20160705-大和证券-Asia_Pacific_Daily_31页_3mb

Asia Pacific Daily Summary

Core Content

The Asia Pacific Daily report provides an overview of key market updates, equity research insights, and financial forecasts across various sectors in the region. It includes analyst ratings, company-specific analysis, macroeconomic trends, and event summaries related to Daiwa's conferences.

Main Points

Equity Research Highlights

• PTG Energy Pcl. (PTG TB):

  • Analyst: Chatchawin Lertapiruk
  • Rating: Sell
  • Reasoning: PTG's valuation is considered expensive, with a high PE ratio. Despite strong earnings growth due to low oil prices and expansion, the marketing margins are expected to peak and earnings growth to taper off. The report prefers IRPC over PTG.

• Samsung Electro-Mechanics (009150 KS):

  • Analyst: SK Kim
  • Rating: Buy
  • Reasoning: The company is developing integrated solutions for dual-camera modules and expects improved operating margins in 2017. Despite a lower-than-expected operating profit in 2Q16, the long-term outlook is positive due to its growth in the smartphone market.

• Sheng Siong Group (SSG SP):

  • Analyst: Jame Osman
  • Rating: Outperform
  • Reasoning: The company is targeting the low-cost customer segment, which is a strategic advantage.

• China Mengniu Dairy (2319 HK):

  • Analyst: Anson Chan
  • Note: Yashili's profit is expected to decline by 85% YoY in 1H16.

• Malaysia Healthcare:

  • Analyst: Tan Kee Hoong
  • Rating: Overweight
  • Reasoning: Long-term opportunity for investors due to the sector's growth potential.

Macro Research

• Malaysia Economy - Manufacturing PMI: Fell to 47.1 in 2Q16, indicating a contraction in manufacturing activity.
• Malaysia Economy - Trade: Exports declined by -0.9% YoY in May, reflecting weak export performance.

Daiwa Asian Events

• Company Roadshows:

  • 5 Jul: China Titans Energy (2188)
  • 7-8 Jul: Link REIT (823 HK) in Tokyo
  • 18-21 Jul: Gamuda Berhad (GAM MK) in EU
  • 26 Jul: Incitec Pivot (IPL AU) in Tokyo
  • 27 Jul: HKEI (2638 HK) in HK
  • 28-29 Jul: Xstep (1368 HK) in US
  • 1 Aug: CKI / Power Assets (1038 HK/6 HK) in HK
  • 3-5 Aug: Delta Electronics (DELTA TB) in EU
  • 23 Sep: CSL Limited (CSL AU) in Tokyo

• Daiwa Investment Conferences:

  • 8-11 Nov 2016: Hong Kong
  • 27 Feb-3 Mar 2017: Tokyo

Key Stock Calls

• Geely Automobile (175 HK): Buy, with a target of HKD4.90
• Brilliance China Automotive (1114 HK): Buy, with a target of HKD9.00
• BYD (1211 HK): Outperform, with a target of HKD50.00
• China Harmony New Energy Auto (3836 HK): Buy, with a target of HKD5.80

Recommendations

• China Autos Sector: Neutral, with a preference for local OEMs over foreign JVs due to better growth prospects in lower-tier cities.
• China Industrial Sector: Positive outlook, with recommendations for companies like CSCI, AviChina, and SITC due to continued growth in infrastructure contracts, asset injections, and policy support.
• Airlines: Cautious due to potential weakening of the CNY against USD, especially after Brexit.

Key Information

• Market Indices Performance (as of 1 Jul):

  • TPX: 1D: 0.6%, 1M: -5.6%, YTD: -18.4%
  • HSCEI: 1D: 1.0%, 1M: 1.1%, YTD: -8.9%
  • HSI: 1D: 1.3%, 1M: 1.4%, YTD: -3.9%
  • KOSPI: 1D: 0.4%, 1M: 0.5%, YTD: 1.7%
  • TWSE: 1D: 0.3%, 1M: 2.0%, YTD: 5.1%
  • SENSEX: 1D: 0.5%, 1M: 1.6%, YTD: 4.4%
  • FBMKLCI: 1D: 0.5%, 1M: 1.1%, YTD: -2.2%
  • SET: 1D: 0.7%, 1M: 2.7%, YTD: 12.9%
  • PCOMP: 1D: 0.2%, 1M: 4.4%, YTD: 12.9%
  • JCI: 1D: -0.9%, 1M: 2.4%, YTD: 8.2%

• Key Risks:

  • PTG Energy: Earnings growth may taper off due to declining marketing margins.
  • China Autos Sector: Weaker or better-than-expected new-vehicle sales.
  • SEMCO: Further delay in the recovery of the ACI business.

Company Valuation and Financials (PTG Energy)

Company Valuation and Financials (Samsung Electro-Mechanics)

Summary of Key Trends

• PTG Energy: High valuation, potential for earnings growth to decline in 2017-2018 due to margin pressures.
• China Autos Sector: Neutral rating; focus on local OEMs and after-sales services.
• China Industrial Sector: Positive outlook with focus on infrastructure and policy support.
• SEMCO: Strong growth in camera modules and MLCC due to smartphone demand, but facing challenges in ACI business.
• Malaysia Economy: Weak manufacturing PMI and trade outlook, with a contraction in PMI and declining exports.

Event Wrap

• Auto and Industrial Leaders Conference:
  • OEMs: Optimistic about new-car sales recovery.
  • Dealers: Focus on after-sales services and exploring new business segments.
  • Airlines: Facing challenges from overcapacity and potential CNY/USD exchange rate fluctuations.
  • Construction Companies: Expect strong 1H16 results due to low base and stable contracts.

Analysts' Company Visits

• Auto OEMs: Geely, FDG Electric Vehicles
• Auto Dealers: China Harmony, China Yongda Auto Services, Dah Chong Hong Holdings
• Aviation: Air China, AviChina, China Aircraft Leasing, TravelSky
• Construction and Engineering: Beijing Urban Construction, China Railway Group, China State Construction International
• Logistics: Kerry Logistics, NWS Holdings, Shenzhen International, Sinotrans, SITC International
• Marine: Orient Overseas International

Key Stock Calls (Daiwa)

Summary of Earnings Forecasts (SEMCO)

Key Assumptions

Conclusion

The report highlights a mixed outlook across the Asia Pacific region, with certain sectors like energy and industrial showing growth potential while others face challenges due to macroeconomic factors and industry-specific issues. Analysts recommend selective investment strategies and highlight key companies with positive growth prospects.