CICC English Daily-081106-Li Ning (2331.HK)/ Beijing Jingkelong (814.HK)/ Ban research, English, report

yangh

Pls see attached the full PDF research report, below is a highlight:
 
Listco Updates
Li Ning (2331.HK): BUY                                              Page 2
2Q09 Trade Fair Order Growth Better than Other
Brands
Li Ning announced 31.6% growth in orders taken at the 2Q09 Trade Fair. Footwear saw a 10.2% increase in average retail price and an 18.9% increase in volume, while apparel products saw their average retail price increase by 11.8% and volume increase by 18.8%. We think the company is on course to beat our 42% forecast for 2009 net profit growth, as increasing prices will improve gross margin, while increasing sales volumes will improve economies of scale and we expect the marketing expenses to sales ratio to decline by 1ppt in 2009 as compared to 2008, due to the falling off of exceptional marketing expenses incurred due to the Olympics. BUY reiterated.
Beijing Jingkelong (814.HK): ACCUMULATE                 Page 4
1~3Q08 Results in Line; Continued Good Growth
Revenue and net profit increased by 23.3% and 41.1% YoY in 3Q08, in line with our estimate. 1~3Q revenue and net profit account for around 72% and 74% of our full year targets, and the company has a good chance of outperforming. JKL is trading at the lowest valuation among comparables, due to its conservative way of communicating with investors, SOE background and small market cap. However, in our view, the company’s unique business model and stable earnings growth will make it a defensive player in the HK market. ACCUMULATE maintained.
Sector Updates
Banking: Still More Challenges Ahead:                         Page 9
3Q08 Results Review
Listed banks reported 53% bottom line growth YoY in 1~3Q whereas 3Q net profits slid 9% QoQ, confirming the downward trend of Chinese banks. Key takeaways are: 1) NIM squeeze was the main drag on earnings growth QoQ and may accelerate in the next two quarters; 2) Net fee income fell 12% QoQ and will continue facing challenges in the future. 3) Asset quality remains resilient but NPL risks for the next two years are immeasurable. A-share banks still face downsides while H-share banks may enter a range-trading area; we expect banks will be line with market in Nov. and maintain our Neutral rating. In Nov. we prefer A-shares BoBJ, SZDB & CMB; among H-shares, we would buy CITICB and accumulate CMB.
 

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