Regional Morning Notes Summary
Core Content Overview
This document provides a summary of stock performance, company results, and economic trends for various markets and sectors in the Asia-Pacific region, focusing on China, Indonesia, Malaysia, and Singapore. It includes analyst recommendations, key financial metrics, and market outlooks for selected companies.
Main Points by Region
China
- Industrial Profit Growth: Steady growth in September 2016, with total revenue up 3.9% yoy and industrial profit up 7.7% yoy. The upstream sectors (coal, steel) were the primary beneficiaries.
- Coal Price Volatility: Despite coal price increases, the coal sector is still rated OVERWEIGHT due to potential policy support and strong demand from infrastructure projects.
- Cement Sector:
- Anhui Conch Cement Co (914 HK):
- 9M16 Results: Core earnings grew by 28.4% yoy, outperforming expectations.
- Price and Cost Dynamics: Cement prices increased, offsetting coal cost hikes. Gross margin rose to 31.7% in 9M16.
- Outlook: Expected to see continued margin expansion in 4Q16, with a target price of HK$26.90.
- BBMG Corporation (2009 HK):
- 9M16 Results: Core earnings slightly below consensus but above expectations.
- Strategic Positioning: Strong in property and a consolidator in the BTH cement market.
- Target Price: HK$3.75.
Indonesia
- Mitra Adiperkasa (MAPI IJ):
- 3Q16 Results: Net income surged by 139% qoq, driven by performance in specialty retail and F&B.
- Target Price: Rp5,900.
Malaysia
- Malaysia Airports Holdings (MAHB MK):
- 3Q16 Results: Weak performance, but earnings growth is expected to depend on PSC revisions.
- Pavilion REIT (PREIT MK):
- 9M16 Results: Earnings below expectations due to lower occupancy and rental reversion.
- Sunway REIT (SREIT MK):
- 1QFY17 Results: In line with expectations; improved performance expected in upcoming quarters.
- Tenaga Nasional (TNB MK):
- FY16 Results: Core net profit increased 12% yoy due to higher electricity demand and lower tax rates.
- Target Price: RM16.00.
Singapore
- Oversea-Chinese Banking Corp (OCBC SP):
- 3Q16 Results: Stable asset quality due to early recognition of non-performing loans.
- Target Price: S$10.45.
- Sembcorp Industries (SCI SP):
- 3Q16 Results: Expected to benefit from India's economic growth.
- Target Price: S$3.05.
- Singapore Post (SPOST SP):
- Key Development: The SPOST-Alibaba deal is nearing completion, which is expected to positively impact the company.
- Target Price: S$1.77.
Key Indices
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
18169.7 |
(0.2) |
0.0 |
(0.3) |
4.3 |
| S&P 500 |
2133.0 |
(0.3) |
(0.4) |
(1.2) |
4.4 |
| FTSE 100 |
6986.6 |
0.4 |
(0.6) |
2.6 |
11.9 |
| AS30 |
5378.4 |
(1.2) |
(2.7) |
(2.2) |
0.6 |
| CSI 300 |
3345.7 |
(0.3) |
0.8 |
3.6 |
(10.3) |
| FSSTI |
2828.9 |
0.0 |
(0.5) |
(1.0) |
(1.9) |
| HSCEI |
9608.9 |
(0.9) |
(0.3) |
(1.1) |
(0.5) |
| HSI |
23132.4 |
(0.8) |
(0.7) |
(2.1) |
5.6 |
| JCI |
5416.8 |
0.3 |
0.2 |
(0.2) |
17.9 |
| KLCI |
1669.0 |
(0.3) |
0.1 |
0.2 |
(1.4) |
| KOSPI |
2024.1 |
0.5 |
(0.8) |
(1.4) |
3.2 |
| Nikkei 225 |
17336.4 |
(0.3) |
0.6 |
5.3 |
(8.9) |
| SET |
1498.4 |
0.4 |
0.8 |
1.3 |
16.3 |
| TWSE |
9299.6 |
(0.7) |
(0.2) |
1.1 |
11.5 |
| BDI |
798 |
(0.5) |
(6.0) |
(14.2) |
66.9 |
| CPO (RM/ml) |
2795 |
0.6 |
1.5 |
(3.7) |
27.0 |
| Brent Crude (US$/bbl) |
50 |
1.0 |
(1.8) |
9.8 |
35.4 |
Top Picks (BUY)
| Company |
Ticker |
Current Price (Icy) |
Target Price (Icy) |
Upside (%) |
| Air China |
753 HK |
5.13 |
8.40 |
63.7 |
| Ping An Insurance |
2318 HK |
40.50 |
47.00 |
16.0 |
| Ciputra Property |
CTRP LJ |
775.00 |
960.00 |
23.9 |
| Indosat |
ISAT LJ |
6,400.00 |
9,500.00 |
48.4 |
| Genting Bhd |
GENT MK |
7.76 |
9.90 |
27.6 |
| Citiv Dev |
CIT SP |
8.67 |
10.36 |
19.5 |
| OCBC |
OCBC SP |
8.58 |
10.30 |
20.0 |
| Bangkok Dusit |
BDMS TB |
21.90 |
31.00 |
41.6 |
| Siam Cement |
SCC TB |
500.00 |
645.00 |
29.0 |
Economic Assumptions
| Country |
GDP Growth (2015) |
GDP Growth (2016F) |
GDP Growth (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 |
Key Assumptions on Commodity Prices
| Commodity |
2015 |
2016F |
2017F |
| Brent Crude |
53.60 |
42 |
54 |
| CPO (RM/mt) |
2,168 |
2,500 |
2,600 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| Greentown Service Group Luncheon |
Hong Kong |
28 Oct |
28 Oct |
| CTCM & TUL Reverse Roadshow |
Hong Kong |
31 Oct |
31 Oct |
| Ekovest Bhd Roadshow |
Singapore |
3 Nov |
3 Nov |
| Cityneon Roadshow |
Hong Kong |
9 Nov |
9 Nov |
| Xstep International Holdings Roadshow |
Kuala Lumpur |
15 Nov |
15 Nov |
| Ministry of Finance Indonesia Roadshow |
Taipei |
21 Nov |
22 Nov |
| Indo Strategy Analyst Marketing |
Taipei |
23 Nov |
23 Nov |
| Metro Pacific Investments Roadshow |
Canada |
24 Nov |
25 Nov |
Anhui Conch Cement Co Highlights
- Core Earnings: 28% growth in 9M16, beating expectations.
- Cement Price: Rose to Rmb188/tonne in 3Q16, up 3% from 1H16.
- Sales Volume: Increased by 8% yoy in 9M16.
- Gross Margin: Rose to 31.7% in 9M16.
- Target Price: HK$26.90.
- Valuation: Based on 1.5x 2017F P/B, which is higher than the historical trough of nearly 1.0x but lower than the historical average of 2x.
Financial Metrics
| Metric |
2015 |
2016F |
2017F |
2018F |
| Net Turnover (Rmbm) |
50,976.0 |
55,109.4 |
58,418.0 |
61,341.1 |
| EBITDA (Rmbm) |
13,609.9 |
16,520.6 |
17,412.3 |
18,460.8 |
| Net Profit (Rmbm) |
7,538.7 |
8,398.5 |
8,912.2 |
9,456.6 |
| Net Profit (adj.) (Rmbm) |
5,300.7 |
8,398.5 |
8,912.2 |
9,456.6 |
| EPS (Fen) |
100.0 |
158.5 |
168.2 |
178.5 |
| Net Margin (%) |
14.8 |
15.2 |
15.3 |
15.4 |
| Net Debt/(Cash) to Equity (%) |
21.2 |
19.2 |
14.5 |
9.9 |
Risk and Earnings Revisions
- Anhui Conch: Earnings forecasts lifted by 4–9% for 2016–2018 due to improved margin estimates.
- Cement Price Outlook: Expected to rise further in 4Q16, with potential for a price correction in December.
- Deleveraging: Continued in the industrial sector, with the coal and steel sectors showing increased leverage due to higher production.
Analysts
Conclusion
The report highlights a mixed performance across the region, with notable gains in China's cement and property sectors, as well as strong results in Indonesia's specialty retail and F&B industries. While some sectors like oil and gas show negative growth, others like coal and steel benefit from rising prices and government policies. The report also suggests that corporate events and market dynamics will influence future performance, with continued focus on earnings growth, margin expansion, and strategic positioning.
