Regional Daily, Maybank KE (2014-07-21)

Daily 21 July 2014 TOP VIEWS TCL Communication (2618 HK) | Company Update RGL Plantation | NEUTRAL Bumi Resources Minerals (BRMS IJ) | Company update China Coal Energy (1898 HK) | Flash note TCL Communication (2618 HK) A shot in the arm Share Price: HKD10.18 | Target Price: HKD12.00(+18%) | MCap (USD): 1.5B | ADTV (USD): 6M Microsoft�s plan to lay off 12,500 staff, scale back R&D and production of low-end phones previously under Nokia is positive for TCL. Microsoft is likely to exit the feature phone market, as we predicted back in Oct-13. Nokia shipped 220m feature phones in 2013. If TCL sells just 10m more units as result of Nokia�s exit, this would boost our FY14F EPS by 10-12%. TCL is reporting its 2Q results on 15 August and we expect a strong set of numbers and to surpass consensus considerably. Click here for report » RGL Plantation Key takeaways from Conference Sector update El Nino is not here yet, and the weather expert at our plantations conference has ruled out a strong El Nino in 2014. Indonesia�s biodiesel consumption has lagged expectations with 0.4m-0.45m KL consumed in 1Q14. Besides oilseeds supply concerns, the above developments also contributed to the recent CPO price correction. Stay NEUTRAL on the sector. Click here for report » Bumi Resources Minerals (BRMS IJ) Better comfort level Share Price: IDR254 | Target Price: IDR350 (+38%) | MCap (USD): 556M | ADTV (USD): 0.4M Reiterate BUY and TP of IDR350. Catalyst: shareholder change. Undemanding 0.4x P/BV. We see high certainty of transfer of BRMS to CIC as that is part of BUMI�s debt restructuring. Our TP is not aggressive as we only take into account Newmont and Dairi projects. This under-researched name remains one of our Top Picks. Click here for report » China Coal Energy (1898 HK) Profit warning; Reiterate SELL Share Price: HKD4.12 | Target Price: HKD3.25 (-25%) | MCap (USD): 2.2B | ADTV (USD): 9M Reiterate SELL after warning that 1H14 profits will decrease 65-75% YoY due to a substantial decline in coal prices and sluggish industrial demand growth. This is in line with our unchanged forecast 73% YoY fall in 1H14E EPS to CNY0.07. We do see significant downside risk to consensus 2014 EPS of at least 24% to our CNY0.16 est. Further downside is likely if coal prices do not improve by year-end, as we forecast. Overall, we see downside to consensus EPS for all thermal coal companies with Shenhua (1088 HK; HKD20.85; BUY) the least impacted relative to China Coal and Yanzhou Coal (1171 HK; HKD5.80; HOLD) whose earnings are more volatile. Click here for report » COMPANY NOTES Cairn India (CAIR IN) | Results preview Malaysia Construction | OVERWEIGHT Lafarge Republic (LRI PM) | TP revision CapitaCommercial Trust (CCT SP) | Results Review Thanachart Capital (TCAP TB) | Results review Ticon Industrial Connection (TICON TB) | Results Preview Ebbs & Flows Cairn India (CAIR IN) Exploration upside key for re-rating Share Price: INR347 | Target Price: INR400(+15%) | MCap (USD): 11.0B | ADTV (USD): 17M Maintain BUY with DCF-based TP of INR400. For 1QFY15, we estimate EPS to decline to INR15.3 due to higher production and manpower costs (-6% YoY and QoQ each). Our estimate is 9% above consensus. CAIR trades at undemanding PER of 5x FY15F and P/B of 1x with dividend yield of 4%. Increase in proven reserves at its main Rajasthan field and in Sri Lanka and Africa where it is carrying out exploration would be a catalyst for the stock. Click here for report » Malaysia Construction Optimism continues Sector update Continuing from the positive developments in 1H14, we expect construction job awards and positive news flow to sustain in 2H14 and into 2015. An upcoming state election in Sarawak and higher oil royalty request by the oil producing states, if approved, should filter down to more development spending. Long-term orderbook sustainability is intact and will support earnings. Despite outperformance, sector valuations still at discount to KLCI. Maintain Overweight; Gamuda is Top BUY. Click here for report » Lafarge Republic (LRI PM) TP cut on potential asset disposal Share Price: PHP9.44 | Target Price: PHP12.50(+32%) | MCap (USD): 1.3B | ADTV (USD): 0.4M TP cut to PHP12.50 on 50% discount to DCF-based valuation. Earnings downgraded for 2014F but little changed for 2015F. Maintain BUY as valuation remains undemanding. Click here for report » CapitaCommercial Trust (CCT SP) Poised to benefit from rental uplift Share Price: SGD1.67 | Target Price: SGD1.83(+15%) | MCap (USD): 4.0B | ADTV (USD): 10M 23% pre-commitment leases signed to-date for CapitaGreen. The expanded scope for AEI at Capital Tower will delay the completion date by six months to 4Q15. GIC to renew leases at Capital Tower next year with significant reversion. Click here for report » Thanachart Capital (TCAP TB) 2Q earnings squeezed by provisions Share Price: THB35.75 | Target Price: THB29.00(-19%) | MCap (USD): 1.4B | ADTV (USD): 3M 2Q14 earnings down 7% QoQ and 70% YoY to THB1.2b, below our and market estimates by 7% due to high credit costs. TCAP has low competitiveness in corporate and SMEs; cut loan growth to 3% from 5%. Provisioning risk remains high. Maintain SELL and TP of THB29, implying 0.7x 2014 P/BV and 7x PER. Prefer SCB, KBANK and KTB. Click here for report » Ticon Industrial Connection (TICON TB) 2Q14 weak but looking to better 2H Share Price: THB19.40 | Target Price: THB24.00 (+21%) | MCap (USD): 621M | ADTV (USD): 4M Maintain Buy with lower TP of THB24 (from THB24.32) based on 2.1x 5-yr PBV. 2Q14 earnings could drop 11% QoQ and 23% YoY due to continued sluggish factory business and no major asset sale. Outlook is improving and the base case scenario of a rushed 2H is panning out. TICON�s medium term outlook could receive additional boost from strategic partnership with a Japanese investor in REITS to be launched in 2H. Click here for report » Ebbs & Flows Regional Quants Risk-on trade flourishes in Asia xJ This is a weekly fund flows tracker for emerging markets. EM funds saw inflows for a sixth consecutive week, albeit pace of inflows slowed. Asia x-Japan equity funds continued to attract funds flow. Click here for report »