20150929-法国巴黎银行-SPOTLIGHT_ON_ASIA_15页_739kb_739kb

SPOTLIGHT ON ASIA Summary

Core Content

This document provides an overview of investment opportunities in the Asian financial and industrial sectors, focusing on key companies in Thailand and China, as well as a Japanese capital goods firm. It includes analyst recommendations, financial performance data, and market insights.

Main Points

Thailand

• Muangthai Leasing (MTLS TB)

  • Recommendation: Buy
  • Target Price (TP): THB19.00 (+18.8% upside)
  • Close Price: THB16.00
  • Key Highlights:
    • Largest motorcycle title lender in Thailand.
    • Third-largest loan portfolio in microfinance.
    • 69% of total portfolio is from two-wheeler title loans.
    • Targets to expand branch network from 506 at end-2014 to 900 by end-2015 and 1,200 by 2016.
    • Strong earnings growth of 56% in 2015E and 36% in 2016E.
    • NPL of 1.3% with high coverage of 259%, better than peers and the banking sector.
    • PEG of 0.7–0.8x, below banking peers and consumer stocks.
    • Attractive yield with secured collaterals and low LTV (50%) to counter concerns on asset quality.

• Srisawad Power 1979 (SAWAD TB)

  • Recommendation: Buy
  • Target Price (TP): THB43.00 (+18.6% upside)
  • Close Price: THB36.25
  • Key Highlights:
    • Dominant consumer finance player in Thailand.
    • Largest mass-market secured consumer finance network.
    • 54% of total loans are for pick-up trucks and cars.
    • Loan growth relatively immune to economic volatility.
    • High ROE of 34% in 2016E.
    • PEG of less than 1x, supported by 45% EPS growth.
    • NPL of 3.6%, better than banks with retail focus.
    • Strong earnings growth and high ROE justify P/E multiples.

China

• China Consumer: Decentralisation

  • Trend: E-commerce is driving decentralisation, reducing entry barriers for retail businesses.
  • Impact: Traditional retailers and brand owners face challenges, while logistics companies like Gome benefit.
  • Weishang: An emerging retail format with zero cost access for customers and vendors, expected to grow with mobile device adoption.

• China Power & Coal

  • Power Consumption: +1.9% y-y in August, with secondary industry demand accounting for 69.2% of total.
  • Coal Prices: QHD 5500 kcal price flat at RMB380.5/tonne, while 5800 kcal price decreased to RMB416/tonne.
  • Freight Rates: Continued decline, with imported coal at a 9.7% discount to domestic coal.
  • Coal Imports: 5.4% of China's 8M15 coal consumption from imports, down from 7.5% in 2014.

• China Everbright Bank (6818 HK)

  • Recommendation: Buy
  • Target Price (TP): HKD4.30 (+25.4% upside)
  • Close Price: HKD3.43
  • Key Highlights:
    • Announced HKD19.6b private placement to CEG at HKD4.8962/share.
    • CEG's stake in CEB increases from 23.96% to 29.96%.
    • Post-placement, CEG's total stake (direct and indirect) increases to 34%.
    • The placement could dilute EPS/BVPS by 4.0% / 1.7% but improve CAR.
    • A-share will resume trading on Sep 28, H-share on Sep 29.
    • P/E of 12x, P/BV of 1.6x, ROE of 14%.

Japan

• Kubota Corp (6326 JP)
  • Recommendation: Buy
  • Target Price (TP): JPY2,600 (+52.6% upside)
  • Close Price: JPY1,704
  • Key Highlights:
    • Forecasted 2Q OP slightly ahead of guidance.
    • Targets a 10% y-y rise in 1H FY12/15 OP to JPY110b.
    • N. American sales expected to grow, despite product mix issues.
    • Sales units for lawnmowers, utility vehicles, and construction machinery up, but mid-size tractors down.
    • P/E of 18.3x, P/BV of 1.8x, ROE of 10.1%.

Key Information

Financial Metrics

Analysts

• Wannapa Asavatevath – Lead analyst for MTLS TB and SAWAD TB.
• Charlie Y Chen – Analyzed China Consumer sector and Weishang trend.
• Daisy Zhang, CFA – Covered China Power & Coal.
• Judy Zhang – Analyzed China Everbright Bank.
• Yukihiro Kumagai – Covered Kubota Corp.

Disclaimer

• The report is issued by BNP Paribas Securities (Asia) Ltd.
• Analysts are not registered/qualified under NYSE and/or FINRA regulations.
• Disclosures apply to companies rated or recommended in the report.
• The report includes information from FactSet and BNP Paribas/FSSIA estimates.

Conclusion

The document highlights the potential for growth in the financial and industrial sectors across Asia. Both MTLS TB and SAWAD TB are recommended with Buy ratings due to their strong loan growth, attractive yields, and solid asset quality. In China, the decentralisation trend is reshaping the retail landscape, with Weishang gaining prominence. Meanwhile, China Everbright Bank and Kubota Corp are also recommended with Buy ratings, driven by capital replenishment, growth expectations, and favorable market conditions.