20160120-大华银行-KEY_STORY_33页_1mb

Regional Morning Notes Summary

Core Content Overview

This document provides a comprehensive summary of economic and sector updates for various Asian countries, focusing on China, Singapore, Indonesia, and Malaysia. It also includes insights on key indices, monetary policy, and company-specific updates.

Main Points

China

• Economic Activity:

  • China's GDP growth slowed further to 6.8% yoy in 4Q15, missing the 7.0% target.
  • Industrial production and fixed asset investment (FAI) also declined in December 2015.
  • The government is expected to increase fiscal stimulus, with the fiscal deficit possibly rising to 3% of GDP in 2016.
  • The PBOC is strengthening management of the RMB through measures such as RRR cuts and market intervention to stabilize the currency and prevent speculation.
  • The PBOC may shift the RMB peg from the dollar to a currency basket, including USD, EUR, JPY, HKD, GBP, etc.
  • The RMB is forecasted to remain at 6.8/US$ by the end of 2016, despite ongoing depreciation pressures.

• Sector Updates (Cement):

  • The cement sector remains under pressure due to weak demand and supply dynamics.
  • Cement production and prices declined in 2015, with output falling 3.7% yoy in December.
  • Infrastructure investment is expected to grow 15-17% yoy in 2016, but it may not be enough to offset the slowdown in industrial output.
  • Supply-side reform is a long-term process, potentially taking 5-10 years to cut 20-30% of capacity in the basic materials sector.
  • BBMG (2009 HK) is highlighted as a top pick due to its exposure to property and potential benefits from the Beijing-Tianjin-Hebei integration.

• Valuation Comparison:

  • Cement stocks are trading near their historical troughs.
  • The P/B ratio for CNBM is 0.30, while for BBMG it is 0.60.
  • The P/E ratio for BBMG is 13.6x, with a target price of HK$8.40.
  • The P/B ratio for Conch is 1.10, while for CRCement it is 0.50.

• Key Indices:

  • DJIA closed at 16016.0, with a 1D % change of 0.2.
  • FTSE 100 closed at 5876.8, with a 1D % change of 1.7.
  • HSCEI closed at 8377.8, with a 1D % change of 3.0.
  • Brent Crude closed at 29 US$/bbl, with a 1M % change of 21.9.
  • CPO (RM/mt) closed at 2282, with a 1M % change of 5.9.

• Corporate Events:

  • Greater China Strategy and Energy Sector Analyst Presentation is scheduled in multiple locations from 20 Jan to 29 Jan.
  • UOB Luncheon and Futotech Bhd Luncheon are held in Singapore on 20 Jan and 22 Jan, respectively.
  • WCT Holdings Roadshow and Dawnrays Pharma Roadshow are also scheduled in Singapore on 26 Jan and 29 Jan, respectively.

Key Information

China - Economic Activity

• GDP growth for 2015 was 6.9% yoy, slightly below the target.
• Service sectors showed 8.3% yoy growth, which is a positive trend.
• Industrial production and FAI slowed down in December 2015, indicating weak economic momentum.
• Retail sales increased slightly, supported by the rebound in property sales and the holiday season.

China - Monetary Policy

• The PBOC is implementing targeted easing to stabilize the RMB and control market liquidity.
• The RRR for CNH deposits is expected to be raised to 17%, locking in Rmb210b of offshore RMB liquidity.
• The CFETS Index is being used to better reflect the RMB's exchange rate against a basket of currencies.

China - Cement Sector

• The cement sector is expected to remain under pressure in 2016.
• Cement production is projected to decline 1% yoy, and prices to fall 2% yoy.
• BBMG is recommended as a BUY with a target price of HK$8.40.
• The P/B ratio for BBMG is 0.60, indicating a potential 44.5% price upside.

Regional Markets

• Singapore Post (SPOST SP) is recommended as a BUY with a target price of S$2.23.
• Axis REIT (AXRB MK) is rated HOLD with a target price of RM1.68.
• Guinness Anchor (GUIN MK) is rated BUY with a target price of RM15.50.
• Pruksa Real Estate (PS TB) is recommended as a BUY with a target price of Bt34.00.
• Supalai (SPALI TB) is rated HOLD with a target price of Bt21.00.

Summary Table

Conclusion

The document highlights the ongoing economic slowdown in China, particularly in the industrial and cement sectors, and the government's response through fiscal and monetary stimulus. It also provides insights into the RMB management and the performance of key companies in various Asian markets, with a focus on REITs and construction firms. The analysis emphasizes the need for political reform to sustain long-term economic growth and the importance of monitoring market dynamics and policy changes.