20130912-新鸿基金融集团-Investment_Daily_Note_11页_917kb

Investment Daily Note Summary - 12 September 2013

Core Content

This daily note provides an overview of the stock and market conditions in Hong Kong and the U.S., focusing on key stocks, indices, and market data. It includes analysis on China Automation (569.HK) and CT Environmental (1363.HK), as well as details on economic data, exchange rates, energy prices, and financial instruments like ETFs and H-shares.

Main Points

• Market Performance:

  • The Dow and S&P 500 showed positive movements, with the Dow rising 135 points and the S&P 500 up 5 points.
  • The Hang Seng Index (HSI) ended a four-day rally, closing at 22,937, down 39 points, but still showing a year-to-date (YTD) gain of 1.2%.
  • The Shanghai Composite rose 0.2%, with a YTD loss of 7.0%.
  • Hong Kong market turnover fell to HK$70.3bn.

• Key Stocks:

  • China Automation (569.HK):

    • Closed at HK$1.60, with a target of HK$1.75 and a stop-loss at HK$1.48.
    • Positive factors include the re-launch of CRC tenders and positive price movement.
    • The company's revenue from the petrochemical segment surged 41% in the first half of 2013, making up 72% of total revenue.
    • It is a railway signals and critical controlling system manufacturer.
    • The stock is recommended for short-term speculation due to recent volume surge and the re-launch of CRC tenders.
    • Net profit is expected to jump 20% to RMB176mn, with an estimated 6.5X FY13E P/E.
    • Valuation is below major railway construction firms.
    • Technical analysis suggests the share price has rallied beyond the downtrend and 50-day MA.

  • CT Environmental (1363.HK):

    • Positive factors include an improved IPO market and supportive government policies.
    • The company is a leading provider of industrial wastewater treatment services.
    • It operates five wastewater treatment plants and one industrial water supply plant.
    • The company's aggregate capacity is 365,000 m³/day for wastewater treatment and 150,000 m³/day for industrial water supply.
    • Three new facilities in Guangdong, Hunan, and Sichuan are under construction, expected to boost capacity.
    • Gross margin for CT Environmental is 59.4%, higher than the industry average of ~40%.
    • Net profit has been volatile, with a 31% increase in 2011, a 7.3% decline in 2012, and a 1.3% drop in the first four months of 2013.
    • The company is expected to outperform due to the fast-growing wastewater treatment industry.

• Other Highlights:

  • BYD (1211.HK): Surged 9.6% after the CEO indicated the company's new electrical sportscars could challenge Tesla.
  • Macau Gaming Stocks: Galaxy Ent (27.HK) and Sands China (1928.HK) hit record highs.
  • Tencent (700.HK): Set a new high and touched HK$405.8.
  • Major ETFs:
    • CSOP A50 (2822.HK) closed at HK$10.02, up 0.3%.
    • ChinaAMC CSI 300 (3188.HK) closed at HK$31.05, up 0.2%.
    • E Fund CSI 300 (3100.HK) closed at HK$29.55, up 0.7%.
    • SPDR Gold Trust (2840.HK) closed at HK$1022, down 0.7%.

• Economic Data and Events:

  • U.S. Data:
    • Initial Jobless Claims: 330K (down from 323K).
    • Continuing Claims: 2968K (down from 2951K).
    • Import Price Index MoM: 0.5% (down from 0.2%).
    • Industrial Production SA MoM: -0.3% (down from 0.7%).
    • Retail Sales Advance MoM: 0.5% (up from 0.2%).
    • University of Michigan Confidence (Preliminary): 82.0 (up from 82.1).
  • Euro Zone:
    • Industrial Production SA MoM: -0.3%.
    • Industrial Production WDA YoY: -0.2%.
  • Japan:
    • Machine Orders MoM: 2.4% (up from -2.7%).
    • Industrial Production YoY (Final): 1.6%.

• Market Turnover and Performance:

  • The HSI closed at 22,937, down 0.2%, with a market turnover of HK$70.3bn.
  • The best performers included BYD (9.6%), China Res Power (7.0%), and Zoomlion (5.0%).
  • The worst performers included China Longyuan (-3.2%), Sinopharm (-3.1%), and PetroChina (-2.6%).

• A-share and H-share Comparison:

  • Several companies are listed on both the A-share and H-share markets, with notable A-share premiums over H-shares.
  • For example, BYD has an A-share premium of 53.9%, and Zijin Mining has a premium of 86.0%.

• Treasury Yields and Interest Rates:

  • U.S. 2-year Treasury yield: 0.4429%, down 7.48 bps.
  • U.S. 10-year Treasury yield: 2.9084%, down 8.53 bps.
  • U.S. 30-year Treasury yield: 3.8494%, down 3.55 bps.
  • HK 1-month HIBOR: 0.2064%, down 13.43 bps.
  • HK 3-month HIBOR: 0.3857%, up 0.29 bps.

• Exchange Rates:

  • USD/HKD: 7.7542, unchanged.
  • EUR/USD: 1.3319, up 1.5%.
  • GBP/USD: 1.5828, up 1.5%.
  • USD/JPY: 99.6800, down 0.4%.
  • AUD/USD: 0.9344, up 2.4%.
  • NZD/USD: 0.8149, up 3.3%.
  • USD/CAD: 1.0307, down 1.9%.
  • USD Index: 81.4460, down 1.4%.

• Energy and Raw Material Prices:

  • Gold (USD/oz): US$1,363.80, down 0.1%.
  • Silver (USD/oz): US$23.1, down 0.5%.
  • Aluminum (USD/t): US$1,803.0, up 0.8%.
  • Copper (USD/t): US$7,170.0, up 0.6%.
  • Hot roll steel (USD/t): US$545.0, down 0.5%.
  • Cotton (USD/lb): US$85.7, up 2.3%.
  • Brent (USD/barrel): US$111.9, down 2.8%.
  • WTI (USD/barrel): US$107.6, up 0.3%.

Key Information

• China Automation (569.HK) is recommended for a short-term buy, targeting HK$1.75 with a stop-loss at HK$1.48, due to the re-launch of CRC tenders and improved price movement.
• CT Environmental (1363.HK) is expected to outperform due to the active IPO market and supportive government policies, with potential for growth from new wastewater treatment facilities.
• The Hang Seng Index ended a four-day rally after a spike above 23,000.
• The U.S. market showed positive momentum, with the Dow and S&P 500 rising.
• The HSI closed at 22,937, down 39 points, but with a YTD gain of 1.2%.
• The Shanghai Composite closed at 2,241, up 0.2%, with a YTD loss of 7.0%.
• BYD (1211.HK) and China Res Power (836.HK) were among the top performers, with significant gains.
• China Longyuan (916.HK), Sinopharm (1099.HK), and PetroChina (857.HK) were among the worst performers.
• The A-share premium for many companies is significant, with notable cases like BYD and Zijin Mining.

Conclusion

The market showed mixed performance with the U.S. indices rising due to eased concerns over QE-tapering, while the Hang Seng Index experienced a reversal after a strong early rally. China Automation and CT Environmental are highlighted as potential investment opportunities, driven by policy support and growth prospects. Key economic data and energy prices indicate mixed trends, with some sectors showing improvement while others face challenges. Investors should consider the risk factors and valuation dynamics when making decisions.