20170214-大华继显-Regional_Morning_Notes_22页_1mb

报告摘要

Regional Morning Notes Summary - 14 February 2017

Core Content Overview

This document provides a comprehensive summary of stock market insights and recommendations for the Asia-Pacific region, focusing on China, Indonesia, Malaysia, and Singapore. It includes updates on specific companies, sector performance, key indices, corporate events, and investment strategies.

China

Paper Sector

Containerboard Prices: Remained at a record high of Rmb4,600/tonne in the first week of February 2017, driven by tight supply from the closure of small paper plants.
OCC Prices: Rose 4% month-over-month (mom) to US$243/tonne, aligning with expectations. The year-to-date (ytd) increase is in line with the analyst's forecast.
Coal Prices: Fell 2% mom to Rmb587/tonne, following a three-month decline since December 2016, indicating a peak in 2016 and expected further declines in 2017.
Sector Outlook: Maintain OVERWEIGHT rating due to strong performance from leading players.
Top Picks:
- Nine Dragons Paper (2689 HK): BUY rating, target price HK$13.00. Expected strong earnings growth and higher sensitivity to containerboard price increases.
- Lee & Man Paper (2314 HK): BUY rating, target price HK$8.00. Less sensitive to containerboard price fluctuations due to lower operating leverage. Diversifying into paper tissue, expected to contribute 15% of net profit by 2018.
Earnings Estimates:
- Nine Dragons Paper: Core net profit expected to grow 41.5% yoy to Rmb4.01b in FY17.
- Lee & Man Paper: Net profit expected to grow 28% yoy to HK$2.95b in FY17.

Indonesia

Dividend Strategy

High Dividend Yields: Suggested names with dividend yields >2.5% include SIDO, TBLA, BTPN, ICBP, TLKM, ASII, BBTN, and BBNI.
Consumer Sector: Offers reasonable yields (2–4%) with positive operational outlooks.
Banks: Second-tier banks such as BFIN, BBKP, and BTPN have yields above 2.5%, with BFIN offering the highest at 5.9%.
Cement Stocks: High yields but unfavourable prospects due to overcapacity and intense competition.

Malaysia

Small/Mid Cap Highlights

Kim Loong Resources (KIML MK): BUY rating, target price RM4.20. Expected better quarter-over-quarter (qoq) results for 4QFY17 and strong production growth in FY18. Offers an attractive dividend yield of 5–7%.

Singapore

Results & Highlights

Valuetronics Holdings (VALUE SP): 3QFY17 results exceeded expectations due to strong comparable sales growth.
ISOTeam (ISO SP): Expected better performance in 2HFY17 compared to 1HFY17.

Key Indices Performance (as of 13 Feb 17)

Index	Prev Close	1D %	1W %	1M %	YTD %
DJIA	20412.2	0.7	1.8	2.6	3.3
S&P 500	2328.3	0.5	1.6	2.4	4.0
FTSE 100	7278.9	0.3	1.5	(0.8)	1.9
AS30	5812.9	0.7	2.6	0.6	1.6
CSI 300	3436.3	0.7	1.9	3.5	3.8
FSSTI	3111.6	0.4	1.8	2.9	8.0
HSCEI	10257.8	1.3	4.2	4.8	9.2
HSI	23711.0	0.6	1.6	3.4	7.8
JCI	5409.6	0.7	0.3	2.6	2.1
KLCI	1710.2	0.7	1.5	2.3	4.2
KOSPI	2078.7	0.2	0.0	0.1	2.6
Nikkei 225	19459.2	0.4	2.5	0.9	1.8
SET	1585.2	0.1	0.1	0.6	2.7
TWSE	9710.3	0.5	1.8	3.5	4.9
BDI	702	(0.7)	(4.5)	(22.9)	(27.0)
CPO (RM/ml)	3348	0.4	1.6	2.8	4.7
Brent Crude	56	(1.8)	(0.1)	0.4	(2.0)

Top Picks (BUY)

Company	Ticker	Current Price	Target Price	Potential Upside (%)
Air China	753 HK	HK$5.78	HK$6.50	12.5
Ping An Insurance	2318 HK	HK$42.20	HK$47.00	11.4
Ciputra Property	CTRP IJ	IJ690.00	IJ960.00	39.1
Indosat	ISAT IJ	IJ6,500.00	IJ8,015.00	23.3
Genting Bhd	GENT MK	MK8.71	MK10.15	16.5
Inari Amertron	INRI MK	MK1.88	MK2.00	6.4
City Dev	CIT SP	SP9.59	SP10.36	8.0
OCBC	OCBC SP	SP9.75	SP10.65	9.2
Bangkok Dusit	BDMS TB	TB21.40	TB31.20	45.8
Siam Cement	SCC TB	TB526.00	TB600.00	14.1

Key Risks

Renminbi Depreciation: A depreciation of more than 5% could reduce earnings for both Nine Dragons and Lee & Man Paper.
Forex Losses: NDP is expected to incur forex losses of Rmb260m and Rmb120m for FY17 and FY18, respectively, which are 8% and 3% of core net profit. These are expected to decline in FY19 due to reduced foreign-currency debt.

Corporate Events

Tea Session with Duty Free International – Singapore, 17 Feb
SGX-UOB Kay Hian Corporate Day – Taipei, 21 Feb
UOB Kay Hian ASEAN Conference – Taipei, 22 Feb
Group Meeting with Bumitama Agri – Singapore, 27 Feb
Greater China Strategy Analyst Marketing – UK/Europe, 27 Feb – 1 Mar
Lunchon with Yinson Holdings – Malaysia, 1 Mar
Teleconference with First Resources – Malaysia, 2 Mar
Annual Plantation Outlook Seminar – Malaysia, 6 Mar
Roadshow with Guotai Junan – Singapore, 7 Mar

GDP & Commodity Assumptions

GDP Growth (yoy)

Region	2015	2016F	2017F
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

Commodity Prices

Commodity	2016 (US$/bbl)	2017F (US$/bbl)	2018F (US$/bbl)
Brent Crude	45	56	61
CPO (RM/mt)	2,653	2,600	2,500

Company Update: Huaneng Renewables Corporation (958 HK)

Performance: Outperformed peers in January 2017 due to better asset quality and resilience to weak demand and curtailment.
Earnings Growth: Expected to continue solid growth in 2017, driven by improved utilisation and full-year implementation of the guaranteed purchase policy.
Dividend Yield: Expected to rise to 2.5% in 2017.
Valuation: Trading at 7.1x 2017F PE, which is attractive compared to historical average of 13x.
Target Price: HK$3.50 (upside +28.7%).

Conclusion

The report highlights strong performance in the paper sector in China, particularly for Nine Dragons Paper and Lee & Man Paper, with positive outlooks and attractive valuations. It also recommends dividend-focused stocks in Indonesia and Malaysia, emphasizing strong earnings and yield potential. The document outlines key risks, including potential currency depreciation and forex losses, and provides insights into corporate events and market indices.

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