20170116-招商证券_香港_-CMS_HK__Research_Highlights_17页_1mb_1mb

Summary of Document Content

Core Content

The document provides a comprehensive overview of investment highlights and market analysis across multiple sectors, including Casino & Hospitality (MPEL), Auto & Auto Parts, Railroad Sector, and Global Macro Trends. It also includes Research Highlights, Investment Strategies, and Economic Data for the week of January 16-19, 2017.

Key Highlights

1. Melco Crown (MPEL US, US $17.32, BUY, TP US$24.40)

• Special DPS: MPEL announced a special dividend of US$1.3212, with a yield of 7.6%, to be paid on Feb 10 for names registered on Jan 23.
• Dividend Policy Change: MPEL amended its regular DPS policy to pay US$0.09 per quarter, which is US$0.36 annually, significantly higher than the previous 30% of net profit.
• Funding Relief: The special DPS is expected to provide US$246mn to Melco Group, helping alleviate the US$700mn shortfall for the 13% acquisition of MPEL shares from Crown.
• Market Confidence: MPEL's balance sheet is healthy, and the market is likely to re-rate the stock due to the improved dividend yield. Reiterate BUY.

2. Great Wall Motor (2333 HK, HK$7.98, BUY, TP HK$11.00)

• 2016E Results: Forecasted net profit of RMB10-10.6bn, up 24.1%–31.5% YoY, 3.4%–7.4% above estimates.
• Sales Growth: Annual sales reached 1.07mn units, 26% YoY, exceeding the annual target by 13%.
• 2017E Target: Set at 1.25mn units, 16.3% YoY growth.
• Valuation: Trading at 5.8x FY17E P/E, 34% below industry average.
• Reiterate BUY: Strong growth prospects and improved fundamentals.

Market Indices and Global Macro Trends

Hong Kong Equity Research

Global Macro Overview

• Brent Oil: $55.59, -0.52, -0.93
• COMEX Gold: $1197.3, -2.5, -0.21
• COMEX Copper: $270.55, +3.4, +1.27
• LME Aluminum: $1813.0, +23.0, +1.28
• LME Copper: $5910.0, +68.0, +1.16
• BDI: 910.0, +18.0, +2.02

ECB Policy Outlook

• ECB is expected to maintain current monetary policy despite inflation signs.
• No further tapering or rate hikes anticipated until more solid data is available.
• TLTRO extension may be considered to counteract negative interest rates.
• Eurozone economic recovery is weaker than the US, and core inflation remains low.

Investment Strategy

Non-Ferrous Industry

• Key Recommendations:

  • Jiangxi Copper (600362)
  • Zhongjin Lingnan (000060)
  • Chihong Zinc & Germanium (600497)
  • Nanshan Aluminum (600219)
  • Yunhai Special Metals (002182)
  • Asia-Pacific Light Alloy (002540)
  • China Molybdenum (603993)
  • Advanced Technology (000969)
  • Ganfeng Lithium (002460)
  • Zhenghai Magnetic (300224)

• Risk Reminders:

  • Resumed production of industrial metals above expectations.
  • Infrastructure investment below expectations.

Sectors to Watch

Auto & Auto Parts

• Top Picks:

  • Brilliance China (1114 HK): BUY, 12.6% upside.
  • Geely Automobile (175 HK): BUY, 26.0% upside.
  • Great Wall Motor (2333 HK): BUY, 7.3% upside.
  • Fuyao Glass (3606 HK): BUY, 17.4% upside.
  • Minth Group (425 HK): BUY, 17.9% upside.

• NEUTRAL:

  • BAIC Motor (1958 HK): 12.7% upside.
  • Zhongsheng Group (881 HK): -18% upside.

Oil and Gas

• BUY:
  • Sinopec Oilfield Service (1033 HK): 41.9% upside.
  • SPT Energy (1251 HK): 1.8% upside.
  • China Oilfield Services (2883 HK): SELL.
  • CNOOC (883 HK): 268.1% upside.

Property

• BUY:

  • Yuexiu Property (123 HK): 10.0% upside.
  • Times Property (1233 HK): 3.8% upside.
  • Yuzhou Property (1628 HK): 6.0% upside.
  • New World Dev (17 HK): 11.7% upside.
  • Greentown China (3900 HK): 8.9% upside.
  • CIFI Holdings (884 HK): 5.3% upside.

• NEUTRAL:

  • Country Garden (2007 HK): -21% upside.
  • China Overseas Land (688 HK): -2% upside.
  • Ch Ovs G Oceans (81 HK): 7.3% upside.
  • Agile Property (3383 HK): 5.5% upside.

Auto and Auto Parts

• 2016 Car Sales: Reached 28.03 mn units, up 13.7% YoY.
• 2017E Growth: Expected to be 5–7%, back to a moderate level.
• Independent Brands: Focus on growth in independent brands and BMW industry chain.
• Sales Targets: Geely Auto and Great Wall Motor have set conservative but positive growth targets.
• Market Sentiment: Improved due to updated sales targets and better-than-expected results.

Railroad Sector

• Mixed-Ownership Reform: Seen as a long-term process with many challenges.
• Efficiency Gains: Most practical improvements will come from railway logistics.
• Passenger Fare Hike: Likely to be resisted by the public, despite being a feasible measure.
• China Railway Corporation: High political rank and low profitability hinder reform progress.
• Railway Logistics: Tielong Container Logistics (600125 SH) is the only listed name in this sector.

Summary of Investment Themes

• Dividend Policy Adjustments in the casino and auto sectors are seen as positive for investor returns.
• Market confidence is improving due to better-than-expected results and improved financials.
• Non-ferrous metals and new economy sectors are key areas for 2017 investment.
• Railway logistics is the main focus for efficiency improvement.
• ECB policy is expected to remain accommodative in the short term.
• Auto industry is shifting focus to independent brands and high-end product development.
• Property and telecom sectors show mixed outlooks, with some names being BUY and others NEUTRAL or SELL.