20160418-大华继显-Regional_Morning_Notes_26页_1mb

Regional Morning Notes Summary

Core Content Overview

This document provides a detailed analysis of economic activity and market performance across several Asian countries and key sectors, with a focus on China, Indonesia, Malaysia, and Singapore. It includes updates on company results, key indices, sector performance, and analyst views.

Main Points and Key Information

China: Economic Activity

• GDP Growth: China's GDP growth for 1Q16 was 6.7% yoy, slightly lower than the previous quarter but in line with market expectations. The report maintains a forecast of 6.5% yoy for the full year of 2016.
• Industrial Production (IP): IP rebounded to 6.8% yoy in March 16, mainly due to a low base effect from the previous year's Chinese New Year (CNY) holiday. The recovery is expected to continue into early 3Q16.
• Fixed Asset Investment (FAI): FAI growth was 10.7% yoy in 1Q16, with real growth reaching 13.8% yoy after adjusting for deflation. Infrastructure investment was the key driver, with a 23.3% yoy increase in March 16.
• Retail Sales: Retail sales grew 10.5% yoy, supported by rising inflation and strong sales in durable goods. Construction material and furniture sales also showed notable growth.
• Cement Sector: Cement production surged 24.0% yoy in March 16, and prices in Guangdong and Guangxi rose by Rmb15-20/ton, contributing to improved demand. BBMG is set to acquire Jidong Cement, which is expected to yield good synergy and enhance profitability in the Beijing-Tianjin-Hebei region.
• Key Sectors: Growth in downstream sectors like automobile (11.4% yoy), pharmaceuticals (11.2% yoy), and electrical equipment (8.4% yoy) was notable. Upstream sectors also showed signs of recovery, with steel output (3.3% yoy) and cement output (24.0% yoy) increasing.
• Market Views: The report recommends BUY for Anhui Conch and BBMG, with target prices of HK$25.00 and HK$8.16, respectively. However, the cement sector is expected to face challenges due to overcapacity elimination and slower growth in some regions.

Indonesia: Tiga Pilar Sejahtera Food (AISA)

• Performance: AISA's 2015 net profit was 15.4% below forecast, leading to a downgrade to HOLD. The 2016 forecast is for single-digit growth in net profit.
• Financials: AISA reported Rp6,011b in revenue for 2015, with food manufacturing growing 11.8% yoy and rice mills growing 20.6% yoy. However, agribusiness and others segments saw significant declines.
• Valuation: AISA is currently trading at 10.9x 2016F PE, below its 5-year average. The target price was cut to Rp1,210, with an upside of +1.3%.

Malaysia: Hartalega Holdings (HART)

• Results Preview: 4QFY16 results are expected to show flat to modestly stronger net profit of RM74m-80m, driven by three new production lines and forex gains from forward contracts.

Singapore: Sector Updates

• REITs: Results for ART, CCT, and CMT were reported in 1Q16.
• Ezra Holdings (EZRA): Expected to report another season of loss provisions in 2QFY16.
• Singapore Airlines (SIA): Improved load factors and low fuel costs are expected to support strong 4QFY16 earnings.

Key Indices (1Q16)

• DJIA: -0.2% (1D), +1.8% (1W), +1.7% (1M), +2.7% (YTD)
• S&P 500: -0.1% (1D), +1.6% (1W), +1.5% (1M), +1.8% (YTD)
• FTSE 100: -0.3% (1D), +2.2% (1W), +2.5% (1M), +1.6% (YTD)
• AS30: +0.7% (1D), +4.1% (1W), -0.3% (1M), -2.3% (YTD)
• CSI 300: -0.1% (1D), +2.7% (1W), +3.2% (1M), -12.3% (YTD)
• FSSTI: +0.3% (1D), +4.1% (1W), +0.6% (1M), +1.4% (YTD)
• HSCEI: -0.2% (1D), +5.9% (1W), +3.7% (1M), -4.6% (YTD)
• HSI: -0.1% (1D), +4.6% (1W), +3.1% (1M), -2.7% (YTD)
• JCI: +0.2% (1D), -0.5% (1W), -1.3% (1M), +5.0% (YTD)
• KLCI: +0.2% (1D), +0.6% (1W), +0.7% (1M), +2.1% (YTD)
• KOSPI: -0.1% (1D), +2.2% (1W), +1.1% (1M), +2.7% (YTD)
• Nikkei 225: -0.4% (1D), +6.5% (1W), +0.7% (1M), -11.5% (YTD)
• SET: +1.1% (1D), -1.1% (1W), -0.6% (1M), +7.6% (YTD)
• TWSE: +0.4% (1D), +1.9% (1W), -1.3% (1M), +4.3% (YTD)
• BDI: +6.4% (1D), +17.8% (1W), +60.8% (1M), +32.8% (YTD)
• CPO: -0.0% (1D), -2.6% (1W), +4.3% (1M), +19.1% (YTD)
• Brent Crude: -5.2% (1D), -4.6% (1W), -0.8% (1M), +9.6% (YTD)

Top Picks (BUY)

• Air China (753 HK): CP 6.22, TP 10.20, Pot. +/- 64.0%
• Ping An (2318 HK): CP 37.85, TP 45.00, Pot. +/- 18.9%
• Bank BJB (BJBR J): CP 915.00, TP 1,140.00, Pot. +/- 24.6%
• Gamuda (GAM MK): CP 4.90, TP 5.55, Pot. +/- 13.3%
• WCT Holdings (WCTHG MK): CP 1.69, TP 2.05, Pot. +/- 21.3%
• City (CIT SP): CP 8.82, TP 10.86, Pot. +/- 23.1%
• DBS (DBS SP): CP 15.75, TP 19.25, Pot. +/- 22.2%
• Charoen (CPF TB): CP 25.50, TP 30.00, Pot. +/- 17.6%
• Siam Cement (SCC TB): CP 450.00, TP 630.00, Pot. +/- 40.0%

Top Picks (SELL)

• Spurakencana (SAKP MK): CP 1.87, TP 1.43, Pot. +/- -23.5%
• Sembcorp (SMM SP): CP 1.80, TP 0.88, Pot. +/- -51.1%

Key Assumptions

• GDP Growth (yoy):
  • 2014: 7.3% (China), 6.5% (Indonesia), 5.0% (Malaysia), 3.2% (Thailand)
• Brent Crude (US$/bbl):
  • 2015: 53.60, 2016F: 42, 2017F: 54
• CPO (RM/mt):
  • 2015: 2,168, 2016F: 2,500, 2017F: 2,600

Analysts

• China: Chaoping Zhu and Ye Xu
• Indonesia: Stevanus Juanda and Posmarito Pakpahan
• Malaysia: Not specified in the summary
• Singapore: Johnson Hu and Cynthia Wang

Corporate Events

• Shenzhen Investment Corporate Roadshow: Taipei, 19 Apr - 20 Apr
• Thailand Contractor and Property Sector Analyst Presentation: Kuala Lumpur & Singapore, 19 Apr - 20 Apr

Conclusion

The document highlights the economic recovery in China, driven by government spending and infrastructure investment, with cement and property sectors showing strong performance. In Indonesia, the food sector faces challenges with mediocre growth expected in 2016. Malaysia and Singapore also show mixed results with Hartalega Holdings and Singapore Airlines being notable. Key indices and market performance data are provided, with a focus on BUY and SELL recommendations for various stocks.