20160531-兴业证券-A-Share_Daily_Express_13页_878kb

Summary of Industrial Securities Co., Ltd. Report

Core Content

The report provides an overview of the Chinese stock market performance, sector analysis, company news, and investment strategies for fixed income products, particularly focusing on the impact of financial deleveraging. It also includes detailed financial data for Beijing Hanbang Technology (300449: SZ) and other relevant market indicators.

Market Indices

• SSE Composite: Closed at 2916.62, up 3.34%.
• SZSE Component: Closed at 10159.93, up 4.00%.
• ChiNext: Closed at 2159.80, up 4.92%.
• HSI: Closed at 20815.09, up 0.90%.
• HSCEI: Closed at 8704.90, up 0.93%.
• Aggregate Market Volume: CNY 632 billion, almost double from the previous session.

Market Review

• China stocks surged on Tuesday due to rumors of A-shares' inclusion in MSCI.
• The rally was triggered by Goldman Sachs lifting the odds of inclusion to 70%.
• Mid and small-cap stocks outperformed.
• Winners outnumbered losers by 2544 to 9.

Sector Review

• Brokerage Firms: Led the market with increased exposure to global markets.
• IT Names: Showed strong performance due to improved investor sentiment.
• Media Shares: Rose with East Money Information Co. and Beijing Enlight Media Co. closing 10.01% and 5.06% higher.
• Non-ferrous Metal Names: Surged due to recurring speculations.
• Merchant Names: Zhejiang China Commodities City Group Co. and Liaoning Cheng Da Co. gained 4.34% and 5.17%, respectively.

Daily Headlines

• President Xi Jinping emphasized innovation and scientific progress to enhance China's competitiveness.
• China aims to increase the supply of high-end consumer goods.
• Local governments are urged to ensure moderate subsidies for public-private partnership projects.
• PBOC Deputy Governor Chen Yulu suggested promoting equity financing and lowering leverage ratios.

Latest Company News

• Chalco (601600.SH): Transferring environmental protection assets.
• Gezhouba (600068.SH): New outperform rating from SWS Research.
• Guotai Junan Securities: Fined HK$1.3 million for client identity rules.
• Hainan Airlines: Taking a stake in Virgin Australia.
• Merchants Energy (601872.SH): Planning $381.9 million investment.
• PetroChina (601857.SH): Not planning to sign binding deals with Rosneft.
• Sanbian Sci-Tech (002112.SZ): Buying assets worth 2.8 billion yuan.
• Sinomach Auto: Strategic cooperation agreement with Alibaba Auto.
• Xinjiang Yilite (600197.SH): New buy recommendation from Haitong.

Rates Product Investment Strategy

• Deleveraging Trend: Expected to continue with an unstable pace.
• Investor Focus: On supply-side reform, credit tightening, credit risk, and financial regulation.
• New Profit-making Patterns: High return financial assets are becoming harder to find; credit tightening may lead to monetary loosening and lower long-term interest rates.
• Asset Pricing: Importance of stable cash flow and high-quality credit bonds.
• Market Outlook: Ideal opportunities may emerge after a market slump; investors should lower return expectations.

Bond Market Weekly Review (May 23 - May 27)

• Inter-bank Liquidity: Fluctuated but remained accommodative.
• Repo Rates: Declined for most terms, but 7-day repo rates increased.
• Shibor and IRS Rates: Increased, indicating liquidity pressure.
• Primary Market: New bond issuance and net supply decreased.
• Secondary Market: Yields increased slightly for short terms, while high-rating medium-terms outperformed.

Beijing Hanbang Technology (300449: SZ)

• Outperform Rating: Maintained.
• Collaboration: Jointly founded Beijing Fei Shi Technology Co., Ltd. with Beijing Wen Tong Visual Recognition Technology Research Center.
• Registered Capital: CNY 40 million; Beijing Hanbang Technology and its executives contributed CNY 28 million and hold 70% stakes.
• Earnings Forecast:
  • EPS: CNY 0.39 (2016), CNY 0.47 (2017), CNY 0.55 (2018).
• Key Financial Indicators:
  • Revenue: 479 Mn (2015), 553 Mn (2016E), 630 Mn (2017E), 706 Mn (2018E).
  • Net Profit: 45 Mn (2015), 56 Mn (2016E), 66 Mn (2017E), 78 Mn (2018E).
  • Gross Margin: 35.2% (2015), 35.7% (2016E), 35.4% (2017E), 35.8% (2018E).
  • Net Profit Margin: 9.5% (2015), 10.0% (2016E), 10.5% (2017E), 11.1% (2018E).
  • ROE: 7.2% (2015), 8.1% (2016E), 8.8% (2017E), 9.4% (2018E).
• Financial Ratios:
  • PE Ratio: 139.22 (2015), 113.89 (2016E), 96.05 (2017E), 80.94 (2018E).
  • PB Ratio: 9.96 (2015), 9.25 (2016E), 8.44 (2017E), 7.64 (2018E).

Analysts and Translators

• Analysts:
  • Tang Yue, Ph.D.
  • Huang Weiping
  • Wang Han, Ph.D.
  • Lu Yanjin
  • Jia Xiaojun
  • Wang Yijun, Ph.D.
  • Zuo Dayong, Ph.D.
  • Li Huiquan
  • Chi Guangsheng
  • Luo Ting
• Translators:
  • Li Xing

Key Risks

• Intensified competition in the market.
• Slower-than-expected R&D progress.

Summary of Key Financial Data

• Market Cap (CNY/Mn): 6327.65 (2016E).
• EPS (CNY): 0.39 (2016E), 0.47 (2017E), 0.55 (2018E).
• OCFPS (CNY): 0.59 (2016E), 0.13 (2017E), 0.29 (2018E).
• NAVPS (CNY): 4.84 (2016E), 5.30 (2017E), 5.86 (2018E).

Conclusion

The report highlights a positive trend in the Chinese stock market driven by potential MSCI inclusion, with significant gains across various indices and sectors. It also provides investment strategies for fixed income products under the context of financial deleveraging, emphasizing the need for stable cash flow and high-quality credit bonds. Detailed financial data and forecasts for Beijing Hanbang Technology show a promising outlook with continued growth and strong EPS projections. However, potential risks such as competition and R&D delays are noted.