20150527-杰富瑞-Today_At_A_Glance_13页_303kb_303kb

Asia Research Summary

Core Content Overview

This summary presents a compilation of key insights and recommendations for various Asian companies across multiple sectors, including TMT, shipping, basic materials, alternative energy, and others. The analysis includes current financial performance, future expectations, price targets, and valuation assessments.

Main Points

China Property Sector

• CBRC Policy Support: The China Banking Regulatory Commission (CBRC) has allowed the extension of construction loans, signaling strong government support.
• Sales Growth: Developers are expected to report 40% YoY sales growth in May, with companies like SZI, COLI, and Vanke outperforming.
• Valuation: The sector is currently trading at 10x PE and 0.9x PB, which is considered undemanding.
• Recommendation: A good time to accumulate high-quality developers due to favorable valuations and policy support.

Shipping Sector

• Cosco/CSD Partnership: Expected to generate approximately RMB170 million net profit each in 2017, with potential expansion to 35 vessels.
• Vale's Shipping Needs: The program is expected to significantly boost CSD's net profit.
• Mizuho Financial Group: The stock is trading at 9.8x PER and 0.79x PBR, with no near-term share buybacks anticipated.
• JPX: The stock price is raised to ¥4,500, with a 18% upside from the previous close. Updated dividend payout ratio is incorporated into the analysis.
• Recommendation: Retain BUY rating for JPX due to continued positive market sentiment and cost control.

Basic Materials Sector

• Cement Prices: National cement prices declined by 1.44% WoW, with regional declines in Jilin and Sichuan.
• Inventory Levels: Increased by 1% to 74.4% due to weak demand.
• Containerboard and OCC: Prices remained stable, with the US OCC ending its three-week rise.
• Recommendation: Valuations are considered undemanding, and the sector remains a focus for investment opportunities.

Alternative Energy Sector

• Government Commitment: Strong policy support and subsidies are expected to drive value creation for developers.
• Wind Farms: Positive outlook due to capacity expansion, wind speed normalization, and declining curtailment.
• Shin-Etsu Chemical: EPS growth is anticipated due to PVC volume and wafer price increases. The stock is valued at ¥7,564 with a BUY rating.
• Recommendation: Raising price target to reflect lower risk premium and robust earnings growth.

TMT Sector

• ZTE Corporation: Raised price target to HK$33, with a BUY rating. The company is expected to benefit from 4G market share growth and enterprise opportunities.
• China Mobile Limited: Maintained BUY rating with a price target of HK$119 and $76.70. Expected Capex reduction and data tariff decline.
• Recommendation: Both ZTE and China Mobile are seen as strong picks due to their strategic growth and market position.

Other Sectors

• Bharat Heavy Electricals (BHEL): FY15 profits came in 8% higher than flash results, but still 25% below expectations. Management is non-committal on FY16 growth. Recommend reducing exposure due to weak fundamentals.
• Voltas Limited: Raised FY16-17 EPS by 4-5%, with a revised price target of INR375. Strong unitary cooling margins and growth in air-coolers.
• Reliance Industries: FY15 capex reached a peak of US$16bn. Expected downstream project commissioning in FY17/FY18. Maintained BUY rating.
• E&O Properties: Normalized net profit declined 99% in 1Q15. Most positives have been priced in, and valuations are considered lofty.
• Naim Holdings: Returned to the black in 1Q15 with RM18m net profit. Offers three-in-one exposure at discounted valuations.
• Supermax Corporation: Traded at 10.1x CY15F PE and 1.2x PBV. Current valuations are seen as attractive due to discounted sector multiples.
• Tenaga Nasional Berhad: Unfairly priced despite positive fundamentals. Target price remains RM18.70 with a BUY rating.
• MBM Resources: Earnings declined qoq due to one-time events, but yoy growth is noted. Maintain BUY recommendation.
• MSM Holdings: 1Q15 earnings improved by 26% yoy. Current valuation is considered attractive with a net yield of 4%.
• Felda Global Ventures: Reported a core loss in 1Q15 due to CPO price declines. Hold recommendation as downside risks remain.
• IJM Plantations: FY15 numbers exceeded forecasts due to a deferred tax credit. Valuations are seen as rich at 22x FY16F PE.

Key Takeaways

• Policy and Market Trends: Strong government support and favorable market conditions are key drivers for the China property and alternative energy sectors.
• Valuation Considerations: Most companies are trading at attractive valuations, making them potential investment opportunities.
• Earnings Growth: Anticipated growth in earnings is supported by capacity expansion, cost control, and improved operational performance.
• Sector-Specific Risks: Some companies, such as BHEL and FGV, face challenges due to weak fundamentals and market underperformance.
• Company-Specific Actions: Certain companies, like ZTE and China Mobile, are expected to benefit from strategic initiatives and market dynamics.

Summary of Price Targets and Ratings

Conclusion

The Asia research highlights a mix of strong and weak performers across different sectors. The property and alternative energy sectors are supported by favorable policies and growth expectations. TMT companies like ZTE and China Mobile show positive momentum and strategic growth opportunities. However, some companies, such as BHEL and FGV, face challenges and are recommended for reduced exposure. Overall, the analysis suggests a cautious approach with a focus on high-quality companies trading at attractive valuations.