Regional Daily, Maybank KE (2014-04-14)

Daily 14 April 2014 TOP VIEWS China Banks | OVERWEIGHT Materials Sector | OVERWEIGHT Nickel Asia (NIKL) | Company update Indonesia Banking Sector | NEUTRAL China Banks | OVERWEIGHT Sector update Potential issue of preference shares � Limited dilution effect ABC, CMB and CNCB may need to replenish tier-1 capital. Potential issue of preference shares by ABC, BOC and ICBC. Keep Overweight. Potential 2014F ROE dilution of 24-35bps. Click here for report » Materials Sector | OVERWEIGHT Sector update Battle of the laggards - Buy nickel/aluminium, Sell steel We see further upside potential for nickel and aluminium prices as supply disruptions move the markets from over to under supply. These laggards we picked last year to outperform are now price leaders, up 22% and 12% YTD. Chinese steel remains in oversupply vs. weak demand growth and sector financial risks are high. Price leader Baosteel cut May steel prices 2.2% MoM and further cuts are likely. Thermal coal prices appear to have bottomed but we see limited upside potential despite positive seasonal factors. Tax subsidies in Shanxi Province (1/3 of total China supply) may help producers maintain high levels of output. Click here for report » Nickel Asia (NIKL PM) Higher contract prices raise TP Share Price: PHP22.00 | Target Price: PHP27.62 (+26%) | MCap (USD): 1.3B | ADTV: USD1M 1Q14 shipments up 52% YoY to 2.65m WMT while revenues grow 21% to PHP1.45b with ASPs down 15.7% to USD6.59/lb but higher 3.9% QoQ as prices bottomed in Nov. Successful renegotiation of contracts pegged to LME prices now reflect higher prices paid by Chinese buyers. Maintain BUY as we revise up our price assumptions and raise TP to PHP27.62 for potential upside of 25.5%. (FULL NOTE TO BE OUT SOON) Indonesia Banking Sector | NEUTRAL Sector update Results preview 1Q14 Bank Central Asia credit utilization is improving; BUY. Bank Negara Indonesia to build up provisioning buffer; HOLD Bank Rakyat Indonesia margin likely to stay at 8.5%; BUY. Bank Mandiri retail segment is the main earnings driver; BUY. Click here for report » COMPANY NOTES ABS-CBN (ABS PM) | Results review Singapore Press Holdings (SPH SP) | Results review ABS-CBN (ABS PM) Healthy core business highlighted Share Price: PHP34.80 | Target Price: PHP42.50 (+22%) | MCap (USD): 658M | ADTV (USD): 0.4M Reiterate BUY on biggest Philippine media company. 2013 earnings up 25% in line with expectations. Attractive long-term potential growth from new businesses. Click here for report » Singapore Press Holdings (SPH SP) Weak results; HOLD with lower TP Share Price: SGD4.22 | Target Price: SGD4.10(-2%) | MCap (USD): 5.4B | ADTV (USD): 8M SPH reported a set of weak 2QFY8/14 results with flattish revenue and a 12.8% YoY drop in core operating profit. We trim our revenue and net profit forecasts for FY8/14E-16E by 1-3%. Earnings growth expected to stay weak as core media business continues to languish. Share price may be supported by its decent dividend yield of almost 5%. Maintain HOLD with a lower TP of SGD4.10. (FULL NOTE TO BE OUT SOON)     Click here for full Regional Daily report »