馬來西亞市場策略展望2020：以低期望開始新的一年

1、GlobalResearch9 December 2019Malaysia Market StrategyOutlook 2020: Starting the year with low expectationsDj vu: beginning the year with uncertainty once morebut is it in the price? Althoughwecontinuetoseeuncertaintiesandconcerns(earnings,policy,andpolitics) for Malaysia, we believe expectations are

2、 low at this stage. Hence, we believe the market could improve once earnings growth bottoms and confidence recovers. Our base case for Malaysia is for a FBM KLCI target of 1,680 in 2020E (based on a 5% earnings CAGR in 2020-21E and a 16x 2020E PE; see HYPERLINK l _bookmark3 here for sensitivity anal

3、ysis). Malaysias PE premium relative to the region has also fallen to 17% currently, from 38% in December 2018 (see here).Will earnings growth finally bottom in 2020?Malaysianearningsareonalowbaseearningsdeclinedata2%CAGRin2013-18; consensus expects a further 6.4% decline in 2019; and consensus has

4、already downgraded 2020 earnings by 12% YTD. HYPERLINK l _bookmark1 Our earnings growth assumption is supportedbyourexpectationsofcyclicalrecoveryandGDPtobottominQ220,higher CPOpricesin2020,andoilpricestoremainataroundcurrentlevels.Somecompanies (consumer,telcosandenergy)havealsobeencuttingcostsandc

5、apex.What else could change confidence in the market?Some of the key factors that could boost confidence in the market next year include: recovery of the external environment; Malaysias ability to capture share in thesupply chain relocation/diversification pie (see here); and domestic policy clarity

6、/continuity/ execution of reforms. We believe the government has fiscal room and some fiscal stimuluspackageispossible.Thegovernmentisprojectingaslightlywiderfiscaldeficit thanplannedtosupportgrowth(seehere).However,havingnopolicyclarity/continuity andpopulistmeasuresthatcouldimpedegrowthcouldbenega

7、tiveforconfidence.Stock picks we like cyclical underperformersWelikecompaniesthatwouldbenefitfrom:1)theglobalcyclicalrecovery/supplychain diversification Inari (recent initiation), Sime Darby Bhd, and Petronas Chemical; 2) higherCPOpricesSimeDarbyPlantations;3)self-helpbycuttingcostsAxiata;and4) pro

8、xies to the Malaysian market CIMB, and Bursa. Our least-preferred stocks are Public Bank, Telekom and AirAsia.Figure 1: Most- and least-preferred stocks Equity Strategy MalaysiaNicole Goh HYPERLINK mailto:nicole.goh +603-27811133EdwardTeather HYPERLINK mailto:edward.teather +65-64955965JianBoGan,CFA

9、 HYPERLINK mailto:jian-bo.gan +603-27811111KenTay,CFA HYPERLINK mailto:ken.tay +603-27811121NavinKilla HYPERLINK mailto:navin.killa +852-29717594Aakash Rawat,CFA HYPERLINK mailto:aakash.rawat +65-64958283RachaelTan HYPERLINK mailto:rachael.tan +65-64952708Piyanan Panichkul HYPERLINK mailto:piyanan.p

10、anichkul +662-6135753Wai Fai Kok,CFA HYPERLINK mailto:wai-fai.kok +65-64955912Eric HYPERLINK mailto:eric-p.lin +86-21-38668865RatingPrice (RM)PT (RM)Mkt cap (RM m)PE (x) 2020EP/BV (x) 2020ERatingPrice (RM)PT (RM)Mkt cap (RM m)PE (x) 2020EP/BV (x) 2020EMost preferredMost preferred (contd)InariBuy1.86

11、2.605,88821.274.77Bursa MalaysiaBuy5.988.304,82523.295.25Sime DarbyBuy2.362.9016,05014.531.01Petronas ChemicalsBuy7.118.4056,88014.881.69Least preferredSD PlantationBuy5.285.8035,90834.382.54Public BankSell19.1819.0074,45913.191.48AxiataBuy4.215.4038,18937.382.12Telekom MalaysiaSell3.813.4014,31821.

12、341.70CIMB GroupBuy5.205.9049,7359.140.84AirAsia GroupNeutral1.691.805,6487.550.83Source: Reuters, UBS estimates. Data as of 6 December 2019. HYPERLINK /investmentresearch /investmentresearchThis report has been prepared by UBS Securities Malaysia Sdn Bhd. ANALYST CERTIFICATION AND REQUIRED DISCLOSU

13、RES BEGIN ON PAGE 16. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor

14、 in making their investment decision.MalaysiaStrategyOutlook2020UBS Research THESIS MAP a guide to our thinking and whats where in this reportMOSTFAVOUREDLEAST FAVOUREDInari,SimeDarbyBhd,PetronasSime Darby Axiata, BursaMalaysiaPublic Bank, Telekom, AirAsiaPIVOTALQUESTIONSQ: How will earnings growth

15、for the market develop in2020?We forecast market earnings growth of 6.6% and 8.0% for 2020 and 2021, respectively. Althoughthereissomedownsiderisktoearnings,especiallyintheearlypartof2020,weexpectearningsto pick up in H220. We expect a bottoming of economic growth in Q220, higher CPO prices, and an

16、improvementinexportstosupportanearningsrecovery. HYPERLINK l _bookmark0 Q: What could change confidence in the market?Someofthekeyfactorsthatcouldboostconfidenceinthemarketnextyearinclude:arecoveryof the external environment, Malaysias ability to capture share in the supply chain relocation story, a

17、ndthepaceofdomesticstructuralreformandpolicyimplementation.Bycontrast,havingnopolicy certaintyorpoliciesthatimpedegrowthwouldbearisktoconfidenceinthemarket. HYPERLINK l _bookmark2 WHATSPRICEDIN?TheFBMKLCIistheworst-performingmarketintheregiononaYTDbasis.Hence,webelievethe markethasalreadyfactoredins

18、omeoftheuncertaintiessurroundingthemarketandexpectationsare low.UBSVIEWWesetour2020EKLCItargetat1,680,basedona12-monthforwardPEof16x(five-yearaverage) and a two-year adjusted earnings CAGR of 5%. Although we continue to see uncertainties andconcerns(earnings,policyandtheexternalenvironment)fortheMal

19、aysianmarketasweheadinto 2020,webelieveexpectationsarelowatthisstage.Hence,wethinkthemarketcouldtrendhigher once earnings growth bottoms and confidencerecovers.EVIDENCEIts PE premium relative to the region has also decreased to 17% in November 2019, from 38% in December2018.Foreignshareholdingforthe

20、equitymarketingeneralhasnowfallento22.9%asof September 2019, from 23.5% a year ago and 24.2% just before GE14. Earnings are at a low base a 2.0% decline in earnings CAGR (2013-18); consensus expects a further 6.4% decline in 2019; and consensus has already downgraded 2020 earnings by 12% YTD.Figure2

21、:FBMKLCItargetof1,680byyear-end2020E1,9001,800Upside: 1,850Dec-09Dec-09 Base: 1,680Jun-10Jun-11Jun-12Jun-13Jun-14Jun-16Jun-17Jun-18Jun-19Jun-20Downside: 1,350Jun-10Jun-11Jun-12Jun-13Jun-14Jun-16Jun-17Jun-18Jun-19Jun-20Dec-10Dec-11Dec-12Dec-13Dec-14Jun-15Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-10Dec-

22、11Dec-12Dec-13Dec-14Jun-15Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Outlook 2020 in picturesFigure 3: We project weaker external demand to cause Malaysiangrowthtoslowatthestartbuttorecoverfrom H220onwardsandinto2021UBSe forecasts7.0UBSe forecasts6.05.04.03.02.01.0Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18

23、Q4-18 Q1-19 Q2-19 Q3-19 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19E Q1-20E Q2-20E Q3-20E Q4-20E Q1-21E Q2-21E Q3-21EQ4-21EFigure4:Fromanearningsperspective,weexpect2020to be a year with modest earnings recovery (despite some downward pressure in H120) after six years ofd

24、ecline35%30%25%20%15%10%5%0%-5%201120122013201420152016201720182019E2020E2021E-10%201120122013201420152016201720182019E2020E2021EActualUBSeConsensusSource: Haver,CEIC,NationalStatistics,UBSestimatesSource: Datastream, Reuters, UBSestimatesFigure5:Banks,CPO,andaviationkeyearningsgrowth drivers for202

25、0EFigure 6: FBM KLCI is the worst-performing market in the region YTD. Hence, we also believe market expectations are lowUS$ YTD 20193-month 6-month1-year2018 TaiwanTAIEX17.3%5.3%12.4%14.1%-19.3%ASX200Index13.7%0.4%2.1%9.8%-15.9%ShanghaiCompositeIndex12.6%-2.3%-1.4%5.6%-28.6%SensexIndex10.2%12.2%-1.

26、2%12.4%-2.8%MSCIAPACxJ8.6%2.9%3.2%4.7%-16.2%PhilippineSEIndex7.9%0.8%-0.1%5.9%-17.0%Stock ExchangeofThailand7.5%-5.1%-1.6%1.2%-10.8%StraitsTimesIndex2.9%1.9%0.8%0.4%-11.5%JakartaCompositeIndex1.9%-2.8%-0.4%1.7%-9.2%HangSengIndex0.9%-1.6%-2.9%-3.0%-13.8%KOSPIIndex-5.0%3.8%-1.0%-8.0%-20.8%Malaysia Fin

27、ancials Malaysia Financials Consumer StaplesCommunication Services IndustrialsUtilities Materials Health CareConsumer DiscretionaryEnergyConsensus 7.0%10%13%UBS earnings growth 0 owh ibuion6.6%5% 2.2%31% 2.3%-11% -0.9%13% 1.2%3% 0.3%9% 0.6%17% 0.5%0.4%0.2% RealEstate0%0% 0.0%FBMKLCI-8.7%-2.1%-5.1%-8

28、.0%-7.9%Source: Reuters, UBSestimatesSource: ReutersFigure7:Theme#1:CyclicalrecoveryUBSeconomics teamexpectsthecycletotroughinearly2020%4.03.53.02.52.01.51.0Q119Q219Q319EQ419EQ120EQ220EQ320EQ420EQ121EQ221EQ321EQ421E0.5Q119Q219Q319EQ419EQ120EQ220EQ320EQ420EQ121EQ221EQ321EQ421E%6Figure 8: Supply chain

29、 relocation FDI approvals to Malaysia increased 169% in 2018 and 65% in H119. Hopefully with that, DDI and loans growth will accelerateRM 403530252015105Q117Q217Q317Q417Q118Q218Q318Q418Q119Q2190Q117Q217Q317Q417Q118Q218Q318Q418Q119Q219USWorldChina ForeignapprovedinvestmentLocal approvedinvestmentSour

30、ce: CEIC, Haver,UBSestimatesSource: CEIC, Department of StatisticsMalaysiaFigure9:WeexpectaverageCPOpricesin2020tobe c20% higher than in2019Figure 10: Earnings could rise with loans growth for banks25%20%15%10%5%0%-5%-10%-15%-20%-25%-30%+19% 15%16%17%18%19%20%21%22%23%2013 2014 2015 2016 2017 2018 2

31、019E 2020EAvgCPOpricechg(LHS)Stock-to-useratio(RHS)400350300250200150100Sep-19 Nominal GDP (2005rebased) 12mfEPS(2004rebased)Sep-19 Loans (2004rebased)Source: Reuters,OilWorld,USDA,GAPKI,MPOB,SEAI,UBSestimatesSource: CEIC, Datastream,UBSFigure11:Theme#2:Governmentactiongovernmentis optimistic about

32、2020 GDP growth; aims to run a less- contractionarybudgetFigure12:Governmentactionwhatelsearewewaiting for clarityon?PeriodPotentialkeysignposts Q120- Award of ECRL contractsFinalisation of terms for Gamudas toll roadprivatisationFinalisation of MAVCOMs RABframeworkDecisionontheextensionofHomeOwners

33、hipCampaign -NewTobaccoControlandSmokingAct Q220-DetailsoftheB20implementationinMalaysiain2021 -PenangTransportMasterplancallfortendersQ420- WACC for RP3 (which starts 2021) forTenagaEnergyCommissiontopublishnewrules/draftamendmentstocurrent regulationstoopenuppowergenerationfuelsourcingunderMESI2.0

34、Allocationof700MHz,2.3GHzand2.6GHzspectrumtomobile networksBudget 2021Source: MinistryofFinanceBudgetdataSource: UBS, various newsportalsFigure 13: Theme #3: Corporate self-help some corporatesaretakingtheleadincuttingcosts More self-help14.0%12.0%10.0%8.0%6.0%4.0%2.0%0.0%IndustrialsFinancialsCons.S

35、taplesHealth CareMaterialsEnergyTelcosCons.IndustrialsFinancialsCons.StaplesHealth CareMaterialsEnergyTelcosCons.Disc.UtilitiesFigure 14: We forecast FBM KLCI target of 1,680 for year- end 2020, driven by 16x PE, 5% two-year earnings CAGR 20182019E2020E2021EKLCI target1,6911,568*1,680-EPS growth, %

36、YoY-1.9-2.920182019E2020E2021EKLCI target1,6911,568*1,680-EPS growth, % YoY-1.9-Policy rate, % (year-end)3.253.002.503.00CPI inflation, % YoY (average)1.0CPI inflation, % YoY (year-end)2.2USD/MYR (year-end)4.144.304.054.00Source:ReutersNote:*ActualFBMKLCIpricelevelasof6December2019.Source: CEIC, Hav

37、er, UBS estimatesMalaysiaStrategyUBS ResearchPIVOTALQUESTIONSreturn Q: How will earnings growth for the market develop in 2020?UBS VIEWWe forecast earnings growth of 6.6% and 8.0% in 2020 and 2021, respectively. Although there is some downside risk to earnings, especially in the early part of 2020,

38、we expect earnings to pick up in H220. We expect a bottoming of economic growth in Q220, higher crude palm oil (CPO) prices, and an improvement in exports to support an earnings recovery.EVIDENCEEarnings are on a low base earnings declined at a 2.0% CAGR over 2013- 18; consensus expects a further 6.

39、4% decline in 2019; and consensus has alreadydowngraded2020earningsby12%YTD.UBSforecastsc20%higher average CPO prices in 2020 than 2019; and oil prices to remain stable at around the current level of US$63.5/bbl. Some consumer, telcos and energy companies have been cutting costs with SG&A growth slo

40、wer than revenue growth;andhaveannouncedtheirintentionstocutcostsandcapex.WHATS PRICED IN?Malaysias PE premium relative to the region has now fallen to below itsfive- year average. We believe that expectations are currently low and we do not believethemarkethasfullypricedinapotentialearningsgrowthre

41、covery.We forecast 6.6%/8.0% earnings growth in 2020/210.1%8%0.1%8%0.0%0%8%0%Real Estate0.1%6%0.2%7%6%7%EnergyLow base in 2019 due to gaming tax hike, 2020 should see some cost cutting measures coming throughGenting, GenM (+)6%0.8%0.4%5%4%-4%Consumer DiscretionaryIHH narrowing losses at Gleneagles H

42、ong KongIHH (+)0.7%24%0.5%17%18%22%Health CarePetChemlowbasein2019frommaintenanceshut downs,expectbettermarginsin2020PetChem, Press Metal* (+)1.0%16%0.6%9%10%13%MaterialsTenaga, YTL Corp* (+)0.5%4%0.3%3%1%3%UtilitiesAirAsia from a low base;MAHBfromimplementationofRABframeworkwhichwill increasepretax

43、 ROICto10.9%vs9.5%in2018Sime Darby global cyclical recoveryMISC*, AirAsia, MAHB, Sime Darby (+)0.9%9%1.2%13%8%10%IndustrialsTelekomMalaysia,Axiata(-)4%0.5%-0.9%-11%6%4%Communication ServicesHigher average CPO pricesSD Plantation, IOI, KLK (+)0.9%10%2.3%31%8%30%Consumer StaplesUpside from increased F

44、DI and DDI in MalaysiaCIMB, Maybank (+)2.8%7%2.2%5%6%4%Financials8.0%6.6%6.2%7.0%MalaysiaCommentsGrowth 2021 attributionGrowth 2020 attribution202120202020 earnings driversConsensusNote:*Consensusestimatedearningsgrowthforthesecompaniesidentifiedasearningsdrivers. Source: Reuters, UBSestimatesFigure

45、 16: MSCI Malaysia earnings have declined at a 2.0% CAGR (2013-18)35%30%25%20%15%10%5%0%-5%201120122013201420152016201720182019E2020E2021E-10%201120122013201420152016201720182019E2020E2021EMSCI Malaysias earnings have declined at a 2.0% CAGR (2013- 18). This is despite a 3.4% CAGR in revenue (2013-1

46、8)ActualUBSeConsensusSource: Reuters Datastream, UBS estimatesFigure 17: Consensus earnings downgrades by sectorWhat were the key downgrade areas in 2019?The downgrades were mainly in materials, consumer staples, healthcare, industrials and utilitiesConsensus 2019 earningsConsensus 2019 earningsgrow

47、thestimatesYTDSector Malaysia FinancialsConsumer staplesCommunication services IndustrialsUtilities Materials HealthcareConsumer discretionary EnergyReal estate5.4%4.4%28.8%27.8%18.5%13.0%-4.7%9.0%Q119Q219Q319Latest change Main drivers 2.0%-1.8%-5.0%-6.4%3.3%-0.1%-2.1%-2.4%22.8%7.2%-5.2%-6.0%22.0% 2

48、4.2% 23.0% 20.3%8.5%6.8%3.8%0.4%3.1%1.5%1.4%0.8%-7.9% -17.3% -28.6% -35.3%7.0%3.0%-4.3%-8.8%-29.7% -24.9% -27.7% -22.4% -23.1%20.6% 13.5% 18.3%8.5% 10.8%-59.3% -58.1% -54.5% -57.9% -57.3%-11%-7% (-) CIMB, Maybank, PBB-27% (-)KLK,IOI,SDP,GENP,BAT-6% (-) Axiata, Maxis (+) TM-15% (-) AirAsia, IJM, MAHB

49、-11% (-) Tenaga, YTL-32% (-) Pchem, Press Metal-16% (-) TopGlove,Hartalega 9% (+)GENM-8% (-)PetDag5% (-) SP SetiaFigure 18: Progression of consensus bottom-up EPS forecasts for Asia ex-JapanFigure 19: Progression of consensus bottom-up EPS forecasts for MalaysiaEPS 75.070.065.060.055.050.045.0Jan-17

50、Apr-1740.0Jan-17Apr-17EPS 50.048.046.044.042.040.038.036.034.0Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-1932.0Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19201720182019202020212017201820

51、1920202021Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Source: ReutersDatastreamSource: Reuters DatastreamMalaysiaStrategyUBS ResearchPIVOTALQUESTIONSreturn Q: What could change confidence in the market?UBS VIEWSome of the key factors that could boost confidence in the market next yea

52、r include: a recovery of the external environment, Malaysias ability to capture shareinthesupplychainrelocationstory,andthepaceofdomesticstructural reform and policy implementation. By contrast, any form of politicalinstability would be a risk to confidence in the market.EVIDENCEFDIapprovalsintoMala

53、ysiahaveincreased169%in2018and65%inH119. Webelievethegovernmenthasfiscalroomandsomefiscalstimuluspackage is possible. The government is projecting a slightly wider fiscal deficit than planned to support growth. However, in terms of policy implementation, we think the market is still waiting for clar

54、ity on certain measures previously announced by the government.WHATS PRICED IN?Malaysias PE premium relative to the region has now fallen to below itsfive- year average. We believe that expectations are currentlylow.Figure20:FDIapprovalstoMalaysiahaveincreased169% in 2018 and 65% in1H19RM 4035302520

55、15105Q117Q217Q317Q417Q118Q218Q318Q418Q119Q219Q3190Q117Q217Q317Q417Q118Q218Q318Q418Q119Q219Q319Figure21:Relativetotheregion,FDIapprovalsin Malaysiaareveryhighrelativetoitsownhistory4Q4QRollingASEAN: InvestmentApprovalsSum 2015=100(Manufacturing)0Foreignapprovedinvestment-manufacturingMalaysiaThailand

56、VietnamPhilippines 2013-18avg.1H172H171H182H18Source:CEICSource: CEIC, HaverFigure 22: Potential key signposts to look for in 2020PeriodKeysignpostsQ120- Award of ECRL contractsFinalisation of terms for Gamudas toll road privatisationFinalisation of MAVCOMs RAB frameworkDecision on the extension of

57、Home OwnershipCampaignNew Tobacco Control and Smoking ActQ220- Details of the B20 implementation in Malaysia in2021PenangTransportMasterplancallfortendersQ420-WACCforRP3(whichstarts2021)forTenagaEnergyCommissiontopublishnewrules/draftamendmentstocurrentregulations toopenuppowergenerationfuelsourcing

58、undertheMESI2.0initiativesAllocation of 700MHz, 2.3GHz and 2.6GHz spectrum to mobilenetworksBudget 2021Source: UBS, various news portalsNo deterioration in external environment: oil prices and tradeFigure23:Brentcrudeoilprice(US$/bbl)Figure 24: Sensitivity to Asian growth to slowerG3growth85 S$/bbl6

59、0Value60ValueaddedexportstoGDP(2014)(lhs)50Beta to acceleration/deacceleration in G3 GDP since 2000 (rhs)40303.53.02.52.01.5201001.00.50.02020E: US$63.50/bbl 2021E:US$67.00/bbllong term:US$70.00/bbl65554535Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20SingaporeTaiwanHKMalaysiaThailandKoreaPhilippinesIndonesia

60、IndiaVietnam25Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20SingaporeTaiwanHKMalaysiaThailandKoreaPhilippinesIndonesiaIndiaVietnamSource:Reuters,UBSestimatesNote: In addition to the low level of the beta, the R-squared for the Indian, IndonesianandVietnamesebetasarealsolow.Thissignalsthepoorexplanatory power