Regional Morning Notes Summary - 25 August 2015
Core Content Overview
This document provides a detailed analysis of stock performance and company results across various regions, including China, Indonesia, Malaysia, and Singapore, with a focus on the financial performance and outlook of key companies. It also includes key indices, corporate events, and analyst insights.
Main Points and Key Information
China
AAC Technologies (2018 HK)
- Rating: HOLD
- Current Price: HK$38.45
- Target Price: HK$40.37
- Upside: +5.0%
- 1H15 Results:
- Net profit increased 27.1% yoy to Rmb1.2b.
- Revenue rose 26.7% yoy to Rmb4.7b, driven by non-acoustics business growth.
- Non-acoustics sales surged to Rmb1.5b (31% of total sales) due to growing demand for haptics and RF mechanical solutions.
- Acoustics segment saw a slowdown due to potential weak cycle in the smartphone industry.
- Key Financials:
- Gross margin: 41.5% (down 0.1ppt yoy)
- Operating margin: 28.7% (down 0.9ppt yoy)
- Net margin: 26.5% (up 0.4ppt yoy)
- EBITDA margin: 23.5% (stable)
- Earnings Revision:
- EPS forecasts cut by 10-13% for 2015-2017.
- Stock Impact:
- Interim dividend of HK$0.25/share, implying a 20.4% payout ratio.
- Management is focusing on RF mechanical solutions after acquiring WiSpry.
- Concerns about Apple's declining speaker box sales and margin pressures.
China National Building Material (3323 HK)
- Rating: SELL
- Current Price: HK$5.39
- Target Price: HK$4.80
- Upside: -10.9%
- 1H15 Results:
- Net profit declined 56% yoy to Rmb792m.
- Revenue dropped 13% yoy to Rmb48.3b due to a 10% ASP decline.
- Gross margin fell to 24.5% (from 26.7% in 2014).
- Operating profit dropped 15% yoy.
- Key Financials:
- Net gearing increased to 273% (from 268% in 2014).
- Interest cover: 1.4x (from 2.7x in 2014).
- Net margin: 1.6% (from 3.2% in 2014).
- Stock Impact:
- Expected 5% yoy decline in cement production.
- Cement prices down 14% yoy, leading to significant earnings contraction.
- Management plans to reduce capex to Rmb13b in 2015 (from Rmb15.4b in 2014).
- Liquidity concerns and frequent refinancing needed due to low short-term debt coverage.
- Likely to see slower growth compared to peers like Conch due to higher gearing.
Indonesia
Surya Toto Indonesia (TOTO IJ)
- Rating: NOT RATED
- Price: Rp5,525
- Market Position: Market leader enjoying acceleration in domestic demand growth.
Malaysia
IOI Corporation (IOI MK)
- Rating: HOLD
- Current Price: RM3.93
- Target Price: RM3.60
- 1H15 Results:
- Net profit RM979m, in line with expectations.
- Lower earnings due to weaker performances in two divisions and a higher effective tax rate.
Malaysian Resources Corporation (MRC MK)
- Rating: BUY
- Current Price: RM0.83
- Target Price: RM1.50
- 2Q15 Results:
- Construction and EDL earnings dragged performance.
- Property segment remained steady.
Singapore
Property Sector
- Trend: Expanding public-housing electives.
Thailand
Strategy
- Selective BUYs: SVI, TVO, KTB, PTTGC, IRPC, AP.
Key Indices
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
15871.4 |
-3.6 |
-9.5 |
-9.7 |
-11.0 |
| S&P 500 |
1893.2 |
-3.9 |
-10.0 |
-9.0 |
-8.0 |
| FTSE 100 |
5898.9 |
-4.7 |
-9.9 |
-10.3 |
-10.2 |
| AS30 |
5014.2 |
-4.0 |
-6.6 |
-9.8 |
-6.9 |
| CSI 300 |
3275.5 |
-8.7 |
-19.7 |
-21.6 |
-7.3 |
| FSSTI |
2843.4 |
-4.3 |
-7.3 |
-15.2 |
-15.5 |
| HSCEI |
9602.3 |
-5.8 |
-12.4 |
-17.8 |
-19.9 |
| HSI |
21251.6 |
-5.2 |
-10.8 |
-15.4 |
-10.0 |
| JCI |
4163.7 |
-4.0 |
-9.2 |
-14.3 |
-20.3 |
| KLCI |
1532.1 |
-2.7 |
-2.6 |
-11.0 |
-13.0 |
| KOSPI |
1829.8 |
-2.5 |
-7.0 |
-10.6 |
-4.5 |
| Nikkei 225 |
18540.7 |
-4.6 |
-10.1 |
-9.8 |
6.2 |
| SET |
1301.1 |
-4.7 |
-7.6 |
-9.5 |
-13.1 |
| TWSE |
7410.3 |
-4.8 |
-9.8 |
-15.5 |
-20.4 |
| BDI |
968 |
-2.6 |
-8.9 |
-10.9 |
23.8 |
| CPO (RM/mt) |
1919 |
0.2 |
-2.9 |
-12.3 |
-16.5 |
| Brent Crude |
43 |
-6.1 |
-12.4 |
-21.8 |
-25.5 |
Top Picks
| BUY |
Ticker |
CP (Icy) |
TP (Icy) |
Pot. +/- (%) |
| Beijing Capital |
694 HK |
8.10 |
12.30 |
51.9 |
| ICBC |
1398 HK |
4.70 |
7.80 |
66.0 |
| Bank BJB |
BJR IJ |
590.00 |
1,300.00 |
120.3 |
| DiGi Com |
DIGI MK |
4.95 |
6.30 |
27.3 |
| Maybank |
MAY MK |
8.32 |
10.30 |
23.8 |
| CapitaLand |
CAPL SP |
2.80 |
4.08 |
45.7 |
| DBS |
DBS SP |
17.65 |
25.12 |
42.3 |
| Kasikornbank |
KBANK TB |
163.50 |
232.00 |
41.9 |
| PTT |
PTT TB |
- |
410.00 |
70.8 |
| SELL |
Ticker |
CP (Icy) |
TP (Icy) |
Pot. +/- (%) |
| SIA |
SIE SP |
3.26 |
3.00 |
-8.0 |
Key Assumptions
| Region |
GDP (% yoy) |
2013 |
2014 |
2015F |
| US |
2.9 |
2.2 |
2.4 |
2.9 |
| Euro Zone |
1.3 |
-0.5 |
0.9 |
1.3 |
| Japan |
1.0 |
1.6 |
-0.1 |
1.0 |
| Singapore |
2.9 |
4.4 |
2.9 |
2.9 |
| Malaysia |
5.0 |
4.7 |
6.0 |
5.0 |
| Thailand |
2.7 |
2.8 |
0.9 |
2.7 |
| Indonesia |
5.0 |
5.6 |
5.0 |
5.0 |
| Hong Kong |
3.7 |
2.9 |
3.5 |
3.7 |
| China |
7.0 |
7.7 |
7.2 |
7.0 |
| Brent (Average) |
CPO |
2014 |
2015F |
2016F |
| 99.45 |
722 |
99.45 |
61 |
72 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| CIFI Holdings Roadshow |
Kuala Lumpur |
25 Aug |
26 Aug |
| SinoCom Luncheon |
Hong Kong |
25 Aug |
25 Aug |
| China Resources Gas Luncheon |
Hong Kong |
26 Aug |
26 Aug |
| China Traditional Chinese Medicine Roadshow |
Shanghai |
26 Aug |
27 Aug |
| China Traditional Chinese Medicine Roadshow |
Taipei |
31 Aug |
31 Aug |
| BWI International Luncheon |
Hong Kong |
28 Aug |
28 Aug |
| Overseas Education New Campus Site Visit |
Singapore |
28 Aug |
28 Aug |
| The United Laboratories Roadshow |
Shanghai |
1 Sep |
2 Sep |
| Kuantan Port Site Visit |
Malaysia |
3 Sep |
3 Sep |
| Phoenix Healthcare Group Roadshow |
Shanghai |
8 Sep |
9 Sep |
| Evergrande Real Estate Roadshow |
Singapore |
11 Sep |
11 Sep |
| KWG Property Roadshow |
Shanghai |
15 Sep |
15 Sep |
| Asian Gems Conference |
Singapore |
12 Oct |
13 Oct |
Summary of Company Performance
- AAC Technologies reported in-line results but faced challenges in acoustics and margin sustainability.
- China National Building Material saw significant margin pressure and net profit decline, leading to a SELL rating.
- Indonesia's Surya Toto is a market leader with growing domestic demand.
- Malaysia's IOI Corporation had net profit in line with expectations, while MRC faced earnings drag from construction and EDL.
- Thailand's strategy included selective BUYs for certain stocks.
- Singapore's property sector is expanding public-housing electives.
- Key indices showed mixed performance across the regions, with most declining over the past year.
Analysts
Conclusion
The report highlights mixed performance in the region, with AAC Technologies maintaining a HOLD rating due to uncertain outlook and margin risks, while China National Building Material was downgraded to SELL due to significant earnings contraction and financial strain. Other companies in Malaysia and Indonesia showed mixed results, and the Singapore property market is expanding. Overall, the analysis underscores the need for caution in high-debt companies and the potential for growth in non-acoustics and public-housing sectors.
