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1、EQUITY RESEARCHHong Kong Open | 14 September 2012 ASIA EX-JAPAN MORNING RESEARCH SUMMARY Highlights Kia Motors Corporation (000270.KS) Overweight/Neutral Kia Motors Corporation: Recent weakness an opportunity to accumulate shares Summary of Changes RatingPrice TargetEPS FY1 (E)EPS FY2 (E) Target Pri
2、ce ChangesOldNewOldNewOldNewOldNew Hindalco Industries Ltd.HINDA.NSOWOW159.00145.0018.0516.8016.7616.76 Jindal Steel OW; PT US$153): Latest IUT weekly search traffic data (27 Aug-2 Sept) suggests flattish Qihoo share and a slight rebound for Baidu while Google continues to drop China Eastern Airline
3、s (0670.HK; EW; PT HK$3.32): Thats what we call a peak season China Life (2628.HK; EW; PT HK$26.7): Positive 3Q growth as strong rebound in Aug offsets Jul weakness CPIC (2601. HK; OW; PT HK$36.0): Further slowdown in August, likely from bancassurance weakness DGB Financial Group: Attractive risk re
4、ward Hon Hai Precision Industry Co., Ltd.: Reiterate OW rating, and remains one of our top picks on the iPhone 5 product cycle Kia Motors Corporation: Recent weakness an opportunity to accumulate shares LG Display(034220 KS): iPhone 5 launch - LG Display should be a core beneficiary PICC (2328.HK; O
5、W; PT HK$15.8): Steady premium growth in August, no disruptions in sales PT XL Axiata (OW; PT Rp7,600): Etisalat share placement-driven share price weakness offers good opportunity to accumulate Results snapshot: Sun Hung Kai Properties (16 HK; UW; PT HK$87.50) - in-line; rising property sales and n
6、on-core assets disposals in sight Sichuan Expressway (107 HK; OW; PT HK$4.75): Volumes lurking close to the floor - so is its valuation Industry Research Asia ex-Japan Internet EW; PT HK$26.7): Positive 3Q growth as strong rebound in Aug offsets Jul weakness 13 September 2012 Mark Kellock, Thomas Wa
7、ng China Life reported a 20% y/y increase in premium income in Aug, lifting YTD growth to -3% (from -6% in Jul). This rebound in growth in Aug was likely well ahead of market expectation, and offsets the -10% y/y decline in Jul. 3Q12 premium growth is so far +6% y/y, comparing positively with the -5
8、% y/y decline in 1H12. We see possible positive growth improvements in both agency and bancassurance channel, especially given the low-base effect of 2H11, and note that y/y comparisons will even get easier in 4Q12. View full report on Barclays LiveBack to Top Financial Services CPIC (2601. HK; OW;
9、PT HK$36.0): Further slowdown in August, likely from bancassurance weakness 13 September 2012 Mark Kellock, Thomas Wang CPICs life insurance premium slowed down further in August, to -8% y/y, reducing YTD growth to flat (vs. 1% in July). The main cause is likely further weakness in the bancassurance
10、 channel, which was down 40% y/y in 1H12. Agency growth is likely to be stable, after posting a 14% y/y increase in volume in 1H12 and a 17% y/y increase in agent productivity. View full report on Barclays LiveBack to Top Financial Services DGB Financial Group: Attractive risk reward Stock RatingOve
11、rweight Industry ViewNeutral Price TargetKRW 20000.00 Price (13 Sep 2012)KRW 13450.00 EPS FY1 (E)2180.00 EPS FY2 (E)2388.00 Market Cap (KRW bn)1,802.9725 Ticker139130 KS / 139130.KS Asia ex-Japan Banks Sun Mok Ha +82 2 2126 2933 BCSL, Seoul YooJin Choi, CFA +82 2 2126 2935 BCSL, Seoul 14 September
12、 2012 Although we revise down our earnings forecasts for DGB due mainly to ongoing net interest margin compression, it continues to be one of our top picks in the Korea banks sector along with HFG. We believe that DGB offers an attractive risk-reward on the back of its high ROE outlook, strong capit
13、al, attractive valuation and benign asset quality, coupled with Daegu provinces relatively resilient local economy, and the banks proven operational record. We also notice that foreign investors have returned to buying DGB since July. Our price target is unchanged at W20,000 (1.0x our 2013E BVPS and
14、 8.4x our 2013E EPS), suggesting potential upside of 49%. High ROE and strong capital base: Our average forecast ROE for DGB for 2012E14E is 12.4%, higher than the industry average of 10.3% during the same period. Meanwhile, the banks tier 1 capital at end-2Q12 was the second highest among the Korea
15、 banks, following KEB. Attractive valuation: Despite the banks handsome profitability, robust capital base, and asset quality well in check in this sliding economy, the stock currently trades just at 0.73x our 2013E BVPS and 5.6x our 2013E EPS. Resilient local economy in Daegu: The overall Korea eco
16、nomy is facing macro headwinds. The economic environment in Daegu province is relatively sound, based on industrial production growth, export growth, housing prices, and units of unsold apartments. View full report on Barclays LiveBack to Top Financial Services PICC (2328.HK; OW; PT HK$15.8): Steady
17、 premium growth in August, no disruptions in sales 13 September 2012 Mark Kellock, Thomas Wang PICC reported a 13% y/y increase in premium in August, lifting YTD growth slightly to 11% y/y (from 10% y/y in July). There has been little disruption in August from the typhoon season, and we note that th
18、e recent fatal earthquakes are unlikely to lead to material claims payments, due to low penetration. The outlook for PICCs profitability in 2H12 remains solid, with steady premium growth and stable underwriting performance (combined ratio). View full report on Barclays LiveBack to Top Financial Serv
19、ices Results snapshot: Sun Hung Kai Properties (16 HK; UW; PT HK$87.50) - in-line; rising property sales and non-core assets disposals in sight 13 September 2012 Andrew Lawrence, Vivien Chan, CFA SHKP reported full-year underlying profits for 2012 at HK$21.7bn in line with FY11 and our own forecast.
20、 The company maintained its full-year dividend at HK$3.35 per share and contrary to market expectations did not pay out a special dividend. View full report on Barclays LiveBack to Top Financial Services Hong Kong Banks: HKIB conference takeaways - Industry experts view on offshore RMB 13 September
21、2012 Sharnie Wong, CA, Shujin Chen Today, we attended the Annual Banking Conference 2012 held by the Hong Kong Institute of Bankers (HKIB) where a panel of banking industry experts discussed the challenges and opportunities of offshore RMB (CNH) business. In summary, the experts believe that near-te
22、rm profitability from CNH business is increasingly under pressure due to the rapid rise in deposit competition, which also supports our view that CNH margins have peaked in 1H12. View full report on Barclays LiveBack to Top Industrials China Eastern Airlines (0670.HK; EW; PT HK$3.32): Thats what we
23、call a peak season 13 September 2012 Patrick Xu, CFA, Jon Windham, CFA Strong growth at cheap valuation: Passenger volume growth accelerated further to +11% y/y in Aug, outstripping capacity growth in terms of ASK and pushing up the passenger load factor for the third consecutive month. The company
24、remains our top pick of the AEJ airlines, with better operating performance and attractive valuation at 0.9x 2013 P/E against 10% ROE. View full report on Barclays LiveBack to Top Industrials Kia Motors Corporation: Recent weakness an opportunity to accumulate shares Stock RatingOverweight Industry
25、ViewNeutral Price TargetKRW 87000.00 Price (13 Sep 2012)KRW 73400.00 EPS FY1 (E)10779.10 EPS FY2 (E)11165.17 Market Cap (KRW bn)29,753.424 Ticker000270 KS / 000270.KS Asia ex-Japan Autos 2) still 5-9% y/y capacity increase for FY13E; and 3) launch of K3 in Sep 2012. We slightly lower our FY12-14E ne
26、t profit estimates by 2-4% to reflect the impact of the strike/adoption of daytime shifts, and lower our PT to W87,000 accordingly. Estimated 60k units of production loss from strike in 3Q12: We estimate Kia saw around 60k units of production loss due to the strike in 3Q12 (5.5k/39k/16k units in Jul
27、/Aug/Sep 2012) which accounts for 9% of 3Q12 global shipments. Accordingly, we forecast Kias sales/OP/NP to come in at 11%/17%/15% below market consensus. Yet, no major impact on FY12E earnings: However, we forecast Kia to make up for the majority of production lost during 4Q12 through weekend overt
28、ime, and we forecast global shipment growth to accelerate to +9% y/y in 4Q12 vs +4% y/y in 3Q12. As such, our FY12E NP estimate is only 3% below market consensus. 5-9% y/y increase in 2013E production capacity looks feasible: Despite scheduled adoption of two daytime shifts from Mar 2013 (which redu
29、ces working hours from the current 10+10 hours to 8+9 hours), we forecast Kias stated production capacity to still increase to 285-295k in 2013 from 271k in 2012 through a 10k increase at overseas factories working overtime, a 4-9k increase at domestic factories through UPH increase, and a 5k increa
30、se at domestic factories working overtime. Launch of K3: Kia will be launching its new K3 model (previously Forte) from next week and we estimate it will generate around 450k global volume per annum (15% of Kias FY13E total global shipments) with around 5-7% higher ASP than Forte previously. View fu
31、ll report on Barclays LiveBack to Top Industrials Sichuan Expressway (107 HK; OW; PT HK$4.75): Volumes lurking close to the floor - so is its valuation 13 September 2012 Patrick Xu, CFA, Jon Windham, CFA We believe most of the downside is already in the price, at 5x forward P/E and 0.5x 2013 P/B aga
32、inst 10% ROE for 2013E, with 1H earnings ahead of our full year projection. Sichuan Expressway (107 HK) released its Aug operating figures after the market close on 12 Sep. Toll revenue in Aug was, +2% y/y and +1% ytd, behind our +6% y/y forecast for full-year 2012. The main drag was from Chengle Ex
33、pressway, which had a high base in 2011 with a competing road under maintenance. View full report on Barclays LiveBack to Top Internet OW; PT US$153): Latest IUT weekly search traffic data (27 Aug-2 Sept) suggests flattish Qihoo share and a slight rebound for Baidu while Google continues to drop 13
34、September 2012 Alicia Yap, CFA, Anand Ramachandran, CFA, William Huang, Joyce Zhou Latest weekly data suggests Qihoo share retain at 10%: According to the latest published weekly data (from 27th of August to 2nd of Sept) by iResearch iUserTracker, Qihoo360 search finished the 2nd full week with tota
35、l weekly unique visitors (UV) of 79.4mn and average daily unique visitors of 24.9mn View full report on Barclays LiveBack to Top Internet 2) a diverging trend in the number of shares shorted for Baidu (8.9% m/m increase) and Qihoo (24% m/m decline) as a result of the launch of the Qihoo search servi
36、ce; 3) a significant drop in short interest for FMCN (-53% m/m) post its privatization announcement; 4) online games stocks saw a meaningful increase in the number of shares shorted (Tencent +102%, NetEase +48% and Changyou +38% m/m). One-month performance for China Internet sector: After consecutiv
37、e two-month underperformance in Jun and Jul, the China Internet sector outperformed the market, with average performance +13.5% in Aug, vs +4.3% and -2.0% for the NASDAQ and Hang Seng Index, respectively. QIHU recorded the highest share price rebound of +52.2% within the month, due to the launch of
38、online search business, while BIDU was down 7.5% in Aug, the worst among our coverage. We also noted some technical rebound for CTRPs share price after it hit bottom at US$12.50 in early Aug following a disappointing 2Q. Short-selling trending down for advertising and illiquid gaming names: We noted
39、 a downward trend for short selling across most online advertising names (FMCN, YOKU, QIHU, RENN, SINA, SOHU) with an average decrease of 24.1% m/m, led by FMCN -53% m/m and YOKU -41% m/m. BIDU was the only advertising stock that saw an increase in short selling, +8.9%, due to rising concerns on the
40、 potential impact from 360 Search. Meanwhile, due to the privatization announcement by FMCN, we noted a flat or decrease in short selling of some beaten-down gaming stocks, such as PWRD and GAME, despite disappointing 2Q earnings/3Q guidance, mainly due to concerns that some of the under-valued name
41、s could also be potential candidates for privatization. As a result of various speculation and investors expectations, PWRD and GAMEs share prices actually rose +16% and +14%, respectively, during most of August. Source: Bloomberg, Barclays Research View full report on Barclays LiveBack to Top Techn
42、ology AAC Technologies Holdings: Will the share price pull-backs post Apple product launches be repeated? Stock RatingOverweight Industry ViewPositive Price TargetHKD 29.80 Price (13 Sep 2012)HKD 27.35 EPS FY1 (E)1.35 EPS FY2 (E)1.83 Market Cap (HKD bn)33.5858 Ticker2018 HK / 2018.HK Asia ex-Japan W
43、ireless Equipment 2) Wi-Fi PA chips double to two; 3) SWKS and AVGO appear to be the winners, followed by TQNT and then RFMD, in line with our expectations. While we still await a detailed teardown post the first shipment on 21 September for more colour on the winners and losers, we maintain our Ove
44、rweight rating on VPEC and Equal Weight rating on Win Semi. Separate LTE model for iPhone 5; likely two LTE PAs in each phone: As expected, the long-awaited iPhone 5 is LTE enabled but surprisingly with three different models to cover different regions/carriers (Figures 1 and 2). Therefore, we find
45、it slightly positive that the phone can also support Australia, Korea and some European carriers (with Band 3 added). Due to the separate models being launched, we expect the three models may have two LTE PAs (vs. our earlier expectation of three) with five PAs in total, up from three in iPhone 4S,
46、but the total PA chips value may increase by over US$3 per phone. ( to refer to the report by our USClick here analyst, Blayne Curtis, on his takeaways for details.) Wi-Fi PA content to double: The iPhone 5 carries an 802.11a/b/g/n Wi-Fi module with dual channels (2.4GHz and 5GHz) so the PA chips do
47、uble to two. Murata, SWKS and TQNT are the likely suppliers to benefit so Win Semi, VPEC and AWSC might also benefit. Initial teardown of iPhone 5 suggests 5 PAs in total: As shown in Figure 3, the likely teardown photo of the iPhone 5 indicates that there are five PA chips, including two SWKS chips
48、 (a 2G/EDGE and likely one dual PAD or just one single Band), one TQNT chip (Band 2/5 dual PAD or just Band 2), and one or two AVGO chips (likely a LTE dual PAD and a likely smaller single LTE). Also, we can identify the part number of one AVGO chip likely to be AFEM-7x13 (Band 1/3), which is in the
49、 series of AVGOs PA+FBAR Duplexer Modules, suggesting that this tear down phone should be the A1429 model. Such an outcome is not far from our house view, in which SWKS and AVGO appear to be the content winners, followed by TQNT and then RFMD. Of note, the photo is blurry and likely only represents one model (out of three) so we cannot confirm which players have won which bands yet; we await a more detailed teardown when the iPhone 5 is shipped post 21 September. Slightly positive implications for the Taiwan PA supply chain: 1) Th