Analysis Report on Rotation and Differentiation Between Cyclical Stocks and Growth Stocks

Based on the obtained data and analysis tool results, I will provide you with a systematic analysis report on the rotation and differentiation between cyclical stocks and growth stocks.

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The current A-share market shows a significant pattern of

[0]. Data from today’s midday close shows:

Index Performance	Change	Market Interpretation
Shanghai Composite Index	+0.13%	Slightly up supported by cyclical stocks
ChiNext Index	-0.64%	Significant pullback pressure on growth stocks

:

• Petrochemicals (Hengli Petrochemical up over 6%)
• Catering & Tourism (Dalian Sun Asia hit limit-up)
• Power Generation Equipment
• Basic Materials

:

• Internet
• Culture & Media (Visual China saw significant decline)
• Education (DouShen Education)
• Communication Services [0]

From the perspective of sector capital flows, capital is shifting from high-valued growth sectors to

. This trend is highly consistent with the position adjustment behavior of institutional investors, reflecting the market’s revaluation of cyclical stocks against the backdrop of enhanced economic recovery expectations [1][2].

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: As of January 19, 2026, Hengli Petrochemical closed at 24.90 yuan, with a daily increase of 6.14%, approaching its 52-week high (25.16 yuan) [0].

Indicator Category	Indicator Name	Data Performance	Evaluation
Short-Term Momentum	6-Month Gain	+77.73%	Extremely Strong
	1-Month Gain	+31.05%	Strong
Valuation Level	PE (TTM)	25.18x	Reasonable Range
	PB	2.71x	Moderately High
Profitability Indicators	ROE	10.86%	Good
	Net Profit Margin	3.22%	Stable
Liquidity Indicators	Current Ratio	0.60	Tight
	Quick Ratio	0.41	Need Attention

:

• Conservative accounting policies, high depreciation/capital expenditure ratio, with room for profit improvement as investments mature [0]
• Debt Risk Rating:
  High Risk
  (Need to continuously monitor liability levels)
• 2025 Q3 Earnings Beat Expectations: Revenue 53.52 billion yuan (12.2% above expectations), EPS 0.28 yuan (1.08% above expectations) [0]

:

• Trend Judgment:
  Sideways Consolidation
  (No clear trend)
• Key Price Levels: Support at 22.33 yuan, Resistance at 25.41 yuan [0]
• KDJ Indicators: K=74.0, D=72.8, J=76.3 →
  Overbought and Diverging
• RSI Signal:
  Overbought Risk
  [0]

: Closed at 48.53 yuan, hit limit-up (+10%) today, up 16.24% in the past 20 trading days [0].

Indicator Category	Data Performance	Risk Warning
PE (TTM)	-57.77 (Negative)	The company is still in loss
PB	29.26	Valuation is relatively high
52-Week Range	25.81-66.55 yuan	High volatility
Trading Volume	18.44M (Above average)	Increased capital attention

:

• The company has not yet turned profitable, with negative EPS (-0.84 yuan)
• Although technicals show a positive K-line pattern (KDJ golden cross), it lacks fundamental support [0]

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[2]:

“The current upward cycle of A-shares is transitioning from the ‘second stage of bull market’ driven by liquidity and dominated by track stocks, to earnings-driven. The key observation variable is the bottoming and rebound of PPI, which usually marks a substantial improvement in corporate earnings, especially in pro-cyclical sectors.”

[1]:

“Industry trend inflection points and liquidity inflection points are the core of the style shift from ‘growth → value’. There is no need to be overly ‘fearful of high valuations’ when allocating growth stocks; the level of valuation itself is not the key to market inflection points, but whether the logic driving valuations has reversed is the key.”

According to institutional forecasts,

may become the key window for a new round of style shift from ‘growth → value’ [1][2]:

Influencing Factor	H1 Expectation	H2 Expectation
USD Trend	Fed rate cuts + USD weakening	Mid-term elections approaching, USD may turn stronger
AI Industry Trend	If no blockbuster applications emerge, sentiment may turn to wait-and-see	Coupled with liquidity pressure, the AI main theme may enter a medium-term adjustment
Policy Effects	Start of the 15th Five-Year Plan, intensified sci-tech innovation policies	Verification period of anti-involution policy effects; if PPI turns positive, cyclical logic will be strengthened

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• A bottoming rebound in PPI will mark a substantial improvement in corporate earnings
• Continued fiscal expansion policy efforts, rising investment driving cyclical demand
• Sino-US policy resonance: 2026 is the start of China’s 15th Five-Year Plan + US mid-term election year [2]

• Petrochemical industry chain benefits from oil price recovery and downstream demand rebound
• Anti-involution policies promote capacity clearing, optimizing industry structure
• Commodity price center moves upward, benefiting pro-cyclical sectors such as non-ferrous metals and basic chemicals

• Cyclical stocks still remain at historically low valuations relative to growth stocks
• Capital rotates from high-valued sectors to low-valued sectors

• Hengli Petrochemical’s RSI is in the overbought zone, with short-term pullback pressure
• Stock price is close to 52-week high, increasing willingness to take profits [0]

• Hengli Petrochemical’s liquidity indicators are tight (current ratio 0.60), with high debt risk
• Dalian Sun Asia continues to lose money, lacking fundamental support

• Economic recovery strength may fall short of expectations
• Overseas policy uncertainties (Fed policy, geopolitics)
• If the timing of PPI turning positive is delayed, the logic for cyclical stocks may weaken

Evaluation Dimension	Hengli Petrochemical	Dalian Sun Asia
Short-Term Momentum	★★★★★ Extremely Strong	★★★★☆ Strong
Fundamental Support	★★★☆☆ Stable	★★☆☆☆ Weak
Valuation Rationality	★★★☆☆ Reasonable	★★☆☆☆ Relatively High
Risk Warning	Short-term overbought	Weak fundamentals
Sustainability Judgment	Medium-term strong, short-term consolidation needed	Short-term sentiment-driven, sustainability in doubt

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• Prioritize Leading Companies
  : Sector leaders such as Hengli Petrochemical have stronger earnings recovery capabilities and risk resistance
• Focus on Earnings Certainty
  : Select targets that beat Q3 earnings expectations and have robust orders
• Avoid High Debt
  : Be alert to cyclical stocks with high debt risks

• Wait for pullback to key support levels (e.g., around 22.33 yuan for Hengli Petrochemical)
• Focus on layout windows around the release of PPI data
• Enter when volume shrinks, stabilizes, and then expands

• Set stop-loss levels (suggest reducing positions if breaking below the 20-day moving average)
• Control position size (cyclical stocks should account for no more than 30% of the portfolio)
• Monitor Fed interest rate meetings and domestic economic data

Although growth stocks are under short-term pressure,

. It is recommended to adopt:

• Core Allocation
  : Strategic tech sectors such as AI computing power and domestic chips
• Satellite Allocation
  : Wait for the style rotation window around June, and accumulate high-quality growth stocks on dips
• Hedging Strategy
  : Appropriately allocate dividend assets to cope with market volatility

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1. Style Rotation is Underway
   : The differentiation between cyclical and growth stocks reflects the market’s transition from “liquidity-driven” to “earnings-driven”, a trend expected to continue in H1 2026.
2. Cyclical Stocks’ Strength Has Fundamental Support
   : Factors such as expected PPI inflection point, fiscal policy efforts, and capacity clearing jointly support the cyclical stock market, but short-term technical pullbacks need to be watched for.
3. Stock Differentiation Will Intensify
   : Cyclical stocks with solid fundamentals such as Hengli Petrochemical are expected to maintain strength, while theme stocks lacking earnings support (such as Dalian Sun Asia) have doubtful sustainability.
4. Pay Attention to the Key Window in June
   : The USD trend, AI industry progress, and policy effect verification will determine the sustainability of the style rotation.

Investment Type	Recommended Operation	Logic
Cyclical Stocks	Accumulate on pullbacks, do not chase highs	Short-term overbought, need to wait for better entry points
Growth Stocks	Accumulate high-quality targets on dips	Industry trend remains unchanged, be patient
Risk Preference	Maintain neutral to cautious	Focus on macroeconomic data verification

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[1] Soochow Securities: 2026 A-share Investment Strategy Outlook: The Giant Wheel of Style Continues to Roll (https://www.fxbaogao.com/detail/5150403)

[2] China Merchants Securities: 2026 A-share Investment Strategy Outlook: Global Resonance, Domestic Demand Return (https://finance.sina.com.cn/stock/report/2025-12-14/doc-inhauuyz2663654.shtml)

[3] Jinling AI Securities API Data: Real-time market and technical analysis data of Dalian Sun Asia and Hengli Petrochemical [0]