20170606-大华继显-Regional_Morning_Notes_24页_968kb

报告摘要

Regional Morning Notes Summary - 06 June 2017

Core Content Overview

This document is a regional investment summary for June 2017, focusing on key markets: China, Indonesia, Malaysia, and Singapore. It outlines alpha picks, economic data, corporate events, and valuation insights for various stocks and indices. The summary is divided into sections, each providing strategic insights, performance updates, and analyst recommendations.

China Strategy

Alpha Picks: June Conviction Calls

Added to BUY list: IMAX China (1970 HK), Tencent (700 HK), TUL (3933 HK)
Added to SELL list: Cathay Pacific (293 HK)
Maintained BUY: BEWG (371 HK), Ctrip (CTRP US)

Key Picks & Reasons

BEWG (371 HK): Strong government ties and leading position in the industry, expected to win more PPP projects. Target price: HK$7.60.
Ctrip (CTRP US): Improved margin expansion, strong overseas expansion, and better synergy with Skyscanner. Target price: US$65.
IMAX China (1970 HK): Benefiting from a stronger Hollywood movie pipeline, better product mix, and lower costs. Target price: HK$41.
Tencent (700 HK): Stronger-than-expected PC game revenue growth, monetization on WeChat Ads and payments, and faster growth in cloud business. Target price: HK$312.

Key Actions

Take profit on Brilliance (1114 HK) and Longfor (960 HK) due to strong returns.
Dropped CITICS (6030 HK) due to regulatory concerns and lack of near-term catalysts.

Economic Data Preview

Expected further slowdown in May 17 with lower YoY growth in industrial production, fixed asset investment, retail sales, and foreign trade.
CPI and PPI inflation are expected to remain weak, with CPI at 1.2% and PPI at 5.0% YoY.
M2 growth is expected to decline to 10.3% YoY in May 17, down from 10.5% in April 17.
New loan issuance is forecasted at Rmb850b in May 17, down from Rmb1097.8b in April 17.

Indonesia Strategy

Alpha Picks: Exiting AISA and ROTI

Exited AISA (AISA J) and ROTI (ROTI J) due to weak 1Q17 results and upcoming rights issue.
Key picks: MAPI (MAPI J), BBNI (BBNI J), WIKA (WIKA J)
SELL: INTP (INTP J)

Top Alpha Picks

MAPI (MAPI J): Undervalued, with a fashion division trading at <18x PE. Performance: +36.9% since inception.
BBNI (BBNI J): Trading at 1.0x 2017F P/B, with a target price of Rp7,100. Performance: +2.9% in May 17.
WIKA (WIKA J): Strong growth potential, with a target price of Rp3,100. Performance: +37.8% since inception.

Key Actions

Trim AISA after an 11.6% gain since inception.
Exit ROTI after a 10.5% loss, due to rights issue dilution.
Exit SGRO after a minimal 0.4% gain.

Malaysia Sector: Rubber Gloves

1Q17 sector earnings rose by 19% qoq, driven by higher ASPs and favourable exchange rates.
Magnum (MAG MK): Upgraded to BUY after trading at its assessed trough value. Target price: RM2.00.

Singapore Sector: Aviation

SIAEC's share buybacks are expected to support the share price.
However, the aviation industry faces macroeconomic headwinds.

Key Indices Performance (as of 06 June 2017)

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	21184.0	-0.1	0.5	0.8	7.2
S&P 500	2436.1	-0.1	0.8	1.5	8.8
FTSE 100	7525.8	-0.3	-0.3	3.1	5.4
AS30	5792.1	-0.5	0.8	-1.2	1.3
CSI 300	3468.8	-0.5	-0.5	2.5	4.8
FSSTI	3238.3	-0.1	0.7	0.3	12.4
HSI	25863.0	-0.2	0.9	5.7	17.6
JCI	5748.2	0.1	0.5	1.1	8.5
KLCI	1788.0	0.6	1.3	1.4	8.9
KOSPI	2368.6	-0.1	0.7	5.7	16.9
Nikkei 225	20170.8	-0.0	2.5	3.7	5.5
SET	1566.9	-0.0	-0.1	-0.1	1.5
BDI	821	-1.1	-10.0	-17.4	-14.6
CPO (RM/mt)	2782	0.5	-2.5	2.9	-13.0
Brent Crude	49	-1.0	-5.4	0.8	-12.9

Top Analyst Alpha Picks (China)

Company	Ticker	Recommendation	Price (HK$)	Target Price (HK$)	Upside/Downside (%)
BEWG	371 HK	BUY	6.21	7.60	+22.4
Cathay Pacific	293 HK	SELL	11.50	9.90	-13.9
Ctrip	CTRP US	BUY	56.14	65.00	+15.8
IMAX China	1970 HK	BUY	34.20	41.00	+19.9
Tencent	700 HK	BUY	272.40	312.00	+14.5
TUL	3933 HK	BUY	5.33	6.32	+18.6

Valuation Insights

BEWG (371 HK): 12.9x 2017F PE, target price HK$7.60.
Cathay Pacific (293 HK): 49.3x 2017F PE, target price HK$9.90.
Ctrip (CTRP US): 31.3x 2017F PE, target price US$65.
IMAX China (1970 HK): 31.4x 2017F PE, target price HK$41.
TUL (3933 HK): 22.8x 2017F PE, target price HK$6.32.
Tencent (700 HK): 31.9x 2017F PE, target price HK$312.

Corporate Events

Analyst Presentation on Singapore Property & REITs Strategy: 1 Jun – 6 Jun
Group meeting with Fortune REIT: 7 Jun
Roadshow with Meidong Auto Holdings: 8 Jun – 9 Jun
Site visit to Auto Sector Companies: 13 Jun
Roadshow with PT Siloam Int'l Hospital: 5 Jun – 16 Jun
Analyst Presentation on Spore Strategy: 15 Jun – 16 Jun
Luncheon with United Overseas Bank: 3 Jul
Sarawak Oil Palms Site Visit: 3 Jul – 5 Jul
New Economy Conference 2017: 11 Jul
Roadshow with Top Glove Corporation: 5 Sep – 12 Sep

Performance in May 17 (China)

Ticker	Return (%)	Since Inception (%)
BEWG	+10.7	+36.86
Ctrip	+15.7	+38.19
IMAX China	n.a.	n.a.
TUL	n.a.	n.a.
Tencent	n.a.	n.a.

Performance in May 17 (Indonesia)

Ticker	Return (%)	Since Inception (%)
MAPI	+36.9	+38.19
BBNI	+2.9	+2.90
INTP	-14.8	-14.80
WIKA	+37.8	+37.80

Key Recommendations Summary

China: Focus on IMAX China, Tencent, TUL, BEWG, and Ctrip for BUY recommendations.
Indonesia: Recommend MAPI, BBNI, and WIKA as BUY, and INTP as SELL.
Malaysia: Recommend Magnum (MAG MK) as BUY.
Singapore: Monitor SIAEC for share buybacks, though the sector faces macro challenges.

Conclusion

The report highlights optimistic outlooks for certain stocks in China and Indonesia, driven by strong fundamentals, growth potential, and strategic initiatives. However, it also warns of headwinds in the economy, including slower growth in key sectors, tightened financial regulations, and weaker macroeconomic conditions. Analysts recommend taking profits on some high-performing stocks and exiting others due to underperformance or negative outlooks. The document serves as a strategic guide for investors looking to optimize their portfolios based on short-term market dynamics and fundamental analysis.