20141212-工银亚洲-VIEWPOINTS_EXPRESS_11页_351kb_351kb

Market Report Summary - 12 December 2014

Core Content

The report provides an overview of market performance, sector updates, and valuation analysis for Belle International (1880.HK) and the TMT sector, along with key financial data and market indicators.

Main Points

Belle International (1880.HK)

• Performance Update (FY3Q15):

  • Footwear segment reported a 5.6% same-store sales (SSS) decline.
  • Sportswear segment reported a 5.3% SSS growth.
  • The company added 400 stores during the quarter.
  • The results were slightly below expectations, with a further slowdown in the sportswear segment and continued challenges in the footwear segment.
  • Consumer sentiment remains weak, and the company faces headwinds including slowing consumer income growth, shifting consumer traffic to shopping malls, and competition from online brands.

• Valuation:

  • The stock is currently trading at 11.7x FY2015F P/E, which is below its historical average of 22.3x.
  • Compared to China discretionary names and US footwear peers, it is also at a lower P/E ratio.
  • The target price is set at HK$12.00, indicating a 41.2% upside from the current price of HK$8.50.
  • The 52-week high is HK$9.998, and the 52-week low is HK$6.997.

• Market Cap:

  • Market cap is HK$71.69 billion or US$9.25 billion.
  • Total issued shares are 8.43 billion.

• Long-Term Outlook:

  • The company's core strength remains intact with a vertical business model and premium product quality.
  • Online competition is seen as cyclical, and the company is expected to benefit from the brand owner position.
  • The valuation is considered attractive, and the BUY rating is maintained.

TMT Sector

• Highlights:
  • Youku Tudou will launch a 15.6-inch tablet, smart router, and set-top box next month.
  • Blacklane, an online chauffeur booking service, has partnered with Qunar, China's largest travel search engine.
  • China's mobile gaming growth continues to slow in Q3, with year-on-year revenue growth at 72.8%, down from 108% in the previous quarter.
  • Mobile is the main driver of the global advertising rise, with an estimated annual growth of 38% between 2014 and 2017.
  • China Mobile plans to install 10,000 4G base stations in Shanghai, following a 2 million user milestone.

Key Information

Market Indices Performance

• Hong Kong Equities:

  • Hang Seng Index (HSI): 23,313 (down 0.9%)
  • H-share Index: 11,255 (down 1.0%)
  • Turnover: HK$98.1 billion, down 10.8% from previous levels.

• China Equities:

  • CSI 300 Index: 3,183 (down 1.2%)
  • Shanghai Composite Index: 2,925.7 (down 0.49%)
  • Shenzhen Composite Index: 1,466 (up 0.9%)

• Asian Equities:

  • Nikkei 225: 17,257 (down 0.9%)
  • Korea KOSPI: 1,917 (down 1.5%)
  • Taiwan TWSE: 9,013 (down 0.2%)
  • India Sensex 30: 27,602 (down 0.8%)

• US/European Equities:

  • DJIA: 17,596 (up 0.4%)
  • S&P 500: 2,035 (up 0.5%)
  • NASDAQ: 4,708 (up 0.5%)
  • UK FTSE 100: 6,462 (down 0.6%)
  • Germany DAX: 9,863 (up 0.6%)
  • France CAC40: 4,226 (down 0.0%)

Commodity Prices

• Oil:
  • WTI crude: $60.0 (down 1.6%)
• Precious Metals:
  • Gold: $1,226.5 (down 0.2%)
• Industrial Metals:
  • Copper: $6,415.0 (no change)
  • Aluminium: $1,959.0 (no change)
• Other Commodities:
  • Reuters/Jefferies CRB futures: 245.4 (down 0.6%)
  • Baltic Dry Index: 911.0 (no change)

Interest Rates and Bond Yields

• HIBOR 3m: 0.39% (no change)
• USD LIBOR 3m: 0.24% (no change)
• US Treasury Yield 3m: 0.02% (down 0.01%)
• US Treasury Yield 10y: 2.16% (down 0.002%)
• China Treasury Yield 2y: 3.47% (no change)
• China Treasury Yield 10y: 3.77% (no change)

ADR Performance

• ADR cIs HK$ eqv. vs HK cIs HK$:
  • PetroChina: 8.03 vs 8.07 (down 0.53%)
  • China Mobile: 90.54 vs 91.20 (down 0.72%)
  • HSBC: 74.85 vs 75.80 (down 1.25%)
  • Sinopec Corp: 6.03 vs 6.10 (down 1.21%)
  • China Life: 26.88 vs 27.00 (down 0.43%)
  • CNOOC: 9.93 vs 10.06 (down 1.25%)
  • Hutchison Whampo: 90.27 vs 90.50 (down 0.25%)
  • China Telecom: 4.47 vs 4.48 (down 0.20%)
  • Sun Hung Kai: 113.64 vs 113.70 (down 0.05%)
  • Cheung Kong: 131.63 vs 132.80 (down 0.88%)

Valuation Statistics

Peer Valuation Comparisons

Conclusion

The report indicates that Belle International is facing short-term challenges in its footwear segment, but the long-term outlook remains positive due to its strong brand and cost advantages. Despite the current underperformance, the stock is valued attractively, and the BUY rating is maintained. The TMT sector is also showing mixed performance, with notable developments in hardware, online services, and mobile advertising. Overall, the market indices across various regions show a mixed trend, with some indices declining and others showing moderate growth.