20170818-大华继显-Regional_Morning_Notes_26页_3mb

Regional Morning Notes Summary

Core Content

This document provides an overview of market updates and analysis for various Asian regions and key sectors, including commodities, property, and corporate events, as well as price forecasts and company performance data.

Main Points

China

• Zinc Sector:
  • Zinc prices have surged by 24% year-to-date (Ytd) to US$3,108/tonne due to persistent global supply shortages and strong demand from China and Europe.
  • Supply tightness continues as overseas capacity restart and Chinese production ramp-up are slower than expected.
  • We forecast zinc prices to rise to US$2,900/tonne in 2017, US$3,050/tonne in 2018, and US$3,080/tonne in 2019.
  • The global zinc market is expected to remain in deficit of 409kt in 2017.
  • Chinese zinc consumption is expected to grow by 1.98% in 2017, with a slowdown in the property sector likely to be a headwind.

Hong Kong

• Property Sector:
  • The property market is downgraded to UNDERWEIGHT due to reduced liquidity and rising yields from additional bill sales.
  • Property developers are expected to underperform relative to the broader market due to the HK dollar weakening and a drop in HK$-NEER.
  • Key recommendations include BUY for New World Devt and Sun Hung Kai, and SELL for Wharf Hldgs Ltd.

Indonesia

• Nippon Indosari Corpindo (ROTI IJ):
  • 2Q17 results were below expectations, with weak performance attributed to sales returns and expired inventory.
  • The company has reduced its 2017 profit guidance and plans to use rights issue proceeds for factory construction and expansion.
  • The stock is maintained at HOLD with a target price of Rp1,100.

Malaysia

• Technology Sector:
  • Prospects remain bright, with the potential to ride on global key trends and sustain long-term earnings visibility.
• Carlsberg Brewery Malaysia (CAB MK):
  • 2Q17 results were in line with expectations, with strong performance in Malaysia and Singapore.
  • Lion Brewery, a 25% owned subsidiary, remains unprofitable with low utilisation.

Singapore

• M1:
  • A BUY recommendation with a target price of S$1.98.
  • Near-term headwinds are already priced in.

Thailand

• PTT (PTT TB):
  • A BUY recommendation with a target price of Bt478.
  • Downstream plays in the O&G sector, such as IRPC, PTTGC, and TOP, are preferred.

Key Indices

Top Picks

Top Picks - Sell

Key Assumptions

Corporate Events

• Roadshow with Star Petroleum Refining: Hong Kong, 21 Aug
• Analyst Presentation on Malaysia Technology Sector: Taipei, 22-23 Aug
• Roadshow with Logan Property Holdings: Taipei, 23-24 Aug
• Roadshow with China TCM Holdings: Hong Kong & Shanghai, 24-28 Aug
• Roadshow with Globetronics Technology: Taipei, 24-25 Aug
• Roadshow with Meidong Auto Holdings: Hong Kong, 25-28 Aug
• Roadshow with Dah Chong Hong: Singapore, 28-29 Aug
• Roadshow with Sihuan Pharmaceutical: Taipei, 1 Sep
• Roadshow with Anta Sports Products Ltd: Shanghai, 5 Sep
• Luncheon with Ten Pao Group Holdings Ltd: Hong Kong, 5 Sep
• Analyst Marketing on 2H17: Singapore, 5-6 Sep
• Asian Gems Conference 2017: Singapore, 10-11 Oct

Analysts

• Sandra Huang (Commodities - China)
• Vikrant Pandey (Property - Hong Kong)
• Stevanus Juanda (Nippon Indosari Corpindo - Indonesia)

Peer Comparison (Hong Kong Property Sector)

| Company | Ticker | Rec | Price (HK$) | Target Price (HK$) | Upside/Downside (%) | Market Cap (US$m) | Curr PE | Fwd PE | Curr P/B | Fwd P/B | EV/EBIT | EV/EBITDA | Curr Yield (%) | Fwd Yield (%) | Book NAV ps | Price/Book | RNAV ps | Fwd ROE (%) | Gearing (%) | Discount to RNAV (%) |
|----------------------|----------|---------|------------|--------------------|---------------------|------------------|---------|--------|----------|---------|---------|-----------|----------------|----------------|-------------|-------------|------------|-------------|------------------|
| Cheung Kong Property | 1113 HK | HOLD | 67.85 | 70.28 | 3.6 | 32,067 | 13.6 | 12.9 | 74.54 | 57.34 | 15.90 | 10.89 | 2.1 | 2.1 | 106.90 | 0.6 | 4.5 | 7.3 | -26 |
| New World Devt | 17 HK | BUY | 10.24 | 13.14 | 28.3 | 12,849 | 14.1 | 12.4 | 18.47 | 164.71 | 10.4 | 7.7 | 4.1 | 3.1 | 21.90 | 0.7 | 4.1 | 10.5 | -53 |
| Sun Hung Kai | 16 HK | BUY | 122.6 | 148.87 | 21.4 | 45,386 | 13.9 | 13.0 | 164.71 | 183.80 | 17.75 | 10.0 | 2.9 | 3.1 | 183.80 | 0.7 | 2.9 | 7.4 | -33 |
| Wharf Hldgs Ltd | 4 HK | SELL | 69.35 | 65.80 | -5.1 | 26,914 | 15.0 | 14.2 | 106.90 | 94.00 | 10.89 | 7.51 | 3.1 | 2.0 | 94.00 | 0.6 | 3.1 | 4.5 | -26 |

Company Results - Nippon Indosari Corpindo

• 2Q17 Results: Net income of Rp19.9b, down 53.1% yoy and 33.4% qoq.
• Sales Returns: Rose by 82.6% yoy and 15.7% qoq, significantly impacting profits.
• Expired Inventory: Increased by 66% yoy and 15.5% qoq.
• Profit Guidance: Reduced from Rp345b to Rp185b for 2017.
• Target Price: Rp1,100 (maintained HOLD), with a previous target of Rp1,200.

Company Description

• Nippon Indosari Corpindo: The largest bread manufacturer in Indonesia, dominating the mass bread market with the Sari Roti brand.
• Stock Data:
  • GICS sector: Consumer Staples
  • Bloomberg ticker: ROTI IJ
  • Shares issued (m): 5,061.8
  • Market cap (Rpb): 5,998.2
  • Market cap (US$m): 448.4
  • 3-mth avg daily turnover (US$m): 0.6

Price Performance

Major Shareholders

Conclusion

The report highlights the continued strength in zinc fundamentals, the negative impact on the Hong Kong property sector due to liquidity issues, and the mixed performance of Indonesian and Malaysian companies. It also outlines key corporate events and provides price forecasts and recommendations for various stocks across the region.