20170905-大华继显-Regional_Morning_Notes_32页_1mb

报告摘要

Regional Morning Notes Summary - 05 September 2017

Core Content Overview

This document provides a detailed summary of investment strategies, stock recommendations, and financial updates for various Asian markets, including China, Indonesia, Malaysia, Singapore, and Thailand. It highlights key stock picks, performance reviews, and market assumptions for the period of September 2017, with a focus on the performance of the selected stocks and their potential for growth or decline.

Main Market Strategies

China

Alpha Picks: CCB (939 HK), CSPC (1093 HK), Tongda Group (698 HK) are highlighted as BUY calls.
Sell Calls: Great Wall Motor (2333 HK) is added to the SELL list.
Key Updates:
- CCB: Maintains a BUY recommendation with a target price of HK$8.25, up from HK$6.74.
- CSPC: Maintains a BUY recommendation with a target price of HK$15.24, up from HK$12.76.
- Tongda Group: Added to the BUY list due to expected revenue from Apple, with a target price of HK$2.80.
- Great Wall Motor: Added to the SELL list due to expected margin pressure and cannibalisation of sales.
- Take Profit: Suggested for TUL (3933 HK) and Alibaba (BABA US), as their share prices have appreciated significantly.
- Ctrip (CTRP US): Closed out position due to regulatory pressures and expected near-term volatility.

Indonesia

Alpha Picks: MAPI and BBNI are retained, while ERAA is added and INTP is dropped.

Malaysia

Alpha Picks: Ann Joo and Gabungan AQRS are new additions to the BUY list. Bumi Armada, Globetronics, and VS Industry are maintained. RHB Bank remains a SELL.
Key Stock: Xiata (AXIATA MK) reported earnings within expectations, but core net profit declined 23% YoY due to weak Celcom earnings and merger losses.

Singapore

Alpha Picks: Cityneon and Wing Tai are added as new conviction calls. ISDN is removed.

Thailand

Alpha Picks: Take profit on IRPC and BCH. Switch out of PSH, GFPT, and ROBINS. Add ADVANC, AP, KTB, and PTT.

Key Indices Performance

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	21987.6	0.2	0.8	-0.5	11.3
S&P 500	2476.6	0.2	1.4	-0.0	10.6
FTSE 100	7411.5	-0.4	0.1	-1.3	3.8
AS30	5763.8	-0.4	-0.1	-0.2	0.8
CSI 300	3845.6	0.4	0.1	3.7	16.2
FSSTI	3231.0	-1.4	-0.9	-2.9	12.2
HSI	27740.3	-0.8	-0.4	0.6	26.1
JCI	5813.7	-0.9	-1.7	0.6	9.8
KLCI	1773.2	0.7	-0.1	-0.1	8.0
KOSPI	2329.7	-1.2	-1.7	-2.7	15.0
Nikkei 225	19508.3	-0.9	0.3	-2.2	2.1
SET	1619.1	0.0	2.1	2.6	4.9
TWSE	10569.9	-0.2	0.4	0.6	14.2
BDI	1183	-0.1	-2.2	14.6	23.1
CPO (RM/mt)	2701	-0.3	-0.1	2.2	-15.6
Brent Crude (US$/bbl)	52	-0.8	0.9	-0.2	-7.9

Corporate Events

Roadshow with Anta Sports Products: Shanghai, 5 Sep
Roadshow with Meidong Auto Holdings: Shanghai, 5 Sep
Lunteon with Ten Pao Group Holdings: Hong Kong, 5 Sep
Analyst Marketing on 2H17: Singapore, 5-6 Sep
Roadshow with Health Management Int'l: Kuala Lumpur, 6 Sep
Roadshow with Xin Point Holdings: Hong Kong, 7 Sep
Analyst Marketing on Indonesia Construction Sector: Singapore, 13 Sep
Roadshow with Globetronics Technology: Hong Kong, 12 Sep
Tea Session with Cityneon Holdings: Singapore, 12 Sep
Roadshow with China Yongda: Canada/US, 25-29 Sep
Asian Gems Conference 2017: Singapore, 10-11 Oct
UOB Kay Hian Annual Regional Strategy Conference: Kuala Lumpur, 13 Nov

Key Assumptions

Country/Region	2016 % YoY	2017F % YoY	2018F % YoY
US	1.6	2.5	2.5
Euro Zone	1.7	1.8	1.6
Japan	1.0	0.9	1.2
Singapore	2.0	2.4	2.5
Malaysia	4.2	5.0	4.9
Thailand	3.2	3.3	3.3
Indonesia	5.0	5.2	5.5
Hong Kong	1.9	2.0	2.0
China	6.7	6.6	6.3
Brent Crude	45	52	55
CPO (RM/mt)	2,653	2,600	2,400

Analysts' Top Alpha Picks

Company	Ticker	Recommendation	Target Price (HK$)	Upside/Downside (%)
CCB	939 HK	BUY	8.25	+22.4
CSPC	1093 HK	BUY	15.24	+19.4
Tongda Group	698 HK	BUY	2.80	+16.2
Great Wall Motor	2333 HK	SELL	5.50	-36.9
Alibaba (BABA US)	-	-	-	-
Ctrip (CTRP US)	-	-	-	-
TUL (3933 HK)	-	-	-	-

Key Financial Highlights

China Galaxy Securities (6881 HK)

1H17 Results:
- Commission & fee income fell 29.8% YoY due to lower market trading turnover and investment banking income.
- Interest income increased slightly, driven by dealer-quoted securities repurchase business.
- Net investment gains rose to Rmb1,380m.
- Total revenue declined 16.6% YoY to Rmb7,686m.
- Operating expenses fell 19.5% YoY due to lower staff costs and interest expenses.
- Net profit declined 6.4% YoY to Rmb2,112m.
Financial Ratios:
- Cost-income ratio improved from 68.3% to 66.0%.
- ROE declined from 8.1% to 7.0%.
- Leverage ratio decreased from 4.7x to 4.0x.
Valuation:
- Target price of HK$7.60 based on 2018F P/B of 1.0x.
- Current price at HK$6.92, with an upside of +9.8%.
- P/B ratio at 0.9x, with a potential 1.0x in 2018F.

Summary of Key Stocks

CCB (China Construction Bank)

Performance: Maintains BUY recommendation.
Valuation: P/B of 0.7x for 2018F, which is attractive.
Catalyst: Strong asset quality and potential outperformance in higher interest rate environment.

CSPC (China Pharmaceutical)

Performance: Maintains BUY recommendation.
Valuation: P/E of 27.2x in 2017F, with a target of 21.8x in 2018F.
Catalyst: Earlier-than-expected rollout of 2017-version NRDL and strong Vitamin C price.

Tongda Group

Performance: Added to BUY list.
Valuation: Target price of HK$2.80 based on 12x FY18F P/E.
Catalyst: Expected to benefit from Apple's new smartphone models.

Great Wall Motor

Performance: Added to SELL list.
Valuation: Target price of HK$5.50 based on 7x 2018F P/E.
Catalyst: Expected to have disappointing margins due to price competition and cannibalisation of sales.

Summary of Portfolio Returns

Methodology	1Q17 (%)	2Q17 (%)
Price-weighted	5.3	6.3
Market cap-weighted	5.6	4.9
Equal-weighted	4.4	3.3

Summary of Investment Outlook

The document reflects a cautious yet strategic approach to stock selection, with a focus on sectors showing potential for growth and those facing regulatory or market headwinds. Key emphasis is placed on improving fundamentals, such as asset quality and cost structure, as well as the impact of macroeconomic factors like GDP growth and interest rates.

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