类别:晨报 机构:中国银河国际证券(香港)有限公司 研究员: 日期:2019-10-23

Market Commentary

    The three major A-share market indices traded at a range-bound pattern on Monday. Mostsectors reported gains. The agriculture, insurance, banking, and transportation & logistic sectorswere among the top gainers. The arts & craft, utility, chemical fiber, brokerage & trust sectorswere among the top losers.

    While heavyweights in the banking and insurance sectors were relatively resilient on Mondayamid muted performance of the broader market with shrinking turnover, some themed stocks sawsignificant share price correction. The broader market has come under pressure as a largenumber of IPOs will make their debuts this week. Meanwhile, the new rules which allow back-doorlistings of technology companies on the ChiNext only benefit some individual stocks, and themarket is not sensitive to the positive news flow, as suggested by the weakness in the ChiNext onMonday. In the near term, the major indices may be stabilized after their corrections forconsecutive days. Some stocks with overdone correction may offer opportunities. However,considering lukewarm market sentiment and scattered investment themes in the market, investorsshould control their risk exposures and avoid stocks with demanding valuation. In the near term,investors may pay close attention to stocks with stronger-than-expected Q3 results and sectorswith low valuation and high margin of safety.

    From CGS A-Share Morning Meeting Summary

    Non-ferrous Metals: Average gold prices in China were RMB269.05/g and RMB278.3/g in Q32018 and Q4 2018, respectively. The average prices reached RMB337.08/g in Q3 2019, up15.22% qoq and 25.29% yoy, respectively. The earnings results of gold miners will start to seeexplosive growth in Q3 2019. We are still optimistic about the latest round of gold’s uptrend.

    Recommend Shandong Gold (600547.CH), Yintai Resources (000975.CH), Zhongjin Gold(600489.CH), Hunan Gold (002155.CH)。 Investor should also pay attention to silver minersincluding Shengda Mining (000603.CH), which is a proxy of higher gold prices. (Click here…)IPP: According to the National Bureau of Statistics, the power generation of industrial enterprisesabove designated size increased 3.0% yoy in 9M19. The high coal inventory in power plants andloose supply-and-demand dynamics will continue to suppress coal prices. The decline in coalprices will have a positive impact on the profitability of thermal power players. In general, theimpact of “base price-plus-floating”, a mechanism under market-oriented reform, on theprofitability of thermal power players is manageable. Investors should not be overly pessimistic.

    The nature of utilities in the IPP industry is expected to become more prominent, and the industryshould offer investment opportunities. Investors should pay attention to the national thermal powerleaders including Huaneng Power International (600011.CH) and Huadian Power International(600027.CH)。 We also like thermal power players with strong regional exposure includingGuodian Changyuan Electric Power (000966.CH) and An Hui Wenergy (000543.CH)。

    Property: China’s property sales were relatively resilient. The land market is recovering butdifferent segments had a divergent performance. While the downward trend in new constructionstarts and projects under construction persisted, the completion of construction continued torecover. Property FAI was resilient. It is expected that property sales will continue to rise given alower base going forward. We reiterate our view that both new construction starts and propertyFAI will trend downwards in FY19E. In terms of financing, given the loose market liquidity in lateAugust and the easing of financing policies in September, the property developers may be underless pressure going forward. We expect overall housing prices to increase 1% in FY19E; GFAsold is expected to report yoy change of -1% and -0%. Property sales growth is expected to be6% to 8% yoy in FY19E. Meanwhile, after factoring in land transactions, shantytown reform, andthe changes in the statistical measure, we expect property FAI to slow gradually and the growthrate is estimated to be 8%-10% in FY19E.