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29 Sep, 2014 (Monday)

            
VST HOLDINGS(856)
Analysis¡G
VST Holdings (856) is principally engaged in the distribution of information technology products and enterprise systems. In the first half of this year, the Group`s profitability significantly improved, mainly driven by growth in business systems division with higher margin. During the period, revenue from enterprise systems business reached HK $ 4.746 billion, representing a substantial increase of 40% yoy, operating profit increased 21.6 % to $ 84.64 million. Although revenue from the distribution business decreased 12% to $ 13.935 billion, but the operating profit has increased 11% to $ 313 million. The Group`s first half profit attributable to shareholders was $ 2.83 billion, up 14.2. Gross profit margin was 4.33%, up 0.47 percentage points. Its historical PE was less than 7 times, dividend yield was about 3.5%.(I do not hold the above stock)
Strategy¡G
Buy-in Price: $2.25, Target Price: $2.50, Cut Loss Price: $2.10

POWER ASSETS(0006)
Analysis¡G
The OccupyCentral event started in the weekend, earlier than expected. Last night it evolved into violent conflict, and was widely reported in the major international news channels, eg BBC, CNN etc. The market in general expected HSI to plunged 500 points or more today. We believe the protest will continue at least after the National Day, and it is estimated to bring substantial market volatility. In this case, instead of taking huge risk to win on the unknown price difference, it was more recommended to place the capital on defensive stocks such as Power Assets (0006).
Strategy¡G
Buy-in Price: $69.00, Target Price: $72.00, Cut Loss Price: $67.00


Wanda Commercial Properties Group (169.HK) - The main assets of the parent company expected to be listed in HK

-The mid-term performance of Wanda Commercial Properties indicates that in the first half of 2014, Wanda Commercial Properties has raked in about 88,700,000 HKD, a decrease of 92.26% on a year-on-year basis. Earnings from property sales, property leasing and property administration are respectively 26,700,000 HKD, 53,600,000 HKD, and 8,400,000 HKD. While the profits of the company shareholders are -57800000 HKD. The figure for the same time last year was 0.204 billion HKD;

-There are two primary reasons behind the marked decrease in the company profits: first, the company gained 0.88 billion HKD in the first half of 2013 by selling the affiliated company. Second, 0.189 billion HKD shrank in the profits from selling the Fuzhou Property because of the cool-down of the Fuzhou real estate market in the first half of the year;

-In the end of June, the cash and the total balance of the company were around 2.8 billion HKD, with 61% and 35% of the cash and the total balance calculated by HKD and RMB. The 4% left was calculated by pound and dollar. Currently, the company is in the state of net cash;

-The convenience of financing is the very purpose of Wanda group¡¦s holding Hong Kong listed company. In the future, Wanda Commercial Properties will raise capitals through issuing foreign currency debentures and dim sum bonds, whose financing efficiency and cost enjoy a salient advantage than those in the mainland. While in terms of the business orientation, the company will focus on commercial property development in South China in a short term, at the same time, it will expand to foreign countries.

How we view this

We hold that the change of the company name has something to do with the news about the parent company¡¦s IPO in Hong Kong. The total assets of Wanda Commercial Properties parent company are around 500 billion. The scale of financing may well exceed 5 billion dollars, which suggests that Wanda is likely to become the biggest real estate company ever listed in Hong Kong. In the future, Wanda will have two financing platforms in Hong Kong stocks, one for the operation of domestic business, the other for overseas business. We hold that Wanda parent company or its main assets is more likely to go public in Hong Kong, which will become its major financing platform in the future. While Wanda Commercial Properties will be a supplementary part of its overseas business, which means that there will be no overt competition between these two sectors¡C

Investment Action

We hold that from 2014 to 2015 Wanda Commercial Properties will be in the state of consistent capital input and restricted cash flow. Hengli Town will remain its primary source of earnings for these two years. Equity expansion potentially brought by continued financing will have a continued dilution effect on earnings per share. In our opinion, the company is more worth being financed than being invested, and the company has restricted view on its business position and future development visibility in the short and medium term. We decide to maintain ¡§Accumulate¡¨ rating for Wanda Commercial Properties, whose 12 months` target price is 2 HKD, 15.6% higher than the present price.

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Recommendation on 29-9-2014
RecommendationAccumulate
Price on Recommendation Date$ 1.730
Suggested purchase priceN/A
Target Price$ 2.000
Writer Info
Chen Geng
(Research Analyst)
Tel: (8621) 63512937-107
Email:
chengeng@phillip.com.cn

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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
2014 Interim Report of China¡¦s Banking Sector26/09/2014Buy
PICC133918/09/2014Buy4.093.35
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
China Southern Airlines105523/09/2014Neutral2.782.69
TravelSky69615/09/2014Accumulate8.737.9
Mainland Property Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Wanda Commercial Properties Group16929/09/2014Accumulate2.000.000
Color Life177822/09/2014Buy86.58
Insurance Xingyu Chen (86) 2151699400-105chenxingyu@phillip.com.cn
New China Insurance133615/08/2014Buy36.628
New China Insurance133616/07/2013Buy30.1422.2
Properties  
China State Construction International Holdings Ltd331116/05/2014Buy15.813.16
Hysan Development001418/03/2014Accumulate36.833.35
Hotels and Entertainment Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Galaxy Entertainment2716/07/2014Accumulate7262.95
Galaxy Entertainment Group2716/04/2014Accumulate7868.7
New Energy  
Huaneng Renewables95817/09/2014Buy3.542.7
CT Environmental Group136305/09/2014Accumulate7.86.53
Food, Beverage and Retail  
Sa Sa International17816/09/2014Reduce5.075.81
Samsonite International SA191012/09/2014Accumulate3126.55
Telecommunications  
SMIC98125/09/2014Buy10.78
Trigiant Group130019/09/2014Buy32.18
Oil and Gas Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Jutal Offshore Oil Services330303/09/2014Buy3.83.04
Anton Oilfield Service333731/07/2014Accumulate5.24.51
Software & Service Kay Ng (852) 2277 6751kayng@phillip.com.hk
KINGDEE INT`L26824/09/2014Buy3.052.46
PAX GLOBAL TECH32708/09/2014Buy9.557.88

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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