Regional Daily, Maybank KE (2014-10-13)

Daily 13 October 2014 TOP VIEWS Malaysia Budget 2015 | NEUTRAL China Transport | OVERWEIGHT India Banks | OVERWEIGHT Agile Property (3383 HK) | Rating change Malaysia Budget 2015 Positive reaffirmation Strategy No surprises � project reaffirmation positive for Construction, GST and subsidy rationalisation negative for Consumer. No change in our sector weights � we continue to Overweight Construction, and Oil & Gas. Maintain 1,940 end-2014 KLCI target, introduce 2,040 for end-2015. Key domestic risk is corporate earnings growth. Click here for report » China Transport Tides turning; Long CSD, short CSCL Sector Strategy The peak season for both dry bulk and tanker shipping should support better freight rates in 4Q14 and 1Q15, boosted by winter heating and higher coal demand. Container shipping will enter into a quiet period as cargoes for peak winter season have been shipped and newsflows will be muted after formation of major alliances/co-operations. We recommend long CSD (1138.HK) and short CSCL (2866.HK) for the next 3-6 months to capture the seasonal pattern, with a target 10-15% return. Click here for report » India Banks 2Q earnings to rise from low base Sector preview We estimate EPS increase of 29% for our coverage universe for 2QFY15 YoY. We estimate net profit will rise 45% for PSBs and 20% for private sector banks. Banks� 2QFY14 EPS suffered due to higher MTM provisions and reduced treasury gains (RBI raised short-term rates to curb FX volatility). Systemic loan growth dropped to 10% YoY for 2QFY15 due to lack of credit demand from large and mid-sized corporates. We expect pickup in growth to 14% for FY15 with onset of the busy season and improving investment sentiment in 2H. We expect NIM to remain steady given lower volatility in interest rates and moderation in non-performing assets. Click here for report » Agile Property (3383 HK) Uncertainties ahead; D/G to HOLD Share Price: HKD4.77 | Target Price: HKD4.35 (-9%) | MCap (USD): 2.1B | ADTV (USD): 7M D/G to HOLD on weak balance sheet and uncertainties ahead. Agile announced on Friday night Fion Luk, wife of chairman Chen Zhuo Lin, informed Agile that she received a notice from Kunming City People�s Procuratorate that Chen was required to stay at a designated residence since 30 Sep (the �Measures�). We are not sure what caused this. Agile stated it failed to dispatch rights issue documents (to raise ~HKD2.785b), hence underwriting agreement will lapse. Co has high gearing, tight cashflow, and lacklustre sales; as of June, it had CNY14.7b of debt due within 1 year. We believe mgmt will likely be distracted by the Measures, which could have neg. impact on sales, margin performance. Click here for report » COMPANY NOTES Filinvest Land Inc. (FLI PM) | Company visit Singapore Airlines (SIA SP) | Company update United Envirotech (UENV SP) | Company update Regional Plantations | NEUTRAL Ebbs & Flows Filinvest Land Inc. (FLI PM) Growth & communication promised Share Price: PHP1.54 | Target Price: PHP2.40 (+56%) | MCap (USD): 837M | ADTV (USD): 0.5M Management highlighted expansion in recurring income and indicated greater communication with investors. Office projects for 2016 delivery already fully leased. Maintain BUY on below-average PER and strong profit growth. (Full report will be out soon) Singapore Airlines (SIA SP) Ascending on cheaper oil Share Price: SGD9.73 | Target Price: SGD12.00 (+23%) | MCap (USD): 9.0B | ADTV (USD): 6M Maintain BUY & SGD12 TP (1.05x FY3/16E P/BV), after rollover to FY3/16. Major beneficiary of falling oil prices. Recent USD strength inconsequential. FY3/15E-17E EPS raised by 18-42% for cheaper fuel partially offset by larger losses from Tigerair. Click here for report » United Envirotech (UENV SP) Partners local Chinese behemoth Share Price: SGD1.33 | Target Price: SGD1.44 (+8%) | MCap (USD): 956M | ADTV (USD): 1M 49:51 JV with Chengdu Xingrong, A-share listed water SOE. First block of capacity expansion/upgrading projects is about 1m tonnes/day, worth over SGD300m. Right way to expand, in our view. Maintain HOLD & SGD1.44 TP (27x FY3/15E P/E). Still prefer HanKore and SIIC. Click here for report » Regional Plantations Crude oil slump to delay recovery Sector update Recent slump in crude oil prices have quashed hope of a swift CPO price recovery by December. CPO price needs to trade closer to MYR2,000/t to stimulate demand and flush out incoming supplies in Oct/Nov. Sustained CPO price recovery to above MYR2,400/t may now be deferred to 1Q15. Maintain our 12M NEUTRAL view. Click here for report » Ebbs & Flows October redemptions for both DM and EM equity funds Regional Quants This is a weekly equity fund flows tracker for emerging markets. Click here for report » ECONOMICS Malaysia Industrial Production, Aug �14 Malaysia Manufacturing Sales, August 14 Malaysia Budget 2015 Malaysia Industrial Production, Aug �14 Like external trade, better than July Economics Growth regained momentum (Aug 2014: +6.5% YoY; Jul 2014: +0.6% YoY) on broad-based increase in all components. But moderating expansion in so far in 2H 2014 (Jul-Aug 2014: +3.5% YoY; 1H 2014 +5.3% YoY) Further indication of slowing real GDP growth after earlier release of similar trend in external trade. Click here for report » Malaysia Manufacturing Sales, August 14 Firmer August after July�s dip Economics Like industrial output and external trade data, manufacturing sales performance was better in Aug 2014 vs July 2014. Similarly, despite sequential improvement, growth in Jul-Aug 2014 slowed to 3.3% YoY vs 5.7% YoY in 2Q 2014. Data further point to easing in economic growth in 2H 2014 after a robust 1H 2014. Click here for report » Malaysia Budget 2015 Walking the fiscal talk Economics No major surprise as Budget 2015 maintains the momentum on fiscal consolidation. Key tax measures were already announced in Budget 2014 i.e. introduction of a broader-based 6% GST on 1 Apr 2015 to replace the narrower-based 5%-10% Sales Tax and 6% Services Tax, and in exchange for personal and corporate income tax rate cuts in 2015-2016. There is also indication of further fuel subsidy rationalisation next year. One thing to watch is whether the efforts will be �rewarded� by the international rating agencies via upgrade in its sovereign ratings and/or outlook. (Full report will be out soon)