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Dim Sum Express

广发证券

Equity Research
Jan 11, 2017
Dim Sum Express Key index performance Market HSI HSCEI MXCN SHSZ300 SHCOMP SZCOMP INDU SPX CCMP UKX NKY Chg (%) 1D 1M YTD 0.8 -0.1 3.4 0.6 -2.1 2.9 1.0 0.6 4.3 -0.2 -3.9 1.5 -0.3 -2.2 1.9 -0.2 -3.9 1.0 -0.2 0.5 0.5 0.0 0.4 1.3 0.4 2.0 3.1 0.5 4.6 1.9 0.4 2.0 1.3 EPS (%) 16E 17E -11.4 9.9 -14.7 8.9 -15.5 13.7 0.8 13.4 12.0 13.5 47.6 48.7 0.4 10.8 9.2 11.8 42.4 16.5 123.5 8.8 10.7 10.4 P/E 16E 17E 11.5 10.5 7.9 7.3 11.9 10.5 12.7 11.2 13.3 11.8 22.6 15.2 16.6 15.0 17.5 15.6 20.9 18.0 14.8 13.6 19.3 17.5
A-Share Market Macro: Vegetable prices main culprit for Dec CPI slip; mild re-inflation expected during 2017 Looking into Jan, continued downward pressure on vegetable prices should be more than offset by the CNY effect. We expect Jan CPI to come in at 2.4-2.5%. A potential peak in the CRB in Jan would be reflected in the PPI with a 2-3 month delay. Compared with 4Q16, when the CPI and PPI hovered around 2.1% and 3.3%, 1Q17 CPI should come in slightly higher while PPI should be much stronger with monthly readings potentially reaching as high as above 7%. This would mean further increases in the GDP deflator and nominal GDP growth. Pharmaceutical: “Two-invoice system” to drive industry consolidation and players in healthcare reform pilot cities A “two-invoice system” is being promoted to simplify the supply chain for the purpose of reducing drug prices for the general public. The scope of its implementation will be expanded in 2017, with a goal to achieve nationwide implementation in 2018. As such, we believe leading players along the pharmaceutical supply chain in Jiangsu, Zhejiang, Fujian and Chongqing will be the first to benefit. In addition, the promotion of the “two-invoice system” will facilitate industry consolidation. We prefer companies with solid business performance which are actively seeking M&A with a strong cash position and abundant business management experience.
Hong Kong ADRs HK ticker Company 700 TENCENT 1398 ICBC 941 CHINA MOBILE 857 PETROCHINA 939 CCB 5 HSBC 3988 BANK OF CHINA 386 SINOPEC 2628 CHINA LIFE 2318 PING AN Local (HK$) 198.0 4.7 84.1 6.2 5.9 63.4 3.5 5.9 21.1 39.8 Daily ADR (%) (US$) 1.23 25.9 0.64 25.9 0.12 54.5 0.00 79.8 1.20 15.3 -0.55 40.8 0.29 11.3 0.51 75.8 0.48 0.25 75.1 Daily (%) 2.47 1.26 0.63 1.37 1.94 0.22 0.80 1.34 3.32
Hong Kong Market Brilliance China (1114 HK, Buy): Weak Dec sales; full-year volume still meets expectations Brilliance-BMW unit sales rose 8.5% YoY but dropped 15.1% MoM during Dec, a weak figure for the peak sales period. 2016 sales were up 7.7% YoY, close to our estimate and meeting the company’s high single-digit growth guidance. The X1 continued to see sharp growth, with sales up 68% YoY; we expect this sales trend to continue in 2017 as the model becomes an increasingly important growth pillar. We expect a strong sales rebound for the 5-Series with the launch of the next generation of the model. We believe the stock is undervalued; maintain Buy. Q Tech (1478 HK, Buy): Upbeat 2017 guidance Q Tech’s CMOS Camera Module (CCM) shipments reached rose 82% YoY in 2016, beating the company’s target of 50% YoY growth. Product mix continued to improve, with CCMs of 8MP or above accounting for 69% of shipments, up from 47% in the same period a year ago. Management is upbeat on the outlook for its fingerprint module business in 2017 and targets a 200% increase in shipments, in line with our current shipment assumption. The upbeat 2017 shipment target reinforces our current forecast for robust earnings growth in 2017. Maintain Buy.
Source: Bloomberg
GF events Date Event 16 Jan Shenzhen Inv NDR Location Hong Kong
Source: GF Securities (Hong Kong)
Alex Fan, CFA, Head of Research, SFC CE No. ADJ672 alexfan@gfgroup.com.hk +852 3719 1047 Gao Yedong, Editor, SFC CE No. BAI002 yedonggao@gfgroup.com.hk +852 3719 1026
Dim Sum Express
Jan 11, 2017
Macro: Vegetable prices main culprit for Dec CPI slip; mild re-inflation expected during 2017 Lower-than-normal vegetable prices the main reason for CPI decline Dec CPI came in at 2.1% YoY, slightly lower than Nov’s 2.3% but flat with Oct. The decline from Nov was mainly attributable to weaker-than-usual vegetable price growth which was a result of this year’s winter temperature being much higher than previous years. Looking into Jan, while the warm weather will continue to weigh on vegetable prices, this should be more than offset by the effect of the Chinese New Year. With the price growth of other index components remaining stable or rising on the CNY effect, we expect Jan CPI to come in higher than Dec, possibly at 2.4-2.5%. CRB index yet to peak The PPI beat expectations by picking up strongly from 3.3% in Nov to 5.5% in Dec, with the strength in oil and steel prices the key drivers. It is worth noting that an inflection point in the CRB index is yet to be seen, with both the CRB index and CRB raw industrials going up further in YoY terms in Dec. A potential peak in the CRB in Jan would be reflected in the PPI with a 2-3 month delay, while the mid-term downside to the PPI is still subject to uncertainties such as oil price levels. We expect to see mild re-inflation during 2017 Recent rebounds in the CPI and PPI have led to high nominal GDP growth: the GDP deflator has risen over the past few quarters, and the nominal GDP figure has rebounded for the last four quarters. Compared with 4Q16, when the CPI and PPI hovered around 2.1% and 3.3%, 1Q17 CPI should come in slightly higher while PPI should be much stronger with monthly readings potentially reaching as high as above 7%. This would mean further increases in the GDP deflator and nominal GDP growth. In 2Q17, while real GDP growth might ease by 0.1-0.2pp, the outlook of nominal GDP growth is still hard to pinpoint at this stage.
Pharmaceutical: “Two-invoice system” to drive industry consolidation and players in healthcare reform pilot cities Players in healthcare reform pilot cities to benefit first The National Health and Family Planning Commission has recently held a press conference to elaborate on the “two-invoice system” for drug procurement by public hospitals, which is being promoted to simplify the supply chain for the purpose of reducing drug prices for the general public. It is stated in the commission’s notice that the scope of “two-invoice system” implementation will be expanded in 2017, with a goal to achieve nationwide implementation in 2018. It is proposed that key cities that act as pilots for healthcare and public hospital reforms should take the lead in enforcing a “two-invoice system”. As such, we believe leading players along the pharmaceutical supply chain in Jiangsu, Zhejiang, Fujian and Chongqing will be the first to benefit, and suggest watching NanJing Medical (600713 CH), Huadong Medicine (000963 CH) and Luyan Pharma (002788 CH). Full coverage of the “two-invoice system” in 2018 will benefit leading companies with nationwide business presence. “Two-invoice system” to support industry consolidation The promotion of the “two-invoice system” will facilitate industry consolidation. In particular, rules have been proposed in the commission’s latest notice regarding the number of invoices allowed to be issued which make things easier for leading companies taking stakes in smaller and medium drug supply chain companies. We prefer companies with solid business performance which are actively seeking M&A with a strong cash position and abundant business management experience, such as China Medicine Health Industry (600056 CH), Realcan Pharmaceutical (002589 CH), Cachet Pharmaceutical (002462 CH) and Jointown Pharmaceutical (600998 CH).
Brilliance China (1114 HK, Buy): Weak Dec sales; full-year volume still meets expectations Weak Dec sales but full-year volume meets expectation Brilliance China sold 26,437 BrillianceBMW units in Dec, up 8.5% YoY but down 15.1% MoM, a weak figure for the peak sales period. During 2016, the company sold 309,000 units, up 7.7% YoY, close to our estimate of 309,300 units, and meeting the company’s high single-digit growth guidance. X1 continues to be a strong growth contributor The X1 continued to see sharp growth, with sales up 68% YoY, but down 7.7% MoM; full-year sales reached 54,582 units, up 32.5% YoY. The model has been on a considerable upward sales trend in 2H16 with its upgraded version, compared to the decline seen in 1H16, indicating strong competitiveness, particularly with its long-wheelbase
Page 2
Dim Sum Express
Jan 11, 2017
version. The model accounted for 17.7% of the JV’s 2016 sales volume (2015: 14%). We expect this sales trend to continue in 2017 as the model becomes an increasingly important growth pillar for the company. 3-Series and 5-Series sales decline The company sold 8,336 3-Series units in Dec, down 19.5% YoY and 12.9% MoM; 2016 sales came in at 98,504 units, down just 0.1% YoY. The model accounted for 46% of the JV’s total sales volume during 2016. Sales growth for the model has decreased slowly since 2Q16, putting more pressure on sales in 2017 as it is now less attractive compared to peers such as the Audi A4. Sales of the 5-Series also declined, dropping 1.6% YoY and 23.2% MoM; full-year sales were down 3.9% YoY to 141,514 units. While the decline in sales has continued, the full-year figure is slower than the 7% decline seen in 2H16. The company has implemented a price discount to boost sales of the model. We expect a strong sales rebound this year with the launch of the next generation of the model. Confident on the sales in 2017; maintain Buy We expect the new 5-Series in 2017 to lead to sharp sales growth for the model and the company this year, given its strong competitiveness and low comparative sales base. The X1 will be the other major growth contributor, driving the company’s sales. The stock is trading at 11x 1-y forward P/E which is below its historical average of 12.2x P/E. Given the upcoming sales rebound this year with an improved product mix, we believe the stock is undervalued, and maintain our Buy rating. Our target price is under review as selfowned brand sales data has not yet been announced. (Alex Fan, CFA, Head of Research, SFC CE No. ADJ672, alexfan@gfgroup.com.hk +852 3719 1047) (Chongjing Deng, Research Analyst, SFC CE No. BEY953, dengchongjing@gfgroup.com.hk +86 20 8757 0515)
Q Tech (1478 HK, Buy): Upbeat 2017 guidance What's new? Q Tech released 4Q16 shipment figures and announced 2017 shipment targets. Core CCM business beat company's own target In 2016, Q Tech’s CMOS Camera Module (CCM) shipments reached 179m units (+82% YoY), beating the company’s target of 50% YoY growth. Product mix continued to improve, with CCM of 8MP or above accounting for 69% of shipments, up from 47% in the same period a year ago. Management targets not less than 25% YoY growth in CCM shipments in 2017. Upbeat 2017 outlook for new FPM business The company’s fingerprint modules (FPM) business saw a rapid ramp-up in shipments in 4Q16. Total FPM shipments in 2016 reached 20m units. Management is upbeat on the outlook for its FPM business in 2017 and targets a 200% increase in shipments to 60m units, in line with our current shipment assumption. Maintain Buy on this growth stock The upbeat 2017 shipment target reinforces our current forecast for robust earnings growth in 2017. We currently forecast 49% EPS growth during the year. The stock is up 15% YTD vs an increase of 3% for the Hang Sang Index. We maintain our Buy rating. The stock is currently trading at 14.7x 2017E P/E based on our 2017 EPS estimate of Rmb0.28. (Joseph Ho, CFA, Research Analyst, SFC CE No. AFP308, josephho@gfgroup.com.hk +852 3719 1030)
Page 3
Dim Sum Express
Jan 11, 2017
Rating Definitions Benchmark: Hong Kong Hang Seng Index Time horizon: 12 months Company ratings Buy Accumulate Hold Underperform Sector ratings Positive Neutral Cautious Sector expected to outperform benchmark by more than 10% Expected sector relative performance ranges between -10% and 10% Sector expected to underperform benchmark by more than 10% Stock expected to outperform benchmark by more than 15% Stock expected to outperform benchmark by more than 5% but not more than 15% Expected stock relative performance ranges between -5% and 5% Stock expected to underperform benchmark by more than 5%
Analyst Certification The research analyst(s) primarily responsible for the content of this research report, in whole or in part, certifies that with respect to the company or relevant securities that the analyst(s) covered in this report: (1) all of the views expressed accurately reflect his or her personal views on the company or relevant securities mentioned herein; and (2) no part of his or her remuneration was, is, or will be, directly or indirectly, in connection with his or her specific recommendations or views expressed in this research report.
Disclosure of Interests (1) The proprietary trading division of GF Securities (Hong Kong) Brokerage Limited (“GF Securities (Hong Kong)”) and/or its affiliated or associated companies do not hold any shares of the securities mentioned in this research report. (2) GF Securities (Hong Kong) and/or its affiliated or associated companies do not have any investment banking relationship with the companies mentioned in this research report in the past 12 months. (3) Neither the analyst(s) preparing this report nor his/her associate(s) serves as an officer of the company mentioned in this report and has any financial interests or hold any shares of the securities mentioned in this report.
Disclaimer This report is prepared by GF Securities (Hong Kong). It is published solely for information purpose and does not constitute an offer to buy or sell any securities or a solicitation of an offer to buy, or recommendation for investment in, any securities. The research report is intended solely for use of the clients of GF Securities (Hong Kong). The securities mentioned in the research report may not be allowed to be sold in certain jurisdictions. No action has been taken to permit the distribution of the research reports to any person in any jurisdiction that the circulation or distribution of such research report is unlawful. No representation or warranty, either express or implied, is made by GF Securities (Hong Kong) as to their accuracy and completeness of the information contained in the research report. GF Securities (Hong Kong) accepts no liability for all loss arising from the use of the materials presented in the research report, unless is excluded by applicable laws or regulations. Please be aware of the fact that investments involve risks and the price of securities may be fluctuated and therefore return may be varied, past results do not guarantee future performance. Any recommendation contained in the research report does not have regard to the specific investment objectives, financial situation and the particular needs of any individuals. The report is not to be taken in substitution for the exercise of judgment by respective recipients of the report, where necessary, recipients should obtain professional advice before making investment decisions. GF Securities (Hong Kong) may have issued, and may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented in the research report. The points of view, opinions and analytical methods adopted in the research report are solely expressed by the analysts but not that of GF Securities (Hong Kong) or its affiliates. The information, opinions and forecasts presented in the research report are the current opinions of the analysts as of the date appearing on this material only which may subject to change at any time without notice. The salesperson, dealer or other professionals of GF Securities (Hong Kong) may deliver opposite points of view to their clients and the proprietary trading division with respect to market commentary or dealing strategy either in writing or verbally. The proprietary trading division of GF Securities (Hong Kong) may have different investment decision which may be contrary to the opinions expressed in the research report. GF Securities (Hong Kong) or its affiliates or respective directors, officers, analysts and employees may have rights and interests in securities mentioned in the research report. Recipients should be aware of relevant disclosure of interest (if any) when reading the report. Copyright © GF Securities (Hong Kong) Brokerage Limited. Without the prior written consent obtained from GF Securities (Hong Kong) Brokerage Limited, any part of the materials contained herein should not (i) in any forms be copied or reproduced or (ii) be re-disseminated. © GF Securities (Hong Kong) Brokerage Limited. All rights reserved. 29-30/F, Li Po Chun Chambers, 189 Des Voeux Road Central, Hong Kong Tel: +852 3719 1111 Fax: +852 2907 6176 Website: http://www.gfgroup.com.hk
Page 4

Dim Sum Express

发布机构:广发证券
报告类型:外行报告 发布日期:2017/1/11
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内容简介

Equity Research
Jan 11, 2017
Dim Sum Express Key index performance Market HSI HSCEI MXCN SHSZ300 SHCOMP SZCOMP INDU SPX CCMP UKX NKY Chg (%) 1D 1M YTD 0.8 -0.1 3.4 0.6 -2.1 2.9 1.0 0.6 4.3 -0.2 -3.9 1.5 -0.3 -2.2 1.9 -0.2 -3.9 1.0 -0.2 0.5 0.5 0.0 0.4 1.3 0.4 2.0 3.1 0.5 4.6 1.9 0.4 2.0 1.3 EPS (%) 16E 17E -11.4 9.9 -14.7 8.9 -15.5 13.7 0.8 13.4 12.0 13.5 47.6 48.7 0.4 10.8 9.2 11.8 42.4 16.5 123.5 8.8 10.7 10.4 P/E 16E 17E 11.5 10.5 7.9 7.3 11.9 10.5 12.7 11.2 13.3 11.8 22.6 15.2 16.6 15.0 17.5 15.6 20.9 18.0 14.8 13.6 19.3 17.5
A-Share Market Macro: Vegetable prices main culprit for Dec CPI slip; mild re-inflation expected during 2017 Looking into Jan, continued downward pressure on vegetable prices should be more than offset by the CNY effect. We expect Jan CPI to come in at 2.4-2.5%. A potential peak in the CRB in Jan would be reflected in the PPI with a 2-3 month delay. Compared with 4Q16, when the CPI and PPI hovered around 2.1% and 3.3%, 1Q17 CPI should come in slightly higher while PPI should be much stronger with monthly readings potentially reaching as high as above 7%. This would mean further increases in the GDP deflator and nominal GDP growth. Pharmaceutical: “Two-invoice system” to drive industry consolidation and players in healthcare reform pilot cities A “two-invoice system” is being promoted to simplify the supply chain for the purpose of reducing drug prices for the general public. The scope of its implementation will be expanded in 2017, with a goal to achieve nationwide implementation in 2018. As such, we believe leading players along the pharmaceutical supply chain in Jiangsu, Zhejiang, Fujian and Chongqing will be the first to benefit. In addition, the promotion of the “two-invoice system” will facilitate industry consolidation. We prefer companies with solid business performance which are actively seeking M&A with a strong cash position and abundant business management experience.
Hong Kong ADRs HK ticker Company 700 TENCENT 1398 ICBC 941 CHINA MOBILE 857 PETROCHINA 939 CCB 5 HSBC 3988 BANK OF CHINA 386 SINOPEC 2628 CHINA LIFE 2318 PING AN Local (HK$) 198.0 4.7 84.1 6.2 5.9 63.4 3.5 5.9 21.1 39.8 Daily ADR (%) (US$) 1.23 25.9 0.64 25.9 0.12 54.5 0.00 79.8 1.20 15.3 -0.55 40.8 0.29 11.3 0.51 75.8 0.48 0.25 75.1 Daily (%) 2.47 1.26 0.63 1.37 1.94 0.22 0.80 1.34 3.32
Hong Kong Market Brilliance China (1114 HK, Buy): Weak Dec sales; full-year volume still meets expectations Brilliance-BMW unit sales rose 8.5% YoY but dropped 15.1% MoM during Dec, a weak figure for the peak sales period. 2016 sales were up 7.7% YoY, close to our estimate and meeting the company’s high single-digit growth guidance. The X1 continued to see sharp growth, with sales up 68% YoY; we expect this sales trend to continue in 2017 as the model becomes an increasingly important growth pillar. We expect a strong sales rebound for the 5-Series with the launch of the next generation of the model. We believe the stock is undervalued; maintain Buy. Q Tech (1478 HK, Buy): Upbeat 2017 guidance Q Tech’s CMOS Camera Module (CCM) shipments reached rose 82% YoY in 2016, beating the company’s target of 50% YoY growth. Product mix continued to improve, with CCMs of 8MP or above accounting for 69% of shipments, up from 47% in the same period a year ago. Management is upbeat on the outlook for its fingerprint module business in 2017 and targets a 200% increase in shipments, in line with our current shipment assumption. The upbeat 2017 shipment target reinforces our current forecast for robust earnings growth in 2017. Maintain Buy.
Source: Bloomberg
GF events Date Event 16 Jan Shenzhen Inv NDR Location Hong Kong
Source: GF Securities (Hong Kong)
Alex Fan, CFA, Head of Research, SFC CE No. ADJ672 alexfan@gfgroup.com.hk +852 3719 1047 Gao Yedong, Editor, SFC CE No. BAI002 yedonggao@gfgroup.com.hk +852 3719 1026
Dim Sum Express
Jan 11, 2017
Macro: Vegetable prices main culprit for Dec CPI slip; mild re-inflation expected during 2017 Lower-than-normal vegetable prices the main reason for CPI decline Dec CPI came in at 2.1% YoY, slightly lower than Nov’s 2.3% but flat with Oct. The decline from Nov was mainly attributable to weaker-than-usual vegetable price growth which was a result of this year’s winter temperature being much higher than previous years. Looking into Jan, while the warm weather will continue to weigh on vegetable prices, this should be more than offset by the effect of the Chinese New Year. With the price growth of other index components remaining stable or rising on the CNY effect, we expect Jan CPI to come in higher than Dec, possibly at 2.4-2.5%. CRB index yet to peak The PPI beat expectations by picking up strongly from 3.3% in Nov to 5.5% in Dec, with the strength in oil and steel prices the key drivers. It is worth noting that an inflection point in the CRB index is yet to be seen, with both the CRB index and CRB raw industrials going up further in YoY terms in Dec. A potential peak in the CRB in Jan would be reflected in the PPI with a 2-3 month delay, while the mid-term downside to the PPI is still subject to uncertainties such as oil price levels. We expect to see mild re-inflation during 2017 Recent rebounds in the CPI and PPI have led to high nominal GDP growth: the GDP deflator has risen over the past few quarters, and the nominal GDP figure has rebounded for the last four quarters. Compared with 4Q16, when the CPI and PPI hovered around 2.1% and 3.3%, 1Q17 CPI should come in slightly higher while PPI should be much stronger with monthly readings potentially reaching as high as above 7%. This would mean further increases in the GDP deflator and nominal GDP growth. In 2Q17, while real GDP growth might ease by 0.1-0.2pp, the outlook of nominal GDP growth is still hard to pinpoint at this stage.
Pharmaceutical: “Two-invoice system” to drive industry consolidation and players in healthcare reform pilot cities Players in healthcare reform pilot cities to benefit first The National Health and Family Planning Commission has recently held a press conference to elaborate on the “two-invoice system” for drug procurement by public hospitals, which is being promoted to simplify the supply chain for the purpose of reducing drug prices for the general public. It is stated in the commission’s notice that the scope of “two-invoice system” implementation will be expanded in 2017, with a goal to achieve nationwide implementation in 2018. It is proposed that key cities that act as pilots for healthcare and public hospital reforms should take the lead in enforcing a “two-invoice system”. As such, we believe leading players along the pharmaceutical supply chain in Jiangsu, Zhejiang, Fujian and Chongqing will be the first to benefit, and suggest watching NanJing Medical (600713 CH), Huadong Medicine (000963 CH) and Luyan Pharma (002788 CH). Full coverage of the “two-invoice system” in 2018 will benefit leading companies with nationwide business presence. “Two-invoice system” to support industry consolidation The promotion of the “two-invoice system” will facilitate industry consolidation. In particular, rules have been proposed in the commission’s latest notice regarding the number of invoices allowed to be issued which make things easier for leading companies taking stakes in smaller and medium drug supply chain companies. We prefer companies with solid business performance which are actively seeking M&A with a strong cash position and abundant business management experience, such as China Medicine Health Industry (600056 CH), Realcan Pharmaceutical (002589 CH), Cachet Pharmaceutical (002462 CH) and Jointown Pharmaceutical (600998 CH).
Brilliance China (1114 HK, Buy): Weak Dec sales; full-year volume still meets expectations Weak Dec sales but full-year volume meets expectation Brilliance China sold 26,437 BrillianceBMW units in Dec, up 8.5% YoY but down 15.1% MoM, a weak figure for the peak sales period. During 2016, the company sold 309,000 units, up 7.7% YoY, close to our estimate of 309,300 units, and meeting the company’s high single-digit growth guidance. X1 continues to be a strong growth contributor The X1 continued to see sharp growth, with sales up 68% YoY, but down 7.7% MoM; full-year sales reached 54,582 units, up 32.5% YoY. The model has been on a considerable upward sales trend in 2H16 with its upgraded version, compared to the decline seen in 1H16, indicating strong competitiveness, particularly with its long-wheelbase
Page 2
Dim Sum Express
Jan 11, 2017
version. The model accounted for 17.7% of the JV’s 2016 sales volume (2015: 14%). We expect this sales trend to continue in 2017 as the model becomes an increasingly important growth pillar for the company. 3-Series and 5-Series sales decline The company sold 8,336 3-Series units in Dec, down 19.5% YoY and 12.9% MoM; 2016 sales came in at 98,504 units, down just 0.1% YoY. The model accounted for 46% of the JV’s total sales volume during 2016. Sales growth for the model has decreased slowly since 2Q16, putting more pressure on sales in 2017 as it is now less attractive compared to peers such as the Audi A4. Sales of the 5-Series also declined, dropping 1.6% YoY and 23.2% MoM; full-year sales were down 3.9% YoY to 141,514 units. While the decline in sales has continued, the full-year figure is slower than the 7% decline seen in 2H16. The company has implemented a price discount to boost sales of the model. We expect a strong sales rebound this year with the launch of the next generation of the model. Confident on the sales in 2017; maintain Buy We expect the new 5-Series in 2017 to lead to sharp sales growth for the model and the company this year, given its strong competitiveness and low comparative sales base. The X1 will be the other major growth contributor, driving the company’s sales. The stock is trading at 11x 1-y forward P/E which is below its historical average of 12.2x P/E. Given the upcoming sales rebound this year with an improved product mix, we believe the stock is undervalued, and maintain our Buy rating. Our target price is under review as selfowned brand sales data has not yet been announced. (Alex Fan, CFA, Head of Research, SFC CE No. ADJ672, alexfan@gfgroup.com.hk +852 3719 1047) (Chongjing Deng, Research Analyst, SFC CE No. BEY953, dengchongjing@gfgroup.com.hk +86 20 8757 0515)
Q Tech (1478 HK, Buy): Upbeat 2017 guidance What's new? Q Tech released 4Q16 shipment figures and announced 2017 shipment targets. Core CCM business beat company's own target In 2016, Q Tech’s CMOS Camera Module (CCM) shipments reached 179m units (+82% YoY), beating the company’s target of 50% YoY growth. Product mix continued to improve, with CCM of 8MP or above accounting for 69% of shipments, up from 47% in the same period a year ago. Management targets not less than 25% YoY growth in CCM shipments in 2017. Upbeat 2017 outlook for new FPM business The company’s fingerprint modules (FPM) business saw a rapid ramp-up in shipments in 4Q16. Total FPM shipments in 2016 reached 20m units. Management is upbeat on the outlook for its FPM business in 2017 and targets a 200% increase in shipments to 60m units, in line with our current shipment assumption. Maintain Buy on this growth stock The upbeat 2017 shipment target reinforces our current forecast for robust earnings growth in 2017. We currently forecast 49% EPS growth during the year. The stock is up 15% YTD vs an increase of 3% for the Hang Sang Index. We maintain our Buy rating. The stock is currently trading at 14.7x 2017E P/E based on our 2017 EPS estimate of Rmb0.28. (Joseph Ho, CFA, Research Analyst, SFC CE No. AFP308, josephho@gfgroup.com.hk +852 3719 1030)
Page 3
Dim Sum Express
Jan 11, 2017
Rating Definitions Benchmark: Hong Kong Hang Seng Index Time horizon: 12 months Company ratings Buy Accumulate Hold Underperform Sector ratings Positive Neutral Cautious Sector expected to outperform benchmark by more than 10% Expected sector relative performance ranges between -10% and 10% Sector expected to underperform benchmark by more than 10% Stock expected to outperform benchmark by more than 15% Stock expected to outperform benchmark by more than 5% but not more than 15% Expected stock relative performance ranges between -5% and 5% Stock expected to underperform benchmark by more than 5%
Analyst Certification The research analyst(s) primarily responsible for the content of this research report, in whole or in part, certifies that with respect to the company or relevant securities that the analyst(s) covered in this report: (1) all of the views expressed accurately reflect his or her personal views on the company or relevant securities mentioned herein; and (2) no part of his or her remuneration was, is, or will be, directly or indirectly, in connection with his or her specific recommendations or views expressed in this research report.
Disclosure of Interests (1) The proprietary trading division of GF Securities (Hong Kong) Brokerage Limited (“GF Securities (Hong Kong)”) and/or its affiliated or associated companies do not hold any shares of the securities mentioned in this research report. (2) GF Securities (Hong Kong) and/or its affiliated or associated companies do not have any investment banking relationship with the companies mentioned in this research report in the past 12 months. (3) Neither the analyst(s) preparing this report nor his/her associate(s) serves as an officer of the company mentioned in this report and has any financial interests or hold any shares of the securities mentioned in this report.
Disclaimer This report is prepared by GF Securities (Hong Kong). It is published solely for information purpose and does not constitute an offer to buy or sell any securities or a solicitation of an offer to buy, or recommendation for investment in, any securities. The research report is intended solely for use of the clients of GF Securities (Hong Kong). The securities mentioned in the research report may not be allowed to be sold in certain jurisdictions. No action has been taken to permit the distribution of the research reports to any person in any jurisdiction that the circulation or distribution of such research report is unlawful. No representation or warranty, either express or implied, is made by GF Securities (Hong Kong) as to their accuracy and completeness of the information contained in the research report. GF Securities (Hong Kong) accepts no liability for all loss arising from the use of the materials presented in the research report, unless is excluded by applicable laws or regulations. Please be aware of the fact that investments involve risks and the price of securities may be fluctuated and therefore return may be varied, past results do not guarantee future performance. Any recommendation contained in the research report does not have regard to the specific investment objectives, financial situation and the particular needs of any individuals. The report is not to be taken in substitution for the exercise of judgment by respective recipients of the report, where necessary, recipients should obtain professional advice before making investment decisions. GF Securities (Hong Kong) may have issued, and may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented in the research report. The points of view, opinions and analytical methods adopted in the research report are solely expressed by the analysts but not that of GF Securities (Hong Kong) or its affiliates. The information, opinions and forecasts presented in the research report are the current opinions of the analysts as of the date appearing on this material only which may subject to change at any time without notice. The salesperson, dealer or other professionals of GF Securities (Hong Kong) may deliver opposite points of view to their clients and the proprietary trading division with respect to market commentary or dealing strategy either in writing or verbally. The proprietary trading division of GF Securities (Hong Kong) may have different investment decision which may be contrary to the opinions expressed in the research report. GF Securities (Hong Kong) or its affiliates or respective directors, officers, analysts and employees may have rights and interests in securities mentioned in the research report. Recipients should be aware of relevant disclosure of interest (if any) when reading the report. Copyright © GF Securities (Hong Kong) Brokerage Limited. Without the prior written consent obtained from GF Securities (Hong Kong) Brokerage Limited, any part of the materials contained herein should not (i) in any forms be copied or reproduced or (ii) be re-disseminated. © GF Securities (Hong Kong) Brokerage Limited. All rights reserved. 29-30/F, Li Po Chun Chambers, 189 Des Voeux Road Central, Hong Kong Tel: +852 3719 1111 Fax: +852 2907 6176 Website: http://www.gfgroup.com.hk
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