Listed companies in Shanghai and Shenzhen bourses gradually released earnings preannouncement in their interim reports, which attracted growing attention from investors. Market research center of Securities Daily reported based on statistics from Hithink RoyalFlush Information Network that 1,104 listed companies in the two bourses have unveiled earnings preannouncement in their interim reports as of yesterday, 821 companies or 74.4 percent of which reported growth in earnings. It is noteworthy that earnings of 155 listed companies are expected to double in their interim reports. Analysts said that investors can seize the investment opportunity with growing earnings. The 155 companies will be analyzed in three aspects including market performance, industry characteristics and institutional ratings.
Market performance: 49 blue chips favored by capitals
According to statistics from Hithink RoyalFlush Information Network, among 155 individual stocks whose earnings are expected to double, 45 stocks rose amid market rebound in recent two trading days. Specifically, Jiangsu Xinquan Automotive Trim Co., Ltd. (9.88 percent), Nanjing Port Co., Ltd. (9.26 percent), Shenzhen TXD Technology Co., Ltd. (7.12 percent), Guangdong Tapai Group Co., Ltd. (6.23 percent), Ningxia Qinglong Pipes Industry Co., Ltd. (5.55 percent) and Qianjiang Yongan Pharmaceutical Co., Ltd. (5.34 percent) went up by over 5 percent. In addition, Genimous Technology Co., Ltd., Ningbo Ligong Environment And Energy Technology Co., Ltd., Goldenmax International Technology Ltd., Jiangxi Ganfeng Lithium Co., Ltd. and Palm Eco-Town Development Co., Ltd. also jumped by over 3 percent in recent two days.
In terms of capital flow, among the above-mentioned blue chips, 49 saw tremendous net capital inflow in recent two trading days, 18 of which saw total net capital inflow worth more than 10 million yuan. Individual stocks such as China Shenhua Energy Company Limited (87,375,300), Shandong Weida Machinery Co., Ltd. (53,199,600), Xinjiang Zhongtai Chemical Co., Ltd.（38,211,500), Jiangsu Xinquan Automotive Trim (36,980,100), Zibo Qixiang Tengda Chemical Co., Ltd. (22,783,300), Yunnan Xiyi Industry Co., Ltd. (22,160,200) were the most favored by major capitals and more than 20 million yuan flew into these stocks during the period.
Specifically, China Shenhua Energy ranked the first among the above-mentioned stocks with 87,375,300 yuan flowing into it. Stock price of the company dropped slightly by 0.1 percent in recent two days, but it has gained 2.18 percent against market trend since April 14. The company predicted that its net profits will move up by 100 percent year on year at most by the middle of this year. Haitong Securities Co., Ltd. indicated that as the company’s earnings hike significantly and offers high dividend and it is a leading company of reform of central state-owned enterprises (SOEs), it valuation is expected to recover. Haitong Securities forecast earnings per share (EPS) of the company will be 1.49 yuan, 1.71 yuan and 1.92 yuan during 2017 and 2019 respectively. If assuming the average PE ratio of the industry is 16 times in 2017, the securities company estimates valuation of the listed company is 15 times in the year and its stock price will reach 22.35 yuan per share. It maintains a “buying” rating for the company.
Noticeably, although some individual stocks showed good performance, some blue chips were still sluggish amid market rebound recently. Analysts indicated that even though the bottom of the market has been basically determined, the market may still drop. Under this background, blue chips are still the most defensive in the market.
Industry characteristics: number of companies with middle-term performance doubled in four industries rank ahead
According to statistics, the above-mentioned 155 listed companies are included in 23 primary industries of Shenwan Hongyuan Group. The number of companies, whose earnings are expected to double, in media, national defense and military, non-ferrous metal and chemical engineering industries accounts for 31.58 percent, 28.57 percent, 27.50 percent and 26.19 percent respectively in the companies which have disclosed earnings preannouncement.
91 companies or 58.7 percent of the 155 listed companies were rated at a “buying” level by 91 institutions in recent 30 days.
Specifically, four companies including Global Top E-Commerce Co., Ltd., Qingdao Kingking Applied Chemistry Co., Ltd., Ningbo Joyson Electronic Corp. and Shan Dong Sun Paper Industry Joint Stock Co., Ltd. were favored by 13, 10, 10 and 10 institutions. Besides, individual stocks which were favored by 7 or more than 7 institutions included Haoxiangni Jujube Co., Ltd., Hongda Xingye Co., Ltd., LingNan Landscape Co., Ltd., Lomon Billions Group Co., Ltd., Simei Media Co., Ltd., Shanghai 2345 Network Holding Group Co., Ltd., Jiangxi Ganfeng Lithium Co., Ltd. and Anhui Jinhe Industrial Co., Ltd.
In terms of the targeted prices estimated by institutions, the latest closing prices of Zhanjiang Guolian Aquatic Products Co., Ltd., Hunan Gold Corporation Limited, Meisheng Cultural & Creative Corp., Ltd., CASTECH Inc., Inner Mongolia Xingye Mining Co., Ltd., Jiangsu Huifeng Agrochemical Co., Ltd., Beijing Shengtong Printing Co., Ltd., Hongda Xingye Co., Ltd., Wus Printed Circuit (Kunshan) Co., Ltd., Shanghai 2345 Network Holding Group and Hangzhou Boiler Group Co., Ltd. may rise by over 50 percent above the targeted prices offered by institutions in recent 30 days.
8 institutions rated Hongda Xingye at a “buying” level. The company’s latest closing price stood at 7.25 yuan per share. The company predicted that its net profit will grow by 117.36 percent year on year at most to 600 million yuan by the middle of this year. Citic Securities Company Limited maintained a “buying” rating for the company. As the securities company was optimistic about PVC industry in 2017, it kept the forecast that the company’s EPS will be 0.50 yuan, 0.60 yuan and 0.78 yuan during 2017 and 2019 respectively and the company’s stock price will reach 14 yuan per share.
Institutions rosy about nearly 60 pct. individual stocks
Among the companies which have released earnings preannouncement, 12 companies predicted their net profits will increase by several times year on year. The year-on-year growth in net profits of Oriental Times Media Corporation (534.16 percent), Jiangyin Zhongnan Heavy Industries Co., Ltd.（250.00%）、Beijing Bewinner Communications Co., Ltd. (245.26 percent), Genimous Technology (188.53 percent), Dalian Zeus Entertainment Co., Ltd. (177.27 percent), Zhejiang Century Huatong Group Co., Ltd. (157.32 percent), Focus Technology Co., Ltd. (150.00 percent) is expected to reach or exceed 150 percent. Analysts widely believed that high growth in game field is the major contributor to growth in media industry. Everbright Securities Company Limited added that as entertainment consumption on mobile Internet has been popularized all over the world, growth of consumption of average user is obviously higher than increase in downloads and drives growth in game incomes. The continuous expansion in overseas markets and successful deployment of mobile games are the key for game enterprises listed in A-share market to gain further profits.
As for national defense and military industry, Jiangsu Guoxin Corp., Ltd. (115.20 percent) and Beijing BDStar Navigation Co., Ltd. (100.00 percent) forecast their earnings will double. Everbright Securities remarked that it gave a “buying” rating to Beijing BDStar Navigation as it is rosy about the development prospect of Beidou chip industry of the company and the development potential brought by the “Beidou plus” development strategy.
By now, 11 companies engaged in non-ferrous industry expected their net profits to surge by several times year on year at the middle of this year. Net profit of Inner Mongolia Xingye Mining is predicted to edge up by 1,294.22 percent year on year, the highest growth in the industry. In addition, the expected maximum growth in profits of Guangdong Jingyi Metal Co., Ltd. (517.69 percent), Western Metal Materials Co., Ltd. (398.62 percent), Loften Environmental Technology Co., Ltd. (333.97 percent), Hunan Gold Corporation Limited (280.00 percent) and Sinosteel Anhui Tianyuan Technology Co., Ltd. (262.38 percent) is above 200 percent.
Among the 33 companies in chemical engineering industry whose earnings are expected to increase by several times, net profits of companies such as Zhejiang Satellite Petrochemical Co., Ltd. (3,775.78 percent), CNNC Hua Yuan Titanium Dioxide Co., Ltd. (2,263.44 percent), Guangdong Hongda Blasting Co., Ltd. (2,141.04 percent), Anhui Annada Titanium Industry Co., Ltd. (1,915.24 percent) and Lomon Billions Group (1,587.53 percent) may skyrocket by more than 15 times. Besides, earnings of Guizhou Jiulian Industrial Explosive Material Development Co., Ltd., Zhejiang Jiangshan Chemical Co., Ltd., Nanjing Red Sun Co., Ltd., Xinjiang Guannong Fruit & Antler Group Co., Ltd., Xinjiang Zhongtai Chemical, Xiangtan Electrochemical Scientific Co., Ltd., Xiangtan Electrochemical Scientific Co., Ltd., Shanxi Yongdong Chemistry Industry Co., Ltd., Jiangxi Selon Industrial Co., Ltd. and Oriental Energy Co., Ltd. are expected to rise by 200 percent or above 200 percent.
Translated by Vanessa Chen
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