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CMS(HK) Research Highlights Summary

Core Content Overview

This document provides a detailed analysis of several Hong Kong-listed companies, including their financial performance, earnings forecasts, and valuation insights. It also highlights key economic data and upcoming company events. The analysis is conducted by researchers from CMS(HK), with a focus on the banking and technology sectors, as well as the broader market indices and industry-specific updates.

Key Stock Analyses

BOC (3988 HK)

• Current Rating: BUY
• Target Price (TP): HK$4.72
• Earnings Outlook:
  • Revised FY15/16/17E NPAT growth: 0.2% / -0.6% / 3.2% YoY
  • 4Q15E NPAT expected to dip 0.6% YoY to RMB38 bn, mainly due to NIM compression and dividend payment
  • Non-interest income is expected to grow by 72.0% YoY, partially offsetting the decline in net interest income
• Valuation:
  • Trading at 0.57x FY16E P/B and 4.81x FY16E P/E
  • Target P/B of 0.86x applied to FY16E BVPS of RMB4.95
• Main Factors:
  • Larger overseas exposure helps shield against domestic slowdown
  • Maintains a top BUY rating due to resilience in current operating environment

BOCOM (3328 HK)

• Current Rating: BUY
• Target Price (TP): HK$6.75
• Earnings Outlook:
  • Revised FY15/16/17E NPAT growth: 0.5% / -2.2% / 2.8% YoY
  • 4Q15E NPAT expected to slip 1.3% YoY to RMB14 bn, partially offset by non-interest income growth
• Valuation:
  • Trading at 0.58x FY16E P/B and 5.04x FY16E P/E
  • Target P/B of 0.80x applied to FY16E BVPS of RMB7.58
• Main Factors:
  • Benefiting from mixed-ownership reform
  • Strong fee income growth expected

TK Group (2283 HK)

• Current Rating: BUY
• Target Price (TP): HK$2.57
• Earnings Outlook:
  • FY15 results in-line with estimates, with strong growth in high-quality client wins
  • FY16E EPS revised down by 2% due to product launch delays
• Valuation:
  • Trading at 8.0x FY16E P/E
  • Target P/E of 8.7x, in-line with peers
• Main Factors:
  • Positive long-term growth outlook with new clients and product launches
  • High ROE and dividend yield make it an attractive investment

Minsheng (1988 HK)

• Current Rating: SELL
• Target Price (TP): HK$5.98
• Earnings Outlook:
  • Revised FY15/16/17E NPAT growth: 3.5% / 0.1% / 6.8% YoY
  • 4Q15E NPAT expected to decline 0.4% YoY due to higher credit cost and lower net interest income
• Valuation:
  • Trading at 0.69x FY16E P/B and 5.24x FY16E P/E
  • Target P/B of 0.58x applied to FY16E BVPS of RMB9.30
• Main Factors:
  • Still seeking new growth drivers amid NIM compression and higher credit cost
  • Downgraded to SELL due to deteriorating asset quality and lack of clear growth prospects

China Unicom (762 HK)

• Current Rating: BUY
• Target Price (TP): HK$12.21
• Earnings Outlook:
  • FY15 results in-line with estimates, with service revenue and EBITDA decline due to tariff cuts and churn
  • 4Q15E results expected to be weak, but recovery is anticipated in FY16E
• Valuation:
  • Trading at 4.0x EV/EBITDA and 21.4x P/E
  • DCF-derived TP of HK$12.21
• Main Factors:
  • Positive turnaround strategy with 4G migration and TowerCo cooperation
  • Stronger fixed-line broadband revenue and mobile data usage growth

Key Market Indices and Global Data

• Global Market Data:
  • Brent Oil: +3.98%
  • COMEX Gold: +2.61%
  • COMEX Copper: +0.92%
  • LME Aluminum: +0.26%
  • LME Copper: +0.75%
  • BDI: -11.7%

Valuation and Earnings Revisions

• BOC:
  • Revised TP: HK$4.72
  • Target P/B: 0.86x
  • Sustainable ROE: 10.27%
• BOCOM:
  • Revised TP: HK$6.75
  • Target P/B: 0.80x
  • Sustainable ROE: 9.71%
• TK Group:
  • Revised TP: HK$2.57
  • Target P/E: 8.7x
  • Sustainable ROE: 30%+
• Minsheng:
  • Revised TP: HK$5.98
  • Target P/B: 0.58x
  • Sustainable ROE: 8.65%

Company Events (March 17, 2016)

Multiple companies released their FY15 results and dividends, including:

• CK Hutchison Holdings Ltd.
• Computer And Technologies Holdings Ltd.
• Miramar Hotel & Investment Co. Ltd.
• China Overseas Grand Oceans Group Ltd.
• Sun Hung Kai & Co. Ltd.
• Kunlun Energy Co. Ltd.
• Beijing Jingcheng Machinery Electric Company Limited
• Nanyang Holdings Ltd.
• Wing Tai Properties Ltd.
• Li & Fung Ltd.
• CASH Financial Services Group Ltd.
• Zhejiang Expressway Co. Ltd.
• Enerchina Holdings Ltd.
• Genting Hong Kong Ltd.
• Tencent Holdings Ltd.
• Singamas Container Holdings Ltd.
• Far East Global Group Ltd.
• TPV Technology Ltd.
• China Mobile Ltd.
• Matrix Holdings Ltd.
• PacRay International Holdings Limited
• Towngas China Co. Ltd.
• Enviro Energy International Holdings Ltd.
• Luoyang Glass Co. Ltd.
• Cheung Kong Property Holdings Ltd.
• TCC International Holdings Ltd.
• Sinolink Worldwide Holdings Ltd.
• Hengdeli Holdings Ltd.
• Finsoft Financial Investment Holdings Ltd.
• ETS Group Ltd.
• Keen Ocean International Holding Limited
• Top Dynamic International Holdings Ltd.

Research Coverage List (March 17, 2016)

Main Viewpoints and Key Insights

• BOC and BOCOM are highlighted as top BUY stocks due to their resilience and exposure to overseas markets.
• TK Group is expected to benefit from new high-quality clients and has a strong long-term growth outlook.
• Minsheng faces significant challenges with deteriorating asset quality and lacks clear growth drivers, leading to a SELL rating.
• China Unicom is expected to recover in FY16E with a turnaround strategy focused on 4G migration and cost efficiency.
• The valuation of BOC and BOCOM is seen as attractive relative to historical averages and peers.
• Economic and market data are presented for context, including global commodity prices and local indices.
• Upcoming company events are listed, indicating the release of FY15 financial results and dividends.