20180907-大华继显-Regional_Morning_Notes_23页_1mb

报告摘要

Regional Morning Notes Summary

Core Content Overview

This document provides a detailed analysis of market conditions and investment recommendations across several Asian regions, including China, Indonesia, Malaysia, Singapore, and Thailand. It covers sector updates, company results, key assumptions, corporate events, and investment actions for various stocks. The summary is based on the analysis of financial performance, market trends, and strategic outlooks.

Main Points

China

Healthcare Sector

Growth Momentum: Expected to continue in 2H18 due to fast-track approvals and the execution of the NRDL (National Reimbursement Drug List).
GPO Price Cuts: Caution is advised as these could impact margins.
TCM (Traditional Chinese Medicine):
- Strong growth due to favorable government policies.
- Companies like China TCM (570 HK) and HEC Pharma (1558 HK) are recommended as BUY.
- CSPC (1093 HK) is also recommended as BUY due to strong revenue and net income growth, and the potential of new blockbuster drugs.
- HEC Pharma is expected to outperform due to expansion of sales teams, increased public awareness, and new ANDA drug injections.

IT Hardware Sector

1H18 Performance: Handset component players generally reported poor results due to margin squeeze and a weak smartphone market.
Key Companies:
- Sunny Optical (2382 HK): Missed expectations with only 1.8% net profit growth.
- AAC (2018 HK): Significant miss with a 16% decline in net profit.
- Q Tech (1478 HK): Recorded a net loss of Rmb51.3m in 1H18.
- Tongda (698 HK): Results were in line with expectations.
2H18 Outlook: Seasonal uptrend expected, but likely to be weak and short-lived.
Recommendation: UNDERWEIGHT for the sector.

Key Information

Market Indices (YTD %)

DJIA: 5.2%
S&P 500: 7.6%
FTSE 100: -4.8%
AS30: 1.6%
CSI 300: -19.1%
FSSTI: 7.5%
HSCEI: -9.7%
HSI: -9.8%
JCI: 9.1%
KLCI: 0.1%
KOSPI: -7.3%
Nikkei 225: 1.2%
SET: -5.8%
TWSE: 2.6%
BDI: 8.1%
CPO (RM/ml): -7.0%
Brent Crude (US$/bbl): 14.4%

Top Picks (BUY)

China TCM (570 HK): Target price HK$8.22, current price HK$5.34.
CSPC (1093 HK): Target price HK$24.36, current price HK$18.92.
HEC Pharma (1558 HK): Target price HK$63.10, current price HK$34.80.
CIMB (MK): Target price RM2.26, current price RM1.95.
Gudang Garam (GGRM IJ): Target price RM85,000, current price RM71,175.
PP Persero (PTPP IJ): Target price RM3,700, current price RM1,645.
SingTel (ST SP): Target price RM3.98, current price RM3.14.
Siam Cement (SCC TB): Target price Bt7.50, current price Bt5.90.

Corporate Events

Group Luncheon with Nexteer Automotive Group (1316 HK): 11 Sep
Roadshow with VS Industry (VSI MK): 17 Sep
Roadshow with China TCM Holdings (570 HK): 20–21 Sep
Roadshow with PT. Sarimelati Kencana (PZZA LJ): 25–26 Sep
Corporate Roadshow with BBI Life Sciences (1035 HK): 26 Sep
Roadshow with Digi.com (DIGI MK): 30 Oct – 2 Nov
UOB Kay Hian Annual Regional 1H2019 Strategy Conference: 13 Nov

Key Assumptions (GDP YoY Growth)

US: 2.3% (2017), 2.5% (2018F), 2.3% (2019F)
Euro Zone: 2.4% (2017), 2.3% (2018F), 1.9% (2019F)
Japan: 1.7% (2017), 1.8% (2018F), 1.9% (2019F)
Singapore: 3.6% (2017), 2.8% (2018F), 3.0% (2019F)
Malaysia: 5.9% (2017), 5.0% (2018F), 5.3% (2019F)
Thailand: 3.9% (2017), 4.2% (2018F), 4.2% (2019F)
Indonesia: 5.1% (2017), 5.3% (2018F), 5.4% (2019F)
Hong Kong: 3.8% (2017), 3.8% (2018F), 2.8% (2019F)
China: 6.9% (2017), 6.4% (2018F), 6.2% (2019F)
CPO (RM/mt): 2,783 (2017), 2,400 (2018F), 2,500 (2019F)
Brent Crude (US$/bbl): 55.00 (2017), 71.60 (2018F), 71.00 (2019F)

Indonesia

Economic Stability: Larger economy and higher foreign reserves (6.8x pre-AFC level) suggest a major crisis is unlikely.
Recommended Stocks (BUY):
- GGRM
- SIDO
- LPPF
- BBNI
- BMRI

Malaysia

Minimum Wage Increase: Minimal impact on market earnings.
Plantation Sector: Moderately impacted.
Recommended Stock (BUY): Magnum (MAG MK) with a target price of RM2.26.
Key Catalyst: U-Mobile monetisation (RM400m, 14% of market cap) to restore dividend payout to near 100%, offering a yield of >7%.

Singapore

Telecommunications Sector: Delay in regulation brings reprieve; upgraded to OVERWEIGHT.

Thailand

Diamond Building Products (DRT TB): Expected to resume strong earnings growth in 2019.
Recommended Stock (BUY): DRT TB with a target price of Bt7.50.
Share Price Yield: Offers an attractive 6% annual yield.

Investment Actions

China TCM (570 HK): Maintain BUY.
CSPC (1093 HK): Maintain BUY.
HEC Pharma (1558 HK): Maintain BUY.
Sunny Optical (2382 HK): Maintain HOLD.
Tongda (698 HK): Maintain HOLD.
AAC (2018 HK): Maintain HOLD.
Q Tech (1478 HK): Maintain SELL.

Risks and Opportunities

Upside Risks

Robust shipment growth due to seasonal demand recovery.
Launch of new products with meaningful specification upgrades.

Downside Risks

Sharp slowdown in smartphone market.
Worsening competitive landscape.

Analysts

Michael Cheung: +852 2826 4857, michael.cheung@uobkayhian.com.hk
Yukkei Lee: +852 2826 4867, yukkei.lee@uobkayhian.com.hk

Conclusion

The document outlines a positive outlook for the healthcare sector in China, highlighting strong growth potential and favorable policies. However, it cautions against GPO price cuts and maintains a UNDERWEIGHT rating for the IT Hardware sector due to margin pressures and weak growth. In other regions, it suggests cautious optimism for Indonesia and Malaysia, with specific investment recommendations and key events planned. The overall tone is one of selective buying and holding, with emphasis on market dynamics and company-specific factors.

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