20161005-大华继显-Regional_Morning_Notes_20页_1mb

Regional Morning Notes Summary - 05 October 2016

Core Content Overview

This document provides a regional update on financial and business developments across China, Indonesia, Malaysia, Singapore, and Thailand. It includes investment highlights, company updates, key financial metrics, and valuation analysis for selected firms. The focus is on MicroPort Scientific Corporation (853 HK), Waskita Karya (WSKT IJ), and other notable companies in the region.

Key Regions & Companies

China

• MicroPort Scientific Corporation (853 HK):
  • Re-initiate Coverage: BUY with a target price of HK$6.72.
  • Performance: Achieved a net profit turnaround in 1H16 and expanded operating margins.
  • Product Growth:
    • Third-generation Firehawk stent sales grew by 133% yoy.
    • Domestic orthopaedic sales increased by 78% yoy.
  • New Products:
    • Launch of Columbus, a 3D magnetic EP navigation system.
    • Development of TAVI and Firesorb.
  • Financials:
    • Net turnover expected to increase from US$355.3m in 2014 to US$491.4m in 2018.
    • EBITDA margin improved from 12.6% in 2015 to 24.6% in 2018.
    • Net profit expected to reach US$25.3m in 2016, US$48.8m in 2017, and US$59.2m in 2018.
  • Valuation:
    • EV/EBITDA of 9.0x in 2017.
    • Target price is based on 11.5x 2017F EV/EBITDA, with a 25% premium to Weigao (1066 HK) and a 20% discount to Medtronic (MDT US).

Indonesia

• Waskita Karya (WSKT IJ):
  • Update: Remains on track for rapid earnings growth.
  • New Contracts: As of mid-2016, booked Rp59t of new contracts, exceeding previous targets.
  • Target Price: Maintained at Rp3,500 with an upside of +30.1%.
  • Toll Road Projects:
    • Total portfolio length of 721km as of 2016.
    • Recent acquisitions include Semarang-Batang (187km) and Kayu Agung-Palembang-Betung (112km).
  • Financials:
    • Net turnover is projected to grow from Rp10,287m in 2014 to Rp44,351m in 2018.
    • EBITDA is expected to rise from Rp913m in 2014 to Rp5,182m in 2018.
    • Net profit forecast for 2016 is Rp1.73t, and for 2017 is Rp2.34t.
  • Leverage:
    • Interest-bearing debt increased to Rp16.5t in 2016.
    • Debt-to-equity ratio surged to 1.6x from 0.86x in 2015.
  • Catalysts:
    • Toll road asset monetisation is expected to be a major driver for share price growth.

Malaysia

• Malakoff Corporation (MLK MK):
  • Update: HOLD with a target price of RM1.80.
  • Activity: A site visit was conducted to the newly-commissioned Tg Bin Energy power plant in Johor Bahru.
  • Financials:
    • EPS (Rp) is expected to reach RM127.6 in 2016 and RM172.4 in 2017.
    • Net margin is projected to increase from 7.4% in 2015 to 10.9% in 2017.
  • Valuation:
    • PE (x) is 21.1 in 2016 and 15.6 in 2017.
    • EV/EBITDA is 14.9 in 2016 and 9.8 in 2017.

Singapore

• Sector Focus: REITs.
• Hospitality: The Golden Week is expected to have limited impact due to the "likely meek" performance.

Thailand

• Alpha Picks: Two new picks for October:
  • Bangkok Dusit Medical Services (BDMS TB)
  • KasikornBank
• Quality Houses (QH TB):
  • Update: BUY with a target price of Bt3.20.
  • Site Visit: Key takeaways from the visit to Ratchapruek zone.

Key Indices (as of 5 October 2016)

Top Picks (BUY)

Sell Recommendation

Key Assumptions

Corporate Events

Summary of Financial Highlights

• MicroPort Scientific Corporation:

  • Strong growth in high-end medical devices.
  • Operating margin expected to surge to 11.8% in 2016 and 14.3% in 2017.
  • High potential for EP segment with Columbus approved in 2016.
  • Target price of HK$6.72, based on 11.5x 2017F EV/EBITDA.

• Waskita Karya:

  • New contract booking expected to reach Rp70t in 2016.
  • Orderbook projected to grow to Rp102.8t and Rp132.7t in 2016 and 2017.
  • Toll road asset monetisation is a key catalyst for growth.
  • Net profit forecast reduced due to higher leverage, but still expects a 48% CAGR.

Conclusion

The document highlights the strong growth potential of MicroPort Scientific Corporation and Waskita Karya, with both companies showing significant progress in their respective sectors. MicroPort is a rising star in the medical devices industry, driven by high-end product launches and improved margins. Waskita Karya continues to benefit from its toll road projects and new contract bookings, with asset monetisation expected to be a key driver for future performance. Other markets such as Singapore and Thailand also show promising investment opportunities, with REITs and new stock picks highlighted.