China/HK - Morning Notes 13 June 2012§‹官效應.pdf · Shanda Games (SDG) reported in-line 1Q...

Morning Notes China/Hong Kong

China & HK Research Team (852) 2600 8593 Wednesday, 13 June 2012

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Conviction callsTicker Company Rec Target

return P/E(x) EPSg(%) Yield(%) P/B(x) ROE(%) 1M YTD3383 HK Agile Property BUY 31 4.6 27.1 6.7 0.9 23.9 11.3 37.4BIDU US Baidu BUY 77 18.4 36.7 0.0 6.4 41.0 (1.9) 4.26030 HK Citics BUY 25 15.0 34.9 2.3 1.3 9.2 2.7 25.4688 HK Coli BUY 18 7.6 23.6 2.6 1.5 21.3 5.1 30.4857 HK PetroChina BUY 34 8.6 14.1 5.3 1.2 14.7 (0.6) 7.3

1913 HK Prada BUY 34 21.8 30.7 1.1 5.5 27.8 9.1 47.21928 HK Sands China BUY 35 13.9 48.4 4.3 4.0 30.1 (10.2) 18.2700 HK Tencent BUY 21 19.3 25.5 0.5 5.5 32.9 3.5 48.2

3331 HK Vinda BUY 28 14.3 21.9 1.9 2.4 19.3 (5.6) 25.21211 HK BYD SELL (52) 18.9 19.6 0.0 1.1 6.3 (13.5) (9.3)3968 HK CMB SELL 0 6.3 10.3 4.0 1.1 18.2 (7.1) (9.4)1200 HK Midland SELL 6 7.6 42.7 6.3 1.4 18.7 1.6 (6.2)

Valuations 13CL Performance(%)

What’s inside Sector Outlook - Chinese renewable operators. Overhang hangover. China’s renewable energy operators have sold off sharply since Longyuan announced in May that it would dilute existing shareholders up to 18%. This overhang will remain at least into July, but valuations look attractive as we look beyond the summer, even after factoring in lacklustre operating assumptions. We still prefer Longyuan, as dilution overhang will likely continue to hang over Huaneng Renewables and Datang Renewable into 2013.

Shanda Games (GAME US - O-PF). Temporary slowdown. Shanda Games (SDG) reported in-line 1Q results with its earnings up +8% YoY. For 2Q, it guided a 15% to 20% QoQ top line decline backed by a delay of expansion packs for its key games till 2H. It will launch two promising new titles in 2H. Revenue will likely rebound in 3Q backed by the expansion packs and new titles. SDG unveiled a US$100mn share buyback plan. The stock could trade under pressure in the near term on disappointing 2Q guidance. However, the downside should be limited backed by share buyback and cheap valuation. We cut earnings by 15%/7% for 2012/13CL. Maintain O-PF with a new US$4.8 target.

Hong Kong Slice of life. Mind war. Adam Cheng Siu-chow is back with a new TV drama, “Mind War”. The show has stirred worries among local punters as his dramas have an eerie correlation with market corrections. The Adam Cheng effect has a strong track record as markets have corrected 70% of the time when his dramas have been aired since 1992, and by an average of 6.6%. The effect appears to be stronger if the drama is more tragic. The current show is about a serial killer. We refined our Adam Cheng effect formula by adding a tragedy quotient. The formula predicts the HSI could fall another 6% and bottom at 17,650 by the end of the show on 29-June and then rebound by a similar amount three months after the show. It is not all bad news as TVB benefits from the effect and generally goes up by an average of 10% during the dramas.

FCLSA – Sany Heavy (600031 CH – Initiate with BUY). Sany Heavy is China's leader in concrete machinery and continues to gain share in excavators. We expect net income and revenue Cagr for 2012-14 of 25% and 24%, respectively, thanks to its innovative product offering, market share gains, product diversification and international expansion. Sany has shown a solid track record and we are confident it will outperform its peers amid demand recovery in 2H12. We initiate with a BUY and a target price of Rmb19.18, implying 30% upside. Sany Heavy is our top pick among A-share machinery companies.

FCLSA – China Merchants Property (000024 CH - Initiate with U-PF). CMPD is an SOE with a solid shareholder background. It has a robust balance sheet thanks to a consistently low leverage. Large-scale operations will be gradually materialised given low financing costs. However, gross margins in 2013-14 will be under pressure due to large price cuts. Joint partnership with strong sales in Shenzhen, Beijing and Foshan have started to book, leading to rapidly increasing minority interests and decelerating net profit growth. Solid fundamentals have been priced in. We initiate coverage with an U-PF call to a Rmb27 TP, implying 4% upside.

News headlines Hong Kong Should Reconsider Currency Peg, Says Joseph Yam Joseph Yam, the former Hong Kong monetary chief who helped introduce a dollar peg in 1983 and defended it against speculators during the Asian financial crisis, said the city should review its currency policy. -Bloomberg Bank president detained for 'economic problems' Postal Savings Bank of China said its president Tao Liming and another official are, because of suspicions of personal "economic problems," currently "assisting" an

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investigation by relevant departments, according to a statement posted on the lender's website on Monday. -China Daily New loans helping reverse slowdown China's new lending in May exceeded analysts' estimates and money-supply growth accelerated, aiding the efforts to reverse a slowdown. -China Daily CNNC calls itself core of China's nuclear strategy China National Nuclear Corp (CNNC) is preparing to launch the first initial public offering of shares by a Chinese nuclear power generator. -SCMP Beijing to boost strategic investment China will roll out a slew of public spending measures in the second half of this year to support the development of new strategic industries, state media reported on Tuesday. -SCMP China Metals Output Softens Growth in China's production of industrial metals including bellwether crude steel mildly slowed in May from the previous month as broader macroeconomic demand weakened. – WSJ

Key to CLSA investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than market return but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL: Total return expected to be less than market return AND to provide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market where the stock is traded. ©2012 CLSA Asia-Pacific Markets (“CLSA”). Note: In the interests of timeliness, this document has not been edited.

The analyst/s who compiled this publication/communication hereby state/s and confirm/s that the contents hereof truly reflect his/her/their views and opinions on the subject matter and that the analyst/s has/have not been placed under any undue influence, intervention or pressure by any person/s in compiling such publication/ communication. The CLSA Group, CLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that CLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report. Regulations or market practice of some jurisdictions/markets prescribe certain disclosures to be made for certain actual, potential or perceived conflicts of interests relating to research report and such details are available at www.clsa.com/member/research_disclosures/. Disclosures therein include the position of the CLSA Group only and do not reflect those of Credit Agricole Corporate & Investment Bank and/or its affiliates. If investors have any difficulty accessing this website, please contact [email protected] or (852) 2600 8111. If you require disclosure information on previous dates, please contact [email protected] IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set out at www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place, 88 Queensway, Hong Kong, telephone (852) 2600 8888.27/04/2012


Chinese renewable Sector outlook

China’s wind operators: A tough 2Q12 (Share price performance rebased to 100)

Source: CLSA Asia-Pacific Markets, Bloomberg

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03 01 2012 03 02 2012 03 03 2012 03 04 2012 03 05 2012 03 06 2012

Longyuan Huaneng Ren Datang Ren HSCI

Longyuan announces equity offering

Longyuan announces final results

PBOC interest rate cut

Charles [email protected](852) 26008539

12 June 2012

ChinaAccounting

Longyuan (916 HK)Market cap: US$4,965m3M average volume: US$5mOld target: HK$8.09New target: HK$6.94Rec: Buy (unchanged)

Datang Ren (1798 HK)Market cap: US$1,005m3M average volume: US$0.3mOld target: HK$1.46New target: HK$1.14Rec: UPF (unchanged)

Huaneng Ren (958 HK)Market cap: US$1,451m3M average volume: US$0.4mOld target: HK$2.19New target: HK$1.39Rec: UPF (OPF previously)

www.clsa.com

Overhang hangoverChina’s renewable energy operators have sold off sharply since Longyuanannounced in May that it would dilute existing shareholders up to 18%. This overhang will remain at least into July, but valuations look attractive as we look beyond the summer, even after factoring in lacklustre operating assumptions. We still prefer Longyuan, as dilution overhang will likely continue to hang over Huaneng Renewables and Datang Renewable into 2013.

Generating data thus far is so-soq Longyuan’s May generating data, out last week, was relatively weak. Given the

company’s size and geographic spread, this serves as a proxy for China.q Cumulative wind generation through May was up 17% YoY; base effect is more

favourable in 2H12 after last year’s windless autumn and winter.q Year-to-date, Inner Mongolia has generally been quite strong, while the Northeast

and Gansu have been quite weak; this favours Datang Ren.

Financing remains the main issueq Longyuan’s surprise announcement that it would dilute shareholders by 18% in May

has been the primary culprit in the group’s poor performance.q This will remain an overhang until at least late July, as Longyuan cannot start the

equity offer process until after its EGM on July 3. q Given the current environment, the two smaller operators could struggle to entice

investors as we believe they need to raise equity in 2013.

Adjustments to the modelsq We have brought down utilization hours slightly for the three operators to reflect

relatively low generation to date; slower improvement going forward as well.q For Longyuan, we have reduced our thermal coal price assumptions from a +5%

YoY rise to +2% YoY rise.q We have added in 18% dilution for Longyuan, while bringing down the offer prices

for expected offers from Huaneng Renewables and Datang Renewable.

Bringing down target prices, recs; still positive Longyuanq Adjusting for lower utilization hours and dilution brings down our DCF-derived

target price for Longyuan from HK$8.09 to HK$6.94; Buy with 36% upside.q Datang Renewable’s target price falls from HK$1.46 to HK$1.14; Maintain U-PF.q Huaneng Renewables’ target price falls from HK$2.19 to HK$1.39; Downgrade from

O-PF to U-PF.


http://www.clsa.com/

http://www.clsa.com/member/bios/index.asp?alogin=YONTSC&pagename=bios


Overhang hangoverChinese renewable

operators

12 June 2012 [email protected] 2

Overhang hangoverChina’s renewable energy operators have sold off sharply since Longyuan announced in May that it would raise equity. This overhang will remain at least into July, but valuations look attractive as we look beyond the summer, even after factoring in lacklustre operating assumptions. We still prefer Longyuan, as dilution overhang will likely continue to hang over Huaneng Renewables and Datang Renewable into 2013.

Generating data thus far is so so Taking Longyuan as a proxy, wind generation has been relatively lacklustre thus far in 2011. Cumulative wind generation through May was up 17% YoY.This is far behind where they started the year in 2011, when generation was up 45% YTD at the same point. However, things headed South for most of the second half last year (ex-September), which will provide an easier base for 2H12.

Figure 1

Longyuan monthly wind generating data

Source: CLSA Asia-Pacific Markets, company

In May, sequential wind power generation fell across nearly all provinces, with overall numbers for the company falling 17% MoM. Relative to last May, there was a broad range of generation performance, with an overall YoY gain of 12%.

The Northeast was generally pretty weak, with Liaoning as a stand-out. Jiangsu, while up year-on-year, was down sharply after pretty steady numbers through April. Year-to-date, Inner Mongolia has generally been quite strong, while the Northeast and Gansu have been quite weak.

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Figure 2

Longyuan monthly wind generation

May 12 MoM (%) YoY (%) Cumulative YoY (%)

Heilongjiang 138,388 -23% 7% 5%Jilin 46,306 -2% -25% -32%Liaoning 130,366 -29% -33% -23%

Inner Mongolia 361,916 -16% 27% 49%

Jiangsu 92,387 -36% 5% 39%

Zhejiang 14,772 -27% 53% 85%

Fujian 70,991 24% 57% 1%

Hainan 4,608 -40% -28% -15%Gansu 138,661 1% 0% -18%

Xinjiang 121,980 2% 76% 31%

Hebei 167,691 -18% -2% 4%

Yunnan 19,330 -47% -5% 38%

Anhui 27,715 -35% 1% 158%

Shandong 5,833 -45% -18% 411%

Tianjin 18,025 -40% - -

Shanxi 34,280 -19% - -

Ningxia 9,037 65% - -

Guizhou 3,754 -3% - -Wind power 1,406,040 -17% 12% 17%Coal 989,340 3% -3% -3%Other Revenewable 62,145 16% 302% 223%

Total 2,457,525 -10% 7% 9%Source: CLSA Asia-Pacific Markets, Company

Figure 3

Longyuan monthly coal generating data

Source: CLSA Asia-Pacific Markets, company

Financing remains the main issueOver the past six weeks, market sentiment toward financing at the wind operators has plummeted, due to Longyuan’s surprise dilution announcement; then improved somewhat on the back of a 25 basis point PBOC rate cut. Given that we had already built in a 50 bps rate cut in 2H12, we expect the market to linger on Longyuan’s equity offer and the risk of dilution.

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Focus on debt: How much is too much?Like the traditional IPPs, all of the wind operators have stretched balance sheets, with triple-digit net gearing levels and low single-digit interest coverage ratios. We have always assumed dilution for both Huaneng Renewables and Datang renewable in 2013. For Longyuan, cashflows are stronger and we had assumed no dilution until the company surprised markets with its announcement in May. Now we are building in 18% dilution in 2H12. For Huaneng Renewables, we factor in an equity raising in 2013 of 2.4bn shares at HK$1.3. For Datang Renewable, we factor in an equity raising in 2013 of 2.4bn shares at HK$1.15.

Wind projects in China are typically funded with 80% debt (though foreign entities are capped at 66%). With their SOE backgrounds and leading positions in a preferred sector, the big-three wind operators have not struggled to get debt financing, and we do not expect this situation to change in the near future. The low-interest coverage ratios are far from ideal, but the wind operators’ risks of late/no payment from the grid companies is low enough to mitigate much of this risk. There is precedent for maintaining such high gearing levels in China, with the IPPs.

Figure 4

Renewable operators - Net gearing levels (%)

10A 11A 12CL 13CL 14CL

Longyuan 121 147 124 129 132

Huaneng Ren 273 152 192 160 177

Datang Ren 195 264 280 234 243Source: CLSA Asia-Pacific Markets

Figure5

Deja vu: Traditional IPP net gearing levels (%)

(%) 2006 2007 2008 2009 2010 2011

CRP 81 69 107 111 136 126

CPI 48 77 126 217 249 269

Huaneng 48 77 126 217 249 269

Datang 181 197 325 399 381 327

Huadian 189 201 363 322 406 445Source: CLSA Asia-Pacific Markets

Figure6

Traditional IPP interest coverage ratios (%)

2006 2007 2008 2009 2010 2011

CRP 6.5 5.8 3.7 5.5 4.8 5.2

Huaneng 10.4 8.1 1.8 4.2 3.7 2.8

CPI 13.6 6.0 1.8 3.3 2.8 2.4

Datang 7.6 6.4 2.5 3.5 3.1 2.4

Huadian 9.0 4.2 1.1 2.8 1.9 1.7Source: CLSA Asia-Pacific Markets

We assume dilution for DR and HNR in 2011

We expect gearing to remain high for all three

wind operators . . .

. . . which reminds us of some other companies

Coverage ratios deteriorating for IPPs



operators


Figure 7

Chinese power gearing (liabilities / assets) at the group level (%)

Source: CIC, CLSA Asia-Pacific Markets

Sensitivity to interest ratesSuch high debt levels make the wind operators extremely sensitive to changes in interest rate. Based on our China macro view, we expect relatively stable interest rates over the next couple years. If we are wrong, the most exposed is Datang renewable. A 100 bps move up/down in our interest-rate assumptions for 12/13CL moves 12CL EPS 16% and 13CL EPS by 26% in either direction. Prior to the June rate cut, we had already been factoring in two 25 bps cuts to interest rates for each of the wind operators in 2H12, in line with our strategy and econ teams.

Figure8

Interest rate sensitivity (12CL)

Absolute change in int rate(%)

Longyuan EPS(%)

Datang EPS(%)

Huaneng EPS(%)

(1.0) 10 16 11

(0.5) 5 8 5

0.0 0 0 0

0.5 (5) (8) (5)

1.0 (10) (16) (11)Source: CLSA Asia-Pacific Markets

Figure 9

Interest rate sensitivity (13CL)

Absolute change in int rate(%)

Longyuan EPS(%)

Datang EPS(%)

Huaneng EPS(%)

(1.0) 10 26 12

(0.5) 5 13 6

0.0 0 0 0

0.5 (5) (13) (6)

1.0 (10) (26) (12)Source: CLSA Asia-Pacific Markets

Longyuan – Changes to the modelUtilization hours: Based on generation data thus far, we are reducing our assumption for utilization hours in 12CL / 13CL from 2,087 / 2,129 hours to 2,026 / 2,067 hours.

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Liability to assets ratios at the major IPP groups

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Capex: We are raising our non-turbine cost assumptions by 2% to Rmb3,880 / kW to reflect higher EPC costs in less developed (from a wind perspective) areas.

Coal price: We have reduced our price increase forecast for 2012 from +5% YoY previously to +2% YoY.

Share offer: We are now building in a 2H12 share offer of Rmb5,270m, based on 1.355m shares and a price of HK$4.8 per share.

FinancialsYear to 31 December 10A 11A 12CL 13CL 14CLRevenue (Rmbm) 14,218 16,159 18,570 20,512 22,767Rev forecast change (%) - - (1.7) (1.9) (1.5)Net profit (Rmbm) 2,013 2,638 3,373 3,702 4,497NP forecast change (%) - - (3.3) (2.0) (1.6)CL/consensus (25) (NP%) - - 111 105 108EPS (fen) 27.0 35.3 38.2 42.0 51.0EPS forecast change (%) - - (18.2) (17.0) (16.7)EPS growth (% YoY) 55.0 31.0 8.2 9.8 21.5PE (x) 16.5 11.8 10.5 9.1 7.5ROE (%) 10.4 11.5 12.6 11.4 12.2Net debt/equity (%) 120.6 147.4 123.8 128.8 131.6Source: CLSA Asia-Pacific Markets

Datang – Changes to the model, recUtilization hours: Based on Longyuan’s generation data thus far, we are reducing our assumption for utilization hours in 12CL / 13CL from 1,990 / 2,030 hours to 1,951 / 1,990 hours.

Share offer: For Datang Renewable, we had already been factoring in an equity raising in 2013 of 2.4bn shares at HK$1.7 per share. We are maintaining the equity dilution next year, but reducing the share price to HK$1.15 per share. Barring a significant improvement in market sentiment, this type of equity raising will be no small feat.

FinancialsYear to 31 December 10A 11A 12CL 13CL 14CLRevenue (Rmbm) 2,380 3,829 4,918 5,986 7,278Rev forecast change (%) - - (1.9) (1.9) (1.9)Net profit (Rmbm) 456 730 923 1,009 1,480NP forecast change (%) - - (6.7) (8.1) (7.4)CL/consensus (16) (NP%) - - 92 80 96EPS (fen) 9.0 10.2 12.9 10.5 15.5EPS growth (% YoY) 80.5 13.6 26.5 (18.1) 46.7PE (x) 10.4 8.6 6.5 7.6 5.2ROE (%) 8.4 8.7 9.4 8.4 9.8Net debt/equity (%) 194.7 264.3 280.2 234.4 242.9PB (x) 0.6 0.7 0.6 0.6 0.5Source: CLSA Asia-Pacific Markets

Huaneng Renewables – Changes to the modelUtilization hours: Based on Longyuan’s generation data thus far, we are reducing our assumption for utilization hours in 12CL / 13CL from 2,021 / 2,082 hours to 1,962 / 2,021 hours.



operators


Share offer: For Huaneng Renewables, we had already factored in an equity raising in 2013 of 2.4bn shares at HK$2.1. We maintain the dilution by number of shares, but reduce the offer price to HK$1.3 per share.

FinancialsYear to 31 December 10A 11A 12CL 13CL 14CLRevenue (Rmbm) 1,769 3,196 5,099 6,472 8,025Rev forecast change (%) - - (2.9) (2.8) (2.8)Net profit (Rmbm) 528 1,023 1,837 1,860 2,229NP forecast change (%) - - (6.8) (8.1) (8.4)CL/consensus (15) (NP%) - - 110 103 105EPS (fen) 9.1 14.1 22.2 17.4 20.9EPS growth (% YoY) 134.7 54.4 57.7 (21.5) 19.9PE (x) 12.7 7.7 4.7 5.7 4.8ROE (%) 12.9 12.1 14.6 11.8 11.7Net debt/equity (%) 273.1 152.1 191.8 160.4 177.6PB (x) 1.3 0.7 0.7 0.6 0.5Source: CLSA Asia-Pacific Markets

Seeking value in the sell-offFollowing the sell-off in wind operators’ shares since May, all three of the big listed, H-share operators are comfortably below 1x PB, based on 13CL. While Longyuan continues to trade at a considerable premium to both Huaneng Renewables and Datang Renewable, we still prefer the stock for its (much) better visibility. The biggest question mark is how quickly management will be able to regain investor trust after the surprise equity offer announcement in May.

Figure 10

Power operators – PB (x) vs ROE (%)


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Longyuan: Maintain BuyWe base our target price of HK$6.94, down from HK$8.09 per share previously, for Longyuan on a DCF-valuation. This implies a 13CL PB of 1.3x, compared to a 12-14CL ROE of 12%. While this is considerably more expensive than peers, we believe this is justified by better cashflow and visibility on financing. Maintain Buy with 36% upside.Figure 11

Longyuan DCF – Key assumptions (same for Datang Ren, Huaneng Ren)

AssumptionsRisk free interest 4.0%Risk premium 6.0%Beta 1Cost of equity 10.0%Cost of debt 6.3%Equity ratio 30%Debt ratio 70%WACC 7.4%Source: CLSA Asia-Pacific Markets

Figure 12

Longyuan DCF - Valuation

Discounted FCFTerminal value (Rmb mn) 68,265 Terminal value (%) 74%Firm value 92,163 Less: net debt 37,811 Equity value 54,351 Minority interests 4,144 Net equity value 50,207 No. of shares 8,808 Target price 6.94 Source: CLSA Asia-Pacific Markets

Datang Renewable: Maintain U-PFWe base our target price of HK$1.14, down from HK$1.46 per share previously, for Datang Renewable on a DCF-valuation. This implies an undemanding 13CL PB of 0.7x, compared to a 13CL ROE of 8.4%. While this looks relatively cheap, we expect the dilution overhang to impede share price performance. Maintain U-PF with 6% upside.

Figure 13

Datang Renewable DCF – valuation (Key assumptions same as Longyuan)

Discounted FCFTerminal value (Rmb mn) 42,708 Terminal value (%) 102%Firm value 41,823 Less: net debt 32,496 Equity value 9,327 Minority interests 2,647 Net equity value 6,680 No. of shares 7,165 Target price 1.14 Source: CLSA Asia-Pacific Markets

Huaneng Renewables: Downgrade from O-PF to U-PFWe base our target price of HK$1.39, down from HK$2.19 per share previously, for Huaneng Renewables on a DCF-valuation. This implies an



operators


undemanding 13CL PB of 0.7x, compared to a 13CL ROE of 12%. While this looks relatively cheap, we expect the dilution overhang to impede share price performance. Downgrade from O-PF to U-PF, with 6% upside.

Figure 14

Huaneng Renewables DCF – Valuation (Key assumptions same as Longyuan)

Discounted FCFTerminal value (Rmb mn) 37,022 Terminal value (%) 102%Firm value 36,122 Less: net debt 27,002 Equity value 9,120 Minority interests 828 Net equity value 8,292 No. of shares 7,274 Target price 1.39 Source: CLSA Asia-Pacific Markets

Figure 15

Wind valuation metrics


Price Mkt Cap ADTV 2012 2013 2012 2013 2012 2013 2012 2013 2012

(local) (USD,m) (USD,m) PE PE PB PB EV/Ebitda EV/Ebitda ROE ROE NG (%) 1m 3m 6m 12m

WindWind farmsLongyuan 916 HK 5.10 4,906 4.98 10.5 9.1 1.0 0.9 8.2 8.1 12.6 11.4 129 (13) (28) (10) (34)Huaneng Renewables 958 HK 1.33 1,451 0.41 4.7 5.7 0.7 0.6 7.2 7.2 14.6 11.8 160 (20) (34) (27) (45)Datang Renewables 1798 HK 1.07 1,005 0.30 6.5 7.6 0.6 0.6 9.6 9.4 9.4 8.4 234 (4) (27) (24) (47)China Wind Power 182 HK 0.29 276 0.30 3.8 3.2 0.4 0.4 2.6 1.8 10.9 12.3 1.5 0 (27) (9) (58)China Suntien 956 HK 1.38 576 1.07 6.5 5.5 0.6 0.6 6.2 4.8 10.7 11.5 90.3 (6) (20) (9) (37)Beijing Jingneng 579 HK 1.67 1,324 0.12 7.7 6.0 0.8 0.7 6.4 5.4 12.1 13.7 129.2 4 (7) - -CPNE 735 HK 0.32 451 0.27 5.2 - - - - - 7.1 - 88.7 0 (13) (17) (43)Japan Wind Development 2766 JP 54,700.00 103 1.01 - - - - - - - - 426.8 (14) (26) (37) (50)Wind EquipmentGoldwind 2208 HK 2.96 2,567 0.75 15.0 13.0 0.5 0.5 22.7 17.4 3.8 4.0 19.9 (17) (37) (32) (70)Sinovel 601558 CH 15.07 4,754 5.77 - - - - - - - - 3.8 (8) (14) (26) (46)Guodian Tech 1296 HK 1.75 1,368 0.24 6.0 4.0 0.8 0.7 5.8 4.2 14.1 17.9 77.6 (8) (29) - -Mingyang MY US 1.54 193 0.28 - - 0.34 0.4 1.53 1.2 8.90 11.6 -18.1 (28) (23) (22) (73)China High Speed Transmission Equipment658 HK 2.89 508 2.37 5.2 4.8 0.41 0.4 6.0 5.6 9.40 8.9 78.9 (18) (39) (17) (66)Dongfang Electric 1072 HK 17.92 6,321 7.06 10.2 8.7 1.7 1.4 5.9 5.2 17.8 17.1 -4 (4) (19) (25) (31)Shanghai Electric 2727 HK 3.19 9,215 9.43 8.7 8.1 1.0 0.9 4.0 3.7 12.5 11.8 -36 (9) (28) (6) (18)

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Figure 16

Longyuan – Detailed P&L

09A 10A 11A 12CL 13CLDriversConsolidated capacity (MW)Wind 4,504 6,556 8,598 10,198 12,178 Coal 1,875 1,875 1,875 1,875 1,875 Utilization hours (hrs)Wind 2,268 2,217 2,026 2,026 2,067 Coal 5,819 5,994 5,994 5,994 5,994 Net output (GWh)Wind 5,684 9,442 12,568 16,527 20,002 Coal 10,207 10,670 10,672 10,523 10,523 Electricity sales (Rmb mn)Wind 2,752 4,613 6,206 8,372 10,117 Coal 3,669 3,859 3,945 4,089 4,130 Other 46 71 119 194 318 Total electricity sales 6,467 8,544 10,270 12,655 14,565 P&L (Rmb mn)Sales of electricity 6,467 8,544 10,270 12,655 14,565 Service concession construction 883 1,450 793 793 793 Sales of steam 230 311 319 316 316 Sales of electricity equipment 128 262 289 318 350 Other 2,036 3,651 4,487 4,487 4,487 Total revenue 9,744 14,218 16,159 18,570 20,512 YoY 14% 46% 14% 15% 10%Other net income (grants and CER/VER) 574 986 1,271 1,179 580 YoY 47% 72% 29% -7% -51%Fuel cost (2,290) (2,737) (2,877) (2,848) (2,876)Service concession construction (883) (1,450) (793) (793) (793)Depreciation (1,590) (2,237) (2,845) (3,379) (3,840)Personnel costs (540) (666) (769) (884) (976)Material costs (150) (282) (328) (3,997) (4,022)Repair and maintenance (108) (184) (254) (292) (322)Admin expense (148) (222) (294) (338) (373)Other operating expense (197) (306) (338) (388) (429)Total operating expense (7,459) (11,131) (12,395) (12,917) (13,631)YoY -1% 49% 11% 4% 6%Operating income 2,858 4,073 5,036 6,831 7,461 YoY 101% 42% 24% 36% 9%Finance income 51 79 400 306 439 Finance expense (1,071) (1,179) (1,887) (2,292) (2,680)Net finance expense (1,020) (1,100) (1,487) (1,986) (2,241)YoY 19% 8% 35% 34% 13%Associates and JVs 105 228 60 108 149 YoY 100% 116% -74% 80% 38%PBT 1,944 3,200 3,609 4,954 5,369 YoY 215% 65% 13% 37% 8%Tax expense (296) (439) (305) (605) (647)Net profit before minority 1,647 2,761 3,304 4,348 4,722 Minority interest (753) (748) (667) (976) (1,020)Net profit 894 2,013 2,638 3,373 3,702 YoY 165% 125% 31% 28% 10%EPS 17.40 26.97 35.34 38.24 41.97 Source: CLSA Asia-Pacific Markets



operators


Figure 17

Longyuan – BS and CF statements

Balance sheet (Rmb mn)09A 10A 11A 12CL 13CL

Current assetsInventories 333 636 890 881 889 Trade debtors and bills receivable 2,181 3,496 5,157 5,966 6,618 Prepayments and other current assets 853 1,502 2,773 2,773 2,773 Tax recoverable 5 20 72 1 1 Restricted deposits 492 246 32 32 32 Cash at bank 16,503 4,092 3,645 7,931 8,950 Total current assets 20,367 10,392 12,975 17,990 19,669 PP&E 37,305 50,652 61,337 69,438 79,213 Investment properties 133 101 98 98 98 Lease prepayments 741 876 1,160 1,160 1,160 Intangible assets 6,086 7,661 8,162 10,811 12,386 Investment in associates and JCEs 799 1,315 1,554 2,707 2,978 Other financial assets 2,319 3,459 4,628 4,216 5,264 Deferred assets 205 208 181 181 181 Total non-current assets 47,587 64,283 77,133 88,623 101,291 Total assets 67,954 74,675 90,108 106,613 120,961 Current liabilitiesST borrowing 17,087 17,200 16,369 18,571 18,524 Trade creditor 1,943 1,515 1,597 1,664 1,756 Other payables 4,521 6,034 8,222 6,995 8,296 Tax payables 140 196 158 313 334 Total current liabilities 23,692 24,945 26,345 27,543 28,911 Non-current liabilitiesLT borrowing 16,219 19,975 31,308 37,830 46,458 Obiligations under finance leases 50 0 0 0 0 Other non-current liabilities 0 0 494 0 0 Deferred income 2,268 2,225 1,993 1,993 1,993 Deferred liabilities 45 104 101 101 101 Total non-current liabilities 18,582 22,304 33,896 39,924 48,551 Total equity 25,680 27,425 29,866 39,146 43,498 Total liabilities and equity 67,954 74,675 90,107 106,613 120,961 Net debt 16,853 33,082 44,526 48,470 56,032 Net gearing 66% 121% 149% 124% 129%Cashflow statement (rmb mn)

09A 10A 11A 12CL 13CLNet profit 1,647 2,761 3,304 4,348 4,722 Plus deprecation 1,367 1,956 2,808 3,379 3,840 Plus amortisation 223 280 259 259 259 Working capital - trading 848 (976) (3,329) (733) (569)Working capital - other 0 0 2,529 (1,001) 1,323 Operating cashflow 4,085 4,021 5,572 6,253 9,577 Capex (16,184) (17,845) (15,328) (13,313) (15,450)Acquisition of equity interest (632) (224) (240) (1,153) (271)Others 1,661 369 (1,659) 412 (1,048)Investing cash flow (15,156) (17,700) (17,226) (14,054) (16,768)Net proceeds from share issue 17,022 0 0 5,270 0 Dividends paid 0 (632) (515) (337) (370)Other 167 (413) 0 0 0 Financing cash flow 26,575 1,313 10,482 13,162 8,211 Source: CLSA Asia-Pacific Markets



operators


Figure 18

Datang Renewable - Summary drivers, P&L, ratios

08A 09A 10A 11A 12CL 13CLKey driversConsolidated installed capacity (MW) 1,768 2,620 4,028 5,172 6,122 7,222 Average generating capacity 623 1,401 2,414 4,068 5,286 6,254 Average utilisation hours 2,255 2,159 2,134 1,951 1,951 1,990 Net power generation (GWh) 1,279 2,880 4,843 7,004 9,693 11,698 Weighted average on-grid tarrif (excluding VAT) (Rmb/kWh) 0.48 0.48 0.49 0.49 0.49 0.49 Capex per KW (Rmb) 9.8 9.0 8.4 7.7 7.6 7.5 CER price (Euro / ton) 10.0 10.0 12.0 9.0 7.0 3.0 Carbon earnings (Rmb mn) 71.6 137.4 229.5 370.8 369.2 29.1 Consolidated P&LTotal revenue 860.3 1,428.1 2,379.7 3,828.8 4,918.1 5,985.8 Total wind operating costs ex-dep (Rmb mn) 73.1 183.5 359.5 533.1 638.6 733.2 Depreciation 212.5 552.7 886.3 1,360.8 1,702.9 2,070.0 Adjusted Ebit (Rmb mn) 340.8 445.4 765.2 1,416.5 1,898.9 2,785.6 Other net income (Rmb mn) 120.7 206.8 368.7 518.4 554.1 214.0 Operating profit (Rmb mn) 461.4 859.1 1,502.6 2,429.0 3,002.2 3,220.5 Ebitda (Rmb mn) 674.0 1,411.8 2,389.0 3,789.8 4,705.1 5,290.5 Finance costs (221.5) (474.8) (766.0) (1,431.3) (1,747.3) (1,872.6)PBT 239.9 383.5 734.6 1,005.3 1,247.5 1,340.4 Income tax (21.7) (17.3) (57.1) (35.0) (93.6) (100.5)PAT 218.2 366.2 677.5 970.3 1,153.9 1,239.9 Profit from discontinued operation - - - - - -Comprehensive income, net of tax 218.2 366.2 677.5 970.3 1,153.9 1,239.9 Net profit for equity holders 139.5 247.7 455.8 729.8 923.2 1,009.1 Minority interests 78.7 118.5 221.7 240.5 230.8 230.8 Basic and diluted earnings per share (RMB cents) 2.80 4.97 8.97 10.19 12.88 10.55 Key ratiosEbitda margin (%) 78% 99% 100% 99% 96% 88%Operating margin (%) 54% 60% 63% 63% 61% 54%Adjusted operating margin (%) 40% 31% 32% 37% 39% 47%RoE (%) 7% 7% 7% 8% 10% 9%Gross gearing (%) 204% 281% 243% 389% 325% 269%Net gearing (%) 190% 271% 195% 264% 280% 234%Interest coverage ratio (x) 2.1 1.8 2.0 1.7 1.7 1.7Source: CLSA Asia-Pacific Markets



operators


Figure 19

Huaneng Renewables - Summary drivers, P&L, ratios

08A 09A 10A 11A 12CL 13CLKey driversConsolidated installed capacity (MW) 402 1,550 3,522 4,904 5,904 7,104 Average generating capacity 184 693 1,542 3,660 5,004 6,048 Average utilisation hours 2,380 2,365 2,265 1,962 1,962 2,021 Consolidated net power generation (GWh) 427 1,607 3,405 6,150 9,264 12,082 Weighted average on-grid tarrif (excluding VAT) (Rmb/kWh) 0.58 0.53 0.52 0.51 0.51 0.51 Capex per KW (Rmb) 9.8 9.0 8.4 7.8 7.6 7.4 CER price (Euro / ton) 10.0 10.0 12.0 9.0 7.0 3.0 Carbon earnings (Rmb mn) 16.2 28.7 164.8 483.6 492.5 29.1 Consolidated P&LTotal revenue 570.3 918.5 1,768.5 3,195.9 5,099.2 6,471.7 Total wind operating costs ex-dep (Rmb mn) 48.7 100.8 250.3 357.7 577.2 729.9 Depreciation 101.9 296.8 633.7 1,169.3 1,640.1 2,110.8 Adjusted Ebit (Rmb mn) 66.2 454.3 884.5 1,668.9 2,802.6 3,482.7 Other net income (Rmb mn) 35.6 85.3 249.8 682.5 607.4 179.0 Total operating profit (Rmb mn) 137.2 539.6 1,134.3 2,351.5 3,410.1 3,661.7 Ebitda (Rmb mn) 239.1 836.3 1,768.0 3,520.7 5,050.2 5,772.5 Finance costs (63.0) (239.2) (492.9) (1,212.4) (1,334.6) (1,514.5)PBT 74.3 303.5 641.4 1,139.1 2,075.5 2,147.2 Income tax 0.5 (22.2) (32.0) (32.3) (155.7) (214.7)PAT 74.8 281.3 609.4 1,106.8 1,919.8 1,932.5 Profit from discontinued operation 11.1 39.4 - - - -Comprehensive income, net of tax 85.9 320.7 609.4 1,106.8 1,919.8 1,932.5 Net profit for equity holders 32.1 264.4 528.2 1,023.0 1,837.2 1,859.6 Minority interests 53.8 56.2 81.1 83.8 82.7 72.8 Basic and diluted earnings per share (RMB cents) 0.91 4.56 9.11 14.06 22.17 17.40 Huaneng - Key ratiosEbitda margin (%) 42% 91% 100% 110% 99% 89%Operating margin (%) 24% 59% 64% 74% 67% 57%Adjusted operating margin (%) 12% 49% 50% 52% 55% 54%RoE (%) 3% 12% 13.4% 12.3% 15% 12%Gross gearing (%) 310% 372% 340% 249% 244% 207%Net gearing (%) 238% 347% 319% 187% 222% 183%Source: CLSA Asia-Pacific Markets

Companies mentioned datang renewable (N-R)huaneng renewables (N-R)Longyuan Power (916 - HK$5.16 - BUY)



operators


Key to CLSA investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than market return but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL: Total return expected to be less than market return AND to provide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market where the stock is traded.

©2012 CLSA Asia-Pacific Markets (“CLSA”). Note: In the interests of timeliness, this document has not been edited.

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Shanda GamesUS$4.04 - OUTPERFORM

FinancialsYear to 31 December 10A 11A 12CL 13CL 14CLRevenue (Rmbm) 4,505 5,282 5,428 6,884 7,720Forecast change (%) (13.6) (6.6) (5.6)EBIT (Rmbm) 1,333 1,474 1,574 1,996 2,239Net Profit (Rmbm) 1,289 1,265 1,413 1,730 1,943Forecast change (%) (15.0) (6.6) (5.8)CL/consensus(%) 92 101 113EPS (Rmb) 4.52 4.46 4.95 6.06 6.81EPS (US$) 0.68 0.68 0.77 0.96 1.08EPS(% YoY) (12) 0 13 24 12Pex 5.9 6.0 5.3 4.2 3.8Pex (ex cash) 4.2 4.4 3.8 3.1 2.3 Source: CLSA Asia-Pacific Markets

Find CLSA research on Bloomberg, Thomson Reuters, CapIQ and themarkets.com - and profit from our evalu@tor proprietary database at clsa.com

Jialong [email protected](852) 26008631

Elinor Leung, CFA(852) 26008632

13 June 2012

ChinaInternet

Reuters GAME.OQBloomberg GAME USADR GAME.OQ

Priced on 8 June 2012HS CEI @ 9,352.8

12M hi/lo US$6.92/3.47

12M price target US$4.80±% potential +17%

Shares in issue 285.4mFree float (est.) 29.0%

Market cap US$1,132m

3M average daily volumeUS$.6m (US$.6m)

Major shareholdersShanda Interactive 71.0%

Stock performance (%)1M 3M 12M

Absolute (18.2) (6.9) (36.1)Relative (10.0) 12.0 (15.4)Abs (US$) (18.2) (6.9) (36.1)

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Jun 10 Dec 10 Jun 11 Dec 11Shanda Games (LHS)

Rel to CEI (RHS)

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Source: Bloomberg

www.clsa.com

Resu

lts revie

w

Temporary slowdownShanda Games (SDG) reported in-line 1Q results with its earnings up +8% YoY. For 2Q, it guided a 15% to 20% QoQ top line decline backed by a delay of expansion packs for its key games till 2H. It will launch two promising new titles in 2H. Revenue will likely rebound in 3Q backed bythe expansion packs and new titles. SDG unveiled a US$100mn share buyback plan. The stock could trade under pressure in the near term on disappointing 2Q guidance. However, the downside should be limited backed by share buyback and cheap valuation. We cut earnings by 15%/7% for 2012/13CL. Maintain O-PF with a new US$4.8 target.

1Q in line, but 2Q guidance disappoints1Q revenues increased 11% YoY to Rmb1.39bn. Its earnings increased 8% YoY to Rmb337mn, in line with CLSA/consensus forecasts. Revenue from its top three games, i.e. Mir2, Dragon Nest and Woool increased 2%, 11%, and 4% YoY respectively to 34%, 18% and 15% of its total revenues. However, its 2Q guidance surprised on the downside. It guided a 15-20% QoQ revenue decline backed by a delay of expansion packs for its key games. We expectits revenue to rebound in 3Q on the launch of expansion packs and new titles.

Rich game pipelineSDG has a big game pipeline (figure 5). The company will co-operate Age of Wushu with its developer Snail Game in 3Q12. Age of Wushu is a 3D martial-arts role-playing game (RPG). Based on our channel checks, the game enjoys good word of mouth among gamers for its splendid graphics. It is ranked among the top 10 most anticipated games on 17173.com. The game is under closed beta testing and it appears promising based on baidu search index (figure 4). SDG also aims to launch its licensed 3D fantasy-themed RPG RIFTin 4Q12. The game has generated a big buzz among Chinese gamers thanks to its high recognition in overseas market.

New share buyback planSDG announced to buy back a maximum US$100mn-worth of shares from open market over the next 12 months, which would represent 9% of its latest market cap and 27% of its net cash balance as of 1Q. This buyback plan will provide some downside support for its share prices. However, it would further reduce its float shares, which accounts for merely 27% of its share counts currently. With the new share buyback plan in place, we believe the company is unlikely to put out other payback plans any time soon, such as the much-talked-about cash dividend among investors.



http://www.clsa.com/member/bios/index.asp?alogin=shijia&pagename=bios


Temporary slowdown Shanda Games - O-PF


Maintain O-PF with new US$4.8 targetWe cut our 2012/2013 earnings forecasts by 15%/ 7% on the back of lower2Q guidance. We maintain O-PF but raised the target slightly to US$4.8 from previous US$4.5 based on 6.0x 12CLPE (versus previous 5.0x), which is a 14% discount to peer average and 30% discount to its historical average. We raised the target multiple on the back of SDG’s upcoming new games, Age of Wushu and RIFT, both of which appear promising based on our initial channel checks. The stock could trade under pressure on the back of weak 2Q revenue guidance. However, we expect its top line growth to resume in 2H with the introduction of new contents for its flagship games and launch of new titles. Also SDG’s share buyback should provide downside support for its share prices. Valuation is undemanding. The stock is trading at 5.3x 12CL PE and 3.8x ex-cash PE.

Figure 1

Overview of 1Q results

Rmb mn 1Q11 4Q11 1Q12 QoQ YoYOnline-games revenue 1,185 1,262 1,289 2% 9%Others 67 94 101 7% 50%Total net revenues 1,253 1,356 1,389 2% 11%Gross profit 761 834 874 5% 15%Gross margin 61% 62% 63% 1% 2%Operating income 350 401 436 9% 25%Operating margin 28% 30% 31% 2% 3%Pre-tax income 401 547 460 -16% 15%Taxation -84 -226 -106 -53% 25%Effective tax rate 21% 41% 23% -18% 2%Net profit 313 304 337 11% 8%Diluted EPS(Rmb) 1.09 1.08 1.20 11% 11%Source: CLSA Asia-Pacific Markets

Figure 2

Shanda Games: Monthly paying users and ARPU

Source: CLSA Asia-Pacific Markets

77.5

77.4 77.4

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Figure 3

Shanda Games: monthly active users


Figure 4

Baidu search index for Age of Wushu


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Figure 5

Overview of New versus Old forecasts

Profit & loss (Rmbm) 2012CL 2013CLNEW OLD Chg NEW OLD Chg

Domestic game revenues 4,996 5,686 -12% 6,174 6,635 -7%Others 432 455 -5% 540 569 -5%Total net revenues 5,428 6,281 -13.6% 6,884 7,374 -6.6%Cost of services -2,117 -2,449 -14% -2,685 -2,950 -9%Gross profit 3,311 3,831 -14% 4,199 4,424 -5%Gross margin 61% 61% 0% 61% 60% 1%Product development -679 -754 -10% -860 -885 -3%Sales and marketing -624 -722 -14% -792 -848 -7%General and administrative -434 -465 -7% -551 -546 1%Total operating expenses -1,737 -1,941 -10% -2,203 -2,279 -3%Operating income 1,574 1,890 -17% 1,996 2,146 -7%Operating margin 29% 30% -1% 29% 29% 0%Pre-tax income 1,827 2,144 -15% 2,230 2,385 -7%Taxation -384 -450 -15% -468 -501 -7%Effective tax rate 21% 21% 0% 21% 21% 0%Loss in affiliates -10 -10 0% -10 -10 0%Minority interests -21.1 -21.1 0% -21.1 -21.1 0%Net profit 1,413 1,662 -15% 1,730 1,853 -7%Net profit margin 26% 26% 0% 25% 25% 0%Diluted EPS 2.47 2.91 -15% 3.03 3.25 -7%Source: CLSA Asia-Pacific Markets




Figure 6

Shanda Games: game pipeline for 2H12-2013

MMORPGs

No. Game Genre Dimension Game Source1 Final Fantasy XIV Fantasy 3D License2 World Zero MMORPG platform 3D In-house3 Dragon Ball Online Fantasy 3D License4 The Age II Martial arts adventure 2D Investment5 Chang Chun Online Martial arts adventure 3D License6 World of Kungfu Martial arts adventure 3D License7 Two Kingdoms Martial arts adventure 2D Investment8 Lie Tian Martial arts adventure 3D Investment9 Ring of Dragons Martial arts adventure 3D In-house10 Rift Fantasy 3D License11 Age of Wushu Martial arts adventure 3D Co-operationCasual Games

No. Game Genre Dimension Game Source1 Point Plank First-Person Shooting 3D License2 Rapid Fire First-Person Shooting 3D Investment3 GranAge Side-scrolling action 2D LicenseWeb Games

1 Web version for Woool Martial arts adventure 2D In-house2 Immortals Martial arts adventure 2D Investment3 Championship Manager Sports 3D Co-developmentMobile Games

1 Mobile version for Woool RPG 2D In-house2 Magical Land 2 RPG 2D In-houseSource: Company data, CLSA Asia-Pacific Markets




Figure 7

Quarterly P&L

Rmb mn 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12CLOnline-game rev. China 1,185 1,247 1,281 1,262 1,289 1,036Others 67 73 72 94 101 103Total net revenues 1,253 1,321 1,353 1,356 1,389 1,139QoQTotal revenues 8.7% 5.4% 2.4% 0.2% 2.5% -18.0%YoYTotal revenues 10% 19% 23% 18% 11% -14%Cost of sales -491 -520 -523 -522 -516 -444Gross profit 761 801 830 834 874 695Gross margin 61% 61% 61% 62% 63% 61%Product development -157 -162 -186 -190 -176 -148Sales and marketing -145 -160 -163 -142 -156 -125G&A -110 -117 -120 -101 -105 -91Total opex -411 -439 -468 -433 -437 -365Operating income 350 362 361 401 436 330Operating margin 28% 27% 27% 30% 31% 29%Net interest income 24 30 42 40 20 20Investment income 0 0 0 0 0 0Other income 27 -2 41 106 4 50Pre-tax income 401 389 444 547 460 400Taxation -84 -80 -94 -226 -106 -88Effective tax rate 21% 21% 21% 41% 23% 22%Loss of affiliates -3 1 -3 -6 -5 -5Minority interests -1 -5 -5 -11 -13 -13Net profit 313 305 343 304 337 294QoQ% -15% -2% 12% -11% 11% -13%ToY -5% 0% 19% -17% 8% -4%Net margin 25% 23% 25% 22% 24% 26%Source: CLSA Asia-Pacific Markets




Figure 8

P&L

Rmb mn 2009 2010 2011 2012CL 2013CL 2014CLMMORPG 4,422 4,018 4,673 4,640 5,800 6,540Casual game 306 301 333 356 374 389Others 79 186 306 432 540 621Mobile/social games 0 0 0 0 170 170Total net revenues 4,807 4,505 5,282 5,428 6,884 7,720YoYMMORPG 48% -9% 16% -1% 25% 13%Casual game -15% -2% 11% 7% 5% 4%Others 163% 135% 65% 41% 25% 15%Mobile/social games 0% 0% 0% 0% 0%Total net revenues 42% -6% 17% 3% 27% 12%% of net revenueMMORPG 92% 89% 88% 85% 84% 85%Casual game 6% 7% 6% 7% 5% 5%Others 2% 4% 6% 8% 8% 8%Mobile/social games 0% 0% 0% 0% 2% 2%Total revenues 100% 100% 100% 100% 100% 100%Cost of services -1,934 -1,837 -2,056 -2,117 -2,685 -3,011Gross profit 2,873 2,668 3,226 3,311 4,199 4,709YoY 52% -7% 21% 3% 27% 12%Gross margin 60% 59% 61% 61% 61% 61%Product development -340 -466 -694 -679 -860 -965Sales and marketing -433 -502 -610 -624 -792 -888General and administrative -366 -367 -447 -434 -551 -618Total operating expenses -1,139 -1,335 -1,752 -1,737 -2,203 -2,470Operating income 1,734 1,333 1,474 1,574 1,996 2,239YoY 50% -23% 11% 7% 27% 12%Operating margin 36% 30% 28% 29% 29% 29%Interest income 26 62 135 81 61 88Investment income 0 0 0 0 0 0Other income 169 216 172 172 172 172Pre-tax income 1,930 1,610 1,781 1,827 2,230 2,499Taxation -429 -300 -485 -384 -468 -525Effective tax rate 22% 19% 27% 21% 21% 21%Loss in affiliates -30 -5 -10 -10 -10 -10Minority interests -19 -16 -21 -21 -21 -21Net profit 1,453 1,289 1,265 1,413 1,730 1,943YoY 55% -11% -2% 12% 22% 12%Net profit margin 30% 29% 24% 26% 25% 25%Diluted EPS (Rmb) 5.20 4.52 4.46 4.95 6.06 6.81Diluted EPS (US$) 0.77 0.68 0.68 0.77 0.96 1.08Source: CLSA Asia-Pacific Markets




Figure 9

Balance sheet

Rmb mn 2008 2009 2010 2011 2012CL 2013CL 2014CLCash & cash equivalents 629 1,799 1,572 1,836 1,034 1,938 3,111Restricted cash 0 55 5 1,284 64 64 64Short-term investment 235 758 598 945 945 945 945Marketable securities 3 9 5 4 4 4 4Accounts receivable 441 424 438 479 492 624 700Deferred licensing fees 51 54 45 20 20 20 20Other current assets 154 119 665 1,113 1,113 1,113 1,113Deferred tax assets 70 80 67 75 75 75 75Total current assets 1,583 3,298 3,395 5,755 3,747 4,782 6,031PPE 93 140 195 231 244 276 312Investment in aff. Cos. 24 9 32 38 38 38 38Intangible assets 409 517 1,270 995 995 995 995Goodwill 117 170 487 492 486 482 481LT deposits 50 65 1,278 95 95 95 95LT prepayments 0 0 0 0 0 0 0Other LT assets 134 113 104 327 327 327 327Deferred tax 35 16 20 26 26 26 26Total assets 2,444 4,328 6,780 7,959 5,957 7,021 8,305Account payable 95 98 130 116 115 145 163Licensing fees payable 203 225 246 188 188 188 188Taxes payable 88 143 146 191 191 191 191Deferred revenue 330 251 234 173 173 173 173Due to related parties 263 20 951 126 126 126 126Others 155 449 366 416 416 416 416Deferred tax liabilities 44 77 70 73 73 73 73Dividend payable 0 0 0 1,823 0 0 0Total current liabilities 1,178 1,261 2,143 3,965 1,282 1,312 1,330Others 29 37 328 329 329 329 329Deferred revenue 2 4 50 48 48 48 48Total liabilities 1,208 1,302 2,521 4,342 1,658 1,689 1,707Minority interests 139 206 239 271 271 271 271Ordinary shares 40 42 41 41 41 41 41Additional paid-in capital 477 1,229 1,420 1,561 1,689 1,851 2,032Statutory reserves 114 127 142 147 147 147 147Acc. other comprehensive gain -87 -59 -41 -69 -69 -69 -69Retained earnings 553 1,480 2,458 1,665 2,219 3,090 4,175Total shareholders' equity 1,097 2,820 4,020 3,346 4,027 5,061 6,327Total liabilities and equities 2,444 4,328 6,780 7,959 5,957 7,021 8,305Source: CLSA Asia-Pacific Markets




Companies mentionedShanda Games (GAME - US$4.04 - OUTPERFORM)

Recommendation history of Shanda Games Ltd GAME US

Date Rec* Target Date Rec* Target22 February 2012 O-PF 4.50 10 September 2010 U-PF 5.2503 February 2012 O-PF 4.00 09 September 2010 U-PF 5.0018 November 2011 O-PF 5.70 18 June 2010 U-PF 5.9024 August 2011 O-PF 6.00 15 June 2010 Dropped Coverage01 June 2011 O-PF 8.50 03 June 2010 U-PF 6.1019 April 2011 O-PF 8.60 01 March 2010 U-PF 9.5003 March 2011 U-PF 6.20 29 September 2009 O-PF 12.5002 December 2010 U-PF 5.70Source: CLSA Asia-Pacific Markets




The CLSA Group, CLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that CLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report. Regulations or market practice of some jurisdictions/markets prescribe certain disclosures to be made for certain actual, potential or perceived conflicts of interests relating to research report and such details are available at www.clsa.com/member/research_disclosures/. Disclosures therein include the position of the CLSA Group only and do not reflect those of Credit Agricole Corporate & Investment Bank and/or its affiliates. If investors have any difficulty accessing this website, please contact [email protected] or (852) 2600 8111. If you require disclosure information on previous dates, please contact [email protected]


4

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Stock

price

(US$)

Jan 10 May 10 Sep 10 Jan 11 May 11 Sep 11 Jan 12 May 12

Jialong ShiOther analystsNo coverage

BUYU-PF

O-PFSELL


Hong Kong Man Ho Lam /Francis Cheung, CFA

Slice of life (852) 26008732 / (852) [email protected] / [email protected]

13 June 2012

Please see important notice on last page Page 1 of 8

Mind warq Adam Cheng Siu-chow is back with a new TV drama, “Mind War”. The show has

stirred worries among local punters as his dramas have an eerie correlation with market corrections.

q The Adam Cheng effect has a strong track record as markets have corrected 70% of the time when his dramas have been aired since 1992, and by an average of 6.6%.

q The effect appears to be stronger if the drama is more tragic. The current show is about a serial killer.

q We refined our Adam Cheng effect formula by adding a tragedy quotient. The formula predicts the HSI could fall another 6% and bottom at 17,650 by the end of the show on 29-June and then rebound by a similar amount three months after the show.

q It is not all bad news as TVB benefits from the effect and generally goes up by an average of 10% during the dramas.

Adam Cheng effectEvery time actor Adam Cheng Siu-chow has a new TV drama, local investors get

worried as the timing of his shows has been associated with bear markets. The

Adam Cheng effect has been well established in the media and even broker

research since 1992 with “The Greed of Man” which was about a high-flying trader

who lost his fortune and his family. The show was a big hit and was one of the

most top-rated TVB dramas of all time, which cemented the legend of Adam Cheng.

The Hang Seng fell 20% during the broadcast of the show. The Adam Cheng effect

was born and its bearish impact has since been well documented. Of the 18 TV

dramas aired since 1992, 70% of the time, the markets fell by a weighted average

6.6%. Each TV drama averages 5 weeks and 25 episodes.

Adam Cheng is currently airing his new TV series, “Master of Play”. In Chinese, it is

titled Mind War, “心戰” and is a tragic story about an actor who helps the police to

track a serial killer by using his skills to get into his mind-set. The show debuted

on 21 May, and it coincided with Hong Kong’s first solar annular eclipse in 54 years,

another bad omen. We are about half way through the series and the HSI is already

down 10% since the show was announced.

Figure 1 Figure 2

Adam Cheng in Master of Play (2012) and in The Greed of Man(1992)

English translation: (Left) “A man’s life does not necessarily suit his taste”, (Right) “What is the worst catastrophe for everyone? It’s a stock market crash!” Source: TVB, Screenshots through evchk.wikia.comand Baidu user’s blog, CLSA Asia-Pacific Markets

Adam Cheng’s Master of Play was on TVBin the last 3 weeks


http://www.clsa.com/member/bios/index.asp?alogin=CHEUNGF&pagename=bios

Hong Kong Mind war 13 June 2012


We would not underestimate the Adam Cheng effect as local investors especially

retailers have been known to sell their stocks ahead of the show. Hong Kong

investors can be very superstitious and Adam Cheng is a very well-known actor

with a large following.

CLSA popularize the Adam Cheng Effect by being the first to measure the negative

on the market. Our piece 8 years ago is still on our website, see AML 30-Mar-2004

Slice of life: Adam Cheng Effect. The new drama has drawn a large mainland

broker to do an updated analysis which was published in the respected Hong Kong

Economic Journal. The detail analysis which ran the full page of the newspaper

argued there is no such effect and claims that the Adam Cheng effect is

“academically dishonest”. Adam Cheng effect has become a source of controversy

which has been complicated by the falling market.

Has it worked?Adam Cheng Effect has been accurate in predicting down markets. In this last 18

TV series since 1992, 70% of the shows resulted in a down market. In general, the

more tragic the TV series, the worse the market performs. The current Master of

Play is definitely one of the more violent dramas on TV.

q In the more tragic shows such as The Greed of Man (1992), Divine Retribution(2000), and Blade Heart (2004), the market had a larger correction.

q In more light-hearted shows such as comedy dramas, The Driving Power (2003), Bar Bender (2006) and The King of Snooker (2009), the market generally went up.

Figure 3

HSI performance during Adam Cheng’s TV series (since 2004)

Figure 4

HSI performance during Adam Cheng’s TV series (1992-2004)

Source: TVB, Bloomberg, Wikipedia, CLSA Asia-Pacific Markets

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12

(HSI Index)

Blade Heart血薦軒轅

The Conqueror'sStory楚漢驕雄

Up 11%

The Prince's Shadow御用閒人

Down 2%

Bar Bender潮爆大狀

Up 4%

The King of Snooker桌球天王

Up 13%

Return Home榮歸

Down 5%

The Book andthe Sword書劍恩仇錄

Down 2%

Master of Play心戰

Down 4%(max)

0

5,000

10,000

15,000

20,000

Jan 92 Jan 93 Jan 94 Jan 95 Jan 96 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03

(HSI Index)

The Greed of Man大時代

Down 13%

Instinct笑看風雲

Down 13.8%

The Legend of Chor Lau Heung香帥傳奇

Up 12%

The Driving Power非常外父

Up 4%

Forty Something男人四十一頭家 4%Cold Blood Warm Heart天地男兒 7%

Lord of Imprisonment神劍萬里追

Down 7%

Once upon a time in Shanghai新上海灘

Up 12%

Legend of Yung Ching江湖奇俠傳

Down 1%

Divine Retribution世紀之戰

Down 8%

“You will lose if you take it too seriously,”

Motto of HK’s top internet forum hkgolden.com

The Effect is accurate in predicting down markets

CLSA first to quantify Adam Cheng Effect


http://www.clsa.com/member/reports/269670647.pdf



Figure 5 Figure 6

Master of Play心戰 (2012) The Book and the Sword 書劍恩仇錄 (2010)

Figure 7 Figure 8

The King Of Snooker 桌球天王 (2009) Return Home榮歸 (2007)

Figure 9 Figure 10

Bar Bender 潮爆大狀 (2006) The Prince's Shadow 御用閒人 (2005)

Figure 11 Figure 12

The Conqueror's Story楚漢驕雄 (2004) Blade Heart 血薦軒轅 (2004)


95

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110

-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(Index)

HSICSI300

(Days, 0=debut)

????

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105

110

-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(Index) HSICSI300

(Days, 0=debut)

Inverse effecton ATV?

90

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105

110

115

120

125

130

135

-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(Index)

HSICSI300

(Days, 0=debut)(Days, 0=debut)

Recovery after 2009 GFCHSI outperformed

85

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125

135

145

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105

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-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(HSI) HSI

CSI300

(Days, 0=debut)

Classic Adam Cheng patternV-shared recovery

90

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-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(Index)HSICSI300

(Days, 0=debut)

No Adam Chengeffect at all?

90

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-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(Index) HSICSI300

(Days, 0=debut)

This time on A-share

95

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115

-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(Index) HSICSI300

(Days, 0=debut)

HSI early rebound!

90

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105

110

-15 -10 -5 0 5 10 15 20 25 30 35 40 45

(Index) HSICSI300

(Days, 0=debut)

Classic Adam Cheng patternV-shared recovery




A new predictive formulaWe are refining our CLSA Adam Cheng formula to incorporate a tragic quotient to

better predict the bear market bottom. Our old formula from 2004 can be

improved by giving each drama a tragedy score based on the premise that the

sadder the show, the worst the market will perform. We revisited the storyline of

each of his dramas since The Greed of Man of 1992, and assigned a “tragic score”

to each of the series. We scored this via a scale of -10 (most tragic) to +10

(happiest), based on rules below.

q +10 for absolutely happy endings, such as Adam’s family reunited, all main characters alive and healthy, and criminals got punished.

q Between +2 and +5 for births, marriages, resolution of love triangle(s) of main characters during the series, etc.

q Between -2 and -5 for events such as death, sickness, divorce, or accidents of main characters, etc.

q Mandatory -10 for death of Adam Cheng in the show.

q Between +5 and -5 at our absolute discretion, which is awarded based our team’s viewing experience.

Figure 13

Scoring emotional contentTitle Genre Tragic storyline? Tragic

scoreMaster of Play 心戰 Modern

crimeViolence and tragedy. Murders from the beginning. Cheng loss his daughter and focus on his acting career, but got involved in a serial killer case. Undercover police died. People got murdered.

(7)

The Book and the Sword

書劍恩仇錄 Qing dynasty action

Tragedy for ATV, as the show was terminated after showing 34 out of 40 episodes. Another adaption of novel of the same title, where Cheng played Qianlong Emperor. In the original book Princess Fragrance committed suicide.

(5)

The King Of Snooker

桌球天王 Modern drama

Classic see-lai drama involving family relationships and romance. Story revolves around Cheng as a retired award-winning snooker player, but failed to maintain his relationships. No love triangle with a happy ending.

9

Return Home 榮歸 Modern drama

Depends. Drama to celebrate 10-year anniversary of HK handover. Story about family reunion post-1997, financial trouble during the Asian Financial Crisis, and Cheng faces Leukemia but has recovered.

(2)

Bar Bender 潮爆大狀 Modern drama

Happy see-lai classic. Cheng is an evil senior counsel with a reputation of helping the rich and powerful. He eventually engaged in pro bono work, and repaired relationship with his daughter.

10

The Prince's Shadow

御用閒人 Qing dynasty comedy

Love triangle. As Qianlong emperor's assistant, Cheng fell into a love triangle with the Emperor and a palace servant. The servant was expelled from the palace and became a prostitute, but eventually Cheng saved her.

8

The Conqueror's Story

楚漢驕雄 Chu-Han dynasty history

Followed history where Cheng played Liu Bang. Story evolved around the war between Liu Bang and Xiang Yu (Chu–Han Contention between 206–202 BC), and ended with Liu Bang eventually became Emperor Gaozu of Han.

5

Blade Heart 血薦軒轅 Ming dynasty action

Dead in series finale. Cheng is leader and assassin of Ming Dynasty's Secret Police. He was separated with his wife soon after he got married. He murdered people, people try to kill him, eventually he is dead in the finale.

(10)

The Driving Power

非常外父 Hong Kong 1960s

comedy

Another see-lai classic. Cheng acted as "princeling" of a triad gangster, and became a boss of a dance hall and mah-jong house. Cheng involved in a number of extramarital affairs.

7

Divine Retribution

世紀之戰 Modern business

Repeated tragedy. ATV's own sequel of The Greed of Man, featured another Asian financial crisis in 2003. The scene where Crab Ting threw his sons from the roof was replayed on episode 4. Cheng was murdered in episode 39.

(10)

Lord of Imprisonment

神劍萬里追 Ming dynasty action

Dead wife. Cheng is a police chief in Ming dynasty whose wife is missing. It turns out that his wife was dead, and Cheng was involved in other cases. Towards the end of the show, Cheng was poisoned by his enemies.

(7)

Legend of Yung Ching

江湖奇俠傳 Qing dynasty history

Historical drama. ATV coproduction with Taiwan where Cheng was Yongzheng Emperor. Storyline flow through the majority of life of Yongzheng, including his death.

(3)

*See-lai means middle aged housewives in Cantonese. Source: TVB, Media Reports, CLSA Asia-Pacific Markets

Emotional impact is now incorporated




Figure 14

Scoring emotional content (continued)Title Genre Tragic storyline? Tragic

scoreOnce Upon a Time in Shanghai

新上海灘 1930s Shanghai

action

Classic remake of TVB's 1980s Shanghai Tang. As a patriotic Gamble King, Cheng was involved crime and received death threats in order to save the country. He was in coma towards the end, but recovered and left Shanghai.

7

Cold Blood Warm Heart

天地男兒 Modern HK action

Moderately tragic. Cheng is a Police Sergeant. He was wrongfully jailed for murder in episode 23, but was released in episode 30. Father was dead in episode 63, and brother was kidnapped and murdered in episode 36-37.

(8)

Forty Something

男人四十

一頭家1990s HK

sitcomMidlife crisis. Cheng as 40 year old man in mid-life crisis. His business is in trouble, and his wife is leaving him because of love triangle. Cheng wanted a divorce, and his wife wanted to migrate to Canada. Happy ending.

8

The Legend of Chor Lau Heung

香帥傳奇 Ancient action

Justice. Cheng as wuxia who robs from the rich to help the poor. He recovered the stolen Buddhist relics, and discovered conspiracy to murder the emperor. Happy ending with emperor saved and criminals jailed.

10

Instinct 笑看風雲 1990s HK drama

Harsh reality. Cheng as CEO of a business empire, but have business conflict. Ex-wife and step-daughter both dead. Business empire was lost. Neutral ending with some criminals dead, but Cheng’s wife died of cancer.

(7)

The Greed of Man

大時代 1970-90s HK drama

Extreme tragedy. Shocked HK on its debut where Cheng, acting Crab Ting, threw his 4 sons from the top of the stock exchange to their death, before taking his own life. Ting survived and spent the rest of his life in prison.

(10)

Source: TVB, Media Reports, CLSA Asia-Pacific Markets

Viewership level, which is measured in terms of TV rating (TVR) points, magnifies

impact of the Effect. As more people watch the drama, higher psychological impact.

TVR represents the size of audience as a percentage of the total TV population, and

each TVR point represented 63,880 persons in 2011. Due to insufficient data, TV

ratings for 1990s were estimated.

Based on our framework above, we can apply simple regression and reveal our

formula to predict how HSI will perform during Master of Play.

%HSI Adam Cheng = 0.0308 (Tragic Score x TV Rating) -1.5216%

Figure 15

2012 Adam Cheng Effect Formula


y = 0.0308x - 1.5216R² = 0.578

(20)

(15)

(10)

(5)

0

5

10

15

(500) (400) (300) (200) (100) 0 100 200 300 400

HSI performance(%)

Tragic score x Viewers(Index x TVR)The Greed of Man

King of Snooker

R2 correlation of 58%




Figure 16

Tragedy score vs. market performanceTitle Start date Finish date HSI

startHSI

finishPerf%

Tragic score

Est. TVRating

Channel

Master of Play 心戰 21 May 12 29 Jun 12 18,922 ?? ?? (7) 25 TVBThe Book and the Sword 書劍恩仇錄 25 Oct 10 09 Dec 10 23,628 23,172 (1.9) (5) 2 ATVThe King Of Snooker 桌球天王 30 Mar 09 24 Apr 09 13,456 15,259 13.4 9 27 TVBReturn Home 榮歸 18 Jul 07 10 Aug 07 22,842 21,793 (4.6) (2) 6 ATVBar Bender 潮爆大狀 03 Apr 06 28 Apr 06 16,064 16,661 3.7 10 32 TVBThe Prince's Shadow 御用閒人 14 Mar 05 08 Apr 05 13,907 13,667 (1.7) 8 29 TVBThe Conqueror's Story 楚漢驕雄 25 Oct 04 04 Dec 04 12,818 14,212 10.9 5 29 TVBBlade Heart 血薦軒轅 08 Mar 04 25 Apr 04 13,574 12,384 (8.8) (10) 27 TVBThe Driving Power 非常外父 06 Oct 03 31 Oct 03 11,734 12,190 3.9 7 29 TVBDivine Retribution 世紀之戰 11 Sep 00 03 Nov 00 17,008 15,594 (8.3) (10) 11 ATVLord of Imprisonment 神劍萬里追 05 Jul 99 20 Aug 99 14,507 13,567 (6.5) (7) 7 ATVLegend of Yung Ching 江湖奇俠傳 01 Dec 97 20 Feb 98 10,751 10,600 (1.4) (3) 8 ATVOnce upon a time in Shanghai 新上海灘 02 Sep 96 25 Oct 96 11,107 12,388 11.5 7 30 TVBCold Blood Warm Heart 天地男兒 05 Feb 96 03 May 96 11,484 10,734 (6.5) (8) 30 TVBForty Something 男人四十一頭家 05 Jun 95 30 Jun 95 9,570 9,207 (3.8) 8 30 TVBThe Legend of Chor Lau Heung 香帥傳奇 01 May 95 30 Jun 95 8,226 9,207 11.9 10 10 ATVInstinct 笑看風雲 31 Oct 94 23 Dec 94 9,646 8,312 (13.8) (7) 30 TVBThe Greed of Man 大時代 02 Nov 92 25 Dec 92 6,231 5,442 (12.7) (10) 41 TVBSource: Bloomberg, TVB, Media reports, CLSA Asia-Pacific Markets

HSI to fall 6% and then reboundsWe currently score tragic level of Master of Play at -7, and the show had an

average of 24 TVR points in the first three weeks. This implies HSI will fall by at

0.0308 x -7 x 24 –1.5216 = -6.7% due to the Adam Cheng Effect, bottoming at

17,650 by the end of 30 episodes. We believe the market has another 6% to fall

until June 29th which coincides with the end of the much anticipated EU summit.

This is within the mid-range of CLSA’s technical analyst, Laurence Balanco, forecast

of wave 5 bottoming between 17,343 and 17,937. After reaching bottom, the HSI

should rebound by 7% in three months after the show based on historical trading

pattern.

Figure 17

CLSA’s technical view on HSI

Source: Price Action Derivatives published 5 June, CLSA Asia-Pacific Markets

HSI to bottom at 17,650 by the end of the show

Technical ViewLaurence Balanco believes the HSI is trading in wave 5 of an impulse sequence off the February high. If we are correct then the HSI should be on the way into an important trading low this week as the basis for a tactical rebound into August develops. The ideal lows for wave 5 lie between 17,343 and 17,937.

Support: 17,937, 17,343,16,139.Resistance: 19,075, 19,742, 20,908.




Adam Cheng Effect is positive to TVBFor something to cheer about, we identify TVB (511 HK – N-R) as a pure-play proxy

which benefits from the Effect. In the past 8 years, TVB shares consistently went

up when Adam Cheng is on-air on TVB, while it went down when the drama is on

TVB's arch-rival, ATV.

On average, TVB’s share price goes up by 10.3% when the show is on TVB. We

also observed a linear relationship between the shows’ TV rating points with TVB’s

share price performance with an even better R2 correlation of 75%. Based on 28 TV

rating points received on the show’s premiere night, our regression predicts TVB’s

share could have 10% upside to HK$57 by the end of Master of Play on 29 June.

Figure 18


Figure 19 Figure 20

Consistent pattern TVB share performance vs. TV rating points


CLSA checks out TVB While we did not meet Adam Cheng at TVB, we met with TVB’s management to

discuss China strategy and new competition. They believe that the new China JV to

license their content to China will be a new growth driver for the company. The risk

is that the HK gov’t is set to offer up to three new free to air broadcasting license.

Competition will likely have little impact as the capital cost is too high to build up

quality content/dramas in a small market such as Hong Kong. Shares are trading

at 13.2x consensus forward PER. We believe that new competitors will have a

difficult time, but upside depends on how well they can execute in China.

0

10

20

30

40

50

60

70

Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12

(HK$)

Blade Heart血薦軒轅 (TVB)Down 0.5%

TheConqueror'sStory (TVB)楚漢驕雄

Up 13%

The Prince'sShadow (TVB)御用閒人

Up 13%

Bar Bender潮爆大狀 (TVB)Up 12%

The King of Snooker桌球天王 (TVB)Up 17%

Return Home榮歸 (ATV)Down 9%

The Book andthe Sword (ATV)書劍恩仇錄

Down 6%

Master of Play心戰 (TVB)???

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125

-15 -10 -5 0 5 10 15 20 25 30 35 40 45

Index (Debut =100)

(Days, 0=debut)

(Shown on TVB)

(Shown on ATV)

y = 0.5584x - 5.3247R² = 0.7501

(15)

(10)

(5)

0

5

10

15

20

(10) 0 10 20 30

TVB SharePerformance %

ShowTV Rating

Points

TVB ratingATV rating

TVB could go up by 10%+ based on

28 TV Rating points

TVB (511 HK) is a pure play proxy



Page 8 of 8

Companies mentionedTVB (N-R)




The CLSA Group, CLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that CLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report. Regulations or market practice of some jurisdictions/markets prescribe certain disclosures to be made for certain actual, potential or perceived conflicts of interests relating to research report and such details are available at www.clsa.com/member/research_disclosures/. Disclosures therein include the position of the CLSA Group only and do not reflect those of Credit Agricole Corporate & Investment Bank and/or its affiliates. If investors have any difficulty accessing this website, please contact [email protected] or (852) 2600 8111. If you require disclosure information on previous dates, please contact [email protected]



Sany Heavy Rmb14.71 - BUY

Financials Year to 31 Dec 10A 11A 12FCL 13FCL 14FCL Revenue (Rmbm) 33,955 50,776 63,742 81,723 99,644 Net profit (Rmbm) 5,615 8,649 10,221 13,199 16,390 EPS (fen) 73.9 113.9 134.6 173.8 215.8 CL/consensus (18) (EPS%) - - 99 108 115 EPS growth (% YoY) 112.7 54.0 18.2 29.1 24.2 PE (x) 19.3 12.5 10.6 8.2 6.6 Dividend yield (%) 0.3 2.1 2.5 3.2 4.0 FCF yield (%) 2.1 (4.5) (1.1) 2.7 5.1 PB (x) 9.5 5.5 3.8 2.7 2.0 ROE (%) 57.2 57.3 43.7 38.9 34.7 Net debt/equity (%) 6.1 31.0 43.3 31.8 21.6 Source: Company data, FortuneCLSA

Please see important notice on last page

Yan Yang SAC registration no.

S0150512050001

Thanks to:

Alexious Lee Frank Pan

13 June 2012

China Capital goods Reuters 600031.SS Bloomberg 600031 CH

Priced on 12 June 2012 CSI 300 @ 2,540.2 12M hi/lo Rmb18.88/11.10 12M price target Rmb19.18 ±% potential +30% Target set on Shares in issue 7,593.7m Free float (est.) 83.2% Mcap (total)* US$17,015m Mcap (A-shares) US$16,505m 3M average daily volume Rmb444.6m (US$69.9m) Major shareholders Sany Group 56.4%

Stock performance (%) 1M 3M 12M

Absolute (3.6) (3.9) (17.2) Relative (3.9) (3.8) (5.6) Abs (US$) (4.5) (4.9) (15.7)

4.9

9.0

13.1

17.2

21.3

Jun-10 Dec-10 Jun-11 Dec-110

50

100

150

200

250

300

350

Sany Heavy (LHS) Rel to 300 (RHS)

(Rmb)

Source: Bloomberg

www.cf-clsa.com

Initiating coverage

Gearing up for the rally Sany Heavy is China's leader in concrete machinery and continues to gain share in excavators. We expect net income and revenue Cagr for 2012-14 of 25% and 24%, respectively, thanks to its innovative product offering, market share gains, product diversification and international expansion. Sany has shown a solid track record and we are confident it will outperform its peers amid demand recovery in 2H12. We initiate with a BUY and a target price of Rmb19.18, implying 30% upside. Sany Heavy is our top pick among A-share machinery companies.

Further share gain in excavators While Sany Heavy is aggressively increasing its excavator market share from 7% in 2010 to 14% 5M12, real opportunity lies in climbing the technology curve and improving ASPs. Sany Heavy is the first Chinese excavator maker to have had an opportunity to dig into Komatsu’s market, even in the mining sector. It doubled its slice of the market for big-mining models (over 35 tonnes), from less than 5% in 2010 to 10% in 2011. We expect excavators to be Sany’s fastest-growing top line contributor.

Best-in-class product offering Leading the market with product innovation and model offering, Sany will maintain its leadership in concrete pumps. The company’s domestic share in truck cranes has improved from 6% in 2010 to 10% in 2011, and reached 12% in 1Q12. We expect crane export growth to accelerate in 2013.

Overseas business a positive 5M12 Excavator export sales grew over 100% YoY from a low base but new factories in Indonesia and Brazil, in 2H12, will help the company gain ground in overseas markets. The acquisition of Putzmeister strengthened Sany Heavy’s position as the global leader in concrete pumps. While the company’s JV with Palfinger for truck cranes could lay a foundation for Chinese brands to tap into the global wheel-based machinery market.

Attractive valuation The stock is currently trading at 8x13FCL PE, a 50% discount to its 5 year trading average. We believe it is one of the most attractively priced Chinese machinery stocks to ride the rally on increasing positive newsflow, improvement in new loans, surging government infrastructure spending, and a visible recovery as evidenced in its monthly machinery sales. We apply 11x 13 FCL PE to reach our target price of Rmb19.18, which is a 40% discount to the stock’s 5 year PE average. We initiate with a BUY call, with our TP implying 30% upside. Sany Heavy is our top pick among A share machinery.


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Gearing up for the rally Sany Heavy - BUY


Figure 1

Sany Heavy net profit forecast

Source: Company data, FortuneCLSA

Figure 2

Excavator business- Comparison with Komatsu China

Source: CCMA, Company data, FortuneCLSA

Figure 3

Figure 4

Revenue contribution by products- 12FCL Gross earnings by products- 12FCL

Source: Company data, FortuneCLSA

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2009 2010 2011 12FCL 13FCL

(Rmbm) Net profit

100

100

100

210

97

204

0 50 100 150 200 250

ASP

Units

Revenue

Excavator Komatsu China

Excavator Sany HI

Concrete machinery

54%Excavator

20%Truck Crane7%

Piling machinery

4%

Crawler Crane3%

Road machinery

3%Others

9%

Concrete machinery

59%Excavator

18%Truck Crane6%

Piling machinery

5%

Crawler Crane3%

Road machinery

3%

Others6%

Net profit growth to accelerate in 2013, thanks

to increasing exports

More room for improvement in terms of ASP and revenue




Summary financials Year to 31 December 2010A 2011A 2012FCL 2013FCL 2014FCL Summary P&L forecast (Rmbm) Revenue 33,955 50,776 63,742 81,723 99,644 Op Ebitda 7,778 11,704 14,011 18,233 22,888 Op Ebit 7,256 10,985 13,150 17,205 21,659 Interest income 33 114 127 163 199 Interest expense (203) (765) (956) (1,062) (1,295) Other items (147) 458 718 531 344 Profit before tax 6,938 10,792 13,039 16,836 20,907 Taxation (774) (1,431) (1,786) (2,307) (2,864) Minorities/Pref divs (549) (713) (1,031) (1,331) (1,653) Net profit 5,615 8,649 10,221 13,199 16,390

Summary cashflow forecast (Rmbm) Operating profit 7,256 10,985 13,150 17,205 21,659 Operating adjustments (1,092) (1,624) (1,897) (2,675) (3,616) Depreciation/amortisation 522 718 862 1,029 1,228 Working capital changes 814 (6,403) (3,032) 455 1,626 Net interest/taxes/other (752) (1,398) (1,495) (1,917) (2,366) Net operating cashflow 6,749 2,279 7,587 14,096 18,531 Capital expenditure (4,426) (7,136) (8,733) (11,180) (13,016) Free cashflow 2,323 (4,857) (1,146) 2,916 5,515 Acq/inv/disposals 300 (253) (159) (168) (179) Int, invt & associate div (2,648) 381 (2,495) 168 179 Net investing cashflow (6,774) (7,007) (11,387) (11,180) (13,016) Increase in loans 3,423 10,760 5,523 1,235 1,359 Dividends (1,413) (1,657) (3,080) (3,549) (4,527) Net equity raised/other (244) (101) - - - Net financing cashflow 1,766 9,002 2,443 (2,313) (3,168) Incr/(decr) in net cash 1,741 4,274 (1,357) 603 2,348 Exch rate movements (10) 3 (5) (7) (8) Opening cash 4,240 5,970 10,247 8,885 9,481 Closing cash 5,970 10,247 8,885 9,481 11,820

Summary balance sheet forecast (Rmbm) Cash & equivalents 5,970 10,247 8,885 9,480 11,821 Debtors 6,841 12,356 18,404 22,007 26,002 Inventories 5,687 8,134 11,509 14,075 16,054 Other current assets 1,938 3,047 3,729 4,507 5,286 Fixed assets 8,990 14,835 22,005 31,384 42,311 Intangible assets 1,564 2,161 3,909 4,564 5,283 Other term assets 153 199 200 202 204 Total assets 31,341 51,307 69,128 86,874 107,795 Short-term debt 4,994 9,502 12,353 13,588 14,947 Creditors 6,666 6,670 8,111 10,251 12,365 Other current liabs 5,871 6,959 7,772 8,919 10,081 Long-term debt/CBs 1,701 7,170 9,843 9,843 9,843 Provisions/other LT liabs 190 251 298 359 432 Minorities/other equity 568 1,091 2,122 3,453 5,106 Shareholder funds 11,350 19,663 28,630 40,461 55,020 Total liabs & equity 31,341 51,307 69,128 86,874 107,795

Ratio analysis Revenue growth (% YoY) 78.9 49.5 25.5 28.2 21.9 Ebitda growth (% YoY) 94.2 50.5 19.7 30.1 25.5 Ebitda margin (%) 22.9 23.0 22.0 22.3 23.0 Net profit margin (%) 16.5 17.0 16.0 16.2 16.4 Dividend payout (%) 5.4 26.3 26.3 26.3 26.3 Effective tax rate (%) 11.2 13.3 13.7 13.7 13.7 Ebitda/net int exp (x) 45.7 18.0 16.9 20.3 20.9 Net debt/equity (%) 6.1 31.0 43.3 31.8 21.6 ROE (%) 57.2 57.3 43.7 38.9 34.7 ROIC (%) 58.9 48.0 32.0 29.3 28.7 EVA®/IC (%) 47.4 36.5 20.5 17.8 17.3 Source: Company data, FortuneCLSA

Best-in-class ROE

Cash position reflects our base-case forecast after

the Putzmeister acquisition but without the HK IPO

We expect 25% revenue and net profit Cagr in

FY12-14




Key to FortuneCLSA investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than market return but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL: Total return expected to be less than market return AND to provide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market where the stock is traded. © 2012 Fortune CLSA Securities Limited (“FortuneCLSA”). Note: In the interests of timeliness, this document has not been edited. FortuneCLSA has produced this publication/communication for private circulation to selected professional and institutional clients only. This publication/communication is confidential and proprietary to FortuneCLSA and shall not be reproduced, copied, redistributed or circulated (whether in whole or in part) without the express written permission of FortuneCLSA. The analyst/s who compiled this publication/communication hereby state/s and confirm/s that the contents hereof truly reflect his/her/their views and opinions on the subject matter and that the analyst/s has/have not been placed under any undue influence, intervention or pressure by any person/s in compiling such publication/ communication. FortuneCLSA, FortuneCLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that FortuneCLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report. Regulation of People’s Republic of China prohibits FortuneCLSA employees to hold shares or trade in shares or to receive shares from other person in the form of gift. Regulation of People’s Republic of China does not allow FortuneCLSA analysts to take up part-time job or outside activity. FortuneCLSA does not allow gift or advantage to be provided to analysts. FortuneCLSA is not allowed to engage in proprietary trading (other than those positions arising from underwriting) and does not make any market. Any departure from the above which may give rise to conflict of interest will be disclosed in the concerned research report. Disclosure of conflict of interest include the position of FortuneCLSA and / or its employees and Fortune Securities Company Limited, the Chinese shareholder of FortuneCLSA, only and does not reflect those of CLSA Asia-Pacific Markets (“CLSA”) and / or its affiliates (including but not limited to Credit Agricole Corporate & Investment Bank). IMPORTANT: The content of this report is subject to FortuneCLSA's Legal and Regulatory Notices as set out at www.cf-clsa.com/www/disclaimer.html, a hard copy of which may be obtained on request from FortuneCLSA Compliance (9th floor, 100 Century Avenue, Pudong New Area, Shanghai 200120, PRC, telephone (8621) 3878.4818). 01/01/2012


CM Property Rmb26.00 - UNDERPERFORM

Financials Year to 31 December 10A 11A 12CL 13CL 14CL Revenue (Rmbm) 13,782 15,111 19,642 26,052 33,642 Net profit (Rmbm) 2,011 2,592 3,063 3,458 3,656 EPS (fen) 117.1 150.9 178.4 201.4 212.9 CL/consensus (15) (EPS%) - - 92 84 76 EPS growth (% YoY) 22.3 28.9 18.2 12.9 5.7 PE (x) 22.2 17.2 14.6 12.9 12.2 Dividend yield (%) 0.4 0.5 0.8 0.7 0.8 FCF yield (%) (8.4) (3.0) (5.1) 10.9 (3.7) PB (x) 2.5 2.2 1.9 1.7 1.5 ROE (%) 12.6 14.6 15.3 14.2 14.5 Net debt/equity (%) 15.9 31.4 36.9 18.2 22.3 Source: FortuneCLSA

Please see important notice on last page

Yan Yang SAC registration no.

S0150512050001 (8621) 38784818

12 June 2012

China Property Reuters 000024.SZ Bloomberg 000024 CH

Priced on 11 June 2012 HS CEI @ 9,574.8 12M hi/lo Rmb26.60/15.55 12M price target Rmb27.00 ±% potential +4% Target set on Shares in issue 1,717.3m Free float (est.) 48.0% Market cap US$6,260m 3M average daily volume Rmb200.8m (US$31.8m) Major shareholders

China merchants Shekou industrial zone 40.4%

Stock performance (%) 1M 3M 12M

Absolute 11.6 25.0 58.8 Relative 18.2 47.0 105.4 Abs (US$) 10.6 23.9 61.6

10

14

18

22

26

30

Jun-10 Dec-10 Jun-11 Dec-110

50

100

150

200

250

CM Property (LHS) Rel to CEI (RHS)

(Rmb)

Source: Bloomberg

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Initiating coverage

Transition CMPD is an SOE with a solid shareholder background. It has a robust balance sheet thanks to a consistently low leverage. Large-scale operations will be gradually materialised given low financing costs. However, gross margins in 2013-14 will be under pressure due to large price cuts. Joint partnership with strong sales in Shenzhen, Beijing and Foshan have started to book, leading to rapidly increasing minority interests and decelerating net profit growth. Solid fundamentals have been priced in. We initiate coverage with an U-PF call to a Rmb27 TP, implying 4% upside.

Economy of scale With presence in 18 cities in China, CMPD’s residential property (contributing 86% of its revenue) has been widely recognized as a quality brand, the company has therefore shifted its strategic focus from maintaining a high margin to scale expanding. Given largely price cuts and increasing contribution from Joint partnership in 2013-14 booked revenue, CMPD faces a arduous task in keeping profit growth by boosting sales to make up for lower prices. Assuming -5%, 5% and 5% YoY price changes for 2012-14, the revenue and net profit are expected to register 20% and 6% Cagr respectively, and gross margins are expected to decline from 44% to 34%. By 1Q12, 118% of our full year revenue forecast has been secured, implying high earnings visibility.

Better-than-expected sales Quick price cuts and constantly improving product mix enables the company to earn Rmb11bn in 5M12, 49% of our full year estimates. Sales are mainly driven by volume recovery and release of pent up demand in the first and second-tier cities. GFA in 90-140sqm shell houses will be the main supply for 2012, with an available-for-sale valued at Rmb40bn. Assuming a stable construction speed, CMPD will maintain over 2msqm GFA in new started and planned completion area in 2012-14. We expect Rmb22.4bn, 28.1bn and 28.9bn contract sales and Rmb17.5bn, 23.7bn and 31.2bn booked revenue in 2012-14.

Healthy balance sheet CMPD always kept its leverage low with net gearing ratio below 30% in the past three years and moderately increased to 33% in 1Q12, ranking the third among top 10 developers by market cap. LT debts account for more than 71%. The company has good access to bank loans with an average cost below 7%. We expect gearing to further rise to 37% if the


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Transition CM Property - U-PF


company maintains the fast pace of land purchase and construction investment does not slow, risking further inventory build up.

Overvalued CMPD is without doubt a fundamentally sound company, but we believe this has partly priced in. The stock is trading on 13x 2013FCLPE, 20% higher than sector average. NAV/share is Rmb23. Given its low cost of land and diversified financing channels, we gave a 30% valuation premium over peers. We initiate coverage with U-PF and a TP Rmb27, implying 4% upside.

This is an English translation excerpt of a Chinese report published on 12th June.

Figure 1

Main assumptions of CMPD 2012FCL 2013FCL 2014FCL YoY growth rate of property price (%) -5 5 5 YoY growth rate of construction cost (%) 5 6 6 Contracted but unbooked revenue (Rmbm) 21,840 26,245 24,050 Revenue locked ratio at the year beginning (%) 86 84 78 % revenue rely on presales in current year (%) 14 16 22 Source: FortuneCLSA, Company data

Figure 2

Main income drivers of CMPD 2008A 2009A 2010A 2011A 2012FCL 2013FCL 2014FCL Contracted GFA (ksqm) 445 1212 952 1274 1387 1701 1848 Booked GFA (ksqm) 114 625 926 748 1019 1451 1892 Booked ASP (Rmb/sqm) 17,092 13,588 12,940 17,578 17,122 16,351 16,462 Gross profit margin (%) 41 41 40 52 44 38 34 EBIT margin (%) 15 19 24 28 28 23 21 Business tax and additional tax 7 16 12 19 13 12 10 SG&A (%) 12 5 4 6 5 4 4 Financial cost (%) 1 0 1 -1 1 1 1 Tax rate (%) 16 23 24 26 25 25 25 Source: FortuneCLSA, Company data




Summary financials Year to 31 December 2010A 2011A 2012CL 2013CL 2014CL Summary P&L forecast (Rmbm) Revenue 13,782 15,111 19,642 26,052 33,642 Op Ebitda 3,479 4,343 5,636 6,006 6,967 Op Ebit 3,312 4,152 5,577 5,975 6,934 Interest income - - - - - Interest expense (93) 169 (280) (312) (296) Other items 53 171 53 53 53 Profit before tax 3,272 4,492 5,351 5,716 6,691 Taxation (788) (1,179) (1,338) (1,429) (1,673) Minorities/Pref divs (473) (721) (950) (829) (1,363) Net profit 2,011 2,592 3,063 3,458 3,656

Summary cashflow forecast (Rmbm) Operating profit 3,312 4,152 5,577 5,975 6,934 Operating adjustments - - - - - Depreciation/amortisation 167 190 59 31 34 Working capital changes (7,117) (5,263) (5,764) 1,162 (6,035) Net interest/taxes/other (46) (369) (784) (800) (994) Net operating cashflow (3,685) (1,289) (912) 6,368 (62) Capital expenditure (44) (69) (1,376) (1,487) (1,610) Free cashflow (3,728) (1,358) (2,288) 4,881 (1,672) Acq/inv/disposals 126 (366) 0 0 0 Int, invt & associate div (2) 267 53 53 53 Net investing cashflow 80 (168) (1,323) (1,434) (1,557) Increase in loans 4,724 8,355 2,000 (1,000) (873) Dividends (817) (1,357) (1,098) (1,033) (1,323) Net equity raised/other 618 63 600 600 600 Net financing cashflow 4,524 7,061 1,502 (1,433) (1,596) Incr/(decr) in net cash 920 5,605 (733) 3,501 (3,215) Exch rate movements (19) (35) 0 0 0 Opening cash 8,776 8,915 14,484 13,751 17,252 Closing cash 9,676 14,484 13,751 17,252 14,036

Summary balance sheet forecast (Rmbm) Cash & equivalents 9,676 14,484 13,751 17,252 14,036 Debtors 4,253 6,265 6,416 6,491 6,580 Inventories 38,699 51,440 62,379 66,044 70,424 Other current assets 982 1,754 1,754 1,754 1,754 Fixed assets 3,722 3,765 4,456 5,203 6,012 Intangible assets 0 0 0 0 0 Other term assets 1,887 1,144 1,233 1,332 1,439 Total assets 59,822 79,671 90,810 98,897 101,069 Short-term debt 3,033 6,486 6,487 5,488 4,616 Creditors 4,758 4,559 4,103 3,693 3,324 Other current liabs 20,722 28,641 34,439 39,770 38,591 Long-term debt/CBs 9,996 15,621 17,621 17,621 17,621 Provisions/other LT liabs 169 87 87 87 87 Minorities/other equity 2,938 3,859 4,934 5,948 7,229 Shareholder funds 18,207 20,418 23,138 26,290 29,600 Total liabs & equity 59,822 79,671 90,810 98,897 101,069

Ratio analysis Revenue growth (% YoY) 36.0 9.6 30.0 32.6 29.1 Ebitda growth (% YoY) 56.5 24.8 29.8 6.6 16.0 Ebitda margin (%) 25.2 28.7 28.7 23.1 20.7 Net profit margin (%) 14.6 17.2 15.6 13.3 10.9 Dividend payout (%) 8.5 8.0 11.2 8.9 9.5 Effective tax rate (%) 24.1 26.2 25.0 25.0 25.0 Ebitda/net int exp (x) 37.4 - 20.1 19.2 23.5 Net debt/equity (%) 15.9 31.4 36.9 18.2 22.3 ROE (%) 12.6 14.6 15.3 14.2 14.5 ROIC (%) 12.3 11.1 12.1 11.9 12.7 EVA®/IC (%) 4.2 3.0 4.1 3.8 4.6 Source: CLSA Asia-Pacific Markets




Key to FortuneCLSA investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than market return but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL: Total return expected to be less than market return AND to provide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market where the stock is traded. © 2012 Fortune CLSA Securities Limited (“FortuneCLSA”). Note: In the interests of timeliness, this document has not been edited. FortuneCLSA has produced this publication/communication for private circulation to selected professional and institutional clients only. This publication/communication is confidential and proprietary to FortuneCLSA and shall not be reproduced, copied, redistributed or circulated (whether in whole or in part) without the express written permission of FortuneCLSA.


FortuneCLSA, FortuneCLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that FortuneCLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report. Regulation of People’s Republic of China prohibits FortuneCLSA employees to hold shares or trade in shares or to receive shares from other person in the form of gift. Regulation of People’s Republic of China does not allow FortuneCLSA analysts to take up part-time job or outside activity. FortuneCLSA does not allow gift or advantage to be provided to analysts. FortuneCLSA is not allowed to engage in proprietary trading (other than those positions arising from underwriting) and does not make any market. Any departure from the above which may give rise to conflict of interest will be disclosed in the concerned research report. Disclosure of conflict of interest include the position of FortuneCLSA and / or its employees and Fortune Securities Company Limited, the Chinese shareholder of FortuneCLSA, only and does not reflect those of CLSA Asia-Pacific Markets (“CLSA”) and / or its affiliates (including but not limited to Credit Agricole Corporate & Investment Bank).

IMPORTANT: The content of this report is subject to FortuneCLSA's Legal and Regulatory Notices as set out at www.cf-clsa.com/www/disclaimer.html, a hard copy of which may be obtained on request from FortuneCLSA Compliance (9th floor, 100 Century Avenue, Pudong New Area, Shanghai 200120, PRC, telephone (8621) 3878.4818). 01/01/2012


Ticker Stock Name Date Confirmed/ Reporting Fiscal CLSA Ccy CLSA vs Est. AnalystExpected Estimated Period Year end Rec CLSA CONS CONS(%) YoY (%)

FINANCIAL SERVICES: Kevin Chan/Patricia Cheng/Derek Ovington/Chen Huang5 HK HSBC 07/30/2012 Confirmed 1H FY2012 12/2011 O-PF USD 19,407 19,279 100.7 6.8 Derek Ovington

2888 HK Standard Chartered 08/03/2012 Estimated 1H FY2012 12/2011 BUY USD 6,119 5,820 105.1 9.0 Derek Ovington1398 HK ICBC 08/30/2012 Estimated 2Q FY2012 12/2011 SELL CNY 262,398 259,811 101.0 14.9 Kevin Chan939 HK CCB 08/14/2012 Estimated 2Q FY2012 12/2011 SELL CNY 212,834 206,621 103.0 8.0 Kevin Chan

1288 HK Agricultural Bank 08/30/2012 Estimated 2Q FY2012 12/2011 BUY CNY 178,431 170,500 104.7 27.7 Kevin Chan3988 HK Bank of China 08/14/2012 Estimated 2Q FY2012 12/2011 BUY CNY 157,994 142,607 110.8 15.6 Kevin Chan3328 HK Bocom 08/14/2012 Estimated 2Q FY2012 12/2011 O-PF CNY 65,829 60,711 108.4 16.7 Kevin Chan3968 HK CMB 03/28/2013 Estimated FY FY2012 12/2011 SELL CNY 44,907 47,868 93.8 12.7 Chen Huang998 HK CNCB 08/14/2012 Estimated 2Q FY2012 12/2011 BUY CNY 37,673 36,000 104.6 9.7 Chen Huang

2388 HK Bank of China (HK) 08/24/2012 Estimated 1H FY2012 12/2011 BUY HKD 22,178 20,974 105.7 (7.1) Kevin Chan11 HK Hang Seng Bank 07/30/2012 Confirmed 1H FY2012 12/2011 U-PF HKD 17,621 18,057 97.6 (1.4) Kevin Chan23 HK BEA 08/06/2012 Estimated 1H FY2012 12/2011 O-PF HKD 4,696 4,839 97.0 18.9 Kevin Chan

302 HK Wing Hang Bank 08/13/2012 Estimated 1H FY2012 12/2011 BUY HKD 2,173 1,902 114.2 (9.0) Kevin Chan1299 HK AIA 07/30/2012 Estimated 1H FY2012 11/2011 U-PF USD 2,896 2,842 101.9 n.a. Patricia Cheng2628 HK China Life 08/23/2012 Estimated 1H FY2012 12/2011 U-PF CNY 31,854 36,425 87.5 n.a. Patricia Cheng2601 HK CPIC 08/28/2012 Estimated 2Q FY2012 12/2011 O-PF CNY 9,848 13,477 73.1 n.a. Patricia Cheng2318 HK Ping An 08/14/2012 Estimated 2Q FY2012 12/2011 O-PF CNY 31,073 30,968 100.3 n.a. Patricia Cheng2328 HK PICC 08/13/2012 Estimated 1H FY2012 12/2011 BUY CNY 10,964 10,761 101.9 n.a. Patricia Cheng966 HK China Taiping 08/27/2012 Estimated 1H FY2012 12/2011 U-PF HKD 1,654 2,080 79.5 n.a. Patricia Cheng

1336 HK New China Life 03/28/2013 Estimated FY FY2012 12/2011 SELL CNY 3,204 4,558 70.3 n.a. Patricia Cheng388 HK HK Exchanges 08/10/2012 Estimated 2Q FY2012 12/2011 SELL HKD 5,248 5,514 95.2 (2.5) Derek Ovington

6030 HK Citics 07/12/2012 Estimated 1H FY2012 12/2011 BUY CNY 8,857 7,874 112.5 (47.8) Chen Huang6837 HK Haitong 08/27/2012 Estimated 2Q FY2012 12/2011 O-PF CNY 5,346 6,311 84.7 32.0 Chen Huang165 HK Everbright Ltd 08/30/2012 Estimated 1H FY2012 12/2011 O-PF HKD 2,661 2,088 127.4 13.9 Chen Huang

CHINA PROPERTY: Nicole Wong/Susanna Leung/Ricky Mui688 HK Coli 08/09/2012 Estimated 1H FY2012 12/2011 BUY HKD 18,247 17,192 106.1 (1.8) Nicole Wong

200002 CH Vanke 08/08/2012 Estimated 2Q FY2012 12/2011 BUY CNY 14,218 14,743 96.4 31.2 Nicole Wong1109 HK CR Land 08/20/2012 Estimated 1H FY2012 12/2011 O-PF HKD 6,584 7,793 84.5 (21.2) Nicole Wong3333 HK Evergrande 09/04/2012 Estimated 1H FY2012 12/2011 U-PF CNY 7,730 11,489 67.3 (24.8) Ricky Mui2007 HK Country Garden 08/16/2012 Estimated 1H FY2012 12/2011 O-PF CNY 8,126 6,860 118.4 15.7 Susanna Leung410 HK Soho China 08/27/2012 Estimated 1H FY2012 12/2011 U-PF CNY 4,978 5,040 98.8 (1.2) Susanna Leung

3383 HK Agile Property 08/20/2012 Estimated 1H FY2012 12/2011 BUY CNY 5,413 4,971 108.9 3.7 Nicole Wong813 HK Shimao Property 08/31/2012 Estimated 1H FY2012 12/2011 U-PF CNY 5,242 4,928 106.4 (35.5) Nicole Wong

2777 HK Guangzhou R&F 08/23/2012 Estimated 1H FY2012 12/2011 BUY CNY 4,497 5,150 87.3 (7.3) Nicole Wong81 HK Cogo 08/02/2012 Estimated 1H FY2012 12/2011 BUY HKD 2,784 2,542 109.5 14.0 Ricky Mui

917 HK NWC Land 10/03/2012 Estimated FY FY2012 06/2011 U-PF HKD 2,308 2,417 95.5 (28.7) Ricky Mui1813 HK KWG Property 08/20/2012 Estimated 1H FY2012 12/2011 BUY CNY 2,848 2,275 125.2 1.3 Susanna Leung845 HK Glorious Prop 08/29/2012 Estimated 1H FY2012 12/2011 BUY CNY 3,053 2,383 128.1 (7.3) Ricky Mui

YLLG SP Yanlord 08/10/2012 Estimated 2Q FY2012 12/2011 O-PF CNY 1,729 1,211 142.7 (3.7) Ricky Mui960 HK Longfor 08/15/2012 Estimated 1H FY2012 12/2011 O-PF CNY 8,783 6,557 134.0 4.3 Ricky Mui

2868 HK BCL 08/20/2012 Estimated 1H FY2012 12/2011 U-PF CNY 1,011 1,037 97.5 5.6 Ricky MuiHK PROPERTY: Nicole Wong/Susanna Leung/Ricky Mui/Danie Schutte

16 HK SHKP 09/17/2012 Estimated FY FY2012 06/2011 U-PF HKD 18,596 20,238 91.9 (60.3) Nicole Wong1 HK Cheung Kong 08/06/2012 Estimated 1H FY2012 12/2011 BUY HKD 29,082 25,951 112.1 (46.0) Danie Schutte, CFA

101 HK Hang Lung Prop 08/01/2012 Estimated FY FY2012 06/2011 BUY HKD 5,847 n.a. n.a. (47.9) Susanna Leung4 HK Wharf 08/27/2012 Estimated 1H FY2012 12/2011 U-PF HKD 11,583 10,260 112.9 (67.2) Susanna Leung

12 HK Henderson Land 08/27/2012 Estimated 1H FY2012 12/2011 U-PF HKD 5,761 6,982 82.5 (64.6) Nicole WongHKL SP Hongkong Land 07/26/2012 Confirmed 1H FY2012 12/2011 O-PF USD 845 811 104.2 (87.2) Susanna Leung

1972 HK Swire Properties 08/10/2012 Confirmed 1H FY2012 12/2011 U-PF HKD 6,031 6,107 98.8 (74.4) Danie Schutte, CFA83 HK Sino Land 09/03/2012 Estimated FY FY2012 06/2011 U-PF HKD 7,683 5,607 137.0 (50.0) Susanna Leung

683 HK Kerry Properties 08/24/2012 Estimated 1H FY2012 12/2011 U-PF HKD 4,510 4,288 105.2 45.8 Susanna Leung17 HK New World Dev 10/03/2012 Estimated FY FY2012 06/2011 SELL HKD 6,687 5,888 113.6 (30.9) Ricky Mui14 HK Hysan 08/09/2012 Estimated 1H FY2012 12/2011 SELL HKD 1,738 1,840 94.5 (83.8) Ricky Mui41 HK Great Eagle 08/20/2012 Estimated 1H FY2012 12/2011 U-PF HKD 1,590 1,564 101.6 (64.9) Ricky Mui

1200 HK Midland 08/27/2012 Estimated 1H FY2012 12/2011 SELL HKD 357 288 124.0 87.5 Susanna LeungTELECOMS: Elinor Leung

941 HK China Mobile 08/20/2012 Estimated 1H FY2012 12/2011 BUY CNY 135,920 131,881 103.1 3.3 Elinor Leung, CFA728 HK China Telecom 08/23/2012 Estimated 1H FY2012 12/2011 BUY CNY 22,007 20,137 109.3 (8.4) Elinor Leung, CFA762 HK Unicom 08/14/2012 Estimated 2Q FY2012 12/2011 U-PF CNY 14,281 12,760 111.9 119.6 Elinor Leung, CFA

OIL & GAS: Simon Powell/Graham Rhodes857 HK PetroChina 08/22/2012 Estimated 2Q FY2012 12/2011 BUY CNY 166,748 166,969 99.9 9.9 Simon Powell386 HK Sinopec 08/14/2012 Estimated 2Q FY2012 12/2011 BUY CNY 85,489 85,535 99.9 7.9 Simon Powell883 HK CNOOC 08/24/2012 Estimated 1H FY2012 12/2011 U-PF CNY 60,228 71,705 84.0 (8.1) Simon Powell

2883 HK COSL 08/23/2012 Estimated 1H FY2012 12/2011 O-PF CNY 4,786 5,200 92.0 5.2 Graham RhodesGDG LN Green Dragon Gas 10/01/2012 Estimated 1H FY2012 12/2011 BUY USD 337 66 510.1 244.9 Simon Powell3337 HK Antonoil 08/28/2012 Estimated 1H FY2012 12/2011 BUY CNY 226 226 100.0 57.4 Graham Rhodes

RESOURCES: Andrew Driscoll/Richard Leung/Daniel Meng1088 HK Shenhua 08/27/2012 Estimated 1H FY2012 12/2011 BUY CNY 48,668 54,676 89.0 0.9 Andrew Driscoll, CFA1898 HK China Coal 08/16/2012 Estimated 1H FY2012 12/2011 O-PF CNY 10,452 12,392 84.3 (3.4) Andrew Driscoll, CFA2600 HK Chalco 08/27/2012 Estimated 1H FY2012 12/2011 SELL CNY (183) 1,053 (17.4) (270.6) Andrew Driscoll, CFA486 HK Rusal 08/14/2012 Estimated 2Q FY2012 12/2011 U-PF USD 1,070 1,799 59.5 (39.0) Andrew Driscoll, CFA

1171 HK Yanzhou Coal 08/20/2012 Estimated 1H FY2012 12/2011 BUY CNY 7,121 8,597 82.8 (19.1) Andrew Driscoll, CFA358 HK Jiangxi Copper 08/27/2012 Estimated 1H FY2012 12/2011 U-PF CNY 6,526 6,656 98.0 (5.1) Andrew Driscoll, CFA639 HK Shougang Fushan 08/27/2012 Estimated 1H FY2012 12/2011 BUY HKD 1,805 2,129 84.8 (12.2) Andrew Driscoll, CFA

1878 HK SouthGobi 08/10/2012 Estimated 2Q FY2011 12/2010 BUY USD 23 23 100.0 (60.0) Andrew Driscoll, CFA1393 HK Hidili Industry 08/27/2012 Estimated 1H FY2012 12/2011 U-PF CNY 791 791 100.0 (7.5) Andrew Driscoll, CFA975 HK Mongolian Mining 08/27/2012 Estimated 1H FY2012 12/2011 BUY USD 398 461 86.4 127.2 Daniel Meng914 HK Conch 08/15/2012 Estimated 1H FY2012 12/2011 BUY CNY 9,991 10,247 97.5 (22.7) Richard Leung

3323 HK CNBM 08/23/2012 Estimated 1H FY2012 12/2011 O-PF CNY 9,207 8,396 109.7 (5.9) Richard Leung1893 HK Sinoma 08/30/2012 Estimated 1H FY2012 12/2011 SELL CNY 1,468 1,603 91.6 (13.9) Richard Leung1313 HK CR Cement 08/13/2012 Estimated 1H FY2012 12/2011 BUY HKD 7,414 5,338 138.9 37.2 Richard Leung2899 HK Zijin 08/10/2012 Estimated 1H FY2012 12/2011 U-PF CNY 7,610 6,999 108.7 20.3 Richard Leung1818 HK Zhaojin 08/14/2012 Estimated 1H FY2012 12/2011 O-PF CNY 2,088 2,504 83.4 17.9 Richard Leung1051 HK G-Resources 10/03/2012 Estimated FY FY2012 06/2011 U-PF USD 1,180 160 737.6 n.a. Richard Leung246 HK Real Gold 06/15/2012 Estimated 1Q FY2011 12/2010 SELL CNY 829 829 100.0 (5.7) Richard Leung

CONGLOMERATE: Danie Schutte/Paul Kalogirou/Jonathan Galligan 13 HK Hutchison Whampoa 08/06/2012 Estimated 1H FY2012 12/2011 BUY HKD 28,241 27,292 103.5 (56.8) Jonathan GalliganJM SP Jardine Matheson 07/27/2012 Confirmed 1H FY2012 12/2011 BUY USD 1,730 1,812 95.5 (55.2) Danie Schutte, CFAJS SP Jardine Strategic 07/27/2012 Confirmed 1H FY2012 12/2011 O-PF USD 1,793 1,884 95.2 (58.9) Danie Schutte, CFA66 HK MTRC 08/13/2012 Estimated 1H FY2012 12/2011 O-PF HKD 8,905 9,169 97.1 (46.1) Danie Schutte, CFA19 HK Swire Pacific 08/10/2012 Confirmed 1H FY2012 12/2011 U-PF HKD 11,369 10,629 107.0 (65.7) Danie Schutte, CFA

392 HK Beijing Ent 08/31/2012 Estimated 1H FY2012 12/2011 U-PF HKD 3,568 4,095 87.1 13.9 Paul Kalogirou267 HK Citic Pacific 08/20/2012 Estimated 1H FY2012 12/2011 SELL HKD 7,196 7,330 98.2 (31.1) Paul Kalogirou656 HK Fosun Intl 08/27/2012 Estimated 1H FY2012 12/2011 SELL CNY 2,407 2,856 84.3 (37.6) Paul Kalogirou363 HK Shanghai Industrial 08/30/2012 Estimated 1H FY2012 12/2011 O-PF HKD 3,182 3,034 104.9 (19.0) Paul Kalogirou659 HK NWS 09/28/2012 Estimated FY FY2012 06/2011 U-PF HKD 3,831 4,222 90.7 11.0 Paul Kalogirou54 HK Hopewell Hldgs 08/27/2012 Estimated FY FY2012 06/2011 O-PF HKD 1,484 1,322 112.2 (74.5) Danie Schutte, CFA

737 HK HHI 09/04/2012 Estimated FY FY2012 06/2011 BUY HKD 987 897 110.1 (2.8) Danie Schutte, CFA142 HK First Pacific 08/29/2012 Estimated 1H FY2012 12/2011 U-PF USD 509 494 103.0 (24.5) Danie Schutte, CFA

1828 HK Dah Chong Hong 08/17/2012 Estimated 1H FY2012 12/2011 O-PF HKD 1,754 1,752 100.1 13.3 Paul Kalogirou881 HK Zhongsheng 08/16/2012 Estimated 1H FY2012 12/2011 O-PF CNY 2,021 2,540 79.6 17.9 Paul Kalogirou

TRANSPORT: Robert Bruce/Paul Wan/Paul Kalogirou/Nathan Snyder 753 HK Air China 08/27/2012 Estimated 1H FY2012 12/2011 BUY CNY 7,416 7,342 101.0 (38.2) Paul Kalogirou293 HK Cathay Pacific 08/08/2012 Confirmed 1H FY2012 12/2011 U-PF HKD 5,157 5,060 101.9 (38.0) Paul Kalogirou

2866 HK CSCL 03/28/2013 Estimated FY FY2012 12/2011 U-PF CNY 358 1,203 29.7 n.a. Paul Wan316 HK OOIL 08/08/2012 Estimated 1H FY2012 12/2011 O-PF USD 115 386 29.7 136.9 Paul Wan

2343 HK Pacific Basin 08/01/2012 Confirmed 1H FY2012 12/2011 N-R USD n.a. n.a. n.a. n.a. Nathan Snyder 1138 HK CS Dev 08/14/2012 Estimated 2Q FY2012 12/2011 N-R CNY n.a. n.a. n.a. n.a. Nathan Snyder 368 HK Sinotrans Shipping 08/27/2012 Estimated 1H FY2012 12/2011 N-R USD n.a. n.a. n.a. n.a. Nathan Snyder

1919 HK China Cosco 08/30/2012 Estimated 1H FY2012 12/2011 N-R CNY n.a. n.a. n.a. n.a. Nathan Snyder 1199 HK 0 08/14/2012 Estimated 2Q FY2012 12/2011 N-R 0 n.a. n.a. n.a. n.a. Nathan Snyder 144 HK 0 08/30/2012 Estimated 1H FY2012 12/2011 N-R 0 n.a. n.a. n.a. n.a. Nathan Snyder

HPHT SP HPH Trust 08/03/2012 Estimated 2Q FY2011 12/2010 BUY HKD 2,235 2,249 99.4 24.7 Robert Bruce

China & Hong Kong - Upcoming results (1)

Net Income (LC'm)


Ticker Stock Name Date Confirmed/ Reporting Fiscal CLSA Ccy CLSA vs Est. AnalystExpected Estimated Period Year end Rec CLSA CONS CONS(%) YoY (%)

STEEL & AUTOS: Scott Laprise347 HK Angang Steel 08/27/2012 Estimated 1H FY2012 12/2011 U-PF CNY 1,187 1,317 90.1 n.a. Scott Laprise323 HK Magang 08/20/2012 Estimated 1H FY2012 12/2011 BUY CNY 891 834 106.9 254.8 Scott Laprise697 HK Shougang Intl 08/27/2012 Estimated 1H FY2012 12/2011 BUY HKD 711 796 89.2 50.8 Scott Laprise489 HK Dongfeng 08/30/2012 Estimated 1H FY2012 12/2011 BUY CNY 12,481 13,082 95.4 0.8 Scott Laprise

1211 HK BYD 08/25/2012 Estimated 1H FY2012 12/2011 SELL CNY 1,430 1,675 85.4 33.5 Scott Laprise2238 HK GAC 08/30/2012 Estimated 1H FY2012 12/2011 BUY CNY 4,895 5,270 92.9 (6.5) Scott Laprise2333 HK Great Wall Motor 08/20/2012 Estimated 1H FY2012 12/2011 BUY CNY 5,507 4,807 114.5 21.8 Scott Laprise

CONSUMER STAPLES: Xiaopo Wei/Dawei Feng322 HK Tingyi 08/14/2012 Estimated 2Q FY2012 12/2011 U-PF USD 592 624 94.9 29.1 Xiaopo Wei, CFA151 HK Want Want 08/23/2012 Estimated 1H FY2012 12/2011 BUY USD 684 649 105.3 29.7 Xiaopo Wei, CFA

1044 HK Hengan 08/30/2012 Estimated 1H FY2012 12/2011 BUY HKD 4,212 4,396 95.8 34.9 Dawei Feng, CFA3331 HK Vinda 08/31/2012 Estimated 1H FY2012 12/2011 BUY HKD 915 893 102.6 75.6 Dawei Feng, CFA1068 HK Yurun Food 08/17/2012 Estimated 1H FY2012 12/2011 U-PF HKD 2,282 2,241 101.8 (6.5) Dawei Feng, CFA6808 HK Sun Art 08/14/2012 Estimated 2Q FY2012 12/2011 SELL CNY 2,671 2,891 92.4 37.0 Xiaopo Wei, CFA291 HK CRE 08/27/2012 Estimated 1H FY2012 12/2011 O-PF HKD 2,652 3,169 83.7 (25.4) Xiaopo Wei, CFA168 HK Tsingtao 08/27/2012 Estimated 1H FY2012 12/2011 U-PF CNY 2,416 2,369 102.0 39.9 Xiaopo Wei, CFA

CONSUMER DISCRETIONARY: Aaron Fischer/Xiaopo Wei/Mariana Kou/Dawei Feng1929 HK Chow Tai Fook 06/26/2012 Confirmed FY FY2012 03/2011 O-PF HKD 7,133 8,066 88.4 78.2 Aaron Fischer, CFA1913 HK Prada 09/24/2012 Estimated 1H FY2013 01/2012 BUY EUR 564 550 102.6 72.2 Aaron Fischer, CFA1910 HK Samsonite 08/31/2012 Estimated 1H FY2012 12/2011 BUY USD 199 199 100.0 94.0 Aaron Fischer, CFA494 HK Li & Fung 08/13/2012 Estimated 1H FY2012 12/2011 O-PF USD 1,119 1,038 107.8 25.8 Aaron Fischer, CFA973 HK L'Occitane 06/18/2012 Confirmed FY FY2012 03/2011 BUY EUR 153 132 115.8 24.6 Aaron Fischer, CFA330 HK Esprit 09/17/2012 Estimated FY FY2012 06/2011 U-PF HKD 1,495 955 156.6 1576.0 Aaron Fischer, CFA999 HK I.T 10/24/2012 Estimated 1H FY2013 02/2012 BUY HKD 550 520 105.7 21.5 Mariana Kou

1212 HK Lifestyle 08/08/2012 Estimated 1H FY2012 12/2011 BUY HKD 2,447 2,320 105.5 6.9 Mariana Kou3308 HK Golden Eagle 08/27/2012 Estimated 1H FY2012 12/2011 BUY CNY 1,692 1,752 96.6 14.3 Xiaopo Wei, CFA3368 HK Parkson Retail Grp 11/14/2012 Estimated 3Q FY2012 12/2011 O-PF CNY 1,507 1,461 103.2 9.4 Xiaopo Wei, CFA1833 HK Intime 08/30/2012 Estimated 1H FY2012 12/2011 U-PF CNY 976 1,166 83.7 23.8 Xiaopo Wei, CFA825 HK NWDS 09/27/2012 Estimated FY FY2012 06/2011 U-PF HKD 665 681 97.6 (31.2) Xiaopo Wei, CFA331 HK PCD Stores 08/27/2012 Estimated 1H FY2012 12/2011 #N/A CNY n.a. n.a. n.a. n.a. 0.0493 HK Gome 08/14/2012 Estimated 2Q FY2012 12/2011 BUY CNY 1,802 1,939 92.9 (28.6) Xiaopo Wei, CFA

2020 HK Anta Sports 08/08/2012 Estimated 1H FY2012 12/2011 O-PF CNY 1,590 1,546 102.8 (15.6) Xiaopo Wei, CFA3818 HK Dongxiang 08/24/2012 Estimated 1H FY2012 12/2011 U-PF CNY 343 401 85.6 159.5 Xiaopo Wei, CFA2331 HK Li Ning 08/24/2012 Estimated 1H FY2012 12/2011 U-PF CNY 557 535 104.2 2.0 Xiaopo Wei, CFA1880 HK Belle Intl 08/27/2012 Estimated 1H FY2012 12/2011 BUY CNY 5,934 5,792 102.5 16.4 Xiaopo Wei, CFA210 HK Daphne 08/20/2012 Estimated 1H FY2012 12/2011 BUY HKD 1,284 1,412 91.0 16.2 Dawei Feng, CFA891 HK Trinity 08/27/2012 Estimated 1H FY2012 12/2011 BUY HKD 711 759 93.8 15.7 Dawei Feng, CFA

1234 HK Lilang 08/22/2012 Estimated 1H FY2012 12/2011 U-PF CNY 740 824 89.8 7.4 Dawei Feng, CFA238 HK Evergreen Intl 08/23/2012 Estimated 1H FY2012 12/2011 U-PF CNY 232 264 87.9 7.0 Xiaopo Wei, CFA

HOTELS & LEISURE: Aaron Fischer/Richard Huang/Mariana Kou (* Announcement date of parent company is shown below)1928 HK Sands China * 07/27/2012 Estimated 2Q FY2012 12/2011 BUY USD 1,936 2,140 90.5 16.6 Aaron Fischer, CFA1128 HK Wynn Macau * 07/18/2012 Estimated 2Q FY2012 12/2011 BUY HKD 6,790 8,464 80.2 12.6 Aaron Fischer, CFA880 HK SJM 08/10/2012 Estimated 1H FY2012 12/2011 BUY HKD 7,013 7,731 90.7 21.9 Aaron Fischer, CFA27 HK Galaxy 08/31/2012 Estimated 1H FY2012 12/2011 BUY HKD 6,372 7,508 84.9 103.1 Aaron Fischer, CFA

MPEL US Melco Crown 08/23/2012 Estimated 2Q FY2012 12/2011 BUY USD 497 466 106.8 46.7 Aaron Fischer, CFA2282 HK MGM China * 08/08/2012 Estimated 2Q FY2012 12/2011 BUY HKD 3,811 4,964 76.8 13.6 Aaron Fischer, CFA242 HK Shun Tak 08/29/2012 Estimated 1H FY2012 12/2011 BUY HKD 1,429 997 143.4 75.2 Mariana Kou

3918 HK Nagacorp 08/08/2012 Estimated 1H FY2012 12/2011 BUY USD 138 138 100.0 20.2 Richard HuangUtilities/Power Equipment: Rajesh Panjwani/Alex Wu

2 HK CLP 08/14/2012 Confirmed 1H FY2012 12/2011 U-PF HKD 11,948 11,781 101.4 20.7 Rajesh Panjwani6 HK Power Assets 07/27/2012 Estimated 1H FY2012 12/2011 U-PF HKD 9,720 9,502 102.3 6.3 Rajesh Panjwani

1038 HK Cheung Kong Infra 07/30/2012 Estimated 1H FY2012 12/2011 U-PF HKD 9,488 9,140 103.8 17.3 Rajesh Panjwani2727 HK Shanghai Electric 08/18/2012 Estimated 1H FY2012 12/2011 U-PF CNY 3,816 3,949 96.6 12.8 Rajesh Panjwani1072 HK Dongfang 08/24/2012 Tentative 1H FY2012 12/2011 U-PF CNY 3,093 3,682 84.0 (9.4) Rajesh Panjwani1133 HK Harbin Electric 08/20/2012 Estimated 1H FY2012 12/2011 U-PF CNY 1,141 1,489 76.6 7.0 Rajesh Panjwani902 HK Huaneng Power 08/09/2012 Estimated 1H FY2012 12/2011 U-PF CNY 5,891 5,437 108.4 402.4 Alex Wu991 HK Datang Power 08/28/2012 Estimated 1H FY2012 12/2011 U-PF CNY 4,158 3,769 110.3 93.7 Alex Wu836 HK CR Power 08/22/2012 Estimated 1H FY2012 12/2011 BUY HKD 8,356 7,638 109.4 54.5 Alex Wu

1071 HK Huadian Power 08/23/2012 Estimated 1H FY2012 12/2011 SELL CNY 1,142 1,416 80.6 1321.6 Alex Wu2380 HK China Power 08/10/2012 Estimated 1H FY2012 12/2011 BUY CNY 1,427 1,242 114.9 155.9 Alex Wu2688 HK ENN Energy 08/27/2012 Estimated 1H FY2012 12/2011 O-PF CNY 1,761 1,799 97.9 20.7 Alex Wu1193 HK CR Gas 08/23/2012 Estimated 1H FY2012 12/2011 BUY HKD 1,963 1,980 99.2 28.9 Alex Wu

Alternative Energy: Charles Yonts916 HK Longyuan Power 08/23/2012 Estimated 1H FY2012 12/2011 BUY CNY 3,777 3,524 107.2 32.3 Charles Yonts

1798 HK Datang Renewable 08/20/2012 Estimated 1H FY2012 12/2011 U-PF CNY 1,098 1,265 86.8 35.6 Charles Yonts958 HK HN Renewables 08/23/2012 Estimated 1H FY2012 12/2011 O-PF CNY 2,024 1,804 112.2 92.6 Charles Yonts257 HK Everbright Intl 08/24/2012 Estimated 1H FY2012 12/2011 BUY HKD 1,170 1,149 101.9 34.5 Charles Yonts

3800 HK GCL-Poly 08/27/2012 Estimated 1H FY2012 12/2011 U-PF CNY 2,825 1,862 151.7 (92.1) Charles YontsTSL US Trina Solar 08/23/2012 Estimated 2Q FY2012 12/2011 SELL USD 41 23 179.6 n.a. Charles YontsSTP US Suntech Power 08/22/2012 Estimated 2Q FY2012 12/2011 SELL USD (211) (138) 152.5 n.a. Charles Yonts

INTERNET & MEDIA: Elinor Leung/Jialong Shi/James LeeBIDU US Baidu 07/25/2012 Estimated 2Q FY2012 12/2011 BUY CNY 13,463 14,411 93.4 48.0 Elinor Leung, CFA700 HK Tencent 08/10/2012 Estimated 2Q FY2012 12/2011 BUY CNY 16,401 16,451 99.7 28.0 Elinor Leung, CFA

SINA US Sina 08/17/2012 Estimated 2Q FY2012 12/2011 O-PF USD 72 n.a. n.a. (67.6) Jialong ShiNTES US NetEase 08/17/2012 Estimated 2Q FY2012 12/2011 BUY CNY 4,624 4,354 106.2 22.1 Jialong ShiCTRP US Ctrip 08/01/2012 Estimated 2Q FY2012 12/2011 U-PF CNY 1,209 1,071 112.9 (13.9) Elinor Leung, CFA1688 HK Alibaba 08/13/2012 Estimated 2Q FY2012 12/2011 BUY CNY 2,161 2,126 101.7 19.2 Elinor Leung, CFAFMCN US Focus Media 08/22/2012 Estimated 2Q FY2012 12/2011 BUY USD 352 404 87.1 69.7 James LeeSOHU US Sohu 08/01/2012 Estimated 2Q FY2012 12/2011 O-PF USD 173 159 108.5 (34.2) Jialong ShiCYOU US Changyou 08/01/2012 Estimated 2Q FY2012 12/2011 O-PF USD 286 281 102.0 (3.5) Jialong Shi

GA US Giant Interactive 08/08/2012 Estimated 2Q FY2012 12/2011 BUY CNY 1,228 1,243 98.8 27.0 Jialong ShiGAME US Shanda Games 06/12/2012 Confirmed 1Q FY2012 12/2011 O-PF CNY 1,853 1,691 109.6 31.4 Jialong ShiPWRD US Perfect World 08/22/2012 Estimated 2Q FY2012 12/2011 U-PF CNY 866 907 95.5 (23.8) Jialong ShiDANG US Dangdang 08/16/2012 Estimated 2Q FY2012 12/2011 SELL CNY (258) (442) 58.4 n.a. Elinor Leung, CFAVISN US VisionChina 08/03/2012 Estimated 2Q FY2012 12/2011 U-PF USD 1 (3) (44.8) n.a. James Lee

AMCN US Airmedia 08/17/2012 Estimated 2Q FY2012 12/2011 O-PF USD 2 12 15.1 n.a. James LeeTECHNOLOGY: Nicolas Baratte/CK Cheng/Chitra Gopal/Bruce Lu

763 HK ZTE 08/30/2012 Estimated 1H FY2012 12/2011 O-PF CNY 4,338 4,213 103.0 64.8 CK Cheng, CFA992 HK Lenovo 08/14/2012 Estimated 1Q FY2013 03/2012 O-PF USD 594 598 99.3 73.0 Chitra Gopal, CFA522 HK ASM Pacific 08/14/2012 Estimated 2Q FY2012 12/2011 BUY HKD 3,342 2,638 126.7 8.0 Chitra Gopal, CFA

2018 HK AAC 08/14/2012 Estimated 2Q FY2012 12/2011 BUY CNY 1,814 1,890 96.0 39.6 Chitra Gopal, CFA981 HK SMIC 08/10/2012 Estimated 2Q FY2012 12/2011 SELL USD (161) (95) 170.0 n.a. Bruce Lu

SMALL/MID CAPS: Paul Quah/Zac Gill303 HK VTech 11/16/2012 Estimated 1H FY2013 03/2012 BUY USD 206 214 96.2 (5.0) Paul Quah

3389 HK Hengdeli 08/23/2012 Estimated 1H FY2012 12/2011 BUY CNY 1,009 1,065 94.8 7.1 Paul Quah887 HK Emperor Watch 08/24/2012 Estimated 1H FY2012 12/2011 BUY HKD 916 853 107.3 8.3 Paul Quah341 HK Café de Coral 06/29/2012 Estimated FY FY2012 03/2011 U-PF HKD 500 530 94.3 3.5 Paul Quah555 HK Rexlot 08/29/2012 Estimated 1H FY2012 12/2011 BUY HKD 1,078 1,109 97.2 9.3 Paul Quah

HOLI US Hollysys 08/15/2012 Estimated 4Q FY2012 06/2011 O-PF USD 59 n.a. n.a. 21.0 Paul Quah398 HK Oriental Watch 06/20/2012 Confirmed FY FY2012 03/2011 BUY HKD 166 244 68.1 18.0 Paul Quah201 HK Magnificent 08/30/2012 Estimated 1H FY2012 12/2011 BUY HKD 354 355 99.5 29.2 Paul Quah838 HK EVA Precision 08/23/2012 Estimated 1H FY2012 12/2011 BUY HKD 332 372 89.4 1.7 Paul Quah

2266 HK Kosmopolito 06/19/2012 Confirmed FY FY2012 03/2011 BUY HKD 220 342 64.4 37.2 Paul Quah826 HK Tiangong 08/27/2012 Estimated 1H FY2012 12/2011 BUY CNY 594 559 106.1 40.1 Paul Quah569 HK China Automation 08/23/2012 Estimated 1H FY2012 12/2011 O-PF CNY 234 299 78.3 9.8 Paul Quah

8161 HK LotSynergy 08/09/2012 Estimated 2Q FY2012 12/2011 U-PF HKD 181 181 99.9 64.9 Paul Quah1259 HK Prince Frog 08/30/2012 Estimated 1H FY2012 12/2011 BUY CNY 285 321 88.8 21.9 Paul Quah868 HK Xinyi Glass 09/03/2012 Estimated 1H FY2012 12/2011 BUY HKD 1,696 1,938 87.5 5.5 Zac Gill

2168 HK Yingde Gases 08/13/2012 Estimated 1H FY2012 12/2011 U-PF CNY 1,050 1,171 89.7 (5.1) Zac Gill

China & Hong Kong - Upcoming results (2)

Net Income (LC'm)

Key to CLSA investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than market return but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL:Total return expected to be less than market return AND to provide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market where the stock is traded. CLSA changed the methodology by which itderives its investment rankings on 1 January 2012. The stocks covered in this report are subject to the revised methodology. We have made no changes to the methodologies through which analysts derive price targets - our views on intrinsic values and appropriate price targets are unchanged by this revised methodology. For further details of our newinvestment ranking methodology, please refer to our website.©2012 CLSA Asia-Pacific Markets (“CLSA”)

The analyst/s who compiled this publication/communication hereby state/s and confirm/s that the contents hereof truly reflect his/her/their views and opinions on the subject matter and that the analyst/s has/have not been placed under any undue influence, intervention or pressure by any person/s in compiling such publication/ communication.The CLSA Group, CLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that CLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report.Regulations or market practice of some jurisdictions/markets prescribe certain disclosures to be made for certain actual, potential or perceived conflicts of interests relating to research report and such details are available at www.clsa.com/member/research_disclosures/. Disclosures therein include the position of the CLSA Group only and do not reflectthose of Credit Agricole Corporate & Investment Bank and/or its affiliates. If investors have any difficulty accessing this website, please contact [email protected] or (852) 2600 8111. If you require disclosure information on previous dates, please contact [email protected]

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Note: In the interests of timeliness, this document has not been edited.


Ticker Stock Name Upside CLSA12-Jun Target (%) total ff 12CL 13CL 12CL 13CL 12CL 13CL 12CL 13CL Rec

FINANCIAL SERVICES: Kevin Chan/Patricia Cheng/Derek Ovington/Chen Huang5 HK HSBC HKD 64.35 72.00 11.9 150,711 150,711 8.3 7.7 9.7 8.0 5.1 5.5 0.9 0.8 O-PF

2888 HK Standard Chartered HKD 162.80 217.00 33.3 50,227 50,227 9.8 8.4 8.1 16.8 4.0 4.4 1.1 1.0 BUY1398 HK ICBC HKD 4.26 4.65 9.2 219,488 47,680 4.9 4.3 14.9 9.7 6.2 7.0 1.0 0.8 SELL939 HK CCB HKD 5.31 5.29 -0.4 171,282 164,627 5.7 4.7 8.0 16.4 5.3 6.4 1.1 0.9 SELL

1288 HK Agricultural Bank HKD 2.93 4.30 46.8 132,066 11,614 4.8 4.0 27.7 14.6 6.3 7.5 1.0 0.8 BUY3988 HK Bank of China HKD 2.80 4.18 49.1 122,560 30,194 4.3 3.7 15.6 10.1 7.5 8.6 0.7 0.6 BUY3328 HK Bocom HKD 4.93 6.80 37.9 41,393 18,549 4.5 4.2 4.7 3.6 2.5 2.9 0.8 0.6 O-PF3968 HK CMB HKD 14.28 13.75 -3.7 37,173 7,201 7.2 6.3 (7.6) 10.3 3.5 4.0 1.3 1.1 SELL998 HK CNCB HKD 3.81 5.70 49.6 27,191 7,312 4.1 3.6 1.6 11.4 6.0 7.0 0.7 0.6 BUY

2388 HK Bank of China (HK) HKD 22.00 27.23 23.8 29,995 29,995 12.3 10.5 (7.1) 16.8 5.4 6.0 1.7 1.6 BUY11 HK Hang Seng Bank HKD 101.50 96.84 -4.6 25,024 25,024 11.8 11.0 (1.4) 7.2 5.1 5.1 2.3 2.1 U-PF23 HK BEA HKD 25.30 33.51 32.5 6,851 6,851 10.1 11.2 17.9 (9.4) 4.5 4.1 1.0 1.0 O-PF

302 HK Wing Hang Bank HKD 76.65 97.94 27.8 2,972 2,972 11.9 10.5 (9.6) 12.6 2.1 2.4 1.3 1.2 BUY1299 HK AIA HKD 25.95 27.50 6.0 40,304 40,304 16.0 13.9 57.7 14.8 1.2 1.2 1.6 1.5 U-PF2628 HK China Life HKD 18.64 20.00 7.3 72,399 17,887 16.3 12.4 38.3 25.7 0.0 0.0 1.9 1.6 U-PF2601 HK CPIC HKD 23.80 26.50 11.3 27,622 7,100 22.0 15.6 (12.2) 34.9 1.9 2.0 1.9 1.6 O-PF2318 HK Ping An HKD 59.25 67.00 13.1 55,839 23,913 15.4 11.4 20.7 29.9 1.0 1.3 2.4 1.9 O-PF2328 HK PICC HKD 8.92 11.90 33.4 14,098 4,373 8.4 7.5 21.0 7.8 0.0 0.0 1.9 1.4 BUY966 HK China Taiping HKD 12.56 15.00 19.4 2,762 2,762 18.0 13.0 141.5 38.3 0.0 0.0 1.6 1.3 U-PF

1336 HK New China Life HKD 31.75 29.00 -8.7 14,495 4,234 26.5 23.6 6.5 7.5 0.0 0.0 2.4 2.0 SELL388 HK HK Exchanges HKD 111.00 98.00 -11.7 15,470 15,470 24.1 22.9 (2.6) 5.4 3.7 3.9 12.4 11.7 SELL

6030 HK Citics HKD 16.06 19.66 22.4 22,962 2,440 21.1 15.0 (51.7) 34.9 1.7 2.3 1.5 1.3 BUY6837 HK Haitong HKD 10.68 11.90 11.4 15,226 2,056 18.7 14.4 18.8 24.5 1.8 2.4 1.3 1.2 O-PF165 HK Everbright Ltd HKD 10.66 12.20 14.4 2,365 2,365 8.4 6.9 14.1 21.4 4.2 5.1 0.6 0.6 O-PF

CHINA PROPERTY: Nicole Wong/Susanna Leung/Ricky Mui688 HK Coli HKD 17.16 19.50 13.6 18,085 18,085 9.5 7.7 (1.8) 23.6 2.1 2.6 1.7 1.5 BUY

200002 CH Vanke HKD 9.95 14.10 41.7 15,695 1,687 6.8 5.8 31.2 12.6 2.2 2.6 1.5 1.2 BUY1109 HK CR Land HKD 15.66 16.00 2.2 11,767 11,767 14.6 12.8 (20.1) 13.6 1.7 2.0 1.3 1.2 O-PF3333 HK Evergrande HKD 4.67 4.30 -7.9 8,969 8,969 6.4 6.8 17.6 (9.6) 6.1 3.7 1.5 1.2 U-PF2007 HK Country Garden HKD 3.36 3.53 5.1 7,529 7,529 6.8 5.4 11.3 20.1 6.0 7.5 1.3 1.0 O-PF410 HK Soho China HKD 5.57 6.20 11.3 3,727 3,727 5.9 4.4 (1.3) 29.4 6.4 7.2 0.9 0.5 U-PF

3383 HK Agile Property HKD 9.90 12.00 21.2 4,404 4,404 6.3 4.7 4.2 27.1 4.9 6.5 1.0 0.9 BUY813 HK Shimao Property HKD 11.82 9.60 -18.8 5,292 5,292 8.9 6.0 (36.0) 41.9 3.9 4.6 1.2 1.1 U-PF

2777 HK Guangzhou R&F HKD 10.90 12.00 10.1 4,529 1,427 6.1 5.9 (7.3) 0.2 6.6 6.9 1.1 0.9 BUY81 HK Cogo HKD 6.96 9.10 30.7 2,048 2,048 7.7 5.7 14.0 34.5 0.8 1.1 2.2 1.6 BUY

917 HK NWC Land HKD 3.11 2.21 -28.9 3,468 3,468 12.5 11.7 (40.6) 6.9 2.3 2.3 0.6 0.6 U-PF1813 HK KWG Property HKD 5.14 5.90 14.8 1,918 1,918 5.5 3.9 1.3 33.7 5.5 7.2 0.7 0.6 BUY845 HK Glorious Prop HKD 1.24 1.90 53.2 1,246 1,246 3.7 2.4 18.4 48.7 2.7 4.2 0.4 0.3 BUY

YLLG SP Yanlord SGD 1.09 1.45 33.6 1,648 1,648 7.2 5.7 (3.7) 21.1 0.8 1.1 0.6 0.6 O-PF960 HK Longfor HKD 12.48 14.10 13.0 8,305 8,305 7.6 5.5 4.3 33.0 2.6 3.6 1.8 1.4 O-PF

2868 HK BCL HKD 2.25 2.22 -1.3 597 296 3.5 3.4 5.6 0.2 11.3 11.8 0.5 0.5 U-PFHK PROPERTY: Nicole Wong/Susanna Leung/Ricky Mui/Danie Schutte

16 HK SHKP HKD 89.40 100.00 11.9 30,156 30,156 12.0 12.4 (60.3) (2.7) 3.7 4.0 0.7 0.7 U-PF1 HK Cheung Kong HKD 90.35 118.00 30.6 26,986 26,986 8.4 7.2 (46.0) 17.3 4.4 4.9 0.6 0.6 BUY

101 HK Hang Lung Prop HKD 25.35 30.50 20.3 14,625 14,625 37.6 19.4 (49.2) 93.8 2.8 2.8 1.0 0.9 BUY4 HK Wharf HKD 42.80 48.60 13.6 16,719 16,719 12.9 11.2 (67.2) 15.5 2.5 2.6 0.6 0.5 U-PF

12 HK Henderson Land HKD 41.25 46.00 11.5 12,601 12,601 16.1 17.0 (66.2) (5.2) 2.5 2.4 0.6 0.5 U-PFHKL SP Hongkong Land USD 5.59 7.00 25.2 13,100 13,100 18.4 14.9 (86.6) 23.9 3.2 3.2 0.6 0.6 O-PF

1972 HK Swire Properties HKD 22.20 23.60 6.3 16,747 16,747 20.2 21.5 (75.0) (6.3) 2.5 2.3 0.7 0.7 U-PF83 HK Sino Land HKD 10.66 14.30 34.1 8,127 8,127 11.3 8.2 (54.1) 38.0 4.2 4.2 0.7 0.7 U-PF

683 HK Kerry Properties HKD 30.50 36.40 19.3 5,658 5,658 6.3 9.7 46.1 (35.5) 2.9 2.9 0.7 0.6 U-PF17 HK New World Dev HKD 8.85 8.90 0.6 7,020 7,020 8.5 8.1 (55.3) 5.8 2.9 2.9 0.4 0.4 SELL14 HK Hysan HKD 30.40 31.00 2.0 4,156 4,156 23.3 18.5 5.4 25.9 2.7 3.4 0.7 0.6 SELL41 HK Great Eagle HKD 19.50 23.00 17.9 1,582 1,582 8.3 7.8 (65.1) 7.0 3.6 3.9 0.4 0.3 U-PF

1200 HK Midland HKD 3.85 3.80 -1.3 355 355 11.0 7.7 88.7 42.7 4.4 6.2 1.6 1.4 SELLTELECOMS: Elinor Leung

941 HK China Mobile HKD 79.40 105.00 32.2 205,686 205,686 9.6 8.8 3.3 4.5 4.5 4.9 1.7 1.5 BUY728 HK China Telecom HKD 3.51 5.50 56.7 36,633 6,281 15.0 9.7 (8.4) 48.6 2.6 3.4 0.8 0.8 BUY762 HK Unicom HKD 10.80 14.50 34.3 32,819 32,819 21.5 13.4 119.6 53.9 1.3 2.1 0.9 0.9 U-PF

OIL & GAS: Simon Powell/Graham Rhodes857 HK PetroChina HKD 10.30 13.41 30.2 261,059 28,024 10.1 8.5 9.9 14.1 4.4 5.3 1.4 1.2 BUY386 HK Sinopec HKD 7.09 10.27 44.9 86,453 15,342 6.3 5.6 7.9 8.2 4.9 5.5 0.9 0.8 BUY883 HK CNOOC HKD 14.52 16.61 14.4 83,597 83,597 7.9 8.1 (8.1) (6.7) 4.4 4.3 1.7 1.4 U-PF

2883 HK COSL HKD 11.06 11.77 6.4 10,046 2,189 9.2 7.8 5.2 12.6 2.2 2.6 1.2 1.0 O-PFGDG LN Green Dragon Gas USD 6.00 16.69 178.2 819 819 24.0 2.4 244.9 889.2 0.0 0.0 1.1 1.0 BUY3337 HK Antonoil HKD 1.16 1.44 24.1 315 315 15.7 8.1 57.2 85.9 3.4 4.4 1.1 1.0 BUY

RESOURCES: Andrew Driscoll/Richard Leung/Daniel Meng1088 HK Shenhua HKD 25.90 33.80 30.5 72,406 11,351 8.8 8.0 0.9 5.6 4.6 5.0 1.6 1.4 BUY1898 HK China Coal HKD 6.74 8.50 26.1 15,606 3,569 7.4 6.4 (3.4) 10.4 3.4 3.9 0.8 0.7 O-PF2600 HK Chalco HKD 3.22 2.80 -13.0 11,622 1,638 (84.2) (179.2) n.a. n.a. 0.0 0.0 0.7 0.6 SELL486 HK Rusal HKD 4.72 5.50 16.5 9,248 9,248 9.1 8.6 (39.0) 5.2 0.0 0.0 0.8 0.7 U-PF

1171 HK Yanzhou Coal HKD 12.44 16.80 35.0 12,972 3,142 6.6 6.5 (19.1) (1.4) 4.5 4.6 1.0 0.9 BUY358 HK Jiangxi Copper HKD 16.78 18.80 12.0 10,992 3,002 7.3 6.7 (5.1) 4.4 5.0 5.5 1.0 0.9 U-PF639 HK Shougang Fushan HKD 2.40 3.50 45.8 1,641 1,641 6.1 7.2 (12.2) (14.1) 7.3 6.3 0.6 0.6 BUY

1878 HK SouthGobi HKD 40.60 70.00 72.4 949 949 41.7 15.1 (60.3) 176.7 0.0 2.0 1.3 1.2 BUY1393 HK Hidili Industry HKD 2.20 2.80 27.3 586 586 5.3 4.3 (7.6) 18.1 3.8 4.6 0.4 0.4 U-PF975 HK Mongolian Mining HKD 5.30 7.20 35.8 2,532 2,532 9.4 6.4 127.2 47.0 0.0 0.0 2.4 1.8 BUY914 HK Conch HKD 22.00 34.00 54.5 13,812 3,687 10.0 8.8 (22.7) 9.4 1.6 1.8 1.8 1.4 BUY

3323 HK CNBM HKD 9.17 12.00 30.9 6,384 3,405 5.1 4.0 (5.9) 22.0 2.8 3.6 1.2 0.9 O-PF1893 HK Sinoma HKD 2.49 2.90 16.5 1,147 374 5.6 4.6 (13.9) 16.8 2.6 3.2 0.6 0.5 SELL1313 HK CR Cement HKD 5.33 7.60 42.6 4,481 4,481 5.6 4.7 37.2 20.5 2.5 3.1 1.4 1.1 BUY2899 HK Zijin HKD 2.73 3.00 9.9 12,210 2,115 6.8 5.9 20.3 10.8 3.7 3.7 1.4 1.1 U-PF1818 HK Zhaojin HKD 10.80 13.40 24.1 4,060 1,218 12.7 11.5 16.9 5.7 2.1 2.3 3.1 2.5 O-PF1051 HK G-Resources HKD 0.43 0.57 33.8 925 925 (9.6) 0.7 n.a. n.a. 0.0 0.0 0.2 0.1 U-PF246 HK Real Gold HKD 8.81 7.00 -20.5 1,032 1,032 7.6 9.2 (5.7) (21.3) 0.0 0.0 1.0 0.9 SELL

CONGLOMERATE: Danie Schutte/Paul Kalogirou/Jonathan Galligan 13 HK Hutchison Whampoa HKD 64.85 94.00 44.9 35,654 35,654 11.4 9.8 (56.8) 16.6 3.6 4.0 0.7 0.7 BUYJM SP Jardine Matheson USD 49.24 62.00 25.9 32,868 32,868 11.5 10.3 (55.2) 12.1 2.7 2.8 1.0 1.0 BUYJS SP Jardine Strategic USD 31.02 35.00 12.8 34,746 34,746 11.9 10.7 (58.9) 10.6 0.8 0.8 0.9 0.8 O-PF66 HK MTRC HKD 24.85 31.50 26.8 18,543 18,543 18.1 16.1 (46.2) 12.2 3.2 3.4 1.1 1.0 O-PF19 HK Swire Pacific HKD 85.35 88.00 3.1 16,418 9,967 11.6 11.3 (65.7) 2.9 4.3 4.4 0.6 0.5 U-PF

392 HK Beijing Ent HKD 43.40 44.00 1.4 6,367 6,367 15.6 13.8 13.9 12.9 1.9 2.2 1.2 1.2 U-PF267 HK Citic Pacific HKD 11.14 11.60 4.1 5,243 5,243 6.4 5.6 (31.1) 13.2 3.9 4.1 0.5 0.5 SELL656 HK Fosun Intl HKD 4.14 4.40 6.3 3,428 3,428 9.8 8.3 (37.6) 13.3 4.6 5.1 0.6 0.6 SELL363 HK Shanghai Industrial HKD 21.60 27.60 27.8 3,008 3,008 7.0 7.3 (19.0) (4.0) 4.8 4.8 0.7 0.7 O-PF659 HK NWS HKD 11.78 11.80 0.2 5,441 5,441 7.8 10.4 8.1 (25.4) 6.4 4.8 1.2 1.1 U-PF54 HK Hopewell Hldgs HKD 20.15 26.00 29.0 2,265 2,265 12.7 12.2 (74.5) 4.2 5.3 5.4 0.6 0.6 O-PF

737 HK HHI HKD 3.70 5.00 35.1 1,413 1,413 11.1 11.1 (2.8) (0.3) 8.9 8.9 1.2 1.2 BUY142 HK First Pacific HKD 7.98 9.20 15.3 3,944 3,944 8.8 7.8 (24.5) 12.1 2.9 3.4 1.2 1.1 U-PF

1828 HK Dah Chong Hong HKD 7.59 9.35 23.2 1,787 1,787 9.2 7.9 13.3 17.0 4.0 4.4 1.6 1.4 O-PF881 HK Zhongsheng HKD 10.70 16.00 49.5 2,633 2,633 9.6 7.6 17.9 21.0 2.1 2.9 1.8 1.5 O-PF

TRANSPORT: Robert Bruce/Paul Wan/Paul Kalogirou/Nathan Snyder 753 HK Air China HKD 4.85 7.02 44.7 10,789 2,854 9.1 6.0 (38.2) 45.7 2.1 3.2 1.0 0.8 BUY293 HK Cathay Pacific HKD 12.28 14.00 14.0 6,230 6,230 12.4 9.4 (38.0) 32.3 3.8 4.7 0.8 0.8 U-PF

2866 HK CSCL HKD 1.84 2.08 12.9 4,276 890 10.8 45.2 n.a. (77.0) 0.0 0.0 0.6 0.6 U-PF316 HK OOIL HKD 39.00 47.48 21.7 3,147 3,147 7.3 27.5 136.9 (73.4) 3.4 0.9 0.7 0.7 O-PF

2343 HK Pacific Basin HKD 3.37 n.a. n.a. 842 842 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. N-R1138 HK CS Dev HKD 4.08 n.a. n.a. 2,482 682 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. N-R368 HK Sinotrans Shipping HKD 1.76 n.a. n.a. 906 906 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. N-R

1919 HK China Cosco HKD 3.68 n.a. n.a. 6,953 1,225 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. N-R1199 HK 0 0 9.86 n.a. n.a. 3,448 #N/A n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. N-R144 HK 0 0 22.45 n.a. n.a. 7,164 #N/A n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. N-R

HPHT SP HPH Trust USD 0.69 0.92 34.3 5,966 5,966 20.7 21.8 24.7 (5.1) 9.4 8.0 0.7 0.7 BUY

12 June, 2012China & Hong Kong - Price and valuation data (1)

PE(x) EPSg(%)MktCap (US$m) Yield(%) PB(x)Price


Ticker Stock Name Upside CLSA12-Jun Target (%) total ff 12CL 13CL 12CL 13CL 12CL 13CL 12CL 13CL Rec

STEEL & AUTOS: Scott Laprise347 HK Angang Steel HKD 4.38 4.72 7.7 4,473 613 (43.0) 20.1 n.a. n.a. 0.0 2.5 0.5 0.5 U-PF323 HK Magang HKD 1.83 2.42 32.1 2,544 409 44.8 11.9 254.8 261.0 0.8 2.9 0.4 0.4 BUY697 HK Shougang Intl HKD 0.36 0.57 57.7 416 416 14.0 4.5 43.7 209.5 1.4 4.4 0.3 0.3 BUY489 HK Dongfeng HKD 13.06 17.33 32.7 14,511 4,810 8.4 6.8 0.8 18.1 0.0 0.0 1.6 1.3 BUY

1211 HK BYD HKD 15.10 7.40 -51.0 7,022 1,544 23.3 18.7 33.5 19.6 0.0 0.0 1.2 1.1 SELL2238 HK GAC HKD 6.62 9.13 38.0 6,938 1,889 8.0 6.3 (6.5) 22.6 1.9 2.4 1.0 0.8 BUY2333 HK Great Wall Motor HKD 16.20 20.68 27.6 7,548 2,158 8.9 6.7 21.8 26.0 0.2 0.2 1.9 1.5 BUY

CONSUMER STAPLES: Xiaopo Wei/Dawei Feng322 HK Tingyi HKD 18.90 20.05 6.1 13,630 13,630 25.3 23.1 29.1 9.3 2.0 2.2 5.6 5.0 U-PF151 HK Want Want HKD 9.24 10.99 18.9 15,762 15,762 29.0 23.1 29.7 25.6 2.1 2.6 10.2 8.7 BUY

1044 HK Hengan HKD 76.85 90.00 17.1 12,180 12,180 26.4 22.4 34.6 17.9 2.3 2.7 6.7 5.9 BUY3331 HK Vinda HKD 12.00 15.70 30.8 1,547 1,547 16.8 13.8 65.7 21.9 1.7 2.0 2.8 2.3 BUY1068 HK Yurun Food HKD 7.80 8.50 9.0 1,833 1,833 8.4 6.2 (6.5) 35.6 3.0 4.0 0.8 0.7 U-PF6808 HK Sun Art HKD 9.54 8.54 -10.5 11,736 11,736 32.6 25.6 12.1 21.8 1.0 1.3 4.3 3.7 SELL291 HK CRE HKD 22.55 27.55 22.2 6,980 6,980 25.8 20.6 11.3 25.1 1.8 2.2 1.4 1.4 O-PF168 HK Tsingtao HKD 50.25 51.24 2.0 8,533 4,245 26.4 21.1 39.9 19.8 0.6 0.8 4.2 3.4 U-PF

CONSUMER DISCRETIONARY: Aaron Fischer/Xiaopo Wei/Mariana Kou/Dawei Feng1929 HK Chow Tai Fook HKD 8.75 10.10 15.4 11,284 11,284 13.9 12.3 59.5 13.2 5.2 1.6 2.7 2.3 O-PF1913 HK Prada HKD 49.45 68.70 38.9 16,317 16,317 27.2 20.8 68.2 30.7 1.4 1.2 6.4 5.2 BUY1910 HK Samsonite HKD 14.14 20.40 44.3 2,566 2,566 15.3 12.9 20.0 18.4 2.6 3.1 2.4 2.2 BUY494 HK Li & Fung HKD 15.02 16.10 7.2 16,175 16,175 18.3 14.0 25.8 30.6 3.8 4.9 3.0 2.7 O-PF973 HK L'Occitane HKD 19.26 27.50 42.8 3,668 3,668 21.0 17.0 24.6 23.8 1.0 1.2 4.1 3.5 BUY330 HK Esprit HKD 13.48 13.90 3.1 2,244 2,244 13.2 11.6 #### 13.6 3.4 5.2 1.0 1.0 U-PF999 HK I.T HKD 3.04 5.50 80.9 481 481 7.8 6.8 17.4 15.5 5.1 5.9 1.6 1.4 BUY

1212 HK Lifestyle HKD 17.04 25.30 48.5 3,666 3,666 14.3 11.8 6.0 21.1 2.8 3.4 2.9 2.5 BUY3308 HK Golden Eagle HKD 16.88 21.24 25.8 4,226 4,226 18.8 14.7 14.3 22.1 1.6 2.1 4.6 3.6 BUY3368 HK Parkson Retail Grp HKD 7.80 9.20 17.9 2,827 2,827 14.0 11.0 9.5 22.7 3.2 4.1 2.8 2.3 O-PF1833 HK Intime HKD 8.00 9.02 12.8 2,061 2,061 16.4 13.3 9.8 17.7 2.4 2.4 1.7 1.5 U-PF825 HK NWDS HKD 4.38 4.78 9.1 952 952 12.6 11.1 (31.2) 13.1 4.0 4.5 1.2 1.1 U-PF331 HK PCD Stores HKD 0.77 n.a. n.a. 419 419 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. #N/A493 HK Gome HKD 1.11 1.41 27.0 2,416 2,416 11.2 7.8 (28.7) 37.1 2.7 3.8 0.9 0.8 BUY

2020 HK Anta Sports HKD 5.81 6.80 17.0 1,869 1,869 7.9 6.9 (15.6) 9.7 7.6 8.7 1.7 1.5 O-PF3818 HK Dongxiang HKD 0.89 1.00 12.4 635 635 14.9 11.0 158.1 29.4 4.7 6.4 0.6 0.5 U-PF2331 HK Li Ning HKD 5.25 5.23 -0.4 715 715 11.1 7.5 1.5 41.2 3.6 5.3 1.1 1.0 U-PF1880 HK Belle Intl HKD 12.76 17.29 35.5 13,878 13,878 17.0 13.6 16.4 19.8 1.8 2.2 3.7 3.0 BUY210 HK Daphne HKD 8.60 10.70 24.4 1,827 1,827 14.3 12.1 14.9 17.4 2.3 2.7 3.3 2.8 BUY891 HK Trinity HKD 5.84 7.90 35.3 1,291 1,291 16.7 13.9 15.7 19.8 4.2 5.0 2.9 2.7 BUY

1234 HK Lilang HKD 5.34 5.80 8.6 827 827 7.5 6.5 7.4 10.6 6.3 7.3 2.0 1.6 U-PF238 HK Evergreen Intl HKD 1.66 1.86 12.0 203 203 6.1 5.1 9.0 14.2 6.6 7.8 0.8 0.7 U-PF

HOTELS & LEISURE: Aaron Fischer/Richard Huang/Mariana Kou 1928 HK Sands China HKD 25.95 34.00 31.0 26,941 26,941 20.7 13.9 16.6 48.4 2.9 4.3 4.5 4.0 BUY1128 HK Wynn Macau HKD 18.78 27.20 44.8 12,563 12,563 14.7 14.3 12.6 2.4 5.4 5.6 18.2 14.5 BUY880 HK SJM HKD 14.06 22.50 60.0 10,051 10,051 12.0 11.1 21.9 8.4 6.7 7.2 4.4 4.0 BUY27 HK Galaxy HKD 19.56 24.00 22.7 10,562 10,562 13.4 12.8 103.1 4.5 0.0 0.0 4.0 3.1 BUY

MPEL US Melco Crown USD 12.01 20.00 66.5 6,634 6,634 14.8 12.7 46.7 16.0 0.0 0.0 2.0 1.7 BUY2282 HK MGM China HKD 12.00 18.80 56.7 5,880 5,880 12.2 12.0 13.6 2.3 6.0 6.9 7.8 7.0 BUY242 HK Shun Tak HKD 2.80 4.00 42.9 1,078 1,078 6.1 5.9 70.7 4.5 4.9 5.1 0.4 0.4 BUY

3918 HK Nagacorp HKD 3.01 3.44 14.3 808 808 7.3 5.9 20.2 24.6 9.6 11.9 2.1 1.9 BUYUtilities/Power Equipment: Rajesh Panjwani/Alex Wu #VALUE!

2 HK CLP HKD 63.45 65.00 2.4 19,688 19,688 13.6 12.7 20.5 7.0 3.9 3.9 1.8 1.7 U-PF6 HK Power Assets HKD 55.75 56.00 0.4 15,344 15,344 12.3 12.2 6.3 0.8 4.5 4.5 1.9 1.8 U-PF

1038 HK Cheung Kong Infra HKD 43.05 43.00 -0.1 13,578 13,578 11.5 11.1 10.8 3.6 3.9 4.1 1.8 1.6 U-PF2727 HK Shanghai Electric HKD 3.19 4.35 36.4 9,216 1,223 8.7 8.1 12.3 3.6 3.4 3.7 1.0 0.9 U-PF1072 HK Dongfang HKD 17.92 20.00 11.6 6,322 786 10.2 8.7 (9.4) 11.7 1.1 1.4 1.7 1.4 U-PF1133 HK Harbin Electric HKD 7.39 8.70 17.7 1,312 644 7.5 6.7 6.9 7.6 2.8 3.1 0.7 0.6 U-PF902 HK Huaneng Power HKD 5.37 4.90 -8.8 12,218 2,462 10.0 9.6 402.4 (0.7) 1.2 3.1 1.1 0.9 U-PF991 HK Datang Power HKD 2.87 2.90 1.0 9,550 1,227 7.8 6.9 87.7 8.9 3.8 4.3 0.7 0.6 U-PF836 HK CR Power HKD 14.40 19.00 31.9 8,823 8,823 9.9 8.2 52.9 21.5 3.5 4.3 1.3 1.2 BUY

1071 HK Huadian Power HKD 1.96 1.50 -23.5 3,345 362 10.4 9.5 #### 4.4 1.0 1.1 0.6 0.5 SELL2380 HK China Power HKD 1.89 2.30 21.7 1,245 1,245 5.9 5.1 155.9 10.4 5.1 5.9 0.5 0.5 BUY2688 HK ENN Energy HKD 29.05 33.00 13.6 3,996 3,996 15.9 13.1 20.7 16.4 2.0 2.4 2.8 2.4 O-PF1193 HK CR Gas HKD 14.30 19.00 32.9 3,806 3,806 17.6 14.5 23.4 21.6 1.2 1.7 3.1 2.6 BUY

Alternative Energy: Charles Yonts #VALUE!916 HK Longyuan Power HKD 5.10 8.09 58.6 4,909 1,783 8.6 7.6 32.3 8.2 1.2 1.3 1.0 0.9 BUY

1798 HK Datang Renewable HKD 1.07 1.46 36.4 1,005 345 6.1 7.0 35.6 (16.9) 0.0 0.0 0.6 0.5 U-PF958 HK HN Renewables HKD 1.33 2.19 64.5 1,452 499 4.4 5.3 69.1 (20.4) 0.0 0.0 0.6 0.5 O-PF257 HK Everbright Intl HKD 3.77 3.99 5.9 1,787 1,787 13.5 11.9 34.5 13.4 0.4 0.4 2.0 1.7 BUY

3800 HK GCL-Poly HKD 1.73 1.74 0.4 3,452 3,452 75.5 7.1 (92.1) 914.4 0.0 0.0 1.2 1.0 U-PFTSL US Trina Solar USD 6.13 5.70 -7.0 499 499 (8.2) 10.5 n.a. n.a. 0.0 0.0 0.4 0.4 SELLSTP US Suntech Power USD 1.62 1.70 4.9 292 292 (0.7) (1.4) n.a. n.a. 0.0 0.0 0.6 0.9 SELL

INTERNET & MEDIA: Elinor Leung/Jialong Shi/James Lee #VALUE!BIDU US Baidu USD 120.80 215.00 78.0 42,192 32,766 26.2 18.4 48.0 36.7 0.0 0.0 10.2 6.4 BUY700 HK Tencent HKD 225.80 280.00 24.0 53,679 53,679 24.7 18.8 28.0 25.5 0.4 0.6 7.8 5.4 BUY

SINA US Sina USD 52.05 70.00 34.5 3,431 3,431 216.3 47.0 (67.6) 360.0 0.0 0.0 2.3 2.2 O-PFNTES US NetEase USD 61.80 73.00 18.1 8,076 8,076 12.4 10.2 21.7 16.5 0.0 0.0 3.4 2.9 BUYCTRP US Ctrip USD 17.06 22.00 29.0 2,453 2,453 16.1 11.8 (13.9) 30.5 0.0 0.0 1.8 1.4 U-PF1688 HK Alibaba HKD 13.44 13.50 0.4 8,676 8,676 26.0 23.5 19.5 6.1 0.0 0.0 5.4 4.1 BUYFMCN US Focus Media USD 19.42 47.00 142.0 2,508 2,508 9.4 7.4 77.2 26.8 0.0 0.0 2.0 1.2 BUYSOHU US Sohu USD 45.10 60.00 33.0 1,713 1,713 15.9 10.0 (34.2) 58.7 0.0 0.0 1.6 1.4 O-PFCYOU US Changyou USD 20.88 28.00 34.1 1,096 216 4.5 3.9 (3.5) 17.0 0.0 0.0 1.2 0.9 O-PF

GA US Giant Interactive USD 4.73 6.60 39.5 1,113 1,113 6.0 5.2 27.0 9.9 0.0 0.0 2.2 1.7 BUYGAME US Shanda Games USD 4.05 4.50 11.1 1,135 306 4.2 3.6 30.6 11.5 0.0 0.0 1.6 1.2 O-PFPWRD US Perfect World USD 9.51 12.00 26.2 451 395 3.7 3.1 (18.9) 15.5 0.0 0.0 0.6 0.5 U-PFDANG US Dangdang USD 5.29 6.00 13.4 423 283 (6.5) (9.5) n.a. n.a. 0.0 0.0 3.3 4.8 SELLVISN US VisionChina USD 0.93 1.10 18.3 95 95 (4.2) 68.7 n.a. n.a. 0.0 0.0 0.4 0.4 U-PF

AMCN US Airmedia USD 2.27 2.70 18.9 150 150 334.1 77.0 n.a. 333.8 0.0 0.0 0.4 0.4 O-PFTECHNOLOGY: Nicolas Baratte/CK Cheng/Chitra Gopal/Bruce Lu #VALUE!

763 HK ZTE HKD 14.66 23.03 57.1 7,502 1,190 11.8 8.8 64.0 27.8 2.9 3.8 1.5 1.3 O-PF992 HK Lenovo HKD 7.14 7.75 8.6 9,518 9,518 20.1 16.0 67.3 25.6 1.9 1.9 4.0 3.5 O-PF522 HK ASM Pacific HKD 93.10 122.00 31.0 4,774 4,774 16.9 11.0 7.8 52.9 2.9 3.8 4.9 3.8 BUY

2018 HK AAC HKD 24.05 27.80 15.6 3,809 3,809 16.0 12.2 39.6 25.3 2.5 3.3 4.0 3.2 BUY981 HK SMIC HKD 0.27 0.34 27.9 1,093 1,093 (5.3) (6.9) n.a. n.a. 0.0 0.0 0.5 0.6 SELL

SMALL/MID CAPS: Paul Quah/Zac Gill #VALUE!303 HK VTech HKD 88.00 90.24 2.5 2,833 2,833 14.8 13.9 (5.2) 6.4 6.7 7.1 5.1 5.1 BUY

3389 HK Hengdeli HKD 2.19 3.00 37.0 1,242 1,242 10.1 8.0 7.0 20.7 2.7 3.3 1.4 1.2 BUY887 HK Emperor Watch HKD 0.81 1.70 109.9 702 702 8.2 6.1 3.0 34.8 3.7 5.0 1.3 1.1 BUY341 HK Café de Coral HKD 19.90 22.00 10.6 1,466 1,466 25.7 23.4 0.0 9.6 2.8 4.1 3.7 3.6 U-PF555 HK Rexlot HKD 0.60 1.00 66.7 658 658 5.9 4.4 9.3 33.0 2.4 4.6 0.9 0.8 BUY

HOLI US Hollysys USD 8.66 11.00 27.0 484 484 9.2 8.3 20.2 10.5 0.0 0.0 1.5 1.3 O-PF398 HK Oriental Watch HKD 2.20 3.40 54.5 162 162 5.2 8.3 (0.9) (37.0) 4.5 3.1 0.7 0.6 BUY201 HK Magnificent HKD 0.30 0.43 43.3 346 346 10.3 7.6 29.2 35.4 1.0 1.3 0.7 0.6 BUY838 HK EVA Precision HKD 0.79 1.32 67.1 179 179 6.9 4.2 (4.9) 65.4 4.0 6.9 0.6 0.6 BUY

2266 HK Kosmopolito HKD 1.35 1.75 29.6 348 348 13.2 12.3 27.4 7.3 3.4 4.1 0.9 0.9 BUY826 HK Tiangong HKD 1.61 2.80 73.9 383 383 4.6 3.9 29.0 12.2 5.1 6.0 0.9 0.7 BUY569 HK China Automation HKD 1.99 2.11 6.0 263 263 9.1 6.6 7.9 32.8 2.2 3.1 0.9 0.8 O-PF

8161 HK LotSynergy HKD 0.09 0.15 61.1 86 86 5.5 4.0 62.4 39.3 0.0 0.0 0.6 0.5 U-PF1259 HK Prince Frog HKD 2.92 4.00 37.0 380 380 9.0 7.8 21.9 11.0 2.2 2.6 2.0 1.6 BUY868 HK Xinyi Glass HKD 4.47 5.70 27.5 2,173 2,173 12.7 10.5 0.9 21.9 3.6 4.6 1.8 1.6 BUY

2168 HK Yingde Gases HKD 7.32 8.00 9.3 1,706 1,706 13.2 9.5 (5.1) 33.2 1.9 2.6 1.9 1.6 U-PF

Price

12 June, 2012

Yield(%) PB(x)EPSg(%)

China & Hong Kong - Price and valuation data (2)

PE(x)MktCap (US$m)

Key to CLSA investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than market return but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL: Total retuexpected to be less than market return AND to provide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market where the stock is traded. CLSA changed the methodology by which it derives its investment rankings1 January 2012. The stocks covered in this report are subject to the revised methodology. We have made no changes to the methodologies through which analysts derive price targets - our views on intrinsic values and appropriate price targets are unchanged by this revised methodology. For further details of our new investment ranking methodology, please refer to owebsite.©2012 CLSA Asia-Pacific Markets (“CLSA”)

The analyst/s who compiled this publication/communication hereby state/s and confirm/s that the contents hereof truly reflect his/her/their views and opinions on the subject matter and that the analyst/s has/have not been placed under any undue influence, intervention or pressure by any person/s in compiling such publication/ communication.The CLSA Group, CLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that CLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report. Regulations or marpractice of some jurisdictions/markets prescribe certain disclosures to be made for certain actual, potential or perceived conflicts of interests relating to research report and such details are available at www.clsa.com/member/research_disclosures/. Disclosures therein include the position of the CLSA Group only and do not reflect those of Credit Agricole CorporatInvestment Bank and/or its affiliates. If investors have any difficulty accessing this website, please contact [email protected] or (852) 2600 8111. If you require disclosure information on previous dates, please contact [email protected]

IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set out at www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place, 88 Queensway, Hong Kong, telephone (852) 28888.

Note: In the interests of timeliness, this document has not been edited


Tickers Stock NameH-share A/B-share Total Free flow H Free flow A/B H-share A/B-share H-share A/B-share A/B-share H to A/B WoW

US$m US$m US$m US$m US$m HKD RMB HKD % Change%1033 HK 600871 CH Yizheng Chemical 3,162 285 221 1.2 2.3 1.58 7.05 8.58 81.6 0.2553 HK 600775 CH Nanjing Panda 440 43 389 0.1 1.7 1.64 6.00 7.30 77.5 (0.4)

1108 HK 600876 CH Luoyang Glass Co 308 48 261 0.1 3.0 1.48 6.64 8.08 81.7 0.042 HK 000585 CH Northeast Elec 227 21 205 0.0 2.8 0.62 2.14 2.60 76.2 1.0

350 HK 000666 CH Jingwei Textile 898 91 431 0.7 26.7 4.14 12.07 14.69 71.8 (0.6)338 HK 600688 CH Shanghai Petrochem 5,252 618 679 2.1 5.9 2.19 6.01 7.31 70.1 (0.1)187 HK 600860 CH Beiren Printing 87 20 -- 0.0 0.5 1.59 #N/A N/A n.a. n.a. n.a.719 HK 000756 CH Shandong Xinhua 290 33 255 0.0 1.3 1.81 5.29 6.44 71.9 0.3

1065 HK 600874 CH TCEP 1,049 71 969 0.2 6.0 1.82 5.68 6.91 73.7 1.0991 HK 601991 CH Datang Intl Power 9,550 1,049 8,323 4.5 5.6 2.87 5.36 6.52 56.0 (1.3)300 HK 600806 CH Kunming Machine Tool 422 36 385 0.1 6.3 2.00 6.29 7.66 73.9 (0.3)

2727 HK 601727 CH Shanghai Electric 9,216 1,149 7,993 9.4 6.3 3.19 5.17 6.29 49.3 (3.1)1071 HK 600027 CH Huadian Power 3,345 340 2,900 0.8 4.6 1.96 3.56 4.33 54.8 (3.8)1053 HK 601005 CH Chongqing Iron & Steel 640 71 568 0.2 0.9 1.03 3.03 3.69 72.1 (2.6)1055 HK 600029 CH China Southern Airlines 6,357 784 4,499 6.5 24.9 3.45 4.64 5.65 38.9 0.0588 HK 601588 CH Beijing North Star 1,402 133 1,269 0.1 2.9 1.46 3.04 3.70 60.5 (1.7)358 HK 600362 CH Jiangxi Copper 10,992 3,002 7,989 31.9 54.4 16.78 24.53 29.85 43.8 (4.5)921 HK 000921 CH Kelon Elec 662 83 181 0.2 2.2 1.48 4.09 4.98 70.3 (0.1)670 HK 600115 CH China Eastern Airlines 6,100 517 1,692 3.8 12.9 2.56 4.05 4.93 48.1 (7.3)874 HK 600332 CH Guangzhou Pharma 2,358 369 1,990 7.0 54.7 13.00 21.45 26.11 50.2 (5.6)

2600 HK 601600 CH Chalco 11,622 1,638 9,984 8.9 24.3 3.22 6.64 8.08 60.2 (1.7)317 HK 600685 CH Guangzhou Shipyard Intl 1,150 146 1,002 0.4 15.8 5.61 14.56 17.72 68.3 (2.4)

2866 HK 601866 CH CSCL 4,276 890 3,286 13.7 9.4 1.84 2.72 3.31 44.4 (1.5)902 HK 600011 CH Huaneng Power 12,218 2,102 9,291 13.5 10.5 5.37 5.92 7.20 25.5 (5.7)386 HK 600028 CH Sinopec 86,453 14,224 71,111 70.3 35.3 7.09 6.48 7.89 10.1 (3.9)525 HK 601333 CH Guangshen Railway 3,199 458 2,608 0.9 11.3 2.48 3.09 3.76 34.1 (2.4)

2883 HK 601808 CH COSL 10,046 2,188 7,724 13.5 28.4 11.06 16.91 20.58 46.3 (3.5)548 HK 600548 CH Shenzhen Expway 1,176 279 889 0.6 1.5 2.98 3.95 4.81 38.0 1.1

1812 HK 000488 CH Shandong Chenming Paper 1,195 113 577 0.8 4.6 3.09 4.54 5.53 44.1 (0.9)107 HK 601107 CH Sichuan Expressway 1,585 329 672 0.5 3.0 2.85 3.70 4.50 36.7 (4.0)753 HK 601111 CH Air China 10,789 1,237 7,811 10.0 14.4 4.85 6.07 7.39 34.3 (3.0)857 HK 601857 CH PetroChina 261,059 27,637 232,459 82.7 24.9 10.30 9.17 11.16 7.7 (7.3)

1919 HK 601919 CH China Cosco 6,953 1,225 1,609 11.6 12.6 3.68 4.78 5.82 36.7 (5.4)1171 HK 600188 CH Yanzhou Coal 12,972 3,142 1,196 30.8 21.7 12.44 21.16 25.75 51.7 (3.5)2899 HK 601899 CH Zijin Mining 12,210 2,115 10,095 16.0 39.5 2.73 4.07 4.95 44.9 (2.4)995 HK 600012 CH Anhui Expressway 1,006 216 790 0.8 2.7 3.40 4.32 5.26 35.3 (1.0)

1618 HK 601618 CH MCC 7,143 618 1,457 0.9 10.2 1.67 2.56 3.12 46.4 (0.3)998 HK 601998 CH China Citic Bank 27,191 3,912 19,746 21.1 12.6 3.81 3.97 4.83 21.1 (3.3)

2338 HK 000338 CH Weichai Power 7,942 1,656 3,444 12.2 33.4 31.75 31.75 38.64 17.8 (1.1)1138 HK 600026 CH China Shipping Dev 2,482 682 1,800 4.9 4.0 4.08 5.44 6.62 38.4 (6.9)177 HK 600377 CH Jiangsu Expressway 4,695 1,024 3,480 2.9 1.5 7.41 5.89 7.17 (3.4) (4.9)763 HK 000063 CH ZTE 7,502 1,190 6,279 18.6 45.8 14.66 14.31 17.42 15.8 (4.0)

1072 HK 600875 CH Dongfang Electric 6,322 785 5,137 7.1 31.5 17.92 21.20 25.80 30.5 (4.5)168 HK 600600 CH Tsingtao Brewery 8,533 1,849 4,288 7.9 12.8 50.25 39.26 47.78 (5.2) (2.1)

1898 HK 601898 CH China Coal Energy 15,606 3,303 11,846 24.7 17.1 6.74 8.38 10.20 33.9 (4.2)3988 HK 601988 CH Bank of China 122,560 26,051 92,366 160.2 11.2 2.80 3.01 3.66 23.6 4.92601 HK 601601 CH China Pacific 27,622 5,443 20,267 25.0 58.6 23.80 20.80 25.31 6.0 (6.7)1088 HK 601088 CH Shenhua Energy 72,406 11,316 60,389 61.8 59.9 25.90 23.59 28.71 9.8 (6.5)323 HK 600808 CH Magang 2,544 409 2,135 4.5 5.3 1.83 2.28 2.77 34.1 (6.2)

1766 HK 601766 CH China South Loco 10,269 1,354 7,094 10.8 26.7 5.70 4.75 5.78 1.4 (3.2)2208 HK 002202 CH Goldwind Sci & Tech 2,567 175 2,228 0.8 18.0 2.96 6.90 8.40 64.8 (0.3)568 HK 002490 CH Shandong Molong 785 76 187 0.3 15.2 2.58 16.45 20.02 87.1 0.8

2607 HK 601607 CH Shanghai Pharma 3,951 670 1,705 4.6 36.1 8.99 10.15 12.35 27.2 (1.9)2880 HK 601880 CH Dalian Port 1,830 209 383 0.8 12.6 1.72 3.02 3.68 53.2 (5.8)2899 HK 601899 CH Zijin Mining 12,210 2,115 10,095 16.0 39.5 2.73 4.07 4.95 44.9 (2.4)2009 HK 601992 CH BBMG 4,711 841 1,556 10.7 25.1 5.86 7.83 9.53 38.5 (1.8)1988 HK 600016 CH China Minsheng Bank 26,860 4,883 21,376 41.5 109.7 7.36 6.03 7.34 (0.3) (7.2)390 HK 601390 CH China Railway Group 8,651 1,677 6,784 9.2 14.9 3.09 2.60 3.16 2.3 (11.8)

2628 HK 601628 CH China Life 72,399 17,887 54,512 92.7 36.0 18.64 16.68 20.30 8.2 (8.3)914 HK 600585 CH Conch 13,812 3,356 -- 45.9 102.5 22.00 16.13 19.63 (12.1) 0.1

1186 HK 601186 CH China Railway Const 8,853 1,519 7,011 12.4 17.8 6.24 4.46 5.43 (15.0) (9.6)1288 HK 601288 CH Agricultural Bank 132,066 11,614 10,474 64.4 32.1 2.93 2.61 3.18 7.8 5.33328 HK 601328 CH Bocom 41,393 2,674 22,844 20.1 35.9 4.93 4.45 5.42 9.0 (0.9)1398 HK 601398 CH ICBC 219,488 38,495 -- 225.6 30.3 4.26 4.17 5.08 16.1 7.8939 HK 601939 CH CCB 171,282 47,355 -- 221.4 27.8 5.31 4.42 5.38 1.3 0.2

2318 HK 601318 CH Ping An 55,839 12,840 31,926 85.5 149.7 59.25 42.50 51.72 (14.6) (5.6)347 HK 000898 CH Angang Steel 4,473 577 3,860 6.3 7.0 4.38 4.00 4.87 10.0 (6.0)

1157 HK 000157 CH Zoomlion H 12,599 1,863 10,733 27.8 85.8 10.10 10.90 13.27 23.9 6.33968 HK 600036 CH CMB 37,173 7,201 29,972 33.7 97.4 14.28 10.81 13.16 (8.5) (6.6)6030 HK 600030 CH Citic Securities 22,962 1,228 20,471 15.3 190.5 16.06 13.29 16.17 0.7 (8.9)

35.6 (2.6)Average H discount to A

12 June, 2012China & Hong Kong - - Price and valuation data (3)

DiscountMarket Cap (US$m) Avg 3M daily Turnover Share price

Key to CLSA investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than market return but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL:Total return expected to be less than market return AND to provide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market where the stock is traded. CLSA changed the methodology by which itderives its investment rankings on 1 January 2012. The stocks covered in this report are subject to the revised methodology. We have made no changes to the methodologies through which analysts derive price targets - our views on intrinsic values and appropriate price targets are unchanged by this revised methodology. For further details of our newinvestment ranking methodology, please refer to our website.

©2012 CLSA Asia-Pacific Markets (“CLSA”)The analyst/s who compiled this publication/communication hereby state/s and confirm/s that the contents hereof truly reflect his/her/their views and opinions on the subject matter and that the analyst/s has/have not been placed under any undue influence, intervention or pressure by any person/s in compiling such publication/ communication.The CLSA Group, CLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companies covered in their research reports. As a result, investors should be aware that CLSA and/or such individuals may have one or more conflicts of interests that could affect the objectivity of this report.Regulations or market practice of some jurisdictions/markets prescribe certain disclosures to be made for certain actual, potential or perceived conflicts of interests relating to research report and such details are available at www.clsa.com/member/research_disclosures/. Disclosures therein include the position of the CLSA Group only and do not reflectthose of Credit Agricole Corporate & Investment Bank and/or its affiliates. If investors have any difficulty accessing this website, please contact [email protected] or (852) 2600 8111. If you require disclosure information on previous dates, please contact [email protected]

IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set out at www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place, 88 Queensway, Hong Kong,telephone (852) 2600 8888.

Note: In the interests of timeliness, this document has not been edited.


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Transcript of China/HK - Morning Notes 13 June 2012§‹官效應.pdf · Shanda Games (SDG) reported in-line 1Q...