Regional Daily, Maybank KE (2014-03-10)

Daily 10 March 2014 TOP VIEWS TCL Communication (2618 HK) | BUY Vale Indonesia (INCO IJ) | BUY Starhill Global REIT (SGREIT SP) | HOLD TCL Communication (2618 HK) Small but beautiful Share Price: HKD9.31 | Target Price: 12.00 (+29%) | MCap (USD): 1.4B | ADTV: USD6M Reiterate BUY and HKD12 target price. Its global EM-ex-China exposure, new product cycle (LTE & tablet) and integrated model should deliver sustainable growth. Alcatel�s strong EMEA exposure allows it to capture 4G upgrade demand and 3G smartphone demand. TCL secured new orders with several operators at the recent MWC. Expect blended ASP to grow 18-22%/11-15% YoY in 2014/15E following 24% expansion in 2013 driven by better mix and new models. Click here for report » Vale Indonesia (INCO IJ) Set for positive trend Share Price: IDR2,690 | Target Price: IDR3,500(+30%) | MCap (USD): 2.3B | ADTV: USD3M Maintain BUY with Street high TP IDR3,500 based on 1.5x 2015 PBV, a 20% discount to 11-year average. The stock is trading at 1.3x PBV, low end of the cycle. Expect nickel price to rise in 4Q14 to factor in impact of nickel ore export ban in Indonesia. Higher nickel price and cost efficiencies are main catalysts for the stock. Click here for report » Starhill Global REIT (SGREIT SP) NDR feedback: Tide slowly turning Share Price: SGD0.79 | Target Price: SGD0.84 (+6%) | MCap (USD): 1.3B | ADTV: USD0.8M A 100bps/200bps increase in borrowing costs will shave 2%/2.5% off DPU. A 10% drop in all SGREIT�s forex exposure will see DPU slide by no more than 5%. Higher occupancy costs for SGREIT tenants are offset by their higher sales efficiency. Click here for report » COMPANY NOTES Regional Tech-Tracks Philex Mining (PX PM) | BUY Dynasty Ceramic (DCC TB) | BUY Ticon Industrial Connection (TICON TB) | BUY Regional Tech-Tracks Funds bargain hunt Bargain hunting activity in Feb and Mar helped shore up regional indices. Vietnam remains the best performing market followed by FBMKLCI but other ASEAN indices as well as the Hang Seng index are now turning up from oversold conditions. Top BUYS: MKH Berhad (MKH MK), CSPC Pharmaceutical Group Limited (1093 HK), Vicom Limited (VCM SP), PT Surya Citra Media Tbk (SCMA IJ), Petroleum Equipment Assembly and Metal Structure Company Ltd (PXS VN), Airports of Thailand Public Company Ltd (AOT TB) and Semirara Mining Corporation (SCC PM). Click here for report » Philex Mining (PX PM) Setting up for faster growth Share Price: PHP9.11 | Target Price: PHP17.19 (+89%) | MCap (USD): 1.0B | ADTV: USD0.3M Excluding one-off items due to clean up of financial statements, 2013 results were in line with forecasts. Production volumes for Padcal mine to remain high in 2014F, with grades and tonnages similar to 2013. Keep BUY with TP of PHP17.19 and 29% FY14 profit growth. (Full note will be sent later) Dynasty Ceramic (DCC TB) Dividend attraction, growth expectations Share Price: THB51.5 | Target Price: THB68.00 (32.0%) | MCap (USD): 651M | ADTV: USD0.3M Outlook likely to remain lacklustre in 1Q14 as consumption spending remains weak; offering higher value products, bigger sizes could help offset the slowdown. Stronger than expected demand growth could push profits higher due to high operating leverage. Baseline forecast ROCE/WACC (capital yield) remains solid ranging 4.6-5.7x during 2014/16, slightly higher than the 2010-2013 range of 4.2-5.3x. Maintain BUY with DDM-based TP of THB68. With 3-Yr EPS CAGR of 14.4% and prospective dividend yield of 8% average, DCC is attractive. Click here for report » Ticon Industrial Connection (TICON TB) More action in 2014 Share Price: THB17.50 | Target Price: THB25.00(+43%) | MCap (USD): 495M | ADTV: USD2M Delays in 2013 resulted in just 9% YoY profit growth, 24% below our forecast. We now look for c.60% YoY growth in 2014 net profits, 32% YoY at EPS level (assuming full conversion of the TSR). Maintain BUY with 12M TP of THB25 � 2.1x PBV based its 10Y LTM. Targeting to add approx. 350K sqm to a pool of 1.3m sqm increasing locations to c. 30 from 10 two years ago in need for strategic locations driven by positioning for the upcoming ASEAN Economic Cooperation (AEC). Expansion raised D/E to 2x by YE 2013. Successful TSR share issue and conversion of remaining warrants could bring down D/E back to the comfortable level of 1.32x by YE14. Click here for report » ECONOMICS Malaysia Economics External Trade, Jan�14 Strong start to 2014 Both exports and imports grew in Jan 2014 by +12.2% YoY (Dec 2013: +14.4% YoY) and +7.2% YoY (Dec 2014: +14.8% YoY) while trade surplus narrowed to +MYR6.4b (Dec 2013: +MYR9.6b). A better year for external trade amid simultaneous expansions in G3 and firming up in the prices of key export commodities, namely crude oil and CPO. Maintain full-year exports and import growth forecasts of +5.9% (2013: +2.4%) and +8.0% (2013: +7.0%). Click here for report »     Click here for full Regional Daily report »