20161216-大华继显-Regional_Morning_Notes_22页_1mb

Regional Morning Notes Summary

Core Content

This document provides a comprehensive overview of the financial performance and outlook for several companies and sectors in Malaysia, China, and Singapore as of Friday, 16 December 2016. It includes updates on company results, earnings revisions, and investment recommendations, along with macroeconomic indicators and corporate events.

Main Points

Malaysia

• YTL Power International (YTLP MK):

  • Initiated coverage with a BUY recommendation.
  • Net dividend yield of 7% in 2017.
  • Key re-rating catalyst: commissioning of PT Tanjung Jati by 2021.

• Scientex (SCI MK):

  • 1QFY17 results missed expectations.
  • Manufacturing arm underperformed with a 3.5ppt yoy drop in EBIT margin.
  • Downgraded to HOLD.

• Top Glove (TOPG MK):

  • 1QFY17 net profit rose 12% qoq.
  • Upgraded to BUY due to improving supply-demand dynamics and sustained US dollar strength.

China

• City Gas Distribution Sector:

  • Impact from renminbi depreciation is a key concern, leading to forex losses and currency translation losses.
  • Maintain MARKET WEIGHT due to the potential for long-term sustainable growth and the risk of property tightening.

• China Mengniu Dairy (2319 HK):

  • Issued a profit warning for 2016 mainly due to one-off items.
  • Sales remain in an uptrend.
  • Maintain BUY with a target price of HK$17.20.
  • Net profit forecast was reduced by 18% to Rmb2.1b for 2016.
  • Sales growth is expected to be 8% in 2016 and 7% in 2017.

• Key Financials for Mengniu Dairy:

  • Net turnover increased from Rmb49,027m (2015) to Rmb52,887m (2016F).
  • Net profit (adj.) for 2016 is Rmb2,072.7m.
  • EBITDA is expected to grow to Rmb4,156.2m (2016F).
  • Sales expense as a percentage of top-line is expected to rise to above 24% for 2016.

• Valuation:

  • Target price of HK$17.20 is based on 22x 2017F PE, in line with historical averages.
  • The company is expected to maintain solid earnings growth in the long term.

Singapore

• Singapore Airlines (SIA SP):
  • Maintained HOLD recommendation.
  • Passenger loads continue to decline in the traditionally peak quarter.

Thailand

• Electronics Sector:

  • Appreciating US dollar impacts the sector.
  • Corporate events include analyst meetings and conferences.

• Key Indices:

  • DJIA: 19852.2 (1D: 0.3%, 1W: 1.2%, 1M: 4.9%, YTD: 13.9%)
  • S&P 500: 2262.0 (1D: 0.4%, 1W: 0.7%, 1M: 3.7%, YTD: 10.7%)
  • FTSE 100: 6999.0 (1D: 0.7%, 1W: 1.0%, 1M: 3.0%, YTD: 12.1%)
  • AS30: 5595.0 (1D: -0.8%, 1W: -0.1%, 1M: 3.6%, YTD: 4.7%)
  • CSI 300: 3340.4 (1D: -1.1%, 1W: -3.7%, 1M: -2.6%, YTD: -10.5%)
  • FSSTI: 2930.8 (1D: -0.8%, 1W: -0.9%, 1M: 4.9%, YTD: 1.7%)
  • HSCEI: 9479.2 (1D: -2.3%, 1W: -4.2%, 1M: 1.2%, YTD: -1.9%)
  • HSI: 22059.4 (1D: -1.8%, 1W: -3.5%, 1M: -1.0%, YTD: 0.7%)
  • JCI: 5254.4 (1D: -0.2%, 1W: -0.2%, 1M: 1.3%, YTD: 14.4%)
  • KLCI: 1637.0 (1D: -0.4%, 1W: 0.3%, 1M: 0.6%, YTD: -3.3%)
  • KOSPI: 2036.7 (1D: 0.0%, 1W: 0.3%, 1M: 2.9%, YTD: 3.8%)
  • Nikkei 225: 19273.8 (1D: 0.1%, 1W: 2.7%, 1M: 7.9%, YTD: 1.3%)
  • SET: 1519.7 (1D: -0.1%, 1W: -0.1%, 1M: 3.1%, YTD: 18.0%)
  • TWSE: 9360.4 (1D: -0.1%, 1W: -0.2%, 1M: 4.4%, YTD: 12.3%)

Key Assumptions

• GDP Growth:

  • US: 2.6% (2015), 1.7% (2016F), 2.7% (2017F)
  • Euro Zone: 2.0% (2015), 1.6% (2016F), 1.1% (2017F)
  • Japan: 1.2% (2015), 0.8% (2016F), 0.9% (2017F)
  • Singapore: 2.0% (2015), 1.4% (2016F), 1.8% (2017F)
  • Malaysia: 5.0% (2015), 4.2% (2016F), 4.5% (2017F)
  • Thailand: 2.8% (2015), 3.2% (2016F), 3.3% (2017F)
  • Indonesia: 4.8% (2015), 5.0% (2016F), 5.2% (2017F)
  • Hong Kong: 2.4% (2015), 2.1% (2016F), 1.8% (2017F)
  • China: 6.9% (2015), 6.5% (2016F), 6.2% (2017F)

• Brent Crude (US$/bbl): 54 (2015), 42 (2016F), 56 (2017F)

• CPO (RM/mt): 3207 (2015), 2500 (2016F), 2600 (2017F)

Top Picks (BUY)

Corporate Events

• China Healthcare Sector Analyst: Singapore, 16 Jan
• Marketing: Malaysia, 17–18 Jan
• SGX-UOB Kay Hian Corporate Day: Taipei, 21 Feb
• UOB Kay Hian ASEAN Conference: Taipei, 22 Feb

Conclusion

The report highlights the impact of renminbi depreciation on Chinese city gas companies and the risks from property tightening in 2017. Despite these challenges, CR Gas is recommended due to its solid management and lower exposure to industrial users. For China Mengniu Dairy, the profit warning is attributed to one-off losses, but the core business remains strong with continued sales growth and a target price of HK$17.20. The US dollar appreciation is also noted as a factor affecting the electronics sector in Thailand. The report concludes with maintaining MARKET WEIGHT for the city gas sector and BUY for Mengniu.