20151216-大和证券-Asia_Pacific_Daily_63页_5mb

Asia Pacific Daily Summary

Core Content

This document provides a comprehensive analysis of the Asia Pacific markets, focusing on the construction sector in Korea, the insurance sector in China, and macroeconomic outlooks for various regions. It also includes details on company roadshows, investment recommendations, and financial summaries for several firms.

Key Points

Korea Construction Sector

• Market Outlook: The domestic housing market is expected to experience only a mild correction in 2016, contrary to some market observers. The construction sector's resilience is attributed to strong demand for rental houses and high rents.

• Analyst: Mike Oh

• Recommendations:

  • Hyundai Development (012630 KS): Upgraded from Outperform to Buy, due to strong in-house project offerings and resilient internal housing development opportunities.
  • Hyundai Engineering & Construction (000720 KS): Reiterated as Outperform, as the share-price correction is considered overdone.
  • Samsung C&T (028260 KS): Rated as Hold, with limited synergies expected in the short term.
  • Daewoo Engineering & Construction (047040 KS): Downgraded from Outperform to Hold due to earnings uncertainty.
  • GS Engineering & Construction (006360 KS): Downgraded from Hold to Underperform due to earnings uncertainty.

• Earnings and Valuation:

  • 2016E EPS: Expected at KRW1,814, which is 25% below the consensus forecast.
  • Valuation Tool: Changed from PER to PBR due to earnings uncertainty.
  • Target Price: KRW47,000 for Hyundai Development, with an upside of 22.6%.
  • Downside Risk: Prolonged overseas cost overruns.
  • Upside Risk: Sharp recovery in housing demand.

• Company Highlights:

  • Hyundai Development: Expected to secure 6,000 in-house units in 2016 (up 33% YoY), with a strong landbank and rising in-house unit offerings.
  • Samsung C&T: Has KRW14.8tn in investment assets and KRW900bn in land. Its IPO in 2016 and management's DPS target of KRW4,800 by 2020 are positive factors.
  • DFS Store: Expected to contribute KRW57bn in equity-method earnings in 2017E, due to its competitive position in the DFS market.

China Insurance Sector

• Analyst: Leon Qi
• Rating: Positive
• Key Insight: The insurance sector is seen as a beneficiary of IPO reform, with potential for growth in the mass market transformation.

China Galaxy Securities (6881 HK)

• Analyst: Leon Qi
• Rating: Downgraded from Hold to Underperform
• Reason: Likely to lose market share due to lack of share-price catalysts.
• Target Price: HKD6.50, representing a 48% drop from current levels.

China Mobile (941 HK)

• Analyst: Ramakrishna
• Rating: Buy
• Reason: Strong defensive appeal and positive outlook.

Huatai Securities (6886 HK)

• Analyst: Leon Qi
• Rating: Buy
• Reason: Beneficiary of IPO reform.

Indonesian Automotive

• Analyst: Leonardo Henry
• Rating: Underweight
• Reason: Weak auto wholesale sales in November and February.

Indonesia Shipping

• Analyst: Agustinus Reza
• Rating: Overweight
• Reason: Strong performance and potential for growth.

Top Glove (TOPG MK)

• Analyst: Walter Aw
• Rating: Buy
• Reason: Strong performance in 1QFY16.

Macro Research

• Malaysia Economic Outlook 2016: Real GDP growth is expected to remain stable at 5%.
• Japan: Tokyo opened slightly lower, but a US rate hike could be positive for Japanese stocks.
• US Data Review: CPI data is highlighted, though no specific figures are given.
• Euro Wrap-up: Overview is provided, but details are not specified.

Regional Indices Performance

Investment Case and Catalysts

• Samsung C&T: Needs time to improve efficiencies and realize synergies. Its asset value and new business earnings are expected to limit share price downside.
• Catalysts:
  • Construction business expected to improve in 2H16 with more profitable captive orders.
  • Bio business growth and product launches are key to sustainable EPS growth.
• Risks:
  • Prolonged overseas cost overruns.
  • Delays in bio business product launches.

Company Roadshows

• 16-17 Dec: CJ Korea Express (000120 KS) – NDR in Tokyo.
• 16 Dec: Beijing Enterprises Water (371 HK) – NDR in Seoul.
• 17-18 Dec: Beijing Enterprises Water (371 HK) – NDR in Tokyo.
• 5 Jan: China Aircraft Leasing (1848 HK) – NDR in Singapore.
• 15 Jan: Siloam Int'l Hospitals (SILO IJ) – NDR in the US.
• 15 Jan: Nine Dragons Paper (2689 HK) – Group Luncheon in Hong Kong and Singapore.
• 28 Jan: Airports of Thailand (AOT TB) – NDR in Singapore.
• 1-3 Feb: Bank Pembangunan Daerah Jawa Timur Tbk PT (BJTM IJ) – NDR in Europe.

Daiwa Asian Events

• 5-8 Jan 2016: Daiwa P.U.R.E. Energy Conference – Hong Kong.
• 28-29 Jan 2016: Daiwa Philippine Corporate Day Tokyo – Tokyo.
• 29 Feb-4 Mar 2016: Daiwa Investment Conference Tokyo 2016 – Tokyo.

Financial Summary

Revenue and Profit

EPS Growth

• 2016E EPS Growth: -87.9% YoY.
• 2017E EPS Growth: +72.0% YoY.
• Daiwa vs Cons. EPS: -24.7% for 2016E, +3.9% for 2017E.

Valuation Metrics

Key Ratios

Summary

The document outlines the current market sentiment and analyst recommendations across various sectors in the Asia Pacific region. It emphasizes the resilience of the domestic housing market in Korea, the potential for recovery in the construction sector, and the impact of earnings visibility on investment decisions. It also highlights the challenges faced by some firms due to overseas projects and the importance of new business synergies. Financial metrics and valuations are provided, along with key events such as company roadshows and analyst meetings, offering a comprehensive view of the market landscape.