20160608-招商证券_香港_-Morning_Express_14页_395kb

Morning Express Summary

Core Content

This document is a Hong Kong equity research report from China Merchants Securities (HK) Co., Ltd., covering various sectors including pharmaceuticals, property, technology, and consumer goods. It includes analysis on stock performance, market trends, company earnings, and investment recommendations.

HEC Pharm (1558 HK)

Key Points

• Market Position: HEC Pharm is the sole manufacturer of the patent-protected granule form of oseltamivir phosphate in China, targeting the paediatrics market.
• Market Share: It has been the market leader in the oseltamivir phosphate category in China since 2013 with a market share of around 84%.
• Growth: The company has shown strong growth with a revenue CAGR of 37% and an adjusted net profit CAGR of 133% from FY12 to FY15.
• Future Projections: Expected revenue growth of 28% in FY16E, 27% in FY17E, and 26% in FY18E, with adjusted net profit expected to grow at a CAGR of 25%.
• Valuation: The target price is HK$20.0, which implies a FY16E P/E of 15.5x, lower than the H-share average of 16x.
• Risks: Includes concentration risk, licensing risk, and potential competition.

Chow Tai Fook (1929 HK)

Key Points

• Earnings Decline: Earnings fell 46% YoY, which is 8% and 18% below market and CMS estimates respectively.
• Market Outlook: Continued weakness is expected for HK and Mainland China in FY17E due to economic slowdown and declining visitors.
• Share Price Rally: The recent 38% rally in share price is attributed to gold price gains, which are not expected to translate into improved demand for gold products.
• Rating: Rating and target price are under review.

China Brokers

Key Points

• Earnings Recovery: Aggregated revenues and NPAT of 20 Chinese brokers improved in May compared to April.
• FY16E Outlook: Despite sequential improvement, the full-year NPAT growth remains under pressure.
• Performance: CITICS, HTS, and GFS reported significant YoY declines in NPAT, with CITICS at -50%, HTS at -79%, and GFS at -69%.
• Catalysts: A mild recovery in A-share markets and the launch of Shenzhen-Hong Kong Stock Connect are expected to serve as positive catalysts.
• Valuation: The sector is trading at 1.33x FY16E P/B and 13.97x FY16E P/E, which is considered undemanding.
• Recommendation: Maintain OVERWEIGHT rating for the sector, with HTS as the top pick.

Electronics Industry Special Report

Key Points

• Internet Speaker: Expected to become the new control center in the IoT era due to its natural traffic from speakers and TVs.
• Market Growth: Amazon Echo has seen continuous sales growth since 2015, with 1Q16 shipments reaching one million.
• Investment Recommendations: Focus on companies involved in the supply chain of Internet speakers, such as Edifier Technology and Luxshare Precision, as well as smart home and AI enterprises like H&T Intelligent Control, Eastsoft, and All Winner Technology.

What to Watch

Economic Data

• US: Consumer Credit on June 8, 2016, is expected to be 20.25bn, down from 29.67bn.
• China: Exports are forecasted to decline by 3.60% YoY, while Imports are expected to decline by 6.00% YoY.
• Trade Balance: Forecasted at 58.00bn, up from 45.56bn.
• PPI and CPI: Both are expected to decline by 3.30% and remain at 2.30% respectively.
• M2 Money Supply: Forecasted to grow by 12.50% YoY.
• New Yuan Loans: Expected to reach CNY750bn in June.

Company Events

• Multiple companies released their financial results for the first quarter or fiscal year ended March 31, 2016, including Easy One Financial Group, Culturecom Holdings, and Boyaa Interactive.

Research Coverage List (As of June 8, 2016)

Key Highlights

• Auto & Auto Parts: Brilliance China, China ZhengTong Auto, Geely Automobile, BAIC Motor, Great Wall Motor, and others.
• Technology, Media & Telecom: China Telecom, China Unicom, China Mobile, Tencent, NetDragon, and others.
• Hardware Technology: Cowell, AAC Technologies, Coolpad, Sunny Optical, and others.
• Textile & Garment: China Lilang, 361 Degrees, Xstep International, and others.
• Consumer Staple: Hengan Int'l, Biostime, Jiashili Group, Want Want China, and others.
• Retail: Sinomax, Chow Tai Fook, Cosmo Lady, Luk Fook Holdings, and others.
• Alternative Energy: Datang Renewable Power, Xinjiang Goldwind, GCL-Poly Energy, and others.

Investment Recommendations

• Companies like Brilliance China, Geely Automobile, and Tencent are recommended with BUY ratings.
• Some companies, such as Coolpad and Country Garden, have NEUTRAL or SELL ratings due to various risks and market conditions.