20140313-工银国际-VIEWPOINTS_EXPRESS_18页_837kb_837kb

Document Summary

Core Content

This document contains financial analyses and market insights from various sectors in China, focusing on the implications of Chaori's bond default, performance of China Lilang Limited, and Country Garden Holdings, alongside broader market and economic indicators.

Main Views and Key Information

Chaori's Bond Default

• Event Overview: Chaori's Solar Energy defaulted on an onshore bond payment of Rmb 89.8 million, marking the first such default in China.
• Market Impact: The default did not cause significant market disruption, with minimal impact on bond yields and spreads, indicating that the market had already priced in the risk.
• Government Perspective: The incident is seen as a sign of the government's push towards a market-based economy by reducing its intervention.
• Systemic Risk: The default is considered company and industry-specific, with no immediate contagion effect to other sectors. The government may still intervene in larger cases to ensure financial stability.
• Long-term Implication: The default is viewed positively for the development of the financial market, promoting more efficient risk pricing and management.

China Lilang Limited (1234.HK)

• 2013 Performance: Recorded a 17.7% YoY decline in both sales and earnings, which was in line with market expectations.
• Retail Channel: SSSG at the retail end showed positive single-digit growth, suggesting de-stocking and healthier inventory levels.
• Order Growth: The company reported order growth for the 2014 trade-fair, indicating a potential recovery in sales growth.
• Valuation: The stock is valued at 10.2x 2014F P/E and 7.2x ex-cash P/E, which is considered attractive.
• Financial Health: The company managed to maintain its net margin at 22.5%, reflecting good cost control and reduced inventory write-downs.
• Future Outlook: Sales growth is expected to resume in 2014, with positive order growth and store expansion anticipated.

Country Garden Holdings (2007.HK)

• 2013 Performance: Achieved 49.6% YoY revenue growth, reaching Rmb62.7bn, which exceeded the consensus revenue of Rmb53.7bn.
• Gross Margin: Gross margin (Pre-LAT) declined to 30.3% from 36.6%, indicating margin pressure.
• Debt Structure: Improved slightly, but net gearing increased to 62.3%, raising concerns about financial leverage.
• 2014 Target: Aims for Rmb128bn contracted sales, a 21% YoY increase, which is seen as achievable.
• Strategic Focus: The company has been focusing on landbanking in non-Guangdong areas, which may put pressure on maintaining current gross margin levels.

Market and Economic Indicators

Stock Market Performance

• HK Equities: Hang Seng Index (HSI) closed at 21,902 with a 1.7% decline, while the H-share Index closed at 9,365 with a 1.6% decline.
• Turnover: HK equities had a turnover of HK$79.0bn, with a 40.2% increase from the HSI.
• China Equities: CSI 300 Index closed at 2,114 with a 0.3% increase, while the Sh Composite Index closed at 7,217 with a 0.1% increase.
• Asian Equities: Nikkei 225 declined by 2.6%, Korea KOSPI by 1.6%, and Taiwan TWSE by 0.2%.
• US/European Equities: DJIA declined slightly, while S&P500 and NASDAQ showed minimal changes.

Other Indicators

• WTI Oil: Declined by 2.0% to $98.0 per barrel.
• Gold: Increased by 1.4% to $1,367.1 per troy ounce.
• Bond Yields: Lower-rated corporate bond yields rose slightly, with 5-year BBB+ rated bonds at 14.35%.
• Bond Spread: Wider by 8bps to 1,017bps.
• Interest Rates: HIBOR 3m remained stable at 0.37%, while USD LIBOR 3m increased slightly to 0.23%.

HK Listed ADRs

• ADR Performance: ADRs for major HK-listed companies showed mixed results, with some experiencing small declines and others slight increases.
• Weighting: ADRs account for 39.3% of HSI and 26.6% of H-share Index.

Financial Metrics for China Lilang Limited

• Valuation: 10.2x 2014F P/E and 7.2x ex-cash P/E.
• Dividend Yield: 6.0% for 2014.
• ROE: 19.8% for 2014.
• Net Income: Expected to be Rmb566 million for 2014.
• Earnings Forecast: Projected net profit growth of 10.6% for 2014.
• Historical Performance: Sales growth has been volatile, with a significant decline in 2013 but potential for recovery in 2014.

Cash Flow and Balance Sheet for China Lilang Limited

• Net Cash Flows: Showed fluctuations, with net cash generated from operations at Rmb558 million in 2012.
• Investing Activities: Net cash generated from investing activities was negative in 2012.
• Financing Activities: Net cash provided by financing activities was Rmb15 million in 2012.
• Balance Sheet: Total assets increased over the years, with a notable rise in total assets to Rmb3,289 million in 2012.

Conclusion

The document provides a comprehensive overview of the financial landscape in China, highlighting the implications of Chaori's bond default and the performance of key companies such as China Lilang Limited and Country Garden Holdings. It also includes broader market indicators and financial metrics, offering insights into the market's reaction and the potential for future growth and reform in the financial sector.