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New report – Muck to money: Chinese waste management.
􀂉 In a world where everything increasingly comes wrapped, waste follows
consumption and the production of municipal waste in China is set to explode. The
multiplier effect of growing populations and rising per capita production of waste
sees the rise of an industry in China that has already established itself in Europe
and the United States. We recommend investors get in early on what we see as a
long-term trend. In the area of waste management, municipal waste incineration
is Charles Yonts’ top pick.
CRR: Environment - Meeting the waste challenge:
􀂉 In China there is more rubbish than ever before, the product of rapid
industrialisation and urbanization. Rising environmental concerns are putting the
processing of all this waste higher on the agenda. The result is huge opportunities
for companies in the waste treatment sector. China Reality Research spoke to local
government officials and visited 23 rubbish treatment plants in nine Chinese cities
to sniff out developments in this sector.
New report - Cosco Singapore (COS SP – Initiating with BUY)
􀂉 With eight strategically positioned yards in China, Cosco Singapore is set to benefit
from shipbuilding and offshore booms in the country as it expands its market
share in the ship-repair business. Caroline Maes expects the company to gain
US$3.2bn in new orders in 2008, with a 32% EPS Cagr over the next three years.
Her S$5.70 target suggests 30% upside, but fair value could be even higher if the
expansion continues. She initiates coverage on the stock with a BUY rating.
Parkson (3368 HK – BUY): Strong growth intact.
􀂉 Parkson’s 47% rise in full year earnings was in line with both Xiaopo Wei’s and
consensus forecasts. Xiaopo’s forecasts are little changed with the company
having started the year strongly and he continues to view Parkson as China’s topquality
department store chain among listed peers. While this is certainly not a
cheap stock, there are no signs of any cracks in its high growth profile and Xiaopo
remains confident valuations can be maintained. On a target PE/G of 0.9x, Xiaopo
looks to 28% upside to his target price of HK$94.63.
Sector outlook – China telcos.
􀂉 Francis Cheung met with the MII, SASAC, and NDRC last week and believes that
the State Council held a discussion meeting a week ago and in principle agreed on
the NDRC version of telecom restructuring. The primary objective of the
restructuring was to create integrated operators, allocate assets efficiently and not
to curtail China Mobile’s dominance. There is no agreement at this point how to
execute the plan, which could delay its approval until after the NPC. China Mobile
and Unicom will get more aggressive and earnings could surprise this year. Real
change in competitive landscape is not likely until 2009.
Sector outlook – HK property.
􀂉 Share prices of the developers have softened recently, but driven more by
valuation than NAV contraction. Positive outlook for the physical property market
has not changed so much. In fact residential prices were up 10.2% YTD less than
two months into the year. Interestingly, argument of the developers’ lack of NAV
sensitivity to residential prices, which had stretched valuations in the past few
months, still holds as share prices correct. This NAVs resilience, which set against