Credit Suisse Asian Daily Summary
Core Content Overview
This document presents Credit Suisse's analysis and updates on various sectors and companies in the Asia-Pacific region, including stock ratings, earnings forecasts, target prices, and market events. It also includes insights on market indices, currencies, and specific investment opportunities across different countries.
Key Highlights
EPS, TP, and Rating Changes
| Company |
EPS (T+1) |
EPS (T+2) |
TP Chg |
TP Up/Dn |
Rating |
| Blackmores Ltd |
Initiation |
Initiation |
- |
- |
O (NA) |
| Sinopec SSC - H |
n.m |
n.m |
(8) |
(32) |
U (U) |
| LIC Housing Finance |
0 |
(1) |
6 |
19 |
O (O) |
| CyberAgent |
Initiation |
Initiation |
- |
- |
O (NA) |
| GMO Internet |
Initiation |
Initiation |
- |
- |
O (NA) |
| Kakaku.com |
Initiation |
Initiation |
- |
- |
N (NA) |
| SapuraKencana |
(4.3) |
(30.8) |
0 |
— |
N (N) |
| Melco Crown (Phils) |
n.m |
n.m |
2 |
(21) |
U (O) |
| NCSOFT |
(0.3) |
5 |
7 |
(23) |
U (U) |
| Powertech Technology |
0 |
0 |
10 |
21 |
O (N) |
| Total Access Comm. |
(23.4) |
(24.8) |
(6) |
108 |
O (O) |
| SMIC |
0 |
11 |
0 |
45 |
O (O) |
| Huahong Semi |
0 |
7 |
0 |
54 |
O (O) |
| WPG |
0 |
1 |
5.8 |
3 |
N (N) |
Key Companies and Ratings
- Blackmores Ltd (BKL.AX): Initiation with a rating of O (Outperform).
- LIC Housing Finance (LICH.BO): Maintain O (Outperform), with favorable risk reward and visible catalysts.
- GMO Internet (9449.T): Initiation with O (Outperform), as it is considered undervalued with potential for growth.
- CyberAgent (4751.T): Initiation with O (Outperform), showing growth potential in new and existing businesses.
- Kakaku.com (2371.T): Initiation with N (Neutral), due to lack of share price catalysts.
Market Events
- China Healthcare Tour: 18-19 July, Zhengzhou and Beijing, led by Iris Wang.
- Shenzhen Auto Dealer Visit: 19 July, Shenzhen, led by Bin Wang.
- India Macro Tour: 01-03 August, Mumbai, New Delhi, led by Neelkanth Mishra.
- Indonesia Conference Site Trip: 17-18 August, Surabaya, Indonesia, led by Jahanzeb Naseer.
- ASEAN Banks Tour: 22-26 August, Jakarta, Bangkok, Manila, led by Sanjay Jain.
Corporate Days / Conferences
- 2016 Indonesia Conference: 15-16 August, Singapore, led by Jahanzeb Naseer.
- 4th Asia Internet C-Level Conference: 31 August - 02 September, Singapore / Hong Kong, led by Manish Nigam.
- 17th Annual Asian Technology Conference: 07-09 September, Taipei.
Non-Deal Roadshows
- RHB Capital Berhad (RHBC.KL): 14-15 July, Hong Kong, led by Danny Goh.
- Egis Technology Inc. (6462.TWO): 20-22 July, Hong Kong, led by Jerry Su.
- Egis Technology Inc. (6462.TWO): 18-19 July, Singapore, led by Jerry Su.
Asia-Pacific Indices and Currency Performance
Asian Indices
| Index |
Closing |
1D |
1W |
3M |
YTD |
| ASX300 |
5,317.78 |
0.3 |
2.4 |
6.0 |
1.3 |
| CSEALL |
6,401.31 |
0.5 |
1.9 |
0.8 |
-7.2 |
| Hang Seng |
21,224.74 |
1.6 |
2.3 |
0.3 |
-3.1 |
| H-SHARE |
8,855.31 |
1.8 |
2.5 |
-3.7 |
-8.3 |
| JCI |
5,099.53 |
0.6 |
2.6 |
5.1 |
11.0 |
| KLSE |
1,653.97 |
0.0 |
0.2 |
-4.0 |
-2.3 |
| KOSPI |
1,991.23 |
0.1 |
0.1 |
0.5 |
1.5 |
| KSE100 |
39,031.62 |
1.7 |
2.8 |
16.0 |
18.9 |
| NIFTY |
8,521.05 |
0.6 |
2.2 |
8.5 |
7.2 |
| NIKKEI |
16,095.65 |
2.5 |
2.7 |
-1.7 |
-15.4 |
| TOPIX |
1,285.73 |
2.4 |
2.3 |
-3.5 |
-16.9 |
| PCOMP |
7,937.95 |
0.9 |
1.7 |
8.1 |
14.2 |
| RED CHIP |
3,680.99 |
1.6 |
1.8 |
-4.9 |
-9.2 |
Asian Currencies (vs US$)
| Currency |
Closing |
1D |
1W |
3M |
YTD |
| A$ |
0.76 |
0.9 |
1.8 |
-0.8 |
4.4 |
| Bt |
35.13 |
-0.1 |
-0.1 |
0.2 |
-2.5 |
| D |
22,298 |
0.1 |
-0.0 |
0.1 |
-0.8 |
| JPY |
103.30 |
0.5 |
1.6 |
-5.5 |
-14.1 |
| NT$ |
32.19 |
0.1 |
-0.5 |
-0.6 |
-1.9 |
| P |
47.37 |
0.1 |
0.8 |
2.9 |
1.0 |
| PRs |
104.80 |
0.1 |
0.2 |
0.2 |
0.1 |
| Rp |
13,130 |
0.4 |
0.2 |
-0.2 |
-4.8 |
| Rs |
67.14 |
0.0 |
-0.4 |
1.0 |
1.4 |
| S$ |
1.35 |
-0.1 |
-0.1 |
-0.0 |
-4.8 |
Global Indices
| Index |
Closing |
1D |
1W |
3M |
YTD |
| DJIA |
18,347.57 |
0.7 |
2.8 |
2.5 |
5.3 |
| S&P 500 |
2,152.69 |
0.7 |
3.1 |
3.4 |
5.3 |
| NASDAQ |
4,988.64 |
0.6 |
2.6 |
2.4 |
-0.4 |
| SOX |
708.90 |
1.1 |
3.5 |
5.8 |
6.8 |
| EU-STOX |
2,855.79 |
0.9 |
2.6 |
-0.0 |
-7.9 |
| FTSE |
6,680.69 |
-0.0 |
2.1 |
5.0 |
7.0 |
| DAX |
9,964.07 |
1.3 |
4.5 |
-0.6 |
-7.3 |
| CAC-40 |
4,331.38 |
1.6 |
4.0 |
-3.5 |
-6.6 |
| 10 YR LB |
1,4860 |
3.3 |
10.5 |
-15.9 |
-34.5 |
| 2 YR LB |
0.6530 |
- |
18.0 |
-12.5 |
-38.1 |
| US$:E |
1.1084 |
0.3 |
0.1 |
-1.7 |
2.1 |
| US$:Y |
103.30 |
0.5 |
1.6 |
-5.5 |
-14.1 |
| GOLD |
0.00 |
- |
- |
- |
- |
| VIX |
0.00 |
2.6 |
-8.3 |
-8.8 |
-25.6 |
Asia-Pacific Sector Analysis
China Utilities Sector
- Recurring profit growth is expected to slow from +14% in FY15 to +1% in 1H16.
- Wind operators are likely to lead with +20% growth due to large finance cost savings.
- Gas and hydro operators are forecasted to grow by +15% and +14%, respectively.
- IPPs may see earnings drop by -13% due to volume and tariff pressures.
- Three top picks with potential to exceed expectations: Huaneng Renewables (+59%), China Yangtze Power (+33% ex. injections), and CR Gas (+20%).
- Dividend sustainability is expected for CKI and PAH, despite FX losses in 1H16.
India NBFC Sector
- LIC Housing Finance (LICHF) is maintained at O (Outperform), with favorable risk reward and visible catalysts.
- Pay commission stimulus is expected to benefit LICHF, given its high exposure to government salaried borrowers.
- LAP exposure is a unique product, distinct from industry norms, and considered a secured, low-priced alternative.
- Bond yields are a key driver, with a 4% earnings increase for every 10 bp fall in bond yields.
- Earnings growth is projected to accelerate with a target price increase to Rs625.
Asia Semiconductor Sector
- New report: 2Q16 preview—Chip builds strong, but raises risk of an adjustment.
- Key players: NCSOFT, Huahong Semi, and Powertech Technology are highlighted.
Other Markets
- Singapore: GMO Internet and CyberAgent are initiated with O (Outperform).
- Japan: Kakaku.com is initiated with N (Neutral), while CyberAgent and GMO Internet are initiated with O (Outperform).
- Hong Kong: CKI and PAH are expected to benefit from FX correction, with dividends likely to remain stable.
Summary of Investment Themes
- Outperform: Blackmores Ltd, GMO Internet, CyberAgent, and LICHF.
- Neutral: Kakaku.com and WPG.
- Underperform: Sinopec SSC - H, SapuraKencana, and others.
Analyst Notes
- LIC Housing Finance: Maintain OUTPERFORM, with strong earnings growth and ROE.
- GMO Internet: Initiate at OUTPERFORM, with a target price of ¥1,600.
- China Utilities: Pecking order includes wind, gas, hydro, and IPPs.
- India Macro Tour: Led by Neelkanth Mishra, focusing on reforms and economic momentum.
- Asia Semiconductor Sector: Randy Abrams, CFA, highlights the 2Q16 preview and potential for adjustment.
Valuation and Performance
- Valuation comparison shows that LICHF is undervalued with a P/E of 9x and P/B of 2x for FY18.
- Earnings growth for LICHF is expected to be strong, with a CAGR of 26.8%.
- ROE for LICHF is projected to increase to 24.4% by FY19.
- Bond yields are a key catalyst for LICHF, with a 19% increase in EPS in FY16.
Disclosure
- Credit Suisse may have conflicts of interest due to its business relationships with companies covered in reports.
- Investors should consider this report as only one factor in their investment decision.
Contact Information
- Research mailing options: asia.research@credit-suisse.com
- Sales Contact: Hong Kong 852 2101 7211, Singapore 65 6212 3052, London 44 20 7888 4367, New York 1 212 325 5955, Boston 1 617 556 5634.
