20170802-大华继显-Regional_Morning_Notes_24页_1mb

Regional Morning Notes Summary - August 2, 2017

Core Content Overview

This document provides a detailed summary of market insights and investment recommendations for various Asian markets, including China, Indonesia, Malaysia, Singapore, and Thailand. It outlines key company results, analyst recommendations, and valuation updates for selected stocks, along with corporate events and key economic assumptions.

Main Points and Key Information

China

• Alpha Picks: Alibaba Group (BABA US), China Construction Bank (CCB 939 HK), Ctrip (CTRP US), China Shenhua Energy (CSPC 1093 HK), and TUL (3933 HK) are highlighted as high conviction picks.
• Alibaba (Julia Pan):
  • Revenue growth is driven by core commerce and cloud businesses.
  • Expected 46% and 31% yoy revenue growth in FY18-19.
  • Trading at 24.2x FY18F PE, lower than e-commerce peers.
  • Target price: US$173.00.
• China Construction Bank (Jonathan Koh):
  • Strong performance expected ahead of 1H17 results.
  • Trading at 0.8x 2017F P/B.
  • Prudent loan classification policy and strong deposit franchise.
• Ctrip (Julia Pan):
  • Strong growth in low-tier cities and international expansion.
  • Target price: US$66.00.
  • Trading at 49x, 30x, and 23x 2017-19F PE.
  • Non-GAAP operating margin estimates raised to 19% and 25% for 2017-18.
• CSPC (Alex Jiang):
  • Successful transformation to innovative drug industry.
  • Blockbuster drug NBP contributes 34% of EBIT.
  • Target price: HK$15.24.
• TUL (Alex Jiang):
  • Focused on insulin market expansion.
  • Plans to submit production application for insulin aspart.
  • Target price: HK$6.32.

Indonesia

• Semen Indonesia (SMGR IJ):
  • 1H17 net profit down 44.4% yoy.
  • Revenue growth of 2% yoy, driven by export sales and ready-mix cement.
  • Maintain HOLD with a revised target price of Rp10,000.
  • Net profit estimates cut by 27.3% and 14.0% for 2017 and 2018.
  • Margins weakened due to higher fuel costs and inclusion of low-margin downstream businesses.
  • Share price at Rp9,925, with 0.8% upside to target.

Malaysia

• My E.G. Services (MYEG MK):
  • Maintain HOLD; stock should firm up before 2Q17 results.
  • GST monitoring system improves earnings visibility.

Singapore

• SATS (SATS SP):
  • Upgrade to BUY due to strong cargo traffic and stabilising yields.
  • Target price: S$5.40.

Key Indices

• The document includes performance data for several major indices like DJIA, S&P 500, FTSE 100, and regional indices such as AS30, CSI 300, HSI, etc.
• Indices show varied performance across the period with some showing positive growth and others experiencing declines.

Corporate Events

• A series of analyst meetings and roadshows are scheduled for the month, including events in Sarawak, Hong Kong, Singapore, Brunei, and Malaysia, focusing on various sectors like TCM, technology, and small/mid-cap stocks.

Key Assumptions

• GDP growth projections for various countries and regions are provided for 2016, 2017F, and 2018F.
• Brent crude and CPO prices are forecasted to increase in 2017 and 2018.

Investment Recommendations

• BUY recommendations for Alibaba, CCB, Ctrip, CSPC, and TUL.
• HOLD for Semen Indonesia.
• SELL for Great Wall Motor and Sapura Energy.

Valuation Highlights

• Valuation data for each company is provided, including PE, P/B, and other financial metrics.
• The target prices are based on different valuation methodologies, such as SOTP and historical averages.

Performance Analysis

• The document provides performance metrics for the selected stocks since their selection as alpha picks.
• The portfolio return analysis is given for different weighting methodologies: price-weighted, market cap-weighted, and equal-weighted.

Risk and Earnings Revisions

• Earnings forecasts for Semen Indonesia have been revised downward due to lower-than-expected net profit.
• The company is expected to see net profit growth in 2018 after a decline in 2017.

Summary Table

Conclusion

The summary outlines key investment insights and recommendations for the Asian markets, with a focus on China and Indonesia. It highlights strong performers, revised forecasts, and potential catalysts for stock movements. Analysts maintain a cautious approach, with some stocks being upgraded to BUY and others maintained on HOLD or SELL. The document also provides corporate event details and valuation metrics to support investment decisions.