20161118-大华继显-Regional_Morning_Notes_28页_1mb

报告摘要

Regional Morning Notes Summary

Core Content Overview

This document provides a comprehensive analysis of the Asian financial markets for Friday, 18 November 2016, focusing on China, Indonesia, Malaysia, Singapore, and Thailand. It covers sector updates, company results, key indices, top picks, corporate events, and market assumptions.

Main Points by Region

China

Automobile Sector:
- A probable sales slowdown in 2017 has already been partially priced in, with auto stocks down by 20% from their peak.
- The government's policy rollback on small car tax breaks (from 5% to 7.5% in 2017 and 10% in 2018) is expected to reduce sales growth.
- SUVs remain the fastest-growing segment, but competition is intensifying with new models being launched at an increased pace.
- Top Picks: Geely (BUY, Target: HK$10.00), BAIC (BUY, Target: HK$12.50). Sell: Great Wall Motor (GWM), Upgrade: Guangzhou Auto (GAC) from SELL to HOLD.
- Key Risks: Macro risks tied to China's economic performance and increased reliance on leverage for auto sales.
Infrastructure Sector:
- More construction orders from the One Belt One Road (OBOR) initiative are expected to materialise in 2017.
- Key Projects: Malaysia East Coast Rail Link, Singapore-Kuala Lumpur HSR, and China-Thailand Railway.
- Top Pick: CRCC (BUY, Target: HK$12.80).
- Key Challenges: Political instability and safety concerns in target markets like the Philippines and Pakistan.
- Construction Cost Comparison: China's railway construction costs are significantly lower than Europe's.

Indonesia

Indosat (ISAT IJ):
- 3Q16 results showed continued recovery, with revenue of Rp6,301b and EBITDA of Rp3,425b.
- Net profit reached Rp417b, above the forecast.
- Subscriber growth continued, with 1.1m mobile subscribers added, and a 18.3% year-on-year increase in subscriber base.
- Recommendation: Maintain BUY rating, but reduce target price to Rp8,015.

Malaysia

Gas Malaysia (GMB MK):
- Strong 3Q16 earnings driven by 2% quarter-on-quarter growth in natural gas volume, stable EBITDA margin, and good cost control.
- Recommendation: BUY, Target: RM2.75.
Ann Joo Resources (AJR MK):
- 9M16 results exceeded expectations, with revenue of RM1.4b and core net profit of RM97.8m.
- Expect another set of decent results in 4Q16.
- Recommendation: BUY, Target: RM2.80.

Singapore

Raffles Medical Group (RFMD SP):
- Share price decline presents a buying opportunity.
- Recommendation: BUY, Target: S$1.70.

Thailand

3Q16 Results Review:
- Mixed results, with 36% of covered companies reporting better-than-expected earnings.
- 2016-17 earnings forecasts are slightly up by 3.2% and 1.2%, respectively.
Corporate Activity:
- Charoen Pokphand Foods (CPF TB): Planning to acquire a new food service channel in the US.
- Sino-Thai Engineering & Construction (STEC TB): Expected to see strong earnings growth in 2017 from mega projects and power plant contracts.
Key Indices:
- The FTSE 100 and KLCI showed negative performance, while the DJIA and S&P 500 showed positive trends.

Key Indices Summary

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	18903.8	0.2	0.5	4.5	8.5
S&P 500	2187.1	0.5	0.9	2.9	7.0
FTSE 100	6794.7	0.7	-0.5	-2.2	8.8
AS30	5408.9	0.2	0.0	-1.5	1.2
CSI 300	3436.5	0.2	1.4	3.5	-7.9
FSSTI	2813.5	0.7	-0.7	-0.6	-2.4
HSI	22262.9	-0.1	-2.5	-4.8	1.6
JCI	5193.0	0.1	-4.7	-4.4	13.1
KLCI	1626.8	-0.1	-1.6	-2.4	-3.9
KOSPI	1980.6	0.0	-1.1	-2.9	1.0
Nikkei 225	17862.6	0.0	3.0	5.3	-6.2
SET	1473.9	-0.1	-2.7	-0.2	14.4
TWSE	8995.3	0.4	-1.7	-2.5	7.9
BDI	1145	5.6	17.6	28.1	139.5
CPO (RM/ml)	2905	0.4	2.1	8.3	32.1
Brent Crude	46	-1.3	0.4	-10.7	23.4

Top Picks and Sell Recommendations

BUY Recommendations

Air China (753 HK): Target price HK$7.00
Ping An Insurance (2318 HK): Target price HK$47.00
Ciputra Property (CTRP IJ): Target price HK$960.00
Indosat (ISAT IJ): Target price Rp8,015
Genting Bhd (GENT MK): Target price HK$10.10
Citiv Dev (CIT SP): Target price HK$10.36
OCBC (OCBC SP): Target price HK$10.45
Bangkok Dusit (BDMS TB): Target price S$31.20
Siam Cement (SCC TB): Target price Bt35.75

SELL Recommendations

Hartalega (HART MK): Target price HK$3.33

Key Assumptions

Country/Region	GDP Growth (yoy) 2015	GDP Growth (yoy) 2016F	GDP Growth (yoy) 2017F
US	2.6	2.0	2.7
Euro Zone	2.0	1.4	1.0
Japan	0.5	0.6	0.8
Singapore	2.0	1.4	1.7
Malaysia	5.0	4.2	4.5
Thailand	2.8	3.2	3.5
Indonesia	4.8	5.0	5.2
Hong Kong	2.4	2.1	1.8
China	6.9	6.5	6.2

Corporate Events

Indonesia Ministry of Finance Corporate Roadshow: Taipei, 21–22 Nov
Greater China Auto Parts Sector Analyst Presentation: Singapore, 22 Nov
Concord New Energy Roadshow: London and Milan, 21–24 Nov
Indo Strategy Analyst Marketing: Taipei, 23 Nov
China TCM Group Luncheon: Hong Kong, 24 Nov
Metro Pacific Investments Roadshow: Canada, 24–25 Nov
Thai Oil Corporate Roadshow: Singapore, 29–30 Nov

Action Recommendations

BUY Geely and BAIC for their resilience to policy changes and exposure to faster-growing segments like SUVs and premium cars.
SELL GWM due to its vulnerability to competition and potential losses from its new high-end brand "WEY".
BUY infrastructure contractors such as CRCC for their strong new-orders growth and undemanding valuations.

Conclusion

The report highlights the expected slowdown in China's auto sector due to policy changes and increased competition, with a focus on resilient players. It also notes the potential for growth in the infrastructure sector, particularly through OBOR projects, and recommends selective buying in certain companies while cautioning against others. The overall sentiment is cautious but with opportunities in sectors showing recovery and growth potential.

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