The CookedBYD Company – BUY??(1211.HK/HK$66.15; TP: HK$80.00??) Frank HERating Change — BYD delivered blowout results for 3Q09, with net profitsurging 537% YoY to Rmb1.16bn, greatly beating our estimate and marketconsensus. It posted solid revenue growth and a significant jump in operatingmargin. We believe BYD will continue to benefit from its operating leverage inthe automobile segment while proactively seeking growth opportunities inalternative energy industries. We thus lift our EPS forecasts by 44% for 2009,61% for 2010 and 61% for 2011. Accordingly, we double our target price fromHK$40.00 to HK$80.00 and upgrade the stock from HOLD to BUY.
The RawShenzhen government unveils new urban renewal policyManfred HO, CFA/Andy SO, CFASnippet — The Shenzhen municipal government recently announced a newpolicy focusing on urban renewal and encompassing changes of usage and/orre‐development of old industrial, commercial, residential and village areas.
Shenzhen Investment, which owns two plots of logistics‐use land bank andnine parcels of industrial‐use land bank in the city, could benefit from thepolicy by transforming them into residential use.
CBRC issues new investment guidelinesYUAN Lin, CFASnippet — The China Banking and Regulatory Commission (CBRC) hasannounced new regulations for the investment of commercial banks ininsurance companies. Based on the guidelines: i) any individual commercialbank may only invest in one insurance company; ii) commercial banks?investments in insurance companies are to be fully deducted from capital, and;iii) commercial banks will not be allowed to sell directly or indirectlysubordinated debt to the insurance companies in which they invest. We believethe overall impact of the new guidelines on banks will be very limited.
Café de Coral guides for FY10 same-store sales growth of 4-5%(0341.HK/HK$17.60, BUY) Ashley CHEUNG, CFASnippet — Café de Coral (CdC) chairman Michael Chan said in yesterday’sanalyst briefing that the fast‐food chain under the CdC brand could achievesame‐store sales growth of 4‐5% in FY10 (year ending 31 March). Given the lowbase in 3Q‐4QFY09 and the recovery in consumption sentiment, he anticipatesthe company’s same‐store sales will rebound significantly. He remains cautiousabout the operations in mainland China and guides for low single‐digitsame‐store sales if the catering sector in southern China recovers at a fasterpace.
Tariff adjustments to have minimal effect on Huadian Power(1071.HK/HK$2.19, BUY; 600027.SS/Rmb5.56, HOLD) Peter YAO, CFASnippet — Huadian Power (HDP) announced on‐grid tariff adjustments forselected plants in provinces including Sichuan, Henan and Zhejiang, pursuantto the recent sales‐tariff adjustment by the National Development and ReformCommission (NDRC). Based on a capacity‐weighted average, the change in theoverall tariff amounts to 0.16%, which boosts HDP’s 2010E EPS by 1.74%.
China Resources Gas to acquire Zhengzhou Gas(1193.HK/HK$8.26, BUY) Peter YAO, CFASnippet — China Resources Gas (CRG) and Zhengzhou Gas (ZZG) jointlyannounced that CRG was to acquire ZZG and potentially make a general offerto all ZZG shareholders through an 80/20 joint venture (JV) between CRG andthe State‐owned Assets Supervision and Administration Commission (SASAC)of Zhengzhou (the parent of ZZG).
