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Coal : Supply tightness continues to drive up domestic coal prices.
The recent domestic coal price rally is largely driven by concerns over a potential supply shortage as well as coal import restriction, in our view. The ongoing re-stocking of key IPPs before the summer season is also pushing up coal prices. However, we continue to believe the price rally would be short-lived with more hydro power contribution kicking in from late-June. We expect coal prices to trend back to the green zone with more production ramp-up from new coal capacity. Maintain UNDERWEIGHT.
Cement : Prices continue to search for the bottom in the slow season.
Cement prices continue to trend down in July, as the heavier-than-usual rainfall is restricting downstream construction activities. We have seen the biggest price cut in the eastern region over past five weeks while inventory continues to pile up. Flexible production has been implemented in certain regions to cope with the weak demand. We think cement prices are not far from bottoming out as we are optimistic about construction demand once the weather normalises. Maintain OVERWEIGHT.
Greater China Daily: Wednesday, July 8, 2020
KEY HIGHLIGHTS Sector Cement Prices continue to search for the bottom in the slow season. Coal Supply tightness continues to drive up domestic coal prices. TRADERS’ CORNER Hengan International (1044 HK): Trading Buy Range: HK$64.60-64.65 Anta Sports (2020 HK): Trading Buy Range: HK$75.90-75.95
Abdul Hadi Bin Abdul Manaf ...
- Arandi Ariantara
- Chaiwat Arsirawichai
- Chong Lee Len
- Jack Goh Tooan Orng
- Jie Ying Chloe Tan
- Jonathan Koh
- Kowit Pongwinyoo
- Neo Chen Wentao
- Sandra Huang Jieqiong
- Siwakorn Mitsantisuk
- Tanaporn Visaruthaphong
- Vincent Khoo Boo Aik
- Ziv Ang Sze Champ
Regional Morning Notes - Wednesday, July 8, 2020
GREATER CHINA Sector Cement: Prices continue to search for the bottom in the slow season. Coal: Supply tightness continues to drive up domestic coal prices. INDONESIA Update Waskita Karya (WSKT IJ/BUY/Rp710/Target: Rp820): Expect 200% hoh earnings growth in 2H20 on project completions and cost efficiencies. MALAYSIA Sector Building Materials: Cement companies have been able to stabilise their ASPs, paving the way for firmer ASPs by end-20. Maintain BUY on Hume. Gaming: Despite lower NFOs’ ticket sales in the first few draws post lifting of lockdown, expect progressive recovery in 2H20. Main...
China Economics: US-China trade war escalation piles further pressure on weak Renminbi.
Trade tensions between the US and China reached a new high on 23 Aug 19 as retaliations from China were swiftly met with further tariff hikes and threats from the US. The higher tariffs will bring further pressure on China’s external balance; hence we are lowering our USDCNY forecast to Rmb7.20 at end-19 and Rmb7.60 at end-20.
Coal : Supply tightness continues to drive up domestic coal prices.
The recent domestic coal price rally is largely driven by concerns over a potential supply shortage as well as coal import restriction, in our view. The ongoing re-stocking of key IPPs before the summer season is also pushing up coal prices. However, we continue to believe the price rally would be short-lived with more hydro power contribution kicking in from late-June. We expect coal prices to trend back to the green zone with more production ramp-up from new coal capacity. Maintain UNDERWEIGHT.
Cement : Prices continue to search for the bottom in the slow season.
Cement prices continue to trend down in July, as the heavier-than-usual rainfall is restricting downstream construction activities. We have seen the biggest price cut in the eastern region over past five weeks while inventory continues to pile up. Flexible production has been implemented in certain regions to cope with the weak demand. We think cement prices are not far from bottoming out as we are optimistic about construction demand once the weather normalises. Maintain OVERWEIGHT.
Greater China Daily: Wednesday, July 8, 2020
KEY HIGHLIGHTS Sector Cement Prices continue to search for the bottom in the slow season. Coal Supply tightness continues to drive up domestic coal prices. TRADERS’ CORNER Hengan International (1044 HK): Trading Buy Range: HK$64.60-64.65 Anta Sports (2020 HK): Trading Buy Range: HK$75.90-75.95
Abdul Hadi Bin Abdul Manaf ...
- Arandi Ariantara
- Chaiwat Arsirawichai
- Chong Lee Len
- Jack Goh Tooan Orng
- Jie Ying Chloe Tan
- Jonathan Koh
- Kowit Pongwinyoo
- Neo Chen Wentao
- Sandra Huang Jieqiong
- Siwakorn Mitsantisuk
- Tanaporn Visaruthaphong
- Vincent Khoo Boo Aik
- Ziv Ang Sze Champ
Regional Morning Notes - Wednesday, July 8, 2020
GREATER CHINA Sector Cement: Prices continue to search for the bottom in the slow season. Coal: Supply tightness continues to drive up domestic coal prices. INDONESIA Update Waskita Karya (WSKT IJ/BUY/Rp710/Target: Rp820): Expect 200% hoh earnings growth in 2H20 on project completions and cost efficiencies. MALAYSIA Sector Building Materials: Cement companies have been able to stabilise their ASPs, paving the way for firmer ASPs by end-20. Maintain BUY on Hume. Gaming: Despite lower NFOs’ ticket sales in the first few draws post lifting of lockdown, expect progressive recovery in 2H20. Main...
China Economics: PMI - A jobless recovery.
China’s official manufacturing PMI edged up 0.3ppt mom to 50.9% in Jun 20, while non-manufacturing PMI rose 0.8ppt mom to 54.4%, both beating Bloomberg consensus estimate of 50.5% and 53.6% respectively. China is seeing steady but slow recovery. We remain watchful, given the lack of employment gains.
China Economic Activity: May 20 - Improvements seen but still not good enough.
China’s IP and retail sales growth improved to 4.4% yoy and -2.8% yoy in May 20 while FAI growth recovered to -6.3% yoy in 5M20. The pace of recovery broadly fell short of consensus expectations. We note the wide discrepancy over work resumption in the surveys for IP and manufacturing PMI, which casts further doubts on the pace of growth recovery. Although sales growth was driven by discounting, we hope the 6.18 shopping festival will kick-start China’s consumption drive.
Economics: Money Supply - Making headway.
China’s M1 growth topped estimates and rose to 6.8% yoy while M2 growth held firm at 11.1% yoy in May 20. These point to a solid improvement in the real economy’s liquidity condition while the 10.4% yoy growth in outstanding deposits further reinforces our view. As such, fiscal efforts need to be bolstered in order to spearhead a consumption-driven growth recovery in the coming months.
Economics: Inflation - Easing inflationary pressure creates room for further stimulus in 2H20.
China’s CPI inflation slowed to 2.4% yoy while core-CPI inflation stayed flat at 1.1% yoy in May 20. PPI inflation came in below expectations at -3.7% yoy amid broad-based demand weakness. We expect PPI inflation to stay negative going into 2H20 despite the low base. Overall, easing inflationary pressure should set the stage for further monetary easing in 2H20.
Ivy Xu Da ...
- Joyce Chan Pui Lai
- Julia Pan Mengyao
- Nick Liu Sunliang
- Oscar Jiang
- Robin Yuen
- Shaun Tan
Greater China Daily: Wednesday, October 9, 2019
KEY HIGHLIGHTS Sector Consumer Observations from National Day Golden Week. Internet Volume growth slowing down, tourism spending increasing. Property Housing sales volume exceeds expectations. TRADERS’ CORNER China Res Beer (291 HK): Trading Buy Range China Res Gas (1193 HK): Trading Buy Range
Greater China Daily: Friday, October 4, 2019
KEY HIGHLIGHTS Sector Automobile BMW may skip special rebates to dealers for 3Q19, pressuring dealers’ new car sales margins. REITs & Landlords Office & retail: Uncertainties may linger; downgrade to MARKET WEIGHT. Sportswear Channel checks suggest a healthy 3Q19. TRADERS’ CORNER Haidilao (6862 HK): Trading Buy Range Café de Coral (341 HK): Trading Buy Range
Strategy - Alpha Picks: Greater China October Conviction List
As we continue to expect market volatility, we maintain exposure to names that have resilient earnings or are expected to enjoy an earnings growth recovery, such as Ausnutria Dairy (1717 HK), CSPC (1093 HK) and Dongfeng Motor (489 HK), and add PICC P&C (2328 HK) to our BUY list.
Carol Dou Xiao Qin ...
- Greater China Research Team
- Johnny Yum Chung Man
- Joyce Chan Pui Lai
- Ken Lee
- Michael Cheung Ho Bun
- Tham Mun Hon
Greater China Daily: Thursday, October 3, 2019
KEY HIGHLIGHTS Strategy Alpha Picks: Greater China October Conviction List No change in strategy; adding PICC P&C to our BUY list. Initiate Coverage Shenzhen Mindray Bio-Medical Electronics Co (300760 CH/BUY/Rmb184.46/Target: Rmb235.00) Becoming a global medtech giant. Update China Yongda Auto Services Holdings (3669 HK/BUY/HK$6.59/Target: HK$9.00) Acquires a niche dealer of Porsche, Mercedes-Benz and Lexus at attractive valuation. TRADERS’ CORNER Conch Venture (586 HK): Trading Buy Range Lenovo Group (992 HK): Trading Buy Range