Dim Sum Express

Shenzhen Investment (604HK, Hold): Unimpressive 1H17results; stock fairly valued

    1H17contract sales dropped by 36% YoY, and revenue dropped 15% YoY. The company sold fiveproperty projects in Guangdong and Jiangsu, giving it pre-tax disposal gains of HK$3.7bn. Boostedby this, earnings rose 119% YoY. Contract sales performance was disappointing, in our view, andcore earnings were unimpressive. Its land bank is relatively small compared to peers. The stock istrading at 0.8x 2016NBV. Given a lacks of sales growth visibility in 2H17, we think this valuation isfair. We maintain our Hold rating and target price of HK$3.60.

    Chow Sang Sang (116HK, Hold): Gem-set SSS continues to underperform gold products3Q17-to-date

    Revenue was up 3% and net profit rose 8% YoY. 1H17revenue/net profit represented 47%/43% ofFY17Bloomberg consensus. Although revenue was broadly in line (1H revenue represented 48-56% of FY13-16full-year revenue), we think 1H17net profit may come in below consensus as 1Hnet profit represented 49-56% of full-year from FY13to FY16. The results were above ourexpectation mainly due to: 1) higher-than-expected GPM, although still below consensus; 2) the 5%drop in selling expenses, which was better than our forecasted 2% drop.

    Jiangnan Group (1366HK, Hold): 1H17results poor due to GPM decline

    1H17revenue picked up 23.4% YoY to Rmb4.67bn, mainly driven by a 52% increase in the salesvolume of power cables. However, net profit dropped 82.9% YoY to Rmb37.6m due to a decline inpower cable ASP and increased provisions. We downgraded our rating on the company to Hold inMay to reflect our concern about GPM given price competition between peers and potentially highermanufacturing costs resulting from changes in quality control for power cables. We maintain our Holdrating.

    CDB Leasing (1606HK, Hold): 1H17results better than expected; maintain Hold on low tradingvolume

    Total revenue and other income rose 6.5%, mainly driven by expanded leased assets and a stableoverall lease yield. Total expenses increased by 2.1%, with a rapid increase in depreciation and staffcosts, offset by the decrease in interest expenses and impairment losses. As a result, net profit roseby 17.3% YoY, coming in a little higher than expectation. The fundamentals of the company’s aircraftleasing segment and infrastructure leasing segment are steady and reliable, and should seecontinued growth ahead. However, there are still challenges in ongoing asset quality control in itsother two leasing segments. Maintain Hold and TP of HK$2.10.