20170207-大华继显-Regional_Morning_Notes_24页_1mb

报告摘要

Regional Morning Notes Summary

Core Content

This document is a Regional Morning Notes report dated Tuesday, 07 February 2017, focusing on China, Indonesia, Malaysia, and Singapore markets. It provides investment recommendations, company updates, key indices, and valuation insights for various stocks and sectors.

Main Points

China Strategy: February Conviction Calls

Alpha Picks: Alibaba Group, BEWG, CITICS, CRCC, CSPC, CSA, Lee & Man Paper, MGM China, UMF, and Sunac China.
Key Catalysts: Full-year results announcements in Feb-Mar 17, potential infrastructure investment policies, and strong performance in online marketing and cloud business.
Action Taken:
- Take profit on Sunny Optical.
- Add Alibaba Group, China Southern Airlines, and CRL to the BUY list.
- Add MGM China to the SELL list.

Indonesia Strategy

Alpha Picks: MAPI, AISA, MPPA, BBNI, PTPP, and AALI.
Sector Adjustment: Increased exposure in the consumer sector.

Malaysia Sector: Technology

OSAT (Original Equipment Manufacturer and Semiconductor Technology): The launch of new-generation smartphones in Sep 17 is expected to drive a strong replacement cycle.
Key Beneficiaries: Globetronics and Inari.

Malaysia Small/Mid Cap Highlights

Ann Joo Resources (AJR MK):
- Expected to deliver strong earnings in 2017 with high ASP and lower coal prices.
- Benefits from China's industry consolidation.

Singapore Results

Frasers Logistics & Industrial Trust (FLT SP):
- Strong performance in 1QFY17.
- Trading at S$0.96, with a target of S$1.11.

Thailand Update

Diamond Building Products (DRT TB):
- Share price has not yet factored in new ready-made housing business.
- Maintain BUY.

Key Indices

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	20052.4	-0.1	0.4	0.4	1.5
S&P 500	2292.6	-0.2	0.5	0.7	2.4
FTSE 100	7172.2	-0.2	0.8	-0.5	0.4
AS30	5665.4	-0.1	-0.9	-2.5	-0.9
CSI 300	3373.2	+0.3	+0.3	+0.8	+1.9
FSSTI	3056.9	+0.5	-0.3	+3.2	+6.1
HSCEI	9840.3	+1.6	-0.1	+2.4	+4.7
HSI	23348.2	+0.9	-0.1	+3.8	+6.1
JCI	5396.0	+0.7	+1.8	+0.9	+1.9
KLCI	1691.2	+0.4	-0.1	+0.9	+3.0
KOSPI	2077.7	+0.2	-0.3	+1.4	+2.5
Nikkei 225	18976.7	+0.3	-2.0	-2.5	-0.7
SET	1589.1	+0.4	-0.1	+1.1	+3.0
TWSE	9538.0	+0.9	+2.2	+1.8	+3.1
BDI	752	-2.3	-7.8	-21.9	-21.7
CPO (RM/mt)	3297	-0.0	-0.1	+1.1	+3.1
Brent Crude (US$/bbl)	56	-1.6	+1.2	-2.1	-1.6

Top Picks

BUY

Alibaba Group (BABA US): Target price US$130, upside 29%. Strong online marketing and cloud growth, global expansion.
BEWG (371 HK): Target price HK$7.60, upside 40.5%. Benefiting from PPP initiatives and government relationships.
CITICS (6030 HK): Target price HK$19.90, upside 25.16%. Expected to benefit from A-share IPO approvals.
CRCC (1186 HK): Target price HK$12.80, upside 18.3%. Expected to benefit from new PPP policies.
CSPC (1093 HK): Target price HK$10.00, upside 14.2%. NBP injection and oncology products expected to drive growth.
Lee & Man Paper (2314 HK): Target price HK$8.00, upside 14.1%. Benefiting from containerboard price increases.
UMF (2666 HK): Target price HK$10.26, upside 57.8%. Revenue contribution from Xi'an project.

SELL

MGM China (2282 HK): Target price HK$12.50, downside 15.5%. Missed expectations due to market share loss and delayed project openings.
Sunac China (1918 HK): Target price HK$4.34, downside 37.3%. Aggressive landbanking and potential price cuts hurt margins.

Key Assumptions

GDP (yoy):
- US: 2.7
- Euro Zone: 1.1
- Japan: 0.9
- Singapore: 1.8
- Malaysia: 4.5
- Thailand: 3.3
- Indonesia: 5.2
- Hong Kong: 1.8
- China: 6.2
Brent Crude (US$/bbl):
- 2016: 45
- 2017F: 56
- 2018F: 61
CPO (RM/mt):
- 2016: 2,653
- 2017F: 2,600
- 2018F: 2,500

Corporate Events

Event	Venue	Begin	Close
PTT Exploration and Production Roadshow	Singapore	6 Feb	7 Feb
Luncheon with Keppel T&T	Singapore	10 Feb	10 Feb
Luncheon with Kim Loong Resources	Malaysia	13 Feb	13 Feb
Tea Session with Valuetronics	Singapore	13 Feb	13 Feb
Tea Session with Duty Free International	Singapore	17 Feb	17 Feb
SGX-UOB Kay Hian Corporate Day	Taipei	21 Feb	21 Feb
UOB Kay Hian ASEAN Conference	Taipei	22 Feb	22 Feb
Group Meeting with Bumilama Agri	Singapore	27 Feb	27 Feb
Annual Plantation Outlook Seminar	Malaysia	6 Mar	6 Mar
Roadshow with Guotai Junan	Hong Kong	7 Mar	8 Mar

Company Updates

Microport (853 HK)

Positive Profit Alert: Net profit of at least US$10m in 2016 (vs. US$11.4m loss in 2015).
Growth Drivers:
- Sales ramp-up of Firehawk in domestic and EU markets.
- Continued reduction of net loss in orthopaedic business.
- Fast growth of endovascular and electrophysiological segments.
New Product Launch:
- VitaFlow™ (Transcatheter Aortic Valve and Delivery System) expected to be launched in 2018.
- Clinical fast track granted by CFDA in Aug 16.
EU Market Expansion:
- Firehawk likely to be covered by medical insurance in Europe by end-2017.
- EU sales expected to surge from ~US$1m to over US$10m in the next few years.
Acquisition:
- Acquired 17.4% stake in Lombard Medical, Inc. (NASDAQ: EVAR) for US$25.3m.
Valuation:
- Current EV/EBITDA: 9.6x.
- Target price: HK$7.02, based on 12.0x 2017F EV/EBITDA.

Analysts' Top Alpha Picks

Company	Ticker	Recommendation	Price 27 Jan 17 (HK$)	Target Price (HK$)	Upside/Downside (%)
Alibaba Group	BABA US	BUY	100.84	130.00	+29%
BEWG	371 HK	BUY	5.41	7.60	+40.5%
CITICS	6030 HK	BUY	15.90	19.90	+25.16%
CRCC	1186 HK	BUY	10.82	12.80	+18.3%
CSPC	1093 HK	BUY	8.76	10.00	+14.2%
China Southern Airlines	1055 HK	BUY	4.41	5.90	+33.8%
Lee & Man Paper	2314 HK	BUY	7.01	8.00	+14.1%
UMF	2666 HK	BUY	6.50	10.26	+57.8%
Sunac China	1918 HK	SELL	6.92	4.34	-37.3%
MGM China	2282 HK	SELL	14.80	12.50	-15.5%

Valuation Highlights

Alibaba Group:
- Trading at 21.8x FY17F PE.
- Valuation is considered attractive due to better profitability and strong earnings growth.
Microport:
- Target price: HK$7.02.
- Valuation based on 12.0x 2017F EV/EBITDA.
- Trading at 9.6x 2017F EV/EBITDA, which is a 15% premium over Shandong Weigao.

Summary of Key Insights

Positive Trends: Strong growth in key sectors, including online marketing, cloud business, and containerboard prices.
Market Catalysts: Upcoming results announcements, new PPP projects, and product launches are expected to drive performance.
Valuation Adjustments: Some companies are trading at premium valuations, while others are undervalued with potential for growth.
Risks: Overly aggressive landbanking, weak fundamentals, and potential price cuts can negatively impact certain stocks.
Strategic Moves: Analysts are adjusting their investment positions based on performance and market conditions.

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