We expect Hang Seng Index to test 27,000 in the worst scenario. Market Overview. Hang Seng Index Performance

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1 28 August 2018 Hang Seng Index Performance Source: Bloomberg Major Market Indicators % Cha nge Hong Kong Close 1- Da y 1- Mth 6 - Mth 12 - Mth Hang Seng Index 28, % - 1.9% - 8.3% 1.5% HSCEI (H- Shares) 11, % 0.0% % - 2.6% Mkt T/O ($ Mn) 95, % 46.1% % % Ove rse a DJIA 26, % 2.4% 4.1% 19.4% NASDAQ 8, % 3.6% 10.2% 27.6% Shanghai SE Composite 2, % - 3.2% % % Shenzhen Component 8, % - 6.1% % % Commoditie s a nd FX Crude Oil Futures (US$) % 0.6% 12.2% 48.4% Gold Futures (US$) 1, % - 0.7% - 7.9% - 7.5% Baltic Dry Index 1, % 1.3% 42.8% 40.4% USD / Euro % - 0.3% - 4.3% - 2.4% Yen / USD % - 0.2% - 4.0% - 1.8% CNH / USD % 0.4% - 6.9% - 2.6% Market Overview Hang Seng Index closed up 2.2% at 28,271. HSCEI surged 2.5%. Heavily weighted AIA Group (1299), Tencent (700) and HSBC (5) rose 2.0%, 2.0% and 1.0% respectively. Automobile, PRC property, technology, gaming, securities and oil stocks outperformed the market. Geely Automobile (175), Guangzhou Automobile (2238), Dongfeng Motor (489), Great Wall Motor (2333) and BYD Co (1211) jumped 4.5%-7.0%. Ten largest Chinese property developers grew an average 4.1%, among which Guangzhou R&F (2777) soared 12.9%. Sunny Optical (2382) and AAC Technologies (2018) advanced 6.7% and 3.2% respectively. Galaxy Entertainment (27) and Sands China (1928) increased 3.1%-4.8%. Securities stocks in HSCEI had an average increase of 3.6%, among which China Galaxy Securities (6881), GF Securities (1776) and Haitong Securities (6837) surged 4.5%-4.8%. Sinopec (386) and PetroChina (857) soared 5.1% and 3.6% respectively. PRC banking and railway related stocks moved in line with the HSCEI. ICBC (1398) and CCB (939) rose 2.6%-2.9%. Consumption, HK property & banking, HK utilities, telecom, power and insurance stocks ended higher but underperformed the market. Mengniu Dairy (2319), WH Group (288) and Hengan Int l (1044) elevated 2.5%-2.8%. Sino Land (83), New World Development (17) rose 2.7%-3.3%. Bank of East Asia (23) and BOC Hong Kong (2388) climbed 2.2%-2.3%. Three largest telecom stocks added 0.5%-1.5%. Ping An Insurance (2318) and New China Life (1336) both increased 2.4%. Zhongan Online (6060) lost 1.7% making it the worst performing stock in HSCEI. We expect Hang Seng Index to encounter technical resistance at 28,700. We expect Hang Seng Index to test 27,000 in the worst scenario.

2 Market in Focus China Suntien Green Energy MKT Cap ($Bn) 8.1 Bloomberg Ticker 956 HK Equity 52-week High/Low ($) Rating BUY Free Float (%) 88.1% Target Price $2.80 3M Avg Turnover ($, Mn) 20.6 Recent share price weakness offers a buying opportunity Maintain Buy on China Suntian Green Energy (956) China Suntien Green Energy (956, $2.17, Suntien) is going to report its interim results tomorrow and we expect the market to react positively to its interim results. We expect Suntien to report +30% yoy net profit growth for the first half of 2018, mainly due to 22.1% yoy growth on power generation growth, low grid curtailment and 55% yoy growth on gas sales volume due to higher wholesale natural gas volume growth in Hebei. Fig1: 1 Year Share Price As a recap, Suntien released a decent operational data for 1H18 on 11 July. Total power generation grew 22.1% yoy to approximately 4,239,166MWh of which 4,175,880MWh was contributed by wind power and 63,286 MWh by solar power, representing an increase of 21.8% and 46.4% yoy respectively. Sales volume of the gas segment amounted to approximately 12.97bn cubic meters, up 55.0% yoy. We expect Suntien s net profit growth to sustain in 2018 to 2019 given its plenty of approved projects on hand to be developed and improving wind turbine utilization due to favourable policy. According to Bloomberg estimates, Suntien s net profit is expected to reach RMB1,219mn (EPS RMB0.335) and RMB1,363mn (EPS RMB0.375) in 2018 and 2019, up approximately 32.3% and 12.2% respectively. Net asset value is expected to reach RMB9.41bn (BPS RMB2.58) and RMB10.28bn (BPS RMB2.82). 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. We therefore reiterate our BUY rating on Suntien and maintain our P/B-based 12-month target price of $2.80 based on 2019 P/B of 0.9x. Source: Bloomberg, Mason Securities

3 Technical Ideas Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss China Oilfield Services 2883 HK Equity BUY $7.10 $7.81 $8.80 $6.75 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 191% 52.4X 0.85X 57% Technical Indicator SMA RSI (14) 42.6 SMA BB (Upper) 7.69 SMA BB (Lower) 6.64 Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss XYG 868 HK Equity BUY $10.20 $11.22 $12.25 $9.69 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 96% 9.2X 2X 29% Technical Indicator SMA RSI (14) 61.9 SMA BB (Upper) SMA BB (Lower) 8.48 Source: Bloomberg, Mason Securities

4 Recent Recommendations Date of Issue Stock Pick Recommendation Highlights Rating (TP) Better than expected interim earnings results Maintain BUY on A-Living Services (3319) 14/8/2018 A-Living Services (3319) 15/8/2018 Dali Foods (3799) 16/8/2018 Anta Sports (2020) China Everbright 17/8/2018 Greentech (1257) 20/8/2018 CCCC (1800) 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) The company announced better-than-expected earnings results for the first half of 2018 As at 30 June 2018, ALS had net cash of RMB4.17bn providing sufficient funds for future acquisition and expansion Dali Foods (3799): Share price is expected to react positively to solid interim results In short-term, we expect Dali to deliver solid revenue and net profit growth in upcoming interim results (+ve low double digit growth) and the share price should react positively to the solid interim results Anta Sports (2020) posted better than expected interim results Maintain BUY The share price correction is sentiment driven while the fundamentals of the company remain intact evidenced by better-than-expected interim results Strong financial position provides room for further expansion through acquisition 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. China s infrastructure investments is likely to increase in 2H18 Maintain BUY CCCC (1800) In order to offset the impact from escalating trade war tension between China and the U.S., we do believe the Chinese government will substantially increase infrastructure spending in the second half of the year that will certainly benefit CCCC In 2018, management targets to achieve an 8.0% growth in new contracts value to RMB970bn and 6.5% growth in revenue to RMB490bn China Resources Gas (1193): Better-than-expected interim results, upgrade to BUY 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/E of 7.3x and 2018 P/B of 1.0x compared with an average 2018 P/E of 7.3x and 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 BUY ($18.0) BUY ($8.5) BUY ($48.0) BUY ($9.60) BUY ($9.20) BUY ($40.9) BUY ($24.8) BUY ($31.2) BUY ($3.00) BUY ($8.20)

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