Important: please refer to our disclosures and disclaimers at the end of this report.

22 MAY 2015

MAJOR MARKET INDICES Chg +/- Close pt % HSI 27,523.72 -61.33 -0.2 HSCEI 14,132.16 -103.74 -0.7 Turnover (HK$bn) 124.51 SHSECI 4,529.42 +83.13 +1.9 SHSECI 2,713.42 +94.10 +3.6 Dow 18,285.74 +0.34 +0.0 NASDAQ 5,090.79 +19.05 +0.4 S&P 500 2,130.82 +4.97 +0.2 FTSE 100 7,013.47 +6.21 +0.1 Nikkei 225 20,202.87 +6.31 +0.0 Source: Bloomberg

HSI FUTURES May 2015 Jun 2015 Closing 27,635 27,378 Change +42 +47 Prem./dis. to spot +111 -146 Volume 53,568 10,005 Open Interest 115,122 29,486 High 27,642 27,382 Low 27,551 27,293 Ex-dividend -4.85 -348.01 Source: Bloomberg

HSCEI FUTURES May 2015 Jun 2015 Closing 14,193 13,967 Change +52 +59 Prem./dis. to spot +61 -165 Volume 100,506 30,116 Open Interest 230,390 99,643 High 14,201 13,967 Low 14,121 13,892 Ex-dividend -8.77 -306.88 Source: Bloomberg SHANGHAI-HK STOCK CONNECT

Northbound Top 10 Turnover Stocks Stock Company Turnover Code (RMBm) 600585 Anhui Conch Cement 450.32 601318 Ping An Insurance 402.95 600881 Jilin Yatai 290.85 600519 Kweichow Moutai 239.95 600887 Inner Mongolia Yili 183.68 600036 China Merchants Bank 177.22 600009 Shanghai Intl Airport 176.88 601398 ICBC 164.74 600030 CITIC Securities 143.65 601166 Industrial Bank 138.57 Southbound Top 10 Turnover Stocks Stock Company Turnover Code (HK$m) 0493 GOME 213.25 2727 Shanghai Electric 144.99 2866 CSCL 138.40 1919 China COSCO 136.06 1060 ALI Pictures 116.38 0530 Goldin Finance 115.35 3333 Evergrande 112.35 1165 SFCE 110.95 1816 CGN Power 106.11 0981 SMIC 96.26 Source: HKEx BOND/ FOREX & COMMODITIES Exchange mth Close +/- Chg (US$) (US$) (%) Crude Oil NYMEX 07/15 60.72 1.74 2.95 Gold NYMEX 06/15 1,204.10 -4.60 -0.38 10 Yr Note CBOT 06/15 127.72 0.45 0.36 BP CME 06/15 1.5670 0.0127 0.82 EUR CME 06/15 1.1134 0.0014 0.13 Jap CME 06/15 82.69 0.1400 0.17 Source: Bloomberg

Hong Kong market to hover around current level over the short term Peripheral markets stay firm Germanys Finance Minister said possibility

of Greek debt default cannot be ruled out. The three major European stock indices rose 0.09-0.26%, respectively. US economic data are mixed. While initial jobless claims and leading economic indicator were better than expected, existing home sales and manufacturing data came in worse than expected. Dow closed flat, while S&P500 and Nasdaq rose 0.23% and 0.38%, respectively.

HSI forecast Though A-shares rose for a third day, the HSI did not follow

the uptrend. This reflects the lack of funds to support Hong Kong market upwards. The HSI is expected to hover around current level overt the short term. According to the ADR closing prices, the HSI is expected to open ~70 points higher. Expected trading range for today is 27,450-27,750.

Sector and stocks in spotlight Oil price rose for a second day. Nymex

crude oil for July delivery closed at US$60.72/barrel, up US$1.74 or 2.9%. CNOOC (883) and PetroChina (857) are worth attention.

Kaiser Choi Kaiser.choi@sctrade.com (852) 2820 7221

CHINA MERCHANTS HOLDINGS (0144) Whats new: Shenzhen Chiwan Wharf Holdings, a Shenzhen listed subsidiary of China Merchants Holdings, may be involved in the restructuring of West Shenzhen port assets of the parent company. Comment: Shenzhen Chiwan Wharf has 13 container and bulk cargo berths in Chiwan Port (Shenzhen), 3 container berths in Mawan Port (Shenzhen) and 5 bulk cargo berths in Machong Port (Dongguan). It also has an investment in Laizhou Wharf in Shandong Province. The restructuring is deemed to be related to the inclusion of port areas in Shekou, Chiwan and Mawan into the Guangdong Free Trade Zone. Since the business scale of Shenzhen Chiwan Wharf is far smaller than that of China Merchants Holdings, the parent company may start its restructuring with the Chiwan and Mawan ports of Shenzhen Chiwan Wharf first, which could possibly be extended to the Shekou Container Terminal of China Merchants Holdings later.

SHARE PRICE: HK$33.95

Source: Bloomberg

VOLUME FILTER Stock Company Price Change Volume Change code HK$ HK$ % m shares % 530 Goldin Financial 17.48 -13.37 -43.3 32.3 2,520.7 283 Goldin Properties 14.36 -9.94 -40.9 40.3 1,051.3 996 Carnival Group Int'l 1.51 -0.01 -0.7 67.9 555.3 3823 Tech Pro Technology 7.72 0.56 +7.8 31.4 293.1 520 Xiabuxiabu Catering 4.99 0.04 +0.8 2.2 252.0 631 Sany Heavy Equipment Int'l 2.37 0.38 +19.1 47.9 234.2 517 COSCO Int'l 5.69 0.22 +4.0 19.0 226.7 925 Beijing Properties 0.80 0.05 +6.7 69.7 198.6 1211 BYD Co 54.55 4.45 +8.9 24.4 190.8 846 Mingfa Group Int'l 2.17 -0.07 -3.1 1.7 182.3 The Volume Filter is a tool to spot stocks where there is an increase in trading activity, which may not always be apparent by a change in the share price. The last column in the table shows the percentage change in volume on the last trading day, relative to the average for that stock over the preceding month. The table shows the top 10 gainers by volume change, drawn from the members of Hang Seng Composite Index. Source: Bloomberg

3.0

8.0

13.0

18.0

23.0

28.0

33.0

38.0

May Jul Sep Nov Jan Mar May

22 MAY 2015

2 South China Group

AH PREMIUM/DISCOUNT MOVEMENT

H share H share close A share A share close H/A dis. (Prem.)# stock Company last day 1mth stock last day 1 mth last day 1mth Chg* code (HK$) (HK$) code (RMB) (RMB) % % % pt Expanded 995 Anhui Expressway 6.850 6.650 600012 12.350 8.650 55.7 38.5 17.1 317 Guangzhou Shipyard 32.650 34.950 600685 64.560 50.170 59.6 44.3 15.3 1108 Luoyang Glass 6.590 6.890 600876 16.990 12.900 69.0 57.3 11.7 2727 Shanghai Electric 7.900 8.050 601727 21.570 15.740 70.7 59.1 11.6 338 Shanghai Petrochemical 3.900 3.920 600688 8.540 6.590 63.5 52.4 11.0 Condensed 895 Dongjiang Environmental 43.500 30.400 002672 62.190 50.260 44.1 51.6 7.6 1071 Huadian Power Int'l 8.700 7.770 600027 8.530 8.130 18.5 23.6 5.1 347 Angang Steel 6.390 6.270 601939 7.030 7.360 27.3 31.9 4.6 2318 Ping An Insurance 113.000 109.900 601318 86.600 87.990 (4.3) 0.2 4.5 2009 BBMG Corp 9.050 8.630 601992 12.010 12.290 39.8 43.9 4.1 Hang Seng AH Prem. Index (Condensed) 127.3 128.09 0.8 *A shares prices have been converted to HK$ for calculation Source: Bloomberg, *South China Research

HK STOCKS ADR LAST CLOSING (MOST ACTIVE) Stock Company Closing (HK$) Rel to HK closing code HKEx ADR HK$ % 16 SHK Properties 131.00 132.19 1.19 +0.91 700 Tencent 156.80 158.09 1.29 +0.82 857 PetroChina 9.42 9.49 0.07 +0.73 762 China Unicom 13.54 13.63 0.09 +0.67 2388 BOC HK 30.65 30.78 0.13 +0.42 1398 ICBC 6.70 6.73 0.03 +0.39 2318 Ping An Insurance 113.00 113.39 0.39 +0.35 883 CNOOC 12.46 12.49 0.03 +0.28 941 China Mobile 103.40 103.64 0.24 +0.24 1 CK Hutchison 171.30 171.66 0.36 +0.21

Stock Company Closing (HK$) Rel to HK closing code HKEx ADR HK$ % 1088 China Shenhua Energy 19.10 19.13 0.03 +0.16 5 HSBC Holdings 74.25 74.37 0.12 +0.16 386 Sinopec 6.82 6.82 0.00 +0.04 3988 Bank of China 5.16 5.16 0.00 -0.05 2628 China Life Insurance 37.35 37.33 -0.02 -0.06 939 CCB 7.58 7.57 -0.01 -0.07 11 Hang Seng Bank 157.30 157.00 -0.30 -0.19 2600 Chalco 4.82 4.81 -0.01 -0.21 13 Hutchison Whampoa 116.10 115.76 -0.34 -0.30 66 MTR Corp 38.75 38.22 -0.53 -1.36

Source: Bloomberg

UPCOMING IPO IPO Stock Company Listing Price Mkt Cap Sponsor Business code date HK$ HK$m 6839 Yunnan Water H 27/05/15 5.00-5.80 6,670 CMS Integrated service providers in the municipal (IPO report) (Application lists closed) wastewater treatment & water supply 1301 D&G Technology 27/05/15 1.82-2.40 1,440 BOCOMI Design, manufacturing and sale (IPO report) (Application lists closed) of asphalt mixing plants 8355 i-Control 27/05/15 0.30-0.39 390 Pan Asia Video conferencing and multimedia (Listing by placing) audiovisual solution provider 6886 HTSC H 01/06/15 20.68-24.80 38,192 HTS/JP/UBS Securities firm (IPO report) (Application lists close: 22/ 05/ 15) 1113 CK Property 03/06/15 BoAML/HSBC Property developer (Listing by introduction) Sources:Bloomberg, Prospectus, South China Research

22 MAY 2015

3 South China Group

ECONOMIC DATA

Date Country Indicators Consensus Actual Previous 21/05/15 US Existing Home Sales (April) 5.23m 5.04m 5.21m 21/05/15 US Initial Jobless Claims (16 May) 270K 274K 264K 21/05/15 US Leading Index (April) +0.3% +0.7% +0.4% 21/05/15 US Philadelphia Fed (May) 8.0 6.7 7.5 22/05/15 US CPI (April) +0.1% +0.2% 26/05/15 US Consumer Confidence (May) 95.2 95.2 26/05/15 US Durable Goods Orders (April) -0.5% +4.4% 26/05/15 US New Home Sales (April) 500K 481K 29/05/15 US Chicago PMI (May) 53.0 52.3 29/05/15 US GDP (1Q2015) -0.9% +0.2% 29/05/15 US Personal Consumption (1Q2015) +2.0% +1.9% 29/05/15 US University of Michigan Confidence (May) 90.0 88.6 01/06/15 US Construction Spending (April) -0.6% 01/06/15 US ISM Manufacturing (May) 51.5 01/06/15 US Personal Income (April) 0.0% 01/06/15 US Personal Spending (April) +0.4% 02/06/15 US Factory Orders (April) +2.1% 02/06/15 US Domestic Vehicles Sales (May) 12.88m 02/06/15 US Total Sales (May) 16.46m 03/06/15 US ADP Employment Change (May) 169K 03/06/15 US ISM Non-Manufacturing (May) 57.8 03/06/15 US Trade Balance (April) -US$51.4bn 04/06/15 US Nonfarm Productivity (1Q2015) -1.9% 05/06/15 US Nonfarm Payrolls (May) 223K 05/06/15 US Unemployment Rate (May) 5.4% 06/06/15 US Consumer Credits (April) US$20.523bn 21/05/15 CH HSBC PMI Manufacturing (May) 49.3 49.1 48.9 27/05/15 CH Industrial Profits (April) -0.4% 28/05/15 CH Leading Index (April) 98.32 01/06/15 CH Manufacturing PMI (May) 50.2 50.1 01/06/15 CH Non-Manufacturing PMI (May) 53.4 03/06/15 CH HSBC PMI Services (May) 52.9 21/05/15 EURO-ZONE Consumer Confidence (May) -4.8 -5.5 -4.6 29/05/15 EURO-ZONE Money Supply M3 (April) +4.9% +4.6% 02/06/15 EURO-ZONE PPI (April) -2.3% 03/06/15 EURO-ZONE Retail Sales (April) +1.6% 03/06/15 EURO-ZONE Unemployment Rate (April) 11.3% 05/06/15 EURO-ZONE GDP (1Q2015) +1.0% 21/05/15 HK Composite CPI (April) +4.3% +2.8% +4.5% 28/05/15 HK Exports (April) -1.8% 28/05/15 HK Imports (April) -2.7% 28/05/15 HK Trade Balance (April) -HK$46.2bn 29/05/15 HK Money Supply M1 (April) +29.2% 29/05/15 HK Money Supply M2 (April) +15.2% 29/05/15 HK Money Supply M3 (April) +15.2% 02/06/15 HK Retail Sales Value (April) -2.9% 05/06/15 HK Foreign Currency Reserves (May) US$343.2bn

Source: Bloomberg

22 MAY 2015

4 South China Group

South China Financial Holdings Ltd

HEAD OFFICE 28/F, Bank of China Tower, 1 Garden Road, Central, HK Tel: (852) 2820 6333 Fax: (852) 2845 5765 URL: http://www.sctrade.com E-mail: research@sctrade.com Telex: 69208 SCSL LONDON OFFICE WAN CHAI OFFICE NORTH POINT BRANCH FORTRESS HILL BRANCH 4/F, Sabadell House, 120 Pall Mall, 19/F, Tesbury Centre, Shop 1 G/F, Majestic Apartments, Unit 02, 15/F, Olympia Plaza London SW1Y 5EA, 28 Queens Road East, 301-319 King's Road, 255 King's Road, United Kingdom Wan Chai North Point North Point Tel: (4420) 7930 9037 Tel: (852) 3196 6233 Tel: (852) 2979 4800 Tel: (852) 2570 4422 Fax: (4420) 7925 2189 Fax: (852) 2537 0606 Fax: (852) 2979 4898 Fax: (852) 2570 4688 HUNG HOM BRANCH KWUN TONG BRANCH YUEN LONG BRANCH TSUEN WAN BRANCH RM1002-03, Nan On Com Bldg Office G1, 15/F, Legend Tower, Shop D, G/F, Kar Ho Building, Unit A&B 17/F, Hang Seng Tsuen Wan Bldg 69A Wuhu Street, 7 Shing Yip Street, 27-31 Hong Lok Road, 289 Sha Tsui Road, Hung Hom Kwun Tong Yuen Long Tsuen Wan Tel: (852) 2330 5881 Tel: (852) 2191 2822 Tel: (852) 2442 4398 Tel: (852) 2614 1775 Fax: (852) 2627 0001 Fax: (852) 2793 3000 Fax: (852) 2479 4418 Fax: (852) 2615 9427

DISCLOSURES: This report is prepared and approved by the research team member(s) (Analyst) of South China Research Limited (SCRL). The analyst hereby declare the views expressed in this research report accurately reflect the analyst personal views about the subject companies( The Company ) and the securities covered in this report. In accordance with the applicable requirements and relevant definitions mentioned in the code of conduct issued by The Hong Kong Securities and Futures Commission, the Analyst confirm that neither the Analyst nor the Analysts associates (1) have dealt in or traded in the securities covered in this report within 30 days prior to the date of issue of this report; (2) will deal in or trade in the securities covered in this report three business days after the date of issue of this report; (3) serve as an officer of any of The Company; and (4) have any financial interests in The Company. The Analyst also declare the Analyst have not been, are not, and will not be receiving direct or indirect compensation for expressing the specific recommendations(s) or view(s) in this report. South China Financial Holdings Limited including its subsidiaries, and its associated companies (SCFH) may have financial interests in relation to The Company in respect of which are reviewed in this report, and such interests aggregate to an amount may equal to or more than 1 % of its market capitalization or 1% of its new listing issued shares covered in this report. One or more directors, officers and/or employees of SCFH may be a director or officer of the securities of The Company. SCFH and its affiliates, officers, directors and employees, excluding the Analyst, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) of The Company; and/or perform services or solicit business for The Company; and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. SCFH may have served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any of the entities mentioned in this report or may be providing, or have provided within the last 12 months, significant advice or investment services in relation to the investment concerned or a related investment or investment banking services to the shares issuer(s) mentioned in this report. SCFH may have received compensation for investment banking services from The Company within the preceding 12 months and/or may currently seeking investment banking mandate from The Company.

IMPORTANT: This report and the information and opinions provided or expressed herein have been prepared by SCRL and/or SCFH for the information of its or their respective clients only, and has been compiled with reasonable care using data, information, or sources believed to be true, reliable, and accurate at the time of publication. No representation or warranty whatsoever, whether express or implied, is made to the accuracy or completeness or otherwise of this report or any of the contents thereof. SCRL and/or SCFH and their or their directors, officers, associates, representatives, or employees accordingly do not accept any responsibility or liability whatsoever for any direct or consequential loss or damage of whatsoever nature arising from or as a result of the use, publication, or distribution in whole or in part of this report or any of its contents. The information and opinions contained in this report are or may be subject to change or revision without any notice. SCRL and/or SCFH and their or their respective directors, officers, associates, representatives, or employees may have positions or otherwise be directly or indirectly interested in the securities mentioned in this report or may buy, sell, or deal or offer to buy, sell, or deal in or with such securities from time to time, whether as principal for its or their own account or as agent or in any other capacity for or on behalf of another person. This report is not, and is not intended to be, nor constitutes any offer or solicitation for the purchase or sale or other dealing in the securities mentioned herein. Copyright protection and other rights exist or subsist in this report, which may accordingly not be used for any other purpose, nor sold, distributed, published, or reproduced in any manner without the express consent of SCRL. This publication is approved for distribution in the UK by South China Securities (UK), a firm authorized and regulated by the FSA. Investors, when reading this report, should understand and comprehend the investment objectives and its relevant investment risks, and consult their own independent financial advisers before making any investment decision when necessary.