20170919-DBS_Group-Monthly_market_pulse_28页_827kb

报告摘要

DBS Group Research Summary - 19 Sep 2017

Core Content

DBS Group Research provides an analysis of the Hong Kong and Chinese equity markets as of 19 September 2017. The report outlines the current market situation, key indices performance, and investment recommendations across various sectors. It highlights both the upside potential and the risks associated with the current market environment.

HSI and HSCEI Targets

The HSI target for the end of 2017 is set at 29,200, implying an ~5% upside.
The HSCEI target is 12,400, with an ~12% upside.
The HSI target suggests a consensus PE of 13.2x for FY17F and 12.2x for FY18F, slightly above the 5-year average of 11.8x.
The HSCEI target implies a PE of 9.4x for FY17F and 8.6x for FY18F, also above the 5-year average of 7.9x.

Main Recommendations

Better take profit in auto makers and China consumer sectors such as Geely (175.HK) and Tingyi (322.HK).
Preferred sectors include:
- China banks (underperformed, improving margins and asset quality)
- Oils (operating results improved, underowned)
- IT and software (potential for re-rating)
- China materials (rising commodity prices)
- Railway & construction (OBOR and strong CNY)
Top picks:
- Agricultural Bank of China (1288.HK)
- Bank of China HK (2388.HK)
- China Resources Cement (1313.HK)
- Wharf Holdings (4.HK)
- Lee & Man Paper (2314.HK)
- China Petroleum & Chem (386.HK)
- Swire Properties (1972.HK)
- CRRC Corp (1766.HK)
- Tencent (700.HK)
- United Co RUSAL PLC (486.HK)

Key Risks

China economy slowdown: M2 growth at historical lows, retail sales, fixed assets investment, and industrial production growth are all at recent lows. The strong CNY may negatively impact exports.
Uncertain US interest rate outlook: Despite four rate hikes, bond yields are still falling, suggesting either a bubble or investor pessimism about future growth.
HK liquidity concerns: The HKD peg and the lack of change in the HSBC prime rate, along with the fall in HIBOR, indicate that the current liquidity may not be sustainable.
Investor complacency: Low market volatility and under-pricing of risks, as seen with the VIX and Greece/Argentina bond yields, suggest a need for caution.

Market Performance

HSI has had an 8-month rally, the best since 2007, but it's not yet comparable to that period.
The HSI has a YTD return of 26.4%, while the HSCEI has a YTD return of 17.8%.
The report also includes a table showing the performance of key indices such as HSI, HSCEI, and others, highlighting the positive trend in the Hong Kong market.

Sector Views

Sector	Weighting	Rationale
China banks	Overweight	Underowned, NIM & asset qualities bottomed out, cheap valuations
Oil	-	Operating results improved, prefer Sinopec (386.HK) and CNOOC (883.HK)
IT, software, & e-commerce	-	Upcoming high-profile IPOs may lead to sector re-rating
China materials	-	Cement, steel, and aluminium prices still going up
Railway and construction	-	Investors having greater confidence in OBOR, weak USD positive to earnings
HK and global banks	Positive bias	2H17 results still supported by steeper yield curve, more uncertainties ahead
Non-bank financials	-	Investment income of insurers improved, A-share market turnover remain sluggish
Gaming	-	Gaming revenue remain robust after typhoon, concerns on capital control
China power producers	-	Attractive valuations, potential industry restructuring
Environmental	-	Largely forgotten by investors, good level to entry now
China telecom equipment	-	Potential start for 5G capex cycle in 2018 can be a growth catalyst
Hong Kong property	Neutral	Mortgage rates remain stubbornly low, no signs of property market crash
China airlines	-	Benefit from USD weakness, still room to improve efficiencies
Apparel and sportswear	-	Prefer sportswear companies; valuations quite stretched though
China property	-	Property sales held up well, balance sheet strengthened, prefer laggards
China appliances	-	Helped by strong property sales and e-commerce
China retailers	-	Going extremes: prefer players with strong brand names, or the most low-end plays
Textiles	-	Weak USD not helping the sector, valuations still attractive
Hong Kong retailers	-	Rental cuts and weak USD are positive factors, but largely priced in
China telecom carriers	Negative bias	Competitions put pressure on ARPU, not expensive though
China auto and parts	-	Auto makers seem to have overshot, prefer dealers
China F&B	-	Stretched valuations mean little room for negative news or earnings misses
China coal	-	Current share prices seem priced in too much positive news
Pharmaceutical + healthcare	-	Huge growth potentials, but valuations not very appealing
Hong Kong REITs	-	Office rentals may still go up, shopping malls rentals are less resilient
Hong Kong telecom	Underweight	Competitions heated up, but new smartphones may help in short term

Conclusion

The report suggests that while the equity market has shown strong performance, investors should remain cautious due to underlying risks. It recommends taking profit in certain sectors and focusing on underperforming or undervalued ones. The long-term outlook for HSI is positive, but the short-term risks are significant.

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