20170516-大华继显-Regional_Morning_Notes_38页_2mb

Regional Morning Notes Summary

Core Content Overview

This document provides a comprehensive analysis of regional economic activities and stock market updates for China, Indonesia, Malaysia, and Singapore as of Tuesday, 16 May 2017. It includes economic indicators, company updates, stock performance, and key assumptions. The summary highlights the performance of major companies and the overall market outlook.

Key Economic Indicators (China)

• Economic Activity Softened: In April 2017, all three major economic indicators (FAI, IP, and Retail Sales) showed a slowdown. FAI growth declined, with private sector FAI decelerating due to policy pressures. Infrastructure investment remained stable, while IP growth dropped across most sectors.
• FAI (Fixed Asset Investment):
  • 4M17 FAI growth was 8.9% yoy, down from 9.2% yoy in 3M17.
  • Private FAI in the mining sector dropped 17.6% yoy due to overcapacity control.
  • Property development investment remained strong at 9.3% yoy.
• IP (Industrial Production):
  • April 2017 IP growth was 6.5% yoy, down from 7.6% yoy in March.
  • Auto output growth dropped sharply to 0.3% yoy from 4.8% yoy.
  • Upstream sectors showed strong growth, but commodity prices were falling.
• Retail Sales:
  • April 2017 retail sales grew 10.7% yoy, slightly lower than March's 10.9% yoy.
  • Property-related consumption continued to support retail sales.
  • Construction materials and furniture sales rose 13.4% and 13.9% yoy respectively.

Company Updates

Wanda Cinema Line (002739 CH)

• Investment in Bona Film Group: Acquired a 1.9% stake for Rmb300m, expected to positively impact the long-term fundamentals.
• Strategic Cooperation:
  • New Bona Cinemas will join Wanda Cinema Circuit.
  • Wanda Media will manage pre-movie advertising at Bona Cinemas.
  • Joint ventures in movie production and slate sharing.
• Performance:
  • Maintains BUY rating.
  • Current share price: Rmb54.11, target price: Rmb63.00.
  • Upside potential: +16.4%.
• Financial Highlights:
  • Net profit (2017F): Rmb1,847.3m.
  • EBITDA (2017F): Rmb3,294.3m.
  • EPS (2017F): Rmb157.3.
  • PE (2017F): 34.4x.
• Valuation:
  • Trading at 34x 2017F PE, above the sector average of 28x.
  • Target price based on 40x 2017F PE, aligned with historical -1SD.

Indofood Sukses Makmur (INDF IJ)

• Downgrade to HOLD: Due to narrowing discount to subsidiaries (from 22% to 13%).
• Core Earnings Growth:
  • Expected 15.6% yoy growth in 2017, driven by ICBP and IFAR.
  • Projected 4.7% yoy growth in 2018.
• CPO Prices:
  • Expected to decline from RM2,600/tonne in 2017 to RM2,500/tonne in 2018.
• Current Valuation:
  • Trading at 16.9x 2017F and 2018F PE, near +2SD above historical average.

Other Market Updates

Malaysia

• QL Resources (QLG MK):
  • Maintains HOLD rating.
  • Target price: RM4.60.
  • Strong growth in the POA segment could offset weaker performance in MPM and ILF segments.

Singapore

• Bumitama Agri (BAL SP):
  • Maintains BUY rating.
  • Target price: S$1.25.
  • 1Q17 core net profit declined 46% qoq but is expected to improve in 2Q17.
• SIA Engineering (SIE SP):
  • Maintains SELL rating.
  • Target price: S$3.50.
  • Earnings growth depends on successful line maintenance expansion and engine shop visits.

Thailand

• Airports of Thailand (AOT TB):
  • Maintains HOLD rating.
  • 2QFY17 earnings exceeded expectations, but uncertainty around concession charges limits upside.
• Bangkok Dusit Medical Services (BDMS TB):
  • Maintains BUY rating.
  • 1Q17 results were weak, but performance is expected to improve in 2H17.
• Banpu (BANPU TB):
  • Maintains BUY rating.
  • 1Q17 core profit was strong, and the valuation is considered undemanding.
• GFPT (GFPT TB):
  • Maintains BUY rating.
  • 1Q17 earnings were impressive.
• PTT (PTT TB):
  • Maintains BUY rating.
  • 1Q17 earnings were higher than expectations due to non-recurring gains.

Key Indices

Top Picks

Key Assumptions

Corporate Events

• Roadshow with Tonly Electronics Holdings:
  • Hong Kong-Shenzhen: 15 May to 17 May
  • Shanghai: 18 May
• Analyst Presentation on Malaysia Outlook and Strategy:
  • Hong Kong: 17 May
• Roadshow with IGG Inc:
  • Taipei: 18 May
• Site Visit to Fosun Pharma Group, Shanghai Pharma Holding, Mircoport Scientific Corp:
  • All on 18 May
• Roadshow with Petronas Dagangan Bhd:
  • Hong Kong: 23 May
• Analyst Marketing on China Internet Sector:
  • Hong Kong, Singapore, Kuala Lumpur: 22 May to 26 May
• Roadshow with Singtel:
  • Canada: 26 May
• Roadshow with Tongda Group Holdings:
  • Hong Kong: 1 Jun
• Roadshow with PT Siloam Int'l Hospital:
  • Canada: 5 Jun to 16 Jun
• Lunteon with United Overseas Bank:
  • Singapore: 3 Jul

Analyst Views

• Zhu Chaoping:
  • Contact: +8621 5404 7225 ext. 822, chaoping@uobkayhian.com
  • Overall Outlook: Weakening trends are in line with expectations, with caution on overall growth.
  • Sector Outlook: Infrastructure and consumption upgrading sectors are expected to outperform.
• Mark Chen:
  • Contact: +8621 5404 7225 ext 825, markchen@uobkayhian.com
  • Wanda Cinema: Maintains BUY rating due to leading position and growth in non-ticketing businesses.

Summary of Key Points

• Economic Slowdown: China's economic activity softened in April, with FAI, IP, and retail sales all showing declines.
• Infrastructure and Consumption: These sectors are seen as potential outperformers.
• Wanda Cinema Line: Acquired stake in Bona Film Group, enhancing advertising and movie production, maintaining BUY.
• Indofood Sukses Makmur: Narrowing discount to subsidiaries, downgraded to HOLD.
• Market Indices: Most indices showed positive returns, but some like BDI and CPO showed declines.
• Corporate Events: Numerous roadshows and analyst presentations planned for May and June 2017.

This summary encapsulates the main economic trends and stock movements across the regions, with a focus on Wanda Cinema Line and Indofood Sukses Makmur.