中国金融业-China to Push Forward “Zombie Enterprise” Clean Up-Deutsche Bank

Deutsche Bank Markets Research Asia China Banking / Finance Banks Periodical China Financial Daily Date 24 July 2017 China to Push Forward “Zombie Enterprise” Clean Up ________________________________________________________________________________________________________________ Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. Hans Fan, CFA Research Analyst (+852 ) 2203 6353 hans.fan@db.com Jacky Zuo Research Associate (+852 ) 2203 6255 jacky.zuo@db.com Top picks ICBC (1398.HK),HKD5.36 Buy Bank of China (3988.HK),HKD3.76 Buy Source: Deutsche Bank Companies Featured ICBC (1398.HK),HKD5.36 Buy China Construction Bank (0939.HK),HKD6.35 Buy Agri. Bank of China (1288.HK),HKD3.62 Buy Bank of China (3988.HK),HKD3.76 Buy Bank of Communications (3328.HK),HKD5.72 Buy China Merchants Bank (3968.HK),HKD24.75 Hold China CITIC Bank (0998.HK),HKD5.04 Hold China Minsheng Bank (1988.HK),HKD7.97 Hold Chongqing Rural Bank (3618.HK),HKD5.52 Hold CITIC Securities-H (6030.HK),HKD16.18 Buy Haitong Securities-H (6837.HK),HKD12.80 Hold Shanghai Pudong Bank (600000.SS),CNY13.45 Hold Industrial Bank (601166.SS),CNY17.84 Sell China Everbright Bank (601818.SS),CNY4.27 Sell Ping An Bank (000001.SZ),CNY10.89 Hold Bank of Beijing (601169.SS),CNY7.93 Buy Bank of Nanjing (601009.SS),CNY8.13 Sell Bank of Ningbo (002142.SZ),CNY15.96 Sell Bank of Chongqing (1963.HK),HKD6.74 Sell Huishang Bank (3698.HK),HKD3.86 Sell Source: Deutsche Bank What is included here? China to Push Forward “Zombie Enterprise” Clean UpCCB AMC Subsidiary Received Approval from CBRCTrust Companies 1H17 Profit Up 8% YoY with Divergent IndividualPerformanceState Council Released Consultation Paper on PPPLarge Increase in NBFI Lending in June Not Signal Higher LeverageChina Liquidity Monitor – PBOC Injects Rmb220bn Net Liquidity via OMOinto the Market on MondayTop Stories China to Push Forward “Zombie Enterprise” Clean Up (Wallstreetcn, July 23) Post national financial work conference, SASAC held meeting on July 19 to discuss related matters and said it will push forward clean-up of zombie enterprise and help SOEs to deleverage. SASAC will soon release guidelines of SOE deleverage and risk prevention. It supports de-capacity, debt restructuring, direct financing and debt-to-equity swap to resolve debt problems in SOEs. Guangdong province and Hebei province also held meetings and said to accelerate identification and clean-up local zombie enterprises. So far 12 central SOEs have signed agreement to conduct structuring or debt-to-equity swap. Guangdong province specified to complete Rmb45bn equity-to-equity swap for 3 loca