20180809-大华继显-Regional_Morning_Notes_28页_4mb

报告摘要

Regional Morning Notes Summary - 09 August 2018

Core Content

This document provides an overview of regional market updates, focusing on China, Hong Kong, Indonesia, and Malaysia. It highlights key economic indicators, company results, and investment recommendations across these regions, along with corporate events and key assumptions for future performance.

Main Points

China

Trade Growth: Exports grew by 12.2% yoy in July 2018, surpassing expectations, while imports rose by 27.3% yoy, almost doubling from June. This resulted in a shrunk trade balance of US$28.1b.
Key Markets: Strong growth in exports to Japan (16.6%) and Hong Kong (16.6%), but weaker growth to the US (11.2%) and EU (9.5%).
Commodity Imports: Increased significantly, with crude oil (63.0%), copper ore (68.1%), and coal (72.7%) showing strong yoy growth. Iron ore imports also saw a notable recovery, growing 19.7% yoy.
Trade Outlook: Uncertain due to softening global demand and heightened trade tensions, with expectations of moderate trade growth in the coming months.
Earnings: 1H18 core loss was HK$364m, which was 50% lower than expected, driven by pax and cargo yield recovery.
Operating Cash Flow: Doubled to HK$8.5b, with a reduction in net debt/equity ratio from 96.8% to 85%.
Valuation: Maintained HOLD recommendation with a target price of HK$13.00, suggesting an entry price range of HK$11.60-11.70.

Hong Kong

Cathay Pacific Airways (293 HK):
- 1H18 results beat expectations due to yield recovery.
- Pax yields rose 7.6% yoy, and cargo yields increased 16.3% yoy.
- Operating cash flow doubled to HK$8.5b, and net profit improved by 87.2% yoy.
- Dividend yield is expected to increase to 1.0%.
- Valuation: Maintained HOLD with a target price of HK$13.00.

Indonesia

Mitra Adiperkasa (MAPI IJ):
- 1H18 profit exceeded expectations, leading to an upgrade to BUY.
- Target price raised to Rp1,000 from Rp890.

Malaysia

Gas Malaysia (GMB MK):
- 2Q18 earnings were within expectations.
- Dividend yield of 4.6% is expected with an accumulation price at RM2.50.

Key Information

Top Picks (BUY)

Company	Ticker	Current Price	Target Price	Potential Upside
Baoshan Iron & Steel	600019 CH	8.66	9.53	10.0%
Gudang Garam	GGRM LJ	77,000.00	85,000.00	10.4%
PP Persero	PTPP LJ	1,990.00	3,700.00	85.9%
Bumi Armada	BAB MK	0.73	1.06	46.2%
OCBC	OCBC SP	12.00	13.68	14.0%
SingTel	ST SP	3.20	4.22	31.9%
Siam Cement	SCC TB	454.00	530.00	16.7%

Sell

Company	Ticker	Current Price	Target Price	Potential Downside
Hartalega	HART MK	6.34	4.02	(36.6)%

Key Assumptions (GDP Growth)

Region	2017	2018F	2019F
US	2.3	2.5	2.3
Euro Zone	2.4	2.3	1.9
Japan	1.7	1.8	1.9
Singapore	3.6	2.8	3.0
Malaysia	5.9	5.0	5.3
Thailand	3.9	4.2	4.2
Indonesia	5.1	5.3	5.4
Hong Kong	3.8	3.8	2.8
China	6.9	6.4	6.2

Commodity Prices

Commodity	Price (RM/mt or US$/bbl)	2018F	2019F
CPO	2183	2400	2500
Brent Crude	72	67.00	66.50

Corporate Events

Group luncheon with OCK Group: 13 Aug, Kuala Lumpur.
Analyst Presentation on Greater China 2H18 Strategy and Outlook: 13 Aug, 15 Aug, 20 Aug (Singapore, Kuala Lumpur, Bangkok).
Group Dinner Meeting with China Traditional Chinese Medicine Holdings: 17 Aug, Hong Kong.
Group Meeting with Xlep International Holdings: 24 Aug, Hong Kong.
Group Meeting with YiChang HEC ChangJiang Pharmaceutical: 28 Aug, Hong Kong.
UOB Kay Hian Asian Gems Conference: 9 Oct, Singapore.
UOB Kay Hian Annual Regional 1H2019 Strategy Conference: 13 Nov, Kuala Lumpur.

Summary of Key Companies

Cathay Pacific Airways (293 HK)

Performance: 1H18 core net loss of HK$364m, which is 50% lower than expected.
Yield Recovery: Pax and cargo yields improved significantly, contributing to operating cash flow doubling.
Outlook: Pax yield growth is expected to slow down in 2H18, but cargo yield is projected to rise to 10%.
Valuation: Maintained HOLD with target price HK$13.00.

Galaxy Entertainment Group (27 HK)

Performance: 2Q18 results showed strong momentum, with GGR and EBITDA growing 30% and 32% yoy, respectively.
Market Share: Increased to 23.2% in 2Q18, taking the lead in Macau.
Valuation: Upgraded to BUY with a higher target price of HK$79.00.
Outlook: Despite macroeconomic concerns, Galaxy is expected to outperform peers due to operational excellence and renovated projects.

Investment Recommendations

BUY: Baoshan Iron & Steel, Gudang Garam, PP Persero, Bumi Armada, OCBC, SingTel, Siam Cement.
HOLD: Cathay Pacific Airways.
SELL: Hartalega.

Summary of Key Financials

Cathay Pacific Airways:
- Net profit improved by 87.2% yoy.
- Operating cash flow doubled to HK$8.5b.
- Net debt/equity ratio dropped from 96.8% to 85%.
- P/B ratio at 0.90, with fair value per share at HK$7.62.
- Adjusted book value at HK$8.4.
Galaxy Entertainment Group:
- EBITDA rose 31.7% yoy in 2Q18 to HK$4,326m.
- VIP Revenue increased 40.1% yoy.
- Mass Revenue grew 20% yoy.
- GGR growth at 30% yoy.
- Target price increased to HK$79.00.

Summary of Key Indices

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	25583.8	(0.2)	1.0	4.6	3.5
S&P 500	2857.7	(0.0)	1.6	3.5	6.9
FTSE 100	7776.7	0.8	1.6	1.2	1.2
AS30	6354.9	0.2	(0.1)	(0.2)	3.0
CSI 300	3314.5	(1.6)	(3.9)	(4.2)	(17.8)
FSSTI	3326.7	(0.4)	(0.1)	3.0	(2.2)
HSCEI	10901.2	0.3	(0.7)	1.2	(6.9)
HSI	28359.1	0.4	0.1	(1.1)	(5.2)
JCI	6094.8	0.1	1.0	4.9	(4.1)
KLCI	1804.7	0.8	0.9	7.9	0.4
KOSPI	2301.5	0.1	(0.2)	0.7	(6.7)
Nikkei 225	22644.3	(0.1)	(0.5)	2.7	(0.5)
SET	1721.6	0.8	(0.0)	6.1	(1.8)
TWSE	11075.3	0.8	(0.2)	3.3	4.1
BDI	1704	(1.6)	(3.2)	5.1	24.7
CPO	2183	0.1	1.3	(4.1)	(8.7)
Brent Crude	72	(3.2)	(0.2)	(6.3)	8.1

Analyst Contact

Clement Voon
- Email: clementvoon@uobkayhian.com
- Phone: +603 2147 1912
Tham Mun Hon, CFA
- Email: munhon.tham@uobkayhian.com.hk
- Phone: +852 2236 6799