20160725-新鸿基金融集团-INVESTMENT_DAILY_NOTE_15页_2mb

Investment Daily Note Summary

Core Content Overview

This document provides a comprehensive summary of the Hong Kong and global financial market conditions, including index performance, stock trends, upcoming results, and valuation data. It also highlights key market data such as trading volumes, interest rates, exchange rates, and commodity prices. The focus is on identifying investment opportunities and potential risks based on the latest market information and technical analysis.

Main Market Trends

Hong Kong Indices

• Hang Seng Index (HSI): Closed at 21,964, down 36 points (-0.17%).
• HSCEI: Closed at 9,031, down 25 points (-0.28%).
• Shanghai Composite: Closed at 3,031, down 0.3%.
• Shenzhen Composite: Closed at 2,037, down 0.1%.
• Market Turnover: Declined significantly across all major indices.

Trading Mechanism Change

• The closing auction session starts today, extending the securities market closing time to 4:10 pm from 4:00 pm.
• The first phase includes all Hang Seng Composite LargeCap and MidCap index constituent stocks, H shares with corresponding A shares, and all ETFs. This change will have a notable impact on CBBC and warrants.

Stock in Focus: Guangzhou Auto-H (2238.HK)

• Last Close: HK$10.20
• Entry Price: HK$9.52
• Target Price: HK$11.00
• Stop-loss Price: HK$8.90
• YTD/1M/3M/12M % Change: 46.5%/6.4%/16.7%/60.9%
• Market Cap: HK$138.57 billion
• 3M Average Daily Volume: 12.91 million shares
• FY1 Forward P/E: 9.1x

Reason for Focus:

• Strong sales growth in China due to reduced automobile purchase tax.
• H1 sales increased by 8.1% YoY to 12.83 million units.
• June sales growth for SUVs and passenger cars was 14.6% and 27%, respectively.
• Expected to release interim results on 26 August, which could be positive for investors.
• The stock is undervalued with a forward P/E lower than the five-year average of 10.5x.

Today's Top Picks

1. Chi Mer Land (978.HK)

   • Last Close: HK$1.35
   • Purchase Price: Current
   • Target Price: HK$1.49
   • Stop-loss Price: HK$1.27
   • Reason: Share price rallied with increased turnover, expected to rise further.

2. Code Agri (8153.HK)

   • Last Close: HK$1.70
   • Purchase Price: Current
   • Target Price: HK$1.82
   • Stop-loss Price: HK$1.58
   • Reason: Share price showed support on 10-day moving average, suggesting a small bet may be placed.

Sector Performance

Best Performing Sectors

• Telecoms Equipment: +1.6% (1D), +5.1% (5D), +8.1% (1M)
• Handset and related accessories: +1.0% (1D), +5.8% (5D), +6.9% (1M)
• Technology: +1.0% (1D), +1.2% (5D), +6.3% (1M)
• Agriculture: +0.8% (1D), +4.8% (5D), +2.5% (1M)
• Dairy: +0.5% (1D), +0.1% (5D), +1.1% (1M)
• Automobile: +0.3% (1D), +5.7% (5D), +18.0% (1M)

Key Stocks in Best Performing Sectors

• Telecoms Equipment: China Com Service (552), ZTE (763), Trigiant (1300), Comba (2342)
• Handset and related accessories: Tongda Group (698), AAC Tech (2018), Sunny Optical (2382), Coolpad Group (2369), TCL Comm (2618)
• Technology: Kingdee (268), Chinasoft (354), Tencent (700), NetDragon (777), Kingsoft (3888)
• Agriculture: First Tractor (38), Sinofert (297), Ko Yo Group (827), National Agri (1236), China Bluechem (3983)
• Dairy: Biostime (1112), CH Modern (1117), YST Dairy (1431), Mengniu (2319), Huishan Dairy (6863)
• Steel: Angang Steel (347), Maanshan Iron (323), Shougang Res (639)
• Automobile: Geely Auto (175), Dongfeng Motor (489), BRILLIANCE CHI (1114), BYD Co. (1211), Great Wall Motor (2333)

Valuation Analysis

Forward P/E and Valuations of Major Indices

• Hang Seng Index: FY16E P/E = 12.2, Long-term average = 11.0
• HSCEI: FY16E P/E = 7.7, Long-term average = 7.9
• Shanghai Composite: FY16E P/E = 13.9, Long-term average = 10.7
• S&P 500: FY16E P/E = 18.4, Long-term average = 15.3

Deviations and Earnings Growth

• Hang Seng Index: Deviation = +11.2%, FY1 EPS growth = -10.4%, FY2 EPS growth = +10.7%
• HSCEI: Deviation = -2.3%, FY1 EPS growth = -8.0%, FY2 EPS growth = +9.1%
• Shanghai Composite: Deviation = +29.6%, FY1 EPS growth = +20.6%, FY2 EPS growth = +13.1%
• S&P 500: Deviation = +20.3%, FY1 EPS growth = +9.4%, FY2 EPS growth = +13.2%

Market Data Highlights

Previous Day's Best and Worst Performers

• Best Performers:

  • ZALL GROUP LTD (2098.HK): +5.5%
  • NETDRAGON WEBSOF (777.HK): +4.7%
  • EMPIRE WATCH & COSMO LADY CHINA (887.HK, 2298.HK): +4.5%
  • COMBA TELECOM SY (2342.HK): +4.1%

• Worst Performers:

  • PETRO-KING (2178.HK): -6.2%
  • DAPHNE INTERNATI (210.HK): -5.6%
  • YUANDA CHINA HLD (2789.HK): -4.1%
  • TSUI WAH HOLDING (1314.HK): -4.0%
  • GUANGZHOU AUTO-H (2238.HK): -3.6%

External Market Conditions

• U.S. Stocks: Rose as telecom and utilities sectors rallied.
  • Dow Jones: +53 points, closed at 18,570.
  • S&P 500: +9 points, closed at 2,175.
  • NASDAQ Composite: +26 points, closed at 5,100.
• ADR Impact: ADRs rose, effectively putting HSI up 11 points.
• Commodity Prices:
  • Oil: Fell due to a fourth consecutive rise in U.S. active oil rigs.
  • Gold: Down by US$7.60 to US$1,323.40/oz.
  • Crude Oil (NYMEX WTI): Down to US$44.33/bbl.
  • Brent Crude (ICE): Down to US$45.82/bbl.
• Exchange Rates:
  • USD/HKD: 7.7567, down 0.1%.
  • USD/CNY: 6.7022, down 0.7%.
  • USD/CNH: 6.6873, down 0.1%.
• Interest Rates:
  • U.S. 2-year Treasury yield: 0.7188%, up 2.91 bps.
  • U.S. 10-year Treasury yield: 1.5800%, down 0.18 bps.
  • HK 1-month HIBOR: 0.2359%, down 0.64 bps.
  • SH 1-month HIBOR: 2.7840%, down 1.90 bps.

A-Share Premium to H-Share

• Guangzhou Auto-H (2238.HK): A-share premium to H-share = 172.6%.
• BYD Co. Ltd.-H (1211.HK): A-share premium to H-share = 39.5%.
• China Life-H (2628.HK): A-share premium to H-share = 40.1%.
• Citic Bank-H (998.HK): A-share premium to H-share = 45.5%.
• Others: High premiums for many companies, indicating potential undervaluation in H-shares compared to A-shares.

Key Information and Insights

• Market Volatility: Increased volatility in the Hong Kong market, with significant declines in turnover and price movements.
• Valuation Opportunities: Guangzhou Auto-H is undervalued with a forward P/E of 9.1x, lower than the five-year average.
• Sector Outlook: Technology, agriculture, and automobile sectors show strong performance and growth potential.
• Corporate News: CITIC issued a profit warning due to restructuring, weak stock market, and RMB depreciation.
• Investment Strategy: Buy the dips for Guangzhou Auto-H, and consider small bets on Code Agri based on technical support.

Summary

The Hong Kong market experienced a decline in index values and trading activity, with the Hang Seng Index and HSCEI both showing negative daily and year-to-date changes. The introduction of the closing auction session is expected to significantly affect CBBC and warrants. Guangzhou Auto-H (2238.HK) is highlighted as a stock with strong fundamentals and potential for growth, especially due to rising sales and expected interim results. The document also provides insights into the performance of various sectors, identifies top-performing stocks, and highlights valuation opportunities. A-share premiums to H-shares are significant, indicating potential for H-share investment. External market conditions show mixed results, with U.S. stocks rising and commodities falling, affecting the broader market sentiment.