20160428-大华继显-Regional_Morning_Notes_34页_1mb

Regional Morning Notes Summary - April 28, 2016

Core Content Overview

This summary provides a detailed analysis of the economic and corporate developments across several Asian markets, including China, Hong Kong, Indonesia, Malaysia, Singapore, and Thailand. It also includes key financial data and analyst recommendations for specific companies.

Main Points and Key Information

China

• Economic Policy Review:

  • China's GDP growth in 1Q16 stabilized as expected, with a rebound in fixed-asset investment, industrial production, and exports.
  • Recent stimulus policies have had a positive impact on the demand side, but structural reforms have not been implemented as anticipated, leading to increased economic imbalances and distortions.
  • The government has shifted focus to fiscal expansion and monetization of government debt to support demand and employment.
  • Policy risks remain due to information asymmetry and the potential for inflation and currency depreciation in the future.

• Company Results - Guangzhou Automobile Group (2238 HK):

  • 1Q16 Results: Net profit surged 264% yoy to Rmb1,927m, exceeding the company's guidance range of 240-270%.
  • Performance Drivers: Strong sales growth from the proprietary brand Trumpchi (up 133.9% yoy) and GAC FCA (up 202.4% yoy due to increased production and sales of the Jeep Cherokee).
  • Analyst View: Maintain BUY with a target price of HK$11.00, based on 10x 2016F PE.
  • Key Financials:
    • Revenue is expected to grow from Rmb29,418m in 2015 to Rmb59,845m in 2018.
    • Net profit is forecasted to rise from Rmb4,211m in 2015 to Rmb7,558m in 2018.
    • EBITDA margin is projected to increase from 6.8% to 9.0%.
    • ROE is expected to rise from 11.4% to 14.9%.
    • The company's PE is currently at 8.3x 2016F, which is below its historical mean of 12x.
    • The company is expected to achieve a 42% yoy profit growth in 2016 due to strong performance in Trumpchi and GAC FCA.

• Company Update - Tianneng Power (819 HK):

  • Rumors of accounting fraud were deemed groundless, but the company's 2H15 lead-acid battery ASP was 10% below expectations.
  • As a result, the analyst downgraded the stock from HOLD to SELL and cut the target price from HK$7.50 to HK$5.20.
  • The EPS forecast for 2016-18 was reduced by 11-14% due to weaker battery prices.
  • The company clarified the allegations and reported the case to authorities.

Hong Kong

• Galaxy Entertainment (27 HK):
  • 1Q16 results slightly above expectations.
  • The opening of Phase 3 is expected to align with the completion of the bridge.

Indonesia

• Bank Central Asia (BBCA IJ):

  • 1Q16 net profit up 11.1% yoy, in line with expectations.
  • PPOP (provision for outstanding performance) increased by 27% yoy.

• United Tractors (UNTR IJ):

  • 1Q16 net profit dropped 55% yoy.
  • Core earnings were within expectations.
  • Maintain SELL with a lower target price of Rp12,500 (previously Rp12,700).

Malaysia

• Sunway REIT (SREIT MK):
  • 3QFY16 results in line with expectations.

Singapore

• Sembcorp Marine (SMM SP):

  • 1Q16 net profit down 48% yoy.
  • Orderbook issues continued, leading to a SELL recommendation.
  • Target price cut to S$0.90.

• Cityneon Holdings (CITN SP):

  • Analysts maintain BUY with a target price of S$0.72.
  • The company is positioned for "blockbuster" performance in the coming years.

Thailand

• Banking Sector:

  • 1Q16 earnings down 11% yoy due to a surge in loan-loss charges.

• Siam Cement (SCC TB):

  • 1Q16 results beat consensus estimates by 20%.
  • Analysts maintain BUY with a target price of Bt630.00.

Key Indices (as of 28 April 2016)

Top Picks

BUY

• Air China (753 HK): CP 5.85, TP 10.20, Pot. +/- 74.4%
• Ping An (2318 HK): CP 37.40, TP 45.00, Pot. +/- 20.3%
• Bank BJB (BJBR J): CP 910.00, TP 1,140.00, Pot. +/- 25.3%
• Gamuda (GAM MK): CP 4.68, TP 5.55, Pot. +/- 18.6%
• WCT Holdings (WCTHG MK): CP 1.63, TP 2.05, Pot. +/- 25.8%
• City (CIT SP): CP 8.59, TP 10.86, Pot. +/- 26.4%
• DBS (DBS SP): CP 15.60, TP 19.25, Pot. +/- 23.4%
• Charoen (CPF TB): CP 25.25, TP 30.00, Pot. +/- 18.8%
• Siam Cement (SCC TB): CP 492.00, TP 630.00, Pot. +/- 28.0%

SELL

• Spurakencana (SAKP MK): CP 1.77, TP 1.43, Pot. +/- -19.2%
• Sembcorp (SMM SP): CP 1.67, TP 0.88, Pot. +/- -47.3%

Key Assumptions

Summary of Economic and Corporate Trends

• China's Economic Recovery:

  • The government's demand-side policies have led to a stabilization in GDP growth and a recovery in industrial activity.
  • Structural reforms are not progressing as expected, leading to concerns about long-term sustainability and policy risks.
  • GAC's performance is strong, with significant growth in Trumpchi and GAC FCA.

• Hong Kong:

  • Galaxy Entertainment reported slightly above expectations results.
  • The opening of Phase 3 is aligned with the completion of the bridge.

• Indonesia:

  • Bank Central Asia's results were in line with expectations.
  • United Tractors experienced a significant drop in net profit, leading to a SELL recommendation.

• Malaysia:

  • Sunway REIT's results were in line with expectations.

• Singapore:

  • Sembcorp Marine's results were weak, leading to a SELL recommendation.
  • Cityneon Holdings is expected to perform well, leading to a BUY recommendation.

• Thailand:

  • The banking sector faced a decline in earnings due to loan-loss charges.
  • Siam Cement exceeded expectations, leading to a BUY recommendation.

Analysts

• Chaoping Zhu: +8621 5404 7225 ext. 822, chaoping@uobkayhian.com
• Ye Xu: +8621 5404 7225 ext. 820, xuye@uobkayhian.com
• Ken Lee: +852 2236 6760, ken.lee@uobkayhian.com.hk
• Sophie Yu: +852 2826 1392, sophie.yu@uobkayhian.com.hk