Regional Morning Notes Summary
Core Content Overview
This document provides a summary of financial results and market analysis for several Asian markets and specific companies as of Friday, 30 January 2015. It includes results, target prices, key financial metrics, and investment recommendations for Alibaba Group (BABA US) and Sands China (1928 HK), alongside market indices and other regional insights.
Main Points and Key Information
China
Alibaba Group (BABA US)
- 3QFY15 Results: Mixed results with revenue slightly below consensus by 3%, but non-GAAP net profit exceeded expectations by 12%.
- Key Highlights:
- Revenue growth of 40% yoy and 56% qoq, reaching Rmb26,179m.
- Non-GAAP net profit reached Rmb13,115m, up 25% yoy and 93% qoq.
- Mobile GMV accounted for 30% of total revenue, up 448% yoy.
- Active buyers increased to 334m, up 9% qoq and 45% yoy.
- Mobile revenue accounted for 42% of GMV.
- Valuation:
- Current share price: US$89.00.
- Target price: US$103.00.
- Adjusted FY15-16 non-GAAP net profit forecasts by -7% and -5%.
- Recommendation: Maintain BUY.
- Market Catalysts:
- Progress in Ant Finance.
- Margin improvements.
- Higher monetisation rate.
Key Financials
- Net Profit (Non-GAAP): Rmb13,115m (3QFY15), up 93% qoq and 12% vs consensus.
- Operating Profit: Rmb9,347m, up 115% qoq and 6% yoy.
- Gross Margin: 71%, up from 67% in 2QFY15.
- EPS (fen): 580.5 (2014), 1,406.6 (2015F), 1,707.8 (2016F), 2,346.6 (2017F).
- PE Ratio (x): 105.9 (2014), 43.7 (2015F), 36.0 (2016F), 26.2 (2017F).
- ROE (%): 92 (2014), 32 (2015F), 23 (2016F), 25 (2017F).
- Net Debt/(Cash) to Equity (%): (23.7) (2014), (70.8) (2015F), (85.5) (2016F), (94.3) (2017F).
Market Indices
- DJIA: Prev Close: 17416.9, 1D: 1.3%, 1W: -2.2%, 1M: -3.4%, YTD: -2.3%.
- S&P 500: Prev Close: 2021.3, 1D: 1.0%, 1W: -2.0%, 1M: -3.3%, YTD: -1.8%.
- FTSE 100: Prev Close: 6810.6, 1D: -0.2%, 1W: 0.2%, 1M: 2.7%, YTD: 3.7%.
- AS30: Prev Close: 5532.2, 1D: 0.3%, 1W: 3.1%, 1M: 2.6%, YTD: 2.7%.
- CSI 300: Prev Close: 3481.8, 1D: -1.2%, 1W: -2.4%, 1M: 0.7%, YTD: -1.5%.
- FSSTI: Prev Close: 3419.1, 1D: 0.0%, 1W: 1.4%, 1M: 1.6%, YTD: 1.6%.
- HSCEI: Prev Close: 11736.1, 1D: -1.9%, 1W: -2.6%, 1M: -0.9%, YTD: -2.1%.
- HSI: Prev Close: 24595.9, 1D: -1.1%, 1W: 0.3%, 1M: 4.7%, YTD: 4.2%.
- JCI: Prev Close: 5262.7, 1D: -0.1%, 1W: 0.2%, 1M: 0.7%, YTD: 0.7%.
- KLCI: Prev Close: 1782.2, 1D: -0.8%, 1W: 0.0%, 1M: 0.9%, YTD: 1.2%.
- KOSPI: Prev Close: 1951.0, 1D: -0.5%, 1W: 1.6%, 1M: 1.8%, YTD: 1.8%.
- Nikkei 225: Prev Close: 17606.2, 1D: -1.1%, 1W: 1.6%, 1M: 0.9%, YTD: 0.9%.
- SET: Prev Close: 1586.4, 1D: -0.4%, 1W: 1.7%, 1M: 5.9%, YTD: 5.9%.
- TWSE: Prev Close: 9426.9, 1D: -0.9%, 1W: 0.6%, 1M: 1.7%, YTD: 1.3%.
- BDI: Prev Close: 632, 1D: -5.1%, 1W: -15.8%, 1M: -19.2%, YTD: -19.2%.
- CPO (RM/mt): Prev Close: 2198, 1D: 1.4%, 1W: -5.5%, 1M: -1.3%, YTD: -4.3%.
- Nymex Crude (US$/bbl): Prev Close: 45, 1D: 0.2%, 1W: -3.8%, 1M: -16.9%, YTD: -16.4%.
Hong Kong
Sands China (1928 HK)
- 4Q14 Results: Below expectations due to margin pressure, but the stock remains a BUY based on attractive yield and strategic positioning.
- Key Highlights:
- Net revenue declined by 9% qoq to US$2,097m.
- Property EBITDA dropped by 12.1% qoq to US$711.2m.
- VIP, mass market, and slots segments all declined yoy.
- Management noted that the smoking ban and visa tightening impacted the gaming market.
- Valuation:
- Current share price: HK$39.20.
- Target price: HK$48.80.
- Upside: +24.5%.
- Recommendation: Maintain BUY.
Key Financials
- Net Profit (Rep./Act.): US$1,236m (2014), US$2,201m (2015F), US$2,470m (2016F).
- EBITDA: US$1,913m (2012), US$2,827m (2013), US$3,171m (2014F), US$2,817m (2015F), US$3,318m (2016F).
- EPS (US$ cent): 15.3 (2012), 27.5 (2013), 32.0 (2015F), 27.3 (2015F), 30.6 (2016F).
- PE (x): 32.9 (2012), 18.4 (2013), 15.8 (2015F), 18.5 (2015F), 16.5 (2016F).
- ROE (%): 20.9 (2012), 36.8 (2013), 39.6 (2014F), 34.1 (2015F), 39.7 (2016F).
- Dividend Yield (%): 3.4 (2012), 6.4 (2013), 5.9 (2015F), 7.5 (2015F), 7.9 (2016F).
Malaysia
- Bursa Malaysia (BURSA MK):
- Recommendation: HOLD.
- Share Price: RM8.21.
- Target Price: RM7.90.
- 4Q14 Results: Marginally ahead of expectations due to lower-than-expected effective tax rate.
- Volume and Value: Down by 19.6% and 12.5% respectively from 4Q14, indicating a slowdown.
Singapore
SMRT Corporation (MRT SP)
- Recommendation: HOLD.
- Share Price: S$1.73.
- Target Price: S$1.73.
- Notes: Still fairly valued despite improvement in earnings.
Venture Corporation (VMS SP)
- Recommendation: BUY.
- Share Price: S$8.14.
- Target Price: S$8.75.
- Notes: Growing and differentiating despite adversity.
Wilmar International (WIL SP)
- Recommendation: HOLD.
- Share Price: S$3.28.
- Target Price: S$3.55.
- Notes: 4Q14 preview: On track to deliver net profit of US$300m-350m or full-year profit of US$1.1b. Better performance to come from sugar merchandising and consumer pack.
Thailand
PTT Exploration & Production (PTTEP TB)
- Recommendation: HOLD.
- Share Price: Bt106.50.
- Target Price: Bt120.00.
- Notes: 4Q14 earnings worse than expected, but already priced in.
Advanced Info Service (ADVANC TB)
- Recommendation: BUY.
- Share Price: Bt251.00.
- Target Price: Bt270.00.
- Notes: Key takeaways from AIS Vision event.
Bangchak Petroleum (BCP TB)
- Recommendation: BUY.
- Share Price: Bt34.00.
- Target Price: Bt42.75.
- Notes: 4Q14 results preview: Earnings to stand out among Thai refineries.
Top Picks (BUY)
| Company |
Ticker |
Price (Icy) |
Target Price (Icy) |
Upside |
| Sunac China |
1918 HK |
6.94 |
9.29 |
33.9% |
| ICBC |
1398 HK |
5.60 |
6.90 |
23.2% |
| Bank Mandiri |
BMRI LJ |
10,975.00 |
12,500.00 |
13.9% |
| Ijm Corp |
IJM MK |
6.84 |
7.60 |
11.1% |
| DBS |
DBS SP |
19.96 |
22.68 |
13.6% |
| Pacific Radiance |
PACRA SP |
0.78 |
1.00 |
29.0% |
| Krung Thai Bank |
KTB TB |
23.00 |
29.00 |
26.1% |
| Sino Thai Engr |
STEC TB |
25.75 |
30.25 |
17.5% |
Key Assumptions
| Region |
GDP (yoy) 2013 |
GDP (yoy) 2014 |
GDP (yoy) 2015F |
| US |
1.9% |
2.7% |
3.2% |
| Euro Zone |
-0.4% |
0.9% |
1.4% |
| Japan |
1.5% |
1.5% |
2.0% |
| Singapore |
3.9% |
3.2% |
3.3% |
| Malaysia |
4.7% |
5.9% |
5.2% |
| Thailand |
2.9% |
1.5% |
3.9% |
| Indonesia |
5.8% |
5.2% |
5.8% |
| Hong Kong |
2.9% |
3.5% |
3.7% |
| China |
7.7% |
7.2% |
7.0% |
Commodity Prices
| Commodity |
2014 (US$/bbl or US$/ml) |
2015F |
2016F |
| Brent |
99.45 |
65 |
70 |
| CPO |
722 |
765 |
788 |
| BDI |
1,101 |
1,300 |
1,400 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| Malaysia 1H15 Strategy Analyst Presentation |
Singapore |
29 Jan |
30 Jan |
| China 1H15 Market Strategy Analyst Presentation |
Taipei |
29 Jan |
30 Jan |
| Singapore and Indonesia Telecommunications Sectors Analyst Presentation |
Singapore |
4 Feb |
4 Feb |
| Singapore and Indonesia Telecommunications Sectors Analyst Presentation |
Singapore |
6 Feb |
6 Feb |
| Oil & Gas Sector Analyst Presentation |
Hong Kong |
5 Feb |
6 Feb |
Analyst Notes
- Alibaba Group: Nicky Ge, UOB Kay Hian.
- Sands China: Victor Yip, UOB Kay Hian.
Summary of Key Insights
- Alibaba Group reported mixed results with revenue below expectations but non-GAAP net profit above. The market over-reacted, and the company remains a BUY due to strong long-term growth potential.
- Sands China faced margin pressure in 4Q14 but maintains a BUY due to its high dividend yield and strategic positioning.
- Malaysia's Bursa Malaysia saw results slightly ahead of expectations but signs of a slowdown in 4Q14.
- Singapore companies like Venture Corporation and Wilmar International showed growth despite challenges.
- Thailand had mixed results, with PTT and Bangchak showing potential for better performance.
- Market indices showed varied performance, with some regions like Singapore and Malaysia showing positive growth.
- Corporate events and analyst presentations are scheduled for early February, focusing on strategy and performance.
