Dahua announced 1H17 prelim results on 25 July, revenue/NI of Rmb7.5 bn/Rmb983 mn (up 51%/39% YoY) were 12%/4% above our prior estimates, due to stronger sales in both China and overseas, in our view. 2Q17 single quarter revenue/NI grew 52%/41% YoY. Although we already held a bullish view on Dahua's share gain momentum (in both China and overseas), we see multiple/even better positive signals from the results and recent business developments. Solution wins in high-end and improving margins in channels are bright spots for the domestic market, while own brand sales in developing countries are major driver for overseas. We see major solution project wins in China, sales reaccelerating overseas, better visibility on the PPP business model, and solid quarterly earnings as major stock price catalysts. We raise 2017-19E EPS by 13%-17% for higher revenues. Our new target price of Rmb30.7 (vs Rmb20.50) is based on updated sector average P/E of 23x (from 20x) with EPS base rolling over half year. Maintain OUTPERFORM.

Nari Technology's (Nari) 1H17 core earnings grew by 22% YoY (for existing business before asset injection), higher than consensus full year forecast of 17% growth. 2Q17 earnings (+24% YoY) came in stronger than 1Q17 thanks to larger earnings contribution from new tenders. Total revenue registered 10% expansion led by 17% growth from grid automation business thanks to accelerating distribution and substation automation growth. Gross margin remains defensive at 20% (flat YoY) with stable margin from grid automation (24%). We see strong pick up of distribution equipment tenders YTD with 1H17 tender volume for both distribution terminal and master station higher than the full year amount of 2016, suggesting significant momentum in 2017E. Nari's leadership in grid automation could further enhance following the asset injection. The stock is currently trading at 17x FY18E P/E (vs. historical average of 22x P/E) on the back of 23% EPS CAGR in FY17-19E. Our top picks in T&D sector are Nari and XJ Electric.

Robam reported 1H17 results on Wednesday (25-Jul) after market close followed by a management call on Thursday. Revenue/net profit recorded Rmb3.2 bn/Rmb597.7 mn (27%/41% YoY), which missed consensus by 3%/1.6%, respectively. We believe a slower 2Q17 (1Q/2Q is 34%/22%) growth is attributed to the property market control starting in 4Q16 and accounting policy change. If we "restore" the numbers without such change, revenue is ~Rmb3.2 bn, which missed consensus by 1.9%. The company will continue to expand POS in lower-tier cities in 2H and increase average selling price (ASP) in e-commerce starting in July. We believe these two measures will partly offset the negative impact of property slowdown and YoY raw material price increase. We fine-tune our numbers on slower revenue assumptions but better gross profit margin assumptions. Our new target price is Rmb47.50 (from Rmb48.46), based on 27x forward P/E.

A read-through of Ford Motor’s 2Q17 results showed Ford China JVs (including CA Ford and JMC Ford) 2Q17 earnings decreased 31% YoY to Rmb1.34 bn, which is the lowest in the last ten quarters. Ford JVs' contributed 90% of total Chang'an group's 2016 earnings, thus, Chang'an 2Q17 earnings is likely down 50% YoY to Rmb1.4 bn. Ford China JVs earnings drop was mainly driven by margin & selling price decline-net margin down 5.7 pp YoY / 2.3 pp QoQ to 10.7% (a three year-low). We attribute this notable margin drop to its middle-size SUV Kuga’s official price cut since April 2017. We expect the stock price to react negatively to the results miss as it may aggravate investors' concern on its earnings power outlook. We revise down Chang'an 2017-19E earnings by 30-36% with a lower margin and sales volume assumption for Ford China JVs, resulting in a lower target price to Rmb16.8 (from Rmb17.0). Upside risk is volume spike from Chang'an local brand's strong new products, especially the just launched CS55 middle-size SUV, CS95 large size SUV and Linmax 7-seat MPV.

Longfor delivered stronger-than-expected 1H16 rental income of Rmb883 mn (+34% YoY) with an improving GP margin of 74% (+3 pp YoY) amid higher occupancy rate of 96% (+3.6 pp YoY). We expect FY16E rental to reach Rmb2 bn, which would help strengthen its cash flow position and support its dividend growth. Overall, interim result was satisfactory with core profit and EPS up 7.7% and 7.3% YoY to Rmb2.4 bn and Rmb0.41, respectively. Development GP margin gradually improved by 0.8 pp YoY to 25.8% while net gearing remained healthy at 71.3%. Longfor revised up its full-year contracted sales target by 21% to Rmb75 bn given a better sell-through rate of 60% amid increasing saleable resource of Rmb125 bn. With intact pre-sales margin at 26%, we revise our FY16E/17E/18E EPS by +2.2%/+5.9%/+2.6%. We revise up our estimated end-2016E NAV by 10% to HK$22.8 due to better-than-expected margin in both residential and commercial property development. We revise our TP to HK$13.7 (from HK$12.4) based on the same 40% NAV discount but maintain our OUTPERFORM rating.

We initiate coverage on Bright Dairy with an OUTPERFORM rating. Bright is the largest dairy company in Shanghai (above 50% share), the third-largest dairy company in China (an 8% share). We forecast Bright's earnings will see a 46% CAGR over 2014-16, on a sales CAGR of 14%. Full report Bright created Mosilian, a UHT yoghurt product in 2009. It has chilled yoghurt texture, offers certain nutrition, requires no cold-chain support, and enjoys a 40-50% gross margin. We forecast its sales to grow 27% CAGR over 2014-16 (36% of sales and 45% segment share in 2016) and drive margin expansion. We believe the popularity of Mosilian would help Bright expand out of East China (60%/70% sales/earnings). It added 500k new POS in 2014, lifting total POS count to 700k from 200k in 2013. Our target price of Rmb24 is based on 36x 2015E P/E (implying 0.8x PEG). This compares with: (1) our target 24x P/E and 1.2x PEG for Yili, (2) target 25.5x P/E and 1.2x PEG for Mengniu, and (3) trading 1.5-2x PEG for Tingyi, Hengan, WW, Sunart, and TT.