20170725-大华继显-Regional_Morning_Notes_17页_1mb
报告摘要
Regional Morning Notes Summary - 25 July 2017
Core Content Overview
This document provides a detailed market analysis and investment insights for various regions and sectors, including China, Indonesia, Malaysia, and Singapore, with a focus on financial performance, market trends, and stock recommendations.
Key Regions & Sectors
China - Internet Sector
- Impact of US GAAP Changes: The updated US GAAP revenue recognition rules (ASC 606) will significantly affect tech companies, particularly in how they report revenue and costs. Companies that act as principals will see changes in cost recognition timing, potentially leading to improved profitability for cloud software firms.
- E-commerce & Online Travel Companies: Alibaba and Ctrip are not significantly impacted as they report commissions as revenue. JD.com, which reports total direct sales, may still be treated as a principal entity due to its control over goods/services.
- Stock Recommendations:
- Alibaba (BABA US): Buy recommendation with a target price of $173.00 (current price: $151.89).
- Ctrip (CTRP US): Buy recommendation with a target price of $66.00 (current price: $58.07).
- JD.com (JD US): Buy recommendation with a target price of $44.00 (current price: $43.08).
- Potential Impact: Cloud companies like AliCloud may benefit from delayed cost recognition, improving reported profitability.
Indonesia - PP London Sumatra Indonesia (LSIP IJ)
- Re-initiate Coverage: HOLD rating due to expected weak CPO prices overshadowing 2017 earnings.
- Earnings Outlook:
- 2017 earnings are expected to grow by 20.1% to Rp713 billion.
- 2018 earnings are projected to be flat at Rp720 billion due to declining CPO prices.
- Key Factors:
- Strong balance sheet with a significant cash reserve and zero debt.
- Expected increase in FFB production due to favorable weather and recovery from previous disruptions.
- Target price of Rp1,560, which is 1SD below its 5-year historical mean of 16.5x PE.
- Entry Price: Rp1,400.
Malaysia - Construction Sector
- 2H17 Outlook: Construction activity is expected to gain momentum, with rail-related projects dominating.
- Key Projects:
- LRT3 (RM9b) awards.
- ECRL (RM55b) groundbreaking.
- Pre-election Budget 2018 in October.
- Stock Recommendations:
- Ekovest (EKO): Buy recommendation with a target price of RM1.55 (current price: RM1.13).
- Gamuda (GAMUDA): Buy recommendation with a target price of RM6.00 (current price: RM5.26).
- IJM Corporation (IJM): Buy recommendation with a target price of RM3.95 (current price: RM3.50).
- Downgrade: Kerjaya Prospek to HOLD, with a target price of RM3.69, due to overperformance and potential overvaluation.
Singapore - REITs Sector
- Performance:
- MLT's 1QFY18 results are in line.
- FCT's 3QFY17 results are in line.
- Market Conditions:
- REITs are a stable investment with moderate growth expectations.
- No specific stock recommendations are provided for this sector.
Key Market Indices (as of 25 July 2017)
| Index | Previous Close | 1D % | 1W % | 1M % | YTD % |
|---|---|---|---|---|---|
| DJIA | 21513.2 | -0.3 | -0.5 | 0.6 | 8.9 |
| S&P 500 | 2469.9 | -0.1 | 0.4 | 1.3 | 10.3 |
| FTSE 100 | 7377.7 | -1.0 | -0.4 | -0.6 | 3.3 |
| AS30 | 5738.0 | -0.6 | -1.1 | -0.3 | 0.3 |
| CSI 300 | 3743.5 | 0.4 | 2.2 | 3.3 | 13.1 |
| FSSTI | 3310.8 | -0.1 | 0.4 | 3.2 | 14.9 |
| HSCEI | 10821.0 | 0.3 | 0.4 | 3.7 | 15.2 |
| HSI | 26846.8 | 0.5 | 1.4 | 4.6 | 22.0 |
| JCI | 5801.6 | 0.6 | -0.7 | -0.5 | 9.5 |
| KLCI | 1762.0 | 0.2 | 0.4 | -1.0 | 7.3 |
| KOSPI | 2451.5 | 0.1 | 1.1 | 3.1 | 21.0 |
| Nikkei 225 | 19975.7 | -0.6 | -0.7 | -0.8 | 4.5 |
| SET | 1576.7 | 0.2 | 0.2 | -0.4 | 2.2 |
| TWSE | 10461.3 | 0.2 | 0.0 | 0.8 | 13.1 |
| BDI | 977 | 1.3 | 7.1 | 12.3 | 1.7 |
| CPO (RM/mt) | 2600 | 0.2 | -0.5 | -0.3 | -18.7 |
| Brent Crude | 49 | 1.1 | 0.4 | 6.7 | -14.5 |
Top Picks Summary
| Company | Ticker | Recommendation | Target Price | Current Price | Potential Upside |
|---|---|---|---|---|---|
| Alibaba | BABA US | Buy | $173.00 | $151.89 | 13.6% |
| Ctrip | CTRP US | Buy | $66.00 | $58.07 | 13.6% |
| JD.com | JD US | Buy | $44.00 | $43.08 | 2.2% |
| PP London Sumatra | LSIP IJ | Hold | Rp1,560 | Rp1,420 | 9.9% |
| Ekovest | EKO | Buy | RM1.55 | RM1.13 | 37.1% |
| Gamuda | GAMUDA | Buy | RM6.00 | RM5.26 | 14.1% |
| IJM Corporation | IJM | Buy | RM3.95 | RM3.50 | 12.9% |
Key Analysts
- Julia Pan: Focus on China's Internet sector and LSIP (Indonesia).
- Edward Lowis: Analysis on LSIP's financials and CPO market.
- Ridhwan Effendy: Coverage of Malaysia's Construction sector.
Summary of Key Financials (LSIP IJ)
- 2017F Earnings: Rp713 billion (+20.1% yoy).
- 2018F Earnings: Rp720 billion (flat due to declining CPO prices).
- FFB Production: Expected to grow by 10.42% in 2017 to 1.35 million tonnes, and 5.69% in 2018 to 1.43 million tonnes.
- CPO Price Assumption: RM2,600/tonne for 2017 and RM2,400/tonne for 2018.
- Balance Sheet: Strong with significant cash reserves and zero debt.
- Target Price: Rp1,560 based on a 14.8x average 2017-18F PE, 0.5SD below 5-year historical mean PE.
Risk & Uncertainty
- CPO Market: Expected to weaken, which could limit upside for LSIP.
- Construction Sector: Potential for growth due to mega projects, but uncertainty remains due to market conditions and competition.
- GAAP Changes: Could impact revenue recognition for US-based companies, but limited impact on China's ADRs.
Conclusion
The report highlights the potential impact of US GAAP changes on tech companies in China, particularly cloud firms, and reiterates a Hold rating for LSIP due to the weak CPO market. In Malaysia, the construction sector is expected to benefit from rail-related projects, with a preference for infrastructure beneficiaries like Ekovest, Gamuda, and IJM Corporation. Overall, the report maintains an OVERWEIGHT stance on certain sectors and stocks, while cautioning against overvaluation in others.
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