20171201-广发证券_香港_-Dim_Sum_Express_4页_502kb

Equity Research Summary: Dim Sum Express (Dec 1, 2017)

Key Index Performance

Source: Bloomberg

Company Ratings Overview

The United Lab (3933 HK, Buy)

• Key Points:
  • Well-positioned to capitalize on the 3rd generation insulin opportunity.
  • Strong pipeline including 1 GLP-1 and 3 insulin analogs, targeting an Rmb7bn market.
  • Expected to achieve 2% market share by 2020, increasing to 10% by 2025.
  • Revenue growth in 2H17 is expected to be higher than 1H17 due to API upcycle and insulin Glargine ramp-up.
  • EBIT margins are expected to improve despite rising input costs.
  • Key challenges include production, volume, and device (bioreactors) development.
• Target Price: HK$30, representing 20% upside from current price.
• Rating: Buy (outperform benchmark by more than 15%).

Gemdale PI (535 HK, Buy)

• Key Points:
  • Expected stable contract sales growth in 2018-2019, with a minimum of 20%-30% YoY increase.
  • Gross margin expected to remain stable at ~40% in 2018-2019, then decline to 35% in 2020-2021.
  • Earnings growth is expected to be slightly YoY in 2017 and at a minimum CAGR of 50% in 2018-2019.
  • Adoption of HKFRS 15 in 2018 may increase booked revenue and earnings by 10%.
  • Acquired a new land bank with GFA over 3.0m sqm in 10M17.
• EPS Forecast: HK$0.089 (2017), HK$0.135 (2018), with a CAGR of 53% for 2017-2019.
• Target Price: HK$1.60, equal to 10x 2017E P/E.
• Rating: Buy (outperform benchmark by more than 15%).

China Gas (384 HK, Buy)

• Key Points:
  • 1HFY17/18 net profit increased by 100.7% YoY to HK$3,395m.
  • Core revenue rose 55.2% YoY to HK$20,875m.
  • Strong growth in natural gas sales volume and coal-to-gas substation users.
  • Urban gas sales volume grew 40.1%, with pipeline & trading sales increasing 154.7%.
  • Rural coal-to-gas substitution projects are a key driver of connection income growth.
• EPS Forecast: HK$1.253 (FY18), HK$1.593 (FY19), HK$1.922 (FY20).
• P/E Ratio: 20x (FY18), 15.7x (FY19), 13x (FY20).
• Target Price: HK$30, representing 20% upside.
• Rating: Buy (outperform benchmark by more than 15%).

Key Risks

• The United Lab: Production and manufacturing challenges, volume constraints, and device development issues.
• Gemdale PI: Regulatory risks, potential changes in revenue recognition principles, and market competition.
• China Gas: Slower-than-expected coal-to-gas substitution, tight natural gas supply in winter, and insufficient subsidy support.

Rating Definitions

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 any loss arising from the use of this report.
• The information, opinions, and forecasts are subject to change without notice.
• No representation or warranty is made regarding the accuracy or completeness of the report.

Analyst Certification

• The views expressed in this report accurately reflect the personal views of the analysts.
• No part of the analysts' remuneration is directly or indirectly connected with the recommendations or views expressed.

Disclosure of Interests

• GF Securities (Hong Kong) and its affiliates do not hold shares in the mentioned securities.
• No investment banking relationship with the companies in the past 12 months.
• Analysts and their associates do not serve as officers of the companies and have no financial interests in the securities.