CREDIT SUISSE - Asian Daily (Asia Edition) Summary
Core Content
This report covers various investment updates, analyst notes, and market insights from Credit Suisse for the Asian markets. It includes changes in earnings per share (EPS), target prices (TP), and ratings for several companies, as well as insights into regional and global market performance and upcoming events.
Key Investment Updates
EPS and TP Changes
| Company |
T+1 EPS |
T+2 EPS |
TP Chg |
TP Up/Dn |
Rating |
| BHP Billiton |
1 |
5 |
0 |
4 |
O (O) |
| Primary Health Care |
20 |
20 |
0 |
(5) |
N (N) |
| China Eastern Airlines - A |
- |
- |
- |
- |
Initiation |
| China Eastern Airlines - H |
- |
- |
- |
19 |
O (NA) |
| Anta Sports Products |
5 |
4 |
27 |
22 |
O (N) |
| China Modern Dairy |
n.m |
(26.6) |
(23) |
(20) |
U (U) |
| Lee & Man Paper |
5 |
16 |
6 |
20 |
O (O) |
| Powergrid Corporation |
1 |
1 |
0 |
21 |
O (O) |
| Tata Consultancy Services |
0 |
(2) |
0 |
19 |
O (O) |
| Lion |
14 |
14 |
24 |
7 |
N (O) |
| Com2uS Corporation |
(0.2) |
4 |
0 |
47 |
O (O) |
| Gamevil |
0 |
4 |
0 |
(3) |
N (N) |
| China Steel |
(3.1) |
(2.4) |
(2) |
1 |
N (N) |
| Largan Precision |
7 |
2 |
9 |
19 |
O (O) |
| Bangkok Expressway and Metro PLC |
2 |
5 |
21 |
10 |
O (O) |
| Ch Karn Chang |
17 |
(4.9) |
11 |
31 |
O (O) |
| Air China (H) |
(31) |
(30) |
(1.4) |
17 |
O (O) |
| China Southern Airlines - H |
(42) |
(30) |
(2.8) |
(29) |
U (U) |
| Cathay Pacific |
(18) |
(13) |
(2.5) |
(4) |
N (N) |
| Air China (A) |
(31) |
(30) |
(0.3) |
(22) |
N (N) |
| China Southern Airlines - A |
(42) |
(30) |
(3.1) |
(63) |
U (U) |
| Spring Airlines |
(27) |
(14) |
(9) |
25 |
O (O) |
Rating Changes
- Maintain OUTPERFORM: Largan Precision, Anta Sports Products, China Eastern Airlines - H, Lee & Man Paper, Powergrid Corporation, BHP Billiton, Ch Karn Chang, Bangkok Expressway and Metro PLC, Largan Precision
- Upgrade to OUTPERFORM: Anta Sports Products
- Downgrade to Neutral: Lion, Gamevil, China Steel
- Maintain Neutral: Primary Health Care, China Modern Dairy, Air China (H), Air China (A), China Southern Airlines - H, Cathay Pacific, China Southern Airlines - A, Spring Airlines
Upcoming Events
| Event |
Date |
Analyst |
| China Healthcare Tour |
18-19 July, Zhengzhou and Beijing |
Iris Wang |
| Shenzhen Auto Dealer Visit |
19 July, Shenzhen |
Bin Wang |
| India Macro Tour – Reforms & Reforms |
01-03 August, Mumbai, New Delhi |
Neelkanth Mishra |
| Indonesia Conference Site Trip – Surabaya |
17-18 August, Surabaya, Indonesia |
Jahanzeb Naseer |
| ASEAN Banks Tour |
22-26 August, Jakarta, Bangkok, Manila |
Sanjay Jain |
| India Internet Tour – Tip of the iceberg |
05-08 December, New Delhi, Mumbai, Bengaluru |
Anantha Narayan |
| 2016 Indonesia Conference |
15-16 August, Singapore |
Jahanzeb Naseer |
| 4th Asia Internet C-Level Conference |
24-26 August, Hong Kong/Singapore |
Manish Nigam |
| 17th Annual Asian Technology Conference |
07-09 September, Taipei |
Manish Nigam |
| Japan Kyoto Conference |
08-09 September, Kyoto |
Kenneth Fong |
| Macau Gaming Corporate Day |
13 September, Hong Kong |
Kenneth Fong |
Market Insights
India Automobiles Sector
- India is tightening emissions and safety standards rapidly, which could pose regulatory challenges.
- The market has re-rated auto stocks on potential GST implementation but has not adequately addressed the regulatory headwinds.
APAC Equity Strategy
- New report: Highlighting defensives with EPS cuts.
- Some companies have seen EPS cuts ranging from 13% to 32% for the 2016E consensus.
- Despite the risk of profit-taking, cyclicals are still favored over defensives due to valuation gaps and ROE considerations.
- Top cyclical picks: TSMC, Hon Hai, Samsung Electronics, Alibaba, POSCO, Angang, Hindalco, Rio Tinto, Hyundai Motors, Formosa Petrochemicals.
Asian Indices Performance
| Index |
Closing |
1D |
1W |
3M |
YTD |
| ASX300 |
5,375.42 |
0.4 |
3.5 |
5.0 |
2.4 |
| CSEALL |
6,401.90 |
0.0 |
1.4 |
0.0 |
(7.1) |
| Hang Seng |
21,561.06 |
1.1 |
4.1 |
1.1 |
(1.6) |
| H-SHARE |
9,010.10 |
1.1 |
4.8 |
(2.2) |
(6.7) |
| JCI |
5,083.54 |
(1.0) |
2.3 |
5.4 |
(5.4) |
| KLSE |
1,654.78 |
(0.3) |
0.2 |
(4.2) |
(2.2) |
| KOSPI |
2,008.77 |
0.2 |
1.8 |
(0.3) |
2.4 |
| KSE100 |
39,257.00 |
0.5 |
3.4 |
16.3 |
19.6 |
| NIFTY |
8,565.00 |
0.5 |
2.7 |
9.1 |
7.8 |
| TOPIX |
1,311.16 |
0.8 |
6.9 |
(3.7) |
(15.3) |
| PCOMP |
7,956.14 |
0.2 |
2.6 |
8.7 |
26.5 |
Asian Currencies (vs US$)
| Currency |
Closing |
1D |
1W |
3M |
YTD |
| A$ |
0.76 |
0.3 |
2.0 |
(1.2) |
4.8 |
| Bt |
35.11 |
(0.2) |
(0.3) |
0.2 |
(2.5) |
| JPY |
105.62 |
1.1 |
4.8 |
(2.9) |
(12.2) |
| NT$ |
32.02 |
(0.5) |
(1.0) |
(0.9) |
(2.4) |
| P |
47.03 |
(0.3) |
(0.2) |
1.9 |
0.3 |
| PRs |
104.79 |
0.2 |
0.2 |
0.2 |
0.1 |
| Rs |
66.91 |
(0.1) |
(0.9) |
0.4 |
1.1 |
| S$ |
1.35 |
- |
(0.2) |
(0.8) |
(5.0) |
| SLRs |
146.10 |
0.6 |
0.7 |
0.9 |
1.4 |
| W |
1,136.20 |
(0.8) |
(1.8) |
(0.8) |
(3.3) |
MSCI Asian Indices - Valuation & Performance
| MSCI Index |
EPS Growth (16E) |
EPS Growth (17E) |
P/E (16E) |
P/E (17E) |
Performance (1M) |
Performance (3M) |
| Asia F X Japan |
(0) |
4 |
12.1 |
11.2 |
3.5 |
26.6 |
| Asia Pac F X J. |
(2) |
1 |
12.8 |
12.0 |
2.5 |
24.8 |
| Australia |
(3) |
(13) |
15.7 |
14.5 |
3.5 |
26.6 |
| China |
(3) |
3 |
9.0 |
8.3 |
(4.3) |
(4.3) |
| Hong Kong |
(14) |
5 |
15.2 |
13.9 |
0.2 |
26.6 |
| India |
2 |
18 |
20.1 |
16.8 |
5.5 |
4.2 |
| Indonesia |
(9) |
11 |
17.2 |
15.4 |
11.2 |
18.9 |
| Japan |
6 |
3 |
12.3 |
11.5 |
1.5 |
(3.7) |
| Korea |
12 |
2 |
11.0 |
10.2 |
5.0 |
6.1 |
| Malaysia |
(2) |
2 |
16.4 |
15.1 |
5.2 |
7.2 |
| Philippines |
6 |
9 |
21.9 |
19.6 |
3.1 |
14.0 |
| Singapore |
(4) |
(1) |
12.2 |
11.4 |
0.3 |
5.7 |
| Taiwan |
(1) |
8 |
15.0 |
13.3 |
5.1 |
10.4 |
| Thailand |
3 |
6 |
12.2 |
11.5 |
4.5 |
21.1 |
Largan Precision Highlights
- Maintain OUTPERFORM
- EPS and TP Update: Largan raised its FY16-18E EPS by 2-7%, based on higher gross margin (GM) growth of 300-400 bps.
- Target Price: Raised from NT$3,400 to NT$3,700, based on 16x FY17E EPS.
- Key Performance: GM beat expectations for three consecutive quarters, driven by favorable product mix and lens spec upgrades.
- Outlook: Largan is expected to outgrow the iPhone supply chain in 3Q16 due to dual camera module demand and higher ASPs.
- Inventory Concerns: Inventory levels remain high at 112 days in 2Q16, attributed to shipment delays of the 5.5" dual camera model.
- ROE and P/E: Largan's ROE is at 34.6x, and its P/E ratio is at 13.8x, making it a quality name for the dual camera story.
Regional Insights
- China Auto Sector: Geely, BAIC, GAC, Dongfeng, and Great Wall beat expectations; BYD and Brilliance were in line.
- China Paper Sector: Positive supply story continues.
- China Airlines Sector: Solid June passenger traffic with RPK +12% YoY; Air China notes most load factor improvement.
- India Auto Sector: Regulatory tightening is a key concern, with potential impact on the sector.
- Singapore Market Strategy: 2Q16 results could drive further EPS cuts.
- Korea Economics: BoK kept rates unchanged but revised down growth forecasts.
Disclosure
- Credit Suisse may have conflicts of interest due to its business relationship with companies covered in its research reports.
- Investors should consider this report as only a single factor in making investment decisions.
