BOCOM Int'l Research

Morning Express 2 May 2019

Focus of the Day

China Railway Construction 1186 HK Global Stock Indices Earnings outlook intact for 2019, reiterate Buy Rating: Buy Close 1D% YTD% CP: HK$ 9.26 TP: HK$ 12.20 Upside: +31.7% HSI 29,699 0.00 12.52 HSCEI 11,542 0.00 14.00 Fay Zhou [email protected] SH A 3,224 0.00 23.46 Net profit of Railway Construction increased 13.6% YoY in 1Q19 to SH B 312 0.00 15.02 SZ A 1,712 0.00 29.11 RMB3,885.6m. Solid contract backlog growth buttressed robust revenue growth SZ B 1,011 0.00 20.70 of 19.3% YoY in 1Q19, surpassing its peers. DJIA 26,430 -0.61 13.30 S&P 500 2,924 -0.75 16.63 Although new contract value growth remained slow in 1Q19, we expect Nasdaq 8,050 -0.57 21.32 continuous improvement in 2Q19, mainly driven by contribution from urban FTSE 7,385 -0.44 9.77 transit, railway, and property development segments. CAC 5,586 0.00 18.09 DAX 12,344 0.00 16.91 Looking ahead, we expect revenue to maintain high single-digit growth in 2019, Source: FactSet in light of solid contract backlog growth of 10.3% YoY as of 1Q19. We maintain Key Commodity/Forex Indicators our earnings estimates for FY19-21E. We reiterate Buy call and TP of HK$12.20. Close 3M% YTD% Brent 71.99 14.69 33.74 Gold 1,282.80 -2.59 0.35 Silver 14.99 -6.40 -3.10 China Eastern Airlines 670 HK Copper 6,442.00 5.65 8.00 Strong domestic demand lifted 1Q19 results JPY 111.18 -1.62 -1.31 Luya You [email protected] GBP 1.31 -0.08 2.72 EUR 1.12 -1.98 -1.67 China Eastern Airlines (CEA) reported 1Q19 net profit of RMB2,006m, up 1.2% bps change 3M 6M YoY, while revenue gained 12.3% YoY. Consolidated RPK rose 12.4% YoY HIBOR 2.08 21.11 -0.79 (15.0%/8.0% for domestic/international), with RFTK up 2.3% YoY, the highest US 10yr yield 2.51 -6.66 -20.11 among three major PRC airlines. Source: FactSet

We expect the highest traffic growth for CEA in Korea/Japan markets in FY19, HSI Technical while traffic in SE Asia, North America, and Europe may see stable or even HSI 29,699.11 decelerating growth. While short-haul destinations (Korea, Japan) should still see 50D MA 29,514.20 200D MA 27,400.36 high demand, we expect international passenger yield to expand 1-2% in FY19 14D RSI 52.67 due to slower long-haul demand. Short sell (HK$ m) 10,313 Source: FactSet We maintain Neutral and TP of HK$5.50, equivalent to 1.0x FY19E P/B. CEA’s lackluster international expansion could mean further market share erosion Hao Hong, CFA given peers’ aggressive global expansion plans. Despite strong domestic demand Head of Research in 1Q19, CEA may struggle to add routes given tightening capacity and increasing [email protected] slot restrictions at major domestic airports.

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Orient Overseas Int'l 316 HK Flat start to FY19, Long Beach sale to boost Rating: Neutral earnings CP: HK$ 53.00 TP: HK$ 55.94↑ Upside: +5.5% Maggie Wang [email protected] In 1Q19, total shipping volume of OOIL inched up 1.6% YoY, which reflected the unfavorable demand for container trade at year beginning, in our view. Average freight rate rose 4.2% YoY on the back of a 5.9% YoY increase in total revenue. Its Transpacific revenue (~38% of total) grew only 5.6% YoY in 1Q19, vs. double-digit growth in 1Q18.

OOIL has agreed to sell its wholly-owned Long Beach Container Terminal (LBCT) to a subsidiary of Macquarie Asset Management. Total amount of US$1.78bn fully paid by cash will bring ~US$1.29bn pre-tax gain for OOIL, according to its announcement. We expect this to result in a FY19 net profit surge of 704.7% YoY to US$870.4m.

Given the limited liquidity for OOIL and the unfavorable outlook for container shipping sector, we maintain our Neutral call for now. We lift our TP from HK$48.50 to HK$55.94, equivalent to 0.8x FY19E P/B.

China Education Group 839 HK ST expenses dragged earnings but LT M&A funds Rating: Buy ample; maintain Buy CP: HK$ 12.36 TP: HK$ 14.39↓ Upside: +16.4% Scarlett Shi [email protected] China Education Group’s revenue continued to surge in 1HFY19, up 70.6% YoY to ~RMB930m, while gross profit/profit after tax grew 66.7%/33.8% YoY to RMB540m/344m. Both revenue and profit missed our estimates.

Student number increased rapidly to 147,414 as of end-Feb 2019. We estimate expense ratio to drop in 2HFY19 and gross margin to gradually pick up starting FY21E when the company no longer pays administration fees for two colleges upon their independence from public universities.

We expect Quancheng College of Jinan University to contribute revenue upon consolidation from Jun 2019. The company maintains its plan to acquire 2-3 schools every year.

We cut FY19-21E EPS by 9-15%, trim TP from HK$15.54 to HK$14.39 but maintain Buy.

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Fosun Pharmaceutical 2196 HK 1Q19 remained subdued, but pipeline on track Li Zhao, PhD [email protected] ’s 1Q19 revenue of RMB6.73bn (+18% YoY) and attributable net profit of RMB712m (+0.92% YoY) were below our expectations, mainly on surging R&D expenses, higher selling expenses and higher cost due to YoY growth of interest rate.

As the company may launch three biosimilars in 2019/20 and has multiple candidates in clinical trials, we expect its R&D and selling expenses to remain high in 2019.

The company has a stronger mAb pipeline than peers and thus enjoys first-mover advantages in the biosimilar market. Blockbuster products to be launched in 2019/20 will also alleviate the pressure from rising expenses. Maintain Buy and TP of HK$32.00 on our optimistic outlook.

Healthcare Sector Weekly As of 30 April 2019 Rating: Outperform Li Zhao, PhD [email protected] Company news: Luye Pharma (2186 HK) was granted the exclusive right to develop and commercialize Zepsyre in China; its main product Lipusu was included in the Chinese Society of Clinical Oncology (CSCO) Guideline as a first- line treatment for primary lung cancer.

Fosun Pharma’s (2196 HK) Trastuzumab for injection was accepted for drug registration by NMPA, and Adalimumab injection was granted priority review.

CSPC’s (1093 HK) SYHA136 and paclitaxel cationic liposome for injection received clinical trial approval from NMPA.

Industry news: The National Health Commission announced on 25 April that since 2018, 17 new anticancer drugs have entered the NRDL with 56.7% average price cut; and a total of 1,714 anti-cancer drugs have seen price cut by 10% on average through the provincial special procurement of anticancer drugs.

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Economic data releases for this week – US Economic data releases for this week – China Date Event Survey Prior Date Event Survey Prior 1 May MBA mortgage applications (%) -- -7.30 30 Apr PMI 50.6 50.5 1 May ISM manufacturing 55 55.3 2 May Initial jobless claims (k) -- 230 2 May Durable goods order (%) -- 2.70 2 May Factory orders (%) 1.00 -0.50 3 May Change in Non-farm payrolls(k) 181 196 3 May Change in Private payrolls(k) 180 182 3 May Unemployment rate (%) 3.80 3.80 3 May ISM non-manufacturing 57.2 56.1 Source: Bloomberg Source: Bloomberg

BOCOM Research latest reports Date Report Analyst 30 Apr Fosun Pharmaceutical (2196 HK) - 1Q19 remained subdued, but pipeline on track Li Zhao, PhD, Kelvin Chen, PhD, Kent Lin, Mengmeng Xi 30 Apr China Eastern Airlines (670 HK) - Strong domestic demand lifted 1Q19 results Luya You, Maggie Wang 30 Apr China Communications Const (1800 HK) - Upgrade to Buy on new contract recovery and Fay Zhou undemanding valuation 30 Apr Datang Int'l Power (991 HK) - No sign of improvement in profitability; maintain Neutral & TP Spencer Luo, Wallace Cheng 30 Apr Great Wall Motor (2333 HK) - 1Q19 net profit slumped on margin and R&D expenses Angus Chan 30 Apr Sohu.com Inc (SOHU US) - 1Q19 in line; lift TP on US$337m cash dividend from Changyou Brandy Sun, Connie Gu, CPA, Gigi Zhou 30 Apr of China (3988 HK) - 1Q19 missed slightly on provisions, but loan reserves remain Jaclyn Wang, Hannah Han moderate 30 Apr COSCO Shipping Holdings (1919 HK) - Improved 1Q19 results, recovery on track Maggie Wang, Fay Zhou 30 Apr Industrial & Comm (1398 HK) - 1Q19 in line, good PPOP offset by loan Jaclyn Wang, Hannah Han provision 30 Apr (3968 HK) - NIM expanded QoQ and YoY; stronger reserves and Jaclyn Wang, Hannah Han capitalization 30 Apr (939 HK) - 1Q19 in line; prudent provision offset fee growth, NIM up Jaclyn Wang, Hannah Han QoQ 30 Apr China Railway Group (390 HK) - Robust earnings growth in 1Q19, full-year outlook cautiously Fay Zhou positive 30 Apr Huaneng Renewables (958 HK) - 1Q19 earnings slightly beat; maintain Buy Louis Sun, Bob Wen 30 Apr (753 HK) - Pace to pick up after slow start in 1Q19; maintain Buy Luya You, Maggie Wang 30 Apr Ping An (2318 HK) - NBM jumped; lift TP Li Wan, CFA, FRM 30 Apr Transportation & Infrastructure Sector Weekly - As of 26 April 2019 Fay Zhou, Luya You, Maggie Wang, Vicky Zhang 30 Apr China Education Group (839 HK) - ST expenses dragged earnings but LT M&A funds ample; Scarlett Shi, Mengdi Lin maintain Buy 29 Apr HEC Pharm (1558 HK) - 1Q19 growth robust, but selling expense hike to squeeze margin Li Zhao, PhD, Kelvin Chen, PhD, Kent Lin, Mengmeng Xi 29 Apr Agricultural Bank of China (1288 HK) - 1Q19 in line; prudent provisions offset strong fee Jaclyn Wang, Hannah Han income Source: BOCOM Int'l

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HSI constituents Company Stock Current Mkt 5D YTD ------52-week------P/E------Yield P/B name code price cap chg chg High Low 2018 2019E 2020E 2019E 2019E (HK$) (HK$ m) (%) (%) (HK$) (HK$) (x) (x) (x) (%) (x) CKH 1 HK 82.40 317,754 0.12 9.57 93.20 73.35 8.15 7.66 7.06 4.16 0.65 CLP 2 HK 88.95 224,728 0.91 0.51 96.95 80.05 16.60 18.44 17.86 3.50 1.88 HK & 3 HK 18.72 288,034 0.54 15.56 19.26 14.64 30.94 31.46 29.90 2.06 4.25 HSBC 5 HK 67.70 1,369,990 1.20 4.48 78.70 60.50 13.69 12.21 11.66 5.91 1.02 POWER ASSETS 6 HK 54.70 116,744 -0.09 0.37 59.35 51.65 15.28 15.13 14.80 5.12 1.37 HANG SENG 11 HK 206.00 393,839 0.88 17.18 216.60 167.80 16.51 15.88 15.15 4.00 2.33 HLD 12 HK 48.30 212,581 -1.83 23.85 50.85 36.20 10.76 14.04 14.04 3.85 0.67 SHKP 16 HK 135.40 392,292 0.15 21.33 141.60 100.90 11.60 10.62 9.75 3.95 0.68 NWD 17 HK 12.98 132,675 -0.92 25.29 13.88 9.76 14.23 12.52 11.73 4.22 0.53 SWIRE PACIFIC 19 HK 99.30 89,887 -0.65 20.07 102.30 75.50 19.91 15.90 14.06 3.52 0.54 GEG 27 HK 58.65 254,050 0.95 17.77 70.95 40.75 18.75 18.29 17.17 1.65 3.56 MTRC 66 HK 46.70 286,797 0.65 13.35 49.00 37.55 25.11 22.78 21.21 2.78 1.54 SINO 83 HK 13.80 94,074 -1.00 2.83 15.48 12.00 8.02 18.19 17.13 3.99 0.62 HLP 101 HK 18.44 82,938 0.33 23.59 19.92 14.04 20.26 19.40 18.08 4.07 0.60 WANT WANT 151 HK 6.22 77,435 0.48 13.50 8.11 5.24 19.70 17.95 N/A 3.09 3.68 175 HK 15.74 142,901 -1.99 14.06 24.40 10.22 9.87 9.45 8.24 2.44 2.20 CITIC LTD 267 HK 11.42 332,211 -1.04 -7.00 13.08 10.40 6.60 6.33 5.91 3.81 0.55 WH GROUP 288 HK 9.30 136,577 1.53 54.23 9.60 5.28 18.44 14.82 12.53 2.99 2.04 386 HK 6.03 153,846 0.33 7.87 8.22 5.41 10.05 9.60 9.25 7.82 0.85 HKEX 388 HK 272.00 342,206 0.59 20.04 285.40 196.70 36.27 32.35 28.33 2.78 8.07 COLI 688 HK 29.35 321,564 2.26 9.11 30.95 22.55 7.16 7.00 6.01 3.76 1.01 700 HK 388.00 3,693,927 1.36 23.57 429.20 252.20 40.49 36.18 28.25 0.29 7.57 UNICOM 762 HK 9.31 284,868 -1.90 11.36 11.40 8.07 24.23 18.17 12.96 2.20 0.76 LINK 823 HK 91.50 193,003 0.16 15.38 93.70 66.50 36.63 34.14 30.98 2.98 1.06 CR POWER 836 HK 10.98 52,819 -3.00 -27.09 16.20 10.98 7.55 7.03 5.76 5.46 0.70 PETROCHINA 857 HK 4.98 105,073 -1.97 2.05 6.59 4.63 14.75 13.36 12.58 4.15 0.63 CNOOC 883 HK 14.18 633,101 -3.27 17.19 15.64 11.32 10.32 9.88 9.30 4.97 1.22 CCB 939 HK 6.93 1,666,092 0.29 7.28 8.35 6.07 5.94 5.57 5.22 5.38 0.71 941 HK 74.75 1,530,542 0.81 -0.80 87.25 67.95 11.16 11.11 10.79 4.42 1.18 CK INFRA 1038 HK 63.70 168,848 1.35 7.42 65.85 56.65 15.39 14.38 14.05 4.01 1.42 HENGAN 1044 HK 69.15 82,266 -0.65 21.32 79.25 52.40 18.85 16.45 15.32 4.17 3.91 SHENHUA 1088 HK 17.34 58,931 -1.25 1.05 22.00 16.16 6.71 6.74 6.94 5.71 0.83 CSPC 1093 HK 15.12 94,293 2.16 33.81 26.05 10.06 25.82 20.71 16.81 1.52 4.63 CR LAND 1109 HK 34.15 236,692 1.49 13.46 36.00 24.20 10.55 8.32 7.08 4.17 1.31 CKA 1113 HK 63.00 232,684 -2.10 9.95 72.20 50.90 9.65 8.23 9.05 3.33 0.66 SBP 1177 HK 7.54 94,916 0.40 46.12 13.60 4.63 28.18 25.90 22.33 0.83 2.58 AIA 1299 HK 79.95 966,162 0.13 23.00 80.90 58.25 46.32 19.70 17.28 1.67 2.82 ICBC 1398 HK 5.89 511,217 0.51 5.37 6.99 5.16 6.17 5.88 5.56 5.16 0.73 SANDS 1928 HK 43.10 348,337 2.50 25.66 48.30 30.30 23.69 20.35 18.33 4.65 9.83 WHARF REIC 1997 HK 60.10 182,477 -0.41 28.28 64.00 45.80 18.16 17.64 16.59 3.67 0.82 2007 HK 12.64 273,785 1.94 32.63 16.80 7.89 7.00 5.52 4.77 5.53 1.55 AAC TECH 2018 HK 50.70 61,474 -3.15 11.55 131.90 40.70 14.00 17.17 14.55 2.60 2.57 SHENZHOU 2313 HK 105.30 158,289 1.35 18.65 109.30 82.85 29.94 25.15 21.15 2.01 5.38 PING AN 2318 HK 94.45 703,424 2.50 36.59 95.20 66.55 13.79 11.14 9.77 2.67 2.27 MENGNIU 2319 HK 29.00 113,934 2.11 18.85 30.20 21.45 32.01 25.16 21.10 0.92 3.44 2382 HK 95.65 104,914 -0.93 37.43 173.00 61.40 36.04 24.85 19.15 1.03 7.30 BOCHK 2388 HK 35.10 371,105 0.14 20.62 41.15 27.95 11.60 11.02 10.28 4.42 1.34 CHINA LIFE 2628 HK 22.20 165,194 2.30 33.41 23.05 15.50 48.88 14.57 13.71 2.57 1.51 BOCOM 3328 HK 6.61 231,428 -0.15 8.18 6.90 5.42 5.91 5.62 5.30 5.46 0.60 BOC 3988 HK 3.74 312,747 0.54 10.65 4.30 3.23 5.44 5.18 4.94 5.92 0.58

HANG SENG INDEX 29,699.11 17,403,032 0.51 14.91 31,541.08 24,585.53 20.80 17.46 15.11 3.34 2.76 Source: FactSet

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HSCEI constituents Company Stock Closing Mkt 5D YTD ------52-week------P/E------Yield P/B name code price cap chg chg High Low 2018 2019E 2020E 2019E 2019E (HK$) (HK$ m) (%) (%) (HK$) (HK$) (x) (x) (x) (%) (x) CITIC LTD 267 HK 11.42 332,211 -1.04 -7.00 13.08 10.40 6.60 6.33 5.91 3.81 0.55 GDI 270 HK 14.70 96,106 1.38 -2.91 15.60 12.20 19.16 18.02 16.44 4.01 2.27 CGH 384 HK 25.25 131,769 0.80 -9.50 36.60 20.20 20.53 16.34 13.79 1.78 3.65 SINOPEC 386 HK 6.03 153,846 0.33 7.87 8.22 5.41 10.05 9.60 9.25 7.82 0.85 CRG 390 HK 6.18 26,002 0.32 -13.32 7.96 5.74 7.39 6.24 5.59 2.67 0.61 DONGFENG 489 HK 7.61 21,732 -1.42 7.18 9.30 6.75 4.34 4.33 4.28 4.98 0.43 TENCENT 700 HK 388.00 3,693,927 1.36 23.57 429.20 252.20 40.49 36.18 28.25 0.29 7.57 728 HK 4.06 56,342 -0.25 1.50 4.47 3.50 13.41 12.55 11.62 3.21 0.79 AIR CHINA 753 HK 9.35 42,661 1.08 37.10 10.52 5.90 15.00 10.40 8.75 2.08 1.13 788 HK 2.12 98,927 -1.40 43.24 2.28 1.03 101.08 58.62 36.24 1.10 1.74 PETROCHINA 857 HK 4.98 105,073 -1.97 2.05 6.59 4.63 14.75 13.36 12.58 4.15 0.63 CNOOC 883 HK 14.18 633,101 -3.27 17.19 15.64 11.32 10.32 9.88 9.30 4.97 1.22 HUANENG 902 HK 5.02 23,596 1.83 0.80 6.10 4.07 143.69 13.47 10.03 5.20 0.77 CONCH 914 HK 47.85 62,186 1.59 25.92 52.10 35.70 7.30 7.22 7.07 4.19 1.63 CCB 939 HK 6.93 1,666,092 0.29 7.28 8.35 6.07 5.94 5.57 5.22 5.38 0.71 CHINA MOBILE 941 HK 74.75 1,530,542 0.81 -0.80 87.25 67.95 11.16 11.11 10.79 4.42 1.18 CNCB 998 HK 5.03 74,857 1.00 5.67 5.84 4.61 4.91 4.64 4.36 5.67 0.48 HENGAN 1044 HK 69.15 82,266 -0.65 21.32 79.25 52.40 18.85 16.45 15.32 4.17 3.91 SHENHUA 1088 HK 17.34 58,931 -1.25 1.05 22.00 16.16 6.71 6.74 6.94 5.71 0.83 CSPC 1093 HK 15.12 94,293 2.16 33.81 26.05 10.06 25.82 20.71 16.81 1.52 4.63 SINOPHARM 1099 HK 30.80 36,739 -1.28 -6.38 39.50 30.10 13.49 11.97 10.66 2.50 1.65 CR LAND 1109 HK 34.15 236,692 1.49 13.46 36.00 24.20 10.55 8.32 7.08 4.17 1.31 BYD 1211 HK 53.40 48,861 0.19 6.91 59.70 40.90 49.31 34.92 28.66 0.45 2.14 ABC 1288 HK 3.62 111,275 0.56 5.54 4.56 3.36 5.27 5.17 4.81 5.82 0.63 NCI 1336 HK 43.45 44,932 -0.34 39.71 46.25 27.60 14.69 11.81 10.30 2.35 1.55 PICC 1339 HK 3.21 28,011 -0.93 1.90 4.09 3.01 9.19 7.32 6.65 2.18 0.72 CINDA 1359 HK 2.09 28,356 -0.48 10.00 2.89 1.83 6.19 5.13 4.49 6.01 0.47 ICBC 1398 HK 5.89 511,217 0.51 5.37 6.99 5.16 6.17 5.88 5.56 5.16 0.73 PSBC 1658 HK 4.77 94,714 3.47 15.50 5.59 4.13 6.61 6.02 5.46 4.17 0.70 CRRC 1766 HK 6.85 29,942 -2.14 -10.34 8.39 5.92 15.08 12.79 11.53 2.93 1.23 GF SEC 1776 HK 10.60 18,039 -2.93 -0.19 14.16 8.73 16.25 10.23 8.92 3.30 0.75 CCC 1800 HK 7.55 33,428 -1.44 2.03 9.10 7.00 5.53 4.81 4.35 4.09 0.49 CGN POWER 1816 HK 2.07 23,109 -0.48 11.29 2.27 1.72 9.31 8.51 7.77 4.25 1.05 MSB 1988 HK 5.89 49,007 0.51 9.07 6.33 5.27 4.42 4.25 4.10 3.67 0.49 2202 HK 30.35 47,891 -0.16 14.10 35.10 21.75 8.48 7.04 6.07 4.88 1.55 GAC 2238 HK 8.43 26,121 -4.53 7.94 10.51 6.79 6.77 6.50 5.64 5.27 0.88 SHENZHOU 2313 HK 105.30 158,289 1.35 18.65 109.30 82.85 29.94 25.15 21.15 2.01 5.38 PING AN 2318 HK 94.45 703,424 2.50 36.59 95.20 66.55 13.79 11.14 9.77 2.67 2.27 PICC P&C 2328 HK 8.81 60,783 -3.19 9.99 9.98 7.54 10.87 8.41 7.57 4.10 1.07 GWM 2333 HK 6.37 19,744 -2.45 41.87 8.23 4.06 9.59 9.25 8.75 4.02 0.90 CPIC 2601 HK 32.15 89,226 -1.23 26.82 37.00 24.60 13.87 11.41 10.19 4.26 1.54 CHINA LIFE 2628 HK 22.20 165,194 2.30 33.41 23.05 15.50 48.88 14.57 13.71 2.57 1.51 HUARONG 2799 HK 1.68 42,074 2.44 17.48 2.79 1.33 36.07 4.97 4.37 4.16 0.43 BOCOM 3328 HK 6.61 231,428 -0.15 8.18 6.90 5.42 5.91 5.62 5.30 5.46 0.60 CMB 3968 HK 38.85 178,356 -2.14 35.37 41.25 27.00 10.66 9.40 8.34 3.21 1.47 BOC 3988 HK 3.74 312,747 0.54 10.65 4.30 3.23 5.44 5.18 4.94 5.92 0.58 CITIC SEC 6030 HK 16.96 38,640 -2.30 25.63 20.40 11.94 22.03 13.73 12.13 3.07 1.07 ZA ONLINE 6060 HK 28.30 13,296 1.62 12.97 55.05 23.70 N/A N/A 194.10 0.00 2.41 HAITONG SEC 6837 HK 10.10 34,437 0.60 34.67 11.26 6.40 19.27 12.39 11.33 2.69 0.79 HTSC 6886 HK 14.76 25,373 -0.67 19.03 18.08 10.06 19.12 13.07 11.19 3.65 0.95

HANG SENG CHINA ENT INDX 11,542.25 10,762,915 0.35 14.00 12,544.55 9,833.69 20.95 17.74 14.85 3.15 3.13 Source: FactSet

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Rating System Analyst Stock Rating: Analyst Industry Views: Buy: The stock's total return is expected to exceed that of the Outperform: The analyst expects the industry coverage universe corresponding industry over the next 12 months. to be attractive relative to the relevant broad market benchmark over the next 12 months. Neutral: The stock's total return is expected to be in line with that of the corresponding industry over the next 12 months. Market perform: The analyst expects the industry coverage universe to be in line with the relevant broad market Sell: The stock's total return is expected to be below that of the benchmark over the next 12 months. corresponding industry over the next 12 months. Underperform: The analyst expects the industry coverage Not-Rated: The analyst does not have conviction regarding the universe to be unattractive relative to the relevant broad outlook of the stock's total return relative to that of the market benchmark over the next 12 months. corresponding industry over the next 12 months. Broad market benchmark for Hong Kong is the Hang Seng Composite Index, for China A-shares is the MSCI China A Index, for US-listed Chinese companies is S&P US Listed China 50 (USD) Index.

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Analyst certification The authors of this report, hereby declare that: (i) all of the views expressed in this report accurately reflect their personal views about any and all of the subject securities or issuers; and (ii) no part of any of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report; (iii) no insider information/ non-public price-sensitive information in relation to the subject securities or issuers which may influence the recommendations were being received by the authors. The authors of this report further confirm that (i) neither they nor their respective associates (as defined in the Code of Conduct issued by the Hong Kong Securities and Futures Commission) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of the report; (ii)) neither they nor their respective associates serve as an officer of any of the Hong Kong listed companies covered in this report; and (iii) neither they nor their respective associates have any financial interests in the stock(s) covered in this report except for one coverage analyst who is holding shares of Shimao Property Holdings Limited.

Disclosure of relevant business relationships BOCOM International Securities Limited, and/or its associated companies, has investment banking relationship with Bank of Communications, Guolian Securities Co. Ltd., Human Health Holdings Limited, Hebei Yichen Industrial Group Corporation Limited, Phoenix Healthcare Group, Co. Ltd, Luzhou Xinglu Water (Group) Co., Ltd., Shandong International Trust Co., Ltd, BOCOM International Holdings Company Limited, HPC Holdings Limited, Zhongyuan Bank Co., Ltd, Sichuan Energy Investment Development Co., Ltd, Light Year Holdings Limited, Analogue Holdings Limited, Redsun Properties Group Limited, 51 CREDIT CARD INC., Zhejiang New Century Hotel Management Co., Ltd, Dianping, Shandong Gold Mining Co., Ltd, Xinchengyue Holdings Limited, Ever Reach Group (Holdings) Company Limited, Watts International Maritime Engineering Limited, Kaisa Property Holdings Limited, Chengdu Expressway Co., Ltd, China Kepei Education Group Limited, Yincheng International Holding Co., Ltd, Tai Hing Group Holdings Limited, Shenwan Hongyuan Group Co., Ltd, Dexin China Holdings Company Limited and S.A.I. Leisure Group Company Limited. within the preceding 12 months. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Orient Securities Company Limited. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Everbright Securities Company Limited. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Guolian Securities Co., Ltd. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Co., Ltd.

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