Regional Daily, Maybank KE (2014-04-30)

Daily 30 April 2014 TOP VIEWS China Lesso Group (2128 HK) | Initiation Pegatron Corporation (4938 TT) | Results preview Malaysia Construction | OVERWEIGHT China Lesso Group (2128 HK) | Initiation Catalysts drive imminent re-rating; initiate BUY Share Price: HKD4.18 | Target Price: HKD7.20(+72%) | MCap (USD): 1.7B | ADTV: USD2M Initiate at BUY with 72% upside to Street-high HKD7.20 TP (11X FY14F PER, 20% discount to DCF). Trading at 40% discount to A-share listed peers and being a constituent of Hang Seng Composite MidCap Index, we expect the discount will narrow under the upcoming �through train� scheme. Project 16% 3-year NPAT CAGR forecast. We foresee accelerating demand growth for plastic pipes driven by increasing urbanisation, government-led municipal pipeline construction and water conservation projects. We believe Lesso can grow its home building materials sales by leveraging its dominant market leadership in plastic pipes. We expect its margins to improve ahead on enhanced scale. Click here for report » Pegatron Corporation (4938 TT) | Results preview Likely solid 1Q14 results; BUY Share Price: TWD46.10 | Target Price: TWD55.00(+19%) | MCap (USD): 3.5B | ADTV: USD13M Pegatron is due to release 1Q14 results on 8 May. We think it will be a neutral to positive event. Expect operating income topped ours and consensus estimate thanks to improvement in production efficiency. Despite potential non-operating loss from its CBs and FX, we estimate net income beat consensus of TWD1.96bn (EPS TWD0.84). Maintain BUY, above-consensus estimate and TWD55 target price. Click here for report » Malaysia Construction | OVERWEIGHT Sector update Strengthened Pipeline Current pipeline is more solid than a year ago; RRIM, RAPID, WCE, Warisan Merdeka, Langat 2 works to kick off this year, KVMRT2 go-ahead is merely procedural. Impending major construction awards, to at least sustain the earnings momentum, is good enough reason to remain Overweight on the sector. Also, stock valuations remain undemanding at 8x-14x 2015 PER versus 16x for the KLCI; our Top Pick is still IJM Corp. (FULL NOTE WILL BE OUT SOON) COMPANY NOTES China LotSynergy Holdings (1371 HK) | Flash Note Bank of Communications (3328 HK) | TP Revision Jiangxi Copper (358 HK) | Company Update ICBC (1398 HK) | TP Revision China CITIC Bank (998 HK) | TP Revision Sesa Sterlite (SSLT IN) | Company Update Idea Cellular (IDEA IN) | Results Review Bank Central Asia (BBCA IJ) | Results Review Jasa Marga (JSMR IJ) | Results Review Starhill Global REIT (SGREIT SP) | Results Review Robinson Department Store (ROBINS TB) | Results Review Supalai PCL (SPALI TB | TP Revision Siam Makro (MAKRO TB) | Results Preview Vard Holdings (VARD SP) | Results Review China LotSynergy Holdings (1371 HK) | Flash Note Buys back 45 million shares; BUY Share Price: HKD0.58 | Target Price: HKD1.00(+72%) | MCap (USD): 561M | ADTV (USD): 22M Maintain BUY and TP of HKD 1 aswe recommend investors to accumulate CLS� stock after recent share price pullback. The company bought back 45 million shares today and management re-affirmed its growth outlook at today�s conference call. Click here for report » Bank of Communications (3328 HK) | TP Revision 1Q14: More downside risks ahead; SELL Share Price: HKD4.91 | Target Price: HKD4.15(-15%) | MCap (USD): 22.2B | ADTV (USD): 16M Maintain SELL with TP lowered further to HKD4.15 Cut NIM and net fees forecasts on weak retail customer base Concerns over higher new NPL formation and rise in SM loans Click here for report » Jiangxi Copper (358 HK) | Company Update Look past weak 1Q to rising copper; BUY Share Price: HKD12.94 | Target Price: HKD15.00(+16%) | MCap (USD): 5.8B | ADTV (USD): 14M Management showed poor judgement today issuing a trading halt/profit warning the same day it released results and then providing minimal 1Q14 disclosure with little operating data. After backing out asset impairment losses but leaving in hedging gains, EPS was CNY0.16 in 1Q14, in line with our estimate that we lowered March 27, but 6% below consensus. The Shanghai copper price is up 6% the past six weeks after being down 14% YTD and we forecast further improvement. Maintain BUY. DCF-based TP of HKD15 assumes11% WACC, and l-term growth of 4.25% and copper price of USD2.85/lb. Click here for report » ICBC (1398 HK) | TP Revision 1Q14: Facing higher NIM pressure; HOLD Share Price: HKD4.67 | Target Price: HKD4.85(+4%) | ADTV (USD): 151MMCap (USD): 52.3B We lower our NIM forecast on rising deposit competition. Loan impairment charges slightly above new NPL formation. Sustainable dividend payout. Maintain HOLD with TP cut. Click here for report » China CITIC Bank (998 HK) | TP Revision 1Q14: On the improvement track; HOLD Share Price: HKD4.75 | Target Price: HKD4.35(-8%) | MCap (USD): 9.1B | ADTV (USD): 37M We lower our NIM but raise our net fees forecasts. New NPL formation stabilized at a high level. Raise our earnings forecasts; Maintain HOLD with higher TP. Click here for report » Sesa Sterlite (SSLT IN) | Company Update 4Q in line, FY15 outlook strong; BUY Share Price: INR193 | Target Price: INR252(+31%) | MCap (USD): 9.5B | ADTV (USD): 2M Maintain BUY with Street-high TP of INR252. 4QFY14 recurring profit was INR17.9b (+3% QoQ) as expected. EBITDA margin remained unchanged at 32.2%. We forecast FY15 profit to increase 62% on higher iron ore sales in Karnataka/Goa, ramp-up of Jharsugura power plant, and commencement of the Korba III aluminium smelter. Click here for report » Idea Cellular (IDEA IN) | Results Review Another strong quarter; BUY Share Price: INR140 | Target Price: INR203(+45%) | MCap (USD): 7.7B | ADTV (USD): 14M Maintain BUY with TP of INR203 based on sum-of-the-parts, which includes INR189 for the core business based on EV/EBITDA of 8x FY15 and INR14 for value of the telecom tower assets. 4Q EPS of INR1.78, +26% QoQ and +91% YoY has been higher than our as well as consensus forecasts, on the back of: 1) strong revenue growth of 6.5% QoQ; and 2) Improvement of 58bps QoQ in EBITDA margin to 31.7%. We remain confident on IDEA's ability to deliver sustained growth and continue to outperform others in the sector. Hence, we maintain our FY15 earnings forecast of +27%. Click here for report » Bank Central Asia (BBCA IJ) | Results Review 1Q14 margin resilient but tax-case risk; BUY Share Price: IDR10,600 | Target Price: IDR12,300 (+16%) | MCap (USD): 22.6B | ADTV (USD): 16M BCA�s IDR3.7t 1Q14 net profit beat our estimate of IDR3.2t. Maintain BUY with TP at IDR12,300. Margin remained resilient despite aggressive interest-rate strategy in raising time deposits. Strong fundamentals, but tax-related case might create negative sentiment on share price. We prefer Bank Rakyat Indonesia (BUY, TP IDR11,000). Click here for report » Jasa Marga (JSMR IJ) | Results Review Sustained margin recovery; BUY Share Price: IDR5,850 | Target Price: IDR7,000(+20%) | MCap (USD): 3.4B | ADTV (USD): 5M Maintain BUY with unchanged TP of IDR7,000. 1Q14 earnings of IDR376b (+16.7% YoY) in line with our forecast. Toll road margin in 1Q14 recovers to 38.7% after steep contraction in 2013 due to higher salary expenses. Earnings growth set to resume on impact of higher tariff adjustment and stable traffic volume growth on existing routes, and commencement of new toll roads. Click here for report » Starhill Global REIT (SGREIT SP) | Results Review Courting growth and divestment; HOLD Share Price: SGD0.82 | Target Price: SGD0.84(+3%) | ADTV (USD): 1MMCap (USD): 1 1Q14 DPU rose 5.1% YoY to 1.24 SGD cts; revenue up 1.8% YoY excluding payment of Toshin�s rent arrears in 1Q13. Non-core Chengdu mall remains a drag on overall portfolio; divestment is essential in our view. Maintain HOLD with DDM-derived TP unchanged at SGD0.84. Click here for report » Robinson Department Store (ROBINS TB) | Results Review 1Q14 weak; downgrade to HOLD on valuation Share Price: THB50.25 | Target Price: THB53.00(+5%) | MCap (USD): 1.7B | ADTV (USD): 1M Downgrade to HOLD from BUY given limited upside to TP of THB53 and lack of short term catalysts. 1Q14 expected to be weak with net profit to decline 10% YoY on 6% revenue growth. Remain positive on long term outlook as the brand is poised to be the dominant department store operator. Foray in Vietnam will add attractiveness but this is a long term potential source of value. Click here for report » Supalai PCL (SPALI TB | TP Revision Cream of the crop; sector top pick; BUY Share Price: THB19.40 | Target Price: THB25.50(+31%) | MCap (USD): 1.0B | ADTV (USD): 4M Reiterate BUY with revised Street-high TP of THB25.5 following 11% upgrade in FY14 earnings to reflect solid backlog position. Potential earnings upgrade by consensus post analyst briefing; a share price catalyst. Valuation remains attractive at 7.2x FY14 PE with 5.5% dividend yield despite 33% increase in share price YTD. Click here for report » Siam Makro (MAKRO TB) | Results Preview 1Q14 expecting mild growth; SELL Share Price: THB32.50 | Target Price: THB25.00(-23%) | MCap (USD): 4.8B | ADTV (USD): 0.2M Maintain SELL as 13%/17% net profit growth in 2014/15 makes 32x 2014 PE difficult to defend, especially considering the significant drop in stock liquidity post acquisition. We expect 1Q14 net profit to grow 6% YoY on 12% YoY revenue growth with underlying SSSG projected at 6% YoY � possibly the best in the sector MAKRO remains the most efficient Thai retailer despite its increasing vulnerability to the volatility of the tourism sector via HORECA merchandise. However, valuation and very low liquidity are the major deterrents to the stock. Click here for report » Vard Holdings (VARD SP) | Results Review Recovery clearly on track; BUY Share Price: SGD0.96 | Target Price: SGD1.07(+12%) | MCap (USD): 897M | ADTV (USD): 3M 1Q14 results in line with PATMI of NOK92m making up 15% of our and 16% of consensus forecasts. EBITDA margin saw a third consecutive quarter of improvement to 6.4%. Selldown unwarranted. Maintain BUY and TP of SGD1.07, based on 1.4x FY14E P/BV, 1SD below its historical mean. Click here for report »     Click here for full Regional Daily report »