20140923-大华继显-Regional_Morning_Notes_21页_1mb

报告摘要

Regional Morning Notes Summary - 23 September 2014

Core Content

This document outlines key developments in the ASEAN Open Skies agreement and provides sector and company updates, particularly in aviation and hospitality, along with financial insights on China Merchants Bank (CMB). It also includes corporate events and investment recommendations.

Key Story: ASEAN Open Skies

Indonesia's ratification of the 2009 ASEAN Open Skies agreement is a significant step toward forming a single aviation market by end-2015.
The agreement grants unlimited third, fourth, and fifth freedom rights to ASEAN airlines, enabling unrestricted travel and cargo operations between capital cities.
LCCs (Low-Cost Carriers) such as AirAsia, Lion Air, and Thai AirAsia are expected to benefit the most from increased intra-ASEAN travel.
Hospitality firms like Erawan, CDL Hospitality REIT, and Ascott REIT will also see growth due to increased tourism.
Philippines is the only ASEAN member not yet to ratify the agreement, citing infrastructure limitations in Manila.

Strategy: ASEAN Open Skies

The ratification of the agreement will boost intra-ASEAN tourism, increasing hotel demand and REVPAR (Revenue Per Available Room) for Singapore and Thailand.
AirAsia is highlighted as the top pick in the aviation sector due to:
- Higher intra-ASEAN travel
- Utilization of its extensive orderbook
- Higher lease income
Airport operators like MAHB (Malaysia) and AOT (Thailand) are expected to benefit, especially KLIA2, which has limited LCCs and is a key hub for AirAsia.
MAHB could benefit from uniform passenger service charges for LCCs and FSCs, currently offering 50% discounts to LCCs at KLIA2.

Key Indices (as of 22 Sep 2014)

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	17172.7	(0.6)	0.8	1.0	3.6
S&P 500	1994.3	(0.8)	0.5	0.3	7.9
FTSE 100	6773.6	(0.9)	(0.4)	(0.0)	0.4
AS30	5368.2	(1.3)	(2.0)	(4.8)	0.3
CSI 300	2378.9	(1.9)	(2.4)	0.6	2.1
FSSTI	3296.6	(0.3)	(0.5)	(0.9)	4.1
HSCEI	10597.3	(1.7)	(2.2)	(4.2)	(2.0)
HSI	23955.5	(1.4)	(1.6)	(4.6)	2.8
JCI	5219.8	(0.1)	1.5	0.4	22.1
KLCI	1846.1	(0.2)	(0.5)	(1.3)	(1.1)
KOSPI	2039.3	(0.7)	0.2	(0.8)	1.4
Nikkei 225	16205.9	(0.7)	1.6	4.3	(0.5)
SET	1589.5	0.3	0.7	2.1	22.4
TWSE	9134.7	(1.1)	(0.9)	(2.6)	6.1
BDI	1077	0.2	(8.2)	(1.0)	(52.7)
CPO (RM/mt)	2134	(1.5)	2.3	2.2	(17.1)
Nymex Crude (US$/bbl)	91	(0.9)	(2.2)	(3.0)	(7.7)

Sector Picks

AirAsia (BUY) - Expected to benefit from increased intra-ASEAN travel, higher lease income, and a strong orderbook.
Erawan (BUY) - Focuses on the non-luxury segment, with 25.7% CAGR expected in 2014-15, compared to 13% in the luxury segment.
CDL Hospitality REIT (BUY) - Derives 77% of its value from ASEAN properties.
Ascott REIT (BUY) - Derives 31% of its value from ASEAN properties.

Company Update: China Merchants Bank (3968 HK)

Key Takeaways:
- The bank's interbank assets and investment receivables saw significant growth in 1H14.
- Risk management and adequate provisions are in place, ensuring sustainable growth.
- Net interest margin (NIM) declined slightly in 1H14, expected to continue this trend.
- Asset growth in 2H14 is likely to slow, but overall growth in 2014 is still robust.
- Maintain BUY with a target price of HK$18.20, indicating +29.4% upside.
Financial Highlights:
- Net interest income is projected to grow from Rmbm 98,913 in 2014F to Rmbm 131,929 in 2016F.
- Non-interest income is expected to rise to Rmbm 62,809 in 2016F.
- Net profit is forecasted to increase from Rmbm 51,743 in 2014F to Rmbm 65,230 in 2016F.
- ROE is expected to decline slightly from 14.4% in 2014 to 12.8% in 2016.
- Capital Adequacy Ratio (CAR) is expected to remain above 10% in 2016.
Valuation:
- PE ratio is projected to decrease from 5.0 in 2014F to 4.3 in 2016F.
- P/B ratio is expected to fall from 1.1 in 2014F to 0.7 in 2016F.
- Dividend yield is forecasted to increase from 5.6% in 2014F to 7.0% in 2016F.

Corporate Events

China Property Sector Analyst Presentation - London, 22-26 Sep 2014
Kong Sun Corporate Roadshow - Hong Kong, 24 Sep 2014
CIFI Holdings Corporate Roadshow - London & Milan, 25-26 Sep 2014
Comba Corporate Roadshow - Taipei, 29-30 Sep 2014
China Railway and Shipping Sector Analyst Presentation - Hong Kong, 30 Sep 2014
Asian Gems Conference - Singapore, 8-9 Oct 2014

Analysts

K Ajith - +65 6590 6627 | ajith@uobkayhian.com
Pornthipa Rayabsangduan - +662 659 8302 | pornthipa@uobkayhian.co.th
Vijay Natarajan - +65 6590 6626 | vijaynatarajan@uobkayhian.com
Edmond Law - +852 2826 4837 | edmond.law@uobkayhian.com.hk
Terrance Liu - +852 2826 1351 | Terrance.liu@uobkayhian.com.hk

Key Assumptions

Region	GDP % YoY (2013)	GDP % YoY (2014F)	GDP % YoY (2015F)
US	1.9	3.0	3.0
Euro Zone	-0.4	1.0	1.4
Japan	1.5	2.1	2.0
Singapore	3.9	4.2	4.2
Malaysia	4.7	5.6	5.2
Thailand	2.9	1.5	5.1
Indonesia	5.8	5.5	6.0
Hong Kong	2.9	3.5	3.7
China	7.7	7.2	7.0

Investment Recommendations

BUY:
- AirAsia
- Erawan
- CDL Hospitality REIT
- Ascott REIT
- China Merchants Bank (3968 HK)
SELL:
- Thai Airways (THAI TB)
- Tigerair (TGR SP)
- Airports of Thailand (AOT TB)

Summary of Key Points

Indonesia's ratification of the ASEAN Open Skies agreement will lead to greater intra-ASEAN tourism.
LCCs like AirAsia and Thai AirAsia are expected to benefit from increased travel and lower operating costs.
Hospitality firms in Singapore and Thailand will see increased demand and occupancy rates.
China Merchants Bank is BUY due to solid risk management and sustainable growth.
Key risks include interbank asset growth and increased NPLs, but the bank is well-positioned to handle them.
Market expectations for GDP growth and economic stability remain positive across the region.