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报告摘要

Summary of Industrial Securities Co., Ltd. Report

Core Content

This report provides an overview of the Chinese stock and bond markets as of September 22, 2015, including key market indices, sector performance, daily headlines, company news, and investment strategies. It also includes detailed financial analysis of China United Travel (600358: SH), focusing on its M&A activities and business expansion in the sport industry.

Main Market Indices

SSE Composite Index: Closed at 3185.62, up 0.92% or 29.08 points.
SZSE Component Index: Closed at 10238.69, up 0.61% or 61.96 points.
CSI 300 Index: Closed at 3339.03, up 0.93% or 30.78 points.
ChiNext Index: Closed at 2078.72, down 0.02% or 0.34 points.
HSI (Hang Seng Index): Closed at 21796.58, up 0.18% or 39.65 points.
HSCEI (Hang Seng China Enterprises Index): Closed at 9835.39, down 0.65% or 63.98 points.
Aggregate Market Volume: CNY 672 billion.

Market Review

China stocks showed a steady uptrend on Tuesday, with increased trading volume.
Market sentiment improved due to President Xi's commitment to continue reforms and potential follow-up economic policies.
The Shanghai Composite Index touched the long-awaited 3200-level during the day.
Market turnover increased by 17.4% to 671.89 billion yuan.
Advancing issues outnumbered declining ones by a ratio of 1.84-to-1.

Sector Review

Non-banking financials were the biggest winners, with Guotai Junan Securities rising 5.98% and China Life Insurance climbing 2.89%.
Agricultural names continued their strong performance, with Heilongjiang Agriculture up 5.56%.
Merchant names performed well, led by Zhejiang China Commodities City Group closing at ceiling price.
Real estate developers advanced alongside rising housing prices, with Greenland Holdings up 1.47%.
Coal miners, power equipment suppliers, and transportation also fared well.
Tourism and IT companies saw profit-taking, with China International Travel Service and Aisino dipping 2.27% and 1.82%, respectively.

Daily Headlines

China and the U.K. are exploring a London-Shanghai stock trading link.
China's central bank will issue yuan-denominated short-term bonds in the U.K. for the first time.
China agreed to expand U.K. RQFII quota based on market demand.
The U.K. supports yuan inclusion in the SDR basket.
China plans to use a "negative list" for market access starting in 2018, with regional trials from 2015-2017.

Bond Market Investment Strategy

The PBOC has taken measures to curb speculation and reduce yuan depreciation expectations.
The bond market is expected to see a long-term bull run due to economic restructuring.
Investors should be cautious of underestimated credit risks and wait for mid- to short-term opportunities.
Key indicators for mid- to short-term opportunities include falling WMP yields, a faster-than-expected real estate market decline, and bursting credit bond bubbles.

Bond Market Review (September 14–18)

Market Liquidity: Improved with the PBOC reducing money injection.
Yield Curve: Flattened downward due to weak economic demand and strong allocation.
Government Bond Futures: Rose slightly, with TF1512 at 98.70 and T1512 at 96.40.
Credit Bonds: Yields trended down, with some credit risks underestimated.
Potential Default: "12 Erzhongji MTN1" bonds may default, indicating even SOEs are vulnerable to debt crisis.

Company News

ARTS Gp (603017.SH): Plans to raise up to 598 million yuan through a share sale.
Greenland (600606.SH): Cooperating with Mizuho on financing and asset management.
PowerChina (601669.SH): Signed a 1.46 billion yuan power plant pact with Saudi Electricity.

Investment Recommendations

Pork Industry: Prices dropped 5% to CNY 17.6/kg, but the uptrend is still valid. Companies are expected to see improved earnings in Q3 and maintain momentum.
Blue Chips: Guangdong Dahuanong Animal Health Products, Muyuan Foodstuff, Fujian Sunner Development.
Growth Stocks: Jiangxi Zhengbang Technology, Ningbo Tech-Bank, Shandong Yisheng Livestock & Poultry Breeding, Shandong Minhe Animal Husbandry.
China United Travel (600358: SH): Maintained "Buy" recommendation. The company is expanding into the sport industry through a CNY 1 billion M&A fund with Huashe Asset.

Financial Highlights of China United Travel

Earnings Forecast: EPS at 0.27 in 2015, 0.27 in 2016, and 0.33 in 2017.
M&A Fund: Jointly established with Huashe Asset to target sport marketing, advertising, event rights, and other related assets.
Projects: Includes promotion of the 13th Chinese Winter Games, sharing 40% of total earnings.
Potential Risks: Projects may not meet expectations.