Regional Daily, Maybank KE (2014-07-07)

Daily 07 July 2014 TOP VIEWS Samsung Electronics - Prefs (005935 KS) | Rating Change China Property | OVERWEIGHT Bangkok Life Assurance (BLA TB) | Initiation Sunny Optical (2382 HK) | Rating Change Samsung Electronics - Prefs (005935 KS) It�s over for now� D/G to HOLD Share Price: KRW1.0M | Target Price: KRW1.1M (9%) | MCap (USD): 23.6B | ADTV (USD): 46M Downgrading the Prefs shares to HOLD from BUY and cutting TP to KRW1.14m (20% discount to Common shares TP) from KRW1.35m as we lower FY14/15F EPS by 12/22%. While the Prefs shares are better value than the Common shares and its relative outperformance may continue� �we are less certain if the Prefs can continue to outperform major benchmarks given the lacklustre outlook. Click here for report » China Property Sector Update Positive pointers to show Maintain OVERWEIGHT on sector with COLI, KWG and GZ R&F as Top Picks; also like Sunac as we expect upside earnings surprises. Sector valuations still cheap at close to -1 SD below six-year avg forward PER and P/B despite run-up. Key reasons we continue to like the sector: 1) land costs softening in Tier 2 and 3 cities, which should alleviate some margin concerns amidst property price cuts; 2) New start GFA down 5 months straight, we believe supply-demand will be more balanced at end-2014 or early-2015; 3) We are half way through the down cycle in the physical market, in our view, stocks should lead upturn in 2H14, while policy loosening in Tier 2 and 3 cities can serve as catalysts. (FULL REPORT WILL BE OUT SOON) Bangkok Life Assurance (BLA TB) Riding on industry growth; Init BUY Share Price: THB86.00 | Target Price: THB100 (+16%) | MCap (USD): 3.2B | ADTV (USD): 2M Initiate at BUY, Street-high TP of THB100 based on THB47 EV plus THB53 VNB; implying 19x 2015F PE, 3.9x P/BV. 20% earnings CAGR in 2013-2016F from growth in premiums and growing investment portfolio with stable ROI of 5%. ROE is 22%. Strong demand for life insurance due to low penetration rate, ageing society, rising wealth and tax incentives. Click here for report » Sunny Optical (2382 HK) No more sunshine; D/G to HOLD Share Price: HKD11.04 | Target Price: HKD10.50 (-5%) | MCap (USD): 1.5B | ADTV (USD): 10M Downgrade to HOLD as positives priced in. Stock +39% last 3 months. Forecasts, TP unchanged; Switch to FIH. 3Q momentum may slow due to China smartphone demand uncertainties and lukewarm Samsung outlook, putting its upbeat guidance at risk. Wait for better entry point. Sunny can benefit from camera migration trend but looks fairly valued after strong run-up and it�s trading at 15x FY14F PER vs historical average of only 11-12x. Click here for report » COMPANY NOTES Samsung Electronics - Common (005930 KS) | TP Revision Ebbs & Flows Chong Hing Bank (1111 HK) | Rating Change India IT Sector | OVERWEIGHT Sentul City (BKSL IJ) | Company Visit Pembangunan Perumahan (PTPP IJ) | Flash Note Malaysia Banking Sector | NEUTRAL Sime Darby (SIME MK) | Company Update RFM (RFM PM) | TP Revision Raffles Medical (RFMD SP) | Transfer Coverage Bangkok Bank (BBL TB) | Company Update Samsung Electronics - Common (005930 KS) Houston, we have a problem! Share Price: KRW1,306,000 | Target Price: KRW1,420,000 (+9%) | MCap (USD): 192.5B | ADTV (USD): 331M We further lower FY14/15F EPS by 12%/22% and cut TP to KRW1.42m (from KRW1.5m) on SOTP valuation approach. The slowdown in sales and competition in the smartphone and tablet markets are worse than expected. Without capital management, the stock could trade nearer to 1x PB FY15F given the sharp dip in earnings and ROE. Click here for report » Ebbs & Flows Regional Quants A Great 2Q14 for EM Equity Funds EM funds continued drawing inflows for four consecutive weeks. Asia xJ funds flow finished 2Q14 in the black with USD1.1bn inflows. Click here for report » Chong Hing Bank (1111 HK) A need to replenish capital in 2015 Share Price: HKD14.50 | Target Price: HKD14.85 (+2%) | MCap (USD): 814M | ADTV (USD): 0.8M Upgrade to HOLD but cut TP to HKD14.85. Cut loan growth and net fees forecasts. ROE dilution of 50bps from potential capital replenishment. Click here for report » India IT Sector Sector Update FY15 to open stronger Maintain Overweight on India IT Sector. TECHM, TCS,KPIT, and PSYS are our Top Picks. For 1QFY15, we estimate 21% YoY net profit growth for the 11 stocks in our coverage. We estimate increase in salary and visa cost (generally a 1Q phenomenon) and 3% QoQ INR appreciation to bring about 7.3% net profit decline QoQ. We continue to believe that faster pickup in demand in the US and Europe will be upside triggers to FY15-16 consensus forecast. We factor in FX rate of INR60 vs. INR62 for FY15-16, roll over our valuation to FY16F EPS and increase TP by 3-23% (refer fig. 4 on page 5). Upgrade PSYS to BUY (TP +50%). (FULL REPORT WILL BE OUT SOON) Sentul City (BKSL IJ) Key takeaways from company visit Share Price: IDR101 | Target Price: IDR140 (+39%) | MCap (USD): 266M | ADTV (USD): 2M We visited Sentul City�s management to clarify several issues surrounding the company. We think that it is being relatively transparent in communicating its challenges. The KPK will soon decide the legal status on CEO bribery case. CEO maintains his innocence and will assume normal role in the company. Maintain HOLD with TP of IDR140. Click here for report » Pembangunan Perumahan (PTPP IJ) Well armoured Share Price: IDR1,815 | Target Price: IDR2,200 (+21%) | MCap (USD): 737M | ADTV (USD): 2M Maintain BUY with unchanged TP of IDR2,200, pegging the stock at 2015 PE of 17x. Least affected by upcoming government budget cut given low exposure to public work projects. Potential delay in new government contract awards will likely be due to timing rather than project cancellation. Strong backlog order growth of 29% YoY is sufficient to support double-digit revenue growth in 2014F-2015F. PTPP has the highest order book to revenue among all contractors. Click here for report » Malaysia Banking Sector Sector Update Short-term positive price reaction? On 5 of 7 recent occasions, the KLFIN rose by 1-2% within two weeks post the announcement of a rate hike. But, it was less of an obvious trend over a 1 month period, which suggests that positive sentiment may be short-lived. We expect AFG (BUY; TP: MYR5.50, FYE3/15 yield of 4.9%) to be the main beneficiary of a rate hike. Click here for report » Sime Darby (SIME MK) Partners E&O at Elmina Estate Share Price: MYR9.63 | Target Price: MYR10.30 (+7%) | MCap (USD): 18.3B | ADTV (USD): 20M Sime is selling a 135-acre land in Elmina Estate to its 22%-associate E&O for MYR239.8m or MYR40.78psf; a fair price. A win-win case for both as Sime taps onto E&O�s expertise and reputation as a niche luxury lifestyle developer. Expect MYR145m net disposal gain in FY6/16. We leave our earnings unchanged for now. BUY with MYR10.30 TP. Click here for report » RFM (RFM PM) Fortifying leadership in pasta Share Price: PHP6.00 | Target Price: PHP7.00 (+17%) | MCap (USD): 435M | ADTV (USD): 0.1M Maintain BUY with TP raised to PHP7 on sales and earnings upgrade on under-researched stock. Newly-acquired Royal factored into forecast. High-margin ice cream business starting to recover in 2Q14. (FULL REPORT WILL BE OUT SOON) Raffles Medical (RFMD SP) Positives priced in; cut to HOLD Share Price: SGD3.86 | Target Price: SGD3.94 (+2%) | MCap (USD): 1.7B | ADTV (USD): 1M Downgrade to HOLD as surge in share price has closed the valuation discount to peers. DCF-based TP is SGD3.94. China catalyst not in sight yet despite a year-long gestation, while local competition could rise in the near-term. However, premium valuation justified by resilient corporate customer base and diversified foreign patient base. Click here for report » Bangkok Bank (BBL TB) 2Q14: An unexciting quarter Share Price: THB199.50 | Target Price: THB205.00 (+3%) | MCap (USD): 11.8B | ADTV (USD): 41M Maintain HOLD and TP THB205, implying 10.4x 2014PE, 1.2x P/BV and 12.2% ROE. Prefer KBANK and KTB . 2Q14F net profit should drop 14% YoY (flat QoQ) to THB8.8b, due to the slow loan growth and weak non-interest income. Expect weak earnings growth of 5% compare to 8-10% for other large banks in 2014. (FULL REPORT WILL BE OUT SOON) ECONOMICS Malaysia Economics External Trade, May�14 So far so good� Both exports (+16.3% YoY) and imports (+11.9% YoY) surged in May 2014. 2014 YTD figures reflected the low base in 1H 2013 when trade shrank before the rebound in 2H 2013, which should �bite� into 2H 2014 figures. Softer MYR also lifted growth via translation gains (exports in USD grew by slower +8.8% YoY and +6.2% YTD). No change in our full-year forecasts on +8.2% export growth (2014 YTD: +13.5%), +6% import growth (2014 YTD: +6.7%) and +MYR90.8b trade surplus (2014 YTD: +MYR40.8b). Click here for report »