Regional Morning Notes Summary
Core Content Overview
This document provides a summary of stock updates and market analysis for various regions, including China, Hong Kong, Indonesia, Malaysia, Singapore, and Thailand, as well as key financial metrics and analyst recommendations. The focus is on company-specific updates, financial performance, and future outlooks.
Main Points by Region
China
- Zhengzhou Yutong Bus (600066 CH)
- Update: The company held a conference call to discuss 2016 performance and the impact of new EV subsidy cuts.
- Key Takeaways:
- E-bus sales increased by 27% yoy in 2016, reaching 26,000 units.
- Management expects continued growth in 2017 but is concerned about margin pressure due to subsidy cuts.
- The delay in central government subsidies has negatively impacted operating cash flow.
- Management expects e-bus margins to drop, with potential realized ASP decline of 29% in 2017.
- Net profit is expected to decline in 2017, despite guidance for growth.
- Valuation & Recommendation: Maintain HOLD, with a target price of Rmb20.00 and an upside of +2.4%.
Hong Kong
- Bank of East Asia (23 HK)
- Update: The bank faced a challenging operating environment in 2H16 due to NPLs cleanup, leading to a surge in credit costs.
- Key Takeaways:
- NIM stabilized in 2H16 due to tighter liquidity and increased interbank lending.
- Loan growth is expected to be mid-single-digit in 2017, driven by Chinese M&A activity.
- The bank is expected to generate a significant gain from the sale of Tricor in 2017.
- Management remains cautious about asset quality and NIM due to the US interest rate hike.
- Valuation & Recommendation: Maintain SELL, with a target price of HK$25.90 and an upside of -15.6%.
Indonesia
- PP London Sumatra Indonesia (LSIP IJ)
- Update: Production is expected to recover in 2017, but upside remains limited.
Malaysia
- MISC (MISC MK)
- Update: Downgraded to SELL due to potential earnings weakness in crude tankers from OPEC production cuts and global tanker deliveries.
- Target Price: RM6.30
- Tune Protect Malaysia (TIH MK)
- Update: Travel insurance bookings stabilized in 4Q16; the recent share price weakness is seen as an opportunity to accumulate.
- Target Price: RM2.05
Singapore
- China Aviation Oil Singapore Corp (CAO SP)
- Update: Beneficiary of USD strength and oil price contango.
- Target Price: S2.01
Thailand
- PTT (PTT TB)
- Update: The company is a key player in gas infrastructure; other energy & petrochemical stocks (BANPU, PTTEP, PTTGC) are also highlighted for 2017 earnings growth.
- Target Price: Bt430.00
Key Indices
| Index |
Prev Close |
1D % |
1W % |
1M % |
YTD % |
| DJIA |
19942.2 |
0.3 |
0.0 |
4.0 |
0.9 |
| S&P 500 |
2270.8 |
0.6 |
0.1 |
3.6 |
1.4 |
| FTSE 100 |
7189.7 |
0.2 |
1.7 |
6.8 |
0.7 |
| AS30 |
5788.2 |
0.1 |
2.0 |
6.0 |
1.2 |
| CSI 300 |
3368.3 |
0.8 |
1.6 |
(2.9) |
1.8 |
| FSSTI |
2921.3 |
0.8 |
1.2 |
(0.7) |
1.4 |
| HSCEI |
9441.0 |
(0.2) |
2.8 |
(2.8) |
0.5 |
| HSI |
22134.5 |
(0.1) |
2.6 |
(1.6) |
0.6 |
| JCI |
5301.2 |
0.5 |
3.9 |
0.6 |
0.1 |
| KLCI |
1647.5 |
0.7 |
1.7 |
1.4 |
0.3 |
| KOSPI |
2045.6 |
0.1 |
0.2 |
4.2 |
0.9 |
| Nikkei 225 |
19594.2 |
2.5 |
1.0 |
7.2 |
2.5 |
| SET |
1563.6 |
1.3 |
3.2 |
4.1 |
1.3 |
| TWSE |
9287.0 |
0.2 |
2.0 |
1.4 |
0.4 |
| BDI |
953 |
(0.8) |
4.3 |
(20.5) |
(0.8) |
| CPO (RM/ml) |
3259 |
1.9 |
1.0 |
3.3 |
1.9 |
| Brent Crude (US$/bbl) |
56 |
1.8 |
0.7 |
3.7 |
(0.6) |
Key Assumptions
| Metric |
2015 |
2016F |
2017F |
2018F |
| GDP (% yoy) |
- |
- |
- |
- |
| US |
2.6 |
1.7 |
2.7 |
- |
| Euro Zone |
2.0 |
1.6 |
1.1 |
- |
| Japan |
1.2 |
0.8 |
0.9 |
- |
| Singapore |
2.0 |
1.4 |
1.8 |
- |
| Malaysia |
5.0 |
4.2 |
4.5 |
- |
| Thailand |
2.8 |
3.2 |
3.3 |
- |
| Indonesia |
4.8 |
5.0 |
5.2 |
- |
| Hong Kong |
2.4 |
2.1 |
1.8 |
- |
| China |
6.9 |
6.5 |
6.2 |
- |
| Brent (Average) (US$/bbl) |
53.60 |
42 |
56 |
- |
| CPO (RM/mt) |
2,168 |
2,500 |
2,600 |
- |
Top Picks
| Ticker |
CP (Icy) |
TP (Icy) |
Pot. +/- (%) |
| Air China |
5.04 |
6.50 |
29.0 |
| Ping An Insurance |
39.25 |
47.00 |
19.7 |
| Ciputra Property |
690.00 |
960.00 |
39.1 |
| Indosat |
6,100.00 |
8,015.00 |
31.4 |
| Genting Bhd |
7.94 |
10.15 |
27.8 |
| City Dev |
8.39 |
10.36 |
23.5 |
| OCBC |
9.10 |
10.45 |
14.8 |
| Bangkok Dusit |
23.30 |
31.20 |
33.9 |
| Siam Cement |
494.00 |
645.00 |
30.6 |
Corporate Events
| Event |
Venue |
Begin |
Close |
| Luncheon with UOB Bank |
Singapore |
9 Jan |
9 Jan |
| Luncheon with UOB Bank Senior Economist Thailand |
- |
12 Jan |
12 Jan |
| China Healthcare Sector Analyst Marketing |
Singapore |
16 Jan |
16 Jan |
| China Healthcare Sector Analyst Marketing |
Malaysia |
17 Jan |
18 Jan |
| Spore REITS Sector Analyst Marketing |
Malaysia |
19 Jan |
20 Jan |
| PTT Exploration and Production Roadshow |
Singapore |
6 Feb |
7 Feb |
| SGX-UOB Kay Hian Corporate Day |
Taipei |
21 Feb |
21 Feb |
| UOB Kay Hian ASEAN Conference |
Taipei |
22 Feb |
22 Feb |
Financial Highlights (Zhengzhou Yutong Bus)
| Metric |
2014 |
2015 |
2016F |
2017F |
2018F |
| Net turnover (Rmbm) |
25,728 |
31,211 |
35,857 |
30,905 |
35,225 |
| EBITDA (Rmbm) |
3,939 |
4,644 |
5,336 |
3,863 |
4,403 |
| Operating profit (Rmbm) |
2,903 |
3,906 |
4,597 |
3,098 |
3,616 |
| Net profit (Rmbm) |
2,613 |
3,535 |
4,192 |
2,882 |
3,335 |
| EPS (Rmb) |
1.18 |
1.47 |
1.89 |
1.30 |
1.50 |
| Net margin (%) |
10.2 |
11.3 |
11.7 |
9.3 |
9.5 |
| Dividend yield (%) |
3.4 |
7.7 |
4.9 |
3.3 |
3.9 |
| Net debt/(cash) to equity (%) |
(55.7) |
(52.1) |
(37.2) |
(70.2) |
(50.4) |
| ROE (%) |
25.8 |
29.9 |
31.5 |
20.4 |
21.6 |
Financial Highlights (Bank of East Asia)
| Metric |
2015 |
2016F |
2017F |
2018F |
| Net interest income (HK$m) |
12,653 |
11,934 |
10,950 |
11,322 |
| Non-interest income (HK$m) |
5,579 |
5,130 |
3,915 |
3,845 |
| Net profit (rep./act.) (HK$m) |
6,661 |
5,522 |
3,501 |
6,420 |
| EPS (HK$ cent) |
286.5 |
215.4 |
132.5 |
243.1 |
| PE (x) |
10.7 |
14.3 |
23.2 |
12.6 |
| P/B (x) |
1.0 |
1.0 |
1.0 |
0.9 |
| Dividend yield (%) |
3.6 |
2.9 |
1.5 |
2.8 |
| Net int margin (%) |
1.8 |
1.7 |
1.6 |
1.6 |
| Cost/income (%) |
54.0 |
57.0 |
59.8 |
59.8 |
| Loan loss cover (%) |
50.7 |
47.9 |
67.0 |
46.2 |
| Consensus net profit (HK$m) |
- |
- |
3,722 |
4,810 |
| UOBKH/Consensus (x) |
- |
- |
0.94 |
1.33 |
Analysts
Summary of Key Points
- Zhengzhou Yutong Bus faces margin pressure due to EV subsidy cuts, which are expected to lead to a drop in realized ASP and net profit in 2017.
- Bank of East Asia is under pressure from asset quality issues and higher credit costs, with a SELL recommendation due to concerns over future performance.
- Malaysia has mixed outlooks, with MISC downgraded and Tune Protect Malaysia seen as a buying opportunity.
- Singapore and Thailand have positive outlooks on certain stocks, especially in the energy and insurance sectors.
- Indonesia is expected to see production recovery in 2017, but with limited upside.
- The document also includes key indices and corporate events, highlighting market dynamics and potential investment opportunities.
