20150324-大华继显-Regional_Mornlng_Notes_40页_2mb

Regional Morning Notes Summary

Core Content Overview

This document provides a detailed analysis of stock performance and company results for various markets, including China, Indonesia, Malaysia, Singapore, and Thailand, as of Tuesday, 24 March 2015. It also includes key financial metrics, valuation insights, and analyst recommendations for selected stocks, particularly focusing on China Overseas Grand Oceans (81 HK) and China Resources Land (1109 HK).

Main Points and Key Information

China

• China Overseas Grand Oceans (81 HK):

  • 2014 Results: Disappointing performance within expectations. Core net profit dropped by 55.2% yoy, and gross margin weakened by 5ppt to 24.1% due to a shift in product mix and price cuts. Net gearing ratio increased to 74.3%, indicating higher leverage.
  • Recommendation: Maintain HOLD. Target price is HK$3.96 with an upside of +7.3% from the entry price of HK$3.50.
  • Stock Impact: Lower dividend declared, weak sales in lower-tier cities, and slow land replenishment.
  • Valuation: The company's valuation remains stretched, and the earnings forecast has been revised down for 2015 and 2016 by 9.3% and 12.7%, respectively.
  • Outlook: Improved pricing power and higher contracted sales in 2015 could lead to margin recovery. The company has HK$1b in unrecognised sales with a higher ASP, which may help future profitability.

• China Resources Land (1109 HK):

  • 2014 Results: Stronger pricing power initiated margin recovery. Core net profit increased by 25.0% yoy to HK$11.8b, and net margin recovered to 30.6%.
  • Recommendation: Maintain BUY. Target price is HK$27.36, with an upside of +30.3%.
  • Stock Impact: Increased dividend yield and a higher sales target for 2015. The company has Rmb73.0b in unbooked sales, with Rmb53.3b expected in 2015.
  • Valuation: RNAV/share has been raised to HK$34.20, reflecting strong pricing power and upgraded products in the pipeline. The company is expected to lead the valuation recovery cycle in 2Q15.
  • Outlook: Sales growth in 2015 is expected to be 5.0%. Risks include slower-than-expected sales progress and delayed new launches.

Indonesia

• Sawit Sumbermas Sarana (SSMS J):
  • Strong production growth has already been reflected in the EV/Planted Ha valuation.

Malaysia

• Tenaga Nasional (TNB MK):
  • Conducting due diligence on the Track 3B Jimah East project, which could enhance equity by RM1.3b if successful.

Singapore

• CapitaCommercial Trust (CCT SP):
  • Latest completion goes green.

Thailand

• Strategy: Play it safe with CFRESH, IRPC, KTB, AMATA, and SPALI.
• Media Sector: 4Q14 net profit fell 34% yoy and 27% qoq.

Key Indices and Market Trends

Top Picks and Sell Recommendations

Key Assumptions

Corporate Events

• Indofood Suits Makmur Roadshow: Singapore, 27 Mar
• Sunway Berhad Luncheon: Kuala Lumpur, 31 Mar
• Singamas Container Holdings Roadshow: Singapore, 31 Mar
• Roadshow: Kuala Lumpur, 1 Apr
• Sihuan Pharmaceutical Holdings: Taipei, 30 Mar
• Corporate Roadshow: Singapore, 2 Apr; Kuala Lumpur, 3 Apr; Hong Kong, 16 Apr

Summary of Key Financial Metrics for China Overseas Grand Oceans (81 HK)

Summary of Key Financial Metrics for China Resources Land (1109 HK)

Valuation and Earnings Outlook

• China Overseas Grand Oceans (81 HK):

  • Earnings Forecast: Revised down by 9.3% for 2015 and 12.7% for 2016.
  • Dividend Yield: Expected to rise to 2.7% in 2015.
  • Valuation: RNAV is HK$13.20/share, with a 70% discount.
  • Catalysts: Better-than-expected sales, supportive government policies, and further mortgage easing.

• China Resources Land (1109 HK):

  • Earnings Forecast: RNAV/share is HK$34.20, with a target discount of 70%.
  • Valuation: Target price is HK$27.36, with an upside of +30.3%.
  • Catalysts: Stronger-than-expected contracted sales, government support for home sales, and further mortgage easing.

Conclusion

The document highlights mixed results across the region, with some companies like China Resources Land showing positive margin recovery and strong growth potential, while others such as China Overseas Grand Oceans are facing challenges due to weak sales and higher leverage. Analysts recommend BUY for companies with strong fundamentals and potential for growth, and HOLD for those with weaker performance but expected recovery. Key factors influencing stock performance include government policies, mortgage easing, and sales performance.