Regional Morning Notes Summary
Core Content Overview
This document provides a summary of financial results and market updates for various companies and regions as of Thursday, 06 November 2014. It includes performance highlights, key financial metrics, stock recommendations, and outlook for the companies and markets covered.
China
China Shineway Pharmaceutical (2877 HK)
- 3Q14 Performance: Revenue declined 7.5% yoy to Rmb520m, with injection products seeing the most significant drop at 10.8% yoy. Other products showed modest growth.
- 9M14 Performance: Revenue was flat yoy at Rmb1,580m, with injection products down 3.6% yoy and granules up 7.0% yoy.
- Outlook: Despite plans for new product launches and M&A, pricing pressure from major competitors remains. The company is expected to see single-digit revenue and net profit growth in 2014.
- Recommendation: Maintain SELL with a target price of HK$10.20.
- Key Financials:
- EBITDA margin: 39.9% (2013) to 41.0% (2014F)
- Net margin: 31.3% (2013) to 31.0% (2014F)
- Net debt/(cash) to equity: (40.5%) (2014F)
- Valuation: Based on 8.5x 2015F PE or 1x PEG.
Hong Kong
Giordano International (709 HK)
- 3Q14 Performance: Sales declined 4% yoy to HK$1,283m, with same-store sales (SSS) falling 6% yoy, mainly due to weak performance in Hong Kong, Southeast Asia, and the Middle East.
- Recent Improvements: SSS in China and Taiwan showed improvement, with Taiwan recording +6% SSS growth due to competitor exit.
- Outlook: Sales may improve with the new winter collection and holiday season. Operating deleverage is expected to ease in 2015.
- Recommendation: Maintain HOLD with a target price of HK$4.02.
- Key Financials:
- Net margin: 11.3% (2014F) to 8.5% (2016F)
- EV/EBITDA: 6.7x (2014F) to 7.4x (2016F)
- Earnings Forecast:
- Revenue: HK$5,583m (2014F) vs HK$5,619m (Old)
- Net profit: HK$405.8m (2014F) vs HK$458.8m (Old)
- Key Risks: Further sales slowdown, increasing competition from international brands, and e-commerce.
Indonesia
AKR Corporindo (AKRA IJ)
- Strategy: Could benefit from subsidised fuel price hike and higher margin on industrial land sales, potentially boosting net profit.
- Key Assumptions:
- GDP growth: 5.2% (2014)
- CPO: 725 US$/mt (2014F)
- BDI: 1,200 (2014F)
- Recommendation: No specific recommendation mentioned, but potential upside to net profit is noted.
Malaysia
Malaysia Marine and Heavy Engineering Holdings (MMHE MK)
- 9M14 Performance: Earnings were lifted by investment tax allowance, but operating profits remained weak.
- Recommendation: Maintain HOLD with a target price of RM2.00.
Perisai Petroleum (PPT MK)
- 9M14 Performance: Downgraded to HOLD due to low earnings visibility for its mobile offshore production unit and Derrick Pipelay Barge.
- Recommendation: HOLD with a target price of RM1.05.
Singapore
Riverstone Holdings (RSTON SP)
- 9M14 Performance: Results were within expectations, and the company fared well despite intense competition.
- Recommendation: BUY with a target price of S$1.09.
Sembcorp Marine (SMM SP)
- 3Q14 Performance: Weak operating margin due to more drillships contributing to top-line growth.
- Recommendation: Maintain HOLD with a target price of S$4.00.
StarHub (STH SP)
- 3Q14 Performance: Results were not good enough; performance could be better.
- Recommendation: Maintain HOLD with a target price of S$4.33.
Thailand
IRPC (IRPC TB)
- 3Q14 Performance: No surprises in results.
- Recommendation: Maintain HOLD with a target price of Bt3.30.
Bumrungrad Hospital (BH TB)
- Update: Despite a target price upgrade, the recommendation remains HOLD as good news is already priced in.
- Recommendation: Maintain HOLD with a target price of Bt140.00.
Key Indices
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
17484.5 |
0.6 |
3.0 |
2.8 |
5.5 |
| S&P 500 |
2023.6 |
0.6 |
2.1 |
2.8 |
9.5 |
| FTSE 100 |
6539.1 |
1.3 |
1.3 |
0.2 |
(3.1) |
| AS30 |
5492.8 |
(0.1) |
1.1 |
3.8 |
2.6 |
| CSI 300 |
2503.4 |
(0.4) |
2.1 |
2.1 |
7.4 |
| FSSTI |
3287.7 |
0.2 |
2.0 |
1.1 |
3.8 |
| HSCEI |
10622.0 |
(1.0) |
(1.0) |
2.0 |
(1.8) |
| HSI |
23695.6 |
(0.6) |
(0.5) |
1.6 |
1.7 |
| JCI |
5066.8 |
(0.1) |
(0.1) |
1.3 |
18.5 |
| KLCI |
1839.3 |
(0.4) |
(0.0) |
(0.1) |
(1.5) |
| KOSPI |
1931.4 |
(0.2) |
(1.5) |
(1.9) |
(4.0) |
| Nikkei 225 |
16937.3 |
0.4 |
10.5 |
6.6 |
4.0 |
| SET |
1577.4 |
(0.5) |
0.9 |
2.2 |
21.5 |
| TWSE |
8962.6 |
(0.3) |
0.7 |
(1.5) |
4.1 |
| BDI |
1464 |
(1.3) |
2.5 |
41.2 |
(35.7) |
| CPO (RM/mt) |
2299 |
(0.4) |
4.8 |
5.6 |
(10.6) |
| Nymex Crude |
79 |
2.2 |
(4.1) |
(12.1) |
(19.9) |
Top Picks (BUY)
| Company |
Ticker |
Current Price (Icy) |
Target Price (Icy) |
Potential Upside (%) |
| Sunac China |
1918 HK |
6.71 |
8.45 |
25.9 |
| ICBC |
1398 HK |
5.03 |
6.15 |
22.3 |
| Bank Mandiri |
BMRI IJ |
10,425.00 |
12,500.00 |
19.9 |
| Gamuda |
GAM MK |
5.15 |
5.50 |
6.8 |
| DBS |
DBS SP |
19.20 |
22.68 |
18.1 |
| Pacific Radiance |
PACRA SP |
1.04 |
1.76 |
69.2 |
| Bangkok Bank |
BBL TB |
199.50 |
276.00 |
38.3 |
| Advanced Info |
ADVANC |
239.00 |
270.00 |
13.0 |
Key Assumptions
| Metric |
2013 |
2014F |
2015F |
| GDP (%yoy) |
2.9 |
1.5 |
3.9 |
| Brent (US$/bbl) |
110 |
100 |
85 |
| CPO (US$/mt) |
736 |
725 |
765 |
| BDI |
1,219 |
1,200 |
1,300 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| China Aviation Sector Analyst Presentation |
Taipei |
6 Nov |
7 Nov |
| Alam Sutera Realty Corporate Roadshow |
Taipei |
10 Nov |
11 Nov |
Summary of Key Points
- China Shineway Pharmaceutical faced revenue decline in 3Q14 due to pricing pressure and weak performance in major markets, despite expansion efforts.
- Giordano International reported weak sales in 3Q14, but improvements in China and Taiwan were noted. The company is expected to benefit from new winter collections and holiday season.
- AKR Corporindo may benefit from subsidised fuel price hike and higher margin on industrial land sales.
- Malaysia Marine and Heavy Engineering Holdings saw earnings lifted by investment tax allowance, but operating profits were still weak.
- Perisai Petroleum was downgraded to HOLD due to low earnings visibility.
- Riverstone Holdings performed well despite intense competition.
- Sembcorp Marine had weak operating margin due to increased contribution from drillships.
- StarHub was not performing up to expectations.
- IRPC had no surprises in 3Q14 results.
- Bumrungrad Hospital maintained HOLD despite a target price upgrade.
- Key Indices showed mixed performance, with some markets experiencing positive growth and others declining.
- Top Picks included several companies with significant upside potential.
- Key risks for Giordano include sales slowdown, increased competition, and e-commerce.
