We expect Hang Seng Index to be highly volatile in the short term. Market Overview

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1 28 November Hang Seng Index Performance Major Market Indicators % Change Hong Kong Close 1-Day 1-Mth 6-Mth 12-Mth Hang Seng Index 26, % 6.5% -14.5% -11.3% HSCEI (H-Shares) 10, % 4.5% -13.2% -10.2% Mkt T/O ($ Mn) 78, % -18.0% -16.2% -23.6% Oversea DJIA 24, % 0.2% 0.0% 3.8% NASDAQ 7, % -1.2% -4.7% 2.5% Shanghai SE Composite 2, % -0.9% -17.9% -22.8% Shenzhen Component 7, % 1.7% -27.0% -31.2% Commodities and FX Crude Oil Futures (US$) % -23.0% -23.3% -10.2% Gold Futures (US$) 1, % -1.8% -6.9% -6.3% Baltic Dry Index 1, % -19.9% 13.0% -19.2% USD / Euro % -0.8% -2.9% -4.8% Yen / USD % -1.2% -3.9% -2.3% CNH / USD % 0.2% -8.0% -5.0% Source: Bloomberg Market Overview Hang Seng Index closed down 0.2% at 26,331. HSCEI declined 0.1%. Heavily weighted Tencent (700) and HSBC (5) surged 1.9% and 0.4% respectively. AIA Group (1299) cut 0.8%. Gaming, technology and securities stocks outperformed the market. Sunny Optical (2382) and AAC Technologies (2018) advanced 2.5%-3.0%. Five securities stocks in HSCEI grew an average 1.1% among which China Galaxy Securities (6881) and CITIC Securities (6030) rose 1.7%-2.0%. Sands China (1928) and Galaxy Entertainment (27) climbed 1.0%-1.1%. Consumption, HK property, insurance, cement and airline stocks underperformed the market. Want Want China (151), Mengniu Dairy (2319) and Hengan (1044) tumbled 1.7%-2.2%. Anhui Conch (914) and Air China (753) decreased 1.5%-1.7%. Nine local property stocks in Hang Seng Index dropped an average 0.9% among which Wharf REIC (1997) slid 2.4%. CK Asset (1113), Henderson Land (12) and Link REIT (823) lost 1.2%-1.5%. Seven insurance stocks in HSCEI cut an average 0.8% among which CPIC (2601) and Zhongan Online (6060) fell 1.6%-1.8%. We expect Hang Seng Index to be highly volatile in the short term PRC banking & property, oil, railway, automobile and pharmaceutical stocks lacked clear direction. China Evergrande (3333) soared 2.1% while China Overseas Land (688) plunged 1.7%. China Minsheng Banking (1988) and China Merchants Bank (3968) shrank 0.6%-0.7% whilst ABC (1288) added 0.6%. China Mobile (941) fell 1.2% while China Telecom (728) advanced 0.5%. BYD Company (1211) jumped 2.8% while Great Wall Motor (2333) retreated 1.2%. CNOOC (883) declined 2.0% while PetroChina (857) rose 0.6%. China Railway Group (390) increased 1.1% while CCCC (1800) decreased 0.7%. We expect Hang Seng Index to be highly volatile in the short term.

2 Index Movers H S I H S C E I Name Price % Chg Points Name Price % Chg Points AAC Technologies ( 2018 ) % 3.6 BYD ( 1211 ) % 2.8 Sunny Optical ( 2382 ) % 4.0 China Galaxy Securities ( 6881 ) % 0.8 Tencent ( 700 ) % 48.2 Tencent ( 700 ) % 11.2 Sands China ( 1928 ) % 2.6 CITIC Securities ( 6030 ) % 1.3 Galaxy Entertainment ( 27 ) % 3.6 Huarong Asset ( 2799 ) % 0.6 China Resources Land ( 1109 ) % 1.7 China Railway ( 390 ) % 0.9 PetroChina ( 857 ) % 1.9 Huatai Securities ( 6886 ) % 0.5 Sino Biopharmaceutical ( 1177 ) % 0.8 Anhui Conch Cement ( 914 ) % 1.2 Geely ( 175 ) % 1.3 Haitong Securities ( 6837 ) % 0.5 Hong Kong & China Gas ( 3 ) % 1.7 China Resources Land ( 1109 ) % 0.7 HSBC ( 5 ) % 10.0 PetroChina ( 857 ) % 1.8 CSPC Pharmaceutical ( 1093 ) % 0.7 Agricultural Bank ( 1288 ) % 1.5 BOCOM ( 3328 ) % 0.5 CRRC Corp ( 1766 ) % 0.5 BOC ( 3988 ) % 2.4 China Telecom ( 728 ) % 0.7 China Unicom ( 762 ) % 0.4 CSPC Pharmaceutical ( 1093 ) % 0.3 Shenzhou International ( 2313 ) % 0.5 GF Securities ( 1776 ) % 0.2 ICBC ( 1398 ) % 2.2 BOCOM ( 3328 ) % 0.5 CCB ( 939 ) % 3.3 BOC ( 3988 ) % 2.2 BOC Hong Kong ( 2388 ) % 0.0 Shenzhou International ( 2313 ) % 0.2 MTR ( 66 ) % 0.0 ICBC ( 1398 ) % 1.9 China Resources Power ( 836 ) % 0.0 CCB ( 939 ) % 1.6 Hang Lung Properties ( 101 ) % 0.0 China Gas ( 384 ) % 0.0 Ping An Insurance ( 2318 ) % -0.9 Guangdong Investment ( 270 ) % 0.0 CK Infrastructure ( 1038 ) % -0.1 Postal Savings Bank of China ( 1658 ) % 0.0 Sun Hung Kai Properties ( 16 ) % -0.4 CITIC Bank ( 998 ) % 0.0 Hang Seng Bank ( 11 ) % -1.2 Ping An Insurance ( 2318 ) % -0.7 Swire Pacific ( 19 ) % -0.5 Guangzhou Automobile ( 2238 ) % -0.1 Sino Land ( 83 ) % -0.5 New China Life ( 1336 ) % -0.3 Sinopec ( 386 ) % -2.3 Sinopec ( 386 ) % -2.1 China Life Insurance ( 2628 ) % -1.8 China Life Insurance ( 2628 ) % -1.7 HKEx ( 388 ) % -4.3 Cinda Asset Management ( 1359 ) % -0.2 New World Development ( 17 ) % -1.5 CGN Power ( 1816 ) % -0.3 CITIC ( 267 ) % -1.8 China Vanke ( 2202 ) % -0.6 WH Group ( 288 ) % -1.3 CMB ( 3968 ) % -2.2 CK Hutchison ( 1 ) % -5.8 CCCC ( 1800 ) % -0.6 AIA Group ( 1299 ) % China Minsheng Banking ( 1988 ) % -0.7 Power Assets ( 6 ) % -2.1 CITIC ( 267 ) % -0.8 CK Asset Holdings ( 1113 ) % -5.1 Sinopharm Group ( 1099 ) % -1.2 Country Garden ( 2007 ) % -2.5 Dongfeng Motor ( 489 ) % -0.5 China Mobile ( 941 ) % PICC Property & Casualty ( 2328 ) % -1.5 Henderson Land ( 12 ) % -2.0 Huaneng Power International ( 902 ) % -0.6 China Shenhua ( 1088 ) % -2.7 People's Insurance ( 1339 ) % -0.8 Link ( 823 ) % Great Wall Motor ( 2333 ) % -0.5 Want Want China ( 151 ) % -1.7 China Mobile ( 941 ) % -7.7 China Overseas ( 688 ) % -5.3 China Shenhua ( 1088 ) % -2.5 CLP Holdings ( 2 ) % -9.8 Zhongan ( 6060 ) % -0.5 CNOOC ( 883 ) % Air China ( 753 ) % -0.7 Hengan International ( 1044 ) % -3.2 China Pacific Insurance ( 2601 ) % -3.7 Mengniu Dairy ( 2319 ) % -4.6 CNOOC ( 883 ) % -6.1 Wharf ( 1997 ) % -4.4 Hengan International ( 1044 ) % -1.4 Source: Bloomberg, Mason Securities

3 Market in Focus Name CRG MKT Cap ($Bn) 71.8 Bloomberg Ticker 1193 HK Equity 52-week High/Low ($) Rating BUY Free Float (%) 36.0% Target Price $ M Avg Turnover ($, Mn) CRG (1193): We expect a robust growth in 3Q18 given a weak economic situation, Maintain BUY We expect CRG (1193, $32.30) to deliver +20% volume growth in 3Q18. Besides, we expect CGR to record a yoy improvement in gas sales gross margin in 4Q18 due to more preparation on gas storage and supply before heating season and higher bargaining power due to more time to negotiate with downstream customers this year. We expect CRG to beat its volume growth target of 20% in As a recap, CRG reported better-than-expected interim results on 24 Aug, revenue surged 34.8% yoy to $23,847mn. Revenue from (i) gas sales, (ii) gas connection and (iii) other segments including gas station and design and construction services grew approximately 44.9%, 5.7% and 16.9% yoy to $18,182mn, $3,342mn and $2,322mn respectively accounting for 76.2%, 14.0% and 9.7% of total revenue. Total gas sales volume grew 22.9% to 12,375mn m3, better than our expectations. Residential, industrial and commercial users gas sales volume grew 13.8%, 29.8% and 27.2%. Overall gross profit amounted to $6,742mn, up 18.3% yoy. CRG s dollar margin of gas sales dropped to RMB0.62/m3 from RMB 0.64/m3 in 1H17, but improved hoh from RMB 0.52/m3 in 2H17. Segment profit amounted to $4,871mn in 1H18, the above-mentioned three sectors grew approximately 54.6%, 11.3% and 36.2% respectively to $2,605mn, $1,728mn and 538mn. We maintain our long-term positive views on China gas market and expect the gas consumption in China to nearly triple by Among the gas supply sources, we expect domestic production to reach nearly 6% CAGR and LNG imports to reach approximately 13% CAGR from 2018 to Fig1: 1 Year Share Price Source: Bloomberg, Mason Securities We continue to take a long-term positive view on the CRG given the industry s long-term and stable growth. According to Bloomberg estimates, the company s earnings are expected to reach $4.64bn in 2018 and $5.23bn in 2019, up approximately 27.1% and 12.7% respectively. EPS is expected to reach $2.04 in 2018 and $2.29 in Traded at 2018 P/E of 15.8x and 2019 P/E 14.1x, we believe the valuation of CRG is still attractive to long-term investors. We maintain our BUY rating on CRG with 12-month target price of $38.4. Our target PE multiple is based on 2019 P/E of 16.7x or equivalent to average forward P/E of 16.7x from 2011 to 2018.

4 Technical Ideas Name Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss Maanshan Iron & Steel 323 HK Equity SELL $3.68 $3.31 $5.34 $3.86 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 168% 3.8X 0.86X 80% Technical Indicator SMA RSI (14) 27.9 SMA BB (Upper) 4.54 SMA BB (Lower) 3.81 Name Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss TravelSky Technology 696 HK Equity BUY $20.75 $22.83 $24.50 $19.71 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 126% 20.8X 3.09X -38% Technical Indicator SMA RSI (14) 52.3 SMA BB (Upper) SMA BB (Lower) Source: Bloomberg, Mason Securities

5 Recent Recommendations Date of Issue Stock Pick Recommendation Highlights Rating (TP) 15/11/2018 A-Living Services (3319) Weakness in share price presents a good buying opportunity Maintain BUY A-Living Services (3319) Investors have over-reacted on unexpected resignation of the CEO. Undemanding valuation at forward P/E of 16.3x in 2018 and 11.1x in 2019 with a 2-year EPS CAGR of 48%. BUY ($13.0) 16/11/2018 CSCI (3311) China s infrastructure investment picked up in October Maintain BUY China State Construction (3311) As at 31 October 2018, the unfinished contract value grew 21.2% yoy to $235.35bn of which 77% or $181.47bn were infrastructure investments in China Traded at 2018 P/E of 5.1x and 2019 P/E of 4.4x, CSCI looks unreasonably cheap compared with its historical valuation at 5-year average forward P/E of 9.7x BUY ($9.00) 19/11/2018 Huadian Fuxin (816) Huadian Fuxin (816): Improving fundamentals with undemanding valuation; BUY Underperformance was mainly due to a drag of hydropower generation which recorded a negative growth of 47.3% for 10M18 Sequential improvement on the main earnings driver will serve a ST catalyst for the company BUY ($1.84) 20/11/2018 Shimao Property (813) 21/11/2018 CTCM (570) 22/11/2018 CEG (839) 23/11/2018 ENN Energy (2688) Fundamental remains solid - Maintain BUY on Shimao Property (813) Thanks to improvement in product mix and abundant saleable resources, Shimao s contracted sales increased by 48% in 2017 and 73% yoy in the first ten months of 2018 compared to industry growth of 13.7% and 12.5% respectively Promising growth with undemanding valuation Maintain BUY on CTCM (570) We believe CTCM will benefit from 1) solid industry development; 2) channel expansion in high-tolow tier hospitals; 3) the increasing penetration rate of TCM granules due to more and more provinces including TCM granules in medical insurance in the future CEG (839) is to benefit from proposed personal income tax reduction Maintain BUY The proposed personal income tax reduction will be effective on 1st January 2019 and is likely to benefit CES which is a leading provider of private higher education service in China. Moreover, CES is also less affected by the Draft Amendments on the Implementation Rules for the Law for Promoting Private Education issued in August ENN Energy (2688) : Recent weakness offers a long-term buying opportunity at reasonable price; BUY Domestic production to reach nearly 6% CAGR and LNG imports to 13% CAGR from 2018 to 2025 We believe the valuation of ENN is reasonable long term investors BUY ($21.9) BUY ($6.70) BUY ($12.1) BUY ($79.4) 26/11/2018 China Suntian Green Energy (956) China Suntian Green Energy (956): Upward revision on market earnings consensus is poised Maintain Buy on undemanding valuation 9M18 NP has already accounted for 75.8% of consensus estimate vs 63.3% of net profit last year We expect an upward revision on Suntien s earnings consensus in 2018 and 2019 after the 3Q18 results BUY ($2.62) 27/11/2018 Galaxy Entertainment (27) Share price broke through a technical resistance - Maintain BUY Galaxy Entertainment (27) Share price broke through a technical resistance at $47.0. Macau s gaming revenue increased by 17.5% yoy in the first eight months of 2018 but only 2.8% yoy in September and 2.6% yoy in October We believe the expectation for a low-single digit growth in Macau s gaming revenue in 2019 has been priced in by investors BUY ($57.9)

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