20160719-招商证券_香港_-Morning_Express_16页_403kb

Macau Gaming Summary

Core Content and Key Information

• Macau Gaming Industry Overview: The Macau gaming sector experienced a weak performance in the second quarter of 2016 (2Q16), with EBITDA declining by 5% YoY and 8% QoQ due to an 8% QoQ drop in Gross Gaming Revenue (GGR). This decline is attributed to seasonality, with mass GGR showing a 1% YoY growth while VIP GGR dropped by 18%.
• Summer Outlook: Despite the weak QoQ performance, the summer season is expected to show positive YoY growth in GGR, with a likely 1% YoY increase in July and a 18% MoM growth. The market is anticipated to respond positively to the summer rebound, especially with the opening of Parisian Macao in Cotai potentially leading to a price war.
• Valuation and Sector Sentiment: The sector is at a stabilizing stage with an undemanding valuation, with an average P/E of 19x for FY17E and an EV/EBITDA of 11x. While some stocks may benefit from the summer rally, the overall sector is maintained as NEUTRAL due to potential promotional opex hikes.
• Stock Recommendations:
  • Wynn Macau and Galaxy are highlighted as top picks due to their recovery and new casino initiatives, and improving foot traffic.
  • Melco Crown is downgraded to NEUTRAL.
  • SJM lagged in QoQ performance.
• Market Timing: The report suggests that it is a good time for investors to accumulate selected stocks for potential re-rating as the summer season is expected to drive market sentiment upward.

Key Viewpoints

• Seasonality Impact: The QoQ decline in GGR is largely due to the seasonality of the gaming industry, with June being a historically weak period.
• Recovery Potential: The report highlights the potential for a recovery in July and August, which could counterbalance the weak June data.
• Valuation Analysis: The sector is considered undervalued, with certain stocks having attractive valuations that may trigger a re-rating.
• Investment Strategy: Investors are advised to focus on stocks with strong fundamentals and growth potential, such as Wynn Macau and Galaxy, while being cautious about the broader sector due to possible cost increases.

361 Degrees Summary

Core Content and Key Information

• Earnings Forecast: 361 Degrees (1361 HK) is expected to see a 18% YoY growth in recurring earnings for 1H16E, driven by revenue growth. However, the growth is expected to slow in 2H16E to 9% YoY.
• Valuation: The stock is currently valued at 7x FY17E P/E, which is considered attractive, and has a 6% dividend yield, lower than the peer average of 12%.
• Debt Refinancing: The company issued US $390mn worth of senior notes with a 7.3% coupon rate to refinance its RMB1.5bn notes with a 7.5% coupon rate, which may lead to a slight increase in interest expenses.
• Earnings Adjustments: The earnings forecast for FY16E-18E was trimmed by 2%, 3%, and 11% respectively due to higher interest expenses from the refinancing.
• Target Price Update: The target price was lowered to HK$2.80 from HK$3.48, reflecting reduced visibility and weaker market sentiment.

Key Viewpoints

• Growth Slowdown: Despite strong performance in the first half of 2016, the company is expected to experience a slowdown in growth for the second half.
• Valuation Justification: The lower valuation is justified by the company's lower market share and earnings visibility compared to its peers.
• Investor Confidence: The report maintains a BUY rating, suggesting the stock is still attractive despite the earnings adjustments.

Cosmo Lady Summary

Core Content and Key Information

• Negative Profit Alert: Cosmo Lady (2298 HK) issued a negative profit alert for its 1H16E results, with a 35%-40% YoY decline in net profit.
• Reasons for Decline:
  • Cautious consumer sentiment due to China's economic slowdown.
  • Surge in the Micronet (微商) channel affecting sales and supply.
  • Increased operating expenses due to slower revenue growth.
• Market Reaction: The stock price has declined by 30% since the downgrade to NEUTRAL by the third broker.
• Target Price: The target price is under review, and further negative pressure is expected once the market opens.

Key Viewpoints

• Earnings Disappointment: The company's earnings are expected to be worse than market expectations, leading to continued downward pressure.
• Market Sentiment: The negative results may impact investor sentiment and stock performance.
• Valuation Uncertainty: The report notes that the target price is under review, indicating uncertainty in the valuation.

Hong Kong Strategy Summary

Core Content and Key Information

• Earnings Trends: HK listed companies' earnings have been falling due to the macroeconomic slowdown and China's economic restructuring, but the amplitude of the decline is stabilizing.
• Sector Performance:
  • Industrial goods, new energy, environmental protection, and hardware technology have seen relatively mild declines.
  • Energy and transportation have fallen the most.
• Structural Improvement: Over the past month, there has been a structural diversification, with industrial goods (steel/coal) showing upward revisions in earnings expectations.
• Seasonal Trends: The HK stock market has seasonal characteristics, with July, September, and October being better months for performance, and August typically being a month of losses.
• Interim Results Impact: The market performance one month after interim results is better than before, as uncertainty is dispelled and sentiment becomes more positive.

Key Viewpoints

• Seasonality: The market is expected to perform better in July, September, and October, with July showing the second highest gain among the months.
• Structural Opportunities: Structural opportunities are expected to drive the market performance in July due to the deployment for interim results.
• Earnings Expectations: Companies with more comprehensive earnings expectations and better historical records, such as Anta and Sino Biopharm, are highlighted as examples.

A-share Research Highlights Summary

Core Content and Key Information

• 2Q16 Macau Data: The actual YoY growth of 2Q16 GDP was 6.7%, better than market consensus. June's industrial value added growth was 6.2%, the second highest in the past year.
• Consumer Goods Growth: The nominal growth of total retail sales of consumer goods was 10.6%, and the decline in exports narrowed.
• Fixed Asset Investment: 1H16 fixed asset investment grew 9.0% YoY, but private investment and real estate investment saw significant declines.
• Economic Outlook: The economic downside in 2H16 is expected to be controllable, supported by improved private investment and exports. PPP projects are anticipated to help stabilize private investment.

Key Viewpoints

• Economic Stabilization: The economic slowdown is stabilizing, with a focus on structural improvements.
• Sector Performance: Various sectors, including industrial goods, hardware technology, and consumer staples, are analyzed for their earnings and growth prospects.
• Company Events: Several companies have announced results or events that may impact their stock performance, such as Chinese Estates Holdings and Vinda International Holdings.

Research Coverage Summary

Core Content and Key Information

• Stock Ratings: A variety of companies are listed with their ratings, target prices, and market caps, including those in the Auto & Auto Parts, Oil and Gas, Property, Technology, Media & Telecom, Consumer Staple, Retail, and Alternative Energy sectors.
• Earnings and P/E Analysis: EPS and P/E data are provided for each company for the years 2015, 2016E, and 2017E, offering insights into their financial health and valuation.
• Performance Trends: Companies like 361 Degrees, Brilliance China, and Geely Automobile are highlighted for their growth potential and stock performance.

Key Viewpoints

• Valuation and Growth: The report provides a detailed analysis of the valuation and growth expectations for various listed companies.
• Investment Recommendations: Some companies are recommended as BUY or SELL based on their financial performance and market conditions.
• Market Trends: The report highlights trends in different sectors and provides insights into the performance of stocks before and after results.

What to Watch Summary

Core Content and Key Information

• Economic Data: Key economic indicators for various countries and regions are listed, including Core CPI MM, ZEW Economic Sentiment, and others.
• Company Events: Upcoming company events are listed, including dividends and results announcements.
• Research Coverage: The report includes a detailed list of companies with their ratings, share prices, target prices, and financial metrics.

Key Viewpoints

• Economic Indicators: The report highlights key economic data that investors should monitor for market trends.
• Company Announcements: Upcoming company events, such as dividend announcements, are listed for investors to track.
• Valuation and Earnings: The report provides a comprehensive view of the valuation and earnings of various companies, aiding in investment decisions.