20170608-大华继显-Regional_Morning_Notes_14页_964kb

报告摘要

Regional Morning Notes Summary

Core Content Overview

This document provides a detailed analysis of the financial and market conditions of various sectors in China, Indonesia, Malaysia, and Thailand, with a focus on the auto dealers sector in China and Acset Indonusa (ACST) in Indonesia. It includes investment recommendations, key financial metrics, market trends, and risk assessments.

China: Auto Dealers Sector Re-Initiation

Main Points

The auto dealers sector in China is being re-initiated with MARKET WEIGHT.
BMW dealers are preferred over Mercedes-Benz dealers due to their stronger product cycle in 2017-19.
BUY recommendations for Meidong, Yongda, and Zhengtong, and SELL for Zhongsheng.
Meidong is highlighted for its expertise in premium car dealership in small cities and high exposure to BMW, Lexus, and Porsche.
Yongda has the highest exposure to BMW and a strong ROIC, making it a top pick.
Zhengtong benefits from BMW's product cycle and the growth in car loan services.
Zhongsheng is seen as overvalued with a peaking product cycle tied to Mercedes-Benz.

Key Financials

Meidong has a ROIC of 10% and a target price of HK$2.70 (13x 2017F PE).
Yongda has a ROIC of 9% and a target price of HK$11.80 (13x 2017F PE).
Zhengtong has a ROIC of 4.5% and a target price of HK$6.20 (13x 2017F PE).
Zhongsheng has a high net debt-to-equity ratio and a target price of HK$10.00 (10x 2017F PE).

Key Assumptions

The document assumes a 100bp increase in interest rates will reduce 2017 net profit by 1-4%.
A 5% depreciation of the RMB against the USD is expected to affect earnings.
GDP growth for China is expected to slow slightly to 6.3% in 2017 and 2018.

Indonesia: Acset Indonusa (ACST IJ)

Main Points

ACST is transitioning from a foundation works specialist to an infrastructure-play contractor.
It has a large orderbook and is the largest private contractor in Indonesia.
The company is expected to deliver 61% earnings CAGR from 2016 to 2019.
Valuation is attractive at 9.6x 2018F PE, which is -0.7 SD below the historical mean and discounted to the industry average.

Key Financials

Net turnover has grown significantly from Rp670m in 2012 to Rp1,794m in 2016.
EBITDA has also increased from Rp101m in 2012 to Rp243m in 2016.
Net profit has shown a steady increase, from Rp52m in 2012 to Rp68m in 2016.
PE is at 27.7x in 2016, which is higher than the industry average.

Company Description

ACST is a private construction company in Indonesia, specializing in foundation works and building structures.
It has expanded into the infrastructure segment, including toll roads, bridges, and power plant civil construction.

Risks

Lower-than-expected contract burning rate due to project postponements.
Project concentration risk in the toll-road segment, which is subject to regulatory and land acquisition challenges.

Malaysia: Plantation Sector

1Q17 results show that performance is largely in line with expectations.
Higher CPO ASP (Crude Palm Oil prices) boosted year-on-year net profit growth.
Weaker quarter-on-quarter performance is attributed to seasonally low production.

Thailand: Property Sector

Unit transfers remained weak in 1Q17 but are expected to improve in 2H17.
The REIC seminar highlights the current state of the property market and the outlook for the second half of the year.

Key Indices Overview

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	21173.7	0.2	0.8	0.8	7.1
S&P 500	2433.1	0.2	0.9	1.4	8.7
FTSE 100	7478.6	-0.6	-0.5	2.4	4.7
AS30	5707.8	-0.0	-0.9	-3.2	-0.2
CSI 300	3533.9	1.2	1.2	5.2	6.8
FSSTI	3230.5	-0.2	0.6	-0.2	12.1
HSCEI	10611.5	0.0	0.1	6.3	12.9
HSI	25974.2	-0.1	1.2	5.7	18.1
JCI	5717.3	0.2	0.4	0.2	7.9
KLCI	1785.9	-0.3	1.1	1.0	8.8
KOSPI	2360.1	-0.4	0.7	2.9	16.5
Nikkei 225	19984.6	0.0	1.7	0.4	4.6
SET	1566.6	-0.2	0.3	-0.1	1.5
TWSE	10210.0	0.0	1.2	2.7	10.3
BDI	821	0.4	-6.5	-17.4	-14.6
CPO (RM/mt)	2742	-0.3	-1.3	0.7	-14.3
Brent Crude (US$/bbl)	48	-4.1	-4.5	-2.1	-15.4

Top Picks

BUY

Alibaba (BABA US): Target price HK$139.00 (10.6% upside)
Beijing Ent. Water (371 HK): Target price HK$7.60 (26.0% upside)
Telekomunikasi (TLKM J): Target price 5,000.00 (15.7% upside)
V.S. Industry (VSI MK): Target price 2.20 (9.5% upside)
OCBC (OCBC SP): Target price 11.70 (10.6% upside)
Siam Cement (SCC TB): Target price 600.00 (16.3% upside)
Yongda Auto (3669 HK): Target price HK$11.80 (63.7% upside)
Meidong Auto (1268 HK): Target price HK$2.70 (57.9% upside)
Zhengtong Auto (1728 HK): Target price HK$6.20 (28.4% upside)

SELL

Great Wall Motor (2333 HK): Target price HK$15.00 (30.2% downside)
MGM China (2282 HK): Target price HK$15.00 (7.2% downside)
Hartalega (HART MK): Target price HK$4.07 (37.1% downside)
Zhongsheng (881 HK): Target price HK$10.00 (24.9% downside)

Corporate Events

Roadshow with Meidong Auto Holdings – Taipei, 8 Jun
Roadshow with Tonly Electronics Holdings – Taipei, 8-9 Jun
Roadshow with GFPT Public Company – Hong Kong, 8-9 Jun
Site visit to Auto Sector Companies – Shanghai, 13 Jun
Roadshow with PT Siloam Int'l Hospital – Canada/US, 5-16 Jun
Analyst Presentation on Spore Strategy – Kuala Lumpur, 15-16 Jun
Luncheon with Loob Holdings – Kuala Lumpur, 20 Jun
Luncheon with United Overseas Bank – Singapore, 3 Jul
Site Visit to Sarawak Oil Palms Bhd – Sarawak, 3-5 Jul
New Economy Conference 2017 – Kuala Lumpur, 11 Jul
Roadshow with Top Glove Corporation – US/Canada, 5-12 Sep

Analysts

Ken Lee: +852 2236 6760, ken.lee@uobkayhian.com.hk
Sophie Yu: +852 2236 6392, sophie.yu@uobkayhian.com.hk
Adrianus Bias Prasuryo: +6221 2993 3990, adrianusbias@uobkayhian.com

Summary of Key Insights

The auto dealers sector in China is expected to benefit from BMW's strong product cycle, recovery in new-car sales margins, and growth in after-sales revenue.
Meidong, Yongda, and Zhengtong are recommended for purchase due to their strong exposure to BMW, efficient operations, and undervaluation.
Zhongsheng is recommended for sale due to its overvalued status and peaking product cycle.
ACST is a promising infrastructure contractor in Indonesia, with a large orderbook and high earnings growth potential.
The property sector in Thailand is expected to see improvement in unit transfers in the second half of the year.
The plantation sector in Malaysia had seasonally low production in 1Q17, but higher CPO prices supported stronger net profit growth.
Valuation risks include interest rate hikes and foreign exchange fluctuations, which can impact the financial performance of companies with USD-denominated debt.
PE vs ROIC and core net profit growth are key metrics used to evaluate the performance and potential of the companies.