Regional Daily, Maybank KE (2014-10-27)

Daily 27 October 2014 TOP VIEWS Piggy Banks & Crystal Ball Thai Market Compass Regional Materials Robinsons Retail Holdings (RRHI PM) | Company visit Piggy Banks & Crystal Ball Regional Banks Bi-weekly Sector update More �LIKEs� for Singapore banks. Based on Bloomberg consensus forecasts, there have been earnings and net rating upgrades for Singapore banks ahead of 3Q14 results. Market has turned more positive towards loan and deposit growth, NIM and credit costs of Singapore banks. Recent share price performance of Singapore banks has yet to reflect this positive outlook. We prefer DBS on its strong deposit franchise. Earnings downgrades for Indonesian banks. Market has downgraded earnings of Indonesian banks amid of 3Q14 results. Market has increasing concerns over tighter monetary policy and aggressive deposit competition among banks. However, their share prices have overlooked the market concerns. Our less preferred Indonesian banks are Bank Tabungan Negara, Bank Danamon and Bank BJB. (Full report will be out soon) Thai Market Compass Agri commodities, crude casualties Sector strategy Avoid Thai soft commodities as crude oil continues to fall with no clear bottom. Sugar is least correlated to crude oil and prices have been bucking the general trend due to favorable demand/supply balance. KSL is a BUY and KBS a HOLD. Outlook for soybean prices remains negative on high production and potential knock-on effect from drop in crude oil price. Maintain SELL on TVO. Rubber has the worst outlook, we believe, as high supply remains unmanageable and likely to be for longer. STA is a SELL. Click here for report » Regional Materials Gems, Picks & Shovels Sector update Our top pick is long-term copper growth play MMG (1208 HK; HKD2.90; BUY; TP HKD3.40). EBITDA should nearly double to USD1.5b in 2017E when Las Bambas reaches full capacity. We are positive on the reforms in India. A key initiative is the gov�t expanding electrical capacity by over a third by 2020 (capex in transmission and distribution USD80b). A direct play is Powergrid Corp. (PWGR IN; INR136.00; BUY; TP INR158). For nickel exposure, BUY on dips Vale Indonesia (INCO IJ; IDR3,720; BUY; TP IDR4,800) on a pull back in nickel prices and fuel subsidy cut in Indonesia forecast this Nov. We look for a 19% YoY increase in nickel 2015/14 on a nickel market deficit. Click here for report » Robinsons Retail Holdings (RRHI PM) Developing niche brands/formats Share Price: PHP64.40 | Target Price: PHP91.00 (+41%) | MCap (USD): 1.9B | ADTV (USD): 2M Maintain BUY. Cheap at less than 8x EV/EBITDA for 2015F. Indications of higher supermarket SSSG in 3Q14 vs 3.7% in 1H14. New supermarket brand/format launched for affluent crowd. (Full report will be out soon) COMPANY NOTES Goodbaby International (1086 HK) | TP revision Tenaga Nasional (TNB MK) | Results preview Singapore Banks | NEUTRAL Siam Makro (MAKRO TB) | Results preview Goodbaby International (1086 HK) | TP revision Earlier-than-expected order cuts Share Price: HKD3.09 | Target Price: HKD3.15 (+2%) | MCap (USD): 439M | ADTV (USD): 1M Maintain HOLD. Lower TP on 1-10% cuts to FY14-16F EPS to reflect earlier-than-expected order cuts from key client and low order visibility. Our new TP is pegged to 15x FY15F PER. Our checks confirm lacklustre offline sales that are dragging overall market growth. We expect growth in FY14F to be lower than mgmt�s low double-digit guidance (KE est.8%). Limited update on Evenflo�s integration; Low visibility on its turnaround is major overhang over near to medium term. Click here for report » Tenaga Nasional (TNB MK) | Results preview Expect a strong finish Share Price: MYR13.00 | Target Price: MYR14.00 (+8%) | MCap (USD): 22.4B | ADTV (USD): 26M We estimate TNB�s 4QFY14 core net profit at about MYR1.5b (+100% YoY, -4% QoQ), 29% of our FY14 forecast. The benefits from higher coal-fired generation (+22% QoQ) would more than offset seasonally higher costs and potentially higher taxes. Reiterate BUY with an unchanged MYR14.00 TP. Click here for report » Singapore Banks | NEUTRAL Sector Update No repeat of 1998 Property market could get worse. New supply to inundate market as population growth slows & interest rates rise. But banks are unfazed; see no threat of 20% price falls next year. Banks also have some protection. Neutral on sector. DBS our top pick. Click here for report » Siam Makro (MAKRO TB) | Results preview Good but expensive; Maintain SELL Share Price: THB37.00 | Target Price: THB25.00 (-32%) | MCap (USD): 5.5B | ADTV (USD): 0.3M Maintain SELL despite expectations of strong performance; Perhaps again the best profit growth in the sector but 31.3x 2015 PER already captures the good story. Our DDM-based TP remains THB25, a 15% discount for low liquidity (2% free float). Without the discount, MAKRO�s fair value is THB29. Estimate 3Q14 net profit grew 9% YoY on 11% growth in turnover. If our forecast is met, 9M14 revenue/net profit would reach 75%/71% of our FY14 forecast. Profit growth has been decelerating sequentially in recent quarters as operating cost base rises on the back of aggressive expansion. Will track this development closely but for now keep our 16% YoY FY15 net profit growth forecast. Click here for report » ECONOMICS Singapore IP, Sept �14 Singapore Econs Singapore IP, Sept �14 Pulled down by volatile biomedical Industrial production (IP) fell -1.2% YoY in Sep 2014 (Aug 2014: +4.0% YoY), dragged by biomedical output (Sep 2014: -10.3% YoY; Aug 2014: +9.5% YoY). Excluding biomedical output, the adjusted IP was up by +0.5% YoY (Aug 2014: +2.8% YoY). Notwithstanding the volatile biomedical sector, IP growth picked up to +1.9% YoY last quarter (2Q 2014: +1.5% YoY), better than the advanced estimate of +1.4% YoY, implying likely upward revision to the preliminary 3Q 2014 GDP growth of +2.4% YoY. Click here for report »