Regional Morning Notes

Tuesday, 30 January 20181 Refer to last page for important disclosures. Regional Morning Notes PLEASE CLICK ON THE PAGE NUMBER TO MOVE TO THE RELEVANT PAGE. KEY STORY CHINA Sector Healthcare Page 2 Traditional Chinese medicine - Structural changes to trigger sector re-rating. CHINA Sector Healthcare Page 2 Traditional Chinese medicine: Structural changes to trigger sector re-rating. Steel Page 4 Steel prices bottoming; positive profit alerts. INDONESIA Update Bumi Serpong Damai (BSDE IJ/HOLD/Rp1,840/Target: Rp1,950) Page 8 Strong 2017 earnings priced in, downgrade to HOLD. MALAYSIA Update Yinson (YNS MK/BUY/RM4.20/Target: RM4.80) Page 11 We see upside in FY19, but it would be milder vs FY18’s outperformance. Unlike in FY18, expectations of new contract wins in FY19 may be balanced by a reversal in earnings momentum. Small/Mid Cap Highlights Sarawak Oil Palms (SOP MK/HOLD/RM3.79/Target: RM4.15) Page 14 Expect stronger 4Q17 results yoy on significantly higher FFB production. Weaker 2018 FFB production outlook due to labour shortage and high rainfall. Maintain HOLD. SINGAPORE Update SIA Engineering (SIE SP/BUY/S$3.26/Target: S$4.00) Page 17 Improving engine MRO to be earnings and rerating catalyst. Upgrade to BUY. THAILAND Update KCE Electronics (KCE TB/SELL/Bt77.50/Target: Bt65.00) Page 20 4Q17 results preview: Too early to be optimistic. KEY INDICES Prev Close 1D % 1W % 1M % YTD % DJIA 26439.5 (0.7) 0.9 7.0 7.0 S&P 500 2853.5 (0.7) 0.7 6.7 6.7 FTSE 100 7671.5 0.1 (0.6) (0.2) (0.2) AS30 6187.6 0.4 1.1 0.3 0.3 CSI 300 4302.0 (1.8) (0.8) 6.7 6.7 FSSTI 3577.1 0.3 0.2 5.1 5.1 HSCEI 13659.6 (0.5) 3.4 16.7 16.7 HSI 32966.9 (0.6) 1.8 10.2 10.2 JCI 6680.6 0.3 2.8 5.1 5.1 KLCI 1870.5 0.9 2.0 4.1 4.1 KOSPI 2598.2 0.9 3.8 5.3 5.3 Nikkei 225 23629.3 (0.0) (0.8) 3.8 3.8 SET 1837.5 0.5 0.7 4.8 4.8 TWSE 11221.8 0.7 (0.1) 5.4 5.4 BDI 1219 0.2 8.0 (10.8) (10.8) CPO (RM/mt) 2458 (0.3) 1.3 3.5 2.9 Brent Crude (US$/bbl) 69 (1.5) 0.6 3.8 3.8 Source: Bloomberg TOP PICKS Ticker CP (lcy) TP (lcy) Pot. +/- (%) BUY CSPC Pharma 1093 HK 16.78 20.10 19.8 China TCM 570 HK 5.02 5.91 17.7 Nippon Indosari ROTI IJ 1,295.00 1,425.00 10.0 PP Persero PTPP IJ 3,200.00 3,900.00 21.9 Gabungan AQRS AQRS MK 1.95 2.47 26.7 OCBC OCBC SP 13.15 14.88 13.2 SingTel ST SP 3.61 4.53 25.5 Siam Cement SCC TB 494.00 600.00 21.5 SELL Great Wall Motor 2333 HK 9.62 4.70 (51.1) HM Sampoerna HMSP IJ 5,175.00 3,700.00 (28.5) Hartalega HART MK 12.14 8.04 (33.8) KEY ASSUMPTIONS GDP (% yoy) 2016 2017F 2018F US