demand balance through capacity expansion in supply-demand balanced industries. From the analysis of historical data, the supply-demand pattern can guide the direction of industry’s future net profit and income, while the turning point signals of capacity utilization, capital expenditure, and demand have foresight on changes in the supply-demand pattern. Furthermore, based on the supply-demand pattern, identify capacity clearance and capacity expansion strategies from the turning points of the capacity cycle and demand price signals. From 2014 to December 31, 2024, the annualized excess returns of the combination of capacity clearance and capacity expansion relative to the CSI 300 Index were 9.2% and 8.5%, respectively.