20170120-招商证券_香港_-CMS_HK__Research_Highlights_13页_1mb_1mb

CMS(HK) Research Highlights Summary

Core Content Overview

This document provides a detailed analysis of several Hong Kong-listed companies, focusing on their financial performance, strategic direction, and market outlook. It includes insights on capital expenditure (Capex), production targets, earnings forecasts, and stock price targets, alongside market indices and exchange rate data.

Key Insights by Company

CNOOC (883 HK)

• Capex Recovery: Management guided 2017E Capex at RMB60-70bn, a 19-39% YoY increase following a 53% plunge in 2014-16E.
• Production Decline: 2017E production is expected to decline 3-5% YoY to 450-460mboe, mainly due to fewer new projects in 2016E.
• Earnings Recovery: Despite production decline, CNOOC is expected to report robust earnings of RMB21,869mn in 2017E, up from RMB458mn in 2016E, driven by oil price recovery.
• Stock Recommendation: Maintain BUY with a lower target price of HK$12.1, reflecting a 21% upside from the current price of HK$10.00.
• Valuation: Trading at 2017E P/B of 1.1x, 21% below historical average, seen as attractive given long-term oil price outlook.

361 Degrees (1361 HK)

• Positive Performance: 4Q16 SSSG for core brand was 7.5%, continuing the uptrend. Kidswear also showed growth.
• Healthy Inventory: Channel inventory and average retail discount remain healthy at 4.1x and 25% off respectively.
• Sector Indication: 361's results are seen as a positive indicator for the domestic sportswear sector.
• Stock Recommendation: Maintain BUY with a target price of HK$3.17, implying a 14% upside from current price of HK$3.06.

AIA (1299 HK)

• Uncertainties Ahead: 2017E HK earnings could fall due to capital outflow restrictions in mainland China, and RMB depreciation is expected from 2018E.
• Valuation: Trading at 1.63x 2017E P/EV or 9.7x NBV, reflecting a 10% CAGR for NBV growth, but not particularly attractive in the short term.
• Stock Recommendation: Maintain NEUTRAL with a target price of HK$40.6.
• Outlook: 2016E NBV growth was 23%, but 2017E growth is expected to be weak. Growth in Malaysia is expected to continue, while HK and Singapore face challenges.

COSL (2883 HK)

• Profit Warning: Announced a net loss of RMB11.7bn in 2016E, with a significant 4Q16E loss of RMB2.6bn.
• Capex Impact: COSL is more sensitive to exploration capex, which is expected to grow at a slower pace (15-35%) compared to CNOOC.
• Stock Recommendation: Maintain SELL with a target price of HK$6.20, reflecting a -20% upside from current price of HK$7.75.
• Valuation: Negative outlook due to overseas exposure and high valuation.

Market Indices and Exchange Rates

Global Commodities:

• Brent Oil: HK$54.19, -0.06, -0.11%
• COMEX Gold: HK$1204.4, -7.7, -0.64%
• COMEX Copper: HK$261.05, -0.6, -0.23%
• LME Aluminum: HK$1818.0, -16.5, -0.90%
• LME Copper: HK$5740.0, -29.0, -0.50%
• BDI: HK$942.0, -10.0, -1.05%

Exchange Rates:

• USD/RMB: 6.87, +0.03, +0.47%
• USD/HKD: 7.76, +0.00, +0.01%
• EUR/USD: 1.07, +0.00, +0.26%
• 1Y RMB NDF: 7.13, +0.01, +0.14%
• 3M Libor: 1.0, -0.03, -2.70%
• 3M Shibor: 3.8, +0.05, +1.44%
• 10Y US T-Note Yield: 2.42, +0.09, +3.86%

Research Coverage List (as of January 20, 2017)

Oil and Gas

• CNOOC: BUY, TP HK$12.1, 21% upside, 2017E P/E 17.8
• China Oilfield Services: SELL, TP HK$6.2, -20% upside, 2017E P/E N.A.

Property

• Yuexiu Property: BUY, TP HK$13.6, 21% upside, 2017E P/E 10.2
• Times Property: BUY, TP HK$4.8, 20% upside, 2017E P/E 3.5
• Yuzhou Property: BUY, TP HK$3.3, 25% upside, 2017E P/E 4.9
• New World Dev: BUY, TP HK$12.2, 37% upside, 2017E P/E 11.9
• Country Garden: NEUTRAL, TP HK$3.4, -23% upside, 2017E P/E 18.2

Auto & Auto Parts

• Brilliance China: BUY, TP HK$13.0, 16% upside, 2017E P/E 12.6
• China ZhengTong Auto: BUY, TP HK$3.5, 34% upside, 2017E P/E 5.4
• Geely Automobile: BUY, TP HK$13.0, 43% upside, 2017E P/E 13.9
• Great Wall Motor: BUY, TP HK$11.0, 35% upside, 2017E P/E 6.2
• Fuyao Glass: BUY, TP HK$26.0, 10% upside, 2017E P/E 15.7

Consumer Discretionary

• 361 Degrees: BUY, TP HK$3.17, 14% upside, 2017E P/E 10.3
• Li Ning: BUY, TP HK$6.47, 31% upside, 2017E P/E 19.8
• China Foods: BUY, TP HK$4.4, 23% upside, 2017E P/E 12.1
• JD: BUY, TP US$33.0, 19% upside, 2017E P/E N.A.

Pharmaceutical & Healthcare

• Sinopharm Group: BUY, TP HK$40.0, 12% upside, 2017E P/E 17.8
• 3SBio: BUY, TP HK$12.0, 57% upside, 2017E P/E 18.1
• HEC Pharm: BUY, TP HK$20.0, 26% upside, 2017E P/E 11.8
• China Biologic Products: BUY, TP US$149.0, 39% upside, 2017E P/E 25.0

Insurance

• AIA: NEUTRAL, TP HK$40.6, -15% upside, 2017E P/E 19.8
• Ping An Insurance Group: BUY, TP HK$53.39, 31% upside, 2017E P/E 9.7
• PICC P&C: BUY, TP HK$15.81, 35% upside, 2017E P/E 7.9

Key Themes

• Capex Recovery: CNOOC is leading the capex rebound among oil majors, signaling a recovery in the sector.
• Earnings Turnaround: CNOOC's earnings are expected to recover significantly in 2017E due to oil price rebound.
• Market Uncertainty: AIA faces short-term uncertainties, including potential earnings declines and RMB depreciation.
• Valuation Concerns: COSL is seen as overvalued and sensitive to exploration capex, leading to a SELL recommendation.
• Sector Performance: 361 Degrees' positive results indicate a potential recovery in the domestic sportswear sector.