o* ,Áxqdoc.imedao.com/15d166720c79c123fcf7c31f.pdf · revise down our target price from hk$1.24 to...

SWS Research Co. Ltd is a subsidiary of Shenwan Hongyuan Securities 99 East Nanjing Road, Shanghai | (8621)23297818 www.swsresearch.com

Capital Goods | Company Research Bringing China to the World

2017 年 7 月 4 日

中性

下调

乌云密布

江南集团 (01366 HK)

Market Data: Jul 3,2017

Closing Price (HK$) 0.68

Price Target (HK$) 0.73

HSCEI 10,412

HSCCI 4,017

52-week High/Low (HK$) 1.66/0.66

Market Cap (USD Mn) 356

Market Cap (HK$ Mn) 2,774

Shares Outstanding (Mn) 4,079

Exchange Rate (RMB-HK$) 1.1453

Price Performance Chart:

Source: Bloomberg Analyst Vincent Yu, CFA A0230513070005 BAM599 [email protected] (+86) 21 2329 7301

Related Reports

"JIANGNAN GROUP (1366:HK)_ Beyond the bid" Mar 17,2017

Financial summary and valuation 2015 2016 2017E 2018E 2019E

Revenue (Rmbm) 9,167 9,111 10,574 10,907 11,482

YOY (%) 12.42 (0.61) 16.06 3.14 5.27

Net income (Rmbm) 703 531 227 552 583

YOY (%) 12.34 (24.65) (57.46) 144.11 5.72

EPS (Rmb) 0.19 0.13 0.06 0.14 0.14

Diluted EPS (Rmb) 0.19 0.13 0.06 0.14 0.14

ROE (%) 17.31 10.40 4.18 9.66 9.47

Debt/asset (%) 59.60 57.51 56.39 55.13 54.51

Dividend Yield (%) 4.56 4.56 1.68 4.10 4.33

P/E (x) 3.2 4.5 10.7 4.4 4.2

P/B (x) 0.5 0.5 0.4 0.4 0.4

EV/EBITDA (x) 4.1 5.1 11.9 5.4 5.1

受到奥凯事件影响，我们预计 2017 年江南集团主营业务成本及管理费用将显著上

升。因此我们调低 EPS 预测如下：2017 年由 0.17 元调至 0.06 元（同比减少

57.7%），2018 年由 0.2 元调至 0.14 元（同比增长 143%），2019 年由 0.22 元调至

0.14 元（同比增长 6%）。为了反映由此带来的成本上升，我们将目标价由 1.24 港币

调至 0.73港币。现价距目标价仍有 7.4%的上行空间，因此降级至中性。

奥凯事件引发行业强监管。2017 年 3 月，西安地铁被揭露使用陕西奥凯生产的不合

格电缆，对地铁安全运营造成威胁。事件引发监管部门对全国电力电缆行业的全面

质量检查，一定程度上造成整个行业成本增加。一些产品面临退回重新加工的风

险。对于江南集团，我们很难预计受影响产品数量。在模型中，我们假设被退回产

品占 2017 年电缆销售额的 30%，计算得出 2017 年毛利率将由 2016 年的 14.91%下降

至 13.24%。

行业景气度下滑为龙头带来扩张机会。由于受到经济增速放缓及行业公司基数庞大

等因素影响，电缆行业近年增速明显下滑。众多公司 2017 年一季度收入仅实现个位

数增长。铜价高企导致电缆企业主营业务成本上升，毛利润在一定程度上受到挤

压。我们认为行业增速放缓及主营业务成本上升会加速中小企业产能出清，有利于

江南集团等龙头企业拓展市占率。

2017 年应收账款拨备风险。截止 2016 年底，江南集团贸易及其他应收款总额为 38

亿元，占总收入的 41.7%（2015 年该比例为 39.1%）。一般情况下，公司为客户提供

30 至 180 天的信贷期。然而，截止 2016 年底，账龄超过 180天的贸易应收款项（扣

除呆坏账拨备）及应收票据（按发票日期）总额达到 9.97 亿元，占全部贸易及其他

应收款额的 28.6%（2015 年底该比例为 22.4%）。我们注意到 2016 年，上述 9.97 亿

元没有做任何减值处理，同期呆坏账拨备金额为 6500 万元。因此我们认为 2017 年

公司应收账款存在减值风险，我们的模型中预计 2017 年呆坏账拨备为 8700万元。下调至中性。考虑到奥凯事件为电缆行业带来的负面影响及主营业务成本上升，我们调低 EPS预测如下：2017 年由 0.17元调至 0.06元（同比减少 57.7%），2018 年由0.2 元调至 0.14 元（同比增长 143%），2019 年由 0.22 元调至 0.14 元（同比增长6%）。为了反映由此带来的成本上升，我们将目标价由 1.24 港币调至 0.73 港币，代表着 11.5 倍 17 年 PE 及 0.5 倍 17 年 PB，或 4.7 倍 18 年 PE 及 0.4 倍 18 年 PB。现价距目标价仍有 7.4%的上行空间，因此降级至中性。

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-48%

2%

52%

JIANGNAN GROUP LTD

Hang Seng China Ent Index

SWS Research Co. Ltd is a subsidiary of Shenwan Hongyuan Securities 99 East Nanjing Road, Shanghai | (8621)23297818 www.swsresearch.com

Capital Goods | Company Research Bringing China to the World

We expect Jiangnan Group’s administrative expenses and cost of goods sold to increase in 2017E in the wake of the “Aokai event”, which led to stricter quality supervision and thus higher production costs for electric cable manufacturers. Therefore, we revise down our EPS forecast from Rmb0.17 to Rmb0.06 in 17E (-57.7% YoY), from Rmb0.20 to Rmb0.14 in 18E (+143% YoY), and from Rmb0.22 to Rmb0.14 in 19E (+6% YoY). We also revise down our target price from HK$1.24 to HK$0.73. With 7.4% upside, we downgrade to Hold.

Stricter industry supervision due to “Aokai event”. In March 2017, Xi’an Subway was revealed to use unqualified electric cables produced by Shaanxi Aokai. Following the event, the authorities have called for stricter quality supervision, leading to cost increases in the whole cable and wire industry. Products are also likely to be sent back and re-manufactured. We estimate 30% of expected power cables sales in 2017 need to be reprocessed, which will lead to a gross margin decline for Jiangnan Group from 14.9% in 2016 to 13.2% in 2017E.

Weak industry environment but opportunity to expand market share. Due to the relatively low economic growth and large number of competitors, the cable and wire industry has suffered low growth in recent years. Most companies posted low single digit revenue growth in 1Q17 as well as decreasing gross margin due to high copper prices. However, we believe large industry players like Jiangnan Group will gain market share from small and medium-sized enterprises (SMEs).

Provision for bad debt likely in 2017E. By end-2016, Jiangnan Group’s trade and other receivables amounted to Rmb3.8bn, accounting for c.41.7% of total revenue (vs 39.1% in 2015). The company’s credit terms usually range from 30 days to 180 days. However, by end-2016, trade and bills receivable over 180 days amounted to Rmb997m and represented 28.6% of total trade receivables (vs 22.4% in 2015). We note this amount was not impaired and the allowance for bad and doubtful debt was estimated at Rmb65m only. Therefore, we believe the company is likely to record c.Rmb87m of provision for bad debt in 2017E.

Downgrade to Hold. Given the “Aokai event” and the subsequent increase in production costs across the industry, as well as a possible provision for bad debt in 2017E, we revise down our EPS forecast from Rmb0.17 to Rmb0.06 in 17E (-57.7% YoY), from Rmb0.20 to Rmb0.14 in 18E (+143% YoY) and from Rmb0.22 to Rmb0.14 in 19E (+6% YoY). We also revise down our target price from HK$1.24 to HK$0.73, representing 11.5x 17E PE and 0.5x 17E PB, or 4.7x 18E PE and 0.4x 18E PB. With 7.4% upside, we downgrade to Hold.

October 12, 2010 Building Materials | Company Research

Please refer to the last page for important disclosures Page 1

Jul 4, 2017 Capital Goods | Company Research

Lower margin In March 2017, Xi’an Subway was revealed to use unqualified electric cables produced by Shaanxi Aokai. The cross-sectional diameter of the cables was too small, leading to increased temperature and a risk of fire. The event quickly attracted attention of the State Council and the following investigation indicated the unqualified products accounted for more than 75% of total volume. Xi’an Subway announced it would change all the cables from Aokai within 100 days, followed by other companies, like China Railway Group (601390:CH – OUTPERFORM) and Power Construction Corporation of China (601669:CH – NR), which also terminated their cooperation with Aokai. 8 employees from Aokai were arrested by the local authorities. The Chinese cable and wire industry is not concentrated. The 10 largest companies only account for 7%-10% of total market share, as opposed to top 10 companies in the US, Japan and France, which total more than 60% of their local market. The relatively low market concentration indicates most companies have small operations and do not invest much in research and development (R&D). Most companies in the industry compete over price, somehow leading to quality issues due to cost cut. According to State Grid, out of 421 companies winning the bid in 2016, average gross margin amounted to 8.2% and average net profit margin amounted to -2.0%. Considering the tiny industry profit, companies had to figure out ways to expand profit margin and decrease cost. Therefore, quality became a general concern within the sector.

Figure 1: Cable and Wire Industry Concentration

Source: Qianzhan.com

In order to enhance quality supervision, the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republish of China (AQSIQ) published Implementation plan for specific supervision and inspection of wire and cable production enterprises. 17 provinces and 4 cities started specific wire and cable inspections. Under the strict industry environment, we believe Jiangnan Group is also negatively affected by the “Aokai event”. By end-2016, inventories amounted to Rmb3.8bn including Rmb0.04bn of raw materials, Rmb2.5bn work in progress and Rmb1.3bn of finished goods. We believe only sales to state-owned enterprises (SOEs) will be affected by the “Aokai event”. Sales to SOE accounts for c.50% of Jiangnan’s total sales in our model, and we assume 60% return rate, which will lead to 30% of total sales volume needing to be reprocessed.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Chinese Top 10 Companies

Japanese Top 7 Companies

American Top 10 Companies

French Top 5 Companies




Figure 2: Sensitive Analysis between product return rate and administrative expense to revenue ratio (Rmbm)

2017E Product return rate

2017E Administrative

expense to revenue

2017E Net income 0% 10% 20% 30% 40% 50% 60%

2.57% 638 587 535 483 432 380 329

3.57% 553 501 450 398 346 295 243

4.57% 467 416 364 312 261 209 158

5.57% 382 330 278 227 175 124 72

6.57% 296 245 193 141 90 38 -13

7.57% 211 159 107 56 4 -47 -99

8.57% 125 73 22 -30 -81 -133 -184

Source: SWS Research

We expect gross margin to decline from 14.9% in 2016 to 13.2% in 2017E, and administrative expense to revenue ratio to increase by c.3% due to the inventory impairment. In 1H17, copper price rallied by c.23% YoY. In our model, we assume the same price rally for copper in 2017E. We also assume sales volume of power cable, which is the main product of Jiangnan Group, will have a 6% YoY increase in 17E (vs +5% YoY in 2016). Therefore, we expect 2017E attributable net income to amount to Rmb227m, indicating 2.2% net profit margin (vs 5.8% in 2016).

Figure 3: Sensitivity Analysis between copper price increase and power cable sales volume growth (Rmbm)

2017E YoY Copper price increase

2017E Power cable volume growth rate

2017E Net income 8% 13% 18% 23% 28% 33% 38%

0% 180 189 197 206 214 223 232

2% 187 196 204 213 222 230 239

4% 193 202 211 220 229 238 247

6% 200 209 218 227 236 245 254

8% 207 216 225 234 243 253 262

10% 213 223 232 241 251 260 269

12% 220 229 239 248 258 268 277


Weak industry environment

After fluctuating at a relatively low level during the first 10 months of 2016, copper price experienced a sharp increase in late October, from USD4,621/t on 24 October to USD5,900/t on 11 November (27.7% increase). Currently, copper price fluctuates at c.USD5,700/t. High copper price leads to cost increase, forcing many companies to report lower margin in 1Q17. Despite the weak industry environment, we believe large industry players like Jiangnan Group will gain market share from small and medium-sized enterprises (SMEs). Adopting cost-plus pricing method, we believe 2017E revenue of Jiangnan Group will increase by 20% partly due to copper price increase and partly due to sales volume growth.




Figure 4: LME copper price (USD/t)

Source: Wind, SWS Research

In 1Q17, we note cable and wire companies have experienced a tough time. We chose several leading companies within the sector to indicate the industry environment. Except for Jiangnan Group, other companies are listed on the A-share market.

Figure 5: Competitors

Market cap (Rmbbn)

Percentage of cable related business

17E PE PB (MRQ)

2498.SZ Qingdao Hanhe Cable 12.1 90.10% 26 2.69

600973.SH Baosheng Science & Technology 6.56 63.10% 20 1.85

2300.SZ Fujian Nanping Sun Cable 6.44 86.20% 44.6 4.77

2471.SZ Jiangsu Zhongchao Holding 6.05 63.13% 54.8 3.31

600869.SH Far East Smarter Energy 15.5 83.70% 25.4 2.74

2276.SZ Zhejiang Wanma 9.31 50.60% 43.9 3.07

603606.SH Orient Cable 3.59 74.76% 67.8 4.17

1366.HK Jiangnan Group 2.47 100% 5.9 0.5


Due to the relatively low economic growth and large number of competitors, the cable and wire industry has suffered low growth in recent years. Most companies posted low single digit revenue growth in 1Q17 as well as decreasing gross margin due to high copper prices.

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Figure 6: Revenue (Rmbm) Figure 7: Jiangnan Group’s revenue (Rmbm)

Source: Company data, SWS Research Source: Company data, SWS Research

Affected by the copper price rally, we see that most companies within the sector have suffered from gross margin decline as well as net income decline in 1Q17.

Figure 8: Gross margin

1Q16 1Q17

2300.SZ Fujian Nanping Sun Cable 14.31% 8.19%

2471.SZ Jiangsu Zhongchao Holding 15.77% 14.83%

600869.SH Far East Smarter Energy 20.75% 14.27%

2276.SZ Zhejiang Wanma 18.91% 12.14%

603606.SH Orient Cable 13.65% 13.54%

2498.SZ Qingdao Hanhe Cable 11.35% 13.05%

600973.SH Baosheng Science & Technology 6.82% 7.17%

2015A 2016A

1366.HK Jiangnan Group 16.16% 14.91%

Source: Company data, SWS Research

Figure 9: Net income (Rmbm)

1Q17 Net income (Rmbm)

YoY Growth 1Q17 Net income after excluding non-recurring profit and loss (Rmbm)

YoY Growth

2498.SZ Qingdao Hanhe Cable 73.42 31.16% 18.61 -49.39%

600973.SH Baosheng Science & Technology

30.23 -21.42% 25.41 35.84%

2300.SZ Fujian Nanping Sun Cable 11.8 -47.96% 4.67 -74.76%

2471.SZ Jiangsu Zhongchao 10.81 -12.50% 9.03 -25.52%

600869.SH Far East Smarter Energy 11.87 -86.31% 7.06 -91.69%

2276.SZ Zhejiang Wanma -31.55 -215.93% -45.73 -270.04%

603606.SH Orient Cable 7.78 16.24% 6.63 1.83%

2016A Net income (Rmbm)

YoY Growth

1366.HK Jiangnan Group 531 -24.65%

Source: Company data, SWS Research

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QingdaoHanheCable

BaoshengScience &

TechnologyInnovation

FujianNanping

Sun Cable

JiangsuZhongchao

Holding

Far EastSmarterEnergy

ZhejiangWanma

OrientCable

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Provision for bad debt By end-2016, Jiangnan Group’s trade and other receivables amounted to Rmb3.8bn, accounting for c.41.7% of total revenue (vs 39.1% in 2015). The company’s credit terms usually range from 30 days to 180 days. However, by end-2016, trade and bills receivable over 180 days amounted to Rmb997m and represented 28.6% of total trade receivables (vs 22.4% in 2015).

Figure 10: Accounts receivable (Rmbm)


We note this amount was not impaired and the allowance for bad and doubtful debt was estimated at Rmb65m only. Therefore, we believe the company is likely to record c.Rmb87m of provision for bad debt in 2017E. The risk might be alleviated considering the company announced that c.27% of outstanding trade and bills receivables over 365 days had been settled.

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Appendix

Table 1: Consolidated Income Statement

Rmbm 2015 2016 2017E 2018E 2019E

Revenue 9,167 9,111 10,574 10,907 11,482

Cost of Sales -7,685 -7,753 -9,175 -9,369 -9,859

Gross Profit 1,482 1,358 1,400 1,538 1,623

Other Income 74 85 70 74 76

Distribution expenses -203 -219 -232 -242 -252

Administrative expenses -179 -235 -589 -325 -375

EBITDA 944 747 363 771 818

EBIT 871 667 279 680 719

Finance Costs -243 -222 -246 -239 -255

Profit before tax 870 655 279 680 719

Income tax expense -166 -125 -53 -130 -138

Minority interests 0 -1 -1 -1 -1

Profit for equity holders 703 531 227 552 583


Table 2: Consolidated Cash Flow Statement

Rmbm 2015 2016 2017E 2018E 2019E

Profit before taxation 870 655 279 680 719

Plus：Depr. and amortisation 80 84 91 98 106

Finance cost -243 -222 -246 -239 -255

Losses from investments 1 16 0 0 0

Change in working capital -648 -702 -141 -265 -242

Others 150 372 -181 410 288

CF from operating activities 210 202 -198 685 615

CAPEX -110 -125 -103 -123 -115

Other CF from investing activities -325 529 91 -30 -115

CF from investing activities -435 404 -12 -153 -230

Equity financing 619 0 0 0 0

Net change in liabilities 553 -205 72 114 198

Dividend and interest paid -438 -331 -292 -353 -375

Other CF from financing activities -40 -32 0 0 0

CF from financing activities 694 -568 -221 -239 -178

Net cash flow 469 39 -431 293 208

Source：SWS Research




Table 3: Consolidated Balance Sheet

Rmbm 2015 2016 2017E 2018E 2019E

Current Assets 10,885 11,205 11,277 11,865 12,682

Bank balances and cash 2,131 2,172 1,741 2,035 2,242

Trade and other receivables 3,592 3,797 3,643 3,757 3,955

Inventories 3,269 3,809 4,508 4,603 4,844

Other current assets 1,893 1,425 1,386 1,470 1,641

Long-term investment 272 262 265 268 273

PP&E 790 844 860 889 901

Intangible and other assets 172 156 156 156 156

Total Assets 12,119 12,466 12,558 13,178 14,013

Current Liabilities 7,146 7,097 7,010 7,193 7,566

Borrowings 3,770 3,565 3,637 3,751 3,949

Trade and other payables 3,254 3,422 3,264 3,333 3,507

Other current liabilities 122 109 109 109 109

Long-term liabilities 77 72 72 72 72

Total Liabilities 7,223 7,169 7,082 7,265 7,638

Minority Interests 0 0 0 0 1

Shareholder Equity 4,896 5,297 5,476 5,913 6,374

Share Capital 33 33 33 33 33

Reserves 4,863 5,264 5,442 5,879 6,341

Equity attributable 4,896 5,297 5,476 5,913 6,374

Total Liabilities and equity 12,119 12,466 12,558 13,178 14,013


Table 4: Key Financial Ratios

2015 2016 2017E 2018E 2019E

Ratios per share (Rmb)

Earnings per share 0.19 0.13 0.06 0.14 0.14

Diluted earnings per share 0.19 0.13 0.06 0.14 0.14

Operating CF per share 0.06 0.05 -0.05 0.17 0.15

Dividend per share 0.03 0.03 0.01 0.03 0.03

Net assets per share 1.30 1.31 1.34 1.45 1.56

Key Operating Ratios(%)

ROIC 14.00 9.06 3.69 8.63 8.57

ROE 17.31 10.40 4.18 9.66 9.47

Gross profit margin 16.16 14.91 13.24 14.10 14.13

EBITDA Margin 10.29 8.20 3.43 7.07 7.12

EBIT Margin 9.50 7.32 2.64 6.24 6.26

Growth rate of Revenue(YoY) 12.42 (0.61) 16.06 3.14 5.27

Growth rate of Profit(YoY) 12.34 (24.65) (57.46) 144.11 5.72

Debt-to-asset ratio 59.60 57.51 56.39 55.13 54.51

Turnover rate of net assets 2.3 1.8 2.0 1.9 1.9

Turnover rate of total assets 0.9 0.7 0.8 0.8 0.8

Effective tax rate (%) 19.12 19.12 19.12 19.12 19.12

Dividend yield (%) 4.56 4.56 1.68 4.10 4.33

Valuation Ratios (X)

P/E 3.2 4.5 10.7 4.4 4.2

P/B 0.5 0.5 0.4 0.4 0.4

EV/Sale 0.4 0.4 0.4 0.4 0.4

EV/EBITDA 4.1 5.1 11.9 5.4 5.1





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Equal weight： Industry performs about the same as that of the whole market；

Underweight：Industry performs worse than that of the whole market. We would like to remind you that different security research institutions adopt different rating terminologies and rating standards. We adopt the relative rating method to recommend the relative weightings of investment. The clients’ decisions to buy or sell securities shall be based on their actual situation, such as their portfolio structures and other necessary factors. The clients shall read through the whole report so as to obtain the complete opinions and information and shall not rely solely on the investment ratings to reach a conclusion. The Company employs its own industry classification system. The industry classification is available at our sales personnel if you are interested. HSCEI is the benchmark employed in this report.

Disclaimer： This report is to be used solely by the clients of SWS Research Co., Ltd. ( subsidiary of Shenwan Hongyuan Securities, hereinafter referred to as the “Company”). The Company will not deem any other person as its client notwithstanding his receipt of this report. This report is based on public information, however, the authenticity, accuracy or completeness of such information is not warranted by the Company. The materials, tools, opinions and speculations contained herein are for the clients’ reference only, and are not to be regarded or deemed as an invitation for the sale or purchase of any security or other investment instruments. The clients understand that the text message reminder and telephone recommendation are no more than a brief communication of the research opinions, which are subject to the complete report released on the Company’s website (http://www.swsresearch.com). The clients may ask for follow-up explanations if they so wish. The materials, opinions and estimates contained herein only reflect the judgment of the Company on the day this report is released. The prices, values and investment returns of the securities or investment instruments referred to herein may fluctuate. At different periods, the Company may release reports which are inconsistent with the materials, opinions and estimates contained herein. Save and except as otherwise stipulated in this report, the contactor upon the first page of the report only acts as the liaison who shall not provide any consulting services. The clients shall consider the Company’s possible conflict of interests which may affect the objectivity of this report, and shall not base their investment decisions solely on this report. The clients should make investment decisions independently and solely at your own risk. Please be reminded that in any event, the company will not share gains or losses of any securities investment with the clients. Whether written or oral, any commitment to share gains or losses of securities investment is invalid. The investment and services referred to herein may not be suitable for certain clients and shall not constitute personal advice for individual clients. The Company does not ensure that this report fully takes into consideration of the particular investment objectives, financial situations or needs of individual clients. The Company strongly suggests the clients to consider themselves whether the opinions or suggestions herein are suitable for the clients’ particular situations; and to consult an independent investment consultant if necessary. Under no circumstances shall the information contained herein or the opinions expressed herein forms an investment recommendation to anyone. Under no circumstances shall the Company be held responsible for any loss caused by the use of any contents herein by anyone. Please be particularly cautious to the risks and exposures of the market via investment. Independent investment consultant should be consulted before any investment decision is rendered based on this report or at any request of explanation for this report where the receiver of this report is not a client of the Company.




The Company possesses all copyrights of this report which shall be treated as non-public information. The Company reserves all rights related to this report. Unless otherwise indicated in writing, all the copyrights of all the materials herein belong to the Company. In the absence of any prior authorization by the Company in writing, no part of this report shall be copied, photocopied, replicated or redistributed to any other person in any form by any means, or be used in any other ways which will infringe upon the copyrights of the Company. All the trademarks, service marks and marks used herein are trademarks, service marks or marks of the Company, and no one shall have the right to use them at any circumstances without the prior consent of the Company. This report may be translated into different languages. The Company does not warrant that the translations are free from errors or discrepancies. This report is for distribution in Hong Kong only to persons who fall within the definition of professional investors whether under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) (the “SFO”) or the Securities and Futures (Professional Investor) Rules (Chapter 571D of the laws of the Hong Kong under the SFO). This report is for distribution in the United Kingdom only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) order 2001 (as amended) (the “Order”) or (ii) are persons falling within Article 49(2)(a) to (d) (“High Net Worth Companies, Unincorporated Associations, etc”) of the Order (All such persons together being referred to as “Relevant Persons”). This document is directed only at Relevant Persons. Other Persons who are not Relevant Persons must not act or rely upon this document or any of its contents.

Distribution in Singapore If distributed in Singapore, this report is meant only for Accredited Investors and Institutional Investors as defined under Section 4A of the Securities and Futures Act of Singapore. If you are not an Accredited Investor or an Institutional Investor, you shall ignore the report and its contents. The Singapore recipients of the report are to contact the Singapore office of Shenwan Hongyuan Singapore Private Limited at 65-6323-5208, or 65-6323-5209 in respect of any matters arising from, or in connection with, the report.

o* ,Áxqdoc.imedao.com/15d166720c79c123fcf7c31f.pdf · revise down our target price from hk$1.24 to...

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