20160923-招商证券_香港_-Morning_Express_13页_1mb_1mb

Morning Express Summary

Core Content

• Geely Automobile is highlighted as a key focus, with its new model, Emgrand GL, driving product line upgrades and enhancing coverage of A-class sedans.
• The launch of Emgrand GL has led to a significant increase in orders, with a potential impact on both Geely's own brands and its joint venture (JV) counterparts.
• The Emgrand series is expected to rank among the top ten A-class sedans, and the company's sales are projected to grow significantly.
• The stock is currently trading at a 24% discount compared to its historical average, with a target price (TP) raised to HK$11.0, implying a 13.0x FY17E P/E.
• The research recommends a BUY rating for Geely Automobile, citing potential catalysts such as higher dividend yields and share repurchases.

Main Points and Key Information

Geely Automobile Highlights

• Emgrand GL Launch: Launched on September 20, it enhances Geely's A-class product coverage and is expected to drive growth.
• Strategic Significance:
  1. Enhances A-class product coverage with Vision/EC7/Emgrand GL.
  2. Promotes product line upgrades.
  3. Opens up new market segments based on price differences.
• Sales Performance:
  • 2016E sales beat guidance, reaching 700,000 units.
  • 2017/18E sales are lifted to 940,000 and 1.18 million units, respectively.
• Earnings Growth:
  • 2016-18E net profit (NP) lifted by 5-26%.
  • 2015-18E NP CAGR is 54%.
  • Earnings are expected to grow faster than the consensus.
• Valuation:
  • Stock is at 24% discount compared to historical average.
  • TP raised to HK$11.0, suggesting a 13.0x FY17E P/E.

FOMC Meeting Summary

• Rate Hike Decision: The FOMC kept the Fed Funds Target Rate unchanged at 0.25-0.5%.
• Guidance: Set the stage for a potential December rate hike, with 59% chance according to futures market.
• Economic Forecasts:
  • 2016 GDP forecast cut to 1.8% YoY.
  • 2016 PCE inflation cut to 1.3% YoY.
  • Unemployment rate forecast raised to 4.8%.
• Economic Data:
  • Recent data is mixed, with strong job market but weak inflation.
  • The Fed is cautious, avoiding rate hikes that could trigger a recession.
• Uncertainty: The November meeting is unlikely to have a rate hike due to the proximity to the election and no press conference scheduled.

What to Watch

Economic Data

• Germany: Markit Mfg Flash PMI on September 23, forecasted at 53.
• Euro Zone: Markit Mfg Flash PMI on September 23, forecasted at 51.5.
• US: Markit Mfg PMI Flash on September 23, forecasted at --.

Company Events

• 2016/09/23:
  • 0159 HK (Brockman Mining Ltd.): Financial results (Y.E. 30/06/16).
  • 0565 HK (Art Textile Technology International Co. Ltd.): Annual results and financial dividend (Y.E. 30/06/16).
  • 0682 HK (Chaoda Modern (Holdings) Ltd.): Agriculture sector, annual results.
  • 0721 HK (China Financial International Investments Ltd.): Financial dividend (Y.E. 30/06/16).
  • 1142 HK (Siberian Mining Group Co. Ltd.): Annual results and financial dividend (Y.E. 31/03/16).

Research Coverage List (As of September 23, 2016)

Auto & Auto Parts

• Brilliance China: BUY, 12-month TP HK$12.0, 36% upside.
• China ZhengTong Auto: BUY, 12-month TP HK$3.5, 37% upside.
• Geely Automobile: BUY, 12-month TP HK$9.0, 26% upside.
• BAIC Motor: NEUTRAL, 12-month TP HK$7.3, -12% upside.
• Great Wall Motor: BUY, 12-month TP HK$10.0, 31% upside.
• Fuyao Glass: BUY, 12-month TP HK$20.0, -6% upside.

Oil and Gas

• Sinopec Oilfield Service: NEUTRAL, 12-month TP HK$1.4, -8% upside.
• China Oilfield Services: SELL, 12-month TP HK$4.6, -28% upside.
• CNOOC: BUY, 12-month TP HK$12.8, 36% upside.
• Sinopec Kantons: BUY, 12-month TP HK$4.9, 32% upside.

Property

• China Resources Land: BUY, 12-month TP HK$24.8, 6% upside.
• Yuexiu Property: BUY, 12-month TP HK$1.36, 7% upside.
• Yuzhou Property: BUY, 12-month TP HK$3.0, 3% upside.
• New World Dev: BUY, 12-month TP HK$11.3, 9% upside.
• Country Garden: NEUTRAL, 12-month TP HK$3.4, -20% upside.
• Agile Property: NEUTRAL, 12-month TP HK$4.6, -1% upside.
• China Aoyuan: BUY, 12-month TP HK$6.2, 57% upside.
• Minth Group: BUY, 12-month TP HK$33.0, 22% upside.

Consumer Discretionary

• Maple Leaf Education: BUY, 12-month TP HK$7.71, 10% upside.
• Sinomax: BUY, 12-month TP HK$0.92, 33% upside.
• Chow Tai Fook: SELL, 12-month TP HK$4.67, -18% upside.
• Cosmo Lady: NEUTRAL, 12-month TP HK$3.11, -4% upside.
• Luk Fook Holdings: SELL, 12-month TP HK$15.36, -20% upside.
• Haier Electronics: NEUTRAL, 12-month TP HK$13.5, 1% upside.
• Springland International: NEUTRAL, 12-month TP HK$2.5, 100% upside.
• Intime Retail Group: BUY, 12-month TP HK$7.5, 7% upside.
• Gome Electrical: BUY, 12-month TP HK$1.1, 8% upside.
• JD: BUY, 12-month TP US$33.0, 25% upside.

Pharmaceutical & Healthcare

• 3SBio: BUY, 12-month TP HK$12.0, 40% upside.
• HEC Pharm: BUY, 12-month TP HK$20.0, 11% upside.
• Trad Chi Med: BUY, 12-month TP HK$4.0, 1% upside.
• Sinco: BUY, 12-month TP US$1.0, 72% upside.
• China Medical System: BUY, 12-month TP HK$14.0, 1% upside.
• China Biologic Products: BUY, 12-month TP US$149.0, 19% upside.

Bank

• ICBC: BUY, 12-month TP HK$5.88, 17% upside.
• Minsheng: SELL, 12-month TP HK$5.98, -32% upside.
• BOCOM: BUY, 12-month TP HK$6.75, 9% upside.
• CQRCB: BUY, 12-month TP HK$5.26, 5% upside.
• BOC: BUY, 12-month TP HK$4.72, 30% upside.
• China Construction Bank: BUY, 12-month TP HK$6.9, 15% upside.
• CITIC Bank: SELL, 12-month TP HK$3.92, -27% upside.

Insurance

• AIA: BUY, 12-month TP HK$56.0, 9% upside.
• NCI: BUY, 12-month TP HK$31.31, -8% upside.
• China Reinsurance: NEUTRAL, 12-month TP HK$1.93, 3% upside.
• Ping An insurance group: BUY, 12-month TP HK$41.3, -2% upside.
• PICC P&C: BUY, 12-month TP HK$15.39, 13% upside.

Conclusion

The research highlights Geely Automobile's strategic product line upgrades and potential for growth, supported by strong sales performance and a favorable valuation. The FOMC's decision to keep rates unchanged reflects cautious economic conditions, with a focus on the December meeting as a likely rate hike. The report also provides an overview of key economic data and company events, emphasizing the importance of monitoring upcoming releases and market movements for investment decisions.