20170410-大华继显-Regional_Morning_Notes_24页_1mb

Regional Morning Notes Summary

Core Content

This document provides a summary of market updates and stock analyses for various regions and companies on Monday, 10 April 2017. It includes company-specific updates, key financial metrics, valuation analysis, and corporate events. The main focus is on the performance of Geely Auto and Great Wall Motor, with additional insights into Ann Joo Resources, Raffles Medical Group, Charoen Pokphand Foods, and other key indices and market indicators.

Main Points

China

• Geely Auto (175 HK)

  • March 2017 sales increased by 74% yoy, meeting expectations but down 2% mom.
  • 1Q17 sales surged 94% yoy to 278,600 units, on track to meet the 1.2m unit estimate for 2017.
  • Four new models launched from March to September 2016 (Boyue SUV, Vision SUV, Emgrand GS/GL) contributed significantly to sales in 1Q17.
  • Maintain HOLD recommendation with a target price of HK$10.50.
  • Expected yoy growth of 57%, 9%, and 11.5% for 2017–2019, respectively.
  • Key financial metrics:
    • Net turnover: Rmb88,920m (2017F)
    • EBITDA: Rmb11,907m
    • Operating profit: Rmb9,929m
    • Net profit (adj.): Rmb8,130m
    • EPS: 92.2 fen
    • PE: 10.9x
    • P/B: 3.7x
    • EV/EBITDA: 7.8x
    • Net margin: 9.1%

• Great Wall Motor (2333 HK)

  • March 2017 sales growth slowed to 2% yoy, below consensus.
  • 1Q17 sales still grew 9% yoy to 254,159 units, but not meeting the 1.25m unit target.
  • Flagship model H6 saw a 13% yoy drop in sales, while H2 sales more than doubled.
  • Maintain SELL recommendation with a target price of HK$6.00.
  • Expected yoy growth of 7%, 4%, and 4% for 2017–2019, respectively.
  • Key financial metrics:
    • Net turnover: Rmb94,067m (2017F)
    • EBITDA: Rmb10,639m
    • Operating profit: Rmb7,996m
    • Net profit (adj.): Rmb6,736m
    • EPS: 73.8 fen
    • PE: 11.1x
    • P/B: 1.7x
    • EV/EBITDA: 6.4x
    • Net margin: 7.2%

• Ann Joo Resources (AJR MK)

  • Maintain BUY recommendation with a target price of RM3.15.
  • Positive sentiment due to its hybrid manufacturing facility and steel industry dynamics.

Indonesia

• Holcim Indonesia (SMCB IJ)
  • Downgrade to SELL with a target price of Rp800.
  • Expected to remain loss-making in 2017–2018.

Malaysia

• Kuala Lumpur Kepong (KLK MK)
  • Maintain HOLD recommendation with a target price of RM23.80.
  • FFB production growth estimate for FY17 is 4.3% yoy.
  • 2QFY17 results may be weaker qoq due to lower production and weaker downstream margins.

Singapore

• Raffles Medical Group (RFMD SP)
  • Maintain BUY recommendation with a target price of S$1.66.
  • Sacrificing near-term growth for future growth.

Thailand

• Charoen Pokphand Foods (CPF TB)
  • Maintain BUY recommendation with a target price of Bt39.75.
  • 1Q17 results preview: relatively weak earnings.

Key Indices

Top Picks

BUY

• Alibaba (BABA US): Target price $130.00, potential upside 19.3%
• Beijing Ent. Water (371 HK): Target price HK$7.60, potential upside 21.4%
• Indosat (ISAT IJ): Target price Rp7,900.00, potential upside 16.2%
• Tiga Pilar (AISA IJ): Target price Rp2,550.00, potential upside 18.6%
• V.S. Industry (VSI MK): Target price RM2.20, potential upside 17.6%
• OCBC (OCBC SP): Target price S$10.75, potential upside 11.2%
• Venture Corp (VMS SP): Target price S$12.40, potential upside 8.5%
• Bangkok Dusit (BDMS TB): Target price Bt27.00, potential upside 29.2%
• Siam Cement (SCC TB): Target price Bt600.00, potential upside 9.1%

SELL

• Great Wall Motor (2333 HK): Target price HK$6.00, potential downside 33.6%
• MGM China (2282 HK): Target price HK$13.20, potential downside 24.5%
• Hartalega (HART MK): Target price RM3.67, potential downside 25.9%

Key Assumptions

Corporate Events

• Roadshow with BBI Life Science Corp – Hong Kong, 10 Apr
• Luncheon with Dynagreen Environmental Protection Group – Hong Kong, 11 Apr
• Plant Visit with Hume Industries – Perak, 11 Apr
• Roadshow with Universal Medical Financial and Technology – Hong Kong, 12 Apr
• Roadshow with Singamas Container – Shanghai, 12 Apr
• Roadshow with Sihuan Pharmaceutical Holdings – Taiwan, 12 Apr
• Analyst Presentation on China Economics – Taiwan, 17 Apr
• Group Luncheon with U-Mobile – Kuala Lumpur, 19 Apr
• Group Luncheon with Singamas Container Holdings – Hong Kong, 20 Apr
• Analyst Presentation on Malaysia Outlook and Strategy – Singapore, 20 Apr
• Roadshow with China Display Optoelectronics Technology Holdings – Taipei, 21 Apr
• Group Luncheon with ZTE Corp – Hong Kong, 25 Apr
• Group Luncheon with CAT Telecom – Thailand, 28 Apr
• Roadshow with Singtel – Canada, 26 May
• Roadshow with PT Siloam Int'l Hospital – Canada, 5 Jun
• Luncheon with United Overseas Bank – Singapore, 3 Jul
• Roadshow with Top Glove Corporation – US/Canada, 5 Sep

Summary of Key Financials and Valuation

• Geely Auto (175 HK): Maintains HOLD, with a target price of HK$10.50 based on 10x 2017F PE, aligning with historical average.
• Great Wall Motor (2333 HK): Maintains SELL, with a target price of HK$6.00, based on 7x 2017F PE.

Conclusion

The document outlines the performance and outlook for several Chinese and Southeast Asian companies, with a particular emphasis on Geely Auto and Great Wall Motor. It highlights Geely's strong sales growth and Great Wall Motor's slowing sales and increasing competition. Additionally, it provides insights into market indices, top stock picks, and upcoming corporate events. The analysis suggests that Geely is expected to maintain its growth trajectory, while Great Wall Motor faces challenges due to market slowdown and price competition.