20170821-大华继显-Regional_Morning_Notes_19页_1mb

Regional Morning Notes Summary - 21 August 2017

Core Content

This document provides a summary of company results and market analysis for several Asian markets including China, Indonesia, Malaysia, Singapore, and Thailand. It also includes key indices, top picks, corporate events, and detailed financial data for selected companies.

Main Points

China TCM (570 HK)

• 1H17 Results:

  • Net profit rose 22% yoy to Rmb599m, slightly exceeding expectations.
  • Revenue increased 21.9% yoy to Rmb3,899m.
  • TCM granules (64% of sales) and finished drugs (35% of sales) drove growth with TCM granules up 23.8% and finished drugs up 3.0% yoy.
  • TCM decoction pieces and healthcare complex showed significant growth (493.2% and 1118.7% respectively).
  • Gross profit increased 18.3% yoy to Rmb2,170m, while operating profit rose 29.9% to Rmb910m.
  • Net profit margin remained stable at 15.4%.

• Valuation:

  • Current valuation (13.5x 2017F PE) is attractive with a 19.0% 2016-18F net profit CAGR.
  • Target price is HK$5.58, implying a 18.0x 2017F PE, which is the average for the healthcare sector.
  • The company is trading at a 25.8% discount to the sector average, indicating potential for re-rating.

• Key Financials:

  • EBITDA margin is expected to decrease slightly to 25.9% in 2017F.
  • Net margin is projected to remain at 14.8% in 2017F and increase to 15.3% in 2018F.
  • Debt to equity is expected to decline from 59.7% in 2017F to 51.6% in 2018F.

• Stock Impact:

  • TCM granule sales continue to grow despite policy impact.
  • Sales of Xian Lin Gu Bao dropped due to reclassification as a prescription drug.
  • The company is expected to maintain cost control and improve operating margins in 2H17.

• Corporate Events:

  • Roadshow with Star Petroleum Refining (21 Aug, Hong Kong).
  • Analyst Presentation on Malaysia Technology Sector (22-23 Aug, Taipei).
  • Roadshow with China TCM Holdings (24 Aug, Hong Kong and Shanghai).
  • Analyst Marketing on 2H17 (5 Sep, Singapore).

Indocement TP (INTP IJ)

• 2Q17 Results:

  • Revenue fell 6.2% qoq to Rp3,167m, net income dropped 16.5% qoq to Rp410m.
  • Earnings are expected to have bottomed out in 2Q17, with revenue improvement anticipated in 2H17.
  • Revenue for 1H17 was Rp6.5t, down 15.5% yoy, which is 28% of the 2017 estimate.
  • Gross and EBIT margins declined to 34.0% and 12.5%, respectively.

• Valuation:

  • Target price is Rp18,000, with an upside of -9.1% from the current share price of Rp19,800.
  • The upgrade to HOLD reflects improved outlook for Genting Dream cruise and a 13% share price decline since the downgrade.

• Key Financials:

  • EBITDA margin decreased to 25.9% in 2017F.
  • Net margin is projected to fall to 16.4% in 2017F and rise to 19.3% in 2018F.
  • The company has a 51% ownership stake by Birchwood Omnia Ltd.

• Stock Impact:

  • Demand for cement is expected to improve in 2H17 due to infrastructure progress and a stronger property sector.
  • Energy cost pressure, especially from rising coal prices, may limit ASP downside.
  • Potential 4% qoq increase in COGS/tonne in 3Q17 due to coal price rally.

• Corporate Events:

  • Roadshow with Health Management Int'l (6 Sep, Kuala Lumpur).
  • Analyst Marketing on 2H17 (5 Sep, Singapore).
  • Roadshow with Globetronics Technology (24 Aug, Hong Kong).

Key Indices

Top Picks

BUY

• Alibaba (BABA US): CP 167.50, TP 205.00, Pot. +/- 22.4%
• Beijing Ent. Water (371 HK): CP 6.55, TP 7.60, Pot. +/- 16.0%
• Ace Hardware (ACES IJ): CP 1,080.00, TP 1,300.00, Pot. +/- 20.4%
• Waskita Karya (WSKT IJ): CP 2,290.00, TP 3,350.00, Pot. +/- 46.3%
• Ekovest (EKO MK): CP 1.12, TP 1.55, Pot. +/- 38.4%
• OCBC (OCBC SP): CP 11.00, TP 13.38, Pot. +/- 21.6%

SELL

• Great Wall Motor (2333 HK): CP 9.92, TP 5.50, Pot. +/- -44.6%
• Sapura Energy (SAPE MK): CP 1.50, TP 1.38, Pot. +/- -8.0%

Key Assumptions

Summary

The document outlines the performance of several Asian companies and markets, highlighting key financial metrics, earnings revisions, and investment recommendations. It emphasizes the strong results of China TCM, the bottoming out of Indocement TP earnings, and the potential for recovery in the second half of 2017. Corporate events and market indices are also detailed, providing insights into market trends and company strategies.