20181015-大华继显-Regional_Morning_Notes_19页_1mb

Regional Morning Notes Summary

Core Content Overview

This document provides a comprehensive overview of market insights and corporate updates from various regions, with a focus on China, Hong Kong, Indonesia, and Malaysia, along with key financial metrics and upcoming events.

Main Points and Key Information

China

• Trade Performance:
  • China's export growth rebounded to 14.5% yoy in September 2018, while import growth slowed to 14.3% yoy, resulting in a trade surplus of US$31.7b.
  • The export rebound is attributed to front-loaded trade ahead of tariffs and a low base effect.
  • Expected Weakness in 4Q18: Global growth slowdown and domestic consumption weakness are expected to moderate trade performance in the coming quarter.
  • Key Export Markets:
    • Exports to Japan, Hong Kong, and the EU showed notable rebounds.
    • Exports to the US remained stable despite trade tensions.
  • Import Trends:
    • Import growth of iron ore, crude oil, and coal declined significantly, with iron ore falling to -8.9% yoy and crude oil rising to +46.6% yoy.
    • CPO (Crude Palm Oil) declined to RM2066/mt in September 2018.
  • Key Financial Metrics:
    • GDP Forecast: China's GDP growth is expected to slow to 6.2% in 2019.
    • CPO Forecast: Expected to be RM2,500/mt in 2019.
    • Brent Crude Forecast: Expected to rise to US$71.60/bbl in 2019.

Hong Kong

• Property Market:
  • The CCL Index dipped 0.14% week-on-week (wow) to 185.25, and the HSP Index declined 3.32% wow.
  • Primary Market Weakness: Sales volume fell 50% wow in the week ending 14 October 2018, with only 20% of LP6 units sold on the first day.
  • Secondary Market: Sales volume remained flat wow.
  • Land Sales: Five plots of land estimated to be worth HK$10b or more will be released in the next five weeks.
  • Top Picks:
    • SHKP (Sun Hung Kai Properties) and NWD (New World Development) are recommended with BUY ratings.
    • Target Prices: SHKP at HK$146.00, NWD at HK$13.30.
    • Upside: SHKP at 39.4%, NWD at 34.1%.
    • Market Cap: SHKP at US$38,711m, NWD at US$12,927m.
    • Current and Forward PE: SHKP at 11.7x and 10.0x, NWD at 7.6x and 4.3x.
    • Discount to RNAV: SHKP at (50)%, NWD at (55)%.

Indonesia

• Cement Sector:
  • 3Q18 Results: Strong qoq earnings growth driven by margins recovery.
  • Industry Utilisation: Improved to 72% in 3Q18 from 52% in 2Q18.
  • ASP (Average Selling Price): Most producers increased ASP by 4-6%, which is expected to offset cost pressures from rupiah depreciation.
  • Domestic Demand:
    • Solid at 6.8mt in September 2018.
    • 9M18 demand rose 4.9% yoy, in line with expectations.
    • Outer-Java Demand Growth: Outperformed Java at 6.3% vs 3.8% yoy.
    • Demand Realisation: Reached 71% of 2018 volume-based assumption, slightly above 9M17's 71.5%.

Malaysia

• Plantation Sector:
  • El Nino Impact: The 2015 El Nino had a more severe effect on Malaysia, even damaging the roots of oil palm trees.
  • Extended Recovery: The sector is still recovering from this event.
  • Corporate Highlight: Globetronics Technology (GTB MK) is maintained at HOLD with a target price of RM2.52.
  • Current Price: RM2.44.
  • Upside: +14.4%.
  • Production Ramp-Up: The laser headlamp production is on track, and good prospects have been largely priced in.

Corporate Highlights

Razer (1337 HK)

• New Product Launches:
  • Launched Razer Blade 15, Razer Phone 2, and Razer Raiju Mobile on 10 October 2018.
  • The Razer Phone 2 offers 30% more performance than its predecessor.
• Financials:
  • Net Turnover: Expected to rise from US$517.9m in 2017 to US$854.3m in 2018.
  • EBITDA: Expected to be -US$87.3m in 2018.
  • Net Profit (adj.): Expected to be -US$25.5m in 2018.
  • Target Price: HK$1.95, with an upside of +35.42%.
• Strategic Focus:
  • Services to Drive Margin Improvement: Expected to account for 25% of total revenue in the next five years.
  • Gross Margin Stabilisation: Aiming for 60-70%.
• Share Buybacks:
  • Conducted 20 share buybacks, repurchasing 50.6m shares (5.6% of allowed total) for HK$87m.
  • Current Share Price: HK$1.44.

Indices Overview

Top Picks

Analysts

• Clement Voon

  • Email: clementvoon@uobkayhian.com
  • Phone: +603 2147 1912

• Tham Mun Hon, CFA

  • Email: munhon.tham@uobkayhian.com.hk
  • Phone: +852 2236 6799

• Julia Pan

  • Email: juliapan@uobkayhian.com
  • Phone: +8621 5404 7225 ext.808

• Shaun Tan

  • Email: shaun.tan@uobkayhian.com.hk
  • Phone: +852 2236 6798

Upcoming Events

• Corporate Events:

  • Group Luncheon with China Shineway Pharmaceutical – 29 Oct in Hong Kong.
  • Group Luncheon with Sembcorp Industries (SCI SP) – 30 Oct in Canada and 5 Nov in Singapore.
  • UOB Kay Hian Annual Regional 1H2019 Strategy Conference – 13 Nov in Kuala Lumpur.

• Land Sales by Tender:

  • TKOTL 131: Data Centre – Wan Po Road, Tseung Kwan O.
  • RBL 1211: Residential – The Peak.
  • Lot 2883 in DD 130: Residential – Lam Tei, Tuen Mun.
  • NKIL 6574: Residential – Kai Tak, Kowloon.
  • Lot 766 in DD332: Residential – Cheung Sha, Lantau Island.
  • NKIL 6591: Residential – Kai Tak, Kowloon.

Key Assumptions