Regional Morning Notes Summary
Core Content Overview
This document provides an analysis of the stock performance and market outlook for various companies and indices across China, Indonesia, Malaysia, Singapore, and Thailand. It includes updates on company earnings, key financial metrics, corporate events, and investment recommendations.
Key Regions and Their Highlights
China
- China Power International (2380 HK):
- Strong earnings growth potential with near-term catalysts, including parent asset injections and organic capacity expansion.
- Earnings are expected to grow significantly due to increased hydro generation and lower coal prices.
- Target price: HK$5.50, with an upside of +23.3% from current price (HK$4.30).
- The company is projected to lead Hong Kong-listed IPPs with capacity growth and sustainable earnings.
China Telecom (728 HK)
- Earnings growth in 2015 is expected to recover due to rising 4G subscriptions and reduced impact of VAT reform.
- The company's performance is influenced by China Mobile's 4G strategy and the pace of VAT reform.
- Target price: HK$4.80, with an upside of +6.0% from current price (HK$4.53).
- Recommendation: Maintain HOLD due to near-term uncertainties, but long-term prospects are stable.
Indonesia
- Poultry Sector:
- Recovery in DOC and broiler prices exceeds expectations.
- Top picks: CPIN and MAIN.
- Maintain OVERWEIGHT.
Malaysia
- Bumi Armada (BAB MK):
- Faces near-term challenges but has a strong long-term earnings outlook.
- Target price: RM1.40, with an upside of +23.3%.
- CIMB Group (CIMB MK):
- Earnings outlook for 2015 is expected to remain challenging.
- 4Q14 and 1Q15 earnings likely to show further deterioration from weak 3Q14 results.
- Maintain HOLD.
Singapore
- CapitaCommercial Trust (cct):
- Strong performance in 4Q14 due to tight office space supply.
- Target price: S$2.06, with an upside of +16.0%.
- Maintain BUY.
- Keppel Land (KPLD SP):
- 4Q14 results focus on the special dividend.
- Maintain BUY.
- ComfortDelGro Corporation (CD SP):
- Higher-than-expected fare increase boosts performance.
- Maintain BUY.
- Target price: S$3.08.
Thailand
- Bangkok Bank (BBL TB):
- 2014 earnings grew by 1% yoy, but excluding a one-off windfall, growth would have been 9%.
- Target price: Bt230.00, with an upside of +48.8%.
- Maintain BUY.
- Krung Thai Bank (KTB TB):
- 2014 earnings declined by 4% yoy due to the absence of one-time gains.
- Core operating revenue grew moderately.
- Maintain BUY.
- Dynasty Ceramic (DCC TB):
- Expected to return to growth mode with 21% earnings growth in 2015.
- Maintain BUY.
Key Indices Performance
| Index |
Previous Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
17554.3 |
0.2 |
-0.3 |
-1.4 |
-1.5 |
| S&P 500 |
2032.1 |
0.5 |
0.4 |
-1.9 |
-1.3 |
| FTSE 100 |
6728.0 |
1.6 |
5.3 |
2.8 |
2.5 |
| AS30 |
5367.4 |
1.5 |
0.7 |
-0.9 |
-0.4 |
| CSI 300 |
3548.9 |
4.5 |
1.3 |
4.5 |
0.4 |
| FSSTI |
3354.5 |
0.6 |
0.9 |
0.7 |
-0.3 |
| HSCEI |
12021.3 |
2.4 |
0.1 |
2.4 |
0.3 |
| HSI |
24352.6 |
1.7 |
1.0 |
4.0 |
3.2 |
| JCI |
5215.3 |
1.0 |
1.1 |
1.7 |
-0.2 |
| KLCI |
1770.1 |
1.1 |
1.6 |
1.5 |
0.5 |
| KOSPI |
1921.2 |
0.2 |
0.4 |
-1.1 |
0.3 |
| Nikkei 225 |
17280.5 |
-0.5 |
2.9 |
-2.0 |
-1.0 |
| SET |
1537.4 |
0.1 |
0.9 |
0.0 |
2.7 |
| TWSE |
9319.7 |
0.7 |
1.5 |
2.5 |
0.1 |
| BDI |
770 |
2.3 |
1.7 |
-4.1 |
-1.5 |
| CPO (RM/mt) |
2331 |
0.0 |
-1.0 |
8.4 |
1.5 |
| Nymex Crude |
47 |
1.9 |
3.2 |
-16.2 |
-11.1 |
Top Picks and Investment Recommendations
| Company |
Ticker |
Current Price |
Target Price |
Upside |
Recommendation |
| Sunac China |
1918 HK |
HK$7.06 |
HK$9.29 |
+31.6% |
BUY |
| ICBC |
1398 HK |
HK$5.72 |
HK$6.90 |
+20.6% |
BUY |
| Bank Mandiri |
BMRI LJ |
Rp10,975.00 |
Rp12,500.00 |
+13.9% |
BUY |
| Gamuda |
GAM MK |
RM5.00 |
RM5.50 |
+10.0% |
BUY |
| DBS |
DBS SP |
S$20.00 |
S$22.68 |
+13.4% |
BUY |
| Pacific Radiance |
PACRA SP |
S$0.72 |
S$1.00 |
+38.9% |
BUY |
| Bangkok Bank |
BBL TB |
Bt185.00 |
Bt230.00 |
+48.8% |
BUY |
| Advanced Info |
ADVANC |
Bt249.00 |
Bt270.00 |
+8.4% |
BUY |
Key Assumptions
| Region |
GDP (%yoy) 2013 |
GDP (%yoy) 2014 |
GDP (%yoy) 2015F |
| US |
1.9 |
2.7 |
3.2 |
| Euro Zone |
-0.4 |
0.9 |
1.4 |
| Japan |
1.5 |
1.5 |
2.0 |
| Singapore |
3.9 |
3.2 |
3.3 |
| Malaysia |
4.7 |
5.9 |
5.2 |
| Thailand |
2.9 |
1.5 |
3.9 |
| Indonesia |
5.8 |
5.2 |
5.8 |
| Hong Kong |
2.9 |
3.5 |
3.7 |
| China |
7.7 |
7.2 |
7.0 |
| Commodity |
2014 Price |
2015F Price |
2016F Price |
| Brent (US$/bbl) |
99.45 |
65 |
70 |
| CPO (US$/mt) |
722 |
765 |
788 |
| BDI |
1,101 |
1,300 |
1,400 |
Corporate Events
| Event |
Venue |
Start Date |
End Date |
| Indosat Corporate Roadshow |
New York |
22 Jan |
23 Jan |
| Singapore and Indonesia Telecom Analyst Presentation |
Kuala Lumpur |
26 Jan |
27 Jan |
| Malaysia 1H15 Strategy Analyst Presentation |
Singapore |
29 Jan |
30 Jan |
Summary of Key Financial Metrics
China Power International (2380 HK)
- Earnings Growth: Expected to grow significantly in 2015 due to strong hydro generation and low coal prices.
- Capacity Expansion: 1,200MW Pingwei III Power Plant coming online in 2015, with Shentou II and Puan in 2016-17.
- Valuation: Trading at 6.8x 2015P/E and 1.0x 2015F P/B, with a dividend yield of 6.5%.
- Debt Metrics: Net debt to equity is expected to decrease from 225.9% in 2014 to 172.2% in 2015.
China Telecom (728 HK)
- Earnings Outlook: Expected to show recovery in 2015 due to 4G subscriptions and reduced VAT impact.
- Financials: Net profit is forecasted to increase from Rmb17,012m in 2015 to Rmb22,563m in 2016.
- Valuation: Trading at 17.3x 2015P/E and 1.0x 2015F P/B, with a dividend yield of 2.8%.
- Debt Metrics: Net debt to equity is expected to increase from 34.3% in 2014 to 35.8% in 2015.
Conclusion
The report highlights a mix of growth opportunities and challenges across the region. China Power International and several other companies are seen as strong investment options due to their solid earnings potential and strategic initiatives. China Telecom is expected to recover in 2015, but its performance is still dependent on external factors such as the VAT reform and 4G market dynamics. Overall, the region presents a varied investment landscape with both BUY and HOLD recommendations.
