20161116-兴业证券-A-Share_Daily_Express_11页_426kb

Summary of Industrial Securities Co., Ltd. Document

Core Content

This document provides an overview of the Chinese stock market performance, sector analysis, company news, and investment recommendations from Industrial Securities Co., Ltd., dated November 16, 2016. It includes details on major indices, market volume, and the performance of different sectors, with a focus on A-Share Daily Express and Tourist Attraction.

Market Overview

• Market Indices:
  • SSE Composite: Closed at 3205.06, down 0.06%.
  • SZSE Component: Closed at 10968.08, up 0.09%.
  • CSI 300: Closed at 3429.59, down 0.01%.
  • ChiNext: Closed at 2182.47, up 0.15%.
  • HSI: Closed at 22280.53, down 0.19%.
  • HSCEI: Closed at 9362.54, down 0.38%.
• Market Volume: CNY 627.54 billion, down 0.5% from the previous session.
• Market Sentiment: Mixed, with thematic investments showing strength, while blue chip stocks remained weak due to continued profit-taking.

Sector Review

Winners:

• Port and Shipping Companies: Strong performance due to ample cash inflows.
  • Dalian Port (601880): +10.00%
  • China Shipping Container Lines Co. (601866): +3.66%
• Graphene Theme: Boosted by technological speculation.
  • Kangde Xin Composite Material Group Co. (002450): +2.76%
  • Dongxu Optoelectronic Technology Co. (000413): +7.99%

Losers:

• Construction Companies: Corrections lagged behind.
  • China State Construction Engineering Corporation (601668): -1.51%
  • China Communications Construction Co. (601800): -1.19%
• Coal and Nonferrous Metals: Continued losses.
  • Shaanxi Coal Industry Co. (601225): -2.91%
  • China Molybdenum Co. (603993): -1.88%

Daily Headlines

• Shenzhen-Hong Kong Stock Link: Expected to start on November 21.
• Premier Li's Statement: Confirmed China will meet full-year financial targets.
• U.S. Steel Corp.: Unable to pursue antitrust claims against Chinese manufacturers.
• JD.com: Plans to spin off its $7 billion financial services business to reduce risk.
• Minth: Became the first parts maker to win a China electric car permit.
• BMO Capital Markets: Approved to quote CAD/CNY in the China Foreign Exchange Trade System.
• China Investment Corp & Caisse Des Depots: Agreed to promote investment in real estate and infrastructure in the Paris region.

Company News

• Air China (601111 CH): Passenger traffic rose 8% year-on-year in October.
• Bank of Shanghai (601229 CH): Trading debut.
• BYD (002594 CH): New buy at China Securities.
• China Eastern (600115 CH): Passenger traffic rose 12.9% year-on-year in October.
• China Railway Construction (601186 CH): Won a 22.9 billion yuan subway project.
• Guangdong Transtek (300562 CH): Trading debut.
• Poly Real Estate (600048 CH): New buy at Haitong International.

Investment Recommendations

Songcheng Performance (300144 SZ) - Buy (Maintained)

• First Overseas Project in Australia: Legend Kingdom.
• Project Details:
  • Total investment: RMB 2 billion.
  • Includes an entrance square, theater, and cultural theme park.
  • Scheduled to open in 3 years.
• Earnings Forecast:
  • EPS: CNY 0.63 (2016), CNY 0.86 (2017), CNY 1.09 (2018).
  • PE: 40x (2016E), 29x (2017E), 23x (2018E).
• Potential Risk: Slower-than-expected project progress.

Anhui Yingliu Electromechanical (603308 SH) - Buy (Maintained)

• Shareholding Reduction: CDH reduced its stake from 4.32% to below 1%.
• New Opportunities:
  • Obtained a license to manufacture military-use products.
  • Transitioning from OEM to direct military product supplier.
  • Potential to become a major player in the military product industry.
• Earnings Forecast:
  • Net Profit (Parent): CNY 640 million (2016), CNY 149 million (2017), CNY 286 million (2018).
  • EPS: CNY 0.14 (2016), CNY 0.29 (2017), CNY 0.55 (2018).
  • PE: 159x (2016E), 78x (2017E), 40x (2018E).
• Potential Risk: Slower-than-expected development.

Key Financial Ratios (Songcheng Performance)

• Gross Margin: 65.6% (2015), 66.1% (2016E), 66.1% (2017E), 66.1% (2018E).
• Net Profit Margin: 37.2% (2015), 36.5% (2016E), 40.5% (2017E), 39.7% (2018E).
• ROE: 11.3% (2015), 14.3% (2016E), 16.6% (2017E), 17.7% (2018E).
• Current Ratio: 2.63 (2015), 5.53 (2016E), 7.73 (2017E), 9.06 (2018E).
• Quick Ratio: 2.62 (2015), 5.52 (2016E), 7.72 (2017E), 9.05 (2018E).
• Asset Turnover Ratio: 31.3% (2015), 34.4% (2016E), 37.7% (2017E), 41.9% (2018E).
• PE: 107.4 (2015), 73.9 (2016E), 54.2 (2017E), 42.7 (2018E).
• PB: 12.1 (2015), 10.5 (2016E), 9.0 (2017E), 7.6 (2018E).

Key Financial Indicators (Anhui Yingliu Electromechanical)

• Revenue (Mn/CNY): 1345 (2015A), 1345 (2016E), 1614 (2017E), 2098 (2018E).
• YoY Growth: -2.3% (2015A), 0% (2016E), 20.0% (2017E), 30.0% (2018E).
• Net Profit (Mn/CNY): 75 (2015A), 64 (2016E), 149 (2017E), 286 (2018E).
• YoY Net Profit Growth: -29.4% (2015A), -14.2% (2016E), 130.9% (2017E), 92.4% (2018E).
• Gross Margin: 30.2% (2015A), 28.3% (2016E), 32.0% (2017E), 36.0% (2018E).
• Net Profit Margin: 5.6% (2015A), 4.8% (2016E), 9.2% (2017E), 13.6% (2018E).
• ROE: 4.0% (2015A), 2.3% (2016E), 5.0% (2017E), 8.7% (2018E).
• EPS: CNY 0.16 (2015A), CNY 0.14 (2016E), CNY 0.29 (2017E), CNY 0.55 (2018E).
• OCFPS: CNY 0.16 (2015A), CNY 0.67 (2016E), CNY 0.33 (2017E), CNY 0.31 (2018E).
• PE: 159x (2016E), 78x (2017E), 40x (2018E).

Analysts and Investment Highlights

• Analysts: CHEN Jiao, JIANG Weihua, MAO Yifan, PAN Mengchen.
• Investment Highlight:
  • Sow inventory dipped again in October.
  • Pig supply is increasing, but demand remains strong due to seasonal factors.
  • Pig prices may stay high in the long term due to shrinking sow inventory.
  • Investment Recommendations: Focus on companies in the Agriculture, Forestry & Fishing sector, including Guangdong Haid Group (002311: SZ), Liaoning Wellhope Agri-Tech JSC (603609: SH), Beijing Dabeinong Technology Group (002385: SZ), and Tangrenshen Group (002567: SZ).

Conclusion

The document highlights a mixed performance in the Chinese stock market with certain sectors, such as ports and graphene, showing strength, while others, like construction and coal, underperformed. It also emphasizes the strategic importance of overseas expansion and the potential for growth in the agricultural and military product sectors. Both Songcheng Performance and Anhui Yingliu Electromechanical are recommended for investment, with Songcheng Performance focusing on international expansion and Anhui Yingliu Electromechanical on its transition to a military product supplier.