Regional Morning Notes Summary - 26 April 2016
Core Content Overview
This document provides a comprehensive update on stock performance, company developments, and market analysis for various regions, including Indonesia, China, Malaysia, Singapore, and Thailand. It includes investment recommendations, financial data, corporate events, and key metrics for selected companies, along with analysis of their market position and future outlook.
Key Stories and Company Updates
Indonesia
- Mitra Adiperkasa (MAPI IJ/BUY/Rp4,065/Target: Rp5,000)
- The stock is recommended for buying as the market may not have fully priced in potential recovery.
- Target price is set at Rp5,000 with an upside potential.
- Unilever Indonesia (UNVR IJ/SELL/Rp44,775/Target: Rp34,000)
- The stock is downgraded to SELL due to margin compression in the food segment affecting 1Q16 profit growth.
- Target price is set at Rp34,000.
China
- Evergrande Real Estate (3333 HK/HOLD/HK$5.90/Target: HK$6.33)
- Evergrande plans to acquire a 52.8% stake in Calxon for Rmb3.6b, which may provide a domestic listing platform.
- Despite the acquisition, the company faces challenges due to its red-chip structure and offshore debt.
- The stock is maintained at HOLD with a target price of HK$6.33, implying a 7.3% upside.
- Tianneng Power (819 HK/HOLD/HK$7.60/Target: HK$7.50)
- Downgraded from BUY to HOLD as the stock has reached its target price of HK$7.50.
- The EV battery segment is overhyped, contributing only 6–10% to profit and facing margin risks due to rising raw material costs and weak bargaining power.
- The company's share price increased by 34% since the last upgrade, leading to a profit-taking decision.
Market Performance and Key Indices
| Index |
Previous Close |
1 Day % |
1 Week % |
1 Month % |
YTD % |
| DJIA |
17977.2 |
(0.1) |
(0.1) |
2.6 |
3.2 |
| S&P 500 |
2087.8 |
(0.2) |
(0.3) |
2.5 |
2.1 |
| FTSE 100 |
6260.9 |
(0.8) |
(1.5) |
2.5 |
0.3 |
| AS30 |
5299.2 |
(0.7) |
1.4 |
2.9 |
(0.8) |
| CSI 300 |
3162.0 |
(0.4) |
(2.1) |
(1.1) |
(15.2) |
| FSSTI |
2900.3 |
(1.4) |
(0.6) |
1.9 |
0.6 |
| HSCEI |
8986.3 |
(1.5) |
(1.1) |
3.3 |
(7.0) |
| HSI |
21304.4 |
(0.8) |
0.7 |
4.7 |
(2.8) |
| JCI |
4878.9 |
(0.7) |
0.3 |
1.1 |
6.2 |
| KLCI |
1714.5 |
(0.2) |
(0.2) |
0.6 |
1.3 |
| KOSPI |
2014.6 |
(0.0) |
0.3 |
1.5 |
2.7 |
| Nikkei 225 |
17439.3 |
(0.8) |
7.1 |
2.6 |
(8.4) |
| SET |
1408.7 |
(0.1) |
0.7 |
1.0 |
9.4 |
| TWSE |
8560.3 |
0.3 |
(1.2) |
(1.7) |
2.7 |
| BDI |
690 |
0.3 |
4.7 |
70.0 |
44.4 |
| CPO (RM/ml) |
2665 |
(0.8) |
2.0 |
1.6 |
21.1 |
| Brent Crude |
44 |
(1.4) |
3.7 |
10.0 |
19.3 |
Top Picks (BUY)
| Company |
Ticker |
Current Price |
Target Price |
Upside (%) |
| Air China |
753 HK |
HK$5.85 |
HK$10.20 |
74.4 |
| Ping An |
2318 HK |
HK$36.90 |
HK$45.00 |
22.0 |
| Bank BJB |
BJBR J |
Rp915.00 |
Rp1,140.00 |
24.6 |
| Gamuda |
GAM MK |
RM4.86 |
RM5.55 |
14.2 |
| WCT Holdings |
WCTHG MK |
RM1.66 |
RM2.05 |
23.5 |
| City |
CIT SP |
S$8.71 |
S$10.86 |
24.7 |
| DBS |
DBS SP |
S$15.70 |
S$19.25 |
22.6 |
| Charoen |
CPF TB |
Bt25.00 |
Bt30.00 |
20.0 |
| Siam Cement |
SCC TB |
Bt478.00 |
Bt630.00 |
31.8 |
Key Assumptions
| Region |
GDP (yoy) 2014 |
GDP (yoy) 2015F |
GDP (yoy) 2016F |
| US |
2.4 |
2.4 |
2.5 |
| Euro Zone |
0.9 |
1.6 |
1.7 |
| Japan |
0.0 |
0.5 |
1.0 |
| Singapore |
3.3 |
2.0 |
2.7 |
| Malaysia |
6.0 |
5.0 |
4.2 |
| Thailand |
0.8 |
2.8 |
3.2 |
| Indonesia |
5.0 |
4.8 |
5.0 |
| Hong Kong |
2.5 |
1.8 |
1.5 |
| China |
7.3 |
6.5 |
6.7 |
Corporate Events
| Event Name |
Venue |
Date |
| Cityneon Holdings Tea Session |
Singapore |
26 Apr |
| CT Environment Roadshow |
Hong Kong |
28 Apr |
| CDL Hospitality Trust Luncheon |
Singapore |
3 May |
Key Financials and Metrics (Evergrande)
| Metric |
2014 (Rmbm) |
2015 (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
2018F (Rmbm) |
| Net turnover |
111,398 |
133,130 |
167,570 |
193,763 |
215,759 |
| EBITDA |
29,689 |
33,305 |
28,985 |
33,002 |
36,261 |
| Net profit (rep./act.) |
12,604 |
10,460 |
8,536 |
10,468 |
12,095 |
| EPS (Fen) |
52.6 |
40.3 |
50.5 |
63.7 |
74.8 |
| PE (x) |
9.4 |
12.3 |
9.8 |
7.8 |
6.6 |
| Net margin (%) |
10.9 |
8.3 |
7.5 |
7.4 |
7.3 |
| ROE (%) |
24.3 |
21.5 |
21.2 |
19.1 |
17.1 |
Key Financials and Metrics (Tianneng Power)
| Metric |
2014 (Rmbm) |
2015 (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
2018F (Rmbm) |
| Net turnover |
14,044 |
17,804 |
20,152 |
22,806 |
25,868 |
| EBITDA |
84 |
1,232 |
1,411 |
1,596 |
1,811 |
| Operating profit |
(142) |
915 |
1,068 |
1,210 |
1,385 |
| Net profit (rep./act.) |
(305) |
611 |
777 |
888 |
1,031 |
| EPS (Fen) |
(27.4) |
54.9 |
69.9 |
79.9 |
92.7 |
| P/B (x) |
2.5 |
2.0 |
1.8 |
1.5 |
1.3 |
| Net margin (%) |
(2.2) |
3.4 |
3.9 |
3.9 |
4.0 |
Valuation and Recommendation
- Evergrande Real Estate (3333 HK)
- Maintained at HOLD with a target price of HK$6.33.
- Based on end-16 RNAV of HK$10.55/share and a 40% discount to RNAV.
- Entry price: HK$5.06.
- Tianneng Power (819 HK)
- Downgraded to HOLD with a target price of HK$7.50.
- Upside potential: -1.3%.
- Share price reached 9.5x 2016F PE and 1.8x 2016F P/B, above historical averages.
Risk and Earnings Outlook
- Evergrande
- Earnings estimates for 2016–2018 remain unchanged.
- Privatization may be challenging due to red-chip structure and offshore debt.
- The lithium EV battery segment is expected to contribute 10% to 2016 gross profit but faces margin risks.
- Tianneng Power
- Limited upside for lead-acid battery prices due to market competition.
- Potential for further margin compression from raw material price increases.
- Earnings revisions for 2016–2018 remain unchanged.
Conclusion
The report highlights key investment opportunities and risks in the real estate and energy sectors across multiple regions. Evergrande's acquisition of Calxon and its potential privatization are significant, but challenges remain due to its red-chip structure and offshore debt. Tianneng Power's share price has been overbought, and the company faces margin risks in its lithium battery segment. The market indices show mixed performance, with some regions experiencing growth and others facing declines. Overall, the recommendations are cautious, with a focus on maintaining or downgrading positions based on fair valuation and market conditions.
