stable results but lacking surprise, maintain neutral
TRANSCRIPT
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Company Report: Sun Art Retail (06808 HK) Andrew Song 宋涛
公司报告:高鑫零售 (06808 HK) +852 2509 5313
12 May 2017
Stable Results but Lacking Surprise, Maintain “Neutral” 表现稳定但缺乏惊喜,维持“中性”
1Q17 revenue reached RMB 31,617 million, up 2.0% YoY, net profit
increased 1.5% YoY to RMB 1,041 million. SSS declined approximately
1.5% YoY during the period, of which, foot traffic dropped by around 4% YoY
and per ticket price rose by 3%-4% YoY.
Key takeaways: 1) Gross margin was flat YoY, but if excluding VAT impact
was up 0.3 ppts; 2) SSSG declined in 1Q17 due to the timing of Chinese
New Year in 2017 and one day less in February 2017 compared with 2016;
3) store closures brought an impairment loss of around RMB 60 million and
the Company targets to close 1-2 more sometime in the year; 4)
e-commerce loss narrowed by RMB 30 million in 1Q17.
Revenue growth remained moderate in 1Q17 and SSSG remained negative.
The earnings growth did not meet market expectations and the Company’s
stock price has recently plunged. The reduction in e-commerce loss helps
but the effect is limited. We maintain the investment rating as “Neutral”
and TP of HK$ 6.91, representing 20.5x 2017 PER, 18.9x 2018 PER and
17.5x 2019 PER.
2017 年第一季度收入同比上升 2.0%至人民币 31,617 百万元,股东净利同比上升 1.5%至
人民币 1,041 百万元。公司同店销售略微同比下降约 1.5%,其中客流量同比下降约 4%,
客单价同比提升 3%-4%。
关键摘要:1)毛利率同比持平,但除去增值税影响同比改善 0.3 个百分点;2)2017 年
第一季度同店增长倒退主要由于农历新年日期及 2 月相比 2016 年减少一天;3)关店录
得约 6000 万人民币的减值损失,且公司计划在今年剩下时间里再关闭 1-2 家;4)2017
年第一季度电商亏损收窄 3000 万人民币。
2017 年第一季度收入增长温和,同店增长仍未转正。盈利增速不及市场预期,公司股价
在近日下降较多。电商减亏有所帮助但是效果有限。我们维持高鑫零售的投资评级“中
性”及目标价 6.91 港元,相当于公司 20.5 倍 2017 年市盈率、18.9 倍 2018 年市盈率和
17.5 倍 2019 年市盈率。
Rating: Neutral Maintained
评级: 中性 (维持)
6-18m TP 目标价: HK$6.91 Revised from 原目标价: HK$6.91
Share price 股价: HK$6.900
Stock performance 股价表现
(10.0)
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
May-16 Aug-16 Nov-16 Feb-17 May-17
% of return
HSI Index SUN ART RETAIL
Change in Share Price
股价变动
1 M
1 个月
3 M
3 个月
1 Y
1 年
Abs. %
绝对变动 % (11.7) (13.5) 33.7
Rel. % to HS index
相对恒指变动 % (15.0) (20.1) 7.6
Avg. share price(HK$)
平均股价(港元) 7.7 7.5 6.3
Source: Bloomberg, Guotai Junan International.
Year End 年结
Turnover 收入
Net Profit 股东净利
EPS 每股净利
EPS 每股净利变动
PER 市盈率
BPS 每股净资产
PBR 市净率
DPS 每股股息
Yield 股息率
ROE 净资产收益率
12/31 (RMB m) (RMB m) (RMB) (△%) (x) (RMB) (x) (RMB) (%) (%)
2015A 96,414 2,443 0.256 (15.7) 22.6 2.175 2.7 0.160 2.8 12.1
2016A 100,441 2,571 0.270 5.2 21.8 2.284 2.6 0.200 3.4 12.1
2017F 106,210 2,732 0.286 6.3 20.5 2.370 2.5 0.144 2.5 12.3
2018F 113,374 2,961 0.310 8.4 18.9 2.536 2.3 0.156 2.7 12.7
2019F 121,213 3,194 0.335 7.9 17.5 2.715 2.2 0.168 2.9 12.7
Shares in issue (m) 总股数 (m) 9,539.7 Major shareholder 大股东 A-RT Retail Holdings Ltd. 51.0%
Market cap. (HK$ m) 市值 (HK$ m) 65,823.9 Free float (%) 自由流通比率 (%) 21.7
3 month average vol. 3 个月平均成交股数 (‘000) 14,057.2 FY17 Net gearing (%) FY17 年净负债/股东资金 (%) Net cash
52 Weeks high/low (HK$) 52 周高/低 8.880 / 4.780 FY17 Est. NAV (HK$) FY17 年每股估值 (港元) 7.2
Source: the Company, Guotai Junan International.
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Shareholders’ profit increased by 1.5% YoY to RMB 1,041 million in 1Q17. Revenue reached RMB 31,617 million during
the period, up 2.0% YoY, of which rental revenue rose by 5.3% YoY, and if excluding the effect of VAT, rental revenue
increased 9.6% YoY. Revenue growth and net profit growth missed our full-year growth forecasts of 5.7% and 5.3% by 3.7
ppts and 3.8 ppts, respectively.
Gross margin was relatively flat at 21.6% in 1Q17 and gross profit rose by 2% YoY to RMB 6,836 million. According to
the management, gross margin would increase by 30 bpts during the period if excluding the effect of VAT reform. The VAT
reform started in May 2016 and mainly impacts rental revenue of the Company. So we think that the VAT impact will still exist in
2Q17, but less significantly. Nevertheless, EBIT margin remains flat, which indicates that increasing staff costs have been
covered by gross margin improvement, as the management guided before.
Table-1: Sun Art’s 1Q17 Results Review
RMB million 1Q16 1Q17 YoY Comment on 1Q17 Results
Revenue 31,012 31,617 2.0% Rental income up 5.3% YoY
Cost of sales (24,310) (24,781) 1.9%
Gross profit 6,702 6,836 2.0%
Operating profit 1,541 1,593 3.4%
Profit for the period 1,068 1,113 4.2%
Shareholders' profit 1,026 1,041 1.5%
Gross margin 21.6% 21.6% 0.0 ppt Up 0.3 ppts excluding the VAT effect
EBIT margin 5.0% 5.0% 0.0 ppt Impairment of store closure dragged 0.2 ppt
Net margin 3.3% 3.3% 0.0 ppt
Source: the Company, Guotai Junan International.
Table-2: Quarterly Results Breakdown
RMB million 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Revenue 29,294 21,414 23,357 22,349 31,012 21,931 24,376 23,122 31,617
YoY growth 5.6% 5.6% 5.2% 3.4% 5.9% 2.4% 4.4% 3.5% 2.0%
Gross profit 6,318 5,107 5,581 5,457 6,702 5,357 5,999 5,923 6,836
YoY growth 9.0% 8.0% 8.5% 2.4% 6.1% 4.9% 7.5% 8.5% 21.6%
Operating profit 1,578 458 966 302 1,541 517 1,075 548 1,593
YoY growth -7.6% -23.3% -10.9% -41.9% -2.1% 14.1% 12.0% 72.9% 3.4%
Shareholders’ profit 1,065 411 542 425 1,026 406 599 540 1,041
YoY growth -9.7% -22.6% -14.1% -23.8% -3.5% 0.0% 11.1% 24.7% 1.5%
Gross margin 21.6% 23.8% 23.9% 24.4% 21.6% 24.4% 24.6% 25.6% 21.6%
YoY growth 0.7 ppt 0.5 ppt 0.7 ppt -0.2 ppt 0.0 ppt 0.6 ppt 0.7 ppt 1.2 ppts 0.0 ppt
Operating margin 5.4% 2.1% 4.1% 1.4% -2.1% 14.1% 12.0% 72.9% 5.0%
YoY growth -0.8 ppt -0.8 ppt -0.7 ppt -1.1 ppt -0.4 ppt 0.2 ppt 0.3 ppt 1.0 ppt 0.0 ppt
Source: the Company, Guotai Junan International.
SSSG was negative in 1Q17 at -1.5%. In detail, SSSG was down by around 2.0% in January-February, but up by over 2.0%
in March and up 1.8% in April. In 1Q17, price per ticket increased YoY by around 3%-4%, but foot traffic declined by around
4% YoY. The management explained that the negative SSSG was mainly due to the timing of Chinese New Year in 2017, and
one day less in February compared with 2016. Also, CPI in China was 1.4% and food CPI was -2.1% in 1Q17, lower than that
in 2016.
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Figure-1: Sun Art’s SSSG
4.0%
2.0%
0.0%
-1.6%
-3.4% -3.6%
-0.3% -0.3%
-1.5%
-4%
-2%
0%
2%
4%
6%
1H13 2013 1H14 2014 1H15 2015 1H16 2016 1Q17 Source: the Company.
Store opening target remains at 30-35 in 2017. Sun Art opened only 1 new store in 1Q17 (8 in 1Q16) and closed 1 store in
Qingdao as previously guided. Total number of stores by the end of 1Q17 stayed at 446 (78 Auchan stores and 368 RT-Mart
stores). The management mentioned that their store opening plan did not change and most new stores will be launched in
2H17. In addition, the management guided that 1-2 more stores would be closed during the year. The store closure in 1Q17
brought an impairment loss of approximately RMB 60 million, including equipment impairment and staff compensation,
however, the impairment amount varies case by case. Also, the impairment dragged EBIT in 1Q17 by around 0.2 ppt,
according to the management.
Table-3: Number of Sun Art Stores
Location 2015
1Q16
2016
1Q17
Auchan RT-Mart Total
Auchan RT-Mart Total
Auchan RT-Mart Total
Auchan RT-Mart Total
Eastern China 46 122 168
47 124 171
50 131 181
50 131 181
Northern China 7 38 45
7 38 45
6 42 48
6 42 48
North-Eastern China 2 38 40
2 38 40
2 44 46
2 44 46
Southern China 5 69 74
5 72 77
5 75 80
5 75 80
Central China 9 55 64
9 57 66
10 61 71
10 61 71
Western China 5 13 18
5 13 18
5 15 20
5 15 20
Total 74 335 409
75 342 417
78 368 446
78 368 446
Source: the Company.
GMV of Feiniu.com increased by 93% YoY. Growth is in line with the management’s guidance of a 100% YoY increase in
targets, but slowed down compared with 2016. The management mentioned that the loss from e-commerce was cut by
approximately RMB 30 million, improving by EBIT margin by 0.1 ppt. The Company is changing its focus from B2C services to
O2O leveraging within its nationwide offline stores. The market expects a larger improvement in earnings as the Company
plans to reduce its input into e-commerce, but the results do not seem significant.
VALUATION
Maintain investment rating as “Neutral” and target price of HK$ 6.91. Net profit growth in 1Q17 missed market consensus
by around 10 ppts, and the recent dive in stock price reflects the market’s disappointment. Sales growth in 1Q17 remained
sluggish and foot traffic continued to decline despite a low base. We have noted improving SSSG in March and April, but the
performance still lacks surprise. Reduction in e-commerce loss did help the EBIT margin but the real effect is weaker than
market expectations. We maintain our “Neutral” rating and TP of HK$ 6.91, representing 20.5x, 18.9x and 17.5x 2017-2019
PER, respectively.
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Figure-2: Historical Forward PER of Sun Art Figure-3: Historical Forward PBR of Sun Art
12
17
22
27
32
37
42+1 std Avg -1 std Historical PEx
0
1
2
3
4
5
6+1 std Avg -1 std Historical PBx
Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International.
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Table-4: Peers Comparison
Company Stock Code Currency Last price PE (fiscal year)
PB (fiscal
year) Gross
Margin(%) Operating Margin(%)
Net Margin(%)
ROE(%)
D/Y(%)
Market Cap
16A 17F 18F 17F 17F 17F 17F 17F 17F HKD mil
HK - Listed Supermarkets Sun Art Retail Group Ltd 6808 HK HKD 6.900
21.9 21.1 19.4
2.6
24.0
3.7 2.6
12.5
3.0
65,824
Lianhua Supermarket Hldgs -H 980 HK HKD 2.950
n.a. n.a. n.a.
1.2
14.9
0.6 (0.5)
(5.3)
0.0
3,303
Beijing Jingkelong Co Ltd-H 814 HK HKD 2.330
33.2 22.8 17.9
0.5
20.4
1.8 0.3
2.2
2.7
960
Simple Average 27.6 22.0 18.7 1.4 19.8 2.0 0.8 3.1 1.9
Weighted Average 22.1 21.1 19.4 2.5 23.5 3.5 2.5 11.5 2.9
HK - Listed Department Stores
Lifestyle Intl Hldgs Ltd 1212 HK HKD 10.800
10.9 10.2 10.4
6.1
49.5
42.7 35.9
72.5
5.0
17,308
Golden Eagle Retail Group 3308 HK HKD 11.660
40.9 19.5 17.7
3.0
65.8
31.1 18.6
16.4
2.6
19,532
Intime Retail Group Co Ltd 1833 HK HKD 9.980
15.8 22.2 21.2
1.5
52.0
20.4 17.1
7.6
1.9
27,200
Maoye International Hldgs 848 HK HKD 0.800
76.0 n.a. n.a.
n.a.
n.a.
n.a. n.a.
n.a.
n.a.
4,112
Springland International Hol 1700 HK HKD 1.640
10.0 10.4 10.1
0.7
40.5
12.7 7.6
6.5
4.2
3,797
Parkson Retail Group Ltd 3368 HK HKD 1.060
16.2 n.a. n.a.
0.5
68.2
(1.7) (4.3)
(4.1)
n.a.
2,793
New World Dept Store China 825 HK HKD 1.210
40.3 n.a. n.a.
n.a.
n.a.
n.a. n.a.
n.a.
n.a.
2,040
Shirble Department Store 312 HK HKD 0.500
21.4 n.a. n.a.
n.a.
n.a.
n.a. n.a.
n.a.
n.a.
1,248
Simple Average 28.9 15.6 14.8 2.4 55.2 21.0 15.0 19.7 3.4
Weighted Average 21.5 17.7 16.8 3.0 55.2 27.6 20.8 25.4 3.0
PRC - Listed Supermarkets
Yonghui Superstores Co Ltd-A 601933 CH CNY 6.030
43.1 37.2 30.3
2.9
20.4
3.2 2.7
8.0
1.6
65,192
Better Life Commercial Cha-A 002251 CH CNY 11.590
68.7 53.9 46.0
1.8
22.0
1.6 1.0
3.5
0.9
11,311
Renrenle Commercial Group-A 002336 CH CNY 9.790
64.7 n.a. n.a.
n.a.
n.a.
n.a. n.a.
4.4
n.a.
4,424
Beijing Hualian Hypermarke-A 600361 CH CNY 5.660
n.a. 62.9 47.2
1.4
22.0
0.3 0.5
2.2
n.a.
4,257
Simple Average 58.8 51.3 41.2 2.0 21.5 1.7 1.4 4.5 1.2
Weighted Average 44.4 40.9 33.4 2.7 20.7 2.8 2.3 6.9 1.5
Japan - Listed Supermarkets
Seven & I Holdings Co Ltd 3382 JP JPY 4,829.000
26.5 44.1 22.0
1.8
22.5
7.8 2.1
4.1
2.0
293,029
Aeon Co Ltd 8267 JP JPY 1,694.000
235.6 126.0 71.8
1.3
27.3
2.5 0.2
1.0
1.8
101,110
Lawson Inc 2651 JP JPY 7,520.000
24.0 20.7 21.3
2.7
31.4
29.0 14.3
13.5
3.2
51,632
Familymart Co Ltd 8028 JP JPY 6,490.000
29.2 37.8 28.3
1.6
26.1
10.9 3.7
4.7
1.6
56,295
Arcs Co Ltd 9948 JP JPY 2,472.000
21.0 13.1 14.0
1.1
24.6
2.9 2.0
8.6
1.8
9,586
Heiwado Co Ltd 8276 JP JPY 2,513.000
14.1 14.3 13.5
0.9
29.6
3.7 2.2
6.8
1.2
10,072
Ministop Co Ltd 9946 JP JPY 2,259.000
67.6 304.0 436.1
1.1
37.6
0.6 0.1
0.4
2.1
4,542
Okuwa Co Ltd 8217 JP JPY 1,243.000
68.9 37.6 34.9
0.7
25.6
1.0 0.6
1.9
2.3
3,849
Simple Average 60.8 74.7 80.2 1.4 28.1 7.3 3.2 5.1 2.0
Weighted Average 66.8 57.8 35.5 1.7 25.0 8.9 3.1 4.6 2.0
Europe, North America and Australia - Listed Supermarkets Wal-Mart Stores Inc WMT US USD 76.130
16.6 17.3 17.6
3.0
25.6
4.7 2.8
17.2
3.0
1,798,219
Target Corp TGT US USD 56.060
10.5 11.8 14.0
2.8
29.7
7.2 3.9
22.9
3.7
240,935
Kroger Co KR US USD 30.430
14.6 14.6 13.9
4.2
22.4
3.0 1.7
29.0
1.4
219,575
Wesfarmers Ltd WES AU AUD 44.360
122.5 17.2 17.0
2.1
31.0
6.4 4.2
12.3
4.9
289,097
Tesco Plc TSCO LN GBp 180.350
106.1 n.a. 17.5
2.3
5.2
1.8 (0.1)
(0.5)
0.0
148,025
Woolworths Ltd WOW AU AUD 27.050
n.a. 23.3 20.9
3.7
27.0
4.2 2.6
16.4
2.9
201,253
Carrefour Sa CA FP EUR 22.005
21.8 13.7 12.3
1.4
21.5
3.2 1.5
10.7
3.5
140,899
Metro Ag MEO GR EUR 29.602
16.2 14.3 13.0
1.7
19.5
2.6 1.2
12.6
3.6
81,855
Metro Inc MRU CN CAD 46.100
19.1 17.7 16.2
4.0
19.8
6.2 4.5
22.2
1.4
59,785
Sainsbury (J) Plc SBRY LN GBp 265.100
11.1 15.1 13.6
0.9
6.2
2.4 1.4
6.2
3.8
58,256
Wm Morrison Supermarkets MRW LN GBp 242.100
25.5 18.5 19.6
1.6
3.7
2.9 1.9
7.8
2.3
56,768
Casino Guichard Perrachon CO FP EUR 53.170
2.2 17.2 14.4
0.7
25.4
3.2 0.9
4.8
5.9
49,970
J.C. Penney Co Inc JCP US USD 5.290
n.a. n.a. 11.4
1.2
35.7
3.1 0.0
0.1
0.0
12,720
Simple Average 33.3 16.4 15.5 2.3 21.0 3.9 2.1 12.4 2.8
Weighted Average 24.6 16.0 16.8 2.8 24.3 4.6 2.7 16.3 3.0
Source: Bloomberg, Guotai Junan International.
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Financial Statements and Ratios
Income Statement Balance Sheet
Yr end 31 Dec (RMB m) 2015A 2016A 2017F 2018F 2019F Yr end 31 Dec (RMB m) 2015A 2016A 2017F 2018F 2019F
Turnover 96,414 100,441 106,210 113,374 121,213 Fixed assets 26,418 27,308 27,359 27,356 27,295
Cost of sales (73,951) (76,460) (80,426) (85,455) (91,000) Land use right 5,278 5,412 5,552 5,698 5,848
Gross profit 22,463 23,981 25,783 27,919 30,213 Others 1,169 525 1,275 1,343 1,421
Non-current assets 32,865 33,244 34,186 34,397 34,564
Other revenue 476 618 679 722 769
Administrative expenses (2,633) (2,876) (3,041) (3,246) (3,471) Inventories 12,646 15,409 13,837 14,413 17,253
Operating costs (17,002) (18,042) (19,602) (21,316) (23,142) Trade & other receivables 3,380 3,552 3,276 3,807 3,526
Profit from operations 3,304 3,681 3,819 4,079 4,370 Bank deposits 36 36 40 44 48
Cash balance 6,582 8,100 11,514 14,341 16,374
Finance income, net 251 232 338 426 489 Available for sale items 0 0 0 0 0
Profit before taxation 3,552 3,909 4,154 4,502 4,856 Current assets 22,644 27,097 28,667 32,605 37,201
Income tax (1,088) (1,280) (1,360) (1,474) (1,590) Trade & other payables 32,626 36,807 38,082 40,487 43,407
Minority interest (21) (58) (62) (67) (72) Bank loans and overdrafts 638 23 369 388 407
Shareholder's profit 2,443 2,571 2,732 2,961 3,194 Others 491 638 646 717 764
EPS (RMB) 0.256 0.270 0.286 0.310 0.335 Current liabilities 33,755 37,468 39,097 41,592 44,579
Cash Flow Statement Non-current liabilities 127 64 61 61 61
Yr end 31 Dec (RMB m) 2015A 2016A 2017F 2018F 2019F
Total equity 33,882 37,532 39,158 41,653 44,640
Profit before tax 3,552 3,909 4,154 4,502 4,856 Shareholders' equities 20,746 21,785 22,609 24,197 25,901
Depreciation and amortization 2,954 2,971 3,062 3,158 3,260 Minority interest 881 1,024 1,086 1,152 1,224
Interest income (271) (255) (362) (451) (515) BPS (RMB) 2.175 2.284 2.370 2.536 2.715
Finance cost 20 23 24 25 27
Working capital change 1,169 1,376 2,965 1,263 326 Key Financial Ratios
Others (1,124) (1,072) (977) (1,026) (1,165) Yr end 31 Dec 2015A 2016A 2017F 2018F 2019F
Operating cash flow 6,300 6,952 8,865 7,471 6,789
Growth (%):
Purchase of PP&E (4,837) (3,564) (3,585) (3,628) (3,671) Turnover growth 5.0 4.2 5.7 6.7 6.9
Others 254 201 290 365 412 Net profit growth (15.7) 5.2 6.3 8.4 7.9
Investing cash flow (4,583) (3,363) (3,295) (3,263) (3,259) Gross margin 23.3 23.9 24.3 24.6 24.9
Operating margin 3.4 3.7 3.6 3.6 3.6
Net bank loans 217 (372) 18 18 19 Net margin 2.5 2.6 2.6 2.7 2.7
Interest paid (15) (23) (24) (25) (27)
Dividend paid (1,230) (1,695) (1,908) (1,374) (1,489) ROE (%) 12.1 12.1 12.3 12.7 12.7
Others 109 0 (241) 0 (0) ROA (%) 4.5 4.4 4.4 4.6 4.6
Financing cash flow (919) (2,090) (2,156) (1,381) (1,496)
Inventory days 58.8 67.0 66.4 60.3 63.5
Net increase in cash 798 1,499 3,414 2,827 2,033 Account receivable days 0.7 1.2 0.7 0.6 0.6
Cash balance year beginning 5,770 6,582 8,100 11,514 14,341 Account payable days 85.0 93.2 96.5 95.9 96.5
Foreign exchange effect 14 19 0 0 0 Cash cycle (25.6) (25.1) (29.5) (35.0) (32.3)
Cash balance year end 6,582 8,100 11,514 14,341 16,374
Bank overdraft 0 0 0 0 0 Current ratio (x) 0.7 0.7 0.7 0.8 0.8
Balance sheet cash 6,582 8,100 11,514 14,341 16,374 Pay-out ratio (%) 62.4 74.2 50.3 50.3 50.3
Source: the Company, Guotai Junan International.
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See the last page for disclaimer Page 7 of 7
Company Rating Definition
The Benchmark: Hong Kong Hang Seng Index
Time Horizon: 6 to 18 months
Rating Definition
Buy Relative Performance >15%; or the fundamental outlook of the company or sector is favorable.
Accumulate Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable.
Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral.
Reduce Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.
Sell Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.
Sector Rating Definition
The Benchmark: Hong Kong Hang Seng Index
Time Horizon: 6 to 18 months
Rating Definition
Outperform Relative Performance >5%; or the fundamental outlook of the sector is favorable.
Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral.
Underperform Relative Performance <-5%; or the fundamental outlook of the sector is unfavorable.
DISCLOSURE OF INTERESTS
(1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for SMI Holdings Group Limited (00198 HK), GFI MSCI A I-R (CNY) (83156 HK), Guotai Junan International Holdings Limited
(01788 HK), GFI MSCI A I (03156 HK), Binhai Investment Company Limited (02886 HK), CAM SCSMALLCAP (03157 HK) and Link Holdings Limited (08237 HK), Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report.
(4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months.
(5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report.
(6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.
DISCLAIMER
This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities
(Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction. © 2017 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Tel.: (852) 2509-9118 Fax: (852) 2509-7793 Website: www.gtja.com.hk