20161214-大华继显-Regional_Morning_Notes_18页_1021kb

Regional Morning Notes Summary

Core Content Overview

This document provides a regional market analysis and investment recommendations for various countries, focusing on economic activity, sector performance, and stock evaluations. It highlights key financial data, potential risks, and company-specific updates across China, Indonesia, Malaysia, and Singapore, with a particular emphasis on the automotive and property sectors in China and Indonesia.

Main Points by Region

China

• Economic Activity:
  • Continued recovery in November 2016, but signs of a slowdown are evident.
  • Fixed Asset Investment (FAI) growth remained stable, driven by infrastructure and public services, with a 23.5% yoy increase.
  • Property investment growth slowed slightly to 6.5% yoy, which could pressure FAI growth in the coming months.
  • Industrial Production (IP) growth rebounded to 6.2% yoy, mainly due to strong auto output.
  • Retail sales increased by 10.8% yoy, with auto, electronics, and appliances driving growth.
• Automotive Sector:
  • Currency risk is manageable; a 5% depreciation of the RMB would lead to limited forex losses.
  • Geely, BAIC, and GAC are top picks with BUY ratings, while GWM is recommended for SELL.
  • RMB depreciation is expected to impact forex performance, but not enough to change overall ratings.
  • GWM is vulnerable to competition in the SUV segment and may face losses due to its new high-end brand.
• Key Indices:
  • The CSI 300 and HSI showed slight declines in some periods, while the DJIA and S&P 500 showed positive trends.
• Corporate Events:
  • China Healthcare Sector Analyst event in Singapore on 16 Jan 2017.
  • SGX-UOB Kay Hian Corporate Day in Taipei on 21 Feb 2017.
  • UOB Kay Hian ASEAN Conference in Taipei on 22 Feb 2017.

Indonesia

• Alam Sutera Realty (ASRI IJ):
  • Re-initiated coverage with a BUY rating.
  • Target price: Rp430, with an upside of +12.6%.
  • 2017 marketing sales are expected to be driven by a Rp2t office building sale in Jakarta.
  • 2016 marketing sales were reduced to Rp3.1t from the initial target of Rp5.0t.
  • ASPs in Serpong and Pasar Kemis remain flat.
  • Expected higher recurring income from Bali's GWK space starting in 2017.
• Key Financials:
  • 2016F net profit forecast reduced to Rp727b.
  • EBITDA and operating profit declined in 2016F.
  • PE ratio rose to 9.4 in 2017F, while P/B dropped to 0.6.
  • Dividend yield and net margin improved slightly in 2016F.

Malaysia

• Property Sector:
  • Chinese restrictions on real estate deals in Malaysia are unlikely to significantly impact local developers due to over-coverage.
  • Property developers are expected to remain resilient despite external pressures.

Singapore

• Sembcorp Industries (SCI SP):
  • BUY rating with a target price of S$3.20.
  • Utilities segment is under-appreciated despite a rising share price.

Thailand

• Ticon Industrial Connection (TICON TB):
  • SELL rating with a target price of Bt11.40.
  • EGM regarding capital increase for FPHT will be held next week.
  • Financial position may improve, but synergistic impact will take time to materialize.

Key Assumptions

• Brent Crude (Average): Expected to decrease from 53.60 in 2015 to 42 in 2016F, then increase to 56 in 2017F.
• CPO (RM/mt): Expected to increase from 2,168 in 2015 to 2,500 in 2016F, then to 2,600 in 2017F.

Top Picks Summary

Key Risks

• Currency Risk: A larger-than-expected RMB depreciation could reduce earnings for companies with foreign currency exposure.
• Property Sector Slowdown: Potential slowdown in property investment may pressure FAI growth.
• Auto Sales Decline: Auto sales may cool down after the tax reduction policy ends in 2017.

Conclusion

The report outlines a cautiously optimistic outlook for the Chinese economy, with continued recovery in key sectors but signs of a slowdown in property investment. It highlights the importance of the automotive and property sectors, with several top picks and sell recommendations. In Indonesia, Alam Sutera Realty is re-initiated with a BUY rating, while in Thailand, Ticon Industrial Connection is recommended for SELL. The report also includes key financial data and assumptions for various markets and companies, along with potential corporate events and their impact on market dynamics.