20141030-大华继显-Regional_Morning_Notes_30页_1mb

Regional Morning Notes Summary - 30 October 2014

Core Content Overview

This document provides a detailed analysis of stock performance and financial results for several companies across Asia, with a focus on China and other regional markets. It includes company-specific results, financial indicators, key assumptions, corporate events, and investment recommendations.

Main Points

China Merchants Bank (3968 HK)

• Performance: 3Q14 earnings slightly ahead of expectations, driven by solid net interest income and robust fee growth.
• Fee Growth: Net fees and commissions increased by 39.8% yoy, one of the highest among banks.
• Asset Quality: NPL balance rose 13.6% qoq to Rmb26.9b, and NPL ratio increased to 1.10%, raising concerns. However, asset quality risks are considered manageable due to the bank's strong risk management.
• Financials: Net interest income grew by 13.3% yoy, and cost-to-income ratio decreased by 3.8pt.
• Recommendation: Maintain BUY, with a target price of HK$18.20.
• Key Metrics: P/BV ratio at 0.9x, adjusted P/E ratio at 5.0x, and dividend yield at 6.1%.

China National Offshore Oil Corporation (883 HK)

• Performance: 3Q14 output remained flat at 103.0m boe, and financials were impacted by low oil prices.
• Revenue Impact: Sales revenue declined 4.0% yoy due to lower oil prices, while natural gas prices increased by 21.7% yoy.
• Cost Control: Management maintained strong cost control, with all-in cost increasing only 2% yoy.
• Capital Expenditure: Capex increased by 19.6% yoy to Rmb26.3b due to new projects and deepwater exploration.
• Recommendation: Maintain SELL, with a target price of HK$10.90.
• Key Metrics: PE ratio at 8.6x, P/B ratio at 1.2x, and ROE at 14.3%.

Wynn Macau (1128 HK)

• Performance: Beat expectations with lower costs and better revenue mix.
• Outlook: 4Q14 performance may be affected by poor VIP outlook and rising margin pressure.
• Recommendation: HOLD, with a target price of HK$29.70.

Arwana Citramulia (ARNA IJ)

• Performance: Short-term speed bump but attractive structural story.
• Recommendation: NOT RATED.

Malaysia Marine and Heavy Engineering Holdings (MMHE MK)

• Performance: Prospects remain unexciting amid challenging times.
• Recommendation: HOLD, with a target price of RM2.50.

Wilmar International (WIL SP)

• Performance: 3Q14 results showed net profit of US$310m-330m, doubling qoq due to sugar milling and better crush margins, but both still lower yoy.
• Recommendation: HOLD, with a target price of S$3.55.

Dynasty Ceramic (DCC TB)

• Performance: Results remain weak, but growth momentum is expected to return next year with a new strategy.
• Recommendation: BUY, with a target price of Bt66.00.

Banpu (BANPU TB)

• Performance: Expected to break even, with upgraded recommendation to BUY.
• Recommendation: BUY, with a target price of Bt33.00.

Key Indices

Top Picks (BUY)

Key Assumptions

Corporate Events

Key Financials and Metrics

China Merchants Bank (CMB)

• Earnings: 9M14 net profit of Rmb45.8b, up 16.0% yoy.
• Fee Growth: 3Q14 fees up 39.8% yoy, driven by bank cards, custody, and credit comment fees.
• NPL: Increased 13.6% qoq to Rmb26.9b, NPL ratio at 1.10%.
• CAR: Tier-1 CAR at 10.35%, Total CAR at 12.28%.
• Liquidity: Loan/deposit ratio at 74.9%, liquid assets/short-term liabilities at 34.9%.
• Valuation: P/BV at 0.9x, adjusted P/E at 5.0x.

China National Offshore Oil Corporation (CNOOC)

• Output: Flat at 103.0m boe, with crude oil down 1.1% to 82.6m bbl.
• Revenue: Sales revenue down 4.0% yoy due to lower oil prices.
• Cost: All-in cost up 2% yoy, but lower than historical averages.
• Capex: Increased 19.6% yoy to Rmb26.3b, due to new projects and deepwater exploration.
• Valuation: PE ratio at 8.6x, P/B at 1.2x, ROE at 14.3%.

Summary

The report highlights mixed results across key companies in China and other Asian markets. China Merchants Bank (CMB) showed slightly better-than-expected earnings and strong fee growth, though asset quality remains a concern. China National Offshore Oil Corporation (CNOOC) faced revenue pressure due to declining oil prices, but maintained strong cost control and expects production rebound in the future. Other companies such as Wynn Macau, Dynasty Ceramic, and Banpu show varied performance and outlook, with some receiving upgrades and others maintaining holds or sells. The report also includes key economic indicators and corporate events for the region, providing a comprehensive overview for investors.