Morning Brief

MarketResearch MorningBrief [October16th,2024] MorningBrief ZHOUJinyu021‐38674924zhoujinyu011178@gtjas.comS0880516080007 Contents TopRecommendations ●PharmaceuticalSector:In‐depthReport ●MacroResearch:UpdateReport ●T&SCommunications(300570):OW,TP@RMB52.80 ●Food&BeverageSector:UpdateReport ●ChemicalSector:UpdateReport LatestReports ●COSCOEnergyTransportation(600026):OW,TP@RMB22.96 ●ChuantouEnergy(600674):OW,TP@RMB22.04 SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint 本报告内容译自同日发布的简体中文报告《国泰君安晨报》，报告观点及内容如有任何不一致的地方，一律以该简体中文版报告为准。 TopRecommendations PharmaceuticalSector:In‐depthReport Theexpectationsforpolicytightening,thoughcomingintobeingin2024Q3,remainstablein2024Q4.Offeaturedcompanies,wepreferthoseengagingininnovativedrugsorwithbetterbusinessperformances.Tobespecific,werecommend(1)(theleadingcompaniesofbothinnovativeandcommercializeddifferentiatedproducts)(a)(biotech)BeiGene(6160.HK),InnoventBio(1801.HK),Akeso(9926.HK),Kelun‐Biotech(6990.HK),Hutchmed(0013.HK),InnoCare(9969.HK),andKeymed(2162.HK);(b)(pharma)HengruiPharma(600276),NhwaPharma(002262),HuadongMedicine(000963)andAosaikangPharma(002755);(2)(recoveryofbusinessordersandprofitgrowth,orstableoutlookin2024Q4‐2025H1)Mindray(300760),NewIndustriesBioEngineering(300832),APTMedical(688617)andAmoyDiagnostics(300685). MacroResearch:UpdateReport InSeptember2024,thesocialfinancinggrowthratefellslightlyto8.0%(previousvalue:8.1%),andthegrowthofsocialfinancingwasRMB3.76trn,downRMB0.3722trnyoy.InSeptember,thebalancesheetcontractionofthehouseholdsectorsloweddownsignificantlycomparedtothepreviousmonth.Inthesamemonth,M2growthreboundedto6.8%(previousvalue:6.3%)andM1growthdippedto‐7.4%(previousvalue:‐7.3%). M1isakeyindicatorofpolicyeffects.AslearnedfromthedatathisSeptember,thenetfiscalexpendituregrowthandthedebtreductionactionshaveassuagedthetightcashflowofthebusinesssector,andthedeclineofM1sloweddown.Iffasterrecoveryofthebalancesheetofhouseholdsectorisabletorestorethecashflowloopbetweenthebusinesssectorandhouseholdsector,M1growthmaykeeponrebounding.Thiswillmeanthatthegovernmentcredithasreallybeguntoleveragethehouseholdsectorcredit.Ofcourse,thisprocesswillnothappenovernight. T&SCommunications(300570):OW,TP@RMB52.80 [Rating:OW(Prv:N/A);TP:RMB52.80(Prv:N/A);MP:RMB35.94;Mkt‐Cap:RMB8163mn] TheCompanyisaleadingopticalconnectmanufacturerinChina,whosebusinessdevelopmentmayrunbeyondmarketexpectationthankstotheriseofAI.WeforecasttheCompany’s2024‐2026netprofitofRMB187mn(+20.3%yoy),279mn(+49.3%yoy)and367mn(+31.7%yoy),andEPSofRMB082,1.23and1.62.Withreferencetothesectorvaluation,wesuggest2025PEof43xandcorrespondingtargetpriceofRMB52.8.“Overweight”rating. Food&BeverageSector:UpdateReport Despitethedeclineofconsumerexpenditure,thesnackfoodsub‐sectorbeatthebusinesscycleandoutperformedothersforitsadvantagesindistributionchannelsandproductrange.Asthehighbusinessseasoniscoming,theprofitmarginofsnackfoodsmaycontinuetoincrease.Offeaturedcompanies,werecommendThree Squirrels(300783),JinzaiFood(003000),ChachaFood(002557),YankerFood(002847),WeilongDelicious(9985.HK)andHaoxiangniFood(002582). ChemicalSector:UpdateReport OnOctober10,Brazilissuedpreliminaryanti‐dumpingresultsonChina’stitaniumdioxide:thepreliminarytemporaryanti‐dumpingtaxeswereUSD578/t(around25%)forLBGroup(002601),USD654/t(around29%)forAnhuiGISI,USD1,420.83/ttootherexporterslisted(includingCITICTitanium,HuiyunTitaniumandPangangV&T)andUSD1,772.69/tforotherexportersunlisted.BecausethetitaniumdioxidepricesmaybeUSD3,000‐3,400/tinfuture,theleadingproducersmaytakeadvantageofloweranti‐dumpingtaxratetograblargermarketsharesagain.Offeaturedcompanies,werecommendLBGroup(002601). LatestReports COSCOEnergyTransportation(600026):OW,TP@RMB22.96 [Rating:OW(Prv:OW);TP:RMB22.96(Prv:RMB22.96);MP:RMB13.67;Mkt‐Cap:RMB65217mn] TheCompanyannounceditsplantopurchaseandintegratethechemicallogisticssupplychainofitsparentgroup.Becausethelimitedsizeoftheassetsofthesupplychaintobepurchased,thispurchasewillnotreversetheCompany’sprofitgrowth.Onthesameoccasion,theCompanyoffereditsfirstmidyeardividenddistribution,forthecauseofmarketvaluemanagement.WeanticipatetheCompany’shigh‐dividendpolicytocontinuethroughouttheyear.Thoughundergeopoliticalpressurein2024HH2,theoutlookofabigbullofoilshippingindustryremainsunchanged.Weadvisetomakecontrarianinvestmentrathertradingonthehighseason.WemaintainourforecastsoftheCompany’s2024‐2026netprofitofRMB5.5bn,7.0bnand8.0bn,andmaintaintargetpriceofRMB22.96and“Overweight”rating. ChuantouEnergy(600674):OW,TP@RMB22.04 [Rating:OW(Prv:OW);TP:RMB22.04(Prv:RMB22.04);MP:RMB17.56;Mkt‐Cap:RMB85598mn] TakingintoaccountthewaterconditionofYalongRiver,welowerourforecastsoftheCompany’s2024‐2026EPSfromRMB1.16,1.21and1.27toRMB1.03,1.17and 1.23.Withreferencetothevaluationsofcomparablecompanies,andbecausetheshort‐termdecreaseofwatersupplyhaslimitedimpactontheCompany’sequityvalue,wemaintaintargetpriceofRMB22.04and“Overweight”rating. SectorRatingsoftheMonth RatingSector OW BuildingMaterials,ComprehensiveFinance,Insurance,CommercialBanking,Coal,Food