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Strategy Note Hong Kong│May 6, 2019

Hong Kong Hong Kong Strategy Northbound Stock Connect: First monthly net Insert outflows since October 2018  Northbound trading recorded net fund outflows of RMB18bn in April, which was the first monthly net outflows since October 2018.  Average daily turnover of northbound trading continued to increase from RMB55bn (buy and sell) in March to RMB62bn in April.  Major stocks accumulated by northbound investors early this year became major selling targets in April. The top five stocks unloaded in April were Wuliangye Yibin (000858.CH), Kweichow Moutai (600519.CH), Midea Group (000333.CH), Gree Electric Appliances (000651.CH) and Hangzhou Hikvision Digital Technology (002415.CH).  Sector preference for net fund inflows in April remained diversified. The top five companies were China Merchants Bank (600036.CH), China State Construction Engineering (601668.CH), Focus Media Information Technology (002027.CH), SAIC Motor (600104.CH), and China International Travel Service (601888.CH).  Northbound investors underweighted consumer staples on a relative basis in April.

April 2019: First fund outflows since Oct 2018 for northbound trading Net fund inflows for northbound trading were strong in the first two months of 2019, exceeding RMB120bn in total. The net inflows became much smaller in March at only RMB4.36bn. Then we saw net fund inflows of RMB18bn in April, the first monthly net outflows since October 2018. The CSI 300 Index was up only 0.66% in April (currency adjusted), the weakest monthly performance YTD. However, the Index was still up 33% YTD, whereas the Hang Seng Index rose 16.9% (both adjusted for currency). The accumulated northbound net fund inflows YTD have still exceeded that of southbound by 470%.

Average daily turnover (ADT) continued to increase despite net fund outflows The ADT for northbound trading continued to increase, from RMB55bn in March to RMB62bn in April, although the net fund flows turned from positive to negative. This was also much higher than the ADT in February (RMB40.1bn).

Darlings in earlier months became major selling targets The baijiu and home appliance sectors recorded the largest net fund inflows earlier this year, But these stocks recorded the largest net fund outflows in April. Wuliangye, Kweichow Moutai, Midea and Gree were in the top 5 net fund outflow stocks in April (Figure 3 and 11). In particular, for Wuliangye, the stake owned by northbound investors dropped from 9.69% at end-March to 7.51% at end-April.

Net fund inflows remained diversified in April The pattern of net fund inflows in April was similar to that in March, i.e. no clear sector preference. The top five companies recording the largest net fund inflows in April were China Merchants Bank, China State Construction Engineering, Focus Media, SAIC Motor and China International Travel Service (Figures 2 and 10).

Northbound investors underweight consumer staples on a relative basis Based on the MSCI China A Inclusion Index (the version to be adopted in November, Analysts which will include mid caps), the weighting of consumer staples increased by 1.04ppt Wong Chi Man during the month to 13.78% at end-April. However, the weighting owned by northbound T (852) 3698 6317 investors was largely flat month-on-month at 23.43% (Figure 18). The main reason is that [email protected] E Wuliangye, Kweichow Moutai and Inner Mongolia Yili were major selling targets of Mark Lau northbound investors in April. T (852) 3698 6393 E [email protected]

Hong Kong Strategy Note│ May 6, 2019

Figure 1: Monthly net buy of northbound Stock Connect trading (RMB bn)

70.0 60.7 60.4 60.0

50.0 47.0

40.0 35.5

30.0

20.0 17.6 16.1

10.0 4.36

0.0

-10.0 -10.5 -20.0 -18.0 -30.0 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19

SOURCES: BLOOMBERG, CGIS RESEARCH

Figure 2: Top 20 net fund inflows for Shanghai-listed stocks in the past four weeks (northbound)

Changes in stake Changes in % Change in Total stake owned by Amount of stake owned by Price on 2019E shareholding held by shareholding held by Estimated amount northbound investors owned by Market cap 2019E 2020E Ticker Company name northbound May 3 PBR (x) Dividend northbound investors northbound investors involved (RMB) based on CCASS northbound (RMB$m) PER (x) PER (x) investors within a (RMB$) yield (%) compared with Mar 30 compared with Mar 30 record on Apr 30 investors (RMB) month (ppt) 600036 CH Equity China Merchants Bank Co Ltd 60,261,790 7.3% 2,119,378,458 0.24% 3.52% 30,550,894,879 34.45 867,324.63 9.62 8.51 1.63 3.13 601668 CH Equity China State Construction Engineering Corp Ltd 170,743,531 24.2% 1,089,099,808 0.41% 2.13% 5,370,664,346 6.13 257,345.16 6.19 5.58 1.12 5.01 600104 CH Equity SAIC Motor Corp Ltd 32,447,517 9.1% 913,552,116 0.28% 3.34% 10,698,541,204 27.38 319,893.17 8.59 8.08 1.30 6.12 601888 CH Equity China International Travel Service Corp Ltd 10,897,383 4.4% 817,142,859 0.56% 13.23% 20,011,043,637 77.49 151,297.33 34.21 29.12 8.18 1.03 601012 CH Equity LONGi Green Energy Technology Co Ltd 34,522,035 36.0% 800,204,341 1.00% 3.78% 2,958,222,845 22.7 82,269.88 21.66 17.52 4.59 0.63 601225 CH Equity Shaanxi Coal Industry Co Ltd 67,297,987 26.1% 627,729,985 0.68% 3.30% 2,929,351,995 9.02 90,200.00 8.23 7.95 1.66 3.80 601933 CH Equity Yonghui Superstores Co Ltd 55,654,739 41.0% 511,387,545 0.59% 2.04% 1,871,317,741 9.77 93,503.41 40.37 31.31 4.47 1.53 600406 CH Equity NARI Technology Co Ltd 21,104,881 11.4% 446,096,885 0.46% 4.51% 4,117,704,555 19.93 92,118.75 19.29 16.51 3.28 2.19 601166 CH Equity Industrial Bank Co Ltd 21,867,308 4.0% 424,444,448 0.11% 2.75% 11,394,258,127 19.92 413,821.88 6.39 5.90 0.91 3.72 600660 CH Equity Fuyao Glass Industry Group Co Ltd 16,183,399 6.9% 419,188,566 0.65% 10.04% 6,325,297,715 25.12 62,403.59 15.96 14.45 3.04 3.91 603338 CH Equity Zhejiang Dingli Machinery Co Ltd 5,221,230 59.1% 412,889,896 2.11% 5.68% 1,056,124,400 75.12 18,606.98 28.17 20.83 6.90 0.74 600258 CH Equity BTG Hotels Group Co Ltd 18,213,273 24.7% 402,218,452 1.86% 9.40% 1,862,765,444 20.25 19,822.55 20.64 17.29 2.41 0.69 601155 CH Equity Seazen Holdings Co Ltd 9,392,800 30.8% 395,848,374 0.42% 1.78% 1,582,342,411 39.62 89,411.41 6.47 5.21 3.01 5.01 600436 CH Equity Zhangzhou Pientzehuang Pharmaceutical Co Ltd 2,916,446 34.1% 339,828,454 0.48% 1.90% 1,322,220,391 115.3 69,562.47 46.34 35.90 12.63 0.62 600025 CH Equity Huaneng Lancang River Hydropower Inc 80,121,979 50.9% 336,893,845 0.45% 1.32% 971,946,688 4.09 73,620.00 19.02 16.17 1.63 2.69 600606 CH Equity Greenland Holdings Group Co Ltd 42,068,786 18.4% 326,013,059 0.35% 2.23% 2,023,726,870 7.47 90,896.11 6.63 5.49 1.25 4.86 600872 CH Equity Jonjee Hi-Tech Industrial And Commercial Holding Co L 9,074,292 30.9% 319,216,308 1.14% 4.83% 1,385,983,780 36.05 28,718.77 38.64 30.32 7.97 0.64 603589 CH Equity Anhui Kouzi Distillery Co Ltd 5,440,460 47.7% 316,510,419 0.91% 2.81% 1,095,357,188 64.99 38,994.00 21.79 18.45 5.81 1.83 600600 CH Equity Tsingtao Brewery Co Ltd 5,715,811 48.4% 277,241,330 0.42% 1.30% 893,313,756 51 64,424.29 40.16 33.55 3.67 1.04 603259 CH Equity WuXi AppTec Co Ltd 2,942,825 61.6% 0.25% 0.66% 683,084,763 88.52 102,516.25 47.90 38.35 5.63 0.50 272,295,393 SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 3: Top 20 net fund outflows for Shanghai-listed stocks in the past four weeks (northbound)

Changes in stake Changes in % Change in Total stake owned by Amount of stake owned by Price on 2019E shareholding held by shareholding held by Estimated amount northbound investors owned by Market cap 2019E 2020E Ticker Company name northbound May 3 PBR (x) Dividend northbound investors northbound investors involved (RMB) based on CCASS northbound (RMB$m) PER (x) PER (x) investors within a (RMB$) yield (%) compared with Mar 30 compared with Mar 30 record on Apr 30 investors (RMB) month (ppt) 600519 CH Equity Kweichow Moutai Co Ltd (4,664,956) -3.9% (4,319,602,643) -0.37% 9.24% 113,102,504,632 974 1,223,536.66 28.90 24.55 9.86 1.73 600887 CH Equity Inner Mongolia Yili Industrial Group Co Ltd (47,992,283) -5.4% (1,457,251,393) -0.79% 13.79% 25,926,282,948 31 188,421.96 27.22 23.47 7.16 2.40 600028 CH Equity China Petroleum & Chemical Corp (206,203,266) -20.6% (1,204,325,265) -0.17% 0.65% 4,503,661,753 5.68 673,961.52 10.64 10.12 0.93 6.87 601318 CH Equity Ping An Insurance Group Co of China Ltd (10,998,393) -1.4% (911,311,132) -0.06% 4.36% 68,630,453,873 86.1 1,542,621.66 11.98 10.19 2.63 2.43 600276 CH Equity Jiangsu Hengrui Medicine Co Ltd (10,131,784) -1.7% (652,453,117) -0.23% 13.06% 37,757,267,828 65.75 290,814.52 53.59 41.99 14.20 0.28 601390 CH Equity China Railway Group Ltd (81,965,541) -46.7% (604,164,100) -0.36% 0.41% 659,464,376 7.04 153,850.11 8.21 7.30 0.98 2.34 600779 CH Equity Sichuan Swellfun Co Ltd (9,940,172) -19.1% (468,455,456) -2.03% 8.63% 2,123,746,514 50.39 24,617.82 32.32 25.26 11.86 2.62 601939 CH Equity China Construction Bank Corp (58,116,764) -11.0% (429,289,163) -0.02% 0.19% 3,512,696,163 7.44 1,514,020.29 6.88 6.50 0.94 4.37 600066 CH Equity Zhengzhou Yutong Bus Co Ltd (27,307,577) -10.3% (412,929,575) -1.23% 10.72% 3,394,286,396 14.3 31,659.33 12.55 12.05 1.98 3.62 600875 CH Equity Dongfang Electric Corp Ltd (31,804,747) -68.2% (400,603,506) -1.03% 0.48% 177,697,829 11.96 34,580.80 27.37 23.78 1.29 1.05 600030 CH Equity CITIC Securities Co Ltd (15,019,085) -6.7% (367,259,540) -0.12% 1.73% 4,819,002,762 23.04 260,399.50 20.37 18.16 1.77 1.97 603816 CH Equity Jason Furniture Hangzhou Co Ltd (6,566,094) -34.4% (361,022,608) -1.53% 2.92% 623,157,851 49.68 21,366.81 16.58 13.74 4.49 2.39 600737 CH Equity COFCO Tunhe Sugar Co Ltd (34,687,748) -54.6% (355,813,705) -1.69% 1.41% 273,242,105 9.47 20,254.89 n.a. n.a. 2.54 n.a. 600018 CH Equity Shanghai International Port Group Co Ltd (42,169,989) -30.5% (349,428,561) -0.18% 0.42% 776,989,873 8.07 187,011.55 18.13 16.30 2.35 1.91 600009 CH Equity Shanghai International Airport Co Ltd (4,587,469) -1.4% (295,509,461) -0.24% 17.19% 23,401,546,057 70.63 136,101.08 26.15 24.76 4.59 1.15 600585 CH Equity Anhui Conch Cement Co Ltd (6,754,776) -1.7% (280,548,363) -0.13% 7.50% 15,881,962,101 39.95 214,008.44 7.08 7.21 1.78 4.65 600031 CH Equity Sany Heavy Industry Co Ltd (21,290,846) -3.6% (273,769,864) -0.27% 7.41% 7,049,236,800 12.25 102,600.78 11.56 10.25 2.64 2.79 601688 CH Equity Huatai Securities Co Ltd (11,706,162) -12.1% (257,167,656) -0.14% 1.03% 1,739,914,123 20.4 155,250.27 20.08 18.07 1.58 1.97 601328 CH Equity Bank of Communications Co Ltd (40,286,901) -5.5% (254,363,819) -0.05% 0.93% 4,335,023,088 6.26 445,582.87 6.13 5.79 0.65 4.98 600837 CH Equity Haitong Securities Co Ltd (17,465,626) -17.0% -0.15% 0.74% 1,191,009,520 13.98 143,099.98 19.55 17.24 1.31 1.80 (254,341,099) SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Hong Kong Strategy Note│ May 6, 2019

Figure 4: Top 20 Shanghai-listed stocks based on positive changes in stake by northbound investors in the past four weeks (ppt)

% Change in Changes in Total stake owned Changes in Amount of stake shareholding held by stake owned by by northbound Price on 2019E shareholding held by Estimated amount owned by Market cap 2019E 2020E Ticker Company name northbound investors northbound investors based on May 3 PBR (x) Dividend northbound investors involved (RMB) northbound (RMB$m) PER (x) PER (x) compared with Mar investors within CCASS record on (RMB$) yield (%) compared with Mar 30 investors (RMB) 30 a month (ppt) Apr 30 603737 CH Equity Skshu Paint Co Ltd 3,523,385 112.5% 231,149,156 2.69% 5.09% 440,004,823 66.11 8,801.15 26.10 17.58 6.59 n.a. 603338 CH Equity Zhejiang Dingli Machinery Co Ltd 5,221,230 59.1% 412,889,896 2.11% 5.68% 1,056,124,400 75.12 18,606.98 28.17 20.83 6.90 0.74 600258 CH Equity BTG Hotels Group Co Ltd 18,213,273 24.7% 402,218,452 1.86% 9.40% 1,862,765,444 20.25 19,822.55 20.64 17.29 2.41 0.69 600971 CH Equity Anhui Hengyuan Coal Industry and Electricity Power Co 15,423,230 61.7% 131,060,733 1.54% 4.04% 319,224,899 7.9 7,900.03 7.05 6.48 0.98 3.80 600233 CH Equity YTO Express Group Co Ltd 5,312,221 56.7% 73,753,865 1.40% 3.86% 195,362,982 13.31 37,646.73 18.04 15.62 0.43 1.17 600422 CH Equity KPC Pharmaceuticals Inc 9,139,095 219.7% 119,243,430 1.20% 1.74% 152,009,696 11.43 8,714.14 23.33 20.78 2.40 3.59 600872 CH Equity Jonjee Hi-Tech Industrial And Commercial Holding Co L 9,074,292 30.9% 319,216,308 1.14% 4.83% 1,385,983,780 36.05 28,718.77 38.64 30.32 7.97 0.64 600123 CH Equity Shanxi Lanhua Sci-Tech Venture Co Ltd 11,748,570 68.3% 98,721,555 1.03% 2.53% 225,747,959 7.8 8,910.72 8.32 7.44 0.85 2.69 600748 CH Equity Shanghai Industrial Development Co Ltd 18,808,995 156.0% 203,146,103 1.02% 1.67% 315,117,182 10.21 18,832.99 n.a. n.a. 1.86 n.a. 600201 CH Equity Jinyu Bio-Technology Co Ltd 11,911,962 10.5% 199,332,503 1.02% 10.70% 2,013,899,738 16.08 18,647.26 20.15 16.65 3.64 1.93 601012 CH Equity LONGi Green Energy Technology Co Ltd 34,522,035 36.0% 800,204,341 1.00% 3.78% 2,958,222,845 22.7 82,269.88 21.66 17.52 4.59 0.63 600557 CH Equity Jiangsu Kanion Pharmaceutical Co Ltd 5,920,139 164.2% 83,764,329 0.98% 1.57% 126,698,141 13.3 7,885.32 17.90 16.08 2.19 0.63 600105 CH Equity Jiangsu Etern Co Ltd 11,688,675 374.9% 73,020,823 0.93% 1.18% 90,615,896 6.12 7,668.06 n.a. n.a. 2.81 n.a. 603589 CH Equity Anhui Kouzi Distillery Co Ltd 5,440,460 47.7% 316,510,419 0.91% 2.81% 1,095,357,188 64.99 38,994.00 21.79 18.45 5.81 1.83 600153 CH Equity Xiamen C & D Inc 25,351,316 53.1% 246,716,593 0.89% 2.58% 703,604,731 9.63 27,302.98 5.38 4.69 0.98 5.50 603588 CH Equity Beijing GeoEnviron Engineering & Technology Inc 5,744,823 78.2% 65,737,189 0.87% 1.98% 143,978,637 11 7,265.97 16.87 13.24 2.70 0.45 601100 CH Equity Jiangsu Hengli Hydraulic Co Ltd 7,490,340 15.4% 231,768,954 0.85% 6.35% 1,608,625,951 28.71 25,322.22 21.87 17.68 5.57 1.50 600565 CH Equity Chongqing Dima Industry Co Ltd 20,234,697 31.2% 96,972,376 0.84% 3.53% 377,413,711 4.44 10,824.61 7.53 5.41 1.25 5.41 600239 CH Equity YunNan Metropolitan Real Estate Development Co Ltd 13,327,558 89.1% 64,485,389 0.83% 1.76% 117,692,345 4.16 6,679.66 14.34 n.a. 1.40 n.a. 600348 CH Equity Yang Quan Coal Industry Group Co Ltd 19,802,237 194.9% 126,479,717 1.25% 187,580,919 6.26 15,055.30 7.30 6.97 0.89 4.31 0.82% SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 5: Top 20 Shanghai-listed stocks based on negative changes in stake by northbound investors in the past four weeks (ppt)

% Change in Changes in Total stake owned Changes in Amount of stake shareholding held by stake owned by by northbound Price on 2019E shareholding held by Estimated amount owned by Market cap 2019E 2020E Ticker Company name northbound investors northbound investors based on May 3 PBR (x) Dividend northbound investors involved (RMB) northbound (RMB$m) PER (x) PER (x) compared with Mar investors within CCASS record on (RMB$) yield (%) compared with Mar 30 investors (RMB) 30 a month (ppt) Apr 30 600668 CH Equity Zhejiang Jianfeng Group Co Ltd (12,824,424) -64.7% (195,951,092) -3.73% 2.03% 97,922,040 13.99 4,813.73 n.a. n.a. 1.47 n.a. 600779 CH Equity Sichuan Swellfun Co Ltd (9,940,172) -19.1% (468,455,456) -2.03% 8.63% 2,123,746,514 50.39 24,617.82 32.32 25.26 11.86 2.62 600737 CH Equity COFCO Tunhe Sugar Co Ltd (34,687,748) -54.6% (355,813,705) -1.69% 1.41% 273,242,105 9.47 20,254.89 n.a. n.a. 2.54 n.a. 603816 CH Equity Jason Furniture Hangzhou Co Ltd (6,566,094) -34.4% (361,022,608) -1.53% 2.92% 623,157,851 49.68 21,366.81 16.58 13.74 4.49 2.39 600066 CH Equity Zhengzhou Yutong Bus Co Ltd (27,307,577) -10.3% (412,929,575) -1.23% 10.72% 3,394,286,396 14.3 31,659.33 12.55 12.05 1.98 3.62 603118 CH Equity Shenzhen Gongjin Electronics Co Ltd (9,549,379) -63.9% (107,189,506) -1.23% 0.69% 51,752,771 9.61 7,454.80 24.64 18.84 1.62 1.04 600200 CH Equity Jiangsu Wuzhong Industrial Co (8,425,548) -65.2% (63,973,982) -1.17% 0.62% 29,211,910 6.5 4,692.30 n.a. n.a. 1.96 n.a. 600875 CH Equity Dongfang Electric Corp Ltd (31,804,747) -68.2% (400,603,506) -1.03% 0.48% 177,697,829 11.96 34,580.80 27.37 23.78 1.29 1.05 600125 CH Equity China Railway Tielong Container Logistics Co Ltd (12,896,860) -16.2% (112,429,912) -0.99% 5.11% 534,017,240 8 10,444.17 18.22 15.81 1.80 1.25 600563 CH Equity Xiamen Faratronic Co Ltd (2,179,200) -45.5% (100,456,969) -0.97% 1.16% 111,713,360 42.75 9,618.75 18.82 16.17 3.77 3.23 600138 CH Equity China CYTS Tours Holding Co Ltd (6,661,963) -14.9% (108,336,208) -0.92% 5.25% 543,171,372 14.3 10,350.91 15.08 13.05 1.69 0.94 600694 CH Equity Dashang Co Ltd (2,652,362) -32.9% (81,299,947) -0.90% 1.84% 159,431,231 29.44 8,647.08 9.98 9.68 1.02 2.99 600859 CH Equity Wangfujing Group Co Ltd (6,789,428) -22.5% (128,148,837) -0.87% 3.01% 428,762,118 18.35 14,244.19 11.39 10.25 1.27 2.72 600684 CH Equity Guangzhou Pearl River Industrial Development Co Ltd (7,205,116) -69.9% (37,010,279) -0.84% 0.36% 14,081,509 4.54 3,874.71 n.a. n.a. 1.22 n.a. 600879 CH Equity China Aerospace Times Electronics Co Ltd (22,668,812) -81.6% (160,354,858) -0.83% 0.19% 32,521,827 6.38 17,348.95 28.23 27.98 1.45 0.00 600978 CH Equity Yihua Lifestyle Technology Co Ltd (12,321,283) -33.5% (60,491,632) -0.83% 1.65% 105,742,575 4.33 6,420.83 8.49 7.22 0.77 1.15 600240 CH Equity Beijing Homyear Capital Holdings Co Ltd (11,574,707) -51.7% (38,225,470) -0.81% 0.76% 28,504,046 2.64 3,760.03 n.a. n.a. 28.36 n.a. 600312 CH Equity Henan Pinggao Electric Co Ltd (10,782,340) -40.3% (93,770,417) -0.79% 1.18% 130,532,817 8.17 11,086.05 17.27 12.69 1.24 2.08 600887 CH Equity Inner Mongolia Yili Industrial Group Co Ltd (47,992,283) -5.4% (1,457,251,393) -0.79% 13.79% 25,926,282,948 31 188,421.96 27.22 23.47 7.16 2.40 600284 CH Equity Shanghai Pudong Road & Bridge Construction Co Ltd (7,573,146) -51.3% (61,681,471) 0.74% 52,629,863 7.32 7,102.27 14.27 12.41 1.20 2.19 -0.78% SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Hong Kong Strategy Note│ May 6, 2019

Figure 6: Top 20 Shanghai-listed stocks based on positive % change in stake by northbound investors in the past four weeks

Changes in Total stake owned Changes in % Change in Estimated Amount of stake stake owned by by northbound Price on 2019E shareholding held by shareholding held by amount owned by Market cap 2019E 2020E Ticker Company name northbound investors based on May 3 PBR (x) Dividend northbound investors northbound investors involved northbound (RMB$m) PER (x) PER (x) investors within CCASS record on (RMB$) yield (%) compared with Mar 30 compared with Mar 30 (RMB) investors (RMB) a month (ppt) Apr 30 600075 CH Equity Xinjiang Tianye Co Ltd 6,703,572 1843.7% 47,416,599 0.69% 0.73% 41,908,253 5.93 5,767.06 11.34 9.83 1.20 n.a. 600072 CH Equity CSSC Science & Technology Co Ltd 1,178,034 939.9% 19,061,151 0.16% 0.18% 17,882,305 13.72 10,101.35 95.94 228.67 2.62 0.04 603997 CH Equity Ningbo Jifeng Auto Parts Co Ltd 1,536,359 812.6% 16,520,249 0.24% 0.27% 16,650,293 9.65 6,170.34 18.56 16.36 3.19 3.52 601865 CH Equity Flat Glass Group Co Ltd 407,800 660.9% 5,828,821 0.02% 0.03% 6,192,705 13.19 21,276.13 37.69 25.37 6.47 0.15 603363 CH Equity Fujian Aonong Biological Technology Group Inc Ltd 1,953,678 623.5% 42,021,753 0.46% 0.53% 54,067,902 23.85 10,399.48 38.16 8.53 12.48 n.a. 600871 CH Equity Sinopec Oilfield Service Corp 3,139,900 553.8% 9,229,736 0.02% 0.03% 9,823,081 2.65 40,886.25 44.17 31.18 8.21 0.11 603801 CH Equity ZBOM Home Collection Co Ltd 409,675 453.5% 15,261,564 0.26% 0.31% 16,410,624 32.82 5,251.20 14.71 11.70 2.80 1.29 601015 CH Equity Shaanxi Heimao Coking Co Ltd 1,867,970 427.3% 12,106,225 0.15% 0.18% 13,323,426 5.78 7,246.29 16.51 15.62 1.26 n.a. 600093 CH Equity Easysight Supply Chain Management Co Ltd 2,982,467 414.8% 46,819,051 0.27% 0.33% 49,265,847 13.31 14,939.78 16.85 14.63 2.05 n.a. 603367 CH Equity Cisen Pharmaceutical Co Ltd 994,939 396.1% 18,008,396 0.22% 0.27% 21,271,815 17.07 7,738.74 n.a. n.a. 1.86 n.a. 600105 CH Equity Jiangsu Etern Co Ltd 11,688,675 374.9% 73,020,823 0.93% 1.18% 90,615,896 6.12 7,668.06 n.a. n.a. 2.81 n.a. 603283 CH Equity Suzhou Secote Precision Electronic Co Ltd 302,451 288.6% 6,124,057 0.19% 0.25% 7,831,360 19.23 3,129.95 n.a. n.a. 4.21 n.a. 603039 CH Equity Shanghai Weaver Network Co Ltd 211,135 258.1% 20,332,200 0.23% 0.33% 28,187,938 96.22 9,863.42 65.10 49.39 11.94 0.24 603239 CH Equity Zhejiang Xiantong Rubber & Plastic Co Ltd 1,193,503 243.3% 14,733,510 0.44% 0.62% 18,524,858 11 2,977.92 n.a. n.a. 2.95 n.a. 603848 CH Equity Guangdong Hotata Technology Group Co Ltd 188,125 222.6% 3,938,979 0.05% 0.07% 5,984,426 21.95 8,801.95 26.83 21.95 6.84 0.36 600422 CH Equity KPC Pharmaceuticals Inc 9,139,095 219.7% 119,243,430 1.20% 1.74% 152,009,696 11.43 8,714.14 23.33 20.78 2.40 3.59 600348 CH Equity Yang Quan Coal Industry Group Co Ltd 19,802,237 194.9% 126,479,717 0.82% 1.25% 187,580,919 6.26 15,055.30 7.30 6.97 0.89 4.31 603596 CH Equity Bethel Automotive Safety Systems Co Ltd 137,600 184.0% 3,088,727 0.03% 0.05% 4,039,544 19.02 7,770.83 n.a. n.a. 6.36 n.a. 600557 CH Equity Jiangsu Kanion Pharmaceutical Co Ltd 5,920,139 164.2% 83,764,329 0.98% 1.57% 126,698,141 13.3 7,885.32 17.90 16.08 2.19 0.63 601811 CH Equity Xinhua Winshare Publishing and Media Co Ltd 1,424,730 159.9% 19,964,538 0.12% 0.19% 31,101,019 13.43 12,888.80 18.92 16.79 2.02 n.a. SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 7: Top 20 Shanghai-listed stocks based on negative % change in stake by northbound investors in the past four weeks

Changes in Total stake owned Changes in % Change in Estimated Amount of stake stake owned by by northbound Price on 2019E shareholding held by shareholding held by amount owned by Market cap 2019E 2020E Ticker Company name northbound investors based on May 3 PBR (x) Dividend northbound investors northbound investors involved northbound (RMB$m) PER (x) PER (x) investors within CCASS record on (RMB$) yield (%) compared with Mar 30 compared with Mar 30 (RMB) investors (RMB) a month (ppt) Apr 30 600829 CH Equity HPGC Renmintongtai Pharmaceutical Corp (570,192) -87.5% (4,852,605) -0.10% 0.01% 613,287 7.55 4,378.16 n.a. n.a. 2.65 n.a. 603897 CH Equity Zhejiang Grandwall Electric Science&Technology Co Ltd (204,287) -86.0% (5,062,426) -0.11% 0.02% 727,114 21.83 3,894.47 n.a. n.a. 2.32 n.a. 603188 CH Equity Jiangsu Yabang Dyestuff Co Ltd (583,455) -83.3% (5,941,517) -0.10% 0.02% 1,076,467 9.23 5,316.48 8.37 6.41 1.62 n.a. 603959 CH Equity Hunan Baili Engineering Sci & Tech Co Ltd (837,944) -82.7% (18,405,639) -0.27% 0.06% 4,002,269 22.85 7,165.76 24.05 n.a. 6.28 n.a. 600879 CH Equity China Aerospace Times Electronics Co Ltd (22,668,812) -81.6% (160,354,858) -0.83% 0.19% 32,521,827 6.38 17,348.95 28.23 27.98 1.45 0.00 601068 CH Equity China Aluminum International Engineering Corp Ltd (425,129) -80.2% (3,193,933) -0.02% 0.00% 675,941 6.43 17,264.06 n.a. n.a. 1.62 n.a. 601019 CH Equity Shandong Publishing & Media Co Ltd (5,109,043) -77.3% (44,935,250) -0.24% 0.07% 12,426,171 8.27 17,258.66 10.63 9.70 1.79 n.a. 600917 CH Equity Chongqing Gas Group Corp Ltd (1,553,060) -76.2% (12,436,313) -0.10% 0.03% 3,746,700 7.73 12,027.88 33.61 33.61 2.99 1.29 600551 CH Equity Time Publishing and Media Co Ltd (839,918) -75.7% (8,932,328) -0.17% 0.05% 2,625,086 9.73 4,921.68 n.a. n.a. 1.08 n.a. 603421 CH Equity Qingdao Topscomm Communication Inc (131,300) -75.0% (3,794,320) -0.03% 0.01% 1,202,129 27.52 12,938.32 n.a. n.a. 5.03 n.a. 603895 CH Equity Shanghai Tianyong Engineering Co Ltd (88,882) -74.9% (2,413,231) -0.08% 0.03% 697,483 23.36 2,524.75 n.a. n.a. 4.00 n.a. 603612 CH Equity Sunstone Development Co Ltd (799,854) -74.8% (12,430,493) -0.24% 0.08% 3,382,476 12.55 4,270.00 12.43 9.37 1.74 n.a. 601777 CH Equity Lifan Industry Group Co Ltd (1,355,236) -73.0% (8,942,622) -0.10% 0.04% 3,531,341 7.04 9,248.85 n.a. n.a. 1.24 n.a. 603650 CH Equity Red Avenue New Materials Group Co Ltd (194,289) -71.5% (4,699,388) -0.03% 0.01% 1,605,853 20.71 12,135.80 n.a. n.a. 5.33 n.a. 600901 CH Equity Jiangsu Financial Leasing Co Ltd (4,077,514) -69.9% (29,859,053) -0.14% 0.06% 11,828,012 6.75 20,159.89 n.a. n.a. 2.54 n.a. 600684 CH Equity Guangzhou Pearl River Industrial Development Co Ltd (7,205,116) -69.9% (37,010,279) -0.84% 0.36% 14,081,509 4.54 3,874.71 n.a. n.a. 1.22 n.a. 600803 CH Equity ENN Ecological Holdings Co Ltd (3,847,531) -69.9% (46,930,717) -0.31% 0.14% 19,102,514 11.51 14,149.89 8.66 8.27 1.62 2.02 600614 CH Equity Pengqi Technology Development Co Ltd (9,648,875) -68.7% (66,562,764) -0.55% 0.25% 24,249,642 5.52 9,004.77 11.04 n.a. 8.62 n.a. 600875 CH Equity Dongfang Electric Corp Ltd (31,804,747) -68.2% (400,603,506) -1.03% 0.48% 177,697,829 11.96 34,580.80 27.37 23.78 1.29 1.05 603773 CH Equity WG Tech JiangXi Co Ltd (150,272) -68.1% (6,965,966) -0.16% 0.07% 2,535,331 35.98 3,403.55 n.a. n.a. 3.48 n.a. SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Hong Kong Strategy Note│ May 6, 2019

Figure 8: Top 20 Shanghai-listed stocks owned by northbound investors in the past four weeks (in terms of amount)

Changes in Changes in Total stake owned % Change in Estimated Amount of stake shareholding held stake owned by by northbound Price on 2019E shareholding held by amount owned by Market cap 2019E 2020E Ticker Company name by northbound northbound investors based May 3 PBR (x) Dividend northbound investors involved northbound (RMB$m) PER (x) PER (x) investors compared investors within on CCASS record (RMB$) yield (%) compared with Mar 30 (RMB) investors (RMB) with Mar 30 a month (ppt) on Apr 30 600519 CH Equity Kweichow Moutai Co Ltd (4,664,956) -3.9% (4,319,602,643) -0.37% 9.24% 113,102,504,632 974 1,223,536.66 28.90 24.55 9.86 1.73 601318 CH Equity Ping An Insurance Group Co of China Ltd (10,998,393) -1.4% (911,311,132) -0.06% 4.36% 68,630,453,873 86.1 1,542,621.66 11.98 10.19 2.63 2.43 600276 CH Equity Jiangsu Hengrui Medicine Co Ltd (10,131,784) -1.7% (652,453,117) -0.23% 13.06% 37,757,267,828 65.75 290,814.52 53.59 41.99 14.20 0.28 600036 CH Equity China Merchants Bank Co Ltd 60,261,790 7.3% 2,119,378,458 0.24% 3.52% 30,550,894,879 34.45 867,324.63 9.62 8.51 1.63 3.13 600887 CH Equity Inner Mongolia Yili Industrial Group Co Ltd (47,992,283) -5.4% (1,457,251,393) -0.79% 13.79% 25,926,282,948 31 188,421.96 27.22 23.47 7.16 2.40 600009 CH Equity Shanghai International Airport Co Ltd (4,587,469) -1.4% (295,509,461) -0.24% 17.19% 23,401,546,057 70.63 136,101.08 26.15 24.76 4.59 1.15 600900 CH Equity China Yangtze Power Co Ltd (7,208,844) -0.6% (120,724,108) -0.03% 5.47% 20,293,275,904 16.87 371,140.00 16.80 16.41 2.55 4.07 601888 CH Equity China International Travel Service Corp Ltd 10,897,383 4.4% 817,142,859 0.56% 13.23% 20,011,043,637 77.49 151,297.33 34.21 29.12 8.18 1.03 600585 CH Equity Anhui Conch Cement Co Ltd (6,754,776) -1.7% (280,548,363) -0.13% 7.50% 15,881,962,101 39.95 214,008.44 7.08 7.21 1.78 4.65 603288 CH Equity Foshan Haitian Flavouring & Food Co Ltd (2,049,091) -1.4% (177,091,226) -0.08% 5.51% 13,278,075,595 89.28 241,088.97 46.16 38.70 15.70 1.27 601166 CH Equity Industrial Bank Co Ltd 21,867,308 4.0% 424,444,448 0.11% 2.75% 11,394,258,127 19.92 413,821.88 6.39 5.90 0.91 3.72 600104 CH Equity SAIC Motor Corp Ltd 32,447,517 9.1% 913,552,116 0.28% 3.34% 10,698,541,204 27.38 319,893.17 8.59 8.08 1.30 6.12 600690 CH Equity Qingdao Haier Co Ltd (2,165,914) -0.4% (38,263,449) -0.03% 9.47% 10,361,438,957 17.18 111,589.26 12.76 11.33 2.66 2.31 601901 CH Equity Founder Securities Co Ltd (1,048,477) -0.1% (8,116,710) -0.01% 16.77% 9,622,533,274 6.98 57,460.07 63.45 58.17 1.49 0.14 600031 CH Equity Sany Heavy Industry Co Ltd (21,290,846) -3.6% (273,769,864) -0.27% 7.41% 7,049,236,800 12.25 102,600.78 11.56 10.25 2.64 2.79 600660 CH Equity Fuyao Glass Industry Group Co Ltd 16,183,399 6.9% 419,188,566 0.65% 10.04% 6,325,297,715 25.12 62,403.59 15.96 14.45 3.04 3.91 601006 CH Equity Daqin Railway Co Ltd 12,074,640 1.7% 102,065,207 0.08% 5.0% 6,274,712,907 8.52 126,665.06 8.49 8.46 1.15 5.87 601398 CH Equity Industrial & Commercial Bank of China Ltd (16,778,957) -1.8% (97,365,890) 0.00% 0.3% 5,444,337,465 5.81 2,006,792.39 6.61 6.24 0.86 4.58 601668 CH Equity China State Construction Engineering Corp Ltd 170,743,531 24.2% 1,089,099,808 0.41% 2.1% 5,370,664,346 6.13 257,345.16 6.19 5.58 1.12 5.01 600000 CH Equity Shanghai Pudong Development Bank Co Ltd 14,691,237 3.6% 170,964,024 0.05% 1.5% 5,126,859,077 11.97 351,344.40 6.18 5.90 0.77 2.33 SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 9: Top 20 Shanghai-listed stocks owned by northbound investors in the past four weeks (in terms of stake)

Changes in Changes in Total stake owned % Change in Estimated Amount of stake shareholding held stake owned by by northbound Price on 2019E shareholding held by amount owned by Market cap 2019E 2020E Ticker Company name by northbound northbound investors based on May 3 PBR (x) Dividend northbound investors involved northbound (RMB$m) PER (x) PER (x) investors compared investors within CCASS record on (RMB$) yield (%) compared with Mar 30 (RMB) investors (RMB) with Mar 30 a month (ppt) Apr 30 600009 CH Equity Shanghai International Airport Co Ltd (4,587,469) -1.4% (295,509,461) -0.24% 17.19% 23,401,546,057 70.63 136,101.08 26.15 24.76 4.59 1.15 601901 CH Equity Founder Securities Co Ltd (1,048,477) -0.1% (8,116,710) -0.01% 16.77% 9,622,533,274 6.98 57,460.07 63.45 58.17 1.49 0.14 600887 CH Equity Inner Mongolia Yili Industrial Group Co Ltd (47,992,283) -5.4% (1,457,251,393) -0.79% 13.79% 25,926,282,948 31 188,421.96 27.22 23.47 7.16 2.40 601888 CH Equity China International Travel Service Corp Ltd 10,897,383 4.4% 817,142,859 0.56% 13.23% 20,011,043,637 77.49 151,297.33 34.21 29.12 8.18 1.03 600276 CH Equity Jiangsu Hengrui Medicine Co Ltd (10,131,784) -1.7% (652,453,117) -0.23% 13.06% 37,757,267,828 65.75 290,814.52 53.59 41.99 14.20 0.28 600885 CH Equity Hongfa Technology Co Ltd 323,734 0.4% 8,774,116 0.04% 11.91% 2,194,751,419 24.75 18,432.85 22.52 18.81 4.02 1.29 600066 CH Equity Zhengzhou Yutong Bus Co Ltd (27,307,577) -10.3% (412,929,575) -1.23% 10.72% 3,394,286,396 14.3 31,659.33 12.55 12.05 1.98 3.62 600201 CH Equity Jinyu Bio-Technology Co Ltd 11,911,962 10.5% 199,332,503 1.02% 10.70% 2,013,899,738 16.08 18,647.26 20.15 16.65 3.64 1.93 600660 CH Equity Fuyao Glass Industry Group Co Ltd 16,183,399 6.9% 419,188,566 0.65% 10.04% 6,325,297,715 25.12 62,403.59 15.96 14.45 3.04 3.91 600690 CH Equity Qingdao Haier Co Ltd (2,165,914) -0.4% (38,263,449) -0.03% 9.47% 10,361,438,957 17.18 111,589.26 12.76 11.33 2.66 2.31 600258 CH Equity BTG Hotels Group Co Ltd 18,213,273 24.7% 402,218,452 1.86% 9.40% 1,862,765,444 20.25 19,822.55 20.64 17.29 2.41 0.69 600298 CH Equity Angel Yeast Co Ltd (1,423,510) -1.8% (39,757,956) -0.17% 9.36% 2,151,051,917 27.9 22,991.86 23.00 19.72 5.03 1.49 600519 CH Equity Kweichow Moutai Co Ltd (4,664,956) -3.9% (4,319,602,643) -0.37% 9.24% 113,102,504,632 974 1,223,536.66 28.90 24.55 9.86 1.73 600779 CH Equity Sichuan Swellfun Co Ltd (9,940,172) -19.1% (468,455,456) -2.03% 8.63% 2,123,746,514 50.39 24,617.82 32.32 25.26 11.86 2.62 600323 CH Equity Grandblue Environment Co Ltd (3,456,208) -5.0% (58,418,144) -0.45% 8.59% 1,054,886,819 16.03 12,283.21 13.29 11.19 2.04 1.39 600004 CH Equity Guangzhou Baiyun International Airport Co Ltd (6,536,934) -3.6% (94,701,497) -0.32% 8.50% 2,679,619,634 15.24 31,536.44 33.35 25.15 1.99 0.90 603939 CH Equity Yifeng Pharmacy Chain Co Ltd 2,346,831 8.7% 136,899,593 0.62% 7.79% 1,762,661,281 60.05 22,627.20 39.17 29.71 5.38 0.68 600585 CH Equity Anhui Conch Cement Co Ltd (6,754,776) -1.7% (280,548,363) -0.13% 7.50% 15,881,962,101 39.95 214,008.44 7.08 7.21 1.78 4.65 600031 CH Equity Sany Heavy Industry Co Ltd (21,290,846) -3.6% (273,769,864) -0.27% 7.41% 7,049,236,800 12.25 102,600.78 11.56 10.25 2.64 2.79 601098 CH Equity China South Publishing & Media Group Co Ltd (5,820,561) -4.4% (75,115,726) -0.32% 7.12% 1,597,527,355 12.49 22,432.04 16.70 15.52 1.63 4.88 SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Hong Kong Strategy Note│ May 6, 2019

Figure 10: Top 20 net fund inflow Shenzhen-listed stocks in the past four weeks (northbound)

Changes in % Change in Changes in Total stake owned Amount of shareholding held by shareholding held by Estimated stake owned by by northbound stake owned by Price on 2019E Market cap 2019E 2020E Ticker Company name northbound northbound amount involved northbound investors based on northbound May 3 PBR (x) Dividend (RMB$m) PER (x) PER (x) investors compared investors compared (RMB) investors within CCASS record on investors (RMB$) yield (%) with Mar 30 with Mar 30 a month (ppt) April 30 (RMB) 002027 CH Equity Focus Media Information Technology Co Ltd 147,327,286 19.4% 1,002,527,103 1.01% 6.21% 5,519,912,948 6.1 89,535.07 18.65 15.29 6.35 2.10 002024 CH Equity Suning.com Co Ltd 58,917,114 65.4% 808,679,473 0.64% 1.61% 1,880,437,560 12.62 117,492.70 10.46 35.25 1.44 1.32 000069 CH Equity Shenzhen Overseas Chinese Town Co Ltd 92,598,899 125.6% 779,153,593 1.13% 2.03% 1,322,123,979 7.95 65,222.45 5.42 5.14 1.06 4.68 000538 CH Equity Yunnan Baiyao Group Co Ltd 7,821,940 10.2% 697,579,233 0.75% 8.14% 7,498,294,011 88.5 92,163.88 24.01 21.13 4.44 1.42 000425 CH Equity XCMG Construction Machinery Co Ltd 140,449,867 79.7% 677,770,930 1.79% 4.04% 1,449,948,839 4.58 35,878.20 12.55 10.43 1.36 1.70 002475 CH Equity Luxshare Precision Industry Co Ltd 25,254,999 10.9% 651,121,979 0.61% 6.24% 6,694,341,811 26.09 107,350.35 27.61 21.26 6.67 0.46 300285 CH Equity Shandong Sinocera Functional Material Co Ltd 36,803,023 157.1% 585,933,335 3.82% 6.25% 989,009,834 16.42 15,818.06 24.95 21.92 4.74 n.a. 002146 CH Equity RiseSun Real Estate Development Co Ltd 45,307,019 53.3% 512,185,062 1.04% 3.00% 1,348,804,445 10.35 45,003.50 4.72 3.89 1.30 4.22 300122 CH Equity Chongqing Zhifei Biological Products Co Ltd 11,188,830 37.2% 508,516,339 0.70% 2.58% 1,779,135,416 43.1 68,960.00 26.49 19.11 14.73 1.65 001979 CH Equity China Merchants Shekou Industrial Zone Holdings Co Lt 21,099,727 15.0% 479,737,460 0.27% 2.05% 3,568,982,538 22 173,890.04 9.23 7.86 2.46 4.15 300498 CH Equity Wens Foodstuffs Group Co Ltd 10,972,495 35.3% 446,763,421 0.21% 0.79% 1,733,488,883 41.21 218,953.22 23.37 11.45 6.35 0.95 300274 CH Equity Sungrow Power Supply Co Ltd 34,271,132 364.4% 423,542,233 2.36% 3.01% 519,752,278 11.9 17,360.48 15.72 12.59 2.19 0.84 300347 CH Equity Hangzhou Tigermed Consulting Co Ltd 6,354,458 16.5% 414,289,480 1.27% 8.98% 2,982,003,482 66.4 33,211.72 50.73 37.64 12.07 0.70 002050 CH Equity Zhejiang Sanhua Intelligent Controls Co Ltd 24,922,273 16.1% 414,267,516 1.18% 8.50% 2,861,255,610 15.9 33,877.28 23.01 19.78 3.88 1.81 300296 CH Equity Leyard Optoelectronic Co Ltd 42,209,018 123.3% 396,041,186 1.67% 3.03% 686,504,369 8.98 22,835.03 12.79 9.94 2.83 1.34 002572 CH Equity Suofeiya Home Collection Co Ltd 15,731,117 22.9% 372,055,899 1.72% 9.23% 1,879,874,118 22.26 20,555.47 17.85 15.59 4.59 2.43 002583 CH Equity Hytera Communications Corp Ltd 32,130,824 42.0% 358,273,988 1.77% 5.98% 1,111,714,611 10.24 18,813.14 24.73 19.58 3.04 0.39 002727 CH Equity Yunnan Hongxiang Yixintang Pharmaceutical Co Ltd 12,746,367 55.8% 347,435,616 2.24% 6.27% 1,033,331,159 29.05 16,493.71 25.09 20.26 4.07 1.23 000157 CH Equity Zoomlion Heavy Industry Science and Technology Co Lt 50,423,193 18.8% 260,015,599 0.65% 4.09% 1,579,059,950 4.95 37,322.08 13.34 11.02 0.97 4.30 300450 CH Equity Wuxi Lead Intelligent Equipment Co Ltd 7,161,648 33.3% 252,574,273 0.81% 3.25% 913,002,486 31.87 28,098.48 24.78 18.86 7.71 0.90 SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 11: Top 20 net fund outflow Shenzhen-listed stocks in the past four weeks (northbound)

Changes in % Change in Changes in Total stake owned Amount of shareholding held by shareholding held by Estimated stake owned by by northbound stake owned by Price on 2019E Market cap 2019E 2020E Ticker Company name northbound northbound amount involved northbound investors based on northbound May 3 PBR (x) Dividend (RMB$m) PER (x) PER (x) investors compared investors compared (RMB) investors within CCASS record on investors (RMB$) yield (%) with Mar 30 with Mar 30 a month (ppt) April 30 (RMB) 000858 CH Equity Wuliangye Yibin Co Ltd (84,824,072) -22.5% (8,618,085,323) -2.19% 7.51% 29,856,707,604 102.36 397,321.40 24.05 19.96 5.68 2.11 000333 CH Equity Midea Group Co Ltd (58,577,149) -5.5% (3,086,039,466) -0.88% 15.26% 52,948,470,276 52.4 345,407.76 15.18 13.41 3.86 3.06 000651 CH Equity Gree Electric Appliances Inc of Zhuhai (33,548,292) -4.8% (1,854,118,247) -0.56% 11.08% 37,037,679,412 55.58 334,354.32 12.04 10.78 3.58 4.14 002415 CH Equity Hangzhou Hikvision Digital Technology Co Ltd (50,040,514) -5.7% (1,718,915,485) -0.54% 8.99% 27,105,391,449 32.68 305,507.87 22.92 18.49 7.68 1.93 000568 CH Equity Luzhou Laojiao Co Ltd (14,213,241) -26.3% (999,671,385) -0.97% 2.72% 3,104,526,546 77.88 114,074.92 25.88 20.90 6.15 2.36 000338 CH Equity Weichai Power Co Ltd (70,763,743) -18.8% (929,195,340) -0.88% 3.81% 3,766,018,040 12.35 95,704.25 11.35 10.82 2.33 3.72 000002 CH Equity China Vanke Co Ltd (24,552,220) -8.2% (760,592,701) -0.22% 2.49% 7,951,550,703 28.88 322,014.38 7.81 6.81 2.02 4.62 002304 CH Equity Jiangsu Yanghe Brewery Joint-Stock Co Ltd (5,455,848) -4.9% (665,779,729) -0.36% 7.08% 12,551,965,270 117.66 177,312.21 18.95 16.52 4.69 2.97 000063 CH Equity ZTE Corp (18,256,683) -29.4% (592,177,247) -0.44% 1.05% 1,410,797,620 32.15 127,043.33 30.62 22.13 4.54 0.68 002508 CH Equity Hangzhou Robam Appliances Co Ltd (16,191,539) -16.2% (514,451,456) -1.71% 8.81% 2,439,205,485 29.18 27,692.52 16.76 14.87 4.35 2.90 002008 CH Equity Han's Laser Technology Industry Group Co Ltd (9,815,797) -5.1% (407,477,104) -0.93% 17.53% 7,208,201,010 39.1 41,722.35 21.09 15.87 4.82 0.88 000656 CH Equity Jinke Properties Group Co Ltd (44,681,035) -26.0% (349,022,713) -0.84% 2.40% 968,148,355 7.61 40,635.24 9.35 7.56 1.85 4.47 300124 CH Equity Shenzhen Inovance Technology Co Ltd (12,822,073) -12.1% (348,998,510) -0.77% 5.62% 2,352,700,837 25.17 41,831.65 29.82 24.23 6.43 1.21 002507 CH Equity Chongqing Fuling Zhacai Group Co Ltd (11,728,170) -16.2% (344,366,995) -1.49% 7.71% 1,746,173,872 28.69 22,646.66 28.04 23.54 8.62 1.05 000581 CH Equity Weifu High-Technology Group Co Ltd (12,472,791) -18.7% (295,177,508) -1.24% 5.37% 1,113,800,999 20.55 19,457.10 7.98 7.56 1.25 5.25 002268 CH Equity Westone Information Industry Inc (8,143,858) -16.2% (256,678,892) -0.97% 5.02% 1,184,741,703 28.15 23,599.16 92.30 53.62 5.45 0.07 002271 CH Equity Beijing Oriental Yuhong Waterproof Technology Co Ltd (12,226,988) -17.0% (252,242,762) -0.82% 3.99% 1,167,461,622 19.61 29,259.75 14.84 11.90 3.63 1.77 002236 CH Equity Zhejiang Dahua Technology Co Ltd (12,742,112) -16.2% (214,904,820) -0.44% 2.28% 1,091,210,709 16.52 49,519.98 15.69 13.30 3.69 1.00 000963 CH Equity Huadong Medicine Co Ltd (6,178,651) -13.0% (206,993,635) -0.42% 2.83% 1,439,848,744 34.9 50,890.29 18.43 15.19 4.71 1.93 002110 CH Equity Sansteel Minguang Co Ltd Fujian (9,910,567) -71.8% (186,743,398) -0.61% 0.24% 71,251,296 18.31 29,925.57 5.74 5.59 1.55 4.78 SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Hong Kong Strategy Note│ May 6, 2019

Figure 12: Top 20 Shenzhen-listed stocks based on positive change in stake by northbound investors in the past four weeks (ppt)

Changes in % Change in Changes in Total stake owned Estimated Amount of stake shareholding held by shareholding held stake owned by by northbound Price on Market 2019E amount owned by Market cap 2019E 2020E Ticker Company name northbound investors by northbound northbound investors based on May 3 cap PBR (x) Dividend involved northbound (RMB$m) PER (x) PER (x) compared with Mar investors compared investors within CCASS record on (RMB$) (RMB$) yield (%) (RMB) investors (RMB) 30 with Mar 30 a month (ppt) April 30 300285 CH Equity Shandong Sinocera Functional Material Co Ltd 36,803,023 157.1% 585,933,335 3.82% 6.25% 989,009,834 16.42 1.58E+10 15,818.06 24.95 21.92 4.74 n.a. 002402 CH Equity Shenzhen H&T Intelligent Control Co Ltd 23,507,011 918.1% 242,614,741 2.79% 3.09% 255,460,589 9.8 8.38E+09 8,383.27 25.00 18.35 5.16 0.41 300274 CH Equity Sungrow Power Supply Co Ltd 34,271,132 364.4% 423,542,233 2.36% 3.01% 519,752,278 11.9 1.74E+10 17,360.48 15.72 12.59 2.19 0.84 002727 CH Equity Yunnan Hongxiang Yixintang Pharmaceutical Co Ltd 12,746,367 55.8% 347,435,616 2.24% 6.27% 1,033,331,159 29.05 1.65E+10 16,493.71 25.09 20.26 4.07 1.23 000425 CH Equity XCMG Construction Machinery Co Ltd 140,449,867 79.7% 677,770,930 1.79% 4.04% 1,449,948,839 4.58 3.59E+10 35,878.20 12.55 10.43 1.36 1.70 300203 CH Equity Focused Photonics Hangzhou Inc 8,061,315 15.5% 222,315,713 1.78% 13.24% 1,525,961,343 25.46 1.15E+10 11,521.09 15.02 12.01 3.26 1.90 002583 CH Equity Hytera Communications Corp Ltd 32,130,824 42.0% 358,273,988 1.77% 5.98% 1,111,714,611 10.24 1.88E+10 18,813.14 24.73 19.58 3.04 0.39 002572 CH Equity Suofeiya Home Collection Co Ltd 15,731,117 22.9% 372,055,899 1.72% 9.23% 1,879,874,118 22.26 2.06E+10 20,555.47 17.85 15.59 4.59 2.43 300296 CH Equity Leyard Optoelectronic Co Ltd 42,209,018 123.3% 396,041,186 1.67% 3.03% 686,504,369 8.98 2.28E+10 22,835.03 12.79 9.94 2.83 1.34 300012 CH Equity Centre Testing International Group Co Ltd 23,650,251 8.7% 215,983,102 1.43% 17.82% 2,944,415,155 9.97 1.65E+10 16,525.58 45.53 33.68 5.98 0.55 300347 CH Equity Hangzhou Tigermed Consulting Co Ltd 6,354,458 16.5% 414,289,480 1.27% 8.98% 2,982,003,482 66.4 3.32E+10 33,211.72 50.73 37.64 12.07 0.70 000620 CH Equity Macrolink Culturaltainment Development Co Ltd 6,763,961 53.1% 32,711,804 1.26% 3.64% 84,245,270 4.32 8.19E+09 8,193.70 6.55 5.50 0.35 4.17 002127 CH Equity NanJi E-Commerce Co Ltd 5,031,525 23.3% 56,999,990 1.21% 6.39% 318,989,932 11.96 2.94E+10 29,360.25 24.16 18.43 1.29 0.64 002050 CH Equity Zhejiang Sanhua Intelligent Controls Co Ltd 24,922,273 16.1% 414,267,516 1.18% 8.50% 2,861,255,610 15.9 3.39E+10 33,877.28 23.01 19.78 3.88 1.81 300571 CH Equity Hangzhou Anysoft Information Technology Co Ltd 1,374,948 199.3% 74,300,226 1.14% 1.72% 92,461,207 44.78 5.39E+09 5,390.16 18.66 15.33 12.57 n.a. 000069 CH Equity Shenzhen Overseas Chinese Town Co Ltd 92,598,899 125.6% 779,153,593 1.13% 2.03% 1,322,123,979 7.95 6.52E+10 65,222.45 5.42 5.14 1.06 4.68 002697 CH Equity Chengdu Hongqi Chain Co Ltd 15,055,099 67.8% 88,158,358 1.11% 2.74% 226,604,774 6.08 8.27E+09 8,268.80 21.64 18.48 3.07 1.32 002146 CH Equity RiseSun Real Estate Development Co Ltd 45,307,019 53.3% 512,185,062 1.04% 3.00% 1,348,804,445 10.35 4.5E+10 45,003.50 4.72 3.89 1.30 4.22 002027 CH Equity Focus Media Information Technology Co Ltd 147,327,286 19.4% 1,002,527,103 1.01% 6.21% 5,519,912,948 6.1 8.95E+10 89,535.07 18.65 15.29 6.35 2.10 300287 CH Equity Beijing Philisense Technology Co Ltd 14,225,812 292.3% 73,364,545 0.99% 1.33% 93,173,313 4.88 7E+09 7,004.14 n.a. n.a. 1.85 n.a.

SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 13: Top 20 Shenzhen-listed stocks based on negative change in stake by northbound investors in the past four weeks (ppt)

Changes in % Change in Changes in Total stake owned Estimated Amount of stake shareholding held by shareholding held stake owned by by northbound Price on Market 2019E amount owned by Market cap 2019E 2020E Ticker Company name northbound investors by northbound northbound investors based on May 3 cap PBR (x) Dividend involved northbound (RMB$m) PER (x) PER (x) compared with Mar investors compared investors within CCASS record on (RMB$) (RMB$) yield (%) (RMB) investors (RMB) 30 with Mar 30 a month (ppt) April 30 002143 CH Equity Yinji Entertainment and Media Co Ltd (5,951,299) -96.5% (19,072,496) -8.05% 0.29% 539,461 2.49 4.41E+09 4,406.89 n.a. n.a. 0.13 n.a. 000858 CH Equity Wuliangye Yibin Co Ltd (84,824,072) -22.5% (8,618,085,323) -2.19% 7.51% 29,856,707,604 102.36 3.97E+11 397,321.40 24.05 19.96 5.68 2.11 000603 CH Equity Shengda Mining Co Ltd (2,246,015) -33.9% (25,117,934) -1.75% 3.40% 45,855,062 10.48 7.23E+09 7,230.88 15.69 12.66 0.70 n.a. 002508 CH Equity Hangzhou Robam Appliances Co Ltd (16,191,539) -16.2% (514,451,456) -1.71% 8.81% 2,439,205,485 29.18 2.77E+10 27,692.52 16.76 14.87 4.35 2.90 002507 CH Equity Chongqing Fuling Zhacai Group Co Ltd (11,728,170) -16.2% (344,366,995) -1.49% 7.71% 1,746,173,872 28.69 2.26E+10 22,646.66 28.04 23.54 8.62 1.05 002597 CH Equity Anhui Jinhe Industrial Co Ltd (7,509,702) -66.5% (155,086,074) -1.34% 0.68% 72,425,314 19.11 1.07E+10 10,678.09 10.95 8.81 2.60 1.78 000581 CH Equity Weifu High-Technology Group Co Ltd (12,472,791) -18.7% (295,177,508) -1.24% 5.37% 1,113,800,999 20.55 1.95E+10 19,457.20 7.98 7.56 1.25 5.25 002228 CH Equity Xiamen Hexing Packaging Printing Co Ltd (13,511,491) -78.0% (79,318,886) -1.16% 0.33% 20,052,782 5.27 6.16E+09 6,163.35 17.57 13.87 2.20 1.33 002737 CH Equity Sunflower Pharmaceutical Group Co Ltd (6,488,531) -94.7% (115,739,944) -1.11% 0.06% 5,787,830 16.09 9.4E+09 9,396.56 13.52 11.12 2.73 1.55 000717 CH Equity SGIS Songshan Co Ltd (24,635,974) -87.1% (143,052,889) -1.02% 0.15% 18,813,873 5.17 1.25E+10 12,508.94 5.32 3.89 1.90 n.a. 002425 CH Equity Kaiser China Cultural Co Ltd (8,119,300) -76.4% (59,827,642) -1.00% 0.31% 17,567,739 7 5.7E+09 5,696.21 10.40 7.78 1.41 1.86 002268 CH Equity Westone Information Industry Inc (8,143,858) -16.2% (256,678,892) -0.97% 5.02% 1,184,741,703 28.15 2.36E+10 23,599.16 92.30 53.62 5.45 0.07 000568 CH Equity Luzhou Laojiao Co Ltd (14,213,241) -26.3% (999,671,385) -0.97% 2.72% 3,104,526,546 77.88 1.14E+11 114,074.92 25.88 20.90 6.15 2.36 000089 CH Equity Shenzhen Airport Co Ltd (19,250,601) -10.2% (178,682,245) -0.94% 8.26% 1,515,923,568 8.95 1.84E+10 18,354.39 22.43 19.63 1.55 1.15 002008 CH Equity Han's Laser Technology Industry Group Co Ltd (9,815,797) -5.1% (407,477,104) -0.93% 17.53% 7,208,201,010 39.1 4.17E+10 41,722.35 21.09 15.87 4.82 0.88 000338 CH Equity Weichai Power Co Ltd (70,763,743) -18.8% (929,195,340) -0.88% 3.81% 3,766,018,040 12.35 9.57E+10 95,705.22 11.35 10.82 2.33 3.72 000333 CH Equity Midea Group Co Ltd (58,577,149) -5.5% (3,086,039,466) -0.88% 15.26% 52,948,470,276 52.4 3.45E+11 345,407.76 15.18 13.41 3.86 3.06 000400 CH Equity Xuji Electric Co Ltd (8,601,235) -68.3% (91,902,148) -0.85% 0.40% 39,083,413 9.79 9.87E+09 9,871.52 15.47 11.65 1.27 0.96 000525 CH Equity Nanjing Redsun Co Ltd (4,942,796) -81.2% (79,593,138) -0.85% 0.20% 16,020,637 14.04 8.15E+09 8,154.05 8.80 7.31 1.71 n.a. 000543 CH Equity An Hui Wenergy Co Ltd (15,172,650) -31.6% (81,758,908) -0.85% 1.83% 168,170,711 5.12 9.17E+09 9,166.83 11.45 8.72 0.86 1.86

SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Hong Kong Strategy Note│ May 6, 2019

Figure 14: Top 20 Shenzhen-listed stocks based on positive % change in stake by northbound investors in the past four weeks

Changes in % Change in Changes in Total stake owned Amount of Estimated shareholding held by shareholding held by stake owned by by northbound stake owned Price on 2019E amount Market cap 2019E 2020E Ticker Company name northbound northbound northbound investors based on by northbound May 3 PBR (x) Dividend involved (RMB$m) PER (x) PER (x) investors compared investors compared investors within CCASS record on investors (RMB$) yield (%) (RMB) with Mar 30 with Mar 30 a month (ppt) April 30 (RMB) 300429 CH Equity Changzhou Tronly New Electronic Materials Co Ltd 332,365 1794.5% 9,368,103 0.12% 0.13% 8,659,866 24.68 6,692.87 30.85 24.75 4.21 0.89 002668 CH Equity Guangdong Homa Appliances Co Ltd 3,543,749 1118.1% 24,316,868 0.33% 0.36% 24,862,895 6.44 6,981.68 n.a. n.a. 2.86 n.a. 300679 CH Equity Electric Connector Technology Co Ltd 1,686,136 1040.0% 68,627,341 0.78% 0.86% 77,072,776 41.7 9,007.20 29.00 22.15 2.69 n.a. 002204 CH Equity Dalian Huarui Heavy Industry Group Co Ltd 1,552,523 1035.9% 6,538,340 0.08% 0.09% 6,349,930 3.73 7,204.01 n.a. n.a. 1.09 n.a. 002402 CH Equity Shenzhen H&T Intelligent Control Co Ltd 23,507,011 918.1% 242,614,741 2.79% 3.09% 255,460,589 9.8 8,383.27 25.00 18.35 5.16 0.41 300684 CH Equity Jones Tech PLC 215,682 903.5% 8,195,916 0.14% 0.15% 7,442,943 31.07 4,894.50 25.30 19.14 7.21 3.43 000582 CH Equity Beibuwan Port Co Ltd 3,872,744 893.9% 38,793,830 0.24% 0.26% 40,949,746 9.51 15,545.21 n.a. n.a. 1.65 n.a. 300091 CH Equity JiangSu Jin Tong Ling Fluid Machinery Technology Co Ltd 3,068,754 767.7% 19,961,514 0.25% 0.28% 19,423,634 5.6 6,889.48 n.a. n.a. 2.71 n.a. 002851 CH Equity Shenzhen Megmeet Electrical Co Ltd 525,884 710.3% 17,694,244 0.17% 0.19% 19,227,564 32.05 10,030.75 32.11 24.43 6.03 0.44 002537 CH Equity HyUnion Holding Co Ltd 4,382,666 675.5% 52,723,472 0.35% 0.40% 48,553,850 9.65 12,036.79 16.36 12.87 1.84 0.93 002782 CH Equity Shenzhen Click Technology Co Ltd 591,149 631.9% 8,575,038 0.14% 0.16% 8,812,050 12.87 5,482.62 n.a. n.a. 6.50 n.a. 300323 CH Equity HC SemiTek Corp 4,451,444 589.5% 36,743,491 0.41% 0.47% 37,174,717 7.14 7,845.21 n.a. n.a. 1.26 n.a. 300527 CH Equity China Harzone Industry Corp Ltd 1,546,077 581.6% 23,085,875 0.18% 0.21% 22,793,564 12.58 11,001.25 39.94 32.26 5.25 0.24 000065 CH Equity Norinco International Cooperation Ltd 5,432,424 554.4% 70,864,678 0.71% 0.83% 67,328,468 10.5 8,079.81 8.43 9.13 1.92 3.33 002662 CH Equity Beijing WKW Automotive Parts Co Ltd 4,881,170 534.3% 26,446,644 0.33% 0.39% 26,481,688 4.57 6,855.00 n.a. n.a. 1.36 n.a. 002256 CH Equity Shenzhen Sunrise New Energy Co Ltd 5,131,212 520.5% 20,429,554 0.27% 0.32% 20,797,820 3.4 6,400.20 n.a. n.a. 3.36 n.a. 300666 CH Equity Konfoong Materials International Co Ltd 291,289 513.9% 12,722,671 0.13% 0.16% 13,393,404 38.49 8,420.07 93.88 66.94 13.73 0.13 300317 CH Equity Jiawei Renewable Energy Co Ltd 3,796,922 450.7% 24,840,910 0.45% 0.55% 29,506,215 6.36 5,340.72 n.a. n.a. 1.81 n.a. 002047 CH Equity Shenzhen Bauing Construction Holding Group Co Ltd 2,061,200 372.8% 14,911,310 0.56% 0.70% 17,383,958 6.65 8,919.62 n.a. n.a. 0.62 n.a.

002309 CH Equity Jiangsu Zhongli Group Co Ltd 1,869,682 367.5% 17,906,212 0.21% 0.27% 19,098,576 8.03 7,000.45 n.a. n.a. 0.78 n.a. SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 15: Top 20 Shenzhen-listed stocks based on negative % change in stake by northbound investors in the past four weeks

Changes in % Change in Changes in Total stake owned Amount of Estimated shareholding held by shareholding held by stake owned by by northbound stake owned Price on 2019E amount Market cap 2019E 2020E Ticker Company name northbound northbound northbound investors based on by northbound May 3 PBR (x) Dividend involved (RMB$m) PER (x) PER (x) investors compared investors compared investors within CCASS record on investors (RMB$) yield (%) (RMB) with Mar 30 with Mar 30 a month (ppt) April 30 (RMB) 000893 CH Equity Donlinks International Investment Co Ltd (360,400) -100.0% (2,763,753) -0.05% 0.00% 377 7.53 5,699.48 n.a. n.a. 1.58 n.a. 300090 CH Equity Anhui Shengyun Environment Protection Group Co Ltd (31,992) -99.7% (80,818) 0.00% 0.00% 184 2.14 2,824.70 n.a. n.a. 14.48 n.a. 001896 CH Equity Henan Yuneng Holdings Co Ltd (19,500) -99.3% (83,599) 0.00% 0.00% 578 4.07 4,682.89 n.a. n.a. 0.82 n.a. 002143 CH Equity Yinji Entertainment and Media Co Ltd (5,951,299) -96.5% (19,072,496) -8.05% 0.29% 539,461 2.49 4,406.89 n.a. n.a. 0.13 n.a. 002737 CH Equity Sunflower Pharmaceutical Group Co Ltd (6,488,531) -94.7% (115,739,944) -1.11% 0.06% 5,787,830 16.09 9,396.56 13.52 11.12 2.73 1.55 300049 CH Equity Inner Mongolia Furui Medical Science Co Ltd (75) -91.5% (863) 0.00% 0.00% 67 9.6 2,525.31 n.a. n.a. 1.76 n.a. 000882 CH Equity Beijing Hualian Department Store Co Ltd (12,595,596) -91.0% (40,581,811) -0.46% 0.05% 3,603,931 2.88 7,883.57 n.a. n.a. 1.01 n.a. 002906 CH Equity Foryou Corp (387,971) -90.0% (4,861,646) -0.08% 0.01% 472,422 10.94 5,175.71 24.58 54.70 1.52 0.55 300276 CH Equity Hubei SanFeng Intelligent Conveying Equipment Co Ltd (261,700) -88.5% (3,664,548) -0.05% 0.01% 469,576 13.75 7,534.99 n.a. n.a. 2.11 n.a. 300568 CH Equity Shenzhen Senior Technology Material Co Ltd (359,759) -88.3% (10,977,275) -0.19% 0.02% 1,363,135 28.7 5,510.49 23.58 16.89 3.61 0.84 002111 CH Equity Weihai Guangtai Airport Equipment Co Ltd (30,000) -87.9% (414,757) -0.01% 0.00% 54,400 13.14 5,017.21 17.57 13.76 1.79 0.95 000717 CH Equity SGIS Songshan Co Ltd (24,635,974) -87.1% (143,052,889) -1.02% 0.15% 18,813,873 5.17 12,508.94 5.32 3.89 1.90 n.a. 002510 CH Equity Tianjin Motor Dies Co Ltd (10,100) -86.3% (50,967) 0.00% 0.00% 7,136 4.46 4,107.00 n.a. n.a. 1.57 n.a. 000155 CH Equity Sichuan New Energy Power Co Ltd (3,948,716) -86.1% (19,875,204) -0.31% 0.05% 3,033,033 4.77 6,057.90 n.a. n.a. 1.77 n.a. 300477 CH Equity Beijing Hezong Science & Technology Co Ltd (341,788) -85.8% (3,240,313) -0.06% 0.01% 485,745 8.6 5,006.87 n.a. n.a. 2.54 n.a. 002741 CH Equity Guangdong Guanghua Sci-Tech Co Ltd (781,747) -84.9% (12,141,648) -0.21% 0.04% 1,924,934 13.8 5,164.36 25.32 18.04 4.02 0.72 300443 CH Equity Jinlei Technology Co Ltd (400) -82.1% (6,466) 0.00% 0.00% 1,316 15.13 3,601.80 20.45 11.82 2.03 0.33 000525 CH Equity Nanjing Redsun Co Ltd (4,942,796) -81.2% (79,593,138) -0.85% 0.20% 16,020,637 14.04 8,154.05 8.80 7.31 1.71 n.a. 002768 CH Equity Qingdao Gon Technology Co Ltd (469,840) -81.0% (13,924,939) -0.17% 0.04% 3,054,300 27.78 7,535.33 17.81 13.98 3.58 0.68

002064 CH Equity Zhejiang Huafeng Spandex Co Ltd (11,280,002) -80.5% (63,248,583) -0.67% 0.16% 14,360,403 5.24 8,786.43 16.38 11.78 2.37 n.a. SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Hong Kong Strategy Note│ May 6, 2019

Figure 16: Top 20 Shenzhen-listed stocks owned by northbound investors in the past four weeks (in terms of amount)

Changes in % Change in Changes in Total stake owned Amount of stake shareholding held by shareholding held by Estimated stake owned by by northbound Price on 2019E owned by Market cap 2019E 2020E Ticker Company name northbound northbound amount northbound investors based on May 3 PBR (x) Dividend northbound (RMB$m) PER (x) PER (x) investors compared investors compared involved (RMB) investors within CCASS record on (RMB$) yield (%) investors (RMB) with Mar 30 with Mar 30 a month (ppt) April 30 000333 CH Equity Midea Group Co Ltd (58,577,149) -5.5% (3,086,039,466) -0.88% 15.26% 52,948,470,276 52.4 345,407.76 15.18 13.41 3.86 3.06 000651 CH Equity Gree Electric Appliances Inc of Zhuhai (33,548,292) -4.8% (1,854,118,247) -0.56% 11.08% 37,037,679,412 55.58 334,354.32 12.04 10.78 3.58 4.14 000858 CH Equity Wuliangye Yibin Co Ltd (84,824,072) -22.5% (8,618,085,323) -2.19% 7.51% 29,856,707,604 102.36 397,321.40 24.05 19.96 5.68 2.11 002415 CH Equity Hangzhou Hikvision Digital Technology Co Ltd (50,040,514) -5.7% (1,718,915,485) -0.54% 8.99% 27,105,391,449 32.68 305,507.87 22.92 18.49 7.68 1.93 002304 CH Equity Jiangsu Yanghe Brewery Joint-Stock Co Ltd (5,455,848) -4.9% (665,779,729) -0.36% 7.08% 12,551,965,270 117.66 177,312.21 18.95 16.52 4.69 2.97 000001 CH Equity Ping An Bank Co Ltd (10,017,335) -1.4% (139,536,706) -0.06% 4.12% 9,787,007,157 13.85 237,810.20 8.83 7.87 1.03 1.22 000002 CH Equity China Vanke Co Ltd (24,552,220) -8.2% (760,592,701) -0.22% 2.49% 7,951,550,703 28.88 322,014.38 7.81 6.81 2.02 4.62 000538 CH Equity Yunnan Baiyao Group Co Ltd 7,821,940 10.2% 697,579,233 0.75% 8.14% 7,498,294,011 88.5 92,163.88 24.01 21.13 4.44 1.42 002008 CH Equity Han's Laser Technology Industry Group Co Ltd (9,815,797) -5.1% (407,477,104) -0.93% 17.53% 7,208,201,010 39.1 41,722.35 21.09 15.87 4.82 0.88 002475 CH Equity Luxshare Precision Industry Co Ltd 25,254,999 10.9% 651,121,979 0.61% 6.24% 6,694,341,811 26.09 107,350.35 27.61 21.26 6.67 0.46 300015 CH Equity Aier Eye Hospital Group Co Ltd 3,086,245 1.8% 106,044,848 0.13% 7.38% 6,502,412,432 37.33 88,971.58 61.70 47.19 14.75 0.61 002027 CH Equity Focus Media Information Technology Co Ltd 147,327,286 19.4% 1,002,527,103 1.01% 6.21% 5,519,912,948 6.1 89,535.07 18.65 15.29 6.35 2.10 000338 CH Equity Weichai Power Co Ltd (70,763,743) -18.8% (929,195,340) -0.88% 3.81% 3,766,018,040 12.35 95,704.25 11.35 10.82 2.33 3.72 001979 CH Equity China Merchants Shekou Industrial Zone Holdings Co Ltd 21,099,727 15.0% 479,737,460 0.27% 2.05% 3,568,982,538 22 173,890.04 9.23 7.86 2.46 4.15 002714 CH Equity Muyuan Foodstuff Co Ltd 2,607,941 5.0% 175,539,267 0.13% 2.61% 3,485,899,533 64.1 133,663.51 33.32 12.66 14.39 0.44 000568 CH Equity Luzhou Laojiao Co Ltd (14,213,241) -26.3% (999,671,385) -0.97% 2.72% 3,104,526,546 77.88 114,074.92 25.88 20.90 6.15 2.36 300347 CH Equity Hangzhou Tigermed Consulting Co Ltd 6,354,458 16.5% 414,289,480 1.27% 8.98% 2,982,003,482 66.4 33,211.72 50.73 37.64 12.07 0.70 300012 CH Equity Centre Testing International Group Co Ltd 23,650,251 8.7% 215,983,102 1.43% 17.82% 2,944,415,155 9.97 16,525.58 45.53 33.68 5.98 0.55 002032 CH Equity Zhejiang Supor Co Ltd (1,153,210) -2.6% (84,030,569) -0.14% 5.27% 2,929,477,593 67.77 55,655.70 28.06 23.59 8.65 1.80 002050 CH Equity Zhejiang Sanhua Intelligent Controls Co Ltd 24,922,273 16.1% 414,267,516 1.18% 8.50% 2,861,255,610 15.9 33,877.28 23.01 19.78 3.88 1.81 SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 17: Top 20 Shenzhen-listed stocks owned by northbound investors in the past four weeks (in terms of percentage)

Changes in % Change in Changes in stake Total stake owned Amount of shareholding held by shareholding held by Estimated owned by by northbound stake owned by Price on 2019E Market cap 2019E 2020E Ticker Company name northbound investors northbound investors amount northbound investors based on northbound May 3 PBR (x) Dividend (RMB$m) PER (x) PER (x) compared with Mar compared with Mar involved (RMB) investors within a CCASS record on investors (RMB$) yield (%) 30 30 month (ppt) April 30 (RMB) 300012 CH Equity Centre Testing International Group Co Ltd 23,650,251 8.7% 215,983,102 1.43% 17.82% 2,944,415,155 9.97 16,525.58 45.53 33.68 5.98 0.55 002008 CH Equity Han's Laser Technology Industry Group Co Ltd (9,815,797) -5.1% (407,477,104) -0.93% 17.53% 7,208,201,010 39.1 41,722.35 21.09 15.87 4.82 0.88 000333 CH Equity Midea Group Co Ltd (58,577,149) -5.5% (3,086,039,466) -0.88% 15.26% 52,948,470,276 52.4 345,407.76 15.18 13.41 3.86 3.06 300203 CH Equity Focused Photonics Hangzhou Inc 8,061,315 15.5% 222,315,713 1.78% 13.24% 1,525,961,343 25.46 11,521.09 15.02 12.01 3.26 1.90 002366 CH Equity Taihai Manoir Nuclear Equipment Co Ltd 1,075,375 3.5% 15,051,153 0.42% 12.49% 394,939,640 12.47 10,812.21 15.84 11.76 1.02 1.04 000651 CH Equity Gree Electric Appliances Inc of Zhuhai (33,548,292) -4.8% (1,854,118,247) -0.56% 11.08% 37,037,679,412 55.58 334,354.32 12.04 10.78 3.58 4.14 002353 CH Equity Yantai Jereh Oilfield Services Group Co Ltd 7,850,038 9.0% 197,140,621 0.82% 9.91% 2,159,353,310 22.75 21,791.18 24.97 18.33 2.56 0.79 002572 CH Equity Suofeiya Home Collection Co Ltd 15,731,117 22.9% 372,055,899 1.72% 9.23% 1,879,874,118 22.26 20,555.47 17.85 15.59 4.59 2.43 002415 CH Equity Hangzhou Hikvision Digital Technology Co Ltd (50,040,514) -5.7% (1,718,915,485) -0.54% 8.99% 27,105,391,449 32.68 305,507.87 22.92 18.49 7.68 1.93 300347 CH Equity Hangzhou Tigermed Consulting Co Ltd 6,354,458 16.5% 414,289,480 1.27% 8.98% 2,982,003,482 66.4 33,211.72 50.73 37.64 12.07 0.70 002508 CH Equity Hangzhou Robam Appliances Co Ltd (16,191,539) -16.2% (514,451,456) -1.71% 8.81% 2,439,205,485 29.18 27,692.52 16.76 14.87 4.35 2.90 002050 CH Equity Zhejiang Sanhua Intelligent Controls Co Ltd 24,922,273 16.1% 414,267,516 1.18% 8.50% 2,861,255,610 15.9 33,877.28 23.01 19.78 3.88 1.81 000089 CH Equity Shenzhen Airport Co Ltd (19,250,601) -10.2% (178,682,245) -0.94% 8.26% 1,515,923,568 8.95 18,354.39 22.43 19.63 1.55 1.15 000538 CH Equity Yunnan Baiyao Group Co Ltd 7,821,940 10.2% 697,579,233 0.75% 8.14% 7,498,294,011 88.5 92,163.88 24.01 21.13 4.44 1.42 000999 CH Equity China Resources Sanjiu Medical & Pharmaceutical Co L (1,766,555) -2.2% (50,196,240) -0.18% 7.88% 2,276,689,375 29.5 28,877.55 14.26 15.78 2.41 1.78 002507 CH Equity Chongqing Fuling Zhacai Group Co Ltd (11,728,170) -16.2% (344,366,995) -1.49% 7.71% 1,746,173,872 28.69 22,646.66 28.04 23.54 8.62 1.05 000858 CH Equity Wuliangye Yibin Co Ltd (84,824,072) -22.5% (8,618,085,323) -2.19% 7.51% 29,856,707,604 102.36 397,321.40 24.05 19.96 5.68 2.11 000418 CH Equity Wuxi Little Swan Co Ltd 865,377 1.9% 52,861,348 0.14% 7.47% 2,722,048,520 57.65 34,108.65 17.46 15.37 4.08 2.28 300015 CH Equity Aier Eye Hospital Group Co Ltd 3,086,245 1.8% 106,044,848 0.13% 7.38% 6,502,412,432 37.33 88,971.58 61.70 47.19 14.75 0.61 002304 CH Equity Jiangsu Yanghe Brewery Joint-Stock Co Ltd (5,455,848) -4.9% (665,779,729) -0.36% 7.08% 12,551,965,270 117.66 177,312.21 18.95 16.52 4.69 2.97 SOURCES: BLOOMBERG, CGIS RESEARCH (BASED ON CCASS DATA ON MAY 3)

Figure 18: Changes in sector weightings (based on GICS) Based on MSCI China A Inclusion Index (the version to Based on positions owned by northbound investors be adopted in Nov) (for stocks in the MSCI universe) Weighting at end-April Weighting at end-March Change Weighting at end-April Weighting at end-March Change Communication Services 1.81% 1.92% -0.11% 0.70% 0.78% -0.09% Consumer Discretionary 8.51% 8.28% 0.23% 17.21% 16.53% 0.68% Consumer Staples 13.78% 12.74% 1.04% 23.43% 23.38% 0.05% Energy 2.49% 2.62% -0.13% 1.53% 1.61% -0.08% Financials 28.86% 28.35% 0.52% 20.65% 20.12% 0.53% Health Care 7.67% 7.78% -0.11% 8.65% 8.69% -0.04% Industrials 13.02% 13.39% -0.37% 11.50% 11.62% -0.12% Information Technology 8.81% 9.26% -0.45% 6.75% 7.33% -0.58% Materials 7.44% 7.72% -0.28% 4.17% 4.39% -0.22% Real Estate 4.82% 5.11% -0.30% 2.74% 2.78% -0.05% Utilities 2.79% 2.82% -0.04% 2.66% 2.76% -0.09%

SOURCES: BLOOMBERG, CGIS RESEARCH, CCASS

Hong Kong Strategy Note│ May 6, 2019

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