20170728-大华继显-Regional_Morning_Notes_32页_1mb

Regional Morning Notes Summary

Core Content Overview

This document is a summary of stock market insights and analysis for the week of 28 July 2017, covering performance updates and key financial highlights from various regions, including China, Indonesia, Malaysia, and Singapore, along with key indices and corporate events.

Main Points and Key Information

China

• TAL Educational Group (TAL US)
  • 1QFY18 Results: Revenue was $5%$ above guidance and expectations, driven by a $62%$ yoy increase in student enrolment in small classes and online courses.
  • Guidance: Revenue growth is expected to be $58 - 60%$ yoy for 2QFY18 and stronger in 2HFY18.
  • Valuation: Maintained BUY rating with an updated target price of US$183.00, reflecting a higher 3-year CAGR of $40%$ and a 1.2x PEG.
  • Financial Highlights:
    • Revenue: US$321.9m
    • Net profit: US$39.5m (Non-GAAP)
    • Net profit (GAAP): US$28.8m
    • Net margin: 14.7% (2017) to 15.2% (2020F)
    • ROE: 28.4% (2017) to 35.2% (2020F)
    • Share Price: US$149.20
    • Upside: $+22.7%$
    • Share Split: 6-for-1 ADS split effective 16 Aug 2017
  • Key Metrics:
    • Net turnover: US$620m (2016) to US$3,483m (2020F)
    • EBITDA: US$130m (2016) to US$680m (2020F)
    • Operating profit: US$111m (2016) to US$643m (2020F)
    • Net profit: US$129m (2016) to US$531m (2020F)

Indonesia

• Tiga Pilar Sejahtera Food (AISA IJ)
  • 1QFY18 Update: Maintained HOLD rating with a revised target price of Rp1,300 due to regulatory uncertainties and loss in sales from modern retailers.
  • Issues:
    • Uncertainty regarding price ceiling for branded rice.
    • Loss in sales as modern retailers stopped selling AISA products.
    • Share price decline from Rp1,605 to Rp1,195.
  • Financial Highlights:
    • Net turnover: Rp6,011m (2015) to Rp6,426m (2019F)
    • EBITDA: Rp878m (2015) to Rp1,231m (2019F)
    • Operating profit: Rp739m (2015) to Rp961m (2019F)
    • Net profit (rep./act.): Rp323m (2015) to Rp395m (2019F)
    • Net profit (adj.): Rp323m (2015) to Rp395m (2019F)
    • EPS: Rp100.5 (2015) to Rp122.8 (2019F)
    • PE: 11.9 (2015) to 9.7 (2019F)
    • P/B: 1.1 (2015) to 0.8 (2019F)
    • EV/EBITDA: 9.1 (2015) to 6.5 (2019F)
    • Share Price: Rp1,195
    • Upside: $+8.8%$
    • Major Shareholders: Tiga Pilar Corporation (23.5%), Primanex (12.0%)

Malaysia

• Sector Overview: Technology sector shows promising earnings prospects, though valuations are at a higher range.
• Pavilion REIT (PREIT MK)
  • 1H17 Results: Major tenant relocation and refurbishment continued to disrupt earnings.
  • Guidance: Better earnings expected from 3Q17 onwards.
  • Proposed Acquisition: Pavilion Extension is proposed for acquisition.
  • Share Price: RM1.75
  • Target Price: RM1.65
  • Rating: HOLD
• Tenaga Nasional (TNB MK)
  • 9MFY17 Results: In line with expectations.
  • Rating: BUY
  • Reason: Attractive valuation for a large-cap laggard trading at 10x forward earnings.
  • Target Price: RM16.00
  • Share Price: RM14.24

Singapore

• Sector Overview: REITs sector shows mixed performance, with AREIT in line for 1QFY18 and FHT in line for 3Q17.
• Oversea-Chinese Banking Corp (OCBC SP)
  • 2Q17 Results: Broad-based growth, higher CASA ratio.
  • Rating: BUY
  • Target Price: S$13.38
  • Share Price: S$11.47
• Sembcorp Marine (SMM SP)
  • 2Q17 Results: Earnings uplift from resumption of Transocean rig contract.
  • Rating: HOLD
  • Target Price: S$1.80
  • Share Price: S$1.74
• Singapore Airlines (SIA SP)
  • 1QFY18 Results: Pax yield decline pace narrowed, but sustainability in question.
  • Rating: HOLD
  • Target Price: S$10.00
  • Share Price: S$10.14
• China Aviation Oil Singapore Corp (CAO SP)
  • 2Q17 Results: "Cruising along just fine."
  • Rating: BUY
  • Target Price: S$2.26
  • Share Price: S$1.67

Key Indices

Top Picks

BUY

• Alibaba (BABA US): CP $154.15$, TP $173.00$, Pot. +/- $12.2%$
• Beijing Ent. Water (371 HK): CP $6.63$, TP $7.60$, Pot. +/- $14.6%$
• Ace Hardware (ACES IJ): CP $1,130.00$, TP $1,300.00$, Pot. +/- $15.0%$
• Waskita Karya (WSKT IJ): CP $2,240.00$, TP $3,350.00$, Pot. +/- $49.6%$
• V.S. Industrv (VSI MK): CP $2.17$, TP $2.40$, Pot. +/- $10.6%$
• OCBC (OCBC SP): CP $11.49$, TP $13.00$, Pot. +/- $13.1%$
• Siam Cement (SCC TB): TP $600.00$, Pot. +/- $20.0%$

SELL

• Great Wall Motor (2333 HK): CP $10.18$, TP $6.00$, Pot. +/- $-41.1%$
• Hartalega (HART MK): CP $7.21$, TP $4.07$, Pot. +/- $-43.6%$

Corporate Events

• Roadshow with Jacobson Pharma: Shanghai, 28 Jul
• Roadshow with Tonly Electronics Hldgs: Hong Kong, 1 Aug
• Visit to Sarawak Corridor of Renewable Energy: Sarawak, 1–3 Aug
• Luncheon with Plover Bay Technologies: Hong Kong, 3 Aug
• Luncheon with Singapore Post: Singapore, 4 Aug
• Analyst Marketing on Chinese and Singapore Banking: Brunei, 14 Aug
• Analyst Marketing on Singapore Small & Mid Caps: Malaysia, 14–15 Aug
• Analyst Marketing on Greater China Strategy: Brunei, Singapore, Kuala Lumpur (14–17 Aug)
• Analyst Presentation on Malaysia Technology Sector: Taipei, 22 Aug
• Roadshow with China TCM Hldgs: Hong Kong and Shanghai, 24 and 28 Aug
• Roadshow with Globetronics Technology: Taipei, 24–25 Aug
• Roadshow with Top Glove Corporation: US/Canada, 5–12 Sep
• Roadshow with Singapore Technologies Engineering: Canada, 9–11 Oct
• Asian Gems Conference 2017: Singapore, 10–11 Oct

Key Assumptions

Conclusion

The report highlights the performance of several key companies and sectors in the Asia-Pacific region, with a focus on TAL Educational Group, Tiga Pilar Sejahtera Food, Pavilion REIT, Tenaga Nasional, and others. It also provides insights into the broader market indices and corporate events. TAL's strong performance and guidance for continued growth support a BUY rating, while regulatory issues affect AISA's outlook, leading to a HOLD rating. Other sectors, particularly technology, show promising earnings potential, and various corporate events are planned for the upcoming months.