20160314-招商证券_香港_-Morning_Express_16页_1mb

Summary of Document Content

Sands China (1928 HK)

• Dividends:

  • Final dividends of HK$1.00 per share were announced, consistent with expectations and the same as in FY14.
  • Total DPS for FY15E was HK$1.99, with a 144% payout ratio and a yield of 6.9%.
  • The company is expected to maintain total DPS at HK$1.99 for FY16E and FY17E.

• Valuation:

  • Current share price is trading at 16.2x FY16E EV/EBITDA and 21.9x P/E, which is in line with its 5-year historical average.
  • The analyst maintains a NEUTRAL rating with a target price (TP) of HK$28.20, equivalent to a 5-yr historical average of 19x P/E and 16x EV/EBITDA.
  • The analyst believes that Sands China is fairly valued with limited upside and is not a good entry point at this time.

• Outlook:

  • The opening of Parisian Macao is expected to bring positive synergy with Studio City, leading to increased foot traffic.
  • The analyst recommends Melco Crown (MPEL US) and Galaxy (27 HK) in the Macau gaming sector.

China Banks

• February Loan Data:

  • New loans fell to RMB727 billion in February 2016, significantly below the consensus of RMB1.2 trillion.
  • TSF also declined to RMB780 billion, missing the consensus of RMB1.84 trillion.
  • The decline was attributed to the Chinese New Year holiday and tightened regulatory oversight on bill financing.
  • Medium and long-term loans to non-FI enterprises increased YoY, reaching RMB502 billion, indicating improving investment demand.

• Valuation and Outlook:

  • The sector is trading at 0.59x FY16E P/B and 4.19x FY16E P/E, which is attractive compared to historical averages.
  • The analyst remains cautiously positive on the sector and reiterates an OVERWEIGHT rating.
  • BOC (3988 HK) is highlighted as the top pick.

China Property Sector

• Sales and Investment:

  • Contracted sales for 21 listed developers grew by 79% YoY in February, with CIFI and CR Land showing strong performance.
  • National home sales increased by 49% in value and 30% in volume YoY for the first two months of 2016.
  • New residential construction and investment grew in February, ending a period of negative growth.

• Market Outlook:

  • The analyst expects the sector to remain robust due to government property QE.
  • Inventories are declining, and the home price index is rising steadily.
  • Full-year home price growth is estimated at 5% in large Tier-1/2 cities, with national sales volume growth expected to be between 0-3%.

• Catalysts:

  • Continued loosening of credit policies (mainly mortgages) and tax reduction plans for home buyers.
  • M&A activity for land replenishment and reduced competition is a key catalyst.
  • CR Land and COLI are highlighted as having M&A potential.

Healthcare Sector Strategy and FY15E Preview

• Sector Outlook:

  • The sector is expected to face challenges in 1H16, with pressure from tendering and regulatory reforms.
  • The analyst expects sector re-rating after the completion of provincial tendering in 2H16.

• Sub-sectors:

  • The plasma industry and biotech sector are recommended for investment due to their higher barriers to entry and stable growth prospects.
  • The analyst is cautious about overall industry growth but believes these sub-sectors may outperform.

• Valuation:

  • The HK-listed China healthcare industry is trading at 16x 2016E P/E, which is considered fair value.
  • The analyst highlights the need for catalysts to drive future re-rating.

• Top Picks:

  • CTCM (570 HK), CBPO (27 HK), and CMS (867 HK) are recommended due to attractive valuation, unique opportunities, and strong drug portfolios.

ECB Stimulus Measures

• Policy Actions:

  • The ECB cut its benchmark lending rate by 5 bp to 0%, and the deposit rate by 10 bp to -0.4%.
  • The ECB expanded its monthly QE purchases from EUR 60 billion to EUR 80 billion and included investment grade corporate bonds in eligible assets.
  • A new TLTRO2 program was announced, allowing banks to borrow up to 30% of their loans for 4 years.

• Market Reaction:

  • The Euro dropped sharply after the announcement but recovered.
  • The ECB's actions were more aggressive than expected, signaling policy limits.

• Impact:

  • The measures are expected to boost 2H16 outlook but increase medium-term risks.
  • The analyst downgrades CPI inflation forecast to 0.5% due to deflationary pressures.

What to Watch

Economic Data

• China:
  • Fixed Asset Investment YoY on March 14, 2016.
  • House Price Index YoY on March 18, 2016.
• Eurozone:
  • Industrial Production YoY, Employment Change QoQ, and Core Inflation Rate YoY.
• Japan:
  • BoJ Interest Rate Decision on March 15, 2016.
• US:
  • PPI MoM, Core PPI MoM, Retail Sales MoM, NAHB Housing Market Index, Core Inflation Rate YoY, and Inflation Rate YoY.

Company Events

• Multiple companies released financial results and dividends on March 14, 2016, including Modern Media Holdings Ltd., Sinotrans Shipping Ltd., Welling Holding Ltd., and others.

Research Coverage List (As of March 14, 2016)