20180710-大华继显-Regional_Morning_Notes_20页_1mb

Regional Morning Notes Summary - 10 July 2018

Core Content Overview

This report provides an analysis of stock performance and company updates for various markets and firms, including China, Indonesia, Malaysia, Singapore, and Thailand. It includes key financial data, valuation metrics, and investment recommendations.

Main Points by Region

China

• CSPC Pharmaceutical Group (1093 HK):
  • Recommendation: BUY
  • Target Price: HK$29.02
  • Upside: +26.7%
  • Key Growth Drivers: Rapid growth in the oncology segment and an upcoming pipeline of drugs.
  • Oncology Segment: Expected to reach Rmb2b in 2018 and Rmb4b in 2019, up from Rmb1b in 2017.
  • Pipeline: CSPC has secured two bioequivalent qualifications and plans to add five more domestic drugs in 2018, including Bortezomib injections and Ticagrelor tablets.
  • International Approvals: Received 13 overseas ANDA approvals and expects five more in 2018-19.
  • Financials:
    • Revenue is projected to grow from HK$15,463m in 2017 to HK$29,846m in 2020.
    • Net profit is expected to rise from HK$2,771m in 2017 to HK$5,611m in 2020.
    • EBITDA margin is projected to decrease slightly from 27.2% in 2017 to 25.0% in 2019.
    • ROE is expected to increase from 21.8% in 2017 to 24.3% in 2020.
  • Valuation: Based on SOTP valuation, with a 32.0x 2019F PE for existing drugs and a NAV-derived pipeline value of HK$5.19/share.

Indonesia

• Mitra Adiperkasa (MAPI IJ):
  • Recommendation: HOLD
  • Target Price: Rp900
  • Upside: +2.8% (from previous target of Rp7.37)
  • Catalysts: Have played out, and the stock is now fairly valued.
  • Financials: No significant changes in profit forecasts, but the stock is considered fairly valued.

Malaysia

• Top Glove (TOPG MK):
  • Recommendation: SELL
  • Target Price: RM7.80
  • Current Price: RM9.13
  • Reason: Post-briefing, net profit forecasts for FY19-20 were cut by 6-8%. The stock is trading at +1SD to its five-year forward PE.
  • Pipeline: No significant update mentioned.

Singapore

• Sector Insight: Banking sector has seen past cooling measures that have tamed investment demand.

Thailand

• Italian-Thai Development (ITD TB):
  • Recommendation: HOLD
  • Target Price: Bt2.70
  • Reason: Good performance may be outweighed by negative factors, and negative news has been priced in.

Key Indices

Key Assumptions

Corporate Events

• 10 Jul: Roadshow with Jacobson Pharma Corp (2633 HK)
• 11 Jul: Group Luncheon with CIMC-TianDa Holdings Company Limited (445 HK)
• 12 Jul: Group Luncheon with China Yongda Automobiles Services Holdings (3669 HK)
• 19 Jul: Analyst Presentation on 2H18 Malaysia Strategy and Outlook
• 26 Jul: Industry 4.0 Conference
• 30 Jul: Group Luncheon with Singapore Airlines (SIA SP)

Small/Mid Cap Highlights

CPMC Holdings (906 HK)

• Recommendation: HOLD
• Target Price: HK$3.64
• Upside: +2.8%
• Issue: Thwarted in its attempt to become an F&B play due to a trademark dispute.
• Dispute: Over the valuation of the JDB trademark, which was supposed to be injected into the JV company Qingyuan JDB Herbal by Wong Lo Kat.
• Actions Taken: CPMC filed arbitration and suspended supply of cans to JDB, which led to instability in JDB's can supply.
• Financial Impact:
  • Revenue for 2018F is slashed to Rmb6,794m from Rmb7,277m, a -7% change.
  • Net profit for 2018F is reduced to Rmb356m from Rmb465m, a -23% change.
  • Operating profit is cut to Rmb531m from Rmb587m, a -10% change.
  • Gross profit is down to Rmb1,132m from Rmb1,231m, a -8% change.
  • Net margin drops to 5.2% from 6.2%.
  • Dividend yield is expected to increase from 4.4% to 5.1%.
  • P/E ratio is reduced to 9.8x from 11.1x.
  • P/B ratio is at 0.6x.
  • EV/EBITDA ratio is at 8.5x.

Analysts

• Alex Jiang Lei: +852 2236 6749 | alexjiang@uobkayhian.com
• Michael Cheung: +852 2826 4857 | Michael.cheung@uobkayhian.com.hk
• Yukkei Lee, CFA: +852 2826 4867 | yukkei.lee@uobkayhian.com.hk