20160108-大华继显-Regional_Morning_Notes_15页_1mb

Regional Morning Notes Summary

Core Content

This document provides a summary of regional market updates and stock analysis for several key companies in China, Malaysia, and Singapore, as well as financial data and valuation insights for China Vanke and Scientex.

Key Regions and Companies

China

• China Vanke (2202 HK)
  • Company Overview: One of the largest property developers in China with a focus on contracted sales and landbanking.
  • Update: Recorded Rmb260b in contracted sales in 2015, with higher ASPs and accelerated landbanking in the second half of the year. Despite strong performance, the stock is downgraded to HOLD due to uncertainties around its shareholding structure and the risks from margin financing and market corrections.
  • Target Price: HK$19.61, with an upside of -2.2% from the current price of HK$20.05.
  • Key Financials:
    • Net turnover increased from Rmb137,994m in 2014 to Rmb181,949m in 2015 and is projected to reach Rmb210,024m in 2016.
    • EBITDA and operating profit also rose significantly.
    • Net profit (rep./act.) reached Rmb20,082m in 2015, up from Rmb15,745m in 2014.
    • Valuation metrics such as PE and P/B have declined, indicating a rich valuation.
  • Landbanking: Purchased 108 land plots in 2015, with a total GFA of 22.6m sqm. Land premium increased by 176% yoy.
  • Shareholding: Baoneng Group holds 24.26%, while China Resources Holding (CRH) holds 15.29%. The shareholding structure remains unstable.
  • Risks: Potential forced closure of positions due to margin financing, and possible sell-off if the stock price falls below Rmb15.00-16.00.

Malaysia

• Scientex (SCI MK)
  • Company Overview: A major industrial packaging company and a niche property developer in Southern Malaysia.
  • Update: Positive outlook for becoming a regional consumer packaging player. The company is expanding its manufacturing capacity and has a strong property segment with a focus on affordable properties.
  • Target Price: RM12.50, implying a 9.2x 2017F PE.
  • Key Financials:
    • Net turnover rose from RM1,590m in 2014 to RM1,802m in 2015 and is expected to reach RM2,340m in 2016.
    • EBITDA and operating profit also increased significantly.
    • Net profit (rep./act.) reached RM245m in 2016, up from RM158m in 2015.
    • Valuation metrics such as PE and P/B have improved.
  • Manufacturing Expansion:
    • Ramped up utilisation at its new CPP plant in Malacca.
    • BOPP plant in Pulau Indah will be operational by mid-2016.
    • Plans to expand production capacity by 50% at SGWI by end-2016/early-2017.
  • Property Segment:
    • Focus on affordable properties, with 80% of launches comprising such properties.
    • Take-up rates for recent projects were around 80%, leading to RM632.2m in unbilled sales.
    • Proposed acquisition of a 326-acre land in Pulai for RM219m to increase landbank to 1,200 acres.
  • Forex Impact: Expected minimal or no forex loss from 2QFY16 onwards due to reduced US$-denominated loans.

Singapore

• Sector: Shipyard is experiencing a decline.

Thailand

• Krung Thai Bank (KTB TB)
  • Update: Steady operating results expected for 4Q15. 2015 earnings are expected to meet expectations.
  • Recommendation: BUY with a target price of Bt19.00.

Key Indices

Top Picks

BUY

• Beijing Capital (694 HK): Target price HK$11.40, implying a 49.8% upside.
• ICBC (1398 HK): Target price HK$7.60, implying a 77.2% upside.
• Bank BJB (BJBR J): Target price 1,140.00, implying a 47.1% upside.
• DiGi.Com (DIGI MK): Target price RM5.95, implying a 14.4% upside.
• Maybank (MAY MK): Target price RM10.00, implying a 20.5% upside.
• Citiv Developments (CIT SP): Target price RM10.86, implying a 46.4% upside.
• DBS (DBS SP): Target price RM22.34, implying a 42.3% upside.
• Kasikornbank (KBANK TB): Target price Bt192.00, implying a 33.3% upside.
• PTT (PTT TB): Target price Bt340.00, implying a 62.7% upside.

SELL

• SIA Engineering (SIE SP): Target price RM3.30, implying a -6.5% upside.
• UMWH Holdings (UMWH MK): Target price RM7.00, implying a -7.0% upside.
• Sembcorp (SMM SP): Target price RM1.69, implying a 9.0% upside.

Key Assumptions

Corporate Events

Analysts

• Edison Bian: +852 2236 6761 | edison.bian@uobkayhian.com.hk
• David Yang: +8621 5404 7225 ext 801 | davidyang@uobkayhian.com

Summary of Key Points

China Vanke

• Downgrade: To HOLD due to shareholding uncertainties and potential risks from margin financing.
• Target Price: HK$19.61, with a downside of 2.2%.
• Valuation: RNAV remains at HK$24.51, but discount to RNAV is widened to 20%.
• Financials: Strong sales growth, improved margins, and increased landbanking activities.
• Risks: Market corrections, potential forced selling, and uncertain restructuring.

Scientex

• Maintain BUY: Target price RM12.50, implying a 27.9% upside.
• Manufacturing Expansion: Expected to significantly increase production capacity in 2016.
• Property Segment: Focus on affordable properties, with strong take-up rates and a large pipeline.
• Forex Impact: Expected minimal or no forex loss from 2QFY16 onwards.

Conclusion

The report highlights the mixed performance of regional markets and the key challenges and opportunities for major companies like China Vanke and Scientex. While China Vanke faces shareholding and market risks, it remains a top property developer. Scientex, on the other hand, shows strong growth potential with its manufacturing expansion and resilient property segment. The document also provides key financial metrics and valuation insights for both companies.