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Summary of Industrial Securities Co., Ltd. Document

Core Content

The document provides an overview of the Chinese stock market performance on a specific day, along with sector analysis, company-specific news, and financial forecasts for Henan Rebecca Hair Products (600439: SH). It also includes macroeconomic insights on global asset class price movements and the company's financial health.

Market Overview

• Market Indices:

  • SSE Composite Index: Closed at 3066.64, up 1.42%.
  • SZSE Component Index: Closed at 10684.92, up 1.44%.
  • CSI 300 Index: Closed at 3261.38, up 1.33%.
  • ChiNext Index: Closed at 2294.02, up 1.33%.
  • HSI (Hang Seng Index): Closed at 21158.71, up 3.19%.
  • HSCEI (Hang Seng China Enterprises Index): Closed at 9191.49, up 3.95%.
  • Aggregate Market Volume: CNY 824 billion, up 40% from the previous day.

• Market Trends:

  • The market showed upward momentum, with more buyers returning to the market.
  • Winners outnumbered losers by a ratio of 2157-to-329.

Sector Review

• Cyclical Industries: Led the market with strong performance.

  • Tongling Nonferrous Metals Group (000630): Rose 10.07%.
  • Yanzhou Coal Mining Company (600188): Rose 8.15%.
  • Inner Mongolia Baotou Steel Union (600010): Rose 5.23%.

• Brokerage Firms:

  • GF Securities (000776): Rose 4.24%.
  • Huatai Securities (601688): Rose 3.59%.

• Oil and Gas Firms:

  • China Petroleum & Chemical Corporation (600028): Rose 2.83%.
  • Offshore Oil Engineering (600583): Rose 2.88%.

• Machinery Sector:

  • Siasun Robot & Automation (300024): Rose 2.76%.
  • Sany Heavy Industry (600031): Rose 2.62%.

Daily Headlines

• China's Exports: Rose 18.7% year-on-year in March, the first increase in nine months.
• Imports: Fell 10.1% year-on-year in March, compared to a 13.8% drop in February.
• Trade Surplus: Widened to $34.95 billion, up from $32.59 billion.
• QFII and RQFII Alignment: The PBOC, SAFE, and CSRC are working to align the Qualified Foreign Institutional Investor and Renminbi Qualified Foreign Institutional Investor programs.
• FDI in China: March FDI rose 7.8% year-on-year in yuan terms.
• P2P Monitoring: Shenzhen tightened regulations on P2P lenders.
• US-China Investment: Chinese direct investment in the US reached a record high, creating the highest number of jobs.
• China's Oil Demand: Projected to grow 2.6% in 2016-2020, down from 3.3% in 2011-2015.

Company News

• BYD (002594.SZ): Named supplier of a 1.81 billion yuan Shenzhen bus contract.
• Guotai Junan Securities (601211.SH): Denied involvement in P2P lending.
• ICBC (601398.SH): Signed a mandate letter on yuan trading with Nigeria.

Henan Rebecca Hair Products (600439: SH)

Financial Performance

• 2015 Revenue: CNY 1.95 billion, up 0.67% YoY.
• 2015 Net Profit: CNY 141 million, down 9.56% YoY.
• EPS: CNY 0.15.
• Dividend Policy: CNY 0.5 per ten shares.

Financial Forecast

• 2016 Revenue: CNY 2146 million, up 10.3% YoY.
• 2016 Net Profit: CNY 163 million, up 15.6% YoY.
• 2017 Revenue: CNY 2406 million, up 12.1% YoY.
• 2017 Net Profit: CNY 194 million, up 18.5% YoY.
• 2018 Revenue: CNY 2705 million, up 12.4% YoY.
• 2018 Net Profit: CNY 243 million, up 25.7% YoY.

EPS Forecast

• 2016: CNY 0.17 (31x PE)
• 2017: CNY 0.21 (26x PE)

Key Financial Ratios (2015-2017)

• Gross Margin: 29.5% (2015), 30.1% (2016), 30.6% (2017).
• Net Profit Margin: 7.6% (2016), 8.0% (2017).
• ROE: 6.5% (2016), 8.4% (2017).

Sales and Market Trends

• North American Market: Accounted for over 40% of revenue, saw a 18% YoY increase.
• African Market: Accounted for 30% of revenue, experienced an 8.4% YoY decline.
• European Market: Accounted for 7% of revenue, remained sluggish.
• Product Mix: The company increased medium-level wig supply and reduced high-end product destocking.
• Brand Strategy: Hired FAN Bingbing as image spokesperson, boosting brand awareness.
• Sales Channel Development: Actively expanding both online and offline sales channels.
• Online Sales: Reached CNY 3.03 million in 2015, currently contributing 1.4% of revenue.

Strategic Moves

• "Dual Brand, Dual Channel" and "Compartment" Strategies: Implemented to improve market coverage and consumer engagement.
• Repositioning of Sleek Brand: Average price reduced from CNY 1,000-2,000 to CNY 500-800.
• Foreign Exchange Gains: Expected to provide strong earnings boost due to yuan depreciation.
• Inventory and Raw Materials: Secured low-cost raw materials, increasing gross margin by 4.13 percentage points YoY.

Risks

• Raw Material Price Increases: Could impact profitability.
• Slower-than-Expected Business Development: May affect growth projections.

Analysts and Translators

• Analysts:
  • WANG Han, LUO Yamei, WANG Wanting, JIA Xiaojun, WANG Yijun, WANG Lianqing, DUAN Chao, YU Kun
• Translator:
  • LI Xing

Key Financial Statements

Balance Sheet (Mn/CNY)

Cash Flow Statement (Mn/CNY)

Income Statement (Mn/CNY)

Revenue Breakdown (Mn/CNY)

Conclusion

The document highlights the positive momentum in the Chinese stock market, driven by improving economic data and policy support. Henan Rebecca Hair Products is performing well, with a focus on sales channel development and product repositioning. The company is expected to benefit from foreign exchange gains and a recovering wig market. Analysts maintain a "BUY" rating due to the company's strong financial position and strategic initiatives. However, potential risks such as raw material price increases and slower business growth remain.