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					 Morning Express
         23 November 2012




Focus of the Day
                                                                                               Indices
China Macro                                                                                                   Close       1d %     Ytd %
                                                                                               HSI            21,743        1.02    17.95
Comments on HSBC Preliminary China Nov PMI                                                     H Shares       10,492        0.91     5.59
                                                                                               SH A            2,111       -0.73    -8.40
     Li Miaoxian             limiaoxian@bocomgroup.com                                         SH B              218       -0.51     1.44
                                                                       Economic                SZ A              834       -1.18    -8.01
                                                                                               SZ B              600       -0.21     5.89
Event:                                                                                         DJIA           12,837        0.38     5.07
                                                                                               S&P 500         1,391        0.23    10.61
HSBC Preliminary China Nov PMI came in at 50.4, an increase of 0.9 ppt from Oct.               Nasdaq          2,927        0.34    12.34
                                                                                               FTSE            5,791        0.68     3.93
                                                                                               CAC             3,498        0.60    10.71
Comments:                                                                                      DAX             7,245        0.84    22.83
                                                                                               Source: Bloomberg
1) Stronger output was the key driving force of PMI increase this month. HSBC
   PMI has rebounded for three consecutive months and stood above the 50-point                 Indicators
                                                                                                                 Close    3m %     Ytd %
   threshold for the first time since Nov last year, which reconfirmed our view that
                                                                                               Brent             110.55    -3.79     2.95
   the Chinese economy has been recovering steadily recently. The new order index              Gold            1,729.65     3.54    10.61
                                                                                               Silver             33.34     9.05    19.75
   gained slightly by 0.1 ppt MoM to 51.3. The output index rebounded sharply                  Copper          7,692.00     1.08     1.21
   from 48.2 last month to 51.3 this month given increased orders and the                      JPY                82.42    -4.77    -6.69
                                                                                               GBP                 1.59     0.52     2.58
   soon-to-complete destocking process, boosting the overall PMI by 0.8 ppt. The               EURO                1.29     2.54    -0.60
   upcoming Nov CFLP PMI is likely to show a rising momentum MoM.
                                                                                               bps change                  3m        6m
                                                                                               HIBOR             0.40      0.00     -0.01
2) China unlikely to cut RRR. The rumors of RRR cut on Wednesday triggered a
                                                                                               US 10 yield       1.68      0.00     -0.05
   market reversal on that day, but the rumors are unlikely to come true given the             Source: Bloomberg
   positive PMI data and the reduced likelihood of policy relaxation, in our opinion.
                                                                                               HSI Technical
   We reiterate our view that there will not be any more RRR cut or interest rate
                                                                                               HSI                                 21,743
   cut for the year.                                                                           50 d MA                             21,169
                                                                                               200 d MA                            20,329
                                                                                               14 d RSI                                58
                                                                                               Short Sell (HK$ m)                   4,200
Net Dragon (777.HK)                                                                 LT
                                                                                               Source: Bloomberg
                                                                         Neutral
                                                                                   BUY


Expect 3Q results to outperform the market; TP raised                SELL                BUY




      Ma Yuan                 yuan.ma@bocomgroup.com                           Stock

 Last Closing: HK$9.24    Upside: +11.5%    Target Price: HK$10.3↑

Net Dragon will release its 3Q12 results on 23rd Nov. We expect total revenue to be
RMB293.7mn, up 45% YoY or 6% QoQ. Our diluted EPS is RMB0.12, up 26% YoY.

    We expect strong mobile operating data to support a solid quarter.

    We expect the mobile game business to contribute 52% of total mobile revenue,
    driven by fast-growing game operation data and the number of users on the Android
    platform. 91 game centre offers support to developers to integrate game kit,


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Morning Express                                                        23 November 2012




    account system, payment system and channel, as well as testing services, etc. Apart          Hang Seng Index (1 year)
    from banner ad, 91’s CPA ad mode, which connects over 650k APPs, will expand its              22,000
                                                                                                  20,000
    scope. 91 is well positioned in the market, but we think 91’s current focus is on
                                                                                                  18,000
    mobile games due to commercialization. Overall, we estimate revenue of the mobile             16,000
    Internet business to grow by 11% QoQ and 335% YoY, representing 28% of total                  14,000




                                                                                                           16/11/11
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    revenue.

    The game business saw a solid and stable performance during the quarter, mainly              Source: Company data, Bloomberg
    driven by the new expansion pack of Eudemons. We also saw good search results
                                                                                                 HS China Enterprise Index (1 year)
    based on our monthly data tracking with Eudemons ranking among the Top 25 in
                                                                                                  12,000
    Oct, which proved the good performance of the new expansion pack.                             11,000
                                                                                                  10,000
We expect the mobile business to continue to grow rapidly and may deliver upside                   9,000
                                                                                                   8,000
surprise in the coming quarters, especially mobile games, on the back of the buoyant               7,000




                                                                                                           16/11/11
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China mobile Internet market. We maintain BUY rating and lift TP from HK$8.4 to
HK$10.3, based on 16x 2013E PE, which implies 6x 2013E PE for the game business plus
HK$4.1bn for the mobile business on 13% WACC and 2% terminal growth rate.                        Source: Company data, Bloomberg

                                                                                                 Shanghai A-shares (1 year)
                                                                                                  2,800
Anxin-China (1149.HK)                                                                 LT
                                                                                                  2,600
                                                                           Neutral                2,400
                                                                                     BUY
                                                                                                  2,200
Announcement of IVAS products                                           SELL               BUY
                                                                                                  2,000




                                                                                                          16/11/11
                                                                                                          16/12/11
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                                                                                                          16/11/12
       Li Zhiwu                lizhiwu@bocomgroup.com                            Stock

 Last Closing: HK$1.63     Upside: +121%       Target Price: HK$3.6→                             Source: Company data, Bloomberg

                                                                                                 Shenzhen A-shares (1 year)
1) On 18 Nov, Anxin announced the IVAS (Intelligent Video Analysis System) products
                                                                                                  1,200
during a product launch event organized by the office of the organization committee of
                                                                                                  1,100
China High Tech Fair, Shenzhen Investment Promotion Bureau, Shenzhen Technological                1,000
Innovation Committee and Anxin; 2) The technology, a major advancement in monitoring                900
                                                                                                    800
technology capable of real-time, active and intelligent monitoring, was the result of a
                                                                                                          16/11/11
                                                                                                          16/12/11
                                                                                                           16/1/12
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                                                                                                           16/3/12
                                                                                                           16/4/12
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                                                                                                           16/6/12
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                                                                                                           16/8/12
                                                                                                           16/9/12
                                                                                                          16/10/12
                                                                                                          16/11/12
decade of R&D in Israel and has obtained US patent. Anxin acquired the technology on 19
Mar. The technology was used for monitoring at the National Stadium (Bird’s Nest)
                                                                                                 Source: Company data, Bloomberg
during the 2008 Beijing Olympics, the luggage system of Beijing Capital International
Airport, and the Jinan-Hezhe Expressway; 3) Anxin will use the world-class IVAS                  Result Announcement This Week
technology as an entry point to the public security market, which will provide a new             Date         Company              Code
growth driver; 4) The stock is trading at only 6.7x/4.3x 12/13E P/E and 1.4x/1.1x P/B, with      23/11/2012   BAUHAUS INT'L          483   Interim
                                                                                                 23/11/2012   KING FOOK HOLD         280   Interim
a dividend yield of 3.0%/4.7%. Maintain “Buy” rating and TP of HK$3.6.                           23/11/2012   ORIENTAL PRESS          18   Interim
                                                                                                 23/11/2012   PACIFICTEXTILES       1382   Interim
                                                                                                 23/11/2012   WONDERFUL SKY         1260   Interim
                                                                                                 23/11/2012   ZHIDAO INT'L          1220   Interim
                                                                                                 23/11/2012   ZHONG FA ZHAN          475   Interim
                                                                                                 Source: BOCOM Int’l




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Morning Express                                                       23 November 2012




China Mobile (941.HK)                                                                LT
                                                                          Neutral
                                                                                    BUY


Comments on first TD-LTE terminal tender results                       SELL               BUY




         Li Zhiwu             lizhiwu@bocomgroup.com                            Stock

 Last Closing: HK$88.2    Upside: +4.3%     Target Price: HK$92.00→

Event:
Media reported that China Mobile recently released the results of the first TD-LTE
terminal tender. China Mobile started the tender process in Sept mainly for its TD-LTE
technological trial in 13 cities, which purchased a total of 34,700 devices covering 7
categories of TD-LTE terminals. A total of 16 companies won the bid, covering the scope
of data card, MIFI, international roaming MIFI, CPE and multi-mode dual-standby
single-card smartphones (except tablet PCs).

Comments:
1) Data card and MIFI purchases took the lead. The number of data cards
   purchased was about 12,400 units and the 7 winning vendors were Huawei,
   Alcatel Sbell, AsiaTelco, Dafu Computer, Tianjin Zhongqichuang, Nationz Tech
   and Qingdao Hisense. The number of MIFI purchased was about 11,600 units.
   For MIFI module products, the 10 winning vendors were Fujian Sunnada, UT
   Starcom, Alcatel Sbell, ZTE, Datang Telecom, Huawei, Tianjin Zhongqichuang,
   Datang Mobile, Dafu Computer and Yulong Coolpad. For the international
   roaming MIFI module products, the 3 winning vendors were Huawei, ZTE and
   Dafu Computer. For CPE, the 7 winning vendors were Tianjin Zhongqichuang,
   Dafu Computer, Chuangyi Tech, Nationz Tech, ZTE, Arima Communications and
   Alcatel Sbell.

2) Mobile handset purchases were small. About 300 multi-mode dual-standby
   single-card smartphones and about 300 CSFB handsets were purchased.
   Samsung and Chuangyi Tech were the winning vendors for multi-mode
   dual-standby single-card smartphones, while Samsung ZTE and Huawei were the
   winning vendors for CSFB handset module products.

3) The total purchase volume beat expectations. The total purchase volume
   exceeded vendors’ expectations, which implied that China Mobile has attached
   great importance to its TD-LTE technological trial in 13 cities. This move will also
   greatly enhance the confidence of the terminal vendors.

4) The winning vendors are highly fragmented. The winning vendors are highly
   fragmented and they are required to display a certain degree of supply capacity
   by Apr 2013, showing that the primary objective of China Mobile is to pursue the
   long-term development of the industry chain. It will take some time for the
   industry chain to develop as we note that the development of mobile handsets
   and tablet PCs still lags behind that of data cards.

5) Maintain “LT-Buy”. China Mobile aims to achieve long-term development of
   TD-LTE technology, which is likely to facilitate the growth of the whole industry
   chain. China Mobile remains as our top pick with a “LT-Buy” rating. Near-term
   opportunities for terminal providers are limited. More time for development and
   a shuffling process for terminal providers is required.




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Morning Express                                                        23 November 2012




HSBC (5.HK)                                                                           LT
                                                                           Neutral
                                                                                     BUY
Proposed sale of Ping An stake likely based on the
                                                                        SELL               BUY
Group’s overall strategies
     Yang Qingli             yangqingli@bocomgroup.com                           Stock

 Last Closing: HK$76.55    Upside: -4.0%     Target Price: HK$73.50→

We believe that the proposed sale of Ping An stake would be likely based on the Group’s
overall development strategies and capital management needs. As a financial investment,
Ping An has failed to satisfy the “connectivity” and “efficiency” requirements among the
five service dimensions of HSBC. As of end-3Q12, the core tier-1 CAR and total CAR of
HSBC Group maintained at a healthy level of 11.7% and 15.6%, respectively. However,
Basel III requirements will pose a potential impact of 2.5-3 ppts on its CAR based on the
Group’s own estimates and HSBC may need to compress some of its non-core portfolio to
replenish the capital base. While the proposed sale will have no impact on its intrinsic
value, improvements of CAR and profit-sharing capability will be viewed as a positive
factor amid the sluggish economy, though the effect is limited. HSBC is trading at FY12E
12.57x PE and 1.07x PB. Maintain “Neutral” with a TP of HK$73.5.




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                                                                                                                           23 November 2012




      Last Closing: HK$9.24                       Upside: +11.5%             Target Price: HK$10.3↑                      Internet Sector

Net Dragon (777.HK)                                                                                               UP              MP                OP
Expect 3Q results to outperform the market; TP raised

Financial Highlights
Y/E 31 Dec                                2010        2011         2012E       2013E         2014E                                    LT
                                                                                                                      Neutral
Revenue (RMB m)                            538         761         1,111       1,369          1,665                                  BUY
YoY growth                               -13.4%      41.3%         46.0%       23.2%         21.6%
Net profit (RMB m)                          35         135           188         237           311              SELL                        BUY
YoY growth                               -59.9%     286.7%         39.3%       25.8%         31.1%
Adjusted diluted EPS (HK$)                 0.08       0.32          0.54        0.65           0.83
DPS (RMB)                                  0.13       0.10          0.15        0.18           0.24
                                                                                                                                Stock
Dividend yield                            1.8%        1.4%          2.0%        2.5%          3.3%
PE                                        117.7       29.0          17.0        14.2           11.1
Source: Company, BOCOM Int’l estimates

                                                                                                                91 is well positioned in the market, but
     Expect 3Q results to outperform market. Net Dragon will release its 3Q12 results on 23rd
     Nov. We expect total revenue to be RMB293.7mn, up 45% YoY or 6% QoQ. Our diluted                           we think 91’s current focus is on mobile
     EPS is RMB0.12, up 26% YoY.                                                                                games due to commercialization.

     Strong mobile operating data to support a solid quarter. By Sep 2012, the number of 91                     We expect the mobile business to
     portal’s daily unique visitors surpassed 7mn while the Android portal – Hiapk had over
                                                                                                                continue to grow rapidly and may deliver
     13mn users, and 4.2mn visitors per day. 91 Assistant installations reached 155mn+ in 3Q12
     with 650k APPs on board. Hi market installations on Android reached 52mn with 363k APPs.                   upside surprise in the coming quarters,
     Panda Reader, one of the top reading programs, had over 60mn+ installations and 4.4mn                      especially mobile games, on the back of
     MAU. 91 Panda Desktop had 33mn installations and 7.8mn MAU by the end of 3Q12.                             the buoyant China mobile Internet
                                                                                                                market. Maintain BUY and lift TP to
     Commercialization is easier for mobile games; mobile version of MMO games started to
                                                                                                                HK$10.3 based on 16x 2013E P/E.
     ramp up. There are over 200 mobile games on 91 game centre, including nine
     self-developed games, while there are over 300 3rd-party game developers partnering
     with Net Dragon, contributing more than 60-70% of the mobile game revenue. We expect
     mobile game revenue to grow by 15% QoQ or 800% YoY to RMB43.2mn, representing
                                                                                                       Stock data
     52% of total mobile revenue, driven by fast-growing game operation data and the                   52w High                                          9.45
     number of users on the Android platform (increased by ~1.5mn per week). 91 game                   52w Low                                           4.07
     centre offers support to developers to integrate game kit, account system, payment                Market cap (HK$m)                                4,651
     system and channel, as well as testing services, etc.                                             Issued shares (m)                                  505
                                                                                                       Avg daily vol (m)                                 0.54
                                                                                                       1-mth change(%)                                   8.87
     ADMob system will be a further growth driver in the mobile ad business. Apart from banner         YTD change(%)                                   100.65
     ad, 91’s CPA (click per action) ad mode, which connects 650k APPs, will expand its scope. 91 is   50d MA                                            8.40
     well positioned in the market, but we think 91’s current focus is on mobile games due to          200d MA                                           6.33
                                                                                                       14-day RSI                                       63.61
     commercialization. Mobile ad is expected to contribute about 44% of total mobile revenue in       Source: Company data, Bloomberg
     3Q12 with about 8% QoQ or 200% YoY growth. Overall, we estimate revenue of the mobile
     Internet business to grow by 11% QoQ and 335% YoY, representing 28% of total revenue.             1 Year Performance chart
     Online game business may achieve good revenue due to stable performance of Eudemons.                                   HSI               777.HK
                                                                                                        100%
     The game business saw a solid and stable performance during the quarter, and we expect               80%
     online game revenue to be RMB210mn, up 15% YoY and 5% QoQ, mainly driven by the                      60%
                                                                                                          40%
     new expansion pack of Eudemons (魔域) – Undead Mage (亡灵法师) in Sep, and Conquer                         20%
     (征服) in the overseas market. We also saw good search results based on our monthly                     0%
                                                                                                         -20%
     data tracking with Eudemons ranking among the Top 25 in Oct, which proved the good
     performance of the new expansion pack.                                                                 Nov-11     Feb-12     May-12   Aug-12   Nov-12


     Maintain Buy and lift TP to HK$10.3 on higher valuation for the mobile business. The              Source: Company data, Bloomberg
     stock is trading at 17x/14x 2012E/2013E PE. We expect the mobile business to continue
     to grow rapidly and may deliver upside surprise in the coming quarters, especially mobile         Ma Yuan (Martina), Ph.D
     games, on the back of the buoyant China mobile Internet market. We maintain BUY                   yuan.ma@bocomgroup.com
     rating and lift TP from HK$8.4 to HK$10.3, based on 16x 2013E PE, which implies 6x                Tel: (8610) 8800 9788 – 8039
     2013E PE for the game business plus HK$4.1bn for the mobile business on 13% WACC and              Gu Xinyu (Connie), CPA
     2% terminal growth rate.                                                                          conniegu@bocomgroup.com
                                                                                                       Tel: (8610) 8800 9788 - 8045

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Morning Express                                                       23 November 2012




Market Review
Sentiment has improved, more short-term upside is possible.
The preliminary reading of HSBC PMI was 50.4 in November, compared with 49.5 in
October, this was the first expansion in 13 months, adding to signs that economic growth
is rebounding after a seven-quarter slowdown. This spurred the Asian markets to go
higher generally, Nikkei 225 Stock Average rallied 1.6%. But China’s stocks failed to follow
the region’s trend, SHCOMP index lost 0.8% to 2014. While Hong Kong stocks rose for a
second day with the HSI soared 218-point, or 1%, to 21743 with a turnover of HK$49.5bn.
Heavy-weight HSBC (5.HK) and China Mobile (941.HK) led the market higher.

On the other hand, economists have scrapped projections for any easing of monetary
policy in China for the rest of 2012. PBOC conducted RMB89bn reverse repurchase
operations by way of interest rate tender yesterday, including RMB46bn of 7-day
operations at a coupon rate of 3.35% and RMB43bn of 14-day operations at a coupon
rate of 3.45%.

European leaders will begin a two-day summit in Brussels on the bloc’s next budget. UK
Prime Minister David Cameron has threatened to veto a proposed spending increase that
he says is excessive at a time when states are engaged in austerity policies.

Guangzhou Automobile (2238.HK) rose 4.5% after partner Toyota Motor said it expects
demand for Japanese cars to rebound in China. Dongfeng Motor (489.HK), which
produces cars with Nissan Motor in China, advanced 4.3% to HK$10.58. Glencore
International (805.HK) rose 1.3% as people familiar with the matter said regulators are
set to approve the company’s US$32bn takeover of Xstrata Plc.

China Railway Group (390.HK) rose 1.8% to HK$4.35 after saying it won contracts worth
RMB23.7bn. China Railway Construction (1186.HK) advanced 1.7% to HK$8.31, and China
Communications Construction (1800.HK) increased 1.6% to HK$6.92. AIA (1299.HK) plans
to invest about US$500m in PICC Group at the initial public offering. AIA currently owns
about 9.9% of PICC Property & Casualty (2328.HK).




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Morning Express                                                     23 November 2012




News Reaction
PBOC conducts RMB89bn of 7-day and 14-day reverse repos. The People’s Bank of China
(PBOC) said it conducted RMB89bn reverse repurchase operations by way of interest rate
tender today, including RMB46bn of 7-day operations at a coupon rate of 3.35% and
RMB43bn of 14-day operations at a coupon rate of 3.45%.

MOF may gradually expand property tax program nationwide. The Head of Ministry of
Finance (MOF) Xie Xuren recently wrote an article and stated that China will steadily
expand value-added tax coverage, timely include water resources into the scope of
resource tax levy and introduce environmental protection tax for the coming period. The
country will sum up the experiences gained from the pilot property tax reform on
individual residential housing and study the possibility of expanding the property tax
program nationwide, while proactively promoting the property tax reform on
apartments.

China’s five state-owned banks enter into insurance market. The Agricultural Bank of
China (ABC) yesterday announced that the application for acquiring Jiahe Life Insurance
was duly approved, implying that the Big Five banks (namely ICBC, ABC, BOC, CCB and
BOCOM) have established their own insurance companies. The banks’ stake acquisition is
a driver for earnings growth for the insurers. Statistics show that the premium growth of
bank-based insurance companies is far beyond the industry average.

BDI rises over 16% in 13 days. The Baltic Freight Index (BDI) reached 1066.00 on 20 Nov,
an increase of 16.376% in 13 days since 8 Nov. Industry parties believed that the surge in
BDI might be attributable to the upcoming Christmas holiday and traditional peak season
of the container market. With the strong gain of the BDI, the shipping market is likely to
recover as a whole.

Japan’s Mazda sees 34-35% YoY China sales fall in Nov. Noriaki Yamada, China Head of
Japan’s Mazda Motor, said its China sales are expected to drop by around 34-35% in Nov
as compared with the corresponding period last year. Mazda also expected around 20%
YoY fall in China sales for 1Q13 and the impacts of anti-Japanese sentiment are likely to
eliminate by the end of March next year.




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Morning Express                                                                                        23 November 2012




Economic releases for this week - USA                                                               Economic releases for this week - China
                                                                 Survey                Prior                                                                          Survey              Prior
27-Nov          Durable goods order                                      -             9.9%                            -                                -                  -                    -
Source: Bloomberg                                                                                   Source: Bloomberg




BOCOM Research Latest Reports
Data            Report                                                                                                                        Analyst
22 Nov 12      Baidu (BIDU.US) - Comments on Baidu's recent share price weakness and issuance of US$1.5bn notes                               Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
22 Nov 12      Digital China (861.HK) - Sept quarter results missed                                                                           XIE Jianying (Miles)
22 Nov 12      China Resources Enterprise (291.HK) -: 3Q12 below expectation; competitive threat to CRE beer business worth a closer watch    Phoebe Wong
21 Nov 12      Internet Sector - Analyzing the rationale behind the potential Alibaba Group's purchase of a significant stake of Sina Weibo   Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
20 Nov 12      Tingyi (322.HK) - Remain in good shape amid stiff competition                                                                  Summer Wang
20 Nov 12       Internet Sector - CCTV 2013 ad auction revenue up 11% YoY, better than our expectation                                        Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
19 Nov 12       HK Property Sector - Property weekly for the week of 19th November, 2012                                                      Alfred Lau, CFA
19 Nov 12       Container Shipping Sector - Weekly container shipping commentary                                                              Geoffrey Cheng, CFA
19 Nov 12       Parkson (3368.HK) - Reiterate Sell on disappointing 3Q12 results                                                              Albert Yip, CFA
19 Nov 12       Truly International (732.HK) - Gross margin saw an improvement in the third quarter                                           XIE Jianying (Miles)
19 Nov 12       Sina (SINA.US) - 3Q beat; Weibo monetization started taking off                                                               Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
16 Nov 12       China Market Strategy - Economy at A Crossroad                                                                                Hao Hong, CFA
16 Nov 12       Sa Sa (178.HK) - 1H13 in line; Leading sector outperformer re-affirmed; Reiterate Buy                                         Phoebe Wong
16 Nov 12       Netease (NTES.US) - 3Q miss on declining World of Warcraft (WoW); Cut TP and downgrade to Neutral                             Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
15 Nov 12       Electronics Sector - Semiconductor saw monthly growth in September                                                            XIE, Jianying (Miles)
15 Nov 12       SMIC (981.HK) - Takeaways from analyst tour in Beijing Fab                                                                    XIE, Jianying (Miles)
15 Nov 12       Tencent (700.HK) - 3Q in line; Focus on mobile user-base & engagement                                                         Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
14 Nov 12       Tencent (700.HK) - 3Q preview: Expect results to slightly beat; Raise TP                                                      Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
14 Nov 12       China Property Sector - Cautious on November contracted sales performance                                                     Toni Ho, CFA
13 Nov 12       Internet Sector - Opportunities for Cultural/Internet Sector brought by the 18th National Congress                            Ma Yuan (Martina), Ph.D, Gu Xinyu (Connie), CPA
Source: Company data, BOCOM International




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Morning Express                                                       23 November 2012




Hang Seng Index Constituents
Company               BBG       Share           Mkt     5d    Ytd     –––– 52-week ––––      –––––––––– PE –––––––––––   Yield   P/B
name                  code       price          cap    chg    chg          Hi        Lo     2009A     2010E      2011E
                                 (HK$)      (HK$m)     (%)     (%)      (HK$)      (HK$)       (X)       (X)       (X)    (%)    (X)
CHEUNG KONG           1 HK      116.20      269,138     3.2    25.8    120.20      83.00       9.5      11.1       9.9     2.7    0.9
HANG LUNG PROPER     101 HK      27.00      120,802     1.3    22.2     30.50      21.50      20.0      24.3      21.0     2.6    1.1
CHINA SHENHUA-H     1088 HK      31.75      549,299     4.3    -5.8     36.45      24.15      10.2      10.6      10.1     3.5    2.2
HANG SENG BK         11 HK      116.80      223,303     2.0    26.7    120.00      91.15      12.5      13.0      12.9     4.5    2.7
CHINA RES LAND      1109 HK      19.64      114,450     5.5    57.4     19.80       9.83      13.6      15.9      13.6     1.2    1.8
COSCO PAC LTD       1199 HK      10.66       29,699     7.1    17.5     13.06       8.30      11.3      10.2       9.0     3.5    1.0
HENDERSON LAND D     12 HK       54.00      130,402     2.3    39.9     57.90      35.40       8.0      17.1      16.7     1.9    0.7
HUTCHISON WHAMPO     13 HK       78.15      333,182     1.9    20.1     82.40      61.80      16.7      14.6      12.6     2.7    0.9
CHINA COAL ENE-H    1898 HK       7.71      110,241     4.2    -8.0     10.48       6.08       9.2       9.2       8.9    N/A     1.0
BELLE INTERNATIO    1880 HK      15.14      127,694     5.4    11.8     16.30      11.38      22.9      21.6      18.4     1.3    4.9
IND & COMM BK-H     1398 HK       5.20     1,705,750    3.8    12.8      5.72       3.97       6.6       6.4       6.1     4.9    1.4
CHINA MERCHANT       144 HK      23.25       57,887     0.6     3.1     29.00      20.90      16.9      14.9      13.3     3.9    1.3
SUN HUNG KAI PRO     16 HK      112.80      295,055     0.2    15.9    122.00      85.30       6.8      13.4      12.9     3.0    0.9
NEW WORLD DEV        17 HK       12.52       77,068     5.6   100.0     13.20       6.13       6.5      11.2      10.3     3.0    0.6
SWIRE PACIFIC-A      19 HK       94.50      138,892     1.8    15.3     96.80      75.10       8.5      15.2      14.9     3.5    0.7
CLP HLDGS LTD         2 HK       66.70      160,490     1.1     1.0     69.90      62.10      23.5      16.7      14.4     3.8    2.0
AIA GROUP LTD       1299 HK      30.45      366,740     1.2    25.6     31.90      22.45      27.3      18.3      16.8     1.1    2.1
HENGAN INTL         1044 HK      69.90       85,909    -0.4    -3.8     83.45      66.80      27.8      24.8      20.2     2.1    6.6
BANK EAST ASIA       23 HK       29.35       62,079     2.6    -0.2     32.50      24.50      13.2      12.9      14.0     3.2    1.2
PING AN INSURA-H    2318 HK      58.80      401,419    -1.2    14.8     68.60      46.80      18.1      16.4      12.8     0.8    2.5
BOC HONG KONG HO    2388 HK      23.90      252,689     1.5    29.9     25.00      16.26      12.8      12.5      11.8     4.6    1.8
ALUMINUM CORP-H     2600 HK       3.31       70,039     1.8    -2.1      4.45       2.86      N/A        N/A       N/A    N/A     0.8
CHINA LIFE INS-H    2628 HK      22.50      615,177     1.1    17.2     24.70      17.00      34.1      29.0      14.5     1.3    2.4
CITIC PACIFIC        267 HK       9.69       35,363    -1.8   -30.8     15.88       8.64       4.1       6.3       7.1     4.6    0.5
CHINA RES ENTERP     291 HK      25.60       61,461    -0.6    -3.9     30.80      18.88      17.6      28.4      23.8     1.8    1.6
CATHAY PAC AIR       293 HK      13.96       54,916     3.3     4.8     16.38      11.76      31.3      48.3      16.5     2.4    1.0
HONG KG CHINA GS      3 HK       20.60      179,027     3.5    27.1     20.80      15.60      25.4      25.3      23.5     1.6    4.2
ESPRIT HLDGS         330 HK      12.24       23,724    -5.6    32.6     18.22       7.66      18.1      36.6      18.5     3.3    1.0
BANK OF COMMUN-H    3328 HK       5.58      400,500     4.7     2.8      6.55       4.73       5.0       5.5       5.9     2.2    0.9
CHINA PETROLEU-H     386 HK       8.26      664,126     5.2     1.1      9.67       6.38      10.2       9.6       7.8     4.5    1.2
HONG KONG EXCHNG     388 HK     127.30      138,000     4.3     2.6    148.90     100.00      29.0      32.1      28.7     3.1   14.8
BANK OF CHINA-H     3988 HK       3.18      937,424     2.3    11.2      3.45       2.35       5.5       5.5       5.5     6.1    0.9
WHARF HLDG            4 HK       55.60      168,426     4.7    58.4     55.65      33.25       4.2      16.2      15.1     2.1    0.7
LI & FUNG LTD        494 HK      12.18      101,796    -3.8   -15.3     20.15      11.46      16.9      18.9      15.6     4.0    3.0
HSBC HLDGS PLC        5 HK       76.55     1,408,834    3.5    29.7     78.00      56.00      11.0      11.1       9.8     4.2    1.1
POWER ASSETS HOL      6 HK       68.70      146,624     2.8    19.6     68.70      52.55      15.7      15.2      14.7     3.4    2.5
MTR CORP             66 HK       30.15      174,578     3.8    19.9     30.30      23.60      14.0      19.3      19.3     2.5    1.3
CHINA OVERSEAS       688 HK      21.70      177,344     5.1    67.4     21.95      11.51      10.7      11.3       9.8     1.6    2.3
TENCENT HOLDINGS     700 HK     259.60      480,459     4.2    66.3    281.00     139.80      32.2      29.4      23.1    N/A    10.3
CHINA UNICOM HON     762 HK      12.20      287,494     9.3   -25.3     16.98       9.45      44.6      33.2      20.3     1.0    1.1
SINO LAND CO         83 HK       13.58       80,279     2.7    22.8     14.94       9.28       8.0      12.8      13.4     3.4    0.9
CHINA RES POWER      836 HK      17.28       82,237     3.3    15.4     17.98      13.00      16.5      12.2      10.2     1.7    1.7
PETROCHINA CO-H      857 HK      10.28     1,931,538    1.8     6.3     11.92       8.85      11.6      11.6      10.3     3.8    1.5
CNOOC LTD            883 HK      16.36      730,414     3.9    20.5     18.20      13.18       9.4       9.0       9.0     2.7    2.1
CHINA CONST BA-H     939 HK       5.88     1,463,195    3.5     8.5      6.62       4.71       6.4       6.2       6.1     5.0    1.4


HANG SENG INDEX                21,743.2   12,611,311    3.0    17.9   22,149.7   17,613.2     11.1      11.4      10.5     3.4    1.4
Source: Bloomberg




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Morning Express                                                           23 November 2012




China Ent Index Constituents
Company                      BBG     Share          Mkt    5d     Ytd     –––– 52-week ––––    –––––––––– PE –––––––––––   Yield   P/B
name                         code    price          cap    chg    chg         Hi        Lo    2009A     2010E     2011E
                                     (HK$)      (HK$m)     (%)     (%)     (HK$)     (HK$)      (X)        (X)       (X)    (%)    (X)
CHINA SHENHUA-H            1088 HK    31.75   549,298.69    4.3    -5.8     36.45     24.15     10.2      10.6      10.1     3.5   2.2
SINOPHARM-H                1099 HK    24.70    59,344.85    0.4   32.4      27.45     16.76     27.6      25.0      19.8     1.0   2.9
CHINA SHIPPING-H           1138 HK     3.89    16,139.89    2.9   -19.8      6.46      2.83     N/A       N/A       27.7     3.2   0.5
YANZHOU COAL-H             1171 HK    11.54    83,373.31    2.7   -30.4     20.15      9.92      5.3       8.5       9.3     6.1   1.1
CHINA RAIL CN-H            1186 HK     8.31    85,182.12    1.6   94.2       8.83      4.00     10.9      10.4       9.2     1.5   1.2
BYD CO LTD-H               1211 HK    19.58    47,131.89   -1.2   16.3      28.45     12.54     32.9      90.4      38.5     0.0   1.7
IND & COMM BK-H            1398 HK     5.20 1,705,749.88    3.8   12.8       5.72      3.97      6.6       6.4       6.1     4.9   1.4
METALLURGICAL-H            1618 HK     1.50    45,124.18    0.7   -14.8      2.20      1.39     11.2       6.3       5.1     0.0   0.5
TSINGTAO BREW-H            168 HK     42.00    53,491.43    1.4    -2.3     51.65     39.40     N/A       25.1      21.5    N/A    3.7
CHINA COM CONS-H           1800 HK     6.92    93,785.95    1.9   14.0       8.00      5.20      7.7       7.7       6.9     3.2   1.2
CHINA COAL ENE-H           1898 HK     7.71   110,240.71    4.2    -8.0     10.48      6.08      9.2       9.2       8.9    N/A    1.0
CHINA COSCO HO-H           1919 HK     3.66    49,065.61    4.9    -4.2      5.61      2.75     N/A       N/A        N/A     0.0   1.0
CHINA MINSHENG-H           1988 HK     7.38   214,934.78    4.1    9.7       8.23      5.35      4.6       5.0       5.0    N/A    1.1
PING AN INSURA-H           2318 HK    58.80   401,418.72   -1.2   14.8      68.60     46.80     18.1      16.4      12.8     0.8   2.5
PICC PROPERTY &            2328 HK     9.93   121,701.88    2.1    -5.4     11.50      7.81     10.6       9.5       8.9     2.6   2.2
ALUMINUM CORP-H            2600 HK     3.31    70,038.77    1.8    -2.1      4.45      2.86     N/A       N/A        N/A    N/A    0.8
CHINA LIFE INS-H           2628 HK    22.50   615,176.69    1.1   17.2      24.70     17.00     34.1      29.0      14.5     1.3   2.4
SHANGHAI ELECT-H           2727 HK     3.13    57,109.86    3.6   -12.8      4.48      2.61      9.1       9.1       8.7     3.0   1.1
GUANGZHOU R&F -H           2777 HK    10.88    35,059.36    2.6   77.2      11.02      5.72      6.8       6.1       5.9     5.7   1.2
CHINA OILFIELD-H           2883 HK    14.84    80,613.14    4.7   21.0      15.26     10.02     12.3      11.5      10.1    N/A    1.8
ZIJIN MINING-H             2899 HK     3.14    91,627.03    0.3    7.5       3.90      2.23     11.2      10.4       9.0    N/A    2.2
CHINA NATL BDG-H           3323 HK     9.61    51,884.64    1.6    9.0      11.58      7.07      6.6       8.0       6.2     2.8   1.5
BANK OF COMMUN-H           3328 HK     5.58   400,499.53    4.7    2.8       6.55      4.73      5.0       5.5       5.9     2.2   0.9
ANGANG STEEL-H             347 HK      4.91    31,346.15    7.2   -12.2      6.77      3.44     N/A       N/A        N/A     0.0   0.6
JIANGXI COPPER-H           358 HK     19.40    79,518.71    1.5   15.6      22.70     15.40     11.0       9.9       9.3     3.2   1.3
CHINA PETROLEU-H           386 HK      8.26   664,126.19    5.2    1.1       9.67      6.38     10.2       9.6       7.8     4.5   1.2
CHINA RAIL GR-H            390 HK      4.35    78,492.92    4.8   79.0       4.41      2.20     11.3      11.0       9.7     1.4   1.0
CHINA MERCH BK-H           3968 HK    14.18   273,078.38    2.5    -9.7     18.30     12.02      6.0       6.1       6.2     3.7   1.4
BANK OF CHINA-H            3988 HK     3.18   937,423.88    2.3   11.2       3.45      2.35      5.5       5.5       5.5     6.1   0.9
DONGFENG MOTOR-H           489 HK     10.58    91,158.55   10.6   -20.6     15.80      8.54      7.3       7.6       7.0     2.1   1.5
ZHEJIANG EXPRESS           576 HK      5.93    25,754.67    2.8   17.7       5.95      3.51     11.5      11.6      11.5     6.5   1.4
CHINA TELECOM-H            728 HK      4.33   350,437.16    8.5    -2.0      4.92      3.23     18.3      18.7      14.4    N/A    1.1
AIR CHINA LTD-H            753 HK      5.13    71,290.16    1.6   -10.6      6.73      4.40     11.8      13.1       9.5     2.9   1.2
ZTE CORP-H                 763 HK     11.50    35,357.71    1.2   -52.8     25.00      9.23     20.5      50.5      15.0     2.2   1.3
PETROCHINA CO-H            857 HK     10.28 1,931,538.38    1.8    6.3      11.92      8.85     11.6      11.6      10.3     3.8   1.5
HUANENG POWER-H            902 HK      6.52   107,715.08    3.2   57.9       6.60      3.70     34.1      12.2       9.5     1.0   1.4
ANHUI CONCH-H              914 HK     25.40   113,039.59    2.0   10.2      28.55     19.10     12.7      16.9      12.9     1.7   2.4
CHINA CONST BA-H           939 HK      5.88 1,463,195.38    3.5    8.5       6.62      4.71      6.4       6.2       6.1     5.0   1.4
DATANG INTL PO-H           991 HK      2.72    59,005.00   -1.1    5.8       3.13      2.34     13.3       9.2       7.2     5.0   0.8


HANG SENG CHINA ENT INDX             10,492    4,072,748    2.9    5.6     11,916     8,988      8.6       8.7       7.9     3.6   1.4
Source: Bloomberg




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Morning Express                                                               23 November 2012




BOCOM International
         11/F, Man Yee Building, 68 Des Voeux Road, Central, Hong Kong
     Main: + 852 3710 3328                        Fax: + 852 3798 0133         www.bocomgroup.com

Rating System
Company Rating                                                             Sector Rating
Buy: Expect more than 20% upside in 12 months                               Outperform (“OP”): Expect more than 10% upside in 12 months
LT Buy: Expect more than 20% upside but longer than 12 months               Market perform (“MP”): Expect low volatility
Neutral: Expect low volatility                                              Underperform (“UP”): Expect more than 10% downside in 12 months
Sell: Expect more than 20% downside in 12 months



Research Team

Deputy Head of Research
Raymond Cheng,                (852) 2977 9393            raymond.cheng
CFA, CPA, CA                                             @bocomgroup.com


Strategy                                                 @bocomgroup.com   Economics
Hao Hong, CFA                 (852) 2977 9384            hao.hong          Li Miaoxian             (86) 10 8800 9788 - 8043   limiaoxian
Benny Wong, CFA               (852) 2977 9215            benny.wong


Banks                                                    @bocomgroup.com   Internet
Yang Qingli                   (86) 10 8800 9788 - 8008   yangqingli        Ma Yuan                 (86) 10 8800 9788 - 8039   yuan.ma
Li Shanshan                   (86) 10 8800 9788 - 8058   lishanshan        Connie Gu, CPA          (86) 10 8800 9788 - 8045   conniegu
Wan Li                        (86) 10 8800 9788 - 8051   wanli


Coal                                                                       Metals & Mining
He Wei                        (86) 10 8800 9788 - 8040   hewei             Jovi Li                 (852) 2977 9243            jovi.li
Wang Rongjuan                 (86) 10 8800 9788 - 8046   wangrongjuan      Benjamin Pei            (86) 10 8800 9788 - 8041   benjaminpei


Consumer                                                                   Oil & Gas
Phoebe Wong                   (852) 2977 9391            phoebe.wong       Wu Fei                  (852) 2977 9392            fei.wu
Albert Yip, CFA (Discretionary) (852) 2977 9205          albertyip
Summer Wang (Staples)         (852) 2977 9221            summer.wang
Kevin Wang                    (852) 2977 9386            kevin.wang


Electronics                                                                Property
Miles Xie                     (852) 2977 9216            miles.xie         Alfred Lau, CFA         (852) 2977 9235            alfred.lau
                                                                           Toni Ho, CFA, FRM       (852) 2977 9220            toni.ho


Healthcare                                                                 Telecom & Small/Mid - Caps
Wu Bin                        (86) 10 8800 9788 - 8052   wu.bin            Li Zhiwu                (852) 2977 9209            lizhiwu


Insurance                                                                  Transportation & Industrial
Li Wenbing                    (86) 10 8800 9788 - 8053   liwenbing         Geoffrey Cheng, CFA     (852) 2977 9380            geoffrey.cheng
                                                                           Ian Feng                (852) 2977 9381            Yinan.feng




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Morning Express                                                                23 November 2012




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