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DJ Global Equities Roundup: Market Talk

· 02/07/2021 23:05

The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.

0405 GMT - Secom Co.'s current valuation looks more attractive than its international peers, supported by its solid cash flow, Jefferies says. Sales of the company's security business rose in 3Q, recovering from the Covid-19 pandemic, and Jefferies expects Secom's contracts for electronic security to increase gradually. The U.S. bank maintains a buy call and raises its target price to Y11,700 from Y11,500. Shares rise 5.5% to Y10,155. (justina.lee@wsj.com)

0400 GMT - China Longyuan Power's valuation looks overdone after a recent rally, which has likely priced in most of the stock's positive catalysts, Citi says. The bank keeps the comany rated as sell with a target of HK$9.80. While the wind power producer's gross generation volume grew 48% in January, Citi reckons that isn't enough to justify Longyuan's 16x price-to-earnings ratio. Moreover, the sentiment boost from Longyuan's upcoming A-share listing has likely been fully priced in as well. The bank also notes Longyuan's relatively low return-on-equity rate of 9.8%. Shares are up 4.4% at HK$12.94. (yifan.wang@wsj.com)

0356 GMT - Medibank's acquisition of a non-controlling, 33.5% stake in Myhealth Medical Group for A$63 million will initially have small financial implications for the Australian private health insurer, but strategically offers much more, Macquarie says. The deal gives Medibank general practitioner's access to surgical data that may improve patient outcomes, could lower claims costs and potentially exert downward pressure on private health insurance pricing for customers in the long term. Macquarie forecasts MyHealth's FY 2021 Ebitda at A$21 million. "The acquisition will be equity accounted with Medibank's share of Myhealth flowing into the Medibank Health operating segment." Medibank falls 1.8% to A$2.97. (alice.uribe@wsj.com)

0349 GMT - Thailand's bank sector has likely emerged from the "double bottom" of a couple of structural factors and a cyclical downgrade, Thanachart Securities says, upgrading the sector's rating to overweight from underweight. The structural factors--higher coverage ratio base and higher cost cycle--have likely passed their worst. The hit from Covid-19 also appears to be over for the sector as seen from their lower provisioning and the country's economic turnaround. Siam Commercial Bank and Kiatnakin Phatra Bank are the top stock plays on this story, the brokerage says, raising the target price for Siam to THB112.00 from THB83.00 and Kiatnakin to THB70.00 from THB47.00. It retains a buy rating for both. (ronnie.harui@wsj.com)

0344 GMT - Inventec Corp.'s near-term earnings are likely to be supported by stable notebook and server demand, Citi Research says, as it maintains a buy call on the stock. Product diversification into the internet-of-things and medical space over the longer term could also help the notebook maker's profit margins. However, the U.S. bank cuts its forecast for Inventec's 2021 EPS by 10% and its target price to NT$25.70 from NT$29.00, citing less economies of scale as it gradually exits the AirPods assembly business. Shares slip 0.4% to NT$23.15.(justina.lee@wsj.com)

0343 GMT - Ping An Healthcare & Technology can keep spurring earnings growth by positioning itself to be a leader in online medical devices amid a rise in the popularity of online consultations, UOB Kay Hian says. Ping An Healthcare plans to increase its investment in online medical devices in the next 2-3 years, putting it on track to become an industry giant. The healthcare provider has also been upgrading its online and offline channels as part of its aggressive market expansion. UOB expects the company to generate nearly 33% CAGR growth in revenue for 2020-2022. It raises the stock's target price to HK$140.00 from HK$122.00 and keeps its buy rating. Shares are down 4.1% to HK$100.50. (yiwei.wong@wsj.com)

0338 GMT - Telekom Malaysia's 2020 earnings may exceed management guidance as demand for broadband continues to rise in the Southeast Asian country amid the prolonged Covid-19-related lockdown, CGS-CIMB says. It forecasts 2020 earnings before interest and tax to touch MYR1.7 billion, versus the management's guidance range of between MYR1.3 billion and MYR1.5 billion. The Malaysian telco giant is expected to release its results on February 24. The brokerage raises the stock's target price to MYR7.00 from MYR5.60 and maintains an add rating. Shares are up 2.7% at MYR6.47. (chester.tay@wsj.com)

0326 GMT - Zoomlion Heavy Industry's sales growth may outperform the sector in FY 2021 on higher demand, Citi Research says. The construction-machinery maker expects sales of its concrete-machinery segment to rise 30%, its truck-crane segment to gain 25% and its tower-crane segment to increase 55%-60% in FY 2021, Citi says. The company also aims to stabilize or improve its segments' gross profit margins, helped by cost-control efforts which could save around CNY700 million in the financial year. Citi maintains a HK$10.24 price target at a buy rating for Zoomlion's H-shares, which jump 12% to HK$12.64.(justina.lee@wsj.com)

0326 GMT - China MeiDong Auto will likely engage in M&A in 1Q, given the prevailing industry trends in China's luxury car market in recent months as dealers step up their expansion efforts, Citi says. The bank keeps the stock rated a buy with a HK$40 target. The company would likely focus its M&A on enhancing its exposure to more high-performing luxury car brands, Citi says, projecting the deal to boost investor sentiments. MeiDong's precise data-driven management approach and strong efficiency are another positive. The bank also likes MeiDong's robust dividends, which would likely be 90% of free cash flow. (yifan.wang@wsj.com)

0310 GMT - The financial sector in Hong Kong's stock market could outperform other industries this week, thanks to rising U.S. Treasury yields and stronger links between Hong Kong's and China's financial markets, KGI Securities says. The recent rise in U.S. Treasury yields is a sign of funds flowing out of the Treasury market, which means more funding could go into bank loans, supporting lenders' net interest margin and interest income. Moreover, the latest development in the Wealth Management Connect program between Hong Kong, Macau and Guangdong is another positive that could boost investor sentiment on the sector, KGI adds. Its top picks include AIA Group, BOC Hong Kong and HSBC. (yifan.wang@wsj.com)

0306 GMT - Thai Beverage could gain from the potential spinoff of its beer business, Nomura says. The beverage company has recently said it plans to spin off and list up to 20% of its stake in BeerCo, a wholly owned subsidiary. The move would benefit Thai Beverage shareholders and improve the Singapore-listed brewer's financial position, enabling it to repay debt with the proceeds, Nomura says. The Japanese investment bank says maintains a buy call and target price of S$0.90 on Thai Beverage's shares, which are trading 1.8% higher at S$0.84. (yiwei.wong@wsj.com)

0304 GMT - Singapore banks could report another quarter of on-year earnings declines in 4Q, Daiwa Capital says. It doesn't expect much gain in the banks' trading income during the quarter despite some signs of improved global market sentiment. Daiwa says there should be "no surprises" in the banks' dividend per share, expecting DBS's 4Q DPS at S$0.18, and OCBC and UOB's 2H DPS at S$0.16 and S$0.39, respectively. Daiwa maintains a positive rating on Singapore banks and chooses OCBC as its top pick, citing its attractive valuation. Shares of DBS are up 1.7%, while OCBC and UOB are each 0.6% higher. (justina.lee@wsj.com)

(END) Dow Jones Newswires

February 07, 2021 23:05 ET (04:05 GMT)

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