Monday, April 21, 2014

Regional Daily, Maybank KE (2014-04-21)


Daily
21 April 2014
TOP VIEWS
  • India Property Sector | OVERWEIGHT
  • MY Autos Sector | U/G to OVERWEIGHT
  • Tata Consultancy Services (TCS IN) | Results review
  • Bank of Ayudhya (BAY TB) | Rating change
India Property Sector | OVERWEIGHT
Sector update
Presales important than earnings
  • Property index increases 15% in last 3 months led by consistent customer demand and on anticipation that a stable government would be formed at the centre, boosting investor sentiment.
  • New launches/pre-sales performance in FY15 should drive stock prices. Reported quarterly earnings are less important as developers adjust to new accounting norms.
  • Discounted NAV's reduced to some extent but stocks remain attractive at 55% discount. The main triggers are favorable election results and start of the interest rate reduction cycle. Our top picks include DLFU, OBER, SOBHA.
MY Autos Sector | U/G to OVERWEIGHT
Sector update
Values have emerged
  • Share prices of UMWH and MBM have retraced 28% and 21% in the last 12 months relative to the KLCI.
  • We upgrade UMWH and MBM to BUY on undemanding valuations and as we turn upbeat on Perodua.
  • Upgrade sector to OVERWEIGHT with BUYs on UMWH, TCM, MBM and BAuto. TCM is our favourite.
Tata Consultancy Services (TCS IN)
Reiterates strong FY15
Share Price: INR2167 | Target Price: INR2,590(+20%) | MCap (USD): 70.5B | ADTV: 47.4M
  • Maintain BUY with TP of INR2,590. TCS remains one of our top picks among large-cap IT stocks under our coverage.
  • 4QFY14 EPS of INR27.4 was flattish QoQ and up 43% YoY in line with our forecast. QoQ revenue growth of 1.9% (in USD) was slightly lower than our expectations. Despite slightly muted 4Q, TCS outperformed the sector with FY14 revenue growth (in USD) of 16.2%.
  • TCS re-iterated that FY15 revenue growth would be faster than in FY14. We remain bullish on TCS' ability to outperform the sector and maintain our FY15F EPS of INR117 (+20% YoY) and FY16F EPS of INR135 (+16% YoY).
Bank of Ayudhya (BAY TB)
Weak 1Q14 results
Share Price: THB38 | Target Price: THB31 (-22%) | MCap (USD): 7.2B | ADTV: USD0.8M
  • Downgrade to SELL (from HOLD) with new TP of THB31 (from THB33) implying 1.4x 2014 P/BV, 12x PER with 13% ROE.
  • Earnings fall 19% YoY to THB3.3bn in 1Q14, below our and Street estimates by 19% and 16% due to the lower dividend income and higher provision expenses.
  • Cut 2014 earnings by 8% to reflect the weaker loan growth (5% from 7%) and non-interest income (3% from 9%) assumptions.
COMPANY NOTES
  • HCL Technologies (HCLT IN) | ADTV (USD): 2M
  • Bank Danamon (BDMN IJ) | Company update
  • GT Capital Holdings Inc (GTCAP PM) | Results review
  • CapitaCommercial Trust (CCT SP) | Results review
  • TMB Bank (TMB TB) | Results review
  • Siam Commercial Bank (SCB TB) | Results review
  • Bangkok Bank (BBL TB) | Rating change
  • Kasikornbank (KBANK TB) | Result review
  • Kiatnakin Bank (KKP TB) | Results review
  • Thanachart Capital (TCAP TB) | Results review
HCL Technologies (HCLT IN)
Outperformance continues
Share Price: INR1,424 | Target Price: INR1,587(+11%) | MCap (USD): 16.5B
  • Maintain BUY with TP of INR1,587 based on PER of 16x FY15F.
  • EPS increases 8.5% QoQ and 55% YoY to INR23.2 in 3QFY14 (FYE June), beating our forecast. Revenue growth in line with expectation. However, EBITDA margin of 26.7% (+77bps QoQ) higher than our forecast of 25.7%.
  • We remain bullish on HCLT's ability to outperform the sector and maintain our FY15-16 revenue forecast. We factor in higher EBITDA margin and marginal increase in our FY14-15 EPS.
Bank Danamon (BDMN IJ)
Earnings adjustment on weak 1Q14
Share Price: IDR4,470 | Target Price: IDR4,600 (3%) | MCap (USD): 3.8B | ADTV (USD): 2M
  • Maintain HOLD but lower TP to IDR4,600 (10.7x 2014F PER; 1.3x 2014F PBV).
  • We cut our 2014F net profit estimate by 5% to IDR4.1t on the back of higher funding cost.
  • As NIM continues a down trend, a shift in loan-mix towards the high-yield segment becomes critical.
GT Capital Holdings Inc (GTCAP PM)
No surprises
Share Price: PHP834.50 | Target Price: PHP860.00(+3%) | MCap (USD): 3.3B | ADTV (USD): 4M
  • FY13 core income up 34% and well in line with estimate.
  • Major business units performed within targets.
  • Keeping FY14 earnings estimate of PHP10.1b and NAV of PHP860/sh. Maintain HOLD.
CapitaCommercial Trust (CCT SP)
In-line results; eyes on CapitaGreen
Share Price: SGD1.64 | Target Price: SGD1.67(+2%) | MCap (USD): 3.8B | ADTV (USD): 10M
  • 1Q14 results in line with our expectations. DPU rose 7.2% YoY to 2.08 cts.
  • 12% pre-commitment signed to-date for CapitaGreen. Cargill leases 51,000 sq ft and likely paying SGD9-10 psf per month.
  • Reiterate HOLD with DDM-based TP raised to SGD1.66.
TMB Bank (TMB TB)
Earnings squeezed by weak NIM
Share Price: THB2.48 | Target Price: THB2.10(-15%) | MCap (USD): 3.4B | ADTV (USD): 8M
  • Downgrade to SELL (from HOLD) and TP of THB2.1, pegged to 1.4x 2014 P/BV, 11.5x PER and 12.3% ROE.
  • 1Q14 net profit dropped 12% YoY to THB1.6b, below our and Street estimates of 11% and 17%, due to the weak NIM and fee income.
  • Current share price looks relatively expensive compared to the sector. It is unlikely that the M&A deal will take place soon as there is no functional government.
Siam Commercial Bank (SCB TB)
Earnings lifted by good cost control
Share Price: THB161.00 | Target Price: THB158.00(-2%) | MCap (USD): 16.9B | ADTV (USD): 29M
  • Maintain HOLD with THB158 TP, implying 1.9x 2014 PBV, 10x PER with 20% ROE. Prefer KTB and KBANK.
  • 1Q14 earnings flat YoY but up 12% QoQ to THB13bn, beating our estimates by 7% due to stronger than expected NIM and effective cost management strategy.
  • FY14F earnings growth of 5% should be supported by its funding cost reduction and decelerating OPEX growth rate during the slow top line growth.
Bangkok Bank (BBL TB)
Weak loan growth in 1Q14
Share Price: THB190.00 | Target Price: THB205.00(+8%)|
  • Downgrade to HOLD (from BUY) with TP of THB205 implying 10.4x 2014PE, 1.2x P/BV and 12.2% ROE, in line with the historical data. Prefer KBANK and KTB.
  • 1Q14 earnings flat YoY (+17%QoQ) to THB9bn, beating our and Street estimates by 3% due to the lower OPEX.
  • Loan growth and NIM should improve in 2H14 due to better economic situation and lower funding costs.
Kasikornbank (KBANK TB)
Impressive 1Q14 earnings
Share Price: THB188.00 | Target Price: THB210.00(+12%) | MCap (USD): 14.0B | ADTV (USD): 40M
  • Re-iterate BUY and revised TP to THB210 (from THB195), implying 2x P/BV in 2014. Top pick in banking sector.
  • 1Q14 earnings jump 13% YoY and 20% QoQ to THB11.5bn, beating our forecast by 6% due to strong net insurance income and NIM.
  • Raise 2014 earnings by 1% after cut loan growth to 6% (from 8%) amid the slower economy but revise up NIM and non-interest income to reflect better than expected insurance income and low funding cost in 1Q14.
Kiatnakin Bank (KKP TB)
Weak 1Q14 earnings
Share Price: THB46.25 | Target Price: THB43.00(-7%) |
  • 1Q14 net profit drops 40% YoY and 32% QoQ to only THB700m, 24% & 30% below our and consensus estimates due to weak non-interest income and high credit cost.
  • Asset quality hit from auto loans and one real estate account. KKP booked THB412m loss from cars liquidation in 1Q14.
  • Maintain BUY with THB 43 TP as we maintain our forecast and models pending analyst meeting on 22 Apr.
Thanachart Capital (TCAP TB)
Thanachart Capital (TCAP TB) | Results review
Share Price: THB34.75 | Target Price: THB29.00(-17%) | MCap (USD): 1.4B | ADTV (USD): 3M
  • Maintain SELL and TP of THB29, implying 0.7x 2014 P/BV and 6.4x PER. We cut 2014 earnings by 8% to reflect weaker than expected 1Q14 results. Prefer KBANK and KTB.
  • 1Q14 earnings fell 32% YoY to THB1.3bn, 15% below our and consensus forecasts due to weak non-interest income
  • TCAP has high provisioning risk due to weak coverage ratio and high NPLs. We remain cautious on its coverage ratio and apply a valuation discount to the book value.
ECONOMICS
Singapore Exports, Mar 14
Economics
NODX down, NORX up
  • Non-Oil Domestic Exports (NODX) fell by -6.6% YoY in Mar 2014 and -1% YoY in 1Q 2014.
  • Impact of improving external demand is seen in the Non-Oil Re-Exports (NORX), which surged +18.7% YoY in Mar 2014 and +14.3% YoY in 1Q 2014.
  • Possible downside to 1Q 2014 real GDP growth after the advanced estimate of +5.1% YoY.
   

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