Regional Daily, Maybank KE (2014-05-12)

Daily 12 May 2014 TOP VIEWS Philippines Strategy | Strategy HanKore Environment Tech (BIOT SP) Malaysia Property Sector | Sector update Philippines Strategy S&P upgrade justifies elevated valuation Strategy S&P upgrade confirms Philippine growth story; more likely in coming years. Higher valuation than historical average warranted by brighter prospects. Small-cap portfolio has outperformed, changes lead to more growth-oriented models. FULL REPORT TO BE OUT SOON. HanKore Environment Tech (BIOT SP) Issues abound; keep the faith Share Price: SGD0.09 | Target Price: SGD0.17 (+93%) | MCap (USD): 359M | ADTV (USD): 15M HanKore�s shares fell 18.5% last Friday over fears of CEI deal fallout as corruption investigations of SOEs extend to CEI. Separately, HanKore issued a profit warning. We are not worried as it is purely accounting adjustments with zero impact on cash flows. In our view, current share price assumes no CEI deal and presents a good entry point. Reiterate BUY with unchanged TP of SGD0.17, based on 30x FY6/15E P/E. Click here for report » Malaysia Property Sector Subdued interest Sector update Minimal interest in Malaysian property stocks; foreign focus is more on property sectors in other emerging markets. GST-themed is overplayed; housing affordability is an issue. Maintain NEUTRAL; Eco World could be the new bellwether in the property sector. Click here for report » COMPANY NOTES Chalco (2600 HK) | Company Update MISC Bhd (MISC MK) | Results Review East West Banking Corp (EW PM) | Rating Change Singapore Airlines (SIA SP) | Results Review ST Engineering (STE SP) | Results Review Midas (MIDAS SP) | Results Review Bumitama Agri (BAL SP) | Results Review Sarine Technologies (SARIN SP) Malee Sampran (MALEE TB) | Results Review Robinson Department Store (ROBINS TB) Minor International PCL (MINT TB) | Results Review CH. Karnchang (CK TB) | Company Update L.P.N. Development (LPN TB) | Company Update Chalco (2600 HK) Pressure rises for more changes Share Price: HKD2.76 | Target Price: HKD3.20(+16%) | MCap (USD): 4.8B | ADTV (USD): 5M Chalco is reducing operating costs but aluminium prices fell even more during 1Q14 YoY. We further reduce our EPS estimates, but see results improving from the 1Q14 trough. We anticipate more aluminium production cuts in response to the recent slide in aluminium prices to the lowest quartile of global producers and setting a floor under the market. Reiterate BUY (speculative) with DCF-based TP of HKD3.20 (unchanged). We look forward to a thorough update on the progress of the cost initiatives in the 1H14 results. Click here for report » MISC Bhd (MISC MK) Petroleum ops fuelled 1Q14 Share Price: MYR6.41 | Target Price: MYR7.20 (+12%) | MCap (USD): 8.9B | ADTV (USD): 3.2M 1Q14 results in line; petroleum ops the key positive outlier. Expect QoQ weakness in 2Q14 as petroleum ops softens. Maintain BUY and MYR7.20 SOP-TP. Click here for report » East West Banking Corp (EW PM) Above-industry NIM maintained Share Price: PHP31.20 | Target Price: PHP31.80(+2%) | MCap (USD): 797M | ADTV (USD): 0.2M Downgrade to HOLD and TP of PHP31.80 with limited 2% upside, equivalent to 1.6x 2014F P/BV relative to 12.9% ROE. Drop in 1Q14 earnings was expected due to normalizing trading gains. Core lending business remains strong with 38% loan growth and 8% NIM. FULL REPORT TO BE OUT SOON. Singapore Airlines (SIA SP) Restraining capacity growth Share Price: SGD10.25 | Target Price: SGD12.00(+17%) | MCap (USD): 9.7B | ADTV (USD): 11M Maintain BUY with TP unchanged at SGD12.00, pegged to 1.05x FY3/15E P/BV. Slowdown in capacity expansion could arrest slide in yields. 4QFY3/14 net profit of SGD27m met expectations, operating loss of SGD60m a miss. Full-year DPS doubled to 46 SGD cts, including a special DPS of 25 SGD cts. This gives an attractive 4.5% dividend yield. Click here for report » ST Engineering (STE SP) No catalysts in sight Share Price: SGD3.86 | Target Price: SGD4.00(+4%) | MCap (USD): 9.6B | ADTV (USD): 7M 1Q14 net income of SGD137.2m (+2.4% YoY), tracking below our projected growth of 6.8% for the full year. VT Halter Marine no longer on the shortlist for the major Offshore Patrol Cutter contract. Potential catalyst lacking. Maintain HOLD with unchanged TP of SGD4.00, pegged to 20x FY14E. Click here for report » Midas (MIDAS SP) Better quarters ahead Share Price: SGD0.47 | Target Price: SGD0.75(+61%) | MCap (USD): 454M | ADTV (USD): 2M 1Q14 results were in line. Bottom line swung to a profit of CNY11.5m vs a loss of CNY4.9m last year. 1Q is usually the weakest quarter. We expect stronger quarters ahead on higher utilisation rates and maiden contributions from the two HSR orders secured in April. Maintain BUY with TP unchanged at SGD0.75, pegged to 1.5x FY14E P/BV. Click here for report » Bumitama Agri (BAL SP) 1Q14 results � no surprises Share Price: SGD1.145 | Target Price: SGD1.38 (+21%) | MCap (USD): 1.6B | ADTV (USD): 0.6M 1Q14 results met our and market expectations. An interim DPS of 1.3 SGD cts was declared. Reiterate BUY with an unchanged TP of SGD1.38, based on 16x FY15E P/E. Click here for report » Sarine Technologies (SARIN SP) Another glittering quarter Share Price: SGD2.40 | Target Price: SGD3.09(+29%) | MCap (USD): 667M | ADTV (USD): 0.7M Record 1Q14 net profit of USD9.1m (+12.6% YoY, +103.5% QoQ) in line with our expectations. Strong GalaxyTM sales with 15 units delivered in 1Q14, bringing installed base to 157. Maintain BUY with unchanged DCF-based TP of SGD3.09. Click here for report » Malee Sampran (MALEE TB) 1Q14 in line, positive outlook Share Price: THB37.00 | Target Price: THB47.00 (+27%) | MCap (USD): 160M | ADTV (USD): 0.5M Maintain BUY and THB47 TP as we expect earnings momentum to pick up in the subsequent quarters on execution of orders from contract manufacturing (CMG). 1Q14 net profit THB85mn flat YoY and in line with our expectation, c. 16% of our FY14F � forecast unchanged. Gross margin for domestic sales rose by 720bps over a year ago, driving blended gross margin to 31.8%, up by 570bps! Click here for report » Robinson Department Store (ROBINS TB) 1Q net beat, but no catalyst Share Price: THB50.00 | Target Price: THB53.00(+6%) | MCap (USD): 1.7B | ADTV (USD): 1M Net profit of THB539m, down 2% YoY, beat our estimate by 8% because of higher margin and other income. Same-store sales contracted 3.3%, while total merchandising sales fell 5.8% due to cannibalisation and slowing consumption causing new stores to underperform. Maintain HOLD. While we like the long-term proposition of ROBINS, in the short term it�s very challenging. DCF-based target price is THB53. Click here for report » Minor International PCL (MINT TB) Net 18% beat; Buy on Dips Share Price: THB23.80 | Target Price: THB30.00(+26%) | MCap (USD): 2.9B | ADTV (USD): 6M 1Q14 core net profit of THB1,420mn, down 9% QoQ but up 27% YoY, exceeds our and consensus expectations, c.33% of our FY14F � forecast unchanged. Earnings growth drivers: i) robust hotel management fees; ii) double profit from investments; and iii) lower taxes. Blended EBITDA margin fell to 22% in 1Q14 (vs. 26% in 1Q13). Maintain BUY with DCF-based TP of PT THB30. We expect share price to pullback during May-Aug low season combined with ongoing political conflict. We advise Buy on Dips. Click here for report » CH. Karnchang (CK TB) Smooth on a bumpy ride; top pick Share Price: THB17.30 | Target Price: THB20.49(+18%) | MCap (USD): 902M | ADTV (USD): 8M BUY as sector Top Pick with TP of THB21 pegged to 2.1x FY14 PBV (11-yr avg); we like its ability to generate its own work from CK�s group amid downturn in construction business. 1Q14 net profit should be THB289m (EPS THB0.17), down 78% QoQ and 94% YoY due to no extra gain in 1Q14; results out on 15-May. Industry outlook remains dull without functional government; only Suvarnabhumi Phase II (THB48b) could open for bidding, tentatively in June-14. FULL REPORT TO BE OUT SOON L.P.N. Development (LPN TB) 1Q14: Bang on the target Share Price: THB16.80 | Target Price: THB14.00(-17%) | MCap (USD): 763M | ADTV (USD): 4M Maintain SELL and TP of THB14 based on 8.9x FY14 PE; rich valuation at 10.8x FY14 PE with flat earnings growth this year. Prefer AP (TP THB6.5) and SPALI (TP THB25.5). 1Q14 earnings at THB350m (EPS THB0.24), down 37% QoQ and 3% YoY; in line with our and consensus estimates. 1Q14 net profit accounts for 15% of our full-year estimate Stay bearish given lack of positive momentum in terms of presales and earnings growth this year. FULL REPORT TO BE OUT SOON