Morning Express 18 December 2014 Focus of the Day Indices Baidu (BIDU.US) Neutral Baidu’s investment in Uber will not change the layout of the taxi hailing industry Yuan MA Last Closing: US$220.06 BUY SELL [email protected] Upside: +28.6% LT BUY Stock Target Price: US$283.00→ As reported by Techweb, Baidu made a strategic move to invest in Uber, the US car hailing app, and it is estimated that Baidu will take up a 1.5% stake in the company. Such investment partnership is more likely to be financial instead of strategic in nature, unless more collaboration can be seen in the future, and the synergy is limited. If such move is meant to be a strategic investment, given that Uber focuses more on the mainland market, there is a greater chance for the company to tie up with Baidu Map and Baidu Purse. In our view, Uber’s expansion into the Chinese market will not change the duopoly in China’s taxi hailing market for now and the app may not simply serve as a means of payment like Baidu Purse. The duopoly between the two players Alipay and Weixin Payment in the mobile payment industry will not be affected at the moment. In the meantime, the coach service market is growing rapidly and Uber can swiftly penetrate the coach market through Baidu Map. We maintain Buy for Baidu and TP of US$283. Qihoo 360 (QIHU.US) Neutral MIT- Martina Internet Talk: Cooperating with Coolpad for foothold in smart hardware LT BUY BUY SELL Stock Yuan MA Last Closing:US$55.52 [email protected] Upside: +99.9% Target Price: US$111.00→ Event: Qihoo will invest US$490mn to take a 45% stake in a joint-venture with Coolpad. The JV will design, manufacture and sell smartphones under the “Dazen" brand. The phones will mainly be sold on the Internet. Comments: The investment marks Qihoo’s second foray into smartphones in two years. Sun Zhengyi predicted that by 2040, everything and every individual will be connected to the Internet. Qihoo has been exploring hardware, such as the 360 Child Guard, a smart bracelet. The Download our reports from Bloomberg: BOCM〈enter〉 Close HSI 22,586 H Shares 11,269 SH A 3,207 SH B 288 SZ A 1,560 SZ B 1,017 DJIA 17,357 S&P 500 2,013 Nasdaq 4,644 FTSE 6,336 CAC 4,112 DAX 9,544 Source: Bloomberg 1d % -0.37 1.19 1.32 -0.78 -0.71 -0.45 1.69 2.04 2.12 0.07 0.46 -0.20 Ytd % -3.09 4.19 44.81 13.49 41.36 17.17 4.71 8.90 11.20 -6.11 -4.28 -0.08 Close 61.18 1,190.20 15.75 6,368.00 118.77 1.56 1.23 3m % -38.18 -2.86 -15.04 -8.12 -8.49 -5.02 -4.57 Ytd % -44.78 -1.28 -19.11 -13.48 -11.33 -5.94 -10.26 bps change HIBOR 0.39 US 10 yield 2.14 Source: Bloomberg 3m 0.02 -0.47 6m 0.01 -0.44 Indicators Brent Gold Silver Copper JPY GBP EURO HSI Technical HSI 50 d MA 200 d MA 14 d RSI Short Sell (HK$m) Source: Bloomberg 22,586 23,521 23,375 33 11,139 Morning Express 18 December 2014 cooperation with Coolpad marks a substantial move of Qihoo in hardware, and is likely to create an ecosystem together with 360’s previous layout in TV, routers and smart home. Smartphone resources allow Qihoo to gain a foothold in the mobile market by bolstering its competitiveness in app distribution and mobile search. Coolpad has nearly 10,000 patents and conducts cross-licensing with other companies. Patents are very important to smartphone manufacturers. Maintain Buy and TP of US$111. Hang Seng Index (1 year) 26,000 25,000 24,000 23,000 22,000 21,000 Source: Company data, Bloomberg Huaneng Renewable (958.HK) Neutral H-share placing; adjust earnings forecasts and TP LT BUY HS China Enterprise Index (1 year) BUY SELL 13,000 12,000 Louis SUN Last Closing: HK$2.44 11,000 [email protected] Upside: +35.2% Stock 10,000 Target Price: HK$3.30↓ 9,000 8,000 1) Huaneng Renewables announced H-share placing. The company will issue 699mn new shares, or 16.7% of the total number of H shares post issuance and 7.2% of the total share capital, for the purpose of optimizing its financial structure and reducing financial risks. 2) We expect the placing to lower its net gearing from 72.4% to 69.1% by end-2014. We project capex of RMB13.6bn and RMB13.9bn in 2015 and 2016, respectively. We expect net gearing to remain stable at 72.1% and 72.7% in 2015 and 2016, respectively, in light of improving profitability and increasing operating cash flow. Therefore, we believe both the amount and frequency of equity financing will be much lower going forward. 3) Given the new shares will dilute EPS by about 5%, we adjust our 2014E/15E/16E EPS estimates to RMB0.109/0.201/0.275. We adjust TP from HK$3.48 to HK$3.30, corresponding to 13x 15E P/E. Maintain Buy. As the Nov wind power data of China were lower than expected, the stock lacks short-term catalysts. However, we are optimistic that the operating environment will improve next year. Renewable Energy Sector Highlights: The US announced final ruling on the anti-dumping and countervailing investigations on the Chinese PV product exports to the US; the wind turbine utilization hours fell sharply in Nov; The polysilion prices declined at a faster pace Louis SUN [email protected] UP MP OP 1) The US Department of Commerce announced the final ruling on 16 Dec. It ruled that dumping and subsidization of the Chinese PV product exports to the US were found and the US will impose anti-dumping and countervailing duties. It also ruled that dumping acts for the Taiwanese PV product exports to the US were found and the US will impose anti-dumping tax. It ruled that the dumping margin of the Chinese manufacturers was 26.71% to 165.04% and the subsidy margin was 27.64% to 49.79%. According to the US trade remedy procedure, the US International Trade Download our reports from Bloomberg: BOCM〈enter〉 Source: Company data, Bloomberg Shanghai A-shares (1 year) 3,500 3,000 2,500 2,000 Source: Company data, Bloomberg Shenzhen A-shares (1 year) 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 Source: Company data, Bloomberg Morning Express 18 December 2014 Commission will make a final ruling on 29 Jan 2015. If this agency also makes such an affirmative final ruling, the US Customs will officially levy the anti-dumping and countervailing duties. We believe that the final ruling is no surprise to the market. The Sino-US trade war on PV products is gradually intensified. The trade war will raise the difficulties of exporting Chinese PV products to the US. The Chinese PV manufacturers are expected to gradually expand its overseas investment, accelerate global development and develop its businesses towards the downstream PV power plant investment and operation. 2) From Jan to Nov, the cumulative average utilization hours of the national wind power generation equipment were 1,685 hours, down 204 hours YoY, and the fall in hours increased 19 hours compared with the previous month. From Jan to Oct, the national new on-grid wind power capacity grew 24.7% YoY to 89.315GW, up 0.8 ppt from the previous month. The significant fall in the wind turbine utilization hours again in Nov reflected the lack of real improvement in the wind resources this year, and the newly-installed capacity has maintained rapid growth. 3) The prices of polysilicon raw materials continued to fall WoW this week and the decline expanded sharply. The prices of polysilicon wafers, cells and cell modules declined slightly further this week. The prices of polysilicon raw materials / polysilicon wafers / cells / cell modules were -3.51%/-0.23%/-0.31%/-0.16% WoW this week. The product prices were 0.6%/-5.3%/-17.6%/-11.1% since early 2014. The larger decline in the polysilicon prices was mainly due to the price cut by the Chinese manufacturers to deal with the competition from silicon imports, while the fall in the polysilicon wafer, cell and cell module prices was mainly due to the impacts of weakened foreign demand. The PV product prices may fluctuate slightly some time ahead. China Eastern Airlines (670.HK) Neutral November operating data Geoffrey CHENG, CFA Last Closing: HK$3.74 LT BUY BUY SELL [email protected] Stock Target Price: HK$2.48→ What’s new? China Eastern Airlines (CEA) reported November 2014 operating data. Overall RPK of CEA rose 9.1% YoY but plunged 6.9% MoM. Cargo RFTK slid 5.8% YoY, but increased 2.1% MoM. Analysis: Month of November: RPK – overall up 9.1% YoY; domestic up 9.6% YoY; international up 8.2% YoY and regional up 5.2% YoY PLF – overall 78.4%, up 2.3 ppts YoY; domestic 79.4%, up 3.4 ppts YoY; international 76.5%, down 0.7 ppt YoY; regional 69.0%, down 4.3 ppts YoY Download our reports from Bloomberg: BOCM〈enter〉 Morning Express 18 December 2014 Cargo RFTK – overall down 5.8% YoY; domestic down 11.8% YoY; international down 4.8% YoY, and regional up 11.1% YoY ASK – overall up 6.0% YoY; domestic up 4.9% YoY; international up 9.2% YoY and regional up 11.7% YoY YTD: RPK – overall up 5.7% YoY; domestic up 6.3% YoY; international up 3.6% YoY and regional up 9.6% YoY PLF – overall 79.8%, up 0.4 ppt YoY; domestic 80.1%, up 0.6 ppt YoY; international 79.5%, down 0.3 ppt YoY; regional 76.0%, up 1.4 ppts YoY Cargo RFTK – overall down 1.2% YoY; domestic down 5.5% YoY; international down 0.3% YoY and regional up 4.0% YoY ASK – overall up 5.2% YoY; domestic up 5.6% YoY; international up 4.0% YoY and regional up 7.6% YoY The air passenger business of CEA in November reported 9.1% YoY growth, but a decrease of 6.9% MoM. RPK on regional routes saw weaker growth of 5.2% YoY, compared with other routes, while they reported the highest YoY growth on a YTD basis. On the contrary, domestic and international RPK grew 9.6% YoY and 8.2% YoY, respectively. In addition, on a MoM basis, RPK of CEA witnessed across-theboard decline with international RPK plunging the most, by 7.1%, underperforming other routes. In November, PLF on international and regional routes declined slightly on a YoY basis as ASK increased more than RPK. Overall PLF was up 2.3 ppts YoY, to 78.4%. However, on a MoM basis, domestic and regional PLF fell 1.6 ppts MoM and 5.0 ppts MoM, to 79.4% and 69.0%, respectively. Compared with the positive results of other PRC airlines, cargo RFTK of CEA in November declined on both domestic and international routes on a YoY basis. Overall cargo RFTK slid 5.8% YoY, but rose 2.1% MoM. International cargo RFTK declined 4.8% YoY, but increased slightly by 1.9% MoM. Similarly, domestic cargo RFTK was down 11.8% YoY, but increased 1.4% MoM, underperforming other routes. On the contrary, regional cargo RFTK surged 11.1% YoY and 15.2% MoM, surpassing others. On a YTD basis, cargo RFTK was still down 1.2% YoY. Recommendation: We have a NEUTRAL rating on the counter with a target price of HK$2.48 at the moment. On the last closing price of HK$3.74, CEA is trading at 17.5x PER and 1.3x PBR, respectively, according to our FY14 forecast EPS and BVPS. Download our reports from Bloomberg: BOCM〈enter〉 Morning Express 18 December 2014 Tencent (700.HK) Neutral Comments on the registration completion of Tencent’s Qianhai Weizhong Bank Yuan MA Last Closing: HK$105.3 [email protected] Upside: +48.1% LT BUY BUY SELL Stock Target Price: HK$156.0→ Event: Qianhai Weizhong Bank, mainly established by Tencent, completed its registration on 16 Dec. Its registered capital was RMB3bn. Tencent, Baiyeyuan and Liye Group (the major shareholders) hold 30%, 20% and 20% stake in the bank, respectively. There are a total of 10 sponsor shareholders. Tencent could nominate 1 shareholder to the board of directors and board of supervisors. Analysis: The business operations of Weizhong Bank mainly include the deposit and loan businesses for the individuals and small and micro enterprises. Domestic and international settlement, bill acceptance and discounting, issuance of financial bonds and government bonds, agency issuance and trading are also included. In addition, there are bank card and guarantee services. There are five major divisions, namely the retail and small and micro finance division, credit card division, industry and company business division, IT division and micro-finance division. Unlike traditional banks, Weizhong Bank may have a small amount of outlets or it may not establish any outlet. It conducts businesses mainly through the Internet channel. Compared with traditional banks, Weizhong Bank is more like a platform. It was established as the financial needs of many small and micro individuals and enterprises are not fulfilled. Its initial positioning is to provide services in niche markets to meet the needs of these small and micro individuals and enterprises. Internet concept is mainly reflected in: 1) service orientation; 2) outlet establishment. The target users are mainly those “diors users”, especially the blue-collar groups such as young professionals, industrial workers and service practitioners, as well as Internet users of the non-agricultural practitioners in small towns. Weizhong Bank may leverage on Tencent’s existing personal user advantages to launch consumer finance, credit cards and other retail business services. This positioning is similar to the user positioning of Tencent’s QQ in the initial stage. Upon establishing sufficient brand reputation, Weizhong Bank’s businesses will naturally extend upward. Download our reports from Bloomberg: BOCM〈enter〉 Morning Express 18 December 2014 Market Review Hong Kong stocks extended decline to a fifth consecutive session. The Hang Seng Index dropped 84 points, or 0.4%, to 22,565. Casino operators were among the worst hit. Galaxy Entertainment (27.HK) slumped 8.2% and Sands China (1928.HK) fell 6.2% as the worst blue-chip performers. Technology companies retreated following the pullback of their US-listed peers overnight. Tencent (700.HK) fell 2.5%. Kingsoft (3888.HK) dropped 6%. Auto makers fell. Geely (175.HK) plunged 17% after issuing profit warning expecting about 50% decline in full-year net profit. Peers BYD (1211.HK) dropped 3.7% and Great Wall Motor (2333.HK) shed 3%. Mainland lenders rose. Minsheng Bank (1988.HK) gained 4.6%. CITIC Bank (998.HK) rose 3.9%. US stocks rose on Wednesday. The S&P 500 rose 40.15 points, or 2%, to 2,012.89. The DJIA jumped 288 points, or 1.7%, to 17,356.87. European stocks rebounded. The Stoxx Europe 600 rose 0.1% to close at 329.34. News Reaction CASS expects investment growth to drop to 10% during 13th FYP. Li Yang, vice director of Chinese Academy of Social Sciences (CASS), said China’s investment growth will continue to decline in the future, and the investment is estimated to maintain a growth speed of around 10% during the 13th Five-year Plan. The role of investment serving as the support for the economy will decline, media reported. The investment growth is 15.8% at present, the lowest level in nearly 13 years. Export tariff rate for Chinese coal to cut to 3% in 2015. The Ministry of Finance announced that in 2015, the provisional export tariff rate for the Chinese coal (including anthracite, bituminous coal, coking coal, lignite, etc.) will be reduced to 3% from 10% in 2014. US to impose high tariffs on solar products from China and Taiwan. The US confirmed on Tuesday that it will impose high import duties on solar products from China and Taiwan. This decision may intensify the already-tense trade relations between China and the US. China’s 2014 game market revenue up 37.7% to RMB114.5bn. The 2014 China Game Industry Annual Conference took place in Haikou, Hainan Province. According to the 2014 China’s Game Industry Report released at the conference, the game market in China recorded actual sales revenue of RMB114.48bn in 2014, up 37.7% YoY. During the period, the number of users increased 4.6% YoY to about 517m. CITIC Securities (6030.HK) sets up REITs for store acquisition, Suning Appliance says. Suning Appliance announced that CITIC Securities has established REITs asset-backed special plans. The funds raised will be used to acquire the outlet properties directly or indirectly held by Suning. Download our reports from Bloomberg: BOCM〈enter〉 Morning Express 18 December 2014 Economic releases for this week - USA Date Time 15-Dec 16-Dec 17-Dec 17-Dec 18-Dec Source: Bloomberg Event Industrial Production(MoM) Housing Starts(k) CPI (MoM) CPI ex food & energy (MoM) Initial jobless claims (k) Economic releases for this week - China Survey 0.7% 1,035.0 -0.1% 0.1% 89.5 Prior 15-Dec 16-Dec 17-Dec 17-Dec 18-Dec Date Time 16-Dec Event HSBC Manufacturing PMI Survey 49.8 Prior 16-Dec Source: Bloomberg BOCOM Research Latest Reports Data 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 Report 2015 Outlook - Introducing 2015 Top Picks; A Bright New Beginning HK Property Sector - Downgrade to Market Perform; both prices and rents have overshot Hysan (14.HK) - More opportunities than challenges in 2015 New World Development (17.HK) - High earnings visibility Hang Lung Properties (101.HK) - Record profit in 2014E Kerry Properties (683.HK) - Expanding its recurring income base Auto (Outperform): Finding bright spots amid modest sector outlook Transportation (Container Shipping: Market Perform); (Aviation: Outperform); (Logistics: Outperform): Still challenging for container shipping; airlines to benefit from lower jet fuel prices Telecom & Small/Mid Cap (Market Perform): Opportunities from the expansion of Shanghai-Hong Kong Stock Connect Technology (Market Perform): The rise of Chinese power Steel (Market Perform): On the road to re-rating as sector bottoms out Renewable Energy (Outperform): Improving operating environment to lift profitability China Property (Outperform): Resetting market risk appetite 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 Internet (Outperform): Penetration into traditional industries has just begun Insurance (Outperform): Sector bottomed out with re-rating on the horizon Healthcare (Outperform): Sustainable growth to continue Energy (Market Perform): Energy world under new crude price and Stock Connect environment Consumer Discretionary (Market Perform): Upgrade to Market Perform, but upside catalysts remain absent Brokerage (Outperform): 2015 growth well supported with bright long-term prospects China Market Strategy - Outlook 2015: Re-pricing Risks Consumer Staples (Market Perform): Being selective in a mixed bag in 2015E 17 Dec 2014 Source: Company data, BOCOM International Download our reports from Bloomberg: BOCM〈enter〉 Analyst Raymond Cheng, CFA, CPA, CA Alfred Lau, CFA, FRM Alfred Lau, CFA, FRM Alfred Lau, CFA, FRM Alfred Lau, CFA, FRM Alfred Lau, CFA, FRM Yao Wei Geoffrey Cheng, CFA Zhiwu LI Miles XIE Jovi Li Louis Sun Alfred Lau, CFA, FRM, Toni Ho, CFA, FRM, Luella Guo Yuan Ma Ph.D, Connie Gu, CPA Li Wenbing Johnson Sun, Milo Liu Fei Wu, Tony Liu Phoebe Wong, Anita Chu Li Wenbing Hao Hong, CFA Summer Wang, Shawn Wu Morning Express 18 December 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$) 125.90 21.10 79.05 21.85 125.30 19.18 10.56 50.65 40.95 86.05 6.99 5.31 25.85 9.66 110.60 8.69 8.40 4.72 98.50 37.95 64.75 29.45 73.35 25.45 26.95 13.20 15.22 16.84 17.14 16.24 8.68 6.72 5.98 168.70 4.14 54.40 7.58 72.55 71.65 31.10 21.65 105.30 10.26 12.16 19.42 8.25 9.87 6.07 87.90 9.93 Mkt cap (HK$m) 291,605 94,640 96,788 439,171 239,554 111,843 31,051 151,967 493,248 366,863 56,426 1,941,854 66,237 127,474 312,222 75,299 70,848 88,339 143,712 306,139 163,588 69,115 654,864 269,077 862,521 328,724 36,853 66,246 180,177 91,004 16,863 537,402 839,193 197,058 1,214,205 164,839 63,372 1,394,091 152,920 181,149 176,967 986,479 245,449 73,741 93,159 2,156,062 440,670 1,530,656 1,792,735 110,309 5d chg (%) -7.0 -2.5 -1.1 -4.0 -1.3 -4.1 -0.4 -2.1 -6.7 -5.4 -2.6 -0.9 -2.6 -4.4 -2.6 -3.4 -1.4 -3.9 -4.3 -5.8 -1.1 -5.0 0.3 -4.1 -0.7 -4.1 -1.9 -2.3 -3.2 -7.7 -4.8 -1.3 -3.1 -5.5 -0.5 -1.2 -5.0 -5.1 -3.8 -0.2 -6.3 -8.8 -3.8 -1.5 -6.9 1.1 -3.4 -0.7 -4.2 -7.7 Ytd chg (%) 8.5 -13.9 -13.7 -10.6 -0.3 -0.2 -0.8 25.9 5.3 -12.7 -48.8 1.3 -8.7 -13.8 12.5 -5.7 -3.0 8.3 8.4 -39.3 5.6 -10.4 5.6 2.4 11.1 11.3 -40.9 2.7 6.0 -27.5 -41.9 22.9 -5.5 30.5 16.0 -8.3 -7.6 -13.8 16.2 6.0 -0.7 6.4 -11.6 14.7 5.7 -2.9 -31.6 3.8 9.3 5.3 22,585.8 13,946,976 -4.0 -3.1 Source: Bloomberg Download our reports from Bloomberg: BOCM〈enter〉 –––– 52-week –––– Hi Lo (HK$) (HK$) 152.00 105.95 26.45 19.80 93.15 74.05 24.95 19.12 133.00 117.60 20.60 13.62 11.92 9.40 56.40 36.46 45.65 34.65 108.50 86.00 14.18 6.88 5.69 4.33 28.75 22.75 13.10 9.32 120.20 90.35 10.48 7.15 10.00 7.00 5.44 3.72 108.00 80.55 68.00 37.80 68.35 56.00 34.45 28.50 77.30 55.60 27.95 21.50 28.80 19.72 16.88 9.35 26.40 15.20 18.00 13.56 18.90 13.91 23.50 16.02 16.60 8.62 7.13 4.53 8.23 5.73 189.00 112.80 4.35 3.03 63.45 46.35 10.70 7.55 86.40 72.40 76.50 57.85 32.30 26.55 24.60 17.52 134.90 91.80 14.22 9.03 14.16 9.83 24.90 17.10 11.70 7.31 15.88 9.72 6.42 4.89 102.20 63.65 12.70 7.62 25,363.0 21,137.6 –––––––––– PE ––––––––––– 2013A 2014E 2015E (X) (X) (X) 6.8 8.2 8.5 12.4 14.2 14.9 26.8 25.5 21.2 8.1 8.8 8.7 14.4 14.0 12.9 7.3 9.9 8.5 13.6 11.9 10.7 8.5 16.3 16.0 25.9 20.1 17.5 7.8 10.7 10.3 8.9 9.0 8.3 5.4 5.4 5.1 15.0 15.4 13.9 23.6 23.5 20.1 8.9 14.2 13.3 6.5 10.2 9.7 N/A 12.5 11.9 36.3 58.0 33.1 11.3 14.1 13.2 14.9 15.0 14.4 18.1 15.5 15.2 9.9 10.6 10.3 14.7 12.8 11.8 11.7 10.9 9.9 22.7 18.2 15.5 9.4 9.4 7.9 20.0 64.8 39.9 22.5 19.2 11.9 25.9 24.4 22.7 28.1 25.5 20.7 79.4 49.3 26.1 6.2 6.1 5.8 8.1 8.8 9.6 42.0 38.6 28.8 5.5 5.6 5.1 6.9 13.9 12.2 9.7 15.3 13.2 11.7 10.5 10.0 2.4 17.0 17.6 12.2 17.4 16.1 7.1 7.7 6.6 35.5 32.9 24.9 15.5 15.1 13.1 8.1 13.8 13.4 8.0 7.6 7.0 9.2 9.8 10.6 6.3 6.7 8.1 5.3 5.2 4.9 12.2 12.9 12.9 14.8 15.8 13.5 9.6 10.6 10.1 Yield P/B (%) 2.8 3.6 2.3 5.2 4.4 2.3 2.9 2.0 1.1 2.7 3.3 N/A 3.0 2.8 3.0 4.8 N/A 2.1 3.7 4.6 4.0 3.8 1.2 4.0 1.4 2.0 1.6 1.5 1.9 1.7 0.8 N/A 5.0 2.1 5.9 3.2 6.2 5.2 3.6 3.0 2.3 0.2 2.0 4.1 3.9 4.8 5.8 6.2 3.5 2.4 (X) 0.8 0.8 5.9 1.2 2.2 1.3 0.9 0.6 2.3 0.9 1.1 1.0 1.0 8.7 0.7 0.5 2.2 0.6 0.7 7.5 1.8 1.0 2.2 1.6 2.5 0.5 0.7 1.1 3.5 3.9 1.0 0.9 1.0 9.5 0.9 0.6 1.7 0.9 1.2 1.2 1.5 10.5 0.9 0.7 1.4 1.0 1.0 1.0 1.7 4.3 3.7 1.3 Morning Express 18 December 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 Share price (HK$) Mkt cap (HK$m) 5d chg (%) Ytd chg (%) 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 5.95 21.85 26.40 5.40 5.27 6.31 3.70 34.00 5.31 52.40 9.12 4.72 9.26 6.94 73.35 14.60 38.35 31.45 3.29 34.45 26.95 12.62 2.07 7.21 6.72 13.10 5.98 6.03 17.18 4.14 10.96 30.10 19.82 4.42 6.42 8.25 9.85 26.55 7.72 6.07 5.84 26,634.41 439,170.93 73,051.31 29,562.04 56,000.42 59,369.76 1,306,160.62 147,341.28 1,941,853.88 69,966.53 219,162.13 88,339.17 385,478.16 61,963.51 654,864.48 216,496.25 137,445.20 63,468.77 74,008.65 305,456.46 862,521.14 91,292.45 75,783.64 38,926.98 537,401.55 63,317.66 839,193.08 189,023.97 468,734.42 1,214,205.20 94,432.68 438,742.90 275,995.67 357,721.09 110,994.21 2,156,061.60 141,908.48 133,321.59 62,040.92 1,530,655.94 373,222.75 -4.6 -4.0 -4.7 18.2 0.6 -4.2 -1.3 0.4 -0.9 -4.9 11.2 -3.9 0.2 -2.8 0.3 -2.7 -5.0 -4.0 -3.2 2.7 -0.7 -5.0 -2.8 -3.1 -1.3 -3.4 -3.1 4.7 1.5 -0.5 -3.7 3.1 -0.9 -2.2 4.2 1.1 3.0 -2.9 -5.0 -0.7 -0.7 -43.1 -10.6 18.7 -10.3 -27.2 -10.9 -2.9 30.8 1.3 -20.1 45.9 8.3 29.1 -18.2 5.6 32.0 -10.4 0.6 21.9 13.3 11.1 -47.5 24.7 -13.5 22.9 -6.4 -5.5 50.8 4.0 16.0 -9.7 42.3 46.8 12.8 10.9 -2.9 40.5 -7.7 -22.7 3.8 38.7 11.2 25.0 34.5 6.3 7.4 7.5 4.0 38.2 5.7 66.8 9.2 5.4 9.7 9.9 77.3 16.2 44.3 34.9 3.9 37.3 28.8 24.5 2.3 8.8 7.1 15.2 8.2 6.2 17.8 4.4 15.2 34.0 23.2 5.2 6.7 11.7 10.3 35.7 10.3 6.4 6.2 5.8 19.1 19.7 4.0 3.5 4.9 3.0 21.1 4.3 52.0 4.9 3.7 5.9 6.7 55.6 9.4 26.1 25.8 2.5 23.6 19.7 11.7 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 24.0 7.1 4.9 3.6 69.5 8.1 21.1 N/A 17.5 6.7 5.3 14.1 5.4 28.5 9.2 36.3 5.6 11.3 14.7 15.0 11.5 9.6 N/A 23.3 22.7 5.9 16.9 5.0 6.2 10.2 8.1 10.3 6.0 5.5 5.6 33.3 36.0 15.4 24.0 9.2 9.6 9.3 25.4 5.3 5.4 21.3 8.8 19.1 53.9 18.8 16.3 5.2 12.1 5.4 27.5 8.7 58.0 5.3 10.3 12.8 13.1 11.5 10.7 N/A 21.2 18.2 6.1 14.9 5.4 6.1 13.0 8.8 9.8 6.0 5.6 5.9 32.0 24.4 15.4 18.8 9.8 8.9 9.6 19.5 5.2 5.3 17.6 8.7 16.0 15.6 14.8 16.6 4.8 10.9 5.1 24.2 8.0 33.1 5.0 8.0 11.8 12.0 8.9 10.7 N/A 17.6 15.5 6.5 15.0 5.0 5.8 13.2 9.6 8.8 5.4 5.1 5.5 26.8 19.9 14.0 12.0 10.6 8.6 8.9 14.0 4.9 5.0 11,269 4,624,730 -0.9 4.2 11,950.0 9,159.8 7.9 7.8 7.3 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) 1.3 5.2 1.2 0.0 3.6 0.4 N/A 0.6 N/A N/A 2.6 2.1 2.1 3.2 1.2 1.9 2.7 1.0 N/A 1.5 1.4 4.3 N/A 2.8 N/A 4.8 5.0 1.4 4.5 5.9 2.1 N/A 0.8 2.7 0.9 4.8 4.8 1.6 0.8 6.2 N/A 2.3 1.2 2.5 0.7 0.8 0.6 1.0 2.0 1.0 3.6 1.2 0.6 1.1 1.0 2.2 2.5 3.2 1.6 0.9 2.3 2.5 1.1 1.3 0.9 0.9 0.8 1.0 1.2 1.2 0.9 1.1 2.9 2.4 1.0 1.3 1.0 1.7 1.9 1.6 1.0 0.9 4.1 1.2 Morning Express 18 December 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 Raymond CHENG, CFA, CPA, CA (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 Strategy Economics Hao HONG, CFA Banks/Network Financials Qingli YANG (86) 10 8800 9788 - 8043 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 Fay ZHOU (852) 2977 9381 fay.zhou (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 (852) 2977 9387 milo.liu (852) 2977 9389 liwenbing Healthcare Louis SUN Telecom & Small/ Mid-Caps Milo LIU Insurance & Brokerage Zhiwu LI Technology Internet Miles XIE Transportation & Industrial Yuan MA, PhD (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 Miaoxian LI Oil & Gas/ Gas Utilities Consumer Discretionary Jerry LI @bocomgroup.com Automobile Download our 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