Regional Daily, Maybank KE (2014-11-12)

Daily 12 November 2014 TOP VIEWS Galaxy Entertainment Group (27 HK) | Results review Cebu Air Inc (CEB PM) | Results preview United Envirotech (UENV SP) | Rating change Energy Development Corp (EDC PM) | Transfer coverage Galaxy Entertainment Group (27 HK) Looking forward to 2015 Share Price: HKD51.05 | Target Price: HKD63.30 (+24%) | MCap (USD): 27.9B | ADTV (USD): 96M Maintain BUY and HKD63.30 TP as 3Q14 results in line and new casino properties will drive growth. Earnings growth meek but expected. Only operator to record higher VIP GGR YoY. Top Pick in the Macau gaming space. GM3&4 and Grand Waldo not yet factored in, implying upside potential. Click here for report » Cebu Air Inc (CEB PM) Having the time of its life Share Price: PHP77.50 | Target Price: PHP88.00 (+15%) | MCap (USD): 1.0B | ADTV (USD): 1M BUY ahead of anticipated strong 3Q14 results (14 Nov) and will benefit from improving industry fundamentals. Expect core net profit of PHP371m (vs a loss of PHP700m in 3Q13). Demand exceeds supply, underpinning yield growth; Lower cost due to falling fuel price. Top ASEAN airline pick as all the variables suggest strong performance near term with record earnings likely in FY15. Revising up FY14-16F earnings on lower fuel price assumption. TP raised to Street-high PHP88 (from PHP75). Click here for report » United Envirotech (UENV SP) Strong results; U/G to BUY Share Price: SGD1.52 | Target Price: SGD1.93 (+27%) | MCap (USD): 858M | ADTV (USD): 2M 2QFY3/15 core beat expectations on higher engineering revenue. Raise core EPS by 2-4%. Partnership with Chinese SOE and potential new investor could bring UENV to next level, providing catalysts. Upgrade to BUY from HOLD. TP raised to SGD1.93 from SGD1.44 after EPS increases and rollover, still at 27x EPS. Click here for report » Energy Development Corp (EDC PM) Operational risk falls; Raising TP Share Price: PHP7.79 | Target Price: PHP9.30 (+19%) | MCap (USD): 3.3B | ADTV (USD): 6M Maintain BUY and raising TP 28% to PHP9.30 (Street-high) as we transfer coverage to Michael Bengson. Assigning narrower discount to NAV of 10% as risk has declined significantly with EDC addressing operational issues. Specifically, all three Bac-Man units operational following outages in Jul. Nasulo geothermal plant started commercial operation, while Burgos wind plant recently commissioned. Click here for report » COMPANY NOTES Puravankara Projects (PVKP IN) | Results review Tech Mahindra (TECHM IN) | Company visit UMW Holdings (UMWH MK) | Company update Malaysia Oil & Gas | OVERWEIGHT AirAsia X (AAX MK) | Results preview Metropolitan Bank & Trust Co. (MBT PM) | Results review San Miguel Pure Foods Co., (PF PM) | Results review ABS-CBN (ABS PM) | Results review Nam Cheong Ltd (NCL SP) | Results review Vard Holdings (VARD SP) | Results review Wilmar International (WIL SP) | Results review Genting Singapore (GENS SP) | Results review Erawan Group (ERW TB) | Results review Supalai PCL (SPALI TB) | Results review Pruksa Real Estate (PS TB) | TP revision Puravankara Projects (PVKP IN) Encouraging presales performance Share Price: INR96 | Target Price: INR118 (+23%) | MCap (USD): 371M | ADTV (USD): 0.5M Maintain BUY on under-researched stock with TP of INR118. 2Q presales rose 30% YoY after 36% rise in 1Q. 1H presales now stand at INR8.1b with backlog rising to INR13.6b. Strong housing demand in Bangalore and proposed new launches valued at INR70b in next 12 months should result in earnings growth of 21% in FY15 and 55% in FY16. Click here for report » Tech Mahindra (TECHM IN) Sustainable sector outperformance Share Price: INR2,634 | Target Price: INR2,887 (+10%) | MCap (USD): 10.1B | ADTV (USD): 27M Maintain BUY and TP of INR2,887 based on 17x FY16F PER at the top end of one-year forward PER of 8-17x in the past three years. TECHM remains one of our Top Picks in IT sector. At the analyst day yesterday TECHM maintained its positive outlook for growth in 2HFY15 and FY16. It also re-iterated its target of annualised revenue of USD5b by end-4QFY16. We expect TECHM to outperform the sector over FY14-17F and maintain our forecast of revenue/recurring EPS CAGR of 17.4%/20%. Continued growth momentum and M&A remain catalysts for the stock. Click here for report » UMW Holdings (UMWH MK) The tides have turned Share Price: MYR11.44 | Target Price: MYR12.55 (+10%) | MCap (USD): 4.0B | ADTV (USD): 5M Downgrade to HOLD on less rosy outlook for Auto and O&G divisions. FY15/16 forecasts marginally trimmed (-2%). Potential downside to auto earnings from (i) intensive vehicle sales competition and (ii) unfavourable USD/MYR forex. Cut SOP-based TP to MYR12.55 (-9%) on lower valuations of 55.2%-owned UMWOG using DCF method (from PER). Click here for report » Malaysia Oil & Gas Sector de-rates; key stock selects Sector update Cut Brent crude oil ASP forecast by 15%to USD85/bbl. Go for oil services in the production phase, less volatility. Yinson, Bumi Armada, Dialog and Perdana are our preferred BUYs. Click here for report » AirAsia X (AAX MK) 3Q14F: To be another tough one Share Price: MYR0.76 | Target Price: MYR0.63 (-17%) | MCap (USD): 538M | ADTV (USD): 2M 3Q14 results will be out by 19-20 Nov. Expect core net loss of MYR73m (versus a profit of MYR16min 3Q13). Capital base depleting, adjusted gearing was3.6x and we think it will have to raise new equity. Maintain SELL, with an unchanged target price of MYR0.63 based on FY15 P/BV of 1.0x. Click here for report » Metropolitan Bank & Trust Co. (MBT PM) Asset divestment boosts bottom line Share Price: PHP83.50 | Target Price: PHP95.00 (+14%) | MCap (USD): 5.1B | ADTV (USD): 6M Maintain HOLD and TP of PHP95, based on 1.7x P/BV relative to 12.3% ROE. 9M14 earnings of PHP13.1b were in line with expectations. Parent level CET 1 fell to 9.9% which we believe may result in capital-raising soon. Click here for report » San Miguel Pure Foods Co., (PF PM) Agro and flour units rebound in 3Q Share Price: PHP223.00 | Target Price: PHP285.00 (+28%) | MCap (USD): 825M | ADTV (USD): 0.2M 9M14 earnings flattish YoY even without equity earnings. 3Q14 EBIT growth accelerates to 29% from 12% in 1H14 on strong performance of agro-industrial and flour milling. Retain BUY with forecasts and PHP285 TP unchanged. Click here for report » ABS-CBN (ABS PM) Clearer picture in 3Q14 Share Price: PHP45.80 | Target Price: PHP57.50 (+26%) | MCap (USD): 875M | ADTV (USD): 0.0M Earnings rebounded 23% YoY in 3Q14 from -3% in 1H14. ABS Mobile gaining traction, hitting 1.1m active subscribers as of October with 10k daily take up. Maintain BUY with forecasts and PHP57.50 TP unchanged. (Full report will be out soon) Nam Cheong Ltd (NCL SP) Standout yard Share Price: SGD0.41 | Target Price: SGD0.57 (+39%) | MCap (USD): 668M | ADTV (USD): 3M 3Q14 PATMI beat on stronger vessel sales and margins. 9M14 already at 104% of our FY14E forecast. Raise FY14E-16E EPS by 4-23%. Remains optimistic on new orders. Catalyst from unveiling of 2016 shipbuilding programme. Maintain BUY. GGM TP raised to SGD0.57 from SGD0.55, still pegged to 2.2x FY15E P/BV. Click here for report » Vard Holdings (VARD SP) Taking a step back Share Price: SGD0.68 | Target Price: SGD0.73 (+8%) | MCap (USD): 616M | ADTV (USD): 4M 3Q14 net loss first in history. Expected after profit warning. More muted order outlook. Needs to show convincing recovery. Maintain HOLD & SGD0.73 TP, at trough 1.0x FY15E P/BV. Prefer Nam Cheong in sector. Click here for report » Wilmar International (WIL SP) Strong comeback Share Price: SGD3.20 | Target Price: SGD4.08 (+28%) | MCap (USD): 15.8B | ADTV (USD): 11M 3Q14 core PATMI beat forecasts, up 10% YoY & 164% QoQ. Growth from Oilseeds & Grains and Sugar. Palm & Laurics margins remained depressed. Reiterate BUY with catalysts from return of growth. TP still at SGD4.08, 15x FY15E EPS. Still our sector top pick. Click here for report » Genting Singapore (GENS SP) Dismal 3Q14 priced in Share Price: SGD1.04 | Target Price: SGD1.13 (+9%) | MCap (USD): 9.9B | ADTV (USD): 20M 3Q14 missed on poor VIP win rates. Expect better 4Q14 on normalising VIP win rates. No change to EPS. Outlook still tepid. Maintain HOLD & SGD1.13 TP, at 9x FY15E EV/EBITDA. Prefer Galaxy and Genting Malaysia in sector. Click here for report » Erawan Group (ERW TB) 3Q14: Slightly below estimate Share Price: THB4.50 | Target Price: THB6.00 (+33%) | MCap (USD): 340M | ADTV (USD): 2M Earnings was slightly below our (Loss THB65) and consensus (Loss THB70). 9M14 sales and EBITDA accounted for 69%/57% of our FY14 forecast. 3Q14 net loss of THB83 from loss of THB107m in 2Q14 and THB6m in 3Q13. Occupancy rate in 3Q14 fell to 62% from 77% in 3Q13. RevPAR dropped 17% YoY. Maintain BUY with DCF-based TP of THB6.0 (10% WACC and 3% terminal growth). Bottom out in 2Q14, we expect earnings turnaround in 2015. (Full report will be out soon) Supalai PCL (SPALI TB) 3Q14 beat estimates Share Price: THB25.75 | Target Price: THB28.50 (+11%) | MCap (USD): 1.3B | ADTV (USD): 5M Maintain HOLD and TP of THB28.5 pegged to 9.7x FY15 PER; stock offers limited upside. Prefer LPN (TP THB27) and QH (TP THB6.0). 3Q14 earnings surged 198% QoQ and 351% YoY to THB1.6b (EPS THB0.92), beating our and consensus estimates by 12% and 13% due to stronger-than-expected GPM. 9M14 net profit accounted for 61% of our full-year forecast. 4Q14 should be peak quarter of this year. However, we see downside risk if recognition of Supalai Wellington starting in Dec 2014 is lower than expected � estimated at THB950m. Revenue could miss our and mgmt FY14 target of THB19.6b and THB20b, which would disappoint the market. Click here for report » Pruksa Real Estate (PS TB) Cut new launches, presales likely miss Share Price: THB32.25 | Target Price: THB37.50 (+16%) | MCap (USD): 2.2B | ADTV (USD): 4M Maintain HOLD and raise TP to THB37.5 after tweaking FY14-15 earnings by 2.7%-5.3% to reflect stronger-than-expected GPM. Our TP is pegged to 11.5x FY15 PER. 3Q14 earnings were THB1.8b (EPS THB0.83), up 35% YoY but flat QoQ. This was in line with our and consensus estimate. 9M14 net profit accounted for 74% of our full-year estimate PS has cut its guidance on new launches in 4Q14 to 10 (THB9.6b) from 21 (THB23.7b) previously. FY14 presales likely to miss target. Click here for report » ECONOMICS Industrial Production, Sep �14 Regional Econs: Crude Oil Price Industrial Production, Sep �14 More signals of slower 3Q 2014 GDP Economics Industrial output grew by +5.4% YoY in Sep 2014 In 3Q 2014, it slowed to +4.1% YoY from +5.8% YoY in 2Q 2014 3Q GDP to be released this Friday is expected to decelerate to +5.6% YoY (2Q 2014: +6.4% YoY) Click here for report » Regional Econs: Crude Oil Price Oil Spills... Economics We revised our average 2015-2016 crude oil price forecasts to of USD85-USD90 per barrel from USD100/bbl. Oil industry dynamics will be key to this outlook as OPEC - led by Saudi Arabia - is not keen to play the role of "price stabilisers" by slashing its output as in the past. A key contributor to current global oil supply glut - the US shale oil producers - on average is just about breaking even at current oil price level. Click here for report »