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UOB
Charles Wong Kok Min ...
  • K Ajith
  • Robin Yuen

Greater China Daily: Monday, September 16, 2019

KEY HIGHLIGHTS Sector Dairy 1H19 review and 2H19 outlook. Update Cathay Pacific Airways (293 HK/SELL/HK$10.88/Target: HK$9.10) Facing a liquidity crunch.

UOB
Robin Yuen

Dairy - 1H19 review and 2H19 outlook.

Dairy names reported in-line 1H19 results with sales on track with guidance while bottom lines were slightly ahead due to the positive impact from non-operating factors. Leaders continued to win market share via product innovation, brand investment and channel penetration. The recent raw milk upcycle, representing higher cost inflation, while we note other materials have gone down as well as mix-upgrade to more than offset higher price of milk. Maintain OVERWEIGHT on the sector.

UOB
Charles Wong Kok Min ...
  • K Ajith

Cathay Pacific Airways - Facing a liquidity crunch.

CX’s fixed cash cover is likely to be below 1.0x in 2H19 and the carrier also has HK$16b in debt that is due by the year end, along with an estimated HK$7b in capex for the same period. Thus, CX will be facing a severe cash crunch unless it manages to raise further capital in the form of MTN or a rights issue. Fuel volatility will also not be in CX’s favour as the carrier has only hedged 30% of Brent fuel requirements for 2019. Maintain SELL. Target price: HK$9.10.

UOB
John Cheong Ming Chern

Fu Yu Corporation (FUYU SP) - Continued optimisation of business

FUYU continues to put in efforts to optimise its operations. Three key initiatives which will lead to cost savings and growth include: a) liquidation of a loss-making JV in Malaysia; b) lease renewal for its Singapore plant; and c) closure of its Shanghai factory. Although the one-off expense related to the closure of the Shanghai factory could drag 3Q19 earnings into the red, we believe FUYU will still pay a higher dividend for 2019, which could support share price. Maintain BUY and target price of S$0.285.

UOB
Arsit Pamaranont ...
  • Chaiwat Arsirawichai

Energy & Petrochemicals – Thailand - Reaffirms Our Positive View On Refinery Margins, Boosted By IMO2020 Regulation

Sector Energy & Petrochemicals Reaffirms our positive view on refining margins, boosted by IMO2020 regulation.

UOB
Thailand Research Team

Thailand Daily- Monday, September 16, 2019

KEY HIGHLIGHTS Sector Energy & Petrochemicals Reaffirms our positive view on refining margins, boosted by IMO2020 regulation.

UOB
John Cheong Ming Chern

Singapore Daily - Monday, September 16, 2019

KEY HIGHLIGHTS Small/Mid Cap Highlights Fu Yu Corporation (FUYU SP/BUY/S$0.215/Target: S$0.285): Continued optimisation of business.

UOB
Maskun Ramli ...
  • Stevanus Juanda

Indonesia Daily - Monday, September 16, 2019

Consumer: Stocks set to benefit from the rising purchasing power of millennials. TRADERS’ CORNER Wijaya Karya (WIKA IJ): Technical BUY Unilever Indonesia (UNVR IJ): Technical BUY

UOB
Arsit Pamaranont ...
  • Chaiwat Arsirawichai
  • Charles Wong Kok Min
  • John Cheong Ming Chern
  • K Ajith
  • Robin Yuen
  • Stevanus Juanda

Regional Morning Notes - Monday, September 16, 2019

GREATER CHINA Sector Dairy: 1H19 review and 2H19 outlook. Update Cathay Pacific Airways (293 HK/SELL/HK$10.88/Target: HK$9.10): Facing a liquidity crunch. INDONESIA Sector Consumer: Stocks set to benefit from the rising purchasing power of millennials. SINGAPORE Small/Mid Cap Highlights Fu Yu Corporation (FUYU SP/BUY/S$0.215/Target: S$0.285): Continued optimisation of business. THAILAND Sector Energy & Petrochemicals: Reaffirms our positive view on refining margins, boosted by IMO2020 regulation.

UOB
Stevanus Juanda

Consumer - Stocks Set To Benefit From The Rising Purchasing Power Of Millennials

Beneficiaries of rising consumer purchasing power in Indonesia can be categorised as follows: a) Millennial spending: MAPI and MAPA; b) online trade spending: ERAA, TLKM and EXCL; c) fashion and personal care spending: LPPF and UNVR; d) F&B spending: MAPB, PZZA and FAST; e) travel spending: BAYU, GIAA and CASS; and f) entertainment spending: SCMA. With the 2020 budget being favourable to consumer spending, we maintain OVERWEIGHT on the sector and select MAPI, LPPF, FAST, ERAA and EXCL as our top picks.

UOB
Joyce Chan Pui Lai ...
  • Nick Liu Sunliang
  • Robin Yuen
  • Shaun Tan

Greater China Daily: Friday, September 13, 2019

KEY HIGHLIGHTS Sector Macau Gaming 1H19 sector review and 2H19 outlook. Property Limited impact from renminbi fluctuation. Results Sun Hun Kai Properties (16 HK/BUY/HK$116.90/Target: HK$148.00) FY19: Results in line; strong balance sheet and positioning allow company to capitalise on opportunities. TRADERS’ CORNER WH Group (288 HK): Trading Buy Range BAIC Motor (1958 HK): Trading Buy Range

UOB
Chong Lee Len ...
  • Jacquelyn Yow Hui Li
  • Jie Ying Chloe Tan
  • Jonathan Koh
  • Leow Huey Chuen
  • Loke Pei Hao
  • Malaysia Research Team
  • Nick Liu Sunliang
  • Peerawat Dentananan
  • Robin Yuen
  • Shaun Tan

Regional Morning Notes - Friday, September 13, 2019

GREATER CHINA Sector Macau Gaming: 1H19 sector review and 2H19 outlook. Property: Limited impact from renminbi fluctuation. Results Sun Hun Kai Properties (16 HK/BUY/HK$116.90/Target: HK$148.00): FY19: Results in line; strong balance sheet and positioning allow company to capitalise on opportunities. INDONESIA Update Astra Agro Lestari (AALI IJ/BUY/Rp10,325/Target: Rp11,700): Expect 61.8% yoy net profit growth in 2020; upgrade to BUY. MALAYSIA Sector Telecommunications: 1H19 earnings affected by 4% yoy decline in service revenue. Telcos to continue focusing on customer acquisition and good...

UOB
Robin Yuen

Macau Gaming - 1H19 sector review and 2H19 outlook.

2Q19 was marked by core-mass growth, while both premium-mass and VIP suffered further weakness. For the rest of 2H19, we expect weakness to be further exacerbated as the trade war intensifies, the renminbi depreciates and regional instability affects traffic. Gaming operators that are ramping up new facilities are likely to continue gaining market share. We reduce our 2019 GGR forecast to -1.1% yoy (from +2.4%). While valuations have hit multi-year lows at 11x EBITDA (vs 2016 trough of 9x), we maintain MARKET WEIGHT on the sector as the risks of both EBITDA downgrades and a PE multiple de-rati...

UOB
Jonathan Koh ...
  • Loke Pei Hao

Mapletree Industrial Trust - High-tech transformation powered by data centres; Upgrade to BUY

MINT’s strategy to grow its high-tech buildings segment is transformational. It has expanded exposure to high-tech buildings to 43.3% of portfolio valuation, much larger than flatted factories’ at 33.1%. We view acquisitions to further increase exposure to data centres as a positive catalyst. MINT provides growth from data centres at a reasonable price. Its FY20F distribution yield of 5.5% is higher than 5.2% for AREIT and 4.5% for Keppel DC REIT. Upgrade to BUY. Target price: S$2.58.

UOB
Jonathan Koh ...
  • Loke Pei Hao

Singapore Daily - Friday, September 13, 2019

KEY HIGHLIGHTS Update Mapletree Industrial Trust (MINT SP/BUY/S$2.30/Target: S$2.58): High-tech transformation powered by data centres; Upgrade to BUY. TRADERS’ CORNER Jardine Cycle & Carriage (JCNC SP): Trading BUY Singapore Airlines (SIA SP): Trading BUY

UOB
Shaun Tan

Sun Hun Kai Properties - FY19: Results in line; strong balance sheet and positioning allow company to capitalise on opportunities.

FY19 earnings are in line with expectations with core profit of HK$32,398m (+6.6% yoy). SHKP reported FY19 contracted sales of HK$60b, up 40% yoy and trashing its HK$42.5b target. 70% of Hong Kong sales recognition planned for FY20 has been locked in while management maintains the “medium-term” Hong Kong contracted sales target of HK$40b for FY20. Full-year DPS of HK$4.95 represents an attractive yield of 4.2%. Maintain BUY and target price of HK$148.00.

UOB
Nick Liu Sunliang ...
  • Shaun Tan

China Property- Limited impact from renminbi fluctuation.

One of the direct effects of the renminbi breaking 7 per dollar is the rising cost of repaying foreign currency liabilities in the local currency. In the long run, exchange rate fluctuations may impact developers that rely on US dollar debt financing. However, most developers suffer little pressure on US dollar debt maturity in the short term, so the impact of short-term exchange rate fluctuations on developers is still controllable. Maintain MARKET WEIGHT.

UOB
Silvia Dwiputri

Astra Agro Lestari (AALI IJ) - Expect 61.8% yoy Net Profit Growth In 2020; Upgrade To BUY

AALI is expected to post 61.8% yoy net profit growth in 2020, mainly driven by higher CPO ASP of RM2,250/tonne (2019F: RM2,100. We forecast slower production growth in 2019-2020 due to AALI’s stagnant mature plantation area and stable FFB yield. Upgrade to BUY with a higher target price of Rp11,700, based on 20.4x 2020F PE, or the stock’s 5-year mean.

UOB
Peerawat Dentananan

Hotels – Thailand - Sector Sees Improvements, But We Remain Cautious

Sector Hotel Sector sees improvements, but we remain cautious.

UOB
Thailand Research Team

Thailand Daily- Friday, September 13, 2019

KEY HIGHLIGHTS Sector Hotel Sector sees improvements, but we remain cautious.

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