Investment Daily

23 November 2020

9Major Market Indicators Market Overview 20 Nov 19 Nov 18 Nov

Mkt. Turn.(mn) 132,600 131,900 133,800 Fund Flow to IPO Market in the short term; HSI major Stock Advances 892 793 977 resistance at 26,800 Stock Declines 873 978 720 stock market traded within narrow range on Friday. Investors focus switched to HSI 26,452 26,357 26,544 COVID 19 epidemic, fund flow away from traditional stock to Tech stock. The Hang Seng Index Change +95 -187 +129 closed 95 points higher at 26,452. Marketturnover maintained at HK$132.6bn. Hang Seng Tech HSI Turn.($bn) 49.97 51.83 52.34 index futures will be launched on coming Monday, together with the worsening epidemic, tech HSCEI 10,553 10,555 10,640 stocks performed well, Alibaba (9988) rose 3.2%. Besides, auto sector remained strong, GAC Change -2 -85 +90 Auto (2238) rose 6.5%. HSCEI Turn.($bn) 49.55 51.99 51.14 Investors continued to concern the impact of recent soar in newly COVID 19 infected case on US economy. Besides, Treasury Secretary Steven Mnuchin announced a decision to allow some of the Federal Reserve's emergency lending programs to expire at the end of the year, further hurt HSI Technical Indicators investors confidence. US stock market fell last Friday.The three major US stock index fell 10-days MA 26,302 0.4-0.8% last Friday, with the Dow index suffered the most. Besides, nearly all S&P 500 50-days MA 25,591 sub-industry sector declined, reflecting the selling pressure is comprehensive. On the other hand, 250-days MA 25,379 fund flow to treasury market, 10 Year US Treasury yield fell 3 basis points to 0.83%. Moreover, 14-days RSI 69.29 oil price rose 1% to US$42.2 with hope that OPEC will cut oil production volume at meeting on Primary resistance 26,800 Primary support 26,302 30 Nov and 1 Dec. The COVID 19 epidemic in US is severe, state governments have further stepped up social HS CEI Technical Indicators distancing measures. The epidemic seems to dominate the global investment market again, while 10-days MA 10,576 funds flow from traditional stocks to technology stocks. On the other hand, some local 50-days MA 9,953 government corporate bonds defaulted, although Central government vowed to prevent 250-days MA 10,180 systematic risk, it might still hurt investor confidence. Besides, HK infected cases increases 14-days RSI 63.67 sharply, also impacted local Hong Kong stocks. The Hang Seng Index is unlikely to break Primary resistance 10,700 through the major resistance at 26,800 points in the short term. It is expected that funds may flow Primary support 10,332 to IPO market in the short term. With Hang Seng Tech Index futures to be launched today, together with some fund flow back to HSI Futures Tech stock due to the epidemic, China Internet stock rebounded. However, since China government plans to strengthen the regulation on digital platform leaders, it might limit the 20 Nov 19 Nov 18 Nov rebound upside of the sector. Of which, Alibaba (9988) will suffered most from antitrust concern, Nov 26,455 26,349 26,555 expect heavy selling pressure when share price is above HK$260. Volume 83,242 78,210 90,384 Open interests 122,931 126,260 124,095 Technical Analysis Dec 26,455 26,345 26,560 The Hang Seng Index once rose above 26,500 last Friday, but failed to sustain. It finally closed Volume 3,266 1,539 1,358 with a white candlestick, and continued to stay above 10 Day SMA (26,302). Market daily Open interests 21,628 19,929 19,420 turnover maintained at HK$130bn while MACD narrowed in positive region. Overall marketing

momentum is not strong. Initial support remained at 10 Day SMA while second support is at HSCEI Futures 26,000. In addition, the first resistance level is 26,800 points and the second resistance level is 20 Nov 19 Nov 18 Nov 27,000 points. Nov 10,537 10,545 10,651 Volume 59,343 52,912 60,870 HSI Chart Open interests 195,427 203,427 203,899

Dec 10,535 10,546 10,647 Volume 12,437 4,285 2,312 Open interests 83,495 79,017 76,146

Sources ：Google Investment Daily Daily Focus Yue Kan Holdings [2110.HK]: IPO Brief  Yue Kan (YK) is a Hong Kong-based marine construction works IPO Info subcontractor specialising in reclamation works and supplemented by our vessel chartering services and other civil engineering works. The marine Industry sector Construction construction works carried out by us included, among others (i) Issue price (HK$) 14.2-17.0 Total share offer size reclamation works; (ii) regulation and deposition of sand blanket works; 125-150 (HK$ Mn) (iii) submarine pipeline works; and (iv) sediment treatment works. FY19 Adjusted P/E(x) 14.2-17.0  YK also provided vessel chartering services to customers where YK Zhong Jia, chartered vessels for a specific period, and provided vessel crew for Sponsor Sinomax Securities operation and management of the vessels. In addition, YK was also Dealing of shares 7-Dec engaged in other civil engineering works including foundation works, site formation works and roads and drainage works  YK completed 27 projects involving marine construction and/or other civil engineering works with contract sum of HK$737.6mn. YK had 10 projects in progress, including five marine construction projects, four other civil engineering projects and one project involving both marine construction and other civil engineering works.  YK generally act as a subcontractor to carry out marine construction or other civil engineering works. Its customers are main contractors engaged by property developers or project employers in the public and private sectors. Top 5 customers accounted for 80-93% of total sales while largest customer accounted for over 30%.  YK past few years profit growth is just flat. Besides, the marine construction subcontracting business is not appeal to investors. Neutral Analyst: Samuel Chua, CFA

http://www.kgieworld.com 23 November 2020 2

Investment Daily Evergrande Property Services[6666.HK]: IPO Brief  The company is one of the largest and fastest-growing comprehensive IPO Info property management service providers in China. Among the Top 100 Property Industry sector Property Management Companies in China, the company ranked second management in number of cities covered by their projects; third in each of total revenue, Issue price (HK$) 8.50-9.75 total gross profit and total net profit; third in contracted GFA and fourth in Total share offer size 13,784-15,811 (HK$ Mn) GFA under management, as of, or for the year ended Dec 31, 2019, FY19 P/E(x) 83.5-95.8 according to CIA. Its net profit increased at a CAGR of 195.5% from Huatai, UBS, 2017 to 2019, which was the highest among the Top 20 Property ABC Management Companies in China, according to CIA. International, Sponsor CCB  The company’s portfolio of properties was all-round and diversified, International, including mid- to high-end residential properties, commercial properties, CITIC, Haitong theme parks, industrial parks, healthcare complexes, themed towns and Dealing of shares 2-Dec schools, among others. As of June 30, 2020, the company was contracted to provide property management services, value-added services to non-property owners and/or community value-added services to 1,354 projects in over 280 cities in 22 provinces, five autonomous regions, four municipalities and Hong Kong, with a total GFA under management of approximately 254.0 million sq.m. and contracted GFA of 513.3 million sq.m.  For the breakdown of revenue, Property management services, Value-added services to non-property owners and Community value-added service accounted for 61.9%, 27% and 11.1% of total revenue respectively for 1H20. For the breakdown by under management by developer, projects from the accounted for 98.8% of revenue from property management services. The company ranked first among property developers in China in terms of attributable contracted sales for three consecutive years starting from 2017, according to CRIC. It is believed the Evergrande Group’s vast land bank provides the company with a large potential pipeline of high-quality projects. The company charged property management fees primarily on a lump sum basis, accounted for 99.6% of the revenue from Property management services, and by property type, residential property accounted for around 98% of revenue from Property management services.  The company experienced fast growth during the reporting period, the revenue had CAGR of 29.14% during FY2017 to FY2019, while the gross profit had CAGR of 101.4% and profit had CAGR of 195.5% during the same period. And for the 1H20, the company’s revenue and profit also up 31.7% and 181.7% YoY. The company's gross profit margin continued to increase, from 9.8% in FY2017 to 38.1% as for 1H20, which was mainly due to greater economies of scale and increased percentage of newly delivered property management projects with relatively high property management fees, and enhanced effort to charge property management fees for parking spaces etc. For the gross profit margin by business, for 1H20, Property management services was 33.6%, Value-added services to non-property owners was 37.3%, Community value-added services was 65%.

http://www.kgieworld.com 23 November 2020 3

Investment Daily  In terms of valuation, the company’s FY19 P/E ratio is 83.5-95.8times, and the P/B ratio is about 9.1-9.6 times. In Aug 2020, the company introduced a group of strategic investors, including Sequoia Capital China Growth, CITIC Capital Holdings Limited, Yunfeng Capital Limited and Holdings as per IPO investors. The company also entered into cornerstone investment agreements with more than 20 cornerstone investors agreed to, purchased with an aggregate amount of HK$7.20 billion of shares. Moreover, the company also intend to adopt an annual dividend payout ratio of no less than 25% of the annual net profit available for distribution generated in each financial year beginning from the year ending Dec 31, 20. However, the company’s average trade receivables turnover days was higher than peers, it was 116 days for FY2017, 147days for FY2018, 194 days for FY2019 and 218 days for the six months ended June 30,20. And for 1H20, the average trade receivables turnover days for Related parties reached 413 days, and worth investors attention, we recommended “Neutral ”. Analyst: Li Kam Ming, CFA, FRM

http://www.kgieworld.com 23 November 2020 4

Investment Daily

Shanghai / -Hong Kong Stock Connect Statistics SH Connect SZ Connect Combined Southbound Balance (RMB bn) 49.90 49.72 78.30 Balance as % of Quota Amount 96.0 95.6 93.2

Top 10 Most Actively Traded Stocks(SH-HK Connect Southbound) Stock Name Stock code Buy Trades (HKD) Sell Trades (HKD) Turnover (HKD) XIAOMI-W 1810 603,478,650 273,698,570 877,177,220 TENCENT 700 480,819,650 357,390,600 838,210,250 MEITUAN-W 3690 517,187,640 199,485,620 716,673,260 GREATWALL MOTOR 2333 177,849,120 69,052,260 246,901,380 SMIC 981 110,125,300 135,332,350 245,457,650 AUTO 175 169,251,250 63,588,910 232,840,160 PA GOODDOCTOR 1833 6,071,160 218,055,750 224,126,910 JXR 1951 88,638,760 104,238,840 192,877,600 CHINA RES BEER 291 172,758,900 10,956,700 183,715,600 2020 119,097,000 62,148,800 181,245,800 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 1,147,907,400 177,633,950 1,325,541,350 BYD COMPANY 1211 891,225,950 176,332,600 1,067,558,550 XIAOMI-W 1810 324,519,870 164,195,670 488,715,540 MEITUAN-W 3690 113,263,000 273,687,715 386,950,715 CHINA RES BEER 291 345,322,300 41,534,600 386,856,900 JXR 1951 163,118,280 106,949,280 270,067,560 GEELY AUTO 175 188,363,500 71,898,400 260,261,900 LIFETECH SCI 1302 112,572,320 142,322,020 254,894,340 KINGDEE INT'L 268 151,020,600 100,037,000 251,057,600 SMIC 981 100,345,600 124,435,925 224,781,525 Sources: HKEx Other Statistics

Ten Most Actively Traded Stocks Stock Name Code Change Closed Price Turnover(Million) TENCENT 700 2.62% 588.00 97.01 BABA-SW 9988 3.18% 253.00 63.16 XIAOMI-W 1810 1.39% 25.55 56.14 MEITUAN-W 3690 3.47% 304.20 41.77 BYD COMPANY 1211 5.92% 182.50 39.36 GEELY AUTO 175 1.99% 23.10 23.84 PING AN 2318 -0.84% 88.15 20.30 AIA 1299 1.47% 89.50 18.06 941 -0.32% 46.95 17.73 JD-SW 9618 1.14% 336.00 17.12

http://www.kgieworld.com 23 November 2020 5

Investment Daily Ten Short Sell Stocks

Stock Name Code Short Selling Turnover Short Selling Ratio Turnover TENCENT 00700.HK 1.63B 9.70B 16.83% PING AN 02318.HK 960.05M 2.03B 47.30% MEITUAN-W 03690.HK 687.01M 4.18B 16.45% BABA-SW 09988.HK 655.36M 6.32B 10.38% TRACKER FUND 02800.HK 618.11M 2.31B 26.74% XIAOMI-W 01810.HK 538.33M 5.61B 9.59% CCB 00939.HK 474.47M 1.66B 28.63% GEELY AUTO 00175.HK 413.38M 2.38B 17.34% BYD COMPANY 01211.HK 411.56M 3.94B 10.46% JD-SW 09618.HK 385.24M 1.71B 22.50% Source: AA Stocks Economic Calendars

Date Country Event Survey Prior Mon US Nov. Markit PMI 52.5 53.4 Euro Zone Nov. Markit Manufacturing PMI 54.2 54.8 Hong Kong Tongcheng-Elong (780), CSPC Pharma (1093) Results Tue Hong Kong Xiaomi (1810), Chow Tai Fook (1929) Results Wed US 3Q. GDP Annualized QoQ 33.1% 33.1% Nov. Durable Goods Orders 1.3% 1.9% Initial Jobless Claims (Till Nov 21) 742k Continuing Jobless Claims (Till Nov 14) 6,372k Oct. Personal Income 0.1% 0.9% Oct. Personal Spending 0.5% 1.4% Hong Kong Ali Health (241) Result Thu US Market will close (Thanksgiving Day) Fri China Oct. Industrial Profits YoY 10.1% Hong Kong (384) Result

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.

Some of KGI Asia Ltd. equity research and earnings estimates are available electronically on KGIEWORLD.COM. Please contact your KGI representative for information. The information Disclaimer and opinions in this report are those of KGI Asia Ltd. internal research activity. KGI Asia Ltd. does not make any representation or warranty, express or implied, as to the fair ness, accuracy, completeness or correctness of the information and opinions contained in this report. The information and opinions contained in this report are subject to change without any notice. No person accepts any liability whatsoever for any loss however arising from any use of this report or its contents. This report is not to be construed as an invitation or offer to buy o r sell securities and/or to participate in any investment activity. This report is being supplied solely for informational purposes and may not be reproduced or published (in whole or in part) for any purpose without the prior written consent of KGI Asia Ltd.. Members of the KGI group and their affiliates may provide services to any companies and affiliates of such companies m entioned herein. Members of the KGI group, their affiliates and their directors, officers and employees may from time to time have a position in any securities mentioned herein.

http://www.kgieworld.com 23 November 2020 6