20160509-招商证券_香港_-CMS_HK__Research_Highlights_16页_1mb

Morning Express Summary

Core Content

This document provides a comprehensive overview of the financial performance and market outlook for several listed companies in Hong Kong and China, along with relevant macroeconomic data and research coverage updates.

Key Companies and Their Analysis

Longyuan Power (916 HK)

• Performance: Wind power generation increased by 5% YoY in April 2016, and by 6% YoY in January–April 2016. However, wind utilization dropped by 11% YoY in April and 12% YoY in January–April.
• Curtailment: Wind curtailment remained serious in several zones, including IM, Xinjiang, Gansu, Helongjiang, and Ningxia.
• Forecast: The company expects full-year utilization to reach 1,900 hours, but the report is not optimistic about the second and third quarters due to lower wind resources.
• Valuation: The stock is currently trading at 9.8x FY16E PE, which is more than 2SD below its 5-year average. The valuation is considered attractive.
• Rating: BUY with a target price (TP) of HK$6.9.

Wynn Macau (1128 HK)

• Performance: 1Q16 adjusted EBITDA of US$169mn, a 9% increase QoQ, driven by strong mass growth.
• Outlook: The company is expected to benefit from the mass market bottoming out and the opening of Wynn Palace in 3Q16. However, VIP performance continues to decline.
• Valuation: The stock is trading at 5-year average P/E and EV/EBITDA, with a target price of HK$10.8.
• Rating: NEUTRAL (upgraded from SELL).

MGM China (2282 HK)

• Performance: 1Q16 EBITDA of HK$995mn, a 23% decline YoY and 12% drop QoQ.
• Outlook: The company is expected to suffer from market share loss and cost pressures before the opening of MGM Cotai in FY17E.
• Valuation: Trading at 19.5x FY16E P/E and 14.2x EV/EBITDA, which are in line with its peers.
• Rating: SELL with a target price of HK$9.2.

Wasion Group (3393 HK)

• Performance: Decline in SGCC orders and market share, with a 30% YoY drop in orders from the first 2015 tender.
• Outlook: Earnings visibility remains low, and there is no sign of recovery in SGCC orders.
• Valuation: Fairly priced at 8x FY16E P/E, with a target price of HK$4.25.
• Rating: NEUTRAL.

A-Share Research Highlights

GEM Board M&A Analysis

• Trend: M&A activities have significantly contributed to GEM companies' performance in 2015.
• 2016 Outlook: Expected to maintain more than 20% growth, driven by M&A.
• Impact of M&A: Acquisitions have been the main driver of growth, with profit from acquisitions contributing 60% to 2015 net profit (up to 90% when including Hithink RoyalFlush and East Money).
• Organic Growth: 2015 organic growth was only 2.3%, and could be zero if considering cash acquisitions.
• 2016 Performance: 1Q16 net profit increased by 40% YoY, reaching a 12-year high, primarily due to the low base effect from the 2015 acquisitions.
• Future Outlook: If M&A activities continue and organic growth improves, GEM earnings growth could surpass 20%.

What to Watch

Economic Data

Company Events (April 2016)

Main Points and Key Information

• Longyuan Power is expected to benefit from potential favorable policies, despite ongoing wind curtailment.
• Wynn Macau is showing signs of recovery, with improved mass performance and a planned opening of Wynn Palace in 3Q16.
• MGM China is under pressure due to declining VIP performance and market share loss, with a SELL rating.
• Wasion Group is facing a decline in SGCC orders and market share, with a NEUTRAL rating.
• GEM Board is driven by M&A, with significant growth in 2016E due to the base effect of 2015 acquisitions.
• The target price for each company is based on a combination of current valuation, expected performance, and market conditions.
• The Research Coverage List includes various sectors, with key analysts providing ratings and forecasts.

Conclusion

The report highlights the performance of various companies and the potential impact of market conditions, policy changes, and M&A activities. It provides a detailed analysis of each company's financials and market position, with ratings and target prices based on current and projected performance.