HK Stock Picks of the Month
Come join us in this presentation as we share our views on these companies and why they have the potential to outperform the market in the longer term.
1. ENN Energy 新奧能源 (2688 HK)
The NDRC has formally released regulations on NG transmission price and UOB Kay Hian thinks that there is little likelihood for a margin squeeze in the city gas distribution industry. The industry is expected to broadly benefit from the reform, which may help boost more NG consumption. ENN Energy, one of the leading piped gas distributors in China, guided the piped gas sales volume to rise 10-12% yoy in 2016, which should see sustainable growth.
2. Nine Dragons Paper 玖龍紙業 (2689 HK)
As the largest containerboard manufacturer in China, Nine Dragon Paper is benefiting from industry consolidation, driven by the closure of small plants amid tightened environmental regulations. Due to improved supply-demand balance, NDP has raised product prices twice year-to-day, boosting FY16 core profit by over 100%. NDP will further raise prices in 4Q16, thereby underpinning margins.
3. CT Environment 中滔環保 (1363 HK)
CT Environment has 3 major businesses – industrial waste water treatment, sludge, solid waste segment and hazardous waste treatment. The company has a number of new projects under construction, including industrial waste water treatment of 230,0003 cubic metre/day and solid waste of 3394 tonnes/day capacity, representing 23% and 60% of its current capacity respectively. The above projects in pipeline are expected to support solid earnings growth in the long term.
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