market strategists sg & us equity analysts · but 2015 should see several headwinds turn to...
TRANSCRIPT
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
1
Market Strategists Kenneth Koh, Market & Equity Analyst
Soh Lin Sin, Macro | Equities Economist
Osama Bakhteyar, Macro | Equities Economist
SG & US Equity Analysts Wong Yong Kai, US Equities
Colin Tan, Telecoms | Technology
Caroline Tay, Real Estate
Benjamin Ong, Finance | Offshore Marine
Richard Leow, Transport & Logistics
Dehong Tan, REITs
Shane Goh, Consumer
By Phillip Securities Research Mr. Chan Wai Chee, CEO
Jaelyn Chin, Operations Exec
23rd Mar 15, 8.15am/11.15am Morning Call/Webinar
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
2
Disclaimer
The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to
believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this
presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or
warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any
such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the
information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be
liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made
available, even if it has been advised of the possibility of such damages.
This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or
particular needs of any particular person.
You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment
objectives, financial situation or particular needs, before making a commitment to invest in such products.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
3
Eurozone (Maintains Neutral-weight)
• The Eurozone’s economy is poised to show some positive
growth this year, supported by a budgetary policy.
• The recovery should shift toward domestic consumption as
the recovery progresses barring any economic shocks.
• An increasingly supportive credit cycle should help the
recovery with growth in money supply accelerating and
lending conditions improving on trend.
• Spain, Portugal, Estonia, and Finland are having elections
this year, following after the colorful results in Greece.
• There is a good chance that the policy consensus will be
debated.
The ECB’s achieving its inflation target will not be easy
because other Eurozone policymakers are less focused on
generating economic growth.
ECB cannot do anything about the underlying structural
problems in the eurozone. Only the politicians can do this.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
4
Eurozone (Maintains Neutral-weight)
Eurozone’s institutional framework is incomplete. The Bloc’s
monetary policy (driven by troika) is not connected to fiscal
policy.
Most of the member states feature weak government
finances, an inefficient labor market and extensive
bureaucracy.
An immediate reduction in the taxation of labor, combined with
a subsequent and gradual increase in VAT, could boost
consumption and introduce new expectations for inflation.
But 2015 should see several headwinds turn to tailwinds —
including the lagged effect of a weakening euro, easing fiscal
austerity and more certainty in the banking sector.
Unit Trust that proxy Eurozone
Templeton - European
Schroder - European Equity Alpha
Schroder - ISF European Smaller Companies
ETFs that proxy Eurozone
DBX Tracker MSCI Europe - IH3
VGK Vanguard European Stock Index
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
5
Eurozone (Maintains Neutral-weight)
• Grexit: In Greece Syriza came out as a winner.
• We believe a Greek exit (Grexit) is a scenario that all
parties want to avoid and so is highly unlikely. But
assuming Grexit happens, there could be some serious
implications to that.
• Greece itself will be secluded from further funding by the
ECB, EU or IMF.
• Even if Syriza were to provoke such an outcome in the
coming months, we would expect strong financial stress in
the form of a bank run and another round of new elections
before an exit could happen.
• For Europe, even without a complete breakdown of the
euro, a Greek exit will leave the ECB holding billions of
dollars of Greek debt and very few options.
• The European Union accounts for about one-fifth of global
trade.
• A slowdown in Europe could lead to further shocks to the
world energy market and damage to global exports.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
6
Civmec (Buy, TP: 0.475, CP: 0.415)
1. Stock price tanked well below what fundamentals are.
2. Civmec sold off by 30+% over last week. Management has responded citing a large (but not substantial) shareholder selling for personal reasons. No change in fundamentals. Strong ROEs ~ 19%, little net debt.
3. Net earnings will take a hit this year due to investment into new markets and shifting project focus into infrastructure, but current prices make this undervalued as we wait for growth next year.
4. We revise our target price to 47.5 SGD based on a conservative 8.2x FY15 PE. Upgrade to BUY from REDUCE.
Key Financial Summary
Y/E June FY12 FY13 FY14 FY15E
Revenue (SGD '000) 328,654 405,924 433,677 491,291
adj. NPAT (SGD '000) 30,310 36,049 35,079 28,997
EPS. (SG cents) 6.05 7.20 7.00 5.79
P/E (X),adj. 19.3 9.6 10.6 7.1
P/B (X) 6.55 3.15 2.57 1.21
DPS (SGcents) 0.0 0.6 0.7 0.6
Div. Yield (%) 0.5% 1.0% 0.8% 1.5%
Source: Bloomberg, PSR est.
*Forward multiples and yields are based on current price; historical multiples and
yields are based on historical prices
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
7
2 Technical gold reports released today
Technical Ideas: Gold, Downside bias
with long tailed upside risk (23 March
2013)
Key idea: "… short term cycle up?"
QUANT ideas: Trend-following series,
Optimizing an N-day breakout on the GLD
(23 March 2013)
Key Idea: "How to profit from the price
cycles…"
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
8
Initiation: Sina Corp [SINA]
(USD 32.93, Non-Rated)
• $2.45b SOTP (liquid assets & net cash) vs $1.91b
market cap. 12.3% shares were repurchased since
2014 for $311m. 65% SOTP derived from Weibo
(微博 | listed on Nasdaq), aka China’s Twitter.
• Weibo is trading at $14/user vs Twitter’s $97/user.
• Competition from Tencent-backed WeChat (微信).
• Sina might trade up to SOTP (+28% upside), share
buybacks below SOTP, valuations of its equity stakes
fall, or cash balance depleted for M&A.
2,45256129
120147
1,583
417
1,000
1,500
2,000
2,500
3,000
Weibo Net Cash E-House Tian Ge Alibaba Youku SOTP
$'m Breakdown of Liquid Assets & Net Cash
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
020406080
100120140160180200
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Segm
en
t R
eve
nu
e ($
'm)
Weibo 3-Year Users Growth
Daily Active Users (DAU) Monthly Active Users (MAU) % q-o-q DAU growth
$0.23
$0.44 $0.51
$0.57
$0.93
$1.51
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Weibo vs Twitter Users Monetization
Weibo ARPU Twitter ARPU
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
9
Presenting Analyst: Caroline Tay Phillip Securities Research
23 March 2015
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
10
Initiation: CapitaRetail China Trust (CRCT)
(Accumulate: TP $1.7)
Portfolio of 10 shopping malls in China, primarily Beijing (~75% by NLA)
•Growth of the Chinese Consumer Story
•Beijing a huge beneficiary of the rapid urbanization in China
•Strong mall operator
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
11
The big picture… The Chinese Consumer Growth Story
•China’s push towards economy driven by domestic consumption
•Pro-consumption government measures
Rapid
Urbanization Increasing disposable
income and consumption
expenditure per capita
Sustained job growth as
China moves towards
“better quality” growth
Recent easing
monetary policy
Growth of the Chinese consumers – discretionary spending driven by
rising disposable income
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
12
The big picture… The Chinese Consumer Growth Story
Beijing: a huge beneficiary of rising urbanization.
Fastest growing Chinese city
Recent easing
monetary policy
22 19 11 11
2.60%
0
5
10
15
20
25
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Shanghai Beijing Tianjin Guangzhou
CAGR (1990-2013) of population in China's top 4 cities with largest urban population
Urban Population(RHS, mn)
CAGR 1990-2013
Fig 3
2000
2200
2400
2600
2800
3000
3200
3400
3600
6/3/14 9/3/14 12/3/14 3/3/15
SSE Composite Index (background)
NOV 2014: Cut in benchmarklending and deposit rates, first cuts since 2012
Early FEB 2015: Cut in Reserve Ratio Requirement (RRR) to 19.5%, first industry wide move since 2012
End FEB 2015:Cut in benchmark lending rates and deposit rates by 25bp each
Fig 6
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
13
Company Analysis
•Strong shopper traffic driven by proactive tenant adjustment
18
22
26
30
34
38
6
7
8
9
10
11
12
13
14
2010 2011 2012 2013 2014
mill
ion
Shopper Traffic
WANGJING
QIBAO
SAIHAN
WUHU
XIZHIMEN
Fig 8
Excludes Malls on master leases,
AEI and recently acquired malls
Av tenant sales growth
outperformed general retail
sales growth
Wuhu (Red line): affected because
of government decision to change
surrounding land use from
residential to commercial.
Repositioning of mall expected to
take till end 2015
17.9%
14.6%
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014
Tenant Sales yoy % Growth
Tenant Sales YOY
General Retail Sales YOY
Tenant Sales (5yr average)
Retail Sales (5yr average)
Fig 9
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
14
Peer Comparison and Key Risks
Risks:
Chinese preference for online shopping
•Proliferation of e-commerce platforms such as Wechat and frequent marketing gimmicks such as
Alibaba’s hugely popular 11.11 Singles Day
Increased household savings amid falling consumer confidence
•Uncertainties over the economy and housing could lead to falling consumer sentiment and
tightening of purse strings
ACCUMULATE: (TP: $1.7, upside of 12.3%)
Name Mkt Cap (SGD, mn) Price (SGD) Dvd Yld:D-1 WACC Wt Dbt P/B Company Profile
CAPITARETAIL CHINA TRUST 1,329 1.59 6.14 33.41 0.99
SUNLIGHT REAL ESTATE INVEST (HKG:0435) 1,119 0.68 5.47 40.43 0.51 Office and retail properties in Hong Kong
YUEXIU REAL ESTATE INVESTMENT (HKG:0405) 2,161 0.76 6.82 48.19 0.73 Office, Retail, Commercial properties in Guangzhou
FORTUNE REIT (SGX:F25U) 2,857 1.49 5.00 40.04 0.71 18 private housing estate retail properties in Hong Kong
LINK REIT (HKG:0823) 20,094 8.37 3.73 12.23 1.02 Mainly retail properties in Hong Kong
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
15
Disclaimer
The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to
believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this
presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or
warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any
such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the
information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be
liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made
available, even if it has been advised of the possibility of such damages.
This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or
particular needs of any particular person.
You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment
objectives, financial situation or particular needs, before making a commitment to invest in such products.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
16
Market Strategists Kenneth Koh, Market & Equity Analyst
Soh Lin Sin, Macro | Equities Economist
Osama Bakhteyar, Macro | Equities Economist
SG & US Equity Analysts Wong Yong Kai, US Equities
Colin Tan, Telecoms | Technology
Caroline Tay, Real Estate
Benjamin Ong, Finance | Offshore Marine
Richard Leow, Transport & Logistics
Dehong Tan, REITs
Shane Goh, Consumer
By Phillip Securities Research Mr. Chan Wai Chee, CEO
Jaelyn Chin, Operations Exec
Ask Questions!