Regional Morning Notes Summary - 28 October 2015
Core Content Overview
This document provides a summary of the financial performance and market outlook for various companies and indices in the Asia-Pacific region, with a focus on China, Malaysia, and Singapore. It includes company results, key financial metrics, analyst recommendations, and market data such as price performance and valuation ratios.
Main Points by Region
China
Jiangxi Copper (358 HK)
- 3Q15 Results: Net profit dropped 47% yoy, missing consensus estimates. Earnings growth is constrained by margin contraction and stagnant mined copper production.
- Key Drivers: Mined copper remains the main contributor to earnings, with a gross margin of 3.0% in 1H15 and a decline to 2.6% in 9M15.
- Analyst Recommendation: Maintain HOLD, with a target price of HK$11.20.
- Valuation: Trading at 0.7x 2015F P/B, which is higher than the 2008 trough but below historical averages.
- Earnings Forecast: Projected net profit to decline 46% yoy to Rmb1.6b in 2015, with a 11% yoy increase expected in 2016.
- Copper Demand: China's demand for copper is a major global driver, but weak demand in 2015 is expected to cap earnings upside.
Ping An Insurance (2318 HK)
- 3Q15 Results: Stronger-than-expected results across all segments, with net profit up 32% yoy to Rmb13.6b.
- Key Drivers: Strong life business growth, improved P&C underwriting ratio, and stabilising NPL growth in the banking segment.
- Analyst Recommendation: Maintain BUY, with an unchanged target price of HK$63.00.
- Valuation: Undervalued at 1.1x 2015F PE.
- Earnings Forecast: 9M15 earnings of Rmb48.3b, representing 91% of the Bloomberg consensus.
Malaysia
British American Tobacco (ROTH MK)
- 3Q15 Results: Net profit in line with expectations, up 6.5% yoy despite a 4% yoy drop in sales due to margin expansion and lower opex.
- Analyst Recommendation: Maintain HOLD.
Malaysia Airports Holdings (MAHB MK)
- 3Q15 Results: Strong earnings reversal as the company reduced airline incentives.
- Analyst Recommendation: BUY, with a target price of RM7.20.
Singapore
OSIM International (OSIM SP)
- 9M15 Results: "When it rains, it pours" – net profit declined significantly.
- Analyst Recommendation: HOLD, with a target price of S$1.42.
Wilmar International (WIL SP)
- 3Q15 Preview: Expected net profit of US$300m-350m, after adjusting 2015 net profit down by 13% to reflect lower palm & lauric sales and sugar margin.
Key Indices Performance
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
17581.4 |
-0.2 |
2.1 |
7.8 |
-1.4 |
| S&P 500 |
2065.9 |
-0.3 |
1.7 |
7.0 |
0.3 |
| FTSE 100 |
6365.3 |
-0.8 |
0.3 |
4.2 |
-3.1 |
| AS30 |
5384.6 |
-0.0 |
2.1 |
4.7 |
-0.1 |
| CSI 300 |
3592.9 |
0.1 |
0.4 |
10.8 |
1.7 |
| FSSTI |
3052.5 |
-1.0 |
1.1 |
9.3 |
-9.3 |
| HSCEI |
10714.8 |
-0.3 |
0.2 |
12.6 |
-10.6 |
| HSI |
23142.7 |
0.1 |
0.3 |
9.2 |
-2.0 |
| JCI |
4674.1 |
-0.4 |
1.9 |
13.4 |
-10.6 |
| KLCI |
1697.0 |
-0.6 |
-0.5 |
5.5 |
-3.7 |
| KOSPI |
2044.7 |
-0.2 |
0.3 |
5.2 |
6.7 |
| Nikkei 225 |
18777.0 |
-0.9 |
3.1 |
6.4 |
7.6 |
| SET |
1424.1 |
-0.0 |
0.5 |
5.3 |
-4.9 |
| TWSE |
8701.3 |
-0.5 |
0.6 |
7.0 |
-6.5 |
| BDI |
739 |
-2.6 |
-3.0 |
-21.6 |
-5.5 |
| CPO (RM/mt) |
2152 |
-1.4 |
-1.0 |
-0.9 |
-6.3 |
| Brent Crude (US$/bbl) |
47 |
-1.5 |
-3.9 |
-3.7 |
-18.3 |
Top Picks (BUY)
- Beijing Capital (694 HK): Target price HK$11.40, potential upside 34.0%
- ICBC (1398 HK): Target price HK$7.60, potential upside 48.1%
- Bank BJB (BJBR IJ): Target price IJ$980.00, potential upside 27.3%
- DiGi.Com (DIGI MK): Target price MK$5.95, potential upside 12.3%
- Maybank (MAY MK): Target price MK$10.00, potential upside 17.0%
- CapitaLand (CAPL SP): Target price SP$4.08, potential upside 28.3%
- DBS (DBS SP): Target price SP$23.75, potential upside 34.0%
- Kasikornbank (KBANK TB): Target price TB$210.00, potential upside 17.3%
- PTT (PTT TB): Target price TB$410.00, potential upside 43.9%
Top Picks (SELL)
- SIA Engineering (SIE SP): Target price SP$3.00, potential downside 24.6%
- UMWH Holdings (UMWH MK): Target price MK$7.00, potential downside 13.6%
Key Assumptions
| Region |
2014 GDP (yoy) |
2015F GDP (yoy) |
2016F GDP (yoy) |
| US |
2.4 |
2.5 |
2.5 |
| Euro Zone |
0.9 |
1.5 |
1.7 |
| Japan |
-0.1 |
0.5 |
1.5 |
| Singapore |
2.9 |
2.5 |
2.9 |
| Malaysia |
6.0 |
4.8 |
4.8 |
| Thailand |
0.9 |
2.7 |
4.0 |
| Indonesia |
5.0 |
4.8 |
5.4 |
| Hong Kong |
2.5 |
1.8 |
1.5 |
| China |
7.3 |
6.5 |
6.7 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| Frasers Hospitality Trust Luncheon & Property Tour |
Singapore |
30 Oct |
30 Oct |
| Malaysia & Indonesia Strategy, Indonesia Consumer and Regional Gaming |
London |
30 Oct |
30 Oct |
| Malaysia & Indonesia Strategy, Indonesia Consumer and Regional Gaming |
Frankfurt |
02 Nov |
02 Nov |
| Malaysia & Indonesia Strategy, Indonesia Consumer and Regional Gaming |
Milan |
03 Nov |
03 Nov |
| Malaysia & Indonesia Strategy, Indonesia Consumer and Regional Gaming |
London |
04 Nov |
06 Nov |
| China City Railway Transportation Technology Roadshow |
Shanghai |
09 Nov |
10 Nov |
| Bumitama Agri Luncheon |
Singapore |
12 Nov |
12 Nov |
| Regional 1H16 Strategy Forum |
Kuala Lumpur |
2 Dec |
2 Dec |
Key Financials for Jiangxi Copper (358 HK)
| Metric |
2014 (Rmbm) |
2015F (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
| Net turnover |
198,264.2 |
161,684.2 |
167,405.0 |
168,537.8 |
| EBITDA |
3,298.1 |
1,733.1 |
1,984.9 |
2,041.3 |
| Net profit (rep./act.) |
28,154 |
1,579.6 |
1,745.6 |
1,770.1 |
| EPS (fen) |
177.8 |
45.6 |
50.4 |
51.1 |
| PE (x) |
20.4 |
19.3 |
17.4 |
17.2 |
| P/B (x) |
0.7 |
0.7 |
0.7 |
0.6 |
| EV/EBITDA (x) |
10.4 |
25.3 |
22.1 |
21.5 |
| Net margin (%) |
1.5 |
1.0 |
1.0 |
1.1 |
| ROE (%) |
6.4 |
3.5 |
3.8 |
3.8 |
Key Financials for Ping An Insurance (2318 HK)
| Metric |
2013 (Rmbm) |
2014 (Rmbm) |
2015F (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
| Gross written premiums |
269,051 |
326,423 |
378,168 |
432,183 |
490,407 |
| Net earned premiums |
240,199 |
288,779 |
338,935 |
387,742 |
440,062 |
| Net profit (rep./act.) |
28,154 |
39,279 |
47,537 |
50,105 |
54,329 |
| EPS (Fen) |
177.8 |
246.7 |
260.0 |
274.1 |
297.2 |
| PE (x) |
20.4 |
14.7 |
13.9 |
13.2 |
12.2 |
| P/EV (x) |
1.7 |
1.3 |
1.1 |
1.0 |
0.8 |
| Total investment yield (%) |
5.1 |
5.1 |
5.8 |
5.2 |
4.9 |
| Combined ratio (%) |
97.3 |
95.3 |
100.8 |
96.3 |
95.7 |
Summary of Key Insights
- Jiangxi Copper is a key copper miner in China, with earnings heavily dependent on copper prices and limited production growth.
- Ping An Insurance reported strong performance across all segments, with a solid P&C underwriting ratio and improving asset quality, but faces challenges from declining investment income.
- Malaysia Airports Holdings showed a strong earnings reversal, suggesting improved operational efficiency.
- Singapore's market is showing signs of recovery, with Wilmar International's earnings forecast adjusted for lower sales and margin contraction.
- China's copper demand is a major global driver, but weak demand in 2015 is expected to limit earnings growth.
- Valuation metrics indicate that Jiangxi Copper is currently undervalued relative to its historical average, but the outlook for copper prices remains cautious.
- Top picks suggest a mix of BUY and SELL ratings across different companies, with some showing strong potential for growth and others facing downside risks.
