Regional Daily, Maybank KE (2014-07-10)

Daily 10 July 2014 TOP VIEWS Indonesia Election Bekasi Fajar (BEST IJ) | Rating change UMW Oil & Gas Corporation (UMWOG MK) | Company update Nickel Asia (NIKL PM) | Rating change Indonesia Election How long will the honeymoon be? Strategy Market will cheer Jokowi�s win, but fundamental challenges remain. He is expected to deliver strong structural reforms to boost economic growth back to above 6%. There is potential hiccup in medium-term corporate earnings as we expect new gov�t to hike domestic fuel price (cut fuel subsidies), likely to come with substantial min. wage hike. We continue to believe infrastructure, healthcare, and mass market consumer sectors will benefit from a Jokowi gov�t. Six stocks to buy: Bank Rakyat, Indocement, Pembangunan Perumahan, Adhi Karya, Jasa Marga and Kalbe Farma. Click here for report » Bekasi Fajar (BEST IJ) | Rating change Looking beyond 2014; U/G to BUY Share Price: IDR479 | Target Price: IDR650(+36%) | MCap (USD): 394M | ADTV (USD): 1M Upgrade to BUY with raised TP of IDR650 (from IDR500) as we believe BEST still has the most prime industrial land bank in Indonesia. They currently have 937ha of land bank. We turn more positive on Indonesia�s industrial estate sector as Joko Widodo is named as winner of Indonesia�s Presidential election according to quick count. We believe that he will promote Indonesia�s industrialization to create more jobs in the country. We expect another wave of investment in industrial estate land from auto sector as we believe that Indonesia�s annual car sales will double to 2.5m units by 2018F (15% 5yr CAGR). Click here for report » UMW Oil & Gas Corporation (UMWOG MK) Maiden contract in Myanmar Share Price: MYR4.16 | Target Price: MYR5.15 (+24%) | MCap (USD): 2.8B | ADTV (USD): 6.2M Bags first JU drilling charter in Myanmar for USD51m. Expect more contract announcements in 2H14. Reiterate BUY and MYR5.15 TP, based on 23x FY15 PER. Click here for report » Nickel Asia (NIKL PM) Tight supply to persist Share Price: PHP33.80 Target Price: PHP43.87 (+30%) MCap (USD): 2B ADTV (USD): 2M Upgrade to BUY and raise TP to PHP43.87. Strong demand from China has sharply increased NIKL�s price and volume guidance for this year. Depleting reserves/resources of regional suppliers, long gestation for Indonesian processing plants and continuous growth in demand from China result in a long-term deficit. Our revised price and volume assumptions lead to significant earnings upgrades and higher DCF-based TP. (FULL REPORT WILL BE OUT SOON) COMPANY NOTES Sinotrans (598 HK) | TP Revision OUE Ltd (OUE SP) | Company update OCBC Bank (OCBC SP) | Company update TSH Resources (TSH MK) | Company update Sinotrans (598 HK) Great deal, strong EPS outlook: BUY Share Price: HKD5.17 | Target Price: HKD6.20(+20%) | MCap (USD): 2.8B | ADTV (USD): 6M As promised, announced it will acquire lucrative logistics assets from parent priced at undemanding 11.2x FY13 PER. RaisingFY15-16F earnings by 6.2% and 7.3% to reflect profit enhancements. Raising TP to HKD6.20from HKD5.10. Reiterate BUY. Now forecast strong 3-year earnings CAGR of 27.6%, yet stock trading at only 11.8x FY15F PER vs16.7x for regional peers. Further upside once we factor in asset synergies. More asset injections likely, another catalyst. Click here for report » OUE Ltd (OUE SP) Greasing its capital recycling wheel Share Price: SGD2.43 | Target Price: SGD2.80(+15%) | MCap (USD): 1.9B | ADTV (USD): 1M One Raffles Place (ORP) mall reopened after a major revamp, with new tenants such as H&M and UNIQLO already in operation. Works continue at OUE Downtown and Downtown Gallery, which we expect could be recycled for capital into OUE Hospitality Trust (OUEHT) and OUE C-REIT by 2017. Incorporating our TP for recently-initiated OUEHT and adjustments for the distribution in specie, we trim our TP to SGD2.80, pegged to a 35% discount to RNAV. Maintain BUY. Click here for report » OCBC Bank (OCBC SP) Higher hurdle to cross Share Price: SGD9.45 | Target Price: SGD9.63(+2%) | MCap (USD): 26.6B | ADTV (USD): 29M With Elliott Capital Advisors in the picture, the privatisation bid for Wing Hang Bank looks challenging. A higher offer price for WHB would be negative; we think OCBC is likely to keep its stake at 75% before embarking on its second privatisation bid for WHB a year from now. Negative view reinforced; reiterate HOLD. Click here for report » TSH Resources (TSH MK) Diligent planter Share Price: MYR3.66 | Target Price: MYR3.40(-7%) | MCap (USD): 1.0B | ADTV (USD): 0.6M FFB output will grow at double digit in 2014. TSH prefers greenfield land for expansion; acquisition of brownfield assets would require fund raising via equities. Impact of El-Nino would be minimal if it is not severe and prolonged. Maintain Hold at unchanged TP of MYR3.40. Click here for report » ECONOMICS BNM Monetary Policy Preview | Economics BNM Monetary Policy Preview Figuring Out �Financial Imbalances� Economics We investigate �financial imbalances� as the phrase becomes a key feature in BNM�s recent Monetary Policy Statements (MPS). By analysing a number of indicators in terms of their deviations from trend as indication of build up or existence of �financial imbalances�. With remarks and evidence of �financial imbalances�, we expect BNM to raise OPR by up to 50bps in 2H 2014, possibly as soon as this evening. Click here for report »