20170829-大华继显-Regional_Morning_Notes_42页_2mb

Regional Morning Notes Summary - 29 August 2017

Core Content Overview

This document provides a comprehensive market analysis for various companies across China, Hong Kong, Indonesia, Malaysia, and Singapore, focusing on their financial performance, strategic outlook, and valuation metrics. It includes re-initiated coverage, earnings reports, key assumptions, and corporate events for the listed entities.

Main Points and Key Insights

China

• China Maple Leaf Educational Systems (1317 HK):

  • Re-initiated with a BUY recommendation, target price HK$8.00 (upside +22.5%).
  • Positive outlook on its strategy of competitive pricing, asset-light expansion, and exposure to non-compulsory education.
  • Expected 3-year CAGR of 24.5% for net profit and 25.9% for revenue.
  • Anticipated 40,000 students by end-FY20 and 20% contribution from non-tuition revenue.
  • Strong operating cash flow and healthy balance sheet with a low debt-to-equity ratio.
  • The company is well-positioned to benefit from the growth of the K12 private education market, expected to reach Rmb370b by 2021.

• Chaowei Power (951 HK):

  • 1H17 net profit Rmb281m, missing expectations due to lower sales volume.
  • Cut target price from HK$5.80 to HK$5.50.
  • Maintained BUY recommendation with an upside of +41.8%.
  • Expected sales volume to recover in 2H17 as lead prices stabilize.
  • Management guidance suggests stable margins in 2H17 due to lead price stabilization.

• China Shenhua Energy (1088 HK):

  • Strong 1H17 results suggest better-than-expected performance for 2017.
  • Maintained BUY recommendation with a target price of HK$25.14.

• Sinopharm (1099 HK):

  • Efficient cost control offset top-line slowdown.
  • Upgraded to HOLD with a target price of HK$34.60.

Hong Kong

• IGG (799 HK):
  • Maintained BUY recommendation with a target price of HK$14.50.
  • Strong performance from Lords Mobile, with increased marketing expenses to extend game life.

Indonesia

• Bank Jabar (BJBR IJ):
  • Results in line with expectations, but stock considered too expensive.
  • Suggested SELL recommendation with a target price of Rp1,900.

Malaysia

• BIMBHoldings (BIMBK):

  • 2Q17 earnings slightly below estimate due to higher operating costs.
  • Maintained BUY recommendation with a target price of RM5.05.

• CIMB Group (CIMB MK):

  • 2Q17 results broadly in line with expectations.
  • Annualised ROE of 9.4% slightly below full-year estimate due to lumpy provisions and weak loan growth, expected to improve in 2H17.
  • Maintained HOLD recommendation with a target price of RM6.20.

• IOI Corporation (IOI MK):

  • 4QFY17 core net profit RM358m, exceeding expectations.
  • Maintained SELL recommendation with a target price of RM3.70.

• UMW Holdings (UMWH MK):

  • 2Q17 results missed expectations due to operational challenges, particularly in the automobile sector.
  • Maintained SELL recommendation with a target price of RM4.80.

Singapore

• NetLink NBN Trust (NETLINK SP):
  • Initiated with a BUY recommendation, target price S$0.93.
  • Strong foundation for the Next Gen NBN.

Thailand

• Property Sector:
  • Expected earnings growth to accelerate in 2H17.
• Total Access Communication (DTAC TB):
  • Maintained BUY recommendation with a target price of Bt64.00.
  • Neutral on the impact of new accounting standards.

Key Indices

Top Picks

BUY

• Alibaba (BABA US): Target price US$205.00, potential upside +21.8%.
• Beijing Ent. Water (371 HK): Target price HK$7.60, potential upside +18.6%.
• Ace Hardware (ACES IJ): Target price IJ$1,300.00, potential upside +22.1%.
• Waskita Kaya (WSKT IJ): Target price IJ$3,350.00, potential upside +48.9%.
• Ekovest (EKO MK): Target price MK$1.55, potential upside +37.2%.
• OCBC (OCBC SP): Target price SP$13.38, potential upside +21.1%.
• Siam Cement (SCC TB): Target price TB$600.00, potential upside +23.5%.

SELL

• Great Wall Motor (2333 HK): Target price HK$5.50, potential downside -45.1%.
• UMW Holdings (UMWH MK): Target price MK$4.80, potential downside -16.5%.

Key Assumptions

Corporate Events

Valuation Highlights

• China Maple Leaf Educational Systems (1317 HK):

  • Target price HK$8.00 based on 0.8x FY18F PEG.
  • FY17F and FY18F PE of 28x and 23x respectively.
  • Strong fundamentals with a healthy balance sheet and high dividend payout policy.

• Chaowei Power (951 HK):

  • Target price HK$5.50 after cutting previous estimate.
  • Maintained BUY with an upside of +41.8%.
  • Expected recovery in sales and stable margins in 2H17.

Conclusion

The document highlights key investment opportunities and risks across the Asia-Pacific region, with a focus on China's education sector, Malaysia's financial services, and other industries in Hong Kong, Indonesia, and Singapore. It provides detailed financial forecasts, strategic insights, and market performance data, along with corporate events that may impact stock valuations. The BUY recommendations are primarily for companies with strong growth potential and resilient fundamentals, while SELL is advised for those facing operational or regulatory challenges.