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1、 abc Global Research First Light Asia China Microfinance, Chinalco Mining, Samsung TechwinProduction: please change headline text colour to WHITE, change headline row height to 1pt exactly before publish Whats Changed, Research Focus, Todays Events Ticker Company Rating was Currency Target was EPS 1
2、2e EPS 13e Price Price At Close New 86 HK Sun Hung Kai share price already reflecting some positives 06 March 2013 Ticker Event Rating Target Price Ticker Event NI Bbg Power Assets 6 HK Y N 70.00 69.2 Brown-Forman BF/B US Q3 65.6 Hysan Development 14 HK Y N 37.00 39.9 Staples Inc SPLS US Q4 13.2 ASM
3、 Pacific Technology 522 HK Y UW 74.00 102.2 PetSmart Inc PETM US Q4 65.1 Orient Overseas International 316 HK Y N (V) 58.00 54.7 MBA Mortgage Applications US 1-Mar - SOHO China 410 HK Y N 7.10 6.0 Factory Orders US Jan 2.20% Australia GDP 4Q 2.9% Feds beige book US Source: Bloomberg, HSBC estimates
4、Sunayana Daga* Research Marketing +852 2822 .hk *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at: http:/ Disclaimer accordin
5、gly, we rate the stocks Overweight, Underweight, or Neutral, with a (V) if they are volatile (see disclosure appendix for HSBCs definition of volatility). Potential return equals the percentage difference between the current share price and the target price, including the forecast dividend yield whe
6、n indicated. Figure 1: Valuation comparison Close price as of 5 Mar Bberg Rating Mkt cap TargetCurrent Potential _ PE _ _ EV/EBITDA _ _ PB _ USDbn PricePriceReturn*20112012e2013e2011 2012e 2013e 20112012e China, Taiwan, Mongolia Coal China Coal Energy 1898 HK N 14.7 8.357.2419%7.99.28.83.9 4.5 4.0 0
7、.90.9 China Shenhua 1088 HK OW 70.9 36.8828.4534%9.99.89.55.3 5.5 5.1 2.01.8 Shougang Fushan 639 HK UW(V) 2.2 2.903.22-6%7.79.510.63.2 3.7 3.9 0.90.8 Mongolian Mining 975 HK UW 1.5 3.003.06-2%12.3n.a.42.510.8 34.2 16.0 1.92.0 Yanzhou Coal 1171 HK UW 10.8 9.8511.30-11%5.08.212.93.8 6.1 6.8 1.01.0 Gol
8、d Zhaojin Mining 1818 HK OW(V) 3.8 14.9410.1850%14.313.611.49.0 8.2 6.9 3.63.1 Zijin Mining 2899 HK OW 11.3 3.822.6348%8.18.77.64.6 4.9 4.0 1.81.6 Non-ferrous metals Chalco 2600 HK UW 8.9 2.353.18-26%145.0n.a.n.a.10.7 31.0 18.2 0.70.7 Jiangxi Copper 358 HK OW 10.9 22.1217.4829%7.49.48.66.1 7.2 6.0 1
9、.21.1 Steel Angang Steel 347 HK UW(V) 4.2 4.104.98-17%n.a.n.a.44.911.6 23.1 8.6 0.60.6 Baoshan 600019 CH UW 13.6 4.804.951%11.88.411.36.0 4.4 5.1 0.80.7 CH Metal Recycling 773 HK OW(V) 1.4 14.009.4353%5.85.74.97.2 7.2 5.9 1.71.4 China Steel 2002 TT UW 14.1 25.2527.40-7%21.172.332.614.1 24.8 18.1 1.4
10、1.7 Maanshan I awaiting the new mine plan Simon Francis* Zhaojin Mining (1818 HK) OW(V): 3Q results boosted by high sales volume Thomas Zhu* Zijin Mining (2899 HK) OW(V): 3Q results conference call shows cost may decline in 4Q Thomas Zhu* Zijin Mining (2899 HK) OW(V): 3Q slightly miss; expect positi
11、ve earnings growth from 4Q Thomas Zhu* Asia metals and Mining Outlook still tough Simon Francis* Zijin Mining (2899 HK) OW(V): Global Natural Resources Conference takeaways Thomas Zhu* China Coal (1898 HK) N(V): HSBC Global Natural Resources Conference take-aways Simon Francis* China Metal Recycling
12、 (773 HK) OW(V): Robust 1H12 results and solid growth outlook Simon Francis* Jiangxi Copper (358 HK) N(V): Limited upside in the near term Thomas Zhu* China Shenhua (1088 HK) OW: Well positioned for a tougher environment in 2H12 Simon Francis* Zhaojin Mining (1818 HK) OW(V): Substantially higher gol
13、d sales in 2H12e Thomas Zhu* Zijin Mining (2899 HK) OW(V): Attractive long-term growth and re-rating potential Thomas Zhu* Mongolian Mining Corp (975 HK) OW(V): Substantially higher earnings expected in 2H12 Simon Francis* Metals and Mining Back to reality launching coverage in China, Taiwan and Mon
14、golia Simon Francis* India: India Metals time to buy again” published on 17 August 2012. Riding the wave of financial reform We initiate on two investment options of H-share listed companies SHK 2) a reference point for real money pricing in the lower-tier lending market; and 3) early knowledge and
15、better understanding of the policy reform process, which might help shape the general investment thesis. Risks it wont be smooth The reform measures will not be smooth, particularly in the case of the trial programmes as there are many uncertainties and there is even the possibility that the trials
16、will fail or be abandoned. Where changes to the law are required, there are potential problems of legislation complexity and time. And there is always uncertainty in these uncertain times for example, the less active private lending market has not yet recovered from the confidence crisis of 2011. Mo
17、reover, the informal lending market and non-bank financing sector are more vulnerable to economic volatility and thus asset quality risks, especially those that rely on property as collateral. 7 FIG Diversified Financial Services 6 March 2013 abc Sun Hung Kai Note: FI = financial institutions Note:
18、* as of 1H12 12 FIG Diversified Financial Services 6 March 2013 abc Shining more light elsewhere Guarantee companies Since the beginning of 2012, there have been several reports of credit guarantee companies facing bankruptcy, raising fears of a contagious impact on the financial system. Growth in c
19、redit guarantee companies has been robust and there are now over 8,000 with total assets of over RMB930bn as of the end of 2011. The outstanding balance is RMB2trn, of which under RMB1.7trn is in the form of credit guarantees. This is 60%), these bonds are indirectly financed by banks with extra liq
20、uidity (such as from SOE banks or other rural cooperatives). The wholesale funding through the bond market has further improved banks lending incentive to small and micro-enterprises. Disintermediation: A separate set of measures to improve the use of direct financing (debt issuance and equity) is b
21、eing introduced so that SOEs and large companies may better utilise the capital market for cheaper and broader sources. The loan quota freed up in the banking system can thus be allocated to micro-, small and medium enterprises. A side note is that the specific target is to raise the non-FI direct f
22、inancing mix to 15% of total social financing during the Five-Year plan period. Specialised entities: New types of non-bank financial institutions specialising in serving small micro enterprises through more diversified lending entities are to be nurtured. These include guarantee companies, financia
23、l leasing, small lending companies and other emerging types of financing. See Appendix 3 for details. Bottom up testing grounds Since China is so big and development is not spread evenly, financial innovations be done historically by regional trial and error. Economic zones are selected to carry out
24、 experiments to polish serious system-wide reform policies before they are implemented. Remember that four special economic zones (Shenzhen, Zhuhai, Shantou and Xiamen) were used to open the door to economic reform from complete state-controlled communism. The same method will be used in this wave o
25、f financial sector reform. Again, coastal city testing grounds have been chosen to experiment with the introduction of private and foreign capital or other funds to finance or invest in micro/SMEs. Micro/SME-related testing grounds The key pilot programmes are as follows: Zhejiang Wenzhou: In a city
26、 famous as a hub for small-scale manufacturing entrepreneurship and investment, the Wenzhou Reform Trial was first initiated by the central government in March 2012 with a focus on supporting micro/SMEs financing, private capital and policies favourable to small loan companies. See Appendix 2 for de
27、tails. Guangdong Pearl River Delta: A broad financial reform plan was approved in July 2012. SME support also appeared in the agenda through introducing new financing channels and private capital. Shenzhen Qianhais special district was also within this scheme. 14 FIG Diversified Financial Services 6
28、 March 2013 abc Fujian Quanzhou: Recently approved by the State Council in December 2012, this scheme is aimed at developing innovative financing to medium, small and micro-enterprises and introducing private capital into the financial system. Shanghai: The government published the Legislation Const
29、ruction White Paper in August 2012, with in-depth discussions on legal services, jurisdiction and improvement of delivery in Shanghai. This municipal experiment is likely to act as a primer to building an efficient legal protection environment for finance related issues. Tianjin Binhai New Area: Lau
30、nched in 2008, the city has developed to become one of the largest centres for alternative financing, including leasing and private equity funds, which are actively involved with micro/SMEs investments. China: Bottom up key testing grounds for reforms related to micro/SMEs Tianjin Binhai Financial R
31、eform Pilot Programme (Mar-08) 天津濱海新區金融改革天津濱海新區金融改革 Shanghai International Financial Centre Legislation Construction White paper (Aug-12) 上海国际金融中心法治环境建设白皮书上海国际金融中心法治环境建设白皮书 Wenzhou Financial Reform Pilot Programme Plan (Mar-12) 浙江省温州市金融综合改革试验区总体方案浙江省温州市金融综合改革试验区总体方案 Guangdong Pearl River Delta Refor
32、m Pilot Programme (Jul-12) 广东省建设珠江三角洲金融改革创新综合试验区总体方案广东省建设珠江三角洲金融改革创新综合试验区总体方案 Fujian Quanzhou Reform Pilot Programme (Dec-12) 福建泉州综合改革试验区福建泉州综合改革试验区 Source: State Council, News media, HSBC 15 FIG Diversified Financial Services 6 March 2013 abc Blooming potential Theres nothing small about it, other
33、than the size of the loans themselves. The number of companies involved in Chinas small loans business surged from 497 to 6080 over 2008-12, delivering a loan balance growth of over 180% CAGR over that period to near RMB600bn by 2012. The robust growth suggests that this financing channel has its ow
34、n robust demand and at 0.5% of credit system, the potential market ahead remains substantial. These companies are more versatile than banks, which are more rigid about making changes to their loan portfolios, even when it is glaringly obvious that credit support to micro and small enterprises is mor
35、e urgent, especially in times of an economic slowdown. With a little policy help from government, the small loan companies are able to make significant gains on ground where they do not have to compete head-on with banks, which have inherent advantages in other respects, such as extensive branch net
36、works, comprehensive services and relatively cheap sources of capital. Why microfinance? Enormous growth potential with advantage of specialisation over banks Pay attention to stay ahead of financial reform as well as to keep track of early macro signals Case studies show that small loan business ca
37、n be sustainable and highly profitable China: Number of small loan companies China: Loan balance of small loan companies 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 20082009201020112012 No. of small loan co 12 times growth 0 100 200 300 400 500 600 700 20082009201020112012 RMBbn Loan balance CAGR =
38、+188% Source: PBOC, CEIC, HSBC Source: PBOC, CEIC, HSBC 16 FIG Diversified Financial Services 6 March 2013 abc New stars emerging As we saw in our discussion of Chinas shadow banking system in the previous chapter, the relatively new small loans companies have a key role to play in the financial ref
39、orm process. Indeed, the growth of this new star will be nurtured by continuous policy measures. Apart from those already under way in the various trial zones, there have been other supportive policies at both central and local government level. In the table below, we summarise the four key aspects
40、of positive measures and what further could be done in the future. They are: 1 Capital: Curbs on private capital and foreign capital participation are being eased and more approvals granted, which has attracted plenty of enthusiasm. Studies of possible funding from both debt and equity capital marke
41、ts are ongoing so that direct financing could also be streamed into the area. This helps enhance the scale and social recognition and pushes forward the building of databases and scientific modeling in areas of financing that have previously lacked attention. 2 Leverage: Relaxing leverage constraint
42、s, conversion to rural banks and the introduction of special funding debt should all help boost the potential return of small loan companies. Broadening of funding sources should also ensure that liquidity is adequate and refinancing risks of businesses are lowered. 3 Legal protection: The current s
43、ystem is too highly dependent on the interpretation of outdated law codes and officialdom. Recognition from the government, together with an improvement in law codes and court jurisdiction services, would remove the uncertainty surrounding legal risks involved in microfinance. 4 Formalised framework
44、: The Wenzhou Private Lending Registration Service Centre is a model for a centralised platform for traditional non-formal private lending. This helps to properly establish a credit information system and serves as an important step towards building the risk management system which is key to the mic
45、rofinance business. For full details and examples see Appendix 2. China: Small loan companies supporting measures Current situation Positive measures already in place What else is needed? Capital entry Scale remains small Supporting private capital entry Further funds from equity capital market More
46、 foreign capital participationWell-defined entry requirement Leverage Leverage cap is low at 1.5x Zhejiang new rules that allow other financing channelsFurther funds from debt capital market Rules for rural bank conversion is rigid Allow conversion to rural banksFurther funds from foreign markets Su
47、ccessful introduction of SME private debt Legal protection Laws are outdated Official recognition by “registering“New Money Lender Rules No specific codes for non-bank lending Special Financial Jurisdiction Court set upUpdate law codes for non-bank lending Legal enforcement rate is questionable Gree
48、n Channel for creditors Formalized framework Many private lending undocumented Registration centre offers standardized contract for private lending Update law codes for non-bank lending No risk management measuresRegistration centre has PBOC bank record systemConnect to more systems, such as tax bur
49、eau etc Private lending pricing 10% in 16 years of operations) through interest pricing and securitization. These match the credit demand from consumers who find it hard to get bank financing and cover the operating costs and potential defaults. Aeon: Loan asset breakdown, 2011 Hire purchase 1% Insurance 2% Credit card 67% Instalment loan 30% Source: Company data, HSBC Hong Kong GDP growth and overdue (90days)