Morning Research Department Table of Contents 目录 20 June 2016 Weekly Overview and Trading Focus 上周回顾和本周交易提示 Industry and Company Focus 行业和公司焦点 Coolpad (02369 HK): LeShi became the Largest Shareholder 酷派 (02369 HK): 乐视成为大股东 PICC Group (01339 HK): Monthly Life Insurance Premiums Surged 50% MoM 人保集团 (01339 HK): 寿险月度保费收入环比增长 50% Latest Reports 最新报告摘要 EPS Est. Company Name 公司名称 Code 代码 Title 标题 TP 目标价 Chg 变动 Rating 评级 Chg 变动 Change? 盈利预测 是否改变 Chow Sang Sang 00116 HK HK Jewellery Market to Remain Weak, Maintain Reduce HK$11.08 Reduce -- Y 周生生 00116 HK 香港珠宝市场依旧疲弱, 维持 减持 评级 HK$11.08 减持 -- 是 Uni-President China 00220 HK Awaits Better Entry Point, Downgrade to Neutral HK$7.00 Neutral Y 统一企业中国 00220 HK 静候更好入市良机, 下调至 中性 HK$7.00 中性 是 Gaming Sector 博彩业 Sector Report: Forecast 2016 GGR Decline of 7.6% (Revised from 5.1% Decline) 行业报告 : 我们预期 2016 年总博彩收入下降 7.6%( 此前预期下 5.1%) -- Neutral -- N -- 中性 -- 否 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 See the last page for disclaimer Page 1 of 10
HSI Performance HSCEI Performance 29,000 16,000 27,000 25,000 14,000 12,000 23,000 21,000 19,000 17,000 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16 Source: Bloomberg 10,000 8,000 6,000 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16 Source: Bloomberg Weekly Overview and Trading Focus (Gary Ching) 上周回顾和本周交易提示 ( 程嘉伟 ) Overview of last week 上周回顾 Following the decline of other markets, Hong Kong market went down significantly last week with HSI down 4.1% wow to 20,169 and HSCEI down 3.9% wow to 8,485. China s investment and retail data slowed down in May with yoy growth of both Retail Sales and FAI excl. rural YTD lower than market consensus. M1 increased 23.7% yoy in May, which beat market consensus, but M2 yoy growth in May slowed down to 11.8%, missed market consensus. China s New RMB Loans in May reached RMB985.5 billion, increased 77.4% mom, far beyond RMB750 billion of market consensus. MSCI decided to delay the inclusion of China A-share into its Emerging Market Index, but maintained A-share into monitoring list for inclusion next year. BoJ maintained its monetary policy last Thursday, which disappointed the market. Japan stock market went down by 3.05% on the same day, while Japanese Yen went up vigorously. USD/JPY once reached 103.65 with overall increase of 2.6% wow to 104.16. Renminbi central parity decreased by 202 bps wow, and spot exchange rate of onshore Renminbi against U.S. dollar was down by 246 bps wow to 6.5870. PBoC injected RMB105 billion liquidity via open market. Short-term SHIBOR s changes were mixed. Spot gold price continued to rebound with 1.9% wow increase to US$1,298.65 per ounce. Crude oil price went down below US$50 and fluctuated within a narrow interval with WTI down 2.2% wow to US$47.98 per barrel. The Fed decided not to raise rates in June meeting, in line with market expectation. The Fed also maintained its expectation of 2 times rate hike this year but more FOMC committees supported to raise interest rate once only this year, while number of rate hike decreased to 3 times next year. U.S. markets fell last week with S&P 500 down 1.2% wow to 2,071 and Dow Jones Industrial dropping 1.1 % wow to 17,675. We expect Hong Kong stock market to remain fluctuating in the short term, as investor sentiment of risk-averse continued to escalate. Market is waiting for the result of Brexit referendum on Thursday. 上周港股跟随受外围市场显著向下 恒指累计下跌 4.1% 至 20,169 点, 国指累计下跌 3.9% 至 8,485 点 内地 5 月投资及消费数据放缓,5 月社会消费品零售总额及固定资产投资 ( 不含农户 ) 同比增速低于市场预期 5 月 M1 同比上升 23.7%, 比预期高, 但 M2 同比增速则放缓至 11.8%, 比预期低 5 月新增人民币贷款达到 9,855 亿人民币, 环比上升 77.4%, 远高于市场预测的 7,500 亿人民币 上周三 MSCI 延迟把中国 A 股纳入 MSCI 新兴市场指数但继续保留 A 股在明年纳入新兴市场的审核名单上 日本央行在上周四议息会议维持货币政策不变, 令市场失望 日股当天急跌 3.05%, 但日元汇价急升, 对美元一度上升至 103.65, 全周累计上升 2.6% 至 104.16 上周人民币中间价累计下调 202 个基点, 在岸人民币兑美元即期汇率累计下跌 246 个基点, 收报 6.5870 上周人民银行在公开市场净投放 1,050 亿人民币 短期 SHIBOR 涨跌不一 黄金期货价格持续反弹, 全周累计上升 1.9% 至每盎司 1,298.65 美元 国际油价上周回落至 50 美元以下窄幅震荡, 纽约期油累计下跌 2.2 % 至每桶 47.98 美元 美联储在 6 月议息会议并没有加息, 符合市场预期, 并维持预计今年加息 2 次, 不过更多委员认为今年只会加息 1 次, 而明年加息則下降至 3 次 美股上周下跌, 标准普尔 500 指数全周累计下跌 1.2% 至 2,071 点, 道琼斯指数全周累计下跌 1.1% 至 17,675 点 我们预期短期內港股仍处于震荡格局, 投资者避险情绪升温 市场观望本周四举行的英国脱欧公投 See the last page for disclaimer Page 2 of 10
Trading focus of this week 本周交易提示 Key economic data and events 重要经济数据和事件 Date Country Data / events Market Consensus Previous Value Change 22 June 6 月 22 日 23 June 6 月 23 日 23 June 6 月 23 日 24 June 6 月 24 日 24 June 6 月 24 日 U.S. 美国 U.S. 美国 Europe 欧洲 U.S. 美国 U.S. 美国 May Existing Home Sales (mn units) 5 月年化成屋销售量 ( 百万套 ) May New Home Sales annualized (SA '000) 5 月年化新建住宅销售量 ( 季调, 千套 ) June Markit Euro-zone Manufacturing PMI SA Preliminary 6 月 Markit 欧元区制造业 PMI ( 初值 ) May Durable Goods New Orders SA (mom) 5 月经季调耐用品订单 ( 环比 ) June University of Michigan Consumer Sentiment (Final) 6 月密歇根大学消费者信心指数 ( 终值 ) Note: All the forecasts in the above table are based on market consensus from Bloomberg. 注 : 上表中所有预测都基于彭博的市场一致预期 5.55 5.45 1.8% 560 619 (9.5%) 51.4 51.5 (0.1ppts) (0.4%) 3.4% (3.8ppts) 94.1 94.3 (0.2ppts) Newly Published Key Economic Data for China, US and Europe 中美欧最新公布的重要经济数据 Country 国家 U.S. 美国 Indicator 指标名称 Housing Starts annualized (SA, '000) 年化新屋开工量 ( 季调, 千套 ) Source: U.S. Census Bureau, Bloomberg 数据来源 : 美国人口普查局 彭博 Data Period 数据期间 May 5 月 Current Value 当期值 MoM / QoQ 环比变动 YoY 同比变动 Market Consensus 市场一致预期 1,164 (0.3%) 8.9% 1,150 See the last page for disclaimer Page 3 of 10
Industry and Company Focus Coolpad (02369 HK): LeShi became the Largest Shareholder Analyst: Ricky Lai What happened: Coolpad s largest shareholder disposed 11% of its holdings in Coolpad to the second largest shareholder LeShi at HK$ 1.90 per share. LeShi will become the largest shareholder with the holdings of 28.9% Comments and Views: LeShi became the second largest shareholder in June 2015 but there was little improvement to Coolpad s smartphone shipments and growth even though LeShi introduced its video content resources and patents. Coolpad s share price declined by 39% since June 2015. Due to market saturation in China and little improvement after the transaction. The disposal of largest shareholder s equity also indicated his negative view of the Company s outlook. Investment suggestion: We maintain the Company s investment rating of Sell with TP of HK$ 0.90. PICC Group (01339 HK): Monthly Life Insurance Premiums Surged 50% MoM Analyst: Dayton Wang What happened: PICC Group (01339 HK) announced unaudited ytd premium income for its 3 key business segments after the market closed on June 17; namely life insurance (RMB 76.0 billion, up 20.9% yoy), P&C insurance (the separate listed subsidiary of PICC P&C (02328 HK)) (RMB 132.0 billion, up 12.6% yoy) and health insurance (RMB 19.5 billion, up 63.2% yoy), which totals RMB 227.5 billion with a yoy gain of 18.5%. Comments and Views: PICC Life delivered a surprising 50.3% MoM surge in monthly life insurance premium income, which resulted in the ytd figure to account for 72.9% of our full-year forecast of RMB 104.2 billion. To our knowledge, this may due to two new participating products that were launched in April. Regarding to PICC P&C, its May premium income came in at RMB 24.5 billion, down 5.8% MoM. As the commercial auto insurance pricing reform is expanding to more geographical regions, we foresee this will weigh on the yoy growth on head line premium income in 2016 to some extent, which our current forecast is around 10.0%. (~ytd: 42.7% of our full-year forecast). Investment suggestion: Both PICC Group and PICC P&C s share price rebounded on June 17, by 1.70% and 0.30%, respectively. Our latest investment rating on PICC Group is Neutral on the grounds life insurance drag on the overall valuation of the Group with a target price of HKD 3.26 per share. Our sector top pick remains PICC P&C with an investment rating of Buy and a target price of HKD 17.25 per share. (~28.5% absolute upside potential). See the last page for disclaimer Page 4 of 10
Latest Reports Chow Sang Sang (00116 HK): HK Jewellery Market to Remain Weak, Maintain Reduce Rating: Reduce 6-18m TP: HK$11.08 Analyst: Kevin Guo Report Date: 2016-06-17 Summary The Hong Kong retail sector is still undergoing contraction and the jewellery sub-sector is the worst hit. Total retail sales in Hong Kong in the first four months of 2016 decreased by 11.4% to HKD 150.3 billion. Jewellery, watches and valuable gifts were some of the worst hit sub-sectors, which dropped by 21.8% yoy to HKD 23.9 billion. We expect the Company s HK/Macau jewellery POS to record negative SSSG in 2016, but mainland China jewellery POS to record slightly positive SSSG. Mainland Chinese tourists visiting Hong Kong is expected to continue to decline in 2016, however, the Company directly runs all of the jewellery POS which offsets part of the negative factors. We expect the gross margin of the Company to decline due to tough operating environments. We believe that the average selling price of the Company s jewellery may decline in 2016. We expect the Company to restructure its Hong Kong jewellery POS and to slow its expansion speed in mainland China. We expect the Company to shut un-profitable jewellery POS in Hong Kong and add around 16 jewellery POS in mainland China in 2016. Revise up TP to HKD 11.08 and maintain Reduce. Uni-President China (00220 HK): Awaits Better Entry Point, Downgrade to Neutral Rating: Neutral 6-18m TP: HK$7.00 Analyst: Sunny Kwok Report Date: 2016-06-17 Summary UPC s noodles business profitability is low; we see potential for further improvement. Demand for noodles in China is expected to remain weak, which limits UPC s noodles business growth momentum. In addition, Tingyi is fixing its noodles pricing strategy and we expect both Tingyi s and UPC s market share of noodles to stablise from 3Q16 onwards. UPC s 1Q16 results were in line with 17.4% earnings growth. However, adverse weather in China in 2Q16 could post a threat to beverage manufacturers sales in 2016. Disposal of JML Beverages is expected to help financials to further improve but earnings in 2017 will be negatively impacted due to a reduction of shares from JVs as well as low interest rates in China. We revise up UPC s EPS forecast in 2016 by 13.9% due to disposal gain of JML Beverages but revise down 2017 and 2018 EPS by 7.5% and 6.6%, respectively, on lower contributions from JVs. UPC s share price rose by more than 30% in 3 months, valuation is fair and we do not expect Tingyi s noodles to continue losing market share to UPC. Therefore, we downgrade UPC s investment rating to Neutral but raise the Company s TP to HK$7.00 on better sentiment towards FMCG sector. The new TP represents 23.2x 2016 PER, 27.0x 2017 PER and 22.7x 2018 PER. See the last page for disclaimer Page 5 of 10
Sector Report: Gaming Sector: Forecast 2016 GGR Decline of 7.6% (Revised from 5.1% Decline) Rating: Neutral 6-18m TP: n.a. Analyst: Noah Hudson Report Date: 2016-06-17 Summary We forecast 2016 GGR decline of 7.6%. We have revised our expectations from our previous forecast of a 5.1% decline. Macau's 2016 GGR has declined by 11.9% YoY year-to-date through May. Macau's 2016 YTD through April visitation decreased by 0.3% YoY despite the fact that there was more gaming capacity and more non-gaming attractions. Moreover, recent negative developments include a ban on proxy betting, new China UnionPay controls, new anti-money laundering rules and delays in infrastructure developments. However, with two positive recent developments (expect a full smoking ban to not be implemented and a positive overall tone in the Macau government's Mid-term Report) we are not as pessimistic as the Macau government, which maintains its forecast of 13.4% GGR decline in 2016. We expect more hotels and gaming tables to increase competition and cannibalization, and not bring significant new GGR growth. With more hotel rooms and less visitors, Macau's hotel occupancy has decreased YoY every month since November 2014. We expect Macau's occupancy to further decline in 2016 as the supply of hotel rooms surges 21.5%, and for lower hotel rates and more non-gaming attractions to attract lower spending tourists. During Jan. Apr. 2016, GGR per visitor decreased 12.1% YoY. In 2H16 and 2017, US$11.8 billion in new casino resort development is planned to go into operation, increasing gaming capacity by 18.7% and hotel rooms by 44.2%. We maintain our "Neutral" Sector Rating since we do not foresee a strong recovery in Macau's GGR growth. We believe that GGR has bottomed, but has not bottomed-out with an upward recovery trend. Chinese Translation 中文翻译 行业和公司焦点 酷派 (02369 HK): 乐视成为大股东分析员 : 黎柏坚 事件描述 : 酷派宣布大股东以每股 1.90 港元出售其持有酷派的 11% 股权给第二大股东乐视网 乐视网将持有 28.9% 股权, 并成为酷派的大股东 观点评论 : 乐视网在 2015 年 6 月成为第二大股东后, 即使乐视网加入了它的视频内容资源及其专利, 但对酷派的智能手机出货量及业绩并没有显著改善 自 2015 年 6 月酷派的股价下跌 39%, 因中国手机市场的饱和及业务持续下跌 大股东股权的减持亦显示他对公司前景负面的看法 投资建议 : 我们维持公司的投资级为 卖出 及目标价为 0.90 港元 See the last page for disclaimer Page 6 of 10
人保集团 (01339 HK): 寿险月度保费收入环比增长 50% 分析员 : 王庆鲁 事件描述 : 人保集团 (01339 HK) 在 6 月 17 日收市后公布了 3 个保险业务子公司的 1 至 5 月未经审计保费收入, 分别为寿险 ( 人民币 760 亿元, 同比增长 20.9%), 财产险 ( 在上市公司中国财险 (02328 HK) 下 )( 人民币 1,320 亿元, 同比增长 12.6%) 以及健康险 ( 人民币 195 亿元, 同比上涨 63.2%), 合计人民币 2,275 亿元, 同比上涨 18.5% 观点评论 : 人保寿险月度保费收入同比增长了 50%, 致使累计值占我们全年人民币 1,042 亿元预测值的 72.9% 我们的理解是月环比的增幅主要归功于 4 月推出的两款分红型产品 至于中国财险, 其月度保费收入为人民币 245 亿元, 环比微跌 5.8% 由于车险费率改革正在向更多区域推广, 我们认为这将一定程度上影响公司今年保费收入的的同比增幅, 目前我们预期为 10.0% (~ 累计值 : 占 42.7% 全年预测 ) 投资建议 : 人保集团及中国财险股价在 6 月 17 日均出现上涨, 当日涨幅分别为 1.70% 和 0.30% 我们对于人保集团的投资评级是 中性, 主要基于其寿险业务对于整体估值的拖累, 目标价为 3.26 港元 而我们目前的行业首选是中国财险, 投资评级是 买入, 目标价为 17.25 港元 (~ 对应 28.5% 的绝对上升空间 ) 最新报告 周生生 (00116 HK): 香港珠宝市场依旧疲弱, 维持 减持 评级 评级 : 减持 6-18m 目标价 : HK$11.08 分析员 : 郭勇报告日期 : 2016-06-17 报告摘要 香港零售行业仍在经历衰退, 而珠宝行业是受到最严重冲击的部门 2016 年前 4 个月香港零售额同比下降 11.4% 至 港币 1,503 亿 珠宝 手表和名贵礼品行业零售额同比下降 21.8% 至港币 239 亿, 是受到最严重冲击的一个子行业 我们预计港澳珠宝零售点在 2016 年将录得负的同店销售增长, 但中国大陆珠宝零售点的同店销售将会录得小幅增长 中国大陆访港旅客在 2016 年预计将会继续下降, 但公司直接经营所有门店有助于抵消部分负面因素 由于不利的经营环境, 我们预计公司的毛利率将会下降 我们相信公司珠宝的平均销售价格在 2016 年将会下降 我们预计公司将会重组其香港珠宝零售点并放缓在中国大陆的扩张速度 我们预计公司 2016 年将会关闭香港不盈利 的珠宝零售点并在中国大陆新增 16 家珠宝零售点 上调目标价至 11.08 港元并维持 减持 评级 See the last page for disclaimer Page 7 of 10
统一企业中国 (00220 HK): 静候更好入市良机, 下调至 中性 评级 : 中性 6-18m 目标价 : HK$7.00 分析员 : 郭日升报告日期 : 2016-06-17 报告摘要 统一方便面业务利润率较低, 我们认为有上升空间 然而, 中国方便面需求疲弱, 统一方便面增长势头会受到压制 再者, 康师傅正调整其方便面定价策略, 我们认为康师傅及统一于方便面市场的占有率于 2016 年第 3 季起将保持稳定 统一 2016 年第 1 季业绩不错, 盈利增长 17.4% 然而,2016 年第 2 季中国天气反常或对软饮料企业 2016 年销售有负面影响 出售今麦郎饮料对统一财务有帮助, 但由于 2017 年缺少了今麦郎饮料的贡献, 加上利率持续维持在低位, 统一 2017 年盈利将受到影响 由于出售今麦郎饮料录得收益, 我们上调统一 2016 年每股净利 13.9%, 但由于缺少了今麦郎饮料的贡献, 我们分别下调统一 2017 年及 2018 年每股净利 7.5% 及 6.6% 统一股价于过去 3 个月已上升超过 30%, 估值一般而且我们并不预期康师傅市场占有率持续流失至统一 因此, 我们下调统一的投资评级至 中性, 但由于快速消费品行业估值较此前有所提升, 目标价上调至 7.00 港元, 相当于公司 23.2 倍 2016 年市盈率 27.0 倍 2017 年市盈率及 22.7 倍 2018 年市盈率 行业报告 : 博彩业 : 我们预期 2016 年总博彩收入下降 7.6%( 此前预期下降 5.1%) 评级 : 中性 6-18m 目标价 : n.a. 分析员 : Noah Hudson 报告日期 : 2016-06-17 报告摘要 我们预期澳门 2016 年总博彩收入下降 7.6% 我们调整此前下降 5.1% 的预期 2016 年 1 月到 5 月, 澳门总博彩收入同比下降 11.9% 尽管有更多博彩和非博彩项目,2016 年 1 月到 4 月, 澳门入境人数同比下降 0.3% 最近也有些不利的信息, 包括禁止电话代客博彩 新推出的中国银联限制 新推出的反洗钱法案以及基础设施建设延迟 不过, 最近有两件好消息 ( 预期不会全面禁止抽烟 而且澳门政府的博彩中期检讨报告总体乐观 ), 故我们没有澳门政府维持它 2016 年总博彩收入下降 13.4% 预期那么悲观 我们预期更多酒店客房以及更多赌台将令竞争更激烈而不会带动明显博彩需求增长 随着澳门客房量增多但是旅客人数减少, 自从 2014 年 11 月起, 澳门酒店入住率每个月都同比下降了 2016 年酒店客房量将增长 21.5%, 而我们预期入住率将持续往下走, 并且预期较低的房价和更多非博彩娱乐项目将吸引更多低质量的旅客 2016 年 1 月到 4 月, 每位旅客的博彩总收入同比下降 12.1% 2016 年下半年至 2017 年 118 亿美元的新博彩度假村将投入营运, 将使澳门总赌台量提升 18.7%, 酒店客房量提升 44.2% 我们预期澳门总博彩收入不会恢复大幅度的增长走势, 维持博彩业 中性 投资评级 我们认为澳门总博彩收入见底, 但是并没有向上好转 See the last page for disclaimer Page 8 of 10
Research Department 研究部 Grace Liu 刘谷 Head of Research, Market Strategy, Petrochemicals 主管, 市场策略 石化 liugu@gtjas.com (86755) 23976698 / (852) 25097516 Noah Hudson Noah Hudson Consumer (Hotels), Gaming 消费 ( 酒店 ) 博彩 noah.hudson@gtjas.com (86755) 23976684 Gary Wong 黄家玮 Environmental Protection, Infrastructure 环保 基建 gary.wong@gtjas.com.hk (852) 25092616 Leo Wu 吴逸超 Coal, Electricity 煤炭 电力 wuyichao@gtjas.com (86755) 23976871 Sunny Kwok 郭日升 Consumer (Food & Beverage, Household Products) 消费 ( 食品饮料 日用品 ) sunny.kwok@gtjas.com.hk (852) 25092642 Ray Zhao 赵睿 Conglomerate, E-commerce 综合 电子商务 zhaorui@gtjas.com (86755) 23976755 Shirley Gu 古乔艺 Market Strategy 市场策略 guqiaoyi@gtjas.com (86755) 23976718 Square Chui 徐惠芳 Futures 期货 square.chui@gtjas.com.hk (852) 25092629 Kevin Guo 郭勇 Raw Materials, Gas 原材料 燃气 kevin.guo@gtjas.com (86755) 23976671 Ricky Lai 黎柏坚 Telecommunications, Internet 电信 互联网 ricky.lai@gtjas.com.hk (852) 25092603 Dayton Wang 王庆鲁 Insurance, Fixed-income 保险 债券 dayton.wang@gtjas.com.hk (852) 25095347 Richard Cao 曹柱 Banking 银行 caozhu013592@gtjas.com (86755) 23976870 Jun Zhu 朱俊杰 Clean Energy, Electric Equipment 清洁能源 电力设备 junjie.zhu@gtjas.com.hk (852) 25097592 Ivan Zhou 周一帆 Shipping & Logistics, Ports 航运物流 港口 zhouyifan013593@gtjas.com (86755) 23976685 Andrew Song 宋涛 Consumer (Retailing), Home Appliances 消费 ( 零售 ) 家电 andrew.song@gtjas.com.hk (852) 25095313 Van Liu 刘斐凡 Property 房地产 liufeifan@gtjas.com (86755) 23976672 Sean Xiang 向宇豪 Machinery, Construction Materials 机械 建材 xiangyuhao@gtjas.com (86755) 23976725 Terry Hong 洪学宇 Consumer (Apparel) 消费 ( 服装 ) hongxueyu@gtjas.com (86755) 23976722 Johnny Wong 王俊浩 Research Assistant 研究助理 johnny.wong@gtjas.com.hk (852) 25095348 Toliver Ma 马守彰 Research Assistant 研究助理 toliver.ma@gtjas.com.hk (852) 25095317 Spencer Fan 范明 Research Assistant 研究助理 fanming@gtjas.com (86755) 23976686 Barney Wu 吴宇扬 Research Assistant 研究助理 wuyuyang@gtjas.com (86755) 23976680 Gary Ching 程嘉伟 Research Assistant 研究助理 gary.ching@gtjas.com.hk (852) 25092665 Esabella Zhao 赵舒蔓 Research Assistant, Translator 研究助理 翻译员 zhaoshuman013399@gtjas.com (86755) 23976681 Penny Pan 潘凌蕾 Secretary, Translator 秘书 翻译员 penny.pan@gtjas.com.hk (852) 25092632 See the last page for disclaimer Page 9 of 10
Company Rating Definition The Benchmark: Hong Kong Hang Seng Index / NASDAQ Composite Index Time Horizon: 6 to 18 months Rating Definition Buy Relative Performance >15%; or the fundamental outlook of the company or sector is favorable. Accumulate Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. Sector Rating Definition The Benchmark: Hong Kong Hang Seng Index / NASDAQ Composite Index Time Horizon: 6 to 18 months Rating Definition Outperform Relative Performance >5%; or the fundamental outlook of the sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform Relative Performance <-5%; or the fundamental outlook of the sector is unfavorable. DISCLOSURE OF INTERESTS (1) Except for Shenzhen International Holdings Limited (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 SMI Holdings Group Limited (00198 HK), China All Access (Holdings) Limited (00633 HK), Guotai Junan International Holdings Limited (01788 HK), Binhai Investment Company Limited (02886 HK) and Link Holdings Limited (08237 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 Xiao Nan Guo Restaurants (03666 HK) / China Aoyuan Property (03883 HK) / Anhui Conch Cement- H shares (00914 HK) / China Power (02380 HK) / Sinotruk (03808 HK) / Chanjet Information Technology- H shares (01588 HK) / Tianyun International (06836 HK) / China U-Ton (06168 HK) / AviChina Industry & Technology- H shares (02357 HK) / Huaneng Power- H shares (00902 HK) / Shanghai Electric- H shares (02727 HK) / China Wood Optimization (08099 HK) / 361 Degrees (01361 HK) / CECEP COSTIN New Materials (02228 HK) / Powerlong Real Estate (01238 HK) / Huishang Bank- H shares (03698 HK) / SMI Holdings Group (00198 HK) / Bosideng (03998 HK) / WH Group (00288 HK) / China All Access (00633 HK) / Huaneng Renewables- H shares (00958 HK) mentioned in this Research Report within the preceding 12 months. 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 and 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. 2016 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) 2509-9118 Fax: (852) 2509-7793 Website: www.gtja.com.hk See the last page for disclaimer Page 10 of 10