CHINA_HEALTHCARE：CHINA_EDGE_P109：MONTHLY_DATA_TRACKER_JANUARY_2013-2013-01-31.ppt

,ben bei,january 29, 2013 china in charts 12/12: more recovery, what next? portfolio strategy research,december capped off a fairly robust 4q12 our china in charts monthly monitor presents 80+ charts of china high frequency data from the macro to the micro (industry, corporate, etc.). december data skewed to the positive still, despite some mixed trends in investment and consumption areas, possibly due to seasonality. upbeat industrial/sentiment data, but there were some blemishes industrial indicators continued to improve in dec overall - ip, pmi and trade data were all encouraging, especially export. sentiment also trended favorably as earnings revisions, account openings and a-share fund positions all noticeably improved together with a-share returns. investment and consumption data were mixed, however. overall fai held up but manufacturing fai decelerated. gfa new starts turned negative yoy again, although gfa completions and land sales picked up. commodity prices showed divergence. retail sales were solid but some data like dept,helen zhu +852-2978-0048 goldman sachs (asia) l.l.c. timothy moe, cfa +852-2978-1328 goldman sachs (asia) l.l.c. jason sun +86(10)6627-3187 beijing gao hua securities company limited +852-2978-1220 goldman sachs (asia) l.l.c.,store sss, auto sales weakened seasonality may be a likely culprit. chenjie liu,focus to shift from recovery to sustainability and risks we believe offshore (and more recently, onshore) investors higher expectations on chinas macro recovery are priced in amid the market rally in 4q12. with less room for more china cyclical positive surprises vs raised expectations, further equities upside hinges more on reform progress and liquidity/fundflows going forward, in our view. key factors to focus on include cpi, property/land prices, export resilience, and maintaining a proper balance between leverage increase and investment pace as these factors could pose cyclical risks later on in the year. november data largely positive, consumption activities in particular,+86(10)6627-3324 beijing gao hua securities company limited,investment/industrial activities,sep,oct,nov,dec,consumption activities,sep,oct,nov,dec,industrial production electricity generation oil production overall fai infra fai,retail sales dept store sales auto sales macau gaming ggr airline passenger traffic,property fai,policy and sentiment,sep,oct,nov,dec,mfgr fai gfa starts gfa completion land sales machinery sales commodities prices commodities destocking,total social financing fiscal conditions a-share equity fund position a-share account openings earnings revision industrial profits soe profits,note: up = better yoy vs. previous month, down = worse; sideways = unchanged. source: nbs, ceic, gs global ecs research goldman sachs does and seeks to do business with companies covered in its research reports. as a result, 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. for reg ac certification and other important disclosures, see the disclosure appendix, or go to /research/hedge.html. analysts employed by non-us affiliates are not registered/qualified as research analysts with finra in the u.s.,the goldman sachs group, inc.,goldman sachs,1),2),a.,b.,c.,d.,e.,3),a.,2,january 29, 2013,china,highlights from the latest charts: december data overall was still positive and reflected a sustained recovery trend that started a few months ago. industrial data was generally upbeat in december and the strong export data brought us positive surprises. investment data was a bit weaker, evidenced by slightly moderated fai and pullback in housing starts. consumption data was slightly mixed. policy and sentiment indicators were upbeat. our key observations from the december data: industrial activity still strengthened broadly: ip continued to improve on yoy and sequential basis. official pmi held up at above 50%, while hsbc pmi further increased. trade data was particularly strong in december after a short correction in november (there may be some seasonal distortion factors behind this, in our view). power consumption continued to climb, but power generation pulled back slightly. oil production was flattish. investments a more mixed month: december fai growth rate was broadly stable while manufacturing fai continued to trend down (mining and machinery fai slowed the most). property fai is stable vs. prior trend but monthly infra fai growth saw mild decline from novs peak (ytd flat). within infra fai, utilities and non- railway transport investment growth slowed, offsetting continuous acceleration in other sub-segments. property data leaned to positive although property new starts fell back to slightly negative growth in december, we saw an overall encouraging picture for property. developers gfa completions rebounded meaningfully in december together with non-residential completions. land sales rose further to about 50% yoy growth a strong rebound vs. negative growth for sept and prior months from higher volumes as well as price. weak starts in 2012 may mean fai growth risks in 2013, however. cscec new contract growth declined: as a good gauge of infra and property activity, cscecs new contracts in december rose on absolute levels compared to november, but saw a slowdown in terms of yoy growth rates. commodities weakened. steel prices rose since late 2012 and iron ore prices also increased against the backdrop of restocking. but, cement prices continue to pull back in most regions. coal prices gradually retreated further even as inventory levels stabilized. asp of aluminum and copper were flat although aluminum inventory declined further. according to our commodity team, the cement price drop was mainly driven by seasonality (project suspension due to winter). other than cement, commodities should be in a re-stocking cycle, including steel and copper on comparatively low inventory and improvement on downstream demand. however, such re-stocking may be interrupted by cny and only resume after the festival. capital goods data was also positive: hdt sales growths stabilized in december. excavator sales continued to pick up in terms of both volume and growth, which is in line with macro recovery trend. consumption indicators diverged; but should be in a cyclical recovery phase retails sales maintained its acceleration in december, from a top-down perspective. goldman sachs global economics, commodities and strategy research,b.,c.,d.,e.,4),a.,b.,c.,d.,3,january 29, 2013,china,department store sss growth meaningfully fell off from november peak level, however, likely due to seasonality effects (2012 cny was in jan, which was a positive boost to 2011 dec retail sales; while in 2013, cny is not until february). auto sales pulled back in december in terms of both volume and growth but remain at fairly strong levels. macau gaming ggr saw substantial pick up from vip segment cyclically but mild decline in mass market airline passenger traffic continued to improve in december policy and sentiment indicators sentiment recovering liquidity is more dependent on tsf, which remained loose: money supply decelerated further that m2 and loan extensions pulled back modestly. but, total social financing stabilized at relatively high levels. year end fiscal expenditure was conservative: fiscal expenditure rose in dec due to year-end effect. however, expenditure growth slowed from previous months (given less seasonality than past years). overall 2012 fiscal expenditure grew 15%, comparable to the original budgeted 14%. fiscal revenue actually rose by 13%, much higher than budget (9%). thus, fiscal deficit in 2012 was only around 1.6% of gdp, lower than budgeted 2%. price pressure continued to rise: cpi yoy leaped to 2.5% yoy in december largely due to food prices (cold weather driving up vegetable prices etc). ppi edged up a bit too. property asp in tier 1 cities corrected modestly, despite higher transaction volume. cpi is worth keeping an eye on. capital market sentiment enhanced: earnings revision sentiment improved in the past weeks despite remaining slightly net negative. a- share account and mutual fund account openings rose meaningfully thanks to strong a-share performance. a-share fund equity position also rose quickly in the past few weeks. our current market views: short-term bumpy, more drivers in 2q both onshore and offshore markets priced in cyclical recovery to a greater extent. china macro rebound sustained smoothly through 3-4q last year and ytd in 2013. we believe investors, including onshore investors who were comparatively more skeptical early on, have reset their cyclical expectations higher now (such adjustment of expectation was likely the main driver for the strong rally of mxcn in sept/oct and a-shares in late 2012). in addition to cyclical recovery, chinese equities were also recently boosted by some other factors like better liquidity prospects (offshore from qe and dm to em rotation, and onshore from higher qfii outlook and delayed ipos) as well as early expectations of economic reforms to come. upside depends on more reform and liquidity improvements we reiterate our view that reform progress will likely play an increasingly more important role in driving equity returns in 2013 on china markets. but we may need to wait until after the leadership transition completes in march before more concrete steps or evidence is witnessed. meanwhile, we keep an eye on potential risk factors. china macro may pose some risks in the quarters to come including inflation, property price control (property and land asps are both important) and rising leverage needed to support continuous infra fai. we think that the macro improvement is already known and accepted; the focus should move to whether the current trends are sustainable or not. goldman sachs global economics, commodities and strategy research,sep-09,sep-10,sep-11,mar-11,may-11,mar-10,may-10,mar-09,may-09,mar-12,may-12,nov-09,nov-10,nov-11,sep-12,jan-09,jan-10,jan-11,jan-12,jul-09,jul-10,jul-11,jul-12,nov-12,60,(%),4,january 29, 2013 macroeconomic indicators exhibit 1: ip growth (yoy and sequential) continued to rise; hsbc pmi also improved while official pmi stabilized,china exhibit 2: downstream industries were still de-stocking, while upstream industries stabilized,30.0,ip % yoy,ip % qoq (sa, ann),official pmi,hsbc pmi,rmb bn 40,upstream,downstream,25.0,55,35 30,20.0 25 50,15.0,20,10.0 5.0,45,15 10,40 5 0.0,35,0,-5.0 -5,-10.0,jan-09,apr-09,jul-09,oct-09,jan-10,apr-10,jul-10,oct-10,jan-11,apr-11,jul-11,oct-11,jan-12,apr-12,jul-12,oct-12,30,-10,source: ceic, nbs, gs global ecs research. exhibit 3: infra fai growth was flat in dec, while manufacturing fai decelerated further,source: ceic, nbs, gs global ecs research. exhibit 4: within infra, utilities and non-railway transport growth trimmed down but railway was still upbeat,total fai yoy real estate fai yoy,manufacturing/mining fai yoy other fai yoy,infrastructure fai yoy,ytd growth,total infrastructure transport (ex railway),utilities production and supply water conservancy & environment,railway transport education/healthcare/sports,60%,ytd,growth,90%,50% 70% 40% 50%,30% 20%,30% 10%,-10% 10% -30% 0%,jan-09,apr-09,jul-09,oct-09,jan-10,apr-10,jul-10,oct-10,jan-11,apr-11,jul-11,oct-11,jan-12,apr-12,jul-12,oct-12,-50%,jan-09,jul-09,jan-10,jul-10,jan-11,jul-11,jan-12,jul-12,source: nbs, ceic, gs global ecs research. exhibit 5: both cpi yoy and ppi yoy continued to pick up,source: nbs, ceic, gs global ecs research. exhibit 6: food price kept rising since oct largely due to vegetable prices,cpi % yoy,cpi % qoq (sa, ann),ppi % yoy,ppi % qoq (sa, ann),agricultural product price index(2000 level=100, lhs),agricultural product price yoy growth (rhs),20.0,250.0,25,% 15.0 20 200.0 10.0 15 5.0 150.0,0.0 -5.0,100.0,10,5 -10.0 50.0,-15.0 -20.0,0.0,0 -5,jul-09,oct-09 jan-10 apr-10,jul-10,oct-10,jan-11 apr-11,jul-11,oct-11 jan-12 apr-12 jul-12,oct-12 jan-13,source: ceic, nbs, gs global ecs research. goldman sachs global economics, commodities and strategy research,source: ceic, nbs, gs global ecs research.,50%,600,50,0,5,january 29, 2013 exhibit 7: most sub-segments within manufacturing fai continued to decelerate,china exhibit 8: fiscal expenditure amount surged in dec but declined yoy,ytd growth,minings oil and gas downstream,agriculture, food and beverage downstream metals and minings downstream,rmb bn,fiscal revenue,fiscal expenditure,machinery total manufacturing,transportation,2,500,fiscal balance fiscal expenditure yoy growth - rhs,fiacal revenue yoy growth - rhs,75%,45% 40% 35% 30% 25%,2,000 1,500 1,000 500 0,55% 35% 15%,-5% 20% -500,15% 10% 5% 0%,-1,000 -1,500,-25% -45%,jan-09,jul-09,jan-10,jul-10,jan-11,jul-11,jan-12,jul-12,source: ceic, gs global ecs research. exhibit 9: fiscal deposit dropped significantly mainly due to seasonal factor,source: ceic, mof gs global ecs research. exhibit 10: overall money supply maintained downward trend, incl m2 and loan extension,rmb bn 400 200 0 -200 -400 -600 -800 -1,000 -1,200,cn: deposit: new increased: fiscal monthly incremental fiscal deposit yoy growth-rhs,1400% 1200% 1000% 800% 600% 400% 200% 0% -200% -400%,rmb bn 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200,monthly incremental loan m2 yoy growth loan (medium & long term) growth yoy,m1 yoy growth loan (short term) yoy growth,(%) 45 40 35 30 25 20 15 10 5,-1,400,jan-09 apr-09 jul-09 oct-09 jan-10 apr-10 jul-10 oct-10 jan-11 apr-11 jul-11 oct-11 jan-12 apr-12 jul-12 oct-12,-600%,0 jan-09,jul-09,jan-10,jul-10,jan-11,jul-11,jan-12,jul-12,source: ceic, mof, gs global ecs research exhibit 11: trade data significantly rebounded in dec,source: ceic, nbs, gs global ecs research exhibit 12: summary table of key macro data in recent months,(yoy %) 90.0,export,import,key macro data ip (yoy %),jul-12 9.2,aug-12 8.9,sep-12 9.2,oct-12 9.6,nov-12 10.1,dec-12 10.3,fai (yoy %),20.4,19.0,22.2,22.2,20.7,19.9,70.0 50.0 30.0 10.0 -10.0,exports (yoy %) imports (yoy %) retail sales (yoy %) official pmi (%) hsbc pmi (%) cpi (yoy %) ppi (yoy %) m2 (yoy %) cny loans (yoy %) monthly incremental loan (rmb bn) chg of fiscal desposit (rmb bn),1.0 4.7 13.1 50.1 49.3 1.8 -2.9 13.9 16.0 540.1 427.4,2.7 -2.6 13.2 49.2 47.6 2.0 -3.5 13.5 16.1 703.9 40.6,9.9 2.4 14.2 49.8 47.9 1.9 -3.6 14.8 16.3 622.6 -369.8,11.6 2.4 14.5 50.2 49.5 1.7 -2.8 14.1 15.9 505.4 480.6,2.9 0.0 14.9 50.6 50.5 2.0 -2.2 13.9 15.7 522.0 -114.9,14.1 6.0 15.2 50.6 51.5 2.5 -1.9 13.8 15.0 454.3 -1192.7,-30.0 -50.0,jan-09,jul-09,jan-10,jul-10,jan-11,jul-11,jan-12,jul-12,source: ceic, nbs, gs global ecs research goldman sachs global economics, commodities and strategy research,source: ceic, nbs, gs global ecs research,insurance,banks,i.t.,utilities,healthcare,industrials,property,materials,property,energy,telcos.,cons.disc.,cons.stap.,mxcn,cons.disc.,utilities,healthcare,materials,industrials,energy,telcos.,cons.stap.,i.t.,banks,financials,cons.disc.,industrials,materials,cons.stap.,utilities,healthcare,energy,telcos,i.t.,mscichina,cons.stap.,financials,telcos,industrials,materials,i.t.,energy,cons.disc.,healthcare,utilities,csi300,csi300,feb-10,may-08,may-09,may-12,aug-12,nov-08,nov-09,aug-10,may-11,aug-11,nov-11,may-10,aug-08,aug-09,nov-12,feb-09,nov-10,feb-12,feb-11,11,14,6,january 29, 2013 markets and earnings exhibit 13: mxcn reached high teen digit returns in cy2012 thanks to valuation re-rating 70%,exhibit 14: a-share (csi300) also managed to deliver positive return thanks to year end rally 30%,china,60% 50% 40% 30% 20% 10% 0% -10% -20% -30%,earnings revision valuation change price performance,20% 10% 0% -10% -20% -30% -40% -50%,-40% -50% -60%,-60% -70% -80%,earnings revision valuation change price performance,source: msci, gs global ecs research exhibit 15: last four weeks mxcn index performed well despite earnings cut, led by financials and materials 10%,source: csi, gs global ecs research exhibit 16: last four weeks csi300 also rallied led by financials and industrials,8% 6%,earnings change valuation change price performance,15% 10%,earnings change valuation change price performance,4% 5% 2%,0% -2% -4% -6% -8% source: msci, gs global ecs research exhibit 17: earnings sentiment gradually improved in past weeks,0% -5% -10% -15% source: csi, gs global ecs research exhibit 18: stabilized gdp forecasts led to stable earnings,80%,number of analysts upgrades minus downgrades / total number of estimates,120,consensus gdp growth (%),consensus msci china eps integer (rhs),china 1-wk rev,msci china (right),60%,100,10,2010,12,40%,2011,20%,80,9,10,0%,60,8,2009,2013,2012,8,-20% -40%,40,7,2013,6,-60%,20,6,2011,2012,2010 4,-80%,0,5,2008,2009,4,2,jan-09,jul-09,jan-10,jul-10,jan-11,jul-11,jan-12,jul-12,jan-13,source: msci, gs global ecs research goldman sachs global economics, commodities and strategy research,source: msci, gs global ecs research,jan-10,sep-10,jan-11,jul-10,jul-11,mar-09,nov-09,jan-09,jul-09,sep-09,jan-13,may-10,nov-12,may-11,sep-11,jan-12,jul-12,sep-12,mar-12,may-09,may-12,mar-10,mar-11,nov-10,nov-11,jan-10,jul-10,sep-10,mar-12,may-10,mar-09,jan-12,may-12,nov-09,may-11,may-09,nov-12,jan-09,sep-09,mar-10,nov-10,sep-12,nov-11,jan-13,jan-11,jul-11,sep-11,jul-09,mar-11,jul-12,jan-10,jan-11,jul-10,jul-11,jan-12,apr-12,jul-12,jan-09,jan-13,oct-09,apr-09,apr-10,oct-12,jul-09,oct-10,apr-11,oct-11,jan-10,jul-10,mar-12,mar-09,jan-12,may-10,sep-10,may-11,nov-09,may-12,may-09,nov-12,sep-09,mar-10,jan-09,nov-10,sep-12,nov-11,jan-13,sep-11,jan-11,jul-11,jul-09,mar-11,jul-12,jan-12,jan-09,jan-12,jan-13,jan-10,oct-09,jan-09,apr-09,jan-13,jan-10,apr-09,oct-09,jan-11,apr-12,oct-10,apr-10,oct-12,oct-12,jan-11,jul-10,apr-12,jul-09,