PC WONG
PC WONG
DISCLAIMER The views by the author are his alone. All opinions expressed by the author are subject to change. The viewer is not to assume the performance of any company shares will equal its past performance. Use of information contained in this presentation does not constitute any contractual relationship between the viewer and the author. The author hereby disclaims all responsibilities and liabilities for any use of information contained in this presentation. The author’s risk assessment may differ from the viewer's. Risks are subject to economic uncertainties and market conditions. Viewers are advised to exercise due diligence and do their own assessment of the risks involved when investing in any company. Viewers shall not hold the author liable for investments which have gone sour. All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S ECONOMY All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S ECONOMY 1 • Debt to GDP has grown to more than 300% of GDP at the end of 2015. Recent 2016 figure suggests the ratio at 346% of GDP • Government’s debt to GDP is at 43.9% at the end of 2015 (source: tradingeconomics.com), much lower than Japan’s 250% and the US 105% • China mentioned it is time to reign in its debts and lower its growth expectation to the mid single digit • China could face massive default on private debts. The solution could be in the form of a RMB devaluation to bail out the banks and important state owned enterprises while allowing those in dire straits to collapse. China cannot save all the companies
• The saving grace for the China is its foreign reserves, which remain strong at US$3.2T, boosted by a trade surplus which could help soften a severe blow to its economy All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S ECONOMY 2 • China has an unknown amount of gold which analysts have put somewhere between 5,000 – 30,000 tonnes. Official figure is less than 1,800 tonnes • China has recently established the Shanghai Gold Exchange (SGE) which is based on physical delivery while its largest investment bank ICBC has accumulated gold vaults in London from Barclays and Deutsche Bank • The Yuan (RMB) is expected to be included in the IMF reserve currency in October 2016 • In preparation for this, China has several agreements for cross border Yuan transaction through multiple clearing houses • The accumulation of gold vaults, establishment of overseas clearing houses and the eventual inclusion in the IMF reserve currencies seem to suggest that China could possibly back its Yuan with gold
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S FUTURE DEVELOPMENT • The development of the One Belt, One Road initiative which unites Central Asia with Europe could result in a economy worth trillions of dollars a year. This could be a game changer for China, Central Asia and Europe
• China’s major expressway companies have indicated interest in participating in this massive project. The infrastructure will be financed by the Asia Infrastructure Investment Bank (AIIB) which China is the major sponsor • Large Chinese companies have been accumulating assets in overseas mergers which could help to strengthen China’s economic position in the years to come. Repatriation of the Yuan could provide some measure of stability to the currency • China’s successful transition from a manufacturing base economy to a service based economy will provide future GDP growth
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
EXPRESSWAY TOLL COMPANIES • After the sell off in the January – February, prices have stabilised • They remain attractive investments due to the dividend yield, many of which are at 5% • As China slows down toll companies could be a crowded trade as investors seek refuge in dividend yielding stocks with strong balance sheet and growth prospects, thus creating a support for the price • Today stock picks will focus on Anhui Expressway and Shenzhen Expressway
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
ANHUI EXPRESSWAY All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
ANHUI EXPRESSWAY • Listed on the HKEX under code 0995. Lot size 2,000 shares • Interests Hening Expressway 100% New Tianchang Section of National Trunk 205 100.00% Lianhuo Expressway Anhui Section 100.00% Xuanguang Expressway Company Limited 55.47% Gaojie Expressway Company Limited 51.00% Kangcheng Pharmaceutical Company Limited 65.00% Anhui Expressway Advertisement Company Limited 38.00% Hefei Information Investment Company Limited 18.00%
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
ANHUI PROVINCE AND EXPRESSWAY
Image Sources: luventics.org and Anhui Expressway website All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
SUMMARY OF FINANCIALS Q1 2016 • • • • • • • • •
Revenue RMB677.296M in 2016 vs RMB629.515M in 2015 Net Profit RMB254.214M in 2016 vs Net Profit RMB223.296M in 2015 Current Assets RMB2,002.220M Non Current Assets RMB10,793.747M Total Assets RMB12,795.967M Current Liabilities RMB810.105M Non Current Liabilities RMB2,801.769M Total Liabilities RMB3,611.874M Total Equity RMB9,184,093M
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
BENCHMARK AGAINST KPIs • • • • • •
Revenue Growth Net Profit Growth Current Ratio Debt to Equity Ratio Payback Period Distribution Yield (based on HK$5.61)
• NAVPS • SP/NAVPS
Actual +7.6% +13.9% 2.47 0.39 1.8 yrs 4.9%
KPI +5% +10% >1.0
DISCLAIMER The views by the author are his alone. All opinions expressed by the author are subject to change. The viewer is not to assume the performance of any company shares will equal its past performance. Use of information contained in this presentation does not constitute any contractual relationship between the viewer and the author. The author hereby disclaims all responsibilities and liabilities for any use of information contained in this presentation. The author’s risk assessment may differ from the viewer's. Risks are subject to economic uncertainties and market conditions. Viewers are advised to exercise due diligence and do their own assessment of the risks involved when investing in any company. Viewers shall not hold the author liable for investments which have gone sour. All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S ECONOMY All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S ECONOMY 1 • Debt to GDP has grown to more than 300% of GDP at the end of 2015. Recent 2016 figure suggests the ratio at 346% of GDP • Government’s debt to GDP is at 43.9% at the end of 2015 (source: tradingeconomics.com), much lower than Japan’s 250% and the US 105% • China mentioned it is time to reign in its debts and lower its growth expectation to the mid single digit • China could face massive default on private debts. The solution could be in the form of a RMB devaluation to bail out the banks and important state owned enterprises while allowing those in dire straits to collapse. China cannot save all the companies
• The saving grace for the China is its foreign reserves, which remain strong at US$3.2T, boosted by a trade surplus which could help soften a severe blow to its economy All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S ECONOMY 2 • China has an unknown amount of gold which analysts have put somewhere between 5,000 – 30,000 tonnes. Official figure is less than 1,800 tonnes • China has recently established the Shanghai Gold Exchange (SGE) which is based on physical delivery while its largest investment bank ICBC has accumulated gold vaults in London from Barclays and Deutsche Bank • The Yuan (RMB) is expected to be included in the IMF reserve currency in October 2016 • In preparation for this, China has several agreements for cross border Yuan transaction through multiple clearing houses • The accumulation of gold vaults, establishment of overseas clearing houses and the eventual inclusion in the IMF reserve currencies seem to suggest that China could possibly back its Yuan with gold
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
CHINA’S FUTURE DEVELOPMENT • The development of the One Belt, One Road initiative which unites Central Asia with Europe could result in a economy worth trillions of dollars a year. This could be a game changer for China, Central Asia and Europe
• China’s major expressway companies have indicated interest in participating in this massive project. The infrastructure will be financed by the Asia Infrastructure Investment Bank (AIIB) which China is the major sponsor • Large Chinese companies have been accumulating assets in overseas mergers which could help to strengthen China’s economic position in the years to come. Repatriation of the Yuan could provide some measure of stability to the currency • China’s successful transition from a manufacturing base economy to a service based economy will provide future GDP growth
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
EXPRESSWAY TOLL COMPANIES • After the sell off in the January – February, prices have stabilised • They remain attractive investments due to the dividend yield, many of which are at 5% • As China slows down toll companies could be a crowded trade as investors seek refuge in dividend yielding stocks with strong balance sheet and growth prospects, thus creating a support for the price • Today stock picks will focus on Anhui Expressway and Shenzhen Expressway
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
ANHUI EXPRESSWAY All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
ANHUI EXPRESSWAY • Listed on the HKEX under code 0995. Lot size 2,000 shares • Interests Hening Expressway 100% New Tianchang Section of National Trunk 205 100.00% Lianhuo Expressway Anhui Section 100.00% Xuanguang Expressway Company Limited 55.47% Gaojie Expressway Company Limited 51.00% Kangcheng Pharmaceutical Company Limited 65.00% Anhui Expressway Advertisement Company Limited 38.00% Hefei Information Investment Company Limited 18.00%
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
ANHUI PROVINCE AND EXPRESSWAY
Image Sources: luventics.org and Anhui Expressway website All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
SUMMARY OF FINANCIALS Q1 2016 • • • • • • • • •
Revenue RMB677.296M in 2016 vs RMB629.515M in 2015 Net Profit RMB254.214M in 2016 vs Net Profit RMB223.296M in 2015 Current Assets RMB2,002.220M Non Current Assets RMB10,793.747M Total Assets RMB12,795.967M Current Liabilities RMB810.105M Non Current Liabilities RMB2,801.769M Total Liabilities RMB3,611.874M Total Equity RMB9,184,093M
All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying or distribution is deemed an infringement under the Malaysian Copyright Act 1987
BENCHMARK AGAINST KPIs • • • • • •
Revenue Growth Net Profit Growth Current Ratio Debt to Equity Ratio Payback Period Distribution Yield (based on HK$5.61)
• NAVPS • SP/NAVPS
Actual +7.6% +13.9% 2.47 0.39 1.8 yrs 4.9%
KPI +5% +10% >1.0
