FY19 revenue grew 50.9% yoy to Rmb1,954.9m, in line with estimates. Excluding forex losses, share-based payments fair value gain on convertible bonds and listing expenses, adjusted net profit increased 23.9% yoy to Rmb841m, above street estimates. Gross margin shrank 3.3ppt yoy to 57%, while adjusted net margin dropped 9.4ppt yoy to 43% in FY19. Maintain BUY on China Education Group but cut target price to HK$14.00 from HK$16.00.
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 Update MicroPort Scientific Corporation (853 HK/BUY/HK$8.91/Target: HK$11.00) 2019 results preview: Domestic growth accelerates, weak overseas businesses may regain growth momentum in 2020. TRADERS’ CORNER China Res Gas (1193 HK): Trading Buy Range Geely Auto (175 HK): Trading Sell Range
KEY HIGHLIGHTS Sector Dairy 2020 outlook: Product premumisation is key. Update Shenzhen Mindray Bio-Medical Electronics (300760 CH/BUY/Rmb193.27/Target: Rmb235.00) 2019 results preview: Expect net profit to grow 20-30% yoy, in line with expectations. TRADERS’ CORNER Hengan International (1044 HK): Trading Buy Range CSPC Pharma (1093 HK): Trading Buy Range
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