20150507-大华继显-Regional_Morning_Notes_33页_1mb

Regional Morning Notes Summary

Core Content Overview

This document provides a summary of financial updates and stock analysis for several companies in Asia, including China, Indonesia, Malaysia, Singapore, and Thailand, as well as key market indices and investment recommendations.

Main Points by Country

China

• Brilliance Auto (1114 HK):
  • 1Q15 Net Profit: Dropped unexpectedly by 43% yoy to €128m due to margin pressure from dealer rebates, additional capacity expansion costs, and intense competition.
  • Share Price: Fell 7% on the news, with a target price of HK$12.00 (downside of -9.8% from current price).
  • Recommendation: Maintain SELL.
  • Key Risks: Weak sales, aging product portfolio, intensified competition from Mercedes-Benz.
  • Upside Risk: Stronger-than-expected sales growth in 2015 driven by the A-share market and BMW Auto Finance.
  • Financial Highlights:
    • 1Q15 sales growth of 7% yoy, but 6% drop in Q3 2015.
    • Net profit is forecasted to decline 1% yoy in 2015, with growth of 17% and 20% in 2016 and 2017 respectively.
    • The company is expected to face pressure from weak sales and margin contraction.
    • The stock is currently trading near 2SD below its historical mean PE.

Indonesia

• Sido Muncul (SIDO IJ):
  • 1Q15 Net Profit: Increased 1.8% yoy to Rp118b, in line with expectations.
  • Recommendation: Upgraded to BUY.
  • Target Price: Rp635, offering a 30.7% upside.
  • Key Factors:
    • Potential recovery in 2H15.
    • Trading near 2SD below historical mean forward PE.
    • Strong margin improvement and new pharmaceutical business.
  • Sales Performance:
    • Revenue dropped 2% yoy to Rp509b.
    • Sales from the new pharmaceutical business contributed Rp21.3b, or 4.2% of total revenue.
    • Gross margin improved slightly due to margin improvement and reduced low-margin product sales.
  • Key Risks:
    • Rupiah depreciation due to macroeconomic slowdown.
    • New entrants in the beverage market.
  • Share Price Catalyst:
    • Stable rupiah and recovery in the energy drinks market.
    • Better-than-expected performance from the pharmacy business.

Malaysia

• MMC Corporation (MMC MK):
  • Update: Crystallizing landbank value into 2016-17 paves the way for a blue-sky RNAV of RM5.15/share, suggesting a 30% upside from base case.

Singapore

• Nam Cheong (NCL SP):
  • 1Q15 Earnings: Expected to fall 40-45% yoy.
  • Recommendation: SELL, with a target price of S$0.28.
• Pacific Radiance (PACRA SP):
  • 1Q15 Results: Expected to be another poor quarter, but earnings may have bottomed.
  • Recommendation: BUY, with a target price of S$0.99.

Thailand

• Bumrungrad Hospital (BH TB):
  • 1Q15 Results: Excellent, leading to a review of forecasts and target price.
  • Recommendation: HOLD, with a target price of Bt146.00.
• IRPC (IRPC TB):
  • 1Q15 Results: Strong, as expected.
  • Recommendation: BUY, with a target price of Bt6.50.
• Major Cineplex (MAJOR TB):
  • 1Q15 Earnings: May increase yoy but be flat qoq.
  • Recommendation: HOLD, with a target price of Bt36.75.
• Thai Vegetable Oil (TVO TB):
  • 1Q15 Earnings: May drop yoy but increase qoq.
  • Recommendation: HOLD, with a target price of Bt25.25.

Key Indices Performance (as of 07 May 2015)

Top Picks (BUY & SELL)

BUY Recommendations

• Beijing Capital (694 HK): Target price HK$12.30, potential upside 56.3%
• ICBC (1398 HK): Target price HK$7.80, potential upside 20.2%
• Bank BJB (BJR IJ): Target price Rp1,300.00, potential upside 49.4%
• Maybank (MAY MK): Target price RM10.30, potential upside 11.8%
• DBS (DBS SP): Target price S$25.08, potential upside 20.3%
• Pacific Radiance (PACRA SP): Target price S$1.06, potential upside 55.9%
• Krung Thai Bank (KTB TB): Target price Bt27.00, potential upside 38.5%
• Sino Thai Engr (STEC TB): Target price Bt30.25, potential upside 43.4%

SELL Recommendations

• UMWH Holdings (UMWH MK): Target price HK$10.00, potential downside 7.4%

Key Assumptions

Corporate Events

• BMI International Luncheon: Hong Kong, 7 May
• JCY International Luncheon: Kuala Lumpur, 14 May
• SIN Telcos, SIN Banks & INDO Telcos Analyst Presentation: Taipei, 28 May
• Indosat Roadshow:
  • Kuala Lumpur: 27 May
  • Singapore: 28 May
  • Taipei: 29 May

Brilliance Auto Financial Highlights

• 1Q15 Net Profit: Rp118b (up 1.8% yoy, 17.2% qoq)
• Earnings Forecast:
  • 2015: Rmb5.33b
  • 2016: Rmb6.25b
  • 2017: Rmb7.5b
• PE Band:
  • 2015: 9.0x
  • 2016: 8.6x
  • 2017: 7.1x
• ROE:
  • 2014: 36.1%
  • 2015: 27.7%
  • 2016: 25.6%
  • 2017: 24.7%

Sido Muncul Financial Highlights

• 1Q15 Net Profit: Rp118b (up 1.8% yoy)
• Earnings Forecast:
  • 2015: Rp417b
  • 2016: Rp487b
  • 2017: Rp434b
• PE:
  • 2015: 17.5x
  • 2016: 16.8x
• Dividend Yield:
  • 2015: 4.3%
  • 2016: 4.5%
• Gross Margin:
  • 1Q15: 54.1%
  • 1Q14: 54.6%
• Operating Margin:
  • 1Q15: 27.2%
  • 1Q14: 23.0%
• Net Debt/Equity:
  • 2015: 24.2%
  • 2016: 18.8%
  • 2017: 13.8%

Conclusion

The report highlights the performance and outlook of key companies across different Asian markets, emphasizing the need for caution with Brilliance Auto due to its weak 1Q15 results and near-term challenges, while identifying Sido Muncul as a potential BUY due to its improved margins and new business ventures. The indices show mixed performance, with some experiencing declines and others showing growth. The analyst recommends maintaining a SELL on Brilliance Auto and upgrading to BUY on Sido Muncul based on valuation and potential recovery.