20170106-大华继显-Regional_Morning_Notes_33页_1mb

报告摘要

Regional Morning Notes Summary - 06 January 2017

Core Content Overview

This document outlines market insights and investment recommendations for various regions and sectors as of 06 January 2017, focusing on plantation companies, Chinese stocks, and other regional markets. It includes sector performance, key indices, top picks, and catalysts for future growth.

Main Points

Plantation Sector

Plantation companies underperformed CPO prices in 2016 due to weak palm oil production from severe dry weather.
CPO prices are expected to remain firm in 1H17 due to slow inventory replenishment, but production recovery is anticipated from late-3Q17.
Key factors for performance in 2017 include higher production and CPO prices.
Top Picks: KIML (RM5.41), BAL (RM0.81), FR (RM1.90).
Earnings Catalyst: Companies will report 4Q16 results from mid-February, with expectations of strong performance, especially for Indonesia-based firms.
Dividend Yield: KIML offers sustainable dividend yields of 5–7%.

China Market

Alpha Picks: BEWG (371 HK), CITICS (6030 HK), CRCC (1186 HK), CSPC (1093 HK), Lee & Man Paper (2314 HK), Sunny Optical (2382 HK), Sunac China (1918 HK), and UMF (2666 HK).
Market Outlook: The MSCI China index dropped over 4% in December 2016 due to capital outflow and RMB weakness.
Key Catalysts:
- Announcement of 4Q16 financial results.
- PPP initiatives and policy support.
- New hospital project agreements.
- Launch of FTM generics and inclusion of NBP injection in NRDL.
Performance:
- BEWG: -8.0% since selection.
- CITICS: -7.7% since Shenzhen-Hong Kong Connect launch.
- Sunny Optical: -11.4% since selection.
- UMF: -12.8% since selection.
Recommendations:
- Maintain BUY for CRCC, CSPC, UMF, BEWG, and Sunny Optical.
- SELL for Sunac China and HKEX (0388 HK).
- HOLD for some companies like Genting Plantations and others.

Key Indices

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	19899.3	(0.2)	0.3	3.6	0.7
S&P 500	2269.0	(0.1)	0.8	2.9	1.3
FTSE 100	7195.3	0.1	1.3	6.6	0.7
AS30	5805.1	0.3	1.3	5.8	1.5
CSI 300	3367.8	(0.0)	2.0	(2.6)	1.7
FSTTI	2954.1	1.1	1.9	0.2	2.5
HSCEI	9598.7	1.7	3.2	(1.7)	2.2
HSI	22456.7	1.5	3.2	(1.0)	2.1
JCI	5325.5	0.5	2.2	1.0	0.5
KLCI	1659.8	0.7	1.8	1.8	1.1
KOSPI	2042.0	(0.2)	0.9	2.6	0.8
Nikkei 225	19520.7	(0.4)	0.6	6.3	2.1

Key Assumptions

GDP Growth:
- US: 2.6% (2015), 1.7% (2016F), 2.7% (2017F)
- Euro Zone: 2.0% (2015), 1.6% (2016F), 1.1% (2017F)
- Japan: 1.2% (2015), 0.8% (2016F), 0.9% (2017F)
- Singapore: 2.0% (2015), 1.4% (2016F), 1.8% (2017F)
- Malaysia: 5.0% (2015), 4.2% (2016F), 4.5% (2017F)
- Thailand: 2.8% (2015), 3.2% (2016F), 3.3% (2017F)
- Indonesia: 4.8% (2015), 5.0% (2016F), 5.2% (2017F)
Brent Crude (US$/bbl): 57 (2016), 42 (2016F), 56 (2017F)
CPO (RM/mt): 2,168 (2016), 2,500 (2016F), 2,600 (2017F)

Sector Catalysts

1H17: Expected to be supported by better-than-industry earnings growth and CPO prices.
CPO Price Trends: Expected to trend higher to RM2,800–3,300/tonne in 1H17.
Weather Impact: Negative weather effects could be positive for prices.
Corporate Events:
- Luncheon with UOB Bank in Singapore on 9 Jan 17.
- Luncheon with UOB Bank Senior Economist in Thailand on 12 Jan 17.
- China Healthcare Sector Analyst Marketing in Singapore (16–17 Jan 17).
- Spore REITS Sector Analyst Marketing in Malaysia (19–20 Jan 17).
- PTT Exploration and Production Roadshow in Singapore (6–7 Feb 17).
- SGX-UOB Kay Hian Corporate Day in Taipei (21 Feb 17).
- UOB Kay Hian ASEAN Conference in Taipei (22 Feb 17).

Key Risks

Biodiesel Mandates: Backtracking in Indonesia and Malaysia due to crude oil price decline.
Market Volatility: Expected in the first half of 2017 due to economic uncertainty.

Summary of Recommendations

OVERWEIGHT for Regional, Singapore, and Indonesia.
BUY for KIML, BAL, FR, BEWG, CITICS, CRCC, CSPC, UMF, and Sunny Optical.
HOLD for some companies like Genting Plantations and Lee & Man Paper.
SELL for Sunac China and HKEX (0388 HK).

Summary of Earnings and Performance

FFB Production Growth Forecast:
- KIML: 13.2% (2017F)
- GENP: 15.8% (2017F)
- IJMP: 7.5% (2017F)
- SIME: 0.4% (2017F)
- IOI: 3.1% (2017F)
- THP: 1.4% (2017F)
- KLK: 7.7% (2017F)
- SOP: 44.3% (2017F)
- FR: 17.9% (2017F)
- BAL: 15.6% (2017F)
- GGR: 6.8% (2017F)
- WIL: 2.0% (2017F)
CPO Price vs Soyoil and Crude Oil:
- CPO spot price: RM3,203.50 (up 45.6% yoy)
- Soyoil price: up 9.4% yoy
- Crude oil price: up 3.5% yoy

Analyst Contact

Regional Research Team: +65 6535 6868, research@uobkayhian.com
Greater China Research: +852 25218787, research@uobkayhian.com

Conclusion

The document emphasizes the potential for better earnings and improved CPO prices in 2017 for plantation companies, especially those with strong production recovery. In China, it highlights the importance of policy support, new project announcements, and financial data releases as key drivers for stock performance. Overall, the outlook is positive for certain sectors and companies, with a focus on growth opportunities and catalysts for share price improvement.

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