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报告摘要

Regional Morning Notes Summary - 18 May 2016

Core Content Overview

This summary provides an analysis of economic policies, corporate results, and market indices for several Asian countries, including China, Indonesia, Malaysia, Singapore, and Thailand. It also includes sector updates, valuation insights, and analyst recommendations.

Main Points

China

Economic Policy

Supply-side reforms are being advocated by Chinese policymakers, with a focus on eliminating overcapacity, destocking in the property market, and improving the quality of supply.
The State Council is encouraging private-sector investment, aiming to reduce barriers in sectors such as electricity, telecommunications, and education.
Despite the push for reforms, implementation remains a challenge.

Banking Sector

Stricter regulations on non-performing loan (NPL) recognition are being introduced by the PBOC and CBRC.
The No.82 document restricts the transfer of credit asset beneficiary rights, aiming to prevent banks from hiding NPLs.
Banks are required to book NPLs rather than transfer them, which could lead to higher NPLs and credit costs.
ICBC and CCB are recommended as BUYs, while ABC, BOC, and BoCom are on HOLD.
BoCom and Minsheng are likely to be most impacted due to weaker NPL recognition quality.

Corporate Events

Regulatory actions and events are being held across various sectors, including banking and energy.

Indonesia

Sido Muncul (SIDO IJ)

1Q16 Net Profit increased by 6.3% yoy and 12.6% qoq to Rp125b, in line with forecasts.
Revenue grew by 19.4% yoy to Rp608b, driven by herbal and supplement, and food and beverage segments.
Operating and net margins contracted due to a significant rise in operating expenses (up 65% yoy), particularly in advertising and promotion.
Target price remains at Rp550, with an upside of +6.8%.
Valuation suggests a 18.2x 2016F PE and 16.8x 2017F PE, slightly below the average forward PE of 18.6x.

Malaysia

Carlsberg Brewery Malaysia (CAB MK)

1Q16 showed a strong recovery in the Malaysia operation, driven by strategic cost management.
Singapore operation maintained momentum from the previous quarter.
Recommendation is HOLD.

Singapore

Plantation Sector

1Q16 results were mixed, with earnings dragged down by low production and ASP, but mitigated by higher sales volumes and improved downstream operations.

Thailand

Thai Airways (THAI TB)

1Q16 profit improved due to lower fuel costs and impairment losses.
Recommendation was upgraded to HOLD.

Key Indices

A variety of indices (DJIA, S&P 500, FTSE 100, etc.) are listed with previous close and performance metrics over different periods.
Indices such as HSCEI and HSI showed positive performance in the short term, while CSI 300 had a negative YTD.

Analysts

Chaoping Zhu and Ye Xu are the analysts for the China section.
Posmarito Pakpahan and Stevanus Juanda are the analysts for the Indonesia section.
Edmond Law and Jasmine Duan are the analysts for the Banking section.

Key Financials and Valuation

Sido Muncul

Share Price: Rp515
Target Price: Rp550
Earnings: Net profit of Rp125b in 1Q16, with forecasts for 2016F and 2017F.
Financial Metrics:
- PE (2016F): 17.0x
- PE (2017F): 15.8x
- P/B (2016F): 2.8x
- P/B (2017F): 2.7x
Dividend Yield: Expected to increase to 5.7% in 2018F.

Risk and Outlook

Earnings revisions are not expected, as 1Q16 results are in line with full-year forecasts.
Fiscal policy is likely to continue supporting demand due to the slow implementation of other supply-side reforms.
The banking sector is expected to report higher NPLs and credit costs in 2016, with weak earnings outlook.
Insurance and brokerage sectors are preferred over the banking sector in the financial space.

Summary of Key Reforms and Targets

Sector	Target Capacity (m tons)	Capacity to be Eliminated (m tons)
Coal	5,700	500
Steel	1,200	100–150

Provincial Targets for Coal Overcapacity Elimination

Province	Capacity (m tons)	Capacity to be Eliminated (m tons)
Shanxi	1,450	100
Hebei	92	40
Shandong	150	45
Jiangsu	22	8
Guizhou	170	70
Chongqing	41	20
Inner Mongolia	717	120
Anhui	152	30
Gansu	54	10
Hubei	11	8
Hunan	n/a	15

Provincial Targets for Steel Overcapacity Elimination

Province	Capacity (m tons)	Capacity to be Eliminated (m tons)
Hebei	280	60
Shandong	75	10
Jiangsu	110	17.5
Anhui	35	7
Guangdong	44.5	4.5
Xinjiang	30	3
Gansu	40	3

Conclusion

The report highlights ongoing economic reforms in China, mixed corporate results in Indonesia and Singapore, and market dynamics across various sectors. Regulatory actions are expected to improve transparency in the banking sector, though short-term earnings may be affected. Sido Muncul is performing in line with expectations, with continued investment in production capacity. The banking sector is recommended with caution due to increased NPLs and credit costs.

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