Quam Pulse
INSTITUTIONAL RESEARCH: TRADING PLACES
DATE FRIDAY JUNE 20, 2014
EQUITIES HONG KONG STRATEGY
QUAM PULSE Starwood to Open 4 Luxury Hotels in China (China Daily)- Starwood Hotels & Resorts Worldwide Inc., said it plans to open four luxury hotels in China by the end of the year to cater to the growing number of wealthy Chinese travelers. The properties opening are The St. Regis Chengdu, The Azure Qiantang in Hangzhou, The Castle Hotel in Dalian and the W Beijing – Chang’an. The four hotels have a total of 1,129 high-end guestrooms. In 2014, the Stamford, Connecticut, company plans to open a total of 21 hotels through its nine brands in China. Starwood’s other brands include Westin, Le Meridien and Sheration. It operates 1,200 properties around the world. Our take: Starwood’s decision to add four luxury hotels in China suggests that the China hotel market is bottoming out, especially the luxury segment, which has been negatively affected by the government’s crackdown on luxury spending since last year. Recent industrial data also shows signs of bottoming out, where the May RevPAR (revenue per available room) for China hotels grew 7% YoY, its highest since 2010 when excluding the Lunar New Year effect. The increase was mostly led by Hainan, Shanghai and Hong Kong. The rebound in demand also indicates a return of higher domestic leisure and business travel, which minimizes the demand and supply gap of hotel rooms in China. We expect hotel REITs listed in HK with a China market focus will benefit most from the rebound, such as New Century REIT (1275 HK), which owns and operates 140 star-rated hotels in China; with 5-Star hotels, such as New Century Ground Hotel and New Century Resort also benefiting. It trades at a DPU yield of 10.1% for 2014E, according to bloomberg consensus forecast.
CHINA TAKEAWAYS SOEs Fuel Economic Hope with Jan-May Profit Gains– Annual profit growth at China’s SOEs in the first five months may be stabilizing after a weak start to the year. Of these, non-financial SOEs made combined net profits of RMB943bn, up 6.9% YoY. Growth was up from a rise of 6.5% in the first four months. The faster growth came after a batch of data showed signs of growth stabilizing in May. Chongqing Launches Carbon Trading Market– Southwest China’s Chongqing Municipality launched its carbon trading market on Thurs, marking the operation of all seven approved pilot trading programs in the country. Sixteen transactions worth more than RMB4.45mn and involving gas emission quotas of 145,000 tons were reached within half an hour after the trading started on Thurs. The city selected 254 companies with carbon dioxide emissions exceeding 20,000 tons each year for the trading market. The government has imposed emission quotas for them.
HSI TOP M OVERS Leaders Ticker CHEUN G KO N G BELLE IN TERN LEN O VO GRO UP N EW WO RLD DE SIN O LA N D CO
Laggers % 2.60 1.83 1.81 1.45 1.27
Ticker BA N K O F CHIN CHIN A RES LA CHIN A O VERSE CHIN A LIFE I PIN G A N IN SU
% -6.45 -3.00 -2.64 -1.65 -1.13
Close
1D Chg
1D %Chg
23167.73 10354.06 2126.91 9316.81 1992.03 3269.02 1881.48 25184.72 7534.90 1461.91 4864.27 6699.39 3640.54
-13.99 -90.35 -33.33 36.88 2.54 -7.78 4.90 -61.53 -23.30 10.55 -23.59 -3.74 28.95
-0.06 -0.87 -1.54 0.40 0.13 -0.24 0.26 -0.24 -0.31 0.73 -0.48 -0.06 0.80
Close
1D %Chg
YTD %Chg
106.43 114.54 4.66 311.36
0.43 0.25 0.00 0.50
10.35 5.60 12.40 7.66
307.00 1281.38 19.96 1455.50
0.29 0.29 0.33 0.32
-8.79 6.64 2.49 6.16
Corn Wheat Soybeans Coffee Sugar Cotton
441.75 601.50 1215.50 169.10 18.30 76.94
0.51 0.88 0.21 -0.44 -0.27 -0.32
-1.89 -3.99 7.09 44.34 7.33 -1.90
Baltic Dry
867.00
1.05
-61.92
Asia HSI HSCEI SHSZ300 TWSE KO SPI FSSTI KLCI SEN SEX N IFTY SET JCI PCO M P A SX
COM M ODITIES Energy WTI Brent N atural Gas Gasoline
M etals Copper Gold (Spot) Silver (Spot) Platinum (Spot)
Agriculture
China Unicom 3G Users Increased Over 50% - China Unicom(762 HK) added 3.3mn 3G/4G users in May, up 58.7% YoY. The accumulated 3G/4G users reached 138mn. However, 2G lost 645,000 users in May, the smallest loss this year. It lost 1.2mn 2G users last month. The net added users amounted to 2.7mn, with the accumulated number of users to reach 293mn. The average number of net added users ranged from 3.5mn to 4.3mn last year, compared to this year’s figures of 2mn to 3.5mn users. China Announces Stimulus Package for Film Industry – China’s film industry received a boost on Thursday after the government announced a raft of measures to support its development. Measures included an annual budget of 1bn yuan to support the production of five to ten movies. A separate fund will be set up by the sector, however no details has been disclosed yet. The country’s development fund will also support the sector by specifically promoting the use of hi-technology in movie making, boosting exports of Chinese films.
1
Tmall.com Sold 1mn Mobile Phones on 18 Jun – Tmall.com, the B2C platform of Alibaba.com, sold ~1mn mobile phones on 18 Jun, a record-high daily sales of mobile phones. According to the latest data released by market research company Canalys, global sales of mobile phones reached 279.4mn units in 1Q14, in which China accounted for 35%, equivalent to 1mn units sold a day. Tmall.com sales of mobile phones on 18 Jun exceeded the daily sum of mobile phones through all retail channels.
QUAM INSTITUTIONAL BUSINESS UNIT RESEARCH
SALES
JENNIFER SO
+852 2971 5433
STANLEY NG
+852 2217 2857
ANDY CK WONG
+852 2971 5434
GUY STILLE
+852 2217 2853
CHRISTOPHER HO
+852 2971 5436
quam research@quam group.com 18/F China Building, 29 Queen's Road Central, Hong Kong
Disclaimer and Risk Statement This document is published by Quam Securities Company Limited (“Quam Securities”), a licensed corporation (central entity number AAC557) regulated by the Securities and Futures Commission in Hong Kong. This document is for distribution in Hong Kong only to persons who are “Professional Investors” as defined in Part 1 of Schedule 1 of Securities and Futures Ordinance (Cap 571) of Hong Kong and any rules made thereunder. This document is not intended for distribution to or use by, any person or entity who is a citizen or resident of any jurisdiction where such distribution or use would be contrary to applicable law or regulation within such jurisdiction. This document does not constitute an offer or a solicitation of an offer to buy or sell any securities. This document is circulated to addresses solely and may not be reproduced or redistributed to any other person or published, in whole or in part, for any purpose. The research is based on information obtained from sources believed to be reliable, but Quam Securities does not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without prior notice. Any recommendation does not have regard to specific investment objectives, financial situation and particular needs of any specific addressee. Quam Securities accepts no liability whatsoever for any direct or consequential loss arising from any use of this document. Quam Securities and its affiliates as well as persons associated with any of them from time to time may or may not have interests in the securities mentioned in this document. The prices of securities may move up or down, and past performance is not an indication of future performance. Investors shall consider seeking separate legal or financial advice before making investment decisions.
2
DATE FRIDAY JUNE 20, 2014
EQUITIES HONG KONG STRATEGY
QUAM PULSE Starwood to Open 4 Luxury Hotels in China (China Daily)- Starwood Hotels & Resorts Worldwide Inc., said it plans to open four luxury hotels in China by the end of the year to cater to the growing number of wealthy Chinese travelers. The properties opening are The St. Regis Chengdu, The Azure Qiantang in Hangzhou, The Castle Hotel in Dalian and the W Beijing – Chang’an. The four hotels have a total of 1,129 high-end guestrooms. In 2014, the Stamford, Connecticut, company plans to open a total of 21 hotels through its nine brands in China. Starwood’s other brands include Westin, Le Meridien and Sheration. It operates 1,200 properties around the world. Our take: Starwood’s decision to add four luxury hotels in China suggests that the China hotel market is bottoming out, especially the luxury segment, which has been negatively affected by the government’s crackdown on luxury spending since last year. Recent industrial data also shows signs of bottoming out, where the May RevPAR (revenue per available room) for China hotels grew 7% YoY, its highest since 2010 when excluding the Lunar New Year effect. The increase was mostly led by Hainan, Shanghai and Hong Kong. The rebound in demand also indicates a return of higher domestic leisure and business travel, which minimizes the demand and supply gap of hotel rooms in China. We expect hotel REITs listed in HK with a China market focus will benefit most from the rebound, such as New Century REIT (1275 HK), which owns and operates 140 star-rated hotels in China; with 5-Star hotels, such as New Century Ground Hotel and New Century Resort also benefiting. It trades at a DPU yield of 10.1% for 2014E, according to bloomberg consensus forecast.
CHINA TAKEAWAYS SOEs Fuel Economic Hope with Jan-May Profit Gains– Annual profit growth at China’s SOEs in the first five months may be stabilizing after a weak start to the year. Of these, non-financial SOEs made combined net profits of RMB943bn, up 6.9% YoY. Growth was up from a rise of 6.5% in the first four months. The faster growth came after a batch of data showed signs of growth stabilizing in May. Chongqing Launches Carbon Trading Market– Southwest China’s Chongqing Municipality launched its carbon trading market on Thurs, marking the operation of all seven approved pilot trading programs in the country. Sixteen transactions worth more than RMB4.45mn and involving gas emission quotas of 145,000 tons were reached within half an hour after the trading started on Thurs. The city selected 254 companies with carbon dioxide emissions exceeding 20,000 tons each year for the trading market. The government has imposed emission quotas for them.
HSI TOP M OVERS Leaders Ticker CHEUN G KO N G BELLE IN TERN LEN O VO GRO UP N EW WO RLD DE SIN O LA N D CO
Laggers % 2.60 1.83 1.81 1.45 1.27
Ticker BA N K O F CHIN CHIN A RES LA CHIN A O VERSE CHIN A LIFE I PIN G A N IN SU
% -6.45 -3.00 -2.64 -1.65 -1.13
Close
1D Chg
1D %Chg
23167.73 10354.06 2126.91 9316.81 1992.03 3269.02 1881.48 25184.72 7534.90 1461.91 4864.27 6699.39 3640.54
-13.99 -90.35 -33.33 36.88 2.54 -7.78 4.90 -61.53 -23.30 10.55 -23.59 -3.74 28.95
-0.06 -0.87 -1.54 0.40 0.13 -0.24 0.26 -0.24 -0.31 0.73 -0.48 -0.06 0.80
Close
1D %Chg
YTD %Chg
106.43 114.54 4.66 311.36
0.43 0.25 0.00 0.50
10.35 5.60 12.40 7.66
307.00 1281.38 19.96 1455.50
0.29 0.29 0.33 0.32
-8.79 6.64 2.49 6.16
Corn Wheat Soybeans Coffee Sugar Cotton
441.75 601.50 1215.50 169.10 18.30 76.94
0.51 0.88 0.21 -0.44 -0.27 -0.32
-1.89 -3.99 7.09 44.34 7.33 -1.90
Baltic Dry
867.00
1.05
-61.92
Asia HSI HSCEI SHSZ300 TWSE KO SPI FSSTI KLCI SEN SEX N IFTY SET JCI PCO M P A SX
COM M ODITIES Energy WTI Brent N atural Gas Gasoline
M etals Copper Gold (Spot) Silver (Spot) Platinum (Spot)
Agriculture
China Unicom 3G Users Increased Over 50% - China Unicom(762 HK) added 3.3mn 3G/4G users in May, up 58.7% YoY. The accumulated 3G/4G users reached 138mn. However, 2G lost 645,000 users in May, the smallest loss this year. It lost 1.2mn 2G users last month. The net added users amounted to 2.7mn, with the accumulated number of users to reach 293mn. The average number of net added users ranged from 3.5mn to 4.3mn last year, compared to this year’s figures of 2mn to 3.5mn users. China Announces Stimulus Package for Film Industry – China’s film industry received a boost on Thursday after the government announced a raft of measures to support its development. Measures included an annual budget of 1bn yuan to support the production of five to ten movies. A separate fund will be set up by the sector, however no details has been disclosed yet. The country’s development fund will also support the sector by specifically promoting the use of hi-technology in movie making, boosting exports of Chinese films.
1
Tmall.com Sold 1mn Mobile Phones on 18 Jun – Tmall.com, the B2C platform of Alibaba.com, sold ~1mn mobile phones on 18 Jun, a record-high daily sales of mobile phones. According to the latest data released by market research company Canalys, global sales of mobile phones reached 279.4mn units in 1Q14, in which China accounted for 35%, equivalent to 1mn units sold a day. Tmall.com sales of mobile phones on 18 Jun exceeded the daily sum of mobile phones through all retail channels.
QUAM INSTITUTIONAL BUSINESS UNIT RESEARCH
SALES
JENNIFER SO
+852 2971 5433
STANLEY NG
+852 2217 2857
ANDY CK WONG
+852 2971 5434
GUY STILLE
+852 2217 2853
CHRISTOPHER HO
+852 2971 5436
quam research@quam group.com 18/F China Building, 29 Queen's Road Central, Hong Kong
Disclaimer and Risk Statement This document is published by Quam Securities Company Limited (“Quam Securities”), a licensed corporation (central entity number AAC557) regulated by the Securities and Futures Commission in Hong Kong. This document is for distribution in Hong Kong only to persons who are “Professional Investors” as defined in Part 1 of Schedule 1 of Securities and Futures Ordinance (Cap 571) of Hong Kong and any rules made thereunder. This document is not intended for distribution to or use by, any person or entity who is a citizen or resident of any jurisdiction where such distribution or use would be contrary to applicable law or regulation within such jurisdiction. This document does not constitute an offer or a solicitation of an offer to buy or sell any securities. This document is circulated to addresses solely and may not be reproduced or redistributed to any other person or published, in whole or in part, for any purpose. The research is based on information obtained from sources believed to be reliable, but Quam Securities does not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without prior notice. Any recommendation does not have regard to specific investment objectives, financial situation and particular needs of any specific addressee. Quam Securities accepts no liability whatsoever for any direct or consequential loss arising from any use of this document. Quam Securities and its affiliates as well as persons associated with any of them from time to time may or may not have interests in the securities mentioned in this document. The prices of securities may move up or down, and past performance is not an indication of future performance. Investors shall consider seeking separate legal or financial advice before making investment decisions.
2
