20131009-大和证券-Asia_Pacific_Daily_28页_1mb

Asia Pacific Daily Summary - 9 October 2013

Conference Information

• Daiwa Investment Conference: Scheduled for 19-22 November 2013 in Hong Kong, specifically at the Island Shangri-La, Pacific Place, Supreme Court Road, Admiralty.
• The conference is expected to cover macroeconomic research and equity research topics.

Macro Research Highlights

China Economy

• 3Q13 GDP Growth: Expected to rise slightly to 7.6% YoY, slightly above the Bloomberg consensus of 7.7% YoY.
• September Exports: Projected to grow 3% YoY, below the Bloomberg forecast of 5% YoY, due to disappointing performance from Korea and Taiwan.
• September Imports: Forecasted at 2% YoY, lower than the Bloomberg consensus of 7% YoY.
• Industrial Production (IP): Expected to remain stable at 10.2% YoY for September, supported by a PMI production sub-index reading of 52.9.
• Fixed-Asset Investment (FAI): Projected to grow 20.3% YoY YTD for September, driven by fiscal stimulus measures.
• Retail Sales: Expected to increase 13.5% YoY, up from 13.4% YoY in August, supported by higher inflation and housing-related durable product sales.
• Inflation: CPI inflation is forecasted at 2.9% YoY for September, up from 2.6% YoY in August due to higher food prices and the Mid-Autumn Festival effect.
• M2 and Loans: New RMB loans for September are expected to reach CNY680bn, with M2 growth decelerating to 14.5% YoY.

Euro Area

• Economic Recovery Slowed: Despite firm GDP growth in Q2 and improved PMIs, recent data suggest a slowdown in Q3.
• German Exports: Rose 1.0% M/M in August, but this was below the previous month's -0.8% M/M in July, indicating a slower pace of growth.
• French Exports: Declined 1.4% M/M in August, following gains in previous months, with weak business sentiment.
• Spanish Industrial Production: Remained flat in Q3, following a cumulative decline over the previous two months.
• Key Data Releases: German industrial production and UK retail sales data are expected on Wednesday, 16 October.

Equity Research Highlights

Japan Auto Parts/Tire Sector

• Earnings Preview: Expected to show mixed performance.
• Japanese Car Sales in China: Surpassed forecast significantly, indicating strong demand.

China Aviation Sector

• Positive Outlook: Air traffic growth during the Golden Week holiday reached 16% YoY, exceeding expectations and government forecasts.
• Passenger Yields: Improved slightly, with domestic yields showing more significant gains than international ones.
• Top Picks: Air China (753 HK) is the top pick with a Buy rating, followed by China Eastern (670 HK) with a Buy rating and TravelSky (696 HK) with an Outperform rating.
• Valuation Summary:
  • Air China: PER 14.8x (2013E), PBR 1.0x (2013E), EV/EBITDA 5.5x (2013E)
  • China Southern: PER 32.6x (2013E), PBR 0.7x (2013E), EV/EBITDA 6.6x (2013E)
  • China Eastern: PER 14.9x (2013E), PBR 0.9x (2013E), EV/EBITDA 7.2x (2013E)
  • Cathay Pacific: PER 26.7x (2013E), PBR 1.0x (2013E), EV/EBITDA 5.2x (2013E)
  • TravelSky: PER 11.1x (2013E), PBR 1.5x (2013E), EV/EBITDA 6.3x (2013E)

Novatek Microelectronics (3034 TT)

• Rating: Hold
• Target Price: TWD120 (up from TWD114)
• Upside: 4.3%
• Key Points:
  • Expected 10% penetration rate of UHD-TV sets in 2014, boosting shipments.
  • 2013E EPS revised down by 3% due to lower gross margins.
  • 2014E EPS revised up by 2% due to better sales growth.
  • Gross margin expected to remain flat at 28% for 2014 due to product mix changes.

Company Roadshows

• 7-8 Oct: MC TB (SG)
• 7-10 Oct: 101 HK (US)
• 8-9 Oct: 3311 HK (Taipei)
• 9 Oct: 1313 HK (HK), 590 HK (HK), 590 HK (SG)
• 14-17 Oct: 4904 TT (US)
• 14-18 Oct: 2678 HK (EU)
• 17 Oct: 3336 HK (HK), 3336 HK (SG)
• 17-18 Oct: 917 HK (Tokyo)
• 18 Oct: 1728 HK (HK), 1728 HK (SG), CCT SP (SG)

Daiwa Asian Events

• 10-Oct: Daiwa ASEAN Conference - Philippines Corporate Day 2013 (SG)
• 16-Oct: KOSDAQ Global Investors Conference 2013 (HK)
• 18-Oct: KOSDAQ Global Investors Conference 2013 (SG)
• 21-22 Oct: Daiwa ASEAN Conference - Best of Indonesia 2013 (Tokyo)
• 23-Oct: Daiwa ASEAN Conference - Best of Indonesia 2013 (Toronto)
• 19-22 Nov: Daiwa Investment Conference Hong Kong 2013 (HK)

Regional Indices

• TPX: Performance change 0.2% (1D), 0.2% (1M), 33.8% (YTD); EPS growth 64.3% (2013E), 9.4% (2014E); PER 15.0x (2013E), 13.7x (2014E)
• HSCEI: Performance change 1.0% (1D), 1.9% (1M), -7.9% (YTD); EPS growth 9.2% (2013E), 8.2% (2014E); PER 6.9x (2013E), 6.4x (2014E)
• HSI: Performance change 0.9% (1D), 2.5% (1M), 2.3% (YTD); EPS growth 10.3% (2013E), 6.9% (2014E); PER 10.9x (2013E), 10.2x (2014E)
• KOSPI: Performance change 0.4% (1D), 2.4% (1M), 0.3% (YTD); EPS growth 16.6% (2013E), 23.1% (2014E); PER 11.0x (2013E), 9.0x (2014E)
• TWSE: Performance change 0.5% (1D), 2.6% (1M), 8.8% (YTD); EPS growth 35.5% (2013E), 11.5% (2014E); PER 15.7x (2013E), 14.0x (2014E)
• SENSEX: Performance change 0.4% (1D), 3.7% (1M), 2.9% (YTD); EPS growth 8.3% (2013E), 17.0% (2014E); PER 15.4x (2013E), 13.2x (2014E)
• FSSTI: Performance change 0.3% (1D), 3.2% (1M), -0.6% (YTD); EPS growth -2.1% (2013E), 9.4% (2014E); PER 14.9x (2013E), 13.7x (2014E)
• FBMKLCI: Performance change 0.0% (1D), 3.1% (1M), 5.2% (YTD); EPS growth -1.3% (2013E), 9.2% (2014E); PER 16.7x (2013E), 15.3x (2014E)
• SET: Performance change 1.4% (1D), 7.3% (1M), 3.0% (YTD); EPS growth 13.6% (2013E), 14.0% (2014E); PER 13.0x (2013E), 11.4x (2014E)
• PCOMP: Performance change 0.2% (1D), 8.0% (1M), 11.0% (YTD); EPS growth 8.6% (2013E), 7.5% (2014E); PER 20.0x (2013E), 18.6x (2014E)
• JCI: Performance change 1.3% (1D), 8.8% (1M), 2.7% (YTD); EPS growth 10.7% (2013E), 14.7% (2014E); PER 15.1x (2013E), 13.2x (2014E)
• AS51: Performance change -0.2% (1D), 0.1% (1M), 10.8% (YTD); EPS growth 7.9% (2013E), 9.5% (2014E); PER 15.1x (2013E), 13.8x (2014E)

Key Notes

• Windows XP Impact: The end of support for Windows XP is expected to boost IT spending, benefiting the technology sector.
• Bond Market Movements:
  • BKO 0¼ 09/15: Yield 0.172%, change +0.010%
  • OBL 1 10/18: Yield 0.838%, change +0.013%
  • DBR 2 08/23: Yield 1.810%, change +0.008%
  • UKT 4¾ 09/15: Yield 0.425%, change -0.006%
  • UKT 1¼ 07/18: Yield 1.551%, change -0.005%
  • UKT 2¼ 09/23: Yield 2.699%, change -0.008%

Summary

• The Asia Pacific market is expected to show mixed performance, with some positive surprises in China's aviation sector and tech industry due to the end of Windows XP support.
• The Daiwa Investment Conference is set for November 2013 in Hong Kong, covering macroeconomic and equity research.
• The Chinese economy is projected to show a slight improvement in GDP growth, with cautious outlooks on exports and industrial production.
• The euro area's economic recovery appears to have slowed, with German and French exports underperforming and Spanish industrial production remaining flat.
• Regional indices show varying degrees of performance, with some markets showing strong growth and others experiencing declines.
• Novatek Microelectronics is maintained at a Hold rating with a revised target price of TWD120, reflecting a flat outlook for 2013 and a slight improvement in 2014.
• The bond market saw mixed movements, with yields increasing for some and decreasing for others.