20150910-大华继显-Regional_Morning_Notes_16页_2mb

Regional Morning Notes Summary - 10 September 2015

Core Content Overview

This document provides a comprehensive analysis of stock performance and market outlook for various regions, focusing on China, Malaysia, and Singapore. It includes company updates, key indices, corporate events, financial metrics, and valuation insights.

China Market Analysis

CRRC Corp (1766 HK)

• Key Points:
  • Expected strong increase in new orders in 3Q15 due to efforts to ramp up railway procurement.
  • Full-year new orders projected to moderately increase in 2015.
  • Maintain HOLD due to fair valuation; target price HK$10.10.
  • Prefer Zhuzhou CSR (3898 HK) over CRRC due to better earnings growth and potential benefits from merger and restructuring.

Dongfeng Motor (489 HK)

• Key Points:
  • Sales recovery underway, with August sales up 4.3% yoy and 25.3% mom.
  • Target price raised to HK$11.00; maintain BUY.
  • New models and completion of destocking are expected to drive sales growth in 2H15 and 2016.
  • Raised sales assumptions for DF Honda and DF Nissan by 3-6%.
  • Net margin for JVs improved to 4% in 1H15, with forecasts raised to 3.9% for 2015-17.

Key Financials (CRRC)

• Net Turnover: Projected to grow from Rmb221,801.6m in 2014 to Rmb233,498.4m in 2015 and Rmb254,952.2m in 2017.
• Net Profit: Expected to increase from Rmb10,807.3m in 2014 to Rmb14,390.5m in 2017.
• Valuation Metrics:
  • PE (2016F): 16.9x (CRRC), 17x (Zhuzhou CSR).
  • EBITDA margin: Expected to rise from 9.6% in 2014 to 10.2% in 2017.
  • ROE: Expected to increase to 15.6% in 2017.

Key Indices (China)

• CSI 300: Prev Close 3399.3, 1D % 2.0, 1W % 1.0, 1M % -16.8, YTD % -3.8.
• HSCEI: Prev Close 9975.5, 1D % 5.2, 1W % 5.5, 1M % -11.7, YTD % -16.8.
• HSI: Prev Close 22131.3, 1D % 4.1, 1W % 4.5, 1M % -9.7, YTD % -6.2.

Key Assumptions

• GDP Growth: China is projected to grow at 7.0% in 2015, with a 60% increase in new contract value in 9M15.
• Brent Crude: Average in 2014 at 99.45 US$/bbl, projected to drop to 61 US$/bbl in 2015.
• CPO (Crude Palm Oil): Projected to rise from 722 US$/mt in 2014 to 765 US$/mt in 2015.

Corporate Events

• Evergrande Real Estate Roadshow: Singapore, 11 Sep.
• KWG Property Roadshow: Shanghai, 15 Sep.
• Deleum Bhd Luncheon: Kuala Lumpur, 17 Sep.
• Genting Singapore Luncheon: Singapore, 18 Sep.
• Far East Consortium Roadshow: Toronto (8 Oct), Montreal (9 Oct).
• Asian Gems Conference: Singapore, 12-13 Oct.

Malaysia Market Analysis

IJM Corporation (IJM MK)

• Key Points:
  • BUY recommendation; target price RM3.95.
  • Kuantan Port is a key anchor for earnings and growth prospects.

Singapore Market Analysis

Sector: Telecommunications

• Key Points:
  • Assessing the impact of the entry of a fourth mobile operator on the market.

Thailand Market Analysis

Feedback from Retail Seminar

• Key Points:
  • Selective BUY recommendations: ADVANC, KTB, PTTGC, TVO, and AP.
  • Avoid overvalued sectors.

Valuation and Investment Recommendations

Top Picks (BUY)

• Beijing Capital (694 HK): Target price HK$11.40, potential upside +43.8%.
• ICBC (1398 HK): Target price HK$7.60, potential upside +61.0%.
• Bank BJB (BJBR LJ): Target price HK$980.00, potential upside +39.0%.
• DiGi.Com (DIGI MK): Target price HK$6.30, potential upside +19.1%.
• Maybank (MAY MK): Target price HK$10.00, potential upside +16.0%.
• CapitaLand (CAPL SP): Target price HK$4.08, potential upside +42.7%.
• DBS (DBS SP): Target price HK$23.75, potential upside +32.2%.
• Kasikornbank (KBANK TB): Target price HK$232.00, potential upside +26.1%.
• PTT (PTT TB): Target price HK$410.00, potential upside +55.9%.

Top Picks (SELL)

• SIA Engineering (SIE SP): Target price HK$3.00, potential downside -15.5%.
• UMWH Holdings (UMWH MK): Target price HK$7.00, potential downside -11.2%.

Key Metrics and Financial Highlights

CRRC Corp

• Net Profit (Adj.): Expected to rise from Rmb10,807.3m in 2014 to Rmb14,390.5m in 2017.
• EPS (Fen): Projected to increase from 39.6 in 2014 to 52.7 in 2017.
• PE (x): Expected to fall from 19.1x in 2014 to 14.3x in 2017.
• Debt to Equity: Projected to rise from 44.8% in 2014 to 34.0% in 2017.
• Interest Cover: Expected to increase from 9.1x in 2014 to 13.0x in 2017.

Dongfeng Motor

• Net Profit (Adj.): Projected to increase from Rmb9,918m in 2014 to Rmb12,334m in 2017.
• EPS (fen): Expected to rise from 115.1 in 2014 to 143.2 in 2017.
• P/B (x): Expected to fall from 1.0x in 2014 to 0.6x in 2017.
• Net Margin: Projected to rise from 2.8% in 2015 to 3.9% in 2017.

Key Assumptions and Outlook

• GDP Growth: China is expected to grow at 7.0% in 2015, with a 60% increase in new contract value in 9M15.
• Overseas Orders: Expected to be below management's target due to weakening currencies and poor emerging market growth.
• Urban Rail Transit (URT): Expected to be a growth driver, with sales expected to increase from 3,650 sets in 1H15 to 5,000 sets in 2015.
• Infrastructure Investment: Strong government support expected, with policies like construction bonds and PPP initiatives.

Analyst Information

• CRRC Corp: Johnson Hu, CFA, +8621 5404 7225 ext 809, johnsonhu@uobkayhian.com.
• Dongfeng Motor: Ken Lee, +852 2236 6760, ken.lee@uobkayhian.com.hk.