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Weekly A-share Market Recommendations Summary

Core Content Overview

This document provides weekly stock recommendations from the Industrial Securities Research Institute, dated February 1, 2016. It outlines the investment highlights and EPS forecasts for several A-share companies across different sectors, including Tourism, Other Electronics, Agriculture, Meters, Pharmaceuticals, Real Estate, and Rail. Each company is rated either BUY or OUTPERFORM, and the report also includes market data, such as closing prices, market caps, and BVPS (Book Value Per Share), to support the investment analysis.

Top Stock Recommendations

Main Investment Highlights

Lijiang Yulong Tourism (002033.SZ)

• Rating: BUY
• Key Points:
  • Low valuation and small market cap with CNY 1.3 billion in cash reserves.
  • Rich tourism resources and a dispersed equity structure.
  • Expected EPS of CNY 0.95 in 2017, implying a PE of 20x, the lowest in the industry.
  • Potential risks: drop in tourist numbers, prolonged incubation of new projects.

Han's Laser Technology Industry Group (002008.SZ)

• Rating: BUY
• Key Points:
  • Expected to benefit from the iPhone 7 release, which may use sapphire crystal displays.
  • Projects from follow-on offerings are expected to start paying off from 2017, adding CNY 300 million in earnings annually.
  • Potential risks: lower iPhone 7 sales, slow adoption of sapphire crystal displays, weakening industrial demand.

Fujian Sunner Development (002299.SZ)

• Rating: BUY
• Key Points:
  • Processes and markets poultry, including frozen chicken meat.
  • EPS forecast shows strong growth from -0.29 in 2015 to 2.2 in 2017.
  • Potential risks: policy changes in the pharmaceutical field, slower-than-expected M&A progress.

Shanghai M&G Stationery (603899: SH)

• Rating: OUTPERFORM
• Key Points:
  • High-quality assets and strong institutional investor support.
  • Earnings growth projected at over 20% annually.
  • Focus on expanding 'Morning Glory Colipu' and launching 'Morning Glory Superior'.
  • Potential risks: management risk, slowdown in office supplies market expansion.

Jiangsu Linyang Energy (601222.SH)

• Rating: OUTPERFORM
• Key Points:
  • Strong earnings growth with a CAGR of over 25%.
  • Benefits from the Internet of Energy strategy and distributed PV systems.
  • Potential risks: earnings may fall short of expectations, challenges in new business development.

Zhejiang Jingxin Pharmaceutical (002020.SZ)

• Rating: OUTPERFORM
• Key Points:
  • Fastest organic growth among peers.
  • Strong M&A strategy to drive growth.
  • Private stock offering at CNY 27.34 provides a high margin of safety.
  • Potential risks: policy changes, slower M&A progress.

China Union Holdings (000036.SZ)

• Rating: BUY
• Key Points:
  • High margin of safety with RNAV at CNY 11.2.
  • Strong benefits from Shenzhen property price surge and equity incentive plans.
  • Potential risks: weaker industry recovery, slower project progress, delayed cash collection.

Nanjing Xinlian Electronics (002546: SZ)

• Rating: OUTPERFORM
• Key Points:
  • Building an electricity services cloud platform through software-hardware integration.
  • Potential for EPS growth through new business opportunities.
  • Potential risks: slower development of the cloud platform.

Sino Great Wall (000018.SZ)

• Rating: BUY
• Key Points:
  • Expected to see explosive growth in overseas business under the 'One Belt One Road' strategy.
  • Expanding into healthcare via PPP and BOT projects.
  • Potential risks: fewer new contracts, slower overseas business, delayed client payments.

Guangshen Railway (601333.SH)

• Rating: OUTPERFORM
• Key Points:
  • Expected to benefit from rail fare hikes and land development.
  • Potential for asset injection from peers.
  • Market concerns over Futian Railway Station diversion are alleviated, with estimated 10% impact on EPS.
  • Potential risks: rail fare hike uncertainty, land reform delays, asset injection uncertainty.

Key Information

• Valuation and Earnings Growth: Several companies are highlighted for their low valuations and strong earnings growth expectations.
• Market Catalysts: Factors such as iPhone 7 release, rail reform, M&A activities, and new business lines are cited as key drivers.
• Risk Factors: Each recommendation includes potential risks, such as market conditions, policy changes, and project delays.
• Sector Diversification: The recommendations span multiple sectors including Tourism, Electronics, Agriculture, Pharmaceuticals, Real Estate, and Rail.

Conclusion

The report emphasizes the potential for growth across a variety of sectors, with a focus on companies with strong fundamentals, strategic expansion plans, and favorable market conditions. The ratings of BUY and OUTPERFORM are based on EPS forecasts, valuation metrics, and market dynamics. Investors are advised to consider these recommendations while being aware of the associated risks.