20131107-大和证券-Asia_Pacific_Daily_51页_1mb_1mb

Asia Pacific Daily - 7 November 2013

Daiwa Investment Conference

• Date: 19-22 November 2013 (Tuesday to Friday)
• Location: Island Shangri-La, Hong Kong; Pacific Place, Supreme Court Road, Admiralty
• Focus: Various financial and market analyses, including updates on major companies and economic trends in the region

Major Changes

• China Merchants Bank (3968 HK):

  • Rating: Upgraded from Outperform (2) to Buy (1)
  • Target Price: Increased by 21.7% to HKD21.00
  • Justification: Strong internal capital generation, improved asset quality, and limited regulatory risks
  • Key Points:
    • The bank has the most sustainable growth model
    • Overhang of rights issue removed
    • Expected to outperform peers due to capital efficiency and exposure to retail and intermediary businesses
    • Revised net-profit forecasts by 3-10%
    • New target price implies a 1.4x 2014E PBR

• Acer (2353 TT):

  • Rating: Downgraded from Hold to Underperform
  • Target Price: Decreased by 30% to TWD14.70
  • Justification: Substantial net loss in 3Q13 due to operating loss and intangible asset impairment
  • Key Points:
    • Management reshuffle and restructuring
    • 4Q13 revenue outlook is bleak
    • Likely to face asset impairment losses
    • EPS forecasts revised downward due to weak revenue and profit margin

Key Market and Economic Insights

• India Economy: RBI policy is less hawkish than it appears
• Indonesia Economy: GDP slowed to 5.6% YoY
• Macro Research: Various analyses on regional economic performance and EPS growth

Regional Indices Performance

*Valuation based on MSCI Universe
**MSCI index priced as of 5 Nov

Company Roadshows

Financial Highlights - China Merchants Bank

• Share Price Performance:

  • 12-month range: 12.05-18.41
  • Market Cap (USD bn): 48.95
  • 3m avg daily turnover (USD m): 45.72
  • Shares Outstanding (m): 25,331
  • Major Shareholder: China Merchants Group (17.9%)

• Financial Summary:

  • Total Operating Income (CNY m): 127,981 (2013E), 144,555 (2014E), 160,555 (2015E)
  • Net Profit (CNY m): 47,518 (2013E), 52,307 (2014E), 53,989 (2015E)
  • Core EPS (fully-diluted) (CNY): 2.026 (2013E), 2.065 (2014E), 2.131 (2015E)
  • PBR (x): 1.1 (2013E), 1.0 (2014E), 0.9 (2015E)
  • ROE (%): 20.2 (2013E), 18.2 (2014E), 16.6 (2015E)

Financial Highlights - Acer

• Share Price Performance:

  • 12-month range: 16.90-27.50
  • Market Cap (USD bn): 1.63
  • 3m avg daily turnover (USD m): 9.64
  • Shares Outstanding (m): 2,835
  • Major Shareholder: Vanguard Group (2.7%)

• Financial Summary:

  • Revenue (TWD m): 356,985 (2013E), 338,583 (2014E), 352,788 (2015E)
  • Net Profit (TWD m): -19,743 (2013E), -2,821 (2014E), -417 (2015E)
  • Core EPS (fully-diluted) (TWD): -6.965 (2013E), -0.995 (2014E), -0.147 (2015E)
  • PBR (x): 0.8 (2013E), 0.8 (2014E), 0.8 (2015E)
  • EV/EBITDA (x): -4.2 (2013E), -163.6 (2014E), 10.0 (2015E)

Key Ratios

• Net Interest Margin: 3.4 (2008), 2.2 (2009), 2.7 (2010), 3.1 (2011), 3.0 (2012), 2.8 (2013E), 2.9 (2014E), 3.0 (2015E)
• NPLs/Gross Loans: 1.1 (2008), 0.8 (2009), 0.7 (2010), 0.6 (2011), 0.6 (2012), 0.8 (2013E), 1.1 (2014E), 1.3 (2015E)
• Tier-1 CAR: 6.6 (2008), 6.6 (2009), 8.0 (2010), 8.2 (2011), 8.5 (2012), 9.8 (2013E), 10.1 (2014E), 10.4 (2015E)
• ROAA: 1.5 (2008), 1.0 (2009), 1.2 (2010), 1.4 (2011), 1.5 (2012), 1.3 (2013E), 1.3 (2014E), 1.2 (2015E)

Summary of Key Points

• China Merchants Bank is upgraded to Buy due to strong internal capital generation and improved asset quality.
• Acer is downgraded to Underperform due to substantial net losses and restructuring challenges.
• The Daiwa Investment Conference is being held in Hong Kong from 19-22 November 2013.
• Regional Indices show mixed performance with some showing strong gains and others facing declines.
• Financial forecasts for both companies indicate a need for caution, with Acer facing more significant earnings uncertainty.
• Share price performance and key financial metrics are provided for both companies.