20151028-大和证券-Asia_Pacific_Daily_71页_7mb

Daiwa Capital Markets Investment Conference Summary (2015)

Core Content

Daiwa Capital Markets hosted the 2015 Daiwa Investment Conference in Hong Kong from 10-13 November, with the event also featuring various company roadshows and research updates. The conference provided insights into key stock ratings, target prices, and financial performance across multiple sectors, including consumer goods, real estate, and technology.

Key Stock Ratings and Target Prices

• Anta Sports Products (2020 HK)

  • Rating: Downgraded from Buy to Outperform
  • Target Price: HKD23.50 (up from HKD22.20)
  • Reasoning: Anta unveiled a soccer strategy targeting the youth market in China, with 4 key avenues: soccer matches, coaching, gear, and pitches. The company is expected to sell 1 million pairs of soccer shoes in 2016, and its 2016E PER is raised to 20x. Key risk: aggressive expansion by international peers in lower-tier cities.

• WHA Corporation Pcl (WHA TB)

  • Rating: Upgraded from Sell to Buy
  • Target Price: THB4.00 (up from THB3.40)
  • Reasoning: Improved visibility due to the HEMRAJ acquisition, which is expected to significantly boost earnings. The company's net debt-to-equity is projected to decrease from 3.2x to 1.3x by 2016. Normalized EPS growth is forecasted at 40% annually in 2016-2017. The PEG is 0.4x, indicating strong value.

• Ping An Insurance (2318 HK)

  • Rating: Buy
  • Reasoning: Strong core life business, but the bank segment is a drag. The company's management is seen as solid, with continued growth expectations.

• Samsung Heavy Industries (010140 KS)

  • Rating: Sell
  • Reasoning: Better than the rest, but difficult to buck the trend of declining demand and rising OPEX.

• Siliconware Precision (2325 TT)

  • Rating: Outperform
  • Reasoning: Next upturn not a remote prospect, with strong growth in the semiconductor sector.

• Realtek Semiconductor (2379 TT)

  • Rating: Underperform
  • Reasoning: Rising OPEX is expected to outweigh demand potential.

• Starhill Global REIT (SGREIT SP)

  • Rating: Outperform
  • Reasoning: Operating performance has exceeded forecasts, suggesting strong management execution.

• Globetronics (GTB MK)

  • Rating: Buy
  • Reasoning: The company is performing well despite market softness.

• Bank Danamon (BDMN IJ)

  • Rating: Hold
  • Reasoning: 3Q15 results were below consensus with continued worsening loan quality.

• Bank Tabungan Negara (BBTN IJ)

  • Rating: Buy
  • Reasoning: 3Q15 results were above consensus with a strong NIM.

Key Research Highlights

• Kinouchi’s Technical Tips for Institutions: Focuses on mounting selling pressure as a potential entry opportunity.
• US Data Review: Durable Goods Orders are highlighted as a key economic indicator.
• Euro Wrap-up: Overview of the European market and its implications.
• Asia Tech Sector: Rick Hsu discusses the tech sector, noting that Broadcom's fast inventory draw-down is favorable for the SCM sector.
• Alibaba Group Holding Ltd (BABA US): 2QFY16 results show a 28% YoY increase in GMV, with 62% from mobile. Strong growth is expected for the company.
• AviChina Industry and Technology: 3Q15 results show Avionics as a drag, but overall performance is better than expected.

Company Roadshows

• 26-28 Oct: Lai Sun Development (488 HK) - NDR in EU
• 28 Oct: Sheng Siong Group (SSG SP) - Group Luncheon in SG
• 29 Oct: CDL Hospitality Trusts (CDREIT SP) - Group Luncheon in SG
• 3 Nov: Hyflux Ltd (HYF SP) - Small group meeting in EU
• 3-5 Nov: CITIC Telecom (1883 HK) - NDR in EU
• 9 Nov: HKEx (388 HK) - NDR in Tokyo
• 16-17 Nov: National Australia Bank (NAB AU) - NDR in Tokyo
• 18 Nov: Tencent (700 HK) - NDR in Korea
• 19 Nov: Harmony Auto (3836 HK) - Group Luncheon in HK
• 26 Nov: Yue Yuen (551 HK) - Group Luncheon in HK
• 26-27 Nov: Jolibee Foods Corp (JFC PM) - NDR in Tokyo
• 3-4 Dec: Lippo Karawach (LPKR IJ) - NDR in Canada
• 7-8 Dec: Guotai Junan (1788 HK) - NDR in Tokyo

Regional Indices Performance

Financial Summary (Anta Sports Products)

• Share Price (27 Oct): HKD21.95
• Target Price: HKD23.50 (up from HKD22.20)
• 12-month range: HKD12.70–HKD21.95
• Market Cap (USD bn): 7.06
• 3m Avg Daily Turnover (USD m): 13.85
• Shares Outstanding (m): 2,496
• Major Shareholder: Mr. Ding Shizhong (55.3%)
• Revenue (CNY m): 10,851 (2015E), 12,703 (2016E), 14,305 (2017E)
• Net Profit (CNY m): 2,012 (2015E), 2,401 (2016E), 2,790 (2017E)
• Core EPS (fully-diluted): 0.804 (2015E), 0.960 (2016E), 1.116 (2017E)
• Dividend Yield (%): 2.8 (2015E), 3.3 (2016E), 3.8 (2017E)
• PBR (x): 5.3 (2015E), 4.7 (2016E), 4.1 (2017E)
• EV/EBITDA (x): 14.1 (2015E), 11.6 (2016E), 9.8 (2017E)
• ROE (%): 24.7 (2015E), 26.5 (2016E), 27.1 (2017E)
• Free Cash Flow (CNY m): 1,592 (2015E), 2,021 (2016E), 2,471 (2017E)

Key Assumptions (Anta Sports Products)

• Gross Profit Margin: 42.8% (2010), 46.6% (2015E), 48.0% (2017E)
• EBITDA Margin: 24.6% (2010), 26.2% (2015E), 27.5% (2017E)
• Operating Profit Margin: 23.4% (2010), 24.5% (2015E), 25.9% (2017E)
• Net Profit Margin: 20.9% (2010), 18.5% (2015E), 19.5% (2017E)
• ROAE: 28.8% (2010), 24.7% (2015E), 26.5% (2016E), 27.1% (2017E)
• ROAA: 23.6% (2010), 17.0% (2015E), 18.7% (2016E), 19.7% (2017E)
• ROCE: 32.0% (2010), 27.4% (2015E), 29.9% (2016E), 31.2% (2017E)
• ROIC: 113.0% (2010), 55.7% (2015E), 59.8% (2016E), 62.6% (2017E)
• Effective Tax Rate: 16.1% (2010), 27.0% (2015E), 27.0% (2016E), 27.0% (2017E)
• Current Ratio (x): 4.9 (2010), 3.1 (2015E), 3.2 (2016E), 3.5 (2017E)
• Free Cash Flow Yield: 3.0% (2010), 3.5% (2015E), 4.5% (2016E), 5.5% (2017E)

Conclusion

The 2015 Daiwa Investment Conference in Hong Kong provided an overview of key investment opportunities and company performance. Anta Sports Products and WHA Corporation Pcl were highlighted as major investment targets, with Anta's strategy in the soccer market and WHA's improved financial visibility leading to upgrades in ratings and target prices. The conference also featured updates on various sectors, including technology, insurance, and real estate, offering insights into market trends and company-specific catalysts. Overall, the event underscored the importance of strategic growth and financial performance in shaping investment decisions.