中集安瑞科控股有限公司 (03899.HK)

Transcription

1 公司报告 中集安瑞科控股有限公司 (03899.HK) 股价充分反映天然气汽车概念 我们把中集安瑞科 ( 集团 或 安瑞科 ) 的评级由 买入 下调至 中性 目前股价已接近我们根据分类加总值法 (SOTP) 而计算出的目标价, 而对应的市盈率较更历史平均值高逾一个标准差 我们认为其股价已充分反映政府推动以天然气取代石油的利好因素 天然气加气站的供大于求对设备销售加快形成矛盾在使用天然气作为汽车燃料的主要国家中, 中国具有最低的天然气车辆与加气站比例 假设每年有 10 万辆新天然气汽车 (NGVs) 投入使用, 也将需要 15 年的时间使中国天然气车辆与加气站比例与行业的平均水平达成一致 这意味着增加天然气汽车可能不会导致天然气加气站和天然气灌装设备需求的激增 此外, 对于使用压缩天然气和液化天然气的潜在危险似乎已经在替代燃料的增长狂潮中被遗忘 这些风险也会导致减少或延缓使用天然气作为汽车燃料 不仅限于能源设备 2013 年上半年能源相关设备占经营利润仅为 53% 自 2009 年该公司收购了其母公司的非核心业务后, 尽管中国的天然气和天然气汽车多年来有惊人的增长, 其能源相关设备收入且有稳步下降 鉴于持续下降的能源设备销售额和利润比, 我们很难看到天然气汽车概念会给安瑞科带来刺激性增长 非能源相关部门不应该被忽视集团的管理层一直承认它的化工设备和液态食品装备属于其三大核心业务, 将不会被拆分掉 这些非能源业务对安瑞科的财务业绩同时具有上行和下行的影响, 是不容忽视的 估值 年的预测保持不变 但我们将估值方法从 DCF 改为 SOTP 这可以更好地反映出集团的三大核心业务 我们将目标价上调至港币 元 / 股 ( 相当于 18.8 倍 2014 年每股盈利 ), 但鉴于股价上升空间有限将评级下调至 中性 盈利预测及估值 人民币百万元 E 2014E 2015E 营业额 6,829 8,083 9,640 11,441 13,074 同比增长 71% 18% 19% 19% 14% 净利润 ,152 1,323 同比增长 105% 32% 28% 17% 15% 每股盈利 ( 元 ) 每股股息 ( 元 ) 市盈率 (X) 市净率 (X) ROE 17% 19% 19% 18% 17% 资料来源 : 招商证券 ( 香港 ) 预测 中性 ( 上次 : 买入 ) 目标价 :HK$ 现价 :HK$13.82 招商证券 ( 香港 ) 研究部郁明德 (852) yukmt@cmschina.com.cn 2014 年 1 月 23 日 基础数据 恒生指数 23, H 股指数 10, 总股数 ( 百万股 ) 1, 港股股数 ( 百万股 ) 1, 港股市值 ( 港元百万 ) 26, 每股净资产 ( 港元 ) 2.35 主要股东 持股 中集集团香港 59.85% 自由流通量 35.88% 行业 石油燃气设备 股价表现 % 1m 6m 12m 绝对表现 相对恒指表现 % HK HSI Index 120% 100% Sino Land (23.HK) Price 80% 60% 40% 20% 0% -20% Jan 13 Apr 13 Jul 13 Oct 13 Jan 14-40% 资料来源 : 彭博 相关报告 1 of 12

2 CIMC Enric Holdings Ltd. (03899.HK) Natural Gas Vehicle Theme Fully Priced In We downgrade CIMC Enric s rating from Buy to Neutral. The stock is close to our SOTP fair value target, with corresponding P/E beyond +1 SD to the stock s historical P/E trading range. We believe that Enric s stock fully captures expected benefits from the government s push for natural gas replacing oil. Oversupply of natural gas filling stations contradicts faster equipment sales picture China has the lowest vehicle-to-filling station ratio amongst all major countries that use natural gas as vehicle fuel. Even with an estimated 100,000 new natural gas vehicles (NGVs) put into use each year it would take another 15 years before China s vehicle-to-filling station ratio is in line with the industry average. This means that an increase in NGVs may not result in a surge in new natural gas filling stations or greater demand for natural gas filling equipments. Furthermore, the inherent dangers regarding CNG and LNG seem to have been forgotten amidst the growth frenzy of alternative fuels. These dangers could curtail or slow the use of natural gas as vehicle fuel. Not an energy equipment pure-play Energy-related equipment accounted for just 53% of operating profit during 1H13 and has been in a steady decline since the company acquired its parent s non-core businesses in Given the continual decline in energy equipment s proportion of sales and profits, despite the astonishing growth of China s natural gas and NGV developments over the years, it s difficult to see Enric as being more than just moderately leveraged to any NGV theme. Non-energy related divisions should not be overlooked Enric s management has consistently acknowledged that its chemical equipment and liquid food equipment are two of its three core businesses that will not be diversified away. These non-energy businesses have both upside and downside impacts to Enric s financial results, which should not be overlooked. Valuation Our FY13-FY15 forecast remains unchanged. However, we change valuation methodology from DCF to SOTP to better reflect Enric s three core businesses. We raise our TP to HK$13.88/share (18.8x FY14E EPS), but downgrade the stock to Neutral given limited upside. Financials RMBmn E 2014E 2015E Revenue 6,829 8,083 9,640 11,441 13,074 Growth 71% 18% 19% 19% 14% Net profit ,152 1,323 Growth 105% 32% 28% 17% 15% EPS(RMB) DPS(RMB) P/E(x) P/B(x) ROE 17% 19% 19% 18% 17% Source: Company data, CMS(HK) estimates Neutral (Previous: Buy) Target Price:HK$ Current Price HK$13.82 China Merchants Securities (HK) Michael Yuk (852) yukmt@cmschina.com.cn 23 Jan 2014 Key data HSI Index 23, HSCEI Index 10, S/O (mn) 1, Mkt cap (HK$mn) 26, BVPS (HK$) 2.35 Major share holder Holding CIMC HK 59.85% Free float 35.88% Industry Oil & Gas Equip Share performance % 1m 6m 12m Absolute Relative % HK HSI Index 120% 100% Sino Land (23.HK) Price 80% 60% 40% 20% 0% -20% Jan 13 Apr 13 Jul 13 Oct 13 Jan 14-40% Source:Bloomberg Related research 2 of 12

3 Focus charts Figure 1: Enric s revenue mix Figure 2: 3 core businesses % of revenue Energy Equipment Chemical Equipment Liquid Food Equipment RMB' H13 70% 60% 50% 40% 30% 20% 10% 0% Energy Equipment Chemical Equipment Liquid Food Equipment H13 Source: Company data Figure 3: Enric s operating profit mix Source: Company data Figure 4: 3 core businesses % of operating profit Energy Equipment Chemical Equipment Liquid Food Equipment RMB' H13 80% 70% 60% 50% 40% 30% 20% 10% 0% Energy Equipment Chemical Equipment Liquid Food Equipment H13 Source: Company data Figure 5: Operating margins stable Source: Company data Figure 6: Non-energy equipment enjoys higher growth Energy Equipment Chemical Equipment Energy Equipment Chemical Equipment Liquid Food Equipment Operating margins % Liquid Food Equipment Operating profit growth % 18.0% 300.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% H % 200.0% 150.0% 100.0% 50.0% 0.0% -50.0% % H13 Source: Company data Source: Company data 3 of 12

4 Oversupply of natural gas filling stations contradicts faster equipment sales picture According to NGV Journal, China, with over 1.5million natural gas vehicles (NGVs), ranks fifth in terms of countries with the most NGVs. In terms of natural gas filling stations, China, with about 2800 stations ranks second behind Pakistan. If we take a closer look at the numbers, China has the lowest vehicle-to-filling station ratio amongst the top 10 countries that uses natural gas as vehicle fuel. With about 560 vehicles per filling station it would take another 15 years before China s vehicle-to-filling station ratio is in line with the industry average even with an estimated 100,000 new NGVs put into use each year (based on media reports). The low vehicle-to-filling station ratio underscores our view that China currently has an oversupply of natural gas filling stations. This means that an increase in natural gas vehicles may not result in a surge in new natural gas filling stations and hence greater demand for natural gas filling-equipment. Figure 7: Top 10 countries with the most NGV and filling stations 2012 No Country Number of vehicles (million) Number of filling stations Thousand vehicles/filling station 1 Iran Pakistan Argentine Brazil China India Italy Columbia Uzbekistan Thailand Source: NGV Journal and CMS(HK) Location, location, location Mean Medium With such a low vehicle-to-station ratio, a question that might immediately spring up is Then why the long lines at some filling stations? The answer is location. Not all filling stations are created equal. Since fleet vehicles make up nearly all of NGVs (e.g. buses, garbage disposal trucks, taxis, etc.) those filling stations that are located along or adjacent to designated routes, bus stations or within short distances of bustling urban areas are extremely sought after for refueling. However, these prime locations are becoming increasingly scarce and very expensive to build new stations due to higher land premiums, stringent safety requirements, while generally being unwelcomed by local residents (no one wants to live next to a petro or natural gas filling station). It also means most NGVs herd to only the most convenient and nearby stations. Hence, you have long lines at some filling stations while the vast majority of stations are completely or nearly empty. 4 of 12

5 We believe that China s NGV and natural gas filling station development will eventually gravitate toward the industry equilibrium. In Sichuan Province, one of the first provinces to adopt natural gas for vehicle fuel, we have already seen signs of market saturation with an estimated 213 filling stations serving over 252,000 NGVs, putting the province s vehicle-to-station ratio inline with the industry average of Natural gas is more dangerous than gasoline or diesel According to SafeNGV.org, the dangers of natural gas as a vehicle fuel include 1) Fire, 2) Explosion, and 3) Asphyxiation. These inherent dangers regarding CNG and LNG seem to have been forgotten amidst the growth frenzy of alternative fuels. The explosive energy of a 100litre water-capacity CNG tank, pressurized to 3600psi, is 11.1megajoules, same as 6lbs of TNT. In Pakistan, 2,000 people were killed by CNG tank explosions over the course of one year. A LNG tank could rupture and/or vented gas be ignited by a nearby spark or heat source if the LNG stored is not kept at -162 o C. These dangers require a higher level of safety awareness during use than traditional gasoline or diesel vehicles. Energy equipment s share of earnings decline despite yester-years natural gas filling station/vehicle surge China s surge in natural gas filling stations (F/S) and NGVs began during the 11th Five Year Plan ( ) when the government encouraged the development and use of new types of vehicles, to enhance energy saving and environmental protection. Auxiliary policies rolled out during the 12th Five Year Plan and, more recently, the Notice to Continue to Promote the Application of New Energy Vehicles are continuities of this theme. Combining the total number of natural gas filling stations between ENN Energy (2688.HK), CR Gas (1193.HK), and China Gas (384.HK) from FY09 to 1H13 as a growth proxy, we see that China s natural gas F/Ss have grown at a 34% CAGR during the period. Yet, Enric s revenue mix during the same period shows energy equipment sales dropping from 59% to 52% of total revenue while the division s attributable profit has declined from 76% to 53% of total operating profit. Given the continual decline in energy equipment s proportion of sales and profits, despite the astonishing growth of China s natural gas and NGV development over the years, it s difficult to see Enric as being more than just moderately leveraged to any NGV theme. Figure 8: Gas distributors filling stations Figure 9: Enric s energy equipment % of revenue/op 2688 HK 1193 HK 384 HK No. of filling stations %HoH %CAGR H12 1H13 Source: The Companies and CMS(HK) 80.0% 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% Energy Equipment % of total revenue Energy equipment % of operating profit H13 5 of 12

6 Non-energy related divisions should not be overlooked New investments reaffirm non-energy equipments importance Enric has continued to seek new opportunities to bolster its non-energy businesses (i.e. chemical equipment and liquid food equipment divisions). This was most recently reaffirmed in 2012 when Enric acquired core liquid food & beverage assets from Ziemann Group for over RMB205mn. Enric s chemical tank container business is also one of its pride and joy with a 30% market share in the specialty tank container market. Enric plans to increase production capacity by 4000 units for these specialized containers during the year. In all, non-energy equipment assets have continued to grow by 16% CAGR(FY09-FY12) after the 2009 acquisition. With every purchase, merger and acquisition, Enric s management has repeatedly acknowledged that chemical equipment and liquid food equipment are two of its three core businesses, which upholds our view that Enric s non-energy equipment related business cannot be neglected nor does the company have plans to diversify away the two businesses. Non-energy equipment could overtake energy equipment as main profit generator Since 2009, operating margins for chemical equipment has risen from 6% to 15%, while liquid food equipment has rebounded strongly from a low of 2% to 7% during 1H13. Combined with energy-equipment s operating margin (ranging from between 12-15%), overall operating profitability for the group has been stable between 10-12%. In terms of profit growth, non-energy equipment has grown at an 80% CAGR(FY09-FY12) versus 32% CAGR for energy equipment. At this trajectory, non-energy equipment would overtake energy equipment as the main earnings contributor for the group in about a year. Container market recovering For 2014, the chemical equipment market should continue to recover from a slow Global container rates have rebounded since 4Q13 and chemical tanks that normally sell at a premium to traditional box containers should rebound as well. We forecast an 11%YoY growth for Enric s chemical equipment business fostered by improving market conditions. Figure 10: F/S growth of gas distributors USD/box 2500 WCI Composite Container Freight Benchmark Rate (per 40' Box) Source: WCI and CMS(HK) 6 of 12

7 Valuation Financial outlook Energy segment: We believe growth in Enric s energy equipment will continue to moderate as it has over the past 2 years due to a more mature CNG market but still record good top-line growth of around 20% p.a. for FY14-FY15. Margins should be relatively flat as more competition from both domestic (e.g. Furui Special Equipment) and international (e.g. Chart Industries) peers prevents any significant increase in margins. Chemical segment: Enric s chemical container and storage business should see revenue increase as demand begins to recover. We are factoring an 11%YoY growth in sales for FY14 and another 5%YoY growth during FY15. Tank container sales are expected to reached 20,000units and 21,000units during FY14 & FY15, respectively. However, GPM will stay virtually flat at 18% as a surplus in production in the market prevents higher level of profitability. Chemical segment: We expect growth will remain robust after integrating Ziemann with a 30%YoY and 20%YoY increase in sales. Margins, however, will still remain at around 15% as the bulk of synergies have already been reflected. Figure 11: Segment breakdown RMBmn E 2014E 2015E Energy Equip Revenue Gross Profit Operating profit Chemical Equip Revenue Gross Profit Operating profit Liquid Food Equip Revenue Gross Profit Operating profit Revenue growth % Energy Equip 41.4% 26.2% 25.0% 20.0% 20.0% Chemical Equip 139.9% -1.0% 3.6% 11.1% 5.0% Liquid Food Equip 40.3% 69.0% 40.0% 30.0% 20.0% GP growth % Energy Equip 52.2% 16.2% 25.6% 22.7% 22.7% Chemical Equip 195.9% 17.1% 6.6% 11.1% 6.5% Liquid Food Equip -19.3% 140.1% 38.2% 30.0% 22.0% OP growth % Energy Equip 71.2% 8.8% 8.8% 20.0% 20.0% Chemical Equip 144.4% 28.4% 4.9% 11.1% 5.0% Liquid Food Equip -49.5% 268.3% 59.5% 30.0% 20.0% % of OP Energy Equip 60.4% 54.9% 57.6% 59.0% 61.6% Chemical Equip 38.2% 41.0% 36.7% 34.8% 31.8% Liquid Food Equip 1.3% 4.1% 5.6% 6.2% 6.5% Source: The Company and CMS(HK) 7 of 12

8 Major shareholder activity Enric s parent, CIMC (2039.HK), previously held about 62.56% of Enric s shares through two wholly-owned and one partially-owned subsidiary (i.e. CIMC HK, Charm Wise Ltd., and CIMC Vehicle). After CIMC Vehicle divested all of its shares, and CIMC HK converted all of its preferred shares, CIMC now effectively holds a 70% interest in Enric, the highest since More recently, PGM Holding B.V. divested all of its shares to the open market last November. Given the elevated stake holding of Enric s parent, there is a risk that CIMC may reduce its Enric holdings in the future, while keeping majority control of the company. Figure 12: Recent major shareholder activity Date Acting entity Action Interest in Enric (Before/After) Number of shares Placing price (HK$/share) 26 Nov PGM Holding 2013 B.V. Divest shares 4.24%/0% 80,067, May Convert 2013 CIMC 1 preference shares 59.64%/70.25% 495,000,000 N/A 27 Mar 2013 CIMC 2 Divest shares 65.08%/59.67% 75,055, Oct 2012 CIMC 2 Divest shares 62.56%/52.17% 103,500, Source: The Company and CMS(HK); 1: via CIMC HK, 2: via CIMC Vehicle Switching to SOTP Given the stable growth of Enric s energy equipment segment and the expected/recent recovery in chemical equipment and liquid food equipment divisions, we believe that a SOTP valuation is more reflective of Enric s value than a DCF valuation, which we previously used. We expect Enric s earnings mix between the three divisions Energy, Chemical, Liquid Food during FY14 to be 59:35:6, respectively (consistent with attributable operating profit split). We adjust our FY13-15 EPS estimates to reflect the dilutive effects relating to the preference share conversion and additional share options. Based on the most recent company disclosure, Enric has 1,890,705,522 ordinary shares, with another 58,638,000 share-option shares that may be exercised, thus bringing total diluted shares to 1,949,343,522 shares. Figure 13: Basic/Diluted EPS adjustment to converted shares and share options NEW OLD FY13E FY14E FY15E FY13E FY14E FY15E Shareholder s earnings (RMBmn) , , , ,309.8 Basic shares 1,890,705,522 1,890,705,522 1,890,705,522 1,382,271,522 1,382,271,522 1,382,271,522 Diluted shares 1,890,705,522 1,949,343,522 1,949,343,522 1,878,867,522 1,878,867,522 1,878,867,522 Basic EPS (RMB) Diluted EPS (RMB) Source: The Company and CMS(HK) 8 of 12

9 Using diluted EPS, earnings mix and corresponding valuation multiples for Enric s three business (refer to Fig.16 for peer analysis). We derive Enric s fair value at HK$13.88/share, which would be equivalent to18.8x FY14 earnings. Figure 14: SOTP calculations FY14E Diluted EPS (RMB) Earnings Mix FY14E Valuation (RMB/share) Energy Equipment % 21.5x 7.42 Chemical Equipment % 15.0x 3.07 Liquid Food Equipment % 14.9x 0.52 Source: The Company and CMS(HK Fair Value (RMB) (HKD) 11.01/share 13.88/share Cross-checking with Enric s historical valuation, our derived fair value price places Enric s value at more than +1std. deviation above the stock s historical P/E trading range. We believe that at this level, Enric s stock has fully captured the expected benefits from the governments push for natural gas as oil replacement. Given the share s recent rise, we see limited upside for the stock (less than 1% based on yesterday s close). Hence, we downgrade the stock from BUY to NEUTRAL. Figure 15: CIMC Enric 12-month forward P/E bands (X) 25 12M Rolling Forward PE Mean +1 Standard Deviation -1 Standard Deviation Price 5X 10X 15X 20X (HK$) Source: The Company and CMS(HK) 9 of 12

10 Figure 16: Peer Analysis Company Stock Code Share price (LC$) Market cap (HK$m) Gross margin Operating margin Net margin NAT. GAS EQUIPMENT/NGV RELATED Jutal Offshore Oil 3303 HK , Chart Industries Inc GTLS US , Furui Special - A CH , Average ROAA ROAE CONTAINER Singmas Container 716 HK ,357 N/A CIMC -H 2039 HK , Average FOOD/LIQUID FOOD METAL PACKAGING CPMC Holdings Ltd 906 HK , Ball Corp BLL US , Crown Holdings Inc CCK US , N/A Silgan Holding Inc SLGN US , Greif Inc GEF US , Toyo Seikan Group 5901 JP 1, , Great China Metal Ind 9905 TT , Amcor Ltd AMC AU , Average CIMC Enric Holding Ltd HK , Company Free cash flow yield Dividend payout ratio Div. yield FY13 P/E (X) FY14 P/E (X) P/B (X) FY2 EPS growth 2-yr forward EPS CAGR NAT. GAS EQUIPMENT/NGV RELATED Jutal Offshore Oil (7.4) Chart Industries Inc (0.3) 0.0 N/A Furui Special - A Average (2.5) CONTAINER Singmas Container (8.2) CIMC -H (4.7) Average (0.9) FOOD/LIQUID FOOD METAL PACKAGING CPMC Holdings Ltd N/A Ball Corp Crown Holdings Inc N/A N/A 13.7 (4.3) Silgan Holding Inc Greif Inc Toyo Seikan Group N/A (2.0) 2.2 Great China Metal Ind Amcor Ltd Average CIMC Enric Holding Ltd (6.5) Source: CMS(HK) 10 of 12

11 Appendix: Financial summary Statement of financial position Statement of comprehensive income RMBmn E 2014E 2015E RMBmn E 2014E 2015E Current Assets 4,971 5,324 7,268 8,940 10,688 Revenues 6,829 8,083 9,640 11,441 13,074 Cash & equivalents 1,082 1,010 2,116 2,835 3,731 Cost of sales (5,550) (6,505) (7,732) (9,147) (10,387) Trading investments Sales taxes Trade notes Op (200) (259) (387) (475) (569) Trade receivables 1,356 1,842 2,245 2,664 3,045 Admin exp (470) (565) (413) (522) (653) Other receivables Financial (12) (9) (8) (7) (7) Inventories 2,078 1,974 2,330 2,757 3,130 Impairments Other current assets FV changes Non-current assets 1,806 2,403 2,486 2,636 2,786 Others Investment property Op Profit PPE 1,295 1,763 1,846 1,996 2,146 Non-op inc Intangible assets Non-op exp Other non-current assets PBT Total assets 6,777 7,727 9,754 11,576 13,474 Taxes (147) (162) (215) (253) (286) Liquid Liabilities 2,883 3,115 3,964 4,636 5,238 Net Profit Bank loans NCI Trade payables 1,312 1,351 1,585 1,878 2,139 Parents Prepaid Accounts EPS - (RMB) Other liquid liabilities 1,250 1,501 2,129 2,520 2,874 Long term Liabilities Ratios Loans E 2014E 2015E Others YoY growth Total Liabilities 3,346 3,649 4,499 5,173 5,779 Revenue 70.8% 18.4% 19.3% 18.7% 14.3% Issued capital Op profit 95.6% 26.7% 28.6% 17.3% 13.0% Retained Earnings 2,246 2,928 3,908 5,060 6,363 Net profit 105.0% 32.2% 28.1% 17.4% 13.1% Reserves 1,147 1,107 1,291 1,277 1,253 Profitability NCI Gross 18.7% 19.5% 19.8% 20.1% 20.6% Parents 3,431 4,078 5,255 6,403 7,695 margin NP margin 8.5% 9.5% 10.2% 10.1% 10.0% Total equity and liabilities 6,777 7,727 9,754 11,576 13,474 ROE 16.9% 18.8% 18.7% 18.0% 16.9% ROIC 8.9% 13.6% 15.3% 15.2% 14.6% Statement of cash flows Liquidity RMBmn E 2014E 2015E D/A 10.1% 8.5% 7.0% 5.8% 4.9% CF from OA ,038 1,030 1,230 ND/A -5.9% -8.7% -14.7% -18.7% -22.8% PBT ,196 1,404 1,589 Liquid ratio D&A Quick ratio Finance costs (4) Operating efficiency Investment income Asset Changes of WC (336) (45) (108) (298) (261) turnover Inventory Others (148) (161) (206) (243) (276) turnover AR turnover CF from IA (508) (726) (150) (150) (150) AP turnover Capital expenditure (405) (451) (150) (150) (150) Per share ratios(rmb) Other investments (102) (275) EPS CF from FA 360 (211) (135) (162) (185) CFS (0.03) Borrowings 373 (113) (20) (19) (18) BVPS Share capital DPS Changes of reserves 115 (40) -8 (15) (24) Valuation Dividends 0 (117) (107) (136) (160) ratios PE Others (128) 40 (1) 7 17 PB Net cash flow 206 (81) EV/EBITDA Source: Company data, CMS(HK) estimates 11 of 12

12 RATING DEFINITION & DISCLAIMER RATING BUY NEUTRAL SELL DEFINITION Expected to outperform the market index by >10% over the next twelve months Expected to outperform or underperform the market index by 10% or less over the next twelve months Expected to underperform the market index by >10% over the next twelve months DISCLAIMER This document is prepared by China Merchants Securities (HK) Co., Limited ( CMS HK ). CMS HK is a licensed corporation to carry on Type 1 (dealing in securities), Type 2 (dealing in futures), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance (Chapter 571). This document is for information purpose only. Neither the information nor opinion expressed shall be construed, expressly or impliedly, as an advice, offer or solicitation of an offer, invitation, advertisement, inducement, recommendation or representation of any kind or form whatsoever to buy or sell any security, financial instrument or any investment or other specific product. The securities, instruments or strategies discussed in this document may not be suitable for all investors, and certain investors may not be eligible to participate in some or all of them. Certain services and products are subject to legal restrictions and cannot be offered worldwide on an unrestricted basis and/or may not be eligible for sale to all investors. The information and opinions, and associated estimates and forecasts, contained herein have been obtained from or are based on sources believed to be reliable. CMS HK, its holding or affiliated companies, or any of its or their directors, officers or employees ( CMS Group ) do not represent or warrant, expressly or impliedly, that it is accurate, correct or complete and it should not be relied upon. CMS Group will not accept any responsibility or liability whatsoever for any use of or reliance upon this document or any of the content thereof. The contents and information in this document are only current as of the date of their publication and will be subject to change without prior notice. Past performance is not indicative of future performance. Estimates of future performance are based on assumptions that may not be realized. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. Opinions expressed herein may differ or be contrary to those expressed by other business divisions or other members of CMS Group as a result of using different assumptions and/or criteria. This document has been prepared without regard to the individual financial circumstances and investment objectives of the persons who receive it. Use of any information herein shall be at the sole discretion and risk of the user. Investors are advised to independently evaluate particular investments and strategies, take financial and/or tax advice as to the implications (including tax) of investing in any of the securities or products mentioned in this document, and make their own investment decisions without relying on this publication. CMS Group may have a long or short position, make markets, act as principal or agent, or engage in transactions in securities of companies referred to in this document and may also perform or seek to perform investment banking services or provide advisory or other services for those companies. This document is for the use of intended recipients only and this document may not be reproduced, distributed or published in whole or in part for any purpose without the prior consent of CMS Group. CMS Group will not be liable for any claims or lawsuits from any third parties arising from the use or distribution of this document. This document is for distribution only under such circumstances as may be permitted by applicable law. This document is not directed at you if CMS Group is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. In particular, this document is only made available to certain US persons to whom CMS Group is permitted to make available according to US securities laws, but cannot otherwise be made available, distributed or transmitted, whether directly or indirectly, into the US or to any US person. This document also cannot be distributed or transmitted, whether directly or indirectly, into Japan and Canada and not to the general public in the People s Republic of China (for the purpose of this document, excluding Hong Kong, Macau and Taiwan). China Merchants Securities (HK) Co., Ltd 48/F, One Exchange Square, Central, Hong Kong Website: Tel: (852) Fax: (852) of 12