20160704-大华继显-Regional_Morning_Notes_20页_1mb

报告摘要

Regional Morning Notes Summary - 04 July 2016

Core Content Overview

This document provides a detailed analysis of regional economic and corporate developments across China, Hong Kong, Malaysia, and Singapore, with a focus on PMI indices, stock recommendations, and key financial metrics. It highlights economic trends, company-specific updates, and market valuations.

China Economic Update

PMI Indices

Official Manufacturing PMI dropped to 50.0% in June 2016, indicating weakening domestic and foreign demand.
Caixin Manufacturing PMI also declined to 48.6%, showing a downturn in private-sector activity.
Large manufacturers (mostly SOEs) saw a slight increase in PMI to 51.0%, suggesting that state-directed investments remain a key driver.
Medium and small enterprises experienced declines in PMI, with medium-sized companies at 49.1% and small enterprises at 47.4%.
Non-manufacturing PMI rose to 53.7%, driven by booming construction activities.
Construction PMI increased to 62.0%, highlighting the continued reliance on infrastructure and property development for economic growth.
Service sector PMI remained stable at 52.2%, with positive trends in retail, air transportation, internet software, and property sales.

Demand Trends

Domestic demand was supported by fiscal policy.
Foreign demand weakened due to Brexit concerns and potential US rate hikes.
Employment indicators showed a downtrend, with both manufacturing and non-manufacturing PMI sub-indices below 50%, suggesting shrinking employment.

Government Response

The central government is expected to accelerate fiscal spending and implement monetary easing to stabilize demand.
Supply-side reforms have led to overcapacity-elimination measures, which are affecting private-sector investment and employment.

Company Updates

BBMG Corporation (2009 HK/BUY/HK$2.31/Target: HK$3.75)

Potential consolidation of Jidong Cement raises financial pressure in the short term but is a long-term catalyst for BBMG's cement business.
Jidong Cement will acquire Rmb12.95b worth of BBMG's cement assets, including 1.39b new shares.
BBMG will own 45.4% of Jidong Cement directly and 52.7% indirectly via Jidong Development.
Cement price hikes are expected to reverse losses and improve gross profit margins from -Rmb10/ton to Rmb30/ton.
Net gearing is projected to rise from 69% to slightly above 90%, indicating increased financial leverage.
Valuation remains undemanding at 0.5x P/B for the cement business in Beijing.

Hong Kong Economic Update

BOC Hong Kong (2388 HK/BUY/HK$23.20/Target: HK$29.50)

Acquisition of BOC Thailand and Malaysia for HK$6.9b is expected to negatively impact the near-term share price.
The transaction valuation is at the high end of peers, and special dividends are unlikely due to future similar transactions.
Operating risks in new regions may detract from investor confidence.
Despite this, the analyst maintains a BUY rating based on valuation and long-term growth potential.

Malaysia Economic Update

KLCC Property Holdings (KLCCSS MK/HOLD/RM7.41/Target: RM7.37)

Offices remain fully occupied.
Three office building projects are expected to be completed, with underwriting support from Petronas and respective JV partners.
The company is maintained on HOLD, with target price slightly below current.

Singapore Economic Update

Ezion Holdings (EZI SP/HOLD/S$0.475/Target: S$0.51)

The company is venturing into China offshore wind farm.
Rights issue is being evaluated as part of its strategy.
Hold recommendation is maintained with a target price slightly above current.

Thailand Economic Update

KCE Electronics (KCE TB/BUY/Bt83.25/Target: Bt105.00)

Promising earnings outlook.
The company is recommended as a BUY with a target price significantly higher than current.

Key Indices Overview

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	17949.4	0.1	3.2	0.8	3.0
S&P 500	2103.0	0.2	3.2	0.2	2.9
FTSE 100	6577.8	1.1	7.2	5.9	5.4
AS30	5327.0	0.3	2.6	-1.2	-0.3
CSI 300	3154.2	0.0	2.5	-1.1	-15.5
FSSTI	2846.4	0.2	4.1	1.3	-1.3
HSCEI	8712.9	1.7	-0.8	0.1	-9.8
HSI	20794.4	1.8	-0.4	0.2	-5.1
JCI	4971.6	-0.9	2.8	2.4	8.2
KLCI	1646.2	-0.5	0.7	0.6	-2.7
KOSPI	1987.3	0.9	3.2	0.1	1.3
Nikkei 225	15682.5	0.7	4.9	-5.8	-17.6
SET	1445.0	0.2	0.6	2.1	12.2
TWSE	8738.2	0.8	3.1	1.7	4.8
BDI	677	2.6	11.2	11.0	41.6
CPO (RM/ml)	2407	-2.0	-1.7	-7.5	9.4
Brent Crude	51	0.4	7.2	1.8	35.6

Top Picks and Recommendations

BUY Recommendations

Air China (753 HK): Target Price HK$10.20, Upside +92.5%
Ping An (2318 HK): Target Price HK$45.00, Upside +31.8%
Bank BJB (BJBR IJ): Target Price 1,170.00, Upside +8.3%
Genting (GENT MK): Target Price HK$10.40, Upside +29.8%
City (CIT SP): Target Price HK$10.86, Upside +33.6%
DBS (DBS SP): Target Price HK$19.30, Upside +22.9%
Bangkok (BDMS TB): Target Price HK$27.70, Upside +15.9%
Siam (SCC TB): Target Price HK$630.00, Upside +32.4%

SELL Recommendations

Hartalega (HART MK): Target Price HK$3.10, Downside -28.7%
Sembcorp (SMM SP): Target Price HK$0.90, Downside -41.7%

Key Assumptions and Economic Outlook

Region	GDP (yoy) 2015	GDP (yoy) 2016F	GDP (yoy) 2017F
US	2.4	2.5	2.7
Euro Zone	1.6	1.5	1.6
Japan	0.5	0.6	0.8
Singapore	2.0	2.7	3.0
Malaysia	5.0	4.2	5.0
Thailand	2.8	3.2	3.6
Indonesia	4.8	5.0	5.5
Hong Kong	2.4	2.1	1.8
China	6.9	6.5	6.2

Brent Crude is expected to average 42 US$/bbl in 2016 and 54 US$/bbl in 2017.
CPO is expected to rise to 2,500 RM/mt in 2016 and 2,600 RM/mt in 2017.

Valuation and Financial Metrics

BBMG Corporation

Net gearing is projected to rise from 69% to slightly above 90%, indicating increased financial pressure.
Discount to NAV is raised to 65%, leading to a target price cut to HK$3.75.
Valuation is considered undemanding at 0.5x P/B.
EPS is expected to rise to 19.0 fen in 2016F, with PE at 10.4x.
EBITDA is forecast to increase to Rmb5,519.3m in 2016F, with EV/EBITDA at 8.0x.
Net profit is projected to reach Rmb2,426.6m in 2016F, with adjusted net profit at Rmb2,029.1m.