20181015-川财证券-Chuancai_Securities_Research_Highlights_Weekly__China_Market_Weekly_Outlook_13页_573kb

Market Overview Summary

Core Content

The document provides an analysis of the Chinese stock market and key industry sectors as of October 15, 2018. It outlines the performance of major indices, highlights industry-specific developments, and offers investment recommendations while reminding investors of potential risks.

Key Market Indices Performance

• The A-share market shows mixed performance with significant declines in several indices.
• The P/E ratio of all A-shares is at its lowest level since 2008, indicating a potentially attractive entry point for long-term investors.
• The short-term economy is resilient, with stable cash flow liquidity and a rebound in export growth in September.

Main Sectors and Key Points

1. Construction Materials (Cement)

• The cement sector is showing strong profit growth in the third quarter.
• Companies like Huaxin Cement and Wannianqin have reported profit increases of 2.2-2.8 times over the last three quarters.
• National cement prices rose by 0.5% this week, with strong price willingness in the East China region due to low inventory levels.
• Demand in North and South China regions is weak post-holiday, but the overall price remains high.
• The sector is expected to benefit from the superimposed infrastructure development, with a focus on regional cement stocks.

2. Coal

• The price of coke may enter a new increasing cycle due to tight quotas and environmental protection impacts.
• Port coal prices are rising due to inventory decline and increased price inquiries.
• The closing price of Qinhuangdao Port 5500 kcal thermal coal is 666 yuan per ton, up 22 yuan from the previous week.
• The ban on U.S. technology transfer may increase the localization rate of AP1000 projects and accelerate the development of Hualong No.1.
• The profitability of thermal power enterprises is expected to improve if coal prices stabilize within the green interval.

3. Retailer

• The retail sector, especially supermarkets, has shown moderate growth, with a year-on-year increase of 9.0%.
• The cosmetics sector is expected to maintain high revenue growth, driven by expansion into third- and fourth-tier cities and e-commerce channels.
• Chinese brands are benefiting from first-mover advantages and data experience accumulation.
• Recommended stocks: Yonghui Supermarket, Jiajiayue, Yujiahui, Polaiya, Shanghai Jahwa, Lafang Jahwa.

4. Leisure

• Customer flow in natural scenic spots has slowed due to passenger traffic bottlenecks, but leisure scenic spots have maintained steady growth.
• Songcheng Performing Arts reported over 1.8 million visitors, a 20% increase.
• Duty-free consumption in Hainan saw a 16.81% year-on-year growth during National Day.
• Recommended stocks: China International Travel (601888), Songcheng Performing Arts (300144).

5. Agriculture

• African Swine Fever continues to spread, causing a sharp decline in pig production and prices.
• The disease is primarily affecting the northeast, east, and central regions of China.
• The domestic average price of live pigs remains stable and weak, with some provinces experiencing continued price weakening.
• The pig cycle is expected to reach its bottom, with potential for price recovery in the long term.
• Recommended stocks: Wen's Shares (300498), Makino Shares (002714).

Investment Recommendations

• Investors should focus on large-scale financial, food, pharmaceutical, steel, blue chips, and 5G sectors.
• The coal and cement sectors are expected to show positive rebounds in the short term.
• The cosmetics and leisure sectors are seen as growth opportunities due to channel expansion and steady customer flow.

Risk Reminder

• Macro-policy changes may impact the market.
• Systematic risk is present due to market-wide volatility.
• Data delay could affect the accuracy of current analysis.

Analyst Information

• Analyst: Li CHEN
• Contact: Wenyi ZHOU
• Research Division Offices: Beijing, Shanghai, Shenzhen, Chengdu

Disclaimer

• This document is issued for the information of Chuancai Securities' clients only.
• It is based on information from reliable sources, but no guarantees are made regarding its accuracy or completeness.
• The opinions and forecasts in this document are subject to change and should not be considered as investment advice.
• Investors are advised to consult their tax, accounting, or legal advisers before making investment decisions.

Copyright and Distribution

• This report is copyrighted by Chuancai Securities Limited.
• Unauthorized distribution, reproduction, or quotation is strictly prohibited.
• The document should not replace independent investment judgment and does not guarantee investment returns.

Conclusion

The Chinese stock market is currently under pressure, but the low P/E ratio and resilience in the short-term economy suggest potential for long-term capital inflows. Key sectors like construction materials, coal, and cosmetics are showing positive signs, while others such as leisure and retail are experiencing mixed performance. Investors are advised to remain cautious and consider the risks associated with macro-policy changes and data accuracy.