Regional Morning Notes Summary - 13 October 2016
Core Content Overview
This document provides a summary of corporate highlights and market analysis for various companies in Asia, focusing on China, Hong Kong, Malaysia, Singapore, and Thailand. It includes updates on company performance, stock recommendations, key financial metrics, and upcoming corporate events.
Main Points
China
- ENN Energy Holdings (2688 HK)
- Recommendation: BUY
- Current Price: HK$39.35
- Target Price: HK$58.00
- Upside: +47.4%
- Highlights:
- Sustainable growth in natural gas (NG) sales and connections expected for 2016.
- NG sales volume to rise 10-12% yoy, with 1H16 growth at 17.2% yoy.
- LNG business is a new growth engine, with vehicle gas sales expected to grow 15-20% yoy.
- The company has over 200 LNG stations and plans to increase utilization to drive profits.
- NG connection targets for 2016: 1.8m households, driven by the hot property market.
- Management expects the property market to slow but is optimistic about expanding to old buildings with minimal margin impact.
- The company has reduced forex risk through bond repayments and hedging, with a lower potential forex loss in 2016F.
- Free cash flow is expected to increase, allowing for a higher dividend payout ratio (up to 50%).
Hong Kong
- Cathay Pacific Airways (293 HK)
- Recommendation: SELL
- Current Price: HK$10.76
- Target Price: HK$9.60
- Highlights:
- Issues profit warning; 2H16 net profit not expected to beat 1H16's.
Malaysia
Singapore
Thailand
- TISCO Financial Group (TISCO TB)
- Recommendation: HOLD
- Current Price: Bt53.00
- Target Price: Bt58.00
- Highlights:
- 3Q16 net profit up 54% yoy due to reduced loan loss charges and steady top-line improvement.
Key Indices (as of 13 October 2016)
| Index |
Previous Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
18144.2 |
0.1 |
-0.7 |
-1.0 |
4.1 |
| S&P 500 |
2139.2 |
0.1 |
-1.0 |
-0.9 |
4.7 |
| FTSE 100 |
7024.0 |
-0.7 |
-0.1 |
4.8 |
12.5 |
| AS30 |
5555.2 |
-0.1 |
0.3 |
4.6 |
3.9 |
| CSI 300 |
3300.0 |
-0.2 |
2.1 |
1.2 |
-11.6 |
| FSSTI |
2813.7 |
-1.5 |
-2.4 |
-0.2 |
-2.4 |
| HSCEI |
9673.2 |
-1.3 |
-0.9 |
1.1 |
0.1 |
| HSI |
23407.1 |
-0.6 |
-1.2 |
0.8 |
6.8 |
| JCI |
5364.6 |
-0.3 |
-1.0 |
2.9 |
16.8 |
| KLCI |
1667.0 |
0.1 |
0.2 |
-0.6 |
-1.5 |
| KOSPI |
2033.7 |
0.1 |
-0.9 |
1.7 |
3.7 |
| Nikkei 225 |
16840.0 |
-1.1 |
0.6 |
0.7 |
-11.5 |
| SET |
1406.2 |
-2.5 |
-6.9 |
-2.8 |
9.2 |
| TWSE |
9252.6 |
0.4 |
-0.4 |
3.5 |
11.0 |
| BDI |
906 |
-1.7 |
4.3 |
12.7 |
89.5 |
| CPO (RM/mt) |
2637 |
0.6 |
-3.9 |
-9.0 |
19.9 |
| Brent Crude (US$/bbl) |
52 |
-1.1 |
-0.1 |
7.2 |
39.0 |
Top Picks (BUY)
| Company |
Ticker |
Current Price |
Target Price |
Potential Upside (%) |
| Air China |
753 HK |
5.24 |
8.40 |
60.3 |
| Ping An Insurance |
2318 HK |
41.00 |
47.00 |
14.6 |
| Ciputra Property |
CTRP LJ |
650.00 |
960.00 |
47.7 |
| Indosat |
ISAT LJ |
6,375.00 |
9,500.00 |
49.0 |
| Genting Bhd |
GENT MK |
7.91 |
9.90 |
25.2 |
| Citiv Dev |
CIT SP |
8.92 |
10.36 |
16.1 |
| OCBC |
OCBC SP |
8.55 |
10.30 |
20.5 |
| Bangkok Dusit |
BDMS TB |
21.00 |
31.00 |
47.6 |
| Siam Cement |
SCC TB |
498.00 |
645.00 |
29.5 |
Sell Recommendation
| Company |
Ticker |
Current Price |
Target Price |
Potential Upside (%) |
| Hartalega |
HART MK |
4.90 |
3.10 |
-36.7 |
Key Assumptions
| Region |
GDP (% yoy) 2015 |
GDP (% yoy) 2016F |
GDP (% yoy) 2017F |
| US |
2.6 |
2.0 |
2.7 |
| Euro Zone |
2.0 |
1.4 |
1.0 |
| Japan |
0.5 |
0.6 |
0.8 |
| Singapore |
2.0 |
2.2 |
2.4 |
| Malaysia |
5.0 |
4.2 |
4.5 |
| Thailand |
2.8 |
3.2 |
3.5 |
| Indonesia |
4.8 |
5.0 |
5.2 |
| Hong Kong |
2.4 |
2.1 |
1.8 |
| China |
6.9 |
6.5 |
6.2 |
| Indicator |
2016F |
2017F |
2018F |
| Brent (Average) |
42 |
54 |
54 |
| CPO |
2,500 |
2,600 |
2,600 |
Corporate Events
| Event |
Venue |
Date |
| Joy City Roadshow |
Shanghai |
13 Oct |
| Nameson Holdings Luncheon |
Hong Kong |
13 Oct |
| Duty Free International Luncheon |
Kuala Lumpur |
17 Oct |
| KL Kepong Site Visit |
Malaysia |
25 Oct |
| Xtep International Holdings Roadshow |
Kuala Lumpur |
15 Nov |
| Metro Pacific Investments Roadshow |
Canada |
24 Nov-25 Nov |
Financial Highlights (ENN Energy)
Profit & Loss
| Metric |
2015 (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
2018F (Rmbm) |
| Net turnover |
32,063 |
32,635 |
36,783 |
39,109 |
| EBITDA |
4,830 |
5,778 |
6,450 |
6,919 |
| Net profit (rep./act.) |
2,036 |
3,240 |
3,735 |
4,034 |
| Net profit (adj.) |
2,739 |
3,240 |
3,735 |
4,034 |
Cash Flow
| Metric |
2015 (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
2018F (Rmbm) |
| Operating |
4,022 |
4,640 |
6,152 |
6,239 |
| Net cash inflow |
-3,164 |
1,750 |
3,380 |
3,319 |
Balance Sheet
| Metric |
2015 (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
2018F (Rmbm) |
| Total assets |
47,019 |
50,132 |
54,836 |
59,213 |
| Shareholders’ equity |
13,468 |
16,015 |
18,779 |
21,692 |
Key Metrics
| Metric |
2015 (%) |
2016F (%) |
2017F (%) |
2018F (%) |
| EBITDA margin |
15.1 |
17.7 |
17.5 |
17.7 |
| Net margin |
6.3 |
9.9 |
10.2 |
10.3 |
| ROE |
15.9 |
22.0 |
21.5 |
19.9 |
| Debt to equity |
130.1 |
107.4 |
96.0 |
84.9 |
Financial Highlights (FDG Electric Vehicles)
Profit & Loss
| Metric |
2013 (Rmbm) |
2014 (Rmbm) |
2015 (Rmbm) |
2016 (Rmbm) |
| Net turnover |
54 |
84 |
304 |
363 |
| EBITDA |
-220 |
-784 |
-214 |
-419 |
| Net profit (rep./act.) |
-324 |
-906 |
-410 |
-228 |
Balance Sheet
| Metric |
2013 (Rmbm) |
2014 (Rmbm) |
2015 (Rmbm) |
2016 (Rmbm) |
| Total assets |
1,628 |
3,877 |
6,024 |
8,689 |
| Shareholders’ equity |
340 |
1,734 |
2,071 |
3,363 |
Key Metrics
| Metric |
2013 (%) |
2014 (%) |
2015 (%) |
2016 (%) |
| Net margin |
-744.2 |
-602.5 |
-1,079.6 |
-62.8 |
| ROE |
-83.6 |
-95.4 |
-52.6 |
-9.5 |
Valuation & Earnings Outlook (FDG Electric Vehicles)
- 2016-18 Net Losses: Rmb130m, Rmb1,247m, Rmb366m
- 2019 Net Profit: Rmb688m
- Share Price Catalysts:
- Electric buses and PVs listed on the New Energy Vehicle Subsidy List.
- Company turning around after subsidies are phased out by 2021.
Analysts
- ENN Energy: Yan Shi
- FDG Electric Vehicles: Ken Lee, Sophie Yu
