20131008-大华银行-Asia_Pacific_Daily_27页_1mb

Daiwa Investment Conference Summary - Hong Kong, 19-22 November 2013

Core Content

This document is a summary of the Daiwa Investment Conference held in Hong Kong from 19 to 22 November 2013. It contains technical analysis, market insights, and investment recommendations for various sectors and companies across Asia, including real estate investment trusts (REITs) and construction machinery.

Main Points

1. Market Overview

• Tokyo Stock Market:

  • The market rebounded at the opening, likely due to the positive impact of foreign broker buy orders.
  • Technical indicators suggest the Nikkei Stock Average has hit a major peak.
  • The 25-day advance-to-decline ratio peaked at around 120%, indicating overbought conditions.
  • The 5W MA surpassed the 13W MA on 26 September, suggesting a potential peak.
  • A meaningful decline from current levels would indicate a downside breakout, with the Nikkei likely to languish until 1 November.

• US Market:

  • US shares rebounded on Friday due to expectations of progress in budget talks.
  • US stock futures lost ground on Monday due to little progress in budget talks.

• Regional Indices:

  • Performance changes, EPS growth, and PER (Price-to-Earnings Ratio) are analyzed for various markets including TPX, HSCEI, HSI, KOSPI, TWSE, SENSEX, FSSTI, FBMKLCI, and SET.
  • These indices reflect different levels of performance and valuation trends.

2. REITs Analysis

• H-REITs:

  • Focus on Fortune REIT's acquisition of Kingswood Ginza, a large-scale mall with 665,244 sq ft GRA.
  • The acquisition is viewed positively due to its strategic value and potential for suburban retail growth.
  • The deal is expected to offer upside potential through refurbishments and other initiatives.

• J-REITs:

  • Tokyo's bid to host the 2020 Summer Olympics is a positive factor for the sector.
  • Japan Hotel REIT (JHR) is highlighted as a top pick due to its variable rent structure, which is expected to benefit from a strengthening economy.

• S-REITs:

  • The physical markets (office, retail, industrial) are resilient, despite a decline in unit prices since June.
  • CapitaCommercial Trust (CCT) is recommended as an office S-REIT with exposure to the recovery of the office rental market.

3. Investment Recommendations

• Fortune REIT (778 HK):

  • Rating: Buy
  • Target: HKD 8.20
  • Upside: 30.4%

• Japan Hotel REIT (8985 JP):

  • Rating: Buy
  • Target: JPY 56,000
  • Upside: 22.3%

• CapitaCommercial Trust (CCT SP):

  • Rating: Outperform
  • Target: SGD 1.650
  • Upside: 15.4%

4. Doosan Infracore (042670 KS)

• Target Price: Raised to KRW 14,300 from KRW 12,500.
• Recommendation: Hold
• Key Points:
  • 3Q13 operating profit is expected to be in line with the Bloomberg consensus.
  • The company's balance sheet improvement is expected to take time.
  • Strong US demand for construction machinery is a positive factor.
  • China and Europe machinery demand has not yet recovered.
  • Forecasted net profit for 3Q13 is KRW 17.6bn, with a 30% upside from the previous forecast.
  • Revised EPS forecasts for 2014 and 2015 show a decrease due to higher non-operating expenses.

5. Key Stock Calls

• Fortune REIT: Buy
• Japan Hotel REIT: Buy
• CapitaCommercial Trust: Outperform
• Doosan Infracore: Hold

Key Information

6. Regional Indices Performance

*Valuation based on MSCI Universe
**MSCI index priced as of 04 Oct

7. Investment Outlook

• H-REITs: Positive outlook due to strategic acquisitions and suburban retail growth.
• J-REITs: Positive due to the 2020 Olympics bid and strong fundamentals.
• S-REITs: Positive with stable fundamentals, despite unit price declines.
• Doosan Infracore: Hold due to uncertain demand recovery in China and Europe, but strong US presence.

8. Upcoming Events

• Company Roadshows:

  • 7-8 Oct: Mc Group (MC TB) - NDR in SG
  • 7-10 Oct: Hang Lung Properties (101 HK) - NDR in US
  • 8 Oct: Macau Legend (1680 HK) - Lunceon and Video Con. in HK and SG
  • 9 Oct: CR Cement (1313 HK) - NDR in HK, Luk Fook Holdings (590 HK) - Lunceon and Video Con. in HK and SG
  • 14-17 Oct: Far Eastone (4904 TT) - NDR in US
  • 14-18 Oct: Texhong Textile Group (2678 HK) - NDR in EU
  • 17 Oct: Ju Teng (3336 HK) - Lunceon and Video Con. in HK and SG
  • 17-18 Oct: New World China Land (917 HK) - NDR in Tokyo
  • 18 Oct: CapitalCommercial Trust (CCT SP) - NDR in SG

• Daiwa Asian Events:

  • 10-Oct: Daiwa ASEAN Conference - Philippines Corporate Day 2013 in SG
  • 16-Oct: KOSDAQ Global Investors Conference 2013 in HK
  • 18-Oct: KOSDAQ Global Investors Conference 2013 in SG
  • 21-22 Oct: Daiwa ASEAN Conference - Best of Indonesia 2013 in Tokyo
  • 23-Oct: Daiwa ASEAN Conference - Best of Indonesia 2013 in Toronto
  • 19-22 Nov: Daiwa Investment Conference Hong Kong 2013 in HK

Conclusion

The document provides a detailed analysis of the Asian markets and investment opportunities, with a focus on REITs and construction machinery. It highlights key technical indicators, market trends, and investment recommendations for various companies and sectors. The outlook for the Nikkei Stock Average is cautiously positive, with potential for a downturn if demand for construction machinery does not recover. The REITs sector is viewed as a good investment opportunity, with specific emphasis on H-REITs, J-REITs, and S-REITs. The document also includes upcoming events and key financial metrics for various companies.