20151030-大华继显-Regional_Morning_Notes_49页_2mb

Regional Morning Notes Summary - 30 October 2015

Core Content Overview

This document provides a comprehensive summary of the financial performance and economic outlook for various markets in Asia, with a focus on China, Indonesia, Malaysia, and Singapore. It includes company results, economic policy updates, sector analysis, and key financial metrics.

Main Points

China

• Economic Policy: The Communist Party of China's 5th Plenum outlined a new development model emphasizing innovation, coordination, green growth, openness, and shared benefits. The goal is to achieve a "moderately prosperous society" by 2020, targeting an average GDP growth of 6.5%.
• Population Policy: The two-child policy was introduced to address the aging population, though its impact on labor supply is expected to be marginal until 2030.
• Property Sector: Property management services are a rising business with a promising outlook. The market is fragmented, and the industry is expected to grow significantly.
• Company Results:
  • BBMG Corporation (2009 HK): 9M15 core net profit declined by 46% yoy, but property sales recognition is expected to improve in 4Q15. The company is expected to see a lower rate of decline in earnings compared to pure cement players.
  • China Construction Bank (939 HK): 3Q15 results were in line with expectations, with an upside surprise on net interest margin (NIM).
  • China General Nuclear Corp (1816 HK): 9M15 net profit increased by 19.4% yoy.
  • China Merchants Bank (3968 HK): 3Q15 core earnings grew strongly, though asset quality remains a concern.
  • MGM China (2282 HK): 3Q15 results slightly missed expectations, but MGM Cotai is expected to open in late-4Q16.
• Sector Picks:
  • Large-cap picks: COLI (688 HK), Vanke (2202 HK), CRL (1109 HK).
  • Key Financials: Colour Life (1778 HK) and COPH (2669 HK) are compared, highlighting differences in business models and financial performance. Colour Life has a more innovative approach and higher gross profit margins, while COPH has a more traditional business model with stable financials.

Indonesia

• AKR Corporindo (AKRA IJ): 9M15 net profit rose by 46% yoy, in line with expectations. Maintained BUY with a target price of Rp6,800.
• Jasa Marga (JSMR IJ): 9M15 net profit was Rp961b, down 9% yoy and 14% qoq, but 4Q15 earnings are expected to improve due to higher toll tariffs.
• Logindo Samudramakmur (LEAD IJ): 3Q15 reported a smaller quarterly loss, with improved prospects in 4Q15. Earnings forecasts were cut by 12-38%, and the target price was lowered to Rp250.
• Semen Indonesia (SMGR IJ): 9M15 net profit was Rp3.4t, down 16% yoy, but the company is expected to benefit from future infrastructure projects. Maintained BUY with a target price of Rp12,250.
• XL Axiata (EXCL IJ): 3Q15 showed gradual improvements from the 3R transformation. Upgraded to BUY.

Malaysia

• Tenaga Nasional (TNB MK): 4QFY15 core net profit was in line with expectations. Maintained BUY with a target price of RM15.30.

Singapore

• REITs: 3Q15 hospitality REITs results were mixed.
• Sembcorp Industries (SCI SP): 3Q15 results highlighted the shift from marine to utilities.

Key Indices

Top Picks

Key Assumptions

Corporate Events

Financial Ratios Comparison

Market Weight

• Maintained: Market weight for property management services in China.

Key Financial Trends

• Property Management Services: The industry is growing, with a fragmented market and potential for consolidation.
• BBMG Corporation: Despite a decline in core net profit, the company's property sales are expected to improve in 4Q15, and the integration with BTH is crucial for future growth.

Analysts

• Chaoping Zhu: Responsible for the China section.
• Edison Bian: UOB Kay Hian Analyst.
• David Yang: UOB Kay Hian Analyst.
• Johnson Hu: Responsible for BBMG Corporation analysis.

Conclusion

The document highlights the economic and sectoral developments in China, Indonesia, Malaysia, and Singapore, with a focus on property management services and key financial metrics. It provides detailed insights into the performance of major companies, economic policy changes, and future growth expectations.