1. business and industrial

Morning Express
03 November 2014
Focus of the Day
Indices
Yongda Auto (3669.HK)
Neutral
3Q profit margin significantly below expectation
Wei YAO
Last Closing: HK$6.78
BUY
SELL
[email protected]
Upside: +19.5%
LT
BUY
Stock
Target Price: HK$8.10→
1. Yongda Auto released its 3Q results prepared under China Accounting Standards
for Business Enterprises. 3Q14 sales revenue was RMB24.05 bn, up 29.5% YoY. Net
profit attributable to parentco was RMB370 mn, up 9.2% YoY. For Q3 alone, the sales
revenue was RMB9.02 bn, up 35.3% YoY and net profit attributable to parentco was
RMB558.94 bn, down 47.9% YoY and 66.0% QoQ. The levels were significantly lower
than expected. The poor performance for Q3 was mainly attributable to the fact that
the profit margin dropped. 2. The profit margin of new cars slumped, which dragged
the overall profit margin downwards. 3. The Q3 expenses ratio remained relatively
stable. 4. After-sale services will continue to see high growth momentum. 5. We
downgrade to Neutral rating. Given the significantly lower-than-expected profit
margin for Q3, we trim our earnings estimates and anticipate 2014/2015/2016
earnings per share to be RMB0.39/RMB0.52/RMB0.68 upon adjustment, down
19.6%/24.1%/22.5%, respectively. Due to the adjustments to our earnings estimates,
we revise TP downward to HK$6.6, corresponding to 2015PE of 10x. The downward
adjustment of TP and rebates of suppliers may still pose uncertainty on performance.
We downgrade our rating from LT Buy to Neutral.
Close
HSI
23,998
H Shares
10,756
SH A
2,534
SH B
262
SZ A
1,411
SZ B
978
DJIA
17,391
S&P 500
2,018
Nasdaq
4,631
FTSE
6,546
CAC
4,233
DAX
9,327
Source: Bloomberg
1d %
1.25
1.19
1.22
0.37
0.07
0.31
1.13
1.17
1.41
1.28
2.22
2.33
Ytd %
2.97
-0.56
14.43
3.32
27.82
12.65
4.91
9.18
10.87
-3.00
-1.46
-2.36
Close
85.88
1,166.13
15.99
6,695.00
112.85
1.60
1.25
3m %
-18.08
-9.84
-21.34
-5.90
-9.11
-5.28
-6.85
Ytd %
-22.49
-3.28
-17.86
-9.04
-6.68
-3.53
-9.03
bps change
HIBOR
0.38
US 10 yield
2.34
Source: Bloomberg
3m
0.01
-0.16
6m
0.01
-0.25
Indicators
Brent
Gold
Silver
Copper
JPY
GBP
EURO
HSI Technical
Dongfeng Group (489.HK)
Neutral
3Q results notably affected by the off-peak season
Wei YAO
Last Closing: HK$11.98
[email protected]
Upside: +36.9%
LT
BUY
BUY
SELL
Stock
Target Price: HK16.40↓
1. Under China Accounting Standards for Business Enterprises, Dongfeng Group’s 3Q
sales revenue was RMB48.68 bn, up 86.7% YoY. Net profit attributable to parentco
was RMB10.49 bn, up 32.8% YoY. Earnings per share was RMB1.22. In Q3, the net
profit attributable to parentco was RMB1.994 bn, down 15.8% YoY and 60.3% QoQ,
respectively. The YoY decrease was mainly attributable to the widened loss of
proprietary brands, the extent to which was larger than expected. The significant
Download our reports from Bloomberg: BOCM〈enter〉
HSI
50 d MA
200 d MA
14 d RSI
Short Sell (HK$m)
Source: Bloomberg
BOCOM Int'l Corporate Access
11 Nov
Kingsoft (3888.HK)
23,998
24,008
23,170
59
8,168
Morning Express
03 November 2014
setback on QoQ basis was mainly due to the fact that a one-off gain was recorded in
Q2 while Q3 was the off-peak season of the sector and investment gains from joint
ventures declined QoQ. 2. Dongfeng Peugeot Citroën performed the best among
joint ventures. 3. Proprietary brands continued to record loss. 4. Looking into 2015,
Infiniti will launch domestic manufacturing, the proprietary brands will reduce loss
and PSA will turnaround. 5. We maintain Buy. According to 3Q14 results, and taking
account of the sales in Sept. we adjust our earnings estimates and the adjusted
2014/15 earnings per share are RMB1.50/1.62, respectively, down 7.8%/5.1%, for
2014/15. Due to the adjustments to our earnings estimates, we revise TP downward
to HK$16.4, corresponding to 2015PE of 8x. We maintain Buy rating. Upcoming
highlights are the domestic manufacturing of Infiniti, the turnaround of PSA and loss
reduction of the proprietary brands. Catalysts would mainly come from monthly
sales data and the results announcement.
Hang Seng Index (1 year)
26,000
25,000
24,000
23,000
22,000
21,000
Source: Company data, Bloomberg
HS China Enterprise Index (1 year)
13,000
12,000
11,000
10,000
9,000
8,000
CQRCB (3618.HK)
Neutral
Decent growth trend in intermediary businesses; NPL declined
QoQ
Shanshan LI
Last Closing: HK$3.73
[email protected]
Upside: +25.3%
LT
BUY
Source: Company data, Bloomberg
BUY
SELL
Stock
Target Price: HK$4.67→
Shanghai A-shares (1 year)
2,600
2,400
Net profit attributable to shareholders of parentco grew by 13.18% YoY in 1-3Q14, better
than consensus by 1.25%, mainly due to better-than-expected asset quality and net fee
and commission income, in our view. As of the end of 3Q, deposits increased 2.7% QoQ,
while the deposit growth rates of its A-share listed peers either decelerated QoQ or
stayed flat during the same period. Based on beginning and ending balances, annualized
average NIM was 3.16% during the quarter, down 9bps QoQ. NPL declined QoQ, and we
expect asset quality to improve in 4Q. Growth of net fee and commission income
accelerated, while the proportion of retail deposits increased. CQRCB is the only
small-sized regional bank among the eligible stocks under SH-HK Stock Connect. Maintain
Buy in view of undemanding valuation.
NOL (NOL.SP)
Last Closing: S$0.835
2,000
1,800
Source: Company data, Bloomberg
Shenzhen A-shares (1 year)
1,500
1,400
1,300
1,200
1,100
1,000
900
800
Source: Company data, Bloomberg
Downgrade on weak 3Q14
Geoffrey CHENG, CFA
2,200
[email protected]
Upside: -12.6%
Target Price: S$0.73
NOL reported a net loss of US$23.1m for 3Q14 and US$174.8m for 9M14, which we
believe is below market expectation as the Bloomberg consensus forecast is loss of
US$117m for the full year.
While the bunker consumption has reduced by 9% YoY, the cost of sales per TEU was
down only 1% for 9M14. More importantly, NOL did not manage to increase volume of
containers shipped significantly on tradelanes with good freight rate growth.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
03 November 2014
We downgrade our rating to SELLL after we revised down our earnings forecast for
FY14-16.
China Macro
Central Bank’s statements proved the injection of liquidity
Miaoxian LI
[email protected]
Economics
China’s central bank added RMB550 bn to claims on other depository corporations in
September, which validated the rumour of central bank's injection of liquidity through
SLF.
Property sector
Not yet a turning point
Luella GUO
[email protected]
China property sector
HK property sector
UP
MP
OP
UP
MP
OP
HK market: As developers slowed down the pace of project launches, primary volume
dropped for the third week. The take-up ratio also declined given aggressive pricing. In
view of the mass new launches coming soon, we expect a volume recovery and slower
price hike going forward. We believe there is still room for sector valuation recovery,
backed by the strong sales momentum.
China market: Volume soared but inventory maintained at a high level. It is still too early
to call it a turning point given banks are still hesitant in mortgage approvals and home
prices remain under pressure. We expect valuation repair after developers'
announcement of October contracted sales data.
Mining Sector
Mining Weekly
Jovi LI
[email protected]
Weekly
The national cement average price rose 0.52% MoM. In late Oct, the downstream
demand in different parts of the country was mixed. The demand from Northeastern
China continued to shrink, while the demand from Eastern China reduced slightly MoM
due to heavy rain. The demand from Southern China was better, with balanced
production and sales. The demand from Southwestern China, Northern China and
Northwestern China maintained at 70-80%. The average market price maintained an
upward trend, but the rate and the range of increase narrowed. Looking forward to Nov,
prices are expected to remain stable or slightly increase due to the weak overall
downstream demand.
Steel prices may continue to fall ahead. The demand was stable last week. The national
average price of deformed steel bars/hot-rolled plates was +0.3%/-1.0% WoW, but the
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
03 November 2014
imported ore prices fell sharply again. The average price at Qingdao Port/Beilun Port fell
2.6%/2.7% WoW.
CEB Bank (6818.HK)
Neutral
A plan to issue not more than RMB30bn preferred
shares domestically
Li WAN
Last Closing: HK$3.80
[email protected]
Upside:20.8%
LT
BUY
SELL
BUY
Stock
Target Price: HK$4.59
Event:
China Everbright Bank (CEB) announced that it plans to issue not more than RMB30bn
preferred shares domestically by way of non-public offering.
Comments:
According to the announcement, the total number of preferred shares to be issued is not
more than 300m shares. The shareholder China Everbright Group intends to subscribe for
not more than 10m preferred shares, with the subscription amount of not more than
RMB1bn.
The preferred share issuance is expected to raise its tier-1 CAR by 1.66ppts. Based on
the 3Q14 data, the RMB30bn preferred share issuance is expected to raise its tier-1 CAR
by 1.66ppts to 11.12%.
7 banks (ICBC, ABC, BOC, SPDB, CIB, Ping An Bank and NBCB) have announced plans to
issue preferred shares, of which BOC has issued 40bn preferred shares overseas in
mid-Oct. Similar to the industry peers, CEB’s plan to issue preferred shares enjoys
equity attributes, with the increase in net assets exceeding BOC. The equity attributes
are shown in: (1) CEB has the right to remove the preferred share dividends. In any case,
CEB is entitled to remove the preferred share dividends and does not constitute an event
of default upon the approval at the shareholders’ meeting; (2) CEB is entitled to exercise
the right of redemption. There is no term of maturity for the preferred shares, but the
company is entitled to exercise the redemption right to redeem all or part of the
preferred shares without setting the investor reselling terms from the date of
redemption period after obtaining the approval of CBRC and complying with the relevant
requirements; (3) The preferred share dividends are non-cumulative. The completion of
the RMB30bn preferred share issuance may raise CEB’s net assets (end-2014 forecast) by
34%, exceeding that of BOC. This implies that the available leverage ratio of the common
shareholders may increase, thereby enhancing the rate of return.
The preferred shares may be issued in tranches. According to the announcement, the
preferred shares will be issued once or several times in accordance with the relevant
procedures upon regulatory approval. The issuance of preferred shares will enjoy the
same terms except the dividend coupon rate. However, CEB president Zhao Huan said at
the 2014 Interim Results Briefing held at the Shanghai Stock Exchange in Sept 2014 that
CEB will actively promote the issuance of preferred shares. It initially plans to issue the
first tranche of preferred shares in mid-2014. It is expected to issue preferred shares in
tranches.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
03 November 2014
Unlike the fixed dividend rate of BOC’s preferred shares, CEB’s preferred shares may
apply dividend coupon rate that can be reset in different stages. The preferred shares
may apply the same dividend rate in the duration or set a dividend rate reset period,
which apply the same dividend rate at a certain period of time from the date of the
corresponding interest accrual periods and reset the dividend rate at the later periods.
BOC’s overseas preferred share dividends rate was 6.75%. CEB’s preferred share dividend
rate should be slightly higher than BOC if there is no material change in the interest rate
environment.
Maintain LT-Buy. CEB is trading at FY14E 4.16x PE and 0.70x PB. We maintain LT-Buy on
CEB.
Zhengtong Auto (1728.HK)
Neutral
YoY growth of net profit rebounded in 3Q14
Wei YAO
Last Closing: HK$4.39
[email protected]
Upside: +32.1%
LT
BUY
BUY
SELL
Stock
Target Price: HK$5.80↓
(1) ZhengTong Auto announced that the sales revenue of its subsidiary Wuhan Shengze
Jietong rose 9.9% YoY to RMB13.225bn in 9M14. The net profit attributable to the parent
company jumped 2.8% YoY to RMB425m. In 3Q14, net profit climbed 16.0% YoY to
RMB78.816m, higher than the 0.9% in 2Q14 and down 69.6% QoQ. The QoQ decline in
the net profit of Wuhan Shengze Jietong was mainly due to the sales decline QoQ in the
low season of 3Q14 and significantly higher expense ratio. The YoY growth of 3Q14 was
higher than 2Q14, mainly driven by the revenue growth and stable margin YoY. Based on
the positive correlation between Wuhan Shengze Jietong and ZhengTong Auto, we
expect the net profit growth of ZhengTong Auto to fall QoQ in 3Q14 but rebound YoY. (2)
3Q14 gross margin beat peers’ level. (3) Capital expansion led to higher finance costs. (4)
Auto finance business is the highlight of the company’s future earnings growth. (5)
Maintain Buy. Based on the 3Q14 results of Wuhan Shengze Jietong, we revise our capital
expenditure and finance cost assumptions. Our revised FY14/15/16E EPS are
RMB0.43/0.51/0.63, down 3.5%/3.9%/2.4%. The counter is trading at a low valuation of
FY14/15E 8.2x/6.8x PE and 0.9x/0.8x PB. We maintain our Buy rating but trim our TP to
HK$5.80 due to earnings estimate revision, equivalent to FY15E 9x PE. We will focus on
the development of the auto finance business.
Download our reports from Bloomberg: BOCM〈enter〉
03 November 2014
Last Closing: S$0.835
Upside: -12.6%
Target Price: S$0.73
Container Shipping Sector
Neptune Orient Limited (NOL.SP)
UP
MP
OP
Downgrade on weak 3Q14
Financial Highlights
Y/E 31 Dec
2012
2013
2014E
2015E
2016E
Revenue (US$m)
9,512
YoY growth
(3.3)
Net profit (US$m)
(419.4)
YoY growth
(12.3)
EPS (US$)
(0.162)
BVPS (US$)
0.828
PER(x)
N.A
PBR(x)
0.74
Source: Company, BOCOM Int’l estimates
8,831
(7.2)
(76.3)
(81.8)
(0.030)
0.804
N.A.
0.76
8,780
(0.6)
(191.7)
(151.2)
(0.074)
0.730
N.A.
0.92
9,199
(4.8)
57.7
N.A.
0.022
0.752
29.9
0.89
9,638
(4.8)
432.3
649.7
0.167
0.919
4.0
0.73
Neutral
We downgrade to SELL. The share price of NOL was weak in the past one month as
the market had probably been expecting lackluster results in 3Q14. We revise our
earnings forecast for NOL, as per the following table. We lower our target price to
S$0.73, which is now based on the average PB valuation of the past three years at
the lower price bound and equivalent to 0.8x PB on our forecast FY14 BVPS .
BUY
SELL
Stock
NOL reported a net loss of US$23.1m for
3Q14 and US$174.8m for 9M14, which
we believe is below market expectation
as the Bloomberg consensus forecast is
loss of US$117m for the full year.
3Q14 earnings still lackluster. NOL reported a net loss of US$23.1m for 3Q14. On
a cumulative basis, loss for the first three quarters reached US$174.8m. Revenue
for 3Q14 was essentially flat, while YTD revenue was down 1.7% YoY. We believe
the result will be a disappointment to the market considering the Bloomberg
consensus forecast for FY14 stands at US$117m loss. We think the major
disappointment came from the cost performance despite that management cited
cost of sales reduction of 1% YoY for 9M14, while bunker consumption was down 9%
YoY during the same period. The inability to deliver better cost saving performance
was exacerbated by the fact that it had taken 24 newbuilds since the start of 2013,
which were supposed to reduce vessels cost substantially.
Revenue management also uninspiring.
In 3Q14, revenue from its container
shipping operation decreased by 1.9% YoY due to reduced volume and freight rate,
according to management. The number of containers shipped in 3Q14 was down
3.4% YoY. However, we are disappointed to see a low 5.0% YoY increase in
containers shipped on the Asia-Europe tradelane in 3Q14 by NOL while freight rate
on this tradelane increased by 0.7% YoY. Similarly, there was a 6.4% YoY increase in
freight rate on the Trans-Atlantic tradelane but volume was down significantly by
35.9% YoY in 3Q14. Moreover, while the intra-Asia market has been reported to
register robust growth for the overall market, NOL achieved zero growth in volume in
3Q14. In a nutshell, we view the revenue management result of NOL in 3Q14 as far
from satisfactory.
LT
BUY
While the bunker consumption was
reduced by 9% YoY, the cost of sales per
TEU was down only 1% for 9M14. More
importantly, NOL did not manage to
increase volume of containers shipped
significantly on tradelanes with good
freight rate growth.
We downgrade our rating to SELL after
we revise down our earnings forecast for
FY14-16.
Stock data
52w High (S$)
52w Low (S$)
Market cap (S$m)
Issued shares (m)
Avg daily vol (m)
1-mth change（%）
YTD change（%）
50d MA (S$)
200d MA (S$)
14-day RSI
Source: Company data, Bloomberg
1 Year Performance chart
(S$)
NOL
Rel to MSCI SG
130
1.15
110
1.05
0.95
90
0.85
0.75
Oct-13
70
Feb-14
Jun-14
Source: Company data, Bloomberg
Geoffrey Cheng, CFA
[email protected]
Tel: (852) 2977 9380
Download our reports from Bloomberg: BOCM〈enter〉
1.135
0.835
2165.8
2593.8
2.3
(10.22)
(25.8)
0.932
0.971
32.6
Oct-14
03 November 2014
Weekly Express
HK Property Sector
China Property Sector
Property Sector
UP
MP
OP
Not yet a turning point
Focus chart:
HK weekend primary market volume
(No. of units)
700
600
500
400
300
200
100
(No of units)
30,000
25,000
20,000
15,000
10,000
5,000
0
10 cities weekly volume (LHS)
(%)
4-wk momentum (RHS)
4-wk growth
20.1%
50
30
10
(10)
(30)
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
28 Oct 13
11 Nov 13
25 Nov 13
9 Dec 13
23 Dec 13
6 Jan 14
20 Jan 14
3 Feb 14
17 Feb 14
3 Mar 14
17 Mar 14
31 Mar 14
14 Apr 14
28 Apr 14
12 May 14
26 May 14
9 Jun 14
23 Jun 14
7 Jul 14
21 Jul 14
4 Aug 14
18 Aug 14
1 Sep 14
15 Sep 14
29 Sep 14
13 Oct 14
27 Oct 14
0
Sector Weekly Performance
China 10 cities’ volume and momentum
Index
HSI
23,998
HK Prop
3,942
NAV discount (%)
-40.4
HIBOR (1W,%)
0.1136
% WoW
Total
Return
3.0
1.8
0.9%pt
0.009%pt
% YTD
Total
Return
7.0
20.4
HSCEI
10,756
3.5
3.6
China Prop
11,420
3.3
-8.3
NAV discount (%)
-51.8 1.5%pt
SHIBOR (1W,%) 3.2000 0.175%pt
Source: Bloomberg, BOCOM Int'l estimate
Source: Local news, Wind, BOCOM Int'l
Upcoming Economic Releases
Hong Kong property
Sales slowed down; expect a rebound in November. Primary volume declined for
the third week as developers slowed down project releases. Moreover, the take-up
ratio dropped significantly on aggressive pricing. Going forward, we expect primary
volume to rebound given major projects are coming soon. And the pace of price hike
is likely to slow down as developers should still prefer high sell-through. Weighed by
aggressive asking prices and abundant new supply, the secondary market will likely
remain a laggard, in our view.
Potential rate hike was largely priced in. The Fed indicated the possibility to
increase interest rates sooner than expected if economic goals are met. Though the
market may fine-tune its rate hike expectation, we believe most property stocks
have already gone through price correction. Having said that, we believe landlords
and REITs are still under pressure, given their interest-sensitive attributes. As we
expected, developers regained value with NAV discount narrowing for the fourth
week to 40.4%. Based on the strong sales momentum and attractive price/NAV
discount, we continue to prefer Sino Land (83 HK), Henderson (12 HK) and CK (1
HK).
China property
Volume soared, but too early to call it a turning point. 10 major cities’ transaction
volume surged 26% WoW and registered the highest weekly volume since April 2013.
We believe developers were actively pushing projects into the market given the
improved sentiment. On the other hand, the new supply was well-received by the
market with an estimated 90% net take-up. Despite signs of bottoming out, it is still
too early to call it a turning point, given banks are still hesitant in mortgage
approvals. We believe home prices will remain under pressure before inventory
comes down to a more balanced level.
Additional catalysts? In the past 2 months, the PBoC injected liquidity through SLF and
MLF, instead of direct monetary policies. As interest rate liberalization is under way,
we believe the central government is reluctant to use strong stimulus at the current
stage. Contrary to the ambiguous attitude of Beijing, local governments drove the
‘bailout’ into the third phase with many providing subsidies to home buyers. However,
these subsidies are mostly <2% of total home value, thus having little impact, in our
view. The sector is trading at a 51.8% discount to NAV, which we expect to narrow
after developers release October contracted sales data. We prefer large developers with
healthy balance sheets, such as CR Land (1109 HK) and Shimao (813 HK).
Download our reports from Bloomberg: BOCM〈enter〉
Nov 03
Nov 04
Nov 05
China Oct Non-manufacturing PMI
US Sep Trade Balance
Oct HSBC China Services PMI
Oct HSBC Hong Kong PMI
Nov 07
US Oct Unemployment Rate
HK Oct Foreign Reserves
Nov 08
China Oct Trade Balance
Source: Bloomberg
Upcoming company events
Nov 03
SUNLIGHT REIT (435 HK) AGM
Source: Bloomberg consensus
* Tentative
Luella Guo
[email protected]
Tel: (852) 2977 9211
Alfred Lau, CFA, FRM
[email protected]
Tel: (852) 2977 9235
Toni Ho, CFA, FRM
[email protected]
Tel: (852) 2977 9220
Morning Express
03 November 2014
Market Review
Hong Kong stocks rallied on Friday along with other markets in the region after BoJ’s
unexpected easing move. The Hang Seng Index rose 296 points, or 1.2%, to 23,998.
Casino operators advanced. Galaxy Entertainment (27.HK) jumped 5.2% as the top
blue-chip performer. Sands China (1928.HK) rose 3%. China Mobile (941.HK) rose 2.6%.
Tencent (700.HK) added 1.4%. HKEx (388.HK) gained 2% on rumors Shanghai Stock
Exchange will run a trial for SH-HK Stock Connect on 1 Nov. The news also bolstered
brokerage names. Haitong (6837.HK) and CITIC Securities (6030.HK) both increased more
than 3%.
US stocks finished at record levels on Friday after the BoJ unexpectedly increased
stimulus. The S&P 500 rose 23.4 points, or 1.17%, to close at 2,018.05, the highest since
June 2013. The DJIA climbed 195.10 points, or 1.1%, to 17,390.52. European stocks rallied.
The Stoxx Europe 600 leapt 1.8% to close at 336.80, ending the week with a 2.9% gain.
News Reaction
3Q14 industry outlook index drops further, NBS says. China’s economic outlook index
was 94.4 in 3Q14, slightly down 0.2 ppt compared to 2Q14, the National Bureau of
Statistics (NBS) said. During the period, the outlook index of home appliances and dairy
product industries (which are directly related to consumption) improved, while the
outlook index of coal, electricity, chemicals and cement industries retreated.
Installed capacity of renewable energy power generation exceeds 400m kW, NEA says.
China’s total installed capacity of renewable energy power generation exceeded 400m
kW and reached 404m kW as of late Sept, representing over 30% of the total installed
capacity and maintaining the world’s top position in terms of the size of renewable
energy utilization, the National Energy Administration (NEA) said.
SZ GEM Board to develop regional index products and gradually allow direct
investment by foreign investors. Shenzhen Stock Exchange (SSE) will formulate regional
sector indices for areas that the GEM-listed companies are more concentrated, and
develop tradable index products on such basis, Wu Lijun, SSE chairman said. It will also
offer conditions to allow innovative start-ups that have been listed overseas to go listing
on the GEM Board, so as to gradually allow direct investment by foreign investors.
China’s 9M14 gold production up 14% but gold consumption down 21%. China’s gold
production rose 14.27% YoY to 351.727 tonnes in 9M14, while gold consumption slipped
21.42% YoY to 754.82 tonnes over the same period, according to the latest statistics from
the China Gold Association.
Internet transformation gets through whole value chain, Suning Commerce Group says.
Zhang Jindong, chairman of Suning Commerce Group (a traditional Chinese home
appliances chained retailer which has been exploring the Internet transformation), said
on Thursday evening that Suning’s Internet transformation has gone through the whole
value chain from shopping, payment, distribution to after-sales services. The effects of
O2O transformation will be shown on 11 Nov (Single-Day Festival).
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
03 November 2014
Economic releases for this week - USA
Date Time
3-Nov
4-Nov
4-Nov
5-Nov
6-Nov
7-Nov
7-Nov
7-Nov
Source: Bloomberg
Event
ISM manufacturing
Trade balance (US$ bn)
Factory orders
MBA mortgage applications
Initial jobless claims (k)
Change in Non-farm payrolls(k)
Change in Private payrolls(k)
Unemployment rate
Economic releases for this week - China
Survey
56.5
-40.0
-0.5%
230.0
225.0
5.9%
Prior
56.6
-40.1
-10.1%
-6.6%
287.0
248.0
236.0
5.9%
Date Time
1-Nov
3-Nov
Event
Manufacturing PMI
HSBC Manufacturing PMI
Survey
51.2
50.4
Prior
51.1
50.4
Source: Bloomberg
BOCOM Research Latest Reports
Data
01 Nov 2014
01 Nov 2014
01 Nov 2014
01 Nov 2014
01 Nov 2014
01 Nov 2014
30 Oct 2014
30 Oct 2014
30 Oct 2014
30 Oct 2014
29 Oct 2014
29 Oct 2014
29 Oct 2014
28 Oct 2014
28 Oct 2014
28 Oct 2014
28 Oct 2014
24 Oct 2014
24 Oct 2014
24 Oct 2014
Report
Energy Sector - Time to switch into Sinopec - PetroChina and Sinopec's Q3 results read-through
China Southern Airlines (1055.HK) - 3Q14 results review - improving as expected
Transportation Sector - Weekly transportation news wrap
ASM Pacific (522.HK) - 186% growth in net profit
CITICS (6030.HK) - 3Q review; Buy maintained
Baidu (BIDU.US) - 3Q14 results beat; another investment year to come with O2O
Guangshen Railway (525 HK) - 3Q14 results review - 3Q14 improvement insufficient to lift YTD
performance
CNOOC (883.HK) - Uncertainty looms - Lower crude price, higher cost and flat production in the near
future
SITC (1308.HK) -3Q14 result review - average freight rate ahead of our expectation
Vinda (3331 HK) - Better positioned in China's growth game; BUY
Digital China (861.HK) - Distribution business grew for four consecutive quarters
Energy Sector - Bocom Energy Weekly
Air China (753.HK) - 3Q14 results review - RMB appreciation during the quarter reduced forex loss in
1H14
Sinopharm (1099.HK) - 1-3Q14 Results In line; Maintain "Buy" with TP of HK$34.00
Biostime (1112 HK) - Second downward guidance in 2014; cut TP
Belle (1880.HK) - Bottoming out; upgrade to Buy
Container Shipping Sector - Weekly container shipping commentary
Transportation Sector - Weekly transportation news wrap
TCL Multimedia (1070.HK) - Annual shipment target lowered on weak China market
Shengmu Organic Milk (1432.HK) - The leading voice in organic; Initiate at BUY
Source: Company data, BOCOM International
Download our reports from Bloomberg: BOCM〈enter〉
Analyst
Fei Wu, Tony Liu
Geoffrey Cheng, CFA
Ian Feng, Geoffrey Cheng, CFA
Miles XIE
Li Wenbing
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Geoffrey Cheng, CFA
Fei Wu, Tony Liu
Geoffrey Cheng, CFA
Summer Wang
Miles XIE
Fei WU, Tony LIU
Geoffrey Cheng, CFA
Johnson Sun, Milo Liu
Summer Wang
Phoebe Wong
Geoffrey Cheng, CFA
Ian Feng, Geoffrey Cheng, CFA
Miles XIE
Summer WANG
Morning Express
03 November 2014
Hang Seng Index Constituents
Company
name
Cheung Kong
Hang Lung Proper
Hengan Intl
China Shenhua-H
Hang Seng Bk
China Res Land
Cosco Pac Ltd
Henderson Land D
Aia Group Ltd
Hutchison Whampo
Kunlun Energy Co
Ind & Comm Bk-H
China Merchant
Want Want China
Sun Hung Kai Pro
New World Dev
Belle Internatio
China Coal Ene-H
Swire Pacific-A
Sands China Ltd
Clp Hldgs Ltd
Bank East Asia
Ping An Insura-H
Boc Hong Kong Ho
China Life Ins-H
Citic Pacific
China Res Enterp
Cathay Pac Air
Hong Kg China Gs
Tingyi Hldg Co
Esprit Hldgs
Bank Of Commun-H
China Petroleu-H
Hong Kong Exchng
Bank Of China-H
Wharf Hldg
Li & Fung Ltd
Hsbc Hldgs Plc
Power Assets Hol
Mtr Corp
China Overseas
Tencent Holdings
China Unicom Hon
Sino Land Co
China Res Power
Petrochina Co-H
Cnooc Ltd
China Const Ba-H
China Mobile
Lenovo Group Ltd
Hang Seng Index
BBG
code
1 HK
101 HK
1044 HK
1088 HK
11 HK
1109 HK
1199 HK
12 HK
1299 HK
13 HK
135 HK
1398 HK
144 HK
151 HK
16 HK
17 HK
1880 HK
1898 HK
19 HK
1928 HK
2 HK
23 HK
2318 HK
2388 HK
2628 HK
267 HK
291 HK
293 HK
3 HK
322 HK
330 HK
3328 HK
386 HK
388 HK
3988 HK
4 HK
494 HK
5 HK
6 HK
66 HK
688 HK
700 HK
762 HK
83 HK
836 HK
857 HK
883 HK
939 HK
941 HK
992 HK
Share
price
(HK$)
136.70
23.50
79.20
21.60
130.90
18.10
10.18
51.85
42.75
98.10
10.20
5.07
24.35
10.20
115.20
9.67
9.78
4.68
101.70
46.90
66.45
32.00
62.00
25.45
22.65
13.60
18.54
14.38
17.98
19.52
10.08
5.69
6.71
168.50
3.68
56.40
9.34
78.45
74.40
31.20
22.05
121.90
11.48
12.60
22.25
9.65
12.00
5.72
94.05
11.48
Mkt
cap
(HK$m)
316,620
105,404
97,162
381,280
250,260
105,545
29,934
155,568
514,929
418,237
82,338
1,645,332
62,020
134,599
314,358
83,791
82,487
73,773
148,527
378,315
167,883
75,099
449,250
269,077
576,047
338,685
44,749
56,569
189,071
109,369
19,582
412,279
770,887
196,811
981,086
170,899
78,086
1,505,283
158,789
181,671
180,236
1,141,713
274,512
75,797
106,725
1,791,047
535,769
1,424,952
1,916,694
127,527
5d
chg
(%)
2.3
1.7
-1.6
1.9
1.1
0.7
-1.0
-2.1
1.7
0.4
0.0
1.0
0.4
3.8
0.7
1.8
14.0
2.4
-1.0
3.5
1.5
1.7
3.9
0.8
3.0
0.4
0.2
1.6
0.1
2.8
-0.8
0.7
1.2
-3.5
2.5
0.3
-0.4
0.6
2.3
0.5
2.3
1.9
5.1
-2.3
6.2
0.5
-3.5
1.6
6.8
2.3
Ytd
chg
(%)
17.8
-4.1
-13.5
-11.7
4.1
-5.8
-4.3
28.9
9.9
-0.5
-25.3
-3.2
-14.0
-8.9
17.1
4.9
9.0
7.3
11.9
-25.0
8.4
-2.6
-10.7
2.4
-6.6
14.7
-28.0
-12.3
11.2
-12.9
-32.5
4.0
6.0
30.3
3.1
-4.9
13.8
-6.8
20.7
6.3
1.1
23.2
-1.0
18.9
21.1
13.5
-16.8
-2.2
17.0
21.7
23,702.0 14,530,882
1.6
1.7
Source: Bloomberg
Download our reports from Bloomberg: BOCM〈enter〉
–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
152.00
105.95
27.00
19.80
99.70
74.05
27.00
19.12
133.00
117.60
22.80
13.62
11.92
9.40
56.40
36.46
44.20
34.65
108.50
86.88
14.82
10.00
5.66
4.33
29.80
22.75
13.10
9.32
120.20
90.35
10.48
7.15
11.08
7.25
5.26
3.72
108.00
80.55
68.00
38.70
67.80
56.00
35.00
28.50
76.50
55.60
26.65
21.50
25.80
19.72
16.88
9.35
27.90
18.14
17.26
13.56
18.40
13.91
24.00
17.82
17.42
9.91
5.98
4.53
8.23
5.73
185.00
112.80
3.79
3.03
66.30
46.35
10.70
7.72
87.35
75.75
75.85
57.85
32.30
26.55
24.60
17.52
134.00
77.56
14.22
9.03
14.16
9.83
24.90
17.10
11.70
7.31
16.06
11.42
6.37
4.89
102.20
63.65
12.70
7.62
25,363.0
21,137.6
–––––––––– PE –––––––––––
2013A
2014E
2015E
(X)
(X)
(X)
7.3
8.9
9.2
13.8
17.2
16.5
26.8
25.5
21.2
7.9
8.6
8.5
15.0
14.5
13.5
6.9
9.1
7.8
13.1
11.6
10.3
8.7
16.4
16.5
27.0
21.0
18.3
8.9
12.4
11.5
13.0
12.7
11.7
5.1
5.1
4.8
14.1
14.6
13.2
24.9
24.4
21.2
9.2
15.0
14.0
7.3
11.0
10.7
14.5
14.4
13.5
35.5
39.7
24.8
11.6
14.6
13.5
18.4
17.9
16.1
18.6
15.9
15.6
10.8
11.6
10.9
12.2
10.8
9.6
11.7
10.9
9.9
18.8
15.4
13.1
9.6
9.6
8.2
24.4
34.3
27.6
19.2
16.8
11.4
27.2
25.2
23.2
22.4
27.7
22.7
92.2
31.5
20.4
5.2
5.1
4.8
9.0
9.3
9.0
42.6
37.6
28.5
4.8
4.9
4.5
7.2
14.4
12.6
12.0
18.2
15.8
12.8
11.1
10.3
2.5
18.0
18.3
12.2
17.5
16.1
7.2
7.8
6.8
44.1
36.6
27.7
17.2
16.5
14.2
8.4
14.2
14.0
9.2
8.7
8.0
10.6
10.5
10.1
7.6
7.7
7.8
5.0
4.9
4.6
12.9
13.7
13.5
17.9
18.3
14.7
10.3
10.9
10.1
Yield
P/B
(%)
2.6
3.2
2.3
5.3
4.2
2.5
3.0
2.0
1.0
2.4
2.3
N/A
3.2
2.6
2.9
4.3
1.0
2.2
3.5
3.7
3.9
3.5
1.4
4.0
1.7
1.9
1.3
1.8
1.8
1.5
0.7
N/A
4.5
2.1
6.8
3.1
5.1
4.8
3.5
2.9
2.2
0.2
1.8
4.0
3.4
4.2
4.8
6.7
3.4
2.1
(X)
0.8
0.8
5.9
1.2
2.3
1.2
0.8
0.6
2.4
1.0
1.6
1.0
1.0
9.2
0.8
0.5
2.5
0.6
0.7
9.3
1.8
1.1
1.9
1.6
2.1
0.6
0.9
0.9
3.7
5.0
1.2
0.7
1.1
8.9
0.8
0.6
2.1
1.0
1.3
1.2
1.5
12.8
1.0
0.7
1.6
1.2
1.2
0.9
1.8
4.8
3.6
1.3
Morning Express
03 November 2014
China Ent Index Constituents
Company
name
Shandong Weig-H
China Shenhua-H
Sinopharm-H
China Shipping-H
Zoomlion Heavy-H
Yanzhou Coal-H
Agricultural-H
New China Life-H
Ind & Comm Bk-H
Tsingtao Brew-H
China Com Cons-H
China Coal Ene-H
China Minsheng-H
Guangzhou Auto-H
Ping An Insura-H
Picc Property &
Great Wall Mot-H
Weichai Power-H
Aluminum Corp-H
China Pacific-H
China Life Ins-H
China Oilfield-H
Zijin Mining-H
China Natl Bdg-H
Bank Of Commun-H
Jiangxi Copper-H
China Petroleu-H
China Rail Gr-H
China Merch Bk-H
Bank Of China-H
Dongfeng Motor-H
Citic Securiti-H
Haitong Securi-H
China Telecom-H
Air China Ltd-H
Petrochina Co-H
Huaneng Power-H
Anhui Conch-H
China Longyuan-H
China Const Ba-H
China Citic Bk-H
Hang Seng China Ent Indx
BBG
code
1066 HK
1088 HK
1099 HK
1138 HK
1157 HK
1171 HK
1288 HK
1336 HK
1398 HK
168 HK
1800 HK
1898 HK
1988 HK
2238 HK
2318 HK
2328 HK
2333 HK
2338 HK
2600 HK
2601 HK
2628 HK
2883 HK
2899 HK
3323 HK
3328 HK
358 HK
386 HK
390 HK
3968 HK
3988 HK
489 HK
6030 HK
6837 HK
728 HK
753 HK
857 HK
902 HK
914 HK
916 HK
939 HK
998 HK
Share
price
(HK$)
Mkt
cap
(HK$m)
5d
chg
(%)
Ytd
chg
(%)
7.76
21.60
30.00
5.11
3.84
6.43
3.57
28.70
5.07
56.85
5.91
4.68
7.60
6.85
62.00
13.92
33.25
29.55
3.41
28.65
22.65
16.62
1.98
7.17
5.69
13.56
6.71
4.84
14.14
3.68
11.78
18.68
12.88
4.85
5.02
9.65
9.35
25.55
8.13
5.72
4.98
34,736.65
381,280.01
77,048.80
23,095.78
44,095.28
44,990.27
1,042,092.94
102,836.94
1,645,331.53
71,618.26
102,447.82
73,773.15
268,244.50
57,406.45
449,249.58
189,369.59
111,158.00
52,650.08
59,743.12
233,635.20
576,047.40
98,248.30
64,482.18
38,711.02
412,279.22
54,188.04
770,887.00
111,411.18
338,843.16
981,086.27
101,497.90
183,975.58
124,215.30
392,522.00
71,217.77
1,791,046.93
120,468.25
118,933.60
65,335.84
1,424,951.61
265,914.57
2.4
1.9
3.3
5.1
1.3
4.4
1.1
4.7
1.0
2.1
3.5
2.4
0.7
-7.2
3.9
3.3
2.3
3.3
4.3
4.4
3.0
-8.1
4.2
1.7
0.7
5.1
1.2
10.8
2.6
2.5
-4.1
1.5
1.4
3.4
6.6
0.5
5.6
1.6
7.0
1.6
1.0
-25.8
-11.7
34.8
-15.1
-47.0
-9.2
-6.3
10.4
-3.2
-13.3
-5.4
7.3
5.9
-19.2
-10.7
21.0
-22.3
-5.4
26.3
-5.8
-6.6
-30.9
19.3
-14.0
4.0
-3.1
6.0
21.0
-14.4
3.1
-3.0
-11.7
-4.6
23.7
-13.3
13.5
33.4
-11.1
-18.6
-2.2
18.3
11.2
27.0
30.7
6.3
8.0
8.7
4.1
29.6
5.7
68.3
6.7
5.3
8.2
10.9
76.5
15.0
48.9
35.5
3.9
33.5
25.8
26.0
2.2
9.1
6.0
15.4
8.2
4.9
17.6
3.8
15.2
21.7
14.5
5.2
6.3
11.7
9.7
35.7
10.3
6.4
5.3
6.9
19.1
19.7
4.0
3.5
4.9
3.0
21.1
4.3
53.1
4.9
3.7
5.9
6.7
55.6
9.8
26.1
25.8
2.5
23.6
19.7
16.3
1.6
6.7
4.5
11.6
5.7
3.0
12.1
3.0
9.6
13.7
9.5
3.1
4.2
7.3
6.1
24.2
7.1
4.9
3.6
63.5
7.9
23.7
N/A
12.6
6.8
5.1
11.8
5.1
30.5
5.9
35.5
4.5
11.0
12.2
13.9
9.9
8.9
N/A
19.1
18.8
7.6
15.9
4.9
5.2
10.4
9.0
8.2
4.9
4.8
5.9
20.4
23.1
16.6
18.5
10.6
9.0
8.8
26.4
5.0
4.5
25.8
8.6
21.5
42.4
9.5
18.4
4.9
10.6
5.1
29.6
5.6
39.7
4.3
9.5
10.8
12.1
9.7
10.0
N/A
17.5
15.4
7.6
14.1
5.3
5.1
13.7
9.3
7.9
4.9
4.9
6.1
22.0
18.0
16.4
15.3
10.5
8.4
9.1
19.4
4.9
4.4
10,629
4,269,136
1.8
-1.7
11,638.3
9,159.8
7.4
7.2
Source: Bloomberg
Download our reports from Bloomberg: BOCM〈enter〉
–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
––––––––––– PE –––––––––––
2013A
2014E
2015E
(X)
(X)
(X)
Yield
P/B
(%)
(X)
21.2
8.5
17.9
14.1
8.1
15.7
4.6
9.5
4.8
25.6
5.3
24.8
4.0
7.4
9.6
10.8
7.6
9.6
N/A
15.0
13.1
7.2
13.9
4.9
4.8
13.7
9.0
7.2
4.4
4.5
5.7
19.1
15.4
14.8
11.0
10.1
8.2
8.4
14.2
4.6
4.1
1.0
5.3
1.1
0.0
5.0
0.4
N/A
0.7
N/A
N/A
4.0
2.2
2.6
3.3
1.4
2.0
3.1
1.1
N/A
1.8
1.7
3.3
N/A
2.8
N/A
4.7
4.5
1.7
5.6
6.8
1.9
N/A
1.2
2.5
1.1
4.2
5.2
1.7
0.7
6.7
N/A
2.9
1.2
2.8
0.6
0.6
0.6
1.0
1.6
1.0
3.9
0.8
0.6
0.9
1.0
1.9
2.3
2.7
1.5
0.9
1.9
2.1
1.4
1.2
0.8
0.7
0.8
1.1
0.9
1.0
0.8
1.1
1.8
1.5
1.1
1.0
1.2
1.6
1.8
1.6
0.9
0.7
6.7
4.5
1.1
Morning Express
03 November 2014
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
(852) 2977 9393
raymond.cheng
(852) 2977 9384
hao.hong
(852) 2977 9212
yangqingli
Shanshan LI, CFA
(86) 10 8800 9788 - 8058
lishanshan
Li WAN, CFA
(86) 10 8800 9788 - 8051
Wanli
Raymond CHENG, CFA, CPA, CA
Strategy
Economics
Hao HONG, CFA
Banks
Consumer Discretionary
miaoxian.li
Fei WU
(852) 2977 9392
fei.wu
Tony LIU
(852) 2977 9390
xutong.liu
Alfred LAU, CFA, FRM
(852) 2977 9235
alfred.lau
Toni HO, CFA, FRM
(852) 2977 9220
toni.ho
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
Ian FENG
(852) 2977 9381
Yinan.feng
(86) 21 6065 3675
wei.yao
Property
Phoebe WONG
(852) 2977 9391
phoebe.wong
Anita CHU
(852) 2977 9205
anita.chu
Consumer Staples
Renewable Energy
Summer WANG
(852) 2977 9221
summer.wang
Shawn WU
(852) 2977 9386
shawn.wu
Johnson SUN
(852) 2977 9203
johnson.sun
Milo LIU
(852) 2977 9387
milo.liu
(852) 2977 9389
liwenbing
Healthcare
Louis SUN
Telecom & Small/ Mid-Caps
Insurance
Zhiwu LI
Technology
Internet
Miles XIE
Transportation & Industrial
Yuan MA
(86) 10 8800 9788 - 8039
yuan.ma
Connie GU, CPA
(86) 10 8800 9788 - 8045
conniegu
(852) 2977 9243
jovi.li
Metals & Mining
Jovi LI
(86) 10 8800 9788 - 8043
Miaoxian LI
Oil & Gas/ Gas Utilities
Qingli YANG
Jerry LI
@bocomgroup.com
Automobile
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Wei YAO
Morning Express
03 November 2014
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BOCOM International Securities Limited, and/or its associated companies, has investment banking relationship with Bank of Chongqing Co. Ltd.,
Huishang Bank Corporation Limited, Phoenix Healthcare Group Co. Ltd., China Cinda Asset Management Co. Ltd., Qinhuangdao Port Co. Ltd,
Jintian Pharmaceutical Group Limited, Logan Property Holdings Company Limited, Nanjing Sinolife United Company Limited, Magnum
Entertainment Group Holdings Limited, 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 and Sichuan Development (Holding) Co. Ltd.
within the preceding 12 months.
BOCOM International Holdings Company Limited currently holds more than 1% of the equity securities of Shanghai Fosun Pharmaceuticals Group
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BOCOM International Securities Limited currently holds more than 1% of the equity securities of Sanmenxia Tianyuan Aluminum Company
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