Regional Daily, Maybank KE (2014-05-02)

Daily 02 May 2014 TOP VIEWS China Banks | OVERWEIGHT MediaTek (2454 TT) | BUY Hankore Environment Tech (BIOT SP) China Banks 1Q14: more provisions accumulated Sector update Positive NIM surprise (for large banks) and positive non-interest income surprise (for small banks) in 1Q14. Increased provisions more than offset new NPL formation. Maintain OVERWEIGHT with ABC and CQRB as our top picks. Click here for report » MediaTek (2454 TT) Profitability unleashed Share Price: TWD472 | Target Price: TWD650 (+28%) | MCap (USD): 24.5B | ADTV: USD92M Maintain BUY with revised Street-high TP of TWD650 on better-than-expected results and outlook. Earnings are powered by favourable industry dynamics, market share gain and cost reduction. Rapid margin drives record earnings in 2Q14 and leads to all time high for FY14 &15. Accelerating export growth, the upcoming switch to LTE in China and penetration of tier-1 handset OEMs will power future earnings growth. Click here for report » Hankore Environment Tech (BIOT SP) Deal delay won�t mar solid stock Share Price: SGD0.12 | Target Price: SGD0.17(+48%) | MCap (USD): 466M | ADTV: USD15M The exclusivity period for the acquisition by CEI has been extended by a month to end-May. Even without CEI, Hankore�s fundamentals remain solid and its good assets and attractive valuation may appeal to other prospective buyers. Any share price weakness would present a good buying opportunity; reiterate BUY with TP of SGD0.17. Click here for report » COMPANY NOTES Hong Kong Banks | NEUTRAL Exide Industries (EXID IN) | HOLD Indofood Sukses (INDF IJ) | HOLD Indofood CBP (ICBP IJ) | HOLD Ramayana Lestari (RALS IJ) | BUY Malaysia Banking Sector Bank of the Philippine Islands (BPI PM) | HOLD DBS Group (DBS SP) | BUY United Overseas Bank (UOB SP) | BUY OCBC Bank (OCBC SP) Yangzijiang Shipbuilding (YZJSGD SP) SMRT (MRT SP) | SELL Cosco Corp (COS SP) | SELL Siam Cement (SCC TB) Bangkok Dusit Medical Services (BGH TB) | HOLD Hong Kong Banks Mar14 data: Decline in total loans Sector Update Decline in HKD and USD deposits; ongoing rise in RMB deposits Annualized loan growth has reduced to 23% in 1Q14 Slight rise in HKD funding costs. Maintain NEUTRAL. Click here for report » Exide Industries (EXID IN) 4Q signals recovery; we increase TP Share Price: INR127 | Target Price: INR121(-5%) | MCap (USD): 1.8B | ADTV (USD): 3.7M Maintain HOLD but raise TP by 16% to INR121. 4Q EPS was the best in the past three quarters owing to strong seasonal improvement in the industrial battery segment. Historically, EXID�s PER ranged 15-17x one-year forward earnings. YTD EXID�s stock price has risen 24% and is now trading at PER of 17x FY15F excluding value of investments. We will upgrade to BUY if catalysts emerge ie. rise in battery demand following general elections. Key risk: weak monsoon from anticipated El Nino effect driving down rural demand. Click here for report » Indofood Sukses (INDF IJ) Margins up but expect pressure Share Price: IDR7,025 | Target Price: IDR8,000(+14%) | MCap (USD): 5.3B | ADTV (USD): 6M Maintain HOLD with TP of IDR8,000, which implies a 17.9x FY14F PER. 1Q14 net profit was above our estimates owing to one-off forex gain. All segments performed well, except the flat consumer branded EBIT growth. Click here for report » Indofood CBP (ICBP IJ) Margins Compression Share Price: IDR10,000 | Target Price: IDR11,000(+10%) | MCap (USD): 5.0B | ADTV (USD): 4M Maintain HOLD with TP of IDR11,000, which implies a 24.5x FY15F PER. 1Q14 results in-line with our estimates. All segments, except noodles and NSF, suffer margin pressure. Click here for report » Ramayana Lestari (RALS IJ) 1Q14 profit fell, expect improvement Share Price: IDR1,235 | Target Price: IDR1,800(+46%) | MCap (USD): 759M | ADTV (USD): 0.3M 1Q14 earnings fell slightly (-3% YoY), mainly due to the decline in margin and FX loss. Expect improvement in the coming quarters, and thus reiterate BUY and IDR1,800 TP. Revenue grew a decent 9% YoY on SSSG of 7.5% as per Mar14 YTD. EBIT margin declined slightly to 2.1% vs. 1Q13�s 2.3%. In 1Q14, its supermarket business recorded higher revenue growth than department store due to the impact from natural disasters in several areas. Click here for report » Malaysia Banking Sector Not in vogue just yet Sector Update Subdued interest in Malaysian banks at this stage due to premium valuations and the country�s austerity drive. NEUTRAL on the sector, top banking picks continue to be AMMB, HL Bank and HLFG. Consider MPHB Capital as a mid-cap deeply discounted financial services play � BUY with an RNAV TP of MYR2.42. Click here for report » Bank of the Philippine Islands (BPI PM) 1Q14 results disappoint Share Price: PHP90.65 | Target Price: PHP93.50(+3%) | MCap (USD): 8.0B | ADTV (USD): 5M Maintain HOLD and TP of PHP93.50, equivalent to 2014F PBV of 2.5x. 1Q14 earnings came in lower than expected at PHP3.6b, down 57% YoY. Loan growth of 25% boosted net interest income by 15% but treasury operations likely weakened. Click here for report » DBS Group (DBS SP) A blowout quarter Share Price: SGD16.53 | Target Price: SGD19.60 (+19%) | MCap (USD): 31.9B | ADTV (USD): 40M 1Q results beat expectations by a mile, lifted by strong NIM, customer-related non-interest income and lower provisions. Key positives: Strong NIM rebound, strong fee income, strong credit quality, ample liquidity (73% SGD LDR). Reiterate BUY. Remains our preferred pick. DBS is well-positioned to benefit from a rising interest rate environment. Click here for report » United Overseas Bank (UOB SP) A decent quarter Share Price: SGD21.18 | Target Price: SGD23.60(+11%) | MCap (USD): 12.2B | ADTV (USD): 41M 1Q14 results surpassed expectations on lower taxes. Directionally, certain operating trends were weaker than that of DBS and OCBC, characterised by weaker NIM (-1bp QoQ) and weaker fee income (-4.8% QoQ, -8.6% YoY). Maintain BUY with a SGD23.60 TP, based on 13x FY14E P/E. Click here for report » OCBC Bank (OCBC SP) 1Q14: A strong start to the year Share Price: SGD9.47 | Target Price: SGD9.08(-4%) | MCap (USD): 26.0B | ADTV (USD): 30M Like DBS, OCBC�s NIM also surprised on the upside on larger loan spreads and better gapping opportunities. Other notable trends: Strong loan traction, solid credit quality, ample liquidity (78.8% SGD LDR). Purchase of WHB remains a concern. Maintain HOLD with TP of SGD9.08, based on 1.24x FY14E P/BV. Click here for report » Yangzijiang Shipbuilding (YZJSGD SP) Earnings beat, upgrade to HOLD Share Price: SGD1.10 | Target Price: SGD1.18(+7%) | MCap (USD): 3.4B | ADTV (USD): 8M 1Q14 results beat expectations on higher contributions from HTM investments. Shipbuilding margin decline inevitable but bottom-line profitability to be held up by non-core businesses. Upgrade to HOLD with higher SOTP-based TP of SGD1.18. Click here for report » SMRT (MRT SP) Smaller bus loss gives cheer Share Price: SGD1.22 | Target Price: SGD0.65(-47%) | MCap (USD): 1.5B | ADTV (USD): 2M Bus operations posted sharp drop in loss but fare-based business still in the red. Fare hike implemented in April will ensure continued improvement in profitability. Earnings raised by 17-29% to reflect lower cost estimates. Maintain SELL with higher TP of SGD0.65. Click here for report » Cosco Corp (COS SP) Execution remains key drag Share Price: SGD0.72 | Target Price: SGD0.65(-10%) | MCap (USD): 1.3B | ADTV (USD): 0.6M 1Q14 PATMI of SGD12.6m (+29.6% YoY, +174.1% QoQ) missed expectations after adjusting for irregular items. Weak execution remains key drag on profitability. Maintain SELL and TP of SGD0.65, pegged to trough P/BV level of 1.1x. Click here for report » Siam Cement (SCC TB) 1Q14 disappointing � BUY on dips Share Price: THB442.00 | Target Price: THB550(24.5%) | MCap (USD): 16.4B | ADTV (USD): 18M 1Q14 net THB8.4bn, down 5% YoY. Adjusted for FX elements, bottom line was 12% below our forecast - very disappointing. Where SCC disappointed us was in �other income�, 56% below our forecast � not much dividends this time. Revenue grew 11% YoY, 1% below our forecast, but 26% of our FY14F. GM rose to 16.5% vs 15.2% in 1Q13 (we expected 16.8%). Overall, maintain BUY. We remain positive on the long-term outlook for SCC and recommend buying the stock on dips as the disappointing results likely to weigh on the shares. Click here for report » Bangkok Dusit Medical Services (BGH TB) Flat quarter Share Price: THB1.43 | Target Price: THB14.00(+879%) | MCap (USD): 69M | ADTV (USD): 1M Maintain HOLD with TP of THB14, based on DCF at 9.5% WACC and 3% terminal growth. Our TP implies 2014 multiples are 4.8x PBV and 30.1x PER. Expect 1Q14F net profit of THB1,932m, and this would 28% of our FY forecast. Earnings growth is driven by volume growth and improved margin from cost control measures. Utilisation rate in 1Q14 is expected to hit 75% (66% in 4Q13, 73% in 1Q13), volume growth 7% YoY and price to rise 3% YoY. Hospital revenue is forecast to increase 4% QoQ and 10% YoY; International patients� revenue could jump 4% YoY. Click here for report » ECONOMICS Thailand Economics Thailand Economics Econ softens slightly Economics 1Q14 GDP is due on 19 May. We expect a -1.00% YoY contraction from 0.60% in 4Q13, and -3.50% QoQ SA, from 0.60%. For the whole year, we are looking at 3.00% or lower. 1Q14 GDP could convince the BoT to cut interest rates in Jun. In May, two legal cases against caretaker PM Yingluck Shinawatra will be concluded by public independent agencies. Regardless of the rulings, Abhisit�s sudden peace proposal that has emerged recently and gaining momentum seems to be one of the possibilities that could result in not too bad outcomes. Click here for report »     Click here for full Regional Daily report »