20170222-招商证券_香港_-CMS_HK__Research_Highlights_13页_1mb_1mb

报告摘要

Morning Express Summary

Core Content

This document is a research report from China Merchants Securities (HK) Co., Ltd., dated February 22, 2017, focusing on equity research highlights for various sectors, including Traditional Chinese Medicine (TCM), Hong Kong (HK) equities, and specific stocks such as Hanbell Precise Machinery and others. It also includes a market strategy update and investment recommendations.

Main Points

Traditional Chinese Medicine (TCM) Sector

TCM finished drugs have bottomed out after destocking in FY16, with expected growth of about 7% in FY17E.
CCMG (Granule business) is still showing strong growth potential.
The stock is considered attractive with a 14.2x FY17E P/E ratio, which is lower than the TCM 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.

Market Strategy

The Hang Seng Index (HSI) has continued its uptrend in February, surpassing the target of 24,000.
Take profit is recommended for sectors that have already rallied, such as energy and materials.
Investors should shift focus to potential laggards with higher margins of safety, including Chinese banks, HK stock brokers, infrastructure developers, gold, and HK property developers.
A major correction is unlikely due to potential southbound capital inflow and economic recovery expectations.
Range trading is expected until mid-March due to limited liquidity.

Hanbell Precise Machinery (002158.SZ)

FY16 revenue increased by 9.53% YoY to RMB974 million, with net profit up by 6.27% YoY to RMB167 million.
Production resumed to normal pace after the Spring Festival.
The company aims for a 30% sales growth for air compressors in FY17E.
High temperature heat pumps saw robust sales due to the "Coal Reform" policy.
New Energy Vehicles (NEV) are driving demand for vacuum pumps and rotary air compressors.
The company's 2017E and 2018E net profit is expected to reach RMB195 million and RMB233 million, respectively, with a P/E of 28.1x and 23.5x.
The investment recommendation is STRONGLY OVERWEIGHT-A.

Risks

Infrastructure growth slowing and intensified competition are noted as risks for Hanbell.

Key Information

Market Indices:
- Hang Seng Index: 23964, -0.76%
- Hang Seng Finance Index: 33123, -1.48%
- Hang Seng Utilities Index: 53596, +0.25%
- Hang Seng Property Index: 32672, +0.96%
- HSCEI: 10445, +0.82%
- CSI 300: 3483, +0.33%
- Shanghai Composite Index: 3253, +0.41%
- TWSE: 9764, +0.11%
Global Market Data:
- Brent Oil: 56.67, +0.93%
- COMEX Gold: 1237.3, -0.15%
- COMEX Copper: 274.0, +1.22%
- LME Aluminum: 1882.5, -0.92%
- LME Copper: 6056.0, -0.23%
- BDI: 778.0, +2.77%
Exchange Rates and Interest Rates:
- USD/RMB: 6.88, +0.07%
- USD/HKD: 7.76, +0.0%
- EUR/USD: 1.06, -0.57%
- 1Y RMB NDF: 7.11, +0.35%
- 3M Libor: 1.05, -0.4%
- 3M Shibor: 4.27, +0.19%
- 10Y US T-Note Yield: 2.42, -1.22%

What to Watch

Economic Data

Euro zone Inflation Final MM: 0.50%, Forecast: -0.20%
Euro zone Inflation Final YY: 1.10%, Forecast: 1.80%
Euro zone Inflation Ex Food & Energy YY: 0.90%, Forecast: 0.90%
US API weekly crude stocks: Forecast 9.941 million
Germany GDP Detailed QQ: 0.10%, Forecast: 0.40%
Germany GDP Detailed YY: 1.50%, Forecast: 1.80%
US Initial Jobless Claims: 239,000
US Continued Jobless Claims: Forecast 2.05 million
US U Mich Sentiment: Forecast 96.8
US New Home Sales-Units: Forecast 0.57 million

Company Events

Hysan Development Co. Ltd. (0014 HK): RES/2ND INT DIV
New World Development Co. Ltd. (0017 HK): INT RES/INT ENDED
Sino Land Co. Ltd. (0083 HK): INT RES/INT ENDED
Good Resources Holdings Ltd. (0109 HK): INT RES/INT ENDED
Tsim Sha Tsui Properties Ltd. (0247 HK): INT RES/INT ENDED
Esprit Holdings Ltd. (0330 HK): INT RES/INT ENDED

Research Coverage List

Company	Ticker	Rating	Share Price (Feb. 21)	12-month TP	% Upside	2016 EPS	2017E EPS	2018E EPS	2016 P/E	2017E P/E	2018E P/E
Brilliance China	1114 HK	BUY	HK$12.52	HK$13.0	4%	0.69	0.72	0.89	14.5	14.0	9.1
China ZhengTong Auto	1728 HK	BUY	HK$2.72	HK$3.5	29%	0.29	0.39	0.46	7.5	5.6	5.9
Geely Automobile	175 HK	BUY	HK$11.18	HK$13.0	16%	0.26	0.53	0.83	34.4	17.0	7.7
BAIC Motor	1958 HK	NEUTRAL	HK$9.01	HK$7.3	-19%	0.44	0.71	0.86	16.4	10.3	7.6
Great Wall Motor	2333 HK	BUY	HK$9.72	HK$11.0	13%	0.88	1.06	1.19	8.8	7.4	6.6
Fuyao Glass	3606 HK	BUY	HK$23.0	HK$26.0	13%	1.09	1.22	1.42	16.9	15.2	11.0
China Harmony Auto	3836 HK	BUY	HK$3.61	HK$6.2	72%	0.39	0.42	0.50	7.4	6.9	0.0
Minth Group	425 HK	BUY	HK$25.25	HK$33.0	31%	N.A.	N.A.	-0.08	N.A.	N.A.	N.A.
Cowell	1415 HK	BUY	HK$2.5	HK$3.73	49%	0.08	0.07	0.09	4.0	4.6	27.8
AAC Technologies	2018 HK	BUY	HK$88.1	HK$90.0	2%	2.53	3.17	3.69	27.9	22.4	23.9
Truly	732 HK	BUY	HK$3.68	HK$4.86	32%	0.29	0.34	0.41	12.7	10.8	9.0
Lenovo Group	992 HK	NEUTRAL	HK$4.7	HK$4.7	0%	-0.01	0.07	0.07	N.A.	8.7	67.1

Investment Recommendation

Take profit in sectors that have considerably rallied, such as energy and materials.
Switch to potential laggards with higher margins of safety.
For stocks related to Southbound Trading Link, investors can refer to the themes in A-share markets as the impact from southbound capital is increasing.

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