Left Brain Right B - the DBS Vickers Securities Equities Research

Regional Equity Strategy 4Q 2009
Country Assessment
Economic Indicators
2005A 2006A 2007A 2008A 2009F 2010F
China
GDP Growth (%) 10.4 11.6 13.0 9.0 8.0 9.0
FDI (US$bn) 72 73 84 108 70 80
Exports (yoy %) 28 27 26 17 -21.0 22
Retail Sales (yoy %) 12.9 13.7 16.8 21.6 16.0 17.5
CPI (yoy %) 1.8 1.5 4.8 5.9 -1.0 3.0
Hong Kong
GDP Growth (%) 7.1 7.0 6.4 2.4 -2.4 5.5
CPI (yoy %) 0.9 2.0 2.0 4.3 -0.1 1.0
Source: DBS Economics Research
Valuation – HSI
Index Earnings Growth (%) PE (x) Yield (%)
17-Sep 08A 09F 10F 08A 09F 10F 08A 09F 10F
Finance -42 21 30 21.6 18.0 13.9 3.6 2.7 3.7
Power, Infrastructure & Utilities -10 -6 26 14.3 15.3 12.1 3.0 3.1 3.6
Properties -23 8 4 20.1 18.5 17.8 2.1 2.1 1.9
ex Cheung Kong -6 -10 22 22.5 24.9 20.5 2.0 2.0 1.7
Hongs/Conglomerates -69 45 25 31.7 21.9 17.5 2.5 2.4 2.5
ex H utchison -90 515 4 116.2 18.9 18.1 2.2 2.0 2.2
Com m/Ind -57 42 35 43.3 30.4 22.6 2.0 2.0 2.4
Telecom & Media 34 -11 4 11.1 12.6 12.1 3.2 3.4 3.6
HSI 21769 -31 9 23 19.0 17.4 14.2 3.2 2.7 3.3
HSI ex Cheung Kong and Hutchison -30 10 24 19.3 17.5 14.2 3.2 2.7 3.3
Source: DBS Vickers
Valuation – HSCEI
Index Earnings Growth (%) PE (x) Yield (%)
17-Sep 08A 09F 10F 08A 09F 10F 08A 09F 10F
Consumer 9 23 12 19.2 15.6 13.9 0.8 1.5 1.7
Energy -19 16 26 20.6 17.7 14.0 1.8 2.0 2.6
Financials 17 19 31 18.4 15.5 11.8 1.7 1.7 2.2
Industrial Goods -22 -20 6 9.0 11.2 10.6 1.8 1.6 1.7
Information Technology -36 81 33 110.7 61.1 45.9 0.0 1.1 1.1
Materials -90 238 213 258.8 76.6 24.4 0.5 0.4 0.8
Utilities -130 nm 20 nm 17.9 15.0 2.3 3.0 3.6
Property & Construction -2 41 30 26.8 19.0 14.6 0.7 1.2 1.6
Services -61 0 0 18.4 -45.3 92.3 2.1 1.1 1.1
Telecom & Technology -87 430 39 92.0 17.4 12.5 1.8 1.4 2.1
HSCEI 12668 -12 20 36 21.6 18.1 13.3 1.6 1.6 2.1
Ex oil * -6.6 19.2 36.1 22.8 19.2 14.1 1.5 1.5 2.0
* Ex 386, 857
Source: DBS Vickers
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