Today's Viewpoint
1 Macro At present, the average exchange rate of RMB in September depreciated by 4.2% year on year, which to some extent puts pressure on customs clearance tax. The export growth rate of the General Administration of Customs in September was 17% in RMB and 14.5% in US dollars, stronger than expected. The growth situation of major countries is divided, and the external trade environment continues to be under pressure. The trade surplus is expected to decline to a low level, and the current account is expected to have a slight surplus this year. Monetary policy should focus on China to ensure that the monetary and financial environment is conducive to stable growth and reform. Whether from the perspective of economic fundamentals or China's objective monetary policy environment, it is difficult for the RMB exchange rate to become strong against the US dollar in a certain period of time.
2 Strategy In the past week, the Shanghai Composite Index recorded its biggest weekly decline since February this year. At present, the main reason is the risk spillover caused by the decline of US stocks. Powell's hawkish speech of the Federal Reserve's interest rate hike led to a higher than expected rise in US bond yields, triggering panic selling among investors and causing a sharp decline in US stocks. At the same time, the PMI in September was lower than expected and the RMB exchange rate depreciated. The market was worried about the decline of the domestic economy, leading to a further decline in risk appetite. For the future market, we should be cautious in the short term and wait for the market to stabilize. Pay attention to domestic favorable factors and external market fluctuations. If there are new domestic stimulus factors, there may be a rebound. In the medium and long term, China US game and domestic deleveraging are still the main contradictions affecting the market, and their complexity determines the long-term impact on valuation.
3 Medicine We continue to maintain an optimistic attitude towards the pharmaceutical sector. The current valuation of the pharmaceutical sector has hit a new low for more than 10 years, and a large number of companies have entered the 10-20 times PE range, with a high cost performance ratio. On the one hand, we continue to be bullish on leading companies in various sub industries, and on the other hand, we are bullish on undervalued stocks with PEG less than 1, such as OTC sector Renhe Pharmaceutical 。
The monthly portfolio in October includes:
Zhaoyi Innovation (603986), Renhe Pharmaceutical (000650) Goldwind Technology （002202）、 Shuijingfang （600779）、 Aerospace appliance （002025）、 Shaanxi Coal Industry （601225）、 Guizhou Moutai （600519）、 Four dimensional Tuxin （002405）、 Beixin Building Materials （000786）、 Tongyuan Petroleum （300164）。
The undervalued portfolio includes:
Renhe Pharmaceutical (000650) CCCC (601800), Europe Africa Technology (002456) CRCC （601186）、 Suzhou Keda （603660）、 Daqin Railway (601006), Beixin Building Materials (000786), Swellfun (600779), Siwei Tuxin (002405) Poly Real Estate （600048）。
Cash cow portfolio includes:
Beixin Building Materials (000786) Changchun High tech (000661), Guizhou Maotai (600519) Ping An, China （601318）、 Yangtze Power (600900), Siwei Tuxin (002405), Poly Real Estate (600048) Hikvision （002415）、 Jerry Shares (002353), Swellfun (600779).
This report is excerpted from the morning meeting research report released on October 15, 2018
Editor in charge: Ding Wen Practicing Certificate No.: S0130511020004
Rating system:
Galaxy Securities Industry Rating System: recommendation, cautious recommendation, neutral and avoidance.
Recommendation: It means that in the next 6 to 12 months, the industry index (or the industry index composed of companies covered by the analyst team) will exceed the average return of the exchange index (or the main index in the market) by 20% or more. The rating is given by analysts.
Caution: The industry index (or the industry index composed of companies covered by the analyst team) exceeds the average return of the exchange index (or the main index in the market). The rating is given by analysts.
Neutral: the average return of the industry index (or the industry index composed of companies covered by the analyst team) is equivalent to that of the exchange index (or the main index in the market). The rating is given by analysts.
Avoidance: The industry index (or the industry index composed of companies covered by the analyst team) is 10% or more lower than the average return of the exchange index (or the main index in the market). The rating is given by analysts.
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