20181012-大华继显-Regional_Morning_Notes_39页_1mb

Regional Morning Notes Summary

Core Content

This document provides a summary of stock market updates and corporate highlights for various regions and companies on Friday, 12 October 2018. It includes key financial metrics, earnings forecasts, valuation insights, and strategic developments for Anta Sports, Geely Auto, and other firms in China, Indonesia, Malaysia, and Singapore. Additionally, it outlines market indices performance and upcoming corporate events.

Main Points

China

• Anta Sports (2020 HK/BUY/HK$30.35/Target: HK$40.00)

  • 3Q18 operating results were solid and on track to meet 2018 estimates.
  • Management kept guidance unchanged, but there are concerns about potential dividend cuts due to the acquisition of Amer Sports.
  • Retail sales growth accelerated in 3Q18, with Anta-branded sales growing at mid-teens, while non-core brands grew at 90-95%.
  • Store efficiency improved across all brands.
  • Anta's net profit is expected to grow from Rmb3,087m in 2017 to Rmb3,922m in 2018, with a target price of HK$40.00.
  • Valuation metrics show a declining P/E and P/B ratio, with a target of 19x 2019F P/E.
  • Net profit margin is projected to increase slightly from 18.5% to 17.6%.
  • Management is confident in 4Q18 performance, despite a high base effect.

• Geely Auto (175 HK/BUY/HK$12.90/Target: HK$30.00)

  • 3Q18 sales growth was 14% yoy, the lowest in two years, due to the US-China trade war and domestic political risks.
  • Sales rebounded in late September, aligning with market sentiment recovery.
  • Geely is accelerating new product launches to offset weak sales of older models.
  • The company plans to launch EV versions of all models by 2019 and expects to reach 90% EV sales in the long term.
  • Net profit is expected to grow from Rmb10,634m in 2017 to Rmb14,290m in 2018, with a target price of HK$30.00.
  • Valuation is based on an 11x 2019F PE, which is above the historical mean of peers.
  • Management remains confident in its sales guidance and long-term growth strategy.

Indonesia

• Japfa Comfeed Indonesia (JPFA IJ/BUY/Rp1,905/Target: Rp2,800)
  • 2018 net profit growth is expected to be 143.4% yoy.

Malaysia

• Top Glove (TOPG MK/SELL/RM10.70/Target: RM8.20)

  • 4QFY18 core earnings declined 9% qoq, below expectations.
  • Forward orders remained weak, and the company is facing concerns over high valuations and unattractive risk-reward profile.

• Inari Amertron (INRI MK/BUY/RM2.20/Target: RM2.68)

  • Long-term outlook is positive, with strategic relationships with OSRAM and continued growth with Broadcom.

• Malaysian Resources Corporation (MRC MK/BUY/RM0.72/Target: RM0.98)

  • Ongoing transformation through cost rationalization and focus on core businesses is expected to strengthen the balance sheet and improve future earnings.

Singapore

• Memtech International (MTEC SP/HOLD/S$0.85/Target: S$0.95)
  • Continued drag from high raw material costs.

Thailand

• TISCO Financial Group (TISCO TB/BUY/Bt79.00/Target: Bt98.00)

  • 3Q18 net profit rose 15% yoy due to strong top-line growth and higher investment gains.
  • Upgrade to BUY.

• Charoen Pokphand Foods (CPF TB/BUY/Bt23.70/Target: Bt32.25)

  • Earnings are expected to improve in 3Q18.

Key Financial Highlights

Indices Performance

Top Picks (BUY)

Sell Recommendation

Corporate Events

Key Assumptions

Conclusion

The report highlights strong performance from Anta Sports and Geely Auto, with both maintaining BUY recommendations. Anta's 3Q18 results were in line with forecasts, while Geely's sales rebounded in late September. However, challenges remain, including potential dividend cuts for Anta and concerns over overpayment for its acquisition. The document also notes positive developments in other markets, such as Indonesia and Malaysia, and outlines key corporate events and financial assumptions for the upcoming year.