Regional Daily, Maybank KE (2014-03-07)

Daily 07 March 2014 TOP VIEWS China Property | OVERWEIGHT Wing Hang Bank (302 HK) | TP Revision Malaysia Aviation | NEUTRAL Star Publications (STAR MK) | Rating change China Property | OVERWEIGHT Sector update UK & Europe marketing take-aways | OVERWEIGHT Majority of investors Underweight, still negative. But early signs of shift s about one-fifth recently added China property stocks to portfolios. Key concerns: 1) potential CNY depreciation; 2) tight credit and crackdown on trust financing; 3) potential margin squeeze. We don�t see high risk of CNY depreciation but provide breakdown of foreign-currency debt of developers. Of our three top picks, investors more interested in COLI and Franshion on potential restructuring and low funding costs, rather than Shimao. For SMID caps, interest centered on Agile, Country Garden, KWG and SOHO. Maintain SELL on SOHO: bumpy road to improving leasing capability and forecast earnings void. Click here for report » Wing Hang Bank (302 HK) | TP Revision The Final Countdown Share Price: HKD107.5 | Target Price: HKD132.2 (+23%) | MCap (USD): 4.3B | ADTV: USD6M Expecting WHB's ROE to rise to 11-12% in 2015-16. Potential revenue synergy justifies offer price of HKD130.60. Raise TP to HKD132.20 based on 1.85x Dec 2013 P/B. Click here for report » Malaysia Aviation | NEUTRAL Sector update 2013: A year to forget 4Q13 results were a big disappointment, with the worse yield and profit decline since the GFC of 2008-09. Overcapacity was the root of the underperformance, forcing the industry to dump fares in favour of loads. Cut to Neutral (from Overweight), AirAsia and AirAsia X are our BUY list, NEUTRAL on MAS, SELL on MAHB. Click here for report » Star Publications (STAR MK) | Rating change Cost cuts, undervalued; U/G to BUY Share Price: MYR2.22 | Target Price: MYR2.55 (+15%) | MCap (USD): 0.5B | ADTV: USD0.3M Trading at trough valuations, upgrade Star to contrarian BUY. A new and more cost-conscious management is in place. Attractive yields of 6.8% p.a. will also limit downside risk. Click here for report » COMPANY NOTES Philippine Long Distance Telephone Co (TEL PM) | Company update SATS (SATS SP) | Company update Thai Market Update L.P.N. Development (LPN TB) | Rating Change Kasikornbank (KBANK TB) | Company update Philippine Long Distance Telephone Co (TEL PM) | Company update Pension problem not a threat Share Price: PHP2,804.00 | Target Price: PHP3,090.00(+10%) | MCap (USD): 13.3B| ADTV (USD): 11M Issue not new but concerns are valid. Impact on finances still manageable as free cash flow generation remains strong. No change in view. Maintain BUY with TP of PHP3,090. Click here for report » SATS (SATS SP) | Company update TFK at inflection point Share Price: SGD2.99 | Target Price: SGD3.47(+16%) | MCap (USD): 2.7B | ADTV (USD): 3M TFK�s contribution to SATS has been lacklustre since it was acquired in 2010, hampered by the 2011 Tohoku earthquake, rising Sino-Japanese tensions since 2012 and falling JPY. But positive developments are afoot: 1) rise in China visitation numbers to Japan, 2) steady growth in JAL�s international traffic, and 3) expanding customer base. Longer-term outlook is bright as well. Reiterate BUY on SATS with DCF-based TP of SGD3.47. Click here for report » Thai Market Update Sector update 1Q14 earnings at risk, take profit Earnings of SET50 and SET100 companies contracted in 4Q13 but post growth for the whole year. Overall growth in SET100 is > than the SET50. Surprised by weak growth of large cap SET50 companies vs broader economic growth. Weaker Jan/Feb14 economic data signals earnings downgrades, capping SET�s performance at 12.7x 2014PE or c.+1SD>LTM (11.4x). Rebounding 12% from Jan-14 bottom SET ripe for profit taking. At LTM PE, SET Index is 1208, 11% downside from here. We remain on the sidelines. Our top picks are: HEMRAJ, STPI, SPALI, LH, TUF, PTTEP, ADVANC, AOT, SCC, BEC and DCC. (Full note will be out soon) L.P.N. Development (LPN TB) | Rating Change The scent of danger; D/G to SELL Share Price: THB16.40 | Target Price: THB14.00(-15%) | MCap (USD): 749M | ADTV (USD): 3M Downgrade to SELL from HOLD with revised TP of THB14 (from THB15.7) based on 8.9x FY14 PE. FY14 earnings cut by 11% due to postponement of new launches and weaker than expected take-up rate of recently launched projects. Too early to get into the stock for FY15 earnings growth story. Click here for report » Kasikornbank (KBANK TB) | Company update Capitulates on loan growth target Share Price: THB174.50 | Target Price: THB195 (+12%) | MCap (USD): 12.9B | ADTV (USD): 44M Maintain BUY, THB195 TP. Most resilient bank in our coverage, cumulate on dips. It cut its loan growth target by 2ppts to 7-8% after reducing its GDP target to 3% from 5%, third bank to do so after TISCO and KKP this year. Despite cutting overall target, it is keeping the housing loan growth target at 8% to THB52b, on reasoning the sector has bottomed and will start rebounding at a slower pace. Loan growth anchored on 3% GDP target now appears aggressive, with downside risk, in light of negative data such as contraction in Jan 2014 exports and mild inflation. Click here for report » ECONOMICS Malaysia BNM Monetary Policy Malaysia BNM Monetary Policy Economics OPR maintained at 3.0% Bank Negara Malaysia (BNM) keeps the Overnight Policy Rate (OPR) unchanged at 3.00%, during the second Monetary Policy Committee (MPC) meeting in 2014 yesterday. Preserve the �neutral� tone of the Monetary Policy Statement (MPS) as the central bank is still assessing the balance of risk between growth and inflation as well as signs of destabilising risks of financial imbalances. Maintain our call of no change in OPR this year as the currently rising inflation is predominantly �cost-push� coupled with temporary weather-related factor. Click here for report »     Click here for full Regional Daily report »