20180706-广发证券_香港_-Dim_Sum_Express_4页_499kb

Dim Sum Express Summary

Key Index Performance (July 6, 2018)

Hong Kong ADRs Performance

A-Share Market: Coal Sector

• Performance in June: The coal sector outperformed the market, with the SHCOMP down 8.0% and coal sector index down 2.4%, outperforming SHCOMP and CSI300 by 5.6pp and 5.3pp respectively.
• Demand Recovery: Daily coal consumption at power plants increased by 8.2% YoY in June, indicating a solid growth trend.
• Supply Constraints: Production is constrained due to national safety checks, environmental regulations, and limited growth in imports.
• Price Trends: Coal prices have stabilized at a high level, with thermal coal prices rebounding in June and coking coal prices remaining flat.
• Inventory Levels: Power plant coal inventory remains at a normal level, while coking coal inventory is at a low level.
• Outlook for July: Thermal coal is expected to benefit from high prices, coking coal to remain stable with a slight increase, and anthracite to bottom out.
• Long-term Outlook: The coal industry is expected to maintain a tight supply-demand balance from 2018 to 2020, with a supply gap declining to 20-40m tonnes.
• Valuation and Earnings: Coal company earnings are likely to increase, and there is significant room for re-rating in the sector.

Macau Gaming Sector

• June GGR Performance: GGR increased by 12.5% YoY to MOP22.5bn, but fell short of market consensus.
• Reasons for Lower-than-Expected Growth: Renminbi depreciation and diversion of gaming expenditure to sports during the World Cup.
• Visitor Arrivals: May visitor arrivals rose 5.2% YoY to 2.71m, with ex-Guangdong arrivals growing strongly.
• Hotel Occupancy: Hotel occupancy reached 87.5% in May, a new post-2005 high.
• Near-term Headwinds: Exchange rate fluctuations and World Cup-related diversion are expected to weigh on visitor arrivals and gaming expenditure.
• Risks: Potential tightening of Macau's visa policies, stricter forex controls in China, full smoking ban in casinos, increased competition from Asian casinos, and risks tied to casino concession extensions.

Rating Definitions

• Company 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 relative performance 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 relative performance between -10% and 10%
  • Cautious: Expected to underperform benchmark by more than 10%

Analyst Certification and Disclosure

• The research analyst certifies that all views expressed accurately reflect personal opinions.
• No part of the analyst's remuneration is directly or indirectly connected to specific recommendations.
• GF Securities (Hong Kong) and its affiliates do not hold shares in the mentioned securities or have investment banking relationships with the companies discussed.
• The report is for informational purposes only and does not constitute an offer to buy or sell securities.

Disclaimer

• This report is not intended as a recommendation for investment.
• It is for the use of GF Securities (Hong Kong) clients only.
• The information may not be allowed to be sold in certain jurisdictions.
• The report may contain errors or omissions, and GF Securities (Hong Kong) accepts no liability for any loss resulting from its use.