20171006-大华继显-Regional_Morning_Notes__24页_1mb

报告摘要

Regional Morning Notes Summary - 06 October 2017

Core Content Overview

This document provides a regional update on stock performance, key financial metrics, and strategic insights for various markets and companies across Asia, with a focus on China, Indonesia, Malaysia, Singapore, and Thailand. It includes updates on airport operations, small/mid-cap highlights, corporate events, and analyst recommendations.

Main Points by Region

China

Airports Sector Update:
- CAAC introduced new measures to improve on-time performance (OTP) and capacity utilisation, which may affect slot availability.
- BCIA and Shanghai Airport are unlikely to be impacted, but BCIA might have to reduce capacity by about 1.7% in 2018, leading to a potential 3% reduction in earnings.
- The impact is expected to be temporary due to the opening of Daxing Airport in 2019.
- BCIA is recommended as a BUY with a target price of HK$15.70, and Shenzhen Airport is also recommended as a BUY with a target price of Rmb10.60.
- Most Chinese airports have OTP below 80%, but they are not expected to face significant penalties as long as they meet the criteria for slot expansion.

Indonesia

Kino Indonesia (KINO IJ):
- Expected to show better performance in 2H17 and 2018.
- Net profit fell 87% yoy in 1H17 due to low purchasing power, tighter competition, and distribution restructuring.
- Revenue and net profit are expected to grow by 22% and 56-79% yoy in 2H17, respectively.
- KINO targets 15% yoy revenue growth in 2018 with a 7-8% net margin.
- The company is focusing on its performing brands and product innovation, including the launch of traditional herbal medicine in 4Q17.
- KINO is trading at 12.9x 2018F PE.

Malaysia

Alpha Picks:
- Yong Tai has been added to the existing BUY list for October.
- Malaysia Airports Holdings (MAHB MK) is recommended as a SELL due to its poor performance and valuation.

Singapore

Oversea-Chinese Banking Corporation (OCBC SP):
- Recommended as a BUY with a target price of S$13.38.
- 3Q17 results are expected to be steady.

Thailand

Siam Cement (SCC TB):
- Recommended as a BUY with a target price of Bt600.00.
- Described as a laggard play.

Key Indices Performance

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	22775.4	0.5	1.8	4.4	15.2
S&P 500	2552.1	0.6	1.7	3.5	14.0
FTSE 100	7508.0	0.5	2.5	2.1	5.1
AS30	5720.3	0.0	(0.2)	(0.6)	0.0
CSI 300	3836.5	0.4	(0.0)	0.2	15.9
FSSTI	3261.8	0.8	1.1	0.9	13.2
HSI	28379.2	0.7	3.1	2.3	29.0
JCI	5901.9	(0.8)	1.0	1.3	11.4
KLCI	1759.1	(0.2)	0.1	(0.8)	7.1
KOSPI	2394.5	0.9	0.2	1.6	18.2
Nikkei 225	20628.6	0.0	1.3	6.6	7.9
SET	1690.9	0.2	1.5	4.3	9.6
TWSE	10518.3	0.5	2.2	(0.3)	13.7
BDI	1320	0.9	(5.1)	8.6	37.4
CPO (RM/mt)	2719	0.7	(0.7)	1.5	(15.0)
Brent Crude	57	2.2	(0.7)	6.8	0.3

Key Assumptions

Region	GDP (yoy) 2016	GDP (yoy) 2017F	GDP (yoy) 2018F
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 (Avg)	45	52	55
CPO (Avg)	2,653	2,600	2,400

Corporate Events

Event	Venue	Start Date	End Date
Roadshow with Adhi Karya Persero	UK	2 Oct	6 Oct
Asian Gems Conference 2017	Singapore	10 Oct	11 Oct
Post Conference Marketing on Indonesia Strategy	Singapore	12 Oct	12 Oct
Luncheon with O-Net Technologies	Hong Kong	17 Oct	17 Oct
Fintech Seminar 2017	Kuala Lumpur	19 Oct	19 Oct
UOB Kay Hian Annual Regional Strategy Conference	Kuala Lumpur	13 Nov	13 Nov

Top Picks

Company	Ticker	Recommendation	Target Price	Pot. +/- (%)
BCIA	694 HK	BUY	HK$15.70	14.1
Shenzhen Airport	000089 CH	BUY	Rmb10.60	66.7
Kino Indonesia	KINO IJ	BUY	Rp1,820	35.5
Siam Cement	SCC TB	BUY	Bt500.00	21.0
OCBC	OCBC SP	BUY	S$11.25	18.9
CSPC Pharmaceutical	1093 HK	BUY	HK$15.24	14.1
Hengan Intl	1044 HK	BUY	HK$80.00	8.3
Ace Hardware	ACES IJ	BUY	1,300.00	3.2
Waskita Kanya	WSKT IJ	BUY	1,800.00	66.7
Ekovest	EKO MK	BUY	1.45	35.5
V.S. Industry	VSI MK	BUY	3.10	6.9

Analysts

K Ajith: +65 6590 6627 | ajith@uobkayhian.com
Sophie Yu: +852 2826 1392 | sophie.yu@uobkayhian.com.hk
Andre Suntono: +6221 2993 3979 | andresuntono@uobkayhian.com

Risks

Kino Indonesia:
- Key risks include low purchasing power, higher raw material prices, tighter competition, and IDR depreciation against the US dollar.

Summary of Key Financials for Kino Indonesia

Metric	1H17 (Rpb)	1H16 (Rpb)	YoY (%)
Revenue	1,423.4	1,938.6	-26.6
Net Profit (rep./act.)	23.8	183.7	-87.0
Gross Margin	41.0	42.2	-29.0
Net Margin	1.7	9.5	-81.9

Strategic Insights

Airport Sector:
- The new OTP measures may cause short-term challenges, but the impact is expected to be temporary with the introduction of new airports.
- Airlines may face some pressure, but the effect is likely limited to one year.
- Companies like BCIA and Shenzhen Airport are still considered strong investment opportunities.
Small/Mid Cap Focus:
- Kino Indonesia is expected to show strong performance in 2H17 and 2018 due to improved purchasing power and distribution channels.
- The company is focusing on its top-performing brands and launching new products to boost growth.
Market Outlook:
- Overall, the market is showing a positive trend with growth in GDP and corporate earnings expected across several regions.
- The document highlights the importance of monitoring key financial metrics and market dynamics to identify strong investment opportunities.

Conclusion

The document outlines a positive outlook for several companies in the region, particularly in the airport and FMCG sectors. It emphasizes the temporary nature of challenges related to new regulations and the potential for recovery in 2H17 and 2018. Analysts suggest maintaining a BUY stance on BCIA and Shenzhen Airport while highlighting Kino Indonesia's potential for significant growth. The overall market remains optimistic, with several key indices showing positive performance.

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