20171031-广发证券_香港_-Dim_Sum_Express_6页_464kb

Equity Research Summary: Dim Sum Express (Oct 31, 2017)

Key Index Performance

The following table summarizes the performance of key global and regional indices for the period up to October 31, 2017:

A-Share Market Outlook

The A-Share market is expected to maintain a structural performance trend. Mutual fund managers have differing views:

• Bullish Views:

  • Positive on financial and consumer sectors in 4Q17.
  • Highlight "dark horse" stocks in financial and consumer sectors.
  • Expect investment opportunities in sectors with relatively cheap 2018 valuations and improving fundamentals such as defense, environmental, and supply chain operations.
  • Believe that leading consumer blue-chip stocks will benefit from industrial upgrades and policy initiatives.

• Neutral Views:

  • No across-the-board investment opportunities currently.
  • Focus on blue-chip stocks and new policy themes.
  • Prefer sectors like banking, consumer, leading property developers, and high-end manufacturing.

• Bearish View:

  • Risk of valuation bubbles in consumer blue chips.
  • Risk of rising risk-free rates.
  • Caution is advised due to sector rotations and uncertainty in growth estimates.

Key Company Analysis

Maple Leaf (1317 HK, Buy)

• Student Enrolment Growth: Achieved 37% YoY growth in student numbers, with 28,111 students enrolled by October 15, 2017.
• Capacity Growth: 32% capacity growth (excluding Hainan school).
• Profit Growth: Expected FY17 net profit to rise by at least 30%.
• Revisions: Revised FY18/19 net profit estimates up by 8% and 5% respectively.
• Target Price: Increased from HK$6.80 to HK$9.10.
• Preference: Wisdom Education is preferred over Maple Leaf due to more visible growth and better transparency.

Universal Medical (2666 HK, Buy)

• Steady Growth: Total assets increased by 16% YoY, operating income up 25% YoY, and profit before tax up 30% YoY.
• Asset Quality: Maintained stable NPA ratio and steady provision coverage ratio.
• Hospital Operations: Continued projects with Xi'an Jiaotong University First Affiliated Hospital and others.
• Future Outlook: P/E valuation is expected to rise due to increased contribution from hospital operations.
• Rating: Maintain Buy.

Longyuan Power (916 HK)

• 9M17 Results: Revenue and net profit rose by 12.90% and 6.36% YoY, respectively.
• Wind Power Performance: Net profit increased by 24.3% YoY due to improved curtailment issues.
• Thermal Power Decline: Net profit dropped by 53.9% YoY due to high coal prices.
• Curtailment Rate: Declined to 11.7% in 9M17, utilization hours increased to 1,433 hours.
• Subsidy Receivables: Increased to Rmb8.67bn in 9M17.
• New Capacity: Target reduced to ~1.5GW due to subsidy delays.
• Earnings Forecasts: EPS estimates of Rmb0.470, 0.542, and 0.633 for 2017-2019.
• Key Risks: High coal prices, unsustainability of curtailment improvements, and exchange rate risk.

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: Expected sector relative performance ranges between -10% and 10%.
• Cautious: Sector expected to underperform benchmark by more than 10%.

Analyst Certification

• The views expressed in the report reflect the personal opinions of the analysts.
• No part of the analysts' remuneration is directly or indirectly connected to their recommendations.

Disclosure of Interests

• GF Securities (Hong Kong) and its affiliated companies do not hold shares in the mentioned securities.
• No investment banking relationships with the companies mentioned in the past 12 months.
• Analysts and their associates have no financial interests in the securities mentioned.

Disclaimer

• This report is for informational purposes only and does not constitute an offer to buy or sell securities.
• The research is intended for GF Securities (Hong Kong) clients.
• The information may be subject to change without notice.
• The report does not take into account individual investment objectives or financial situations.
• GF Securities (Hong Kong) may issue other reports with different conclusions.