20170330-大华继显-Regional_Morning_Notes_33页_1mb

Regional Morning Notes Summary - 30 March 2017

Core Content Overview

This summary outlines the key financial results and stock performance for various companies and indices across Asia, with a focus on China, Indonesia, Malaysia, Singapore, and Thailand. It also includes key assumptions, corporate events, and analyst recommendations.

China

Company Results

• Agricultural Bank Of China (1288 HK)

  • 4Q16 Performance: Healthy growth from retail loans and fee income. Loans grew 9.1% yoy and 1.1% qoq. Fee income increased 11.7% yoy, driven by agency commissions and bancassurance.
  • Asset Quality: Stabilised with a slight improvement in NPL ratio to 2.37% and a reduction in special mention loans and overdue loans.
  • NIM: Receded to 2.11% in 4Q16, with a contraction of 16bp qoq.
  • Operating Expenses: Declined 13.9% yoy due to reduced general & admin expenses and VAT reform.
  • Dividend Yield: Attractive at 5.5%.
  • Target Price: HK$3.50 (Maintain HOLD).
  • Key Metrics:
    • Net interest income: Rmb398,104m (2016)
    • Non-interest income: Rmb112,024m (2016)
    • Net profit: Rmb183,941m (2016)
    • P/B: 0.8x
    • P/E: 5.6x
    • Cost/income ratio: 38.6% (2016)
    • ROE: 14.6% (2016)
    • Loan loss coverage: 173.4% (2016)

• BYD (1211 HK)

  • 2016 Performance: Net profit rose 79% yoy to Rmb5.05b, driven by EV subsidies. Earnings are expected to decline in 2017 due to subsidy cuts, but the new mono-rail business may offset this.
  • Stock Impact: Upgrade to HOLD from SELL. Target price increased to HK$43.00 from HK$38.00.
  • Key Financials:
    • Revenue: Rmb100,208m (2016)
    • EBITDA: Rmb15,589m (2016)
    • Net profit: Rmb5,052m (2016)
    • P/B: 2.3x
    • P/E: 21.0x
    • ROE: 11.5% (2016)
    • EPS: 177.7 fen (2016)

Indonesia

• Sampoerna Agro (SGRO IJ)
  • 2016 Performance: Net income rose 78.5% yoy due to record CPO production.
  • Stock Recommendation: BUY.
  • Target Price: Rp2,300.
  • Current Price: Rp2,000.

Malaysia

• AirAsia (AIRAMK)

  • Stock Impact: Downgrade to HOLD from previous status. Euphoria over special dividend from AACL was considered unwarranted.
  • Current Price: RM3.07.
  • Target Price: RM3.10.

• YTL Power International (YTLP MK)

  • Update: Jordan power plant project commenced, positive newsflow expected.
  • Stock Recommendation: BUY.
  • Current Price: RM1.47.
  • Target Price: RM1.65.

Singapore

• ComfortDelGro Corporation (CD SP)
  • Update: Hold at S$2.60. Potential for increased competition from JustGrab for drivers.

Thailand

• IRPC (IRPC TB)
  • Update: Earnings could surprise positively in 1Q17.
  • Stock Recommendation: BUY.
  • Current Price: Bt5.15.
  • Target Price: Bt6.70.

Key Indices

Top Picks

BUY

• Alibaba (BABA US): CP = 109.51, TP = 130.00, Pot. +/- = 18.7%
• Beijing (371 HK): CP = 5.83, TP = 7.60, Pot. +/- = 30.4%
• Indosat (ISAT IJ): CP = 6,975.00, TP = 7,900.00, Pot. +/- = 13.3%
• Tiga Pilar (AISA IJ): CP = 2,140.00, TP = 2,550.00, Pot. +/- = 19.2%
• Inari Amertron (INRI MK): CP = 2.03, TP = 2.15, Pot. +/- = 5.9%
• V.S. Industries (VSI MK): CP = 1.73, TP = 2.20, Pot. +/- = 27.2%
• OCBC (OCBC SP): CP = 9.72, TP = 10.75, Pot. +/- = 10.6%
• Venture Corp (VMS SP): CP = 11.30, TP = 12.40, Pot. +/- = 9.7%
• Bangkok Dusit (BDMS TB): CP = 21.10, TP = 27.00, Pot. +/- = 28.0%
• Siam Cement (SCC TB): CP = 538.00, TP = 600.00, Pot. +/- = 11.5%

SELL

• Great Wall Motor (2333 HK): TP = 6.00, Pot. +/- = (33.3)%
• MGM China (2282 HK): TP = 13.20, Pot. +/- = (18.5)%

Key Assumptions

Corporate Events

• Roadshow with China Meidong: Singapore (29–30 Mar)
• Group Meeting with IGG Inc: Shanghai (30 Mar)
• Luncheon with O-Net Technologies: Hong Kong (30 Mar)
• Roadshow with China Traditional Chinese Medicine: Shanghai (5 Apr)
• Group Meeting with Yihai Int'l Holdings: Hong Kong (5 Apr)
• Roadshow with Ann Joo Resources: Singapore (5 Apr)
• Roadshow with Sihuan Pharmaceutical Holdings: Shanghai (7 Apr), Taiwan (12 Apr)
• Roadshow with Singamas Container: Shanghai (12 Apr), Taiwan (17–18 Apr)
• Roadshow with BB Life Science Corp: Hong Kong (10 Apr)
• Luncheon with Dynagreen Environmental Protection Group: Hong Kong (11 Apr)
• Plant Visit with Hume Industries: Perak (11 Apr)
• Roadshow with Universal Medical Financial and Technology: Hong Kong (12 Apr)
• China Economics Sector Group Luncheon with U-Mobile: Kuala Lumpur (19 Apr)
• Group Luncheon with Singamas Container Holdings: Hong Kong (20 Apr)
• Roadshow with Singtel: Canada (26 May)
• Roadshow with PT Siloam Int'l Hospital: Canada (5 Jun)
• Luncheon with United Overseas Bank: Singapore (3 Jul)
• Roadshow with Top Glove Corporation: US/Canada (5 Sep)

Summary of Key Views

• Agricultural Bank Of China: Maintains HOLD due to stable asset quality and a low net interbank borrowings-to-total assets ratio. Target price is based on 0.88x 2017F P/B.
• BYD: Upgraded to HOLD, with a revised target price due to the potential contribution of the mono-rail business.
• Sampoerna Agro: Strong CPO production in 2016 led to a 78.5% net income increase.
• IRPC: Expected to report positive earnings in 1Q17.
• YTL Power International: Positive sentiment from the Jordan power plant project.
• ComfortDelGro Corporation: Faces increased competition from JustGrab.
• Malaysia & Singapore GDP Growth: Expected to remain stable, supporting loan growth and economic performance.

Valuation and Risk

• Agricultural Bank Of China: Conservative valuation with low P/B and stable ROE.
• BYD: Expectations of earnings decline in 2017 due to EV subsidy cuts, but potential recovery from the mono-rail business.
• General Risk: Economic recovery, asset quality improvements, and policy changes are key factors influencing stock performance.

Conclusion

The report highlights the performance of major financial and industrial companies in Asia, focusing on growth, asset quality, and market sentiment. Agricultural Bank Of China and BYD are central to the analysis, with the former maintaining a HOLD rating and the latter upgraded to HOLD. Sampoerna Agro and IRPC show positive growth potential. Corporate events and market indices are also noted, with key focus areas on economic recovery, regulatory changes, and sector-specific developments.