Regional Daily, Maybank KE (2014-08-19)

Daily 19 August 2014 TOP VIEWS Tingyi (Cayman Islands) Holding (322 HK) | TP revision NewOcean Energy (342 HK) | Results review OCBC Bank (OCBC SP) | Company update Robinsons Retail Holdings (RRHI PM) | Results review Tingyi (Cayman Islands) Holding (322 HK) War abating; Margins to trend up Share Price: HKD22.90 | Target Price: HKD26.10(+14%) | MCap (USD): 16.5B | ADTV (USD): 10M Maintain BUY with new TP of HKD25.8. Trim FY14-16F EPS by 15%-22% on more conservative sales assumptions amid weak demand and higher minority interest. Abating sausage war and increased product diversity should drive better margins. 1H14 confirmed our argument that OPEX burden peaked in FY13 and is set to decline going forward. We thus project EBIT margin to double to 12.9% in FY16F vs 6.3% in FY13. Widening market share gaps against peers across the board and good sales feedback on its YTD new launches are key merits though industry-wide sales weakness a major concern. Click here for report » NewOcean Energy (342 HK) See the forest for the trees Share Price: HKD5.34 | Target Price: HKD8.88 (+66%) | MCap (USD): 1.0B | ADTV (USD): 2M Reiterate BUY, while lowering FY15F earnings by 8% to reflect uncertainties in LPG transportation volumes. 1H14 net profit HKD398.5m +5 YoY (represents ~40% of our full-year forecast), but boosted by non-core electronic division. LPG volumes were light, while marine bunkering and oil products were surprisingly robust. NOE�s auto LNG strategy could propel it to become a national leader, but even the most bullish were caught off guard by the swiftness of the government�s energy reforms. But short-term pain may mean long-term gains. Click here for report » OCBC Bank (OCBC SP) Now the hard part: Execution Share Price: SGD10.20 | Target Price: SGD10.10(-1%) | MCap (USD): 28.6B | ADTV (USD): 26M On paper, Greater China strategic initiatives look good, with revenue synergies from day one. Execution is critical. May prove harder than expected. Scrip dividends likely to stay, lifting CET1 higher. Maintain HOLD and TP of SGD10.10 (1.24x FY15E P/BV). Top sector pick is DBS. Click here for report » Robinsons Retail Holdings (RRHI PM) A cut above the rest in 1H14 Share Price: PHP65.60 | Target Price: PHP77.50 (+18%) | MCap (USD): 2.1B | ADTV (USD): 2M 1H14 results on track to meet full-year expectations. Earnings up 26% in 1H14 anchored on strong sales and stable margins of flagship Robinsons Supermarkets. Outperforming biggest retailing peers; reiterate BUY. (Full report will be out soon) COMPANY NOTES China Lesso Group (2128 HK) | Company Update Kerry Logistics Network (636 HK) | Results Review Indo Tambangraya (ITMG IJ) | Company Update Inari Amertron(INRI MK) | Company Visit Star Publications (Malaysia) (STAR MK) | Results Review Vista Land & Lifescapes (VLL PM) | Results Review Puregold Price Club (PGOLD PM) | Rating Change Olam International (OLAM SP) | Company Update Sri Trang Agro (STA TB) | Results Review China Lesso Group (2128 HK) 1H14 first take: On-track & in-line Share Price: HKD4.66 | Target Price: HKD7.20(+55%) | MCap (USD): 1.9B | ADTV (USD): 2M 1H14 sales and NPAT account for 43% of our FY14F estimates as we expect both items to be 2H-loaded on seasonality and lower finance costs. 1H NPAT was dragged down by one-off CNY49m finance cost due to early redemption of senior note. Capacity expansion progress well on track, adding 150k tonnes in 6M14 to 1.95m tonnes, as two new production bases commenced operations in Hainan and Yunan in May. FY14F CAPEX budget unchanged at CNY1.2b. Maintain BUY and keep our projections and TP intact pending upcoming analyst briefing at 10am HKT today. Click here for report » Kerry Logistics Network (636 HK) Healthy but unexciting Share Price: HKD12.80 | Target Price: HKD12.80(+0%) | MCap (USD): 2.8B | ADTV (USD): 3M Reiterate HOLD with minimal changes to our core earnings forecasts. 1H14 earnings down 29.8% YoY due to lower gain from fair value change of investment properties. Core profit of HKD490m in 1H14 equals a mediocre 7.7% growth; in line with our full-year forecast of c9% increase. Click here for report » Indo Tambangraya (ITMG IJ) Maintain TP & recommendation Share Price: IDR29,225 | Target Price: IDR28,500(-2%) | MCap (USD): 2.8B | ADTV (USD): 2M Maintain HOLD, TP IDR28,500/share. At 3.2x book value (26% discount to long-term mean), the stock looks fairly valued. High pay-out ratio is the main catalyst for the share price. Upgrade 2015-16F earnings on higher volume. Strip ratio will remain low in 2015-16F before potentially moving up should there be no improvements in coal prices. Click here for report » Inari Amertron(INRI MK) Growth momentum to sustain Share Price: MYR3.34 | Target Price: MYR4.20 (+26%) | MCap (USD): 0.6B | ADTV (USD): 2.6M Fibre-optics, Inari�s next growth catalyst, to be supported by capacity extension in the newly-acquired Batu Kawan land. 4QFY14 results, to be announced on 26 Aug, should be stronger QoQ but within expectations. Reiterate BUY with an unchanged MYR4.20 cum-rights TP (17x CY15 PER), offering 26% upside. Click here for report » Star Publications (Malaysia) (STAR MK) Comeback quarter Share Price: MYR2.60 | Target Price: MYR2.50(-4%) | MCap (USD): 609M | ADTV (USD): 0.3M 2Q14 results were within expectations and made up for a poor 1Q14. Dividends surprised positively. Nonetheless, we leave our earnings and dividend estimates unchanged for now. Maintain HOLD and MYR2.50 TP. Even at our lower 15sen p.a. DPS estimate, yields are attractive at 5.8%. Click here for report » Vista Land & Lifescapes (VLL PM) Affordable segments drive growth Share Price: PHP6.18 | Target Price: PHP6.80(+10%) | MCap (USD): 1.2B | ADTV (USD): 2M Maintain HOLD and PHP6.80 TP with no near-term surprises. 1H14 earnings in line but margins slightly decreased on revenue recognition in low-income and affordable segments. Earnings visibility in the next three years will be driven by Camella brand as VLL builds up recurring income. Click here for report » Puregold Price Club (PGOLD PM) 2Q14 disappoints; D/G to HOLD Share Price: PHP34.25 | Target Price: PHP36.75(+7%) | MCap (USD): 2.2B | ADTV (USD): 3M Downgrade to HOLD with lower TP of PHP36.75 from PHP50. Profit forecasts lowered 14% in 2014F-2015F. 1H14 earnings surprisingly down 6.6%; top line up 17% but GPM fell 101 bps YoY. More competitive pricing, lower tobacco sales drag margins. (Full report will be out soon) Olam International (OLAM SP) Monetising packaged food business Share Price: SGD2.55 | Target Price: SGD2.35(-8%) | MCap (USD): 5.1B | ADTV (USD): 5M Sanyo Foods taking 25% stake in Olam�s packaged food division for USD187.5m. Improved cash flow but limited impact on balance sheet. Maintain HOLD. Top sector pick is Wilmar. TP higher at SGD2.35 from SGD1.57, after rollover to 13x FY6/15E P/E (from 11x FY6/14E). Click here for report » Sri Trang Agro (STA TB) 2Q14 much worse than expected Share Price: THB13.90 | Target Price: THB11.50(-17%) | MCap (USD): 559M | ADTV (USD): 1M Maintain SELL with a 12M TP of THB11.5 pegged to LTM PBV-0.5x SD. Continuing fall in rubber prices is hitting profitability hard. 2Q14 operating loss was THB216m, 18-fold higher than forecast. 1H14 operating losses stood at THB 340m. Thanks to paper gains in futures trading and forex, reported net profit was THB169m for 2Q14 and THB570m for 1H14. Outlook remains negative due to continued oversupply. Click here for report » ECONOMICS Thailand Economics Singapore Economics Thailand Economics No technical recession Maintain our +2.5% GDP for 2014 We�re likely to keep our 2014 2.50% GDP growth forecast, w/ the expectation the effects of junta�s economic policies will be visible rest of this year; we look for 3.50-4.00% next year. We expect MPC to keep key rate at 2.00% for rest of 2014 and raise it 25bps during 2H15 to normalize monetary stance and be in line with global and regional interest rate policy. Improving economic fundamentals amid relative peace and stability should underpin the USD/THB ahead; we therefore maintain our USD/THB forecast at 31.70 and 31.80 for 3Q14 and 4Q14 respectively. Click here for report » Singapore Economics Singapore Exports, July �14 Not a great start to 3Q 2014 NODX and NORX data for July 2014 were disappointing NODX fell for the third month in a row while NORX slipped for the second time in the past three months No change in our 2014 NODX forecast of another year of decline Click here for report »