Dim Sum Express

Environmental: Soil restoration theme in the spot light with issuance of “Soil Ten Rules”

    The long-awaited “Soil Ten Rules” was issued by the State Council on Tuesday, which was earlierthan expected. The market has been pessimistic on the soil treatment investment theme due toconcerns about insufficient investment, the absence of a mature profit-making model and difficultieswith the implementation of soil restoration. However, we expect market interest in the soil treatmentsector to increase driven by tough regulation against pollution incidents, a new round of soil pollutioninvestigations, the introduction of more pilot projects, and progress in soil protection legislation.

    OGSE: Oilfield protection market to take off on issuance of “Soil Ten Rules”

    We believe the oilfield protection market is set to take off as petrochemical is identified as one of thekey industries to be regulated for soil protection according to the newly released Soil Ten Rules. Theoilfield protection market in China is at an early stage of development with a small number ofparticipants. That said, several listed companies have taken the lead to establish presence in thismarket. Looking ahead, we are positive on companies with solid technological reserves, capitalstrength and early market presence.

    Electronics: The worst is over; positive on globalization of Chinese IC packaging companies

    Global semiconductor sector revenue growth is estimated to rebound to positive growth of 0.3% in2016 and 3.08% in 2017 driven by the completion of destocking and strength from emerging marketssuch as car electronics and industrial terminals. A trend that was not seen amid the overall industrydownfall in 2015 is that global semiconductor production capacity is currently shifting towards China.

    We are optimistic that supported by industry development funds and the capital markets, Chinse ICpackaging companies will be able to surpass their Taiwan, Japanese, Korean and US peers byspeeding up overseas M&A.