Deutsche Bank Markets Research Asia China Strategy Periodical Made in China Date 18 March 2014 6863.HK -A forgotten regional dairy brand; CN Property/ CN insurance Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 054/04/2013. Michael Tong, CFA Research Analyst (+852) 2203 6167 michael.tong@db.com Jun Ma, Ph.D Chief Economist (+852) 2203 8308 jun.ma@db.com Lin Li, Ph.D Strategist (+852) 2203 6187 lin.li@db.com Daily Market Statistics 17/03/2014 Performance Price 1D% chg 1M% chg HSI 21,474 -0.3 -4.9 H-share 9,333 0.4 -8.2 A300 2,143 0.9 -7.9 Volume Price 1D% chg 1M% chg HSI 1,027 -65.3 -1.6 H-share 1,090 -66.3 -9.3 A300 5,241 -11.8 -67.6 Indexes 14/02/2014 HSI CY2012 CY2013 CY2014 EPSg 4.1% 13.5% 8.0% PER 10.9 11.1 9.9 PBR 1.4 1.4 1.2 HSCEI CY2012 CY2013 CY2014 EPSg 3.8% 15.0% 9.7% PER 9.6 8.0 6.6 PBR 1.4 1.3 1.0 MSCI HK CY2012 CY2013 CY2014 EPSg 5.7% 10.8% 10.6% PER 16.5 16.3 14.2 PBR 1.3 1.2 1.1 MSCI China CY2012 CY2013 CY2014 EPSg 3.9% 12.5% 10.5% PER 10.7 9.2 7.8 PBR 1.6 1.3 1.1 DB Economic forecasts Hong Kong 2012 2013F 2014F GDP (%) 1.5 2.9 4.2 Merch. Exp. (%) 6.4 8.4 8.0 CPI (%) 3.8 4.3 3.5 China 2012 2013F 2014F GDP (%) 7.8 7.7 8.6 Merch. Exp. (%) 7.9 7.9 14.0 CPI (%) 2.6 2.6 3.5 FX rate (eop) CNY/USD 6.28 6.10 5.98 Source: Deutsche Bank AG estimates k THEME OF THE DAY China Huishan Dairy - A forgotten regional dairy brand (6863.HK, Buy, Target Price: HKD 3.40, Closing Price: HKD 2.39, Winnie Mak) We note that Huishan share price largely tracked China Modern Dairy (1117 HK2.39; Sell), which have underperformed HSI by 9.3% and 11.5% ytd, respectively. China non-high-end raw milk price softened from RMB4.27 in mid Feb to RMB4.23 in early Mar, yet it is still up 24% yoy. For high-end raw milk, we have not changed our forecast for a 5% price increase p.a. in 2014-15. (Winnie Mak– 852 2203 6187) http://pull.db-gmresearch.com/p/1656-94E9/6927528/0900b8c0880b2350.pdf China Property - Taking a look at the inventory situation (Tony Tsang) The inventory period as measured by the conventional methodology currently stands at 14.5 months equivalent of sales, the highest level since Feb-12 and above the seven-year average of 11.7. However, we believe concerns on rising inventory are overdone as there is a strong seasonality pattern that inventory period is biased upwards at the beginning of every year. In particular, inventory period in the first two months is adversely impacted by the natural decline in sales volume towards year-end/Chinese New Year, thereby dragging down the three-month average volume data we use for the calculation. We think the inventory period should decline in coming months as sales volumes normalize. (Tony Tsang – 852 2203 6256) http://pull.db-gmresearch.com/p/1474-B17C/8058518/0900b8c0880b5084.pdf China Insurance Sector - Feb Premium - Weaker month due to CNY effects, not a concern (Esther Chwei) Both life and P&C premium growth slowed in Feb-14, which we believe was partly due to CNY effects. After an exceptional month in Jan-14, life premiums growth slowed to between -21.0% and 136.5% yoy, with China Life and Ch Taiping recording yoy declines (likely due to a decrease in low-margin bancassurance sales, and hence not a concern). P&C premium growth also moderated to 8.9% to 20.8% yoy. We note that life premium growth will likely slow in the coming months as insurers meet their volume targets and start focusing on higher-margin products. We continue to prefer life over P&C insurers, with Ping An and Ch Taiping our top picks. (Esther Chwei – 852 2203 6200) http://pull.db-gmresearch.com/p/1624-B4B0/7742926/0900b8c088063c18.pdf HK/China sector analysts' top picks Financials - ABC, BOC, Pingan, CTIH, Haitong Securities; Telecom - China Telecom; Property - COLI, CR Land, Shimao, Country Garden; Auto - Brilliance China, Baoxin; Transportation - CSA, China Shipping Development; Construction - CSR; Consumer - Gome, Belle International, Biostime; Energy/Chemicals - Sinopec; Utilities - Huadian, Huaneng, Beijing Enterprise, Longyuan; Metal/Mining – Anhui Conch; Gaming – Sands, Galaxy ;Internet - VIPS, CTRP; Healthcare – Shinway, Sihuan Pharmaceutical, Wuxi PharmaTech; Small-mid caps - Home Inns, CCS. 18 March 2014 Made in China Page 2 Deutsche Bank AG/Hong Kong DB EQUITY RESEARCH China/HK Consumer and Media - FY13/1HFY14 results review/preview (Anne Ling) We recently upgraded Sun Art to Buy, on greater confidence in management's execution ability. With China discretionaries no longer largely viewed as growth companies, Sun Art's investors may change focus from growth to value (as seen by HK retailers post the 1997 Asia crisis). Key discretionaries are due to announce their 2013 results this week. We expect investors to focus on SSSG outlook, online challenges for GE, CRE and Gome, LF's FY14-16 three-year plan guidance, and benefits for Samsonite from its successful product placement in Korea. Our top picks are Gome, Belle and Biostime. (Anne Ling – 852 2203 6177) http://pull.db-gmresearch.com/p/1488-FEED/7366988/0900b8c08808b626.pdf China Cement - Demand recovery on track; valuations at 5-year troughs; reiterating Buy (Johnson Wan) Due to weak macro data ytd, cement stocks have been over-sold and are now trading on 5-year troughs, almost 2-SD from the mean. We believe the sell-off presents a good buying opportunity as we see signs of a turnaround in March. Last week, daily output for the average producer in East, South and Central China have resumed to c.80% of normal levels, so seasonal price hikes can be expected during 2Q. Cement prices are already 10% higher YoY while coal prices are 10% lower YoY. As supply-demand continues to improve in 2014, we believe there is a strong willingness among leading producers to maintain flat margins, supporting our thesis for a super-cycle in the next few years. (Johnson Wan– 852 2203 6163) http://pull.db-gmresearch.com/p/1238-6DB6/6421990/0900b8c088087b33.pdf China Environment - 2020 solid and waste water treatment target in line (Kai-Ting Wong) Last night, China State Council announces the 2014-2020 urbanization plans for the country. The document states that by 2020, China cities should achieve a wastewater treatment rate of 95% and solid waste treatment rate of 95%. This is slightly higher than the 2015 targets set in the 12th Five Year plan (solid waste treatment at rate 90% and wastewater treatment rate at 85%). We believe this is in line with market expectations, and is not a positive surprise. New capacity addition should decline in the 13th Five Year period. (Kai-Ting Wong– 852 2203 6235) http://pull.db-gmresearch.com/p/1326-D21A/7069316/0900b8c0880b16fd.pdf Metals & Mining - FY2013 earnings calendar for Metals & Mining sector (James Kan) For the benefit of investors following FY2013 earnings results of companies in Metals & Mining sector, we organized the updated calendar table. (James Kan – 852 2203 6146) http://pull.db-gmresearch.com/p/1320-1484/7373129/0900b8c0880b26bd.pdf China State Construction - Solid FY13 results (3311.HK, Buy, Target Price: HKD 14.89, Closing Price: HKD 11.96, Tony Tsang) While strength in the construction markets in HK and Macau contributed to solid 2013 results for CSCI and should continue to drive solid earnings growth, we also see promising new contracts potential for CSCI in 2014 from mainland China given the current economic situation and the central government's corresponding proactive fiscal policies. In addition to social housing, we expect new contract opportunities from other types of infrastructure construction and investment, which should add new growth drivers for CSCI. (Tony Tsang – 852 2203 6256) http://pull.db-gmresearch.com/p/1582-D57D/7415968/0900b8c0880a5871.pdf Mindray Medical - Top 12 questions asked during NDR (MR.N, Buy, Target Price: USD 40.00, Closing Price: USD 33.04, Jack Hu) Mindray (MR) management articulated the rationale and investment priorities for this round of investment cycle, which focuses on investment the in sales/marketing channel for the low-end domestic market, as well as R&D in high-end products. While 2014 could be a year of transition, we anticipate reasonable ROI within four to five quarters. We have the conviction that double-digit profit growth is likely to resume in 2015. (Jack Hu – 852 2203 6208) http://pull.db-gmresearch.com/p/1276-BB27/6424015/0900b8c08807f440.pdf China Hongqiao - FY2013 results beat our and market expectations; reiterating Buy (1378.HK, Buy, Target Price: HKD 8.60, Closing Price: HKD 4.92, James Kan) 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 3 ongqiao announced its FY2013 results over the weekend and its FY2013 NPAT is ahead of our estimate by 7% and Bloomberg market consensus by 5%. The company also proposed to distribute a dividend at HK$0.27 per outstanding share, which implies a cash dividend yield at 5.5% based on the closing price on 14 March. We believe Hongqiao's consistently good financial results will let the stock re-rate in coming quarters along with potential cyclical improvement for the aluminum industry. We re- iterate Buy for Hongqiao. (James Kan – 852 2203 6146) http://pull.db-gmresearch.com/p/1356-6C15/6617804/0900b8c0880a651f.pdf New World Dev - Timing for rights issue/privatization of NWCL far from ideal (0017.HK, Hold, Target Price: HKD 8.86, Closing Price: HKD 8.27, Jason Ching) We cut our target price by 23% to HK$8.86 (HK$11.5) to reflect dilution from the latest rights issue. While it is believed proceeds from the issue would be used to fund the privatization of NWCL, given the uncertainties surrounding the proposal, we have not factored in any potential accretion to NAV. With NWD trading at close to an 18-month low and NWCL at a five-year high, timing for the rights issue/privatization proposal is far from ideal, in our view. Meanwhile, we expect net gearing to improve to 29% (37% by end-13), which potentially enhances its ability to participate in new landbanking opportunities at a time when the Hong Kong government is ramping up land supply. (Jason Ching – 852 2203 6205) http://pull.db-gmresearch.com/p/1450-190F/6941326/0900b8c0880a59df.pdf Lee & Man Paper - FY13 in line but likely further margin contraction in 2014; lowering TP (2314.HK, Hold, Target Price: HKD 3.59, Closing Price: HKD 4.25, Johnson Wan) LMP reported FY13 results on 17 March and held an analyst briefing the same day. This is the first time LMP reported full year results after switching to a Dec year end (versus March previously), so there is no direct comparison from 2012. FY13 net profit came in at HKD1.9bn, or EPS of HKD0.415/sh. This is in line with our est. of HKD0.40/sh and consensus of HKD0.43/sh. The company also proposed a final dividend of HK0.073/sh, keeping its dividend payout ratio steady at 35% for FY13. We believe the paper sector will continue to be oversupplied in 2014, prompting our 13% FY14 earnings downgrade. We maintain Hold lowering our target price to HKD3.59 from HKD5.48. (Johnson Wan– 852 2203 6163) http://pull.db-gmresearch.com/p/1185-2A93/8502305/0900b8c0880b6ddd.pdf Trinity - 2014: low visibility in menswear but saw SSSG stabilizing in Jan-Feb; Hold (0891.HK, Hold, Target Price: HKD 2.14, Closing Price: HKD 1.90, Anne Ling) While headline NP was in line with market forecast and 6% better than DB; core NP was 3.8% lower than expected (in line) but 8% lower than market forecast if one-off other income and non-cash contingent liability write-back (G&H failed to meet its earn- up target) are excluded. With visibility low despite SSSG having "stabilized", we cut our NP by 15/22% in FY14E/15E and introduce our 2016 forecast. Cutting TP by 25% to HK$2.14. Maintaining Hold. (Anne Ling – 852 2203 6177) http://pull.db-gmresearch.com/p/1479-59DC/6944039/0900b8c088089895.pdf CR Power - FY13 results beat; 3-4% unit fuel cost decline in 2014E (0836.HK, Buy, Target Price: HKD 28.80, Closing Price: HKD 18.42, Michael Tong) CR power reported its FY13 results with net profit up 47% yoy to HK$11.0bn, driven by 16.3% decline in unit fuel cost and 10% growth in net generation. Stripping out one-off FX gains/impairment charges, recurring net profit was up 53% to HK$11.8bn, in line with our estimate of HK$11.6bn and 8% above market consensus of HK$10.9bn. Reiterate Buy given its strong earnings growth of 15% and 18% in 2014E and 2015E (driven by capacity pipeline) and attractive valuation at 6.9x14E P/E (historical low), 1.1x 14E P/B vs. 17% ROE and 6% dividend yield in 2014E (historical high). (Michael Tong – 852 2203 6167) http://pull.db-gmresearch.com/p/1412-BC48/7652580/0900b8c0880898ee.pdf Longyuan Power - Recurring FY13 results 20% below consensus; OCF +141% (0916.HK, Buy, Target Price: HKD 11.50, Closing Price: HKD 9.20, Kai-Ting Wong) We believe the market will react negatively on the set of weak results, which is 20% below consensus, and 10% below our estimates. While we remain positive on the sector and Company's growth outlook, we believe investors will be skeptical on the Company's wind business, given its impairment on the wind assets. Nonetheless, on the positive side, we note there is a significant improvement (+141% yoy) in OCF (post interest and tax) and it implies an OCF yield of 18%. (Kai-Ting Wong– 852 2203 6235) http://pull.db-gmresearch.com/p/1450-B7C4/7592144/0900b8c0880b4a87.pdf 18 March 2014 Made in China Page 4 Deutsche Bank AG/Hong Kong SEG - 2013 missed slightly on higher F/X loss and lower interest income (2386.HK, Buy, Target Price: HKD 13.41, Closing Price: HKD 9.75, Phyllis Wang) New contracts rose 104.2% yoy to RMB82bn in 2013, significantly higher than our forecast of 53.7%. The improvement was mainly due to strong growth of EPC contracts in petrochemicals and new coal chemicals segments. Among the new contracts, 66% were entered into with non-Sinopec Group and its associates in 2013 (vs. 40% in 2012). SEG also guided that the backlog at end-Dec 2013 was c.RMB104bn (up 37% yoy), indicating continued solid revenue growth in 2014-15. We now forecast SEG's revenue to grow 13% in 2014 and 13% in 2015. The company set its 2014 new order target at around RMB63bn (including a domestic new contract amount of RMB45bn and overseas order value of USD3bn), which we believe is conservative. We currently expect new contract values in 2014 to reach RMB73bn. (Phyllis Wang) http://pull.db-gmresearch.com/p/1105-582E/6974105/0900b8c0880a70fd.pdf Lifestyle International - Resignation of Mr. Joseph Lau will not affect operation (1212.HK, Buy, Target Price: HKD 20.10, Closing Price: HKD 15.06, Anne Ling) The company has announced that Mr. Joseph Lau Luen Hung has resigned as a non- executive director of the company, with effect from 14 March 2014, in light of his convictions of the offences of bribery and money laundering by the collegial bench of the Criminal Court of the Court of First Instance of Macau. The company noted from the announcement by Chinese Estates Holdings Ltd (127.HK, NR) on 16 March 2014 that Mr. Lau has made an application to appeal against the verdict of the collegial bench of the Criminal Court of the Court of First Instance of Macau, which has been accepted. (Anne Ling – 852 2203 6177) http://pull.db-gmresearch.com/p/1504-B268/7391895/0900b8c0880b5498.pdf CTIH - Feb prem declined due to low margin business, not a concern (revised) (0966.HK, Buy, Target Price: HKD 21.90, Closing Price: HKD 11.94, Esther Chwei) Taiping Life reported 2M14 premiums, which showed a 15% yoy decline in Feb premiums. This was mainly driven by a 43.4% yoy decline in low margin single premium bancassurance business (vs. +261.9% yoy in Jan), hence should not be a concern, in our view. Agency premiums in Feb-14 remained strong +43.2% yoy (vs. 85.4% yoy in Jan-14 which was exceptional). Also, on an APE basis, total premiums were up 11.8% yoy in Feb-14. (Esther Chwei – 852 2203 6200) http://pull.db-gmresearch.com/p/1581-BFA1/6728189/0900b8c0880af12e.pdf Shanghai Pudong Bank - Potential acquisition of SH Int'l Trust: Hardly a re-rating catalyst (600000.SS, Hold, Target Price: CNY 10.13, Closing Price: CNY 8.99, Hans Fan) According to an announcement made by SPDB after the market close of 17 March 2014, the bank plans to acquire the stakes of Shanghai International Trust from Shanghai International Group with details being under review. While the potential acquisition of a trust company license should provide the bank with more cross-selling opportunities and enhanced product capacity over the medium to long term, we believe the development hardly represents a re-rating catalyst for the bank given the limited revenue contribution (around 3%), potential capital consumption (tier-1 ratio down 68bps, we estimate) and near-term market concerns over trust defaults. We maintain a Hold rating on the stock and wait for more details to be released. (Hans Fan - 852 2203 6353) http://pull.db-gmresearch.com/p/1827-A411/8456995/0900b8c0880b5266.pdf China CITIC Bank - The initiation and suspension of virtual credit card (0998.HK, Hold, Target Price: HKD 5.00, Closing Price: HKD 3.92, Tracy Yu) Having announced its foray into internet financing following the tie up with Alipay and Tencent (13 March 2014), CITIC Bank has had to rollback its plans regarding the launch of CITIC WeChat Credit Card and CITIC Taobao CyberPayment Card after PBOC issued a notice on 14 March 2014 suspending payment services made through non- bank channels, including virtual credit cards and offline bar codes (QR codes). While we see no material revenue impact from the delay (or possible cancellation) of the launch of the two e-financial products, this event might end the pre-mature rally of CNCB's A-share price (still up 17.8% ytd), thus pressurizing the performance of its CNCB's H-share price in the near term. We maintain a Hold rating on the stock. (Tracy Yu – 852 2203 6191) http://pull.db-gmresearch.com/p/1835-D44C/7200401/0900b8c0880b119e.pdf Towngas China - FY13: better connection growth but gas volume growth slightly below (1083.HK, Hold, Target Price: HKD 8.70, Closing Price: HKD 9.61, Eric Cheng) 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 5 Towngas China (TCCL) announced FY13 results on Mar 17 after market close. Reported net profit was in line with DBe, up 32% yoy to HK$1,106m. Stripping out one-off items, recurring profit was also broadly in line with DBe, up 22% yoy to HK$971m (recurring EPS +15% yoy due to share issuance in Jan 2013). We show yoy comparison in the tables below and on the right-hand column. (Eric Cheng – 852 2203 6202) http://pull.db-gmresearch.com/p/1395-99D7/7394773/0900b8c088089bab.pdf ? Consumer & Media – A Buyer's Guide - Esprit Holdings Ltd ? Key takeaways from NDR ? China TMT Daily – Mobile internet update; also, 0700.HK, 0941.HK ? Utility/Alternative Energy – CEI - WTE project tenders and earnings growth have peaked ? Utility/Alternative Energy – 2013 earnings calendar (updated on 17 Mar) ? China Financial Daily – PBOC Regulates Virtual Credit Cards and Third-party Payment ? Inside the Great Wall – China widens yuan daily trading band from 1% to 2% ? Asia Consumer & Media Daily – Prada - Acquisition of new business MARKET NEWS ? China vows to clean up 60 percent of cities by 2020 – China pledged on Sunday that it will make sure that 60 percent of its cities meet national pollution standards by 2020, with pressure growing to make cities liveable as hundreds of millions of migrants are expected to relocate from the countryside. (Reuters) ? Shanghai's CPI posts slower climb – Shanghai's Consumer Price Index, the main gauge of inflation, rose 2.7 percent from a year earlier in February, the city's statistics bureau said. (Shanghai Daily) ? China's food industry's profit up 13.6% in 2013 – Food enterprises, each with core business revenue of at least RMB 20 million, in China reaped a combined gross profit of RMB 753.1 billion in 2013, up 13.6% year on year, according to the latest figures from the Ministry of Industry and Information Technology. (China Knowledge) ? Chinese products gain popularity in Russian Far East city – Chinese products are gaining popularity in the Russian Far East city, with Chinese-made clothes and electronics now accounting for 80 to 90 percent of the local market. (Xinhuanet) ? China, South Korea start 10th FTA talks – China and South Korea started the 10th round of negotiation on the bilateral free trade agreement (FTA) in Ilsan, north of Seoul, on Monday. (China Daily) ? Luxembourg woos China for yuan business – Although the renminbi has attracted a host of suitors from across the world, it is banking on a small European nation to boost its global standing as an investment currency. (China Daily) ? China to speed up transport construction – China will accelerate the construction of transport infrastructure to facilitate the country's rapid urbanization, a national plan said. (China Daily) ? China tightens checks on cod-liver oil products – China's food and drug watchdog promised increased safety checks of cod-liver oil products following media exposure of the hazards of overconsumption. (Xinhuanet) 18 March 2014 Made in China Page 6 Deutsche Bank AG/Hong Kong DB EVENTS DB COMPANY ROADSHOWS CIMC Enric Holdings Ltd: Post Results Update - HK 3/24-25 Fufeng Group: Post Results Update - SG 3/24 Halla Visteon Climate Control: Company Update - SG 3/20-21 Hyundai Marine & Fire: Company Update - SG 3/18-19 & HK 3/20-21 BBMG: Post Results Update - HK 3/31 West China Cement Ltd: Post Result Update - HK 3/19-20 Dawnrays: Pharmaceutical Holdings Ltd - Post Results Update - HK 3/19 China State Construction International Holdings Ltd: Post Results Update - TPE 4/16 ENN Energy: Post Results Update - HK 3/26-27 Sinotruk Hong Kong Ltd: Post Results Update - HK 4/1 Guangzhou R&F Properties Co., Ltd: Post Results Update - HK 3/21 Phoenix Healthcare Group: Post Results Update - HK 4/1-3 & SG 4/4 Greentown China Holdings Ltd: Post Results Update - HK 3/25 Shanghai Fudan-Zhangjiang Bio-pharmaceutical Company Limited: Post Results Update - HK 3/28 Air China Ltd: Post Result Update: HK 3/27-28 Jiangxi Copper Company Ltd: Post Results Update - HK 3/27 Aluminium Corporation of China Limited: Post Results Update - SG 3/25 Anhui Conch Cement Company Ltd: Post Results Update - HK 3/31 & 4/1-2 China Conch Venture Holdings Ltd: Post Results Update - HK 4/1-3 Hutchison China Meditech: Post Results Update - HK 3/24 & SG 3/25 Lianhua Supermarket Holdings: Company Update - HK 3/27 AAC Technologies Holdings Inc: Post Results Update - SG 3/31 & SG 4/1 China Telecom: Post Results Update - HK 3/20 Paradise Entertainment Ltd: Post Results Update - HK 3/28 Zijin Mining Group Co Ltd: Post Results Update - HK 4/1 Harbin Electric Company Limited: Post Result Update - HK 3/26 Cosco Pacific Limited: Post Result update - HK 3/26-28 Brilliance China Automotive Holdings: Post Result update - HK 3/31 China Zhengtong Auto Services: Post Result update - HK 4/4 INDUSTRY SPECIALIST ROADSHOWS Wood Mackenzie: Asia Pacific Natural Gas - LNG, Shale, CBM, Conventional - SG 5/6, HK 5/7 DB SALES/ICG ROADSHOWS N/A DB ANALYST ROADSHOWS Hanjoon Kim: Korea Tech Hardware & Software - HK 3/31-4/1 & SG 4/2-3 Michael Chou: Taiwan Semi Strategy - 2014 Themes - SG 4/21-22 & HK 4/23-24 Rob Clifford: Metals and Mining Sector Update - HK 3/18, TPE 3/19 & SG 3/20 Shawn Park: Oil & Gas Sector Update - SG 3/31 - 4/1 & HK 4/2-3 John Kim: Telecom Sector Update - HK 4/7-8 & SG 4/10-11 David Hurd: China Oil & Gas/ Fertilizers-Chemical Sector Update - HK 4/7-8, KL 4/9 & SG 4/10-11 Peach Patharavanakul: Thai Banking Sector Update - SG 3/20-21 Nathavut Shivaruchiwong: Thai property-Time to Revisit - SG 3/18 & HK 3/19-20 Abhishek Puri: Indian Utilities: Power Sector Commerciality Improving - HK 3/18-19 & SG 3/20-21 Manish Karwa: Indian Banking Sector Update - Indian Banking Sector Update - SG 3/18-19 & HK 3/20-21 Franco Lam: Sector outlook and key catalysts - SG 3/31, 4/1, KL 4/2 & HK 4/3-4 Justin Yagerman: Transportation Sector Update - BEI 4/22, HK 4/23 & SG 4/24 Harold Thompson: Food and Household Sector Update - BEI 3/31, HK 4/1, KL 4/2 & SG 4/3 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 7 Jeehoon Park: Korea Financial Sector Outlook - SG 3/22-23 & HK 3/24-25 Chanwook Park: Korea metal and auto parts outlook - HK 4/14-15 & SG 4/16-17 18 March 2014 Made in China Page 8 Deutsche Bank AG/Hong Kong DB China/Hong Kong research contacts Analyst Coverage Phone Email Michael Tong Head of HK/China Research +852 2203 6167 michael.tong@db.com Jun Ma Economics & Strategy +852 2203 8308 jun.ma@db.com Lin Li Economics & Strategy +852 2203 6187 lin.li@db.com Wei Zhou Economics & Strategy +86(10)5969 8652 wei.zhou@db.com Audrey Shi Economics & Strategy +852 2203 6139 audrey.shi@db.com Tracy Yu Chinese Banks +852 2203 6191 tracy.yu@db.com Sukrit Khatri Chinese/ Hong Kong Banks +852 2203 5927 sukrit.khatri@db.com Michael Zhang Chinese/ Hong Kong Banks michael.zhang@db.com Hans Fan Chinese/ Hong Kong Banks +852 2203 6353 hans.fan@db.com Franco Lam Hong Kong Banks +852 2203 6226 franco.lam@db.com Pandora Lee Chinese Brokers +852 2203 5928 pandora.lee@db.com Esther Chwei Insurance +852 2203 6200 esther.chwei@db.com Tony Tsang HK/China Property +852 2203 6256 tony.tsang@db.com Jason Ching HK/China Property +852 2203 6205 jason.ching@db.com David Hurd Oil & Gas +852 2203 6242 david.hurd@db.com James Kan Metals & Mining +852 2203 6164 james.kan@db.com Johnson Wan Metals & Mining +852 2203 6163 johnson.wan@db.com Anne Ling Consumers +852 2203 6177 anne.ling@db.com Winnie Mak Consumers +852 2203 6178 winnie.mak@db.com Lydia Ling Consumers +852 2203 6181 lydia.ling@db.com Vincent Ha Airline / Autos +852 2203 6247 vincent.ha@db.com Fei Sun Airline / Autos +852 2203 6130 fei.sun@db.com Sky Hong Transportations/ Ports +852 2203 6131 sky.hong@db.com Phyllis Wang Rail/ Machinery/ Toll Road phyllis.wang@db.com Alan Hellawell Tech & Telecom +852 2203 6240 alan.hellawell@db.com Vivian Hao Tech & Telecom +852 2203 6241 vivian.hao@db.com Michael Tong Utilities/ Renewables +852 2203 6167 michael.tong@db.com Eric Cheng Utilities/ Renewables +852 2203 6202 eric-ct.cheng@db.com Kai-Ting Wong Utilities/ Renewables +852 2203 6235 kai-ting.wong@db.com Karen Tang HK Conglomerates/ Gaming +852 2203 6141 karen.tang@db.com Cyrus Ng HK Conglomerates/ Gaming +852 2203 5925 cyrus.ng@db.com Jack Hu Health Care +852 2203 6208 jack.hu@db.com Michael Chou Technology +886(2)2192 2836 michael.chou@db.com Birdy Lu Technology +886(2)2192 2822 birdy.lu@db.com Andrew-C Chang Technology +886(2)2192 2845 andrew-c.chang@db.com 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 9 Appendix 1 Important Disclosures Additional information available upon request For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr Analyst Certification This report covers more than one security and was contributed to by more than one analyst. The views expressed in this report accurately reflect the views of each contributor to this compendium report. In addition, each contributor has not and will not receive any compensation for providing a specific recommendation or view in this compendium report. Equity rating key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share- holder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes: 1. Newly issued research recommendations and target prices always supersede previously published research. 2. 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Deutsche Bank Markets Research Asia China Strategy Periodical Made in China Date 18 March 2014 6863.HK -A forgotten regional dairy brand; CN Property/ CN insurance Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 054/04/2013. Michael Tong, CFA Research Analyst (+852) 2203 6167 michael.tong@db.com Jun Ma, Ph.D Chief Economist (+852) 2203 8308 jun.ma@db.com Lin Li, Ph.D Strategist (+852) 2203 6187 lin.li@db.com Daily Market Statistics 17/03/2014 Performance Price 1D% chg 1M% chg HSI 21,474 -0.3 -4.9 H-share 9,333 0.4 -8.2 A300 2,143 0.9 -7.9 Volume Price 1D% chg 1M% chg HSI 1,027 -65.3 -1.6 H-share 1,090 -66.3 -9.3 A300 5,241 -11.8 -67.6 Indexes 14/02/2014 HSI CY2012 CY2013 CY2014 EPSg 4.1% 13.5% 8.0% PER 10.9 11.1 9.9 PBR 1.4 1.4 1.2 HSCEI CY2012 CY2013 CY2014 EPSg 3.8% 15.0% 9.7% PER 9.6 8.0 6.6 PBR 1.4 1.3 1.0 MSCI HK CY2012 CY2013 CY2014 EPSg 5.7% 10.8% 10.6% PER 16.5 16.3 14.2 PBR 1.3 1.2 1.1 MSCI China CY2012 CY2013 CY2014 EPSg 3.9% 12.5% 10.5% PER 10.7 9.2 7.8 PBR 1.6 1.3 1.1 DB Economic forecasts Hong Kong 2012 2013F 2014F GDP (%) 1.5 2.9 4.2 Merch. Exp. (%) 6.4 8.4 8.0 CPI (%) 3.8 4.3 3.5 China 2012 2013F 2014F GDP (%) 7.8 7.7 8.6 Merch. Exp. (%) 7.9 7.9 14.0 CPI (%) 2.6 2.6 3.5 FX rate (eop) CNY/USD 6.28 6.10 5.98 Source: Deutsche Bank AG estimates k THEME OF THE DAY China Huishan Dairy - A forgotten regional dairy brand (6863.HK, Buy, Target Price: HKD 3.40, Closing Price: HKD 2.39, Winnie Mak) We note that Huishan share price largely tracked China Modern Dairy (1117 HK2.39; Sell), which have underperformed HSI by 9.3% and 11.5% ytd, respectively. China non-high-end raw milk price softened from RMB4.27 in mid Feb to RMB4.23 in early Mar, yet it is still up 24% yoy. For high-end raw milk, we have not changed our forecast for a 5% price increase p.a. in 2014-15. (Winnie Mak– 852 2203 6187) http://pull.db-gmresearch.com/p/1656-94E9/6927528/0900b8c0880b2350.pdf China Property - Taking a look at the inventory situation (Tony Tsang) The inventory period as measured by the conventional methodology currently stands at 14.5 months equivalent of sales, the highest level since Feb-12 and above the seven-year average of 11.7. However, we believe concerns on rising inventory are overdone as there is a strong seasonality pattern that inventory period is biased upwards at the beginning of every year. In particular, inventory period in the first two months is adversely impacted by the natural decline in sales volume towards year-end/Chinese New Year, thereby dragging down the three-month average volume data we use for the calculation. We think the inventory period should decline in coming months as sales volumes normalize. (Tony Tsang – 852 2203 6256) http://pull.db-gmresearch.com/p/1474-B17C/8058518/0900b8c0880b5084.pdf China Insurance Sector - Feb Premium - Weaker month due to CNY effects, not a concern (Esther Chwei) Both life and P&C premium growth slowed in Feb-14, which we believe was partly due to CNY effects. After an exceptional month in Jan-14, life premiums growth slowed to between -21.0% and 136.5% yoy, with China Life and Ch Taiping recording yoy declines (likely due to a decrease in low-margin bancassurance sales, and hence not a concern). P&C premium growth also moderated to 8.9% to 20.8% yoy. We note that life premium growth will likely slow in the coming months as insurers meet their volume targets and start focusing on higher-margin products. We continue to prefer life over P&C insurers, with Ping An and Ch Taiping our top picks. (Esther Chwei – 852 2203 6200) http://pull.db-gmresearch.com/p/1624-B4B0/7742926/0900b8c088063c18.pdf HK/China sector analysts' top picks Financials - ABC, BOC, Pingan, CTIH, Haitong Securities; Telecom - China Telecom; Property - COLI, CR Land, Shimao, Country Garden; Auto - Brilliance China, Baoxin; Transportation - CSA, China Shipping Development; Construction - CSR; Consumer - Gome, Belle International, Biostime; Energy/Chemicals - Sinopec; Utilities - Huadian, Huaneng, Beijing Enterprise, Longyuan; Metal/Mining – Anhui Conch; Gaming – Sands, Galaxy ;Internet - VIPS, CTRP; Healthcare – Shinway, Sihuan Pharmaceutical, Wuxi PharmaTech; Small-mid caps - Home Inns, CCS. 18 March 2014 Made in China Page 2 Deutsche Bank AG/Hong Kong DB EQUITY RESEARCH China/HK Consumer and Media - FY13/1HFY14 results review/preview (Anne Ling) We recently upgraded Sun Art to Buy, on greater confidence in management's execution ability. With China discretionaries no longer largely viewed as growth companies, Sun Art's investors may change focus from growth to value (as seen by HK retailers post the 1997 Asia crisis). Key discretionaries are due to announce their 2013 results this week. We expect investors to focus on SSSG outlook, online challenges for GE, CRE and Gome, LF's FY14-16 three-year plan guidance, and benefits for Samsonite from its successful product placement in Korea. Our top picks are Gome, Belle and Biostime. (Anne Ling – 852 2203 6177) http://pull.db-gmresearch.com/p/1488-FEED/7366988/0900b8c08808b626.pdf China Cement - Demand recovery on track; valuations at 5-year troughs; reiterating Buy (Johnson Wan) Due to weak macro data ytd, cement stocks have been over-sold and are now trading on 5-year troughs, almost 2-SD from the mean. We believe the sell-off presents a good buying opportunity as we see signs of a turnaround in March. Last week, daily output for the average producer in East, South and Central China have resumed to c.80% of normal levels, so seasonal price hikes can be expected during 2Q. Cement prices are already 10% higher YoY while coal prices are 10% lower YoY. As supply-demand continues to improve in 2014, we believe there is a strong willingness among leading producers to maintain flat margins, supporting our thesis for a super-cycle in the next few years. (Johnson Wan– 852 2203 6163) http://pull.db-gmresearch.com/p/1238-6DB6/6421990/0900b8c088087b33.pdf China Environment - 2020 solid and waste water treatment target in line (Kai-Ting Wong) Last night, China State Council announces the 2014-2020 urbanization plans for the country. The document states that by 2020, China cities should achieve a wastewater treatment rate of 95% and solid waste treatment rate of 95%. This is slightly higher than the 2015 targets set in the 12th Five Year plan (solid waste treatment at rate 90% and wastewater treatment rate at 85%). We believe this is in line with market expectations, and is not a positive surprise. New capacity addition should decline in the 13th Five Year period. (Kai-Ting Wong– 852 2203 6235) http://pull.db-gmresearch.com/p/1326-D21A/7069316/0900b8c0880b16fd.pdf Metals & Mining - FY2013 earnings calendar for Metals & Mining sector (James Kan) For the benefit of investors following FY2013 earnings results of companies in Metals & Mining sector, we organized the updated calendar table. (James Kan – 852 2203 6146) http://pull.db-gmresearch.com/p/1320-1484/7373129/0900b8c0880b26bd.pdf China State Construction - Solid FY13 results (3311.HK, Buy, Target Price: HKD 14.89, Closing Price: HKD 11.96, Tony Tsang) While strength in the construction markets in HK and Macau contributed to solid 2013 results for CSCI and should continue to drive solid earnings growth, we also see promising new contracts potential for CSCI in 2014 from mainland China given the current economic situation and the central government's corresponding proactive fiscal policies. In addition to social housing, we expect new contract opportunities from other types of infrastructure construction and investment, which should add new growth drivers for CSCI. (Tony Tsang – 852 2203 6256) http://pull.db-gmresearch.com/p/1582-D57D/7415968/0900b8c0880a5871.pdf Mindray Medical - Top 12 questions asked during NDR (MR.N, Buy, Target Price: USD 40.00, Closing Price: USD 33.04, Jack Hu) Mindray (MR) management articulated the rationale and investment priorities for this round of investment cycle, which focuses on investment the in sales/marketing channel for the low-end domestic market, as well as R&D in high-end products. While 2014 could be a year of transition, we anticipate reasonable ROI within four to five quarters. We have the conviction that double-digit profit growth is likely to resume in 2015. (Jack Hu – 852 2203 6208) http://pull.db-gmresearch.com/p/1276-BB27/6424015/0900b8c08807f440.pdf China Hongqiao - FY2013 results beat our and market expectations; reiterating Buy (1378.HK, Buy, Target Price: HKD 8.60, Closing Price: HKD 4.92, James Kan) 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 3 ongqiao announced its FY2013 results over the weekend and its FY2013 NPAT is ahead of our estimate by 7% and Bloomberg market consensus by 5%. The company also proposed to distribute a dividend at HK$0.27 per outstanding share, which implies a cash dividend yield at 5.5% based on the closing price on 14 March. We believe Hongqiao's consistently good financial results will let the stock re-rate in coming quarters along with potential cyclical improvement for the aluminum industry. We re- iterate Buy for Hongqiao. (James Kan – 852 2203 6146) http://pull.db-gmresearch.com/p/1356-6C15/6617804/0900b8c0880a651f.pdf New World Dev - Timing for rights issue/privatization of NWCL far from ideal (0017.HK, Hold, Target Price: HKD 8.86, Closing Price: HKD 8.27, Jason Ching) We cut our target price by 23% to HK$8.86 (HK$11.5) to reflect dilution from the latest rights issue. While it is believed proceeds from the issue would be used to fund the privatization of NWCL, given the uncertainties surrounding the proposal, we have not factored in any potential accretion to NAV. With NWD trading at close to an 18-month low and NWCL at a five-year high, timing for the rights issue/privatization proposal is far from ideal, in our view. Meanwhile, we expect net gearing to improve to 29% (37% by end-13), which potentially enhances its ability to participate in new landbanking opportunities at a time when the Hong Kong government is ramping up land supply. (Jason Ching – 852 2203 6205) http://pull.db-gmresearch.com/p/1450-190F/6941326/0900b8c0880a59df.pdf Lee & Man Paper - FY13 in line but likely further margin contraction in 2014; lowering TP (2314.HK, Hold, Target Price: HKD 3.59, Closing Price: HKD 4.25, Johnson Wan) LMP reported FY13 results on 17 March and held an analyst briefing the same day. This is the first time LMP reported full year results after switching to a Dec year end (versus March previously), so there is no direct comparison from 2012. FY13 net profit came in at HKD1.9bn, or EPS of HKD0.415/sh. This is in line with our est. of HKD0.40/sh and consensus of HKD0.43/sh. The company also proposed a final dividend of HK0.073/sh, keeping its dividend payout ratio steady at 35% for FY13. We believe the paper sector will continue to be oversupplied in 2014, prompting our 13% FY14 earnings downgrade. We maintain Hold lowering our target price to HKD3.59 from HKD5.48. (Johnson Wan– 852 2203 6163) http://pull.db-gmresearch.com/p/1185-2A93/8502305/0900b8c0880b6ddd.pdf Trinity - 2014: low visibility in menswear but saw SSSG stabilizing in Jan-Feb; Hold (0891.HK, Hold, Target Price: HKD 2.14, Closing Price: HKD 1.90, Anne Ling) While headline NP was in line with market forecast and 6% better than DB; core NP was 3.8% lower than expected (in line) but 8% lower than market forecast if one-off other income and non-cash contingent liability write-back (G&H failed to meet its earn- up target) are excluded. With visibility low despite SSSG having "stabilized", we cut our NP by 15/22% in FY14E/15E and introduce our 2016 forecast. Cutting TP by 25% to HK$2.14. Maintaining Hold. (Anne Ling – 852 2203 6177) http://pull.db-gmresearch.com/p/1479-59DC/6944039/0900b8c088089895.pdf CR Power - FY13 results beat; 3-4% unit fuel cost decline in 2014E (0836.HK, Buy, Target Price: HKD 28.80, Closing Price: HKD 18.42, Michael Tong) CR power reported its FY13 results with net profit up 47% yoy to HK$11.0bn, driven by 16.3% decline in unit fuel cost and 10% growth in net generation. Stripping out one-off FX gains/impairment charges, recurring net profit was up 53% to HK$11.8bn, in line with our estimate of HK$11.6bn and 8% above market consensus of HK$10.9bn. Reiterate Buy given its strong earnings growth of 15% and 18% in 2014E and 2015E (driven by capacity pipeline) and attractive valuation at 6.9x14E P/E (historical low), 1.1x 14E P/B vs. 17% ROE and 6% dividend yield in 2014E (historical high). (Michael Tong – 852 2203 6167) http://pull.db-gmresearch.com/p/1412-BC48/7652580/0900b8c0880898ee.pdf Longyuan Power - Recurring FY13 results 20% below consensus; OCF +141% (0916.HK, Buy, Target Price: HKD 11.50, Closing Price: HKD 9.20, Kai-Ting Wong) We believe the market will react negatively on the set of weak results, which is 20% below consensus, and 10% below our estimates. While we remain positive on the sector and Company's growth outlook, we believe investors will be skeptical on the Company's wind business, given its impairment on the wind assets. Nonetheless, on the positive side, we note there is a significant improvement (+141% yoy) in OCF (post interest and tax) and it implies an OCF yield of 18%. (Kai-Ting Wong– 852 2203 6235) http://pull.db-gmresearch.com/p/1450-B7C4/7592144/0900b8c0880b4a87.pdf 18 March 2014 Made in China Page 4 Deutsche Bank AG/Hong Kong SEG - 2013 missed slightly on higher F/X loss and lower interest income (2386.HK, Buy, Target Price: HKD 13.41, Closing Price: HKD 9.75, Phyllis Wang) New contracts rose 104.2% yoy to RMB82bn in 2013, significantly higher than our forecast of 53.7%. The improvement was mainly due to strong growth of EPC contracts in petrochemicals and new coal chemicals segments. Among the new contracts, 66% were entered into with non-Sinopec Group and its associates in 2013 (vs. 40% in 2012). SEG also guided that the backlog at end-Dec 2013 was c.RMB104bn (up 37% yoy), indicating continued solid revenue growth in 2014-15. We now forecast SEG's revenue to grow 13% in 2014 and 13% in 2015. The company set its 2014 new order target at around RMB63bn (including a domestic new contract amount of RMB45bn and overseas order value of USD3bn), which we believe is conservative. We currently expect new contract values in 2014 to reach RMB73bn. (Phyllis Wang) http://pull.db-gmresearch.com/p/1105-582E/6974105/0900b8c0880a70fd.pdf Lifestyle International - Resignation of Mr. Joseph Lau will not affect operation (1212.HK, Buy, Target Price: HKD 20.10, Closing Price: HKD 15.06, Anne Ling) The company has announced that Mr. Joseph Lau Luen Hung has resigned as a non- executive director of the company, with effect from 14 March 2014, in light of his convictions of the offences of bribery and money laundering by the collegial bench of the Criminal Court of the Court of First Instance of Macau. The company noted from the announcement by Chinese Estates Holdings Ltd (127.HK, NR) on 16 March 2014 that Mr. Lau has made an application to appeal against the verdict of the collegial bench of the Criminal Court of the Court of First Instance of Macau, which has been accepted. (Anne Ling – 852 2203 6177) http://pull.db-gmresearch.com/p/1504-B268/7391895/0900b8c0880b5498.pdf CTIH - Feb prem declined due to low margin business, not a concern (revised) (0966.HK, Buy, Target Price: HKD 21.90, Closing Price: HKD 11.94, Esther Chwei) Taiping Life reported 2M14 premiums, which showed a 15% yoy decline in Feb premiums. This was mainly driven by a 43.4% yoy decline in low margin single premium bancassurance business (vs. +261.9% yoy in Jan), hence should not be a concern, in our view. Agency premiums in Feb-14 remained strong +43.2% yoy (vs. 85.4% yoy in Jan-14 which was exceptional). Also, on an APE basis, total premiums were up 11.8% yoy in Feb-14. (Esther Chwei – 852 2203 6200) http://pull.db-gmresearch.com/p/1581-BFA1/6728189/0900b8c0880af12e.pdf Shanghai Pudong Bank - Potential acquisition of SH Int'l Trust: Hardly a re-rating catalyst (600000.SS, Hold, Target Price: CNY 10.13, Closing Price: CNY 8.99, Hans Fan) According to an announcement made by SPDB after the market close of 17 March 2014, the bank plans to acquire the stakes of Shanghai International Trust from Shanghai International Group with details being under review. While the potential acquisition of a trust company license should provide the bank with more cross-selling opportunities and enhanced product capacity over the medium to long term, we believe the development hardly represents a re-rating catalyst for the bank given the limited revenue contribution (around 3%), potential capital consumption (tier-1 ratio down 68bps, we estimate) and near-term market concerns over trust defaults. We maintain a Hold rating on the stock and wait for more details to be released. (Hans Fan - 852 2203 6353) http://pull.db-gmresearch.com/p/1827-A411/8456995/0900b8c0880b5266.pdf China CITIC Bank - The initiation and suspension of virtual credit card (0998.HK, Hold, Target Price: HKD 5.00, Closing Price: HKD 3.92, Tracy Yu) Having announced its foray into internet financing following the tie up with Alipay and Tencent (13 March 2014), CITIC Bank has had to rollback its plans regarding the launch of CITIC WeChat Credit Card and CITIC Taobao CyberPayment Card after PBOC issued a notice on 14 March 2014 suspending payment services made through non- bank channels, including virtual credit cards and offline bar codes (QR codes). While we see no material revenue impact from the delay (or possible cancellation) of the launch of the two e-financial products, this event might end the pre-mature rally of CNCB's A-share price (still up 17.8% ytd), thus pressurizing the performance of its CNCB's H-share price in the near term. We maintain a Hold rating on the stock. (Tracy Yu – 852 2203 6191) http://pull.db-gmresearch.com/p/1835-D44C/7200401/0900b8c0880b119e.pdf Towngas China - FY13: better connection growth but gas volume growth slightly below (1083.HK, Hold, Target Price: HKD 8.70, Closing Price: HKD 9.61, Eric Cheng) 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 5 Towngas China (TCCL) announced FY13 results on Mar 17 after market close. Reported net profit was in line with DBe, up 32% yoy to HK$1,106m. Stripping out one-off items, recurring profit was also broadly in line with DBe, up 22% yoy to HK$971m (recurring EPS +15% yoy due to share issuance in Jan 2013). We show yoy comparison in the tables below and on the right-hand column. (Eric Cheng – 852 2203 6202) http://pull.db-gmresearch.com/p/1395-99D7/7394773/0900b8c088089bab.pdf ? Consumer & Media – A Buyer's Guide - Esprit Holdings Ltd ? Key takeaways from NDR ? China TMT Daily – Mobile internet update; also, 0700.HK, 0941.HK ? Utility/Alternative Energy – CEI - WTE project tenders and earnings growth have peaked ? Utility/Alternative Energy – 2013 earnings calendar (updated on 17 Mar) ? China Financial Daily – PBOC Regulates Virtual Credit Cards and Third-party Payment ? Inside the Great Wall – China widens yuan daily trading band from 1% to 2% ? Asia Consumer & Media Daily – Prada - Acquisition of new business MARKET NEWS ? China vows to clean up 60 percent of cities by 2020 – China pledged on Sunday that it will make sure that 60 percent of its cities meet national pollution standards by 2020, with pressure growing to make cities liveable as hundreds of millions of migrants are expected to relocate from the countryside. (Reuters) ? Shanghai's CPI posts slower climb – Shanghai's Consumer Price Index, the main gauge of inflation, rose 2.7 percent from a year earlier in February, the city's statistics bureau said. (Shanghai Daily) ? China's food industry's profit up 13.6% in 2013 – Food enterprises, each with core business revenue of at least RMB 20 million, in China reaped a combined gross profit of RMB 753.1 billion in 2013, up 13.6% year on year, according to the latest figures from the Ministry of Industry and Information Technology. (China Knowledge) ? Chinese products gain popularity in Russian Far East city – Chinese products are gaining popularity in the Russian Far East city, with Chinese-made clothes and electronics now accounting for 80 to 90 percent of the local market. (Xinhuanet) ? China, South Korea start 10th FTA talks – China and South Korea started the 10th round of negotiation on the bilateral free trade agreement (FTA) in Ilsan, north of Seoul, on Monday. (China Daily) ? Luxembourg woos China for yuan business – Although the renminbi has attracted a host of suitors from across the world, it is banking on a small European nation to boost its global standing as an investment currency. (China Daily) ? China to speed up transport construction – China will accelerate the construction of transport infrastructure to facilitate the country's rapid urbanization, a national plan said. (China Daily) ? China tightens checks on cod-liver oil products – China's food and drug watchdog promised increased safety checks of cod-liver oil products following media exposure of the hazards of overconsumption. (Xinhuanet) 18 March 2014 Made in China Page 6 Deutsche Bank AG/Hong Kong DB EVENTS DB COMPANY ROADSHOWS CIMC Enric Holdings Ltd: Post Results Update - HK 3/24-25 Fufeng Group: Post Results Update - SG 3/24 Halla Visteon Climate Control: Company Update - SG 3/20-21 Hyundai Marine & Fire: Company Update - SG 3/18-19 & HK 3/20-21 BBMG: Post Results Update - HK 3/31 West China Cement Ltd: Post Result Update - HK 3/19-20 Dawnrays: Pharmaceutical Holdings Ltd - Post Results Update - HK 3/19 China State Construction International Holdings Ltd: Post Results Update - TPE 4/16 ENN Energy: Post Results Update - HK 3/26-27 Sinotruk Hong Kong Ltd: Post Results Update - HK 4/1 Guangzhou R&F Properties Co., Ltd: Post Results Update - HK 3/21 Phoenix Healthcare Group: Post Results Update - HK 4/1-3 & SG 4/4 Greentown China Holdings Ltd: Post Results Update - HK 3/25 Shanghai Fudan-Zhangjiang Bio-pharmaceutical Company Limited: Post Results Update - HK 3/28 Air China Ltd: Post Result Update: HK 3/27-28 Jiangxi Copper Company Ltd: Post Results Update - HK 3/27 Aluminium Corporation of China Limited: Post Results Update - SG 3/25 Anhui Conch Cement Company Ltd: Post Results Update - HK 3/31 & 4/1-2 China Conch Venture Holdings Ltd: Post Results Update - HK 4/1-3 Hutchison China Meditech: Post Results Update - HK 3/24 & SG 3/25 Lianhua Supermarket Holdings: Company Update - HK 3/27 AAC Technologies Holdings Inc: Post Results Update - SG 3/31 & SG 4/1 China Telecom: Post Results Update - HK 3/20 Paradise Entertainment Ltd: Post Results Update - HK 3/28 Zijin Mining Group Co Ltd: Post Results Update - HK 4/1 Harbin Electric Company Limited: Post Result Update - HK 3/26 Cosco Pacific Limited: Post Result update - HK 3/26-28 Brilliance China Automotive Holdings: Post Result update - HK 3/31 China Zhengtong Auto Services: Post Result update - HK 4/4 INDUSTRY SPECIALIST ROADSHOWS Wood Mackenzie: Asia Pacific Natural Gas - LNG, Shale, CBM, Conventional - SG 5/6, HK 5/7 DB SALES/ICG ROADSHOWS N/A DB ANALYST ROADSHOWS Hanjoon Kim: Korea Tech Hardware & Software - HK 3/31-4/1 & SG 4/2-3 Michael Chou: Taiwan Semi Strategy - 2014 Themes - SG 4/21-22 & HK 4/23-24 Rob Clifford: Metals and Mining Sector Update - HK 3/18, TPE 3/19 & SG 3/20 Shawn Park: Oil & Gas Sector Update - SG 3/31 - 4/1 & HK 4/2-3 John Kim: Telecom Sector Update - HK 4/7-8 & SG 4/10-11 David Hurd: China Oil & Gas/ Fertilizers-Chemical Sector Update - HK 4/7-8, KL 4/9 & SG 4/10-11 Peach Patharavanakul: Thai Banking Sector Update - SG 3/20-21 Nathavut Shivaruchiwong: Thai property-Time to Revisit - SG 3/18 & HK 3/19-20 Abhishek Puri: Indian Utilities: Power Sector Commerciality Improving - HK 3/18-19 & SG 3/20-21 Manish Karwa: Indian Banking Sector Update - Indian Banking Sector Update - SG 3/18-19 & HK 3/20-21 Franco Lam: Sector outlook and key catalysts - SG 3/31, 4/1, KL 4/2 & HK 4/3-4 Justin Yagerman: Transportation Sector Update - BEI 4/22, HK 4/23 & SG 4/24 Harold Thompson: Food and Household Sector Update - BEI 3/31, HK 4/1, KL 4/2 & SG 4/3 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 7 Jeehoon Park: Korea Financial Sector Outlook - SG 3/22-23 & HK 3/24-25 Chanwook Park: Korea metal and auto parts outlook - HK 4/14-15 & SG 4/16-17 18 March 2014 Made in China Page 8 Deutsche Bank AG/Hong Kong DB China/Hong Kong research contacts Analyst Coverage Phone Email Michael Tong Head of HK/China Research +852 2203 6167 michael.tong@db.com Jun Ma Economics & Strategy +852 2203 8308 jun.ma@db.com Lin Li Economics & Strategy +852 2203 6187 lin.li@db.com Wei Zhou Economics & Strategy +86(10)5969 8652 wei.zhou@db.com Audrey Shi Economics & Strategy +852 2203 6139 audrey.shi@db.com Tracy Yu Chinese Banks +852 2203 6191 tracy.yu@db.com Sukrit Khatri Chinese/ Hong Kong Banks +852 2203 5927 sukrit.khatri@db.com Michael Zhang Chinese/ Hong Kong Banks michael.zhang@db.com Hans Fan Chinese/ Hong Kong Banks +852 2203 6353 hans.fan@db.com Franco Lam Hong Kong Banks +852 2203 6226 franco.lam@db.com Pandora Lee Chinese Brokers +852 2203 5928 pandora.lee@db.com Esther Chwei Insurance +852 2203 6200 esther.chwei@db.com Tony Tsang HK/China Property +852 2203 6256 tony.tsang@db.com Jason Ching HK/China Property +852 2203 6205 jason.ching@db.com David Hurd Oil & Gas +852 2203 6242 david.hurd@db.com James Kan Metals & Mining +852 2203 6164 james.kan@db.com Johnson Wan Metals & Mining +852 2203 6163 johnson.wan@db.com Anne Ling Consumers +852 2203 6177 anne.ling@db.com Winnie Mak Consumers +852 2203 6178 winnie.mak@db.com Lydia Ling Consumers +852 2203 6181 lydia.ling@db.com Vincent Ha Airline / Autos +852 2203 6247 vincent.ha@db.com Fei Sun Airline / Autos +852 2203 6130 fei.sun@db.com Sky Hong Transportations/ Ports +852 2203 6131 sky.hong@db.com Phyllis Wang Rail/ Machinery/ Toll Road phyllis.wang@db.com Alan Hellawell Tech & Telecom +852 2203 6240 alan.hellawell@db.com Vivian Hao Tech & Telecom +852 2203 6241 vivian.hao@db.com Michael Tong Utilities/ Renewables +852 2203 6167 michael.tong@db.com Eric Cheng Utilities/ Renewables +852 2203 6202 eric-ct.cheng@db.com Kai-Ting Wong Utilities/ Renewables +852 2203 6235 kai-ting.wong@db.com Karen Tang HK Conglomerates/ Gaming +852 2203 6141 karen.tang@db.com Cyrus Ng HK Conglomerates/ Gaming +852 2203 5925 cyrus.ng@db.com Jack Hu Health Care +852 2203 6208 jack.hu@db.com Michael Chou Technology +886(2)2192 2836 michael.chou@db.com Birdy Lu Technology +886(2)2192 2822 birdy.lu@db.com Andrew-C Chang Technology +886(2)2192 2845 andrew-c.chang@db.com 18 March 2014 Made in China Deutsche Bank AG/Hong Kong Page 9 Appendix 1 Important Disclosures Additional information available upon request For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr Analyst Certification This report covers more than one security and was contributed to by more than one analyst. The views expressed in this report accurately reflect the views of each contributor to this compendium report. In addition, each contributor has not and will not receive any compensation for providing a specific recommendation or view in this compendium report. Equity rating key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share- holder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes: 1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were: Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12- month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period 55% 39% 7% 25% 19% 12% 0 50 100 150 200 250 300 350 400 450 Buy H old Sell Asia-PacificUniverse Com paniesCovered Cos.w/BankingRelationship 18 March 2014 Made in China Page 10 Deutsche Bank AG/Hong Kong Regulatory Disclosures 1. Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. 2. 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