We believe Hang Seng Index will continue to rebound in near term. Hang Seng Index Performance

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1 26 July 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, % 0.1% -12.8% 7.3% HSCEI (H-Shares) 11, % -0.4% -19.3% 2.2% Mkt T/O ($ Mn) 86, % -19.5% -54.0% 8.6% Oversea DJIA 25, % 4.7% -4.5% 17.1% NASDAQ 7, % 4.9% 5.7% 23.5% Shanghai SE Composite 2, % 2.1% -18.4% -10.6% Shenzhen Component 9, % 1.3% -18.1% -8.1% Commodities and FX Crude Oil Futures (US$) % -1.4% 5.1% 42.6% Gold Futures (US$) 1, % -2.1% -8.8% -1.3% Baltic Dry Index 1, % 34.1% 45.5% 83.3% USD / Euro % 0.6% -5.7% 0.9% Yen / USD % -0.8% -2.2% 1.2% CNH / USD % -2.6% -6.4% 0.0% Market Overview Hang Seng Index closed up 0.9% at 28,920. HSCEI also rose 0.9%. Market turnover decreased to $86.4 billion. Heavily weighted Tencent (700) and HSBC (5) increased 1.2% and 0.5% respectively. AIA Group (1299) slid 0.4%. Gaming, oil, technology, pharmaceutical, insurance, automobile and airline stocks outperformed the market. Sands China (1928) and Galaxy Entertainment (27) soared 3.6%-4.4%. Air China (753) jumped 3.4%. AAC Technologies (2018) and Sunny Optical (2382) surged 2.5%-3.0%. Three largest oil companies jumped 2.1%-3.5%. CSPC Pharmaceutical (1093) and Sinopharm (1099) advanced 3.1% and 1.7% respectively. Seven insurance stocks in HSCEI had an average increase of 1.3%, among which New China Life (1336) and CPIC (2601) rose 1.8%-2.0%. Geely Automobile (175) and Dongfeng Motor (489) lifted 1.3%-1.7%. Local banking and telecom stocks ended higher. Hang Seng Bank (11) and Bank of East Asia (23) climbed 1.3%-1.5%. China Telecom (728) and China Unicom (762) grew 1.1%-1.4% but China Mobile (941) was flat. We believe Hang Seng Index will continue to rebound in near term. Consumption, property, Chinese banking, securities and railway related stocks lacked clear direction. Want Want China (151) added 0.5% while WH Group (288) tumbled 1.4% making it the worst performing stock in HSI. Country Garden (2007) elevated 3.7% whilst Sunac China (1918) cut 0.8%. New World Development (17) soared 2.8% while Link REIT (823) dropped 0.9%. Postal Savings Bank (1658) surged 2.0% while China CITIC Bank (998) retreated 0.6%. Four largest Chinese banks added 0.3%-0.8%. China Gas Holdings (384) increased 1.9%. China Railway Group (390) fell 1.3%. We believe Hang Seng Index will continue to rebound in near term.

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) Anticipation of good earnings results for 2Q18 - Maintain BUY Galaxy Entertainment (27) Since our BUY commentary dated July 3, the share price of Galaxy Entertainment (27, GEG, $64.7) has climbed 6.5% compared with a loss of 0.1% for Hang Seng Index. We believe the outperformance of CEG is driven by better-than-expected Macau s gaming revenue after completion of the World Cup and speculation on good earnings results for the second quarter. Macau s gaming revenue growth, on a year-on-year basis, decelerated from 22.2% in the first four months of 2018 to 12.1% in May, 12.5% in June and estimated 12% in July. We reiterate that the opening of the Hong Kong-Zhuhai- Macau Bridge in the second half of 2018 will further boost Macau s tourism and gaming industry. As a recap, GEG registered strong earnings results for 2017 with revenue and adjusted EBITDA increased by 18% and 37% yoy to $62.5bn and $14.1bn respectively. Net profit reached $10.5bn. For the first quarter of 2018, revenue and adjusted EBITDA grew 32% and 36% yoy to $18.5bn and $4.3bn respectively. Total gaming revenue rose 31% yoy to $17.2bn, primarily fueled by a 17% yoy increase in mass gaming revenue to $6.7bn and 44% yoy gain in VIP gaming revenue to $9.9bn. Balance sheet was strong with net cash and liquid investments amounting to $34.5bn or approximately $8.0 per share as of 31 March 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. Fig1: 1 Year Share Price Source: Bloomberg, Mason Securities 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 $73.8bn in 2018 and $80.3bn in 2019 representing an increase of 18% and 9% yoy respectively. Traded at 16.0x 2018 EV/EBITDA, valuation of GEG is still attractive in our view. We therefore maintain our BUY rating on GEG with an unchanged 6- month price target of $72.0 based on 18.0x 2018 EV/EBITDA.

3 Technical Ideas Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss Nine Dragons Paper 2689 HK Equity BUY $9.93 $10.92 $15.66 $9.43 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 232% 5.6X 1.13X 75% Technical Indicator SMA RSI (14) 53.2 SMA BB (Upper) SMA BB (Lower) 8.24 Stock Code Rating / Last Closing Price Our TP / Bloomberg TP Cut Loss Kerry Properties 683 HK Equity BUY $38.55 $42.41 $39.12 $36.62 MKT Cap ($Bn) / Free Float Turnover / 30D Avg ($Mn) Turnover vs 5D & 30D Avg Forward PER / PBR Net Debt (Cash) / Equity % % 252% 10.1X 0.58X 24% Technical Indicator SMA RSI (14) 55.0 SMA BB (Upper) SMA BB (Lower) Source: Bloomberg, Mason Securities

4 Recent Recommendations Date of Issue Stock Pick Recommendation Highlights Rating (TP) Upgrade Wisdom Education (6068) to BUY as valuation turns attractive to long-term investors 11/7/2018 Wisdom Education (6068) 12/7/2018 CR Gas (1193) 13/7/2018 CSCI (3311) 16/7/2018 CTCM (570) 17/7/2018 COPH (2669) 18/7/2018 Mengniu Dairy (2319) 19/7/2018 Anta Sports (2020) 20/7/2018 CCCC (1800) 23/7/2018 Dali Foods (3799) 24/7/2018 Shimao Property (813) Recent outperformance reflected investors confidence in the growth prospects of education service providers in China We continue to take a positive view on China s education services industry given a fast-growing middle class and rising demand for quality education service China Resources Gas (1193): Defensive player with long-term value in volatile market, reiterate BUY Natural gas consumption growth in China remained strong in May, according to NDRC We continue to take a positive view on the gas operator given the industry s long-term and stable growth Robust new contract value growth for 1H18 Maintain BUY China State Construction (3311) Robust new contract value growth in the first half of 2018 and increasing housing supply in Hong Kong should benefit CSCI in long term Unfinished contract value grew 26.6% to $224.0bn in June, equivalent to 4.5x revenue for 2017 China Traditional Chinese Medicine (570): Bullish on the industry growth, initiate BUY Sales of TCM granules will increase at a CAGR of 40% in the coming four years CTCM 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 and more and more provinces including TCM granules in medical insurance in the future Room for further expansion through acquisition Maintain BUY China Overseas Property (2669) We remain optimistic about the growth prospects of China s property management industry Valuation of COPH is still attractive to long term investors in our view Mengniu Dairy (2319) - Recent share price weakness offers a buying opportunity, Maintain BUY We believe Mengniu s fundamental still remains strong and expect it to deliver solid revenue and net profit growth in upcoming interim results Reallocation of capital flow to consumer staples sector which did not suffer from trade war between China and U.S. may provide support to share price in the near term. We think the recent share price weakness offers a buying opportunity and maintain our BUY rating on Mengniu. Room for further expansion through acquisition BUY Anta Sports (2020) Price correction is sentiment driven while the fundamentals of the company remain intact The company is also less affected by renminbi depreciation and trade war between the U.S. and China Undemanding valuation at forward P/E of below 5x Maintain BUY CCCC (1800) Underperformance of CCCC is mainly driven by worries about a slowdown in China s fixed assets investment growth However, a higher revenue exposure to overseas market and good track record in acquisition of new contracts should help minimize impact from the industry slowdown Dali Foods (3799): Share price is expected to react positively to solid interim results 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. Traded at 2018 PER of 20.5x and 2019 PER of 17.6x, valuation of Dail Foods is still undervalued in our view given its proven Innovative & executive ability. Strong contracted sales and share buyback are key catalysts - Maintain BUY on Shimao Property (813) We believe the acceleration in contracted sales and continuous share buyback will be key share price drivers for Shimao in near term. Trading at 2018 P/E of 6.9x and 2018 P/B of 0.97x compared with an average 2018 P/E of 6.9x and 2018 P/B of 1.45x for the remaining nine largest Chinese property stocks. BUY ($7.50) BUY ($38.50) BUY ($10.20) BUY ($8.00) BUY ($3.20) BUY ($28.9) BUY ($47.5) BUY ($9.20) BUY ($8.50) BUY ($24.8)

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