Regional Daily, Maybank KE (2014-11-18)

Daily 18 November 2014 TOP VIEWS Thailand Aviation | Initiation Singapore Banks | OVERWEIGHT NewOcean Energy (342 HK) | Company Visit Ramayana Lestari (RALS IJ) | Company Visit Thailand Aviation Sector Initiation Busier next year Initiate at NEUTRAL. We expect better performance in 2015, driven by improved passenger traffic, falling costs but the benefits will be muted by lower yield due to rising competition and oversupply. Pax and cargo traffic are expected to grow by 14% and 5% in 2015 as the political situation in Thailand normalises. Also, we expect export trade to pick up, although only marginally. Prefer AOT over the airlines on superior earnings/cashflow quality. Among the airlines, we prefer LCCs over FSC as they catch the faster traffic growth. FSCs will have to deal with keen competition in cargo traffic. Top Pick is AOT. We rate AAV - BUY, NOK - HOLD and THAI - SELL. Click here for report » Singapore Banks Sector Update Two catalysts; U/G to OW EPS growth prospects plus potential fund inflows from oil & gas sector. Raise EPS by up to 10% and TPs. UOB could be re-rated further after management assurances. Weaker liquidity profile well-cited. Upgrade to BUY from HOLD. Upgrade sector to OVERWEIGHT from Neutral. DBS our top pick, followed by UOB. Still cautious on OCBC. Click here for report » NewOcean Energy (342 HK) Learning to dance in the rain Share Price: HKD2.97 | Target Price: HKD5.82 (+96%) | MCap (USD): 567M | ADTV (USD): 4M Reiterate BUY, following co. visit. We believe NOE�s shares are sadly disconnected from fundamentals, tainted by short-sellers� claims of fallacious accounting. We see extremely favourable risk-reward for LT investors. Suggest accumulating We incorporate bear-case projections to reflect its imbedded value and lower our FY14/15/16F earnings 9.2%/18.5%/17.5% - our 2015 ests are 10% below consensus. Still, we expect co. to deliver 18.4% profit CAGR FY14-16F, trading at 0.3x PEG. Instead of earnings-based valuation, we lower our TP to match our bear-case 10-year DCF estimate, which implies 96% upside. Click here for report » Ramayana Lestari (RALS IJ) NDR: Revamp on track Share Price: IDR840 | Target Price: IDR1,000 (+19%) | MCap (USD): 488M | ADTV (USD):0.9 Maintain BUY with IDR1,000 TP, at 18x FY15F PER. Catalysts from better margins & yields after revamp. Ramayana met 21 investors during 2-day SG and HK NDR. Questions mostly on its supermarket revamp after partnership with SPAR. Click here for report » COMPANY NOTES Malaysia Strategy IOI Corporation (IOI MK) Tingyi (322 HK) | TP Revision State Bank of India (SBIN IN) | Results Review Energy Development Corp (EDC PM) | TP Revision United Overseas Bank (UOB SP) | Rating Change Malaysia Strategy Strategy Nov Shariah compliance review Seven stocks could drop off, IOI Corp and SapuraKencana being the two largest. Five could be added, the more prominent ones being Amway and Padini. No change in stock calls for those identified. Click here for report » IOI Corporation (IOI MK) Hurt by low downstream earnings Share Price: MYR4.70 | Target Price: MYR3.73 (-21%) | MCap (USD): 9.5B | ADTV (USD): 9M 1QFY6/15 core PATMI of MYR229m was below expectations. Potential stock overhang if heavyweight IOI drops off the Hijrah Shariah and EMAS Shariah indices end-November. Maintain SELL with a new TP of MYR3.73 (vs. MYR3.97) on unchanged 20x 2015 PER peg as we cut FY6/15 EPS by 12%. Click here for report » Tingyi (322 HK) Short-term hiccup offers good entry point Share Price: HKD18.98 | Target Price: HKD21.20 (+12%) | MCap (USD): 13.7B | ADTV (USD): 17M Stay BUY. New TP is pegged at 25x FY15F PER (old: 28X) as factoring lower earnings post 3Q. Recovering margins outlook under easing competition still intact. Forecast 2-year EPS CAGR of 23% as Pepsi integration entering final stage in 2015. We believe Tingyi�s market leadership is unscathed by parent�s food safety scandal. Thus co�s sales should be among first to rebound in case industry growth momentum returns, considering its healthy channel inventory. Co�s newly adopted strategy to streamline organizational structure (since Nov) is expected to contribute to progressive SG&A burden savings. Cost trend in recent quarters shows mgmt�s determination to control OPEX, in our view. Click here for report » State Bank of India (SBIN IN) Strong operating performance Share Price: INR2,788 | Target Price: INR3,200 (+15%) | MCap (USD): 33.7B | ADTV (USD): 84M Maintain BUY with higher SOTP TP of INR3,200, from INR3,100. Catalysts are revival of loan growth and lower credit cost next year. 2QFY15 beat on sharp uptick in fee income/recoveries and opex growth of just 2% YoY. Asset quality improved. Lack of demand for SME/mid-corporate credit held back loan growth. Raise EPS by 2-4% for higher fee income and lower staff costs. Click here for report » Energy Development Corp (EDC PM) Raise forecasts; Maintain BUY Share Price: PHP8.20 | Target Price: PHP9.70 (+18%) | MCap (USD): 3.4B | ADTV (USD): 6M Maintain BUY and raise earnings forecasts on higher sales volume contributions from Bac-Man and Nasulo geothermal plants. Increase fair value by 5% to PHP10.80/sh. With 10% discount, raise TP to PHP9.70. 2015F net income to grow 29% from full-year contribution of three projects after 41% surge this year. Click here for report » United Overseas Bank (UOB SP) Second bite of cherry; U/G to BUY Share Price: SGD23.00 | Target Price: SGD26.70 (+16%) | MCap (USD): 28.6B | ADTV (USD): 31M Raise EPS by 6-9% for better non-interest income. Housing slippage and less-favourable funding profile well-cited. Upgrade to BUY from HOLD with new SGD26.70 TP from SGD25.30, still on 12x FY15E EPS. Catalysts from stronger SGD deposit growth and improving housing NPLs. For sector exposure, prefer DBS. Best-positioned to benefit from rising rates. Click here for report » ECONOMICS Thailand Economics Singapore Economics Thailand Economics Domestic demand improved in 3Q14 Hope recovery continues into 4Q14 We did not see significant softening of economic recovery from the 3Q14 GDP data, with private consumption, investment, and imports all improving and expected to continue to grow in 4Q14. Our revised 2014 forecast is now at 1%, which requires a strong recovery of around 3.5% GDP growth in 4Q14; though, we are looking at a moderate pace of 4% for 2015F. We maintain for now that the BOT will keep the policy rate at 2% at the MPC meeting on 17 Dec and wait for BOT data for the first month of 4Q14 due next Friday. Click here for report » Singapore Economics Singapore Exports, Oct �14 Volatile NODX and NORX NODX fell -1.5% YoY in Oct 2014, reversing gains in Aug-Sep 2014 NORX also fell, by-5.4% YoY, the fourth time in the last six months The volatility in NODX is spreading to NORX Click here for report »