20160812-大华继显-Regional_Morning_Notes_26页_2mb

报告摘要

Regional Morning Notes Summary - 12 August 2016

Core Content Overview

This document provides a summary of market insights and analysis for the Asia-Pacific region, focusing on China, Indonesia, Malaysia, and Singapore. It includes sector updates, stock performance, key assumptions, corporate events, and analyst ratings.

Main Points

China

Sportswear Segment: The China sportswear market is expected to experience steady growth, driven by improving retail sales and margin expansion. Leading companies like Anta and Li Ning have reported positive sales improvements in 2Q16, with Li Ning showing a notable increase in same-store sales (SSS) growth and a higher contribution of new products to sales.
Xtep: The sportswear segment is rated OVERWEIGHT, with Xtep as the top pick. Xtep is expected to achieve mid-single-digit SSS growth in 2Q16 and is expected to see a gross margin expansion of 1-2% in 1H16. Xtep's strong focus on running footwear, which contributes 35-40% of its total sales, is a key differentiator.
Inventory Trends: Domestic sportswear companies have improved their inventory turnover, with Xtep's internal inventory days decreasing from 72 in 2013 to 64 in 2015. Retailers like Pou Sheng International have also reduced their inventory levels.
Dividend Yields: Anta and Xtep have maintained high dividend payout ratios (around 70% and 60%, respectively), with dividend yields of 3.9% and 5.6%. Li Ning has not paid dividends since 2012 but may do so in 2016.

Indonesia

Taxes and Fees: Property sales tax has been reduced by 25%, and corporate income tax could be reduced from 25% to 17%, which may have a positive impact on the market. The upside potential for JCI EPS is estimated at 10.6%.

Malaysia

Sunway REIT (SREIT MK): The company reported a 5.6% year-on-year growth in core net profit for FY16, driven by resilient retail assets and improved performance in the hotel segment. The office segment, however, showed weakness.

Singapore

City Developments (CIT SP): The company's 2Q16 results showed strong growth in the e-commerce segment and the EC (Economic Community) segment, with a target price of S$10.36.
Ezion Holdings (EZI SP): Earnings are expected to have bottomed in 2Q16, but there are risks on the horizon.
Wilmar International (WIL SP): The company reported a core net loss of US$220m in 2Q16, but saw good sale volume growth across all divisions in 1H16.

Key Indices

Index	Previous Close	1 Day %	1 Week %	1 Month %	YTD %
DJIA	18613.5	0.6	1.4	2.1	6.8
S&P 500	2185.8	0.5	1.0	2.3	6.9
FTSE 100	6914.7	0.7	2.6	3.5	10.8
AS30	5599.4	-0.5	0.6	3.1	4.8
CSI 300	3233.4	-0.3	1.0	-1.2	-13.3
FSSTI	2869.8	-0.2	1.5	-1.1	-0.4
HSCEI	9423.3	1.2	4.7	6.4	-2.5
HSI	22580.6	0.4	3.4	6.4	3.0
JCI	5419.1	-0.1	0.8	6.3	18.0
KLCI	1678.8	0.3	1.4	1.5	-0.8
KOSPI	2048.8	0.2	2.4	2.9	4.5
Nikkei 225	16735.1	-0.2	4.1	6.5	-12.1
SET	1552.6	0.3	3.0	5.3	20.5
TWSE	9131.8	-0.7	1.2	3.3	9.5
BDI	653	2.4	2.7	-7.2	36.6
CPO (RM/ml)	2587	0.9	6.3	11.3	17.6
Brent Crude (US$/bbl)	46	4.5	4.0	-0.5	23.5

Top Picks and Sell Recommendations

BUY Recommendations

Air China (753 HK): Target price HK$9.00, potential upside of 47.3%
Ping An Insurance (2318 HK): Target price HK$45.00, potential upside of 18.3%
Ciputra Property (CTRP LJ): Target price HK$960.00, potential upside of 44.4%
Indosat (ISAT LJ): Target price HK$9,500.00, potential upside of 44.5%
Genting Bhd (GENT MK): Target price RM10.40, potential upside of 26.2%
City Developments (CIT SP): Target price S$10.36
DBS (DBS SP): Target price S$19.15, potential upside of 28.1%
Bangkok Dusit (BDMS TB): Target price RM25.75, potential upside of 15.5%

SELL Recommendation

Wilmar International (WIL SP): Target price S$3.05, potential downside of 28.1%

Key Assumptions

GDP Growth (yoy)

US: 2.4 (2015), 2.5 (2016F), 2.7 (2017F)
Euro Zone: 1.6 (2015), 1.5 (2016F), 1.6 (2017F)
Japan: 0.5 (2015), 0.6 (2016F), 0.8 (2017F)
Singapore: 2.0 (2015), 2.7 (2016F), 3.0 (2017F)
Malaysia: 5.0 (2015), 4.2 (2016F), 5.0 (2017F)
Thailand: 2.8 (2015), 3.2 (2016F), 3.6 (2017F)
Indonesia: 4.8 (2015), 5.0 (2016F), 5.5 (2017F)
Hong Kong: 2.4 (2015), 2.1 (2016F), 1.8 (2017F)
China: 6.9 (2015), 6.5 (2016F), 6.2 (2017F)

Brent Crude (US$/bbl)

2015: 53.60
2016F: 42
2017F: 54

CPO (RM/mt)

2015: 2,168
2016F: 2,500
2017F: 2,600

Corporate Events

China Economics and Coal & Wind Supply Analyst Presentation: Taipei, 11-12 Aug
ST Engineering Luncheon: Singapore, 16 Aug
China Resources Gas Luncheon: Hong Kong, 17 Aug
Cowell E Holdings Luncheon: Hong Kong, 18 Aug
Q Technology Group Luncheon: Hong Kong, 26 Aug
Q Technology Group Roadshow: Shanghai, 2 Sep
Inari Amerton Corporate Roadshow: Taipei, 6 Sep
China Resources Gas Roadshow: Canada, 12-16 Sep
China Aviation Oil Roadshow: UK/Europe, 13-16 Sep
Sembcorp Industries Corp Roadshow: Canada, 26-27 Sep
Regional Financial and Telco Sector Analyst Presentation: UK/Europe, 26-30 Sep
Metro Pacific Investments Corporate Roadshow: Canada, 26-28 Oct

Sector Analysis

Sportswear - China

Growth Drivers: E-commerce and multiple brand strategies are key drivers for sales growth.
Performance: Li Ning and Anta have seen strong improvements in SSS and trade fair orders. Anta's 1H16 gross profit margin dropped to 44.3%, but this was due to inventory provisions, not the product mix or cost changes.
Valuation: Xtep is rated BUY and is expected to achieve 1H16 earnings growth of 16% and full-year net profit growth of 19%. It is trading at a lower valuation (10x 2017F PE) compared to Anta and Li Ning.

Analysts

Johnson Hu, CFA: +86 21 5404 7225 ext 809, johnsonhu@uobkayhian.com
Cynthia Wang: +86 21 5404 7225 ext 858, cynthiawang@uobkayhian.com
K Ajith: +65 6590 6627, ajith@uobkayhian.com
Sophie Leong: +65 6590 6621, sophieleong@uobkayhian.com

Summary of Key Insights

China's sportswear market is showing signs of steady growth, with Anta and Li Ning leading the way in sales and margin improvements.
Xtep is highlighted as a top pick due to its strong performance in running footwear and better valuation.
BOC Aviation is rated HOLD due to concerns over weak cash flow and rising interest rates, despite its strong market position and diversified customer base.
Indonesia and Malaysia are showing positive economic growth, with potential tax reductions expected to boost market sentiment.
Singapore and Hong Kong are showing mixed performance, with some stocks like City Developments and DBS performing well.
Key indices indicate a mixed performance across the region, with some showing strong growth while others show declines.
Corporate events and roadshows are scheduled for the upcoming months, indicating continued investor interest in the region.

Valuation and Dividend Insights

Xtep is expected to outperform Anta and Li Ning in terms of earnings growth and valuation.
Dividend yields for Anta and Xtep are high, indicating strong shareholder returns.
BOC Aviation is expected to have a dividend yield of 4.1% and a target price of HK$35.60, implying a HOLD rating due to its risk profile and weak cash flow.

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