We expect Hang Seng Index to underperform HSCEI in near term and dip below 20,000 due to profit taking. Hang Seng Index Performance.

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1 11 st April, 2016 Hang Seng Index Performance Index Performance Abs chg % Change Hong Kong Close 1-Day 1-Day 1-Mth 3-Mth Hang Seng Index 20, HSCI 2, HSCCI (Red Chips) 3, HSCEI (H-Shares) 8, Mkt T/O ($ Mn) 59, , Source: Bloomberg Market Outlook Eric Yuen - ericyuen@masonsec.com Hang Seng Index closed up 0.5% at 20,370 last Friday. Market turnover decreased to $60.0 billion. Heavily weighted Tencent (700) cut 1.1%. China Mobile (941) was little changed. HSBC (5) and AIA Group (1299) climbed 0.4% and 1.4% respectively. Local property stocks in Hang Seng Index grew an average 1.0%. Wharf (4) jumped 3.0%. Lenovo (992), CNOOC (883) and China Resources Power (836) soared 1.8%- 2.8%. Consumption stocks were mixed. Tingyi (322), Want Want China (151) and Belle Int l (1880) advanced 1.7%-2.9%. China Mengniu Dairy (2319) and Hengan Int l (1044) tumbled 1.4%-1.7%. HSCEI rose 0.7% led by power, railway and banking shares. Huaneng Power (902), China Longyuan (916) and CGN Power (1816) edged up by 1.4%-3.0%. CRRC Corporation (1766) and China Railway Group (390) increased 1.9%-2.1%. Chinese banks in HSCEI surged an average 0.9%. Chinese insurers showed mixed performance. Four securities stocks in HSCEI shrank 0.1%-0.9%. Dongfeng Motor (489), the worst performing HSCEI stock, slumped 1.2%. We expect Hang Seng Index to underperform HSCEI in near term and dip below 20,000 due to profit taking. Oversea DJIA 17, NASDAQ 4, Shanghai SE Composite 2, Crude Oil Futures (US$) Gold Futures (US$) 1, Baltic Dry Index USD / Euro Yen / USD HSCEI HSI 20-Day MA 8, , Day MA 8, , Day RSI We expect Hang Seng Index to underperform HSCEI in near term and dip below 20,000 due to profit taking. Remarks: Mason Securities Limitedd ( Mason Securities ) is licensed by the Securities and Futures Commission to carry on Types 1, 4, and 6 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. Bullion trading service is provided by Mason Bullion Limited. Securities Futures Bullion

2 Industry / Corporate News Becky Yuen, CFA beckyyuen@masonsec.com Reiterate BUY on Shenzhou Int l (2313) amid continuous margin expansion and better product mix Reiterate BUY Weak earnings of Uniqlo has little impact on Shenzhou's business Risk Level: Medium Sales growth from sportswear brands can reach double-digit in 2016 Time Horizon: Medium Benefit from continuous shift to synthetic products Fast Retailing (6288), parent of Uniqlo, reported disappointing earnings for 1HFY8/16 last Thursday, with operating profit down 33.8% yoy to JPY99.3bn. Comment: We believe the weak results was mainly dragged by warm winter, higher operating expenses in domestic market, impairment losses in US and forex losses. Yet the sales growth of 6.5% yoy was in line with market expectation and the apparel giant also retained its FY8/16 sales growth target of 7% yoy, meaning that it is not especially worrying about the sales growth. Uniqlo accounted for close to 33% of Shenzhou s (2313, $40.60) sales in 2015 if including lingerie items. Yet, we believe the weak earnings of Uniqlo will not have any material impact to Shenzhou as Uniqlo will try to maintain their order level at Shenzhou given that the latter is capable of manufacturing large amount of high quality products with short lead time which allows Uniqlo to adjust their orders in a more flexible way. As a recap, Shenzhou Int l reported 2015 earnings of RMB2.35bn (EPS RMB0.169), up 14% yoy, on the back of a 13.5% yoy sales growth. While the revenue growth was in line with our expectation, bottom line was around 5% below our estimates, which we think is mainly due to a larger than expected one-off mark-to-market translation loss from the $3.9bn convertible bond. Nonetheless, company demonstrated a stronger than expected gross margin expansion in 2015, with gross margin up 1.5ppts to 30.5% which beat our forecast of 29.5%. Specifically, gross margin in 2H15 jumped 1.9ppts hoh to 31.3%. The company attributed the margin expansion to 1) cotton price and oil price stayed at low level, which dragged down production cost; 2) RMB depreciation against USD, as over 70% of revenue is denominated in USD and Euro whilst China is Shenzhou s major production base; and 3) continuous optimization of company s product structure (shift to higher-margin sportswear as well as higher portion of synthetic products). Sales of sportswear segment grew 17.5% yoy and now accounted for 63.5% of overall sales in 2015 (we estimate that Nike, Adidas and Puma accounted for 24.8%, 21.7% and 8.6% of sales respectively). Management is positive that the current Ath-leisure trend is sustainable in 2016 and guided that sales of sportswear segment should outpace that of casual wear in 2016 with a double-digit growth rate. Separately, sales generated from Flyknit shoes reached US$100mn (or 5-6% of sales) in 2015 and management estimates that sales in 2016 will go up by more than 80% as Shenzhou following the ramp up of machines. The above factors should bode well for Shenzhou s gross margin in Meanwhile, the overall efficiency should improve as company s Vietnam facilities continue to ramp up with more workers in place. We have revised our 2016 sales growth forecast to 13% following company s latest guidelines. Yet we expect gross profit to grow 15% yoy amid 0.5ppts GPM expansion to 31.0%. Meanwhile, with the absence of translation loss in 2016, we expect OPM to expand 1.7ppts to 20.2%. This leads to our earnings forecast of RMB2,878mn, up 22% yoy. Yet considering the potential conversion of CBs into ordinary shares, we estimate that fully diluted EPS will be $1.92, up 14% yoy. We also introduce our 2017 earnings forecast of RMB3,397mn (EPS RMB2.26) which based on an assumption of 17% sales growth and 31.5% gross margin, mainly driven by higher portion of synthetic products. This implies an EPS CAGR of 16% during Counter is now trading at 15.1x 2017 PER, which is undemanding in view of company s excellent management capability, solid financial position and high sales visibility. Reiterate BUY with unchanged 6-month target price of $45.7, based on 17x 2017 PER. Recent Recommendations Techtronic Industries (669) BUY Reiterate BUY on Techtronic Industries (669) given company s strong innovation and solid results $34.5 HKEx (388) SELL Maintain SELL on HKEx (388) due to expensive valuation $155 AAC Technologies (2018) HOLD Downgrade AAC Technologies (2018) to HOLD as we think the stock has limited upside from current level $61.8 Sinopharm (1099) BUY Maintain BUY on Sinopharm (1099) as valuation is cheap by historical standard $36.5 China High Speed Transmission (658) BUY Reiterate BUY on China High Speed Transmission (658) on attractive valuation $8.9 Shenzhen Investment (604) BUY Shenzhen Investment (604) reported better-than-expected earnings results Maintain BUY $4.05 China Shipping Development Reiterate BUY on China Shipping Development (1138) as it will benefit from the BUY (1138) recent restructuring plan of shipping companies $7.24 Texwinca (321) BUY BUY Texwinca (321) on recovery of the U.S. business and high dividend yield $8.70 Sunny Optical (2382) HOLD Downgrade Sunny Optical (2382) to HOLD as current share price has factored in lots of positives in our view $22.34 Hua Hong Semiconductor Weakness in share price offers a good buying opportunity - Maintain BUY Hua Hong BUY (1347) Semiconductor (1347) $9.4

3 Technical Ideas HKT Trust and HKT (6823, $10.64) TP: $9.55 SELL Risk: Low Time Horizon: Short HKT Trust and HKT Ltd trade together as a stapled security. HKT Ltd provides telecommunications services. The Company's business provides telecommunications products and services including local telephony services, local data and broadband services, international telecommunications services, and other services Counter recorded no change last Friday with exceptional turnover. 9-day RSI fell towards 50, indicating a strong downward momentum ahead. SELL. Short-term target at $9.55. Cover Short at $ Source: Bloomberg, Mason Securities Consensus 2016 PER: 18.3x Consensus target price: $11.8 Goodbaby Int l (1086, $4.01) TP: $3.60 SELL Risk: Medium Time Horizon: Short Goodbaby International Holdings Ltd. is an international durable juvenile products company. The Company designs, researches and develops, manufactures, markets and sells strollers, children's car safety seats, cribs, bicycles and tricycles, and other durable juvenile products. Goodbaby markets its products in North America, Europe and China. Counter fell 0.3% last Friday with exceptional turnover. 9-day RSI fell after reaching 80, indicating a strong downward momentum ahead. SELL. Short-term target at $3.60. Cover short at $4.40. Source: Bloomberg, Mason Securities Consensus 2016 PER: 16.0x Consensus target price: $4.36

4 RSI Indicator Overbought (9-day RSI> 80) Tickers 41, 120, 148, 223, 341, 557, 582, 662, 718, 732, 753, 842, 859, 1303, 1341, 1358, 1361, 1368, 1415, 1628, 1812, 1893, 2111, 2112, 2238, 2277, 2371, 2668, 2698, 3332, 3699, 3709, 3799, 3823, 6869 Oversold (9-day RSI<20) Tickers 404, 763, 861, 6288, 6878 Exceptional Turnover & Price Movements Stock Stock Last Price ($) Price Change (%) Turnover / 3-mth daily avg turnover Target price up / downside (%)* Rating*^ Landing Int l Dev N/A N/A N/A Elegance Optical Int l N/A N/A N/A Digital Domain N/A N/A N/A Anta Sports Co-Prosperity N/A N/A N/A City E-Solutions N/A N/A N/A Nanjing Sinolife United CST Mining N/A N/A N/A Cowell E Holdings China Titans Energy Tech N/A 3.0 N/A Wisdom Sports 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 PER*

5 A-H Share Premium / Discount (%) Average AH Shanghai Listed -40.5% Premium/Discount (%) Shenzhen Listed -42.7% 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 China Shenhua Shenji Group Air China SSC CRCC Beijing Jingcheng Guangshen Railway China ABC China Shipping Huaneng Power Intl Yanzhou Coal BoComm Shanghai Electric Huadian Power Intl Nanjing Panda Haitong Securities Chongqing Iron Shanghai Pharm First Tractor Bank of China GAC Group China Everbright Guangzhou Tsingtao Brewery Anhui Expressway ICBC China Oilfield China Merchants Zhengzhou Coal CCB MCC Sinopec China Cosco Citic Securities Sinopec Shanghai Huatai Securities Co Tianjin Capital CPIC Dalian Port Shanghai Fosun Datang Intl Power Ping An Insurance Dongfang Electric Jiangsu Express Sichuan Anhui Conch Chalco Fuyao Glass Beijing North Star China Coal Energy A-H Shares Shenzhen Listed Magang Shandong Molong Petrochina Northeast Electric Great Wall Motor Zhejiang Shibao Jiangxi Copper Shandong Xinhua New China Life Hisense Kelon BBMG Zoomlion Heavy Zijin Mining Dongjiang Env China Railway Xinjiang Goldwind China Eastern BYD Guangzhou Pharm Shandong Chenming CRRC Corp Livzon Pharm China Citic Bank China Vanke CCCC China International China Shipping ZTE Corp China Life Angang Steel China Minsheng GF Securities Co Ltd Shenzhen Express Weichai Power China Southern

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, Cement, Infrastructure, PRC Properties, Telecom Asset Management, Automobile Consumer, Oil, Power, HK Property, Securities 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 151 Want Want Galaxy Air China BOC Hong Kong Tingyi Lenovo China Telecom CCB CNBM GF Securities Sinopharm PICC Group China Resources CM Bank Wharf CITIC Bank China Comm Cons CKI Holdings Hengan Int'l Cathay Pac Air MTR Corporation CITIC Ltd Power Assets Longyuan Power Huaneng Power CITIC Securities New World Dev Bank of E Asia CK Property Hang Seng Bank Dalian Wanda China Oilfield Kunlun Gas China Unicom Tencent Sands China CNOOC Sino Land Link REIT Hang Lung Prop Henderson Land China Pacific China Res Land ABC China Mobile CK Hutchison HKEx China Life China Vanke ICBC China Shenhua Ping An Li & Fung New China Life Minsheng Bank CGN Power CLP Hldgs BOCOM AIA PICC P&C Belle Int'l Haitong Securities China Mengniu Bank of China CRRC HTSC Anhui Conch GreatWall Motor Sinopec Corp China Cinda China Mer Hldgs PetroChina Swire Pacific 'A' HSBC Hldgs HK & China Gas BYD Company SHK Prop Tsingtao Brew China Railway Dongfeng Group China Overseas

7 Upcoming Events Date Stock Company Name Event Apr China Overseas Grand Oceans Quarter Apr Hidili Industry Int l Final Apr TC Orient Lighting t Final Apr Zhuguang Holdings Final Apr China Overseas Land & Invest. Quarter Apr Fuyao Glass Quarter Apr HKBN Interim Apr TCL Communication Tech Quarter Apr TCL Multimedia Tech Quarter Apr Far East Global Final Apr Livzon Pharmaceutical Quarter Apr China State Construction I Quarter Apr Zhuzhou CRRC Times Electric Final Apr Tsingtao Brewery Quarter Apr Ping An Insurance Quarter Apr Maanshan Iron & Steel Quarter Apr Vinda International Interim Apr China Shipping Dev. Quarter Apr Nanjing Panda Electronics Final 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 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 above-mentioned 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, and 6 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. Bullion trading service is provided by Mason Bullion Limited.