Turnover (HK$ bn) Hang Seng Index 9/F, 10 Des Voeux Road Central, Hong Kong. Dealing: 2308 8200 Research: 3608 8098 Facsimile: 3608 6113 HONG KONG RESEARCH Restricted circulation Weekly Report Analyst: Paul Sham 24 th March 2017 500 450 400 350 300 Hong Kong stocks retreated from 20-month high HSI Weekly Movement 24,502 24,593 24,310 24,320 24,328 24,358 26,000 25,500 25,000 24,500 Weekly Market Statistics Week ended 24/3/2017 17/3/2017 Change % Hang Seng Index 24,358 24,310 +48 +0.2% HS Red Chip Index 3,986 4,027-42 -1.0% HS China Enterprises Index 10,478 10,514-36 -0.3% HS Hong Kong 35 Index 2,847 2,833 +14 +0.5% 250 24,000 HS Mainland 100 Index 7,202 7,210-8 -0.1% 200 150 100 50 0 121.26 97.84 95.18 103.48 91.85 83.37 17-Mar Mon Tue Wed Thu Fri 23,500 23,000 22,500 22,000 Growth Enterprise Index 349 353-4 -1.1% Avg Daily Turnover 94.3 91.0 +3 +3.6% (HK$ bn ) Sectoral Indices Finance 33,068 33,288-219 -0.7% Utilities 54,153 53,782 +371 +0.7% Properties 34,026 33,806 +219 +0.6% Comm & Ind 14,348 14,190 +157 +1.1% Turnover Hang Seng Index Review & Outlook of Market Performance Optimism towards corporate earnings helped boost the Hang Seng Index to 20-month highs on the first two days of the week. Nevertheless, Hong Kong stocks were knocked lower on Wednesday, tracking overnight losses on Wall Street where the major indices posted their largest single-day decline since the November election of US President Donald Trump. Despite the global index maker, MSCI, issued a revised proposal to include A shares in its Emerging Market Index towards the end of the week, the impact of the news was minimal to the stock markets. Over the week, the HSI gained 0.2% w-o-w to 24,358, while the HSCEI was down 0.3% w-o-w. The daily average Mainboard turnover increased to HK$94.3bn, up from HK$91.0bn in the previous week. Individual stocks with strong and volatile trading performance drew investors attention throughout the week. China Shenhua (#1088) spiked 16% on Monday, the most since 2008 after rewarding investors with a special dividend of RMB2.51 per share as it posted its first profit growth in four years. On the same day, beauty-enhancing selfie app developer, Meitu Inc (#1357), surged as much as 28% intraday but tumbled as much as 33% in the final 90 minutes of trading. AAC Technologies (#2018) jumped 10.1% on Wednesday after the miniature technology components maker posted a 30% y-o-y increase in net profit for 2016. In contrast, heavyweight China Mobile (#941) slid the most in six months on the following day, down 3.5%, as the giant telecom operator failed to raise dividend payout like China Shenhua. Shares of China Huishan Dairy (#6863) plunged more than 90% before the end of the week, wiping off HK$32bn of its market value, before its trade was halted. The reason that triggered the slide was still unclear at the moment. For the coming week, results announcement will soon come to an end, with a number of listed companies including Chinese big four banks, BOC Hong Kong and PetroChina to release their final results. In addition, investors may eye on China s manufacturing and non-manufacturing PMI on 31 st March, which may provide clues for the market direction. This report has been prepared solely for information purposes and we, East Asia Securities Company Limited are not soliciting any action based upon it. Neither this document nor its contents shall be construed as an offer, invitation, advertisement, inducement or representation of any kind or form whatsoever. This document is based upon information, which we consider reliable, but accuracy and completeness are not guaranteed. Opinions expressed herein are subject to change without notice. At the time of preparing this report, we have no position in securities of the company or companies mentioned herein, while other Bank of East Asia Group companies may from time to time have interests in securities of the company or companies mentioned herein.
US & Regional Markets Weekly Update Date US US JAPAN SINGAPORE MALAYSIA BANGKOK TAIPEI Dow Jones NASDAQ Nikkei Avg STI KLSE Index SET Index Weighted Index 24th March 20,656.58* 5,817.69* 19,262.53 3,142.90 1,745.75 1,572.84# 9,902.98 17th March 20,934.55 5,900.76 19,521.59 3,173.14 1,745.20 1,559.15 9,908.69 Change -277.97-83.07-259.06-30.24 +0.55 +13.69-5.71 % -1.3% -1.4% -1.3% -1.0% +0.0% +0.9% -0.1% Remark: (*) closing as of 23 rd March 2017; (#) closing as of 17:15 24 th March 2017 Major Changes in Index Constituent s (Week ended 24 th March 2017) Hang Seng Index (HSI) Code Closing Price @24/3/2017 W-O-W Change Remarks / Comments Absolute % AAC Tech 02018 HK$98.0 +HK$11.85 +13.8% AAC Tech reported a 30% y-o-y rise in FY16 net profit to RMB4bn on the back of strong growth in its non-acoustic business that includes antennas and optical components. Its 4Q16 revenues also jumped 49% y-o-y to RMB5.7bn, while operating profit jumped 75% to RMB1.8bn. Hang Seng China Enterprises Index (HSCEI) Code Closing Price @24/3/2017 W-O-W Change Remarks / Comments Absolute % China Shenhua 01088 HK$18.56 +HK$2.1 +12.8% China Shenhua posted a 41% y-o-y rise in FY16 net profit to RMB24.9bn, its first profit growth in four years. The giant coal producer also surprised investors by paying a special dividend of RMB2.51 per share. Hang Seng China-Affiliated Corporations Index (HSCCI) Code Closing Price @24/3/2017 W-O-W Change Remarks / Comments Absolute % China Power 2380 HK$2.99 -HK$0.16-5.1% China Power Int l reported FY16 net profit of RMB2.4bn, missing market estimate of RMB2.8bn. The 43% y-o-y decline in earnings was attributable to 6% fuel cost hike and 10% decline in both utilization and tariff. 2
Major Results Announcements During the Week China Shenhua (01088) China Telecom (00728) China State Construction (03311) CKI Holdings (01038) Henderson Land (00012) Power Assets (00006) AAC Tech (02018) China Overseas Land (00688) China Resources Land (01109) FY2016 Net profit y-o-y change RMB24,910m +41.1% RMB18,004m -10.2% HK$5,130m +13.4% HK$9,636m -13.6% HK$21,916m +2.8% HK$6,417m -17.0% RMB4,026m +30% HK$37,021 +6.9% HK$19,501 +10.2% Drivers of performance China Shenhua reported its first annual profit growth since 2012 as the price of coal rebounded last year following government output cuts. The coal producer also declared a special dividend of RMB2.51 per share. China Telecom reported FY16 net profit of RMB18bn, down 10.2% y-o-y, due to the positive impact in the prior year associated with the sale of its tower assets to telecommunications infrastructure joint venture China Tower. The Company s Macau business was strong with 64% y-o-y sales growth and margin expansion of 3.8%, thanks to the Macau MGM project. On the other hand, China infrastructure business was up 25% while HK registered 8% y-o-y sales growth in 2016. Net profit of CKI Holdings fell by 13.6% y-o-y to HK$9,636m due mainly to a smaller UK deferred tax credit in 2016 and unfavourable exchange rate movement (particularly the British pound). Henderson Land posted better-thanexpected underlying profit growth in FY16, rising 29% y-o-y to HK$14.2bn, thanks to a sales rebound in China and disposal of some non-core investment properties. Power Assets reported FY16 net profit down by 17% to HK$6,417m due to the weakening of the British pound, a lower UK deferred tax credit adjustment and a reduction of shareholding in HK Electric. AAC Tech reported a 30% y-o-y rise in FY16 net profit to RMB4bn on the back of strong growth in its non-acoustic business that includes antennas and optical components. China Overseas Land s core profit, excluding revaluation gains, grew to HK$31.37bn in 2016 from HK$27.56bn in 2015, as its contracted sales of properties went up 16.6% y-o-y. Property development revenue of China Resources Land increased by 5% to HK$98.7bn, while rental income of investment property (including hotel operations) was up by 8.5% to HK$7.2bn. Share price w-o-w chg +12.8% -1.6% +3.2% -0.9% +4.5% -1.5% +13.8% -4.6% -0.4% 3
CK Property (01113) CKH Holdings (00001) Dah Sing Financial (00440) Geely Auto (00175) Ping An Insurance (02318) HK$19,415m +13.5% HK$33,008m +3.7% HK$1,892m -2.9% RMB5,112m +126% RMB62,394m +15.1% Tencent (00700) RMB41,447m +42% China Mobile (00941) China Life (02628) China Resources Power (00836) CITIC Ltd. (00267) RMB108.7bn +0.2% RMB19,127m -44.9% HK$7,708m -23.1% HK$43,119m +3.1% CNOOC (00883) RMB637m -96.9% CKP's property development turnover went up 16% y-o-y to HK$56,804m in 2016. The increase in sales from Hong Kong (+31% y-o-y) and China (+22%) was partly dragged by zero contribution from Singapore. Excluding the disposal gain from its Husky s asset, CKH s core net profit fell 8% y-o-y to HK$30bn, mainly dragged by unfavourable FX movement. DSF s high-single-digit growth in net interest income was offset by higher impairment charges as well as lower contribution from Bank of Chongqing. Geely Auto posted its biggest profit growth in eight years, as improved product design and engineering following its 2010 purchase of Sweden's Volvo helped propel it to record sales. Ping An Insurance reported a 15% y-oy rise in net profit in 2016 on sales of more policies and a one-off gain of RMB9.5bn arising from integrating micro-financing platform Puhui Financial and institution-focused Shenzhen Qianhai Financial Asset Exchange into Lufax, its peer-to-peer lending platform. The underlying performance of Tencent in 4Q16 was not so encouraging: (i) Online game growth slowed to 15.6% y-o-y due to high base, (ii) Gross margin of value-added services reversed the recent improving trend and contracted 0.5ppts. China Mobile reported a slight increase in FY16 net profit to RMB108.7bm. Its wireless data traffic became the company s biggest revenue driver, accounting for 46.2% of its total turnover. China Life saw net profit tank 44.9% y- o-y as a result of the downturn of interest rate and fluctuations in the capital market. China Resources Power reported a 23.1% y-o-y decline in FY16 net profit as coal prices rose sharply during the period. CITIC Ltd. reported a 3.1% rise in its 2016 net profit, partly thanks to gains from selling residential property assets in China to China Overseas Land. CNOOC reported a net profit of RMB637 million in 2016, down nearly 97%, as the Company slashed upstream investment, reduced production and saw a drop in both crude oil and natural gas prices. +3.6% +0.7% -0.4% +9.3% +2.0% +1.4% -0.8% -4.2% +0.0% -1.6% +1.2% 4
Summary of US Economic News Indicator Change/Index Comments Existing Home Sales - February 2017 New Home Sales - February 2017 Initial jobless claims week ended 18 th March 2017-3.7% m-o-m +6.1% m-o-m +15,000 w-o-w Existing home sales in the US declined 3.7% m-o-m to a seasonally adjusted annual rate of 5.48 million units in February amid a persistent shortage of houses on the market that pushed up prices and sidelined potential buyers. New-home sales rose 6.1% m-o-m to a seasonally adjusted annual rate of 592,000, a positive sign for the housing market that demand was robust at the start of the spring home-buying season. Initial claims for unemployment benefits increased 15,000 to a seasonally adjusted 258,000 for the week ended 18 th March. The jobless claims have now been below 300,000, a threshold associated with a healthy labour market for 80 straight weeks. Forthcoming Important Announcements / Events 27 th March 2017 (Monday) HK : Chow Sang Sang (00116) - final results CIMC (02039) final results GOME (00493) - final results Pak Fah Yeow (00239) - final results Shenzhou Intl (02313) - final results Shun Tak Hold (00242) - final results Tingyi (00322) - final results US : No important announcement/event 28 th March 2017 (Tuesday) HK : ABC (01288) - final results Angang Steel (00347) - final results Bank of Communications (03328) - final results BYD Company (01211) - final results China Communications Constructions (01800) - final results China Jinmao (00817) - final results China Resources Gas (01193) - final results COSCO Shipping Energy (01138) - final results COSCO Shipping Ports (01199) - final results CRRC Times Electric (03898) - final results Dongfeng Group (00489) - final results Evergrande (03333) - final results Fosun Int l (00656) - final results Fosun Pharma (02196) - final results Harbin Electric (01133) - final results Huaneng Renewables (00958) - final results Kunlun Energy (00135) - final results Sihuan Pharm (00460) - final results Tianjin Port (03382) final results US : International Trade in Goods February 2017 5
29 th March 2017 (Wednesday) HK : CCB (00939) - final results China Merchants Port (00144) - final results CPIC (02601) - final results CRRC (01766) - final results EB Securities (06178) - final results FE Horizon (03360) - final results GCL-Poly Energy (03800) - final results Goldwind (02208) - final results Guangdong Investment (00270) - final results Guangshen Railway (00525) - final results Haitong Securities (06837) - final results Harbin Bank (06138) - final results Hisense Kelon (00921) - final results Jiangxi Copper (00358) - final results Legend Holding (03396) - final results Li & Fung (00494) - final results Mengniu Dairy (02319) - final results New China Life (01336) - final results Shanghai Industrial (00363) - final results Shimao Property (00813) - final results Sinotruk (03808) final results TVB (00511) - final results Weichai Power (02338) final results US : No important announcement/event 30 th March 2017 (Thursday) HK : Air China (00753) - final results BJ Enterprises Water (00371) - final results CEB Bank (06818) - final results China Galaxy Securities (06881) - final results China Cinda (01359) - final results China East Air (00670) - final results China EB Ltd (00165) - final results China Railway Construction (001186) - final results China Railway (00390) - final results China South Air (01055) - final results China Merchants China Direct Investments (00133) final results China Reinsurance (01508) final results COSCO Shipping Development (02866) - final results COSCO Shipping Holdings (01919) - final results DFZQ (03958) - final results GAC Group (02238) - final results HTSC (06886) - final results ICBC (01398) - final results Minsheng Bank (01988) - final results PetroChina (00857) final results Sino-Ocean (03377) - final results Sinofert (00297) - final results Wynn Macau (01128) - final results SHIS Limited (01647) trading debut Retail sales statistics - February 2017 US : Initial jobless claims week ended 25 th March 2017 GDP Q4 2016 31 st March 2017 (Friday) HK : Bank Of China (03988) - final results Beijing Enterprise (00392) - final results BOC Hong Kong (02388) - final results Sinoma (01893) - final results Yanzhou Coal (01171) - final results Luzhou Xinglu Water (02281) trading debut Chanhigh Holdings (02017) trading debut US : Personal Income and Outlays February 2017 6
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