Asia Pacific Daily Summary
Core Content Overview
The Asia Pacific Daily report provides an analysis of various financial updates, investment ratings, and market performance across multiple Asian markets and companies. The key focus is on Pacific Textiles Holdings (1382 HK) and Hai-O (HAIO MK), along with other market-related insights and upcoming events.
Main Points
Pacific Textiles Holdings (1382 HK)
- Rating Change: Upgraded from Hold to Outperform.
- Target Price: Raised from HKD11.20 to HKD12.30.
- Upside Potential: 13.3% potential upside from current price (HKD10.86).
- FY16E Revenue Forecast: HKD8,074 million.
- FY16E Net Profit Forecast: HKD1,186 million (up 9.5% from previous estimate).
- EPS Forecast: HKD0.820 (up 9.4% from previous estimate).
- Dividend Yield: 9.4% for FY16E, up from 8.3% in FY15.
- Key Drivers:
- Strong orders from major clients such as UNIQLO and Walmart.
- Aggressive ramp-up at the Vietnam facility.
- Management expects 215 million lbs of volume sales in FY16E (16% YoY growth).
- Improved operating margin due to reduced G&A expenses and tax provisions.
- Risks: Sharp decline in orders from main clients.
Hai-O (HAIO MK)
- Rating Change: Upgraded from Sell to Hold.
- Target Price: Raised from RM1.80 to RM2.02.
- FY15 Performance:
- Revenue and core earnings dropped by 5% and 25% YoY, respectively.
- Decline attributed to weaker sales and softer margins across all divisions.
- Dividend Yield:
- FY15: 6.7% (payout ratio 101%).
- FY16-18E: Expected to range from 5-7%.
- Valuation:
- More attractive, with a revised PER of 11.5x.
- Risks: Weak consumer spending and currency fluctuations (RM vs. USD).
Other Research Highlights
- HK Electric Investments (2638 HK): Hold rating, with a consultation countdown.
- China State Construction International (3311 HK): Buy rating, with PPP as a long-term solution.
- Ascott Residence Trust (ART SP): Hold rating, with continued buying.
- Tenaga (TNB MK): Buy rating, with an unfavourable cut.
- IJM Corp (IJM MK): Buy rating.
Macro Research Highlights
- China Economy: Kevin Lai discusses fighting a liquidity trap.
- Indonesia Economy: Adi Saputra provides MoF briefing.
- Kinouchi's Technical Tips: Eiji Kinouchi shares insights for institutions.
- European Shares: Strong in July; progress in TPP talks bodes well for US shares.
- US Data Review: Personal income and consumption analysis by Michael Moran.
- Euro Wrap-up: Overview by the Research Team.
Memos – Quick Updates
- China Aviation Sector: Positive outlook due to merger of cargo units.
- Dah Chong Hong (1828 HK): Hopes for a rebound in 2H.
- Hon Hai (2317 TT): AGM takeaways showing management positivity.
- Luk Fook (590 HK): FY15 results show continued buying.
Daiwa's Banner Products and Events
- Daiwa Auto & Industrial Leaders Conference: Held in Hong Kong.
- Daiwa Asia's Ageing Society Conference: In Zurich.
- Daiwa Asia Water Day: In Zurich.
- Daiwa Pan Asia REIT Day Tokyo 2015: In Tokyo.
- Daiwa Investment Conference Hong Kong 2015: In Hong Kong.
Company Roadshows
- Shenzhen International (2313 HK): NDR in US (15-26 Jun).
- Vinda (3331 HK): Aging Day + NDR in EU (23-30 Jun).
- Pacific Textiles (1382 HK): NDR in HK (29 Jun).
- Goodman Group (GMG AU): NDR in Tokyo (30 Jun–1 Jul).
- China South City (1668 HK): NDR in HK (2 Jul).
- QBE Insurance (QBE AU): NDR in Tokyo (9 Jul).
- Qantas Airways (QAN AU): NDR in Tokyo (9 Jul).
- L'Arc Macau (Not Listed): NDR in US (10–17 Sep).
- Thai Beverage PCL (THBEV SP): NDR in Tokyo (13–14 Jul).
- Luk Fook Holdings (590 HK): NDR in Tokyo (23–24 Jul).
- Japfa Comfeed Indonesia TBK (JPFA IJ): NDR in SG and HK (24–25 Aug).
- Stockland (SGP AU): NDR in Tokyo (31 Aug).
- L'Arc Macau (Not Listed): NDR in EU (21–25 Sep).
Regional Indices Performance
| Market |
1D (%) |
1M (%) |
YTD (%) |
EPS Growth 15E (%) |
EPS Growth 16E (%) |
PER 15E (x) |
PER 16E (x) |
| TPX |
-0.5 |
0.7 |
18.7 |
18.4 |
9.2 |
15.7 |
14.4 |
| HSCEI |
-1.6 |
-6.7 |
12.4 |
4.3 |
8.0 |
8.2 |
7.6 |
| HSI |
-0.9 |
-3.0 |
15.0 |
-0.4 |
9.5 |
12.0 |
11.0 |
| KOSPI |
-0.0 |
-2.8 |
8.8 |
43.9 |
5.9 |
10.7 |
10.1 |
| TWSE |
0.8 |
-1.8 |
1.8 |
12.2 |
8.1 |
13.0 |
12.0 |
| SENSEX* |
0.6 |
0.9 |
1.4 |
16.9 |
19.3 |
18.2** |
15.2** |
| FBMKLCI* |
-0.9 |
-2.9 |
-2.5 |
2.3 |
10.0 |
16.0** |
14.6** |
| SET* |
0.1 |
0.7 |
1.5 |
15.0 |
13.5 |
14.5** |
12.8** |
| PCOMP* |
-0.8 |
-2.3 |
4.9 |
10.1 |
12.5 |
20.2** |
17.9** |
| JCI* |
-0.7 |
-7.0 |
-5.9 |
6.2 |
13.8 |
14.4** |
12.7** |
| AS51 |
-1.0 |
-1.6 |
4.1 |
-1.8 |
0.9 |
15.7 |
15.5 |
*Valuation based on MSCI Universe
**MSCI index priced as of 24 Jun
Financial Summary of Pacific Textiles Holdings
Revenue and Net Profit (HKDm)
| Year to 01 Apr |
2015 |
2016E |
2017E |
2018E |
| Revenue |
6,907 |
8,074 |
9,155 |
9,801 |
| Net Profit |
1,186 |
1,338 |
1,433 |
1,433 |
EPS (HKD)
| Year to 01 Apr |
2015 |
2016E |
2017E |
2018E |
| EPS |
0.820 |
0.925 |
0.991 |
0.991 |
Key Ratios
| Metric |
2015 |
2016E |
2017E |
2018E |
| Gross Profit Margin |
17.1 |
17.6 |
17.8 |
18.0 |
| EBITDA Margin |
18.3 |
19.1 |
19.0 |
19.0 |
| Operating Profit Margin |
16.1 |
16.8 |
16.8 |
16.9 |
| Net Profit Margin |
15.6 |
14.7 |
14.6 |
14.6 |
| ROE (%) |
28.9 |
34.5 |
40.4 |
45.2 |
| Dividend Yield (%) |
8.3 |
9.4 |
10.0 |
10.0 |
| Free Cash Flow Yield |
5.0 |
4.6 |
7.2 |
8.0 |
Earnings & Valuation Summary
| FYE Apr |
2014 |
2015 |
2016E |
2017E |
2018E |
| Revenue (RMm) |
253.4 |
239.9 |
270.0 |
283.8 |
303.4 |
| EBITDA (RMm) |
58.0 |
48.5 |
49.3 |
53.0 |
57.0 |
| Pretax Profit (RMm) |
53.1 |
43.0 |
45.8 |
49.6 |
53.7 |
| Net Profit (RMm) |
40.3 |
30.1 |
33.6 |
36.4 |
39.4 |
| EPS (sen) |
19.9 |
14.8 |
16.6 |
18.0 |
19.4 |
| PER (x) |
11.2 |
15.0 |
13.4 |
12.4 |
11.5 |
| Core EPS Growth (%) |
-7.5 |
-25.3 |
11.7 |
8.3 |
8.2 |
Summary of Key Information
- Pacific Textiles has improved its performance with strong FY15 results and received orders from major clients like UNIQLO and Walmart.
- Hai-O has seen a drop in FY15 earnings, but its valuation is now more attractive, leading to an upgrade to Hold.
- The report includes a detailed financial forecast for Pacific Textiles with a new target price and increased EPS expectations.
- The Daiwa Auto & Industrial Leaders Conference and other events are scheduled for the coming months.
- A variety of company roadshows are planned in different regions to update investors on business developments.