20170215-招商证券_香港_-Morning_Express_13页_1mb_1mb

Morning Express Summary

Core Content

The document provides a detailed research summary from China Merchants Securities (HK) Co., Ltd., covering stock market indices, global commodity prices, exchange rates, and company-specific analyses. It includes investment recommendations for various sectors, such as gaming, hardware technology, home appliances, and others.

Main Points

NetEase (NTES US)

• Gaming Leadership: NetEase is recognized as a top-tier game creator with a diversified game portfolio. It has a strong history of producing chart-topping mobile games, with 1 in 2014, 2 in 2015, and 4 in 2016.
• Growth Outlook: Mobile games are expected to drive growth with a top-line CAGR of 34% for FY16-18E, slightly higher than the market average of 32%.
• Non-Gaming Growth: The advertising and core e-commerce businesses (including Kaola, Yixin, YiYuanGou, and Duobao) are projected to grow at 15-20% CAGR, though earnings may be volatile due to regulatory influences.
• Investment Recommendation: Initiated with a BUY rating and a target price of US$330, based on an EV/EBITDA of 14x, which is lower than peers (21x).
• Market Position: NetEase is viewed as a strong contender in the gaming industry, with a focus on IP-centric development and long-term growth potential.

Tencent (700 HK)

• Market Leadership: Tencent is the leading game publisher in China, with a dominant position in both iOS and Android app stores.
• Diversified Portfolio: It has a broad range of game genres and publishing capabilities, along with strong relationships with global game content providers.
• Investment Recommendation: Maintained with a BUY rating, with a target price of HK$230.
• Global Expansion: Tencent continues to expand globally through acquisitions and partnerships with leading developers.

China Hardware Technology

• Top Picks: Companies such as Tongda (698 HK), Cowell (1415 HK), and Truly (732 HK) are highlighted with BUY ratings.
• Performance: These companies have shown strong YTD performance (50%, 22%, and 19% respectively) due to factors like seasonality, product launches, and supply chain opportunities.
• Valuation and Catalysts: Low valuations and strong fundamentals are expected to drive outperformance. Upcoming product launches and company guidance in March are seen as positive catalysts.
• Apple Supply Chain: Tongda and Cowell are recommended as Apple supply chain beneficiaries due to increased ASP and share allocation in FY17E.

A-Share Research Highlights

• Kitchen Electrical Appliances: Expected to be the fastest-growing sub-sector in 2016-2017 with strong earnings growth. Companies like Robam (002508) and Vatti (002035) are highlighted.
• Valuation Concerns: Despite strong growth expectations, valuation re-rating has not occurred yet, likely due to real estate sentiment and industry life cycle concerns.
• Sector Opportunities: The consumer goods sector is expected to offset the negative impacts of the real estate downturn.

Key Information

• Gaming Sector: Both NetEase and Tencent are expected to outperform due to their strong mobile game portfolios and diversified business models.
• Non-Gaming Growth: NetEase's advertising and e-commerce segments offer steady growth, though some may be subject to regulatory changes.
• Hardware Technology: Companies like Tongda, Cowell, and Truly are favored for their growth potential and low valuations.
• Market Sentiment: The overall market sentiment is positive, with multiple catalysts expected to drive performance in the near term.
• Valuation Metrics: EV/EBITDA and P/E ratios are used to evaluate company valuations, with NetEase being undervalued compared to Tencent.

What to Watch

• Economic Data: Key economic indicators such as API weekly crude stocks, CPI, and manufacturing indices are scheduled for February 15 and 16, 2017.
• Company Events: CITIC Dameng Holdings Ltd. is set to release its annual results and dividend information on February 15, 2017.

Summary Table