20161104-大华继显-Regilonal_Morning_Notes_32页_1mb

报告摘要

Regional Morning Notes Summary

Core Content

This document provides a detailed analysis of the financial and market performance of various companies in China, Indonesia, Malaysia, and Singapore for the period ending 4 November 2016. It includes updates on company results, sector performance, and investment recommendations, along with key assumptions and corporate events.

Main Points by Region

China

Sector Update: City Gas Distribution
- NG price adjustments and a weak economy are expected to impact sentiment and slow growth.
- Downgrade to MARKET WEIGHT for the sector.
- Kunlun Energy is downgraded to HOLD due to potential tariff cuts.
- CR Gas is preferred as it may experience the lowest tariff cut due to its SOE background.
Company Update: Lee & Man Paper (2314 HK)
- 3Q16 margin squeeze was priced in, but 4Q16 profitability is expected to recover.
- Maintain BUY recommendation with a revised target price of HK$7.20.
- Sales volume is expected to grow by 3% annually, driven by tissue paper business.
- New capacity additions in Vietnam and Jiangxi are on track.
- Tissue paper is expected to be a key growth driver, increasing EBIT share from 3% to 14% by 2018.

Key Information

Market Indices

Index	Previous Close	1D %	1W %	1M %	YTD %
DJIA	17930.7	(0.2)	(1.3)	(1.8)	2.9
S&P 500	2088.7	(0.4)	(2.1)	(3.4)	2.2
FTSE 100	6790.5	(0.8)	(2.8)	(2.8)	8.8
AS30	5293.4	(0.2)	(1.4)	(5.0)	(1.0)
CSI 300	3365.1	1.0	0.6	3.4	(9.8)
FSSTI	2802.1	(0.2)	(0.9)	(2.9)	(2.8)
HSCEI	9482.0	(0.4)	(1.3)	(2.8)	(1.9)
HSI	22683.5	(0.6)	(1.9)	(4.2)	3.5
JCI	5329.5	(1.4)	(1.6)	(2.6)	16.0
KLCI	1648.1	(0.7)	(1.3)	(0.8)	(2.6)
KOSPI	1983.8	0.2	(2.0)	(3.5)	1.1
Nikkei 225	17134.7	(1.8)	(1.5)	3.2	(10.0)
SET	1493.1	(0.4)	(0.4)	(1.1)	15.9

Key Assumptions

GDP Growth (yoy):
- US: 2.6 (2015), 2.0 (2016F), 2.7 (2017F)
- Euro Zone: 2.0 (2015), 1.4 (2016F), 1.0 (2017F)
- Japan: 0.5 (2015), 0.6 (2016F), 0.8 (2017F)
- Singapore: 2.0 (2015), 1.4 (2016F), 1.7 (2017F)
- Malaysia: 5.0 (2015), 4.2 (2016F), 4.5 (2017F)
- Thailand: 2.8 (2015), 3.2 (2016F), 3.5 (2017F)
- Indonesia: 4.8 (2015), 5.0 (2016F), 5.2 (2017F)
- China: 6.9 (2015), 6.5 (2016F), 6.2 (2017F)
Brent Crude (US$/bbl):
- 2015: 53.60
- 2016F: 42
- 2017F: 54
CPO (RM/mt):
- 2015: 2,168
- 2016F: 2,500
- 2017F: 2,600

Top Picks

Company	Ticker	Current Price (lcy)	Target Price (lcy)	Pot. +/-
Air China	753 HK	5.11	7.00	37.0
Ping An Insurance	2318 HK	40.65	47.00	15.6
Ciputra Property	CTRP IJ	730.00	960.00	31.5
Indosat	ISAT IJ	6,500.00	9,500.00	46.2
Genting Bhd	GENT MK	7.57	9.90	30.8
City Dev	CIT SP	8.50	10.36	21.9
OCBC	OCBC SP	8.45	10.45	23.7
Bangkok Dusit	BDMS TB	22.80	31.20	36.8
Siam Cement	SCC TB	502.00	645.00	28.5

Corporate Events

Event	Venue	Start	End
Valuetronics Tea Session	Singapore	7 Nov	7 Nov
Cityneon Roadshow	Hong Kong	9 Nov	9 Nov
SMI Holdings Roadshow	Singapore	10 Nov	10 Nov
Xstep International Holdings Roadshow	Kuala Lumpur	15 Nov	15 Nov
Ministry of Finance Indonesia Corporate Roadshow	Taipei	21 Nov	22 Nov
Indo Strategy Analyst Marketing	Taipei	23 Nov	23 Nov
Metro Pacific Investments Roadshow	Canada	24 Nov	25 Nov

Company Updates

Lee & Man Paper (2314 HK)

3Q16: Net income below expectations due to margin squeeze.
4Q16: Expected margin recovery and profitability improvement.
Recommendation: Maintain BUY.
Target Price: HK$7.20.
Upside: +25.9% from current price of HK$5.72.
EPS Forecast (2016-2018): HK$0.61, HK$0.72, HK$0.78.
Net Profit Forecast (2016-2018): HK$2.8b, HK$3.28b, HK$3.57b.
Net Profit Per Tonne: HK$518, HK$566, HK$595.
EBIT Margin: 17.0%, 19.0%, 20.0%.
Tissue Paper Sales: Expected to grow from 48,000 tonnes in 2015 to 140,000, 300,000, and 400,000 tonnes in 2016, 2017, and 2018 respectively.
New Capacity: Vietnam plant (400,000 tonnes) expected to start commercial operation in 2Q17.
Tissue Paper EBIT Share: Expected to increase from 3% to 14% by 2018.

Financial Highlights

Metric	2015	2016F	2017F	2018F
Net Turnover (HK$m)	32,093	34,047	35,750	37,180
EBITDA (HK$m)	6,260	7,234	7,637	7,970
EBIT (HK$m)	4,331	5,286	5,665	5,997
Net Profit (HK$m)	1,122	3,076	3,399	3,686
Net Profit (Recurrent) (HK$m)	2,834	3,076	3,399	3,686
EPS (HK$)	2.99	3.35	3.68	3.96
PE (x)	11.5	9.3	7.9	7.3
P/B (x)	1.5	1.4	1.2	1.1
EV/EBITDA (x)	10.0	8.5	7.5	7.0
Dividend Yield (%)	2.8	3.4	4.0	4.4
Net Margin (%)	13.1	14.6	15.4	15.8
Net Debt/Equity	65.6	71.9	51.3	43.3
Interest Cover (x)	18.6	22.4	27.6	30.8
ROE (%)	13.3	15.3	16.1	15.7

Investment Recommendations

Lee & Man Paper (2314 HK): Maintain BUY.
City Gas Companies: Earnings revised down by 2.5–12.2%, target prices trimmed by 3.9–16.7%.
ENN Energy: Downgraded to MARKET WEIGHT.
CR Gas: Maintained BUY, with a target price of HK$34.20.
Kunlun Energy: Downgraded to HOLD due to potential 10% tariff cut.