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MorningNotesChina/HongKongChina&HKResearchTeam(852)26008593Wednesday,30October2013PleaseseeimportantnoticeonlastpagePage1of2FindCLSAresearchonBloomberg,ThomsonReuters,CapIQandthemarkets.
com-andprofitfromourevalu@torproprietarydatabaseatclsa.
comConvictioncallsTickerCompanyRecTargetreturnP/E(x)EPSg(%)Yield(%)P/B(x)ROE(%)1MYTDBIDUUSBaiduBUY1025.
322.
20.
06.
630.
20.
253.
7293HKCathayPacificBUY179.
5114.
34.
21.
010.
40.
98.
31HKCheungKongBUY209.
011.
73.
00.
78.
50.
72.
42007HKCountryGardenBUY466.
237.
36.
01.
425.
30.
422.
9CTRPUSCtripBUY742.
827.
00.
04.
712.
1(2.
1)146.
0992HKLenovoBUY1215.
113.
82.
73.
424.
8(2.
4)14.
8MPELUSMelcoCrownBUY2523.
632.
30.
03.
717.
26.
699.
9NTESUSNetEaseBUY299.
917.
42.
52.
325.
30.
369.
03968HKCMBSELL(8)5.
55.
14.
50.
918.
10.
3(15.
4)1072HKDongfangSELL(20)11.
4(12.
3)1.
11.
09.
26.
0(23.
4)2727HKShanghaiElectricSELL(20)13.
0(4.
5)2.
30.
96.
72.
2(14.
5)3HKHK&ChinaGasSELL(9)25.
75.
62.
13.
313.
4(3.
2)(6.
2)Valuations14CLPerformance(%)MSCIChinavsMSCIAsiaex-JapanChina&HKIndicesLast1D1M3MHSCEI10,3911.
30.
77.
5HSCCI4,4520.
61.
69.
1ShanghaiA2,228(0.
2)(2.
1)7.
0ShanghaiB247(1.
2)(2.
2)4.
8ShenzhenA1,064(1.
8)(3.
6)8.
6ShenzhenB825(1.
5)(0.
3)7.
5HSI22,8470.
2(0.
1)4.
1Finance31,8240.
80.
73.
0Properties29,753(0.
2)(1.
8)1.
7Utilities49,9840.
4(2.
3)(4.
8)Comm&Ind.
13,339(0.
6)(0.
2)7.
2Yesterday'stopfivegainersandlosers%changeTopgainersTicker1D1MYTDVipshopVIPSUS8.
219.
7289.
2NetEaseNTESUS5.
4(3.
9)65.
7ShimaoProperty813HK5.
14.
827.
9YingdeGases2168HK4.
56.
92.
8Conch914HK3.
96.
4(6.
0)ToplosersShanghaiPetroche338HK(4.
3)2.
87.
6MGMChina2282HK(4.
3)3.
7101.
1Minth425HK(4.
2)(0.
8)72.
2Gome493HK(4.
0)20.
229.
3WynnMacau1128HK(3.
9)7.
235.
3UpcomingKeyEconomicData31-OctOct31-OctOct02-NovOct04-NovOct08-NovOct08-NovOctUpcomingCLSAEvents15Oct-4NovHK4-5NovHK28Oct-5NovHK31Oct-1NovSG31Oct-1NovHKHSIvsCSI300vsHSCEINBSNon-manufPMIAsiaTransportationroadshow-PaulWane-normous-PaulMcKenzieHKBanks-ACityofTwoTales-DerekOvington%changeNBSManufacturingPMIHSBCPMIConsumerPriceIndexKoreanConglomerates&Construction-SteveChungGaming&ConsumerRoadshow-AaronFischerHSBCServicesPMIProducerPriceIndex(20)(15)(10)(5)051015202530Oct-12Jan-13Apr-13Jul-13HangSengHSCEICSI300(%)(15)(10)(5)051015Oct-12Jan-13Apr-13Jul-13MSCIChinaMSCIAsiaxJapan(%)HSIvsCSI300vsHSCEIWhat'sinside:PetroChina(857HK-BUY).
Refining-backinblack.
JiangxiCopper(358HK–UpgradetoBUY).
3Q13bouncesback.
Ctrip.
com(CTRPUS-BUY).
Astrongquarter.
AnhuiConch(914HK-O-PF).
Solid3Q13oncosts.
ChinaShippingDevelopment(1138HK-BUY).
Risingwiththetide.
FCLSA:ChinahealthcareIPOpreview-PWMedtech-1358HKPetroChina(857HK-BUY).
Refining-backinblack.
PetroChinareported3Q13earningsaftermarket.
Thestandoutsarethatrefiningreturnedtoprofitafter10quartersoflosses,andgaspricereformhasliftedtherealisedgaspricebyawhopping24%QonQ.
Earningsarenowupalmost10%ona9Mbasisv's2012,withcontinuedstrongupstreamproductionatmorethan4%growthonaBOEbasis.
Lossesonimportednaturalgashavepeakedandwilldeclinefromhere.
Theoverhangofgovernmentinvestigationisreceding.
MaintainBUYJiangxiCopper(358HK–UpgradetoBUY).
3Q13bouncesback.
ThesequentialrecoveryinJiangxiCopper's3Q13earningsaddssomeconfidencetoourforecasts,andsupportsourviewthat2Qwasimpactedbynegativepricingmomentum.
Thestockisdown15%insixweeks,andconsensusEPShasfallenby15%andnowappearconservative.
Valuationsarereasonableat4.
7x14CLEV/Ebitda,andthecompanyisrelativelywellpositionedofferingcopperexposureandastrongbalancesheet.
WeraiseourTPby5%toHK$16.
80,andupgradeourratingfromU-PFtoBUY.
Ctrip.
com(CTRPUS-BUY).
Astrongquarter.
Ctripwillbereporting3Qresultson6Nov.
3Qresultswilllikelybestrongwithoperatingprofitsup33%YoYtoRmb254m.
3Qrevenuescouldsurpriseandincrease30%YoYwithleisuretravelandmobileasnewcatalysts.
Ctripwillaccelerateitsmarketsharegain,benefitingthetourism,eCommerceandsmartphoneseculargrowthinChina.
Itsearningcouldgrow29%CAGRfornextthreeyears.
Valuationisreasonableat40x14CLPE(31x15CLPE).
MaintainBUY.
AnhuiConch(914HK-O-PF).
Solid3Q13oncosts.
Conchreportedastrong3Q13,withearningsaheadofourexpectationonasurprisinglylargedecreaseinproductioncosts.
Wewereunabletofullyreconcilethecostreduction,butarecomfortableraisingearningsby6%in13-14CL.
Conchremainsourpreferredcementplay,boastinglow-costoperations,exposuretostrongpricinginEastChina(whereweexpecttocontinuetooutperformin4Q)andahealthybalancesheet.
WemaintainourOutperformrating,withanunchangedtargetpriceofHK$30.
00.
ChinaShippingDevelopment(1138HK-BUY).
Risingwiththetide.
CSDreleasedaverysolidsetof3Qresults,withnetprofitlossnearlyhalvingQoQ,a12%QoQrevenueincrease,positivegrossmarginforthesecondquartersince2011,andprofitableJCEsforthefirsttimethisyear.
Wecontinuetoanticipate4QresultstobeafurtherimprovementwithupsiderisktoourearningsgivenimprovedcoastalcoalfreightratesandimprovinginternationalVLCCtankerrates.
WemaintainCSDasourtoppickinthesector.
FCLSA:ChinahealthcareIPOpreview-PWMedtech-1358HKPWMedtechisChina's2ndlargestadvancedinfusionsetmakerand5thlargestorthopaedicimplantsmanufacturer.
Thecompanybuiltthebusinessthroughacquisition.
PWMedtechmainlyoperatesin2ndand3rdtiercitiesandcompeteswithWeigao.
TheindicativeIPOpricerange,suggesta13PEat29xPreparedfor:CITICSMorningNotes-China/HongKongPage2of2FindCLSAresearchonBloomberg,ThomsonReuters,CapIQandthemarkets.
com-andprofitfromourevalu@torproprietarydatabaseatclsa.
comto38x,vsWeigaoat24x13PE.
WethinkMindrayandWeigaowilltradeupifthePWMedtechdealtoispricedatthehigherrangeNewsheadlinesCCBSaidtoBeClosetoDealtoBuyBrazil'sBicBancoChinaConstructionBankCorp.
,thenation'ssecond-biggestlenderbyassets,isclosetoreachingadealtoacquireBrazil'sBancoIndustrial&ComercialSA,accordingtoapersonwithdirectknowledgeofthematter.
–BloombergSinopecProfitPrecedesLi'sPlantoReduceStateRolePetroChinaCo.
andChinaPetroleum&ChemicalCorp.
,thecountry'slargestenergycompanies,increasedprofitinthethirdquarterasanewpolicyhelpedthemraisefuelprices,foreshadowingPremierLiKeqiang'splantoreducestateinterventionintheeconomy.
–BloombergNQMobileHaltsMuddyWaters-LedRout:ChinaOvernightNQMobileInc.
jumped25percent,leadinggainsinChineseequitiestradedinNewYork,aftertakingfurtherstepstorefuteallegationsbyMuddyWatersLLCthatsankthestockby62percentinthepreviousthreedays.
–BloombergAppleExpandsChinaBusiness,MovingBeyondBigCitiesAppleInc.
ChiefExecutiveOfficerTimCookisworkingtobroadenthecompany'sdistributioninChinaasawaytoreignitegrowthaftertheiPhonemakerreporteditsfirstdeclineinannualprofitinatleastadecade.
–BloombergResearchsubscriptionsTochangeyourreportdistributionrequirements,pleasecontactyourCLSAsalesrepresentativeoremailusatcib@clsa.
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Youcanalsofine-tuneyourResearchAlertemailpreferencesathttps://www.
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KeytoCLSA/CATaiwaninvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
Forrelativeperformance,webenchmarkthe12-monthtotalreturn(includingdividends)forthestockagainstthe12-monthforecastreturn(includingdividends)forthelocalmarketwherethestockistraded.
Wedefinestocksweexpecttoprovidereturnsof100%orhigherincludingdividendswithinthreeyearsas"DoubleBaggers".
2013CLSALimited(forresearchcompiledbynon-Taiwananalyst(s))and/orCreditAgricoleSecuritiesTaiwanCo.
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Note:Intheinterestsoftimeliness,thisdocumenthasnotbeenedited.
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05/08/2013Preparedfor:CITICSPetroChinaHK$8.
91-BUYFinancialsYearto31December11A12A13CL14CL15CLRevenue(Rmbm)2,003,8432,195,2962,112,2762,226,5672,335,551Netprofit(Rmbm)132,961115,326133,632151,278163,106EPS(fen)72.
663.
073.
082.
789.
1CL/consensus(30)(EPS%)--104112116EPSgrowth(%YoY)(5.
0)(13.
3)15.
913.
27.
8PE(x)10.
211.
59.
78.
57.
9Dividendyield(%)4.
43.
94.
75.
35.
7FCFyield(%)(4.
5)(8.
5)(5.
6)(1.
2)1.
8PB(x)1.
41.
21.
11.
00.
9ROE(%)13.
711.
212.
112.
712.
4Netdebt/equity(%)23.
834.
042.
342.
238.
6Source:CLSAFindCLSAresearchonBloomberg,ThomsonReuters,CapIQandthemarkets.
com-andprofitfromourevalu@torproprietarydatabaseatclsa.
comSimonPowellsimon.
powell@clsa.
com+85226008626NelsonWang+8522600858929October2013ChinaPetro/ChemsReuters0857.
HKBloomberg857HKADRPTR.
NPricedon29October2013HSCEI@10,390.
612Mhi/loHK$11.
30/7.
8612MpricetargetHK$12.
50±%potential+40%Sharesinissue183,021.
0mFreefloat(est.
)12.
1%MarketcapUS$226,618m3MaveragedailyvolumeHK$1,041.
9m(US$134.
4m)MajorshareholdersCNPC86.
5%TempletonAssetManagement0.
7%Stockperformance(%)1M3M12MAbsolute2.
3(2.
5)(17.
2)Relative3.
3(9.
5)(16.
0)Abs(US$)2.
3(2.
5)(17.
2)0501001504.
66.
48.
210.
011.
8Nov08Mar10Jul11Nov12PetroChina(LHS)ReltoCEI(RHS)(HK$)(%)Source:Bloombergwww.
clsa.
comResultsreviewRefining-backinblackPetroChinareported3Q13earningsaftermarket.
Thestandoutsarethatrefiningreturnedtoprofitafter10quartersoflosses,andgaspricereformhasliftedtherealisedgaspricebyawhopping24%QonQ.
Earningsarenowupalmost10%ona9Mbasisv's2012,withcontinuedstrongupstreamproductionatmorethan4%growthonaBOEbasis.
Lossesonimportednaturalgashavepeakedandwilldeclinefromhere.
Theoverhangofgovernmentinvestigationisreceding.
MaintainBUYRefiningbackinblackAfter10quartersofrefininglossescausedmainlybytheNDRCnotapplyingtherulesofitsoldfuelpricemechanism,themoretoashortermarktomarketperiodfromlateMarchhasdeliveredanoperatingprofitintheformofUSD1.
7perbblGaspricereformisworkingOn10thJuly2013theNDRCannouncedashifttowardsgaspricesbeinglinkedmorecloselytooilprices.
The2tiersystemthattheNDRCguidedwouldhavedelivereda15%increase,buttherealisedpriceforPetroChinahasrisenmorethan24%QoQsuggestingthatnewgasvolumeshavebeensignificant.
ExpectimprovementsinE&Pandgasandpipelineasaresult.
RumoursofapipelinespinoffareoverdoneRecentmarketrumourssuggesttheChinesegovernmentwantstospinoffornationalisethepipelinebusiness.
MostrecentlyweunderstandthatTheStateCouncilDevelopmentandResearchCentrecalledfor"thespin-offthecrudeoilandnaturalgaspipelinesofftheintegratedoilcompanies,andsetupseparatepipelinecompaniesthataresupervisedbythegov't.
WebelievethisisunlikelyandevenifitweretohappenasaseparateIPOcouldenhancetheNAVofthelistco.
Policyriskisreceding–BUYhereThestockhasrecentlyunderperformedonthegovernmentinvestigationintotheactionof3employeesofthelistcoandoneintheparentco.
Webelievethissocalled"petropurge"ismorethanlikelysimplyChinesepoliticsatworkoverandhasinnowayimpactedearnings.
Insteadweseetheliftinrealisedgaspricecombinedwithareturntorefiningprofitabilityasevidencethatnationalservicehaspeakedandsuggestinvestorstobuyintoimprovingearnings.
Preparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com2Refining-BackinblackAfter10consecutivequartersofrefininglossesthecompanydeliveredapositiveoperatingresultintherefiningsegment.
Thekeyreasonhasbeenthechangeinthefuelpricingmechanism,withmorefrequentmarkingtomarketofrefinedproducts–22daysreducedto10days.
Figure1PetroChinarefiningoperatingprofitsonperbblbasisSource:CLSA,CompanyGaspricereformisworkingWiththegovernmentliftinggaspricesinJuly2013theresulthasbeena24%liftinrealisedgaspriceforPetroChinaonaQonQbasisandYTDgaspricesarenowupalmost10%v'sthesameperiodlastyear.
Figure2PetroChinagasASPSource:Company,NDRCMoreimportantlyit'snowclearthatlossesonimportedgas,thathavehistoricallydraggedtheoperatingprofitlineofthegasandpipelinedivisionlower,havepeaked.
-3.
7-11.
0-12.
2-11.
4-6.
4-8.
7-4.
2-2.
2-1.
0-4.
11.
71.
0-14.
0-12.
0-10.
0-8.
0-6.
0-4.
0-2.
00.
02.
04.
01Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q13CL(US$/bbl)10consecutivelossmakingquarters6.
35.
90.
01.
02.
03.
04.
05.
06.
07.
01Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q13(US$/mcf)PetroChinarealizedgaspriceNDRCguidanceGasASPwasliftedby24%in3Q13QoQ,higherthanNDRC's15%guidanceRefiningprofitsbacktoblackafter10consecutivelossmakingquartersThegaspriceliftrealisedseemstohavebeenhigherthantheNDRCguidanceA24%liftintherealisedgaspriceLossesonimportedgas,havepeakedPreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com3Figure3PetroChinaNaturalGas&PipelineoperatingprofitsbreakdownSource:CompanyFigure4PetroChinalossesinimportedgasbusiness*3Q13isCLSAestimateasPetroChinadidn'tdiscloseimportedvolumein3Q13.
Source:CLSA,CompanyWeexpectlossesonimportedgastodeclineinFY14andFY15ashighersellingpricescounterthehighimportprice.
0.
71.
61.
92.
53.
29.
012.
516.
119.
024.
136.
939.
815.
629.
99.
755.
1-3.
7-21.
4-41.
9-14.
5-9.
1-8.
2-31.
7(60)(40)(20)02040602001200220032004200520062007200820092010201120121Q132Q133Q139M13(Rmbbn)Naturalgas&crudeoiltransmissionNaturalgasimportlossesinlucdingaRmb19.
5bndisposalgains-0.
9-1.
2-1.
4-1.
7-1.
1-0.
9(1.
8)(1.
6)(1.
4)(1.
2)(1.
0)(0.
8)(0.
6)(0.
4)(0.
2)0.
02010201120121Q132Q133Q13*(Rmb/cm)Lossisnarrowingandbackto2010levelImportedlosseshavepeakedLossisnarrowingandbackto2010levelPreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com4Figure5PetroChinafinancialsonquarterlybasisRmbbn1Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q13Turnover446.
0506.
3530.
7520.
9525.
6521.
0551.
6597.
0540.
3560.
8581.
7Operatingexpenses(392.
8)(462.
0)(485.
7)(480.
9)(470.
8)(485.
2)(512.
3)(552.
5)(487.
2)(514.
1)(537.
7)Operatingprofits53.
244.
344.
940.
154.
935.
839.
344.
653.
146.
843.
9-E&P45.
957.
857.
158.
760.
453.
449.
551.
757.
041.
848.
2-Refining(6.
1)(17.
2)(18.
2)(18.
5)(10.
4)(12.
9)(6.
7)(3.
7)(1.
6)(6.
2)2.
4-Chemicals2.
4(0.
1)0.
8(4.
9)(0.
4)(5.
2)(1.
8)(2.
5)(3.
2)(4.
9)(6.
6)-Marketing7.
75.
94.
42.
66.
13.
91.
84.
62.
11.
33.
3-Naturalgasandpipeline6.
93.
82.
52.
32.
0(0.
4)(0.
8)(3.
0)1.
120.
81.
6-Corporate(3.
6)(6.
0)(1.
7)(0.
1)(2.
8)(3.
2)(2.
7)(2.
6)(2.
4)(6.
0)(4.
9)Profitsbeforeincometax53.
544.
744.
741.
354.
133.
537.
341.
949.
744.
140.
9Incometaxexpense(12.
9)(11.
7)(4.
0)(9.
7)(10.
3)(7.
5)(8.
1)(10.
4)(9.
3)(11.
9)(7.
9)Profitsfortheperiod40.
633.
140.
731.
643.
826.
029.
231.
540.
432.
233.
0Attributableprofits37.
029.
037.
427.
339.
222.
924.
928.
436.
029.
529.
8Non-controllinginterest3.
64.
13.
34.
34.
73.
24.
33.
24.
32.
73.
2Basic/Dilutedeps,Rmbpershare0.
200.
160.
200.
170.
210.
130.
140.
150.
200.
160.
16Totalcurrentassets383432465383492476504414547589596Totalnon-currentassets1,5351,3781,4091,5351,5421,5751,6061,7551,7511,7531,783Totalassets1,9181,8091,8731,9182,0342,0512,1102,1692,2972,3412,379Totalcurrentliabilities560547597560571553574575597619667Totalnon-currentliabilities275212215275335368399413479489473Totalliabilities8357598138359069209729881,0761,1081,140Attributableequity1,0039749781,0031,0441,0411,0401,0641,1011,1011,103Non-controllinginterest80768280859097117121132136Totalequity1,0831,0501,0601,0831,1291,1311,1371,1811,2221,2341,239Cashflowfromoperatingactivities67.
161.
986.
574.
621.
826.
2119.
971.
317.
185.
0103.
6Cashflowfrominvestingactivities(52.
4)(47.
9)(67.
4)(115.
9)(73.
2)(74.
6)(65.
7)(118.
8)(67.
3)(31.
5)(71.
6)Cashflowfromfinancingactivities54.
6(13.
5)(2.
2)(29.
7)89.
921.
4(22.
1)(13.
9)119.
8(15.
0)(25.
4)Forexgains/losses0.
00.
6(0.
5)(0.
4)(0.
4)1.
1(0.
0)(0.
9)0.
5(1.
9)(0.
1)Changesincash&cashequivalents69.
31.
116.
4(71.
3)38.
1(25.
9)32.
2(62.
2)70.
136.
66.
6Source:CompanyFigure6PetroChinatotalcapexSource:CLSA,CompanyFigure7PetroChinaoperatingdataonquarterlybasisE&P1Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q13Crudeproduction,mmbbls219.
1226.
7224.
3216.
0227.
0225.
4230.
8233.
3231.
0233.
2233.
8Gasproduction,bcf639.
3546.
6548.
9661.
6710.
9581.
5586.
9679.
5745.
3652.
2650.
56578901061341581832322672762843532023553393230501001502002503003504000102030405060708091011129M1313CL14CL15CL(Rmbbn)CapexspendinghaspeakedPreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com5Total,mmboe325.
7317.
8315.
8326.
3345.
5322.
4329.
0346.
2355.
3341.
9342.
2Cruderealizedprice,US$/bbl91.
9111.
0108.
1105.
5105.
5110.
595.
1104.
9103.
197.
998.
6Gasrealizedprice,US$/mcf4.
435.
174.
745.
144.
874.
945.
285.
315.
075.
116.
32Refining&Marketing1Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q13Processedcrudeoil,mmbbls250241234259257233254269254246236Productionofgasoline,dieselandkerosene,'000tonnes2200021393209092284823025208012330923881227582238121619-Gasoline63536092635066526869625074277835755671456842-Kerosene5846277057477717749868778549801199-Diesel1506314674138541544915385137771489615169143481425613578Salesvolumeofgasoline,dieselandkerosene,'000tonnes3160735186404543828536500365684047139738374414195140030-Gasoline992810208124851134611956109671221512269129931353013467-Kerosene18962022301928412741273228523030323134703368-Diesel1978322956249502409821803228692540424439212172495123195Chemical,'000tonnes1Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q13Ethylene92189874290692184084310861071989860Syntheticresin14941472122814961536140113921760176215951451Syntheticfibrerawmaterialsandpolymers583511486451475369332419366330239Syntheticrubber153157142154157153132191194170143Urea9571217116711431192118210221012893121018461Q112Q113Q114Q111Q122Q123Q124Q121Q131Q133Q13EPS,Rmbp.
s.
0.
200.
160.
200.
170.
210.
130.
140.
150.
200.
160.
16Brentspotavg,US$/bbl105.
2116.
8112.
9109.
3118.
7108.
7109.
9110.
5112.
8103.
0110.
0Brentspotavg,US$/bbl-onemonthlag97.
1117.
0113.
3110.
8112.
9118.
5104.
3111.
6113.
0105.
0107.
4USDCNY6.
556.
466.
386.
306.
306.
356.
286.
236.
216.
146.
13Source:CompanyTalkofpipelinerestructuring–couldbegoodaswellasbadRecentmarketrumourstalkoftheChinesegovernmentwantingtospinoff,ornationalisethepipelinebusinesses.
MostrecentlyweunderstandthatTheStateCouncilDevelopmentandResearchCentre(athinktankoftheChineseGov't)releasedtheso-called"383ForwardAgenda",whichisregardedasapre-releaseofthereformstobeannouncedinthePartyConferenceinNovember,callingfor"thespin-offthecrudeoilandnaturalgaspipelinesofftheintegratedoilcompanies,andsetupseparatepipelinecompaniesthataresupervisedbythegov't.
"ItsnotclearwhytheyhavecalledforthisbutitsspeculatedthatobservesbelievethatPetroChinaowningthepipelinesisn'tgoodforcompetition,andisstiflingthedevelopmentofnaturalgasinChinaThePipelinebusinessisabigearningscontributorIt'snotimmediatelyclearbuttheearningsfromgastransmissionaresignificant.
Erodedbythemountinglossesonimportednaturalgastheunderlyingtransmissionearningspointtoabusinesswithcloseto20–25%EBITmargins.
Aswehavepointedoutinthepastinour2x3yreportthegastransmissionbusinessonitsownwouldcommandahighPERduetothehighROEnatureofthesebusinesses.
Sometypicalgastransmissioncompaniesaresetoutinthetablebelow.
ChatterofpipelinespinoffsSignificantlyprofitablePreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com6Figure8GlobalpipelinecompanyvaluationcompNameTickerMarcapEVPE(x)EV/Ebitda(x)PB(x)Divyield(%)(US$bn)(US$m)13E14E13E14E14E14EWilliamsWMBUS25.
438.
248.
730.
415.
912.
14.
84.
7EnergyTransferETEUS19.
156.
934.
222.
514.
413.
27.
04.
3WilliamsPtnrsWPZUS22.
931.
133.
725.
614.
110.
72.
17.
1EnergyTranserETPUS25.
446.
723.
120.
112.
912.
42.
07.
1SpectraSEUS23.
939.
423.
322.
213.
612.
42.
43.
8PlainsPipelinePAAUS17.
925.
717.
318.
511.
611.
22.
34.
9ElPasoEPBUS9.
313.
421.
319.
612.
311.
44.
46.
5KinderMorganKMIUS37.
485.
432.
123.
915.
814.
02.
84.
9Average22.
742.
129.
222.
913.
812.
23.
55.
4Source:BloombergPossiblescenario'sandtheirimpactonPetroChina'sNAVWeseeanumberofpossibleoutcomesBusinessasusual–therumoursareunfoundedandthepipelinesremainwithinPetroChina'slistedstructure.
PartialIPOofthepipelinebusiness–thiscouldbesignificantintermsofitspositiveimpactonPetroChina'sNAV–webelievethepipelineonitsowncouldcommandamuchhigherPERthanthemainbusinesssospinningoff30-40%ofthebusinesswouldaddvaluetoPetroChinashareholders.
Nationalisation–thiscouldhaveasignificantnegativeimpactespeciallyiftheGovernmentweretosimplypay1xPBfortheasset.
WeseethegaspipelinesasakeyassetthatPetroChinahasconstructedandnowmanages.
Havingthemnationalisedwouldhaveasignificantnegativeimpacttoinvestorsentiment.
Figure9Figure10PetroChina(857HK)PERbands,12MforwardPetroChina(857HK)PBbands,12MforwardSource:CLSASource:CLSA-1sd7.
5xavg10.
8x+1sd14.
1x4.
99.
914.
919.
924.
9Nov03Nov05Nov07Nov09Nov11-1sd1.
23xavg1.
72x+1sd2.
22x0.
91.
41.
92.
42.
93.
43.
9Nov03Nov05Nov07Nov09Nov11NationalismwouldbesignificantlynegativePreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com7Figure11Globaloil&gascomparisonsheetTickerCompanyNameP/E(x)P/B(x)ROE(%)Div.
Yield(%)12A13E14E12A13E14E12A13E14E12A13E14EOilMajorsXOMUSEquityExxon11.
211.
811.
12.
42.
22.
024.
018.
919.
02.
52.
83.
0RDSALNEquityShell8.
39.
08.
61.
21.
11.
114.
312.
413.
05.
05.
45.
5BP/LNEquityBP8.
49.
98.
51.
21.
11.
113.
613.
812.
74.
54.
85.
1CVXUSEquityChevron9.
810.
410.
01.
71.
61.
518.
415.
515.
32.
93.
23.
4TOTUSEquityTotal8.
69.
49.
21.
4--16.
114.
013.
75.
15.
25.
3COPUSEquityConoco13.
012.
411.
71.
71.
81.
712.
214.
314.
83.
63.
73.
8REPSMEquityRepsol12.
311.
812.
00.
90.
90.
88.
07.
97.
34.
65.
15.
1Average10.
210.
710.
11.
51.
51.
415.
213.
813.
74.
04.
34.
5ChineseOilMajors857HKEquityPetroChina10.
810.
09.
31.
21.
11.
011.
411.
311.
04.
24.
54.
7386HKEquitySinopec8.
87.
97.
21.
10.
90.
912.
612.
712.
83.
94.
75.
1883HKEquityCNOOC8.
38.
48.
11.
71.
51.
322.
318.
817.
22.
63.
33.
6Average9.
38.
88.
21.
31.
21.
115.
414.
313.
73.
64.
24.
5EmergingMarketRILINEquityReliance13.
412.
611.
21.
61.
51.
312.
211.
812.
01.
01.
11.
2ONGCINEquityOil&NaturalGas10.
110.
07.
91.
81.
81.
618.
116.
518.
83.
43.
54.
0OINLINEquityOilIndia7.
87.
66.
51.
41.
31.
218.
417.
718.
14.
45.
15.
7PTTTBEquityPTT8.
38.
47.
71.
41.
31.
217.
816.
415.
84.
14.
14.
4PTTEPTBEquityPTTEP10.
510.
49.
82.
11.
81.
622.
318.
617.
63.
53.
63.
9OGDCPAEquityOil&GasDevelop10.
49.
07.
43.
32.
92.
434.
134.
833.
33.
34.
55.
8PPLPAEquityPakistanPetroleum8.
77.
36.
52.
42.
01.
931.
130.
830.
14.
95.
86.
6Average9.
99.
38.
22.
01.
81.
622.
020.
920.
83.
54.
04.
5Source:BloombergPreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com8SummaryfinancialsYearto31December2011A2012A2013CL2014CL2015CLSummaryP&Lforecast(Rmbm)Revenue2,003,8432,195,2962,112,2762,226,5672,335,551OpEbitda307,214321,991345,025383,046410,407OpEbit182,461174,519199,414226,687242,060Interestincome2,6742,0632,0435,81613,140Interestexpense(10,886)(18,164)(15,895)(21,935)(29,108)Otheritems9,9668,3932,0002,0002,000Profitbeforetax184,215166,811187,562212,567228,092Taxation(38,256)(36,191)(43,139)(48,890)(52,461)Minorities/Prefdivs(12,998)(15,294)(10,791)(12,399)(12,525)Netprofit132,961115,326133,632151,278163,106Summarycashflowforecast(Rmbm)Operatingprofit182,461174,519199,414226,687242,060Operatingadjustments(36,502)(43,899)(54,991)(63,010)(66,429)Depreciation/amortisation124,753147,472145,611156,359168,346Workingcapitalchanges(23,773)(3,617)(2,379)3,2753,123Netinterest/taxes/other43,216(35,187)(4,992)--Netoperatingcashflow290,155239,288282,663323,311347,100Capitalexpenditure(350,600)(352,526)(355,000)(338,700)(323,200)Freecashflow(60,445)(113,238)(72,337)(15,389)23,900Acq/inv/disposalsInt,invt&associatediv66,96220,300---Netinvestingcashflow(283,638)(332,226)(355,000)(338,700)(323,200)IncreaseinloansDividends(30,129)(22,666)(60,763)(36,908)(29,936)Netequityraised/other39,38898,022162,517237,483237,483Netfinancingcashflow9,25975,356101,754200,575207,547Incr/(decr)innetcash15,776(17,582)29,417185,186231,447Exchratemovements(313)(195)000Openingcash45,70961,17243,39572,812257,998Closingcash61,17243,39572,812257,998489,445Summarybalancesheetforecast(Rmbm)Cash&equivalents61,17243,39572,812257,998489,445Debtors53,82274,43171,61675,49179,186Inventories182,253214,117206,020217,167227,797Othercurrentassets85,46482,38982,38982,38982,389Fixedassets1,372,0071,569,8881,779,2771,961,6182,116,471IntangibleassetsOthertermassets162,868184,676115,042115,042115,042Totalassets1,917,5862,168,8962,327,1562,709,7053,110,331Short-termdebt137,698151,247113,764151,247188,730Creditors302,600351,456338,165356,462373,910Othercurrentliabs119,74072,04572,04572,04572,045Long-termdebt/CBs180,675293,774493,774693,774893,774Provisions/otherLTliabs94,327119,62645,00045,00045,000Minorities/otherequity79,801116,738127,529139,928152,453Shareholderfunds1,002,7451,064,0101,136,8791,251,2491,384,419Totalliabs&equity1,917,5862,168,8962,327,1562,709,7053,110,331RatioanalysisRevenuegrowth(%YoY)36.
79.
6(3.
8)5.
44.
9Ebitdagrowth(%YoY)2.
14.
87.
211.
07.
1Ebitdamargin(%)15.
314.
716.
317.
217.
6Netprofitmargin(%)6.
65.
36.
36.
87.
0Dividendpayout(%)45.
045.
045.
045.
045.
0Effectivetaxrate(%)20.
821.
723.
023.
023.
0Ebitda/netintexp(x)37.
420.
024.
923.
825.
7Netdebt/equity(%)23.
834.
042.
342.
238.
6ROE(%)13.
711.
212.
112.
712.
4ROIC(%)11.
29.
29.
19.
49.
2EVA/IC(%)3.
00.
90.
81.
21.
0Source:CLSAPreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com9CompaniesmentionedPetroChina(857HK-HK$8.
91-BUY)RecommendationhistoryofPetroChinaCoLtd857HKDateRecTargetDateRecTarget22Mar2013BUY12.
5026Aug2011BUY14.
0029Jan2013BUY13.
0007Apr2011BUY14.
4030Mar2012BUY13.
4124Mar2011BUY14.
0002Feb2012BUY14.
0022Feb2011BUY14.
3015Sep2011BUY12.
8508Feb2011BUY13.
50Source:CLSA8101214Stockprice(HK$)Jan11May11Sep11Jan12May12Sep12Jan13May13Sep13SimonPowellOtheranalystsNocoverageBUYU-PFN-RO-PFSELLPreparedfor:CITICSRefining-backinblackPetroChina-BUY29October2013simon.
powell@clsa.
com10ResearchsubscriptionsTochangeyourreportdistributionrequirements,pleasecontactyourCLSAsalesrepresentativeoremailusatcib@clsa.
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KeytoCLSA/CATaiwaninvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
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05/08/2013Preparedfor:CITICSJiangxiCopperHK$14.
22-BUYFinancialsYearto31December11A12A13CL14CL15CLRevenue(Rmbm)117,119158,006148,038123,264122,683Revforecastchange(%)--0.
00.
00.
0Netprofit(Rmbm)6,5875,1703,2123,8973,631NPforecastchange(%)--4.
65.
55.
6EPS(fen)190.
2149.
392.
8112.
5104.
9CL/consensus(22)(EPS%)--111120106EPSgrowth(%YoY)23.
7(21.
5)(37.
9)21.
3(6.
8)PE(x)6.
27.
712.
110.
010.
7Dividendyield(%)5.
94.
33.
34.
03.
7ROE(%)17.
912.
67.
48.
67.
6Netdebt/equity(%)(1.
1)(3.
6)(10.
5)(22.
4)(27.
3)Source:CLSAFindCLSAresearchonBloomberg,ThomsonReuters,CapIQandthemarkets.
com-andprofitfromourevalu@torproprietarydatabaseatclsa.
comAndrewDriscoll,CFAandrew.
driscoll@clsa.
com+85226008528DanielMeng+8522600835529October2013ChinaMaterialsReuters0358.
HKBloomberg358HKPricedon29October2013HSCEI@10,390.
612Mhi/loHK$21.
75/12.
0412MpricetargetHK$16.
80±%potential+18%Sharesinissue3,022.
8mFreefloat(est.
)59.
6%MarketcapUS$7,613m3MaveragedailyvolumeHK$432.
4m(US$55.
8m)MajorshareholdersJiangxiCopperCorp.
40.
4%Stockperformance(%)1M3M12MAbsolute(7.
9)4.
4(29.
8)Relative(7.
0)(3.
1)(28.
7)Abs(US$)(7.
9)4.
5(29.
8)0501001501114172023Nov-11May-12Nov-12May-13JiangxiCopper(LHS)ReltoCEI(RHS)(HK$)(%)Source:Bloombergwww.
clsa.
comUpgraderecommendation3Q13bouncesbackThesequentialrecoveryinJiangxiCopper's3Q13earningsaddssomeconfidencetoourforecasts,andsupportsourviewthat2Qwasimpactedbynegativepricingmomentum.
Thestockisdown15%insixweeks,andconsensusEPShasfallenby15%andnowappearconservative.
Valuationsarereasonableat4.
7x14CLEV/Ebitda,andthecompanyisrelativelywellpositionedofferingcopperexposureandastrongbalancesheet.
WeraiseourTPby5%toHK$16.
80,andupgradeourratingfromU-PFtoBUY.
ResultsinanutshellJiangxiCopper's3Q13PRCGAAPearningsincreased1%YoYand356%QoQtoRmb1.
23bn;andaccountedfor68%ofourIFRS2H13CLforecasts.
TheresultincludedanRmb0.
17bninventoryimpairmentwritebackaswellasanRmb0.
34bninvestmentgain(mostlyhedging).
Theseimpactearningsonaquarterlybasis,andshouldbeconsideredpartofrecurringearningsgiventhenatureofJiangxiCopper'sbusiness.
SG&Aexpensesincreased36%YoY,butfell14%QoQ,andonlyaccountedfor42%ofour2H13CLforecasts.
BalancesheetstrongThecompany'scashpilecontinuestoaccumulate:Netcashincreasedby73%QoQtoRmb6.
82bn(US$1.
12bn)underPRCGAAP,andnowaccountsforalmostonefifththemarketcap(Hsharebasis).
Anunclearcapitalallocationstrategyisaninvestmentdeterrent,butweforecastthecompanytopayout40%ofearnings(34%in2012),whichtranslatestoa3.
3%dividendyield.
ConsensusrebasedlowerThestockhasunderperformedtheHSCEIIndexby11%sinceourAugustdowngradeandfallenby15%fromitsrecenthighs,despitecopperpricesbeingsupportedinanarrowrange.
Consensus2014estimateshavefallenbyabout15%overthistime.
Earningsvisibilityremainslow,butthe3Q13resultssuggestthatthereisnowupsidepotentialtotheseforecasts(consensusimpliesa>60%QoQreductionin4Q13earnings).
UpgradetoBUYWedecreaseG&Aexpensesby9-10%,whichresultsina4-5%upgradein13-14CLEPS,anda5%increaseinourblendedtargetpricetoHK$16.
80.
Lowquarterlyearningsvisibilityandanunclearcapitalallocationstrategyremainadragontheinvestmentthesis,butthecompanyisrelativelywellpositionedamongstChineseminers:welikecopperexposure,itsgeneratingcash,thebalancesheetisstrong,weseepotentialforarenewedtaxbreakandsmeltingtermsaresettorise.
WeupgradeourratingfromU-PFtoBUY.
Preparedfor:CITICS3Q13bouncesbackJiangxiCopper-BUY29October2013andrew.
driscoll@clsa.
com2ResultsinanutshellJiangxiCopper's3Q13PRCGAAPearningsincreased1%YoYand356%QoQtoRmb1.
23bn;andaccountedfor68%ofourIFRS2H13CLforecasts.
TheresultincludedanRmb0.
17bninventoryimpairmentwritebackaswellasanRmb0.
34bninvestmentgain(mostlyhedging).
Theseimpactearningsonaquarterlybasis,andshouldbeconsideredpartofrecurringearningsgiventhenatureofJiangxiCopper'sbusiness.
SG&Aexpensesincreased36%YoY,butfell14%QoQ,andonlyaccountedfor42%ofour2H13CLforecasts.
Figure13Q13resultsinanutshellFinancials(GAAP)Unit3Q133Q12AYoY(%)QoQ(%)Revenues(Rmbm)43,96038,03615.
64.
7Costsofsales(Rmbm)(42,276)(36,393)16.
25.
0Grossprofit(Rmbm)1,6841,6432.
5(2.
2)GPmargin(%)3.
84.
3(0.
5)(0.
3)Businesstaxand(Rmbm)(156)(130)20.
1(1.
6)Sellingexpenses(Rmbm)(147)(135)9.
53.
7Administrative(Rmbm)(350)(232)50.
9(19.
2)EBIT(Rmbm)1,0311,146(10.
0)4.
2EBITmargin(%)2.
33.
0(0.
7)(0.
0)Financecosts(Rmbm)(53)24(322.
1)(467.
0)Impairment(Rmbm)17011943.
1(133.
7)Gainsonfairvalue(Rmbm)138(432)(132.
0)(440.
2)Investmentincome(Rmbm)339504(32.
7)(217.
0)EBT(Rmbm)1,6451,37120.
0813.
2EBTmargin(%)3.
73.
60.
13.
3Incometaxexpenses(Rmbm)(323)(146)121.
9(3,724.
2)Effectivetaxrate(%)(%)19.
610.
69.
024.
6Profitfortheperiod(Rmbm)1,3221,2267.
8599.
2Minority(Rmbm)(92)(10)823.
2(214.
0)Attributablenetprofit(Rmbm)1,2301,2161.
1355.
6Netmargin2.
83.
2(0.
4)2.
2Operatingcashflows(RMBm)71558621.
9(44.
6)Capex(RMBm)124210(41.
1)(83.
5)BalancesheetSep-13Jun-13QoQ(%)Netdebt(RMBm)(6,817)(3,951)72.
5-Equity(RMBm)44,71443,3993.
0-Source:Company,CLSAFigure2QuarterlyEBT(PRCGAAP)andtheSHFEcopperpriceSource:Company,CLSA20,00030,00040,00050,00060,00070,00080,00090,000100,00005001,0001,5002,0002,5003,0003,5001Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q13(Rmb/t)(RMBm)EBTSHFEcopper(RHS)KeyoperatingandfinancialresultsHugevolatilityonaquarterlybasisEarningsup3.
6xQoQfromalowbasePreparedfor:CITICS3Q13bouncesbackJiangxiCopper-BUY29October2013andrew.
driscoll@clsa.
com3ConsensusearningsrebasedlowerThestockhasunderperformedtheHSCEIIndexby11%sinceourAugustdowngradeandfallenby15%fromitsrecenthighs,despitecopperpricesbeingsupportedinanarrowrange.
Consensus2014estimateshavefallenbyabout15%overthistime.
Earningsvisibilityremainslow,butthe3Q13resultssuggestthatthereisnowupsidepotentialtotheseforecasts(consensusimpliesa>60%QoQreductionin4Q13earnings).
Figure3ConsensusearningsestimatesSource:Bloomberg,CLSAUpgradetoBUYWedecreaseG&Aexpensesby9-10%,whichresultsina4-5%upgradein13-14CLEPS,anda5%increaseinourblendedtargetpricetoHK$16.
80.
Lowquarterlyearningsvisibilityandanunclearcapitalallocationstrategyremainadragontheinvestmentthesis,butthecompanyisrelativelywellpositionedamongstChineseminers:welikeitscopperexposure,itsgeneratingcash,thebalancesheetisstrong,weseepotentialforarenewedtaxbreakandsmeltingterms(TCRCs)aresettoincreasenextyear.
WeupgradeourratingfromUnderperformtoBUY.
Figure412MforwardPEbandchart(5Y)Source:CLSA01,0002,0003,0004,0005,0006,0007,000Jan-13Mar-13May-13Jul-13Sep-13(Rmbm)ConensusEarnings2013ConensusEarnings2014-1sd8.
1xAvg10.
6x+1sd13.
1x4681012141618Nov08Jun09Jan10Aug10Mar11Oct11May12Dec12Jul13(x)2013Consensusearningsdown~15%fromtheinterimresultsDown15%fromrecenthighsRelativelywellpositionedamongstChineseminersTradingclosetohistoricalaverageonaPEbasis,butasubstantialdiscountonEV/Ebitda(4.
7xvs6.
8x)Preparedfor:CITICS3Q13bouncesbackJiangxiCopper-BUY29October2013andrew.
driscoll@clsa.
com4Figure5JiangxiCopper:operatingparametersMineproductionUnit11A12A13CL14CL15CLCopper(ktonne)202211204205205Gold(tonne)6.
76.
36.
06.
16.
1Silver(tonne)77.
680.
978.
278.
878.
8SmelterproductionCopper(ktonne)9401,0931,1341,1501,150Gold(tonne)25.
425.
425.
826.
126.
1Silver(tonne)526.
0540570.
0570.
0570.
0SalesvolumeCopperCathode(ktonne)1,1842,1161,8771,5001,500CopperWireRods(ktonne)353484901850850Gold(kg)24.
427.
425.
826.
126.
1Silver(kg)522.
2555.
4605.
7570.
0570.
0Sulphuricacid&Conc.
(ktonne)4,1444,5616,6305,0835,083YoYchangesCopperCathode(%)51.
178.
8(11.
3)(20.
1)0.
0CopperWireRods(%)(7.
4)37.
186.
2(5.
7)0.
0Gold(%)10.
812.
6(6.
1)1.
40.
0Silver(%)11.
16.
49.
1(5.
9)0.
0Sulphuricacid&Conc.
(%)(28.
6)1045.
4(23.
3)0.
0AveragesellingpricesLMECopper(US$/lb)4.
013.
613.
323.
303.
30Coppercathode(RMB/t)56,35048,94545,67044,77844,379Copperwirerods(RMB/t)75,48055,85446,91646,27845,879Gold(US$/oz)1,5721,6691,4381,3501,400Gold(Rmb/g)325342285.
2267.
1274.
6Silver(Rmb/g)7.
26.
54.
23.
83.
9Sulphuricacid(RMB/t)563381296242233YoYchangesLMECopper(%)16.
8(9.
9)(7.
9)(0.
7)0.
0Coppercathode(%)11.
5(13.
1)(6.
7)(2.
0)(0.
9)Copperwirerods(%)42.
4(26.
0)(16.
0)(1.
4)(0.
9)GoldUS$(%)28.
26.
2(13.
8)(6.
1)3.
7Gold(%)37.
75.
2(16.
6)(6.
3)2.
8Silver(%)75.
7(9.
7)(35.
1)(9.
3)2.
6Sulphuricacid(%)121.
3(32.
3)(25.
9)(18.
0)(3.
9)UnitcostestimatesMining&conc.
cashcost(RMB/t)30,36434,53434,49135,35736,246Domesticconc.
purchase(RMB/t)51,91146,24742,14441,64441,272Concentrateimports(RMB/t)53,89246,53041,10339,78739,432Smeltingcashcosts(RMB/t)1,4911,1061,1991,5181,5563rdpartycathode(RMB/t)57,39853,32651,25547,15446,733WireRodProcessing(RMB/t)419368346355364YoYchangesMining&conc.
cashcost(%)9.
213.
73.
42.
52.
5Domesticconcentrate(%)11.
3(10.
9)(8.
9)(1.
2)(0.
9)Concentrateimports(%)13.
6(13.
7)(11.
4)(3.
2)(0.
9)Smeltingcashcosts(%)(15.
1)(25.
8)8.
326.
72.
53rdpartycathode(%)(10.
7)(7.
1)(3.
9)(8.
0)(0.
9)WireRodProcessing(%)32.
1(12.
1)(6.
0)2.
62.
5Note,variousparametersareback-calculatedorCLSAestimates.
Source:CLSAFigure6Jiangxi-BlendedvaluationEarningssensitivity,14CL(%)2014CLTarget(x)Value(HK/sh)NPV1.
017.
57PE11.
015.
65EV/Ebitda6.
016.
96Average16.
80Assumption+10%Copperprice20.
9Goldprice5.
7CopperTCRC4.
5Mineproductionvolume5.
6Source:CLSAKeyoperatingassumptionsOurblendedtargetpriceisraisedby5%toHK$16.
80Preparedfor:CITICS3Q13bouncesbackJiangxiCopper-BUY29October2013andrew.
driscoll@clsa.
com5CompanyoutlineThebusinessCompetition&marketfranchiseJiangxiCopperisChina'slargestcopperproducer,andisinvolvedinmining,smelting,anddownstreamprocessing.
ThecompanyoperatesanumberofminesinChina,withtotalproductionofaboutthan210,000tonnesofcopperinconcentrate,whichisabout12%ofthecountry'sproduction.
ItcurrentlyhaslimitedproductiongrowthopportunitiesinChina,buthasaJointventureinterestintwo-earlystagedevelopmentprojectsoffshore.
JiangxiCopper'ssmelters'outputreached940,000tonnesin2011,whichisequalto18%ofthecountry'sproductionin2011.
Italsoproducesgold,silver,andsulphuricacid.
CoppercathodeproducedbyJiangxiCopperisregisteredwiththeLMEandSHFE.
Thecompanyalsohasasubstantialcoppertradingbusiness.
Chinaistheworld'slargestcopperconsumer,with2012consumptionofabout8mtonnes,accountingforaround40%ofglobalconsumption.
Chinaistheworld'ssecondlargestrefinedcopperproducerafterChile.
Its2012refinedcopperoutputroseby10%YoYto5.
7mtonnes,accountingformorethanone-fourthoftheworld'stotalproduction.
InChina,thetopthreeproducers,JiangxiCopper,TonglingnonferrousandJinchuanCopperproduce45%oftotalChinarefinedcopper.
However,withinsufficientcopperreserves,China'sself-minedcopperconcentrateonlyaccountsforaboutone-fifthofitsdemand.
Itisamajorimporterofcopperconcentrate,copperscrapandrefinedcopper.
Domesticcopperprices,liketheShanghaiFuturesExchangequote,closelytrackinternationalcopperprices.
.
StrengthsWeaknessesChina'slargestcopperproducer;itoffersexposuretothecoppermarket.
Large-scaleminingoperationsandby-productcreditscontributetoestimatedlowmineproductioncosts.
Astrongbalancesheetaftersuccessfuldeleveraging;theearningspayoutratiowas37%in2011and33%in2012.
Limitedcopperproductiongrowthwithminesoperatingatcapacity.
Lowearningsvisibilityduetoitsintegratedbusiness,substantialtradingvolumesandpoorsegmentdisclosure.
Thesmeltingandprocessingbusinessisadragonmarginsandreturns.
Anunclearcapitalallocationstrategy.
OpportunitiesThreats(Risks)Opportunitytounlockequityvaluebypresentingacapitalallocationstrategy,includingaspecialdividend.
Likemostminingcompanies,ithasthepotentialtoaddvaluethroughresourcesdevelopment.
ItispursingoffshoredevelopmentopportunitiesinPeruandAfghanistan.
Operatingandenvironmentalmanagementrisksassociatedwithcopperminingandprocessing.
Furtherinvestmentinsmeltingorprocessingwherereturnsarelow.
Copperpricesarecyclicalandmayunderperformourexpectations.
CLSACopperuniverse:Earnings-basedvaluationsCompanyTickerPE(x)EV/Ebitda(x)13CL14CL15CL13CL14CL15CLFreeportMcMoranFCXUS16.
110.
810.
27.
45.
55.
2JiangxiCopper358HK12.
210.
010.
66.
84.
74.
4OzMineralsOZLAU-26.
142.
98.
31.
91.
3PanAustPNAAU12.
29.
28.
45.
23.
93.
3PhilexMiningPXPM22.
016.
421.
98.
13.
83.
6Simpleaverage15.
611.
612.
86.
94.
54.
1Source:CLSAEvalu@torPreparedfor:CITICS3Q13bouncesbackJiangxiCopper-BUY29October2013andrew.
driscoll@clsa.
com6DetailedfinancialsIncomeStatement(Rmbm)12A13CL14CL15CLBalancesheet(Rmbm)12A13CL14CL15CLCoppercathode103,58385,73367,16866,568Cash&equivalents20,31024,46726,47225,407Copperwirerods27,02342,27439,33738,997Accountsreceivable14,15614,08812,57512,586Gold&silver12,9619,8889,1519,402Inventory15,93612,60710,34710,320Sulphuricacid2,2051,8571,2131,251Othercurrentassets2,0532,0532,0532,053Others12,2358,2866,3956,464Totalcurrentassets52,45653,21551,44750,366Totalrevenue158,006148,038123,264122,683NetPP&E19,93420,34219,91519,366Costofgoodssold(150,570)(142,012)(116,553)(116,24Netintangibles8171,4001,3481,295SG&A(1,802)(1,972)(1,897)(1,881)DeferredTaxAssets352317285257Otheroperatingcosts574(198)00Otherlong-termassets4,5294,1804,4794,793EBITDA7,4885,1766,1745,936Totalassets78,08879,45477,47476,076Depreciation&amortization(1,281)(1,320)(1,360)(1,381)Accountspayable7,2936,0694,9814,968EBIT6,2073,8574,8144,555Short-termdebt12,41713,41710,4177,417Interestincome648672637648Othercurrentliabilities7,5277,6418,0678,542Interestexpense(832)(961)(886)(686)Totalcurrentliabilities27,23827,12823,46520,927Others250406355372Long-termdebt6,2996,2995,2994,299Pretaxprofit6,2733,9744,9204,890Otherlong-termliabilities689718749781Incometax(1,026)(795)(984)(1,222)Totalliabilities34,22634,14529,51326,007Minorities(78)34(39)(37)Ordinarysharecapital3,4633,4633,4633,463Corenetincome5,1703,2123,8973,631Othercommonequity39,31240,79343,40545,477Post-taxexceptionals0000Shareholdersfunds42,77544,25646,86848,940Reportednetincome5,1703,2123,8973,631Minorityinterest1,0881,0531,0931,129EPS(basic)(Rmb)1.
490.
931.
131.
05Totalliabilities&equity78,08879,45477,47476,076BVPS(HK$)12.
3512.
7813.
5314.
13Operatingparameters12A13CL14CL15CLCashflow(Rmbm)12A13CL14CL15CLMinecopperproduction(Kt)211204205205OperatingprofitbeforeTax6,2733,9744,9204,890Coppercathodeproduction(Kt)1,0931,1341,1501,150Depreciation&amortization1,2811,3201,3601,381Copperwire&rodsprod(Kt)582810850850Changeinworkingcapital(130)2,4732,999330Goldproduction(tonne)6666TaxPaid(1,225)(925)(818)(1,024)Sulfuricacidproduction(Kt)4,5755,0125,0835,083Others(965)(277)(291)(305)CostassumptionsCashflowfromoperations5,2336,5648,1705,273Minecashcost(Rmb/tonne)34,53434,49135,35736,246Capitalexpenditures(1,789)(1,770)(974)(874)Smeltingcashcost(Rmb/tonne)1,1061,1991,5181,556Acquisitions0000PriceassumptionsDisposals379949494Copperprice(US$/lb)3.
613.
323.
303.
30Others(1,090)000CombinedTCRC(Rmb/tonne)2,2172,3932,8972,871Cashflowfrominvestments(2,500)(1,676)(880)(780)Ratioanalysis(%)12A13CL14CL15CLNewordinaryequity0000Salesgrowth34.
9(6.
3)(16.
7)(0.
5)NetDebtMovement3,3111,000(4,000)(4,000)EBITDAgrowth(13.
4)(30.
9)19.
3(3.
9)Dividendspaid(ord.
&minor)(1,731)(1,731)(1,285)(1,559)Netincomegrowth(21.
5)(37.
9)21.
3(6.
8)Others151000EPSgrowth(21.
5)(37.
9)21.
3(6.
8)Cashflowfromfinancing1,730(731)(5,285)(5,559)Grossmargin4.
74.
15.
45.
2Netcashflow4,4634,1572,005(1,066)EBITDAmargin4.
73.
55.
04.
8Freecashflow2,1074,7947,1964,399Netprofitmargin3.
32.
23.
23.
0Earningssensitivity(+10%Assump.
)14CLROE12.
67.
48.
67.
6Copperprice20.
9ROA7.
14.
15.
04.
7Goldprice5.
7Netdebt/equity(3.
7)(10.
7)(23.
0)(28.
0)InternationalTCRC4.
5DPS(HK$)0.
500.
370.
450.
42Mineproductionvolume5.
6Dividendpayoutratio33.
540.
040.
040.
0Mineproductioncost(16.
9)Source:Company,CLSAPreparedfor:CITICS3Q13bouncesbackJiangxiCopper-BUY29October2013andrew.
driscoll@clsa.
com7SummaryfinancialsYearto31December2011A2012A2013CL2014CL2015CLSummaryP&Lforecast(Rmbm)Revenue117,119158,006148,038123,264122,683OpEbitda8,6517,4885,1766,1745,936OpEbit7,4736,2073,8574,8144,555Interestincome557648672637648Interestexpense(731)(832)(961)(886)(686)Otheritems410250406355372Profitbeforetax7,7096,2733,9744,9204,890Taxation(1,060)(1,026)(795)(984)(1,222)Minorities/Prefdivs(61)(78)34(39)(37)Netprofit6,5875,1703,2123,8973,631Summarycashflowforecast(Rmbm)Operatingprofit7,4736,2073,8574,8144,555OperatingadjustmentsDepreciation/amortisation1,1781,2811,3201,3601,381Workingcapitalchanges205052,4732,999330Netinterest/taxes/other(2,398)(3,254)(1,085)(1,002)(993)Netoperatingcashflow6,2734,7396,5648,1705,273Capitalexpenditure(2,477)(2,154)(1,770)(974)(874)Freecashflow3,7962,5844,7947,1964,399Acq/inv/disposals(633)(2,345)949494Int,invt&associatediv(2,152)2,668---Netinvestingcashflow(5,262)(1,832)(1,676)(880)(780)IncreaseinloansDividends(1,393)(1,741)(1,731)(1,285)(1,559)Netequityraised/other9,9253,2981,000(4,000)(4,000)Netfinancingcashflow8,5321,557(731)(5,285)(5,559)Incr/(decr)innetcash9,5434,4634,1572,005(1,066)Exchratemovements00000Openingcash6,30315,84620,31024,46726,472Closingcash15,84620,31024,46726,47225,407Summarybalancesheetforecast(Rmbm)Cash&equivalents15,84620,31024,46726,47225,407Debtors12,57014,15614,08812,57512,586Inventories14,09715,93612,60710,34710,320Othercurrentassets3,6892,0532,0532,0532,053Fixedassets18,09219,93420,34219,91519,366Intangibleassets1,0541,4521,4001,3481,295Othertermassets2,8024,2464,4974,7645,049Totalassets68,15078,08879,45477,47476,076Short-termdebt9,80912,41713,41710,4177,417Creditors8,81011,64710,6419,78210,009Othercurrentliabs3,4013,1733,0703,2673,501Long-termdebt/CBs5,5966,2996,2995,2994,299Provisions/otherLTliabs727689718749781Minorities/otherequity5031,0881,0531,0931,129Shareholderfunds39,30342,77544,25646,86848,940Totalliabs&equity68,15078,08879,45477,47476,076RatioanalysisRevenuegrowth(%YoY)53.
834.
9(6.
3)(16.
7)(0.
5)Ebitdagrowth(%YoY)17.
3(13.
4)(30.
9)19.
3(3.
9)Ebitdamargin(%)7.
44.
73.
55.
04.
8Netprofitmargin(%)5.
63.
32.
23.
23.
0Dividendpayout(%)36.
833.
540.
040.
040.
0Effectivetaxrate(%)13.
816.
420.
020.
025.
0Ebitda/netintexp(x)49.
740.
717.
924.
8159.
1Netdebt/equity(%)(1.
1)(3.
6)(10.
5)(22.
4)(27.
3)ROE(%)17.
912.
67.
48.
67.
6ROIC(%)17.
313.
37.
910.
710.
1EVA/IC(%)6.
92.
9(2.
5)0.
3(0.
3)Source:CLSAPreparedfor:CITICS3Q13bouncesbackJiangxiCopper-BUY29October2013andrew.
driscoll@clsa.
com8CompaniesmentionedJiangxiCopper(358HK-HK$14.
22-BUY)RecommendationhistoryofJiangxiCopperCoLtd358HKDateRecTargetDateRecTarget18Sep2013U-PF16.
0028Mar2012U-PF19.
5029Aug2013U-PF14.
6031Jan2012U-PF20.
7002Jul2013O-PF14.
6013Dec2011O-PF20.
7002May2013O-PF17.
0026Oct2011O-PF20.
2002Apr2013O-PF19.
0005Oct2011BUY19.
0027Mar2013BUY20.
0026Aug2011O-PF27.
0030Oct2012U-PF20.
0030Mar2011U-PF27.
0030Aug2012U-PF17.
2006Jan2011U-PF25.
0029May2012U-PF18.
80Source:CLSAResearchsubscriptionsTochangeyourreportdistributionrequirements,pleasecontactyourCLSAsalesrepresentativeoremailusatcib@clsa.
com.
Youcanalsofine-tuneyourResearchAlertemailpreferencesathttps://www.
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KeytoCLSA/CATaiwaninvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
Forrelativeperformance,webenchmarkthe12-monthtotalreturn(includingdividends)forthestockagainstthe12-monthforecastreturn(includingdividends)forthelocalmarketwherethestockistraded.
Wedefinestocksweexpecttoprovidereturnsof100%orhigherincludingdividendswithinthreeyearsas"DoubleBaggers".
2013CLSALimited(forresearchcompiledbynon-Taiwananalyst(s))and/orCreditAgricoleSecuritiesTaiwanCo.
,Ltd(forresearchcompiledbyTaiwananalyst(s)).
Note:Intheinterestsoftimeliness,thisdocumenthasnotbeenedited.
Theanalyst/swhocompiledthispublication/communicationherebystate/sandconfirm/sthatthecontentshereoftrulyreflecthis/her/theirviewsandopinionsonthesubjectmatterandthattheanalyst/shas/havenotbeenplacedunderanyundueinfluence,interventionorpressurebyanyperson/sincompilingsuchpublication/communication.
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,Ltd.
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05/08/201315202530Stockprice(HK$)Jan11May11Sep11Jan12May12Sep12Jan13May13Sep13AndrewDriscoll,CFAOtheranalystsNocoverageBUYU-PFN-RO-PFSELLPreparedfor:CITICSCtripUS$55.
74-BUYFinancialsYearto31December11A12A13CL14CL15CLRevenue(Rmbm)3,7264,4095,6437,1838,959Netincome(Rmbm)1,0767148231,0461,375EPS(fen)748.
0521.
7629.
8800.
11,051.
7CL/consensus(17)(EPS%)--114105100EPSgrowth(%YoY)1.
0(30.
3)20.
727.
031.
5PE(x)48.
267.
454.
342.
832.
5Dividendyield(%)0.
00.
00.
00.
00.
0FCFyield(%)3.
22.
32.
43.
04.
2PB(x)7.
47.
45.
74.
73.
9ROE(%)16.
410.
611.
512.
113.
1Netdebt/equity(%)(70.
0)(61.
1)(61.
9)(65.
6)(69.
9)Source:CLSAFindCLSAresearchonBloomberg,ThomsonReuters,CapIQandthemarkets.
com-andprofitfromourevalu@torproprietarydatabaseatclsa.
comElinorLeung,CFAelinor.
leung@clsa.
com+85226008632TerryChen+8522600859829October2013ChinaInternetReutersCTRP.
OBloombergCTRPUSADRCTRP.
OPricedon28October2013HSCEI@10,258.
412Mhi/loUS$59.
92/17.
5812MpricetargetUS$59.
50±%potential+7%Sharesinissue131.
7mFreefloat(est.
)74.
5%MarketcapUS$7,214m3MaveragedailyvolumeUS$129.
0m(US$129.
0m)MajorshareholdersFMR(Fidelity)15.
0%AXAAssurances10.
4%Stockperformance(%)1M3M12MAbsolute(2.
1)54.
8185.
3Relative0.
247.
2190.
6Abs(US$)(2.
1)54.
8185.
3-203080130180122435475870Nov-11May-12Nov-12May-13Ctrip(LHS)ReltoCEI(RHS)(US$)(%)Source:Bloombergwww.
clsa.
comResultspreviewAstrongquarterCtripwillbereporting3Qresultson6Nov.
3Qresultswilllikelybestrongwithoperatingprofitsup33%YoYtoRmb254m.
3Qrevenuescouldsurpriseandincrease30%YoYwithleisuretravelandmobileasnewcatalysts.
Ctripwillaccelerateitsmarketsharegain,benefitingthetourism,eCommerceandsmartphoneseculargrowthinChina.
Itsearningcouldgrow29%CAGRfornextthreeyears.
Valuationisreasonableat40x14CLPE(31x15CLPE).
MaintainBUY.
RevenuescouldbeatguidanceCtrip'srevenuecouldbeatguidanceandgrow30%YoYtoRmb1.
6bnin3Q13,drivenbybetterindustrygrowthandacceleratingmarketsharegainwithnewproducts.
Airpassengergrowthwashigherin3Q13,up11.
2%YoY(vs10.
2%YoYin3Q12).
HotelindustrywasstablewithRevPARup2%YoYinShanghaianddown1%YoYinBeijing.
MobilewillbeanewcatalystCtriphasaccelerateditsmarketsharegainsincethebeginningoftheyearasitsnewleisureproducts(Tujia,Songguo,SmartChoice,Groupbuy)havegainedtraction.
Mobilewillbeanewcatalyst.
Ctrip'snew"CtripTravel5.
0"appisimpressivewithuserfriendlyinterfaceandrichcontentforuserstoplanandbooktheirtrips.
Itprovidesaonestoptravelbookingplatformofhotels,airtickets,traintickets,carrental,packagetoursandentryticketsforpopularattractionsits.
TheapphasalsoincorporatedCtrip'sonlinetravelcommunityplatformwhereuserssharetheirtravelnotesandplans.
Mobilecontributionhasreachedover40%ofCtrip'stransactionsatthepeaklevel.
Ctriphasalsoofferedmorepromotionstoencouragemobilebookings.
ImprovingmarginNon-GAAPoperatingmarginwilllikelyimproveby1pptQoQto25.
6%in3Qgiventhehighoperatingleverageofthebusiness.
Marketingcostisloweronmobileascustomerswillvisititsmobileappdirectly.
R&Dcostswillremainhighin3Qascompanyexpandsitsleisureandmobileproducts.
ButR&Dasapercentageofrevenuescouldstartfallingin2014.
HigherdilutedsharesDilutedEPSmaygrowatslower14%YoYduetoincreaseindilutedsharesfromCBissues(146min2Q13vs150min3Q13and160min4Q13).
TheSept2012CBwillincreasedilutedsharesby~4masshareincreasedfromUS$30toUS$56.
TheOct2013CBwillincreasedilutedsharesby~10m.
Preparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com2Figure1Key3QfinancialforecastRmbm1Q122Q123Q124Q121Q132Q133Q13CL3Q13CLYoY(%)3Q13CLQoQ(%)Hotelroomsold(m)5.
46.
68.
47.
67.
69.
411.
740.
024.
0Commission/room(Rmb)67.
962.
554.
661.
759.
154.
149.
1(10.
0)(9.
1)Airticketsold(m)8.
28.
910.
410.
210.
311.
913.
530.
013.
4Commission/ticket(Rmb)44.
145.
546.
043.
744.
243.
845.
1(2.
0)3.
0Hotelreservation36741045746845151157626.
012.
7Air-ticketing36040447844745752260927.
416.
7Packagedtour16613422416623518732445.
073.
5Others313334293534352.
72.
4Grossrevenues9641,0311,2471,1671,2281,3201,61529.
522.
3YoY(%)18.
416.
320.
018.
327.
528.
129.
5Netrevenue9119741,1731,1011,1611,2451,51829.
422.
0Grossprofit6857328878178569361,13928.
421.
7Grossmargin(%)75.
275.
275.
674.
173.
875.
275.
0(0.
6)(0.
2)EBIT17716819012016019625433.
429.
4YoY(%)(32.
8)(37.
4)(37.
5)(48.
0)(9.
4)16.
633.
4EBITmargin(%)19.
417.
316.
210.
913.
815.
716.
70.
51.
0Netprofit20812019419315321023622.
012.
4YoY(%)(11.
3)(54.
6)(40.
4)(23.
7)(26.
3)75.
822.
0Netmargin(%)22.
912.
316.
517.
513.
216.
915.
6(1.
0)(1.
3)EPS(US$)0.
230.
130.
230.
240.
190.
260.
2927.
212.
4DilutedEPS(US$)0.
220.
130.
220.
220.
170.
230.
2614.
09.
4Source:CLSAFigure2Figure3Airpassengergrowth-MonthlyAirpassengergrowth-QuarterlySource:CLSASource:CLSAPreparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com3Figure4Figure5Hoteloccupancyrate-ShanghaiHoteloccupancyrate–BeijingSource:CLSASource:CLSAFigure6Figure7HotelADR-ShanghaiHotelADR-BeijingSource:CLSASource:CLSAFigure8Figure9HotelRevPAR-ShanghaiHotelRevPAR–BeijingSource:CLSASource:CLSAPreparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com4Figure10Figure11TypecharttitlehereXXXXTypecharttitlehereXXXXSource:CLSASource:CLSAFigure12Figure13Margintrend–QuarterlyMargintrend-AnnualSource:CLSASource:CLSAPreparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com5Figure14Quarterlyprofit&lossRmbm3Q124Q121Q132Q133Q13CL3Q13CLYoY%Hotelreservation45746845151157626.
0Air-ticketing47844745752260927.
4Packagedtour22416623518732445.
0Corporatetravel545851667030.
0Others34293534352.
7Grossrevenues1,2471,1671,2281,3201,61529.
5QoQ(%)Hotelreservation112(4)1313Air-ticketing18(7)21417Packagedtour67(26)42(20)73Corporatetravel106(11)297Others3(16)23(3)2Total21(6)5722%ofgrossrevenueHotelreservation3740373936Air-ticketing3838374038Packagedtour1814191420Corporatetravel45454Others32332Total100100100100100Businesstax(74)(66)(68)(75)(97)30.
3Businesstaxrate(%)6.
05.
65.
55.
76.
0Netrevenue1,1731,1011,1611,2451,51829.
4Costofservices(286)(285)(304)(309)(380)32.
7Grossprofit8878178569361,13928.
4YoY(%)18.
516.
425.
027.
828.
4Grossmargin(%)75.
674.
173.
875.
275.
0(0.
6)Productdevelopment(243)(264)(268)(310)(372)52.
9Salesandmarketing(303)(281)(267)(271)(326)7.
9Generalandadministration(151)(152)(161)(159)(187)23.
6Totalopex(697)(697)(696)(740)(885)27.
0Operatingincome19012016019625433.
4YoY(%)(37.
5)(48.
0)(9.
4)16.
633.
4Operatingmargin(%)16.
210.
913.
815.
716.
70.
5Interestincome5434234330(44.
5)Otherincomes65882424294.
0Pre-taxincome25021219026330822.
9Taxation(59)(54)(61)(70)(89)50.
2Taxrate(%)23.
725.
332.
326.
829.
05.
3Incomeinaffiliates540(5)3naMinorityinterests(2)30242215naNetincome19419315321023622.
0YoY(%)(40.
4)(23.
7)(26.
3)75.
822.
0Netmargin(%)16.
517.
513.
216.
915.
6(1.
0)EPS(US$)0.
230.
240.
190.
260.
2927.
2DilutedEPS(US$)0.
220.
220.
170.
230.
2614.
0%ofnetrevenueProductdevelopment20.
724.
023.
124.
924.
53.
8Salesandmarketing25.
825.
523.
021.
821.
5(4.
3)Generalandadministration12.
913.
813.
912.
712.
3(0.
6)Source:CLSAPreparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com6Figure15Profit&loss(Rmbm)201120122013CL2014CL2015CLHotelreservation1,4871,7032,1212,6923,395Air-ticketing1,4371,6902,1422,6773,213Packagedtour5356909791,3221,745Others106127138151164Totalrevenues3,7264,4095,6437,1838,959YoY(%)Hotelreservation16.
314.
524.
626.
926.
1Air-ticketing19.
117.
626.
725.
020.
0Packagedtour40.
629.
042.
035.
032.
0Corporatetravel24.
623.
631.
030.
030.
0Others47.
719.
89.
09.
09.
0Total21.
518.
328.
027.
324.
7%ofrevenueHotelreservation39.
938.
637.
637.
537.
9Air-ticketing38.
638.
338.
037.
335.
9Packagedtour14.
315.
617.
418.
419.
5Corporatetravel4.
34.
54.
64.
74.
9Others2.
82.
92.
52.
11.
8Total100.
0100.
0100.
0100.
0100.
0Businesstax(228)(250)(339)(431)(538)Businesstaxrate(%)6.
15.
76.
06.
06.
0Netrevenue3,4984,1595,3046,7528,422Costofservices(805)(1,038)(1,353)(1,722)(2,148)Grossprofit2,6933,1213,9525,0306,274YoY(%)19.
415.
926.
627.
324.
7Grossmargin(%)77.
075.
074.
574.
574.
5Productdevelopment(601)(912)(1,273)(1,587)(1,937)Salesandmarketing(625)(984)(1,167)(1,418)(1,726)Generalandadministrative(401)(570)(674)(824)(985)Totaloperatingexpenses(1,627)(2,466)(3,114)(3,828)(4,649)Operatingincome1,0666558381,2021,625YoY(%)1.
1(38.
6)28.
043.
435.
2Operatingmargin(%)30.
515.
715.
817.
819.
3Interestincome106166126220262Otherincome(expense)1181309090100Pre-taxincome1,2909511,0541,5121,988Taxation(262)(295)(306)(438)(576)Effectivetaxrate20.
331.
029.
029.
029.
0Equityincomes58345514Minorityinterests(9)2470170Netincome1,0767148231,0951,425YoY(%)2.
7(33.
6)15.
233.
130.
1Netmargin(%)30.
817.
215.
516.
216.
9EPS(Rmb)7.
485.
226.
308.
3810.
90DilutedEPS(Rmb)7.
084.
955.
636.
838.
89EPS(US$)1.
190.
841.
031.
361.
78DilutedEPS(US$)1.
120.
790.
921.
111.
45Source:CLSAPreparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com7Figure16Balancesheet(Rmbm)201120122013CL2014CL2015CLCash3,5033,4228,70210,11612,060Restrictedcash212768768768768Shortterminvestment1,2881,4091,4091,4091,409Accountreceivable7899841,2551,5971,992Prepaymentsandothers5669991,2741,6222,023Deferredtaxassets4062626262Totalcurrentassets6,3997,64313,47015,57418,315PPE6841,1241,5381,6851,798LTdeposits155211211211211Landuserights113111111111111Investment1,3051,4371,4371,4371,437Goodwill799823823823823Intangibleassets306321321321321Totalassets9,76111,67017,91120,16123,015Accountpayable7631,0241,3261,6201,958Salaryandwelfarepayable146230298364440Taxespayable221216216216216Advancesfromcustomers1,0911,4151,4151,4151,415Provisionforrewardprogram162218218218218Otherpayablesandaccruals186354530734992Totalcurrentliabilities2,5683,9104,4575,0215,692Longtermdebt01,1215,5855,5855,585LTpayables4853535353Totalliabilities2,6165,08510,09510,66011,331Minorityinterests103952588Sharecapital33333Additionalpaid-incapital3,4663,8184,2964,9035,661Statutoryreserves98103103103103Cumulativeadjustments(172)(59)(59)(59)(59)Retainedearnings3,8074,5165,3396,4347,860Treasurystock(159)(1,892)(1,892)(1,892)(1,892)Totalshareholders'equity7,0426,4907,7909,49311,676Totalliabilities&equity9,76111,67017,91120,16123,015Source:CLSAFigure17Cashflowstatement(Rmbm)201120122013CL2014CL2015CLNetprofit1,0767148231,0951,425Depreciation105144207259308Sharebasedcompensation343432477608758Changeinworkingcapital3915340(126)(125)Others(64)(169)(70)(17)0Operatingcashflow1,8511,6541,4381,8192,366Capex(205)(543)(371)(405)(421)Others(135)(697)(250)00Investingcashflow(340)(1,240)(621)(405)(421)Issuance(repurchase)ofshares(104)(1,651)000Financingcashflow(115)(516)4,46400Netchangeincash1,397(101)5,2801,4141,945Cash,beginningofyear2,1543,5033,4228,70210,116Exchangelosses(47)19000Cash,endofyear3,5033,4228,70210,11612,060Source:CLSAPreparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com8Clickheretoentertext.
CompaniesmentionedCtrip(CTRPUS-US$55.
74-BUY)RecommendationhistoryofCtrip.
comInternationalLtdCTRPUSDateRecTargetDateRecTarget16Sep2013BUY59.
5014Jun2012U-PF19.
0013Aug2013BUY52.
0014May2012U-PF22.
0001Aug2013BUY50.
0005Jan2012U-PF27.
5009May2013BUY31.
0015Nov2011U-PF40.
0024Apr2013O-PF25.
0027Oct2011U-PF42.
0004Feb2013O-PF22.
3017May2011U-PF52.
0006Nov2012O-PF24.
0009Feb2011BUY52.
0004Oct2012U-PF18.
0001Feb2011DroppedCoverage25Jul2012U-PF17.
0003Nov2010BUY65.
00Source:CLSA203040506070Stockprice(US$)Jan11May11Sep11Jan12May12Sep12Jan13May13Sep13ElinorLeung,CFAOtheranalystsNocoverageBUYU-PFN-RO-PFSELLPreparedfor:CITICSAstrongquarterCtrip-BUY29October2013elinor.
leung@clsa.
com9ResearchsubscriptionsTochangeyourreportdistributionrequirements,pleasecontactyourCLSAsalesrepresentativeoremailusatcib@clsa.
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Youcanalsofine-tuneyourResearchAlertemailpreferencesathttps://www.
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KeytoCLSA/CATaiwaninvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
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Wedefinestocksweexpecttoprovidereturnsof100%orhigherincludingdividendswithinthreeyearsas"DoubleBaggers".
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05/08/2013Preparedfor:CITICSConchHK$26.
50-OUTPERFORMFinancialsYearto31December11A12A13CL14CL15CLRevenue(Rmbm)48,65445,76652,07155,47858,607Revforecastchange1.
7)(0.
6)(0.
5)Netprofit(Rmbm)11,5866,3318,2879,6039,835NPforecastchange(%)--5.
76.
34.
8EPS(fen)218.
6119.
5156.
4181.
2185.
6CL/consensus(30)(EPS%)--999889EPSgrowth(%YoY)88.
1(45.
4)30.
915.
92.
4PE(x)10.
118.
013.
411.
611.
3Dividendyield(%)1.
61.
21.
61.
81.
8ROE(%)29.
313.
616.
016.
314.
8Netdebt/equity(%)32.
631.
622.
611.
4(0.
5)Source:CLSAFindCLSAresearchonBloomberg,ThomsonReuters,CapIQandthemarkets.
com-andprofitfromourevalu@torproprietarydatabaseatclsa.
comDanielMengdaniel.
meng@clsa.
com+85226008355AndrewDriscoll,CFA+8522600852829October2013ChinaMaterialsReuters0914.
HKBloomberg914HKPricedon29October2013HSCEI@10,390.
612Mhi/loHK$30.
95/19.
5212MpricetargetHK$31.
00±%potential+17%Sharesinissue5,299.
3mFreefloat(est.
)25.
0%MarketcapUS$14,413m3MaveragedailyvolumeHK$290.
6m(US$37.
5m)MajorshareholdersConchHoldings36.
0%Stockperformance(%)1M3M12MAbsolute4.
115.
02.
1Relative5.
26.
73.
6Abs(US$)4.
115.
02.
10501001501620242832Nov11May12Nov12May13Conch(LHS)ReltoCEI(RHS)(HK$)(%)Source:Bloombergwww.
clsa.
comResultsreviewSolid3Q13oncostsConchreportedastrong3Q13,withearningsaheadofourexpectationonasurprisinglylargedecreaseinproductioncosts.
Wewereunabletofullyreconcilethecostreduction,butarecomfortableraisingearningsby6%in13-14CL.
Conchremainsourpreferredcementplay,boastinglow-costoperations,exposuretostrongpricinginEastChina(whereweexpecttocontinuetooutperformin4Q)andahealthybalancesheet.
WemaintainourOutperformrating,witharevisedtargetpriceofHK$31.
00.
3QbeatoncostConch'snetprofitincreasedby11%QoQand128%YoYtoRmb2.
32bn,whichwasalsoabout20%betterthanourexpectationandwebelieve10%aheadofconsensusforecasts.
The3Q13netprofitaccountedfor48%ofour2H13CLforecast,and44%of2H13CLconsensus.
Wenotethatpricingseasonallymeansthat3Qtypicallyaccountsfor35-40%of2Hearnings.
CostsfallsequentiallyManagementindicatedthatthecementandclinkeraverageproductioncostsdecreasedsequentiallythrough3Q13:Rmb154/tinJuly,Rmb151/tinAugust,andRmb148/tinSeptember(coalpricefelltoRmb520/tatend-September).
Managementdidn'tprovideaclearexplanationforthelowercosts,otherthanthereductionincoalpurchasedprice,whichweestimateaccountsforonlyonefifthoftheRmb12/tQoQdecreaseinthereportedcementcosts.
CementpriceoutperformingThecementpriceinEastChinahasbeenstrongerthanexpectationsincethesummer,andnowthepricesarealreadyRmb10-30/t(3-10%)higherthanthepeaklevelsof4Q12.
NovemberisanotherastrongmonthbyseasonalityforcementmarketinEastChina,andwebelievethatthecementpriceinthisregionwillcontinueperformingbetterthannormalseasonaltrend.
OutperformmaintainedWeraiseearningsby6%in13-14CLonalowerunitproductioncostforecast(weestimatethathalfofthe3Q13costdecreaseissustainable).
ConchremainsourpreferredChinesecementplay,withitslowoperatingcost,strongbalancesheet,andexposuretoourfavouredEastChinaregion.
WemaintainourOutperformratingwitharevisedtargetpriceofHK$31.
00.
Preparedfor:CITICSSolid3Q13oncostsConch-O-PF29October2013daniel.
meng@clsa.
com2ResultsinanutshellqConchreportedstrong3Q13results,withearnings~20%betterthanourexpectation,andlikely~10%betterthanconsensusexpectation,thankstoamuchbetterthanexpectedcostreduction.
qOperatingbeat.
Grossprofitincreasedby7%QoQand66%YoYtoRmb4.
38bn,whichwasabout20%betterthanourexpectation(48%ofour2H13CLforecast).
Netprofitincreasedby11%QoQand128%YoYtoRmb2.
32bn,whichwasalsoabout20%betterthanourexpectation,and10%betterthanconsensusexpectation.
The3Q13netprofitaccountedfor48%ofour2H13CLforecast,and44%of2H13CLconsensus(normally3Qaccountsfor35-40%of2Hearnings).
qCostdropped.
Underanassumptionof59Mtsalesin3Q13(up4%QoQ,10%YoY),theASPin3Q13wouldbelowerby5%QoQtoRmb234/t,whichwasRmb2/tbelowourexpectationatRmb236/t;theunitCOGS(GAAP)decreasedby9%QoQtoRmb150/t,whichwasmuchlower(Rmb12/t)thanourexpectationatRmb162/t(-1%QoQ).
Asaresult,theGP/twasupbyRmb1/tQoQtoRmb74/t,whilewewereexpectingRmb66/t.
UnitSG&AwasstableQoQatRmb20.
5/t,whilewewereexpectingasmallincreaseduetoabiggerportionofcementsales.
qSolidbalancesheet.
Netdebtdecreasedby11%over3Q13,toRmb12.
78bn,whilenetgearingratiofell4.
2pptovertheperiodto23.
4%atendofSep2013.
qStrongcashflows.
Operatingcashinflowwaslowerby1%QoQ(up118%YoY)toRmb3.
76bn,whilecapexandacquisitioncashoutflowsincreasedby10%QoQ(up331%YoY)toRmb2.
20bn.
Figure13Q13resultssnapshotOperations(unit)3Q13A2Q13AQoQ(%)YoY(%)Salesvolume(mtonnes)59573.
510.
5Averagesellingprice(Rmb/t)224236(5.
3)4.
0UnitCOGS(Rmb/t)(149)(163)(8.
6)(9.
3)Unitgrossprofit(Rmb/t)74731.
947.
9Unitsellingexpenses(Rmb/t)(11)(11)(2.
1)0.
1UnitG&Aexpenses(Rmb/t)(9)(9)2.
2(3.
3)UnitEBT(Rmb/t)554912.
4110.
8UnitNP(Rmb/t)39377.
5106.
7IncomestatementRevenue(RMBm)13,42113,681(1.
9)14.
8Operatingcost(RMBm)(8,970)(9,496)(5.
5)(0.
3)Businesstax(RMBm)(70)(73)(3.
7)22.
3Grossprofit(RMBm)4,3804,1126.
566.
4Sellingexpenses(RMBm)(663)(655)1.
310.
6G&Aexpenses(RMBm)(545)(516)5.
76.
8EBIT(RMBm)3,1722,9427.
8108.
4Financialexpenses(RMBm)(206)(258)(20.
1)(23.
5)Non-operatingincome(RMBm)2592580.
563.
5EBT(RMBm)3,2322,77716.
4132.
9Incometax(RMBm)(761)(608)25.
1120.
7NPAT(RMBm)2,4712,16913.
9136.
9Minority(RMBm)(147)(82)80.
5482.
1Netprofit(RMBm)2,3242,08811.
3128.
4CashflowsOperatingcashinflow(RMBm)3,7633,793(0.
8)118.
1Capex&acquistions(RMBm)(2,195)(1,987)10.
5331.
4BalancesheetSep13Jun13QoQ(%)Netdebt(RMBm)12,77714,405(11.
3)-Equity(RMBm)54,54152,1554.
6-Netgearing(%)23.
427.
6(4.
2)-Source:CLSAEarnings10%betterthanconsensusexpectation,on9%costreductionKeyoperatingandfinancialdataPreparedfor:CITICSSolid3Q13oncostsConch-O-PF29October2013daniel.
meng@clsa.
com3CostbeenfallingsequentiallyManagementindicatedthatthecementandclinkeraverageproductioncostsdecreasedsequentiallythrough3Q13:Rmb154/tinJuly,Rmb151/tinAugust,andRmb148/tinSeptember(coalpricefelltoRmb520/tatend-September).
Managementdidn'tprovideaclearexplanationforthelowercosts,otherthanthereductionincoalpurchasedprice,whichwasdownRmb22/t(4%)QoQtoRmb537/tin3Q13.
WenotethatanRmb22/tdecreaseincoalpricewouldleadtoa~Rmb2.
6/tdecreasedcementcostreduction(1.
00tofcement&clinkeronaverageconsumes0.
12tcoal),whichaccountsforonlyonefifthoftheRmb12/tQoQdecreaseinthereportedcementcosts.
Figure2Conch'scementproductioncostandcoalpriceSource:Company,CCTD,CLSACementpriceoutperformingThecementpriceinEastChinahasbeenstrongerthanexpectationsincethesummer,andnowthepricesarealreadyRmb10-30/t(3-10%)higherthanthepeaklevelsof4Q12.
NovemberisanotherastrongmonthbyseasonalityforcementmarketinEastChina,andwebelievethatthecementpriceinthisregionwillcontinueperformingbetterthannormalseasonaltrend.
Figure3Figure4CementpriceinEastChinaCoalprice(QHDbenchmark)EastChina:Jiangsu,Zhejiang,Anhui,Shanghai.
Source:CLSASource:CLSA4005006007008009001,0001401501601701801902001Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q13(Rmb/t)(Rmb/t)Conchcementcost(RHS)Coalprice(QHDindex)260280300320340360380400420JanFebMarAprMayJunJulAugSepOctNovDec(Rmb/t)2009201020122013500550600650700750800850900JanFebMarAprMayJunJulAugSepOctNovDec(Rmb/t)20092010201120122013Costhasbeenfallingsequentiallyin3Q13Costdecreasedmorethancoalpricesuggestedin3Q13CementpriceintheEasthasbeenstrongerthanexpectationsincethesummerCementpricesnowhigherthanpeaksin4Q12Preparedfor:CITICSSolid3Q13oncostsConch-O-PF29October2013daniel.
meng@clsa.
com4OutperformmaintainedWeraiseearningsby6%in13-14CLonalowerunitproductioncostforecast(weestimatethathalfofthe3Q13costdecreaseissustainable).
ConchremainsourpreferredChinesecementplay,withitslowoperatingcost,strongbalancesheet,andexposuretoourfavouredEastChinaregion.
WemaintainourOutperformratingwitharevisedtargetpriceofHK$31.
00.
Figure5Targetprice-BlendedmatrixEarningssensitivity,14CL(%)2014CLTarget(x)Value(HK/sh)PE13.
530.
94EV/Ebitda8.
031.
05Average131.
00Assumption+10%Cementprice45Coalprice(13)Clinkerproductioncost(24)Clinkerproductionvolume131Theaverageisrounded.
Source:CLSAFigure6Keychanges2013CL(unit)NewOldChange(%)Averagesellingprice(Rmb/t)231234(1.
6)UnitCOGS(Rmb/t)158164(3.
7)Unitgrossprofit(Rmb/t)73713.
4Ebitda(RMBm)15,50314,8584.
3Netprofit(RMBm)8,2877,8425.
72014CL(unit)NewOldChange(%)Averagesellingprice(Rmb/t)233239(2.
5)UnitCOGS(Rmb/t)157165(4.
8)Unitgrossprofit(Rmb/t)76742.
6Ebitda(RMBm)17,25716,3245.
7Netprofit(RMBm)9,6019,0366.
3Source:CLSAFigure7Chinacement:Earnings-basedvaluationsCompanyTickerPE(x)EV/Ebitda(x)13CL14CL15CL13CL14CL15CLAnhuiConch914HK13.
511.
611.
27.
96.
96.
4CNBM3323HK5.
85.
45.
27.
57.
16.
8CRCement1313HK12.
510.
49.
79.
07.
66.
6Shanshui691HK6.
26.
15.
15.
85.
54.
8Sinoma1893HK9.
87.
98.
03.
93.
83.
4Source:CLSAFigure8CLSAEPSandconsensusCompanyEPS(Rmb)CL/Consensus13CL14CL15CL13CL14CL15CLConch1.
561.
811.
86999889CNBM0.
991.
071.
101009389CRCement0.
420.
500.
54949793Shanshui0.
360.
360.
44979194Sinoma0.
130.
160.
169710192Source:IBES,CLSAConch'svaluationsremainattractiveEarningsupgradecycleforConchLowercostassumptions,higherearningsforecastTargetpriceisraised3%highertoHK$31.
00ConchisourpreferredChinesecementplayPreparedfor:CITICSSolid3Q13oncostsConch-O-PF29October2013daniel.
meng@clsa.
com5CompanyoutlineThebusinessCompetition&marketfranchiseAnhuiConchisalonghistorycementindustryleaderwith150mtpaclinkercapacityatendof2012,whichranksNo.
2behindCNBM.
Thecompanyisapurecementplay,withclinkerandcementasitsfinalproducts.
AnhuiConch'smajormarketisinEastChina(Jiangsu,Zhejiang,AnhuiandShanghai),where50%ofitscapacitylocated.
TheremaindercapacitiesarelocatedinGuangdongandGuangxi(17%ofitstotalcapacity),CentralChina(12%capacity),andWestChina(21%capacity).
AnhuiConchconductsexpansionbybuildingnewcapacitiesratherthanbyacquisitions,thusitbringsthestableandlowcostoperationstoitsnewcapacity.
Thecompanyisastateownedcompany,withAnhuiprovincialgovernmentasitsmajorshareholder.
AnhuiConchhasmoststableearningstrackrecordandlowestcostamongthepeers.
Itconductsexpansionbybuildingnewcapacitiesratherthanbyacquisitions,thusitbringsthestableandlowcostoperationstoitsnewcapacity.
50%ofitscapacitylocatedinEastChina,andithas30%marketsharesintheregion,wherecementcapacitygrowthisslowingdown,andtherearegreatpotentialsforsuccessfulcooperatedproductioncontrol.
Thecompanyhasstrongbalancesheet,withnetdebttoequityratioonlyat31%(Dec-2012balance),comparedwithmanypeerswhichhavetheratiosmostlyabove80%,orevenabove200%.
StrengthsWeaknessesLowproductioncostStrongbalancesheetThecheapriver-bornetransportationinEastChinabringsmorecompetitionOpportunitiesThreats(Risks)50%capacitylocatedinEastChinawithhealthyeconomyandlowcapacitygrowthIfpricesincreasetoohighinEastChina,theregioncouldfacecompetitionfromotherregionsPreparedfor:CITICSSolid3Q13oncostsConch-O-PF29October2013daniel.
meng@clsa.
com6DetailedfinancialsIncomeStatement(Rmbm)12A13CL14CL15CLBalancesheet(Rmbm)12A13CL14CL15CLRevenue45,76652,07155,47858,607Cash&equivalents8,1118,1137,6759,476COGS(33,265)(35,912)(37,768)(40,341)Accountsreceivable11,14613,75214,47215,132Grossprofit12,50216,15917,71118,266Inventory4,0394,5434,7785,104Sellingexpenses(2,280)(2,611)(2,642)(2,753)Othercurrentassets326326326326G&Aexpenses(2,178)(2,512)(2,655)(2,768)Totalcurrentassets23,62226,73527,25130,038Taxrefundandgrants1,0318931,1261,079NetPP&E52,60754,40656,29956,208EBITDA12,35115,50317,25717,617Netintangibles2,1142,3272,5162,680Depreciation&amortization(3,276)(3,574)(3,717)(3,793)DeferredTaxAssets3,2973,2973,2973,297EBIT9,07511,92913,54013,824Otherlong-termassets5,8845,8415,8415,841Netinterestexpenses(999)(953)(730)(443)Totalassets87,52492,60695,20498,065Others50600Accountspayable11,11112,17912,79813,550Pretaxprofit8,12610,98212,80913,381Short-termdebt2,7132,6582,6582,658Incometax(1,639)(2,526)(3,010)(3,345)Othercurrentliabilities6981,0441,2331,364Minorities(156)(169)(196)(201)Totalcurrentliabilities14,52115,88216,69017,573Reportednetincome6,3318,2879,6039,835Long-termdebt21,08018,08012,0806,080Post-taxexceptionalsOtherlong-termliabilities1,1191,1191,1191,119Recurringnetincome6,3318,2879,6039,835Totalliabilities36,72035,08129,88924,772EPS1.
191.
561.
811.
86Ordinarysharecapital5,2995,2995,2995,299Operatingparameters12A13CL14CL15CLOthercommonequity43,23849,79157,38565,162Volumes(mtonnes)Shareholdersfunds48,53855,09162,68470,461Clinkercapacity184194205211Minorityinterest2,2662,4352,6312,831Clinkerproduction154183193201Totalliabilities&equity87,52492,60695,20498,065Clinkerutilisationrate89%97%97%97%BVPS(HK$)9.
1610.
4011.
8313.
30Sales(clinker+cement)187222235245Cashflow(Rmbm)12A13CL14CL15CLMarginanalysis(Rmb/t)OperatingprofitbeforeTax8,12610,98212,80913,381ASP241231233236Depreciation&amortization3,3943,5743,7173,793UnitCOGS174158157161Changeinworkingcapital1,830(2,043)(335)(234)Unitgrossprofit67737675TaxPaid(2,773)(2,526)(3,010)(3,345)Unitsellingexpenses12121111Others(69)4200UnitG&Aexpenses12111111Cashflowfromoperations10,50710,03013,18113,595UnitEBT43495555Capitalexpenditures(6,157)(5,494)(5,730)(3,629)GrowthYoY(%)Acquisitions(600)000Sales12.
418.
65.
74.
2Disposals27200200200ASP(21.
0)(4.
2)0.
91.
4Others(1,910)(355)(355)(355)UnitCOGS(4.
3)(9.
2)(0.
4)2.
6Cashflowfrominvestments(8,640)(5,649)(5,885)(3,785)Ratioanalysis(%)12A13CL14CL15CLNewordinaryequity0000Salesgrowth(5.
9)13.
86.
55.
6NetDebtMovement1,301(3,054)(6,000)(6,000)EBITDAgrowth(34.
1)25.
511.
32.
1Dividendspaid(1,926)(1,325)(1,734)(2,010)Netincomegrowth(45.
4)30.
915.
92.
4Others(878)000EPSgrowth(45.
4)30.
915.
92.
4Cashflowfromfinancing(1,503)(4,379)(7,734)(8,010)Grossmargin27.
331.
031.
931.
2Netcashflow3642(438)1,801EBITDAmargin27.
029.
831.
130.
1Freecashflow4,3504,5367,4519,966Netprofitmargin13.
815.
917.
316.
8Earningssensitivity(to+10%assump.
)14CLROE13.
616.
016.
314.
8Cementandclinkerprice45ROA7.
49.
210.
210.
2Coalprice(13)Netdebt/equity30.
921.
910.
8(1.
0)Clinkerproductioncost(24)DPS(Rmb/shr)0.
250.
330.
380.
39Clinkerproductionvolume13Dividendpayoutratio20.
920.
920.
920.
9Source:CLSAAsia-PacificMarketsPreparedfor:CITICSSolid3Q13oncostsConch-O-PF29October2013daniel.
meng@clsa.
com7SummaryfinancialsYearto31December2011A2012A2013CL2014CL2015CLSummaryP&Lforecast(Rmbm)Revenue48,65445,76652,07155,47858,607OpEbitda18,67712,46815,50317,25717,617OpEbit16,1689,07511,92913,54013,824Interestincome228138141141133Interestexpense(875)(1,137)(1,094)(871)(577)Otheritems1785060-Profitbeforetax15,6998,12610,98212,80913,381Taxation(3,880)(1,639)(2,526)(3,010)(3,345)Minorities/Prefdivs(233)(156)(169)(196)(201)Netprofit11,5866,3318,2879,6039,835Summarycashflowforecast(Rmbm)Operatingprofit16,1689,07511,92913,54013,824Operatingadjustments(469)(949)(947)(730)(443)Depreciation/amortisation2,5093,3943,5743,7173,793Workingcapitalchanges(4,974)1,830(2,043)(335)(234)Netinterest/taxes/other(3,315)(2,842)(2,483)(3,010)(3,345)Netoperatingcashflow9,92010,50710,03013,18113,595Capitalexpenditure(7,615)(6,157)(5,494)(5,730)(3,629)Freecashflow2,3054,3504,5367,4519,966Acq/inv/disposals(1,795)(3,350)(155)(155)(155)Int,invt&associatediv(951)867---Netinvestingcashflow(10,361)(8,640)(5,649)(5,885)(3,785)Increaseinloans8,3351,301(3,054)(6,000)(6,000)Dividends(1,060)(1,855)(1,325)(1,734)(2,010)Netequityraised/other(1,776)(949)0-0Netfinancingcashflow5,499(1,503)(4,379)(7,734)(8,010)Incr/(decr)innetcash5,0583642(438)1,801Exchratemovements00000Openingcash2,6897,7478,1118,1137,675Closingcash7,7478,1118,1137,6759,476Summarybalancesheetforecast(Rmbm)Cash&equivalents7,7478,1118,1137,6759,476Debtors13,72711,14613,75214,47215,132Inventories4,3784,0394,5434,7785,104Othercurrentassets367326326326326Fixedassets48,80452,60754,40656,29956,208Intangibleassets1,8762,1142,3272,5162,680Othertermassets7,1039,1819,1399,1399,139Totalassets84,00387,52492,60695,20498,065Short-termdebt3,2522,7132,6582,6582,658Creditors12,05611,11112,17912,79813,550Othercurrentliabs1,6836981,0441,2331,364Long-termdebt/CBs19,64421,43518,43512,4356,435Provisions/otherLTliabs919765765765765Minorities/otherequity1,9922,2662,4352,6312,831Shareholderfunds44,45748,53855,09162,68470,461Totalliabs&equity84,00387,52492,60695,20498,065RatioanalysisRevenuegrowth(%YoY)41.
0(5.
9)13.
86.
55.
6Ebitdagrowth(%YoY)76.
6(33.
2)24.
311.
32.
1Ebitdamargin(%)38.
427.
229.
831.
130.
1Netprofitmargin(%)23.
813.
815.
917.
316.
8Dividendpayout(%)16.
020.
920.
920.
920.
9Effectivetaxrate(%)24.
720.
223.
023.
525.
0Ebitda/netintexp(x)28.
912.
516.
323.
639.
8Netdebt/equity(%)32.
631.
622.
611.
4(0.
5)ROE(%)29.
313.
616.
016.
314.
8ROIC(%)23.
912.
014.
315.
515.
2EVA/IC(%)15.
23.
25.
66.
76.
5Source:CLSAPreparedfor:CITICSSolid3Q13oncostsConch-O-PF29October2013daniel.
meng@clsa.
com8CompaniesmentionedConch(914HK-HK$26.
50-OUTPERFORM)CNBM(3323HK-HK$7.
29-SELL)CRCement(1313HK-HK$5.
26-OUTPERFORM)ShanshuiCement(691HK-HK$2.
81-UNDERPERFORM)Sinoma(1893HK-HK$1.
63-OUTPERFORM)RecommendationhistoryofAnhuiConchCementCoLtd914HKDateRecTargetDateRecTarget16Aug2013O-PF30.
0025Oct2012O-PF28.
3014Jul2013O-PF26.
0016Oct2012O-PF28.
8031May2013U-PF26.
0015Aug2012O-PF23.
7026Mar2013U-PF27.
5021Jun2012O-PF26.
5005Mar2013O-PF33.
0029Mar2012BUY34.
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05/08/20132030405060Stockprice(HK$)Jan11May11Sep11Jan12May12Sep12Jan13May13Sep13DanielMengOtheranalystsNocoverageBUYU-PFN-RO-PFSELLPreparedfor:CITICSChinaShippingDevHK$4.
34-BUYFinancialsYearto31December11A12A13CL14CL15CLRevenue(Rmbm)12,17311,09011,10612,01613,067Netprofit(Rmbm)1,06274(1,508)(693)485EPS(Rmb)0.
310.
02(0.
44)(0.
20)0.
14EPSgrowth(%YoY)(38.
1)(93.
1)(2,145.
4)nmnmPE(x)11.
5163.
0nmnm24.
1CL/consensus(18)(NP%)--130(594)73Dividendyield(%)2.
80.
00.
00.
01.
2FCFyield(%)(62.
0)(48.
7)(49.
6)(36.
0)(10.
6)PB(x)0.
50.
50.
50.
60.
5ROE(%)4.
60.
3(6.
6)(3.
2)2.
3Netdebt/equity(%)86.
5111.
7143.
8166.
0166.
7Source:CLSAFindCLSAresearchonBloomberg,ThomsonReuters,CapIQandthemarkets.
com-andprofitfromourevalu@torproprietarydatabaseatclsa.
comNathanSnydernathan.
snyder@clsa.
com+85226008141PaulWan+8522600805829October2013ChinaTransportReuters1138.
HKBloomberg1138HKPricedon29October2013HSCEI@10,390.
612Mhi/loHK$5.
13/2.
9912MpricetargetHK$5.
00±%potential+15%Sharesinissue3,404.
6mFreefloat(est.
)53.
6%MarketcapUS$2,201m3MaveragedailyvolumeHK$173.
5m(US$22.
4m)MajorshareholdersChinaShippingGroup46.
4%Stockperformance(%)1M3M12MAbsolute6.
125.
815.
4Relative7.
216.
717.
2Abs(US$)6.
125.
915.
40501001502.
43.
44.
35.
36.
2Nov11May12Nov12May13ChinaShippingDev(LHS)ReltoCEI(RHS)(HK$)(%)Source:Bloombergwww.
clsa.
comResultsreviewRisingwiththetideCSDreleasedaverysolidsetof3Qresults,withnetprofitlossnearlyhalvingQoQ,a12%QoQrevenueincrease,positivegrossmarginforthesecondquartersince2011,andprofitableJCEsforthefirsttimethisyear.
Wecontinuetoanticipate4QresultstobeafurtherimprovementwithupsiderisktoourearningsgivenimprovedcoastalcoalfreightratesandimprovinginternationalVLCCtankerrates.
WemaintainCSDasourtoppickshippingpickforarecoveryindrybulkshipping.
Buy;HK$5target.
ResultsinanutshellCSD3Qresultswerestrongandlargelyin-linewithourexpectations,withrevenuecomprising50%of2H13CLforecastandattributableprofitcomprising44%ofoursecondhalfforecast.
Theresultsshouldimplyaslightbeattoconsensus,andweseethepotentialforanearningsupgradecycle.
ResultdetailsRevenueincreased12%QoQwithgrossprofitofRmb93mturning-aroundQoQandYoY,andoperatingprofitlossofRmb26mcomparedtoalossofRmb132min2Q13andlossofRmb59mayearago.
Importantly,thejointlycontrolledentitiesreportedaprofitofRmb33maftersurprise1H13lossesandwewouldanticipatecoal-carryingJCEshavethepotentialtosurpriseontheupsidein4Q13.
Interestexpenseswerein-linewithnetgearingrisingto131%from126%at1H13,andtaxescontinuetorunbelowourexpectationatonly3.
8%effectiveratein3Q13vs5%inFY13.
PositivemomentumAswehighlightedlastweek,Chinesedomesticcoalshippingrateshavesurged,withtheQinhuangdaotoGuangzhoubenchmarkraterisingfromRmb38/tin3QtocurrentRmb66/t.
WeestimatebreakevenaroundRmb43/tandnote80%ofvolumesareindexedtospot,withthefirmrealizingnearlyRmb40/tinSeptember.
Additionally,internationaltankerrateshavebeentickingupsincelateAugustandtendtobeseasonallystrongintoyearend.
ValuationsattractiveWevalueCSDatHK$5/shrbasedonanequalblendofpricetobookandreplacementvalueNAV.
Ourpricetobookmultipleof0.
7xPBimpliesHK$5.
7/shrwhileourNAVimpliesHK$5.
4/shrtowhichwetakea20%discountin-linewiththehistoricalaverage.
Weseeupsiderisktoourearningsandreturningconfidenceinthesectorsuggestspotentialformultiplererating.
CSDisourtopregionaldrybulkshippingpick.
Preparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
snyder@clsa.
com2ResultsinanutshellCSD3Qresultswerestrongandlargelyin-linewithourexpectations,withrevenuecomprising50%of2H13CLforecastandattributableprofitcomprising44%ofoursecondhalfforecast.
Theresultsshouldimplyaslightbeattoconsensus,andweseethepotentialforanearningsupgradecycle.
Revenueincreased12%QoQwithgrossprofitofRmb93mturning-aroundQoQandYoY,andoperatingprofitlossofRmb26mcomparedtoalossofRmb132min2Q13andlossofRmb59mayearago.
Importantly,thejointlycontrolledentitiesreportedaprofitofRmb33maftersurprise1H13lossesandwewouldanticipatecoal-carryingJCEshavethepotentialtosurpriseontheupsidein4Q13.
Interestexpenseswerein-linewithnetgearingrisingto131%from126%at1H13,andtaxescontinuetorunbelowourexpectationatonly3.
8%effectiveratein3Q13vs5%inFY13.
Figure1Resultsinanutshell3Q132Q131Q134Q123Q122Q121Q12YoY%QoQ%2HCL3Q/2HCL%Revenues2,9272,6122,6332,6712,8142,9332,7394125,86350Businesstax(1)(1)(2)(6)(18)(20)(22)(93)2000Netrevenues2,9252,6112,6312,6652,7962,9132,7165125,86350Costofsales(2,832)(2,743)(2,731)(2,544)(2,856)(2,919)(2,941)(1)3(5,632)50Grossprofit93(132)(99)121(59)(7)(225)t/at/a23140Salesexpenses(13)(9)(11)(9)(15)(12)(15)(16)37(30)42Administrativeexpenses(106)(86)(86)(141)(111)(88)(79)(5)23(228)47Operatingprofit(26)(228)(196)(29)(186)(106)(319)(86)(89)(27)95PP&Edisposal–gains/(losses)(0)(5)9580(9)350(97)87(0)Othernon-operatingincome700(64)351381(80)n/a00Othernon-operatingexpenses(7)(4)(6)(4)(6)(2)(5)249(11)61JCEs/associates33(11)(27)103399260(15)t/a(5)(714)Netinterest(220)(207)(261)(141)(127)(183)(85)747(521)42PBT(215)(467)(482)313(250)(82)(313)(14)(54)(457)47Tax(8)(3)(3)122347(8)8t/a208(65)13Netprofit(223)(470)(485)43598(90)(305)t/a(53)(522)43Minorities(24)61(21)(8)(19)(15)t/at/a(38)62Attributabletoshareholders(247)(464)(484)41489(108)(321)t/a(47)(560)44Source:CLSA,CompanyPreparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
snyder@clsa.
com3Figure2Coastalcoalbenchmarkrate:QinhuangdaotoGuangzhouSource:CLSA,WindFigure3VLCCtankerrates:MiddleEasttoFarEastdailyspotrate(1weekmovingavg)Source:CLSA,BloombergFigure4Capesizevesselrates2010-YTDSource:CLSA,Clarksons2025303540455055606570JanFebMarAprMayJunJulAugSepOctNovDec(RMB/t)20122013(10,000)010,00020,00030,00040,00050,00060,00070,00080,00090,000100,000(US$/day)2010201120122013010,00020,00030,00040,00050,00060,00070,000JanFebMarAprMayJunJulAugSepOctNovDec(US$/day)2010201120122013CapesizeratesconsolidatingCoastalrateshavespikedonrisingcoalpricesVLCCtankerratesareveryvolatile,buttendtopeakin4Q-1QPreparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
snyder@clsa.
com4Figure5BDI2010-YTDSource:CLSA,ClarksonsFigure6ROEvsCOESource:CLSA,CompanyFigure7ShippingcomparablesSource:CLSA,Bloomberg05001,0001,5002,0002,5003,0003,5004,0004,500JanFebMarAprMayJunJulAugSepOctNovDec(BDI)201020112012201311.
26.
6(10)(5)05101520253035ROECOEROEex07-08BDIrunningaheadofexpectationsROEvsCOEPreparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
snyder@clsa.
com5WevalueCSDonanequalblendofpricetobookandreplacementvalueNAV.
WecalculatetheaverageROEexcludingupcycleyearsof2007-08tohavebeen6.
6%comparedtoacalculatedCOEof11.
2%,whichsuggestsamid-cyclepricetobookmultipleof0.
6x14CLPB.
However,givenourviewthatwearemovingoutoftroughearningsfordrybulkshippers,webelieveslightlyincreasingthePBtarget,to0.
7xPBisjustified,particularlyasweblendwithforwardNAVasananchortoourvaluation.
Wenotethatthehistoricalaveragepricetobookis1.
5xPBsince1999,whichprovidescomforttoslightlyincreasingthePBmultipleabovewhatistheoretically"justifiable.
"Figure8TargetpriceMethodologyWeight%Value/sh(HK$)Multiple(x)Valuation/sh(HK$)PBV50.
07.
90.
75.
7NAV50.
05.
40.
84.
3Targetprice5.
0Source:CLSAFigure9ReplacementvalueNAVcalculation(US$m)FY14Fleetvalue-drybulk2,365Fleetvalue-tankers2,277Orderbookvessel(adjusted)1,158JCEs&investments2,516Cash440Less:debt(6,379)Netassetvalue(US$m)2,377NAV(HK$m)18,424Totalavg.
share(A+Hending)3,405NAVpershare(HK$)5.
4Discountsince200820%Targetprice(HK$/shr)4.
3Source:CLSAFigure10CSDpricetobooksince1999Source:CLSA,DatastreamAverage,1.
5+1sd,2.
40.
00.
51.
01.
52.
02.
53.
03.
54.
04.
55.
0Dec-99Dec-01Dec-03Dec-05Dec-07Dec-09Dec-11-1sd,0.
6BreakingoutofthebottomofthecycleCSDtargetpricemethodologyCSDNAVPreparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
snyder@clsa.
com6CompanyoutlineThebusinessCompetition&marketfranchiseLong-termcontractswithmajorsteel,power,andoilSOEsgenerallyguaranteevolumesandallowratestofluctuate,increasingcertaintyandabilitytocapitalizeonarisingBDI.
OneoffourmainshipperslicensedtoshipbulksalongChina'scoast.
Second-largestbulkerandtankerfleetinChinaand,asanSOE,CSDfulfilsnationalsecurityrequirementsforshippingwhichboostscargodemand.
SOEstatusallowssignificantbankfunding.
VolumesshippedaregenerallysetbyCOAcontracts,butratesgenerallyadjusttointernationalspotpriceswhicharevolatile.
Highnetdebtresultsinlargeinterestpaymentsandpotentiallyreducedabilitytoconductfleetexpansion.
ParticularlytiedtoChina'seconomyandcoastal-shippingmarket,withcoastalshippingsufferingfromovercapacity.
Preparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
snyder@clsa.
com7SummaryfinancialsYearto31December2011A2012A2013CL2014CL2015CLSummaryP&Lforecast(Rmbm)Revenue12,17311,09011,10612,01613,067OpEbitda2,8588471,2081,6662,724OpEbit1,112(640)(451)(107)888Interestincome3561496268Interestexpense(415)(593)(988)(1,196)(1,329)Otheritems512840(16)651960Profitbeforetax1,244(331)(1,406)(590)588Taxation(150)469(70)(71)(71)Minorities/Prefdivs(31)(64)(32)(32)(32)Netprofit1,06274(1,508)(693)485Summarycashflowforecast(Rmbm)Operatingprofit1,112(640)(451)(107)888OperatingadjustmentsDepreciation/amortisation1,7461,4861,6591,7731,836Workingcapitalchanges(1,231)201,252(6)(35)Netinterest/taxes/other(864)(662)(1,929)(1,646)(1,819)Netoperatingcashflow76320553115870Capitalexpenditure(8,374)(6,053)(6,335)(4,225)(2,115)Freecashflow(7,612)(5,849)(5,804)(4,210)(1,245)Acq/inv/disposals(484)(1)209182164Int,invt&associatediv3560496268Netinvestingcashflow(8,823)(5,994)(6,076)(3,981)(1,882)Increaseinloans10,8605,9445,4113,6171,261Dividends(579)(340)000Netequityraised/other13292(71)0-Netfinancingcashflow10,4135,6965,3393,6171,261Incr/(decr)innetcash2,352(93)(206)(349)249Exchratemovements(38)2000Openingcash1,0623,3773,2863,0802,731Closingcash3,3773,2863,0802,7312,980Summarybalancesheetforecast(Rmbm)Cash&equivalents3,3773,2863,0802,7312,980Debtors1,1281,485444481523Inventories824934281280266Othercurrentassets533757359374384Fixedassets41,76645,73450,59853,33753,950Intangibleassets2218181818Othertermassets3,9395,6485,5976,1587,039Totalassets51,58957,86160,37863,37865,160Short-termdebt4,5734,1959,08013,43817,570Creditors1,0731,208636666667Othercurrentliabs833920(267)(253)(251)Long-termdebt/CBs19,86526,32726,85226,11123,240Provisions/otherLTliabs9038251,2391,2391,239Minorities/otherequity703868900933965Shareholderfunds23,63923,51721,93721,24421,730Totalliabs&equity51,58957,86160,37863,37865,160RatioanalysisRevenuegrowth(%YoY)7.
8(8.
9)0.
18.
28.
7Ebitdagrowth(%YoY)(14.
9)(70.
4)42.
637.
963.
5Ebitdamargin(%)23.
57.
610.
913.
920.
8Netprofitmargin(%)8.
70.
7(13.
6)(5.
8)3.
7Dividendpayout(%)32.
10.
0--30.
0Effectivetaxrate(%)12.
1141.
6(5.
0)(12.
0)12.
0Ebitda/netintexp(x)7.
51.
61.
31.
52.
2Netdebt/equity(%)86.
5111.
7143.
8166.
0166.
7ROE(%)4.
60.
3(6.
6)(3.
2)2.
3ROIC(%)2.
50.
6(1.
0)(0.
2)1.
4EVA/IC(%)(4.
8)(3.
9)(8.
6)(8.
1)(5.
9)Source:CLSAPreparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
snyder@clsa.
com8CompaniesmentionedChinaShippingDev(1138HK-HK$4.
34-BUY)RecommendationhistoryofChinaShippingDevelopmentCoLtd1138HKDateRecTargetDateRecTarget20Oct2013BUY5.
0009Jan2012BUY6.
9011Sep2013U-PF4.
7017Aug2011O-PF6.
6002Sep2013BUY4.
7003Aug2011U-PF6.
8028Apr2013BUY4.
8009May2011U-PF8.
2025Jan2013BUY6.
0018Mar2011SELL7.
8028May2012DroppedCoverage21Jan2011SELL8.
80Source:CLSA468101214Stockprice(HK$)Jan11May11Sep11Jan12May12Sep12Jan13May13Sep13NathanSnyderOtheranalystsNocoverageBUYU-PFN-RO-PFSELLPreparedfor:CITICSRisingwiththetideChinaShippingDev-BUY29October2013nathan.
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05/08/2013Preparedfor:CITICSChinaHealthcarePWMedtech-1358HKConsolidatedfinancials2010201120121H13Revenue(Rmbmn)60.
8175.
3331.
5218.
8Netprofitattributable(Rmbmn)7.
122.
144.
750.
0EPS(fen)0.
441.
382.
793.
13EPSgrowth(%YoY)210.
6102.
1148.
3ROE(%)20.
330.
820.
29.
8Dbt/equity(%)29.
9114.
175.
632.
1Source:FortuneCLSA,companydataPleaseseeimportantnoticeonlastpageHeatherHsu,CFAheather.
hsu@cf-clsa.
com(86)2138784818CharlesLiZen.
zhou@cf-clsa.
com(86)2138784818ZenZhouZen.
zhou@cf-clsa.
com(86)213878481830October2013ChinaHealthcareDetailsoftheIPOSharesissuedOutstandingshares(m)1,600mnSharesofferedinIPO(m)400mnPriceBandLower(HK$)2.
6Upper(HK$)3.
38NetissuesizeLower(HK$m)1040Upper(HK$m)1352MarketcapLower(US$m)533Upper(US$m)693PE(annualized1H13)Lower(x)29.
4Upper(x)38.
3IPODatesPricing31stOct2013Listing8thNov2013www.
cf-clsa.
comcrIPOpreviewPWMedtechisChina's2ndlargestadvancedinfusionsetmakerand5thlargestorthopaedicimplantsmanufacturer.
Thecompanybuiltthebusinessthroughacquisition.
PWMedtechmainlyoperatesin2ndand3rdtiercitiesandcompeteswithWeigao.
TheindicativeIPOpricerange,suggesta13PEat29xto38x,vsWeigaoat24x13PE.
WethinkMindrayandWeigaowilltradeupifthePWMedtechdealtoispricedatthehigherrange.
ApuremeddeviceplayThecompanyisanorthopaedics(30%ofrevenue)andinfusionsets(70%ofrevenue)playerinChinahavingbuilttheirbusinessthroughM&A.
Threeindividualsholdacombinedtotalof54.
6%stakeinthecompany.
USPEgiantWarburgPincusalsoholda20.
5%interestinthecompany.
Thecompanycurrentlyhas244orthopaedicsdistributorsin30provincesprimarilycovering1,400Class-2hospitalstargetingTier-2/3cities.
2ndlargestinadvancedinfusionsetsThecompanycurrentlyhas10.
3%domesticmarketshareinadvancedinfusionsets(AIS),secondonlytosectorleaderWeigaowith22.
7%.
ThecompanybuiltAISbusinessafteracquiringBeijingFertin2011.
In2012,itsoverallgrossmarginis66.
0%versusWeigao's57.
3%anditsopmarginisat38.
8%versusWeigao's23.
2%.
5thlargestinChineseorthopaedicsmarketThecompanyisoneoftheonly2domesticplayersthathaveafullproductrangeincludingtrauma,spineandjointproducts.
ThecompanyacquiredtwoimplantproductbrandsTianjingWalkmanandShenzhenBoneMedicalin2008and2013respectively.
AfterKanghuiandTrausonbeingacquiredbyMedtronicsandStryker,PWMedtechisnowthe3thlargestdomesticplayersfollowingWeigaoandTianjingZhengtianwith1.
3%marketshare.
Notacheapdeal;othermeddeviceplayswillbenefitTheIPOpricerangesuggesteda2013PEof29xto38xversusWeigaocurrentlyon24xandMindrayon17x.
ThecompanyhasaROEof20.
2%andhasanetgearingof20.
0%in2012.
WelikeChinesemedicaldevicesectorasthesectorgrowthwillcontinuetorideonhospitalexpansionandupgrade.
Ifthedealtogothroughatthecompany'sindicativepricingrange,weexpectthiswillbepositivecatalystsforotherChinesemeddeviceplayers.
Were-iterateBuyonMindrayandWeigao.
Preparedfor:CITICSIPOpreviewChinaHealthcare30October2013zen.
zhou@cf-clsa.
com2FocusingonmeddevicesectorBasedinBeijing,PWMedtechisalargedomesticmedicaldevicemanufacturerspecializinginorthopaedicimplantsandadvancedinfusionsets.
Thecompanyiscurrentlythethirdlargestorthopaedicimplantsmanufacturer(excludingKanghuiandTrausonwhichwereacquiredbyMNCs)inChinawith1.
3%marketsharebehindWeigao(2.
8%)andTianjinZhengtian(2.
1%).
Thecompanyalsohasthesecondlargestdomesticmarketsharebyrevenueinadvancedinfusionsetswith10.
3%,trailingsectorleaderWeigaowhichhold22.
7%.
Thecompanyhasbeengoingunderrapidgrowthwithsales/netprofitCAGRreaching133.
5%/164.
4%between2010and2012.
1H13sales/netprofitwereup50.
1%/35.
2%toRmb219mn/Rmb60.
2mndrivenbyhighmargininfusionsetswhichaccountforover70%oftotalsales.
Thecompany'smajorshareholdersareprivateinvestorsMsYufengLiuwhoholda34.
19%stakeinthecompanythroughCrossMark,MrMarcChanwhoholda14.
52%stakethroughRightFaith,andMrLiNgaiwhoholda5.
84%stakethroughSparkleWealthy.
Inaddition,AmericanPEgiantWarburgPincusPrivateEquityXalsohasa20.
45%stakeinthecompany.
Thecompanyissettoissue400mnsharesatHK$2.
6-HK$3.
38whichbringstotaloutstandingsharesto1.
6bnwithfreefloatpercentageof25%andtotalmarketcapbetweenHK$4160mnandHK$5408mn.
ThecompanywillreceiveitsfinalpricingonOct31st2013andbegintradingontheHKExchangeonNov8th2013.
Figure1PWMedtechshareholderstructureSource:FortuneCLSA,companydataPWMedtech74.
3%34.
19%5.
84%14.
52%CrossMark(BVI)WPX(BVI)RightFaith(BVI)SparkleWealthy(BVI)20.
45%100%100%100%MS.
YufengLIUMr.
MarcCHANMr.
LINgaiPWMInvestment(HK)HealthForward(HK)100%100%HealthAccess(HK)100%BasedinBeijingRapidgrowthLikelyoverhandifPEInvestors(WarburgPincus)toexitFinalpricingonOct31st2013Preparedfor:CITICSIPOpreviewChinaHealthcare30October2013zen.
zhou@cf-clsa.
com3SecondlargestinadvancedinfusionsetsAdvancedinfusionsetsaccountformorethan70%ofthecompany'stotalsalesandover70%ofoperatingprofitin2012.
Thecompany'smainadvancedinfusionproductistheprecisionfilterinfusionsetwhichaccountedforover93%oftotalinfusionsetsalesin1H13.
ThecompanyproducesitsinfusionsetsthroughBeijingFerttechnologieswhichitacquiredin2011.
CurrentlyPWMedtech'sadvancedinfusionsetsbusinesshasthesecondlargestmarketshareinChinabothbysalesvolume(12.
2%)andsalesrevenue(10.
3%),secondonlytosectorleaderWeigaowith17.
9%and22.
7%respectively.
Figure2Infusionsetssalesbreakdown(2010-1H13)RMB'000201020112012YoY(%)1H121H13YoY(%)Precisionfilterinfusionsets85,275130,503221,05969.
495,720137,52843.
7Non-PVC-basedinfusionsets--2,915-5834,070598.
1Others3,5345,86110,00070.
63,9025,45939.
9Total88,809136,364233,97471.
6100,205147,05746.
8Source:FortuneCLSA,companydataInfusionsetsalesreachedRmb233.
9mnin2012,up71.
6%YoYandrepresentinga3-yearCAGRof62.
3%.
Grossprofitandoperatingprofitwereup95.
5%and55.
1%respectivelyin2012withgrossmarginandoperatingmarginof62.
0%and38.
9%respectively.
Figure3Infusionsetsmarginbreakdown(2010-1H13)RMB'000201020112012YoY(%)1H121H13YoY(%)Sales88,809136,364233,97471.
6100,205147,05746.
8Grossprofit37,35274,253145,16695.
557,54297,17568.
9Grossmargin42.
154.
562.
057.
466.
1Operatingprofit27,29158,61790,90555.
138,14456,61248.
4Operatingmargin30.
743.
038.
938.
138.
5Source:FortuneCLSA,companydataNote:PWMacquiredFertinApril2011.
Figure4Figure5AISmarketsharebysalesvolumeAISmarketsharebyrevenueSource:FortuneCLSA,Frost&SullivanSource:FortuneCLSA,Frost&SullivanPWMedtechcurrentlyhasthreeinfusionsetsproductionfacilitiesinBeijingandJiangsuwithtotalannualproductioncapacitiesof55mnunitsandutilizationrateof81.
5%.
Thecompanycurrentlyhasover211distributors17.
912.
26.
96.
96.
64.
84.
202468101214161820ShandongWeigaoPWMedtechTianjinHanacoShandongShinvaJiangxiHongdaShandongQiaopaiJiangsuSuyun(%)22.
710.
38.
57.
36.
94.
34.
20510152025ShandongWeigaoPWMedtechShandongShinvaJiangxiHongdaTianjinHanacoShandongQiaopaiJiangsuSuyun(%)70%ofthecompany'ssalesfrominfusionsetPreparedfor:CITICSIPOpreviewChinaHealthcare30October2013zen.
zhou@cf-clsa.
com4nationwideacross1,113hospitalsforitsinfusionsetswhichprimarilytargetClass-3(top)hospitalsinTier1/2cities.
Figure6PWMedtech'smajordomesticinfusionsetcompetitorsCompanyDescriptionShandongWeigaoLargedomesticdevicemanufacturerandlistedontheHKexchange.
Mainproductsincludeinfusionsets,syringesandneedles,orthopaedicproductsanddisinfectionproducts.
Totalsalesin2012reachedRmb3689mnwithinfusionsetsaccountingforRmb531mnShandongShinvaMainproductsincludeinfusionsetsandothermedicalplasticproducts,thecompanyhasgoodbrandawarenessinNorthernChina.
Alsooneofthethreecompaniesthatcanproducealloftheprecisionfilter,lightresistantandnon-PVCbasedinfusionsets.
JiangxiHongdaLargemanufacturerofconventionalinfusionsetswithentryintoadvancedinfusionsetsacoupleofyearsago.
ShandongQiaopaiThecompanyisoneofthelargestmanufacturersofconventionalinfusionsets,ithaslargedomesticpresenceandalsolargequantitiesmadeforinternationalexports.
Thecompanyproducesbothprecisionfilterandlightresistantinfusionsets.
JiangsuSuyunLargeinfusionsetssuppliertoEasternChinaprovinces,similartoShandongQiaopaithecompanyspecializesinbothprecisionfilterandlightresistantinfusionsets,exportsaccountforapprox.
30%ofitstotalsales.
Source:FortuneCLSA,companydataThirdlargestinChineseorthopaedicsmarketThecompanyspecializesinthreemajorfieldsoforthopaedicimplantsincludingtrauma,spineandjointimplantsandit'soneofonlytwodomesticplayerswithafullproductline-up.
Thecompany'straumaandspineproductsaresoldthroughthe"Walkman"brandanditsjointproductsaresoldthroughthe"Bone"brand.
TheorthopaedicsmarketinChinaisdominatedbyMNCswithover64%ofmarketsharein2012,PWMedtechhasthethirdlargestmarketsharewithinthedomesticplayerswith1.
3%behindWeigaoandTianjinZhengtian.
Figure7MajororthopaedicsplayersinChinaTraumaSpineJointCoverageIntramedullaryrodBonePlatesMaxillofacialPlatesBoneScrewsAnteriorFixationPostieriorFixationLumbarFusionCageHipKneePWMedtech9ShandongWeigao9Kanghui9SuzhouXinrong8Trauson7TianjinZhengtian7XiamenDabo7ShanghaiPuwei7SuzhouIdeal7ChunliZhengda5BeijingBaimtec2AikangYicheng2Source:FortuneCLSA,companydataSalesfromorthopaedicimplantsreachedRmb97.
6mnin2012,up29.
4%YoYandrepresentinga3-yearCAGRof26.
7%.
Grossprofitandoperatingprofitwereup34.
2%and66.
8%respectivelyin2012,implyinga3-yearCAGRof29.
1%/39.
3%.
FullproductrangePreparedfor:CITICSIPOpreviewChinaHealthcare30October2013zen.
zhou@cf-clsa.
com5Figure8Orthopaedicsalesbreakdown(2010-1H13)(RMB'000)201020112012YoY(%)1H121H13YoY(%)Traumaproducts44,48756,26170,17824.
731,88651,02760.
0Spineproducts13,22915,37420,86735.
711,10011,4753.
4Jointproducts5,789-Others3,1003,7446,52274.
22,5823,40231.
8Total60,81675,37997,56729.
445,56871,69357.
3Source:FortuneCLSA,companydataFigure9Orthopaedicsmarginbreakdown(2010-1H13)RMB'000201020112012YoY(%)1H121H13YoY(%)Sales60,81675,37997,56729.
445,56871,69357.
3Grossprofit44,18754,92173,68134.
233,71050,21549.
0Grossmargin72.
772.
975.
574.
070.
0Operatingprofit19,37222,52137,57666.
817,47622,60129.
3Operatingmargin31.
929.
938.
538.
431.
5Source:FortuneCLSA,companydata1H13saleswereup57.
3%toRmb71.
7mnandontrackforarecordgrowthyear.
Traumaproductswerethebiggestcontributorwhichaccountedforover71%oftotalsalesin1H13,followedbyspineproductswith16%andjointproductswith8%.
Figure10Figure11OrthopaedicsmarketinChina(2012)PWMorthopaedicssalesbreakdown(1H13)Source:FortuneCLSA,companydataSource:FortuneCLSA,companydataThecompanycurrentlyhasthreeorthopaedicimplantsproductionfacilitiesinTianjin,AnyangandShenzhenwithtotalannualproductioncapacitiesof1.
96mnunitsforTraumaimplants,230,000unitsforspineimplantsand8,000unitsofjointimplants.
AsofJune2013theproductionutilizationratefortheseproductswere79.
6%,74.
0%and44.
4%respectively.
Currentlythecompanyhasover244distributorsnationwideacross1,444hospitals.
Thecompany'smajormarketfororthopaedicsisinClass-2hospitalsinTier-2/3citieswhichexperiencedthefastestgrowthinmarketsizeinthelast4years.
MNC64.
3%Otherdomestic29.
9%Weigao2.
8%Zhengtian2.
1%PWM1.
3%Traumaproducts71%Spineproducts16%Jointproducts8%Others5%244distributorsPreparedfor:CITICSIPOpreviewChinaHealthcare30October2013zen.
zhou@cf-clsa.
com6MarginanalysisBothofthecompany'sorthopaedicsimplantsbusinessandinfusionsetsbusinessarehighgrowthhighmarginbusinesses.
In2012grossmarginandoperatingmarginfororthopaedicsreached75.
5%and38.
5%,up2.
6pptand8.
6pptYoYrespectively.
Grossmarginforitsinfusionsetsbusinesswereup7.
5pptYoYhoweveroperatingmarginwasdown4.
1pptYoYin2012.
Thegrossmarginforthecompany'sorthopaedicsbusinessisabovedomesticsectoraverageof69%butthegrossmarginofitsinfusionbusinessisbelowdomesticsectoraverageof64%.
Figure12Marginbreakdown(2010-1H13)RMB'000201020112012YoY(%)1H121H13YoY(%)OrthopaedicsSales60,81675,37997,56729.
445,56871,69357.
3Grossprofit44,18754,92173,68134.
233,71050,21549.
0Grossmargin72.
772.
975.
574.
070.
0Operatingprofit19,37222,52137,57666.
817,47622,60129.
3Operatingmargin31.
929.
938.
538.
431.
5InfusionsetsSales88,809136,364233,97471.
6100,205147,05746.
8Grossprofit37,35274,253145,16695.
557,54297,17568.
9Grossmargin42.
154.
562.
057.
466.
1Operatingprofit27,29158,61790,90555.
138,14456,61248.
4Operatingmargin30.
743.
038.
938.
138.
5Blendedgrossmargin72.
7*61.
066.
062.
667.
4Blendedoperatingmargin31.
9*38.
338.
838.
236.
2Source:FortuneCLSA,companydata,Note*:PWMacquiredFertinApril2011Overallgrossmargindroppedfrom2010to2011whenPWMedtechacquiredFertinApril2011astheinfusionsetsbusinesshasalowergrossmarginthanitsorthopaedicsbusiness.
Figure13Grossprofitbreakdownbysegment(2010-1H13)RMB'0002010201120121H121H13OrthopaedicsTrauma33,79242,56454,99424,56137,547Grossmargin(%)76.
075.
778.
477.
073.
6Spine9,74611,42716,5438,4998,488Grossmargin(%)73.
774.
379.
376.
674.
0Joint----3,041Grossmargin52.
5Others649219306501,139Grossmargin(%)21.
024.
832.
925.
233.
5InfusionsetsPrecisionfilterIS34,92369,720135,70854,22490,881Grossmargin(%)41.
053.
461.
456.
766.
2Non-PVCbasedPIS--1,9233382,692Grossmargin(%)--66.
058.
066.
1Source:FortuneCLSA,companydataMarginhigherthanWeigao'sPreparedfor:CITICSIPOpreviewChinaHealthcare30October2013zen.
zhou@cf-clsa.
com7Managementexpectthenon-PVCprecisioninfusionbusinesstosurgegoingforwarddrivenbygovernmentpoliciesandraisinghealthawarenessbythegeneralChinesepublic.
In2012,itsoverallgrossmarginis66.
0%comparedwithWeigao's57.
3%anditsopmarginisat38.
8%versusWeigao's23.
2%Figure14Figure15Grossmargincomparison(2010-2012)Opmargincomparison(2010-2012)Source:FortuneCLSA,companydataSource:FortuneCLSA,companydataFigure16Combinedincomestatement(2010-1H13)201020112012YoY(%)1H121H13YoY(%)Revenue60,816175,267331,54189.
2145,773218,75050.
1COGS(16,629)(66,150)(112,694)70.
4(54,521)(71,360)30.
9Grossprofit44,187109,117218,847100.
691,252147,39061.
5Sellingexpenses(13,071)(23,405)(46,821)100.
0(17,900)(28,542)59.
5Administrativeexpenses(10,621)(17,708)(35,603)101.
1(14,668)(33,272)126.
8R&Dexpense(1,153)(7,064)(9,512)34.
7(4,651)(6,614)42.
2Othergains(net)308661,57081.
31,687251-85.
1Operatingprofit19,37261,806128,481107.
955,72079,21342.
2Financialincome3820132963.
771247247.
9Financialcosts(2,142)(4,679)(9,089)94.
3(3,377)(5,116)51.
5Profitbeforetax17,26857,328119,721108.
852,41474,34441.
8Incometax(2,936)(7,982)(19,538)144.
8(7,845)(14,104)79.
8Netprofit14,33249,346100,183103.
044,56960,24035.
2Attributabletoowners7,11722,10344,668102.
120,14150,014148.
3Non-controllinginterests7,21527,24355,515103.
824,42810,226(58.
1)Source:FortuneCLSA,companydata72.
772.
975.
542.
154.
562.
055.
255.
357.
301020304050607080201020112012(%)PWMOrthopaedicsPWMInfusionWeigaoblended31.
929.
938.
530.
743.
038.
925.
526.
423.
205101520253035404550201020112012(%)PWMOrthopaedicsPWMInfusionWeigaoblendedPreparedfor:CITICSIPOpreviewChinaHealthcare30October2013zen.
zhou@cf-clsa.
com8Figure17HealthcarevaluationtableCompanyTickerMktcap(US$mn)Price(lcy)T/O(US$mn)PE(x)EPSgth(%)PB(x)ROE(%)Yield(%)EV/Ebitda(%)Netgearing(%)1213F14F1213F14F121213F121213F14F12DevicesGlobalPeersGENERALELECTRICGEUS265,69526.
0984417.
216.
014.
610.
97.
49.
32.
211.
413.
12.
711.
09.
79.
01.
5JOHNSON&JOHNSONJNJUS260,36292.
3975118.
116.
915.
82.
07.
56.
74.
017.
821.
52.
612.
110.
710.
1(7.
6)SIEMENSAG-REGSIEGR114,08594.
1324716.
717.
712.
1(24.
3)(5.
3)45.
82.
614.
315.
23.
29.
712.
28.
734.
3MEDTRONICINCMDTUS57,50457.
6523016.
015.
114.
46.
95.
55.
23.
220.
220.
31.
810.
19.
89.
3(2.
2)KONINKLIJKEPHILPHIANA33,13925.
6810722.
516.
414.
095.
737.
416.
82.
11.
912.
12.
910.
68.
07.
26.
3BECTONDICKINSONBDXUS20,654106.
357518.
818.
216.
34.
03.
011.
74.
925.
924.
91.
710.
610.
59.
448.
0ZIMMERHLDGSZMHUS14,94288.
138816.
615.
414.
210.
47.
88.
62.
613.
314.
90.
69.
08.
78.
34.
5STJUDEMEDICALSTJUS16,55157.
639516.
615.
414.
56.
17.
36.
84.
217.
623.
91.
611.
211.
110.
546.
1BOSTONSCIENTIFCBSXUS15,55011.
5816728.
226.
422.
0(8.
9)7.
119.
82.
3(44.
6)8.
90.
011.
911.
610.
958.
9SYSMEXCORP6869JP6,86864702351.
436.
430.
08.
041.
221.
55.
812.
614.
90.
621.
717.
014.
3(28.
3)OMRONCORP6645JP8,40036102831.
219.
916.
966.
756.
817.
92.
27.
910.
50.
912.
58.
97.
8(13.
6)BIO-RADLABS-ABIOUS3,547124.
15921.
027.
120.
5(99.
9)77395.
832.
31.
88.
75.
70.
08.
910.
18.
4(9.
3)BIOSENSORSINTLBIGSP1,3661.
00412.
316.
018.
2(65.
9)(23.
1)(12.
0)1.
119.
58.
01.
98.
09.
17.
9(27.
0)NIKKISO6376JP9671176514.
815.
415.
0110.
1(4.
0)3.
01.
611.
49.
61.
111.
29.
88.
540.
0INVACARECORPIVCUS66720.
85356.
4na595.
7(82.
0)(391.
9)103.
21.
10.
37.
30.
210.
0132.
848.
631.
6OPTOCIRCUITSOPTCIN8922.
6011.
01.
4na21.
9(33.
5)na0.
324.
318.
114.
02.
7nana59.
7DomesticplayersMINDRAYMEDI-ADRMRUS4,51338.
432821.
216.
915.
613.
425.
19.
03.
416.
918.
11.
318.
814.
412.
1(8.
2)SHANDONGWEIG-H1066HK4,1177.
13924.
523.
517.
0(71.
2)0.
138.
02.
711.
611.
00.
622.
919.
214.
3(14.
5)MICROPORTSCIENT853HK9565.
26116.
522.
617.
813.
6(26.
8)26.
82.
516.
09.
81.
511.
312.
810.
5(45.
3)TRAUSONHOLDINGS325HKnananananana28.
96.
923.
4na15.
616.
50.
1nanana(66.
7)LIFETECHSCIENTI8122HK4266.
60079.
8136.
534.
6109.
7(41.
5)294.
78.
711.
56.
00.
043.
0nana(67.
4)CHINARESOURCE-A600055CH39111.
01673.
90.
00.
0(19.
2)(100.
0)na3.
75.
20.
00.
527.
737.
737.
7(15.
3)SHANDONGBLUE-A002382CH46011.
68554.
837.
924.
2(12.
5)46.
956.
52.
95.
58.
00.
920.
129.
629.
612.
5EDANINSTRUMEN-A300206CH52424.
57757.
949.
935.
2(15.
4)(10.
5)41.
82.
74.
85.
21.
222.
557.
457.
4(89.
4)GUANGZHOUIMPR-A300030CH41317.
00767.
149.
537.
24.
237.
333.
23.
95.
90.
00.
418.
038.
838.
8(39.
6)Source:Bloomberg,Wind,FortuneCLSAKeytoFortuneCLSAinvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
Forrelativeperformance,webenchmarkthe12-monthtotalreturn(includingdividends)forthestockagainstthe12-monthforecastreturn(includingdividends)forthelocalmarketwherethestockistraded.
Wedefinestocksweexpecttoprovidereturnsof100%orhigherincludingdividendswithinthreeyearsas"DoubleBaggers".
2013FortuneCLSASecuritiesLimited("FortuneCLSA").
Note:Intheinterestsoftimeliness,thisdocumenthasnotbeenedited.
FortuneCLSAhasproducedthispublication/communicationforprivatecirculationtoselectedprofessionalandinstitutionalclientsonly.
Thispublication/communicationisconfidentialandproprietarytoFortuneCLSAandshallnotbereproduced,copied,redistributedorcirculated(whetherinwholeorinpart)withouttheexpresswrittenpermissionofFortuneCLSA.
Theanalyst/swhocompiledthispublication/communicationherebystate/sandconfirm/sthatthecontentshereoftrulyreflecthis/her/theirviewsandopinionsonthesubjectmatterandthattheanalyst/shas/havenotbeenplacedunderanyundueinfluence,interventionorpressurebyanyperson/sincompilingsuchpublication/communication.
FortuneCLSA,FortuneCLSA'sanalystsand/ortheirassociatesdoandfromtimetotimeseektoestablishbusinessorfinancialrelationshipswithcompaniescoveredintheirresearchreports.
Asaresult,investorsshouldbeawarethatFortuneCLSAand/orsuchindividualsmayhaveoneormoreconflictsofintereststhatcouldaffecttheobjectivityofthisreport.
People'sRepublicofChinaregulationsprohibitFortuneCLSAemployeesfromholding,tradinginorreceivingsharesfromotherpersonsintheformofgifts.
People'sRepublicofChinaregulationsdonotallowFortuneCLSAanalyststotakeuppart-timejobsoroutsideactivities.
FortuneCLSAdoesnotallowgiftsoradvantagestobeprovidedtoanalysts.
FortuneCLSAisnotallowedtoengageinproprietarytrading(otherthanthosepositionsarisingfromunderwriting)anddoesnotmakeanymarket.
Anydeparturefromtheabovewhichmaygiverisetoconflictofinterestwillbedisclosedintheconcernedresearchreport.
DisclosureofconflictsofinterestincludethepositionofFortuneCLSAand/oritsemployeesandFortuneSecuritiesCompanyLimited,theChineseshareholderofFortuneCLSA,onlyanddonotreflectthoseofCLSAgroupofcompanies("CLSA"),CreditAgricoleSecuritiesTaiwanCo.
,Ltd.
and/ortheirrespectiveaffiliates(includingbutnotlimitedtoCITICSecuritiesInternationalCompanyLimitedandCreditAgricoleCorporate&InvestmentBank).
IMPORTANT:ThecontentofthisreportissubjecttoFortuneCLSA'sLegalandRegulatoryNoticesassetoutatwww.
cf-clsa.
com/www/disclaimer.
html,ahardcopyofwhichmaybeobtainedonrequestfromFortuneCLSACompliance(9thfloor,100CenturyAvenue,PudongNewArea,Shanghai200120,PRC,telephone+862138784818).
01/01/2013Preparedfor:CITICSChina&HongKong-Upcomingresults(1)TickerStockNameDateConfirmed/ReportingFiscalCLSACcyCLSAvsEst.
AnalystExpectedEstimatedPeriodYearendRecCLSACONSCONS(%)YoY(%)FinancialServices:DerekOvington/PatriciaCheng/MarcusLiu/ChenHuang5HKHSBC11/4/2013Confirmed3QFY201312/2012U-PFUSD18,52018,005102.
937.
7DerekOvington2888HKStandardChartered3/5/2014ConfirmedFYFY201312/2012BUYUSD5,2155,51394.
69.
0DerekOvington1398HKICBC10/30/2013Confirmed3QFY201312/2012U-PFCNY257,554259,86099.
18.
0PatriciaCheng939HKCCB3/24/2014EstimatedFYFY201312/2012O-PFCNY207,651212,09597.
97.
5PatriciaCheng1288HKAgriculturalBank10/30/2013Confirmed3QFY201312/2012O-PFCNY163,572163,321100.
212.
7PatriciaCheng3988HKBankofChina10/30/2013Confirmed3QFY201312/2012BUYCNY143,732148,91796.
53.
1PatriciaCheng3328HKBocom10/30/2013Confirmed3QFY201312/2012O-PFCNY60,84262,40097.
54.
2ChenHuang3968HKCMB10/29/2013Confirmed3QFY201312/2012SELLCNY44,35449,58989.
4(2.
0)ChenHuang998HKCiticBank10/29/2013Confirmed3QFY201312/2012BUYCNY33,75433,741100.
08.
8ChenHuang1988HKMinsheng10/30/2013Confirmed3QFY201312/2012U-PFCNY41,17042,46497.
09.
6ChenHuang2388HKBankofChina(HK)10/30/2013Confirmed3QFY201312/2012BUYHKD21,24621,81497.
41.
5DerekOvington11HKHangSengBank2/24/2014ConfirmedFYFY201312/2012SELLHKD26,63722,849116.
637.
0DerekOvington23HKBEA2/26/2014EstimatedFYFY201312/2012U-PFHKD6,2315,619110.
92.
9DerekOvington302HKWingHangBank3/7/2014EstimatedFYFY201312/2012O-PFHKD2,0391,905107.
013.
1DerekOvington1299HKAIA2/27/2014EstimatedFYFY201311/2012SELLUSD3,4633,061113.
1n.
a.
PatriciaCheng2628HKChinaLife3/27/2014EstimatedFYFY201312/2012U-PFCNY28,01428,014100.
0n.
a.
PatriciaCheng2601HKCPIC10/30/2013Confirmed3QFY201312/2012U-PFCNY9,58810,13894.
6n.
a.
PatriciaCheng2318HKPingAn3/14/2014EstimatedFYFY201312/2012BUYCNY26,88928,19295.
4n.
a.
PatriciaCheng2328HKPICCP&C3/25/2014EstimatedFYFY201312/2012O-PFCNY11,87611,790100.
7n.
a.
PatriciaCheng966HKChinaTaiping3/19/2014EstimatedFYFY201312/2012U-PFHKD1,4941,322113.
0n.
a.
PatriciaCheng1336HKNewChinaLife10/30/2013Confirmed3QFY201312/2012O-PFCNY3,3394,06282.
2n.
a.
PatriciaCheng1339HKPICCGroup3/25/2014EstimatedFYFY201312/2012SELLCNY9,7999,799100.
0n.
a.
PatriciaCheng388HKHKExchanges11/6/2013Confirmed3QFY201312/2012SELLHKD4,5194,64397.
310.
7MarcusLiu6837HKHaitong#N/AN/A#N/AN/A#N/A12/2012BUYCNY4,2444,32598.
140.
5ChenHuang165HKEverbrightLtd3/26/2014EstimatedFYFY201312/2012BUYHKD1,6541,588104.
244.
9ChenHuang3360HKFarEastHorizon3/27/2014EstimatedFYFY201312/2012BUYUSD302300100.
825.
2ChenHuangChinaProperty:NicoleWong/SusannaLeung688HKColi3/18/2014EstimatedFYFY201312/2012BUYHKD20,46319,368105.
79.
3NicoleWong200002CHVanke10/29/2013Tentative3QFY201312/2012BUYCNY15,25415,71597.
121.
5NicoleWong1109HKCRLand3/17/2014EstimatedFYFY201312/2012BUYHKD8,8259,11796.
8(16.
5)NicoleWong3333HKEvergrande3/26/2014EstimatedFYFY201312/2012U-PFCNY7,8978,04898.
1(13.
9)NicoleWong2007HKCountryGarden11/14/2013Estimated3QFY201312/2012BUYCNY8,5028,277102.
724.
1SusannaLeung410HKSohoChina3/6/2014EstimatedFYFY201312/2012U-PFCNY3,1313,38192.
6(70.
8)SusannaLeung3383HKAgileProperty3/25/2014EstimatedFYFY201312/2012O-PFCNY4,4354,87091.
1(11.
3)NicoleWong813HKShimaoProperty3/26/2014EstimatedFYFY201312/2012BUYCNY6,8956,487106.
319.
6NicoleWong2777HKGuangzhouR&F3/20/2014EstimatedFYFY201312/2012BUYCNY5,4495,53798.
4(1.
0)NicoleWong81HKCogo2/28/2014EstimatedFYFY201312/2012O-PFHKD2,8182,799100.
717.
3NicoleWong1813HKKWGProperty3/25/2014EstimatedFYFY201312/2012BUYCNY2,3592,36599.
7(2.
0)SusannaLeung960HKLongfor3/17/2014EstimatedFYFY201312/2012O-PFCNY6,0556,12898.
8(3.
9)NicoleWongHKProperty:NicoleWong/SusannaLeung/DanieSchutte/JonathanGalligan/JacksonHui16HKSHKP2/28/2014Estimated1HFY201406/2013U-PFHKD24,67422,153111.
4(6.
4)NicoleWong1HKCheungKong3/26/2014EstimatedFYFY201312/2012BUYHKD27,96527,726100.
9(13.
0)JonathanGalligan101HKHangLungProp2/3/2014EstimatedFYFY201312/2012O-PFHKD3,6304,04589.
8(56.
8)SusannaLeung4HKWharf3/26/2014EstimatedFYFY201312/2012O-PFHKD12,21211,833103.
2(74.
2)SusannaLeung12HKHendersonLand3/25/2014EstimatedFYFY201312/2012SELLHKD7,5487,87595.
8(62.
6)NicoleWongHKLSPHongkongLand2/28/2014EstimatedFYFY201312/2012BUYUSD923923100.
0(35.
9)SusannaLeung1972HKSwireProperties3/13/2014ConfirmedFYFY201312/2012BUYHKD6,2295,912105.
4(66.
8)DanieSchutte,CFA83HKSinoLand2/27/2014Estimated1HFY201406/2013U-PFHKD4,1304,67788.
39.
5SusannaLeung683HKKerryProperties3/14/2014EstimatedFYFY201312/2012U-PFHKD4,7404,347109.
1(23.
8)SusannaLeung17HKNewWorldDev2/27/2014Estimated1HFY201406/2013O-PFHKD7,6537,405103.
439.
5SusannaLeung14HKHysan3/6/2014EstimatedFYFY201312/2012O-PFHKD2,0722,056100.
8(79.
2)SusannaLeung41HKGreatEagle2/27/2014EstimatedFYFY201312/2012U-PFHKD1,4801,55295.
4(58.
3)SusannaLeung1200HKMidland3/17/2014EstimatedFYFY201312/2012U-PFHKD(78)(61)127.
6(131.
1)SusannaLeung823HKLinkReit11/13/2013Confirmed1HFY201403/2013SELLHKD3,5573,67296.
9119.
4JacksonHui497HKCSIProperties11/19/2013Estimated1HFY201403/2013BUYHKD1,4681,238118.
6(48.
5)JacksonHuiOil&Gas:SimonPowell/NelsonWang857HKPetroChina10/29/2013Confirmed3QFY201312/2012BUYCNY133,632128,876103.
715.
9SimonPowell386HKSinopec10/29/2013Confirmed3QFY201312/2012BUYCNY70,06568,687102.
09.
7SimonPowell883HKCNOOC3/24/2014EstimatedFYFY201312/2012BUYCNY64,58663,802101.
21.
4SimonPowell2883HKCOSL3/24/2014EstimatedFYFY201312/2012U-PFCNY4,8195,78783.
35.
7SimonPowell2386HKSEG3/31/2014EstimatedFYFY201312/2012BUYCNY3,4193,87788.
23.
1SimonPowell338HKShanghaiPetrochem10/28/2013Confirmed3QFY201312/2012BUYCNY1,1021,065103.
5n.
a.
NelsonWang3337HKAntonoil3/17/2014EstimatedFYFY201312/2012SELLCNY38339497.
226.
6SimonPowellResources:AndrewDriscoll/DanielMeng1088HKShenhua3/24/2014EstimatedFYFY201312/2012BUYCNY42,55144,97094.
6(12.
9)AndrewDriscoll,CFA1898HKChinaCoal4/3/2014EstimatedFYFY201312/2012SELLCNY4,4475,38782.
5(49.
7)AndrewDriscoll,CFA2600HKChalco10/30/2013Confirmed3QFY201312/2012SELLCNY(3,053)(3,614)84.
5n.
a.
AndrewDriscoll,CFA486HKRusal11/11/2013Confirmed3QFY201312/2012U-PFUSD(15)91(16.
6)n.
a.
AndrewDriscoll,CFA1171HKYanzhouCoal3/24/2014EstimatedFYFY201312/2012U-PFCNY16034446.
4(97.
4)AndrewDriscoll,CFA358HKJiangxiCopper10/29/2013Confirmed3QFY201312/2012U-PFCNY3,0712,899105.
9(40.
6)AndrewDriscoll,CFA639HKShougangFushan3/27/2014EstimatedFYFY201312/2012O-PFHKD1,0731,07599.
8(40.
4)AndrewDriscoll,CFA1393HKHidiliIndustry3/27/2014EstimatedFYFY201312/2012SELLCNY(148)(94)157.
1n.
a.
AndrewDriscoll,CFA975HKMongolianMining3/12/2014EstimatedFYFY201312/2012SELLUSD(34)(47)72.
7n.
a.
DanielMeng914HKConch10/28/2013Confirmed3QFY201312/2012O-PFCNY7,8428,34394.
023.
9DanielMeng3323HKCNBM10/31/2013Estimated3QFY201312/2012SELLCNY5,3445,332100.
2(4.
2)DanielMeng1893HKSinoma10/30/2013Confirmed3QFY201312/2012O-PFCNY472468100.
7(0.
4)DanielMeng1313HKCRCement3/3/2014EstimatedFYFY201312/2012O-PFHKD2,7512,91094.
518.
4DanielMeng691HKShanshuiCement3/18/2014EstimatedFYFY201312/2012U-PFCNY1,0081,02198.
8(33.
6)DanielMeng2899HKZijin3/28/2014EstimatedFYFY201312/2012U-PFCNY2,5242,60896.
8(51.
6)DanielMeng1818HKZhaojin11/1/2013Estimated3QFY201312/2012SELLCNY1,2391,095113.
1(35.
6)DanielMeng1051HKG-Resources2/28/2014Estimated1HFY201406/2013BUYUSD698284.
6n.
a.
DanielMengConglomerates:DanieSchutte/JonathanGalligan/RobertBruce13HKHutchisonWhampoa3/26/2014EstimatedFYFY201312/2012BUYHKD30,21029,893101.
115.
6JonathanGalliganJMSPJardineMatheson2/28/2014EstimatedFYFY201312/2012BUYUSD1,4611,51596.
5(13.
4)JonathanGalliganJSSPJardineStrategic2/28/2014EstimatedFYFY201312/2012BUYUSD1,6531,638100.
9(10.
1)JonathanGalliganJCNCSPJardineC&C11/6/2013Confirmed3QFY201312/2012U-PFUSD932915101.
8(5.
6)JonathanGalliganDFISPDairyFarm3/6/2014EstimatedFYFY201312/2012U-PFUSD503503100.
011.
1RobertBruce66HKMTRC3/11/2014EstimatedFYFY201312/2012U-PFHKD7,7148,35292.
4(43.
0)DanieSchutte,CFA19HKSwirePacific3/13/2014ConfirmedFYFY201312/2012O-PFHKD9,6218,560112.
4(45.
0)DanieSchutte,CFA54HKHopewellHldgs2/21/2014Estimated1HFY201406/2013O-PFHKD1,4601,341108.
9236.
2DanieSchutte,CFA737HKHopewellHighway2/21/2014Estimated1HFY201406/2013U-PFHKD769646119.
0(27.
0)DanieSchutte,CFA142HKFirstPacific3/19/2014EstimatedFYFY201312/2012BUYUSD34436594.
2(1.
4)DanieSchutte,CFA392HKBeijingEnt3/28/2014EstimatedFYFY201312/2012U-PFHKD3,7483,75099.
914.
6JonathanGalliganTelecoms:ElinorLeung/TerryChen941HKChinaMobile3/14/2014EstimatedFYFY201312/2012BUYCNY127,503126,374100.
9(1.
4)ElinorLeung,CFA728HKChinaTelecom10/28/2013Confirmed3QFY201312/2012U-PFCNY17,94617,99499.
720.
2ElinorLeung,CFA762HKUnicom3/21/2014EstimatedFYFY201312/2012U-PFCNY10,73310,87998.
751.
3ElinorLeung,CFA215HKHutchisonTelecom3/18/2014EstimatedFYFY201312/2012U-PFHKD1,2541,26699.
02.
2TerryChenInternet&Media:ElinorLeung/JialongShiBIDUUSBaidu10/29/2013Confirmed3QFY201312/2012BUYCNY10,70810,685100.
23.
0ElinorLeung,CFA700HKTencent11/13/2013Confirmed3QFY201312/2012O-PFCNY15,86015,94399.
524.
6ElinorLeung,CFASINAUSSina11/15/2013Estimated3QFY201312/2012U-PFUSD(21)n.
a.
n.
a.
n.
a.
JialongShiNTESUSNetEase11/14/2013Estimated3QFY201312/2012BUYCNY4,5444,398103.
324.
9JialongShiCTRPUSCtrip11/5/2013Confirmed3QFY201312/2012BUYCNY823821100.
215.
2ElinorLeung,CFASOHUUSSohu10/28/2013Confirmed3QFY201312/2012BUYUSD828399.
4(5.
8)JialongShiCYOUUSChangyou10/28/2013Confirmed3QFY201312/2012BUYUSD318300106.
07.
3JialongShiGAUSGiantInteractive11/6/2013Confirmed3QFY201312/2012U-PFCNY1,2821,38592.
629.
0JialongShiGAMEUSShandaGames11/26/2013Estimated3QFY201312/2012U-PFCNY1,1361,27788.
92.
0JialongShiPWRDUSPerfectWorld11/19/2013Estimated3QFY201312/2012BUYCNY40243991.
6(30.
9)JialongShiVIPSUSVipshop11/13/2013Estimated3QFY201312/2012O-PFUSD435084.
9n.
a.
JialongShiSteel&Autos:ScottLaprise347HKAngang10/29/2013Confirmed3QFY201312/2012U-PFCNY1,0271,027100.
0n.
a.
ScottLaprise323HKMagang10/29/2013Confirmed3QFY201312/2012SELLCNY(333)(158)210.
6n.
a.
ScottLaprise697HKShougangIntl3/28/2014EstimatedFYFY201312/2012BUYHKD(770)(1,027)75.
0n.
a.
ScottLaprise489HKDongfeng4/15/2014EstimatedFYFY201312/2012SELLCNY9,2319,98892.
41.
5ScottLaprise1211HKBYD10/29/2013Confirmed3QFY201312/2012SELLCNY47378660.
1481.
1ScottLaprise2238HKGAC10/30/2013Confirmed3QFY201312/2012SELLCNY2,1662,51086.
391.
0ScottLaprise2333HKGreatWallMotor3/26/2014EstimatedFYFY201312/2012SELLCNY7,8558,22395.
538.
0ScottLaprise1728HKZhengtongAuto3/28/2014EstimatedFYFY201312/2012BUYCNY80790089.
733.
6ScottLapriseNetIncome(LC'm)Preparedfor:CITICSChina&HongKong-Upcomingresults(2)TickerStockNameDateConfirmed/ReportingFiscalCLSACcyCLSAvsEst.
AnalystExpectedEstimatedPeriodYearendRecCLSACONSCONS(%)YoY(%)Machinery,Trucks&Construction:AlexiousLee1800HKCCC10/30/2013Confirmed3QFY201312/2012O-PFCNY13,48613,477100.
110.
1AlexiousLee3339HKLonking3/28/2014EstimatedFYFY201312/2012BUYCNY497497100.
0227.
8AlexiousLee631HKSanyIntl2/25/2014EstimatedFYFY201312/2012BUYCNY52058189.
54.
0AlexiousLee3808HKSinotruk3/26/2014EstimatedFYFY201312/2012SELLCNY38239098.
1210.
9AlexiousLee2338HKWeichaiPower3/21/2014EstimatedFYFY201312/2012SELLCNY2,5083,68868.
0(16.
1)AlexiousLee200581CHWeifuHigh-Tech3/27/2014EstimatedFYFY201312/2012BUYCNY1,2261,139107.
737.
8AlexiousLee564HKZMJ3/19/2014EstimatedFYFY201312/2012O-PFCNY1,4031,143122.
8(11.
7)AlexiousLee1157HKZoomlion10/30/2013Confirmed3QFY201312/2012BUYCNY5,4315,257103.
3(25.
9)AlexiousLeeTechnology:NicolasBaratte/CKCheng/ChitraGopal763HKZTE3/27/2014EstimatedFYFY201312/2012SELLCNY1,9531,870104.
4n.
a.
CKCheng,CAST992HKLenovo11/8/2013Estimated2QFY201403/2013BUYUSD72375995.
334.
4ChitraGopal,CFA*522HKASMPacific10/31/2013Confirmed3QFY201312/2012BUYHKD1,2291,036118.
780.
2ChitraGopal,CFA*2018HKAAC11/4/2013Confirmed3QFY201312/2012O-PFCNY2,1882,29095.
630.
1ChitraGopal,CFA*2382HKSunnyOptical3/10/2014EstimatedFYFY201312/2012U-PFCNY41846689.
720.
9CKCheng,CASTConsumerstaples:XiaopoWei/DaweiFeng151HKWantWant3/5/2014EstimatedFYFY201312/2012BUYUSD682663102.
923.
2XiaopoWei,CFA322HKTingyi11/14/2013Estimated3QFY201312/2012SELLUSD41241499.
5(9.
5)XiaopoWei,CFA220HKUni-PresidentChina3/26/2014EstimatedFYFY201312/2012U-PFCNY79781198.
3(6.
9)DaweiFeng,CFA2319HKMengniuDairy3/27/2014EstimatedFYFY201312/2012BUYCNY1,5451,57698.
027.
8XiaopoWei,CFA6863HKHuishanDairy#N/AN/A#N/AN/A#N/A03/2013BUYCNY1,3471,347100.
0110.
2XiaopoWei,CFA1044HKHengan3/26/2014EstimatedFYFY201312/2012O-PFHKD3,8903,94698.
610.
9DaweiFeng,CFA3331HKVinda3/26/2014EstimatedFYFY201312/2012O-PFHKD53255895.
3(0.
9)DaweiFeng,CFA1068HKYurunFood3/24/2014EstimatedFYFY201312/2012SELLHKD(256)(124)206.
2n.
a.
DaweiFeng,CFA6808HKSunArt3/17/2014EstimatedFYFY201312/2012SELLCNY2,7262,76598.
613.
2XiaopoWei,CFA291HKCRE11/14/2013Estimated3QFY201312/2012O-PFHKD1,7971,797100.
0(54.
4)XiaopoWei,CFA168HKTsingtao10/30/2013Confirmed3QFY201312/2012U-PFCNY2,0072,007100.
014.
1XiaopoWei,CFAConsumerDiscretionary:AaronFischer/XiaopoWei/MarianaKou/DaweiFeng1913HKPrada12/5/2013Confirmed3QFY201401/2013BUYEUR762744102.
444.
9AaronFischer,CFA1910HKSamsonite3/19/2014EstimatedFYFY201312/2012BUYUSD17419092.
017.
5AaronFischer,CFA494HKLi&Fung3/21/2014EstimatedFYFY201312/2012U-PFUSD58359797.
8(5.
5)AaronFischer,CFA973HKL'Occitane11/27/2013Estimated1HFY201403/2013U-PFEUR11913389.
51.
3AaronFischer,CFA330HKEsprit2/27/2014Estimated1HFY201406/2013SELLHKD(1,287)215(598.
6)(602.
6)AaronFischer,CFA1929HKChowTaiFook11/29/2013Estimated1HFY201403/2013BUYHKD6,7216,76299.
4(13.
2)AaronFischer,CFA3389HKHengdeli3/26/2014EstimatedFYFY201312/2012U-PFCNY729623117.
0(10.
8)MarianaKou,CFA887HKEmperorWatch3/18/2014EstimatedFYFY201312/2012U-PFHKD32833199.
1(18.
8)MarianaKou,CFA398HKOrientalWatch11/21/2013Estimated1HFY201403/2013SELLHKD11113582.
410.
7MarianaKou,CFA999HKI.
T5/5/2014EstimatedFYFY201402/2013SELLHKD11827343.
4(18.
6)MarianaKou,CFA1212HKLifestyle3/4/2014EstimatedFYFY201312/2012BUYHKD2,3422,133109.
813.
9MarianaKou,CFA178HKSaSa11/21/2013Estimated1HFY201403/2013U-PFHKD98599798.
819.
7MarianaKou,CFA3308HKGoldenEagle3/31/2014EstimatedFYFY201312/2012O-PFCNY1,2501,233101.
42.
7XiaopoWei,CFA3368HKParksonRetailGrp11/14/2013Estimated3QFY201312/2012U-PFCNY653639102.
2(23.
3)XiaopoWei,CFA1833HKIntime3/19/2014EstimatedFYFY201312/2012O-PFCNY9021,05085.
9(7.
2)XiaopoWei,CFA825HKNWDS2/26/2014Estimated1HFY201406/2013U-PFHKD66569895.
31.
0XiaopoWei,CFA493HKGome11/14/2013Estimated3QFY201312/2012SELLCNY54363385.
7n.
a.
XiaopoWei,CFA2020HKAntaSports2/25/2014EstimatedFYFY201312/2012O-PFCNY1,2511,242100.
8(7.
9)XiaopoWei,CFA3818HKDongxiang3/20/2014EstimatedFYFY201312/2012U-PFCNY199189105.
412.
7XiaopoWei,CFA2331HKLiNing3/26/2014EstimatedFYFY201312/2012SELLCNY(342)(298)114.
7n.
a.
XiaopoWei,CFA1880HKBelleIntl3/25/2014EstimatedFYFY201312/2012BUYCNY4,5274,405102.
84.
0XiaopoWei,CFA210HKDaphne3/20/2014EstimatedFYFY201312/2012U-PFHKD654647101.
1(31.
6)DaweiFeng,CFA2313HKShenzhouIntl3/25/2014EstimatedFYFY201312/2012BUYCNY1,8781,878100.
015.
9DaweiFeng,CFA1836HKStellaInternational3/20/2014EstimatedFYFY201312/2012U-PFUSD11912099.
2(21.
6)DaweiFeng,CFA891HKTrinity3/13/2014EstimatedFYFY201312/2012U-PFHKD32132897.
8(40.
6)DaweiFeng,CFA1234HKLilang3/13/2014EstimatedFYFY201312/2012SELLCNY48149796.
9(23.
3)DaweiFeng,CFA238HKEvergreenIntl3/25/2014EstimatedFYFY201312/2012U-PFCNY138138100.
0(11.
4)DaweiFeng,CFAHotels&Leisure:AaronFischer/RichardHuang/MarianaKou(*Announcementdateofparentcompanyisshownbelow)1928HKSandsChina*1/30/2014Estimated4QFY201312/2012O-PFUSD2,2352,186102.
279.
2AaronFischer,CFA1128HKWynnMacau*1/31/2014Estimated4QFY201312/2012BUYHKD7,3797,211102.
315.
2AaronFischer,CFA880HKSJM11/14/2013Estimated3QFY201312/2012BUYHKD7,9797,516106.
219.
9AaronFischer,CFA27HKGalaxy3/26/2014EstimatedFYFY201312/2012O-PFHKD9,9629,741102.
335.
0AaronFischer,CFAMPELUSMelcoCrown11/5/2013Confirmed3QFY201312/2012BUYUSD59763394.
443.
1AaronFischer,CFA2282HKMGMChina*10/31/2013Confirmed3QFY201312/2012BUYHKD5,3865,272102.
218.
9AaronFischer,CFA1680HKMacauLegend3/31/2014EstimatedFYFY201312/2012BUYHKD614589104.
214.
7AaronFischer,CFA703HKFutureBright3/17/2014EstimatedFYFY201312/2012BUYHKD11314180.
524.
8RichardHuang511HKTVB3/27/2014EstimatedFYFY201312/2012O-PFHKD1,7591,660106.
01.
7RichardHuang242HKShunTak3/25/2014EstimatedFYFY201312/2012BUYHKD828700118.
2(75.
6)RichardHuangUtilities/PowerEquipment:RajeshPanjwani/CharlesYonts2HKCLP2/25/2014EstimatedFYFY201312/2012SELLHKD8,6509,43991.
64.
1RajeshPanjwani6HKPowerAssets3/6/2014EstimatedFYFY201312/2012SELLHKD10,24510,162100.
85.
3RajeshPanjwani1038HKCheungKongInfra3/7/2014EstimatedFYFY201312/2012SELLHKD9,90110,33695.
85.
0RajeshPanjwani2727HKShanghaiElectric10/30/2013Confirmed3QFY201312/2012SELLCNY2,3222,81382.
6(14.
5)RajeshPanjwani1072HKDongfang10/31/2013Confirmed3QFY201312/2012SELLCNY1,8962,22685.
2(13.
5)RajeshPanjwani1133HKHarbinElectric3/25/2014EstimatedFYFY201312/2012SELLCNY75989684.
7(46.
1)RajeshPanjwani902HKHuanengPower3/19/2014EstimatedFYFY201312/2012O-PFCNY12,40811,273110.
1125.
1CharlesYonts991HKDatangPower10/29/2013Confirmed3QFY201312/2012U-PFCNY4,7104,421106.
515.
9CharlesYonts836HKCRPower3/18/2014EstimatedFYFY201312/2012BUYHKD11,67010,645109.
656.
0CharlesYonts1071HKHuadianPower10/30/2013Confirmed3QFY201312/2012O-PFCNY3,9313,498112.
4171.
7CharlesYonts2380HKChinaPower3/20/2014EstimatedFYFY201312/2012BUYCNY2,6892,457109.
4127.
7CharlesYonts2688HKENNEnergy3/26/2014EstimatedFYFY201312/2012O-PFCNY1,6941,78894.
714.
3RajeshPanjwani1193HKCRGas3/13/2014EstimatedFYFY201312/2012O-PFHKD1,9682,15591.
319.
2RajeshPanjwani3HKHK&ChinaGas3/18/2014EstimatedFYFY201312/2012SELLHKD6,3646,96491.
4(17.
7)RajeshPanjwaniAlternativeEnergy:CharlesYonts916HKLongyuanPower10/31/2013Confirmed3QFY201312/2012BUYCNY3,2953,011109.
426.
9CharlesYonts1798HKDatangRenewable3/24/2014EstimatedFYFY201312/2012U-PFCNY475470101.
2322.
0CharlesYonts958HKHNRenewables3/19/2014EstimatedFYFY201312/2012BUYCNY1,3031,145113.
8133.
6CharlesYonts257HKEverbrightIntl2/28/2014EstimatedFYFY201312/2012O-PFHKD1,1481,27690.
0(8.
5)CharlesYonts816HKHuadianFuxin3/26/2014EstimatedFYFY201312/2012BUYCNY1,8661,556119.
979.
3CharlesYonts3800HKGCL-Poly3/14/2014EstimatedFYFY201312/2012SELLCNY(13)(810)1.
6n.
a.
CharlesYontsTSLUSTrinaSolar11/20/2013Estimated3QFY201312/2012SELLUSD(80)(112)70.
8n.
a.
CharlesYontsTransport:PaulWan/NathanSnyder753HKAirChina10/29/2013Confirmed3QFY201312/2012N-RCNYn.
a.
n.
a.
n.
a.
n.
a.
PaulWan293HKCathayPacific3/12/2014ConfirmedFYFY201312/2012BUYHKD2,9672,238132.
6223.
9PaulWan2866HKCSCL10/29/2013Confirmed3QFY201212/2011SELLCNY1,063582182.
8(172.
3)PaulWan316HKOOIL3/6/2014EstimatedFYFY201312/2012O-PFUSD3018216.
6(89.
8)PaulWan1138HKChinaShippingDev10/29/2013Confirmed3QFY201312/2012BUYCNY(1,508)(1,163)129.
7(2145.
4)NathanSnyder1919HKChinaCosco10/30/2013Confirmed3QFY201312/2012SELLCNY(9,046)(1,437)629.
5n.
a.
NathanSnyder2343HKPacificBasin2/28/2014EstimatedFYFY201312/2012O-PFUSD4335123.
2(15.
4)NathanSnyderHPHTSPHPHTrust4/30/2014Estimated1QFY201312/2012SELLHKD1,8321,92495.
2(19.
9)NathanSnyder1199HKCoscoPacific10/28/2013Confirmed3QFY201312/2012O-PFUSD1,111363306.
1224.
7NathanSnyder144HKChinaMerchants3/27/2014EstimatedFYFY201312/2012U-PFHKD4,1114,11599.
97.
7NathanSnyderSmall&MidCaps:ZacGill341HKCafédeCoral11/26/2013Estimated1HFY201403/2013#N/AHKDn.
a.
n.
a.
n.
a.
n.
a.
ZacGill303HKVTech11/14/2013Estimated1HFY201403/2013U-PFUSD218216100.
96.
3ZacGill1259HKPrinceFrog3/26/2014EstimatedFYFY201312/2012BUYCNY25727294.
67.
0ZacGill669HKTechtronic3/21/2014EstimatedFYFY201312/2012U-PFUSD24224997.
120.
3ZacGill826HKTiangong3/26/2014EstimatedFYFY201312/2012BUYCNY498497100.
111.
8ZacGill838HKEVAPrecision3/27/2014EstimatedFYFY201312/2012BUYHKD171101168.
2160.
1ZacGill1882HKHaitian3/26/2014EstimatedFYFY201312/2012U-PFCNY1,0701,16292.
110.
2ZacGill425HKMinth3/19/2014EstimatedFYFY201312/2012BUYCNY998991100.
618.
6ZacGill868HKXinyiGlass2/28/2014EstimatedFYFY201312/2012BUYHKD2,1482,113101.
680.
8ZacGill2168HKYingdeGases3/28/2014EstimatedFYFY201312/2012SELLCNY80184295.
24.
1ZacGill2689HKNineDragons2/24/2014Estimated1HFY201406/2013SELLCNY1,9471,97298.
717.
4ZacGill2314HKLee&ManPaper3/31/2014EstimatedFYFY201303/2012U-PFHKD1,9791,973100.
333.
2ZacGillNetIncome(LC'm)KeytoCLSA/CATaiwaninvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
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Preparedfor:CITICSChina&HongKong-Priceandvaluationdata(1)TickerStockNameUpsideCLSA28-OctTarget(%)totalfree-flow13CL14CL13CL14CL13CL14CL13CL14CLRecFinancialServices:DerekOvington/PatriciaCheng/MarcusLiu/ChenHuang5HKHSBCHKD85.
1585.
00-0.
2205,887205,88711.
211.
133.
20.
64.
65.
01.
21.
1U-PF2888HKStandardCharteredHKD190.
50232.
0021.
859,61659,61611.
59.
57.
721.
93.
74.
21.
31.
2BUY1398HKICBCHKD5.
205.
7911.
3221,20058,2115.
65.
37.
96.
36.
36.
71.
11.
0U-PF939HKCCBHKD5.
776.
8318.
4185,556178,9185.
55.
07.
511.
16.
47.
11.
10.
9O-PF1288HKAgriculturalBankHKD3.
483.
675.
5134,12313,7975.
54.
912.
712.
56.
47.
21.
00.
9O-PF3988HKBankofChinaHKD3.
464.
6735.
0126,64437,3175.
34.
93.
19.
36.
67.
20.
80.
8BUY3328HKBocomHKD5.
475.
836.
651,53424,7015.
34.
7(7.
4)13.
06.
67.
50.
80.
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144,5658,5625.
85.
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94.
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333,54633,54612.
210.
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5BUY11HKHangSengBankHKD127.
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231,34131,3419.
115.
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24.
22.
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5034.
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69,5939,59311.
711.
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23.
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1U-PF302HKWingHangBankHKD113.
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84,4814,48116.
716.
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54.
82.
12.
21.
61.
5O-PF1299HKAIAHKD38.
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70-20.
760,11760,11717.
416.
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73.
91.
41.
52.
11.
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165,57919,17616.
014.
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52.
81.
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526,9469,68320.
318.
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251,41523,41313.
512.
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91.
22.
01.
7BUY2328HKPICCP&CHKD11.
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118,5056,1619.
89.
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02,4912,49119.
513.
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3U-PF1336HKNewChinaLifeHKD20.
8524.
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110,3102,78115.
413.
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2O-PF1339HKPICCGroupHKD3.
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219,5894,02912.
311.
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3SELL388HKHKExchangesHKD123.
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818,50118,50131.
427.
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73.
17.
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5SELL6837HKHaitongHKD11.
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416.
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11.
72.
11.
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3BUY165HKEverbrightLtdHKD11.
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62,4542,45411.
58.
144.
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6BUY3360HKFarEastHorizonHKD5.
536.
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92,3482,3487.
86.
220.
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63.
24.
01.
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9BUYChinaProperty:NicoleWong/SusannaLeung688HKColiHKD23.
4031.
4034.
224,66624,6669.
37.
29.
329.
02.
12.
81.
91.
6BUY200002CHVankeHKD13.
9120.
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816,2732,3597.
96.
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92.
21.
61.
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316,01416,01414.
19.
9(16.
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61.
32.
01.
71.
1BUY3333HKEvergrandeHKD3.
253.
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86,7226,7224.
94.
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15.
10.
80.
7U-PF2007HKCountryGardenHKD4.
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311,87911,8798.
66.
221.
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34.
46.
01.
71.
4BUY410HKSohoChinaHKD6.
606.
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04,1324,1328.
118.
0(68.
7)(55.
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84.
80.
80.
5U-PF3383HKAgilePropertyHKD9.
099.
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84,0424,0425.
65.
4(11.
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54.
54.
61.
01.
1O-PF813HKShimaoPropertyHKD17.
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67,9727,9727.
35.
616.
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23.
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41.
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55,3451,6846.
05.
4(1.
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86.
77.
41.
11.
0BUY81HKCogoHKD8.
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22,6202,6207.
25.
917.
322.
92.
83.
12.
11.
6O-PF1813HKKWGPropertyHKD4.
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01,8361,8364.
84.
1(2.
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60.
5BUY960HKLongforHKD12.
6415.
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68,8718,8719.
06.
7(7.
3)33.
22.
23.
01.
61.
3O-PFHKProperty:NicoleWong/SusannaLeung/DanieSchutte/JonathanGalligan/JacksonHui16HKSHKPHKD101.
40105.
003.
634,93234,9326.
610.
8(7.
2)(38.
8)3.
34.
70.
70.
6U-PF1HKCheungKongHKD121.
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336,41636,41610.
19.
0(13.
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72.
73.
00.
80.
7BUY101HKHangLungPropHKD25.
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014,47014,47030.
917.
7(56.
8)74.
83.
03.
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90.
8O-PF4HKWharfHKD66.
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525,89125,89116.
414.
1(74.
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82.
63.
20.
70.
6O-PF12HKHendersonLandHKD45.
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515,97815,97814.
415.
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42.
20.
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5SELLHKLSPHongkongLandUSD6.
158.
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614,47014,47015.
716.
9(36.
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82.
80.
60.
5BUY1972HKSwirePropertiesHKD21.
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415,99615,99619.
918.
6(66.
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52.
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60.
6BUY83HKSinoLandHKD10.
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68,1478,1475.
415.
38.
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74.
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6U-PF683HKKerryPropertiesHKD33.
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26,1976,19710.
113.
3(23.
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72.
70.
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6U-PF17HKNewWorldDevHKD10.
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38,7438,7434.
78.
921.
0(46.
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93.
90.
50.
5O-PF14HKHysanHKD36.
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84,9394,93918.
516.
6n.
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11.
13.
53.
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60.
6O-PF41HKGreatEagleHKD27.
5027.
44-0.
22,2672,26711.
811.
8(58.
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02.
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40.
4U-PF1200HKMidlandHKD3.
133.
10-1.
0290290(28.
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8n.
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n.
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0.
01.
91.
51.
4U-PF823HKLinkReitHKD38.
9535.
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311,60911,60926.
625.
213.
35.
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84.
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1SELL497HKCSIPropertiesHKD0.
260.
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73193192.
61.
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75.
78.
90.
40.
3BUYOil&Gas:SimonPowell/NelsonWang857HKPetroChinaHKD8.
7712.
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5224,76823,8669.
58.
415.
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24.
75.
41.
11.
0BUY386HKSinopecHKD5.
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683,68719,6457.
97.
29.
79.
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44.
81.
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9BUY883HKCNOOCHKD15.
2818.
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087,99087,9908.
47.
61.
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03.
03.
31.
51.
3BUY2883HKCOSLHKD21.
3515.
50-27.
414,8814,22615.
815.
55.
72.
01.
31.
32.
11.
9U-PF2386HKSEGHKD11.
1012.
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16,3392,09111.
49.
2(27.
8)23.
92.
63.
31.
91.
7BUY338HKShanghaiPetrochemHKD2.
072.
4015.
94,27093316.
113.
6n.
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18.
32.
52.
91.
11.
0BUY3337HKAntonoilHKD4.
544.
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81,2641,26419.
717.
226.
614.
61.
82.
13.
33.
0SELLResources:AndrewDriscoll/DanielMeng1088HKShenhuaHKD23.
5028.
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154,23110,3018.
79.
5(12.
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54.
11.
31.
2BUY1898HKChinaCoalHKD4.
674.
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810,1142,47411.
011.
4(49.
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72.
60.
60.
5SELL2600HKChalcoHKD3.
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77,9651,526(10.
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2)n.
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a.
0.
00.
00.
80.
8SELL486HKRusalHKD2.
382.
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24,6644,664(308.
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7n.
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n.
a.
0.
00.
00.
40.
4U-PF1171HKYanzhouCoalHKD7.
757.
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66,9731,958189.
211.
0(97.
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12.
52.
70.
70.
7U-PF358HKJiangxiCopperHKD14.
2816.
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07,6572,55512.
810.
6(40.
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33.
13.
80.
90.
8U-PF639HKShougangFushanHKD2.
633.
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11,7981,79813.
212.
4(40.
4)6.
43.
43.
60.
70.
7O-PF1393HKHidiliIndustryHKD1.
291.
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0340340(14.
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4n.
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n.
a.
0.
00.
90.
30.
3SELL975HKMongolianMiningHKD1.
161.
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8554554(16.
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4n.
a.
n.
a.
0.
00.
00.
80.
7SELL914HKConchHKD25.
5030.
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613,8314,27413.
711.
823.
915.
21.
51.
82.
01.
7O-PF3323HKCNBMHKD7.
297.
300.
15,0762,7075.
85.
4(4.
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22.
62.
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90.
8SELL1893HKSinomaHKD1.
621.
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37462439.
77.
9(0.
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41.
41.
70.
40.
4O-PF1313HKCRCementHKD5.
116.
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44,3064,30612.
110.
118.
419.
51.
61.
91.
41.
3O-PF691HKShanshuiCementHKD2.
733.
5028.
29929926.
06.
0(33.
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25.
05.
10.
70.
6U-PF2899HKZijinHKD1.
802.
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17,8881,39512.
310.
3(51.
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82.
93.
51.
11.
0U-PF1818HKZhaojinHKD6.
326.
00-5.
12,37671312.
013.
4(36.
1)(10.
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12.
81.
71.
5SELL1051HKG-ResourcesHKD0.
240.
2817.
781081020.
710.
0n.
a.
106.
30.
00.
90.
60.
7BUYConglomerates:DanieSchutte/JonathanGalligan/RobertBruce13HKHutchisonWhampoaHKD96.
15106.
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252,87152,87113.
612.
115.
612.
72.
42.
71.
00.
9BUYJMSPJardineMathesonUSD55.
4068.
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737,70337,70313.
912.
8(13.
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42.
22.
31.
11.
0BUYJSSPJardineStrategicUSD34.
3841.
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338,51638,51612.
811.
3(10.
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70.
70.
80.
90.
9BUYJCNCSPJardineC&CSGD36.
3638.
004.
510,46310,46311.
110.
2(5.
6)8.
84.
04.
32.
01.
8U-PFDFISPDairyFarmUSD11.
4710.
72-6.
615,50815,50830.
827.
911.
110.
32.
03.
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29.
5U-PF66HKMTRCHKD29.
6532.
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217.
0(43.
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32.
83.
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11.
1U-PF19HKSwirePacificHKD89.
35103.
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317,23510,43614.
011.
5(45.
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13.
94.
30.
60.
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3028.
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62,8442,8441.
915.
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50.
5O-PF737HKHopewellHighwayHKD3.
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39-8.
81,4791,47915.
014.
9(28.
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96.
46.
51.
21.
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94,8354,83513.
311.
2(7.
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62.
83.
21.
21.
1BUY392HKBeijingEntHKD61.
2056.
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59,2099,20920.
416.
34.
225.
11.
31.
61.
81.
6U-PFTelecoms:ElinorLeung/TerryChen941HKChinaMobileHKD80.
50100.
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2208,713208,71310.
010.
4(1.
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34.
11.
61.
5BUY728HKChinaTelecomHKD4.
054.
408.
642,2767,24914.
511.
620.
224.
92.
32.
80.
90.
9U-PF762HKUnicomHKD12.
0812.
503.
536,99436,99421.
015.
351.
337.
01.
31.
81.
01.
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534.
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52,1942,19413.
613.
02.
24.
55.
55.
81.
51.
4U-PFInternet&Media:ElinorLeung/JialongShiBIDUUSBaiduUSD159.
36170.
006.
755,74043,38532.
026.
22.
922.
20.
00.
09.
36.
9BUY700HKTencentHKD433.
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4103,844103,84439.
632.
224.
022.
90.
30.
411.
18.
3O-PFSINAUSSinaUSD83.
2381.
00-2.
75,5465,546(261.
0)77.
2n.
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00.
04.
13.
8U-PFNTESUSNetEaseUSD72.
8583.
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99,5209,52012.
911.
024.
917.
41.
92.
33.
12.
5BUYCTRPUSCtripUSD55.
7259.
506.
87,2117,21154.
342.
820.
727.
00.
00.
05.
74.
7BUYSOHUUSSohuUSD81.
4299.
0021.
63,1173,11738.
122.
1(5.
8)72.
30.
00.
02.
72.
4BUYCYOUUSChangyouUSD35.
7143.
0020.
41,8933886.
05.
57.
38.
60.
00.
02.
11.
5BUYGAUSGiantInteractiveUSD9.
248.
10-12.
32,2142,21410.
910.
525.
84.
24.
64.
83.
63.
1U-PFGAMEUSShandaGamesUSD4.
414.
40-0.
21,1932916.
87.
42.
0(8.
1)0.
00.
01.
41.
2U-PFPWRDUSPerfectWorldUSD17.
5925.
0042.
185775313.
08.
4(30.
9)54.
31.
93.
01.
21.
1BUYVIPSUSVipshopUSD66.
6684.
0026.
03,6883,6880.
00.
0n.
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n.
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0.
00.
030.
417.
5O-PFSteel&Autos:ScottLaprise347HKAngangHKD4.
495.
3819.
93,59062925.
120.
7n.
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21.
30.
02.
40.
50.
5U-PF323HKMagangHKD1.
951.
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12,152436(35.
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3n.
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0.
00.
00.
50.
5SELL697HKShougangIntlHKD0.
390.
5337.
5445445(4.
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9n.
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00.
00.
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4BUY489HKDongfengHKD10.
909.
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112,1134,0158.
19.
21.
5(12.
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01.
21.
1SELL1211HKBYDHKD39.
255.
18-86.
814,1354,015160.
0161.
4481.
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00.
03.
53.
4SELL2238HKGACHKD8.
894.
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08,0602,53820.
913.
891.
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01.
42.
11.
41.
3SELL2333HKGreatWallMotorHKD46.
5035.
08-24.
620,7186,19614.
313.
338.
07.
60.
10.
14.
03.
2SELL1728HKZhengtongAutoHKD5.
395.
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41,5361,53611.
78.
433.
638.
50.
00.
01.
31.
1BUYPricePE(x)EPSg(%)MktCap(US$m)28October,2013Yield(%)PB(x)Preparedfor:CITICSChina&HongKong-Priceandvaluationdata(2)TickerStockNameUpsideCLSA28-OctTarget(%)totalfree-flow13CL14CL13CL14CL13CL14CL13CL14CLRecMachinery,Trucks&Construction:AlexiousLee1800HKCCCHKD6.
007.
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411,2833,4265.
75.
310.
18.
44.
34.
70.
80.
7O-PF3339HKLonkingHKD1.
602.
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488388310.
98.
4227.
830.
81.
72.
20.
80.
7BUY631HKSanyIntlHKD2.
273.
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889089010.
78.
54.
026.
53.
03.
80.
90.
9BUY3808HKSinotrukHKD3.
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51,4031,40322.
513.
1210.
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51.
22.
10.
50.
4SELL2338HKWeichaiPowerHKD31.
1022.
90-26.
46,7121,94819.
618.
9(16.
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80.
40.
41.
81.
7SELL200581CHWeifuHigh-TechHKD23.
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74,10052915.
711.
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72.
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01.
7BUY564HKZMJHKD4.
685.
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51,5351474.
34.
0(11.
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07.
17.
70.
60.
5O-PF1157HKZoomlionHKD7.
028.
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57,2661,2957.
96.
9(25.
9)14.
52.
73.
11.
00.
9BUYTechnology:NicolasBaratte/CKCheng/ChitraGopal763HKZTEHKD16.
7610.
80-35.
68,4491,36123.
419.
8n.
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18.
01.
41.
72.
11.
9SELL992HKLenovoHKD8.
068.
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010,80510,80517.
115.
134.
113.
82.
32.
74.
03.
4BUY522HKASMPacificHKD73.
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33,8003,80023.
814.
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260.
31.
94.
43.
83.
3BUY2018HKAACHKD34.
3542.
4823.
75,4405,44015.
313.
330.
114.
62.
63.
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33.
5O-PF2382HKSunnyOpticalHKD7.
509.
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01,0611,06113.
910.
919.
527.
02.
22.
82.
42.
1U-PFConsumerstaples:XiaopoWei/DaweiFeng151HKWantWantHKD11.
4414.
8930.
219,51219,51228.
624.
423.
217.
32.
12.
510.
58.
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415,19215,19238.
032.
411.
417.
41.
41.
55.
55.
0SELL220HKUni-PresidentChinaHKD7.
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13,7093,70928.
624.
4(6.
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70.
82.
72.
5U-PF2319HKMengniuDairyHKD35.
2039.
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28,3298,32932.
323.
726.
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10.
70.
93.
63.
2BUY6863HKHuishanDairyHKD3.
073.
4111.
15,7055,70528.
023.
4158.
819.
70.
00.
04.
82.
6BUY1044HKHenganHKD90.
3093.
003.
014,34214,34228.
523.
610.
920.
92.
12.
57.
06.
2O-PF3331HKVindaHKD10.
949.
00-17.
71,4091,40920.
717.
2(0.
9)20.
81.
41.
72.
42.
2O-PF1068HKYurunFoodHKD5.
184.
30-17.
01,2181,218(36.
9)28.
4n.
a.
n.
a.
0.
00.
90.
60.
6SELL6808HKSunArtHKD12.
349.
34-24.
315,18315,18334.
330.
513.
012.
50.
91.
05.
04.
5SELL291HKCREHKD26.
7027.
804.
18,2758,27535.
929.
517.
121.
71.
11.
41.
51.
5O-PF168HKTsingtaoHKD62.
1559.
60-4.
110,6705,25133.
128.
714.
115.
60.
91.
14.
84.
3U-PFConsumerDiscretionary:AaronFischer/XiaopoWei/MarianaKou/DaweiFeng1913HKPradaHKD74.
0096.
0029.
724,42224,42230.
323.
143.
621.
81.
21.
18.
26.
1BUY1910HKSamsoniteHKD20.
0527.
3036.
23,6393,63919.
016.
219.
217.
51.
21.
43.
12.
7BUY494HKLi&FungHKD10.
7610.
50-2.
411,60311,60319.
715.
4(5.
5)28.
04.
45.
62.
52.
3U-PF973HKL'OccitaneHKD17.
7419.
007.
13,3793,37921.
320.
41.
6(3.
2)1.
61.
73.
63.
1U-PF330HKEspritHKD12.
9610.
00-22.
83,2433,243(5.
2)(17.
7)n.
a.
n.
a.
0.
00.
01.
41.
5SELL1929HKChowTaiFookHKD12.
2213.
9013.
715,76115,76122.
218.
2(13.
2)22.
11.
82.
23.
73.
3BUY3389HKHengdeliHKD1.
831.
80-1.
61,1341,1349.
88.
0(10.
7)21.
53.
23.
71.
21.
1U-PF887HKEmperorWatchHKD0.
620.
7521.
055055012.
89.
3(18.
8)37.
22.
33.
21.
00.
9U-PF398HKOrientalWatchHKD2.
461.
90-22.
81811817.
712.
710.
7(38.
9)2.
82.
00.
60.
6SELL999HKI.
THKD2.
412.
00-17.
03823827.
725.
0(19.
3)(69.
2)1.
20.
01.
21.
1SELL1212HKLifestyleHKD16.
5624.
3647.
13,5223,52211.
810.
913.
57.
93.
43.
72.
52.
2BUY178HKSaSaHKD8.
378.
906.
33,0583,05828.
724.
119.
519.
12.
52.
912.
010.
0U-PF3308HKGoldenEagleHKD11.
0013.
0018.
22,6342,63413.
311.
76.
113.
22.
32.
63.
02.
5O-PF3368HKParksonRetailGrpHKD2.
763.
3019.
69999999.
48.
3(23.
3)14.
14.
85.
51.
00.
9U-PF1833HKIntimeHKD9.
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5617.
32,3292,32917.
214.
09.
323.
01.
92.
21.
81.
6O-PF825HKNWDSHKD4.
593.
96-13.
799899812.
611.
61.
08.
44.
04.
31.
21.
1U-PF493HKGomeHKD1.
240.
73-41.
12,6992,69930.
521.
1n.
a.
45.
01.
01.
41.
11.
0SELL2020HKAntaSportsHKD10.
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23,5333,53317.
416.
3(8.
0)6.
93.
53.
73.
12.
9O-PF3818HKDongxiangHKD1.
231.
230.
087887825.
924.
7(13.
3)4.
62.
62.
80.
80.
8U-PF2331HKLiNingHKD6.
934.
14-40.
31,2231,223(26.
7)87.
5n.
a.
n.
a.
0.
00.
53.
53.
3SELL1880HKBelleIntlHKD10.
5413.
5028.
111,46611,46615.
613.
54.
015.
31.
92.
22.
82.
4BUY210HKDaphneHKD4.
054.
8018.
586186111.
410.
2(29.
8)11.
53.
03.
51.
51.
2U-PF2313HKShenzhouIntlHKD26.
9529.
609.
84,8634,86315.
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110.
718.
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63.
12.
72.
4BUY1836HKStellaInternationalHKD19.
4419.
20-1.
21,9921,99216.
715.
9(21.
6)4.
84.
24.
42.
12.
1U-PF891HKTrinityHKD2.
763.
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361661614.
811.
7(40.
6)26.
24.
76.
01.
41.
3U-PF1234HKLilangHKD4.
974.
00-19.
57707709.
811.
9(23.
3)(17.
3)5.
34.
31.
91.
8SELL238HKEvergreenIntlHKD1.
551.
7714.
41901908.
58.
6(11.
4)(2.
0)6.
56.
40.
80.
8U-PFHotels&Leisure:AaronFischer/RichardHuang/MarianaKou1928HKSandsChinaHKD55.
6557.
002.
457,87057,87025.
920.
679.
225.
73.
13.
910.
29.
0O-PF1128HKWynnMacauHKD29.
5037.
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419,73819,73820.
719.
015.
28.
94.
24.
218.
615.
6BUY880HKSJMHKD25.
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5014.
017,90617,90617.
415.
619.
911.
84.
65.
16.
86.
1BUY27HKGalaxyHKD58.
1061.
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031,60231,60224.
421.
835.
011.
80.
00.
07.
65.
6O-PFMPELUSMelcoCrownUSD34.
3242.
0022.
419,01519,01531.
824.
043.
132.
30.
00.
04.
53.
8BUY2282HKMGMChinaHKD27.
9036.
8031.
913,67413,67419.
717.
818.
910.
93.
73.
712.
810.
2BUY1680HKMacauLegendHKD4.
744.
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63,8103,81048.
159.
614.
7(19.
2)0.
00.
04.
84.
4BUY703HKFutureBrightHKD3.
043.
102.
024724716.
913.
311.
326.
91.
01.
42.
82.
4BUY511HKTVBHKD46.
9557.
0021.
42,6522,65211.
711.
01.
76.
15.
96.
02.
52.
3O-PF242HKShunTakHKD4.
515.
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61,7431,74316.
39.
2(75.
6)77.
32.
23.
80.
70.
6BUYUtilities/PowerEquipment:RajeshPanjwani/CharlesYonts2HKCLPHKD61.
7055.
00-10.
920,10520,10518.
015.
8(0.
7)14.
24.
24.
21.
81.
7SELL6HKPowerAssetsHKD64.
9558.
00-10.
717,87917,87913.
513.
15.
33.
64.
14.
22.
01.
9SELL1038HKCheungKongInfraHKD52.
8543.
00-18.
617,01317,01313.
312.
63.
05.
53.
33.
51.
91.
8SELL2727HKShanghaiElectricHKD2.
832.
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37,0101,08512.
413.
0(14.
5)(4.
5)2.
42.
30.
90.
9SELL1072HKDongfangHKD11.
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73,64552510.
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21.
11.
11.
0SELL1133HKHarbinElectricHKD4.
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08.
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1)(18.
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24.
20.
40.
4SELL902HKHuanengPowerHKD8.
088.
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713,1093,7057.
38.
0125.
1(9.
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46.
71.
41.
3O-PF991HKDatangPowerHKD3.
483.
45-0.
98,4801,4887.
86.
915.
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14.
24.
80.
80.
8U-PF836HKCRPowerHKD19.
9224.
2021.
512,30612,3068.
18.
155.
10.
14.
04.
01.
51.
3BUY1071HKHuadianPowerHKD3.
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10.
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9O-PF2380HKChinaPowerHKD3.
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12,2782,2785.
65.
992.
4(4.
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76.
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80.
8BUY2688HKENNEnergyHKD44.
9045.
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26,2716,27122.
819.
813.
414.
71.
11.
33.
93.
4O-PF1193HKCRGasHKD19.
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05,5995,59922.
118.
58.
119.
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70.
93.
32.
9O-PF3HKHK&ChinaGasHKD18.
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322,24322,24327.
125.
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61.
92.
13.
63.
3SELLAlternativeEnergy:CharlesYonts916HKLongyuanPowerHKD9.
039.
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29,4263,89017.
413.
618.
128.
60.
00.
01.
81.
6BUY1798HKDatangRenewableHKD1.
701.
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51,59554827.
115.
0216.
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30.
00.
01.
01.
0U-PF958HKHNRenewablesHKD3.
043.
7322.
73,3121,37015.
711.
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231.
70.
00.
01.
41.
4BUY257HKEverbrightIntlHKD7.
526.
13-18.
53,9323,93225.
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3(8.
5)17.
20.
80.
83.
12.
8O-PF816HKHuadianFuxinHKD2.
462.
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82,4195668.
08.
079.
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7)2.
52.
51.
31.
1BUY3800HKGCL-PolyHKD2.
381.
12-53.
14,7524,752(2316.
9)768.
3n.
a.
n.
a.
0.
00.
01.
71.
7SELLTSLUSTrinaSolarUSD16.
103.
07-80.
91,2711,271(14.
2)(17.
5)n.
a.
n.
a.
0.
00.
01.
51.
6SELLTransport:PaulWan/NathanSnyder753HKAirChinaHKD5.
44n.
a.
n.
a.
8,6913,201n.
a.
n.
a.
n.
a.
n.
a.
n.
a.
n.
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n.
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n.
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N-R293HKCathayPacificHKD15.
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4313.
27,8147,81420.
49.
5223.
9114.
32.
04.
21.
01.
0BUY2866HKCSCLHKD1.
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001.
54,290953(48.
3)17.
2n.
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n.
a.
0.
00.
00.
70.
7SELL316HKOOILHKD40.
3546.
7015.
73,2573,257108.
316.
7(89.
8)548.
30.
21.
50.
70.
7O-PF1138HKChinaShippingDevHKD4.
395.
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92,265734(7.
8)(17.
1)n.
a.
n.
a.
0.
00.
00.
50.
6BUY1919HKChinaCoscoHKD3.
702.
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65,2851,232(3.
3)(30.
1)n.
a.
n.
a.
0.
00.
01.
21.
3SELL2343HKPacificBasinHKD5.
436.
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01,3561,35631.
314.
3(6.
7)119.
31.
03.
51.
01.
0O-PFHPHTSPHPHTrustUSD0.
750.
67-10.
36,5336,53327.
627.
3(20.
0)1.
17.
07.
40.
80.
8SELL1199HKCoscoPacificHKD10.
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64,1024,1023.
511.
5218.
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3)7.
13.
50.
90.
9O-PF144HKChinaMerchantsHKD27.
6029.
506.
98,9828,98216.
815.
47.
19.
53.
03.
31.
51.
4U-PFSmall&MidCaps:ZacGill341HKCafédeCoralHKD26.
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n.
a.
1,9601,960n.
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n.
a.
n.
a.
n.
a.
n.
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n.
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n.
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n.
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#N/A303HKVTechHKD111.
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50-16.
83,5983,59817.
716.
55.
56.
85.
66.
06.
46.
4U-PF1259HKPrinceFrogHKD4.
666.
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560760714.
610.
66.
837.
11.
42.
22.
82.
3BUY669HKTechtronicHKD18.
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04,4524,45218.
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219.
330.
81.
21.
42.
62.
3U-PF826HKTiangongHKD1.
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8044.
34864866.
05.
26.
516.
53.
23.
80.
90.
8BUY838HKEVAPrecisionHKD1.
151.
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424924912.
38.
9148.
238.
63.
04.
21.
00.
9BUY1882HKHaitianHKD18.
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50-32.
93,8333,83322.
018.
310.
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51.
82.
23.
93.
5U-PF425HKMinthHKD16.
0215.
00-6.
42,2512,25113.
812.
318.
711.
92.
93.
31.
81.
7BUY868HKXinyiGlassHKD8.
029.
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24,0524,05214.
412.
475.
315.
93.
23.
92.
72.
5BUY2168HKYingdeGasesHKD7.
756.
80-12.
31,8291,82913.
811.
94.
116.
62.
52.
91.
81.
7SELL2689HKNineDragonsHKD6.
096.
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53,6653,66515.
811.
617.
534.
61.
21.
71.
00.
9SELL2314HKLee&ManPaperHKD5.
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503.
63,2163,21612.
711.
333.
112.
01.
92.
21.
61.
5U-PFPrice28October,2013Yield(%)PB(x)EPSg(%)PE(x)MktCap(US$m)KeytoCLSA/CATaiwaninvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
Forrelativeperformance,webenchmarkthe12-monthtotalreturn(includingdividends)forthestockagainstthe12-monthforecastreturn(includingdividends)forthelocalmarketwherethestockistraded.
Wedefinestocksweexpecttoprovidereturnsof100%orhigherincludingdividendswithinthreeyearsas"DoubleBaggers".
Theanalyst/swhocompiledthispublication/communicationherebystate/sandconfirm/sthatthecontentshereoftrulyreflecthis/her/theirviewsandopinionsonthesubjectmatterandthattheanalyst/shas/havenotbeenplacedunderanyundueinfluence,interventionorpressurebyanyperson/sincompilingsuchpublication/communication.
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Note:Intheinterestsoftimeliness,thisdocumenthasnotbeenedited.
Preparedfor:CITICSTickersStockNameSharepriceH/AA/HH-shareA/B-shareTotalFreeflowHFreeflowA/BH-shareA/B-shareH-shareA/B-sharepremium/premium/(discount)(discount)US$mUS$mUS$mUS$mUS$m%%1288HK601288CHAgriculturalBank134,12313,797116,27955.
645.
6HKD3.
48CNY2.
499.
7(8.
8)753HK601111CHAirChina8,6911,2085,2827.
715.
9HKD5.
44CNY3.
928.
9(8.
2)2600HK601600CHChalco7,9651,5266,4395.
221.
5HKD3.
00CNY4.
09(42.
4)73.
7347HK000898CHAngang3,5905982,96111.
65.
5HKD4.
49CNY2.
9320.
3(16.
9)914HK600585CHConch13,8313,891--37.
658.
3HKD25.
50CNY14.
5437.
6(27.
4)995HK600012CHAnhuiExpressway1,0422757660.
95.
4HKD4.
33CNY4.
00(15.
0)17.
73988HK601988CHBankofChina126,64432,57189,327126.
415.
2HKD3.
46CNY2.
78(2.
3)2.
43328HK601328CHBocom51,5348,93122,36118.
767.
7HKD5.
47CNY4.
163.
2(3.
1)2009HK601992CHBBMG3,9637561,2883.
416.
9HKD5.
27CNY6.
19(33.
2)49.
7588HK601588CHBeijingNorthStar1,4161611,2550.
24.
0HKD1.
77CNY2.
87(51.
6)106.
6187HK600860CHBeirenPrinting472394320.
48.
0HKD3.
06CNY8.
17(70.
6)240.
21211HK002594CHBYD14,1353,9272,23319.
873.
0HKD39.
25CNY39.
45(21.
9)28.
1998HK601998CHCNCB27,6794,09819,92418.
420.
2HKD4.
04CNY3.
80(16.
6)19.
81898HK601898CHChinaCoal10,1142,2857,51936.
510.
2HKD4.
67CNY5.
08(27.
8)38.
61800HK601800CHCCC11,2833,42690315.
313.
5HKD6.
00CNY4.
0715.
7(13.
6)939HK601939CHCCB185,55654,4616,637206.
517.
8HKD5.
77CNY4.
217.
6(7.
0)1919HK601919CHChinaCosco5,2851,2313,9686.
48.
1HKD3.
70CNY3.
23(10.
1)11.
2670HK600115CHChinaEasternAirlines5,3465403,5813.
721.
4HKD2.
67CNY2.
80(25.
2)33.
62039HK000039CHCIMC5,0367892,4671.
734.
7HKD13.
92CNY12.
19(10.
4)11.
62628HK601628CHChinaLife65,57919,17646,40368.
832.
2HKD19.
98CNY13.
5615.
6(13.
5)3968HK600036CHCMB44,5658,56236,00344.
6117.
0HKD14.
46CNY10.
626.
9(6.
4)1988HK600016CHMinsheng39,4545,59832,96376.
0228.
6HKD8.
71CNY8.
88(23.
0)29.
93993HK603993CHChinaMoly4,5884812,1221.
39.
9HKD3.
13CNY6.
56(62.
6)167.
02883HK601808CHCOSL14,8814,22510,47516.
322.
8HKD21.
35CNY21.
90(23.
5)30.
72601HK601601CHCPIC26,9467,09617,04828.
157.
6HKD27.
05CNY16.
7127.
1(21.
3)386HK600028CHSinopec83,68718,42464,04264.
831.
4HKD5.
97CNY4.
289.
5(8.
7)1186HK601186CHChinaRailwayConst10,6921,9948,29613.
019.
6HKD8.
19CNY5.
0427.
5(21.
6)390HK601390CHChinaRailwayGroup10,1162,2797,62311.
019.
9HKD4.
20CNY2.
7918.
2(15.
4)1088HK601088CHShenhua54,23110,27043,93061.
643.
2HKD23.
50CNY16.
2113.
8(12.
1)2866HK601866CHCSCL4,2909533,23912.
835.
8HKD1.
97CNY2.
56(39.
6)65.
61138HK600026CHCSDev2,2656641,53210.
712.
6HKD4.
39CNY4.
42(22.
0)28.
31055HK600029CHChinaSouthernAirlines4,2266703,1064.
915.
2HKD2.
95CNY2.
74(15.
5)18.
31053HK601005CHChongqingIron&Steel582765070.
26.
1HKD1.
09CNY2.
58(66.
8)201.
66030HK600030CHCitics21,3342,04118,88718.
4222.
2HKD15.
80CNY11.
715.
9(5.
6)1766HK601766CHChinaSouthLoco10,6391,5387,74813.
641.
8HKD6.
20CNY4.
664.
4(4.
2)2880HK601880CHDalianPort1,7002143510.
711.
1HKD1.
76CNY2.
64(47.
7)91.
1991HK601991CHDatangPower8,4801,1966,9926.
15.
3HKD3.
48CNY4.
30(36.
5)57.
41072HK600875CHDongfang3,6455253,1202.
419.
4HKD11.
98CNY11.
41(17.
6)21.
3895HK002672CHDongjiang1,3101585540.
712.
0HKD24.
50CNY40.
30(52.
3)109.
638HK601038CHFirstTractor1,1802872262.
616.
1HKD5.
54CNY9.
15(52.
5)110.
42333HK601633CHGreatWallMotor20,7186,1962,19930.
222.
9HKD46.
50CNY43.
98(17.
0)20.
5525HK601333CHGSRC3,4717592,7122.
924.
7HKD4.
11CNY2.
9210.
5(9.
5)2238HK601238CHGAC8,0602,5387918.
911.
2HKD8.
89CNY7.
96(12.
3)14.
1874HK600332CHGuangzhouPharma7,0249465,8815.
666.
2HKD33.
35CNY34.
52(24.
2)31.
9317HK600685CHGuangzhouShipyardIntl1,1402938421.
511.
6HKD11.
28CNY11.
69(24.
3)32.
06837HK600837CHHaitong17,5411,87115,34617.
7315.
1HKD11.
40CNY11.
54(22.
5)29.
0921HK000921CHKelonElec1,8473641,4351.
85.
8HKD6.
95CNY9.
76(44.
1)78.
91071HK600027CHHuadianPower3,7256113,0445.
019.
0HKD3.
52CNY3.
15(12.
3)14.
0902HK600011CHHuanengPower13,1093,1888,95623.
023.
3HKD8.
08CNY5.
4516.
4(14.
1)1398HK601398CHICBC221,20046,536162,989156.
932.
5HKD5.
20CNY3.
768.
5(7.
9)3948HK900948CHYitaiCoal6,329329--0.
00.
7HKD14.
98USD1.
95(1.
0)1.
0177HK600377CHJiangsuExpway5,0561,4943,5184.
12.
1HKD9.
48CNY5.
6831.
0(23.
7)358HK600362CHJiangxiCopper7,6572,3175,10224.
232.
4HKD14.
28CNY14.
96(25.
1)33.
5350HK000666CHJingweiTextile9091203420.
510.
5HKD5.
17CNY9.
17(55.
7)126.
01108HK600876CHLuoyangGlassCo248452030.
11.
6HKD1.
39CNY4.
95(78.
0)353.
7323HK600808CHMagang2,152436--4.
24.
3HKD1.
95CNY1.
75(12.
5)14.
31618HK601618CHMCC5,3865554,8300.
914.
4HKD1.
50CNY1.
81(35.
0)53.
7553HK600775CHNanjingPanda993945401.
06.
7HKD3.
70CNY7.
95(63.
5)173.
81336HK601336CHNewChinaLife10,3101,7843,9747.
532.
3HKD20.
85CNY21.
97(25.
5)34.
342HK000585CHNortheastElec274302410.
11.
8HKD0.
90CNY2.
41(70.
7)241.
2857HK601857CHPetroChina224,76823,536200,40696.
321.
1HKD8.
77CNY7.
55(8.
8)9.
72318HK601318CHPingAn51,41511,70128,00290.
1200.
3HKD58.
00CNY35.
6027.
9(21.
8)1812HK200488CHShandongChenmingPaper1,311116--0.
70.
6HKD3.
18HKD3.
89(18.
3)22.
31812HK000488CHShandongChenmingPaper1,3111168640.
77.
0HKD3.
18CNY4.
76(47.
6)90.
7568HK002490CHShandongMolong871723720.
413.
3HKD2.
45CNY8.
88(78.
3)361.
8719HK000756CHShandongXinhua274362340.
02.
0HKD2.
06CNY4.
64(65.
2)187.
02727HK601727CHShanghaiElectric7,0101,0195,9252.
78.
4HKD2.
83CNY3.
66(39.
3)64.
82196HK600196CHShanghaiFosunPharm6,3976125,6087.
277.
5HKD18.
20CNY17.
92(20.
3)25.
42607HK601607CHShanghaiPharma6,0361,1564,4564.
753.
5HKD16.
00CNY14.
10(10.
9)12.
3300HK600806CHKunmingMachineTool345353100.
13.
6HKD1.
92CNY4.
83(68.
8)220.
5548HK600548CHShenzhenExpway1,1402988341.
22.
1HKD3.
18CNY3.
54(29.
5)41.
8107HK601107CHSichuanExpressway1,337263--1.
03.
7HKD2.
28CNY3.
02(40.
7)68.
8338HK600688CHShanghaiPetrochem4,2708897404.
619.
5HKD2.
07CNY4.
17(61.
0)156.
71033HK600871CHYizhengChemical2,2693932162.
06.
6HKD2.
18CNY4.
39(61.
0)156.
61065HK600874CHTCEP1,7391231,6010.
927.
9HKD3.
14CNY8.
96(72.
5)263.
6168HK600600CHTsingtao10,6702,629--9.
717.
6HKD62.
15CNY47.
383.
0(2.
9)2338HK000338CHWeichaiPower6,7121,9482,99310.
225.
0HKD31.
10CNY19.
1527.
5(21.
5)2208HK002202CHGoldwindSci&Tech3,5274632,9115.
143.
1HKD8.
16CNY8.
32(23.
0)29.
91171HK600188CHYanzhouCoal6,9731,7785,01530.
017.
9HKD7.
75CNY10.
31(41.
0)69.
51057HK002703CHZhejiangShibao55629410.
15.
7HKD2.
76CNY16.
75(87.
1)673.
2564HK601717CHZhengzhouCoalMining1,535951,3881.
018.
7HKD4.
68CNY6.
13(40.
1)66.
92899HK601899CHZijin7,8881,3956,49312.
127.
5HKD1.
80CNY2.
50(43.
5)77.
01157HK000157CHZoomlion7,2661,1405,97011.
356.
5HKD7.
02CNY5.
79(4.
8)5.
1763HK000063CHZTE8,4491,3617,06819.
095.
3HKD16.
76CNY15.
36(14.
4)16.
8Simpleaverage(21.
5)60.
5Marketcapweightedaverage0.
61.
1MarketCap(US$m)Avg3MdailyT/OChina&HongKong-Priceandvaluationdata(3)28October,2013KeytoCLSA/CATaiwaninvestmentrankings:BUY:TotalreturnexpectedtoexceedmarketreturnANDprovide20%orgreaterabsolutereturn;O-PF:Totalreturnexpectedtobegreaterthanmarketreturnbutlessthan20%absolutereturn;U-PF:Totalreturnexpectedtobelessthanmarketreturnbutexpectedtoprovideapositiveabsolutereturn;SELL:TotalreturnexpectedtobelessthanmarketreturnANDtoprovideanegativeabsolutereturn.
Forrelativeperformance,webenchmarkthe12-monthtotalreturn(includingdividends)forthestockagainstthe12-monthforecastreturn(includingdividends)forthelocalmarketwherethestockistraded.
Wedefinestocksweexpecttoprovidereturnsof100%orhigherincludingdividendswithinthreeyearsas"DoubleBaggers".
Theanalyst/swhocompiledthispublication/communicationherebystate/sandconfirm/sthatthecontentshereoftrulyreflecthis/her/theirviewsandopinionsonthesubjectmatterandthattheanalyst/shas/havenotbeenplacedunderanyundueinfluence,interventionorpressurebyanyperson/sincompilingsuchpublication/communication.
CLSAgroupofcompanies(excludingCLSAAmericas,LLC)("CLSA"),CreditAgricoleSecuritiesTaiwanCo.
,Ltd.
("CATaiwan"),CLSA/CATaiwan'sanalystsand/ortheirassociatesdoandfromtimetotimeseektoestablishbusinessorfinancialrelationshipswithcompaniescoveredintheirresearchreports.
Asaresult,investorsshouldbeawarethatCLSAand/orsuchindividualsmayhaveoneormoreconflictsofintereststhatcouldaffecttheobjectivityofthisreport.
Regulationsormarketpracticeofsomejurisdictions/marketsprescribecertaindisclosurestobemadeforcertainactual,potentialorperceivedconflictsofinterestsrelatingtoresearchreportsandsuchdetailsareavailableatwww.
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DisclosuresthereinincludethepositionofCLSA,CLSAAmericas,LLCandCATaiwanonlyanddonotreflectthoseofCITICSecuritiesInternationalCompanyLimited,CreditAgricoleCorporate&InvestmentBankand/ortheirrespectiveaffiliates.
IfinvestorshaveanydifficultyaccessingIMPORTANT:ThecontentofthisreportissubjecttoandshouldbereadinconjunctionwiththedisclaimerandCLSA'sLegalandRegulatoryNoticesassetoutatwww.
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html,ahardcopyofwhichmaybeobtainedonrequestfromCLSAPublicationsorCLSAComplianceGroup(18/F,OnePacificPlace,88Queensway,HongKong,telephone+85226008888)and/orCATaiwanCompliance(27/F,95,Section2DunHuaSouthRoad,Taipei10682,Taiwan,telephone+886223268188).
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