20180926-大华继显-Regional_Morning_Notes_27页_1mb

报告摘要

Regional Morning Notes Summary - 26 September 2018

Core Content Overview

This document provides a comprehensive analysis of the financial and market outlook for various countries and sectors, focusing on China, Indonesia, Malaysia, Singapore, and Thailand. It includes updates on key industries, stock performance, corporate events, and valuation insights.

Key Sectors and Regions

China

Internet Sector:
- The pre-tax deduction proportion of R&D expenses was increased to 75%, which is expected to boost net income for covered China internet stocks by 1–44%.
- Companies like Kingsoft will benefit the most due to their thin net income margins, while Tencent will see the least impact.
- The policy change is seen as a positive catalyst, and the overall outlook for the sector remains OVERWEIGHT.
Metals Sector (Copper):
- Copper prices rebounded due to a weaker US dollar, but trade tensions and a strong dollar are expected to suppress short-term performance.
- Positive long-term view on copper due to solid fundamentals and stable supply.
- Top Pick: Zijin Mining, with a revised target price of HK$3.47.
- Jiangxi Copper target price was cut to HK$8.59 due to weak performance and lack of catalysts.

Indonesia

Integra Indocabinet (WOOD IJ):
- Positive impact from the US-China trade war, with a 107.6% YoY sales increase in the forestry segment in 1H18.
- Expected sales growth of 15% YoY in 2018, driven by seasonality and international partnerships.
- Expansion into retail and distribution is expected to enhance brand recognition and drive sales.
- Currency depreciation benefits the manufacturing segment as a large portion of its costs are in USD.
- Risks include currency fluctuations, trade regulations, and economic downturns.

Malaysia

VS Industry (VSI MK):
- 4QFY18 results slightly above expectations.
- Key re-rating catalyst: news on new contracts and new capacity utilization.
Gamuda (GAM MK):
- Expected to deliver promising earnings in FY18, supported by construction billings and improved property sales from overseas markets.
Yinson (YNS MK):
- Progress on projects remains on track, with optimism about securing more contracts.
- Positive outlook on short-term performance and potential for additional projects.

Singapore

Oversea-Chinese Banking Corporation (OCBC SP):
- Redefined customer engagement through digital transformation.
- Buy recommendation with a target price of S$13.68.

Thailand

Krunthai Card (KTC TB):
- Initiated coverage as a leading consumer credit provider with a strong earnings outlook.
- Buy recommendation with a target price of Bt41.25.

Key Indices Performance

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	26492.2	(0.3)	0.9	2.7	7.2
S&P 500	2915.6	(0.1)	0.4	1.4	9.0
FTSE 100	7507.6	0.7	2.8	(0.9)	(2.3)
AS30	6299.1	(0.0)	0.5	(0.9)	2.1
CSI 300	3379.8	(0.9)	5.5	1.6	(16.2)
FSSTI	3236.1	0.5	3.1	0.7	(4.9)
HSCEI	10827.5	(1.8)	3.5	0.4	(7.5)
HSI	27499.4	(1.6)	2.1	(0.6)	(8.1)
JCI	5874.3	(0.1)	1.1	(1.6)	(7.6)
KLCI	1794.5	(0.3)	0.1	(0.8)	(0.1)
KOSPI	2339.2	0.7	0.9	2.0	(5.2)
Nikkei 225	23940.3	0.3	3.7	5.9	5.2
SET	1748.0	(0.1)	0.2	2.6	(0.3)
TWSE	10978.9	0.1	1.4	1.6	3.2
BDI	1434	1.5	5.8	(15.5)	5.0
CPO (RM/mt)	2126	0.4	(3.8)	(2.5)	(11.1)
Brent Crude	82	0.8	3.6	8.0	22.4

Top Picks and Recommendations

BUY Recommendations

Alibaba (BABA US): Target price US$230.00, current price US$162.37, upside 37.9%.
Tencent (700 HK): Target price HK$489.00, current price HK$313.60, upside 49.2%.
Ctrip (CTRP US): Target price US$52.00, current price US$37.56, upside 23.1%.
Kingsoft (3888 HK): Target price HK$17.00, current price HK$13.70, upside 19.7%.
Zijin Mining (2899 HK): Target price HK$3.47, current price HK$3.02, upside 14.9%.

SELL Recommendation

Hartalega (HART MK): Target price HK$4.02, current price HK$6.59, downside 39.0%.

Key Assumptions

Country/Region	GDP Growth (yoy) 2017	GDP Growth (yoy) 2018F	GDP Growth (yoy) 2019F
US	2.2	2.7	2.3
Euro Zone	2.4	2.1	1.8
Japan	1.7	1.2	1.1
Singapore	3.6	3.2	2.8
Malaysia	5.9	4.8	4.8
Thailand	3.9	4.5	4.2
Indonesia	5.1	5.3	5.4
Hong Kong	3.8	3.8	2.8
China	6.9	6.4	6.2
CPO (RM/mt)	2,783	2,400	2,500
Brent (US$/bbl)	55.00	71.60	71.00

Corporate Events

Analyst Presentation on China Automobile Sector – Kuala Lumpur, 25–26 Sep 18
Roadshow with PT. Sarimelati Kencana (PZZA IJ) – Taipei, 25–26 Sep 18
Corporate Roadshow with BBI Life Sciences Corporation (1035 HK) – Hong Kong, 26 Sep 18
Group Luncheon with STEC TB and GUNKUL TB – Thailand, 27 Sep 18
Analyst Presentation on Malaysia Strategy & Outlook – Taipei, 27–28 Sep 18
Analyst Presentation on ASEAN Plantation – Kuala Lumpur, 27 Sep 18
Roadshow with CSE Global (CSE SP) – Kuala Lumpur, 4 Oct 18
Roadshow with Shenzhen International Group Holdings Limited (2313 HK) – Taipei, 4–5 Oct 18
UOB Kay Hian Asian Gems Conference – Singapore, 9–10 Oct 18
Roadshow with Digi.com (DIGI MK) – Canada, 30 Oct–2 Nov
UOB Kay Hian Annual Regional 1H2019 Strategy Conference – Kuala Lumpur, 13 Nov

Valuation Insights

Integra Indocabinet (WOOD IJ) is currently trading at 18.9x 2018F PE, which is +1.5 SD above its historical mean of 10.8x.
Key financials indicate strong growth in the forestry segment and positive outlook for 2018.

Risk Factors

Currency risk: Affects sales and raw material costs.
Trade regulations: Uncertainties in US policies may influence wood log prices.
Economic factors: Could impact overall demand and company performance.

Conclusion

The document highlights positive developments in the China Internet and Indonesian forestry sectors, with a focus on growth potential and policy changes. It recommends BUY on several key stocks like Alibaba, Tencent, Ctrip, Kingsoft, and Zijin Mining, while SELL on Hartalega. The Indonesian forestry sector is expected to benefit from the US-China trade war, with Integra Indocabinet showing strong sales growth and a positive outlook for 2018. Overall, the market outlook is positive with key re-rating catalysts and potential for further growth in the short and medium term.