20141215-大华继显-Regional_Morning_Notes_20页_953kb

Regional Morning Notes Summary

Core Content

This document is a regional market update from 15 December 2014, focusing on China, Indonesia, Malaysia, and Thailand. It includes economic analysis, company updates, and investment recommendations.

Main Points

China

• Monetary Policy: Ongoing monetary easing in November, with more supportive policies expected. The central bank is likely to continue with monetary loosening in 1Q15 to counter deflationary pressure.
• Key Indicators:
  • Loans: Increased by Rmb852.7b in November, surpassing the consensus estimate.
  • M2 Growth: Rose to 12.3% yoy, below market expectations, due to tighter regulation on deposit competition.
  • Interest Rates: Continued to rise in December, reflecting tighter liquidity conditions.
  • Total Social Financing (TSF): Reached Rmb1.15t in November, up by Rmb465.6b from October.
• Corporate Events:
  • China Communications Construction (1800 HK): Acquired John Holland for A$953.1m, which is expected to open doors to the Australasia market and boost long-term growth. The acquisition is based on a 15x 2014F PE and 1.8x 2014F P/B.
  • Dah Chong Hong Holdings (1828 HK): Upgraded from HOLD to BUY. The company's Hong Kong automobile business is expected to perform well in 2H14 with improved margins due to yen depreciation. The China automobile segment saw a slowdown in sales and inventory build-up in 4Q14, but after-sales services are expected to grow. The company also plans to build a logistics center, which could result in a significant gain from land disposal. The stock price is expected to rise from HK$4.02 to HK$5.00.

Indonesia

• Recommendations: The 2014 recommendations on property stocks and high conviction ideas worked well.
• Buy List for 1Q15: INTP, SMGR, TLKM, PGAS, ICBP, BBRI, BJBR, ACES, AISA, and GIAA.

Malaysia

• Tenaga Nasional (TNB MK): Expected to save RM424m in fuel costs in 1H15 due to low coal prices. Net profit forecasts for FY15-17 are raised by 9% to account for reinvestment allowance over the next three years.

Singapore

• CapitaLand (CAPL SP): The "One CapitaLand" strategy is expected to yield positive results.

Thailand

• Economic Outlook: Bright outlook for 2015.
• Key Assumptions:
  • GDP Growth:
    • 2013: 2.9%
    • 2014: 1.5%
    • 2015F: 3.9%
  • Brent Oil Prices:
    • 2013: 110 US$/bbl
    • 2014: 100 US$/bbl
    • 2015F: 85 US$/bbl
  • CPO Prices:
    • 2013: 736 US$/mt
    • 2014: 725 US$/mt
    • 2015F: 765 US$/mt
  • BDI:
    • 2013: 1,219
    • 2014: 1,200
    • 2015F: 1,300

Key Information

• China Communications Construction (CCC):

  • Acquired John Holland for A$953.1m.
  • Expected to benefit from interest rate cuts.
  • Target price raised to HK$9.90 from HK$8.28.
  • Valuation is considered fair based on international contractor multiples.
  • Share price performance: 17.4% in 1mth, 47.8% in 3mth, 52.4% in 6mth, 32.1% in 1yr, 33.6% YTD.
  • Key financials include steady growth in net turnover, EBITDA, and EPS.

• Dah Chong Hong Holdings (DCH):

  • Upgraded from HOLD to BUY with a target price of HK$5.00.
  • Dividend yield of 5% is appealing.
  • Food segment revenue and EBIT grew by 12% and 26% yoy in 1H14 due to the consolidation of its joint venture.
  • Plans to build a logistics center on a 200,000sqm site, which could yield a substantial gain.
  • Potential for growth in the luxurious yacht business with a JV with Chow Tai Fook.

Analysts

• China Communications Construction (CCC):
  • Lawrence Li: +8621 5404 7225 x 813, lawrenceli@uobkayhian.com
• Dah Chong Hong Holdings (DCH):
  • Ken Lee: +852 2236 6760, ken.lee@uobkayhian.com.hk

Corporate Events

• Regional Oil & Gas Conference: Scheduled in Kuala Lumpur from 13 Jan to 13 Jan.

Summary of Key Metrics

Investment Catalysts

• CCC: Monetary easing, government initiatives like the Silk Road Economic Belt, and further interest rate cuts.
• DCH: Steady food and FMCG businesses, potential land disposal gain, and growth in the yacht business.