China’s stock market experienced ups and downs last week (Aug. 7-11). The SSE Composite Index fell 1.64 percent in the week. Cyclicals which strengthened remarkably earlier the week dragged the broader market down 1.63 percent on last Friday, which was the largest decline in the year. With lackluster performance of hotspot sectors, institutions shift focus to companies with outstanding mid-year report.
Iflytek, Originwater Tech. are inspected by lots of companies
A total of 35 listed companies on Shanghai and Shenzhen bourses announced institutions’ survey last week. Among them, Iflytek Co., Ltd. (002230.SZ) and Beijing Originwater Technology Co., Ltd. (300070.SZ) were favored the most. The two companies went up against the market trend, adding 5.11 percent and 9.85 percent, respectively last week.
After the disclosure of semi-annual report on August 9, Iflytek was surveyed by 231 institutional investors on August 10, including BOCOM Schroder Fund Management Co., Ltd. and Penghua Fund Management Co., Ltd. Originwater Technology was surveyed by 106 institutions, including Deutsche Bank and Citibank on August 8 after disclosing its semi-annual report on August 7 evening.
The survey record disclosed by Iflytek has over 18,000 words. The focus on the record is the company “increase in revenue, decrease in profit”. Its operating revenue increased 43.79 percent year on year to 2.1 billion yuan in the first half of this year. Its gross profit gained 328 million yuan year on year to 1.027 billion yuan, but its net profit declined 149 million yuan, or 58.11 percent, to 107 million yuan.
Where did the incremental revenue go? Iflytek said that the company continued to increase input in the research and development and market layout in medical, public security, smart city and open platform. For example, its sales costs increased 66 percent, and R&D costs increased by 63 percent in the period. In other words, the increase in costs due to business expansion, to some degree, offsets the company’s gross profit. The company also said that growth in after-tax profit is not its first goal; instead it will focus on long-term development strategy with competitive advantage.
Originwater Technology saw its operating revenue up 23 percent year on year to 2.895 billion yuan in the first half of this year, and its net profit up 98 percent year on year to 534 million yuan. The company announced on August 10 evening that that it won a joint bid of road construction projects worth about 5.537 billion yuan. In the survey, the company detailed the financial expenses, inventory confirmation and order statistics of its semi-annual report.
Companies bought by CSF catch attention
Stocks bought by national teams also rose against the market last week. For example, Zhejiang Huace Film & TV Co., Ltd. (300133.SZ) and JSTI Group (300284.SZ) whose stocks were first bought by China Securities Finance Co., Ltd. (CSF) rose 11.46 percent and 3.88 percent, respectively in the week, and were much favored by institutions.
Huace Film & TV were surveyed by 14 institutions on August 7, 9 and 11. The survey surrounds on the company’ online TV business as well as major items that will certainly bring revenue in the second half of this year.
It is learnt that the company’s gross profit rate from online TV business in the first half of this year picked up about 9 percent from the second half of last year. It believes that the upward trend in purchasing online TV shows has not yet reached a ceiling. In the downstream, major video websites maintained high growth in revenues from both subscription fee and advertising, making their purchasing ability grow rapidly. It is expected that the purchasing ability of downstream online platforms will strengthen further in the next few years.
Among all those companies surveyed last week, Huace Film & TV saw the largest gain due to various factors. In addition that CSF bought shares in the company, the hot reaction to Wolf Warriors II also shored up the movie and TV media sector in the A-share market. As for the company’s performance, its net profit increased 1.21 percent to 275 million yuan in the first half of this year.
50 institutions, including E Fund Management Co., Ltd. and Harvest Fund Management Co., Ltd., inspected JSTI Group on August 10. Most of them focused on the company’s overseas business. After it acquired TestAmerica and Eptisa, the proportion of its foreign sales in the company’s operating revenue rose continuously. The company said that one of its strategies is to acquire more overseas assets and integrate them with domestic resources. The company will take Eptisa as a platform for international business and TestAmerica as a platform for environmental protection business.
Translated by Coral Zhong
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