20180629-广发证券_香港_-Dim_Sum_Express_5页_451kb

报告摘要

Dim Sum Express Summary (Jun 29, 2018)

Core Content Overview

This document provides an equity research summary for the Chinese A-Share market and related sectors, focusing on the Power Equipment and Pharmaceutical industries in the second half of 2018. It includes performance data of key indices, analysis of ADRs, market outlook, investment recommendations, and risk factors.

Key Index Performance (1D, 1M, YTD)

Market	1D (%)	1M (%)	YTD (%)
HSI	0.5	-6.5	-4.8
HSCEI	-0.1	-9.1	-7.2
MXCN	0.2	-7.5	-4.3
SHSZ300	-1.0	-10.0	-15.1
SHCOMP	-0.9	-10.7	-15.7
SZCOMP	-1.2	-12.9	-18.0
INDU	0.4	-0.6	-2.0
SPX	0.6	1.0	1.6
CCMP	0.8	1.4	8.7
UKX	-0.1	-0.2	-0.9
NYK	0.3	-0.1	-1.9

Main Points of the Power Equipment Sector

Market Conditions

Business conditions in the industrial control industry have improved, with revenue growth exceeding 20% for major players in 1Q18.
The PMI (Purchasing Managers' Index) has remained above 50% in 2018, indicating strong downstream demand.
Industrial automation and smart manufacturing are expected to drive demand improvements.

Growth Drivers

Industry upgrade, aging population, and higher wage costs are key growth factors.
Supply-side reform and manufacturing industry upgrades are expected to promote recovery in the project-based market.
Consumption and emerging industries will support OEM market growth.
Technology upgrades will further stimulate demand.

New Energy Consumption

New energy consumption is a key driver for power equipment investment.
UHV (Ultra-High Voltage) and VSC-HVDC are expected to see steady demand.
Grid control facilities, intelligent power grids, and energy storage will be important areas for development.

Investment Recommendations

Inovance Technology (300124 CH), Xinje Electric (603416 CH), Hongfa Technology (600885 CH), Chint Electronics (601877 CH), Liangxin Electrical (002706 CH), and Megmeet Electrical (002851 CH) are recommended.
NARI Technology (600406 CH) is highlighted as a leading company in new energy consumption.
Wiscom System (002090 CH) is recommended for its leadership in new distribution networks and comprehensive energy services.

Risks

Manufacturing industry recovery may fall short of expectations.
Import substitution may be lower than anticipated.
Grid investment could decline.
Electricity market reforms may not meet expectations.

Main Points of the Pharmaceutical Sector

Innovation as Core Strategy

The China Food and Drug Administration (CFDA) has reformed the new drug approval system, significantly improving efficiency and shortening time to market for innovative products.
Patent extension and data protection are expected to increase returns from innovative drugs.
Quality and efficacy consistency evaluation is being promoted, with four batches of 41 varieties already approved.

Medical Insurance Impact

Medical insurance expenditure has reached a post-2013 high and is expected to grow in line with income growth.
The negotiation of innovative drugs for inclusion in the insurance list has led to rapid growth for included products.
Fair use of medical insurance is expected to drive demand for innovative drugs and reduce use of auxiliary and bulk drugs.

Consumption Trends

High-end consumption is rising due to increased wealth in third and fourth-tier cities.
New vaccines (e.g., EV71, HPV4, pneumonia13-valent vaccines, third-generation HDCV, HPV9, and quadrivalent influenza vaccine) are expected to see strong sales.
Specialized medical services (e.g., dentistry, ophthalmology, and health examinations) are growing rapidly.

Investment Highlights

Innovation: Companies with strong R&D capabilities like Hengrui Medicine (600276 CH), Fosun Pharma (2196 HK), HEC Technology (600673 CH), and Kelun Pharmaceutical (002422 CH) are highlighted.
Innovation Service Chain: WuXi AppTec (603259 CH) and Tigermed Consulting (300347 CH) are recommended.
Vaccine Sector: The sector is expected to enter an upcycle with new vaccines launched. Recommended companies include Kangtai Biological Products (300601 CH), Zhifei Biological Products (300122 CH), Walvax Biotechnology (300142 CH), Changsheng Bio-Technology (002680 CH), and Hualan Biological Engineering (002007 CH).
High-End Consumption: Companies like Changchun High & New Technology Industries (000661 CH), Topchoice Medical Investment (600763 CH), Aier Eye Hospital Group (300015 CH), and Meinian Onehealth Healthcare (002044 CH) are recommended.
Medical Insurance Growth: Hengrui Medicine (600276 CH), Tasy Pharmaceutical Group (600535 CH), and Kanghong Pharmaceutical Group (002773 CH) are suggested.
Earnings Visibility: Companies like Huahai Pharmaceutical (600521 CH), Salubris Pharmaceuticals (002294 CH), Realcan Pharmaceutical (002589 CH), and Shanghai Pharmaceuticals (601607 CH) are recommended for quality and efficacy consistency evaluation.

Risks

Price cuts could be larger than expected.
Local drug procurement bidding policies may be stricter than anticipated.
Clinical trials data reviews could become more rigorous.
Examinations of medicines and medical devices may be more stringent.

Rating Definitions

Company Ratings

Rating	Description
Buy	Expected to outperform benchmark by more than 15%
Accumulate	Expected to outperform benchmark by more than 5% but not more than 15%
Hold	Expected relative performance ranges between -5% and 5%
Underperform	Expected to underperform benchmark by more than 5%

Sector Ratings

Rating	Description
Positive	Sector expected to outperform benchmark by more than 10%
Neutral	Expected sector relative performance ranges between -10% and 10%
Cautious	Sector expected to underperform benchmark by more than 10%

Analyst Certification & Disclosure

The research analyst certifies that all views expressed accurately reflect their personal views on the companies and securities discussed.
No part of the analyst's remuneration is directly or indirectly linked to specific recommendations.
GF Securities (Hong Kong) and its affiliates do not hold shares in the mentioned securities or have investment banking relationships with the companies discussed.
The report is for informational purposes only and does not constitute an offer to buy or sell securities.
The report may contain other communications from GF Securities (Hong Kong) that are inconsistent with this report.

Disclaimer

The report is prepared by GF Securities (Hong Kong).
It is not intended as a recommendation for investment and should not replace professional advice.
The information may be subject to change and is not guaranteed to be accurate or complete.
GF Securities (Hong Kong) accepts no liability for losses arising from the use of this report.

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