20180829-中国银河国际证券-China_Galaxy_A-Share_Morning_Comments__晨会纪要__3页_350kb

China Galaxy A-Share Morning Comments Summary (August 29, 2018)

Core Content

The China A-share market experienced mixed performance on August 28, 2018, with the SHCOMP showing slight volatility but overall maintaining a range-bound trend. The market was influenced by sector-specific movements, particularly in non-ferrous metals, financials, and 5G-related stocks, as well as macroeconomic factors such as the PBOC's policy adjustments.

Main Market Observations

• Market Performance:

  • The A-share market opened slightly higher but lost momentum, with the SHCOMP showing a small rebound in the afternoon.
  • The ChiNext index declined, reflecting weaker sentiment.
  • Overall, the market saw reduced trading volume due to increasing risk aversion.

• Sectoral Highlights:

  • Non-ferrous Metals: Prices rose by about 18% since July due to tighter domestic supply and rising overseas prices. The uptrend is expected to continue, especially with the upcoming heating period and production suspension.
  • Coal Sector: Prices increased due to expectations of lower coal imports, leading to significant gains in coal-related stocks.
  • 5G-related Stocks: Underperformed, with only oversold stocks showing strong gains.
  • Financials: Financial and banking stocks declined, dragging down the ChiNext index.

• Indices Overview:

  • SHCOMP closed at 2,778.0, down 0.10%.
  • SZSE Comp closed at 8,733.7, up 0.06%.
  • CSI 300 closed at 3,400.2, down 0.19%.
  • ChiNext closed at 1,493.1, down 0.02%.
  • HSI closed at 28,351.6, up 0.28%.
  • HSCEI closed at 11,097.6, up 0.44%.

Key Investment Recommendations

• Non-ferrous Metals:

  • Recommended stocks: Aluminum Corp of China (601600.CH), Yunnan Aluminium (000807.CH), Henan Shenhuo Coal & Power (000933.CH).

• Transportation:

  • Recommended stocks: China Merchants Expressway (001965.CH), Daqin Railway (601006.CH), YTO Express (600233.CH), SF Holding (002352.CH), and Shenzhen Airport (000089.CH).

• Non-bank Financials:

  • Brokerage sector is undervalued, with a PBR of 1.21x, suggesting defensive and rebound opportunities.
  • Recommended brokers: CITIC Securities (600030.CH), GF Securities (000776.CH), Huatai Securities (601688.CH).
  • Insurance sector is reasonably valued, with an average P/EV of ~0.92x.
  • Recommended insurers: Ping An Insurance (601318.CH), China Pacific Insurance Group (601601.CH), New China Life Insurance (601336.CH), and China Life Insurance (601628.CH).

Recent Research Reports

• Hengrui Medicine (600276.CH): Stable earnings growth; major drug product investments expected to yield results.
• Jiajiayue Group (603708.CH): Interim earnings in line; store expansion and enhancement anticipated in H2.
• Shanghai Trendzone Construction: Sharp increase in earnings and profits; customized decoration business expected to drive growth.
• Property Sector: Curbing measures still in effect; better demand/supply balance expected.
• Home Appliances: Market size expanded in H1 2018.
• Non-ferrous Metals: Electrolytic aluminum prices likely to rise due to emerging catalysts.
• Retailing: Social consumption growth slowed; supermarkets may benefit from improving CPI.
• Machinery: Oil & gas industry expected to boom due to increased PetroChina investments.
• Food & Beverages: Brewery industry climate index remained stable in June.
• Electronics: Sector to benefit from China's support for technology industries.
• TMT Sector: Expected to benefit from information consumption upgrades.
• Lepu Medical Technology (300003.CH): Strong earnings growth; multi-segment expansion for long-term development.
• Media: Video platforms and film/TV companies are boycotting unreasonable actor pay; a more regulated industry is expected.
• Textile & Apparel: Sector may recover amid RMB depreciation.
• Fixed Income Strategy: Yield curve likely to remain steep.
• Auto Sector: Auto sales growth softened in July; new energy vehicle sales remained stable.
• Tianyu Eco-Environment (603717.CH): Stable earnings growth; ample orders and huge potential.

Disclaimer and Risk Statement

• The document is issued by China Galaxy International Securities (Hong Kong) Co., Ltd. for institutional clients.
• Information is based on reliable sources but not guaranteed for accuracy or completeness.
• The analysis is for general reference and does not constitute personal investment recommendations.
• Market conditions may change, and past performance is not indicative of future results.
• The recipient should consult independent financial advisors before making any investment decisions.

Disclosure of Interests

• China Galaxy International may have financial interests in the companies mentioned, potentially equal to or exceeding 1% of their market capitalization.
• Some directors, officers, and employees may be affiliated with the mentioned companies.
• The firm may engage in financing transactions, provide services, or hold positions in the securities of the mentioned companies.
• There may be compensation received for investment banking services from the mentioned companies within the preceding 12 months.

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• Unauthorized reproduction, redistribution, or publishing is strictly prohibited.