Made in China:CN Banks,consumer debt boom;Results,BABAPing AnLodging+VIPS-Geely

THEME OF THE DAY

    China banks - China's consumer debt boom (Stephen Andrews)

    Over the past 2 years mortgage growth in China has surged supporting a buoyant housing market & helping partially clear the significant property oversupply issue many 2nd and 3rd tier cities faced. In the past 3-4 months another phenomenon has started to emerge which is equally interesting: Short-term consumer debt in China has started to surge. During Q2 17 household debt with a duration of less than one year accelerated & is now growing +34-35% yoy (faster than mortgage growth) and currently makes up close to 9-10% of all net new credit provision within China (a level we have not seen before). (Stephen Andrews – 852 2203 6191)

    Alibaba - Jun Q margin: "when they go low, we go high" (BABA.N, Buy, Target Price: USD 208.00, Closing Price: USD 159.50, Alan Hellawell)

    Alibaba delivered a strong quarter with revenue of RMB50.2b (+56% YoY), 2%/5% ahead of DBe/street. Core-commerce rev of RMB43b topped DBe by 4% on improving content and personalization. Tmall physical goods GMV grew 49% YoY (vs the industry at 31% per NBS). Non-GAAP EBITDA margin of 50.1% was 5.3ppts/5.7ppts higher than DBe/street. Core-commerce adj EBITA margin grew further to 63%; this amidst amids the aggressive subsidies of June promotions. BABA reiterated its full year revenue guidance of 45-49% YoY, previewing higher investment in 2H. In raising FY18 rev growth to 49% to capture strong momentum, we reiterate Buy. (Alan Hellawell – 852 2203 6240)

    Ping An - 1H17 – Strong life results, lifting forecasts and TP (Esther Chwei)

    Ping An reported 1H17 results today. Group EV came in at Rmb739,144mn (+15.9% hoh), Life EV at Rmb446,600mn (+23.9% hoh), VNB at Rmb38,551mn (underlying growth of 46.2%, vs. our 2017E forecast of 35.8%). Net profit grew 6.5% yoy to Rmb43,427mn, accounting for ~70% of DBe and 63% of BBG consensus full-year forecasts. An interim dividend of Rmb0.5/share (+150% yoy). Reiterate Buy and Top Pick. (Esther Chwei – 852 2203 6200)