According to the CITIC Securities Research Report, the 2026 semi-annual report shows that the A-share profit cycle has entered the accelerated recovery phase, but the “profit improvement” itself is losing scarcity. The breadth of the spread of the economy, the quality of profit restoration, and the adequacy of market pricing are becoming the keys to the next stage of asset selection. Currently, the resource and technological boom is leading, profit recovery in traditional industries has spread, and overall consumption and manufacturing are still relatively low; however, high growth is not equivalent to high quality, and further verification of the “success” of profits is needed. First, the technology sector focuses on whether profits can be converted into cash, looking for assets that resonate with high growth and high profit quality, but cash flow pressure cannot be rejected by one vote; second, “reverse internal roll” cannot be judged only by capital expenditure contraction or price recovery; third, in the context of RMB appreciation, the impact of exchange losses on profit quality is unavoidable. 4. In the context of RMB appreciation, the impact of exchange losses on profit quality is unavoidable. 4. Shifting to a source of dividends and sustainability Sex, and a new logic for exploring dividends from a dynamic perspective. At the valuation level, the market has begun to provide differentiated pricing for profits of different quality. In the next phase, it is recommended to focus on finding high-quality, high-boom assets that improve income, profit, cash flow, and return on capital at the same time, yet the valuation has not yet fully reflected.

According to the CITIC Securities Research Report, the 2026 semi-annual report shows that the A-share profit cycle has entered the accelerated recovery phase, but the “profit improvement” itself is losing scarcity. The breadth of the spread of the economy, the quality of profit restoration, and the adequacy of market pricing are becoming the keys to the next stage of asset selection. Currently, the resource and technological boom is leading, profit recovery in traditional industries has spread, and overall consumption and manufacturing are still relatively low; however, high growth is not equivalent to high quality, and further verification of the “success” of profits is needed. First, the technology sector focuses on whether profits can be converted into cash, looking for assets that resonate with high growth and high profit quality, but cash flow pressure cannot be rejected by one vote; second, “reverse internal roll” cannot be judged only by capital expenditure contraction or price recovery; third, in the context of RMB appreciation, the impact of exchange losses on profit quality is unavoidable. 4. In the context of RMB appreciation, the impact of exchange losses on profit quality is unavoidable. 4. Shifting to a source of dividends and sustainability Sex, and a new logic for exploring dividends from a dynamic perspective. At the valuation level, the market has begun to provide differentiated pricing for profits of different quality. In the next phase, it is recommended to focus on finding high-quality, high-boom assets that improve income, profit, cash flow, and return on capital at the same time, yet the valuation has not yet fully reflected.