20141017-大华继显-Regional_Morning_Notes_41页_2mb

Regional Morning Notes Summary - 17 October 2014

Core Content Overview

This document provides a summary of market insights and analysis for various regions including China, Hong Kong, Indonesia, Malaysia, and Singapore, with a focus on the banking, power, and other sectors. It also includes company-specific updates, key financial metrics, and recommendations for stock investors.

Main Regions and Sectors

China

• Banking Sector
  • September new loans exceeded expectations, with a better loan mix than August.
  • Discounted bills decreased by 64% month-over-month, while mid-to-long-term loans remained stable.
  • The PBOC has lowered the 14-day repo rate to 3.4% from 3.8% in June.
  • Monetary loosening is expected to continue, using tools like SLF and PSL.
  • Key Financials:
    • New loans: Rmb857.2b (above consensus of Rmb750b).
    • Total social financing (TSF): Rmb1.05t (lower than consensus of Rmb1,150b).
    • TSF mainly driven by new renminbi loans (81%).
  • Sector Picks:
    • ICBC: Target Price HK$6.15, Current Price HK$4.88.
    • CMB: Target Price HK$18.20, Current Price HK$13.40.
    • Bank Mandiri: Target Price RM12,500, Current Price RM9,650.
  • Earnings Outlook:
    • Power sector earnings are expected to peak in 2H14.
    • Huadian Power: Expected 27% yoy net profit growth.
    • Huaneng Power: Expected 4.3% yoy net profit decline.
    • Datang Power: Expected 21.7% yoy net profit decline due to base effect.
    • SOE Reform: Expected to boost asset injections and capacity growth for IPPs.

Hong Kong

• Sands China (1928 HK)
  • 3Q14 results above expectations, driven by non-gaming businesses.
  • Margin pressure is a near-term concern, but long-term potential remains strong.
  • Target Price: HK$54.60, Current Price: HK$42.55.
  • Key Financials:
    • Net revenue: US$2,305m.
    • Property EBITDA: US$809m.
    • EBITDA Margin: 35.1%.
  • Earnings Outlook:
    • Non-gaming revenue increased 16% yoy.
    • VIP, mass, and slots GGR growth was -21.9%, +14.7%, and +5.7% respectively.
    • Management lowered EBITDA margin assumptions for the mass segment.
  • Dividend Update:
    • Parent company (Las Vegas Sands) raised 2015 dividend by 30% to US$2.6/share.
    • Sands China is expected to follow suit.
  • Stock Impact:
    • Sands China's low VIP dependency makes it better positioned for growth.
    • Large property scale supports growth in mass market and non-gaming segments.

Indonesia

• Automobile Sector
  • Astra's market share dropped from 49% in August to 46% in September.
  • Toyota's market share fell from 31.3% to 28.5% in September.

Malaysia

• Construction Sector

  • More mega projects expected to proceed.
  • Recommendation: Maintain OVERWEIGHT.

• British American Tobacco (ROTH MK)

  • 3Q14: Minor market share loss due to pricing disparity.
  • Target Price: RM66.70, Current Price: RM65.14.

• Top Glove (TOPG MK)

  • Cautiously optimistic for FY15 due to potential slowdown in demand migration to nitrile gloves.

Singapore

• Keppel REIT (KREIT SP)

  • 3Q14: Awaiting EGM approval for MBFC T3.
  • Target Price: S$1.42, Current Price: S$1.18.

• M1 (M1 SP)

  • 3Q14: Slight easing of growth for post-paid mobile.
  • Target Price: S$4.00, Current Price: S$3.44.

• RH Petrogas (RHP SP)

  • Development plan for oilfield in Fuyu, China approved.
  • Target Price: S$1.00, Current Price: S$0.505.

Key Indices

Key Assumptions

Corporate Events

• Tea Tasting Session with Chatime: Petaling Jaya, 17 Oct.
• TICON Industrial Connection Corporate Roadshow: Kuala Lumpur, 17 Oct.
• ASEAN Plantation Sector Analyst Presentation: Taipei, 20-21 Oct.
• Raffles Medical Group Luncheon: Singapore, 30 Oct.
• Alam Sutera Really Corporate Roadshow: Taipei, 10-11 Nov.

Top Picks

Key Risks

• Worse-than-expected NPL formation.
• Faster-than-expected interest rate liberalisation in the banking sector.

Valuation and Recommendation

• Sands China: Maintain BUY. Target Price HK$54.60. Upside +28.3%.
• Huaneng Power: Maintain MARKET WEIGHT.
• Huadian Power: Maintain MARKET WEIGHT.
• Datang Power: Maintain MARKET WEIGHT.

Analysts

• Edmond Law: +852 2826 4837, edmond.law@uobkayhian.com.hk
• Terrance Liu: +8621 5404 7225 ext 819, terryzhou@uobkayhian.com.hk
• Victor Yip: +852 2826 1392, victor.yip@uobkayhian.com.hk

Summary of Key Financials (Sands China)

Conclusion

The document outlines a range of market insights, focusing on the performance and outlook of various sectors and companies across China, Hong Kong, Indonesia, Malaysia, and Singapore. It emphasizes the impact of monetary policy, asset injections, and sector-specific trends on earnings and stock performance, while maintaining buy recommendations for key stocks like Sands China, ICBC, and Bank Mandiri. The analysis also highlights the importance of non-gaming revenue and the potential for growth in the mass market and construction sectors.