20160818-大华银行-REGIONAL_MORNING_NOTES_32页_1mb

Regional Morning Notes Summary

Core Content

This document provides a summary of company results and market analysis for various regions in August 2016, with a focus on stock performance, financial metrics, and investment recommendations. It includes detailed analyses of key companies, market indices, corporate events, and key assumptions for economic growth and financial indicators.

Main Points by Region

China

• CIFI Holdings (884 HK):
  • 1H16 core net profit beat expectations by 52.3% yoy, driven by higher GFA delivery.
  • Gross margin rebounded to 27.1%, up 4.3ppt from 2015.
  • Core net margin declined slightly to 10.8% due to increased SG&A costs.
  • Dividend yield remains attractive, with a 35% payout ratio expected in 2016.
  • Maintain BUY recommendation; target price: HK$2.76.
• Longfor Properties (960 HK):
  • 1H16 core net profit was in line with expectations; gross margin remained decent at 27.9%.
  • Net profit slightly declined yoy by 2.7% but core net profit rose by 7.6%.
  • Maintain BUY recommendation; target price: HK$14.69.
• Nexteer (1316 HK):
  • 1H16 net profit surged 54% yoy, exceeding expectations.
  • Strong order flows for ADAS-related new products.
  • Upgraded from SELL to BUY; target price: HK$9.50.
• Ping An Insurance (2318 HK):
  • 1H16 earnings beat expectations due to lower-than-expected reserve expense.
  • Maintain BUY recommendation; target price: HK$47.00.

Hong Kong

• Cathay Pacific (293 HK):
  • 1H16 results were below expectations with little forward visibility.
  • Downgraded to SELL; target price: HK$10.60.

Indonesia

• Japfa Comfeed Indonesia (JPFA IJ):
  • 1H16 margins improved due to lower raw material prices and ASP recovery.
  • Maintain BUY recommendation; target price: Rp2,075.

Malaysia

• Kuala Lumpur Kepong (KLK MK):
  • 3QFY16 core net profit was RM226m (+16.3% qoq, -17.0% yoy), below expectations due to slower FFB production recovery.
  • Downgraded to HOLD; target price: RM24.35.

Singapore

• 2Q16 Report Card – From Bad To Worse:
  • 2Q16 results were disappointing with more companies underperforming and cutting dividends.
  • Recommendation: Stay selective in companies with resilient earnings and dividend yields amid uncertainty.

Thailand

• Advanced Info Service (ADVANC TB):
  • 1H16 results were positive; maintain BUY recommendation; target price: Bt210.00.
• Robinson Department Store (ROBINS TB):
  • On track to meet 2016 earnings forecast; promising 2017 outlook.
  • Maintain BUY recommendation; target price: Bt80.00.

Key Indices Overview

Top Picks

BUY Recommendations

• Air China: Target price HK$9.00, potential upside 44.9%
• Ping An Insurance: Target price HK$45.00, potential upside 13.4%
• Ciputra Property: Target price HK$960.00, potential upside 47.7%
• Indosat: Target price HK$9,500.00, potential upside 43.9%
• Genting Bhd: Target price HK$10.40, potential upside 26.1%
• Citiv Dev: Target price HK$10.36, potential upside 18.4%
• OCBC: Target price HK$10.48, potential upside 24.2%
• Bangkok Dusit: Target price HK$25.75, potential upside 13.9%
• Siam Cement: Target price Bt630.00, potential upside 21.6%

SELL Recommendation

• Hartalega: Target price (Icy) HK$11.92, potential downside 27.7%

Key Assumptions

Brent Crude Average (US$/bbl)

• 2015: 53.60
• 2016F: 42
• 2017F: 54

CPO (RM/mt)

• 2015: 2,168
• 2016F: 2,500
• 2017F: 2,600

Corporate Events (August 2016)

• Cowell E Holdings Luncheon: Hong Kong, 18 Aug
• Geely Auto Group Meeting: Hong Kong, 23 Aug
• Q Technology Group Luncheon: Hong Kong, 26 Aug
• China TCM Roadshow: Shanghai, 1 Sep
• Dawnrays Pharma Roadshow: Shanghai, 1 Sep
• Q Technology Group Roadshow: Shanghai, 2 Sep
• Inari Amerton Corporate Roadshow: Taipei, 6 Sep
• China Power International Roadshow: Shanghai, 7 Sep
• Frasers Logistics & Industrial Trust Luncheon: Singapore, 7 Sep
• China Resources Gas Roadshow: Canada, 12–16 Sep
• Skyworth Digital Holdings Group Meeting: Hong Kong, 21 Sep
• Sembcorp Industries Corp Roadshow: Canada, 26–27 Sep
• Regional Financial and Telco Sector Analyst Presentation: UK/Europe, 26–30 Sep
• Xstep International Holdings Roadshow: Taipei, 7 Oct
• Metro Pacific Investments Corporate Roadshow: Canada, 26–28 Oct
• Xstep Roadshow: Kuala Lumpur, 15 Nov

Valuation & Earnings Outlook

CIFI Holdings (884 HK)

• Dividend Yield: Expected to be 7.5% in 2016.
• Net Profit (Adj.): Rmb2,751m in 2016F, Rmb3,197m in 2017F, Rmb3,745m in 2018F.
• EPS (Adj.): 41.2 fen in 2016F, 47.9 fen in 2017F, 56.1 fen in 2018F.
• Target Price: HK$2.76, implying a 24.3% upside.
• RNAV: HK$6.89/share.
• Valuation Metrics:
  • PE (x): 4.6 in 2016F, 4.0 in 2017F, 3.4 in 2018F.
  • P/B (x): 0.9 in 2016F, 0.8 in 2017F, 0.7 in 2018F.
  • EV/EBITDA (x): 4.9 in 2016F, 4.4 in 2017F, 3.7 in 2018F.

Longfor Properties (960 HK)

• Dividend Yield: Expected to rise to 5.5% in 2016.
• Net Profit (Adj.): Rmb8,253.8m in 2016F, Rmb9,461.6m in 2017F, Rmb10,891.0m in 2018F.
• EPS (Adj.): 141.5 fen in 2016F, 162.2 fen in 2017F, 186.7 fen in 2018F.
• Target Price: HK$14.69, implying a 24.5% upside.
• RNAV: HK$22.60/share.
• Valuation Metrics:
  • PE (x): 7.1 in 2016F, 6.2 in 2017F, 5.4 in 2018F.
  • P/B (x): 1.1 in 2016F, 1.0 in 2017F, 0.9 in 2018F.
  • EV/EBITDA (x): 7.6 in 2016F, 6.5 in 2017F, 5.6 in 2018F.

Conclusion

The report highlights strong performance from CIFI Holdings and Longfor Properties, with both maintaining BUY ratings due to improved financials, dividend yields, and growth prospects. In contrast, Cathay Pacific and Hartalega were downgraded, reflecting weaker results and outlook. The document also provides insights into key economic assumptions, corporate events, and valuation metrics across various markets, emphasizing the importance of selective investment in a volatile environment.