20141125-大华继显-Regional_Morning_Notes_21页_1mb

Regional Morning Notes Summary - 25 November 2014

Core Content Overview

This document provides a regional market update covering Indonesia, China, Malaysia, Singapore, Thailand, with a focus on healthcare, property, shipping, and other sectors. It also includes key indices, top picks, assumptions, and sector-specific analysis.

Main Points

Indonesia - Healthcare

• The healthcare industry is expected to grow at over 20% in 2015-16 due to rising income, increased government spending, and underpenetration.
• Recommendation: BUY SIDO and SILO.

China - Interest Rates

• The PBOC announced asymmetric interest rate cuts on 22 November 2014, reducing the one-year lending rate by 40bps to 5.6% and the one-year deposit rate by 25bps to 2.75%.
• The cap on deposit rates was raised to 1.2x.
• Expectation: Further monetary easing, including RRR cuts, is anticipated in early 2015.
• Impact: Lower interest rates will support asset prices and the real estate market, but may also trigger new tightening measures if ASPs surge.
• Recommendation:
  • BUY SUNAC China (1918 HK) and China Vanke (2202 HK).
  • SELL Guangzhou R&F (2777 HK).
  • HOLD Shimao (813 HK) and Agile (3383 HK).

China - Property

• Property stocks rebounded on the back of rate cuts, with transaction volumes expected to surge in large cities.
• Key Insight: While mortgage rates may decrease, banks are unlikely to ease lending significantly due to narrowing NIMs.
• Valuation: A sustainable recovery is expected in the coming 3-6 months (1H15) until housing prices surge again, which may lead to new pricing controls.
• Top Picks:
  • BUY SUNAC China (1918 HK), China Vanke (2202 HK), and China Resources Land (688 HK).
  • HOLD COLI (688 HK).
  • SELL R&F (2777 HK).

China - Shipping

• No fundamental improvement in the shipping sector.
• Bunker fuel prices dropped 22.5% from end-June, providing short-term cost savings but not long-term improvement.
• BDI is constrained by high iron ore inventory and weak demand.
• Recommendation:
  • BUY OOIL (316 HK).
  • HOLD CSCL (2866 HK).
  • SELL China COSCO (1919 HK) and China Shipping Dev (1138 HK).

Key Indices

Top Picks

Key Assumptions

Sector Catalysts

• Property: Expectations of further rate cuts and improved supply-demand conditions.
• Shipping: Strong Transpacific (TP) spot rates and contractual rates in 2014-15.
• Economic Factors: Low CPI and PPI, providing room for monetary expansion.

Analysts

• Chaoping Zhu: +8621 5404 7225 ext. 822, chaoping@uobkayhian.com
• Edison Bian: +852 2236 6761, edison.bian@uobkayhian.com.hk
• David Yang: +8621 5404 7225 ext 801, davidyang@uobkayhian.com
• Angela Zhou: +8621 5404 7225 ext.858, angelazhou@uobkayhian.com
• Lawrence Li: +8621 5404 7225 ext.813, lawrenceli@uobkayhian.com

Corporate Events

• GC 1H15 Market Strategy, CH Infrastructure Sector:
  • London: 21 Nov – 25 Nov
  • Dublin: 26 Nov – 26 Nov
• Regional 1H15 Strategy Forum: Kuala Lumpur, 3 Dec – 3 Dec

Summary of Market Trends

• Property: Short-term rebound due to rate cuts, but potential for new tightening if prices surge.
• Shipping: No fundamental improvement, with concerns over supply surplus and weak demand.
• Healthcare: Strong growth expected in 2015-16.
• Monetary Policy: PBOC is expected to continue easing, including rate cuts and RRR reductions.
• Investor Action: Focus on high beta and high gearing stocks for short-term gains, with caution on long-term impacts.