20160408-大华继显-Regional_Morning_Notes_16页_704kb

报告摘要

Regional Morning Notes Summary - April 8, 2016

Core Content Overview

This document provides a regional market update covering China, Malaysia, and Singapore, with a focus on the Healthcare and Rubber Gloves sectors, as well as Innovalues in Singapore. It includes analysis of market trends, corporate events, and investment recommendations, supported by financial data and assumptions.

China: Healthcare Sector

Main Points

The healthcare industry in China has long-term growth potential due to low per capita healthcare expenditure and an aging population.
However, short-term growth is under pressure due to significant tender price cuts.
Earnings visibility will improve only after tenders conclude in 2H16.
CSPC and Dawnrays have performed better than most healthcare companies in 2015.
The pharmaceutical industry is expected to grow at an 8% CAGR in 2016-2018.

Key Investment Recommendations

China TCM (570HK/BUY/Target: HK$5.60): Faces limited price pressure due to its exclusive National Essential Drug List (NEDL) products. Its acquisition of Tianjiang Pharma is expected to boost growth, with a target of Rmb10m net income from the TCM healthcare complex in 2017.
Microport (853HK/BUY/Target: HK$4.50): Reduced losses in 2015 and is expected to deliver steady earnings growth in 2016. The company has received a licence for Columbus, its key Electrophysiological Product (EP), from CFDA and plans to launch it soon.

Underweight Recommendation

Maintained for the healthcare sector due to the ongoing price pressures and uncertain regulatory environment.

Malaysia: Rubber Gloves Sector

Main Points

Share prices of glove makers have retraced by 20-34% year-to-date due to a reversal in the ringgit's weakness.
A stress test was conducted on earnings based on a softer-than-expected USD rate of RM3.80/US$.
The sector-wide earnings could reduce by 25-26% if the ringgit appreciates further.

Key Investment Recommendations

Kossan (KRI MK/BUY/Target: RM7.75): Retained as the sector pick due to its lowest PE multiple (14x 2017F PE) and strong long-term growth potential.
Hartalega (HART MK/SELL): Considered overvalued due to 23x 2017F PE, and its earnings growth is expected to normalize to 10-12% in 2016, down from 32% in FY16E.

Market Weight

Maintained for the sector as valuations have already reflected cost savings and capacity expansion.

Singapore: Innovalues (IP SP)

Main Points

Innovalues is considering strategic options, including potential M&A, which could boost its valuation.
The company has positive financials, including strong cash generation and low capex requirements, with a forecast of rising net cash per share from S$0.08 in 2015 to S$0.20 in 2018.
The auto segment is a major revenue driver, with 80% of revenue from automotive components.

Key Investment Recommendations

Maintained BUY with a DCF-based target price of S$1.06.
Potential for M&A could push the target price up to S$1.20, based on comparable transactions like the IPE Group acquisition.

Financial Highlights

Net profit is expected to grow from S$23.0m in 2015 to S$31.8m in 2018.
PE ratio is projected to decline from 13.7 in 2015 to 9.9 in 2018.
Dividend yield is expected to increase to 3.7% in 2016 and 4.4% in 2017.

Key Indices Performance (April 8, 2016)

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	17542.0	-1.0	-0.8	2.7	0.7
S&P 500	2041.9	-1.2	-0.9	2.0	-0.1
FTSE 100	6136.9	-0.4	-0.6	-0.7	-1.7
AS30	5042.3	0.4	-2.1	-2.5	-5.7
CSI 300	3209.3	-1.5	-0.2	3.3	-14.0
FSSTI	2813.6	0.1	-1.0	1.3	-2.4
HSI	20266.1	0.3	-2.6	1.3	-7.5
JCI	4867.3	-0.0	0.5	1.2	6.0
KLCI	1724.3	0.4	0.4	2.2	1.9
KOSPI	1973.9	0.1	-1.1	1.4	0.6
Nikkei 225	15749.8	0.2	-6.0	-6.2	-17.3
SET	1356.7	-1.2	-3.8	-1.3	5.3
BDI	517	3.4	20.5	46.0	8.2
CPO (RM/ml)	2683	-1.2	0.3	9.1	22.0
Brent Crude	39	-1.0	-0.4	-3.5	5.8

Key Assumptions

Country	GDP (yoy) 2014	GDP (yoy) 2015F	GDP (yoy) 2016F
US	2.4	2.4	2.5
Euro Zone	0.9	1.6	1.7
Japan	0.0	0.5	1.0
Singapore	3.3	2.0	2.7
Malaysia	6.0	5.0	4.2
Thailand	0.8	2.8	3.2
Indonesia	5.0	4.8	5.0
Hong Kong	2.5	1.8	1.5
China	7.3	6.5	6.7

Commodity	2015 (Avg)	2016F (Avg)	2017F (Avg)
Brent (US$/bbl)	53.60	42	54
CPO (RM/mt)	2,168	2,500	2,600

Corporate Events

Coslight Technology Roadshow: Hong Kong, 8 Apr
China City Construction Group Roadshow: Hong Kong, 12 Apr
China Property Sector Analyst Presentation: London, 12 Apr & 15 Apr
Sihuan Pharmaceutical Holdings Roadshow: Kuala Lumpur, 13 Apr & Taipei, 14 Apr
Evergrande Real Estate Group Limited Corporate Roadshow: London, 14 Apr
BeijingWest Industries Int'l Roadshow: Hong Kong, 14 Apr
Shenzhen Investment Corporate Roadshow: Taipei, 19 Apr

Risks and Assumptions Changes

China Healthcare: Price control, anti-corruption, hospital reform, and regulatory uncertainties remain key risks.
Malaysia Rubber Gloves: Continued pricing pressure, potential for margin erosion, and the risk of a steep ringgit appreciation.
No change in earnings forecasts for any of the listed companies.