My One Academy: Regional Daily, Maybank KE (2014-10-14)

Tuesday, October 14, 2014

Daily

14 October 2014

TOP VIEWS

Huaneng Power International (902 HK)

Upgrade to BUY: Assets injection

Share Price: HKD8.46 | Target Price: HKD11.00 (+30%) | MCap (USD): 15.3B | ADTV (USD): 32M

Huaneng Power to acquire 10 projects from its parent for around CNY9.3b in total.
We calculate the transaction FY13 PER to be around 5.4x and we expect the total attributable capacity will increase by around 9% at end-FY14.
We believe the asset injections will be favourable to Huaneng due to the low transaction PER. Upgrade to BUY and raising the DCF-based target price to HKD11 from HKD8.5.

UMW Oil & Gas (UMWOG MK)

From regional to global

Share Price: MYR3.10 | Target Price: MYR5.15 (+66%) | MCap (USD): 2.1B | ADTV (USD): 3M

Naga 6, Naga 7 and Naga 8 on track to meet delivery schedule; charter extensions secured for Naga 2 and Naga 3.
Optimistic of segment�s outlook; targets to add one new unit p.a. from 2016 and not ruling out M&A opportunities.
Maintain BUY and MYR5.15 TP (23x 2015 PER).

Infosys (INFO IN)

Valuation ahead of growth recovery

Share Price: INR3,889 | Target Price: INR3200 (-18%) | MCap (USD): 36.4B | ADTV (USD): 68M

Maintain non-consensus SELL, raise TP 12% to INR3200 on 14x FY16F PER (13x earlier). We believe current 16x FY16F PER is expensive considering low EPS growth over FY14-16F.
2QFY15 EPS of INR31 beat consensus and our estimate on the back of 133bps QoQ increase in EBITDA margin to 28.3%. Attrition remained high at 20%.
We factor in the higher EBITDA margin and increase our FY15/16F EPS by 5%/3%. However, we still expect INFO to underperform the sector with revenue CAGR (in USD) of 9% and EPS CAGR of 9.6% over FY14-16F.

Nickel Asia Corp (NIKL PM)

Record-breaking sales

Share Price: PHP39.90 | Target Price: PHP51.17 (+28%) | MCap (USD): 2.3B | ADTV (USD): 4M

9M14 revenues of PHP20.6b on 14.26m WMT of nickel ore is 5% above our PHP19.6b forecast.
Negotiated nickel ore prices remain stable even with unsteady refined LME nickel prices as the Philippines continues to be major source of nickel laterite ore for China.
Maintain BUY and Street-high PHP51.17 TP, 28% upside.
(Full report will be out soon)

COMPANY NOTES

Valuetronics (VALUE SP)

Losing the light; Initiate with SELL

Share Price: SGD0.40 | Target Price: SGD0.25 (-38%) | MCap (USD): 118M | ADTV (USD): 2M

Initiate with SELL, TP SGD0.25 (4.4x FY16E P/E). Earnings forecast to decline in next two years.
Major customer spinning off LED lighting business, given fierce Chinese competition, price wars and falling margins.
Stock unlikely to perform until uncertainties blow over. We would be buyers only at SGD0.25 or below.

TISCO Financial Group (TISCO TB)

3Q14 earnings saved by NIM

Share Price: THB43.25 | Target Price: THB50.00 (+16%) | MCap (USD): 1.1B | ADTV (USD): 1M

Maintain BUY and THB50 TP, implying 8x 2015F PER, 1.4x P/BV and 18% ROE. Still prefer TISCO to TCAP and KKP.
3Q14 net profit grew 10% QoQ and fell 4%YoY to THB1.1b, in line with our and consensus� forecasts.
Cut FY14-15F earnings by 2-3% on lower loan growth and higher NIM. 9M14 earnings accounted for 76% of our revised FY14 full-year forecast.

Tech-Tracks

October remains mired in red

Regional Quants

Most markets in Asia ex-Japan (notably Hong Kong) made key highs in early September and remain locked in a downward draft with further downside bias.
The moribund trading environment is not only affected by the prevalent risk-off sentiment but also diminished appetite for emerging market equities in light of the strong underlying USD strength and forex risks.
Top BUYs: Ratchaburi Electricity Generating Holding PCL (RATCH TB), GT Capital Holdings Inc (GTCAP PM) and Vinh Hoan Corporation (VHC VN).
Top SELLs: Kuala Lumpur Kepong Berhad (KLK MK), Anton Oilfield Services Group (3337 HK), PT Electronic City Tbk (ECII IJ) and Vard Holdings Ltd (VARD SP).

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