Hang Seng Index Performance Major Market Indicators % Change Hong Kong Close 1-Day 1-Mth 6-Mth 12-Mth Oversea Commodities and FX Market Overview

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1 4 September 2018 Hang Seng Index Performance Source: Bloomberg Major Market Indicators % Change Hong Kong Close 1-Day 1-Mth 6-Mth 12-Mth Hang Seng Index 27, % 0.1% -9.4% -0.1% HSCEI (H-Shares) 10, % 1.1% -11.4% -3.3% Mkt T/O ($ Mn) 78, % -10.6% -37.4% -21.5% Oversea DJIA 25, % 2.0% 5.8% 18.1% NASDAQ 8, % 3.8% 11.7% 26.0% Shanghai SE Composite 2, % -0.7% -16.4% -19.5% Shenzhen Component 8, % -1.7% -22.1% -22.9% Commodities and FX Crude Oil Futures (US$) % 2.2% 14.3% 48.0% Gold Futures (US$) 1, % -1.4% -9.2% -9.5% Baltic Dry Index 1, % -10.9% 30.8% 33.0% USD / Euro % 0.4% -5.9% -2.3% Yen / USD % 0.4% -4.3% -1.1% CNH / USD % 0.5% -7.4% -4.6% Market Overview Hang Seng Index closed down 0.6% at 27,712. HSCEI lost 0.6%. Heavily weighted Tencent (700) and HSBC (5) lost 2.1% and 0.7% respectively. AIA Group (1299) had little change. Automobile, airline, securities, gaming, PRC property, technology and railway related stocks underperformed the market. Great Wall Motor (2333) and Guangzhou Automobile (2238) tumbled 6.1%-6.6%, making them the worst performing stocks in HSCEI. Air China (753) retreated 3.1%. Except for Sunac China (1918) surging 1.0%, other nine largest Chinese property developers had an average decrease of 2.8% among which Shimao Property (813) and China Vanke (2202) fell 7.1% and 4.2% respectively. Sands China (1928) and Galaxy Entertainment (27) dropped 1.5%-2.5%. Five securities stocks in HSCEI had an average decrease of 1.8%, among which HTSC (6886) cut 3.6%. Sunny Optical (2382) and AAC Technologies (2018) lost 0.8%-1.5%. CCCC (1800) and China Railway Group (390) declined 1.0%-1.2%. Energy stocks ended lower. PetroChina (857) and China Shenhua (1088) lost 1.5%-2.1%. Consumption, HK property, banking, insurance and telecom stocks were mixed. Shenzhou Int l (2313) slid 0.5%. WH Group (288) jumped 2.7% making it the best performing stock in HSI. Sino Land (83) decreased 1.5% while Swire Pacific (19) lifted 0.8%. Hang Seng Bank (11) declined 1.1% whilst Bank of East Asia (23) rose 0.5%. Postal Savings Bank (1658) increased 1.3%. ICBC (1398), CCB (939) and BOC (3988) fell 0.2%-0.3%. PICC Group (1339) lost 1.5% while Zhongan Online (6060) advanced 1.0%. China Unicom (762) cut 0.9% while China Mobile (941) and China Telecom (728) elevated 1.2%-1.4%. We expect Hang Seng Index to move between 26,500 and 28,500 in this month but the risk is on the downside. We expect Hang Seng Index to move between 26,500 and 28,500 in this month but the risk is on the downside

2 Market in Focus CGR MKT Cap ($Bn) 78.8 Bloomberg Ticker 1193 HK Equity 52-week High/Low ($) Rating BUY Free Float (%) 36.0% Target Price $ M Avg Turnover ($, Mn) China Resources Gas (1193): Better-than-expected interim results, upgrade to BUY 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%. Fig1: 1 Year Share Price 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 abovementioned three sectors grew approximately 54.6%, 11.3% and 36.2% respectively to $2,605mn, $1,728mn and 538mn. 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 $4.48bn in 2018 and $5.05bn in 2019, up approximately 22.7% and 12.7% respectively. EPS is expected to reach $2.03 in 2018 and $2.29 in Traded at 2018 P/E of 17.4x and 2019 P/E 15.5x, we believe the valuation of CRG is fair to investors. We maintain our BUY rating on CRG with 12-month target price of $40.9. Our target PE multiple is based on 2019 P/E of 18.0x or equivalent to 0.5x standard deviation above average forward P/E of 16.7x from 2011 to Source: Bloomberg, Mason Securities

3 Technical Ideas Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss CSCI 3311 HK Equity BUY $8.10 $8.91 $11.59 $7.70 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 51% 6.5X 0.95X 41% Technical Indicator SMA RSI (14) 35.6 SMA BB (Upper) 9.49 SMA BB (Lower) 7.84 Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss China Mobile 941 HK Equity BUY $74.65 $82.12 $85.49 $70.92 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity 1, % 1,125 1,155 99% 97% 11.5X 1.28X -47% Technical Indicator SMA RSI (14) 58.9 SMA BB (Upper) SMA BB (Lower) Source: Bloomberg, Mason Securities

4 Recent Recommendations Date of Issue Stock Pick Recommendation Highlights Rating (TP) China Resources Gas (1193): Better-than-expected interim results, upgrade to BUY 21/8/2018 CRG (1193) 22/8/2018 Shimao Property (813) 23/8/2018 China Gas (384) China Overseas 24/8/2018 Property (2669) 27/8/2018 CTCM (570) 28/8/2018 Suntian Green Energy (956) 29/8/2018 Galaxy Entertainment (27) 30/8/2018 CEG (1257) 31/8/2018 Anta Sports (2020) 1/9/2018 COG (581) CRG reported better-than-expected interim results We continue to take a long-term positive view on the CRG given the industry s long-term and stable growth Interim results are likely to beat market expectations - Maintain BUY on Shimao Property (813) Recent outperformance is mainly driven by robust contracted sales, aggressive share buyback and expectation of strong upcoming interim results The counter is presently trading at 2018 P/B of 1.0x compared with an average 2018 P/B of 1.5x for the remaining nine largest Chinese property stocks China Gas Holdings (384): Buy a good company at a fair price, recommend BUY After the recent share price pullback, we believe the valuation goes back to a reasonable level We continue to take a positive view on the gas operator given the industry s long-term and stable growth Interim results in-line with market expectation Maintain BUY China Overseas Property (2669) COPH reported in-line interim results We are optimistic about the growth prospects of COPH given strong support from parent company and ongoing industry consolidation China Traditional Chinese Medicine (570): Better-than-expected interim results, Maintain BUY We maintain our bullish view on CTCM and believe it will benefit from 1) solid industry development; 2) channel expansion in high-to-low tier hospitals; 3) the increasing penetration rate of TCM granules due to consumption upgrade more and more provinces including TCM granules in medical insurance in the future Recent share price weakness offers a buying opportunity Maintain Buy Suntian Green Energy (956) We expect Suntien to report +30% yoy net profit growth in 1H18, mainly due to 22.1% yoy growth on power generation growth, low grid curtailment and 55% yoy growth on gas sales volume Traded at 2019 P/E of 5.63x and 2019 P/B of 0.73x with a ROE of >13%, valuation of Suntien is still undervalued in our view P/E and EV/EBITDA valuation below historical average - Maintain BUY Galaxy Entertainment (27) Recent underperformance is mainly due to concerns about a slowdown in Macau s gaming revenue which increased by 18.9% yoy in 1H18 but only 10.3% yoy in July We believe the opening of the Hong Kong-Zhuhai-Macau Bridge will improve earnings outlook for gamings stocks in the medium-to-long term China Everbright Greentech (1257): Solid 1H18 results, reiterate BUY We remain our bullish views on CEG given on promising industry growth, its strong project pipeline and supports from China Everbright International (257) We believe the relatively low gearing provides CEG sufficient rooms for future expansion Long term growth prospects remain promising - Maintain BUY Anta Sports (2020) Better than expected interim results Strong financial position provides room for further expansion through acquisition. We believe current valuation of Anta Sports is still attractive to long term investors China Oriental Group (581): Re-rating on sustainable profitability and upward revision of consensus earnings, Maintain BUY After half a year later, we still see the overall steel price and margin staying at a relatively high level which have proved our previous thoughts We expect an upward revision on COG earnings consensus in 2018 and 2019 after its strong interim results BUY ($40.9) BUY ($24.8) BUY ($31.2) BUY ($3.00) BUY ($8.20) BUY ($2.80) BUY ($63.5) BUY ($9.60) BUY ($48.0) BUY ($9.50)

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