20151215-大华继显-Regional_Morning_Notes_19页_906kb

Regional Morning Notes Summary - 15 December 2015

Core Content Overview

This document provides an update on several regional markets and stocks, focusing on China, Indonesia, Malaysia, Singapore, and Thailand. It includes company updates, stock performance, financials, and investment recommendations.

China

Baoxin Auto Holdings (1293 HK)

• Update: China Grand Auto (CGA) proposed a partial cash offer to acquire a 75% stake in Baoxin at HK$5.99 per share, a 44% premium to the pre-trading halt price.
• Deal Status: The deal is pending approval from multiple authorities, including CSRC and HKEx, and remains uncertain.
• Stock Impact: The share price surged over 20% after the offer announcement. However, the rally is considered mostly priced in, leading to a downgrade from HOLD to SELL with a target price of HK$3.80.
• Shareholding Changes: If all shareholders accept the offer, the shareholding of Mr. Yang Aihua and his family will drop from 53.58% to 13.31%, and the free floating ratio will decrease from 33.6% to 25%.
• Valuation: The current share price of HK$5.00 is a 19.8% discount to the offer price, and the implied post-deal share price is HK$2.03, which is close to the price before the offer announcement.
• PE Multiple: Baoxin is trading at around 14x 2015F PE, a 75% premium to peers, which is a key valuation concern.
• Key Metrics:
  • Net turnover: Rmb29,931m (2015F)
  • EBITDA: Rmb2,011m (2015F)
  • Operating profit: Rmb1,652m (2015F)
  • Net profit (rep./act.): Rmb783m (2015F)
  • Net margin: 2.6% (2015F)
  • Net debt/(cash) to equity: 28.9% (2015F)
  • Interest cover: 2.9x (2015F)
  • ROE: 14.4% (2015F)
  • Dividend yield: 2.2% (2015F)

China Resources Land (1109 HK)

• Update: China Resources Land (CRL) recorded a 29.7% yoy sales growth and achieved its full-year sales target in 11M15 due to premium asset injections and strong sales execution.
• Recommendation: Maintain BUY with a target price of HK$27.62.
• What's New:
  • CRL achieved Rmb78.1b in sales in 11M15, with a 52% sell-through rate.
  • Rental income in Nov 15 reached HK$580m, up 14.2% yoy.
  • New malls opened in Qingdao, Zibo, Ganzhou, Hefei, Shenyang, and Changsha.
  • CRL plans to operate 31 shopping malls with a total GFA of 7.14m sqm in 2017.
• Key Financials:
  • Net turnover: HK$103,284m (2015F)
  • EBITDA: HK$25,843m (2015F)
  • Operating profit: HK$25,445m (2015F)
  • Net profit (rep./act.): HK$14,116m (2015F)
  • Net profit (adj.): HK$14,116m (2015F)
  • EPS (HK$ cent): 214.2 (2015F)
  • PE (x): 9.7 (2015F)
  • P/B (x): 1.2 (2015F)
  • EV/EBITDA (x): 7.0 (2015F)
  • Dividend yield (%): 2.6 (2015F)
  • Net margin (%): 13.7 (2015F)
  • Net debt/(cash) to equity (%): 39.6 (2015F)
  • Interest cover (x): 6.8 (2015F)
  • ROE (%): 13.2 (2015F)
• Stock Impact:
  • CRL's share price is at HK$20.70, with an upside of +33.4% to the target price of HK$27.62.
  • The company is targeting to reduce its US$/HK$ debt exposure to below 50% by end-2015.
• Valuation/Recommendation:
  • Maintain BUY due to strong sales execution, active landbanking, and premium assets.
  • RNAV (Net Asset Value) assumption revised to HK$36.82 from HK$35.80.
  • Target price of HK$27.62 reflects a 25% discount to RNAV.

Indonesia

Astra International (ASII IJ)

• Update: Astra International (ASII) is upgraded to BUY with a target price of Rp7,600.
• EPS Growth: Expected to grow by 17.25% in 2016.

Malaysia

Plantation Sector

• Update: More male flowers on trees indicate poor crop yields for the next 3-5 months.
• Market Insight: The wide pricing spread between spot and future prices will benefit large refiners.

Singapore

Singapore O&G (SOG SP)

• Update: Singapore O&G (SOG SP) is recommended as a BUY with a target price of S$0.90.
• Strategy: Mid-cap spotlight: combination of growth and dividends.

Thailand

Healthcare Sector

• Update: Earnings growth is expected to continue into 2016, but much of the good news has already been priced in.
• Recommendation: Maintain MARKET WEIGHT.

Key Indices

Key Assumptions

Top Picks

Analysts

• Ken Lee (Baoxin Auto Holdings): +852 2236 6760 | ken.lee@uobkayhian.com.hk
• Edison Bian (China Resources Land): +852 2236 6761 | edison.bian@uobkayhian.com.hk
• David Yang (China Resources Land): +8621 5404 7225 ext 801 | davidyang@uobkayhian.com

Summary of Key Points

• Baoxin Auto Holdings: Partial cash offer by CGA remains uncertain due to regulatory approvals. The stock is downgraded to SELL with a target price of HK$3.80.
• China Resources Land: Achieved full-year sales target in 11M15, showing strong performance. Maintained BUY with a target price of HK$27.62.
• Indonesia: Astra International is upgraded to BUY due to expected 17.25% EPS growth in 2016.
• Malaysia: Plantation sector faces poor crop yields for the next 3-5 months, but large refiners benefit from pricing spreads.
• Singapore: Singapore O&G is recommended as a BUY with a target price of S$0.90.
• Thailand: Healthcare sector's earnings growth is expected to continue, but much of the positive sentiment is already priced in. Maintain MARKET WEIGHT.
• Key Indices: Most indices showed negative performance over the past week and month, with some showing positive YTD growth.
• Top Picks: Several stocks are recommended as BUY or SELL based on their potential price movements.