20160726-兴业证券-A-Share_Daily_Express_11页_891kb

报告摘要

Industrial Securities Co., Ltd. Summary

Core Information

Company Name: Industrial Securities Co., Ltd.
Address: 21F, Building 1, Wudaokou Plaza, No.1199, Minsheng Road, Pudong New District, Shanghai, China, 200135
Website: http://www.xyzq.com.cn

Market Overview

China's stock market showed steady growth on Tuesday with a slightly lighter trading volume. Leading sectors continued to drive the market upward, and foreign investors were attracted due to the SH-HK Stock Connect's net inflow over two weeks. The total market volume amounted to CNY 485.13 billion (USD 72.67 billion), a 1.4% decrease from the previous session. Winners outnumbered losers by 2326-to-265.

Market Indices

Index	Close	Daily Change	% Change
SSE Composite	3050.17	↑ 34.34	↑ 1.14%
SZSE Component	10852.21	↑ 133.85	↑ 1.25%
CSI 300	3269.59	↑ 38.70	↑ 1.20%
ChiNext	2279.55	↑ 33.66	↑ 1.50%
HSI	22129.73	↑ 136.29	↑ 0.62%
HSCEI	9062.25	↑ 27.49	↑ 0.30%

Sector Performance

Food and Beverage: Led the market with strong gains, including Wuliangye Yibin (+2.80%), Inner Mongolia Yili (+4.32%), and Henan Shuanghui (+2.71%).
Home Appliances: Strong performance, with Midea Group (+3.30%) and Hangzhou Robam (+3.73%).
Gold Shares: Rebounded strongly, including Shandong Gold Mining (+7.22%) and Zhongjin Gold (+3.83%).
Auto Makers: Positive due to satisfactory company results, such as SAIC Motor (+6.72%) and Great Wall Motor (+4.82%).
Coal Companies: Outperformed with China Coal Energy (+2.93%) and Shanxi Xishan Coal (+4.83%).
Healthcare: Notable gains, including Shanghai Pharmaceuticals (+3.63%) and Zhangzhou Pientzehuang (+2.81%).

Daily Headlines

The World Bank plans to issue bonds in China denominated in IMF SDR.
NDRC Vice Chairman Zhang Yong suggests increasing government investment amid economic pressures.
Baidu's Chairman Robin Li withdrew from acquiring iQiyi due to pricing and structure disagreements.
Wang Jianlin secured endorsement for a $4.4 billion buyout of his property unit.
China UnionPay supports the central bank's crackdown on payment violations.
Huawei reported accelerated revenue growth in the first half of 2016.
U.S. National Security Advisor Susan Rice expressed hope for bilateral discussions during the G20 Summit in Hangzhou.

Latest Company News

Agricultural Bank of China (601288.SH): Cut to sell at Daiwa.
Bank of Communications (601328.SH): Raised to buy at Daiwa.
BYD (002594.SZ): Won new energy bus contracts worth ~1.52 yuan.
Henan Pinggao Electric (600312.SH): Rated as a new buy at Haitong.
Minsheng Bank (600016.SH): New Hope Group reduced its stake to 4.82%.
Shenhua Energy (601088.SH): Coal sales rose 4.8% to 186.3m tons in the first half.
Sinopec (600028.SH): Raised to outperform at Macquarie.
Tianjin Tianhai (600751.SH): Trading resumes, with ~4.3b in bank loans for an Ingram Micro deal.

Today's Research: Fixed Income Weekly - Caution Against Risk When Trading

Key Points

The bond market continues to boom due to:
1. Sluggish economic growth.
2. Excess demand over supply in bonds.
3. Tightening financial leverage regulations.
4. Stabilization of the credit market.
The market is increasingly money-driven, with rising transactions.
PBOC is hesitant to ease money supply.
Investors are advised to be prudent due to the high risk appetite and uncertain credit market.
Low-rated credit bonds are not recommended for investment.
The spread between 30-year and 10-year government bonds remains wide.

Bond Market Weekly Review (July 18 - July 22)

Market Liquidity

Inter-bank liquidity tightened due to quarterly tax payments, maturing MLFs, and RMB exchange rate fluctuations.
PBOC injected liquidity through open market operations and MLFs.

Rates Product Investment Strategy

Primary Market: Net supply of bonds increased, with local government bonds being the main category.
Secondary Market: Yields declined for short-end and ultra-long-term bonds.
Key Rates:
- Shibor: ON 2.02%, 1W 2.32%, 2W 2.68%, 1M 2.78%, 3M 2.86%.
- Interbank Repo: ON 2.10%, 1W 2.56%, 2W 2.94%, 1M 2.89%, 3M 2.72%.
- Exchange Repo: ON 3.13%, 1W 2.66%, 2W 2.66%, 1M 2.62%, 3M 2.44%.

Bond Yields

Treasury Bond: 1Y 2.26%, 3Y 2.48%, 5Y 2.60%, 7Y 2.78%, 10Y 2.79%.
CDB Bond: 1Y 2.33%, 3Y 2.73%, 5Y 3.00%, 7Y 3.18%, 10Y 3.15%.
Commercial Paper (AA+): 1Y 2.95%.
Mid-term Note (AA+): 1Y 2.96%, 3Y 3.25%, 5Y 3.52%, 7Y 3.82%, 10Y 3.92%.
Enterprise Bond (AA+): 1Y 3.02%, 3Y 3.30%, 5Y 3.58%, 7Y 3.87%, 10Y 4.02%.
City Investment Bond (AA+): 1Y 2.99%, 3Y 3.12%, 5Y 3.39%, 7Y 3.77%, 10Y 3.89%.

Jiangsu Yulong Steel Pipe (601028: SH) - Outperform (Maintained)

Company Profile

Engaged in the manufacture and distribution of welded steel pipes.
Products include spiral submerged arc-welded steel pipes, longitudinal seam submerged arc-welded steel pipes, square welded steel pipes, and longitudinal seam high frequency welded steel pipes.
Applied in petroleum and natural gas transportation, chemical industry, coal mines, urban infrastructure, and large-scale construction projects.

Investment Highlights

Main Business to Bottom Out: Expected to reverse the earnings and revenue decline due to low oil prices and anti-graft campaigns.
New Controlling Shareholder: Zhihe Technology became the controlling shareholder, with Mr. Wang Wenxue as the actual controller. His affiliated enterprises may be injected into the company.
Earnings Forecast:
- 2016: EPS of CNY 0.19, implying a 48x PE.
- 2017: EPS of CNY 0.29, implying a 32x PE.
- 2018: EPS of CNY 0.38, implying a 24x PE.
- Net profit is expected to reach CNY 151 million in 2016, CNY 225 million in 2017, and CNY 301 million in 2018.
Potential Risks: Uncertainty in the overseas market, slow pipeline construction, and poor integration results.

Key Financial Ratios

Metric	2015	2016E	2017E	2018E
Gross Margin	17.6%	17.0%	18.4%	19.4%
Net Profit Margin	5.8%	6.2%	7.1%	7.9%
ROE	5.0%	5.5%	7.6%	9.2%
PE	55.8	48.2	32.4	24.2
PB	2.8	2.6	2.4	2.2

Industry Insight: Smart Driving Industry Gathering Momentum

Smart networked car industry is at an inflection point due to stricter regulations and new telecom specs.
Recommended Companies:
- Shenzhen Soling Industrial (002766: SZ)
- NavInfo (002405: SZ)
- Beijing Hanbang Technology Corp (300449: SZ)
These companies are expected to benefit from the market boom in the smart driving and IoV sectors.