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3 Jul, 2015 (Friday)

Dawnrays Pharmaceutical (2348) issued profit alert, the Group expects approximately 50% yoy increase in profit attributable to shareholders for the first half ended 30 June 2015, it was primarily attributable to the increase in revenue of high-gross-profit-margin system specific medicines compared with the corresponding period of 2014. In the first half of last year, the Group's profit attributable to shareholders was RMB 101 million. According to the profit alert, the profit for the first half this year will reach RMB 150 million or more. Besides the specific medicines, the Group also engaged in production of the cephalosporin antibiotics. Last year, Group was complied with China's new GMP requirements, necessary retrofit and reconstruction works were conducted for relevant production workshops, while the renovation works had passed government inspection and obtained GMP certification. The Group's production of cephalosporin antibiotics powder for injection and bulk medicines have come back to normal on a gradual basis. (I do not hold the above stock)
Buy-in Price: $6.35, Target Price: $7.15, Cut Loss Price: $5.95

CGS's profits increased sharply, by the end of 2014, net profit was RMB3.771 billion, up 76.59% y-y sharply, equivalent to the EPS of RMB0.50. Meanwhile, according the latest data, bu the end of May, CGS's net profit amounted to RMB1.224 billion. We expect its net profit would be around RMB10 billion in 2015. However, considering the large adjustment of share price recently, we hold a cautiously optimistic view for the price performance in future, and increase CGS's 12-m target price to HK$14.00. Recommend Buy rating.
Buy-in Price: $9.40, Target Price: $14.00, Cut Loss Price: $8.00

China Construction Bank (939.HK) - Profit growth slowed down with the decrease of the asset quality


-According to 1Q Results of China Construction Bank (CCB or the Group), by the end of March, the Group's net profit was RMb67.005 billion, up 1.86% y-y slightly, lower than our previous expectation, equivalent to the EPS of RMB0.27, mainly due to the large growth of cost, especially for impairment losses, increased sharply by 73.1% y-y. We believe CCB's profit growth would maintain at the stable level in 2015;

-On the other hand, the quality of CCB's loans went down continually. In 1Q2015, the Group's net loans increased by 3.5% to RMB9.55 trillion. Due to the downstream of economy, the bank's NPLs continued to increase, NPL ratio increased largely from 1.19% in 2014 to 1.30%. Meanwhile, the converge ratio decreased from 222.33% to 207.23%. However, this trend met our expectation, and we believe the asset quality will continue to go down in future, both the amount and ratio of NPLs would increase, and the NPL ratio would be around 1.54% in 2015;

-However, we note that CCB's CAR increased obviously, located at the leading position among the peers, Core Tier-1 ratio and CAR increased by 0.39ppts and 0.1ppts respectively compared with the end of 2014, representing the easing of the bank's capital pressure, in line with expectation;

-Overall, CCB's business performance maintains stable, the profit growth slows down and the loan quality continues to go down, but the capital pressure declines, which would be helpful for the future development. Considering the sharp decrease of the share price, we estimate CCB's 12-m TP to HK$8.00, around 13% higher than the latest closing price, equivalent to 6.0xP/E and P/B0.9x in 2016E respectively, the valuation is attractive. Maintain Accumulate rating. (Closing price as at 30 June 2015)


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Recommendation on 3-7-2015
Price on Recommendation Date$ 7.080
Suggested purchase priceN/A
Target Price$ 8.000
Writer Info
Xingyu Chen
(Research Analyst)
Tel: +86 21 5169 9400 – 105

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Phillip Research - Hong Kong 輝立研究部 – 香港及中國
Company Stock Code Last Update Suggestion Target Price Price on Recom
Mainland Financial Xingyu Chen (86)
China Construction Bank93903/07/2015Accumulate8.000.000
Harbin Bank613825/06/2015Buy3.852.91
Transportation and Automobiles Zhang Jing (86)
On Time Logistics612329/06/2015Buy2.21.73
Mainland Property Geng Chen (86)
Colour Life177823/06/2015Buy13.89.8
Insurance Xingyu Chen (86)
FORTUNE REIT77814/10/2014Accumulate7.326.92
Hysan Development001418/03/2014Accumulate36.833.35
Local Financials Xingyu Chen (86)
HSBC Holdings PLC000509/05/2013Accumulate9587.7
Health & Personal Care Fan Guohe  (+ 86 21 51699400-110)
Kangmei Pharmaceutical60051816/06/2015BUY 62.4449.98
Zhongxin Pharmaceuticals60032912/05/2015Hold23.6422.89
Hotels and Entertainment Geng Chen (86)
Galaxy Entertainment2728/05/2015Accumulate 4238.8
Wisdom Group166105/01/2015BUY6.554.6
New Energy  
Longking ENV60038830/06/2015Accumulate22.519.12
GCL New Energy45118/06/2015Buy 1.610.76
Food, Beverage and Retail  
Samsonite International SA191011/06/2015Accumulate3026.05
Samsonite International SA191026/03/2015Accumulate30
NetDragon Websoft Inc.77726/06/2015Accumulate40.4734.45
Tongda Group69822/06/2015Accumulate1.71.51
Oil and Gas Geng Chen (86)
SPT Energy125124/02/2015Reduce1.51.74
CIMC ENRIC389927/10/2014Buy107.67
Software & Service  
Goldpac Group331518/02/2015N/A4.77
KINGDEE INT`L26802/12/2014Accumulate2.752.45

Information contained herein is based on sources that Phillip Securities (Hong Kong) Limited and/or its affiliates ( the “Group”) believe to be accurate. The Group does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof. The Group (or its employees) may have interests in relevant investment products. For details of different products’ risks, please view the Risk Disclosures Statement on

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