20161109-大华继显-Regional_Morning_Notes_37页_2mb

Regional Morning Notes Summary - 09 November 2016

Core Content Overview

This document provides a summary of economic and company performance updates for various regions including China, Indonesia, Malaysia, Singapore, and Thailand, along with key market indices, analyst recommendations, and corporate events.

Main Points

China

• Trade Data:

  • In October 2016, China's exports and imports declined slightly in US dollar terms (-7.3% and -1.4% yoy respectively), but this was an improvement from the sharp decline in September (-10.0% and -1.9% yoy).
  • Trade value in RMB terms showed higher growth due to the weakening RMB.
  • Exports to major markets (US, EU, Japan) saw slower yoy declines (-5.6%, -8.7%, -3.3% respectively) compared to September, suggesting better demand conditions.
  • Imports improved on a low base and were supported by strong infrastructure investment, with notable growth in volumes for crude oil, iron ore, and coal.

• Economic Outlook:

  • Growth momentum is expected to continue until year-end, supported by domestic investment.
  • There is a risk of further government intervention to curb property, coal, and steel prices, which may introduce more uncertainty in early 2017.
  • The trade data may signal stabilization in the global economy and politics.

• Company Update: BAIC Motor (1958 HK):

  • Oct 16 sales increased 7% yoy, in line with expectations, with the proprietary brand and Beijing Benz driving growth.
  • Beijing Hyundai's sales declined due to channel inventory destocking, but new models like the E-class and Verna are expected to boost performance in the coming months.
  • BAIC plans to expand into South Africa through a joint venture, which could be a positive for the company, though details are not yet available.
  • Maintain BUY with a target price of HK$12.50.

Indonesia

• Matahari Putra Prima (MPPA IJ):
  • 3Q16 results showed a decline in net income, but the company is expected to have better earnings in 2017 due to higher coal and CPO prices and a shift to Smart Club format.
  • The analyst maintains a BUY rating, but revised the target price to Rp2,000 (down from Rp2,250), due to a 11.5% cut in 2017 EPS estimate.

Malaysia

• Ekovest (EKO MK):
  • Entered into a sale-and-purchase agreement to sell a 40% stake in DUKE to EPF, and declared a RM244.4m special dividend.
  • Maintain BUY with a target price of RM3.00.

Singapore

• M&A Activity:
  • M&A continues to be a focus area, with companies like Cityneon and SMI Holdings holding roadshows in Singapore.
  • The report highlights companies with potential accretive acquisitions that may attract investor interest.

Thailand

• Advanced Info Service (ADVANC TB):

  • 3Q16 results were in line with estimates but below consensus by 10%.
  • Maintain BUY with a target price of Bt210.00.

• GFPT (GFPT TB):

  • 3Q16 earnings were slightly better than expected.
  • Maintain SELL with a target price of Bt13.70.

• KCE Electronics (KCE TB):

  • 3Q16 earnings hit new highs.
  • Maintain HOLD with a target price of Bt110.00.

• Thai Union Group (TU TB):

  • 3Q16 earnings were slightly lower than expected.
  • Maintain BUY with a target price of Bt24.50.

• PTT Exploration & Production (PTTEP TB):

  • High chance of consensus earnings upgrade and success in M&A deals.
  • Maintain BUY with a target price of Bt101.00.

Key Indices

• DJIA: Up 2.1% in one day, 0.6% in one week, 0.1% in one month, and 4.8% year-to-date.
• S&P 500: Up 2.2% in one day, 0.3% in one week, -1.0% in one month, and 4.3% year-to-date.
• FTSE 100: Up 1.7% in one day, -2.1% in one week, -3.4% in one month, and 9.0% year-to-date.
• AS30: Up 1.3% in one day, -1.3% in one week, -3.9% in one month, and -0.3% year-to-date.
• CSI 300: Up 0.1% in one day, 0.6% in one week, 3.2% in one month, and -10.0% year-to-date.
• FSSTI: Up 0.4% in one day, -0.5% in one week, -2.6% in one month, and -2.8% year-to-date.
• HSCEI: Up 1.2% in one day, 0.5% in one week, -3.2% in one month, and -0.5% year-to-date.
• HSI: Up 0.7% in one day, -0.6% in one week, -4.4% in one month, and 4.0% year-to-date.
• JCI: Up 0.4% in one day, -0.7% in one week, 0.2% in one month, and 17.3% year-to-date.
• KLCI: Up 0.1% in one day, -1.3% in one week, -0.9% in one month, and -2.5% year-to-date.
• KOSPI: Up 0.8% in one day, -0.5% in one week, -2.7% in one month, and 1.8% year-to-date.
• Nikkei 225: Up 1.6% in one day, -1.5% in one week, 1.9% in one month, and -9.8% year-to-date.
• SET: Up 1.1% in one day, 0.4% in one week, -0.1% in one month, and 16.6% year-to-date.
• TWSE: Up 1.3% in one day, -1.1% in one week, -0.8% in one month, and 10.2% year-to-date.
• BDI: Up 1.8% in one day, 1.5% in one week, -5.5% in one month, and 82.0% year-to-date.
• CPO (RM/ml): Down 0.1% in one day, -0.5% in one week, up 1.7% in one month, and 26.8% year-to-date.
• Brent Crude (US$/bbl): Up 1.6% in one day, -4.1% in one week, -10.8% in one month, and 24.2% year-to-date.

Top Picks

• BUY:

  • Air China (753 HK): Target price HK$7.00, potential upside 34.1%
  • Ping An Insurance (2318 HK): Target price HK$47.00, potential upside 14.5%
  • Ciputra Property (CTRP IJ): Target price IJ$960.00, potential upside 25.5%
  • Indosat (ISAT IJ): Target price IJ$9,500.00, potential upside 49.0%
  • Genting Bhd (GENT MK): Target price MK$9.90, potential upside 23.9%
  • City Dev (CIT SP): Target price SP$10.36, potential upside 21.9%
  • OCBC (OCBC SP): Target price SP$10.45, potential upside 23.5%
  • Bangkok Dusit (BDMS TB): Target price TB$31.20, potential upside 36.8%
  • Siam Cement (SCC TB): Target price TB$645.00, potential upside 28.5%

• SELL:

  • Hartalega Holdings (HART MK): Target price MK$3.33, potential downside 34.0%

Key Assumptions

• GDP Growth:

  • US: 2.6% (2015), 2.0% (2016F), 2.7% (2017F)
  • Euro Zone: 2.0% (2015), 1.4% (2016F), 1.0% (2017F)
  • Japan: 0.5% (2015), 0.6% (2016F), 0.8% (2017F)
  • Singapore: 2.0% (2015), 1.4% (2016F), 1.7% (2017F)
  • Malaysia: 5.0% (2015), 4.2% (2016F), 4.5% (2017F)
  • Thailand: 2.8% (2015), 3.2% (2016F), 3.5% (2017F)
  • Indonesia: 4.8% (2015), 5.0% (2016F), 5.2% (2017F)
  • Hong Kong: 2.4% (2015), 2.1% (2016F), 1.8% (2017F)
  • China: 6.9% (2015), 6.5% (2016F), 6.2% (2017F)

• Brent Crude (US$/bbl):

  • 2015: 53.60
  • 2016F: 42
  • 2017F: 54

• CPO (RM/mt):

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

Corporate Events

• Cityneon Roadshow: Hong Kong, 9 Nov
• SMI Holdings Roadshow: Singapore, 10 Nov
• Shanghai Industrial Urban Devt Group Roadshow: Shanghai, 10 Nov
• Xstep International Holdings Roadshow: Kuala Lumpur, 15 Nov
• Ministry of Finance Indonesia Corporate Roadshow: Taipei, 21-22 Nov
• Indo Strategy Analyst Marketing: Taipei, 23 Nov
• Metro Pacific Investments Roadshow: Canada, 24-25 Nov

Key Financial Metrics (BAIC Motor)

• Sales:
  • Oct 16: 165,616 units (+7% yoy, -8% mom)
  • 10M16: 1,480,978 units (+17% yoy)
• Earnings:
  • 2016F: Net profit Rmb5,792m (up 8% from 2015)
  • 2017F: Net profit Rmb8,095m (up 24% from 2016F)
• Valuation:
  • 2016F PE: 8.6x
  • 2017F PE: 6.5x
  • Target price: HK$12.50
• Growth Assumptions:
  • 2016: 1.9m units
  • 2017: 2.1m units
  • 2018: 2.3m units

Analysts

• Chaoping Zhu: +8621 5404 7225 ext. 822, chaoping@uobkayhian.com
• Ye Xu: +8621 5404 7225 ext. 820, xuye@uobkayhian.com

Risk and Upside

• Upside Risk: Stronger-than-expected sales for Beijing Hyundai and the proprietary brand.
• Downside Risk: Proprietary brand's net loss expanding and Beijing Benz E-class sales underperforming.

Recommendation

• Maintain BUY for BAIC Motor with a target price of HK$12.50. The stock is undervalued relative to historical forward PE, and strong 2017 earnings are expected to drive a price increase.