HTI Asia-Ex Daily 20160726 (Initiation on Henan Pinggao Electric (600312 CH))
Ye Tian (James)
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Asia Ex Key Market Focus |
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Company/ Market |
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Henan Pinggao (600312 CH, BUY) |
Major Switchgear Supplier for the State Grid |
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Hansae (105630 KS, BUY) |
Market Has Overreacted to Acquisition |
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Cathay Specific |
Stocks Mark Weekly Loss Amid Reduced Volatility |
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Haitong International |
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Updates
Henan Pinggao Electric (600312 CH, BUY, TP: RMB22.75, +33% Upside) – Major Switchgear Supplier for the State Grid (Pin Niu / Fook Tat Cho) l China Total Investment in Ultra-High-Voltage Lines: Could reach Rmb2.2trn over 2016-2030, which we expect to result in orders of Rmb3-4bn per year over our forecast period, up from Rmb2bn last year l Benefit from NEA Plans of Investment of Rmb1.7trn: n Phase 1 of its Tianjin Smart Switchgear Industrial Park was completed and we expect this to generate Rmb2-3bn of rev per year n Co could acquire power distribution assets from its parent l Earnings: We forecast an organic rev CAGR of 20% and EPS CAGR of 22% over FY16-18 l Placements: Its planned placement should be completed by end FY16, which proceeds are planned be used to acquire assets from tis parents l Valuation: TP is based on 18x our pro forma FY17 EPS estimate upon completion of the share placement l Catalysts: Co winning tenders for domestic and overseas power transmission and distribution projects
http://equities.htisec.com/x/pdfView?_S=3YbGBTie1cVBZtDB0FJoIIiJkJ
Hansae (105630 KS, BUY, TP: W49,000, +55% Upside) – Market Has Overreacted to Acquisition (Jaesong Woo) l Acquisition: Signed a contract to acquire a 40% equity stake in MK Trend, which owns a number of local apparel brands and licenses The NBA clothing brand l Implications: The share price dropped 10.6% possibly due to market seeing the transaction as overpriced with little synergy l Positive of MK Trend: It is positive for Hansae in the long run. MK Trends is growing rapidly in China and consensus is expecting its ROE to rise to 15.3% in FY18 from 2.4% in FY15 l Valuation: TP is based on FY17 PER of 14x from 15x in view of the rapid change in the business expansion strategy of the company l Catalysts: Q2 FY16 results announcement in mid-Aug could be positive while continued weak earnings for Makalot could be negative
http://equities.htisec.com/x/pdfView?_S=1iRx1TyWj1q9ChRYFAXLIpIIh8
Cathay Specific: Stocks Mark Weekly Loss Amid Reduced Volatility (Leanne Wang) l Macro News and A-share Strategy: The index has traded in a narrow range over the past two weeks. Suggesting the market may be taking a breather after the rally in the previous three weeks l China Vanke (000002 CH): China’s securities regulator urged the company and its biggest shareholders to resolve their dispute as soon as possible l Air China (601111 CH): CSRC has approved its private placement of Rmb12bn l BYD (002594 CH): Has raised a total of Rmb14.47bn in a private placement by issuing 252mn new shares at Rmb57.40 per share l Zhangzhou Pientzehuang Pharmaceutical (600436 CH): Co announced that it would inject RMb22.8mn in cash into subsidiary Shaanxi Pientzehuang Musk
http://equities.htisec.com/x/pdfView?_S=QUyA8F32bHjgGXR16TULcIh1iJ
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