Regional Morning Notes Summary
Core Content
This document provides a comprehensive market analysis for the week of 07 October 2016, focusing on key stories and investment recommendations across several Asian markets, including Indonesia, China, Malaysia, Singapore, and Thailand. It also includes insights on corporate events, sector valuations, and financial performance of specific companies.
Key Stories
Indonesia
- Matahari Putra Prima (MPPA IJ) is initiated with a BUY recommendation.
- The stock is valued at >Rp300b in earnings power and is considered attractive at -0.5 SD P/B.
- Page 7 contains the detailed analysis.
China
- Market Strategy Update: Due to rising SHIBOR rates and concerns over real estate price increases, the document recommends increasing weighting of healthcare in the portfolio.
- Microport is added to the BUY list, replacing CR Land and KWG.
- Sunac and Poly Property are added to the SELL list due to high gearing and weak margins.
- The SHIBOR increase is attributed to the need for renminbi stability and reduced capital outflows.
- GDP growth for China is expected to remain at 6.5% in 2016 and 6.2% in 2017.
- Corporate bond yields and spreads are expected to stabilize, which could negatively impact the stock market if further easing is not achieved.
- The China Harmony New Energy Auto Holding Luncheon and Joy City Roadshow are highlighted as upcoming corporate events.
Malaysia
- Fraser & Neave Holdings (FNH MK) is given a HOLD recommendation.
- The company is viewed as a proxy for consumer plays due to its defensive business model and consumption-driven earnings.
- Page 10 contains the detailed analysis.
Singapore
- Sector Focus: Offshore & Marine.
- The document warns about the mirage of recovery in this sector, suggesting caution due to ongoing challenges.
- Page 13 contains the detailed analysis.
Thailand
- Bangkok Bank (BBL TB) is added to the BUY list with a target price of Bt212.00.
- 3Q16 results are expected to show steady operating performance, but net profit is likely to decline by 10% yoy due to lower investment gains.
- Thai Union Group (TU TB) is maintained on HOLD, with a target price of Bt23.00.
- 3Q16 earnings could increase marginally yoy.
- Page 16 and 19 contain the detailed analysis.
Key Indices (as of 07 October 2016)
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
18268.5 |
(0.1) |
0.7 |
(1.5) |
4.8 |
| S&P 500 |
2160.8 |
0.0 |
0.4 |
(1.2) |
5.7 |
| FTSE 100 |
7000.0 |
(0.5) |
1.2 |
2.5 |
12.1 |
| AS30 |
5564.8 |
0.5 |
0.1 |
0.8 |
4.1 |
| CSI 300 |
3253.3 |
0.3 |
(0.7) |
(1.8) |
(12.8) |
| FSSTI |
2885.2 |
0.1 |
(0.0) |
(0.3) |
0.1 |
| HSCEI |
9947.1 |
1.4 |
1.6 |
(0.2) |
3.0 |
| HSI |
23952.5 |
0.7 |
0.9 |
0.9 |
9.3 |
| JCI |
5409.3 |
(0.2) |
(0.4) |
0.5 |
17.8 |
| KLCI |
1666.7 |
0.2 |
0.1 |
(1.4) |
(1.5) |
| KOSPI |
2065.3 |
0.6 |
0.6 |
0.2 |
5.3 |
| Nikkei 225 |
16899.1 |
0.5 |
1.2 |
(0.7) |
(11.2) |
| SET |
1513.9 |
0.3 |
1.5 |
1.8 |
17.5 |
| TWSE |
9284.3 |
0.1 |
0.1 |
0.3 |
11.3 |
| BDI |
915 |
5.3 |
3.0 |
22.8 |
91.4 |
| CPO (RM/ml) |
2732 |
(0.4) |
(2.3) |
(5.6) |
24.2 |
| Brent Crude |
53 |
1.3 |
6.6 |
11.1 |
40.9 |
Top Picks (BUY)
| Name |
Ticker |
Current Price (HK$) |
Target Price (HK$) |
Upside (%) |
| Air China |
753 HK |
5.31 |
8.40 |
58.2 |
| Ping An Insurance |
2318 HK |
41.90 |
47.00 |
12.2 |
| Ciputra Property |
CTRP IJ |
640.00 |
960.00 |
50.0 |
| Indosat |
ISAT IJ |
6,350.00 |
9,500.00 |
49.6 |
| Genting Bhd |
GENT MK |
7.96 |
9.90 |
24.4 |
| City Dev |
CIT SP |
9.15 |
10.36 |
13.2 |
| OCBC |
OCBC SP |
8.69 |
10.30 |
18.5 |
| Bangkok Dusit |
BDMS TB |
22.40 |
31.00 |
38.4 |
| Siam Cement |
SCC TB |
522.00 |
645.00 |
23.6 |
SELL
| Name |
Ticker |
Current Price (HK$) |
Target Price (HK$) |
Upside (%) |
| Hartalega |
HART MK |
4.75 |
3.10 |
(34.7) |
Key Assumptions
GDP Growth (yoy)
| Country |
2015 |
2016F |
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 |
2.2 |
2.4 |
| 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 |
Commodity Prices
| Commodity |
2015 |
2016F |
2017F |
| Brent (Average) |
53.60 |
42 |
54 |
| CPO |
2,168 |
2,500 |
2,600 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| Singapore Banks, Singapore Telcos and ASEAN Banks Analyst Presentation |
Kuala Lumpur |
6 Oct |
7 Oct |
| Xtep International Holdings Roadshow |
Taipei |
7 Oct |
7 Oct |
| Xtep International Holdings Roadshow |
Kuala Lumpur |
15 Nov |
15 Nov |
| Asian Gems Conference 2016 |
Singapore |
11 Oct |
12 Oct |
| China Harmony New Energy Auto Holding Luncheon |
Hong Kong |
12 Oct |
12 Oct |
| Joy City Roadshow |
Shanghai |
13 Oct |
13 Oct |
| Nameson Holdings Luncheon |
Hong Kong |
13 Oct |
13 Oct |
| Metro Pacific Investments Roadshow |
Canada |
24 Nov |
25 Nov |
| KL Kepong Site Visit |
Malaysia |
25 Oct |
25 Oct |
Small/Mid Cap Highlights
Haichang Ocean Park (2255 HK)
- BUY recommendation is maintained.
- Target Price: HK$1.78.
- Upside: +9.9%.
- The park has been rated as "5A" by the National Tourism Administration.
- Laohutan Ocean Park and Discoveryland are the two main parks in Dalian.
- 3Q16 Results: Expect steady operating performance, with net profit likely to decline 10% yoy due to lower investment gains.
- Discoveryland is an amusement park with a variety of rides, while Laohutan Ocean Park features attractions like the Polar-Aquarium.
- Attendance has been relatively flat, but weather on the day of the visit affected the number of visitors.
- The company is expected to benefit from the launch of the SZ-HK Stock Connect and the opening of Shanghai and Sanya parks in 2018 and 2019 respectively.
Peer Comparison
| Company |
Ticker |
2015 PE |
2016F PE |
2017F PE |
2015 EV/EBITDA |
2016F EV/EBITDA |
2017F EV/EBITDA |
2015-18 CAGR (%) |
| Haichang Ocean Park |
2255 HK |
60.2 |
30.5 |
29.3 |
10.8 |
11.2 |
10.9 |
25.7 |
| Shenzhen Overseas |
000069 CH |
11.0 |
10.3 |
9.1 |
22.1 |
20.8 |
18.5 |
17.0 |
| Emei Shan Tourism |
000888 CH |
34.0 |
32.5 |
27.3 |
18.9 |
16.0 |
14.1 |
13.0 |
| Songcheng Performance |
300144 CH |
45.2 |
38.2 |
29.3 |
21.0 |
17.7 |
14.3 |
32.6 |
| Huangshan Tourism |
600054 CH |
37.1 |
32.2 |
27.8 |
37.7 |
44.0 |
42.5 |
21.4 |
| China CYTS Tours |
600138 CH |
33.1 |
30.6 |
27.0 |
14.0 |
12.9 |
11.5 |
30.7 |
| Dalian Sunasia |
600593 CH |
99.9 |
83.7 |
73.9 |
14.0 |
13.8 |
13.4 |
10.6 |
| China Peers' Average |
- |
43.4 |
37.9 |
32.4 |
22.1 |
20.8 |
18.5 |
20.9 |
| Seaworld |
SEAS US |
38.2 |
24.2 |
18.7 |
10.0 |
8.8 |
8.4 |
7.1 |
| Six Flags |
SIX US |
28.5 |
29.1 |
31.5 |
13.8 |
13.4 |
12.2 |
11.2 |
| Cedar Fair |
FUN US |
19.8 |
16.5 |
16.3 |
11.1 |
10.1 |
9.6 |
21.5 |
| Walt Disney |
DIS US |
15.9 |
16.0 |
15.2 |
9.9 |
9.7 |
9.4 |
5.6 |
| Merlin |
MER LN |
25.3 |
22.8 |
19.7 |
14.0 |
12.9 |
11.5 |
14.1 |
| Average |
- |
35.3 |
30.6 |
26.9 |
17.4 |
16.3 |
15.2 |
16.8 |
Risks
- Delay in the roll-out of the Shanghai and Sanya parks.
- Adverse weather could affect theme park visitations.
Analyst Contact
