Regional Daily, Maybank KE (2014-04-24)

Daily 24 April 2014 TOP VIEWS Hongkong Land (HKL SP) | Initiation Singapore Banks | Sector update Barakah Offshore Petroleum (BARAKAH MK) | Company update Hongkong Land (HKL SP) Recentralization theme; initiate BUY Share Price: USD6.83 | Target Price: USD8.16 (+19%) | MCap (USD): 16.1B | ADTV: USD8M Initiate at BUY, TP USD8.16. We're bullish as we expect: i) �recentralization� theme in next 2 years; ii) Grade A office rents in Central to rise 5-6% in 12M; and iii) lack of supply in Central with upside risks on demand and pick-up in leasing enquiries. In addition, valuations look attractive at 37% discount to NAV of USD10.88/sh and 0.59x 2014 P/B (vs long-term avg of 0.73x forward P/B). Our TP is pegged to 25% discount to NAV, similar to long-term average of 23.5% discount. Potential catalysts include faster-than-expected take up in Central, especially at Two Exchange Square and Citibank Plaza, which could enhance landlords' rent negotiations. Click here for report » Singapore Banks Sector update Safety nets for home loans Property market weakness has stoked fears of fallout in housing loan quality; the health of housing market is critical to banks as mortgages account for 29% of total DBU loans. We see slim chances of fallout, given the cooling measures in place since 2009, strong household balance sheets and resilience of housing loans in past economic cycles. Maintain Overweight on banks. DBS remains our top sector pick, followed by UOB. Stay cautious on OCBC. Click here for report » Barakah Offshore Petroleum (BARAKAH MK) Gets Pengerang�s pipeline job Share Price: MYR1.61 | Target Price: MYR1.90 (+18%) | MCap (USD): 0.3B | ADTV: USD1.7M Will contribute about MYR13m, based on its 50% stake. Raised FY14-16 net profit forecasts by 1-4% with majority of works recognised in FY15. Maintain BUY with a higher MYR1.90 TP, pegged to 14x FY15 FD PER. Click here for report » COMPANY NOTES Indonesia Poultry | Under Review Alam Maritim (AMRB MK) | Company update Philippine Business Bank (PBB PM) | Results review CapitaMall Trust (CT SP) | Results review The Link REIT (823 HK) | Initiation Cache Logistics Trust (CACHE SP) | Results review AP (Thailand) (AP TB) | Results preview China Merchants Holdings (144 HK) | Company update Indonesia Poultry | Under Review Sector update New regulation changes the game New regulation caps DOC price and reduces DOC supply, which will negatively impact the poultry sector. Capped DOC supply could trigger higher chicken prices, thus higher inflation risks. MAIN would be negatively impacted the most. We will review our forecasts and sector recommendation. Click here for report » Alam Maritim (AMRB MK) Enter new shareholders Share Price: MYR1.65 | Target Price: MYR1.90 (+15%) | MCap (USD): 0.4B | ADTV (USD): 1.8M Hong Leong Company (Malaysia) and Caprice Capital emerge as new shareholders with aggregate 13% stake. Proceeds will be timely for its fleet expansion program. Reiterate BUY but MYR1.90 TP (15x 2015 PER) is under review. Click here for report » Philippine Business Bank (PBB PM) Solid core lending in FY13 Share Price: PHP24.10 | Target Price: PHP29.00(+20%) | MCap (USD): 186M | ADTV (USD): 0.0M Maintain BUY with TP of PHP29, equivalent to 1.3x 2014F P/BV relative to 13.2% ROE. FY13 earnings mostly within expectations, no change to FY14 forecast of PHP925m. Forecast 17% earnings rebound in FY15. Click here for report » CapitaMall Trust (CT SP) Small boost to revenue Share Price: SGD1.99 | Target Price: SGD2.05(+3%) | MCap (USD): 5.5B | ADTV (USD): 14M 1Q14 revenue rose 5.8% YoY to SGD164.7m on AEI completion and positive rental reversion. Possible tenant cannibalisation in Jurong East with IMM and JCube seeing QoQ drop in occupancy of 80bps and 70bps. Maintain HOLD with DDM-derived TP unchanged at SGD2.05. Click here for report » The Link REIT (823 HK) Limited upside; Initiate at HOLD Share Price: HKD38.50 | Target Price: HKD41.47(+8%) | MCap (USD): 11.5B | ADTV (USD): 18M Initiate at HOLD, DDM-based HKD41.47 TP given limited upside with 4.20% distribution yield for FY14 (March YE), 4.50% for FY15 and 1.1x forward book. We forecast distributable profit growth will slow to 11.6% YoY in FY14 and 9.9% in FY15 from FY13�s impressive 14.6%. Recent share price run-up on excitement around proposed HK REIT Code changes and pending China deals also implies upside may be capped. Click here for report » Cache Logistics Trust (CACHE SP) No surprises in 1Q14 results Share Price: SGD1.17 | Target Price: SGD1.15(-2%) | MCap (USD): 724M | ADTV (USD): 0.8M 1Q14 results in line with our and consensus forecasts. Foray into build-to-suit development with DHL Supply Chain is positive. This asset will account for 12% of our total GAV. Reiterate HOLD with a DDM-derived TP of SGD1.15. Click here for report » AP (Thailand) (AP TB) Back for good � stay at BUY Share Price: THB5.65 | Target Price: THB6.50(+15%) | MCap (USD): 500M | ADTV (USD): 2M Reiterate BUY, top sector pick, TP THB6.50: valuation is the cheapest in the sector with moderate earnings visibility (57% of our FY14 revenue forecast is secured). Short-term catalyst will come from strong 2Q14 pre-sales. Estimate 1Q14 earnings of THB284m (EPS THB0.10), up 28% YoY. Gross margin should be stable at 33.5%. 1Q14 pre-sales THB2.2b, down 44% YoY, mainly due to the cancellation of Rhythm Sathorn condo (THB1.1b) sales. But stripping this out, 1Q14 pre-sales fell only 15% YoY. Click here for report » China Merchants Holdings (144 HK) | Company update On stable course, but prefer Cosco Share Price: HKD25.30 | Target Price: HKD33.30(+32%) | MCap (USD): 8.2B | ADTV (USD): 13M 1Q14 organic throughput growth is slightly behind forecast, but this is offset by new terminals including Sri Lanka, Djibouti and Terminal Link. Reiterate BUY as we see healthy 13% recurring earnings growth in FY14F. But prefer Cosco Pacific for its cheaper multiples and better growth pace. SASAC�s appointment of CM�s chairman Fu Yu-ning as the new head of China Resources Group probably hints a change in leadership at CM. Click here for report » ECONOMICS BoT could wait until Jun Singapore CPI, Mar �14 BoT could wait until Jun Economics To take further action We do not see inflation as a significant constraint on the BoT�s monetary easing as inflation would be curbed by weak domestic demand. BoT data due later this month and 1Q14 GDP due on 19 May could convince the BoT to deliver a rate cut on 18 Jun, or before year-end. Click here for report » Singapore CPI, Mar �14 Economics Back to trend at 1.2% YoY Inflation rate in Mar 2014 rose +1.2% YoY (Feb 2014: +0.4% YoY) with slower inflation for 1Q2014 at +1.0% YoY (1Q2013: +4.0% YoY). Core inflation rate (CPI ex-accommodation and private road transport) edged higher to +2.0% YoY (Feb 2014: +1.6% YoY). Domestic cost pressures will remain as main drivers for Singapore�s inflation going forward with subdued risk from external price pressure. Click here for report » OTHERS Tech-Tracks Tech-Tracks Technicals Buy ASEAN, Sell Vietnam Sustained investor buying in ASEAN buoyed markets in Malaysia, Indonesia, Thailand, Singapore and Philippines. Vietnam peaks at resistance level of 609.46; Advocate sell Vietnam, long ASEAN strategy. Top BUYS: SBC Corporation Berhad (SBC MK), China Gas Holdings Limited (384 HK), Oxley Holdings Limited (OHL SP), PT Bank Rakyat Indonesia (Persero) Tbk (BBRI IJ), KCE Electronics Public Company Limited (KCE TB) and Semirara Mining Corporation (SCC PM). Click here for report »     Click here for full Regional Daily report »