20160906-法国巴黎银行-Spotlight_on_Asia_18页_867kb_867kb

SPOTLIGHT ON ASIA Summary

Core Content Overview

This document provides an analysis of several Asian companies, including upgrades and downgrades, along with market research and sector insights. The focus areas are Taiwan, Thailand, and China, with particular emphasis on the textile, apparel, and energy sectors.

Main Points and Key Information

Feng Tay Enterprises (9910 TT) - Upgrade to BUY

• Target Price (TP): TWD170.00
• Change from Previous TP: Increased by 11.02%
• 2016E P/E: 20.3x, P/B: 6.5x, Yield: 3.0%
• Reason for Upgrade: Better sales and margins due to improved product mix and cost-saving efficiency. The company has a strong relationship with key customers, economies of scale, and better cost control. The TP multiple is set at c20x 2017E P/E, which is fair compared to historical and regional peer valuations.
• Positive Outlook: The firm is expected to benefit from global brands streamlining their supply chains, particularly Nike, with whom it has had a long-term relationship since 1977.
• ROE: Expected to reach 34.8% in 2017, significantly higher than the global peer average of 15.8%.

Siam Makro (MAKRO TB) - Upgrade to BUY

• Target Price (TP): THB38.00
• Change from Previous TP: Increased by 2.7%
• 2016E P/E: 31.8x, P/B: 10.6x, Yield: 2.6%
• Reason for Upgrade: Recovery in SSSG (Sales, Service, and Supply Growth) and improved gross margin due to increased HORECA sales. The company is expected to expand into ASEAN countries in 2017.
• Key Risks: Price competition could negatively impact gross margin.

Eclat Textile (1476 TT) - Downgrade to HOLD

• Target Price (TP): TWD370.00
• Change from Previous TP: Decreased by 29.80%
• 2016E P/E: 27.8x, P/B: 8.4x, Yield: 2.7%
• Reason for Downgrade: 2016 reported earnings are expected to be weak due to intensified competition and inventory adjustment. The company is waiting for a catalyst, such as new product innovations, to drive growth.
• ROE: Expected to be 34.1% in 2017, with a 21.4% reported EPS growth in 2016.

Makalot Industrial (1477 TT) - Downgrade to HOLD

• Target Price (TP): TWD150.00
• Change from Previous TP: Decreased by 48.59%
• 2016E P/E: 16.6x, P/B: 3.3x, Yield: 6.5%
• Reason for Downgrade: Weak demand from fast fashion due to high inventory, unfavourable FX, and high labor costs. Earnings are expected to remain slow in 2016 but show mild recovery in 2017.
• Key Risks: No strong near-term catalysts for growth, but limited downside risk.

Sector Research and Insights

• Greater China Consumer Durables & Apparel: Inventory issues affect private labels and fast fashion, but the sports and casual wear convergence is creating new opportunities. Shenzhen and Feng Tay are highlighted as top picks.
• Asia Oil & Gas/Chemicals: Crude oil prices fell 4% due to high inventories, while refining margins rose. Ethylene and propylene margins increased significantly, attributed to the completion of PP plants in China.
• China Power & Coal: Power demand increased significantly in July due to high temperatures and a low base. Spot coal prices rose, with the Bohai Bay index hitting a record increase. The coal index is expected to show a narrowing y-y decline.

Key Stock Data Highlights

Summary of BNP Paribas Recommendations

Key Risks and Outlooks

• Feng Tay: Investors' concerns over Nike's sales growth are considered overdone. The firm is expected to benefit from its long-term relationship with Nike and expansion into India and ASEAN.
• Siam Makro: Faces price competition as a key risk, but the company is expected to recover in 2017 with increased HORECA sales and potential expansion into ASEAN.
• Eclat Textile: Needs time to recover from weak 2016 performance. The company's new product innovations are expected to drive growth in 2017-18.
• Makalot Industrial: Struggles with weak demand in fast fashion. The firm is expected to benefit from a shift in client focus towards sport-like products.

Additional Notes

• The report includes key stock data, including revenue, net profit, EPS, and valuation metrics for each company.
• It highlights the importance of R&D capability, economies of scale, and cost control in the textile and apparel sector.
• The energy sector is noted for its fluctuating prices and margins, influenced by crude oil inventories, refining activities, and coal demand.