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27 Oct, 2014 (Monday)

            
GREATWALL MOTOR(2333)
Analysis¡G
The performance of Great Wall Motor (2333) for the 1st 3 quarters in 2014 was worse than expected, the 3Q2014 gross profit margin was 27.68%, decreasing 1.29% yoy, which is mainly due to the low capacity utilization of the Baoding car plant and the initial setup fee of the Tianjin plant. The group launched Hover H2 in mid July, 14, the sales volume in Sep already climbed to 8,288, doubling the figure for the 2nd consecutive month. Moreover, since Jul, other modified models including the upgrade version of Great Wall C50 have also been launched, which is expected to improve the net profit margin of 4Q2014. (I do not hold the above stock)
Strategy¡G
Buy-in Price: $30.50, Target Price: $33.50, Cut Loss Price: $29.00

BYD COMPANY(1211)
Analysis¡G
The Guangdong provincial government announced yesterday that in the next two years the province would accelerate the scale and commercial applications on new energy vehicles and encourage businesses and individuals to use new energy vehicles. It was expected at the end of 2015, addional new energy vehicles could over 45,000, where Pearl River Delta region would have 4,000 pure electric public vehicles. In addition, seven ministries and commissions jointly published a new energy vehicles promotion program to authorities in Beijing, Tianjin and Hebei Province. The program requests to promote a total of 20,222 new energy vehicles for public transport services in the next two years in Beijing and Tianjin area. In the future MIIT will also encourage energy conservation and new energy vehicle development, research the establishment of a tax system which linked to fuel consumption.
Strategy¡G
Buy-in Price: $50.50, Target Price: $60.00, Cut Loss Price: $48.95


CIMC ENRIC (3899.HK) - Stepping Into Recovery

-In 2014H1, ENRIC has recorded the revenue of 4.81 billion yuan, down 0.3% yoy; with the net profit attributable to the parent company of 508 million yuan, increasing by 8.8% yoy. The gross margin was 18.6%, down 1.6% yoy. The net profit margin was 10.7%, up 0.9% yoy. The diluted EPS was 0.26 yuan, a bit less than expectations.

-In H1, performance of the company was below the expectation mainly due to negative impact of energy equipment business. During the period, there was a 7.4% decrease in that business which consists of 8.4% revenue decrease in LNG equipment to RMB 1.12 billion yuan and 20% in CNG equipment to 560 million yuan respectively. We believe that it was decelerated economy growth, anti-corruption campaign of the government and price reform of natural gas which affected industrial demand.

-However, the liquid food equipment would hopefully become an important source for growth in H2. The revenue growth speed of H1 was far less than the 30% revenue guideline of the whole country. We predict that orders from Europe and Latin America as well as acquisition of Holvrieka will hopefully drive the liquid food equipment to have a more than 20% growth.

How we view this

Domestic demand for LNG equipment has recovered since this May. And this demand recovery will continue in H2. According to the latest data from Wind, the domestic sales volume of LNG truck of the third quarter has increased 114% yoy and 36% mom (month on month). This will stimulate the demand for LNG storage tank, gas station and related equipment, and is expected to have positive effect on energy equipment business of ENRIC Holdings Ltd.

We expect in the whole year of 2014, the company's LNG equipment revenue is expected to have a year-on-year growth exceeding 10%, while the year-on-year growth in 2013 amounted to 62%. Besides, the LNG transport ship and power-driven vessel are expected to have significant growth in the period from 2015 to 2016, which will further promote the demand for LNG-related equipment.

Investment Action

In the past few months, international oil price showed great decline, with the maximum decline reaching 25%. This has positive effect on the declining of forward price of international natural gas and the increase of demand for natural gas equipment. We believe that ENRIC Holdings Ltd is expected to gradually walk out the situation of weak demand for energy equipment, and liquid food equipment will promote the improvement of the company's performance. We give ENRIC a "Buy" rating, with 12m TP at HKD10, equivalent to 11.8x and 9.7x of 2014/2015 expected P/E.

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Recommendation on 27-10-2014
RecommendationBuy
Price on Recommendation Date$ 7.670
Suggested purchase priceN/A
Target Price$ 10.000
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
Agile Property338317/10/2014Neutral3.83.96
Chongqing Rural Commercial Bank361809/10/2014Buy4.853.59
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
Air China75320/10/2014Accumulate5.164.56
China Eastern Airlines67013/10/2014Accumulate2.812.65
Mainland Property Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Wanda Commercial Properties Group16929/09/2014Accumulate21.73
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  
FORTUNE REIT77814/10/2014Accumulate7.326.92
China State Construction International Holdings Ltd331116/05/2014Buy15.813.16
Hotels and Entertainment Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Galaxy Entertainment2716/07/2014Accumulate7262.95
Galaxy Entertainment Group2716/04/2014Accumulate7868.7
New Energy  
China Suntien Green Energy95621/10/2014Buy2.331.93
GCL Poly380007/10/2014Buy3.752.88
Food, Beverage and Retail  
Sa Sa International17816/09/2014Reduce5.075.81
Samsonite International SA191012/09/2014Accumulate3126.55
Telecommunications  
Peace Map Holding40223/10/2014¶R¤J0.470.34
ZTE Corporation76316/10/2014Buy21.5816.68
Oil and Gas Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
CIMC ENRIC389927/10/2014Buy10.000.000
Anton Oilfield Service333710/10/2014Neutral2.22.29
Software & Service Kay Ng (852) 2277 6751kayng@phillip.com.hk
SINOSOFT TECH129722/10/2014Accumulate2.942.59
IGG800206/10/2014Accumulate3.953.47

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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