20161008-大华继显-Regional_Morning_Notes_33页_1mb

报告摘要

Regional Morning Notes Summary

Core Content

This document is a financial analysis report from UOB Kay Hian dated Wednesday, 12 October 2016, focusing on key sectors and stocks in Asia, particularly China's cinema sector and China Longyuan Power. It provides insights into market trends, stock recommendations, corporate updates, and valuation analysis.

Main Points and Key Information

China Cinema Sector

Sustainable Growth: The cinema sector is expected to benefit from rising domestic entertainment spending, consumption upgrade, and demand from lower-tier cities.
Box Office Growth: Box office growth slowed in 2016 due to lack of foreign blockbusters, lower content quality, and subsidy cuts, but is expected to recover in 2017 with a stronger blockbuster pipeline and reduced impact of subsidies.
Earnings Growth: Leading cinema players are projected to achieve a 27% CAGR in earnings from 2015 to 2018, driven by aggressive screen expansion and non-ticketing revenue.
Market Share Expansion: Top cinema players are expected to expand their market share with a 34% CAGR in screen numbers, which is higher than the industry average of 22%.
Valuation: China cinema stocks trade at 28x 2017F PE, which is higher than the global media sector (21x) but lower than the China entertainment content sector (31x). The report recommends Wanda Cinema Line and SMI Holdings as top picks.

China Longyuan Power

Strong Performance: China Longyuan Power reported a 25.2% yoy increase in wind power generation volume in September 2016, outperforming its peer Huaneng Renewables.
Utilisation Improvement: Curtailment rates have decreased significantly, with a 20-30ppt reduction in highly curtailed regions such as Gansu and Xinjiang.
Earnings Outlook: The company is expected to deliver a 23% yoy earnings growth in 9M16, driven by strong power generation volume and low-base effects.
Tariff Cut Impact: The proposed 6% tariff cut in 2018 is expected to have minimal impact on earnings due to existing tariff structures and the focus on new capacity in regions with low tariff cuts.
Valuation: The stock is currently trading at 10.0x 2017F PE, which is 27% below the target price of HK$8.00. The report upgrades the stock to BUY.

Sector Pick Summary

Company	Ticker	Rating	Share Price (LC)	Target Price (LC)	Upside (%)
Wanda Cinema Line	002739 CH	BUY	Rmb66.60	Rmb81.40	22.9
SMI Holdings	198 HK	BUY	HK$0.76	HK$1.07	48.8

Key Assumptions

Region	GDP (yoy)	2015	2016F	2017F
China	6.9	6.9	6.5	6.2
US	2.6	2.6	2.0	2.7
Euro Zone	2.0	2.0	1.4	1.0
Japan	0.5	0.5	0.6	0.8
Singapore	2.0	2.0	2.2	2.4
Malaysia	5.0	5.0	4.2	4.5
Thailand	2.8	2.8	3.2	3.5
Indonesia	4.8	4.8	5.0	5.2

Key Risks

Slower-than-expected box office growth
Rapid screen expansion outpacing cinema admissions growth
Lack of high-quality movies to meet audience demand

Analysts

Johnson Hu, CFA
Email: johnsonhu@uobkayhian.com
Phone: +86 21 5404 7225 ext 809
Mark Chen
Email: markchen@uobkayhian.com
Phone: +86 21 5404 7225 ext 825
Yan Shi
Email: yan.shi@uobkayhian.com
Phone: +8621 5404 7225 ext. 804

Corporate Highlights

China Longyuan Power (916 HK): Strong wind generation volume growth due to supportive policies and reduced curtailment.
Geely Auto (175 HK): Robust sales growth of 82% yoy, in line with expectations.
Jasa Marga (JSMR IJ): Expected 15% yoy earnings growth in 2016 due to toll road traffic growth and tariff increase.
Destini (DSTN MK): Encouraged by the prospect of securing RM1.7b in new contracts.
VS Industry (VSI MK): Strong earnings growth expected in FY17 from new contracts.
Siam Cement (SCC TB): Expected to benefit from forward integration and upgrade to BUY.
Thai Union Group (TU TB): Forward integration is a positive step; upgrade to BUY.

Key Financial Metrics for China Longyuan Power

Metric	2016F	2017F	2018F
Net Turnover (Rmbm)	21,629.5	24,381.2	27,573.2
EBITDA (Rmbm)	14,920.2	16,906.8	19,590.8
Operating Profit (Rmbm)	8,687.2	10,055.4	12,103.4
Net Profit (Rmbm)	3,736.6	4,403.7	5,411.5
EPS (Fen)	46.5	54.8	67.3
PE (x)	11.7	10.0	8.1
P/B (x)	1.1	1.0	0.9
EV/EBITDA (x)	8.8	7.7	6.7
Dividend Yield (%)	1.3	1.5	1.8
Net Margin (%)	17.3	18.1	19.6
ROE (%)	9.4	10.2	11.4

Market Indices

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	18128.7	(1.1)	(0.2)	0.2	4.0
S&P 500	2136.7	(1.2)	(0.6)	0.4	4.5
FTSE 100	7070.9	(0.4)	(0.0)	4.3	13.3
AS30	5562.2	0.1	(0.1)	4.6	4.1
CSI 300	3306.6	0.4	2.0	1.3	(11.4)
FSSTI	2856.1	(0.5)	(1.0)	(0.6)	(0.9)
HSCEI	9804.5	(1.2)	1.3	1.6	1.5
HSI	23549.5	(1.3)	(0.1)	1.1	7.5
JCI	5382.0	0.4	(1.7)	1.9	17.2
KLCI	1668.7	0.2	0.4	(1.1)	(1.4)
KOSPI	2031.9	(1.2)	(1.1)	2.0	3.6
Nikkei 225	17024.8	1.0	2.6	2.1	(10.6)
SET	1442.2	(1.0)	(4.5)	2.2	12.0
TWSE	9219.8	(0.5)	(0.2)	3.0	10.6
BDI	922	0.0	7.2	14.7	92.9
CPO (RM/mt)	2622	(1.7)	(4.2)	(9.5)	19.2
Brent Crude	52	(1.4)	3.0	9.2	40.6

Stock Recommendations

BUY Stocks

Wanda Cinema Line (002739 CH): Leading position in the sector, strong parent company support, and good synergy with Wanda Plaza.
SMI Holdings (198 HK): Strong growth, relatively low valuation, and 34% earnings CAGR.
China Longyuan Power (916 HK): Strong wind generation growth, improved utilisation, and upgrade to BUY.
Geely Auto (175 HK): Robust sales growth, maintains BUY rating.
Jasa Marga (JSMR IJ): Expected 15% yoy earnings growth in 2016, re-initiated coverage.
Destini (DSTN MK): Strong potential for new contracts, maintains BUY rating.
VS Industry (VSI MK): Strong earnings growth in FY17, maintains BUY rating.
Siam Cement (SCC TB): Forward integration is a positive step, upgraded to BUY.
Thai Union Group (TU TB): Forward integration is a good move, upgraded to BUY.
Singapore Post (SPOST SP): Transition from shopping to delivery, maintains BUY rating.

SELL Stock

Hartalega (HART MK): Downgraded to SELL due to a significant drop in target price.

Market Catalysts

Strong results in 9M16 and 4Q16.
Announcement of more supportive policies, including details on carbon trading.

Conclusion

The report highlights a positive outlook for China's cinema sector and China Longyuan Power, emphasizing sustainable growth, recovery in 2017, and improved utilisation. It also provides sector-specific insights and stock recommendations across multiple Asian markets, with a focus on BUY ratings for top performers and SELL for underperforming ones. The report is structured to offer investment guidance and risk assessments, aiding in decision-making for investors in the region.