2019 21 Jan 2019

China Connect Weekly

Market Strategy The A-share mapping of the STI Board

Macroeconomics No improvement in banks’ risk appetite

Stock Recommendations CMSK  Pinggao Electric  Sunner Development  Nari Technology

CITIC Securities Brokerage (HK) Limited Investment Advisory Services Tel：2237 9250 Please refer to the attachment for detailed disclaimer and regulatory disclosures E-mail：[email protected] csb.com.hk Contents:

Marke t Stra tegy The A-share mapping of the STI Board

The Science and Technology Innovation Board (STI Board) is expected to be rolled out by end- 2Q19E at the earliest, with guidance projects from brokerage firms the most likely pilot shares.

Macroeconomics No improvement in banks’ risk appetite

The recovery of local special bonds and bond market may help Jan 2018E social financing stabilize briefly.

Weekly Top Pick Price Target Stop Loss Upside Company (Rmb) (Rmb) (Rmb) (%) CMSK CMSK 18.39 26.77 17.5 46 (001979 CH)

Pinggao Electric 8.44 10.40 8.0 23 (600312 CH)

Sunner Development 18.40 21.40 17.5 16 (002299 CH)

Nari Technology 19.39 22.00 18.4 13 (600406 CH) China Connect Weekly: mapping A-share The the STI of Board

2 21 Jan 2019 Source: Respective Company, CS Please refer to the attachment for detailed disclaimer and regulatory disclosures. Market Strategy:

The A-share mapping of the STI Board

he A-share market’s Science and have the opportunity to become protection; (iv) biomedicine; and (v) TTechnology Innovation Board public, in our view, but they are not technology services. We expect the (STI Board) is expected to come likely to be among the first pilots. The incremental market reform of the STI into being the end of 2Q19E at the IPO-related requirements are both Board will accelerate the relaxation of earliest. The first batch of pilot stocks more stringent and more flexible A-share M&As. are most likely guidance projects than those for the NEEQ. According from brokerage firms. Most of these to the latest policy announcement, projects are sufficiently profitable the STI Board will focus on five to be listed on A-share bourses and industrial areas: (i) next-generation capable of meeting the requirements information technology; (ii) high- as specified in Rule 51 for regulatory end equipment manufacturing approval. Internet start-ups, typically and new materials; (iii) new energy, of red-chip and VIE structures, still conservation and environmental China Connect Weekly: mapping A-share The the STI of Board

3 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. Macroeconomics:

No improvement in banks’ risk appetite

n Dec 2018, China’s credits and weighing on the sustainability of M2 Iloans increased by Rmb1.08trn, new rebound. Along with recovering local social financing tallied Rmb1.59trn special bonds and the bond market, and M2 was up 8.1% YoY. Overall, the social financing in Jan 2018E may increase in bills boosted the volume stabilize temporarily. of lending in the last month of the year, while improvement in direct financing and more loan write-offs combine to pushed up incremental social financing. On the other hand, the decline in off-balance- sheet financing deepened, indirectly China Connect Weekly: mapping A-share The the STI of Board

4 21 Jan 2019 Source: CS Please refer to the attachment for detailed disclaimer and regulatory disclosures. Market Review & Techinical:

CITIC S&P 50 Market Review: On Monday, both (Index) Index 2,858.43 Shanghai and Shenzhen bourses 3,150 52-wk high/low 3,852.92/2,657.51 3,100 50/100/200D MA 2,820.8/2,875.4/3,009.2 fluctuated downward, with the 3,050 RSI (14D) 54.2 Shanghai Composite Index (SCI) MACD (12/26D)/Signal -6.55/-23.94 3,000 recording a 0.71% loss. On Tuesday, 2,950 2,900 the two markets diverged at opening. 2,850 Stocks hovered within a narrow band 2,800 before the consumer and financial 2,750 2,700 sectors staged a rally near the lunch 2,650 break, pushing up the broad market 2,600 and allowing the SCI to collect 1.36%

at the close. On Wednesday, the 4/1/19 9/1/19 3/9/18 6/9/18 29/8/18 11/9/18 14/9/18 19/9/18 25/9/18 28/9/18 5/11/18 8/11/18 4/12/18 7/12/18 14/1/19 17/1/19 10/10/18 15/10/18 18/10/18 23/10/18 26/10/18 31/10/18 13/11/18 16/11/18 21/11/18 26/11/18 29/11/18 12/12/18 17/12/18 20/12/18 25/12/18 28/12/18 markets started low, climbed and went into a consolidation mode. The Shanghai gauge finished flat. CITIC S&P 300 Thursday morning saw one bourse (Index) Index 2,783.43 open high and one low. Stock indices 3,100 52-wk high/low 3,846.60/2,607.72 moved north on the strength of 3,050 50/100/200D MA 2,761.4/2,817.4/3,018.7 financial shares but pulled back in the 3,000 RSI (14D) 52.8 2,950 MACD (12/26D)/Signal -7.02/-21.47 afternoon. The SCI shed 0.42%. On 2,900 Friday, the markets fluctuated and 2,850 2,800 ascended after lunch, with the SCI 2,750 adding 1.42%. In the week, CITIC/S&P 2,700 50 and CITIC/S&P 300 advanced 2.9% 2,650 2,600 and 2.3%, respectively. 2,550 Technical analysis: The technical

3/9/18 6/9/18 4/1/19 9/1/19 trends of CITIC/S&P 50 and CITIC/ 29/8/18 11/9/18 14/9/18 19/9/18 25/9/18 28/9/18 5/11/18 8/11/18 4/12/18 7/12/18 14/1/19 17/1/19 10/10/18 15/10/18 18/10/18 23/10/18 26/10/18 31/10/18 13/11/18 16/11/18 21/11/18 26/11/18 29/11/18 12/12/18 17/12/18 20/12/18 25/12/18 28/12/18 S&P 300 stiffened more, sending both indices into the bull zone. We expect the index pair to jolt upwards in the near term.

Source: Bloomberg, CS China Connect Weekly: mapping A-share The the STI of Board

5 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. Stock Recommendations:

(A Shenzhen-HK Stock Connect Northbound Stock) CMSK Target Price: Rmb26.77 Upside: 46%

Share Price Performance Repurchase reflects confidence MSK (001979 CH) repurchased Rmb23.12. The scale of the repurchase 19.5 (Share price/Rmb) 19.2 Cstocks accounting for 2.19% of shows that the Company is confident 18.9 18.6 its total shares capital for Rmb2-4bn, over its share valuation going forward. 18.3 18.0 equaling approximately to 8-16 days of Real estate shares typically perform 17.7 17.4 trading volume of late. The price per better post-repurchase. Half of the stocks

17.1 share repurchased was no higher than repurchased this time will be used as 16.8 16.5 incentives, which should further 2/1/19 4/1/19 8/1/19 3/12/18 5/12/18 7/12/18 10/1/19 14/1/19 16/1/19 18/1/19

11/12/18 13/12/18 17/12/18 19/12/18 21/12/18 25/12/18 27/12/18 sharpen the Price/Target/Stop Loss 18.39/26.77/17.50 competitive edge 52 Weeks High/Low 27.38/16.10 of the incentive 50/100/200D MA 18.07/17.87/19.06 RSI (14D) 59.5 mechanism. We MACD (12/26D)/Signal 0.00/-0.14 suggest follow 2018E PER (x) 8.9 this counter. Company: CMSK is engaged in integrated development of industrial parks. The Company conducts land and real estate development and management, science and technology venture capital and fund management.

(A Shenzhen-HK Stock Connect Northbound Stock) Sunner Development Target Price: Rmb21.4 Upside: 16% Escalating swine fever epidemic to raise chicken market climate

ccording to government was China’s first case of swine epidemic Share Price Performance Adocuments from Siyang County, in a large-scale pig farm, escalated by 18.6 (股价/人民币) Jiangsu Province, the African Swine Fever the fact that it happened in a farm that 18.3 18.0 breakout took place in a pig farm under produces breeding boars. The breeding 17.7 17.4 Jiangsu Jiahua Breeding Boar Ltd. Co. This capacity of sows in 2020E will be affected. 17.1 16.8 A decline in pork 16.5 16.2 supply will stoke 15.9 15.6 demand for chicken 15.3 and higher prices 2/1/19 4/1/19 8/1/19 3/12/18 5/12/18 7/12/18 10/1/19 14/1/19 16/1/19 18/1/19

for the white meat. 11/12/18 13/12/18 17/12/18 19/12/18 21/12/18 25/12/18 27/12/18 We recommend Price/Target/Stop Loss 18.4/21.4/17.5 52 Weeks High/Low 18.80/11.95 chicken business 50/100/200D MA 17.03/16.71/16.15 player Sunner RSI (14D) 66.9 Development MACD (12/26D)/Signal 0.38/0.23 2018E PER (x) 14.8 (002299 CH). Company: Sunner Development processes and markets poultry. The Company's products include China Connect Weekly: mapping A-share The the STI of Board frozen chicken meat and other chicken parts.

6 21 Jan 2019 Source: Bloomberg, Respective Company, CS * Closing prices as of 18 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. Risk Rating: 1 to 5 in ascending order Stock Recommendations:

According to report on www.nengapp.com, the UHVDC (ultrahigh-voltage direct current) line from Northern Shaanxi to Hubei has been given the green light by regulators, with a static investment of Rmb17.8bn, making it the fourth line in the current round of UHV construction to have obtained approval. The pace of approval is largely in line with expectations. The remaining planned lines will likely receive regulatory nods by mid- 2019E. Given prompt launch of tendering, faster repayment and a shortened cycle for the current round of construction, corporate earnings should peak between 2H19E and 1H20E. We continue to recommend leaders of the sector, such as Pinggao Electric (600312 CH) and Nari Technology (600406 CH). New UHVDC line approved

(A Shanghai-HK Stock Connect Northbound Stock) Share Price Performance Price/Target/Stop Loss 8.44/10.40/8.00

9.2 (Share price/Rmb) 52 Weeks High/Low 9.95/4.92 9.0 8.8 50/100/200D MA 8.05/7.22/6.93 8.6 Pinggao Electric 8.4 RSI (14D) 54.6 8.2 8.0 MACD (12/26D)/Signal 0.17/0.14 Target Price: Rmb10.4 7.8 7.6 2018E PER (x) 30.1 Upside: 23% 7.4 7.2 7.0 Company: Pinggao Electric manufactures and

markets high voltage equipment, including circuit breakers, switches, insulated switchgears, and

2/1/19 4/1/19 8/1/19 switch disconnecters. 3/12/18 5/12/18 7/12/18 10/1/19 14/1/19 16/1/19 18/1/19 11/12/18 13/12/18 17/12/18 19/12/18 21/12/18 25/12/18 27/12/18

(A Shanghai-HK Stock Share Price Performance Price/Target/Stop Loss 19.39/22.00/18.40 Connect Northbound Stock) 52 Weeks High/Low 19.54/14.71 19.9 (Share price/Rmb) 19.6 50/100/200D MA 18.24/17.47/17.00 19.3 RSI (14D) 59.7 Nari 19.0 18.7 MACD (12/26D)/Signal 0.28/0.27 18.4 Technology 2018E PER (x) 20.8 18.1 Target Price: Rmb22 17.8 Company: NARI Technology develops, 17.5 manufactures and sells automation products for electricity distribution, converting stations, Upside: 13% coal-fired power plants, and industrial process. The Company also provides services and system 2/1/19 4/1/19 8/1/19

3/12/18 5/12/18 7/12/18 10/1/19 14/1/19 16/1/19 18/1/19 integration. 11/12/18 13/12/18 17/12/18 19/12/18 21/12/18 25/12/18 27/12/18 China Connect Weekly: mapping A-share The the STI of Board

7 21 Jan 2019 Source: Bloomberg, Respective Company, CS * Closing prices as of 18 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. Risk Rating: 1 to 5 in ascending order Global Asset Allocation

Recommended global asset allocation (GAA) Bonds China/HK Stocks 20% 20%

Cash 15%

US Stocks 20%

Global ETF 10% Emerging Markets Euro Stocks 2% Japan Stocks 5% 8% Selected equity markets at a glance

Hong Kong: Relatively undemanding stock valuation; potential benefit of Europe: Stock valuation falling due to weak euro and further quantitative “Shenzhen-Hong Kong Stock Connect” to small caps ease Mainland China: Government preference for a “slow bull market”; relaxed The Philippines: Positive current account balance for over a decade; fiscal policy in favor of equities projected GDP growth of 6.3% in 2018E Japan: Real estates, exports and tourism enjoying monetary easing and India: Relatively strong growth versus other emerging markets; projected weak yen GDP growth of 7.3% in 2018E US: Macro stability and recovery; short-term pressure stemming from rate rise and strong USD China Connect Weekly: mapping A-share The the STI of Board

8 21 Jan 2019 Source: Bloomberg, Respective Company, CS Please refer to the attachment for detailed disclaimer and regulatory disclosures. Top GAA picks China/Hong Kong Stocks Company Remarks Realcan Pharm (002589 CH) Medical equipment distribution across the nation Wellhope Agri-Tech (603609 CH) Wider margins in animal feed and upbeat growth in slaughter and trade Dabeinong (002385 CH) Warming industry climate and growth-driving strategy Huace Film & TV (300133 CH) Continued progress in SIP operations and promising VR content investment Alpha Animation (002292 CH) Entering the baby/toddler market upon acquisition of BT and Jinwang Kweichow Moutai (600519 CH) Steady and superb CR Land (1109 HK) Benefiting from rate/RRR cuts + projects in top-tier cities BOCHK (2388 HK) Revenue growth momentum: Top pick among local lenders Zoomlion (1157 HK) A late-cycle equipment maker stands to win Haitong Sec. (6837 HK) Gaining from IPO re-launch and rebounding A-share market turnover Eastern Airlines (670 HK) To ride on Shanghai Disney and Beijing Winter Olympics Tencent (700 HK) WeChat user experience significantly enhanced on subscription improvement Mengniu Dairy (2319 HK) New products to drive up income and margins CCB (939 HK) Outstanding spread and relatively mild impact from IFRS 9 Japan Stocks Company Remarks Mizhuho (8411 JP) Expanding overseas portfolio remains the key driver Nissan Motor (7201 JP) Robust sales, favorable currency, further cost cutting Sony (6758 JP) Growth story continues... US Stocks Company Remarks Facebook (FB US) Strong products Citigroup (C US) Economic growth and interest rate rise to support earnings Alphabet (GOOG US) Positive data on page view Euro Stocks Company Remarks Adidas (ADS GY) Upbeat industry climate Zurich Insurance (ZURN VX) High dividend yield LVMH (MC FP) Gain from weak € Global ETF / ETN Name Remarks Tracker Fund of HK (2800 HK) To track the performance of the Hang Seng Index CSOP Hang Seng Index Daily (2x) Leveraged Product (7200 HK) To track the daily performance of Hang Seng Index (2x leverage) CSOP Hang Seng H-Shares Index Daily (2x) Leveraged Product (7288 HK) To track the daily performance of Hang Seng H-Shares Index (2x leverage) CSOP Hang Seng Index Daily (-1x) Inverse Product (7300 HK) To track the daily performance of Hang Seng Index (inverse 1x leverage) CSOP Hang Seng H-Shares Index Daily (-1x) Inverse Product (7388 HK) To track the daily performance of Hang Seng H-Shares Index (inverse 1x leverage) ChinaAMC Hang Seng SmallCap Index (3157 HK) To track the performance of the Hang Seng SmallCap Index ChinaAMC CSI 300 Index (3188 HK) To track the performance of the CSI 300 Index Powershares QQQ Trust Series 1 (QQQ US) To track the performance of the Nasdap 100 Index (Excluded Financial Sector) PowerShares DB Commodity Index Tracking ETF (DBC US) To track the performance of the DBIQ Optimum Yield Diversified Commodity Index XIE Shares FTSE Chimerica (3161 HK) To track the performance of the FTSE China N Shares All Cap Capped Net Tax Index Deutsche X-Trackers MSCI Eur (DBEU US) To track the performance of the MSCI Europe USD Hedged Index Deutsche X-Trackers MSCI Jap (DBJP US) To track the performance of the MSCI Japan US Dollar Hedged Net Index iShares MSCI Philippines (EPHE US) To track the performance of the MSCI Philippines Investable Market Index iShares MSCI India (INDA US) To track the performance of the MSCI India Index SPDR Gold ETF (2840 HK) To track the performance of the price of gold bullion in COMEX Value Gold ETF (3081 HK) To track the performance of the London Gold Morning Fixing Price CSOP WTI OIL ETF (3135 HK) To track the performance of the Merrill Lynch Commodity index eXtra CLA Index ER China Connect Weekly: mapping A-share The the STI of Board

9 21 Jan 2019 Source: Bloomberg, Respective Company, CS Please refer to the attachment for detailed disclaimer and regulatory disclosures. A-share Recommended Stocks:

Defensive Stocks Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Beating market expectations: launching of new Great Wall Motors Automobiles 37 6.20 15.00 5.9 142 3 models and new powertrain will optimize its product (601633 CH)^ mix and help improve profitability outlook. Aggressive and resilient at the same time: Solid Bank of Beijing Banks 122 5.79 11.5 0 5.5 99 3 financials poised for growth, backed by safe assets (601169 CH)^ and quality clients China United Network The approaching 5G era: transformation and profit Telecom 167 5.37 9.14 5.1 70 3 (600050 CH)^ rebound on SOE reform Enhanced effect of the highway-to-railway shift: Tielong Container Rail Freight 9 7.18 11. 6 0 6.8 62 3 Unique core business of container shipping plus rising Logistics (600125 CH)^ volume and price on the Shaba line More duty free operation tipped to ease T2 impact: Baiyun International Transport Contribution from arrival duty free business revenue 21 10.36 16.00 9.8 54 3 Airport (600004 CH)^ Support Services plus more departure duty free sales to offset new capacity cost Active expansion: A better-than-expected first half Bank of Nanjing Banking Services 57 6.77 10.10 6.4 49 3 thanks to scale expansion; capital replenishment a (601009 CH)^ positive response to business model. Enhanced effect of the highway-to-railway shift: Daqin Railway Rail 124 8.37 12.00 8.0 43 3 A rare investment vehicle to the west-to-east coal (601006 CH)^ Transportation shipping, featuring attractive valuation and dividend Construction Sany Heavy Industry Still better performance ahead: Sales volume tipped & Mining 67 8.64 11. 82 8.2 37 3 (600031 CH)^ to rise, leading to wider margins Machinery Strengthening core while seeking transformation: SZ Expressway Infrustructure Net cash of Rmb3bn upon repurchase of three toll 13 9.03 10.80 8.6 20 3 (600548 CH)^ Construction roads will be used to consolidate main business and facilitate transformation

Aggressive Stocks Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Basic & Prices of chemicals tipped to remain elevated: Prices Xinjiang Tianye Diversified 5 4.68 19.49 4.4 316 3 likely to hike further on re-stocking, providing drive to (600075 CH)^ Chemicals sector earnings growth A new healthcare arm to integrate tumor treatment Yibai Pharmaceutical Generic Pharma 5 5.86 22.40 5.6 282 3 resources: Speeding up resource consolidation and (600594 CH)^ looking to set up shops across the nation Basic & Qingdao Kingking New retail a key growth driver in 2018E: Planning to Diversified 4 5.10 16.60 4.8 225 3 (002094 CH)* erect 10,000 pilot stores practicing new retail Chemicals Huayou Cobalt Continuous catalysts for the NEV sector: Optimistic Base Metals 25 29.78 90.00 28.3 202 3 (603799 CH)^ long-term visibility Anticipating more pleasant surprises ahead: All lines Hengtong Optic Optical fiber 35 18.45 55.75 17.5 202 3 of businesses set to ride on the upbeat industry Electric (600487 CH)^ and cables climate. Xinhua Pharmaceutical Multi-dimensional re-rating: Accelerating growth in Specialty Pharma 3 6 .11 18.13 5.8 197 3 (000756 CH)* preparation and hiking price for preparation Tasly Pharma Top-tier drug R&D: Core biological drug Pro-UK Specialty Pharma 28 18.67 52.15 17.7 179 3 (600535 CH)^ looking to be a new blockbuster COFCO Biochemical Cementing leadership in corn deep-processing: Rising Biofuels 14 7.39 18.90 7.0 156 3 (000930 CH)* oil prices to boost revenue of fuel ethanol business Sensing the future: To be driven by market expansion O-film Tech Electronics 24 8.78 22.44 8.3 156 3 on dual camera and OLED technology advancement (002456 CH)* Components and increasing number of major clients Innovative diabetes drug approved for clinical trial: Huadong Medicine Medicines 40 27.50 70.16 26.1 155 3 New diabetes medicine approved and coming to the (000963 CH)* Retailing market circa 2021E Jianghuai Automobile Volkswagen JV approved: A win-win deal for both Automobile 9 4.93 12.00 4.7 143 3 (600418 CH)^ parties Dominating the out-of-home advertising scene: Focus Media Advertising & 85 5.76 13.80 5.5 140 3 Building advertising to expand steadily and cinema (002027 CH)* Marketing advertising to surge

Source: Bloomberg, CS U Closing prices as of 18 Jan 2019 * Shenzhen-HK Stock Connect – Northbound Stocks (ChiNext Board for Professional

China Connect Weekly: mapping A-share The the STI of Board Institutional Investors Only) ^ Shanghai-HK Stock Connect – Northbound Stocks Risk Rating: 1 to 5 in ascending order

10 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. A-share Recommended Stocks:

Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Driven by auto financing and second-hand car sales: Grand Auto Agricultural 36 4.41 10.50 4.2 138 3 China’s largest car dealer aiming at top-of-the-world (600297 CH)^ Chemicals rank Grandland Non-Residential Launching employee stock ownership plan: ESOP to 8 5.12 12.00 4.9 134 3 (002482 CH)* Bldg Const fuel endogenous growth An emerging integrated platform: One of the few China Meheco Healthcare Chinese companies that have already established 14 12.95 29.80 12.3 130 4 (600056 CH)^ Supply Chain diversified operations including manufacturing, sales and international trade. CYTS Tours Earnings poised to pick up next year: Price hike for Tourism Services 10 13.37 29.80 12.7 123 3 (600138 CH)^ Wuzhen and strong income from Gubei Chilong Zinc & Benefiting from price hike potentials: Entering an up- Germanium Base Metals 23 4.43 9.50 4.2 114 3 cycle for explosive earnings growth (600497 CH) ^ Expecting high growth for heavy truck sector in Commercial 1H18E: improving competition landscape of the CNHTC (000951 CH)* 8 11.73 25.00 11.1 113 3 Vehicles industry helps leading players to register significantly improvement in earnings. China Molybdenum Molybdenum sector rebound expected: Further price Base Metals 69 3.92 8.20 3.7 109 3 (603993 CH) ^ hike against disrupted supply Sanan Optoelectronics Semiconductor Early success in business expansion: Further release of 39 9.54 19.20 9.1 101 3 (600703 CH)^ Devices downstream demand bodes well for 2H18E Truchum Advanced Skewing towards new materials: Developing new Base Metals 5 5.08 10.10 4.8 99 3 Materials (002171 CH)* materials a part of national strategy Four-pronged reform: Long-term outlook improving Luzhou Laojiao Beverages 62 42.20 80.50 40.1 91 3 on dynamic execution with product, channel, brand (000568 CH)* and management reforms Hitting the sweet spot: Warmer-than-expected Yang Quan Coal Coal Operations 13 5.28 10.05 5.0 90 3 industry climate and increasingly clear earnings (600348 CH)^ visibility Sunway Making presence in RF ahead of peers: Sustainable Electronics Communication 20 20.01 37.39 19.0 87 3 gains from high growth in acoustic-RF solutions and Components (300136 CH)* RF front-end devices. BTG Hotels Leisure & Travel New incentive scheme to unleash potential: 15 14.98 27.50 14.2 84 3 (600258 CH)^ Services Expecting strong earnings rebound in the short run Guangshen Railway Picking up steam on reform: Faster railway reform Transit Services 20 3.50 6.40 3.3 83 3 (601333 CH)^ expected to boost earnings Expecting high growth for heavy truck sector in Weichai Power Commercial 1H18E: improving competition landscape of the 49 8.23 15.00 7.8 82 3 (000338 CH)* Vehicles industry helps leading players to register significantly improvement in earnings. Industrial Sinoma International Across-the-board synergy on M&A deal to widen Distribution 10 5.71 10.35 5.4 81 3 (600970 CH)^ margins and lead to a profit upturn & Rental Gross margin upturn as expected: Moderate increase Greenland Real Estate 77 6.31 11.4 0 6.0 81 3 in real estate income, coupled with significantly wider (600606 CH)^ Services margins Rationale for copper price hike: Picking stocks with Yunnan Copper Base Metals 12 8.50 15.00 8.1 76 3 resource edge, potential capacity expansion, earnings (000878 CH)* elasticity, M&A plans and sustainable operation Expert electro ceramics maker upgrading business Three-Circle Advanced 29 16.60 29.12 15.8 75 3 structure and looking to promising future with new (300408 CH)* Ceramics products Mixed-ownership reform to boost OP efficiency: The Wuliangye private placement will likely align the interests of the Beverages 209 53.88 93.80 51.2 74 3 (000858 CH)* management and distributors with the Company, and thus improve the operational efficiency. Satellite Petrochemical Rebounding climate: Recovering demand for acrylic Chemicals 11 10.34 18.00 9.8 74 3 (002648 CH)* acid and ester, sanguine prospects in SAP. Riding on high-end consumption recovery: Exploring Wangfujing Department 11 14.20 24.50 13.5 73 3 supermarket and premium store formats via joint (600859 CH)^ Stores ventures Linglong Tyre Pumping up: Potential to become a tier-2 international Auto Parts 17 14.55 25.00 13.8 72 3 (601966 CH)^ brand and one of the global top 10 tire makers Pocketing a rare gem: Adding a Shenzhen hospital to Fosun Pharma Pharmaceutical 48 23.70 40.32 22.5 70 3 form a strong healthcare network in the Pearl River (600196 CH)^ Delta

Source: Bloomberg, CS U Closing prices as of 18 Jan 2019 * Shenzhen-HK Stock Connect – Northbound Stocks (ChiNext Board for Professional

China Connect Weekly: mapping A-share The the STI of Board Institutional Investors Only) ^ Shanghai-HK Stock Connect – Northbound Stocks Risk Rating: 1 to 5 in ascending order

11 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. A-share Recommended Stocks:

Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Optimizing asset structure: Steady operation and CCB (601939 CH) ^ Banks 64 6.64 11.20 6.3 69 3 good asset quality A dawning golden decade for semiconductor Power plays: China-US trade dispute to reinforce Chinese Ninestar (002180 CH)* 26 24.60 41.42 23.4 68 3 Generation determination to replace imports with home-made products Rationale for copper price hike: Picking stocks with Jiangxi Copper Base Metals 28 13.61 22.80 12.9 68 3 resource edge, potential capacity expansion, earnings (600362 CH)^ elasticity, M&A plans and sustainable operation Gree Electric Getting smart: Transition into an intelligent appliances Air-con 234 38.97 64.50 37.0 66 3 (000651 CH)* era with volume and price rising in tandem Potential rebound of industry leaders after excessive Yunnan Tim Base Metals 18 10.69 17.58 10.2 64 3 decline: Stricter environmental rules and further (000960 CH)* reform boding well for basic metals Likely breakthrough in application of ceramic Sunlord Electronics Electrical 12 14.67 24.00 13.9 64 3 components: Use of ceramic parts to differentiate (002138 CH)* Components mobile phones. Looking for major contributors to airline growth: China Eastern Airlines Airlines 50 5.09 8.30 4.8 63 3 Listed carriers showing greater attraction due to (6 0 0115 C H)^ historically low P/B ratios S.F. Holding Faster delivery of brand premium: Potential to speed Courier Services 145 32.75 53.00 31.1 62 3 (002352 CH)* up revenue growth Yifeng Pharmacy Food & Drug Renowned for pharmaceutical retail management, 16 43.74 70.65 41.6 62 3 (603939 CH)^ Stores with superior presence in eastern China Speculating on measures to boost car sales: Potential SAIC Motor Automobiles 297 25.39 41.00 24.1 61 3 policy to stimulate auto consumption after continuous (600104 CH)^ decline in sales Smart equipment platform established: The Company Shanghai Mech & Elect Elevator 13 16.26 26.16 15.4 61 3 may serve as platform for parent to float more quality (600835 CH)^ assets going forward. Qingdao Haier Home Getting smart: Transition into an intelligent appliances 92 15.14 24.30 14.4 61 3 (600690 CH)^ Improvement era with volume and price rising in tandem Yinlun Machinery Continuous catalysts for the NEV sector: Optimistic Auto Parts 6 7.80 12.50 7.4 60 3 (002126 CH) * long-term visibility Equity value to benefit from wider financing ABC (601288 CH)^ Banking Services 1,143 3.58 5.70 3.4 59 3 channels: Relatively stable ROE and risk expectations Tuopu Group Eyes on the Tesla supply chain: Fast sales of Model 3 Auto Parts 11 14.84 23.60 14.1 59 3 (601689 CH)^ to add upside along the industry chain A new journey in wealth management: Favoring CMB (600036 CH)^ Banking Services 559 27.10 43.00 25.7 59 3 banks that excel in asset quality indicators and potential dividend payout SDIC Power Power Approaching season of power shortage: Pick thermal 57 8.35 13.20 7.9 58 3 (600886 CH)^ Generation power companies in high-demand regions Sun Paper Visible and upbeat outlook: Set to become a paper Paper 16 6.07 9.40 5.8 55 3 (002078 CH)* giant with integrated operations First-mover advantage: Cutting into battery supply Chuangxin New Containers & 22 46.82 71.60 44.5 53 3 chain abroad to embrace explosive growth in 2018- Material (002812 CH)* Packaging 19E orders Zhongnan Non-Residential Construction 22 5.85 8.92 5.6 52 3 Turning point in operation: A blue-chip hopeful Bldg Const (000961 CH)* Broad-Ocean Motor Industrial New era of clean and efficient energy: A key player in 10 4.27 6.50 4.1 52 3 (002249)* Machinery the core section of the fuel cell chain Investing on ethylene and polyester filament projects: Hengli Petrochemical Rubber & Plastic 66 13.13 19.80 12.5 51 3 Cementing leadership in the sub-sectors of the (600346 CH)^ petrochemical industry Anticipating faster growth on mixed-ownership Xingrong Environment Utility Networks 12 4.18 6.30 4.0 51 3 reform: Progress in reform to exert impact far and (000598 CH)* wide Looking for major contributors to airline growth: Juneyao Airlines Airlines 22 11.9 9 18.00 11.4 50 3 Listed carriers showing greater attraction due to (603885 CH)^ historically low P/B ratios Beginning of a beautiful story: Faster growth ahead Yili (600887 CH)^ Dairy products 149 24.45 36.70 23.2 50 3 on recovering demand in lower-tier cities, regulatory approval and channel restocking Freeing up excess reserve to smooth volatility: Industrial Bank Banking Services 326 15.68 23.00 14.9 47 3 Moderate improvement in financial data and (601166 CH)^ accommodating new rules for reserves .

Source: Bloomberg, CS U Closing prices as of 18 Jan 2019 * Shenzhen-HK Stock Connect – Northbound Stocks (ChiNext Board for Professional

China Connect Weekly: mapping A-share The the STI of Board Institutional Investors Only) ^ Shanghai-HK Stock Connect – Northbound Stocks # Sell Only Risk Rating: 1 to 5 in ascending order

12 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. A-share Recommended Stocks:

Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Rapid revenue growth on brands appealing to young Shanghai Jahwa Household 18 27.42 40.00 26.0 46 3 consumers: Accelerating new product launches and (600315 CH)^ Products robust digital operations Investment Repurchase reflects confidence: Incentive system to CMSK (001979 CH)* 145 18.39 26.77 17.5 46 3 Companies be further boosted by share repurchase Steel Raw Shaanxi Coal Material 80 7.98 11. 6 0 7.6 45 3 Value emerging: Steady margins and high dividend. (601225 CH)^ Suppliers Beijing Real Estate Sector: Buying investment Financial Street Real Estates 20 6.83 9.92 6.5 45 3 properties in core districts while staying away from (000402 CH)* so-called “king plots”. Potential beneficiaries of stepped-up infrastructure Infrastructure investment: With a large number of railway projects CRCC (601186 CH)^ 125 10.83 15.70 10.3 45 3 Construction expected to finish in 2019-20E, sector investment may accelerate An elephant dancing to the national strategy tune: Bank of China Well positioned in global financial operation and Banking Services 750 3.56 5.08 3.4 43 3 (601988 CH)^ ready to gain from RMB internationalization and “One Belt One Road”. Value recovery of the insurance sector appears China Pacific Insurance Life Insurance 188 29.83 42.40 28.3 42 3 sustainable: Insurers tipped to surge in early 2019E on (601601 CH)^ a low base Double Medical Exploring high-value medical consumables: Rapidly Medical Devices 12 29.37 41.74 27.9 42 3 (002901 CH)* growing market for spine products Gold price directed by short-term risk aversion: Zijin Mining Precious Metal 52 3.03 4.30 2.9 42 3 Increase in institutional positions in gold plays to (601899 CH)^ Mining hedge against risk of overall market decline Gujing Distillery Resilient profit growth: Gradual decline in expense Beverages 23 59.18 83.40 56.2 41 3 (000596 CH)* ratios helping to prop up earnings. China South Publishing Deserving richer valuation: A much undervalued Media 23 12.67 17.72 12.0 40 3 & Media (601098 CH)^ stock seeing catalysts emerging on the upside Sustaining growth in output and sales of lithium Xiamen Tungsten battery materials: Rising capacity coupled with Base Metals 18 12.44 17.00 11. 8 37 3 (600549 CH)^ higher proportions of deep-processed materials and overseas sales Spring Airlines Returning to positive growth: Greater earnings upside Airlines 29 31.81 43.00 30.2 35 3 (601021 CH)^ in high-end markets Weigh in on thermal power names as the sector’s Zheneng Electric Power 62 4.53 6.10 4.3 35 3 counter-cycle meets weak macro growth: Expecting Power (600023 CH) ^ Generation margins to continue recovering in 2019E Major beneficiary of medical insurance and pharmacy Dashenlin Food & Drug 16 40.15 53.40 38.1 33 3 reforms in Guangdong and national expansion on (603233 CH)^ Stores home advantages in southern China Earnings elasticity from new LNG terminal: Getting Shenzhen Gas Utility Networks 16 5.49 7.30 5.2 33 3 ready to warm up earnings from bunkered energy (601139 CH)^ come winter 2018E Tight supply expected for 2H18E: High or even rising Sinopec (600028 CH)^ Integrated Oils 516 5.40 7.00 5.1 30 3 oil price boding well for E&P and oilfield services companies Gold price directed by short-term risk aversion: Shandong Gold Mining Precious Metal 55 29.52 38.00 28.0 29 3 Increase in institutional positions in gold plays to (600547 CH)^ Mining hedge against risk of overall market decline Rainbow Department Department Forecast-beating 3Q18 results: Gathering fruit from 14 11.4 4 14.50 10.9 27 3 Store (002419 CH)* Stores transformation and reform Real Estate Future Land Mortgage rate may be peaking: Selecting leading Owners & 59 26.26 33.08 24.9 26 3 (6 01155 C H)^ players that excel in profitability Developers Jinduicheng Molybdenum price hike adds to earnings elasticity: Molybdenum Base Metals 21 6.44 8.00 6.1 24 3 Abundant upstream resources aiding efforts to (601958 CH)^ develop downstream markets China Fortune Land Real Estate Complimenting each other in funding and capability: Development Owners & 78 26.06 32.24 24.8 24 3 Remarkable improvement expected in financing (600340 CH)^ Developers environment going forward Guiguan Electric Power Optimizing asset mix: Selling an aluminum firm to 34 5.58 6.90 5.3 24 3 (600236 CH)^ Generation improve resource allocation Chongqing Embracing reform and innovation: Alibaba and Department Department Store 11 27.95 34.50 26.6 23 3 local government collaboration to offer growth Stores (600729 CH)^ opportunities

Source: Bloomberg, CS U Closing prices as of 18 Jan 2019 * Shenzhen-HK Stock Connect – Northbound Stocks (ChiNext Board for Professional

China Connect Weekly: mapping A-share The the STI of Board Institutional Investors Only) ^ Shanghai-HK Stock Connect – Northbound Stocks Risk Rating: 1 to 5 in ascending order

13 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. A-share Recommended Stocks:

Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Hualan Biological Engineering Specialty Pharma 31 32.81 39.93 31.2 22 3 Stella growth: A powerful trio to accelerate earnings. (002007 CH)* Steady and long-term growth: Eyes on Central China Railway Infrastructure 132 7.07 8.60 6.7 22 3 enterprises with better financing conditions and more Group (601390 CH)^ Construction visible outlook Real Estate Investment cues for anticipated rebound: Potential Vanke (000002 CH)* Owners & 250 25.76 31.01 24.5 20 3 rebound of property counters on easing concern Developers over funding cost Weigh in on thermal power names as the sector’s Huadian International Power 38 4.69 5.50 4.5 17 3 counter-cycle meets weak macro growth: Expecting (600027 CH)^ Generation margins to continue recovering in 2019E Factory Hongfa Technology Eyes on the Tesla supply chain: Fast sales of Model 3 Automation 19 25.39 29.64 24.1 17 3 (600885 CH)^ to add upside along the industry chain Equipment Tight supply expected for 2H18E: High or even rising PetroChina Integrated Oils 1,190 7.35 8.54 7.0 16 3 oil price boding well for E&P and oilfield services (601857 CH)^ companies Communications Steadily delivering promised growth: Upbeat 1H17 ZTE (000063 CH)* 69 19.98 23.02 19.0 15 3 Equipment results and visible 5G prospects Yangtze Power Power Yangtze Power: Ample water runoff forecasting 347 15.75 18.00 15.0 14 3 (600900 CH)^ Generation strong 3Q18E results of hydropower names Making a new start: Presenting a clearer structure Yonghui Superstores Food & Drug 78 8.15 9.30 7.7 14 3 by focusing on cloud supermarket and taking some (601933 CH)^ Stores businesses off balance sheet

Very Agressive Stocks Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks New business deals in offshore nuclear power Taihai Manoir Nuclear Flow Control 10 11. 0 0 47.70 10.5 334 3 equipment: Improving fundamentals to support (002366 CH)* Equipment further growth Shouhang Resources Comml & Res Killing two birds with one mixed-ownership stone: 7 2.83 11.70 2.7 313 3 Saving (002665 CH)* Bldg Equip & Sys Faster advance on reform and business upturn Acquiring a controlling share in Keer Education: Vtron Tech Consumer 4 4.88 18.00 4.6 269 3 Leveraging on top-quality education resources and (002308 CH)* Electronics offline development in core cities. Changjiang Electronics Leading the race: Intensifying M&As as the Moore’s Semi Conductor 15 9.11 31.95 8.7 251 3 (600584 CH)^ Law coming towards a bottleneck Set sail for an exciting long journey with powerful Huayi Brothers partners onboard: Cooperate with Alibaba and Movie/TV drama 13 4.66 14.97 4.4 221 3 (300027 CH)* Tencent in e-commerce, new media and movie production development. Originwater Waste Water “River chiefs” assuming duty: Shanghai rolling out 24 7.55 22.50 7.2 198 3 (300070 CH)* Treatment new system to clean polluted waters . Policy guidance to beef up industry leaders: Large- Guoxuan High-Tech Electrical Power 14 12.35 36.00 11.7 191 3 scale manufacturers of car batteries to ride on (002074 CH)* Equipment favorable policy and first-mover advantages Framework pact signed for Qianhai plot: Land Fabricated Metal CIMC (000039 CH)* 15 11.4 4 29.00 10.9 153 3 conversion to commercial use tipped to boost & Hardware valuation and balance sheet Raising the bamboo curtain: Growing online UTour Int'l Travel distribution platforms such as Tuniu and huge offline Tourism Services 5 6.02 14.90 5.7 148 3 (002707 CH)* resources, its O2O model has huge upside potential going forward. All that glitters is gold: The Company appears ready CHJ Industry Jewelries and 4 4.82 11. 6 0 4.6 141 3 to attract industry capital from China and abroad to (002345 CH)* Accessories facilitate future M&As and incubate new brands. Rebound underway as the high season unfolds: Lu'An Environmental Coal Operations 22 7.23 17.40 6.9 141 3 Expecting a strong sector rebound over the two Energy (601699 CH)^ months ahead Basic & Growth on abundant resource and capacity Tianqi Lithium Diversified 34 29.46 70.00 28.0 138 3 expansion: Poised to maintain advantages in cost and (002466 CH)* Chemicals margin

Source: Bloomberg, CS U Closing prices as of 18 Jan 2019 * Shenzhen-HK Stock Connect – Northbound Stocks (ChiNext Board for Professional

China Connect Weekly: mapping A-share The the STI of Board Institutional Investors Only) ^ Shanghai-HK Stock Connect – Northbound Stocks Risk Rating: 1 to 5 in ascending order

14 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. A-share Recommended Stocks:

Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Hytera Seeking global dominance in private communication Communications Communications 16 8.70 19.70 8.3 126 3 networks: Core technology and rich products Equipment (002583 CH)* pointing way to industry leader worldwide Apparel, Ningbo Shanshan Leading supplier of lithium battery material: Favorable Footwear & 15 13.30 27.00 12.6 103 3 (600884 CH)^ climate thanks to the NEV market boom Acc Design Basic & Wanhua Chemical Diversified 88 32.05 65.00 30.4 103 3 The second leap: M&A deals set to lift profits (600309 CH) ^ Chemicals Maoye Communication Real Estate Accelerating business transition: Steady organic & Network 7 10.20 20.00 9.7 96 3 & Telecom growth with scale expansion on the horizon. (000889 CH)* Hoshine Silicon Specialty Stellar performance: Full-chain operation guarantees 29 43.85 85.20 41.7 94 3 (603260 CH)^ Chemicals long-term growth Jereh Oilfield Services Oil & Gas A leading oilfield service provider: Best of the pack in 16 16.94 32.00 16.1 89 3 (002353 CH)* Services & Equip profitability and earnings potential Star-net Communication Communication 10 17.56 32.00 16.7 82 3 Sustainable growth: Abundant business innovation Equipment (002396 CH)* Radio Frequency sector to enjoy higher prices Dongshan Precision Fabricated Metal 16 9.95 17.89 9.5 80 3 and volume: Colossal 5G investment to buoy up (002384 CH)* & Hardware performances of pre-cycle manufacturers A launch pad to international track: Buying a stake Application NavInfo (002405 CH)* 21 15.85 27.99 15.1 77 3 into global mapping service provider to form strong Software alliance New JV for secondary housing management: Worldunion Real Estate 10 4.92 8.52 4.7 73 3 Potential takeover of competitive targets on (002285 CH)* Services increasingly strict industry regulation Global Top Apparel, Consolidating to stoke quality growth: Persistently E-Commerce Footwear & 17 11.12 18.00 10.6 62 3 strong electronics and recovering apparel trade (002640 CH)* Acc Design Heilan Home Specialty Advancing the multi-brand strategy: Expanding scale 39 8.72 14.04 8.3 61 3 (600398 CH)^ Apparel Stores and widening presence via UR acquisition Perfect World Entertainment Asset sales to consolidate core business: Selling 34 25.70 41.10 24.4 60 3 (002624 CH)* Content cinema line assets in a bid to concentrate on core Informatization and internetization tasks outlined: Wangsu Science IT Services 19 7.89 12.36 7.5 57 3 Broad-stroke IT policy to be followed by concrete (300017 CH)* measures. Accelerating shift towards a global leader in animal Jinyu Bio-technology Animal Biophar- health solutions: Regaining market share via new 18 15.23 23.00 14.5 51 3 (600201 CH)^ maceuticals products and faster transformation to a leading global player Shanghai Ganglian Internet Based Building up moat via information service: Enhancing 80 50.15 75.47 47.6 50 3 (300226 CH)* Services the supply-chain service model Global trade of growing scale: Upbeat about players Better Life Food & Drug 7 8.07 12.00 7.7 49 3 with strong overseas supply chains and commodity (002251 CH)* Stores flow. Sunsea Communications High-level liaison: Well-defined strategy and excellent Telecommunications 7 23.20 34.40 22.0 48 3 Equipment execution (002313 CH)* AECC Aviation Power Promising target: A whole-engine platform with Aircraft & Parts 51 22.52 32.50 21.4 44 3 (600893 CH)^ sustainable strong growth Investment prospects in science and technology: Lianchuang Electronic Consumer 5 8.99 12.80 8.5 42 3 2017E to see equipment market expansion and (002036 CH)* Electronics explosive content growth. Nanji E-Commerce Huge room to expand: Strong head products and Internet Retailing 22 8.81 12.40 8.4 41 3 (002127 CH)* potential to expand long-tail goods Network Sustainable high growth in cloud computing: Sinnet Technology Integration 22 14.05 19.60 13.3 40 3 Subsidiary formed to lift AWS cloud sales and own (300383 CH)* Services cloud computing business tipped to grow rapidly Laobaixing Food & Drug New deal for a new market: 2016E performance to 14 47.69 65.80 45.3 38 3 (603883 CH)^ Stores ride on acquisition of quality local chain Songcheng Theme Park & Hatching the first offshore project: Making headways Performance 27 18.90 25.50 18.0 35 3 Cultural Arts on/off-line and on/offshore. (300144 CH)*

Source: Bloomberg, CS U Closing prices as of 18 Jan 2019 * Shenzhen-HK Stock Connect – Northbound Stocks (ChiNext Board for Professional

China Connect Weekly: mapping A-share The the STI of Board Institutional Investors Only) ^ Shanghai-HK Stock Connect – Northbound Stocks Risk Rating: 1 to 5 in ascending order

15 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. A-share Recommended Stocks:

Mkt Cap PriceU Target Stop Loss Upside Risk Company Business (Rmb bn) (Rmb) (Rmb) (Rmb) (%) rating Remarks Renewable New energy policy rolled out: Upbeat about Goldwind Science Energy 32 10.99 14.56 10.4 32 3 leading manufacturers with cost and performance (002202 CH)* Equipment advantages The real worth of Tang DM: On way to monthly NEV BYD (002594 CH)* Automobiles 85 46.82 62.00 44.5 32 3 sales of 10K-plus units thanks to strong demand for Tang DM five-seat and Tang EV600 models AVIC Asset injection on the door steps: Private placement Electromechanical Aircraft Parts 27 7.36 9.70 7.0 32 3 of shares approved by regulator. (002013 CH)* Private placement to solidify basis for robust growth: Aier Eye (300015 CH)* Health Care 64 27.00 35.40 25.7 31 3 Strong outlook for the next few years on the back of hospital acquisitions. Luxshare Precision Electrical From mobile to AI: Potential benefits from Chinese 62 15.09 19.74 14.3 31 3 (002475 CH)* Components advancement in Science and technology as well as AI Full speed ahead to payment business: Buying Newland Infrastructure a national merchant acquiring license to boost 16 15.43 20.00 14.7 30 3 (000997 CH)* Software profitability and transform into an integrated electronic payment operator. Leader of the “core cloud”: Pushing for enterprise Yonyou Network Application 48 24.80 31.86 23.6 28 3 transition to cloud and optimizing operation and (600588 CH)^ Software management Greater volume, higher price and lower cost: Pig Muyuan Foodstuff Hog & Pig 68 32.79 41.70 31.2 27 3 slaughtering tipped to hit 3mn heads in 2016E with (002714 CH)* Farming cost down, leading to stronger earnings growth Sanqi Interactive Application A traffic giant in the age of web-to-mobile conversion: Entertainment 23 10.64 13.50 10.1 27 3 Software Blockbuster games expected to lift 2018E earnings (002555 CH)* Renewable Policy guidance to beef up industry leaders: Large- EVE Energy Energy 14 15.99 20.00 15.2 25 3 scale manufacturers of car batteries to ride on (300014 CH)* Equipment favorable policy and first-mover advantages Pinggao Electric Electrical New UHV line approved: Eyeing bellwethers with 11 8.44 10.40 8.0 23 3 (600312 CH)^ Components core equipment and profit elasticity AVIC Helicopter Promising target: The sole listed helicopter asset in Aircraft & Parts 24 40.58 50.00 38.6 23 3 (600038 CH)^ parent group Nuts are core in online food sales: Nuts outrunning all Cha Cha Food other snacks in online food sales during the Chinese Packaged Food 10 20.51 25.00 19.5 22 3 (002557 CH)* New Year holidays; online venders with nuts as core products ready for a bumper harvest ahead Dabeinong Setting sails again: Concentrating on high-end feed Animal Feeds 14 3.31 3.96 3.1 20 3 (002385 CH)* to maintain strong margins Expecting breakthroughs in photonic chip Accelink Technologies Communications 17 26.51 31.50 25.2 19 3 manufacturing: Prospective exposure to VCSEL and (002281 CH)* Equipment photonic chip platform Offshore Oil Oil & Gas Upside for re-rating: 2016E earnings likely to ease Engineering 23 5.31 6.30 5.0 19 3 Services & Equip. moderately, with overseas orders on the rise. (600583 CH)^ Sunner Development Meat Type Escalating swine fever epidemic to raise chicken 23 18.40 21.40 17.5 16 3 (002299 CH)* Chicken Products market climate: Higher demand for chicken Haid Group Agricultural Galloping growth: Deserving premium for sustainable 37 23.62 27.40 22.4 16 3 (0 02 311 C H)* Producers growth and visibility Nari Technology Electrical Power New UHV line approved: Eyeing bellwethers with 89 19.39 22.00 18.4 13 3 (600406 CH)^ Equipment core equipment and profit elasticity Baking up a promising market across the Mainland: Toly Bread (603866 Packaged Food 23 49.40 56.00 46.9 13 3 Great expectations as the bread consumption moves CH)^ into high gear.

Source: Bloomberg, CS U Closing prices as of 18 Jan 2019 * Shenzhen-HK Stock Connect – Northbound Stocks (ChiNext Board for Professional

China Connect Weekly: mapping A-share The the STI of Board Institutional Investors Only) ^ Shanghai-HK Stock Connect – Northbound Stocks Risk Rating: 1 to 5 in ascending order

16 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. Top Twenties:

Top 20 Gainers Top 20 Losers Price WoW Chg Price WoW Chg Company Company (Rmb) (%) (Rmb) (%)

Qingdao Vland (603739 CH) 17.75 74 Zhongchang Big Data (600242 CH) 12.86 (28)

Bank of Qingdao (002948 CH) 7.65 69 Baota Industry (000595 CH) 3.40 (22)

Shanghai Sinotec (603121 CH) 27.36 61 Xinjiang Communications (002941 CH) 31.54 (22)

Longjie Special Fiber (603332 CH) 30.79 58 SinoDaan (300635 CH) 15.25 (20)

Chinalin Securities (002945 CH) 5.73 58 Taiyong-Changzheng (002927 CH) 32.13 (20)

RoboTechnik Intelligent (300757 CH) 63.27 53 Kangde Xin (002450 CH) 6.17 (19)

Yicheng New Energy (300080 CH) 7.26 38 Geoway (600462 CH) 2.75 (18)

Shenyang Machine Tool (000410 CH) 8.44 32 Sanan Optoelectronics (600703 CH) 9.54 (18)

Fangda Group (000055 CH) 5.85 31 Baiyun Electric (603861 CH) 11.74 (18)

Wintime Energy (600157 CH) 2.23 28 Advanced Fiber (300620 CH) 37.75 (16)

Shunho New Materials (002565 CH) 5.04 26 Kerong Environmental (300152 CH) 2.11 (15)

YGSOFT (002063 CH) 7.32 26 Changzhou NRB (002708 CH) 7.69 (15)

Zhongfu Industry (600595 CH) 2.88 26 CSC Nanjing Tanker (601975 CH) 2.42 (14)

Huaming Power Equipment (002270 CH) 5.93 24 Changsheng Bio-technology (002680 CH) 3.37 (14)

Topstrong Living (300749 CH) 31.97 24 QuanXinHao (000007 CH) 6.63 (14)

Huakong SEG (000068 CH) 5.08 24 Shangdong Geo-Mineral (000409 CH) 5.36 (14)

Hanbell Precise (002158 CH) 9.45 23 Hanhe Cable (002498 CH) 2.74 (14)

Meijin Energy (000723 CH) 4.18 22 GHT (300711 CH) 19.31 (14)

Center Power Tech (002733 CH) 18.23 21 Senyuan Road (300210 CH) 3.95 (14)

Guibao Science (300019 CH) 7.47 21 Yunyi Electric (300304 CH) 3.85 (13)

China Connect Weekly: mapping A-share The the STI of Board Source: Bloomberg, CS * Closing prices as of 18 Jan 2019

17 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. A/H premium table

A/H A/H Price Price A-share H-share Company premium A-share H-share Company premium (Rmb) (Rmb) (%) (%) 600876 CH 110 8 H K Luoyang Glass 11.55 519 601588 CH 588 HK Beijing North Star 2.90 52 002703 CH 1057 HK Zhejiang Shibao 4.50 365 600027 CH 1071 HK Huadian Power 4.69 51 601330 CH 1330 HK Dynagreen Environmental 12.39 322 601600 CH 2600 HK Aluminum of China 3.68 50 600860 CH 187 HK Beijing Jingcheng 4.94 300 000063 CH 763 HK ZTE 19.98 50 002490 CH 568 HK Shangdong Molong 4.38 293 603993 CH 3993 HK China Molybdenum 3.92 49 Northeast Electric 000585 CH 42 HK 2.09 261 600188 CH 1171 H K Yanzhou Coal 9.12 49 Development 000488 CH 1812 HK Chenming Paper 5.95 49 600871 CH 1033 HK Sinopec SSC 1.88 246 601238 CH 2238 HK Guangzhou Automobile 10.26 43 601866 CH 2866 HK CSCL 2.42 222 600012 CH 995 HK Anhui Express 5.77 42 600874 CH 1065 HK Tianjin Capital Environmental 8.36 216 000157 CH 1157 H K Zoomlion 3.70 40 600775 CH 553 HK Nanjing Panda 7.41 210 601633 CH 2333 HK Great Wall Motor 6.20 38 601375 CH 1375 HK Central China Securities 4.64 207 600332 CH 874 HK Baiyunshan 36.71 38 601038 CH 38 HK First Tractor 4.81 203 000776 CH 1776 HK GF Securities 13.81 38 601068 CH 2068 HK China Aluminum Int'l 5.54 201 601808 CH 2883 HK China Oilfield Services 8.68 38 601066 CH 6066 HK CSC Financial Co Ltd 11.78 161 000921 CH 921 HK Kelon Electric 8.42 36 002910 CH 1533 HK Zhuangyuan Pasture 12.19 133 601766 CH 1766 HK China South Locomotive 8.97 35 601881 CH 6881 HK China Galaxy Securities 8.05 131 600026 CH 113 8 H K China Shipping Dev. 4.72 34 601880 CH 2880 HK Dalian Port 1.96 125 600030 CH 6030 HK CITIC Securities 17.88 34 601811 CH 811 H K Xinhua Winshare 9.97 122 600837 CH 6837 HK Haitong Securities 9.85 33 601727 CH 2727 HK Shanghai Electric 5.06 120 601998 CH 998 HK CITIC Bank 5.55 32 600685 CH 317 HK COMEC 10.14 118 601628 CH 2628 HK China Life 21.51 30 601869 CH 6869 HK Yangtze Optical Fibre 40.89 118 601899 CH 2899 HK Zijin Mining Group 3.03 28 002460 CH 1772 HK Ganfeng Lithium 22.42 106 601333 CH 525 HK Guangshen Railway 3.50 27 601326 CH 3369 HK Qinhuangdao Port 3.17 106 601601 CH 2601 HK Pacific Insurance 29.83 27 601319 CH 1339 HK People's Insurance Co Group 5.51 101 601818 CH 6818 HK China Everbright Bank 3.95 27 600635 CH 1635 HK DZUG 4.97 101 000513 CH 1513 HK Livzon Pharmaceutical 27.97 26 601005 CH 1053 HK Chongqing Iron & Steel 2.06 99 6 01111 C H 753 HK Air China 8.13 24 600875 CH 1072 HK Dongfang Electrical 8.49 91 6 0 0115 C H 670 HK China Eastern Airlines 5.09 23 601991 CH 991 HK Datang Int'l Power 3.18 86 002594 CH 1211 H K Byd Co Ltd 46.82 23 600958 CH 3958 HK DFZQ 8.34 84 600600 CH 168 HK Tsingtao Brewery 36.19 21 601717 CH 564 HK ZMJ 5.84 83 600548 CH 548 HK Shenzhen Express 9.03 21 002202 CH 2208 HK Goldwind 10.99 81 601988 CH 3988 HK BOC 3.56 19 601618 CH 1618 HK Metallurgical Corporation 3.05 80 6 01211 C H 2611 H K Guotai Junan Securities 16.65 18 002936 CH 6196 HK Bank of Zhengzhou Co Ltd 5.18 80 601088 CH 1088 HK Shenhua Energy 19.01 18 601828 CH 1528 HK Red Star Macalline 11. 01 78 600016 CH 1988 HK Minsheng Bank 5.83 18 000756 CH 719 HK Xinhua Pharmaceutical 6 .11 75 601939 CH 939 HK CCB 6.64 16 600547 CH 1787 HK Shandong Gold Mining 29.52 75 601288 CH 1288 HK ABC 3.58 16 601898 CH 1898 HK China Coal 4.84 70 601607 CH 2607 HK Shanghai Pharmaceuticals 16.95 15 601857 CH 857 HK PetroChina 7.35 69 600808 CH 323 HK Maanshan Iron & Steel 3.64 15 600688 CH 338 HK Shanghai Petrochemical 5.21 69 600196 CH 2196 HK Fosun Pharmaceutical 23.70 15 6 01107 C H 107 HK Sichuan Expressway 3.65 68 6 0118 6 C H 118 6 H K China Railway Construction 10.83 11 600362 CH 358 HK Jiangxi Copper 13.61 67 601390 CH 390 HK China Railway Group 7.07 11 601919 CH 1919 HK COSCO 4.53 66 601328 CH 3328 HK BoComm 5.98 8 601800 CH 1800 HK China Comm. Construction 11.17 65 601398 CH 1398 HK ICBC 5.39 8 601992 CH 2009 HK BBMG 3.58 63 000898 CH 347 HK Angang Steel 5.30 7 600011 CH 902 HK Huaneng Power 6.91 62 000002 CH 2202 HK Vanke 25.76 4 000039 CH 2039 HK CIMC 11.4 4 61 600028 CH 386 HK Sinopec 5.40 2 603157 CH 6116 H K La Chapelle Fashion 8.80 57 600036 CH 3968 HK China Merchants Bank 27.10 1 601336 CH 1336 HK New China Life Insurance 40.95 57 000338 CH 2338 HK Weichai Power 8.23 1 600999 CH 6099 HK CMSC 14.25 56 600660 CH 3606 HK Fuyao Glass 22.96 1 002672 CH 895 HK Dongjiang Environmenta 11. 2 9 55 600377 CH 177 HK Jiangsu Express 9.97 1 601788 CH 6178 HK EB Securities 9.72 55 601318 CH 2318 HK Ping An 59.92 (3) 601688 CH 6886 HK HTSC 18.44 55 600585 CH 914 HK Anhui Conch Cement 31.05 (9) 600029 CH 1055 HK China Southern Airlines 7.24 53 China Connect Weekly: mapping A-share The the STI of Board

18 21 Jan 2019 Source: Bloomberg, CS * A-share closing prices as of 18 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. Major Index Performance:

CITIC S&P 50 Index PER (x) 17-19E Chg (%) 6M Avg Daily T/O Mkt Cap Sector 17 18E 19E PEG (x) 1-wk 1-mth YTD 1-yr (Rmb mn) (Rmb bn) Market cap weighted average 20 14 12 0.7 2.7 1.3 5.1 (20.8) 39,975 13,651 Energy 41 16 16 0.7 0.4 (4.0) 3.8 (17.8) 1,346 2,020 Materials 11 8 8 0.6 1.6 (1.9) 2.5 (21.2) 2,016 353 Capital Goods 24 19 15 0.9 1.3 (3.3) 2.0 (20.8) 2,223 827 Transportation 9 9 8 1.7 2.6 4.0 1.7 (13.3) 245 124 Automobiles & Components 9 8 8 1.3 0.9 1.6 (4.8) (21.9) 513 297 Consumer Durables & Apparel 13 11 10 1.0 5.0 7.3 11.5 (27.5) 3,268 603 Retailing 111 13 26 1.0 2.6 4.6 11. 3 (19.7) 425 102 Food, Beverage & Tobacco 28 23 19 1.4 6.8 11. 2 12.2 (17.1) 5,809 1,367 Pharmaceuticals, Biotechnology & Life Sciences 59 48 38 2.3 4.7 (0.8) 7.5 (4.7) 1,995 254 Banks 7 6 6 0.9 2.2 0.4 2.9 (20.2) 6,304 4,587 Diversified Financials 16 19 16 174.6 4.2 6.7 11.1 (21.8) 2,235 337 Insurance 15 14 11 1.0 4.4 (0.8) 6.1 (26.6) 4,586 1,285 Software & Services 128 82 58 2.7 (2.9) 14.5 14.2 (31.2) 946 59 Technology Hardware & Equipment 24 19 19 1.9 2.0 5.9 9.9 (36.7) 4,961 432 Telecommunication Services NA 42 27 NA 0.2 2.5 3.9 (21.6) 602 167 Utilities 17 15 15 3.7 2.0 4.3 (0.6) (4.1) 362 397 Real Estate 9 8 6 0.4 1.4 (0.1) 6.1 (34.2) 2,140 440

CITIC S&P 300 Index PER (x) 17-19E Chg (%) 6M Avg Daily T/O Mkt Cap Sector 17 18E 19E PEG (x) 1-wk 1-mth YTD 1-yr (Rmb mn) (Rmb bn) Market cap weighted average 21 16 14 0.9 2.2 1.1 4.5 (20.9) 89,226 23,113 Energy 40 17 15 0.7 0.8 (3.1) 4.7 (18.3) 2,142 2,136 Materials 22 17 14 0.9 1.7 (0.6) 4.5 (27.5) 10,408 1,252 Capital Goods 22 18 15 1.0 1.3 (0.8) 3.3 (22.1) 9,546 2,165 Commercial & Professional Services 16 16 13 1.5 (0.7) 0.9 2.8 (44.6) 239 41 Transportation 17 18 15 2.6 0.8 0.2 3.1 (23.7) 2,351 824 Automobiles & Components 18 15 13 1.0 (0.3) (0.0) (1.4) (27.3) 2,373 825 Consumer Durables & Apparel 15 13 12 1.1 4.5 6.6 10.8 (29.2) 4,469 771 Consumer Services 33 23 19 1.0 (1.5) 0.2 (1.3) 1.9 896 177 Retailing 60 12 17 0.7 2.4 3.1 7.8 (29.7) 883 218 Food & Staples Retailing 36 45 32 5.7 0.2 9.4 3.5 (26.9) 332 101 Food, Beverage & Tobacco 31 26 21 1.5 6.4 9.4 10.2 (12.3) 7,827 1,978 Household & Personal Products 47 35 28 1.5 1.4 (4.6) 0.4 (20.2) 105 18 Health Care Equipment & Services 37 30 23 1.3 7.3 (1.6) 1.0 (24.5) 860 137 Pharmaceuticals, Biotechnology & Life Sciences 39 32 26 1.6 4.2 (2.0) 3.0 (16.3) 7,355 931 Banks 7 6 6 1.0 2.0 0.3 2.5 (19.8) 7,209 5,806 Diversified Financials 18 22 19 NA 2.8 6.1 10.2 (21.7) 2,899 528 Insurance 15 14 11 1.0 4.4 (0.8) 6.1 (26.6) 4,586 1,285 Software & Services 74 54 41 2.1 0.6 8.6 10.8 7.9 3,449 274 Technology Hardware & Equipment 23 20 17 1.5 0.4 1.6 6.8 (28.8) 12,510 1,185 Semiconductors & Semiconductor Equipment 17 21 16 3.7 0.4 0.8 11. 0 (29.7) 1,091 116 Telecommunication Services NA 42 27 NA 0.2 2.5 3.9 (21.6) 602 167 Media & Entertainment 21 18 16 1.4 0.2 (1.2) 3.6 (34.3) 836 173 Utilities 27 17 15 0.8 1.6 2.4 (0.2) (6.7) 1,667 954 Real Estate 13 8 7 0.3 1.6 0.2 4.6 (30.2) 4,593 1,052

China Connect Weekly: mapping A-share The the STI of Board Source: Bloomberg, CS * Closing prices as of 18 Jan 2019 GICS (Global Industry Classification Standard)

19 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. What to Watch Out For: Major corporate results and economic data Results Announcement Code Company Estimated Date Financial Year / Quarter^ - - - - - *Companies included in CITIC S&P 300 Index only ^ MM/YY QQ Source: Bloomberg, CS

Publication of Economic Data Date/Time* Event Period Figures Actual Previous Revision 01/17 - 01/25/2019 FX Net Settlement - Clients CNY Dec -- -- -139.4b -- 01/21/2019 10:00 Retail Sales YoY Dec 8.2% -- 8.1% -- 01/21/2019 10:00 Retail Sales YTD YoY Dec 9.0% -- 9.1% -- 01/21/2019 10:00 Industrial Production YoY Dec 5.3% -- 5.4% -- 01/21/2019 10:00 Industrial Production YTD YoY Dec 6.2% -- 6.3% -- 01/21/2019 10:00 Fixed Assets Ex Rural YTD YoY Dec 6.0% -- 5.9% -- 01/21/2019 10:00 Property Investment YoY Dec -- -- 9.7% -- 01/21/2019 10:00 Surveyed Jobless Rate Dec -- -- 4.8% -- 01/21/2019 10:00 GDP YoY 4Q 6.4% -- 6.5% -- 01/21/2019 10:00 GDP SA QoQ 4Q 1.5% -- 1.6% -- 01/21/2019 10:00 GDP YTD YoY 4Q 6.6% -- 6.7% -- Source: Bloomberg, CS * MM/DD/YYYY China Connect Weekly: mapping A-share The the STI of Board

20 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. What to Watch Out For: Major economic indicators

GDP ► 7.0 (%) 6.9 China posted 3Q18 GDP growth of 6.8 6.5% YoY, below the 6.7% figure in 6.7 2Q18 and the lowest since the global 6.6 6.5 financial crisis in 2008. The National 6.4 China GDP Constant Price YoY Bureau of Statistics pointed to a sharp 6.3 6.2 China GDP Constant Price Cumulative increase in the number of challenging 6.1 YoY externalities and continuing pains 6.0 from China’s restructuring efforts.

The economy is decelerating steadily 2019E

as downward pressure mounts. The 31/3/2016 30/6/2016 30/9/2016 31/3/2017 30/6/2017 30/9/2017 31/3/2018 30/6/2018 30/9/2018 31/12/2016 31/12/2017 market forecasts full-year 2019E GDP growth to be 6.2% YoY.

6 (%) ◄ CPI and PPI China CPI YoY 5 For Dec 2018, China recorded CPI China PPI YoY 4 growth of 1.9% YoY, the smallest 3 advance in six months and 0.3ppt lower 2 compared to the Nov reading; PPI inched 1 up 0.9% YoY, the weakest in two years. 0 The market estimated full-year 2019E CPI

2019E and PPI growth to be 2.3% and 2.2% YoY, 31/1/2018 28/2/2018 31/3/2018 30/4/2018 31/5/2018 30/6/2018 31/7/2018 31/8/2018 30/9/2018

31/12/2017 31/10/2018 30/11/2018 31/12/2018 respectively.

Import and Export ► 50 (%) China Export Trade USD YoY In Dec 2018, China’s imports and exports 40 China Import Trade USD YoY in value terms fell by 4.4% and 7.6% 30 YoY, respectively. Difficult comparison, 20 weakening external demand and the 10 passing of “front-loading exports” combined to slash export growth by 0 9.8ppts, to -4.4% YoY. Regarding imports, in (10) addition to a high base, sluggish domestic

demand is a major cause for the decline. 2019E

The market estimates full-year 2019E 31/1/2018 28/2/2018 31/3/2018 30/4/2018 31/5/2018 30/6/2018 31/7/2018 31/8/2018 30/9/2018 31/12/2017 31/10/2018 30/11/2018 31/12/2018 exports and imports to rise 4.0% and 6.0% YoY, respectively.

52.1 (Index) ◄ Manufacturing PMI 51.8 51.5 China’s manufacturing PMI came to 49.4 in 51.2 50.9 Dec 2018, the lowest since Jul 2016, with 50.6 weak sub-indices across the board. The 50.3 overall softness was caused by sluggish 50.0 49.7 internal and external demand, combined 49.4 with price declines and seasonality. We 49.1 expect proactive fiscal policies such as accelerating issuance of local special

31/1/2018 28/2/2018 31/3/2018 30/4/2018 31/5/2018 30/6/2018 31/7/2018 31/8/2018 30/9/2018 bonds will take effect from the start of the 31/12/2017 31/10/2018 30/11/2018 31/12/2018 new year, hopefully propping up macro Source: Bloomberg, CS

China Connect Weekly: mapping A-share The the STI of Board growth.

21 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. What to Watch Out For: Major economic indicators

Value Added of Industry ► 7.3 (%) In Nov 2018, total industrial value-added 7.0 from China’s scale enterprises increased 6.7 5.4% YoY, lagging the 5.9% reading in 6.4 the previous month. Of major industrial 6.1 products, the growth of automobile 5.8 China Value Added of Industry YoY Cumulative output eased 16.7% YoY; steel products 5.5 and raw steel output continued to expand China Value Added of Industry YoY 5.2 at a double-digit pace, while cement inched up only 1.6% YoY, a drastic retreat 2018 2019E

from the 11.5% rate recorded a month Jan-Feb 31/3/2018 30/4/2018 31/5/2018 30/6/2018 31/7/2018 31/8/2018 30/9/2018

earlier and the lowest since Mar this year. 31/12/2017 31/10/2018 30/11/2018 The market forecasts 2019E industrial value-added will advance 5.8% YoY.

3,000 (Rmb bn) ◄ CNY Monthly New Loan

2,500 New loans and credits tallied Rmb1.08trn

2,000 in Dec 2018, up nearly Rmb496bn from the year-ago period. Of the total, 1,500 (i) 45.5% are bills and non-bank loans, 1,000 functioning as a loan reserve; (ii) lending

500 to companies/institutions expanded circa Rmb118bn only, reflecting the year- 0 end slow season for project starts; and (iii) household short-term and mid/ long-term debts rose approximately

31/1/2018 28/2/2018 31/3/2018 30/4/2018 31/5/2018 30/6/2018 31/7/2018 31/8/2018 30/9/2018 Rmb152bn and Rmb308bn, respectively, 31/10/2018 30/11/2018 31/12/2018 in line with the seasonal pattern (tight mortgage lending towards year-end). Monthly Supply M1 & M2 ► 17 (%) China’s M2 growth came to 8.1% YoY 15 China Monthly Money Supply M1 YoY in Dec 2018, still one of the slowest 13 monthly increases in the year. M1 growth 11 China Monthly Money Supply M2 YoY stabilized, logging a 1.5% YoY gain and 9 flat MoM. Going forward, M2 should 7 gradually steady and rebound, provided 5 banks’ risk appetite remains unchanged. 3 1 However, the magnitude of any rebound should be limited. Considering potential

changes in companies’ cash flow, the 2019E

prospect of negative M1 growth still 31/1/2018 28/2/2018 31/3/2018 30/4/2018 31/5/2018 30/6/2018 31/7/2018 31/8/2018 30/9/2018 31/12/2017 31/10/2018 30/11/2018 31/12/2018 lingers for the near future. The market expects M2 growth to be 8.6% YoY for full-year 2018E.

10.4 (YoY %) ◄ Retail Sales Value

10.0 Retail sales value in China climbed at a 9.6 slower pace for the second consecutive 9.2 month in Nov 2018, rising 8.1% YoY and 8.8 trailing the 8.6% print for Oct 2018. In 8.4 Jan-Nov 2018, aggregate consumer 8.0 spending came to Rmb34,509bn, up 9.1%

2018 2019E YoY and in line with expectations. The Jan-Feb 31/3/2018 30/4/2018 31/5/2018 30/6/2018 31/7/2018 31/8/2018 30/9/2018 31/10/2018 30/11/2018 31/12/2017 market projects a 9.0% YoY uptick for full- year 2019E.

China Connect Weekly: mapping A-share The the STI of Board Source: Bloomberg, CS

22 21 Jan 2019 Please refer to the attachment for detailed disclaimer and regulatory disclosures. Disclaimer: Analyst Certification The analysts primarily responsible for the preparation of all or part of the research report contained herein hereby certify that: (i) the views expressed in this research report accurately reflect the personal views of each such analyst about the subject securities and issuers; and (ii) no part of the analyst’s compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed in this research report. Investment rating system

Rating standard for Investment Recommendations Ratings Description Investment ratings are divided into stock rating and sector rating (unless stated otherwise). Rating standard is based BUY Increase relative to market representative index over 20% on the relative performance with market in 6 to 12 months from the report issuance date, i.e. Performance of company OVERWEIGHT Increase relative to market representative index between 5% and 20% stock price (or sector index) over the 6-to-12-month period Stock from report issuance day is benchmarked against the ratings HOLD Increase relative to market representative index between -10% and 5% change in market representative index in the same period. CSI 300 Index will be the benchmark index for A-share market; the NEEQ Component Index (stocks subject to SELL Decrease relative to market representative index over 10% negotiated transfer) or the NEEQ Market Making Index (stocks subject to market making) will be the benchmark OUTPERFORM Increase relative to market representative index over10% index for the NNEQ board; MSCI-China Index will be the Industry NEUTRAL Increase relative to market representative index between -10% and 10% benchmark index for Hong Kong market; and NASDAQ ratings Composite Index or Standard & Poor’s 500 Index will be the benchmark indices for U.S. market. UNDERPERFORM Decrease relative to market representative index over 10%

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