20170717-大华继显-Regional_Morning_Notes_28页_2mb

报告摘要

Regional Morning Notes Summary - 17 July 2017

Core Content Overview

This summary provides a detailed analysis of the financial markets and key companies in China, Indonesia, Malaysia, and Singapore, with a focus on Auto Dealers and Financials. It includes stock recommendations, earnings updates, market performance, and key assumptions for the upcoming year.

Main Points

China: Auto Dealers

BMW 5-Series Launch: The market response to the new BMW 5-Series is stronger than expected, with no discounts and a premium in some cases. The waiting list for the new model is as long as three months.
Earnings Growth: BMW dealers such as Zhengtong Auto Services, Yongda Auto, and Meidong Auto have all reported over 100% and 40% year-over-year (yoy) profit growth in 1H17, exceeding expectations.
Target Price Adjustments:
- Zhengtong Auto (1728 HK): Target price raised to HK$9.50 from HK$6.20.
- Yongda Auto (3669 HK): Target price raised to HK$14.50 from HK$11.80.
- Meidong Auto (1268 HK): Target price raised to HK$4.00 from HK$2.70.
Key Factors:
- New 5-Series: Lower manufacturer suggested retail prices (MSRPs) and strong demand have improved dealer margins.
- Auto Financing Business: A major driver of growth for Zhengtong.
- Roll Over Target PE: Target PE from 2017 to 2018, reflecting continued growth expectations.
Risk Factors:
- Interest Cost: A 100bp increase in average interest cost could reduce net profit by 1-4%.
- Foreign Exchange: A 5% depreciation of the RMB against the USD is expected to affect earnings.

China: Financials

5th National Financial Work Conference: Focused on preventing financial risks, deleveraging SOEs, and deepening financial reforms.
Sector Outlook:
- Large SOE Banks: Likely to benefit due to their strong deposit franchise and resilience to liquidity tightening.
- Brokers with Strong Investment Banking: Expected to outperform due to emphasis on direct financing and IPO approvals.
Top Buys:
- CCB (939 HK): Target price HK$7.36, with a strong CASA ratio and CET-1 CAR.
- ICBC (1398 HK): Target price HK$5.95.
- CITICS (6030 HK): Target price HK$19.40, with 15-20% of revenue from investment banking.
Market Weight:
- Maintained for both Auto Dealers and Financials sectors.

Key Indices

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	21637.7	0.4	1.0	1.2	9.5
S&P 500	2459.3	0.5	1.4	1.1	9.8
FTSE 100	7378.4	-0.5	0.4	-1.1	3.3
AS30	5808.7	0.5	1.1	0.0	1.6
CSI 300	3703.1	0.4	1.3	5.2	11.9
FSSTI	3287.4	1.6	1.8	1.7	14.1
HSI	26389.2	0.2	4.1	3.0	19.9
KLCI	1755.0	0.1	-0.3	-2.0	6.9
KOSPI	2414.6	0.2	1.5	2.2	19.2
Nikkei 225	20118.9	0.1	1.0	0.9	5.3
SET	1577.8	-0.1	0.5	0.1	2.3
TWSE	10443.9	-0.2	1.4	2.8	12.9
BDI	900	1.4	9.8	5.8	-6.3
CPO (RM/ml)	2630	-1.0	-1.1	-1.2	-17.8
Brent Crude	49	0.2	4.6	3.5	-13.7

Top Picks

Auto Dealers

Yongda Auto (3669 HK): BUY, Target price HK$14.50, Upside +63.7%.
Meidong Auto (1268 HK): BUY, Target price HK$4.00, Upside +63.9%.
Zhengtong Auto (1728 HK): BUY, Target price HK$9.50, Upside +25.5%.

Financials

CCB (939 HK): BUY, Target price HK$7.36.
ICBC (1398 HK): BUY, Target price HK$5.95.
CITICS (6030 HK): BUY, Target price HK$19.40.

Corporate Events

Event	Venue	Start	End
Luncheon with United Overseas Bank	Thailand	18 Jul	18 Jul
Roadshow with Citic Envirotech Ltd	Taipei	18 Jul	19 Jul
Analyst Marketing on Singapore Strategy & Small & Mid Caps	Taipei	19 Jul	21 Jul
Roadshow with Jacobson Pharma	Shanghai	28 Jul	28 Jul
Visit to Sarawak Corridor of Renewable Energy	Sarawak	1 Aug	3 Aug
Luncheon with Singapore Post	Singapore	4 Aug	4 Aug
Roadshow with Top Glove Corporation	US/Canada	5 Sep	12 Sep

Key Assumptions

Region/Country	2016	2017F	2018F
US	1.6	2.5	2.5
Euro Zone	1.7	1.8	1.6
Japan	1.0	0.9	1.2
Singapore	2.0	2.4	2.5
Malaysia	4.2	5.0	4.9
Thailand	3.2	3.3	3.3
Indonesia	5.0	5.2	5.5
Hong Kong	1.9	2.0	2.0
China	6.7	6.3	6.3
Brent Crude	45	55	58
CPO	2,653	2,600	2,500

Risks

Interest Cost: A 100bp increase in average interest cost could lower net profit by 1-4%.
Foreign Exchange: A 5% depreciation of the RMB against the USD could drag down net profit by 2-5%.
Liquidity Tightening: Continued focus on preventing financial risks may affect smaller banks more due to tighter credit and interbank activities.