20180904-大华继显-Regional_Morning_Notes_30页_1mb

报告摘要

Regional Morning Notes Summary

Core Content Overview

This document provides a comprehensive update on regional market performance and company-specific insights, focusing on China, Hong Kong, Indonesia, Malaysia, and Singapore. It includes financial results, analyst recommendations, key assumptions, and market outlook for various sectors, particularly aviation and energy.

Key Sectors and Companies

Aviation - China

1H18 Results Review: Air China and China Southern Airlines (CSA) reported better-than-expected earnings, while China Eastern Airlines (CEA) showed a decline. All three airlines guided for flat to lower non-fuel unit costs and better domestic yields.
Top Pick: CSA is highlighted as the top pick due to its lowest absolute debt, highest domestic exposure, and the expected boost from moving to the new Beijing Airport in late 2018.
Domestic Yields: Expected to rise in 2H18 as more domestic routes are liberalised. CEA is the most optimistic about yield improvements.
International Yields: Mixed outlook, with CSA showing the most improvement and Air China at risk of deterioration due to declining US-China traffic.
Fuel and Forex Impact: Fuel unit costs rose across all carriers, while forex losses are expected to more than double in 2H18. All carriers plan to reduce USD debt exposure.
PEER Comparison: CSA and Air China are recommended as BUYs, with CEA as HOLD. Valuation is based on 1.1x P/B, with target prices unchanged for CSA and Air China.

Tianneng Power (819 HK)

1H18 Performance: Net profit rose 17% yoy to Rmb513m, in line with estimates, but the company faces heavy policy headwinds.
Downgrade: From HOLD to SELL due to a grim earnings outlook and stretched valuation.
Target Price: Cut from HK$8.90 to HK$6.00.
Segment Performance:
- LAB (Lead-Acid Battery): Remain the main revenue driver, contributing 92% of total revenue, with growth slowing due to policy changes.
- LIB (Lithium Battery): Segment revenue dropped 39% yoy, with significant share loss to the market.
- Recycled Lead and Others: Showed modest growth, but not enough to offset LAB and LIB declines.
Earnings and Margin Outlook:
- Net profit forecasts for 2018-20 have been slashed by 18%, 26%, and 32% respectively.
- Net margins are expected to decline from 4.4% to 3.3% over the same period.
Key Risks: Fluctuations in lead prices, increased competition, and the continued decline in LAB demand due to policy changes.

Key Indices and Market Trends

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	25964.8	(0.1)	0.7	2.0	5.0
S&P 500	2901.5	0.0	0.9	2.2	8.5
FTSE 100	7504.6	1.0	(1.0)	(2.0)	(2.4)
AS30	6416.5	(0.2)	0.6	1.4	4.0
CSI 300	3321.8	(0.4)	(2.5)	0.2	(17.6)
FSSTI	3207.2	(0.2)	(0.6)	(1.8)	(5.8)
HSCEI	10813.6	(0.6)	(2.1)	1.1	(7.6)
HSI	27712.5	(0.6)	(2.0)	0.1	(7.4)
JCI	5967.6	(0.8)	(1.0)	(0.7)	(6.1)
KLCI	1813.6	(0.3)	0.3	1.9	0.9
KOSPI	2307.0	(0.7)	0.3	0.8	(6.5)
Nikkei 225	22707.4	(0.7)	(0.4)	0.8	(0.3)
SET	1721.2	(0.0)	0.2	0.5	(1.9)
TWSE	10964.2	(0.9)	0.6	(0.4)	3.0
BDI	1579	(2.2)	(7.0)	(10.9)	15.6
CPO	2179	0.1	(0.7)	1.1	(8.8)
Brent Crude	78	0.7	2.5	6.7	16.9

Corporate Events

Roadshow with Bright Scholar Education Holdings Limited (BEDU US): Kuala Lumpur, 4 Sep
Group Luncheon with Nexteer Automotive Group (1316 HK): Hong Kong, 11 Sep
Roadshow with VS Industry (VSI MK): Singapore, 17 Sep
Roadshow with China Traditional Chinese Medicine Holdings (570 HK): Taipei, 20–21 Sep
UOB Kay Hian Asian Gems Conference: Singapore, 9–10 Oct
Roadshow with Digi.com (DIGI MK): Canada, 30 Oct–2 Nov
UOB Kay Hian Annual Regional 1H2019 Strategy Conference: Kuala Lumpur, 13 Nov

Regional Strategy Picks

Indonesia

Alpha Picks: Banks (BBNI, BMRI, BBRI) and Consumer (ASII, GGRM)

Malaysia

Alpha Picks: Patience is required due to underwhelming 2Q18 earnings and policy uncertainty around the ECRL project.

Singapore

Update: Singapore Press Holdings (SPH SP) reported a 14% decline in 4QFY18 page count due to weak display ads.

Thailand

Update: TTCL (TTCL TB) is recommended as a BUY with a target of Bt11.00, expecting synergy from Sojitz Corporation.

Analysts and Contact Information

K Ajith: +65 6590 6627, ajith@uobkayhian.com
Charles Wong Kok Min: +603 2147 1913, kokmin@uobkayhian.com

Summary of Key Financial Metrics for Tianneng Power

Metric	2016	2017	2018F	2019F	2020F
Net Profit (Rmbm)	859	1,178	1,097	1,035	982
EPS (fen)	74.4	102.5	95.4	90.0	85.4
PE (x)	9.5	6.6	7.4	7.8	8.3
P/B (x)	2.0	1.6	1.4	1.3	1.1
EV/EBITDA (x)	3.3	2.9	3.0	3.2	3.4
Net Margin (%)	4.0	4.4	3.8	3.8	3.6
Net Debt/Cash to Equity (%)	(28.5)	(48.6)	(4.2)	(51.8)	(42.2)

Key Risks and Catalysts

Risks: Policy changes in China's e-bike and EV industry, weak cash flows, and increased competition.
Catalysts: Lower fuel prices, stronger renminbi, and potential improvement in domestic yields for airlines.

Summary of Stock Recommendations

BUY: CSA, Air China, Serba Dinamik Holdings (SDH MK), TTCL (TTCL TB)
SELL: Tianneng Power (819 HK), Hartalega (HART MK)
HOLD: Singapore Press Holdings (SPH SP)

Conclusion

The document outlines a mixed outlook for regional markets, with emphasis on China's aviation and energy sectors. While some companies like CSA and Air China are recommended as buys due to strong domestic exposure and positive guidance, others like Tianneng Power face significant challenges due to policy shifts and market saturation. Analysts highlight the importance of monitoring forex movements, fuel prices, and government grants for airlines, as well as the impact of policy changes on the LAB and LIB markets.

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