20170803-大华继显-Regional_Morning_Notes_26页_1mb

Regional Morning Notes Summary - 03 August 2017

Core Content Overview

This document provides a summary of market updates and investment recommendations for various regions in Southeast Asia and Hong Kong. It includes company results, sector analyses, key assumptions, and valuation data, focusing on property and food sectors.

Main Points by Region

Hong Kong - Property Sector

• Qianhai-Shekou Free Trade Zone (QH FTZ) is expected to bring both investment opportunities and challenges for Hong Kong property players.
• The zone could divert mainland tourists from Hong Kong's retail sector, particularly impacting street shops in core commercial areas like Central and TST.
• New World Development (NWD) and Kerry Properties (KP) are early investors in the zone and are highlighted as key BUYs due to their potential for income growth.
• Wharf Holdings (WH) is recommended as a SELL due to its underperformance.
• QH FTZ offers tax exemptions and direct access to branded goods, potentially serving as an alternative shopping destination for mainland tourists.

Indonesia - Fast Food Indonesia (FAST)

• FAST reported solid results for 1H17 with a 75.4% yoy increase in net profit.
• Revenue grew 12.7% yoy to Rp2.6t due to the Eid Al-Fitr holiday.
• 2Q17 results showed a 10.4% yoy increase in net profit and 15.8% yoy increase in revenue.
• RSC Jakarta was the largest revenue contributor in 2Q17, accounting for 38% of total revenue.
• Karee Chicken and Cheesy Chicken were new products launched during the Eid Al-Fitr period.
• FAST is rated BUY with a target price of Rp1,750, reflecting its strong earnings growth and undervaluation.

Key Financial Highlights

FAST (Fast Food Indonesia)

• 1H17 Revenue: Rp2,605b (up 12.7% yoy)
• 1H17 Net Profit: Rp76b (up 75.4% yoy)
• 2Q17 Revenue: Rp1,401b (up 15.8% yoy)
• 2Q17 Net Profit: Rp39b (up 10.4% yoy)
• EPS (2Q17): Rp99.9
• PE (2017F-18F): 12.7x (below 5-year average)
• Target Price: Rp1,750 (upside of +27.7%)

Key Assumptions

Corporate Events

• Visit to Sarawak Corridor of Renewable Energy (1–3 Aug)
• Luncheon with Plover Bay Technologies (3 Aug)
• Luncheon with Singapore Post (4 Aug)
• Analyst Marketing Events (14–15 Aug, Malaysia; 22 Aug, Taipei)
• Roadshow with China TCM Hldgs, Globetronics Technology, and Top Glove Corporation (August–October 2017)
• Asian Gems Conference 2017 (10 Oct)

Top Picks

Key Recommendations

• Maintain BUY for FAST due to solid results and undervaluation.
• Maintain MARKET WEIGHT for the overall market.
• Maintain BUY for NWD and SHK in the Hong Kong property sector.
• Maintain SELL for WH in the Hong Kong property sector.
• Downgrade the Food sector in Thailand to MARKET WEIGHT due to minimal impact from flash floods.

Investment Opportunities

• QH FTZ is seen as a promising investment area with a focus on property development.
• The zone offers tax exemptions, bonded warehouses, and cross-border e-commerce platforms.
• The development of CTF HOKO (Chow Tai Fook Global Goods Shopping Center) is expected to boost property values and rental income.

Analysts

• Vikrant Pandey and Lauren Jiang (UOB Kay Hian)
• Andre Suntono (UOB Kay Hian)

Summary

The document outlines the mixed impact of the Qianhai-Shekou Free Trade Zone on Hong Kong's property and retail sectors. It highlights the potential for growth in the region, especially for developers like New World Development and Kerry Properties, while also noting the risks to traditional retail businesses. In Indonesia, Fast Food Indonesia (FAST) is performing well, with strong results and a BUY recommendation. The overall market sentiment remains positive, with several top picks across different sectors.