20170519-大华继显-Regional_Morning_Notes_26页_1mb
报告摘要
Regional Morning Notes Summary - 19 May 2017
Core Content Overview
This document provides a comprehensive summary of the performance and outlook for various markets and companies, with a focus on China's online game sector and key financial updates for Alibaba Group. It also includes insights on other regional markets such as Indonesia, Malaysia, Singapore, and Thailand, along with key indices, analyst recommendations, and corporate events.
China Online Game Sector
Market Overview
- China has become the world's largest online game market, surpassing the US, with revenue of US$26b in 2016.
- The market has grown at a 28% CAGR over the past five years, driven by mobile game growth from 2011-2016.
- Mobile game revenue grew at 71% CAGR over the past five years, but is expected to slow to mid-to-low teens in the coming years due to peaking player numbers and slower PC game growth.
Market Drivers
- Elaborate operations, overseas expansion, and increasing ARPU are expected to drive the market to over US$30b by 2018.
- PC client-based games still maintain strong monetization power, longer life cycles, and higher entry barriers.
- eSports, AR/VR, and live stream broadcasting are new elements expected to boost the sector.
Key Players
- Tencent and NetEase dominate the market, with Tencent holding 59% of mobile game market share by 2016.
- Tencent has seen 130% CAGR in mobile game revenue, while NetEase has seen 385% CAGR.
- The top 10 mobile games of 2016 generated Rmb36b in revenue, accounting for 44% of the mobile game market.
Analyst Recommendations
- Tencent (700 HK): BUY with a target price of HK$312.00.
- NetEase (NTES US): BUY with a target price of US$347.00.
- Kingsoft (3888 HK): BUY with a target price of HK$28.00.
- OVERWEIGHT rating is assigned to the online game sector due to its growth potential.
Risks
- Stricter game-related policies and regulations.
- Falling profitability of existing games.
- Uncertainty of new game popularity.
Alibaba Group (BABA US)
Key Financial Highlights
- 4QFY17 Revenue: Rmb38.6b, 52% yoy growth, 7% above consensus.
- Adjusted EBITDA: Rmb16.6b, up 44% yoy.
- Non-GAAP diluted EPS: Rmb4.35, up 44% yoy, but 3% below consensus due to a higher effective tax rate.
- Cloud computing revenue: Rmb2.2b, up 103% yoy.
- Digital media and entertainment revenue: Rmb3.9b, up 234% yoy.
Segment Performance
- Core commerce: Rmb31.6b, up 47% yoy.
- Mobile revenue: Up 69% yoy, accounting for 85% of China retail revenue.
- Global expansion: International commerce revenue up 111% yoy.
- Digital media and entertainment: Revenue up 234% yoy, but adjusted EBITA margin narrowed to -44%.
Valuation
- Current valuation: 12x 2017F PE, lower than global peers.
- Target price: US$139.00, implying 29x FY18F PE and 23x FY19F PE.
- Maintain BUY due to strong top-line growth and potential for higher valuation.
Other Regional Markets
Indonesia
- Gudang Garam (GGRM IJ): HOLD with a target price of Rp74,000.
- Lower inventory purchases and interest expense noted in the update.
Malaysia
- JCY International (JCYH MK): HOLD with a target price of RM0.590.
- Press Metal (PRESS MK): BUY with a target price of RM3.30.
- 1Q17: Sales grew 56.7% yoy, net profit surged 180.5% yoy due to improved operating leverage.
Singapore
- Singapore Airlines (SIA SP): HOLD with a target price of S$10.10.
- 4QFY17: Earnings missed expectations due to yield and cost mismatch.
Thailand
- Bangkok Dusit Medical Services (BDMS TB): SELL with a target price of Bt16.00.
- Downgrade due to negative core earnings growth and low growth expectations for the next year.
Key Indices
| Index | Prev Close | 1D % | 1W % | 1M % | YTD % |
|---|---|---|---|---|---|
| DJIA | 20663.0 | 0.3 | -1.2 | 1.3 | 4.6 |
| S&P 500 | 2365.7 | 0.4 | -1.2 | 1.2 | 5.7 |
| FTSE 100 | 7436.4 | -0.9 | 0.7 | 4.5 | 4.1 |
| AS30 | 5775.5 | -0.8 | -2.3 | -1.1 | 1.0 |
| CSI 300 | 3398.1 | -0.3 | 1.2 | -1.4 | 2.7 |
| FSSTI | 3221.7 | -0.1 | -1.5 | 3.1 | 11.8 |
| HSCEI | 10271.4 | -1.1 | 0.1 | 2.9 | 9.3 |
| HSI | 25136.5 | -0.6 | 0.0 | 5.5 | 14.3 |
| JCI | 5645.5 | 0.5 | -0.1 | 0.7 | 6.6 |
| KLCI | 1767.2 | -0.5 | -0.5 | 1.6 | 7.6 |
| KOSPI | 2286.8 | -0.3 | -0.4 | 6.9 | 12.8 |
| Nikkei 225 | 19553.9 | -1.3 | -2.0 | 6.1 | 2.3 |
| SET | 1545.9 | -0.2 | -0.3 | -1.4 | 0.2 |
| TWSE | 9969.5 | -0.4 | -0.3 | 3.4 | 7.7 |
| BDI | 957 | -0.3 | -5.4 | -26.0 | -0.4 |
| CPO | 2876 | 1.3 | 2.7 | 5.8 | -10.1 |
| Brent Crude | 53 | 0.6 | 3.4 | -4.3 | -7.6 |
Top Picks
BUY
- Alibaba Group (BABA US): Target Price: US$139.00, Upside: +15.1%.
- Beijing Ent. Water (371 HK): Target Price: HK$7.60, Upside: +24.8%.
- Telekomunikasi (TLKM J): Target Price: JPY5,000.00, Upside: +16.0%.
- Tiga Pilar (AISA J): Target Price: JPY2,500.00, Upside: +22.0%.
- V.S. Industry (VSI MK): Target Price: RM2.20, Upside: +9.5%.
- OCBC (OCBC SP): Target Price: S$11.70, Upside: +12.7%.
SELL
- Great Wall Motor (2333 HK): Target Price: HK$6.00, Downside: -23.9%.
- MGM China (2282 HK): Target Price: HK$15.00, Downside: -7.4%.
- Hartalega (HART MK): Target Price: RM4.07, Downside: -30.4%.
Analysts
- Julia Pan: +8621 5404 7225 ext 808, juliapan@uobkayhian.com
- Olivia Li: +8621 5404 7225 ext 858, oliviali@uobkayhian.com
Corporate Events
- Site visit to Mircocoort Scientific Corp: Shanghai, 19 May.
- Roadshow with Petronas Dagangan Bhd: Hong Kong, 22-23 May.
- Analyst Marketing on China Internet Sector: Hong Kong, Singapore, Kuala Lumpur, 22-26 May.
- Roadshow with Singtel: Canada, 26 May.
- Roadshow with Tongda Group Holdings: Hong Kong, 1 Jun.
- Roadshow with United Overseas Bank: Canada, 2 Jun.
- Group meeting with Fortune REIT: Hong Kong, 7 Jun.
- Roadshow with PT Siloam Int'l Hospital: Canada, 5-16 Jun.
- Analyst Presentation on SIN Strategy: Kuala Lumpur, 15-16 Jun.
- Luncheon with United Overseas Bank: Singapore, 3 Jul.
- Roadshow with Top Glove Corporation: US/Canada, 5-12 Sep.
Sector Catalysts
- New elements like AR/VR, eSports, and live streaming are expected to drive growth.
- Overseas expansion continues to be a key growth driver.
- Strong IP investment and high conversion rate from PC game IPs to mobile.
- Potential listing of Ant Financial could boost the company's valuation.
Essential Insights
- China's mobile game market surpassed PC game market in 2016 with Rmb91b in revenue.
- Tencent and NetEase are leading players with strong growth in mobile and new PC games.
- Alibaba is a major player in the e-commerce and digital media sectors, with strong performance in mobile and cloud computing.
- The online game sector is expected to continue growing due to increased ARPU, strong R&D, and aggressive investment.
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