20171108-广发证券_香港_-Dim_Sum_Express_4页_498kb

Dim Sum Express Summary

Core Content Overview

The document provides an analysis of the Hong Kong market and the consumer sector outlook for 2018, with a focus on key indices, ADR performance, and specific company evaluations. It also includes rating definitions, analyst certifications, and disclosures.

Key Index Performance

Hong Kong Market Analysis

Consumer Sector Outlook

• Positive Outlook: The consumer sector is viewed positively due to consumption upgrade driven by income growth, and rising industry concentration.
• GDP Growth: China's GDP growth in the first three quarters of 2017 was 6.8%, with solid export growth, stable retail sales growth, and a recovery in manufacturing investment.
• Income Growth: Chinese residents' income is expected to grow steadily in 2018, leading to increased demand for high-end goods.
• Auto Sales: PV sales volume growth is expected to be 4% in 2018. The withdrawal of car purchasing subsidies in 1Q18 may affect auto sales volume.
• New Energy Vehicles: The introduction of the double scoring system for new energy vehicles is expected to stimulate industry demand growth.
• Market Share Shifts: Chinese and Japanese brands are expected to benefit from the declining market share of Korean brands, while German luxury brands will see further sales growth due to consumption upgrade.

Company Evaluations

• Brilliance China (1114 HK):

  • Strong 9M17 earnings growth, despite a slowdown in 3Q17.
  • 9M17 equity investment earnings for BMW Group were €634m, up 76% YoY.
  • 3Q17 earnings from equity investment slid 11% YoY, but the decrease was minimal due to the Eur/Rmb appreciation.
  • The 5 Series model is expected to rebound in 4Q17, improving profitability.
  • The company is expected to launch competitive X3/X2 SUVs in 2018/19, enhancing its product mix.
  • Maintain Buy rating and target price of HK$25.75 based on 14x 2018E P/E.

• Other Companies:

  • Goodbaby (1086 HK): Favorable due to enhanced mainland business mix and growth momentum through M&A.
  • Wisdom Education (6068 HK): Favorable due to its focus in the Guangdong-Hong Kong-Macau greater bay area and strong branding of its schools.
  • New Oriental (EDU US): Favorable due to strong fundamentals in the education sector.
  • ZhengTong Auto (1728 HK): Preferred due to high luxury car sales mix and advantages in financial services.
  • YongDa Auto (3669 HK): Preferred due to solid business operations.

Key Risks

• Economic policies being reversed
• Raw material prices rising significantly
• Volatility in the Rmb/HK$ exchange rate

Rating Definitions

Sector Ratings

Analyst Certification

• The views expressed accurately reflect the personal views of the analysts.
• No part of their remuneration was directly or indirectly connected with specific recommendations.

Disclosure of Interests

• GF Securities (Hong Kong) and its affiliated companies do not hold any shares of the securities mentioned.
• No investment banking relationship with the companies mentioned in the past 12 months.
• Analysts and their associates do not serve as officers of the companies mentioned and have no financial interests in the securities.

Disclaimer

• This report is for informational purposes only and does not constitute an offer to buy or sell securities.
• The report is intended solely for use by clients of GF Securities (Hong Kong).
• The information may be subject to change without notice.
• No liability is accepted for any loss arising from the use of the materials presented.
• Investments involve risks, and past performance does not guarantee future results.