20150729-兴业证券-A-Share_Daily_Express_16页_2mb

报告摘要

Summary of Industrial Securities Co., Ltd. Document

Core Content

The document provides an overview of the Chinese stock market performance on July 26, 2015, and highlights the ongoing reforms in state-owned enterprises (SOEs), particularly in Shanghai and Shandong. It also includes company-specific analysis of Wangsu Science and Technology (300017 SZ), detailing its financial performance, strategic initiatives, and investment recommendations. Additionally, it outlines key market indices, daily headlines, and latest company events.

Market Indices

SSE Composite Index: Closed at 3789.17, up 3.44%.
SZSE Component Index: Closed at 12823.07, up 4.11%.
CSI 300 Index: Closed at 3930.38, up 3.13%.
ChiNext Index: Closed at 2693.87, up 4.33%.
HSI (Hang Seng Index): Closed at 24619.45, up 0.47%.
HSCEI (Hang Seng China Enterprises Index): Closed at 11273.69, up 0.90%.
Aggregate Market Volume: CNY 1081 billion, down 17% from the previous day.

Market Review

The A-share market rebounded strongly on Wednesday, with small-cap stocks leading the gains.
The market's sharp rise was accompanied by a significant drop in trading volume, suggesting cautious investor sentiment.
Winners outnumbered losers by around 26.38 to 1, indicating a generally positive market mood.
The Chinese securities regulator has initiated a legal enforcement taskforce to investigate the recent selloff.

Sector Review

Aerospace & Military Equipment: Strong performers, with Avic Aircraft Co. (000768) and Shaanxi Aerospace Power Hi-Tech Co. (600343) rising over 10%.
Media: Beijing Enlight Media Co. (300251) and Zhejiang Huace Film & Tv Co. (300133) surged over 10%.
Tourism: Yunnan Tourism Co. (002059) and Huangshan Tourism Development Co. (600054) both gained over 10%.
Ports & Shipping: China Cosco Holdings Co. (601919) and Rizhao Port Co. (600017) led the sector with gains over 10%.
Electricity: Shanghai Electric Power Co. (600021) and Huadian Energy Co. (600726) rose over 9.98%.
Financials: Bank Of China (601988) and China Citic Bank Corp. (601998) saw declines of 0.86% and 1.10%, respectively.

Daily Headlines

China CPI is expected to rise moderately in the second half of the year, with a full-year increase of 2%.
New stock investors have dropped to a record low following the market downturn.
The IMF suggests that large current-account surplus countries like China should boost domestic demand.
China may start offering electric car production licenses in early 2016.
Solar power capacity increased by 7.73 million kW in the first half of 2015, reaching 35.78 million kW.
Credit card transactions in China reached 15.2 trillion yuan in 2014, up 16% year-on-year.

Latest Company Events

Air China (601111.SH): Plans to raise up to CNY 12 billion via private placement.
Bank of Nanjing (601009.SH): To issue up to USD 1.6 billion in preferred shares.
China Merchants Bank (600036.SH): Appointed Li Xiaopeng as vice chairman and plans to increase investment in CMB International.
Shenzhen Kaifa (000021.SZ): Affiliate plans to buy bridgeLux for USD 130 million.
TCL (000100.SZ): Major shareholder purchased 990,000 shares today.
Fushun Special Steel (600399.SH): Expected 1H net rise of 780% to 830%.
Shanghai Feilo Acoustics Co. Ltd.: Acquired assets through private placement from Beijing Shenan Investment Group.

SOE Reform Series Report

Strategic Direction

President Xi Jinping emphasized the importance of SOEs as the backbone of the economy and highlighted the principles of preserving and enhancing state-owned assets.
The CPC's leadership is central to the reform process, aiming to prevent loss of state assets.

Approaches to SOE Reform

Operating Platforms: Central and local governments are establishing platforms to manage state assets.
M&A: SOEs are merging to enhance competitiveness and leverage resources.
Diversification of Ownership: SOEs are encouraged to introduce strategic investors and go public.
Employee Stock Ownership Plans (ESOPs): Pilots are being launched to motivate employees and retain talent.

SOE Reform in Shanghai

The reform campaign started on June 11, 2015, after two years of preparation.
SOEs in similar industries are being merged to form globally competitive groups.
Assets are being injected into listed subsidiaries to expand operations and build international brands.
Back-door listings are used to transfer state assets to public platforms.
State-owned assets are being gradually transferred to Shanghai International Group and Shanghai Guosheng Group.

SOE Reform in Shandong

The reform plan was published at the start of 2015.
Part of the state-owned capital is being relocated to the social security fund.
M&A is progressing alongside other reforms.
ESOPs are being encouraged, with a clear timetable for implementation.
Luxin Group and Shandong State-owned Assets Investment Holding Co. are key pilot companies.

Investment Strategy

M&A is a key driver of growth and value creation for SOEs.
Companies involved in SOE reform are expected to maintain upward trends without being affected by market fluctuations.
Investors are advised to focus on SOEs with strong overseas operations and those involved in M&A or asset injection.
The implementation of ESOPs is seen as a positive development for long-term growth and employee motivation.

Wangsu Science and Technology (300017 SZ)

Investment Highlights

Financial Performance: Revenue reached CNY 1.24 billion, operating profit CNY 345 million, and net profit CNY 322 million in 15H1.
Growth Rates: Operating profit increased by 100.25% YoY, net profit by 66.7% YoY.
ESOP: Draft plan to offer 14.59 million stock options to 445 employees, with exercise price at CNY 57.9 per share.
Profit Margins: Gross margin improved to 45%, and net profit margin rose to 26.2%.
R&D Investment: Increased to CNY 109 million, up 77% YoY, with a 9% proportion of operating revenue.
Business Expansion: Focused on private cloud development, especially the Community Cloud platform, and expanding into the overseas CDN market.
Investment Recommendations: Buy (Maintained), with EPS forecasts of CNY 1.10 in 2015, CNY 1.64 in 2016, and CNY 2.46 in 2017.

Key Financial Indicators (Wangsu Science and Technology)

FY	2014	2015E	2016E	2017E
Revenue (Mn/CNY)	1911	2924	4386	6579
YoY (%)	58.6%	53.0%	50.0%	50.0%
Net Profit (Mn/CNY)	484	766	1147	1716
YoY (%)	104.0%	58.4%	49.7%	49.6%
EPS (CNY)	0.69	1.10	1.64	2.46

Potential Risks

Slower-than-expected progress in cloud computing business.
Intensifying competition in the CDN market.

Appendix: Balance Sheet and Cash Flow

Balance Sheet (Mn/CNY)

Item	2014	2015E	2016E	2017E
Current Assets	1578	2335	3707	5670
Cash and Cash Equivalent	762	1723	2814	4355
Account Receivables	297	425	638	957
Inventory	17	80	118	178
Total Assets	1978	2660	3950	5841
Total Liabilities	342	306	448	622
Total Shareholders' Equity	1636	2355	3502	5219