20170712-大华继显-Regional_Morning_Notes_17页_862kb
报告摘要
Regional Morning Notes Summary - 12 July 2017
Core Content Overview
This document provides a regional market update focusing on the plantation sector in Indonesia, Malaysia, and Singapore, alongside an update on China Construction Bank (CCB). It outlines market trends, company-specific insights, and investment recommendations based on current performance, assumptions, and risks.
Plantation Sector Analysis
Indonesia
- Biodiesel Uptake: Expected to be lower year-on-year in 2017 due to delays in biodiesel delivery during May–June 2017. The unmet demand will not recover in the near term.
- CPO Production: Expected to rise significantly in the second half of 2017, which could lead to weaker CPO prices in 2018 due to stagnant demand.
- Government Policy: The B20 biodiesel program (20% palm oil and 80% crude oil mix) is likely to continue until 2020, with no immediate plans to increase the blend to B30 due to infrastructure constraints.
- Subsidy Outlook: Subsidy for the non-PSO segment is under discussion, but likely not materializing in the near term due to insufficient CPO funds. A potential subsidy of Rp2,000/litre could increase CPO demand by 1.5m–1.6m tonnes if implemented.
- Corporate Impact: Delays in biodiesel delivery affected earnings for companies like Wilmar (WIL SP), First Resources (FR SP), Bumitama Agri (BAL SP), and Golden Agri (GGR) in Q2 2017. However, improved FFB production is expected to offset this.
- Sector Weighting: Maintain MARKET WEIGHT on the Singapore plantation sector and UNDERWEIGHT on the Malaysia plantation sector.
Key Companies in Indonesia
- Bumi Serpong Damai (BSDE IJ): Re-initiated coverage with a BUY recommendation. Current share price: Rp1,780, target: Rp2,300. Trading at a discount to RNAV.
- Sampoerna Agro (SGRO LJ): BUY recommendation. Current share price: Rp1,990, target: Rp2,300. Potential upside of 18.6%.
- Astra Agro (AALI LJ): BUY recommendation. Current share price: Rp15,150, target: Rp19,045.
- London Sumatra (LSIP LJ): BUY recommendation. Current share price: Rp1,450, target: Rp1,780.
Key Companies in Malaysia
- Kim Loong Resources (KIML MK): BUY recommendation. Current share price: RM3.90, target: RM4.10.
- Kuala Lumpur Kepong (KLK MK): HOLD recommendation. Current share price: RM24.76, target: RM22.55.
- Genting Plantations (GENP MK), IJM Plantations (IJMP MK), IOI Corporation (IOI MK), Sime Darby (SIME MK), Sarawak Oil Palms (SOP MK), and TH Plantations (THP MK): SELL calls due to weak fundamentals and lower growth prospects.
China Construction Bank (939 HK) Update
Key Highlights
- NPL Classification: CCB uses a conservative approach by classifying loans overdue by more than 60 days as NPLs, which is stricter than regulatory requirements (90 days). This practice helps maintain a buffer against credit risk.
- Loan Growth: Driven by infrastructure loans and residential mortgages. CCB expects new loans of Rmb800b–900b in 2017, with Rmb400b from corporate loans and Rmb200b from infrastructure.
- Net Interest Margin (NIM): Improved slightly in Q1 2017, with an upside of 2.04% for 2017F. NIM is expected to stabilize at 2.0% for 2017.
- Non-Interest Income: Grew by 1% yoy in Q1 2017 due to improved fee structures. Management expects single-digit growth in fees for 2017.
- Asset Quality: NPLs declined from Rmb150b in 2016 to Rmb25b in Q1 2017, with a loan loss coverage ratio of 152.0% for 2017F, expected to increase to 160.0% by 2019F.
- Valuation: Maintained BUY recommendation. Target price: HK$7.36, based on 1.19x 2017F P/B using the Gordon Growth Model with assumptions of 14.4% ROE, 12.6% COE, and 3% growth.
Market Indices and CPO Trends
| Index | Previous Close | 1D % | 1W % | 1M % | YTD % |
|---|---|---|---|---|---|
| DJIA | 21409.1 | 0.0 | -0.3 | 0.8 | 8.3 |
| S&P 500 | 2425.5 | -0.1 | -0.1 | -0.2 | 8.3 |
| FTSE 100 | 7329.8 | -0.5 | -0.4 | -2.4 | 2.6 |
| AS30 | 5768.5 | 0.1 | -0.9 | 0.9 | 0.9 |
| CSI 300 | 3670.8 | 0.5 | 1.4 | 2.7 | 10.9 |
| FSSTI | 3218.8 | -0.8 | 0.2 | -0.9 | 11.7 |
| HSI | 25877.6 | 1.5 | 1.9 | 0.7 | 17.6 |
| KLCI | 1755.0 | -0.1 | -0.4 | -1.9 | 6.9 |
| KOSPI | 2396.0 | 0.6 | 0.7 | 1.6 | 18.2 |
| Nikkei 225 | 20195.5 | 0.6 | 0.8 | 1.4 | 5.7 |
| SET | 1569.2 | -0.0 | -0.6 | 0.3 | 1.7 |
| TWSE | 10415.6 | 1.2 | 0.7 | 3.0 | 12.6 |
| BDI | 820 | -0.2 | -5.9 | -3.4 | -14.7 |
| CPO (RM/ml) | 2665 | 1.0 | 1.4 | -1.0 | -16.7 |
| Brent Crude (US$/bbl) | 48 | 1.4 | -4.2 | -1.3 | -16.4 |
Key Assumptions
| Country | 2017F GDP (yoy) | 2018F GDP (yoy) |
|---|---|---|
| US | 2.5 | 2.5 |
| Euro Zone | 1.8 | 1.6 |
| Japan | 0.9 | 1.2 |
| Singapore | 2.4 | 2.5 |
| Malaysia | 5.0 | 4.9 |
| Thailand | 3.3 | 3.3 |
| Indonesia | 5.2 | 5.5 |
| Hong Kong | 2.0 | 2.0 |
| China | 6.3 | 6.3 |
| Brent (Avg) | 55 | 58 |
| CPO (RM/mt) | 2,600 | 2,500 |
Corporate Events
- Lunaroon with United Overseas Bank – Thailand, 18 Jul
- Roadshow with Citic Envirotech Ltd – Taipei, 18–19 Jul
- Analyst Marketing on Singapore Strategy & Small & Mid Caps – Taipei, 20–21 Jul
- Roadshow with Jacobson Pharma – Shanghai, 28 Jul
- Visit to Sarawak Corridor of Renewable Energy – Sarawak, 1–3 Aug
- Roadshow with Top Glove Corporation – US/Canada, 5–12 Sep
Top Picks and Sell Calls
BUY
- Alibaba (BABA US) – Target: $173.00, Potential upside: 18.6%
- Beijing Ent. Water (371 HK) – Target: HK$7.60, Potential upside: 25.2%
- Telekomunikasi Indo (TLKM J) – Target: JPY5,000.00, Potential upside: 8.7%
- V.S. Industry (VSI MK) – Target: RM2.40, Potential upside: 20.6%
- OCBC (OCBC SP) – Target: S$13.00, Potential upside: 20.5%
- Siam Cement (SCC TB) – Target: THB600.00, Potential upside: 21.0%
SELL
- Great Wall Motor (2333 HK) – Target: HK$6.00, Potential downside: -42.6%
- Hartalega (HART MK) – Target: RM4.07, Potential downside: -40.1%
Sector Catalysts and Risks
Catalysts
- Higher biodiesel consumption
- Improved FFB production
Risks
- Backtracking of biodiesel mandates in Indonesia and Malaysia
- Worse-than-expected labour shortages
Valuation and Recommendations
- CCB: Maintain BUY recommendation with a target price of HK$7.36.
- Plantation Sector: Maintain MARKET WEIGHT for Singapore, UNDERWEIGHT for Malaysia, and OVERWEIGHT (under review) for Indonesia.
Stock Impact and Financials
CCB Financial Highlights (Rmbm)
| Metric | 2016 | 2017F | 2018F | 2019F |
|---|---|---|---|---|
| Net Interest Income | 417,799 | 425,187 | 453,840 | 483,366 |
| Non-Interest Income | 142,061 | 150,342 | 159,254 | 168,741 |
| Net Profit (rep./act.) | 231,391 | 240,137 | 258,753 | 283,405 |
| Net Profit (adj.) | 231,391 | 240,137 | 258,753 | 283,405 |
| EPS (fen) | 92.6 | 96.1 | 103.5 | 113.4 |
| PE (x) | 5.8 | 5.6 | 5.2 | 4.7 |
| P/B (x) | 0.9 | 0.8 | 0.7 | 0.6 |
| Dividend Yield (%) | 5.2 | 5.4 | 5.8 | 6.3 |
Analyst Contact
- Leow Huey Chuen: +603 2147 1990, hueychuen@uobkayhian.com
- Ooi Mong Huey: +603 2147 1995, monghuey@uobkayhian.com
Conclusion
The report highlights a cautious outlook for the Indonesian biodiesel and CPO markets, with potential for price weakness in 2018 due to stagnant demand and lower biodiesel uptake. In Malaysia, the plantation sector is underweight, while Singapore remains market weight. China Construction Bank (CCB) is maintained as a BUY, with positive financials and strong asset quality. The report also outlines key corporate events and market catalysts, emphasizing the importance of infrastructure development and biodiesel policy in shaping future outcomes.
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