Regional Daily, Maybank KE (2014-11-20)

Daily 20 November 2014 TOP VIEWS Vanguard Int�l Semiconductor (5347 TT) | Company Update China Mengniu Dairy (2319 HK) | TP Revision Singapore Offshore & Marine | UNDERWEIGHT Star Publications (STAR MK) | Rating Change Vanguard Int�l Semiconductor (5347 TT) Risk is to the upside Share Price: TWD46.35 | Target Price: TWD68.00 (+47%) | MCap (USD): 2.5B | ADTV (USD): 11M Upside risk to 4Q guidance due to favourable forex trend. Fab3 conversion is tracking well and requires only half of the time vs Fab2 in 2007. New capacity/customers/applications (finger printing and IoT) to drive FY15/16 growth. FY14 cash dividend to be finalized early-15 and we expect it to increase by 25-30% YoY � if not higher. Maintain contrarian BUY and Street-high TP TWD68. Click here for report » China Mengniu Dairy (2319 HK) Growth lagging; Earnings risk surges Share Price: HKD30.60 | Target Price: HKD24.90 (-19%) | MCap (USD): 7.2B | ADTV (USD): 25M Maintain contrarian SELL. We believe lagging sales vs major competitor will trigger de-rating. Re-rating on structural mix upgrade thesis in past may not hold as Milk Deluxe sales slow. We note deceleration in sales growth in 2H14, which does not surprise us, but GPM to drop +2ppt HoH should disappoint given more favourable input costs. Aggressive gifts offering for milk beverages/pure milk is key reason. Mengniu guided 10% organic sales growth pa ahead. With keen competition in IMF, we think market�s 24% NPAT CAGR over FY14-16F is demanding. Post its Yashili�s shareholding dilution, it will further lower our FY15-16F EPS by 2%-3%. Click here for report » Singapore Offshore & Marine Sector Update Batten down hatches; D/G to UW Sector downgraded to UNDERWEIGHT from NEUTRAL. De-rating catalysts from order-win misses in 2015. Cut rigbuilders� orders and TPs. Cut valuations across the board. SMM downgraded to SELL from HOLD. Nam Cheong our preferred asset builder. Value still exists for some asset owners. For exposure, we still prefer Ezion. Click here for report » Star Publications (STAR MK) Dividend yields look enticing Share Price: MYR2.30 | Target Price: MYR2.65 (+15%) | MCap (USD): 506M | ADTV (USD): 0.3M 3Q14 results slightly below; trim estimates by 6-11%. 18sen p.a. DPS may still hold; yields very attractive at 7.8%. Trim TP from MYR2.89 to MYR2.65 but upgrade to BUY. Click here for report » COMPANY NOTES Regional Plantations | NEUTRAL Tech-Tracks Power Impulse AMMB Holdings (AMM MK) | Results Review Inari Amertron (INRI MK) | Results Preview Kuala Lumpur Kepong (KLK MK) | Results Review Boustead Plantations (BPLANT MK) | Results Review TH Plantations (THP MK) | Results Review MSM Malaysia (MSM MK) | Results Review AirAsia Bhd (AIRA MK) | Results Review AirAsia X Bhd (AAX MK) | Results Review Cebu Air Inc (CEB PM) | Results Review Nickel Asia (NIKL PM) | Results Review Regional Plantations Sector Update El Nino Alert! The Australia Bureau of Meteorology (ABM) upgraded the threat of an upcoming El Nino; with at least 70% probability. The new El Nino threat may boost sentiment and drive CPO price higher, aided by seasonal price recovery in 1Q15. Investors should position for a short term trade. BUY First Resources, Bumitama Agri, Sime Darby, Sarawak Oil Palms, Ta Ann and TSH Resources for earnings recovery play. Click here for report » Tech-Tracks Regional Quants Regional green shoots emerging Regional green shoots may be appearing in most markets in Asia ex-Japan (except Malaysia, Hong Kong and Vietnam). Despite US dollar�s strength, we see buying activities on the rise in most ASEAN markets - both foreign and local investor categories. Top BUYs: Superblock Public Company Limited (SUPER TB), AIA Group Limited (1299 HK), PT Samudera Indonesia (SMDR IJ), Robinsons Land Corporation (RLC PM), DBS Group Holdings Limited (DBS SP), Saovang Rubber JSC (SRC VN). Top SELL: Bumi Armada Berhad (BAB MK). Click here for report » Power Impulse Sector Update Utilities & renewables weekly Gas distribution was the best performing sector (12 Nov to 18 Nov), up 1.5% WoW, while solar fell 5.2% WoW. Spot polysilicon price fell 0.29% WoW to USD20.62/kg. Spot wafer price was unchanged at USD0.88/piece. Qinhuangdao spot coal price (5500 kcal/kg, Shanxi Premium Blended) was up 1% WoW to CNY515/tonne. Click here for report » AMMB Holdings (AMM MK) Better, on lower provisions Share Price: MYR6.52 | Target Price: MYR6.90 (+6%) | MCap (USD): 5.9B | ADTV (USD): 7M 2QFY15 core net profit rebounded 35% QoQ, but 1HFY15 core earnings still down 14% YoY. FY15 forecast maintained, trimming FY16-17 by 5% p.a. to factor in slower loans growth and lower NIMs. HOLD maintained, lowering TP to MYR6.90 from MYR7.70 on a lower CY15 P/BV peg of 1.5x (1.7x previously). Click here for report » Inari Amertron (INRI MK) 1QFY6/15: Expect a strong start Share Price: MYR2.95 | Target Price: MYR4.20 (+42%) | MCap (USD): 542M | ADTV (USD): 4M Expect net profit of MYR32-35m (+4-13% QoQ), supported by strong growth in overall smartphone demand. Inari is a beneficiary of the stronger USD, providing upside to our earnings forecasts. Reiterate BUY with a Street-high cum-rights TP of MYR4.20 (on unchanged 17x CY15 PER peg). Click here for report » Kuala Lumpur Kepong (KLK MK) Set back by oleochemicals business Share Price: MYR23.00 | Target Price: MYR23.20 (+1%) | MCap (USD): 7.3B | ADTV (USD): 3M FY9/14 results hurt by weak downstream earnings. Muted earnings outlook in FY9/15 as oleo-chemical, refinery and property businesses remain challenging. Maintain HOLD on unchanged TP of MYR23.20 after rolling forward our valuation on unchanged 23x PER target. Click here for report » Boustead Plantations (BPLANT MK) Rich land value caps downside Share Price: MYR1.52 | Target Price: MYR2.03(+34%) | MCap (USD): 726M | ADTV (USD): 0.4M 3Q14 results disappointed due to low CPO ASP achieved and lower-than-expected FFB output. Share price downside limited, backed by strategic land that has development potential, offering a RNAV of e.MYR2.96/sh. Maintain BUY with a revised SOP-TP of MYR2.03 (previously MYR2.16). Click here for report » TH Plantations (THP MK) Hit by dry spell Share Price: MYR1.63 | Target Price: MYR1.65(-1%) | MCap (USD): 428M | ADTV (USD): 0.2M Results below our and consensus forecasts. Cut FY14 net profit by 9% on lower production and CPO ASP. FY15-16 forecasts unchanged but have downside potential. Maintain HOLD and TP of MYR1.65 on 15x 2015 PER. Click here for report » MSM Malaysia (MSM MK) Expect a pickup in 4Q14 Share Price: MYR4.90 | Target Price: MYR5.50 (+12%) | MCap (USD): 1.0B | ADTV (USD): 0.1M 9M14 results were above expectations at 80%/77% of our and consensus full-year forecasts. Anticipating a better 4Q14 on higher margin assumption, FY14 net profit forecast raised 5%. Upgrade to BUY with a higher TP of MYR5.50 (14x FY15 PER). Click here for report » AirAsia Bhd (AIRA MK) Losing the low cost advantage Share Price: MYR2.46 | Target Price: MYR2.55 (+4%) | MCap (USD): 2.0B | ADTV (USD): 3M 3Q14 core net income of MYR112.4m (-28% YoY, +342% QoQ) was within expectations. Credible signs that market has bottomed, but expect slow yield recovery. Earnings growth driven by lower fuel cost. Maintain HOLD, target price raised to MYR2.60 (from MYR2.30) due to positive earnings revision. Click here for report » AirAsia X Bhd (AAX MK) Disappoints again Share Price: MYR0.65 | Target Price: MYR0.57 (-12%) | MCap (USD): 456M | ADTV (USD): 2M 3Q14 core net loss of MYR185m (vs. MYR16m profit in 3Q13) was greater than forecast on weak yields and higher costs. All sectors were loss making with the exception of Nepal. Maintain SELL with a lower TP of MYR0.57 (from MYR0.63). Click here for report » Cebu Air Inc (CEB PM) Long-haul drag Share Price: PHP72.00 | Target Price: PHP83.00 (+15%) | MCap (USD): 970M | ADTV (USD): 1M 3Q14�s performance significantly impacted by lower aircraft utilisation and start-up losses on the new long-haul services. Excluding the long-haul flights, the short-haul routes are performing well and competition environment is rational. Maintain BUY, target price lowered to PHP83 (from PHP88) due to lower earnings revision. Click here for report » Nickel Asia (NIKL PM) Prospects remain bright Share Price: PHP42.35 | Target Price: PHP51.94 (+23%) | MCap (USD): 2.4B | ADTV (USD): 4M 9M14 earnings up 370% to PHP8.2b, below our expectations. Higher minority interest was main culprit, cut 2014F-2015F earnings. Further expansion of Taganito HPAL plant in later years and positive scale effects offset earnings downgrade; we raise TP to PHP51.94 from PHP51.17 as a result. Maintain BUY. Click here for report »