Made in China-Chinese Autos:Immune to BTA;Sporting Goods,FY16preview;Insurance,HK Property

Chinese Autos - Immune to BTA - sustainable re-rating (Vincent Ha)

    Chinese auto companies are insulated from a key disruptive threat to the industry - the potential introduction of Border Tax Adjustment (BTA). Their revenues come mainly from the domestic market, unlike Asian or European peers. Although revenue growth is forecast to be slower than 2016 with only 4.5% volume growth, they do not face a major pricing or margin dislocation. Along with the ongoing squeeze on short positions and evidence of southbound investor flow, we believe the recent re-rating against global peers will be extended. We raise valuations across the sector and rate Brilliance and BAIC as our top picks. (Vincent Ha - 852 2203 6247)