20161028-大和证券-Asia_Pacific_Daily_105页_11mb

Asia Pacific Daily Summary

Core Content

• Event: Daiwa Investment Conference is scheduled to take place in Hong Kong from 8 to 11 November 2016.
• Research Highlights: The document provides detailed equity research and analysis on various companies across the Asia Pacific region, including updates on their financial performance and analyst ratings.

Major Changes

• GS Retail (007070 KS):
  • Rating: Hold → Buy
  • Target price: Increased by 25.3% to KRW62,000
  • Key factors: Weaker performance in non-CVS segment, but valuations are now seen as attractive. Expected improvement in non-CVS margins from 4Q16, which may boost investor sentiment.
  • Revenue: 1,987.3 KRWbn in 3Q16
  • Operating profit: 85.3 KRWbn
  • Net profit: 63.7 KRWbn
  • Operating profit margin: 5.2% (up 0.4pp YoY)
• Sheng Siong Group (SSG SP):
  • Rating: Outperform → Hold
  • Target price: Decreased by 5.4% to SGD1.050
  • Key factors: Time for a breather, with weaker performance expected in the non-CVS segment.

Other Research

• TAL Education Group (XRS US):
  • 2Q FY17 results: Deserves a gold star
  • Rating: Buy
• Cheung Kong Property (1113 HK):
  • Rating: Buy
  • Key factor: Capital management is the key
• Samsung Electronics (005930 KS):
  • 3Q16 earnings: Weak
  • Key factor: Waiting for the new flagship model
• SK Telecom (017670 KS):
  • Rating: Outperform
  • Key factor: Longing for the rewards of the ICT ecosystem

Japan Equity Research

• Japan Aviation Electronics Industry (6807 JP):
  • Rating: 2 → Neutral
• Mitsubishi Tanabe Pharma (4508 JP):
  • Rating: Underperform
  • Key factor: Biogen ending development of MT-1303

Company Roadshows

• 28 Oct:
  • Frasers Centrepoint Trust (FCT SP) - NDR in Tokyo
  • Mapletree Logistics Trust (MLT SP) - NDR in Tokyo
• 1 Nov:
  • Orion (001800 KS) - NDR in Tokyo
• 3 Nov:
  • BreadTalk Group (BREAD SP) - Group Luncheon in SG
• 7 Nov:
  • Glenmark Pharmaceuticals (GNP IN) - NDR in SG
• 8 Nov:
  • Yoma Strategic Holdings (YOMA SP) - Group Luncheon in SG
• 15-17 Nov:
  • Lai Sun Development (488 HK) - NDR in US
• 17 Nov:
  • Malaysia Airports (MAHB MK) - Group Luncheon in HK
  • SATS Ltd (SATS SP) - Group Luncheon in Tokyo
• 21 Nov:
  • Sinotrans (598 HK) - Group Luncheon in HK and SG
• 21-25 Nov:
  • President Chain Store (2912 TT) - NDR in EU
  • China Telecom (728 HK) - NDR in EU
• 22 Nov:
  • Angang Steel (347 HK) - Telecon. in HK
  • BWP Trust (BWP AU) - NDR in SG
• 23 Nov:
  • LG U Plus (032640 KS) - NDR in EU
  • SITC (1308 HK) - Group Luncheon in HK and SG
  • Kingsoft (3888 HK) - Group Luncheon in HK and SG

Regional Indices

• TPX:
  • 1D: -0.0%
  • 1M: 2.4%
  • YTD: -10.7%
  • EPS growth: 12.1% (16E), 8.4% (17E)
  • PER: 14.2 (16E), 13.1 (17E)
• HSCEI:
  • 1D: -0.9%
  • 1M: -1.4%
  • YTD: -0.5%
  • EPS growth: -3.7% (16E), 5.6% (17E)
  • PER: 7.2 (16E), 6.8 (17E)
• HSI:
  • 1D: -0.8%
  • 1M: -1.9%
  • YTD: 5.6%
  • EPS growth: -2.3% (16E), 9.7% (17E)
  • PER: 12.9 (16E), 11.7 (17E)
• KOSPI:
  • 1D: 0.5%
  • 1M: -1.9%
  • YTD: 3.2%
  • EPS growth: 26.8% (16E), 11.3% (17E)
  • PER: 11.1 (16E), 10.0 (17E)
• TWSE:
  • 1D: -0.7%
  • 1M: 1.1%
  • YTD: 11.5%
  • EPS growth: -1.2% (16E), 11.0% (17E)
  • PER: 15.1 (16E), 13.6 (17E)
• SENSEX:
  • 1D: 0.3%
  • 1M: -1.1%
  • YTD: 6.9%
  • EPS growth: 12.0% (16E), 18.5% (17E)
  • PER: 19.4 (16E), 16.3 (17E)
• FSSTI:
  • 1D: 0.0%
  • 1M: -1.1%
  • YTD: -1.9%
  • EPS growth: -5.4% (16E), 4.9% (17E)
  • PER: 13.6 (16E), 12.9 (17E)
• FBMKLCI:
  • 1D: -0.3%
  • 1M: 0.3%
  • YTD: -1.4%
  • EPS growth: -3.5% (16E), 7.0% (17E)
  • PER: 17.1 (16E), 15.9 (17E)
• SET:
  • 1D: 0.4%
  • 1M: 0.6%
  • YTD: 16.3%
  • EPS growth: 11.0% (16E), 10.5% (17E)
  • PER: 15.4 (16E), 14.0 (17E)
• PCOMP:
  • 1D: -0.7%
  • 1M: -1.5%
  • YTD: 7.1%
  • EPS growth: 8.8% (16E), 7.9% (17E)
  • PER: 19.5 (16E), 18.0 (17E)
• JCI:
  • 1D: 0.3%
  • 1M: -0.1%
  • YTD: 17.9%
  • EPS growth: 6.2% (16E), 15.3% (17E)
  • PER: 18.7 (16E), 16.2 (17E)
• AS51:
  • 1D: -1.2%
  • 1M: -2.0%
  • YTD: -0.0%
  • EPS growth: 8.6% (16E), 7.2% (17E)
  • PER: 16.3 (16E), 15.2 (17E)

Macro Research

• US Data Review:
  • Analyst: Michael Moran
  • Page: P.51
• Durable Goods Orders:
  • Analyst: Michael Moran
• Euro Wrap-up:
  • Analyst: Grant Lewis
  • Page: P.52

Memo - Quick Updates

• China Aviation Sector:
  • Analyst: Kelvin Lau
  • Page: P.54
  • 3Q16 benefit from low base last year
• China Life Insurance (2628 HK):
  • Analyst: Leon Qi
  • Page: P.57
  • Recurring investment yield dips to near 4%
• ComfortDelGro Corp (CD SP):
  • Analyst: Jane Osman
  • Page: P.59
  • Minimal impact from public transport fare reduction
• CRCC (1186 HK):
  • Analyst: Brian Lam
  • Page: P.60
  • In-line 3Q16 earnings, new contracts see improvement
• Daewoo E&C (047040 KS):
  • Analyst: Mike Oh
  • Page: P.62
  • Weak overseas margin continued in 3Q16
• Glovis (086280 KS):
  • Analyst: Sung Yop Chung
  • Page: P.64
  • Bucking the trend, heightened earnings visibility from 4Q16 onwards
• Hyundai E&C (000720 KS):
  • Analyst: Mike Oh
  • Page: P.66
  • In-line 3Q16 operating profit, solid order momentum in 4Q16
• Hyundai Wia (011210 KS):
  • Analyst: Sung Yop Chung
  • Page: P.68
  • Much weaker 3Q16 earnings, but bracing for an earnings upturn in 2017E
• Kia Motors (000270 KS):
  • Analyst: Sung Yop Chung
  • Page: P.71
  • 3Q16 operating-profit margin falls to record low since 1Q13, but well expected
• LG Electronics (066570 KS):
  • Analyst: SK Kim
  • Page: P.75
  • 3Q16 review: Large loss in MC vs. earnings surprise in HA/HE
• Mando Corporation (204320 KS):
  • Analyst: Sung Yop Chung
  • Page: P.77
  • 3Q16 earnings review: Pedal to the metal
• Naver (035420 KS):
  • Analyst: Thomas Y. Kwon
  • Page: P.80
  • 3Q16 results review: Rapidly going mobile and global
• NCsoft (036570 KS):
  • Analyst: Thomas Y. Kwon
  • Page: P.82
  • Highlights from Lineage RK showcase
• Ping An Insurance (2318 HK):
  • Analyst: Leon Qi
  • Page: P.84
  • Core life business sets its bottom line apart
• Samsung Electro-Mechanics (009150KS):
  • Analyst: SK Kim
  • Page: P.87
  • 3Q16 review: Note 7 impact to continue in 4Q16
• Samsung Engineering (028050 KS):
  • Analyst: Mike Oh
  • Page: P.89
  • 3Q16: Operating profit up strongly but net profit weak due to forex loss
• Vinda International (3331 HK):
  • Analyst: Anson Chan
  • Page: P.90
  • 3Q16 update
• Yestar International (2393 HK):
  • Analyst: Carlton Lai
  • Page: P.91
  • 4th IVD acquisition announced

Daiwa Asian Events

• 8-11 Nov: Daiwa Investment Conference Hong Kong 2016
• 21-22 Nov: Daiwa Asia Communidation Days in London
• 27 Feb-3: Daiwa Investment Conference Tokyo
• Mar 2017: Daiwa Investment Conference 2017

Financial Summary

Key Assumptions

• Number of CVS:
  • 2011: 1,300.0
  • 2012: 812.0
  • 2013: 636.0
  • 2014: 516.0
  • 2015: 995.0
  • 2016E: 1,227.0
  • 2017E: 650.0
  • 2018E: 500.0
• CVS OPM:
  • 2011: 3.5%
  • 2012: 3.7%
  • 2013: 3.7%
  • 2014: 3.2%
  • 2015: 4.1%
  • 2016E: 3.9%
  • 2017E: 4.0%
  • 2018E: 4.1%
• Number of Supermarkets:
  • 2011: n.a.
  • 2012: 230.0
  • 2013: 254.0
  • 2014: 258.0
  • 2015: 262.0
  • 2016E: 281.0
  • 2017E: 294.0
  • 2018E: 302.0
• Sales per Supermarket (KRW bn):
  • 2011: n.a.
  • 2012: 1,302.1
  • 2013: 1,412.3
  • 2014: 1,370.6
  • 2015: 1,331.3
  • 2016E: 1,389.3
  • 2017E: 1,420.9
  • 2018E: 1,455.2
• Hotel Revenue (KRW bn):
  • 2011: n.a.
  • 2012: n.a.
  • 2013: n.a.
  • 2014: n.a.
  • 2015: 66.4
  • 2016E: 209.7
  • 2017E: 226.5
  • 2018E: 240.1
• Hotel OP (KRW bn):
  • 2011: n.a.
  • 2012: n.a.
  • 2013: n.a.
  • 2014: n.a.
  • 2015: 49.0
  • 2016E: 43.6
  • 2017E: 18.9
  • 2018E: 16.6

Profit and Loss (KRWbn)

• Revenue:
  • 2011: 3,982
  • 2012: 4,378
  • 2013: 4,709
  • 2014: 4,962
  • 2015: 6,273
  • 2016E: 7,397
  • 2017E: 8,109
  • 2018E: 8,711
• Operating Profit:
  • 2011: 94
  • 2012: 140
  • 2013: 155
  • 2014: 143
  • 2015: 226
  • 2016E: 226
  • 2017E: 278
  • 2018E: 344
• Net Profit:
  • 2011: 93
  • 2012: 123
  • 2013: 119
  • 2014: 111
  • 2015: 168
  • 2016E: 176
  • 2017E: 233
  • 2018E: 296
• EPS (adjusted fully-diluted):
  • 2011: 1,211
  • 2012: 1,603
  • 2013: 1,546
  • 2014: 1,445
  • 2015: 2,185
  • 2016E: 2,288
  • 2017E: 3,021
  • 2018E: 3,848
• DPS:
  • 2011: 300
  • 2012: 400
  • 2013: 450
  • 2014: 600
  • 2015: 850
  • 2016E: 1,000
  • 2017E: 1,150
  • 2018E: 1,300

Cash Flow (KRWbn)

• Cash flow from operations:
  • 2011: 1
  • 2012: 221
  • 2013: 294
  • 2014: 368
  • 2015: 444
  • 2016E: 552
  • 2017E: 459
  • 2018E: 647
• Capex:
  • 2011: (230)
  • 2012: (234)
  • 2013: (144)
  • 2014: (215)
  • 2015: (277)
  • 2016E: (395)
  • 2017E: (280)
  • 2018E: (250)
• Change in cash:
  • 2011: (8)
  • 2012: 21
  • 2013: (7)
  • 2014: 60
  • 2015: (39)
  • 2016E: 495
  • 2017E: (257)
  • 2018E: 208
• Free cash flow:
  • 2011: (230)
  • 2012: (13)
  • 2013: 151
  • 2014: 153
  • 2015: 167
  • 2016E: 157
  • 2017E: 179
  • 2018E: 397

Balance Sheet (KRWbn)

• Cash & short-term investment:
  • 2011: 762
  • 2012: 477
  • 2013: 425
  • 2014: 433
  • 2015: 154
  • 2016E: 630
  • 2017E: 380
  • 2018E: 593
• Inventory:
  • 2011: 133
  • 2012: 149
  • 2013: 153
  • 2014: 122
  • 2015: 116
  • 2016E: 120
  • 2017E: 125
  • 2018E: 124
• Accounts receivable:
  • 2011: 69
  • 2012: 91
  • 2013: 104
  • 2014: 103
  • 2015: 182
  • 2016E: 213
  • 2017E: 232
  • 2018E: 249
• Total current assets:
  • 2011: 994
  • 2012: 731
  • 2013: 702
  • 2014: 692
  • 2015: 483
  • 2016E: 982
  • 2017E: 757
  • 2018E: 989
• Fixed assets:
  • 2011: 683
  • 2012: 749
  • 2013: 707
  • 2014: 749
  • 2015: 2,095
  • 2016E: 2,296
  • 2017E: 2,364
  • 2018E: 2,399
• Goodwill & intangibles:
  • 2011: 110
  • 2012: 131
  • 2013: 150
  • 2014: 149
  • 2015: 163
  • 2016E: 145
  • 2017E: 113
  • 2018E: 88
• Other non-current assets:
  • 2011: 1,207
  • 2012: 1,304
  • 2013: 1,320
  • 2014: 1,331
  • 2015: 1,994
  • 2016E: 1,820
  • 2017E: 1,901
  • 2018E: 1,977
• Total assets:
  • 2011: 2,994
  • 2012: 2,914
  • 2013: 2,880
  • 2014: 2,920
  • 2015: 4,736
  • 2016E: 5,243
  • 2017E: 5,136
  • 2018E: 5,453
• Short-term debt:
  • 2011: 507
  • 2012: 210
  • 2013: 60
  • 2014: 100
  • 2015: 173
  • 2016E: 9
  • 2017E: 131
  • 2018E: 213
• Accounts payable:
  • 2011: 393
  • 2012: 321
  • 2013: 361
  • 2014: 391
  • 2015: 529
  • 2016E: 872
  • 2017E: 827
  • 2018E: 898
• Total current liabilities:
  • 2011: 957
  • 2012: 602
  • 2013: 480
  • 2014: 545
  • 2015: 876
  • 2016E: 986
  • 2017E: 1,074
  • 2018E: 1,235
• Long-term debt:
  • 2011: 539
  • 2012: 729
  • 2013: 734
  • 2014: 635
  • 2015: 1,353
  • 2016E: 1,445
  • 2017E: 986
  • 2018E: 822
• Shareholders’ equity:
  • 2011: 1,430
  • 2012: 1,524
  • 2013: 1,615
  • 2014: 1,682
  • 2015: 1,793
  • 2016E: 2,081
  • 2017E: 2,308
  • 2018E: 2,596

GS Retail: SOTP Valuation

• CVS: 5,066 KRWbn
• SSM: 0 KRWbn
• Hotel: 165 KRWbn
• Net debt: -469 KRWbn
• Total value: 4,762 KRWbn
• Value per share: 61,846 KRW
• No. of shares (m): 77.0

Peer Valuation

• Peer PER (x):
  • FY16: 29.5
  • FY17: 24.1
• Peer PBR (x):
  • FY16: 5.5
  • FY17: 5.0
• Peer EPS growth (%):
  • FY16: 18.0
  • FY17: 14.6

Key Risks and Recommendations

• GS Retail:
  • Key risk: Lower revenue from office rental business
  • Recommendation: Upgrade rating to Buy and raise target price to KRW62,000
  • Daiwa vs Cons. EPS: 11.7% (16E), 10.8% (17E), 17.6% (18E)
  • PER: 20.1 (16E), 15.2 (17E), 11.9 (18E)
  • Dividend yield: 2.2% (16E), 2.5% (17E), 2.8% (18E)
  • DPS: 1,000 (16E), 1,150 (17E), 1,300 (18E)
  • PBR: 1.7 (16E), 1.5 (17E), 1.4 (18E)
  • EV/EBITDA: 10.3 (16E), 9.0 (17E), 7.6 (18E)
  • ROE: 9.1% (16E), 10.6% (17E), 12.1% (18E)

Forecast Revisions (%)

• Revenue change:
  • 16E: 3.9%
  • 17E: 4.1%
  • 18E: 4.0%
• Net profit change:
  • 16E: -0.9%
  • 17E: 16.8%
  • 18E: 25.3%
• Core EPS (FD) change:
  • 16E: -0.9%
  • 17E: 16.8%
  • 18E: 25.3%

Share Price Performance

• 12-month range: 44,700-65,600
• Market cap (USDbn): 3.12
• 3m avg daily turnover (USDm): 9.02
• Shares outstanding (m): 77
• Major shareholder: GS Corp (65.8%)

Summary

• GS Retail has been upgraded from Hold to Buy due to improved non-CVS margins and a revised target price of KRW62,000.
• TAL Education Group, Cheung Kong Property, and Samsung Electronics are highlighted in the research section, with positive outlooks and Buy ratings.
• Sheng Siong Group has been downgraded from Outperform to Hold, with a target price of SGD1.050.
• GS Retail is expected to have significant improvements in non-CVS margins, leading to higher operating profit contributions.
• Peer valuation shows GS Retail's PER is lower than the global average, indicating a potential rerating.
• Financial summary includes detailed revenue, profit, and cash flow data, showing a positive trend in EPS growth and improved operating profit margins.
• Company roadshows are scheduled in various locations, indicating active engagement with investors.
• Daiwa Asian Events include the Daiwa Investment Conference in Hong Kong and London, highlighting the firm's continued focus on regional market engagement.