20140905-大华继显-Regional_Morning_Notes_20页_1mb

报告摘要

Regional Morning Notes Summary - 05 September 2014

Core Content Overview

This document provides a comprehensive market analysis and investment recommendations for the Asia-Pacific region, with a focus on China, Indonesia, Malaysia, Singapore, and Thailand. It outlines macroeconomic trends, sector-specific insights, and key stock recommendations for the period of September 2014.

Main Points

China: The Case for Further Monetary Easing

Macroeconomic Outlook: Recent data suggests the Chinese economy is still facing challenges. Despite a 7% rally in the MSCI China index since mid-July, the PMI (Purchasing Managers' Index) declined in August, indicating a broader-based slowdown in industrial activities.
Inflation and Funding Costs: Inflation remains benign at 2.3% yoy, and high funding costs provide room for further monetary easing.
Monetary Policy: The PBoC has implemented targeted RRR reductions and extended loans to policy and small-to-mid-sized banks, but the impact has been muted.
Banking Sector: The banking sector is expected to benefit from further monetary easing, with a preference for large banks due to better asset quality and earnings visibility. Mid-sized banks are at higher risk due to rising NPLs (Non-Performing Loans) from MSE (Micro and Small Enterprise) loans.
Top Picks: ICBC and CMB are recommended as top picks due to their strong asset quality and potential for growth. Property developers and mid-sized banks are also highlighted as key beneficiaries.
Valuation: The MSCI China index is trading at 9.9x 12-month forward PE, suggesting potential for further upside.

Indonesia: Wijaya Karya (WIKA IJ)

Growth Potential: The company is expected to benefit from growth in its subsidiaries, Wika Beton, Wika Realty, and Wika Bitumen.
Recommendation: Maintained as an attractive investment due to growth opportunities.

Malaysia: Oil & Gas

Performance: Mixed results in 1H14, but improved expectations for 2H14.
Recommendation: Maintain OVERWEIGHT.

Singapore: REITs

Yield Analysis: The report compares gearing-adjusted yields to level the playing field for investors.
Recommendation: Maintain OVERWEIGHT for REITs.

Thailand: Diamond Building Products (DRT TB/BUY/Bt6.20/Target: Bt8.00)

Growth Prospects: Focus on positioning for growth beyond this year.
Recommendation: Maintain BUY with a 29% price upside and 6–7% annual yield.

Key Information

Key Indices

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	17069.6	(0.1)	(0.3)	3.0	3.0
S&P 500	1997.7	(0.2)	(0.1)	3.0	8.1
FTSE 100	6878.0	0.1	1.1	3.0	1.9
AS30	5632.1	(0.4)	0.2	2.2	5.2
CSI 300	2426.2	0.7	5.0	2.4	4.1
FSSTI	3346.3	(0.1)	0.5	0.6	5.6
HSCEI	11386.4	0.7	4.2	3.4	5.3
HSI	25297.9	(0.1)	2.3	2.6	8.5
JCI	5205.3	(0.4)	0.4	1.9	21.8
KLCI	1869.2	0.2	(0.2)	(0.4)	0.1
KOSPI	2056.3	0.2	(0.9)	(0.5)	2.2
Nikkei 225	15676.2	(0.3)	1.4	2.3	(3.8)
SET	1579.7	(0.2)	1.3	3.3	21.6
TWSE	9428.9	(0.2)	(0.5)	3.1	9.5
BDI	1147	0.4	2.5	52.3	(49.6)
CPO (RM/mt)	1983	2.1	(1.9)	(15.6)	(22.9)
Nymex Crude	95	0.1	(0.1)	(3.0)	(4.0)

Top Picks

Company	Ticker	Current Price (HK$)	Target Price (HK$)	Potential Upside (%)
CNBM	3323 HK	7.71	7.54	(2.2)
ICBC	1398 HK	5.30	6.15	16.0
Bank Mandiri	BMRI IJ	10,550.00	10,800.00	2.4
Gamuda	GAM MK	4.79	5.60	16.9
DBS	DBS SP	18.18	22.68	24.8
Pacific Radiance	PACRA SP	1.48	1.76	19.3
Bangkok Bank	BBL TB	211.00	237.00	12.3
PTT	PTT TB	331.00	360.00	8.8

Key Assumptions

Country	GDP (%yoy) 2013	GDP (%yoy) 2014F	GDP (%yoy) 2015F
US	1.9	3.0	3.0
Euro Zone	-0.4	1.0	1.4
Japan	1.5	2.1	2.0
Singapore	3.9	4.2	4.2
Malaysia	4.7	5.6	5.2
Thailand	2.9	1.5	5.1
Indonesia	5.8	5.5	6.0
Hong Kong	2.9	3.5	3.7
China	7.7	7.3	7.3

Sector Updates

Banking - China

Performance: Banks' 1H14 results were mostly in line with expectations, but asset quality and capital position are key differentiators.
Asset Quality: Large banks like ICBC and CCB showed better asset quality trends, with lower NPLs and better NPL coverage ratios. Mid-sized banks like CMB and Minsheng had higher NPLs, especially from MSE loans.
Equity Fund-Raising: Equity fund-raising is unlikely in the near term, with preference for issuing preference shares. However, this is not considered core tier-1 capital, posing medium-term risks for banks like Minsheng and ABC.
Top Picks: ICBC and CMB are recommended as top picks. Maintain MARKET WEIGHT.

Coal - China

Price Recovery: Coal prices are expected to recover in 4Q14 due to production cuts, slowing imports, and increased demand from power and cement plants.
Supply Disruption: Seasonal restocking by IPPs and Daqin railway maintenance will support the price recovery.
Recommendation: Maintain MARKET WEIGHT. Top pick is China Coal.

Analysts

Tham Mun Hon: UOB Kay Hian Analyst
Contact: +852 2236-6799 | munhon.tham@uobkayhian.com.hk
Edmond Law: UOB Kay Hian Analyst
Contact: +852 2826 4837 | edmond.law@uobkayhian.com.hk
Terrance Liu: UOB Kay Hian Analyst
Contact: +852 2826 1351 | Terrance.liu@uobkayhian.com.hk

Conclusion

The report highlights the need for continued monetary easing in China due to weak macroeconomic data and benign inflation. It recommends a bar-bell strategy, focusing on property developers and mid-sized banks as key beneficiaries. The banking sector is emphasized, with large banks like ICBC and CMB showing stronger asset quality and earnings visibility. Coal prices are expected to recover in 4Q14, and REITs in Singapore and Oil & Gas in Malaysia are also recommended. The document underscores the importance of monitoring macroeconomic indicators and maintaining a diversified approach to mitigate risks.

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