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The views & opinions expressed are the dealers' own and they do not represent the views of UOBKH. The content is written in their personal capacity and is in no way related or associated to UOBKH. Please read disclaimer page here.

Thursday, July 12, 2018

Xiaomi (1810 HK) | Buy now at HKD 19.50 for a HKD 30 target

Xiaomi (1810HK)
Px/Tgt: hkd19.50/30 
(my tgt; Macquarie has same target (more analysts likely to write report at these higher targets; bookrunners report out next 40 days)

I have a CONVICTION BUY on Xiaomi (1810HK) in contrast to UOBKH Research downbeat report.

My reasons are as follows:

1. Xiaomi was supposed to list at hkd30 @ 70x but given that there were no Foreign Institutions biting, they list it at hkd17 @ 37x

2. Forward PE is 20x

3. Main shareholders are China SOEs & China Tycoons

4. Liquidity-wise: this is good because it is UNDER-OWNED (No Foreign Funds will SELL against them if they China SOE's/Tycoons buy up)

5. Even the on-going US-China Tech/Trade war likely to have limited impact on this stock because they sell only to China (no 3) & India (market leader)

6. Xiaomi replaces ZTE as one of HSI component stocks

7. Shortists previously try to SHORT Xiaomi to hkd14 but FAILED (only to hkd16 & the price now is hkd19.50)

8. China loves to copy US:
a. Xiaomi as China's next Apple
b. Tencent is China's next Facebook/Paypal/Amazon/Google
c. Alibaba is China's Facebook/Amazon/Netflix/Alphabet

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Monday, July 09, 2018

Alibaba BABA US | I say Buy lower; UOBKH Research says buy NOW

My view:

China-Internet-pick:
1. BABA US Px/Tgt USD190/230
Theme: US/China spat-weighs-down-China-Internet-sector

1. Personally, I am of the view that China Internet sector is being weighed down with the US-China Technology spat & is taking a much more BEARISH view than UOBKH Research BULLISH view because BABA US' upside is mainly attributable to USA's FAANG's upside. Going forward, China Internet-play (whether they are listed in US or HK) likely to be under pressure as the US-China Trade/Technology War drags on. I would prefer to BUY BABA US nearer usd160.

2, UOBKH Research has a BUY on BABA US with unchanged target price of usd230. Alibaba will announce 1QFY19 results in early-August. We estimate 1QFY19 revenue at Rmb81.5b, up 62% yoy. We trim our EPS by 4% and 1% for FY19-20 respectively due to margin contraction from the consolidation of Ele.me and drag from content investment on Digital entertaiment. FY19 revenue growth was guided at over 60% yoy with organic revenue growth of over 50% yoy, excluding the recent consolidation of Cainiao and Ele.me.



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Friday, July 06, 2018

Singapore Property | Share price to fall; weighed-down by new curbs

My view:

S'pore-Property-picks:
Theme: Property-stocks-to-fall

1. Personally, I am of the view that S'pore Property stocks will see share price down e.g.:

CIT SP:

a. Jan 17: sgd 8.00
b. Mar 18: sgd 13.50 +70%
c. Jul 18: sgd 11.20 -20%
d. My guestimate: sgd 9.50 -15%

2. Personally, I am in agreement with this new property curbs because:

a. Foreign cash money is pulling up property price in the mid to high end (asset allocation away from 'more expensive' global cities to 'less expensive' S'pore)

b. It needs to address issue of 'Foreign Cash Money' (pull property price up) versus 'Local 30-year Loan Money' (push up property price & over-arching loan repayments)

c. Aggressive land bidding by Foreign Developers after S'pore Developers have replenished their landbank

d. En-bloc sales i.e likely to see same development e.g. 500 units @ sgd1,000psf to 1,500 smaller units at sgd1,500psf (Gov earns DC/Developers earns 20% margin/en-blockers earns windfall gain/new foreign buyers asset allocate to 'cheaper' S'pore/new local buyers buying at a high & saddled with exorbitant loan repayments OR be sidelined)

e. S'pore physical property price movement has gone back to near its 2013 peak:

i. 2005-2013: +100%
ii. 2014-2017: -10%
iii. 1H18: +10%

3. UOBKH Research is reviewing our current OVERWEIGHT call on S'pore Property (likely to MARKETWEIGHT). Share prices of developers are likely to suffer knee jerk reaction to the latest residential property cooling measures. Based on previous cooling measures in 2011 and 2013, we see potential worst-case downside of 11-25% for our key stocks. Key curbs are as follows:

a. LTV:



b. ABSD:


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Friday, June 29, 2018

VSI Industry (VSI MK) | Prefer to BUY < MYR 1.20 despite -50% erosion

My view:

Mal-EMS-pick:
VSI Industry (VSI MK) Px/Tgt MYR1.40/1.85 (+30% upside)
Theme: Mal-EMS-sector-weighed-down-I-prefer-to-BUY-lower-<MYR1.20


1. Personally, I reckon that its best to AVOID all Asean stocks for now until the USD/RMB stabilises as the RMB weakness weigh down Asean currencies, hence further equity selling despite low single digit PEs & good EPS growth. Put VSI MK on radar because it is doing 9x PE vs +30% EPS growth & trading -1SD PE.

2. Given the significant -50% retracement in share price from Feb 18 high, Kah Yen maintains our BUY rating with a lower target price of RM1.85 (from RM2.30), based on a 13x PE pegged to its 2019F fully diluted EPS. However, I prefer to BUY <myr 1.20.

3. VSI's 3QFY18 results missed expectations. The underperformance was due to weaker-than-expected gross profit margin owing to: a) reduced operating leverage from given the large base of labour, b) set-up and testing costs of new assembly lines, and c) existing box-built assembly lines have yet to achieve optimal efficiency. We cut our FY18-20 earnings forecasts by 17-22%. We opine it will take two or more quarters for margins to recover to 2017's level. Maintain BUY. Target price: RM1.85.



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Monday, June 25, 2018

China Internet | I say Buy lower; UOBKH Research says buy NOW

My view:

China-Internet-pick:
Theme: US/China spat-weighs-down-China-Internet-sector


1. Personally, I am of the view that China Internet sector continues being weighed down by the US-China Technology spat & is taking a much more BEARISH view than UOBKH Research's BULLISH view because:

a. As an example, share price of Tencent (700HK) has been stuck at HKD 380-450 range over last 7 months since Nov 17 as the US announced a clamp-down on China Technology to arrest it growth ie. technology investment, IP theft, etc

b. Market seems dismissive of the above pressure as the games are domestic, but sidelined share price is pointing to a likely valuation de-rating

c. I would prefer BUYING Tencent nearer HKD 350

2. UOBKH Research still maintains OVERWEIGHT China Internet sector despite the above headwinds. The top 10 highest grossing game list in April and May was fully occupied by Tencent's and NetEase's games, compared with only seven games from the two companies a year ago, indicating a growing market share for Tencent and NetEase. Survival shooting games, as the world's most popular game genre, continued to grow in popularity. We also see better visibility on Kingsoft's 2H18 performance as all of its JX Online series games have entered test phases. Our top pick is Tencent.



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Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

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