20180530-兴业金融证券-Regional_Morning_Cuppa_7页_288kb

Regional Morning Cuppa Summary

Core Content Overview

This document is a financial report from RHB Research, summarizing key investment insights and recommendations for stocks in Malaysia, Singapore, and other regional markets as of May 2018. It includes stock analyses, sector outlooks, and investment ratings, along with detailed disclaimers and distribution restrictions.

Main Points and Key Information

Malaysia

• Malayan Banking (MAY MK):

  • Maintained as a BUY with a target price of MYR11.80 (18% upside).
  • Dividend yield is around 6%.
  • 1Q18 results met expectations, with a 10% YoY earnings increase due to higher fee-based income and lower provisions.
  • Recent share price decline of 8% was due to concerns over exposure to Hyflux.
  • Asset quality risk is abating, and corporate credit demand is showing early signs of recovery.
  • Strong capital position is expected to cushion the impact of MFRS 9.
  • Core earnings forecast to grow 14% in FY18, lifting ROE to 10.4%.

• Felda Global Ventures (FGV MK):

  • Maintained as a BUY.
  • Suffered a setback in 1Q18, but long-term growth potential remains intact.

• Supermax (SUCB MK):

  • Maintained as a BUY.
  • Resilient growth despite higher gas tariffs.

• OKA Corp (OKAC MK):

  • Maintained as a BUY.
  • Advised to wait for the market to stabilize before investing.

• Tambun Indah Land (TILB MK):

  • Maintained as NEUTRAL.
  • Property sales have yet to recover.

• Kerjaya Prospek (KPG MK):

  • Maintained as NEUTRAL.
  • Steady ship operations in a volatile market.

• CB Industrial Product Holding (CBP MK):

  • Maintained as NEUTRAL.
  • New contract targets are expected to reduce.

• Tenaga Nasional (TNB MK):

  • Maintained as BUY.
  • Status quo for now, with no major changes anticipated.

• Genting Malaysia (GENM MK):

  • Maintained as BUY.
  • Anticipated strong performance in 2018 due to new theme parks and increased visitor arrivals.

• Tune Protect (TIH MK):

  • Maintained as BUY.
  • Seen as a good time to invest due to strategic positioning.

• Pintaras Jaya (PINT MK):

  • Maintained as NEUTRAL.
  • Facing a difficult path to recovery.

• Sime Darby (SIME MK):

  • Maintained as SELL.
  • Positives are already priced in.

Singapore

• China Aviation Oil (CAO SP):

  • Maintained as BUY.
  • Management reiterates growth outlook.

• Valuetronics (VALUE SP):

  • Maintained as BUY.
  • Auto sector is expected to drive growth in FY19.

• APAC Realty (APAC SP):

  • Maintained as BUY.
  • Investor luncheon key notes suggest positive outlook.

Regional Insights

• Regional Oil & Gas (OVERWEIGHT):

  • Potential supply shortfall is expected, but not immediate.
  • Monitor OPEC meetings and Iran sanctions.

• Top BUYs:

  • Longfor (960 HK):
    • Strong contracted sales growth, resilient margins, and a defensive balance sheet.
    • Target price: HKD26.00.
  • China Construction Bank (939 HK):
    • Expected sustained earnings recovery due to NIM expansion and improving asset quality.
    • Target price: HKD10.30.
  • Indofood Sukses Maksur (INDF IJ):
    • Likely to benefit from government stimulus for low-end consumers.
    • Target price: IDR10,300.
  • Astra International (ASII IJ):
    • Raised sales targets due to strong orders for Toyota Rush and Daihatsu Terios.
    • Strategy to reclaim market share is seen as effective.
    • Target price: IDR9,500.
  • BSD City (BSDE IJ):
    • Benefiting from lower interest rates and a large landbank.
    • Target price: IDR2,210.

Investment Research Ratings

• Buy: Share price may exceed 10% over the next 12 months.
• Trading Buy: Share price may exceed 15% over the next 3 months, but longer-term outlook is uncertain.
• Neutral: Share price may fluctuate within ±10% over the next 12 months.
• Sell: Share price may fall by more than 10% over the next 12 months.
• Not Rated: Not within regular research coverage.

Key Sector Recommendations

• Construction & Engineering:
  • Sector recommendation is NEUTRAL.
  • Likely cancellation of the HSR project (estimated cost: MYR50-60bn).
  • Possible resurrection if fiscal conditions improve, with a different iteration possibly extending to Northern states.
  • Two consortia (MRCB-Gamuda and YTL-THP) were appointed as PDPs for HSR legs.
  • MRCB-Gamuda's potential from HSR is questionable.

Disclaimers and Restrictions

• The report is for information purposes only and does not constitute investment advice.
• No guarantee is given regarding accuracy, completeness, or reliability of the information.
• The report may contain forward-looking statements and is subject to risks and uncertainties.
• Distribution restrictions apply based on the jurisdiction, with confidentiality and non-reproduction clauses.
• Ownership and conflict of interest disclosures are provided for each region, indicating potential interests in covered companies or related services.

Conclusion

The report highlights key investment opportunities in Malaysia and Singapore, with a focus on financial performance, market conditions, and sector-specific developments. While some stocks face short-term risks, others are viewed as long-term growth prospects. The investment ratings and target prices reflect the analysts' views on potential price movements and earnings growth. Investors are advised to make their own decisions and seek professional advice due to the complexity and risk involved in these markets.