KEY HIGHLIGHTS Sector Insurance Life segment remains weak but auto insurance shows improvement. Results China Education Group (839 HK/BUY/HK$11.00/Target: HK$14.00) FY19: Solid growth; will be more cautious on M&As. TRADERS’ CORNER China Oriental (581 HK): Trading Buy Range Hua Hong Semiconductor (1347 HK): Trading Buy Range
GREATER CHINA Sector Insurance: Life segment remains weak but auto insurance shows improvement. Results China Education Group (839 HK/BUY/HK$11.00/Target: HK$14.00): FY19: Solid growth; will be more cautious on M&As. INDONESIA Sector Poultry: More culling to stabilise poultry prices; upgrade to OVERWEIGHT. MALAYSIA Results Alliance Bank Malaysia (ABMB MK/HOLD/RM2.69/Target: RM2.75): 2QFY20: Net profit below expectations due to spike in provisions. Maintain HOLD with lower target price post cut in earnings. Hong Leong Bank (HLBK MK/BUY/RM16.86/Target: RM18.68): 1QFY20: Above estimate, driven by...
Feasibility Study Results in December to be a Catalyst for this Junior
Slot machine distributor and concession operator RGB’s growth visibility will remain high through 2020-21, riding on the burgeoning casinos in the emerging ASEAN countries (mainly new concessions in the Philippines and Indochina). RGB is expected to deliver net profit growth of 10-20% p.a. in 2020-22, with the lucrative concession division expected to grow 23.3% in the three-year period. It currently trades at 6.0x FY20F PE and offers a lush yield of 4.5-5.0%. Maintain OVERWEIGHT on the sector.
The cement industry is on track for a recovery in 2020, evident from the easing of the price war and we expect demand to pick up gradually. On the other hand, the outbreak of the coronavirus will exert greater pressure on steel prices as there are concerns of a further slowdown in China’s economy, the world’s biggest steel producer and consumer. Maintain MARKET WEIGHT on the building materials sector but OVERWEIGHT on the cement segment. Our top pick is Hume.
KEY HIGHLIGHTS Sector Update Building Materials –Malaysia: Cement recovery progressing well; coronavirus weighing on steel segment. Gaming – Malaysia: Sold-down RGB provides an excellent opportunity to accumulate. A proxy for thriving ASEAN gaming jurisdictions, RGB trades at a prospective PE of only 6x and yield of >5%. TRADERS’ CORNER MKH (MKH MK): Technical BUY Gadang Holdings (GADG MK): Technical BUY
KEY HIGHLIGHTS Sector Coal Stay cautious In 2020; downgrade to UNDERWEIGHT. Property More share placements by developers? Results TAL Education Group (TAL US/BUY/US$51.95/Target: US$60.00) 3QFY20: Strong offline growth, soft 4QFY20 guidance. Update Koolearn Technology Holding (1797 HK/NOT RATED/HK$25.50) Strategic penetration into lower-tier cities. Ping An Good Doctor (1833 HK/NOT RATED/HK$67.00) China telehealth – a game changer for healthcare consultation. TRADERS’ CORNER Yanzhou Coal (1171 HK): Trading Sell Range China Res Land (1109 HK): Trading Sell Range
TAL’s revenue jumped 47.2% yoy to US$862.4m, 3% above our and consensus estimates. Non-GAAP operating margin was 12.5%, down 3.4ppt, in line with our estimate. Non- GAAP net income of US$58.3m (-60% yoy) was in line with our estimate but missed consensus forecast due to a one-off impairment loss. 3QFY20 revenue guidance was 3- 5% below consensus estimate. Maintain BUY with an unchanged target price of US$60.00.
Koolearn is the leading online education brand in the college test preparation and K12 education market in China. The company provides after-school online live and prerecorded courses for college education, K12 education and preschool education via Koolearn, DFUB and Donut app. Enrolment grew 19% yoy in 1HFY20, driven by exceptional growth of 158.56% yoy to 755,000 students in the K12 education segment under the improved online small class teaching method.