20160204-招商证券_香港_-Morning_Express_15页_1mb_1mb

Document Summary

Core Content Overview

This document is a comprehensive equity research report by China Merchants Securities (HK) Co., Ltd., covering various sectors including technology, real estate, consumer staples, and global economic indicators. It provides analysis on key companies, market trends, and valuation insights.

Key Company Analyses

Lenovo Group (992 HK)

• Performance: FY3Q16 net profit rose 19% YoY to US$300mn, beating market estimates by 24%. Revenue declined 8% YoY to US$12,913mn, but the decline was largely in line with expectations due to slow PC demand and FX impacts.
• Outlook: The company's restructuring efforts led to improved margins in Mobile and Enterprise segments. FY3Q overseas/China shipment mix was 83%/17%, with a 15% increase in overseas shipments and a 65% decrease in China shipments YoY.
• Rating: Maintained BUY with a new target price (TP) of HK$8.4, based on a 10.0x FY17E P/E ratio.
• Risks: Slower-than-expected PC demand, more severe FX impacts, and slower enterprise growth.

Country Garden (2007 HK)

• Performance: Aggressive land purchases in 2015 amounted to RMB55.9bn, leading to a 47% discount to NAV (HK$5.1/share).
• Outlook: Contracted sales forecast was raised to RMB168bn (+20% YoY), but net gearing is expected to rise to 80% and 106% by FY15/16E year-end, exceeding the company's target of below 70%.
• Rating: Maintained NEUTRAL with a TP of HK$2.7.
• Risks: High debt levels, potential new casino law in Cambodia, and delays in project openings.

NagaCorp (3918 HK)

• Performance: FY15 revenue/EBITDA/net profit of US$503.7/228.5/172.6mn (+26%/+30%/+27% YoY), slightly below market estimates due to weak win rate.
• Outlook: FY15 DPS of US$0.045 implies a 60% payout ratio and 60% yield. The company is expected to maintain high dividend policy.
• Rating: Non-rated.
• Valuation: Trades at 5x FY16E EV/EBITDA and 8x P/E, 65% and 60% below Macau peers.
• Risks: New casino law in Cambodia, potential delays in Naga 2 and Vladivostok projects.

Sector Analysis

Consumer Staples

• Valuation: Sector stocks declined by an average of 14% in 2016 YTD, with industry valuation retreating to 17x 2016 P/E, below historical lows.
• Outlook: The 2Q2016 product launches and sales upturn could act as catalysts for the sector.
• Rating: Initiated BUY for Want Want China (151 HK) and Uni-President (220 HK), NEUTRAL for Tingyi (322 HK).
• Earnings Growth: Want Want China, Tingyi, and Uni-President are estimated to have 8.4%, 10%, and 15% CAGR in earnings from 2015–2017E, respectively.
• Valuation Premium: Uni-President is expected to benefit from valuation premium due to new product launches.

Hardware Technology

• Key Companies: Including Cowell (1415 HK), AAC Technologies (2018 HK), Coolpad (2369 HK), Sunny Optical (2382 HK), TCL Comm (2618 HK), and others.
• Performance: Varies, with some companies showing strong growth in earnings and P/E ratios.
• Outlook: The sector is expected to benefit from improved fundamentals and product innovation.
• Risks: Market volatility and competition.

Global Economic Indicators

• Stock Market Indices:

  • Hang Seng Index: Closed at 18991.59, down 2.34%
  • Hang Seng Finance Index: Closed at 25263.12, down 2.71%
  • Hang Seng Utilities Index: Closed at 48715.88, down 0.33%
  • Hang Seng Property Index: Closed at 24795.54, down 2.59%
  • Hang Seng Industrial Index: Closed at 11453.39, down 2.14%
  • HSCEI: Closed at 7858.31, down 2.49%
  • CSI 300: Closed at 2948.64, down 0.43%
  • Shanghai Composite Index: Closed at 2739.25, down 0.38%
  • TWSE: Closed at 8063.0, down 0.84%

• Commodity Prices:

  • Brent Oil: +7.7% at $35.24
  • COMEX Gold: +1.27% at $1141.5
  • COMEX Copper: +2.12% at $209.85
  • LME Aluminum: +1.33% at $1521.0
  • LME Copper: +2.1% at $4644.5
  • BDI: -2.26% at 303.0

• Exchange Rates & Interest Rates:

  • USD/RMB: 6.58, down 0.03%
  • USD/HKD: 7.79, down 0.08%
  • EUR/USD: 1.11, up 1.56%
  • 1Y RMB NDF: 6.94, up 0.06%
  • 3M Libor: 0.62, up 0.1%
  • 3M Shibor: 3.07, down 0.32%
  • 10Y US T-Note Yield: 1.87, down 5.08%

Other Takeaways

• NagaCorp is collaborating with China International Travel Service (CITS) to expand its reach to Chinese tier-2 cities.
• Three Projects: NagaCity Walk is set to open in 3Q16, Naga 2 in mid-2017, and Vladivostok project in 2018.
• Dividend Policy: Dividend payout ratio decreased to 60% from 70%, but management reaffirmed the commitment to a high dividend policy.

BOJ's Negative Rate Cut

• Action: The Bank of Japan cut interest rates on newly deposited excess reserves to -0.1% in a 5-4 decision.
• Purpose: To stimulate spending, lending, and inflation, while adding depreciation pressure to the currency.
• Comment: The move is seen as a sign of desperation due to weak economic fundamentals and strong external headwinds.
• Effect: Likely to impact bank profitability but may not significantly boost loan growth. Similar to the ECB, fiscal stimulus may be necessary to support growth.

A-Share Research Highlights

• Rating Summary:

  • BUY: Brilliance China (1114 HK), China ZhengTong Auto (1728 HK), Geely Automobile (175 HK), China Resources Land (1109 HK), Yuzhou Property (1628 HK), KWG Property (1813 HK), Country Garden (2007 HK), Agile Property (3383 HK), Want Want China (151 HK), Uni-President (220 HK), Tencent (700 HK), NetDragon (777 HK), AAC Technologies (2018 HK), and others.
  • NEUTRAL: BAIC Motor (1958 HK), Country Garden (2007 HK), Kingdee (268 HK), I.T (999 HK), Hengan Int'l (1044 HK), and others.
  • SELL: Coolpad (2369 HK)

• Valuation Metrics:

  • Target prices, percentage upside, and P/E ratios are provided for each company, reflecting market expectations and analyst views.

What to Watch

• Economic Data:

  • U.S. Initial Jobless Claims, Labor Costs Prelim, Productivity Prelim, Durable Goods, and Factory Orders MM.
  • Germany Industrial Orders MM.
  • U.S. Non-Farm Payrolls, Private Payrolls, Unemployment Rate, and Average Earnings MM.

• Company Events:

  • Multiple companies released financial results and dividends in early February 2016, including San Miguel Brewery Hong Kong Ltd., Future Land Development Holdings Ltd., and others.

Conclusion

The report highlights both opportunities and risks across various sectors. Lenovo Group is viewed positively due to improved margins and restructuring, while Country Garden faces challenges due to high debt levels and valuation concerns. NagaCorp shows potential for growth despite external risks. The BOJ's negative rate cut signals economic uncertainty, and the A-share market reflects mixed performance with a focus on valuations and earnings forecasts.