Hong Kong & China Market Daily

MorningSnapshotKingsway Financial Services Group Limited-http://www.sunwahkingsway.com/Please see the important disclaimer and disclosures (if any) at the end of this report. HongKong&ChinaMarketDailyChina & HK IndicesCLOSE1DYTDHSI24,170 -0.6%3.3%HSCEI8,455 -1.0%2.7%HSCCI4,361 0.5%11.8%CSI3004,634 -0.4%-6.2%Shanghai A3,658 -0.0%0.6%Shanghai B287 0.4%0.6%Shenzhen A2,433 0.6%-8.1%Shenzhen B1,154 -0.0%-1.6% Key Int'l IndicesCLOSE1DYTD Dow Jones34,079 -0.7%-6.2% S&P 5004,348 -0.7%-8.8% Nasdaq13,548 -1.2%-13.4% NIKKEI Index26,402 -1.9%-8.3% FTSE Index7,484 -0.4%1.4% CAC Index6,788 -2.0%-5.1% DAX Index14,731 -2.1%-7.3%CommoditiesCLOSE1DYTDGOLD(US$/oz.)1,906 0.4%4.4%STEEL(US$/oz.)1,687 -2.5%6.8%SILVER(US$/oz.)23 -0.1%3.2%CRUDE OIL(US$/bbl)91 1.3%24.9%COPPER(US$/oz.)9,898 -0.3%1.8%ALUMINIUM(US$/oz.)3,279 0.4%16.8%PLATINUM(US$/oz)1,078 0.6%11.9%ZINC(US$/oz.)3,558 -1.3%0.7%WHEAT(US¢/bu)797 2.1%3.4%CORN(US¢/bu)652 1.1%9.7%SUGAR(US¢/lb)N/AN/A-6.1%SOYBEAN(US¢/bu)1,603 0.8%18.9%PVC(US$/t.)N/AN/A-2.4%CRB263 -0.6%3.0%BDI#VALUE!#VALUE!-11.4%Exchange RatesUSDHKDEURJPYCHFRMBUSD7.8010.884114.7400.9166.335HKD0.1280.11314.70811.7400.812EUR1.1318.824129.7900.9667.179JPY0.0096.8000.7710.7980.055CHF1.0928.5180.966125.2666.917RMB0.1581.2310.13918.1360.145 Market SentimentCURRENT5DCDS Monitor - USD SR 5Y GreeceN/AN/A Ireland83 -2.4% Italy139 -0.6% Portugal207 -0.0% Spain108 0.3%VIX27 1.4%Source: Bloomberg22 February 2022 Latest Research Reports DateCompanyAnalyst16-FebEdvantage Group (382 HK)Katherine Dai20-Jan361 Degrees (1361 HK)Eason Cui14-JanBinjiang Services (3316 HK)Ken Li15-DecMeidong Auto (1268 HK)Eason Cui17-NovEdvantage Group (382 HK)Katherine Dai27-OctTruly Int'l (732 HK)Jade Wang10-SepTruly Int'l (732 HK)Jade Wang09-Sep361 Drgrees (1361 HK)Research Department03-SepiDreamsky (1119 HK)Katherine Dai13-AugTruly Int'l (732 HK)Jade Wang09-AugXinyi Solar (968 HK)Research Department06-AugXinyi Energy (3868 HK)Jade Wang04-AugXinyi Glass (868 HK)Research Department03-AugTruly Int'l (732 HK)Jade Wang02-AugWeimob (2013 HK)Katherine Dai27-JulEdvantage Group (382 HK)Katherine Dai07-JuliDreamsky (1119 HK)Katherine Dai23-JunDIT Group (726 HK)Endy Lo16-JunWeimob (2013 HK)Katherine Dai26-AprEdvantage Group (382 HK)Endy Lo15-AprGench Edu (1525 HK)Endy LoWhat’s Hot Today:►Propertysectorupdate–SellingpricesrecoveredinJanCorporateNewsCommentary/ReportsSummary►YuexiuProperty(123HK–HK$8.36)–Sharepriceup21.7%YTD,oneofourtoppicksinthesectorEvent(a):AccordingtoNationalBureauofStatistics.Thesellingpricefor1sttiercities+0.6%mominJan(-0.1%inDec),inwhichBeijing,Shanghai,GuangzhouandShenzhenroseby1%,0.6%,0.5%and0.5%respectively.Andfor2ndand3rdtiercities,thesellingprice+0.1%/-0.2%mom(-0.3%/-0.3%inDec).Event(b):ForFeb,one-yearloanprimeratewas3.7%,whilethefive-yearratewas4.6%,bothonparwithJanEvent(c):FourmajorbankslowermortgageratesinGuangzhouatthesametime.Event(c):SomeChinesecities(Chongqing,HezecityandGanzhoucity)havecutthedownpaymentratiofor1sttimehomebuyers(from30%to20%).Ourview–Withmoresupportivemeasures,weexpectthehousingmarketsentimenttocontinuetorecover.Thefifthplenarysessionofthe13thNationalPeople’sCongress(startingon5Mar)mayprovidemorepolicyguidance,meanwhile,themarketalsoexpectstheretobefurthercutinRRRand/orLPR,thesalesfigureinMaristobeakeycheckpoint.Thedownpaymentratiocutsinseveralcitiesmaysignalaturnaroundofpolicy,fromtighttoloss.Infact,thegovernmenthassentaclearsignaltoeasepressureonthepropertymarket(allowdeveloperstoaccesspresales,State-ownedbad-debtmanagerstosupportstresseddevelopersetc).Themarketisexpectingmorelocalgovernmentstorolloutflexiblepoliciestoboostdemandandstabilizethepropertymarket.Webelieveinvestorstoturnmore‘constructive’forthesectorwhenthesalesdatagetimprovedandtheliquidityproblemforthesectoreases.Withinthesector,weexpectSOEstobebetterpositioned,wefavourCOLI(688HK–HK25.45)andCRLand(1109HK–HK39.7)whichareup~38%/21%YTD.Forthe2ndtierSOEs,wefavourYuexiuProperty(123HK–HK$8.36).Thetickeristradingat4.2xFY22E/0.42xPB,lowerthan3yraverageof5x/0.5xwith~9.4%yield,thevaluationisreasonable.Thestockpricewasup~21.7%YTD,YuexiuPropertyhas(1)inexpensivevaluation,(2)SOEbackgroundwithahealthyfinancialposition(in"green"category,borrowingcost~4.45%vspeersave~6%),(3)TODprojects(“rail+property”developmentmodel)tobethedifferentiationandkeydriver(TODprojectswere4.06ms.qm,~14.5%oftotallandbank,moreTODprojectinjectionsfromGZMetro),(4)amplelandbankwithgoodlocation(totallandbank>30ms.qm,sufficientfor2-3yrssaleswith>90%locatedintier1and2cities),YuexiuPropertywillbeoneofourtoppicksin2ndtierpropertysector.Long.(KenLi)Figure 1. LPR Source: Bloomberg and Sunwah Kingsway Research 3.53.73.94.14.34.54.74.9%1Y(%)5Y(%) Kingsway Financial Services Group Limited-http://www.sunwahkingsway.com Please see the important disclaimer and disclosures (if any) at the end of this report