Regional Daily, Maybank KE (2015-02-09)

Daily 09 February 2015 TOP VIEWS Vanguard Int'l Semiconductor (5347 TT) | Results Review Sunac China (1918 HK) | TP Revision KNM Group (KNMG MK) | Company Update Vanguard Int'l Semiconductor (5347 TT) Goldilocks Share Price: TWD56.70 | Target Price: TWD68.00 (+20%) | MCap (USD): 3.0B | ADTV (USD): 8M Preliminary FY14 results are ahead of Street expectations and cash dividend is 30% (8% than ours) above consensus. Favourable industry dynamics and rapid growth of FCF likely to lead to sustainable higher pay-out and cash yield. Valuation is a steal factor amid abundant cash and returns. Click here for report » Sunac China (1918 HK) Big cities powerhouse, up TP Share Price: HKD6.94 | Target Price: HKD9.00 (+30%) | MCap (USD): 3.0B | ADTV (USD): 14M Sunac announced Friday night via HKEX it entered into a share purchase agreement to buy 2.529b shares of Kaisa (1638 HK, NR, or 49.25% stake) from 3 BVI companies owned by Kwok family at HKD1.80/sh, only 13% premium to Kaisa�s pre-suspension price. That translates to HKD4.553b in total. Our initial take is it�s positive for Sunac, but deal completion is conditional on various things. Avg land cost of Kaisa as of interim-2014 was around CNY2,418/sq m for its 23.6m sq m landbank, which represented 24.8% of its 2013 contract sales ASP of CNY9,760/sq m. In our view, land costs in Tier 1 and key 2 cities are quite high and it is hard to replenish landbank in cities like Shenzhen and core-Chengdu in a sizeable manner. Maintain BUY and raise TP by 18% to HKD 9.00 from HKD7.60, after incorporating our estimated 65% probability of a HKD3.9/sh NAV-accretion (vs Sun�s est of 50% probability for deal completion) to Sunac. Uncertainties include political risks, if Shenzhen units can be unblocked, Kaisa�s ability to resume normal borrowings, etc. Click here for report » KNM Group (KNMG MK) Streamlining costs and ops Share Price: MYR0.67 | Target Price: MYR1.00 (+49%) | MCap (USD): 307M | ADTV (USD): 5M Disposed loss-making overseas ops, set to make MYR22.5m one-off gain and save MYR20m in opex p.a. Targets to transform into a renewable energy player, a more stable business model. Maintain BUY and MYR1.00 TP (0.6x EV/order backlog) with upside bias. Click here for report » COMPANY NOTES Piggy Banks & Crystal Ball Tech-Tracks Tambang Batubara Bukit Asam (PTBA IJ) | Company Update Axiata Group (AXIATA MK) | Results Review Barakah Offshore Petroleum (BARAKAH MK) | Company Update CIMB Group Holdings (CIMB MK) | Company Update Maxis Bhd (MAXIS MK) | Results Review MISC Bhd (MISC MK) | Results Review Singapore Airlines (SIA SP) | Results Review Singapore Offshore & Marine | UNDERWEIGHT Bumrungrad Hospital (BH TB) | Results Preview Piggy Banks & Crystal Ball Regional Banks Regional Banks Bi-weekly No. 7 Net rating upgrades for China banks. We expect more earnings and TP upgrades after the recent cut in RRR given this should help improve loan growth, NIM and asset quality of banks. Our top BUY is Bank of China (3988 HK) given it will be a key beneficiary of overseas expansion of mainland companies. More bearish earnings outlook for HK banks. This is especially for the coming 2014 results of both HSBC and SCB. Besides, we believe market has not yet factored in impairment charge of HKD2.1b for Hang Seng Bank�s (HSB) holding of shares of Industrial Bank. Our top SELL is HSB (11 HK) as it needs to moderate loan growth and cut DPS to revive its fully-loaded CET1 CAR to 13% before 2018. Long AFG; Funded by China Minsheng Bank. Based on our "long-short position analysis", we see increasing buying interest in AFG by long-only funds. We also see more short-selling positions for CMSB by hedge funds with stable stock borrow utilization rate. Fundamentals support this trade. We believe AFG will benefit from its niche in SME businesses, high CASA ratio and strong capitalization. Meanwhile, we have concerns about EPS and ROE dilution from planned capital replenishment of CMSB as well as low provision coverage for its loan portfolio. Click here for report » Tech-Tracks Regional Quants Buoyant markets may re-test resistances US markets gyrated nervously at lofty levels from poorer corporate results and benign job data. However, a good reversal in crude oil�s downtrend lifted equity market sentiment in early February. Regionally, the undulating undertones improved despite US Dollar strength against emerging ASEAN currencies and the Euro. A sign that funds are placing their bets in Asia ex Japan is that most indices have risen over the last fortnight (with the exception of Vietnam). Top BUYs: ComfortDelGro Corporation Limited (CD SP), Fuguiniao Co Ltd (1819 HK), Japan Vietnam Medical Instrument JSC (JVC VN), Fortune Parts Industry PCL (FPI TB), PT Pembangunan Perumahan Persero Tbk (PTPP IJ), Karex Berhad (KAREX MK) and First Philippine Holdings Corporation (FPH PM). Click here for report » Tambang Batubara Bukit Asam (PTBA IJ) Lower TP Share Price: IDR11,375 | Target Price: IDR13,400 (+18%) | MCap (USD): 2.1B | ADTV (USD): 2M Maintain BUY but cut DCF TP to IDR13,400 from IDR15,000 for lower long-term railway volume. PTKA missed railway-volume target again. Rajawali project may be delayed. But every 1% increase in PLN�s ASPs could lift 2015F EPS by 4.4%. 3.1x P/BV at 14% discount to 12-year mean. Click here for report » Axiata Group (AXIATA MK) XL ahead on better margins Share Price: MYR7.17 | Target Price: MYR7.80 (+9%) | MCap (USD): 17.3B | ADTV (USD): 16M XL�s FY14 EBITDA was in line with ours and consensus forecasts; net profit was ahead of expectations. Margins expanded QoQ as major cost items trended down, aided by provision reversal and finance lease income. XL�s FY14 earnings are distorted by the Axis acquisition; our BUY rating and MYR7.80 TP for Axiata are unchanged. Click here for report » Barakah Offshore Petroleum (BARAKAH MK) Clinches PCSB job worth MYR110m Share Price: MYR0.97 | Target Price: MYR1.15 (+19%) | MCap (USD): 207M | ADTV (USD): 1M This is for a pig trap system works, on 3+1 year contract. Targets to replenish MYR600m contracts for 2015. Reiterate Trading Buy and MYR1.15 TP (10x 2016 PER). Click here for report » CIMB Group Holdings (CIMB MK) T18 unveiled Share Price: MYR5.80 | Target Price: MYR5.70 (-2%) | MCap (USD): 13.8B | ADTV (USD): 15M Ambitious goals include CIR < 50% and ROAE >15% by FY18 from cost savings and business acceleration. More specifics required to convince that lofty targets can be achieved. HOLD maintained, TP of MYR5.70 on FY15 P/BV peg of 1.2x. Click here for report » Maxis Bhd (MAXIS MK) Positive revenue momentum Share Price: MYR6.99 | Target Price: MYR7.40 (+6%) | MCap (USD): 14.8B | ADTV (USD): 8M 2014 net profit below ours/consensus expectations owing to higher depreciation; EBITDA was in line. Encouragingly, revenue trended up sequentially for both the prepaid and postpaid segments, albeit aided by seasonality. Slight earnings cuts on higher depreciation; BUY rating and MYR7.40 TP unchanged. Click here for report » MISC Bhd (MISC MK) Growth catalyst nears Share Price: MYR7.74 | Target Price: MYR8.70 (+12%) | MCap (USD): 9.7B | ADTV (USD): 5M Strong 4Q14; expect better 2015 on performance by Offshore, Petroleum and Chemical divisions. Impetus from LNG contract renewals and LNG newbuilds. Maintain BUY, raised SOP-based TP to MYR8.70 (+9%). Click here for report » Singapore Airlines (SIA SP) 3QFY15 below, fuel-hedge spoiler Share Price: SGD12.13 | Target Price: SGD12.00 (-1%) | MCap (USD): 10.6B | ADTV (USD): 14M Transfer of coverage. 3QFY3/15 core net income of SGD146.4m slightly below due to higher-priced fuel hedges. Parent airline continued to struggle. Subsidiary airlines - Silkair, SIA Cargo, Tigerair - performed well. EPS, BUY & SGD12 SOTP TP unchanged, pending briefing today. Click here for report » Singapore Offshore & Marine Sector Update Sete Brasil woes may spill over Brazil national bank, BNDES, once again postponed USD3.2b loan to Sete Brasil. Ex-Petrobras executive alleged shipyard contractors paid bribes to secure rig-building contracts. Keppel Corp & SembMarine unlikely involved in bribery but may have to write down order books in worst case scenario that Sete Brasil could not pay. Click here for report » Bumrungrad Hospital (BH TB) Expect strong 4Q; Valuations stretched Share Price: THB158.00 | Target Price: THB130.00 (-18%) | MCap (USD): 3.5B | ADTV (USD): 3M Maintain HOLD with DCF-based TP of THB130, implying 35x PER, 7x P/BV, and 1.5x PEG for FY15F. We expect greater competition. Valuations stretched, switch to BGH (TP THB23) Expect hospital revenue to increase 10% YoY as IPD and OPD revenue should rise 7% and 9%. Patient traffic could grow 13% with 5% rise in prices. Estimate net profit of THB700 in 4Q14, -9% QoQ on seasonal weakness while +12% YoY due to continuous volume growth, return of int�l patients, and EBITDA margin expansion. Click here for report » ECONOMICS Indonesia Economics Indonesia GDP 2014 Economy slowest since 2010 Indonesia economic growth in 2014 posted 5.02%, down from 5.58% in 2013, driven by slowing growth in private consumption, government spending, investment and exports. Even though growth slowed to 5.02% y-o-y 2014, we see improvement in 2015 from strong government consumption and investment. We see exports rising in 2015 due to the improving economies of Indonesia's major trading partners such as India, US, Singapore, and the UK. We expect Indonesia's economic growth to hit 5.50% y-o-y in 2015. Click here for report »