20160331-兴业证券-A-Share_Daily_Express_11页_755kb

Industrial Securities Co., Ltd. Summary

Core Information

• Company Name: Industrial Securities Co., Ltd.
• Address: 21F, Building 1, Wudaokou Plaza, No.1199, Minsheng Road, Pudong New District, Shanghai, China, 200135
• Website: http://www.xyzq.com.cn
• Date: March 31, 2016

Market Overview

• SSE Composite Index: Closed at 3003.92, up 0.11%.
• SZSE Component Index: Closed at 10455.37, up 0.09%.
• ChiNext Index: Closed at 2238.29, down 0.47%.
• HSI (Hong Kong): Closed at 20776.70, down 0.13%.
• HSCEI (Hong Kong): Closed at 9003.25, up 0.27%.
• Total Market Volume: CNY 697 billion.

Main Market Trends

• The A-share market saw a slight increase in the Shanghai and Shenzhen indices, but the ChiNext index declined.
• The number of rising tickers (1248) slightly outperformed the number of falling tickers (1224), with a ratio of approximately 1.01:1.
• The positive sentiment from the announcement of the Foreign Exchange Administration Bureau's three investment platforms entering the A-share market had a favorable impact on investor emotions.

Sector Performance

• Transportation: Strong performance with Dalian Port (601880) and Ningbo Port (601018) hitting the ceiling price, up 10.03%.
• Travel & Leisure: Beibu Gulf Tourism (603869) and Dalian Sunasia Tourism (600593) saw significant gains, up 10.02% and 8.03% respectively.
• Construction Materials: Youngy (002192) and Tangshan Jidong Cement (000401) rose by 10.01% and 7.81%, suggesting potential government support for infrastructure development.

Daily Headlines

• State-Owned Lenders: Reduced dividend payouts, indicating a new normal of low profit growth due to rising bad loans.
• State-Owned Airlines: Combined foreign-exchange losses of about $2.5 billion in 2015 due to yuan devaluation and falling oil prices.
• China Cosco: Earnings dropped by 22% in 2015 due to overcapacity in vessels.
• Debt Restructuring: Financial institutions with overdue debts must form a commission for restructuring if more than three creditors are involved.
• Economic Outlook: President Xi Jinping affirmed that China's economic fundamentals remain stable and it will continue to be a key driver of global economic growth.
• Policy Development: China will promote mobile and internet payments, and support banks in cooperation with online retail platforms for small lending.
• Innovation Reform: The cabinet decided to implement an overall innovation reform trial in Shanghai over three years.

Latest Company News

• Air China (601111.SH): FY net profit of 7.06 billion yuan, down from 3.85 billion yuan.
• Angang Steel (000898.SZ): FY net loss of 4.59 billion yuan, down from 928 million yuan.
• Baoshan Steel (600019.SH): FY net income fell by 83% compared to the previous year.
• BOC (601988.SH): FY net profit of 170.8 billion yuan, close to estimate. To issue up to 60 billion yuan in capital instruments.
• CCB (601939.SH): Full-year profit increased by 0.1%.
• China Cosco (601919.SH): FY net profit of 283.4 million yuan, down from 362.5 million yuan.
• China Eastern (600115.SH): Suffered a $770 million foreign exchange loss.
• China Southern (600029.SH): FY net profit of 3.74 billion yuan, up from 1.78 billion yuan.
• China Railway Construction (601186.SH): FY net profit of 12.6 billion yuan, up from 11.7 billion yuan.
• China Railway Group (601390.SH): FY net profit of 11.7 billion yuan, secured a $3.3 billion railroad project in Bangladesh.
• Haitong Securities (600837.SH): FY net profit of 15.8 billion yuan, up from 7.71 billion yuan.
• Merchants Bank (600036.SH): FY net profit of 57.7 billion yuan, up from 55.9 billion yuan.
• Minsheng Bank (600016.SH): FY net profit of 46.1 billion yuan, close to estimate.
• Shanghai Electric Group (601727.SH): FY net profit declined by 17%.
• Shenhua (601088.SH): Engaged in talks with nuclear developers.
• Sinopec (600028.SH): Top performer in China's oil sector due to refining gains.
• Weichai Power (000338.SZ): FY net profit of 1.39 billion yuan, down from 5 billion yuan.
• Yantai Changyu (000869.SH): Expanding internationally, targeting Chile.
• Zoomlion (000157.SZ): FY net profit of 89 million yuan, down from 594 million yuan; proposed to issue up to 8 billion yuan in bonds.

Company Analysis: China CAMC Engineering (002051 SZ)

• Rating: BUY (Revised Up)
• Key Financials:
  • FY 2015 Revenue: CNY 8.12 billion, down 14.82% YoY.
  • FY 2015 Operating Profit: CNY 1.09 billion, up 14% YoY.
  • FY 2015 Net Profit: CNY 1.05 billion, up 21.24% YoY.
  • EPS: CNY 1.36.
• Profit Distribution:
  • Cash dividend: CNY 0.3/share (before tax).
  • Bonus shares: 2 per 10 shares.
• Earnings Forecast:
  • 2016E EPS: CNY 1.66.
  • 2017E EPS: CNY 2.01.
  • 2018E EPS: CNY 2.33.
• Valuation:
  • 2016E PE: 14x.
  • 2017E PE: 11x.
  • 2018E PE: 10x.
• Performance Highlights:
  • Fast increase in valid contracts, up 70% YoY.
  • Improved cash flows, with net cash flow surge to CNY 1.76/share.
  • The company is expanding its overseas market with USD 8.24 billion in new contracts.
  • The company is exploring new markets and participating in the "One Belt One Road" strategy.
• Potential Risks:
  • Slower progress in foreign market projects than expected.
  • New orders may not meet expectations.

Company Analysis: Sansteel Minguang (002110 SZ)

• Rating: OUTPERFORM (Maintained)
• Key Financials:
  • FY 2015 Revenue: CNY 125.42 billion, down 30.41% YoY.
  • FY 2015 Net Profit: CNY -929 million, down 3006.3% YoY.
  • EPS: CNY -1.74.
  • OCFPS: CNY 0.77.
• Earnings Forecast:
  • 2016E EPS: CNY 0.02.
  • 2017E EPS: CNY 0.09.
  • 2018E EPS: CNY 0.24.
• Valuation:
  • 2016E PE: 330x.
  • 2017E PE: 71x.
  • 2018E PE: 26x.
• Performance Highlights:
  • The company is undergoing transformation and has high price elasticity.
  • The company reduced its scale in 2016 (5.3 million metric tons output, CNY 9.6 billion revenue).
  • The company is focusing on improving operating efficiency and adopting new technologies.
  • Invested 4.52% of total operating revenue in R&D in 2015.
• Potential Risks:
  • Continued decline in steel prices.
  • Management risk.

Financial Ratios and Key Data

China CAMC Engineering (002051 SZ)

• Market Cap (March 21, 2016): CNY 17,533.40 million.
• Shares Outstanding: 764.53 million.
• Net Assets: CNY 5,952.29 million.
• Total Assets: CNY 19,840.42 million.
• BVPS: CNY 7.70.
• EPS Forecast:
  • 2016E: CNY 1.66.
  • 2017E: CNY 2.01.
  • 2018E: CNY 2.33.
• Valuation Ratios:
  • 2016E PE: 14x.
  • 2017E PE: 11x.
  • 2018E PE: 10x.
  • 2016E PB: 1.7x.
• Growth:
  • 2016E Revenue Growth: 14.6% YoY.
  • 2016E Net Profit Growth: 15.8% YoY.
  • 2016E Net Profit Margin: 15.6%.

Sansteel Minguang (002110 SZ)

• Market Cap (March 30, 2016): CNY 3,310 million.
• Shares Outstanding: 535 million.
• Net Assets: CNY 1,649 million.
• Total Assets: CNY 7,124 million.
• BVPS: CNY 3.08.
• EPS Forecast:
  • 2016E: CNY 0.02.
  • 2017E: CNY 0.09.
  • 2018E: CNY 0.24.
• Valuation Ratios:
  • 2016E PE: 330x.
  • 2017E PE: 71x.
  • 2018E PE: 26x.
• Growth:
  • 2016E Revenue Growth: -20.0% YoY.
  • 2016E Net Profit Growth: -98.9% YoY.
  • 2016E Net Profit Margin: 0.1%.
• Performance:
  • Revenue from steel sales accounted for 87.37% of total revenue.
  • The company is investing in R&D and exploring new technologies.
  • It is aiming to improve efficiency and increase profits to CNY 52 million in 2016.

Analysts and Contact Information

• China CAMC Engineering:
  • Analyst: MENG Jie
  • Email: mengjie@xyzq.com.cn
  • Research ID: S0190513080002
• Sansteel Minguang:
  • Analysts: REN Zhiqiang, QIU Zuxue, YAN Peng
  • Email: renzhiqiang@xyzq.com.cn, qiuzuxue@xyzq.com.cn, yanpeng@xyzq.com.cn
  • Translator: LI Xing
  • Email: lixingyj@xyzq.com.cn