Regional Daily, Maybank KE (2014-03-27)

Daily	27 March 2014
TOP VIEWS China Gas Utilities | Sector Initiation Sarine Technologies (SARIN SP) | Company update Philippines Monetary policy Biostime (1112 HK) | Rating change China Gas Utilities Sector Initiation More upside in the pipeline� Initiate coverage of the Chinese city gas distribution sector at Overweight. BUYs: China Gas & ENN. HOLDs: CR Gas & Towngas China. This is a relatively defensive business yet it also offers robust growth potential and good earnings visibility. Longer term, we expect robust gas sales growth of ~20% could offset the mild margin risk of city gas distributors. We see the sweet spot will be the growth in vehicle gas sales. Click here for report » Sarine Technologies (SARIN SP) Strong potential not to be missed Share Price: SGD2.44 | Target Price: SGD3.09 (+27%) | MCap (USD): 667M | ADTV: USD0.4M Rising GalaxyTM penetration and scant competition see Sarine closer to entrenching its monopoly in inclusion mapping. New revenue drivers target the highest value-add segment of the diamond industry, ensuring the next leg of growth. Switch to DCF-based intrinsic valuation model yields higher TP of SGD3.09. Reiterate BUY. Click here for report » Philippines Monetary policy Economics Any tightening likely to be minimal Expectations of tighter monetary policy have been brought forward with some anticipating a move in Thursday�s (27 Mar) meeting of the monetary board. However, any action will likely be a token move and unlikely to be the start of sustained tightening initiatives. Reasons for only a nudge in policy: consumer inflation likely to be trending down for the rest of the year, economic growth likely to slow due to natural calamities in 2013 and liquidity from abroad will be squeezed as the Federal Reserve tapers. Click here for report » Biostime (1112 HK) Uncertain times ahead: D/G to SELL Share Price: HKD54.35 | Target Price: HKD48.00(-12%) | MCap (USD): 4.2B | ADTV (USD): 10M Further downgrade to contrarian SELL with Street-low TP on unattractive risk-to-reward profile given weaker-thanexpected sales growth guidance and surging OPEX pressure. We slash both our FY14/15F NPAT forecast by 13%. Our latest forecast implies 22.6% profit CAGR over FY14-16F. We now adopt 22X FY14F PER as our valuation multiple (Old:25X). Numerous encouraging long-term development initiatives such as online-to-offline, personalized marketing, etc are underway, but near-term earnings contributions negligible. Click here for report » COMPANY NOTES Oberoi Realty (OBER IN) | TP Revision Jiangxi Copper (358 HK) | TP Revision Sinotrans (598 HK) | Results review Bolina Holding (1190 HK) | Rating Change Unilever Indonesia (UNVR IJ) | Results review Glomac (GLMC MK) | Company update Breadtalk Group (BREAD SP) | Company update Oberoi Realty (OBER IN) Big land acquisition boosts earnings visibility Share Price: INR207 | Target Price: INR338(+63%) | MCap (USD): 1.1B | ADTV (USD): 0.1M Maintain BUY as we raise TP by 12% to Street-high INR338 underpinned by new land bank in Mumbai, which enhances our NAV valuation. OBER plans residential project with saleable area of 4m sq. ft (potential INR48b revenue in the next four years). Surplus cash of INR5b and internal cash flows would fund INR11.5b of land acquisitions. Click here for report » Jiangxi Copper (358 HK) Reiterate BUY on lowered TP Share Price: HKD12.50 | Target Price: HKD15.00(+20%) | MCap (USD): 5.6B | ADTV (USD): 14M We lower our copper price forecast and EPS estimates for 2014, but raise 2015-16. We also cut our TP 25% to HKD15, on a lower copper price peak than previously forecast. We continue to view the copper price as oversold and look for market concerns regarding slower Chinese GDP growth and tight credit conditions to ease during 2H14. Has healthy balance sheet with cash at HKD7/sh (56% of its share price). Dividend unchanged YoY for FY13, and management is seeking growth opportunities. Click here for report » Sinotrans (598 HK) Excellent delivery Share Price: HKD3.61 | Target Price: HKD4.55(+26%) | MCap (USD): 2.0B | ADTV (USD): 9M Reiterate BUY with TP of HKD4.55 supported by 23.3% 3-yr earnings CAGR. We also project Sinotrans to remain net cash positive in FY14. Solid 3PL growth, higher freight forwarding margin, lower finance costs and improving JCEs are FY14F earnings drivers. Divestment of marine transportation (CNY60m disposal gain) should remove earnings volatility and boost earnings quality. Click here for report » Bolina Holding (1190 HK) D/G on poor execution & mounting risk Share Price: HKD3.74 | Target Price: HKD3.40(-9%) | MCap (USD): 489M | ADTV (USD): 3M Downgrade from BUY to contrarian HOLD given increasing inventory risk for property market in low-tier cities and poor execution. New TP is Street-low and derived at 12x FY14F PER (unchanged) but we slashed our NPAT forecast by 26%/35% for FY14/15F We see rising pressure on domestic ASPs and margins ahead due to nfavourable shift in sales mix, as customers in lowtier markets favour basic and affordable sanitary ware. Near-term capacity constraints remain given moderate plan for outsourced production, which limits upside risk to our 13.2% 3-year CAGR sales volume assumption. Click here for report » Unilever Indonesia (UNVR IJ) No big surprises, margin pressure Share Price: IDR28,250 | Target Price: IDR22,350(-21%) | MCap (USD): 18.9B | ADTV (USD): 5M Reiterate non-consensus SELL. We expect costs to continue to pressure margins. TP of IDR22,350 implies 30x FY14F PER. FY13 top and bottom lines were within our expectations and consensus. EBIT margin contracted slightly by 40bps to 23.2% in FY13 due to higher ad spending. We forecast this to fall further to around 22% in FY14. Click here for report » Glomac (GLMC MK) To pick up pace in 2H14 Share Price: MYR1.08 | Target Price: MYR1.20 (+11%) | MCap (USD): 0.2B | Looking to expand its landbank aggressively especially for township development. Property launches will pick up pace in 2H14; most launches will be affordable landed properties. Maintain HOLD on unchanged earnings forecasts and MYR1.20 TP (0.6x P/RNAV). Click here for report » Breadtalk Group (BREAD SP) Custard in the bun Share Price: SGD0.97 | Target Price: SGD1.54 (+59%) | MCap (USD): 211M | ADTV (USD): 0.2M BreadTalk holds equity stakes in several real estate assets in partnership with Perennial Real Estate Holdings. Recent RTO proposal by St James highlights the value of its assets. BreadTalk has the option of monetising these in the future; SGD0.56/share based on latest independent valuation. Even after taking a 25% discount, our SOTP approach to cross-check raises value to SGD1.65/share. Reiterate BUY. Click here for report » ECONOMICS Singapore IPI, Feb �14 Thailand Economics Singapore IPI, Feb �14 Singapore Economics Broad-based growth Industrial Production (IP) growth reached a two year high of +12.8% YoY in Feb 2014 (Jan 2014: +3.6% YoY). Growth was driven by Electronics and Biomedical clusters. Global economic indicators continue to remain favourable led by prospects in the US while emerging geopolitical events in Europe and slower than expected growth in China could throw a spanner in the works. Click here for report » Exports rose from vehicles, rice Thailand Economics Imports continued to fall We expect rice exports to continue to rise; the cooling Chinese economy could affect Thai exports. Falling imports of capital goods imply weak domestic investment. Click here for report »     Click here for full Regional Daily report »