20150128-大华继显-Regional_Morning_Notes_21页_1mb

Regional Morning Notes Summary

Date: Wednesday, 28 January 2015

Core Content Overview

This document provides a summary of regional financial insights, focusing on China, Indonesia, Malaysia, Singapore, and Thailand. It includes updates on company results, exchange rates, key indices, analyst recommendations, and corporate events for the region.

Key Highlights by Region

China

• Economics: The renminbi (RMB) is under depreciation pressure due to the ECB's quantitative easing (QE), which caused the euro to weaken. The RMB is expected to depreciate to Rmb6.35/US$ by end-2015, a 2.3% drop from the end-2014 rate.
• Exchange Rate: The RMB is expected to fluctuate within a Rmb6.0–6.4 range in 2015. The current account surplus to GDP has declined from 12% in mid-2007 to 3% by end-2014, suggesting the RMB is approaching equilibrium.
• Monetary Policy: The PBOC is expected to continue monetary easing, which may increase depreciation expectations.
• Supporting Factors: The RMB could be supported by a higher trade surplus due to falling oil and commodity prices, the need to stabilize cross-border capital flows, and political pressure from the US to prevent a sharp depreciation.
• Key Indices:
  • CSI 300: Closed at 3574.9, up 5.3% in one week and 3.7% in one month.
  • HSI: Closed at 24807.3, up 3.6% in one week and 6.2% in one month.
  • Nikkei 225: Closed at 17768.3, up 1.7% in one day and 2.3% in one week.

Indonesia

• Bank Rakyat Indonesia (BBRI):
  • 4Q14 Results: Net profit reached Rp6.643t, up 3.8% qoq and 12% yoy. Total net profit for 2014 was Rp24.2t, slightly above consensus estimates.
  • Asset Quality: NPL ratio improved from 1.89% in September 2014 to 1.69% in December 2014, driven by better loan quality and a shift to higher-yield micro loans.
  • Loan Growth: Loan growth slowed to 13.9% yoy, but higher asset yields offset this.
  • Analyst View: Maintain BUY rating with a target price of Rp13,000 (21.2% upside). The P/BV ratio is expected to decline from 3.3x to 1.9x by 2016.
  • Valuation: Current P/BV is 2.8x for 2015F, suggesting undemanding valuation.
  • Corporate Events: No major events listed for this quarter.

Malaysia

• Gamuda Berhad (GAM MK):
  • Update: Downgraded to HOLD due to near-term catalysts being priced in.
  • Target Price: RM5.40.
  • Share Price: RM5.04.
  • Analyst View: The downgrade reflects that the market has already accounted for key catalysts, and further growth is unlikely in the short term.

Singapore

• Plantation Sector:
  • 2014 Results Preview:
    • BAL (likely to be a plantation company) is expected to report better-than-expected net profit.
    • FR (another plantation company) is expected to report results in line with expectations.

Thailand

• Quality Houses (QH TB):
  • Update: Business plan for 2015.
  • Analyst View: Maintain BUY rating with a target price of Bt4.90 (3.9% upside).
• Sino-Thai Engineering & Construction (STEC TB):
  • Update: Expected to report 14% earnings growth in 2015 due to low oil prices and a tax shield.
  • Analyst View: Maintain BUY rating with a target price of Bt30.25 (16.8% upside).

Key Indices Overview

Top Picks

Note: UMWH Holdings is listed as a SELL with a target price of Rp10.00 (8.1% downside).

Key Assumptions

Corporate Events

Conclusion

The report highlights the RMB depreciation pressure and its implications on China's exports and economic growth. It also covers positive developments in Indonesian banking and Thailand's food and beverage sector. The key indices show mixed performance, with Singapore and Malaysia leading in growth. The top picks reflect a mix of BUY and SELL recommendations, with BBRI and STEC being the most recommended. Analysts suggest diversification, improvement in asset quality, and monetary policy changes as key drivers of future performance.