20171206-广发证券_香港_-Dim_Sum_Express_4页_435kb

Dim Sum Express Summary

Core Content

The document provides an analysis of market performance and investment opportunities in the manufacturing and automotive sectors in China, with a focus on Hong Kong and A-shares. It includes key performance metrics for various indices and stock ratings for selected companies.

Market Performance

Key Indices and Performance

• HSI (Hang Seng Index): Showed a YTD growth of 31.1%.
• HSCEI (Hang Seng China Enterprises Index): YTD growth of 22.2%.
• MXCN (MSCI China Index): YTD growth of 46.5%.
• SHSZ300 (Shanghai Composite Index): YTD growth of 22.1%.
• SHCOMP (Shanghai Composite Index - Composite): YTD growth of 6.4%.
• SZCOMP (Shenzhen Composite Index): YTD growth of -5.2%.
• INDU (Dow Jones Industrial Average): YTD growth of 22.4%.
• SPX (S&P 500 Index): YTD growth of 17.5%.
• CCMP (China Composite Index): YTD growth of 25.6%.
• UKX (FTSE 100 Index): YTD growth of 2.6%.
• NKY (Nikkei 225 Index): YTD growth of 17.7%.

Hong Kong ADRs

Auto Sector Analysis

• November HDT Sales: Declined by 9% YoY to 83.5k units, down 10% MoM.
• Reason for YoY Decline: High base last year due to regulatory crackdowns on truck overload.
• Cumulative Sales (11M17): Grew by 59% YoY to 1,046.9k units, with November accounting for 7.98%.
• Historical Context: November sales typically represent 8.3% of annual sales, indicating normal levels this year.
• Industry Conditions: Strong business conditions persist despite lower sales and environmental restrictions.
• Earnings Outlook: 2018 HDT earnings are expected to exceed market expectations even with slight sales volume growth.
• Long-Term Growth Potential: Chinese HDT products have room for 3-4x ASP growth compared to overseas peers.
• Key Companies:
  • Sinotruk Jinan Truck (000951 CH): New product cycle and continued market share growth.
  • Weifu High-Technology (000581 CH): Cheap valuation, high entry barriers, and earnings stability.
  • Weichai Power (000338 CH) and FAWER Automotive Parts (000030 CH): Worth watching.

Manufacturing Sector Investment Strategy

• Government Plan: The 19th CPC National Congress aims to make China a "strong manufacturing nation".
• Overcapacity Elimination: Midstream manufacturing has largely eliminated overcapacity.
• Performance Metrics:
  • Fixed asset investment (FAI) growth slowed from over 30% in 2011 to 5% this year.
  • Industrial value-added (IVA) growth fell from 10% in 2013 to 6% in 2016.
  • Capacity under construction has reported negative growth for eight consecutive quarters since 4Q15.
• Sector Recovery: Midstream manufacturing has shown improved profitability and balance sheets, with ROE and capacity utilization rebounding.
• Key Sectors for Expansion: Chemicals, rubber, new materials, cement, glass, machinery, and paper are likely to begin a new capacity expansion cycle.
• H-Shares Opportunities: Cement and paper sectors are highlighted as the biggest investment opportunities.

Investment Ratings

Stock Ratings

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

Sector Ratings

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

Key Risks

• Slower-than-expected economic growth.
• Disappointments on the sector policy front.
• Increased industry competition.

Disclaimer

• The report is for informational purposes only and does not constitute an offer to buy or sell securities.
• No liability is accepted for losses arising from the use of the materials unless excluded by applicable laws.
• Investment involves risks, and past performance does not guarantee future results.
• The views expressed are those of the analysts and not necessarily those of GF Securities (Hong Kong) or its affiliates.