20180717-大华继显-Regional_Morning_Notes_24页_1mb
报告摘要
Regional Morning Notes Summary - 17 July 2018
Core Content Overview
This summary provides a regional economic and market update for key markets including China, Indonesia, Malaysia, Thailand, and Singapore, along with specific company updates and investment recommendations.
China Economic Activity
- Real GDP Growth: China's real GDP growth slowed to 6.7% yoy in 2Q18, slightly below the 6.8% yoy in 1H18. The services sector was the main driver, growing at 7.8% yoy, while the primary sector remained flat at 3.2% yoy and the secondary sector edged down to 6.0% yoy.
- Consumer Spending: Domestic consumption remained a bright spot, with household appliances and furniture sales rising to 14.3% yoy and 15.0% yoy in June 2018, respectively.
- Fixed Asset Investment (FAI): FAI growth in 1H18 was 6.0% yoy, with infrastructure investment slowing to 7.3% yoy, the sixth consecutive month of decline.
- Industrial Production: Industrial production grew 6.7% yoy in 1H18, slightly below the Bloomberg consensus of 6.8% yoy. The automobile sector showed resilience with value-add growth at 14.0% yoy.
- GDP Forecasts: The full-year real GDP growth forecast for 2018 is maintained at 6.4% yoy, with expectations of more supportive fiscal policies in the second half due to macroeconomic headwinds.
Company Update: Q Technology Group (1478 HK)
- Profit Guidance: QTech now expects a Rmb50m loss in 1H18 instead of a >50% yoy profit decline, due to RMB depreciation, component shortages, and product mix deterioration.
- 2H18 Outlook: Management remains optimistic about 2H18, citing new product launches and improved product mix, but analysts are skeptical due to the company's poor execution history.
- Target Price: The target price is reduced to HK$4.24, based on a 16x 2018F PE, from HK$5.85.
- Key Financials (2018F):
- Net Profit: Rmb252m (down 24% from previous forecast)
- Gross Profit: Rmb777m (down 12.3%)
- Operating Profit: Rmb396m (down 19.1%)
- Margin Pressures: Gross margin is expected to decline in 2H18 due to ASP pressure, component shortages, and slow adoption of new technologies.
- Strategic Moves: QTech is targeting the auto camera module market and exploring synergies with Newmax Technology through vertical integration.
Indonesia: Cement Sector
- 1H18 Demand: Cement demand grew 3.6% yoy in 1H18, driven by outer Java regions, but was 41% mom in June due to led-Fitr seasonality.
- Margin Deterioration: Margins are expected to worsen in 2Q18 due to low utilisation rates and rising costs, especially from coal prices and weakening rupiah.
- Market Share: SMGR lost market share to Conch Cement in key regions like western Java and eastern Indonesia, while INTP and SMCB maintained their positions.
- Industry Dynamics: The potential exit of LafargeHolcim from Indonesia may shift the industry back to an oligopolistic state, benefiting major players like SMCB.
- Earnings Outlook: Analysts expect a potential earnings downgrade after 1H18 results due to higher coal and oil prices and weaker currency.
Malaysia: Construction Sector
- LRT3 Project: Recent approval for the continuation of the LRT3 project may signal a turning point for the construction sector.
- Top Picks: Companies like Gamuda and GAQRS are highlighted as top picks in the construction sector.
Malaysia: Oil & Gas Sector
- Upstream Contracts: The sector is expected to see more local upstream contracts, including large EPCIC projects (K5, Kasawari) and integrated maintenance contracts (ILCT, Pan Malaysia MCM).
- Potential Growth: These contracts may provide long-term benefits to Malaysian oil and gas firms.
Singapore: Keppel REIT (KREIT SP)
- 2Q18 Performance: Results were in line with expectations, with good momentum in the Singapore office segment.
- Recommendation: BUY with a target price of S$1.35.
Thailand: Total Access Communication (DTAC TB)
- 2Q18 Results: Results were in line with market and analyst expectations.
- Recommendation: BUY with a target price of Bt58.00.
PTT Exploration & Production (PTTEP TB)
- Divestment of Montara: The divestment of the Montara oil field is considered a fair deal for PTTEP and may benefit the company in the long run.
- Recommendation: HOLD with a target price of Bt141.00.
Key Indices (as of 17 July 2018)
| Index | Prev Close | 1D % | 1W % | 1M % | YTD % |
|---|---|---|---|---|---|
| DJIA | 25064.4 | 0.2 | 1.2 | -0.1 | 1.4 |
| S&P 500 | 2798.4 | -0.1 | 0.5 | 0.7 | 4.7 |
| FTSE 100 | 7600.5 | -0.8 | -1.1 | -0.4 | -1.1 |
| AS30 | 6326.7 | -0.4 | -0.6 | 2.0 | 2.6 |
| CSI 300 | 3472.1 | -0.6 | 0.4 | -7.5 | -13.9 |
| FSSTI | 3232.8 | -0.8 | 0.1 | -3.7 | -5.0 |
| HSCEI | 10704.3 | -0.4 | -0.6 | -9.8 | -8.6 |
| HSI | 28539.7 | 0.0 | -0.5 | -5.8 | -4.6 |
| JCI | 5905.2 | -0.7 | 1.7 | -1.5 | -7.1 |
| KLCI | 1726.7 | 0.3 | 3.2 | -2.0 | -3.9 |
| KOSPI | 2302.0 | -0.4 | 0.7 | -4.2 | -6.7 |
| Nikkei 225 | 22597.4 | 1.8 | 3.7 | -1.1 | -0.7 |
| SET | 1627.7 | -1.0 | 0.3 | -4.5 | -7.2 |
| TWSE | 10817.5 | -0.4 | 0.9 | -2.4 | 1.6 |
| BDI | 1666 | 2.1 | 3.5 | 15.3 | 22.0 |
| CPO (RM/ml) | 2160 | -1.0 | -5.1 | -6.8 | -9.6 |
| Brent Crude | 72 | -4.6 | -8.0 | -2.2 | 7.4 |
Top Picks and Recommendations
| Company | Ticker | Current Price | Target Price | Potential % Change |
|---|---|---|---|---|
| Baoshan Iron & Steel | 600019 CH | 7.51 | 9.53 | +26.9% |
| Gudang Garam | GGRM LJ | 68,500.00 | 85,000.00 | +24.1% |
| PP Persero | PTPP LJ | 1,985.00 | 3,700.00 | +86.4% |
| Bumi Armada | BAB MK | 0.75 | 1.06 | +42.3% |
| OCBC | OCBC SP | 11.14 | 14.28 | +28.2% |
| SingTel | ST SP | 3.26 | 4.22 | +29.4% |
| Siam Cement | SCC TB | 422.00 | 610.00 | +44.5% |
Sell Recommendations
| Company | Ticker | Current Price | Target Price | Potential % Change |
|---|---|---|---|---|
| Hartalega | HART MK | 6.15 | 4.02 | -34.6% |
Key Assumptions (2018F)
| Economy/Commodity | 2017 | 2018F | 2019F |
|---|---|---|---|
| China | 6.9 | 6.4 | 6.2 |
| Indonesia | 5.1 | 5.3 | 5.4 |
| Malaysia | 5.9 | 5.0 | 5.3 |
| Thailand | 3.9 | 4.2 | 4.2 |
| Singapore | 3.6 | 2.8 | 3.0 |
| CPO | 2,783 | 2,400 | 2,500 |
| Brent Crude | 55.00 | 67.00 | 66.50 |
Corporate Events
- Analyst Presentation on 2H18: Singapore, 19–20 Jul
- Malaysia Strategy and Outlook: TBA
- Roadshow with OM Holdings Limited (OMH AU): Kuala Lumpur, 25 Jul
- Industry 4.0 Conference: Kuala Lumpur, 26 Jul
- Group Luncheon with Singapore Airlines (SIA SP): Singapore, 30 Jul
Analyst Contact
-
Clement Voon
+603 2147 1912
clementvoon@uobkayhian.com -
Tham Mun Hon, CFA
+852 2236 6799
munhon.tham@uobkayhian.com.hk
Key Metrics (2018F)
| Metric | 2017 | 2018F | 2019F | 2020F |
|---|---|---|---|---|
| EBITDA margin | 8.4 | 6.9 | 7.9 | 8.2 |
| Pre-tax margin | 6.4 | 3.5 | 4.7 | 5.1 |
| Net margin | 5.5 | 3.0 | 4.0 | 4.3 |
| ROA | 8.2 | 4.1 | 6.2 | 7.1 |
| ROE | 23.5 | 13.0 | 20.8 | 20.7 |
| Debt to equity | 50.2 | 62.4 | 49.9 | 40.5 |
| Net debt/(cash) to equity | 28.6 | 43.7 | 42.5 | 32.9 |
| Interest cover (x) | 39.3 | 21.5 | 29.8 | 34.9 |
Conclusion
The report highlights the slowdown in China's economic activity, particularly in industrial and infrastructure sectors, with consumption remaining a key growth driver. In Indonesia, the cement sector faces margin pressure due to led-Fitr seasonality and rising costs, while Malaysia sees potential in the construction and oil & gas sectors. In Singapore, Keppel REIT and Total Access Communication are highlighted as BUY recommendations, while Q Technology Group is SELL due to ongoing margin issues and uncertain turnaround. The LafargeHolcim exit in Indonesia may reshape the market, favoring larger players. Overall, the report emphasizes the importance of fiscal support, cost management, and strategic execution in navigating regional economic challenges.
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