Regional Daily, Maybank KE (2014-10-30)

Daily 30 October 2014 TOP VIEWS Industrial & Commercial Bank of China (1398 HK) | Rating change Sesa Sterlite (SSLT IN) | Rating change Bangkok Dusit Medical Services (BGH TB) | Results preview Perdana Petroleum (PETR MK) | Company update Industrial & Commercial Bank of China (1398 HK) Reducing the buffer for new NPLs Share Price: HKD5.11 | Target Price: HKD5.45 (+7%) | MCap (USD): 57.2B | ADTV (USD): 162M D/G to HOLD and cut TP to HKD5.45 from HKD5.90. Trim earnings on lower non-interest income growth. Excess provisions of CNY77b in Sep 2014, lower than CCB. Click here for report » Sesa Sterlite (SSLT IN) Better visibility for 2H; U/G to BUY Share Price: INR250 | Target Price: INR311 (+24%) | MCap (USD): 12.1B | ADTV (USD): 26M Upgrade to BUY with new SOTP-based TP of INR311 (from INR252) after rollover to FY16E. Stock is currently trading at attractive EV/EBITDA of 5x FY16F. Zinc business (36% of EBITDA) benefits from high prices and low production costs. Aluminum business (13% of EBITDA) is gaining from high volume and better cash spreads. This will negate the weakness in the oil and power businesses. We forecast 2H profit to rise 30% over 1H. (Full report will be out soon) Bangkok Dusit Medical Services (BGH TB) Expect solid earnings growth in 3Q Share Price: THB18.20 | Target Price: THB23.00 (+26%) | MCap (USD): 8.7B | ADTV (USD): 17M Expect 3Q14 utilisation rate to hit 73% (vs 63% in 2Q14, 76% in 3Q13) with 7% added capacities. IPD and OPD volume should increase 11% and 6% and price should rise 3%. Anticipate net profit to grow 13% YoY and 17% QoQ due to 6% volume growth and 120bps EBITDA margin expansion. Maintain BUY with DCF-based TP of THB23. We expect earnings growth momentum to continue in 4Q14 and 2015. M&A is a short-term catalyst. (Full report will be out soon) Perdana Petroleum (PETR MK) Sells Superior; gains MYR1m Share Price: MYR1.68 | Target Price: MYR2.55 (+52%) | MCap (USD): 379M | ADTV (USD): 1M A decent sale price, MYR1m gain. Proceeds to help part-finance fleet rejuvenation. Lowering 2015-16 earnings forecasts by 2-3%, taking into account this deal. Maintain BUY, but TP adjusted to MYR2.48 (unchanged 15x 2015 PER) from MYR2.55 post earnings revision Click here for report » COMPANY NOTES Beijing Tong Ren Tang CM (8138 HK) | Rating change CNOOC (883 HK) | Results review China CITIC Bank (998 HK) | TP revision Kimia Farma (KAEF IJ) | Results review Bank Mandiri (BMRI IJ) | TP revision IGB REIT (IGBREIT MK) | Results review CIMB Group (CIMB MK) | Company update Axiata Group (AXIATA MK) | Company update WCT Holdings (WCTHG MK) | Company update Gamuda (GAM MK) | Company update Gas Malaysia (GMB MK) | Company Update Manila Electric Co. (MER PM) | Results Review Dynasty Ceramic (DCC TB) | Results review Siam Cement (SCC TB) | Results review Beijing Tong Ren Tang CM (8138 HK) 3Q in line; D/G to HOLD on valuations Share Price: HKD10.92 | Target Price: HKD10.80 (-1%) | MCap (USD): 1.2B | ADTV (USD): 2M D/G to HOLD on limited near-term earnings upside. 3Q sales/NPAT accounted for 63%/70% of our FY14 forecasts. TP intact pegged at 24x FY15F PER, in line with sector peers. Key positives are faster new product launches and product registration overseas. Delayed opening of its HK healthcare centre and no new stores plan in 2H14 are key negatives. We project normalized EPS CAGR in the high-teens in next two years, as company�s crown Angong Niuhuang pills will have almost filled up market demand shortfall by end-2014F. Click here for report » CNOOC (883 HK) Blame it on oil: Cut TP to HKD11.47 Share Price: HKD12.56 | Target Price: HKD11.47 (-9%) | MCap (USD): 72.3B | ADTV (USD): 125M Reiterate HOLD, cut TP and 2014/15/16earnings by13%/13%/11%as we lower oil price assumption. Expect consensus to be under pressure. Co�s3Q14total output was103.0mm BOE, flat YoY, 9MTDvolume of 314.6mmBOE represents 75% of our full-year production target, in line w/its historical pattern of 73-75%. Impact of lower crude price was magnified by rising total production cost since acquisition of NEXEN. Market should remain on the side lines until OPEC meeting in late November. Click here for report » China CITIC Bank (998 HK) Share placement at a premium Share Price: HKD5.00 | Target Price: HKD5.30 (+6%) | MCap (USD): 9.6B | ADTV (USD): 22M Maintain HOLD and raise TP from HKD5.15. NIM rebound; lower new NPL formation; cutting risky assets. EPS and ROE dilution of 4% and 60bps from share placement. Click here for report » Kimia Farma (KAEF IJ) Pharmaceuticals strong 3Q growth Share Price: IDR1,110 | Target Price: IDR1,400 (+26%) | MCap (USD): 507M | ADTV (USD): 0.2M | ADTV (USD): 0.2M 9M14 net earnings +18% YoY to IDR144bn, in line with our estimates. It made up 61% of our FY14F earnings (vs 9M13 earnings� 56% FY13). Manufacturing and distribution margins improved on continuous restructuring and more efficiency from scale expansion. UpgradeFY15-16F earnings by 4-9% and adjusted TP fromIDR1,200 toIDR1,400 (26x PERFY15F, 15% discount to KLBF�s current 30x). Maintain BUY. Click here for report » Bank Mandiri (BMRI IJ) Weak 3Q14, cut TP, but stay BUY Share Price: IDR10,175 | Target Price: IDR11,500 (+13%) | MCap (USD): 19.7B | ADTV (USD): 19M Cut FY14-15F EPS by 8% following weak 3Q14. Hence, TP down to IDR11,500 from IDR12,000. The much-anticipated loan growth acceleration did not occur in 3Q14. Deposit competition among big SOE banks likely to persist. Retain BUY on undemanding valuations and steady NIM from gradual shift towards the high-yield retail business. Click here for report » IGB REIT (IGBREIT MK) Earnings on track Share Price: MYR1.30 | Target Price: MYR1.29 (-1%) | MCap (USD): 1.4B | ADTV (USD): 0.6M 9M14 core net profit of MYR176.4m was in line. Maintain our earnings forecasts, MYR1.29 DCF-based TP. Lacks strong asset pipeline to re-rate over the short term; maintain HOLD. Click here for report » CIMB Group (CIMB MK) Provisions higher at CIMB Niaga Share Price: MYR6.43 | Target Price: MYR7.40 (+15%) | MCap (USD): 16.4B | ADTV (USD): 12M CIMB Niaga�s results below expectations; FY14/15 net profit cut by 34%/20%. CIMB Group earnings trimmed by 8%/6%. TP trimmed to MYR7.40 from MYR7.60 for CIMB Group, to MYR10.20 from MYR10.45 for RHB � still 15% upside for both. BUY RHB for exposure to the merger, HOLD CIMB. Click here for report » Axiata Group (AXIATA MK) XL: Weak revenue trends Share Price: MYR7.08 | Target Price: MYR7.60 (+7%) | MCap (USD): 18.5B | ADTV (USD): 21M XL�s 9M14 EBITDA was in line at 72% of ours and 71% of consensus full year forecasts; net profit was below. The integration of Axis has been completed; Axis to be EBITDA-neutral by 1Q15. XL�s FY14 earnings are significantly distorted; our BUY rating and MYR7.60 TP for Axiata are unchanged. Click here for report » WCT Holdings (WCTHG MK) Clinches MYR652m job Share Price: MYR2.10 | Target Price: MYR2.30 (+9.5%) | MCap (USD): 701M | ADTV (USD): 0.5M New MYR652m building construction works lifts outstanding external construction orderbook by 35%. Eyeing more jobs from TRX, RAPID, WCE and Qatar. Positive, but not re-rating our call yet; maintain HOLD with an unchanged TP of MYR2.30. Click here for report » Gamuda (GAM MK) Wins PDP for KVMRT 2, TP raised Share Price: MYR4.99 | Target Price: MYR6.00 (+20%) | MCap (USD): 3.5B | ADTV (USD): 8M Clinching the PDP role for KVMRT 2 significantly enhances its construction orderbook. Further major infrastructure job wins would further elevate its construction orderbook size. We raise our sustainable construction orderbook assumption and revise our RNAV-based TP to MYR6.00 (+13%). Click here for report » Gas Malaysia (GMB MK) A milder than expected hike? Share Price: MYR3.52 | Target Price: MYR3.80 (+8%) | MCap (USD): 1.4B | ADTV (USD): 0.6M The 2.3% selling price hike appears to be insufficient for a full pass-through of a MYR1.50/mmBTU hike in the purchase price of subsidised gas. Our forecasts are unchanged pending further clarifications from the company. Maintain HOLD with an unchanged TP of MYR3.80. Click here for report » Manila Electric Co. (MER PM) 3Q14 income in line Share Price: PHP261.60 | Target Price: PHP280.00(+7%) | MCap (USD): 6.7B | ADTV (USD): 3M Transfer coverage to Michael Bengson. Maintain HOLD, no clarity yet on tariff rates for 4th regulatory period. 3Q14 distribution revenue down 2.7% YoY as volume sales affected by typhoons. (Full note will be out soon) Dynasty Ceramic (DCC TB) 3Q14 soft as expected Share Price: THB57.75 | Target Price: THB65.00 (+13%) | MCap (USD): 726M | ADTV (USD): 0.3M Maintain BUY despite weak 9M14. The long-term thesis remains, ie, small-scale renovation of dwellings in the provinces. 12-month DDM-based TP of THB65. 3Q14 net profit -8% YoY, 5% below our forecast. 9M14 net profit contracted 9%, achieving 73% of our full-year forecast. Maintain forecast. 100% dividend payout ratio for 3Q14 as DCC is virtually net cash and capex requirement is low. Click here for report » Siam Cement (SCC TB) 1st cut: 3Q14 results unconvincing Share Price: THB432.00 | Target Price: THB500.00 (+16%) | MCap (USD): 16.0B | ADTV (USD): 17M Maintain non-consensus HOLD despite 16% upside to our TP as we think the driver for the 12% better-than-expected 3Q earnings is not convincing to offset the short-term risks in cement and petrochemicals. 3Q14 net profit fell only 20% YoY thanks to less interest expense, lower tax and higher equity income. Sales and key operational ratios were largely in line with forecasts. We will issue a full update after the analyst meeting. Click here for report »