1. business and industrial

Morning Express
25 March 2015
Focus of the Day
Indices
China Macro
Comments on March HSBC PMI
Miaoxian LI
miaoxian.li@bocomgroup.com
Economics
The HSBC flash China PMI for March came in at 49.2, lower than the final reading of 50.7
in February and consensus of 50.5. The slump, to a certain extent, indicated the economy
is still under downside pressure. However, the March reading may have exaggerated the
actual pressure, as distorted by the CNY, in the same way the higher-than-expected
February reading painted an overly rosy picture of the economy.
Among the components, as a result of a decline in domestic orders, New Orders fell 1.9
ppts MoM, dragging the headline reading by 0.6 ppt. Employment declined notably by
2.8 ppts, dragging the headline figure also by 0.6 ppt. The significant decline of the two
indexes may have reflected the CNY factor. The February PMI survey was conducted
before the CNY and its buoyant result reflected the pre-holiday production rush. In
contrast, the March survey was conducted during the CNY, and reflected the impact of
the holiday on manufacturing.
Apart from the poor HSBC PMI, another factor that could weigh on the March economic
data is that the government is planning to shut down highly polluting industries in Beijing,
Tianjin and Hebei in late March, ahead of the visit of the International Olympic
Committee to consider Beijing’s application to host the Winter Olympics. Similar to the
“ APEC Blue ” last year, the “ Winter Olympics Blue ” could exacerbate the
value-added industrial output data. Regardless of the cause, poor economic data would
provide justification for further easing. We believe the PBoC would lower the RRR further
in April.
KWG (1813.HK)
Neutral
FY14 results inline; solid fundamentals with strong
sales execution
Philip TSE, CFA
Last Closing: HK$5.15
philip.tse@bocomgroup.com
Upside: +35%
LT
BUY
BUY
SELL
Stock
Target Price: HK$6.95→
We view the FY14 set of results as solid and largely in line with our preview on March 16
and see good growth in both development and rental income. Most financial and
earnings indicators, including margins, contracted sales target and gearing level, are all in
good shape with reasonable growth prospect. The counter is currently trading at 3.5x
FY15E PE and 0.54x FY15E book with a projected dividend yield of 9.0%, which we view as
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HSI
24,400
H Shares
12,005
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3,869
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309
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2,011
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1,139
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Close
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0.60
7.83
-2.86
0.01
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bps change
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0.39
US 10 yield
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Indicators
Brent
Gold
Silver
Copper
JPY
GBP
EURO
HSI Technical
HSI
50 d MA
200 d MA
14 d RSI
Short Sell (HK$m)
Source: Bloomberg
24,400
24,429
23,957
53
7,888
BOCOM Int'l Corporate Access
26 Mar
27 Mar
30 Mar
30 Mar
30 Mar
1 Apr
2 Apr
2 Apr
2 Apr
Yongda Auto (3669.HK)
Bank of Communications (3328.HK)
Shengmu Organic Milk (1432.HK)
Kingsoft (3888.HK)
Tiangong (826.HK)
Phoenix Healthcare (1515.HK)
Baoxin Auto (1293.HK)
Landsea Green Properties (106.HK)
Zhengtong Auto Service (1728.HK)
Morning Express
25 March 2015
attractive especially when KWG does not possess key risks like many other developers
such as declining margin, high gearing and loss of sales momentum. We reaffirm our BUY
rating on KWG with an unchanged target price of HK$6.95, representing a discount of
45% to our estimated NAV of HK$12.64 per share.
Hang Seng Index (1 year)
26,000
25,000
24,000
23,000
22,000
21,000
China Life (2628.HK)
Improving structure in the individual channel with
higher-than-expected growth in embedded value
Neutral
LT
BUY
Source: Company data, Bloomberg
BUY
SELL
HS China Enterprise Index (1 year)
13,000
Stock
Jerry LI
Last Closing: HK$27.7
liwenbing@bocomgroup.com
Upside: +33.35%
12,000
11,000
Target Price: HK$36.94→
10,000
China Life announced its FY14 results. Net profit in FY14 amounted to RMB32.2bn. (of
which interest rate adjustment for reserve valuation contributed pre-tax profit of
RMB4.6bn), up 30% YoY and in line with consensus. On consolidated basis, the company’s
profit in FY14 was RMB71.7bn, almost 20.9x of the figure in FY13. Net assets attributable
to the parent company as at the end of FY14 amounted to RMB284.1bn, up 29% YoY and
met our expectation of RMB283.3bn. The growth in new business value of the company
was basically in line with the consensus, while that of embedded value slightly surpassed
expectation. Consolidated ROI was 7.7%. We are optimistic about the re-rating of H-share
insurance stocks and maintain Buy on the counter.
9,000
8,000
Source: Company data, Bloomberg
Shanghai A-shares (1 year)
4,000
3,500
3,000
2,500
2,000
Hengan (1044.HK)
Neutral
2015 swing factor: Tissue and diaper sell-through
Summer WANG
Last Closing: HK$87.50
summer.wang@bocomgroup.com
Upside: 4%
LT
BUY
Source: Company data, Bloomberg
SELL
BUY
Stock
Target Price: HK$91.00↑
In our opinion, Hengan is facing increasing challenges from Vinda (3331 HK, BUY, TP
HK$15.00) in tissues and international players in baby diapers. Its under-investment in
tissue/diaper R&D and new channels in previous years may gradually abate Hengan’s
competitive edge. We note Hengan’s tissue and baby diapers just recorded 2%-3% sales
growth YoY in 2H14, lagging behind competitors (e.g. Vinda: +21% tissue revenue growth
in 2H14; Kimberly-Clark: 25% organic diaper sales in China in 2014). We think Hengan
has to make sure it invests enough in innovation to lock in consumers who are trading
up. The good thing is that we have seen some endeavors from Hengan, including (1)
investing more in R&D, marketing and online channels against the favorable commodity
cost backdrop; (2) splitting sales teams for tissue and hygiene for stronger tissue sales;
and (3) hiring IBM and SAP to optimize operation in supply chain, logistics and SKU
management (with the financial impact to be seen in late 2016, in our estimate). Given
Hengan’s stronger position in sanitary napkin (with super-slim and 420mm night series
on the way; 67% of its operating profit in 2014) and cheerful margin outlook, we are
comfortable to use Hengan’s long-term average P/E (24.0x) for valuation and slightly
raise TP to HK$91.00 (from HK$88.00) on our revised 2015E EPS (+19% YoY). Maintain
LT-BUY (vs BUY for Vinda). Better-than-expected tissue and diaper sell-through is the
biggest catalyst for the stock, in our view.
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Shenzhen A-shares (1 year)
2,000
1,800
1,600
1,400
1,200
1,000
Source: Company data, Bloomberg
Morning Express
25 March 2015
Financial sector
Internet finance should prioritize quality
Qingli YANG
yangqingli@bocomgroup.com
MP
UP
OP
China does not lack high value-added products and services and the mechanism for
creating such products, like high-quality toilet seats. What China lacks is the mechanism
to select such products. Financial intermediaries are not playing their supposed role of
selection. The phenomenon of “bad coins driving out good ones” has intensified over the
years, and the standards by which quality is judged have become blurred or lost. There
are also poor products in finance, and both consumers and industry participants suffer.
The time of change has come. Disorderly expansion is not sustainable; structural change
has started. Quality products and services are scarce. Finance, especially network finance,
cannot pursue rampant scale expansion without any regard to quality. Internet finance
needs to suit the new economy and assist the growth of small and micro enterprises.
ABC (1288.HK)
Neutral
Earnings missed expectation
Shanshan LI, CFA
Last Closing: HK$3.80
BUY
SELL
lishanshan@bocomgroup.com
Upside: +13.4%
LT
BUY
Stock
Target Price: HK$4.31→
ABC reported a 8.0% YoY increase in net profit to RMB179.51bn for FY2014 with EPS of
RMB0.55, lower than consensus estimate by 2.6% and our estimate by 3.4%, mainly due
to higher-than-expected provision, and lower-than-expected net fee and commission
income. Non-performing loan balance grew by 20.8% QoQ, a rate higher than those of
1-3Q. Full-year NPL net formation rate was 0.92%, significantly higher than 0.59% in 1H
after taking write-off into account. The ratio of loans overdue for more than 90 days/NPL
remained at about 75%, indicating stringent classification. Interest spread improved on
both YoY and QoQ bases, mainly attributable to improved deposit-lending rate spread
and bond investment yield. Small and micro loans continued to maintain a rapid growth,
with continued decrease in loans to policy-restricted sectors. The proportion of demand
deposits recorded QoQ growth. Net fee and commission income reported a 3.7% YoY
decline, the first decline among the banks which already announced annual results.
Structurally, the main reason was a larger decrease in consultancy income and settlement
and clearing fee income. We cut our earnings forecasts, but maintain “Neutral” and TP of
HK$4.31.
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Morning Express
25 March 2015
Daphne (210.HK)
Neutral
Hit hard by online competition; TPG stays/exits
should soon unveil
Phoebe WONG
Last Closing: HK$2.11
BUY
SELL
phoebe.wong@bocomgroup.com
Upside: -10%
LT
BUY
Stock
Target Price: HK$1.90→
Daphne reported a 47% FY14 net profit decline (2H -81% to nearly zero earnings vs. 1H
-44%), in line with our expectation but 22% below market estimate, dragged by severe
operating margin squeeze due to escalated selling cost on aggressive promotional
activities (particularly 4Q) for stock clearance and operating de-leverage (FY14 SSS -3.4%)
amplified by its high fixed cost burden (staff +0.4ppt to 14.5% of revenue and rental
+0.5ppt to 25%), notwithstanding the HK$120m inventory write-back (vs. HK$245m
provision). Thus far, signs of improvement remain absent. We continue to believe
Daphne’s key setback is structural, with increasing market share loss amid the intense
online competition, particularly for Daphne’s low-mid end footwear segment which is hit
the hardest. Coupled with the sustained sluggish local consumer climate, we believe
Daphne’s SSS/margin will remain challenging, with prolonged de-stocking pressure
further clouding the outlook. All in all, we expect Daphne to post a further net profit
decline of 17% in FY15E before stabilizing in FY16E (-2%). As for TPG’s CB, given it is now
deep off the money and will expire in less than a month, we believe the chance of
triggering TPG conversion is highly unlikely. In view of TPG’s already “hands-off”
involvement in the company’s operation, an ultimate exit is a matter of time though we
believe the impact on Daphne is minimal. Maintain Sell and TP of HK$1.9.
Intime (1833.HK)
Neutral
FY14 in line; remain positive on earnings outlook;
reiterate Buy
Anita Chu
Last Closing: HK$4.68
Anita.chu@bocomgroup.com
Upside: +18%
LT
BUY
BUY
SELL
Stock
Target Price: HK$5.50↓
Intime’s FY14 net profit declined by 30% YoY to RMB1,121m. Excluding the disposal gains,
core net profit decreased by 15% in FY14, in-line with our and market expectation. 2H
core net profit decreased by 16% YoY, mainly due to negative SSS (-4%), rising operating
expenses, sustained new store losses and higher tax rate. Despite the ongoing renovation
of the Hangzhou Westlake store, sustained weak consumer sentiment, ongoing
anti-corruption and increased competition, SSS decline stabilized at -4% in 4Q, vs.
-4%/-7%/+2% in 3Q/2Q/1Q, which we attribute to the stronger promotional effort.
Merchandise gross margin expanded by 0.1ppt YoY to 16.6% in 2H, thanks to the
improved sales mix. Despite the rising operating costs, operating margin expanded by
0.5ppt YoY to 7.3% in 2H mainly due to the strong revenue growth driven by the sales of
properties. It is worth noting that Intime generated RMB663m from sales of properties
(accounting for 13% of total revenue) in FY14 and the operating profit margin for the
business was 41%, well above the 26% in department stores and the loss-making
shopping mall business. Looking ahead, Intime plans to hold more commercial properties
in order to facilitate its expansion plan of the shopping mall business. We expect the
potential ongoing sales of properties to continue to support Intime’s revenue/earnings
growth, partially offsetting the sluggish growth of its core retail businesses. Further, the
stock is trading at 10.5x FY15E P/E, which appears undemanding, in our view. Reiterate
Buy (TP: HK$5.5).
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
25 March 2015
Henderson Land (12.HK)
LT
BUY
Neutral
FY14 results review; faster sales at lower margin
Alfred LAU, CFA
Last Closing: HK$53.4
BUY
SELL
alfred.lau@bocomgroup.com
Upside: -10.9%
Stock
Target Price: HK$47.60↓
FY14 core profit rose 4.0% YoY to HK$9.3bn, with faster inventory sales offsetting the low
completion volume. Nevertheless, overall HK property margin dropped to 26.5% (2013:
31.8%). We are also concerned that such trend will continue and we maintain our view
that Henderson Land will be one of the major victims in case property prices correct and
the hot sentiment on small units turns. We revise up our NAV forecast by 2.5% to
HK$81.90 (from HK$79.90) but lower our target price from HK$48.90 to HK$47.60, based
on a 60% ex-Gas NAV discount (from 55%), on concern about a slower property sales
momentum along with less sellable resources in 2015. Maintain Sell.
Shanghai Petrochem (338.HK)
Neutral
Ready to receive the benefit of lower crude oil price
Fei WU
Last Closing: HK$2.58
fei.wu@bocomgroup.com
Upside: +16%
LT
BUY
BUY
SELL
Stock
Target Price: HK$3.00→
Shanghai Petrochemical's FY 2014 net loss came in at Rmb692m, within the Rmb650m to
Rmb750m range that the company forecasted in its profit warning at the beginning of
February. Lower price and volume, external investment loss, inventory write-down and
Rmb depreciation contributed to the loss. Most of the oil companies are suffering from
low oil prices, but Shanghai Petrochemical, with no business in upstream E&P, becomes a
net beneficiary in its downstream operation, both in refining and its chemicals business,
which uses the crude-based naphtha. We reiterate our BUY call with a TP of HK$3.0,
16% upside.
SPT Energy (1251.HK)
Margin decline in the low oil price environment
Fei WU
fei.wu@bocomgroup.com
Last Closing: HK$1.28
Not Rated
SPT Energy’s revenue dropped 9% to Rmb2,187mn in 2014 with operating profit down
51% to Rmb204mn. 2014FY net profit fell 61% to Rmb116mn, missing consensus by 13%.
Revenue from the domestic and overseas markets decreased 9.5% and 8.6% YoY,
respectively. And the 19% devaluation of Kazakhstan Tange in Feb 2014 brought
Rmb21.5mn of exchange loss in 2014. SPT is trading at 10.3x consensus 2015 PE.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
25 March 2015
CSPC (1093.HK)
In line FY14 results; FY15 outlook remains positive
Milo LIU
milo.liu@bocomgroup.com
Last Closing: HK$6.33
Not Rated
CSPC reported in-line FY14 results. Revenue came in at HK$10,955mn, +10% YoY
compared with HK$9,949mn in FY13. The growth was mainly driven by the strong
growth momentum in the innovative drug business (+45% YoY), due to improved
market share and focus on the high-end market. The management expects the
segment to continue growing at c.+40% YoY in FY15. The management also provides
the upbeat guidance for FY15, which they expect the bottom-line to grow at c.+30%
YoY, better than our expectation.
Robust growth in the oncology drug segment. Oncology products registered
HK$252mn in revenue (+226% YoY) and HK$55mn in net income contribution in FY14.
The management is confident that the segment will continue growing at a fast pace,
with an aim to doubling both top/bottom line in FY15, according to the company.
Management expects limited pricing pressure from the provincial tenders in FY15.
1) The innovative drug segment will not be affected by the tendering; and 2) the
price erosion from the generic drugs segment will be largely offset by the volume
increase. On the other hand, we expect the provincial tendering to help its newly
launched products to penetrate the local market.
Future growth strategies: 1) To further enrich its R&D efforts on its innovative drug
business; 2) to bring efficiency to the API business to further secure its market
leading position; 3) to collaborate with overseas partners for international expansion;
and 4) to strategically source M&As to enhance its product mix.
Sinotrans Limited (598.HK)
Neutral
FY14 result – The DHL JV kept providing the lift
Geoffrey CHENG, CFA
Last Closing: HK$5.06
geoffrey.cheng@bocomgroup.com
Upside: +21.4 %
LT
BUY
BUY
SELL
Stock
Target Price: HK$6.80→
Sinotrans Limited reported a 36.2% YoY increase in net profit for FY2014. Turnover
increased 0.6% YoY. Though operating margin increased 0.2 ppt during the year to grow
earnings, it was the express delivery JV that provided most of the earnings growth for the
year. The logistics segment continued to grow its turnover and segment profit,
notwithstanding the small improvement in operating margin. We believe the
improvement of the airfreight forwarding industry helped improve the freight forwarding
segment margin in FY14. We keep our earnings forecasts unchanged, and reiterate our
BUY recommendation and target price of HK$6.8. The results presentation is scheduled
to be held on 25th March.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
25 March 2015
Link REIT (823.HK)
A milestone to cross-border investment
Alfred LAU, CFA
alfred.lau@bocomgroup.com
Last Closing: HK$47.3
Not Rated
The Link REIT announced its first acquisition outside Hong Kong, acquiring EC Mall Beijing
for Rmb2.5bn. We believe the consideration is fair and in line with the market price and
CBRE’s appraised value. The purchase represents a 2.4% increase in asset value, bringing
up gearing (TD/TA) to 15.3%. While we only expect a mild 0.4%-0.8% DPS enhancement,
we believe this sets a milestone to The Link REIT’s cross-border expansion and
management’s commitment to exploring investment opportunities.
Yongda Motor (3669.HK)
Neutral
Proactive development in new business areas
Wei YAO
Last Closing: HK$4.06
wei.yao@bocomgroup.com
Upside: +36.7%
LT
BUY
BUY
SELL
Stock
Target Price: HK$5.55→
We participated in Yongda’s FY14 results conference. Our key takeaways are as follows:
1)The company is proactive in exploring Internet business opportunities; 2) The
cooperation with UBER will help its business development in all areas; 3) Financial leasing
is an important area in auto finance; 4) Its network is still expanding; 5) Maintain Buy.
Yongda is making ventures in new areas, such as combining traditional auto sales with
the Internet, and actively developing auto finance. Auto e-commerce and auto finance
are important areas for the auto market in the future. In the long run, Yongda’s efforts in
these segments should support earnings growth. In the short term, store openings in
recent years will support revenue growth in this year and next. Yongda also has high
earnings elasticity. The stock's current valuation is still undemanding. Maintain Buy.
Download our reports from Bloomberg: BOCM〈enter〉
24 March 2015
Last Closing: HK$5.15
Upside: +35.0%
Target Price: HK$6.95→
KWG Property (1813.HK)
Satisfactory FY14 results; solid fundamentals with strong sales execution
China Property Sector
UP
MP
OP
Financial Highlights
Y/E 31 Dec
FY12
Revenue (Rmb m)
9,676
YoY growth (%)
(4.4)
Core net profit (Rmb m)
1,870
Core EPS (Rmb)
0.65
Vs. Consensus (+/- %)
N/A
EPS growth (%)
4.3
P/E (x)
6.5
P/B (x)
0.79
Dividend yield (%)
3.6
Source: Company, BOCOM Int’l estimates
FY13
FY14
FY15E
FY16E
9,468
(2.2)
2,288
0.79
N/A
22.4
5.4
0.69
7.0
10,466
10.5
2,908
1.00
N/A
26.1
4.1
0.61
8.0
16,005
22.1
3,547
1.20
3.0
20.7
3.5
0.54
9.0
18,673
16.7
4,278
1.45
3.4
20.6
2.9
0.47
10.8
Satisfactory FY14 results. On reported basis, revenue increased by 10.5% to Rmb10.5bn.
On consolidated basis (for JCE projects), revenue increased 19.2% to Rmb14.9bn.
Reported GP margin dropped slightly to 35.5%, in line with our expectation. Estimated
core profit increased 27.1% YoY to Rmb2,908m and recognized ASP increased 7.2% YoY
to Rmb11,958psm. The company proposed a final dividend of Rmb0.33 per share,
representing about 8.0% dividend yield on the closing price of HK$5.15 on 24 Mar.
Conservative FY15 contracted sales target of Rmb22.5bn. In 2015, KWG will have 10
brand new projects to be launched for sale and total planned saleable resources for
2015 would amount to Rmb38bn. The company sets its FY15 contracted sales target at
Rmb22.5bn, a 10% YoY growth, which looks conservative, in our view. Assuming a
similar sell-through to be achieved in 2015 (2014: 62%), we expect KWG can achieve
sales as high as Rmb23.5bn.
Stable gearing with ample cash on hand. Net debt to attributable equity was reported
at 66.8%, which increased 10.5 ppts YoY but dropped 3.6 ppts HoH (2013: 56.3% and
1H2014: 70.4%). Cash level increased slightly by 7.5% HoH to Rmb10.9bn. In 2015, KWG
expects a net operating cash inflow of Rmb7.84bn. Major cash inflow would be sales
proceeds of Rmb21.65bn while planned major cash outflows will total Rmb13.81bn,
which include construction CAPEX of Rmb6.8bn, committed land premium of
Rmb0.75bn, tax of Rmb2.5bn, SG&A expenses of Rmb1.46bn and interest of Rmb2.3bn.
More Tier-1 city projects acquired. KWG acquired 9 new projects in 2014 with
attributable GFA of about 1.275m for a total attributable land cost of Rmb7.5bn,
representing an average A.V. of ~Rmb5,872. While the average land costs of these 9
projects are higher than the overall landbank land cost (~Rmb3,200psm), 6 of these
projects are located in Tier-1 cities and should be able to achieve higher profitability and
faster sell-through, in our view.
Valuation. We view the FY14 set of results as satisfactory and see good growth in both
development and rental income. Most financial and earnings indicators, including
margins, contracted sales target and gearing level, are all in good shape with reasonable
growth prospect. The counter is currently trading at 3.5x FY15E PE and 0.54x FY15E
book with a projected dividend yield of 9.0%, which we view as attractive especially
when KWG does not possess key risks like many other developers such as declining
margin, high gearing and loss of sales momentum. We maintain BUY rating on KWG with
an unchanged target price of HK$6.95, representing a discount of 45% to our estimated
NAV of HK$12.64 per share.
LT
BUY
Neutral
BUY
SELL
Stock
Satisfactory FY14 results with
revenue and core profit in line
with expectation
Conservative sales target at
Rmb22.5bn, up 10% YoY
More Tier-1 cities and JV projects
on land replenishment in 2014
Target price remains unchanged at
HK$6.95; maintain BUY.
Stock data
52w High (HK$)
52w Low (HK$)
Market cap (HK$m)
Issued shares (m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA (HK$)
200d MA (HK$)
14-day RSI
6.49
3.94
15,173
2,946.235
5.46
4.67
(3.01)
4.97
5.30
46.44
Source: Company data, Bloomberg
1-year share price performance
60%
50%
40%
30%
20%
10%
0%
-10%
Mar-14
HSI
Jun-14
1813.HK
Sep-14
Dec-14
Source: BOCOM Int’l
Philip Tse, CFA, FRM
philip.tse@bocomgroup.com
Tel: (852) 2977 9220
Alfred Lau, CFA, FRM
alfred.lau@bocomgroup.com
Tel: (852) 2977 9235
Alfred Lau, CFA, FRM
Download our reports from Bloomberg: BOCM
〈enter〉
Mar-15
25 March 2015
Last Close: HK$87.50
Upside: 4%
Target Price: HK$91.00↑
Consumer Staples Sector
Hengan (1044 HK)
UP
2015 Swing factors: tissue and diaper sell-through
In our opinion, Hengan is facing increasing challenges from Vinda (3331 HK, BUY, TP
HK$15.00) in tissues and international players in baby diapers. Its under-investment in
tissue/diaper R&D and new channels in previous years may gradually abate Hengan’s
competitive edge. We note Hengan’s tissue and baby diapers just recorded 2%-3%
sales growth YoY in 2H14, lagging behind competitors (e.g. Vinda: +21% tissue revenue
growth in 2H14; Kimberly-Clark: 25% organic diaper sales in China in 2014). We think
Hengan has to make sure it invests enough in innovation to lock in consumers who are
trading up. The good thing is that we have seen some endeavors from Hengan,
including (1) investing more in R&D, marketing and online channels against the
favorable commodity cost backdrop; (2) splitting sales teams for tissue and hygiene for
stronger tissue sales; and (3) hiring IBM and SAP to optimize operation in supply chain,
logistics and SKU management (with the financial impact to be seen in late 2016, in our
estimate). Given Hengan’s stronger position in sanitary napkin (with super-slim and
420mm night series on the way; 67% of its operating profit in 2014) and positive
margin outlook, we are comfortable to use Hengan’s long-term average P/E (24.0x) for
valuation and slightly raise TP to HK$91.00 (from HK$88.00) on our revised 2015E EPS
(+19% YoY). Maintain LT-BUY (vs BUY for Vinda). Better-than-expected tissue and
diaper sell-through is the biggest catalyst for the stock, in our view.
2H14 results beat on margins and higher other income. Hengan’s 2014 net profit
grew by 5% YoY (-4%/+15% in 1H/2H14) to HK$3.9bn, beating our and consensus
estimate by 6% and 4%, respectively, on stronger gross margin, lower distribution
cost and higher other income. Total revenue grew by 12% YoY (+16%/+9% in
1H/2H14), led by its resilient sanitary napkin business (+24%; ASP/volume
+6.6%/+17%), offsetting the weaker-than-expected performance in tissues (+5%),
baby diapers (+6%) and snack food (-4%). Thanks to declining commodity costs and
positive mix shift, 2H14 gross margin nicely beat (up 2.4-ppt HoH to 47.3%). Tissue
gross margin widened by 2.7-ppt HoH to 35.9% in 2H14 given the lower wood pulp
cost (c60% of tissue COGS) and reduced promotion; sanitary napkin reached 70%
gross margin for the first time owing to mix shift and favorable 4Q14 petrochemical
prices (50-60% of sanitary napkin COGS). A&P climbed to 10.9% of revenue in 2014
(vs 8.8% in 2013), due to the increased marketing for diapers and investments for
new channels. Meanwhile, total staff cost grew by just 3% YoY, partly attributable to
less employees (from 34,000 to 31,000) on higher level of production automation.
Core operating margin (excluding other income and gain) narrowed to 19.2% (vs
20.3% in 2013). Hengan remained in a net cash position (HK$1.8bn, -10% net gearing
ratio). See our detailed earnings review and forecast revision on pages 2-4.
Tissue and baby diaper revenue are the swing factors. Hengan’s three new diaper
series (Super Absorbent, Pull & Up, and Xiaoqinxin), which demonstrated positive
sales momentum, accounted for 39% of Hengan’s diaper segment sales in 2014. This
implies Hengan has to work even harder to lift their contribution level and drop off
underperforming nappies asap. For tissues, the 1.4m tons of new capacity (whole
industry) added in late 2014 (source: CNHPIA), combined with Hengan’s first-time
reluctance to give a capacity timetable, signal a stiff competition landscape in 2015.
Presently, we project 7% tissue sales growth for Hengan in 2015, vs 17% for Vinda.
Download our reports from Bloomberg: BOCM [enter]
MP
Neutral
OP
LT
BUY
SELL
BUY
Stock
Stock data
52w Low-High (HK$)
74.05-94.35
Market cap (US$m)
13,816
3m ADTV (US$m)
22
No. of shares (m)
1,224
Free float
60%
1m change
-2%
YTD change
8%
Auditor
PwC
Source: Bloomberg, Company data
Financial highlights
12-15E 12-16E 12-17E
Revenue (HK$m)
26,426 29,813 33,813
Revenue YoY growth 10.9% 12.8% 13.4%
Gross margin
48.7% 49.7% 50.6%
Core op margin
21.8% 23.0% 24.1%
Net profit (HK$m)
4,659 5,524 6,559
Diluted EPS (HK$)
3.79
4.50
5.34
EPS YoY growth
19.1% 18.6% 18.7%
P/E
23.1x 19.5x 16.4x
P/B
5.4x
4.8x
4.3x
P/S
4.1x
3.6x
3.2x
ROE (average)
24.5% 26.2% 27.8%
Dividend yield
2.6% 3.1% 3.7%
Source: Company data, BOCOM Int’l estimates
1-year stock performance
20%
HSI Index
Hengan
15%
10%
5%
0%
Mar-14
-5%
Jun-14
Sep-14
Dec-14
-10%
Source: Bloomberg
Summer Wang
summer.wang@bocomgroup.com
Tel: +852 2977 9221
Mar-15
25 March 2015
Last Closing: HK$2.11
Downside: 10%
Target Price: HK$1.90→
Consumer Discretionary Sector
Daphne (210.HK)
UP
Hit hard by online competition; TPG stays/exits should soon be
unveiled
MP
OP
Financial Highlights
Y/E Dec
Revenue (HK$m)
Revenue growth (%)
Net profit (HK$m)
vs. Consensus (%)
EPS (HK$)
EPS growth (%)
PER (x)
P/B (x)
DPS (HK$)
Yield (%)
FY12
FY13
FY14
FY15E
FY16E
10,529
23
956
na
0.58
2
3.6
0.7
0.18
8.5
10,447
-1
329
na
0.20
-66
10.6
0.7
0.08
3.8
10,356
-1
176
na
0.11
-47
19.8
0.7
0.04
1.7
9,820
-5
146
-60
0.09
-17
23.9
0.7
0.03
1.4
9,248
-6
143
-70
0.09
-2
24.3
0.7
0.03
1.4
Neutral
LT
BUY
BUY
SELL
Stock
Source: Company, BOCOM Int’l estimates
Daphne reported a 47% FY14 net profit decline (2H -81% to nearly zero earnings vs. 1H
-44%), in line with our expectation but 22% below market estimate, dragged by severe
operating margin squeeze due to escalated selling cost on aggressive promotional
activities (particularly 4Q) for stock clearance and operating de-leverage (FY14 SSS
-3.4%) amplified by its high fixed cost burden (staff +0.4ppt to 14.5% of revenue and
rental +0.5ppt to 25%), notwithstanding the HK$120m inventory write-back (vs.
HK$245m provision). Thus far, signs of improvement remain absent. We continue to
believe Daphne’s key setback is structural, with increasing market share loss amid the
intense online competition, particularly for Daphne’s low-mid end footwear segment
which is hit the hardest. Coupled with the sustained sluggish local consumer climate,
we believe Daphne’s SSS/margin will remain challenging, with prolonged de-stocking
pressure further clouding the outlook. All in all, we expect Daphne to post a further net
profit decline of 17% in FY15E before stabilizing in FY16E (-2%). As for TPG’s CB, given it
is now deep off the money and will expire in less than a month, we believe the chance
of triggering TPG conversion is highly unlikely. In view of TPG’s already “hands-off”
involvement in the company’s operation, an ultimate exit is a matter of time though we
believe the impact on Daphne is minimal. Maintain Sell and TP of HK$1.9.
Whether TPG stays or exits will soon be unveiled. TPG has CB of RMB550m, the
conversion period of which was extended for 1 more year from 25 Apr 2014, and the
expiry date is approaching on 24 Apr 2015. To recap, the key conversion term is if
the closing price for the shares during the conversion period is equal to or higher
than HK$4.25 for 14 consecutive trading days, it is compulsory for TPG to convert
the CB. Given it is now deep off the money and will expire in less than a month, the
chance of triggering TPG conversion is highly unlikely, in our view. Overall, in view of
TPG’s already “hands-off” involvement in the company’s operation, an ultimate exit
is a matter of time though we believe the impact on Daphne is minimal. While TPG
had a 2.1% stake in Daphne according to Bloomberg as of 30 June 2014, no latest
shareholding details are available since then. Despite the likely redemption needs,
Daphne has little financial pressure. Our forecast, which already factored in the
Download our reports from Bloomberg: BOCM〈enter〉
Stock data
52w High (HK$)
52w Low (HK$)
Market cap (HK$m)
Issued shares (m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA (HK$)
200d MA (HK$)
14-day RSI
Source: Company data, Bloomberg
4.10
1.86
3,480
1,649
6.9
-3.7
-25.2
2.30
3.16
50.24
1 Year Performance chart
30%
HSI
210 HK
10%
-10%
-30%
-50%
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
Source: Company data, Bloomberg
Phoebe Wong
phoebe.wong@bocomgroup.com
Tel: (852) 2977 9391
25 March 2015
Last Closing: HK$4.68
Upside: +18%
Target Price: HK$5.50↓
Consumer Discretionary Sector
Intime (1833.HK)
UP
FY14 in line; remain positive on earnings outlook; reiterate Buy
MP
OP
Financial Highlights
Revenue (RMBm)
Revenue growth (%)
Net profit (RMBm)
Net profit growth (%)
Net profit vs consensus (+/-%)
Core net profit (RMBm)
Core net profit growth %
Core EPS (RMB)
P/E (x)
DPS (RMB)
Yield (%)
FY12
FY13
FY14
FY15E
FY16E
3,907
25
973
18
na
819
12
0.41
9.3
0.19
5.0
4,510
15
1,594
64
na
872
7
0.43
8.5
0.21
5.7
5,251
16
1,121
-30
na
744
-15
0.36
10.4
0.22
5.9
6,009
14
1,227
9
32
795
7
0.36
10.5
0.22
5.9
6,703
12
1,323
8
34
893
12
0.40
9.2
0.24
6.4
Note: Intime restated the FY13 figures.
Source: Company, BOCOM Int’l estimates
Intime’s FY14 net profit declined by 30% YoY to RMB1,121m. Excluding the disposal
gains, core net profit decreased by 15% in FY14, in-line with our and market
expectation. 2H core net profit decreased by 16% YoY, mainly due to negative SSS (-4%),
rising operating expenses, sustained new store losses and higher tax rate. Despite the
ongoing renovation of the Hangzhou Westlake store, sustained weak consumer
sentiment, ongoing anti-corruption and increased competition, SSS decline stabilized at
-4% in 4Q, vs. -4%/-7%/+2% in 3Q/2Q/1Q, which we attribute to the stronger
promotional effort. Merchandise gross margin expanded by 0.1ppt YoY to 16.6% in 2H,
thanks to the improved sales mix. Despite the rising operating costs, operating margin
expanded by 0.5ppt YoY to 7.3% in 2H mainly due to the strong revenue growth driven
by the sales of properties. It is worth noting that Intime generated RMB663m from
sales of properties (accounting for 13% of total revenue) in FY14 and the operating
profit margin for the business was 41%, well above the 26% in department stores and
the loss-making shopping mall business. Looking ahead, Intime plans to hold more
commercial properties in order to facilitate its expansion plan of the shopping mall
business. We expect the potential ongoing sales of properties to continue to support
Intime’s revenue/earnings growth, partially offsetting the sluggish growth of its core
retail businesses. Further, the stock is trading at 10.5x FY15E P/E, which appears
undemanding, in our view. Reiterate Buy (TP: HK$5.5).
Results highlights. Despite the negative SSS, overall GSP increased marginally by 1%
in FY14, mainly due to the new store contribution and increased rental income. 4Q
SSS decline remained stable at -4%, vs. -4%/-7%/+2% in 3Q/2Q/1Q. We expect
Intime’s SSS to turn flat in FY15E from -3% in FY14 mainly due to the easier comps.
Merchandise gross margin expanded by 0.1ppt YoY to 16.6% in 2H, thanks to the
improved sales mix. Despite the rising operating costs, operating margin expanded
by 0.5ppt YoY to 7.3% in 2H mainly due to the strong revenue growth driven by the
sales of properties.
Download our reports from Bloomberg: BOCM〈enter〉
Neutral
LT
BUY
BUY
SELL
Stock
Stock data
52w High (HK$)
10.6
52w Low (HK$)
4.2
Market cap (HK$m)
10,168
Issued shares (m)
2,173
Avg daily vol (m)
16.9
1-mth change (%)
8.8
YTD change (%)
-16.7
50d MA (HK$)
4.8
200d MA (HK$)
6.2
14-day RSI
50.0
Source: Company data, Bloomberg
1 Year Performance chart
HSI
30%
1833 HK
10%
-10%
-30%
-50%
-70%
Mar-14
Jun-14
Sep-14 Dec-14 Mar-15
Source: Company data, Bloomberg
Anita Chu
Anita.chu@bocomgroup.com
Tel: (852) 2977 9205
25 March 2015
Last Closing: HK$53.4
Upside: -10.9%
Target Price: HK$47.60↓
HK Property Sector
Henderson Land (12.HK)
UP
FY14 results review; faster sales at lower margin
MP
OP
Financial Highlights
Y/E 31 Dec
FY12
FY13
FY14
FY15E
FY16E
Revenue (HK$ m)
15,592
YoY growth (%)
2.7
Net profit (HK$ m)
7,091
EPS (HK$)
2.70
Vs. Consensus (+/- %)
EPS growth (%)
23.2
P/E (x)
19.0
P/B (x)
0.964
Dividend yield (%)
1.87
Source: Company, BOCOM Int’l estimates
23,289
49.4
8,938
3.05
23,371
0.4
9,292
3.11
13.0
16.9
0.964
1.87
2.0
16.5
1.100
2.14
24,826
6.2
9,316
3.11
0.5
16.6
1.210
2.35
25,916
4.4
9,930
3.31
1.9
6.6
15.5
1.265
2.46
LT
BUY
Neutral
BUY
SELL
Stock
FY14 core profit rose 4.0% YoY,
with faster inventory sales
offsetting the lower completion
volume.
Speeding up asset turnover. FY14 core profit rose 4.0% to HK$9.3bn, 3.3% above
consensus forecast, mainly due to the faster inventory sales. While 2014 was a low year
in terms of completion, with only one major project (Double Cove II) plus several other
its inventory, including Double Cove I/The Reach, and booked property sales
We are concerned the faster
property sales might have come
at the expense of low profit
margin.
(attributable) only fell by 7% YoY. However, as partly affected by the new sales
Maintain Sell.
single-bloc projects completed during the period, the company speeded up the sales at
ordinance, overall HK property margin dropped to 26.5% (2013: 31.8%). On the other
hand, mainland property margin rebounded, but was still low at 10.1% (2013: 6.7%).
Rental income maintained steady growth at 7% YoY and 14% YoY in HK and mainland,
Stock data
respectively. 2014 DPS increased to HK$1.10 (2013: HK$1.06), or +14% YoY, including
52w High
52w Low
Market cap (HK$m)
Issued shares (m)
Avg daily vol (m)
1-mth change（%）
YTD change（%）
50d MA
200d MA
14-day RSI
the bonus shares issued last year. The company also proposed bonus shares for 2014.
But still not fast enough. We believe the company is on the right track to speeding up
its asset turnover. However, the company has started to run out of sellable resources,
with a total of 3,177 units (inventory + potential new launches) available for sale in 2015,
-17% YoY, as a result of the slow landbanking/farmland conversion in the past two years.
We are also concerned about the low profit margin, which we estimate at <30% at
Source: Company data, Bloomberg
1 Year Performance chart
Double Cove III (2015E key contributor), even at a low land cost of HK$3,650/sqft
HSI
(sellable), given its high selling expenses, in our view. We maintain our view that
50%
Henderson Land will be one of the major victims to the potential correction in property
30%
prices, especially when it is sitting on an estimated HK$30bn old building portfolio,
10%
which may become difficult to monetize in case the hot sentiment on small units turns,
-10%
Mar-14
in our view. We revise up our NAV forecast by 2.5% to HK$81.90 (from HK$79.90), based
on a higher valuation on HK&China Gas, but lower property value, due to a weaker
margin outlook. Accordingly, we lower our target price from HK$48.90 to HK$47.60,
based on a 60% ex-Gas NAV discount (from 55%), on concern about a slower property
sales momentum along with less sellable resources in 2015. Maintain Sell.
Download our reports from Bloomberg: BOCM〈enter〉
57.20
37.818
160,218
3,000.3
2.79
(1.57)
(1.66)
53.48
51.27
43.16
Jun-14
Sep-14
12.HK
Dec-14
Mar-15
Source: Company data, Bloomberg
Alfred Lau, CFA, FRM
alfred.lau@bocomgroup.com
Tel: (852) 2977 9235
25 March 2015
Last Closing: HK$ 2.58
Upside: +16%
Target Price: HK$3.00→
Petrochemical Sector
Sinopec Shanghai Petrochemical (338.HK)
UP
Ready to receive the benefit of lower crude oil price
MP
OP
Financial Highlights
Y/E 31 Dec
2013
Revenue (Rmbm)
105,503
Revenue (% YoY)
21.0%
Oper. profit (Rmbm)
2,192
Net profit (Rmbm)
2,055
EPS (Rmb)
0.19
EPS (% YoY)
n.a.
Consensus
Net profit vs consensus (+/-%)
PE (@HK$2.58)
PB (@HK$2.58)
Dividend yield (%)
2.5%
ROAE
11.9%
Source: Company, BOCOM Int’l estimates
2014
92,725
-12.1%
(588)
(692)
(0.06)
-133.7%
(172)
n.a
n.a
1.31
2.5%
-4.0%
2015E
95,496
3.0%
2,192
1,457
0.13
-310.5%
1,437
1.4%
15.1
1.23
2.0%
8.4%
2016E
98,395
3.0%
2,022
1,324
0.12
-9.1%
1,653
-19.9%
16.6
1.17
1.8%
7.3%
2017E
101,431
3.1%
2,104
1,388
0.13
4.8%
2,239
-38.0%
15.8
1.11
1.9%
7.2%
Stock
Losing Rmb692m in 2014 as stated in
profit warning at the beginning of Feb
Lower price and volume, external
investment loss, inventory write-down
and Rmb depreciation contributed to the
loss.
Revenue down 12% YoY on lower price and volume. The factors
contributing to the loss were: (a) lower prices of products and the longer
procurement cycle for crude oil contributing to loss in the refining sector
after Q3; (b) volume decline by varying levels, dragging down profitability.
Revenue declined 12% (YoY) to Rmb92.73bn (vs. up 21% YoY in 2013), with
average product price down 5% to Rmb6,000/ton and sales volume down
13% to 12.8m tons.
Lower crude oil cost and improving margin. Since the company completed
the facility to convert higher-sulfur crude oil in 2012 (now can process
sulfur-content at 2.2% vs. 0.7%), Shanghai Petrochemical’s crude cost is
US$2/bbl lower than that of PetroChina and Sinopec. The quarterly margin
has been moving upward as the crude inventory is about 1.5 to 2 months
behind so there is a US$10/bbl saving from lower crude price used currently.
BUY
SELL
Company lost Rmb692m in 2014, as earlier profit warning stated. Shanghai
Petrochemical's FY 2014 net loss came in at Rmb692m, within the Rmb650m
to Rmb750m range that the company forecasted in its profit warning at the
beginning of February.
External investment loss, inventory write-down and Rmb depreciation were
other reasons for overall 2014 loss: (c) a sharp decrease in external
investment, with Shanghai Secco seeing a decrease of Rmb73m in profit on
investment; (d) provision for decline in the value of inventories, which
amounted to Rmb295m, up by Rmb194m; and (e) net finance costs of
Rmb360m, up by Rmb482m compared with net finance income of Rmb122m
in 2013 given the depreciation of Rmb against the US dollar.
LT
BUY
Neutral
Moving toward gasoline and fuel oil from
diesel
Company’s downstream focus benefits
from a lower crude environment
Stock data
2.85
1.75
7,682
5.8
18.2
7.9
13.7
2.40
2.41
57.21
52w High (HK$)
52W Low (HK$)
Market cap (US$ m)
Trading value (US$ m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA ( HK$)
200d MA (HK$)
14-day RSI
Source: Company data, Bloomberg
1 Year Performance chart
40%
HSI
338 HK
20%
0%
Product focus to move toward gasoline and jet fuel and away from diesel.
Shanghai Petrochemical’s refining restructuring will see it moving from diesel to
gasoline. The company noted that although refining is currently experiencing oversupply, the high-grade gasoline is not impacted. Sinopec had in its own 14FY results
noted the end of industrial stage for China, where diesel product usage would top
out in 2017 and gasoline usage would hit peak in 2025. Shanghai Petrochemical’s
product shift also echoes the trend.
One of the few beneficiaries in a low crude price environment. Most of the
oil companies are suffering from low oil prices, but Shanghai Petrochemical, with no
business in upstream E&P, becomes a net beneficiary in its downstream operation,
both in refining and its chemicals business, which uses the crude-based naphtha.
We reiterate our BUY call with a TP of HK$3.0, representing 16% upside.
Download our reports from Bloomberg: BOCM〈enter〉
-20%
-40%
Mar-14
Jul-14
Nov-14
Source: Company data, Bloomberg
Fei Wu
fei.wu@bocomgroup.com
Tel: (852) 2977 9392
Tony Liu
xutong.liu@bocomgroup.com
Mar-15
25 March 2015
Last Closing: HK$1.22
Oil Services Sector
SPT Energy (1251.HK)
Not Rated
Margin decline in the low oil price environment
Financial Highlights
YE Dec
2013
2014
2015E
2016E
2017E
Revenue (Rmbm)
Revenue YoY%
Net profit (Rmbm)
Consensus EPS (Rmb)
Consensus EPS (% YoY)
PE(@HK$1.22)
Dividend yield (%)
ROAE
Source: Bloomberg
2,403
32%
300
0.20
7%
2,187
-9%
116
0.08
-61%
5%
17%
0%
6%
2,073
-5%
151
0.10
29%
10.3
1%
11%
2,319
12%
175
0.11
17%
8.8
1%
11%
2,395
3%
136
0.09
-23%
11.5
1%
10%
Net profit fell 61%, missing
consensus.
Kazakhstan currency devaluation
brought Rmb21.5mn loss.
Drilling market was hit badly by oil
price drop in the domestic market.
Net profit fell 61% to Rmb116mn, missing consensus by 13%. Revenue dropped 9%
to Rmb2,187mn with operating profit down 51% to Rmb204mn. Net profit fell 61%,
slightly exceeding the 55% to 60% range that the company estimated in its profit
warning in January. Most of the loss occurred in 2H last year as the upstream oil
companies cut their capex. Operating profit and net profit in 2H 2014 declined 72%
and 83% YoY, respectively. Also, no dividend was proposed by the company in 2014.
Kazakhstan currency devaluated 19% in 2014, dragging down the company’s profit.
Revenue from Kazakhstan decreased 8% to Rmb911mn in 2014, accounting for 73%
of overseas revenue and 42% of total revenue. The 19% devaluation of Kazakhstan
Stock data
52w High (HKD)
52W Low (HKD)
Market cap (USD m)
Trading value (USD m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA ( HKD)
200d MA (HKD)
14-day RSI
Source: Company data, Bloomberg
4.87
1.19
252
1.8
9.3
(22.0)
(10.5)
1.41
2.70
34.8
Tange in Feb 2014 resulted in Rmb21.5mn of exchange loss in 2014.
Drilling business was hit badly by oil price drop in the domestic market. In the
1 Year Performance chart
domestic market, revenue from the reservoir business achieved 11.4% YoY growth;
50%
the well completion segment stayed at the same level as 2013, while drilling revenue
0%
declined 24.4% YoY as oil companies cut their capex. For the overseas market,
revenue from reservoir, well completion and drilling saw 5.9%, 18.4% and 0.8%
HSI
1251.HK
-50%
-100%
Mar-14
Jul-14
Nov-14
decrease, respectively. Overall, domestic and overseas revenue recorded 9.5% and
8.6% decrease in the year 2014, respectively.
2015 revenue is expected to slightly decline with capex increasing. For the year
2015, management expects revenue to slightly decline in the low oil price
environment with Rmb200mn capex invested in the JV with Halliburton and
purchase of equipments for the new contracts. As the company already has
Rmb800mn order backlog in hand up to 1Q15 and no exchange loss from Kazakhstan
in this year, we expect better margin in 2015. SPT is trading at 10.3x consensus 2015
PE.
Download our reports from Bloomberg: BOCM〈enter〉
Source: Company data, Bloomberg
Tony Liu
Xutong.liu@bocomgroup.com
Tel: (852) 2977 9390
Fei Wu
fei.wu@bocomgroup.com
Tel: (852) 2977 9392
Mar-15
25 March 2015
Last Closing: HK$5.06
Upside: +21.4 %
Target Price: HK$6.80→
China Logistics Sector
Sinotrans Limited (598.HK)
UP
MP
OP
FY14 result – The DHL JV kept providing the lift
Financial Highlights
Y/E 31 Dec
2012
2013 RS
2014
2015E
2016E
Revenue (Rmb m)
47,482
YoY growth (%)
8.5
Net profit (Rmb m)
641.2
YoY growth (%)
6.5
EPS (Rmb)
0.151
BVPS (Rmb)
2.439
PER (x)
27.0
PBR (x)
1.7
Source: Company, BOCOM Int’l estimates
45,402
(4.4)
904.0
41.0
0.213
2.571
18.6
1.5
45,660
0.6
1,231
36.2
0.280
2.887
14.2
1.4
52,130
14.2
1,619
31.5
0.351
3.168
11.3
1.2
55,555
6.6
1,692
4.5
0.367
3.447
10.6
1.1
FY14 earnings in line with consensus.
Neutral
Stock
Sinotrans Limited reported a 36.2% YoY
increase in net profit for FY2014.
Turnover increased 0.6% YoY. Though
operating margin increased 0.2 ppt
during the year to grow earnings, it was
the express delivery JV that provided
most of the earnings growth for the
year.
Net profit for FY2014 was up 36.2% YoY to
consensus forecast of Rmb1,237m. Net profit of the continued operation increased
The logistics segment continued to
grow its turnover and segment profit,
notwithstanding the small
improvement in operating margin.
We believe the improvement of the
airfreight forwarding industry helped
improve the freight forwarding
segment margin in FY14.
22.6% YoY during the period. Management proposed a final DPS of Rmb0.065 (2013:
Together with the interim DPS of Rmb0.02, the full year DPS payout
reached 30.3%. As seen from the earnings summary table, contribution from the joint
venture, effectively that of DHL-Sinotrans express delivery JV, provided much of the
We keep our earnings forecasts
unchanged, and reiterate our BUY
recommendation and target price of
HK$6.8. The results presentation
is
scheduled to be held on 25th March.
earnings growth in FY2014.
Turnover for the year
Logistics segment buttressed operating performance.
BUY
SELL
Rmb1,231m, which was in line with our forecast of Rmb1,251 m or Bloomberg
Rmb0.05).
LT
BUY
increased 0.6% YoY. According to segmental accounts, only turnover of the logistics
and storage and terminal segments reported increases during the year, up 9.7% YoY
and 4.1% YoY, respectively.
Nevertheless, between the two segments, only the
logistics segment was able to report an increase in segment profit, up 10.0% YoY as
segment profit of the storage and terminal segment declined 5.5% YoY. The freight
forwarding segment remained the biggest revenue contributor (about 77.6%), but only
provided 51.0% of segment profit. Segment profit margin of the freight forwarding
segment improved from 1.9% in FY2013 to 2.0% in FY2014, which we attribute to the
general recovery of the airfreight industry.
52w High (HK$)
52w Low (HK$)
Market cap (HK$m)
Issued shares (m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA (HK$)
200d MA (HK$)
14-day RSI
Source: Company data, Bloomberg
6.55
3.01
25,888
4,606.5
115.4
5.73
7.2
5.477
5.115
57.9
Airfreight cargo tonnage handled by
Sinotrans Limited increased by 20.7% YoY in FY2014. On a HoH basis, despite a 16.7%
HoH increase in turnover, operating margin declined marginally from 2.9% in 1H14 to
2.5% in 2H14.
We maintain our BUY recommendation.
Stock data
We maintain our earnings forecasts and
BUY recommendation for Sinotrans Limited at the moment.
Management will host
th
the results presentation on 25 March, at which we expect to receive more guidance
in terms of its business plan and development strategy.
remains intact.
Our target price of HK$6.8
1 Year Performance chart
(HK$)
Sinotrans
Rel to HS Index
7.00
6.00
5.00
4.00
3.00
2.00
1.00
Mar-14
250
200
150
100
Jul-14
Nov-14
Source: Company data, Bloomberg
Geoffrey Cheng, CFA
geoffrey.cheng@bocomgroup.com
Tel: (852) 2977 9380
Download our reports from Bloomberg: BOCM〈enter〉
50
Mar-15
25 March 2015
Last Closing: HK$47.3
HK Property Sector
Link REIT (823.HK)
Not Rated
A milestone to cross-border investment
Financial Highlights
YE Mar
2013
2014
2015E
2016E
2017E
Revenue (HK$m)
6,506
Revenue YoY%
9.7
Core profit (HK$m)
3,349
EPS (HK$)
1.465
EPS (% YoY)
13.1
PE(@HK$47.3)
32.3
DPS (HK$)
1.465
Dividend yield (%)
3.10
PB(@HK$47.3)
1.33
PB
Source:
Company,
BOCOM
Int’l
estimates
Note: estimates based on Bloomberg consensus
7,155
10.0
3,830
1.657
13.1
28.5
1.657
3.50
1.13
7,719
7.9
4,353
1.830
10.4
25.8
1.809
3.82
1.02
8,318
7.8
4,567
2.011
9.9
23.5
1.969
4.16
1.00
8,986
8.0
4,981
2.159
7.4
21.9
2.158
4.56
1.00
First acquisition outside Hong Kong
Estimated 0.4%-0.8% DPS
enhancement
Set a milestone to cross-border
investment
First acquisition outside Hong Kong. Link REIT (823 HK, NR) has signed a sales and
purchase agreement to acquire EC Mall in Zhongguancun, Beijing for a consideration
of Rmb2.5bn, or an ASP of Rmb45k/sqm, representing a gross/NPI yield of 6.3%/4.3%
Stock data
as of February 2015. The price is also in line with CBRE's valuation of Rmb2.46bn.
52w High (HKD)
52W Low (HKD)
Market cap (USD m)
Trading value (USD m)
Avg daily vol (m)
1-mth change (%)
YTD change (%)
50d MA ( HKD)
200d MA (HKD)
14-day RSI
Source: Company data, Bloomberg
Link REIT will assume the Rmb0.64bn mortgage and settle the remaining Rmb1.8bn
in US Dollar by drawing new loan facilities through an offshore entity. Management
estimates a proforma gearing (TD/TA) increase to only 15.3% (from 11.0%).
Management expects the transaction to complete by April 2015.
More than financial return. Contrary to the 2.4% increase in total assets, we
53.65
36.50
108,401
2,291.8
7.48
(5.68)
(2.57)
50.20
46.58
41.44
estimate only a minimal 0.4% initial yield enhancement from the acquisition, even
assuming Link REIT can fully replace the expensive mortgage by offshore new loans
1 Year Performance chart
50%
at 2.4% (in line with its latest funding cost), due to the low margin/high tax in
40%
mainland China. According to the announcement, the mall is only about 4 years old
30%
HSI
823.HK
20%
and international-branded retailers account for a significant portion of rental income.
Therefore, we do not expect much room for Link REIT to profit from asset
enhancement/tenant reshuffle, as it does in HK. Nevertheless, if the mall can
maintain a 10%-20% increase in rental income (Feb 2015 annualised vs. FY14: +15%),
10%
0%
-1 0%
Mar-14
Jul-14
Nov-1 4
Source: Company data, Bloomberg
we estimate the DPS enhancement can further expand to close to 1%. And apart
from the financial return, we believe the transaction sets a milestone that the
management is proactive in exploring investment opportunities, and opens the door
to other similar acquisitions going forward. We currently have no rating on Link REIT.
Download our reports from Bloomberg: BOCM〈enter〉
Alfred Lau, CFA, FRM
alfred.lau@bocomgroup.com
Tel: (852) 2977 9235
Mar-15
Morning Express
25 March 2015
Market Review
Hong Kong stocks snapped gains on Tuesday, with the Hang Seng Index closing down 94
points, or 0.4%, at 24,399.60, dragged by a disappointing HSBC flash PMI. Tingyi (322.HK)
fell 2.9% as the biggest blue chip decliner. Insurers retreated. China Life (2628.HK) fell
1.5%. CPIC (2601.HK) lost 3.2%. Brokers declined. CITIC Securities (6030.HK) dropped
3.4%. Haitong Securities (6837.HK) fell 3.3%. Among the gainers, Henderson Land (12.HK)
was the best blue-chip performer, rising 3.7%.
US stocks fell. The S&P 500 dropped 12.92 points, or 0.6%, to 2,091.50. The DJIA declined
104.9 points, or 0.6%, to 18,011.14. European stocks rose. The Stoxx Europe 600 gained
0.3% to 402.49.
News Reaction
Le Keqiang: hope that yuan will be included in IMF’s SDR. Chinese Premier Li Keqiang
expressed China’s hope to join SDR when IMF examined SDR this year, in a bid to join the
international cooperation to maintain the stability of international finance, which can
also promote the further opening of China’s capital market and financial area.
PBoC repurchased RMB20 bn at a lower bid rate of 3.55%. PBoc announced that it has
launched the reverse purchase operations of RMB20 bn for 7 days since 24 March with
the bid rate lowered from 3.65% on 19 Mar to 3.55%.
MOFCOM cancelled the review of 5 administrative items. According to the latest
announcement of the State Council of the PRC in respect of its decision to cancel the
delegation of responsibility of review, 5 additional items were cancelled on the list of
items subject to administrative review. Thus far, 8 items had been announced to be
cancelled. Hence MOFCOM fully fulfilled its goal of the cancellation of 13 items subject to
review from 2013 to 2014.
NDRC: the import and export of coals for 2M15 dropped by 40% YoY, respectively.
According to an announcement of NDRC, as the statistics of the custom department
showed, a total of 32.04 mn tonnes of coal were imported in 2M15, down 45.3% YoY,
while a total of 660,000 tonnes of coal were exported, down 46.4%. In 2M15, the
national coal output shrunk and 360 mn coals were delivered by railways, a YoY decrease
of 8.5%. 32.04 mn tonnes were imported, down 45.3%.
It was reported that the time for payment of interest of commercial loans by housing
fund in Guangzhou has not been determined. According to relevant insider of
Guangzhou’s housing provident fund management center, the authority is still studying
the proposal of interest payment with commercial banks. The initial direction of the
research is to study whether interest payment can be settled out of the value-added
gains of provident funds. However, it is uncertain when the new policy will be introduced.
Download our reports from Bloomberg: BOCM〈enter〉
Morning Express
25 March 2015
Economic releases for this week - USA
Date Time
23-Mar
24-Mar
24-Mar
24-Mar
25-Mar
25-Mar
26-Mar
Source: Bloomberg
Event
Existing Home sales (m)
CPI (MoM)
CPI ex food & energy (MoM)
New Home sales (k)
MBA mortgage applications
Durable goods order
Initial jobless claims (k)
Economic releases for this week - China
Survey
4.94
0.2%
0.1%
475.0
0.5%
295.0
Prior
4.82
-0.7%
0.2%
481.0
-3.9%
2.8%
291.0
Date Time
24-Mar
27-Mar
Event
HSBC Manufacturing PMI
Industrial production(YoY)
Survey
50.5
-
Prior
50.7
-8.0%
Source: Bloomberg
BOCOM Research Latest Reports
Data
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
25 Mar 2015
24 Mar 2015
24 Mar 2015
24 Mar 2015
23 Mar 2015
20 Mar 2015
20 Mar 2015
20 Mar 2015
19 Mar 2015
19 Mar 2015
19 Mar 2015
19 Mar 2015
19 Mar 2015
Report
Hilong Holding Limited (1623.HK) – 2014 FY results – Overseas business saves the day
Baiyunshan (874.HK) – FY14 results missed; Maintain “Neutral”
Sinopharm (1099.HK) – FY14 results beat with promising 2015E guidance; Reiterate “BUY”
Sinopec (386.HK) – Lower crude price bit into earnings; Q1 profit warning and uncertain outlook; Downgrade
to Neutral
Golden Eagle (3308.HK) – FY14 in line; remain cautious on earnings outlook as margin pressure lingers
Tingyi (322 HK) – Stick with cost cutting and national brand strategy
China Resources Land (1109.HK) - Satisfactory FY14 results; margin bottomed out with solid financial
fundamentals
GOME (493.HK) – FY14 in-line; margin outlook remains stable; Reiterate Buy
Property Sector - Destocking, cooperation, and growth quality
China Resources Enterprise (291.HK) - Tesco JV remains a key drag; outlook of its retail and beer arms
turns challenging
Kingsoft (3888.HK) – 4Q14 beat; Strong 2015 revenue guidance despite margin pressure; Maintain Buy
Summer Breeze「夏天小语」- Trading buy opportunity in Biostime (1112 HK)
Internet Sector - MIT--Martina Internet Talk: Internet companies' crisis PR will reduce the negative impact of
the 315 evening party
Transportation Sector - Weekly transportation news wrap
China Market Strategy - Price-to-Whatever Ratio: A Bubble Scenario
Kingsoft (3888.HK) - Cheetah mobile acquired Mobpartner to build a global ad platform
HK&China Gas (3.HK) - FY 2014 results on track - stable growth ahead
Truly International (732.HK) - Dim outlook in handset related business
Shandong Weigao (1066.HK) - Better-than-expected FY14 results; upgrade to "Neutral"
Energy Sector - 2014 FY results preview - The beginning of tough times
Source: Company data, BOCOM International
Download our reports from Bloomberg: BOCM〈enter〉
Analyst
Fei Wu
Milo Liu
Milo Liu
Fei Wu, Tony Liu
Anita Chu
Summer Wang
Philip Tse, CFA, FRM, Alfred Lau, CFA, FRM
Anita Chu
Luella Guo, Alfred Lau, CFA, FRM, Philip Tse, CFA,
FRM
Phoebe Wong
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Summer Wang
Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Geoffrey Cheng, CFA, Fay Zhou
Hao Hong, CFA
Ma Yuan (Martina), Ph.D, GuXinyu (Connie), CPA
Fei Wu, Tony Liu
Miles XIE
Milo Liu
Fei Wu, Tony Liu
Morning Express
25 March 2015
Hang Seng Index Constituents
Company
name
CKH HOLDINGS
CLP HOLDINGS
HONG KG CHINA GS
WHARF HLDG
HSBC HLDGS PLC
POWER ASSETS
HANG SENG BANK
HENDERSON LAND D
HUTCHISON
SHK PPT
NEW WORLD DEV
SWIRE PACIFIC-A
BANK EAST ASIA
GALAXY ENTERTAIN
MTR CORP
SINO LAND
HANG LUNG PPT
KUNLUN ENERGY
CHINA MER HOLD
WANT WANT CHINA
CITIC
CHINA RES ENTERP
CATHAY PAC AIR
TINGYI
SINOPEC CORP-H
HKEX
LI & FUNG LTD
CHINA OVERSEAS
TENCENT
CHINA UNICOM
LINK REIT
CHINA RES POWER
PETROCHINA-H
CNOOC
CCB-H
CHINA MOBILE
LENOVO GROUP
HENGAN INTL
CHINA SHENHUA-H
CHINA RES LAND
COSCO PAC LTD
AIA
ICBC-H
BELLE INTL
SANDS CHINA LTD
PING AN-H
BOC HONG KONG HO
CHINA LIFE-H
BANKCOMM-H
BANK OF CHINA-H
Hang Seng Index
BBG
code
1 HK
2 HK
3 HK
4 HK
5 HK
6 HK
11 HK
12 HK
13 HK
16 HK
17 HK
19 HK
23 HK
27 HK
66 HK
83 HK
101 HK
135 HK
144 HK
151 HK
267 HK
291 HK
293 HK
322 HK
386 HK
388 HK
494 HK
688 HK
700 HK
762 HK
823 HK
836 HK
857 HK
883 HK
939 HK
941 HK
992 HK
1044 HK
1088 HK
1109 HK
1199 HK
1299 HK
1398 HK
1880 HK
1928 HK
2318 HK
2388 HK
2628 HK
3328 HK
3988 HK
Share
price
(HK$)
151.40
13.22
143.00
101.40
87.50
19.28
67.10
53.40
118.50
36.20
12.26
28.95
15.06
17.76
20.80
8.84
66.75
8.71
29.85
35.45
180.80
7.42
23.55
11.62
8.17
10.34
11.36
10.34
47.90
5.58
8.84
32.05
91.05
26.95
33.15
6.50
4.41
17.68
52.10
77.15
138.90
103.60
101.60
21.35
7.89
17.76
17.22
6.03
19.00
6.38
Mkt
cap
(HK$m)
350,667
329,222
1,340,370
2,076,114
107,136
470,590
1,290,675
160,218
340,327
211,075
74,345
74,232
36,466
69,865
135,841
74,559
168,641
77,462
70,093
150,731
211,230
62,034
192,497
278,265
2,517,052
461,655
126,194
30,404
576,963
2,101,176
74,559
258,587
851,586
284,936
1,221,770
543,879
1,537,939
185,854
157,917
164,658
265,555
441,685
150,234
95,761
104,088
69,865
96,502
914,345
91,157
1,607,457
5d
chg
(%)
0.9
1.1
6.9
-0.8
1.4
-1.2
3.2
6.4
2.2
3.0
5.7
-1.2
5.3
4.2
4.1
1.4
1.8
-1.4
2.6
5.5
3.1
-6.4
8.0
-1.4
0.5
1.2
4.8
-2.5
2.6
-0.2
1.4
7.0
4.9
0.7
4.2
-1.4
0.7
2.2
4.7
2.9
2.0
0.3
-0.3
-0.9
-1.1
4.2
-5.0
-1.3
0.6
0.3
Ytd
chg
(%)
16.2
0.0
27.1
12.0
8.0
-16.0
-9.3
-1.7
0.2
13.8
-2.1
10.9
-7.3
5.1
1.7
1.4
-0.7
-2.4
-4.5
-18.8
5.3
2.2
2.2
11.7
-5.0
-1.0
11.4
-6.2
11.0
-1.4
1.4
-16.0
15.1
3.9
8.9
-10.2
0.9
-0.5
-7.0
2.5
7.5
16.1
0.6
-1.8
-22.8
5.1
-2.8
-3.5
-5.0
0.2
24,400 15,145,542
2.1
3.4
Source: Bloomberg
Download our reports from Bloomberg: BOCM〈enter〉
–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
158.50
114.39
16.88
12.06
148.80
93.00
108.50
64.85
94.35
74.05
24.40
18.72
84.40
64.35
57.20
37.82
129.40
90.90
36.85
27.70
14.16
10.80
29.95
22.75
24.55
14.04
18.30
13.56
23.60
13.62
10.00
7.19
69.85
56.50
10.48
7.29
34.45
29.00
72.96
32.80
189.00
115.00
10.70
7.06
26.70
17.66
14.22
9.34
11.70
7.93
15.88
9.72
12.70
8.17
11.92
9.71
49.65
35.30
5.90
4.45
10.00
7.19
65.20
29.50
94.45
55.60
27.95
21.50
34.00
19.72
7.36
4.75
4.57
3.12
18.90
14.49
63.90
47.65
82.80
63.80
148.40
118.50
108.50
85.90
108.00
86.80
26.45
20.25
13.10
7.78
18.30
13.56
23.25
16.02
8.23
5.90
24.90
18.02
6.62
5.04
25,363.0
21,590.1
–––––––––– PE –––––––––––
2014A
2015E
2016E
(X)
(X)
(X)
6.5
10.6
10.2
9.4
6.0
5.4
44.4
34.3
26.4
15.1
14.7
14.1
27.4
23.5
20.0
7.9
9.0
8.4
12.5
10.3
9.7
9.5
16.7
16.2
10.7
15.5
14.1
13.5
20.4
20.1
9.6
14.4
13.8
16.8
17.0
15.5
N/A
72.8
32.8
22.2
10.6
9.3
8.2
9.3
7.8
N/A
13.2
12.7
15.0
15.7
14.8
6.5
10.6
9.8
10.4
11.6
10.8
14.7
16.7
14.9
40.7
31.0
27.2
14.4
14.3
12.8
7.0
7.4
6.4
18.4
16.0
13.7
9.1
11.0
20.7
6.7
7.0
16.2
17.4
17.9
14.7
13.3
10.7
10.0
21.3
19.9
17.9
5.6
5.7
5.4
N/A
13.2
12.7
13.1
15.4
14.2
14.7
13.6
12.1
12.3
11.7
10.6
27.9
21.7
18.0
6.0
6.0
5.8
5.9
6.0
5.6
26.0
24.1
22.4
4.4
13.0
11.7
2.7
18.5
18.8
17.6
13.9
13.6
6.6
13.2
11.5
13.8
14.1
12.8
8.2
14.8
15.4
21.7
18.5
17.0
22.2
10.6
9.3
31.1
23.1
20.6
11.6
15.9
11.0
9.8
7.4
7.1
5.6
5.5
5.3
10.3
11.6
10.5
Yield
P/B
(%)
2.4
2.0
0.3
2.8
2.3
4.8
5.7
2.1
2.8
2.2
4.1
2.7
1.8
2.0
2.4
N/A
3.9
4.8
3.7
0.0
2.2
4.6
2.3
2.2
4.9
5.5
2.1
3.0
1.0
N/A
N/A
3.1
1.0
3.7
1.1
N/A
5.6
2.0
3.5
3.5
4.0
2.3
1.1
3.6
2.4
2.0
1.6
4.1
4.1
5.9
(X)
0.9
0.5
13.4
1.9
6.1
1.0
0.9
0.7
0.8
1.3
0.7
1.1
0.7
1.4
1.3
2.3
1.9
0.5
1.0
3.9
9.9
3.1
1.4
1.0
1.0
1.0
3.9
0.8
2.4
1.1
2.3
5.2
2.2
1.7
3.1
0.8
1.0
3.5
0.5
1.3
1.9
1.0
0.7
0.7
6.5
1.4
4.1
1.0
1.3
1.1
3.5
1.4
Morning Express
25 March 2015
China Ent Index Constituents
Company
name
TSINGTAO BREW-H
JIANGXI COPPER-H
SINOPEC CORP-H
CHINA RAIL GR-H
DONGFENG MOTOR-H
CHINA TELECOM-H
AIR CHINA LTD-H
PETROCHINA-H
HUANENG POWER-H
ANHUI CONCH-H
CHINA LONGYUAN-H
CCB-H
CITIC BANK-H
SHANDONG WEIG-H
CHINA SHENHUA-H
SINOPHARM-H
BYD CO LTD-H
ABC-H
NEW CHINA LIFE-H
PICC GROUP-H
CHINA CINDA-H
ICBC-H
CHINA COM CONS-H
CHINA COAL ENE-H
MINSHENG BANK-H
CHINA VANKE-H
GUANGZHOU AUTO-H
PING AN-H
PICC P&C-H
GREAT WALL MOT-H
WEICHAI POWER-H
GREAT WALL MOT-H
CHINA PACIFIC-H
CHINA LIFE-H
CHINA OILFIELD-H
CHINA NATL BDG-H
BANKCOMM-H
CM BANK-H
BANK OF CHINA-H
CITIC SEC-H
HAITONG SECURI-H
Hang Seng China Ent Indx
BBG
code
168 HK
358 HK
386 HK
390 HK
489 HK
728 HK
753 HK
857 HK
902 HK
914 HK
916 HK
939 HK
998 HK
1066 HK
1088 HK
1099 HK
1211 HK
1288 HK
1336 HK
1339 HK
1359 HK
1398 HK
1800 HK
1898 HK
1988 HK
2202 HK
2238 HK
2318 HK
2328 HK
2333 HK
2338 HK
2333 HK
2601 HK
2628 HK
2883 HK
3323 HK
3328 HK
3968 HK
3988 HK
6030 HK
6837 HK
Share
price
(HK$)
Mkt
cap
(HK$m)
5d
chg
(%)
Ytd
chg
(%)
49.70
13.58
6.03
6.97
11.86
4.88
6.96
8.17
9.26
27.65
8.09
6.38
5.78
6.47
19.28
29.50
37.65
3.80
43.95
3.98
3.65
5.58
9.91
4.09
9.24
17.66
7.07
91.05
15.66
51.90
28.20
51.90
36.40
33.15
11.92
7.49
6.50
18.32
4.41
26.75
17.66
68,805
75,494
914,345
296,049
102,187
394,950
136,738
2,517,052
146,498
143,722
65,014
1,607,457
381,393
28,962
470,590
81,629
138,594
1,487,156
192,347
168,847
132,337
2,101,176
269,751
95,922
392,918
181,376
67,602
851,586
232,214
187,647
67,440
187,647
363,438
1,221,770
95,896
40,439
543,879
485,138
1,537,939
430,398
259,296
4.1
4.1
-1.3
11.7
-0.5
2.5
0.1
0.5
2.2
3.2
2.5
0.3
-1.9
6.9
-1.2
3.1
3.9
0.5
4.5
2.6
0.6
-0.2
4.9
2.8
-0.1
4.3
1.1
4.9
0.0
9.5
-0.4
9.5
-4.7
4.2
6.2
2.6
-1.4
0.2
0.7
0.8
2.9
-5.5
2.1
-3.5
9.2
8.0
7.5
11.0
-5.0
-11.6
-4.8
0.2
0.2
-7.1
3.4
-16.0
7.5
24.1
-3.1
12.3
9.6
-3.4
-1.4
6.2
-15.8
-9.4
2.1
0.1
15.1
3.8
17.7
-13.8
17.7
-7.6
8.9
-11.4
-0.7
-10.2
-5.9
0.9
-8.4
-9.5
64.0
15.2
8.2
7.0
15.2
5.2
7.5
11.7
11.6
35.7
9.1
6.6
6.3
9.9
24.4
34.5
57.8
4.1
46.5
4.1
4.5
5.9
10.2
5.4
10.7
20.4
9.9
94.5
17.1
53.4
34.9
53.4
42.0
34.0
23.4
8.4
7.4
20.0
4.6
34.0
23.2
12,005
4,974,284
1.4
0.2
12,400.4
Source: Bloomberg
Download our reports from Bloomberg: BOCM〈enter〉
–––– 52-week ––––
Hi
Lo
(HK$)
(HK$)
––––––––––– PE –––––––––––
2014A
2015E
2016E
Yield
P/B
(X)
(X)
(X)
(%)
(X)
47.5
11.9
5.9
3.4
10.0
3.2
4.2
7.9
7.2
24.0
7.1
5.0
4.1
5.7
18.7
19.7
18.7
3.1
22.1
2.9
3.3
4.5
5.0
3.8
6.2
12.8
6.6
55.6
9.6
26.1
26.0
26.1
23.6
19.7
11.1
6.7
4.8
12.7
3.1
15.0
9.8
27.0
10.6
11.6
11.9
6.1
17.8
26.1
9.1
9.0
10.7
26.7
5.6
5.3
21.4
7.9
21.3
148.0
5.5
18.3
18.7
9.7
5.6
10.0
49.5
5.6
10.3
11.5
14.7
16.7
15.7
8.6
15.7
24.7
27.9
5.6
5.2
6.0
6.6
5.9
29.7
32.1
26.6
13.0
15.9
11.3
6.5
15.3
20.0
11.0
8.5
9.8
21.6
5.5
5.1
18.9
9.0
18.5
123.0
5.0
14.2
12.2
8.9
5.7
9.4
74.4
5.3
9.0
10.8
13.6
12.5
11.3
9.3
11.3
20.9
21.7
6.0
5.8
6.0
6.0
6.0
20.1
18.5
23.9
14.6
11.0
10.1
6.2
13.9
10.3
20.7
7.9
9.1
14.6
5.3
4.7
16.5
8.4
15.3
37.9
4.7
13.0
10.8
7.0
5.4
8.5
37.2
5.0
7.6
8.4
12.1
12.0
9.4
9.8
9.4
17.7
18.0
8.5
5.7
5.8
5.4
5.6
17.4
15.1
N/A
4.6
4.1
1.2
1.9
2.0
0.8
4.9
5.1
2.9
0.7
5.9
N/A
1.3
4.8
1.3
0.2
N/A
0.4
0.3
1.2
N/A
2.4
0.7
2.1
2.9
3.2
1.0
1.7
N/A
1.1
N/A
1.4
1.1
4.5
2.7
N/A
4.6
5.6
N/A
0.8
3.4
0.9
1.0
1.3
1.2
1.1
1.4
1.0
1.6
1.8
1.6
1.1
0.8
2.4
1.0
2.4
2.9
1.0
2.5
1.7
1.4
1.1
1.3
0.5
1.1
2.0
1.1
2.2
2.8
3.8
1.4
3.8
2.5
3.1
1.0
0.9
0.8
1.2
1.0
2.5
2.1
9,483.5
8.6
8.3
7.4
3.8
1.3
Morning Express
25 March 2015
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
@bocomgroup.com
raymond.cheng
Strategy
Economics
(852) 2977 9384
hao.hong
(852) 2977 9212
yangqingli
Fei WU
(852) 2977 9392
fei.wu
Shanshan LI, CFA
(86) 10 8800 9788 - 8058
lishanshan
Tony LIU
(852) 2977 9390
xutong.liu
Li WAN, CFA
(86) 10 8800 9788 - 8051
Wanli
Alfred LAU, CFA, FRM
(852) 2977 9235
alfred.lau
Philip TSE, CFA, FRM
(852) 2977 9220
philip.tse
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
Hao HONG, CFA
Banks/Network Financials
Qingli YANG
(86) 10 8800 9788 - 8043
miaoxian.li
Oil & Gas/ Gas Utilities
Consumer Discretionary
Property
Phoebe WONG
(852) 2977 9391
phoebe.wong
AnitaCHU
(852) 2977 9205
anita.chu
Consumer Staples
Renewable Energy
Summer WANG
(852) 2977 9221
summer.wang
ShawnWU
(852) 2977 9386
shawn.wu
(852) 2977 9387
milo.liu
Healthcare
Louis SUN
Telecom & Small/ Mid-Caps
Milo LIU
Insurance & Brokerage
Zhiwu LI
Technology
Jerry LI
(852) 2977 9389
liwenbing
Jennifer ZHANG
(852) 2977 9250
yufan.zhang
Yuan MA,PhD
(86) 10 8800 9788 - 8039
yuan.ma
Connie GU, CPA
(86) 10 8800 9788 - 8045
conniegu
(852) 2977 9243
jovi.li
Internet
Miles XIE
Transportation & Industrial
Metals & Mining
Jovi LI
Miaoxian LI
Automobile
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Wei YAO
Morning Express
25 March 2015
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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
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