Sectors:

Air, Automobiles (Zhang Jing)

Environmental protection (Wang Yannan)

Healthcare, Consuming (Eurus Zhou)

Automobile & Air (Zhang Jing)

This month I released updated reports of Air China (AC) (753HK) and Yutong (600066CH), which got success by their unique Competitive edge. The Chinese government is studying and formulating a new civil aviation pricing policy. First-tier cities will soon implement marketized fares for air routes and most large-scale air routes, which will be conducive to the restoration of the industry economy. Air China is expected to benefit deeply. According to the latest result, we revised our estimate 2018/2019 net profit of AC to be 10.17/13.865 billion RMB. “Accumulate” rating is given. Among the headwind, Yutong enlarged its market share and the bad debts will be partially reversed, which is helpful to the bottom-up of the FY2018 result. We forecast that the company's EPS in 2018/2019 will be RMB1.72 and RMB1.9. We give “Accumulate” rating.

Environmental protection (Wang Yannan )

In this month I released 3equity reports, including Dongjiang (002672SZ),Tus-sound (000826SZ), Luenmei (600167SH). The development prospect of sanitation business of the Tus-sound company and cooperative development under the industry chain are optimistic. The company is now equipped with abundant funds and strengthened operation duration ability after the completion of directional private placement. We estimate, from 2018 to 2019, the net profit of the company will reach RMB1586/1980mn, respectively, EPS of 1.55/1.94, equivalent to a PE of 18.9/15.1. We give a target price of RMB37.2 and the Buy rating.

Healthcare & Consuming (Eurus Zhou)

This month I released 3 equity reports, including CMS (867HK), Yunnan Baiyao (000538SZ) and Jumpcan (600566SH). We tend to highly recommend CMS (867HK) and Jumpcan (600566SH). For CMS, we highlight that CMS reported strong 2017 results with decreasing expense ratios. Going forward, we highlight that current core products will grow stably in addition that expected progresses in pipeline may become possible explosive catalyst for stock price. For Jumpcan, we highlight that FY17 & 18Q1growth is very strong, PAOL and SGYX pill entered into Shandong PDRL in Mar. And sales network is intensified and R&D is going well. Meanwhile, the company issued convertible bonds to fund capacity expansion, which is believed to pave way for future growth.

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