Merrill Lynch lowered the A share and H share rating of HAITONG SEC (06837.HK) -0.880 (-6.111%) Short selling $42.08M; Ratio 7.875%
from Neutral to Underperform. The target price of H share was $13, due
to the concern of reduction in commission rates in 2015. In addition,
the share price is commensurate to 1.6x 12-month forward P/E, which was
nearly to historical high, as driven by the launch of SH-HK Connect. The
broker believed that the SH-HK Connect will inject new liquidity to A
share markets, but the driven force on stocks may be limited. Following
the cooling down of SH-HK Connect, the market will shift the focus on
macro economy and risks. The share price for brokers will then undergo
gradual correction.
CLSA lowers Beijing Ent Water (00371) to HK$6 CLSA cut its target price for Beijing Enterprises Water (BEW)(00371) by 8% to HK$6, and reiterated its "buy" rating. The research house said BEW's share price has dropped 14% in the last two trading days. First, the 2017 earnings results are below expectations. Second, management is guiding for 20-25% net profit growth for 2018, versus 30% in the past few years. Management now has a cautious approach to water PPP (public-private partnership) projects, which is not necessarily bad. CLSA cut its 2018-19 earnings forecasts by 19%. At the current level, it believes many of the negatives are already priced-in.
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