20160418-DBS_Group-Monday_market_blog_Favo_u_r_laggards_amid_market_consolidation_41页_1mb_1mb
报告摘要
Summary of Market Analysis: Favour Laggards Amid Market Consolidation
Core Content
The document provides a comprehensive market analysis for the Hong Kong and Chinese equity markets, with a focus on market performance, technical indicators, sector performance, and investment recommendations. It emphasizes the need for market consolidation after a strong performance, suggesting that laggard stocks may outperform in this environment.
Main Market Performance
- HSI (Hang Seng Index): Gained 946 points or 4.6% last week, narrowing the year-to-date (YTD) loss to 2.7%. Short selling turnover decreased to 11.1% from 12.1%.
- HK ETFs: Continued to see inflows but at a slower pace, with HK$280m compared to HK$952m the previous week.
- HSCEI (Hang Seng China Enterprises Index): Grew by 5.9% last week, with a YTD loss of 4.6%.
- China's 1Q GDP: Came in at 6.7%, matching estimates, but key macro indicators such as retail sales, urban fixed asset investment, and industrial production exceeded expectations.
Key Market Thoughts
- The market may require consolidation following a strong uptrend.
- Technical indicators, such as the 14-day RSI for the HSI, rose to 69, indicating overbought conditions.
- A more stable GDP growth is needed for H-shares to re-rate, and the HSCEI's PE levels have not closely followed China's GDP growth.
Focus of the Week: Favor Laggards
- The report suggests that laggard stocks are likely to perform better during market consolidation.
- The three worst performing sectors YTD are global banks, insurance, and environmental.
- A list of laggards with "BUY" calls is provided, including CTCM (570.HK), Consun Pharmaceutical (1681.HK), and Kingdee (268.HK).
Company Highlights
CTCM (570.HK)
- 2015 earnings increased by 50%, aligning with expectations.
- Projected 15-17F EPS CAGR of 25%, driven by its Chinese medicine granules business.
- Target price of HK$6.70, with a 65% upside.
Consun Pharmaceutical (1681.HK)
- 2015 earnings rose by 18%, in line with expectations.
- Driven by growth in uremic clearance granules and new contributions from acquired drug makers.
- Projected FY15-18F earnings CAGR of 16%.
- Target price of HK$5.20.
Kingdee (268.HK)
- FY15 results were disappointing despite strong revenue growth from the cloud business.
- Better scale is expected to help future profitability.
- A-share market rebound could boost valuations.
- Target price of HK$3.90.
Market Valuations and Technical Indicators
- The HSI's 14-day RSI is close to overbought levels, suggesting potential consolidation.
- The HSI is currently at 21,316, with a 4.6% gain for the week.
- The report includes several charts and tables to illustrate market valuations, technical indicators, and index targets.
Sector Recommendations
| Sector | Weighting | Rationale |
|---|---|---|
| China banks | Overweight | Trough valuations and under-owned; prefer JSBs with sufficient capital |
| China non-bank financials | Overweight | SZ-HK connect can be a catalyst; capital market growth is part of reform |
| Environmental | Overweight | Sector is more attractive after de-rating since mid-2015 |
| Railway and construction | Overweight | Lower borrowing rates, domestic fiscal spending, and overseas contracts |
| Apparel and footwear | Neutral | Prefer sportswear companies; avoid those with large HK exposure |
| China airlines | Neutral | Hurt by CNY depreciation but oil price declines can offset |
| China appliances | Neutral | Outlook to improve on back of expected rebound in property sales |
| China auto and parts | Neutral | Tax cuts can help sales; inventory situation has improved |
| China IPPs | Neutral | Helped by lower coal prices; prefer operators with more alternative exposure |
| China materials | Neutral | Disappointing ASP; possible rebound if property FAI can recover |
| China property | Neutral | Tightening begins for Tier 1 cities; supply issues for smaller cities |
| China retailers | Neutral | Prefer players with strong O2O initiatives or defense against e-commerce |
| China telecom carriers | Neutral | VAT reform will no longer drag earnings in 2016; potential restructuring |
| China telecom equipment | Neutral | 4G network capex to slow; operator restructuring can be a risk |
| Gaming | Neutral | Worst seems to be over for y-o-y trend, but recovery seems slow |
| Hong Kong banks | Neutral | USD interest rate normalization is positive; HK economic outlook is negative |
| Hong Kong property | Neutral | HK retail, political pressure, and USD interest rates are key risks |
| Hong Kong telecom | Neutral | Stable operations and decent yields are attractive in volatile market |
| IT, software, & e-commerce | Neutral | Strong top line and earnings growth; large caps were resilient during decline |
| Oil | Neutral | Oil price recovery likely a 2017 or 2018 event |
| Pharmaceutical + healthcare | Neutral | Positive long term drivers; valuations are priced for fast growth segments |
| Textiles | Neutral | US order headwinds and near peak valuation limit near term upside |
| China coal | Underweight | Decline of energy intensive sectors; promotion of renewable energy |
| China F&B | Underweight | Sales disappointment and potential El Nino driven cost inflation; prefer dairy |
| HK REITs | Underweight | HK retail and USD interest rate normalization are key risks |
| HK retailers | Underweight | Structural change with mainland tourists; negative wealth effect for locals |
DBSV Top Picks
| Company | Ticker | Closing Price (HK$) | DBSV Rating | Target Price (HK$) | FY16F PE | FY15A ROE | FY16F PBV | Div Yield (%) | YTD Return (%) |
|---|---|---|---|---|---|---|---|---|---|
| Anhui Conch | 914.HK | 21.95 | BUY | 24.00 | 12.9 | 11.1 | 1.4 | 2.3 | 2.3 |
| CGN Power | 1816.HK | 2.57 | BUY | 3.37 | 14.8 | 11.4 | 1.7 | 2.0 | 2.2 |
| China Everbright International | 257.HK | 8.96 | BUY | 9.80 | 19.3 | 12.5 | 2.3 | 2.1 | 2.5 |
| China Everbright Ltd | 165.HK | 16.50 | BUY | 23.84 | 6.4 | 12.6 | 0.8 | 6.3 | 29.5 |
| China Railway Construction | 1186.HK | 10.20 | BUY | 11.60 | 9.0 | 11.9 | 1.0 | 1.7 | 1.7 |
| China Citic Bank | 998.HK | 4.98 | BUY | 6.71 | 4.9 | 14.1 | 0.6 | 6.1 | 6.5 |
| China Hongqiao Group | 1378.HK | 5.40 | BUY | 6.50 | 7.8 | 10.8 | 0.8 | 2.8 | 3.2 |
| Cheung Kong Property | 1113.HK | 51.75 | BUY | 57.00 | 12.8 | 8.7 | 0.7 | 2.7 | 3.1 |
| Haitong Securities | 6837.HK | 13.46 | NR | n.a. | 7.6 | 11.3 | 1.2 | 3.7 | 3.1 |
| Nexteer Automotive | 1316.HK | 8.19 | BUY | 9.40 | 12.8 | 27.2 | 3.2 | 1.6 | 1.9 |
Upcoming Results and Macro Data
- The document lists upcoming company results and macro data releases, including:
Other Research Highlights
- China Internet Sector: Major e-commerce platforms continue to grow despite weak macro conditions.
- Uni-President: Maintained BUY with a target price raised to HK$7.5.
- China Maple Leaf Educational Systems: Largest international school operator in China.
- Xinyi Solar: Leading solar glass manufacturer with 30% market share.
- Midea Group: Acquired 80.1% stake of Toshiba's home appliance unit.
- Beijing Jingkelong: Downgraded to HOLD due to limited positive catalysts.
- Intime Department Store: Downgraded to HOLD due to slow progress on asset sales.
- Bonjour Holdings: Downgraded to FULLY VALUED due to disappointing FY15 results.
- Jinmao Investments: Downgraded to HOLD due to lacklustre outlook.
Analysts and Contact
- Analysts: Alexander LEE CFA and Ian CHUI
- Contact: alexander_lee@hk.dbsvickers.com and ian_chui@hk.dbsvickers.com
Conclusion
The document outlines a strategy to favor laggard stocks in the context of market consolidation, highlighting specific companies and sectors that are expected to perform well. It also provides insights into macroeconomic data, technical indicators, and sector-specific analyses, offering a detailed view of the market landscape.
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