1. business and industrial

Morning Express
18 November 2014
Focus of the Day
Indices
Tingyi (322.HK)
Neutral
Shifting from a volume story to a margin story
Summer WANG
Last Closing: HK$18.98
BUY
SELL
[email protected]
Upside: +0%
LT
BUY
Stock
Target Price: HK$19.00↓
Beyond cooling weather and macro impact, we believe a hidden reason for Tingyi’s
sluggish 3Q14 beverage sales (down 20% YoY) was its lack of real innovative and trendy
new products (more than new SKUs) to awaken consumers. Despite that we recognize
Tingyi’s diversified product portfolio, we encourage Tingyi to decisively fly from its golden
cage, accelerating the unveiling of genuinely impressive new products and replacement
of those losing popularity amid consumer taste shift and fashion chase. In the absence of
eye-catching innovation, we believe Tingyi is shifting from a volume story to a margin
story (especially on instant noodles, 75% of Tingyi’s net profit in 3Q14) given its cost
leadership on production and channel advantage. We project a three-year EPS CAGR of
12% after revising down our EPS estimates by 5%-6% on a combination of 9%-16%
revenue cut and margin increase (from selective ASP increase and stricter expense
control) across 2014-16E. Remain Neutral on Tingyi with TP lowered to HK$19.00 (from
HK$19.50) on 26x 2015E P/E. Reaccelerating beverage sales and larger-than-expected
integration benefit may prompt us to upgrade Tingyi, while worsening sell-through and
reversing commodity prices could push us to downgrade.
Internet Sector
Close
HSI
23,797
H Shares
10,554
SH A
2,591
SH B
263
SZ A
1,395
SZ B
968
DJIA
17,648
S&P 500
2,041
Nasdaq
4,671
FTSE
6,672
CAC
4,226
DAX
9,306
Source: Bloomberg
1d %
-1.21
-1.93
-0.20
0.99
1.00
-0.19
0.07
0.07
-0.37
0.26
0.56
0.58
Ytd %
2.11
-2.42
16.99
3.78
26.42
11.50
6.46
10.44
11.84
-1.14
-1.63
-2.57
Close
79.31
1,186.12
16.17
6,705.00
116.74
1.56
1.24
3m %
-23.39
-8.65
-17.63
-1.76
-12.14
-6.52
-6.86
Ytd %
-28.42
-1.62
-16.95
-8.90
-9.79
-5.56
-9.43
bps change
HIBOR
0.37
US 10 yield
2.34
Source: Bloomberg
3m
0.01
-0.05
6m
0.00
-0.18
Indicators
Brent
Gold
Silver
Copper
JPY
GBP
EURO
MIT-Martina Internet Talk
HSI Technical
Standing Committee of State Council confirmed support for cloud
computing development
Yuan MA
[email protected]
UP
MP
OP
Recently, the Standing Committee of the State Council confirmed new measures to
encourage innovation in cloud computing and support the development of new
forms of the industry. By encouraging cross-sector integration of cloud computing,
Internet-of-Things and mobile Internet, new industry forms are to be developed,
including online R&D, education, healthcare and smart manufacturing. Cloud
computing plays a significant role in industries and administration for reasonable
allocation of resources, expediting investment decision, resolving synergy-related
problems in execution and enhancing efficiency. BAT and Kingsoft have their own
cloud businesses, while Alibaba and Tencent have proposed the concepts of future
Download our reports from Bloomberg: BOCM〈enter〉
HSI
50 d MA
200 d MA
14 d RSI
Short Sell (HK$m)
Source: Bloomberg
23,797
23,755
23,221
52
8,811
BOCOM Int'l Corporate Access
18 Nov
20 Nov
Central China Securities (1375.HK)
Chinasoft (354.HK)
Morning Express
18 November 2014
cities and smart cities. Baidu has accumulated notable experience in personal cloud
and enterprise cloud. We expect, in the foreseeable future, the leading Internet
players will be the major beneficiaries in this field, given that the cloud business
requires 1) tremendous data storage and computing capacity; and 2) sustainable
cash flow to provide seamless connection of different services for a large number of
customers.
Internet Sector
Hang Seng Index (1 year)
26,000
25,000
24,000
23,000
22,000
21,000
Source: Company data, Bloomberg
Bocom Intl’ Internet Weekly
Yuan MA
[email protected]
UP
MP
OP
HS China Enterprise Index (1 year)
13,000
Numerous internet companies released their 3Q results which exhibited strong
growth momentum in revenue. However, most of the internet companies made
hefty investments so as to remain competitive in the rapidly-growing internet sector,
which may pose pressure on profits in the near term. In the long run, however, we
are upbeat about the development prospects of major companies in the internet
sector. Double 11’s transaction volume of RMB57.1 bn and the launch of Weixin
Phonebook were major events last week. Mobile payment saw exponential growth in
Double 11 this year, which also proved that mobile purchases and mobile payment
have become new trends this year. Double 11 had helped promote a habit of mobile
payment among users. Weixin Phonebook is a product to guard against operators’
introduction of free voice messages and can keep Weixin safe at bay in face of the
impact. We maintain Outperform for the sector and regard Baidu (BIDU.US), Tencent
(700.HK) and Qihu(QIHU.US) as our top picks.
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
Source: Company data, Bloomberg
Internet Sector
UnionPay made its entry into Apple Store
Yuan MA
[email protected]
Shenzhen A-shares (1 year)
UP
MP
OP
Event:
Apple announced that its App Store in China had kick-started UnionPay payment
business, which implies that users of Apple in China can settle payment directly with
UnionPay debit or credit cards.
1,500
1,400
1,300
1,200
1,100
1,000
900
800
Source: Company data, Bloomberg
Comments:
Apple Pay had fared well in the last three weeks since its launch in US but no
progress was made as to its expansion to China’s market. Due to license issue
and the lower penetrate rate of credit cards, Apple Pay must collaborate with
licensed payment companies in China.
Apple only tied up with Visa, Master and American Express previously. Apple’s
selection of UnionPay as its partner in the Chinese market proved the
importance it has attached to the market, and could be taken as Apple’s first
attempt to make inroads into China.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
18 November 2014
UnionPay App is less frequently used and has lower user acceptance as
compared with Alipay. In our view, the 150 mn users of mobile payment as
announced by UnionPay are mostly likely to be those using App of its bank
partners. UnionPay’s partnership with Apple Store can enhance its recognition
among users to a certain extent.
Cathay Pacific (293.HK)
Neutral
October operating data
Geoffrey CHENG, CFA
BUY
SELL
[email protected]
Last Closing: HK$15.58
LT
BUY
Stock
Target Price: HK$15.50→
What’s new?
Cathay Pacific Airways (CPA) reported operational data of October 2014. In October,
overall RPK grew 5.7% YoY and 3.1% MoM. Cargo RFTK surged by 18.7% YoY and 10.5%
MoM.
Analysis:
Month of October:
RPK – overall up 5.7% YoY; Europe down 4.7% YoY; China up 2.5% YoY and North America
up 9.9% YoY
PLF – overall 80.7%, down 0.8 ppt YoY; Europe 84.8%, down 0.5 ppt YoY; China 73.5%, up
2.7 ppts YoY, and North America 79.7%, down 7.2 ppts YoY
Cargo RFTK – overall up 18.7% YoY in October
ASK– overall up 6.8% YoY; Europe down 4.2% YoY; China down 1.3% YoY and North
America up 19.8% YoY
YTD:
RPK – overall up 7.7% YoY; Europe down 0.9% YoY; China up 1.9% YoY and North America
up 16.8% YoY
PLF – overall 83.6%, up 1.3 ppts YoY; Europe 88.7%, up 0.5 ppt YoY; China 75.7%, up 3.2
ppts YoY, and North America 87.1%, down 1.8 ppts YoY
Cargo RFTK – overall up 15.0% YoY in October
ASK – overall up 6.0% YoY; Europe down 1.4% YoY; China down 2.5% YoY and North
America up 19.3% YoY
In October, CPA's overall RPK maintained a stable uptrend of 5.7% YoY. In Asia, RPK
reported a stable growth rate of 7.1% YoY in North East Asia, 9.1% in South East Asia,
and 2.5% YoY in China. RPK of the North American region continued to top all other
regions, rising 9.9% YoY. Meanwhile, RPK in Europe saw a decline of 4.7% YoY,
underperforming the other routes. On a MoM basis, RPK in October reversed the
downward trend in September, except that of Europe (down by 11.1% MoM).
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
18 November 2014
Overall PLF declined by 0.8 ppt YoY. Likewise, PLF of the North American region fell
7.2 ppts YoY, underperforming others. PLF of South East Asia and the India, Middle
East, Pakistan & Sri Lanka markets grew 3.4 ppts YoY and 5.8 ppts YoY, respectively,
outperforming others.
Thanks to the continuous increase of export demand driven by electronic products,
cargo RFTK of CPA continued to surge by 18.7% YoY in October.
The air passenger business of CPA in October maintained stable growth, but the
demand for first and business classes was lower than expectation, according to
management.
Recommendation
We have a NEUTRAL rating for CPA at the moment with a target price of HK$15.5. On
the last closing price of HK$15.58, CPA is trading at 0.95x PBR and 25.6x PER on our
forecast FY14 BVPS and EPS, respectively.
Container Shipping Sector
Weekly container shipping commentary
Geoffrey CHENG, CFA [email protected]
MP
UP
OP
Port congestion at the US West Coast ports has deteriorated further and container
shipping companies are proposing hefty surcharge to compensate for heightened cost
with implementation from 17th November. The Shanghai Container Freight Index lost
1.1% WoW. The substantial decline of freight rate on the Asia-Europe tradelane last week
was largely offset by the 8.5% WoW increase in freight rate on the Transpacific tradelane.
The disappointment on the first day of the SH-HK Stock Connect implementation led to
across-the-board sell-down of the HK-listed container shipping companies. In view of
the near-term volatility, we maintain our MARKET PERFORM recommendation.
Kingsoft (3888.HK)
Neutral
MIT-Martina Internet Talk:
Takeaways from 3Q14 NDR --The Next Breakthrough
Yuan MA
Last Closing: HK$19.10
[email protected]
Upside: +4.7%
LT
BUY
SELL
BUY
Stock
Target Price: HK$20.00↑
We held an exclusive NDR for Kingsoft post its 3Q14 results. We still believe Kingsoft will
have solid long-term performance, despite margin pressure given business investments.
We think the investments in Cheetah and cloud services will provide significant rewards.
We suggest investors focus more on its long-term development instead of short-term
margin pressure. Recently, the leading Internet companies, such as the BAT, Qihu and
Sogou, have all been increasing strategic investments to secure their positions in mobile,
cloud services and big data, for fear that they could be outstripped by their rivals and
miss the opportunities. We remain optimistic on the company’s long-term growth
prospects. Maintain LT Buy rating and raise TP to HK$20.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
18 November 2014
Tencent (700.HK)
Neutral
MIT-Martina Internet Talk
Can Weixin Phone Book become the next super Aapp?
Yuan MA
Last Closing: HK$131.9
[email protected]
Upside: +15.2%
LT
BUY
BUY
SELL
Stock
Target Price: HK$152.0→
The impact and reception of Weixin Phone Book are no smaller than the “Double 11”
event among users. The reasons why Tencent, a cautious and low-key corporation,
launched the app could be: 1) the pressure of competition that drove the company to
improve user stickiness and traffic with a product of better user experience; and 2) a
defensive product against free SMS after prolonged rivalry with the telecom operators. It
aims, at least, to help Weixin counter the free SMS service of telecom operators. If
accepted by the users, and operators’ bandwidth resource does not have too much
hindrance on call quality, Weixin phone book can help Weixin attract new users, provide
service to users who are not using Weixin, and meet the current Weixin users’
requirements under different scenarios. Due to reasons relating to system and corporate
culture, telecom operators cannot develop product capabilities as quickly as the Internet
companies. However, they can restrict the OTT service through intelligent pipeline.
Therefore, the struggle between Weixin, the regulators and telecom operators will
largely determine Weixin phone book’s future.
Download our reports from Bloomberg: BOCM〈enter〉
18 November 2014
Last Close: HK$18.98
Upside: 0%
Target Price: HK$19.00↓
Consumer Staples Sector
Tingyi (322 HK)
UP
Shifting from a volume story to a margin story
Beyond cooling weather and macro impact, we believe a hidden reason for Tingyi’s
sluggish 3Q14 beverage sales (down 20% YoY) was its lack of real innovative and trendy
new products (more than new SKUs) to awaken consumers. Despite that we recognize
Tingyi’s diversified product portfolio, we encourage Tingyi to decisively fly from its
golden cage, accelerating the unveiling of genuinely impressive new products and
replacement of those losing popularity amid consumer taste shift and fashion chase. In
the absence of eye-catching innovation, we believe Tingyi is shifting from a volume
story to a margin story (especially on instant noodles, 75% of Tingyi’s net profit in
3Q14) given its cost leadership on production and channel advantage. We project a
three-year EPS CAGR of 12% after revising down our EPS estimates by 5%-6% on a
combination of 9%-16% revenue cut and margin increase (from selective ASP increase
and stricter expense control) across 2014-16E. Remain Neutral on Tingyi with TP
lowered to HK$19.00 (from HK$19.50) on 26x 2015E P/E. Reaccelerating beverage sales
and larger-than-expected integration benefit may prompt us to upgrade Tingyi, while
worsening sell-through and reversing commodity prices could push us to downgrade.
3Q14 results highlights. Tingyi’s net profit dropped by 14% YoY to US$160m
(+22%/13% in 1Q/2Q14) in 3Q14, mainly attributable to across-the-board revenue
decline, integration outlay, and high base. Instant noodle declined by 2%, explained
by muted volume growth on consumption upgrade and rising health awareness, in
our view. Beverage revenue was a bigger miss, with bottled water down 26% YoY
(temporary, impacted by cool weather) and juice/tea drink down 40%/17% YoY
(more structural, on consumer preference shift, in our opinion). The upside surprise
stemmed from noodle margins. Instant noodle EBIT margin climbed to a 16-quarter
high at 13.5%, thanks to direct price increase (c5% price hike on bowl noodles, 46%
of its noodle revenue in 3Q14), reduced sausage offerings, and expense control.
However, beverage EBIT margin was down to 6.6% in 3Q14 (vs 9.7% in 3Q13 and
8.3% in 2Q14), as the favorable PET resin and sugar costs were erased by slower
sell-through and one-off integration expenses. That said, Tingyi’s beverage turnover
remained in good shape coupled with healthy channel inventory in 3Q14. The
company also added 9 production lines for noodles and 10 for water in the quarter.
See our earnings review and forecast revisions on page 2-3.
Margin to be 2015E earnings driver. Weather (external factor) was always the first
thing to blame when beverage companies and retailers reported weaker results.
However, except bottled water, we believe Tingyi’s sales retreat in iced tea and juice
should be structural (also witnessed by Uni-President China’s recent results). Before
new SKUs emerge to cover the loss in the two categories, Tingyi may largely depend
on cost savings to deliver results, in our view. Given Tingyi’s clear competitive
strength in cost management (e.g. from scale benefit, stringent expense policy, and
streamlined organizational structure), we continue to use 26x forward P/E (no
discount to its long-term average P/E at the moment) on this cost leader. That said,
we urge Tingyi to turn more creative and heroic in R&D in the coming quarters to
lead (rather than follow) consumer choices amid escalated competitive pressure.
After all, volume growth is the top priority for a FMCG company, in our opinion.
Download our reports from Bloomberg: BOCM [enter]
MP
Neutral
OP
LT
BUY
BUY
SELL
Stock
Stock data
52w Low-High (HK$)
17.82-23.65
Market cap (US$m)
13,715
3m ADTV (US$m)
17
No. of shares (m)
5,604
Free float
34%
1m change
-3%
YTD change
-15%
Auditor
Mazars CPA
Source: Bloomberg, Company data
Financial highlights
12-14E
Revenue (US$m)
10,352
Revenue growth
-5%
Gross margin
30.8%
Core EBIT margin
7.8%
Core net profit (US$m)
492
Core diluted EPS (US$) 0.088
EPS growth
20%
P/E
27.9x
P/B
3.1x
P/S
1.3x
ROE (average)
11.9%
Dividend yield
1.8%
Source: BOCOM Int’l estimates
12-15E
10,654
3%
31.0%
8.0%
527
0.094
7%
26.0x
2.9x
1.3x
11.6%
1.9%
12-16E
11,163
5%
31.1%
8.2%
581
0.103
10%
23.6x
2.6x
1.2x
11.6%
2.1%
1-year stock performance
15%
HSI Index
Tingyi
10%
5%
0%
-5%Nov-13
Mar-14
Jul-14
-10%
-15%
-20%
Source: Bloomberg
Summer Wang
[email protected]
Tel: +852 2977 9221
Nov-14
18 November 2014
Container Shipping Weekly
Container Shipping Sector
Container Shipping Sector
UP
Weekly container shipping commentary
Container shipping companies - Valuation summary
Company
Name
BBG Sh. Price
code 17 Nov 14
Rating Target
Price
+/-
–––––– PER ––––––
2013 2014E 2015E
–––––– PBR ––––––
2013 2014E 2015E
(LC)
(LC)
(%)
(X)
(X)
(X)
(X)
(X)
(X)
China COSCO
1919 HK
3.73 NEUTRAL
3.10
(16.9)
128.6
N.A.
14.2
1.18
1.19
1.09
CSCL
NOL
2866 HK
NOL SP
2.26 NEUTRAL
0.74
SELL
2.1
0.73
(7.1)
(1.4)
N.A.
N.A.
247.7
N.A.
12.4
26.5
0.87
0.68
0.81
0.81
0.76
0.79
OOIL
316 HK
BUY
50.5
11.4
77.4
11.0
11.3
0.81
0.76
0.73
SITC
1308 HK
4.12 NEUTRAL
Source: Company, BOCOM Int’l estimates
45.35
4.03
(2.2)
12.1
10.7
8.3
1.84
1.66
1.47
News flow – Port congestion deteriorated, surcharge proposed. According to
Lloyd’s List, ship delays at California terminals have worsened due to factors
MP
Port congestion at the US West
Coast ports has deteriorated further
and container shipping companies
are proposing hefty surcharge to
compensate for heightened cost
with implementation from 17th
November.
The Shanghai Container Freight
Index lost 1.1% WoW. The
substantial decline of freight rate on
the Asia-Europe tradelane last week
was largely offset by the 8.5% WoW
increase in freight rate on the
Transpacific tradelane.
The disappointment on the first day
of the SH-HK Stock Connect
implementation led to
across-the-board sell-down of the
HK-listed container shipping
companies. In view of the near-term
volatility, we maintain our MARKET
PERFORM recommendation.
including chassis shortage, compressed peak season, and insufficient truck drivers.
Meanwhile, several member container shipping companies of Transpacific
Stabilization Agreement plan to implement congestion charges for cargoes moving
via US West Coast ports in response to labor-related terminal delays.
According to
the online industry news website, the charge will be up to US$1,000/FEU with effect
th
from 17 November 2014.
However, the bad news to these container shipping
companies was that the initial projection by National Retail Federation of November
import container volume handled at overall US ports will total 1.4m units only, down
from 1.6m in October.
Reality – SCFI down 1.1% WoW.
Thanks to the implementation of GRI by container
shipping companies on the Transpacific tradelane, freight rate rose 8.5% WoW to
above US$2,000/FEU.
In contrast, a decline in the load factor on the Asia-Europe
tradelane to about 80% dragged the freight rate down by about 20.5% WoW to
US$934/TEU, according to Shanghai Shipping Exchange.
According to Lloyd’s List, a
series of GRIs will be proposed by container shipping companies for implementation
early next month.
Freight rate on the Far East-Australia tradelane surged by about
US$100/TEU, or 13.0% WoW, as a result of GRI implementation.
We maintain our MARKET PERFORM recommendation.
The first day
th
implementation of SH-HK Stock Connect on 17 November triggered a round of
profit-taking in the HK-listed container shipping companies, probably due to the
disappointing fund flow from the north.
in our view.
Volatility of share prices is still imminent,
We maintain our cautious view on the outlook of the container
shipping industry and hence, our MARKET PERFORM recommendation.
Download our reports from Bloomberg: BOCM〈enter〉
OP
Geoffrey Cheng, CFA
[email protected]
Tel: (852) 2977 9380
18 November 2014
Last Closing: HK$19.10
Upside: +4.7%
Target Price: HK$20.00↑
Kingsoft (3888.HK)
Internet Sector
UP
MIT-Martina Internet Talk
Takeaways from 3Q14 NDR --The Next Breakthrough
MP
OP
Financial Highlights
Y/E 31 Dec
2012
Revenue (RMB m)
1,411
YoY growth
38%
Net profit (RMB m)
456
YoY growth
30%
Non-GAAP diluted EPS (RMB)
0.39
DPS (RMB)
0.09
Dividend yield
0.6%
PE
40.7
Source: Company, BOCOM Int’l estimates
2013
2,173
54%
694
52%
0.57
0.13
0.8%
26.9
2014E
3,228
49%
560
-19%
0.45
0.11
0.7%
34.3
2015E
4,428
37%
868
55%
0.67
0.12
0.8%
22.9
2016E
5,823
31%
1,090
26%
0.83
0.11
0.7%
18.3
We held an exclusive NDR for Kingsoft post its 3Q14 results. We still believe Kingsoft
will have solid long-term performance, despite margin pressure given business
investments. We think the investments in Cheetah and cloud services will provide
significant rewards. We suggest investors focus more on its long-term development
instead of short-term margin pressure. Recently, the leading Internet companies, such
as the BAT, Qihu and Sogou, have all been increasing strategic investments to secure
their positions in mobile, cloud services and big data, for fear that they could be
outstripped by their rivals and miss the opportunities. We remain optimistic on the
company’s long-term growth prospects. Maintain LT Buy rating and raise TP to HK$20.
Kingsoft’s investment strategy has brought about significant reward from Cheetah.
*
*
*
Cheetah Mobile generated RMB110mn revenue in 3Q14, which represented 24% of
the total revenue, up from 8% in 3Q13, and was up by 624% YoY and 46% QoQ.
Cheetah was questioned for its monetization mode in the overseas market by many
investors when it was listed. Mobile revenue in the overseas market contributed 11%
of the total revenue in 3Q14 and that will dispel investors’ concern.
Now Cheetah earns about USD200,000 per day from ads in the overseas market.
Compared with the Chinese users, overseas users have different habits and good
acceptance of ads. We believe the number will still see notable growth in 4Q.
During the “Double 11”, the traffic Cheetah brought to Alibaba saw significant
growth. Global mobile MAU has reached 340mn and Clean Master has the
highest rating of 4.7 on Google Play’s list of major apps.
Product innovation, user attraction and mobile monetization will be the strategic
focuses of Cheetah. Product matrix will be introduced in product development to
secure future competitive advantages. Moreover, it will benefit from the focus on
mobile and the overseas market. More than 2,000 employees are focusing on this
market now and the product department is divided into the international team and
the domestic team. Healthy content competition will also help trigger innovation.
Cloud computing has great potential and will be the strategic focus of Kingsoft.
*
At present, bandwidth and hardware account for 5-10% of Internet companies’
costs. At the same time, due to the rapid development of mobile Internet and
increased frequency of use, the amount of user data is surging. Kingsoft cloud
has about 230tb of data uploaded on a daily basis.
Download our reports from Bloomberg: BOCM〈enter〉
Neutral
LT
BUY
SELL
BUY
Stock
Kingsoft’s investment strategy has
brought about significant rewards
from Cheetah.
Cloud computing has great potential
and will be the strategic focus of
Kingsoft .
We remain optimistic on the
company’s long-term growth
prospects. Maintain LT Buy and raise
TP to HK$20.
Cheetah Mobile contributed over
50% of Kingsoft revenue, while
mobile revenue contributed 24%.
We suggest investors focus more on
its long-term development instead of
short-term margin pressure .
Stock data
52w High
52w Low
Market cap (HK$m)
Issued shares (m)
A3vg daily vol (m)
1-mth change(%)
YTD change(%)
50d MA
200d MA
14-day RSI
Source: Company data, Bloomberg
1 Year Performance chart
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
33.5
13.4
27,4-1
1,184
10.1
-0.9
3.6
23.7
24.0
46.1
18 November 2014
Last Closing: HK$131.9
Upside: +15.2%
Target Price: HK$152.0→
Internet Sector
Tencent (700.HK)
UP
MP
OP
MIT-Martina Internet Talk
Can Weixin Phone Book become the next super app?
Financial Highlights
Y/E 31 Dec
Revenue (RMB m)
YoY growth
Net profit (RMB m)
YoY growth
EPS (RMB non-GAAP)
DPS (RMB)
Dividend yield
PE
Revenue (RMB m)
Source: Company, BOCOM Int’l estimates
2012
43,894
54%
14,229
39%
1.53
0.69
0.53%
70
43,894
2013
60,437
38%
17,005
20%
1.82
0.85
0.64%
57
60,437
2014E
78,730
30%
24,005
41%
2.31
0.26
0.20%
45
78,730
2015E
97,402
24%
29,394
22%
3.16
0.29
0.22%
33
97,402
2016E
120,011
23%
37,242
27%
4.00
0.37
0.28%
26
120,011
The impact and reception of Weixin Phone Book are no smaller than the “Double 11”
event among users. The reasons why Tencent, a cautious and low-key corporation,
launched the app could be: 1) the pressure of competition that drove the company to
improve user stickiness and traffic with a product of better user experience; and 2) a
defensive product against free SMS after prolonged rivalry with the telecom operators.
It aims, at least, to help Weixin counter the free SMS service of telecom operators. If
accepted by the users, and operators’ bandwidth resource does not have too much
hindrance on call quality, Weixin phone book can help Weixin attract new users, provide
service to users who are not using Weixin, and meet the current Weixin users’
requirements under different scenarios. Due to reasons relating to system and corporate
culture, telecom operators cannot develop product capabilities as quickly as Internet
companies. However, they can restrict the OTT service through intelligent pipeline.
Therefore, the struggle between Weixin, the regulators and telecom operators will
largely determine Weixin phone book’s future.
LT
BUY
Neutral
BUY
SELL
Stock
Weixin phone book is a defensive
product against free SMS after prolonged
rivalry with the telecom operators.
The struggle between Weixin, the
regulators and telecom operators will
largely determine Weixin phone book’s
future .
It aims, at least, to help Weixin counter
the free SMS service of telecom
operators. If accepted by the users, and
operators’ bandwidth resource does not
have too much hindrance on call quality,
Weixin phone book can help Weixin
attract new users, provide service to
users who are not using Weixin, and
meet the current Weixin users’
requirements under different scenarios.
Stock data
Event: Tencent launched Weixin phone book, which can provide free Internet telephone
service, automatic contacts backup, Weixin avatar importation, group messages, and
st
batch contacts delete. According to Xinhua Net, Weixin phone book reached the 1
position in the “Tools” category of Apple app store and had more than 23mn downloads
in Yingyongbao Android app store in less than 24 hours.
52w High
52w Low
Market cap (HK$m)
Issued shares (m)
Avg daily vol (m)
1-mth change（%）
YTD change（%）
50d MA
200d MA
14-day RSI
Source: Company data, Bloomberg
Analysis:
1 Year Performance chart
700 hk Equity
The power of Weixin phone book comes from its ability to change users’ habit: It
may appear that Weixin phone book has no groundbreaking technology and is not much
different from the original video chat function of Weixin. Weixin video chat even has
better video quality. However, Weixin phone book has changed users’ habit. The contacts
show when it is opened and it provides free SMS on Android. It is easy to use and could
be instantly accepted by users.
hsi index
75%
45%
15%
N/13
J/14
M/14
M/14
J/14
-15%
*
*
The contacts in Weixin phone book are linked to phone numbers. They are closer
friends compared with the contacts on Weixin, mobile QQ and Weibo. Therefore,
word of mouth has a greater impact and it can generate higher user stickiness.
The Android version provides free SMS function. In this way, users can text each
other for free even if they have not added each other as “friends” on Weixin.
Download our reports from Bloomberg: BOCM〈enter〉
134.00
79.92
1,235,550
9,367
30.98
16.31
33.34
120.89
116.68
72.02
Source: Company data, Bloomberg
Ma Yuan (Martina), Ph.D
[email protected]
Tel: (852) 2977xxxx
GuXinyu (Connie), CPA
[email protected]
Tel: (8610) 8800 9788-8045
S/14
N/14
Morning Express
18 November 2014
Market Review
Hong Kong stocks fell on the first day of SH-HK Stock Connect. The Hang Seng Index
slumped 290 points, or 1.2%, to close at 23,797. HKEx (388.HK) was the worst blue-chip
performer, down 4.5%. Brokers also dropped. CITIC Securities (6030.HK) fell 3.5% and
Haitong (6837.HK) lost 6.1%. Mainland lenders fell. CITIC Bank (998.HK) dropped 4%. ICBC
(1398.HK) shed 1.2%. Stocks with A/H arbitrage themes plummeted. Zhejiang Shibao
(1057.HK) plunged 13.4%. Dalian Port (2880.HK) nosedived 12.2%.
US stocks finished Monday with modest gains. The S&P 500 rose 1.5 points to 2,041,32, a
record close. The DJIA edged up 13 points, or 0.1%, to 17,647.75. European stocks rose
following talks of possible bond purchases by ECB President Mario Draghi. The Stoxx
Europe 600 added 0.5% to 337.25.
News Reaction
SAFE: the net inflow of direct foreign investors’ investment in China’s financial
institutions for 3Q was RMB11.679 bn. As indicated by SAFE on Monday, the net inflow
of direct foreign investors’ investment in China’s financial institutions in 3Q was
RMB11.679 bn, a slight fall as compared with the net inflow of RMB12.199 bn for the
previous quarter.
State Council: guidance to be given in fiscal and taxation policies and development of
commercial and health insurance by tapping into the effect of the market. In order to
expedite the development of commercial and health insurance, the State Council intends
to provide guidelines as to investment in the health service sector whilst rolling out more
comprehensive supportive policies relating to the fiscal and taxation fields. It will seek to
achieve the goal of provision of guidance by the government and leverage the effect of
the market, so as to basically develop a modern commercial and health insurance service
sector by 2020 and boost the proportion of risk and health insurance compensation
significantly higher within the total healthcare expenditure.
NDRC further approved 5 railways with a total investment of RMB152.7 bn. NDRC again
announced the approval of 5 railway investment projects, namely the new
Liuzhou-Wuzhou railway project, the new double-track project for the Duolun-Tahuangqi
Session, the new Lanzhou-Hezuo railway, the new capacity expansion project linking Emei
to Miyi Session of Chengkun Railway and the new railway linking Yinchuan to Xi’an. The
projects involved a total investment of RMB152.697 bn.
It was rumored that FDD 4G license is set to be released in the mainland by mid-Dec. As
reported by a source of information that is closely related to MIIT, preparation for the
issue of FDD-LTE business license is underway and three major operators have already
submitted their applications. Thus far, the release is scheduled to be mid-Dec but the
specific time remains in discussion.
In the tie-up between Apple and China UnionPay, App Store users can settle payment
through credit cards of UnionPay. Apple, the world’s second largest iphone
manufacturer and China UnionPay jointly announced that effective from 17 Nov, App
Store users using UnionPay credit cards issued in the mainland are provided with a more
convenient way to purchase all sorts of apps through the UnionPay credit card payment
service.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
18 November 2014
Economic releases for this week - USA
Date Time
18-Nov
18-Nov
19-Nov
20-Nov
20-Nov
20-Nov
20-Nov
Source: Bloomberg
Event
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
-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
17 Nov 2014
17 Nov 2014
Report
China Market Strategy - SH-HK Connect: Breaking New Grounds
Property Sector - HK/China property weekly - 14th November 2014
17 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
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
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
SMIC (981.HK) - Net profit slightly beat in the third quarter
AAC Technologies (2018.HK) - Third quarter result missed again
17 Nov 2014
17 Nov 2014
14 Nov 2014
14 Nov 2014
14 Nov 2014
14 Nov 2014
Source: Company data, BOCOM International
Download our reports from Bloomberg: BOCM〈enter〉
Analyst
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
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
Morning Express
18 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$)
140.10
23.05
82.95
20.95
131.70
17.14
10.60
51.80
44.25
98.85
8.96
5.02
25.75
10.30
113.20
9.63
9.87
4.65
105.20
46.60
67.80
32.70
59.45
27.40
22.80
13.42
16.52
15.64
18.88
18.62
9.89
5.78
6.21
174.10
3.77
55.10
8.99
77.75
74.75
31.85
21.05
127.60
11.26
13.00
21.25
8.62
11.50
5.69
95.60
10.62
Mkt
cap
(HK$m)
324,495
103,386
101,563
389,878
251,790
99,947
31,169
155,418
532,996
421,434
72,329
1,702,846
65,595
135,919
318,378
83,444
83,246
75,421
153,374
375,907
171,293
76,742
448,759
289,694
606,603
334,203
40,001
61,525
198,468
104,341
19,214
425,046
756,060
203,358
1,057,051
166,960
75,160
1,491,916
159,536
185,456
172,062
1,195,270
269,269
78,203
101,929
1,787,399
513,446
1,420,093
1,949,249
117,974
5d
chg
(%)
1.4
0.2
3.9
-1.4
1.3
-0.9
1.1
0.0
0.9
1.4
-7.2
-0.6
1.4
0.4
-1.6
1.6
0.5
-1.9
2.1
0.9
0.3
1.9
-1.2
4.0
-0.7
-0.6
-1.8
3.2
3.2
0.4
0.6
-2.7
-2.7
-4.4
-0.8
-1.4
-1.9
-0.4
-1.5
2.9
-2.3
0.0
0.9
1.6
-0.9
-4.3
-2.9
-0.5
1.0
-2.2
Ytd
chg
(%)
20.8
-5.9
-9.4
-14.3
4.8
-10.8
-0.4
28.8
13.8
0.3
-34.4
-4.2
-9.0
-8.0
15.1
4.5
10.0
6.7
15.7
-25.4
10.6
-0.5
-14.4
10.3
-6.0
13.2
-35.8
-4.6
16.8
-16.9
-33.8
5.7
-1.9
34.6
5.6
-7.1
9.5
-7.6
21.2
8.5
-3.4
29.0
-2.9
22.6
15.6
1.4
-20.2
-2.7
18.9
12.6
23,752.9 14,588,883
-0.3
1.9
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
88.61
14.82
8.96
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
16.50
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
66.30
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
11.42
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
9.4
13.6
16.5
16.3
28.1
26.7
22.1
7.7
8.2
8.1
15.1
14.7
13.5
6.5
8.6
7.4
13.6
12.1
10.8
8.7
16.7
16.4
27.9
21.7
18.9
8.9
12.1
11.6
11.4
11.3
10.4
5.0
5.0
4.8
14.9
15.4
14.0
25.2
24.6
21.4
9.1
14.6
13.6
7.3
11.0
10.7
14.6
14.4
13.7
35.3
42.2
26.4
12.0
15.1
13.9
18.3
17.9
16.4
19.0
16.2
15.9
11.0
11.8
11.2
11.8
10.1
9.0
12.6
11.8
10.7
19.0
15.5
13.2
9.5
9.5
8.1
21.7
54.5
37.4
20.9
18.2
12.3
28.6
26.4
24.3
32.2
27.3
22.4
90.5
31.7
20.1
5.3
5.2
4.9
8.4
8.7
8.8
43.3
39.7
29.4
5.0
5.0
4.7
7.0
14.0
12.4
11.5
17.8
15.5
12.6
11.2
10.4
2.5
18.1
18.4
12.5
17.9
16.5
6.9
7.4
6.5
42.5
39.5
30.0
16.8
16.4
14.3
8.7
14.8
14.3
8.7
8.4
7.7
9.5
9.6
9.3
7.3
7.5
7.8
4.9
4.9
4.6
13.1
14.0
13.9
15.8
17.6
14.3
10.3
11.0
10.2
Yield
P/B
(%)
2.5
3.3
2.2
5.5
4.2
2.6
2.9
2.0
1.0
2.4
2.6
N/A
3.0
2.6
3.0
4.3
1.0
2.2
3.4
3.7
3.8
3.4
1.5
3.7
1.7
2.0
1.5
1.7
1.7
1.5
0.7
N/A
4.9
2.0
6.6
3.2
5.3
4.9
3.4
2.9
2.3
0.2
1.8
3.8
3.5
4.7
5.0
6.7
3.3
2.3
(X)
0.9
0.8
6.1
1.2
2.3
1.2
0.9
0.6
2.5
1.0
1.4
1.0
1.0
9.3
0.7
0.5
2.6
0.6
0.7
9.2
1.9
1.1
1.8
1.7
2.1
0.6
0.8
1.0
3.9
4.4
1.1
0.7
1.0
9.9
0.8
0.6
2.0
1.0
1.3
1.2
1.4
12.6
0.9
0.7
1.5
1.1
1.1
0.9
1.9
4.7
3.6
1.3
Morning Express
18 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
(%)
8.45
20.95
32.60
4.99
4.29
6.43
3.54
30.75
5.02
54.25
6.83
4.65
7.82
7.16
59.45
13.62
36.20
29.20
3.28
28.35
22.80
14.86
2.03
7.18
5.78
13.14
6.21
5.03
14.70
3.77
11.06
19.54
13.44
4.72
5.23
8.62
8.86
24.70
8.25
5.69
5.13
37,825.34
389,878.35
83,726.37
22,835.03
46,030.98
46,852.53
1,080,709.93
107,591.80
1,702,845.89
69,915.52
123,809.67
75,421.08
279,052.29
58,028.14
448,759.24
190,460.92
118,973.97
54,070.00
60,251.70
242,916.98
606,603.48
90,945.42
64,493.45
38,765.01
425,046.32
55,049.30
756,059.77
114,019.77
349,616.97
1,057,051.12
95,294.29
207,541.84
141,081.88
382,000.78
76,095.23
1,787,398.90
119,699.54
121,041.08
66,300.21
1,420,092.96
277,147.01
10.2
-1.4
3.2
-8.3
-7.9
-4.9
-1.1
4.4
-0.6
1.2
-2.6
-1.9
-2.0
-2.7
-1.2
-0.6
-4.4
-2.0
-7.9
-0.4
-0.7
-1.3
-4.7
-1.5
-2.7
-3.8
-2.7
0.8
0.0
-0.8
-0.2
-3.0
-5.6
-3.5
-2.1
-4.3
-0.6
-1.4
0.6
-0.5
-1.5
-19.2
-14.3
46.5
-17.1
-40.7
-9.2
-7.1
18.3
-4.2
-17.2
9.3
6.7
9.0
-15.6
-14.4
23.1
-15.4
-6.6
21.5
-6.7
-6.0
-38.2
22.3
-13.9
5.7
-6.1
-1.9
25.8
-11.0
5.6
-8.9
-7.6
-0.4
20.4
-9.7
1.4
26.4
-14.1
-17.4
-2.7
21.9
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
26.0
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
14.7
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
69.2
7.7
25.7
N/A
14.1
6.8
5.1
12.6
5.0
29.1
6.8
35.3
4.7
11.5
11.8
13.6
10.7
8.8
N/A
19.0
19.0
6.8
16.3
4.9
5.3
10.1
8.4
8.5
5.1
5.0
5.6
21.4
24.1
16.2
19.3
9.5
8.5
8.5
26.8
4.9
4.6
28.2
8.2
23.4
46.4
13.7
17.3
4.9
10.9
5.0
28.1
6.5
42.2
4.4
10.2
10.1
12.1
10.6
9.9
N/A
17.2
15.5
7.0
14.6
5.4
5.2
13.1
8.7
8.1
5.1
5.0
5.9
22.4
18.3
16.2
16.3
9.6
8.0
8.8
20.2
4.9
4.6
10,513
4,255,732
-1.3
-2.8
11,638.3
9,159.8
7.3
7.2
Source: Bloomberg
Download our reports from Bloomberg: BOCM〈enter〉
–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
––––––––––– PE –––––––––––
2013A
2014E
2015E
(X)
(X)
(X)
Yield
P/B
(%)
(X)
23.0
8.1
19.5
14.2
11.0
16.1
4.6
9.9
4.8
24.7
6.0
26.4
4.1
7.9
9.0
11.1
8.4
9.5
N/A
14.7
13.2
6.9
14.4
4.9
4.9
13.2
8.8
7.4
4.6
4.7
5.5
19.5
15.7
14.6
11.8
9.3
7.8
8.2
14.8
4.6
4.2
0.9
5.5
1.0
0.0
4.4
0.4
N/A
0.6
N/A
N/A
3.5
2.2
2.6
3.2
1.5
2.1
2.9
1.1
N/A
1.8
1.7
3.7
N/A
2.8
N/A
4.8
4.9
1.7
5.3
6.6
2.1
N/A
1.1
2.5
1.1
4.7
5.4
1.8
0.7
6.7
N/A
3.2
1.2
3.0
0.6
0.6
0.6
0.9
1.8
1.0
3.7
0.9
0.6
0.9
1.1
1.8
2.3
3.0
1.5
0.9
1.9
2.1
1.3
1.3
0.8
0.7
0.8
1.0
0.9
1.0
0.8
1.1
1.8
1.6
1.1
1.0
1.1
1.5
1.7
1.6
0.9
0.8
6.6
4.5
1.1
Morning Express
18 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
18 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〉