20131031-招商证券_香港_-Hong_Kong_Morning_Daily_16页_210kb

Research Summary

1. Huadian Power (1071.HK) - Double Whammy Hurts Its Competitiveness

• Core Content: Huadian's 2013 results are expected to benefit from lower fuel costs, but this is already anticipated by the market. The company's earnings are highly sensitive to coal prices and tariffs.
• Main Points:
  • Stabilization of coal prices and downward tariff adjustments are key stock overhangs.
  • Financial indicators such as net profit margin (7%), ROE (6%), and a higher debt ratio (82%) indicate weaker competitiveness compared to peers.
  • The company has a large installed capacity (8609.8MW) and newly approved capacity (5064.3MW), leading to significant CAPEX requirements.
  • The cost advantage from coal price sensitivity is weakened due to slower coal price decline and expected coal price stabilization in 2014.
  • Net profit attributable to shareholders is projected to rise by 109.7% YoY to RMB3.03 billion in 2013, but is expected to decline by 6.2% YoY to RMB2.85 billion in 2014.
• Key Information:
  • Rating: NEUTRAL
  • 12-Month Target Price (TP): HK$3.8
  • P/E ratio: 8x 2014E

2. PetroChina (00857.HK) - 3Q13 Core Profits Improve on Energy Reform

• Core Content: PetroChina's 3Q13 results show a rebound in core profits, driven by energy reform and price adjustments.
• Main Points:
  • E&P profits increased by 15% QoQ to RMB48.2 billion due to higher crude oil prices.
  • Refining profits rebounded, but were slower compared to Sinopec due to older refineries.
  • Natural gas profits increased by 26% QoQ to RMB1.55 billion, indicating positive impact from policy changes.
  • Valuation remains attractive with a stable dividend yield of about 4%.
• Key Information:
  • Rating: BUY
  • 12-Month TP: HK$10.55
  • FY13 EPS: RMB0.71
  • Mid-cycle valuation: 12.0x earnings

3. Sector Updates

1. China's Shale Gas Policy

• Core Content: China's National Energy Administration introduced new policies to support shale gas exploration and extraction.
• Main Points:
  • The policy aims to promote orderly exploration, increase natural gas supply, and support energy conservation.
  • "Drillers" will benefit first, followed by processing equipment manufacturers and energy transportation infrastructure companies.
• Key Information:
  • Recommended stocks: Anton Oilfield (03337.HK), Jutal Offshore Oil Services (03303.HK), Chu Kong Pipe (01938.HK)

2. Housing Security and Social Housing Supplies

• Core Content: President Xi Jinping emphasized increasing the supply of affordable housing and land for housing.
• Main Points:
  • The government will be mainly responsible for affordable housing supply, while market forces govern other housing types.
  • This policy shift is seen as positive for the real estate sector and indicates a more sustainable growth path.
• Key Information:
  • Recommended stocks: Sunac, Greentown, China Resources, China Overseas

4. Company Comments

1. Datang Power (991.HK)

• Core Content: Datang Power's 3Q2013 results showed strong net profit growth due to lower fuel costs.
• Main Points:
  • Net profit rose by 103.56% YoY to RMB3.67 billion.
  • Operating costs decreased by 11.4% YoY due to fuel cost decline.
  • Financial costs also declined by 5.1% YoY due to improved debt structure.
• Key Information:
  • Rating: BUY
  • 12-Month TP: HK$4.1
  • 2013-2015E EPS: RMB0.40 / RMB0.42 / RMB0.52

2. Lianhua (980.HK)

• Core Content: Lianhua's 1-3Q2013 results showed a decline in net profit due to intense competition.
• Main Points:
  • Sales increased by 4.8% YoY to RMB25 billion, but net profit dropped by 48.3% YoY to RMB185 million.
  • Net profit margin eroded to 0.7% from 1.3% in 1H13.
  • The company recorded a loss in 3Q2013.
• Key Information:
  • Rating: Not specified
  • 1-3Q2013 Net Profit: RMB185 million

3. Baidu Q3 Results

• Core Content: Baidu's Q3 results showed revenue growth but margin pressure due to increased marketing costs.
• Main Points:
  • Total revenue rose by 42.3% to RMB8.892 billion.
  • Operating profit increased by 1.2% to RMB3.338 billion.
  • The company beat earnings guidance.
• Key Information:
  • Q3 Revenue: RMB8.892 billion
  • Q3 Operating Profit: RMB3.338 billion
  • Earnings growth: 1.3% YoY

5. A-share Research Highlights

1. China Vanke (000002)

• Core Content: Vanke's 3Q13 results confirmed its leadership in the real estate sector with strong sales and reserves.
• Main Points:
  • Sales and settled sales revenue increased by 37.5% YoY.
  • Full-year sales expected to reach RMB180 billion.
  • The company has a large reserve of equity construction area, ensuring two to three years of supply.
• Key Information:
  • Rating: Strong Buy-A
  • 2013-2015E EPS: RMB1.43 / RMB1.74 / RMB2.02
  • Target Price: RMB11.44

2. Haitong Securities (600837)

• Core Content: Haitong Securities reported strong growth in revenue and net profit across various business segments.
• Main Points:
  • Operating revenue rose by 20% YoY to RMB8.3 billion.
  • Net profit increased by 51% YoY to RMB3.69 billion.
  • The company's intermediary and proprietary investment businesses performed well.
• Key Information:
  • Rating: Strong Buy
  • 2013-2014E EPS: RMB0.51 / RMB0.59

6. Stock Pool Update

• Core Content: The stock pool update provides detailed ratings and target prices for various sectors.
• Main Points:
  • Key sectors: Textiles, Apparel & Luxury Goods; Metals & Mining; Auto & Others; Oil & Gas; Oil & Gas Services/Equipment.
  • Ratings and target prices vary by company, with some showing growth potential and others facing challenges.
• Key Information:
  • Example: China Shenhua (1088.HK) - Buy, TP: HK$36.40, Upside: 52%
  • Example: Unitedenergy Gp (467.HK) - Buy, TP: HK$1.59, Upside: 28%