20160311-大和证券-Asia_Pacific_Daily_39页_5mb_5mb

Asia Pacific Daily Summary - 11 March 2016

Core Content Overview

The Asia Pacific Daily report from Daiwa provides a detailed analysis of stock ratings, company performance, and market insights for the region. It includes updates on specific companies, sector outlooks, and macroeconomic trends affecting various markets.

Major Company Updates

Ichitan Group Pcl (ICHI TB)

• Rating Change: Downgraded from Hold to Sell.
• Reason: No earnings catalysts in 2016-17F, sluggish consumption, fierce competition, and ongoing losses from the Indonesia project.
• Target Price: Revised to THB11.50 from THB17.00.
• Earnings Outlook:
  • 2016F: 6% YoY growth in earnings.
  • 2017F: 11% YoY contraction due to potential beverage excise tax.
• Market Challenges:
  • Green tea and herbal drinks in a mature market with intense competition.
  • SG&A-to-sales ratio at 17%, compressing operating margin.
• Valuation:
  • 2016F: Normalized PE at 20.1x.
  • 2017F: Normalized PE at 22.6x.
  • EV/EBITDA at 12.2x in 2016.

Sappe Public Co. Ltd. (SAPPE TB)

• Rating Change: Downgraded from Buy to Sell.
• Reason: Weak export performance, distribution issues in China, and economic slowdown in Indonesia.
• Target Price: Revised to THB14.00 from previous estimates.
• Earnings Outlook:
  • 2016F: Net profit at THB320m, down 15.8% from consensus.
  • 2017F: Net profit at THB298m, down 26.2% from consensus.
  • 2018F: Net profit at THB351m, down 41.7% from consensus.
• Margin Pressure:
  • Gross margin expected to expand slightly to 41.3% in 2016.
  • Contract to 39.8% in 2017 due to costs and lower-margin exports.
• Valuation:
  • 2016F: Normalized PE at 15.1x.
  • EV/EBITDA at 9.4x.
  • P/BV at 2.6x.

Sector Insights

China Telecoms Sector

• Sector Rating: Positive.
• Key Points:
  • Tower spin-off will impact 2016-17E earnings due to upfront costs, but long-term benefits from 4G migration and tower sharing are expected.
  • China Mobile is reaffirmed as the top pick with a Buy rating and a revised target price of HKD107.50.
  • China Unicom and China Telecom also retain Outperform ratings, with revised target prices.
• Earnings Forecasts:
  • 2016E: Net profit for China Mobile down 2.7% YoY, Unicom up 35% YoY, Telecom up 58.5% YoY.
• Valuations:
  • EV/EBITDA: 4.4x for China Mobile, 4.2x for Unicom, 3.9x for Telecom.
  • PER: 13.4x for China Mobile, 35.5x for Unicom, 15.3x for Telecom.
  • Dividend Yield: 3.2% for China Mobile, 1.1% for Unicom, 2.3% for Telecom.

Market Indices Performance

*Valuation based on MSCI Universe
**MSCI index priced as of 9 Mar

Company Roadshows

Several companies are scheduled for NDR (Non-Disclosed Roadshow) events in March 2016, including:

• Suprema (094840 KS): 7-11 Mar, EU
• Globetronics Technology Bhd (GTB MK): 10 Mar, SG
• Stockland Corp Ltd (SGP AU): 11 Mar, Tokyo
• WCT Holdings (WCTHG MK): 11 Mar, SG
• SITC (1308 HK): 15-16 Mar, HK
• OOIL (316 HK): 15-16 Mar, Tokyo
• Swire Properties (1972 HK): 16 Mar, SG
• Texhong Textile Group (2678 HK): 17 Mar, SG
• Want Want (151 HK): 17 Mar, HK
• Xinyi Solar (968 HK): 17 Mar, HK
• CKI / Power Assets (1038 HK/ 6 HK): 18 Mar, HK
• Fufeng Group (546 HK): 18 Mar, HK and SG
• Wesfarmers (WES AU): 22-23 Mar, Tokyo
• China Aircraft Leasing (1848 HK): 23 Mar, HK

Daiwa Asian Events

Daiwa has several upcoming events in March and April 2016, including:

• Daiwa Taiwan Corporate Day: 21-22 Mar, SG; 23-24 Mar, HK
• Daiwa ASEAN Conference - ASEAN REIT SG Day: 29-30 Mar
• Daiwa Hong Kong China Corporate Day: 18-19 Apr, SG
• Daiwa Consumer and Gaming Conference 2016: 26-28 Apr, HK
• Daiwa Investment Conference New York 2016: 31 May-1 Jun, New York
• Daiwa Investment Conference San Francisco 2016: 3 Jun, San Francisco
• Daiwa Investment Conference London 2016: 6-7 Jun, London

Key Takeaways

• Earnings Outlook: Most companies face challenges in 2016, with mixed performance and reduced growth expectations.
• Valuation Pressures: Many stocks are trading at low valuations, but the outlook for long-term growth remains positive for some sectors.
• Market Risks: Competitive pressures, macroeconomic uncertainty, and potential regulatory changes are key risks.
• Investment Recommendations: Daiwa maintains Buy and Outperform ratings on select stocks, while downgrading others due to weak performance and lack of catalysts.