20170424-大华继显-Regional_Morning_Notes_14页_871kb

Regional Morning Notes Summary

Core Content Overview

This document provides a comprehensive summary of economic and financial market insights for the region, focusing on China and Southeast Asian markets, along with key stock results and analyst recommendations. It also includes details on corporate events, key financial metrics, and market performance data for various indices and stocks.

Main Points and Key Insights

China Economic Outlook

• Growth Prospects: The consensus is for a gradual slowdown in economic growth for the rest of 2017. The strong growth in 1Q17 is attributed to a low base in 1Q16 and the lagging effects of policy stimulus.
• Monetary Policy: The PBOC's tightening monetary policy, including increased reverse repo and SLF rates, is expected to continue, pressuring investment and economic growth.
• Housing Market: Concerns over the housing bubble in tier-1 and tier-2 cities persist, but the bubble is not expected to burst in the near term due to urbanization and controlled land supply. Property transaction freezes are likely to impact developers and investment in 3Q17.
• Reflationary Trend: While PPI rose 7.6% yoy in March 2017, the reflationary trend may not be sustainable due to price divergence between upstream and downstream products.
• Policy Cycle: There is an expectation that the policy cycle may restart after the 19th Party Congress, potentially leading to a loosening of risk control measures and a boost in investment in early 2018. However, there is caution about new reforms that may reduce reliance on investment.

Company Results

Ascott Residence Trust (ART SP/HOLD/S$1.09/Target: S$1.15)

• 1Q17 Performance: Results were in line with expectations, with overall RevPAU up 2% yoy due to the acquisition of Sheraton Tribeca. On a same-store basis, RevPAU declined due to weak corporate demand in Singapore and depreciation in the pound.
• Financial Highlights:
  • Revenue: S$111.3m (up 5.5% yoy)
  • Gross Profit: S$47.2m (down 2.9% yoy)
  • Unit holders Distribution: S$25.1m (down 8.1% yoy)
  • DPU: 1.51 cents (down 13.7% yoy)
  • Adjusted DPU: 1.64 cents (up 4.4% yoy)
• Key Financial Metrics:
  • Net Profit (adj.): S$122m (down 3% yoy)
  • EBITDA: S$239m (up 1.7% yoy)
  • Net margin: 26.5% (down from 30.2% in 2016)
  • Net debt/(cash) to equity: 79.2% (up from 66.9% in 2016)
• Performance by Region:
  • RevPAU fell in Singapore (-11%), Japan (-4%), China (-3%), and the US (-2%)
  • RevPAU rose in Vietnam (+10%) and the UK (+4%)
• Strategic Moves:
  • ART plans to monetize assets in Japan and potentially divest underperforming assets in tier-2 Chinese cities.
  • Acquisitions and asset recycling are expected to drive DPU growth in 2018.
• Valuation and Recommendation:
  • Maintain HOLD with a target price of S$1.15, based on a two-stage DDM model.
  • Entry price: S$1.00, upside: +5.5%.

Siam Commercial Bank (SCB TB/BUY/Bt160.00/Target: Bt172.00)

• 1Q17 Results: Net profit increased 13% yoy, driven by a strong rebound in non-interest income and stable asset quality.
• Earnings Update: Results were in line with expectations, and the bank's performance is seen as positive with a BUY recommendation.

Pruksa Holding (PSH TB/BUY/Bt22.80/Target: Bt29.00)

• 1Q17 Performance: Healthy presales from a new luxury project, but earnings remain weak due to no new condo completion and transfer.

Key Indices

Top Picks and Sell Recommendations

BUY Recommendations

• Alibaba (BABA US): CP 113.11, TP 130.00, Pot. +14.9%
• Beijing Ent. Water (371 HK): CP 5.97, TP 7.60, Pot. +27.3%
• Indosat (ISAT IJ): CP 7,300.00, TP 7,900.00, Pot. +8.2%
• Tiga Pilar (AISA IJ): CP 2,210.00, TP 2,550.00, Pot. +15.4%
• V.S. Industry (VSI MK): CP 1.89, TP 2.20, Pot. +16.4%
• OCBC (OCBC SP): CP 9.59, TP 10.75, Pot. +12.1%
• SingTel (ST SP): CP 3.73, TP 4.48, Pot. +20.1%
• Bangkok Dusit (BDMS TB): CP 19.90, TP 27.00, Pot. +35.7%
• Siam Cement (SCC TB): CP 542.00, TP 600.00, Pot. +10.7%

SELL Recommendations

• Great Wall Motor (2333 HK): CP 9.20, TP 6.00, Pot. -34.8%
• MGM China (2282 HK): CP 17.44, TP 13.20, Pot. -24.3%
• Hartalega (HART MK): CP 4.98, TP 4.07, Pot. -18.3%

Key Assumptions

Corporate Events

• Tea Session with KSH Holdings: Singapore, 24 Apr
• Group Luncheon with ZTE Corp: Hong Kong, 25 Apr
• Analyst Presentation on Indonesia Strategy: Thailand, Singapore, Kuala Lumpur (24-28 Apr)
• Group Luncheon with Hopefluent: Hong Kong, 27 Apr
• Group Luncheon with CAT Telecom: Thailand, 28 Apr
• Luncheon with Khonburi Sugar & Sappe: Thailand, 2 May
• Roadshow with Meidong Auto Holdings: UK, 4-5 May
• Analyst Presentation on Malaysia Outlook and Strategy and Regional Gaming: Hong Kong, 17 May
• Roadshow with Singtel: Canada, 26 May
• Roadshow with PT Siloam Int'l Hospital: Canada, 5-16 Jun
• Luncheon with United Overseas Bank: Singapore, 3 Jul
• Roadshow with Top Glove Corporation: US/Canada, 5-12 Sep

Summary of Key Financial Metrics for ART

• DPU (cents): 1.51 (down 13.7% yoy)
• Adjusted DPU (cents): 1.64 (up 4.4% yoy)
• Net Profit (adj.): S$122m (down 3% yoy)
• EBITDA: S$239m (up 1.7% yoy)
• Net Debt/(Cash) to Equity: 79.2% (up from 66.9% in 2016)
• Interest Cover: 4.9x (down from 4.9x in 2016)
• ROE: 4.6% (down from 5.5% in 2016)
• PE (x): 19.0 (up from 15.9 in 2016)
• P/B (x): 0.8 (up from 0.8 in 2016)
• DPU Yield (%): 5.7 (down from 7.3% in 2016)

Valuation and Recommendation

• Target Price: S$1.15 (down from S$1.20)
• Entry Price: S$1.00
• Upside: +5.5%
• Recommendation: Maintain HOLD

Analysts

• Derek Chang: +65 6590 6614, derekchang@uobkayhian.com
• Vikrant Pandey: +65 6590 6623, vikrant@uobkayhian.com