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1 Feb, 2016 (Monday)


TSUI WAH HLDG(1314)
Analysis¡G
According to the latest data, as at the fiscal year of 1H2015, the profits of Tsui Wah Holdings (¡§Tsui Wah¡¨ or ¡§the Group¡¨) increased slightly, total revenue increased by 6.6% y-y to HK$952 million and net profit declined 8.5% to HK$81 million, with the EPS of HK$5.75 cents, down 9.2% y-y;The main reason of the decrease of the Group's profits was the decline of the market demand and the increase of the operating expenses. The staff costs and rents increased from 27.3% and 15.1% in Sep 2014 to 27.6% and 15.5% respectively; The Group's profitability maintained at the high level, as at the end of Sep, Tsui Wah's gross margin increased from 68.9% in Sep 2014 to 71.6%. In addition, the financial status declined due to the growth of costs, but it kept at the stable level as a whole. Current ratio declined from 2.2x in the fiscal year of 2014/2015 (Mar 2015) to 2.1x, and the gearing ratio creased from 6.7% to 6.5%, maintained at the low level; It is worthy of noting that Tsui Wah plans to open more stores in future due to the stable market environment in order to increase the market share and enhance the leadership in the industry. The Groups stated it planned to increase the number of the operating restaurants to more than 80 in 2017; Overall, Tsui Wah has the obvious brand advantage in the industry. The development potential is large after central kitchens in Hong Kong and Shanghai commenced operation and more restaurants will be opened in future. Currently the Group's price and valuation are low, and considering the stable profit growth and strong profitability, we hold the cautious optimistic view on Tsui Wah's performance in the middle and long term.
Strategy¡G
Buy-in Price: $1.44, Target Price: $2.00, Cut Loss Price: $1.00


CPIC (2601.HK) - Better-than-expected profit growth in 2015

Summary

-CPIC (or the Group) maintained the strong growth in 2015. According to the latest announcement, as at the end of Dec 2015, the Group's net profit amounted to RMB17.8 billion compared with that of 2014, up 60% y-y approximately, better than our previous expectation;

-According to CIRC's records, CPIC's accumulated premiums of life insurance and P&C insurance amounted to RMB203 billion , increased by 6% y-y. The strong net profit growth was mainly benefited from the large increase of investment gains in 2015;

-Considering the Group's stable operating performance in 2015 and the current price is low, the valuation becomes attractive, and we still hold the positive view on CPIC's future performance. We decrease the 12-m TP to HK$35.00 to reflect the current market risks, around 32% higher than the latest closing price, equivalent to 10.8xP/E and 1.7xP/B in 2016E respectively. Maintain at Buy rating. (Closing price as at 28 Jan 2016)

The strong growth of investment gains

According to CIRC's records, as at the end of Dec 2015, CPIC's accumulated premiums of life insurance and P&C insurance amounted to RMB203 billion , increased by 6% y-y. The premiums of life insurance and P&C insurance businesses increased by 5.34% y-y and 8.13% y-y to RMB4.614 billion and 9.045 billion respectively. The strong net profit growth was mainly benefited from the large increase of investment gains in 2015. By the end of 3Q, investment gains increased by 53.6% y-y to RMB43.83 billion, and we expect it should increase by around 60%-70% y-y in 2015.

According to the latest announcement, by the end of 2015, the Group's net profit amounted to RMB17.8 billion compared with that of 2014, up 60% y-y approximately, better than our previous expectation, and we will discuss it in details after the official announcement of annual results.

Risk

The growth might be lower than our expectation due to the large volatility of investment gains;

Share price drops obviously in the short run due to the deterioration of the market environment.

Financials

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Recommendation on 1-2-2016
RecommendationBuy
Price on Recommendation Date$ 26.550
Suggested purchase priceN/A
Target Price$ 35.000
Writer Info
Xingyu Chen
(Research Analyst)
Tel: +86 21 5169 9400 ¡V 105
Email:
chenxingyu@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
CPIC260101/02/2016Buy 35.000.000
CITIC Bank99825/01/2016Buy 5.24.26
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
Sinotrans air60027026/01/2016Buy2719.14
BYD121120/01/2016BUY5536.05
Mainland Property Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
CSCI331127/01/2016Buy15.812.2
COLI68819/01/2016Neutral2222.1
Insurance Xingyu Chen (86) 2151699400-105chenxingyu@phillip.com.cn
Properties  
LESSO212823/09/2015Buy7.96.02
FORTUNE REIT77814/10/2014Accumulate7.326.92
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
Hao Hai Biotechnology682613/01/2016Buy6846.15
Kangmei Pharmaceutical60051812/01/2016BUY2014.64
Hotels and Entertainment Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Galaxy Entertainment2729/10/2015Buy3526.8
Galaxy Entertainment2708/07/2015Buy4233.55
New Energy  
CT Environmental Group136322/01/2016Buy32.19
United PV68615/01/2016Buy1.050.65
Food, Beverage and Retail  
Tsui Wah Holdings131405/01/2016No Rating1.81
China Tianyi Holdings75611/12/2015Buy 21.32
Telecommunications  
Sunny Optical Technology238228/01/2016Accumulate1715.98
Semiconductor Manufacturing International Corporation98121/01/2016Buy0.920.71
Oil and Gas Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
TSC GROUP20628/07/2015Buy2.82.11
SPT Energy125124/02/2015Reduce1.51.74
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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