China Strategy Spotlight:PPP,SOE Reform and 3Q A-share earnings snapshot

类别:投资策略 机构:德意志银行 研究员:Michael Tong,Luka Zhu 日期:2017-12-11

Inflection point for PPP; SOE reform to accelerate; 3Q A-share earnings.

    The government is increasingly concerned that PPP is becoming a disguisedborrowing vehicle to circumvent policy restrictions. Since May, the MOF hasannounced three major notices to strengthen PPP controls. The latest –Document 92 – provides more concrete guidelines for removing unqualifiedprojects. Meanwhile, we believe SOE reform will accelerate further in 2018-19.

    In our first report on the SOE reform-related investment theme, we focus onthe context, objectives, guidelines, progress, case studies and implications,with a basket of 20 stocks identified as likely beneficiaries. On 3Q earnings, Ashare’snet income growth edged up to 23.8% yoy (14.9%/21.6% in 2Q/1Q).

    Performance and valuations: MXCI gained 1.6% while CSI300/HSCEI flat.

    In the past four weeks, MSCI China gained 1.6%, outperforming A-shares (flat)and HSCEI (-0.3%). Insurance, IT and healthcare led, while transportation,capital goods, diversified financials and real estate posted losses. The MSCIChina (ex. ADRs) 12m forward P/E stands on par with historical average at11.5x while P/B is at 1.5x, or a 12% discount to the historical average. Nonfinancials’12m fwd P/E and P/B are at 15.6x and 2.0x, respectively. A-shareCSI300 was flat in RMB terms in the past four weeks, with insurancesignificantly outperforming others. The index trades at 13.6x and 1.8x 12mforward earnings and book value, respectively. ChiNext’s valuation hasdeclined to 24.2x 12m fwd P/E, nearly 1-STD below historical average.

    Macro and earnings: 3Q macro data weaker; insurance/IT led earnings upgrade.

    Macro data came in slightly weaker than expected for October: 1) NovemberNBS PMI rebounded slightly to 51.8 from the previous month’s 51.6 andremained in the expansion zone. Caixin PMI dipped to 50.8 vs. prior 51.

    October IP came in weaker than expected at 6.2% vs. 6.3% consensusestimate and is below last month’s 6.6%; 2) New loans and TSF also missedexpectation. Adjusted TSF balance growth was stable at 14.7% yoy while corp.

    M/LT loan balance rebounded slightly to 17.8% yoy; 3) Investment deceleratedas FAI growth slowed across the board, and property investment dropped0.3ppt to 7.8% YTD yoy. On high-frequency data, thermal coal consumptiondeclined to 1% yoy in November, significantly lower vs. last month’s 16%. Interms of commodity prices, cement and rebar trended higher while coal pricesfell slightly. MSCI China 2018E consensus EPS expanded by 1.5ppt in the pastfour weeks, with insurance and IT leading the earnings upgrades.

    Liquidity and sentiment: H/A-share liquidity largely stable; onshore rates rising.

    HK equities’ ADT averaged HKD117bn in Nov’ MTD, higher than the previousmonth and still strong compared to the YTD average (HKD86bn). Connectinflows continued both ways while volatilities subsided. A-share sentiment wasstable. Onshore rates and credit spreads both expanded rapidly (10-yr treasuryyield exceeding 4%, likely due to continued financial deleveraging).

    Risks Key downside risks: 1) tighter-than-expected monetary policy; 2) harsherthan-expected property tightening; 3) any disorderly deleveraging as Chinatightens shadow credit; and 4) sharper-than-expected RMB depreciation.



上汽集团 中性 -- 研报
宇通客车 中性 -- 研报
银轮股份 中性 -- 研报
宁德时代 持有 -- 研报
古井贡酒 买入 134.00 研报
尚品宅配 持有 -- 研报
广汽集团 买入 17.00 研报
通化东宝 买入 25.65 研报
凯普生物 持有 27.27 研报
中环股份 持有 -- 研报
国祯环保 中性 -- 研报


银轮股份 1.01 0.29 研报
上汽集团 1.83 1.86 研报
宇通客车 1.94 1.96 研报
宁德时代 0 0 研报
古井贡酒 2.34 1.93 研报
尚品宅配 0 0 研报
广汽集团 0.81 0.37 研报
通化东宝 0.24 0.21 研报
中科创达 0 0 研报
凯普生物 0 0 研报
中环股份 0.43 0.35 研报


五粮液 43 持有 买入
伊利股份 37 持有 持有
完美世界 33 持有 买入
隆基股份 32 持有 买入
保利地产 31 买入 持有
泸州老窖 29 持有 买入
上汽集团 28 买入 中性
中国国旅 28 持有 买入
广联达 28 持有 持有
新宙邦 28 持有 持有
中信证券 27 持有 买入
瀚蓝环境 27 持有 买入
五粮液 27 持有 买入
比亚迪 27 持有 持有
三一重工 26 持有 持有
通威股份 26 买入 持有
恒生电子 26 持有 买入


电子信息 489 86 226
汽车制造 383 38 205
建筑建材 300 47 146
机械行业 288 51 124
生物制药 258 52 147
电子器件 252 52 158
化工行业 241 56 92
金融行业 228 29 96
酿酒行业 201 15 118
有色金属 191 40 44
家电行业 188 14 115
交通运输 184 33 80
酒店旅游 180 20 72
房地产 175 30 98
商业百货 154 34 81
钢铁行业 143 31 66
煤炭行业 134 31 53