Regional Morning Notes Summary - 29 August 2018
Core Content Overview
This document provides a summary of stock performance and company results for key firms in China, Indonesia, Malaysia, Singapore, and Thailand. It highlights strong earnings reports, valuation changes, and market outlooks, along with corporate events and financial metrics.
Main Points and Key Information
China
Angang Steel (347 HK)
- 1H18 Results: Net profit surged 91.9% yoy to Rmb3.5b, beating expectations due to higher sales volume and margin expansion across all steel products.
- 2Q18 Performance: Gross margin remained 15.5%, up 6.6ppt yoy, driven by strong medium and thick plates sales.
- Acquisition: Acquired Chaoyang Iron and Steel, adding 20m tonnes of capacity, expected to enhance earnings.
- Valuation: Raised target price to HK$9.23 from HK$8.74, with +20.4% upside.
- Key Metrics:
- Revenue: Rmb46.9b (up 20% yoy)
- Net profit margin: 7.5% (up 2.8ppt yoy)
- Net debt/(cash) to equity: 28.7%
- Risks: Lower steel ASP, lower sales volume, higher input costs, trade war, and domestic sector weakness.
Anhui Conch Cement (914 HK)
- 1H18 Results: Net profit up 92.4% yoy to Rmb13b, driven by higher cement and clinker ASP and improved cost control.
- Gross Margin: Expanded to 42.8%, up 11.8ppt yoy.
- Valuation: Maintained BUY with a new target price of HK$59.16.
- Market Cap: HK$236,912.6m (up 20% yoy).
- Outlook: Strong momentum expected to continue into 2019 due to tightened environmental standards and potential fiscal stimulus.
- Overseas Expansion: Sales volume up 56.4% yoy, although progress is slower than expected.
Indonesia
Perusahaan Gas Negara (PGAS IJ)
- Performance: Current price Rp2,060, with HOLD recommendation.
- Catalysts: Looking for new catalysts to re-rate the stock further.
Malaysia
ATA IMS (AIB MK)
- 1QFY19 Results: Sales up 37.6% yoy, net profit up 41.6% yoy, driven by new products for a key customer and lower tax rate.
Hong Leong Bank (HLBK MK)
- 4QFY18 Results: In line with expectations, with lower-than-expected credit costs and opex offsetting weak revenue trends.
IJM Corporation (IJM MK)
- 1QFY19 Results: Core net profit met expectations, driven by improved property earnings but offset by weaker performance in plantation and industry divisions.
Malaysia Airports Holdings (MAHB MK)
- 2Q18 Results: Earnings beat expectations, but greater regulatory risks noted.
Singapore
Health Management International (HMI SP)
- FY18 Results: Broadly in line with expectations, with solid execution, awaiting long-term prospects.
Thailand
Property Sector
- 2Q18 Results: Wrap-up of results, with a focus on the property market.
Key Indices
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
26064.0 |
0.1 |
0.9 |
2.4 |
5.4 |
| S&P 500 |
2897.5 |
0.0 |
1.2 |
2.8 |
8.4 |
| FTSE 100 |
7617.2 |
0.5 |
0.3 |
-1.1 |
-0.9 |
| AS30 |
6413.6 |
0.5 |
0.5 |
0.3 |
4.0 |
| CSI 300 |
3400.2 |
-0.2 |
2.2 |
-3.4 |
-15.6 |
| FSSTI |
3247.6 |
0.7 |
1.3 |
-2.3 |
-4.6 |
| HSI |
28351.6 |
0.3 |
2.2 |
-1.6 |
-5.2 |
| JCI |
6042.7 |
0.3 |
2.6 |
0.9 |
-4.9 |
| KLCI |
1826.9 |
0.8 |
2.2 |
3.3 |
1.7 |
| KOSPI |
2303.1 |
0.2 |
1.5 |
0.4 |
-6.7 |
| Nikkei 225 |
22813.5 |
0.1 |
2.7 |
0.4 |
0.2 |
| SET |
1718.2 |
0.1 |
1.4 |
1.0 |
-2.0 |
| BDI |
1697 |
-0.7 |
-1.7 |
1.3 |
24.2 |
| CPO (RM/ml) |
2172 |
-0.4 |
-1.3 |
0.9 |
-9.1 |
| Brent Crude |
76 |
-0.3 |
4.6 |
2.2 |
13.6 |
Top Picks (BUY)
| Company |
Ticker |
Current Price |
Target Price |
Potential Upside |
| Baoshan Iron & Steel |
600019 CH |
Rmb8.18 |
HK$9.53 |
16.5% |
| Gudang Garam |
GGRM LJ |
Rmb74,150.00 |
Rmb85,000.00 |
14.6% |
| PP Persero |
PTPP LJ |
Rmb1,880.00 |
Rmb3,700.00 |
96.8% |
| Bumi Armada |
BAB MK |
Rmb0.67 |
HK$1.06 |
58.2% |
| OCBC |
OCBC SP |
Rmb11.48 |
Rmb13.68 |
19.2% |
| SingTel |
ST SP |
Rmb3.21 |
Rmb3.98 |
24.0% |
| Siam Cement |
SCC TB |
Rmb452.00 |
Rmb530.00 |
17.3% |
Sell
| Company |
Ticker |
Current Price |
Target Price |
Potential Downside |
| Hartalega |
HART MK |
Rmb7.28 |
Rmb4.02 |
-44.8% |
Key Assumptions
| Country/Item |
2017 |
2018F |
2019F |
| GDP (yoy) |
3.6 |
2.8 |
3.0 |
| CPO (RM/mt) |
2,783 |
2,400 |
2,500 |
| Brent Crude (US$/bbl) |
55.00 |
67.00 |
66.50 |
Corporate Events
| Event |
Venue |
Date |
| Roadshow with China Traditional Chinese Medicine Holdings (570 HK) |
Shanghai |
30 Aug |
| Roadshow with Bright Scholar |
Singapore |
3 Sep |
| Education Holdings Limited (BEDU US) |
Kuala Lumpur |
4 Sep |
| Group Luncheon with Nexteer Automotive Group (1316 HK) |
Hong Kong |
11 Sep |
| UOB Kay Hian Asian Gems Conference |
Singapore |
9 Oct |
| UOB Kay Hian Annual Regional 1H2019 Strategy Conference |
Kuala Lumpur |
13 Nov |
Conclusion
The document outlines strong performance from Angang Steel and Anhui Conch Cement, with both companies expected to outperform in the coming quarters. It highlights the importance of environmental policies, market expansion, and cost control in driving profitability. In contrast, some companies such as Hartalega are flagged as potential sellers due to negative outlooks. The report also includes detailed financial metrics and valuation updates, along with a list of upcoming corporate events.
