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Dim Sum Express Summary

Core Content

This document provides a comprehensive analysis of the Hong Kong market and specific sector outlooks, including key stock recommendations and investment ratings. It also includes information on Hong Kong ADRs and company-specific details, particularly focusing on Cowell e Holdings (1415 HK), a major supplier of front camera modules for Apple.

Market Performance Overview

The following table summarizes the recent performance of key global and regional indices:

Sector Outlook

1. Utilities Sector

• Urban Gas: Promising business conditions in the medium/long-term due to ongoing coal-to-gas substitution efforts.
• Wind Power: Profit for existing capacity has improved significantly; profit for newly installed capacity remains stable. The Renewable Energy Quota Policy is expected to reduce curtailment.
• Environmental Protection: Positive outlook on hazardous waste disposal and black water treatment due to increased policies and demand. A shortage of more than 30% is estimated in hazardous waste disposal.
• Solar Power: Stringent policies are expected to curb sector growth in the short-term. New capacity installation is revised down to 35GW for 2018, down 34% YoY.

Recommended Companies:

• Huaneng Renewables (958 HK)
• Suntien Green Energy (956 HK)
• Datang Renewable Power (1798 HK)
• Longyuan Power (916 HK)
• China Gas Holdings (384 HK)
• ENN Energy Holdings (2688 HK)
• Tian Lun Gas (1600 HK)
• Beijing Enterprises Water (371 HK)

Company Analysis: Cowell e Holdings (1415 HK)

Key Information

• Role: Major front camera module supplier for Apple, with key clients including Samsung, LG, and Hitachi.
• Revenue Dependency: Over 80% of revenue from Apple (except 2014).
• Recent Developments: Apple is expected to launch three full-screen smartphones in September 2018, which could boost iPhone sales.

Earnings Forecast

• 2018E EPS: Rmb0.037
• 2019E EPS: Rmb0.040
• 2020E EPS: Rmb0.041
• P/E Ratios: 7.47x, 6.87x, 6.78x respectively
• Target Price (TP): HK$2.26
• Rating: Accumulate (expected to outperform benchmark by more than 5% but not more than 15%)

Investment Ratings

Stock Ratings

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

Sector Ratings

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

Risks

• New Energy Policies: Uncertainties in policy changes.
• Coal-to-Gas Substitution: Risk of falling short of expectations.
• Policy Control: Regulatory risks.
• Natural Gas Supply: Shortage risks.
• Operational Risks: In hazardous waste disposal projects.
• NIMBY Effect: Resistance from local communities.
• PPP Progress: Delays in public-private partnership projects.
• Apple Sales: Missed expectations could impact revenue.
• Gross Profit: Lower-than-expected improvement.
• Exchange Rate Volatility: Risk from Rmb fluctuations.

Disclaimer

• This report is for informational purposes only and does not constitute an offer to buy or sell securities.
• GF Securities (Hong Kong) accepts no liability for losses arising from the use of this report.
• The information, opinions, and forecasts are current as of the date of publication and may change without notice.
• The report may include different viewpoints from the proprietary trading division.