20180810-中泰国际证券-A-Share_Market__6页_532kb

Summary of Document Content

Core Content

The document provides an analysis of the A-Share Market for the beverage manufacturing and mechanical equipment sectors, along with detailed performance and valuation data for specific companies, including Kweichow Moutai, Inner Mongolia Yili Industrial Group, and Yunnan Aluminium Co., Ltd.. It also outlines the broader market trends and policy implications related to railway investment and economic conditions.

Main Viewpoints

Beverage Manufacturing Sector

• The Chinese spirits market has shown signs of adjustment, but quality spirits companies are valued well.
• Market concerns are mainly due to two factors: worry over China's long-term economy and decline in consumption.
• The economic aggregate affects all industries, but the barriers to entry, competitiveness, and distribution feedback are more critical for the spirits industry.
• Moutai and regional wines continue to perform strongly, with Moutai showing a price range of 1720–1780 yuan per batch and dealers optimistic about Mid-Autumn Festival sales.
• The valuation of famous brands has decreased to 20x2018E, suggesting potential for future growth.
• High-end liquor brands such as Moutai, Wuliangye Pu Five, and Guojiao 1573 are highlighted for their strategies to maintain price stability and improve margins.
• Moutai is expected to increase factory prices in the long term, and the gross profit margins of dealers are projected to reach a reasonable level.

Mechanical Equipment Sector

• Railway investment is expected to return to the 800 billion yuan level in 2018, with a strong acceleration in the second half of the year.
• The State Council executive meeting emphasized the need for more active fiscal policies to support domestic demand and infrastructure development.
• The Sichuan-Tibet Railway and similar projects in central and western regions are seen as important for reducing regional development imbalances.
• China Railway is expected to significantly increase procurement of freight trains and locomotives, with a total estimated annual increase of 17 billion yuan.
• CRRC and CRHIC are strongly recommended due to their strong position in the rail equipment market and positive growth outlook.

Yunnan Aluminium Co., Ltd.

• The company successfully turned losses into profits in the first half of 2018, driven by cost reduction, price increase, and production growth.
• Aluminum prices rose, and aluminum oxide costs decreased, contributing to improved profitability.
• Production capacity is expected to increase in the second half of 2018, with the addition of 0.35 million tonnes and 0.21 million tonnes of electrolytic aluminum capacity.
• The company's operating income and net profit are projected to grow significantly in 2019 and 2020.
• Yunnan Aluminium is noted as one of the most recommended stocks in the electrolytic aluminum industry.

Inner Mongolia Yili Industrial Group Co., Ltd.

• The company is considered a quality company with long-term growth potential.
• UHT milk products are driving growth through consumption upgrades and expanding sales in lower-tier cities and rural areas.
• Cold chain logistics and e-commerce channels are contributing to strong sales growth.
• Milk powder is expected to benefit from market vacancy dividends due to the implementation of infant formula registration rules.
• The Pro-kido family has a strong brand image and is expected to drive sales growth.
• The company's sales and net profit are growing at a healthy rate, with operating income and net profit projected to increase in the coming years.
• The P/E ratio is expected to decline as the company grows, indicating improved valuation.

Key Information

Market Performance

Sector Performance

Company Valuation and Performance (Beverage Manufacturing)

Company Valuation and Performance (Mechanical Equipment)

Company Valuation and Performance (Yunnan Aluminium)

Company Valuation and Performance (Inner Mongolia Yili Industrial Group)

Conclusion

The document highlights the resilience of the spirits and rail equipment sectors, with Moutai, CRRC, and Yunnan Aluminium as key performers. The Yili Group is also noted for its strong growth potential in the dairy industry. The overall market is mixed, with some sectors performing better than others. The valuation metrics suggest opportunities for growth in the beverage and mechanical equipment sectors, while Yunnan Aluminium is expected to see significant improvements in the coming years.