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20 May, 2015 (Wednesday)

            
CHI TIANYI HOLD(756)
Analysis¡G
China Tianyi Holdings (756) adopts an integrated business model and is one of the few concentrated orange juice processors operating its own upstream orange farms. The Group begun the research and development of the Not-From-Concentrate Orange Juice, this new product will be selling in China`s major cities. Recently the Group entered into the distribution agreement with DKSH Hong Kong Limited, a wholly-owned subsidiary of DKSH. DKSH HK is appointed as the exclusive distributor of 100% freshly squeezed orange juice (no additive) under the Group`s self-owned brand ¡§Summi¡¨ in Hong Kong. The annual revenue of DKSH of 2014 was over US$10 billion, and had operations in 35 countries worldwide. With DKSH HK`s strong distribution network in Hong Kong, Summi 100% freshly squeezed orange juice (no additive) is expected to enter into the retail market in Hong Kong successfully, which contributes positive effects to the sales and enhances brand awareness. (I do not hold the above stock)
Strategy¡G
Buy-in Price: $1.05, Target Price: $1.25, Cut Loss Price: $0.96

TENCENT(700)
Analysis¡G
1Q15 results were slightly better than expectations, due to strong online advertising revenue growth and improvement in gross profit margin.investment rating of ¡§Buy¡¨ and raise TP from HK$1 60.00 to HK$198.00. Due to the adjustments of VAS and online advertising revenue estimations, FY1 5-1 7 EPS is revised up by 3.0%/3.6%/4.0%,We maintain the Company`s investment rating of ¡§Buy¡¨ based on the Company`s strong video content for advertising revenue growth and the launch of new game genres, 12m TP at HKD 180.
Strategy¡G
Buy-in Price: $161, Target Price: $180, Cut Loss Price: $150


Singyes Solar (750.HK) - Gear up for Upsurging Installations of PV Capacity

Results were well below what was expected

The Company's results for the year 2014 showed that its operating revenues registered RMB5.01 billion, up by 20% yoy; it recorded gross profit of RMB1.049 billion, up by 6.1% yoy with gross margin of 20.9% going down by 3 ppt from that in 2013. The profit attributable to its shareholders was RMB584 million, up by 19.1% yoy, with the earning per share of RMB0.84, which was much lower than expected.

Curtain wall business had a solid growth

The Company had a stable growth in the business of curtain wall and green buildings which reported the revenues of RMB1.67 billion, up by 21.9% yoy; it recorded a gross margin of 15.3%, down by 0.8 ppt yoy. Despite the current downturn of the property market, the Company underwent a fast growth in green building business. So it has identified green building as a business priority.

PV EPC projects delayed

The total revenue generated by PV EPC projects was RMB2.06 billion, up by 9.3% yoy. In 2014, only 240MW of EPC projects were completed, which was below what was expected on the market. The Company has set a target of 600MW for this year, with above-ground power plant and distributed power station accounting for 50% each. The business is expected to have a significant growth in this year and it is likely for on-grid electricity price to adjust downward two years later, like what happened to the wind power. The coming two years will witness the rushing installation of PV power plants and we are confident about the Company's growth of PV EPC construction scale.

New model helps drive profit margin

PV EPC projects has overall shown a declining gross margin. In case of Singyes Solar, its gross margin fell from 29.5% in 2013 to 26.7% in 2014. Therefore, the Company is introducing new model for EPC projects, i.e., in addition to the construction of PV power plants, it will also help investors look for projects, obtain travel permits and approval of relevant application documents. The management says that the new model is likely to bring their gross margin back to exceed 30%.

Increase the scale of self-owned power plants

Singyes Solar plans to scale up its own power plants in this year by completing the construction of up to 300MW power plants. By the end of 2014, the Company's installed capacity stood at 270MW. On one hand, the operation of its own power plants can provide the stable cash flow for its working capital. On the other hand, a low debt level can be achieved by selling its own power plants as well as afterwards helping the investors operate.

Valuation

National Energy Administration has adjusted this year's planned installation of PV capacity up to 17.8GW, of which 5GW was already completed by the end of Q1. Considering that there will be a upsurging installation of PV capacity in the next two years, the Company's EPC business is projected to double at least if construction goes well, plus the likely increase of orders. Coupled with the growth in green buildings, the operation of its own power plants and sales of new materials, it is expected that the Company's net profit can reach RMB790 million and RMB980 million respectively for the next two years. We set its target stock price at HK$14.25, equivalent to 10 times earnings in the fiscal year 2015. A ¡§Buy¡¨ rating is maintained.

Financials

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Recommendation on 20-5-2015
RecommendationBuy
Price on Recommendation Date$ 11.800
Suggested purchase priceN/A
Target Price$ 14.250
Writer Info
Zhang Kun
(Research Analyst)
Tel: (+ 86 21 51699400-104)
Email:
zhangkun@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
Bank of Chongqing196313/05/2015Accumulate9.27.85
BoCom60132805/05/2015Buy8.56.92
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
Cathay Pacific29315/05/2015Accumulate21.319.4
CAR Inc69911/05/2015Accumulate19.9417.4
Mainland Property Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Gemdale Group60038319/05/2015Accumulate 1513.9
Beijing Capital Land286808/05/2015Accumulate86.87
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
Zhongxin Pharmaceuticals60032912/05/2015Hold23.6422.89
Austar Lifesciences Limited611829/04/2015BUY5.63.25
Hotels and Entertainment Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Wisdom Group166105/01/2015BUY6.554.6
Galaxy Entertainment2719/11/2014Accumulate5651.75
New Energy  
Singyes Solar75020/05/2015Buy14.250.000
Beijing Enterprise Water37114/05/2015Buy7.986.59
Food, Beverage and Retail  
Samsonite International SA191026/03/2015Accumulate30
Samsonite International SA191025/03/2015Accumulate3026.55
Telecommunications  
ChinaSoft International35418/05/2015Accumulate5.574.94
ZTE76306/05/2015Accumulate30.0826.05
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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