20170928-大华继显-Regional_Morning_Notes_25页_1mb

报告摘要

Regional Morning Notes Summary

Core Content Overview

This document provides a detailed analysis of the regional financial markets and specific company updates for China, Indonesia, Malaysia, and Singapore, as of Thursday, 28 September 2017. It includes economic data, company performance, valuation insights, and investment recommendations across multiple sectors and stocks.

Key Regions and Their Highlights

China

Industrial Profit Growth:
- Industrial profit growth surged to 24% yoy in August 2017, up from 16.5% yoy in July. This is the highest since February 2017.
- The growth was driven by improved commodity prices and producer price inflation, supported by government measures to cut overcapacity.
- Bottom-line growth increased while top-line growth slightly decreased.
- Upstream sectors (coal, steel, etc.) showed strong performance, with coal mining growing 955.4% yoy and steel mining 68.6% yoy.
- Margin expansion was noted, with industrial profit margin reaching 6.13% in August, up from 6.09% in July.
- Inventory levels showed a slight increase, but the restocking cycle is expected to moderate.
New Oriental Education & Technology Group (EDU US):
- Expected 1QFY18 revenue growth of 19-20% yoy to US$638m-640m and net profit growth of 15-16% yoy to US$163m-165m.
- The company is BUY with a target price of US$99.00, indicating an upside of +20.3%.
- Summer promotion led to double-year-on-year student enrolment, with improved retention rates.
- Expected enrolment growth of 34-34.5% for FY18-20, which will drive net profit growth.
- The company is expected to dominate the AST market due to resilient demand, regulatory pressure on smaller competitors, and operational improvements.

Indonesia

Bank Rakyat Indonesia (BBRI IJ):
- Valuation is rolled over to 2018; the stock is still overvalued.
- The stock is considered a bold beta play due to its high liquidity and performance relative to peers.
- Target price is Rp13,800, implying a P/B ratio of 1.9x.
- The stock split may be a positive catalyst, but the price remains high.
- Regulatory risks are high, especially with the reduction of KUR lending rates to 7% in 2018.
- NIM pressure is expected due to lower loan yields across SME, consumer, and non-SOE segments.

Malaysia

Sapura Energy (SAPE MK):
- SELL recommendation with a target price of RM1.32.
- Concerns about management's lack of optimism and widening core losses.
- Orderbook replenishment gap is significant.
V.S. Industry (VSI MK):
- BUY recommendation with a target price of RM3.10.
- 4QFY17 results exceeded expectations.
- Earnings surge is expected in 2HFY18 due to full ramp-up of contracts for key customers.
Yinson (YNS MK):
- HOLD recommendation with a target price of RM3.75.
- 2QFY18 saw high profit due to early profit recognition from JAK.
- Stable output and lower earnings base in 2HFY18 from JAK, Bien Dong, and Lam Son.

Singapore

SATS (SATS SP):
- BUY recommendation with a target price of S$5.40.
- Price weakness is not aligned with positive data from Changi.
- The company is expected to benefit from improved performance.

Key Indices Performance

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	22340.7	0.3	-0.3	2.4	13.0
S&P 500	2507.0	0.4	-0.0	2.6	12.0
FTSE 100	7313.5	0.4	0.6	-1.2	2.4
AS30	5725.5	-0.1	-0.8	-0.8	0.1
CSI 300	3821.2	0.0	-0.6	-0.6	15.4
FSSTI	3236.2	0.8	0.6	-1.0	12.3
HSCEI	11035.8	0.6	-1.2	-2.7	17.5
HSI	27642.4	0.5	-1.7	-0.8	25.6
JCI	5863.0	-0.0	-0.6	-0.7	10.7
KLCI	1764.2	-0.1	-0.7	-0.3	7.5
KOSPI	2372.6	-0.1	-1.6	0.1	17.1
Nikkei 225	20267.1	-0.3	-0.2	4.2	6.0
SET	1670.3	0.0	-0.0	5.3	8.3
TWSE	10326.7	0.7	-1.8	-1.9	11.6
BDI	1476	-1.8	1.9	22.1	53.6
CPO (RM/ml)	2728	0.7	-3.3	0.7	-14.7
Brent Crude	58	-0.9	2.9	10.5	1.9

Key Assumptions

Country/Region	GDP (yoy) 2016	GDP (yoy) 2017F	GDP (yoy) 2018F
US	1.6	2.5	2.5
Euro Zone	1.7	1.8	1.6
Japan	1.0	0.9	1.2
Singapore	2.0	2.4	2.5
Malaysia	4.2	5.0	4.9
Thailand	3.2	3.3	3.3
Indonesia	5.0	5.2	5.5
Hong Kong	1.9	2.0	2.0
China	6.7	6.6	6.3
Brent (Average)	45	52	55
CPO	2,653	2,600	2,400

Top Picks

BUY

CSPC Pharmaceutical (1093 HK): Target price HK$15.24, upside +16.5%.
Hengan Intl (1044 HK): Target price HK$80.00, upside +12.9%.
Ace Hardware (ACES JI): Target price RM1,300.00, upside +9.7%.
Waskita Kanya (WSKT JI): Target price RM3,000.00, upside +66.2%.
Ekovest (EKO MK): Target price RM1.45, upside +33.0%.
V.S. Industry (VSI MK): Target price RM3.10, upside +22.5%.
OCBC (OCBC SP): Target price S$13.38, upside +18.6%.
Siam Cement (SCC TB): Target price TB600.00, upside +20.0%.

SELL

Great Wall Motor (2333 HK): Target price HK$5.50, downside -43.2%.
UMW Holdings (UMWH MK): Target price RM4.80, downside -14.0%.

Corporate Events

Roadshow with China Yongda: 25–29 September 2017 (Canada/US)
Roadshow with BBI Life Science Corp: 27–28 September 2017 (Hong Kong)
Conference Call with Thai Union Group: 29 September 2017 (Bangkok)
Asian Gems Conference 2017: 10–11 October 2017 (Singapore)
UOB Kay Hian Annual Regional Strategy Conference: 13 November 2017 (Kuala Lumpur)

Analysts

Tham Mun Hon (China): +852 2236 6799, munhon.tham@uobkayhian.com.hk
Leow Huey Chuen (New Oriental Education & Technology Group): +603 2147 1990, hueychuen@uobkayhian.com

Summary of Key Insights

China

Industrial profit growth is 24% yoy, the highest since February 2017.
New Oriental Education & Technology Group (EDU US) is expected to report revenue growth of 19-20% and net profit growth of 15-16% for 1QFY18.
Summer promotion led to double-year-on-year student enrolment and higher retention rates.
The company is BUY with a target price of US$99.00 and upside of +20.3%.
Enrolment growth is a key driver of earnings growth in the K12 AST market.
Regulatory pressure is expected to reduce competition, enhancing market share for EDU.

Indonesia

BBRI is overvalued and SELL with a target price of Rp13,800.
The stock's price outperformance is attributed to beta positioning.
Regulatory risks remain high, particularly with the KUR lending rate reduction.
NIM pressure is expected due to lower loan yields in various segments.

Malaysia

Sapura Energy (SAPE MK) is SELL due to lack of optimism and core loss concerns.
V.S. Industry (VSI MK) is BUY with expected earnings surge in 2HFY18.
Yinson (YNS MK) is HOLD, with high profit in 2QFY18 due to early profit recognition.

Singapore

SATS (SATS SP) is BUY with target price of S$5.40.
Price weakness is not in line with positive data from Changi.

Conclusion

The document highlights positive industrial profit growth in China, particularly in upstream sectors, and strong performance in the education sector with New Oriental Education & Technology Group (EDU US) leading the way. It also discusses overvaluation in Indonesia, earnings risks in Malaysia, and positive outlook in Singapore. Key recommendations include BUY for EDU US, V.S. Industry, and SATS, while SELL is advised for BBRI and Great Wall Motor. The overall tone is cautiously optimistic, with a focus on economic indicators, sector opportunities, and regulatory impacts.