Investment Daily

31 March 2021

Major Market Indicators Market Overview 30 Mar 29 Mar 26 Mar

Mkt. Turn.(mn) 169,300 190,300 183,900 Resistance at 20 Day SMA; Upcoming Focus will switch to macro Stock Advances 1,014 930 1,141 factor Stock Declines 719 824 628 Dow Jones Index hit new record. And stock market rose. rose 239 HSI 28,578 28,338 28,336 points to 28,577 on Tuesday. H-share Index rose 77 points to 11,020. Tech Index rose 199 Change +239 +2 +437 points to 8,180. Market turnover was HK$169.3 billion. Health care sector performed well. HSI Turn.($bn) 66.52 78.36 76.55 Innovent Bio(1801) jumped 6.0% while JD Health(6618) surged 7.6%. HSCEI 11,021 10,943 10,966 property sector rose. SHK Property(16) gained 5.0% while New World Development(17) Change +78 -23 +222 advanced 5.2%. HSCEI Turn.($bn) 66.46 82.42 74.42 Consumer Confidence Index soared obviously in March and is much higher than expectation. President Biden will announce a sizable infrastructure investment plan on HSI Technical Indicators Wednesday. Together with progress on vaccination, it boosted the outlook for a broad economic recovery and rising inflation. 10-days MA 28,588 50-days MA 29,321 US stocks consolidated on Tuesday, with the three major US stock index fell 0.1-0.3% 250-days MA 25,901 respectively. On the other hand, 10 Year US treasury yield once rose to 1.77% but finally 14-days RSI 46.46 closed flat at 1.73%. Besides, US dollar index maintained current strength, rose 0.4% to Primary resistance 28,815 93.3, gold price fell 1.7% to US$1,684 per ounce. Primary support 28,200 Asian stock market remained firm on early trading session on Wednesday. Together with HS CEI Technical Indicators anticipated quarter end window dressing activities, HK stock is likely to range trade today, 10-days MA 11,105 Hang Seng Index resistance is at 20 Day SMA(28,815). Hong Kong stock’s result 50-days MA 11,483 announcement period near the end. Investor focus will switch to macro factor. Of which, 250-days MA 10,374 US treasury yield and US exchange rate continued to move upward, which is not favorable 14-days RSI 44.58 to emerging stock markets including HK stock. It will limit HK stock short term upside. Primary resistance 11,483 Primary support 10,800 Hong Kong stock connect recorded net inflow of HK$3.3bn on Tuesday. Of which, buying concentrated on new economy stocks, (0700) recorded most net buy, while HSI Futures Innovent Bio(1801) and (1810) also recorded fund net inflow. However, with the rate hike concern, as well as valuation of the sector remain high, it would limit the short

30 Mar 29 Mar 26 Mar term upside. On the other hand, BOCHK(2388) result is inline with market expectation. Apr 28,525 28,385 28,920 Since it will benefit from rate hike and further integration between HK/China financial Volume 116,744 122,499 162,188 markets, investors could accumulate during weakness. Open interests 112,252 37,624 83,225 May 28,395 28,338 28,252 HSI Chart Volume - 97,924 62,097 Open interests - 106,411 82,124

HSCEI Futures

30 Mar 29 Mar 26 Mar

Apr 10,999 10,946 10,957 Volume 71,930 130,351 169,175 Open interests 157,408 70,342 146,728 May 10,957 10,930 10,943 Sources ：Google Volume - 117,723 104,783 Open interests - 154,983 124,656

Investment Daily Daily Focus BOCHK(2388): Result Comment

 BOCHK(2388) FY20 net profit fell 17.7% yoy to HK$26,487mn. Final BOCHK(2388) Info DPS fell 19.8% yoy to HK$0.795. Total DPS dropped 19.1% yoy to Closed price 28.4 HK$1.242 while dividend payout ratio is 49.6%. The Group said that its future dividend payout ratio will maintain at 40-60%. Expected P/B (X) 0.96 Expected Dividend  Owing to major Central bank adopt very low interest rate policy, BOCHK 4.7 yield (%) adjusted net interest margin fell 36 basis points yoy to 1.33% in 2020. 52 week high 29.0 Despite a 7.3% loan advance increase, its net interest income still fell 52 week low 19.9 14.3% yoy to HK$34,738mn. On the other hnad, its net fee and 14RSI 64 commission revenue fell 0.7% yoy to HK$10,842mn.  Owing to HIBOR further decline in 2H20, its NIM fell to 1.17% in 3Q20 and 1.16% in 4Q20. Given the ample market liquidity in Hong Kong, the rebound is likely to be limited for HIBOR, its NIM might still have pressure in 2021. However, with mid to high digit loan growth, its net interest income will stabilize in 2021.  Its loan provision charges tose 34.4% yoy to HK$2,489mn, or a credit cost of 0.17% in 2020. Its NPL ratio increased 2 basis points to 0.27% in 4Q20. However, NPL coverage ratio rose to 230% in FY20. Together with vaccination roll out, HK economy is likely to be bottom in 2021, credit cost might not increase further in 2021.  Overall speaking, BOCHK FY20 result is inline with expectation. Its earnings outlook in 2021 is likely to stay flat as the NIM remain at low level. However, its current valuation is 0.96x prospective P/B and over 4% dividend yield, valuation is not high. Since BOCHK will benefit from rate hike and further integration between HK/China financial markets, investors could accumulate during weakness. Analyst: Samuel Chua, CFA

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Investment Daily BYD(1211) 1QFY21 Guidance Missed Expectation

 BYD(1211) announced annual result for the year ended 31 December BYD(1211) Info 2020. Net profit grew 1.6 times to RMB 4.23 billion which was close to Closed price 170.4 low end of expectation range. A large proportion of profit came from BYD Electronics(285). BYD 20Q4 net profit was RMB820 million, Expected P/E (X) 63 Expected Dividend which dropped 53% QoQ. 0.1 yield (%)  Revenue was RMB153.5 billion, up 26% YoY, which was in line with 52 week high 278.4 expectation. Revenue from the automobiles and related products, and 52 week low 36.6 other products amounted to approximately RMB81,958 million, 14RSI 38 representing a year-on-year increase of 37.66%; the revenue from the mobile handset components, assembly service and other products amounted to approximately RMB59,354 million, representing a year-on-year increase of 13.01%; and the revenue from the rechargeable batteries and photovoltaic business amounted to approximately RMB11,705 million, representing a year-on year increase of 20.44%. These three business segments accounted for 53.40%, 38.68% and 7.63% of the Group’s total revenue, respectively.  FY20 gross profit margin was 17.8%, up around 3 ppt. But 20Q4 gross profit margin dropped to 16.6% which disappointed market. FY20 government subsidy which was relevant to revenue declined 9.3% to RMB1.29 billion.  BYD forecasts 21Q1 net profit amounts to RMB200 million to RMB300 million, which increases by 77.56% to 166.34% as compared with the corresponding period last year. It was below market expectation. Management said that 21Q1 automobile business would under pressure since the company would need to de-stock PV which currently equips NCM battery. Besides, even though DMI hybrid order was strong, ICE sales was negatively impacted at this moment. Management expects that after completion of de-stocking, profit will gradually improve.  Forward looking, the company aims that FY21 sales volume reached 555,000 which will increase 29% compared to FY20 level. Overall speaking, we are still positive towards BYD continuous strength of Han sales, new product cycle, blade battery business development and potential semiconductor spin-off. However, chips shortage and raw material cost hike are common headwind of automobile sector. And decreasing EV subsidy pose further pressure to profit outlook. FY21 forecast P/E is 63x which is higher than last three year average 44x. Investors are suggested to wait and see. Analyst: Tracy Chan Lok Yee

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Investment Daily (1109) Result Comment

 China Resources Land (1109) announced annual result ended December China Resources Land (1109) Info 2020. Revenue amounted to RMB179.6 billion, up by 21.2% YoY. Net Closed price 39.2 profit was RMB29.8 billion, up by 3.6&. Core net profit rose 11.6% to RMB24.14 billion. Revenue and profit were in line with market Expected P/E (X) 8.5 Expected Dividend expectation. A final dividend of HKD1.312 was declared, full year 3.8 yield (%) dividend was HKD1.48, up by 17% YoY. 52 week high 41.3  By segments, revenue from development properties was RMB157.1 52 week low 27.0 billion, up by 23.5%. Development property gross profit margin 14RSI 61 decreased to 29.1%, dragged consolidated gross profit margin by 7 ppt to 30.9%. Booking average selling price fell about 10% to RMB15,063 per square meter as Tier 1 city revenue contribution decreased. On the other hand, in 2020, contracted sales rose 17.5% to RMB285 billion with 7.1% increased contracted GFA of 14.187 million square meters. China Resources Land achieved the sales target of RMB262 billion in 2020.  Rental income from investment properties rose 4.5% to RMB12.8 billion. Gross profit margin of the segment remained flat at 66.4%. The rental income of 45 core shopping malls exceeded RMB10 billion, representing an increase of 7.2%; occupancy rate remained high at 94.7%. If excluding rental concession impact due to COVID 19, rental growth could have been 16.2%. It is noticeable that rental income/(dividend + interest) ratio reached 0.84. China Resources Land expects interest and dividend can be fully covered by its rental income within 2 years.  China Resources Land is a green zone company under the Three Red Lines policy which fully complied with policy requirements. Liability-to-asset ratio (excluding advance receipts) was 59.7%. Net interest bearing debt to equity ratio was 29.5%. Cash-to-short term debt ratio was 2.3. Balance sheet remained strong.  Looking ahead, FY21 sales target is RMB315 billion, up by 11% YoY. Saleable resources amounted to RMB505.7 billion, with more than 80% of it located in Tier1/2 cities. Management believed the target is achievable. Besides, China Resources Land set growth targets for 14th Five Year Plan - double the attributable contract sales and rental income by the end of 2025. Therefore, attributable contract sales and rental income are expected to reach RMB372 billion (2020: RMB186 billion) and 25.6 billion respectively, in 2025, representing a CARG of 15%. The target is ambitious.  Overall, gross profit margin dropped significantly in 2020 is disappointing, yet it is still at industry average. On the other hand, commercial development and rental income of China Resources Land have consistently outperformed it peers, demonstrating strong resilience of business and asset portfolio. Coupled with its financial strength and positive guidance, valuation premium has been given on grounds. FY21 PE is 8.5, higher than industry average of 5. Dividend yield is 3.8%. Accumulate. Analyst: Law Yin Ling

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Investment Daily

Shanghai / -Hong Kong Stock Connect Statistics SH Connect SZ Connect Combined Southbound Balance (RMB bn) 46.42 51.24 79.37 Balance as % of Quota Amount 89.3 98.5 94.5

Top 10 Most Actively Traded Stocks(SH-HK Connect Southbound) Stock Name Stock code Buy Trades (HKD) Sell Trades (HKD) Turnover (HKD) TENCENT 700 1,534,430,750 787,146,400 2,321,577,150 -W 3690 447,281,720 534,699,978 981,981,698 SMOORE INTL 6969 358,365,700 311,290,600 669,656,300 941 244,055,675 331,776,206 575,831,881 XIAOMI-W 1810 343,096,250 167,440,640 510,536,890 2382 161,605,510 300,073,620 461,679,130 INNOVENT BIO 1801 242,097,400 179,199,375 421,296,775 2020 317,396,100 82,778,100 400,174,200 CNOOC 883 114,359,070 175,949,627 290,308,697 XINYI SOLAR 968 177,460,520 110,977,320 288,437,840 Sources: HKEx Top 10 Most Actively Traded Stocks(SZ-HK Connect Southbound) Stock Name Stock code Buy Trades (HKD) Sell Trades (HKD) Turnover (HKD) TENCENT 700 1,182,122,250 466,920,960 1,649,043,210 XIAOMI-W 1810 652,152,710 448,073,870 1,100,226,580 MEITUAN-W 3690 666,076,740 292,211,988 958,288,728 SMOORE INTL 6969 219,909,350 423,188,511 643,097,861 GCL-POLY ENERGY 3800 329,860,160 309,731,290 639,591,450 WUXI BIO 2269 307,865,600 164,305,600 472,171,200 CPIC 2601 273,708,100 76,213,340 349,921,440 INNOVENT BIO 1801 276,758,075 50,990,082 327,748,157 BYD ELECTRONIC 285 160,905,700 153,761,850 314,667,550 CHINA OVERSEAS 688 200,850,550 87,633,450 288,484,000 Sources: HKEx Other Statistics

Ten Most Actively Traded Stocks Stock Name Code Change Closed Price Turnover(Million) TENCENT 700 -0.41% 609.50 126.02 BABA-SW 9988 2.50% 221.60 75.39 MEITUAN-W 3690 4.71% 293.60 71.98 BIDU-SW 9888 -0.79% 201.80 42.81 XIAOMI-W 1810 2.20% 25.60 40.92 BYD COMPANY 1211 -0.41% 170.40 30.82 WUXI BIO 2269 2.08% 98.25 22.83 CCB 939 -1.20% 6.60 20.50 GROUP 992 12.35% 11.28 20.47 PING AN 2318 -0.16% 93.55 20.02

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Investment Daily Ten Short Sell Stocks

Stock Name Code Short Selling Turnover Short Selling Ratio Turnover TENCENT 00700.HK 3.78B 12.60B 30.03% TRACKER FUND 02800.HK 1.57B 2.02B 77.75% PING AN 02318.HK 980.55M 2.00B 48.98% BYD COMPANY 01211.HK 876.24M 3.08B 28.43% BIDU-SW 09888.HK 625.21M 4.28B 14.61% BABA-SW 09988.HK 606.11M 7.54B 8.04% XINYI SOLAR 00968.HK 550.54M 1.61B 34.21% CM BANK 03968.HK 533.92M 1.30B 41.08% MEITUAN-W 03690.HK 427.85M 7.20B 5.94% BYD ELECTRONIC 00285.HK 425.62M 1.08B 39.24% Source: AA Stocks Economic Calendars

Date Country Event Survey Prior China Overseas (688), China Resources Land (1109), BYD Mon Hong Kong (1211), Shenzhou Int't (2313) Results WH Group (288), BOC (2388), BeiGene (6160), Tue Hong Kong Smarthome (6690) Results Wed China Mar. PMI 51.1 50.6 Hong Kong SMIC (981), Evergrande (3333), Smoore (6969) Results Thu US Initial Jobless Claims (Till Mar 27) 684k Continuing Jobless Claims (Till Mar 20) 3,870k Mar. Markit Manufacturing PMI 59.0 Mar. ISM Manufacturing 61.0 60.8 Euro Zone Mar. Markit Manufacturing PMI 62.4 62.4 China Mar. Caixin Manufacturing PMI 51.3 50.9 Fri US Mar. Change in Nonfarm Payrolls 600k 379k Market will close (Good Friday) Hong Kong Market will close (Good Friday)

All the above named KGI analyst(s) is SFC licensed person accredited to KGI Asia Ltd to carry on the relevant regulated activities. Each of them and/or his/her associate(s) does not have any financial interest in the respectively covered stock, issuer and/or new listing applicant.

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