20171229-广发证券_香港_-Dim_Sum_Express_5页_453kb

Dim Sum Express Summary

Core Content

This document provides an analysis of the performance of various global and Chinese stock indices, along with insights into the auto and tech hardware sectors, particularly focusing on the development of New Energy Vehicles (NEVs) and the potential return of optical glass in handset lenses. It includes market data, policy updates, investment highlights, and risk assessments.

Key Market Performance (Index)

Auto Sector Outlook

Policy Updates

• NEV Purchase Tax Exemption Extended: The purchase tax exemption for NEVs was extended from 2018 to 2020, helping the industry transition from policy-driven to market-oriented.
• Green Freight Transport Project: The government launched a project to promote NEVs in urban freight distribution, with pilot cities to be confirmed in the first half of 2018. The project will run from July 2018 to June 2020.

Market Outlook

• Steady Growth and Restructuring: The auto sector is expected to maintain steady growth and focus on restructuring due to pro-growth policies, stricter environmental regulations, and consumption upgrades.
• High-Emission Vehicle Restrictions: New driving restriction policies targeting high-emission vehicles are likely to be introduced, supporting stable auto sales in 2018 and beyond.

Investment Highlights

• Buy Recommendations:
  • SAIC Motor (600104 CH): Blue-chip stock with stable earnings growth and low valuation.
  • Huayu Auto (600741 CH) and Jianghuai Auto (600418 CH): Auto companies with competitive products and effective marketing.
• Auto Component Manufacturers:
  • HUAYU Automotive Systems (600741 CH), Wanliyang (002434 CH), Fulin Precision Machining (300432 CH), and Kunming Yunnei Power (000903 CH) are recommended due to the rise of domestic auto brands and the relocation of the global auto parts manufacturing center.
• Heavy Duty Truck Sector:
  • CNHTC Jinan Truck (000951 CH): Likely to increase market share with new launches.
  • Weifu High-Technology (000581 CH): Low valuation, high entry barriers, and stable earnings.
• Other Watchlist: Weichai Power (000338 CH) and FAWER Automotive Parts (000030 CH).
• Beiqi Foton Motor (600166 CH): Offers margin of safety with P/B valuation and is expected to restructure for improved ROE.

Risks

• Worse-than-expected auto sector business conditions.
• Disappointing NEV sales.
• Adjustments to NEV sector policies.
• Lower-than-expected economic growth.
• Auto industry policies falling short of expectations.
• Intensifying market competition.
• Sharp depreciation in the RMB.

Tech Hardware Sector Outlook

Handset Lens Demand

• Dual Cameras and 3D Sensing: These features are driving increased demand for handset lenses, with dual-camera handsets having three lenses and 3D sensing requiring additional components like dot projectors and infrared cameras.
• Penetration Rate: Dual-camera shipments reached ~75.5m units in 2016 (5% penetration), expected to rise to ~240m units in 2017 (15% penetration).

Optical Glass Return

• Current Material: Handset lenses are primarily made of optical plastic due to its ease of processing and impact endurance.
• Potential Shift: With the increasing demand for higher image quality and the limitations of plastic lenses, there is a growing debate over the return of optical glass as a material for handset lenses.
• Key Players: AAC Tech (2018 HK) and Sunny Optical (2382 HK) are actively developing glass lenses and hybrid solutions.

Risks

• Smartphone sales downstream falling short of expectations.
• Disappointing penetration of dual cameras.
• Development of 3D sensing market missing expectations.
• Sharp depreciation in the RMB.

Rating Definitions

Analyst Certification and Disclosure

• The research analyst(s) certifies that the views expressed accurately reflect their personal opinions.
• No part of their remuneration is tied to specific recommendations.
• GF Securities (Hong Kong) and its affiliates do not hold any shares of the securities mentioned.
• No investment banking relationships with the companies discussed 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 information may be subject to change without notice.
• GF Securities (Hong Kong) accepts no liability for losses arising from the use of the report.
• Investments involve risks, and past performance does not guarantee future results.