Regional Morning Notes Summary - 09 October 2018
Core Content Overview
This document provides an analysis of stock updates and market insights for several Asian markets, including China, Indonesia, Malaysia, Singapore, and Thailand. It includes company-specific updates, financial performance, valuation metrics, and investment recommendations, as well as corporate events and key assumptions about economic growth.
Key Markets and Companies
China
- Shenzhen Airport-A (000089 CH):
- Recommendation: BUY
- Current Price: Rmb8.26
- Target Price: Rmb10.00
- Upside: +21.1%
- Core Insight: An upward revision in the duty-free concession fee is expected to be a key earnings driver. The airport is expanding its international flight connections and will complete a new satellite concourse by end-2018, increasing passenger capacity and retail revenue. The company has a solid balance sheet and is preferred among airport operators.
Indonesia
- Ciputra Development (CTRA IJ):
- Recommendation: BUY (Maintained)
- Current Price: Rp800
- Target Price: Rp1,100
- Upside: +37.5%
- Core Insight: Strong 4Q18 earnings are anticipated due to residential project handovers. The company is expected to meet its pre-sales targets with new project launches. Valuation is undemanding, trading at a 75% discount to RNAV.
Malaysia
- Technology Sector:
- Both multinational corporations and local companies are in expansion mode.
- Recommendation: OVERWEIGHT
Singapore
- Sembcorp Industries (SCI SP):
- Recommendation: BUY
- Current Price: S$2.96
- Target Price: S$3.41
- Upside: +15.5%
- Core Insight: The company is expected to benefit from the expansion of international flight connections and new infrastructure projects.
Thailand
- Krunthai Card (KTC TB):
- Recommendation: BUY
- Current Price: Bt35.25
- Target Price: Bt41.25
- Upside: +17.1%
- Core Insight: 3Q18 results are expected to show a robust net profit growth of 39% yoy.
Indices Performance (YTD)
| Index |
Previous Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
26486.8 |
0.2 |
-0.6 |
2.2 |
7.2 |
| S&P 500 |
2884.4 |
0.0 |
-1.4 |
0.4 |
7.9 |
| FTSE 100 |
7233.3 |
-1.2 |
-3.5 |
-0.6 |
-5.9 |
| AS30 |
6218.6 |
-1.3 |
-1.2 |
-0.5 |
0.8 |
| CSI 300 |
3290.9 |
-4.3 |
-3.5 |
0.4 |
-18.4 |
| FSSTI |
3181.5 |
-0.9 |
-2.3 |
1.5 |
-6.5 |
| HSCEI |
10393.3 |
-1.3 |
-5.7 |
-1.6 |
-11.2 |
| HSI |
26202.6 |
-1.4 |
-5.7 |
-2.9 |
-12.4 |
| JCI |
5761.1 |
0.5 |
-3.1 |
-1.5 |
-9.4 |
| KLCI |
1775.8 |
-0.1 |
-0.9 |
-1.3 |
-1.2 |
| KOSPI |
2253.8 |
-0.6 |
-3.8 |
-1.2 |
-8.7 |
| Nikkei 225 |
23783.7 |
-0.8 |
-1.4 |
6.6 |
4.5 |
| SET |
1696.2 |
-1.4 |
-3.6 |
0.4 |
-3.3 |
| TWSE |
10455.9 |
-0.6 |
-5.4 |
-3.6 |
-1.8 |
| BDI |
1536 |
-1.2 |
-1.2 |
3.1 |
12.4 |
| CPO (RM/ml) |
2099 |
-0.1 |
0.9 |
-5.6 |
-12.2 |
| Brent Crude |
84 |
-0.3 |
-1.3 |
9.2 |
25.5 |
Key Assumptions
| Country/Commodity |
2017 |
2018F |
2019F |
| GDP (% yoy) |
6.9 |
6.4 |
6.2 |
| CPO (RM/mt) |
2,783 |
2,400 |
2,500 |
| Brent (US$/bbl) |
55.00 |
71.60 |
71.00 |
Corporate Events
| Event |
Venue |
Start Date |
End Date |
| UOB Kay Hian Asian Gems Conference |
Singapore |
9 Oct |
10 Oct |
| Analyst Marketing on Greater China Commodities |
Kuala Lumpur |
11 Oct |
12 Oct |
| Group Luncheon with China Shineway Pharmaceutical |
Hong Kong |
29 Oct |
29 Oct |
| Roadshow with Digi.com (DIGI MK) |
Canada |
30 Oct |
2 Nov |
| Group luncheon with Sembcorp Industries (SCI SP) |
Singapore |
5 Nov |
5 Nov |
| UOB Kay Hian Annual Regional 1H2019 Strategy Conference |
Kuala Lumpur |
13 Nov |
13 Nov |
Key Financial Metrics (Shenzhen Airport-A)
| Metric |
2017 |
2018F |
2019F |
2020F |
| Net turnover (Rmbm) |
3,321 |
3,658 |
4,017 |
4,444 |
| EBITDA (Rmbm) |
1,224 |
1,429 |
1,645 |
1,889 |
| Operating profit (Rmbm) |
759 |
960 |
1,065 |
1,326 |
| Net profit (Rmbm) |
661 |
819 |
902 |
1,065 |
| EPS (fen) |
32.2 |
39.9 |
44.0 |
51.9 |
| PE (x) |
25.6 |
20.7 |
18.8 |
15.9 |
| P/B (x) |
1.5 |
1.4 |
1.4 |
1.3 |
| EV/EBITDA (x) |
13.1 |
11.3 |
9.8 |
8.5 |
| Net margin (%) |
19.9 |
22.4 |
22.4 |
24.0 |
| ROE (%) |
6.1 |
7.1 |
7.5 |
8.4 |
Key Financial Metrics (Ciputra Development)
| Metric |
2017 |
2018F |
2019F |
2020F |
| Net turnover (US$m) |
6,739 |
8,035 |
7,564 |
7,326 |
| EBITDA (US$m) |
1,742 |
2,128 |
1,897 |
1,780 |
| Operating profit (US$m) |
1,499 |
1,849 |
1,599 |
1,462 |
| Net profit (US$m) |
1,021 |
1,182 |
998 |
889 |
| EPS (Rp) |
66.2 |
63.7 |
53.8 |
47.9 |
| PE (x) |
16.6 |
12.6 |
14.9 |
16.7 |
| P/B (x) |
1.1 |
1.0 |
1.0 |
0.9 |
| EV/EBITDA (x) |
13.1 |
9.7 |
10.9 |
11.7 |
| Net margin (%) |
15.2 |
14.7 |
13.2 |
12.1 |
| ROE (%) |
8.5 |
8.5 |
6.7 |
5.7 |
Investment Recommendations
- Shenzhen Airport-A (000089 CH): Maintain BUY with a target price of Rmb10.00.
- Ciputra Development (CTRA IJ): Maintain BUY with a target price of Rp1,100.
Key Risks
- Shenzhen Airport-A: Weakness in China consumer demand could impact international traffic.
- Ciputra Development: Higher leverage and deteriorating interest coverage ratio are the main risks.
Summary of Key Points
- Shenzhen Airport-A is expected to benefit from increased duty-free concession fees and new international routes, with a target price of Rmb10.00.
- Ciputra Development is projected to have strong 4Q18 earnings and expects to meet its pre-sales targets, with a target price of Rp1,100.
- Malaysia's Technology Sector is in expansion mode, with MNCs showing interest in manufacturing.
- The overall market indices show mixed performance, with some markets experiencing positive growth while others show declines.
- Both companies are considered undervalued based on their respective valuations and are recommended for investment.
