Wednesday, 7 June 2017 - jrj.com.cnpg.jrj.com.cn/acc/Res/CN_RES/INVEST/2017/6/7/be6... · 6/7/2017...
Transcript of Wednesday, 7 June 2017 - jrj.com.cnpg.jrj.com.cn/acc/Res/CN_RES/INVEST/2017/6/7/be6... · 6/7/2017...
Wednesday, 7 June 2017
Beauty Community (Initiating coverage with Underperform) 2
Priced for perfection Chalinee Congmuang
We initiate coverage on BEAUTY with a non-consensus Underperform rating and a DCF-based TP ofBt8.0, or 27% downside potential, as we believe the market has already priced the shares for perfection.
AAC (Underperform) 3
Switch out to safer pool Allen Chang
AAC hosted a conf-call on clarification announcement. Key messages from management included: 1)resume trading on Jun 7, 2) deny the allegations, 3) maintain guidance on business outlook, and 4) willnot exclude the possibility of shares repurchase.
Haichang Ocean Park (Outperform) 4
Higher Visitation in 1H17 Timothy Lam
We believe Haichang could see 15% YoY revenue growth in 1H17, driven by more favourable visitationduring the Chinese New Year holidays as well as successful promotions during the May holidays andChina's Children Day on June 1.
India Strategy 5
Stay on the bandwagon Inderjeetsingh Bhatia
Q4FY17 numbers confirmed nascent recovery post demonetisation with outlook being moreconstructive in the past. Commentary from domestic sectors is encouraging while export led sectorsdisappointed.
Malaysia Strategy 6
1Q17 results wrap: hesitant start Anand Pathmakanthan
Contrary to earlier expectations that 4Q16 kitchen-sinking and commodity price recovery would seemarket earnings recovery gain traction, 1Q17 reporting proved disappointing.
IJM Corporation (Downgrade to Neutral) 7
MacVisit: Leopalace21 8
Tongda (Outperform) 9
Toshiba (Neutral) 10
Global Dynamics 11
Internet traffic in India 12
Please refer to page 13 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures.
THAILAND
BEAUTY TB Underperform
Price (at 08:50, 06 Jun 2017 GMT) Bt11.30
Valuation Bt 8.00 - DCF (WACC 10.5%)
12-month target Bt 8.00
Upside/Downside % -29.2
12-month TSR % -26.7
Volatility Index Medium
GICS sector Retailing
Market cap Btm 33,911
Market cap US$m 992
Free float % 55
30-day avg turnover US$m 7.4
Number shares on issue m 3,001
Investment fundamentals Year end 31 Dec 2016A 2017E 2018E 2019E
Revenue m 2,545.7 3,299.6 3,833.6 4,316.6 EBIT m 808.0 1,124.0 1,322.7 1,511.6 EBIT growth % 65.2 39.1 17.7 14.3 Reported profit m 656.0 903.4 1,063.4 1,215.5 Adjusted profit m 656.0 903.4 1,063.4 1,215.5 EPS rep Bt 0.22 0.30 0.35 0.41 EPS rep growth % 429.7 37.7 17.7 14.3 EPS adj Bt 0.22 0.30 0.35 0.41 EPS adj growth % 96.4 37.7 17.7 14.3 PER rep x 51.7 37.5 31.9 27.9 PER adj x 51.7 37.5 31.9 27.9 Total DPS Bt 0.22 0.26 0.30 0.34
Total div yield % 1.9 2.3 2.7 3.1
ROA % 49.8 58.8 60.0 61.1 ROE % 53.2 65.0 69.1 71.1 EV/EBITDA x 38.3 27.8 23.8 21.0 Net debt/equity % -16.4 -19.7 -26.4 -32.8 P/BV x 25.7 23.3 21.0 18.8
Source: FactSet, Macquarie Research, June 2017
(all figures in THB unless noted)
Expect BEAUTY’s sales growth to fall
Source: Company Data, Macquarie Research, June 2017
Analyst(s) Chalinee Congmuang+66 2 694 [email protected]
6 June 2017 Macquarie Securities (Thailand) Limited
Beauty Community Priced for perfection We initiate coverage on BEAUTY with a non-consensus Underperform rating
and a DCF-based TP of Bt8.0, or 27% downside potential, as we believe the
market has already priced the shares for perfection. The share price has risen
sharply on rapidly growing sales and net profit on expanding market share and
margins. But in contrast with the street, we expect both earnings and profitability
to normalize rather than continue to accelerate exponentially as reflected in its
lofty valuation. We think BEAUTY’s risk/reward ratio is unattractive on 38x 2017e
PER, almost 2-std above its 4-year average. It is also the most expensive
cosmetic stock in the region. In the Thai retail segment, we prefer CPALL and
HMPRO for their dominant industry positions and quality growth.
A financially strong firm in a growing but crowded industry
Thailand’s cosmetic and skincare sales doubled in the past decade. The willingness
of Thais to spend on appearance has been bolstered by growing disposable
income and urbanization. But the industry is highly fragmented and crowded as
it is easy to start a Thai cosmetics business with as little as Bt30k ($860). Using
a unique marketing concept, Beauty Buffet, BEAUTY achieved a high 34% EBIT
margin, low gearing (net cash) and lofty ROE of 65% in 2017E.
Fast cosmetics; earnings likely to normalize
We project BEAUTY’s 2017-19 EPS CAGR at 15% vs. 48% in 2014-16. While the market values the company at 30-40x PE in line with its historic growth trend, we believe BEAUTY’s earnings growth will normalise on:
The industry’s low entry barriers will allow more competition (ie, Thai
market is highly fragmented with shop brand channel only accounting
for 7% of Thailand’s cosmetic and skincare industry value)
BEAUTY’s products are ‘fast cosmetics’ (trendy with a short lifecycle)
making it difficult to have high certainty on SSSg and sales growth: and
Rapidly growing new distribution channels like modern trade,
e-commerce and overseas have lower profit margins. We thus
expect limited profit margin growth for BEAUTY going forward.
What can go wrong?
The industry can be very crowded leading to price competition due to low barrier
to entry which can lead to lower profit margins. Given the short product lifecycle,
BEAUTY’s brand/products can quickly lose favour and the company could fail to
replace fading products with new products and this might lead to falling sales
growth and longer inventory days. We reflect this potential in our base and bear
case scenarios that yield fair value of Bt8 and Bt7/share, respectively. We believe
declines in SSSg and overall sales growth in 2017-18 will be the key catalyst that
will drive down Beauty’s share price.
Key risks to our call
Main risks to our call on BEAUTY are sales contribution from its overseas
operations and other distribution channels increase significantly and stronger-
than-expected SSSg. BEAUTY scores in the 1st quartile of our Macquarie
Governance & Risk Score and in the 2nd quartile for Corporate Governance.
39.3
30.4
43.2
29.6
16.2
12.6
26.9
16.9
22.6
16.0
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4,000
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2014 2015 2016 2017E 2018E 2019E
(%)
Sales (LHS) Sales growth (RHS) SSSg (RHS)
2
Please refer to page 9 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
HONG KONG
2018 HK Underperform
Price (at CLOSE#, 06 Jun 2017) HK$81.43
Valuation HK$ 75.00 - PER
12-month target HK$ 75.00
Upside/Downside % -7.9
12-month TSR % -5.5
Volatility Index Medium
GICS sector Technology Hardware & Equipment
Market cap HK$m 99,996
Market cap US$m 13,018
Free float % 60
30-day avg turnover US$m 78.4
Number shares on issue m 1,228
Investment fundamentals Year end 31 Dec 2016A 2017E 2018E 2019E
Revenue m 15,507 19,781 22,765 26,223 EBITDA m 5,662 7,331 7,923 8,713 EBITDA growth % 35.8 29.5 8.1 10.0 EBIT m 4,700 6,097 6,654 7,414 EBIT growth % 35.9 29.7 9.1 11.4 Reported profit m 4,026 5,136 5,665 6,246
EPS rep Rmb 3.28 4.18 4.61 5.09 EPS rep growth % 29.6 27.6 10.3 10.3 PER rep x 21.7 17.0 15.4 14.0 Total DPS Rmb 1.27 1.61 1.78 1.96 Total div yield % 1.8 2.3 2.5 2.8 ROA % 23.1 22.9 21.3 20.6 ROE % 31.7 32.6 29.7 27.5 EV/EBITDA x 15.4 11.9 11.0 10.0 Net debt/equity % -3.9 -14.6 -24.8 -32.8
P/BV x 6.2 5.0 4.2 3.5
2018 HK rel HSI performance, & rec history
Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Research, June 2017
(all figures in Rmb unless noted, TP in HKD)
Analyst(s) Allen Chang +852 3922 1136 [email protected] Verena Jeng +852 3922 3766 [email protected] Chris Yu +86 21 2412 9024 [email protected]
6 June 2017 Macquarie Capital Limited
AAC Switch out to safer pool Event
AAC hosted a conf-call on clarification announcement. Key messages
from management included: 1) resume trading on Jun 7, 2) deny the
allegations, 3) maintain guidance on business outlook, and 4) will not exclude
the possibility of shares repurchase. Key FAQs included: 1) whether all
suppliers are regulated and will it affect AAC’s business outlook, 2) related
party / business interaction, and 3) guidelines on trading halt and resume.
Prefer to switch out to safer pool: As we highlighted in May (report link,
Where to park nicely, May 22), we expect the recent share price volatility
and Street worries caused by AAC’s stock suspension to last for a while. We
prefer 1) Telecom names: CU, CM, and ZTE, 2) strong growth (>30% YoY
EPS growth) stocks: Sunny Optical, ASMPT, and Tongda, and 3) attractive
valuation names: Lenovo.
Downside risks on valuation after 12-day suspension: We believe the
suspension is at the expense of the company's valuation. The stock was on a
trading halt since May 18 after share price down 10.6% on the day. The stock
traded between 10-22x, and our target PE multiple is at 13x.
Impact
Good company and good products, but we are cautious about share
price risk-reward from here: Our investment thesis remains consistent – we
like AAC’s handset lens development, which will likely lead to gaining market
share from Largan in the long term, but insignificant to earnings; we remain
cautious about its core business Speaker box, Haptics, RF mechanicals, and
new business 3D glass given the fierce competition ahead.
What we don't like – major business under pressure: 1) speaker box: We
see the existing competitor, Goertek, as being aggressive in pricing to gain
more market share and we expect Luxshare and Sunway will intensify the
competition from late 2017. 2) GM for Haptics and RF antenna was down
from 51% in 2015 to 40% in 2016, implying an increasing portion of RF
antenna, GM of which is lower than the company’s blended GM. Pressure
from capable haptics competitors from Japan and numerous suppliers in RF
antenna. 3) GM of 3D glass should also be below the company’s blended
GM, based on Lens Tech's historical GM of 25–30%.
What we like – Handset Lens: We like AAC’s handset lens development,
which will lead to likely gaining market share from Largan given AAC’s good
customer relationships with Apple and China smartphones.
Earnings and target price revision
No change.
Price catalyst
12-month price target: HK$75.00 based on a PER method (13x 2018E PE).
Catalyst: 2Q17 results
Action and recommendation
Maintain Underperform.
3
Please refer to page 7 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
HONG KONG
2255 HK Outperform
Price (at 08:50, 06 Jun 2017 GMT) HK$1.62
Valuation HK$ 2.22 - DCF (WACC 8.1%, beta 1.0, ERP 7.0%, RFR 3.0%, TGR 2.0%)
12-month target HK$ 2.22
Upside/Downside % +37.0
12-month TSR % +37.0
Volatility Index Medium
GICS sector Consumer Services
Market cap HK$m 6,480
Market cap US$m 832
Free float % 29
30-day avg turnover US$m 0.2
Number shares on issue m 4,000
Investment fundamentals Year end 31 Dec 2016A 2017E 2018E 2019E
Revenue m 1,649.7 2,006.6 2,999.4 3,682.2 EBIT m 453.5 503.5 655.0 785.6 EBIT growth % 28.1 11.0 30.1 19.9 Reported profit m 201.0 227.8 292.8 310.8 Adjusted profit m 201.0 227.8 292.8 310.8 EPS rep Rmb 0.05 0.06 0.07 0.08 EPS rep growth % -12.9 13.3 28.5 6.2 EPS adj Rmb 0.05 0.06 0.07 0.08 EPS adj growth % 108.1 13.3 28.5 6.2 PER rep x 28.2 24.9 19.4 18.2 PER adj x 28.2 24.9 19.4 18.2 Total DPS Rmb 0.00 0.00 0.00 0.01 Total div yield % 0.0 0.0 0.0 0.8 ROA % 5.2 5.3 6.4 7.0 ROE % 5.1 5.5 6.6 6.6 EV/EBITDA x 12.0 10.8 8.6 7.4 Net debt/equity % 47.9 56.1 62.0 59.8 P/BV x 1.4 1.3 1.2 1.2
2255 HK rel HSI performance, & rec history
Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Research, June 2017
(all figures in Rmb unless noted, TP in HKD)
Analyst(s) Timothy Lam +852 3922 1086 [email protected]
6 June 2017 Macquarie Capital Limited
Haichang Ocean Park Higher Visitation in 1H17 Event
We believe Haichang could see 15% YoY revenue growth in 1H17, driven by
more favourable visitation during the Chinese New Year holidays as well as
successful promotions during the May holidays and China’s Children Day on
June 1. We forecast 13% YoY EPS growth in FY17 and 29% YoY in FY18.
FY18’s growth will be driven by the opening of its new Shanghai marine park.
We expect Haichang to provide further details on its Shanghai park pricing
and visitation forecasts by 2H17. Besides Shanghai, the company will also
look to complete its Sanya project by end-2018, as well as develop other
operations-focused projects to drive long-term growth.
Impact
Haichang has been benefiting from better EBITDA margins at its Tianjin and
Qingdao projects. We expect improvement for its Dalian projects, after
completion of major upgrades at Dalian Discoveryland in 2017.
The company has been re-packaging its non-ticket offerings, with a wider
selection of merchandise under its own IP, such as “Marine Families (海洋家
族)” and “Seven Guardians (七萌團)”. Haichang also released a number of
brand placements in films and animations, to enhance its brand recognition.
Earnings and target price revision
We revise our 2017/18E EPS by 2%/(11%) to factor in higher top-line
revenue, while the company may see higher ramp-up costs for Sanya in 2018.
We also raise our DCF-based TP to HK$2.22 (from HK$2.00), as we forecast
better free cashflow as its new projects ramp.
Price catalyst
12-month price target: HK$2.22 based on a DCF methodology.
Catalyst: 1) completion of Shanghai theme park construction; 2) new asset-
light project acquisitions; 3) rise in visitation and spending for its existing
facilities.
Action and recommendation
We have an Outperform rating on Haichang. While the company has faced
low liquidity in the past few months, we believe investors may re-visit as it
shows better clarity on its new park in Shanghai.
Other catalysts are a rise in domestic consumption, acquisition of new
projects, and improvement of its existing operations.
Haichang was removed from SZ-HK Connect in March, due to its low share
liquidity. We believe the company may also seek to participate in more
investor events to boost investor interest.
4
Please refer to page 24 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
INDIA
Top Large Cap picks in India
No Stock Ticker
1 HDFC Bank HDFCB IN 2 Hero MotoCorp HMCL IN 3 L&T LT IN 4 Vedanta VEDL IN 5 ITC ITC IN 6 ICICI Bank ICICIBC IN
Source: Bloomberg, Macquarie Research, June 2017
Top mid cap picks in India
No Stock Ticker
1 Dish TV DITV IN 2 Crompton Consumer CROMPTON IN 3 Chola Finance CIFC IN 4 Prestige PEPL IN 5 Glenmark GNP IN 6 NCC NJCC IN
Source: Bloomberg, Macquarie Research, June 2017
Top Sells
No Stock Ticker
1 Wipro WPRO IN 2 Coal India COAL IN 3 BHEL BHEL IN 4 UNSP UNSP IN
Source: Bloomberg, Macquarie Research, June 2017
Nifty EPS - We are above consensus for FY18 and in line on FY19E
FY17 FY18E FY19E
Macquarie EPS 433 492 581 %YoY Growth 14% 18% Consensus EPS 433 482 580 %YoY Growth 11% 20%
Source: Bloomberg, Macquarie Research, June 2017
Analyst(s) Inderjeetsingh Bhatia +91 22 6720 4087 [email protected] Sumangal Nevatia, CFA +91 22 6720 4093 [email protected]
6 June 2017 Macquarie Capital Securities India (Pvt) Ltd
India Strategy Stay on the bandwagon Event
Q4FY17 numbers confirmed nascent recovery post demonetisation with
outlook being more constructive in the past. Commentary from domestic
sectors is encouraging while export led sectors disappointed. We revisit our
sector preferences – Overweight on Financials, Consumer, Industrials and
Autos (neutral earlier), Equal weight on Energy (underweight earlier) and
Metals while underweight on IT (equal weight earlier) and Pharma. We add
ICICI Bank to Top India picks.
Impact
Earnings point to some recovery in cyclicals, trend to strengthen in
FY18: Q4FY17 earnings witnessed constructive commentary from many of
the cyclical sectors like Autos, Capital Goods and Financials. Private Banks
are hinting at retail growth to revert to 17-18% levels after dipping to 13% in
FY17. Capital Goods companies have been most optimistic about future since
2014 on back of improving visibility on government projects. We expect
earnings to further strengthen as rural recovery takes shape along with
improvement in execution on government projects.
Risk to earnings projections factored with recent cuts: Consensus
earnings forecast 11% growth for Nifty in FY18 is significantly lower than 16%
in early April. IT, Energy (mainly Reliance) and Banks have led the earnings
cut for FY18. Consumer related sectors too, cuts have happened to probably
factor in near term disruption of GST.
Market to look through near term GST disruption: Government has
resisted so far any move to delay GST implementation and deadline of 1st July
remains. There are reports from white goods companies regarding de-
stocking the channel but we believe this a short term phenomenon as early
festive season would lead to sharp improvement in sales in Q2. Any market
correction due to GST would be an opportunity to add positions.
Monsoon and interest rate narrative could be near term triggers while
Farm Loan waivers is an emerging risk: Markets would extend the
monsoon cheer if rains match forecasts. Another interesting narrative could
be on interest rates. Market has fully factored in bottoming interest rate which
can be challenged with sustained low inflation and weakness in GDP data.
Meanwhile, state of Maharashtra following UP in farm loan waiver increases
risk of other states following suit.
Outlook
Preference for domestic cyclicals: With the government getting into the
business end of its term with lower pressure on fiscal management, domestic
cyclicals like Infra, Housing and Rural consumption should be top themes.
Financials remain a great way to play these themes. Robust domestic flows,
limited investment alternatives would keep valuation stretched.
Add ICICI Bank to top picks list: We are adding ICICI Bank to our top pick
list as most of the stress in the corporate book is already recognised and
valuations at 1.2x core P/B sufficiently factor the stress, in our view. Other top
picks are ITC, L&T, HDFC Bank, Hero Motocorp and Vedanta.
5
Please refer to page 11 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures.
MALAYSIA
1Q17 results: by-sector round-up
Sectors Beat In-line Miss
Banks/Financials 2 4 2
Telcos 0 5 0
Utilities 1 2 0
Oil & Gas 1 1 0
Plantation 0 3 1
Gloves 0 1 0
Consumer 0 1 2
Transportation 0 1 5
Construction 0 2 1
Property / REITs 1 3 2
Healthcare 0 2 0
Media 0 0 1
Technology & IT 0 2 0
Gaming 0 0 1
Insurance 0 0 1
Total 5 27 16
Source: Macquarie Research, June 2017
Malaysia: earnings growth by sector
Sector Net profit growth (m-cap weighted average)
2016A 2017E 2018E
Banks/Financials 1% 9% 9%
Telcos -15% 8% 5%
Utilities 18% 1% 1%
Oil & Gas -73% -1% 57%
Plantation 13% 24% 11%
Gloves 13% 6% 8%
Consumer 0% -15% -4%
Transportation 80% -5% 6%
Construction 10% 10% 16%
Property/REITs -2% 4% -4%
Healthcare -32% 79% 24%
Media -12% 28% 16%
Technology & IT 40% 35% 21%
Gaming 12% -4% 27%
Insurance 16% -7% 13%
Market 3.2% 8.5%* 8.8%
*After adjustments for Tenaga and Axiata.
Source: Company data, Macquarie Research, June 2017
KLCI consensus EPS growth trend
Source: Bloomberg, Macquarie Research, June 2017
Analyst(s) Anand Pathmakanthan +603 2059 8993 [email protected]
6 June 2017 Macquarie Capital Securities (Malaysia) Sdn. Bhd.
Malaysia Strategy 1Q17 results wrap: hesitant start Conclusion
Contrary to earlier expectations that 4Q16 kitchen-sinking and commodity price
recovery would see market earnings recovery gain traction, 1Q17 reporting
proved disappointing. While the number of companies meeting expectations
rose to 27 (4Q: 21), the number that missed inched higher to 16 (4Q: 15), and
only 5 beat. Guidance outside of banks, tech/exporters and construction
remained uninspiring, with expectations of market earnings acceleration intact
as underscored by unchanged 2017 KLCI consensus EPS growth forecast.
Impact
Consensus unfazed: also reflecting to some extent the general reluctance to
adjust earnings early in the year notwithstanding the weak start, consensus
has not materially adjusted 2017 KLCI EPS growth expectations, i.e., still at
the post-4Q 6%, with 2018 forecast at a faster 12.7%. For Macquarie
coverage, earnings upgrades post-4Q results, especially for banks and oil &
gas, and our above-consensus earnings estimates for heavyweights like
Tenaga, Sime Darby and IHH (as well as new coverage POS(M) and HL
Bank) have our 2017/2018 one-offs-adjusted earnings growth at 8.5%/8.8%.
Banks the biggest beat…: per improving operating trends in 4Q, particularly
in support of net interest margin (NIM) recovery, the bigger banks delivered a
convincing earnings recovery, underpinned by positive jaws (i.e. higher NIM,
contained operating expenses) and lower credit costs. These drivers appear
sustainable against a backdrop of accelerating GDP growth, with restructuring
activity (CIMB’s broking arm sale, AMMB-RHB merger talks) also picking up.
…with plantations, telcos in-line: in line with a much higher 1Q CPO price
(+29% YoY), plantation companies delivered on expectations of sharp recovery
(only IOI missed due to lower CPO production). Telcos also met expectations,
with Maxis performing best among the pressured mobile operators (DiGi the
worst) while preferred fixed-line players Telekom and Time were resilient.
Transport/logistics, consumer, GENM disappoint: the mixed bag that is
transport/logistics missed for a variety of reasons, from kitchen-sinking (POS)
to higher taxes (MAHB), to negative yield-cost dynamics (AAX, downgraded
to Neutral). Karex and BAT were big misses re consumer, underscoring our
negative view on both, while GENM’s sluggish core Malaysian visitorship and
earnings have us reiterating the share price has run ahead of fundamentals.
KLCI upside anchored by big-cap picks: TP upsides for big-caps – Tenaga,
Telekom, Sime Darby and IHH (vs. downsides for PetGas, PetDag and Digi) –
underpin MQ bottom-up 12mth KLCI target of 1,836, or +2.7% upside.
Outlook
GLC Reform is our key market theme for 2017, top picks being Tenaga, Sime
Darby and POS(M). With scope for debt-funded fiscal stimulus and trade
expansion constrained, necessity of internally-generated, debt-neutral growth
means rising pressure for domestic reforms, particularly re GLCs where we
are already seeing momentum re management changes, rising GLIC activism.
Other big cap picks (Fig 2) include Telekom, IHH, Gamuda, CIMB, SP Setia
and AirAsia. Mid-caps with resilient yield and core franchises are Bursa(M),
Gas(M) and TimedotCom; we also like HLBK, Bumi Armada and Econpile.
-5
0
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15
May-1
6
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2017 2018
6
Please refer to page 12 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
MALAYSIA
IJM MK Neutral
Price (at 09:21, 05 Jun 2017 GMT) RM3.53
Valuation RM 3.26-3.85 - Sum of Parts
12-month target RM 3.55
Upside/Downside % +0.6
12-month TSR % +2.7
Volatility Index Low
GICS sector Capital Goods
Market cap RMm 12,772
Market cap US$m 2,936
30-day avg turnover US$m 3.6
Foreign ownership % 29.4
Number shares on issue m 3,618
Investment fundamentals Year end 31 Mar 2017A 2018E 2019E 2020E
Revenue m 6,065.9 6,619.6 7,259.9 7,155.1 EBITDA m 1,251.0 1,333.8 1,516.8 1,548.3 EBITDA growth % 8.2 6.6 13.7 2.1 EBIT m 950.5 1,027.5 1,193.4 1,212.0 EBIT growth % 7.1 8.1 16.1 1.6 Reported profit m 653.8 620.4 790.1 757.6 Adjusted profit m 639.1 620.4 790.1 757.6 EPS rep sen 18.2 17.2 21.9 21.0 EPS rep growth % -41.8 -5.5 27.4 -4.1
EPS adj sen 17.8 17.2 21.9 21.0 EPS adj growth % -19.0 -3.3 27.4 -4.1 PER rep x 19.4 20.6 16.1 16.8 PER adj x 19.9 20.6 16.1 16.8 Total DPS sen 7.5 7.5 7.5 7.5 Total div yield % 2.1 2.1 2.1 2.1 ROA % 4.7 4.8 5.3 5.2
ROE % 6.9 6.4 7.8 7.1 EV/EBITDA x 12.4 12.4 10.4 10.6 Net debt/equity % 35.3 32.1 29.5 27.8 P/BV x 1.3 1.3 1.2 1.2
IJM MK rel KLCI performance, & rec history
Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Research, June 2017
(all figures in MYR unless noted)
Analyst(s) Aiman Mohamad +60 3 2059 8986 [email protected]
6 June 2017 Macquarie Capital Securities (Malaysia) Sdn. Bhd.
IJM Corporation As good as it gets Event
FY17 has proven to be one of the best years for IJM Corporation (IJM) after it
managed to secure close to RM3bn in new orders and ended the FY with
record revenue. However, despite the order wins, the change in share price
was only -0.8% from the start to the end of FY17. We believe the subdued
impact of order wins on its share price is due to the conglomerate discount
imposed by investors on IJM.
At home, the landscape is changing –we saw more small/mid-cap contractors
emerging as the winners of mega government infra contracts. Furthermore,
the government has now turned to Chinese construction giants and appointed
them as the turnkey contractors for the mega projects in Malaysia – putting all
local contractors in Malaysia on a level playing field with one another,
regardless of size and track record. Given the current state of play, IJM will be
forced to compete with the small mid cap and private contractors to win new
orders going forward. Against this backdrop, we downgrade IJM to Neutral
and reduce our TP from RM3.87 to RM3.55, a 16x implied PE to FY19E EPS.
Impact
Construction: Past its prime. Technology advancement and access to
financing have enabled small/mid-cap construction companies to adopt new
technologies and enhance their capacities to compete at the same level as
IJM in bidding for new jobs – both infra and real estate construction works.
Unlike Gamuda which has a niche in tunnel works, IJM’s construction
capacities do not differ from its competitors. The only differentiating factor for
IJM would be its track record, which will decay over time as other players
began to adopt new technologies. We assume an orderbook replenishment of
RM1.2bn/1.5bn/1.5bn for FY18-20E, respectively. Over the long-term horizon,
we believe IJM’s construction capacities will be mostly utilised by its in-house
projects from the concession and property divisions.
Property: Yet to turn the corner. IJM Land registered an improvement in
margins in FY17 at a 21.1% PBT level vs. 13.4% in FY16. However, the
margin growth was largely attributable to the land sale in Penang whereby
IJM generated an RM100mn profit. Property sales in FY17 dropped -4% YoY
to RM1.4bn. IJM is looking to emulate the same achievement in FY18E, a
sign that the management is not foreseeing any strong recovery in the
division. Our FY18E sales forecast is RM1.1bn.
Earnings and target price revision
We rolled-forward our estimates and reduce FY18E EPS by -29% to 17.2sen
from 24.1sen. Post earnings adjustments, TP reduced by -8.3% to RM3.55.
Price catalyst
12-month price target: RM3.55 based on a Sum of Parts methodology.
Catalyst: new order wins from ECRL and LRT3 projects
Action and recommendation
In the big cap space, we prefer Gamuda over IJM due to Gamuda’s expertise
in niche construction projects. Downgrade IJM to Neutral.
7
Please refer to page 3 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
JAPAN
8848 Not Rated
Price (5 June 2017 ) ¥649
TSE Sector Real Estate
Market cap ¥m 173,571
Market cap US$m 1,577.9
Free float % 75
30-day avg turnover US$m 18.1
Foreign ownership % 54
Number shares on issue m 267.4 Note: US$ market cap assumes a ¥110/US$ FX rate. Source: Factset, Toyo Keizai, June 2017
Investment fundamentals Year end 31 Mar 17A 18CoE 18TK 19TK
Revenue m 520,488 540,000 540,000 549,000 EBIT m 22,898 23,500 23,500 23,800 EBIT growth % 9.1 2.6 2.6 1.7 Recurring profit m 22,355 22,500 22,500 22,800 Reported profit m 20,401 14,200 14,200 14,500 EPS rep ¥ 76.3 53.1 53.9 55.0 EPS rep growth % 5.0 -30.4 -29.4 2.0 PER rep x 8.5 12.2 12.2 12.0 Total DPS ¥ 22.0 22.0 22.0 22.0
Total div yield % 3.4 3.4 3.4 3.4 ROE % 13.4 8.7 8.7 8.5 Net debt/equity % -44.1 na na na P/BV x 1.1 1.0 1.0 1.0
8848 rel Topix Performance
Source: FactSet, Toyo Keizai, June 2017 (all figures in JPY unless noted)
Share Price Driver
Thematic
Growth
Value
Event
Source: Macquarie Research, June 2017
Analyst(s) William Montgomery, CFA +81 3 3512 7864 [email protected]
6 June 2017 Macquarie Capital Securities (Japan) Limited
MacVisit: Leopalace21 Orders down, occupancy up Conclusion
Leopalace competes in the rental unit market with Daito Trust (1878 JP, Not
Rated), Sekisui House (1928 JP, ¥1,954, Outperform, TP: ¥2,500) and Daiwa
House Industry (1925 JP, ¥3,703, Outperform, TP: ¥4,200) among others.
General operating conditions remain solid, according to management, with
April and May occupancy up 1.5 percentage points YoY to 90.5%. Orders in
those months trended down low single digits YoY but were in line with
company expectations. In April, Daiwa House rental unit orders were down -
32% (a one-off, according to management), Sekisui House was flat YoY, and
Daito Trust orders were down -14.6% and -13.6% in April and May.
Impact
Occupancy trends: Total occupancy in Leopalace managed units rose to
293,824 for FY ending 3/17, up 6% YoY and reaching an 89.5% occupancy
rate. By industry, occupancy by construction workers was up 9.1% YoY, food
industry workers +3.7%, retail +5.1%, industrial +0.7%, and temp office
workers +13.9%. Tight labour conditions are supporting improved occupancy.
The trend continued to improve in April and May, with occupancy in those
months at 90.5%, up 1.5% YoY. Occupancy of overseas student units (China,
Korea, other Asia) hit a historical high of 16,000 units, up 10% YoY.
Order trends: Leopalace believes recent orders have been negatively
impacted by press reports regarding oversupply concerns and over potentially
misleading contract documentation. The company believes the reports are
exaggerated, identifying extreme examples in regional Japan that do not
reflect general Tokyo area conditions, and that orders should recover. Broadly
speaking, demand for inheritance tax shelter strategies continues to support
new build (around 40%) and repeat customers (around 60% of total).
Changes to inheritance laws in 2015 increased the potential number of
families who pay inheritance tax from 4.4% of deceased individuals to 8%, or
56,000 per year to 103,000 cases. Furthermore, a large aged stock of
apartments built in the 80s—when starts were 840,000/year (versus
427,000/year in 2016)—is being replaced in order to enhance rental yield.
Contracts: Leopalace contracts are for two-year guarantees and pay around
85% of rent to the owner. Daito Trust normally offers 10-year guarantees and
pays around 90% to the owner on average. Daiwa House and Sekisui House
offer a mix of options, but typically guarantee five years, at 90% of rent.
Leopalace on average generates around 6% gross yield for the owner (closer
to 8% in the Tokyo area). Around 50% of Leopalace units are located in the
greater Tokyo Area. Leopalace exclusively offers one-room dormitory-style
units and includes security, lockers, and other services. Competitors offer
mixed family type or one room with kitchen (1LDK).
Shareholder returns: Leopalace targets a 50% payout ratio. Shareholder
return this year includes a buyback of 4.95% of shares outstanding (8b),
cancellation of 1.5% of treasury shares, and a planned Y22 dividend.
Outlook
The stock is trading at 12.2x PER on 3/18E, based on Toyo Keizai estimates.
Forecast dividend yield is 3.3%.
020406080100120140160180
0100200300400500600700800900
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Leopalace21 Corporation (8848)
Leopalace21 Corporation / TOPIX
8
Please refer to page 5 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
HONG KONG
698 HK Outperform
Price (at CLOSE#, 06 Jun 2017) HK$2.02
Valuation HK$ 3.00 - PER
12-month target HK$ 3.00
Upside/Downside % +48.5
12-month TSR % +52.8
Volatility Index Medium
GICS sector Technology Hardware & Equipment
Market cap HK$m 12,344
Market cap US$m 1,765
Free float % 58
30-day avg turnover US$m 34.8
Number shares on issue m 6,111
Investment fundamentals Year end 31 Dec 2016A 2017E 2018E 2019E
Revenue m 7,825 11,159 14,137 17,937 EBITDA m 1,542 2,235 2,857 3,601 EBITDA growth % 37.2 44.9 27.9 26.0
EBIT m 1,271 1,896 2,478 3,178 EBIT growth % 38.1 49.2 30.7 28.3 Reported profit m 1,004 1,567 2,037 2,646
EPS rep ¢ 15.9 25.0 32.5 42.2 EPS rep growth % 34.1 56.6 30.0 29.9 PER rep x 12.7 8.1 6.2 4.8 Total DPS ¢ 3.9 7.5 9.7 12.6 Total div yield % 1.9 3.7 4.8 6.2 ROA % 13.3 16.4 18.2 19.7 ROE % 23.0 30.0 31.4 32.6 EV/EBITDA x 8.3 5.7 4.5 3.6 Net debt/equity % 26.4 31.1 26.6 21.8 P/BV x 2.5 2.0 1.6 1.3
698 HK rel HSI performance, & rec history
Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Research, June 2017
(all figures in HKD unless noted)
Analyst(s) Verena Jeng +852 3922 3766 [email protected] Allen Chang +852 3922 1136 [email protected] Chris Yu +86 21 2412 9024 [email protected]
6 June 2017 Macquarie Capital Limited
Tongda Buy on strong fundamentals Event
We reiterate our Outperform rating on Tongda given: 1) strong
fundamentals: we expect a 30% EPS Cagr in 2017-19E with margin
expansion given better product mix, and 2) attractive valuation: stock is
currently trading at 8x after being 10% down on Jun 6 (vs. HSI up 0.5%),
which is attractive considering our estimated 30% EPS Cagr and compared
to its peers.
Impact
Strong earnings growth: We expect a 30% EPS Cagr in 2017-19E driven by
metal casings, 3D glass, waterproof components, and automotive decorative
parts. Tongda’s metal casing shipments grew more than double YoY in 2016
and management maintained their positive and consistent guidance on metal
casing shipments of 80m in 2017E, driven by market share gains and rising
metal casing penetration.
Margin expansion: Tongda’s GM expanded from 19% in 2011 to 24% in
2016, and we expect it to continue to grow to 26% in 2019E given better
product mix from growing metal casings and new businesses bearing better
GM as well, such as 3D glass and waterproof components. The company’s
metal casing GM is 28~30% and 3D glass and waterproof components is
25~30%, both higher than the company’s blended gross margin of 24%.
3D glass and automotive decorative parts, rising diversification:
We are positive on the company’s move into these two areas, given the 3D
glass enhances its position in the metal middle frame business and diversifies
its casing portfolio, and the automotive decorative parts lower its
concentration risks in the smartphone market. 3D glass will be in mass
production in 2017E and the automotive decorative parts revenues are guided
to triple in 2017E, driven by a rising decorative parts’ penetration rate in the
China automotive market.
Attractive valuation: The share price was down by 10% on Jun 6 (vs. HSI
up by 0.5%), leading the valuation to 8x our 2017E PE or 6x our 2018E PE.
We see the valuation as attractive considering our estimated 30% EPS Cagr,
and compared to its peers: Everwin (26x), BYDE (15x), FIH (13x), and
Catcher (12x).
Earnings and target price revision
No change.
Price catalyst
12-month price target: HK$3.00 based on a PER method (12x 2017E PE).
Catalyst: 1H17 results
Action and recommendation
Maintain Outperform.
9
Please refer to page 4 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
JAPAN
6502 JP Neutral
Price (at 13:50, 05 Jun 2017 GMT) ¥256
Valuation ¥ 280 - Price to Book
12-month target ¥ 280
Upside/Downside % +9.5
12-month TSR % +9.5
Volatility Index Very High
GICS sector Capital Goods
Market cap ¥bn 1,083
Market cap US$m 9,736
30-day avg turnover US$m 255.8
Number shares on issue m 4,238
Investment fundamentals Year end 31 Mar 2017A 2018E 2019E 2020E
Revenue bn 4,870.0 4,975.6 3,957.0 3,829.5 EBIT bn 270.0 355.0 110.0 135.0 EBIT growth % nmf 31.5 -69.0 22.7 Recurring profit bn 240.0 286.2 95.4 130.5
Reported profit bn -950.2 175.0 56.3 83.8 EPS rep ¥ -224.4 41.3 13.3 19.8 EPS rep growth % -106.5 nmf -67.8 48.7 PER rep x nmf 6.2 19.2 12.9 PER adj x 3.5 5.1 19.2 12.9 Total DPS ¥ 0.0 0.0 5.0 10.0 Total div yield % 0.0 0.0 2.0 3.9 ROA % 6.2 10.3 3.5 5.7 ROE % -189.8 -154.0 13.8 17.5 EV/EBITDA x 3.6 3.0 8.0 7.6 Net debt/equity % nmf -60.5 29.0 4.1 P/BV x nmf 2.9 2.5 2.1
6502 JP vs TOPIX, & rec history
Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Research, June 2017
(all figures in JPY unless noted)
Analyst(s) Damian Thong, CFA +81 3 3512 7877 [email protected]
6 June 2017 Macquarie Capital Securities (Japan) Limited
Toshiba Heading for the “Goldilocks Scenario”? Conclusion
Media reports suggest that Western Digital (WD) is willing to accept a 19.9%
stake in Toshiba Memory in a joint bid with the Innovation Network Corp. of
Japan (INCJ) and the Development Bank of Japan. As we last articulated on 1
June, we view this as the likely scenario, though we note this has yet to be
confirmed. Other proposals are likely still in play (the Asahi Shimbun had
suggested just a few hours ago that Broadcom was in the lead with a ¥2.2tr
offer, which we assume to be unlikely, given the prospect of opposition from
WD), and the final outcome may yet be different. We reiterate our Neutral
rating and ¥280 TP; the news would be favourable for Toshiba’s shares.
Impact
The “Goldilocks Scenario”: A joint bid by the INCJ, the DBJ and WD would
be the compromise outcome that satisfies the most stakeholders, in our view.
METI would have more confidence that chipmaking technology will be
retained in Japan, and that leakage to other countries will be minimised.
We also think METI will expect further commitment by Toshiba/WD to
additional capital investment in Japan beyond Fab 6, ie to a future Fab 7.
The banks and the Ministry of Finance would have greater confidence
that the loans to Toshiba will be covered. Interestingly, media reports
suggest that WD would borrow funds from Toshiba’s creditors, Mizuho
Bank and SMBC, to finance their part of the transaction.
Confirmation of the sale of Toshiba Memory would help unlock the bridge
financing needed by Toshiba to cover the Westinghouse-related
obligations to Southern and SCANA.
WD may well be able to secure a right of first refusal with respect to the
eventual exit by the INCJ and DBJ from their stakes – or perhaps other
hidden rights. We expect WD would continue to consider acquisition of
Toshiba Memory by any other consortia to be strategically unsatisfactory.
This deal structure may face fewer obstacles in anti-trust reviews,
compared to one with majority ownership by WD.
The main uncertainty in our mind had been how long WD would fight to stall
the sale through their demands for arbitration (originally aimed at exclusive
negotiating rights and a majority stake) – which we had believed would hold
things up for at least a year. Our view was that it made little sense for WD to
push Toshiba to the brink, since a bankruptcy would likely have curtailed their
rights with respect to the JVs and raised the likelihood of an open sale.
Earnings and target price revision
No change. Our estimates assume successful disposal of Toshiba Memory.
Price catalyst
12-month price target: ¥280 based on a Price to Book methodology.
Catalyst: Finalisation of Toshiba Memory transaction (potentially by end-Jun).
Action and recommendation
We consider Toshiba to be close to fair value assuming a ¥2tr transaction
value for the sale of Toshiba Memory.
10
Please refer to page 13 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
GLOBAL
Inside
Backing Value and Momentum 2
Analyst(s) Macquarie Capital (Europe) Limited Gurvinder Brar +91 97 8055 5902 [email protected] Giuliano De Rossi, PhD +44 20 3037 1997 [email protected] Jakub Kolodziej, CFA +44 20 3037 2016 [email protected] Steve Gao, PhD +44 20 3037 2765 [email protected] Macquarie Securities (Australia) Limited John Conomos, CFA +61 2 8232 5157 [email protected] Jeremy Lamplough +61 2 8232 1060 [email protected] Lachlan Palmer +61 2 8232 0615 [email protected] Zhe Chen, PhD +61 2 8237 9642 [email protected] Fabrice Schloegel, PhD +61 2 8232 7520 [email protected] Macquarie Equities South Africa (Pty) Ltd Josiah Rudolph, FRM +27 11 583 2210 [email protected] Macquarie Capital Limited Woei Chan +852 3922 1421 [email protected] Per Gullberg, CFA +852 3922 1478 [email protected] Danny Deng +852 3922 4646 [email protected] Alvin Chao +852 3922 1108 [email protected]
6 June 2017
Global Dynamics Backing Value and Momentum Reviewing style performances
In our Style Outlook 2017 report, we made a case for Value investing on the
back of improving global economic outlook. Tactically Value trade looked
overbought, hence we cautioned investors to wait for a better entry point in 1H
2017. Reviewing YTD style performances, Cyclical Value theme has struggled in
US and Europe whilst being flat in Asia, Australia and South Africa.
Is it a good time to buy Value stocks?
A sustainable equity rally has three phases. In the first phase, equity markets
rally in expectations of changing economic outlook. In the second phase,
analysts upgrade their earnings expectations to reflect market views. In the third
phase, companies deliver on consensus expectations providing further support
to the equity rally. We witnessed the first two phases in 2016 – Rising asset
prices and an upgrade of consensus analyst expectations.
Leading on to the third phase of the rally, the 1Q 17 reporting season recorded a
higher beat-to-miss ratio and CEO confidence as suggested by our proprietary
Conference Call Transcript Sentiment index. Sustainability of CEO confidence
momentum will support Equity markets and Value stocks in 2017.
Is it a good time to buy Value stocks? Seasonality analysis is not supportive as it
shows that summer months favour Quality stocks whilst the Nov – Apr period
favours Value stocks. We would, however, argue that Value and Momentum
correlations are trading closer to longer-term averages and at current valuations,
Value is an attractive trade. Moreover, positive CEO confidence is a marked
shift from earlier years and supports our favourable outlook towards Value.
Diverging US / Europe growth outlook and slowing Commodity prices will drive
down correlations favouring a local approach to Value investing. Value should be
a stronger performer in developed than commodity markets in 2H 2017.
What are the risks to the Value trade?
The US policy execution risks and slowing global growth pose greatest risks to
the Value trade. Our economists expect the long grinding cycle to continue and
global growth to range between 2.5 to 3.0%. On the positives, both the US and
EU consumer (sentiment, wages and unemployment) and private sector are
recovering. On the negatives, they believe that the reflation trade is behind us
and financial repression policies will persist. Low bond yields, they argue,
suggests growth scarcity and will continue to favour bond surrogates.
Backing Price Momentum
Price Momentum has gone through significant rotation but it seems now to have
stabilised. Compared to this time last year, the opportunities for diversification
are much larger: Looking at correlations we see that Momentum is neither anti-
Value nor pro-Value. It isn’t ‘quality’ either. Momentum Crash Risk Indicator
signals a favourable environment whilst this trade is not impacted by seasonality
either. Investors unsure of the factor direction should tilt towards Momentum.
That is, next factor leadership will be picked up by the Momentum factor.
Macquarie Global Quantitative Conference – June 20/21
11
Please refer to page 11 for important disclosures and analyst certification, or on our website
www.macquarie.com/research/disclosures.
GLOBAL
Inside
About the data 2
Online retail 3
Fashion retailers 4
Classifieds 6
Wallets / e-payments 7
Travel 9
Cab hail 10
Analyst(s) Macquarie Capital Securities India (Pvt) Ltd Alankar Garude, CFA +91 22 6720 4134 [email protected] Suresh Ganapathy, CFA +91 22 6720 4078 [email protected] Macquarie Equities South Africa (Pty) Ltd George Brits +27 11 583 2223 [email protected] Zintle Gantsho +27 11 583 2107 [email protected]
6 June 2017
Internet traffic in India Using internet traffic to navigate the rhetoric The data set in this report is quite simple and designed for a quick scroll of the
mouse.
Main points
Online retail: Amazon’s website traffic has doubled over the last two and a
half years to ~200m per month, while Flipkart’s has declined by ~20% to
~120m per month. Amazon has also drawn level with App installs. Capital
raised in the April funding round is positive, but will not automatically change
Flipkart’s competitive positioning with respect to Amazon. Snapdeal has come
out worst in the rivalry between Flipkart and Amazon (web traffic down 80%
over two and a half years, app installed base down 40% over 18 months), and
it is not clear that Snapdeal’s problems would not outweigh its benefit to
Flipkart in the event of a takeover.
Online fashion retailers: Both Jabong and Myntra are losing a bit of traction.
Flipkart has ambitious targets for both of them. Given Amazon’s increasing
focus on the high-margin fashion segment, it will be interesting to see how it
evolves.
OLX is outpacing Quikr in core horizontal classifieds. Quikr has embarked on
an ambitious programme to acquire bolt-on verticals (property, automotive,
jobs, services), but it still has to bear fruit.
PayTM is the king of Indian wallets, with Freecharge and Mobikwik in distant
second and third positions. Flipkart’s new wallet, PhonePe, has built up a
small following in the six months since launch. Beyond these four wallets,
there is nothing of substance. The UPI wallets seem to be going nowhere.
MakeMyTrip dominates both the premium (MakeMyTrip brand) and budget
(Goibibo brand) end of the market. Android installed bases are decent, and
usage is high by global standards.
Uber is giving Ola a run for its money. On this battleground, Ibibo Ryde has
not made progress.
On balance
Naspers is winning in travel and classifieds, losing in wallets / e-payments, and
the jury is still out, in our view, on just how big a second place will be left for
Flipkart in the wake of Amazon’s determined expansion.
Naspers companies in this report
Naspers companies in this report: Flipkart (online retail), Myntra and Yabong
(fashion retail), OLX (classifieds), PayU and Citrus (wallets / e-payments),
MakeMyTrip, Goibibo, Redbus (travel), Ibibo Ryde (Cab hail).
12
Macquarie Research
Important disclosures:
Recommendation definitions
Macquarie - Australia/New Zealand Outperform – return >3% in excess of benchmark return Neutral – return within 3% of benchmark return Underperform – return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield
Macquarie – Asia/Europe Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10%
Macquarie – South Africa Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10%
Macquarie - Canada
Outperform – return >5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return >5% below benchmark return
Macquarie - USA Outperform (Buy) – return >5% in excess of Russell 3000 index return Neutral (Hold) – return within 5% of Russell 3000 index return Underperform (Sell)– return >5% below Russell 3000 index return
Volatility index definition*
This is calculated from the volatility of historical price movements. Very high–highest risk – Stock should be
expected to move up or down 60–100% in a year – investors should be aware this stock is highly speculative. High – stock should be expected to move up or down at least 40–60% in a year – investors should be aware this stock could be speculative. Medium – stock should be expected to move up or down at least 30–40% in a year. Low–medium – stock should be expected to move up or down at least 25–30% in a year. Low – stock should be expected to move up or down at least 15–25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only
Recommendations – 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations
Financial definitions
All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards).
Recommendation proportions – For quarter ending 31 March 2017
AU/NZ Asia RSA USA CA EUR Outperform 47.26% 55.50% 38.46% 45.47% 59.09% 48.21% (for global coverage by Macquarie, 8.20% of stocks followed are investment banking clients) Neutral 38.01% 29.31% 42.86% 48.77% 37.88% 36.79% (for global coverage by Macquarie, 8.25% of stocks followed are investment banking clients) Underperform 14.73% 15.19% 18.68% 5.76% 3.03% 15.00% (for global coverage by Macquarie, 8.00% of stocks followed are investment banking clients)
Company-specific disclosures: Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures.
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General disclaimers: Macquarie Securities (Australia) Ltd; Macquarie Capital (Europe) Ltd; Macquarie Capital Markets Canada Ltd; Macquarie Capital Markets North America Ltd; Macquarie Capital (USA) Inc; Macquarie Capital Limited and Macquarie Capital Limited, Taiwan Securities Branch; Macquarie Capital Securities (Singapore) Pte Ltd; Macquarie Securities (NZ) Ltd; Macquarie Equities South Africa (Pty) Ltd; Macquarie Capital Securities (India) Pvt Ltd; Macquarie Capital Securities (Malaysia) Sdn Bhd; Macquarie Securities Korea Limited and Macquarie Securities (Thailand) Ltd are not authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL) or MGL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of any of the above mentioned entities. 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Asia Research Head of Equity Research
Peter Redhead (Global – Head) (852) 3922 4836
Jake Lynch (Asia – Head) (852) 3922 3583
David Gibson (Japan – Head) (813) 3512 7880
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Keisuke Moriyama (Japan) (813) 3512 7476
Chan Hwang (Korea) (822) 3705 8643
Suresh Ganapathy (India) (9122) 6720 4078
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Gilbert Lopez (Philippines) (632) 857 0892
Ken Ang (Singapore) (65) 6601 0836
Passakorn Linmaneechote (Thailand) (662) 694 7728
Conglomerates
David Ng (China, Hong Kong) (852) 3922 1291
Conrad Werner (Singapore) (65) 6601 0182
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Consumer and Gaming
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Zibo Chen (China, Hong Kong) (852) 3922 1130
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Sunny Chow (China, Hong Kong) (852) 3922 3768
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Kwang Cho (Korea) (822) 3705 4953
KJ Lee (Korea) (822) 3705 9935
Stella Li (Taiwan) (8862) 2734 7514
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Fransisca Widjaja (65) 6601 0847 (Indonesia, Singapore)
Karisa Magpayo (Philippines) (632) 857 0899
Chalinee Congmuang (Thailand) (662) 694 7993
Emerging Leaders
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Aditya Suresh (Asia) (852) 3922 1265
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Industrials
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Property
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Anna Park (Korea) (822) 3705 8669
Sumangal Nevatia (India) (9122) 6720 4093
Technology
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George Chang (Japan) (813) 3512 7854
Daniel Kim (Korea) (822) 3705 8641
Allen Chang (Greater China) (852) 3922 1136
Jeffrey Ohlweiler (Greater China) (8862) 2734 7512
Patrick Liao (Greater China) (8862) 2734 7515
Louis Cheng (Greater China) (8862) 2734 7526
Kaylin Tsai (Greater China) (8862) 2734 7523
Telecoms
Soyun Shin (Korea) (822) 3705 8659
Prem Jearajasingam (ASEAN) (603) 2059 8989
Kervin Sisayan (Philippines) (632) 857 0893
Transport & Infrastructure
Janet Lewis (Asia) (852) 3922 5417
Corinne Jian (Taiwan) (8862) 2734 7522
Azita Nazrene (ASEAN) (603) 2059 8980
Utilities & Renewables
Patrick Dai (China) (8621) 2412 9082
Candice Chen (China) (8621) 2412 9087
Alan Hon (Hong Kong) (852) 3922 3589
Inderjeetsingh Bhatia (India) (9122) 6720 4087
Prem Jearajasingam (Malaysia) (603) 2059 8989
Karisa Magpayo (Philippines) (632) 857 0899
Commodities
Colin Hamilton (Global) (44 20) 3037 4061
Ian Roper (65) 6601 0698
Jim Lennon (44 20) 3037 4271
Lynn Zhao (8621) 2412 9035
Matthew Turner (44 20) 3037 4340
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Chetan Seth (Asia) (852) 3922 4769
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Peter Eadon-Clarke (Japan) (813) 3512 7850
Chan Hwang (Korea) (822) 3705 8643
Jeffrey Ohlweiler (Taiwan) (8862) 2734 7512
Inderjeetsingh Bhatia (India) (9122) 6720 4087
Jayden Vantarakis (Indonesia) (6221) 2598 8310
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Gilbert Lopez (Philippines) (632) 857 0892
Conrad Werner (Singapore) (65) 6601 0182
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John Jay Lee (Korea) (822) 3705 9988
Nik Hadi (Malaysia) (603) 2059 8888
Gino C Rojas (Philippines) (632) 857 0861
Regional Heads of Sales cont’d
Paul Colaco (San Francisco) (1 415) 762 5003
Amelia Mehta (Singapore) (65) 6601 0211
Angus Kent (Thailand) (662) 694 7601
Ben Musgrave (UK/Europe) (44 20) 3037 4882
Christina Lee (UK/Europe) (44 20) 3037 4873
Sales Trading
Adam Zaki (Asia) (852) 3922 2002
Stanley Dunda (Indonesia) (6221) 515 1555
Sales Trading cont’d
Suhaida Samsudin (Malaysia) (603) 2059 8888
Michael Santos (Philippines) (632) 857 0813
Chris Reale (New York) (1 212) 231 2555
Marc Rosa (New York) (1 212) 231 2555
Justin Morrison (Singapore) (65) 6601 0288
Daniel Clarke (Taiwan) (8862) 2734 7580
Brendan Rake (Thailand) (662) 694 7707
Mike Keen (UK/Europe) (44 20) 3037 4905
15
This publication was disseminated on 06 June 2017 at 17:49 UTC.