Regional Morning Notes Summary
Date: Thursday, 11 August 2016
Core Content Overview
This document provides a summary of company results and market outlook for various Asian regions, including China, Hong Kong, Indonesia, Malaysia, Singapore, and Thailand. It also includes key indices, top picks, corporate events, and analyst insights.
China
China Longyuan Power (916 HK)
- 1H16 Results: Net profit increased by 7.2% yoy to Rmb2,363.6m, in line with expectations.
- Key Highlights:
- Revenue grew 6.2% yoy due to higher power generation volume and tariff cuts.
- Wind power generation volume rose 8.6% yoy, driven by 13.6% yoy increase in capacity and 9.7% yoy decrease in utilisation.
- Thermal power segment EBIT increased 3.4% yoy, outperforming the industry.
- Valuation:
- Target price: HK$8.00.
- Current price: HK$6.69, with 19.6% upside.
- Outlook:
- Management expects a 15% curtailment ratio in 2016, down from 21% in 1H16.
- Full-year utilisation guidance remains at 1,900 hours.
- Finance cost is expected to decrease further in 2H16.
- Recommendation: BUY
Brilliance Auto (1114 HK)
- 1H16 Results Preview: Earnings are expected to miss expectations, with net profit estimated at Rmb1.6b (down 16% yoy, up 2% hoh) vs consensus of Rmb1.7b.
- Key Highlights:
- BBA (BMW Brilliance) profitability is pressured by the ageing 5-series and the launch of new models.
- Mini-bus business suffered a 43% yoy increase in net loss to Rmb200m in 1H16.
- Valuation:
- Target price: HK$7.70, with -11.8% upside.
- Outlook:
- 5-series sales dropped 3% yoy and 15% mom.
- New X1 model saw >5,800 units in July, but at a 20% discount.
- Recommendation: SELL
Hong Kong
Hong Kong Exchanges & Clearing (388 HK)
- 2Q16 Results: Earnings were above estimates, but the outlook is challenging due to LME fee cuts.
- Valuation:
- Target price: HK$150.00.
- Current price: HK$192.10.
- Recommendation: SELL
Indonesia
Fast Food Indonesia (FAST IJ)
- 1H16 Results: Margins improved due to strong SSS growth and an efficiency programme.
- Valuation:
- Target price: Rp1,710.
- Current price: Rp1,275.
- Recommendation: BUY
Malaysia
Plantation Sector
- Jul 16 Update: CPO prices recovered due to lower inventory levels and market expectations.
- Valuation: No specific target price mentioned.
- Recommendation: N/A
Singapore
Shipyards Sector
- Update: The production orders that never came to be, downgrade to UNDERWEIGHT.
- Valuation: No specific target price mentioned.
- Recommendation: UNDERWEIGHT
Thailand
Bangkok Expressway and Metro (BEM TB)
- 2Q16 Results: Low earnings growth due to one-time penalty fee on debt restructuring.
- Valuation:
- Target price: Bt10.00.
- Current price: Bt8.05.
- Recommendation: BUY
Bangchak Petroleum (BCP TB)
- 2Q16 Results: Net profit was as expected, with solid 2H16 outlook.
- Valuation:
- Target price: Bt40.50.
- Current price: Bt35.00.
- Recommendation: BUY
CP ALL (CPALL TB)
- 2Q16 Results: Net profit increased 34% yoy due to stronger top-line and higher other income.
- Valuation:
- Target price: Bt70.50.
- Current price: Bt54.75.
- Recommendation: BUY
Thai Vegetable Oil (TVO TB)
- 2Q16 Results: Earnings hit a record high, exceeding forecasts by a large margin.
- Valuation:
- Target price: Bt46.75.
- Current price: Bt33.75.
- Recommendation: BUY
Key Indices
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
18495.7 |
(0.2) |
0.8 |
1.9 |
6.1 |
| S&P 500 |
2175.5 |
(0.3) |
0.5 |
2.1 |
6.4 |
| FTSE 100 |
6866.4 |
0.2 |
3.5 |
4.2 |
10.0 |
| AS30 |
5628.2 |
(0.1) |
1.4 |
3.9 |
5.3 |
| CSI 300 |
3243.3 |
(0.4) |
1.6 |
1.2 |
(13.1) |
| FSSTI |
2875.6 |
0.2 |
0.7 |
(0.0) |
(0.2) |
| HSCEI |
9315.5 |
0.2 |
3.8 |
7.0 |
(3.6) |
| HSI |
22492.4 |
0.1 |
3.5 |
7.7 |
2.6 |
| JCI |
5423.9 |
(0.3) |
1.3 |
7.0 |
18.1 |
| KLCI |
1673.0 |
0.1 |
1.5 |
1.2 |
(1.2) |
| KOSPI |
2044.6 |
0.0 |
2.5 |
2.8 |
4.2 |
| Nikkei 225 |
16735.1 |
(0.2) |
4.1 |
6.5 |
(12.1) |
| SET |
1548.1 |
(0.0) |
2.7 |
5.4 |
20.2 |
| TWSE |
9200.4 |
0.5 |
2.2 |
4.7 |
10.3 |
| BDI |
638 |
1.1 |
(0.5) |
(9.2) |
33.5 |
| CPO (RM/ml) |
2563 |
2.0 |
6.9 |
10.3 |
16.5 |
| Brent Crude (US$/bbl) |
44 |
(2.1) |
2.2 |
(5.8) |
18.2 |
Top Picks (BUY)
| Company |
Ticker |
Current Price |
Target Price |
Upside (%) |
| Air China |
753 HK |
HK$6.08 |
HK$9.00 |
48.0 |
| Ping An Insurance |
2318 HK |
HK$37.25 |
HK$45.00 |
20.8 |
| Ciputra Property |
CTRP LJ |
665.00 |
960.00 |
44.4 |
| Indosat |
ISAT LJ |
6,525.00 |
9,500.00 |
45.6 |
| Genting Bhd |
GENT MK |
HK$8.29 |
HK$10.40 |
25.5 |
| City |
CIT SP |
HK$8.89 |
HK$10.36 |
16.5 |
| DBS |
DBS SP |
HK$14.98 |
HK$19.15 |
27.8 |
| Bangkok Dusit |
BDMS TB |
HK$22.50 |
HK$25.75 |
14.4 |
| Siam Cement |
SCC TB |
HK$22.50 |
HK$630.00 |
20.2 |
Key Assumptions
| Region |
2015 GDP (yoy) |
2016F GDP (yoy) |
2017F GDP (yoy) |
| US |
2.4 |
2.5 |
2.7 |
| Euro Zone |
1.6 |
1.5 |
1.6 |
| Japan |
0.5 |
0.6 |
0.8 |
| Singapore |
2.0 |
2.7 |
3.0 |
| Malaysia |
5.0 |
4.2 |
5.0 |
| Thailand |
2.8 |
3.2 |
3.6 |
| Indonesia |
4.8 |
5.0 |
5.5 |
| Hong Kong |
2.4 |
2.1 |
1.8 |
| China |
6.9 |
6.5 |
6.2 |
| Metric |
2015 |
2016F |
2017F |
2018F |
| Brent (Average) |
53.60 |
42 |
54 |
54 |
| CPO |
2,168 |
2,500 |
2,600 |
2,600 |
Corporate Events
| Event Name |
Venue |
Dates |
| China Economics and Coal & Wind Supply Analyst Presentation |
Taipei |
11 Aug - 12 Aug |
| ST Engineering Luncheon |
Singapore |
16 Aug |
| China Resources Gas Luncheon |
Hong Kong |
17 Aug |
| Cowell E Holdings Luncheon |
Hong Kong |
18 Aug |
| Q Technology Group Luncheon |
Hong Kong |
26 Aug |
| Q Technology Group Roadshow |
Shanghai |
2 Sep |
| China Resources Gas Roadshow |
Canada |
12 Sep - 16 Sep |
| China Aviation Oil Roadshow |
UK/Europe |
13 Sep - 16 Sep |
| Sembcorp Industries Corp Roadshow |
Canada |
26 Sep |
| Regional Financial and Telco Sector Analyst Presentation |
UK/Europe |
26 Sep - 30 Sep |
| Metro Pacific Investments Corporate Roadshow |
Canada |
26 Oct - 28 Oct |
Key Financials and Metrics
Profit & Loss (Rmbm)
| Metric |
2015 |
2016F |
2017F |
2018F |
| Net turnover |
18,228.4 |
21,629.5 |
24,381.2 |
27,573.2 |
| EBITDA |
11,577.6 |
14,920.2 |
16,906.8 |
19,590.8 |
| Net profit (rep./act.) |
2,550.3 |
3,736.6 |
4,403.7 |
5,411.5 |
| EPS (fen) |
31.7 |
46.5 |
54.8 |
67.3 |
Balance Sheet (Rmbm)
| Metric |
2015 |
2016F |
2017F |
2018F |
| Fixed assets |
98,609 |
106,424 |
114,397 |
121,738 |
| Total assets |
133,473 |
142,586 |
153,324 |
163,200 |
| Shareholders’ equity |
38,100 |
41,405 |
45,250 |
50,002 |
Cash Flow (Rmbm)
| Metric |
2015 |
2016F |
2017F |
2018F |
| Operating cash flow |
16,294 |
10,750 |
15,801 |
18,128 |
| Net cash inflow |
(802) |
(2,004) |
1,682 |
1,366 |
Leverage and Valuation Metrics
| Metric |
2015 |
2016F |
2017F |
2018F |
| Debt to equity |
196.0 |
192.7 |
187.3 |
175.1 |
| Net debt/equity |
188.4 |
190.6 |
181.6 |
167.3 |
| Interest cover (x) |
4.2 |
4.6 |
4.8 |
4.9 |
| ROE (%) |
8.1 |
9.4 |
10.2 |
11.4 |
| P/E (x) |
18.0 |
12.3 |
10.4 |
8.5 |
| P/B (x) |
1.4 |
1.1 |
1.0 |
0.9 |
| EV/EBITDA (x) |
11.5 |
8.9 |
7.9 |
6.8 |
Conclusion
The document outlines the performance of key companies across multiple Asian markets, highlighting profitability trends, sector outlooks, and valuation metrics. While China Longyuan Power and Thailand's CP ALL and Thai Vegetable Oil show positive outlooks and are recommended as BUY, Brilliance Auto is SELL due to expected earnings misses and declining profitability. The Hong Kong Exchanges & Clearing also faces a SELL recommendation due to a challenging outlook from LME fee cuts. Overall, the report indicates a mixed market sentiment, with renewable energy and efficiency gains driving positive results in some sectors, while others like automotive and shipyards face headwinds.
