First Light Asia
Disclaimer & Disclosures This report must be read with the disclosures in the Disclosure appendix, and with the Disclaimer, which forms part of it. Disclosures for companies can be accessed via the hyperlinks to the original published research, which can be found in the title Issuer of report: The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at: https://www.research.hsbc.com THIS CONTENT MAY NOT BE DISTRIBUTED TO THE PEOPLE’S REPUBLIC OF CHINA (THE “PRC”) (EXCLUDING SPECIAL ADMINISTRATIVE REGIONS OF HONG KONG AND MACAO) What’s Changed, Research Focus, Today’s Events Ticker Company Rating was CurrencyTarget was EPS '15e EPS '16e Price Price At Close New 2799 HK China Huarong Asset Management Buy HKD 5.36 0.42(RMB) 0.41(RMB) 3.03 4 Dec 1359 HK China Cinda Asset Management Buy HKD 5.37 0.41(RMB) 0.46(RMB) 2.80 4 Dec 600703 CH Sanan Optoelectronics Buy RMB 34.00 0.821.13 24.098 DecUp MER PM Manila Electric Co Buy PHP 370.00343.00 17.28 15.10 315.207 Dec MPI PM Metro Pacific Inv Buy PHP 7.206.90 0.390.35 5.25 7 DecDown 2883 HK China Oilfield Services – HReduceHold HKD 5.758.80 0.29(CNY) 0.27(CNY) 7.02 9 Dec 142 HK First Pacific Buy HKD 6.507.10 0.07(USD) 0.07(USD) 5.05 8 Dec 601808 CH China Oilfield Services – AReduce CNY 4.807.30 0.290.27 15.739 Dec Source: Bloomberg, HSBC estimates Research Focus China Huarong Asset Management (2799 HK) - Initiate at Buy: Well placed in a fast-growing industry Michael P Chang* China’s largest financial asset management company is well positioned in a structurally fast growing sector We forecast a 19% 2014-17e profit CAGR; distressed asset management is the biggest contributor to its earnings We initiate coverage of Huarong with a Buy rating and TP of HKD5.36, which implies 77% upside and a 1.6x 2016e PB China Cinda Asset Management (1359 HK) - Initiate at Buy: Beneficiary of accelerating NPL sales Michael P Chang* Cinda’s market-leading share sees it well placed to benefit from increased pressure on banks to sell NPLs A potential NCB acquisition looks EPS and ROE accretive; but integration is a risk that could delay a re-rating Initiate at Buy with a target price of HKD5.37 Sanan Optoelectronics (600703 CH) - Initiate at Buy: Uniquely positioned for growth Jerry Tsai* Sanan offers robust net income growth, at a 24% 2016-17e CAGR, in a sector beset by severe competition. We foresee compound semiconductors becoming a multi-year driver While peers only break even, Sanan generates a 35% net margin due to high value-add application sales and subsidies Initiate with a Buy rating and RMB34 TP (30x FY16e PE) China Oilfield Services (2883 HK/601808 CH) - Downgrade to Reduce: Grim and Grimmer Thomas C. Hilboldt* COSL grim messaging continues; 2016 contract negotiations with major clients leads to lower guidance Cut 2016-17e earnings by 60%/55%; and we expect sharp downward revisions to 2015-17e consensus earnings Lower TP to HKD5.75/RMB4.80 (from HKD8.8/RMB7.3), downgrade H to Reduce from Hold, Reduce on A 10 December 2015 First Light Asia RESEARCH MARKETING ASIA Ticker Event Rating Target Price Ticker Event NI Bbg New Zealand RBNZ Official Cash Rate 10-Dec 2.5%Adobe Systems InADBE US Q489.9Australia Employment Change('000s) Nov -15Import Price Index YoYUS Nov-9.50%Australia Unemployment Rate Nov 6% Source: Bloomberg, HSBC estimates Alfred Chin* Research Marketing +852 2996 6753alfred.k.y.chin@hsbc.com.hk *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulationsChina Huarong Asset Management | China Cinda Asset Management | Sanan Optoelectronics | China Oilfield Services abc RESEARCH MARKETING ASIA 10 December 2015 Regional Asian FX: RMB - Mind the gap Paul Mackel The CNH-CNY basis has re-widened. We believe the PBoC has been more "handsoff" after the SDR announce
