20180105-广发证券_香港_-Dim_Sum_Express_5页_508kb

Dim Sum Express Summary

Core Content

The document provides a comprehensive market analysis and company-specific insights, focusing on the performance of various stock indices, the Hong Kong ADRs, and the retail and coal sectors in the Chinese market. It also includes a detailed analysis of Yihai Intl (1579 HK) and outlines investment ratings and risks.

Key Market Performance

Hong Kong ADRs

Market Analysis

A-Share Market: Coal Sector

• Key View: The coal sector is expected to see a tight supply-demand balance in January 2018.
• Thermal Coal: Prices are expected to remain high due to low inventory and restocking demand before the Chinese New Year (CNY).
• Coking Coal: Prices are expected to continue rising due to improved downstream demand and reduced environmental pressure.
• Anthracite: Prices are expected to rise slightly due to strong demand in both chemical and civilian sectors.
• Valuation: Industry leaders with low valuations are seen as positive investments.
• Risks: Lower-than-expected macroeconomic growth, weak demand, supply-side reform falling short, and coal price declines.

Hong Kong Market: Retail Sector

• Key View: Retail sales in November 2017 beat expectations, driven by durable goods and mainland tourist arrivals.
• Performance: Nov retail sales rose 7.5% YoY, with durable goods seeing the biggest improvement (from -8% to +15%).
• Challenges: Normalization of food sales, high base for jewelry sales, and potential decline in mainland tourist purchasing power.
• Outlook: HKRMA anticipates retail sales growth of 5-6% in December 2017 and 3%+ in 2018.
• Company Ratings: Buy rating on I.T (999 HK); Hold ratings on LF (590 HK), CTF (1929 HK), and CSS (116 HK).

Yihai Intl (1579 HK)

• Key View: The company is positioned to benefit from the growing self-heating hotspot market.
• Market Outlook: Self-heating hotspot market is expected to grow to Rmb5-15bn in 5-7 years.
• Competitive Landscape: Copycat brands are expected to exit the market more quickly, benefiting Yihai.
• Sales Strategy: Focus on offline channels in 2018, which may reduce gross profit margin but enhance top-line growth.
• Financial Projections: Adjusted EPS forecasts for 2017/18/19 are Rmb0.23/0.31/0.39, with P/E ratios of 28.95x, 21.52x, and 17.04x.
• Target Price: HK$10.94, equivalent to 30x 2018E P/E.
• Risks: Food safety risks at Haidilao restaurants, competition in the hotspot condiment market, and potential sales misses.

Investment Ratings

Rating Definitions

• Buy: Stock expected to outperform benchmark by more than 15%
• Accumulate: Stock expected to outperform benchmark by more than 5% but not more than 15%
• Hold: Expected stock relative performance ranges between -5% and 5%
• Underperform: Stock expected to underperform benchmark by more than 5%

Sector Ratings

• Positive: Sector expected to outperform benchmark by more than 10%
• Neutral: Sector relative performance ranges between -10% and 10%
• Cautious: Sector expected to underperform benchmark by more than 10%

Analyst Certification & Disclosure

• The analysts certify that their views reflect their personal opinions and that no part of their compensation is tied to specific recommendations.
• No proprietary trading or investment banking relationships with the companies mentioned.
• No financial interests in the securities discussed.

Disclaimer

• This report is for informational purposes only and does not constitute an offer to buy or sell securities.
• The information may be subject to change and is not guaranteed.
• GF Securities (Hong Kong) accepts no liability for losses arising from the use of the materials unless excluded by law.

Copyright

• Copyright © GF Securities (Hong Kong) Brokerage Limited.
• Unauthorized copying or redistribution is prohibited.