20180718-大华继显-Regional_Morning_Notes_28页_1mb
报告摘要
Regional Morning Notes Summary
Core Content
This document provides a detailed analysis of the regional financial market on Wednesday, 18 July 2018, with a focus on the Macau gaming sector, Beijing Capital International Airport (694 HK), and BYD Company (1211 HK), alongside market indices and key economic indicators. It also includes updates on various sectors in Indonesia, Malaysia, and Singapore, as well as corporate events and valuation details.
Main Points
Macau Gaming Sector
- Mass Market Growth Outpaces VIP: The mass market is expected to grow faster than the VIP segment in the second half of 2018, with GGR growth in the mass segment slightly accelerating to 20.5%.
- GGR Data: 2Q18 GGR increased 17.2% yoy to MOP73.7b, while VIP GGR growth decelerated to 14.4% (from 21% in 1Q18).
- Sector Outlook: Despite the weak June GGR, sentiment in the gaming sector is improving. However, the mixed macroeconomic outlook remains a concern.
- Company Impact:
- Wynn Macau (1128 HK): Likely to be most affected due to its focus on VIP high rollers.
- Sands China (1928 HK): Most exposed to the mass market, with 63% of its GGR in this segment.
- Galaxy Ent (0027 HK) and SJM Holdings (880 HK): Both recommended as BUY due to strong fundamentals and growth potential.
Beijing Capital International Airport (694 HK)
- Acquisition of GTC Assets: The acquisition is not earnings accretive due to the assets being non-productive, and it will increase opex. The target price is cut by 10% to HK$9.80.
- Financial Impact: The acquisition will reduce ROE by 0.9ppt to 8.8% and ROIC by 0.8ppt to 8.2% in 2019.
- Valuation: The company is valued at 16x 2019-20 earnings. Suggested entry price is HK$8.50.
- Net Profit Estimates: Lowered by 6.9% for 2018 and 9.5% for 2019 due to the acquisition and increased opex.
BYD Company (1211 HK)
- Downgraded to SELL: Due to multiple headwinds, including disappointing 1Q-2Q18 earnings and expected larger-than-anticipated cuts in EV subsidies.
- Target Price Cut: From HK$37.00 to HK$30.00.
- Subsidy Impact: BYD heavily relies on EV subsidies, and a 30% cut in subsidies in 1H18 could have led to a 71-83% drop in net profit.
- Future Catalysts: Expected to include poor 3Q18 results and further subsidy cuts, which could further depress the stock price.
Key Sectors and Updates
Indonesia - Property
- Housing Demand: There is an uptick in housing demand, which warrants a re-rating.
Malaysia
- Scientex (SCI MK): Recommended as BUY with a target price of RM8.60.
- Manufacturing and Property: Fundamentals remain strong, with the BOPP plant achieving breakeven and a growing landbank.
Singapore
- DBS Group Holdings (DBS SP): Recommended as BUY with a target price of S$28.95.
- Singapore Airlines (SIA SP): Maintained as HOLD, with core earnings expected to rise 11% yoy despite a 42% yoy increase in fuel prices.
Key Indices (as of 17 Jul 18)
| Index | Prev Close | 1D % | 1W % | 1M % | YTD % |
|---|---|---|---|---|---|
| DJIA | 25119.9 | 0.2 | 0.8 | 0.5 | 1.6 |
| S&P 500 | 2809.6 | 0.4 | 0.6 | 1.3 | 5.1 |
| FTSE 100 | 7626.3 | 0.3 | -0.9 | -0.1 | -0.8 |
| AS30 | 6288.4 | -0.6 | -0.9 | 1.2 | 2.0 |
| CSI 300 | 3449.4 | -0.7 | -0.5 | -8.1 | -14.4 |
| FSSTI | 3239.6 | 0.2 | -1.1 | -2.5 | -4.8 |
| HSI | 28181.7 | -1.3 | -1.7 | -7.0 | -5.8 |
| KLCI | 1737.3 | 0.6 | 3.0 | -0.4 | -3.3 |
| KOSPI | 2297.9 | -0.2 | 0.2 | -3.3 | -6.9 |
| Nikkei 225 | 22697.4 | 0.4 | 2.9 | 0.1 | -0.3 |
| SET | 1626.1 | -0.1 | -1.1 | -3.2 | -7.3 |
| TWSE | 10779.0 | -0.4 | 0.2 | -2.8 | 1.3 |
| BDI | 1695 | 1.7 | 9.0 | 17.3 | 24.1 |
| CPO (RM/ml) | 2165 | 0.2 | -4.3 | -6.7 | -9.4 |
| Brent Crude (US$/bbl) | 72 | 0.4 | -8.5 | -1.7 | 7.9 |
Top Picks (BUY)
| Company | Ticker | Current Price (Icy) | Target Price (Icy) | Upside/Downside (%) |
|---|---|---|---|---|
| Baoshan Iron & Steel | 600019 CH | 7.35 | 9.53 | 29.7 |
| Gudang Garam | GGRM U | 69,000.00 | 85,000.00 | 23.2 |
| PP Persero | PTPP U | 2,100.00 | 3,700.00 | 76.2 |
| Bumi Armada | BAB MK | 0.73 | 1.06 | 45.2 |
| OCBC | OCBC SP | 11.12 | 14.28 | 28.4 |
| SingTel | ST SP | 3.27 | 4.22 | 29.1 |
| Siam Cement | SCC TB | 422.00 | 610.00 | 44.5 |
Sell
| Company | Ticker | Current Price | Target Price | Upside/Downside (%) |
|---|---|---|---|---|
| Hartalega | HART MK | 6.15 | 4.02 | -34.6 |
Key Assumptions
| Region | GDP (yoy) 2017 | GDP (yoy) 2018F | GDP (yoy) 2019F |
|---|---|---|---|
| US | 2.3 | 2.5 | 2.3 |
| Euro Zone | 2.4 | 2.3 | 1.9 |
| Japan | 1.7 | 1.8 | 1.9 |
| Singapore | 3.6 | 2.8 | 3.0 |
| Malaysia | 5.9 | 5.0 | 5.3 |
| Thailand | 3.9 | 4.2 | 4.2 |
| Indonesia | 5.1 | 5.3 | 5.4 |
| Hong Kong | 3.8 | 3.8 | 2.8 |
| China | 6.9 | 6.4 | 6.2 |
| CPO (RM/mt) | 2,783 | 2,400 | 2,500 |
| Brent (US$/bbl) | 55.00 | 67.00 | 66.50 |
Corporate Events
| Event | Venue | Begin | Close |
|---|---|---|---|
| Analyst Presentation on 2H18 | Singapore | 19 Jul | 20 Jul |
| Roadshow with OM Holdings | Kuala Lumpur | 25 Jul | 25 Jul |
| Industry 4.0 Conference | Kuala Lumpur | 26 Jul | 26 Jul |
| Group luncheon with SIA SP | Singapore | 30 Jul | 30 Jul |
Risks
- Prolonged trade war: Could hurt market sentiment and VIP gaming budgets, affecting profitability.
- Subsidy cuts: Expected to further depress BYD's profits, as it heavily relies on subsidies.
Valuation Summary (BYD)
| Metric | 2018F | 2019F |
|---|---|---|
| Net Profit (Rmbm) | 2,743 | 2,099 |
| EBITDA (Rmbm) | 5,224 | 4,474 |
| Operating Profit (Rmbm) | 3,841 | 2,928 |
| Net Profit (Adj.) | 2,743 | 2,099 |
| EPS (Fen) | 63.3 | 48.5 |
| PE (x) | 11.8 | 15.5 |
| P/B (x) | 1.4 | 1.3 |
| EV/EBITDA (x) | 6.9 | 8.0 |
| Net Gearing (%) | 50.4 | 69.9 |
Analyst Contact
- Robin Yuen, CFA: +852 2826 4837, robin.yuen@uobkayhian.com.hk
- K Ajith: +65 6590 6627, ajith@uobkayhian.com
- Charles Wong Kok Min: +603 2147 1913, kokmin@uobkayhian.com
Summary
The Macau gaming sector is showing signs of improvement, with the mass market outperforming the VIP segment in the second half of 2018. Sands China and Galaxy Ent are highlighted as strong BUY picks due to their exposure to the growing mass market. However, Wynn Macau is at risk due to its heavy reliance on VIP high rollers.
In Singapore, DBS Group Holdings is recommended as a BUY with positive loan growth and asset quality. Singapore Airlines is maintained at HOLD, with core earnings expected to rise 11% yoy despite rising fuel prices.
In Malaysia, Scientex is a BUY due to strong fundamentals in both manufacturing and property segments. In Indonesia, the property sector is expected to benefit from increased housing demand.
Beijing Capital International Airport faces a HOLD recommendation due to the acquisition of non-productive GTC assets, which may not be earnings accretive and could lower its profitability. BYD Company is downgraded to SELL, with its target price cut due to expected EV subsidy cuts and poor earnings performance.
Overall, the market outlook is mixed, with concerns about the trade war and subsidy cuts, but there are positive indicators in domestic economies and infrastructure development.
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