20160718-大华银行-Regional_Morning_Notes_34页_1mb

报告摘要

Regional Morning Notes Summary

Core Content Overview

This document provides a comprehensive analysis of economic activity and sector updates for China, Malaysia, and Singapore, as well as key financial indices and investment recommendations for the period of Monday, 18 July 2016. It outlines the performance of various sectors, highlights key economic indicators, and presents corporate events and analyst views.

Main Points and Key Information

China: Economic Activity

GDP Growth: 2Q16 GDP growth was 6.7% yoy, slightly above market expectations of 6.6% yoy. This growth was driven by strong fiscal and monetary support.
Fixed Asset Investment (FAI): FAI growth was 9.0% yoy in 6M16, down from 9.6% yoy in 5M16, primarily due to weak private investment. However, infrastructure investment remained robust, growing 20.9% yoy in 1H16, supported by government expenditure.
Industrial Production (IP): IP growth rebounded to 6.2% yoy in June, beating market expectations of 5.9% yoy. Manufacturing sectors such as automobiles, electronics, and machinery showed strong growth.
Retail Sales: Retail sales rose 10.6% yoy in June, outperforming market consensus of 9.9% yoy, supported by auto sales and a booming property market.
Money Supply: M2 money supply grew 11.8% yoy to Rmb149.05t, while M1 money supply increased 24.6% yoy to Rmb44.36t. The divergence was attributed to increased local government bond issuance.
Monetary Policy: The PBOC is expected to cut the required reserve ratio (RRR) by 50bp in late-July to further support liquidity in the economy.

China: Sector Updates

Cement Sector

Demand Growth: Robust infrastructure investment and resilient property new starts are driving cement demand growth in 1H16.
Production Growth: Cement production growth slowed to 3.2% yoy in 1H16 from 3.7% yoy in 5M16, but is expected to rebound in 2H16 due to construction activity picking up.
Price Trends: Cement prices rebounded 7% from March lows but declined 1% in June. Price hikes are expected in Sep-Nov 16.
Earnings Outlook: Earnings for cement companies are expected to improve in 2H16, driven by price rebound and increased demand.
M&A Activity: M&As are a key theme in the basic materials sector, especially in cement and steel. Notable mergers include CNBM and Sinoma, and potential stake increases for CR Cement and Fujian Cement.
Stock Picks: Anhui Conch (914 HK) and CR Cement (1313 HK) are recommended as BUY picks, while BBMG (2009 HK) is a BUY with a likely break-even in 2016.

Consumer Sector

1H16 Results: Lower raw material costs improved margins for F&B companies, but weaker beverage sales offset these gains.
Raw Material Costs: Prices of key materials like PET, sugar, and palm oil remained lower than 2015 levels, but are expected to rise in 2H16.
Sales Impact: Abnormal weather and shorter product life cycles contributed to weaker beverage sales, affecting some F&B companies' earnings.
Earnings Adjustments: Earnings estimates for UPC and Want Want were cut, with UPC downgraded from BUY to HOLD.

Malaysia: Sector Updates

Oil & Gas Sector

Price Volatility: Oil prices are expected to remain volatile due to concerns over a gasoline/diesel glut.
Investment Strategy: A defensive approach is recommended, with selective investments in defensive counters.

SKP Resources (SKP MK)

Earnings Cut: Earnings for FY17-19 were cut by $2 - 13% due to the hiring of costly contract workers and expected lower margins from new contracts.

Singapore: Sector & Results

REITs Sector

Yield Compression: REITs are experiencing yield compression, indicating a trend towards lower returns.

Ezra Holdings (EZRA SP)

3QFY16: Losses aside, the company should be covered until FY17.

M1 (M1 SP)

2Q16: A steep contraction in traditional voice and SMS services revenue.

Singapore Press Holdings (SPH SP)

3QFY16: Core earnings fell 20% yoy, and a dividend cut is likely for FY16.

SMRT Corporation (MRT SP)

Update: A steadier track but with enforced speed limits, indicating cautious growth.

Key Indices

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	18516.6	0.1	2.0	4.8	6.3
S&P 500	2161.7	-0.1	1.5	4.4	5.8
FTSE 100	6669.2	0.2	1.2	10.8	6.8
AS30	5510.1	0.3	3.7	5.0	3.1
CSI 300	3276.3	-0.0	2.6	5.3	-12.2
FSSTI	2925.4	0.6	2.8	5.9	1.5
HSCEI	9049.7	0.4	6.0	6.6	-6.3
HSI	21659.3	0.5	5.3	7.4	-1.2
JCI	5110.2	0.5	2.8	5.7	11.3
KLCI	1668.4	0.8	1.5	2.7	-1.4
KOSPI	2017.3	0.4	2.8	3.3	2.9
Nikkei 225	16497.9	0.7	9.2	5.8	-13.3
SET	1492.0	0.2	2.5	5.0	15.8
TWSE	8949.9	0.9	3.6	4.5	7.3
BDI	745	0.9	6.0	26.9	55.9
CPO (RM/ml)	2297	-0.4	-4.5	-9.4	4.4
Brent Crude (US$/bbl)	48	0.2	3.2	-3.0	28.0

Corporate Events

Event	Venue	Begin	Close
Plantation Outlook Seminar 2016	Singapore	20 Jul	20 Jul
Malaysia 2016 Outlook Strategy	Singapore	20 Jul	21 Jul
Analyst Presentation	Taipei	2 Aug	3 Aug
China Strategy & Coal & Wind Supply	Hong Kong	26 Jul	26 Jul
Analyst Presentation	Singapore	27 Jul	27 Jul
Analyst Presentation	Kuala Lumpur	28 Jul	29 Jul
Kerjaya Prospek Corp Roadshow	Taipei	4 Aug	5 Aug
China Aviation Oil Corp Roadshow	Malaysia	4 Aug	5 Aug
Sembcorp Industries Corp Roadshow	Canada	26 Sep	27 Sep
Regional Financial and Telco Sector Analyst Presentation	UK/Europe	26 Sep	30 Sep
Metro Pacific Investments Corporate Roadshow	Canada	10 Nov	11 Nov

Key Assumptions

Indicator	2015	2016F	2017F
GDP (%)	6.9	6.5	6.2
Brent (US$/bbl)	53.60	42	54
CPO (RM/mt)	2,168	2,500	2,600

Top Picks

Company	Ticker	Price (Icy)	Target (Icy)	Pot. +/- (%)
Air China	753 HK	5.90	9.00	52.5
Ping An Insurance	2318 HK	36.60	45.00	23.0
Bumi Serpong Damai	BSDE IJ	2,000.00	2,390.00	19.5
Mitra Adiperkasa	MAPI IJ	4,140.00	5,000.00	20.8
Genting Bhd	GENT MK	8.76	10.40	18.7
Citiv Developments	CIT SP	8.63	10.36	20.0
DBS	DBS SP	16.12	19.30	19.7
Bangkok Dusit	BDMS TB	23.10	27.70	19.9
Siam Cement	SCC TB	490.00	630.00	28.6

Sell Recommendation

Company	Ticker	Price (Icy)	Target (Icy)	Pot. +/- (%)
Hartalega	HART MK	4.35	3.10	-28.7

Analysts

Chaoping Zhu:
+8621 5404 7225 ext. 822
chaoping@uobkayhian.com
Ye Xu:
+8621 5404 7225 ext. 820
xuye@uobkayhian.com
Johnson Hu, CFA:
+86 21 5404 7225 ext 809
johnsonhu@uobkayhian.com
Cynthia Wang:
+862154047225ext858
cynthiawang@uobkayhian.com

Sector Views

The Cement sector is maintained as OVERWEIGHT, with Anhui Conch and CR Cement as top picks.
The Consumer sector is maintained as MARKET WEIGHT, with Xtep as the top pick.
The Oil & Gas sector in Malaysia is expected to remain volatile, with a defensive investment strategy recommended.

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