Adjust target price to RMB20 on 15:10 stock split. We adjust down our target price proportionately to RMB20 from RMB30 toreflect the recent stock split. Huangshan recently conducted a 15-for-10 stocksplit, which increased the current number of shares outstanding to 747 million. Our net profit forecasts remain unchanged, and we adjust EPS to RMB0.50 for2016E and RMB0.57 for 2017E to account for the split. Valuation and risks. We derive our target price of RMB20 on DCF-based valuation, with keyassumptions unchanged at 7.9% WACC and 3% terminal growth rate in linewith China’s consumer growth rate trends. Downside risks include 1) delays inthe railway development; and 2) cable car capacity and safety incidents.

M&A announced, real impact remains to be seen. On June 26th, Baosteel and Wuhan steel announced a potential mergertransaction, promoted by the Chinese government; the trading of their stockswill be suspended beginning June 27th, 2016. While the details of the potentialmerger transaction have yet to be disclosed, we believe it will likely happen atthe parent company level rather than listed company level. Any potentialsynergy and industry impact (regarding both companies) remains to be seen.Considering Boasteel’s valuation, quality products, and management, wereiterate Buy.

Stock split effective on Jun 24th Ganfeng's 10 to 10 share split has been effective since Jun 24, 2016. Thus,without any earnings adjustment and valuation adjustment, our TP haschanged to RMB39/share based on the new outstanding shares.

Any pull back on slower seasonality implies great entry point We expect Sunway to post 23% QoQ EPS growth in 2Q16, which is below theconsensus estimate of +37%. We attribute this to handset inventory correctionamong major customers (e.g. Apple, Huawei). However, we believe thecompany’s momentum will accelerate in 3Q16 driven by antenna module pullinfor its clients’ new smartphone rollouts, and new NFC antenna order gains. Sunway is one of the top picks among our A-share coverage, featuringpersistent profit growth triggered by: 1) enriched product offering (NFCantenna, connector, mechanical part, speaker box); and 2) share expansionfrom Apple/Android handset vendors. We reiterate our Buy rating. Slightly weaker 2Q16 on seasonality and demand issues We lowered our 2Q16 earnings estimate by 10%. We think order flows fromsome major customers (Apple, and Huawei) will be lower than expected due toweak demand and/or inventory digestion. However, we expect salesmomentum to pick up again in 3Q16, driven by high-end device launches fromkey clients (including iPhone 7/7+, Huawei Mate 9, Meizu MX6). Growing NFC antenna and wireless charging orders boost long-term growth Sunway is making aggressive inroads in NFC antenna and wireless chargingcoils, after its 61% acquisition of Linepri (a key NFC antenna material ferriteprovider) in 2015. The company penetrated Samsung’s 3-in-1 antenna(Samsung pay+ NFC+ wireless power charging for Galaxy S7/S7 Edge) in 1Q16. We expect Sunway to enjoy persistent new NFC antenna customer(Huawei)/order allocation (Samsung Galaxy Note 7) wins in 2H16 given itsmore favorable cost structure (vs. regional competitors) and technologystrength (vs. local peers). Valuation and risks We cut our 2016 EPS forecast by 8% to factor in slower smartphone demandin 1H16, but leave our 2017/2018E EPS largely unchanged thanks to its shareexpansion in the handset NFC antenna space. We increase our TP to RMB22.5from RMB21 as we roll over to 35x one year FW P/E. Risk: weaker-thanexpectedsmartphone demand; price cuts.

EPS revision on stock dividend In light of stock dividend issuance (0.5 new share for one common shareholder), we revise our 2016/2017/2018E EPS from RMB 1.1/1.2/1.5 to RMB0.7/0.8/1.0. Accordingly, we trim our target price from RMB34.5 to RMB24. Valuation and risks Our new target price is still based on 32x FW P/E, or 1.1x PEG (vs. regionalpeers of 0.8x PEG). We see the premium valuation (vs. regional peers)justifiable given its improved sector growth outlook and long-term marketshare gain potential. Downside risks include slow USB type-C proliferation,price competition, and forex fluctuations.

Cultural theme park to be developed in Hunan under asset-light model. Today, Songcheng Performance announced that it has signed a cooperationagreement with Tanheli (炭河里) Tourism and the Ningxiang government (宁乡县) to jointly develop Songcheng Ningxiang Tanheli cultural theme park. Tanheli Tourism will invest RMB2.5bn in the cultural theme park project, andwill be responsible for its development and construction. SongchengPerformance will offer its brand name and management expertise, assistTanheli Tourism in constructing the theme park, develop interactive activitiesand design a cultural show based on the unique culture in Ningxiang. Theproject targets for a trial operation on 1 October 2016, and an official openingon 1 May 2017. Songcheng Performance will receive a payment of RMB260mfor the initial service provided, and will be entitled to a commission on 20% ofthe park’s annual operation revenue. Deutsche Bank’s view – set a clear asset-light model strategy. Songcheng Performance is currently operating five cultural shows, and hasanother five in the pipeline, including the recently signed Romantic Showof Zhangjiajie in Hunan province. The Ningxiang Tanheli project marks theeleventh project of Songcheng and its second project in central China. Ningxiang is one of the key historical sites for Chinese ancient bronze ware,and is located only 40km away from the city of Changsha. The NingxiangTanheli theme park will be constructed based on the existing TanheliNational Heritage Park, and will showcase the society and culture ofChina’s Western Zhou dynasty. We believe that Songcheng is on track for its national expansion, and thecompany is actively exploring the asset-light model to support a fast rampup. The Ningxiang Tanheli project is the third project developed under theasset-light model (the first being the Taishan Romantic Show, and thesecond being the project that will be launched on Shanghai Expo GrandStage.) Successful asset-light projects should help speed up Songcheng’snationwide project expansion, as well as boost the company’s return. According to management, several tourism attraction sites have proposedto work with Songcheng for its expertise in cultural show management. We are positive that Songcheng will continue to leverage its expertise intheme park and cultural show development, and we expect the companyto sign more cooperation agreements with attraction sites. We reiterate Buy on Songcheng, with an unchanged target price of RMB38.

Emergence of a healthcare conglomerate; initiating with a Buy rating As a leader in CNS therapeutics in China, Humanwell is transforming itself intoa healthcare conglomerate. While the CNS franchise remains the largest profitdriver, Humanwell is also involved in generics/OTC export, PDTs (plasmaderivedtherapeutics), contract sales for IVD (in vitro diagnostics), regional drugdistribution, and healthcare services. We expect CAGRs 2015-18 of 26% and27% for revenue and EPS, respectively. We initiate coverage on Humanwellwith a Buy rating and a target price of RMB21.1. CNS therapeutics anchor stable growth; export adds another leg of growth Humanwell is the second largest player in the Chinese analgesic andanesthetic market with a 12% share. The flagship products fentanyl, sufentanil,and remifentanil contributed 83% of the sales of key subsidiary YichuangHumanwell, or 51% of group profit, in 2015. We expect a CAGR 2015-18 of18% for the entire CNS portfolio. In addition, PuraCap, a US subsidiary,delivered 184% YoY growth in 2015, after years of positioning in the USgeneric and OTC market. Humanwell recently completed a USD550macquisition of an ex-Sandoz CNS subsidiary, Epic Pharma, in New York. Weforecast exports should represent 23% of profit in 2018E, up from -3% in 2015. Scaling into hospital management; IVD and PDTs remain attractive assets With an ambitious objective to have 50 hospitals by 2020, Humanwell hasbeen aggressively expanding into hospital management, primarily in its homeprovince of Hubei. At present, the company manages four hospitals, with sixmore under framework agreement. It also plans to build one for-profit hospital. Additionally, Beijing Baron Medical, another Humanwell subsidiary, is thelargest IVD distributor for Roche diagnostics in China, while Zhongyuan Ruideis a meaningful player in PDTs, with a collection volume of 100 tons in 2015. Target price of RMB21.1 based on SOTP; risks We derive our target price of RMB21.1 from a sum-of-the-parts valuation, byapplying 30x on 2017E EPS of RMB0.58 for CNS therapeutics and drugexports, 35x on 2017E EPS of RMB0.01 for hospitals, and 11x/35x on 2017EEPS of RMB0.15/0.05 for IVD and PDTs. We believe the multiples are justifiedwhen compared with their respective A-share peers’. Key risks include: pricecuts, slower progress in exports and hospitals, and delayed product launches. See pages 5-9 for more detail on valuation and risks.

Adjusting target price to RMB49.5 on 6:5 stock split. The 6 for 5 stock split has been effective on June 16, which increased thenumber of shares outstanding to 2,348 million. We adjust our target priceproportionately to RMB49.5 from RMB59.5 to reflect the stock split. Our netprofit forecasts remain unchanged, and we adjust EPS forecasts to RMB1.141and RMB1.414 for 2016 and 2017 respectively. We maintain our Buy rating. Valuation and risks. Our price target of RMB49.5 is based on 35x 2017E EPS of RMB1.414. Webelieve that 35x is justified as A-share peers are trading at 23x with 19% EPSgrowth in 2017 (vs. the 24% we model for Hengrui). We believe the premium isjustified by its higher growth sustainability, driven by multiple innovativeproduct launches in the near-to-mid term and its export business. Key risks aredelays in product launches and pricing pressure.

Re-iterate Buy on structural growth brought by improving transportation. We re-iterate our Buy recommendation on Huangshan. We believe Huangshanwill continue to benefit from the structural volume growth brought by theimproving transportation. In addition, we like the company for its high-qualityoff balance sheet assets (i.e. the Huangshan Mountain), 2) the high bargainingpower of its hotels on the mountain, and 3) the long-term growth potential byutilizing surrounding attraction sites. Continuous visitor volume growth to 3.5 million in 2016. In Jan-May 2016, overall visits increased approx. 7-8% yoy, albeit 10% yoydecline in April and May due to the rainy weather. As June continues toexperience heavy rains, we expect visits to bottom in June and to recover inJuly as summer arrives. We forecast visitor volume to grow 11% yoy in fullyear 2016 to 3.5 million, driven by the improving transportation infrastructureincluding the Hefei-Fuzhou high speed railway and direct flight betweenWuhan and Huangshan from 10-June to 30-November. High bargaining power of the hotel assets. Huangshan Tourism has monopoly over the hotel resources on the mountain –all six hotels on the mountain are owned by the listco. As a result, thecompany can raise the ADR while still achieving close to 100% occupancy rateduring holiday seasons. Based on our channel checks, standard hotel rates areat RMB880 per room per night on regular days, c. RMB1,100-1,180 onweekends, and RMB1,480-1,880 during holidays (e.g. Golden Weeks, SpringFestival, Duanwu Festival and etc.). A leveraged business – net profit up by 46%/41% on 8%/7% volume growth in2014/15. As the costs incurred by Huangshan Tourism, such as the operating expenseand D&A of cable cars and hotels, are relatively fixed and do not grow withvisitor volume, the company generally enjoys a higher revenue and net profitgrowth than the underlying volume growth. In 2014/15, for example, 8%/7%volume growth led to 15%/12% revenue growth and 46%/41% earningsgrowth. We forecast 17% earnings CAGR over 2015-18, driven by the steadyvisitor volume growth. To further leverage the tourism volume attracted by Huangshan Mountain. We saw several attraction sites on the way from city town Tunxi andHuangshan Mountain – including Hongcun ( 宏村), Tangmo ( 唐模), andChengkan (呈坎). Although Huangshan Tourism is likely to focus on managingand developing its existing assets in the near-term, we believe the companycould potentially use Huangshan Mountain as a platform to further leveragethe tourism volume attracted by the Mountain scenic area.

Adjusting target price to RMB35.7 on 8:5 stock split. The 8 for 5 stock split became effective on June 7, which increased thenumber of outstanding shares to 930 million. We adjust our target priceaccordingly from RMB57.2 to RMB35.7 to reflect the stock split. Our revenueand net profit forecasts remain unchanged and we adjust EPS forecasts toRMB0.74 and 0.95 from RMB1.19 and RMB1.52 in 2016 and 2017,respectively. We maintain our Buy rating. Valuation and risks. Our price target of RMB35.7 is based on 48x 2016E EPS of RMB0.74. Webelieve 48x is justified as its A-share listed peers are trading at 36x with 28%growth in 2016 (vs. the 36% we model for Hualan). Risks include lower-thanexpectedplasma collection volume, greater-than-expected cost inflation, and asmaller-than-expected ASP increase.

April Hainan duty free sales down 6% yoy According to MOFCOM data, Hainan duty free sales (Sanya + Haikou)decreased 6% yoy to RMB386m in April 2016. Number of purchases wereflat at 132,900. Based on MOFCOM data, 4M2016 (January to April) duty free sales grew6% yoy to RMB2.6bn, while number of purchases decreased 8% yoy to705,600. This implies a 15% yoy expansion in YTD ticket price toRMB3,735. Not a surprise after CITS stopped rebate to travel agency To recap, CITS ceased rebate to travel agencies from last September. Management of CITS aimed for a higher ASP so that they eventually appliedfor a higher consumption quota in Hainan (i.e. from RMB8,000 to RMB16,000). As a result, 6% drop is mainly due to a different comparable base. Our recent channel check found that CITS has resumed the rebate agreementswith travel agencies, starting from May. In our view, duty free sales growthshould bottom in April/May and is likely to recover in June.

Adjusting target price to RMB24.3 on 6:5 stock split The 6 for 5 stock split has been effective on June 2, which increased thenumber of shares outstanding to 1,363 million. We adjust our target priceproportionately to RMB24.3 from RMB29 to reflect the stock split. Our netprofit forecasts remain unchanged, and we adjust EPS forecasts to RMB0.44and RMB0.56 for 2016 and 2017 respectively. We maintain our Buy rating.。 Valuation and risks Our price target of RMB24.3 is based on 55x 2016E EPS of RMB0.44. Webelieve 55x is justified as its A-share biotech peers which are trading at 53x on2016E EPS with 20% growth in 2016 (vs. the 31% we model for THDB). In ourview the premium is justified by its higher growth sustainability and visibility ofinsulin franchise vs. most other therapeutics, and a compelling risk profile. Keyrisks include larger price cuts and pipeline failure.

Target price adjusted to RMB5.80 on scrip dividend Yonghui Superstores implemented its dividend payout for 2015 on 3 June 2016with cash dividend of RMB0.15 and scrip dividend of one bonus share forevery one existing share. Total shares outstanding will increase from4,067.5mn to 8,135mn. Accordingly, we revise our target price fromRMB11.60 to RMB5.80 to reflect the share capital adjustment. Valuation remains unchanged; maintaining Buy Our target price is derived from DCF, employing 9.5% COE, a 1.0 beta and a2.5% TGR. It is equivalent to 36x FY17E P/E, unchanged from our previousvaluation. We have a Buy rating on the stock, as 1) we believe Yonghui should be a longtermbeneficiary of China’s secular trends of modern trade retailing, and 2) itowns industry-leading expertise in fresh food operations, driven by its strongsourcing capability, well-established supply chain management and optimizedbusiness procedures. We estimate 41% net profit growth for FY16-18, on 20%revenue growth, driven mainly by 60-80 new store additions each year, 2-3%SSSg and operation leverage. Key downside risks: keen competition, low CPI and challenges in nationwideexpansion.

Most leveraged major player to EV lithium battery; initiating with Buy. Guoxuan is the fourth-largest EV lithium battery player in China, in terms ofsales in 2015. It is also the most leveraged major player on the stock market tothe EV lithium battery business, which is set to contribute 90% of its revenueand 94% of its gross profit in 2016. We believe Guoxuan’s aggressive capacityexpansion and competitive advantages should help it to grow market sharesignificantly and make it a major beneficiary of the Chinese government’starget to put 5mn EV units on the road by end-2020. We initiate with a Buy. Quick growth rate of EV sales. China EV sales rose to 331k units last year, up 340% YoY, driven by bothimprovements in demand and government stimulus. The Chinese governmentplans to put 5m units on the road by the end of 2020. We expect China EVsales to grow 27%/57%/36% in the next three years, generating 19/30/39 Gwhlithium battery demand in our forecast years. We believe EV sales will likelyrally in 2H16 after the renewal of subsidy policies in June. EV lithium battery focus with aggressive expansion. Guoxuan High-Tech has been focused on producing EV lithium batteries sinceits establishment and this segment is set to contribute 90% of its revenue and94% of its gross profit in 2016. This makes it the most leveraged stock to EVlithium batteries in the market. The company has a very aggressive expansionplan and total capacity should expand from c.0.16Gwh in 2011 to c. 8.9Gwh in2018, with a CAGR of 78%. Though the group’s operating margin will likely fallfrom a high level of 27% in 2015 to 20% in 2020, driven by lower ASP, strongvolume growth should push the bottom line higher in the next three years. The strong will likely become stronger. We expect Guoxuan to catch up with industry peers and gain more marketshare due to its stronger competitiveness, stemming from 1) first-moveradvantage, as it is already listed as one of the 25 quality producers approvedby MIIT; 2) strong client relationships with key producers in EV markets; and 3)its proven capability of R&D to improve energy density and sufficient fundingto support capacity expansion. Additional material can be found in our FITTreports “Welcome to the Lithium-ion Age”, published on 8 May 2016, and“Charging the car of tomorrow”, published on 2 June 2016. Initiating coverage with Buy; target price set at 26x 2017E P/E; risks. Our target price of RMB40.4 is based on 26x 2017E EPS and implies 29%upside potential. We believe our multiple is justified, given an earnings CAGRof 46% and high ROEs of above 30% over the next three years. Key risks:unexpected changes in the govt’s subsidy policy and EV demand (see pp3,4-5).

Retagliptin: conducting supplementary phase 1 trials On May 23, Hengrui filed an application to conduct phase 1 trial for Retagliptinand is now recruiting patients. The company indicated that it would only haveto provide supplementary data for the phase 1 study while a new phase 2 anda new phase 3 studies are not required. Management expects resubmission in2H16. 19K: expecting re-filing in 2Q16 or 3Q16 Management indicated that the additional data required for 19K would be lessthan that for Retagliptin. Additionally, the supplementary studies for 19K arealmost complete. As such, resubmission in 2Q or 3Q remains likely. Theproduct approval is anticipated in 2016. Velcade mimic: overseas filing might be ahead of China According to management, the company did not file the production approvalfor bortezomib (velcade). As we reviewed the filing on Shanghai StockExchange by Hengrui in late Dec, the company did not include this product inits near-term pipeline list that had been filed for production approval. However,we highlight Jiangsu Hansoh filed the product approval in Jan 2013, comparedwith CSPC which filed in Apr 2013. For Hengrui, management indicated that itmight file ex-China approval ahead of China for this product. Limited impact from CFDA inspection on Fudan University Cancer Center Regarding whether the recent CFDA inspection on Fudan University CancerCenter would affect the ongoing clinical trials, management indicated this hadnot emerged as a risk for Hengrui.