Regional Daily, Maybank KE (2014-05-19)

Daily 19 May 2014 TOP VIEWS India Elections Want Want China (151 HK) | Company Update Singapore Land Transport | UNDERWEIGHT Market strategy India Elections The �Shock and awe� rally can sustain A clear and decisive mandate for the NDA in the 2014 general election is the biggest catalyst for the already strong rally to sustain. We believe this majority will work as a panacea for many of India�s growth woes of the past few years and expedite recovery in the economy. Buoyancy in return of investment in the industrial sector in six months and control over inflation and interest rates in 12 months should provide a positive backdrop for increasing earnings growth. We change our preference to cyclical and rate-sensitive stocks vs. consumers and exporters. We are OVERWEIGHT on auto, cement, contractors, telecom, and property sectors. Our new YE Dec�14 target for the NIFTY is 7770 based on PER of 14x FY16F implying upside of 8%. (FULL REPORT WILL BE OUT SOON) Want Want China (151 HK) Look beyond 1H weakness � BUY on dips Share Price: HKD11.20 | Target Price: HKD13.18(+18%) | MCap (USD): 19.1M | ADTV (USD): 21M Maintain BUY with unchanged TP post moderate earnings cuts. Despite downside risk to FY14 growth guidance, suggest accumulate on weakness. ASP hike-led negative volume impact should stabilize in 3Q, while A&P effort from 2Q should reaccelerate growth in 2H. Furthermore, >20% drop in raw milk powder input cost YTD will be reflected in 2H so expect GP margin to +3ppt HoH. We believe WWC�s valuation premium over peers should sustain given its stable growth track record. Click here for report » Sector Update Singapore Land Transport Win some, lose some in taxi shake-up New entrants look set to shake up the taxi market in Singapore. But fears of booking income loss are unfounded as our analysis shows potential impact to be minimal. Instead, overall industry revenue pool may be augmented and operators stand to benefit in the long run. Maintain BUY on ComfortDelGro as it is most exposed to the impending changes. SELL SMRT. Click here for report » COMPANY NOTES Malaysia Banking Sector | NEUTRAL Malaysia Water Sector Jollibee Foods (JFC PM) | TP Revision Banking Sector Update Malaysia Banking Sector NIM expansion? Not necessarily� Hawkish monetary statement points to rising interest rates � expect 25-50bps OPR hike by end-2014. This could arrest the downtrend in NIMs in FY15 but any NIM expansion would be capped by competitive pressure. Sector NEUTRAL � BUY AMMB, HL Bank & HLFG. Click here for report » Water Sector Update Malaysia Water Sector S114 invocation deferred We are positive that S114 will not be invoked for it will send a very negative signal on the sanctity of government contracts. Langat 2proceeding with less �distruption� is positive for Salcon and the pipe producers; we like Engtex (Not Rated). We are unable to ascertain the impact of the re-examination of SPLASH�s bulk water supply payment; HOLD Gamuda. Click here for report » Jollibee Foods (JFC PM) Jolly 1Q results sustainable Share Price: PHP180.00 | Target Price: PHP210.00(+17%) | MCap (USD): 4.3B | ADTV (USD): 3M Reiterate BUY with revised Street-high TP of PHP210. 2014F net profit raised 7% to a Street-high. 1Q14 earnings grew 20% notwithstanding cost pressures due to mitigating measures and strong demand. (FULL REPORT WILL BE OUT SOON) ECONOMICS Malaysia Econs - Balance of Payments Malaysia Econs - Real GDP Singapore Econs - Exports Balance of Payments Malaysia Economics Trade surplus amid capital outflows Current account surplus was not only sustained but also widened in 1Q 2014 on continued trade surplus plus smaller services trade and income account deficits. Financial account registered a larger deficit due to net outflows in both direct and portfolio investments. In view of robust external trade figures in 1Q 2014, we now expect larger full-year trade and current account surpluses. (FULL REPORT WILL BE OUT SOON) Real GDP Malaysia Economics A strong start to the year 1Q 2014 real GDP growth picked up to +6.2% YoY (4Q 2013: +5.1% YoY), ahead of our and consensus estimates of +6.0% YoY and +5.4% YoY. QoQ, the economy shrank by -3.9% (4Q 2013: +3.0%), but the seasonally-adjusted QoQ GDP showed slower growth of +0.8% (4Q 2013: +1.9%) Domestic demand growth was resilient at +7.4% YoY (4Q 2013: +6.7% YoY) while net external demand rebounded by +14.9% YoY (4Q 2013: -6.8% YoY). We revise our 2014 real GDP growth forecast to +5.4% from +5.0%, mainly reflecting revision in external trade outlook. (FULL REPORT WILL BE OUT SOON) Exports Singapore Economics A sliver of growth Non-Oil Domestic Exports (NODX) eked out a growth of +0.9% YoY (Mar 2014: -6.6% YoY). Non-electronics exports rebounded, largely on petrochemicals, to offset the continued decline in electronics exports. YTD, NODX fell by -0.5% (2013: -6.0%). We trimmed full-year NODX growth forecast to +3.1% vs. +5.3% previously. (FULL REPORT WILL BE OUT SOON)