OOIL (316 HK) reported operational updates for 2Q14 and 2H14, showing improved revenue despite a decline in ASP (Average Shipping Price).
ICBC (1398 HK) announced a RMB80bn A+H preference share issuance plan to strengthen its capital base and support long-term growth.
Industrial profits for January to June 2014 increased by 11.4% YoY, with a notable improvement in June due to lower base and quarter-end accounting effects.
A range of HK-exchange listed companies were covered, with their financial metrics, ratings, and price targets provided.
Main Points
OOIL Operational Updates
Volume: Increased by 11.2% YoY to 1453mn TEUs in 2Q14.
ASP: Declined by 4.0% YoY in 2Q14.
Revenue: Continued to improve in 2Q14, up 6.8% YoY, compared to 1.7% YoY in 1Q14.
Loadable Capacity: Increased by 2.1% YoY.
Load Factor: Improved by 6.5% YoY.
Asia-Europe Route: Experienced the best improvements in 2Q14, with revenue up 24.4% YoY, driven by volume growth of 22.1% and a slight increase in ASP.
Spot Market Comparison: The improvement in the Asia-Europe route was less than the spot market (SCFI up 53% YoY) due to its higher exposure to long-term contracts.
Forecast for 2014: Shipping revenue, volume, and ASP are expected to increase by 5.9%, 4.7%, and 1.2% YoY, respectively.
Price Target (TP): Maintained at HK$51.0 for 12 months, based on an industry average P/B multiple of 0.9x for 2014E.
ICBC Preference Share Issuance
Plan: Issue no more than RMB80bn in A+H preference shares, with RMB45bn in the domestic market and RMB35bn in the offshore market.
Conversion: A+H shares would account for 6.22% of total outstanding shares, with an initial conversion price of RMB3.44/HKD5.0.
Impact: Non-core T1/total CAR is expected to increase by around 63bps.
Valuation: TP of HKD5.95 is based on a 1.16x P/B multiple applied to FY14E BVPS (Book Value Per Share) of RMB4.15.
Valuation Metrics: Trading at 1.0x FY14E P/B and 5.28x FY14E P/E, which is considered undemanding compared to historical averages.
Industrial Profits Analysis
Total Industrial Profits (Jan-June 2014): RMB2,864.98bn, up 11.4% YoY.
Primary Business Activity Profits: RMB2,672.20bn, up 10.8% YoY.
June Profits: RMB588.08bn, up 17.9% YoY.
Factors Affecting Fluctuations: Large base drop and quarter-end accounting for non-primary business activities.
Cost Trends: Costs per hundred RMB of revenue increased for the fourth consecutive month.
Inventory Trends: Finished inventory increased at a higher rate than primary business revenue, indicating pressure on inventory consumption.
Industry Analysis:
Upstream: Still in negative territory.
Non-ferrous Metal Enterprises: Recovered due to rising bulk commodity prices.
Mid-stream: Improved in industries related to growth stabilization policies.
