20161118-招商证券_香港_-Morning_Express_12页_1mb_1mb

报告摘要

2017 China Healthcare Outlook Summary

Core Content

The 2017 China Healthcare Outlook highlights the anticipated revitalization of the healthcare sector, driven by the conclusion of provincial tenders, the initial impact of drug validation campaigns being priced in, and the ongoing focus on large manufacturers with strong R&D capabilities. The sector is expected to show improved growth rates, with most companies delivering around 15-20% top-line and bottom-line growth in FY17E, compared to approximately 15% bottom-line growth in FY16E.

The healthcare sector in Hong Kong is currently trading at a 16x FY17E P/E and 0.9x PEG, which is considered attractive relative to regional counterparts. A-share counterparts are trading at 26x FY17E P/E and 1.2x PEG, while Japan and Korea are trading at higher PEG ratios, reflecting different market dynamics and investment sentiments.

Main Points

Sector Performance in 2016: The healthcare sector underperformed the market due to ongoing provincial tendering, drug validation campaigns, and the two-invoice system.
Revitalization in 2017: The majority of provincial tenders are expected to conclude soon, and the initial impact of validation campaigns is already reflected in the books of most drug makers. This is expected to drive the sector's revitalization.
Valuation: HK-listed healthcare names are currently undervalued compared to regional counterparts, with a reasonable valuation range of 17x-22x FY17E P/E.
Investment Focus: Companies with strong R&D capabilities, nationwide distribution networks, and visible earnings growth are expected to outperform the market in FY17E.

Key Information

Top Picks for 2017:
1. China Medical System (867 HK): Showing visible growth momentum.
2. China Biologic Products (CBPO US): Strong pipeline products and inorganic growth potential.
3. HEC Pharm (1558 HK): Solid growth in FY16E-18E and strong R&D capabilities.
Acquisition Impact: The acquisition of Zhongyou Pharmaceutical is expected to significantly boost the company's earnings and create strategic synergies with its existing surgical instrument segment. Zhongyou's products, such as "JiFro" and "AnEr iodine," are popular in hospitals, and the acquisition is valued at RMB1.4bn with a 2017E P/E of 15x.
Risk Factors: Potential risks include the introduction of new products not meeting expectations and integration challenges with M&A activities.

Market Overview

The following tables provide an overview of the stock market indices, global commodities, and exchange rates as of the time of the report.

Stock Market Indices

Stock Market Indices	Close	1-daychg	%chg
Hang Seng Index	22,263	-18	-0.08
Hang Seng Finance Index	30,132	-161	-0.53
Hang Seng Utilities Index	52,392	+286	+0.55
Hang Seng Property Index	30,364	+287	+0.95
Hang Seng Industrial Index	13,142	+15	+0.11
HSCEI	9,327	-36	-0.38
CSI 300	3,437	+7	+0.20
Shanghai Composite Index	3,208	+3	+0.11
TWSE	8,995	+33	+0.37

Global Commodities

Global	Last price	chg	%chg
Brent Oil	46.02	-0.3	-0.65
COMEX Gold	1218.0	-5.9	-0.48
COMEX Copper	248.6	+1.85	+0.75
LME Aluminum	1694.0	-3.0	-0.18
LME Copper	5476.0	+43.0	+0.79
BDI	1231.0	+86.0	+7.51

Exchange Rates

Exchange/interest rates	Last price	chg	%chg
USD/RMB	6.87	-0.01	-0.1
USD/HKD	7.76	-0.0	-0.01
EUR/USD	1.07	+0.0	+0.19
1Y RMB NDF	7.07	+0.0	+0.01
3M Libor	0.91	+0.0	+0.28
3M Shibor	2.93	+0.02	+0.69
10Y US T-Note Yield	2.22	-0.01	-0.45

Research Coverage List

The following table provides research coverage on various sectors as of November 18, 2016.

Auto & Auto Parts

Company	Ticker	Rating	Share px (Nov. 17)	12-month TP	% Upside	Mkt cap (US$mn)	EPS 2015	EPS 2016E	EPS 2017E	P/E 2015	P/E 2016E	P/E 2017E
Brilliance China	1114 HK	BUY	HK$9.35	HK$13.0	39	6,086	0.69	0.72	0.89	10.9	10.5	9.1
China ZhengTong Auto	1728 HK	BUY	HK$2.25	HK$3.5	56	641	0.29	0.39	0.46	6.2	4.7	4.9
Geely Automobile	175 HK	BUY	HK$7.24	HK$13.0	80	8,251	0.26	0.53	0.83	22.3	11.0	7.7
BAIC Motor	1958 HK	NEUTRAL	HK$7.22	HK$7.3	1	6,993	0.44	0.71	0.86	13.1	8.2	7.6
Great Wall Motor	2333 HK	BUY	HK$6.81	HK$11.0	62	8,018	0.88	1.06	1.19	6.2	5.2	6.6
Fuyao Glass	3606 HK	BUY	HK$23.45	HK$26.0	11	7,589	1.09	1.22	1.42	17.2	15.5	11.0
China Harmony Auto	3836 HK	BUY	HK$3.29	HK$6.2	88	669	0.39	0.42	0.50	6.8	6.3	0.0
Minth Group	425 HK	BUY	HK$24.25	HK$33.0	36	3,455	1.14	1.50	1.87	17.0	13.1	12.6
Zhongsheng Group	881 HK	NEUTRAL	HK$7.33	HK$6.7	-9	2,030	0.21	0.46	0.51	27.9	12.9	10.9

Oil and Gas

Company	Ticker	Rating	Share px (Nov. 17)	12-month TP	% Upside	Mkt cap (US$mn)	EPS 2015	EPS 2016E	EPS 2017E	P/E 2015	P/E 2016E	P/E 2017E
Sinopec Oilfield Service	1033 HK	BUY	HK$1.54	HK$1.9	23	2,864	0.00	-0.61	0.03	N.A.	N.A.	41.9
SPT Energy	1251 HK	BUY	HK$0.69	HK$6.2	799	136	0.32	0.40	0.0	N.A.	1.7	1.4
Petro-king Oilfield Services	2178 HK	NEUTRAL	HK$0.5	HK$1.0	102	129	0.10	0.10	0.10	5.0	5.0	0.0
China Oilfield Services	2883 HK	SELL	HK$7.18	HK$6.2	-14	4,420	0.23	-2.11	-0.07	25.0	N.A.	N.A.
Anton Oilfield Services	3337 HK	NEUTRAL	HK$1.03	HK$0.5	-51	294	0.08	0.13	0.0	10.3	6.4	N.A.
CNOOC	883 HK	BUY	HK$9.71	HK$12.8	32	55,924	-3.44	-2.93	-2.38	N.A.	N.A.	N.A.
Sinopec Kantons	934 HK	BUY	HK$3.44	HK$4.9	42	1,103	0.41	0.43	0.46	8.4	8.0	8.4

Property

Company	Ticker	Rating	Share px (Nov. 17)	12-month TP	% Upside	Mkt cap (US$mn)	EPS 2015	EPS 2016E	EPS 2017E	P/E 2015	P/E 2016E	P/E 2017E
Times Property	1233 HK	BUY	HK$3.7	HK$4.8	30	822	1.03	1.13	1.25	3.6	3.3	3.0
Yuexiu Property	123 HK	BUY	HK$1.1	HK$1.36	24	1,760	0.11	0.11	0.15	10.0	10.0	7.3
Yuzhou Property	1628 HK	BUY	HK$2.97	HK$3.3	11	1,462	0.48	0.54	0.64	6.2	5.5	4.6
New World Dev	17 HK	BUY	HK$8.82	HK$12.2	38	10,544	0.77	0.75	0.81	11.5	11.8	10.9
Country Garden	2007 HK	NEUTRAL	HK$4.21	HK$3.4	-19	12,267	0.54	0.55	0.74	7.8	7.7	5.7
Agile Property	3383 HK	NEUTRAL	HK$4.26	HK$4.6	8	2,153	0.75	0.73	0.81	5.7	5.8	5.3
China Aoyuan	3883 HK	BUY	HK$1.79	HK$2.8	56	624	0.35	0.41	0.54	5.1	4.4	3.3

Technology, Media & Telecom

Company	Ticker	Rating	Share px (Nov. 17)	12-month TP	% Upside	Mkt cap (US$mn)	EPS 2015	EPS 2016E	EPS 2017E	P/E 2015	P/E 2016E	P/E 2017E
China Telecom	728 HK	NEUTRAL	HK$3.64	HK$4.13	13	6,516	-3.44	-2.93	-2.38	N.A.	N.A.	N.A.
China Unicom	762 HK	BUY	HK$8.73	HK$11.86	36	26,968	0.43	0.47	0.52	12.9	11.9	11.2
China Mobile	941 HK	BUY	HK$84.9	HK$112.0	32	223,198	-3.44	-2.93	-2.38	N.A.	N.A.	N.A.
China Telecom	728 HK	NEUTRAL	HK$3.64	HK$4.13	13	6,516	-3.44	-2.93	-2.38	N.A.	N.A.	N.A.
China Unicom	762 HK	BUY	HK$8.73	HK$11.86	36	26,968	0.43	0.47	0.52	12.9	11.9	11.2
China Mobile	941 HK	BUY	HK$84.9	HK$112.0	32	223,198	-3.44	-2.93	-2.38	N.A.	N.A.	N.A.

Machinery & Equipment

Company	Ticker	Rating	Share px (Nov. 17)	12-month TP	% Upside	Mkt cap (US$mn)	EPS 2015	EPS 2016E	EPS 2017E	P/E 2015	P/E 2016E	P/E 2017E
Zoomlion Heavy	1157 HK	BUY	HK$3.23	HK$3.87	20	578	0.01	-0.04	0.05	258.5	N.A.	57.5
CRRC	1766 HK	NEUTRAL	HK$6.91	HK$6.25	-10	24,324	0.43	0.47	0.52	12.9	11.9	11.2
Lonking	3339 HK	NEUTRAL	HK$1.39	HK$1.16	-17	767	0.03	0.05	0.06	37.1	22.5	23.2
CRRC Times Electric	3898 HK	NEUTRAL	HK$37.85	HK$44.2	17	5,737	2.52	2.57	2.94	12.0	11.9	12.0
CRSC	3969 HK	BUY	HK$6.18	HK$7.58	23	7,007	0.32	0.37	0.46	19.3	16.7	9.4
CEEC	3996 HK	BUY	HK$1.09	HK$1.42	30	4,221	0.19	0.16	0.18	5.7	6.8	6.1
Sany Heavy	631 HK	NEUTRAL	HK$1.23	HK$1.19	-3	483	0.01	0.01	0.03	98.5	99.3	31.2

Pharmaceutical & Healthcare

Company	Ticker	Rating	Share px (Nov. 17)	12-month TP	% Upside	Mkt cap (US$mn)	EPS 2015	EPS 2016E	EPS 2017E	P/E 2015	P/E 2016E	P/E 2017E
3SBio	1530 HK	BUY	HK$7.86	HK$12.0	53	2,550	0.25	0.34	0.43	31.4	23.1	18.3
HEC Pharm	1558 HK	BUY	HK$17.22	HK$20.0	16	502	0.86	1.09	1.36	16.0	12.8	11.8
Trad Chi Med	570 HK	BUY	HK$3.98	HK$4.0	1	2,201	0.17	0.21	0.24	18.7	15.3	11.5
Sinco	6833 HK	NEUTRAL	HK$0.5	HK$0.52	4	104	0.05	0.04	0.04	10.0	12.5	5.8
China Medical System	867 HK	BUY	HK$12.78	HK$14.0	10	4,100	0.40	0.54	0.68	25.6	19.1	15.2

Insurance

Company	Ticker	Rating	Share px (Nov. 17)	12-month TP	% Upside	Mkt cap (US$mn)	EPS 2015	EPS 2016E	EPS 2017E	P/E 2015	P/E 2016E	P/E 2017E
AIA	1299 HK	BUY	HK$47.15	HK$60.67	29	73,256	0.22	0.31	0.33	27.7	19.6	18.7
NCI	1336 HK	BUY	HK$35.45	HK$39.83	12	14,268	2.76	1.78	2.39	10.3	16.1	11.4
China Reinsurance	1508 HK	NEUTRAL	HK$1.78	HK$1.83	3	9,754	0.18	0.11	0.15	7.9	13.1	12.0
Ping An insurance group	2318 HK	BUY	HK$40.55	HK$50.52	25	95,622	3.00	3.40	3.49	10.8	9.6	12.7
PICC P&C	2328 HK	BUY	HK$11.9	HK$15.98	34	22,762	1.47	1.20	1.44	6.5	8.0	7.7
CPIC	2601 HK	BUY	HK$27.85	HK$33.07	19	32,564	1.76	1.56	1.66	12.7	14.4	16.8
China Life	2628 HK	BUY	HK$19.96	HK$22.67	14	72,778	1.23	0.79	1.06	13.0	20.4	14.3
China Taiping	966 HK	BUY	HK$16.38	HK$17.94	10	7,594	1.76	1.14	1.46	9.3	14.4	17.8