20171013-广发证券_香港_-Dim_Sum_Express_4页_693kb

Dim Sum Express Summary

Core Content Overview

This document provides a comprehensive market analysis focusing on the performance of various indices and specific stocks in the Hong Kong and A-Share markets. It includes both index data and detailed investment recommendations for selected companies, particularly in the non-ferrous metals and education sectors.

Market Performance

The following indices show their performance in terms of change (1D, 1M, YTD), earnings per share (EPS) growth (17E, 18E), and price-to-earnings (P/E) ratios:

Hong Kong ADRs Performance

A-Share Market Analysis

Non-Ferrous Metals

The "double scoring system" for new energy vehicles (NEVs) was introduced on 28 September and will take effect on 1 April 2018. This policy is expected to drive NEV production and sales, leading to increased demand for lithium and cobalt. Key beneficiaries include:

• Lithium: Tianqi Lithium Industries (002466 CH), Ganfeng Lithium (002460 CH), Youngy (002192 CH), WeiHua (002240 CH), Yahua Industrial (002497 CH)
• Cobalt: Huayou Cobalt (603799 CH), Hanrui Cobalt (300618 CH)
• Salt Lake and Mica Lithium Extraction: Tibet Mineral Development (000762 CH), Tibet Urban Development & Investment (600773 CH), Zangge Holding (000408 CH), Jiangxi Special Electric Motor (002176 CH)
• Copper Foil and Nickel Sulfate: Nuode Investment (600110 CH), GEM (002340 CH)

Education Sector

Wisdom Education (6068 HK) is recommended as a "Buy" with an updated target price (TP) of HK$5.90, up from HK$3.88. The revised TP is based on a 25.4x FY19E P/E and 1.1x FY19E PEG. The key reasons for the re-rating include:

1. Tuition Fee Growth: Private schools have raised tuition fees by high double-digits for the 2017/18 school year, alleviating concerns about fee growth.
2. Valuation Attractiveness: High-P/E US-listed school operators make HK-listed operators more attractive.
3. Policy Uncertainty: The Revised Law for Promoting Private Education (RLPPE) has not finalized details, allowing schools to make decisions on for-profit status during a grace period.

The company is expected to raise tuition fees by 20% in the future, with revised growth estimates for FY19 and FY20. The potential acquisition of a school in Guangdong is also highlighted.

Investment Recommendations

• Buy: Stocks expected to outperform the benchmark by more than 15%
• Accumulate: Stocks expected to outperform the benchmark by more than 5% but not more than 15%
• Hold: Stocks with relative performance between -5% and 5%
• Underperform: Stocks expected to underperform the benchmark by more than 5%

Sector Ratings:

• Positive: Sectors expected to outperform benchmark by more than 10%
• Neutral: Sectors with relative performance between -10% and 10%
• Cautious: Sectors expected to underperform benchmark by more than 10%

Risks

• Surge in teacher costs
• Policy risks
• Oversupply of private schools
• Poor academic results
• Concentration of income from only three schools in Dongguan

Disclaimer

This report is for informational purposes only and does not constitute an offer to buy or sell securities. It is intended solely for clients of GF Securities (Hong Kong). The information is subject to change and should not be relied upon for investment decisions without professional advice.