20140324-申万宏源研究_香港_-海外研究部晨会纪要_13页_374kb

Daily Insight Summary

Core Content Overview

This report provides an analysis of several Chinese listed companies, including real estate developers and a cement company, as well as insights into the banking sector's response to the preferred stock pilot program. The report also includes investment ratings and target prices for each company, based on financial performance, market conditions, and strategic outlook.

Key Companies and Their Analysis

保利置业 (119.HK)

• Core Earnings: Declined by 16% YoY to HK$1.9bn, significantly below expectations.
• Gross Margin: Dropped by 7ppts to 23%, contributing to the earnings miss.
• Dividend Yield: Increased to 6.5%, the only positive outcome.
• Liquidity Risk: Rising, with net gearing at 90% and cash holdings stable at HK$15bn.
• Capital Expenditure: Expected to be HK$34bn in 2014, with a cautious sales target of HK$28bn.
• Target Price: Downgraded to HK$3.21, a 7% downside, with a new rating of "Underperform".

山水水泥 (691.HK)

• Core Earnings: Slightly exceeded expectations at Rmb1,017m, with EPS of Rmb0.36.
• Operating Cash Flow: Remained healthy at Rmb1,925m, despite a 33% decline in net profit.
• Capital Expenditure: Expected to drop to Rmb21bn in 2014, with potential for free cash flow turnaround.
• Sales Growth: Projected to increase by 15% YoY in Q1 2014, with improved margin prospects in Shandong.
• Target Price: Maintained at HK$3.61, implying 6x 2014 earnings, with a "Buy" rating.

龙湖地产 (960.HK)

• Core Earnings: Rose by 15% YoY to Rmb6.2bn, but gross margin declined by 13ppts.
• Dividend Yield: Remained low at 2.9%, with a stable pay-out ratio of 20%.
• Capital Expenditure: High at Rmb55bn in 2014, with a cautious sales target of Rmb57bn.
• Market Concerns: Weakness in Hangzhou market raises concerns about 2014 sales outlook.
• Target Price: Set at HK$10.25, with a "Neutral" rating due to limited upside potential.

华润置地 (1109.HK)

• Core Earnings: Increased by 30% YoY to HK$9.4bn, aligning with market expectations.
• Gross Margin: Declined by 9.5ppts to 28.2%, but asset turnover improved to 28%.
• Capital Expenditure: Expected to be Rmb80bn in 2014, with a cautious sales target of Rmb70bn.
• Dividend Yield: At 2.7%, with a stable pay-out ratio of 27%.
• Target Price: Raised to HK$18.9, a 17% upside, with an "Outperform" rating.

Banking Sector Insights

• Preferred Stock Pilot: Launched in March 2014, with three types of companies eligible for issuance.
• Capital Adequacy Ratio (CAR): Banks face a shortfall in other tier-one capital, with ABC having the largest deficit.
• Impact on EPS and BPS: Issuance of preferred stock can enhance BPS more than EPS, due to LDR constraints.
• Scenario Analysis:
  • If banks issue to meet CAR requirements, EPS increases by 0.3% and BPS by 1%.
  • If issued to upper limit, EPS increases by 1.8% and BPS by 9%.
• Investment Recommendation: Suggest pair trading: long ABC (1288.HK), short CMBC (1988.HK).

Investment Ratings Definitions

• Buy: Expected markup more than 20% better than the market.
• Outperform: Expected markup 5% to 20% better than the market.
• Neutral: Expected markup less than 5% better or worse than the market.
• Underperform: Expected markup more than 5% worse than the market.
• Sell: Expected markup more than 20% worse than the market.

Industry Investment Ratings

• Overweight: Industry outperforms the market.
• Equal Weight: Industry performs in line with the market.
• Underweight: Industry underperforms the market.

Disclaimer and Disclosure

• The report reflects the analyst's personal views and is not an investment recommendation.
• The company does not hold any equities or derivatives of the target companies, except for possible affiliate holdings.
• The report is intended for professional investors only and may not be suitable for all.
• The company reserves all rights to the report and prohibits unauthorized reproduction or distribution.

Summary of Key Financial Metrics

Conclusion

The report highlights the challenges and opportunities across the real estate and banking sectors in China. While some companies like 山水水泥 show signs of recovery, others like 保利置业 face significant margin erosion and liquidity concerns. The banking sector is expected to benefit from the preferred stock pilot, but the overall market remains cautious due to liquidity and asset quality risks. Investment decisions should be made with careful consideration of the company's financials, market position, and strategic direction.