Industry and Company Focus PICC Group (01339 HK) PICC P&C (02328 HK): Life Premiums Decline Narrowed Analyst: Wiley Huang What happened: PICC Group (0

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1 Equity Research 股票研究 Morning Research Focus Research Department 21 March 2018 今晨焦点证券研究报告 Equity Research Report Morning Research Focus [Table_Summary] Table of Contents 目录 Industry and Company Focus 行业和公司焦点 PICC Group (01339 HK) PICC P&C (02328 HK): Life Premiums Decline Narrowed 人保集团 (01339 HK) 中国财险 (02328 HK): 寿险保费下滑收窄 Tingyi (00322 HK): FY2017 Results Beat Expectation, Net Profit Increased 56.6% YoY 康师傅 (00322 HK):2017 财年业绩超预期, 净利同比上涨 56.6% VSTECS Holdings (00856 HK): 2017 Shareholders Profit Increased 29.8% YoY, Beating Consensus 伟仕佳杰 (00856 HK): 2017 年股东净利同比上升 29.8%, 好于预期 Latest Reports Company Name 公司名称 Dali Foods Code 代码 HK 最新报告摘要 Title 标题 Long-term Growth Prospects Unchanged, Attractive Valuation TP 目标价 Chg Rating 评级 Chg 变动 EPS Est.Change? 盈利预测是否改变 HK$7.60 Buy -- Y 达利食品 HK 长期增长前景不变, 估值吸引 HK$7.60 买入 -- 是 Appendices:Chinese Version of the Industry and Company Focus, Latest Reports. 后附 : 行业和公司焦点, 最新报告摘要中文版 HSI Performance HSCEI Performance 35,000 33,000 31,000 29,000 27,000 25,000 23,000 21,000 19,000 17,000 Mar/17 Jun/17 Sep/17 Dec/17 Mar/18 Source: Bloomberg 16,000 14,000 12,000 10,000 8,000 6,000 Mar/17 Jun/17 Sep/17 Dec/17 Mar/18 Source: Bloomberg See the last page for disclaimer 1 of 9

2 Industry and Company Focus PICC Group (01339 HK) PICC P&C (02328 HK): Life Premiums Decline Narrowed Analyst: Wiley Huang What happened: PICC Group (01339 HK) announced 1-2M18 premium income after market closed on March 20. Total premiums decreased 7.8% YoY to RMB112,328 mn, among which PICC P&C (02328 HK) increased 16.0% YoY and PICC Life decreased 16.1% YoY, respectively, to RMB63,808 mn and RMB44,583 mn. Comments and Views: Both of PICC P&C and PICC Life recorded negative MoM growth in February because of seasonality and late spring festival in PICC P&C experienced 45.9% MoM decrease in 2M18 premiums, while YTD premium growth decelerated to 16.0% in 1-2M18 from 26.2% in 1M18. 2M18 premium of PICC Life was down 77.7% MoM, whereas YTD premium decline narrowed to 16.1% in 1-2M18 from 23.1% in 1M18. As new round of auto insurance pricing reform has been launched in several regions, we believe the declining profitability on auto insurance will lead to increase in premium concentration in auto insurance market. As the largest P&C company in China, PICC P&C is able to offset the declining auto insurance profit by lowering operating cost. Despite PICC Life is still weak in business quality, we expect the expanding agency channel to deliver significant growth in high margin premium in Investment suggestion: PICC Group is trading at 1.0x 2017F P/B, which is cheap among listed life insurers. We expect the development of agency channel of PICC Life to be the valuation recovery driver in PICC P&C is trading at 1.4x 2017F P/B, lower than its 5-year average. We expect 2017F results to be the catalyst. The closing price of the PICC Group s share on March 20 was HKD4.19, down 1.18% during the day. The closing price of the PICC P&C s share on March 20 was HKD16.14, down 0.49% during the day. Our target price for PICC Group is HKD4.75 with investment rating of Accumulate. PICC P&C s target price is HKD18.50 with Accumulate investment rating. PICC Group and PICC P&C will release 2017 results on March 23. We will review our earnings forecasts and target price in our next reports after analyst meeting. Tingyi (00322 HK): FY2017 Results Beat Expectation, Net Profit Increased 56.6% YoY Analyst: Barney Wu What happened: The Company posted its FY2017 results. Key fundamentals are as following: RMB million YoY 4Q17 4Q16 YoY Revenue 58,954 55, % 10,700 10, % Gross profit 17,338 17, % 2,627 2, % Shareholder s profit 1,819 1, % % EPS (RMB cents) % % Comments and Views: Tingyi s 2017 results were better than market consensus and our estimation. The company s 2017 revenue recorded RMB 58,954 million, up 6.1% YoY. In 2017, Tingyi s instant noodles and beverages sales increased by 4.9% YoY and 7.0% YoY, respectively. Tingyi s 4Q17 revenue rose 6.8% YoY, better than expected, mainly due to the strong recovery in instant noodle sales. Among the instant noodle segment, high-end instant noodles was the major revenue growth contributor, up 20.9% YoY in As for beverage business, RTD tea recorded the strongest sales growth, up 9.2% YoY in The company's 2017 gross margin was down 1.9 ppt YoY to 29.4%, mainly affected by the increase in raw material prices. Gross margin of beverage fell sharply, down 3.1 ppt YoY to 29.8%, as the prices of sugar, PET and paper materials rose significantly. Benefiting from strict expense control, the company's distribution cost to sales ratio decreased by 2.6 ppt YoY in Tingyi s 2017 shareholders profit recorded RMB1,819 million, up 56.5% YoY, higher than market consensus and our forecast about 5%, mainly due to the continuous See the last page for disclaimer 2 of 9

3 improvement on sales and effective cost control. Morning Research Focus Investment suggestion: In 2017, instant noodle industry and beverage industry recovered considerably. According to Nielsen, instant noodle sales in China recorded the first positive growth since Tingyi firmly maintained its leading position in the instant noodle market and grew faster than the overall growth of the industry. In 2017, China's beverage sales increased by 10.2% YoY. The Company's beverage business also fully benefited from the industry recovery, but its growth rate was lower than the overall growth rate of the industry. Tingyi maintained its leading position in the RTD tea market. However, bottled water, which was highly valued by management, performed unsatisfactorily and its market share continued to decline as bottled water priced at RMB2 still did not improve. Constrained by high raw material prices, Tingyi has started to adjust the ex-factory prices of its varying beverage products this year, which is expected to partially improve the company's profitability. Due to asset activation and the increase in the shareholders of TAB, the management expects Tingyi s net profit is expected to record a 25% YoY growth in We believe that Tingyi s current valuation is not attractive as its price has reflected the recovery of earnings in advance. We believe that Tingyi s current control over expenses has reached its limit, and the continued recovery of instant noodles and beverage business in 2018 remains uncertain. We will maintain our neutral rating on Tingyi but may review our TP in the coming company report. VSTECS Holdings (00856 HK): 2017 Shareholders Profit Increased 29.8% YoY, Beating Consensus Analyst: Andrew Song What happened: VSTECS Holdings posted its 2017 annual results. Key fundamentals are as following: (HKD m) Amount YoY Amount YoY Turnover 54, % Gross Margin 4.3% +0.4 ppts Gross Profit 2, % EPS (HK$) % Shareholder s Profit % DPS (HK$) % Source: the Company. Comments and Views: The Company achieved a decent revenue growth in The Company restructure revenue breakdown into four categories by customers demands starting from Mobility digital devices increased 24.4% to HK$22,357 million, including 3C products and other consumer electronics. Components business provides components to large manufacturers like Lenovo and Hikvisions, which dropped 2.9% YoY due to the weak demands. Cloud and big data analytics business and network and data security business are the value-added IT services, with fast YoY growth of 12.4% and 17.2%, respectively. Benefiting from the higher proportion of 2B IT services which enjoy higher gross margin, overall gross margin improved by 0.4 ppts YoY to 4.3%. SG&A ratio slightly rose 0.2 ppts YoY to 2.4% due to the business expansion. Net margin improved 0.2 ppts YoY and ROE rose 2.1 ppts to 16.5%. Working capital days increased by 19 days YoY, mainly due to the longer account receivable days of large clients. However, those customers provide high quality businesses with high gross margin and low risks. Investment suggestion: VSTECS has transformed from an IT products distributor to a technology products solution platform. Benefiting from the tailwind of big data and cloud computing, the Company achieved rapid growth in value-added IT services business and improved its margin. We believe that the Company is able to continue to increase its market share and revenue growth leveraging on its solid partnership with upstream companies and wide channel layout. In addition, the business expansion in the Southeast Asia and launch of supply chain finance will be momentum in the near future. The Company s last price was HK$4.50. We have an investment rating of Buy with TP of HK$6.18. We are considering revising up earning forecasts and raise target price in the coming report. See the last page for disclaimer 3 of 9

4 Latest Reports Dali Foods(03799 HK):Long-term Growth Prospects Unchanged, Attractive Valuation Rating: Buy 6-18m TP: HK$7.60 Analyst: Barney Wu Report Date: Summary Recurring earnings were slightly below expectation. Dali Foods' 2017 revenue was generally in line with expectation, up 11.0% YoY to RMB19,799 million, mainly driven by beverage and trading business. Doubendou and Hi-Tiger are still major contributors, although growth of Hi-Tiger slowed down in 2H17. The Company's core gross margin increased 0.7 ppt YoY in 2017 due to price adjustment and portfolio optimization. The Company's shareholders' profit increased 9.5% YoY to RMB3,434 million in 2017, but excluding the rise in interest income, recurring shareholders' profit was slightly below expectations. Dali is making solid progress in the breakfast market. The Company is gradually launching the diversified "Quality Breakfast" range with varying shelf-life, to meet customer demand for healthy and quality products. The "Quality Breakfast" series is expected to be the main growth driver for Dali's baked goods sales. Doubendou is rapidly penetrating traditional channels and catering channels. As the penetration of Doubendou is continuously rising, we expect that sales of Doubendou will reach RMB2 billion-rmb2.5 billion in Doubendou is still the game-changer product for Dali. We believe that the market has overreacted to Dali's annual results and neglected the prospects of new products. The market size of bread of short shelf-life and soy milk is great enough to support long-term growth of Dali. Moreover, despite high growth prospects for Dali, the current valuation of Dali is still attractive compared to its major peers. Therefore, we maintain the Company s rating at Buy and raise TP to HK$7.60, which represents 21.9x 2018 PER, 19.0x 2019 PER and 16.3x 2020 PER. See the last page for disclaimer 4 of 9

5 Chinese Translation 中文翻译 Morning Research Focus 行业和公司焦点 人保集团 (01339 HK) 中国财险 (02328 HK): 寿险保费下滑收窄分析员 : 黄重钧 事件描述 : 人保集团 (01339 HK) 在 3 月 20 日收市后公布了 1 至 2 月的原保费收入 总保费收入同比下跌 7.8% 至人民币 1, 亿元 其中, 人保财险 ( 中国财险 (02328 HK)) 同比增长 16.0% 至人民币 亿元, 人保寿险同比下跌 16.1% 和人民币 亿元 观点评论 : 受到季节性因素和 2018 年春节较晚的影响, 人保财险和人保寿险在 2 月份均录得单月保费环比负增长 人保财险 2 月的单月保费环比下降 45.9%, 年累计保费增长从 1 月的 26.2% 放缓至 2 月的 16.0% 人保寿险 2 月的单月保费环比下降 77.7%, 但年累计保费下滑从 1 月的 23.1% 收窄至 2 月的 16.1% 随着新一轮商车险费改在部分地区的启动, 我们相信下滑的车险盈利将会导致车险市场的保费集中度上升 作为中国最大的财险公司, 我们相信人保财险有能力通过降低营运成本来抵消利润下滑的车险产品所带来的影响 尽管人保寿险的业务质量仍然较差, 我们预计扩张中的代理人渠道将会在 2018 年带来高利润保费的显著增长 投资建议 : 人保集团目前交易在 1.0 倍 2017 年预期市净率, 在上市寿险公司中较为便宜 我们预计代理人渠道的发展将成为 2018 年估值恢复的动力 中国财险目前交易与 1.4 倍 2017 年预期市净率, 低于其过往 5 年的平均值 我们预计 2017 年的业绩将会是股价催化剂 人保集团 3 月 20 日的收盘价是 4.19 港元, 当日下跌 1.18% 中国财险 3 月 20 日的收盘价是 港元, 当日下跌 0.49% 我们对于人保集团的目标价是 4.75 港元, 投资评级为 收集 中国财险的目标价为 港元, 投资评级为 收集 人保集团和中国财险将在 3 月 23 日公布其 2017 年业绩, 我们将于分析员会议后检讨我们的盈利预测和目标价 康师傅 (00322 HK): 2017 财年业绩超预期, 净利同比上涨 56.6% 分析员 : 吴宇扬 事件描述 : 公司公布了 2017 年业绩, 主要指标表现如下 : 人民币百万 同比 4Q17 4Q16 同比 收入 58,954 55, % 10,700 10, % 毛利 17,338 17, % 2,627 2, % 股东净利 1,819 1, % % 每股收益 ( 人民币分 ) % % 观点评论 : 康师傅 2017 年业绩好于市场预期和我们预测 公司 2017 年收入录得 亿人民币, 同比上升 6.1% 2017 年康师傅方便面和饮料收入分别同比上升 4.9% 和 7.0% 康师傅 2017 年第 4 季度收入同比上涨 6.8%, 好于预期, 主要归功于方便面销售的强劲复苏 方便面业务中, 高端方便面为销售增长的主要驱动力量, 在 2017 年同比增长 20.9% 饮料业务中, 即饮茶增长最为强劲, 全年同比上升 9.2% 2017 年公司毛利率同比下降 1.9 个百分点至 29.4%, 主要受到原材料价格上涨的影响 其中饮料毛利率下降幅度较大, 同比下降 3.1 个百分点至 29.8%, 主要因为白糖 PET 和纸材价格显著上涨 受益于严格的费用管控, 公司 2017 年分销成本占比同比下降 2.6 个百分点 2017 年康师傅股东净利录得 亿人民币, 同比上升 56.5%, 超过市场一致预期和我们预测约 5%, 主要因为持续回暖的销售以及有效的费用管控 投资建议 :2017 年方便面行业和饮料行业全面复苏 根据尼尔森的数据,2017 年中国方便面销量录得自 2014 年以来的首次正增长 康师傅牢牢维持住了其在方便面市场的龙头地位, 增长快于行业整体增速 2017 年中国饮料销售额同比上涨 10.2%, 公司饮料业务也充分受益于行业复苏, 不过增速差于行业整体增速 康师傅维 See the last page for disclaimer 5 of 9

6 持了其在即饮茶市场的龙头地位, 不过被管理层寄以厚望的瓶装水表现不够理想, 市场份额持续下降, 主要因为 2 元水仍然没有起色 受制于高企的原材料价格, 康师傅已于今年开始陆续调整饮料价格, 有望部分改善公司的盈利状况 由于资产活化以及在康饮的股权比例增加, 管理层预计 2018 年康师傅净利有望录得 25% 的增长 我们认为目前康师傅估值不够吸引, 因市场已提前反应公司的复苏 我们认为目前康师傅对费用的控制已到极限, 而且方便面和饮料业务在 2018 年的持续复苏仍然存在不确定性 因此我们将会在下份公司报告中维持 中性 评级但可能会检讨目标价 伟仕佳杰 (00856 HK): 2017 年股东净利同比上升 29.8%, 好于预期 分析员 : 宋涛 事件描述 : 伟仕佳杰公布了 2017 年年度财务报告, 主要指标表现如下 : ( 港币百万元 ) 总额同比增长总额同比增长 营业额 54, % 毛利率 4.3% +0.4 ppts 毛利 2, % 每股净利 ( 港币 ) % 股东净利 % 每股股息 ( 港币 ) % 资料来源 : 公司 观点评论 :2017 年公司录得了不错的收入增长 从 2017 年开始公司将其收入按客户需求重新划分为四个板块 移动终端业务同比增长 24.4% 至港币 22,357 百万元, 主要包括 3C 产品和其他消费电子产品 配件业务主要向大型制造企业例如联想和海康威视提供零配件, 由于需求较弱同比倒退 2.9% 云计算及大数据分析业务和网络及信息安全业务是公司的增值 IT 服务, 发展较快, 分别同比增长 12.4% 和 17.2% 受益于拥有更高毛利率的对公 IT 服务占比的增加, 总体毛利率同比提升 0.4 个百分点至 4.3% 经营费用率由于业务扩张轻微提升 0.2 个百分点, 但净利率同比改善 0.2 个百分点, 股本回报率同比上升 2.1 个百分点至 16.5% 营运周转天数增加 19 天至 54 天, 主要由于因为大客户更长的账期导致的应收天数增加 然而, 这些客户提供了拥有高毛利低风险的业务 投资建议 : 伟仕佳杰已经从 IT 产品分销商转型为科技产品解决方案平台 受益于大数据和云计算发展的推动, 公司在 IT 增值服务中取得了飞速的发展并提高了利润率 我们认为公司将能通过其坚实的上游合作伙伴关系和广阔的渠道布局继续提升市场份额和收入增长 此外, 在东南亚地区的业务扩张和供应链金融的展开也将成为近几年的增长动力 公司上个交易日的收市价为 4.50 港元 我们投资评级为 买入, 目标价 6.18 港元 我们将在下一份报告中考虑上调盈利预测和目标价 See the last page for disclaimer 6 of 9

7 最新报告 达利食品 (03799 HK): 长期增长前景不变, 估值吸引 评级 : 买入 6-18m 目标价 : HK$7.60 分析员 : 吴宇扬 报告日期 : 报告摘要 可持续净利略微低于预期 达利食品 2017 年收入大体符合预期, 同比上升 11.0% 至人民币 19,799 百万, 主要受到饮料以及商贸业务的推动 豆本豆和乐虎仍然是主要的贡献者, 尽管乐虎 2017 年下半年增长放缓 因为价格调整和产品结构优化, 公司 2017 年核心毛利率同比上涨 0.7 个百分点 公司的股东净利同比上涨 9.5% 至人民币 3,434 百万, 但除去利息收入的上涨, 其可持续股东净利略微低于预期 达利在早餐市场稳固推进 为了满足消费者对健康和品质的需求, 公司将会陆续地推出拥有不同保质期的不同种类 品质早餐 系列产品 品质早餐 系列预计将会是达利烘焙食品的主要增长点 豆本豆正快速地进入传统渠道和餐饮渠道 随着豆本豆渗透率持续提升, 我们预计豆本豆 2018 年销售将达到 亿人民币 豆本豆对于达利仍然是革命性的产品 我们认为市场对达利的业绩过度反应, 并忽略了新产品的前景 短保面包和豆奶的市场规模足够支撑达利的长期增长 尽管达利有高增长前景, 但目前达利的估值跟同行比较, 仍然相当吸引 因此, 我们维持公司 买入 评级, 并上调目标价至港币 7.60, 相当于 21.9,19.0 倍和 16.3 倍 2018 年,2019 年和 2020 年市盈率 See the last page for disclaimer 7 of 9

8 Research Department 研究部 Grace Liu 刘谷 Head of Research, Market Strategy, Petrochemicals 主管, 市场策略 石化 (852) Noah Hudson Noah Hudson Consumer (Hotels), Gaming 消费 ( 酒店 ) 博彩 [email protected] (86755) Gary Wong 黄家玮 Environmental Protection, Infrastructure 环保 基建 [email protected] (852) Kevin Guo 郭勇 Raw Materials, Gas 原材料 燃气 [email protected] (86755) Ricky Lai 黎柏坚 Telecommunications, Internet 电信 互联网 [email protected] (852) Richard Cao 曹柱 Banking 银行 [email protected] (86755) Jun Zhu 朱俊杰 Solar, Electric Equipment 太阳能 电力设备 [email protected] (852) Andrew Song 宋涛 Consumer (Retailing), Home Appliances 消费 ( 零售 ) 家电 [email protected] (852) Van Liu 刘斐凡 Property 房地产 [email protected] (86755) Sean Xiang 向宇豪 Machinery, Construction Materials 机械 建材 [email protected] (86755) Terry Hong 洪学宇 Consumer (Apparel) 消费 ( 服装 ) [email protected] (86755) Johnny Wong 王俊浩 Macroeconomics, Property 宏观 房地产 [email protected] (852) Toliver Ma 马守彰 Aviation, Automobiles & Components 航空 汽车 [email protected] (852) Spencer Fan 范明 Shipping & Logistics, Ports, 航运物流 港口 [email protected] (86755) Barney Wu 吴宇扬 Consumer (Food & Beverage, Household Products) 消费 ( 食品饮料 日用品 ) [email protected] (86755) Jake Wang 汪昌江 Wind & others, Market Strategy 风电及其它 市场策略 [email protected] (86755) Wiley Huang 黄重钧 Insurance, Fixed-income 保险 债券 [email protected] (852) David Liu 刘静骁 Petrochemicals 石化 [email protected] (852) Kay Mai 麦梓琪 Health care 医药 [email protected] (86755) Danny Law 罗沛达 Conglomerate, E-commerce 综合 电子商务 [email protected] (852) Gary Ching 程嘉伟 Market Strategy 市场策略 [email protected] (852) Square Chui 徐惠芳 Futures, Forex 期货 外汇 [email protected] (852) Gary Yang 杨光 Research Assistant 研究助理 [email protected] (852) Danny Deng 邓协 Research Assistant 研究助理 [email protected] (852) Jason Zhou 周桓葳 Research Assistant 研究助理 [email protected] (852) David Feng 冯廷帅 Research Assistant 研究助理 [email protected] (852) Gin Yu 余劲同 Research Assistant 研究助理 [email protected] (852) Esabella Zhao 赵舒蔓 Research Assistant, Translator 研究助理 翻译员 [email protected] (86755) Penny Pan 潘凌蕾 Secretary, Translator 秘书 翻译员 [email protected] (852) See the last page for disclaimer 8 of 9

9 Company Rating Definition The Benchmark: Hong Kong Hang Seng Index / NASDAQ Composite Index Time Horizon: 6 to 18 months Rating Definition Buy 买入 Relative Performance >15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. Morning Research Focus Sector Rating Definition The Benchmark: Hong Kong Hang Seng Index / NASDAQ Composite Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance >5%; or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance <-5%; or the fundamental outlook of the sector is unfavorable. DISCLOSURE OF INTERESTS (1) Except for SHENZHEN INTERNATIONAL (00152 HK),The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for GREENLAND BROAD (01253 HK),GUOTAI JUNAN I (01788 HK),BINHAI INVESTMENT (02886 HK),GFI MSCI A I (03156 HK),CAM SCSMALLCAP (03157 HK),ZHENRO PPT (06158 HK),LINK HOLDINGS (08237 HK),GFI MSCI A I-R (CNY) (83156 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have had investment banking relationships with SMI HOLDINGS GROUP (00198 HK),GOME ELECTRICAL APPLIANCES (00493 HK),CHINA SINGYES SOLAR TECHNOLOGIES (00750 HK),DONGJIANG ENVIRONMENTAL- H SHARES (00895 HK),HUANENG POWER- H SHARES (00902 HK),ANHUI CONCH CEMENT- H SHARES (00914 HK),HUANENG RENEWABLES- H SHARES (00958 HK),MODERN LAND (01107 HK),SINO BIOPHARMACEUTICAL (01177 HK),POWERLONG REAL ESTATE (01238 HK),XIWANG SPECIAL STEEL (01266 HK),3SBIO (01530 HK),SUNDART HOLDINGS LTD. (01568 HK),CHINA SOUTH CITY (01668 HK),CHINA WOOD OPTIMIZATION (01885 HK),CHINA MINSHENG BANKING CORP.- H SHARES (01988 HK),COUNTRY GARDEN (02007 HK),CHARMACY PHARMACEUTICAL- H SHARES (02289 HK),GUANGZHOU R&F PROPERTIES- H SHARES (02777 HK),BINHAI INVESTMENT (02886 HK),EVERGRANDE REAL ESTATE (03333 HK),TANSH GLOBAL FOOD (03666 HK),HUISHANG BANK- H SHARES (03698 HK),DALI FOODS (03799 HK),CHINA AOYUAN PROPERTY (03883 HK),TIANYUN INTERNATIONAL (06836 HK) mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of any issuers mentioned in this Research Report. There is no officer of any issuers mentioned in this Research Report associated with Guotai Junan and its group companies. DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen s Road Central, Hong Kong. Tel.: (852) Fax: (852) Website: See the last page for disclaimer 9 of 9