Made in China-APAC Upstream FITT:U/G CNOOC to Buy;Consumer,Sportswear,Healthcare;TVB

At USD55 Brent and with OPEC making good on its promise to cut production, the risk of underexposure to E&P stocks has become clearer. Most APAC producers should return to profit in 2017 while cash flow and dividend improve with reduced capex from 2013. But the longer-term outlook has shifted. Reserves are being depleted, oil production is falling 3-4% p.a. and structural growth is limited in APAC. A simplistic beta approach is thus inadequate and we now assess the sector based on a matrix of 16 factors across 4 categories: asset quality, growth, financial strength and valuation. The results rank Oil Search, CNOOC and ONGC as our top three picks. We upgrade CNOOC to Buy. (Johnson Wan- 852 2203 6163)