Investment positives
　　We initiate coverage of CITIC Limited with a HOLDrating and a TP of HK$12.0, implying 3.5% upside room:
　　Valuation now near historical average. Since the injectionof group assets, CITIC Ltd. trades at -50——+14% NAVdiscount/premium （avg. 24%）。 The current NAV discount of 32%is slightly lower than average, but still within 1x s.d. （-36%）。 Webelieve share price inflection is more likely to occur if it exceeds1x s.d. （-9.4%——-36%） and suggest range-bound trading.
　　Extensive deployment in financial （FIG） andnon-financial （non-FIG） businesses to bring long-terminvestment value:
　　Similar operating revenue mix as MSCI China Indexmakes it a proxy for investing in China. Revenue mix iscomparable given CITIC Ltd.'s sound sector deployment. Bothhave a high weighting in FIG and similar contribution frommanufacturing business （15.6% for CITIC Ltd & 14.3% forMSCI China Index）。
　　FIG & non-FIG earnings to improve. Stabilizing macroand assets quality may help drive a FIG earnings recovery,while rebounding raw material prices may boost profitability ofnon-FIGs, especially resource & energy and manufacturing.
　　We differ from the market, as we believe: S-T investmentvalue lies in discount deviations, while L-T value derives frombeing a proxy for investing in the Chinese economy.
　　Potential catalysts: S-T: NAV discount to exceed 1x s.d.; L-T:
　　1） non-FIG business earnings improve; and, 2） potential sales ofmainland residential property to COLI in 1H16）。
　　Financials
　　We expect 2015——18 net profit to record 4.6% CAGR, andFIG revenue contribution to reach 51.9/52.1/52.5% over2016——18e, with pre-tax profit contribution of 86.5/96.9/98.6%.
　　Valuation and recommendation
　　Based on SOTP and 30% holding discount, we derive a TP ofHK$12.0 （0.62x 2017e P/B）， implying 3.5% upside room.
　　Initiate with HOLD. Risks: fluctuations in commodity prices;deterioration of asset quality is worse than expected.