20160812-兴业证券-A-Share_Daily_Express_14页_1mb

Summary of Industrial Securities Co., Ltd. Report

Core Content

Industrial Securities Co., Ltd. provides a comprehensive market review and analysis of the Chinese stock market and specific sectors on August 11, 2016. The report includes market indices, sector performance, company news, research highlights, and financial data for two listed companies: Suzhou Victory Precision Manufacture (002426.SZ) and Shenzhen Inovance Technology Co., Ltd. (300124.SZ).

Market Indices

• SSE Composite: Closed at 3050.67, up 1.60%
• SZSE Component: Closed at 10528.10, up 1.32%
• CSI 300: Closed at 3294.23, up 1.88%
• ChiNext: Closed at 2123.84, up 0.97%
• HSI: Closed at 22766.91, up 0.83%
• HSCEI: Closed at 9554.85, up 1.40%
• Total Market Volume: CNY 427 billion, down 5% from Thursday

Market Review

• The A-share market showed a strong rebound on Friday, driven by property developers, particularly China Vanke, which saw intensified competition and investor speculation.
• Winners outnumbered losers by 2421-to-313, indicating a positive market sentiment.
• The market saw a decrease in trading volume, suggesting a more cautious investor behavior.

Sector Review

Winners:

• Property Developers: Strong performance due to speculation and competition, e.g., China Vanke (000002) +10.00%, Greenland Holdings (600606) +9.97%
• Banks: Favoring low-valuation blue chips, e.g., Bank Of Jiangsu (600919) +9.20%, Bank Of Ningbo (002142) +4.65%
• Brokerage and Insurance: Outperformed the market, e.g., Guosen Securities (002736) +4.48%, New China Life Insurance (601336) +4.34%
• Construction: Regained momentum, e.g., China State Construction Engineering (601668) +3.17%, China Nuclear Engineering (601611) +3.74%
• Retailers: Experienced capital inflows, e.g., Yinchuan Xinhua Commercial (600785) +6.80%, Wuhan Zhongnan Commercial (000785) +6.12%

Losers:

• Liquor Makers: Underperformed, e.g., Tonghua Grape Wine (600365) -2.05%, Lu Zhou Lao Jiao (000568) -0.86%

Daily Headlines

• China experienced net capital outflows of CNY 39 billion in July, the largest in six months, though less than during 2015 and early 2016.
• The central bank emphasized the role of markets in determining the exchange rate while maintaining currency stability.
• Yuanta Securities and ICBC International Asset Management received licenses as Qualified Foreign Institutional Investors.
• Nanjing and Suzhou introduced measures to curb property price surges.
• NDRC urged coal producers to close mines to meet overcapacity reduction targets.
• Alibaba is expanding into media and cloud services, with ICBC clarifying it is not involved in bill financing.
• Suzhou Victory Precision Manufacture received approval for a private placement to raise CNY 4.3 billion for growth initiatives.

Latest Company News

• Hisense Electric (600060.SH): 1H net profit of CNY 741 million, up from CNY 625.1 million in the same period last year.
• Jiangsu Kanion (600557.SH): 1H net profit of CNY 191 million, slightly up from CNY 190 million.
• Orient Landscape (002310.SZ): 1H net profit of CNY 297.3 million, up from CNY 157.3 million.
• Ping An Bank (000001.SZ): 1H net profit of CNY 12.3 billion, up from CNY 11.6 billion.

Research Highlights

Suzhou Victory Precision Manufacture (002426.SZ)

• Private Placement Approved: The company raised up to CNY 4.3 billion for capacity expansion, intelligent manufacturing platform, and working capital.
• Financial Performance:
  • Revenue surged 403.52% YoY to CNY 7.2 billion.
  • Net profit increased 327.66% YoY to CNY 411 million.
• EPS Forecast: CNY 0.34 in 2016, CNY 0.51 in 2017, CNY 0.70 in 2018.
• P/E Ratios: 29.9x, 20.3x, 14.7x.
• Key Financial Indicators:
  • Revenue growth: 131.2% in 2016, 26.0% in 2017, 20.8% in 2018.
  • Net profit growth: 315.6% in 2016, 47.2% in 2017, 37.9% in 2018.
  • ROE: 17.3% in 2016, 20.7% in 2017, 24.2% in 2018.
• Potential Risk: Downstream demand decline or weaker-than-expected policy support.

Shenzhen Inovance Technology Co., Ltd. (300124.SZ)

• Exciting Performance: Intelligent device sector growth expected to continue in H216.
• Financial Performance:
  • Revenue grew 31.8% YoY to CNY 1.5 billion.
  • Net profit increased 17.7% YoY to CNY 389 million.
• EPS Forecast: CNY 0.63 in 2016, CNY 0.79 in 2017, CNY 0.98 in 2018.
• P/E Ratios: 29x, 24x, 19x.
• Key Financial Indicators:
  • Revenue growth: 35.6% in 2016, 26.4% in 2017, 22.9% in 2018.
  • Net profit growth: 24.6% in 2016, 25.2% in 2017, 23.4% in 2018.
  • Gross margin: 47.9% in 2016, 47.4% in 2017, 47.0% in 2018.
  • Net profit margin: 26.8% in 2016, 26.6% in 2017, 26.7% in 2018.
  • ROE: 21.2% in 2016, 21.0% in 2017, 20.5% in 2018.
• Potential Risk: Macroeconomic downturn or slower-than-expected growth in new energy vehicles.

Key Financial Data

Suzhou Victory Precision Manufacture

• Closing Price: CNY 10.29
• Total Shares (Mn): 2906.12
• Shares Outstanding (Mn): 1589.83
• Market Cap (CNY/Mn): 29904.01
• Market Float (CNY/Mn): 16359.39
• Net Assets (CNY/Mn): 5214.58
• Total Assets (CNY/Mn): 12158.13
• BVPS: 1.79

Shenzhen Inovance Technology

• Closing Price: CNY 17.87
• Total Shares (Mn): 1604.04
• Shares Outstanding (Mn): 1263.35
• Market Cap (CNY/Mn): 28664.19
• Market Float (CNY/Mn): 22576.06
• Net Assets (CNY/Mn): 4083.65
• Total Assets (CNY/Mn): 5823.52
• BVPS: 2.55

Analyst and Assistant Analyst

• Analyst: LIU Liang, LU Hengjun, SU CHEN
• Assistant Analyst: LIAO Weiji, HUANG Haoyang, LU Yang, ZENG Tao

Conclusion

The report highlights a positive market trend with strong performance in property developers, banks, and technology sectors. Suzhou Victory Precision Manufacture and Shenzhen Inovance Technology are both seen as strong performers with significant growth potential, driven by strategic M&A and industry expansion. The financial indicators and EPS forecasts support a "Buy" rating for both companies, with caution advised for potential macroeconomic risks.