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Morning Express
17 November 2014
Focus of the Day
Indices
China Market Strategy
SH-HK Connect: Breaking New Grounds
Hao HONG, CFA
[email protected]
Strategy
•
Tax free and the removal of RMB daily conversion limit will facilitate a successful
debut
•
Sector picks: Consumer, Financials and Transportation in A; Software for H;
Healthcare and Auto for A and H
•
Significant step towards market access opening and RMB internationalization
China Macro
An interest rate cut is unlikely this year
Miaoxian LI
[email protected]
Economics
China’s M2 growth moderated from 12.9% in Sept to 12.6% in Oct, in line with our
expectation of 12.5%. The moderation is a sign of a slowdown in credit expansion, as data
of bank loans, entrusted loans and other forms of financing all showed deceleration. The
new monetary policy instruments of PBoC have been unable to lower bank lending rates.
In this perspective, the PBoC, which is seeking to lower financing cost, may ultimately opt
for an interest rate cut. But for the remainder of this year, the central bank may adhere
to targeted easing.
Banking Sector
New loans and total social financing lower than expectation; deposit
volatility eased
Shanshan LI
[email protected]
UP
MP
OP
RMB-denominated loans increased by RMB548.3bn in Oct, lower than the market’s and
our expectations. The increase of medium/long-term loans and discounted bills
accelerated YoY, while that of short-term loans decelerated YoY, a trend that has
continued since Aug. This shows the real economy remains weak and banks have lowered
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Close
HSI
24,087
H Shares
10,762
SH A
2,596
SH B
261
SZ A
1,382
SZ B
970
DJIA
17,635
S&P 500
2,040
Nasdaq
4,689
FTSE
6,654
CAC
4,202
DAX
9,253
Source: Bloomberg
1d %
0.28
-0.36
-0.27
-0.33
-0.24
0.04
-0.10
0.02
0.18
0.29
0.35
0.05
Ytd %
3.35
-0.51
17.22
2.76
25.17
11.72
6.38
10.36
12.26
-1.40
-2.18
-3.13
Close
79.38
1,182.45
16.25
6,705.00
116.88
1.57
1.25
3m %
-23.33
-9.38
-16.93
-1.76
-12.24
-6.35
-6.31
Ytd %
-28.36
-1.92
-16.53
-8.90
-9.90
-5.38
-8.89
bps change
HIBOR
0.37
US 10 yield
2.32
Source: Bloomberg
3m
0.01
-0.03
6m
0.00
-0.21
Indicators
Brent
Gold
Silver
Copper
JPY
GBP
EURO
HSI Technical
HSI
50 d MA
200 d MA
14 d RSI
Short Sell (HK$m)
Source: Bloomberg
24,087
23,785
23,214
61
6,981
BOCOM Int'l Corporate Access
18 Nov
20 Nov
Central China Securities (1375.HK)
Chinasoft (354.HK)
Morning Express
17 November 2014
their risk appetite, and partly reflects the impact of a decrease in deposits and LDR. Total
social financing amounted to RMB662.7bn, lower than consensus by RMB220bn, and
declined 23.3% YoY, the fourth straight month of YoY decrease. RMB deposits decreased
by RMB186.6bn, less than the decrease last year by RMB216.1bn. Due to the regulation
on deposit deviation, the month-end volatility of deposits has eased notably. We
maintain Outperform rating on the sector.
Hang Seng Index (1 year)
26,000
25,000
24,000
23,000
22,000
21,000
Source: Company data, Bloomberg
Auto sector
HS China Enterprise Index (1 year)
13,000
Oct sales growth beat expectation; Upgrade sector to Outperform
Wei YAO
[email protected]
12,000
11,000
MP
UP
OP
10,000
9,000
1) According to CAAM, China sold 1.9872m autos in Oct, up slightly by 0.2% MoM and 2.8%
YoY. The YoY growth rate rebounded compared with that in Sept. It was also the first
positive MoM growth. The Oct auto sales data were better than our expectation; 2)
Demand for passenger cars recovered; 3) Inventory days were flat; 4) Market shares of
Japanese and proprietary brands rebounded; 5) The impact of parallel import was limited; 6)
Demand for heavy trucks remained lackluster in Oct; 7) Our three sector investment ideas
for SH-HK Connect remain unchanged; 8) We upgrade the sector from Market Perform to
Outperform, given: 1) signs of recovery in auto demand, with YoY growth likely to surprise
on the upside; 2) peak season; 3) reasonable valuation; and 4) a large number of
beneficiaries under Stock Connect. We switch our top pick to Brilliance China given the
rollout of the Connect program and bearish expectations have been priced in.
Neutral
MIT-Martina Internet Talk:
Takeaways from 3Q results NDR – The Next
Breakthrough
Shanghai A-shares (1 year)
2,600
2,400
2,200
2,000
1,800
LT
BUY
SELL
BUY
Stock
Last Closing: HK$19.58
Source: Company data, Bloomberg
Source: Company data, Bloomberg
Kingsoft (3888.HK)
Yuan MA
8,000
[email protected]
Upside: +2.2%
Target Price: HK$20.00↑
Kingsoft held an NDR exclusively with BOCOM International in Hong Kong after the
release of 3Q14 results. We remain optimistic on its long-term outlook. Although margins
may come under pressure due to investments, such investments in Cheetah, Cloud and
other businesses are likely to produce notable returns. We think investors should focus
on long-term development rather than short-term margin pressure. All of the leading
Internet players, including BAT, Qihoo and Sogou, are increasing investments strategically,
as they must invest to stay competitive in the age of mobile, cloud computing and big
data. Otherwise, they could miss precious opportunities and fall behind competitors. We
stay upbeat on its long-term prospects. Maintain LT-Buy and raise TP to HK$20.
Download our reports from Bloomberg: BOCM〈enter〉
Shenzhen A-shares (1 year)
1,500
1,400
1,300
1,200
1,100
1,000
900
800
Source: Company data, Bloomberg
Morning Express
17 November 2014
Alibaba (BABA.US)
“Double 11”--Mobilization and globalization were the highlights;
mobile payment played an important role
Yuan MA
[email protected]
Last Closing: US$118.07
Not Rated
Alibaba’s transaction volume of the 2014 “Tmall Double 11” event totaled RMB57.1bn.
Trading volume generated from mobile terminals reached RMB24.3bn, constituting
42.6% of the total, and was 4.5 times the number of last year. Alipay completed 197mn
transactions. The dramatic increase of mobile payment also evidenced the emergence of
mobile shopping and mobile payment this year. Mobile payment is the last and most
important chain of the closed O2O circle. Mobile payment needs to make a breakthrough
in changing customers’ behavior for further development. Tmall International, Taobao
Overseas and Aliexpress joined the event for the first year, and this is also an important
part of Alibaba’s globalization strategy. We think globalization and mobilization were the
highlights of this year’s “Double 11” event, and this year marks the beginning of Alibaba’s
globalization. For the long term, the O2O business, underpinned by mobile payment, will
be a new growth point of Alibaba. “Double 11” is not only an event of a single company,
but also the festival of the whole E-commerce industry. In the future, with more
e-commerce companies joining the event, more customers and sellers avoiding peak
seasons, and the growth of the base, the growth of trading volume on the Singles’ Day
will eventually moderate. However, by then, “Double 11” will have already changed
customers’ behavior and become a highly influential business brand.
Sina (SINA.US)
Neutral
Weibo ad to drive revenue in the short term; vertical
portal is the long-term objective
Yuan MA
Last Closing: US$39.8
[email protected]
Upside: +40%
LT
BUY
SELL
BUY
Stock
Target Price: US$56.00↓
Sina’s 3Q non-GAAP net revenue was USD196mn, up 9% YoY and 6% QoQ, in line with
consensus and our estimate of USD196mn. Weibo revenue was USD84mn, representing
42% of Sina’s total revenue. About 44% of ad revenue was generated from the mobile
platform. Weibo cooperated with over 80 TV programs which enhanced user penetration
on Weibo. The enriched user activities and engagement also helped TV advertisers
connect their TV advertising campaign to online audience. TV-related revenue
represented 16% of total key account advertising revenue in 3Q14, and was up 30% from
the same period last year. By 3Q14, the number of SME advertisers on the promoted
tweet platform increased from 9,300 to 11k. During the quarter, Weibo promoted feed
revenue tripled from USD14mn in the previous quarter, mainly contributed by SMEs in
terms of both the number of advertisers and revenue. The YoY decrease of portal ad was
mainly due to the shift of top ad categories’ ad budgets from portal to other platforms.
For example, the auto industry put more ads on the mobile portal or mobile app, and
FMCG shifted budget to social platform, TV-related Weibo ad, video and mobile sites. We
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
17 November 2014
cut our TP to US$56, with US$4bn Weibo valuation and 10x 2015E PE for non-Weibo
businesses. Maintain LT-Buy.
Tencent (700.HK)
Neutral
MIT-Martina Internet Talk:
Will Weixin Phonebook be the next super app?
Yuan MA
Last Closing: HK$131.9
[email protected]
Upside: +15.2%
LT
BUY
BUY
SELL
Stock
Target Price: HK$152.0→
Since the launch of Weixin Phonebook, the reception in its user base and the impact on
them are no second to the influence of Double Eleven. The reasons for Tencent which has
always been prudent and low-profile to take the initiative were due to fact that there was
a need to enhance users’ adherence and traffic by introducing products delivering better
user experience to consumers, given the pressure from competitions. On the other hand,
the app is a product to defend against the free voice messages from operators as
reported by the media, after its long-term rivalry against operators. In terms of the most
fundamental goal, it explained Tencent’s effort to guard against the impact of operators’
introduction of free voice messages as reported by the media. If the reception is good,
the internet resources of operators will have minimal influence on the quality of
telecommunication. Weixin Phonebook can be a strong fortress of Tencent. It illustrates
Tencent’s intention to capture new customers and serve those who have not used Weixin
before, whilst catering to the needs of the existing Weixin customers in different contexts.
Telecommunication operators, given its mechanism and corporate culture, have been
destined to fail to create products through rapid updates and recalculations, unlike
internet enterprise’s. However, operators can also limit OTT services through intelligent
channels. Hence, the destiny of Weixin Phonebook is more likely to depend on the rivalry
between Weixin as well as regulatory authorities and operators. If Weixin Phonebook
proves to be a success, Tencent can introduce a series of functions such as ‘‘yellow pages
for daily life’’ and ‘‘anti-harassmen’’ through this app, so as to increase customers’ loyalty
and traffic, extend its presence in the O2O arena. We maintain Buy for Tencent with a TP
of HK$152.
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Morning Express
17 November 2014
China Resources Enterprise (291.HK)
Neutral
Poorer-than-expected 3Q; profit warning to continue;
dividend may cease
Phoebe WONG
Last Closing: HK$17.18
BUY
SELL
[email protected]
Upside: -14%
LT
BUY
Stock
Target Price: HK$14.70↓
Despite the profit warning, CRE reported a poorer-than-expected 111% decline in 3Q14
recurring net profit, hit by the inclusion of its new hefty loss-making Tesco JV (estimated
loss $450-525m). Moreover, its own retail and beer businesses also posted much
worse-than-expected results. Despite the slightly improved SSS (3Q -2% vs. 2Q/1Q
-2.4%/-0.4%), the retail operation turned into a net loss of HK$207-282m (vs. 3Q13 net
profit of HK$75m), mainly due to higher loss of its non-performing Northern China
market and margin squeeze on negative sales mix and cost pressure. The beer arm
posted 17% net profit decline, mainly dragged by sales deleverage led by 4% revenue
decline (sales volume -6% on “weather” reason) and higher operating cost (particularly
marketing), which resulted in a noticeable margin squeeze (net margin -1.8 ppts to
11.2%). While management expects the company’s trough to come to an end in 1H15E
and targets to turn around the Tesco JV in 3-5 years and the food business in FY16E, we
remain skeptical amid the much more challenging-than-expected markets and expect the
profit warning to continue at least into next year, as echoed by the announcement which
stated that “In the short to medium term, the group’s overall profitability may come
under significant pressure as it takes time to turn around the recurring loss-making Tesco
stores and integrate them with its other supermarket businesses.” Further, we cannot
rule out the possibility that management may change its dividend policy by cutting or
even stopping paying dividend, amid the significant earnings deterioration and
increasingly tight financial position (net gearing of 1%/5% in FY14/15E). With high
earnings uncertainty from Tesco JV’s burden, coupled with increasing challenge of CRE’s
other existing main businesses (beer and food), we believe CRE’s earnings risk remains on
the downside. Reiterate Sell with TP cut to HK$14.7.
Property Sector
HK/China property weekly – 14th November 2014
Luella GUO
[email protected]
China Property Sector
HK Property Sector
UP
MP
OP
UP
MP
OP
Hong Kong property: Driven by the increased supply and keen take-up, primary market
volume rebounded and we expect the momentum to continue. Slight price lifts were
seen in some projects, especially when the previous batch received strong take-up. The
sector NAV discount is currently 40% and has room for further improvement. Based on
the strong sales momentum and attractive price/NAV discount, we continue to prefer
Sino Land (83 HK).
China property: Volume cooled down after October's rally but take-up remained strong.
We believe transaction volume will remain high in 4Q14 as developers are actively
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Morning Express
17 November 2014
pushing supply at the year end, especially when many are still lagging behind sales
schedule. We believe the sector is gradually bottoming out and further stimulus/bailout
from the central government is unlikely. We expect valuation repair for the sector but
further valuation upgrade will depend on property price recovery, in our view. We prefer
large developers with healthy balance sheets, such as CR Land (1109 HK) and Shimao
(813 HK).
Mining Sector
Mining Weekly
Jovi LI
[email protected]
Weekly
China’s cement market price rose by 0.65% WoW. In mid-Nov, in spite of the sluggish
demand in the downstream market, the overall price continued to edge upward amid
fluctuations, mainly driven by the implementation of self-regulatory rules by certain
regional enterprises in Eastern China.
Steel market: the national average price of threads slid by 0.3% WoW and the national
average price of hot rods increased by 0.5% WoW. As a result of APEC held in Beijing, the
utilization ratio of the production capacity of Tangshan Steel Plant plunged to 44.36%,
though the capacity is anticipated to improve in the near term. With the launch of SH-HK
Connect on 17 Nov, we strongly recommend A-share leader Baosteel (600019).
Download our reports from Bloomberg: BOCM〈enter〉
17 November 2014
China Market Strategy
Hao Hong, CFA
SH-HK Connect: Breaking New Grounds
[email protected]
“Liberty, when it begins to take root, is a plant of rapid growth.” – George Washington
Tax free and the removal of RMB daily conversion limit will facilitate a successful debut: After Friday’s close, China
announced that the Connect Program will be free of capital gain tax for three years. And so will QFII and RQFII investors.
Essentially, it is a tax exemption deal for foreign investors in China for the next three years. Many have asked how the
markets will perform on Monday – the first day of the Connect Program. During the Friday overseas trading session, HK ADRs,
the Hang Seng futures and Chinese ETFs had responded with solid gains, with the A-share ETF (CAF.US) surging close to 4%.
As Shanghai and Hong Kong didn’t have a chance to price in this bullish development, we believe that Monday open will be
the first chance for these markets to capitalize on the good news. The news of tax exemption for three years itself should be
enough to give the market a one-off 10% revaluation. No wonder CAF had rallied so hard. The Hang Seng closed above
24,000 and the Shanghai Composite above 2,450 for the week, without pricing in the tax news. These have been key
resistance levels for the two markets, respectively.
Sector picks: Consumer, Financials and Transportation in A; Software for H; Healthcare and Auto for A and H: As we are
anticipating strong cross border capital flow, we prefer sectors with the potential to receive the largest fund inflow. And these
sectors’ performance must also be sensitive to fund flows. Following this logic, Consumer, Financials and Transportation in A;
Software for H; Healthcare and Auto for A and H. Further, we believe investors will be buying into A-share sectors not available
in Hong Kong, and vice versa. In short, valuation discrepancy, scarcity and blue chips should be the focus.
Significant step towards market access opening and RMB internationalization: Back in the 1980s, Korea imposed
restrictive capital control. The Korean Stock Exchange (KSE) remained small and illiquid, and was subject to manipulation by
large players. On November 11, 1984, in a move that is widely considered the most significant step to date towards
liberalizing the KSE, the Ministry of Finance permitted financially solid companies to issue convertible bonds and depository
receipts on international markets. This policy, together with the Korean Fund launched on the NYSE in 1984, introduced
foreign capital into the country. Within days of the announcement, trading volume on the KSE surged. And so did the index.
By early 1986, the recipe of “Three Lows”, namely, lower won, lower international interest rate and lower oil prices doubled
the market in four months. The KSE eventually stepped out of its doldrums, until the late 1980s when KSE started another
decade of range-bound trading.
Many of these elements sound familiar, with the latest developments in China’s capital market. The Connect Program, B to H
listing, RQFII and expanded QF, as well as convertible bond issuance all appear to be emulating South Korea’s success in the
1980s. RQFII has taken less than three years to grow from RMB10b to close to 300b, and less than twelve months to double
in 2014. Even though the quota on the Connect Program will limit the degree of success initially, the quota will be expanded,
if the Connect is successful.
Together with the Chinese “Marshall Plan”, the Connect is an important part of RMB internationalization. After the Second
World War, the Dollar used the Breton Wood system to become the anchor of the international monetary system. It then
expanded the supply of the Dollar overseas through the Marshall Plan, creating a circular flow of on/off shore Dollars. Even
though the collapse of the Breton Wood system in the 70s undermined the confidence in the Dollar, the PetroDollar system
eventually cemented the Dollar’s role in international trade pricing and settlement. Meanwhile, the US maintains its lead in
technology. On the other hand, the Yen’s failed internationalization is more of a consequence of Japan’s failed leadership in
regional industry development, as well as its failure to expand overseas supply of Yen beyond simply through Yen loans. It
offers lessons for RMB’s internationalization after accumulating close to Four trillion USD forex reserve.
Download our reports from Bloomberg: BOCM〈enter〉
17 November 2014
Last Closing: US$118.07
Internet Sector
Alibaba Group (BABA.US)
UP
MP
“Double 11”--Mobilization and globalization were the highlights;
mobile payment played an important role
Alibaba’s transaction volume of the 2014 “Tmall Double 11” event totaled RMB57.1bn.
Trading volume generated from mobile terminals reached RMB24.3bn, constituting
42.6% of the total, and was 4.5 times the number of last year. Alipay completed 197mn
transactions. The dramatic increase of mobile payment also evidenced the emergence
of mobile shopping and mobile payment this year. Mobile payment is the last and most
important chain of the closed O2O circle. Mobile payment needs to make a breakthrough
in changing customers’ behavior for further development. Tmall International, Taobao
Overseas and Aliexpress joined the event for the first year, and this is also an important
part of Alibaba’s globalization strategy. We think globalization and mobilization were
the highlights of this year’s “Double 11” event, and this year marks the beginning of
Alibaba’s globalization. In the long term, the O2O business, underpinned by mobile
payment, will be a new growth point of Alibaba. “Double 11” is not only an event of a
single company, but has become the festival of the whole E-commerce industry. In the
future, with more e-commerce companies joining the event, more customers and sellers
avoiding peak seasons, and the growth of the base, the growth of trading volume on
the Singles’ Day will eventually moderate. However, by then, “Double 11” will have
already changed customers’ behavior and become a highly influential business brand.
Events: Alibaba announced that the transaction volume of this year’s “Tmall Double 11”
event totaled RMB57.1 billion, 42.6% of which was generated from mobile terminals.
Analysis:
Transaction volume of this year’s “Tmall Double 11” event was RMB57.1 billion,
increasing 57.7% YoY from RMB36.2 billion in 2013. Transaction volume generated
from mobile terminals totaled RMB24.3 billion, representing 42.6% of the total
volume this year and 4.5 times the mobile transaction volume last year. In 2013,
mobile transaction volume accounted for only 15.3% of the total.
Ant Financial Services announced that Alipay completed 197 million transactions,
4.36 times last year’s 45.15 million transactions.
Tmall invited more than 10 overseas retailers, such as Costco (US), Kirindo (Japan),
LG Life-style (South Korea), Nature’s Bounty (US) and Its skin (South Korea), to join
this event, and provided free global shipping.
The import and export volume of Tmall grew rapidly. HK, Russia and the US were
the three ex-mainland China markets that registered the highest trading volumes.
The top 10 stores in Tmall during the event were Xiaomi, Huawei, Haier, Linsy
Furniture, Uniqlo, HSTYLE, JackJones, Luolai, Meizu and QUANU.
Download our reports from Bloomberg: BOCM
〈enter〉
OP
After one year’s promotion and investment by
O2O apps like Taxi app, the customers’
payment habits are gradually changing. Mobile
gross merchandise value saw solid growth
with improving monetization capability.
Tmall International, Taobao Overseas, and
Aliexpress joined the event for the first year,
and this is also an important part of Alibaba’s
globalization strategy.
“Double 11” is not only an event of a single
company, but has become the festival of the
whole E-commerce industry. In the future,
with more e-commerce companies joining the
event, more customers and sellers avoiding
peak seasons, and the growth of the base, the
growth of trading volume on the Singles’ Day
will eventually decline. However, by then,
“Double 11” will have already changed
customers’ behaviors and become a highly
influential business brand.
Ma Yuan (Martina), Ph.D
[email protected]
Tel: (8610) 8800 9788 – 8039
Gu Xinyu (Connie), CPA
[email protected]
Tel: (8610) 8800 9788 - 8045
17 November 2014
Last Closing: US$39.8
Upside: +40%
Target Price: US$56.00↓
Internet Sector
Sina (SINA.US)
UP
MP
Weibo ad to drive revenue in the short term; vertical portal is the
long-term objective
OP
Financial Highlights
Y/E 31 Dec
Revenue (US$m)
YoY growth
Non-GAAP net profit (US$m)
YoY growth
Non-GAAP diluted EPS (US$)
DPS (US$)
Dividend yield
PE
Source: Company, BOCOM Int’l estimates
2012
529
10%
10
-83%
0.15
261
2013
665
26%
77
645%
1.13
35
2014E
766
15%
31
-60%
0.46
87
2015E
903
18%
34
12%
0.49
82
2016E
1,084
20%
76
121%
1.06
37
LT
BUY
Neutral
SELL
BUY
Stock
3Q results beat. Non-GAAP diluted EPS was USD0.19, down 56% YoY and up 3% QoQ, beating
consensus of USD0.175. Non-GAAP net revenue was USD196mn, up 9% YoY and 6% QoQ, in
line with consensus and our estimate of USD196mn. Gross margin was up from 61% in 2Q14 to
63%, mainly due to the shift of revenue mix from MVAS with low margins to Weibo-related
VAS with higher margins. Operating margin was -5%, compared with -13% in 2Q14 and 13% in
3Q13, due to high spending on R&D and marketing-related costs.
Weibo revenue was USD84mn, representing
42% of Sina’s total revenue. About 44% of ad
revenue was from the mobile platform.
Weibo monetization on track. Weibo revenue was USD84mn, up 58% YoY and 9% QoQ,
representing 42% of total revenue. About 44% of ad revenue was from the mobile platform.
During the quarter, Weibo promoted feed
revenue tripled from USD14mn in the previous
quarter, mainly contributed by SMEs in terms of
both the number of advertisers and revenue.
*
Weibo DAU reached 76.6mn while MAU reached 167mn as of Sep 2014, with over 78% of
users accessing Weibo from mobile devices.
*
Weibo cooperated with over 80 TV programs which enhanced user penetration on Weibo.
The enriched user activities and engagement also helped TV advertisers connect their TV
advertising campaign to online audience. TV-related revenue represented 16% of total key
account advertising revenue in 3Q14, and was up 30% from the same period last year.
*
In 3Q14, only 3-4 TV programs contributed revenue to Weibo ad. In the future,
management expects the TV program promotion team to allocate more budget to Weibo
promotion which has become one of the most important interactive platforms with the
audience.
*
In terms of monetization, Weibo is working very hard to develop marketing solutions and
is cooperating with over 700k accounts in order to enhance their marketing and service
capacity. Weibo ad revenue contributed 78% to Weibo revenue, or 39% to Sina’s ad
revenue, growing 50% YoY and 10% QoQ to USD65mn, mainly driven by strong market
acceptance of Weibo promoted feed advertising and the penetration of mobile platform,
as well as fast-growing SME customers.
*
By 3Q14, the number of SME advertisers on the promoted tweet platform increased from
9,300 to 11k. During the quarter, Weibo promoted feed revenue tripled from USD14mn in
the previous quarter, mainly contributed by SMEs in terms of both the number of
advertisers and revenue.
*
Non-ad Weibo revenue (Weibo VAS) was USD18.8mn, up 93% YoY or 6% QoQ, mainly
driven by increased revenue of mobile game and data licensing revenue. During the
quarter, game revenue contributed about 50% of total non-Weibo ad revenue.
*
Ad revenue from Alibaba merchants was USD27.5mn, 23% higher than that in 2Q14. In
the future, besides the display advertising format, Weibo and Alibaba will cooperate
further in more vertical areas that are not strengths of the Alibaba platform, such as auto,
movie (which started in 3Q), finance and real estate, in the coming year.
Shift of ad budget due to more ad platform choices. Excluding Weibo ad revenue, Sina’s
traditional portal branded ad revenue was USD102mn, down 6% YoY and up 6% QoQ. The YoY
decrease was mainly due to the shift of top ad categories’ ad budget from portal to other
platforms. For example, the auto industry put more ads on the mobile portal or mobile app,
and FMCG shifted budget to social platform, TV-related Weibo ad, video and mobile sites.
Maintain LT-Buy and cut TP to USD56. As portal ad is experiencing decline, we cut our revenue
forecasts for 2014E/15E by 1%/3%. We also cut EPS estimates given the company’s strategy of
expansion in the vertical area. We cut our TP to US$56, with US$4bn Weibo valuation and 10x
2015E PE for non-Weibo businesses. Maintain LT-Buy.
Download our reports from Bloomberg: BOCM〈enter〉
Weibo ad revenue contributed 77% to the
Weibo business, with a further expanded
monetization model as well as increased
number of advertisers during the quarter.
The YoY decrease of portal ad was mainly due
to the shift of top ad categories’ ad budgets
from portal to other platforms. For example, the
auto industry put more ads on the mobile portal
or mobile app, and FMCG shifted budget to
social platform, TV-related Weibo ad, video and
mobile sites.
Maintain LT-Buy and cut TP to USD56.
Stock data
52w High
52w Low
Market cap (US$m)
Issued shares (m)
Avg daily vol (m)
1-mth change（%）
YTD change（%）
50d MA
200d MA
14-day RSI
Source: Company data, Bloomberg
89.79
36.51
2,789
67
1.39
10.48
-50.33
41.71
50.72
58.48
1 Year performance chart
sina us Equity
AHXH Index
MXCN Index
30%
0%
N/13
F/14
A/14
J/14
-30%
-60%
Source: Company data, Bloomberg
Ma Yuan (Martina), Ph.D
[email protected]
Tel: (8610) 8800 9788 - 8039
Gu Xinyu (Connie), CPA
[email protected]
Tel: (8610) 8800 9788 - 8045
O/14
17 November 2014
Last Closing: HK$17.18
Downside: 14%
Target Price: HK$14.70↓
Consumer Discretionary Sector
China Resources Enterprise (291.HK)
UP
MP
OP
Poorer-than-expected 3Q; profit warning to continue; dividend may
cease
Financial Highlights
Y/E 31 DEC
Revenue (HK$ m)
Revenue growth (%)
Net profit (HK$ m)
Our forecast vs. Consensus (%)
Recurring net profit (HK$ m)
Recurring net profit growth (%)
PER (x)
Yield (%)
FY11
FY12
FY13
FY14E
FY15E
110,164
26
2,832
na
1,889
0
21.8
2.7
126,236
15
3,945
na
1,527
-19
27.0
1.7
146,413
16
1,908
na
1,642
8
25.1
1.6
173,247
18
-44
-104
-44
na
na
na
193,720
12
-244
-116
-244
na
na
na
LT
BUY
Neutral
BUY
SELL
Stock
Source: Company, BOCOM Int’l estimates
Despite the profit warning, CRE reported a poorer-than-expected 111% decline in 3Q14
recurring net profit, hit by the inclusion of its new hefty loss-making Tesco JV (estimated
loss $450-525m). Moreover, its own retail and beer businesses also posted much
worse-than-expected results. Despite the slightly improved SSS (3Q -2% vs. 2Q/1Q
-2.4%/-0.4%), the retail operation turned into a net loss of HK$207-282m (vs. 3Q13 net
profit of HK$75m), mainly due to higher loss of its non-performing Northern China
market and margin squeeze on negative sales mix and cost pressure. The beer arm
posted a 17% net profit decline, mainly dragged by sales deleverage led by the 4%
revenue decline (sales volume -6% on “weather”) and higher operating cost (particularly
marketing), which resulted in a noticeable margin squeeze (net margin -1.8 ppts to
11.2%). While management expects the company’s trough to come to an end in 1H15E
and targets to turn around the Tesco JV in 3-5 years and the food business in FY16E, we
remain skeptical amid the much more challenging-than-expected markets and expect
the profit warning to continue at least into next year, as echoed by the announcement
which stated that “In the short to medium term, the group’s overall profitability may
come under significant pressure as it takes time to turn around the recurring loss-making
Tesco stores and integrate them with its other supermarket businesses.” Further, we
cannot rule out the possibility that management may change its dividend policy by
cutting or even stopping dividend payout, amid the significant earnings deterioration
and increasingly tight financial position (net gearing of 1%/5% in FY14/15E). With high
earnings uncertainty from Tesco JV’s burden, coupled with increasing challenge of CRE’s
other existing main businesses (beer and food), we believe CRE’s earnings risk remains
on the downside. Reiterate Sell with TP cut to HK$14.7.
Forecast and target price cut. We cut our net profit forecast by 112%/257% in
FY14/15E due to our lower sales and margin assumptions of its retail and beer
businesses to reflect the bigger-than-expected operating pressure following the
poorer 3Q results. We now expect CRE to turn into a net loss of HK$44m in FY14E (vs.
a profit of HK$1,642m in FY13) and further to HK$244m in FY15E, putting us well
below market consensus by 104%/116%. Also, we fine-tune our TP downward from
HK$14.9 to HK$14.7, based on a 40% management discount of FY15E SOTP (HK$24.5)
amid the group’s poor visibility and earnings outlook.
Download our reports from Bloomberg: BOCM〈enter〉
Stock data
52w High (HK$)
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
Source: Company data, Bloomberg
27.90
16.72
41,599
2,421
3.22
-6.6
-33.3
18.97
21.32
31.92
1 Year Performance chart
30%
HSI
20%
291.HK
10%
0%
-10%
-20%
-30%
-40%
Nov-13
Feb-14
May-14
Aug-14
Source: Company data, Bloomberg
Phoebe Wong
[email protected]
Tel: (852) 2977 9391
Nov-14
17 November 2014
Weekly Express
HK Property Sector
China Property Sector
Property Sector
UP
MP
OP
th
HK/China property weekly – 14 November 2014
Focus chart:
HK weekend primary market volume
(No. of units)
700
600
500
400
300
200
Sector Weekly Performance
China 10 cities’ volume and momentum
(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)
(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
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
10 Nov 14
0
30
10
100
Index
24,087
3,971
-40.0
0.1143
% YTD
Total
Return
7.3
21.2
HSCEI
China Prop
NAV discount (%)
SHIBOR (1W,%)
10,762
2.1
11,247
-0.9
-52.5 -0.4%pt
3.0780 -0.023%pt
3.7
-9.7
(%)
50
4-wk growth
40%
HSI
HK Prop
NAV discount (%)
HIBOR (1W,%)
% WoW
Total
Return
2.3
3.1
1.8%pt
0.002%pt
Source: Local news, Wind, BOCOM Int'l
Hong Kong property
Primary volume rebounded and we expect the momentum to continue. Driven by
the increased supply and keen take-up, weekend primary volume more than
doubled from the previous week. The major contributor, Dragons Range (developed
by Sino/Kerry), received 100% take-up of its first batch and contributed 90% of the
weekend volume. We believe the take-up will remain strong as double-digit
oversubscription is not uncommon for the upcoming new launches/batches.
Encouraged by the keen take-up, slight price lift was seen in some projects. The
sector NAV discount is currently 40% and has room for further improvement. Based
on the strong sales momentum and attractive price/NAV discount, we continue to
prefer Sino Land (83 HK).
China property
Volume cooled down after October’s rally but take-up remained strong. 10 major
cities’ transaction volume dropped 12.6% WoW but was still 38% higher than the
average weekly volume before the ‘9.30 policy’ this year. In addition, net take-up
stayed above 80% for the fifth consecutive week. We believe transaction volume will
remain high in 4Q14 as developers are actively pushing supply by the year end,
especially when many are still lagging behind sales schedule. On the other hand,
local governments continued to support the market, including those of the first-tier
cities. Though the tax benefits/subsidies represent merely 1%~3% of prices, these
policies have further improved market sentiment.
Source: Bloomberg, BOCOM Int'l estimate
Upcoming Economic Releases
Mon
Tue
Nov 17
Nov 18
HK Oct
China
Unemployme October
nt Rate
Property
Prices
Wed
Nov 19
HK Oct
Composite
Interest Rate
US Oct PPI
Thu
Nov 20
US Fed
Releases
Minutes from
Oct. 28-29
FOMC
Meeting
Nov P HSBC
China
Manufacturin
g PMI
HK Oct CPI
US Oct CPI
Source: Bloomberg
Upcoming company events
Tue
Wed
Thu
Fri
Nov 18
GEMDALE
(535 HK)
*1HFY15
result
Nov 19
Leju (LEJU
US) 3Q14
result
Nov 20
Nov 21
HKR (480
HK) 1HFY15
result
E-HOUSE
(EJ US) 3Q14
result
New World
China (917
HK) AGM
New World
Development
(17 HK) AGM
Source: Bloomberg consensus
* Tentative
Luella Guo
Benign correction is underway. Real estate investment and new construction
posted slower growth in 10M14. We believe this was because developers’ priority
shifted to inventory clearing and, thus, should not be interpreted as a negative
signal. In fact, first-tier cites, which have more balanced inventory levels, saw a YoY
increase in land sales. We believe the sector is gradually bottoming out and further
stimulus/bailout from the central government is unlikely, especially when the
government is willing to tolerate a slower growth rate. We expect valuation repair
for the sector, which is trading at a 52.5% discount to NAV, but further valuation
upgrade will depend on property price recovery, in our view. 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〉
[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
17 November 2014
Market Review
Hong Kong stocks rose on Friday. The Hang Seng Index closed 67 points, or 0.3%, higher
at 24,087. Tencent (700.HK) gained 1.9% and China Mobile (941.HK) added 1.5%. The two
stocks combined contributed 68 points to the HSI’s gain. Hong Kong developers rallied.
New World Development (17.HK) climbed 1.2% and Kerry (683.HK) increased 2.3% after
winning the tender for a Homantin site. Oil companies extended declines as oil price
weakness continued. PetroChina (857.HK) fell 1.7% and CNOOC (883.HK) lost 1%. Kunlun
Energy (135.HK) slumped 2.4% as the worst blue-chip performer.
US stocks posted modest gains on Friday. The S&P 500 rose 0.02% to close at 2,039.82.
The DJIA fell 18 points, or 0.1%, to 17,634.74. Both indexes posted a fourth-straight
weekly gain. European stocks finished largely flat. Stoxx Europe 600 slipped 0.07% to
335.63.
News Reaction
Li Keqiang: Year 2015 will witness greater downside pressure on the economy and the
macro policy will be fine-tuned as and when appropriate. As expressed by Li Keqiang,
China’s Premier of the State Council, China is set to achieve approximately 7.5%
economic growth, the target set for the year. Though greater downside pressure will
weigh on the economy next year, China’s economic fundamentals remain stable and
China will uphold a continuous and stable macro policy by making moderate adjustment
as and when appropriate.
While China’s fiscal revenue in Oct hit a record an 8-month high, the fiscal spending of
the country unexpectedly exhibited negative growth. Driven by the notable increase in
revenue of the central government, China’s YoY growth in fiscal revenue in Oct increased
as compared with that of Sept. China’s fiscal spending in Oct decreased YoY surprisingly,
which was attributable to the higher basis during the same period and
earlier-than-scheduled payment this year.
Moody: China’s brokers will benefit from SH-HK Connect. In view of the launch of SH-HK
Connect on the coming Monday, Moody estimated in its report that the transaction
volume of shares will expand, generating a revenue of RMB5 bn for China’s brokerage
sector. Such revenue will account for approximately 6.6% of the revenue of the entire
sector in 2013.
In 2014, China’s cotton production is anticipated to decline by 7% YoY. According to the
Investigation Report on China’s Cotton Ouput announced by ww.cncotton.com.cn last
Friday, China’s cotton output in 2014 is estimated to reach 6.51 mn toones, down 7% as
compared with that of last year and 4.3 ppt as compared with our estimate in August.
Cathay Pacific (293.HK) is actively preparing for its new cargo services system. As
reported, following the successful launch of its passenger services system, the group is
actively preparing for the launch of its new cargo services system (CSS), which will replace
the existing CUBIC and AMBER.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
17 November 2014
Economic releases for this week - USA
Date Time
17-Nov
18-Nov
18-Nov
19-Nov
20-Nov
20-Nov
20-Nov
20-Nov
Source: Bloomberg
Event
Industrial Production(MoM)
PPI(MoM)
PPI ex food & energy (MoM)
Housing Starts(k)
CPI (MoM)
Initial jobless claims (k)
Existing Home sales (m)
Leading indicators
Economic releases for this week - China
Survey
-0.1%
0.1%
1,025.0
-0.1%
5.15
0.6%
Prior
50.4
-0.1%
0.0%
1,017.0
0.1%
290.0
5.17
0.8%
Date Time
20-Nov
Event
HSBC Manufacturing PMI
Survey
-
Prior
50.4
Source: Bloomberg
BOCOM Research Latest Reports
Data
14 Nov 2014
14 Nov 2014
14 Nov 2014
14 Nov 2014
13 Nov 2014
13 Nov 2014
12 Nov 2014
11 Nov 2014
11 Nov 2014
11 Nov 2014
11 Nov 2014
11 Nov 2014
10 Nov 2014
Report
Energy Sector - Bocom Energy Weekly
Netease (NTES.US) - 3Q top-line beat on fast-growing eCommerce and ad revenue
Transportation Sector - IWeekly transportation news wrap
Insurance Sector - Recommend buying undervalued insurance stocks on re-rating potential driven by visible
growth
Tencent (700.HK) - 3Q top-line missed; opportunity in performance based ad
SH-HK Stock Connect - Rebalancing the A/H valuation gap and searching for overlooked names
China Property Sector - Constrained valuation amid sales recovery
Container Shipping Sector - Weekly container shipping commentary
Parkson (3368.HK) - 3Q14 results in line; Upgrade to Neutral on improving earnings visibility
MTRC (66.HK) - MTRC's Shenzhen Tiara site visit
Kingsoft (3888.HK) - 3Q results beat on fast-growing Cheetah Mobile revenue; one-time gain drove net profit
China Market Strategy - Remaining Questions for SH-HK Connect
Property Sector - HK/China property weekly - 7th November 2014
10 Nov 2014
10 Nov 2014
10 Nov 2014
10 Nov 2014
10 Nov 2014
07 Nov 2014
06 Nov 2014
SMIC (981.HK) - Net profit slightly beat in the third quarter
AAC Technologies (2018.HK) - Third quarter result missed again
Lenovo Group (992.HK) - Net profit beat but top-line missed
China Resources Enterprise (291.HK) - We estimate profit warning to continue into next year; reiterate Sell
Sinotrans Limited (598.HK) - Still pursuing growth; unscathed by Liuzhou company debacle
Transportation Sector - Weekly transportation news wrap
HKEx (388.HK) - Results in-line with market consensus
Source: Company data, BOCOM International
Download our reports from Bloomberg: BOCM〈enter〉
Analyst
Fei Wu, Tony Liu
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
an Feng, Geoffrey Cheng, CFA
Li Wenbing
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Energy Sector - Fei Wu, Xutong Liu
Toni Ho, CFA, FRM, Alfred Lau, CFA, FRM
Geoffrey Cheng, CFA
Anita Chu, Phoebe Wong
Alfred Lau, CFA, FRM
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Hao Hong, CFA
Luella Guo, Alfred Lau, CFA, FRM, Toni Ho, CFA,
FRM
Miles XIE
Miles XIE
Miles XIE
Phoebe Wong
Geoffrey Cheng, CFA
Ian Feng, Geoffrey Cheng, CFA
Wan Li, CFA, Li Shanshan, CFA
Morning Express
17 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$)
140.40
23.15
82.70
20.95
131.20
17.30
10.60
52.00
44.95
99.10
9.11
5.11
25.55
10.28
116.40
9.65
9.84
4.92
104.70
47.70
67.95
32.50
60.80
27.45
23.10
13.60
17.18
15.68
18.74
19.42
10.08
5.96
6.36
186.40
3.85
55.80
9.33
77.85
76.05
31.75
21.45
131.90
11.30
13.02
21.60
8.68
11.60
5.78
96.65
10.84
Mkt
cap
(HK$m)
325,189
103,835
101,257
394,324
250,834
100,880
31,169
156,018
541,428
422,500
73,539
1,709,257
65,086
135,655
317,739
83,617
82,993
77,394
152,742
384,781
171,672
76,273
459,899
290,223
619,152
338,685
41,599
61,683
196,997
108,824
19,583
437,060
767,309
217,725
1,087,703
169,081
78,003
1,493,835
162,311
184,874
175,332
1,235,550
270,226
78,324
103,608
1,786,890
517,910
1,442,644
1,970,658
120,418
5d
chg
(%)
3.8
1.3
3.7
-1.2
0.9
-4.0
-1.5
3.7
4.7
2.7
-8.7
2.2
1.4
1.4
2.6
2.1
0.9
4.7
2.8
7.8
1.2
1.9
-1.1
8.1
1.5
1.9
-4.0
6.2
3.0
5.1
6.7
3.7
-1.1
6.2
4.9
1.4
4.0
-0.1
3.1
3.6
-1.8
7.1
-0.7
3.7
3.3
-5.4
-1.5
2.3
0.2
5.7
Ytd
chg
(%)
21.0
-5.5
-9.7
-14.3
4.4
-10.0
-0.4
29.3
15.6
0.5
-33.3
-2.5
-9.7
-8.2
18.4
4.7
9.7
12.8
15.2
-23.7
10.8
-1.1
-12.5
10.5
-4.7
14.7
-33.3
-4.4
15.9
-13.3
-32.5
9.0
0.5
44.2
7.8
-5.9
13.7
-7.5
23.4
8.2
-1.6
33.3
-2.6
22.8
17.5
2.1
-19.6
-1.2
20.2
15.0
24,087.4 14,703,283
2.3
3.4
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
22.55
13.62
11.92
9.40
56.40
36.46
45.45
34.65
108.50
87.07
14.82
9.06
5.66
4.33
29.80
22.75
13.10
9.32
120.20
90.35
10.48
7.15
10.36
7.25
5.26
3.72
108.00
80.55
68.00
38.70
68.00
56.00
35.00
28.50
76.50
55.60
27.95
21.50
25.80
19.72
16.88
9.35
27.90
16.72
17.26
13.56
18.78
13.91
23.65
17.82
17.42
9.28
6.04
4.53
8.23
5.73
188.80
112.80
3.90
3.03
66.30
46.35
10.70
7.72
87.35
75.75
76.25
57.85
32.30
26.55
24.60
17.52
134.00
79.92
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)
7.5
9.1
9.5
13.6
16.6
16.4
28.0
26.6
22.1
7.7
8.2
8.1
15.0
14.7
13.5
6.6
8.7
7.4
13.6
12.0
10.8
8.7
16.5
16.5
28.4
22.0
19.2
9.0
12.2
11.6
11.6
11.5
10.6
5.1
5.1
4.8
14.8
15.3
13.9
25.1
24.5
21.4
9.3
15.0
14.0
7.3
11.0
10.7
14.6
14.4
13.6
37.4
41.8
26.3
12.0
15.0
13.9
18.7
18.4
16.7
19.0
16.3
15.9
10.9
11.7
11.1
12.0
10.3
9.2
12.6
11.8
10.7
19.2
15.5
13.3
9.6
9.6
8.2
22.6
33.2
26.6
21.0
18.3
12.5
28.3
26.2
24.2
31.6
27.8
22.6
92.2
32.3
20.5
5.5
5.4
5.1
8.6
8.9
9.0
46.4
42.6
31.6
5.1
5.1
4.8
7.1
14.2
12.5
12.0
18.5
16.0
12.6
11.2
10.4
2.6
18.4
18.7
12.5
17.8
16.4
7.0
7.6
6.6
43.9
40.5
30.9
16.9
16.5
14.3
8.7
14.8
14.3
8.9
8.5
7.8
9.5
9.6
9.4
7.4
7.6
7.8
5.0
4.9
4.6
13.2
14.1
14.0
16.1
17.9
14.6
10.4
11.2
10.4
Yield
P/B
(%)
2.5
3.2
2.2
5.5
4.2
2.6
2.9
1.9
1.0
2.4
2.5
N/A
3.0
2.6
2.9
4.3
1.0
2.1
3.4
3.6
3.8
3.4
1.5
3.7
1.6
1.9
1.5
1.7
1.8
1.5
0.7
N/A
4.8
1.9
6.4
3.1
5.1
4.9
3.4
2.9
2.3
0.2
1.8
3.8
3.5
4.6
4.9
6.6
3.3
2.2
(X)
0.9
0.8
6.1
1.2
2.3
1.2
0.9
0.6
2.5
1.0
1.5
1.0
1.0
9.3
0.8
0.5
2.5
0.6
0.7
9.5
1.9
1.1
1.8
1.7
2.1
0.6
0.8
1.0
3.9
4.9
1.2
0.8
1.0
10.5
0.8
0.6
2.1
1.0
1.3
1.2
1.5
13.1
0.9
0.7
1.5
1.1
1.1
1.0
1.9
4.7
3.6
1.4
Morning Express
17 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
(%)
8.80
20.95
34.10
5.20
4.67
7.09
3.61
31.75
5.11
55.35
7.00
4.92
8.05
7.70
60.80
13.90
36.75
30.10
3.56
29.45
23.10
15.50
2.19
7.38
5.96
13.90
6.36
5.12
15.04
3.85
11.24
20.20
14.40
4.96
5.47
8.68
8.97
25.35
8.43
5.78
5.43
39,392.07
394,323.91
87,578.81
23,035.75
46,133.36
49,267.91
1,104,105.03
110,362.31
1,709,256.67
71,179.09
124,756.11
77,393.75
287,941.73
59,176.70
459,898.97
194,376.42
118,816.65
56,205.33
62,757.96
251,354.86
619,152.43
93,606.58
65,769.80
39,844.81
437,060.30
56,798.10
767,308.82
113,647.16
353,997.33
1,087,702.70
96,845.19
215,209.34
145,861.25
401,424.56
78,641.72
1,786,890.10
122,958.87
124,468.98
67,746.76
1,442,643.73
285,425.50
13.1
-1.2
5.9
-1.5
9.9
12.7
2.3
11.8
2.2
2.4
2.3
4.7
5.5
9.1
-1.1
4.8
2.1
2.7
3.8
3.5
1.5
4.7
12.3
1.4
3.7
2.2
-1.1
5.6
4.6
4.9
0.7
3.5
6.0
2.9
2.6
-5.4
0.6
-0.8
2.9
2.3
8.2
-15.9
-14.3
53.3
-13.6
-35.5
0.1
-5.2
22.1
-2.5
-15.6
12.0
12.8
12.2
-9.2
-12.5
25.6
-14.1
-3.7
31.9
-3.1
-4.7
-35.6
31.9
-11.5
9.0
-0.7
0.5
28.0
-9.0
7.8
-7.4
-4.5
6.7
26.5
-5.5
2.1
28.0
-11.8
-15.6
-1.2
29.0
11.2
27.0
34.3
6.3
8.0
8.7
4.1
32.3
5.7
68.3
7.2
5.3
8.2
10.9
76.5
14.4
48.9
35.5
3.9
33.5
25.8
26.0
2.2
9.1
6.0
15.4
8.2
5.3
17.6
3.9
15.2
21.7
15.2
5.2
6.3
11.7
9.7
35.7
10.3
6.4
5.5
7.0
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
9.4
26.1
25.8
2.5
23.6
19.7
14.7
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
72.2
7.7
27.0
N/A
15.4
7.5
5.2
13.1
5.1
29.7
7.0
37.4
4.8
12.4
12.0
13.9
10.9
9.1
N/A
19.7
19.2
7.1
17.6
5.1
5.5
10.7
8.6
8.7
5.2
5.1
5.7
22.1
25.9
17.0
20.2
9.5
8.6
8.8
27.5
5.0
4.9
29.4
8.2
24.5
48.4
13.5
19.1
5.0
11.3
5.1
28.7
6.7
41.8
4.5
10.9
10.3
12.4
10.7
10.2
N/A
17.9
15.5
7.3
15.7
5.5
5.4
13.9
8.9
8.3
5.2
5.1
6.0
23.4
19.9
17.0
17.1
9.6
8.2
9.1
20.4
4.9
4.9
10,762
4,341,768
2.1
-0.5
11,638.3
9,159.8
7.4
7.3
Source: Bloomberg
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–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
––––––––––– PE –––––––––––
2013A
2014E
2015E
(X)
(X)
(X)
Yield
P/B
(%)
(X)
24.0
8.1
20.4
14.8
11.3
17.8
4.7
10.2
4.8
25.2
6.2
26.3
4.3
8.5
9.2
11.3
8.5
9.8
N/A
15.2
13.3
7.2
15.6
5.1
5.1
14.0
9.0
7.5
4.7
4.8
5.6
20.4
16.9
15.4
12.4
9.4
7.9
8.4
15.0
4.6
4.5
0.9
5.5
1.0
0.0
4.1
0.4
N/A
0.6
N/A
N/A
3.4
2.1
2.5
3.0
1.5
2.0
2.8
1.1
N/A
1.7
1.6
3.5
N/A
2.7
N/A
4.6
4.8
1.6
5.2
6.4
2.0
N/A
1.1
2.4
1.0
4.6
5.4
1.7
0.7
6.6
N/A
3.3
1.2
3.2
0.7
0.7
0.7
1.0
1.8
1.0
3.8
0.9
0.6
1.0
1.1
1.8
2.3
3.0
1.5
1.0
2.0
2.1
1.3
1.4
0.9
0.8
0.9
1.0
1.0
1.0
0.8
1.1
1.9
1.7
1.1
1.1
1.1
1.5
1.8
1.7
1.0
0.8
6.8
4.4
1.1
Morning Express
17 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
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Underperform (“UP”): Expect more than 10% downside in 12 months
Research Team
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@bocomgroup.com
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hao.hong
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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/Network Financials
Qingli YANG
miaoxian.li
Fei WU
(852) 2977 9392
fei.wu
Tony LIU
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xutong.liu
Alfred LAU, CFA, FRM
(852) 2977 9235
alfred.lau
Toni HO, CFA, FRM
(852) 2977 9220
toni.ho
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luella.guo
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louis.sun
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lizhiwu
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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 & Brokerage
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
Consumer Discretionary
Jerry LI
@bocomgroup.com
Automobile
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Wei YAO
Morning Express
17 November 2014
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