20170908-大华继显-Regional_Morning_Notes_17页_871kb

Regional Morning Notes Summary

Core Content

This document provides a comprehensive update on the performance and outlook of various sectors and companies across Asia, with a focus on China, Indonesia, Malaysia, Singapore, and Thailand. It includes financial performance reviews, market insights, stock recommendations, and key financial metrics.

Main Points

China Consumer Sector

• 1H17 Results Review: The consumer sector's performance in the first half of 2017 was in line with expectations. Downstream dairy and sportswear sectors showed strong earnings growth.
• 2H17 Outlook:
  • Sportswear sector is expected to maintain growth, with Anta Sports (2020 HK, BUY) and Mengniu Dairy (2319 HK, BUY) as top picks.
  • Macau gaming and white goods sectors are viewed positively, while FMCG and cinema sectors are expected to see improvement in 2018.
• Key Takeaways:
  • Anta Sports has the highest sales growth momentum and profitability.
  • Mengniu Dairy is expected to benefit from product innovations and new launches.
  • Wanda Film (002739 CH, BUY) is expected to benefit from the box office success of Wolf Warrior 2.
  • Li Ning (2331 HK, HOLD) is less favored due to slower margin expansion.
  • Want Want (151 HK, HOLD) has been downgraded due to more conservative sales growth and higher operating expenses.

Indonesia

• Nippon Indosari Corpindo (ROTI IJ/BUY/Rp1,245/Target: Rp1,400):
  • Shows good performance for the second consecutive month.
  • Sales and returns improved gradually, with a strong expectation for 4Q17 and 1H18.
  • Upgrade to BUY with a revised target price of Rp1,400, indicating a potential 12.4% upside.
  • The company is the largest bread manufacturer in Indonesia, known for its brand Sari Roti.
  • It is currently trading at 24x 2018F PE, slightly below the historical average of 25.1x.

Malaysia

• Telecommunications Sector:
  • Defending profitability despite a flattish top-line.
  • Digi is highlighted for yield seekers, offering a net $4.2%$ dividend yield in 2018.
  • Maintain MARKET WEIGHT for the sector.

Singapore

• Keppel Telecommunications & Transportation (KPTTPBUY/S$1.50/Target:S$1.90):
  • Expected to experience short-term uncertainties due to growth acceleration.
  • Maintain MARKET WEIGHT for the sector.

Thailand

• Diamond Building Products (DRT TB/BUY/Bt6.10/Target: Bt7.20):
  • Expected to enjoy good earnings growth over the next two years.
  • The company could benefit from effective management guidance and a $5 - 6%$ yield.

Key Indices

• The indices show mixed performance across the region.
• The CSI 300 and KLCI have the highest YTD growth, while the FTSE 100 and AS30 have lower growth.
• The BDI and CPO indices indicate strong growth in the shipping and palm oil sectors respectively.

Key Financial Metrics

Top Picks

Analysts

• Becky Han: +852 2826 4837, becky.han@uobkayhian.com.hk
• Mark Chen: +8621 5404 7225 ext 825, markchen@uobkayhian.com
• Stevanus Juanda: +6221 2993 3845, stevanusjuanda@uobkayhian.com

Corporate Events

• Analyst Marketing on Indonesia Construction Sector (Kuala Lumpur, 11-12 Sep)
• Analyst Marketing on Singapore Telcos and Banking Sectors (Kuala Lumpur, 18 Sep)
• Roadshow with Globetronics Technology (Hong Kong, 12 Sep)
• Roadshow with Cahya Mata Sarawak (Hong Kong, 18 Sep)
• Roadshow with China Yongda Automobiles Services Holdings (Canada/US, 25-29 Sep)
• Roadshow with BBI Life Science Corp (Hong Kong, 28 Sep)
• Asian Gems Conference 2017 (Singapore, 10 Oct)
• UOB Kay Hian Annual Regional Strategy Conference (Kuala Lumpur, 13 Nov)

Earnings Revisions

Market Weight

• Maintain MARKET WEIGHT for the consumer sector in 2H17.
• Preferred sub-sectors: sportswear, downstream dairy, Macau gaming, white goods, and HK retailers.
• Cautious on FMCG and cinemas.

Risk and Outlook

• ROTI IJ: Expected to recover in 4Q17 and 1H18, with a strong outlook on sales and returns.
• Wanda Film: Maintained BUY, with a target price increase to Rmb61.00.
• FMCG: Most companies missed street estimates, but there is potential for margin improvement in 2H17.
• Cinema: Turnaround expected in 2018, with Wanda Film benefiting the most from Wolf Warrior 2.

Conclusion

The report highlights strong performance in sportswear and downstream dairy in China, positive outlook for ROTI IJ in Indonesia, and cautious views on FMCG and cinema sectors. Key recommendations include buying Anta Sports, Mengniu Dairy, and ROTI IJ, while maintaining a market weight stance on the consumer sector. The document also provides financial insights and market trends across various Asian markets.