Regional Morning Notes Summary - 26 March 2015
Core Content Overview
This summary outlines the performance and outlook of key companies and indices in various Asian markets, including China, Hong Kong, Indonesia, Malaysia, Singapore, and Thailand. It also provides insights into corporate events and investment recommendations.
China Market Highlights
Agile Property Holdings (3383 HK)
- 2014 Results: Disappointing performance with a 11.2% decline in attributable net profit and a 10.7% drop in core net profit. Gross margin fell due to product mix changes and increased land costs.
- Key Metrics:
- Revenue: Rmb38,318m (up 8.1% yoy)
- Core net profit: Rmb3,929m (down 10.7% yoy)
- Net gearing ratio: 81.0% (still higher than the sector average)
- Outlook: Management is looking to enhance cash flow through possible disposal of investment property assets. The company is expected to see a modest 1.9% growth in contracted sales for 2015, but earnings growth outlook is weakened due to pricing power issues.
- Recommendation: Maintain HOLD. Target price: HK$4.87.
- Stock Data:
- Market Cap (HK$m): 17,665.9
- 3-month average daily turnover (US$m): 7.0
- Dividend Yield: 8.8%
Bank of China (3988 HK)
- 2014 Results: Net profit slightly above consensus (8.1% yoy growth), driven by lower credit costs and cost control measures.
- Key Metrics:
- Net interest income: Rmb321,102m (up 13.2% yoy)
- NIM: 2.25% (up 1bp yoy, but down 2bp qoq)
- NPL ratio: 1.18% (up 11bp qoq)
- Outlook: 4Q14 credit cost was 37bp, suggesting higher provision pressures in 2015. Cost-to-income ratio improved slightly, but may not be sustainable.
- Recommendation: Maintain HOLD. Target price: HK$4.70.
- Stock Data:
- Market Cap (HK$m): 1,499,147.0
- 3-month average daily turnover (US$m): 171.6
- Dividend Yield: 5.4%
Hong Kong Market Highlights
AAC Technologies (2018 HK)
- 2014 Results: Missed consensus due to weak margins. Non-acoustics sales expected to be a major growth driver in 2015.
- Recommendation: HOLD. Target price: HK$46.50.
Dah Sing Banking Group (2356 HK)
- 2014 Results: Decent results with improved asset quality. Upgraded to BUY.
- Recommendation: BUY. Target price: HK$15.75.
Indonesia Market Highlights
Cement Sector
- 2014 Performance: Net profit grew 1.5% yoy, in line with forecasts. Earnings outlook remains positive.
- Recommendation: Maintain OVERWEIGHT. INTP is the top pick.
Malaysia Market Highlights
AMMB Holdings (AMMK)
- Outlook: Prospects for FY16 likely to remain challenging due to muted loan growth and NIM pressure.
- Recommendation: Downgraded to SELL. Target price cut to RM5.80.
Singapore Market Highlights
Ezion Holdings (EZI SP)
- Outlook: Staying ahead of the pack.
- Recommendation: BUY. Target price: S$1.55.
Thailand Market Highlights
IRPC
- Outlook: Positive feedback from non-deal roadshow.
- Recommendation: BUY. Target price: Bt6.50.
Key Indices (as of 26 March 2015)
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
17718.5 |
-1.6 |
-2.0 |
-2.8 |
-0.6 |
| S&P 500 |
2061.1 |
-1.5 |
-1.8 |
-2.5 |
0.1 |
| FTSE 100 |
6991.0 |
-0.4 |
0.7 |
0.8 |
6.5 |
| AS30 |
5937.1 |
0.0 |
2.2 |
1.0 |
10.2 |
| CSI 300 |
3940.4 |
-0.8 |
2.5 |
10.5 |
11.5 |
| FSSTI |
3419.0 |
0.2 |
1.7 |
-0.2 |
1.6 |
| HSI |
24528.2 |
0.5 |
1.7 |
-1.5 |
3.9 |
| KLCI |
1819.1 |
0.3 |
1.2 |
-0.1 |
3.3 |
| KOSPI |
2042.8 |
0.1 |
0.7 |
2.5 |
6.6 |
| Nikkei 225 |
19746.2 |
0.2 |
1.0 |
5.1 |
13.2 |
| SET |
1512.8 |
-0.1 |
-1.2 |
-5.1 |
1.0 |
| TWSE |
9667.8 |
-0.7 |
0.1 |
0.5 |
3.9 |
| BDI |
598 |
0.2 |
4.7 |
14.1 |
-23.5 |
| CPO (RM/mt) |
2170 |
-1.2 |
-0.9 |
-2.8 |
-5.5 |
| Nymex Crude |
49 |
-0.9 |
11.0 |
1.3 |
-8.4 |
Top Picks (BUY)
| Company |
Ticker |
Current Price (Icy) |
Target Price (Icy) |
Pot. +/- |
| Sunac China |
1918 HK |
6.41 |
9.29 |
44.9 |
| ICBC |
1398 HK |
5.57 |
6.80 |
22.1 |
| Bank Negara |
BBNI JJ |
7,050.00 |
7,500.00 |
6.4 |
| Genting Msia |
GENM MK |
4.17 |
4.47 |
7.2 |
| DBS |
DBS SP |
20.17 |
23.55 |
16.8 |
| Pacific Radiance |
PACRA SP |
0.65 |
1.00 |
53.8 |
| Krung Thai Bank |
KTB TB |
23.10 |
29.00 |
25.5 |
| Sino Thai Engr |
STEC TB |
20.60 |
30.25 |
46.8 |
Top Picks (SELL)
| Company |
Ticker |
Current Price (Icy) |
Target Price (Icy) |
Pot. +/- |
| UMWH Holdings |
UMWH MK |
10.94 |
10.00 |
-8.6 |
Key Assumptions
| Region |
2014 GDP % |
2015F GDP % |
2016F GDP % |
| US |
2.7 |
3.2 |
3.2 |
| Euro Zone |
0.9 |
1.4 |
1.4 |
| Japan |
1.5 |
2.0 |
2.0 |
| Singapore |
3.2 |
3.3 |
3.3 |
| Malaysia |
5.9 |
5.2 |
5.2 |
| Thailand |
1.5 |
3.9 |
3.9 |
| Indonesia |
5.2 |
5.8 |
5.8 |
| Hong Kong |
3.5 |
3.7 |
3.7 |
| China |
7.2 |
7.0 |
7.0 |
| Indicator |
2014 |
2015F |
2016F |
| Brent |
99.45 |
65 |
70 |
| CPO |
722 |
765 |
788 |
| BDI |
1,101 |
1,300 |
1,400 |
Corporate Events (March 2015)
| Event |
Venue |
Dates |
| Indofood Sukses Makmur Roadshow |
Singapore |
27 Mar |
| Sunway Berhad Luncheon |
Kuala Lumpur |
31 Mar |
| Singamas Container Holdings |
Singapore |
31 Mar |
| Roadshow |
Kuala Lumpur |
1 Apr |
| China Resources Gas Luncheon |
Hong Kong |
2 Apr |
| Sihuan Pharmaceutical Holdings |
Taipei |
30 Mar - 31 Mar |
| Corporate Roadshow |
Singapore |
2 Apr |
| Roadshow |
Kuala Lumpur |
3 Apr |
| Roadshow |
Hong Kong |
16 Apr - 17 Apr |
| Amata Corporation Roadshow |
Kuala Lumpur |
9 Apr |
| Roadshow |
Singapore |
10 Apr |
Key Financials and Metrics (Agile Property Holdings)
| Metric |
2014 (Rmbm) |
2015F (Rmbm) |
2016F (Rmbm) |
2017F (Rmbm) |
| Net turnover |
38,318 |
44,065 |
47,620 |
52,382 |
| EBITDA |
10,781 |
11,615 |
12,450 |
14,945 |
| Net profit (rep./act.) |
4,287 |
4,639 |
4,945 |
6,058 |
| Net profit (adj.) |
3,929 |
4,255 |
4,531 |
5,602 |
| EPS (fen) |
112.0 |
121.3 |
129.2 |
159.7 |
| PE (x) |
3.0 |
2.7 |
2.6 |
2.1 |
| P/B (x) |
0.3 |
0.3 |
0.3 |
0.3 |
| EV/EBITDA (x) |
5.5 |
5.1 |
4.8 |
4.0 |
| Net debt/(cash) to equity |
81.0 |
90.6 |
94.6 |
95.1 |
| ROE (%) |
10.4 |
10.9 |
11.2 |
13.1 |
Development Estimates (Agile Property Holdings)
| Metric |
2015 Estimate |
2014 Actual |
YoY Chg |
| Contracted sales (Rmb b) |
45.0 |
44.2 |
1.8% |
| New starts (m sqm) |
3.2 |
4.9 |
-34.7% |
| GFA under development (m sqm) |
11.2 |
12.1 |
-7.4% |
| Completed GFA (m sqm) |
4.5 |
4.2 |
7.1% |
| Saleable Resources (m sqm) |
7.6 |
7.2 |
5.6% |
Conclusion
The report highlights mixed results across the region, with some companies showing improvement while others face challenges. Agile Property Holdings and Bank of China are both recommended to HOLD, while companies in Indonesia and Singapore are viewed as positive picks. Corporate events are anticipated in several markets, and key financial indicators such as NPL ratios, NIM, and dividend yields are emphasized. The report underscores the importance of cost control, asset quality, and potential policy changes in shaping future performance.
