20180703-中国银河国际证券-China_Galaxy_A-Share_Morning_Comments__晨会纪要__4页_311kb
报告摘要
China Galaxy A-Share Morning Comments Summary (July 3, 2018)
Market Overview
The A-share market experienced a lack of continued rebound last week, opening lower on Monday and entering a consolidation phase. The SHCOMP fell below the 2,800 level, hitting a new low at 2,756, while the SSE50 Index reached its lowest level since May 2017. The ChiNext also closed below 1,600. Key sectors dragging the market down included iron & steel, banking, and property, with many property stocks falling to limit-down due to tighter regulatory policies.
Despite the decline, technical indicators suggest a potential rebound in the near future. The market is currently trading at cheap valuations, with some blue chips reaching historical lows. The report also highlights signs of monetary loosening, which may support a recovery in Q3.
Key Recommendations
Blue Chips and Construction Sectors
- Recommended sectors: Undervalued blue chips, roads & bridges, and decoration sectors.
- Stock Picks:
- China State Construction Engineering (601668.CH)
- Gezhouba Group (600068.CH)
- Shandong Hi-Speed Road & Bridge (000498.CH)
- JSTI Group (300284.CH)
- China Design Group (603018.CH)
- Suzhou Gold Mantis Construction Decoration (002081.CH)
- Shanghai Trendzone Construction Decoration (603030.CH)
- Dong Yi Ri Sheng Home Decoration (002713.CH)
Pharmaceuticals
- Recommended Stock: Renhe Pharmacy (000650.CH)
- Reasons: Strong incentive mechanism, stable earnings growth over the past decade, and entering a fast-growing phase. Expected to benefit from industry concentration and expansion in sales and distribution channels.
- EPS Estimates (2018-20E): RMB0.41, RMB0.54, RMB0.68
- PER Estimates (2018-20E): 15.70x, 11.80x, 9.35x
- Rating: “RECOMMEND”
Food & Beverages
- Focus: Growth in lower-tier cities and baijiu (Chinese liquor) segment.
- Key Recommendations:
Retailing
- Focus: Department store sector trading at historical trough with strong real assets in central business districts.
- Key Recommendations:
Macro and Bond Market Outlook
- Economic Indicators: China's economy showed a marginal decline in June, with lower exports and supply, but the consumer index continued to rise.
- Bond Market Outlook:
- Tight international liquidity may limit the downside of interest rates.
- China's looser liquidity environment could ease default risks.
- M2 growth slower than GDP and CPI growth indicates a tight financing environment for the real economy, necessitating marginal loosening.
- Expected structural credit expansion and investment opportunities in IG bonds.
- The country is expected to stabilize its currency, relax fiscal policies (e.g., tax cuts), strengthen regulations, and promote reforms.
Recent Reports
- Strategy H2 2018 Outlook: Focus on identifying stocks with attractive value and growth potential amid market reshaping.
- Healthcare: Recommend sub-segment leaders with low valuations and strong growth potential.
- Media H2 2018 Outlook: Content is the key growth driver in the post-traffic era.
- Quantitative Analysis: Exposure increased amid market declines.
- Military & Defence: Caution on risks of military-focused funds during sector correction.
- Non-Bank Financials: CDR details announced, with 10 brokers appointed as sponsors for domestic listings.
- TMT: Limited impact from escalating Sino-US trade conflicts.
- Property: Sales volume and value expected to climb as de-inventory efforts begin to show effect.
Disclaimer and Risk Statement
- The document is issued by China Galaxy International Securities (Hong Kong) Co., Ltd. for institutional clients.
- No guarantees are made regarding the accuracy, completeness, or correctness of the information.
- The analysis does not consider individual investment objectives, financial situations, or risk tolerances.
- The document is for general reference only and does not constitute a personal investment recommendation.
- Past performance is not indicative of future results.
Interest Disclosure
- Financial Interests: Galaxy International Securities may have financial interests in the subject companies, potentially equal to or exceeding 1% of their market capitalization.
- Conflicts of Interest: Some directors, officers, or employees of Galaxy International may hold positions in the mentioned companies.
- Investment Activities: Galaxy International may participate in financing transactions, provide services, or solicit business from the mentioned companies.
- Compensation: The company may have received or may currently seek investment banking mandates from the subject companies.
Copyright
- All rights reserved by Galaxy International Securities.
- Unauthorized reproduction, redistribution, or publication is strictly prohibited.
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