Regional Morning Notes Summary
Core Content Overview
This document provides a summary of financial updates, key assumptions, and market analysis for various regions including China, Indonesia, Malaysia, Singapore, and Thailand, as of Thursday, 23 April 2015. It also includes insights on stock performance, corporate events, and investment recommendations.
China
Company Update: China Resources Gas (1193 HK)
- Recommendation: Maintain BUY with a target price of HK$31.00 (upside of +19.9%).
- Key Highlights:
- Strong growth momentum in natural gas (NG) sales, driven by tariff cuts, resumed M&A activity, and ample supply, especially from Russian gas.
- The Tianjin project is expected to turn around with a new management team, offering significant upside potential.
- Management expects NG sales volume to grow by 20% in 2015 and 15% CAGR for 2016–2020.
- The company anticipates another NG price cut in 2H15, which will boost NG consumption.
- Financials show strong growth in net profit, EBITDA, and operating profit, with a projected net profit of HK$3,064m for 2015.
- Valuation metrics (PE, P/B, EV/EBITDA) are improving, indicating strong investor confidence.
Indonesia
Company Update: Waskita Karya (WSKT IJ)
- Recommendation: NOT RATED.
- Key Highlights:
- WSKT plans to raise Rp5.3t via a rights issue, which will result in a 23% dilution in share base.
- The rights issue is expected to double net income from Rp502b to Rp1.0t in 2015.
- WSKT has six toll road projects in its pipeline, with plans to build 400km of toll roads in the next three years.
- The company is expanding its precast production capacity and targeting a significant increase in property division net income.
- WSKT is a leading civil construction firm with a strong government stake (67.33%).
Malaysia
Company Update: Bursa Malaysia (BURSA MK)
- Recommendation: HOLD.
- Key Highlights:
- 1Q15 results: Net profit below consensus, with a sharp 13.5% yoy decline in average daily trading value.
- The company is expected to maintain its market position despite the performance.
Company Update: Malaysian Resources Corp (MRC MK)
- Recommendation: BUY with a target price of RM2.05.
- Key Highlights:
- Sells Nu Sentral stake to PHB, which may impact its financials.
- The company is expected to benefit from strategic moves and cost control.
Singapore
Sector Update: Offshore & Marine
- Key Highlights:
- Bracing for a dry spell; cutting contract win forecasts due to market conditions.
REITs Update
- Key Highlights:
- Tenants are increasingly influencing investment decisions in the REIT sector.
Company Update: CapitaCommercial Trust (CCT SP)
- Recommendation: BUY with a target price of S$2.05.
- Key Highlights:
- Post-results feedback session with investors, indicating positive outlook.
Thailand
Sector Update: Food
- Key Highlights:
- EU issues yellow card against Thailand, signaling potential trade concerns.
Company Update: Dynasty Ceramic (DCC TB)
- Recommendation: BUY with a target price of Bt7.20.
- Key Highlights:
- 1Q15 results: Better-than-expected earnings due to market expansion and cost control.
Company Update: Bangchak Petroleum (BCP TB)
- Recommendation: BUY with a target price of Bt42.75.
- Key Highlights:
- Positive outlook for 1Q15 results, with continued growth expectations.
Key Indices
| Index |
Previous Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
18038.3 |
0.5 |
-0.4 |
-0.5 |
1.2 |
| S&P 500 |
2108.0 |
0.5 |
0.1 |
-0.0 |
2.4 |
| FTSE 100 |
7028.2 |
-0.5 |
-1.0 |
0.1 |
7.0 |
| AS30 |
5812.8 |
-0.5 |
-1.1 |
-1.8 |
7.9 |
| CSI 300 |
4739.8 |
2.6 |
8.2 |
19.3 |
34.1 |
| FSSTI |
3496.2 |
-0.4 |
-1.2 |
2.5 |
3.9 |
| HSI |
27933.9 |
0.3 |
1.1 |
14.0 |
18.3 |
| KLCI |
1854.8 |
-0.4 |
0.8 |
3.3 |
5.3 |
| KOSPI |
2143.9 |
-0.0 |
1.1 |
5.3 |
11.9 |
| Nikkei 225 |
20133.9 |
1.1 |
1.3 |
1.9 |
15.4 |
| SET |
1552.0 |
-1.1 |
0.3 |
2.1 |
3.6 |
| TWSE |
9613.0 |
0.8 |
0.8 |
-1.5 |
3.3 |
| BDI |
600 |
-0.2 |
2.4 |
1.5 |
-23.3 |
| CPO (RM/mt) |
2189 |
0.8 |
2.5 |
-0.0 |
-4.7 |
| Nymex Crude (US$/bbl) |
56 |
0.3 |
-0.7 |
18.7 |
5.7 |
Key Assumptions
| Metric |
2013 |
2014 |
2015F |
| GDP (% yoy) |
7.7 |
7.2 |
7.0 |
| Brent (US$/bbl) |
99.45 |
65 |
70 |
| CPO (US$/mt) |
722 |
765 |
788 |
| BDI |
1,101 |
1,300 |
1,400 |
Top Picks (BUY)
| Company |
Ticker |
Current Price |
Target Price |
Upside (%) |
| Beijing Capital |
694 HK |
8.66 |
12.30 |
42.0 |
| ICBC |
1398 HK |
6.98 |
7.80 |
11.7 |
| Bank BJB |
BJR J |
955.00 |
1,215.00 |
27.2 |
| Maybank |
MAY MK |
9.49 |
10.30 |
8.5 |
| DBS |
DBS SP |
20.88 |
23.55 |
12.8 |
| Pacific Radiance |
PACRA SP |
0.70 |
1.06 |
51.4 |
| Krung Thai Bank |
KTB TB |
21.50 |
29.00 |
34.9 |
| Sino Thai Engr |
STEC TB |
22.90 |
30.25 |
32.1 |
Corporate Events
| Event |
Venue |
Date |
| Triyards Roadshow |
Singapore |
28 Apr |
| Ascott Residence Trust Luncheon |
Singapore |
5 May |
Summary of Key Points
Main Points
- China Resources Gas (1193 HK) is expected to benefit from M&A activity, NG supply, and government policies, with a target price of HK$31.00.
- Waskita Karya (WSKT IJ) is planning a rights issue to boost its net income, with a focus on toll road projects and property development.
- Malaysian Resources Corp (MRC MK) is projected to see growth after selling its Nu Sentral stake.
- Thailand faces trade concerns from the EU, but some companies like Dynasty Ceramic (DCC TB) and Bangchak Petroleum (BCP TB) show positive earnings outlook.
- Singapore's offshore and marine sector is under pressure, with a dry spell anticipated.
- REITs in Singapore are seeing tenants take more control over investment decisions.
- Key indices show mixed performance, with some showing positive growth and others experiencing declines.
Main Views
- Strong growth potential for city gas distributors in China due to M&A and NG supply.
- WSKT is a leading toll road contractor in Indonesia with significant growth opportunities.
- MRC is expected to benefit from strategic divestments and market expansion.
- Thailand's food sector faces trade challenges, but some companies are performing well.
- Singapore's market is facing short-term challenges but has long-term growth potential in certain sectors.
Key Information
- CRG's net profit is expected to increase by 47% in 2015.
- WSKT's rights issue is projected to double its net income in 2015.
- BDI (Baltic Dry Index) has seen a 23.3% decline year-to-date.
- The EU has issued a yellow card against Thailand, affecting its trade relations.
- The document includes financial metrics and market performance for multiple countries and sectors.
