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22 Jul, 2014 (Tuesday)


CKI HOLDINGS(1038)
Analysis¡G
Recently there were reports published, which forecasted the performance on utility company will be in line with expectations for the first half, while feeling optimistic for CKI Holdings (1038). CKI was actively acquiring overseas assets in the first half, while the second half is expected to continue the pace of acquisitions. The target will be water conservation and energy related operations in Australia or Europe which was already functioning. As the M & A activity continues, CKI will likely sell the assets in Power Assets to gather cash. The stock price adjusted since beginning of July, comes back to the historical high now. It is expected if the price can stay above $54, There is opportunity to break up and create new high.
Strategy¡G
Buy-in Price: $54.15, Target Price: $56.50, Cut Loss Price: $52.52


Singyes Solar (750.HK) - Both EPC and BOT have sharp growth

-The Company recorded the revenue of RMB4.15 billion in 2013, up 34% y-y, gross profit amounted to RMB988 million with the gross margin of 23.8%, slightly lower than 24.2% in 2012, net profit attributable to the shareholders achieved to RMB490 million, increased by 49.3% y-y, with the EPS of RMB0.75, and the DPS was HK$0.09. The Company¡¦s profit performance is better than our expectation, which is mainly because of the lower-than-expected administrative expenses, representing the effective cost control of the Company.

-The Company¡¦s curtain wall business maintained stable growth, the annual revenue increased by 12% y-y to RMB137 million, and the gross profit amounted to RMB220 million, the gross margin increased from 15.4% in 2012 to 16.1% in 2013. Public work and high-end residential businesses maintained the same revenue as the same period of the previous year, and the revenue of commercial and industrial buildings increased by 20%. We expect the traditional curtain wall business can still maintain the current profit level under the Company¡¦s strategy for focusing on developing new energy business in future.

-The Company¡¦s Solar EPC project recorded the revenue of RMB1.89 billion in 2013, up largely 76% y-y, among which the revenue of commercial and industrial projects increased by 140% from RMB752 million in 2012 to 1.8 billion in 2013, and the gross margin of photovoltaic EPC dropped from 35.5% in 2012 to 29.5% in 2013, which was because the gross margin was lower than that of public work. The Company¡¦s project under construction was 320MW, including 330MW in Wuwei, Gansu, and 150MW in Zhuhai, Guangdong, we expect the construction of EPC would be over 600MW this year. The Company plans to complete 300MW in Wuwei and 350MW in Zhuhai in 2015, and the construction would achieve to 800MW, therefore the Company will face the large growth of photovoltaic EPC in the next two years.

-The Company finished 195MW of self-built photovoltaic project in 2013, and the Company will continue to operate and find the appropriate time to sell, the scale of photovoltaic BOT is not very large currently, but they can provide the stable growth before they are sold, and can gain the large profit for sale. The Company sold a project with 15MW to gain the net profit of RMB19.6 million, and considering the allowance of Golden Sun, net gains can increase to RMB53.6 million in maximum. We expect the photovoltaic BOT business will continue to expand in future, with 200-300MW of new plans in 2014.

-The Company is a leader in the domestic photovoltaic construction industry, and the project scale of EPC will increase sharply in the next five years after the 1.1GW project in Weiwu, Gansu in 2013. The Company currently has RMB900 million in cash, and there is no pressure of capital expenditure in 2014, and we expect its new projects will increase largely after current issues of distributed projects are sorted out nationwide. We give the Company¡¦s 12-month target price to HK$14.96, equivalent to 11/8.8xP/E in 2014E/2015E respectively, recommend ¡¥Buy¡¦ rating.

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Recommendation on 22-7-2014
RecommendationBuy
Price on Recommendation Date$ 11.340
Suggested purchase priceN/A
Target Price$ 14.960
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Phillip Research - Hong Kong ½÷¥ß¬ã¨s³¡ ¡V ­»´ä¤Î¤¤°ê
Company Stock Code Last Update Suggestion Target Price Price on Recom
Mainland Financial Xingyu Chen (86) 2151698900-105chenxingyu@phillip.com.cn
Hanhua Financial Holding390315/07/2014Buy2.51.52
China Everbright Bank681807/07/2014Buy5.273.64
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
Dongfeng Group48917/07/2014Accumulate16.514.6
GAC Group223810/07/2014Accumulate109.42
Mainland Property Geng Chen (86) 2151698900-113chengeng@phillip.com.cn
NEW WORLD CHINA LAND91719/06/2014Accumulate5.55.12
Wanda Commercial Properties Group16912/06/2014Neutral2.62.5
Insurance Xingyu Chen (86) 2151698900-105chenxingyu@phillip.com.cn
Properties Dennis Wu (852) 2277 6751denniswu@phillip.com.hk
China State Construction International Holdings Ltd331116/05/2014Buy15.813.16
Hysan Development001418/03/2014Accumulate36.833.35
Hotels and Entertainment N/A N/AN/A
Galaxy Entertainment2716/07/2014Accumulate7262.95
Galaxy Entertainment Group2716/04/2014Accumulate7868.7
New Energy  
Singyes Solar75022/07/2014Buy14.960.000
Jingneng Clean Energy57908/07/2014Buy5.13.74
Food, Beverage and Retail Dennis Wu (852) 2277 6751denniswu@phillip.com.hk
Anta Sports202018/07/2014Accumulate13.3112.46
Bolina119005/06/2014Accumulate3.232.87
Telecommunications  
China Communication Service Co., LTD.55221/07/2014Buy4.73.87
Sunny Optical238204/07/2014Accumulate11.811.04
Oil and Gas Geng Chen (86) 2151698900-113chengeng@phillip.com.cn
SPT Energy125127/06/2014Accumulate4.64.2
Anton Oilfield Services Group333725/04/2014Accumulate6.25.29
Software & Service Kay Ng (852) 2277 6751kayng@phillip.com.hk
ZTE Corporation76314/07/2014Buy2114.78
OURGAME689911/07/2014Accumulate4.13.75

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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