Huaqiao in the Middle Kingdom Eng 0509

Transcription

May 2009
Mexican Flu,
a SARS
Redux?
P. 3
May 2009
Table of Contents
Huaqiao in the Middle Kingdom
Chief Strategist: Anthony C.H. LOK
Key Market Indices
Value
HSI
17,390
HSCEI
10,052
HSCCI
3,650
MSCI HK
8,168
MSCI China
51
FTSE-Xinhua A50
9,471
Shanghai Comp
2,626
CSI 300 (SHSZ 300) 2,789
P/E (x)
09E 10E
HSI
15.6 14.8
HSCEI
14.5 14.1
HSCCI
13.9 12.2
MSCI HK
19.0 15.5
MSCI China
14.9 13.5
FTSE-Xinhua A50 19.4 19.9
SHSZ300
22.6 20.8
SHCOMP
23.2 21.8
1M
16.7
13.8
14.4
14.9
15.1
7.0
7.4
7.5
YTD
20.9
27.4
10.9
24.6
24.7
44.7
44.2
53.4
EPS (chg %)
09E 10E
(3.5) 5.6
14.2 2.4
(18.1) 14.0
(23.2) 22.4
4.9 10.3
2.4 (2.2)
3.4 8.3
1.6 6.3
Mexican Flu, a SARS Redux?
– Sell in May and Go Away… .................................. 3
Buy on the Dips – or the Dips are Buying?…… ......... 6
Nobody Loves a Contrarian Bear ........................... 11
1Q09 A-share Results Recap ................................. 14
China Economy..................................................... 21
Hong Kong Economy ............................................ 32
Chief Economist: CHENG Manjiang
Automotive........................................................... 35
Chemicals............................................................. 36
Consumer — Beer & Liquor.....................................37
Consumer — Dairy ................................................ 38
Consumer — Retail ................................................ 39
Consumer Services — Gaming .............................. 40
Energy ...................................................................41
Financials — Banks (China) .................................... 42
Financials — Banks (Hong Kong)............................ 43
Financials — Insurance .......................................... 44
Media ................................................................... 45
Metals & Mining.................................................... 46
Pharmaceuticals.....................................................47
Property (China).................................................... 48
Property (Hong Kong) ........................................... 49
Small Caps............................................................ 50
Technology ............................................................51
Telecoms .............................................................. 52
Transport — Aviation............................................. 53
Transport — Land.................................................. 54
Transport — Marine............................................... 55
Utilities (China) ..................................................... 56
Utilities (Hong Kong)..............................................57
Green shoots are popping up all over the world and
everyone is talking about the beginnings of a
recovery. I don’t believe it for a second and still say
“sell in May and go away”. How Warren Buffett
makes money in a bear market; the IMF’s doom and
gloom forecasts; plus 1Q09 results roundup.
China-HK recommended stocks: In – Weichai Power, Chongqing Iron & Steel.
Out – ZTE, Yurun.
HK-HK recommended stocks: In – Li & Fung.
Out – Next Media.
China-A recommended stocks: In –Yanjing Brewery, FAW Car.
Out – Fujian Dongbai, Changan Auto.
BOCI Stock Universe .............................................. 58
Calendar of Events.................................................67
Recently Published Research ................................. 68
BOCI Research Team ............................................. 69
Sources: Bloomberg, BOCI Research
BOCI research is available electronically on Bloomberg (BOCR <go>), firstcall.com, multex.com and at www.bociresearch.com.
Any views expressed in this report reflect the current personal views of the analyst and do not necessarily represent the views of BOC International or any of its affiliates.
THIS DOCUMENT MAY NOT BE DISTRIBUTED IN OR INTO THE PRC.
2
May 2009
May 2009
Mexican Flu, a SARS Redux? – Sell in May and Go Away
“And scattered about it, some in their overturned war-machines… were the
Martians – dead! – slain by the putrefactive and disease bacteria against
which their systems were unprepared… slain, after all man’s devices had
failed, by the humblest things that God, in his wisdom, has put upon this
earth.” – H.G. Wells, The War of the Worlds
I wrote last month that I expected markets to correct in April, despite the huge rally in the first week. This did not work out and, it is time for my mea culpa, where I admit I was wrong. It is always impossible to predict the short‐term sentiment of markets, which have a schizophrenic quality about them; swinging from irrational exuberance to the pits of despair at the blink of an eye for no good reason. But I am a tenacious man and, while most people subscribe to the motto once bitten twice shy, I am going to stick with my bearish call on markets and hope that the other old investor axiom “sell in May and go away” will work this year, as well. Meanwhile, “green shoots” of recovery seem to be popping up all over the world this spring – so much so that I am already getting sick of hearing the phrase “green shoots”. While I did not coin the phrase, observant readers will remember that the cover photo of the November 2008 monthly was exactly that; a small green sapling growing out of the ground surrounded by the detritus of a major forest fire. All of this talk about “green shoots” reminds me of the book on English grammar, titled “Eats, Shoots & Leaves”, where a panda enters a bar, orders something to eat then proceeds to pull a gun and shoot the other patrons before walking away. As the panda walks out the door a survivor asks him why he shot everyone to which panda throws him a book on wildlife with the entry, “Panda. Large black‐and‐white bear‐like mammal, native to China. Eats, shoots and leaves.” What a difference one comma can make in the meaning of a sentence. And what a difference one month of mistiming can do to an investment portfolio. For that I am truly sorry, but, as several fund managers have pointed out to me, I am generally a month too early in my calls. This I can agree with as I live by the axioms of, “leave the last 20% for the clever guys” and “nobody went bankrupt taking profits”. Nonetheless, the speed of the recovery in equity markets in recent weeks is astounding, even if one accounts for the fact that markets were oversold last October. To suggest that the fact that the rate of decline in many economic indicators has slowed is a signal that the worst is over is, quite frankly, unbelievable. Even optimists will admit that an 18‐month long recession is too short for the worst global financial crisis since World War II. So, what if the rate of decline is slowing? If the year‐on‐year fall in the US GDP slows from –5% to –1% next year, what do we have? Yes, it is still a recession and if it was not for the –5% preceding it, in any normal cycle a –1% fall in GDP would be a bad recession in any case. In other words, we run the real risk that, after the sharp falls we saw in 4Q08 and 1Q09, quarter‐on‐quarter growth in almost all economic indicators, ranging from GDP, trade, manufacturing output, housing starts, etc, is likely to recover just because the base of comparison is so darned low. That does not spell recovery, it merely means that the worst of the crisis part of this depression is behind us, a point I have been making for about half a year now. We still run the real risk of sliding into a long Japanese‐style economic funk punctuated by possible risks of hyper‐inflation stemming from excessively loose monetary policies of governments around the world and the possibility of a second round of financial shocks emerging from a yet‐to‐be‐determined catalyst, such as an economic collapse of an Eastern European country. Do I believe that spring has come and the world economy is on the mend? Not for a second. Noble Group, the Hong Kong commodity logistics provider listed in Singapore, always has an entertaining results announcement, which makes for fun reading regardless of whether or not you invest in the firm. This is what they had to say about business conditions so far this year: “The first twelve weeks of the current year have seen a continuation of the environment that we saw in the second half of 2008. In short, equity market rallies are not a reflection of what we are yet seeing in the real world. The environment that we are dealing with has not materially improved.” In my defence, in January I wrote, “we will have a bear market rally until February‐March with the Hang Seng Index (HSI) running back up to 18,000, the HSCEI (H shares) testing 10,000 and Shanghai Composite (A shares) testing 2,500. Markets will then weaken and likely retest their previously lows in October (HSI 11,000, HSCEI 5,000 and Shanghai Composite 1,600).” So, the rally has lasted longer than I expected, but the magnitude of the rise is more or less in line. Then along comes the swine flu, which threatens to be the worst global pandemic since the Hong Kong flu that killed a million people in 1968. The media, as it is wont to do, has exaggerated the impact and promptly made comparisons with the Spanish flu pandemic of 1918 when an estimated 40m people perished. Despite all the predictions and headlines of mass panic and doom, what does the market do? It ignores this threat and rallies to new highs. Incredible. It is only with a little irony that, while everyone was expecting China to be to be the epicentre of a new global pandemic with an outbreak of H5N1 bird flu, this outbreak of H1N1 originated on the other side of the world in Mexico. 3
4
May 2009
May 2009
Those of us who lived through SARS in 2003 have vivid memories of the event and, to a certain degree, can sympathise with the plight of the Mexicans. Moreover, I now have a chance to revisit a research piece I wrote on 29 April 2003, titled The Ides of March, which went into some depth about the impact of a global pandemic. The most important bit is, “Using the influenza model, an initial epidemic takes about three months to reach a peak from initial outbreak while secondary outbreaks are expected some 3‐9 months after the initial outbreak. A full cycle of a pandemic is expected to last two years based on historical precedent.” Interested readers can ask for a copy of that old report, but, in the case of a pandemic outbreak, it offers little more advice than to sell airlines and hotels (all tourism and travel related industries), while stocking up on defensive utilities and pharmaceutical companies. Buy on the Dips – or the Dips are Buying?
Influenza Pandemic & Epidemic Cycles
Source: Principles and Practice of Infectious Diseases Although media interest in the swine flu seems to have died down, the threat of a second outbreak later this year and/or a mutation into a more virulent strain of the virus remain. Like the H.G. Wells novel, The War of the Worlds (the two movie versions, including the recent one with Tom Cruise, stink), all of the Martian’s advanced technology was insufficient to stave off the disaster from a simple bug. However, the threat of global catastrophe should not get in the way of a massive bear market rally, should it? 5
“After living through (and surviving) nine panics over the past 45 years,
my intuition is that we are close to the end of this one, and that markets
around the world are poised for a rally that could be as violent as the
decline.” – Barton Biggs, Managing Partner, Traxis Partners, 22 March
2008
“I am a child of the bull market.” – Barton Biggs, 2009
“We are all children of the bull market, although some of us are more
mature than others… Yet, there should be no doubt that the bull markets
as we’ve known them are over and that the revolution is on. Investing is no
longer child’s play.” – Bill Gross, Managing Director, PIMCO, April 2009
Yes, most global investors are children of the bull market and even market guru Barton Biggs called it completely wrong. As I wrote in February, “The average Wall Street CEO has about 25 years of experience, which means that the ‘Masters of the Universe’ running global finance today started in about 1983, or just after the last major US bear market (1967‐1982) ended… Thus, despite my meagre 15 years experience in global capital markets, I am, by contrast, more conservative than my Wall Street brethren due to an accident of geography… This is already my third financial crisis and my views on economics and markets cannot help, but to be coloured by these relatively traumatic economic downturns. Moreover, as far as good times go, only half of my investment career has been spent in a bull market and these have tended to be short in duration; 1995‐97, 2000, and 2003‐2007.” I have been telling investors that, like Martin Luther King Jr, Federal Reserve Chairman Ben Bernanke also “has a dream.” In his dream, the Fed pumps in trillions of dollars of excess liquidity into the banking system and even prints money to get the economy going. Then, just as things are recovering, but before inflation starts to surge, he miraculously pulls all that liquidity back. However, what if, as I think extremely likely, markets get a whiff of inflation before things start to recover. Then the policy decision becomes extremely difficult. Do you pull back liquidity immediately and raise interest rates to make sure inflation does not take off? Doing this in the face of a weak economy is a sure recipe for a double‐dip recession. Or do you keep the taps running in the face of inflation in the hopes that the economy does come out of its coma in which case stagflation becomes a reality. Short‐term bear‐market rally aside, it seems that many rational long‐term investors seem to agree that the horrendous volume of cash being printed by governments around the world is likely to result in inflation – with some (i.e. Warren Buffett) predicting hyperinflation worse than that seen in the 1970s. 6
May 2009
May 2009
Out of curiosity, I went back and looked at Warren Buffett’s 1979 letter to shareholders, a time when inflation in the US was rampant. “Just as the original 3% savings bond, a 5% passbook savings account or an 8% US Treasury Note have, in turn, been transformed by inflation into financial instruments that chew up, rather than enhance, purchasing power over their investment lives, a business earning 20% on capital can produce a negative real return for its owners under inflationary conditions not much more severe than presently prevail.” Berkshire Hathaway Annual Return versus S&P 500
“If we should continue to achieve a 20% compounded gain ‐ not an easy or certain result by any means ‐ and this gain is translated into a corresponding increase in the market value of Berkshire Hathaway stock as it has been over the last fifteen years, your after‐tax purchasing power gain is likely to be very close to zero at a 14% inflation rate. Most of the remaining six percentage points will go for income tax any time you wish to convert your twenty percentage points of nominal annual gain into cash.” “That combination ‐ the inflation rate plus the percentage of capital that must be paid by the owner to transfer into his own pocket the annual earnings achieved by the business (i.e., ordinary income tax on dividends and capital gains tax on retained earnings) ‐ can be thought of as an ‘investor’s misery index’. When this index exceeds the rate of return earned on equity by the business, the investor’s purchasing power (real capital) shrinks even though he consumes nothing at all. We have no corporate solution to this problem; high inflation rates will not help us earn higher rates of return on equity.“ “One friendly but sharp‐eyed commentator on Berkshire has pointed out that our book value at the end of 1964 would have bought about one‐half ounce of gold and, fifteen years later, after we have ploughed back all earnings along with much blood, sweat and tears, the book value produced will buy about the same half ounce. A similar comparison could be drawn with Middle Eastern oil. The rub has been that government has been exceptionally able in printing money and creating promises, but is unable to print gold or create oil.” I thought it might be informative to look at Berkshire Hathaway’s performance during the 70s because, if I am right, what will happen over of the next few years will more resemble the bear‐market stagflation of the 1970s than the deflationary depression of the 1930s. More interestingly, how does an investor make money during such a period like Warren Buffett did (although, as you can see from his own comments above, he believes his 20% returns during that era were only sufficient to offset the ravages of inflation rather than generate a real return). 7
(% YoY)
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Berkshire
23.8
20.3
11
19
16.2
12
16.4
21.7
4.7
5.5
21.9
59.3
31.9
24
35.7
19.3
31.4
40
32.3
13.6
48.2
26.1
S&P500
10
(11.7)
30.9
11
(8.4)
3.9
14.6
18.9
(14.8)
(26.4)
37.2
23.6
(7.4
6.4
18.2
32.3
(5.0)
21.4
22.4
6.1
31.6
18.6
Variance
13.8
32
(19.9)
8
24.6
8.1
1.8
2.8
19.5
31.9
(15.3)
35.7
39.3
17.6
17.5
(13.0)
36.4
18.6
9.9
7.5
16.6
7.5
Overall 43-year return
Return during bear market
Return during bull market
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
CAGR (1965-2008)
CAGR (1968-1981)
CAGR (1982-2007)
Berkshire
19.5
20.1
44.4
7.4
39.6
20.3
14.3
13.9
43.1
31.8
34.1
48.3
0.5
6.5
(6.2)
10
21
10.5
6.4
18.4
11
(9.6)
S&P500
5.1
16.6
31.7
(3.1)
30.5
7.6
10.1
1.3
37.6
23
33.4
28.6
21
(9.1)
(11.9)
(22.1)
28.7
10.9
4.9
15.8
5.5
(37.0)
20.5
22.3
21.2
8.9
5.6
13.0
Variance
14.4
3.5
12.7
10.5
9.1
12.7
4.2
12.6
5.5
8.8
0.7
19.7
(20.5)
15.6
5.7
32.1
(7.7)
(0.4)
1.5
2.6
5.5
27.4
Source: Berkshire Hathaway Its interesting to note that the return on Berkshire Hathaway during the bear market of 1968‐1981 is almost identical to that during the bull market from 1982‐2007 – both periods have compound annual returns of just over 20%. That has to be a little more than just coincidence or luck. So, let us look at what Berkshire Hathaway’s key investment holdings were in 1979. Affiliated Publications, American Broadcasting Co, Media General, The Washington Post, Interpublic Group, Ogilvy & Mather, are all media and advertising companies. Amerada Hess is an oil and gas company; General Foods provides consumer staples; Kaiser Aluminum & Chemical and Handy & Harman are basic material companies; and Geico and SAFECO are related to Berkshire’s core insurance business. The other interesting thing to note is that ALL these companies have survived to this date 30 years later and even F.W. Woolworth, the failed department store company survives to this day as Foot Locker, a specialist sportswear and athletic shoe store. I guess this makes sense because if you are to pick winners in terms of stocks, you first have to pick the survivors. 8
May 2009
May 2009
I was not around in markets in the 1970s (I was busy learning to ride a bike I think), so I am not sure of the logic of Buffett’s choices. However, the huge emphasis on media and advertising companies suggests to me that he believed that they had long‐term and stable cash flows in that stagflation era. The only stock that is still on Berkshire’s top investment list 30 years later in 2008 is The Washington Post. Let us fast forward to Berkshire’s 2008 holdings. To a certain extent, this models real life where most long‐biased institutional investors fall into three general camps. Long‐term value investors, growth investors and momentum investors. Pure short investors, though, are few and far between, while hedge funds tend to be more momentum traders in reality with the ability to short although most, in my experience, also tend to have a long bias. Amerada Hess is now replaced by Conoco Phillips for oil and gas exposure, while the materials sector is now represented by POSCO, Korea’s largest steel company. We see an increased focus on consumer staples companies, including Coca‐Cola, Johnson & Johnson, Kraft Foods, Procter & Gamble, as well as leading retailers such as Tesco (UK) and Wal‐Mart. There is also the French pharmaceutical giant, Sanofi‐Aventis. The list is rounded off with a large exposure to financial companies, including American Express, Swiss Re, US Bancorp and Wells Fargo & Company. From this, I draw the following conclusions. I agree that the consumer staples and pharmaceuticals sectors will provide decent cash flow and relatively stable demand in economic downturn, plus, generally, have some room to manoeuvre in terms of passing off increased costs in case there is inflation. The investment in financial services is likely more long term in nature. Fifteen years as a banking analyst tells me that financial services firms are high beta on the economic downturn, but, when a recovery does arrive, they tend to have major rebounds off heavily distressed valuations. Such was the case for Swedish banks in the mid‐90s following their financial crisis in the early 90s and for Asian banks (the ones that survived at least) after the Asian Financial Crisis of 1997‐98. Still, I suspect that this may be a little further out (maybe one or two years) before a sustained recovery in financials is achieved, especially in America and Europe, as they will still have to deal with major write‐offs for bad debts and defaults stemming from the recession. Nassim Taleb in his book, Fooled by Randomness, used a computer‐generated Monte Carlo simulation with three sets of investors, namely idiotic bulls, impetuous bears, and cautious traders, and monitored their short‐ and long‐term survival rates in various boom and bust cycles. “Under such a structure, ‘idiotic bull’ traders who get rich from the rally would use the proceeds to buy more assets, driving prices higher, until their ultimate shellacking. Bearish traders, though, rarely made it in the boom to get to the bust. My models showed that, ultimately, almost nobody really survived; bears dropped out like flies in the rally and bulls ended up being slaughtered, as paper profits vanished when the music stopped. However there was one exception; some of those who traded options… had remarkable staying power and I wanted to be one of those.” 9
However, Teleb’s model assumes that an investor is married to one investment strategy – an assumption which, in general, may be true as most investors tend to have their own style, which they are reluctant to change until they blow up. But my experience tells me that certain styles work better in certain market conditions. Growth and momentum investors tend to clean up during major bull markets, while value investors tend to do better during bear markets. So, what if an investor is flexible and clever enough to swap strategies for different market periods? In reality, major bull and bear cycles tend to be very long in duration (i.e. a decade or more) and are only interrupted by sharp, but often lethal, bull market corrections or bear market rallies. One does not have to time it perfectly. Say, for example, if one started using bear‐market strategies in 1970, two years after the bear market started, but then started to swap to a more bullish strategy in 1984, two years after it began, I would guess that the returns would be much better. As I firmly believe we are still in for a long bear‐market cycle, it would make sense to cut exposure and go more defensive given the current short‐term rally, while picking up beta if and when markets do suffer another major correction. In other words, my strategy is sell on the rallies (like the one we have now) and only buy back after major declines. If you need to maintain equity exposure, then hold consumer staples, pharmaceuticals, utilities and other defensive sectors at this point in time, while swapping for higher‐beta industries, such as property, banks and basic materials after market corrections. Core holdings through the cycle would include energy and insurance companies. Thus, the old long‐term investment strategy of “buy on the dips” or “buy and hold” is, I think, not appropriate for the current market conditions. Unfortunately, that is exactly what a generation of investors has been trained and educated to do because “markets always rally” and “equities always outperform bonds and other investments” over the long term. This strategy patently did not work very well in America during the 70s (I suspect some of Buffett’s outperformance was due to heavy buying on major declines) nor did it do well in Japan during the 90s. I sometimes wonder if we should change the old saying from “buy on the dips” to “the dips are buying.” More precisely, I would hazard to say that one should buy on major dips, but do not forget to sell on the major rallies either. 10
May 2009
May 2009
Nobody Loves a Contrarian Bear
Wait one second. Is this the same IMF that I have grown to know and love as being perennially optimistic and always has GDP growth forecasts far higher than most private market practitioners? Sadly, I think that this time, the IMF’s forecasts may be correct as Wall Street practitioners are itching to stir some turnover and volume in order to generate more revenue and, as such, may be just a little biased in their predictions. This I can understand. Psychologically, after 18 months of bad news, massive losses and near financial collapse, I too am weary of being bearish. So much so that I borrowed a Porsche for a week a few months ago with the intent of cheering myself up by engaging in some ridiculous conspicuous consumption. While flying down Hong Kong’s highways for a week was fun, my sanity returned just in time for me to decide not to make such a purchase that I am sure I would probably regret a few months down the road. “The world economy is in the midst of its deepest and most synchronized
recession in our lifetimes, caused by a global financial crisis and deepened
by the collapse in world trade” – OECD Interim Economic Outlook
Any experienced sell‐side analyst (or strategist) knows that the system is rigged against being bearish because most personal wealth and funds are, by nature, long on assets, whether it be property, bonds, stocks or other things. The few remaining hedge funds have been severely battered by the downturn and are suffering from extreme redemption pressure making the long bias of markets even more pronounced. If one is bullish on markets and the market goes up, everyone cheers. If you are long and wrong, then you are in good company and most everyone is too busy dealing with losses to find a single person to blame in any case. On the other hand, if you are bearish and are wrong, everyone will blame you for missing out on an opportunity and eventually you get shunted into the “Dr Doom” camp of miscreants, who always tell you to buy gold because the world is coming to an end. If you are bearish and right, there is also little comfort and you will get scant praise as investors are too busy licking their wounds from losses. As Nassim Taleb points out in his book, Fooled by Randomness, “There is an ingratitude factor in warning people about something abstract... Say you engage in a business of protecting investments from rare events by constructing packages that shield them from their sting… Say that nothing happens during the period. Some investors will complain about your spending their money; some will even try to make you feel sorry: ‘You wasted my money on insurance last year; the factory did not burn, it was a stupid expense. You should only insure for events that happen.’ One investor came to see me fully expecting me to be apologetic (it did not work). But the world is not that homogeneous: There are some (though very few) who will call you to express their gratitude and thank you for having protected them from the events that did not take place.” What do you get for trying to tell the truth when markets are hell‐bent on having a bear market rally? Scorn and ridicule. This is what the Financial Times Lex column had to say about the IMF’s forecasts: “What is with the International Monetary Fund? Its star is ascendant since the Group of 20 nations tripled its resources earlier this month. Yet the IMF refuses to shine a hopeful light on the world. The more politicians talk up hopes of a recovery, the gloomier the IMF becomes. On Monday, it raised its estimate of aggregate financial write‐downs to $4,100bn, just as the US Treasury Secretary was saying banks were well capitalised. Now the IMF has released growth forecasts that will have even bears running scared.” 11
So, what does the IMF think? In its Global Financial Stability Report (GFSR), the IMF estimates that “that expected write‐downs on U.S.–based assets suffered by all financial institutions over 2007‐10 will amount to $2.7 trillion up from the estimate of $2.2 trillion in January 2009 [and nearly double the US$1.4 trillion estimate in October 2008]. Total expected write‐downs on global exposures are estimated at $4 trillion, of which about two‐thirds will fall on banks, with the remainder distributed among insurance companies, pension funds, hedge funds, and other intermediaries, although this figure is subject to a substantial margin of error. So far, banks have recognized less than one‐third of estimated losses, and substantial amounts of new capital are needed. Subject to a number of assumptions, the GFSR estimates that additional capital would be required (measured as tangible common equity) amounting to $275 billion–$500 billion in the United States, $475 billion–$950 billion for European banks (excluding those in the United Kingdom), and $125 billion–$250 billion for U.K. banks. Moreover, insurance company and pension fund balance sheets have been badly damaged as their assets have declined in value, and lower government bond yields used to discount liabilities have simultaneously widened asset‐liability mismatches.” In other words, we have a hell of a lot of write‐offs to go and losses for banks in the US and Europe will continue to be severe over this year and next. I tend to agree with this. The IMF followed up its GFSR report a week later with its World Economic Outlook (WEO), which had equally dismal predictions. The IMF believes that US growth will remain negative through 1H10 and only turn slightly positive in 2H10 resulting in GDP growth of zero for 2010. The outlook for Europe is bleaker with negative GDP growth continuing through all of 2010. The worst part is that the IMF says, “The current outlook is exceptionally uncertain, with risks still weighing on the downside.” In other words, the IMF thinks its bleak predictions are the optimistic scenario and things can be even worse. 12
May 2009
May 2009
Real GDP Growth, Consumer Prices, Unemployment and Current Account Balance
(%)
Advanced economies
United States
Euro area *
Japan
United Kingdom *
Canada
Emerging Asia **
China
South Asia
ASEAN – 5
New industrialised
Asian economies
Korea
Taiwan
Hong Kong SAR
Singapore
Real GDP growth
2008 2009 2010
0.9
(3.8)
0.2
1.1
(2.8)
0.0
0.9
(4.2) (0.4)
(0.6) (6.2)
0.5
0.7
(4.1) (0.4)
0.5
(2.5)
1.2
6.8
3.3
5.3
9.0
6.5
7.5
7.0
4.3
5.3
4.9
0.0
2.3
1.5
(5.6)
0.8
2.2
0.1
2.5
1.1
(4.0)
(7.5)
(4.5)
(10.0)
1.5
0.0
0.5
(0.1)
Consumer prices
2008 2009 2010
3.4
(0.2)
0.3
3.8
(0.9) (0.1)
3.3
0.4
0.6
1.4
(1.0) (0.6)
3.6
1.5
0.8
2.4
0.0
0.5
7.0
2.5
2.4
5.9
0.1
0.7
9.0
7.7
4.5
9.2
3.6
4.5
4.5
0.4
2.0
4.7
3.5
4.3
6.5
1.7
(2.0)
1.0
0.0
3.0
1.0
1.0
1.1
Unemployment
Current account balance
2008 2009 2010 2008
2009
2010
5.8
8.1
9.2
(1.1)
(1.0)
(1.0)
5.8
8.9
10.1
(4.7)
(2.8)
(2.8)
7.6
10.1 11.5
(0.7)
(1.1)
(1.2)
4.0
4.6
5.6
3.2
1.5
1.2
5.5
7.4
9.2
(1.7)
(2.0)
(1.5)
6.2
8.4
8.8
0.6
(0.9)
(0.7)
5.5
6.3
5.8
10.0
10.3
9.3
(3.4)
(2.6)
(2.7)
2.8
2.2
1.5
3.5
4.9
4.9
4.4
6.3
6.1
3.2
4.1
3.5
3.1
3.8
6.3
6.3
7.5
3.6
6.1
7.5
8.6
(0.7)
6.4
14.2
14.8
2.9
9.7
7.2
13.1
3.0
10.7
5.2
11.2
* Based on Eurostat’s harmonized index of consumer prices. ** Consists of developing Asia, the newly industrialized Asian economies, and Mongolia. Source: IMF Compare this to the pronouncements coming from the Federal Reserve and Wall Street. The Fed thinks that the economy has already stabilised and that positive growth will return by the end of this year. The IMF’s negative outlook is based on its findings that, “Recessions associated with financial crises have been more severe and longer lasting than recessions associated with other shocks. Recoveries from such recessions have been typically slower, associated with weak domestic demand and tight credit conditions. Recessions that are highly synchronised across countries have been longer and deeper than those confined to one region. Recoveries from these recessions have typically been weak, with exports playing a much more limited role than in less synchronised recessions. The implications of these findings for the current situation are sobering. The current downturn is highly synchronised and is associated with a deep financial crisis, a rare combination in the postwar period. Accordingly, the downturn is likely to be unusually severe, and the recovery is expected to be sluggish.” 1Q09 A-share Results Recap
I learned a lesson about extrapolation to do estimates and forecasts – it sometimes does not work very well. Mind you, I should have already known that, given that all our “financial models” using historical data to predict the future have proven to be useless in the face of unprecedented market volatility. Last month, I summarised and wrote a bit about the 4Q08 results with the caveat that, “Most of the full‐year 2008 results of listed Chinese corporations have now been released…” To be specific, we had over 80% of the data for listed Chinese A‐share 2008 results when I prepared those summary tables. We estimated the rest of the companies that had not reported based on 3Q08 results and ended up with the result that A‐share‐listed companies on aggregate posted a 1.1% fall in profits for 2008. The problem is, we now have the 2008 results for the few remaining laggards and it turns out that the decline in overall A‐share profitability was actually 14.3% – a lot more than the 1.1% we estimated last month. This problem reminds me of a rule of thumb I used to have when I was a regional banking analyst. If a company delayed its reporting (i.e. reports later than usual), releases results late on a Friday night, or times its announcement on the same day as five other banks (especially if one of them is HSBC); there is a good chance that the results really stink. Thus, the laggard companies that did not report before the first week of April probably, on average, had some substantial problems with their accounts and/or losses, which resulted in a delay in the release. The lower earnings for 2008 will also likely result in a more flattering year‐on‐year comparison for 2009 results (especially in 4Q09) due to the so‐called “lower base effect.” However, all of that is ancient history (at least from the prospective of capital markets, which nowadays seems to move at CNBC speed with its “breaking news” every five seconds); and what did 1Q09 reporting season tell us? First of all, I will say that, this time, we actually do have all the data for 1Q09 reported results. So, there will not be a 13% downward revision next month. The IMF’s view is consistent with the study by Kenneth Rogoff of Harvard University that I wrote about in February. It also matches my own observation that, based on past financial crises and my prediction made in February, “US stock markets and the economy bottom out in 2010, but without a strong recovery until after 2012.” Other than that, 1Q09 told us virtually nothing that we did not already know. Only a few sectors posted a year‐on‐year increases in profitability, notably food and beverages, pharmaceuticals, which remain high on our list of core defensive holdings in this economic downturn. Media also had a good quarter which reminds me of the huge media weighting that Warren Buffett had in the 1970s that I wrote about earlier. Social services and construction also posted year‐on‐year gains which is likely due to the government’s stimulus package aimed at these sectors. Power and utilities rounded the list of gainers, but I suspect this is due to a small rebound off a very low base in 2008 rather than a signal that earnings growth has actually returned. 13
14
May 2009
May 2009
4Q08
22.5
(0.8)
(110.4)
(174.7)
(124.2)
(130.4)
(346.6)
(300.1)
(305.9)
(66.0)
(50.3)
(67.1)
(142.9)
(79.3)
(207.4)
208.9
(82.0)
(51.4)
(16.0)
(37.7)
(22.7)
(190.4)
(84.3)
1Q09
(41.9)
(6.9)
18.1
38.5
(59.6)
(82.3)
(88.0)
(144.7)
(115.6)
(31.7)
63.7
(63.3)
38.2
44.3
(83.3)
(0.3)
(0.8)
(10.2)
(22.3)
17.6
9.2
(10.4)
(24.5)
Sources: Wind database, Company accounts, BOCI Research estimates (Rmb m)
Sales
Sales ex. financial
Gross profit ex. fin.
Operating profit
Pre-tax profit
Net profit
Attributable net profit
(%)
Gross margin
Operating margin
Pre-tax margin
Net margin
Attributable net margin
ROE (weighted avg)
1Q07
1H07
9M07
2007
1Q08
1H08
9M08
2008
1Q09
1,931,093 4,327,964 5,659,632 9,465,396 2,616,160 5,622,495 8,560,368 11,268,883 2,307,927
1,628,481 3,602,152 4,616,814 7,970,643 2,150,841 4,689,837 7,211,482 9,528,790 1,837,648
324,215 707,382 794,965 1,497,431 359,628 747,597 1,122,974 1,730,196 375,035
272,862 663,614 815,330 1,321,058 344,104 685,494 805,378 964,527 270,341
277,009 673,048 828,432 1,370,584 360,091 737,248 1,044,678 1,069,791 278,467
199,112 491,988 604,184 1,017,816 285,236 584,967 779,594 873,703 213,806
186,173 461,437 567,102 951,780 268,829 551,730 735,299 816,678 202,995
19.9
14.1
14.3
10.3
9.6
20.5
19.6
15.3
15.6
11.4
10.7
18.6
17.2
14.4
14.6
10.7
10.0
16.2
16.7
13.2
13.8
10.9
10.3
17.1
15.9
12.2
13.1
10.4
9.8
17.4
15.6
9.4
12.2
9.1
8.6
15.4
18.2
8.6
9.5
7.8
7.2
15.9
20.4
11.7
12.1
9.3
8.8
13.5
Source: Wind, BOCI Research estimates Rather than look at the growth numbers, let us first look at absolute returns, which is what business managers should be doing, but something which we, in the investment community, tend to de‐emphasise in our search for growth. It shows that, while there is some small recovery in operating margins, returns remain under pressure and, thus, business conditions are still very weak. 2008 BOCI Earnings Growth Estimates
2009 BOCI Earnings Growth Estimates
20
40
30
15
20
10
10
0
5
(10)
0
(20)
(30)
(5)
(40)
(10)
04/07
05/07
06/07
07/07
08/07
09/07
10/07
11/07
12/07
01/08
02/08
03/08
04/08
05/08
06/08
07/08
08/08
09/08
10/08
11/08
12/08
01/09
02/09
03/09
04/09
However, for China, like everywhere else in the world, one can argue that earnings have begun to recover off their 4Q08 lows. In the old days, we very rarely would look at the sequential quarter‐on‐quarterly or month‐on‐month comparisons as the “noise” from using such a short timeframe is huge. Nowadays, with everyone stretching to find as much good news and evidence of recovery as possible, it seems most traders are looking at the short‐term bounce off artificially low bottoms to justify the latest surges in markets. Looking at it from another angle, it would be very unrealistic to assume that corporate earnings or economic statistics would stay at the super low levels of 4Q08, as that would suggest a complete collapse of global commerce, trade and finance. That we are rebounding off these levels is no surprise and, for Chinese corporates, earnings are up a massive 4x QoQ, despite being down 24.5% YoY. So, are earnings still falling or are they recovering? 18.8
14.0
14.5
10.8
10.1
15.9
Hang Seng Index
Source: BOCI Research HSCEI
FTSE-Xinhua A50
Hang Seng Index
HSCEI
02/09
03/09
04/09
05/09
2Q08
(6.7)
(33.8)
70.8
80.3
(19.6)
64.4
27.0
83.0
29.9
19.1
17.1
(15.6)
(96.7)
0.9
52.8
105.7
52.0
13.1
22.3
22.5
13.9
(28.7)
3.5
QoQ %
1Q09
(68.6)
(7.0)
n.m.
n.m.
n.m.
n.m.
n.m.
n.m.
n.m.
105.0
454.7
(64.3)
n.m.
87.9
n.m.
(87.6)
389.9
196.4
(64.9)
(4.9)
(34.5)
n.m.
413.2
09/08
10/08
11/08
12/08
01/09
1Q08
40.3
(24.9)
56.8
5.0
2.4
(6.1)
98.5
120.7
20.0
56.2
14.0
4.7
(62.4)
129.3
153.6
0.6
69.0
126.8
67.8
(4.7)
40.4
3.9
44.5
A-share Universe Historical Profitability & Margins
YoY %
3Q08
(524.5)
22.2
(9.7)
(32.6)
(50.3)
(4.7)
(64.2)
(54.9)
(6.0)
(12.6)
(0.7)
(26.1)
(122.3)
(210.0)
(33.9)
2.4
12.5
(6.0)
(15.8)
(26.7)
(15.3)
6.3
(6.5)
05/08
06/08
07/08
08/08
Net profit (Rmb m)
By Quarter
1Q08
4Q08 1Q09
Agriculture, forest, pasturing and fishery
548
1,014
318
Mining
50,176 50,213 46,703
Food & beverage
4,006
(305) 4,730
Textile, clothing, leather & furs
1,241
(862) 1,719
Timber processing & furniture production
59
(68)
24
Papermaking & printing
1,221
(523)
216
Petroleum, chemicals & plastics
7,058 (13,852)
848
Electronics
1,288 (3,777) (575)
Metal & non-metal
20,829 (37,257) (3,245)
Machinery, equipment & instruments
11,794
3,926 8,050
Pharmaceutical & biotechnology
2,492
735 4,080
Other manufacturing
347
357
127
Power, gas & water utilities
2,341 (3,095) 3,235
Construction
2,058
1,580 2,970
Transportation & storage
18,704 (30,878) 3,115
Information technology
2,508 20,164 2,502
Wholesale & retail
4,263
863 4,229
Financials
132,380 40,104 118,863
Property
3,979
8,802 3,090
Social services
1,094
1,353 1,286
Media & culture
188
313
205
Conglomerates
937 (1,706)
839
Total
268,791 39,558 202,995
01/08
02/08
03/08
04/08
A-share Cumulative Results Summary for 2008 by Industry
FTSE-Xinhua A50
Source: BOCI Research Looking at growth, our BOCI analysts managed to downgrade their 2008 earnings all the way through until they were finalised in April and are now ratcheting up their 2009 earnings forecasts almost as quickly as they cut them last year. 15
16
May 2009
Part of this is the base effect as the lower reported earnings for 2008 means that, even if you kept 2009 earnings unchanged, the growth rate would rise due lower base of earnings from a year earlier. Some of this is because we have raised bank earnings as the credit costs have not risen nearly as much as we expected and new loan growth is so rapid as to help offset some of the margin pressure from narrowing interest spreads. This also raises the interesting question: If H‐share earnings recovery this year is dependent on fast loan growth and no major deterioration of credit quality, what happens if either of these two variables change? We can see that the earnings estimates for A shares are not nearly as optimistic because the weighting of the banks is much lower than in H shares, plus the A shares also have a much broader weighting in manufacturing and other industries, where earnings are expected to remain quite weak this year. China – HK
Strategy
We add Weichai Power as it is on the road to recovery.
Performance Comparison
% Change Since
1M YTD Incept*
BOCI recommended 11
24
297
MSCI China
15 23
246
HSMLCI
17 22
255
HSCEI
17 27
332

* Inception May 2003 Sources: Bloomberg, BOCI Research
Relative Performance
900
Estimates for Chinese Equities Earnings Growth & Valuations
Index 1 year
level
low
HSI
17,218 10,676
HSCEI
9,897 4,792
HSCCI
3,577 2,173
MSCI HK
8,184 5,184
MSCI China
50
26
FTSE-Xinhua A50 9,317 5,734
SHCOMP
2,597 1,665
CSI 300
2,767 1,607
P/E (x)
BOCI estimates
Consensus
08
09E 10E
08
09E 10E
15.1 15.6 14.8 14.4 15.9 13.7
16.5 14.5 14.1 15.8 14.5 12.2
11.4 13.9 12.2 11.3 13.7 12.4
14.6 19.0 15.5 12.5 18.9 16.2
15.6 14.9 13.5 15.7 14.9 12.8
19.9 19.4 19.9 20.3 17.9 15.4
23.3 22.6 20.8 23.1 21.0 17.7
23.5 23.2 21.8 25.0 20.6 17.8
EPS growth (%)
BOCI estimates
Consensus
08
09E 10E
08
09E 10E
(34.2) (3.5) 5.6 (32.5) (9.5) 16.6
(16.7) 14.2 2.4 (17.0) 9.1 18.8
(4.5) (18.1) 14.0 (4.3) (17.3) 10.1
(40.9) (23.2) 22.4 (36.8) (33.6) 16.2
(22.0) 4.9 10.3 (23.3) 5.5 16.6
(15.7) 2.4 (2.2) (17.2) 13.1 16.2
(14.6) 3.4
8.3 (14.0) 10.1 18.7
(19.5) 1.6
6.3 (19.9) 21.5 15.6
Source: WIND, Bloomberg, BOCI Research Hope continues to overpower reason in the recent global stock market rally and I am extremely reluctant to get involved with what, I still firmly believe, is a suckers’ rally. While earnings may have a small recovery this year due to the smaller base in 2008, this does not translate to real growth of earnings. As such, markets are now around 15x P/E for 2009E in Hong Kong, while A shares are around 22x. In neither case are valuations compelling and factoring in not just the beginnings of a recovery but, in my opinion, they are pricing in a return to business as usual as if there were no global financial crisis at all. With my previous short‐term index level targets for the Hang Seng Index (HSI) of 18,000, the HSCEI (H shares) of 10,000 and Shanghai Composite (A shares) hitting 2,500 pretty much being reached (although it took a month longer than expected), I think this rally has pretty much run its course. Sell in May and go away; and see you on the golf course this summer. Huaqiao in the Middle Kingdom
800
BOCI recommended
700
HSCEI
600
MSCI China
500
HSMLCI

400
300
200
100
05/03
09/03
12/03
04/04
08/04
11/04
03/05
07/05
10/05
02/06
06/06
09/06
01/07
04/07
08/07
11/07
03/08
06/08
10/08
01/09
05/09
17
May 2009
We believe the government’s stimulus package has
seen an improvement in demand for heavy-duty
trucks since February 2009. Looking ahead, we
expect the Rmb4trn stimulus package to have a
significant positive impact on demand for heavy-duty
trucks from 2Q09.
We add Chongqing Iron & Steel as we believe its
earnings for 2H09 will improve, as the company will
benefit from lower iron ore cost and its long steel
products from the stimulus package.
We remove ZTE Corp as we believe the company is
unlikely to surprise us in terms of market share for
the third phase TD-SCDMA tender. In addition, the
stiffer price competition may put pressure on ZTE's
margin. The share price has almost doubled since
our BUY rating and we suggest investors take profit
at the current level.
We remove China Yurun Foods because dropping
hog prices in China will affect its earnings. The
recent Clenbuterol issue and the H1N1 flu outbreak
will have a negative impact on pork consumption.
Source: BOCI Research BOCI China-HK Recommended Stocks
Stock
code
Weichai Power
Chongqing Iron & Steel
Tencent
Tsingtao Brewery
Vinda International
Phoenix Satellite
Bank of China
China Everbright Int'l
Huabao
Want Want
Ajisen (China)
Hengan International
China Mobile
Wumart Stores
China Green
CNOOC
Beijing Enterprise
Tong Ren Tang Tech
CR Power
Cash (incl. dividends)
Total
ZTE
Yurun
2338.HK
1053.HK
0700.HK
0168.HK
3331.HK
2008.HK
3988.HK
0257.HK
0336.HK
0151.HK
0538.HK
1044.HK
0941.HK
8277.HK
0904.HK
0883.HK
0392.HK
8069.HK
0836.HK
Last 3M avg. Free float
price daily T/O mkt cap
(HK$) (HK$ m) (HK$ m)
25.60
32
5,118
2.86
20
1,574
73.50
258
63,398
22.00
32
777
4.05
7
1,831
1.04
2
1,288
2.95
1,503 247,112
2.08
21
2,874
6.06
55
6,882
3.98
85
25,070
4.31
10
2,209
35.00
76
16,308
76.25
2,133 388,415
7.40
8
4,983
6.52
16
2,660
9.94
858 128,633
34.55
64
16,106
9.89
2
814
16.42
101
24,212
FY08
9.7
7.3
42.8
35.9
22.0
17.3
10.4
18.9
21.6
25.7
20.6
30.4
11.9
20.2
12.5
8.8
18.2
12.1
41.3
P/E
(x)
FY09E FY10E
9.8
7.9
22.3 9.8
31.9 25.8
26.2 21.5
13.7 11.5
20.0 14.2
8.1
8.7
16.0 13.0
18.4 15.5
25.7 17.1
16.0 12.3
22.2 19.6
11.8 11.1
18.1 15.1
12.5 10.4
14.3 10.0
15.3 13.3
9.8
9.0
16.5 10.9
Yield
(%)
FY09E FY10E
0.6
0.7
1.6
3.6
0.6
0.8
1.3
1.9
1.8
2.2
1.9
1.9
6.5
6.2
1.0
1.4
1.7
2.0
1.9
3.9
1.9
2.4
2.8
3.2
3.7
4.2
2.7
3.3
2.1
2.3
2.5
3.5
2.4
2.7
4.5
4.9
1.5
2.3
1M
35
31
24
22
22
33
13
21
5
14
10
17
11
28
40
19
5
11
(4)
Change (%)
YTD Since rec.
73
0
46
0
45
24
35
22
93
31
48
58
39
35
47
52
18
33
26
29
20
44
42
33
1
(33)
38
24
6
(23)
41
(16)
8
38
65
(35)
12
353
Stocks Removed or Reduced from the BOCI China-HK Recommended List
0763.HK 26.40
69
51,279 19.3 18.0 15.3 1.1
1.3
1
71
1068.HK 9.84
71
8,428 13.3 12.4 10.4 2.1
2.4
(2) 10
94
19
Date
Wgt
rec.
(%)
08-May-09
5
08-May-09
5
03-Apr-09
4
03-Apr-09
4
06-Mar-09
3
06-Mar-09
4
06-Feb-09
6
09-Jan-09
5
09-Jan-09
5
05-Dec-08
4
07-Nov-08
5
05-Sep-08
7
29-May-08
5
07-Mar-08
7
07-Mar-08
4
01-Feb-08
3
01-Jun-07
5
30-Apr-07
3
7-Jan-04
10
7
100
07-Nov-08
05-Dec-08
6
4
Note: 763 shares up0% and all pricesare adjusted Stocks in bod are new additionss to the recommended list. Sources: Bloomberg, BOCI Research estimates 18
May 2009
May 2009
Hong Kong
Strategy
% Change Since
1M YTD Incept*
BOCI recommended 14 19
165
MSCI HK
18 25
73
HSHKCI
21 18
36
HSI
20 21
87
the trough related to the current economic
downturn. With more stable economy and its current
order backlog, we expect L&F to deliver a 2009-11
CAGR in revenue of 18%. However, we maintain our
cautious view on the margin due to pressure from
retailers and uncertainty over the on-shore business.
% Change Since
1M YTD Incept. *
BOCI recommended 7
36
285
Shanghai A
9
44
72
Shenzhen A
10 59
109
FTSE-XinhuaA50
7
45
68
We remove Next Media since it has gone up a long
360
320
850
BOCI recommended
FTSE-XinhuaA50
750
650
450
350
200
150
160
50

Shanghai A
Shenzhen A
550
280
240
05/03
09/03
12/03
04/04
08/04
12/04
03/05
07/05
11/05
02/06
06/06
09/06
01/07
04/07
08/07
11/07
03/08
06/08
10/08
01/09
05/09
06/03
10/03
02/04
06/04
09/04
01/05
05/05
08/05
12/05
04/06
07/06
11/06
02/07
06/07
10/07
01/08
05/08
08/08
12/08
03/09
250
120
80
grew 10% YoY and the second quarter is a peak
season for the beer industry. The earnings growths
of beer companies will be steady and they will
benefit from cost declines.
We add FAW Car because we believe it has quite
stable profitability. Launches of new models may
enhance sales in 2009 and beyond. We also believe
that, as the listing of FAW Group is draws closer, it
will add some valuation premium to the listco.
We remove Fujian Dongbai because, although its
leading market position in Fuzhou has not changed,
we believe its stores face greater uncertainties due
to a whole host of factors. We are concerned about
the departure of key company executives.
We remove Changan as we believe its major profit
contributor Changan Ford Mazda still faces sales
growth uncertainties in 2009, after its poor showing
in 1Q09. Although mini van sales in 1Q09 grew
rapidly, they did not push up the performance of the
entire company. The stock’s valuation is expensive.
Source: BOCI Research BOCI China-A Recommended Stocks
Source: BOCI Research Stock
code
BOCI HK-HK Recommended Stocks
Stock
code
Li & Fung
SCMP
Ports
Comba
Galaxy
Ming An
Cafe de Coral
TVB
V-tech
Oriental Press
CLP
Hang Seng Bank
MTR Corporation
Standard Chartered Bank
HK & China Gas
Total
Next Media

* Inception May 2003 Sources: Bloomberg, BOCI Research BOCI recommended
HSHKCI
MSCI HK
HSI
400
We add Yanjing Brewery as its sales volume for 1Q09
way and is now more or less at our target price of
HK$1.25, even though we remain positive on its
long-term prospects.
* Inception May 2003. Sources: Bloomberg, BOCI Research 440
China – A
Strategy
We add Li & Fung (L&F) because it has come out of
0494.HK
0583.HK
0589.HK
2342.HK
0027.HK
1389.HK
0341.HK
0511.HK
0303.HK
0018.HK
0002.HK
0011.HK
0066.HK
2888.HK
0003.HK
P/E
Yield
(x)
(%)
(HK$) (HK$ m) (HK$ m) FY08 FY09E FY10E FY09E FY10E
21.60
291
25,796 31.8 20.8 15.8 3.8
5.1
1.13
2
441 10.2 12.0 8.4
5.3
6.2
14.62
21
4,994 17.0 16.6 14.7 3.7
4.1
3.42
15
1,254 12.9 10.1 7.7
2.6
3.5
2.16
24
2,138 108.0 8.3
1.4
0.0
0.90
2
725 (6.9) 22.5 12.9 1.1
1.1
14.64
15
431 19.3 16.6 14.2 5.2
4.9
29.00
18
8,637 12.0 12.9 9.9
5.9
6.2
36.70
12
5,417 5.4
7.4
7.1 10.8 9.9
0.79
1
798 6.1
6.6
6.1 12.7
51.30
277
88,951 11.8 14.2 13.8 4.9
4.9
103.70
339
75,138 14.1 16.0 14.4 6.1
6.4
21.40
93
28,026 14.9 18.3 19.3 2.2
2.2
148.60
157 228,814 11.0 11.2 11.1 3.8
3.9
14.84
114
53,419 22.8 23.2 21.5 2.4
2.5
Change (%)
1M YTD Since rec.
5 65
0
10 (52)
10
42 64
65
14 118
64
44 105
50
8 15
36
(6) (5)
5
7 16
8
22 12
(20)
8 10
(19)
(0) (2)
(21)
26 3
(35)
11 17
(33)
31 66
(21)
21 26
49
Stocks Removed or Reduced from the BOCI HK-HK Recommended List
0282.HK
1.24
11
775 5.8
6.9
6.2
7.3
8.1 48 38
(54)
Wgt
Date rec. (%)
8-May-09
4
3-Apr-09
5
6-Mar-09
5
6-Feb-09
9
9-Jan-09
6
5-Dec-08
5
7-Nov-08
5
7-Nov-08
6
26-Sep-08
6
5-Sep-08
4
5-Sep-08
4
1-Aug-08
5
4-Jan-08
5
9-Mar-07
6
23-May-03
6
20
100
29-Jun-07
Yanjing Brewery
FAW Car
Siyuan Electric
PetroChina
Ping An Insurance
Bank of China
ZTE - A
Wuhan Zhongbai
China Animal
Hebei Chengde Lolo
Yantai Changyu
COFCO Tunhe
China Life
Yabao Pharmaceutical
Qinghai Salt Lake Potash
Wangfujing Dep’t Store
Shandong Gold Mining
Pingdingshan Tian'an Coal
Kweichow Moutai
Total
4
Note: Stocks in bod are new additionss to the recommended list. Sources: Bloomberg, BOCI Research Fujian Dongbai
Chang’an Auto
000729.SZ
000800.SZ
002028.SZ
601857.SS
601318.SS
601988.SS
000063.SZ
000759.SZ
600195.SS
000848.SZ
000869.SZ
600737.SS
601628.SS
600351.SS
000792.SS
600859.SS
600547.SS
601666.SS
600519.SS
(Rmb) (Rmb m) (Rmb m)
13.83
162
6,694
15.85
233 12,128
19.44
105
5,812
12.41
708 49,968
41.14 1,509 160,152
3.64
428 27,719
38.50
318 51,706
9.38
135
4,983
21.39
165
3,882
16.02
46
1,748
47.09
65
4,016
11.78
190
5,735
24.25
746 36,375
11.04
170
1,744
50.85
506 19,878
24.08
109
4,779
39.25
708
6,148
28.76
464 12,676
117.51
373 47,911
FY08
36.3
23.7
24.7
20.0
(46.8)
11.4
32.0
33.3
50.9
27.6
27.7
35.7
32.3
20.4
28.6
27.5
21.9
11.6
26.8
P/E
(x)
FY09E
27.2
21.1
23.9
29.9
31.4
12.6
29.8
27.0
28.5
25.0
23.0
26.5
35.2
27.1
14.0
25.7
16.5
19.8
21.9
Yield
(%)
FY10E FY09E FY10E
22.1 1.5
1.8
18.0 2.1
1.8
19.1 0.6
0.8
22.9 1.5
2.0
20.1 0.8
0.9
13.0 4.4
4.1
25.3 0.7
0.8
22.4 1.1
1.1
25.8 2.0
2.2
22.3 2.8
3.1
18.8 3.1
3.7
23.5 1.2
1.5
28.2 1.4
2.0
22.0 1.5
2.3
15.0 3.3
4.9
20.9 0.8
0.8
14.6 2.8
3.2
17.7 2.3
2.5
18.6 1.9
2.1
Change (%)
1M
6
26
3
7
2
2
12
9
22
3
3
(10)
3
6
(11)
18
5
33
1
Wgt.
YTD Since rec. Date rec. (%)
5
0
8-May-09
7
114
0
8-May-09
7
9
3
3-Apr-09
4
26
7
3-Apr-09
4
58
21
6-Mar-09
6
25
11
6-Feb-09
3
37
42
9-Jan-09
5
(3)
5
5-Dec-08
3
88
98
5-Dec-08
7
3
39
7-Nov-08
4
0
23
7-Nov-08
4
28
8
26-Sep-08
5
31
(8)
1-Aug-08
3
77
55
29-May-08
5
(13) (39)
7-Apr-08
4
22
(46)
7-Dec-07
2
56
(7)
2-Nov-07
5
124 (20)
7-Sep-07 10
8
707
20-Jun-03
8
7
100
Stocks removed or reduced from the BOCI China-A recommended list
600693.SS 12.20
88
2,522 31.4 25.6 22.1 1.0
1.2
4 39
000625.SZ 9.00
352 11,343 900.0 50.0 36.4 0.2
0.4 22 137
(24)
27
9-May-08
6-Mar-09
8
7
Note: 600351 and 600547 shares up 100% (100% Bonus) and all price are now adjusted; 002028 shares up 60% (60% Bonus) and all price are adjusted; Stocks in bod are new additionss to the recommended list. Sources: Bloomberg, BOCI Research 19
20
May 2009
May 2009
China Economy
China’s huge incremental lending has drawn worldwide attention. The
incremental lending hit more than Rmb4.6trn in 1Q09, while credit
elsewhere in the world is shrinking. Renminbi lending in 1Q09 grew
29.8% YoY, the highest level in the past decade. Banks have strong
incentives to increase lending in the face of challenges to profitability.
As interest rate cuts have shrunk the availability of decent-yielding
securities, banks are forced to compete hard to provide loans for
long-term government stimulus projects.
The government made a unique move in extremely easing monetary
policy. People’s Bank of China (PBOC) Vice Governor Yi Gang said on 23
April that the central bank would continue to implement a moderately
easing monetary policy to promote economic growth. According to Dr
Yi, the PBOC would stick to a moderately easing monetary policy to
ensure sound and healthy development of the economy. He said that
the benefits of an “easing monetary policy” were bigger than its
negative effect. On 29 April, the State Council announced a reduction in
the capital ratio requirement for major infrastructure projects and even
for property developers for easier access to bank loans.
In the face of skyrocketing lending growth, all expectations have now
changed rapidly. Worries about inflation have effectively revived the
previously sluggish property market. Residential property sales, in
terms of gross floor area (GFA) sold, rose 8.7% YoY in 1Q09, compared
to a fall of 20.3 % YoY 2008. The recovery of sales volumes is
translating to higher investment incentives for property developers.
Previously, the consensus was that the growth of investments in
residential property would decline at least 15% YoY in 2009, after fixed
asset investments (FAI) in property grew a much better-than-expected
4% YoY or so in 1Q09. It is clear that a property bubble will come back if
the much higher-than expected loan growth persists.
21
The core issue for the China economic perspective is the sustainability
of the lending growth. It cannot be denied that the current high lending
growth is mainly due to demand related to the fiscal stimulus projects.
According to the PBOC, long-term loans and discounted bills accounted
for 40.7% and 32.3%, respectively, of the Rmb4.6trn incremental
lending in 1Q09. As for the Rmb1.9trn in long-term loans, the
proportions that went into infrastructure projects, leasing and the
services industry (strongly related to infrastructure investments),
property and manufacturing stood at 50.1%, 12.4%, 11.2% and 7.9% in
1Q09, compared to 40.2%, 4.5%, 19.9% and 12.2% in 1Q08
respectively. We note that the proportions of the first two components
rose about 18ppts in 1Q09, pointing to the huge impact of the
government-supported projects in the loan expansion. Therefore, the
sustainability of the lending growth will depend on the availability of
infrastructure projects; while is, at least, true for the current year.
The government appears well prepared for the sustainability of the
lending growth. In a recent trip to Fujian Province, Premier Wen Jiabao
emphasised that the government stimulus package was definitely more
than Rmb4trn. He said that the government would push forward one
new stimulus policy each week. The intention here is very clear and it is
that, if the stock market is expected to continue its uptrend in tandem
with continuous stimulus policies, the property market can be expected
to be better than it is currently and, hence, help drive up lending in the
future.
While it becoming increasingly clearly is that China has to give up the
export-orientated growth model after 2009. Accordingly, the
government is trying to re-stimulate the economy through the creation
of a booming property market. The challenge ahead is if the marginal
urban demand can really support the strategy. If the answer is negative,
a speedy urbanisation process will be the solution, albeit it will involve
complicated projects related to a series of policies. That to say, the
government has to been forced to change its current fiscal system to
distribute more benefits to common people.
22
May 2009
May 2009
China Monthly Economic Indicators (2007-09)
Breaking down industries, VAIO of textiles and garments rose 8.3% YoY and 11.2% YoY in March from 5.1% YoY and 11.1% YoY in 2M09. Meanwhile, VAIO of furniture, papermaking and paper products, and cultural, educational and sports goods rose 7.5% YoY, 7.1% YoY and 5.6% YoY in March, up from the growths of 1.8% YoY, 3.6% YoY and 2.2% YoY in 2M09, respectively. For communications and electronic equipment, VAIO grew 1.2% YoY in March after dropping 9.4% YoY in 2M09. In March, VAIO of steel and non‐ferrous metals rose 1.1% YoY and 9.1% YoY, respectively, compared to the increase of 0.3% YoY and decrease of 1.5% YoY in 2M09. At the same time, VAIO of ordinary equipment, special equipment and transport equipment grew 11.4% YoY, 14.4% YoY and 5.9% YoY in March, versus the increases of 4.5% YoY, 11.1% YoY and 1.6% YoY, in 2M09, respectively. 2007
2008 2009E Mar08 Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec Jan09 Feb
Mar
Real economy (YoY %)
GDP*
VAIO (real)
-Light industry
-Heavy industry
Industrial sales ratio (%)
11.4
18.5
19.6
16.3
98.1
9.0
13.0
12.3
13.2
97.8
7.2
9.0
10.6
17.8
15.7
18.7
98.0
15.7
12.1
17.2
97.8
16.0
13.5
17.0
98.0
10.1
16.0
13.3
17.1
97.5
14.7
12.2
15.7
98.1
12.8
11.7
13.2
97.8
9.0
11.4 8.2
11.2 10.3
11.5 7.3
97.6 97.4
5.4
10.1
3.4
97.0
6.8
5.7
8.1
4.7
98.7
-
3.8
6.5
2.7
97.2
6.1
8.3
8.5
8.3
96.9
FAI* (YoY %)
- Property
Retail sales*
25.8
30.2
16.8
26.1
20.9
21.6
13.0
(10.0)
10.0
25.9
32.3
21.5
25.7
32.1
22.0
25.6
31.9
21.6
26.8
33.5
23.0
27.3
30.9
23.3
27.4
29.1
23.2
27.6 27.2
26.5 24.6
23.2 22.0
26.8
22.7
20.8
26.1
20.9
19.0
-
26.5
1
15.2
28.6
4.1
14.7
External sector
Exports (US$ bn)
1,218 1,429
Export growth (YoY %)
25.7 17.2
Imports (US$ bn)
956 1,133
Import growth (YoY %)
20.8 18.5
Trade balance (US$ bn) 262.0 295.5
1,356
(4.5)
1,126
(2.0)
230.0
109.0 118.7 120.5 121.5 136.7
31.0 21.8 28.1 17.6 26.9
95.6 102.0 100.3 100.2 111.4
25.0 26.3 40.0 31.0 33.7
13.4 16.7 20.2 21.4 25.3
134.9
21.1
106.2
23.1
28.7
136.4
21.5
107.1
21.3
29.3
115.0
(2.2)
74.9
(17.9)
40.1
111.2
(2.8)
72.2
(21.3)
39.0
90.5
(17.5)
51.3
(43.1)
39.2
64.9
(25.7)
60
(24.1)
4.9
90.3
(17.1)
60
(25.1)
18.6
FDI* (US$ bn)
74.8
92.4
Money supply (YoY %)
M0
12.1 12.7
M1
21.0
9.1
M2
16.7 17.8
Deposit rate, 12M (%)
4.14 2.25
Lending rate, 12M (%)
7.47 5.31
FX reserves* (US$ bn) 1,530 1,908
Inflation (YoY %)
National CPI
60.0
13.0
14.0
16.5
1.44
4.23
2,130
9.3
7.6
11.1 10.7
18.3 19.1
16.3 16.9
4.14 4.14
7.47 7.47
1,682 1,757
7.8
9.6
8.3
7.0
6.7
128.3
19.2
93.1
15.6
35.2
6.7
5.3
6.0
7.5
12.9
15.3
18.1
4.14
7.47
1,797
12.3
14.2
17.4
4.14
7.47
1,809
12.3
14.0
16.4
4.14
7.47
1,845
10.9
11.5
16.0
4.14
7.47
1,884
9.3
9.4
15.3
4.14
7.20
1,906
10.6
8.9
15.0
3.60
6.66
1,880
9.0
6.8
14.8
2.52
5.58
1,885
12.7
9.1
17.8
2.25
5.31
1,946
7.7
7.1
6.3
4.9
4.6
4.0
2.4
1.2
5.8
8.4
12.0 8.3
6.7 10.9
18.8 20.5
2.25 2.25
5.31 5.31
- 1,912
10.9
17.0
25.5
2.25
5.31
1,954
5.9
0
8.3
8.5
1
(1.6) (1.2)
2009
Jan-Feb
3.8
2.7
6.5
Mar
8.3
8.3
8.5
Value Added Industrial Output (VAIO)
2008
Mar
17.8
18.7
15.7
Apr
15.7
17.2
12.1
May
16
17.0
13.5
Jun
16
17.1
13.3
Jul
14.7
15.7
12.2
Aug
12.8
13.2
11.7
Sep
11.4
11.5
11.2
Oct
8.2
7.3
10.3
Nov
5.4
3.4
10.1
Dec
5.7
4.7
8.1
Source: NBS According to the National Bureau of Statistics (NBS), China’s valued‐added industrial output (VAIO) picked up 8.3% YoY in March 2009, 4.5ppts higher than the rise of 3.8% YoY in 2M09. For the heavy and light industries, VAIO rose 8.3% YoY and 8.5% YoY, respectively, in March, up from the corresponding increases of 6.5% YoY and 2.7% YoY in 2M09. 23
Fixed Asset Investments (FAI)
YTD %
Total FAI
Urban FAI
Urban FAI /total FAI (%)
- Primary Industry
- Secondary Industry
- Tertiary Industry
- Property
2007
Dec
24.8
25.8
85.6
31.1
29.0
23.2
32.2
2008
Feb
24.3
77.0
26.1
22.6
32.9
Mar
24.6
25.9
83.9
80.8
25.9
25.3
32.3
Apr
25.74
71.6
25.9
24.9
32.1
May
25.6
66.1
25.6
25.0
31.9
Jun
26.3
26.8
85.4
69.5
26.6
26.2
33.5
Jul
Aug
27.3
27.4
61.9
27.9
26.0
30.9
63.5
28.8
25.5
29.1
Sep
27.0
27.6
85.9
62.8
30.2
24.8
26.5
Oct
Nov
27.2
26.8
61.8
30
24.3
24.6
57.4
29.5
24.1
22.7
Dec
25.5
26.1
86
54.5
28
24.1
20.9
2009
Feb
26.5
100.3
24.8
26.9
1.0
Mar
28.8
28.6
83.8
85.0
26.8
29.1
4.1
Source: NBS 4.8
*Periodical; no single month data from the NBS Sources: NBS, MOF, MOC, PBOC and BOCI Research YoY %
VAIO
Heavy industry
Light Industry
Although most sectors saw obvious pick‐ups in VAIO in March, it will still take time to ascertain if it means a sustainable rebound. Huaqiao in the Middle Kingdom
NBS data shows that China’s FAI rose 28.8% YoY in 1Q09, up from 25.5% YoY in 2008. Meanwhile, overall urban FAI grew 28.6% YoY and that in the primary, secondary and tertiary industries surged 85% YoY, 26.8% YoY and 29.1% YoY in 1Q09, after rising 100% YoY, 24.8% YoY and 26.9% YoY in 2M09, respectively. Specifically, urban FAI in 1Q09 in textiles, furniture, chemical fibres, ferrous metals, and communication and electronics equipment declined 4.5% YoY, 8.8% YoY, 13.6% YoY, 6.4% YoY and 2.4% YoY, while that in water supply, construction, railway transportation, water conservancy, environmental management and public utility jumped 40% YoY, 66.8% YoY, 102% YoY, 82.5% YoY, 89.6% YoY and 56% YoY, respectively. The pick‐up in urban FAI in the tertiary sector was mainly due to the government’s stimulus package. With the rapid expansion of fiscal spending and incremental lending, FAI may sustain steady growth in the short term. However, we are concerned that FAI growth may gradually decelerate as manufacturing and property investments decline further over the longer term. 24
May 2009
Retail Sales
YoY %
Retail sales
Urban
Rural
2008
Mar
21.5
22.1
20.2
Apr
22
22.9
20.1
May
21.6
22.3
20.1
Jun
23.0
23.5
22.0
Jul
23.3
24.0
21.8
Aug
23.2
23.9
21.8
Sep
23.2
23.9
21.8
Oct
22
22.1
21.9
Nov
20.8
20.3
21.8
Dec
19.0
19.0
18.9
2009
Jan-Feb
15.2
14.4
17.0
Mar
14.7
13.7
16.8
Source: NBS China’s retail sales grew 14.7% YoY in March 2009, down from the increases of 15.2% YoY in 2M09 and 21.6% YoY for 2008. Urban sales rose 13.7% YoY, while rural sales went up 16.8% YoY in March 2009, compared to increases of 14.4% YoY and 17% YoY, respectively, in 2M09. Breaking down the segments, retail sales of autos rose 11.1% YoY in 1Q09, up from 9.3% YoY in 2M09. Meanwhile, sales of sporting and recreational goods rose 8.4% YoY, those of cultural and office used goods grew 6.5% YoY, and those of household appliances surged 1.4% YoY in 1Q09, versus the corresponding increases of 13.5% YoY, 8.3% YoY and 2.7% YoY in 2M09. For daily‐use goods and furniture, sales surged 10.9% YoY and 24.1% YoY in 1Q09, after rising 12.0% YoY and 27.1% YoY in 2M09, respectively. The easing of retail sales growth in 1Q09 was mainly due to the gradual decline in durable consumption, as well as falls of prices. As the performance of consumption usually lags changes in revenue and other macro variables, we expect retail sales to remain on a downtrend going forward. YoY %
Exports
Imports
Trade balance (US$ bn)
2008
Feb
16.8
30.9
8.56
Mar
31
25
13.4
Apr
21.8
26.3
16.7
May
28.1
40
20.2
Jun
17.6
31
21.4
Jul
26.9
33.7
25.3
Aug
21.1
23.1
28.7
Sep
21.5
21.3
28.7
Oct
19.2
15.6
35.2
Nov
(2.2)
(17.9)
40.1
Dec
(2.8)
(21.3)
39
2009
Jan
(17.5)
(43.1)
39.1
Breaking down the sectors, exports of most consumer goods saw rebounds in March. Exports of furniture rose 1.2% YoY, those of handbags and similar items grew 11.9% YoY and those of garments went up 9.88% YoY and those footwear increased 7.8% YoY in March, compared to corresponding drops of 28.1% YoY, 30.7% YoY, 36.7% YoY and 21.3% YoY in February. However, exports of most capital goods still declined significantly. In March, exports of steel products dropped 51% YoY, those of electronic integrated circuits and micro‐assemblies decreased 13.9% YoY, and those of containers declined 68.2% YoY, down further from the corresponding falls of 36.3% YoY, 12.3% YoY and 58.8% YoY in February. Imports of commodities rebounded partially in March. China’s import quantities of soybean and iron ore grew 66% YoY and 46% YoY in March, compared to the increases of 61% YoY and 23% YoY in February, respectively. Export quantity of crude oil dropped 6% YoY in March, smaller than the decrease of 18% YoY in February. Although overall exports showed smaller decreases in March, those of most capital goods still saw significant declines. We believe that demand from the US and the EU may see smaller declines in future, albeit it is still too early to view them as a real rebound. We believe exports will probably still show a weakening trend in 2Q09. Foreign Direct Investment (FDI)
YoY %
Actual FDI
US$ bn
Foreign Trade
Feb
(25.7)
(24.1)
4.9
Mar
(17.1)
(25.1)
18.6
Source: GAC China’s exports dropped 17.1% YoY in March, slower than the fall 25.7% YoY in February, while imports went down 25.1% YoY from the decline of 24.1% YoY, according to the State Administration of Customs (SAT). Meanwhile, the trade surplus in March rose 41% YoY to about US$18.6bn. 25
May 2009
2008
Feb
38.31
6.93
Mar
50.3
9.3
Apr
70.1
7.6
May
58.4
7.8
Jun
44.9
9.6
Jul
65.3
8.3
Aug
39.4
7.0
Sep
26.8
6.7
Oct
(0.86)
6.7
Nov
(36.5)
5.3
Dec
(5.7)
6.0
2009
Jan
(32.7)
7.5
Feb
(15.8)
5.8
Mar
(9.5)
8.5
Source: MOC According to the Ministry of Commerce (MoC), China’s actual FDI declined 9.5% YoY in March, after dropping 15.8% YoY in February and 32.7% YoY in January 2009. The utilised FDI amounted to US$8.5bn in March, compared to US$5.7bn in February and US$7.5bn in January 2009. As foreign‐funded enterprises accounted for about 85% of total processing exports in China, the change of FDI actually led the performance of exports. In other words, the consecutive decline of FDI may indicate that China’s exports will probably remain weak going forward. 26
May 2009
Consumer Price Index
2008
Mar
8.3
21.4
(1.2)
(1.7)
7
3.7
YoY %
CPI
- Food
- Clothing
- Trans.& comm.
- Residences
- Medical segment
Apr
8.5
22.1
(1.4)
(1.7)
6.8
3.6
May
7.7
19.9
(1.5)
(1.6)
7.1
3.3
Jun
7.1
17.3
(1.5)
(1.1)
7.7
3.1
Jul
6.3
14.4
(1.4)
(0.3)
7.7
3.1
Aug
4.9
10.3
(1.1)
(0.2)
7.1
2.9
Sep
4.6
9.7
(1.2)
(0.2)
6.5
2.6
Oct
4
8.5
(1.3)
0.0
4.6
2.4
Nov
2.4
5.9
(1.7)
(0.7)
1.1
2.0
Dec
1.2
4.2
(2.2)
(1.4)
(1.4)
1.7
2009
Jan
1.0
4.2
(2.7)
(2.5)
(2.3)
1.6
Feb
(1.6)
(1.9)
(2.3)
(3.0)
(2.9)
1.3
Mar
(1.2)
(0.7)
(2.3)
(2.5)
(3.5)
1.0
Source: NBS China’s Consumer Price Index (CPI) fell 1.2% YoY in March 2009, after dropping 1.6% YoY in February 2009, according to NBS data. The magnitude of the decline in March was mainly due to a lower tail‐factor effect (lower base of comparison). In our rough estimate, the carryover effect contributed about 1.8ppts to the negative CPI growth, down from 2.5ppts in February. On a month‐on‐month basis, the CPI decreased 0.3% in March after coming in at 0% in February and 0.9% in January. Breaking down items, the price of food declined 0.6% MoM in March, after rising 0.8% MoM in February. Meanwhile, prices of clothing, transport and communication, and housing decreased 0.2% MoM, 0.3% MoM and 0.3% MoM in March, after declining 0.5% MoM, 0.2% MoM and 0.4% MoM in February, respectively. Inflation/Deflation
YoY %
EFPI
PPI
CPI
Crude oil
2008
Feb
6.6
9.7
8.7
37.5
Mar
8
11
8.3
37.9
Apr
8.1
11.8
8.5
37.9
May
8.2
11.9
7.7
30.9
Jun
8.8
13.5
7.1
35.9
Jul
10
15.4
6.3
41.2
Aug
10.1
15.3
4.9
38.2
Sep
9.1
14
4.6
25.6
Oct
6.6
11
4
11.3
Nov
2.0
4.7
2.4
(14.7)
Dec
(1.1)
(0.16)
1.2
(39.7)
2009
Jan
(3.3)
(5.3)
1
(49.9)
Feb
(4.5)
(7.1)
(1.6)
(54.8)
Mar
(6.0)
(8.9)
(1.2)
(54.2)
Source: NBS The Ex‐factory Price Index (EFPI) and the Purchasing Price Index (PPI) for materials, fuels and power declined 6% YoY and 8.9% YoY, respectively, in March, down further from the falls of 4.5% YoY and 7.1% YoY in February. Specifically, the EFPI of smelting and pressing of ferrous metals and that of non‐ferrous metals dropped 15% YoY and 28.7% YoY in March, compared to the decrease of 8.9% YoY and 25% YoY in February, respectively. For the PPI, prices of fuels and power, non
‐ferrous metal materials, and chemical materials declined 12.7% YoY, 31.9% YoY and 9.5% YoY in March, versus the falls of 10.9% YoY, 29.7% YoY and 8.3% YoY in February, respectively. 27
May 2009
As most commodity prices still grew up on a month‐on‐month basis before August 2008, the comparison base last year will increase in 1H09. Although the government has implemented its Rmb4trn stimulus package, it is difficult to change the overcapacity situations fundamentally in most sectors. We expect the declines in the EFPI and PPI to magnify in the coming months. Monetary Performance
YoY %
M0
M1
M2
Loan / deposit
M1/M2, %
2008
Feb
5.96
19.2
17.48
67.2
35.7
Mar
11.12
18.25
16.29
65.16
35.67
Apr
10.7
19.05
16.94
66.22
35.35
May
12.9
15.3
18.1
65.6
35.1
Jun
12.3
14.2
17.4
65.2
34.9
Jul
12.3
14.0
16.4
65.4
34.7
Aug
10.9
11.5
16.0
65.1
35.0
Sep
9.3
9.4
15.3
65.2
34.4
Oct
10.6
8.9
15.0
65.1
34.7
Nov
9.0
6.8
14.8
63.9
34.4
Dec
12.7
9.1
17.8
65.1
35.0
2009
Jan
12.0
6.7
18.8
66.4
33.3
Feb
8.3
10.9
20.5
66.4
32.8
Mar
10.9
17.0
25.5
66.9
33.3
Source: PBOC Renminbi lending on the mainland jumped 29.8% YoY in March, up from 24.1% YoY in February, according to PBOC statistics. Renminbi deposits grew 25.7% YoY, 2.7ppts higher than the rise of 23.0% YoY in February. The loans‐to‐deposits ratio rose slightly to 66.9% in March from 66.4% in February. Due to the high lending growth, the increases in demand deposits and the M1 supply accelerated to 18.6% YoY and 17% YoY in March from 11.6% YoY and 10.9% YoY in February. Meanwhile, M2 supply went up a marginal 25.4% YoY in March from 25.0% YoY in February. Specifically, savings deposits, time deposits and other deposits rose 29.6% YoY, 29.4% YoY and 34.1% YoY in March, compared to increases of 29.2% YoY, 30.2% YoY and 3.8% YoY in February, respectively. PBOC statistics show that incremental renminbi lending reached about Rmb1.89trn in March from Rmb1.1trn in February and about Rmb1.6trn more than the amount in the same month last year. The breakdown shows that incremental lending to households amounted to Rmb257bn in March, a rebound from Rmb44bn in February. The rise in household lending, especially long‐term loans, was in line with the rebound of residential property sales in the past two months. However, we still need some time to ascertain if it means a sustained recovery. Incremental lending to non‐financial institutions and others jumped to Rmb1.63trn in March from Rmb1,030bn in February. We note that the weighting of bill‐discounting loans in the overall incremental lending declined to 19.0% in March from a record high of 45.5% in February. This is a positive sign as more incremental loans went to the real economy in terms of project financing. Renminbi deposits grew 25.7% YoY in March, up from the rise of 23% YoY in February. In March, total incremental deposits amounted to Rmb2.46trn, compared to Rmb1.65bn in February and Rmb1.51trn in January. Specifically, incremental savings deposits amounted to about Rmb573.8bn. while those of non‐financial corporations increased about Rmb1.9trn in March. Probably because of the further easing of fiscal revenue growth, fiscal deposits decreased about Rmb173.9bn in March compared to February. 28
May 2009
May 2009
will remove the quota restriction for qualified medium and small commercial banks to set up branches in related regions and simplify the approval procedures. Meanwhile, the CBRC encouraged commercial banks to establish reasonable development plans and to set branches in west and northeast regions of China. The CBRC also combined the thresholds of regional branches with the whole situation of banking institutions and would levy no uniform requirement on working capital for joint‐stock commercial banks and city commercial banks to set up branches. Such a policy adjustment is mainly aimed at loosening and simplifying procedure for joint‐tock commercial banks and city commercial banks to establish branches. Policy Highlights Lowering of capital ratio requirement for infrastructure projects.
The State Council held an executive meeting on 29 April to accelerate reforms of China’s economic system. During the meeting, the cabinet said the government should cut its administrative costs and deepen the reform of monopolistic industries to stimulate private investments. Meanwhile, China will advance its market‐based reform of resource prices and encourage energy saving and environmental protection. To stimulate private investment, the State Council also decided to lower the capital ratio requirement for FAI related to infrastructure projects. The detailed lists include urban track transport, coal, airports, ports, river and marine transport, railways, expressways, commercial residential buildings, postal services, information technology, potash fertilisers and so on. Meanwhile, the cabinet also called for an increase the capital ratio requirements for FAI projects in calcium acetylide, ferroalloy, caustic soda, coke, electrolytic aluminium and other energy‐guzzling and high contamination sectors. Previously, the ratio for investment projects was about 35% or more for transport, coal, property and electrolytic aluminium and about 25% or more for postal services and chemical fertiliser. We believe such a move will further stimulate bank lending to government‐backed industries and, thus, lead to high growth of infrastructure investments in the short term. PBOC to maintain loose monetary policy. PBOC Vice Governor Yi Gang said on April 23 that the central bank would continue to implement a moderately easing monetary policy to promote economic growth. He added that economic signs in China were ʺbetter than expectedʺ because of the countryʹs proactive fiscal policy, moderately easing monetary policy and stimulus plans. He said the Chinese financial market was stable and sound and industrial output was increasing. ʺLiquidity of domestic lenders is more sufficient than overseas banks,ʺ he said, noting the PBOC had reduced the required reserve ratio, cut interest rates and encouraged lenders to extend more loans. Yi said the central bank would stick to a moderately easing monetary policy to ensure sound and healthy development of the economy. He also stressed that the central bank would guide financial institutions to increase loans properly and optimise the credit structure, channeling more loans to small to medium‐sized enterprises (SMEs), programmes to increase employment and post‐disaster reconstruction. However, he said, loans to energy‐intensive or polluting enterprises should be strictly controlled. China starts trial of renminbi settlement in foreign trade. The State Council announced a pilot programme to allow exporters and importers in five cities, Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan, to settle cross‐border trade deals in renminbi. The latter four cities are all in South Chinaʹs Guangdong Province. The State Council said it was important for promoting economic and trade ties between China and neighboring countries and regions to settle cross‐border trade deals in renminbi. Information about when and how the trial programme will start was not available. The State Council urged departments concerned to issue relative rules as soon as possible. Long-term target set for scrapping outdated producers. China will eradicate more obsolete industrial plants in the next three years to maintain economic growth and boost industrial upgrading, the NDRC said on its website on 3 May. According to the NDRC, the government will eliminate 72m tonnes of obsolete iron capacity and 25m tonnes of obsolete steel capacity by 2011. Meanwhile, blast furnaces smaller than 300cu m, and electric arc furnaces and converters with capacity of up to 20 tonnes will be gradually eliminated, according to the NDRC. The NDRC also requires an elimination of capacity for 300,000 tonnes of obsolete copper‐producing capacity this year, while that of lead will be reduced by 600,000 tonnes and zinc by 400,000 tonnes in two years. The light and textile industries are also required to slash 2m tonnes of obsolete paper production capacity and 7.5bn metres of obsolete textile‐printing capacity by 2011, according to the announcement. Oil refiners with annual processing capacity of less than 1m tonnes would be shut down in the next three years, it said. CBRC adjusts policy for setting up branches. The China Banking Regulatory Commission (CBRC) issued a statement on 30 April to adjust its policies for joint‐stock medium and small commercial banks and city commercial banks to set up branches. According to the statement, the CBRC China to lift investments on technological upgrades. China’s State Council held an executive meeting yesterday and called for a boost in private investments on technological upgrades and a health insurance system for retirees of bankrupt state‐owned enterprises (SOEs). According to a statement issued after the meeting, the Central Government will provide interest subsidies of about Rmb20bn to enterprises on their investments in 29
30
May 2009
May 2009
technological upgrades. The subsidies will be mainly allocated to six areas, such as: i) research and development (R&D) projects and product reconstructions in the steel, non‐ferrous metals, petrochemicals, textiles and other light industries; ii) national construction projects, especially self‐raised equipment used; iii) new power‐driven cars and energy‐saving and pro‐environmental technologies; iv) integrated circuits and new generation colour TVs, telecom technology (TD‐SCDMA) and the Internet; v) equipment accessories for wind power, nuclear and other clean power generation and; 6) logistics services. The Rmb20bn in subsidies will be part of the Rmb4trn stimulus package. The meeting also decided that the Central Government would provide subsidies amounting to Rmb42.9bn to health insurance system for retirees of bankrupt SOEs, as part of the medical reform. Hong Kong Economy
Hong Kong’s Composite CPI grew 1.2% YoY in March 2009, up from
0.8%YoY in February 2009, but down from 4.2% YoY in February 2008.
Breaking down the data, the tail-raising factor accounted for 1.3% of the
growth and prices declined 0.1% in 3M09. Looking at the sub-index, we
note that prices of alcoholic drinks and tobacco, and clothing and
footwear went up most. The first item was due to a hike in tobacco tax
rate and partly for seasonal reasons. Most of the other sub-indices
showed signs of gradually stabilising.
Support for economic zone to boost mainland-Taiwan
cooperation. The State Council recently passed a plan to support the development of an economic zone on the western side of the Taiwan Straits. The aim of the plan is to boost development of a region, involving Fujian Province, and promote cooperation with Taiwan. The blueprint for an economic zone on the western side of the Taiwan Straits was included in the countryʹs 11th Five‐year plan (2006‐10) in 2006. According to the plan, the economic zone will become a frontier platform to boost industrial and cultural exchanges across the straits. Under the guidelines, China will speed up infrastructure construction in the region to meet the needs after the realisation of direct flights, postal and shipping services across the straits. Regional coordination and cross‐province cooperation will be stressed in the region to accelerate the regional development, both in urban and rural areas, according to the plan. In addition, the zone will be able to carry out tryouts of major reforms, as a system for innovation will be established. In March 2009, Hong Kong’s total exports in value terms decreased
21.1% YoY and imports went down 22.7% YoY, against falls of 23.0%
YoY and 17.5% YoY a month earlier. Domestic exports tumbled 41.1% in
March 2009, compared to 39.6% the preceding month. However,
re-exports declined 20.5% in March, lower than the fall of 22.4% in
February. Exports to North America and Western Europe recovered
slightly, while those to elsewhere decreased further.
NDRC lifts gasoline and diesel prices. The NDRC announced on its website on 24 March that the ex‐factory price of gasoline would rise by Rmb290/tonne (up 5.3%) and that of diesel by Rmb180/tonne (up 3.7%). The prices rose from current levels to Rmb5,730/tonne and Rmb4990/tonne, respectively, effective on 25 March. The price adjustments were mainly due to consecutive hikes in international oil prices, as well as the requirement for reforms of resource prices under the current deflationary situation. As petroleum weightings are only about 2% in the CP) and about 5% in the EFPI, the price hikes will have little impact on the two indices. Amid the current deflationary climate, the overall impact will be also quite limited. Looking foreword, the authorities will further accelerate reforms of resource prices such as electricity, gas, water, and so on. We believe the government is likely to raise the prices of water for household users in some cities, as well as for non‐agricultural industrial users. Total retail sales decreased 7.7% YoY in value terms in March 2009, a
rebound from the fall of 12.7% YoY in February 2009. In volume terms
retail sales slipped 9.3% YoY in March versus the decrease of 13.9% YoY
in February 2009.
31
The seasonally adjusted unemployment rate came in at 5.2% in 3M09,
up from 5.0% in the preceding three month period. The actual
unemployed persons increased from 172,000 to 187,200 in March, a
rise of 15,200, a tad higher than 14,300 in February, but lower than the
16,400 in January. We see the monthly increase trending lower.
32
May 2009
May 2009
Major Economic Indicators
2008
Mar
7.3
7.6
(1.0)
7.9
6.6
(28.1)
20.0
3.4
4.2
123.7
%YoY
2007 2008 2009E
Apr May
GDP
6.4
2.5
1.5
Total exports
9.2
5.4
(3.5)
14.5 10.3
- Domestic exports
(18.9) (16.8) (18.0)
(10.0) (12.0)
- Re-exports
10.8
6.0
(3.0)
15.5 11.3
Imports
10.3
5.1
(2.0)
11.3 15.4
Trade balance (HK$ bn)
(180.5) (202.0) (180.0)
(16.2) (27.5)
Retail sales value
12.8 10.3
3.5
18.5 13.0
Unemployment rate (%)
4.0
4.1
4.2
3.3 3.3
Composite CPI
3.8
2.1
1.0
5.4 5.7
Fiscal deficit/surplus
86.2 30.9 (80.0)
1.8 (5.7)
(YTD HK$ bn)
Tourist arrivals
11.6
4.8
5.0 11.2 11.2 6.3
M2
20.8
2.7
6.0 13.5 14.5 11.4
Monetary base
8.2
58.3 (10.0) 10.3 9.4 9.9
3-month HIBOR
4.3
1.4
1.5
2.0 1.9 1.8
(Period average %)
HSBC best lending rate (%) 6.8
5.0
4.8
5.3 5.3 5.3
Property price
25.7 (11.1) (6.0) 29.1 26.3 25.8
(domestic premises)
Jun
4.2
(0.6)
(20.2)
0.2
1.3
(24.0)
11.6
3.3
6.1
(16.5)
Jul
11.1
(16.3)
12.4
15.4
(19.5)
13.6
3.2
6.3
(24.2)
Aug
1.9
(17.1)
2.7
1.5
(12.9)
10.3
3.2
4.6
(36.2)
Sep
1.7
3.6
(20.0)
4.6
3.9
(16.0)
7.1
3.4
3.0
(48.6)
Oct
9.4
(23.1)
10.9
11.3
(14.3)
0.4
3.5
1.8
(37.3)
Nov
(5.3)
(31.5)
(4.1)
(7.9)
(8.2)
1.3
3.8
3.1
(9.3)
Dec
(2.5)
(11.4)
(39.0)
(10.3)
(16.2)
(11.8)
1.1
4.1
2.1
30.9
2009
Jan
(21.8)
(50.6)
(20.7)
(27.1)
7.2
7.4
4.6
3.1
49.8
Feb
(23.0)
(39.6)
(22.4)
(17.5)
(23.2)
(12.7)
5.0
0.8
43.2

ExCo approves proposal on government bond programme: On 28 April 2009, the Executive Council approved a proposal to implement a government bond programme and present the Legislative Council with resolutions to authorise the government to borrow and to set up a fund to manage sums raised under the programme. The programmeʹs primary objective is to promote the further and sustainable development of the local bonds market through systematic issuance of government bonds. The Secretary for Financial Services and the Treasury, Professor KC Chan, said the programme would involve issuances of bonds for institutional and retail investors. For a diversified mix and to meet market demand, bonds of tenors ranging from two to 10 years will likely be issued at the initial stage of the programme. Initial market views indicate that it may be able to digest government bonds of HK$10bn‐20bn over the course of a year. And the programmeʹs borrowing ceiling is proposed to be set at HK$100bn or equivalent. However, it represents a long‐term target over periods of five to 10 years of implementation of the programme and fully reflects its long‐term and ongoing nature.
Inland Revenue (Amendment) Bill 2009: On 30 April 2009, The Inland Revenue (Amendment) Bill 2009, which seeks to implement one of the revenue measures announced in the 2009‐10 Budget, was gazetted. Under the bill, the Inland Revenue Ordinance (Cap 112) will be amended to effect the revenue proposal of allowing a one‐off reduction of 50% of salaries tax and tax under personal assessment for year of assessment 2008‐09, subject to a ceiling of $6,000. The reduction will be reflected in the taxpayerʹs final tax payable for 2008‐09. It is estimated that the proposal to reduce salaries tax and tax under personal assessment for 2008‐09 by 50%, subject to a ceiling of $6,000, will cost the government about $4,100m during 2009‐10. The bill will be introduced to the Legislative Council on 13 May 2009. This measure will alleviate peopleʹs hardships and share their burdens in times of difficulties. Mar
(21.1)
(41.1)
(20.5)
(22.7)
(18.2)
(7.7)
5.2
1.2
1.4
5.6 10.4 (2.9) 3.5 (1.4) (1.1) (0.2) 11.0 (8.1) 1.7
5.6 8.1 5.6 1.8 (6.1) (3.6) 2.7 3.2 1.5
10.0 9.2 9.2 15.1 19.6 32.5 58.3 59.9 59.5 73.4
2.1 2.2 2.2 2.6 3.7 2.2 1.4 0.8 0.7 0.8
5.3 5.3 5.3 5.3
24.6 21.5 18.2 15.8
5.3
5.3
5.0 5.0 5.0 5.0 5.0
(7.4) (11.1) (13.1) (14.4) (14.5)
Note: Forecast of unemployment rate and best lending rate refer to year‐end figures. Sources: Hong Kong Census and Statistics Department, HKMA, HTKB, CEIC, BOCI Research estimates Policy Highlights

33
Central Government to expand Hong Kong renminbi bonds
market. On 18 April 2009, a spokesman for the Financial Services and the Treasury Bureau welcomed the Central Government’s measures to expand the renminbi bonds market and to facilitate bank borrowings by Hong Kong enterprises operating on the mainland. The spokesman said that allowing Hong Kong banks in China to issue renminbi bonds in Hong Kong and consideration of the Ministry of Finance of the mainland to issue renminbi bonds in the SAR would help promote the development of the local bonds market and further reinforce Hong Kongʹs position as an international financial centre. In order to facilitate borrowing by Hong Kong enterprises, the Central Government will allow them to use assets in Hong Kong as collateral to secure loans from Hong Kong banks on the mainland. The implementation of this measure amid such a difficult business environment will help alleviate the financing problems of Hong Kong enterprises on the mainland. Huaqiao in the Middle Kingdom
34
May 2009
May 2009
AUTOMOTIVE
HK listed – Neutral
Top pick: FAW CAR
A shares – Neutral
CHEMICALS
Sales of heavy-duty trucks (including chassis) dropped 8% YoY, while those of
semi-tractors tumbled 71% YoY in March 09. Large buses sales declined 5% YoY
in March 2009.
Dongfeng Motor (0489.HK/HK$6.05) — BUY DMG’s net profit for 2008 grew 7% YoY to Rmb4,040m. Meanwhile, its gross margin increased to 16.8% in 2008 from 16.5%% in 2007, mainly due to strict cost controls and a higher domestic content ratio. We believe DMG has a relatively strong competitiveness in China’s passenger car market. Passenger vehicles business segment remained DMG’s key earnings contributor. Earnings contribution from passenger vehicles accounted for more than 100% of its total operating profit last year. Looking ahead, we believe the government’s stimulus measures for the automotive industry will help improve demand for passenger vehicles, especially small cars, over the next few months. We believe sales of DMG’s passenger vehicles in 1Q09 increased 10% YoY to about 198,000 units, against a concurrent 8% rise in total sales of such vehicles nationwide. FAW CAR (000800.SZ/Rmb15.85) — BUY FAW Car’s gross margin slid 5.5ppts YoY in 1Q09, causing a drop in net profit of 20.2%. We believe the product mix adjustments and lower retail prices were the main drags on profitability. However, the auto industry is now on the road to recovery, and we are optimistic about FAW’s new launches and the effects of improved sales on its future results. With the parent company now close to integrated listing, we believe the company deserves a valuation premium. Sales revenue (LHS)
Pretax profit (LHS)
Source: China Automotive Industry Newsletter 35
Pretax margin (RHS)
(8)
(7)
(37)
6
(13)
10
6
(11)
(7)
40
8
12
(17)
21
(8)
(10)
(11)
(30)
(4)
(5)
(8)
(12)
(30)
(1)
14
24
20
(5)
12
52
3,400
25
2,900
20
2,400
15
1,900
10
1,400
5
900
0
Urea (LHS)
KCI (LHS)
Pure MDI (RHS)
Source: China Petroleum & Chemical Industry Association 01/09
10
8
2
5
20
30
07/08
7
7
(13)
25
8
35
3,900
01/08
22
23
18
50
8
4,400
07/07
Mar
2
(8)
(71)
2
(2)
30
(4)
(5)
(5)
(4)
01/07
Dec Jan09 Feb
(20) (32)
42
(36) (64)
7
(62) (87) (73)
(42) (35)
42
(19) (30)
43
13
(2)
75
(23) (36) (12)
(13) (52) (4)
2
(40) (38)
(35) (31) (4)
07/06
09E Oct08 Nov
5
(7) (21)
(5) (33) (39)
(5) (36) (71)
2
(17) (25)
8
(7) (26)
12
22
10
6
(6) (30)
5
(14) (17)
2
14 (23)
8
(11) (35)
01/06
08
6
12
9
(13)
5
19
(3)
10
1
(6)
(Rmb'000/tonne)
40
07/05
07
19
44
92
17
16
8
21
27
14
23
Key Statistics
(Rmb/tonne)
4,900
01/05
0
(2)
07/04
(50)
1-2 04
05/04
08/04
11/04
03/05
06/05
09/05
12/05
04/06
07/06
10/06
1-2 07
05/07
08/07
11/07
03/08
06/08
09/08
12/08
0
Qingdao Kingking is China’s largest manufacturer of candles and related products. Its products are mostly targeted at international markets, with its exports accounting for more than 15% of China’s total candle exports. It ranks No 1 in China in terms of production capacity and sales, and its output is among the top three globally. It has 1,300 patents, nearly 40,000 individual products and covers more than 50 countries and regions. In November 2008, the EU decided to impose anti‐dumping tariffs on Chinese imports based on the varying levels of damage to local makers. Qingdao Kingking and other two Chinese candle producers were deemed exempt from the anti‐dumping duties. Based on its current profitability levels, every 5ppts increase in its market share will lift EPS by Rmb0.01. Our initial estimates have Kingking’s share of the EU market at 20‐25% in the next few years. 01/04
50
Qingdao Kingking (002094.SZ/Rmb8.16) — NR 07/03
8
6
4
2
100
% YoY
Trucks
Heavy
Semi-tractor
Medium
Light
Mini
Buses
Large
Medium
Light
Passenger cars
Sedan
MPV
SUV
Minivan
Total
01/03
150
Blue Star posted a net loss of Rmb160.72m in 2008, even though operating revenue edged up 1.48% YoY to Rmb8.02bn. The net loss attributable to the listco came in at Rmb153.62m, a decline of 135.87%. Blue Star announced that it would pay no dividend or make a capital fund share transfer for the year. The main reason for the loss was the 7.02ppts decline to 7.57% in the gross margin for products due to lower prices and higher costs. Gross profit fell 40% to Rmb654m. Our current estimate is for a 2009 net loss of Rmb6.5m (LPS: Rmb0.12. We reiterate our SELL rating on the stock. 07/02
(% )
12
10
Blue Star New Material (600299.SS/Rmb11.52) — SELL 01/02
(Rmb bn)
200
Product Prices
Key Statistics
Operating Performance of Auto Industry
In light of the higher crude oil price and weak downstream demand, we are
concerned about the return to profitability of the sector. As such, we reiterate
our NEUTRAL ratings for both the H and A shares.

As a result, domestic passenger car sales increased 8% YoY in 1Q09. In
particular, sales of minivan surged 35% YoY in 1Q09.
2009. Meanwhile, the government also put the focus on development of new
energy vehicles. We now expect domestic passenger car sales to grow 10% YoY
in 2009.
Top pick: Yangnong Chemical
Domestic passenger car sales in March 2009 grew 10% YoY to 772,353 units.
We believe the new automotive stimulus measures may boost small car sales in
Poly MDI (RHS)
% YoY
Output
Urea
Potash
PVC
Nitric Acid
07
08
09E
Oct08
11.5
10.6
20.0
13.1
3.7
3.4
(5.3)
(6.0)
2.5
5.0
(2.1)
(2.8)
0.5
(5.2) (0.9) (2.3) 5.0 13.0
(15.0) (38.3) (44.3) (20.0) 5.7 19.8
(29.0) (38.7) (22.7) (8.5) (7.2) (6.5)
(33.0) (27.2) (30.2) (15.0) (17.0) 17.2
Price
Urea
KCI
Nitric Acid
Pure MDI
Poly MDI
PVC
% YoY
0.1
5.4
1.8
5.5
14.3
6.0
13.8
71.6
23.8
(3.0)
(14.7)
1.1
(5.2)
3.5
(15.1)
(8.2)
(25.0)
(10.8)
% MoM
(10.8)
0.0
(50.0)
(7.0)
(24.0)
(14.0)
Nov
(6.8)
(3.9)
(50.0)
(10.0)
(7.7)
(15.7)
Dec
(3.4)
(0.5)
1.0
(23.5)
(7.1)
8.6
Jan09
0.3
(6.0)
(1.0)
0.0
0.0
1.5
Feb
7.2
7.5
14.0
(5.7)
0.0
4.5
Mar
3.8
7.5
5.3
3.6
0.0
3.0
Sources: China Petroleum & Chemical Industry Association, BOCI Research estimates Sources: China Automotive Industry Newsletter, BOCI Research estimates
36
May 2009
May 2009
CONSUMER – Beer, Wine & Liquor
Top picks: Kweichou Moutai
A shares – Overweight
Beer output grew around 5.3% YoY to 8.00m kilolitres in 3M09.
Revenue of the beer industry rose 14.7% YoY in 2M09, but profit tumbled
58.4% YoY.
Liquor production volume went up about 18.5% YoY to 1.54m kl in 3M09.
Revenue of the liquor industry rose 20.2% YoY in 2M09 and profit grew 29.7%
YoY.
Wine output fell about 4.8% YoY to 0.20m kl in 3M09.
Revenue of the wine industry edged up 0.7% YoY in 2M09, but profit fell 11.1%
YoY.

Industry sales revenue rose 2.9% YoY to Rmb21.5bn in 2M09.
Industry profit surged 78.7% YoY to Rmb1.5bn in 2M09.
China Foods (0506.HK/HK$3.93) — BUY Tsingtao Brewery (0168.HK/HK$22.00; 600600.SS/ Rmb25.66) — BUY (H); HOLD (A) Tsingtao’s 1Q09 net profit surged 53.8% YoY to Rmb200m (EPS: Rmb0.15), although revenue rose just 6.4% YoY to Rmb3.8bn. The earnings growth was in line with market consensus and was due todeclines in selling expenses and effective income tax rate. The company’s total sales volume increased 5.2% to 1.21m tonnes and that of the top four brands accounted 95% of total beer sales. The sales volume of Tsingtao brand beer rose 5ppts to make up for 50% the total, compared to 45% in 2008. Tsingtao will benefit from declines in raw material prices from 2Q09. Gross margin for 1Q09 came in down 1.7ppts YoY at 39.8%. Raw materials have inventory periods and their use at low prices from 2Q09 will see gross margin expand. We maintain our earnings forecasts and reaffirm our ratings for the H and A shares. Key Statistics
(YoY %)
40
30
20
10
0
(10)
2005 2006 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 2007 2008 3M09
Output of liquor
Output of beer
Output of wine
Sources: China Light Industry Association, BOCI Research 37
06
07
08
5M
2006
2007
2009
8M 11M 5M 8M 11M 2M
Revenue
Beer
16 17
16
20 18 16 14 16 16
Liquor
31 33
30
31 34 34 33 36 30
Wine
25 28
30
19 23 18 36 24 30
Profit
Beer
20 21 (3)
30 23 17 (4)
3 (3)
Liquor
26 35
37
26 37 38 63 46 37
Wine
16 18
38
27 18 19 33 45 38
Gross margin (%)
Beer
34.0 34.0 31.5 33.4 33.9 33.4 29.9 31.5 31.5
Liquor
34.8 36.0 34.2 36.2 36.1 36.0 36.1 34.3 34.2
Wine
36.7 37.0 32.8 39.3 36.1 35.7 37.5 34.3 32.8
HK listed – Overweight
Dairy products output edged up 3.3% YoY to about 4.4m tonnes in 3M09.
Laojiao’s net profit for 1Q09 rose 3.6% YoY to Rmb530 (EPS: Rmb0.38) as revenue edged up 1.3% YoY to Rmb1.28m. It posted accounts receivable of Rmb465m. The decreases in its selling expenses and income tax rate were the main driver of profit growth. Laojiao has a complete line in terms of mid‐ to highend liquor products, and its unique dualbrand strategy ensures that when sales of highend liquor come under pressure, midend ones can pick up the slack. High‐end liquor producers are improving quantity, and channel wholesale prices have picked up of late. We expect the industry may bottom out in 2H09. We reaffirm our BUY rating for the stock. (% YoY)
Top picks: Want Want China, Huabao Int'l
Liquid milk products output grew 3.1% YoY to about 3.7m tonnes in 3M09.
Luzhou Laojiao (000568.SZ/Rmb22.36) — BUY Beer & Liquor Outputs
CONSUMER – Dairy & Others
15
20
1
China Foods’ pro‐forma net profit for 2008 grew 34% YoY, broadly in line with our estimate. We expect the company to post substantial earnings growth on a turnaround in consumer pack‐edible oil and confectionary business, and steady growth in wine and beverage operations. Accordingly, we raise our 2009 earnings forecast by 7%. China Foods is a hidden pearl in the consumer sector. We reaffirm our BUY call for the stock and retain our target price of HK$4.90. Mengniu Dairy (2319.HK/HK$16.02) — SELL Mengniu booked a 2008 net loss of Rmb949m, in line with our forecast. We believed the worst was over for Mengniu, but the Osteoblast Milk Protein issue disrupted its recovery, and it will likely be the weakest performer among peers. We expect Mengniu to benefit from the lower raw milk cost, although its selling, general and administrative (SG&A) expenses will remain high. We raise by 1% each our 2009 and 2010 earnings forecasts. Due to its high valuation, we retain our target price of HK$8.30, and reiterate our SELL rating. Huabao International (0336.HK/HK$6.06) — BUY Huabao chairperson Chu Lam‐yu placed 190.5m shares, or a 6.18% stake, to investors, at HK$6.10 each. Chu, the founder and the major shareholder of Huabao, cashed in HK$1.16bn from the share sales and her stake in the company decreased from 62.64% to 56.46%. The company did not disclose the reasons for the placement in the announcement. Liquid Milk & Other Dairy Product Outputs
(% YoY)
60
40
30
20
26.9
38.5
33.8
(10)
Source: China Light Industry Association Huaqiao in the Middle Kingdom
50
(58)
30
(11)
Key Statistics
YoY %
Outputs
Liquid milk
Other dairy
products
2007
2008
1H 2H 1H 2H
2009
2M
06
07
08
25
15
16
23
(4)
(1)
7
16
25
29
9
13
(4)
(1)
9.2
9.1
11
21
23
15
22
22
19
18
20
14
22
23
15
23
22
15
29
21
19
18
21
19
2.9
24
10
0
2003
2004
2005
Output of liquid milk
2006
06/05
Output of other dairy products
Sources: China Dairy Yearbook, BOCI Research 38
2008
3M09
Industry
Total assets
Total sales
Gross margin (%)
Sources: China Statistical Yearbook, BOCI Research Huaqiao in the Middle Kingdom
May 2009
May 2009
CONSUMER – Retail
Top picks: Wangfujing Department Store
CONSUMER SERVICES – Gaming
Top pick: Galaxy Entertainment
Macau's visitor arrivals in March fell 11.7% YoY to 5.5m. The total visitor
Although gloomy weather in China partly affected traffic, the May Day holidays
arrivals for 1Q09 dropped 9.6 YoY, with those from China was down 14.2% YoY,
those from Hong Kong down 1.5% and those from elsewhere down 9.3%.
saw total retail sales of the 423 mid- to large-scale retail enterprises in
Shanghai during 1-3 May increase 4.2% YoY to Rmb2,344m (over 22% YoY in
2008). Sales of department stores, specialty stores and supermarket grew
18.7% YoY, 25.6% YoY and 1.4% YoY, respectively.
Gross gaming revenue for 1Q09 dropped 13% YoY to MOP26,019m, according
to Macau’s Gaming Inspection & Coordination Bureau.
Fujian Dongbai Group (3368.HK/HK$11.10) — HOLDª Galaxy Entertainment (0027.HK/HK$2.16) — BUY Dongbai’s net profit rose 61% YoY in 2008, but fell 12% YoY in 1Q09. Due to concerns over the lack of foot traffic at its Qunsheng store, our break‐even forecast period may be extended. Amid underlying concerns over the macro‐economic outlook and numerous other unfavourable factors, we have lowered our earnings forecasts for Dongbai and downgraded our rating it from BUY to HOLD. Galaxy Entertainment showed signs of bottoming out in 1Q09 with group EBITDA up 29% QoQ to HK$204m. The growth mainly stemmed from the steady VIP gaming turnover of HK$55bn and an operational efficiency programme to save HK$200m a year. StarWorld, Galaxy’s flagship hotel and casino complex, recorded a 17% rise in VIP gaming rolling chips for 1Q09, despite a 22% YoY decline in Macau during the period. The growth during tough times was largely due to re‐designing Level Three to serve VIP clients and the opening of a Sky Casino for VIP customers on Level 39. CityClubs, the four casinos for which Galaxy partners with hotels in the downtown, returned to profitability in 4Q09, after being in the red for two consecutive quarters last year. For 2008, Galaxy incurred a non‐cash impairment for its gaming licence amounting to HK$12.3bn. Going forward, the amortisation related to the gaming licence will come down to HK$100m a year, from about HK$1bn in 2008. Subsequent to the write‐down on the fair value of the gaming licence, the net book value of Galaxy as at end‐2008 was estimated to be HK$7.2bn or HK$1.85 per share. Intime Department Store (1833.HK/HK$3.05) — NR As Intime’s strategy is to enhance further its penetration rate in Zhejiang, we believe its peers will not be able to cut into its dominant position in the near term. More Greenfield stores outside its home market will distort its earnings in the short term, as these generally require longer time to mature, especially due to the unfavourable macro‐environment and gloomy consumer sentiment. Comparing its operating data with that of major competitors in Hangzhou, Intime is expanding its market share through further optimisation of merchandise at mature stores and new store opening in emerging commercial districts. Macau Visitor Arrivals
(Rmb bn)
1100
(YoY % )
24
22
20
18
16
14
12
10
1000
900
800
600
01/07
02/07
03/07
04/07
05/07
06/07
07/07
08/07
09/07
10/07
11/07
12/07
01/08
02/08
03/08
04/08
05/08
06/08
07/08
08/08
09/08
10/08
11/08
12/08
01/09
02/09
03/09
700
Retail sales of consumer goods (LHS)
Source: CEIC 39
Growth (RHS)
Wholesale and retail trades by category of main commodities
YoY %
Grain and oil
Meet, poultry and eggs
Clothing, shoes, hats & textiles
Sports & recreation articles
Household & video appliances
Furniture
Cosmetics
Gold, silver & jewellery
Communications appliances
Automobiles
Oct08 Nov08 2008 Jan-Feb 1Q09
10.2
5.9 22.7
16.3
9.6
13.1 13.9 22.3
12.0
9.6
20.3 25.4 25.9
17.4 15.6
2.1
4.6 17.9
13.5
8.4
0.8
7.5 14.2
2.7
1.4
12.8 15.7 22.6
27.1
na
14.5 16.3 22.1
14.6 14.8
30.6 31.1 38.6
16.3 11.8
(7.0) (4.8) 1.4
(9.2) (7.5)
19.6
7.7 25.3
9.3
11.1
3,000
Key Statistics
('000)
2,500
2,000
1,500
1,000
500
0
01/07
02/07
03/07
04/07
05/07
06/07
07/07
08/07
09/07
10/07
11/07
12/07
01/08
02/08
03/08
04/08
05/08
06/08
07/08
08/08
09/08
10/08
11/08
12/08
01/09
02/09
03/09
Key Statistics
Retail Sales of Consumer Goods
China
Source: CEIC HK
Others
Gross revenue from game of fortune
MOP m
1Q08 2Q08 3Q08 4Q08
2008 1Q09 1Q08
VIP Baccarat 20,801 20,100 17,255 15,616 73,772 16,828 20,801
YoY %
73
52
26
(8)
32 (19)
73
Slot machine 1,354 1,395 1,426 1,478 5,653 1,533 1,354
YoY %
80
69
63
30
57
13
80
Others
7,668 7,390 7,306 6,984 29,348 7,658 7,668
YoY %
36
33
26
5
24
(0)
36
Total
29,823 28,885 25,987 24,078 108,773 26,019 29,823
YoY %
62
48
28
(3)
31 (13)
62
Source: CEIC Source: NBS Huaqiao in the Middle Kingdom
40
May 2009
May 2009
ENERGY
Top picks: Sinopec
FINANCIALS (China)
The price of oil fluctuated within a narrow range in April. The spot price of ICE
During the last month, all Chinese listed banks released their results for 1Q09.
Brent moved between US$49/bbl and US$53/bbl before closing the month at
US$51/bbl.
Asian benchmark oils strengthened relative to global benchmarks in April. The
price of Minas (the benchmark for Daqing oil) strengthened from a US$2.7/bbl
discount to that of ICE Brent to a US$3.0/bbl premium. The discount of the
price of Duri (the benchmark for Shengli oil) to that of ICE Brent narrowed from
US$10.0/bbl to US$3.4/bbl.
In April, the median settlement price of Datong high-grade coal at
Qinhuangdao rose 3% MoM to Rmb610/tonne and that of Shanxi high-grade
coal increased 4% MoM to Rmb578/tonne. The FOB price of thermal coal at
Newcastle rose 2% MoM to US$63.9/tonne. The coal inventory at Qinhuangdao
dropped 30% MoM to 3.7m tonnes by the end of April.
Yanzhou Coal (1171.HK/HK$9.05; 600188.SS/Rmb15.36) — HOLD (H)ª; SELL (A) Yanzhou Coal’s earnings jumped 101% YoY to Rmb6.5bn in 2008 for both the H and A shares. However, its earnings in 1Q09 tumbled 48% YoY to Rmb831m for A shares, as sales volume fell 9% YoY and realised coal price dropped more than 20% YoY. Given the poor 1Q09 showing, we have cut our 2009 and 2010 earnings forecasts by 27‐29%. We have also downgraded our call for the H shares to HOLD and reietrated our SELL call for the A shares. CNOOC Limited (0883.HK/HK$9.94) — HOLDª We have downgraded our call for CNOOC Ltd to HOLD as the share price is already close to our target level of HK$8.89. Fushan Energy (0639.HK/HK$3.33) — BUY Fushan’s 2008 net profit of HK$577m was 21% below our forecast owing to one‐off items and an unexpected withholding tax. We have cut our 2009‐10 forecasts by 14‐15%. Despite this, we still expect the earnings to more than double in 2009 on the full‐year contributions from three mines acquired in late July 2008. We have reduced our target price from HK$3.61 to HK$3.07, but reafform our BUY call for the stock. (US$/bbl)
150
30
120
25
90
20
15
60
5
01/07
02/07
03/07
04/07
05/07
06/07
07/07
08/07
09/07
10/07
11/07
12/07
01/08
02/08
03/08
04/08
05/08
06/08
07/08
08/08
09/08
10/08
11/08
12/08
01/09
02/09
03/09
10
Domestic output (LHS)
Apparent demand (LHS)
Net imports (LHS)
IPE Brent price (RHS)
Sources: National Bureau of Statistics, China Petrochem & Chemical Industry Association, Bloomberg 41
30
Imports
Crude oil
Price
IPE Brent
(US$/bbl)
10E Oct08 Nov Dec Jan09 Feb Mar
2.7
9.0
3.0
3.4
4.4
7.9
3.6 0.2 0.3 (3.8) (1.1)
13.3 12.7 6.4 4.0 0.7
(1.5) (6.5) (9.4) (5.7) 1.7
7.9
9.5
6.4
28.2 (1.8) 11.6 (8.0) (17.9) (5.6)
98.5 56.9 66.7
75.4 55.3 43.5 45.0 44.0 47.3
9.6
5.1
Bank of China (3988.HK/HK$2.95; 601988.SS/Rmb3.64) — BUY (H&A) Bank of China’s net profit for 1Q09 declined 14% YoY to Rmb18.5bn, 6% better than our estimate due to lower expenses and provisioning. We expect BOC to see its net profit growth recover in 2Q09, due to lesser contraction of net interest margin (NIM), as well as a rebound in foreign currency loans yield, further stronger volume growth, and less provisioning for foreign currency securities. BOC’s coverage ratio reached 123.43% as at end‐1Q09, and we estimate the lender will raise it to 138% at the end of this year. As a result, we anticipate that BOC will record 2Q09 net profit growth of 4% QoQ. BOC’s current valuation is relatively undemanding due to its higher dividend yield and decent 2009 growth prospects. As such, we reaffirm our BUY ratings for both the H and A shares of BOC. (0.8) (10.1) (8.7) 38.3 27.1
(% YoY)
28
26
24
22
20
18
16
14
12
Source: NBS Sources: National Bureau of Statistics, China Petrochem & Chemical Key Statistics
08
09E Oct08 Nov
4,910 6,500
182
477
Dec Jan09 Feb
Mar
Deposit
New incremental loans
(Rmb bn)
Loan
Deposit (% YoY)
20
23
21
20
20
22
23
26
Lending (% YoY)
19
21
15
16
19
21
24
30
7-day inter-bank lending
rate (%)
1.24
1.7
2.7
2.3
1.2
0.9
0.87 0.84
Excess deposit reserve
ratio (%)
5.11
4.5
n.a
n.a
5.11
n.a
n.a
2.28
NPLs (%)
2.5
2.7
n.a
n.a
2.5
n.a
n.a
2.04
06/03
09/03
12/03
03/04
06/04
09/04
12/04
03/05
06/05
09/05
12/05
03/06
06/06
09/06
12/06
03/07
06/07
09/07
12/07
03/08
06/08
09/08
12/08
03/09
(m tonne)
35
YoY %
08 09E
Output
Crude oil
1.8 (1.4)
Natural gas 18.8 9.9
Refining
4.1 1.5
throughput
Coal
7.5 4.9
The combined net profit in 1Q09 fell 8.4% YoY and climbed 156% QoQ to
Rmb108bn, 4% lower than our forecast, due to less than expected net interest
margin (NIM), strong volume growth and higher provisioning. The decline on
yearly basis was mainly due to NIM contraction (2.14% in 1Q09 compared to
3.06% in 1Q08). The growth on quarterly basis was mainly due to significant
decreases of provisions and expenses. Loans grew 28% YoY in 1Q09. We do not
expect the absolute amount of new lending remain in 2Q09, but the growth
rate will remain high. Furthermore, we expect lesser contractions of NIM and
lower provisioning. As a result, total profit is expected to rise slightly. We
maintain our view that our forecast growth for 2Q09. Maintain Neutral rating on
China’s banking sector.
Growths of Loans & Deposits
Key Statistics
Crude Production, Import & Demand
Top pick: Bank of China, BoCom
772 1,618 1,071 1,893
*NPLs based on listed companies’ data; all other data from PBOC Sources: Listed companies, PBOC, BOCI Research estimates Industry Association, Bloomberg, BOCI Research estimates Huaqiao in the Middle Kingdom
42
May 2009
May 2009
FINANCIALS (Hong Kong)
HK listed — Neutral
Top picks: BOCHK, Standard Chartered, Ming An
FINANCIALS – Insurance
In March 2009, outstanding mortgage loans stayed flat YoY and fell 0.1% MoM
In the last month, two of China major insurers released their 1Q09 results.
while new loans approved number jumped 216% MoM and new loans approved
value posted a 46.0% MoM increase.
According to mReferral, existing homes new mortgage market shares for April
2009 stood at 17.4% for BOC (Hong Kong), 15.4% for Hang Seng Bank, 13.2%
for HSBC Holdings, 13.1% for Standard Chartered, 4.82% for Bank of East Asia,
4.76% for CCB (Asia), 3% for ICBC (Asia), 2.9% for Fubon Bank (HK), 2.7% for Dah
Sing Banking and 2.5% for DBS (HK).
China Life saw its 1Q09 net profit surge 53.5% YoY to Rmb5.4bn due to
increased investment income. Meanwhile, Ping An Insurance saw its 1Q09
earnings decline 72% YoY to Rmb2bn on a higher reserve and lower
commission fees. Recently, the China Insurance Regulatory Committee (CIRC)
announced that the total premium income in 1Q09 for all insurers rose 9.99%
YoY to Rmb327.7bn. For March, the total premium grew only4.45% YoY to
Rmb115bn, as opposed to a rise of 19.2% for February. Looking ahead, we
expect pressure on premium income growth to increase further, although it will
still be over 10% YoY for the full year. On our expectations of an improving
investment yield from the equities market, we maintain our NEUTRAL rating for
the insurance sector.
BOC Hong Kong (2388.HK/HK$11.90) — BUY BOCHK’s 1Q09 net operating income came in at HK$6.0bn and pre‐provision operating profit at HK$4.0bn, both broadly in line with our estimates and representing 25.9% and 28.0% of our 2009E forecasts, respectively. The lender posted a total net securities charge of HK$1.2bn, of which HK$1.06bn was for US residential mortgage‐backed securities. With the additional charge, we calculate provisioning of approximately 35% of gross value (HK$9.2bn) and we understand that there is no underlying default for such securities. BOCHK’s capital adequacy ratio remains high and we still believe that it will have a strong dividend‐paying capability when macro and operating environment normalise even though it will keep facing margin pressure in the near term. The lender’s impaired loans ratio fell from last year and was more benign than we expected. Accordingly, we reaffirm our BUY rating for the stock and stick to our target price of HK$11.20. We also maintain our estimates. Standard Chartered (2888.HK/HK$148.60) — BUY© StanChart’s 1Q09 income and profit reached “record levels”. We believe the strong results show that StanChart has been able to maintain core profit growth amid difficult economic conditions. While the macro picture remains cloudy to us, we believe there are growing signs that near‐term Asian credit impairments may be more benign than our previous expectations. With the improving sentiment and expected near‐term delivery of robust results, we believe that core profitability and valuation of StanChart will likely return to normal in the next 12 months. As such, we raise our target price for StanChart to 1.6x 2010E P/B at HK$170.40 from HK$80.60 and we revert our rating to BUY from HOLD. We encourage long‐term fundamental investors to build positions in the stock. (% )
42
36
30
24
18
12
6
0
(6)
(% )
01/03
04/03
07/03
10/03
01/04
04/04
07/04
10/04
01/05
04/05
07/05
10/05
01/06
04/06
07/06
10/06
01/07
04/07
07/07
10/07
01/08
04/08
07/08
10/08
01/09
55
Source: HKMA 43
65
60
Deposit growth (LHS)
Loan-to-value (RHS)
Ping An (2318.HK/HK$51.00; 601318.SS/Rmb41.14) — HOLD (H) ; BUY (A) Ping An Insurance’s 1Q09 net profit declined 72% YoY to Rmb2bn, due to a higher reserve and lower commission fees. Ping An benefited less from the stock‐market recovery because its market value losses as at end‐2008 dragged down its equity yield. Meanwhile, Ping An had to pay a higher commission due to its surging bancassurance business, which recorded premium growth of 150% YoY in 1Q09. Up to end‐March 2009, Ping An’s non‐life accumulated insurance premium grew 18.1% YoY to Rmb8.9bn, while its life insurance premium climbed up 43.4% to Rmb39.7bn. Looking ahead, we expect Ping An’s earnings growth in 2Q09 will not improve significantly due to its rising reserves and higher expenses. Taking into account its attractive A‐share valuation, we reaffirm our BUY rating. As the H shares are near fully valued, we maintain our HOLD rating. Market Share Breakdown — Mar 2009
Life
Non-life
Key Statistics
Growths of Loans & Deposits
50
Loan growth (LHS)
Prime
3M HIBOR
Prime - HIBOR
Savings deposit
rate
Loan growth
(% YoY)
Deposit growth
(% YoY)
2008
5.00
1.47
3.53
0.01
HK listed — Neutral
Top pick: China Life Insurance
2009E 2010E
4.90 5.05
0.97 1.22
3.93 3.83
0.01 0.16
10.9 5.0
13.3 2.5
7.5
5.0
Nov08
5.08
2.19
2.89
0.01
Dec
5.00
1.47
3.53
0.01
Jan09
5.00
0.88
4.12
0.01
Feb
5.00
0.82
4.18
0.01
Mar
5.00
0.90
4.10
0.01
Apr
5.00
0.87
4.13
0.01
China
Life
41%
Other
37%
China
Pacific
8%
4.93 10.89 6.74 3.84 (0.11)
17.02 13.33 3.69 1.87 4.51
Source: CIRC Ping An
14%
Others
33%
China
Pacific
11%
PICC
44%
Ping An
12%
Insurance Premium Growth
(Rmb bn)
Non-life insurance
premiums
Life insurance
premiums
Total insurance
premiums
Growth rate (%)
Non-life insurance
premiums
Life insurance
premiums
Total insurance
premiums
06 07 08 Nov08 Dec Jan09 Feb Mar
156 199 234 16 18
30
17 25
406 494 745
44
45
85
81
90
562 693 978
60
63
115
98
115
22
28
17
17
17
5.8
11.4 12
12
22
48
52
48
9.9
13.8 9.4
14
23
39
42
39
8.6
13.3 10
Sources: Bloomberg, Company data, BOCI Research estimates Sources: HKMA, BOCI Research estimates Huaqiao in the Middle Kingdom
44
May 2009
May 2009
MEDIA
A listed – Underweight
Top pick: TVB
METALS & MINING
Top pick: Shandong Gold, Zijin Mining
HK listed – Underweight
We note signs of economic recovery in the monthly consumption data for steel,
Industry regulator General Administration of Press and Publishing promulgated
aluminium and copper.
a Guide on Further Promoting the Reform of the Press and Publishing Industry
Structure in early April, calling for the creation, in the next three to five years,
of six to seven publishing groups each with annual revenue and total assets of
over Rmb10bn
There were falls of 10% MoM in the mainland April steel inventory, and 50%
Chinese websites, such as c114.net, have reported that China Satellite Mobile
We are now more positive on China’s recovery story and believe earnings
MoM in the Shanghai Futures Exchange (SFE) refined copper inventory on the
back of stronger end-user demand, based on anecdotal evidence.
Broadcasting Corp has signed a co-operative agreement with China Mobile to
promote handheld TV service jointly, using the home-grown CMMB technology.
outlooks for steel entities will improve in 2H09 as they benefit from lower iron
ore costs. We favour mainland producers of long steel products used for
infrastructure projects.
Price of copper on the domestic market up 27.5% MoM at Rmb39,772/tonne and
Xinhua Winshare (0811.HK/HK$2.79) — BUY that of aluminium up 13.0% MoM at Rmb14,156/tonne.
Xinhua Winshare’ 2008 recurrent net income edged down 0.6% YoY and was 4.1% below our forecast, mainly due to higher selling/administrative costs. Assuming even 4x P/E for the underlying businesses or 0.5x P/B for the non‐cash assets, we maintain our target price at HK$4.00 and reaffirm our BUY rating. Nonferrous metal stocks are more speculative as their earnings outlook is
uncertain. We reaffirm our BUY ratings for gold stocks, which we see as more
resilient in a turbulent economic environment.
Beijing Gehua reported a 26% YoY drop in 1Q09 net profit to Rmb42.4m (EPS: Rmb0.04), slightly below our expectation. This was mainly due to the absence of further profit tax exemption and higher depreciation. We retain our target price of Rmb8.00 on 42x P/E and reiterate our SELL rating. Shanghai Xinhua Media (600825.SS/Rmb17.39) — HOLDª Chongqing Iron & Steel (1053.HK/HK$2.86; 601005.SS/Rmb5.20) — BUY (H©&A©) The net profit of CIS for 1Q09 tumbled 89% YoY to Rmb20m, 4.4% of full‐year market consensus of Rmb445m and 10% of our 2009 forecast of Rmb196m. We believe earnings for 2H09 will improve as CIS will benefit from lower iron ore cost and its long steel products from the stimulus package. We upgrade our ratings for both the H and A shares to BUY, with target prices HK$3.10 for the H shares and Rmb5.80 for the A shares. On account of Xinhua Media’s 23% YoY recurrent net profit decline in 1Q09, we have cut our full‐year profit forecast by 34% to Rmb259m (EPS: Rmb0.446) and trimmed our target price to Rmb13.91. We downgrade the stock to HOLD. Newsprint Prices
US$ per million tonne
(% YoY)
Newsprint (US$/mt)
Adspending (HK$m)**
Circulation* (k)
Readership* (k)
i-Cable TV ARPU
03
04
502 550
14,312 16,423
1,430 1,385
4,935 4,211
230 232
05
614
n.a.
1,351
4,108
218
Dec05 Jan06
614 620
n.a. n.a.
n.a. n.a.
n.a. n.a.
n.a. n.a.
Feb
622
n.a.
n.a.
n.a.
n.a.
Mar
634
n.a.
n.a.
n.a.
n.a.
Apr
637
n.a.
n.a.
n.a.
n.a.
May
642
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a. n.a.
n.a. n.a.
n.a. n.a.
China print advertising volume growth (% YoY)
05/06/01
25/09/01
15/01/02
5/7/2002
27/08/02
27/12/02
15/04/03
08/05/03
25/11/03
16/03/04
07/07/04
26/10/24
22/02/05
14/06/05
04/10/05
24/01/06
16/05/06
05/09/06
26/12/07
18/04/07
08/08/07
28/11/07
25/03/08
15/07/08
04/11/08
03/03/09
800
750
700
650
600
550
500
450
400
Key Statistics
Sources: Bloomberg Newspaper
Magazine
Total
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
18.8
2.8
17.5
n.a.
n.a.
n.a.
3-month Futures Aluminium and Copper
7,000
Copper
5,000
Aluminium
3,000
1,000
Source: LME 46
Key Statistics
(% YoY)
(US$/tonne)
9,000
* Including Oriental Daily, Apple Daily, Ming Pao, SCMP ** assuming 40% off discount Sources: Datastream, HKABC, AC Nielsen, Admango, HC Media Research
45
01/99
05/99
09/99
01/00
05/00
09/00
01/01
05/01
09/01
01/02
05/02
09/02
01/03
05/03
09/03
01/04
05/04
09/04
01/05
05/05
09/05
01/06
05/06
09/06
01/07
05/07
09/07
01/08
05/08
09/08
01/09
05/09
Beijing Gehua CATV (600037.SS/Rmb10.76) — SELL Quick speed wire
rod
Ord. Plate -40mm
Hot-rolled sheet
Cold-rolled sheet
Galvanised steel
Aluminium
Copper
07 08 09E Nov08 Dec Jan09 Feb Mar
(7.0) (5.0) 15.0 (16.9) (19.9) (15.1) (19.9) (32.2)
(9.0)
(4.0)
7.0
4.0
3.0
21.0
(12.0)
(10.0)
(19.0)
(13.0)
21.0
77.0
17.0
10.0
5.0
1.0
(5.0)
0.0
(20.7)
(22.8)
(19.6)
(15.9)
(24.2)
(45.6)
(27.7) (24.7)
(22.7) (18.2)
(21.7) (18.2)
(17.2) (16.3)
(35.6) (30.6)
(52.1) (51.3)
(28.2) (39.3)
(22.3) (33.5)
(24.7) (33.6)
(20.0) (32.1)
(36.8) (35.7)
(56.9) (53.3)
Sources: Bloomberg, Company data, BOCI Research estimates Huaqiao in the Middle Kingdom
May 2009
May 2009

The State Council announced a reduction in minimum capital requirements
for 11 sectors, including property. The minimum capital requirement for
property projects was raised from 20% to 35% from2004. While the State
Council did not disclose the level of reduction, in our view it is still possible
to restore the figure to the previous one of some 20-25%. With the recent
improvements in property sales and easier financing from banks, developers’
funding pressure has been greatly relieved. The said policy will likely further
ease the financing pressure of developers.

The ASP of commodity houses in 70 mainland cities fell 1.3% YoY in March,
0.1ppt higher than that in February, according to NDRC statistics. Shenzhen,
Guangzhou, and Shijiazhuang led the way on price decreases, with falls of
12.2%, 8.9%, and 7.2%, respectively.
Pharmaceuticals industry benefits from medical reform scheme Total revenue (LHS)
08/07
11/07
02/08
Net profit (LHS)
Source: Chinese Medicine Economic Information 05/08
08/08
Net profit margin (RHS)
105
100
95
90
Land development index
Vacancy area index
Housing development area index
Sources: Chinese Medicine Economic Information, BOCI Research estimates Source: Soufun.com 47
48
01/09
05/07
110
10/08
7
115
07/08
8
Key Statistics
04/08
9
Property Indices
01/08
10
Sales increase (%)
Profit increase(%)
Aug08 Nov08 Feb09 Aug08 Nov08 Feb09
Pharmaceutical total 29.8 21.6
16.4
35.8
10.2
19.1
Finished drugs
27.5 25.9
19.3
27.5
37.9
17.0
TCM Yinpian
43.5 33.6
75.5
69.9
18.0 117.8
TCM
25.0 14.1
19.4
12.5 (3.6)
18.2
Biological drugs
37.3 53.3
10.0
43.7
2.3
33.0
Bulk drugs
32.7 10.0 (2.5) 76.2 (4.8) (7.7)
14.2 25.8
31.0
19.3
17.3
74.6
Medical devices
10/07
(%)
07/07
(Rmb m)
600,000
500,000
400,000
300,000
200,000
100,000
0
02/07
04/07
Key Statistics
Revenue of Pharmaceutical Industry
COLI announced that its property sales in April surged 1.15x YoY, but dropped 11.4% MoM, to HK$5.4bn. Meanwhile, its total GFA sold rose 1.49x YoY, but fell 7.4% MoM, to 578,900sqm, with ASP down 4.3% MoM and 13.5% YoY to HK$9,280/sqm. In 4M09, COLI booked contracted sales of HK$14.6bn, representing 52% of its 2009 target of HK$28bn. 01/07
China Overseas Land & Investment (0688.HK/HK$14.50) — HOLD 10/06
On 25 April, media around the world reported of an outbreak of swine flu in Mexico. Since then, the threat of swine flu has been emphasised by many countries, with measures taken to prevent the spread of the disease. Producers of antibiotics and common TCM cold prevention drugs may benefit from the outbreak. 07/06
Producers of pharmaceuticals may benefit from outbreak of swine flu Poly sold a total GFA of 484,000sqm in April, up 324% YoY, while its contracted sales rose 30% MoM and 241.5% YoY to Rmb4.03bn. For 4M09, Poly’s GFA sold surged 182.2% YoY to 1.25m sqm, while its contracted sales jumped 212.8% YoY to Rmb10.52bn. 04/06
Poly Real Estate (600048.SS/Rmb21.73) — BUY 01/06
The policy aims to train more TCM experts, establish more TCM hospitals and destinations, and stimulate more usage of TCM services and medicines through advantageous policies for the sector. Companies will benefit from the policy in the long run. 10/05
TCM sector will benefit from State Council’s newly‐issued policy Vanke sold a total gross floor area (GFA) of 595,000sqm in April and booked contracted sales of Rmb5.27bn, representing increases of 23.7% YoY and 22.0% YoY, but decreases of 18.0% MoM and 14.0% MoM, respectively. In 4M09, the company sold a total GFA of 2.12m sqm and booked contracted sales of Rmb17.49bn, up 30.4% YoY and 21.4% YoY, respectively. 04/04
China Vanke (000002.SZ/Rmb9.84; 200002.SZ/HK$8.89) — BUY 01/04
Most pharmaceutical companies will benefit from the medical reform. In our view, however, the following will benefit more: i) manufacturers of hygiene‐use products and medical equipment; ii) providers of vaccinations and diagnostic reagents; iii) producers of medicines used in hospitals, especially those for serious diseases; iv) big drugs distributors; v) exclusive brand drug producers and regional and national generic drug manufacturers; vi) companies with strong R&D competencies. 07/05
On 6 April, the State Council released an official document, titled Opinions
about deepening the Health System Reform. The scheme aims to set up a
basic medical-care and health system covering all citizens before 2020. On 7
May, the State Council issued a statement on Measures to Advance the
Development of the Traditional Chinese Medicine Industry..
A shares –Overweight©
Top pick: CR Land, Poly Real Estate
04/05

PROPERTY (China)
01/05
Top picks: Tasly, Tiantan Biological
10/04
PHARMACEUTICALS
07/04
Property dev. investment index
Property dev. climate index
(% YoY)
Property investment
Residential property
investment
Commodity housing starts
(area)
Commodity housing
completion area
Commodity housing sales
area
Commodity housing sales
amount
Average selling prices
06
23
26
07
30
32
08 Sep08 Oct Nov Dec J-F09 Mar
21
12
11
8
11
1
7
23
12
18
8
7
1
6
17
21
3
1
(13)
5
(11)
(9)
(15)
(18)
9
10
(7)
29
23
38
26 (19)
(16)
(29) (33) (19)
(0)
16
55
44 (19)
(28)
(34) (39) (14)
11
36
13
15
(0)
(1)
12
14
(0)
(5)
(21) (16)
(2)
(0)
Sources: China Real Estate Net, Soufun.com, BOCI Research estimates Huaqiao in the Middle Kingdom
May 2009
May 2009
PROPERTY (Hong Kong)
Developers – Underweight
Top pick: MTR Corp

SMALL/MID-CAP
Top pick: Vinda International
The April consideration and number of sales and purchase agreements for
properties came in at HK$40.3bn, up 41.0% MoM and 20.3% YoY, and 11,148,
up 38.3% MoM and 1.9% YoY, respectively.
Coda Properties bought a Fanling residential/commercial site at an early-May
land auction for HK$61m or accommodation value of HK$2,766/sq ft for
commercial development. The price was well above the expected market
range of HK$38m to HK$52m. However, the price is less indicative given the
small size of the site and its fringe location.
We believe it was a normal rebound during a correction cycle and believe there
are still downside risks for residential prices in 2H09 given the deteriorating
economy. We reaffirm our UNDERWEIGHT rating for Hong Kong developers.

Li Ning announced the signing of a deal with the Chinese national badminton
team. Badminton-related products, including badminton rackets, will start to
be sold at retail outlets in May. According to a General Administration of
Sports of China survey, badminton ranks second in terms of participation on
the mainland. We believe the cooperation will further enhance the company’s
leading position in the professional sportswear industry, strengthen its
brand image and pave the way for its long term growth. However, we believe
the contribution to its short-term sales will be minimal.
Vinda International (3331.HK/HK$4.05) — BUY MTR Corporation (0066.HK/HK$21.40) — BUY MTR has announced a joint venture (49% owned) with the Shenyang Municipal Government to operate and maintain the two metro lines for a franchise fee over a concession period of 30 years. The total investment in the JV will amount to Rmb400m, of which Rmb200m will be the registered capital. Although the Shenyang JV will only make a minimal contribution to its NAV and earnings, it will help the MTRC further expand its presence in China and explore opportunities in property projects in the city. This will benefit MTRC in the long term. We reaffirm our BUY rating for the stock. Vinda’s 2008 net profit surged 121% YoY to HK$166m, above both our estimate and market consensus. We believe Vinda’s 2009 earnings will grow on margin and capacity expansions. The price of wood pulp has dropped more than 45% from the peak in 3Q08 and fallen more than 30% from the average in 2008. In view of the decreasing raw material prices and strong demand for personal hygiene products, we raise our earnings forecasts by 10.7% for 2009 and 13.4% for 2010. Pegging a 2009E P/E of 13.5x to its EPS, we lift our target price for Vinda from HK$3.65 to HK$4.00 and reaffirm our BUY rating. Ajisen (China) (0538.HK/HK$4.31) — HOLD Ajisen’s net profit for 2008 fell 4.6% YoY to HK$221m. The number of Ajisen’s restaurants increased from 210 as at end‐2007 to 315 as at end‐2008. The company managed to achieve same‐store sales growth of 6.9% on the mainland. As a fast‐food restaurant chain operator, Ajisen’s business is more defensive compared to other industries during an economic downturn. We believe Ajisen will face challenges to deliver strong same‐store sales growth in 2009, especially in 1H09. We lower our earnings forecasts for Ajisen by 14.8% for 2009 and 10.2% for 2010. Based on 15x 12‐month forward P/E, we cut our target price from HK$4.70 to HK$4.40 and downgrade our rating from BUY to HOLD.
Vinda International — Profit & Loss
Private Residential Property Completions & Sales
Key Statistics
Year ended 31 Dec
Revenue (Rmb m)
Change (%)
Net profit (Rmb m)
Fully diluted EPS (Rmb)
Change (%)
Core EPS (Rmb)
Change (%)
Fully diluted P/E (x)
Core P/E (x)
CFPS (Rmb)
P/CF (x)
EV/EBITDA (x)
DPS (Rmb)
Yield
(%)
%
Supply (LHS)
2010E
2006
2008
2004
2002
1998
2000
1996
1994
1990
1992
1988
Take-up (LHS)
Sources: Housing Department, Centaline 49
7
07
6
5
1986
1982
1984
1980
No. of Units
40,000
35,000
30,000
25,000
20,000
15,000
10,000
08 09E Oct08 Nov Dec Jan09 Feb Mar
CCI
1
25
(8)
6
(10) (15)
(18) (20)
CCL Index
3
24 (15)
7
(11) (15)
(17) (20) (17)
-
4
3
Trans. No.
(20) 47 (22) (54)
(79) (22)
(66) (65) (27)
2
Trans. Val
(20) 67 (21) (63)
(87) (21)
(72) (69) (35)
Primary trans
(19) 40 (48) (82)
(97) (48)
(71) (48) (66)
Unsold stock
12 (58)
Vacancy (RHS)
7
(9)
6
13
29
43
33
Sources: Centaline, Midland, BOCI Research estimates Huaqiao in the Middle Kingdom
2007
1,778
31
78
0.082
(34.8)
0.082
(34.8)
49.3
49.3
0.02
185.0
22.4
0.050
1.2
2008 2009E 2010E
2,424 2,838 3,546
36
17
25
166
268
317
0.184 0.296 0.351
123.8
61.4
18.5
0.184 0.296 0.351
123.8
61.4
18.5
22.0
13.6
11.5
22.0
13.6
11.5
0.44
0.26
0.37
9.3
15.5
11.1
13.5
9.0
7.7
0.046 0.074 0.088
1.1
1.8
2.2
Sources: Company data, BOCI Research estimates 50
Ajisen (China) — Profit & Loss
2011E 4,341
22
365
0.403
14.9
0.403
14.9
10.0
10.0
0.47
8.5
6.7
0.101
2.5
Year ended 31 Dec
Revenue (Rmb m)
Change (%)
Net profit (Rmb m)
Fully diluted EPS (Rmb)
Change (%)
Core EPS (Rmb)
Change (%)
Core P/E (x)
CFPS (Rmb)
P/CF (x)
EV/EBITDA (x)
DPS (Rmb)
Yield
(%)
2007
1,082
82
232
0.221
55.8
0.180
28.6
19.4
23.9
0.27
15.7
10.3
0.062
1.5
2008
1,673
55
221
0.209
(5.4)
0.206
14.4
20.5
20.9
0.30
14.4
9.8
0.094
2.2
2009E
2,187
31
286
0.269
29.0
0.266
29.5
15.9
16.1
0.34
12.6
6.3
0.080
1.9
2010E
2,786
27
371
0.349
29.5
0.346
29.9
12.3
12.4
0.54
7.9
4.4
0.104
2.4
2011E
3,528
27
453
0.425
21.7
0.421
21.9
10.1
10.2
0.58
7.4
3.3
0.127
3.0
Source: Company data, BOCI Research estimates Huaqiao in the Middle Kingdom
May 2009
May 2009
TECHNOLOGY
TELECOMS
Top picks: Tencent Holdings, TPV
Top pick: China Mobile
Global TFT-LCD panel shipments in the 2Q09 are estimated to risen 30% QoQ
due to growing demand, according to WitsView. The industry's utilisation
rates rose from 50% in January to 62% in February and 70% in March, and are
expected to increase further to 80% this quarter.
Worldwide sales of semiconductors amounted to US$14.7bn in March, a gain
of 3.3% from the preceding month’s US$14.2bn, According to SIA, sales in
1Q09 amounted to US$44.0bn, representing a 29.9% YoY decline from
US$62.8bn. Sales fell 15.7% from 4Q08’s US$52.2bn.

North America semiconductor equipment bookings rose 7.9% MoM to
US$278.9m, while billings fell 13.4% MoM to US$455.3m in March. The
book-to-bill ratio thus rebounded from 0.49 February to 0.61 in March.

Industry regulator Ministry of Industry and Information Technology (MIIT)
reported on its website that Minister Li Yizhong told the provincial regulators
at an internal meeting that they must fully support the development of
TD-SCDMA and 3G.

China Mobile (0941.HK/HK$76.25) — BUY China Mobile’s 1Q09 net profit was up 5.2% YoY and in line with our estimate, although, perhaps, at the lower end of market forecasts. We have left our current year profit forecast unchanged due to the on‐going economic slowdown. We maintain our target price at HK$89 and reaffirm our BUY call. ZTE Corp (0763.HK/HK$26.40; 000063.SZ/Rmb38.50) — HOLD (Hª&Aª) China Telecom (0728.HK/HK$3.76) — HOLD ZTE’s 1Q09 net profit grew 29% YoY. Its gross margin for the carriers’ network segment declined from 42.5% in 1Q08 to 37.5% in 1Q09. We downgrade both the H and A shares of ZTE from BUY to HOLD since we think the current share price has largely reflected its 3G orders expected to secure and it is unlikely for the company to surprise the market in the third phase TD‐SCDMA tender and the much fierce price competition will cause margin pressure. China Telecom’s adjusted net profit fell 27.4% YoY to Rmb4.7bn, from Rmb6.47bn to reflect the acquisition of Beijing Telecom in 2008. We are leaving our forecasts and target price unchanged at HK$2.90. Reiterate HOLD. Foxconn International Holdings (2038.HK/HK$5.44) — HOLD We believe FIH’s vertically integrated model and exposure to Smartphone ensures its competitiveness for the long term, although the near‐term demand uncertainties. We expect FIH to post an EPS CAGR of 25.3% during 2008‐10, on a gradual recovery in demand and a margin rebound. We recently initiated coverage on FIH with a HOLD Rating. Alibaba.com (1688.HK/HK$12.18) — SELL Alibaba posted 1Q09 results with much better‐than‐expected net additions of paying members. However, we believe it is still in the early stages of its entire revamp and it is not ready to scale up the business. We reiterate our SELL rating on the stock. Key Statistics
(US$ m)
25,000
(% )
10%
sales
Semiconductor
revenue America (US$ bn)
Europe (US$ bn)
Japan (US$ bn)
Asia Pacific (US$ bn)
Total
5%
20,000
0%
15,000
-5%
10,000
-10%
-15%
0
-20%
01/07
02/07
03/07
04/07
05/07
06/07
07/07
08/07
09/07
10/07
11/07
12/07
01/08
02/08
03/08
04/08
05/08
06/08
07/08
08/08
09/08
10/08
11/08
12/08
01/09
02/09
03/09
5,000
Worldwide semiconductor billings (LHS)
Sources: SIA 51
MoM change (RHS)
Unicom’s adjusted net income for 1Q09 came in at Rmb3.42bn for 1Q09, equivalent to 34% of our full‐year forecast. No year‐on‐year comparison is available as the fixed‐line division of the former China Netcom did not report any quarterly financial numbers prior to the merger last October. For now, we leave our profit forecasts and target prices unchanged. SELL. PCCW (0008.HK/HK$2.10) — BUY PCCW’s 2008 underlying operating profit and recurrent net income were up 6.4% and 19% YoY, respectively, broadly in line with our estimates. The Court of Final Appeal has disapproved the privatisation offer of chairman Richard Li and second largest shareholder China Unicom Group. However, his ultimate exit from PCCW is likely to boost the stock price and we have raised our target price to HK$5.00 based on 15x forward P/E. Fixed-line and Mobile Networks’ Monthly
Net Additions in China
12,000
07
44.0
39.1
45.5
123.5
252.1
08
39.0
39.6
49.3
127.4
255.3
4Q07
11.3
10.8
13.1
33.2
68.4
1Q08
10.2
10.2
12.3
30.4
63.1
2Q08
10.4
10.2
12.5
31.5
64.6
3Q08
9.9
10.3
12.6
35.1
67.9
4Q08
9.0
9.1
12.0
30.6
60.8
1Q09
7.6
6.6
8.5
21.5
44.2
Capacity & utilisation rate 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08
Foundry capacity
261 272 307 313 298 308 290 291
(wafer start per weekx1000)
Foundry utilisation rate (%)
79
93
94
94
94
93
86
60
Total IC capacity
1,872 1,972 2,093 2,118 2,152 2,198 2,223 2,185
(wafer start per weekx1000)
Total IC utilisation rate (%)
87
89
90
90
91
89
87
69
Sources: SIA, SICAS Huaqiao in the Middle Kingdom
8,000
4,000
0
(4,000)
(8,000)
01/03
04/03
07/03
10/03
01/04
04/04
07/04
10/04
01/05
04/05
07/05
10/05
01/06
04/06
07/06
10/06
01/07
04/07
07/07
10/07
01/08
04/08
07/08
10/08
01/09
Worldwide Semiconductor Billings
China Unicom (0762.HK/HK$9.24; 600050.SS/Rmb6.71) — SELL (H&A) Fixed-line (LHS)
Source: MII 52
Mobile (LHS)
120%
100%
80%
60%
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
-120%
Fixed-mobile ratio (RHS)
Key Statistics
(m subscribers)
National mobile sub.
net adds
CM total subscribers
net adds in period
CU-G total sub.
net adds in period
CU-C total sub.
net adds in period
National broadband sub
net adds in period
CT broadband sub.
net adds in period
CN broadband sub.
net adds in period
National fixed-line sub.
net adds
2008 2009E
641.2 763.0
93.9 121.8
457.2 532.0
87.9 74.7
133.4 146.9
14.2 13.6
27.9 55.6
(13.5) 27.7
83.4 103.9
17.0 20.5
44.3 52.0
8.6 7.8
25.4 38.1
5.6 12.7
340.8 311.2
(24.6) (29.6)
2010E
857.5
94.5
584.3
52.3
167.3
20.4
77.4
21.8
117.0
13.1
59.0
7.0
41.8
3.7
281.6
(29.6)
Nov08
633.8
6.6
450.2
6.9
132.9
1.0
28.0
(0.4)
83.4
1.2
43.6
0.7
25.4
0.2
348
(3.0)
Dec
641.2
7.4
457.2
7.1
133.4
0.4
27.9
(0.1)
83.4
0.0
44.3
0.7
25.4
(0.0)
341
(7.7)
Jan09
649.7
8.5
463.9
6.7
134.2
0.8
28.9
1.0
84.6
1.2
45.0
0.8
31.1
5.6
340
(1.0)
Feb
659.8
10.1
470.7
6.8
135.8
1.6
30.6
1.7
86.5
1.9
45.9
0.9
31.7
0.6
338
(2.1)
Mar
670.3
10.6
477.2
6.5
136.7
0.8
32.8
2.2
88.1
1.7
46.8
0.9
32.3
0.6
335
(2.4)
Sources: MII, Company data, BOCI Research estimates Huaqiao in the Middle Kingdom
May 2009
May 2009
TRANSPORT – Aviation
TRANSPORT – Land
Airports – Overweight
Airlines – Neutral
Top pick: CSA, Air China, Baiyun Airport

Domestic air travel demand remained strong in March 2009 as passenger
volume increased 15.8% YoY. However, international passenger and cargo
demand stayed weak.

Thanks to domestic air travel boom and low jet fuel price, China’s major
airlines returned to profit in 1Q09.

We reaffirm our OVERWEIGHT rating for the airports segment. Fr the airlines
segment, we reiterate our NEUTRAL ratings for both the H and A shares
because of weak cargo and international passenger demands, as well as
uncertainty over future capacity expand.
A listed – Neutral
Top pick: Chutian Expressway
According to the Ministry of Transport, seven provinces had completely
abolished tolls charges on Tier 2 roads as of 5 May 2009. The distance
involved totalled 70,800km, with 1,263 toll station abolished, representing
65% of the total across the country.

Chutian Expressway (600035.SS/Rmb5.15) — HOLD China Southern Airlines (1055.HK/HK$2.04; 600029.SS/Rmb5.52) — BUY (H); HOLD (A) China Southern’s revenue for 1Q09 fell 9.43% YoY to Rmb12.9bn, but total operating cost rose 3.22% YoY to Rmb13.7bn, leading to an operating loss of Rmb692m. However, thanks to the government refund of Civil Aviation Development Fund, the company made a profit of Rmb222m. The results were largely in line with our forecasts and we are still optimistic about its performance when the peak season comes. We reaffirm our ratings of BUY for its H shares and HOLD for its A shares. Shanghai Airport (600009.SS/Rmb14.19) — HOLD Although the revenue of Shanghai Airport rose 2.74% YoY in 1Q09, operating costs surged 61.93%, causing a 68.68% decline in net profit to Rmb101m. We see international air traffic rebounding as the economy recovers. The negative effects of both the implementation of new government policies for fee collections and the depreciation resulting from its expansion are already reflected thoroughly, as evident in the company’s bottom line. Furthermore, EXPO 2010 may benefit the carrier substantially. Still, we lower our EPS forecasts by 28% to Rmb0.41 for 2009, 23% to Rmb0.58 for 2010 and 21% to Rmb0.68 for 2011. We reaffirm our HOLD rating for the stock as we think that its valuation is not cheap. Chutian’s net profit for 1Q09 grew 9.8% YoY to Rmb80m as revenue rose 6.9% YoY to Rmb180m, in line with our forecasts. The company’s mild rise in revenue, despite the economic downturn, was due to a low base of comparison due to severe snowstorms last year. Based on our conservative view of the overall economy this year and the diversionary impact of new roads, we remain cautious about Chutian’s 2009 results. We retain our target price of Rmb4.90 and reaffirm our HOLD rating for the stock. Total Lengths of Railways & Expressways
6,000
40,000
4,000
20,000
2,000
Sources: NBS, BOCI Research estimates Baiyun
02/09
12/08
10/08
08/08
06/08
02/08
12/07
10/07
04/08
Shanghai-Pudong
Shenzhen
PLF YoY %
Air China
CEA
CSA
77
70
73
75
71
74
71
69
72
76
71
78
78
72
80
76
70
75
74
68
72
77
70
75
77
72
78
74
70
76
Sources: Bloomberg, Company data, BOCI Research estimates Huaqiao in the Middle Kingdom
2008
8,000
60,000
Total length of expressway (LHS)
Total length of railway (LHS)
Length of expressway - New add (RHS)
Length of rail - New add (RHS)
Sources: MOC, CEIC 54
2009E
80,000
2007
5
9
5
2006
6
3
3
2005
10
7
11
2004
2
(4)
4
2003
3
(4)
4
2002
(8) 1
(13) (5)
(5) 7
(km)
10,000
2001
(16)
(25)
(19)
0
Beijing
53
14 (2)
12 (6)
15 2
(km)
2000
RPK YoY %
Air China
CEA
CSA
100,000
1999
(YoY % )
40
30
20
10
0
(10)
(20)
08 Aug08 Sep Oct Nov Dec Jan09 Feb Mar
1998
07
1997
Passenger Throughput YoY%-Major Airports Key Statistics
1996
0
Key Statistics
Railway
Passenger carried (person, bn)
Passenger turnover
(person-km, bn)
Freight carried (tonne, bn)
Freight turnover (tonne-km,
ibn)
FAI (Rmb bn)
Road
Passenger carried (person, bn)
Passenger turnover
(person-km, in bn)
Freight carried (tonne, bn)
Freight turnover (tonne-km, bn)
FAI (Rmb bn)
08 09E 10E Oct08 Nov Dec Jan09 Feb
1,456 1,718 1,924 126 102 103 133 136
773 897 987 63 51 52 77 78
3,301 3,641 3,932 279 262 245 252 234
2,512 2,592 2,800 212 195 195 190 173
402
480
720
34
49 145
20.5 22.1 23.9 2.0 1.8 1.9
1,151 1,264 1,339 115 104 113
34
0
2.0 1.9
112 113
18.2 18.7 19.2 1.6 1.5 1.8 1.5 1.4
1,135 1,317 1,357 114 108 132 106 103
733 913 1,095 69 75 115 49
0
Sources: CEIC, MOC, BOCI Research estimates Huaqiao in the Middle Kingdom
May 2009
May 2009
TRANSPORT – Marine
Top pick: China Communications Const
HK listed – Underweight
A shares – Underweight

The Baltic Dry Index (BDI) rebounded 10.6% MoM in April from 1,615 points
to 1,786 points. The year-to-date average closing of the index was 1,640.6.

The rate for very large crude carriers (VLCC) closed at WS25 in March, up
11.1% MoM from WS22.5. The year-to-date average closing was WS32.6.
UTILITIES (China)
China Communications Construction (1800.HK/HK$10.72) — HOLDª A shares – Neutral
Top picks: Beijing Enterprise Holding

Power generation of the State Grid slid 3.55% YoY in April, a wider drop from
0.7% YoY in March and 2.55% YoY in 1Q09. The last 10 days in April showed
signs of a rebound.

A recovery in the Purchasing Managers’ Index (PMI) points to a better outlook
for power usage. Yet, coal-fired power plants may face utilisation challenges
from the coming flood season and sustainable capacity growth. We forecast
1.5% generation growth and -4.5% utilisation drop for coal-fired plants.

Coal prices largely remained stable, as mine mouth dropped 6.5% MoM and
Qinhuangdao nudged up 3.6% MoM in April. Contract coal price is yet to be
finalised (+4%) given that both domestic supply and demand have dropped.

China will draw up Rmb20bn in special lending for six key areas of
technological improvement, including wind-power and nuclear power
facilities.
Zhenhua Port Machinery (600320.SS/Rmb12.19; 900947.SS/US$1.061) — SELL (A&B) ZPMC posted a 1Q09 net profit decline of 18% YoY because of higher financing costs and administrative expenses. We reiterate our SELL ratings for ZPMC’s A and B shares, while retaining intact our target prices of Rmb10.75 and US$0.87. We reiterate our view that demand for container cranes will weaken amid the weak global trade outlook, which will impact on new orders growth for ZPMC’s core crane manufacturing operations for 2009‐10 and likely negate the growth in its ocean heavy crane‐machinery business. HK listed –Neutralª
Guangdong Investment (0270.HK/HK$3.34) — BUY CCC’s 2008 net profit was in line with our projection, edging up 0.7% YoY to Rmb6.1bn with turnover rising 18.8% YoY to Rmb178.9bn. Although no specific guidance was given, management of CCC expressed optimism over its business development in 1Q09. After applying our assumptions for growth of new orders, changes in backlog order, net gearing and divisional margins and new forecasts for subsidiary ZPMC, we revise our 2009 net profit forecast for CCC to Rmb8.9bn. However, as its valuation has become stretched after the recent rally, we see limited upside for the stock and, as such, downgraded it to HOLD, but raised our target price from HK$9.70 to HK$10.00. GDI has a steady earnings base as lump‐sum water revenue from Hong Kong accounts for nearly 38% of its pre‐tax profit, coupled with a stable China water outlook. With relatively low financial leverage, GDI’s goal to expand its rent‐generating assets will pay off in the years to come. Power plants may turn around this year but with little contribution. Since most of its key businesses generate strong cash flows, the balance sheet will remain solid, despite a dividend cut in 2008. Trading at comparatively low multiples, the market has yet to recognise fully the investment upside. We initiate with BUY, with a target price HK$4.00 COSCO Pacific (1199.HK/HK$8.64) — SELL Huadian Power (1071.HK/HK$2.04; 600027.SS/Rmb5.01) — BUY (H), HOLD (A) CP’s net profit for 1Q09 fell 34.1% YoY to US$43.4m, which, we believe, was due to the poor performances of its leasing division and some container terminals. An increase in tax charges also eroded its earnings. We lower our earnings forecast by 4.7% to US$188.1m for 2009, 7.2% to US$204.1m for 2010 and 5.7% to 234.9m for 2011. We reiterate our SELL rating for the stock and lower target price from HK$6.00 to HK$5.75. Huadian’s core net profit jumped 2.5x and operating profit leapt 5.2x in 1Q09 due to tariff adjustments. We see the profit recovery stemming from lower coal costs and smaller‐than‐average utilisation drops. Huadian shares trade at deep discounts to peers as the market has yet to recognise its recovery story. We reaffirm our BUY rating for the H shares and retain our target price of HK$2.50. We reiterate our HOLD rating for the A shares and also stick to our target price of Rmb5.00. Key Statistics
Baltic Dry Index (BDI) Trend
30-days moving average
Sources: Bloomberg Baltic Dry Index
12/02/09
18/11/08
24/08/08
30/05/08
3/5/2008
10/12/07
07/09/07
13/06/07
19/03/07
23/12/06
28/09/06
04/07/06
09/04/06
05/01/06
07/09/05
09/05/05
% YoY
04/01/05
12,000
10,000
8,000
6,000
4,000
2,000
0
Shenzhen
Shanghai
Dalian
Tianjin
Qingdao
Xiamen
Ningbo
Guangzhou
07
10
25
20
28
24
18
30
40
08 09E Oct08 Nov Dec
2 (10) (4) (12) (28)
7 (5)
7
2
(5)
18 8
6
1
16
20 7
24
21
20
6
4
1
4
38
8
3
8
1
(9)
16 (3)
21
27
27
22 (15) 23
8 (21)
Jan09
(17)
(19)
7
(4)
2
(6)
(7)
(34)
Feb Mar
(26) (21)
(18) (9)
(9) (6)
3
6
2
3
(12) (8)
(22) (3)
(22) (17)
Monthly Electricity Growth
(bn MWh)
500
Key Statistics
(% )
20
400
10
300
0
200
(10)
100
(20)
03/08 04/0805/08 06/0807/08 08/0809/08 10/0811/08 12/082M09 03/09
Total generation (LHS)
Thermal generation (LHS)
Total generation growth (RHS) RHS
Thermal generation growth (RHS) RHS
Sources: MOC, BOCI Research estimates Sources: The Electric Power Industry of China, BOCI Research estimates 55
56
2008 2009E 2010E
2M09 1Q09
Power generation (bn kWh) 3,433.4 3,570.7 3,795.7
488.3 779.7
Power generation YoY%
5.2
4.0
6.3
(3.7)
(2.0)
Thermal YoY%
2.2
1.5
2.6
(7.8)
(6.1)
Hydro YoY%
36.3
16.0
20.0
25.5
24.0
Installed capacity YoY%
10.3
9.3
8.3
10.9
10.6
Utilisation hours
4,677
4,500
4,450
646 1,009
Thermal utilisation hours
4,911
4,691
4,640
702 1,100
Sources: Company data, BOCI Research estimates Huaqiao in the Middle Kingdom
May 2009
May 2009
UTILITIES (Hong Kong)
Top pick: CLP Holdings

Hong Kong utilities still offer stable yield and potential growth angle through
overseas expansion, given their currently lower gearing. In the past month,
Hong Kong Electric and CLP Holdings underperformed due to their defensive
nature amid the market rally.
Hong Kong & China Gas has bought back cumulatively 65m shares (or 1%) at
HK$12.96 since 20 March 2009, supporting its recent stock performance.
CLP Holdings (0002.HK/HK$51.30) — HOLD CLP Holdings’ resilient 2008 earnings reflect its good portfolio and management quality amid tough market conditions. Looking ahead, CLP’s Hong Kong operations may remain lacklustre post new SoC, while Australia’s competitive and regulatory landscape shift may benefit the company as a strong player. Renewable energy expansion in emerging Asian markets may yield rewards in the long term, while facing project financing and implementation difficulties in the near term. Reiterate HOLD rating with target price HK$60.5 HK & China Gas (0003.HK/HK$14.84) — SELLª Its no‐slowdown in developing new energy projects will add earning uncertainties. Despite HKG’s strong financial position, it’s already by far the most expensive utilities stock in HK space. We think a higher premium is not justified. We maintain HK$10.6 target price and downgrade stock rating from HOLD to SELL. Power and Gas Production/Consumption HK & China Gas — Investment Summary
(YoY % )
15
12
9
6
3
0
(3)
(6)
(9)
(12)
(15)
(18)
Year ended 31 Dec
Mar98
Sep98
Mar98
Sep99
Mar00
Sep00
Mar01
Sep01
Mar02
Sep02
Mar03
Sep03
Mar04
Sep04
Mar05
Sep05
Mar06
Sep06
Mar07
Sep07
Mar98
Sep08
(YoY % )
8
7
6
5
4
3
2
1
0
(1)
(2)
(3)
Quarterly gas consumption (LHS)
Quarterly power production (RHS)
Quarterly power consumption (RHS)
Sources: Company data, BOCI Research estimates 57
Revenue (HK$ m)
Change (%)
Net profit (HK$ m)
Fully diluted EPS (HK$)
Change (%)
CFPS (HK$)
P/CF (x)
EV/EBITDA (x)
DPS (HK$)
Yield (%)
2007 2008 2009E 2010E 2011E
14,226 12,353 12,402 14,171 16,388
6
(13)
0
14
16
9,270 4,302 4,236 4,632 5,701
0.75
0.65
0.64
0.69
0.86
(15)
(14)
(2)
9
23
19.8
22.8
23.2
21.5
17.3
0.83
0.74
0.6
0.61
0.72
17.9
20.1
24.7
24.3
20.6
12.7
19.0
17.1
15.6
12.3
0.35
0.35
0.35
0.37
0.38
2.3
2.3
2.3
2.4
2.6
BOCI Stock Universe
China – HK
RIC Company
Price 1M. YTD. 3M avg. Free float EPS
Y/E (8/5/09) chg chg daily T/O mkt. cap.^ 09E
($) (%) (%) (HK$ m) (HK$ m) (HK$)
Automotive
2357 AviChina (H)
1114 Brilliance Auto (R)
0203 Denway Motors (R)
0489 Dongfeng Motor Group (H)
0300 Kunming Machine (H/A)
1122 Qingling Motors (H)
2338 Weichai Power (H/A)
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
1.54
0.64
3.35
6.05
4.26
1.35
25.60
32
31
18
26
5
42
41
28
47
58
39
142
40
75
75
68
18
15
73
117
4
7
31
38
Chemicals
0338 Shanghai Petrochem (H/A) Dec
0297 Sinofert HK Hldg (R)
Dec
Average
2.78
3.72
21
5
13
40
(1)
19
76
86
81
Conglomerates
0291 China Resources (R)
Dec
Average
16.46
40
40
22
22
121
121
Consumer Products
2020 ANTA Sports (P)
3818 China Dongxiang (P)
0506 China Foods (R)
0904 China Green
0359 China Haisheng Juice (P)
3398 China Ting (P)
1044 Hengan International
0336 Huabao International Hldgs
2331 Li Ning (P)
2319 Mengniu Dairy (P)
0157 Natural Beauty (P)
0168 Tsingtao Brewery (H/A)
3331 Vinda International
0151 Want Want China (P)
2088 Xiwang Sugar (P)
8259 Yantai North Andre Juice (H)
Average
Dec
Dec
Dec
Apr
Dec
Dec
Dec
Mar
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
7.98
4.26
3.93
6.52
0.57
0.86
35.00
6.06
17.58
16.02
1.06
22.00
4.05
3.98
1.32
0.31
61
48
27
36
0
32
16
3
37
51
(4)
26
7
17
6
13
24
129
130
36
6
18
62
41
19
45
59
(12)
36
93
24
10
3
44
36
78
11
16
2
2
76
55
65
110
2
32
7
85
10
5
37
5,564
11,608
8,226
2,660
228
522
16,308
6,882
12,373
18,505
729
14,408
1,831
25,070
354
327
125,595
Consumer Services
0538 Ajisen (China) Holdings(P)
1880 Belle International (P)
3308 Golden Eagle
0493 Gome Electrical (P)
0980 Lianhua Supermarket (H)
3368 Parkson Retail Group
1832 Times (P)
8277 Wumart Stores (H)
3389 Xinyu Hengdeli (P)
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
4.31
5.96
6.95
1.12
10.32
11.10
1.93
7.40
2.02
11
27
21
0
17
33
11
31
15
18
19
75
28
0
7
26
(6)
28
68
11
10
87
13
0
4
58
1
8
5
21
2,209
17,105
3,528
8,135
2,876
14,241
422
4,983
3,052
6,131
Energy
0606 China Agri-Industries (R)
1898 China Coal (H/A)
2883 China Oilfield Services (H/A)
0883 CNOOC Ltd. (R)
0639 Fushan Energy
0857 PetroChina (H/A)
1088 Shenhua Energy (H/A)
0386 Sinopec (H/A)
1171 Yanzhou Coal (H/A)
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
4.62
8.63
7.85
9.94
3.33
8.31
25.00
6.34
9.05
17
34
36
26
90
31
30
16
44
36
20
40
26
37
72
22
52
35
59
40
44
350
118
858
52
1,014
568
875
223
456
7,028
35,472
12,032
128,633
5,032
175,333
85,030
106,385
17,714
572,659
2,789
1,433
15,615
17,202
1,050
1,005
5,118
44,212
(0.10)
0.05
0.32
0.51©
0.71©
0.09ª
2.61
0.60
EPS
10E
(HK$)
Analyst
Rec
Target
price
(HK$)
14.1 11.3
10.3 9.9
11.8 10.2
6.0 5.8
15.4 13.4
9.8 7.9
11.2 9.7
33
3
(4)
(3)
8
(1)
6
25
5
16
3
16
25
15
0.0
0.0
2.4
0.8
3.4
4.6
0.6
1.7
0.0 Wang Yusheng Hold 1.42
0.0 Wang Yusheng Sell 0.76
2.5
Eric Hu
Hold 3.25
0.9
Eric Hu
Buy 6.20
3.4
SHI Qi
Buy 7.16
5.3
Eric Hu
Buy 2.23
0.7
Eric Hu
Buy© 26.00
1.8
6,405 (0.14)© 0.03© - 94.1
30,627 0.25
0.26 14.9 14.2
37,032 0.06
0.15 14.9 54.2
(19)
(19)
5
5
0.0
0.6
0.3
0.0 Lawrence Lau Sell
0.6 Ni Xiaoman Hold
0.3
1.59
3.50
18,397 0.72
18,397 0.72
22.9 19.2
22.9 19.2
(27)
(27)
19
19
1.8
1.8
2.2 Ashley Cheung Sell
2.2
10.10
17.1
14.4
14.6
12.5
1.6
6.3
22.2
18.4
18.4
35.9
8.9
26.2
13.7
25.7
10.6
2.5
15.6
16.0
12.1
12.7
10.4
1.4
4.7
19.6
15.5
16.3
23.6
8.2
21.5
11.5
17.1
8.0
2.3
12.6
14
8
59
0
5
(25)
37
18
22
0
37
61
0
51
40
22
7
19
15
20
10
33
13
18
13
52
8
22
19
50
32
12
21
3.0
2.9
2.3
2.1
12.0
7.9
2.8
1.7
2.8
0.6
7.8
1.3
1.8
1.9
3.3
11.7
4.1
3.1
3.2
2.5
2.3
14.0
10.4
3.2
2.0
3.1
0.8
8.5
1.9
2.2
3.9
3.7
13.2
4.9
0.27ª 0.35ª 16.0 12.3
0.32
0.35 18.7 16.9
0.42
0.49 16.5 14.2
0.23
0.24 4.9 4.6
0.78
0.89 13.2 11.6
0.39
0.48 28.7 23.3
0.26
0.32 7.3 5.9
0.41© 0.49© 18.1 15.1
0.19
0.20 10.5 9.9
0.41
0.49 14.4 12.1
29
17
3
7
10
13
31
11
0
15
30
11
16
5
14
24
23
20
6
17
1.9
1.5
4.9
6.1
3.0
1.7
5.9
2.7
2.8
3.9
2.4 Sarah Xing Holdª
1.7 Ashley Cheung Buy
1.8
Liu Du
Buy
6.1 Ashley Cheung Sell
2.1 Zhang Yuan Hold
Ashley Cheung Buy
3.4 Sarah Xing
Sell
3.8
4.40
4.66
5.97
0.91
10.00
8.50
4.10
7.20
1.20
0.49ª
0.61©
0.88
0.70©
0.37©
0.47
1.50©
0.59ª
0.74ª
0.70
(34)
(1)
12
(38)
124
(33)
(2)
55
(51)
4
33
30
19
43
14
31
5
13
14
22
2.1
2.1
2.3
2.5
4.4
2.6
2.0
3.0
2.5
2.6
2.9
2.7
2.7
3.5
5.0
3.3
2.1
3.4
2.9
3.2
4.15
6.17
8.76
8.89
3.07
7.06
21.09
6.37
7.41
0.47
0.30
0.27©
0.52
0.36
0.14
1.58
0.33
0.95
0.45©
0.12ª
0.84
0.30©
0.16
0.12ª
0.12
0.44
(0.07)©
0.06
0.34
0.59©
0.74ª
0.10ª
3.26ª
0.72
P/E P/E EPS gr. EPS gr. Yield Yield
09E 10E 09E 10E 09E 10E
(x) (x) (%)
(%) (%) (%)
0.86
0.86
0.50
0.35
0.31ª
0.62
0.40
0.18
1.79
0.39
1.08
0.68©
0.13ª
1.02
0.35©
0.23
0.16ª
0.14
0.52
0.65ª
0.80©
1.05
0.99©
0.42©
0.62
1.57©
0.66ª
0.84ª
0.84
9.5
14.1
8.9
14.3
9.0
17.6
16.7
10.8
12.3
12.6
7.2
10.8
7.5
10.0
7.9
13.4
15.9
9.6
10.7
10.3
Sarah Xing Hold 3.75
Sarah Xing Hold 3.00
Jenny Chan Buy 4.90
Jenny Chan Buy 7.60
Jenny Chan Buy 2.50
Sarah Xing
Buy 0.60
Sarah Xing
Buy 31.50
Jenny Chan Buy 7.00
Sarah Xing
Sell 9.62
Jenny Chan Sell 8.30
Sarah Xing
Buy 1.60
Zhao Zongjun Buy 18.00
Sarah Xing
Buy 4.00
Jenny Chan Buy 4.00
Jenny Chan Sell 0.78
Jenny Chan Buy 1.05
Lawrence Lau
Lawrence Lau
Lawrence Lau
Lawrence Lau
Lawrence Lau
Lawrence Lau
Lawrence Lau
Lawrence Lau
Lawrence Lau
Holdª
Hold
Buy
Holdª
Buy
Hold
Hold
Buy
Holdª
Sources: Company data, BOCI Research estimates Huaqiao in the Middle Kingdom
58
May 2009
China – HK
China – HK
RIC Company
Y/E (8/5/09) chg chg daily T/O mkt. cap^. 09E
($) (%) (%) (HK$ m) (HK$ m) (HK$)
Financials
3988 Bank of China (H/A)
3328 Bank of Communications (H/A)
0998 China Citic Bank (H/A)
0939 China Construction Bank (H/A)
0165 China Everbright (R)
0966 China Insurance (R)
2628 China Life (H/A)
3968 China Merchant Bank (H/A)
1398 ICBC (H/A)
2328 PICC (H)
2318 Ping An (H/A)
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Industrials
0914 Anhui Conch (H/A)
1800 China Comm. Construction (H)
3323 China National Bldg Material (H)
390 China Railway (H/A)
1186 China Railway Construction (H/A)
1766 China South Locomotive (H/A)
3898 CSR Times Electric (H)
1072 Dongfang Electric (H)
0317 Guangzhou Shipyard Int’l (H/A)
3339 Lonking Hldings Ltd
2689 Nine Dragons Paper (P)
1893 Sinoma
505 Xingye Copper (P)
Average
Media
1000 Beijing Media Corp (H)
2008 Phoenix TV (P)
0811 Xinhua Winshare (H)
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Jun
Dec
Dec
2.95
6.99
4.01
5.25
16.76
13.00
29.00
17.02
4.80
4.89
51.00
55.90
10.72
16.86
5.63
10.80
3.82
11.12
23.90
11.28
6.39
4.92
6.93
0.81
Dec
Dec
Dec
3.60
1.04
2.79
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
11.66
7.63
4.79
2.86
1.750
11.50
2.93
4.13
30.40
3.62
6.58
Pharmaceuticals
0874 Guangzhou Pharmaceutical (H/A) Dec
Average
3.26
Average
Metals & Mining
0347 Angang Steel (H/A)
2600 CHALCO (H/A)
3993 China Molybdenum (H)
1053 Chongqing Iron & Steel (H/A)
2626 Hunan Non-ferrous Metals (H)
0358 Jiangxi Copper (H/A)
3330 Lingbao Gold (H)
0323 Maanshan Iron (H/A)
1862 Sino Gold (P)
3833 Xinjing Xinxin Mining (H)
2899 Zijin Mining (H)
Average
59
May 2009
9
20
28
12
27
(1)
9
18
12
1
5
13
39
25
51
24
76
9
23
19
18
17
36
31
35 57
23 12
41 81
18
5
6 (6)
14 (9)
48 78
37 23
8 59
23 61
54 123
70 49
25
8
31 42
43
30
13
29
184
297
250
143
192
86
30
35
29
20
70
87
1
122
0
2
9
4
35 34
45 87
27 36
38 45
32 59
34 102
2 48
42 50
6 24
47 81
20 40
30 55
262
444
70
20
40
395
20
174
1
17
289
157
24
24
09E 10E 09E 10E 09E 10E
(x) (x) (%) (%) (%) (%)
1,503 247,112 0.36© 0.34© 8.1 8.7 28
383 160,960 0.59© 0.42© 11.8 16.6 (10)
185 16,922 0.42
0.27 9.5 14.7 0
1,536 269,911 0.45 0.45© 11.7 11.6 30
87
12,118 0.64
0.63 26.2 26.6 0
23
7,244 0.74
0.97 17.6 13.4
1,583 213,118 1.06
1.32 27.4 22.0 21
597 45,301 1.60
1.15 10.6 14.8 1
1,853 80,165 0.39© 0.27ª 12.3 17.8 4
205 16,890 0.58
0.00 8.4
16
666 130,509 1.90
2.03 26.9 25.1
784 1,200,250 0.79
0.71 15.5 17.1 8
41
46
61
49
12
12
EPS
10E
(HK$)
12
12
24,680
42,909
20,078
20,626
18,922
7,689
5,063
11,594
1,777
3,214
6,334
8,167
189
14,808
2.32
0.68ª
1.49©
0.34
0.55
0.19ª
0.55
2.27©
1.71ª
0.85ª
0.26
0.31©
0.03
1.02
3.32
0.87ª
1.94©
0.45
0.77
0.25ª
0.69
3.21©
1.22©
0.98ª
0.34
0.39©
0.07
1.28
7
(7)
6.5
2.9
4.5
4.3
0.4
0.5
1.4
2.7
4.0
8.6
0.7
3.0
6.2
2.1
3.4
4.3
0.4
0.7
1.7
2.0
2.8
1.8
2.1
Yuan Lin
Yuan Lin
Yuan Lin
Yuan Lin
K.W. Wong
K.W. Wong
Yuan Lin
Yuan Lin
Yuan Lin
Yuan Lin
Yuan Lin
Buy
Buy
Hold
Hold
Buy
Hold
Hold
Sell
Hold
Buy
Hold
3.48
7.45
3.68
5.00
14.20
11.20
31.20
15.17
4.58
12.60
52.58
16.8 38
12.3 52
8.7 92
12.5 373
14.1 64
15.4 27
16.0 26
7.4 268
9.2 (9)
6.5 20
14.4 (47)
17.6 70
11.9
12.1 82
43
28
30
34
39
33
27
41
(29)
16
30
29
100
27
0.8
1.5
0.6
1.5
1.3
1.6
2.2
0.1
4.0
3.4
0.0
1.3
0.0
1.5
1.1 Grace Tang Buy 61.50
1.9 Jimmy Lam Holdª 10.00
0.8 Grace Tang Buy 18.40
2.0
Patrick Li
Buy 6.77
1.8
Patrick Li
Buy 12.27
2.2
SHI Qi
Buy 4.64
2.9
SHI Qi
Buy 8.14
0.1
Han Ling Buy 25.00
2.9
Xu Minle
Buy 12.06
3.9
Eric Hu
Buy 8.50
1.2 Sarah Xing Sell 1.68
1.7 Lawrence Lau Buy 6.95
0.0 Sarah Xing Sell 0.40
1.9
258 0.27
0.00 13.4
2
1,288 0.05
0.07 20.0 14.2 (13)
1,140 0.36ª 0.41ª 7.7 6.8
7
895 0.23
0.16 16.7 14.2 (6)
40
13
40
6.3
1.9
4.1
4.1
1.9
4.5
1.9
3.1
0.0
1.4
3.6
0.0
1.6
4.7
2.2
0.0
0.9
3.1
1.9
12,654 0.21ª 0.72ª
30,958 (0.06) 0.10
5,302 0.16
0.20
1,574 0.13
0.29
2,395 (0.27) ª (0.28) ©
13,906 0.27ª 0.63©
812 0.37ª 0.39©
8,587 0.08ª 0.29ª
5,859 1.52
1.99
2,496 0.11ª 0.13ª
28,704 0.30
0.36
113,247 0.26
0.44
717
717
0.61
0.61
0.73
0.73
24.1
15.7
11.3
16.6
19.6
20.4
20.4
10.5
6.6
7.5
18.8
22.7
23.8
15.6
(6)
(29)
(35)
1
(2)
31
25
(28)
(31)
Analyst
Target
Rec price
(HK$)
Allan Ng
Allan Ng
Allan Ng
Sell
Buy
Buy
55.2
30.1
22.3
42.9
7.8
53.5
20.0
31.9
22.3
31.8
16.2
80.0
23.4
9.8
18.3
7.6
14.2
15.3
27.0
18.1
23.0
(55)
240
(59)
(67)
29
128
(69)
154
(35)
(26)
24
(17)
135
3
276
31
18
23
98
0.9
0.0
1.2
1.6
0.0
0.7
4.3
0.6
0.0
0.8
2.4
1.1
5.3
5.3
4.5
4.5
6
6
19
19
9.4 13.2 He Changming Buy
9.4 13.2
9.00
0.90
4.00
Belle Chan Sell 4.20
Belle Chan Buy© 3.10
Belle Chan Hold 3.00
Belle Chan Hold© 3.20
Belle Chan Buy 39.00
Belle Chan Sellª 2.10
Belle Chan Buy 6.80
6.14
RIC Company
Y/E (8/5/09) chg chg daily T/O mkt. cap^. 09E
($) (%) (%) (HK$ m) (HK$ m) (HK$)
EPS
10E
(HK$)
09E 10E 09E 10E 09E 10E
(x) (x) (%) (%) (%) (%)
Property
3383 Agile Property (P)
2868 Beijing Capital Land (H)
0832 Central China Real Estate
0688 China Overseas (R)
1109 China Resources Land (R)
2007 Country Garden (P)
3900 Greentown China (H)
1387 Renhe Commercial (R)
0604 Shenzhen Investment (R)
0272 Shui On Land (P)
3377 Sino-ocean Land (R)
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
7.38 53
1.96 26
2.28 104
14.50 16
14.18 16
3.15 39
5.55 50
1.62 (2)
2.97 43
3.99 33
6.78 32
37
83
58
221
35
49
66
71
37
115
63
N/A
80
162 11,020
13
1,590
7
1,140
461 54,572
197 25,406
110
8,761
14
3,156
170 10,044
43
4,891
204
7,514
204 19,119
144 117,074
0.49ª
0.23
0.51
0.79
0.79
0.23ª
1.44©
0.22ª
0.41©
0.39ª
0.46
0.54
15.0
13.5
5.3
22.3
23.2
16.9
5.6
6.1
10.3
15.1
24.5
13.1
15.2
8.5
4.5
18.4
17.9
13.5
3.8
7.4
7.2
10.3
14.7
10.2
(70)
(32)
23
0
30
93
65
144
7
(61)
(22)
30
(2)
59
18
22
30
25
46
(16)
43
47
66
30
1.3
2.3
4.8
1.0
0.8
2.1
3.0
8.1
3.9
0.8
1.7
3.0
1.1
3.5
5.7
1.4
0.9
2.6
6.3
6.8
5.6
1.2
1.7
3.8
Vivien Zhang
Vivien Zhang
TIAN Shixin
Manfred Ho
Manfred Ho
Vivien Zhang
Vivien Zhang
Vivien Zhang
Vivien Zhang
Vivien Zhang
Vivien Zhang
Buy
Sell
Hold
Hold
Buy
Sellª
Sell
Buy
Buy©
Holdª
Buy
6.50
0.85
1.04
11.90
12.40
2.00
3.60
2.30
3.00
3.50
5.80
Dec
Dec
Mar
Mar
Dec
Dec
12.18
26.20
4.57
2.94
73.50
26.40
53
76
45
54
20
4
40
118
106
104
39
47
69
73
85 13,537 0.25© 0.33© 49.2
133
6,445 0.66
0.86 39.8
3
2,247 0.63
0.83 7.3
106 12,392 (0.16) 0.16
258 63,398 2.31
2.85 31.9
69 35,455 1.47ª 1.73ª 18.0
114 119,937 0.98
1.28 24.2
37.1
30.5
5.5
19.0
25.8
15.3
19.2
(8)
16
50
34
7
27
33
30
32
24
18
26
0.0
0.9
3.9
0.0
0.6
1.1
1.3
0.0
1.1
4.6
2.9
0.8
1.3
2.2
Frank He
Frank He
Frank He
Frank He
Frank He
Frank He
Sell
Sell
Buy
Sell
Buy
Holdª
7.40
9.30
4.00
1.10
60.90
29.30
Dec
Dec
Dec
76.25
3.76
9.24
14
16
19
16
(2)
30
(1)
9
2,133 388,415
375 52,036
347 64,112
952 504,563
11.1 1
19.4
24.6 (70)
18.4 (34)
6
13
(21)
(1)
3.7
2.1
1.2
2.3
4.2
2.1
1.2
2.5
Allan Ng
Allan Ng
Allan Ng
Transport
0753 Air China (H/A)
0995 Anhui Expressway (H/A)
0670 China Eastern Airlines (H/A)
0144 China Merchants (R)
1138 China Shipping (H/A)
1055 China Southern Airlines (H/A)
1199 COSCO Pacific (R)
2866 CSCL (H)
0525 GS Railway (H/A)
0177 Jiangsu Expressway (H/A)
0548 Shenzhen Expressway (H/A)
0716 Singamas (P)
0368 Sinotrans Shipping (R)
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
4.10
4.27
1.39
22.40
11.62
2.04
8.64
2.22
3.88
5.63
3.62
0.75
2.87
35
22
16
18
50
24
9
31
23
6
24
67
32
27
71
53
19
50
51
58
9
90
36
(1)
34
106
46
48
73 18,063
10
2,125
27
2,165
169 23,852
159 15,035
55
3,614
66
9,509
212
7,003
19
5,552
41
6,807
8
2,684
21
279
24
3,666
68 100,354
0.02
0.44
0.13©
1.33ª
0.86©
0.27©
0.64ª
(0.18)
0.23ª
0.39
0.27ª
0.05ª
0.16
0.35
15
(7)
(52)
(29)
13
7
7
17
(75)
(12)
50
8
21
(16)
0
(5)
8
14
8
20
86
(50)
12
0.0
5.3
0.0
2.6
1.3
0.0
3.0
0.0
2.3
5.3
4.4
2.1
2.7
2
0.0
5.9
0.0
2.2
1.4
0.0
3.2
0.0
2.6
5.8
5.1
4.1
0.0
2
Du Jianping
Liu Huiming
Du Jianping
Jimmy Lam
Jimmy Lam
Du Jianping
Jimmy Lam
Jimmy Lam
Patrick Li
Liu Huiming
Liu Huiming
Jimmy Lam
Jimmy Lam
Hold
Hold
Buy©
Sellª
Sellª
Buy©
Sellª
Sell
Buy
Hold
Hold
Sell
Buy
2.45
3.48
1.54
14.30
6.80
2.69
5.75
0.95
4.10
5.35
2.75
0.30
3.00
Utilities
0392 Beijing Enterprises (R)
0257 China Everbright Int’l (R)
2380 China Power Int'l (R)
0836 China Resources Power (R)
0991 Datang Int'l (H/A)
0270 Guangdong Investment (R)
1071 Huadian Power
0902 Huaneng Power (H/A)
1193 China Resources Gas
1083 Towngas China (P)
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
34.55
2.08
1.90
16.42
3.99
3.34
2.04
5.30
4.75
2.16
7
14
3
(0)
7
1
7
2
14
24
8
9
45
19
10
(3)
7
10
(5)
70
41
20
64 16,106
21
2,874
12
3,248
101 24,212
98 46,879
30
8,027
22 12,283
179 63,892
9
5,037
4
1,141
54 183,698
2.26
0.13
0.18ª
1.00
0.19ª
0.32©
0.22©
0.33
0.24
0.11
0.50
13.3 19
13.0 18
7.9
10.9 150
15.5 154
9.3
5
6.2
11.9
14.8 (52)
14.4 10
11.7 43
15
23
31
51
38
15
51
36
33
36
33
2.4
1.0
1.7
1.5
2.6
3.3
2.7
3.1
1.3
0.5
2.0
2.7
1.4
4.2
2.3
2.6
3.8
4.1
4.2
1.7
0.5
2.8
Peter Yao
Peter Yao
Peter Yao
Peter Yao
Peter Yao
Peter Yao
Peter Yao
Peter Yao
Peter Yao
Peter Yao
Buy
Buy
Hold
Buy
Hold
Buy
Buy©
Hold
Buy
Hold
35.00
2.30
1.70
19.00
3.50
4.00
2.50
5.50
4.43
1.58
Technology
1688 Alibaba
1211 BYD (H)
0861 Digital China (R)
0992 Lenovo Group (R)
0700 Tencent Holdings
0763 ZTE (H/A)
Average
Telecoms
0941 China Mobile (R)
0728 China Telecom (H)
0762 China Unicom (R/A)
Average
60
0.49ª
0.15
0.43
0.65
0.61
0.19ª
0.99©
0.26ª
0.29©
0.26ª
0.28
0.42
6.45
0.17
0.47
2.36
6.86
0.19
0.37
2.48
11.8
21.8
19.6
17.7
0.03 180.4 120.3
0.48 9.6 8.9
0.16© 10.8 8.9
1.12ª 16.9 20.1
0.87© 13.4 13.4
0.26© 7.5 7.9
0.70ª 13.4 12.4
(0.05) © 0.26ª 17.0 14.9
0.42 14.6 13.5
0.33ª 13.2 11.0
0.10ª 13.8 7.4
0.08 18.5 37.0
0.36 27.4 23.0
2.60
0.16
0.24©
1.50
0.26ª
0.36©
0.33©
0.45
0.32
0.15
0.64
15.3
16.0
10.4
16.5
21.3
10.6
9.4
16.2
19.8
19.6
15.5
Analyst
Target
Rec price
(HK$)
Buy 89.00
Hold 2.90
Sell 7.00
May 2009
May 2009
HK – HK
HK – HK
RIC Company
0330
0709
0494
0589
0210
0341
0052
0027
1212
0200
3813
1836
0662
0023
2388
1111
2356
0440
0636
0011
0388
0005
0349
1389
2888
0302
Y/E
Consumer Products
Esprit
Giordano
Li & Fung
Ports Design
Daphne International
Average
Consumer Services
Café de Coral
Fairwood
Galaxy Entertainment
Lifestyle
Melco Int'l
Pou Sheng Int’l
Stella
Average
Financials
Asia Financial Hldgs
Bank of East Asia
BOC HK (R)
Chong Hing Bank
Dah Sing Banking
Dah Sing Financial
Fubon Bank (HK)
Hang Seng Bank
HKEx
HSBC
ICBC (Asia) (R)
Ming An (Holdings)
Standard Chartered
Wing Hang Bank
Average
Jun
Dec
Dec
Dec
Dec
Mar
Mar
Dec
Dec
Dec
Sep
Dec
Price 1M YTD 3M avg. Free float
(8/5/09) chg. chg. daily T/O mkt. cap.^
(HK$) (%) (%) (HK$ m) (HK$ m)
51.20 24 17
1.70 14 (13)
21.60
9 63
14.62 36 56
3.38 102 168
37 58
14.64
6.45
2.16
8.85
5.18
0.85
10.48
(5) (7)
3 18
61 104
25 13
73 102
21
2
20 66
30 39
311
6
291
21
11
128
15
1
24
10
39
6
4
16
EPS
09E
(HK$)
EPS
10E
(HK$)
54,052 4.46
2,486 0.18
25,796 1.04©
4,994 0.88
2,918 0.30©
90,246 1.37
4.62
0.21
1.37©
0.99
0.34©
1.51
3,945
459
2,138
7,979
3,435
1,607
2,566
19,563
0.88
0.75
0.26
0.50
1.40
0.07
1.01
0.64
1.03
0.88
0.00
0.52
0.00
0.09
0.93
0.42
2.15
24.85
11.90
12.10
6.80
29.25
3.97
103.70
118.30
65.90
13.20
0.90
148.60
55.00
9
42
31
32
21
71
76
26
44
36
44
10
47
31
39
2
69
36
31
22
47
59
2
61
(3)
59
15
61
23
37
Industrials
2314 Lee & Man Paper
Mar
0303 V-Tech
Mar
0551 Yue Yuen
Sep
Average
6.63
36.70
17.26
31
20
(2)
16
74
12
13
33
25
12
63
33
2,789
5,417
10,914
19,120
0.76
4.96
1.54
2.86
0.57
5.19
1.66
2.88
30 144
15
7
(4) (3)
36 38
10
8
7 (56)
1
0
0
11
1
2
637
413
123
775
798
441
0.21
0.00
0.18
0.18
0.00
0.09
3
14
18
5
8,637
11,823
2.24
0.41
Media
Clear Media
i-Cable
Mingpao
Next Media
Oriental Press
SCMP
0511 TVB
Average
61
11.5
9.4
20.8
16.6
11.3
13.9
11.1
8.1
15.8
14.7
9.8
11.9
(14)
(5)
53
3
(1)
7
16.6 14.2 16
8.6 7.3
(5)
8.3
- 1,200
17.7 17.0
2
3.7
66
12.2 9.1 (53)
10.4 11.3 (19)
11.1 3.5 173
4
17
32
12
15
16
17
17
4
33
(8)
4
5.2
4.7
3.8
3.7
1.6
3.8
5.2
3.6
1.4
2.5
5.4
0.0
7.4
3.0
5.4
5.3
5.1
4.1
1.9
4.3
4.9
4.0
2.6
0.0
7.4
2.9
Analyst
Target
Rec price
(HK$)
Ashley Cheung Sell
Ashley Cheung Sell
Ashley Cheung Hold©
Sarah Xing
Buy
Ashley Cheung Sell
Ashley Cheung
Ashley Cheung
Ashley Cheung
Ashley Cheung
Ashley Cheung
Ashley Cheung
Ashley Cheung
28.80
1.40
22.80
11.88
5.80
Buy 18.10
Buy 6.30
Buy 10.00
Sell 4.63
Sell 13.00
Sell 0.56
Hold 8.50
Price
RIC Company
1M YTD 3M avg. Free float
EPS
EPS
P/E
P/E EPS gr. EPS gr. Yield Yield
Y/E (8/5/09) chg. chg. daily T/O mkt. cap.^
09E
10E
09E
10E
09E
10E
09E 10E
(HK$)
(HK$)
(x)
(x)
(%)
(%)
(%)
(HK$)
1
568 0.14
0.18 15.4 11.9
169
32,768 1.73
2.38 14.4 10.4
302
43,029 0.97 1.03© 12.3 11.5
1
1,237 0.54
0.51 22.4 23.7
12
1,592 0.43
0.67 15.8 10.1
9
3,000 3.27
3.96
8.9 7.4
19
1,163 0.09
0.16 44.1 24.8
339
75,138 6.48
7.18 16.0 14.4
819 119,513 3.36
3.49 35.2 33.9
2,463 800,323 4.00
3.58 16.5 18.4
17
4,886 1.04
1.02 12.7 12.9
2
725 0.04
0.07 22.5 12.9
157 228,814 13.30© 13.42© 11.2 11.1
27
7,396 3.96
4.25 13.9 12.9
334 1,319,584 3.02
3.21 18.9 15.7
441
203
286
115
698
0
(12)
(30)
9
39
(1)
1
146
29
38
6
(6)
56
21
78
11
4
(11)
(2)
75
1
7
21
1.9
4.4
4.9
2.6
2.5
4.3
1.3
6.1
2.6
5.5
4.7
1.1
3.8
2.2
3.5
2.3
6.0
5.2
2.6
4.0
5.2
2.5
6.4
2.6
4.3
4.6
1.1
3.9
2.3
3.9
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
K.W. Wong
Buy
Hold
Buy
Sell
Hold
Hold
Sell
Buy
Sell
Hold
Buy
Buy
Buy©
Sell
2.30
15.20
11.20
7.30
4.80
18.00
1.60
84.40
50.40
38.00
10.00
0.95
170.40
33.40
8.7 11.6
7.4 7.1
11.2 10.4
8.1 9.3
(40)
(27)
(16)
(33)
(25) 1.7 1.4
Sarah Xing
Sell
5 10.8 9.9
Frank He
Buy
8
3.1 3.2 Ashley Cheung Sell
(10) 6.2 5.6
2.87
24.90
12.00
0.32
0.04
0.00
0.20
0.00
0.14
11.6 7.6
0.0 15.5
6.4
6.9 6.2
12.0 8.4
(36)
57
(16)
(15)
52
11
44
0.0
0.0
8.0
7.3
5.3
0.0
1.6
8.1
6.2
Allan Ng
Allan Ng
Allan Ng
Allan Ng
Allan Ng
Allan Ng
Buy
Sell
Buy
Buy
Sell
Buy
2.20
0.50
1.88
1.25
1.14
1.25
2.93
0.52
12.9
8.3
(7)
5
31
29
5.9
4.4
6.2
4.4
Allan Ng
Buy
31.50
(%) (%) (HK$ m) (HK$ m)
Target
Analyst
Rec
(%)
price
(HK$)
Property
2778 Champion REIT
Dec
1.97
2
(5)
25
4,019
0.30
0.30
6.6
6.6
-
0
12.7 10.7 Vivien Zhang Hold
0001 Cheung Kong
Dec
86.80
21
18
412
120,626
5.10
7.36
17.0
11.8
(29)
44
2.8
0041 Great Eagle
Dec
11.70
10
36
13
3,906
1.50
1.30
7.8
9.0
1,400
(13)
4.3
4.3 Vivien Zhang Buy
13.50
0405 GZI REIT
Dec
2.12
(2)
18
3
904
0.26
0.30
8.2
7.1
18
15
9.9
2.40
0010 Hang Lung Group
Jun
30.05
14
28
34
25,236
1.44
1.88
20.9 16.0
(23)
31
2.3
2.5 Manfred Ho Hold 19.80
1.43
0101 Hang Lung Properties Jun
22.20
14
32
155
45,089
0.90
1.18
24.7 18.8
(26)
31
3.0
0012 Henderson Land
Jun
39.65
20
38
142
39,670
0.80
2.13
49.6 18.6
(89)
166
2.3
0014 Hysan
Dec
15.48
9
24
25
9,454
1.25
1.28
12.4 12.1
(18)
2
4.8
0683 Kerry Properties
Dec
27.50
24
33
92
18,365
1.77
2.03
15.5 13.5
(14)
15
2.9
3.1 Manfred Ho Sell
13.00
0066 MTR Corporation
Dec
21.40
9
19
93
28,026
1.17
1.11
18.3 19.3
(19)
(5)
2.2
2.2 Manfred Ho Buy
19.80
0017 New World Deve.
Jun
11.86
34
51
104
27,922
0.28
1.24
42.4
9.6
(89)
343
2.4
3.5 Manfred Ho Sell
5.00
0808 Prosperity REIT
Dec
0.90
(4)
0
2
811
0.12
0.14
7.5
6.4
9
17
13.3 13.3 Vivien Zhang Hold
0.86
12.70
0016 SHK Properties
Jun
82.85
6
28
576
123,208
4.33
4.57
19.1 18.1
(2)
6
3.0
0083 Sino Land
Jun
10.74
21
34
119
24,733
0.69
0.75
15.6 14.3
(57)
9
3.5
3.0 Manfred Ho Sell
0823 The Link REIT
Mar
15.94
3
25
122
34,494
0.86
0.95
18.5 16.8
16
10
5.5
6.0 Vivien Zhang Hold 21.20
12
25
128
506,463
1.38
1.77
18.9 13.2
77
45
4.5
4.7
21
Average
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
0100
1097
0685
0282
0018
0583
09E 10E 09E 10E 09E 10E
(x) (x) (%) (%) (%) (%)
4.80
Technology
0522 ASM Pacific
Dec
37.10
46
23
6,811
0.44
1.44
84.3 25.8
(82)
227
0.9
3.1
Frank He
Sell
20.10
2342 Comba Telecom
Dec
3.42
20 126
15
1,254
0.34
0.44
10.1
7.7
28
31
2.6
3.5
Frank He
Buy
3.40
2038 Foxconn Int'l Holdings Dec
5.44
60 112
80
41.3 26.0
0
59
0.0
0.0
Frank He Hold 3.90
0903 TPV
3.09
28
24
16
2,914
0.26
0.38
12.1
8.1
(20)
48
2.8
4.3
Frank He
32
77
33
21,731
0.29
0.62
36.9 16.9
(18)
91
1.6
2.7
2,625
0.05
(0.04)
26.6
-
(87)
0.0
2.3
Allan Ng
Sell
2.46
0.35©
6.2
5.9
79
5
71.4 10.5
Allan Ng
Buy
5.00
Allan Ng
Sell
4.40
Dec
Average
10,752 0.13©
0.21©
Buy
2.95
Telecoms
2332 Hutchison Telecom
Dec
1.33
(44) (36)
26
0008 PCCW
Dec
2.10
(19) (11)
148
Jun
5.09
0315 SmarTone
Average
7,373 0.34ª
9 (11)
2
1,458
0.09
0.19
55.3 27.1
(81)
104
1.6
3.1
(18) (20)
59
11,457
0.16
0.17
29.4 16.5
(30)
54
24.3
5.3
39,479
0.63
0.84
15.9
11.9
33
2.7
3.3 Du JianPing Hold
9.17
5,387 (0.78)
(0.31)
-
-
0.0
0.0
Jimmy Lam
Sell
14.30
Jimmy Lam
Sell
2.65
Transport
Dec
Dec
Mar
Mar
Mar
Dec
2.44
0.62
1.13
1.24
0.79
1.13
Dec
29.00
15
22
9.9
9.5
0293 Cathay Pacific
Dec
10.02
10
15
59
0316 OOIL
Dec
26.90
11
56
34
Dec
4.88
28
39
100
6,820
0.47
0.09
10.5 52.5
(74)
(80)
4.4
1.0
12
32
91
835,693
0.56
0.77
26.5 17.3
(21)
63
8.0
4.0
2343 Pacific Basin
Average
Utilities
0002 CLP
Dec
51.30
(3)
(2)
277
88,951
3.61
3.73
14.2 13.8
(17)
3
4.9
4.9
Peter Yao
0003 HK & China Gas
Dec
14.84
13
27
114
53,419
0.64
0.69
23.2 21.5
(2)
8
2.4
2.5
Peter Yao
Hold 10.60
0006 HK Electric
Dec
42.35
(8)
(3)
200
49,712
3.11
3.20
13.6 13.2
(17)
3
5.4
5.4
Peter Yao
Hold 50.00
1
7
197
192,082
2.45
2.54
17.0 16.2
(12)
5
4.2
4.3
Average
62
Hold 60.50
May 2009
May 2009
China – A
China – A
(¥) (%) (%)
(¥ m)
(¥ m)
RIC Company
EPS
09E
(¥)
EPS
10E
(¥)
09E 10E 09E 10E 09E 10E
(x)
(x)
(%) (%) (%) (%)
Agriculture
600195 China Animal Husbandry
21.39
Average
31
31
82
82
166
166
Automotive
600166 Beiqi Foton Auto
000625 Chongqing Changan (A/B)
000951 CNHTC Jinan Truck
000800 FAW Car
000927 FAW Xiali
600660 Fuyao Group Glass Ind.
000550 Jiangling Motors (A/B)
002048 Ningbo Huaxiang
000338 Weichai Power (A/H)
000581 Weifu High Tech
600686 Xiamen King Long Motor
600066 Zhengzhou Yutong Bus
Average
37
24
(2)
34
47
10
7
8
13
21
(6)
2
16
162
145
70
121
91
96
73
115
92
143
56
50
101
318
352
137
231
114
227
58
159
201
194
188
96
190
7,194
11,343
3,258
12,128
2,316
7,045
2,378
2,847
9,785
4,099
2,939
5,393
5,894
11.52 (10) 57
13.08
5 119
17.30 20 63
7.52 (1) 42
12.75
1 49
9.84 (8) 26
50.85 (9) (11)
5.72
4 74
6.00 26 121
31.86
7 14
7.57 12 37
8.16
7 28
11.84 19 52
35.05 12 40
18.63 16 86
22.55 (13) 28
14.88 16 136
6 57
308
835
209
181
45
114
495
195
157
31
84
120
252
53
345
656
305
258
1,797 0.36
0.49 31.6 23.4
19,793 0.34
0.40 38.6 32.5
3,175 0.88
1.34 19.6 12.9
2,541 0.72
0.84 10.4 8.9
987 0.66ª 0.76 19.4 16.8
1,528 1.00
1.36
9.8 7.3
19,878 3.62
3.39 14.0 15.0
3,115 0.16
0.24 35.8 23.8
2,977 0.17
0.30 34.7 20.1
4,184 1.14
1.61 27.9 19.8
5,450 (0.13) © 0.02©
- 344.1
3,133 0.51
0.65 16.0 12.6
9,705 0.63
0.76 18.8 15.7
2,596 1.73
2.13 20.3 16.5
12,083 0.84
0.98 22.1 19.1
4,738 0.87
1.03 25.9 21.9
9,806 0.72
0.80 20.6 18.6
6,323 0.84
1.01 22.8 37.0
1
8
50
23
55
33
28
5
(0)
29
97
30
46
373
51
478
83
227
81
162
65
879
310
250
1,748
47,911
803
15,992
1,421
4,387
6,048
6,694
4,016
35,198
5,855
11,825
0.64ª
5.36
0.55
1.09ª
0.72
0.58
0.74
0.51©
2.05ª
0.48
1.14
1.26
0.72ª
6.32
0.78
1.25ª
0.80
0.66
0.90
0.63©
2.51ª
0.53
0.00
1.37
25.0
21.9
21.9
20.5
16.2
25.7
34.7
27.2
23.6
35.8
13.8
24.2
9 88
5 73
7 46
12 40
3 54
(2) 13
41 107
(2) 33
21 64
15 24
17 27
13 (0)
10 58
135
23
215
88
53
42
99
60
349
602
109
135
118
1,806
1,130
3,715
2,522
922
1,789
4,107
699
6,894
29,236
4,779
4,983
2,620
0.69
0.50ª
0.38
0.48ª
0.24
0.45ª
0.58ª
0.46
0.12
0.56ª
0.94ª
0.35ª
0.12
0.42
0.62ª
0.49
0.55ª
0.33
0.55ª
0.57ª
0.39
0.13
0.65ª
1.15ª
0.42ª
0.13
25.2
34.0
29.4
25.6
41.1
34.0
32.5
28.9
90.5
26.6
25.7
27.0
90.5
Chemicals
600299 Blue Star New Materials
000839 CITIC Guoan
600426 Hualu Hengsheng
000707 Hubei Shuanghuan S & T
002037 Jiulian Development
600423 Liuzhou Chemical
000792 Qinghai Salt Lake Potash
600409 Sanyou Chemical Industries
000677 Shandong Hailong
600315 Shanghai Jahwa United
600688 Shanghai Petrochem (A/H)
000731 Sichuan Meifeng
600500 Sinochem Int'l
600486 Yangnong Chemical
600309 Yantai Wanhua
600096 Yuntianhua
600352 Zhejiang Longsheng
Average
12.60
9.00
21.60
15.85
7.26
7.63
14.50
7.74
34.55
12.13
7.29
13.47
Consumer Products
000848 Hebei Chengde Lolo
600519 Kweichow Moutai
600559 Laobaigan Liquor
000568 Luzhou Laojiao
600962 SDIC Zhonglu Fruit Juice
600779 Sichuan Swellfun
600600 Tsingtao Brewery (A/H)
000729 Yanjing Brewery
000869 Yantai Changyu
000858 Yibin Wuliangye
600887 Yili Industrial
Average
16.02
117.51
12.03
22.36
11.66
14.93
25.66
13.83
48.36
17.20
15.77
Consumer Services
600258 Beijing Capital Tourism
600828 Chengdu People's Dept St
600138 CYTS
600693 Fujian Dongbai Group
000978 Guilin Tourism
600054 Huangshan Tourism
600754 Jinjiang Development (A/B)
002033 Lijiang Tourism
600832 Oriental Pearl
002024 Suning Appliances
600859 Wangfujing Dept ST
000759 Wuhan Zhongbai Group
Average
17.40
16.85
11.19
12.20
9.87
15.18
18.84
13.28
11.22
14.81
24.08
9.38
63
2
0
21
7
3
12
23
9
3
13
39
12
3,882 0.75© 0.83© 28.5 25.8
3,882 0.75
0.83 28.5 25.8
0.63©
0.18©
1.16
0.75
0.21
0.32
0.81
0.33ª
2.30
0.59ª
0.47ª
0.79©
0.71
0.76©
0.25ª
1.49
0.88©
0.29
0.39
0.93
0.45ª
2.87ª
0.65ª
0.55ª
0.98©
0.87
20.0
50.0
18.6
21.1
34.6
23.8
17.9
23.7
15.0
20.7
15.4
17.0
23.2
79
79
Analyst
Target
Rec price
(¥)
11
11
2.0
2.0
2.2 Zhao Zongjun
2.2
21
37
28
18
38
22
15
39
25
10
15
24
24
0.2
0.2
1.1
2.1
0.6
0.8
2.1
0.8
0.4
1.3
0.7
3.5
1.1
0.5
0.4
1.4
1.8
1.1
2.1
2.1
0.9
0.5
1.5
0.8
4.3
1.4
7
49
16
26
110
39
103
(27)
21
34
28
(6)
11
(7)
(29)
1
23
35
19
52
17
16
35
(6)
50
72
41
27
20
23
16
18
10
28
0.9
0.8
0.7
4.0
1.5
0.6
3.3
0.3
0.8
0.6
0.0
2.5
1.4
0.5
2.7
1.3
0.2
1.3
1.0 Ni Xiaoman
0.9 Ni Xiaoman
0.7 Ni Xiaoman
4.0 Chen Tian
1.8 Chen Tian
0.7 Ni Xiaoman
4.9 Ni Xiaoman
0.3 Chen Tian
0.8 Chen Tian
0.6 Ni Xiaoman
0.0 Lawrence Lau
3.1 Ni Xiaoman
1.5 Ni Xiaoman
0.5 Chen Tian
1.9 Ni Xiaoman
1.6 Ni Xiaoman
0.2 Chen Tian
1.4
22.3
18.6
15.4
17.9
14.6
22.6
28.5
22.1
19.3
32.5
21.4
10
22
77
20
11
(9)
37
33
21
0
19
22
13
18
42
15
11
14
22
23
22
10
19
2.8
1.9
1.2
3.5
2.5
3.1
1.0
1.5
3.0
0.3
2.5
2.1
3.1
2.1
2.1
4.0
2.7
3.5
1.4
1.8
3.6
0.3
2.5
Zhao Zongjun Hold 17.93
Zhao Zongjun Holdª 15.00
Zhao Zongjun Buy© 15.00
Zhao Zongjun Sell 24.00
41.4
27.2
22.8
22.1
29.9
27.5
33.1
34.1
84.4
22.9
20.9
22.4
84.4
(8)
(1)
23
23
85
12
28
0
8
16
7
23
8
(39)
25
29
16
38
24
(2)
(15)
7
16
23
21
7
2.4
0.0
1.4
1.0
0.0
1.2
2.4
1.1
0.2
0.8
0.8
1.1
0.2
1.6
0.4
1.8
1.2
1.8
1.5
2.4
1.9
0.3
1.7
0.8
1.1
0.3
Liu Du
Hold 15.14
Liu Du
Hold 13.40
Liu Du
Hold 8.74
Liu Du
Holdª 11.90
Liu Du
Hold 8.19
Liu Du
Hold 13.41
Liu Du
Buy 16.46
Liu Du
Hold 11.60
Liu Du
Sell 7.25
Liu Du
Hold 10.80
Liu Du
Buy 23.50
Zhang Yuan Buy 10.50
16.5 67
36.4 1,700
14.5 (9)
18.0 12
25.0 91
19.6 167
15.6 (11)
17.1 12
12.0 (1)
18.7 72
13.4
7
13.7 (22)
18.4 174
Buy
Wang Yusheng Buy©
Wang Yusheng Holdª
Eric Hu
Hold
Wang Yusheng Buy©
Wang Yusheng Sell
Wang Yusheng Hold
Wang Yusheng Hold
Wang Yusheng Hold
Eric Hu
Buy©
Wang Yusheng Hold
Eric Hu
Hold
Eric Hu
Buy©
Sell
Hold
Buy
Buy
Buy
Buy
Hold
Hold
Sell
Buy
Sell
Buy
Buy
Buy
Buy
Hold
Hold
23.00
15.26
8.30
11.60
19.36
3.15
5.76
14.60
8.13
36.80
12.94
8.50
15.80
5.46
11.90
17.68
6.96
16.50
20.00
54.30
5.18
1.78
38.80
2.80
9.18
8.19
34.60
19.60
24.36
14.40
RIC Company
Energy
601898 China Coal (A/H)
601808 China Oilfield Service (A/H)
600348 Guoyang New Enegry
600123 Lanhua Sci-Tech
601699 Lu'an Environmental Energy
601857 PetroChina (A/H)
601666 Pingdingshan Tian'an Coal
601088 Shenhua Energy
600028 Sinopec (A/H)
000983 Xishan Coal
600188 Yanzhou Coal (A/H)
900948 Yitai Coal (B)
Average
(¥) (%) (%)
(¥ m)
(¥ m)
EPS
09E
(¥)
EPS
10E
(¥)
P/E P/E EPS gr.EPS gr. Yield Yield
09E 10E 09E 10E 09E 10E
(x) (x) (%) (%) (%) (%)
11.21
17.26
24.56
30.12
34.25
12.41
28.76
26.85
10.44
24.39
15.36
30.74
15
24
23
25
20
11
31
23
19
28
9
3
19
73
45
152
153
174
22
130
53
49
109
86
83
94
667
229
477
356
545
697
458
1,178
767
1,222
330
11
578
17,836
8,534
9,923
17,199
13,009
49,968
12,676
48,064
88,730
27,787
5,530
10,126
25,782
0.51©
0.78
1.34ª
1.76
1.90
0.42ª
1.45ª
1.32©
0.52ª
1.05
0.65ª
4.26
1.33
0.68©
0.92
1.49ª
1.90
2.38
0.54ª
1.62ª
1.38©
0.58ª
1.73
0.74ª
5.43
1.62
21.8 16.6
22.2 18.7
18.3 16.5
17.1 15.9
18.0 14.4
29.9 22.9
19.8 17.7
20.4 19.4
20.2 17.9
23.2 14.1
23.7 20.7
7.2 5.7
20.16 16.71
Financials
600816 Anxin Trust & Investment
601169 Bank of Beijing
601988 Bank of China (A/H)
601328 Bank of Communication (A/H)
601009 Bank of Nanjing
002142 Bank of Ningbo
601998 China Citic Bank (A/H)
000783 Changjiang Securities
601939 China Construction Bank (A/H)
600036 China Merchants Bank (A/H)
600030 CITIC Securities
000728 Guoyuan Securities
600837 Haitong Securities
000562 Hong Yuan Securities
601398 ICBC (A/H)
601166 Industrial Bank
600016 Minsheng Bank
000686 Northeast Securities
601318 Ping An Insurance (A/H)
600000 Pudong Bank
600109 Sinolink Securities
000001 Shenzhen Development
Average
19.49
13.36
3.64
7.22
14.14
10.40
5.17
15.91
4.71
17.29
25.57
17.00
13.05
19.30
4.36
27.66
6.40
26.30
41.14
24.82
38.45
18.18
17 53
12 50
6 23
10 52
16 69
11 53
9 34
10 81
8 23
10 42
6 42
6 59
3 61
16 65
10 23
23 89
16 57
15 119
6 55
19 87
9 62
13 92
11 59
168
431
423
509
325
285
216
354
778
2,650
3,104
147
2,638
437
1,145
922
1,238
297
1,515
1,747
341
752
928
5,922
16,056
27,719
113,196
8,827
6,396
11,901
13,591
242,149
125,853
169,542
4,729
24,482
10,350
86,797
107,874
55,415
4,584
160,152
109,595
7,113
50,820
61,957
0.97
0.86
0.29©
0.50©
0.91
0.49
0.37
0.32©
0.40ª
1.41
0.80©
0.43©
0.30©
0.36ª
0.34©
2.26ª
0.57
0.79
1.31
1.85©
0.60ª
1.49
0.8
1.31
0.98
0.28©
0.36©
0.79
0.28
0.24
0.40©
0.40ª
1.02
1.04©
0.47©
0.35©
0.45©
0.24ª
1.36ª
0.27
0.83ª
2.05
1.51©
0.67ª
1.45
0.8
20.1
15.6
12.6
14.4
15.5
21.2
14.0
49.6
11.9
12.3
31.8
39.4
43.2
53.9
12.7
12.3
11.2
33.3
31.4
13.4
64.5
12.2
24.8
14.9
13.6
13.0
20.3
17.9
37.1
21.5
39.6
11.8
17.0
24.5
36.5
37.1
42.5
18.5
20.3
23.7
31.8
20.1
16.4
57.7
12.5
24.9
(16)
(61)
645
26.2
35 0.7 1.0
15 1.2 1.4
(3) 4.4 4.1
(29) (2.6) (1.8)
(13) 3.0 2.7
(43) 2.1 1.2
(35) 1.9 1.4
25 0.4 0.5
1
4.2 4.2
(28) 1.7 1.1
30 0.4 0.6
8
0.5 0.5
17 0.5 0.5
27 0.4 0.5
(31) 4.0 2.8
(40) 1.3 0.7
(53) 1.3 0.6
5
0.6 0.6
56 0.8 0.9
(18) 1.2 1.0
12 0.3 0.3
(3) 0.8 0.8
(3.0) 1.3 1.2
Industrials
600585 Anhui Conch (A/H)
600761 Anhui Heli
601390 China Railway (A/H)
601186 China Railway Construction (A/H)
600970 China Sinoma
601766 China South Locomotive
600150 China State Shipbuilding
002074 Dongyuan Electric
600875 Dongfang Electric
002164 Donly Transimission
002202 Goldwind Sci & Tech
000528 Guangxi Liugong Machinery
600685 Guangzhou Shipyard Int’l (A/H)
002204 Huarui Heavy Ind. Steel Casting
600308 Huatai Paper
002097 Hunan Sunward Intelligent
600495 Jinxi Axle
600499 Keda Industrial
600806 Kunming Machine (A/H)
002147 Fangyuan Slewing Ring
600449 Ningxia Saima Industry
600312 Pinggao Electric
600425 Qingsong Bldg Mat. & Chem.
600031 Sany Heavy Industry
000680 Shantui Construction Machinery
000837 Shanxi Qinchuan Machinery
000410 Shengyang Machine Tools
002028 Sieyuan Electric
600169 Taiyuan Heavy Industry
000401 Tangshan Jidong Cement
600582 Tian Di Sci. & Tech.
002122 Tianma Bearing
000877 Tianshan Cement
600458 Times New Materials
600580 Wolong Electric
600089 TBEA
000400 XJ Electric
000425 Xugong Science & Technology
000157 Zoomlion Heavy Industry
Average
44.85 32 73
10.25
3 49
6.11
9 13
9.87
4 (2)
57.66 21 80
4.71
7
9
62.65 (6) 64
10.61 (1) 12
47.48 35 59
16.57 35 80
34.70 28 92
18.99 34 101
22.82
8 85
25.92
9 71
10.45
9 71
14.97
0 25
19.15 (0)
9
12.51 (9) 79
11.32 (2) 70
13.60
4 48
26.55 (1) 55
14.40 (8)
5
13.16
8 80
27.06 16 93
11.80
3 56
7.43 13 64
7.62
1 58
19.44
5 11
25.00
3 76
15.97 16 61
20.29 20 48
30.80 (10) 16
13.25 (7) 25
15.02 11 53
13.61
9 93
30.08 12 26
13.86 (6)
5
29.29 10 88
20.49 (2) 83
8 52
347
173
782
776
76
775
449
34
196
40
399
192
264
58
173
119
62
146
51
44
141
243
102
453
239
78
103
104
98
169
100
110
77
68
84
453
153
119
495
214
23,762
2,525
28,631
24,233
4,502
13,942
9,205
881
15,076
746
15,268
8,963
3,668
1,387
3,408
2,379
1,164
3,223
2,790
1,381
3,521
4,636
3,011
40,265
7,075
1,893
2,284
5,812
4,557
10,461
5,880
2,094
2,811
1,624
3,852
28,829
3,667
8,301
15,271
8,281
2.04
0.54
0.30
0.49
2.97©
0.17ª
5.95
0.46ª
1.83©
0.73
1.32©
1.20©
1.51ª
0.91
1.43
0.85
0.79
0.55
0.63ª
1.02
1.62
0.44
0.55
1.26ª
0.78
0.25
0.07
0.82ª
1.40
0.62ª
0.90
2.88
0.87
0.49
0.64©
1.31©
0.42
1.76
1.33ª
1.13
2.92
0.64
0.40
0.68
3.60©
0.22ª
4.03
0.63ª
2.68©
0.94
1.63©
1.37©
1.08©
1.30
1.75
1.11
1.08
0.93
0.65ª
1.41
2.71
0.71
0.75
1.59ª
0.84
0.32
0.08
1.02ª
1.62
0.87ª
1.03
3.58
0.95
0.60
0.87©
1.53©
0.60
1.90
1.78ª
1.34
22.0
18.9
20.7
20.1
19.4
28.5
10.5
23.1
26.0
22.7
26.3
15.8
15.1
28.5
7.3
17.6
24.2
22.6
18.0
13.3
16.4
32.7
23.9
21.5
15.1
29.7
108.9
23.9
17.9
25.8
22.5
10.7
15.2
30.7
21.4
23.0
33.0
16.6
15.4
23.2
15.4 32
16.1 2
15.4 467
14.5 66
16.0 61
21.5 27
15.6 (5)
16.8 64
17.7
17.6 49
21.4 44
13.8 67
21.2 (9)
19.9 52
6.0 26
13.5 77
17.7 7
13.5 26
17.5 (3)
9.6 79
9.8 16
20.3 7
17.5 70
17.0 52
14.0 18
23.2 19
95.3
19.1 3
15.4 12
18.3 51
19.7 17
8.6 52
13.9 40
25.0 81
15.6 39
19.6 63
23.1 320
15.4 780
11.5 29
18.5 76
43 0.9 1.3
18 1.0 1.2
34 1.2 1.6
39 1.2 1.7
21 2.9 3.5
33 1.2 1.5
(32) 1.5 1.0
37 1.3 1.8
47 0.0 0.1
29 0.7 0.8
23 0.2 0.2
14 0.9 1.0
(29) 1.7 1.2
43 0.5 0.8
22 28.7 2.9
31 2.3 2.9
37 0.8 1.1
67 0.7 1.1
3
1.1 1.1
38 3.0 4.1
67 1.1 1.8
61 0.6 1.0
37 2.6 3.5
26 0.9 1.2
8
1.4 1.4
28 0.5 0.7
14 0.1 0.1
25 0.6 0.8
16 1.1 1.3
41 1.1 1.5
14 0.9 1.0
24 1.9 2.3
9
1.8 2.0
22 0.7 0.8
37 1.2 1.6
17 1.3 1.5
43 0.4 0.6
8
0.6 0.6
34 0.6 0.8
27 1.8 1.4
64
(1)
31
11
19
(11)
11
(28)
8
(23) 25
(33) 31
(41) 12
(2)
5
55
13
(27) 65
(51) 14
0
27
(12.7) 21.7
33
(1)
(9)
(13)
6
(11)
0
(23)
30
1
(27)
21
(25)
(4)
1
(1)
(8)
12
1.4
0.9
1.1
1.3
2.2
1.5
2.3
1.7
1.6
1.3
1.3
2.9
1.6
1.8
0.8
1.2
1.4
2.8
2.0
2.5
1.8
1.8
2.1
1.5
2.9
1.9
Analyst
Rec
Target
price
(¥)
Lawrence Lau
Lawrence Lau
Grace Tang
Grace Tang
Grace Tang
Lawrence Lau
Grace Tang
Lawrence Lau
Lawrence Lau
Grace Tang
Lawrence Lau
Grace Tang
Hold
Buy
Buy
Hold
Buy
Buy
Hold
Hold
Buy
Hold
Sellª
Buy
9.18
19.52
27.30
18.30
29.50
12.85
26.74
25.10
11.93
15.90
11.66
42.70
Zhang Jian
Yuan Lin
Yuan Lin
Yuan Lin
Yuan Lin
Yuan Lin
Yuan Lin
Zhang Jian
Yuan Lin
Yuan Lin
Zhang Jian
Zhang Jian
Zhang Jian
Zhang Jian
Yuan Lin
Yuan Lin
Yuan Lin
Zhang Jian
Yuan Lin
Yuan Lin
Zhang Jian
Yuan Lin
Buy
Buy
Buy
Hold
Hold
Sell
Hold
Sell
Buy
Hold
Buy
Sell
Hold
Sell
Hold
Hold
Hold
Hold
Buy
Sell
Sell
Sell
29.04
14.57
4.00
7.08
13.56
9.41
5.15
9.54
5.00
16.68
27.50
11.10
12.25
12.60
4.58
24.14
6.13
19.20
47.84
21.81
16.50
14.00
Grace Tang Buy 47.10
Eric Hu
Hold 9.70
Patrick Li
Buy 6.39
Patrick Li
Buy 12.32
SHI Qi
Buy 5.10
Xu Minle
Hold 59.50
Han Ling Holdª 12.90
Han Ling Buy 40.00
SHI Qi
Buy 9.49
Han Ling
Hold 39.60
Eric Hu
Buy 24.10
Xu Minle
Hold 19.71
SHI Qi
Buy 26.00
Ni Xiaoman Buy 22.80
SHI Qi
Hold 12.75
SHI Qi
Buy 23.70
SHI Qi
Buy 12.60
SHI Qi
Buy 13.83
SHI Qi
Hold 11.20
Han Ling
Hold 15.00
SHI Qi
Buy 27.72
SHI Qi
Buy 14.04
Eric Hu
Hold 5.80
Eric Hu
Sell 2.40
Han Ling
Hold 20.44
SHI Qi
Buy 28.00
SHI Qi
Buy 22.50
SHI Qi
Buy 63.36
SHI Qi
Buy 9.80
Han Ling
Buy 17.80
Han Ling
Buy 32.80
Han Ling
Hold 15.70
SHI Qi
Buy 38.80
Eric Hu
Buy 26.60
May 2009
May 2009
China – A
China – A
(¥) (%) (%)
(¥ m)
(¥ m)
RIC Company
Media
600037 Beijing Gehua CATV
10.76
600825 Xinhua Media
17.39
Average
Metals & Mining
000898 Angang New Steel (A/H)
600019 Baosteel
601600 CHALCO (A/H)
600357 Chengde Xinxin Vanadium
601005 Chongqing Iron & Steel (A/H)
000831 Guanlu
600362 Jiangxi Copper (A/H)
601958 Jinduicheng Molybdenum
600808 Maanshan Iron (A/H)
600282 Nanjing Steel
600219 Nanshan Aluminium
000629 Panzhihua Steel
600547 Shandong Gold
000709 Tangshan Iron & Steel
000630 Tongling Nonferrous Matel
000612 Wanfang Aluminium
600005 Wuhan Steel
600888 Xinjiang Joinworld
000807 Yunnan Aluminium
000960 Yunnan Tin
601899 Zijin Mining
Average
Pharmaceuticals
600085 Beijing Tongrentang
000423 Dong-E E-Jiao
600252 Guangxi Wuzhou Zhongheng
600332 Guangzhou Pharm. (A/H)
000963 Huadong Medicine
002007 Hualan Biological Eng.
600557 Kanion Pharmaceutical
002252 Shanghai RAAS
600535 Tianjin Tasly Pharm.
600161 Tiantan Biological Products
600529 Shandong Pharm.Glass
600351 Yabao Pharmaceuticals
Average
Property
000043 CATIC Real Estate
600675 China Enterprise
000024 China Merchants Prop
000002 China Vanke (A/B)
600007 China World Trade Centre
600067 Citichamp Dartong
000402 Financial Street
600383 Gemdale
600325 Huafa Industrial Share
600048 Poly Real Estate Group
600639 Shanghai Jinqiao Export (A/B)
000069 Overseas Chinese Town
000006 Shenzhen Zhenye Group
600895 Zhangjiang Hi-Tech
Average
Technology
000063 ZTE (A/H)
13
37
13
286
61
286
10.10 23 45
6.14
9 32
10.87
5 77
8.39 13 84
5.20 11 51
6.84 10 71
25.29 11 153
15.87
6 58
4.16
6 29
4.65 22 60
9.74
3 58
8.65 (10) (6)
39.25
6 62
6.36 18 72
16.41 17 147
12.33 (1) 67
7.34
1 54
11.68
9 49
7.60
5 69
22.30 21 136
8.74 (14) 82
9 65
404
833
666
255
63
165
643
601
413
91
183
506
711
598
427
246
1,188
63
153
424
1,576
432
17.61
18.11
13.15
8.17
12.10
25.94
17.73
26.50
15.92
19.00
12.12
11.04
13 43
10 34
24 120
10 39
4 12
2
8
1
4
(0)
5
10 29
3 31
11 27
10 77
8 36
11.38
15.14
30.25
9.84
10.10
9.80
11.42
14.00
18.89
21.73
16.30
17.16
12.00
15.78
21
44
46
20
16
26
22
35
18
31
22
36
34
17
28
133
168
131
53
42
144
50
115
103
96
113
110
143
58
104
32
312
258
1,687
66
176
456
532
207
557
142
279
171
231
365
38.50
14
14
42
42
317
317
6.71
23
23
33
33
1,503
1,503
Average
Telecoms
600050 China Unicom (A/R)
Average
65
7
15
7
131
199
85
71
82
68
72
60
96
165
85
171
107
EPS
09E
(¥)
EPS
10E
(¥)
P/E
09E
(x)
10E 09E 10E 09E 10E
(x) (%) (%) (%) (%)
5,977 0.19ª 0.19ª 58.2 56.6
4,438 0.45ª 0.46ª 39.0 38.1
5,977 0.32
0.32 48.6 47.3
Analyst
Target
Rec price
(¥)
Sell 8.00
Sellª 13.91
(40)
7
(17)
3
2
3
1.4
0.9
1.1
1.4
1.0
1.2
Allan Ng
Liu Du
16.0
19.0
129.4
10.0
20.2
68.4
45.7
66.1
16.3
8.8
44.3
206.0
14.6
20.6
38.2
52.9
10.2
60.5
59.8
71.9
27.3
47.9
(55)
(61)
n.m.
28
(67)
0
(71)
(83)
(35)
182
(57)
33
(54)
(46)
(90)
(29)
(56)
(80)
(59)
24
(30)
241
123
n.m.
13
127
900
134
27
276
157
10
(14)
13
51
(2)
238
53
52
877
(14)
23
164
0.9
0.9
0.0
4.8
0.8
0.0
0.3
0.4
0.5
2.0
0.3
0.0
2.8
2.0
0.8
0.2
3.0
0.2
0.1
0.2
1.6
1.0
3.1
2.1
0.0
4.8
1.7
0.1
0.7
0.5
1.9
5.1
0.4
0.0
3.2
3.1
0.8
0.5
4.6
0.3
1.4
0.1
2.1
1.7
Belle Chan
Belle Chan
Belle Chan
Xu Minle
Belle Chan
Le Yukun
Belle Chan
Le Yukun
Belle Chan
Xu Minle
Le Yukun
Xu Minle
Le Yukun
Le Yukun
Le Yukun
Le Yukun
Le Yukun
Le Yukun
Le Yukun
Le Yukun
Belle Chan
Sell
Hold
Sell
Buy
Buy©
Hold
Sell
Hold
Buy©
Hold
Hold
Sellª
Buy
Hold
Hold
Sell
Buy
Hold
Sell
Hold
Buy
5.20
5.50
8.50
8.95
5.80
3.40
17.10
13.20
6.36
3.80
4.40
4.70
89.50
6.20
5.50
7.50
9.10
10.50
5.30
7.30
11.20
4,121 0.62
0.73 28.4 24.1
7,307 0.65© 0.75© 27.8 24.0
2,197 0.44
0.67 30.1 19.7
1,654 0.54
0.64 15.1 12.8
2,721 0.57
0.66 21.2 18.3
5,629 1.26
1.71 20.6 15.2
3,490 0.72
0.90 24.6 19.7
1,060 0.83
1.04 31.9 25.5
7,769 0.66© 0.80© 24.1 19.9
4,518 0.38
0.49 50.0 38.8
3,115 0.66
0.78 18.4 15.5
1,744 0.41ª 0.50ª 27.1 22.0
3,777 0.64
0.81 26.6 21.3
19
19
103
6
46
52
33
28
26
41
20
(24)
31
18
16
53
19
16
36
25
25
21
29
18
23
25
1.8
1.4
1.0
3.3
0.9
1.5
1.2
1.0
2.5
0.3
1.0
1.5
1.5
2.5
2.1
2.0
4.7
1.1
2.0
2.0
1.3
3.0
0.5
1.2
2.3
2.0
He Changming
He Changming
He Changming
He Changming
Zhang Yin
Zhang Yin
He Changming
He Changming
He Changming
He Changming
Zhang Yin
He Changming
Hold
Hold
Buy
Hold
Buy
Buy
Buy
Hold
Buy
Buy
Buy
Buy
15.50
15.64
13.00
9.72
14.30
48.00
21.60
29.00
19.80
21.10
14.50
12.30
123
331
27
24
(37)
51
33
33
38
32
13
54
57
29
58
56
61
12
15
41
27
4
17
19
20
12
44
2
32
26
1.0
1.3
0.4
0.7
1.1
0.2
2.0
0.2
0.5
0.4
0.9
1.1
0.9
0.8
0.8
1.6
1.3
0.5
0.8
1.5
0.3
2.0
0.2
0.7
0.5
0.9
1.5
0.9
1.1
1.0
7
7
18
18
0.7
0.7
0.8
0.8
Frank He
(81)
(81)
(21)
(21)
0.5
0.5
0.5
0.5
Allan Ng
11,619
29,031
44,105
4,772
2,858
2,948
30,581
8,535
5,094
3,761
4,882
16,712
6,148
11,300
9,131
3,551
23,012
1,933
3,925
5,759
38,127
11,784
1,579
10,509
28,047
93,044
2,035
3,910
27,483
16,679
11,621
22,911
13,757
19,826
2,774
24,438
19,901
0.19ª
0.15ª
(0.05)
0.75
0.11
0.01
0.24ª
0.19ª
0.07ª
0.21ª
0.20
0.05ª
2.38ª
0.20
0.44
0.07ª
0.47ª
0.13©
0.01©
0.36
0.26
0.31
0.29ª
0.56
0.91
0.46©
0.22
0.43
0.56©
0.67©
1.10
1.20©
0.34
0.50
0.70©
0.44
0.60
0.63ª
0.32©
0.08
0.84
0.26
0.10
0.55©
0.24ª
0.26ª
0.53ª
0.22
0.04ª
2.68©
0.31
0.43
0.23©
0.72ª
0.19
0.13ª
0.31
0.32
0.45
0.45ª
0.90
1.02
0.53©
0.31
0.54
0.58ª
0.78©
1.31
1.45ª
0.38
0.72
0.71ª
0.58
0.73
54.6
42.3
11.2
46.0
684.0
107.2
84.0
61.2
22.6
48.7
176.5
16.5
31.2
37.3
178.7
15.7
92.0
584.6
61.9
33.6
119.5
39.5
27.0
33.4
21.4
45.9
22.8
20.5
21.1
17.2
18.1
47.9
34.3
17.2
35.9
28.7
25.3
16.8
29.8
18.6
32.6
18.0
19.7
18.0
14.4
15.0
42.9
23.9
16.9
27.2
22.8
51,706 1.29ª 1.52ª 29.8 25.3
51,706 1.29
1.52 29.8 25.3
55,470
55,470
0.15
0.15
0.12
0.12
44.7 56.4
44.7 56.4
Zhou Lu
Hold 10.61
TIAN Shixin Hold 12.37
TIAN Shixin Buy 10.20
Zhou Lu
Hold 9.32
Zhou Lu
Buy 13.63
TIAN Shixin Holdª 14.64
Zhou Lu
Hold 16.16
TIAN Shixin Hold© 11.13
Zhou Lu
Hold 15.33
(¥) (%) (%)
(¥ m)
(¥ m)
RIC Company
EPS
09E
(¥)
EPS
10E
(¥)
Transport
601111 Air China (A/H)
600012 Anhui Expressway (A/H)
600115 China Eastern Airlines (A/H)
600125 China Railway Tielong
600026 China Shipping (A/H)
600029 China Southern Airlines(A/H)
000039 CIMC (A/B)
601866 CSCL (A/H)
601006 Daqin Railway
601333 GS Railway (A/H)
600004 Guangzhou Baiyun Airport
600035 Hubei Chutian Expressway
600377 Jiangsu Expressway (A/H)
600269 Jiangxi Ganyue Expressway
600350 Shandong Expressway
600591 Shanghai Airlines
600009 Shanghai Airport
000089 Shenzhen Airport
600548 Shenzhen Expressway(A/H)
000900 Xiandai Investment
600320 Zhenhua Port Machinery
Average
6.90
5.20
5.08
7.77
14.11
5.52
8.94
4.25
9.78
4.80
9.17
5.15
6.02
10.29
5.34
4.99
14.19
7.09
5.67
17.51
12.19
14
4
(4)
11
24
7
3
3
2
10
5
8
4
5
4
9
4
14
9
(1)
3
6
68
38
23
39
73
73
44
60
22
29
30
36
11
32
10
14
26
34
29
49
49
36
345
53
106
231
408
401
184
320
916
340
125
43
85
153
131
71
239
76
61
168
305
221
11,311
3,278
1,978
5,439
7,687
9,779
6,902
9,931
25,446
13,261
9,280
2,543
2,426
6,971
3,557
4,477
14,492
4,630
1,237
4,927
13,683
7,596
Utilities
000690 Baolihua New Energy
601991 Datang Intl Power (A/H)
600795 GD Power Dev
600027 Huadian Power (A/H)
600011 Huaneng Power (A/H)
600886 SDIC Huajing Power
Average
9.05
7.59
6.60
5.01
7.78
10.76
6
6
8
4
1
7
5
45
17
18
31
12
18
24
192
84
380
106
156
117
172
7,080 0.56
0.60
46,493 0.18ª 0.24ª
27,290 0.18© 0.25ª
7,541 0.20© 0.32©
30,012 0.29
0.35
11,347 0.41
0.51
21,627 0.30
0.38
0.02
0.02
0.39
0.43
0.13© 0.15©
0.30© 0.36ª
0.71 0.77©
0.24© 0.23©
0.40
0.37
(0.17) © (0.04) ª
0.40ª 0.52ª
0.20ª 0.23ª
0.45ª 0.54ª
0.35ª 0.39©
0.34
0.36
0.92© 1.04©
0.39
0.43
0.08© 0.26©
0.41ª 0.58ª
0.37© 0.39©
0.27ª 0.32ª
1.48ª 1.58ª
0.81ª 0.75ª
0.42
0.48
P/E
09E
(x)
10E 09E 10E 09E 10E
(x) (%) (%) (%) (%)
345.0
13.3
40.0
25.7
19.9
22.9
22.2
24.8
24.2
20.2
14.8
17.9
11.2
13.7
64.8
35.0
19.2
21.2
11.8
15.0
23.0
345.0
12.1
34.8
21.8
18.3
24.4
24.0
18.8
21.1
17.1
13.1
16.5
9.9
12.4
19.4
24.6
18.3
17.9
11.1
16.2
18.5
n.m.
(3)
n.m.
3
(55)
n.m.
(24)
(23)
13
8
8
9
(3)
6
n.m.
(9)
160
16
4
2
7
16.2
43.4
36.1
25.4
26.5
26.2
29.0
15.1 12
31.2 150
26.6 (33)
15.6 n.m.
22.0 n.m.
21.1 242
21.9 93
P/E
09E
(x)
10E 09E 10E 09E 10E
(x) (%) (%) (%) (%)
11.5
11.5
8.8
8.8
P/E
09E
(x)
10E 09E 10E 09E 10E
(x) (%) (%) (%) (%)
3.4
3.4
3.1
3.1
(22)
(22)
11
11
6.0
6.0
Analyst
Rec
Target
price
(¥)
0
0.0 0.0 Du Jianping Hold 5.13
10 3.8 4.2 Liu Huiming Hold 4.79
15 0.0 0.0 Du Jianping Hold 4.52
18 0.8 0.9 Patrick Li
Hold 7.55
9
0.9 1.0 Jimmy Lam Sell 7.30
(6) (0.4) (0.4) Du Jianping Hold© 7.25
(7) 1.3 1.2 Jimmy Lam Sell 3.40
0.0 0.0 Jimmy Lam Sell 0.82
32 2.3 3.1 Patrick Li Holdª 9.08
Hold 4.96
18 2.5 2.9 Du Jianping Buy 11.13
8
4.4 4.8 Liu Huiming Hold 5.71
Hold 11.90
5
0.4 2.9 Du Jianping Holdª 7.40
7
4.7 0.4 Liu Huiming Hold 17.77
(7) 1.7 1.6 Jimmy Lam Sellª 10.75
22 1.7 1.8
7
39
36
63
20
24
32
0.4
1.2
0.6
1.0
1.9
0.8
1.0
0.6
1.3
0.7
1.5
2.5
0.9
1.2
Yu Nian
Buy 13.48
Peter Yao
Sell 6.30
Yu Nian Holdª 6.60
Peter Yao Hold© 5.00
Peter Yao Hold 8.00
Yu Nian
Buy 11.50
Germany
(€) (%) (%)
(€ m)
(€ m)
RIC Company
Industrial
ZEF Zhong De Waste Tech.
Average
15.21
37
37
10
10
0
0
EPS
09E
(€)
EPS
10E
(€)
101 1.32ª 1.73ª
101 1.32
1.73
(24)
(24)
31
31
0.0
0.0
Analyst
Rec
Target
price
(€)
Frank Lai
Buy
18.00
Analyst
Rec
Target
price
(S$)
6.6
6.6
Frank Lai
Buy
0.32
0.0
0.0
Singapore
(S$) (%) (%) (S$m)
(S$m)
RIC Company
EPS
09E
(S$)
EPS
10E
(S$)
Consumer Product
CZAI China Zaino International
Average
0.26
79
79
44
44
1
1
Consumer Services
CHHS China Hongxing Sports
Average
0.22
87
87
16
16
9
9
391
391
0.04
0.04
0.05
0.05
5.3
5.3
4.5
4.5
12
12
16
16
3.0
3.0
3.0
3.0
Frank Lai
Buy
0.34
0.60
19
19
24
24
5
5
258
258
0.04
0.04
0.05
0.05
15.0
15.0
12.0
12.0
0
0
25
25
3.3
3.3
3.3
3.3
Frank Lai
Buy
0.84
Industrial
Midas Midas Holdings
Average
37 0.08ª 0.09ª
37 0.08
0.09
Property
YLLG Yanlord Land
Holdª 38.70
Sell
4.50
1.64 39 83
13
878 0.13© 0.15© 13.1 10.8
7
22 0.8 1.0
Frank Lai
Buy 1.63
Average
39 83
13
878 0.13
0.15 13.1 10.8
7
22 0.8 1.0
NB: Buy = ≥ +10% compared with the relevant benchmark index over a 6-month period; Sell = ≤ -10% compared with the relevant benchmark index over a 6-month period; Hold =
≤ +10% and ≥ -10% compared with the relevant benchmark index over a 6-month period; Not Rated (NR) ^: Represents total figures, while others are averages
Initiating coverage, Arrows (©ª) indicate a change in rating or a change in earnings forecast of at least 5% during the past month
Sources: Reuters, BOCI Research estimates
66
May 2009
May 2009
Calendar of Events
Description
Date
Economic data (China)
CPI
Retail Sales
VAIO
FAI
Mar09
Apr09
Apr09
Apr09
17/04
1305
13/05
13/05
Recently Published Research
Date
Sector
Author(s)
Tel.
7-May China Power Sector
Title
UTILITIES
Peter YAO
(852) 2905 2105
5-May China Economy Update
MACRO & STRATEGY CHENG Manjiang (8610) 9922 9128
Unemployment rate
Composite CPI
Trade balance
Retail sales value
Feb009 - Apr09
Apr09
Apr09
Apr09
19/05
21/05
26/05
01/06
Giordano International (0709.HK)
GS Railway (0525.HK)
Hong Kong Exchange (0388.HK)
Tencent Holdings (0700.HK)
Stella International (1836.HK)
Oriental Press Group (0018.HK)
Lenovo Group (0992.HK)
China Resources Enterprise (0291.HK)
Parkson Group (3368.HK)
Gome Electrical Appliances (0493.HK)
Next Media (0282.HK)
Media Chinese International (0685.HK)
1Q09
1Q09
1Q09
1Q09
1Q09
FY08
FY08
1Q09
1Q09
1Q09
FY08
FY08
5/8/2009
5/11/2009
5/13/2009
5/13/2009
5/14/2009
5/15/2009
5/21/2009
5/21/2009
5/22/2009
5/26/2009
5/26/2009
5/29/2009
1Q09
5/11/2009
Results announcements (China)
GS Railway (601333.SS)
Yanlord Land (YLLG.SP)
Midas Holdings (MIDAS.SP)
China Hongxing (CHHS.SP)
1Q09
1Q09
1Q09
5/8/2009
5/13/2009
5/15/2009
tian.chen@bocigroup.com
NI Xiaoman
(8621) 6860 4866 ext 8319
xiaoman.ni@bocigroup.com
(8610) 6622 9070
Anthony LOK
- Apr09
CHENG Manjiang (8610) 9922 9128
Cons. Services - Retail LIU Du
(852) 2905 2108
bingnan.ye@bocigroup.com
tao.li@bocigroup.com
lin.yuan@bocigroup.com
anthony.lok@bocigroup.com
mj.cheng@bocigroup.com
(8621) 6860 4866 ext 8511
du.liu@bocigroup.com
ZHENG Yuan
(8621) 6860 4866 ext 8517
yuan.zheng@bocigroup.com
26-Mar Alibaba.com
Technology - Internet
Frank HE
(852) 2905 2112
frank.he@bocigroup.com
23-Mar Renhe Commercial
Property - Developer
Vivien ZHANG
(852) 2905 2167
vivien.zhang@bocigroup.com
17-Mar China Resources Gas
Utilities - Gas
Peter YAO
(852) 2905 2105
peter.yao@bocigroup.com
17-Mar Saima Industry Co. Ltd.
Inds - Basic Materials
Grace TANG
(8610) 9922 9077
Anthony LOK
(852) 2905 2108
10-Mar Huaqiao In The Middle Kingdom Monthly
- Mar09
qian.tang@bocigroup.com
9-Mar Wuhan Zhongbai Group
Cons. Services - Retail ZHENG Yuan
27-Feb China Animal Husbandry
Agriculture – Misc.
19-Feb Chinese Telecoms
TELECOMS
Allan NG
(852) 2905 2128
allan.ng@bocigroup.com
18-Feb Sportswear Brands
Consumer Products Textile & Apparel
Sarah XING
(852) 2905 2122
sarah.xing@bocigroup.com
16-Feb Want Want China
Consumer Prod - F & B Jenny CHAN
11-Feb Huaqiao In The Middle Kingdom Monthly
(8621) 6860 4866 ext 8517
LIU Du
(8621) 6860 4866 ext 8511
ZHAO Zongjun
(8621) 6860 4866 ext 8510 zongjun.zhao@bocigroup.com
Anthony LOK
(852) 2905 2127
jenny.chan@bocigroup.com
(852) 2905 2108
5-Feb China Steel Update
Metals & Mining - Iron & Belle CHAN
Steel
(852) 2905 2103
belle.chan@bocigroup.com
3-Feb Comba Telecom
Technology - Hardware Frank HE
& Equipment
(852) 2905 2112
22-Jan China Infrastructure
Inds - Construction
Jimmy Lam
(852) 2905 2111
jimmy.lam@bocigroup.com
Patrick LI
(8610) 6622 9073
pan.li@bocigroup.com
Financials - Banking
YUAN Lin
(8610) 6622 9070
16-Jan China Banking in 2009
Financials - Banking
YUAN Lin
(8610) 6622 9070
16-Jan China Hongxing Sports
Cons. Services - Retail Frank LAI
(65) 6536 8538
frank.lai@bocigroup.com
16-Jan Dongyuan Electrical
Inds - Power Equipment HAN Ling
(8621) 6860 4866 ext 8595
ling.han@bocigroup.com
15-Jan 2009 Property Strategy
China Property
(8621) 6860 4866 ext 8519
shixin.tian@bocigroup.com
19-Jan China Banking Sector
(8621) 6860 4866 ext 8503
Huaqiao In The Middle Kingdom Monthly
& Infrastructure
67
CHEN Tian
FINANCIALS - Banking YUAN Lin
- Feb09
Results announcements (Singapore)
(8610) 6622 9064
21-Apr China Banking Sector
30-Mar Parkson Retail Group
Results announcements (Hong Kong)
(8610) 6622 9081
LI Tao
CHEMICALS – Misc.
7-Apr
YE Bingnan
24-Apr Jiulian Development
Economic data (Hong Kong)
Email
68
TIAN Shixin
May 2009
May 2009
BOCI Research Team
MACRO & STRATEGY
Strategy
China Economy
China Economy
China Economy
Anthony C.H. LOK
CHENG Manjiang
YE Bingnan
LI Tao
Eric HU
WANG Yusheng
Lawrence LAU
NI Xiaoman
CHEN Tian
AUTO & PARTS
CHEMICALS
(852) 2905 2108
(8610) 6622 9128
(8610) 6622 9081
(8610) 6622 9064
(8621) 6860 4866 ext 8520
(8621) 6860 4866 ext 8523
(852) 2905 2130
(8621) 6860 4866 ext 8319
(8621) 6860 4866 ext 8503
bingnan.ye@bocigroup.com
tao.li@bocigroup.com
eric.hu@bocigroup.com
yusheng.wang@bocigroup.com
lawrence.lau@bocigroup.com
xiaoman.ni@bocigroup.com
tian.chen@bocigroup.com
Jenny CHAN
ZHAO Zongjun
Ashley CHEUNG
LIU Du, Duke
ZHENG Yuan
Lawrence LAU
TANG Qian, Grace
SHEN Tao
LUO Dan
(852) 2905 2127
(8621) 6860 4866 ext 8510
(852) 2905 2102
(8621) 6860 4866 ext 8511
(8621) 6860 4866 ext 8517
(852) 2905 2130
(8610) 6622 9077
(8610) 6622 9097
(8610) 6622 9107
jenny.chan@bocigroup.com
zongjun.zhao@bocigroup.com
ashley.cheung@bocigroup.com
lawrence.lau@bocigroup.com
qian.tang@bocigroup.com
tao.shen@bocigroup.com
dan.luo@bocigroup.com
K.W. WONG
YUAN Lin
SUN Peng
ZHANG Jian
LAN Xiaofei
Eric HU
HAN Ling
SHI Qi, Levi
Allan NG
LIU Du, Duke
FENG Xue, Tracy
Belle CHAN
LE Yukun
XU Minle
HE Changming
ZHANG Yin
Manfred HO
Vivien ZHANG
TIAN Shixin
ZHOU Lu
Sarah XING
Peter PAK
Frank HE
Allan NG
(852) 2905 2120
(8610) 6622 9070
(8610) 6622 9072
(8610) 6622 9075
(8610) 6622 9085
(8621) 6860 4866 ext 8520
(8621) 6860 4866 ext 8595
(8621) 6860 4866 ext 8368
(852) 2905 2128
(8621) 6860 4866 ext 8511
(8621) 6860 4866 ext 8590
(852) 2905 2103
(8621) 6860 4866 ext 8559
(8621) 6860 4866 ext 8589
(8610) 6622 9080
(8621) 6860 4866 ext 8929
(852) 2905 2107
(852) 2905 2167
(8621) 6860 4866 ext 8519
(8621) 6860 4866 ext 8587
(852) 2905 2122
(852) 2905 2123
(852) 2905 2112
(852) 2905 2128
kwokwai.wong@bocigroup.com
peng.sun@bocigroup.com
jian.zhang@bocigroup.com
xiaofei.lan@bocigroup.com
eric.hu@bocigroup.com
ling.han@bocigroup.com
qi.shi@bocigroup.com
tracy.feng@bocigroup.com
belle.chan@bocigroup.com
yukun.le@bocigroup.com
minle.xu@bocigroup.com
changming.he@bocigroup.com
yin.zhang@bocigroup.com
manfred.ho@bocigroup.com
vivien.zhang@bocigroup.com
shixin.tian@bocigroup.com
lu.zhou@bocigroup.com
sarah.xing@bocigroup.com
peter.pak@bocigroup.com
DU Jianping
LI Yan
Jimmy LAM
LI Pan, Patrick
LIU Huiming
Peter Yao
YU Nian
Frank LAI
(8610) 6622 9079
(8610) 6622 9014
(852) 2905 2111
(8610) 6622 9073
(8610) 6622 9084
(852) 2905 2105
(8610) 6622 9124
(65) 6536 8538
CONSUMER PRODUCTS/SERVICES
F&B
F&B
Gaming & Retail
Retail
Retail
ENERGY
FINANCIALS
Banks/Insurance (HK)
Banks/Insurance (China)
Banks/Insurance (China)
Securities
Fund
INDUSTRIALS
MEDIA
Media/Tourism
Media/Tourism
METALS & MINING
PHARMACEUTICALS
PROPERTY
SMALL/MID-CAP
TECHNOLOGY
TELECOMS
TRANSPORT
Aviation
Aviation
Marine
Land
Land
UTILITIES
SINGAPORE STOCK
69
DISCLOSURE
The views expressed in this report accurately reflect the personal views of the analysts. Each analyst declares that neither he/she nor his/her associate serves as an officer of nor has any financial interests in relation to the listed corporation reviewed by the analyst. None of the listed corporations reviewed or any third party has provided or agreed to provide any compensation or other benefits in connection with this report to any of the analysts, BOCI Research Ltd and BOCI Group. Member companies of BOCI Group confirm that they, whether individually or as a group (i) do not own 1% or more financial interests in any of the listed corporations reviewed; or (ii) do not have any investment banking relationship with any of the listed corporation reviewed within the preceding 12 months. Certain member companies of BOCI Group have an individual employed by or associated with BOCI Group serving as an officer of Bank of China. Certain member companies of BOCI Group are involved in making a market in the securities of Bank of China, Bank of Communications, China Life Insurance, China Mobile, China Telecoms, HSBC Holdings, Industrial & Commerical Bank of China, MTR Corp, Sinopec, Foxconn , Petrochina and Hong Kong & China Gas. Notwithstanding that BOCI Research Ltd and BOC International Holdings Ltd is a subsidiary of Bank of China Ltd and affiliate of BOC HK Ltd, BOCI Research Ltd and BOC International Holdings Ltd have no authority whatsoever to give any information or make any representation or warranty on behalf of Bank of China Ltd and BOC Hong Kong Ltd. This disclosure statement is made pursuant to paragraph 16 of the “Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission” and is updated as of 7 May 2009. Waiver has been obtained by BOC International Holdings Limited from the Securities and Futures Commission of Hong Kong to disclose any interest the Bank of China Group may have in this research report. jianping.du@bocigroup.com
yan.li@bocigroup.com
jimmy.lam@bocigroup.com
pan.li@bocigroup.com
huiming.liu@bocigroup.com
nian.yu@bocigroup.com
frank.lai@bocigroup.com
70
May 2009
71
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