Morning Express

Transcription

Morning Express

Morning Express
27 March 2015
Focus of the Day
Indices
ICBC (1398.HK)
Neutral
Turned cautious in terms of credit risk
Shanshan LI, CFA
Last Closing: HK$5.57
BUY
SELL
lishanshan@bocomgroup.com
Upside: +10.2%
LT
BUY
Stock
Target Price: HK$6.14→
Net profit attributable to equity holders of the parent rose 5.0% to RMB275.811bn in
2014, slightly lower than expectation, mainly due to higher-than-expected provisions.
NIM was 2.66%, up 9 bps YoY, mainly because the increase of average yield of
interest-generating assets outpaced the increase of cost of liabilities as a result of the
increased proportion of loans. NIM climbed 6 bps in 4Q. The recent two rate cuts will
affect 2015 NIM by about 12 bps. Fee and commission income grew 9.0% YoY, slightly
lower than the pace in 1H14 by 0.5 ppt. Fee and commission income was mainly
contributed by bank cards, personal wealth management, private banking, and corporate
wealth management. The proportion of bill discounting increased slightly, and the bank
reduced loans to the manufacturing, wholesale and retail and property sectors, as well as
individual business loans and small/micro-enterprise loans, showing lower risk appetite
during economic correction. We lower our 15/16E earnings forecasts by 1.3/1.5%. The
stock is trading at 5.63x/0.89x 15E PE/PB. Maintain Neutral.
Kerry Logistics (636.HK)
Neutral
FY14 result review – diversification paid off
Geoffrey CHENG, CFA
geoffrey.cheng@bocomgroup.com
Upside: +16.3%
1d %
-0.13
-0.41
0.59
-0.02
-1.52
0.19
-0.23
-0.24
-0.27
-1.37
-0.29
-0.18
Ytd %
3.78
-0.54
13.86
6.10
35.42
11.17
-0.81
-0.13
2.69
5.01
17.17
20.79
Close
59.19
1,204.70
17.10
6,125.00
119.16
1.49
1.09
3m %
-0.44
0.73
6.39
-2.81
1.27
-4.26
-10.43
Ytd %
3.24
1.67
8.90
-2.78
0.52
-4.63
-10.03
bps change
HIBOR
0.39
US 10 yield
1.99
Source: Bloomberg
3m
0.00
-0.26
6m
0.02
-0.54
Indicators
Brent
Gold
Silver
Copper
JPY
GBP
EURO
LT
BUY
HSI Technical
SELL
BUY
Stock
Kerry Logistics Network reported a net profit of HK$1,658.8m. Taking off the revaluation
gain, core net profit rose 10.1% YoY. We think the diversification strategy of expanding
its regional and international network has borne fruit to mitigate the decline in
contribution from China last year. We maintain our LT Buy rating and target price of
HK$13.3, based upon our revised earnings forecasts.
Download our reports from Bloomberg: BOCM〈enter〉
Close
HSI
24,497
H Shares
11,920
SH A
3,859
SH B
308
SZ A
2,002
SZ B
1,144
DJIA
17,678
S&P 500
2,056
Nasdaq
4,863
FTSE
6,895
CAC
5,006
DAX
11,844
Source: Bloomberg
HSI
50 d MA
200 d MA
14 d RSI
Short Sell (HK$m)
Source: Bloomberg
24,497
24,445
23,972
55
8,103
BOCOM Int'l Corporate Access
27 Mar
30 Mar
30 Mar
30 Mar
31 Mar
1 Apr
2 Apr
2 Apr
2 Apr
Bank of Communications (3328.HK)
Shengmu Organic Milk (1432.HK)
Kingsoft (3888.HK)
Tiangong (826.HK)
GCL Poly (3800.HK)
Phoenix Healthcare (1515.HK)
Baoxin Auto (1293.HK)
Landsea Green Properties (106.HK)
Zhengtong Auto Service (1728.HK)
Morning Express
27 March 2015
Hang Seng Index (1 year)
26,000
NetDragon (777.HK)
Positive on game and online education businesses;
Neutral
SELL
lift TP to HK$16.3
25,000
LT
BUY
24,000
BUY
23,000
22,000
21,000
Yuan MA
yuan.ma@bocomgroup.com
Last Closing: HK$ 15.82
Upside: +3%
Stock
Target Price: HK$16.30↑
Source: Company data, Bloomberg
4Q14 total revenue was RMB283mn, up 22% QoQ, which mainly came from the growth
of 1) Calibur of Spirit Online; 2) mobile technology and mobile marketing business; and 3)
mobile games. We raise ND’s revenue estimates on 1) the strong performance of Calibur
of Spirit, and 2) contribution of mobile games. Though gross margin would be negatively
affected, the revenue growth from PC and mobile games are accretive to EBIT. We raise
our valuation for the online education business as ND has started to build its nationwide
distribution network for its education products. We fine-tune 2015E EPS by -2% and raise
2016E/2017E EPS by 4%/5%. Maintain LT Buy and lift TP from HK$12.6 to HK$16.3.
HS China Enterprise Index (1 year)
13,000
12,000
11,000
10,000
9,000
8,000
Sino-Biopharm (1177.HK)
Neutral
Pricing pressure remains the near-term overhang;
Downgrade to “LT-BUY”
Milo LIU
Shanghai A-shares (1 year)
4,000
BUY
SELL
3,500
3,000
milo.liu@bocomgroup.com
Upside: +13.9%
LT
BUY
Stock
2,500
Target Price: HK$8.30↓
2,000
FY14 results beat our expectation, driven by strong 4Q14 hepatitis medicine and
oncology sales.
The pricing pressure from provincial tendering remains the near-term overhang.
Shenzhen A-shares (1 year)
We expect revenue growth to slow down in FY15 and FY16.
2,000
1,800
We downgrade SBP from BUY to LT-BUY with TP revised to HK$8.3, corresponding to
26x 2015E EPS of HK$0.32.
1,600
1,400
1,200
1,000
GCL-Poly (3800.HK)
Neutral
Takeaways from 2014 results conference; maintain
Buy
Louis SUN
louis.sun@bocomgroup.com
Upside: +42%
LT
BUY
BUY
SELL
Stock
1) Revenue grew 45.8% YoY to HK$37.22bn in 2014. Net profit attributable to equity
holders of the company was HK$1.955bn vs. a loss of HK$664mn in 2013. Net profit
was lower than our forecast of HK$2.197bn, mainly because of lower consolidated
gross margin and higher-than-expected administrative and finance expenses.
Morning Express
27 March 2015
2) Polysilicon business: The company’s polysilicon production in 2014 was 66,900 tons
vs. 50,400 tons in 2013. ASP was US$21.7/kg vs. US$17.4/kg in 2013. Polysilicon cost
dropped to US$15.5/kg as at the end of 2014, and will decrease to US$13/kg after
technological upgrade of production line and commencement of operation of
in-house power plant. Output is expected to reach 70,000 tons after technological
upgrade of production line. Phase one of FBR production line has an annual capacity
of 3,000 tons, and produced 500-600 tons of silicon particles in 2014. We expect FBR
capacity to reach 25,000 tons/year by the end of 2015 and actual production to
reach 5,000 tons, or even 8,000 tons if demand is strong. Upon full production
ramp-up, cash cost of FBR silicon particles will be about US$8/kg.
3) Wafer business: Wafer output was 13.1GW in 2014 vs 8.8GW in 2013. ASP was
US$0.22/W vs US$0.21/W. 2015 output is expected to be 14GW, including a small
amount of outsourced production.
4) Polysilicon prices have slumped since March. The company is optimistic about the
industry outlook for the following reasons: 1) January was a low season while May is
expected to see a peak in power station construction; 2) The Ministry of Commerce’s
ban will improve supply/demand in China; and 3) We expect a rush of installations
ahead of the anticipated cut of on-grid tariff of PV in 2016.
Coolpad Group (2369.HK)
Neutral
Gross margin fell 2.84 ppts YoY in 2H14
Zhiwu LI
lizhiwu@bocomgroup.com
Downside: 2.8%
LT
BUY
BUY
SELL
Stock
1) In 2014, revenue from principal businesses increased 26.9% YoY to RMB24.9bn, while
net profit rose 47.1% YoY to RMB513mn, missing our forecast by 29.1%; 2) 2H14 revenue
fell 0.26% YoY and 33.27% HoH to RMB9.966bn, while net profit dropped 25.42% YoY and
75.54% HoH to RMB101mn; 3) Blended gross margin in 2014 was 12.1%, down 0.78 ppt
YoY and 1.46 ppts HoH. 2H14 gross margin was 9.93%, down 2.84 ppts YoY and 3.64 ppts
HoH; 4) The notable HoH decline in revenue and net profit in 2H14 was largely due to
destocking of 3G handsets and intensified competition from 4G handsets, while the
subsidy cut by telecom operators posted great impact on that channel; 5) In view of the
lower-than-expected gross margin and 2H14 revenue, we cut our 15/16E revenue and
net profit estimates by 34.6%/39.3% and 55.9%/54.6%, respectively. We lower our TP by
25% to HK$1.35, corresponding to 15x 15E P/E. Maintain Neutral.
Morning Express
27 March 2015
Maanshan Iron & Steel (323.HK)
Accounting adjustment helped the company stay in
profit, but the localization of high-speed locomotive
wheels will take a long time
Jovi LI
Neutral
Upside: +7.4%
BUY
SELL
Stock
jovi.li@bocomgroup.com
LT
BUY
The company’s FY14 results were in line with our expectation and market consensus. Due
to an adjustment of depreciation treatment, the company managed to stay in profit and
net profit rose by 40.3% to RMB220mn. In respect of locomotive wheels which has
received high market attention, we believe that at the initial stage of the implementation
of the ‘‘one belt, one road’’ strategy, China will not quicken the pace of localization of
locomotive wheels and high-speed railway wheels for reasons of prudence. The
locomotive wheel business can hardly contribute to FY15 results. Hence, we maintain
‘‘Neutral’’ and TP of HKD2.32, representing 0.60x FY15E PB.
Transportation Sector
Weekly transportation news wrap
Geoffrey CHENG, CFA
Weekly
In terms of sector, we highlight some notable updates for the transportation industry this
week as follows:
Global dry bulk market: BDI saw a slow rebound due to the freight rate performance
of Capesize vessels.
Transportation: China transportation freight volume and passenger throughput
declined in February.
Railway: Up to twelve international companies, including four Chinese companies,
are bidding on India’s high-speed rail projects.
Railway: The National Railway Administration and local governments of ten
provinces deliberated railway network proposal for the Thirteenth-Five-Year Plan.
Midland (1200.HK)
Neutral
FY14 results review; Benefiting from busy project
launches
Alfred LAU, CFA
alfred.lau@bocomgroup.com
Upside: +11.4%
LT
BUY
BUY
SELL
Stock
FY14 net profit turned around to HK$64m. Netting off the net loss in 1H14, the company
posted a HK$100m net profit in 2H14, led by the exceptionally strong primary market.
Management’s proactive cost-cutting also paid off, with the saving in non-commission
salary and rental expenses contributing up to HK$80m increase in net profit, in our
estimate. We forecast 17,000 units of primary market volume in 2015 (2014: 16,822
Morning Express
27 March 2015
units). Therefore, we expect earnings momentum to continue and maintain our forecast
of HK$150m net profit, about half-way to restoring the company’s franchise value, before
the secondary market fully recovers. Nevertheless, the shareholders’ fight since last year
has not been resolved, with the second largest shareholder still holding 10.5% stake in
the company, which might remain an overhang on the share price, in our view. We
maintain Neutral on the counter, with a target price of HK$3.90, based on 9.0x
normalised 16E ex-cash P/E, assuming transaction volume recovers and restores
Midland’s franchise value, and in line with historical average.
China Taiping (966.HK)
Neutral
Highest NBV growth in the industry; rapid growth to
sustain in 2015
Jerry LI
BUY
SELL
liwenbing@bocomgroup.com
Upside: +45.7%
LT
BUY
Stock
Event:
CTIH announced 2014 results, which were fully in line with our expectation.
Comments:
1) 2014 net profit grew 144.6% YoY to HK$4.01bn, mainly due to the substantial
increase in investment gain of the life insurance segment. Net assets attributable to
the parentco as at the end of 2014 was HK$35.9bn, representing an increase of
26.5% HoH (excluding the RMB6.4bn resulting from new share issuance), and slightly
higher than our forecast of HK$34.4bn, mainly because of higher-than-expected
combined ROI.
2) Agent channel grew rapidly with stable margins. First-year regular premium of the
agent channel increased 60.5% YoY, while single premium declined 36.6% YoY.
Policies with terms of over 10 years accounted for 83.9% of first-year premium, up
from 69%. Due to the increased proportion of saving products, even though the
proportion of regular premium to total first-year premium increased, NBV of the
agent channel still edged down 1 ppt to 33%. As at 20 March, first-year regular
premium of the agent channel increased 83% YoY. As the first quarter determines
the NBV growth pace of the whole year, we expect NBV growth in 1H15 to exceed
that of last year.
3) Banc assurance regular premium provided significant value contribution: First-year
regular premium of the banc assurance channel increased 47.4% YoY. However, the
proportion of policies with terms of over 10 years fell from 72.4% to 63.7%. Of note,
NBM of banc assurance regular premium climbed from 29% to 33%.
4) Overall NBV increased by 37.4% YoY to HK$4.33bn, in line with our projection of
HK$4.29bn. EV of life insurance attributable to equity holders of the parentco was
RMB49.2bn, up 44% YoY, largely in line with our forecast of HK$49.7bn.
5) P&C, reinsurance and pension businesses saw robust performance and contributed
an aggregate profit of HK$1.46bn.
6) In our view, there has been a misconception that CTIH’s product structure is poor.
However, judging from the NBV growth and stable NBM of both the agent and banc
Morning Express
27 March 2015
assurance channels, such worries are unwarranted. Trading at about 1.1x 2015F P/EV,
the stock has valuation advantage. Moreover, its NBV growth is likely to beat
expectation again this year. We maintain Buy on the counter.
PetroChina (857.HK)
Neutral
Cost saving in E&P but uncertainty still ahead –
Maintain Neutral
Fei Wu
fei.wu@bocomgroup.com
Upside: -16%
LT
BUY
BUY
SELL
Stock
Target Price: HK$7.00
PetroChina’s 2014 operating and net profit came in at Rmb169.8bn and Rmb107.2bn,
down 10% and 17.3% YoY, respectively. The EPS of Rmb0.59 was 1.6% lower than
consensus estimate of Rmb0.60. However, the current low crude price environment in
addition to the new upstream gas pricing going into effect on April 1 that would lower
the incremental volume gas by Rmb0.44/cub.m would hit its earnings hard. In absence
of a sustainable turnaround in oil prices and long-term cost advantage, PetroChina is still
under the same risks as before. We maintain our Neutral rating with 16% downside.
27 March 2015
Upside: +16.3%
Logistics Sector
Kerry Logistics (636.HK)
UP
MP
FY14 result review – diversification paid off
OP
Financial Highlights
Y/E 31 Dec
2013
2014
2015E
2016E
2017E
Revenue (HK$m)
19,969
YoY growth
3.5
Net profit (HK$m)
1,834.5
YoY growth
71.6
EPS (HK$)
1.404
PER (x)
8.2
PBR (x)
1.41
Source: Company, BOCOM Int’l estimates
21,115
5.7
1,658.8
(9.6)
0.982
11.7
1.32
23,239
10.1
1,263.7
(23.8)
0.748
15.3
1.19
25,277
8.8
1,494.8
18.3
0.885
12.9
1.11
27,528
8.9
1,610.0
7.7
0.953
12.0
1.03
Neutral
SELL
Kerry Logistics Network reported a
net profit of HK$1,658.8m. Taking
off the revaluation gain, core net
profit rose 10.1% YoY.
We think the diversification strategy
of expanding its regional and
international network has borne
fruit to mitigate the decline in
contribution from China last year.
We maintain our LT Buy rating and
target price of HK$13.3, based upon
our revised earnings forecasts.
Stock data
52w High (HK$)
52w Low (HK$)
Market cap (HK$m)
Issued shares (m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA (HK$)
200d MA (HK$)
14-day RSI
KLN (LHS)
120
115
110
105
100
95
90
85
80
Rel to MSCI CN (RHS)
13.00
12.00
11.00
10.00
Jan-00
Jun-14
Sep-14
Dec-14
Geoffrey Cheng, CFA
Tel: (852) 2977 9380
13.3
10.9
19,351
1,691.6
1.65
0.7
(7.0)
11.62
12.24
57.8
1 Year Performance chart
(HK$)
14.00
Our LT Buy recommendation remains. KLN last year spent HK$1.7bn on capex
(inclusive of acquisition) and management targets spending of HK$2.0bn-2.5bn this year.
Key attention will be on expanding its IFF network in North America, for the benefit of
its IL segment. Within Asia, KLN will focus on strengthening its express delivery service
network. In view of the slowing economic growth in China, we believe a diversification
strategy should work best for KLN in pursuit of higher return and profit contribution.
We maintain our LT BUY recommendation and target price of HK$13.3.
BUY
Stock
Core profit up 10.0% to HK$976m for FY14. Kerry Logistics Network (KLN) reported a
headline earnings of HK$1,658.8m, down 9.6% YoY. Fair value gain from property
revaluation amounted to HK$686.5m for the period (2013: HK$600.2m). On a
like-to-like basis, core net profit was up 10.1% YoY to HK$976.0m, while turnover during
the period rose 5.7% YoY. Among the three segments, turnover of its integrated
logistics (IL) rose the most, up 11.5%. Similarly, segment profit of IL rose the most, up
13.3% YoY. Our FY2014 forecast of core profit was HK$927.8m, and so the result was
slightly ahead of our forecast. Together with its interim DPS, the full year payout
reached 24.2% of the full year core earnings.
China was a laggard. Based on the geographical segment report, turnover from
China, contributing 41.4% of the total, declined by 2.1% YoY. The segment profit
contribution from China, about 23.3% of the total, was also down 1.2% YoY. This
was notwithstanding the increased contribution from its IL in China, as the decline
was largely a result of the decrease in contribution from the International Freight
Forwarding (IFF) operation. Fortunately, the diversification effort in the past year
paid off to buttress earnings growth with increased contribution from other regions
such as North America, Europe and SE Asia. Notwithstanding the slowing growth in
China, KLN is still stepping up its China presence with the acquisition of 1.1m sq.ft of
land in Shanghai to build its new flagship facility. At the end of last year, KLN had
received 19 licenses to operate express delivery within China. Management expects
the express delivery service to be launched in at least 4 cities this year.
LT
BUY
Mar-15
27 March 2015
Last Closing: HK$ 15.82
Upside: +3.03%
Target Price: HK$16.30↑
NetDragon (777.HK)
Internet Sector
UP
MP
Positive on game and online education businesses;
lift TP to HK$16.3
OP
Y/E 31 Dec
2013*
2014
2015E
2016E
2017 E
Revenue (RMB m)
YoY growth
Non-GAAP Net profit (RMB m)
YoY growth
Adjusted diluted EPS (RMB)
DPS (RMB)
Dividend yield
PE
1,231
11%
391
19%
1.07
8.13
51.4%
15
963
-22%
201
-49%
0.55
0.13
0.8%
29
1,285
33%
324
61%
0.79
0.03
0.2%
20
1,709
33%
380
17%
0.94
-0.21
-1.3%
17
2,238
31%
383
1%
0.97
-0.05
-0.3%
16
*Note: including the figures of 91 in 1H13
4Q14 results lower than expectation. 4Q14 non-GAAP EPS was RMB1.3 cents, lower than
our expectation of RMB14 cents. Total revenue was RMB283mn, up 22% QoQ but down
38% YoY. The revenue growth mainly came from the growth of 1) Calibur of Spirit Online;
2) mobile technology and mobile marketing business; and 3) mobile games. The increase
in cost due to shift of game mix put pressure on gross margin, which decreased from 90%
in 3Q14 to 87% in 4Q14. As NetDragon (ND) actively invests in the online education
business, operating expenses increased substantially, with operating margin turning
negative (-5%) from 11% in the previous quarter.
Neutral
LT
BUY
SELL
BUY
Stock
Total revenue growth mainly came from
the growth of 1) Calibur of Spirit Online;
2) mobile technology and mobile
marketing business; and 3) mobile
games.
We raise ND’s revenue estimates on 1)
the strong performance of Calibur of
Spirit, and 2) contribution of mobile
games. Though gross margin would be
negatively affected, the revenue growth
from PC and mobile games are accretive
to EBIT.
We raise our valuation for the online
education business as ND has started to
build its nationwide distribution network
for its education products.
Maintain LT Buy and lift TP from
HK$12.6 to HK$16.3.
Online game business exceeded expectation. Online game revenue was RMB283mn,
which increased by 34%/48% QoQ/YoY, 22% higher than our estimate of RMB232mn. The
increase was mainly due to newly launched expansion packs for games such as Conquer
Online (征服), which recorded a 11-year high monthly revenue in December 2014. PCU
and ACU increased from 382k and 225k in 3Q14 to 642k and 301k in 4Q14. Revenue from
overseas markets contributed RMB53.8mn, up 46% compared with the previous quarter.
Mobile game revenue reached RMB18.7mn, which doubled on a QoQ basis. Eudemons
online pocket version (魔域口袋版) was launched in January 2015, and is expected to
contribute RMB10mn to monthly revenue in March 2015.
Stock data
ND online education business expanded further. 1) In November 2014, ND was admitted
by the Education Informatization Standard Committee under the Ministry of Education to
engage in technology standard formation. 2) As for the distribution channel for
educational products, ND is expanding its national school distribution network, through
building agreements with local and regional distributors, which progressed smoothly. 3)
In February 2015, the education subsidiary of ND raised US$477.5mn. In 2015, ND will
continue active investment in online education and look for new merger and acquisition
opportunities. We believe ND’s expertise in online games will help build an ecosystem of
online education with an innovative learning environment and better user experience.
Valuation. We raise ND’s revenue estimates on 1) the strong performance of Calibur of
Spirit, and 2) contribution of mobile games, mainly Eudemons Online Pocket version.
Though gross margin would be negatively affected, the revenue growth from PC and
mobile games are accretive to EBIT. We also raise our valuation for the online education
business as ND has started to build its nationwide distribution network for its education
products, which would contribute to its revenue growth. We fine-tune 2015E EPS by -2%
and raise 2016E/2017E EPS by 4%/5%. Maintain LT Buy and lift TP from HK$12.6 to
HK$16.3.
52w High
16.50
52w Low
11.48
Market cap (HK$m)
7,805.00
Issued shares (m)
493.36
Avg daily vol (m)
7.62
1-mth change（%）
18.95
YTD change（%）
15.81
50d MA
13.47
200d MA
13.83
14-day RSI
80.31
Ma Yuan (Martina), Ph.D
yuan.ma@bocomgroup.com
Tel: (8610) 8800 9788 - 8039
Gu Xinyu (Connie), CPA
conniegu@bocomgroup.com
Tel: (8610) 8800 9788 - 8045
27 March 2015
Upside: +13.9%
Healthcare Sector
Sino Biopharm (1177.HK)
UP
Pricing pressure remains the near-term overhang; Downgrade to “LT-BUY”
MP
OP
FY2013
FY2014
2015E
2016E
Revenue (HKDmn)
7,497
9,901
YoY growth (%)
29.7%
32.1%
Net income (HKDmn)
891
1,037
YoY growth (%)
92.5%
16.4%
EPS (HKD)
0.18
0.21
P/E (x)
40.4
34.7
P/B (x)
6.2
5.0
Dividend yield (%)
0.7%
0.7%
Source: Company, BOCOM Int’l estimates, as of Mar 26, 2015
Y/E 31 Dec
FY2012
12,378
25.0%
1,513
46.0%
0.31
23.8
4.1
0.8%
14,455
16.8%
1,584
4.7%
0.32
22.7
3.5
0.9%
16,817
16.3%
1,963
23.9%
0.40
18.4
2.9
1.1%
LT
BUY
Neutral
BUY
SELL
Stock
FY14 results beat our expectation,
driven by strong 4Q14 hepatitis
medicine and oncology sales.
FY14 results beat our expectation. SBP reported strong FY14 revenue of HK$12,378mn,
+25% vs. FY13 and +2% vs. our estimate of HK$12,165mn. Net income, on the other
The pricing pressure from
provincial tendering remains the
near-term overhang.
hand, was HK$1,513mn in FY14, +46% YoY and beat our estimate by +8% and street
consensus by +10%. The strong results were mainly attributable to the robust 4Q14
figures, particularly in the hepatitis medicines and oncology sales.
We expect revenue growth to
slow down in FY15 and FY16.
The pricing pressure from provincial tendering remains the near-term overhang.
We downgrade SBP from BUY to
LT-BUY with TP revised to HK$8.3,
corresponding to 26x 2015E EPS of
HK$0.32.
Zhejiang announced its second-round tender results on 16 Mar, which surprised the
market by setting the tender prices referenced to the lowest price across the board. As a
result, some of the key products from SBP saw significant price erosion, such as c.45%
price drop of Runzhong. We believe the price erosion from the tenders has been largely
priced in, as we believe other provinces are unlikely to follow the magnitude of the price
cut we have seen in Hunan and Zhejiang provinces. Nevertheless, pricing pressure
remains the main theme for 2015, and we expect SBP to experience price cut in other
provinces, but the magnitude might be relatively benign compared with Hunan and
1-year share price performance
HSI
30%
1177 hk equity
20%
10%
0%
-10%
-20%
Mar-14
Jun-14
Sep-14
Zhejiang, in our view.
Source: BOCOM Int’l
We expect revenue growth to slow down in FY15 and FY16, given: 1) pricing pressure
Stock data
from the tendering; 2) slowdown of TianQingGanMei resulting from reimbursement
budget control and a shift in strategy by the management; and 3) market share
contraction due to severe competition from the peers.
We downgrade SBP from BUY to LT-BUY with TP revised to HK$8.3, which implies 26x
2015E PE based on our forecast 15E EPS of HK$0.32. The revision is largely due to the
overall slowdown resulting from the pricing pressure, while we still favor SBP as it
remains the industry leader in the high-end prescription drug market with strong R&D
52w High (HK$)
52w Low (HK$)
Market cap (HK$m)
Issued shares (m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA (HK$)
200d MA (HK$)
14-day RSI
Mar-15
8.50
5.73
36,023.3
4,941.5
13.32
(2.41)
3.70
7.50
7.28
49.66
Milo Liu
capabilities.
Download our reports from Bloomberg: BOCM
Dec-14
milo.liu@bocomgroup.com
Tel: (852) 2977 9387
〈enter〉
26 March 2015
Transportation Weekly
Transportation
Transportation Sector
Weekly transportation news wrap
th
Global dry bulk market saw slow rebound. As of 25 March 2015, demand of the
global dry bulk market witnessed a slow rebound with BDI increasing by 4.7% WoW,
but falling by 62.1% YoY, to 598, largely as a result of the freight performance of
Capesize vessels. BPI slid by 0.3% WoW to 602, while BSI rose by 4.0% WoW, but
plunged by 46.0% YoY, to 648. Different from last week, demand for Capesize vessels
reversed its downward trend, surging by 27.5% WoW, but was still down 84.8% YoY.
Similarly, both domestic Capesize freight index and Supramax freight index rose by
2.4% WoW and 7.8% WoW, respectively, in line with those of the global dry bulk
market. Due to the weak recovery of the global economy and oversupply of vessels,
we expect a slow rebound in demand for dry bulk commodities.
1-Year Sector Performance
China transportation freight volume and passenger throughput witnessed declines
in February. National Bureau of Statistics of China reported transportation freight
volume and passenger throughput of February 2015. Transportation industry freight
volume reached 2,322.0 million tonnes in February, representing an increase of
11.2% YoY, but a sharp decrease of 36.2% MoM, due to seasonality. For the first two
months of 2015, transportation freight volume achieved stable growth. On the
contrary, transportation industry passenger throughput saw decline trend on a
yearly basis, falling by 0.8% YoY, but increasing by 13.5% MoM, to 1,968.7 million. In
February, both railway and highway passenger throughput saw decline, by 6.1% and
0.7% YoY, respectively. However, the growth of passengers carried in the aviation
industry accelerated to 12.4% YoY in February.
Geoffrey Cheng, CFA
Four Chinese enterprises to bid on India’s high-speed rail project. According to
media reports from India, up to twelve international companies including four
Chinese companies are bidding on India’s high-speed rail lines in three corridors,
namely, Delhi-Mumbai, Delhi-Kolkata, and Mumbai-Chennai, with an estimated cost
of Rs2000 billion. Bidders are invited to undertake feasiblity studies for the high
speed rail with an estimated cost of Rs300 million. Recently, Chinese companies
already started a study of the Delhi-Chennai corridor, which is one part of the
Diamond Quadrilateral corridors. Based on the announcement from Minister of
Railways, the purpose of growing the existing Indian railway network is to modernize
and enhance railway capacity simultaneously. The successful bidders will be selected
by July 2015 for each route, according to the press reports.
National Railway Administration deliberated railway network proposal for the
Thirteenth-Five-Year Plan. As required by the Ministry of Transport, NDRC, and the
State Council, the National Railway Administration recently completed the
preliminary proposal of railway network for the Thirteenth-Five-Year Plan. According
to last week’s media reports, the National Railway Administration obtained advices
regarding the proposal from local governments of more than ten provinces. Each
local government introduced its project proposals, policies, and implementation
plans for the Thirteenth-Five-Year railway network plan. The National Railway
Administration will further strengthen research on the Thirteenth-Five-Year railway
network plan in order to adapt and lead economic growth based on national strategy
under the New Normal.
Download our reports from Bloomberg: BOCM
〈enter〉
30%
Sector performance
HSI Index performance
25%
20%
15%
10%
5%
0%
-5%
Mar-14
Jun-14
Sep-14
Dec-14
Source: Bloomberg
Tel: (852)2977 9380
Fay Zhou
fay.zhou@bocomgroup.com
Tel: (852) 2977 9381
Mar-15
27 March 2015
Upside: +11.4%
Hong Kong Property Sector
Midland Holdings (1200.HK)
UP
MP
OP
FY14 results review; benefiting from busy project launches
Y/E 31 Dec
Total operating revenue
Growth (%)
Core profit
Core EPS (HK$)
Core EPS growth (%)
Core profit vs consensus (+/-%)
Core P/E (X)
DPS (HK$)
Yield (%)
2012
3,911
15.1
240
0.349
88.7
2013
3,344
(14.5)
(204)
(0.284)
(181.5)
2014
4,118
23.1
64
0.089
(131.4)
10.0
0.243
6.9
(12.3)
-
39.3
-
2015E
4,482
7.9
156
0.217
143.7
+22%
16.1
0.152
4.3
2016E
4,902
9.4
260
0.362
66.7
+39%
9.7
0.253
7.2
Neutral
Figure 1: FY14 results highlights
Segment
Highlights
Primary: market Despite a surprise drop in 2H14 market share, FY14
share
primary market commission income still rose 56% YoY,
thanks to the surge in the market volume. Management
will strengthen the sales team and continue to focus on
new launches in 2015.
Primary:
FY14 commission rate: 2.88%, vs. 3.20% for FY13.
commission
Management sees the high commission rate in FY13 as
one-off due to the new sales ordinance, and expects
steady commission rate going forward.
New branches The company closed 22 branches (-6% YoY) and 92
branches (-29% YoY) in HK and mainland, respectively,
contributing HK$33m in rental expenses saving.
Management intends to strengthen the sales team by
enhancing staff productivity, rather than opening new
branches.
BUY
SELL
Stock
Proactive management paid off. FY14 net profit turned around to HK$64m, from a loss of
HK$204m in 2013, in line with its positive profit alert earlier. Netting off the net loss in
1H14, the company posted a HK$100m net profit in 2H14, led by the exceptionally strong
primary market, offsetting the softened market share. On the other hand, we estimate a
market share expansion in the secondary market, where commission income doubled YoY,
versus a 60% YoY increase in industry transaction value in 2H14. More importantly, apart
from the recovery in overall market transaction, the cost-cutting measures also paid off,
with the saving in non-commission salary and rental expenses contributing up to HK$80m
increase in net profit, in our estimate. Net cash position increased to HK$1.09bn (adjusted
for receipt from customers, or HK$460m ex-459.HK), translating into HK$1.5 net cash per
share. Nevertheless, the company declared no dividend for FY14 (FY13: nil).
Busy project launches in 2015. Management expects the focus to remain on the “primary
market” in 2015, especially with the potential slowdown in secondary market volume
after the mortgage tightening, and intends to strengthen the sales team with more
productive staff, rather than branch expansion. And the management does not see major
threat from the entrants, given the well established brand name and network of the two
market leaders. We forecast 17,000 units of primary market volume in 2015 (2014: 16,822
units). Therefore, we expect earnings momentum to continue and maintain our forecast
of HK$150m net profit, about half-way to restoring the company’s franchise value, before
the secondary market fully recovers. Nevertheless, the shareholders’ fight since last year
has not been resolved, with the second largest shareholder still holding 10.5% stake in the
company, which might remain an overhang on the share price, in our view. We maintain
Neutral on the counter, with a target price of HK$3.90, based on 9.0x normalised 16E
ex-cash P/E, assuming transaction volume recovers and restores Midland’s franchise value,
and in line with historical average.
LT
BUY
FY14 net profit turned around to
HK$64m.
Apart from the recovery in market
volume, proactive cost cutting
contributed up to HK$80m net
profit, in our estimate.
The shareholders’ fight remains an
overhang in the near term. Maintain
Neutral.
Stock data
52w High
4.38
52w Low
3.17
Market cap (HK$m)
2,513.16
Issued shares (m)
718.05
Avg daily vol (m)
0.36
1-mth change（%）
-8.38
YTD change（%）
-11.17
50d MA
3.75
200d MA
3.90
14-day RSI
37.5
BOCOM’s Comments
We believe the company maintained its competitiveness in the New
Territories, with well-performing projects including Mount One and
City Point, and may have room for expansion in areas such as West
Kowloon, TKO, and Tung Chung.
We believe developers are setting more realistic ASP, and no
longer give out rebates through commission. We also expect
commission to return to normal at ~3%.
We expect little room to cut the number of branches further, in order
to protect market share, but the most rapid period of rental
reversion is also over, in our view
Source: Company, BOCOM Int’l
20%
HSI
1200.HK
10%
0%
-1 0%
-2 0%
-3 0%
Mar-14
Jul-14
Nov-1 4
Alfred Lau, CFA, FRM
alfred.lau@bocomgroup.com
Tel: (852) 2977 9235
Mar-15
27 March 2015
Upside: -16%
Energy Sector
PetroChina (857.HK) –
UP
Cost saving in E&P but uncertainty still ahead – Maintain Neutral
MP
OP
YE Dec
2013
Revenue (Rmbm)
2,258,124
Revenue growth (% YoY)
2.9%
Net profit (Rmbm)
129,599
EPS (Rmb)
0.71
EPS (% YoY)
12.4%
Consensus EPS
vs. Consensus EPS (%)
PE (@HK$8.35)
9.3
Dividend yield (%)
4.8
ROACE
7.9%
2014
2,282,962
1.1%
107,172
0.59
-17.3%
0.60
-2.4%
11.2
4.0
6.2%
2015E
2,365,782
3.6%
35,027
0.19
-67.3%
0.34
-43.2%
34.4
1.3
2.1%
2016E
2,676,250
13.1%
24,228
0.13
-30.8%
0.55
-75.9%
49.7
0.9
1.5%
2017E
2,955,846
10.4%
28,381
0.16
17.1%
0.84
-81.5%
42.4
1.1
1.6%
LT
BUY
Neutral
BUY
SELL
Stock
Earnings dropped 17.3% YoY and 1.6% lower than consensus. PetroChina’s 2014
operating and net profit came in at Rmb169.8bn and Rmb107.2bn, down 10% and
17.3% YoY, respectively. The EPS of Rmb0.59 was 1.6% lower than consensus
estimate of Rmb0.60. Consistent with the past years, the company issued a 45%
dividend payout.
Earnings declined 17.3% and 1.6% lower
than consensus.
Cost saving helped E&P earnings.
Much uncertainty ahead. Maintain
Neutral.
Cost reduction and market reform in old oilfields contributed to profit in hard
times. PetroChina’s overall E&P earnings for 2014 dropped 1.5% to Rmb186.9bn.
Q4 E&P earnings of Rmb40.9bn was down 6% QoQ compared with the 61% QoQ
E&P earnings drop for Sinopec. While the company’s per unit lifting cost increased
by 3%, its comprehensive cost reduction including administrative, transportation
and operating costs by 5-6% and market reforms in the two old fields Liaohe and
Jilin contributed to the increased profitability.
Refining and chemicals sustained loss. Natural gas segment profit more than
halved on import increase. Refining increased its loss from Rmb4.7bn in 2013 to
Rmb7.2bn in 2014 on decrease in selling price of oil products and price of inventory
while chemicals still recorded loss of Rmb16.4bn (vs. 19.7bn in 2013) on dropping
demand in the chemicals market. The Marketing segment saw a greater 28.3% drop
in operating profit on the domestic economy’s slowdown. In the natural gas
segment, although revenue increased 22% YoY to Rmb232.75bn, operating profit
halved from a year before to Rmb13.13bn. Central Asia, LNG and Myanmar gas
brought in a volume of 29.3bcm, 7.3bcm, and 3.22bcm, each losing Rmb0.60,
Rmb2.82 and Rmb1.07/cub.m, respectively.
Stock data
New oil price landscape leads to lower capex, possibilities of more overseas
acquisitions, but more uncertainty ahead. Maintain Neutral. In the low price
environment, PetroChina’s 2014 capex saw a second year of decline (down 8.5% vs.
9.6% 2012-13). 2015 should see a further cut of 8.8%. PetroChina also said that
the first two months of 2015 E&P was profitable and believes that March should also
be profitable. However, the current low crude price in addition to the new
upstream gas pricing going into effect on April 1 that would lower the incremental
volume gas by Rmb0.44/cub.m would hit its earnings hard. In absence of a
sustainable turnaround in oil prices and long-term cost advantage, PetroChina is still
under the same risks as before. We maintain our Neutral rating with 16%
downside.
52w High (HKD)
52W Low (HKD)
Market cap (USD m)
Trading value (USD m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA ( HKD)
200d MA (HKD)
14-day RSI
60%
HSI
857 HK
40%
20%
0%
-20%
Mar-14
Jul-14
Nov-14
Fei Wu
fei.wu@bocomgroup.com
Tel: (852) 2977 9392
Tony Liu
xutong.liu@bocomgroup.com
11.70
7.93
334,142
102.9
75.6
(7.4)
(2.9)
8.57
9.41
43.82
Mar-15
Morning Express
27 March 2015
Market Review
Hong Kong stocks fell on Thursday. The Hang Seng Index dropped 31 points, or 0.13%, to
close at 24,497. Lenovo (992) was the biggest blue-chip decliner, down 2.1%, while
Mengniu (2319.HK) jumped 9.8% as the stronger blue-chip performer. Oil companies
rallied. CNOOC (883.HK) gained 1.5%. COSL (2883.HK) added 4.1%. BOC (3988.HK) fell
0.9% but BOCHK (2388.HK) rose 1.5%.
US and European stocks fell. The S&P 500 dropped 4.9 points, or 0.2%, to 2,056.15. The
DJIA lost 40.31 points, or 0.2%, to 17,678.23. The Stoxx Europe 600 dropped 0.9% to
394.85.
News Reaction
Fan Gang: the slowdown of the domestic economic growth is normal and the tightening
policies shall come to an end. Fan Gang, the director of China’s National Economic
Research Institute, stated at a forum that the domestic economy will grow at a rate of 7%
in 2015. He pinpointed that the Chinese Mainland has the potential to achieve higher
economic growth but the central government will not boost the economy as taking
reference of the past, a growth rate exceeding 9% will lead to higher inflation. Instead,
the economic slowdown is more sustainable.
SAFE: it remains uncertain as to whether QFII review will be subject to the registration
system or the filing system. According to Guo Song, director of the capital account
management department of SAFE, the reviews of QFII and RQFII have been consistently
reformed and it remains uncertain if QFII review will change from being subject to a
registration system, to a filing system. According to the existing requirements, no more
than 50% of assets under QFII can have access to the inter-bank market while there are
no limitations imposed on RQFII in entering the inter-bank bond market.
It was reported that the Chinese Mainland will loosen requirements of provident fund
loans in various regions to support the property market. It was reported that save as
State Provident Fund center, Fujiang, Jinan and Ningbo had already rolled out policies to
stabilize the property market, Shandong, Huizhou, Shanghai, Guangzhou and other
provinces are also planning to introduce similar policies.
PBoC repurchased RMB2.5 bn on 26 Mar at a bid rate maintained at 3.55%. As
announced by PBoC, on 26 Mar, it has conducted reverse repurchase operations of
RMB2.5 bn at the open market for seven days through interest bidding. The bidding rate
remained to be 3.55% as the previous time.
Mid-to-large scale domestic steel enterprises lost RMB3.15 bn in 2M15. According to
Wang Liqun, the vice president of China Iron and Steel Association, mid-to-large scale
steel enterprises lost RMB3.15 bn in 2M15 due to price pressure given the excess supply
and slowing demand growth. China’s apparent consumption of crude steel in Jan and Feb
declined by 7.5%.
Morning Express
27 March 2015
Economic releases for this week - USA
Date Time
23-Mar
24-Mar
24-Mar
24-Mar
25-Mar
25-Mar
26-Mar
Source: Bloomberg
Event
Existing Home sales (m)
CPI (MoM)
CPI ex food & energy (MoM)
New Home sales (k)
MBA mortgage applications
Durable goods order
Initial jobless claims (k)
Economic releases for this week - China
Survey
4.94
0.2%
0.1%
475.0
0.5%
295.0
Prior
4.82
-0.7%
0.2%
481.0
-3.9%
2.8%
291.0
Date Time
24-Mar
27-Mar
Event
HSBC Manufacturing PMI
Industrial production(YoY)
Survey
50.5
-
Source: Bloomberg
BOCOM Research Latest Reports
Data
26 Mar 2015
26 Mar 2015
26 Mar 2015
26 Mar 2015
26 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
24 Mar 2015
24 Mar 2015
24 Mar 2015
24 Mar 2015
24 Mar 2015
24 Mar 2015
Report
Austar Lifesciences Limited (6118.HK) – GMP impact fading out; set for FY15 recovery
Container Shipping Sector – Weekly container shipping commentary
AAC Technologies (2018.HK) – A strong fourth quarter, but missed
Guangshen Railway (525 HK) – FY14 result review – disappointing result again
Agile Property (3383.HK) – FY14 largely inline; restructuring has begun but Rome was not built in a day
Sinopec Shanghai Petrochemical (338.HK) - Ready to receive the benefit of lower crude oil price
SPT Energy (1251.HK) –Margin decline in the low oil price environment
Link REIT (823.HK) – A milestone to cross-border investment
KWG Property (1813.HK) – FY14 results inline; solid fundamentals with strong sales execution
Sinotrans Limited (598.HK) – FY14 result – The DHL JV kept providing the lift
Intime (1833.HK) – FY14 in line; remain positive on earnings outlook; reiterate Buy
Daphne (210.HK) – Hit hard by online competition; TPG stays/exits should soon be unveiled
Hengan (1044 HK) – 2015 Swing factors: tissue and diaper sell-through
Henderson Land (12.HK) – FY14 results review; faster sales at lower margin
Hilong Holding Limited (1623.HK) – 2014 FY results – Overseas business saves the day
Baiyunshan (874.HK) – FY14 results missed; Maintain “Neutral”
Sinopharm (1099.HK) – FY14 results beat with promising 2015E guidance; Reiterate “BUY”
Sinopec (386.HK) – Lower crude price bit into earnings; Q1 profit warning and uncertain outlook; Downgrade
to Neutral
Golden Eagle (3308.HK) – FY14 in line; remain cautious on earnings outlook as margin pressure lingers
Tingyi (322 HK) – Stick with cost cutting and national brand strategy
Source: Company data, BOCOM International
Analyst
Milo Liu
Geoffrey Cheng, CFA
Miles XIE
Geoffrey Cheng, CFA
Philip Tse, CFA, FRM, Alfred Lau, CFA, FRM
Fei Wu, Tony Liu
Fei Wu, Tony Liu
Philip Tse, CFA, FRM, Alfred Lau, CFA, FRM
Geoffrey Cheng, CFA
Anita Chu
Phoebe Wong
Summer Wang
Fei Wu
Milo Liu
Milo Liu
Fei Wu, Tony Liu
Anita Chu
Summer Wang
Prior
50.7
-8.0%
Morning Express
27 March 2015
Hang Seng Index Constituents
Company
name
CKH HOLDINGS
CLP HOLDINGS
HONG KG CHINA GS
WHARF HLDG
HSBC HLDGS PLC
POWER ASSETS
HANG SENG BANK
HENDERSON LAND D
HUTCHISON
SHK PPT
NEW WORLD DEV
SWIRE PACIFIC-A
BANK EAST ASIA
GALAXY ENTERTAIN
MTR CORP
SINO LAND
HANG LUNG PPT
KUNLUN ENERGY
CHINA MER HOLD
WANT WANT CHINA
CITIC
CHINA RES ENTERP
CATHAY PAC AIR
TINGYI
SINOPEC CORP-H
HKEX
LI & FUNG LTD
CHINA OVERSEAS
TENCENT
CHINA UNICOM
LINK REIT
CHINA RES POWER
PETROCHINA-H
CNOOC
CCB-H
CHINA MOBILE
LENOVO GROUP
HENGAN INTL
CHINA SHENHUA-H
CHINA RES LAND
COSCO PAC LTD
AIA
ICBC-H
BELLE INTL
SANDS CHINA LTD
PING AN-H
BOC HONG KONG HO
CHINA LIFE-H
BANKCOMM-H
BANK OF CHINA-H
Hang Seng Index
BBG
code
1 HK
2 HK
3 HK
4 HK
5 HK
6 HK
11 HK
12 HK
13 HK
16 HK
17 HK
19 HK
23 HK
27 HK
66 HK
83 HK
101 HK
135 HK
144 HK
151 HK
267 HK
291 HK
293 HK
322 HK
386 HK
388 HK
494 HK
688 HK
700 HK
762 HK
823 HK
836 HK
857 HK
883 HK
939 HK
941 HK
992 HK
1044 HK
1088 HK
1109 HK
1199 HK
1299 HK
1398 HK
1880 HK
1928 HK
2318 HK
2388 HK
2628 HK
3328 HK
3988 HK
Share
price
(HK$)
156.20
13.10
140.80
101.30
91.90
18.94
67.35
53.80
119.40
36.40
12.32
29.00
15.00
17.60
20.85
8.64
66.95
8.84
30.35
35.90
178.30
7.34
24.10
11.54
8.35
10.56
11.28
10.08
48.90
5.57
8.64
32.50
90.80
27.80
32.30
6.44
4.36
17.78
53.30
76.95
140.70
107.00
104.10
21.20
8.03
17.60
16.66
6.05
19.24
6.38
Mkt
cap
(HK$m)
361,785
326,234
1,319,749
2,074,067
112,523
468,138
1,295,484
161,418
342,911
212,324
74,709
74,360
36,320
69,236
136,167
72,872
169,146
78,618
71,267
152,645
208,310
61,365
196,993
276,349
2,598,937
471,477
125,306
29,640
589,008
2,071,503
72,872
262,218
866,278
293,923
1,187,540
534,062
1,498,199
186,905
161,554
164,231
268,996
456,181
153,097
95,089
105,935
69,236
93,364
922,314
92,308
1,605,456
5d
chg
(%)
2.5
-1.5
-2.9
1.2
6.0
-6.0
1.1
5.9
1.8
1.4
4.8
-0.5
-0.4
3.0
3.2
-1.9
1.2
0.3
2.4
1.1
1.1
-8.6
8.3
-3.4
-0.9
0.0
2.4
-4.2
1.5
-2.3
-1.9
4.2
2.6
3.3
-1.4
-4.6
-2.0
0.6
0.6
2.3
0.8
2.0
1.2
-0.9
1.3
3.0
-11.0
-2.4
-2.3
-1.4
Ytd
chg
(%)
19.9
-0.9
25.2
11.9
13.4
-17.5
-9.0
-0.9
0.9
14.5
-1.6
11.1
-7.6
4.1
2.0
-0.9
-0.4
-0.9
-2.9
-17.8
3.8
1.1
4.6
11.0
-2.9
1.1
10.6
-8.5
13.3
-1.6
-0.9
-14.8
14.8
7.1
6.1
-11.0
-0.2
0.1
-4.8
2.3
8.9
19.9
3.1
-2.5
-21.4
4.1
-6.0
-3.2
-3.8
0.2
24,528 15,188,704
0.1
3.8
Source: Bloomberg
–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
158.50
117.70
16.88
12.60
148.80
93.00
108.50
67.05
94.35
74.05
24.40
18.62
84.40
64.35
57.20
39.09
129.40
92.35
36.85
28.00
14.16
10.82
29.95
22.75
24.55
14.04
18.30
13.56
23.60
13.62
10.00
7.22
69.85
57.40
10.48
7.34
34.45
29.00
72.96
32.80
189.00
116.10
10.70
7.06
26.70
17.66
14.22
9.76
11.70
7.93
15.88
9.72
12.70
8.17
11.92
9.71
49.65
35.90
5.90
4.56
10.00
7.22
65.20
29.50
94.45
55.60
28.15
21.50
34.00
19.72
7.36
4.75
4.57
3.25
18.90
14.86
63.90
48.40
82.80
64.60
148.40
121.00
108.50
85.90
108.00
88.15
26.45
20.90
13.10
7.69
18.30
13.56
23.25
16.02
8.23
5.90
24.90
18.02
6.62
5.21
25,363.0
21,680.3
–––––––––– PE –––––––––––
2014A
2015E
2016E
(X)
(X)
(X)
6.7
10.9
10.5
6.3
6.0
5.4
43.8
33.8
26.1
15.1
14.7
14.1
28.8
24.2
20.9
7.8
9.0
8.3
12.6
10.4
9.7
9.6
16.8
16.4
10.8
15.6
14.2
13.5
20.5
20.2
9.7
14.4
13.9
16.8
17.0
15.5
N/A
72.5
32.7
22.0
10.5
9.2
8.3
9.4
8.1
N/A
12.9
12.5
15.1
15.7
14.8
6.6
10.7
9.9
10.6
11.8
11.0
14.8
16.9
15.1
40.2
30.6
26.9
14.3
14.3
12.6
7.1
7.3
6.3
18.3
15.9
13.6
11.5
21.2
12.2
6.8
7.2
16.6
17.3
17.7
14.4
13.0
10.8
10.2
21.7
20.3
18.2
5.7
5.4
5.1
N/A
12.9
12.5
13.3
15.6
14.4
14.7
13.9
12.4
12.0
10.9
9.9
22.7
17.4
15.0
5.9
5.9
5.7
5.8
5.6
5.3
26.1
24.2
22.6
4.5
13.3
12.0
2.7
18.4
18.7
17.8
14.1
13.8
6.8
13.7
11.9
14.1
14.5
13.1
8.1
14.7
15.3
22.0
18.8
17.3
22.0
10.5
9.2
30.0
23.4
20.7
12.2
16.5
11.2
9.9
7.5
7.3
5.6
5.5
5.3
10.3
11.7
10.5
Yield
P/B
(%)
2.3
1.6
0.3
2.8
2.2
4.9
5.6
2.0
2.8
2.2
4.1
2.7
1.8
2.0
2.4
N/A
3.9
4.8
3.7
0.0
2.2
4.6
2.3
2.2
3.8
5.4
2.1
3.1
1.0
N/A
N/A
3.1
1.0
4.0
1.5
N/A
5.4
2.0
3.4
3.5
4.0
2.3
1.1
3.6
2.3
2.0
1.7
9.1
4.1
5.9
(X)
0.9
0.8
13.2
1.9
6.4
1.0
0.9
0.7
0.8
1.3
0.7
1.1
0.7
1.3
1.3
2.3
1.9
0.5
1.0
4.0
9.8
3.0
1.5
1.0
1.0
1.0
3.8
0.8
2.5
1.0
2.3
5.3
2.2
1.7
2.6
0.8
0.9
3.6
0.5
1.3
1.9
1.1
0.7
0.7
6.7
1.3
4.0
1.0
1.3
1.1
3.4
1.4
Morning Express
27 March 2015
China Ent Index Constituents
Company
name
TSINGTAO BREW-H
JIANGXI COPPER-H
SINOPEC CORP-H
CHINA RAIL GR-H
DONGFENG MOTOR-H
CHINA TELECOM-H
AIR CHINA LTD-H
PETROCHINA-H
HUANENG POWER-H
ANHUI CONCH-H
CHINA LONGYUAN-H
CCB-H
CITIC BANK-H
SHANDONG WEIG-H
CHINA SHENHUA-H
SINOPHARM-H
BYD CO LTD-H
ABC-H
NEW CHINA LIFE-H
PICC GROUP-H
CHINA CINDA-H
ICBC-H
CHINA COM CONS-H
CHINA COAL ENE-H
MINSHENG BANK-H
CHINA VANKE-H
GUANGZHOU AUTO-H
PING AN-H
PICC P&C-H
GREAT WALL MOT-H
WEICHAI POWER-H
GREAT WALL MOT-H
CHINA PACIFIC-H
CHINA LIFE-H
CHINA OILFIELD-H
CHINA NATL BDG-H
BANKCOMM-H
CM BANK-H
BANK OF CHINA-H
CITIC SEC-H
HAITONG SECURI-H
Hang Seng China Ent Indx
BBG
code
168 HK
358 HK
386 HK
390 HK
489 HK
728 HK
753 HK
857 HK
902 HK
914 HK
916 HK
939 HK
998 HK
1066 HK
1088 HK
1099 HK
1211 HK
1288 HK
1336 HK
1339 HK
1359 HK
1398 HK
1800 HK
1898 HK
1988 HK
2202 HK
2238 HK
2318 HK
2328 HK
2333 HK
2338 HK
2333 HK
2601 HK
2628 HK
2883 HK
3323 HK
3328 HK
3968 HK
3988 HK
6030 HK
6837 HK
Share
price
(HK$)
Mkt
cap
(HK$m)
5d
chg
(%)
Ytd
chg
(%)
51.00
13.38
6.05
6.73
12.16
4.83
6.85
8.35
8.78
27.80
8.21
6.38
5.68
6.44
18.94
29.75
37.20
3.75
40.55
3.91
3.66
5.57
9.80
4.04
9.05
17.12
7.10
90.80
15.66
50.65
28.55
50.65
35.60
32.30
12.32
7.45
6.44
18.28
4.36
26.40
17.64
70,778
72,405
922,314
295,154
104,772
390,903
128,882
2,598,937
141,604
145,239
65,979
1,605,456
372,393
28,828
468,138
82,321
139,658
1,454,661
179,551
165,878
132,699
2,071,503
260,644
95,281
384,083
179,270
67,502
866,278
232,214
183,516
71,287
183,516
352,125
1,187,540
106,767
40,223
534,062
475,733
1,498,199
424,241
254,854
1.4
0.0
-2.4
1.7
-0.2
-4.0
-2.6
-0.9
-5.4
-0.4
-0.2
-1.4
-5.3
6.8
-6.0
0.7
-4.6
-2.3
-6.5
-1.3
-1.1
-2.3
-0.9
-1.9
-4.9
-1.7
-2.2
2.6
-3.8
2.6
-1.9
2.6
-4.6
-1.4
1.7
-1.5
-4.6
-2.5
-2.0
1.0
2.4
-3.0
0.6
-3.2
5.5
10.7
6.4
9.3
-2.9
-16.2
-4.3
1.7
0.2
-8.7
2.9
-17.5
8.4
22.6
-4.3
3.6
7.7
-3.2
-1.6
5.0
-16.9
-11.3
-1.0
0.6
14.8
3.8
14.9
-12.7
14.9
-9.6
6.1
-8.5
-1.2
-11.0
-6.1
-0.2
-9.6
-9.6
64.0
15.2
8.2
7.0
15.2
5.2
7.5
11.7
11.6
35.7
9.1
6.6
6.3
9.9
24.4
34.5
57.8
4.1
46.5
4.1
4.5
5.9
10.2
5.4
10.7
20.4
9.9
94.5
17.1
54.2
34.9
54.2
42.0
34.0
23.4
8.4
7.4
20.0
4.6
34.0
23.2
11,969
4,888,837
-1.7
-0.5
12,400.4
Source: Bloomberg
–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
––––––––––– PE –––––––––––
2014A
2015E
2016E
Yield
P/B
(X)
(X)
(X)
(%)
(X)
47.5
11.9
5.9
3.4
10.0
3.4
4.2
7.9
7.2
24.0
7.1
5.2
4.2
5.7
18.6
19.7
18.7
3.2
22.1
2.9
3.3
4.6
5.0
3.8
6.2
12.8
6.6
55.6
9.7
26.1
26.0
26.1
23.6
19.7
11.1
6.7
4.8
13.1
3.3
15.0
9.8
27.8
12.8
12.2
11.5
6.5
17.6
25.7
11.5
9.3
10.7
20.7
5.6
5.2
21.3
7.8
21.5
146.4
5.5
15.8
18.4
9.8
5.7
9.9
49.0
5.5
10.0
11.4
14.7
16.7
15.4
8.7
15.4
24.2
22.7
5.7
5.4
5.9
6.6
5.8
20.5
32.1
27.3
14.4
16.5
10.9
6.4
15.2
19.7
21.2
7.7
10.2
14.9
5.5
5.0
18.8
9.0
18.6
121.7
5.1
12.3
12.0
8.9
5.4
9.3
89.9
5.2
8.7
8.8
13.9
12.5
10.9
9.5
10.9
20.4
17.4
6.2
5.8
5.9
6.0
5.6
19.3
18.5
24.5
13.1
11.2
9.8
5.8
13.9
10.1
12.2
7.7
9.4
12.8
5.3
4.7
16.5
8.3
15.3
37.4
4.9
10.6
10.6
7.0
5.1
8.4
39.0
5.0
7.4
7.3
12.4
11.9
9.0
10.0
9.0
17.3
15.0
8.8
5.7
5.7
5.4
5.3
16.2
15.1
N/A
1.9
9.1
1.2
2.1
2.0
0.8
3.8
5.4
2.9
0.9
5.9
N/A
1.3
4.9
1.3
0.2
N/A
0.6
0.3
1.2
N/A
2.4
0.7
2.2
3.0
2.8
1.0
1.7
N/A
1.1
N/A
1.4
1.5
4.4
2.8
N/A
4.6
5.4
N/A
0.8
3.5
0.8
1.0
1.3
1.1
1.1
1.3
1.0
1.4
1.8
1.6
1.1
0.8
2.3
1.0
2.4
2.9
0.9
2.1
1.7
1.4
1.0
1.3
0.5
1.1
2.0
1.0
2.2
2.8
3.7
1.4
3.7
2.4
2.6
1.1
0.8
0.8
1.2
0.9
2.4
2.1
9,620.4
8.5
8.2
7.4
3.8
1.3
Morning Express
27 March 2015
BOCOM International
11/F, Man Yee Building, 68 Des Voeux Road, Central, Hong Kong
Main: + 852 3710 3328
Fax: + 852 3798 0133
Rating System
Company Rating
www.bocomgroup.com
Sector Rating
Buy: Expect more than 20% upside in 12 months
LT Buy: Expect more than 20% upside but longer than 12 months
Neutral: Expect low volatility
Sell: Expect more than 20% downside in 12 months
Outperform (“OP”): Expect more than 10% upside in 12 months
Market perform (“MP”): Expect low volatility
Underperform (“UP”): Expect more than 10% downside in 12 months
Research Team
Head of Research
@bocomgroup.com
Raymond CHENG, CFA, CPA, CA
(852) 2977 9393
@bocomgroup.com
raymond.cheng
Strategy
Economics
Hao HONG, CFA
Miaoxian LI
(852) 2977 9384
hao.hong
(852) 2977 9212
yangqingli
Fei WU
(852) 2977 9392
fei.wu
Shanshan LI, CFA
(86) 10 8800 9788 - 8058
lishanshan
Tony LIU
(852) 2977 9390
xutong.liu
Li WAN, CFA
(86) 10 8800 9788 - 8051
Wanli
Alfred LAU, CFA, FRM
(852) 2977 9235
alfred.lau
Philip TSE, CFA, FRM
(852) 2977 9220
philip.tse
Luella GUO
(852) 2977 9211
luella.guo
(86) 21 6065 3606
louis.sun
(852) 2977 9209
lizhiwu
(852) 2977 9216
miles.xie
Geoffrey CHENG, CFA
(852) 2977 9380
geoffrey.cheng
Fay ZHOU
(852) 2977 9381
fay.zhou
(86) 21 6065 3675
wei.yao
Banks/Network Financials
Qingli YANG
miaoxian.li
Oil & Gas/ Gas Utilities
Consumer Discretionary
Property
Phoebe WONG
(852) 2977 9391
phoebe.wong
AnitaCHU
(852) 2977 9205
anita.chu
Consumer Staples
Renewable Energy
Summer WANG
(852) 2977 9221
summer.wang
ShawnWU
(852) 2977 9386
shawn.wu
(852) 2977 9387
milo.liu
Healthcare
Louis SUN
Telecom & Small/ Mid-Caps
Milo LIU
Insurance & Brokerage
Zhiwu LI
Technology
Jerry LI
(852) 2977 9389
liwenbing
Jennifer ZHANG
(852) 2977 9250
yufan.zhang
Yuan MA,PhD
(86) 10 8800 9788 - 8039
yuan.ma
Connie GU, CPA
(86) 10 8800 9788 - 8045
conniegu
(852) 2977 9243
jovi.li
Internet
Miles XIE
Transportation & Industrial
Metals & Mining
Jovi LI
(86) 10 8800 9788 - 8043
Automobile
Wei YAO
Morning Express
27 March 2015
Analyst Certification
The authors of this report, hereby declare that: (i) all of the views expressed in this report accurately reflect their personal views about any
and all of the subject securities or issuers; and (ii) no part of any of their compensation was, is, or will be directly or indirectly related to the
specific recommendations or views expressed in this report; (iii) no insider information/ non-public price-sensitive information in relation to
the subject securities or issuers which may influence the recommendations were being received by the authors.
The authors of this report further confirm that (i) neither they nor their respective associates (as defined in the Code of Conduct issued by the
Hong Kong Securities and Futures Commission) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior
to the date of issue of the report; (ii)) neither they nor their respective associates serve as an officer of any of the Hong Kong listed companies
covered in this report; and (iii) neither they nor their respective associates have any financial interests in the stock(s) covered in this report.
Disclosure of relevant business relationships
BOCOM International Securities Limited, and/or its associated companies, has investment banking relationship with Bank of Communications,
Harbin Bank Co., Ltd., Azure Orbit International Finance Limited, Hanhua Financial Holding Co., Ltd., Central China Securities Company Limited,
China New City Commercial Development Limited, China Shengmu Organic Milk Limited, Broad Greenstate International Company Limited, China
National Culture Group Limited, Sichuan Development Holding Co. Ltd., Austar Lifesciences Limited and BAIC Motor Corporation Limited within
the preceding 12 months.
BOCOM International Holdings Company Limited currently holds more than 1% of the equity securities of Shanghai Fosun Pharmaceuticals Group
Co. Ltd.
BOCOM International Securities Limited currently holds more than 1% of the equity securities of Sanmenxia Tianyuan Aluminum Company Limited.
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such report in accordance with the restrictions set forth below and agrees to be bound by the limitations contained herein. Any failure to
comply with these limitations may constitute a violation of law.
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or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for
any purpose without the prior written consent of BOCOM International Securities Ltd.
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Morning Express

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