Deutsche Bank Markets Research Global Periodical CEEMEA & Latam Daybook Date 10 November 2017 Friday,10 November 2017 ________________________________________________________________________________________________________________ Deutsche Bank AG/London Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, 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 in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. Pascal Moura Head of Research (+971) 4 4283-864 [email protected]Mairead Smith Equity Focus (+44) 20 754-71054 [email protected]CEEMEA Companies COMPANY UPDATE CIB Alert (Hold, TP EGP73.00) - Q3-17 review: EPS beat on stronger margins despite lower loan growth Cyfrowy Polsat (Hold, TP PLN28.00) - 3Q: weak quarter as it was expected Enka Insaat Alert (Hold, TP TRY5.70) - 3Q17: in line; operational performance supportive, Hold Moscow Exchange Alert (Buy, TP RUB185.00) - 3Q17 first look: results in line, good fees dynamics OTE Alert (Buy, TP EUR12.90) - Q3 Rev & EBITDA broadly in line vs. Cons/DBe; Adj. FCF Outlook d/g SECTOR UPDATE SA Company Results Diary - 13-17 November 2017 (FY17: SPP; 1H18: BAT, INL, MEI, VOD) LATAM Companies TARGET PRICE CHANGE Lojas Renner (Hold, TP BRL34.00) - Updating estimates on 3Q17 results COMPANY UPDATE Azul S.A. (Buy, TP USD31.00) - Record Sep Q operating margin; raising 2017 forecast Azul S.A. Alert (Buy, TP USD31.00) - Better-than-expected Sep Q results Banco do Brasil (Buy, TP BRL39.00) - 3Q17 recovery appears on track Bolsa Mexicana (Buy, TP MXN45.00) - October volume trends running ahead of our 4Q17 forecast YPF Sociedad Anonima - 3Q17: Weak Quarter Came in Above Our Ests.; Positioned for a Better 4Q SECTOR UPDATE Metals & Mining Alert - Daily prices and news: Gold demand declines to 8-year low in 3Q17 STRATEGY EM Monthly - Emerging Markets and the Global Economy in the Month Ahead European Equity Strategy - Q3 earnings: growth slows to single-digits, as FX strength weighs EMEA Snap - Hungary and Czech Republic: Divergent VALUATION CEEMEA and Latam valuation tables Stock Performance(US$)–Gainers & Losers (CEEMEA) Top 10 Ticker Price %Chg Dar Al Arkan ALARKAN AB 2.4 9.8 Alhokair ALHOKAIR AB 8.4 5.3 Sberbank SBER RX 3.7 5.1 TCS TCS LI 19.2 3.8 Saudi British Bank SABB AB 6.9 3.3 Erdemir EREGL TI 2.5 3.3 Al Tayyar ALTAYYAR AB 7.1 3.2 Moneta Money Bank MONET CP 3.6 3.1 Dana Gas DANA UH 0.2 2.8 X5 Retail Group FIVE LI 41.1 2.2 Bottom 10 Ticker Price %Chg CCC CCC PW 68.1 -6.1 Alexander Forbes AFH SJ 0.5 -4.1 RAKBANK RAKBANK UH 1.3 -4.0 Magnitogorsk Steel MMK LI 9.8 -3.9 Drake & Scull DSI DB 0.5 -3.8 Pioneer PFG SJ 8.2 -3.7 Brait BAT SJ 3.3 -3.7 Severstal SVST LI 14.8 -3.6 Clicks Group Ltd CLS SJ 10.9 -3.3 Arabtec Holding ARTC DB 0.8 -3.1 Stock Performance(US$)–Gainers & Losers (LATAM) Top 10 Ticker Price %Chg Cencosud CENCOSUD CI 3.0 0.3 Falabella FALAB CI 9.6 0.3 Almacenes Exito EXITO CB 5.5 0.1 Gentera GENTERA* 1.0 0.0 Soriana SORIANAB 2.1 0.0 Grupo Aeromexico AEROMEX* 1.6 0.0 Megacable MEGACPO 4.2 0.0 Arca Continental AC* MM 6.6 0.0 Kimberly-Clark de KIMBERA MM 1.8 0.0 Banorte GFNORTEO 6.0 0.0 Bottom 10 Ticker Price %Chg Grupo Bimbo BIMBOA MM 2.3 -0.7 Cia Hering HGTX3 BS 8.6 -0.2 Natura NATU3 BS 9.1 -0.2 Petrobras PETR4 BS 5.2 -0.2 B2W BTOW3 BS 5.8 -0.2 Petrobras PETR3 BS 5.4 -0.2 Lojas Americanas LAME4 BZ 4.9 -0.2 Multiplus MPLU3 BZ 10.9 -0.2 Minerva BEEF3 BS 3.4 -0.2 Banco do Brasil BBAS3 BS 10.2 -0.2 Source::Bloomberg Finance LP Distributed on: 10/11/2017 05:18:56 GMT 0bed7b6cf11c
41
Embed
CEEMEA & Latam Daybookpg.jrj.com.cn/acc/Res/CN_RES/INVEST/2017/11/10/4630cd86...Deutsche Bank Markets Research Global Periodical CEEMEA & Latam Daybook Date 10 November 2017 Friday,10
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Deutsche Bank Markets Research
Global Periodical
CEEMEA & Latam Daybook
Date 10 November 2017
Friday,10 November 2017
________________________________________________________________________________________________________________ Deutsche Bank AG/London
Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, 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 in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017.
COMPANY UPDATE Azul S.A. (Buy, TP USD31.00) - Record Sep Q operating margin; raising 2017 forecast Azul S.A. Alert (Buy, TP USD31.00) - Better-than-expected Sep Q results Banco do Brasil (Buy, TP BRL39.00) - 3Q17 recovery appears on track Bolsa Mexicana (Buy, TP MXN45.00) - October volume trends running ahead of our 4Q17 forecast YPF Sociedad Anonima - 3Q17: Weak Quarter Came in Above Our Ests.; Positioned for a Better 4Q
SECTOR UPDATE Metals & Mining Alert - Daily prices and news: Gold demand declines to 8-year low in 3Q17
STRATEGY EM Monthly - Emerging Markets and the Global Economy in the Month Ahead European Equity Strategy - Q3 earnings: growth slows to single-digits, as FX strength weighs EMEA Snap - Hungary and Czech Republic: Divergent
VALUATION CEEMEA and Latam valuation tables
Stock Performance(US$)–Gainers & Losers (CEEMEA) Top 10 Ticker Price %Chg
Dar Al Arkan ALARKAN AB 2.4 9.8 Alhokair ALHOKAIR AB 8.4 5.3 Sberbank SBER RX 3.7 5.1 TCS TCS LI 19.2 3.8 Saudi British Bank SABB AB 6.9 3.3 Erdemir EREGL TI 2.5 3.3 Al Tayyar ALTAYYAR AB 7.1 3.2 Moneta Money Bank MONET CP 3.6 3.1 Dana Gas DANA UH 0.2 2.8 X5 Retail Group FIVE LI 41.1 2.2
Bottom 10 Ticker Price %Chg CCC CCC PW 68.1 -6.1 Alexander Forbes AFH SJ 0.5 -4.1 RAKBANK RAKBANK UH 1.3 -4.0 Magnitogorsk Steel MMK LI 9.8 -3.9 Drake & Scull DSI DB 0.5 -3.8 Pioneer PFG SJ 8.2 -3.7 Brait BAT SJ 3.3 -3.7 Severstal SVST LI 14.8 -3.6 Clicks Group Ltd CLS SJ 10.9 -3.3 Arabtec Holding ARTC DB 0.8 -3.1
Stock Performance(US$)–Gainers & Losers (LATAM) Top 10 Ticker Price %Chg
Cencosud CENCOSUD CI 3.0 0.3 Falabella FALAB CI 9.6 0.3 Almacenes Exito EXITO CB 5.5 0.1 Gentera GENTERA*
1.0 0.0
Soriana SORIANAB
2.1 0.0 Grupo Aeromexico AEROMEX*
1.6 0.0
Megacable MEGACPO
4.2 0.0 Arca Continental AC* MM 6.6 0.0 Kimberly-Clark de
KIMBERA MM 1.8 0.0
Banorte GFNORTEO
6.0 0.0
Bottom 10 Ticker Price %Chg Grupo Bimbo BIMBOA MM 2.3 -0.7 Cia Hering HGTX3 BS 8.6 -0.2 Natura NATU3 BS 9.1 -0.2 Petrobras PETR4 BS 5.2 -0.2 B2W BTOW3 BS 5.8 -0.2 Petrobras PETR3 BS 5.4 -0.2 Lojas Americanas LAME4 BZ 4.9 -0.2 Multiplus MPLU3 BZ 10.9 -0.2 Minerva BEEF3 BS 3.4 -0.2 Banco do Brasil BBAS3 BS 10.2 -0.2
Source::Bloomberg Finance LP
Distributed on: 10/11/2017 05:18:56 GMT
0bed7b6cf11c
CE
EM
EA
& Latam
Dayb
oo
k
10
No
vemb
er 20
17
Pag
e 2 D
eutsch
e Ban
k AG
/Lon
do
n
Russia / CIS LatamGeorge Buzhenitsa Metal & Mining +971 4 361 1734 Ryan Todd Oil & Gas +1 212 250 8342Ivan Kachkovski Banks/Financials +44 207 5411735 Xavier Marchand Building materials +44 207 545 1400Pavel Kushnir Oil & Gas +971 4 361 1732 Chris Terry Metals & Mining +1 212 250 5434Masha Kahn TMT +1 212 250 9619 Tito Labarta Financials/Banks +1 212 250 5944Marc Hammoud Healthcare +971 4 4283910 Joana Barros-Magalhaes Financials/Banks +1 212 250 1002Tomasz Krukowski Consumer +48 22 579 8732 Michael Linenberg Airline +1 212 250 9254Aleksandar Stojanovski Transport +971 4 361 1786Lloyd Walmsley Internet +1 212 250-7063 Marcel Moraes Retail +1 904 271-2470
Emerging EMEA/Latam ResearchHead of Company Research Pascal Moura +971 44283864
Source: Deutsche Bank
10 November 2017
CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 3
ASIAN MARKET TOP STORIES NCSOFT (036570.KS, Buy) – Fear cycle kicking in; buy the dip (Han Joon Kim) http://pull.db-gmresearch.com/p/820-B744/66620213/c5b584ba-0484-484c-bd1a-d586128846f1_604.pdf Asia Internet – Mobile messaging: between disillusionment and enlightenment (Han Joon Kim) http://pull.db-gmresearch.com/p/829-81B6/68469811/f949e619-7383-4aa0-84a7-1bfd53f32295_604.pdf Shiseido (4911.T, Buy) – Preemptive investments and reforms paying off stronger than expected (Jihyun Song) http://pull.db-gmresearch.com/p/238-42C7/72936148/0900b8c08dce007c.pdf
RECOMMENDATION CHANGES NHPC (NHPC.BO, Buy) – Results good despite Teesta shutdowns- u/g to Buy (Abhishek Puri) http://pull.db-gmresearch.com/p/546-604F/70153447/8269033b-da5a-4c88-8ebf-895f5966e442_604.pdf
ESTIMATES AND TARGET PRICE CHANGES China SCE (1966.HK, Buy) – Sales to accelerate in 2018F; 30% earnings CAGR implies low valuation (Stephen Cheung) http://pull.db-gmresearch.com/p/813-E7EE/69205470/0900b8c08da3abaa.pdf INPEX (1605.T, Buy) – 1H FY3/18 Briefing - Ichthys in commissing (John Hirjee) http://pull.db-gmresearch.com/p/728-05FB/67710030/0900b8c08dcde004.pdf Press Kogyo (7246.T, Buy) – 2Q results: Raising forecasts in light of guidance hike; reiterate Buy (Takeshi Kitaura) http://pull.db-gmresearch.com/p/530-BEC6/62478189/0900b8c08dccb002.pdf S Foods (2292.T, Buy) – Raising TP to reflect steak popularity (Junichi Shimizu) http://pull.db-gmresearch.com/p/242-B014/65913474/0900b8c08dc27e2e.pdf Goodman Group (GMG.AX, Hold) – 1Q18 Update; guidance reaffirmed despite fall in WACD (Emily Smith) http://pull.db-gmresearch.com/p/609-82D4/64851196/0900b8c08dcc7ea5.pdf Goodman Property Trust (GMT.NZ, Hold) – Portfolio repositioning accelerated (Joshua Dale) http://pull.db-gmresearch.com/p/247-E80D/63983404/0900b8c08dc91f24.pdf James Hardie Industries (JHX.AX, Buy) – Q2FY18 result: FY19 well positioned for volume and margin improvement (Emily Smith) http://pull.db-gmresearch.com/p/499-1196/67096614/0900b8c08dcc2d58.pdf Santos (STO.AX, Buy) – STO Investor Day - Positioning for growth (John Hirjee) http://pull.db-gmresearch.com/p/870-9E89/68753535/0900b8c08dcd1f07.pdf Xero (XRO.NZ, Hold) – Hello, goodbye (Stephen Ridgewell) http://pull.db-gmresearch.com/p/265-D65C/67991786/0900b8c08dcbbabd.pdf Emart (139480.KS, Buy) – Online profitability improvement and restructuring effects to kick in (Jihyun Song) http://pull.db-gmresearch.com/p/834-0224/71065981/0900b8c08dcd8c5e.pdf HTC (2498.TW, Sell) – Another quarter of disappointment (Birdy Lu) http://pull.db-gmresearch.com/p/607-3285/67991258/0900b8c08dcdb4ca.pdf Pegatron (4938.TW, Hold) – 3Q17 EPS missed on weak margin; trimming target price (James Chiu) http://pull.db-gmresearch.com/p/601-B90F/68975078/0900b8c08dcc0380.pdf Ashok Leyland Ltd (ASOK.BO, Buy) – Results miss consensus margin expectations; we remain +ve on growth (Amyn Pirani) http://pull.db-gmresearch.com/p/549-015F/65323244/a5df065d-53a7-459d-9679-7c7693c21dca_604.pdf Indraprastha Gas – Robust volume growth continues (Harshad Katkar) http://pull.db-gmresearch.com/p/601-A72F/69906012/b7507eb6-c488-11e7-bf02-2d390be1d4c2_604.pdf Thermax Limited (THMX.BO, Hold) – Improving at the margin… (Abhishek Puri) http://pull.db-gmresearch.com/p/515-1E07/66850133/e0d0f3fd-4466-48a8-adc4-5fe2b40f7b5a_604.pdf Keppel Corp Ltd – Improving prospects on four key fronts (Joshua Lee) http://pull.db-gmresearch.com/p/532-BC93/72026821/1515212d-0a18-4368-b80d-5f527792d716_604.pdf Bangkok Life Assurance (BLA.BK, Hold) – 3Q17A: likely the bottom (Peach Patharavanakul) http://pull.db-gmresearch.com/p/719-EEDC/68118268/0900b8c08dcdd707.pdf
MACRO/STRATEGY DBDaily – Equities weaker as Senate confirms intention to delay corporate tax cut… (Ken Crompton) http://pull.db-gmresearch.com/p/9273-B083/72637422/DB_DbDailyAPAC_2017-11-09_5b5200f6-c4cb-11e7-bf02-2d390be1d4c2_604.pdf
10 November 2017
CEEMEA & Latam Daybook
Page 4 Deutsche Bank AG/London
MACRO/STRATEGY Dollar Bloc Weekly – 9 November 2017. (Adam Boyton) http://pull.db-gmresearch.com/p/3090-9994/63632932/DB_DollarBlocWkly_2017-11-09_f95e4872-bf85-11e7-a788-17efe23f6f57_604.pdf Data Flash – Japan: September machinery orders (Mikihiro Matsuoka) http://pull.db-gmresearch.com/p/728-7AB2/63865568/DB_DataFlash_2017-11-09_0900b8c08dcaf1f2.pdf FX Blog – Alpha Alert - Nikkei/FX when equity/bond correlation breaks down (Alan Ruskin) http://pull.db-gmresearch.com/p/380-7043/68619184/56848ba6-c463-478b-bb3e-8819401e2856_604.pdf Global Financial Strategy – What caused the big swing in Japan today? Volatility-targeting strategy (Masao Muraki) http://pull.db-gmresearch.com/p/797-4377/72391610/0900b8c08dcda484.pdf Japan FX Insights – JPY: October international securities flow (Taisuke Tanaka) http://pull.db-gmresearch.com/p/1010-4DEA/65617783/DB_DEJAViewFX_2017-11-09_a013a828-83ea-4538-8992-efab91058291_604.pdf Data Flash (New Zealand) – RBNZ OCR review and November MPS (Ken Crompton) http://pull.db-gmresearch.com/p/852-A72B/62558023/79837fbc-698b-44a2-84cc-eaa374e86cc9_604.pdf India Economics Weekly – Special: Oil on the boil - stress testing India’s macro indicators (Kaushik Das) http://pull.db-gmresearch.com/p/13303-9899/70055514/DB_IndiaEconWkly_2017-11-09_4a738ad8-c2ec-11e7-bf02-2d390be1d4c2_604.pdf European Equity Strategy – Q3 earnings: growth slows to single-digits, as FX strength weighs (Wolf von Rotberg) http://pull.db-gmresearch.com/p/5419-F41D/64462401/Strategy_Snapshot.pdf
HONG KONG / CHINA Bright Scholar (BEDU.N, Buy) – Long-term growth still solid; Buy (Alvin Jiang) http://pull.db-gmresearch.com/p/1008-30FB/70355279/0900b8c08dc62255.pdf China Gas Holdings (0384.HK, Hold) – Signing an MOU with US LNG exporter to diversify gas sources (Hanyu Zhang) http://pull.db-gmresearch.com/p/768-7091/68945327/d8b3038c-83d4-441d-bc91-384cd06c6a34_604.pdf China Rail Sector – Diverging outlook, diverging stocks (Sky Hong) http://pull.db-gmresearch.com/p/698-9C1A/69340351/1cb610f0-a219-4827-a61b-1ce9a55fc2d9_604.pdf Galaxy (0027.HK, Hold) – 3Q in-line; VIP strong but mass just so so (Karen Tang) http://pull.db-gmresearch.com/p/879-AF2E/63511965/2d94c750-c36f-11e7-bf02-2d390be1d4c2_604.pdf
JAPAN Bridgestone (5108.T, Hold) – 3Q initial impression – Surprises with downgrade (Kurt Sanger) http://pull.db-gmresearch.com/p/654-F4FD/67186047/0900b8c08dcd501d.pdf Cookpad (2193.T, Hold) – Results comment: challenging conditions (Takahiro Kazahaya) http://pull.db-gmresearch.com/p/227-9ECC/68853084/0900b8c08dcdebde.pdf Daiwa House Industry (1925.T, Hold) – 2Q results: neutral first impression (Yoji Otani) http://pull.db-gmresearch.com/p/260-9EDB/65790806/0900b8c08dcd7c73.pdf Life insurance sector – 1H preview for 4 lifers: Progress rate, new policies, premium cut in 2018 (Masao Muraki) http://pull.db-gmresearch.com/p/560-7EC5/71741404/0900b8c08dcc1881.pdf Mizuho FG (8411.T, Hold) – Restructuring of retail operations (Yoshinobu Yamada) http://pull.db-gmresearch.com/p/542-23E6/64252604/0900b8c08dcd3da8.pdf MUFG (8306.T, Buy) – MUFG seeks 40% stake in Danamon: Good even as pure investment (Yoshinobu Yamada) http://pull.db-gmresearch.com/p/545-FB5E/65247463/0900b8c08dcd47fa.pdf Pioneer (6773.T, Hold) – Results comment: 2Q earnings in line with guidance (Hiroshi Taguchi) http://pull.db-gmresearch.com/p/533-141B/67351968/0900b8c08dcdcf8e.pdf Real estate sector – Real estate shares’ recent rise just trying to play catch-up (Yoji Otani) http://pull.db-gmresearch.com/p/261-35A7/65335420/0900b8c08dcd8dfc.pdf Skylark (3197.T, Buy) – 3Q results and October sales (Junichi Shimizu) http://pull.db-gmresearch.com/p/244-65F7/66804649/0900b8c08dc4db69.pdf SUMCO (3436.T, Buy) – Higher wafer demand forecasts likely to prompt rise in valuations (Yu Yoshida) http://pull.db-gmresearch.com/p/250-932E/67958837/0900b8c08dcddc40.pdf Sumitomo Forestry (1911.T, Hold) – Neutral 2Q results; acquisition of Kumagai Gumi shares a surprise (Yoji Otani) http://pull.db-gmresearch.com/p/259-826E/66805351/0900b8c08dcd3751.pdf
10 November 2017
CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 5
JAPAN Suruga Bank (8358.T, Buy) – Loan-deposit spread for 2Q flat QoQ (Yoshinobu Yamada) http://pull.db-gmresearch.com/p/536-45EC/66400674/0900b8c08dcd7fc3.pdf Sysmex (6869.T, Buy) – Takeaways from management meeting (Jack Hu) http://pull.db-gmresearch.com/p/1021-0037/68933958/b3b54236-04ba-4a12-8ae1-31c3a33e4cd3_604.pdf Tokyu Fudosan Holdings (3289.T, Hold) – 2Q results: neutral first impression (Yoji Otani) http://pull.db-gmresearch.com/p/258-B3F4/67061443/0900b8c08dcd379a.pdf
AUSTRALIA Bridgestone (5108.T, Hold) – 3Q initial impression – Surprises with downgrade (Kurt Sanger) http://pull.db-gmresearch.com/p/654-F4FD/67186047/0900b8c08dcd501d.pdf Cookpad (2193.T, Hold) – Results comment: challenging conditions (Takahiro Kazahaya) http://pull.db-gmresearch.com/p/227-9ECC/68853084/0900b8c08dcdebde.pdf Daiwa House Industry (1925.T, Hold) – 2Q results: neutral first impression (Yoji Otani) http://pull.db-gmresearch.com/p/260-9EDB/65790806/0900b8c08dcd7c73.pdf Life insurance sector – 1H preview for 4 lifers: Progress rate, new policies, premium cut in 2018 (Masao Muraki) http://pull.db-gmresearch.com/p/560-7EC5/71741404/0900b8c08dcc1881.pdf Mizuho FG (8411.T, Hold) – Restructuring of retail operations (Yoshinobu Yamada) http://pull.db-gmresearch.com/p/542-23E6/64252604/0900b8c08dcd3da8.pdf MUFG (8306.T, Buy) – MUFG seeks 40% stake in Danamon: Good even as pure investment (Yoshinobu Yamada) http://pull.db-gmresearch.com/p/545-FB5E/65247463/0900b8c08dcd47fa.pdf Pioneer (6773.T, Hold) – Results comment: 2Q earnings in line with guidance (Hiroshi Taguchi) http://pull.db-gmresearch.com/p/533-141B/67351968/0900b8c08dcdcf8e.pdf Real estate sector – Real estate shares’ recent rise just trying to play catch-up (Yoji Otani) http://pull.db-gmresearch.com/p/261-35A7/65335420/0900b8c08dcd8dfc.pdf Skylark (3197.T, Buy) – 3Q results and October sales (Junichi Shimizu) http://pull.db-gmresearch.com/p/244-65F7/66804649/0900b8c08dc4db69.pdf SUMCO (3436.T, Buy) – Higher wafer demand forecasts likely to prompt rise in valuations (Yu Yoshida) http://pull.db-gmresearch.com/p/250-932E/67958837/0900b8c08dcddc40.pdf Sumitomo Forestry (1911.T, Hold) – Neutral 2Q results; acquisition of Kumagai Gumi shares a surprise (Yoji Otani) http://pull.db-gmresearch.com/p/259-826E/66805351/0900b8c08dcd3751.pdf Suruga Bank (8358.T, Buy) – Loan-deposit spread for 2Q flat QoQ (Yoshinobu Yamada) http://pull.db-gmresearch.com/p/536-45EC/66400674/0900b8c08dcd7fc3.pdf Sysmex (6869.T, Buy) – Takeaways from management meeting (Jack Hu) http://pull.db-gmresearch.com/p/1021-0037/68933958/b3b54236-04ba-4a12-8ae1-31c3a33e4cd3_604.pdf Tokyu Fudosan Holdings (3289.T, Hold) – 2Q results: neutral first impression (Yoji Otani) http://pull.db-gmresearch.com/p/258-B3F4/67061443/0900b8c08dcd379a.pdf
KOREA/TAIWAN Bizlink (3665.TW, Buy) – 3Q17 earnings preview (Frank Lin) http://pull.db-gmresearch.com/p/596-EB7D/68044679/0900b8c08dcdc97b.pdf Hota Industrial (1536.TW, Buy) – 3Q17 results were in line with our estimate (Frank Lin) http://pull.db-gmresearch.com/p/596-213D/67239480/0900b8c08dcdc9de.pdf MediaTek (2454.TW, Buy) – The implication of a competitive landscape change (Michael Chou) http://pull.db-gmresearch.com/p/623-3576/66940172/0900b8c08dcde36f.pdf Samsung Life (032830.KS, Buy) – Starting to recognize the benefits of higher rates and bigger dividends (Jeehoon Park) http://pull.db-gmresearch.com/p/781-E5B1/68785148/0900b8c08dcd925f.pdf
INDIA HPCL (HPCL.BO, Buy) – Weak refining performance leads to a miss (Harshad Katkar) http://pull.db-gmresearch.com/p/600-7251/67834850/c0dcdfec-c519-11e7-bf02-2d390be1d4c2_604.pdf Indian Pharmaceuticals – IPM Monthly sales tracker (Kartik Mehta) http://pull.db-gmresearch.com/p/548-741E/65729081/0a09c7c4-c43a-11e7-bf02-2d390be1d4c2_604.pdf Tata Motors Ltd (TAMO.BO, Buy) – Stronger mix drives margins at JLR; volume growth still needs to improve (Amyn Pirani) http://pull.db-gmresearch.com/p/558-AF9D/72622751/0900b8c08dcad84b.pdf
10 November 2017
CEEMEA & Latam Daybook
Page 6 Deutsche Bank AG/London
ASEAN SATS (SATS.SI, Buy) – 2Q results: associates strong, positive potential of new ventures (Joe Liew) http://pull.db-gmresearch.com/p/827-B522/67927507/0900b8c08dcdbce3.pdf Singapore Telecom (STEL.SI, Buy) – AU mobile, SG enterprise & Digital report positive operating trends (Srinivas Rao) http://pull.db-gmresearch.com/p/966-46C4/64109523/0900b8c08dcaafd8.pdf Central Pattana (CPN.BK, Hold) – Key takeaways from analyst briefing (Nash Shivaruchiwong) http://pull.db-gmresearch.com/p/602-BC42/65814868/0900b8c08dcda44c.pdf IRPC PCL (IRPC.BK, Buy) – Takeaways from analyst meeting: Positive outlook (Wattana Punyawattanakul) http://pull.db-gmresearch.com/p/756-B8FD/67723931/4436d9ef-46bf-434e-aa36-48290b5445f1_604.pdf L.P.N. Development (LPN.BK, Hold) – Quarterly profit misses from weak operations (Nash Shivaruchiwong) http://pull.db-gmresearch.com/p/638-6F76/69724103/0900b8c08dce080f.pdf Bloomberry Resorts (BLOOM.PS, Buy) – EBITDA, profit ahead of estimates; mass volumes hit new highs (Aaron Salvador) http://pull.db-gmresearch.com/p/497-F101/67200363/0900b8c08dcc179e.pdf DMCI Holdings (DMC.PS, Hold) – 9M17 earnings fall short (Klyne Resullar) http://pull.db-gmresearch.com/p/726-44A4/66750960/0900b8c08dcaf2d2.pdf International Container (ICT.PS, Buy) – EBITDA gains momentum in 3Q17 (Klyne Resullar) http://pull.db-gmresearch.com/p/780-AAC2/62543676/0900b8c08dcaf5e7.pdf Metro Pacific Investments (MPI.PS, Hold) – 3Q17 profit up 43% YoY; Resolution on tariff issues soon? (Klyne Resullar) http://pull.db-gmresearch.com/p/726-21A9/67854687/0900b8c08dcaf4b5.pdf PLDT, Inc. (TEL.PS, Hold) – Still no turn in 3Q (Gio Dela-Rosa) http://pull.db-gmresearch.com/p/514-0B44/67059767/0900b8c08dcd8bcf.pdf Robinsons Land Corp (RLC.PS, Hold) – 9M17 recurring profit +6%; 3Q residential sales rebound 29% YoY (Carl Sy) http://pull.db-gmresearch.com/p/824-31A4/66410728/0900b8c08dcc6666.pdf Semirara Mining and Power (SCC.PS, Buy) – Asset write-down not a concern; Reiterate Buy (Klyne Resullar) http://pull.db-gmresearch.com/p/857-E2DF/67480778/0900b8c08dcdc51a.pdf APAC Equities - APAC Research In Focus UPCOMING DB CONFERENCES dbAccess Global Quant Conference 2017 14-15 Nov @Hong Kong dbAccess Thailand SET Corporate Day - 22-23 Nov @Singapore
CE
EM
EA
& Latam
Dayb
oo
k
10
No
vemb
er 20
17
Deu
tsche B
ank A
G/Lo
nd
on
P
age 7
EPS changes
NAME COUNTRY DB EPS FY1 DB EPS FY2 DB EPS FY3 RECOMMENDATION TARGET PRICE
From To Change IBES
DB vs IBES
(%) From To Change IBES
DB vs IBES
(%) From To Change IBES
DB vs IBES
(%) From To From To Change
CEEMEA
Enka Insaat Turkey 0.1 0.2 +25.5 0.2 1.1 0.1 0.2 +41.1 0.2 13.0 Hold Hold 5.7 5.7
Q3-17 net income EGP2,087m vs. DBe 1,907m, Bloomberg consensus 1,998m Strong net interest income (and in turn NIMs +94bps QoQ vs. DBe 20bps) more than offset weaker NIR and higher loan impairments (CoR c.270bps vs. DBe 200bps) and led the net income beat. On the other hand, loan growth disappointed (-4% QoQ), although investments, deposits and total assets grew sequentially. A good set of results. Hold.
NII and NIMs stronger than expected; NIR relatively modest NII rose 41% YoY / 21% QoQ, much stronger than expected. Margins on
average IEA recovered a further 94bps QoQ to 5.70%. Asset yields(+150bps QoQ) rose c.3x funding costs, on the back of a 200bps increasein policy rates at the start of the quarter (YoY comparison not meaningfulas average balances distorted by FX devaluation in Q4-16).
NIR: Fees were flat in the quarter (+56% YoY); investments gains werelower than expected (EGP101m vs. DBe 140m) but were partly offset bystronger FX income (+11% QoQ, 5% above DBe).
Operating costs rose 4% QoQ and 34% YoY; cost/ income ratio lookinggood (DB calculations Q3 23.6%, 9M 25.5%).
NPLs/ gross loans rose 13bps QoQ to 6.94% with 155% coverage. Loanimpairments were an annualized 274bps of gross loans (9M 210bps).
BS: loans -4% QoQ, +3% YTD; investments +25%/+24%; deposits +1%/+7% Both EGP and foreign currency denominated loans declined in the quarter.
Margin-accretive EGP denominated loans have risen 26% YTD(constituting 52% of total loans, up from 43% in Dec-16), while foreigncurrency loans declined 12% YTD. It remains to be seen if there is achange in growth guidance (Q1-17 conference call, full year loan growth ofc.10% at the group level, 25-30% for EGP-denominated loans).
Investments on the other hand grew strongly and remain the largestcomponent of the balance sheet (44% of assets).
Deposit growth came from time deposits (+7% QoQ), although the CASAratio at 48% improved from 43% at the start of the year.
Capital ratios improved and are comfortable (T1 15.9%, CAR 16.9%).
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 8
9 November 2017
Media
Rating
Hold
Valuation & Risks
MediaPrice at 8 Nov 2017 (PLN) 25.50
Price Target (PLN) 28.00
52-week range (PLN) 27.80 - 22.65
ResultsEmerging EuropePoland
Company
Cyfrowy Polsat
Reuters Bloomberg Exchange Ticker
CPS.WA CPS PW WSE CPS
Date9 November 2017
3Q: weak quarter as it was expected
Soft figures but with no impact on our FY forecastsCyfrowy delivered weak results in 3Q 2017 with an 11% decline in EBITDA,largely driven by negative effect of EU roam-like-and-home regulations as wellas high base effect. This, however, is in line with our expectations for 3Q aloneand full year: the surplus accumulated in very strong first half, compensates forthe pressures in the second half of the year, hence we keep our FY estimatesunchanged. We reiterate our Hold rating on Cyfrowy and PLN 28 target price.High FCF (11%) is the main attraction in the company's investment case, but thisdoes not yet convert into any meaningful dividend payment.
Roaming costs and high base effect responsible for YoY EBITDA declineIn 3Q Cyfrowe delivered flat YoY revenues of PLN 2,391m and an 11% decline inEBITDA to PLN 851m. Both figures are in line with our and market expectations.EU roam-like-at-home regulations account for ca. 60% of the YoY deteriorationin earnings with negative impact on EBITDA of PLN 62m. The remainder ofthe pressure comes from TV broadcasting segment: in 3Q 2016 the company'searnings were positively impacted by a sport event, which created a very highbase and consequently EBITDA in that business line declined this quarter by 29%YoY. On the KPI fronts, after weak 1H, some improvement was visible: numberof contract RGUs increased by 110k vs. quarterly run rate of 82k in the first halfof the year. Pay TV as well as mobile telephony dominate among new additions,suggesting continuation of the bundling strategy.
3Q17: in line; EBITDA margin supportive 3Q17 NP came in at USD178m (-12% QoQ, c.+55% YoY) c.+5% DBe / cons. (USD167m). The NP was driven by higher revenues in Construction and Energy segment (26% / 34% QoQ respectively) coupled with strong EBITDA margin YoY (+300bps above 3Q16). Revenues came at USD843m (c.+21% QoQ, -2% YoY) or c.10% / 20% above DBe / cons. (USD698m). EBITDA margin was also supportive at 23.3% (in line with 2Q17) but slightly below DBe: 24% / cons.: 22.6% at USD196m. Net investment income decreased by c.50% QoQ to USD50m in 3Q17 due to depreciation in Turkish Euro bonds. 9M17 NP reached USD550m or c.75% vs. 2017 DBe (USD730m).
Higher construction revenues on higher execution; strong margin Construction execution came in above 2Q17 (revenues USD296m or 10% above DBe) mainly due to higher recognition of revenue. Works on Iraqi power project (new award in 4Q16) did not contribute towards revenue in 3Q17 and we do not expect to contribute in 2017. EBITDA margin reached high level of 23.3% after 16.7% in 2Q17 and 10% in 3Q16. 3Q17 EBITDA margin is already above mgt. expectations for FY2017 (c.13% / DBe: 15.1%). Backlog stood at USD2.5bn end 3Q17 (+50% YoY) while new awards were strong at USD450m (2x YoY). Overall, in 9M17 Enka recorded total construction revenue of c.70% vs. 2017 DBe (USD1.1bn) and c.85% of 2017E EBITDA (USD163m).
Russian real estate: stable; rent / occupancy stable Russian real estate 3Q17 rental income was USD80m (+3% YoY) with EBITDA margin stable 58%. Retail rents were unchanged QoQ (-6% YoY) and also office rents remained stable QoQ (-7% YoY). Retail occupancy (93%) has remained stable over last two years while office occupancy (79%) has started to show slight increase (74% in 4Q16). In 9M17, real estate revenue reached c.70% vs. 2017 DBe (USD330m) and c.60% of 2017E EBITDA (USD234m).
Energy business registered growth but FY should normalize given fix contract Energy business revenues of USD411m (+2% YoY) c.20% above our expectation, given fixed return business model, its EBITDA was within expectations (USD75m) with margin declining slightly to 18.2% (2Q17: 22.4%). In our view, quarterly volatility in energy business performance is not material as fixed off-take arrangement and cost pass through clauses ensure that EBITDA remains stable on yearly basis (c.USD283m).
Valuation at discount to EM peers; Maintain Hold 9M17 NP reached USD550m or c.75% of our full year 2017 estimate (DBe: USD730m. The stock is trading at a P/E of 8.6x 2017E, a discount to EM contractors: 9.1x / and discount to EM utility peers: 14.3x. Although we expect Russian real estate business starts to stabilize, we do not yet see triggers for growth given muted outlook for construction awards. Hold.
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 10
Rating
Buy Emerging Europe
Russia
Banking / Finance
Company
Moscow Exchange Alert
Date
9 November 2017
Results
3Q17 first look: results in line, good fees dynamics
Fees expand nicely on a low base, while interest income still is a drag Net income reached RUB5.1bn (-18% YoY) in 3Q17, slightly above (1%) of consensus (compiled by the company), EBITDA of RUB7.1bn was in line with consensus. Fee income grew 15% YoY driven by equities (+45% YoY), bonds (+12%, money market (+31%), depositary and settlement fees (+21%) and derivatives (+5% YoY). FX market fees were down 6% YoY.
Net interest income expectedly dropped 16% YoY to RUB4.2bn as both rates and investment base are lower. In particular, the daily average of funds available for investment was RUB0.7trn in 3Q17 vs. RUB0.8trn in 3Q16 (-11% YoY). Opex grew 11% YoY and was 1% better vs consensus. The majority of the opex increase was driven by DD&A and equipment maintenance costs (up 19.2% YoY). Staff costs grew by only 3.0% YoY.
Q3 revenue in line and EBITDA slightly below vs. Cons/DBe. Adjusted FCF outlook downgraded OTE reported Q3 group revenues of €991m, in line with Bloomberg consensus (€989m) and DBe (€991m). Adjusted EBITDA at €349m was -0.8% below consensus (€352m) and -1.1% below DBe (€353m). Capex lower for the quarter at €176m, -8.5% below DBe (€193m). OpFCF of €173m, is 7.8% above DBe (€160m). Adj. FCF of €-28m was -3.1% below consensus (€-29m). Full year FCF guidance downgraded to c.€100m (Bloomberg consensus €214m, DBe €220m) reflecting increased capex to c.€800m (earlier c.€700m) and lower EBITDA in its international operations.
Divisional beats/misses Greek fixed revenues of €392m (-1.6% yoy, Q217 +0.3%, Q117 +3.5%) -2.7% vs. DBe and Adj. EBITDA of €166m (-3.0% yoy, Q217+0.8%, Q117 +4.3%) -5.8% vs. DBe. Greek mobile revenues of €323m (+1.6% yoy, Q217 +0.5%, Q117 -1.2%) +1.4% vs. DBe and Adj. EBITDA of €123m (+7.6% yoy, Q217 +3.0%, Q117 -5.4%) +5.5% vs. DBe. Romanian fixed revenues of €152m (+2.2% yoy, Q217 +1.4%, Q117 +4.6%) +2.0% vs. DBe and Adj. EBITDA was €29m (-1.7% yoy, Q217 +67.1%, Q117 +4.4%) +13.2% vs. DBe. Romanian mobile revenues were €111m (-0.9% yoy, Q217 -3.3%, Q117 -4.6%) +3.0% vs. DBe and Adj. EBITDA was €14m (-41.4% yoy, Q217 -36.7%, Q117 -14.2%), -10.3% vs. DBe. Albania mobile revenue was €18m (-7.2% yoy, Q217 -14.4%, Q117 -23.4%) +3.1% vs. DBe and Adj. EBITDA was €3m (-30.6% yoy, Q217 -60.4%, Q117 -81%) -34.9% vs. DBe.
KPIs – Domestic mobile better; Romania weak Domestic Fixed: PSTN net adds were -107k (Q217 -178k, Q117 -161k), ADSL net adds were +34k (Q217 -29k, Q117 +27k), IPTV net adds were +13k (Q217 -1k, Q117 +2k) and LLU net adds were -1k (Q217 +4k, Q117 +17k). Domestic Mobile: net adds were +130k (Q217 +4k, Q117 +23k). Romania Fixed: Fixed telephony net adds were -17k (Q217 -10k, Q117 -23k), Broadband net adds were +5k (Q217 +6k, Q117 -6k) and TV net adds were -5k (Q217 +13k, Q117 -7k). Romania Mobile: net adds were -47k (Q217 -150k, Q117 -294k). Albania mobile: net adds were +24k (Q217 +34k, Q117 -10k).
Conference call details The company will hold a conference call today at 5.00pm Greece time, (3.00pm GMT): 00800 4413 1378 / +44 (0) 1452 542 301. The call will also be accessible via a webcast on https://ote.irwebpage.com/conference_calls/.
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 12
9 November 2017
General Retailers
SA Company Results Diary
General IndustrialPeriodical
Sub-Saharan AfricaSouth Africa
Industry
SA CompanyResults Diary
Date9 November 2017
13-17 November 2017 (FY17: SPP;1H18: BAT, INL, MEI, VOD)Deutsche Bank forecasts for companies reporting results next week.
Date Company Rating Target price
1 Monday, 13 November 2017 Vodacom Group Ltd Buy R 166.00
2 Wednesday, 15 November 2017 Spar Group Ltd/The Hold R 167.00
3 Wednesday, 15 November 2017 Brait SE Buy R 64.00
4 Thursday, 16 November 2017 Mediclinic International Ltd Hold R 150.00
5 Thursday, 16 November 2017 Investec Ltd Buy R 110.00
Prices are as at Thursday, 9 November 2017; Source: Deutsche Bank
John Kim
Research Analyst
+27-11-775-7013
Sean Holmes
Research Analyst
+27-011-775-7292
Ryan Eichstadt
Research Analyst
+27-11-7757249
Stefan Swanepoel
Research Analyst
+27-11-775-7483
Caron Bramwell
Research Analyst
+27-11-775 7069
Marc Hammoud
Research Analyst
+971-0-4428-3910
Letlotlo Lenake
Research Analyst
+27-11-775-7299
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 13
9 November 2017
Retail
Lojas Renner
Rating
Hold
Valuation & Risks
RetailPrice at 8 Nov 2017 (BRL) 35.76
Target price 34.00
52-week range 37.60 - 21.35
ResultsLatin AmericaBrazil
Company
Lojas Renner
Reuters Bloomberg Exchange Ticker
LREN3.SA LREN3 BZ SAO LREN3
Date9 November 2017
Updating estimates on 3Q17 results
Changes to financial services lead to 4% upward revision on TPWe update our estimates with Q3 results and raise our TP by 4% to R$34.0.Renner's retail business continues to face impressive expansion in operatingresults driven by accelerated roll-out of stores and increased sales productivity,most likely fully incorporated into our estimates. However, lower-than-expectedprovisioning for NPLs, recent changes to the credit policy, and the launch ofthe financial institution lead us to revise the 2018 contribution from financialservices to EBITDA and net earnings upwards 33% and 11%, respectively. As aresult, 2018 consolidated EBITDA and earnings were revised upwards 7% and6%, respectively.
Reiterate Hold ratingEven though Renner should be one of the best performing retailers in the Brazilianlandscape in 2017 and probably 2018, we believe that performance is fully pricedin (trading 2% above our target price), at 14.7x forward EV/EBITDA and 28.5xforward PE, 36% and 44% above historical averages, respectively, and 32-35%above Latam peers. The main upside risk to our investment thesis comes fromthe potential operating leverage once the accelerated growth cycle is over. Therewould be some downside risk to our estimates if the sales mix (which has not yetcontributed to gross margin expansion in 2017) continued on a similar trend, asassume gross margin to be up nearly 300bps in coming years due to enhancedinventory management (push-pull distribution).
Not much surprise from retail business' accelerated growth ratesGradual recovery in consumption, continued maturation of recently openedstores, market share gains driven by the attractiveness of fast fashion and homeimprovement stores, and healthy inventory levels pave the way for us to revise Q4and 2018 SSS upwards to 10.0% and 8.0%, respectively, from 8.0% and 7.0%.As a result, we raise the 2018 EBITDA of the retail business by 2%. As in 2017,when recurring EBITDA should be up 17% y/y (excluding extraordinary tax creditsfrom 2016 EBITDA), strong growth in sales productivity and accelerated roll-outof stores (selling space expected to expand 10% in 2018) should drive recurringEBITDA up 20% in 2018. Even though we remain constructive about Renner'stop-line growth in coming years, the risks associated with gross margin gains aremounting. Since the beginning of the year, gross margin was down 50bps y/y dueto increased sale of lower priced products. If not able to bring it back to the growthpath, it would probably put at risk our assumption that increased penetration of
Marcel Moraes
Research Analyst
+1-904-271-2470
Kaila Lopez
Research Associate
+1-904-645-1197
Key changes
TP 32.60 to 34.00 ↑ 4.3%
EPS (BRL) 0.98 to 1.08 ↑ 10.2%
Revenue(BRLm)
7,264 to 7,478 ↑ 2.9%
Source: Deutsche Bank
Price/price relative
Lojas Renner BOVESPA (Rebased)
Jan '16 Jul '16 Jan '17 Jul '17
20
40
0
Performance (%) 1m 3m 12m
Absolute -3.4 19.0 43.7
BOVESPA -2.2 9.5 15.9Source: Deutsche Bank
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 14
Rating
Buy Global Emerging Markets
Brazil
Aviation
Company
Azul S.A. Date
9 November 2017
Results
Record Sep Q operating margin; raising 2017 forecast
Reuters Bloomberg Exchange Ticker AZUL.N AZUL US NYS AZUL
Forecasts And Ratios
Year End Dec 31 2015A 2016A 2017E 2018E 2019E
Revenue (BRLm) 6,258 6,670 7,641 8,971 10,603
EPS (BRL) -4.16 -0.18 1.03 1.41 1.89
P/E (x) – – 77.8 57.0 42.4
Source: Deutsche Bank estimates, company data
Record Sep Q margin; future margin growth points to more upside
Azul reported a Sep Q operating income of R$249 mm and margin of 12.5%, which was up 290 bps y-o-y and a Q'ly record for the company. Azul's fundamentals looked strong in the Sep Q with higher avg. fares (+7.6%), all time high load factor (+2.1 pp. to 83.1%) and solid unit revenue growth of 1.5%. The company will also benefit from the induction of additional A320neos which will reduce CASK ex-fuel by 29.0%. Futhermore, TudoAzul is expected to drive additional margin growth. All of these factors combined with an improving Brazilian macroeconomic backdrop point to further margin expansion; Buy.
Induction of additional A320neos will reduce CASK ex-fuel Azul remains well positioned for margin expansion going forward – both from company specific initiatives as well as an improving Brazilian and Latin American economic backdrop. Management expect the induction of additional A320neo aircraft to reduce CASK ex-fuel by 29.0%. Azul will add 7 new A320neos between November and January for Brazilian high season. The A320neo will account for 14.0% of system ASKs by YE 2017, 27.0% in 2018, 35.0% in 2019 and 41.0% in 2020. Management expect CASK ex-fuel to be negative for the “next couple of years.”
TudoAzul’s growth potential supports Azul’s path to margin expansion TudoAzul could easily add at least one point of margin in 2017 - 2018 as the company (which is 100.0% owned by Azul) grew gross billings (LTM ex-airline) by 47.4% in the Sep Q. Azul has 25.0% share of total airline revenue in Brazil while TudoAzul has 15.0% of gross billings in Brazil, pointing to further growth opportunities for the high margin, wholly-owned subsidiary.
Raising our 2017 forecast We are raising our 2017 EPADS forecast from $0.55 to $0.98 (vs. consensus of $0.45) to reflect the Sep Q beat.
Valuation and risks Our 12-month price target for AZUL shares (ADS) is $31. Our PT is derived by applying a EV/EBITDAR multiple of 8.0x to our 2018 EBITDAR forecast. Historically, Latin American airline stocks have traded 6x – 8x forward EBITDAR when the economic backdrop has been sound, but higher during periods with a weaker backdrop (such as now) to reflect depressed earnings/EBITDAR. Fuel price volatility is a key risk. For more, see Page 4.
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 15
Rating
Buy Global Emerging Markets
Brazil
Aviation
Company
Azul S.A. Alert Date
9 November 2017
Results
Better-than-expected Sep Q results
Reuters Bloomberg Exchange Ticker AZUL.N AZUL US NYS AZUL
Azul reported a Sep Q operating profit of R$249 million and margin of 12.5% (up 290 basis points y-o-y), ahead of our forecasts of R$233 million and 11.5%, respectively. The company reported net income of R$204 million, well ahead of our forecast of R$86 million. This represents an EPADS of $0.59, higher than our forecast of $0.25 and the consensus of $0.11. The company maintained its FY 2017 operating margin guidance of 9.0% - 11.0% (vs. our 9.8% for 2017).
Total operating revenue for the Q was R$2.0 billion, up 15.0% y-o-y and essentially in-line with our forecast. Passenger unit revenue (PRASK) increased 1.3%, driven entirely by a 2.1 point increase in load factor to 83.1%, partially offset by a 1.2% decrease in yield. RASK was up 1.5% boosted by higher passenger revenue in addition to higher ancillary and cargo revenue. Unit costs (CASK) ex-fuel decreased 1.1%; the result was better than our estimated decrease of 0.6%.
Along with its FY 2017 operating margin guidance of 9.0% - 11.0%, Azul also reiterated its 2017 capacity and departures guidance calling for increases of 11% to 13% and 1% to 2% y-o-y, respectively. The company also continues to expect CASK ex fuel to be down 3.5% to 5.5% y-o-y.
At quarter end, Azul’s total cash position was R$3.1 billion, 41.5% of LTM revenue, and up from R$3.0 billion last Q.
We will have more details following Azul’s 9:00 A.M. (Eastern) conference call
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 16
9 November 2017
Banking / Finance
Banco do Brasil
Rating
Buy
Valuation & Risks
Banking / FinancePrice at 8 Nov 2017 (BRL) 33.11
Target price 39.00
52-week range 37.56 - 23.76
ResultsLatin AmericaBrazil
Company
Banco do Brasil
Reuters Bloomberg Exchange Ticker
BBAS3.SA BBAS3 BS SAO BBAS3
Date9 November 2017
3Q17 recovery appears on track
Key takeaway: Bottom line miss, but operating trends in-lineReported net income of R$2.8bn was 1% below DBe, but included a one-timegain of R$133mn mostly related to Neoenergia and IRB. Recurring net incomeof R$2.7bn rose 2% qoq (+16% yoy), but was 6% below DBe and 4% belowconsensus. The weaker than expected result was mainly due to higher otherexpenses related to civil claims and a drop in other operating income, which waspartly offset by a lower tax rate of 24% vs. 36% in 2Q17 and DBe of 36%. Infact, earnings before taxes fell 9% qoq (+9% yoy) and were 19% below DBe.Meanwhile, recurring ROE remained relatively stable at 11.8% vs. 11.7% in 2Q17and 11.0% in 3Q16. Operating trends were mostly in-line, as tight cost control,healthy fees, and lower provisions offset still weak loan growth and lower NIM.
Positives: Asset quality, fees, expenses, and capitalThe NPL ratio fell 20bps to 3.9%, as better corporate NPLs (-70bps) offset higherconsumer (+20bps) and agribusiness (+20bps) NPLs. As such, provisions fell 6%qoq (-6% yoy) and were 3% below DBe with the cost of risk falling to 3.9% from4.2% last quarter. Meanwhile, expenses remained under control, rising 1% qoq,but down 6% yoy and 1% below DBe, due to lower personnel expenses (-3% qoq,-11% yoy), given the 9% reduction in employees over the last year. Fee incomewas also healthy, rising 4% qoq (+9% yoy) and 1% above DBe, driven by stronggrowth in asset management (+6% qoq, +27% yoy) and checking account (+4%qoq, +11% yoy) fees. Furthermore, the fully loaded CET1 ratio reached 9.5% from9.1% last quarter and already reached management's 2019 target. Finally, thecompany announced that it will sell its entire stake in Neoenergia, which we thinkcan boost the CET1 ratio by another 10-20bps.
Negatives: Still weak loan growth and lower NIMLoans fell 2% qoq (-6% yoy), 2% below DBe, due to continued weakness in SME(-10% qoq, -31% yoy) and corporate (flat qoq, -7% yoy) loans, as well as a drop inforeign (-5% qoq, -22% yoy) and agribusiness (-4% qoq, +1% yoy) loans, whichoffset a slight pick-up in individual loans (+1% qoq, +1% yoy). Meanwhile, NIMfell 20bps qoq to 4.5% given lower interest rates, which offset a 10bps increasein loan NIMs. As such, net interest income fell 2% qoq (-6% yoy), 3% below DBe.
Maintain Buy on earnings recovery and discount valuationWhile the bottom line was not "great," we think the earnings recovery is on trackand the stock continues to trade at a discount at 7.2x '18E P/E.
Tito Labarta
Research Analyst
+1-212-250-5944
Price/price relative
Banco do Brasil BOVESPA (Rebased)
Jan '16 Jul '16 Jan '17 Jul '17
20
40
0
Performance (%) 1m 3m 12m
Absolute -10.5 5.6 17.1
BOVESPA -2.2 9.5 15.9Source: Deutsche Bank
Key indicators (FY1)
ROE (%) 12.1
ROA (%) 0.7
Equity/assets (%) 6.3
Dividend yield (%) 3.1
P/BV (x) 1.0
P/E (x) 8.6Source: Deutsche Bank
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 17
9 November 2017
Exchange
Bolsa Mexicana
Rating
Buy
Valuation & Risks
Banking / FinanceExchange
Price at 8 Nov 2017 (MXN) 32.43
Target price (MXN) 45.00
52-week range (MXN) 34.02 - 26.91
ResultsLatin AmericaMexico
Company
Bolsa Mexicana
Reuters Bloomberg Exchange Ticker
BOLSAA.MX BOLSAA MM MEX BOLSAA
Date9 November 2017
October volume trends running aheadof our 4Q17 forecastEquity volumes up, derivatives volumes and debt listings downBolsa Mexicana released operating data for October, showing a pick up in equityvolumes, offset by a sharp decline in derivatives volumes following a spikein September. Nonetheless, October volumes are running well ahead of ourforecasts for 4Q17. Meanwhile, there was one Fibra listing in October and totaldebt listings dipped in the month, but are still up on a yearly basis.
Equity volumes rally for a second month in a rowEquity ADTV rose for the second consecutive month, rising 26% mom (+23% yoy)to Ps15.9bn, as global market volumes spiked 33% mom (+67% yoy) and localmarket volumes rose a strong 22% mom (+6% yoy). For the quarter, volumes arerunning 16% above DBe of Ps13.7bn.
Derivative volumes fell after rebounding in SeptemberMexDer ADTV fell 25% mom to 47.6k contracts after spiking 103% mom to 63.2kcontracts in September. Nonetheless, derivative volumes are still up 2% yoy andare running 13% above our forecast of 42.1k contracts for the quarter. The declinein October was mainly due to a drop in futures volumes (-49% mom, +39% yoy),which offset an increase in 28-day TIIE swaps (+51% mom, -21% yoy).
Debt listings dipped slightly, but one Fibra listingThere were no equity listings in the month, following one in September raisingPs4.6bn, but there was one Fibra listing for Ps12.8bn (+178% mom). Meanwhile,total debt listings fell 4% mom to Ps74.2bn, but were still up 9% from last year,as there were 29 medium & long term listings (+45% mom, +52% yoy) and 75short term listings (+19% mom, +3% yoy) in October.
Maintain Buy on discount valuationWhile October operating results were somewhat mixed, volumes for the quarterare still running above expectations, and we continue to like the long-termoutlook. We also think the threat of competition is manageable. Furthermore,we note valuation is attractive at 15.9x '18E P/E vs. global peers at 21.7x. OurPs45/share PT is derived using DCF analysis with 12.1% COE, 14.0% WACC, and6% terminal growth rate. Main downside risks include further declines in equityand derivatives volumes, limits on equity investments at the Afores, increasedfinancing costs from Indeval payment, and potential competition.
Tito Labarta
Research Analyst
+1-212-250-5944
Price/price relative
Bolsa Mexicana Mexico IPC Index (Rebased)
Jan '16 Jul '16 Jan '17 Jul '1720
30
40
Performance (%) 1m 3m 12m
Absolute 5.4 3.9 8.3
Mexico IPC Index -2.9 -4.9 0.8Source: Deutsche Bank
Key indicators (FY1)
ROE (%) 19.5
ROA (%) 15.6
Equity/assets (%) 80.0
Dividend yield (%) 3.85
P/BV (x) –
P/E (x) 16.7Source: Deutsche Bank
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 18
Emerging Markets Argentina
HY Corporate Credit Energy
Company
YPF Sociedad Anonima
Date 7 November 2017
3Q17: Weak Quarter Came in Above Our Ests.; Positioned for a Better 4Q
In a weak quarter, consistent with our expectations given FX pressure, results held up better than our forecast as upstream production cash costs were pulled back and refining margins held-up relatively well despite the FX hit; Given fuel price increases post liberalization of downstream prices we expect results to improve starting in the fourth quarter In 3Q17, the average ARS:USD rate increased by 10%, while during the quarter fuel prices increased by 6%-7% (a catch-up from the prior quarter’s currency depreciation). YPF’s adjusted EBITDA of USD986mn came in 12% better than our estimate; on a local currency basis it came in ~8% better than Bloomberg consensus (revenues were in-line). Positively, the company saw improved gasoline and diesel demand (+3% qoq sales for a second consecutive quarter), which partially offset lower volumes in other petroleum products and FX-related pricing pressure. The Gas & Energy segment, was once again a positive surprise on the back of higher regulated tariffs. In our view the trajectory of the company’s cash flow generation going forward will be driven by more favorable downstream pricing policies (more pricing visibility) now that fuel prices have been liberalized.
Upstream production recovered slightly from the 2Q trough as it slowly perks up from weather-related constraints and natural declination; company ramping up shift to unconventional Total upstream production of 553.2k boed increased by 0.6% qoq (-4.5% yoy); realized crude oil prices of USD51.4/bbl were down -2% qoq (-14% yoy), as prices converge to Brent. Crude oil production increased by 4% qoq, which more than offset natural gas production declines (-1.1% qoq); the company’s shale production grew by 11% yoy as the company is shifting its production efforts towards non-conventional resource development/production. After a brief uptick in 2Q, upstream unit cash costs declined by -4% sequentially to USD20.9/boe, on higher production and slightly lower than expected royalties.
Downstream segment margins held up despite pricing not keeping up with quarterly depreciation of the ARS; contribution from Gas/Electric segment increased once again this quarter (a trend which should continue) Downstream EBITDA margins of 9% came in slightly lower than 10% in 2Q17 (+4% in 3Q16), on the back of better gasoline/diesel volumes as price increases of 6%/7% were only a catch-up of the prior quarter’s ARS depreciation; the catch-up for the 3Q FX depreciation did not take place until early October (post-Congressional elections fuel prices increased by 10% and prices have now been liberalized). For this reason we expect 4Q results to show a notable sequential improvement versus 3Q17. The Gas and Energy segment continues to benefit from tariff increases (+30% qoq EBITDA growth) at the gas distribution business (Metrogas), and we expect contributions from regulated businesses to increase going forward.
YPF generated negative FCF in the quarter on an uptick in capex and working capital burn; leverage metrics remain strong for the rating category and should improve in the fourth quarter In the quarter, the company reported FCF of –USD444mn (double 2Q’s FCF burn) as capex increased by +13% qoq (though still in guidance range) and working capital pressured operating cash flow (higher accounts receivable from Gas Plan, Gas Utilities, Cammesa). Leverage metrics ticked up on the FCF burn (Net Debt increased 4% qoq) but remained strong at LTM net leverage of 2.1x (versus 2.0x in 2Q17; should go down in 4Q17 on higher EBITDA generation). The company’s liquidity cushion is solid at 1.2x its ST Debt.
We rate YPF’s ’24 and ’25 bonds a Buy (Hold on ’18, ’21, and ‘27 notes) due to the company’s solid stand-alone credit profile (low leverage vs. regional SOE’s), its position as a key strategic asset for the Argentine state, and outsized yields and spread to sovereign (relative to leverage).
YPF’s key negative risks are a halt to downstream price adjustments matching inflation / currency depreciation, and an end to attractive natural gas pricing. Key positive risks include the ability to increase domestic fuel prices in 2017 to more than match FX depreciation/inflation plus substantial asset sale proceeds.
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 19
North America
United States
Industrials
Metals & Mining
Periodical
Metals & Mining Alert
Date
9 November 2017
Periodical
Daily prices and news: Gold demand declines to 8-year low in 3Q17
Global gold demand declines to 8-year low of 915 tons in 3Q17 (-9% YoY). YTD (thru September) demand decreased 12%. ETF inflows grew by only 18.9t (vs. 144t in 3Q16), as global equity markets outperformed. Jewelry demand fell 3% YoY to 479t, mainly driven by a decline in Indian demand (-25% YoY), due to the new tax regime and tighter regulation around jewelry transactions. Chinese jewellery demand rose 13% YoY to 159t. YTD jewelry demand rose 3% to 1,457t. Total bar and coin demand rose 17% YoY to 222t, but was soft compared to long-term average levels. Central bank purchases rose 25% YoY to 111t. Total supply was down 2% to 1,146t, with mine production declining 1% to 841t. (World Gold Council)
China’s passenger-vehicle sales rose for sixth consecutive month in October. Retail sales of cars, SUV’s and multipurpose vehicles increased 2.7% to 2.3m units. YTD (thru October), deliveries rose 1.4% YoY to 18.9m units. Chinese car sales have picked up in recent months as automakers offered large discounts and introduced new products to entice customers, who were slightly deterred by the increase of a sales tax by the government. (Bloomberg Finance LP)
US pig iron imports on track to reach a 10-year high in 2017. 9M17 imports totaled 3.9mt (+19% YoY) and surpassed the 2016 total of 3.87mt. 2017 total expected to reach 5.2mt. YTD imports from Ukraine are up 44% YoY, followed by Russia (+19%) and Brazil (+5%). Pig iron has been an attractive raw material for EAF based sheet mills this year due to higher prime scrap prices. (SBB)
US Hot-Rolled Coil (HRC) spot price rose $11/st WoW to $604/st. Spread between HR and Cold-Rolled coil contracted $13/st WoW to $184/st. Separately, NYMEX December 2017 forward HRC price slid $3/st WoW to $627/st on 11/8. (CRU, CME)
Vale confirms it has received bids for its VNC nickel operation. Company had said in September that it was looking for new partners in the mine as it was reevaluating its nickel business amid low prices. VNC has been loss making and Vale has decided to not invest in further development at current prices. VNC produced 34kt in 2016 (~11% of its total nickel output). (Reuters)
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 20
EM Monthly - Emerging Markets and the Global Economy in the Month Ahead We maintain our late summer "half-empty" view of
emerging markets while reaffirming ourconstructive view on emerging economies. EMGDP growth continued to impress, while inflationstill largely remains in-check. This limits downside.
But year-end protection of gains and insufficientrepricing of US rates in the face of peaking liquidityconditions and a likely less favorable balance ofsupply and demand for global fixed income as wemove into 2018 underlie our still cautious tone.
With the notable exception of CBT, most EM CBshave room to be patient in the coming months.Although we don’t expect Banxico to hike, itappears to have reaffirmed the subordination ofmonetary policy to FX. The fate of the peso andshort-end rates will remain closely linked.
Although politics remain a source of concern
(especially in Mexico, South Africa, Turkey,
Colombia, and Brazil) and a likely boost in the
cases of Argentina and Chile, in Russia and
Venezuela is where event risks are highest.
We see recent weakness as providing better entrylevels for currencies such as BRL and RUB withstrong BoP and high real rates. MXN and ZARremain most vulnerable to event risks while ILSseems too strong and subject to intervention.
We continue to favour North Asia vs. South AsiaFX on relative betas to growth and UST and THBand MYR within South Asia.
EM local curves are optically steep when comparedwith core curves, but a decomposition of slopesinto monetary policy and risk premiumcomponents reveal limited premium across mostcurves. Keep short-end receivers in Brazil,Colombia, and Russia (with a bull steepening bias).Underweight duration in Korea, Singapore andThailand vs. a small long Indonesia. Holdsteepeners in both India and Korea and swapspread payers in Singapore but CNH CCSflatteners.
We expect credit to be more resilient than localmarkets and believe that Venezuela’s apparentchange in debt policy should have limited impacton the broad EM credit market. OverweightArgentina, Ecuador, Malaysia, and Mongolia;underweight Poland, Hungary, and Sri Lanka.
In relative value, we favour cash curve flattenersand long CDS/bond basis in select names. EnterEgypt 47s vs. 28s, Brazil 26s vs. 5Y CDS, Turkey26s vs. 5Y CDS, and Colombia 27s vs. 10Y CDS.Maintain South Africa 27s vs. 22s, PETBRA 26s vs.23s. Hold long Argentina USD Pars, EUR 28s andEUR Warrants, and sell PDVSA 20s.
Threading the needle
Policymakers face an increasingly difficult balancing act in the months ahead. This is especially challenging in the US, where output gaps have narrowed and balance sheet unwinding may be combined with increased deficit and thus issuance. Other major central banks have more leeway, but historically they have tended to move together. EM has largely benefited from extended accommodation and a gradual turn remains our baseline on the view that inflation pressures will stay subdued. But reduced room for error still bodes for caution, in our view.
We expect market volatility to continue to cloud an otherwise supportive growth backdrop for both EM and DM. EM export volumes growth remain near double-digit levels, growth “momentum” indicators continue to point up – most notably in LatAm, and PMIs still have room to catch up with already more upbeat DM surveys. Leverage and credit growth will remain a headwind, but inflation expectations at historical lows bide monetary authorities time to react.
Positioning and the tendency to preserve gains at this time of the year will likely continue to weigh on EM assets. Although foreign positioning has not recovered to the levels pre-tantrum and external vulnerabilities have been reduced since, EM intrinsic value is also reduced. EM inflows are strongest when EM growth is strongest, but – in comparison to 2010-13 – the growth pick-up over DM now is a lot less. The leveraging – especially across emerging middle class – of those years has yet to be fully digested. Real credit growth is near flat in EMEA and LatAm and it is finally decelerating in Asia.
No support from the UST and USD. Our rates strategists expect UST 10Y yields to continue the grind up – now to 2.60% by year-end, which may trigger further USD strength in coming months. With uncertainty about the Fed resolved in favor of continuity (assuming Powell will be approved), tax reform is the main near-term risk for EM stemming from US yields and the USD. Still, a diluted version of the bill is likely to have only a moderate impact on r* and the term-structure. Assuming half the fiscal deficit of the full plan our economists estimate r* would rise by about 40bp by the end of 2020 (chart) – a result consistent with the one obtained via the FRBUS model.
Despite market jitters, risks to US growth also seem contained. DB has recently upgraded its US growth forecast in H2 to 2.75%. Growth is broadening with strengthening inputs from capex and net exports despite hikes – more evidence that rates are below r*. Also, despite some signs of weakness in low-income
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 21
European Equity StrategyWolf von Rotberg +44-20754-52801; Sebastian Raedler +44-20754-18169;Thomas Pearce, CFA +44-20754-16568; Andreas Bruckner +44-20754-18171
9 November 2017
• The 2017 earnings recovery continues to normalize: Following the broad-based earnings surge in Q1 (with year-on-year EPS growthat 26%) and the financials-driven beat in Q2 (with growth at 18%), Stoxx 600 EPS growth has slowed to 7.6% in Q3, with 78% ofcompanies having reported. This result is in line with the 5% to 10% range of consensus expectations ahead of the quarter. At 51%, the
gross beat ratio is at the lowest since Q4 2015, as euro strength has offset the positive impact from a strong growth backdrop during thequarter. Euro strength also explains the fact that those Euro area companies which generate a majority of their revenues domestically(>70%) have managed to beat expectations comfortably (59% gross beats), while exporters (>70% of revenues outside the Eurozone)
have seen their beat ratio drop below 50% for the first time since Q4 2016. As mentioned in our previous note, past euro strength willlikely remain a drag in Q4 with FX hedges continuing to roll off.
• Banks appear visually strong, but beat quality is low: among sectors, banks have enjoyed the highest beat ratio in Q3, with 74% of
reports coming in ahead of consensus expectations. This, however, has failed to translate into an above-expectations earnings growth,given that: a) the beat size for banks has generally been modest; and b) the modest positive surprises have partly been offset by a fewlarge misses (e.g. Barclays). Furthermore, the quality of bank beats is low, as they have largely been driven by a reduction in provisions
(e.g. ABN Amro, Danske Bank, ING, Santander, Unicredit) and lower costs (ABN Amro, Unicredit, RBS), while hopes for a morefundamental NII improvement have not been met.
• Energy delivers strong results: Energy companies have been the key driver behind earnings growth in Q3, accounting for more thanhalf of Stoxx 600 EPS growth and comfortably beating expectations, even though these were demanding going into the season. Sectorearnings have been positive across business units. Upstream results have benefitted from a continued focus on costs (with BP and
Shell indicating that their breakeven price has fallen below $50/bbl). This should continue to provide support for energy earnings overthe coming quarters, barring a sharp drop in the oil price. Refining margins were unusually strong in the downstream business, due tothe impact of hurricane-related disruptions on US refineries (benefitting BP, Shell and Total, among others).
European Equity Strategy - Q3 earnings: growth slows to single-digits, as FX strength weighs
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 22
9 November 2017
EMEA Snap
Emerging EuropeCzech RepublicHungary
Economics
EMEA SnapDate9 November 2017
Hungary and Czech Republic: Divergent
Hungary: headline and core both down in OctoberAnnual headline decelerated by 0.3pps to 2.2% YoY in October, despite theacceleration in monthly terms, as base effects continue to be positive. In monthlyterms, prices increased by 0.3% MoM, the highest in six months. Food inflationemerged as the sole major contributor to higher prices on the month, as it jumpedto 0.5% MoM, ending a three month streak in the negative territory. A numberof food categories posted monthly increase in prices with fruits/vegetables pricesregistering the largest jump. The monthly increase in food prices led to anacceleration in food price in annual terms as well (3.3%YoY vs. 3.1% previous),however this increase was overshadowed by the fall in inflation in the motor fuels/oils component (1.3% YoY vs. 5.3% previous) and in services inflation (1.6% YoYvs. 1.8% previous).
Figure 1: Hungary local measuresof core inflation
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17
Core ex indirect taxes
Demand sensitive inflation
Sticky price inflation
% YoY
Source: CSO, Haver Analytics, Deutsche Bank
Figure 2: Czechia: local measures ofcore inflation
-2
0
2
4
6
-2
0
2
4
6
Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17
% YoYHeadline CPI
Monetary policy relevant inflation
Adjusted inflation ex fuels
Core CPI
Source: CSO, Haver Analytics, Deutsche Bank
All annual core indicators followed by the National Bank of Hungary (NBH)displayed a decline in October, supporting the Bank’s long-standing expectationthat reduced social contribution by employers and lower corporate income taxare helping keep upside pressure from cost-wage pressure in check.
We expect headline CPI to decelerate back to close to 2% levels in the rest of theyear thanks to positive base effects. Inflation is likely to start accelerating oncemore from March-2018 onwards as on back of higher pressures from domesticdemand, but is expected to remain below the 3% target until 2019.
DB assessment: The MPC looks ready to ease monetary conditions furthervia liquidity tools in the coming months, i.e. via the stock and maturity ofswap instruments. The Minutes of October meeting confirmed such bias givenpolicy-setters’ consensus on the need for reducing long-term yields to safeguardfinancial stability as well as lengthy discussions over availability of a wide rangeof tools to achieve this. While a further decline in the lower band (i.e. O/N depositrate) cannot be ruled out given the Council’s ever-rising easing bias, the Octoberstatement and Minutes hint the focus has moved to the liquidity instruments,perhaps towards a new IRS swap facility. The steepness of the yield curve will beimportant to watch from here given the Bank's fledgling aim to loosen conditionsup to the longest possible section of the curve. Further limited compression inthe 3M BUBOR rate seems less likely in the near term, particularly in absence ofanother cut in O/N deposit rate. We still think a gradual rise in 3M BUBOR ratecould be possible starting in H2 2018, i.e. after general elections are out of theway and headline inflation starts converging to the 3% target in a consistent way.In the meantime, however, we would not be surprised to see new unorthodox
Kubilay Ozturk
Chief Economist
+90-212-3170124
Carlos Galindo
Research Analyst
+44-207-547-6269
Twisha Roy
Research Associate
10 November 2017 CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 23
10 November 2017
CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 25
Economic Calendar Country GMT Release DB Expected Actual Consensus Previous
Thursday, 09 November
BR 07:00 FGV CPI IPC-S (Nov) 0.35% 0.33%
BR 07:00 FGV Inflation IGP- DI (Oct) 0.10% 0.62%
TR 07:00 Industrial production (Sep) -5.20%
CL 08:00 CPI (Oct) 0.2% (1.5%) -0.2% (1.5%)
HU 08:00 Merchandise trade balance(prelim) (Sep), EUR, m EUR303.0m
CZ 08:00 Unemployment rate (Oct) 3.8%rate
CZ 09:00 CNB FX reserves (Oct), USD, bn USD146.3bn
EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
Discovery DSYJ.J Sell 149 -0.9 24.8 125.00 na na 20.6 17.8 na 1.3 6723
Liberty LBHJ.J Buy 112 -0.4 -2.8 125.00 na na 11.1 9.8 na 6.4 2199
MMI MMIJ.J Hold 19.45 -0.8 -20.7 20.00 na na 9.7 9.1 na 8.1 2189
Old Mutual OMLJ.J Buy 35.75 -0.8 -0.2 44.00 na na 0.1 0.1 na 352.9 11965
RMI RMIJ.J Hold 38.61 -2.3 -6.7 41.00 na na 14.7 12.1 na 3.1 4025
Sanlam SLMJ.J Buy 72.17 -1.1 10.4 84.00 na na 15.3 13.3 na 4.1 10360
Santam SNTJ.J Hold 250 -1.5 2.8 285.00 na na na na na na na
EV/EBITDA (x) P/E (x)
EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
EV/EBITDA for Banks has been replaced by ROE The Daily and YTD % Price changes refer to the change in US dollar value of the stock Source: Deutsche Bank, Companies
10 November 2017
CEEMEA & Latam Daybook
Page 36 Deutsche Bank AG/London
Appendix1
Important Disclosures *Other information available upon request Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr. Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. Analyst Certification
The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Pascal Moura/Mairead Smith
Equity rating key Equity rating dispersion and banking relationships
Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock.
Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock
Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell.
Newly issued research recommendations and target prices supersede previously published research.
46 % 47 %
7 %37 % 32 %
17 %0
200
400
600
800
1000
1200
1400
1600
Buy Hold Sell
Global Universe
Companies Covered Cos. w/ Banking Relationship
10 November 2017
CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 37
Additional Information
The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively "Deutsche Bank"). Though the information herein is believed to be reliable and has been obtained from public sources believed to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness. Hyperlinks to third-party websites in this report are provided for reader convenience only. Deutsche Bank neither endorses the content nor is responsible for the accuracy or security controls of these websites.
If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in this report, or is included or discussed in another communication (oral or written) from a Deutsche Bank analyst, Deutsche Bank may act as principal for its own account or as agent for another person. Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own account or with customers, in a manner inconsistent with the views taken in this research report. Others within Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those taken in this research report. Deutsche Bank issues a variety of research products, including fundamental analysis, equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication may differ from recommendations contained in others, whether as a result of differing time horizons, methodologies or otherwise. Deutsche Bank and/or its affiliates may also be holding debt or equity securities of the issuers it writes on. Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking, trading and principal trading revenues. Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank provides liquidity for buyers and sellers of securities issued by the companies it covers. Deutsche Bank research analysts sometimes have shorter-term trade ideas that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. Trade ideas for equities can be found at the SOLAR link at http://gm.db.com. A SOLAR idea represents a high conviction belief by an analyst that a stock will outperform or underperform the market and/or sector delineated over a time frame of no less than two weeks. In addition to SOLAR ideas, the analysts named in this report may from time to time discuss with our clients, Deutsche Bank salespersons and Deutsche Bank traders, trading strategies or ideas that reference catalysts or events that may have a near-term or medium-term impact on the market price of the securities discussed in this report, which impact may be directionally counter to the analysts' current 12-month view of total return or investment return as described herein. Deutsche Bank has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof if any opinion, forecast or estimate contained herein changes or subsequently becomes inaccurate. Coverage and the frequency of changes in market conditions and in both general and company specific economic prospects make it difficult to update research at defined intervals. Updates are at the sole discretion of the coverage analyst concerned or of the Research Department Management and as such the majority of reports are published at irregular intervals. This report is provided for informational purposes only and does not take into account the particular investment objectives, financial situations, or needs of individual clients. It is not an offer or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. Target prices are inherently imprecise and a product of the analyst’s judgment. The financial instruments discussed in this report may not be suitable for all investors and investors must make their own informed investment decisions. Prices and availability of financial instruments are subject to change without notice and investment transactions can lead to losses as a result of price fluctuations and other factors. If a financial instrument is denominated in a currency other than an investor's currency, a change in exchange rates may adversely affect the investment. Past performance is not necessarily indicative of future results. Unless otherwise indicated, prices are current as of the end of the previous trading session, and are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank, subject companies, and in some cases, other parties. The Deutsche Bank Research Department is independent of other business areas divisions of the Bank. Details regarding our organizational arrangements and information barriers we have to prevent and avoid conflicts of interest with respect to our research is available on our website under Disclaimer found on the Legal tab.
10 November 2017
CEEMEA & Latam Daybook
Page 38 Deutsche Bank AG/London
Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise to pay fixed or variable interest rates. For an investor who is long fixed rate instruments (thus receiving these cash flows), increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in assets holding limits for different types of investors), changes in tax policies, currency convertibility (which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and settlement issues related to local clearing houses are also important risk factors to be considered. The sensitivity of fixed income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or to specified interest rates – these are common in emerging markets. It is important to note that the index fixings may -- by construction -- lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. It is also important to acknowledge that funding in a currency that differs from the currency in which coupons are denominated carries FX risk. Naturally, options on swaps (swaptions) also bear the risks typical to options in addition to the risks related to rates movements. Derivative transactions involve numerous risks including, among others, market, counterparty default and illiquidity risk. The appropriateness or otherwise of these products for use by investors is dependent on the investors' own circumstances including their tax position, their regulatory environment and the nature of their other assets and liabilities, and as such, investors should take expert legal and financial advice before entering into any transaction similar to or inspired by the contents of this publication. The risk of loss in futures trading and options, foreign or domestic, can be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be incurred that are greater than the amount of funds initially deposited. Trading in options involves risk and is not suitable for all investors. Prior to buying or selling an option investors must review the "Characteristics and Risks of Standardized Options”, at http://www.optionsclearing.com/about/publications/character-risks.jsp. If you are unable to access the website please contact your Deutsche Bank representative for a copy of this important document.
Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs, whose values are affected by the currency of an underlying security, effectively assume currency risk. Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction. Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. Deutsche Bank (which includes Deutsche Bank AG, its branches and all affiliated companies) is not acting as a financial adviser, consultant or fiduciary to you, any of your agents (collectively, "You" or "Your") with respect to any information provided in the materials attached hereto. Deutsche Bank does not provide investment, legal, tax or accounting advice, Deutsche Bank is not acting as Your impartial adviser, and does not express any opinion or recommendation whatsoever as to any strategies, products or any other information presented in the materials. Information contained herein is being provided solely on the basis that the recipient will make an independent assessment of the merits of any investment decision, and it does not constitute a recommendation of, or express an opinion on, any product or service or any trading strategy. The information presented is general in nature and is not directed to retirement accounts or any specific person or account type, and is therefore provided to You on the express basis that it is not advice, and You may not rely upon it in making Your decision. The information we provide is being directed only to persons we believe to be financially sophisticated, who are capable of evaluating investment risks independently, both in general and with regard to
10 November 2017
CEEMEA & Latam Daybook
Deutsche Bank AG/London Page 39
particular transactions and investment strategies, and who understand that Deutsche Bank has financial interests in the offering of its products and services. If this is not the case, or if You are an IRA or other retail investor receiving this directly from us, we ask that you inform us immediately. United States: Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and SIPC. Analysts located outside of the United States are employed by non-US affiliates that are not subject to FINRA regulations. Germany: Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporated in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under German Banking Law and is subject to supervision by the European Central Bank and by BaFin, Germany’s Federal Financial Supervisory Authority. United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by the Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial Conduct Authority. Details about the extent of our authorisation and regulation are available on request. Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch or Deutsche Securities Asia Limited. India: Prepared by Deutsche Equities India Pvt Ltd, which is registered by the Securities and Exchange Board of India (SEBI) as a stock broker. Research Analyst SEBI Registration Number is INH000001741. DEIPL may have received administrative warnings from the SEBI for breaches of Indian regulations. Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA, Type II Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. We may also charge commissions and fees for certain categories of investment advice, products and services. Recommended investment strategies, products and services carry the risk of losses to principal and other losses as a result of changes in market and/or economic trends, and/or fluctuations in market value. Before deciding on the purchase of financial products and/or services, customers should carefully read the relevant disclosures, prospectuses and other documentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the name of the entity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank Group's analysts with the coverage companies specified by DSI. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Target prices set by Deutsche Bank's equity analysts are based on a 12-month forecast period. Korea: Distributed by Deutsche Securities Korea Co. South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register Number in South Africa: 1998/003298/10). Singapore: by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles Quay #18-00 South Tower Singapore 048583, +65 6423 8001), which may be contacted in respect of any matters arising from, or in connection with, this report. Where this report is issued or promulgated in Singapore to a person who is not an accredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and regulations), they accept legal responsibility to such person for its contents. Taiwan: Information on securities/investments that trade in Taiwan is for your reference only. Readers should independently evaluate investment risks and are solely responsible for their investment decisions. Deutsche Bank
International locations Deutsche Bank AG Deutsche Bank Place Level 16 Corner of Hunter & Phillip Streets Sydney, NSW 2000 Australia Tel: (61) 2 8258 1234
Deutsche Bank AG Mainzer Landstrasse 11-17 60329 Frankfurt am Main Germany Tel: (49) 69 910 00
Deutsche Bank AG Filiale Hongkong International Commerce Centre, 1 Austin Road West,Kowloon, Hong Kong Tel: (852) 2203 8888
Deutsche Securities Inc. 2-11-1 Nagatacho Sanno Park Tower Chiyoda-ku, Tokyo 100-6171 Japan Tel: (81) 3 5156 6770
Deutsche Bank AG London 1 Great Winchester Street London EC2N 2EQ United Kingdom Tel: (44) 20 7545 8000
Deutsche Bank Securities Inc. 60 Wall Street New York, NY 10005 United States of America Tel: (1) 212 250 2500