20160909-大华银行-Regional_Morning_Notes_27页_1mb

Regional Morning Notes Summary

Core Content

This document provides a detailed market update for the Asia-Pacific region on Friday, 09 September 2016, focusing on China, Indonesia, Malaysia, and Singapore. It includes coverage of key companies, economic indicators, sector updates, and investment recommendations.

Main Points

China

• Trade Growth:

  • August 2016 trade growth beat market expectations due to a low base effect from the previous year.
  • Exports fell 2.8% yoy, but imports increased 1.5% yoy, showing stronger-than-expected restocking demand.
  • Trade surplus slightly decreased to US$52.05 billion.
  • Export growth was driven by improved demand from key markets like Europe and Japan, while exports to Hong Kong declined significantly.
  • Leading indicators suggest improvement in export trends.

• Coal Sector:

  • The government is implementing a planned economy approach to control coal prices, setting price targets of Rmb460/tonne, Rmb480/tonne, and Rmb500/tonne.
  • Coal production is expected to increase by 0.3mt/day to stabilize prices.
  • The policy is aimed at cutting excess capacity and improving efficiency.
  • Hong Kong-listed coal companies are likely to benefit from this policy.

• Property Sector:

  • Traditional property management models offer more stable margins and visible earnings growth.
  • Value-added services and community O2O platforms are more costly and less profitable.
  • M&As are a key growth strategy, but must be executed with reasonable costs to avoid dilution.
  • Greentown Services and COPH are highlighted as having stable margins and good expansion prospects.
  • Country Garden plans to spin off its property management segment for an A-share listing, which could benefit HK-listed peers.

Key Companies and Recommendations

Buy Recommendations

• BAIC Motor Corporation (1958 HK):

  • Initiate coverage with a BUY rating.
  • Target price: HK$11.50.
  • Current price: HK$7.70.

• Khon Kaen Sugar Industry (KSL TB):

  • Buy recommendation.
  • Target price: Bt4.50.
  • Current price: Bt3.46.

• Frasers Logistics & Industrial Trust (FLT SP):

  • Buy recommendation.
  • Target price: S$1.08.
  • Current price: S$0.985.

• Air China (753 HK):

  • Buy recommendation.
  • Target price: HK$8.40.
  • Current price: HK$5.75.

• Ping An Insurance (2318 HK):

  • Buy recommendation.
  • Target price: HK$47.00.
  • Current price: HK$43.30.

• Ciputra Property (CTRP JI):

  • Buy recommendation.
  • Target price: HK$960.00.
  • Current price: HK$590.00.

• Indosat (ISAT JI):

  • Buy recommendation.
  • Target price: Rp6,800.
  • Current price: Rp5,800.

• Genting Bhd (GENT MK):

  • Buy recommendation.
  • Target price: RM9.75.
  • Current price: RM8.13.

• Citiv Dev (CIT SP):

  • Buy recommendation.
  • Target price: S$10.36.
  • Current price: S$9.11.

• OCBC (OCBC SP):

  • Buy recommendation.
  • Target price: S$10.30.
  • Current price: S$8.87.

• Bangkok Dusit (BDMS TB):

  • Buy recommendation.
  • Target price: THB30.00.
  • Current price: THB22.60.

Sell Recommendation

• Hartalega (HART MK):
  • Sell recommendation.
  • Target price: Rp3,100.
  • Current price: Rp4,600.

Key Indices and Market Data

Key Assumptions

Corporate Events

• Sihuan Pharmaceutical Holdings Group: Roadshow in Taipei from 8 Sep to 9 Sep.
• China Resources Gas: Roadshow in Canada from 12 Sep to 13 Sep.
• Ann Joo Resources: Roadshow in Singapore on 15 Sep.
• HC International: Roadshow in Singapore on 15 Sep.
• Regional Financial and Telco Sector Analyst Presentation: UK/Europe, 26 Sep to 30 Sep.
• Cityneon: Roadshow in Taipei from 29 Sep to 30 Sep.
• Xstep International Holdings: Roadshow in Taipei on 7 Oct.
• Metro Pacific Investments: Roadshow in Canada from 26 Oct to 28 Oct.
• Xstep: Roadshow in Kuala Lumpur on 15 Nov.

Conclusion

The document highlights a recovery in China's trade due to a low base effect and increased restocking demand. The coal sector is under government control with price targets and production adjustments. Property management companies are advised to focus on traditional models for stable earnings and margins. Several buy recommendations are made for companies in different markets, while Hartalega is recommended for a sell. Overall, the market sentiment is positive, with a focus on valuation, earnings visibility, and strategic M&A.