20161027-大华继显-Regional_Morning_Notes_43页_2mb

Regional Morning Notes Summary

Core Content Overview

This document provides a detailed summary of financial and operational updates from key companies and sectors in Asia for the period ending 27 October 2016. It includes results, recommendations, corporate events, and market indices, along with key assumptions and valuation metrics.

Main Points by Region

China

• Sector Update: Coal
  • Core Message: China is pushing for higher coal production amid a strong coal price upsurge.
  • NDRC Action: The National Development and Reform Commission (NDRC) is urging coal miners to follow a production increase plan and sign long-term contracts with fixed volumes and prices.
  • Price Forecast: Coal prices are expected to remain high in November and soften in December. The 2017 average coal price is forecasted to be higher than 2016's, at Rmb460/tonne.
  • Recommendation: Maintain OVERWEIGHT for the coal sector due to ongoing recovery and reduced overcapacity risk.
  • Key Companies:
    • China Coal (1898 HK): Buy recommendation, target price HK$5.50.
    • China Shenhua (1088 HK): Buy recommendation, target price HK$18.00.
    • Yan Zhou Coal (1171 HK): Hold recommendation, target price HK$6.20.

Indonesia

• Company Results:
  • Bank Central Asia (BBCA IJ): Buy recommendation, target price Rp17,300. 9M16 net profit up 13.2% yoy.
  • Jasa Marga (JSMR IJ): Buy recommendation, target price Rp5,500. 3Q16 results strong and ahead of consensus.
  • Unilever Indonesia (UNVR IJ): Sell recommendation, target price Rp41,000. 9M16 net income in line with expectations.
• Corporate Events: No major events are highlighted for Indonesia in this summary.

Malaysia

• Company Results:
  • MRCB-Quill REIT (MQREIT MK): Buy recommendation, target price RM1.40. 9M16 results above expectations.
  • Kuala Lumpur Kepong (KLK MK): Hold recommendation, target price RM23.35. Positive on long-term outlook with improved production efficiency.
• Corporate Events: No major events are highlighted for Malaysia in this summary.

Singapore

• Company Results:
  • First Resources (FR SP): Buy recommendation, target price S$2.00. FFB nucleus production up 43.3% qoq.
  • Singapore Airlines (SIA SP): Hold recommendation, target price S$10.00. Expected weak 2QFY17 results.
• Corporate Events:
  • Innovalues (IP SP): Accept the offer, target price S$1.01. Northstar proposes acquisition.
  • Nera Telecommunications (NERT SP): Buy recommendation, target price S$0.835. Expect smooth transition.
  • United Engineers (UEM SP): Buy recommendation, target price S$2.96. Gearing up for sale.

Key Indices

Key Assumptions

Top Picks and Sell Recommendations

BUY

• Air China (753 HK): Target price HK$8.40, potential upside 62.8%.
• Ping An Insurance (2318 HK): Target price HK$47.00, potential upside 15.6%.
• Ciputra Property (CTRP LJ): Target price Bt960.00, potential upside 25.5%.
• Indosat (ISAT LJ): Target price Bt9,500.00, potential upside 50.8%.
• Genting Bhd (GENT MK): Target price MK9.90, potential upside 26.1%.
• City Dev (CIT SP): Target price S$10.36, potential upside 18.8%.
• OCBC (OCBC SP): Target price S$10.30, potential upside 20.5%.
• Siam Cement (SCC TB): Target price Bt645.00, potential upside 27.5%.

SELL

• Hartalega (HART MK): Target price MK3.10, potential downside 36.5%.

Corporate Events

Galaxy Entertainment (27 HK)

• Recommendation: Maintain HOLD.
• Key Highlights:
  • 3Q16 Results: Earnings above expectations, but EBITDA was luck-normalised. Adjusted EBITDA increased by 18.1% qoq and 27.7% yoy to HK$2.7b.
  • Performance: Mass market revenue surged with a 18.5% yoy increase in mass GGR to HK$5b. VIP segment was a drag, with a 13.3% yoy decline.
  • Valuation: Target price HK$30.00, implying 12.5x 2017F EV/EBITDA.
  • Future Outlook: Strong mass market performance expected to continue, but management will need to conserve cash flow for new expansions (Phase 3, Phase 4, Hengqin) and maintain low dividend yields around 1%.
  • Financials: Net profit (adj.) for 3Q16 is HK$5.99b, with a target price of HK$30.00. The company is trading nearly 20% above its historical average at 14x 2017F EV/EBITDA.

Key Metrics for Galaxy Entertainment

Analysts

• Yan Shi: Contact details provided for further inquiries.

Summary of Key Financials

• 3Q16 Net Revenue: HK$12.9b, up 6.3% qoq and 5.1% yoy.
• 3Q16 Adjusted EBITDA: HK$2.68b, up 18.1% qoq and 27.7% yoy.
• 3Q16 Net Profit (adj.): HK$5.99b.
• Target Price: HK$30.00, implying 12.5x 2017F EV/EBITDA.
• Dividend Yield: Expected to remain low at around 1%.
• Cash Flow: Net cash inflow of HK$782.1m in 3Q16, with ending cash at HK$8.76b.

Conclusion

The report highlights strong performance in the coal sector in China and the mass market segment for Galaxy Entertainment in Macau. Despite positive results, the recommendation to HOLD is maintained due to high valuations and low dividend yields. Other regions show mixed results, with some companies recommended for BUY and others for SELL based on their performance and market outlook.