20181210-广发证券_香港_-Dim_Sum_Express_4页_636kb

Dim Sum Express Summary

Core Content Overview

The document provides a comprehensive analysis of the performance of various stock indices and sectors in the context of the Hong Kong and mainland Chinese markets, with a focus on 2019 investment outlooks. It includes insights from GF Securities' A/H-share analysts on macroeconomic trends, sector dynamics, and company-specific developments.

Market Performance

Key Investment Views

2019 H-Share Strategy Outlook

• 2018 Review: Liquidity pressures, economic downturn, and renminbi depreciation affected H-share valuations and EPS estimates.
• 2019 Expectations:
  • US economy and stock market may decline, and Fed may delay rate hikes.
  • Weaker renminbi and stronger USD could ease upward pressure on US bond yields, improving cross-border liquidity.
  • HSI EPS growth expected at ~2.5% in 2019 under base case.
  • Structural reforms will support moderate valuation growth.
  • Short-term risks remain, but the market is expected to improve after 2Q19.
• Recommendations:
  • Overweight: Consumer services, insurance, auto sectors.
  • Overweight: Consumer and tech leaders with high dollar-denominated costs.
  • Overweight: Infrastructure construction sector.
  • Overweight: Hong Kong local leaders with high dividends.

Sector Analysis

Pharmaceuticals

• Price Negotiation: Completed on Dec 6, with significant price reductions for certain drugs.
• Impact: Successful bidders saw prices drop by 92% and 44%, respectively.
• Uncertainties: Pilot scheme may not be expanded nationwide.
• Outlook: Generic drugs may peak, and competition could deteriorate. R&D efficiency in generics is crucial, and the trend of generics + innovation is expected.

Steel

• Supply-Demand Dynamics: Weak in Nov due to seasonal demand decline and high capacity utilization.
• Valuation: P/E at 6.03x TTM, P/B at 1.03x LF, indicating low valuations.
• Outlook: Sector fundamentals may worsen in Dec. Prices will face pressure, but profitability could recover due to upstream price shifts and reduced production.

Electrical Equipment

• Infrastructure and Intelligent Manufacturing: Expected to benefit the sector.
• Power Trends: Rising power consumption and increasing share of new energy in grid and consumption.
• Sub-Sectors: UHV transmission and power distribution networks are booming.
• Recommendations: Watch Inovance, Hongfa Technology, Nari Technology, Pinggao Electric, and Xuji Electric.

Wind Power and Solar Power

• Wind Power: Bidding prices for 2MW turbines fell from Rmb3,700/kW to Rmb3,200/kW.
• PV Capacity: Global PV capacity to reach ~120GW, up 20% YoY; China's to reach 45GW.
• Technological Drivers: Lower-cost silicon, PERC batteries, and module packaging tech will drive structural growth and enable grid parity sooner.

Textile & Apparel

• Trade Tensions: Risks from Sino-US trade tensions and FX/cotton price impacts on GPM.
• Regional Advantage: Southeast Asian countries have cost advantages and improving industrial chains.
• Outlook: E-commerce revenue growth is expected to outpace offline channels over the next two years.

Computer

• Innovation Stage: Sector is in a take-off phase for innovative products and services.
• Growth Prospects: Stronger counter-cyclical characteristics due to rapid penetration.
• Recommendation: Overweight stance on the sector.

Basic Chemicals

• Price Pressure: Chemical prices under downward pressure due to falling crude oil prices.
• Valuation: P/E at 15.16x TTM, lower than the average since 2012.
• Investment Themes:
  • Sub-sectors with stable demand or upcycle (phoschemical, natural gas, agricultural chemicals).
  • New materials with promising development (auto-exhaust catalyst, OLED materials, lithium batteries).
  • Sector leaders benefiting from industry reshaping.
• Stock Picks: Valiant, Sinocera, Phichem, Hualu-Hengsheng, Yangnong Chemical, Jinhe Industrial.

Company Highlights

Peacebird Fashion (603877 CH)

• Share Transfer: Controlling shareholder Proven transferred shares to associates, avoiding secondary market pressure.
• Financial Estimates: EPS of Rmb1.35/1.70/2.11 for 2018/19/20; P/E of 13/11/8x; PEG < 1x.
• Rating: Maintain Buy.

Kweichow Moutai (600519 CH)

• Pricing Power: Strong brand gives pricing power in the baijiu sector.
• Growth Estimates: High-end baijiu spending to grow at CAGR of 10–15% (personal), 5–10% (business), and 0% (government).
• Sector Growth: Baijiu sector revenue growth at ~10% CAGR.
• Sales and Price: Moutai wine sales and per tonne prices to grow at CAGR of 5% and 8%, respectively.
• Financial Estimates: EPS of Rmb26.82/30.82/38.14; P/E of 22/19/15x.
• Rating: Maintain Buy.

Rating Definitions

• Buy: Stock expected to outperform benchmark by >15%

• Accumulate: Stock expected to outperform benchmark by 5–15%

• Hold: Expected stock relative performance between -5% and 5%

• Underperform: Stock expected to underperform benchmark by >5%

• Sector Ratings:

  • Positive: Sector expected to outperform benchmark by >10%
  • Neutral: Expected sector relative performance between -10% and 10%
  • Cautious: Sector expected to underperform benchmark by >10%

Disclaimer

• This report is for informational purposes only and does not constitute an offer to buy or sell securities.
• GF Securities (Hong Kong) accepts no liability for losses arising from the use of this report.
• Investment involves risks and past performance does not guarantee future results.
• The report is not a substitute for professional advice.