Morning Expresso - A-Share

abc
Global Research
26 November 2014
Morning Expresso - A-Share
Equities
Wednesday 26 November 2014
China
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
China Natural Gas Sector - Natural gas to remain fastest growing energy source
We estimate Chinese demand for natural gas to have a 12% CAGR in 2014-20 and
lower our forecast to 370bn cubic metres from 429bn: 1) in 2020, natural gas, which
would make up more than 10% of primary energy sources, should still be a fastgrowing primary energy source; and 2) YTD, weighed by weak property investment and
price increase expectations, demand growth has undershot our expectations, and
China's economic growth could be slow in the "new normal".
Navinfo - (Buy from Neutral, PT Rmb27.30 from Rmb20.00)
We are bullish on Navinfo's IoV business development. We believe the company is
transforming from a map data vendor into a leading domestic provider of IoV products,
platforms and services. We think the company is likely to take full advantage of the
opportunities arising from the rapid growth of the IoV market by partnering with
Tencent and strengthening its independent product R&D. We expect 2014-16 revenue
from the IoV business to be Rmb0.26/0.40/0.55bn, up 50%/55%/37% YoY.
Angela Sun, PhD, CFA
Product Manager
S1460512010001
[email protected]
+86-213-866 8878
APAC Equity Strategy - Commodity crunch: the key client question
We've been highlighting lower commodity prices as a key support for Asian earnings,
but the key question from clients is how quickly will this feed into better margins, and
how soon will companies erode these gains through price cuts? To help answer this
question we sought expertise from current and former industry experts consisting of
CEOs, other C-suite executives, senior managers and procurement managers, totalling
39 responses across five key sectors.
IN TODAY’S REPORT:
Morning Meeting Agenda also
includes
APAC Refining - Record-high China net refined exports in October
Global Oil and Gas - Weaker outlook for China gas demand highlights challenges for global LNG
market
2
Alpha Preferences
Unchanged; No notes published
-
Rating Changes
Upgrade: Navinfo (Buy from Neutral); Downgrade: None
6
Markets, Events and Newsflow
None expected today
7
Macroeconomic Events
China: Westpac-MNI Consumer Sentiment (Nov)
Latest Market Movements
Hang Seng -0.21% HSCEI -0.55% CSI300 1.37% KOSPI 0.08% S&P -0.12%
8
Latest Interest Rate Movements
Currency Market: 1-day repo 2.67%, 7-days repo 4.00%; National Debt: 1-year 3.00%
8
UBS A-Share Key Calls
Unchanged; No notes published
9
UBS Conferences and Seminars
-
12
7
www.ubssecurities.com
This report has been prepared by UBS Securities Co. Limited. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN
ON PAGE 18. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be
aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this
report as only a single factor in making their investment decision.
Morning Meeting Agenda
China Natural Gas Sector - We expect natural gas to remain fastest growing primary
energy source in China
We estimate 2014-20 natural gas demand CAGR at 12%
We estimate Chinese demand for natural gas to have a 12% CAGR in 2014-20 and lower our forecast
to 370bn cubic metres from 429bn: 1) in 2020, natural gas, which would make up more than 10% of
primary energy sources, should still be a fast-growing primary energy source; and 2) YTD, weighed by
weak property investment and price increase expectations, demand growth has undershot our
expectations, and China's economic growth could be slow in the "new normal". Therefore, we are
lowering our demand forecasts, especially user demand, which has a low gas price affordability level,
especially in the power generation, heating and industrial sectors.
Oil Companies, Major
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
High-cost gas supply exposed to supply risk
We are lowering our supply forecasts. Supply at high theoretical marginal costs (eg, imported LNG and
pipeline gas) could be exposed to higher risk of a supply reduction. However, supply in China is relatively
stable, as most imported gas is based on long-term agreements. Therefore, we are not sharply lowering
our supply forecasts for imported gas. Mainly, we are lowering our forecasts for high-cost domestic gas
supply, such as coal gas and shale gas.
Urban gas: Expectations to be priced in earlier than actual growth
As 2015 natural gas price increase expectations have basically disappeared, we expect downstream
demand to become strong, with downstream customers turning positive. However, a rapid demand
rebound needs the following: 1) no further deterioration of economic growth because natural gas
demand has greater income elasticity than price elasticity; and 2) the government increasing efforts to
implement subsidies after the cost efficiency of converting coal to gas has improved. Actual
improvement in downstream demand may not be visible before June 2015 but we believe expectations
for demand improvement could be factored into the share prices of gas companies earlier than actual
demand growth. We are bullish on Shenzhen Gas (Buy).
Analyst:
Nina Yan
S1460511080002
[email protected]
+86-213-866 8884
Upstream faces risk of falling NAV; downstream could benefit
We are cautious on upstream exploration/development companies but think Sinopec (Buy) has more
ability than PetroChina (Neutral) to defend against demand and price risks, as the former has little
upstream exposure.
Source: This is an extract from UBS research published on 26 November 2014
Navinfo - Pioneer in Internet of Vehicles
We are bullish on Navinfo's Internet of Vehicles (IoV) business
We are bullish on Navinfo's IoV business development. We believe the company is transforming from a
map data vendor into a leading domestic provider of IoV products, platforms and services. We think the
company is likely to take full advantage of the opportunities arising from the rapid growth of the IoV
market by partnering with Tencent and strengthening its independent product R&D. It is likely to shift
from a 2B to a 2C business model.
Promising prospects for "fun drive" business, a partnership with Tencent
At the World Internet Conference, Tencent proposed focusing on communications and social
applications to achieve interoperability of people, equipment, and services. The "fun drive" business, codeveloped by Tencent and Navinfo to connect people, vehicles and roads, is an important part of
Tencent's Internet of Things (IoT) strategy. In future, both companies are likely to further increase their
investment in the "fun drive" business to build it into a leading platform in the field of IoV in China.
We expect IoV business to post rapid revenue growth over next three years
We expect Navinfo's integrated geographic information services business, including the IoV business, to
post rapid growth in 2014-16. We estimate the company's 2014-16 revenue from this business at
Rmb0.54/0.78/1.02bn, respectively. We expect 2014-16 revenue from the IoV business to be
Rmb0.26/0.40/0.55bn, up 50%/55%/37% YoY. On our estimates, the contribution of the IoV business
to the company's total revenue will increase from 19.5% in 2013 to 32% in 2016.
Valuation: Raising earnings estimates and price target, upgrading to Buy
We raise 2014-16E EPS to Rmb0.28/0.42/0.59 on Navinfo's improving overall profitability driven by the
rapid growth in its IoV products and customer base, and the likely further strengthening of the business's
monetisation capacity. Meanwhile, we raise our long-term revenue and earnings growth assumptions for
the company's IoV business. We derive our price target of Rmb27.30 (Rmb20.00 previously) using UBS's
VCAM tool (7.9% WACC), implying 65x 2015E PE.
Notes:
Software
RATING: Buy
Prior: Neutral
 TARGET: Rmb27.30
(+36.50%)
Prior: Rmb20.00
PRICE: Rmb23.71
MCAP: Rmb16.4bn
EPS ESTIMATES:
 12/14E: 0.28
 12/15E: 0.42 (+17.37%)
 12/16E: 0.59 (+18.52%)
RIC: 002405.SZ
BBG: 002405 CH
Analyst:
Zhong Zhou
S1460513090004
[email protected]
+86-213-866 8815
Source: This is an extract from UBS research published on 26 November 2014
Morning Expresso - A-Share 26 November 2014
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APAC Equity Strategy - Commodity crunch: the key client question
How soon will lower commodities lift earnings?
We've been highlighting lower commodity prices as a key support for Asian earnings, but the key
question from clients is how quickly will this feed into better margins, and how soon will companies
erode these gains through price cuts? To help answer this question we sought expertise from current
and former industry experts consisting of CEOs, other C-suite executives, senior managers and
procurement managers, totalling 39 responses across five key sectors.
-
We asked the experts – it should start feeding through within three months
The transport sector is expected to benefit quickest with margins forecast to improve within 3 months.
The benefit for autos and construction/engineering may take time to feed through, but autos are
expected to start to pass on some of the gains to consumers almost instantly, whereas
construction/engineering should hold on to their better margins for longer. Figure 1 summarises the
margin "sweet spot" for each of the five sectors – i.e. the best period for margin expansion before the
benefits begin to fade from price cuts (although some margin uplift is likely to still remain).
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
From super-cycle to profit cycle
As we've been saying all year, lower commodity prices should underpin margins and help drive c.10%
earnings growth both this year and next. In our previous report: Commodity Crunch: Asia's earnings
beneficiaries we identified the sector and stock implications of lower commodity prices, and summarised
the key commodity exposures and potential impact to earnings for almost 300 companies in the region.
Key beneficiaries
We update our list of stocks that should benefit on page 5. These are UBS Buy rated stocks that have
either good earnings momentum or attractive valuations. Stocks include: Cathay Pacific, Hyundai E&C,
Tingyi Cayman Islands, Toray and Toyota Motor.
Notes:
Strategist:
Niall MacLeod
[email protected]
+852-2971 6186
Source: This is an extract from UBS research published on 26 November 2014
APAC Refining - Record-high China net refined exports in October
QTD refining margin up on seasonal demand; but margin upside limited
The QTD average Singapore complex refining margin recovered to US$6.10/bbl from US$4.80/bbl in
Q314, which was no surprise as we had expected winter demand to offer support. Looking forward, we
believe the upside for the Singapore refining margin is limited given: 1) kerosene demand in Japan and
Korea usually peaks in December; 2) gasoline and diesel demand from Indonesia is likely to weaken after
the government reduced fuel subsidies, and raised gasoline prices 30% and diesel prices by 36% on 18
November; and 3) FPCC in Taiwan is likely to increase the run rate at its refinery in December after
unexpected operational issues in November.
Oil Companies, Secondary
China becomes self-sufficient in 10M14; net exports hit record high in October
Net exports of refined products from China hit a historical high in October. The gap between domestic
supply and demand in China has narrowed quickly over the past two to three years with rapid expansion
of refining capacity and slowing demand for key products such as gasoil and fuel oil. China's refined
product supply/demand reached a balance in 10M14 from historically being a net importer. With
domestic demand now almost fully covered by domestic supply, China could become a net exporter of
refined products with further refining capacity additions in the next three to five years.
Crude oil price fell further QTD; SE Asia cutting fuel subsidies
The Dubai crude oil price has fallen US$17/bbl QTD. We expect another quarter of substantial losses for
Asian refiners if the crude oil price remains at around US$75/bbl towards the end of the year. While low
crude oil prices imply improving end demand with lower refined product prices, weaker local currencies
against the US$ and lower government fuel subsidies (Southeast Asia and India) are supporting retail fuel
prices and thus putting pressure on end demand.
Our least and most preferred refining stocks in APAC
Our least preferred stocks are S-Oil and GS Holdings in Korea, Thai Oil in Thailand, and TonenGeneral
Sekiyu and Idemitsu Kosan in Japan. Our most preferred refining stocks in the region are Reliance
Industries in India and PTT Global Chemical in Thailand.
Notes:
Analyst:
John Chung
[email protected]
+81-3-5208 7105
Source: This is an extract from UBS research published on 25 November 2014
Morning Expresso - A-Share 26 November 2014
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Macro Keys - Is Brazil the New India?
Negative
There was much discussion during the Brazilian election campaign as to whether 'Brazil will be the New
India'. In our view, the answer is a resounding no. We have just returned from the UBS India conference
where there was great (and justified) optimism over the outlook for the economy, structural reforms and
even for the outperforming Indian equity market. By contrast, after the Brazilian election, we see a weak
economy, a lack of structural reform and an overvalued equity market. Hopes of a more market-friendly
economic team and of more prudent macro policy are real and are positive. However, these actions are
unlikely to boost growth from its anaemic pace of sub-1%.
-
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Macro and Market Comps: Advantage India
Relative to Brazil, growth in India is higher and rising; lower inflation should allow rate cuts in India,
while rates look set to rise further in Brazil. The investment/GDP ratio in Brazil (18.5%) is little more than
half that of India (31.5%); productivity growth is falling in both countries but is lower in Brazil. Both
countries benefit from lower oil prices, although India seems to benefit more. The main risk for India lies
in a current account deficit that could widen again and a persistent fiscal shortfall. The Rupee has been
much more stable lately than the Real. Earnings momentum looks much stronger in India, although the
operating margin is higher in Brazil. Both markets trade rich (17x for India, 11x for Brazil) to their history
on a forward P/E basis. The P/BV ratio in India (3.05x) is high by EM standards but is fair value relative to
its high ROE (15.7%). On a lower P/BV ratio (1.4x) and a lower ROE (9.6%), Brazil looks slightly rich on
this basis.
Reform Agendas: Advantage India
On our framework for analysing structural reforms in EM, the outlook in India is much better, not least
because of the strong reform mandate for the Modi government. Indian reforms will move ahead at
different speeds but are wide-ranging and should push growth back up to 6.5% by 2016. The outlook
for deep structural reform in Brazil is poor, given an already weak economy and a seemingly different
diagnosis of the country's problems by the government. The ongoing severe worries over Petrobras leave
many investors with little confidence that wide-ranging reform in the SOE sector is likely.
Relative Positioning: Advantage Brazil
Within our GEMs portfolio, we prefer India (Neutral, although an Overweight in the UBS Asian regional
portfolio) to Brazil (Underweight). The one factor militating against that view is positioning. India is wellheld, maybe over-owned and so vulnerable to bad news, while Brazil is under-owned, in our view, by
foreign investors and so could spike on good news (as recently over the optimism about the new
economic team). On our Positioning Model, India is the third most crowded EM (and has become much
more crowded during 2014), while Brazil is the fourth least-crowded market and has become less
crowded during this year.
Notes:
Strategist:
Geoff Dennis
[email protected]
+1-617-748 5622
Source: This is an extract from UBS research published on 25 November 2014
Global Oil and Gas - Weaker outlook for China gas demand highlights challenges for
global LNG market
Changing China gas outlook
Our colleagues covering China have cut their 2020 demand forecast for natural gas by a significant 14%
to 370Bcm from 429Bcm. This is based on a number of factors including slower than forecast demand
growth YTD; a deceleration of Chinese economic growth through 2016; concerns about gas
affordability; and a recent downgrade to long-term gas demand published by the NRDC. This demand
cut falls on all aspects of supply but we have cut our LNG demand number to 59Bcm from 72Bcm.
An incipient problem for the LNG market
When comparing UBSe forecast versus the IEA Medium Term Gas Market Report we find that while this
China forecast leaves us still modestly above for LNG demand it exacerbates an issue of implied
oversupply emerging later this decade in the global market. This is primarily driven by a bearish view on
European natural gas demand as this market disappoints through a combination of weak economic
growth, increased energy efficiency and the use of renewables and persistent burning of coal. The buildup in potential over-supply comes as new Australian LNG plants are started-up through 2015-17 and
exacerbated by the new US projects towards the end of the decade. A loosening of the very tight market
conditions seen since 2010 is in market expectations but a continued problem in the market out to 2020
and beyond may result in projects being delayed (US, East Africa or Canada) and LNG traders focussing
on terming out their portfolios. When the US emerged as a potential importer it encouraged a merchant
model with companies ultimately being saved by new post Fukushima Japanese demand; and US supply
is encouraging similar long-term risks to be taken.
LNG market update
The global LNG market is growing this year helped in particular by the on time start-up of PNG. Steady
growth in Asia (China, Japan plus new demand sources offsetting |Korean weakness) and strong
demand out of Latin America (though deliveries into Argentina have significantly slowed) have offset the
almost extinguishing of US demand and a weak Europe. Next project start-up is expected to be BG's
QCLNG in December.
Oil Companies, Major
Analyst:
Jon Rigby, CFA
[email protected]
+44-20-7568 4168
Source: This is an extract from UBS research published on 25 November 2014
Morning Expresso - A-Share 26 November 2014
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Japan Economic Comment - Major political and economic activity in Japan: key points
for overseas investors and our views
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Overseas investors who have been positive on Japan appear to see recent weak GDP, BoJ easing,
consumption tax postponement, the supplementary budget and other activity in terms of PM Abe's
commitment to prioritizing economic recovery. However, a growing number of observers are concerned
about the impact of rapid yen depreciation. Further, many investors are interested in domestic demand
recovery driven by a pick-up in corporate capex and wages, and in household sentiment. In addition to
gentle wage growth, there is sizable interest in a scenario of a supplementary budget to support
household incomes, and recovery in consumption by the elderly and the savings-rich. On the other hand,
investors who are bearish on Japanese equities generally regard the latest decision to defer the
consumption tax hike as a gamble, and have started to look to the possibility of future risk scenarios.
They spotlight the argument that an outflow of cash from Japan could lead to a chronic currency
account deficit, and if this is negative it would likely affect the market. Below we round up the questions
we frequently hear and our responses to these.
1. Why hold an election now?
2. Forecasts for the results of the December Lower House election
3. Has Abenomics so far been a failure?
4. Outlook for the supplementary budget, corporate tax cuts
5. Will the Third Arrow accelerate after the Lower House election?
6. Possibility of further BoJ easing
7. Our assessment of weak Q3 growth
8. Will Q3 GDP be revised up at the second estimate on 8 December?
9. Why was the consumption tax impact so profound?
10. Will consumption recover from here on?
11. Is the weaker yen positive for the Japanese economy?
12. Will inflation reach 2%?
13. How can Japan grow over the long term as the population declines?
14. What risk scenarios are there for a major breakdown in the Japanese economy?
15. Nuclear power generation restart and the impact on balance of trade
16. How will the structure of JGB holdings shape up from here on?
-
Economist:
Daiju Aoki
[email protected]
+81-3-5208 7454
Source: This is an extract from UBS research published on 25 November 2014
US Economic Comment - Strong GDP, but a correction in confidence
Q3 real growth revised to 3.9% from 3.5%
Q3 real GDP growth was revised up to a 3.9% annual rate from the initially reported 3.5% pace. We
and consensus had expected a slight downward revision to 3.3%. Consumption was increased to a
2.2% pace from 1.8%—a larger upward revision than we had allowed for. The difference reflects
stronger energy goods spending than we had allowed for. Within equipment investment, "all major
subcomponents were revised up", putting it at a 10.7% pace (close to Q2's 11.2%) rather than the
initially reported 7.2%. There was also some slight upward revision to residential investment. Stronger
domestic demand: Domestic final sales are now reported at a 3.2% pace rather than 2.7%. In Q3, the
pace barely slowed from Q2's weather-aided 3.4% growth. More generally, this was the fourth of the
past five quarters with GDP at or above 3 ½%—emphasizing the momentum heading into the holiday
spending season.
A pullback in the Conference Board consumer confidence index (-5.4 to 88.7)
In early November, the Conference Board consumer confidence index fell sharply from a cycle-high in
October, -5.4 pts to 88.7 (cons 96.0, UBSe 96.5). The drop reversed four months of gains but left it
within the recent, side-ways moving range (see chart). Expectations fell 6.8pts to 87.0, and present
situation by 3.1pts to 91.3—each erasing four or five months of increase. However, the level of the
expectations index still suggests acceleration in consumer spending (see chart). More generally, the
Conference Board measure had been outrunning other confidence indexes, and, with their uptrends, this
is probably a realignment rather than a sign of new softness.
SP/CS national index +0.7%, composite 20 +0.3%, FHFA flat m/m
The SP/Case Shiller (SP/CS) national index rose 0.7% in Sept (UBSe 0.6%) after increases of 0.3% and
0.2% in the prior two months—a decent rebound from Q2 softness. The SP/CS composite 20 index—the
old standard, but a narrower measure—has been slower to rebound, +0.3% in Sept (cons & UBSe 0.3%)
after -0.1% & -0.5%. The FHFA index is also lagging a bit, flat m/m in Sep (cons & UBSe 0.5%).
-
Economist:
Maury N. Harris
[email protected]
+1-212-713 2472
Source: This is an extract from UBS research published on 25 November 2014
Morning Expresso - A-Share 26 November 2014
abc 5
Rating & Price Target Changes
Company Name
Directional
Indicator/Rationale
Navinfo
Upgrade to buy,
increase PT
Reuters
Share Price
Code
002405.SZ
New
New PT
Rating
Rmb23.71
Buy
Prior
Prior PT
Analyst
Rating
Rmb27.3
Neutral
Rmb20
Zhong Zhou
Source: UBS estimates. Prices as at market close on November 25, 2014.
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Morning Expresso - A-Share 26 November 2014
abc 6
Markets, Events and Newsflow
Today’s Company Events
Company Name
A-Share
H-Share
-
Event
RIC
Rating
PT
Price
-
-
-
-
-
-
-
-
-
-
Source: Bloomberg, UBS. Prices as at market close on November 25, 2014.
Macroeconomic Events:
Country
Indicator
Time (HKT)
UBS
Previous
Consensus
Wednesday (Nov 26)
Westpac-MNI Consumer Sentiment (Nov)
9:45
Singapore
Industrial Production (Oct)
13:00
Y-o-Y
Singapore
Industrial Production SA (Oct)
13:00
M-o-M
South Korea
Consumer Confidence (Nov)
5:00
UK
GDP (Preliminary) (Q3)
17:30
Q-o-Q
UK
GDP (Preliminary) (Q3)
17:30
Y-o-Y
UK
Exports (Preliminary) (Q3)
17:30
Q-o-Q
UK
Imports (Preliminary) (Q3)
17:30
Q-o-Q
UK
Index of Services (Sep)
17:30
M-o-M
UK
CBI Reported sales (Nov)
19:00
% bal
United States
Core PCE Prices (Oct)
21:30
M-o-M
United States
Durable Goods Orders (Oct)
21:30
M-o-M
United States
Durable Goods Orders Ex Transportation (Oct)
21:30
M-o-M
United States
Jobless Claims (Nov 22)
21:30
lvl
United States
Personal Income (Oct)
21:30
M-o-M
United States
Personal Spending (Oct)
21:30
M-o-M
United States
Univ. of Michigan Consumer Sentiment Index
22:55
index
United States
New Home Sales (Oct)
23:00
lvl
United States
Pending Home Sales (Oct)
23:00
M-o-M
Thursday (Nov 27)
China
Industrial Profits (Oct)
9:30
Y-o-Y
Philippines
GDP (3Q)
10:00
Y-o-Y
Philippines
GDP SA (3Q)
10:00
Q-o-Q
South Korea
BoP Current Account Balance (Oct)
7:00
South Korea
BoP Goods Balance (Oct)
7:00
Taiwan
Monitoring Indicator (Oct)
16:00
UK
Lloyds Business Barometer (Nov)
17:30
United States
Thanksgiving Day (Holiday)
Source: Bloomberg, UBS
Morning Expresso - A-Share 26 November 2014
% bal
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
China
110.9
-1.20%
0.83%
-3.30%
3.00%
105
0.7%
3.0%
0.7%
3.0%
-0.4%
-0.3%
0.0%
31.0%
0.1%
0.1%
-1.4%
-1.1%
-0.6%
0.5%
-0.1%
0.4%
300
291
0.4%
0.2%
0.4%
0.3%
-0.2%
0.3%
91.0
89.4
90.0
475k
467k
470k
0.5%
0.3%
0.8%
0.40%
6.40%
6.40%
1.90%
1.40%
$7624.6M
$7728M
27
35.0%
abc 7
Latest Market Movements
Country/Region
Market
Latest Price/Last Close
1-day % Change
YTD% Change
Asia
Shanghai SE Composite Index
2685.56
1.37%
15.26%
China
Hang Seng H-Share
10782.91
-0.55%
-0.31%
Hong Kong
Hang Seng Index
23843.91
-0.21%
2.31%
India
Sensex
28338.05
-0.57%
33.86%
Indonesia
JCI
5118.95
-0.44%
19.76%
Korea
KOSPI
1980.21
0.08%
-1.55%
Malaysia
KLCI
1838.56
0.26%
-1.52%
Philippines
PHS Composite
7286.85
-0.52%
23.72%
Singapore
Straits Times
3344.99
0.13%
5.61%
Thailand
SET Index
1596.8
0.42%
22.95%
Taiwan
TSE Weighted
9116.24
-0.07%
5.86%
United States
Dow Jones
17814.94
-0.02%
7.47%
United States
S&P 500
2067.03
-0.12%
11.83%
United States
Nasdaq
4758.25
0.07%
13.93%
Europe
FTSEuro First 300
1388.87
0.16%
5.51%
Japan
Nikkei 225
17407.62
0.29%
6.85%
Rest of World
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
China
Source: UBS, Reuters. Prices as at market close on November 25, 2014. Prices In Japan and Hong Kong as at 05:00 BST on November 26, 2014.
Latest Interest Rate Movements
Currency Market
Maturity
Rate %
1-day bp Change
1-week bp Change
1-month bp Change
YTD bp Change
1-day repo
2.67
-1.11
6.37
7.66
-16.82
7-days repo
4.00
14.29
29.03
29.03
-25.93
14-days repo
4.14
-17.20
12.81
9.81
-47.59
1-month repo
4.40
2.33
0.00
6.02
-40.94
3-months repo
4.20
-3.45
3.70
-4.55
-36.36
3-months Shibor
4.16
0.27
-0.50
-6.99
-25.20
Rate %
1-day bp Change
1-week bp Change
1-month bp Change
YTD bp Change
1-year
3.00
-12.84
-14.81
-39.83
-122.27
3-years
3.28
-0.01
-7.31
-17.00
-117.30
5-years
3.38
0.75
-5.16
-16.98
-112.83
7-years
3.50
5.26
-8.53
-20.53
-111.74
10-years
3.52
4.49
-9.38
-19.60
-108.41
20-years
3.93
4.49
-9.44
-19.69
-111.38
National Debt
Maturity
Source: UBS, Bloomberg, WIND
Morning Expresso - A-Share 26 November 2014
abc 8
Latest FX Movements
Currency
Latest Price/Last Close
1-day % Change
1-month % Change
YTD % Change
China
Rmb/$
6.14
-0.02%
-0.3%
-1.4%
Hong Kong
HKD/$
7.75
-0.01%
0.0%
0.0%
India
Rs/$
61.87
-0.02%
-0.9%
0.1%
Indonesia
IDR/$
12140.00
-0.04%
-0.6%
0.2%
South Korea
Won/$
1110.21
-0.09%
-5.7%
-5.2%
Malaysia
MYR/$
3.35
-0.04%
-2.4%
-2.3%
Philippines
PHP/$
44.96
-0.08%
-0.4%
-1.3%
Singapore
SGD/$
1.30
0.00%
-2.0%
-3.0%
Taiwan
TWD/$
30.90
-0.04%
-1.7%
-3.6%
Thailand
Bt/$
32.79
-0.06%
-1.1%
-0.3%
Japan
JPY/$
117.95
0.02%
-9.4%
-12.1%
Euro
€/$
0.80
0.50%
-1.7%
-10.2%
United Kingdom
£/$
0.64
0.24%
-2.6%
-5.2%
AUD/$
1.17
0.06%
-3.1%
-4.6%
Australia
Source: UBS, Reuters. Prices as at market close on November 25, 2014.
UBS Key Calls – A-share
Company Name
Reuters Code
Rating
PT
Jiangxi Cement
000789.SZ
Buy
Rmb16.00
China Merchants Bank
600036.SS
Buy
Rmb13.63
Daqin Railway
601006.SS
Buy
Rmb11.10
Originwater Tech
300070.SZ
Buy
Rmb39.70
Yili Industrial
600887.SS
Buy
Rmb37.40
China Vanke
000002.SZ
Buy
Rmb13.60
Haier
600690.SS
Buy
Rmb25.0
Beijing Sanju
300072.SZ
Buy
Rmb34.30
Yonyou Software
600588.SS
Buy
Rmb31.50
Source: UBS estimates. Prices as at market close on November 25, 2014.
Morning Expresso - A-Share 26 November 2014
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Name
Launch date
Analyst
14-Aug-13
Qiang Liu
19-Nov-13
Zongwei Gan
11-Dec-13
Jean Rao
13-Feb-14
Wei Yu
11-Mar-14
Linda Zhao
13-Mar-14
Han Lin
12-Aug-14
Xinyu Liao
14-Aug-14
Wei Yu
07-Nov-14
Zhong Zhou
abc 9
A & H dual listco premium / discount
A share price
A share Premium/Discount
Name
GICS Sector
In RMB
In HKD
H share price
to H share
2202 HK
China Vanke Co Ltd
Financials
10.1
12.7
15.1
-16%
914 HK
Anhui Conch Cement Co Ltd
Materials
17.7
22.3
25.5
-12%
168 HK
Tsingtao Brewery Co Ltd
Consumer Staples
39.4
49.8
55.6
-10%
A share code
H share code
000002 CH
600585 CH
600600 CH
177 HK
Jiangsu Expressway Co Ltd
Industrials
6.3
7.9
8.7
-10%
600027 CH
1071 HK
Huadian Power International Co
Utilities
4.7
5.9
6.5
-9%
600011 CH
902 HK
Huaneng Power International In
Utilities
6.5
8.3
9.1
-9%
601088 CH
1088 HK
China Shenhua Energy Co Ltd
Energy
15.6
19.7
21.6
-9%
601766 CH
1766 HK
CSR Corp Ltd
Industrials
5.8
7.3
7.9
-7%
000338 CH
2338 HK
Weichai Power Co Ltd
Industrials
21.5
27.1
29.2
-7%
601601 CH
2601 HK
China Pacific Insurance Group
Financials
22.4
28.3
30.5
-7%
601398 CH
1398 HK
Industrial & Commercial Bank o
Financials
3.8
4.8
5.1
-6%
601288 CH
1288 HK
Agricultural Bank of China Ltd
Financials
2.6
3.3
3.5
-6%
601318 CH
2318 HK
Ping An Insurance Group Co of
Financials
45.9
58.0
61.7
-6%
600030 CH
6030 HK
CITIC Securities Co Ltd
Financials
16.5
20.8
22.1
-6%
600036 CH
3968 HK
China Merchants Bank Co Ltd
Financials
11.1
14.0
14.9
-6%
601939 CH
939 HK
China Construction Bank Corp
Financials
4.3
5.4
5.7
-6%
601628 CH
2628 HK
China Life Insurance Co Ltd
Financials
18.9
23.9
25.0
-4%
600196 CH
2196 HK
Shanghai Fosun Pharmaceutical
Health Care
21.0
26.5
27.4
-3%
000898 CH
347 HK
Angang Steel Co Ltd
Materials
4.3
5.4
5.5
-3%
601328 CH
3328 HK
Bank of Communications Co Ltd
Financials
4.5
5.7
5.8
-2%
601988 CH
3988 HK
Bank of China Ltd
Financials
3.0
3.8
3.8
-1%
601607 CH
2607 HK
Shanghai Pharmaceuticals Holdi
Health Care
15.0
19.0
19.2
-1%
601818 CH
6818 HK
China Everbright Bank Co Ltd
Financials
3.0
3.8
3.8
0%
600028 CH
386 HK
China Petroleum & Chemical Cor
Energy
5.2
6.6
6.4
3%
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
600377 CH
000063 CH
763 HK
ZTE Corp
Information Technology
15.6
19.7
18.7
6%
601299 CH
6199 HK
China CNR Corp Ltd
Industrials
6.5
8.2
7.7
6%
600016 CH
1988 HK
China Minsheng Banking Corp Lt
Financials
6.6
8.3
7.8
6%
600837 CH
6837 HK
Haitong Securities Co Ltd
Financials
13.6
17.1
15.9
8%
601390 CH
390 HK
China Railway Group Ltd
Industrials
4.8
6.1
5.5
10%
000513 CH
1513 HK
Livzon Pharmaceutical Group In
Health Care
51.3
64.9
57.4
13%
601857 CH
857 HK
PetroChina Co Ltd
Energy
7.9
9.9
8.8
13%
601111 CH
753 HK
Air China Ltd
Industrials
5.0
6.3
5.4
16%
601633 CH
2333 HK
Great Wall Motor Co Ltd
Consumer Discretionary
34.5
43.6
37.4
17%
601186 CH
1186 HK
China Railway Construction Cor
Industrials
8.0
10.1
8.6
17%
002594 CH
1211 HK
Byd Co Ltd
Consumer Discretionary
44.0
55.6
46.6
19%
601800 CH
1800 HK
China Communications Construct
Industrials
7.5
9.5
7.5
26%
600012 CH
995 HK
Anhui Expressway Co Ltd
Industrials
5.3
6.6
5.3
26%
601998 CH
998 HK
China CITIC Bank Corp Ltd
Financials
5.2
6.5
5.2
26%
000039 CH
2039 HK
China International Marine Con
Industrials
18.9
23.9
18.9
27%
601333 CH
525 HK
Guangshen Railway Co Ltd
Industrials
3.4
4.3
3.3
30%
601898 CH
1898 HK
China Coal Energy Co Ltd
Energy
5.0
6.3
4.8
30%
002202 CH
2208 HK
Xinjiang Goldwind Science & Te
Industrials
12.6
16.0
12.1
31%
601991 CH
991 HK
Datang International Power Gen
Utilities
4.5
5.6
4.3
32%
600332 CH
874 HK
Guangzhou Baiyunshan Pharmaceu
Health Care
26.7
33.7
25.2
34%
601336 CH
1336 HK
New China Life Insurance Co Lt
Financials
35.0
44.3
32.4
37%
600548 CH
548 HK
Shenzhen Expressway Co Ltd
Industrials
6.1
7.8
5.6
38%
000157 CH
1157 HK
Zoomlion Heavy Industry Scienc
Industrials
5.2
6.5
4.7
38%
002672 CH
895 HK
Dongjiang Environmental Co Ltd
Industrials
33.1
41.8
29.9
40%
600362 CH
358 HK
Jiangxi Copper Co Ltd
Materials
15.6
19.7
13.9
42%
Morning Expresso - A-Share 26 November 2014
abc 10
A share price
A share Premium/Discount
H share code
Name
GICS Sector
In RMB
In HKD
H share price
to H share
601238 CH
2238 HK
Guangzhou Automobile Group Co
Consumer Discretionary
8.1
10.3
7.2
42%
600029 CH
1055 HK
China Southern Airlines Co Ltd
Industrials
3.7
4.7
3.3
44%
601808 CH
2883 HK
China Oilfield Services Ltd
Energy
17.4
22.0
15.2
45%
600875 CH
1072 HK
Dongfang Electric Corp Ltd
Industrials
16.9
21.3
14.3
49%
601107 CH
107 HK
Sichuan Expressway Co Ltd
Industrials
3.7
4.6
3.1
51%
600685 CH
317 HK
Guangzhou Shipyard Internation
Industrials
27.9
35.2
22.6
56%
601600 CH
2600 HK
Aluminum Corp of China Ltd
Materials
4.1
5.2
3.3
56%
601618 CH
1618 HK
Metallurgical Corp of China Lt
Industrials
2.9
3.7
2.3
63%
600026 CH
1138 HK
China Shipping Development Co
Industrials
6.4
8.1
4.9
65%
601992 CH
2009 HK
BBMG Corp
Materials
8.2
10.4
6.3
66%
600871 CH
1033 HK
Sinopec Yizheng Chemical Fibre
Materials
4.3
5.4
3.3
66%
000921 CH
921 HK
Hisense Kelon Electrical Holdi
Consumer Discretionary
8.6
10.8
6.5
67%
601899 CH
2899 HK
Zijin Mining Group Co Ltd
Materials
2.8
3.6
2.1
69%
601717 CH
564 HK
Zhengzhou Coal Mining Machiner
Industrials
7.0
8.8
5.2
69%
601919 CH
1919 HK
China COSCO Holdings Co Ltd
Industrials
5.0
6.3
3.6
73%
600115 CH
670 HK
China Eastern Airlines Corp Lt
Industrials
4.8
6.1
3.5
74%
000488 CH
1812 HK
Shandong Chenming Paper Holdin
Materials
5.3
6.7
3.8
76%
601727 CH
2727 HK
Shanghai Electric Group Co Ltd
Industrials
6.4
8.0
4.6
77%
600808 CH
323 HK
Maanshan Iron & Steel Co Ltd
Materials
3.0
3.7
2.1
79%
600188 CH
1171 HK
Yanzhou Coal Mining Co Ltd
Energy
9.6
12.1
6.6
84%
600874 CH
1065 HK
Tianjin Capital Environmental
Industrials
8.9
11.2
5.7
96%
600688 CH
338 HK
Sinopec Shanghai Petrochemical
Materials
3.7
4.7
2.4
98%
601866 CH
2866 HK
China Shipping Container Lines
Industrials
3.4
4.3
2.2
99%
601880 CH
2880 HK
Dalian Port PDA Co Ltd
Industrials
4.7
6.0
3.0
100%
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
A share code
601588 CH
588 HK
Beijing North Star Co Ltd
Financials
3.9
4.9
2.4
103%
600775 CH
553 HK
Nanjing Panda Electronics Co L
Information Technology
12.4
15.7
7.6
106%
603993 CH
3993 HK
China Molybdenum Co Ltd
Materials
8.4
10.6
5.0
111%
600806 CH
300 HK
Shenji Group Kunming Machine T
Industrials
6.5
8.2
3.9
112%
601005 CH
1053 HK
Chongqing Iron & Steel Co Ltd
Materials
3.2
4.0
1.9
115%
601038 CH
38 HK
First Tractor Co Ltd
Industrials
10.6
13.4
6.0
125%
000756 CH
719 HK
Shandong Xinhua Pharmaceutical
Health Care
8.4
10.6
4.7
126%
600860 CH
187 HK
Beijing Jingcheng Machinery El
Industrials
7.2
9.0
3.9
133%
000585 CH
42 HK
Northeast Electric Development
Industrials
4.1
5.2
2.1
146%
000666 CH
350 HK
Jingwei Textile Machinery
Industrials
18.0
22.8
8.6
164%
002490 CH
568 HK
Shandong Molong Petroleum Mach
Energy
10.6
13.4
4.2
222%
002703 CH
1057 HK
Zhejiang Shibao Co Ltd
Consumer Discretionary
27.3
34.5
9.0
284%
Source: UBS, Bloomberg
Morning Expresso - A-Share 26 November 2014
abc 11
UBS Conferences and Seminars*
For the week of 24th – 28th November
From
To
Event
Location
-
-
-
-
Upcoming UBS Conferences and Seminars
To
Event
Location
2-Dec-14
3-Dec-14
Global Real Estate CEO/CFO Conference
London
2-Dec-14
4-Dec-14
Global Emerging Markets One-on-One Conference
New York
3-Dec-14
4-Dec-14
Australian Iron Ore and Coal Conference
12-Jan-15
16-Jan-15
Greater China Conference 2015
4-Mar-15
6-Mar-15
UBS Philippines CEO Forum 2015
9-Mar-15
11-Mar-15
UBS Indonesia Conference 2015
16-Apr-15
17-Apr-15
HK / China Property Conference 2015
4-Jun-15
5-Jun-15
LVMC Conference 2015
4-Jun-15
5-Jun-15
Pan-Asian Telco Conference 2015
Recent events
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
From
Sydney
Shanghai
Makati City
Jakarta
Hong Kong
Bangkok
Hong Kong
From
To
Event
Location
17-Nov-14
18-Nov-14
Asia Oil, Gas and Chemicals Conference 2014
19-Nov-14
21-Nov-14
India Conference
16-Oct-14
16-Oct-14
HK/China Small and Mid Caps Corporate Day
2-Oct-14
2-Oct-14
Malaysia Corporate Day
22-Sep-14
23-Sep-14
Mutual Market Access Conference 2014
25-Sep-14
26-Sep-14
Japan Internet Corporate Day
9-Sep-14
9-Sep-14
UBS Taiwan Corporate Day (Pharma Expert Series)
3-Sep-14
5-Sep-14
ASEAN Conference 2014
7-Jul-14
8-Jul-14
Indonesia eCommerce Day
10-Jul-14
11-Jul-14
UBSS Environmental Protection & Healthcare Conference (Mandarin Only)
Beijing
23-Jun-14
25-Jun-14
Korea Conference
Seoul
25-Jun-14
27-Jun-14
Taiwan Conference
Taipei
17-Jun-14
18-Jun-14
Asian Consumer Conference 2014
Hong Kong
5-Jun-14
6-Jun-14
India Mid-Cap Conference 2014
Mumbai
26-May-14
27-May-14
Thailand - Laos, Vietnam, Myanmar, Cambodia ("LVMC") 2014
Bangkok
14-May-14
15-May-14
Pan-Asian Telco Conference 2014
Hong Kong
8-May-14
8-May-14
UBS China Macro Economics: "Bubble Trouble", Are We There Yet? The
second attempt
Conf Call
Hong Kong
Mumbai
Hong Kong
Singapore
Shanghai
Hong Kong
Taipei
Singapore
Jakarta
*For further information on any of these events, please contact your UBS representative. Replay details may be available for recently concluded conference calls
Morning Expresso - A-Share 26 November 2014
abc 12
Recent UBS Event

UBS China Economics Conference Call
The Rate Cut and Policy Outlook
The Central Bank of China (PBC) finally cut benchmark rates last Friday, to the surprise of most in the market. Market reaction has
been instantaneous and very positive, but many analysts seem to be confused by various conflicting signals from the government.
Why did PBC make a benchmark rate cut now? Are there new indicators or considerations the market has missed? Is this the
beginning of more easing to come? How much of an impact should we expect from the rate cut?
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Host & Speaker:
Dr. Tao Wang - UBS Head of China Economic Research
•
•
•
Related research reports:
China Economic Comment: Finally, PBC Cuts Benchmark Rates and Moves forward on Liberalization, November 21
China Economic Comment: Yes PBC Did! … Inject Liquidity Quietly, November 7
China Economic Perspectives: China Economic Outlook 2015-2016, November 4
Date & Time:
Tuesday November 25th @ 4:00 New York // 09:00 London // 10:00 Paris // 17:00 BJ/HK/SG // 18:00 Japan // 20:00 Australia
Instructions to access call: Two ways to access conference call: Pre-registration and Direct Dial-in.
(1) Pre-registration for conference call via the following link: http://www.directeventreg.com/registration/event/40877366
On successful registration, an email will be sent to you with important details for the conference such as a full list of dial-in
numbers as well as your unique Registrant ID. This ID is to be kept confidential.
(2) Direct Dial-in to one of the numbers below and wait for an operator to service you: International Dial-In: +852 30175341
Dial-in details – PINCODE 40877366 #
Australia, Sydney
Austria, Vienna
Belgium, Brussels
Brazil
Canada, Toronto
China, Domestic
China, Domestic
Denmark
Finland, Helsinki
France, Paris
Germany
Hong Kong
India, Mumbai
Local Dial-In
Numbers
International Toll Free
Dial-In Numbers
+61 290370099
+43 1253022127
+32 28948285
1800031603
080088668271
080070540
08000959113
18552032493
108001521983
108008521983
80251112
0800915724
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+1 4169156546
4001200631
8008702067
+45 32728035
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0008001005897
Japan, Domestic
Japan, Tokyo
Korea (South), Seoul
Malaysia, Kuala
Netherlands
New Zealand
Singapore
Spain, Madrid
Sweden, Stockholm
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Taiwan, Taipei
UK
US
Local Dial-In
Numbers
International Toll
Free Dial-In Numbers
120914280
+81 345891138
+82 264903510
+60 377249561
+31 207085366
+64 92805276
+65 31575464
+34 917699758
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*Access to your conference call will be either of the numbers listed, dependent on the participants' local telecom provider.
Restrictions may exist when accessing freephone/toll free numbers using a mobile telephone.
Replay – PINCODE
40877366 #
Dial In Numbers: http://www.intercallapac.com/web/encorenumbers/
Available time: 25 Nov 2014 20:30 HKT - 01 Dec 2014 20:30 HKT
Morning Expresso - A-Share 26 November 2014
abc 13
Recent UBS Event

UBS Evidence Lab Conference Call
Mobile Devices - What is the future for smartphones?
In addition to our Evidence Lab report, UBS: Mobile Devices - What is the future for smart-phones?, which analyzes mobile device
demand and consumers' stated purchasing intentions, we are also hosting a conference call to highlight the key takeaways and
critical investment debates.
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Hosts:
Gareth Jenkins - Head of European Tech Hardware
Nicolas Gaudois, Head of APAC Technology
Steven Milunovich, UBS US IT Hardware Analyst
•
•
•
•
•
Topics of Discussion:
What are device maker retention rates and how is stickiness valued by the market?
Is the consumer tied to the device vendor or operating system?
Does the smart-phone market have more growth to come?
Who are the winners and losers?
Question and Answer
Date & Time:
Monday, November, 17th @ 9:00 AM New York // 14:00 London // 22:00 Hong Kong
Dial-in details – PINCODE 949636#
North America:+1 877 491 0064
Austria LC+43 (0)268 2205 6292
Hong Kong LC: +852 300 278 26
Denmark LC: +45 3271 4607
Finland LC: +358 (0)9 2313 9201
France LC: +33 (0)1 7099 3208
Germany LC: +49 (0)695 8999 0507
Hungary LC: +36 (0)180 8821 3
Ireland LC +353 (0)1 4364 106
Italy LC: +39 023 0350 9003
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Spain LC: +34 917 889 507
Sweden LC +46 (0)8 5052 0110
UK LC: +44 (0)20 7162 0077
US LC: +1 877 491 0064
Geneva LC: +41 (0)2 2592 7007
Zurich LC +41 (0)434 5692 61
Australia FP: 1800 9889 41
Austria FP: 0800 6779 75
China North FP: 10 800 7121 463
China South FP: 10 800 1201 463
Czech Republic FP: 800 1428 32
Germany FP: 0800 1016 599
Hong Kong FP: 800 9620 99
India FP: 000 8001 0035 51
Indonesia FP: 18030113799
Replay – PINCODE
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Norway Oslo +47 21501292
949636#
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Netherland Amsterdam +31 (0) 207965345
Portugal Toll Free 800782056
This will be available within 4 hrs of the call ending for 14 day(s) from 17 Nov 2014 until midnight on 01 Dec 2014
Morning Expresso - A-Share 26 November 2014
abc 14
Analyst Videos
Analyst
Video Title
Link
25-Nov
Steve Yang
What to expect from China's "Marshall Plan"
Link
25-Nov
Ming Xu
China Auto Dealerships - Anchored in tides
Link
12-Nov
Jason Bedford
Implications and understanding of China's complex interbank market
Link
11-Nov
Nicole Goh
Initiation of Coverage - Berjaya Food: Can't get enough
Link
10-Nov
Gareth Jenkins
UBS Global I/O: Mobile Devices: Smart-phone survey
Link
6-Nov
Tao Wang
China Economics: Managing Transition & Risk in a Property Downturn
Link
31-Oct
Bhanu Baweja
3 Key issues for EM
Link
28-Oct
Ken Liu
Chinese Independent Power Producers: Opportunity arises with MMA
Link
28-Oct
Kim Wright
Back to Fundamentals: What matters for residential prices & retail rents?
Link
22-Oct
Erica Poon Werkun
Alibaba Initiation of Coverage - Forecast Highlights & Investor Feedback
Link
20-Oct
Kelvin Chu
Taiwan ‘International' bonds: Fast growing, but underappreciated
Link
20-Oct
Kelvin Chu
Taiwan ‘International' bonds: Fast growing, but underappreciated
Link
16-Oct
Reinhard Cluse
How will the Ukraine events reshape European energy policy?
Link
16-Oct
Gautam Chhaochharia
UBS Evidence Lab: India consumption demand likely to disappoint near-term
Link
16-Oct
Gautam Chhaochharia
India inflation not structural, rates ease 200bps. An anti-consensus view
Link
16-Oct
Shanle Wu
Brace for headwinds. Impact of macro risk on China H- and A-share markets
Link
10-Oct
Peter Gastreich
All eyes on Sinopec’s Easy Joy as it enters operational execution phase
Link
10-Oct
Eva Lee
What’s in & what’s out in 2015: A look at the HK Property Landlord market
Link
8-Oct
Julien Garran
Commodities & Mining Q&A - The Switch
Link
6-Oct
Edwin Chen
Sa Sa International downgrade. Trouble beyond sales growth
Link
3-Oct
Alberto Gandolfi
Global LNG: supplies +40% by 2018e. Profits to fall
Link
25-Sep
David Lesne
Global Autos - How disruptive is "car-on-demand" for Autos?
Link
24-Sep
Larry Hatheway
Contours of the world economy
Link
18-Sep
Jason Bedford
Shadow banking: securities companies, the new shadow platform
Link
17-Sep
Julien Garran
"The Big Chill" – the impact of falling costs on commodities & miners
Link
17-Sep
Tao Wang
Testing the Government's Resolve
Link
15-Sep
Matthew Gilman
How China A-share corporates behave
11-Sep
Nicolas Gaudois
Semiconductors: DRAM Memory cycle: Stay the course
Link
10-Sep
Wenjie Lu
Understanding the market impact of the MMA southbound trade
Link
10-Sep
Wenjie Lu
China Keys - SOE reform: a significant re-rating catalyst
Link
4-Sep
Shaojin Tong
Investing in your health. Opportunity arises in China's healthcare sector
Link
3-Sep
Christine Peng
'Want Want' more Hot Kid milk? Our anti-consensus Sell call
Link
28-Aug
Young Chang
Samsung "Should their ownership structure, be restructured?"
Link
26-Aug
Robin Xu
China Communications Construction: A one-stop solution provider
Link
19-Aug
Kim Wright
Global Listed Real Estate: Pricing supported by fundamentals
Link
12-Aug
Matthew Mish
High Yield Bond Fire
Link
12-Aug
Eric Lin
China Shipping Development "Strong Leverage to the BDI"
Link
11-Aug
Eric Lin
Thai Airways: A Restructuring Story
Link
8-Aug
Michael Schumacher
Is Your Portfolio Ready for Central Bank Rate Hikes?
Link
7-Aug
Angus Chan
Asia Gaming – Supply Growth Prevails
Link
28-Jul
Matthew Gilman
MMA Primer: Get Connected to A-shares
17-Jul
Julien Garran
Goldilocks or Gold?
Link
16-Jul
Stephane Deo
How to protect an equity portfolio during a bond sell-off?
Link
8-Jul
Niall MacLeod
Debtopia: alive and kicking
Link
17-Jun
Drew Matus & Julian Emanuel
The Dots Could Prove Disruptive
Link
30-May
Michael Schumacher
Treasury Yields to rise significantly by year-end
Link
27-May
Maury Harris
Rising inflation and interest rates
Link
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Date
Link
Link
Source: UBS
Morning Expresso - A-Share 26 November 2014
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Further Information
Morning Expresso - A-Share
Welcome to the Morning Expresso, an early morning summary of the key ideas and issues presented from UBS for the
day ahead. Its contents include:
key items from UBS’ Asian Morning Meeting
-
highlighted recommendation and price target changes
-
today’s anticipated company, sector and macro-economic catalysts
-
company and client events, conferences and conference calls from UBS
-
live key calls portfolio
-
overnight global market movements
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
-
Morning Expresso is designed to give you all that you ‘need to know’ each morning.
Data presented is accurate as at 07:00 HKT on 26 November 2014.
Contacts & Feedback
For further details concerning today’s Morning Expresso – A-share note, please visit www.ubs.com/investmentresearch or
speak to your UBS contact. This note is not intended to be static and it will evolve over time. Feedback welcomed on
email to [email protected]
Morning Expresso - A-Share 26 November 2014
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Statement of Risk
Forecasting earnings and corporate financial behaviour is difficult because it is
affected by a wide range of economic, financial, accounting and regulatory trends,
as well as changes in tax policy.
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Morning Expresso - A-Share 26 November 2014
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Required Disclosures
This report has been prepared by UBS Securities Co. Limited, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and
affiliates are referred to herein as UBS.
For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical
performance information; and certain additional disclosures concerning UBS research recommendations, please visit
www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable
indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed
to conduct securities investment consultancy businesses by the China Securities Regulatory Commission.
UBS Investment Research: Global Equity Rating Definitions
12-Month Rating
Definition
Buy
FSR is > 6% above the MRA.
Neutral
FSR is between -6% and 6% of the MRA.
Sell
FSR is > 6% below the MRA.
Short-Term Rating
Definition
Buy
Sell
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Analyst Certification: Each research analyst primarily responsible for the content of this research report, in whole or in
part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed
accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner,
including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to
the specific recommendations or views expressed by that research analyst in the research report.
Coverage1
IB Services2
47%
34%
42%
28%
11%
21%
Coverage3
IB Services4
Stock price expected to rise within three months from the time
the rating was assigned because of a specific catalyst or event.
less than 1%
less than 1%
Stock price expected to fall within three months from the time
the rating was assigned because of a specific catalyst or event.
less than 1%
less than 1%
Source: UBS. Rating allocations are as of 30 September 2014.
1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within
the 12-month rating category for which investment banking (IB) services were provided within the past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies
within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months.
KEY DEFINITIONS: Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend
yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate
plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR
by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually
in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected nearterm (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment
case. Equity Price Targets have an investment horizon of 12 months.
EXCEPTIONS AND SPECIAL CASES: UK and European Investment Fund ratings and definitions are: Buy: Positive
on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure,
management, performance record, discount; Sell: Negative on factors such as structure, management, performance
record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the
Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the
respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands
as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the
relevant research piece.
Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not
registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained
in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by
a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if
any, follows.
UBS Securities Co. Limited: Angela Sun, PhD, CFA.
Morning Expresso - A-Share 26 November 2014
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Company Disclosures
Reuters
12-month
rating
Cathay Pacific
0293.HK
Buy
N/A HK$15.88
25 Nov
2014
600028.SS
Buy
N/A
Rmb5.19
25 Nov
2014
GS Holdings
078930.KS
Sell
N/AWon43,600
25 Nov
2014
Hyundai E&C5
000720.KS
Buy
N/AWon48,350
25 Nov
2014
5019.T
Neutral
N/A
¥2,107
25 Nov
2014
Navinfo
002405.SZ
Buy
N/A Rmb23.71
25 Nov
2014
PetroChina - A16a, 16b
601857.SS
Neutral
N/A
Rmb7.85
25 Nov
2014
PTT Global Chemical
PTTGC.BK
Buy
N/A
Bt66.00
25 Nov
2014
Reliance Industries4, 5
RELI.BO
Buy
N/A
Rs992.35
25 Nov
2014
Shenzhen Gas
601139.SS
Buy
N/A
Rmb8.15
25 Nov
2014
S-Oil
010950.KS
Sell
N/AWon47,500
25 Nov
2014
TOP.BK
Neutral
N/A
Bt43.75
25 Nov
2014
0322.HK
Buy
N/A HK$18.48
25 Nov
2014
TonenGeneral Sekiyu
5012.T
Neutral
N/A
¥1,001
25 Nov
2014
Toray
3402.T
Buy
N/A
¥925.2
25 Nov
2014
Toyota Motor16b
7203.T
Buy
N/A
¥7,190
25 Nov
2014
China Petroleum and Chemical Corp - A3a, 3b, 4, 5,
16a, 16b
Idemitsu Kosan5
Thai Oil
Tingyi Cayman Islands
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Company Name
Short-term
rating
Price Price date
Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock
pricing date
3a.
3b.
4.
5.
16a.
16b.
UBS is acting as Financial Adviser and UBSS is acting as Independent Financial Adviser for Sinopec Yizheng
Chemical Fibre Company Limited in relation to its proposed material asset reorganization including certain disposal
and share repurchase with China Petroleum & Chemical Corporation.
UBS is acting as financial adviser to ENN Energy Holdings Ltd in its investment into Sinopec Marketing Co Ltd, a
wholly-owned subsidiary of China Petroleum & Chemical Corporation.
Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking
services from this company/entity.
UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking
services from this company/entity within the next three months.
UBS Securities (Hong Kong) Limited is a market maker in the HK-listed securities of this company.
UBS Securities LLC makes a market in the securities and/or ADRs of this company.
For a complete set of disclosure statements associated with the companies discussed in this report, including information on
valuation and risk, please contact UBS Securities LLC, 1285 Avenue of Americas, New York, NY 10019, USA, Attention:
Publishing Administration.
Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.
Morning Expresso - A-Share 26 November 2014
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Additional Prices: Beijing Originwater Technology, Rmb30.40 (25 Nov 2014); Beijing Sanju Environmental Protection,
Rmb27.13 (25 Nov 2014); China Merchants Bank - A, Rmb11.11 (25 Nov 2014); China Vanke, Rmb10.08 (25 Nov 2014);
Daqin Railway, Rmb9.71 (25 Nov 2014); Inner Mongolia Yili Industrial, Rmb25.06 (25 Nov 2014); Jiangxi Wannianqing
Cement, Rmb11.20 (25 Nov 2014); Qingdao Haier Co., Rmb17.68 (25 Nov 2014); Yonyou Software, Rmb24.59 (25 Nov
2014); Source: UBS. All prices as of local market close.
PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
Morning Expresso - A-Share 26 November 2014
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PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
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Morning Expresso - A-Share 26 November 2014
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PCC173f48aa43ea5ba001447700186961d3 00 : 13 26 Nov 2014
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