20170515-大华继显-Regional_Morning_Notes_49页_2mb

Regional Morning Notes Summary - 15 May 2017

Core Content Overview

This document provides a detailed summary of market updates and analysis for various regions, including China, Indonesia, Malaysia, Singapore, and Thailand. It covers economic indicators, company results, stock recommendations, key assumptions, and upcoming corporate events. The central theme revolves around monetary policy, company performance, and market outlook.

Main Points by Region

China

• Monetary Policy: The PBOC maintained a "prudentially neutral" stance, focusing on financial risk control and de-leveraging. Loan issuance and TSF (Total Social Financing) exceeded expectations, driven by household mortgage loans and strong property sales. However, off-balance-sheet financing decreased due to stricter regulations.
• Economic Indicators:
  • M2 growth slowed to 10.5% yoy in April 2017.
  • M1 growth also declined to 18.5% yoy.
  • The PBOC injected liquidity through reverse repo and other tools, leading to a slight expansion of its balance sheet.
• Company Highlights:
  • AAC Technologies (2018 HK): 1Q17 results were in line with expectations. Net profit rose 71.6% yoy, driven by strong performance in the non-acoustics segment. Gross margin was maintained at 41.6%, supported by technological advantages and automation. Management refuted allegations of using undisclosed related parties to inflate profits.
  • Key Financials:
    • Revenue growth expected at 25% yoy for 2017.
    • EBITDA and operating profit are projected to increase significantly.
    • Net profit is forecasted to grow 26% yoy.
  • Valuation: Maintain BUY with a target price of HK$111.20, based on 21.5x 2017F PE or 1x 2016-19F PEG.

Indonesia

• Company Update: Charoen Phokphand (CPIN IJ) is on HOLD with a target price of Rp2,940. The company is expected to face a 9.3% yoy earnings decline in 2017. The entry price is Rp2,645.
• Corporate Events: Re-initiate coverage for CPIN IJ, indicating potential for further analysis and investment.

Malaysia

• China FDI Theme: Despite the Bandar Malaysia project setback, market interest in China FDI beneficiaries is expected to return. Recommended buys include Ekovest and IJM Corp.
• Building Materials Sector: Steel companies are expected to deliver strong earnings in 1Q17 due to higher steel ASP and lower input costs. Steel ASP is expected to remain firm in 2H17.

Singapore

• Company Results:
  • Ezion Holdings (EZI SP): Revised operational guidance was deemed shaky, leading to a downgrade to HOLD.
  • Genting Singapore (GENS SP): Results beat expectations due to better cost efficiency, though revenue trends remained sluggish. Maintain HOLD.
  • Singapore Post (SPOST SP): Earnings dipped due to TG losses, but the company is still in transformation for FY18. Maintain HOLD.
  • ST Engineering (STE SP): PBT beat expectations, but the recommendation was downgraded to HOLD.
• Market Outlook: The overall market is in a transformation phase, with some companies facing challenges.

Thailand

• Company Highlights:
  • AP Thailand (AP TB): Net profit increased 20.6% yoy due to equity income from JV.
  • Charoen Pokphand Foods (CPF TB): Earnings beat expectations due to large investment gains.
  • Thai Beverage (THBEV SP): Weak results due to prolonged mourning period, but still on track for performance.
• Key Financials:
  • IRPC (IRPC TB): Market overestimated the impact of inferior catalyst performance, presenting a buying opportunity.

Key Indices Performance (as of 15 May 2017)

Key Assumptions

Top Picks (BUY)

Corporate Events

• Roadshow with Tonly Electronics Holdings: Hong Kong, Shenzhen (15-17 May); Shanghai (18 May)
• Analyst Presentation on Malaysia Outlook and Strategy: Hong Kong (17 May)
• Roadshow with IGG Inc: Taipei (18 May)
• Site visits: Fosun Pharma Group, Shanghai Pharma Holding, Mircoport Scientific Corp (18-19 May)
• Roadshow with Petronas Dagangan Bhd: Hong Kong (23 May)
• Analyst Marketing on China Internet Sector: Hong Kong, Singapore, Kuala Lumpur (22-26 May)
• Roadshow with Singtel: Canada (26 May)
• Roadshow with Tongda Group Holdings: Hong Kong (1 Jun)
• Roadshow with PT Siloam Int'l Hospital: Canada (5 Jun)
• Lunteon with United Overseas Bank: Singapore (3 Jul)
• Roadshow with Top Glove Corporation: US/Canada (5 Sep)

Analysts

• ZHU Chaoping: +8621 5404 7225 ext. 822 | chaoping@uobkayhian.com
• Cindy Lam: +852 2826 4867 | cindy.lam@uobkayhian.com.hk

Summary

• The PBOC's monetary policy remains neutral, with a focus on financial stability and de-leveraging.
• Loan issuance and TSF outperformed expectations, mainly driven by mortgage loans and improved cost efficiency.
• AAC Technologies reported strong 1Q17 results, with net profit up 71.6% yoy, and the recommendation to maintain BUY.
• Several companies in Singapore and Thailand showed mixed results, with some facing challenges and others showing potential for growth.
• Corporate events are scheduled across multiple regions, highlighting ongoing investor engagement and market opportunities.
• The market outlook is cautiously optimistic, with key indices showing mixed performance.