Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.
This combination of email and password didn't match our records. Your account might not be activated. If so, please click on the link we sent you via email. You can also request a password reset or a new activation email using the links below.
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.
Dec 19 pax load factor registered the first improvement in five months. However, the spread of the Wuhan pneumonia has cast doubts on a recovery in inbound traffic. In the absence of that, CX would have to be dependent on low yielding transit traffic. We remain neutral on CX given increasing cash crush and debt burden. Maintain HOLD. Target: HK$10.20. Entry level: HK$9.50.
Update Supalai (SPALI TB/BUY/Bt19.00/Target: Bt23.00) Setting realistic goals in tough market.
KEY HIGHLIGHTS Update Supalai (SPALI TB/BUY/Bt19.00/Target: Bt23.00) Setting realistic goals in tough market.
Surya Citra Media (SCMA IJ/NOT RATED/Rp1,600): Rate-card increase is the key to growth. TRADERS’ CORNER United Tractors (UNTR IJ): Technical BUY Matahari Department Store (LPPF IJ): Technical BUY
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...
Starhub will remain focused on cost optimisation efforts amid a relatively stable Singapore telco landscape. We note that GIGA has started offering bite-size services to capture market share and we believe the exit of Zero Mobile may lead to competition abating. Separately, Starhub is expected to partner with other MNOs (such as M1) to jointly bid for 5G nationwide spectrum. The stock trades at -2SD below its 5-year mean EV/EBITDA of 8.7x. Maintain HOLD with a DCF-based target price of S$1.45. Entry price: S$1.25.
KEY HIGHLIGHTS Update StarHub (STH SP/HOLD/S$1.48/Target: S$1.45): The company will focus on near-term cost optimisation amid a relatively stable operating front. TRADERS’ CORNER Manulife US Real Estate Investment Trust (MUST SP): Trading Buy Thomson Medical Group (TMG SP): Trading Buy
SCMA plans to carry out a gross rate-card increase of 30% in Mar 20, while their closest competitor (MNCN) is planning a 10% rate-card increase in 1Q20 and another 15% increase in 2Q20. On the back of the rate-card increase, SCMA expects its TV segment revenue to grow by 11-12% in 2020. The company expects around a Rp275b-325b increase in net income in 2020. For Vidio, SCMA will spend Rp280b to create and buy the licences for premium content in 2020. The stock trades at -1SD to the historical PE and implied 15.5x 2020F PE(< industry average PE of 16.1x).
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.
The second round of GPO tenders concluded last Friday with 32 drugs seeing an average price cut of 53% against the lowest procurement prices in 2018. The overall price cut is milder than the market’s and our estimates of 60%. Looking forward, we expect continued GPO programmes and a more innovative pharmaceutical industry to arise. We upgrade the sector from MARKET WEIGHT to OVERWEIGHT.
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.
China’s real GDP growth held firm at 6.0% yoy in 4Q19, providing for full-year real GDP growth of 6.1% yoy. Dec 19’s economic activity indicators generally surprised on the upside, which contributed to the decent improvement in 4Q19. Despite signs of possible growth stabilisation, we nonetheless expect economic growth to trend lower in 2020 as both fiscal and monetary stimulus are expected to unfold at a measured pace.
Stella’s 4Q19 revenue declined 11% yoy to US$345.4m, dragged by a drop in footwear shipment volume. Nonetheless, the weaker-than-expected volume should be a one-off and did not result in the company altering its 2020 volume growth target of 60m pairs. Adjusted EBIT margin was on track to reach Stella’s 8% target for 2019, and management is maintaining its 2020 target to achieve an adjusted EBIT margin of at least 9%. Maintain BUY with a target price of HK$15.70.