We expect Hang Seng Index to encounter technical resistance at 28,700. Market Overview. Hang Seng Index Performance

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1 29 August 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 28, % -1.6% -8.1% 2.1% HSCEI (H-Shares) 11, % 0.5% -10.4% -1.8% Mkt T/O ($ Mn) 90, % 38.2% -33.1% -22.9% Oversea DJIA 26, % 2.4% 4.1% 19.2% NASDAQ 8, % 3.8% 10.4% 27.4% Shanghai SE Composite 2, % -3.3% -14.8% -17.5% Shenzhen Component 8, % -6.0% -19.3% -18.8% Commodities and FX Crude Oil Futures (US$) % -0.1% 11.3% 47.7% Gold Futures (US$) 1, % -1.6% -8.6% -8.5% Baltic Dry Index 1, % 1.3% 42.4% 41.1% USD / Euro % -0.2% -4.3% -2.7% Yen / USD % -0.3% -4.1% -1.9% CNH / USD % 0.3% -7.1% -3.0% Market Overview Hang Seng Index closed up 0.3% at 28,351. HSCEI added 0.4%. Heavily weighted Tencent (700) grew 1.2%. AIA Group (1299) and HSBC (5) had little change. Pharmaceutical, consumption, property, technology, PRC banking, insurance, automobile, telecom, oil and railway related stocks lacked clear direction. Sinopharm (1099) jumped 7.2%, making it the best performing stock in HSCEI, while CSPC Pharmaceutical (1093) lost 1.0%. Shenzhou Int l (2313) surged 5.4%, while Mengniu Dairy (2319) dropped 0.8%. Sunny Optical (2382) advanced 2.2%, while AAC Technologies (2018) slid 0.2%. Guangzhou Automobile (2238) soared 3.5%, while Geely Automobile (175) cut 0.6%. China Vanke (2202) and China Resources Land (1109) increased 1.6%-1.9%, while Country Garden (2007) retreated 3.3%, making it the worst performing stock in HSI. CK Asset (1113) and Link REIT (823) rose 0.6%-0.8%, while Wharf REIC (1997) lost 1.4%. Postal Savings Bank (1658) and CMB (3968) elevated 1.5%-2.1%, while ABC (1288) fell 0.3%. PICC (1339) increased 1.2%, while Zhongan Online (6060) tumbled 7.4%, making it the worst performing stock in HSCEI. China Mobile (941) added 0.4%, while China Telecom (728) lost 1.3%. CNOOC (883) increased 1.6%, while PetroChina (857) lost 0.3%. Huaneng Power (902) lifted 1.2%, while China Resources Power (836) declined 1.1%. We expect Hang Seng Index to encounter technical resistance at 28,700. Gaming, securities and cement stocks ended lower. Anhui Conch (914) tumbled 1.9%. Sands China (1928) and Galaxy Entertainment (27) lost 1.3%-1.4%. HTSC (6886) and China Galaxy Securities (6881) dropped 0.5%-1.0%. We expect Hang Seng Index to encounter technical resistance at 28,700.

2 Market in Focus Galaxy Entertainment MKT Cap ($Bn) Bloomberg Ticker 27 HK Equity 52-week High/Low ($) Rating BUY Free Float (%) 52.9% Target Price $ M Avg Turnover ($, Mn) P/E and EV/EBITDA valuation below historical average - Maintain BUY Galaxy Entertainment (27) Since our BUY commentary dated July 26, the share price of Galaxy Entertainment (27, GEG, $57.9) has dropped 10.5% compared with a loss of 2.0% for Hang Seng Index over the same period. We believe the underperformance of CEG 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. However, we believe the opening of the Hong Kong-Zhuhai-Macau Bridge will improve earnings outlook for gamings stocks in the medium-to-long term. Fig1: 1 Year Share Price As a recap, GEG registered strong earnings results for the first half of 2018 with revenue and adjusted EBITDA increased by 25% and 34% yoy to $28.1bn and $8.6bn respectively. Net profit surged 56% yoy to $7.2bn. Gross revenue from gaming operations rose 31% yoy to $33.4bn, primarily fueled by a 19% yoy increase in mass gaming revenue to $12.7bn and 42% yoy gain in VIP gaming revenue to $19.5bn. Balance sheet was strong with net cash and liquid investments amounting to $34.3bn or approximately $7.9 per share as of 30 June A special interim dividend of $0.50 per share will be paid to shareholders in late October. In early April 2018, GEG completed the acquisition of a 4.9% stake in US-listed Wynn Resorts at a consideration of $7.28bn. Wynn Resorts owns and operates Wynn and Encore Las Vegas, Wynn Macau and Wynn Place, Cotai. We believe the strategic investment in Wynn Resorts will facilitate GEG to further expand business in overseas markets. We maintain our bullish view on the gaming sector and believe any share price correction is a good buying opportunity for long-term investors. According to Bloomberg estimates, analysts expect GEG s revenue to reach $73.0bn in 2018 and $79.8bn in 2019 representing an increase of 17% and 9% yoy respectively. Traded at 14.6x 2018 EV/EBITDA and 2018 P/E of 18.3x compared with 5-year average forward EV/EBITDA of 14.7x and 5-year average forward P/E of 21.0x, valuation of GEG is cheap by historical standard. Maintain BUY on GEG with an unchanged 6-month price target of $63.5 based on 16.0x 2018 EV/EBITDA. Source: Bloomberg, Mason Securities

3 Technical Ideas Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss Fu Shou Yuan International 1448 HK Equity BUY $6.76 $7.44 $9.23 $6.42 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 226% 24.6X 3.5X -49% Technical Indicator SMA RSI (14) 42.0 SMA BB (Upper) 7.19 SMA BB (Lower) 5.59 Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss Lifestyle China 2136 HK Equity BUY $3.76 $4.14 #N/A N/A $3.57 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 84% #VALUE! #VALUE! -7% Technical Indicator SMA RSI (14) 64.6 SMA BB (Upper) 3.74 SMA BB (Lower) 2.97 Source: Bloomberg, Mason Securities

4 Recent Recommendations Date of Issue Stock Pick Recommendation Highlights Rating (TP) 15/8/2018 Dali Foods (3799) 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 BUY ($8.5) 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) 28/8/2018 Suntian Green Energy (956) 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 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 BUY ($48.0) BUY ($9.60) BUY ($9.20) BUY ($40.9) BUY ($24.8) BUY ($31.2) BUY ($3.00) BUY ($8.20) BUY ($2.80)

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