SCUD Group (01399) 2017 sales amount to RMB5.9bn SCUD Group Limited (01399) said its total sales revenue (value added tax not included) for the year ended 31 December 2017 was about RMB5.9 billion, little changed from RMB6 billion in 2016. The ODM business accounted for about RMB5.3 billion, representing about 90% of the total sales revenue, while the own-brand business and others accounted for the remainder. As of 31 December 2017, the bank balance of the group amounted to about RMB786 million, of which about RMB645 million had been pledged in the ordinary course of its business and about RMB141 million was free cash. The amount of account receivables of the group settled during the year ended 31 December 2017 was about RMB6.4 billion and the amount of payables of the group settled during the year ended 31 December 2017 was about RMB5.8 billion. Bank borrowings as at 31 December 2017 was about RMB410 million.
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Citi cuts Datang Power (00991) to HK$2.6 Citi Research cut its target price for Datang Power International (00991) to HK$2.6 from HK$2.9, and reiterated its "neutral" rating. The research house said Datang's 2017 net profit between Rmb1,280-1,750m is 30-49% below consensus, dragged by high coal price and tariff cut from direct power sales. In addition, its proposed parental asset injection looks expensive at 1.5x end 9-month 2017 PB and those assets were loss making in the period. Howver, on the positive side (1) it would resume dividend payment from 2018, (2) its power output was +21% yoy in 4Q 2017 for strong demand and (3) its 7.3x 2018 PE and 0.6x PB for H-share look fair. Citi trimmed its 2017-19 net profits by 14-40% factoring in higher coal price and lower tariff.
Citi lifts Mengniu Dairy (02319) to HK$28.84 Citi Research lifted its target price for China Mengniu Dairy (02319) to HK$28.84 from HK$27.03 reflecting better earnings visibility in 2018, and maintained its "buy" rating. China Modern Dairy (CMD)(01117), in which Mengniu owns 49.57% of voting rights and 60.8% equity stake, issued a profit warning for full-year 2017. Stripping out its non-cash and one-off provision for account receivables related to downstream business (i.e. Rmb344m in 2H 2017 and Rmb156m in 1H 2017), the research house estimated that CMD's underlying operation attained breakeven in 2H 2017 and significantly improved HoH. On back of a favorable industry backdrop and its continuous efforts in sales mix trade-up, Citi expects Mengniu's top line to grow 9% in 2018 and 7% in 2019. It also anticipated Mengniu's more efficient supply chain (in both raw milk & milk powder procurement) and positive operating leverage to also help its gro
Citi lifts China Jinmao (00817) to HK$7.1 Citi Research lifted its target price for China Jinmao Group Holdings (00817) to HK$7.1 from HK$5.38 factoring in new lands/faster sales, and maintained its "buy" rating. The research house believes Jinmao's re-rating will continue with powerful sales in January-2018 (potential new monthly high) and strong management commitment from aggressive stake-raising (74.38m shares for Rmb289m; average HK$3.8794), on top of its superior fundamentals (e.g., 2017 core profit 80% yoy; 50% sales/earnings growth, rich assets, unique edge on primary land development, etc.). Coupled with its prime investment properties with decent rental base and attractive valuation (49% NAV discount, 8.6x 2018 PER; 6.4x only for development properties; 3.7% yield), Citi affirmed the stock its top pick.
Outlook for Asia sovereigns stable; China LGFVs see pressure Moody's Investors Service said that the outlook for Asia Pacific sovereigns, corporates and financial institutions is generally stable, while China's local government financing vehicles (LGFVs) are under pressure, but will likely undergo consolidation and transformation. "Our outlook for sovereign creditworthiness in Asia Pacific (APAC) in 2018 is stable overall, reflecting a favorable growth environment that will amplify the credit benefits of past reforms and encourage some sovereigns to implement further measures, particularly in the emerging markets," said Martin Petch, a Moody's Vice President and Senior Credit Officer. "This favorable environment balances high leverage in various sectors, which continues to represent a credit constraint for many sovereigns in the region," said Petch. These conclusions -- among others -- are included in presentations and discussions which t
Citi trims Hang Lung Properties to HK$16.3 Citi Research trimmed its target price for Hang Lung Properties (HLP)(00101) to HK$16.3 from HK$16.5, and reiterated its "sell" rating. The research house believes HLP will see continuous de-rating as: (1) China online giants have been aggressively investing in "New Retail", starting from upermarkets, Citi expects they should penetrate into mid/high end retail segments in the medium term; (2) the recovery of their Shanghai malls have seen high base effect, which should see retail sales growth rate to decelerate in 2018; (3) All the new IPs including Wuhan, Kunming, Wuxi office tower 2 and Shenyang Conrad Hotel are scheduled for opening in mid-2019 onwards, which should have minimal contributions over the next two years. Citi sees flattish earnings performance of HLP over the next 3 years, which should limit their DPS growth and HLP should underperform on both macro and company specific issues.
Daiwa Raises CLP HOLDINGS (00002.HK) Target to $82; Kept Hold Daiwa, in its report, said HKELECTRIC-SS (02638.HK) +0.020 (+0.277%) Short selling $3.70M; Ratio 23.336% , as a pure power company in Hong Kong, has dividend reduced since the SoC return cut from 9.99% to 8% in 2019. Nevertheless, the case of CLP HOLDINGS (00002.HK) +1.350 (+1.723%) Short selling $13.36M; Ratio 7.148% is different as its overseas contributions from Australia and China increase gradually. As such, CLP HOLDINGS has higher defensiveness in its dividend yield. Daiwa maintained CLP HOLDINGS at Hold with target price raised to $82 from $80. 2017-19E EPS was revised up 4-8% to reflect the profit recovery of Australian wholesale business.
HANG LUNG PPT 2017 Underlying Net Profit Down 13% to $5.53B; Final Div 58 Cents HANG LUNG PPT (00101.HK) -0.400 (-1.882%) Short selling $5.83M; Ratio 28.094% announced that for the financial year ended 31 December 2017, the company's underlying net profit attributable to shareholders fell 13% to HK$5.53 billion. Net profit attributable to shareholders increased 31% to HK$8.124 billion, after including a revaluation gain on investment properties. Earnings per share increased similarly to HK$1.81. A final dividend of HK58 cents per share for 2017 was declared, staying flat yearly. During the period, total revenue decreased 14% yearly to HK$11.199 billion. Revenue of property leasing increased 1% to HK$7.779 billion. Total operating profit decreased 11% to HK$7.91 billion.
Contractor Gain Plus Hldgs (08522) begins IPO Gain Plus Holdings Limited (08522), a construction contractor in Hong Kong principally engaged in subcontracting works providing RMAA (repair, maintenance, alteration and addition) services and building construction services, commenced its initial public offering today. Details of the IPO are as follows: Shares for offer: 93 million new shares (90% for international placing and 10% for Hong Kong public offering), with an option to offer an additional 15% shares Offer price: HK$0.6-0.8 per share Gross proceeds: HK$55.8-74.4 million Net proceeds: HK$44.1 million (assuming an offer price of HK$0.7 per share) Use of net proceeds: - 48.1% for recruiting and retaining additional staff - 36.3% for surety bond - 6.6% for machineries and motor vehicles - 9.0% for working capital The shares for Hong Kong public offering will be increased: - to 30% of all global offer shares if the Hong Kong public offer shares are over-subscribed by 15x or hi
L & M Chemical (00746) tips annual profit to surge over 220% Lee & Man Chemical (00746) said it expects the profit attributable to equity holders for the year ended 31 December 2017 to increase by more than 220% as compared to the previous financial year. Such expected increase was due to an increase in the volume and selling prices of the products sold by the Group. The profit margin of the Group also increased during the year 2017 as compared to the corresponding year. Its annual results announcement is expected to be published before the end of March.
Daiwa lifts Citic Bank (00998) to HK$6.2 Daiwa Research lifted its target price for China Citic Bank (00998) to HK$6.2 from HK$5.2, and maintained its "buy" rating. The research house believes Citic Bank will come under asset growth pressure in 2018, with ongoing regulatory tightening of non-loan assets and off-balance-sheet business giving rise to further provision pressure. Daiwa said Citic Bank's asset growth started to slow in 3Q 2016, earlier than other banks'. Its total assets as at end-3Q 2017 were down by 0.1% YoY, due mainly to a 19.7% YoY contraction in investment assets. Daiwa believes the bank was adjusting its asset structure to maintain its loan growth in 2017, and the research house expects it to continue to do so in 2018. It forecast 5-6% YoY total asset growth in 2018 for Citic Bank.
Daiwa lifts CEB Bank (06818) to HK$4.6 Daiwa Research lifted its target price for China Everbright Bank (CEB)(06818) to HK$4.6 from HK$3.2, and upgraded its rating to "hold" from "underperform". The research house expects CEB to deliver better NIM and fee income growth than peers in 2018. CEB issued a total of 5.8bn H shares in December 2017, which will help replenish its core capital position in 2018. Daiwa believes loan pricing for major banks will rise in 2018 on rising credit demand and tight domestic liquidity. Given a large portion of interbank liability was repriced over 2017, the research house forecast CEB's NIM to expand by 5bps each year in 2018 and 2019 to 1.63% and 1.68%, respectively, from 1.58% in 2017.
Citi upgrades K Wah Int'l (00173) to HK$8.01 Citi Research lifted its target price for K Wah International Holdings (00173) to HK$8.01 from HK$5.39, and upgraded its rating to "buy" from "neutral". The research house believes K Wah deserves a catch-up on its share price lag, given (i) clearer China strategy to build up prime IP portfolio in Shanghai and fasten asset churn in other markets, reduce sales lumpiness; (ii) highly visible earnings (HK$8.9bn sales in HK Kai Tak K City will be booked in 2018) and contract sales pipeline in 2018; (iii) only 2.1% funding cost/ 16% net gearing to embrace more opportunities amid tighter credit; (iv) any increase in dividend from its 3.8%-owned Galaxy (00027); (v) potential share buyback by management. Citi views K Wah's downside is also well protected given its 66% NAV discount (ex-Galaxy, other biz even at 87% discount), 4.4x 2018 PE and 3.6% yield.
HSBC lifts Vinda Int'l (03331) to HK$20.1 HSBC Global Research lifted its target price for Vinda International (03331) to HK$20.1 from HK$18.4, and maintained its "buy" rating. The research house said Vinda's 2017 profit dropped by 5% y-o-y to HK$621m (8% below consensus) on 12% growth in sales. It noted that the cost pressure from rising pulp (47% of tissue revenue) peaked in 4Q 2017 as the GPM dropped to 27.9%, the lowest level of the year, after short fibre pulp prices rose 49% (pulp up by 26% in 2017). Management expects a more prominent effect on tissue ASP in 1Q and 2Q 2018. As the heightened pulp prices have driven many smaller mills out of the market, Vinda is confident of gaining more market share. HSBC expects 2018 net profit to go up by 59% y-o-y to HK$984m. It also expects the net margin in 2018 to recover to 6.5% from 4.6% in 2017 as the OPM for tissue goes up to 10.6% in 2018 from 8.5% in 2017 from the recovery in GPM.
HSBC lifts Li Ning (02331) to HK$7.7; "buy" HSBC Global Research lifted its target price for Li Ning (02331) to HK$7.7 from HK$7.3, and maintained its "buy" rating. The research house said addition of kids wear segment, better wholesale business and improving coverage in Southern China should drive further business recovery. Risk-reward profile turned favourable after share price fell 15% from a peak in 4Q 2017 on potentially higher A&P and staff costs. HSBC factored in higher advertising and promotional expenses for FY2018-19 as it sees Li Ning's intention to strengthen the brand equity for a more sustainable longer-term growth. Also, accounting for the extra staff costs from the shares and options award scheme announced in December 2017, the research house cut FY2018 and FY2019 earnings by 10% and 1%, respectively.
Citi lifts BYD (01211) to HK$97.8; "buy" Citi Research lifted its target price for BYD (01211) to HK$97.8 from HK$83.7, and maintained its "buy" rating. The research house raised its 2018-20 net profit to Rmb6.8/9.9/14.7bn on the back of (1) lower battery cost from potential raw material price declines; (2) higher NEV-bus ex-subsidy ASP forecast; (3) stronger BYD NEV PV sales outlook; and (4) BYD's first-mover advantage into the under-penetrated MPV segment in 2018. Citi believes BYD will become long-term winner from the soon-tobe announced NEV subsidy adjustment via NEV market consolidation.
HSBC lifts Xtep Int'l (01368) to HK$3.7 HSBC Global Research lifted its target price for Xtep International Holdings (01368) to HK$3.7 from HK$2.8, and maintained its "buy" rating. The research house said 2017 was a year of transition for Xtep. Apart from the disruption from the restructuring of the kids wear business, as the company continued its shift towards more functional products offerings, aged inventory in the channel built up. On 8 December 2017, Xtep announced that it plans to spend no more than RMB150m on repurchasing channel inventory that was produced prior to 2015. Management reckons this is the final step of transformation after the brand image has been transformed and store upgrades are done. In the longer term, HSBC believes Xtep will remain a very relevant player in the space. In China: Anatomy of the Consumer (3 November 2017), Xtep was ranked first among the top three favourite domestic brands, even surpassing Anta and Li Ning that have h
Road King Infra (01098) sees annual profit to rise over 75% Road King Infrastructure (01098) said it expects to record a significant increase of not less than 75% in the consolidated net profit for the year ended 31 December 2017 as compared to the consolidated net profit of HK$1,374 million for the previous financial year. Such expected increase in the consolidated net profit is primarily attributable to the improvement in the average selling price and the gross profit margin of properties delivered by the Group in the year ended 31 December 2017. Its annual results announcement is expected to be published in March
Winfull Group (00183) expects significant rise in 1H profit Winfull Group (00183) said it expects the Group is likely to record a significant increase in net profit for the six months ended 31 December 2017 as compared to that of the corresponding period in 2016. Such expected increase was mainly attributable to an one-off gain derived from the disposal of its 51% equity interest in and all outstanding shareholdings' loan of Plan Link Limited, which holds a development project at Nos. 142-154 Carpenter Road, Kowloon, Hong Kong; and the growth in business revenue from the property investment and trading business as a result of the acquisition of a number of new investment properties and a property held for trading during the year ended 30 June 2017 and for the reporting period.
Carrianna (00126) rises 53.7% after share sale Carrianna Group (00126) surged 53.7% to HK$1.46 this morning following the company's announcement that Honorary Chairman Dr. Ma Kai-cheung and Chairman Dr. Ma Kai-yum agreed to sell a total of 125.429 million shares (10% of the issued shares) of the company to Qiqi Food at HK$2.10 per share, which is 121.0% higher than yesterday's closing price of HK$0.95. Qiqi Food, wholly-owned by Ms. Ma Rouye, is an investment holding company interested in catering and food business in China. The sellers will remain substantial shareholders of Carrianna Group after completion of the sale. Carrianna Group is now trading at HK$1.17, up 23.2%.
Stelux Holdings to pay special div $0.19 after biz sale Stelux Holdings (00084) has agreed to sell the entire issued share capital of Optical 88 Group, eGG Optical Boutique and Thong Sia Optical Group and receivables to Bright Odyssey and sell all of the issued ordinary shares in Optical 88 (Thailand)) to Mr. Chumphol Kanjanapas for a total purchase price of HK$400 million. Optical 88 Group, eGG Optical Boutique, Thong Sia Optical Group and Optical 88 (Thailand) operate optical business which comprises the entirety of the Optical 88 Group and eGG Optical Boutique retail operations and the Thong Sia Optical Group wholesale trading business, the operations of which span across Hong Kong, Macau, the PRC, Singapore, Malaysia and Thailand. Stelux Holdings expects HK$57 million gain from the disposal. Stelux Holdings believes the disposal will allow it to focus on the operation and development of the remaining business, which includes the CITY CHAIN watch retail business, and watch
Morgan ups Hengan Int'l (01044) to HK$90 Morgan Stanley lifted its target price for Hengan International (01044) to HK$90 from HK$87, and maintained its "overweight" rating. The research house said encouraging survey results enhance its conviction in Hengan's growth potential, which is being activated by reforms. Sales weakness in December 2017 is priced in. As Hengan moves along the learning curve, Morgan believes 2018 will be a year of delivering results. Morgan said Hengan's product and brand are strongly positioned across city tier, income level, and user age, based on its AlphaWise survey conducted in 2H 2017. It may be a positive surprise that Hengan's market share in Tier 1 cities is leading most international brands. Morgan thinks Hengan's 21ppt year-to-date underperformance versus the Hang Seng Index has factored in the sudden sales drop in December 2017, which stemmed mainly from: (1) weaker performance by some sales teams, and (2)
Morgan lifts BankComm (03328) to HK$7.8 Morgan Stanley lifted its target price for Bank of Communications (BankComm)(03328) to HK$7.8 from HK$6.7, and maintained its "equal-weight" rating as its valuation remains relatively low compared to peers. The research house said BankComm is the smallest of the big five state-owned banks. HSBC (00005) is the third-largest shareholder in BoCom after MOF and HKSCC Nominee Ltd. Its relatively weak deposits franchise has led to high funding costs and below-peer NIM. Below-peer fee income contribution to total revenue, thus it is more sensitive to NIM contraction. But Morgan's concern on asset quality is somewhat mitigated by more intensive efforts in NPL digestion and recovery in recent quarters.
Morgan lifts ICBC (01398) to HK$9.2 Morgan Stanley lifted its target price for Industrial and Commercial Bank of China (ICBC)(01398) to HK$9.2 from HK$7.6, and maintained its "overweight" rating. The research house said larger exposure to SOEs could make ICBC more vulnerable if China carries out further steps on SOE reform in the medium-to-long term. As the largest state-owned bank, ICBC may have more social responsibilities, particularly during a market downturn. Morgan noted that ICBC's high and more resilient profitability outlook amid weak macro and industry headwinds. Liquid balance sheet and lower risk profile versus peer coverage.
SABIC acquires strategic stake in Clariant from 40 North and Corvex SABIC a world leader in chemicals, has agreed to acquire approximately 83 million shares in Clariant (VTX: CLN), a global specialty chemicals company, from 40 North and Corvex Management. The acquisition of this approximately 24.9% stake in Clariant will make SABIC the largest Clariant shareholder and represents another key milestone in SABIC's growth and diversification strategy to become the preferred world leader in chemicals. This acquisition is part of SABIC's long-term growth strategy to remain committed to product differentiation and creating value for its customers. Clariant is complementary to SABIC's existing specialties business and is well in line with SABIC's strategy of opening up new growth opportunities in specialty chemicals. SABIC currently has no plans to launch or otherwise effect a full takeover of Clariant. SABIC and Clariant have already had a successful relationshi
BofAML: GUOTAI JUNAN I (01788.HK) Places Shares; Expected Diluted ROE Down to 14.5% GUOTAI JUNAN I (01788.HK) -0.040 (-1.294%) Short selling $117.16M; Ratio 4.726% announced that it proposed to place up to 700 million shares by top-up subscription at $2.85 each, raising up to $1.995 billion gross proceeds, cited Bank of America Merrill Lynch in its report. The research house expected that after the placing, the return on equity (ROE) dilution will be about 10% and the ROE will drop to 14.5% this year from 16.2%. GUOTAI JUNAN I was maintained at Buy with target price of $3.5.
BofAML lifts JinJiang Hotels (02006) to HK$4.3 BofA Merrill Lynch lifted its target price for Shanghai Jin Jiang International Hotels (02006) to HK$4.3 from HK$3.3, and reiterated its "buy" rating. The research house said Jin Jiang it is a key beneficiary to the multi-year hotel upcycle in China with 75% earnings exposure to China hotels. JinJiang was a laggard after underperforming its hotel peers by 36% in 2017. BofAML believes it can catch up as it is currently trading at more attractive valuation of 7.8x EV/EBITDA/27.5x P/E on 2018 versus peers of 15x/31x with core earnings growth CAGR at 27%.
BofAML restarts Shangri-La (00069) at HK$25 BofA Merrill Lynch reinstated coverage of Shangri-La Asia (SLA)(00069) with a "buy" rating and price target of HK$25. SLA is a high-end international hotel operator with majority of the assets selfowned. Hotel operations contribute 77% of earnings with the rest mainly from China property rental. The research house forecast EBITDA CAGR of 14% in 2016-2019 driven by: (i) multi-year industry RevPAR recovery; (ii) ramp-up of new and renovated hotels; (iii) and potential cost savings. BofAML has not factored in any upside from asset disposals or its potential from leveraging their brands to develop its asset-lite model.
BofAML restarts HK&S Hotels (00045) at HK13.7 BofA Merrill Lynch reinstate coverage of Hong Kong and Shanghai Hotels (HSH)(00045) with an "underperform" rating and a target price of HK$13.7. Within its hotels coverage universe, the research house said HSH has the highest exposure to the Hong Kong hotel market, where competitive pressure will heighten with a surge in supply growth into the market. HSH's gearing is also likely to increase in the medium term with a heavy capex ahead for its projects that are under development. BofAML believes RevPAR growth in HK will be weighed by a surge in hotel supply, with a rise in completion from 1,000 rooms in 2015-2016 to 4,000-5,000 in 2017-2018. The major high-end openings over the next 18 months include The Murray in Central, St Regis in Wanchai and Rosewood in Tsim Sha Tsui. Peninsula Hong Kong could be cannibalized by the new supply, in particular by Rosewood Hotel which will open
Credit conditions in Asia seen stable in 2018 - Moody's Moody's Investors Service said that credit conditions in Asia will be stable in 2018, supported by broad-based regional and global economic growth, a recovery in global trade, and broadly accommodative monetary policy. Moody's view is in turn reflected in its outlooks for the region's sovereigns, and banking and corporate sectors, which saw increasing shares of stable and positive outlooks in 2017. At the same time, various downside risks are apparent, including tighter financing conditions, the threat of increased trade protectionism and geopolitical tensions. Moody's conclusions are contained in its just-released report, "Cross-Sector - Asia-Pacific: 2018 outlook stable on economic growth, supportive trade and monetary policy". The report notes that broad-based economic growth globally and in the Asia-Pacific region is expected in 2018, even as China&
Daiwa upgrades Tingyi (00322) to HK$16.2 Daiwa Research lifted its target price for Tingyi Cayman Islands (00322) to HK$16.2 from HK$9.7, and upgraded its rating to "hold" from "sell". The research house is concerned that the structural decline in the instant noodle market in China will continue, but it expects Tingyi's earnings growth to remain robust in 2018-19 as its operating margin continues to recover. Also, Daiwa expects Tingyi to pass on higher packaging and flour price costs through price hikes. It now expects the company's EPS growth to slow in 2018-19 but still expand at a 19% CAGR over 2017-19.
China Soft Power (00139) adds 3m shares in CMBC Capital China Soft Power Technology (00139) said it has acquired 3 million shares of CMBC Capital (01141) yesterday on open market at a total of about HK$1.74 million (including transaction costs). After such purchase, China Soft Power holds about 8% stake of CMBC Capital.
HSBC lifts Wynn Macau (01128) to HK$37.5 HSBC Global Research lifted its target price for Wynn Macau (01128) to HK$37.5 from HK$27.3, and maintained its "buy" rating. The research house said Wynn's 4Q 2017 property EBITDA came in at USD376m, +17% q-q or +66% y-y, 4% ahead of HSBC's estimates. By property, the positive surprise stemmed from outperformance at Wynn Palace (WP). In light of better-than-expected 4Q 2017 results and higher expected FY2018/19 industry growth in mass (from 14%/12% to 18%/16%, respectively), HSBC raised its FY2018-19 EBITDA estimates by 1%-6%.
Daiwa lifts China Taiping (00966) to HK$40 Daiwa Research lifted its target price for China Taiping Insurance Holdings (00966) to HK$40 from HK$35, and maintained its "buy" rating. The research house sees near-term earnings and dividend upside for Taiping and believes the market is overly concerned about lower-than-expected jumpstart sales growth so far. Daiwa said there could be an industry-wide moderation in agency headcount growth in 2018, Taiping still targets around 50% headcount expansion in 2018. Management is not worried about a decline in its jumpstart sales because: (1) January's VNB contribution is usually <10%, (2) it is seeing a higher quality of business, and (3) agent retention is not a big issue for Taiping.
Daiwa lifts WH Group (00288) to HK$10.9 Daiwa Research lifted its target price for WH Group (00288) to HK$10.9 from HK$9.7, and maintained its "buy" rating. The research house said hog prices in China rose by 4% MoM in December on increased demand for pork in winter. However, Daiwa expects pork to be one of the very few raw materials to see a YoY cost decline in China in 2018 amid abundant supply. It expects the US tax reforms to boost WH Group's net profit by 10-15% over 2018-19, and the company's packaged meat margin to recover in 2018 from the trough in 2H 2017. Hence, Daiwa raised its 2018-19 EPS by 8-10%. In a best-case scenario where Smithfield's standard effective tax rate is 21%, the research house would expect WH Group's net profit to rise by 21% YoY in 2018 (versus 18% in its model).
Daiwa lifts Dali Foods (03799) to HK$8.7 Daiwa Research lifted its target price for Dali Foods Group (03799) to HK$8.7 from HK$7.3, and maintained its "buy" rating. The research house believes the rapid growth in Dali's soybean milk revenue in 2017 (from CNY200m in 1H 2017 to over CNY800m in 2H 2017) following its launch of the Doubendou (DBD) brand confirms the company's ability to launch its own successful products rather than simply being a follower of trends. In the long run, Daiwa looks for Dali's pricing power to improve and its valuation discounts to most of the China staples players to narrow. It forecast Dali's soybean milk sales to exceed CNY1bn in 2017 and CNY2.5bn in 2018.
HSBC downgrades Sinopec SEG (02386) to "hold" HSBC Global Research maintained its target price for Sinopec Engineering (SEG)(02386) unchanged at HK$7.5, but downgraded its rating to "hold" from "buy". The research house said SEG has a deep order book, a strong balance sheet, RMB30bn of cash on hand supporting a relatively generous 40% dividend payout and a strong parent company sponsorship which is also a global customer. HSBC believes SEG is one of the largest beneficiaries of Sinopec (00386) upgrading its refining bases. The company typically trades on a PE multiple closer to 8x on average; with the recent share action it is on 13.8x/13.2x/12.7x 2017/18/19 multiples.