We believe further upside for the Hang Seng Index is limited and recommend short-term investors to take profit. Hang Seng Index Performance

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1 17 th Jan, 2017 Hang Seng Index Performance Index Performance Abs chg % Change Hong Kong Close 1-Day 1-Day 1-Mth 3-Mth Hang Seng Index 22, HSCI 3, HSCCI (Red Chips) 3, HSCEI (H-Shares) 9, Mkt T/O ($ Mn) 56, Source: Bloomberg Market Outlook Eric Yuen - ericyuen@masonsec.com Hang Seng Index closed down 1.0% at 22,718. Market turnover was almost unchanged at $56.9 billion. Heavily weighted HSBC (5), Tencent (700) and China Mobile (941) shrank 1.3%-1.5%. Nine local property stocks in Hang Seng Index cut an average 1.2% among which Hang Lung Properties (101) retreated 2.1%. Gaming operator Sands China (1928) and Galaxy Entertainment (27) slid 0.4%- 0.7%. Consumption stocks were mixed. China Mengniu Dairy (2319) tumbled 2.8% whilst Hengan Int l (1044) and Lenovo (992) added 0.6%-0.7%. Local banks were little changed. Cathay Pacific (293), the best performing index stock, jumped 3.0%. Power Assets (6), Cheung Kong Infrastructure (1038) and CK Property (1113) formed a JV to acquire $43.1bn utility assets in Australia. Power Assets (6) surged 2.8% due to a potential distribution of special dividend. Cheung Kong Infrastructure (1038) rose 1.0%. CK Property (1113) fell 1.3%. HSCEI declined 1.2% led by oil, insurance and securities companies. BYD Company (1211) was the worst performing HSCEI stock, down 3.8%. Banking, insurance and securities stocks in HSCEI dropped an average 1.0%, 1.8% and 1.8% respectively among which China Life (2628), New China Life (1336) and Huatai Securities (6886) slumped 2.2%-2.5%. Eight largest Chinese property developers dropped an average 1.6%. PetroChina (857) and CNOOC (883) decreased 1.8% and 1.3% respectively. Railway related counters had no direction. China Railway Construction (1186) plunged 2.1% but CCCC (1800) grew 0.3%. We believe further upside for the Hang Seng Index is limited and recommend short-term investors to take profit. Oversea DJIA 19, NASDAQ 5, Shanghai SE Composite 3, Crude Oil Futures (US$) Gold Futures (US$) 1, Baltic Dry Index USD / Euro Yen / USD HSCEI HSI 20-Day MA 9, , Day MA 9, , Day RSI We believe further upside for the Hang Seng Index is limited and recommend short-term investors to take profit. Remarks: Mason Securities Ltd ( Mason Securities ) is licensed by the Securities and Futures Commission to carry on Types 1, 4, 6 and 9 regulated activities in Hong Kong. Mason Futures Ltd is licensed by the Securities and Futures Commission to carry on Type 2 regulated activity in Hong Kong. Securities Futures

2 Industry / Corporate News Eric Yuen - ericyuen@masonsec.com Upgrade ANTA Sports (2020) to on potential M&A and strong earnings results for 2016 Upgrade to Proposed issue of RMB3.6bn corporate bonds implies a great chance of M&A in near term Risk Level: Medium Better-than-expected retail sales growth in 3Q16 guarantees strong earnings results for 2016 Company deserves a premium valuation given its leading market position, good earnings Time Horizon: Medium track record and a promising industry outlook Since our SELL commentary dated 6 October 2016, the stock price of ANTA Sports (2020, $23.15) has climbed 7.4% versus a 4.5% drop for the Hang Seng Index. We believe its stellar share price performance is driven by the release of better-than-expected trade fair results for 2Q17 in late October and proposed issue of corporate bonds in late November. We expect the company to report strong earnings results for 2016 next month. This combines with speculation on M&A may trigger a re-rating of the company in near term. The order value of ANTA branded products for the trade fair for 2Q17 achieved a mid-single-digit increase on a year-on-year basis, the same pace as that of 1Q17. However, the retail sales of ANTA branded products increased by a low double-digit in 3Q16 compared with a high single-digit in 2Q16 and mid-single-digit in 1Q16. The retail sales of non-anta branded products (such as FILA, FILA KIDS and DESCENTE branded products) posted a strong increase of 60%-70% in 3Q16 demonstrating its successful strategy of upgrading product mix from mass market to the high-end segment. On 22 November 2016, the company unexpectedly proposed a public issue of RMB3.6bn corporate bonds which we believe is prepared for future M&A to expand market share in the high-end segment. The company had net cash of RMB bn and maintained high dividend payout of 61%-72% over the past five financial years. As a recap, the company posted strong interim results for 1H16. Revenue grew 20.2% to RMB6.14bn fueled by robust demand for ANTA products. Gross margin improved from 46.6% in 1H15 to 47.9% in 1H16 thanks to successful implementation of the multibrand strategy. Net profit surged 17.0% to RMB1.13bn. Basic EPS added 16.8%. DPS increased by 13.3% to $0.34 representing a dividend payout of 65%. Net margin declined from 18.9% to 18.4% but far above the industry average. Return on average equity expanded from 24.6% to 26.0%. Net cash increased to RMB5.88bn as at 30 June 2016 or equivalent to RMB2.35 per share. As at 30 June 2016, the company had 8,510 ANTA stores in China and 687 FILA stores in China, Hong Kong and Macau. According to Bloomberg estimates, the company s revenue is expected to reach RMB13.33bn in 2016 and RMB15.44bn in 2017, up 20% and 16% respectively. Earnings will grow 16% in both years to RMB2.37bn and RMB2.75bn respectively. Traded at 2017 PER of 18.7x compared to its 3-year average forward PER of 17.0x, ANTA Sports is not particularly cheap. Taking into account its leading market position, good earnings track record, potential M&A opportunity and a promising outlook for China s sportswear market, we believe the company deserves a premium valuation and therefore upgrade it to with a 6-month price target of $26.0 based on FY17 PER of 21.0x. Analysts consensus price target is $24.0. Recent Recommendations Stock Pick Rating Recommendation Highlights TP Texhong Textile (2678) Valuation dipped below the historical average Maintain on Texhong Textile (2678) $13.0 Sands China (1928) Reiterate on Sands China (1928) as recent retreat creates a good entry point $40.7 SMIC (981) HOLD No longer undervalued plus a risk of equity fund raising Downgrade SMIC (981) to HOLD $12.0 Lee & Man Paper (2314) Reiterate on Lee & Man Paper (2314) as oversupply situation of paper industry has eased $7.90 Hua Hong Semiconductor (1347) Promising industry outlook and cheap valuation - Maintain Hua Hong Semiconductor (1347) $10.7 Sunny Optical (2382) Reiterate on Sunny Optical (2382) as shipment of handset lens sets in December remains intact $42.6 Luk Fook (590) Improvement in tourist arrivals and same store sales Maintain Luk Fook (590) $24.8 Chalco (2600) CCCC (1800) Maanshan Iron (323) on Chalco (2600) amid better alumina price trend and lower cost pressure compared to peers Both China and U.S. are likely to accelerate infrastructure investments Maintain CCCC (1800) Reiterate on Maanshan Iron (323) as China sees no signs to loosen its de-capacity measures $4.27 $10.5 $3.07

3 Technical Ideas GOME (493, $1.01) TP: $1.11 Risk: Low Time Horizon: Short GOME Electrical Appliances retails household appliances and consumer electronic products in China. The counter rose 4.1% yesterday with exceptional turnover, surpassing SMA50, SMA100 and SMA250, indicating the counter s strong uptrend momentum ahead.. Short-term target at $1.11. Cut loss at $0.95. Consensus 2017 PER: 21.4x Consensus target price: $1.07 Source: Bloomberg, Mason Securities HKBN (1310, $9.03) TP: $9.93 Risk: Low Time Horizon: Short HKBN Ltd. provides telephone voice and data communications services. The company offers wireless internet service, IDD and IPTV service, local telephony services, and other valueadded services. The counter advanced 4.0% yesterday with exceptional turnover, surpassing its critical resistance at $9.00 and SMA250, indicating the counter s further upside potential ahead.. Short-term target at $9.93. Cut loss at $8.46. Consensus 2017 PER: 19.5x Consensus target price: $11.18 Source: Bloomberg, Mason Securities

4 RSI Indicator Overbought (9-day RSI> 80) Tickers 124, 148, 293, 316, 338, 431, 442, 540, 692, 718, 801, 881, 992, 1028, 1076, 1083, 1182, 1193, 1234, 1566, 1658, 1833, 1913, 2086, 2688, 3669, 3708 Oversold (9-day RSI<20) Tickers 400, 1236, 1678, 1970 Exceptional Turnover & Price Movements Stock Stock Last Price ($) Price Change (%) Turnover / 3-mth daily avg turnover Target price up / downside (%)* Rating*^ Golden Meditech N/A N/A N/A HKT Trust And HKT Summit Ascent Sino Haijing N/A N/A N/A Zhongsheng Group Maanshan Iron & Steel Chinese Estates N/A N/A N/A China Harmony New Energy Auto PCCW Gome Electrical Appliances HKBN BYD Electronic Prada S.P.A Cathay Pacific Airways China Packaging N/A N/A N/A Power Assets PER* Source: Bloomberg, Mason Securities; *Based on consensus estimates ^ The Rating indicates analysts opinions on the security. It is calculated by converting analysts recommendations into a number from 1-5 and taking the average. 5 is the best while 1 is the worst.

5 A-H Share Premium / Discount (%) Average AH Shanghai Listed -35.8% Premium/Discount (%) Shenzhen Listed -35.2% H Share A Share A-H Shares Shanghai Listed Company Name A Close (RMB) H Close (HKD) AH Price Gap (%) H Share A Share A-H Shares Shanghai Listed Company Name A Close (RMB) H Close (HKD) AH Price Gap (%) Luoyang Glass New China Life Xinhua Winshare Huatai Securities Jingcheng Haitong Securities Kunming Machinery Machine Chongqing Iron First Tractor CRCC SSC Guangshen Railway CSCL Everbright Bank Shanghai Electric Magang Anhui Expressway Minsheng Bank COMEC Shanghai Pharma GAC Group China Shenhua Nanjing Panda Tsingtao Brewery Tianjin Capital CPIC China Moly BoComm Dalian Port Citic Securities China Cosco Bank of China Datang Intl Power Fosun Pharma China Eastern Sinopec Airlines MCC CMB Yanzhou Coal ABC Zhengzhou Coal CCB China South Air ICBC CCCC Ping An Insurance COSL Jiangsu Express Sichuan Exp Anhui Conch Beijing North Star Fuyao Glass China Shipping Huadian Power A-H Shares Shenzhen Listed Jiangxi Copper Zhejiang Shibao BBMG Shandong Molong Dongfang Electric Northeast Electric China Coal Energy Xinhua Pharma Huaneng Power Hisense Kelon Sinopec Shanghai Dongjiang Env Air China Chenming Paper Great Wall Motor China Int'l Marine CRRC Corp Livzon Pharm China Railway Xinjiang Goldwind Petrochina Group Zoomlion Chalco ZTE Corp China Citic Bank BYD Zijin Mining China Vanke Shenzhen Express GF Securities Guangzhou Pharm Angang Steel China Life Weichai Power

6 HSI & HSCEI Constituents Performance Price Change (%) Index 5 D 1 M 3 M vs 3M High Hang Seng Index Hang Seng China Ent Index Outperform Underperform Mixed Airline, Automobile, Consumer, PRC Property, Utility Insurance, PRC Securities, Telecom Power, HK Property Price Change (%) Price Change (%) Stock vs 3M Stock vs 3M Company Name 5 D 1 M 3 M Company Name 5 D 1 M 3 M High High 2333 GreatWall Motor Hang Seng Bank Sinopharm CRRC China Res Power CK Hutchison China Vanke China Mer Port New World Dev CRRC Times Sino Land Tencent Anhui Conch China Railway China Shenhua CPIC China Overseas China Mobile Power Assets Li & Fung HK & China Gas China Life Cathay Pac Air China Railway Belle Int'l Tsingtao Construction Brew Hang Lung Prop Kunlun Gas Dongfeng Group Sands China Lenovo BYD Company Sinopec Corp Bank of China Air China CKI Holdings China Res Land PetroChina BOC Hong Kong Galaxy Entertain AIA CNOOC CLP Hldgs HKEx Wharf China Cinda Henderson Land CK Property Hengan Int'l CCB Huaneng Power CITIC Bank SHK Prop HSBC Hldgs Haitong Securities China Telecom AAC Technologies CITIC Securities Swire Pacific ABC ICBC CGN Power CM Bank Galaxy Securities Minsheng Bank GF Securities Ping An Link REIT Mengniu Dairy CITIC Ltd China Comm Cons HTSC BOCOM PICC Group Want Want Longyuan Power New China Life PICC P&C Bank of E Asia China Unicom MTR Corporation

7 Upcoming Events Date Stock Company Name Event Jan Public Financial Holdings Final Jan Pico Far East Holdings Final Jan Sands China Dividend Disclosures Investment Rating System Ratings Description Mason Securities Limited s investment Buy Expected positive return of > 10 % rating system is divided into investment Investment Ratings Hold Expected return range of ~ ±10 % ratings, risk rating and investment time Sell Expected negative return > 10% horizon. The rating scale is subject to change upon periodic review of market by High (H) 90-day volatility of > 50% research department. Assigned ratings are Risk Ratings Medium (M) 90-day volatility of > 30-50% based on company and sector historical Low (L) 90-day volatility of < 30% performance and analysts intrinsic Long (L) 6 12 Months valuation of the stock Investment Time Medium (M) 3 6 Months Horizon Short (S) Less than 1 Month Note: 90-day volatility is measured from the security s standard deviation of day to day logarithmic historical price changes. The 90-day price volatility equals the annualized standard deviation of the relative price change for the 90 most recent trading days closing price, expressed as a percentage Mason Securities Limited Portion 1, 12/F, The Center 99 Queen s Road Central Hong Kong Tel: (852) Fax: (852) This report is for information only and is not to be construed as investment advice or as an offer to buy or sell securities or financial instruments. Your investment decision should be based upon your personal investment objectives and should be made only after evaluating the stock s expected performance and risk. While the report is compiled using sources believed to be reliable, no assurance or guarantee is given regarding its accuracy or completeness. Neither Mason Securities Limited nor any of its affiliates, nor any employees or other persons connected with any of them, accepts any responsibility or liability arising from any use of this report. To the extent permitted under applicable law, the abovementioned companies or individuals may have used the research materials before publication. Mason Securities Limited (or any of its affiliates) and their respective officers, directors, analysts, or employees may or may not have a position in or with respect to the securities or financial instruments covered herein, and may, as principal or agent, buy and sell such securities or financial instruments. However, it is hereby declared that the writer, at the time of writing, does not have any interest in any of the securities or financial instruments covered in this report. An employee, analyst, officer, or a director of Mason Securities Limited( or any of its affiliates), may serve as a director for companies covered in this report. Mason Securities Limited (or any of its affiliates) may from time to time perform investment banking or other services or solicit investment banking or other business for any companies covered in this report. Mason Securities Limited is licensed by the Securities and Futures Commission to carry on Types 1, 4, 6 and 9 regulated activities in Hong Kong. Mason Futures Limited is licensed by the Securities and Futures Commission to carry on Type 2 regulated activity in Hong Kong.