Regional Daily, Maybank KE (2014-05-14)

Daily 14 May 2014 TOP VIEWS Malaysia Strategy Malaysia Oil & Gas | OVERWEIGHT Beijing Tong Ren Tang (8138 HK) | Company Visit Sri Trang Agro (STA TB) | Rating Change Malaysia Market Strategy Tracking the vision Malaysia is on track to meet its 2020 aspirations. Construction, oil & gas will remain long-term beneficiaries on continuous job/project flows. No change to our market view, sector and stock calls. Click here for report » Malaysia Oil & Gas | OVERWEIGHT Sector update Key takeaways from the conference The O&G market is expected to remain robust over the next 3 years with opportunities abound across the value chains. Companies with sound financials will ride on the prospect but many will likely fall out on Shariah compliance aspects. We remain Overweight in the sector. Click here for report » Beijing Tong Ren Tang (8138 HK) | Company Visit LT growth intact; Yet ST volatility Share Price: HKD9.46 | Target Price: HKD10.80(+14%) | MCap (USD): 1.0B | ADTV (USD): 2M Maintain BUY following co. visit on under-researched stock, given secular LT growth outlook. Lower HKD10 TP reflects 17%-27% cut to our FY14-16F forecast while multiple stays intact. 3-year NPAT CAGR of 26% is still attractive. Recent shareholders� approval of 68%/47% upward revision to the PRC GLSPC FY14-15F related-party sales cap bode well for earnings outlook given its better profitability profile. Management believes the acquisition of a HK-based medicine chain store in HK and formation of a JV with a New-Zealand based TCM retailer will be concluded in 2H14F. Click here for report » Sri Trang Agro (STA TB) | Rating Change 1Q ops + outlook poor; D/G to SELL Share Price: THB13.10 | Target Price: THB11.50(-12.1%) | MCap (USD): 522M | ADTV (USD): 2M Downgrade to contrarian SELL with 12M price target at THB11.5 pegged to LTM PBV-0.5x SD. We are one of 2 foreign brokers covering the stock. 1Q14 performance below expectations and downside risks on earnings rise as price outlook turns weaker on higher D/S imbalance and unfavourable outlook on synthetic rubber. Though STA is now 2x bigger than it used to be, its ROE and ROA are below cost of capital, earnings volatility remains. Click here for report » COMPANY NOTES ComfortDelGro (CD SP) | Results Review Cordlife Group (CLGL SP) | Results Review Super Group (SUPER SP) | Results Review Quality Houses (QH TB) | Company Update Sino-Thai Engineering (STEC TB) | Results Review Chularat Hospital (CHG TB) | Results Review Erawan Group (ERW TB) | Results Review Bank of China (3988 HK) | Flash note Bumi Serpong Damai (BSDE IJ) | TP revision Globe Telecom (GLO PM) | Results review ComfortDelGro (CD SP) | Results Review Yet another solid quarter Share Price: SGD2.12 | Target Price: SGD2.40(+13%) | MCap (USD): 3.6B | ADTV (USD): 7M 1Q14 net income up 9.7% YoY to SGD63.3m, in line with expectations. Broad-based revenue growth heartening; 1Q14 loss of SGD6.8m on track to meet our full-year forecast for SGD25m. DTL ridership still encouraging. Reiterate BUY with unchanged TP of SGD2.40. Click here for report » Cordlife Group (CLGL SP) | Results Review Not in full sparkle mode yet Share Price: SGD1.21 | Target Price: SGD1.43(+19%) | MCap (USD): 258M | ADTV (USD): 0.7M 3QFY6/14 results disappointed due to softness in Singapore and Hong Kong, while operations in the Philippines, India and Indonesia delivered promising results. FY6/15E is set to be a strong year as positive catalysts converge, helped by new product rollouts, Singapore�s Golden Jubilee Year and stronger contributions from China. Reiterate BUY with TP of SGD1.43, based on SOTP. Click here for report » Super Group (SUPER SP) | Results Review A slow grind Share Price: SGD3.23 | Target Price: SGD3.00 (-7%) | MCap (USD): 1.5B | ADTV (USD): 2M 1Q14 results were below expectations. An across-the-board YoY decline in revenue and profitability makes it difficult to pick out any real positives this quarter. Despite having lowered guidance last quarter for its branded consumer business, we think 5-10% growth would be difficult to achieve for FY14E. In our view, share price has factored in near-term challenges; maintain HOLD, with a lower TP of SGD3.00. Click here for report » Quality Houses (QH TB) | Company Update 1Q14: In line with expectations; SELL Share Price: THB3.04 | Target Price: THB2.30(-24%) | MCap (USD): 856M | ADTV (USD): 4M Maintain SELL TP THB2.3; expect core earnings to be weak. Core profit should drop 17%YoY in FY14. 1Q14 core profit was at THB632m (EPS THB0.07), down 20%QoQ but up 40%YoY; in line with our and consensus estimates. 1Q14 earnings account for 24% of our full-year forecast. Backlog stood at THB9.3b where THB4.8b should recognize within remaining quarter this year (38% of our 2Q-4Q14 revenue forecast). FULL NOTE WILL BE OUT SOON Sino-Thai Engineering (STEC TB) | Results Review 1Q14: in line with estimates Share Price: THB17.50 | Target Price: THB14.00(-20%) | MCap (USD): 819M | ADTV (USD): 8M Maintain SELL and TP of THB14; unjustified rich valuation at 3.2x PBV vs 2.5x (11-yr average) given no re-rating news flow catalyst. 1Q14 core profit within our expectation at THB415m (EPS THB0.27), up 11% QoQ and 3% YoY; accounts for 26% of our full-year estimate. Signs contract for new project in Lao PDR, first time STEC has bid for overseas projects for several years; signals a lack of hope in domestic projects (public and private). Click here for report » Chularat Hospital (CHG TB) | Results Review 1Q: In-line, no catalyst; HOLD Share Price: THB11.30 | Target Price: THB11.50(+2%) | MCap (USD): 375M | ADTV (USD): 0.3M 1Q14 core earnings of THB124m, up 15% QoQ and 37% YoY, within our estimates, c.27% of our FY14F- maintain our forecast. Strong earnings growth driven by: i) strong IPD revenue growth (+36% YoY); ii) price increases; iii) 113% growth from Universal Coverage. EBITDA margin stable YoY at 27% (-60bps YoY). Maintain HOLD and DCF-based TP of THB11.5, implying 3.8x PBV and 27.4x PER. We like the long-term outlook but in the near-term earnings should be diluted from aggressive expansion and rich valuation. FULL NOTE WILL BE OUT SOON Erawan Group (ERW TB) | Results Review Near expectation; Buy on weakness Share Price: THB3.74 | Target Price: THB4.50(+20%) | MCap (USD): 284M | ADTV (USD): 1M 1Q14 normalised profit of THB4m (vs. THB65m in 4Q13, and THB148m in 1Q13), within our expectation at THB7m but below market estimate at THB15m, c.5% of our FY14F. Overall occupancy rate fell to 65% with stable room rate, led RevPAR slumped 22% due to political unrest in Bangkok. While luxury resort continued improving. Blended EBITDA margin declined to 24% (vs. 34% in 1Q13). Maintain BUY with DCF-based TP of THB4.50. We believe the risk/reward is balanced at current level in the context of challenging near-term industry outlook. FULL NOTE WILL BE OUT SOON Bank of China (3988 HK) Issue of A-H preference shares Share Price: HKD3.43 | Target Price: HKD4.15(+21%) | MCap (USD): 37.0B | ADTV (USD): 125M Issue of 600m A-share and 400m H-share preference shares. Limited EPS and ROE dilution of 2% and 30bps for 2015. Raising tier-1 CAR by 85bps. Maintain BUY & TP Click here for report » Bumi Serpong Damai (BSDE IJ) Organic growth from ample land Share Price: IDR1,575 | Target Price: IDR1,800(+14%) | MCap (USD): 2.4B | ADTV (USD): 4M Maintain BUY as we remain positive on BSDE. 1Q14 earnings largely in line. We expect BSDE to grow organically going forward, underpinned by it sample and strategic landbank. Lowering our FY14-15F earnings by 22-19% as BSDE booked the majority of its bulk sales in FY13vs FY14 previously expected. Thus, decline in FY14F earnings will be normalisation from extraordinary earnings growth in FY13. Lowering TP toIDR1,800 from IDR2,000.Our TP represents38% discount to RNAV of IDR2,883 and translates into16.6x PE and 2.5x PB for FY14F. Click here for report » Globe Telecom (GLO PM) Growth sustained in 1Q14 Share Price: PHP1,695.00 | Target Price: PHP1,582.00(-7%) | MCap (USD): 5.1B | ADTV (USD): 2M 1Q14 core earnings up 9% YoY to PHP3.36b. Results were generally in line with expectations, accounting for 26.5% of our FY13 estimate. Service revenues up 9% to PHP23.23b while recurring EBIT is 18% higher with lower depreciation charges. Maintain HOLD with TP of PHP1,582. FULL REPORT TO BE OUT SOON. ECONOMICS Msia Econs | Industrial Production, Mar�14 Malaysia Econs | ETP, GTP, SRI Report Cards Malaysia Econs Industrial Production, Mar�14 Slower monthly, but faster quarterly Industrial output growth slowed in Mar 2014 by +4.3% YoY (Feb 2014: +6.7% YoY). But growth in 1Q 2014 picked up to +4.8% YoY (4Q 2013: +2.8% YoY), which should translate into firmer GDP growth. Globally, the positive industrial output growth momentum last quarter turning �choppy� this quarter. Click here for report » Malaysia Econs | ETP, GTP, SRI Report Cards ETP, GTP, SRI Report Cards Quantitatively on the right track Quantitatively, Malaysia is on the right track to become a High-Income economy. The challenges going forward are more �qualitative� in nature. These include closing the performance vs perception gap in the areas of corruption, crime, cost of living and education, as well as addressing the issues of productivity and the widening income gap. Click here for report »