Download Report

Morning Express
20 November 2014
Focus of the Day
Indices
CQRCB (3618.HK)
Neutral
Valuation to benefit from the favorable economic
environment of the region and the SH-HK Connect
Li WAN
Last Closing: HK$4.21
BUY
SELL
[email protected]
Upside: +22.1%
LT
BUY
Stock
Target Price: HK$5.14↑
Chongqing’s economic growth rate continued to outstrip that of China and other
provinces in Western China. As the largest local commercial bank in Chongqing, CQRCB
benefits fully from the rapid economic growth in Chongqing. Its customers mainly come
from counties where the growth in deposits is stable given the marketization of the
interest rate and little impact of financial disintermediation. The asset quality of the bank
has surprised the market on the upside, and is expected to stabilize or continue to
improve in Q4. The bank is the only regional small-scale bank among the eligible stocks
under the Southbound portion of the Stock Connect. Since mid-Oct, the share price has
outperformed its H-share peers'. However, as compared with the three A-share urban
commercial banks, CQRCB's valuation still appears more attractive, in our view.
Based
on 0.9x FY14 P/B, we revise our TP upward to HK$5.14. We maintain LT Buy.
Internet Sector
MIT-Martina Internet Talk:
Content is king – comments on Alibaba and Tencent’s investment in
Huayi Brothers
Yuan MA
[email protected]
UP
MP
1d %
-0.66
-0.44
-0.22
0.25
0.70
-0.17
-0.01
-0.15
-0.57
-0.19
0.09
0.17
Ytd %
0.29
-4.03
15.89
3.93
27.53
11.08
6.69
10.84
11.95
-0.78
-0.69
-0.83
Close
78.10
1,181.55
16.12
6,631.00
118.18
1.57
1.25
3m %
-23.10
-8.54
-17.22
-3.97
-12.20
-5.54
-5.41
Ytd %
-29.51
-2.00
-17.18
-9.90
-10.89
-5.33
-8.74
bps change
HIBOR
0.37
US 10 yield
2.36
Source: Bloomberg
3m
0.00
-0.07
6m
0.00
-0.15
Indicators
Brent
Gold
Silver
Copper
JPY
GBP
EURO
HSI Technical
OP
Alibaba and Tencent have become the second largest shareholders of Huayi Brothers.
Alibaba has established Alibaba Pictures and can cooperate with Huayi through Alibaba’s
Yulebao and other projects, enriching the movie business of Alibaba. Tencent’s alliance
with Huayi can not only convert the former’s intellectual property into video content, but
also enrich Tencent’s game content as well as copyrighted video content and proprietary
content. As Ping An will also invest in Huayi, this marked the third joint investment by
Tencent, Alibaba and Ping An. While it appears insurance has little relevance to the
Internet and video content, they all serve consumers. With the development of mobile
and big data, there will be more cooperation opportunities. Content, including literature,
games, audio and video contents, and animation, will be the major form of consumption
Download our reports from Bloomberg: BOCM〈enter〉
Close
HSI
23,373
H Shares
10,381
SH A
2,566
SH B
264
SZ A
1,408
SZ B
964
DJIA
17,686
S&P 500
2,049
Nasdaq
4,676
FTSE
6,697
CAC
4,266
DAX
9,473
Source: Bloomberg
HSI
50 d MA
200 d MA
14 d RSI
Short Sell (HK$m)
Source: Bloomberg
BOCOM Int'l Corporate Access
20 Nov
20 Nov
Chinasoft (354.HK)
Yutong Bus (600066 CH)
23,373
23,682
23,236
43
5,839
Morning Express
20 November 2014
on the Internet. Internet companies that possess intellectual properties and channels can
cooperate with both upstream and downstream companies in the cultural industry. The
post-80 and post-90 generations, which form the bulk of Internet consumers, are more
receptive to paying for cultural content and entertainment. It is natural that the Internet,
as an important channel for consumption of cultural content, is catering to their demand.
Renewable Energy Sector
Strategic Implementation Plan of Energy Development (2014-2020)
promulgated; wind power operating metrics improved in Oct;
polysilicon prices continued to fall
Louis SUN
[email protected]
UP
MP
OP
1) The ''Strategic Implementation Plan of Energy Development (2014-2020)'' was
officially promulgated, which specified the overall direction and strategy, as well as
the plan of action for China's energy development. Included in the Plan is the carbon
strategy, under which the proportion of consumption on renewable energy such as
wind power, solar power, geothermal power, as well as nuclear power, is to increase
notably. By 2020, non-fossil energy will account for 15% of one-off energy
consumption and by then, wind power installed capacity will reach 200GW. Online
tariff of wind power and coal power will be on par. Solar power installed capacity will
be around 100GW and the tariff of solar power and grid sales will be on par as well.
In our view, the plan indicates that China will still play an active role in promoting
renewable energy development in the years ahead, while average new installed
capacity of wind power and solar power per year will scale up in the ''Thirteenth FYP”
Period.
2) Wind: grid connection increased with a notable improvement in utilization. New
wind power capacity connected to power grids increased notably in Oct, reaching
3.23GW in Oct and 12.57GW in 1-10M14, compared with 1.56GW and 8.40GW in the
same periods last year, respectively. Utilization hours also improved to 166.2 in Oct,
up 50.7 hours MoM and down only 2.65 hours YoY. Earlier-than-expected wind
capacity installation and increased utilization should enhance the 4Q operating
metrics of wind power operators and enhance their profitability.
3) Prices of polysilicon raw materials fell WoW. Prices of polysilicon wafers, cells and
modules remained flat on a WoW basis. The decline of polysilicon prices reflected a
stable supply and intensified competition. YTD, the prices of polysilicon rose 6.4%,
while those of wafers, cells and modules fell 5.0%, 17.1% and 10.8%, respectively.
We expect PV product prices to remain stable this year.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
20 November 2014
Hang Seng Index (1 year)
26,000
Baidu (BIDU.US)
Neutral
MIT-Martina Internet Talk:
Acquiring Kuaiqian to make up its weakness in mobile
payment
25,000
LT
BUY
24,000
BUY
SELL
23,000
22,000
21,000
Stock
Yuan MA
Last Closing: US$244.15
[email protected]
Upside: +10%
Source: Company data, Bloomberg
Target Price: US$268.00→
Based on recent tech news, we believe Baidu is in negotiation with Kuaiqian for a
potential acquisition. About 0.4mn businesses have already joined the platform after
Baidu Zhidahao was launched. This time, Baidu aims to not only drive traffic as usual, but
also build a closed loop with the account system and payment system. Baidu is relatively
weak in mobile payment, which makes it less competitive compared with Alibaba and
Tencent. Even the advantage Baidu gained from the traffic of Zhidahao is compromised
by this somehow. On the other hand, Baidu is less competitive in Internet finance.
Therefore, it needs to make up for its weakness in mobile payment. Baidu could do this
by leveraging the experience of Kuaiqian in Internet finance. Based on the integration
capability Baidu demonstrated in the acquisition of iQiyi, Qunar and 91, we believe it has
the technology and execution capability to consolidate this business into its other
business lines on PC and mobile, if the deal is finalized, especially in Zhidahao and
Internet Finance products. Maintain Buy and target price of USD268.
HS China Enterprise Index (1 year)
13,000
12,000
11,000
10,000
9,000
8,000
Source: Company data, Bloomberg
Shanghai A-shares (1 year)
2,600
2,400
2,200
2,000
1,800
Weigao Group (1066.HK)
Neutral
3Q14 results declined significantly and missed
expectation; maintain Sell
Johnson SUN
Last Closing: HK$8.34
[email protected]
Upside: -19.7 %
LT
BUY
Source: Company data, Bloomberg
BUY
SELL
Stock
Target Price: HK$6.70→
3Q14 revenue rose 1% YoY but net profit slumped 36% YoY, worse than expectation.
Competition will remain intense in the disposable consumables segment in the short
term. We do not see any sign of improvement in the medium/long run.
Orthopedic products: This segment will be the growth driver in the next 2-3 years
with ~15% CAGR in revenue and profit. However, the company relies too much on
distributors and has insufficient control on channels.
Dialysis: Despite rapid revenue growth, this segment is unlikely to be profitable in
the next two years, as it is still in the stage of capturing market share.
Reiterate Sell and TP of HK$6.7.
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
20 November 2014
Banking Sector
The State Council’s policy of lowering financing cost meets our
consensus
Qingli YANG
[email protected]
UP
MP
OP
Comments:
The State Council’s policy of lowering financing cost meets our consensus
As pinpointed in our article titled ‘‘Let’s eradicate any worries about high M2/GDP’’
published last week, the obstacles that rebut the theory of an actual interest rate cut had
been eradicated and it now only boils down to a matter of how the policy should be
implemented. According to the meeting, an interest rate cut is more market-oriented.
We make an aggressive forecast that the standard loan rate may be cancelled, which will
drag down the open market interest rate further, leading to a decrease in the loan prime
rate. In the meantime, direct financing means, such as debt securities which are sensitive
to short-term interest rate, will see rapid growth and low-cost foreign financing methods
will develop rapidly. All these external forces will expedite the fall of the overall interest
rate. The long-awaited actual interest rate cut is on the horizon. On the other hand, the
revisions of the basis of deposits in the calculation of the loan to deposit ratio indicator
imply that there is also room for downward adjustment of the original deposit reserve
ratio, which will also facilitate the decrease in the financing cost. We maintain
Outperform for the banking sector.
Note: As indicated in the meeting, since the introduction of a series of measures by the
State Council in July, various initiatives have been undertaken in relevant aspects. The
issue of credit being expensive and difficult to obtain in certain regions and fields had
been alleviated, though the issue still caused much concern. Efforts to reform and
innovate will persist, namely, improving the differentiated credit policies and developing
a comprehensive, multi-spectrum capital market system, so as to further alleviate the
problem of high financing costs in a targeted manner. The ultimate goal is to foster the
development of innovation and start-up of businesses, so as to increase the revenue of
the public. 1) In our view, a more flexible deposit to loan ratio will help improve the
management of lendable funds and refine policies in respect of the set-out of the amount
of non-performing loans written off by small and micro enterprises before taxation,
whilst enhancing financial institutions’ capability of expanding the scale of loans for small
and micro enterprises and ‘‘Sannong’’. 2) The pace of the development of
medium-to-small financial institutions such as private banks should be expedited, banks
should be supported to provide multi-dimensional financial services through the social
and small and micro outlets as well as mobile banking, and internet financing operators
should be encouraged to provide standardized services to small and micro enterprises
and ‘‘Sannong’’. 3)The development of guarantee and re-guarantee institutions should be
endorsed and the trial development of petty loan guarantee insurance should be
promoted, making use of the creditability of policies so as to facilitate loan applications. 4)
The performance assessment mechanisms of commercial banks should be optimized so
as to prevent lending in terms of the size of loans and unreasonably high interest rate
and charges. 5) credit asset-backed securitization plans should be conducted to vitalize
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
20 November 2014
fund reserves and the procedures of the issuance of financial bonds such as loans for
small and micro enterprises and ‘‘Sannong’’ should be streamlined. 6) To expedite the
launch of stock issuance and registration reform, removing the continuous profitability
requirement for listing, thus lowering the listing barriers for small/micro enterprises and
innovative ventures, as well as to establish a mechanism for fast small-sum refinancing
and launch the trial of equity crowd funding; 7) To support cross-border financing so that
more companies can tap low-cost funding globally, with innovation in the utilization of
forex reserves to support the real economy and global expansion of Chinese-made
equipment; 8) To optimize the credit system and improve the transparency of credit to
small/micro enterprises, so that credit demand for companies with good credibility and
potential can be met; 9) To accelerate interest rate liberalization and establish a
self-disciplinary mechanism for interest rate pricing, guiding financing institutions to
adjust “inflated” lending rates; 10) To establish a sound accountability system and
prohibit the pushing up of financing cost via irregular charges and illegal fund raising,
promoting healthy competition with a benign financing environment.
Download our reports from Bloomberg: BOCM〈enter〉
20 November 2014
Last Closing: US$244.15
Upside: +10%
Target Price: US$268.00→
Internet Sector
Baidu (BIDU.US)
UP
MIT-Martina Internet Talk
Acquiring Kuaiqian to make up for its weakness in mobile payment
MP
OP
Financial Highlights
Y/E 31 Dec
2012
Revenue (RMB m)
22,306
YoY growth
54%
Net profit (RMB m)
10,456
YoY growth
58%
EPS (RMB)
30.5
DPS
Dividend yield
PE
50.4
Source: Company, BOCOM Int’l estimates
2013
31,944
43%
10,519
1%
31.5
47.5
2014E
49,123
54%
12,938
43%
39.3
38.4
2015E
70,220
43%
14,926
15%
46.7
31.9
2016E
91,127
30%
19,948
34%
63.8
23.1
Neutral
Kuaiqian’s businesses cover the retail, travel, insurance, E-commerce, logistics,
manufacture, pharmaceutical and garment industries. It has partnerships with China
Eastern Airlines, China Southern Airlines, Pingan, LFC, JD.com, Dang, ZJS express,
Baidu, Sina, Li-Ning, Lenovo, Dell and Digital China currently. Kuaiqian received the
license to conduct payment from the PBoC in May 2011.
Kuaiqian is one of the top companies in online payment on PC, but not mobile.
According to iResearch, Alipay/Tenpay had 49.2%/19.4% market share in the
rd
th
third-party payment industry in 2014, while Yinshang ranked 3 . Kuaiqian ranked 4
with a market share of 6.9%. In 2Q14, Alipay Wallet (82.6%), Tenpay (10%) and
Lakala (4.4%) were the top three players. Baidu Wallet had a market share of 0.1% in
Q2, while Kuaiqian was not a top-ranked mobile payment company.
BUY
SELL
Stock
Based on recent tech news, we believe Baidu is in negotiation with Kuaiqian for a
potential acquisition. About 0.4mn businesses have already joined the platform after
Baidu Zhidahao was launched. This time, Baidu aims to not only drive traffic as usual, but
also build a closed loop with the account system and payment system. Baidu is relatively
weak in mobile payment, which makes it less competitive compared with Alibaba and
Tencent. Even the advantage Baidu gained from the traffic of Zhidahao is compromised
by this somehow. On the other hand, Baidu is less competitive in Internet finance.
Therefore, it needs to make up for its weakness in mobile payment. Baidu could do this by
leveraging the experience of Kuaiqian in Internet finance. Based on the integration
capability Baidu demonstrated in the acquisition of iQiyi, Qunar and 91, we believe it has
the technology and execution capability to consolidate this business into its other business
lines on PC and mobile, if the deal is finalized, especially in Zhidahao and Internet Finance
products. Maintain Buy and target price of USD268.
Event: According to Techweb, Baidu intends to acquire Kuaiqian, a third-party payment
th
company, for RMB2bn. Kuaiqian ranks 4 in the Internet third-party payment industry.
LT
BUY
According to Techweb, Baidu is in talk
to acquire Kuaiqian, a third-party
payment company, for RMB2bn.
The reason why Baidu lags behind the
others in Internet finance is related to
its weakness in mobile payment. In the
mobile Internet age, mobile payment is
a significant chain of the closed loop in
many key businesses. Lacking the
support of E-commerce and game
businesses, Baidu cannot compete with
Alibaba or Tencent in mobile payment.
Thus, the acquisition of a payment
company is expected.
We believe that Baidu has the
technology and execution capability to
consolidate this business into its other
business lines on PC and mobile.
Maintain Buy and target price of
USD268.
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
1 Year performance chart
bidu us Equity
AHXH Index
MXCN Index
40%
Comments:
Stepping up mobile payment layout and catching up with Tencent and Alibaba.
Since 2H2013, companies led by Alipay and Weixin have focused on mobile payment
strategies and competed against each other. Yu’ebao, which is supported by Alipay,
still has a balance of RMB500bn and the estimated size of Weixin Licaitong is
RMB100bn. Both of them are well ahead of Baidu Wallet. According to iResearch, the
transaction volume of third-party mobile payment in China was RMB1,400bn in
2014Q3, with YoY growth of 416%. Alibaba set up Ant Finance; Tencent established
Qianhai Bank; Alibaba proposed “Future City” with the support of Alipay; and
Tencent put forward the “Smart City” plan. However, the bank opening application
Baidu submitted has not been approved. The reason why Baidu lags behind the
Download our reports from Bloomberg: BOCM〈enter〉
10%
N/13
-20%
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
251.99
140.66
85,601
275
4.38
15.31
37.26
223.31
189.89
59.64
Morning Express
20 November 2014
Market Review
Hong Kong stocks extended decline to a third day. The Hang Seng Index dropped 155
points, or 0.7%, to finish at 23,373. HKEx (388.HK) dropped 3.4% as SH-HK Connect quota
was underutilized for both northbound and southbound trading. Tencent (700.HK) fell
1.1%. China Mobile (941.HK) shed 1.9%. HKTV (1137.HK) rose 6.9% on its first day of
broadcast. TVB (0511.HK) fell 1.8%. Sa Sa (178.HK) rose 2% despite a decline in interim
profit. CRE (291.HK) slumped 3.2%. Coal producers retreated. Shenhua (1088.HK)
dropped 1.9%. Kunlun Energy (135.HK) fell 2.9%.
US stocks snapped a 4-day winning streak. The S&P 500 dropped 3.1 points to 2,048.72.
The DJIA fell 2.1 points to 17,685.73. European stocks were essentially flat with the Stoxx
Europe 600 barely changed at 339.15.
News Reaction
The State Council announced its strategic implementation plan of energy development,
according to which the government target to push the self-supplied energy ratio to
approximately 85% by 2020. According to the State Council of the PRC on Wednesday,
China’s total one-off energy consumption is to be reined in at around 4.8 bn ton of
standard coal by 2020. It also targets to create a modern energy market system that is
open to all with orderly competitions.
CSRC: to speed up the promotion of board transfer of New Third Board-listed company
to GEM. According to Liu Jianjun, Deputy Director General of Private Fund Supervision
Department, CSRC, as internet and technology innovation enterprises are characterized
by high growth potential and long business cycle, the government should gather pace to
introduce policies of transferring the listing of shares of New Third Board-listed
companies to GEM. Once the New Third Board is listed for a year and is verified to
operate and disclose information in compliance with regulations, such enterprises can be
listed on the special sector established by GEM.
MOHRSS: subsidies for job security to be provided to enterprises with less staff sacked
in the process of restructuring. The Ministry of Human Resources and Social Security of
the PRC announced its decision on Tuesday that enterprises with no layoffs or few layoffs
during the adjustment and optimization of industry structure will be provided with
subsidies for job security from the unemployment insurance fund.
Regulate regional treasury and special financial account management and strictly
control additional lending from fiscal authorities. MOF had released a notification
relating to the strengthening of regulations of regional treasury funding and special
financial account management, pursuant to which authorities are requested to strictly
implement a centralized treasury settlement system, strictly control the grant of loans to
external parties by fiscal authorities and exercise more stringent measures of special
financial account management.
Sinopec (386.HK) commenced construction of the intelligent pipeline management
system. As reported, Sinopec announced the official launch of the pilot development of
its intelligent pipeline construction project and such project will be promoted across the
company since Jan 2015 whilst being put into operation in May 2015.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
20 November 2014
Economic releases for this week - USA
Date Time
20-Nov
20-Nov
20-Nov
20-Nov
Source: Bloomberg
Event
CPI (MoM)
Initial jobless claims (k)
Existing Home sales (m)
Leading indicators
Economic releases for this week - China
Survey
-0.1%
5.15
0.6%
Prior
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
19 Nov 2014
19 Nov 2014
19 Nov 2014
18 Nov 2014
18 Nov 2014
18 Nov 2014
18 Nov 2014
17 Nov 2014
17 Nov 2014
Report
China Market Strategy - SH-HK Connect: D.O.A.?
Sa Sa (178.HK) - Downgrade to Neutral on unexciting near term outlook
Energy Sector - Fei Wu, Tony Liu
Container Shipping Sector - Weekly container shipping commentary
Tingyi (322.HK) - Shifting from a volume story to a margin story
Kingsoft (3888.HK) - MIT-Martina Internet Talk: Takeaways from 3Q14 NDR --The Next Breakthrough
Tencent (700.HK) - MIT-Martina Internet Talk: Can Weixin Phone Book become the next super Aapp?
China Market Strategy - SH-HK Connect: Breaking New Grounds
Property Sector - HK/China property weekly - 14th November 2014
17 Nov 2014
China Resources Enterprise (291.HK) - Poorer-than-expected 3Q; profit warning to continue; dividend may
cease
Sina (SINA.US) - Weibo ad to drive revenue in the short term; vertical portal is the long-term objective
Alibaba Group (BABA.US) - "Double 11"--Mobilization and globalization were the highlights; mobile payment
played an important role
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
17 Nov 2014
17 Nov 2014
14 Nov 2014
14 Nov 2014
14 Nov 2014
14 Nov 2014
13 Nov 2014
13 Nov 2014
12 Nov 2014
11 Nov 2014
Source: Company data, BOCOM International
Download our reports from Bloomberg: BOCM〈enter〉
Analyst
Hao Hong, CFA
Phoebe Wong
Bocom Energy Weekly
Geoffrey Cheng, CFA
Summer WANG
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Hong Hao, CFA
Luella Guo, Alfred Lau, CFA, FRM, Toni Ho, CFA,
FRM
Phoebe Wong
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
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
Morning Express
20 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$)
137.50
22.55
83.00
20.25
129.00
17.06
10.52
51.40
44.05
98.45
8.47
4.95
25.90
10.20
112.50
9.50
9.60
4.65
103.70
45.25
66.60
32.40
58.90
26.85
22.70
13.08
15.82
15.30
18.22
18.60
9.97
5.73
6.17
168.00
3.71
55.00
8.86
77.05
72.85
31.25
20.60
124.40
11.22
12.62
20.70
8.47
11.26
5.59
93.85
10.46
Mkt
cap
(HK$m)
318,473
101,143
101,624
380,296
246,628
99,481
30,933
154,217
530,587
419,729
68,373
1,667,849
65,977
134,599
316,409
82,318
80,969
74,434
151,537
365,017
168,262
76,038
442,631
283,879
595,478
325,735
38,306
60,188
191,530
104,229
19,370
418,047
745,229
196,233
1,035,399
166,657
74,073
1,478,484
155,481
181,962
168,384
1,165,295
268,312
75,917
99,291
1,761,224
502,730
1,394,888
1,913,567
116,197
5d
chg
(%)
-0.4
-1.7
4.1
-5.2
-1.5
-1.6
-0.2
-0.2
-1.0
0.8
-10.8
-2.0
3.0
0.4
-2.2
-0.6
-2.5
-3.9
-0.4
-1.8
-1.1
0.8
-0.8
-1.8
-1.3
-3.1
-6.6
0.1
-1.1
-0.2
-3.9
-3.7
-4.3
-8.9
-3.4
-1.7
-3.6
-1.8
-3.4
0.0
-4.4
-3.7
-0.5
-1.9
-3.3
-6.4
-4.9
-2.3
-2.0
-2.8
Ytd
chg
(%)
18.5
-8.0
-9.4
-17.2
2.6
-11.2
-1.1
27.8
13.2
-0.1
-38.0
-5.5
-8.5
-8.9
14.4
3.1
7.0
6.7
14.1
-27.6
8.6
-1.4
-15.2
8.0
-6.4
10.3
-38.6
-6.7
12.7
-17.0
-33.3
4.8
-2.5
29.9
3.9
-7.3
7.9
-8.4
18.2
6.5
-5.5
25.8
-3.3
19.1
12.6
-0.4
-21.9
-4.4
16.7
10.9
23,373.3 14,451,401
-2.4
0.3
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
45.65
34.65
108.50
88.66
14.82
8.45
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
68.35
56.00
35.00
28.50
76.50
55.60
27.95
21.50
25.80
19.72
16.88
9.35
27.90
15.80
17.26
13.56
18.90
13.91
23.65
17.82
17.42
9.28
6.04
4.53
8.23
5.73
189.00
112.80
3.90
3.03
66.10
46.35
10.70
7.72
87.35
75.75
76.50
57.85
32.30
26.55
24.60
17.52
134.90
82.52
14.22
9.03
14.16
9.83
24.90
17.10
11.70
7.31
16.06
11.22
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)
7.4
8.9
9.3
13.3
16.1
15.9
28.1
26.7
22.2
7.4
7.9
7.8
14.8
14.4
13.3
6.5
8.6
7.4
13.5
12.0
10.7
8.6
16.5
16.2
27.8
21.6
18.8
8.9
12.1
11.6
10.8
10.7
9.8
4.9
5.0
4.7
15.0
15.5
14.1
24.9
24.4
21.2
9.0
14.5
13.5
7.2
10.8
10.5
14.2
13.9
13.3
35.3
42.2
26.2
11.9
14.9
13.7
17.8
17.4
15.9
18.7
15.9
15.6
10.9
11.7
11.1
11.6
10.0
8.9
12.3
11.5
10.5
18.9
15.4
13.2
9.3
9.3
7.9
20.8
61.8
39.6
20.5
17.8
12.1
27.6
25.5
23.5
32.2
28.2
23.1
91.2
32.0
20.3
5.2
5.1
4.9
8.3
8.6
8.7
41.8
38.4
28.5
4.9
4.9
4.6
7.0
14.0
12.4
11.4
17.6
15.0
12.5
11.1
10.3
2.5
17.6
17.9
12.3
17.5
16.1
6.7
7.3
6.3
41.4
38.4
29.2
16.8
16.4
14.3
8.4
14.3
13.9
8.5
8.1
7.5
9.3
9.4
9.1
7.2
7.4
7.6
4.8
4.8
4.5
12.8
13.7
13.6
15.6
17.1
13.9
10.1
10.8
10.1
Yield
P/B
(%)
2.6
3.3
2.2
5.7
4.3
2.6
2.9
2.0
1.0
2.4
2.7
N/A
3.0
2.6
3.0
4.3
1.1
2.2
3.5
3.8
3.9
3.4
1.5
3.8
1.7
2.0
1.6
1.7
1.8
1.5
0.7
N/A
4.9
2.1
6.7
3.2
5.3
4.9
3.5
2.9
2.4
0.2
1.8
4.0
3.6
4.8
5.1
6.8
3.4
2.3
(X)
0.8
0.8
6.1
1.1
2.3
1.2
0.9
0.6
2.4
1.0
1.4
1.0
1.0
9.2
0.7
0.5
2.5
0.6
0.7
9.0
1.9
1.1
1.8
1.7
2.1
0.5
0.8
1.0
3.8
4.4
1.1
0.7
1.0
9.5
0.8
0.6
2.0
1.0
1.3
1.2
1.4
12.3
0.9
0.7
1.5
1.0
1.1
0.9
1.8
4.6
3.7
1.3
Morning Express
20 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
(%)
8.34
20.25
31.15
4.94
4.28
6.35
3.49
29.85
4.95
54.15
6.94
4.65
7.66
7.18
58.90
13.50
35.80
28.95
3.31
28.30
22.70
14.36
2.01
7.16
5.73
13.14
6.17
5.04
14.54
3.71
11.12
18.90
13.26
4.71
5.30
8.47
8.65
24.40
8.00
5.59
5.12
37,332.95
380,295.51
80,002.34
22,813.48
45,579.63
45,642.32
1,054,061.73
105,865.25
1,667,849.11
69,470.11
126,178.08
74,433.83
274,733.88
58,007.97
442,631.19
188,782.86
119,101.50
53,701.03
60,053.46
237,604.71
595,478.02
89,128.79
64,029.08
38,657.03
418,047.48
54,981.24
745,228.60
115,022.25
344,983.32
1,035,398.69
95,811.26
201,860.66
137,140.04
381,191.47
76,143.27
1,761,224.33
116,832.44
118,256.65
64,291.11
1,394,887.73
275,987.61
5.8
-5.2
-4.3
-9.5
-8.2
-7.7
-2.0
0.0
-2.0
0.2
-2.4
-3.9
-4.1
-3.9
-0.8
-2.5
-7.7
-3.0
-7.0
-1.9
-1.3
-9.1
-6.9
-1.9
-3.7
-4.2
-4.3
-1.9
-1.6
-3.4
-0.5
-9.4
-10.9
-4.7
-2.6
-6.4
-4.3
-3.0
-4.5
-2.3
-3.8
-20.3
-17.2
40.0
-17.9
-40.9
-10.3
-8.4
14.8
-5.5
-17.4
11.0
6.7
6.8
-15.3
-15.2
22.0
-16.4
-7.4
22.6
-6.9
-6.4
-40.3
21.1
-14.1
4.8
-6.1
-2.5
26.0
-12.0
3.9
-8.4
-10.6
-1.8
20.2
-8.5
-0.4
23.4
-15.1
-19.9
-4.4
21.6
11.2
27.0
34.5
6.3
8.0
8.7
4.1
32.8
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
25.5
2.3
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
14.0
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
96.2
7.4
24.6
N/A
14.1
6.7
5.0
12.3
4.9
29.0
6.9
35.3
4.6
11.6
11.6
13.5
10.6
8.7
N/A
18.9
18.9
6.6
16.2
4.9
5.2
10.1
8.3
8.5
5.0
4.9
5.6
20.7
23.8
16.2
19.6
9.3
8.3
8.4
26.0
4.8
4.6
27.8
7.9
22.3
45.8
13.7
16.7
4.9
10.6
5.0
28.0
6.6
42.2
4.3
10.2
10.0
12.0
10.5
9.8
N/A
17.1
15.4
6.7
14.4
5.3
5.1
13.0
8.6
8.1
5.0
4.9
5.9
21.6
18.1
16.2
16.5
9.4
7.8
8.7
19.5
4.8
4.6
10,381
4,206,533
-3.3
-4.0
11,638.3
9,159.8
7.2
7.1
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)
22.7
7.8
18.6
14.0
11.1
16.0
4.5
9.6
4.7
24.6
6.1
26.2
4.0
7.9
8.9
10.9
8.2
9.4
N/A
14.6
13.2
6.7
14.3
4.9
4.9
13.2
8.7
7.4
4.5
4.6
5.6
18.9
15.5
14.6
11.8
9.1
7.6
8.1
14.3
4.5
4.2
0.9
5.7
1.1
0.0
4.4
0.4
N/A
0.6
N/A
N/A
3.4
2.2
2.6
3.2
1.5
2.1
2.9
1.1
N/A
1.8
1.7
3.8
N/A
2.8
N/A
4.8
4.9
1.7
5.4
6.7
2.1
N/A
1.1
2.6
1.1
4.8
5.6
1.8
0.8
6.8
N/A
3.1
1.1
2.9
0.6
0.6
0.6
0.9
1.7
1.0
3.7
0.9
0.6
0.9
1.1
1.8
2.3
2.9
1.4
0.9
1.9
2.1
1.2
1.3
0.8
0.7
0.8
1.0
1.0
1.0
0.8
1.1
1.8
1.6
1.1
1.0
1.0
1.5
1.7
1.6
0.9
0.8
6.6
4.5
1.1
Morning Express
20 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/Network Financials
Qingli YANG
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 & 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
Download our reports from Bloomberg: BOCM〈enter〉
Wei YAO
Morning Express
20 November 2014
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 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
Co. Ltd.
BOCOM International Securities Limited currently holds more than 1% of the equity securities of Sanmenxia Tianyuan Aluminum Company
Limited.
Disclaimer
By accepting this report (which includes any attachment hereto), the recipient hereof represents and warrants that he is entitled to receive
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.
This report is strictly confidential and is for private circulation only to clients of BOCOM International Securities Ltd. This report is being
supplied to you strictly on the basis that it will remain confidential. No part of this report may be (i) copied, photocopied, duplicated, stored
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.
BOCOM International Securities Ltd, its affiliates and related companies, their directors, associates, connected parties and/or employees may own
or have positions in securities of the company(ies) covered in this report or any securities related thereto and may from time to time add to or
dispose of, or may be interested in, any such securities. Further, BOCOM International Securities Ltd, its affiliates and its related companies may
do and seek to do business with the company(ies) covered in this report and may from time to time act as market maker or have assumed an
underwriting commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also
perform or seek to perform investment banking, advisory, underwriting, financing or other services for or relating to such company(ies) as well as
solicit such investment, advisory, financing or other services from any entity mentioned in this report. In reviewing this report, an investor
should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest.
The information contained in this report is prepared from data and sources believed to be correct and reliable at the time of issue of this
report. This report does not purport to contain all the information that a prospective investor may require and may be subject to late
delivery, interruption and interception. BOCOM International Securities Ltd does not make any guarantee, representation or warranty,
express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this
report and accordingly, neither BOCOM International Securities Ltd nor any of its affiliates nor its related persons shall not be liable in any
manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and
damages) of any reliance thereon or usage thereof.
This report is general in nature and has been prepared for information purposes only. It is intended for circulation amongst BOCOM
International Securities Ltd’s clients generally and does not have regard to the specific investment objectives, financial situation and the
particular needs of any specific person who may receive this report. The information and opinions in this report are not and should not be
construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other
financial instruments thereof.
The views, recommendations, advice and opinions in this report may not necessarily reflect those of BOCOM International Securities Ltd or
any of its affiliates, and are subject to change without notice. BOCOM International Securities Ltd has no obligation to update its opinion or
the information in this report.
Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own
individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as to the
legal, business, financial, tax and other aspects before participating in any transaction in respect of the securities of company(ies) covered in
this report. The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories of investors.
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any
locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to any law, regulation,
rule or other registration or licensing requirement.
BOCOM International Securities Ltd is a wholly owned subsidiary of Bank of Communications Co Ltd.
Download our reports from Bloomberg: BOCM〈enter〉