20 March 2018 Major Market Indicators Mkt. Turn.(mn) 106,223 143,700 110,700 Stock Advances 748 691 903 Stock Declines 955 1,031 778 HSI 31,514 31,501 31,541 Change +12-39 +106 HSI Turn.($bn) 38.75 56.29 39.65 HSCEI 12,660 12,673 12,719 Change -13-46 +35 HSCEI Turn.($bn) 29.69 44.56 34.13 HSI Technical Indicators 10-days MA 31,155 50-days MA 31,380 250-days MA 27,868 14-days RSI 54.9 Primary resistance 31,800 Primary support 31,000 HSCEI Technical Indicators 10-days MA 12,544 50-days MA 12,701 250-days MA 11,281 14-days RSI 52.8 Primary resistance 13,000 Primary support 12,500 HSI Futures Mar 31,393 31,450 31,540 Volume 120,301 119,034 137,465 Open interests 125,025 118,310 125,676 Apr 31,379 31,426 31,541 Volume 1,024 1,263 712 Open interests 6,523 6,220 5,842 Market Overview The Hang Seng Index is expected to trade at 31,200-31,600 today Hang Seng Index opened lower on Monday, once fell near 250 points. However, buying interest emerged afterward; HK stock resumed its upward momentum. Hang Seng Index closed 12 points at 31,514. H share index fell 13 points to 12,660. Market turnover was HK$106.2bn. Cheung Kong Group announced result last week while Chairman Li Ka Shing retired, CKH(0001) and CK Assets (1113) fell 1.9% and 0.6% each. Macau gaming stock performed well, Galaxy Entertainment (0027) and Wynn (1128) rose around 2% Concerns about Facebook Inc. s management of user data sparked a selloff in technology shares on Monday. Of which, Facebook share price fell 6.8%. Besides, investors also concerned the potential global trade war. US stock market fell sharply on Monday, with the Dow once lost near 500 points. The Dow and the Nasdaq fell 336 points (to 24,611) and 138 points (to 7,344) respectively. On the other head, ahead of FOMC meeting, 10 Year US Treasury yield stayed firm at 2.85%. Local blue chips performed weak in the US ADR market last night. Of which, owing to selling pressure on US high technology stock, Tencent (0700) share price fell further in the US ADR market. Hang Seng Index is expected to open lower today again, investors will eye on whether bargain hunting will emerge to support the market. Besides, Ping An (2318) as well as some blue chips mainland property stock will announce results on Tuesday, which will be market focus. Technical Analysis The Hang Seng Index continued to oscillate at 50 Day SMA (31,380) on Monday, and close above this support level with a white candlestick again. Besides, the MACD is at the positive region, while the 14 day RSI was at 54.9. Together with sluggish market turnover, Han Seng Index seems pending for change. Initial support shifts upward to 31,000, while next support is at 30,800. On the other hand, first resistance is still at 31,800 (correction rebound at 0.618) while second resistance is at 32,000. HSI Chart HSCEI Futures Mar 12,603 12,647 12,720 Volume 78,183 71,717 69,005 Open interests 179,445 179,223 183,002 Apr 12,610 12,655 12,726 Volume 3,862 1,262 1,158 Open interests 25,051 22,081 21,325 Sources:etnet
Daily Focus China Resources Power(0836): Results inline with Expectation China Resources Power(0836) FY17 revenue rose 10.7% yoy to HK$73.3bn. Net profit fell 40% yoy to HK$4.62bn, but still in line with market expectation. It is suggested final DPS is HK$0.75, full year DPS is HK$0.875, payout ratio is 90%. Earnings declined in 2017 is mainly due to 37% unit fuel cost increase. Besides, China Resources Power recorded one-off net loss of 840 million hong kong dollar, mainly on provision on power and coal assets. Chian Resources Power 2017 electricity sales rose over 5% while direct electric sales reached 37.5%. Direct electric price has 6% discount in 2017. The Group expect direct electric sales proportion rose to 57.5% in 2018, but expect the discount might be lowered. On the other hand, China Resources Power 2018 first two months electric sales rose 12.5% yoy. China Res Power (836) Info Closed price 14.06 Expected P/E (X) 10.4 Dividend yield (%) 6.2 52 week high 15.78 52 week low 12.65 14RSI 56.4 China Resources Power capex is expected to rise 11% to HK$18.2bn in 2018. Of which, HK$12.1bn will construct and acquire new energy power projects (solar, wind and water). China Resources Power current new energy power accounted for 17.4% of total capacity and target to achieve 25% in 2020. Current net debt ratio is 126.9%. China Resources Power will maintain full year dividend at HK$0.875 in 2018, while there is no guidance provided for 2019 or after. Although China Resources Power believe it is less likely to have tariff hike in 2018, it is expected that per unit fuel cost might lower 5-8% in 2018. Thanks to lower fuel cost, we expect China Resources Power 2018 net profit to rebound 40%. Current valuation is 10.4x prospective P/E with dividend yield of 6.2%, its valuation is not demanding. Our target price is 15.5 Hong Kong Dollar, suggest investors to accumulate during weakness. Analyst: Chua Tit Hong, CFA R&F (2777): valuation is not attractive Guangzhou R&F Properties (2777) said its net profit last year spiked 204 percent to 21.42 billion yuan (HK$26.53 billion) on revenue of 59.28 billion yuan, which is up by a modest 10 percent. After deducting one-time non-recurring income, net profit for 2017 was RMB 8.32 billion (or 18% increase).the board has proposed a final dividend of 0.77 yuan per share. R&F is forecasting contracted sales of 300 billion yuan ($47.3 billion) by 2020, compared with 81.86 billion yuan in 2017 and a projected figure of 130 billion yuan for this year. R&F Properties had a target of 80 billion yuan in contracted sales for 2017. R&F (2777) Info Closed price 20.2 Expected P/B (X) 1.2 Dividend yield (%) 7.1 52 week high 23.85 52 week low 10.42 14RSI 57.7 Overall gross profit margin rose from 28.3 percent in 2016 to 35.4 percent last year as the company offered a higher proportion of high-margin development projects last year. For R&F, the most important performance review for 2017 was to acquire a hotel property of Dalian Wanda Commercial Real Estate Co., Ltd. After the acquisition, the group owned Yadu, Conrad, Crowne Plaza, DoubleTree by Hilton, Grand Hyatt, Hilton, Holidays, Holidays, Hyatt, Intercontinental, Lanson, Le Meridien, Marriott, Park Hyatt, Ballard Eighty-eight luxury hotels operated by brands such as Man, Renaissance, The Ritz-Carlton, Sheraton, Sofitel, Wanda Realm, Wanda Wenhua and Westin, including 26,365 rooms, in addition, the Group also owns seventeen Hotels under construction and under construction. In terms of land, in 2017, the Group acquired a land bank with a saleable area of 18.11 million square meters for a total consideration of RMB 58.43 billion, and it expects to generate up to RMB 256 billion in new saleable resources in the next few http://www.kgieworld.com 20 March 2018 2
years. For its financial status, the group total net debt was RMB233.2bn the net debt ratio was 170%, which is higher than 193%. During the period, the refinancing costs dropped 1.13% points to 5.12%. We expecting the rate will be in uptrend this year. In terms of valuation, the P/B would be 1.2 times, with estimated NAV of HK$25.2, current price of HK$20.2 is trading at 20% discounted, valuation is not attractive, in addition, its net debt ratio was as high as 170%, the perspective is less certain, as the developer has US$3.9 billion of bonds due in 2018. Analyst: Mak Ka Ka http://www.kgieworld.com 20 March 2018 3
Shanghai/Shenzhen-Hong Kong Stock Connect Statistics SH Connect SZ Connect Combined Southbound Balance (RMB bn) 12.519 12.459 19.972 Balance as % of Quota Amount 96.30% 95.84% 95.11% Top 10 Most Actively Traded Stocks(SH-HK Connect Southbound) Stock Name Stock code Buy Trades (RMB) Sell Trades (RMB) Turnover (RMB) TENCENT 700 278,704,780 177,548,580 456,253,360 PING AN 2318 180,631,350 94,440,750 275,072,100 NCI 1336 56,880,665 172,578,235 229,458,900 CCB 939 42,316,700 174,318,072 216,634,772 SUNAC 1918 78,232,050 126,853,250 205,085,300 GEELY AUTO 175 53,108,000 137,399,950 190,507,950 CHINA SOUTH AIR 1055 89,177,460 94,983,600 184,161,060 YANZHOU COAL 1171 21,987,280 128,929,840 150,917,120 SUNNY OPTICAL 2382 61,056,610 88,483,480 149,540,090 CHINA SHENHUA 1088 36,397,775 103,908,450 140,306,225 Sources: HKEx Top 10 Most Actively Traded Stocks(SZ-HK Connect Southbound) Stock Name Stock code Buy Trades (RMB) Sell Trades (RMB) Turnover (RMB) TENCENT 700 179,455,260 209,226,440 388,681,700 CPIC 2601 230,614,320 5,728,320 236,342,640 GENSCRIPT BIO 1548 98,900,400 128,491,000 227,391,400 KINGDEE INT'L 268 107,838,100 60,510,040 168,348,140 CHINA VANKE 2202 4,886,345 119,383,675 124,270,020 HKEX 388 36,103,680 69,575,400 105,679,080 ZTE 763 62,679,160 33,376,770 96,055,930 SUNAC 1918 40,169,600 54,003,500 94,173,100 ND PAPER 2689 67,654,480 20,054,140 87,708,620 GOLDWIND 2208 43,423,776 43,498,904 86,922,680 Sources: HKEx Other Statistics Ten Most Actively Traded Stocks Stock Name Code Change Closed Price Turnover(Million) TENCENT 700-0.73% 461.80 7584.4 PING AN 2318 2.06% 91.50 6037.3 HKEX 388-1.77% 277.00 2864.7 CCB 939 0.12% 8.51 2347.9 POWER ASSETS 6-2.04% 69.75 1768.1 GEELY AUTO 175 1.70% 26.90 1426.1 AIA 1299 1.27% 68.00 1333.4 BANK OF CHINA 3988-0.68% 4.37 1257.8 SUNNY OPTICAL 2382 2.01% 147.10 1090.4 ICBC 1398-0.15% 6.91 1047.4 http://www.kgieworld.com 20 March 2018 4
Ten Short Sell Stocks Stock Name Code Short Sell Turnover Short Sell Ratio TENCENT 00700.HK 1.07B 7.58B 14.05% PING AN 02318.HK 842.85M 6.04B 13.96% TRACKER FUND 02800.HK 751.17M 1.22B 61.82% CCB 00939.HK 636.51M 2.35B 27.11% HSCEI ETF 02828.HK 359.70M 1.94B 18.52% POWER ASSETS 00006.HK 345.61M 1.77B 19.55% BANK OF CHINA 03988.HK 311.10M 1.26B 24.73% HKEX 00388.HK 311.08M 2.86B 10.86% AIA 01299.HK 263.39M 1.33B 19.75% COUNTRY GARDEN 02007.HK 263.38M 987.25M 26.68% Source: AAStocks Economic Calendars Date Country Event Survey Prior Mon China Res Power (836), CSPC(1093), Wuxi Bio(2269) Sunny Optical(2382) releases annual results Tue China Closing Meeting of the National People's Congress HK & China Gas (3), Tinyi (322), China Res Land(1109), NCI (1336), Country Garden (2007), Ping An(2318), ZA Online(6060) releases annual results Wed Japan Market Close, Vernal Equinox Day Henderson Land(12), Geely(175), Tencent (700), China Res Pharma(3320) releases annual results Thu U.S. Federal Reserve Rate Decision (Released at 02:00 HKT) 1.25%-1.50% 1.50%-1.75% March Markit US Manufacturing PMI (Preliminary) 55.3 Initial Jobless Claims (Mar. 17) Continuing Claims (Mar. 10) Eurozone March Markit Eurozone Manufacturing PMI (Preliminary) 58.6 Petrochina(857), Conch Cement(914), China Mobile(941), Hengan Int'l(1044), Sino Biopharm(1177), China Life(2628) releases annual results Fri U.S. Feb Durable Goods Orders 1.6% 3.6% Feb New Home Sales 620k 593k China Shenhua(1088), Sinopharm(1099), Wynn Macau(1128) Yanzhou Coal(1171), PICC(1339), PICC P&C(2328) SH Pharma(2607), CNBM(3323), CM Bank(3968) releases annual results All the above named KGI analyst(s) is SFC licensed person accredited to KGI Asia Ltd to carry on the relevant regulated activities. Each of them and/or his/her associate(s) does not have any financial interest in the respectively covered stock, issuer and/or new listing applicant. Disclaimer Some of KGI Asia Ltd. equity research and earnings estimates are available electronically on KGIEWORLD.COM. Please contact your KGI representative for information. The information and opinions in this report are those of KGI Asia Ltd. internal research activity. KGI Asia Ltd. does not make any representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. The information and opinions contained in this report are subject to change without any notice. No person accepts any liability whatsoever for any loss however arising from any use of this report or its contents. This report is not to be construed as an invitation or offer to buy or sell securities and/or to participate in any investment activity. This report is being supplied solely for informational purposes and may not be reproduced or published (in whole or in part) for any purpose without the prior written consent of KGI Asia Ltd.. Members of the KGI group and their affiliates may provide services to any companies and affiliates of such companies mentioned herein. Members of the KGI group, their affiliates and their directors, officers and employees may from time to time have a position in any securities mentioned herein. http://www.kgieworld.com 20 March 2018 5