2016 Results above Expectations, Neutral

Transcription

1 Cement and Construction Materials Sector Equity Research 股票研究 Company Report: Ray Zhao 赵睿 公司报告 : 金隅股份 (02009 HK) zhaorui@gtjas.com 2016 Results above Expectations, Neutral 2016 年业绩超预期, 中性 公司报告证券研究报告水泥建材行业 Equity Research Report Company Report BBMG Corporation s ( BBMG ) 2016 results were above expectations. Revenue reached RMB47,739 mn, up 16.7%. Net profit reached RMB2,152 mn, up 71.7%. Contracted GFA reached mn sq.m., up 18.9%. BBMG s booked GFA only reached mn sq.m., down 8.5%. Advances from customers reached RMB23.5 bn, up 23.2%. Cement and clinker sales volume reached 55.21mn tons, up 40.6%. Key points: 1) BBMG will benefit from Xiongan New District in the long run. The central government announced development of Xiongan New District and will accept non-capital function industries in Beijing, such as headquarters of SOEs, financial institutions, schools, and so on. The construction of Xiongan might create 10 mn tons of new cement demand per year over the next decade, around 9% of Beijing-Tianjin-Hebei s total cement demand. 2) 9 cities in Hebei announced severe property tightening policies. More policies in Hebei and Beijing might curb property speculation, bad for new GFA in BBMG's property sales and margins might decline in ) BBMG might complete M&A with Jidong Cement. BBMG will sell its cement assets to gain a controlling share in Jidong Cement in We expect BBMG's cement segment to earn RMB20-RMB30 NP/ton in Raise TP to HKD4.00 and maintain investment rating at Neutral. FAI per capita in Beijing-Tianjin-Hebei will exceed that of in the U.S. in A fair valuation. Our FY17-FY19 earnings estimates are RMB0.314, RMB0.336 and RMB0.348, respectively. Our TP of HKD4.00 represents 11.3x 2017 PE. 金隅股份 2016 年业绩超预期 收入达到 47,739 百万元 ( 人民币, 下同 ), 同比上升 16.7% 净利润达到 2,152 百万元, 同比上升 71.7% 房地产预售面积 2016 年达到 百万 平米, 同比上升 18.9% 结转面积 百万平米, 同比下降 8.5% 预收款达到 235 亿元, 同比上升 23.2% 水泥熟料销量达到 百万吨, 同比上升 40.6% 要点 :1) 长期受惠于雄安新区 中央政府决定设立雄安新区, 来承接北京的非首都职能 产业, 包括国企总部, 金融机构, 学校等等 在未来十年雄安新区的建设可能每年创造 出 1,000 万吨的水泥新需求, 相当于京津冀水泥销量的 9% 2) 河北 9 城市宣布限购政 策 河北和北京可能有更多政策限制房地产投机, 对 2017 年新开工不利 金隅股份的房 地产销售额和利润率可能将在 2017 年下滑 3) 公司将完成对冀东水泥的整合 金隅将 会在 2017 年将水泥资产注入冀东水泥获得冀东水泥的控股权 我们预期金隅的水泥板块 将在 2017 年产生 元每吨的净利 提升目标价至 4.00 港元, 维持投资评级为 中性 京津冀人均固定资产将在 2017 年超过 美国 估值合理 我们 年的盈利预测为 元 元和 元 目标 价 4.00 港元, 相当于 11.3 倍的 2017 年预测市盈率 Rating: Neutral Maintained 评级 : 中性 ( 维持 ) 6-18m TP 目标价 : HK$4.00 Revised from 原目标价 : HK$3.00 Share price 股价 : Stock performance 股价表现 Change in Share Price 股价变动 1 M 1 个月 3 M 3 个月 HK$ Y 1 年 Abs. % 绝对变动 % Rel. % to HS index 相对恒指变动 % Avg. share price(hk$) 平均股价 ( 港元 ) Source: Bloomberg, Guotai Junan International. 金隅股份 Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 12/31 (RMB m) (RMB m) (RMB) ( %) (x) (RMB) (x) (RMB) (%) (%) 2015A 40,925 2, (19.2) A 47,739 2, (40.1) F 64,932 3, F 65,685 3, F 66,432 3, Shares in issue (m) 总股数 (m) 10,677.7 Major shareholder 大股东 Beijing National Asset Management Center 44.95% Market cap. (HK$ m) 市值 (HK$ m) 49,117.4 FY17 Free float (%) FY17 自由流通比率 (%) month average vol. 3 个月平均成交股数 ( 000) 39,109.5 FY17 Net gearing FY17 净负债 / 股东资金 (%) Weeks high/low (HK$) 52 周高 / 低 / FY17 Est. NAV (HK$) FY17 每股估值 ( 港元 ) 5.0 Source: the Company, Guotai Junan International. See the last page for disclaimer Page 1 of 9

2 BBMG Corporation s ( BBMG ) 2016 results were above expectations. Revenue reached RMB47,739 mn, up 16.7%. Net profit reached RMB2,152 mn, up 71.7%. EPS reached RMB0.25, up 25.0%. Contracted GFA reached mn sqm, up 18.9%. BBMG s booked GFA only reached mn sq.m., down 8.5%. Advances from customers reached RMB23.5 bn, up 23.2%. Cement and clinker sales volume reached mn, up 40.6%. BBMG will benefit from Xiongan New District in the long run. On Apr. 1, 2017, the central government announced development of Xiongan New District, the 3 rd National Level New Economic District after Shenzhen New District and Pudon New District. Xiongan New District will accept the non-capital function industries in Beijing, such as headquarters of SOEs, financial institutions, schools, and so on. The central government expects the new district to accommodate 3.0 mn-5.0 mn in population. The construction of Xiongan might create 10 mn tons of new cement demand per year over the next decade, around 9% of Beijing-Tianjin-Hebei s total cement demand. In 2016, cement demand in Beijing-Tianjin-Hebei reached mn tons, up 7.3% due to good new GFA of Hebei properties. The state-owned enterprises (SOE) will also build high speed railways from Xiongan to Bejing, from Xiongan to Tianjin, and from Xiongan to Shijiazhuang in the future. Cement demand outlook is not optimistic. 1) Fixed asset investment (FAI) growth has begun to slow down. The FAI growth rate in Bejing-Tianjin-Hebei slowed down to a new low of 8.9% in 2M17. It's possible that FAI might recover in 2H17, but in the long run, we expect that it will slow down to below 5% due to a very high base of RMB5.2 tn in ) Property policies are a key factor in determining cement demand. Last month, Beijing issued 10 of the most severe new property tightening policies to curb property speculation. After the central government has established Xiongan New District, the 9 cities around Xiongan New District in Hebei may also announce severe property tightening policies. In 2016, new GFA reached 81.6 mn, up 13.6%, a favorable catalyst for the cement industry. However, we think the current policies in Hebei and Beijing have had a negative impact on new GFA in BBMG's property sales and margins might decline in BBMG might complete the M&A with Jidong Cement in BBMG has acquired 55% share in Jidong Cement's parent company, Jidong Group, which holds a 30% share in Jidong Cement ( CH) and 30% in Jidong Equipment ( CH). Currently, BBMG owns 16.5% of Jidong Cement. BBMG will sell its cement assets to gain a controlling share in Jidong Cement in Then BBMG will have around 170 mn tons of cement capacity, 110 mn tons of clinker capacity, and 78 mn M 3 of concrete capacity. BBMG and Jidong Cement will control 50%-60% cement production capacity in Beijing-Tianjin-Hebei. However, as the government has limited investment in cement capacity, Jidong Equipment may consistently make a loss in the next several years. Cement price hike due to capacity control. We have observed that cement production in Beijing-Tianjin-Hebei reduced by 19% in 1-2M17. Currently, BBMG has already sent their people to manage Jidong Cement and we think BBMG and Jidong Cement will act synchronously in the future. On Apr 2, 2017, BBMG and Jidong Cement raised cement prices by RMB50/ton. It might take several months to see the results of price hikes as the cement players in other neighboring provinces, such as Liaoning, Shanxi, Shandong, and Henan, will also transport their cement into Hebei. Hebei has the best and most efficient commodity logistics network in China. Currently, we expect BBMG's cement segment to earn RMB20-RMB30 NP/t in Table 1: BBMG s 2016 Results Financial statements 1H14 2H14 1H15 2H15 1H16 2H16 Total revenues (excl. business tax) 20,638 20,604 18,056 22,869 22,555 25, % COGS (16,300) (16,762) (14,113) (18,591) (17,621) (20,491) 10.2% Selling and marketing expenses (687) (834) (704) (842) (724) (1,130) 34.2% General and administrative expenses (1,453) (1,433) (1,466) (1,508) (1,522) (2,286) 51.6% Share of associates & JC 2 (30) (13) (5) (12) (69) % others Operating profit 2,199 1,543 1,761 1,923 2,675 1, % Financial Expenses (593) (616) (684) (651) (708) (895) 37.5% Fair Value Gains on Investment Properties, Net % Other gains or income % Earnings before Taxes 2,087 1,717 1,525 1,658 2,361 1, % Provision for Income Tax (570) (525) (503) (728) (760) (226) -69.0% Minority Interest (After Tax) (136) (150) (26) 93 (220) % Net Income (Loss) 1,381 1,042 1, , % One off item % Recurring net profit 1, , % Source: the Company, Guotai Junan International. See the last page for disclaimer Page 2 of 9

3 Company Report USD RMB Table 2: Operation Data A 2015A 2016A Cement Clinker and cement sales volume (mnt) Concrete sales volume (mn M3) Cement GP/t (RMB/t) Cement NP/t (RMB/t) Net profit before minority (mn RMB) 1, (459.8) % -79.8% 37.1% n.a. n.a. Modern materials Revenue (mn RMB) 5,460 9,945 14,645 10,522 10,372 11, % 82.1% 47.3% -28.2% -1.4% 7.2% Net profit before minority margin (%) 10.4% 3.8% 0.7% 0.9% -4.1% 0.6% Property development Booked GFA (mn sqm) % 0.0% 40.8% 27.2% -15.7% -8.5% Commodity house (mn sqm) Public house (mn sqm) Commodity house % 57.9% 71.2% 61.3% 66.8% 84.7% 90.4% Public house % 42.1% 28.8% 38.6% 35.4% 15.3% 9.6% Booked ASP (RMB/sqm) 9,904 13,080 12,704 10,375 13,396 15, % 32.1% -2.9% -18.3% 29.1% 19.1% Commodity house 11,460 15,844 15,119 11,792 14,387 15,279 Public house 7,764 6,255 8,893 7,114 7,826 8,452 Contract GFA (mn sqm) % 33.0% 30.1% -12.5% -32.7% 12.7% Contract sales (mn RMB) 11,000 14,326 20,280 14,730 13,884 17, % 41.6% -27.4% -5.7% 28.7% Net profit before minority (mn RMB) 1,770 1,672 2,253 2,181 1,995 2, % 34.8% -3.2% -8.5% 0.7% Property Management Revenue (mn RMB) 1,371 1,741 1,945 2,192 2,692 3, % 27.0% 11.7% 12.7% 22.8% 21.1% Net profit before minority (mn RMB) 1,428 1,555 1, ,299 1, % -4.6% -32.7% 30.0% -9.3% Net profit before minority margin (%) 86.3% 80.8% 73.0% 43.4% 43.6% 32.3% (5.5) (7.7) (29.6) 0.2 (11.3) Net profit / gross GFA (RMB/sqm/day) % -4.6% -32.7% 30.0% -9.3% Source: the Company, Guotai Junan International. FAI per capita in Beijing-Tianjin-Hebei might exceed that in the U.S. in In 2016, FAI in Beijing-Tianjin-Hebei reached RMB5.2 tn, up 7.9%. FAI per capita reached RMB46,394, up 7.3%, with total population of 112 mn. In 2016, U.S. fixed investment (excluding intellectual property products) reached USD2.256 tn, with fixed investment (excluding intellectual property products) of USD7,030.5, down 0.4%. In 2016, FAI per capita in Beijing-Tianjin-Hebei was 95.6% of U.S. fixed investment (excluding intellectual property products) per capita. We expect FAI per capita in Beijing-Tianjin-Hebei may grow 5%-7% in 2017, exceeding that of the U.S. by the end of On a national level, FAI per capita in China reached RMB43,861 in 2016, slightly lower than that in Beijing-Tianjin-Hebei, which means FAI in China was nearly 4 times of that in the U.S. Figure-1: U.S. Fixed Investment per Capita 8,000 7,000 6,000 5,000 4,000 3,000 2,000 Figure-2: Beijing-Tianjin-Hebei FAI per Capita 50,000 70% 46,394 45,000 60% 40,000 50% 35, % 40% 30,000 30% 25,000 20% 20,000 10% 15,000 10, % 0% 1,000-5, % -20% US Fixed Investment per Capita (Excl.Intellectual Property Products) Source: US BEA, Guotai Junan International. Beijing-Tianjin-Hebei FAI per Capita See the last page for disclaimer Page 3 of 9

4 Raise TP to HKD4.00 and maintain investment rating at Neutral. Fair valuation. Our FY17-FY19 earnings estimates are RMB0.314, RMB0.336 and RMB0.348, respectively. Our TP of HKD4.00 represents 11.3x 2017 PE. Table 3: Cement Production (Accumulated) Date Beijing Tianjing Hebei Beijing +Tianjin+ Hebei mnt mnt mnt mnt % Feb % Mar % Apr % May % Jun % Jul % Aug % Sep % Oct % Nov % Dec % Feb % Mar % Apr % May % Jun % Jul % Aug % Sep % Oct % Nov % Dec % Feb % Mar % Apr % May % Jun % Jul % Aug % Sep % Oct % Nov % Dec % Feb % Source: the Cement Association, Guotai Junan International. Table 4: Beijing, Tianjin, Hebei Fixed Asset Investment Date Hebei FAI Beijing FAI Tianjin FAI Beijing+ Tianjin+ Hebei bn RMB % bn RMB % bn RMB % bn RMB % % % % % % % % % % % % % 1, % % % 1, % % % 2, % % % 2, % % % 3, % % % 3, % % % 4, % % % 4, % % % % % % % % % % % 1, % % % % 1, % % % % 2, % % % % 2, % See the last page for disclaimer Page 4 of 9

5 % % % 3, % % % % 3, % % % % 4, % % % % 4, % % % % 4, % % % % % % % % % % % % 1, % % % % 1, % % % % 2, % % % % 2, % % % % 3, % % % % 3, % % % % 4, % % % % 4, % % % % 5, % % % % % Table 5: Beijing Property Investment Beijing Property Investment GFA under Construction New GFA GFA completed Sales GFA Sold mn sqm % mn sqm % mn sqm % mn sqm % bn RMB % mn sqm % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % See the last page for disclaimer Page 5 of 9

6 Table 6: Tianjin Property Investment Tianjin Property Investment GFA under Construction New GFA GFA completed Sales GFA Sold mn sqm % mn sqm % mn sqm % mn sqm % bn RMB % mn sqm % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % See the last page for disclaimer Page 6 of 9

7 Table 7: Hebei Property Investment Hebei Property Investment GFA under Construction New GFA GFA completed Sales GFA Sold mn sqm % mn sqm % mn sqm % mn sqm % bn RMB % mn sqm % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % See the last page for disclaimer Page 7 of 9

8 Financial Statements and Ratios Income statement (DEC Year End mn RMB) 2015A 2016A 2017E 2018E 2019E Balance Sheet (DEC Year End mn RMB) 2014A 2015A 2016E 2017E 2018E Cement 10,829 15,365 34,964 36,077 37,190 Cash and Bank Balance 18,370 28,010 19,480 16,421 13,286 Modern Building Matl 10,372 11,121 11,177 11,233 11,289 Trade and Bill Receivables 9,080 12,747 17,851 18,140 21,901 Property Investment and Management 16,921 18,449 16,911 16,548 16,192 Inventories 54,007 64,111 70,522 77,575 85,332 Property Development 2,692 3,260 3,423 3,526 3,632 Prepayments, Deposits and Other Receivables 3,615 4,969 7,128 7,988 9,121 Intersegment & Others 111 (457) (1,543) (1,699) (1,871) Other Current Assets 4,264 9,642 9,738 9,836 9,934 Revenue 40,925 47,739 64,932 65,685 66,432 Total Current Assets 89, , , , ,574 COGS (32,704) (38,113) (50,175) (50,685) (51,186) Gross profit 8,221 9,626 14,757 15,000 15,247 Property, Plant and Equipment 19,398 50,051 50,445 50,841 51,241 selling costs (1,546) (1,854) (2,522) (2,551) (2,580) Investment Properties 14,445 14,977 16,521 17,652 18,849 administrative cost (2,974) (3,808) (5,179) (5,239) (5,299) Long term equity investment 306 2,234 2,256 2,278 2,301 Share of associates (18) (81) (110) (111) (113) Goodwill 258 2,750 2,750 2,750 2,750 Operating Profit 3,683 3,883 6,946 7,098 7,255 Intangible assets 4,087 11,350 11,691 12,041 12,403 Finance costs (1,336) (1,604) (2,009) (1,869) (1,883) Available-for-sale Financial Assets Fair Value Gains on Investment Properties, Net Deferred Income Tax Asset 1,424 2,696 2,365 2,779 3,204 Other income and gains Others 1,494 2,364 2,435 2,508 2,583 Profit before tax and MI 3,183 3,677 6,069 6,403 6,590 Total non current Assets 41,411 88,918 90,960 93,347 95,829 Income tax (1,232) (986) (1,517) (1,601) (1,648) Total Assets 130, , , , ,403 Minority interests 66 (4) (1,200) (1,212) (1,224) Net profit 2,017 2,687 3,351 3,590 3,719 Trade and Bill Payables 9,062 14,625 17,542 15,785 18,433 Recurring Net Profit 1,636 2,254 2,729 2,937 3,033 Other Payables and Accruals 22,206 30,845 33,960 45,410 40,945 Dividend Interest-bearing Bank Loans 26,714 41,925 40,053 36,243 40,608 EBITDA Taxes Payable 1,465 1,830 1,830 1,830 1,830 EPS Other Current Liabilities 5,740 5,740 5,912 6,089 6,272 recurring EPS Total Current Liabilities 65,187 94,964 99, , ,087 DPS Long-term debt 18,889 39,367 37,609 34,032 38,130 Cash Flow Statements (DEC Year End mn RMB) 2015A 2016A 2017E 2018E 2019E Deferred Tax Liabilities 2,646 4,801 5,258 6,016 6,797 Net Income 2,017 2,687 3,351 3,590 3,719 Other Non-current Liabilities 1,844 6,356 6,546 6,743 6,945 Minority Interest (66) 4 1,200 1,212 1,224 Non-current Liability 23,378 50,523 49,413 46,791 51,872 Interest Paid 1,336 1,604 2,009 1,869 1,883 Total Liability 88, , , , ,958 Dep.&Amortization 1,471 1,515 3,733 3,768 3,804 Working Capital Change (11,414) (924) (7,642) 1,492 (14,469) Minorities 4,099 18,709 19,909 21,121 22,345 Others 6,828 (27,568) (4,083) (4,063) (4,164) Shareholders' Equity 38,083 44,200 47,061 50,038 53,100 CFO 172 (22,683) (1,433) 7,868 (8,003) total equity 42,182 62,909 66,970 71,159 75,445 CAPEX (3,000) (2,999) (2,998) (2,997) (2,996) BVPS Others CFI (2,988) (2,876) (2,854) (2,884) (2,915) Key Ratios 2014A 2015A 2016E 2017E 2018E New Issues 5, Gross Margin 20.1% 20.2% 22.7% 22.8% 23.0% New Bank Loans 5,401 35,690 (3,631) (7,387) 8,463 Net Margin 4.9% 5.6% 5.2% 5.5% 5.6% Dividend Paid (202) (491) (613) (656) (680) ROE 5.3% 6.1% 7.1% 7.2% 7.0% others ROA 1.5% 1.3% 1.6% 1.6% 1.6% CFF 10,206 35,199 (4,243) (8,043) 7,783 ROIC 2.6% 2.0% 3.6% 3.8% 3.5% Cash and cash equivalents at beginning of year 10,980 18,370 28,010 19,480 16,421 Interest Coverage 275.8% 242.1% 345.8% 379.7% 385.3% Foreign Exchange Net Gearing excl. minority 71.5% 120.5% 123.6% 107.6% 123.3% Net change in cash 7,390 9,640 (8,531) (3,059) (3,135) Cash and cash equivalents at end of year 18,370 28,010 19,480 16,421 13,286 Source: the Company, Guotai Junan International. See the last page for disclaimer Page 8 of 9

9 Company Rating Definition The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Buy Relative Performance >15%; or the fundamental outlook of the company or sector is favorable. Accumulate Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. Sector Rating Definition The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform Relative Performance >5%; or the fundamental outlook of the sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 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 SMI Holdings Group Limited (00198 HK), Guotai Junan International Holdings Limited (01788 HK), Binhai Investment Company Limited (02886 HK), Link Holdings Limited (08237 HK), GFI MSCI A I-R (CNY) (83156 HK), GFI MSCI A I (03156 HK) and CAM SCSMALLCAP (03157 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 individuals serving as officers 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 9 of 9