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Industrial Securities Co., Ltd. Summary

Core Content

Industrial Securities Co., Ltd. provides a detailed market review and analysis for the Chinese stock market, including indices, sector performance, daily headlines, company news, and research reports. The report covers the Shanghai and Shenzhen stock exchanges, highlighting the performance of major indices and market trends. It also evaluates key companies such as Wuliangye Yibin and Jiangxi Ganfeng Lithium Co., Ltd., offering insights into their financial performance, earnings forecasts, and investment recommendations.

Market Indices Overview

• Market Volume: RMB 511.09 billion (USD 76.79 billion), up 13.82% from Wednesday.
• Market Performance: Losers outnumbered winners by 1893-to-767.
• Central Bank Actions: PBOC aims to maintain liquidity and reduce maturity mismatch, avoiding RRR or interest rate cuts in favor of long-term funding.

Sector Review

Winners

• Steel sector led the market with strong performance:
  • Chengdu Xuguang Electronics Co., Ltd. (600353 SH): +10.02%
  • Tianjin Realty Development (Group) Co., Ltd. (600322 SH): +9.98%
• Insurance, Trust & Securities Broker sector reversed bearish trends:
  • Pacific Securities Co., Ltd. (601099 SH): +5.68%
  • Guoyuan Securities Company Limited (000728 SZ): +1.95%

Losers

• Real Estate sector dragged down the market:
  • Yinyi Real Estate Co., Ltd. (000981 SZ): -9.98%
  • Hefei Urban Construction Development Co., Ltd. (002208 SZ): -6.12%
• Construction sector also underperformed:
  • Shenzhen Minkave Technology Co., Ltd. (300506 SZ): -6.42%
  • Shenzhen Bauing Construction Holding Group Co., Ltd. (002047 SZ): -4.61%

Daily Headlines

• HK Stock Connect: Shenzhen exchange asks brokerages to prepare for the program by early November.
• Shadow Banking Regulation: China imposed limits on P2P lending to curb risks.
• Fixed Asset Investment: Expected to rise 9% in 2016, with property investment likely to increase 5.5%.
• Earnings Reports: PetroChina and Cnooc report weakest earnings since listing; China Construction Bank and Bank of Communications to report earnings.
• China Coal Energy: Swung to a profit with steady sales and reduced production/costs.
• Alibaba's Finance Affiliate: Not planning an IPO on the A-share market.
• CIMB Bank: Appoints China Construction Bank as sub-custodian lender in China.

Latest Company News

• China Coal (601898 CH): 1H net income of CNY 225.1 million, up from a net loss of CNY 1.07 billion.
• China National Nuclear (601985 CH): 1H net income of CNY 2.5 billion, up 0.3% YoY.
• Citic Securities (600030 CH): 1H net income of CNY 5.24 billion, down from CNY 12.5 billion.
• Guangshen Rail (601333 CH): Raised to "Outperform" by Credit Suisse.
• Huaxin Cement (600801 CH): 1H net income of CNY 8.04 million, down from CNY 88.8 million.
• Huayi Brothers (300027 CH): 1H net income of CNY 302.8 million, down from CNY 503.9 million.
• Sinopec Shanghai (600688 CH): Cut to "Neutral" by Nomura.

Wuliangye Yibin (000858 SZ) - Buy (Maintained)

Key Financial Indicators

• Revenue (16H1): CNY 11.2 billion (+18.2% YoY)
• Net Profit (16H1): CNY 3.89 billion (+17.9% YoY)
• EPS (16H1): CNY 1.02
• Earnings Forecast:
  • 2016E: CNY 1.92 (up 18.2% YoY)
  • 2017E: CNY 2.21 (up 14.7% YoY)
• Valuation:
  • PE (2016E): 18x
  • PB (2016E): 2.8x

Comments

• Sales Channel Reshuffling: Boosted growth outlook.
• Inventory and Pricing: Increased inventory and a CNY 300 gap between Wuliangye and Feitian Moutai retail prices made Wuliangye more attractive.
• Performance: Revenue growth slowed in Q2 due to high inventory and delayed demand.
• Private Offering: Expected to improve distributor motivation and boost sales.
• Potential Risk: Slower-than-expected ESOP progress, intensifying competition, and economic downturn.

Jiangxi Ganfeng Lithium Co., Ltd. (002460 SZ) - Buy (Maintained)

Key Financial Indicators

• Revenue (16H1): CNY 1.3 billion (+148.6% YoY)
• Net Profit (16H1): CNY 580 million (+363.1% YoY)
• EPS (16H1): CNY 0.77
• Earnings Forecast:
  • 2016E: CNY 0.77 Bn
  • 2017E: CNY 1.24 Bn
  • 2018E: CNY 1.55 Bn
• Valuation:
  • PE (2016E): 18.4x
  • PB (2016E): 2.8x

Comments

• Lithium Price Surge: Lithium carbonate price increases drove strong H116 performance.
• Subsidiary Fires: Two fires in March and July caused significant losses.
• Earnings Growth: Net profit and shareholder attributable net profit grew 446.8% and 445% YoY.
• Potential Risk: Unexpected lithium carbonate price fluctuations, slow project progress, and insufficient raw material supply.

Key Financial Ratios (Wuliangye Yibin)

Conclusion

Industrial Securities Co., Ltd. highlights that the Chinese stock market experienced a mixed performance in the recent period, with the Shanghai Composite and Shenzhen Component indices declining slightly. The financial sector's performance helped stabilize the market. Wuliangye Yibin and Jiangxi Ganfeng Lithium Co., Ltd. showed strong performance, with both receiving a "Buy" rating. Wuliangye Yibin's sales and pricing strategy, along with its private offering, are expected to boost its stock performance. Ganfeng Lithium's lithium price surge and strong H116 earnings suggest a positive outlook, although it faces risks related to lithium price fluctuations and project progress.