20171009-大华继显-Regional_Morning_Notes_20页_1mb

Regional Morning Notes Summary

Core Content Overview

This document provides a summary of stock market updates and analysis for several Asian countries on Monday, 09 October 2017. It includes company-specific updates, key financials, valuation metrics, and market outlook for various firms, along with regional economic assumptions and upcoming corporate events.

Main Points by Region

China

• TAL Educational Group (TAL US)
  • Update: TAL is expected to report strong 2QFY18 results with non-GAAP net profit growth of 17-25% yoy.
  • Enrolment Growth: Enrolment is projected to grow 65% in FY18, up from the previous estimate of 55%, due to the opening of 180 new centres.
  • Target Price: Raised from US$30.50 to US$40.00.
  • Key Financials:
    • Revenue expected to reach US$470m-480m for 2QFY18 (up from US$446m).
    • Net profit (rep./act.) is forecasted at US$257m for FY18, with a target of US$629m for FY20.
    • EPS is projected to increase from US$31.4 to US$122.6 by FY20.
  • Valuation: Maintained BUY rating with an upside of +18.1%.
  • Key Assumptions:
    • Enrolment growth of 65% in FY18, 45% in FY19, and 40% in FY20.
    • Net debt to equity ratio expected to drop from 75.0% to 14.4% by FY20.

Indonesia

• Unilever Indonesia (UNVR IJ)
  • Update: 3Q17 results are expected to show a slight qoq improvement in sales volume, driven by 9 more working days than 2Q17.
  • Profit Growth: Profit growth is likely to be in double-digits due to improved input costs and strong performance in the food segment.
  • New Product: "Hijab Fresh" hand and body lotion, targeting Muslim women, is expected to break sales records.
  • Target Price: Maintained at Rp53,650 with an upside of +7.4%.
  • Key Financials:
    • Revenue forecasted at Rp44,529m for 2017F, with a 17.1% net margin.
    • Food segment operating profit expected to grow >50% yoy.
    • HPC segment shows 0.9% revenue growth and 2.1% operating profit decline in 1H17.
  • Valuation: Maintained BUY rating with a PE of 50.1x.

Malaysia

• Sector Overview: Oil & Gas
  • Companies: Bumi Armada and Yinson are expected to remain internationally competitive and benefit from FPSO market recovery.
  • Contract Tenure: Both have remaining firm contract tenures of >6 years.
  • Debt-to-EBITDA: Net debt/adjusted EBITDA ratio is expected to be <4x.

Singapore

• First Resources (FR SP)
  • Update: Likely to report higher earnings in 3Q17 due to increased production and better downstream contribution.
  • Share Price: Current price reflects better earnings.
• Sembcorp Marine (SMM SP)
  • Update: Borrow deal likely clears concerns of additional provisions, leading to an upgrade to BUY.
  • Target Price: Raised from S$1.74 to S$1.90.

Thailand

• Central Plaza Hotel (CENTEL TB)
  • Update: 3Q17 results are expected to show a 6% yoy growth in core profit.

Key Indices Performance

Top Picks

Corporate Events

Summary of Key Metrics

TAL Educational Group (TAL US)

• Share Price: US$33.87
• Target Price: US$40.00
• Upside: +18.1%
• PE (x): 125.2 (2017), 75.8 (2018F), 49.5 (2019F), 32.0 (2020F)
• P/B (x): 4.3 (2017), 3.1 (2018F), 2.2 (2019F), 1.5 (2020F)
• EV/EBITDA (x): 85.6 (2017), 48.8 (2018F), 33.2 (2019F), 21.6 (2020F)
• Net Margin (%): 14.7 (2017), 14.8 (2018F), 15.3 (2019F), 17.0 (2020F)
• ROE (%): 28.4 (2017), 33.4 (2018F), 36.4 (2019F), 39.0 (2020F)

Unilever Indonesia (UNVR IJ)

• Share Price: Rp49,975
• Target Price: Rp53,650
• Upside: +7.4%
• PE (x): 59.7 (2016), 50.1 (2017F), 43.1 (2018F), 40.9 (2019F)
• P/B (x): 81.1 (2016), 62.7 (2017F), 50.8 (2018F), 46.5 (2019F)
• EV/EBITDA (x): 41.5 (2016), 35.4 (2017F), 30.7 (2018F), 29.2 (2019F)
• Net Margin (%): 16.0 (2016), 17.1 (2017F), 16.9 (2018F), 16.0 (2019F)
• ROE (%): 134.1 (2017F), 141.1 (2018F), 130.2 (2019F)

Key Insights and Outlook

• TAL Educational Group: Strong enrolment growth from new centres and summer promotions is expected to boost net profit and earnings. The company is also seeing traction from online courses and a dual-teacher model.
• Unilever Indonesia: The food segment is expected to drive significant profit growth due to low coconut sugar prices, while the HPC segment is improving with new product launches and better sales volume.
• Market Recovery: Companies in the Oil & Gas sector, such as Bumi Armada and Yinson, are expected to benefit from the FPSO market recovery.
• Online School: Online learning is gaining traction, with potential for future growth and diversification in student segments.
• Valuation: Both TAL and Unilever Indonesia are maintained in BUY ratings, with TAL's target price increased due to stronger earnings expectations.

Summary of Key Assumptions

Conclusion

The report highlights positive outlooks for TAL Educational Group and Unilever Indonesia, with both showing strong growth potential in their respective sectors. TAL is expected to benefit from aggressive expansion and improved enrolment, while Unilever Indonesia is projected to see profit growth from the food segment and new product launches. Other sectors, such as Oil & Gas in Malaysia, are also expected to see recovery and continued competitiveness. Overall, the report emphasizes the importance of market trends, corporate events, and strategic moves in shaping future performance.