Regional Daily, Maybank KE (2014-07-25)

Daily 25 July 2014 TOP VIEWS Country Garden (2007 HK) | Rating Change Vale Indonesia (INCO IJ) | Results review Power Assets Holdings (6 HK) | TP revision Country Garden (2007 HK) More room to go; U/G to BUY Share Price: HKD3.77 | Target Price: HKD4.60(+22%) | MCap (USD): 9.3B | ADTV (USD): 17M Upgrade to BUY with unchanged TP of HKD4.60,implying 22% potential upside. Down 19% YTD, trades at 43% discount to NAV, 5.0x FY15 PER and 0.98x FY15 P/BV. Despite our continued belief that margin recovery will be difficult for CG in 2014, we fee the quickly changing policy backdrop and likely looser monetary environment mitigate any of our previous concerns. Last month, management guided lower 2014 GPM similar to 2H2013 levels, meaningabout25% post-LAT or 28-29% pre-LAT. We trim our 2014 core profit by 3% after margin tweak. July project launches in Zhejiang Haining, Luoyang, and Nantong saw encouraging sell-through ratio sat ~80%. We believe growth in July could be flat vs June (CNY9.1b), which is fine given this month is seasonally slower. Company expects strong sales in Sep and Oct. Click here for report » Vale Indonesia (INCO IJ) Solid 2Q14 earnings Share Price: IDR3905 | Target Price: IDR4600 (-18%) | MCap (USD): 3.4B | ADTV (USD): 5M Maintain BUY and Street-high TP IDR4,600. Catalyst: higher nickel price in 4Q14 once China runs down inventory. Solid 2Q14 earnings in 2Q14 due to higher ASPs and slightly lower costs. Management demonstrated its capability as 1H14 earnings remained up YoY driven mainly by lower costs. Click here for report » Power Assets Holdings (6 HK) HKD64b cash, ample bullets Share Price: HKD70.60 | Target Price: HKD82.50 (+17%) | MCap (USD): 19.4B | ADTV (USD): 20M 1H14 net profits were HKD56.6b. After stripping out one-off gain from the HKE spin-off, net recurring earnings were HKD3,616m, down 24%, largely in line with market expectations. Earnings from the UK were HKD2.4b, flat YoY, contributing 62% of total earnings. Slightly lower Australian earnings were mainly due to depreciation of the Australia dollar. Maintain BUY with slightly lower TP of HKD82.50. We are optimistic on the pace of overseas expansion in 2H14. Click here for report » COMPANY NOTES Jaiprakash Associates(JPA IN) | TP Revision Bumi Serpong Damai (BSDE IJ) | Results Review AKR Corporindo Tbk (AKRA IJ) | Results Review Bekasi Fajar (BEST IJ) | Results Review Kimia Farma (KAEF IJ) | Results Review Yinson Holdings (YNS MK) | Company Update Malaysia Airports Holdings (MAHB MK) | Results Review IGB REIT (IGBREIT MK) | Results Review Public Bank (PBK MK) | Results Review RFM Corp (RFM PM) | Results Review Keppel Corp (KEP SP) | Results Review Erawan Group (ERW TB) | Result Preview Semen Indonesia (SMGR IJ) | Company Update Jaiprakash Associates(JPA IN) Power plant sale deal cancelled Share Price: INR62 | Target Price: INR93(+50%) | MCap (USD): 2.3B | ADTV (USD): 46M In a surprise move, TAQA (Abu Dhabi based investor) withdrew from the deal to acquire JPA's two hydro power plants worth INR96b signed in Mar '14. This would delay JPA's debt reduction plans by 6-9 months. JPA would have cut debt by 18% by Nov' 14. The company said it would look for new investors for this sale. We are not concerned about JPA's ability to service the debt since EBITDA of INR15b from these plants is more than sufficient to pay interest. We cut our SOTP-based TP by 10% to INR93 (earlier TP was INR104) because debt would be high as of Mar '16. We think yesterday's 6% correction in stock price factors in this development and maintain BUY. (Full note will be out soon) Bumi Serpong Damai (BSDE IJ) 2Q net in line; Top BUY Share Price: IDR1,650 | Target Price: IDR1,800(+9%) | MCap (USD): 2.5B | ADTV (USD): 2M 2Q14 earnings of IDR2.08t (+324% QoQ), boosted by IDR1.58t extraordinary income. 1H14 earnings IDR2.56t (+67% YoY). Organic 1H14 earnings of IDR983b, in line with our estimate (49%) and consensus (47%). Reiterate BUY, top sector pick with TP of IDR1,800 (38% discount to RNAV of IDR2,898). Click here for report » AKR Corporindo Tbk (AKRA IJ) 2Q earnings better than expected Share Price: IDR4,435 | Target Price: IDR5,500(+24%) | MCap (USD): 1.5B | ADTV (USD): 3M Maintain BUY, TP IDR5,500 on structural reform in economy. 2Q14 earnings of IDR196b topped our estimate, driven by margin expansion in the fuel business, higher fuel sales volume and lower tax rate. Fuel sales volume rose5.4% QoQ on the back of strong growth in subsidized fuel volume. Click here for report » Bekasi Fajar (BEST IJ) 2Q missed, FY15-16 positive: BUY Share Price: IDR590 | Target Price: IDR650(+10%) | MCap (USD): 494M | ADTV (USD): 1M 1H14 earnings of IDR125b (-53% YoY) make up only 20% of our and consensus expectations.2Q14 earnings of IDR34b down 63% QoQ. Management stated it is experiencing delays in recognizing revenues and it may cut its FY14F revenue target to IDR800b from IDR1,200b. Maintain BUY with TP of IDR650 as we expect FDI to return in 2015. BEST major beneficiary as it has ample land reserves. Click here for report » Kimia Farma (KAEF IJ) 6M14 results above estimates Share Price: IDR975 | Target Price: IDR1,200(+23%) | MCap (USD): 448M | ADTV (USD): 0.4M 6M14 net earnings up 65% YoY to IDR71bn, above expectations (30% of our FY14F earnings forecast). TP under review. Revenue growth continued, up 19% QoQ. We believe this was due to the impact of National Health Insurance. EBIT margin expanded 450bps vs 1Q14, mainly on cost efficiencies from restructuring of its distribution business. (Full report will be out soon) Yinson Holdings (YNS MK) Sells Petroleo Nautipa for USD59m Share Price: MYR2.95 | Target Price: MYR3.03 (+3%) | MCap (USD): 1.0B | ADTV (USD): 1.3M A good deal, set to make MYR79mgain from this transaction. Short-term earnings dilution; proceeds to be channelled for new opportunities that would enhance values and earnings. Reiterate BUY and MYR3.03TP(19xFY1/16 PER target). Click here for report » Malaysia Airports Holdings (MAHB MK) Surprise loss Share Price: MYR7.60 | Target Price: MYR6.90 (-9%) | MCap (USD): 3.3B | ADTV (USD): 4.5M 2Q14 core net loss was a negative surprise. Depreciation soared, followed by utilities and mantainence costs. Forecasts reviewed, TP lowered to MYR6.90. Share price has however weakened ahead; upgrade to HOLD (from SELL). Click here for report » IGB REIT (IGBREIT MK) Beat expectations Share Price: MYR1.26 | Target Price: MYR1.29 (+2.4%) | MCap (USD): 1.4B | ADTV (USD): 0.4M 1H14net profit of MYR116m was above our expectations but in line with consensus full-year estimates. RaiseFY14/15/16 earnings forecasts by 4%/5%/5% and DCF-based TP by +5sen to MYR1.29. Lacks strong pipeline assets to re-rate over the short-term. HOLD. Click here for report » Public Bank (PBK MK) Tepid growth in 1HFY14 Share Price: MYR20.00 | Target Price: MYR19.20(-4%) | MCap (USD): 24.5B | ADTV (USD): 38M 1HFY14 net profit rose just 4% YoY; marginally behind expectations due to a larger contraction in NIMs. Domestic loan growth within 10-11% target but NIM to still contract 10-12 bps in FY14. SELL maintained on pricey valuations and declining ROEs �TP unchanged at MYR19.20 (FY15 P/BV of 2.4x). Click here for report » RFM Corp (RFM PM) Logistical issues softened 2Q results Share Price: PHP5.68 | Target Price: PHP7.00(+23%) | MCap (USD): 460M | ADTV (USD): 0.1M 1H14 earnings of PHP427m up 10% YoY as sales grew 8% to PHP5b, accounting for 42% and 43% of our full- year forecasts. Sales and earnings growth slightly accelerated in 2Q14 and expected to further improve in 2H14. Maintain BUY with forecasts and PHP7 TP unchanged for now. (Full report will be out soon) Keppel Corp (KEP SP) Holding its ground Share Price: SGD10.93 | Target Price: SGD10.95 (+0%) | MCap (USD): 16.0B | ADTV (USD): 22M 2Q14 results met expectations. O&M operating margin rose by 0.3ppt to 14.5%, on track to meet our full-year forecast. An oversupplied deepwater rig market and reduced capex by oil companies could cap share price upside. Maintain HOLD with revised SOTP-based TP of SGD10.95. Click here for report » Erawan Group (ERW TB) Bottomed in 2Q, Rebound in 2H Share Price: THB4.82 | Target Price: THB6.00(+24%) | MCap (USD): 380M | ADTV (USD): 1M Occupancy rate in 2Q14 expected to reach 61% (65% in 1Q14, 76% in 2Q13), and ADR to increase 3% YoY. RevPAR expected to decline 18% QoQ and 20% YoY. Forecast net loss of THB81m, from break-even in 1Q14 and NP THB731m in 2Q13. Consensus expects THB45m net loss. Maintain BUY with new DCF-based TP of THB6.0 at 10% WACC and 3% terminal growth. Medium-term outlook remains positive and expect earnings turnaround in 2015. (Full report will be out soon) Semen Indonesia (SMGR IJ) Strong 2Q14 earnings Share Price: IDR16,875 | Target Price: IDR17,100(+1%) | MCap (USD): 8.7B | ADTV (USD): 13M 2Q14 earnings grew 30.1% QoQ boosted by volume recovery and lower costs. As such, margins improved as well. 1H14 earnings were slightly higher than our forecast. Maintain BUY and TP of IDR17,100. (Full note will be out soon)