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报告摘要

Regional Morning Notes Summary - 22 April 2016

Core Content

This document provides an overview of the financial and market conditions in several Asian countries, including China, Indonesia, Malaysia, and Singapore, as well as key stock picks and market indices. It also includes insights from marketing trips, company results, and economic assumptions for the year 2016.

Main Points by Country

China

Credit Market: Credit spreads have widened in April due to the cancellation of debt instrument issuance and an increase in debt defaults. The PBoC's easing measures have limited impact due to existing leverage. The recovery is seen as cyclical rather than structural.
Property Sector:
- Tightening policies in core cities like Shanghai and Shenzhen are expected to stabilize the market and prevent further price surges.
- Core tier-2 cities are seen as major beneficiaries due to healthy inventory levels and economic growth.
- Companies with abundant saleable resources in these cities are recommended, including CR Land, China Overseas Land & Investment, Sunac China Holdings, and CIFI Holdings.
- There is a focus on maintaining exposure to consumer and FAI (Fixed Asset Investment)-related sectors. Banks are cautioned against due to corporate sector financial stress.
- The MSCI China index is trading at 10.6x 12m forward PE, and the portfolio beta is slightly reduced by replacing CITIC Securities with China Resources Land.

Indonesia

XL Axiata (EXCL IJ):
- 1Q16: Margins improved, and ARPU was maintained at Rp39,000.
- Data revenue grew 23.2% yoy, driven by increased traffic, though effective pricing dropped due to promotions.
- Voice revenue increased 7.3% yoy, but SMS revenue fell 17.6% due to cannibalization from data and messaging apps.
- The company is maintaining a BUY rating with a target price of Rp4,500.

Malaysia

Maxis (MAXIS MK):
- 1Q16: EBITDA increased by 3% qoq and 7% yoy due to good cost discipline.
- Earnings are expected to remain uninspiring in 2Q16 due to no signs of competition abating.

Singapore

Strategy: Capitalizing on the recovery in tourist arrivals.
Stock Picks: The report highlights key tactical stock picks for the upcoming results season.

Key Indices

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	17982.5	-0.6	0.3	2.0	3.2
S&P 500	2091.5	-0.5	0.4	1.9	2.3
FTSE 100	6381.4	-0.4	0.3	3.2	2.2
AS30	5336.4	1.0	2.9	2.0	-0.2
CSI 300	3160.6	-0.6	-3.5	-2.0	-15.3
FSSTI	2960.8	0.4	1.6	2.8	2.7
HSCEI	9248.4	1.2	0.1	3.9	-4.3
HSI	21622.3	1.8	1.3	4.6	-1.3
JCI	4903.1	0.5	1.8	1.0	6.8
KLCI	1721.5	0.7	-0.1	-0.2	1.7
KOSPI	2022.1	0.8	0.3	1.3	3.1
Nikkei 225	17363.6	2.7	2.7	1.8	-8.8
SET	1423.9	0.6	3.9	1.9	10.5
TWSE	8568.7	0.6	-1.1	-2.5	2.8
BDI	670	0.1	12.2	68.3	40.2
CPO (RM/ml)	2673	1.0	2.0	3.2	21.5
Brent Crude (US$/bbl)	45	-2.8	1.6	7.2	19.4

Key Assumptions

Country	GDP Growth (yoy)
US	2.4
Euro Zone	0.9
Japan	0.0
Singapore	3.3
Malaysia	6.0
Thailand	0.8
Indonesia	5.0
Hong Kong	2.5
China	7.3

Top Picks

Company	Ticker	Current Price (HK$)	Target Price (HK$)	Upside (%)	PE 2016F (x)	Dividend Yield 2016F (%)
Air China	753 HK	6.15	10.20	65.9	7.4	2.4
Ping An	2318 HK	37.75	45.00	19.2	14.8	1.0
Bank BJB	BJBR J	940.00	1,140.00	21.3	-	-
Gamuda	GAM MK	4.95	5.55	12.1	-	-
WCT Holdings	WCTHG MK	1.67	2.05	22.8	-	-
City	CIT SP	9.06	10.86	19.9	-	-
DBS	DBS SP	15.87	19.25	21.3	-	-
Charoen	CPF TB	25.75	30.00	16.5	-	-
Siam Cement	SCC TB	486.00	630.00	29.6	-	-

Companies with Poor Interest Cover and Altman Z-Score

Bloomberg Ticker	Company	Sector	Interest Cover (x)	Altman Z-Score
3323 HK	CNBM	Materials	1.25	0.35
347 HK	Angang Steel	Materials	-1.91	0.55
2600 HK	Chalco	Materials	-0.12	0.74
1898 HK	China Coal	Energy	0.01	0.80
2009 HK	BBMG	Materials	1.36	1.00
1618 HK	MCC	Industrials	1.23	1.04
1171 HK	Yanzhou Coal	Energy	0.54	1.25
1886 HK	Huiyuan Juice	Consumer Staples	-0.16	1.27
658 HK	China High Speed Transmission	Industrials	1.19	1.33
2233 HK	West China Cement	Materials	1.47	1.47