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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.
GREATER CHINA 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. INDONESIA Sector Consumer: Potential beneficiaries of rupiah appreciation. MALAYSIA Update Bermaz Auto (BAUTO MK/BUY/RM2.02/Target: RM2.60): While we still expect a weaker 3QFY20 due to the high base last year, 4QFY20 could see a meaningful recovery with full contribution from new models. Additional impetus is its attractive yield of 6.7-8.4%. Scientex...
KEY HIGHLIGHTS Results New Oriental Education & Technology Group (EDU US/BUY/US$135.75/Target: US$150.00) 2QFY20: Solid beat on margin improvement; continues to gain market share. Update Cathay Pacific Airways (293 HK/HOLD/HK$10.82/Target: HK$10.20) Dec 19 PLF improves but pneumonia outbreak casts a pall on recovery. TRADERS’ CORNER Baiyunshan (874 HK): Trading Buy Range Prada (1913 HK): Trading Buy Range
2QFY20 revenue increased 31.5% yoy to US$785m, 2% higher than consensus estimates. Management attributes the accelerating revenue growth to the continued market share gain from smaller sector players. Non-GAAP operating margin expanded 7ppt yoy to 4.5%, beating our estimates by 2.5ppt, thanks to improving operating leverage. Management has guided for 3QFY20 revenue to come in at US$983.0m- 1,006.4m (up 23-26% yoy), in line with consensus estimates. Maintain BUY with target price of US$150.00.
GREATER CHINA Results New Oriental Education & Technology Group (EDU US/BUY/US$135.75/Target: US$150.00): 2QFY20: Solid beat on margin improvement; continues to gain market share. Update Cathay Pacific Airways (293 HK/HOLD/HK$10.82/Target: HK$10.20): Dec 19 PLF improves but pneumonia outbreak casts a pall on recovery. INDONESIA Small/Mid Cap Highlights Surya Citra Media (SCMA IJ/NOT RATED/Rp1,600): Rate-card increase is the key to growth. MALAYSIA Update CIMB Group (CIMB MK/BUY/RM5.12/Target: RM6.50): We get the sense that management has turned more optimistic on the group’s loans growth outlo...
KEY HIGHLIGHTS Economics Economic Activity Economic activity indicators broadly retreated in 2019 but held steady in 4Q19. Strategy Breathing space Chinese equities have already priced in the positives of the Phase 1 trade deal; prefer rotation into healthcare and utilities. Sector Healthcare The rocky GPO ride. Internet Multiple drivers continue to boost China’s e-commerce growth. Update Stella International Holdings (1836 HK/BUY/HK$12.30/Target: HK$15.70) 4Q19 operation largely on track, except for volume; 2020 outlook intact.
We think e-commerce will continue to deliver solid growth in 2020 driven by supportive policies, increased online penetration in less developed areas, improved logistic efficiency, and increased user engagement and spending. We also expect physical goods online shopping penetration to rise to 22.4% in 2020 from 20.7% in 2019. Our top pick is Alibaba. Maintain OVERWEIGHT on the sector.
GREATER CHINA Economics Economic Activity: Economic activity indicators broadly retreated in 2019 but held steady in 4Q19. Strategy Breathing space: Chinese equities have already priced in the positives of the Phase 1 trade deal; prefer rotation into healthcare and utilities. Sector Healthcare: The rocky GPO ride. Internet: Multiple drivers continue to boost China’s e-commerce growth. Update Stella International Holdings (1836 HK/BUY/HK$12.30/Target: HK$15.70): 4Q19 operation largely on track, except for volume; 2020 outlook intact. INDONESIA Update Alam Sutera Realty (ASRI IJ/BUY/Rp234/Target...