20140513-申万宏源_香港_-Top_picks_for_the_next_three_months_24页_792kb

Summary of SWS Conviction BUY and SELL List (13 May 2014)

Core Content

This document outlines the SWS Conviction BUY and SELL lists for Hong Kong-listed Chinese stocks as of 13 May 2014, with a focus on the performance and valuation of the listed companies. The summary includes the performance metrics of the lists over a specific period, the companies included in each list, and their financial outlooks.

Performance Overview

• Conviction BUY List (5-12 May 2014):
  • The overall return of the list was -2.78%, underperforming the HSCEI by 3.65%.
  • Since the beginning of the year, the list has dropped by 9.12%, underperforming the HSCEI by 0.37%.
• Conviction SELL List (5-12 May 2014):
  • The overall return of the list was -3.65%, underperforming the HSCEI by 0.37%.
  • No changes were made to either the BUY or SELL lists.

Conviction BUY List (14 Companies)

Conviction SELL List (2 Companies)

Key Financial Metrics and Valuation

Conviction BUY List

• Tencent Holdings (700 HK):
  • Strong mobile internet growth potential.
  • Target price: HK$720, with potential of 42.86%.
• Agricultural Bank of China (1288 HK):
  • Likely to issue preferred shares to improve capital position.
  • Target price: HK$4.41, with potential of 32.83%.
• AviChina (2357 HK):
  • Growth in military and general aviation sectors.
  • Target price: HK$5.64, with potential of 34.29%.
• China Machinery Engineering (1829 HK):
  • Strong bargaining power and cash-rich business model.
  • Target price: HK$7.20, with potential of 39.53%.
• Dawnrays Pharmaceutical (2348 HK):
  • Strong anti-hypertension drug portfolio.
  • Target price: HK$7.20, with potential of 24.14%.
• Hua Han Bio-pharmaceutical (587 HK):
  • Strong growth potential in anti-HBV drugs.
  • Target price: HK$2.70, with potential of 73.08%.
• Shimao Property (813 HK):
  • Strong real estate development and urbanization.
  • Target price: HK$21.82, with potential of 52.59%.
• PetroChina (857 HK):
  • Benefit from decreasing coal prices.
  • Target price: HK$10.00, with potential of 11.23%.
• China Petroleum & Chemical (386 HK):
  • Solid earnings and revenue growth.
  • Target price: HK$7.60, with potential of 8.57%.
• CT Environmental Group (1363 HK):
  • Strong growth potential in environmental services.
  • Target price: HK$6.60, with potential of 50.34%.
• China Windpower Group (182 HK):
  • Potential to develop solar farms with SOE background.
  • Target price: HK$1.23, with potential of 136.54%.
• Beijing Enterprises Water (371 HK):
  • Strong growth in water treatment business.
  • Target price: HK$7.32, with potential of 64.86%.

Conviction SELL List

• China Minsheng Bank (1988 HK):
  • Low growth potential and high risks.
  • Target price: HK$7.56, with potential of 0.92%.
• CNOOC (883 HK):
  • High potential for overvaluation.
  • Target price: HK$11.00, with potential of 15.12%.

Main Points and Insights

• Performance: The Conviction BUY list underperformed the HSCEI in both the short and long term.
• No Changes: No changes were made to the Conviction BUY or SELL lists.
• Rationale and Assumptions:
  • The BUY list includes companies with strong growth potential, solid financials, and favorable market conditions.
  • The SELL list includes companies with weak performance and high risk.
• Catalysts and Risks:
  • BUY list companies are expected to benefit from market growth, policy support, and new developments.
  • SELL list companies face risks such as economic slowdown, policy changes, and liquidity issues.

Conclusion

The SWS Conviction BUY and SELL lists for Hong Kong-listed Chinese stocks as of 13 May 2014 provide a comprehensive view of the investment outlook for the listed companies. The BUY list includes companies with strong fundamentals and growth potential, while the SELL list includes companies with weaker performance and higher risks. The document also highlights the rationale, key assumptions, and potential returns for each listed company.