Sectors:
Mainland financial, Utilities (Xingyu Chen), Mainland Telecom (Fanguohe),Mainland property, Oil and gas service (Chengeng), Air, Automobiles, Infrastructure (ZhangJing), New energy & Environmental Goods (Zhang Kun)
Mainland Financial (Xingyu Chen)
In Sep, HSI decreased from 21,200 at the beginning of this month to 20,800 currently, down 2% approximately. According to the performance, the banks` share prices still maintained the same trend as the market this month, and most of banks` share prices started to be stabilized after the large adjustment.
We believe the banks` operating performance still faces many challenges in 2H, some banks` profit growth may have the negative growth, currently the banks` valuation decreases largely, therefore we still hold the cautiously optimistic view on the banks` prices in future. Maintain the banking sector on Buy rating.
Mainland Telecom (Fan guohe)
This month I released 4 equity reports including, ZTE(0763.HK), SMIC(0981.HK), PAX Global¡]0327.HK¡^and YIBAI Pharmaceutical(600594.CH). We prefer PAX Global with the more attractive future. From the perspective of global development in finance industry, EFT mode would gradually replace the traditional mode of cash payment. For example, Denmark would become the first country in the world which no longer uses cash as a medium of transaction. It is worth to note that, in the era of mobile internet, EFT would be more convenient. Pax Global is expected to be benefitted from the trend. Thereinto, the American market carries the growth highlights, where revenue recorded in 2015H1 surged 78.2% yoy. High-speed growth is still expected. Meanwhile, the Company is expected to regain growth in Chinese market in 2015H2 and we are optimistic about this. First of all, the delayed confirmation of income in first half of the year will be booked in. Moreover, the new product of wireless POS terminal was launched in June. In addition, according to the most recent policy, the administrative fee of using bank cards would be lowered generally, and this would be particularly beneficial to dining and entertainment industries. We believe the launch of such policies would lower the expenses of shops and encourage more shops to use POS terminals. Plus with improving earning capabilities, we believe its consistent growth is expectable.
Mainland Property & Oil/Gas service (Chen geng)
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Automobile & Air (ZhangJing)
This month I released 3 equity reports including Cathay Pacific(293 HK)¡AJ AC(600418 CH)¡Aand LESSO(2128 HK). We prefer the JAC. The total sales volume for the first 8 months grew by 27% yoy. Combined sales volumes in July and August grew by 57% yoy. The growth was almost solely driven by SUV sales, which leapfrogged by 6.5x yoy for the two months combined. Sales volumes of pure electric vehicles totaled 1,995 units for the two months. The 5th generation pure electric vehicle still cannot satisfy the demand. We believe strong sales momentum of SUVs and new energy vehicles will enhance profitability of the company. The growth of trucks swung back to positive. We believe the sales growth will gain momentum in H2. Our target price of RMB16.2 is equivalent to 20x/12.6x of its 2015/2016 PE. We reiterate a ¡§BUY¡¨ rating.
New energy & Environmental protection (ZhangKun)
We update four reports in this month, they are Longi silicon (601012.SH), Canvest Env(1381.HK), Everbright Int (257.HK) and Beijing Enterprise Water (371.HK). We recommend Longi Silicon. Monocrystalline wafers are gaining market acceptance due to its high conversion efficiency ratio, which is especially suitable for adoption by distributed power generation. We believe there is a trend that monocrystalline wafers will increase its market share. The company is the global leader in monocrystalline wafer manufacturing. It has already started to expand into mid-stream business to produce modules as well as downstream business to construct and operate power plants. We expect it can develop the whole supply chain in future. We recommend a ¡§BUY¡¨ rating, with a target price of RMB13.80, which is equivalent to a prospective P/E of 30x.
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