Industrials / China 9 July 2013 Time for bottom-fishing China Transportation Sector • We expect the market to remain volatile over the near term due to Positive (unchanged) uncertainty about the macroeconomic environment Neutral • We recommend accumulating stocks with resilient earnings prospects, especially those with a long-term growth story Negative • Out top picks are AviChina, TravelSky, BCIA, and SITC; we see short-term trading opportunities for CEA, CX, OOIL, and YTI How do we justify our view? Top picks: AviChina Industry & HKD4.20 (from HKD4.60) on cuts Technology (AviChina), to our earnings forecasts. Travelsky Technology (TST), Beijing Capital International We revise our six-month target Airport (BCIA) and SITC prices as follows: Air China (AC) to Kelvin Lau International (SITC). We believe HKD7.50 (from HKD8.00), CEA to (852) 2848 4467 AviChina will benefit the most HKD3.30 (from HKD4.10), CX to
[email protected] from the opening up of China’s HKD16.50 (from HKD16.80), OOIL general aviation market. We raise to HKD61 (from HKD64), China Leo Siu our six-month target price to Shipping Container Lines (CSCL) to (852) 2773 8243
[email protected] HKD5.40 (from HKD5.30). HKD2.40 (from HKD2.70), and YTI to HKD4.45 (from HKD4.68). Major TST and BCIA should be the main risks to our calls include lower-than- ■ What's new beneficiaries of continued air-traffic expected demand growth and a With the stock market expected to volume rises, as they are not affected higher-than-expected fuel price. remain volatile over the near term, by declines in air fares or rises in the we recommend buying companies jet-fuel price.