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Investment Daily Note Summary - 26 March 2014

Core Content Overview

This daily note provides an analysis of the Hong Kong and global stock markets, focusing on performance, key companies, upcoming results, and market data. It highlights the performance of major indices, stock price movements, and investment recommendations for selected companies. Additionally, it includes economic data, exchange rates, commodity prices, and information on companies listed on both A-shares and H-shares.

Market Performance

• U.S. Stocks: Rose due to improved consumer confidence, with the Dow Jones Industrial Average (DJIA) up 91 points, S&P 500 up 8 points, and NASDAQ up 7 points.
• Hong Kong Stocks: The Hang Seng Index (HSI) turned soft after a two-day rally, closing at 21,732, down 114 points or 0.5%. The HSCEI closed at 9,690, down 4 points. Market turnover was HK$66.7 billion.
• Global Indices:
  • DJIA: 16,367 (+0.6%)
  • S&P 500: 1,865 (+0.4%)
  • NASDAQ: 4,234 (+0.2%)
  • DAX: 9,338 (+1.6%)
  • CAC 40: 4,344 (+1.6%)
  • FTSE 100: 6,604 (+1.3%)
  • Nikkei 225: 14,423 (+0.9%)
  • Taiwan weighted: 8,689 (+1.0%)
  • Shanghai Composite: 2,067 (+0.0%)
  • Shenzhen Composite: 7,252 (-0.3%)

Key Companies and Investment Recommendations

Changshouhua Food (1006.HK)

• Price: HK$8.31
• Target: HK$9.20
• Stop Loss: HK$7.80
• Performance: The stock benefited from growing consumer awareness of food safety. It has a strong gross margin due to increased sales of branded products.
• Recommendation: Buy with a small bet, targeting HK$9.20, with stop-loss at HK$7.80.

Tongda Group (698.HK)

• Price: HK$1.15
• Target: HK$1.27
• Stop Loss: HK$1.05
• Performance: The stock remained above the offer price after a share placement. It is expected to benefit from the expansion of China's broadband services and the growth in 4G smartphone demand.
• Recommendation: Buy with a small bet on potential rebound, targeting HK$1.27, with stop-loss at HK$1.05.

Upcoming Results Announcements

Several major Hong Kong-listed companies are set to announce their financial results:

• Wednesday, 26 March:

  • ZTE (763.HK): Net profit of RMB$1.56bn
  • Sino Biopharm (1177.HK): Net profit up 26% yoy to HK$1.12bn
  • BOC Hong Kong (2388.HK): Net profit up 6% yoy to HK$22.2bn
  • Bank of China (3988.HK): Net profit up 9% yoy to RMB$152.1bn

• Thursday, 27 March:

  • Wharf Holdings (4.HK): Net profit down 50% yoy to HK$23.6bn
  • BJ Ent Water (371.HK): Net profit up 50% yoy to HK$1.13bn
  • China Cinda (1359.HK): Net profit of RMB$8.62bn
  • ICBC (1398.HK): Net profit up 21% yoy to RMB$5.14bn

• Friday, 28 March:

  • CNOOC (883.HK): Net profit up 0.5% yoy to RMB$64bn
  • CCB (939.HK): Net profit up 10% yoy to RMB$213.2bn
  • China Shenhua (1088.HK): Net profit down 12% yoy to RMB$43bn
  • PICC Group (1339.HK): Net profit up 57% yoy to RMB$10.8bn
  • Phoenixhealth (1515.HK): Net profit of RMB$104mn
  • CSR (1766.HK): Net profit up 6% yoy to RMB$4.25bn
  • CPIC (2601.HK): Net profit up 96% yoy to RMB$9.96bn
  • SH Pharma (2607.HK): Net profit up 9% yoy to RMB$2.24bn
  • Zijin Mining (2899.HK): Net profit up 55% yoy to RMB$2.36bn
  • Haitong Sec (6837.HK): Net profit of RMB$4.28bn

Economic Data and Events

• MBA Mortgage Applications (U.S.): March 21
• Durable Goods Orders (U.S.): February (-1.0%)
• Trade Balance (New Zealand): February
• M3 Money Supply YoY (Eurozone): February (1.3%)
• GDP Annualized QoQ (U.S.): 4Q (2.7%)
• Jobless Claims (U.S.): March 21
• Bloomberg Consumer Comfort (U.S.): March 23
• Jobless Rate (Japan): February (3.7%)
• Natl CPI YoY (Japan): February (1.5%)
• GDP YoY (U.K.): 4Q F
• Consumer Confidence (Eurozone): March F
• Personal Spending (U.S.): February (0.3%)

Market Data Highlights

HSI and HSCEI Turnover

• HSI: HK$23.6bn (-27.8%)
• HSCCI: HK$4.2bn (-31.2%)
• HSCEI: HK$11.4bn (-37.6%)
• Main Board: HK$66.7bn (-10.6%)

Best and Worst Performers

• Best Performers:

  • Shangdong Weigao (1066.HK): +4.0%
  • PICC P&C (2328.HK): +3.1%
  • Wharf Holdings (4.HK): +3.1%
  • Hang Lung Properties (101.HK): +2.6%
  • China Comm Cons (1800.HK): +2.4%

• Worst Performers:

  • Tencent (700.HK): -4.9%
  • Poly HK (119.HK): -4.4%
  • China Taiping (966.HK): -3.8%
  • Yuexiu Property (123.HK): -2.5%
  • Beijing Ent (392.HK): -2.5%

Commodity and Energy Prices

• Gold (USD/oz.): $1,311.40 (-1.3%)
• Silver (USD/oz.): $20.0 (-3.1%)
• Aluminum (USD/t): $1,752.5 (+1.0%)
• Copper (USD/t): $6,603.0 (+1.9%)
• Hot Roll Steel (USD/t): $510.0 (-3.3%)
• Cotton (USD/lb.): $93.2 (+1.0%)
• CRB Index: 300.8 (-0.6%)
• Brent (USD/barrel): $107.0 (-0.1%)
• WTI (USD/barrel): $99.5 (-0.2%)

A-share and H-share Listings

A list of companies that are listed on both the A-share and H-share markets includes:

• Shandong Molong (568.HK, 002490)
• Luoyang Glass (1108.HK, 600876)
• NE Electric (42.HK, 000585)
• Beiren Printing (187.HK, 600860)
• Nanjing Panda (553.HK, 600775)
• Sichuan Expressway (107.HK, 601107)
• CITIC Bank (998.HK, 600016)
• ZTE (763.HK, 000063)
• Bank of China (3988.HK, 601988)
• ICBC (1398.HK, 601398)
• China Shenhua (1088.HK, 601088)
• PICC (2601.HK, 601601)
• SH Pharma (2607.HK, 601607)
• CCB (939.HK, 601939)
• China Life (2628.HK, 601628)
• China Railway (390.HK, 601390)
• China Shenhua (1088.HK, 601088)

Analysts and Disclosure

• Analysts: Hannah Li, CAIA; Jason Tsang
• Disclosure:
  • The views expressed reflect the personal opinions of the analysts.
  • Analysts may have financial interests in the issuers mentioned.
  • SHKF may make a market in the securities of the mentioned issuers or have financial interests in them.
  • SHKF may have served as an adviser, manager, underwriter, or lender to the issuers.

Disclaimer

• This report is for informational purposes only.
• It does not constitute a solicitation or offer to buy or sell any financial instruments.
• The information may change at any time without notice.
• SHKF disclaims any warranties or fitness for a particular purpose.