■ Industrial profit growth figures indicate that the downstream sectors have been under cost pressure from the upstream sectors. Overall industrial profit growth slowed down in Aug 21 vs. Jul 21. ■ The Chinese government’s dual energy consumption controls, power rationing in some provinces, and the impact of the credit event in the property sector are expected to put pressure on overall industry profit growth in Sep and 4Q21. ■ Shares of upstream names have been under pressure for the reasons mentioned. The potential for government intervention may trigger further selling pressure on upstream names. ■ We believe that the market has shifted its focus from supply-side constraints to weaker downstream demand. Investors may have concerns about industrial goods names such as LMP [2314.HK], NDP [2689.HK], Xinyi Glass [0868.HK] and China Glass [3300.HK], which may face lower demand along with higher costs, especially energy costs. ■ Upstream sectors such as coal mining, including names such as Shenhua [1088.HK], China Coal [1898.HK] and Yanzhou Coal [1171.HK], and natural gas/LNG may continue to benefit from higher ASPs. However, concern about potential government intervention may put pressure on them.