Neutral. Neutral SELL SELL

Transcription

1 Focus of the Day Sunny Optical (2382.HK) Lens shipment once again strong; Focusing on the longer-term outlook Chris YIM Last Closing: HK$64.6 Upside: +13% Target Price: HK$73.0 Handset lens was the bright spot in April, due to continued market share gains on increasing customer adoption. Handset lens set shipment grew 111% YoY to 44m units. Shipment in the first four months grew 86% YoY, ahead of guidance of 35% YoY. Vehicle lens sets remained solid, up 39% YoY to 2.5m units. Handset camera modules increased 9% YoY to 21m units (down 10% MoM). We believe there are still many growth drivers in the early stages as we reassess each of Sunny s key growth opportunities, with drivers such as 1) module mix improvement/dual-cam, 2) module industry consolidation and share gains, 3) handset lens mix/share gains and 4) margin expansion are still at early-to-mid stages of growth. Besides smartphones, we expect ADAS/autonomous driving, 3D sensing/ar/vr, and other applications such as drones/cctv/automation to be long-term drivers. Our new TP of HK$73 is based on 29x average of E P/E. China Longyuan (916.HK) Wind power generation saw more rapid growth in Apr 2017 Louis SUN louis.sun@bocomgroup.com Last Closing: HK$5.95 Upside: +16.8% Target Price: HK$6.95 The company s total power generation In Apr 2017 expanded by 19.7% YoY to bn kwh. In particular, wind power generation increased by 20.35% YoY to bn kwh, thermal power generation increased by 20.98% YoY to 821 mn kwh, while other renewable energy power generation declined by 25.38% YoY to 44 mn kwh. In the first four months of 2017, the total power generation increased by 14.14% YoY to bn kwh, among which wind power increased by 14.54%, thermal power increased by 14.39% while other renewable energy power generation declined by 8.84%. SELL SELL Neutral Neutral Stock Stock LT LT Indices Close 1d % Ytd % HSI 24, H Shares 10, SH A 3, SH B SZ A 1, SZ B 1, DJIA 20, S&P 500 2, Nasdaq 6, FTSE 7, CAC 5, DAX 12, Indicators Close 3m % Ytd % Brent Gold 1, Silver Copper 5, JPY GBP EURO bps change 3 m 6 m HIBOR US 10 yield HSI Technical HSI 24, d MA 24, d MA 23, d RSI 64 Short Sell (HK$m) 8,532 The YoY growth of wind power generation picked up significantly by nearly 19 ppts in Apr compared with Mar 2017, mainly attributable to the notable improvement of wind resources. In Apr, the company s overall wind curtailment rate dropped by approx. 6.6 ppts from the same period last year to approx. 11%. We expect May to be a more promising month for wind power generation. Download our reports from Bloomberg: BOCM enter

2 In anticipation of a decline in earnings from the thermal power generation business, we revised our estimates of the company s FY17/18 EPS from RMB0.521/RMB0.601 to RMB0.465/RMB0.573, and cut TP to RMB6.95 upon its quarterly announcement by the end of Apr. We maintain on the counter. The TP corresponds to FY17/1813.3x/10.8x PE. Hang Seng Index (1 year) 26,000 24,000 22,000 20,000 18,000 Uni-President China (220.HK) 1Q17 revenue under pressure as expected; we remain cautious Summer WANG, CFA summer.wang@bocomgroup.com Last Closing: HK$5.31 Downside:21% Target Price: HK$4.20 What is new? Uni-President China s 1Q17 net profit fell by 60% YoY to RMB174m, mainly attributable to a slump in beverage revenue, gross margin contraction (lower utilization rates and higher raw material costs), and higher effective tax rate. Our comments: We anticipate prolonged revenue softness for UPC in the following quarters. In a year without striking new products, we believe UPC s earnings will be derived from expense control rather than top-line generation. However, in our view, SG&A savings like A&P cut should by no means be sustainable for a FMCG player. We fine-tune our earnings forecast and maintain our TP of HK$4.20 on 19.8x 2017E P/E (10% discount to its LT-average). Trading idea: UPC s share price has been highly correlated to successful new product launches. Therefore, we see limited stock catalyst in a defensive 2017, and remain Neutral on the stock which is trading at 25.1x 2017E P/E. Upside risks to our call lie in margin beat (on more aggressive savings in SG&A and moderating raw material prices ahead). Healthcare Sector A-share healthcare sector weekly updates David LI David.LI@bocomgroup.com A-share healthcare stocks fell 2.58% during the reporting period, underperforming the broad market. Chemical preparations suffered the slimmest loss, down 1.23%. Bulk medicine/tcm/healthcare commerce/medical machinery/medical services dropped 3.11%/2.70%/2.54%/2.54%/2.90% respectively. Biological products were the biggest loser, off 3.48%. SELL UP Neutral Stock MP LT OP Source: Company data, Bloomberg HS China Enterprise Index (1 year) 11,000 10,000 9,000 8,000 7,000 Source: Company data, Bloomberg Shanghai A-shares (1 year) 3,600 3,400 3,200 3,000 2,800 Source: Company data, Bloomberg Shenzhen A-shares (1 year) 2,300 2,100 1,900 1,700 Source: Company data, Bloomberg Download our reports from Bloomberg: BOCM enter 2

3 Market Review Hong Kong stocks rallied on Tuesday, with the Hang Seng Index closing up 311 points, or 1.3%, at 24,889. Power companies surged following news reports that China may restructure the country s thermal and nuclear giants into three groups. CR Power (836.HK) jumped 5.5% as the top blue-chip performer. China Datang Power (991.HK) soared 15.6%. Huadian Power International (902.HK) leapt 7.3%. Longyuan (916.HK) rose 2.8%. Airlines advanced. CEA (670.HK) gained 4.3%. Air China (753.HK) rose 3.9%. CSA (1055.HK) rose 3.8%. Building materials names rose. CR Cement (1313.HK), CNBM (3323.HK) and BBMG (2009.HK) increased 5.1%, 4.8% and 4.7%, respectively. Mainland developers gained. Vanke (1109.HK) rose 2.6%. CR Land (1109.HK) and COLI (688.HK) climbed 2.5% and 1.6%, respectively. Sunac China (1918.HK) jumped 6.1%. Shimao (813.HK) rose 1.7%. Want Want (151.HK) dropped 1.5% as the only blue-chip that finished lower. US stocks fell. The S&P 500 dropped 2.46 points, or 0.1%, to close at 2, The DJIA lost points, or 0.2%, to end at 20, European stocks rose. Stoxx Europe 600 climbed 0.45% to close at points. News Reaction CSRC to toughen regulations on, instead of removing, the asset management products of securities brokers. According to sources familiar with the matter, the China Securities Regulatory Commission on 8 May met with the asset management departments of Chinese securities brokers to express its plan to strengthen regulations on, instead of removing, the asset management products of securities brokers. The authority has not set out a timeline for the revamping work, but assures that all CSRC-approved products will not be removed. Comparable public funds and long-term asset management products of securities firms will remain eligible for issuance. SAFE said China has no intention to sharpen competitive edges through RMB depreciation. Pan Gongsheng, Administrator of the State Administration of Foreign Exchange (SAFE), stated in an article that China has no intention to sharpen its competitive edges through RMB depreciation. The purpose of the PBOC to provide FX liquidity is to prevent exchange rates from excessive corrections and the occurrence of "herd behavior". China will open up the capital market in a progressive manner and strengthen its FX system in order to enhance the flexibility of exchange rates. MSCI clarifies that it has no plan to change MSCI China A International Index methodology. MSCI said it has no plan to change the current index methodology of MSCI China A International Index. MSCI earlier said it will consider narrowing the scope of MSCI China A Index. Currently, MSCI has two indices following China's A shares, being MSCI China A Index and MSCI China A International Index. CASS expects policies on major cities to continue tightening, and growth of new home prices to slow down this year. The Chinese Academy of Social Sciences forecasts in its Blue Book of China s Real Estate Sector that the growth of new home prices in the 70 large and medium Chinese cities would slow down this year. Major cities will see more significant declines on toughened policies. China April passenger vehicles sales down 13.7% MoM to million units. China Passenger Car Association (CPCA) reported that in April, China's broad-sense passenger vehicles sales were million units, down 1.7% YoY and 13.7% MoM. Total sales of passenger vehicles in the first four months of 2017 amounted to million units, down 1.4% YoY. Download our reports from Bloomberg: BOCM enter 3

4 Economic releases for this week - USA Date Time Event Survey Prior 10-May MBA mortgage applications % 10-May Import price index(mom) 0.20% -0.20% 11-May PPI ex food & energy (MoM) 0.20% 0.00% 11-May Initial jobless claims (k) May CPI ex food & energy (MoM) 0.20% -0.10% 12-May CPI (MoM) 2.30% 2.40% Economic releases for this week - China Date Time Event Survey Prior 8-May Trade balance (CNY$ bn) May PPI (YoY) 6.70% 7.60% 10-May Money Supply - M2(YoY) 10.80% 10.60% 10-May New Yuan Loans(bn) , BOCOM Research Latest Reports Date Report Analyst 9 May BOCOM Research - Internet Sector - Live-streaming sector initiation: Traffic, content and operation are crucial; recommend Momo Inc and YY Inc 9 May Container Shipping Sector - Weekly commentary - SCFI retreated as demand was not strong enough to sustain higher freight rate Internet Innovation Center: Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy), Zhou Zhe (Gigi), Shan Ying Geoffrey Cheng, CFA 9 May JD.com (JD US) Expect margin beat to continue; Raise TP again Summer Wang, CFA 9 May Great Wall Motor (2333.HK) - April sales volume decreased 8.1% YoY, still in the clearance of old models Angus Chan 9 May Q Tech (1478.HK) tracking largely as expected; Look for 2H17 dual-cam ramp-up Chris Yim 9 May Shineway Pharm (2877.HK) - Weak sales continued in the first quarter; maintain Sell David Li 8 May Insurance Sector Tightened regulation to benefit the large listed life insurers Li Wan CFA, FRM, Shanshan Li, CFA, Yufan Zhang 8 May Zhou Hei Ya (1458.HK) Key takeaways from reverse roadshow; Zhou Hei Ya Crayfish launched Summer Wang, CFA 8 May Insurance Sector Internet Weekly (May 1-5) Internet Innovation Center: Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy), Zhou Zhe (Gigi), Shan Ying 8 May Liquidity Liquidity tightened in early May; the probability of a rate hike by the Fed in Jun increased-2017/05/05 Karen Tan 8 May Cement sector National cement prices saw some slight gains amid fluctuations last week Angus Chan, Kelvin Xie 8 May Geely (175.HK) April sales volume rose 94.5% YoY Angus Chan 5 May Internet Sector Off-line mobile consumption to see rapid growth on expansion of merchant coverage and consumption levels. In the next three years, the number of consumption per person will increase from once every three days to thrice a day, in our view Internet Innovation Center: Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy), Zhou Zhe (Gigi), Shan Ying 5 May Transportation Sector Weekly transportation news wrap Geoffrey Cheng, CFA, Fay Zhou 5 May Alibaba (BABA.US) 4QFY17 results preview: We project stable revenue growth and adjust profit forecasts Internet Innovation Center: Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy), Zhou Zhe (Gigi), Shan Ying 4 May Renewable Energy Sector Gansu announced implementation plan for renewables consumption; India to install ~10GW of solar capacity in 2017; PV product prices continued to recover Louis Sun 4 May Healthcare Sector A-share healthcare sector weekly updates David Li 4 May Environmental Sector onthly Insights: Development in Xiong an district continues to be a positive catalyst to the environmental sector Wallace Cheng 4 May CEB (6818.HK) The private placement is expected to lift FY17 core tier 1 CAR by approx. 1 ppt Shanshan Li, CFA, Li Wan CFA, FRM, Hannah Han 4 May Datang Renewables (1798.HK) Sound financial performance in 1Q17, but operation metrics missed Louis Sun Source: Company data, BOCOM International Download our reports from Bloomberg: BOCM enter 4

5 Hang Seng Index Constituents Company BBG Share Mkt 5 d Ytd week PE Yield P/B name code price cap chg chg Hi Lo 2016A 2017E 2018E 2017E 2017E (HK$) (HK$m) (%) (%) (HK$) (HK$) (X) (X) (X) (%) (X) CKH HOLDINGS 1 HK , HANG LUNG PPT 101 HK , CKI HOLDINGS 1038 HK , HENGAN INTL 1044 HK , CHINA SHENHUA-H 1088 HK , HANG SENG BANK 11 HK , CHINA RES LAND 1109 HK , CHEUNG KONG PROP 1113 HK , HENDERSON LAND D 12 HK , AIA 1299 HK , KUNLUN ENERGY 135 HK , ICBC-H 1398 HK ,917, CHINA MERCHANTS 144 HK , WANT WANT CHINA 151 HK , SHK PPT 16 HK , NEW WORLD DEV 17 HK , GEELY AUTOMOBILE 175 HK , BELLE INTL 1880 HK , SWIRE PACIFIC-A 19 HK , SANDS CHINA LTD 1928 HK , CLP HOLDINGS 2 HK , AAC TECHNOLOGIES 2018 HK , BANK EAST ASIA 23 HK , PING AN 2318 HK , MENGNIU DAIRY 2319 HK , N/A BOC HONG KONG HO 2388 HK , CHINA LIFE-H 2628 HK , CITIC 267 HK , GALAXY ENTERTAIN 27 HK , CATHAY PAC AIR 293 HK , N/A N/A HONG KG CHINA GS 3 HK , BANKCOMM-H 3328 HK , SINOPEC CORP-H 386 HK , HKEX 388 HK , BANK OF CHINA-H 3988 HK ,160, WHARF HLDG 4 HK , HSBC HOLDINGS PL 5 HK ,346, POWER ASSETS 6 HK , MTR CORP 66 HK , CHINA OVERSEAS 688 HK , TENCENT 700 HK ,376, CHINA UNICOM 762 HK , LINK REIT 823 HK , SINO LAND 83 HK , CHINA RES POWER 836 HK , PETROCHINA-H 857 HK ,479, CNOOC 883 HK , CCB-H 939 HK ,571, CHINA MOBILE 941 HK ,736, LENOVO GROUP 992 HK , HANG SENG INDEX 24,889 15,766, ,890 19, Download our reports from Bloomberg: BOCM enter 5

6 China Ent Index Constituents Company BBG Share Mkt 5 d Ytd week PE Yield P/B name code price cap chg chg Hi Lo 2016A 2017E 2018E 2017E 2017E (HK$) (HK$m) (%) (%) (HK$) (HK$) (X) (X) (X) (%) (X) CHINA SHENHUA-H 1088 HK , SINOPHARM-H 1099 HK , CHINA RAIL CN-H 1186 HK , BYD CO LTD-H 1211 HK , ABC-H 1288 HK ,223, NEW CHINA LIFE-H 1336 HK , PICC GROUP-H 1339 HK , CHINA CINDA-H 1359 HK , ICBC-H 1398 HK ,917, POSTAL SAVINGS-H 1658 HK , CRRC CORP LTD -H 1766 HK , GF SECURITIES-H 1776 HK , CHINA COM CONS-H 1800 HK , CGN POWER-H 1816 HK , MINSHENG BANK-H 1988 HK , CHINA VANKE-H 2202 HK , PING AN 2318 HK , PICC P&C-H 2328 HK , GREAT WALL MOT-H 2333 HK , CHINA PACIFIC-H 2601 HK , CHINA LIFE-H 2628 HK , BANKCOMM-H 3328 HK , SINOPEC CORP-H 386 HK , ZHUZHOU CRRC T-H 3898 HK , CHINA RAIL GR-H 390 HK , CM BANK-H 3968 HK , BANK OF CHINA-H 3988 HK ,160, DONGFENG MOTOR-H 489 HK , CITIC SEC-H 6030 HK , HAITONG SECURI-H 6837 HK , CGS-H 6881 HK , HUATAI SECURIT-H 6886 HK , CHINA TELECOM-H 728 HK , AIR CHINA LTD-H 753 HK , PETROCHINA-H 857 HK ,479, HUANENG POWER-H 902 HK , ANHUI CONCH-H 914 HK , CHINA LONGYUAN-H 916 HK , CCB-H 939 HK ,571, CITIC BANK-H 998 HK , HANG SENG CHINA ENT INDX 10,129 4,623, , , Download our reports from Bloomberg: BOCM enter 6

7 BOCOM International Unit 1701, 17/F, Low Block, Grand Millennium Plaza, 181 Queen s Road Central, Hong Kong Main: Fax: Rating System Company Rating Buy: Expect more than 20% upside in 12 months LT Buy: Expect more than 20% upside but longer than 12 months Neutral: Expect low volatility Sell: Expect more than 20% downside in 12 months Sector Rating Outperform ( OP ): Expect more than 10% upside in 12 months Market perform ( MP ): Expect low volatility Underperform ( UP ): Expect more than 10% downside in 12 months Research Team Head of Deputy Head of Hao HONG, CFA (852) hao.hong Geoffrey CHENG, CFA (852) geoffrey.cheng Macro-Strategy Internet Hao HONG, CFA (852) hao.hong Yuan MA, PhD (86) yuan.ma Karen TAN (852) karen.tan Connie GU, CPA (86) conniegu Grace HUA, CFA (852) Grace.hua Mengqi SUN (86) mengqi.sun Zhe ZHOU (86) zhe.zhou Banks/ Non-Bank Financials Property Shanshan LI, CFA (86) lishanshan Alfred LAU, CFA, FRM (852) alfred.lau Li WAN, CFA, FRM (86) wanli Philip TSE, CFA, FRM (852) philip.tse Hannah HAN (852) hannah.han Carmen WONG (852) carmen.wong Jennifer ZHANG (852) yufan.zhang Consumer Renewable Energy Summer WANG, CFA (852) summer.wang Louis SUN (86) louis.sun Oliver LIU (852) oliver.liu Environmental Services Technology Wallace CHENG (852) wallace.cheng Chris YIM (852) christopher.yim Gaming & Leisure Transportation & Industrials Alfred LAU, CFA, FRM (852) alfred.lau Geoffrey CHENG, CFA (852) geoffrey.cheng Fay ZHOU (852) fay.zhou Healthcare Automobile & Defense David LI (852) david.li Angus CHAN (852) angus.chan Download our reports from Bloomberg: BOCM enter 7

8 Analyst Certification The authors of this report, hereby declare that: (i) all of the views expressed in this report accurately reflect their personal views about any and all of the subject securities or issuers; and (ii) no part of any of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report; (iii) no insider information/ non-public price-sensitive information in relation to the subject securities or issuers which may influence the recommendations were being received by the authors. The authors of this report further confirm that (i) neither they nor their respective associates (as defined in the Code of Conduct issued by the Hong Kong Securities and Futures Commission) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of the report; (ii)) neither they nor their respective associates serve as an officer of any of the Hong Kong listed companies covered in this report; and (iii) neither they nor their respective associates have any financial interests in the stock(s) covered in this report except for one coverage analyst who is holding shares of Shimao Property Holdings Limited. Disclosure of relevant business relationships BOCOM International Securities Limited, and/or its associated companies, has investment banking relationship with Bank of Communications, Guolian Securities Co. Ltd., Bank of Zhengzhou Co. Ltd., Human Health Holdings Limited, COFCO Meat Holdings Limited, Hebei Yichen Industrial Group Corporation Limited, China Aircraft Leasing Group Holdings Limited, Orient Securities Company Limited, Wuxi Construction and Development Investment Co., China Development Bank Financial Leasing Co., Ltd, Phoenix Healthcare Group,Co. Ltd, Everbright Securities Company Limited, China First Capital Group Limited, Jiayuan International Group Limited, Luzhou Xinglu Water (Group) Co., Ltd., Postal Savings Bank of China Co., Ltd., China Merchants Securities Co., Limited, Shandong International Trust Co., Ltd, Guangdong Kanghua Healthcare Co., Ltd, CSC Financial Co., Ltd, BOCOM International Holdings Company Limited, HPC Holdings Limited and and Guotai Junan Securities Co., Ltd within the preceding 12 months. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Orient Securities Company Limited. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Everbright Securities Company Limited. BOCOM International Prosperity Investment Limited currently holds more than 1% of the equity securities of China YuHua Education Corporation Ltd. Disclaimer By accepting this report (which includes any attachment hereto), the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth below and agrees to be bound by the limitations contained herein. Any failure to comply with these limitations may constitute a violation of law. This report is strictly confidential and is for private circulation only to clients of BOCOM International Securities Ltd. This report is being supplied to you strictly on the basis that it will remain confidential. No part of this report may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of BOCOM International Securities Ltd. BOCOM International Securities Ltd, its affiliates and related companies, their directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this report or any securities related thereto and may from time to time add to or dispose of, or may be interested in, any such securities. Further, BOCOM International Securities Ltd, its affiliates and its related companies may do and seek to do business with the company(ies) covered in this report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform investment banking, advisory, underwriting, financing or other services for or relating to such company(ies) as well as solicit such investment, advisory, financing or other services from any entity mentioned in this report. In reviewing this report, an investor should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. The information contained in this report is prepared from data and sources believed to be correct and reliable at the time of issue of this report. This report does not purport to contain all the information that a prospective investor may require and may be subject to late delivery, interruption and interception. BOCOM International Securities Ltd does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report and accordingly, neither BOCOM International Securities Ltd nor any of its affiliates nor its related persons shall be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof. This report is general in nature and has been prepared for information purposes only. It is intended for circulation amongst BOCOM International Securities Ltd s clients generally and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information and opinions in this report are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments thereof. The views, recommendations, advice and opinions in this report may not necessarily reflect those of BOCOM International Securities Ltd or any of its affiliates, and are subject to change without notice. BOCOM International Securities Ltd has no obligation to update its opinion or the information in this report. Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transaction in respect of the securities of company(ies) covered in this report. The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories of investors. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to any law, regulation, rule or other registration or licensing requirement. BOCOM International Securities Ltd is a wholly owned subsidiary of Bank of Communications Co Ltd. Download our reports from Bloomberg: BOCM enter 8