20180710-广发证券_香港_-Dim_Sum_Express_4页_493kb

报告摘要

Dim Sum Express Summary

Key Index Performance (July 10, 2018)

The following table summarizes the performance of key indices across different timeframes:

Market	1D (%)	1M (%)	YTD (%)	18E EPS (%)	19E EPS (%)	18E P/E	19E P/E
HSI	1.3	-7.3	-4.1	39.7	10.7	11.4	10.3
HSCEI	1.4	-11.5	-8.0	19.8	10.3	7.5	6.8
MXCN	1.7	-8.7	-2.7	51.8	15.9	12.7	10.9
SHSZ300	2.8	-8.5	-14.2	34.3	15.2	11.7	10.1
SHCOMP	2.5	-8.2	-14.9	37.8	13.4	14.2	14.7
INDU	1.3	-2.1	0.2	42.5	8.9	16.0	15.8
SPX	0.9	0.2	4.1	46.6	10.3	17.4	15.8
CCMP	0.9	1.4	12.4	82.5	16.6	23.4	20.0
UKX	0.9	0.1	0.0	170.5	6.8	13.8	13.0
NYK	1.2	-2.8	-3.1	62.0	14.6	16.0	14.0

Hong Kong ADRs Performance

HK Company	Local (HK$)	Daily (%)	ADR (US$)	Daily (%)
700 TENCENT	396.0	2.43	51.0	2.35
1398 ICBC	5.6	1.45	14.4	1.48
939 CCB	6.9	-2.94	17.9	2.08
857 PETROCHINA	5.7	1.24	73.9	1.92
5 HSBC	73.4	1.03	47.9	1.51
941 CHINA MOBILE	70.7	1.58	45.3	1.14
2318 PING AN	71.0	1.79	36.3	-3.00
3988 BANK OF CHINA	3.7	0.55	6.7	1.68
386 SINOPEC	7.0	2.18	29.7	1.21
1299 AIA	68.6	1.33	8.9	4.94

A-Share Market Overview

Steel Sector

Demand: 5M18 cumulative property development investment growth was down 0.10pp YoY to 10.20%. Newly constructed area and construction area growth increased by 3.5pp and 0.4pp YoY to 10.8% and 2.0% respectively. Leading indicators such as land area purchased, property development financing, and area sold rose by 4.2pp, 3.0pp, and 1.6pp YoY to 2.10%, 5.10%, and 2.90% respectively. Cumulative infrastructure investment growth was down 2.9pp YoY to 5.89%, while cumulative fiscal expenditure as a proportion of the annual budget was 39.41%, up 8.1% MoM and 1.80% YoY.
Supply: Crude steel output in Jan-May reached 370m tonnes, up 5.34m tonnes YoY. The proportion of long products in steel mills declined to 43.5%, while plate products increased to 56.5%. Molten iron shifted to industrial materials with strong demand visibility. Some steel mills have completed off-season production tasks or are affected by environmental regulations, leading to a stable or slightly decreasing supply.
Inventory: Dealers' inventory of major steel products reached 10.0971m tonnes, up 1.12% MoM and 3.66% YoY. Steel mills' inventory was 4.4587m tonnes, up 3.63% MoM and down 14.87% YoY. Total inventory was 14.5558m tonnes, up 1.87% MoM and down 2.82% YoY.
Price and Earnings: Steel prices increased in June, but we expect them to weaken in July. Earnings declined in June but are expected to perform strongly in July. Average gross profit for rebar was Rmb1,191/tonne, hot-rolled steel was Rmb1,291/tonne, and cold-rolled steel was Rmb924/tonne.
Stock Picks: Hunan Valin Steel (000932 CH), Nanjing Iron & Steel (600282 CH), Xinyu Iron & Steel (600782 CH), Baoshan Iron & Steel (600019 CH), and SGIS Songshan (000717 CH).

Machinery Sector

Demand Recovery: Domestic sales of excavators rose 57.7% YoY, and exports increased 103.9% YoY. Industrial robot output increased by 33.7% YoY. Sales growth for excavators and industrial robots in April-May was higher than in Jan-March, indicating better QoQ growth in 2Q18 than in 1Q18.
Uncertainty: New medium and long-term loans fell 10.3% in 5M18, making it difficult for companies to grow through debt and M&A. Trade disputes have also increased uncertainty in the sector.
Focus on R&D: Companies are shifting to organic, innovative, light-asset, and low-leverage models. Quality equipment companies with strong R&D and business expansion experience are expected to perform well.
Stock Picks: Sany Int'l (631 HK), Jingce Electronic Group (300567 CH), Hengli Hydraulic (601100 CH), Eddie Precision Machinery (603638 CH), Topstar Technology (300607 CH), Estun Automation (002747 CH), Jingsheng Mechanical & Electrical (300316 CH), Centre Testing International Group (300012 CH), Longma Environmental Sanitation Equipment (603686 CH), Dingli Machinery (603338 CH), Great Star Industrial (002444 CH), and KDT Machinery (002833 CH).
Subsector Leaders: Chang Chuan Technology (300604 CH), Lead Intelligent Equipment (300450 CH), Kelai Mechatronics Engineering (603960 CH), Jereh Oilfield Services Group (002353 CH), Offshore Oil Engineering (600583 CH), Tong Oil Tools (300164 CH), Liugong Machinery (000528 CH), XCMG Construction Machinery (000425 CH), CRRC (601766 CH), China International Marine Containers Group (000039 CH), Tian Di Science & Technology (600582 CH), and Jack Sewing Machine (603337 CH).

Risks

Economic downturn
Steel exports missing expectations
Weak enforcement of production cuts
Coordinated price cuts by major iron ore producers
Volatility in the economy
Changes in demand due to trade disputes
Rising raw material prices
Uncertainties in business expansion

Rating Definitions

Company Ratings

Rating	Description
Buy	Expected to outperform benchmark by more than 15%
Accumulate	Expected to outperform benchmark by more than 5% but not more than 15%
Hold	Expected relative performance ranges between -5% and 5%
Underperform	Expected to underperform benchmark by more than 5%

Sector Ratings

Rating	Description
Positive	Expected to outperform benchmark by more than 10%
Neutral	Expected relative performance ranges between -10% and 10%
Cautious	Expected to underperform benchmark by more than 10%

Disclaimer

This report is prepared by GF Securities (Hong Kong) and is for informational purposes only. It does not constitute an offer to buy or sell any securities or a solicitation of an offer to buy, or a recommendation for investment in any securities. The information, opinions, and forecasts are current as of the date of the report and may change without notice. GF Securities (Hong Kong) accepts no liability for any loss arising from the use of the materials presented in this report. Investments involve risks, and past performance does not guarantee future results. Recipients should consult professional advice before making investment decisions.

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