Exciting Future Ahead, Reiterate Buy

Transcription

1 Geely Automobile (00175 HK) Automobiles & Components Sector Equity Research 股票研究 : Geely Automobile (00175 HK) 公司报告 : 吉利汽车 (00175 HK) Exciting Future Ahead, Reiterate Buy 前程似锦, 重申 买入 Toliver Ma 马守彰 (852) toliver.ma@gtjas.com.hk 公 司 报 告 证 券 研 究 报 告 汽车及零部件行业 Equity Research Report Official launch of Lynk & Co 01. Geely has finally started selling its first Lynk & Co model after one year of marketing and setting up. We continue to stay optimistic on the new brand, especially after its product launch in 28 Nov., coupled with the more premium 4S store (Lynk shop). Lynk products will also be heavily marketed in its Lynk space, a brand experience store, and Lynk center, its online site. Strong medium to long-term growth expected. We are excited about Geely auto s growth prospects as we believe that its growth will be underpinned by their 1) strong model cycle, 2) export strategy via Proton cooperation, and 3) NEV strategy. We increase our shareholders profit forecasts by 16.3% / 28.4% / 34.9% in 2017 to 2019, respectively, to reflect our updated sales forecast on both the Geely brand and Lynk & Co. We have also further increased our GP margin assumption due to expected efficiency gain in production and the Company s continuous product upscale strategy. Reiterate Buy rating. We revise up TP to HK$34.54, representing 26.8x 2017 PER, 17.3x 2018 PER, 7.8x 2017 PBR and 5.6x 2018 PBR. The Company s stock price retreated 6.6% last week. We believe that this is a result of profit taking actions from investors, as other stocks experiencing superior performance this year also retreated by a large magnitude. We believe this presents another Buy opportunity as the current performance is a short-term fluctuation with no fundamental impact. 领克 01 正式发布 经过一年的营销和筹备, 吉利终于迎来第一款领克车型的销售 我们继 续对该新品牌保持乐观, 尤其是在出席 11 月 28 日的新品发布会之后 加之更为优质的 4S 店 ( 领克专卖店 ), 领克的产品将通过品牌体验店领克空间和线上的领克中心而得到 大量推广 中长期强劲增长可期 我们对吉利汽车的增长前景感到振奋, 我们认为其增长将来自以下 方面 :1) 强劲的车型周期 ;2) 与宝腾合作的出口战略 ; 以及 3) 新能源车战略 我们将 年度股东净利润的预测分别上调 16.3% / 28.4% / 34.9%, 以反映我们 对吉利品牌和领克品牌的最新销售预测 基于生产率的提升和持续的产品扩张策略, 我们 也进一步上调了毛利率预期 重申 买入 评级 我们将目标价上调至 港元, 分别对应 26.8 倍 2017 年市盈率 17.3 倍 2018 年市盈率 7.8 倍 2017 年市净率和 5.6 倍 2018 年市净率 上周股价下跌 6.6%, 我们认为这是投资者的获利退场行为, 因为其他在本年表现优异的股票也出现大幅度回 调 我们认为这是另一个 买入 机会, 因为当前股价表现属短期波动, 对基本面没有影 响 Rating: Buy Maintained 评级 : 买入 ( 维持 ) 6-18m TP 目标价 : HK$34.54 Revised from 原目标价 : HK$23.47 Share price 股价 : Stock performance 股价表现 [Table_PriceChange] Change in Share Price 股价变动 % of return Abs. % 绝对变动 % Rel. % to HS Index 相对恒指变动 % Avg. Share price(hk$) 平均股价 ( 港币 ) 1 M 1 个月 Source: Bloomberg, Guotai Junan International. 3 M 3 个月 HK$ (50.0) Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 HSI Geely Automobile 1 Y 1 年 (2.3) (1.0) 中吉外利运汽输车 [Table_ Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率 12/31 (RMB m) (RMB m) (RMB) ( %) (x) (RMB) (x) (RMB) (%) (%) 2015A 30,138 2, A 53,722 5, F 100,935 9, F 139,833 15, F 168,055 20, [Table_BaseData] Shares in issue (m) 总股数 (m) 8,945.9 Major shareholder 大股东 Geely Holding 42.7% Market cap. (HK$ m) 市值 (HK$ m) 229,909.6 Free float (%) 自由流通比率 (%) month average vol. 3 个月平均成交股数 ( 000) 58,202.4 FY17 Net gearing (%) FY17 净负债 / 股东资金 (%) Net Cash 52 Weeks high/low (HK$) 52 周高 / 低 / FY17 Est. NAV (HK$) FY17 每股估值 ( 港元 ) 37.1 See the last page for disclaimer Page 1 of 8

2 What LYNK & Co. Does Differently Innovative marketing strategy. Instead of splashing cash on discount promotions, Geely Auto aims to improve customer experience through Lynk space ( 领克空间 ), Lynk center ( 领克中心 ) and Lynk shop ( 领克商城 ). The operating stores of Lynk space will open in popular shopping malls in order to increase brand awareness for target customers. It does not act as a sales center, but rather to boost the higher-end Lynk & Co. brand identity and introduce the brand and vehicles through innovative digital means. With digital touchpoints, the Lynk space will attract a younger demographic and those keen to experience the Lynk and Co lifestyle. This strategy was adopted from top brands such as Mercedes-Benz, which opened the Mercedes Me Store in retail malls. On the other hand, Lynk centers are upgraded 4S stores, but different in store design, such as the inclusion of stylish resting zones, children zones, etc. Both of the above offline stores will be supporting its online Lynk & Co Store. The online shopping experience is expected to be very different from traditional 4S stores, in which, everything will be more standardized and transparent. For all Lynk & Co. buyers, there will be three lifetime services (lifetime warranty, lifetime road emergency service, and lifetime data) which also adds a premium to purchases in our view. A glimpse of initial success during pre-sale. Geely Auto set the quickest sales record on Lynk & Co presale activities. Lynk & Co. pre-sales activities was held on the day Guangzhou Auto Show began. Only 6,201 Lynk model 1 with four different limited edition options was available in the pre-sales activities. Specifically, the yao ( 耀 ) version sold out in 1.7 seconds, time edition was sold out in 2.1 seconds, while the remaining were sold within 137 seconds. In addition, for the next 4 months, Geely will put up 200 units of the Drive Pro Limited Edition ( 时间限量版 ) Lynk 01 for sale during a specified period to trigger a buying surge. We expect that demand will be strong for the time limited edition due to its distinctive appearance and build material; as well as initial orders for the Lynk 01 seem to have reached approximately over 20,000 units in the first day. Figure-1: Lynk & Co Sales Forecast Figure-2: Lynk & Co s 01 Drive Pro Limited Edition Units Sales % to Geely sales 28.3% 500, , , , % 300, , , , ,000 50, % F 2018F 2019F 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Source: Guotai Junan International. Table-1: Lynk & Co 01 Version Model Type Lynk 01 Two-wheel Drive Clear ( 纯 ) Lite Lynk 01 Two-wheel Drive ( 型 ) Lynk 01 Two-wheel ( 型 )Pro Lynk 01 Two-wheel ( 耀 ) Pro Lynk 01 Four-wheel ( 劲 ) Drive Pro Lynk 01 Four-wheel Drive Pro Limited Edition ( 时间限量版 ) Price (RMB) 158, , , , , ,800 Displacement 2.0T 2.0T 2.0T 2.0T 2.0T 2.0T Gearbox 6-speed AMT 6-speed AMT 6-speed AMT 6-speed AMT 7-speed DCT 7-speed DCT See the last page for disclaimer Page 2 of 8

3 Outlook Another Big Year For Geely in 2018 Expected Model cycle continues to be strong for Geely. The management revealed that Geely s model cycle is far from over. In 2018, there should be five brand new models, with two coming from Lynk & Co. (widely reported to be the 02 and 03 models) and three coming from the Geely brand. Lynk & Co: The 03 model is expected to be a small SUV or crossover, while the 02 is expected to be a sedan. Both are expected to launch before 1H18. Geely: Expected to have an MPV, SUV and sedan in Future: model plan to be at least 2-3 new models each year. Table-2: Summary of Financial Forecast Year Model Launch date Mode of upgrade Vehicle Types Displacement 2018 Lynk 02 1H18 New Compact SUV 1.5T Lynk New Sedan 1.5T Emgrand GL 2018 Facelift Sedan 1.4T Emgrand GS 2018 Facelift Sedan 1.4T Boyue 2018 Facelift Compact SUV 2.0L/1.8T New SUV 2018 New Compact SUV unknown New MPV 2H18 New MPV unknown New Sedan (GT) 2018 New Sedan 1.5T / 1.5L PHEV Exciting medium to long-term plan ahead. Geely Auto has a number of initiatives to keep the company growing, including its new energy vehicle strategy, export strategy and model plan. 1) NEV strategy: earlier in 2015 Geely already initiated its Blue Geely Initiatives scheme, setting a target that by 2020, 90% of vehicles sold will be NEV, meaning that vehicles will be either plug-in hybrids ( PHEV ) or pure electric ( EV ) by China s definition. Correspondingly, Volvo also announced this year that they will make only EV, PHEV or hybrid vehicles. Currently, Geely owns a BEV platform which the Emgrand EV is based on. In Nov. 2017, Geely Auto Chairman Mr. Li introduced the launch of a new PMA platform for electric vehicle development (e.g. A0-class CROSS, A-class hatchback and A+-class SUV). The plug-in hybrid vehicle will be equipped with a 1.5T engine +7DCTH gearbox developed by Geely European R&D center, with only 1.5L/100km fuel consumption. 2) Export strategy: Current export sales reveals a different picture of local sales, dropping 46.5% yoy YTD Nov as most capacity is used to fulfill domestic demand in China. Geely Auto s parent company will transfer the Proton business or equity to Geely as announced in late Nov We believe that the injection will unlock a huge scale for Geely Auto in the South East Asia region. With its low-cost production capability and Volvo's technologies, Geely could build cost-competitive cars for the ASEAN market with the Proton plant, which is estimated to have a designed capacity of 1 million units per year. Export costs are further reduced by taking advantage of the Asean Free Trade Area (AFTA), with reduced or eliminated tariffs on automobiles in the region. 3) Model plan: Despite the abovementioned model cycle, there is a missing segment in which Geely currently has no product yet. This is the medium-sized to large-sized vehicle segment. During the investor reception on 30 Nov., Geely Auto CEO Mr. An revealed that the future B-Class, C-Class and D-Class cars are expected to be launched through the Lynk & co. brand. We believe that Geely should soon have the rights to use the SPA (Scalable Product Architecture) platform from Volvo; that platform also underpins SUVs such as Volvo s XC 60 and XC 90. To support the aggressive model plan, more capacity will be committed. Currently, it is known that the Luqiao and Zhangjiakou plant will be used to produce Lynk 01 and Lynk 02 / 03, respectively. The third to fifth production plants are already in progress, with annual capacity of 300,000 units expected, according to Mr. An. See the last page for disclaimer Page 3 of 8

4 Earnings Revisions We have upgraded our forecast to reflect the current run for Geely Auto and updated our outlook for the company based on our optimism towards the Company. As a result, shareholders profit has been adjusted by 16.3% / 28.4% / 34.9% in 2017 to 2019, respectively. Sales: We have increased our sales forecast for Geely brand in 2017 to 2019, by 9.4% / 18.4% / 20.0%. Meanwhile, we largely reduce 2017 sales for Lynk & Co 01 since it only launched in late Nov All in all, we expect Geely Auto s overall sales to be able to reach 2 million units in GP margin: We believe that in the next few years, Geely will continue to refine its product portfolio to a more premium segment and not be limited to Lynk & Co brand. As a result, we also increase our GP margin assumption. Other changes: Other changes in the model include redemption of the USD 300 senior notes in Nov and dividend payout. High interest rate (5.25%) is attached with the senior notes and we believe that the Company is looking to replace it with a cheaper loan. In addition, dividend payout is able to increase as there is debt covenant which restricts the payout ratio to not exceed 15%. We estimate that payout will increase above 25% in 2017 after expected strong results. Table-3: Major Financial Data and Forecast Changes New Old Changes 2017F 2018F 2019F 2017F 2018F 2019F 2017F 2018F 2019F Vehicle sales (Units) Sales Volume 1,245,085 1,751,617 2,002,142 1,137,590 1,479,649 1,667, % 18.4% 20.0% Geely 1,240,085 1,506,117 1,560,142 1,122,590 1,228,149 1,225, % 22.6% 27.3% Lynk & Co 5, , ,000 15, , , % -2.4% 0.0% Financials (RMB mn) Revenue 100, , ,055 90, , , % 24.0% 29.5% Gross Profit Margin 20.0% 20.9% 21.8% 19.3% 20.0% 20.4% 0.7 ppt 0.9 ppt 1.4 ppt Share of profit of JV 73 1,700 3, ,733 3,597 n.a. n.a. n.a. Net Income (Loss) 9,893 15,035 20,421 8,510 11,707 15, % 28.4% 34.9% Basics EPS (RMB) % 28.4% 34.9% Note: Comparing with sector report issued in 7 Jul Table-4: Summary of Financial Forecast F 2018F 2019F Sales volume (units) 510, ,851 1,245,085 1,751,617 2,002,142 yoy 22.1% 50.1% 62.6% 40.7% 14.3% Blended ASP - RMB/unit (Geely only) 59,083 70,146 81,393 92, ,717 yoy 13.6% 22.0% 18.0% 14.1% 16.0% Sales revenue (RMB mn) 30,138 53, , , ,055 yoy 38.6% 78.3% 87.9% 38.5% 20.2% Gross profit 5,471 9,842 20,163 29,198 36,570 yoy 38.1% 79.9% 104.9% 44.8% 25.2% Share of profit of JV ,700 3,597 yoy 368.9% % % % 111.6% Shareholders' profit 2,261 5,112 9,893 15,035 20,421 yoy 58.0% 126.2% 93.5% 52.0% 35.8% Gross profit margin 18.2% 18.3% 20.0% 20.9% 21.8% Operating margin 9.3% 11.0% 12.2% 12.2% 13.0% Net profit margin 7.5% 9.5% 9.8% 10.8% 12.2% EPS 3-year CAGR -1.7% 22.2% 90.4% 87.9% 58.7% See the last page for disclaimer Page 4 of 8

5 Dec 07 Apr 08 Aug 08 Dec 08 Apr 09 Aug 09 Dec 09 Apr 10 Aug 10 Dec 10 Apr 11 Aug 11 Dec 11 Apr 12 Aug 12 Dec 12 Apr 13 Aug 13 Dec 13 Apr 14 Aug 14 Dec 14 Apr 15 Aug 15 Dec 15 Apr 16 Aug 16 Dec 16 Apr 17 Aug 17 Dec 17 Dec 07 Apr 08 Aug 08 Dec 08 Apr 09 Aug 09 Dec 09 Apr 10 Aug 10 Dec 10 Apr 11 Aug 11 Dec 11 Apr 12 Aug 12 Dec 12 Apr 13 Aug 13 Dec 13 Apr 14 Aug 14 Dec 14 Apr 15 Aug 15 Dec 15 Apr 16 Aug 16 Dec 16 Apr 17 Aug 17 Dec 17 Valuation We reiterate our Buy rating for Geely Auto. We revise up TP to HK$34.54, representing 26.8x 2017 PER, 17.3x 2018 PER, 7.8x 2017 PBR and 5.6x 2018 PBR. The stock price retreated 6.6% last week. We believe that this is the result of profit taking action from investors, as other stocks with superior performance this year also retreated to a large magnitude. We believe this presents another Buy opportunity as the current performance is a short-term fluctuation with no fundamental impact. Geely s products are still in hot demand with Lynk & Co. being well-received by the market. The mid- to long-term plan and strategy aligns with the industry landscape. Figure-3: PER Band of Geely Auto Figure-4: PBR Band of Geely Auto (X) PE band PE (2017F) PE (historical high) PE (historical mean) PE (2018F) PE (Historical low) (X) PB band PB(2017F) PB(historical high) PB (historical mean) PB (2018F) PB(historical low) Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International. See the last page for disclaimer Page 5 of 8

6 Table-5: Peers comparison Last price PE PB ROE(%) D/Y(%) EV/E Company Stock Code Currency 16A 17F 18F 19F 16A 17F 18F 19F 17F 17F 17F Dongfeng Motor-H 489 HK HKD Geely Automobile 175 HK HKD Brilliance China 1114 HK HKD n.a. Great Wall Mot-H 2333 HK HKD Qingling Motor-H 1122 HK HKD n.a. Byd Co Ltd-H 1211 HK HKD Guangzhou Auto-H 2238 HK HKD Baic Motor-H 1958 HK HKD Weichai Power-H 2338 HK HKD Sinotruk Hk Ltd 3808 HK HKD Simple Average Weighted Average Dongfeng Auto-A CH CNY n.a. n.a. Great Wall Mo-A CH CNY Faw Car Co Ltd-A CH CNY 10.6 n.a Saic Motor-A CH CNY Chongqing Chan-A CH CNY Weichai Power-A CH CNY Beiqi Foton-A CH CNY n.a. Anhui Jianghua-A CH CNY Cnhtc Jinan T-A CH CNY n.a. Zhengzhou Yut-A CH CNY Xiamen King Lo-A CH CNY n.a n.a. Jiangling Moto-A CH CNY n.a. Yangzhou Yax-A CH CNY n.a. n.a. n.a n.a. n.a. n.a. n.a. n.a. n.a. Zhongtong Bus-A CH CNY n.a. n.a. n.a n.a. Simple Average Weighted Average Nissan Motor Co 7201 JP JPY 1, Toyota Motor 7203 JP JPY 7, Honda Motor Co 7267 JP JPY 3, Mazda Motor 7261 JP JPY 1, Mitsubishi Heavy 7011 JT JPY 4, Fuji Heavy Indus 7270 JP JPY 3, Suzuki Motor 7269 JP JPY 6, Hino Motors Ltd 7205 JP JPY 1, Isuzu Motors 7202 JP JPY 1, Simple Average Weighted Average Hyundai Motor KS KRW 158, Ford Motor Co F US USD Navistar Intl NAV US USD n.a. n.a n.a. n.a. n.a. n.a. (4.3) Paccar Inc PCAR US USD Volkswagen Ag VOW GR EUR Bayer Motoren Wk BMW GR EUR Daimler Ag DAI GR EUR Man Se MAN GR EUR n.a n.a. n.a. n.a. n.a. 3.2 n.a. Renault Sa RNO FP EUR Volvo Ab-B VOLVB SS SEK General Motors C GM US USD Tata Steel Ltd TATA IN INR n.a. n.a Simple Average Weighted Average Global Simple Average Global Weighted Source: Average the Company, Guotai Junan International. See the last page for disclaimer Page 6 of 8

7 Financial Statements and Ratios [Table_IncomeStatement] Income Statement [Table_BalanceSheet] Balance Sheet Year end 31 Dec (RMB m) 2015A 2016A 2017F 2018F 2019F Turnover 30,138 53, , , ,055 Cost of sales (24,668) (43,880) (80,772) (110,635) (131,485) Gross profit 5,471 9,842 20,163 29,198 36,570 Distribution expenses (1,568) (2,503) (4,198) (6,514) (7,829) Administration expenses (2,176) (2,560) (4,534) (6,472) (7,664) Operating Profit 1,727 4,779 11,432 16,211 21,077 Share of results of Asso. and JV 150 (9) 101 1,733 3,628 Other income 1,066 1, Finance costs, net (6) (30) Share-based payment (62) (42) (52) (47) (50) Profit Before Tax 2,875 6,204 12,400 18,827 25,559 Income Tax (586) (1,034) (2,469) (3,749) (5,089) profit After Tax 2,289 5,170 9,931 15,078 20,470 Non-controlling Interest (28) (58) (37) (43) (49) Shareholders' Profit / Loss 2,261 5,112 9,893 15,035 20,421 Basic EPS Diluted EPS Dividend per share (RMB) Cash Flow Statement Year end 31 Dec (RMB m) 2015A 2016A 2017F 2018F 2019F EBT 2,875 6,204 12,400 18,827 25,559 Depreciation and amortization 1,143 1,654 2,104 2,489 2,985 Finance cost (50) (95) (97) Interest income (97) (85) (159) (203) (206) Changes in working capital 3,470 1,538 2,254 (6,420) (7,948) Share of results of associates (150) 9 (101) (1,733) (3,628) Exchange gain/(losses) 457 (230) Income taxes paid (423) (754) (2,469) (3,749) (5,089) Change of other operating Items 32 (114) Cash from Operating Activities 7,409 8,338 14,323 9,591 11,997 Net investments in PPE (1,338) (410) (2,140) (3,852) (4,006) Net change of prepaid land lease (28) (103) 430 (135) (167) Net change of intangible assets (1,660) (2,643) (3,331) (4,614) (5,546) Net change of pledged deposit 7 1 (3) (3) (4) Interest income Net investments in Asso. and JV (720) 1,110 (3,750) 0 0 Others (893) (599) (788) 773 1,720 Cash from Investing Activities (4,534) (2,557) (9,422) (7,629) (7,797) Net change of LT bank loan (692) (0) (0) Issuance of senior notes Issuance of shares Interest paid (75) (105) Dividend paid (174) (281) (960) (1,858) (2,823) Others 8 (21) Cash from Financing Activities (931) 29 (747) (1,763) (2,726) Net Changes in Cash 1,944 5,810 4, ,474 Other adjustment Cash at Beg of Year 7,203 9,167 15,045 19,236 19,461 Cash at End of Year 9,167 15,045 19,236 19,461 20,959 Year end 31 Dec (RMB m) 2015A 2016A 2017F 2018F 2019F PPE 8,034 10,650 11,715 12,972 13,205 Intangible assets 5,260 6,462 9,793 14,407 19,953 Interest in associates and JV 1,994 1,002 4,853 6,586 10,213 Prepaid land lease payment 1,538 2,003 1,572 1,708 1,875 Deferred tax assets Others Total Non-current Assets 16,945 20,334 28,298 36,263 46,142 Cash & Cash Equivalents 9,167 15,045 19,236 19,461 20,959 Pledged deposit Inventories 1,226 3,066 3,830 5,041 5,756 Trade and other receivables 14,836 29,041 42,868 62,358 78,690 Prepaid land lease payment Others Total Current Assets 25,348 47,249 66,033 86, ,523 Total Assets 42,292 67,583 94, , ,665 Trade payables 20,114 39,779 56,625 70,906 80,004 Bank borrowing Other liabilities ,310 1,990 2,703 Total Current Liabilities 20,449 40,630 57,935 72,896 82,708 Senior notes 1,929 2,068 2,068 2,068 2,068 Deferred tax liabilities ,389 2,365 Total Non-current Liabilities 2,104 2,266 2,739 3,458 4,433 Total Liabilities 22,553 42,897 60,674 76,354 87,141 Total Shareholders' Equity 19,524 24,437 33,371 46,548 64,145 Minority Interest Total Equity 19,740 24,686 33,657 46,877 64,524 BPS(RMB) Financial Ratios 2015A 2016A 2017F 2018F 2019F Profitability Gross profit margin (%) EBITDAR (%) EBIT Margin (%) Net profit margin (%) ROE (%) ROA (%) Growth Sales volume growth (%) Revenue growth (%) EPS (%) BPS (%) Liquidity and solvency Gearing ratio (%) net cash net cash net cash net cash net cash Interest cover ratio n.a. n.a. n.a. Cash ratio Quick ratio Current ratio Efficiency Inventory turnover Days receivable Days payable See the last page for disclaimer Page 7 of 8

8 [Table_CompanyRatingDefinition] Company Rating Definition The Benchmark: Time Horizon: 6 to 18 months Rating Hong Kong Hang Seng Index Definition Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. [Table_IndustryRatingDefinition] Sector Rating Definition The Benchmark: Time Horizon: 6 to 18 months Rating Hong Kong Hang Seng Index Definition Outperform 跑赢大市 Relative Performance>5%; or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable. DISCLOSURE OF INTERESTS (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for GUOTAI JUNAN INTERNATIONAL (01788 HK),BINHAI INVESTMENT (02886 HK),GFI MSCI A I (03156 HK),CAM SCSMALLCAP (03157 HK),LINK HOLDINGS (08237 HK),GFI MSCI A I-R (CNY) (83156 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies. DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen s Road Central, Hong Kong. Tel.: (852) Fax: (852) Website: See the last page for disclaimer Page 8 of 8