Regional Daily, Maybank KE (2014-06-12)

Daily 12 June 2014 TOP VIEWS Chinese IPPs | Initiation SingTel (ST SP) | Acquisition SIA Engineering (SIE SP) | Company visit Berjaya Auto (BAUTO MK) | Company results Chinese IPPs | Initiation Floating in mid air Sector update Initiate Chinese IPP sector with NEUTRAL view. BUYs on CPI and CRP for higher hydro and wind exposure respectively; the rest HOLD. IPP margin cycle has peaked, as we see limited downside to spot thermal coal prices. As such, sector lacks investment catalysts to reach new highs. EPS growth tumbles to zero. Div. yield defensive but w/ share price volatility + potentially higher-than-expected tariff cut in near term. Possible margin squeeze from tariff adjustment lag in medium term. Click here for report » SingTel (ST SP) | Acquisition Beefing up digital ad capability Share Price: SGD3.86 | Target Price: SGD4.35(+13%) | MCap (USD): 49.2B | ADTV (USD): 46M Paying USD359m for Adconian and Kontera to beef up the capability of Amobee in digital advertising market. While marginally EBITDA dilutive in the short term, the acquisitions could help Amobee to break even earlier. Our BUY case of growth resumption starting FY3/15E stays intact. Maintain BUY with a SOTP TP of SGD4.35. Click here for report » SIA Engineering (SIE SP) | Company visit NDR feedback Share Price: SGD5.06 | Target Price: SGD5.75(+14%) | MCap (USD): 4.52B | ADTV (USD): 1M Operational efficiency to compensate for labour cost pressure in Singapore. Fairly low threat of new entrants despite growing Line maintenance market at Changi Airport. Remain positive after the non-deal roadshow and reiterate our view that SIAEC offers the best proxy to the structural air traffic growth in the region. Maintain BUY with TP of SGD5.75. Click here for report » Berjaya Auto (BAUTO MK) | Company results Dashing to the finish line Share Price: MYR2.31 | Target Price: MYR2.90 (+26%) | MCap (USD): 0.6B | ADTV (USD): 0.6M FY14 results ahead of our and consensus expectations. Declares 2nd interim DPS of 3.5sen (single-tier). BAuto is our top pick in the sector for its strong earnings growth, improving balance sheet and inexpensive valuations. Reiterate BUY with unchanged TP of MYR2.90 (12x CY15 PER), offering 26% upside. Click here for report » COMPANY NOTES Perusahaan Gas Negara (PGAS IJ) | TP Revision Perusahaan Gas Negara (PGAS IJ) | TP Revision Seeking growth amid the overcast Share Price: IDR5,475 | Target Price: IDR5,500(+4%) | MCap (USD): 11.2B | ADTV (USD): 11M Maintain HOLD and roll over our valuation to 2015, translating to new TP to IDR5,500. Earnings growth will be tepid with margin pressure likely to persist. LNG operation in mid-2014 is set to underpin gas volume over the next three years, but will likely come at the expense of margin on the back of lower profitability. Upstream unit will contribute less than 8% to revenue with no immediate positive impact to gas distribution business. Click here for report » ECONOMICS Malaysia Industrial Production, Apr�14 Sustained growth on mining rebound Economics Industrial production growth was sustained at +4.2% YoY in Apr 2014 (Mar 2014: +4.3% YoY). Mining output rebounded amid slower increases in manufacturing and electricity production. Overall output growth at the start of 2Q 2014 was slightly slower than 4.9% YoY average in 1Q 2014, implying possible moderation in real GDP after the 6.2% YoY growth in 1Q 2014. Click here for report »