20150323-大华继显-Regional_Mornlng_Notes_20页_981kb

Regional Morning Notes Summary - 23 March 2015

Core Content Overview

This report provides an analysis of stock performance, company results, and key financial metrics for several Asian markets and companies, with a focus on China and Malaysia. It also includes key indices, corporate events, and valuation insights for selected stocks.

Main Points and Key Information

China Coal Energy (1898 HK)

• Performance in 2014: Net profit dropped 96.3% year-over-year (yoy) due to lower coal sales volume and average selling price (ASP), and higher earnings sensitivity.
• 2015 Outlook: Expected to report a net loss due to continued market weakness and further decline in coal prices.
• Valuation: Current share price is HK$4.13, with a target price of HK$4.50 (upside of +9.0%).
• Dividend: Declared a final dividend of Rmb0.024/share, down 70.4% yoy.
• Financials:
  • Revenue fell 14.2% yoy to Rmb70,664m.
  • Gross profit declined 36.9% yoy.
  • Operating profit dropped 63.7% yoy.
  • Net profit fell 96.3% yoy to Rmb141m.
• Valuation Metrics:
  • P/B (book value) is 0.5x.
  • EV/EBITDA is 13.2x in 2014, projected to increase to 22.4x in 2015.
  • Net debt to equity is 88.1% in 2014, expected to rise to 92.3% in 2015.
• Recommendation: Maintain HOLD due to the compelling valuation despite weak profitability.

China Shenhua Energy (1088 HK)

• Performance in 2014: Net profit declined 14.2% yoy.
• 2015 Outlook: Expected to report a revenue decline of 15% yoy due to weak demand and a 10.1% drop in weighted ASP.
• Valuation: Current share price is HK$20.05, with a target price of HK$26.00 (upside of +29.7%).
• Dividend: Final dividend of Rmb0.74/share, down 18.7% yoy.
• Financials:
  • Revenue fell 12.5% yoy to Rmb248,360m.
  • Coal segment earnings dropped 29.2% yoy.
  • Power segment earnings rose 9.3% yoy.
  • Total EBIT decreased 11.6% yoy to Rmb60,945m.
• Valuation Metrics:
  • P/B is 1.1x.
  • EV/EBITDA is 5.9x in 2014, projected to be 6.3x in 2015.
  • Net debt to equity is 18.5% in 2014, expected to fall to 9.9% in 2015.
• Recommendation: Maintain BUY due to long-term value potential and integration of power and transport businesses.

Malaysia - Sarawak

• Economic Outlook: Sarawak's SCORE (State Government Revenue) continues to thrive and is a bright spot in Malaysia's economy.
• Industrialization: CMS is highlighted as a proxy for Sarawak's industrialisation and infrastructure growth.

Singapore - Genting Hong Kong (GENHK SP)

• Performance in 2014: Subpar results from Star Cruises and Travellers Group.
• Valuation: Valuations are undemanding, but upside may be capped due to major expansion plans.

Thailand - Total Access Communication (DTAC TB)

• Update: Expected to see 1Q15 earnings improve quarter-over-quarter (qoq), but still down yoy.
• Recommendation: Downgraded to HOLD.

Key Indices Performance

Top Picks (BUY)

Corporate Events

Key Assumptions

Valuation & Earnings Outlook

China Coal Energy (1898 HK)

• Valuation: 0.5x 2015F P/B.
• Recommendation: Maintain HOLD.

China Shenhua Energy (1088 HK)

• Valuation: 1x 2015F P/B.
• Recommendation: Maintain BUY.

Market Outlook

• China: Expected to face a harsher year in 2015 with more severe oversupply due to increased capacity under construction.
• Government Policies: Likely to struggle with oversupply control due to reliance on coal in major producing regions.
• Share Price Catalysts:
  • Progress in parent company's asset injections.
  • Government policies to curb oversupply.
  • Stronger-than-expected stimulus to encourage fixed asset investment.

Analyst Contact

• Name: Yan Shi
• Phone: +8621 5404 7225 x 804
• Email: yan.shi@uobkayhian.com
• Research Area: Greater China Research
• Phone: +8621 5404 7225 x 819