麦格理发布研究报告，维持君实生物(79.8,-0.15,-0.19%)(01877)“跑赢大市”评级，目标价升54%至92.62港元。 报告提到，目前疫情有再度爆发迹象，变种病毒发展迅速，疫苗保护力较弱，出现患者痊愈后再感染的情况，令市场上抗体治疗需求增加。预期今年全球将新增确诊个案1.39亿宗，同比上升66%，为早前预测的2.3倍，预期口罩及区域封锁将继续较疫苗及抗体有效。 麦格理表示，公司近期研发重心预期将由PD1新药“拓益”转移至新冠病毒相关抗体产品，考虑到抗体主要于海外市场销售，不会受到国内政策影响。

From toy manufacturing to entertainment & licensing The company is at its initial stage to transform itself into an IP licensing companyfrom a toy manufacturer. Its key IP, Pleasant Goat and Big Big Wolf (喜羊羊与灰太狼), is one of the best-known Chinese cartoon series and its newly launchedK12 IPs Super Wings (超级飞侠) also has gained wide popularity amongChinese kids. In 2017, Alpha had a mere 2.9% of revenue from IP licensing,which is compared to international companies such as Hasbro’s 10% andeOne’s 51%. We expect that figure to expand to 4.4% in 2020 and help improvethe gross margin of Alpha by ~1ppt a year. The licensing is not just among K12products, but also mass market products, e.g. FMCG, F&B, hotels, given thefame of the IPs. Comic IPs geared to rising demand from OTT platforms Alpha owns U17, the second largest online comic platform in China. That isgeared to the rising original IP demand from iQiyi/Youku/Tencent Video, whichare keen to increase original TV drama series to attract subscribers and lowercosts. We see comic IP-based TV dramas in China jumping to 13 series in 2017from 1-2 series in 2015-16. Along with regulators’ encouragement in contentbased on original IPs, we see growing value to quality IP libraries such as U17. K12 IPs benefit from lift of one-child policy New births in China should finally see a 3% CAGR from 2015-25E, estimated byNBS, after a chronic 1.5% decline since 1990, thanks to the lift of the one-childpolicy. Alpha Group, which has around 60% sales exposure in K12 and 30% injuvenile products, will benefit directly. Based on the company’s plan, there will bemore K12 educational products based on its key IPs to come. They also aim toprudently expand the IP-based indoor kids’ playground business at a low cost bypartnering with mall developers. Its home-grown IPs fit well with thegovernment’s attempt to cultivate domestic brands in culture fields. Strategy realigned to focus on core IPs; initiate with OP The company realigned its strategy to focus on core IPs from 2018, aftersuffering from over-diversification in 2015-17, which has sent its valuation to atrough of 31x 18E PER (vs historical average of 42x). Our TP is based on a 39xPER to factor in the execution risk of its new strategy. We expect the earnings toreturn to a growth trajectory in 2018 with a 185% CAGR in 2017-19E, after a42% decline in 2014-17E. Initiate on the company with an Outperform rating. Risks: execution risk, competition from foreign brands, over-diversification.

We maintain our bullish view on the AI universe (link, Jun 7) andsurveillance solutions. Hikvision attended our IMT conference in Beijingon Nov 21. Investors are particularly interested in: 1) the GM outlook; 2) AIfeaturedsurveillance and edge computing; 3) robots; and 4) the outlook foroverseas business. We expect the new AI-featured product cycle to transformsurveillance from passive observation to active prediction, driving a re-rating. Impact Long-term GM target unchanged at 40%: Management maintains theirconsistent guidance of revenue growth at 20%+ YoY in coming years andlong-term gross margin target at 40%. The company will continue to invest inR&D to support long-term revenue growth. AI-featured surveillance; empowered edge computing: Upgradingsurveillance camera specifications to include AI is more than an upgrade inresolution/image capture, like the shift from analog to digital. Rather it isempowering cameras with computing ability, lowering the computing burdenon central servers and reducing the amount of data to be transmitted.Hikvision believes “Edge computing + Cloud” will be mainstream in the future,especially in the surveillance sector, given that the video consumes largedatastreams and thus will rely more on edge devices to structure data beforesending it to central servers. AI-featured surveillance in transportation; structures data beforetransmission to central servers: AI-featured cameras could do basic dataanalysis. For example: 1) separate those images with cars passing by fromthose without, and only transmit those with cars to central servers; and 2) notonly capture images but also label the cars’ features, such as colour, type,brand, size, car plate, etc, supporting image search using these labels. Robots; dual-engine driven: Management maintains guidance for revenuefrom innovative businesses (home surveillance, robots, automotiveelectronics, SSD, infrared sensors) to at least double in 2017. The robotsbusiness is seeing strong growth driven by increasing automated productionin China and growing use of unmanned warehouses in e-commerce. Overseas business outlook: Management maintains the view that there aregreater uncertainties in overseas businesses compared to domestic/China,given relations among countries. Hikvision continues to expand their overseasmarket, especially in Southeast Asia, and upgrade their services from productsales (distributors’ channel) to total solutions, which have higher GM. Earnings and target price revision No change. Price catalyst 12-month price target: Rmb57.00based on a PER methodology. Catalyst: 4Q17results. Action and recommendation Maintain Outperform.

Conclusion Leshi is attending our flagship A-share Conference in Shenzhen on July 4-5. With investment from Sunac China (1918 HK, HK$14.00, Neutral, TP:HK$4.43, Wilson Ho) coming in place, we are positive on the recovery in itscore businesses, particularly in TV operations, since late 1Q17. However,handset, sports and electric vehicle businesses outside of the listed companyremain cash-strapped. Management is re-prioritizing these businesses,optimising cost and headcount, and seeking external financing. RetainOutperform. Impact TV operations on right track. Leshi targets 7m TV shipments in 2017, upfrom about 5m TV in 2016, with an aim to turn hardware GPM positive in 2017on reasonable pricing and component cost control. We expect the ASP ofLeshi TVs will increase modestly this year as its average TV size expands. Onthe other hand, dropping the US$2bn Vizio acquisition recently could saveLeshi cash for its core business. This may seem to impede Leshi's globalexpansion, which at this stage is both costly and de-prioritised, in our view. Reprioritizing cash-strapped businesses. Outside of the listed company,Leshi is sensibly trimming handset shipments in 2017, following the cash flowissues of Leshi’s handset business with supply chain since late 2016. LeSports also dropped the costly broadcast rights for the Asian FootballConfederation games as well as Chinese Super League games. On the otherhand, Faraday Future and Leshi’s auto arm are seeking external financing. We believe Leshi is taking the right steps to re-prioritize its non-core cashstrappedbusinesses, but the process may take some time and can be bumpy. Cutting US operations on cost rationalisation. Leshi is reportedly cuttingits number of employees from about 400 to less than 100 people in the USoperations. The impacted US operations is mainly on smart TV, smartphones,set-top boxes and video content, whereas the labour force for the electricvehicle operation (outside of listed company) in the US stays intact. Earnings and target price revision No change. Price catalyst 12-month price target: Rmb40.00 based on a Sum of Parts methodology. Catalyst: Injection of Le Vision Pictures, fund raising of entities outside thelisted company, hardware shipments and marginsAction and recommendation Retain Outperform.

Event 1Q17results missed our estimates due to high operating expenditures. Thecompany is guiding to 1H17net profit growth of 0–20% YoY to Rmb805–Rmb966m. We maintain our revenue estimates and are cutting our FY17/18EPS forecasts 5%/6% on lower margin expectations. We are cutting our TP toRmb65from Rmb68, based on a 22x FY18E EV/EBITDA. We maintain anOutperform rating and expect Hollywood movies to continue drive the boxoffice in 2Q17and 2H17. Impact 1Q17net profit misses on high OPEX. Total revenue grew 10% YoY toRmb3.3bn, 4% below our estimate. The 1Q17box office increased 4.2% YoYto Rmb2.3bn. This implies more than a 20% YoY increase in non-theatricalrevenue. Net profit grew 2.3% YoY to Rmb474m, 15% below our forecast onhigh S&M and G&A expenditures. The company is guiding to a 1H17net profitincrease of 0–20% YoY to Rmb805–Rmb966m. April box office to grow more than 40% YoY. The 2Q17box office startedstrong. As of 27April, China’s overall box office had reached Rmb4.1bn,compared with a total of Rmb3.1bn for April of last year. The Fate of theFurious, which was released on 14April, contributed Rmb2.3bn, or more than50% of the box office. We believe the total April box office is likely to growmore than 40% YoY and expect the YTD April-17box office to increasearound 7% YoY. Hollywood movies to drive box office. We expect the strong Hollywoodmovie pipeline, which includes Guardians of the Galaxy Vol.2(in theatres 5May), Pirates of the Caribbean (in theatres 26May), Wonder Woman, andTransformers 5, to continue to drive China’s box office in 2Q17and 2H17 . Non-theatrical business to see continued growth. Wanda Cinema isguiding to the addition of 100–150theatres with 900–1,300screens in 2017.In addition to network expansion, Wanda Cinema will continue to grow itsnon-theatrical business, which includes the sales of F&B and movie-relatedproducts, as well as in-theatre advertising and marketing services throughWanda Media. The company aims for a more than 50% non-theatricalcontribution in the long term. Earnings and target price revision We are lowering our FY17/FY18EPS estimates by 5%/6% on lower marginexpectations and cutting our TP to Rmb65from Rmb68on a 22x FY18EEV/EBITDA. Price catalyst 12-month price target: Rmb65.00based on an EV/EBITDA methodology. Catalyst: Box office growth, non-theatrical revenue. Action and recommendation We maintain an Outperform rating on a 2017box office recovery and nontheatricalrevenue expansion.

Event Wanda Cinema’s FY16 revenue was in line with our expectation but missedthe Wind consensus by 2%. Net income missed our and the Wind estimatesby 11% due to high S&M and finance costs. The company has continued toexpand its theatre network, adding 109 theatres and 1,007 screens in 2016. We are lowering our FY17/FY18 EPS estimates 15%/15% as we arebecoming cautious on box office (BO) growth and lowering our marginestimates on higher-than-expected expenditures. We are cutting our targetprice to Rmb68 from Rmb74, based on a 22x FY18E EV/EBITDA. WandaCinema retained its market leading position with a 13.6% China BO marketshare in 2016. We remain positive on Wanda Cinema’s premium brandingand its ability to consolidate the market. Reiterate Outperform. Impact FY16 net profit missed on S&M and finance costs. Revenue increased40% YoY to Rmb11.2bn, in line with our forecast but missing the Windconsensus by 2%. Theatre admission revenue grew 18% YoY to Rmb7.5bn,attributable to the full-year consolidation of Hoyts. Domestic BO increasedslightly, by 2–3% YoY, to Rmb6.2bn. Net profit grew 15% YoY to Rmb1.4bn,missing our and the consensus estimates by 11%, due primarily to the highsales & marketing expenditure and an increase in finance costs. Strong non-theatrical businesses. Contribution from non-theatrebusinesses increased 13ppts to 33% in 2016 from 20% in 2015. Merchandising revenue grew 44% YoY to Rmb1.3bn, driven by a 22% YoYincrease in movie viewers and the sales of movie-related products. Theconsolidated Muwei boosted advertising revenue 224% YoY to Rmb1.7bn. We expect contribution from non-theatrical businesses to see a continuedincrease to 35% in 2017, which should help drive both revenue and margin. Network expansion continues. In 2016, Wanda Cinema added 109 newtheatres and 1,007 new screens to its theatre network, including 56 IMAXscreens and 11 Dolby Cinemas. The company’s target is continuedimprovement in market share and penetration and is guiding to the addition ofanother 100–150 theatres in 2017. We forecast 110 newly added theatreswith over 900 screens in 2017, including 45 IMAX and 29 Dolby Cinemas. Eyeing BO performance in the coming months. With China’s overall BO havingincreased 26% YoY in Jan-17 but declining 11% YoY in Feb-17, the total BO for1Q17 is likely to be flattish YoY at c.Rmb14.5bn. We expect Wanda Cinema’s BO tooutperform the overall China market and grow c.4% YoY to Rmb2.3bn in 1Q17. Weexpect a strong Hollywood movie pipeline, including The Fate of the Furious,Guardians of the Galaxy and Transformers to drive the BO in 2Q17. Earnings and target price revision We are lowering our FY17/FY18 EPS estimates 15% each, as we are cuttingour BO forecasts and lowering our margin expectations. We are cutting ourTP to Rmb68.00 from Rmb74.00 on a 22x FY18E EV/EBITDA. Price catalyst 12-month price target: Rmb68.00 based on an EV/EBITDA methodology. Catalyst: Box office growth in 2H17 and non-theatrical businesses. Action and recommendation Reiterate Outperform.

We initiate coverage of Leshi Internet (乐视网) with an Outperform anda TP of Rmb50 with 37% upside. Competitively priced and well designed,we expect Leshi will grow the installed base from 10mn TVs and 20mnsmartphones in 2016 to 27mn and 61mn, respectively, by 2018, setting thefoundation for Leshi’s eco-system as well as monetization throughmembership subscriptions and advertising. We believe all these will drive a50% revenue CAGR and 48% earnings CAGR between 2015 and 2018. Cash flow overhang eased with Sunac investment. Since late 2016, cashflow issues surfaced at the parent level, particularly with the handset supplychain with Rmb10-15bn in overdue bills estimated by the industry and media. In Jan 2017, Sunac and others invested Rmb17bn into Leshi. Of which,Rmb7.1bn will support listco’s investments in video content and computinginfrastructure. Another Rmb4.1-6.7bn in cash along with better alignment ofhandset sales and the cash flow cycle will address the handset supply chainoverhang. At the listco level, we expect operating cash flow to improve fromRmb0.4bn in 2016 to Rmb3.8bn 2017. Ecosystem founded on vast hardware installed base. Competitively pricedand well designed with the latest features including 3D, UHD and curveddisplays, Leshi is on track to achieve the annual target of 8mn in 2017, orabout 10%+ market share in China’s TV market, from nowhere when its firstTV debuted in 2013. Relatively late as an entrant in China’s smartphonemarket, from its first Le 1 series in mid-2015 to now the 3rd generation Le Pro 3,Leshi is on track to sell 19mn in 2017, or <5% market share. We expect thehardware revenue to grow at a CAGR of 55% between 2015 and 2018. From hardware to membership and advertising. About 80-90% of Leshi’sTV buyers also subscribe to a Leshi Video membership and 20-30% to aLeshi smartphone. Original content, licensed content, films and dramas fromLe Vision Pictures, Flower Film & TV, and sports content from LeSportscomprise a rich content portfolio. As such, we expect Leshi’s membership andad revenue to grow at a 51% and 39% CAGR during 2015 to 2018. Strategically, hardware subsidies are to incentivise membership and driveadvertising. We project revenue from subscriptions and ads should help liftOPM from 0% in 2016 to 2.9/4.7% in 2017/18. More asset injections to come. Leshi has announced intentions to inject themovie production arm Le Vision Pictures (LeVP) into the listco in 2017. TheTV maker Leshi Zhi Xin is growing its shipments and lifting profitability with anaim to inject into the listco by 2020. LeSports, with 3rd biggest mobile monthlyactive users (MAU), is also in the pipeline but there is no timeline yet. The lastfinancing rounds value LeVP, Leshi Zhi Xin and LeSports at Rmb7bn,Rmb30bn+ and Rmb20bn+ relative to listco’s market cap of Rmb76bn. Valuation. We value Leshi at Rmb50 based on a SOTP with 80% of thevaluation from the video business including advertising and membershipsubscriptions. Our net income is 10% and 9% above Wind consensus in 2017and 2018 for better margin improvement in TVs. Downside risks. Hardwareexecution incl. cash flow management for the supply chain, a cash shortfall inthe auto business, development and licensing of quality content offerings, andrecruiting new membership subscriptions in the face of fierce competition.

1Q16 revenue beat but bottom line missed. 1Q16 revenue grew 19% YoYto RMB590mn, ahead of MQ/consensus of RMB537-588mn, due to strongersoftware revenue. Net loss widened from RMB125mn in 1Q15 to RMB230mnin 1Q16 due to additional RMB94mn investment in enterprise Internetservices and Internet finance, as well as related SBC. Enterprise Internet services/cloud continued strong momentum. Revenue from enterprise Internet services and cloud grew 248% YoY toRMB18mn, or about 6% of total software revenue. The digital marketingplatform Bingjun and SaaS-based apps for ERP customers are key growthdrivers. The number of enterprise users of Yonyou’s enterprise Internetservices and Chanjet’s micro/small enterprise cloud grew 25% and 33% fromDec 2015 to 1mn and 800k in Mar 2016, respectively. Internet finance took a breather. Loan transactions on Yonyou’s P2Pplatform totalled RMB1.5bn in 1Q16, up modestly from RMB1.3bn in 4Q15, aswe suspect P2P lenders became more cautious after recent issues with otherP2P platforms. With regard to the acquiring business (i.e. processing of cardpayments), Yonyou handled transactions of about RMB6.3bn, down fromRMB9-10bn in 3Q-4Q15, owing to low seasonality in 1Q16 as its SMEmerchants closed their doors during the CNY holiday. Outlook for emerging businesses remains positive overall. Yonyou’senterprise Internet services have gained strength on the back of richerproduct offerings (incl. Bingjun and cloud apps) as well as its solid marketleadership. We thus maintain an 8% software revenue CAGR in FY15-18E. We also note the tightening policy stance around P2P and the upcoming feechanges of POS acquiring business proposed by the govt. That said, growthremains intact from its vast enterprise user base and potential adoption. Wethus trim slightly the revenue CAGR of Internet finance from 75% to 63% inFY15-18E.

麦格理于8月27日发表研究报告,指长城汽车(行情,资讯,评论)(02333)旗下运动型多用途车(SUV)推动利润率扩张,重申「优于大市」投资评级,目标价18.6元。长城汽车昨无升跌,收报16.86元,距离目标价尚有约10.32%上升空间。 长城汽车于8月24日公布今年中期业绩,税后盈利按年增长30%,主要由销量和利润率扩张带动。麦格理上周六参加了会议,长城汽车管理层对2013年前景非常有信心。该行预期,长城汽车在未来几个月在潜在利润率扩张下,能够稳健增长。 长城汽车上半年SUV的销售量增长45%,主要由两款新车型H6和M4带动,深受消费者喜爱。麦格理相信,其SUV销量下半年将加快增长,而公司能够达到全年销售目标22万辆,先前的目标为20万至20.5万辆。 报告表示,长城汽车经营利润率改善34个基点,因为毛利率上升18个基点和更好的销售推广支出控制。由于SUV的销售比重正在上升,麦格理相信其利润率仍有扩张空间,因为在规模效应下,新车型H6的利润率快速增长。H6的毛利率在上半年约28%至29%,今年下半年有可能超越分部平均30%。 麦格理指出,根据管理层指引,2013年初步销售目标是70万至80万辆,而2012年目标是55万辆,2011年则是46.3万辆,这意味着正加速增长,反映长城汽车对其产品的信心,但是最终销售目标将于年底设定。