Morning Express 31 May 2018

Transcription

1 BOCOM Int l Research 31 May 2018 Focus of the Day Momo Inc MOMO US 1Q18 results beat on higher ARPU Rating: Buy CP: US$ TP: US$ Upside: +23% Gigi Zhou zhe.zhou@bocomgroup.com 1Q18 revenue/net profit beat consensus by 9%/34%. MAU was in line with our expectation at 103.3m, up 21% YoY, driven by channel marketing and improving user retention rate. Live broadcasting revenue remained strong, up 75% YoY despite CNY impact, underpinned by 7% YoY growth in paying users and 46% YoY ARPU expansion (in RMB). VAS revenue was also driven by 23% QoQ ARPU growth. Tantan will be consolidated from Jun 2018 and we expect it to contribute 2% of revenue in Given higher-than-expected ARPU of live broadcasting and growing user stickiness and activity, we lift 2018/19E revenue by 12%/15% and EPS by 8%/16%. Considering increased incentive plan with talent agency, marketing for Momo/Tantan and R&D for new products from 2Q18, we expect 2018E non- GAAP NPM to drop 3ppts YoY. Yet, we think these initiatives would bring higher revenue longer term. We lift TP to US$55.00, implying 23x/17x 2018/19E PE. Maintain Buy. Alibaba Group BABA US Alibaba/Cainiao lead investment in ZTO to enhance Rating: Buy logistics efficiency of Cainiao Connie Gu, CPA connie.gu@bocomgroup.com Alibaba and Cainiao acquired a 10% stake in ZTO, with Alibaba gaining one seat in the board of directors. The three parties will collaborate to increase cooperation in: (1) first- and last-mile pickup and delivery; (2) warehouse management; (3) international logistics; (4) provision of smart warehouse and logistics solution via the use of big data. In our view, the deal helps fuel synergies within Cainiao s logistics network and improve overall logistics efficiency. Global Stock Indices Close 1D % YTD % HSI 30, H shares 11, SH A 3, SH B SZ A 1, SZ B 1, DJIA 24, S&P 500 2, Nasdaq 7, FTSE 7, CAC 5, DAX 12, Key Commodity/Forex Indicators Close 3M % YTD % Brent Gold 1, Silver Copper 6, JPY GBP EUR bps change 3M 6M HIBOR US 10yr yield HSI Technical HSI 30,057 50D MA 30, D MA 29,704 14D RSI 41 Short sell (HK$ m) 16,026 Hao Hong, CFA Head of Research hao.hong@bocomgroup.com Alibaba now has shareholdings in three logistics companies. This will help further integrate its logistics data, strengthen its delivery services, enhance its competitiveness in offline businesses, and further meet the needs for instant delivery, including same-city, 2-hour and same-day delivery services. Cainiao currently focuses on warehouse service with an expected 5% contribution to Alibaba's total revenue in The latest investment involves less than 10% shareholdings, and should have little impact on Alibaba s P&L. Maintain Buy on Alibaba and TP of US$220. Analyst certifications, disclosures and disclaimer at the back forms part of this report and must be read. Download our reports from Bloomberg: BOCM or

2 Environmental Sector Monthly Insights from May 2018 Rating: Market Perform Wallace Cheng The National Environmental Protection Conference has raised environmental protection to a more prominent level, in our view. We expect the government s new targets to become a long-term catalyst for the environmental sector. The Ministry of Ecology and Environment (MEE) has recently released the Notice for Prohibiting Illegal Transfer and Disposal of the Solid Waste and Strengthening the Supervision for Whole Process of Hazardous Waste Treatment (the Notice). HK-listed environmental plays rallied in May after the National Environmental Protection Conference, with +4% MoM return on average. Some investors may turn more bullish toward the sector on potential acceleration in environmental project launches in near term. Yet, we suggest investors stay focused on the current project pipelines of environmental plays. We maintain Buy on CEG (1257 HK) and Canvest (1381 HK) given their strong project pipelines. Renewable Energy Sector Weekly As of 30 May 2018 Rating: Market Perform Louis Sun louis.sun@bocomgroup.com Key news: The National Energy Administration (NEA) has introduced a new wind power policy to allocate wind power projects and determine on-grid tariffs entirely through market competition. The 2018 SNEC was held and it is widely expected that China's PV on-grid tariff parity will be implemented soon. Besides, PV product prices have fallen more sharply over the past week. Investment opportunities: Prices of wind power plays have swung recently due to the competitive project allocation policy. However, in our view, this policy will have minimal impact on the earnings of wind power companies in the short term, while it will favor market leaders in the long run. We remain positive on the wind power sector, and maintain Buy on Huadian Fuxin (816 HK), Datang Renewable (1798 HK), Longyuan Power (916 HK) and Huaneng Renewables (958 HK). Download our reports from Bloomberg: BOCM or 2

3 Economic data releases for this week US Date Event Survey Prior 30-May MBA mortgage applications (%) May Initial jobless claims (k) Jun Change in Non-farm payrolls(k) Jun Change in Private payrolls(k) Jun Unemployment rate (%) Economic data releases for this week China Date Event Survey Prior 31-May Manufacturing PMI BOCOM Research latest reports Data Report Analyst 30 May MOMO (MOMO US) - 1Q18 results beat on higher ARPU, Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy) 30 May Healthcare Sector Weekly - As of 29 May 2018 Lilian Wan, Kent Lin 30 May Hang Lung Properties (101 HK) - Limited NAV enhancement from new project Carmen Wong, Alfred Lau, CFA, FRM 29 May Transportation & Infrastructure Sector Weekly - As of 25 May 2018 Geoffrey Cheng, CFA, Fay Zhou, Luya You, Maggie Wang 29 May China Property Sector - Takeaways from CRIC Real Estate Summit Philip Tse, CFA, FRM, Alfred Lau, CFA, FRM 29 May Cheetah Mobile (CMCM US) - Shareholder meeting takeaways: smart devices to draw customers; voice as gateway to new era Sun Mengqi (Brandy), Gu Xinyu (Connie), CPA, 28 May Tencent (700 HK) - Positive on LT monetization of survival games; further upside in valuation Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy), 28 May Internet Sector Weekly - As of 25 May 2018 Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy), 28 May Wind Power Sector - Competitive project allocation has little short-term earnings impact, favors market leaders in long run 25 May Xiaomi Inc.- 1Q18 smartphone shipment surge to underpin core IoT and internet services strategies Louis Sun Gu Xinyu (Connie), CPA, Sun Mengqi (Brandy), 25 May Property Sector Weekly - As of 24 May 2018 Carmen Wong, Alfred Lau, CFA, FRM, Philip Tse CFA, FRM 25 May 58.com (WUBA US) - Bottom-line beat by 48%; housing better-than-expected Sun Mengqi (Brandy), Gu Xinyu (Connie), CPA, 25 May Cathay Pacific Airways (293 HK) - Prudence pays off amidst surging oil price Geoffrey Cheng, CFA 25 May Lenovo (992 HK) - Earnings stabilizing; upgrade to Neutral Chris Yim, Xinhe Deng 24 May Renewable Energy Sector Weekly - As of 23 May 2018 Louis Sun, Bob Wen 24 May Banking Sector - Lower >1M market rates, better NIM in 2Q18 Jaclyn Wang, Hannah Han 23 May Kingsoft Corp (3888 HK) - 1Q18 in line; JX III launch in late 3Q18 Sun Mengqi (Brandy), Gu Xinyu (Connie), CPA, 23 May Transportation & Infrastructure Sector Weekly - As of 18 May 2018 Geoffrey Cheng, CFA, Fay Zhou, Luya You, Maggie Wang 23 May Healthcare Sector Weekly - As of 22 May 2018 Lilian Wan, Kent Lin 23 May Automobile Sector - Imported car tariff cut to 15%, in line Angus Chan Source: BOCOM Int l Download our reports from Bloomberg: BOCM or 3

4 HSI constituents Company Stock Current Mkt 5D YTD 52-week P/E Yield P/B name code price cap chg chg High Low E 2019E 2018E 2018E (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 , CK ASSET HOLDING 1113 HK , HENDERSON LAND D 12 HK , AIA 1299 HK , ICBC-H 1398 HK ,411, CHINA MERCHANTS 144 HK , WANT WANT CHINA 151 HK , N/A SHK PPT 16 HK , NEW WORLD DEV 17 HK , GEELY AUTOMOBILE 175 HK , SWIRE PACIFIC-A 19 HK , SANDS CHINA LTD 1928 HK , WHARF REAL ESTAT 1997 HK , N/A CLP HOLDINGS 2 HK , COUNTRY GARDEN 2007 HK , AAC TECHNOLOGIES 2018 HK , BANK EAST ASIA 23 HK , PING AN 2318 HK ,371, MENGNIU DAIRY 2319 HK , SUNNY OPTICAL 2382 HK , BOC HONG KONG HO 2388 HK , CHINA LIFE-H 2628 HK , CITIC 267 HK , GALAXY ENTERTAIN 27 HK , WH GROUP LTD 288 HK , HONG KG CHINA GS 3 HK , BANKCOMM-H 3328 HK , SINOPEC CORP-H 386 HK , HKEX 388 HK , BANK OF CHINA-H 3988 HK ,307, HSBC HOLDINGS PL 5 HK ,503, POWER ASSETS 6 HK , MTR CORP 66 HK , CHINA OVERSEAS 688 HK , TENCENT 700 HK ,753, CHINA UNICOM 762 HK , LINK REIT 823 HK , SINO LAND 83 HK , CHINA RES POWER 836 HK , PETROCHINA-H 857 HK ,677, CNOOC 883 HK , CCB-H 939 HK ,962, CHINA MOBILE 941 HK ,436, LENOVO GROUP 992 HK , N/A HANG SENG INDEX 30,057 19,750, ,484 25, Download our reports from Bloomberg: BOCM or 4

5 HSCEI constituents Company Stock Closing Mkt 5D YTD 52-week P/E Yield P/B name code price cap chg chg High Low E 2019E 2018E 2018E (HK$) (HK$ m) (%) (%) (HK$) (HK$) (x) (x) (x) (%) (x) HENGAN INTL 1044 HK , CHINA SHENHUA-H 1088 HK , CSPC PHARMACEUTI 1093 HK , SINOPHARM-H 1099 HK , CHINA RES LAND 1109 HK , BYD CO LTD-H 1211 HK , ABC-H 1288 HK ,401, NEW CHINA LIFE-H 1336 HK , PICC GROUP-H 1339 HK , CHINA CINDA-H 1359 HK , ICBC-H 1398 HK ,411, 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 , CHINA MINSHENG-H 1988 HK , CHINA VANKE-H 2202 HK , GUANGZHOU AUTO-H 2238 HK , SHENZHOU INTL GP 2313 HK , PING AN 2318 HK ,371, PICC P&C-H 2328 HK , GREAT WALL MOT-H 2333 HK , CHINA PACIFIC-H 2601 HK , CHINA LIFE-H 2628 HK , CITIC 267 HK , GUANGDONG INVEST 270 HK , BANKCOMM-H 3328 HK , CHINA GAS HOLDIN 384 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 ,307, DONGFENG MOTOR-H 489 HK , CITIC SEC-H 6030 HK , ZHONGAN ONLINE-H 6060 HK , N/A N/A HAITONG SECURI-H 6837 HK , CGS-H 6881 HK , HUATAI SECURIT-H 6886 HK , TENCENT 700 HK ,753, CHINA TELECOM-H 728 HK , AIR CHINA LTD-H 753 HK , PETROCHINA-H 857 HK ,677, CNOOC 883 HK , HUANENG POWER-H 902 HK , CONCH CEMENT-H 914 HK , CCB-H 939 HK ,962, CHINA MOBILE 941 HK ,436, CITIC BANK-H 998 HK , HANG SENG CHINA ENT INDX 11,769 12,646, ,963 10, Download our reports from Bloomberg: BOCM or 5

6 BOCOM International 10/F, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong Main: (852) Fax: (852) Rating System Analyst Stock Ratings: Buy: The stock's total return is expected to exceed that of the corresponding industry over the next 12 months. Neutral: The stock's total return is expected to be in line with that of the corresponding industry over the next 12 months. Sell: The stock's total return is expected to be below that of the corresponding industry over the next 12 months. Not-Rated: The analyst does not have conviction regarding the outlook of the stock's total return relative to that of the corresponding industry over the next 12 months. Analyst Industry Views: Outperform: The analyst expects the industry coverage universe to be attractive relative to the relevant broad market benchmark over the next 12 months. Market perform: The analyst expects the industry coverage universe to be in line with the relevant broad market benchmark over the next 12 months. Underperform: The analyst expects the industry coverage universe to be unattractive relative to the relevant broad market benchmark over the next 12 months. Broad market benchmark for Hong Kong is the Hang Seng Composite Index, for China A-shares is the MSCI China A Index, for US-listed Chinese companies is S&P US Listed China 50 (USD) Index. Download our reports from Bloomberg: BOCM or 6

7 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, Guotai Junan Securities Co., Ltd, Zhongyuan Bank Co., Ltd, Sichuan Energy Investment Development Co., Ltd, Light Year Holdings Limited and Analogue Holdings Limited within the preceding 12 months. 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