20170111-大华继显-Regional_Morning_Notes_21页_1mb

报告摘要

Regional Morning Notes Summary - 11 January 2017

Core Content Overview

This document provides a comprehensive analysis of economic and market conditions across several Asian countries and highlights key corporate updates and investment recommendations. It focuses on China, Indonesia, Malaysia, Singapore, and Thailand, offering insights into inflation trends, stock performance, corporate events, and sector-specific developments.

China

Economic Highlights

CPI Inflation: Moderated to 2.1% yoy in December 2016, driven by declining food inflation (from 4.0% to 2.4%), although rental and service inflation remained strong.
PPI Inflation: Surged to 5.5% yoy, with upstream sectors (coal, steel, non-ferrous metals, etc.) being the main contributors.
Inflation Outlook: Expected to remain elevated in Q1 2017, with the PBOC likely to maintain a neutral monetary policy and avoid further easing due to concerns over asset bubbles and domestic property market cooling.
Real Interest Rates: Both manufacturers and consumers face negative real interest rates, indicating a loose monetary environment.

Corporate Update: China TCM (570 HK)

Company Overview: Produces and sells traditional Chinese medicine (TCM), with production bases in Foshan, Jining, Guiyang, Anhui, and Qinghai.
Performance: Completed channel destocking, with finished drugs revenue expected to decline by 25% yoy in 2016, but recovery anticipated in 2017.
Segment Growth: The TCM granules segment is expected to maintain a 20% sales CAGR in 2016-18, supported by zero markup policy and exclusive pricing power.
Earnings Forecast: Net profit is forecasted to grow from Rmb621.7m (2016F) to Rmb1,401.2m (2018F), with EPS CAGR of 22.0% expected for 2016-18.
Valuation: Maintained BUY recommendation with a target price of HK$5.00, based on 16.5x 2017F PE, slightly below the average of Hong Kong-listed pharmas.
Dividend Yield: Expected to increase to 3.8% in 2017.
Key Risks: Margin contraction in finished drugs due to channel destocking; potential asset injections and acquisitions in 2017.

Indonesia

Company Highlight: Timah (TINS IJ), the second-largest tin producer in the world, is expected to report better earnings in 2016-17.
Reasons for Improvement:
- Technological investments in offshore mining to improve efficiency.
- Stable tin prices due to high demand.
- Development of downstream businesses to diversify revenue streams.

Malaysia

Sector Insight: Plantation sector saw inventory levels drop to 1.67m tonnes in December 2016, down 36.8% yoy due to weak production.
CPO Outlook: Expected CPO production of 19.5m-20.0m tonnes and CPO ASP of RM2,600/tonne in 2017.
Corporate Events:
- Luncheon with CREC Malaysia and Titijaya Land on 16 Jan.
- China Healthcare Sector Analyst Marketing events in Singapore and Malaysia (16-18 Jan).
- Annual Heineken-UOB Kay Hian Corporate Networking on 19 Jan.
- PTT Exploration and Production Roadshow in Singapore (6-7 Feb).
- SGX-UOB Kay Hian Corporate Day in Taipei (21 Feb).
- UOB Kay Hian ASEAN Conference in Taipei (22 Feb).

Singapore

Sector Insight: Aviation sector faces lacklustre prospects, with forward capacity growth suggesting weak demand for companies like SATS and SIAEC.

Thailand

Company Highlight: Khon Kaen Sugar Industry (KSL TB) reported robust earnings in 4QFY16 due to large one-off gains.
PTT Exploration & Production (PTTEP TB): Expected to benefit from sustainable high crude prices and potential M&A deals.

Key Indices

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	19855.5	-0.2	-0.1	0.5	0.5
S&P 500	2268.9	0.0	0.5	0.4	1.3
FTSE 100	7275.5	0.5	1.4	4.6	1.9
AS30	5813.0	-0.8	0.5	3.5	1.6
CSI 300	3358.3	-0.2	0.5	-3.9	1.5
FSSTI	3006.0	0.8	3.7	1.7	4.3
HSCEI	9664.2	0.6	2.2	-2.1	2.9
HSI	22744.9	0.8	2.7	-0.1	3.4
JCI	5309.9	-0.1	0.6	0.0	0.2
KLCI	1672.1	0.2	2.2	1.9	1.8
KOSPI	2045.1	-0.2	0.1	1.0	0.9
TWSE	9349.6	0.1	0.8	-0.5	1.0
BDI	949	-1.5	-0.4	-12.9	-1.2
CPO	3242	0.9	1.3	1.8	1.3
Brent Crude	54	-2.4	-3.3	-1.3	-5.6

Top Picks

Company	Ticker	Current Price	Target Price	Upside (%)
Air China	753 HK	HK$5.18	HK$6.50	25.5
Ping An Insurance	2318 HK	HK$39.80	HK$47.00	18.1
Ciputra Property	CTRP LJ	Rmb700.00	Rmb960.00	37.1
Indosat	ISAT IJ	Rmb6,050.00	Rmb8,015.00	32.5
Genting Bhd	GENT MK	Rmb8.21	Rmb10.15	23.6
City Dev	CIT SP	Rmb8.64	Rmb10.36	19.9
OCBC	OCBC SP	Rmb9.35	Rmb10.65	13.9
Bangkok Dusit	BDMS TB	Rmb22.50	Rmb31.20	38.7
Siam Cement	SCC TB	Rmb498.00	Rmb645.00	29.5

Sell: Hartalega (HART MK), with a potential downside of -30.8%.

Key Assumptions

Country	GDP (2015)	GDP (2016F)	GDP (2017F)
US	2.6	1.7	2.7
Euro Zone	2.0	1.6	1.1
Japan	1.2	0.8	0.9
Singapore	2.0	1.4	1.8
Malaysia	5.0	4.2	4.5
Thailand	2.8	3.2	3.3
Indonesia	4.8	5.0	5.2
Hong Kong	2.4	2.1	1.8
China	6.9	6.5	6.2

Brent Crude (US$/bbl): 53.60 (2015), 42 (2016F), 56 (2017F)
CPO (RM/mt): 2,168 (2015), 2,500 (2016F), 2,600 (2017F)

Conclusion

The document outlines a mixed outlook for the region, with China and Malaysia showing moderate to strong growth potential, while Singapore and Thailand face challenges in certain sectors. The TCM granules segment is highlighted as a key growth driver for China TCM, with positive earnings expectations and policy support. The PBOC is expected to maintain a neutral stance on monetary policy, limiting further easing. Corporate events are scheduled to provide further insights into market trends and company strategies.