China Strategy:Fly like an Eagle

After a year of outperformance, multiples the same

    Earnings growth among our Eagle picks is keeping pace with share priceperformance, meaning forward earnings multiples are largely the same as whenwe launched our Eagle picks at the beginning of the year. Our selection grewearnings by 34% YoY in 1H16compared with a 7% decline for the overallmarket. The ROE of our Eagle picks was double the average for the Chinaequity universe despite their lower gearing. The selection trades on 16x forwardearnings with 33% forecast growth and an average ROE of 15%. Half of ourEagle picks trade on less than 12x forward earnings. Eight stocks offer dividendyields above 4%. Investors receive a free option on the overseas potential ofmost companies in our selection, in our view.