Regional Daily, Maybank KE (2014-07-24)

Daily 24 July 2014 TOP VIEWS China/HK Utilities & Renewable Energy MediaTek (2454 TT) | Results Preview Quality Houses (QH TB) | Results Preview China Logistics | OVERWEIGHT China/HK Utilities & Renewable Energy 1H preview: IPPs strong, gas in line Sector update IPPs may beat Street estimates as power tariffs were not cut in 1H while coal prices were lower. Maintain NEUTRAL stance as potential tariff cut in 2H may lower IPP margins. 1H earnings of Chinese gas distributors likely to be in line with market expectations. Estimate natural gas sales grew 20-25%.StayOVERWEIGHT for on-going growth. Reiterate BUYon Power Assets and GCL-Poly. Click here for report » MediaTek (2454 TT) 3Q14 outlook likely to be muted Share Price: TWD517.00 | Target Price: TWD650.00(+26%) | MCap (USD): 27.1B | ADTV (USD): 118M MTK to report record 2Q results but muted 3Q outlook, both out 31 July. 3Q sales may be flattish to up single digit on seasonality strength from consumers and PCs, offsetting muted smartphone demand which is a transient phenomenon. Smartphone outlook impacted by 3G/4G transition, lower subsidies and inventory digestion in China but offset by the strength from overseas markets. Click here for report » Quality Houses (QH TB) 2H14 pre-sales could disappoint Share Price: THB4.10 | Target Price: THB3.10(-24%) | MCap (USD): 1.2B | ADTV (USD): 5M Maintain contrarian SELL and Street-low TP THB3.1pegged to 10x FY14 PER; anemic FY14 earnings growth and lack of pre-sales catalyst. Expect 2Q14 earnings ofTHB893m (EPS THB0.10), down 19%YoY but up 41%QoQ. Results should be announced on 8 Aug. Pre-sales target ofTHB21.6blikely to be missed as majority of new launches in 2H14willbe low-rises(76%),where sales are slower vs condos. Click here for report » China Logistics On a structural uptrend Sector update High cost of logistics in China will create demand for sophisticated value-added logistics services, providing numerous opportunities to industry players. Structural, rather than cyclical, drivers support the uptrend in China�s logistics sector over the long term. Top pick still Sinotrans; China Merchants (CM) is an alternative play. Kerry Logistics Network�s (KLN) growth is slow and valuations stretched, initiate at HOLD. Click here for report » COMPANY NOTES Hexaware Technologies (HEXW IN) Timah (TINS IJ) | Company update Hartalega (HART MK) | Rating Change Westports Holdings (WPRTS MK) | Results Review Jollibee Foods (JFC PM) | Company Update CapitaMall Trust (CT SP) | Results Review Ascendas REIT (AREIT SP) | Results Review Thailand Hotels | OVERWEIGHT Hexaware Technologies (HEXW IN) Revenue beat but margins miss Share Price: INR154 | Target Price: INR177(+15%) | MCap (USD): 764M | ADTV (USD): 5M Maintain BUY, TP of INR177 based on PER of 12x (FY15F) (FYE Dec). Stock also offers 5% yield. Strong growth in large clients led 2QFY14 revenue growth (in USD) of 6.3% QoQ, beating both consensus and our forecasts. But 260bps QoQ decline in EBITDA margin to 16.7% (3-year low) was a big miss. We factor in lower EBITDA margin and cut our EPS forecast for FY14 by 12% and FY15 by 5%. Click here for report » Timah (TINS IJ) 2Q earnings up, but costs surged Share Price: IDR1,335 | Target Price: IDR1,700(+27%) | MCap (USD): 859M | ADTV (USD): 2M 2Q13 earnings rose 13.5% QoQ on higher sales volume and lower tax rate. But costs surged in 2Q14 due to 91% hike in raw material costs. 1H14 earnings are behind our full-year forecast. We will meet with management to get a better view on costs. Maintain BUY, TP IDR1,700 (based on 2.1x P/BV) on tightening tin supply from Indonesia. Click here for report » Hartalega (HART MK) Transitioning to higher growth; U/G BUY Share Price: MYR6.65 | Target Price: MYR7.30 (+9%) | MCap (USD): 1.6B | ADTV (USD): 0.8M Capacity expansion on track; positive that existing customers have indicated full take-up for the new capacity. Strong earnings growth in FY3/16 now more plausible; we forecast +29% YoY (unchanged). Upgrade to BUY with a higher MYR7.30 TP. Click here for report » Westports Holdings (WPRTS MK) Waiting for tariff revision Share Price: MYR2.80 | Target Price: MYR2.85(+2%) | MCap (USD): 3.0B | ADTV (USD): 3M Strong 2Q14 net profit within expectations. Expect defensive growth from the ASEAN import-export activities and EU recovery. Potential tariff revision is a key re-rating catalyst; BUY. Click here for report » Jollibee Foods (JFC PM) No food safety issues in China Share Price: PHP179.50 | Target Price: PHP210.00(+17%) | MCap (USD): 4.4B | ADTV (USD): 2M JFC is not involved in recent food safety scandal in China that adversely effects the Yum group and McDonalds. JFC�s Yonghe King has been gaining recognitions and awards including for food safety. Reiterate BUY as these bode well for JFC�s China operations. Click here for report » CapitaMall Trust (CT SP) AEIs to provide downside buffer Share Price: SGD2.01 | Target Price: SGD2.30(+14%) | MCap (USD): 5.6B | ADTV (USD): 13M 2Q14/1H14 DPU rose 6.3%/5.4% YoY on AEI completions and positive rental reversion. New SGD18.5m AEI for Bukit Panjang Plaza announced with 8% targeted ROI; completion in 3Q16. Reiterate BUY with unchanged DDM-derived TP of SGD2.30. Click here for report » Ascendas REIT (AREIT SP) On solid footing Share Price: SGD2.33 | Target Price: SGD2.65(+14%) | MCap (USD): 4.5B | ADTV (USD): 12M 1QFY3/15 results in line with market expectations. Development and asset enhancement works worth SGD153.9m due for completion by end-2015 to buffer downside risks. Preferred for its well-diversified revenue; reiterate BUY with an unchanged DDM-derived TP. Click here for report » Thailand Hotels �Ni Hao�, Huanying nimen Sector Update We have a positive outlook on Chinese outbound tourism which is likely to increase to from 98m in 2013 to 128m in 2015F, representing 9% of total population. More room to grow for hotel operators. ERW (9% of room revenue) and CENTEL (8%) are the main beneficiaries from influx of Chinese tourists. Maintain OVERWEIGHT. MINT remains out top BUY on the back of its diversified hotel portfolio, strong RevPAR, and food business recovery. HOLD CENTEL (FULL REPORT WILL BE OUT SOON) ECONOMICS Singapore CPI, Jun �14 Singapore CPI, Jun �14 Lower than expected at 1.8% YoY Economics Inflation rate in Jun 2014 eased to +1.8% YoY (May 2014: +2.7% YoY), mainly on moderate increase in car prices. Core inflation rate (CPI ex-accommodation and private road transport) settled at +2.1% YoY from +2.2% YoY in May 2014. Lower our 2014 CPI forecast to +2% from +2.3% (1H 2014: +1.7% YoY) with domestic cost pressures to remain as main drivers for Singapore�s inflation this year. Click here for report »