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17-04-2015(Fri) 16-04-2015(Thu) 15-04-2015(Wed) 14-04-2015(Tue) 13-04-2015(Mon)
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17 Apr, 2015 (Friday)

            
SAMSONITE(1910)
Analysis:
Samsonite (1910) had published the business information for the first quarter, which net sales increased by 10.8% yoy to US$ 566 million. Excluding currency effects, the growth even reached 18.5%. If calculated at constant currency basis, the net sales of all regions showed double-digit growth. Among them, the net sales from North America grew 25.3% to US$ 183 million; net sales from Asia increased 18% to US$ 232 million; net sales from Europe increased 13.6% to US$ 112 million; net sales from Latin America grew 11.5% to US$ 37 million. (I do not hold the above stock)
Strategy:
Buy-in Price: $27.00, Target Price: $30.00, Cut Loss Price: $25.50

BEIJING AIRPORT(694)
Analysis:
The net profit of BCIA was RMB 1.39 billion, + 4.7%yoy. And the final dividend of RMB 0.0816 per share, together with the interim dividend of RMB 0.0469 per share, the dividend payout ratio reached 40%. The debt structure of the Company was continuously optimized and the total debt ratio dropped from 50.4% to 46%. Look into the future, the company plans to continuously optimize the flow structure and hopes to raise the proportion of the passengers of international flights and the punctuality rate of the flight schedules. As to the freight service, the company also tries to implement the new freight service mode, for example, it signs a strategic cooperative agreement on freight with SF-Express. We believe, with the further development and the popularization of this mode in the coming future, it is expected to be a new business increase point in the future.
Strategy:
Buy-in Price: $8.90, Target Price: $9.50, Cut Loss Price: $8.60


China Merchants Bank (3968.HK) - New benchmark – employee stock ownership scheme enhances competitiveness

Summary

-According to CMB's 2014 Annual Results, it maintained stable profit growth that net profit achieved to RMB55.911 billion, up 8.1% y-y, equivalent to the EPS of RMB2.22, down 3.5% y-y due to the dilution of total share capital from Right Issues, slightly lower than our previous expectation;

-CMB's assets increased largely. As at the end of 2014, the Group's total assets increased largely by 17.81% to RMB4.7 trillion compared with the end of 2013, with net assets of RMB314.404 billion, equivalent to the BVPS of RMB12.47, increased by 18.42%;

-We continue to concern about the quality of loans. In 2014, the Group's NPL ratio increased largely by 0.28ppts to 1.11% compared with the end of 2013, higher than our expectation. Meanwhile, the converge ratio decreased by 32.58ppts to 233.42%;

-CMB has large capital pressure with the lower CAR compared with the peers, although the ratio increased stably. By the end of 2014, the Tier 1 Ratio and CAR of CMB recorded to 9.6% and 11.74%, up 0.33 and 0.60ppts respectively compared with the end of 2013. We expect CMB will still face larger financing demand in future;

-Recently, CMB announced the employee stock ownership scheme. According to the scheme, it should be derived from A Shares subscribed for the Private Placement with the total amount of less than RMB6 billion. In the next two years, the Group will continue to announce the stock ownership scheme, which shall not exceed RMB2 billion each year. Therefore, the total amount of funds of the employee stock ownership scheme shall not exceed RMB10 billion. The scheme will be very helpful for stimulating the employee's enthusiasm, and improving the work efficiency to enhance CMB's competitiveness, which provides a new benchmark for the industry. We expect there are more employee stock ownership schemes announced by the banks in future;

-In all, CMB's profit performance maintains stable, and the asset quality and the CAR will be main operating risks in future. However, due to the development of the market environment, we still hold confidence in CMB's competitive business model and brand influence, according to CMB's stable dividend payout record, and based on 3-stage DDM, we increase its 12-m TP to HK$30.00, 27.9% higher than the latest closing price, equivalent to 9.8xP/E and P/B1.5x in 2016E respectively, and maintain Buy rating. (Closing price as at 15 April 2015)

Stable profit growth and employee stock ownership scheme enhances competitiveness

By the end of 2014, the Group's net profit amounted to RMB55.911 billion, up 8.1% y-y, equivalent to the EPS of RMB2.22, down 3.5% y-y due to the dilution of total share capital from Right Issues.

According to incomes, net interest income grew 13.2% y-y approximately to RMB112 billion, and net commission fee increased strongly by 53.2% y-y to RMB44.696 billion, higher than our previous estimation. However, the Group's net profit growth was lower than expectation because of the large growth of expenses, especially for the impairment losses, up 210% y-y approximately to RMB31.681 billion. Considering the consistent deterioration of asset quality, we expect CMB's impairment losses will maintain the high growth in the next two years, which will affect the Group's profit performance obviously, and the profit would maintain the low single-digit growth.

According to assets, CMB's assets increased largely. In 2014, the Group's total assets increased largely by 17.81% to RMB4.7 trillion compared with the end of 2013, with net assets of RMB314.404 billion, equivalent to the BVPS of RMB12.47, increased by 18.42%.

However, the quality of loans continued to go down. In 2014, the Group's NPL ratio increased largely by 0.28ppts to 1.11% compared with the end of 2013, higher than our expectation. Meanwhile, the converge ratio decreased by 32.58ppts to 233.42%. We expect both the amount and ratio of CMB's NPLs will increase continually in 1Q2015.

Meanwhile, CMB has large capital pressure with the lower CAR compared with the peers, although the ratio increased stably. By the end of 2014, the Tier 1 Ratio and CAR of CMB recorded to 9.6% and 11.74%, up 0.33 and 0.60ppts respectively compared with the end of 2013. We expect CMB will still face larger financing demand in future.

Recently, CMB announced the employee stock ownership scheme. According to the scheme, it should be derived from A Shares subscribed for the Private Placement with the total amount of less than RMB6 billion. In the next two years, the Group will continue to announce the stock ownership scheme, which shall not exceed RMB2 billion each year. Therefore, the total amount of funds of the employee stock ownership scheme shall not exceed RMB10 billion. The scheme will be very helpful for stimulating the employee's enthusiasm, and improving the work efficiency to enhance CMB's competitiveness, which provides a new benchmark for the industry. We expect there are more employee stock ownership schemes announced by the banks in future.

Risk

The deterioration of the asset quality due to the large growth of the NPLs;

Lower-than-expected growth of interest incomes and intermediate business incomes;

Share price decreases sharply in the short term.

FINANCIALS

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Recommendation on 17-4-2015
RecommendationBuy
Price on Recommendation Date$ 23.450
Suggested purchase priceN/A
Target Price$ 30.000
Writer Info
Xingyu Chen
(Research Analyst)
Tel: +86 21 5169 9400 – 105
Email:
chenxingyu@phillip.com.cn

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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) 2151698900-105chenxingyu@phillip.com.cn
China Merchants Bank396817/04/2015Buy30.000.000
Standard Chartered PLC288810/04/2015Accumulate140126.2
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
BCIA69415/04/2015Accumulate9.238.73
GWM233308/04/2015Accumulate6354.7
Mainland Property Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
COUNTRY GARDEN200713/04/2015Accumulate3.83.46
COUNTRY GARDEN200718/03/2015Accumulate3.32.9
Insurance Xingyu Chen (86) 2151699400-105chenxingyu@phillip.com.cn
CPIC260111/11/2014Buy33.728.1
New China Insurance133615/08/2014Buy36.628
Properties  
FORTUNE REIT77814/10/2014Accumulate7.326.92
Hysan Development001418/03/2014Accumulate36.833.35
Local Financials Xingyu Chen (86) 2151698900-105chenxingyu@phillip.com.cn
HSBC509/08/2013Accumulate100.484.25
HSBC Holdings PLC000509/05/2013Accumulate9587.7
Health & Personal Care Fan Guohe  (+ 86 21 51699400-110)fanguohe@phillip.com.cn
Tasly Pharmaceutical Group60053514/04/2015Buy64.6249.81
Hotels and Entertainment Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Wisdom Group166105/01/2015BUY6.554.6
Galaxy Entertainment2719/11/2014Accumulate5651.75
New Energy  
China Suntein95616/04/2015Buy2.822.09
GCL Poly380009/04/2015Buy3.192.17
Food, Beverage and Retail  
Samsonite International SA191026/03/2015Accumulate30
Samsonite International SA191025/03/2015Accumulate3026.55
Telecommunications  
Sunny Optical Technology238201/04/2015Accumulate15.314.1
Hi Sun Technology81813/03/2015BUY2.862.2
Oil and Gas Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
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 http://www.phillip.com.hk.

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