20080828-Sun Hung Kai-Investment Daily Note

Summary
Equity Comments
􀂃 Company Report Highlights: Ju Teng (3336.HK, HK$4.30, Buy): Solid 1H
Results, Positive Outlook
Ju Teng’s 1H08 sales grew 59% yoy to HK$3.4bn on strong shipments, higher
ASPs (up 8% yoy in 1H08) and market-share expansion (from 28% in 2007 to
30% in 1H08). The net profit was up 79% yoy to HK$284m as the sales mix
shifted toward high-margin products (IMD casings made up 30% of 2007 sales
vs. 40% in 1H08) helping to widen the gross margin by 0.8 ppt to 15.6%, in line
with our estimate. Please refer to the report issued today.
􀂃 CNOOC (883.HK, HK$11.62, Buy): Strong Production and Higher Crude
Prices Beat Estimates
CNOOC announced its 1H08 results last night, with net profit up 89.3% yoy to
RBM27.542bn due to strong crude-oil and gas production coupled with record
crude prices. The operating profit was RMB31.326bn, 6.4% higher than our
estimate, while the net income was boosted by an exchange-rate gain of
RMB2.895bn (up 298.8% yoy). We have raised our target price to HK15.30,
implying 11X FY08F earnings, and upgraded our rating from Neutral to Buy.
􀂃 PetroChina (857.HK, HK$10.30, Sell): Higher Turnover Unable to Stem
Refining Losses
PetroChina’s first half profit fell 34% yoy to RMB53.615bn even though
turnover increased 40% yoy. The drop was mainly attributed to increased costs
in purchasing crude from overseas for its refineries, which were not passed
through to end users due to price caps on refined products. We maintain our Sell
rating and target price of HK$9.00.