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报告摘要

Regional Morning Notes Summary - 03 February 2015

Core Content Overview

This document provides a detailed analysis of financial markets and company performance in various Asian regions, including China, Hong Kong, Indonesia, Singapore, and Thailand. It includes key insights on market trends, corporate updates, valuation metrics, and investment recommendations for specific companies.

Key Market Insights

China

Financial Sector: Brokers are seen as overvalued, while banks and insurers are preferred due to their better positioning and more reasonable valuations.
GDP Growth Assumptions:
- 2015F: 7.0%
- Brent (US$/bbl): 65 (2015F), 70 (2016F)
- CPO (US$/mt): 765 (2015F), 788 (2016F)
- BDI: 1,300 (2015F), 1,400 (2016F)
Sector Weighting:
- Securities, Insurance, and Banking remain at market weight.
Top Picks:
- ICBC (BUY, Target: HK$6.90)
- CMB (BUY, Target: HK$21.35)
- Ping An (BUY, Target: HK$100.00)
Key Risks:
- Worse-than-expected NPL formation
- Faster-than-expected interest rate liberalisation

Hong Kong

Emperor Watch & Jewellery (887 HK):
- 4Q14 results were exceptionally weak, with a 20% yoy drop in net profit.
- 2014 net profit dropped to HK$159m, below consensus and forecasts.
- We cut 2014-16 EPS forecasts by 31.9%, 29.5%, and 21.1% respectively.
- Target Price: HK$0.34, Entry Price: HK$0.28.
- Valuation Metrics:
  - PE: 13.4 (2014F), 11.9 (2015F), 9.6 (2016F)
  - P/B: 0.5 (2014F), 0.5 (2015F), 0.4 (2016F)
  - EV/EBITDA: 8.0 (2014F), 10.0 (2015F), 7.4 (2016F)
- Key Risks:
  - Decline in Chinese tourist numbers
  - Rental hikes upon lease expiry
  - Narrowing price gap between Hong Kong and China

Indonesia

Bank Danamon (BDMNIJ):
- 4Q14 results were weak due to slower loan growth and restructuring costs (Rp306b).
- Target Price: Rp4,100, Entry Price: Rp3,900.
- Key Ratios:
  - Non-interest income fell 23% yoy to Rp3,956m.
  - Net profit dropped 36% yoy to Rp2,604b.
  - Cost of funds increased to 7.2% (from 6.8% in 4Q13).
  - CIR increased to 55.7% in 2014 (from 52.5% in 2013).
  - LDR remained at 92.6%.
- Valuation Metrics:
  - PE: 14.6 (2014), 10.6 (2015F), 8.7 (2016F)
  - P/B: 1.4 (2014), 1.1 (2015F), 1.0 (2016F)

Singapore

Singapore Telecommunications (ST SP):
- Recommended as a BUY with a target price of S$4.39.
- Key View: "Every dog has its day."
- Valuation Metrics:
  - PE: 13.4 (2014F), 11.9 (2015F), 9.6 (2016F)
  - P/B: 0.5 (2014F), 0.5 (2015F), 0.4 (2016F)

Thailand

Bangkok Dusit Medical Services (BGH TB):
- Strong 4Q14 results indicate a return of growth momentum.
- Target Price: Bt21.50.
PTT Global Chemical (PTTGC TB):
- Expected to report a net loss in 4Q14 due to a huge inventory loss.
- Target Price: Bt76.00.
- Key View: This loss should have already been priced in.

Key Indices Performance

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	17361.0	1.1	-1.8	-2.6	-2.6
S&P 500	2020.9	1.3	-1.8	-1.8	-1.8
FTSE 100	6782.6	0.5	-1.0	3.6	3.3
AS30	5586.5	0.6	2.2	3.2	3.7
CSI 300	3354.0	-2.3	-7.0	-5.1	-5.1
FSSTI	3423.4	0.9	0.7	1.6	1.7
HSCEI	11578.3	-1.2	-5.3	-5.4	-3.4
HSI	24484.7	-0.1	-1.7	2.6	3.7
JCI	5276.2	-0.2	0.3	0.6	0.9
KLCI	1781.3	-0.1	-0.8	1.6	1.1
KOSPI	1952.7	0.2	0.9	1.4	1.9
Nikkei 225	17558.0	-0.7	0.5	0.6	0.6
SET	1582.7	0.1	-0.4	5.7	5.7
TWSE	9387.0	0.3	-1.0	0.9	0.9
BDI	590	-3.0	-16.1	-23.5	-24.6
CPO (RM/mt)	2126	-2.6	-5.6	-7.7	-7.5
Nymex Crude	50	3.3	10.4	-5.4	-6.5

Top Sector Picks

Company	Recommendation	Target Price (HK$)	Share Price (HK$)	Potential Upside
ICBC	BUY	6.90	5.50	25.5%
CMB	BUY	21.35	17.24	24.0%
Ping An	BUY	100.00	80.70	24.0%

Corporate Events

United Overseas Bank Economists Group Luncheon: Singapore, 4 Feb
Singapore and Indonesia Telecommunications Sectors Analyst Presentation: Singapore, 4 Feb and 6 Feb
Oil & Gas Sector Analyst Presentation: Hong Kong, 5 Feb – 6 Feb
PTT Global Chemical Corporate Roadshow: Kuala Lumpur, 23 Feb – 24 Feb
ASEAN Conference: Taipei, 17 Mar – 18 Mar

Investment Recommendations

Prefer banks over insurers and brokers due to their better valuations and potential to benefit from further monetary policy loosening.
Mid-sized banks are more likely to benefit from changes in LDR calculation.
Minsheng Bank (MSB): Share price likely to face pressure due to the resignation of its president; recommend accumulating on further pullback.

Summary of Key Risks

Emperor Watch & Jewellery (887 HK):
- Decline in Chinese tourist numbers
- Rental hikes upon lease expiry
- Narrowing price gap between Hong Kong and China
Bank Danamon (BDMNIJ):
- Rising cost of funds and operating expenses
- Weak loan growth and restructuring costs

Valuation and Financial Highlights

Emperor Watch & Jewellery (887 HK):
- Net profit (adj.): HK$159m (2014F), HK$178m (2015F), HK$221m (2016F)
- EPS (cent): 2.3 (2014F), 2.6 (2015F), 3.2 (2016F)
- PE: 13.4 (2014F), 11.9 (2015F), 9.6 (2016F)
- Net margin (%): 3.0 (2014F), 3.1 (2015F), 3.4 (2016F)
- Dividend yield (%): 7.5 (2014F), 8.4 (2015F), 10.3 (2016F)
Bank Danamon (BDMNIJ):
- Net profit (rep./act.): Rp2,604b (2014), Rp3,809b (2015F), Rp4,612b (2016F)
- EPS (Rp): 271.7 (2014), 397.4 (2015F), 481.2 (2016F)
- PE: 14.6 (2014), 10.6 (2015F), 8.7 (2016F)
- P/B: 1.4 (2014), 1.1 (2015F), 1.0 (2016F)

Summary of Market Outlook

Financial Sector in China: Expected to see a slowdown in NPL growth in 2H15 due to supportive policies and asset securitisation.
Emperor Watch & Jewellery: Continued weak sales, with no improvement in 1H15; potential for recovery if rental costs ease and price gap narrows.
Singapore Telecommunications: Strong outlook with a BUY recommendation.
Banking Sector: Overall weak performance in 2014, with continued pressure on NPL and interest rates.

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