Stock market outlook will remain uncertain in near term given depreciation of renminbi and potential U.S. rate hike in mid-september.

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Brian Parrish
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14 th Aug, 2015 Hang Seng Index Performance Index Performance Abs chg % Change Hong Kong Close 1-Day 1-Day 1-Mth 3-Mth Hang Seng Index 24,018.80 102.78 0.43-4.39-11.98 HSCI 3,284.06 8.74 0.27-4.56-14.

1 14 th Aug, 2015 Hang Seng Index Performance Index Performance Abs chg % Change Hong Kong Close 1-Day 1-Day 1-Mth 3-Mth Hang Seng Index 24, HSCI 3, HSCCI (Red Chips) 4, HSCEI (H-Shares) 11, Mkt T/O ($ Mn) 86, , Source: Bloomberg Market Outlook Eric Yuen ericyuen@guoco.com Hang Seng Index closed up 0.4% at 24,018 amid a rebound in China s stock markets. Market turnover decreased to $86.8 billion. Heavily weighted HSBC (5) added 0.9%. Tencent (700) surged 6.8% since its quarterly earnings beat market forecast. Oil stocks including PetroChina (857), CNOOC (883) and Sinopec (386) soared 0.9%- 1.9%. Four largest Chinese property developers rebounded 1.8% on average. Local banks and property companies were mixed. Wharf (4) and Hang Seng Bank (11) climbed 0.7%-1.0% whilst SHK Properties (16) and BOC Hong Kong (2388) shrank 1.3%-1.7%. Gaming and telecom stocks ended lower. China Mobile (941) and China Unicom (762) dropped 1.3%-2.6%. Sands China (1928) and Galaxy Entertainment (27) slumped 3.0%-3.2%. Lenovo (992) tumbled 9.1%, the most in Hang Seng Index, due to earnings disappointment. Oversea DJIA 17, NASDAQ 5, Shanghai SE Composite 3, Crude Oil Futures (US$) Gold Futures (US$) 1, Baltic Dry Index 1, USD / Euro Yen / USD HSCEI HSI 20-Day MA 11, , Day MA 12, , Day RSI Stock market outlook will remain uncertain in near term given depreciation of renminbi and potential U.S. rate hike in mid-september. HSCEI advanced 0.4% led by coal, cement and railway stocks as investors believed the Chinese government will expand infrastructure investment to bolster economic growth. China Railway Group (390) and CCCC (1800) edged up by 1.5%-2.2%. Anhui Conch (914) and CNBM (3323) grew 1.3%-1.9%. China Shenhua (1088) and China Coal (1898) both increased 1.8%. Haitong Securities (6837) and Sinopharm (1099), the best and worst performing constituent of HSCEI, went up 4.0% and down 3.2% respectively. Chinese banks and insurers showed mixed performance. Given the depreciation of renminbi and potential U.S. rate hike in mid-september, the stock market outlook will be uncertain over the next few weeks. Remarks: GuocoCapital Ltd is licensed by the Securities and Futures Commission to carry on Types 1, 4, and 6 regulated activities in Hong Kong. GuocoCapital Futures Ltd is licensed by the Securities and Futures Commission to carry on Type 2 regulated activity in Hong Kong. Bullion trading services provides by GuocoCapital Bullion Ltd. Securities Futures Bullion Corporate Finance Wholly owned subsidiary of Guoco Group Limited (HKEx Stock : 53) A Member of the Hong Leong Group

2 Industry / Corporate News Eric Yuen ericyuen@guoco.com BUY CCCC (1800) with valuation back to attractive territory Reiterate BUY Key beneficiary from One Belt, One Road policy Risk Level: High Interest rate cut, spin-off of dredging business and accelerating acquisition of overseas Time Horizon: Medium projects are potential share price catalysts in 2H15 Share price of China Communications Construction (1800, CCCC, $10.88) dropped 0.9% since our BUY commentary dated July 6 and outperformed the Hang Seng Index and HSCEI by 7.5% and 12.8% respectively over the same period. We believe the weakness in share price offers a good buying opportunity for investors who wish to capitalize on China s One Belt One Road policy in the long run. Further cut in China s interest rate, the spin-off of dredging business and accelerating acquisition of overseas projects could be potential share price catalysts in 2H15. According to Bloomberg estimates, CCCC s EPS are expected to grow 10% in 2015 and 12% in Traded at 2015 PER of 9.5x and 2016 PER of 8.5x, CCCC s valuation is undemanding in our view. We stick to our BUY recommendation with an unchanged 6-month price target of $15.0. CCCC is principally engaged in infrastructure construction, infrastructure design, dredging and port machinery manufacturing. Revenue and earnings for 2014 grew 10.3% and 11.3% yoy respectively to RMB366.0bn and RMB14.0bn. New contracts value was RMB608.4bn in 2014, up 12.0% yoy. Backlog amounted to RMB818.3bn by end-2014 representing 2.2x booked revenue in CCCC targets to achieve revenue of RMB395bn and new contracts value of RMB650bn in 2015, up 7.9% and 6.8% respectively against the actual figures in CCCC is highly geared with net debt of RMB150.8bn by end-2014 implying net debt to total equity ratio of 115%. Interest saving is estimated at RMB1.5bn per annum for every 100 basis point reduction in borrowing cost. Therefore, further cut in China s interest rate will help reduce financing cost and improve profitability. CCCC has obtained CSRC approval on June 30 regarding the spin-off of its dredging business through the issue of H shares in Hong Kong. Operating profit from the dredging business was RMB2.6bn in 2014 accounting for 11% of CCCC s total operating profit. We expect the spin-off to be materialized in 2H15 providing extra capital for future expansion. CCCC, with a 17% of backlog from overseas contracts, has a stronger presence overseas compared to peers like China Railway Group (390) and China Railway Construction (1186). CCCC started overseas business in early 1990s and currently employed more than 10,000 employees in 60 overseas branches. In April 2015, CCCC completed the AUD953mn acquisition of John Holland Group, a wellestablished construction company in Australia. The acquisition represented a significant progress in the international development strategy of CCCC. Riding on China s One Belt One Road policy, CCCC is likely to achieve growth in the long run. Recent Recommendations Stock Pick Rating Recommendation Highlights TP Shenzhen International (152) Buy BUY Shenzhen International (152) on anticipation of strong interim results $15.00 Sunny Optical (2382) Hold Valuation of Sunny Optical (2382) now seems fair to us after the recent correction. Upgrade to HOLD $15.50 Hua Hong Semiconductor (1347) Buy Maintain BUY on Hua Hong Semiconductor (1347) due to cheap valuation $11.60 Techtronic Industries (669) Buy Reiterate BUY on Techtronic Industries (669) to ride on the strong US housing trends $32.70 Huaneng Renewables (958) Buy BUY Huaneng Renewables (958) on strong interim results $3.85 Shenzhen Investment (604) Buy BUY Shenzhen Investment (604) on extremely strong contracted sales $4.20 Vinda (3331) Buy Vinda (3331) continues to be a long-term buy amid ongoing market share gain and product enrichment $20.60 CMEC (1829) Buy Reiterate BUY on CMEC (1829) given a promising industry outlook $8.30 Shenzhou Int l (2313) Buy Shenzhou Int l (2313) is a beneficiary of Renminbi depreciation. Reiterate BUY $45.70 HKEx (388) SELL HKEx (388) reported lower than expected earnings Downgrade to SELL $190.0

7% yesterday with huge turnover, breaking through the critical resistance of $4.0 as well as the 2-month consolidation range.

3 Technical Ideas Li Ning (2331, $4.16) TP: $4.70 BUY Risk: High Time Horizon: Short Li Ning Company researches, designs, manufactures, distributes, and retails sports footwear, apparel and accessories for sport and leisure use. Counter surged 6.7% yesterday with huge turnover, breaking through the critical resistance of $4.0 as well as the 2-month consolidation range. It surpassed sma100 yesterday, which is an indication of bullish trend ahead. BUY. Short-term target at $4.70. Cut loss at $3.70. Source: Bloomberg, GuocoCapital VTech Holdings (303, $98.85) TP: $109.0 BUY Consensus 2015 PBR: 2.03x Consensus target price: $3.85 Risk: Low Time Horizon: Short Source: Bloomberg, GuocoCapital VTech Holdings designs and manufactures consumer electronic products. The company's products include corded and cordless telephones and electronic learning solutions. VTech also provides contract manufacturing services. Counter retreated a max of 18% from its previous peak of $110.7 in end-march before finding strong support above $90.0. The counter rose 3.5% yesterday and surpassed sma20, 50 and 250. MACD showed positive crossing, signaling a bullish outlook. BUY. Short-term target at $ Cut loss at $93.4. Consensus 2015 PER: 15.5x Consensus target price: $107.25

4 RSI Indicator Overbought (9-day RSI> 80) Tickers 340, 530, 708, 1315, 1636, 2098 Oversold (9-day RSI<20) Tickers 12, 16, 20, 41, 69, 101, 269, 412, 683, 1113, 1143, 1159, 1191, 1237, 1333, 1813, 1972, 2286, 2333, 2821, 2888, 3836 Exceptional Turnover & Price Movements Stock Stock Last Price ($) Price Change (%) Turnover / 3-mth daily avg turnover Target price up / downside (%)* Rating*^ Daiwa Associate N/A N/A N/A Shunfeng Int l Clean Energy Luoyang Glass N/A N/A N/A Zhaojin Mining Industry Metallurgical Corp Of China Tencent Li Ning N/A Boer Power Source: Bloomberg, GuocoCapital; * 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 PER*

5 A-H Share Premium / Discount (%) Average AH Shanghai Listed -45.5% Premium/Discount (%) Shenzhen Listed -50.8% Remark: Shenzhen-listed stocks are not included in the upcoming cross-border stock trading pilot program 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 SSC China Insurance Shenhua Nanjing Panda Huadian Energy Power Intl Electronics China Huatai Securities Co Chongqing Molybdenum Iron Haitong Ltd Securities Shanghai Electric Huaneng Power Intl GAC Group Shanghai Pharm China Shipping Shanghai Fosun Yanzhou Container Coal China Pharm Everbright Sinopec Mining Shanghai Bank Bank of China Petrochem MCC China Minsheng China Coal Energy Sinopec Bank Beijing North Star Citic Securities First Tractor BoComm Shenji Group ABC Tianjin Kunming Capital China Life Insurance Environment Dalian Port CCB Chalco Tsingtao Brewery Beijing Jingcheng ICBC Guangzhou Machinery China Merchants China Shipyard Cosco Jiangsu Bank Express Zhengzhou Coal Fuyao Glass China Mining Oilfield Ping An Insurance Datang Services Intl Power Group CPIC Magang Anhui Conch China Eastern Airlines Cement Zijin Mining A-H Shares Shenzhen Listed China Shipping Zhejiang Shibao Development Sichuan Shandong Molong China Expressway Southern Northeast Petroleum Electric China Air Railway Shandong Develop Xinhua Anhui Group Expressway Weichai Pharm Power Dongfang Electric Shandong Chenming Jiangxi Copper Hisense Paper Kelon Air China Zoomlion Heavy BBMG Industry BYD Guangshen Livzon Pharm Shenzhen Railway Express China International CRRC Corp Jingwei Marine Textile Guangzhou Pharm Dongjiang Machinery Env CRCC Angang Steel Petrochina GF Securities Co Ltd CCCC ZTE Corp Great Wall Motor Xinjiang Goldwind China Citic Bank China Sci&Tec Vanke

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 Base Metal, Coal, Infrastructure, Oil, Oilfield Service, PRC Securities, Airlines, Auto, Gaming, PRC Property, HK Property Consumer, Global Player, Insurance, 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 390 China Railway China Resources China Shenhua China Power Unicom China Coal Swire Pacific 'A' China Oilfield Dalian Wanda Jiangxi Copper CCB Li & Fung China Resources Tingyi Bank of E Asia PICC P&C Link REIT CNOOC ICBC PICC Group China Cinda CITIC Securities ABC Haitong Securities BOCOM China Comm Cons Bank of China Power Assets GAC Tencent CK Hutchison Tsingtao Brew China Hldgs Overseas Ltd MTR Corporation HSBC Hldgs China Life Kunlun Gas New China Life Hang Seng Bank PetroChina AIA China Mer Hldgs Sands China China Telecom CM Bank CNBM Sino Land Sinopec Corp Belle Int'l China Pacific Henderson Land Longyuan Insurance Power New World Dev Anhui Conch Sinopharm China Vanke SHK Prop CLP Hldgs China Res Land HKEx Dongfeng Group Ping An Wharf CITIC Ltd Galaxy HK & China Gas Entertainment CK Property -6-5 N/A Minsheng Bank Cathay Pac Air Huaneng Power Lenovo China Mengniu GreatWall Motor Want Dairy Want BYD Company CITIC Bank Hang Lung Prop Hengan Int'l BOC Hong Kong China Mobile Air China CGN Power

7 Upcoming Events Date Stock Company Name Event Aug Allied Cement Interim Aug Guangzhou Baiyunshan Pharmaceutical Interim Aug China Eastern Airlines Interim Aug China Vanke Interim Aug China Gold International Resources Interim Aug China New Town Development Interim Aug Cowell e Holdings Interim Aug Datang International Power Interim Aug Elec & Eltek International Interim Aug Guangdong Investment Interim Aug Jimei International Entertainment Interim Aug China Kangda Food Interim Aug Leeport Holdings Interim Aug Midas Holdings Interim Aug PacMOS Technologies Interim Aug Pegasus International Interim Aug Sands China Interim Aug Shanghai Prime Machinery Interim Aug Xinjiang Tianye Water Saving Interim Aug TOM Group Interim Aug Uni-Bio Science Group Interim Aug Wanjia Group Holdings Quarter Aug Winfoong International Interim Aug Zhaojin Mining Industry Interim Disclosures Investment Rating System Ratings Description GuocoCapital s investment rating system is Buy Expected positive return of > 10 % divided into investment ratings, risk rating Investment Ratings Hold Expected return range of ~ ±10 % and investment time horizon. The rating Sell Expected negative return > 10% scale is subject to change upon periodic High (H) 90-day volatility of > 50% review of market by research department. Risk Ratings Medium (M) 90-day volatility of > 30-50% Assigned ratings are based on company Low (L) 90-day volatility of < 30% and sector historical performance and analysts intrinsic valuation of the stock Long (L) 6 12 Months 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 GuocoCapital Limited 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 GuocoCapital nor any of its associated companies, (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 above-mentioned companies or individuals may have used the research materials before publication. However, it is hereby declared that neither GuocoCapital nor the writer, at the time of writing, has interest in any of the securities mentioned in this report. GuocoCapital Ltd is licensed by the Securities and Futures Commission to carry on Types 1, 4, and 6 regulated activities in Hong Kong. GuocoCapital Futures Ltd is licensed by the Securities and Futures Commission to carry on Type 2 regulated activity in Hong Kong.

We expect Hang Seng Index to trade range between 18,000 and 20,000 in March. Hang Seng Index Performance. Index Performance.

We expect Hang Seng Index to trade range between 18,000 and 20,000 in March. Hang Seng Index Performance. Index Performance. 1 st March, 2016 Hang Seng Index Performance Index Performance Abs chg % Change Hong Kong Close 1-Day 1-Day 1-Mth 3-Mth Hang Seng Index 19,111.93-252.22-1.30-2.47-14.61 HSCI 2,597.82-32.20-1.22-2.17-15.63