20150521-大华银行-R_e_g_i_o_n_a_l_M_o_r_n_i_n_g_N_o_t_e_s_22页_1mb

Regional Morning Notes Summary

Overview

Date: Thursday, 21 May 2015
Summary: This document provides a regional update on stock market activity in China, Indonesia, Malaysia, and Singapore, along with key financial data, corporate events, and valuation insights.

China

Company Update: Zhengzhou Yutong Bus (600066 CH)

• Market Position: A leading manufacturer and marketer of medium and large buses, plug-in hybrid buses, and pure electric buses.
• Operating Subsidies: The Chinese government has introduced annual operating subsidies for electric buses, ranging from Rmb20,000 to Rmb80,000 per bus, depending on the size and type. This is expected to reduce the operating cost gap between conventional and electric buses.
• Sales Projections: Yutong is targeting 14,000 electric bus sales for 2015, up 89% yoy, with a focus on 2H15.
• Dividend Impact: A two-for-one stock dividend is expected, increasing the share count by 50%. The target price has been revised from Rmb35.00 to Rmb27.20 due to the dividend and market adjustments.
• Financials (2015F):
  • Net profit: Rmb3,448m
  • EBITDA: Rmb4,407m
  • EPS: Rmb1.56
  • PE: 13.4x
• Valuation: Based on a target PE of 15x, the new target price is Rmb27.20.
• Risks: Slower-than-expected government purchases and competition from new players in the electric bus market.

Indonesia

Company Update: Catur Sentosa Adiprana (CSAP IJ)

• Business Strategy: Transitioned from a building materials distributor to a home improvement retail business, similar to Home Depot.
• Store Expansion: Plans to expand from 22 to 24 Mitra10 stores by end-2015, with new stores in Lampung and Pamulang.
• Market Position: Market leader in building materials distribution and second-largest distributor of P&G products in Indonesia.
• Financials (2015F):
  • Net turnover: Rp8.0t
  • Net profit: Rp105m
  • EPS: Rp36.0
  • PE: 14.1x
• Valuation: Trading at a discount compared to peers, with an average PE of 27.3x.
• Risks: Intense competition from traditional retail and managing low margins.

Malaysia

Results: CIMB Group (CIMB MK)

• Performance: 1Q15 earnings missed expectations due to sharper-than-expected NIM compression and weak treasury income.
• Recommendation: SELL with a target price of RM5.60.

Results: Kuala Lumpur Kepong (KLKM)

• Performance: 2QFY15 core net profit of RM177m, down 19.6% qoq and 37.2% yoy, due to lower contributions from plantation and manufacturing divisions.
• Recommendation: HOLD with a target price of RM20.20.

Singapore

Strategy: 1Q15 Report Card

• Performance: Disappointing results, with 42% misses in 1Q15, compared to 21% in 4Q14.
• EPS Growth Forecast: Cut to 8.6% for 2015 and 8.7% for 2016.
• Target: Year-end target of 3,600 for FSSTI.
• Key Events: Analyst presentations for SIN Telcos, SIN Banks, and INDO Telcos in Taipei on 28 May 2015.

Key Indices

Top Picks

Key Assumptions

Corporate Events

Summary of Key Points

China

• Electric Bus Market: Strong growth anticipated with new operating subsidies.
• Yutong Sales: Expected to increase significantly in 2015 and beyond.
• Valuation Adjustments: Target price adjusted due to a two-for-one stock dividend.

Indonesia

• CSAP Transition: From building materials to home improvement retail.
• Store Expansion: Plans to open 24 Mitra10 stores by end-2015.
• Market Leadership: CSAP is a leader in building materials and a top P&G distributor.
• Valuation: Trading at a discount compared to peers.

Malaysia

• CIMB Group: Earnings below expectations.
• KLKM: Core net profit declined, leading to a HOLD recommendation.

Singapore

• Market Performance: Disappointing results in 1Q15.
• EPS Forecasts: Revised downwards for 2015 and 2016.
• Target: Year-end target of 3,600 for FSSTI.

Analysts

• China: Ken Lee

  • Contact: +852 2236 6760
  • Email: ken.lee@uobkayhian.com.hk

• Indonesia: Villya Purba and Stevanus Juanda

  • Villya Purba: +6221 2993 3979
  • Stevanus Juanda: +6221 2993 3845
  • Email: villyapurba@uobkayhian.com and stevanusjuanda@uobkayhian.com