百富勤中国市场策略(1)

ChinaStrategyEarningssplitErwinSan[e-mail](852)28251183OverweightConsumerInternetservicesIThardwareMediaTourismPropertyMachineryTelecommunicationsTextilesInsuranceUnderweightOil&GasPowerNon-ferrousmetalsSteelPetrochemicalsAutomobilesSoftcommoditiesPharmaceuticalsOctober2004■Earningsgrowthdrivesperformance:WeexpectamarkeddivergenceofearningsgrowthwithintheChinamarketoverthenexttwoyears.Acceleratingtertiarysectordevelopmentshouldenhanceconsumerandservicessectorearnings,whilerisingcostsandcapacityadditionswaylaycommodityplaysandindustrials.EarningsgrowthtendstodictateshareperformanceamongHong-Kong-listedChinaequitiesand,so,weexpecttheformergroupofstockstooutperform.■Upcomingconsumptionboom:Risingwealthlevelsareresultinginastructuralshiftinconsumerspendingpatterns,andtheservicessectorisjustbeginningtogrow.Sustainedgrowthinconsumerspendingandretailsales,togetherwithmilddomesticinflation,isgoodnewsforconsumerandservicecompanyprofits.■Whycommoditieswon'tperform:Riskstocommoditysectorperformanceareonthedownsideasrisingcostserodemarginsandsupplygraduallycatchesupwithdemand.Clearsignsofoverheatingintheindustrialsectorhaveemerged,althoughthesewilltaketimetobecomemalignant.■Toppicks:Leadingconsumerandservicesectorfranchisesformthecoreofourrecommendedstocklist.Wealsoexpectoutsourcingplaystoperformwell.Amonglarge-capstocks,weseebetterearningsgrowthprospectsfortelecomsandinsurancethanoil.OurBUYlistincludesChinaMobile,ChinaLife,Lenovo,Tencent,BYD,WeiqiaoTextile,andChinaOverseasLand.(Pleaserefertotheimportantnoticeontheinsidebackcover)ChinaStrategy–October2004ContentsExecutivesummary1IT–Software73Earningsdrivesperformance2Machinery75Upcomingconsumptionboom8Media76Whycommoditieswon’tperform12Non-ferrousmetals77Financialservices19Petrochemicals79Telecommunications36Power80Oil&Gas48Property82Sectorreviews53Refining84Apparel54Softcommodities85Automobiles56Steel87Bulkcommodities58Textiles88Consumer–FB&T60Tourism90Consumer–Retail62Transport/Infrastructure92Consumer–TV63Valuations94Healthcare65Performance108IT–Hardware67Ratingchanges110IT–Internet69Earningsforecastchanges111IT–Semiconductors72ChinaresearchteamRaymondMaCons[e-mail](8621)62882822DorrisChenFinancial[e-mail](8621)62882822CandyHuangConsume[e-mail](8621)62882822SteveFanFinanci[e-mail](8621)62882822MarvinLoTelecom/[e-mail](852)28251[e-mail](852)28251812JimWongTransport&[e-mail](852)28251178SimonCheng,[e-mail](852)28251820ChinaeconomicsteamChenXingdongChiefEconomist–[e-mail](8610)65611118SusanQinEcono[e-mail](8610)65611118IsaacMengEconom[e-mail](8610)65611118Allsharepricesareasatmarketcloseon4October2004unlessotherwisestated.BNPParibasPeregrinestockratingsarebasedonabsoluteexpectedexcessreturn,whichwedefineasthetotalexpectedreturnonastock,lesstherequiredreturnforinvestingintherelevantequitymarket.AstockisratedOutperformifexcessreturnisgreaterthan10%,Underperformifexcessreturnislessthan-10%,andMarketperformifexcessreturnisbetween+10%and-10%.ChinaStrategy–October2004STRATEGY1ExecutivesummaryChina’sacceleratingtertiarysectordevelopmentshouldseeconsumerandservicessectorearningsoutgrowcommodityplaysandindustrials.Domesticinflation,risinginterestratesandanycurrencyrevaluationwillaccentuatethistrend.EarningsgrowthdrivesthesharepriceperformanceofHong-Kong-listedChinaequities.Weexpectthatconsumerandservicesstocks,togetherwithnewlistings,willclaimagrowingshareofChina’sinvestablemarketcapitalisation.ConsumptionshouldgraduallyemergeastheprimedriverofChina’seconomicgrowthasweenterthelatterphaseofitsinvestment-ledboom.Risingwealthlevelsareresultinginastructuralshiftinconsumerspendingpatterns,andtheservicessectorisjustbeginningtogrow.Sustainedgrowthinconsumerspendingandretailsales,togetherwithmilddomesticinflation,isgoodnewsforconsumerandservicecompanyprofits.Aftertheboomyearsof2003–04,riskstocommoditysectorperformancearenowonthedownsideasrisingcostserodemarginsandsupplygraduallycatchesupwithdemand.Clearsignsofoverheatingintheindustrialsectorhaveemerged,althoughthesewilltaketimetobecomemalignant.Industrialprofitswillremainrelativelyhighin2005,butearningsgrowthprospectsaredim.Thepositive