20170512-大华继显-Regional_Morning_Notes_37页_1mb

报告摘要

Regional Morning Notes Summary - 12 May 2017

Core Content

The Regional Morning Notes for 12 May 2017 provide an overview of key market developments, company results, and investment recommendations across several Asian countries, including China, Indonesia, Malaysia, Singapore, and Thailand. The report also includes insights into sector updates, key indices, top picks, key assumptions, corporate events, stock impact, and valuation.

Main Points

China

Cross-industry mergers are being discussed among IPP groups, coal players, and nuclear energy companies, which could lead to the formation of three major power giants.
These mergers are expected to improve industry concentration, enhance pricing power, and stabilise earnings for coal IPPs.
However, they may be negative for China Shenhua and nuclear energy companies due to potential dilution of asset quality.
Sector upgrade to MARKET WEIGHT as industry fundamentals improve.

Ctrip.com International (CTRP US)

1Q17 results show revenue growth of 46% yoy to Rmb6.1b, non-GAAP net profit up 135% yoy to Rmb604m, and non-GAAP EPS of Rmb1.10.
Strong margin expansion with gross margin at 80.5% and non-GAAP operating margin at 15.4%.
Outbound travel and consolidation of Skyscanner contributed to the strong performance.
Target price raised to US$65.00, with an upside of +26.1%.
Continued expansion into low-tier cities and new product offerings such as bus tickets, ferry tickets, and rental car services.
Outlook for 2Q17 is in line with consensus estimates.

Indonesia

Indocement TP (INTP LJ) reported weak results in 1Q17, with earnings below expectations.

Malaysia

Plantation sector saw inventory increase to 1.60m tonnes, slightly below market expectations.
CPO production improved due to Sabah's production recovery.

Singapore

SP Setia (SPSB MK) is downgraded to HOLD due to strong share price performance.
City Developments (CIT SP) is maintained at HOLD.
First Resources (FR SP) reported net profit of US$46.0m, with strong performance in realised PK prices.
Wilmar International (WIL SP) had core net profit of US$313m, above expectations, and is considering restructuring its China operation.

Thailand

Bangkok Expressway and Metro (BEM TB) reported flat yoy earnings despite strong sales growth due to high operating costs.
KCE Electronics (KCE TB) and PTT Global Chemical (PTTGC TB) are BUY due to potential earnings upgrades.
SAPPE (SAPPE TB) had weak earnings, but 2Q17 results are expected to improve.

Key Indices

The DJIA, S&P 500, and FTSE 100 show mixed performance in the past month.
AS30, HSCEI, HSI, and KOSPI have positive returns.
SET and TWSE have negative returns.
CPO and Brent Crude show mixed trends, with CPO down and Brent Crude up.

Top Picks

BUY recommendations include Alibaba (BABA US), Beijing Ent. Water (371 HK), Indosat (ISAT LJ), Tiga Pilar (AISA LJ), Bangkok Dusit (BDMS TB), Siam Cement (SCC TB), and Huadian (1071 HK).
SELL recommendations include Great Wall Motor (2333 HK), MGM China (2282 HK), and Hartalega (HART MK).

Key Assumptions

GDP growth for key countries is expected to increase in 2017.
Brent Crude and CPO prices are projected to rise in 2017 and 2018.
Coal prices are expected to retreat further in 2017, which could lead to higher profitability in the second half of 2017.

Corporate Events

Roadshows and meetings are scheduled in Singapore, Hong Kong, Shanghai, Shenzhen, Kuala Lumpur, and Taipei.
Analyst presentations and site visits are planned for various companies, including Fosun Pharma Group, Shanghai Pharma Holding, and Mircoport Scientific Corp.

Stock Impact

Ctrip.com International is maintained at BUY due to strong performance and synergy with Skyscanner.
Huaneng and Huadian are upgraded to HOLD and BUY respectively.
Datang is maintained at HOLD due to uncertainty about the merger proposal and overpriced share.

Valuation and Earnings

Earnings revisions for 2018 are up by 3.5-23.5%.
Target prices for IPP companies are raised by 2.4-30%.
Non-GAAP net profit and operating margin have improved significantly.
Ctrip has improved its P/B ratio and margin recovery.

Summary of Key Financials

Metric	2016	2017F	2018F
Net Profit (RMBm)	-1,430.7	3,325.6	6,244.3
Non-GAAP Net Profit (RMBm)	2,129.0	4,493.1	7,426.7
Non-GAAP Operating Margin	0.2%	15.4%	17.3%
P/B (x)	2.6	2.5	2.3

Earnings and Target Price Revisions

Company	2018 Net Profit (RMBm)	% Change	Target Price (HK$)	% Change
CR Power	6,572	+7.7%	15.30	+5.5%
Huaneng	6,363	+11.0%	6.00	+25.0%
Datang	2,822	+8.0%	2.70	+22.7%
Huadian	3,421	+23.5%	3.90	+30.0%
CPI	2,832	+3.5%	4.20	+2.4%

Investment Recommendations

Buy for Ctrip.com International, Huadian, Siam Cement, and others.
Hold for SP Setia, CPI, and Datang.
Sell for Great Wall Motor, MGM China, and Hartalega.

Conclusion

The Regional Morning Notes highlight positive trends in market performance, company earnings, and sector consolidation. Ctrip.com International is a top performer, with strong results and high upside potential. Cross-industry mergers in China are expected to improve industry concentration and increase pricing power for IPP groups. The overall market is mixed, with some indices showing positive growth and others declining. Investment recommendations are based on company performance, sector trends, and market conditions.