20170208-招商证券_香港_-Morning_Express_13页_1mb_1mb

Morning Express Summary

Core Content Overview

This document provides a comprehensive update on the performance of various sectors and companies, with a focus on the Chinese and Hong Kong markets. It includes research highlights on the jewellery sector, stock market indices, global commodity prices, exchange rates, and company-specific analyses, along with a research coverage list for different industries.

Mainland China and Hong Kong/Macau Jewellery Sector

• CTF (1929 HK) reported mixed results for its 2017 Chinese New Year (CNY) sales:

  • Mainland China (MC): SSSG (Same Store Sales Growth) of 1%, slightly positive, but gem-set SSSG declined by 20% due to a high base effect from last year's Valentine's Day surge.
  • HK/Macau: SSSG of -7%, with a 17% decline in gem-set SSSG attributed to a drop in average selling price (ASP) from lower sales of large-ticket items, and a potential negative impact from the RMB depreciation.

• Gold products showed strong growth in both regions:

  • HK/Macau: 13% SSSG
  • Mainland China: 14% SSSG

• Luk Fook (590 HK) is rated BUY, with a 14x FY18E P/E valuation, which is considered more attractive than CTF's 20x FY18E P/E. The report suggests that Luk Fook's lower ticket items and better sales growth make it a more favorable investment.

• CTF is rated NEUTRAL, with potential short-term share price pressure due to poor gem-set performance in HK/Macau.

Geely Automobile (175 HK)

• January sales increased 71% YoY to 103k units, despite a slight MoM decline.

• The strong performance was driven by new models, which accounted for nearly 40% of monthly sales.

• The delivery cycle for flagship models exceeded 3 months, indicating strong demand.

• Geely plans to complete its SUV series with 6 new models in 2H17E, priced between RMB50k-200k.

• The report forecasts monthly sales of around 100k units throughout the year, with the potential to exceed its 1mn unit sales target.

• Valuation and recommendation:

  • Current P/E is 10.9x FY17E, close to historical average.
  • Target price (TP) is HK$13.0, implying a 13.6x P/E.
  • The company is expected to achieve a 60% CAGR in net profit from 2015-2018E.
  • The report recommends mid/long-term investors to accumulate on dips.

Truly (732 HK)

• January sales reached HK$2,136mn, a 27% YoY increase and 19% MoM decrease.
• Strong performance attributed to orders from OPPO and Vivo, which are top clients.
• The 1Q17E outlook is cautious from upstream companies, but industry developments suggest a more positive outlook.
• The report maintains a BUY rating, with a TP of HK$4.86 and a P/E of 8.4x FY17E.

A-Share Research Highlights

Sany Heavy Industry (600031.SH)

• The company is rated STRONGLY OVERWEIGHT-A, with a revised TP of RMB8.70-9.00.
• The engineering machinery industry is expected to bottom out in 2016, with a rebound in sales starting in August.
• Excavator sales doubled, and the market share of Sany Heavy's excavators exceeded 20%, making it the market leader.
• The company is undergoing strategic transformation, including expansion into financial services and overseas markets.
• The current valuation is 20x P/E, which is considered inappropriate for a company in transition.
• The report suggests that net profit could return to average levels of RMB3.8bn per year from 2007 to 2011.

Economic and Market Data

• Stock Market Indices:

  • Hang Seng Index: Closed at 23332, down 0.07%.
  • HSCEI: Closed at 9840, up 1.62%.
  • CSI 300: Closed at 3366, down 0.22%.
  • Shanghai Composite Index: Closed at 3153, down 0.12%.

• Global Commodity Prices:

  • Brent Oil: Down 1.32% to $55.15.
  • COMEX Gold: Up 0.21% to $1234.7.
  • COMEX Copper: Down 0.6% to $263.55.
  • LME Aluminum: Down 0.22% to $1830.5.
  • LME Copper: Down 0.67% to $5807.0.
  • BDI: Down 2.86% to 714.0.

• Exchange Rates:

  • USD/RMB: Up 0.32% to 6.88.
  • USD/HKD: Down 0.01% to 7.76.
  • EUR/USD: Down 0.51% to 1.07.
  • 1Y RMB NDF: Up 0.43% to 7.1.
  • 3M Libor: Up 0.43% to 1.04.
  • 3M Shibor: Up 1.68% to 4.02.
  • 10Y US T-Note Yield: Down 2.81% to 2.42.

What to Watch

Economic Data

• US: Consumer Credit on 2017/02/08, expected at 20.00bn.
• Japan: Machinery Orders MM on 2017/02/09, forecasted at 3.10%.
• China: Exports YY and Imports YY on 2017/02/10, with no forecast provided.

Company Events

• Multiple companies reported Q4 2016 results on 2017/02/08, including Lam Soon (Hong Kong) Ltd., NagaCorp Ltd., China Ocean Fishing Holdings Limited, and others.

Research Coverage List (As of February 8, 2017)

Key Industry Trends

• Jewellery sector: Mixed performance, with China showing positive growth and HK/Macau experiencing a negative surprise.
• Auto industry: Geely's strong January performance and expansion into SUV models indicate growth potential.
• Technology sector: Truly's sales were bolstered by orders from major smartphone brands.
• Engineering machinery: Sany Heavy Industry is expected to recover in 2017 with 20% sales growth.
• Valuation considerations: Sany Heavy Industry's P/E ratio is considered inappropriate due to its strategic transformation.

Risks and Considerations

• CTF may face short-term share price pressure due to poor gem-set performance in HK/Macau.
• Sany Heavy Industry faces conversion pressure from convertible bonds and raw material price increases.
• Geely may be affected by component cost pressure and RMB depreciation.
• Truly is subject to upstream supply chain risks and market volatility.