20161014-大华继显-Regional_Morning_Notes_48页_2mb

Regional Morning Notes Summary

Core Content Overview

This document is a comprehensive report from 14 October 2016, covering economic updates, sector developments, corporate highlights, and market insights for various regions including China, Hong Kong, Indonesia, and Malaysia. It includes analysis of trade data, infrastructure investments, corporate performance, and investment recommendations.

Main Points by Region

China

• Trade:

  • Trade growth weakened in September 2016 due to a high base effect from the previous year.
  • Export value in USD terms dropped 10.0% yoy and 3.2% mom, with declines in major markets like the US, Japan, and the EU.
  • Import value fell 1.9% yoy but rose 2.9% mom, indicating some improvement in domestic demand.
  • The PBOC is unlikely to sharply depreciate the renminbi and will rely more on fiscal expansion to stabilize growth.

• Infrastructure:

  • The government announced the third batch of PPP projects with a total investment of Rmb1.17t, signaling continued support for infrastructure development.
  • Leading contractors like CRCC and CRG showed strong new-order growth, with CRCC achieving 22.0% yoy growth in new contracts for 9M16.
  • The government aims to complete contract signing for the first two batches by end-2017 and end-2016 respectively, with a focus on accelerating PPP progress.

• Corporate Highlights:

  • China Vanke (2202 HK): Maintained as a BUY with a target price of HK$22.99. Defensive products and a strong financial position help cushion against market uncertainties.
  • Coslight Technology Int'l Group (1043 HK): Net profit growth is supported by the EV battery sector.
  • Geely Auto (175 HK): Strong product pipeline supports a secular growth story, with a target price of HK$10.00.

Hong Kong

• Corporate Highlights:
  • CT Environment (1363 HK): Benefiting from China's improving environmental standards.
  • Top Picks:
    • Air China (753 HK): Target price HK$5.06.
    • Ping An Insurance (2318 HK): Target price HK$40.30.
    • Ciputra Property (CTRP IJ): Target price HK$635.00.
    • Indosat (ISAT IJ): Target price HK$9,500.00.
    • Genting Bhd (GENT MK): Target price HK$7.94.
    • City Dev (CIT SP): Target price HK$8.77.
    • OCBC (OCBC SP): Target price HK$10.30.
    • Bangkok Dusit (BDMS TB): Target price HK$20.80.
    • Siam Cement (SCC TB): Target price HK$500.00.
  • Sell: Hartalega (HART MK) with a target price HK$3.10.

Indonesia

• Bank Negara Indonesia (BBNI IJ):
  • 3Q16 results indicate an inflection point may have arrived.
  • The stock is recommended as a BUY with a target price of Rp6,800.

Malaysia

• Plantation Sector:
  • POTS 2016 expects CPO prices to weaken before a rebound in 1H17 due to low production.
• Corporate Highlights:
  • Inari Amertron (INRI MK): Multi-pronged expansion and growth in the RF segment.
  • Bumi Armada (BAB MK): Four floating projects are expected to be delivered by October 2016, contributing to cash flow in 2017.
• Top Picks:
  • Inari Amertron (INRI MK): BUY with a target price RM3.42.
  • Bumi Armada (BAB MK): BUY with a target price RM0.92.

Key Indices

Key Assumptions

Top Picks Summary

Corporate Events

Conclusion

The report highlights the slowdown in trade for China, the acceleration in PPP projects, and the ongoing challenges in global trade. Despite this, infrastructure investment remains a key growth driver, supported by government policies and abundant liquidity. The property sector is expected to transition from primary sales to secondary market activities, with China Vanke being a strong player in this shift. Corporate highlights in other regions, such as Malaysia's plantation sector and Indonesia's banking sector, show potential for growth, with specific companies highlighted as BUY or SELL based on their performance and outlook.