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Summary of Industrial Securities Co., Ltd. Report

Core Content

Industrial Securities Co., Ltd. provides a comprehensive analysis of the Chinese stock market and specific company insights, particularly focusing on the performance of key indices and the financial health of two listed companies: Jiangsu Shanghai Composite Materials (300196: SZ) and Zhejiang Hailide New Material (002206: SZ). The report highlights the overall market sentiment, sectoral performance, and future outlook for the Internet finance industry, alongside detailed financial data and investment recommendations.

Market Overview

• Indices Performance:

  • SSE Composite Index: Closed at 4123.92, up 2.43%.
  • SZSE Component Index: Closed at 13754.53, up 2.52%.
  • CSI 300 Index: Closed at 4250.81, up 2.25%.
  • ChiNext Index: Closed at 2967.95, up 2.44%.
  • HSI: Closed at 25398.85, up 0.46%.
  • HSCEI: Closed at 11734.27, up 0.85%.
  • Total Market Turnover: CNY 1396.6 billion, up 8.9%.
  • Market Sentiment: Positive, with more than 300 stocks hitting the upper limit and only 52 declining.

• Market Recovery: The market continues to recover from a downturn that began in June, supported by positive news and regulatory clarity.

• Sectoral Performance:

  • Shipping & Airline: Strong performers, with China COSCO Holdings (601919) up 10.00% and China Southern Airlines (600029) up 8.11%.
  • Textile & Clothing: Jihua Group (601718) up 10.00%.
  • Media: Shanghai Oriental Pearl Media (600637) capped at daily limit.
  • Building Materials: China Jushi (600176) up 3.69%.
  • Non-ferrous Metals: Aluminum Corporation of China (601600) up 4.44%.
  • Real Estate: Shanghai Jinfeng (600606) and China Vanke (000002) up 4.21% and 3.13%, respectively.
  • Banks: Generally lagged, with Bank of China (601988) rising only 0.40%.

Internet Finance Industry Insights

• Guidelines Released: The People's Bank of China, Ministry of Industry and Information Technology, and seven other government authorities jointly issued guidelines to promote sustainable development of the Internet finance industry.
• Key Objectives:
  • Encourage financial innovations.
  • Facilitate development of Internet finance business.
  • Clarify regulatory responsibilities.
  • Regulate market order.
• Impact on Industry:
  • The guidelines are seen as a positive step and meet market expectations.
  • The industry will see more disciplined growth, with regulatory support expected to benefit industry leaders.
• Recommended Companies:
  • East Money Information (300059: SZ)
  • Hithink RoyalFlush Information Network (300033: SZ)
  • Hundsun Technologies (600570: SH)
  • Shenzhen Kingdom Technology (600446: SH)
  • Aisino Corporation (600271: SH)
  • Shanghai 2345 Network Holding Group (002195: SZ)

Company Analysis: Jiangsu Shanghai Composite Materials (300196: SZ)

• Company Profile:

  • Develops, produces, and sells glass fiber products and composites.
  • Main products: Chopped strand mats, wet mats, and composite separators.

• Earnings and Growth:

  • Interim Earnings Estimate: Net profit between CNY 88 million and CNY 102 million, up 39.04% to 61.16% YoY.
  • EPS Forecast: CNY 1.08 in 2015, CNY 1.40 in 2016, CNY 1.82 in 2017.
  • Valuation: Implies 33×15E PE, 25×16E PE, and 19×17E PE.

• Key Financial Indicators:

  • Revenue Growth: Expected to grow by 59.0% in 2015, 23.4% in 2016, and 24.1% in 2017.
  • Net Profit Growth: 40.6% in 2015, 30.2% in 2016, and 30.2% in 2017.
  • ROE: Expected to rise from 13.4% in 2014 to 18.7% in 2017.
  • Gross Margin: Expected to increase from 27.0% to 28.0%.
  • Net Profit Margin: Expected to increase from 13.2% to 12.9%.

• Investment Recommendations:

  • Rating: Maintained as BUY.
  • Reasons: Glass fiber industry rebound, increased marketing efforts for new products, and synergy from the acquisition of Tianma Group.

• Potential Risks:

  • Weaker-than-expected rebound in the glass fiber market.
  • Failure to achieve expected results from new product marketing.

Company Analysis: Zhejiang Hailide New Material (002206: SZ)

• Company Profile:

  • Manufactures and sells industrial polyester yarns, plastic materials, and tire cord fabrics.
  • Products include polyester filament yarns, PET chips, and a variety of plastic and textile materials.
  • Exports to over 80 countries and regions.

• Earnings and Growth:

  • Revenue: CNY 228.6 billion in 2014.
  • Net Profit: CNY 144 million in 2014.
  • EPS Forecast: CNY 0.54 in 2015, CNY 0.71 in 2016, CNY 0.94 in 2017.
  • Valuation: Implies 19.4×15E PE, 14.8×16E PE, and 11.2×17E PE.

• Key Financial Indicators:

  • Revenue Growth: 15.8% in 2015, 21.8% in 2016, and 25.3% in 2017.
  • Net Profit Growth: 69.3% in 2015, 31.5% in 2016, and 31.4% in 2017.
  • Gross Margin: Increased from 19.9% to 22.0%.
  • Net Profit Margin: Increased from 6.3% to 10.4%.
  • ROE: Expected to rise from 7.0% in 2014 to 15.4% in 2017.

• Investment Recommendations:

  • Rating: Revised up to BUY.
  • Reasons: Improved product mix, rising profit margins, and strong growth in auto-related products.

• Product Strategy:

  • Restructured product mix to focus on high-margin polyester filament and new plastic products.
  • Successfully expanded into auto-related products, such as airbag and seat belt yarns, which are superior to Japanese and Korean alternatives.

Key Financial Data (Jiangsu Shanghai Composite Materials)

Key Financial Data (Zhejiang Hailide New Material)

Revenue Breakdown (Zhejiang Hailide New Material)

Analysts and Contact Information

• YUAN Yuming: yuanyuming@xyzq.com.cn, S0190515040001
• JIANG Jialin: jiangjialin@xyzq.com.cn, S0190515050002
• YANG Mo: yangmo@xyzq.com.cn
• QIAN Lufeng: qianlf@xyzq.com.cn
• MA Sijie: -
• PAN Mengchen: panmengchen@xyzq.com.cn
• LI Xing: lixingyj@xyzq.com.cn