20170222-招商证券_香港_-Morning_Express_13页_1mb_1mb

Morning Express Summary

Core Content

The document provides a comprehensive equity research summary from China Merchants Securities (HK) Co., Ltd., covering various sectors in Hong Kong and A-shares. It outlines the performance of specific stocks, market trends, and investment recommendations, with a focus on valuation, earnings forecasts, and risk factors.

Main Points

Traditional Chinese Medicine (TCM) Sector

• Stock: 570 HK (Trad Chi Med)
  • TCM finished drugs have bottomed out, and the company's granule business (CCMG) is still showing strong growth.
  • Destocking in FY16 caused a decline in revenue, but growth is expected to recover to around 7% in FY17E.
  • The company is trading at 14.2x FY17E P/E, which is below the industry average of 17.8x.
  • The BUY rating is maintained, but the target price (TP) is lowered to HK$4.5 due to TCM destocking and margin pressure.
  • Risks include further price erosion, higher SG&A expenses, and competition in the granule market.

A-shares: Hanbell Precise Machinery (002158.SZ)

• Event: Hanbell announced preliminary FY16 results with a 9.53% revenue increase and a 6.27% net profit increase.
• Key Highlights:
  • Production resumed to a normal pace after the Spring Festival.
  • The company is targeting a 30% sales growth for FY17E, particularly in air compressors.
  • High temperature heat pumps saw robust sales, driven by the "Coal Reform" policy.
  • New Energy Vehicles (NEVs) are increasing demand for vacuum pumps and rotary air compressors.
• Earnings Forecast:
  • 2017E and 2018E net profit is expected to reach RMB195mn and RMB233mn, respectively.
  • Corresponding P/E ratios are 28.1x and 23.5x.
• Investment Recommendation: STRONGLY OVERWEIGHT-A due to strong growth potential, though risks include slowing infrastructure growth and intensified competition.

Hong Kong Market Strategy

• The Hang Seng Index (HSI) has been in an uptrend, reaching above the 24,000 target.
• Investment Strategy:
  • Take profit in sectors that have already rallied, such as energy and materials.
  • Focus on potential laggards and sectors with higher margins of safety, such as Chinese banks, HK stock brokers, infrastructure developers, gold, HK property developers, and power companies.
• Market Outlook:
  • A major correction is unlikely due to continued bullish sentiment and potential southbound capital inflow.
  • Limited liquidity is expected to restrict the upside of the HK market until mid-March.

Key Market Indicators

• Stock Market Indices: The HSI and HSCEI showed mixed performance, with the HSI slightly down and the HSCEI up.
• Global Markets: Brent Oil increased slightly, while COMEX Gold and COMEX Copper showed mixed performance.
• Exchange Rates: USD/RMB and USD/HKD remained stable, while EUR/USD decreased slightly.
• Interest Rates: 1Y RMB NDF increased slightly, and 3M Shibor increased.

Company Events

• Multiple companies reported dividend results, including Hysan Development, New World Development, and Sino Land.
• ANTA Sports Products and others announced results and dividend policies.

Investment Recommendations

• Take profit in overperforming sectors such as energy and materials.
• Switch to potential laggards with higher safety margins, including Chinese banks, HK stock brokers, infrastructure developers, gold, and property developers.
• Monitor the impact of Southbound Trading Link on related stocks, as it is expected to influence performance.

Risks and Considerations

• For TCM sector: Further price erosion, higher SG&A expenses, and competition in the granule business.
• For Hanbell: Slowing infrastructure growth and intensified competition could affect growth.
• For the HK market: Limited liquidity may restrict upside potential until mid-March.

Summary Table of Key Stocks

This summary encapsulates the key insights and recommendations from the research report, focusing on the performance of specific stocks, market trends, and investment strategies.