20150623-大华继显-Regional_Morning_Notes_21页_1mb

Regional Morning Notes Summary

Core Content

This document provides a comprehensive market analysis for the week of 23 June 2015, covering economic conditions, sector updates, company-specific insights, and investment recommendations across China, Indonesia, Malaysia, Singapore, and Thailand. It includes details on liquidity conditions, regulatory actions, and macroeconomic indicators, as well as specific company updates and valuations.

Main Points

China

• Economic Overview:

  • The Chinese government is actively working to deleverage the A-share market through increased regulation of lending and speculation.
  • Monetary and fiscal expansion remain key policy drivers, with long-term liquidity expected to improve.
  • The Shanghai Composite Index fell by 13.3% due to concerns over tighter regulation and policy shifts.

• Macro Policy Highlights:

  • The CSRC banned brokerages from facilitating illegal loans to clients.
  • The CBRC investigated "umbrella trusts" used by speculators.
  • The State Council announced new measures to support effective investment, including rural electricity grid improvements and urban renewal.
  • The first batch of municipal bonds swap is almost complete, with 20 provinces issuing Rmb1.13t in new bonds.
  • The PBOC may not roll over part of the mid-term lending facility (MLF) due to unattractive interest rates.

• Liquidity Conditions:

  • Short-term interbank rates rose due to large IPOs and speculation on monetary tightening.
  • Overnight repo rate increased by 13.82bp to 1.2897%.
  • 7-day repo rate jumped to 3.1661%.
  • Long-term Treasury Note yields declined slightly, flattening the yield curve.

• Property Sector:

  • The top 25-30 cities are recovering faster than lower-tier cities.
  • Market consolidation is expected to accelerate in 2H15.
  • Core cities with strong demand and credit easing are outperforming.
  • Upgrade homebuyer demand is becoming a dominant force in tier-1 and selected tier-2 cities.
  • Key risks include earlier-than-expected termination of credit easing and significant RMB depreciation.
  • We maintain a MARKET WEIGHT for the sector.

• Company Update - China Coal Energy (1898 HK):

  • Coal prices have hit a bottom but may be capped by heavy rainfall in the short term.
  • Management expects coal prices to rise to Rmb480-500/tonne by year-end.
  • Oversupply in the industry will continue, with industry consolidation slower than expected.
  • Downgrade to HOLD due to poor earnings outlook and slow price rebound.
  • Maintain target price at HK$5.50.

• Top Picks:

  • Several companies are recommended as BUY, including Beijing Capital, ICBC, Bank BJB, Maybank, DBS, SATS Ltd, PTT, and others.
  • Key sectors include property and financials.

Indonesia

• Jasa Marga (JSMR IJ):
  • The toll road tariff cut during Hari Raya is expected to lower 2015 earnings by 0.8%.
  • Maintain BUY recommendation with a lower target price of Rp7,960 based on DCF analysis.

Malaysia

• Carlsberg Malaysia (CAB MK):
  • Exports to Hong Kong and forex transaction gains offset earnings loss from LH.
  • Upgrade to BUY with a target price of RM13.40.

Singapore

• Singapore Press Holdings (SPH SP):
  • Advertising revenue contraction is tapering off, with a smaller contraction of 2% in 3QFY15 compared to 9% in 2QFY15.
  • Maintain HOLD with a target price of S$4.20.

Thailand

• Construction Services:
  • Contributions from mega projects are expected next year, leading to a downgrade of the sector to MARKET WEIGHT.

Key Financial Data

Corporate Events

• Concord New Energy Roadshow: Singapore, 23 Jun
• M3 Marine Group Luncheon: Singapore, 25 Jun
• QL Resources Berhad Roadshow: Singapore, 30 Jun
• 2H15 Outlook & Strategy Analyst Presentation: Singapore, 01 Jul

Analysts

• Chaoping Zhu (Economics - China): +8621 5404 7225 ext. 822, chaoping@uobkayhian.com
• Edison Bian (Property - China): +852 2236 6761, edison.bian@uobkayhian.com.hk
• David Yang (Property - China): +8621 5404 7225 ext 801, davidyang@uobkayhian.com
• Yan Shi (China Coal Energy): +8621 5404 7225 x 804, yan.shi@uobkayhian.com
• Yingying Tang (China Coal Energy): +8621 5404 7225 x 819, yingying@uobkayhian.com

Key Assumptions

Stock Impact - China Coal Energy

• Share Price: HK$4.97
• Target Price: HK$5.50
• Upside: +10.7%

Conclusion

The document highlights the ongoing efforts by Chinese regulators to deleverage the A-share market, the mixed performance of the property sector, and the impact of coal price fluctuations on China Coal Energy. It also provides key investment recommendations and macroeconomic outlooks for various regions.