20 June 2017 Major Market Indicators Mkt. Turn.(mn) 65,700 79,800 74,300 Stock Advances 952 753 515 Stock Declines 972 807 1,091 HSI 25,924 25,626 25,565 Change +298 +61-310 HSI Turn.($bn) 22.72 28.37 27.06 HSCEI 10,520 10,384 10,346 Change +135 +38-168 HSCEI Turn.($bn) 12.76 16.43 16.80 HSI Technical Indicators 10-days MA 25,862 50-days MA 25,049 250-days MA 23,237 14-days RSI 61.1 Primary resistance 26,300 Primary support 25,500 HSCEI Technical Indicators 10-days MA 10,524 50-days MA 10,338 250-days MA 9,760 14-days RSI 53.6 Primary resistance 10,750 Primary support 10,338 HSI Futures June 25,780 25,497 25,435 Market Overview The Hang Seng Index is expected to trade at 25,800 to 26,100 today Hang Seng Index made some rebound but the turnover was low. It increased 298 points and closed at 25,924 points. HSCEI closed at 10,520 points, falling 135 point. Turnover was $65.7 billion. The surging mainland coal price stimulated the industry stock prices. On the other hand, the concept of A share inclusion in MSCI led to stock price gain for mainland insurance and securities sectors. After recent sell off, major US high technology stocks rebounded sharply on Monday, which supported the US stock market to perform well. The Nasdaq rose 87 points (to 6,239) which is the largest single day rise in the past 7 months. Besides, the Dow continued to hit new high, rose 145 points (to 21,529). On the other hand, oil price resumed its downtrend, fell 1.3% to 44.2 US dollar per barrel. Gold price also fell 0.8% to 1,247 US dollar per ounce. Local blue chips performed well in the US ADR market last night, it will bring support to HK stock market today. However, market turnover remained weak, it might impact upside room. On the other hand, investors focus will eye on whether MSCI will approve to add A share during its annual review. Technical Analysis HSI kept rebounding on Monday and surpassed the middle line of Bollinger Band (25,753 points)again. The MACD bearish gap stopped expanding as well. The first support is 25,400 points, and the next support is 25,000 points. In addition, the first resistance should be 26,155 points, and the next resistance is 26,550 points. Volume 79,453 76,603 89,746 Open interests 161,025 159,007 162,255 July 25,665 25,378 25,319 Volume 1,593 953 1,586 HSI Chart Open interests 9,839 8,965 8,237 HSCEI Futures June 10,382 10,244 10,220 Volume 73,660 52,761 80,952 Open interests 259,953 262,604 271,297 July 10,231 10,093 10,072 Volume 6,247 1,089 2,293 Open interests 24,386 19,791 19,367 Sources:etnet
Daily Focus TVB(0511): Second large major shareholder increased stake Ahead of TVB AGM, its second major shareholder purchased 1.33mn shares for cash consideration of HK$36mn on last Wed to Friday. In fact, Silchester related parties Edgbaston has purchased 1.92% stake of TVB (8.4mn shares) at $28.50-29.0 per share. Silchester and related parties stake in TVB increased to 16.39%. TVB announced plan to repurchase max 120mn shares at HK$35.075. However, SFC has questioned on its major shareholder background. Besides, Silchester has revealed against the plan and suggest to use the funds for repurchase. The repurchase plan need independent shareholder vote to pass through. Since Silchester has significant shareholding, if it vote against, the plan is quite likely cannot go through, its share price retreat recently. TVB (511) Info Closed price 28.25 Expected P/E (X) 19.1 Dividend yield (%) 9.2 52 week high 34.60 52 week low 24.20 14RSI 45.3 Given competition from internet media, TVB, as a traditional TV media companies, have suffered significant earnings and revenue pressure. However, the continuous stake purchase from Silchester, while major shareholder Young Lion intends to increase effective stake of TVB through share repurchase, reflected that they believe TVB have attractiveness at current share price range. TVB prospective P/E is 16x, net cash position, could buy for medium to long term investment. Ping An(2318)considers gradually increasing dividend payout ratio According to mainland media reports, Ma Ming Zhe, Chairman of Ping An, disclosed in the Annual General Meeting that the company considered gradually increasing dividend payout ratio. The company profit should be able to support elevating payout ratio in the future. The members of the management board supplemented that the CAGR of Ping An was as high as 25%, and the management was looking for a better timing to promote the listing of Ping An Securities and Lufax. The Financial Times quoted an informed source that the listing of Lufax had been postponed to next year. The sources pointed out that the new regulations would lead to stricter reviews on internet financial products. The Lufax management was evaluating the impact of the new regulations. Ping An (2318) Info Closed price 52.15 Expected P/B (X) 1.86 Dividend yield (%) 1.3 52 week high 52.95 52 week low 31.85 14RSI 71.1 Comparing several mainland insurance companies dividend payout ratio last year, China Pacific Insurance(2601)had the highest ratio of 53%. China Life Insurance(2628)had a ratio of 36%. China New Life Insurance(1336), which was undergoing business reform, was maintaining a ratio of 30%. The ratio of PICC P&C(2328)was 25%. China Taiping(0966), resuming dividend distribution last year, had a ratio of 8%. Ping An distributed dividend of RMB$0.75 per share last year, which was equivalent to 21% payout ratio. Although its ratio is lower than the peers, the investment thesis Ping An are continual fast growing insurance premium, satisfactory investment income and stable banking profit. The increasing dividend is no big deal to Ping An at all. http://www.kgieworld.com 20 June 2017 2
The insurance premium of Ping An in the first five months this year accounted for RMB$297.61 billion, growing 33.8% yoy. Among which the life insurance segment premium was RMB$201.75 billion, jumping 39.9% yoy. The P&C insurance segment premium was RMB$86.44 billion, jumping 23.6% yoy. Hence, the inability to split Lufax this year doesn t pose a significant impact to the fundamental factors of Ping An. For the valuation, the current stock price is equivalent to 1.86x Forecast P/B, similar to the five-year average 1.89x. It can t be ruled out that the Mainland A share inclusion in MSCI factor may keep supporting the industry stock prices. However, we reiterate that the valuation of Ping An is not low. Therefore, we only suggest short term speculative trading. http://www.kgieworld.com 20 June 2017 3
Shanghai/Shenzhen-Hong Kong Stock Connect Statistics SH Connect SZ Connect Combined Southbound Balance (RMB bn) 11.80 11.81 19.77 Balance as % of Quota Amount 90.7 90.8 94.2 Top 10 Most Actively Traded Stocks(SH-HK Connect Southbound) Stock Name Stock code Buy Trades (RMB) Sell Trades (RMB) Turnover (RMB) TENCENT 700 421,310,240 186,724,920 608,035,160 HSBC HOLDINGS 5 436,592,080 34,129,000 470,721,080 GREATWALL MOTOR 2333 171,362,380 101,763,980 273,126,360 EVERGRANDE 3333 48,732,880 211,381,440 260,114,320 PING AN 2318 125,998,300 99,237,725 225,236,025 FULLSHARE 607 147,205,450 70,384,025 217,589,475 HKEX 388 58,833,320 147,364,560 206,197,880 CHINA MOBILE 941 35,693,950 136,688,175 172,382,125 CM BANK 3968 89,354,425 36,345,550 125,699,975 ICBC 1398 39,658,240 82,047,700 121,705,940 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 69,918,320 45,143,780 115,062,100 IGG 799 31,008,620 18,604,840 49,613,460 ZTE 763 21,548,912 23,158,504 44,707,416 EVERGRANDE 3333 20,680,740 22,241,760 42,922,500 GREATWALL MOTOR 2333 23,702,470 18,359,690 42,062,160 GEELY AUTO 175 12,379,900 24,934,000 37,313,900 CITYCHAMP 256 21,933,500 4,211,480 26,144,980 SUNAC 1918 17,598,340 8,026,180 25,624,520 MEITU 1357 19,504,230 6,071,310 25,575,540 HKEX 388 18,959,940 5,085,760 24,045,700 Sources: HKEx Other Statistics Ten Most Actively Traded Stocks Stock Name Code Change Closed Price Turnover(Million) TENCENT 700 2.27% 278.80 4703.7 PING AN 2318 3.99% 52.15 2431.0 HKEX 388 2.73% 203.00 1476.3 HSBC HOLDINGS 5 0.81% 68.90 1276.0 EVERGRANDE 3333 7.76% 15.00 1024.9 CCB 939 1.10% 6.46 921.6 ICBC 1398 0.77% 5.23 902.5 GREATWALL MOTOR 2333 1.59% 10.22 841.9 CHINA LIFE 2628 1.25% 24.30 810.2 AIA 1299 2.06% 57.05 803.9 http://www.kgieworld.com 20 June 2017 4
Ten Short Sell Stocks Stock Name Code Short Sell Turnover Short Sell Ratio TENCENT 00700.HK 735.17M 4.70B 15.63% PING AN 02318.HK 673.19M 2.43B 27.69% TRACKER FUND 02800.HK 261.24M 1.77B 14.75% HSBC HOLDINGS 00005.HK 248.03M 1.28B 19.44% ICBC 01398.HK 225.71M 902.54M 25.01% GREATWALL MOTOR 02333.HK 181.18M 841.87M 21.52% CAM CSI300 03188.HK 178.01M 372.08M 47.84% X ISHARES A50 02823.HK 148.47M 639.25M 23.23% CCB 00939.HK 148.04M 921.57M 16.06% AIA 01299.HK 144.94M 803.90M 18.03% Source: AAStocks Economic Calendar Date Country Event Survey Prior Mon China May Property Prices U.K., Eurozone Brexit negotiation is scheduled to commence Tue NIL Wed H.K. China Gas Holdings (0384) releases annual result U.S. May Existing Home Sales 555K 557K Thu H.K. Fairwood (0052) and Bauhaus (0483) annual results New Zealand Reserve Bank of New Zealand Rate Decision 1.75% 1.75% U.S. Initial Jobless Claims (Jun. 17) 237K Continuing Claims (Jun. 10) 1,935K Fri H.K. King Fook (0280), Vitasoy (0345), Travel Expert (1235) and Jacobson (2633) release annual results France 1Q GDP (YoY Finalized) 1.0% Jun. Markit Manufacturing PMI 53.8 Germany Jun. Markit Manufacturing PMI 59.0 59.5 Eurozone Jun. Markit Manufacturing PMI 56.7 57.0 U.S. Jun. Markit Manufacturing PMI 53.0 52.7 May New Home Sales 600K 569K 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 June 2017 5