Regional Morning Notes Summary - 01 August 2014
Core Content
This document provides an overview of stock performance, company results, and market outlook for various regions, including China, Hong Kong, Malaysia, Singapore, and Thailand, as well as key indices and corporate events for the period.
Main Points by Region
China
- China Overseas Grand Oceans (81 HK)
- 1H14 Results: Core net profit fell by 21.6% yoy due to weaker sales and lower margins, but the stock has shown recovery.
- Performance: Revenue declined by 1.4% yoy, and gross profit dropped by 12.7% yoy.
- Key Metrics: Gross margin weakened to 29.0% from 33.0%, and net gearing ratio increased to 72.7%.
- Recommendation: Maintain HOLD with a target price of HK$6.90.
- Outlook: Sales recovery and more relaxed housing purchase policies in second and third-tier cities are key for future performance.
Hong Kong
- Cheung Kong Holdings (1 HK)
- 1H14 Results: No surprises, with good contract sales continuing.
- Recommendation: BUY with a target price of HK$167.10.
- Hang Lung Properties (101 HK)
- 1H14 Results: Profit exceeded expectations, but the China retail sales outlook remains crucial.
- Recommendation: HOLD with a target price of HK$25.35.
Malaysia
- Banking Sector: Loan growth reached 9.3% yoy in June, while deposit growth remained weak.
- CIMB Group (CIMB MK)
- Recommendation: HOLD with a target price of RM7.18.
- Overall Outlook: A downbeat sentiment for the rest of 2014 due to challenges in Indonesia and weak capital markets.
Singapore
- Ezion Holdings (EZI SP)
- 2Q14 Results: Strong performance with no signs of slowing down.
- Recommendation: BUY with a target price of S$2.62.
- United Overseas Bank (UOB SP)
- 2Q14 Results: Muted fee income and an uptick in NPL ratio.
- Rating: NOT RATED.
Thailand
- PTT (PTT TB)
- 2Q14 Outlook: Expected to post strong earnings.
- Recommendation: BUY with a target price of Bt360.00.
Key Indices
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
16563.3 |
(1.9) |
(3.0) |
(1.6) |
(0.1) |
| S&P 500 |
1930.7 |
(2.0) |
(2.9) |
(1.5) |
4.5 |
| FTSE 100 |
6730.1 |
(0.6) |
(1.3) |
(0.2) |
(0.3) |
| AS30 |
5623.1 |
0.1 |
0.8 |
4.8 |
5.0 |
| CSI 300 |
2350.3 |
1.2 |
5.1 |
8.6 |
0.9 |
| FSSTI |
3374.1 |
0.6 |
1.0 |
4.1 |
6.5 |
| HSCEI |
11130.2 |
0.1 |
1.7 |
7.7 |
2.9 |
| HSI |
24756.9 |
0.1 |
2.5 |
6.8 |
6.2 |
| JCI |
5088.8 |
(0.2) |
0.0 |
5.0 |
19.1 |
| KLCI |
1871.4 |
(0.4) |
0.0 |
(0.4) |
0.2 |
| KOSPI |
2076.1 |
(0.3) |
2.4 |
3.9 |
3.2 |
| Nikkei 225 |
15620.8 |
(0.2) |
2.2 |
1.9 |
(4.1) |
| SET |
1502.4 |
(1.1) |
(2.7) |
1.1 |
15.7 |
| TWSE |
9315.9 |
(1.4) |
(2.2) |
(1.3) |
8.2 |
| BDI |
755 |
0.1 |
3.1 |
(11.2) |
(66.8) |
| CPO (RM/mt) |
2346 |
0.0 |
0.2 |
(5.6) |
(8.8) |
| Nymex Crude (US$/bbl) |
98 |
(0.4) |
(4.2) |
(7.2) |
(0.7) |
Top Picks
| Company |
Ticker |
Current Price |
Target Price |
Potential Upside |
| China Overseas Grand Oceans |
3323 HK |
7.80 |
9.82 |
25.9% |
| ICBC |
1398 HK |
5.33 |
6.15 |
15.4% |
| Bank Mandiri |
BMRI J |
10,250.00 |
10,800.00 |
5.4% |
| Gamuda |
GAM MK |
4.78 |
5.60 |
17.2% |
| DBS |
DBS SP |
18.22 |
22.60 |
24.0% |
| Pacific Radiance |
PACRA SP |
1.39 |
1.55 |
11.5% |
| Bangkok Bank |
BBL TB |
195.00 |
237.00 |
21.5% |
| PTT |
PTT TB |
319.00 |
361.00 |
13.2% |
| Company |
Ticker |
Current Price |
Target Price |
Potential Upside |
| UMWH Holdings |
UMWH MK |
11.70 |
10.00 |
(14.5)% |
Key Assumptions
| Region |
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 |
| Commodity |
Brent (US$/bbl) 2013 |
Brent (US$/bbl) 2014F |
Brent (US$/bbl) 2015F |
| Aluminium |
1,886 |
1,713 |
1,650 |
| Copper |
7,349 |
6,866 |
6,850 |
| Gold |
1,411 |
1,321 |
1,400 |
| Iron Ore |
135 |
103 |
95 |
| CPO |
736 |
858 |
858 |
| BDI |
1,219 |
1,500 |
1,800 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| Greater China 2H14 Market Strategy Analyst Presentation |
Hong Kong |
31 Jul |
1 Aug |
| Greater China 2H14 Market Strategy Analyst Presentation |
Singapore |
5 Aug |
5 Aug |
| Greater China 2H14 Market Strategy Analyst Presentation |
Kuala Lumpur |
6 Aug |
7 Aug |
| Greater China 2H14 Market Strategy Analyst Presentation |
Taipei |
11 Aug |
12 Aug |
| Thailand 2H14 Market Strategy & Property Sector Analyst Presentation |
Kuala Lumpur |
4 Aug |
5 Aug |
| Bumitama Agri Corporate Luncheon |
Singapore |
13 Aug |
13 Aug |
| Top Glove Corporate Roadshow |
Montreal |
2 Sep |
2 Sep |
Summary of Key Financials and Outlook
China Overseas Grand Oceans (81 HK)
- 1H14 Performance: Net profit fell 31.3% yoy, with core net profit down 21.6%.
- Gross Margin: Dropped to 29.0% from 33.0% due to lower sales from Beijing and price cuts in low-tier cities.
- Net Gearing Ratio: Increased to 72.7% from 47.8%, with plans to bring it back to 50-60% by end-2014.
- Sales Target: Revised from HK$23b to HK$18b for 2014 due to weaker sales in third-tier cities.
- Valuation: Target price upgraded to HK$6.90, with a 50% NAV discount.
Pacific Basin Shipping (2343 HK)
- 1H14 Performance: Net loss of US$90.7m, driven by US$63m impairment loss and provision for offshore business.
- Dry Bulk Loss: US$6.5m in 1H14, with handymax fleet suffering a net loss of US$10.7m.
- Fleet Expansion: Slowed in 2014, but vessels purchased in the last two years will support future growth.
- Market Outlook: Expected recovery in handysize and handymax markets from 2H14.
- Valuation: Maintain HOLD with a target price of HK$5.14 based on 1.0x 2014F P/B.
Conclusion
- The document highlights the mixed performance of companies across different regions, with China Overseas Grand Oceans showing signs of recovery and Pacific Basin Shipping experiencing net losses.
- The overall market sentiment is cautiously optimistic, with potential for recovery in certain sectors and a focus on sales performance and policy changes.
- Key financial metrics and valuation assumptions are provided to support investment decisions.
