20140728-大华继显-Regional_Morning_Notes_22页_994kb

报告摘要

Regional Morning Notes Summary

Core Content

This document is a financial update from UOB Kay Hian dated Monday, 28 July 2014, providing insights into regional markets, particularly focusing on China, Thailand, and other Asian countries. It outlines key stories, sector updates, currency forecasts, stock impacts, and analyst views.

Main Points

Key Story: The Return of a Strong Dollar?

The end of QE3 by October 14 may lead to a reversal in the US dollar weakness, resulting in dollar appreciation.
Energy and offshore marine sectors are expected to benefit from a stronger dollar.
Consumer staples and aviation stocks are likely to be most affected due to their exposure to dollar fluctuations.

China: Power Sector Update

Strong earnings growth is expected to peak in 2H14 as coal prices are likely to bottom out.
Downgrade the power sector to MARKET WEIGHT, and Huadian Power to SELL, while CR Power is HOLD and CPI is BUY.
CPI is highlighted as a top pick due to its cheap valuation and potential asset injection from its parent company.
Datang Power is BUY with a revised target price of HK$4.50 based on a re-focused power business and lower fuel costs.
Huadian Power is SELL due to high sensitivity to tariff cuts and coal cost movements, leading to share price pressure.
SOE reform is identified as a long-term catalyst that could boost asset injections and sector efficiency.

Thailand: Company Updates

Big C Supercenter (BIGC TB) is HOLD with a target price of THB231.00.
Bangkok Dusit Medical Services (BGH TB) is BUY with a target price of Bt20.40.
Charoen Pokphand Foods (CPF TB) is BUY with a target price of Bt36.50.
Minor International (MINT TB) is BUY with a target price of Bt37.50.
2Q14 results show strong margin recovery for Big C, while BGH and CPF are expected to see net profit growth.

GDP and Monetary Policy Outlook

GDP growth is expected to be moderate across the region, with China at 7.3%, Thailand at 1.5%, and Malaysia at 5.6%.
Monetary policy in Thailand and Indonesia is growth-supportive, with policy rates kept at 2% and raised by 25bp in July, respectively.
Interest rates in the region are unlikely to match US rate hikes, leading to dollar appreciation.

Currency Forecast (UOBKH)

US dollar is expected to appreciate against the ruble, ringgit, and baht.
US$/Rmb is forecasted to rise to 6.30 by the end of 2014 and 6.40 by the end of 2015.
US$/Bt is expected to reach 33.00 by the end of 2014 and remain 33.00 by the end of 2015.

Key Information

Stocks Most Affected by US Dollar Appreciation

Company	Exposure to	% exposure to US$	Impact on bottom line for every 1% rise in US$	Comments
China East Air	Cost/Revenue	40	-60.0	Aviation sector most affected.
Air China	Loans/Cost/Revenue	40	-50.0	High exposure to US$ debt.
China South Air	Cost/Revenue	44	-47.0	Significant coal price exposure.
Indofood Sukses Maksur	Cost	-24	-6.2	Net liabilities in US$.
Kossan	Revenue	~100	4.0-5.0	US$-denominated exports.
Top glove	Revenue	~100	4.0-6.0	Natural hedge from raw material purchases.
SIA	Revenue	30-35	11.0	Strong impact on pre-tax profit.
Ezion Holdings	Net profit	~100	8.0	Exposure to multiple currencies.
HEXA	PBT/Asset	-5	14.6	Net asset position in foreign currency.

Earnings and Target Price Revisions

Company	2014F Net Profit (Rmbm)	2015F Net Profit (Rmbm)	Target Price (HK$)
Huaneng Power	11,880	12,522	10.20
Datang Power	5,116	5,196	4.50
Huadian Power	4,958	4,823	4.80
CR Power	11,016	11,862	23.70
CPI	2,849	3,102	4.60

Company Update: MicroPort Scientific Corporation (853 HK)

Downgraded to SELL due to low earnings visibility.
Expected to report a loss in 2014 due to expenses from the acquisition of OrthoRecon and net losses.
OrthoRecon is expected to report a revenue decline of 8% yoy in 2014, and contribute 53% of MicroPort’s total revenue.
New products and expansion of sales force are expected to drive long-term growth.
Uncertainties remain in integration and overseas business recovery.

Conclusion

The report emphasizes the impact of a stronger US dollar on various sectors and companies, with aviation, consumer staples, and energy sectors being the most affected. The power sector in China is expected to see peaking earnings due to coal price stabilization and potential tariff cuts, leading to a downgrade in some companies. MicroPort Scientific Corporation is downgraded to SELL due to low earnings visibility and integration challenges. The currency forecast suggests a positive outlook for the US dollar against local currencies in the region, influencing stock performance and corporate earnings.