20160510-新鸿基金融集团-INVESTMENT_DAILY_NOTE_15页_2mb

Investment Daily Note Summary

Core Content Overview

This document provides a comprehensive overview of the Hong Kong and Chinese stock markets, including key indices, market performance, upcoming results, sector analysis, valuations, and external market conditions.

Main Market Trends

• HSI and HSCEI:

  • Hang Seng Index (HSI) closed at 20,157, with a +0.2% daily change and -8.0% year-to-date (YTD).
  • Hang Seng China Enterprises Index (HSCEI) closed at 8,451, with a -0.2% daily change and -12.5% YTD.
  • The Hong Kong market experienced a significant drop in turnover, with HSI at HK$15.9bn, HSCCI at HK$3.2bn, and HSCEI at HK$10.6bn.

• Global Market Conditions:

  • U.S. stocks ended mixed, with the Dow down 35 points, S&P 500 up 2 points, and NASDAQ up 14 points.
  • ADRs dropped, effectively putting HSI down 190 points, closing at 19,966.
  • Oil prices fell to US$43.55/bbl, down US$1.22, due to uncertainty around Saudi Arabia's oil minister replacement and reduced concerns over Canadian wildfires.
  • Gold prices also declined, closing at US$1,266.60/oz, down US$27.40.

Sector Performance

• Best Performing Sectors:

  • Dairy: +1.7% (daily), +0.3% (5-day), -1.8% (1-month).
  • Local Property: +0.9% (daily), -3.7% (5-day), -0.4% (1-month).
  • Toll Road: +0.5% (daily), -0.3% (5-day), -0.9% (1-month).
  • Local Banks: +0.4% (daily), -2.6% (5-day), +0.9% (1-month).
  • HK Consumer Group: +0.2% (daily), -1.0% (5-day), +4.8% (1-month).
  • Gaming: +0.2% (daily), -4.2% (5-day), -9.1% (1-month).

• Worst Performing Sectors:

  • Consumer Staples: -0.2% (daily), -4.1% (5-day), +3.0% (1-month).
  • Automobile: -0.3% (daily), -6.6% (5-day), -1.7% (1-month).
  • Sports accessories: -0.4% (daily), -6.2% (5-day), -4.8% (1-month).
  • HK Telecoms: -0.4% (daily), -0.7% (5-day), +0.8% (1-month).

Stock in Focus: YUNNAN WATER I-H (6839.HK)

• Last Close: HK$4.30
• Entry: HK$4.28
• Target: HK$5.00
• Stop-loss: HK$4.00
• YTD/1M/3M/12M % Change: -16.5%/-5.3%/12.6%/N/A
• Market Cap: HK$5.13bn
• 3M Average Daily Volume: 0.48mn shares
• FY1 Forward P/E: 10.9x

Investment Rationale:

• Yunnan Water is the largest municipal wastewater treatment operator in Yunnan.
• It has a technological edge in membrane bioreactor (MBR) technology, which is expected to boost long-term profit growth.
• The company is expanding into overseas markets, including Southeast Asia.
• The company is trading at a lower forward P/E (10.9x) compared to its five-year average (15x), indicating an attractive valuation.

Today's Top Picks

• On Time Log (6123.HK):

  • Last Close: HK$1.42
  • Target Price: HK$1.54
  • Stop-loss Price: HK$1.34
  • Reason: Share price showed support on 10-day MA, rallied with strong turnover.

• Major Hldgs (1389.HK):

  • Last Close: HK$3.67
  • Target Price: HK$3.99
  • Stop-loss Price: HK$3.36
  • Reason: Share price rose above 100-day MA, suggesting a small bet is warranted.

Key Sector Performers

• Dairy: Biostime (1112), CH Modern (1117), YST Dairy (1431), Mengniu (2319), Huishan Dairy (6863)
• Local Property: CK Hutchison (1), Henderson Land (12), SHK Prop (16), New World Dev (17), Sino Land (83)
• Toll Road: Sichuan Express (107), Jiangsu Express (177), Shenzhen Express (548), Zhejiang Express (576), Anhui Expressway (995)
• Local Banks: Hang Seng Bank (11), BEA (23), Chong Hing Bank (1111), BOCHK (2388), Dah Sing Banking (2356)
• HK Consumer Group: Sa Sa Int'l (178), Cafe De Coral (341), Luk Fook (590), Bonjour (653), I.T (999)
• Gaming: Galaxy Ent. (27), SJM Hldg (880), Wynn Macau (1128), Sands China (1928), MGM China (2282)
• REITs: Yuexiu REIT (405), Fortune REIT (778), Prosperity REIT (808), LINK Reit (823), Champion REIT (2778)
• Chinese Telecoms: China Telecom (728), China Unicom (762), China Mobile (941)
• Handset and related accessories: Tongda Group (698), AAC Tech (2018), Sunny Optical (2382), Coolpad Group (2369), TCL Comm (2618)
• Chinese Insurers: China Taiping Ins. (966), NCI (1336), CPIC (2601), Ping An (2318), China Life (2628)
• Chinese Banks: CCB (939), ABC (1288), ICBC (1398), BankComm (3328), BOC (3988)
• Consumer Staples: Want Want (151), Uni-President (220), Tingyi (322), Hengan Int'l (1044), Sun Art Retail (6808)
• Automobile: Geely Auto (175), Dongfeng Motor (489), BRILLIANCE CHI (1114), BYD Co. (1211), Great Wall Motor (2333)
• Sports accessories: 361 Degrees (1361), Xstep Int'l (1368), Peak Sport (1968), Anta Sports (2020), Li Ning (2331)
• HK Telecoms: HutchTel HK (215), Smartone (315), HKT-SS (6823)

Valuations and Forward P/E

• Hang Seng Index: FY16E P/E 10.8x, long-term average 11.0x, deviation -1.1%, FY1 EPS growth -7.0%, FY2 EPS growth 10.5%.
• HSCEI: FY16E P/E 6.9x, long-term average 7.9x, deviation -12.4%, FY1 EPS growth 4.7%, FY2 EPS growth 9.3%.
• Shanghai Composite: FY16E P/E 12.9x, long-term average 10.7x, deviation +19.6%, FY1 EPS growth 21.0%, FY2 EPS growth 13.7%.
• S&P 500: FY16E P/E 17.6x, long-term average 15.3x, deviation +14.9%, FY1 EPS growth 8.9%, FY2 EPS growth 13.8%.

Market Data Highlights

• Best Performers:

  • YANCHANG PETRO (346.HK): 12.5% daily change
  • BIOSTIME INTERNA (1112.HK): 11.0% daily change
  • GOLDIN PROPERTY (283.HK): 6.7% daily change
  • GOLDIN FINANCIAL (530.HK): 5.5% daily change
  • AAC TECHNOLOGIES (2018.HK): 5.3% daily change

• Worst Performers:

  • ANGANG STEEL-H (347.HK): -7.0% daily change
  • WISDOM SPORTS GR (1661.HK): -6.9% daily change
  • BOER POWER HOLDI (238.HK): -6.5% daily change
  • WEICHI POWER-H (2208.HK): -5.7% daily change
  • PETRO-KING (2178.HK): -5.6% daily change

External Market Conditions

• Interest Rates:

  • U.S. 2-year Treasury yield: 0.7100%, down -4.40 bps in 5 days.
  • U.S. 10-year Treasury yield: 1.7490%, down -4.73 bps in 5 days.
  • U.S. 30-year Treasury yield: 2.6068%, down -5.10 bps in 5 days.
  • HK 1-month HIBOR: 0.2271%, up 0.21 bps in 1 month.
  • HK 3-month HIBOR: 0.5432%, down -0.22 bps in 5 days.

• Exchange Rates:

  • USD/HKD: 7.7637, up -0.1% in 1 month.
  • EUR/USD: 1.1380, down -1.0% in 5 days.
  • USD/JPY: 108.44, down -1.7% in 5 days.
  • USD/CNY: 6.5163, down -0.4% in 5 days.
  • USD/CNH: 6.5424, down -0.6% in 5 days.

• Precious Metals and Commodities:

  • CRB Index: 177.0, down -3.0% in 5 days.
  • Comex Gold: 1,263.7, down -2.2% in 5 days.
  • Comex Silver: 16.985, down -2.9% in 5 days.
  • Nymex WTI Crude: 43.27, down -0.9% in 5 days.
  • ICE Brent Crude: 43.52, down -3.2% in 5 days.
  • LME Copper: 4,686.00, down -7.2% in 5 days.
  • LME Aluminum: 1,561.00, down -7.0% in 5 days.

A-share Premium to H-share

• LUOYANG GLASS-H (1108.HK): H-share price HK$4.58, A-share price RMB 27.00, premium 602.4%.
• ZTE-H (763.HK): H-share price HK$10.20, A-share price RMB 13.58, premium 58.6%.
• HUANENG POWER-H (902.HK): H-share price HK$5.47, A-share price RMB 7.23, premium 57.5%.
• GUANGZHOU AUTO-H (2238.HK): H-share price HK$8.38, A-share price RMB 23.57, premium 235.1%.
• ANGANG STEEL-H (347.HK): H-share price HK$3.17, A-share price RMB 3.86, premium 45.1%.
• ICBC-H (1398.HK): H-share price HK$3.96, A-share price RMB 4.17, premium 25.5%.
• CHINA LIFE-H (2628.HK): H-share price HK$16.94, A-share price RMB 20.47, premium 44.0%.
• CHINA SHENHUA-H (1088.HK): H-share price HK$12.16, A-share price RMB 13.59, premium 33.2%.
• BOER POWER HOLDI (1065.HK): H-share price HK$4.06, A-share price RMB 7.69, premium 125.7%.
• CITIC BANK-H (998.HK): H-share price HK$4.62, A-share price RMB 5.61, premium 35.55%.

Summary

The Hong Kong and Chinese stock markets show mixed performance, with the Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) experiencing declines. Yunnan Water (6839.HK) is highlighted as a stock with a strong technological edge and positive outlook, especially in the waste-to-energy sector. The market is influenced by global economic indicators, oil prices, and exchange rates, with notable impacts on oil-related sectors and precious metals. A-share premiums over H-shares are substantial for several companies, indicating a strong preference for mainland Chinese stocks. Investors are advised to monitor economic data, focus on stocks with strong fundamentals, and consider the valuation and performance trends of major indices.