活在COVID-19里：北亞重新上線如何定位

1、23 March 2020AsiaEQUITIESRestaurants in Shanghai return to normalInsideImplications for Asia how to position 2COVID 19 Test 3Full Marquee list 6 HYPERLINK l _TOC_250000 Top Observations: 17COVID Impact by Sector 19COVID Impact by Country 59AnalystsMacquarie Capital LimitedJake Lynch +852 3922 3583 H

2、YPERLINK mailto:jake.lynch jake.lynchDaniel Schutte +852 3922 5850 HYPERLINK mailto:daniel.schutte daniel.schutteDavid Ng, CFA +852 3922 1291 HYPERLINK mailto:david.ng david.ngHan Joon Kim +852 3922 5926 HYPERLINK mailto:hanjoon.kim hanjoon.kimLinda Huang, CFA +852 3922 4068 HYPERLINK mailto:linda.h

3、uang linda.huangNicolas Baratte +852 3922 5801 HYPERLINK mailto:nicolas.baratte nicolas.baratteScott Russell, FIAA +852 3922 3567 HYPERLINK mailto:scott.russell scott.russellDavid Ching, CFA +852 3922 1823 HYPERLINK mailto:david.ching david.chingMacquarie Capital Limited, Taiwan Securities BranchCor

4、inne Jian, CFA +886 2 2734 7522 HYPERLINK mailto:corinne.jian corinne.jianLiving with COVID-19N. Asia coming back online: where to positionKey points With enormous effort, China, along with the rest of North Asia, is steadily returning to something approaching normal We see a flood of test kits comi

5、ng on market in coming weeks; this has been key to breaking the panic in much of North Asia and will help globally We do a wholesale restructure of our Marquee list, with core holdings, higher beta rebound plays and some defensivesLiving with the virus a slow but steady return to normalThe global ec

6、onomy has entered recession and the economic cost will not be clear for weeks at least, not to mention the enormous humanitarian cost.However, it is crucial to take note that the worlds second-largest economy has effectively controlled the virus, and the government, in many parts of the country, is

7、actively encouraging businesses to return to normal. Erica Chen, who covers tech for us in Shanghai, had to wait in line for her dinner last Saturday night (see picture). The reality and implications of China (along with much of the rest of North Asia) having come through the virus intact appears to

8、 be ignored by global markets. None of this is to suggest that North Asia is not at risk of another round of infections (HK experiencing a resurgence now) nor that Asia will not have severe knock-on effects from shock to global demand and financial dislocation. But China domestic air traffic is star

9、ting to return, subway usage in key cities is back to 50% and rising, construction machinery OEM production utilisation is up to 60%, NDRC says key projects are back to 89% vs. 2% seven weeks ago.While China held rates unchanged last week, a stimulus is just a matter of time until supply bottlenecks

10、 ease, in our view. So, while the overall direction of markets will remain driven by new case levels and macro responses, investors should start re-looking at stock picks now.Asia on Sale: What to buyIn this report, each country and HK/CH sector have put forward a handful of top investment ideas as

11、well as an up-to-the minute on the ground assessment. We take the unusual step of completely revamping our Marquee list to capture the bargains that have emerged in the last few weeks. At the core of our Marquee list are a dozen high-quality sustainable growth winners. Around that, we keep a few def

12、ensives (we are not ready to call a bottom, which will likely require a stabilisation of the new cases) and a similar number of bombed-out cyclicals and mid-caps that we expect to generate significant returns in a rebound.Watch the test supply better yet, buy itWe think a key to breaking the panic i

13、s providing the population with test on request. The shortage of tests in the US and EU has been well-documented, but the supply chain is ramping up rapidly. Our coverage of Seegene (OP) has given us insights into a fragmented supply chain. The operational bottlenecks to ramping production are now b

14、eing overcome. While we approach forecasts with great humility as data is still hard to come by, we believe global production is approaching 17m within March and can reach 40m by May. Given South Korea has broken the back of the pandemic panic with 316k tests for a population of51m, a 17m flood of t

15、ests will go a long way toward slowing the spread and assuring populations that the virus is manageable. However, more test kits will mean more documented cases and so may exacerbate news-flow in short term.Please refer to page 83 for important disclosures and analyst certification, or on our websit

16、e HYPERLINK /research/disclosures /research/disclosures.AnalystsMacquarie Capital LimitedAditya Suresh, CFA +852 3922 1265 HYPERLINK mailto:aditya.suresh aditya.sureshPatrick Dai +86 21 2412 9080 HYPERLINK mailto:patrick.dai patrick.daiAllen Yuan +86 21 2412 9009 HYPERLINK mailto:allen.yuan allen.yu

17、anCherry Ma +852 3922 5800 HYPERLINK mailto:cherry.ma cherry.maErica Chen +86 21 2412 9024 HYPERLINK mailto:erica.chen erica.chenEric Zong +852 3922 4749 HYPERLINK mailto:eric.zong eric.zongJohn Wang +852 3922 3578 HYPERLINK mailto:john.wang john.wangKelvin Tam, CFA +852 3922 1181 HYPERLINK mailto:k

18、elvin.tam kelvin.tamTerence Chang +852 3922 3581 HYPERLINK mailto:terence.chang terence.changTerrence Leung +852 3922 1314 HYPERLINK mailto:terrence.leung terrence.leungCharles Yonts +852 3922 3583 HYPERLINK mailto:charles.yonts charles.yontsMacquarie Capital Limited, Taiwan Securities BranchCorinne

19、 Jian, CFA +886 2 2734 7522 HYPERLINK mailto:corinne.jian corinne.jianJeffrey Ohlweiler +886 2 2734 7512 HYPERLINK mailto:jeffrey.ohlweiler jeffrey.ohlweilerMacquarie Securities Korea LimitedDaniel Kim +82 2 3705 8641 HYPERLINK mailto:daniel.dw.kim daniel.dw.kimMacquarie Capital Securities (Singapor

20、e) Pte. LimitedJayden Vantarakis +65 6601 0916 HYPERLINK mailto:jayden.vantarakis jayden.vantarakisMacquarie Capital Securities (Japan) LimitedHiroyuki Sakaida +81 3 3512 6695 HYPERLINK mailto:hiroyuki.sakaida hiroyuki.sakaidaDamian Thong, CFA +81 3 3512 7877 HYPERLINK mailto:damian.thong damian.tho

21、ngKey investment conclusionsTech supply chain remains strong for surprising reasons: Datacenter demand and telecom equipment is seeing a surge of demand with the globe moving to work from home. There are now 100m students going to school online. Their laptops are old, and they are clamouring for lar

22、ger monitors. With supply chain in N. Asia now largely opened up and online shopping offering delivery, we expect robust demand through the rest of the year. The acceleration of the global economy online is only accelerating. We do have concerns on the Semi inventory cycle but remain high conviction

23、 on Memory.We remove TSMC from our Marquee list but keep Samsung. Add Accton for datacenters; keep Lenovo for consumer tech and datacenters; keep Sunny Optical as winner in lenses. AIchip has been hungry for TSMCs 7” capacity and will likely get access to it. We see Murata benefitting from 5G accele

24、rated buildout.The internet accelerates its takeover of the economy: An obvious conclusion, but we take the opportunity to replace Tencent with Alibaba. Tencent has been the easy trade through the crisis and has outperformed BABA. But we think BABA is going to be more resilient to the consumption sh

25、ock than is appreciated. Savings in user acquisition costs could help earnings. Crises often force advertisers to re-evaluate their budget allocation and reduce allocation to media while losing consumer mindshare. We stay long VIPS as a V-shaped recovery play on clearing inventory.Home entertainment

26、 got to beat boredom: In Korea, we add NCSoft and in Japan we keep Nexon - the globe is going to be gaming at home for some time to come. That said, online gaming will likely face an inverted U-shaped decline after seeing sharp increase in game time spend during 1H20.More bandwidth please! We add Ch

27、ina Mobile not just because of its very inexpensive valuations after six years of underperformance, but because the world is clamouring for bandwidth at an unprecedented level.Testing and Biotech: On tables 1 and 2 on our healthcare section, we reprint our latest work on the global COVID-19 testing

28、supply chain. We add Seegene to our Marquee as well as SinoBiopharm, the best long-term healthcare innovator we can find in China. Top Glove remains in the list as a global leader in rubber gloves. Yuyue is Chinas leader in household medical devices, including respirators. While its current export s

29、ales % is small, it started to see strong export orders since March, as COVID-19 spread became more sever in Europe. Add to Marquee.Education always wins: Once classes resume, Chinas government is likely to support higher education institutions to help alleviate employment concerns. After-school tea

30、ching has become more crucial than ever.A stimulus is coming: We doubt a passion for gambling has been erased from Asias consumer. Stimulus driven liquidity inevitably finds its way to Macau. MGM is the most attractive play. We also add Anhui Conch to our Marquee list. We are also adding Sany as Chi

31、nas top-heavy machinery play to the list.Pick the champions of fragmented industries as the economic shock is going to drive out marginal players. The glass industry is particularly ripe for a long overdue consolidation. We add Xinyi Glass to the Marquee list. China Resources Gas is another consolid

32、ator.Worsening NIM in China Banks: We think China banks will bear the brunt of the cost of the stimulus with worsening NIMs. Add China Merchants Bank to Marquee Underperform listGrade A office demand may be permanently impaired: Working from home is proving rather attractive for many and cost-consci

33、ous companies will be thinking about whether every employee needs to have a permanent desk in the office. Short CDL Hospitality Trust for its hotels and office portfolioMarquee Core HoldingsTickerCompanyBABA USAlibaba Group914 HKAnhui Conch601888 CHCITS941 HKChina Mobile688 HKChina Overseas Land6000

34、31 CHSany Heavy1177 HKSino BiopharmaBBCA IJBank Central AsiaHUVR INHindustan UnileverICICIBC INICICI Bank005930 KSSamsung Electronics6981 JPMurata8035 JPTokyo Electron8113 JPUnicharmFor more, please see pages 914What weve learned on successfully combatting the virusBefore getting into what seems to

35、be working, we caveat that no one method is enough, and one size does not fit all. Chinas strict enforcement of quarantine may not work in more open societies. Extensive testing may not help in some developing countries with inadequate healthcare facilities. Keep in mind also that N.Asia has been th

36、ru dress-rehearsals before with SARS and MERS, whereby this is new for many countries. But we are seeing success from a mix of the followingFlood the society with tests: S. Korea has dramatically reduced new cases and has also been the most aggressive tester, with 6,200 tests per million population.

37、 We approach the supply / demand forecast on COVID-19 tests with great humility. The demand enormous. If we extend Koreas testing rate to the global middle class (ex-China), it will imply demand for over 15m test kits. Given many tests need 3 instances of testing to be sure, we are quickly approachi

38、ng 50m test kits. The cost of the reagents ranges from US$6 to US$50 for most test kits and so is easily affordable for governments.On the supply side, our coverage of Seegene (a manufacturer of test kits) has given us insights on the global supply situation. The barriers to entry for producing reag

39、ents are not terribly high and a number of small Chinese players jumped into the market early in January to give China a surge in test supply. On figure 1, we present our best estimate at this point in time on where supply is at right now and where it could be in 5 weeks. We would again reiterate; t

40、hese are very rough estimates cobbled together from a diverse number of sources.The cost of testing varies across Asia right now. In China, they are free. In HK, this analyst got tested a few days ago (after developing a cough but no other symptoms) for a nominal HKD180 fee (result negative). HK now

41、 has capacity for 2000 tests a day but is averaging 1000 per day as of last week. HK is now testing incoming air passengers at the airport if any respiratory symptoms (since March 20)In Korea, suspected cases are tested for free but if an individual is just looking for peace of mind, it can cost aro

42、und USD200. Nevertheless, neither the PCR test nor any test should not be treated as conclusive. There are many incidents of positive-turned negative-then positive.Geolocation reporting has been effective: In Korea, the government maintains a website that shows the movements of people who have teste

43、d positive in the days before they were quarantined. The data is clearly drawn from cell phones and while geo-location privacy has been discussed for years, the urgency of the situation is pushing those concerns aside. The individual is not named but identified by age and sex and the site shows spec

44、ifically where the individual was at what time so that others who may have been nearby can be aware. Taiwan is implementing similar measures. However, it is questionable whether western societies will balk at the privacy implications. HK and Singapore is small and so tracing has been easier. China c

45、learly has much tighter social control to enforce tracing. HK also has full transparency with a dashboard showing up to date address of confirmed cases as well as any flights/ferry/taxi usage. HK shows which block (but not which apartment) patients live in.Text Messaging following Geolocation; In Ko

46、rea, citizens are also receiving routine text messages about cases that have emerged in their neighbourhood. Again, no names are disclosed, but the addresses are. Again, matching the geolocation of both the patient and the recipient of the message is integral to the system.QR codes on the mobile pho

47、ne: In China, each phone owner has been issued a QR code Green (healthy)/Yellow (suspected)/ Red(diagnosed positive). If government suspects a case, the app turns yellow. If tested positive, the Dr. informs government and QR code turns red. Public parks, malls etc inspect the phone to ensure it is g

48、reen.Contact tracing: In Singapore, if someone tests positive, the government has been quick to figure out where/when the patient has visited. All individuals the patient may have met are quickly contacted and alerted. Quarantine in Singapore has been strictly enforced with apartment compound manage

49、ments alerted and brought in to monitor that the patient does not leave home.Quarantine and Biometric wristband to enforce quarantine monitoring. HK has experimented with biometric wristband for incoming visitors who need to be quarantined.However, the press reports that only about a third of the 60

50、00 bracelets are working thus far and it is unclear whether this method will be more widely deployed. HK has a maximum penalty of HKD25,000 and 6 months imprisonment for violating quarantine. China has been vigorously enforcing quarantine.Screening at buildings: Many who live in Asia are long accust

51、omed to heat detectors at airports and major buildings. These have been more widely deployed. In Korea, visitors not wearing masks are often refused entry to major office buildings.CT scans and X-Rays: This analyst was given a routine X-Ray as a prerequisite to get tested for which CT scans for lung

52、s have been widely deployed across N. Asian hospitals. Countries with high penetration of CT scans are better prepared.Maintenance of a surplus of personal protective equipment (PPE). the assurance of possessing abundant medical supplies alleviated, at least partially, public panicTaping public area

53、s to guide social distancing: The ever-attentive Singapore government has guided F&B outlets to put tape on the floor to enforce social distancing during queuing. Simple but smart.Masks: Again simple, but when penetrated through the society (HK survey shows 98.8% of residents wear masks) it curbs As

54、ymptomatic carriers from spreading inadvertently. Asias experience with SARS and MERS meant that masks came out quickly and ubiquitously.Healthcare treatment: Of course, once a patient is diagnosed positively, the quality of the healthcare system becomes paramount. ICU beds and the accompanying vent

55、ilators are clearly a necessity for severe cases. China/HK Healthcare - Severe outcome of mild actionsMechanismMolecular diagnostics (detecting pathogens DNA)Immunoassay (using antibody-antibody reaction)Fig 1COVID-19 test comparisonMajor equipment/test Time for result ReliabilityTest costTraining r

56、equired to operateBottleneckRT-PCR (Real Time-PCR: Polymerase Chain Reaction)Serological test (most home test kits)3.5-24 hoursCould be as short as 10 mins99% (50% more accurate than immunoassay)About 85%US$150US$15Trained technician or aboveAverage personReagent manufacturing expertise/capacity.1.

57、Accuracy.Trained technician.2. Delay of disease detection until symptoms severeRegulatory approvals3. Quality control from small companiesEquipmentDNA/RNA extractor, RT-PCR machineNone neededEstimated cost for equipmentUS$100k for DNA extractor, $25k-170k for PCR machineEstimated equipment # globall

58、y50kMajor suppliersRoche, Hologic, Abbott, Thermo Fisher, Bio-Rad, etc.Major suppliers of reagentsRoche, Qiagen, Seegene, etc.ManySource: Company data, Macquarie Research, March 2020KoreaItalyUSUKJapanTaiwanCzechDenmarkIcelandFig 2 Status of global COVID-19 tests700,000600,000500,000400,000300,00020

59、0,000100,000-Feb 26Feb 27Feb 28Feb 29Mar 01Mar 02Mar 03Mar 04Mar 05Mar 06Mar 07Mar 08Mar 09Mar 10Mar 11Mar 12Mar 13Mar 14Mar 15Mar 16Mar 17Mar 18Source: Various countries heath care department, Macquarie Research, March 2020Fig 3 COVID-19 test: Global supply Rough estimatesMonthly productioncapacity

60、*Operating rate (assumption*)as of March 20Actual supply as of March 20Operating rate as of May 1Actual supply as of May 1Diversified Diagnostics companiesRoche (Switzerland)4,000,00090%3,600,000125%5,000,000Hologic (US)600,00050%300,00080%480,000Becton Dickinson (US)600,00050%300,00080%480,000Abbot