Regional Daily, Maybank KE (2014-07-18)

Daily 18 July 2014 TOP VIEWS India Infrastructure | OVERWEIGHT China Property | OVERWEIGHT China Banks | OVERWEIGHT Singapore Banks | NEUTRAL India Infrastructure The dawn of a new exciting phase Sector Update India�s infrastructure sector is abuzz with new optimism. The recent budget laid out a strong foundation for investment into roads, urban infrastructure and housing. To attract large-scale foreign and private participation, it proposed tax exempted investment trusts and specialized infrastructure lending. Government is committed to kick-start the investment/capex cycle by fast-tracking clearance of stalled power, road projects and supporting private sector investments (190 road projects/18k KM and 136 power projects/100 GW are stuck). Infrastructure sector is behind on its USD1t targeted investment for 2012-17 due to policy inaction of the past government. We expect investment momentum to revive in the next six months and the Indian construction/capital goods companies to benefit from this revival. We are OVERWEIGHT the sector. Click here for report » China Property Sector Update Client feedback: sustained vol is key We met over 75 investors in Singapore, Kuala Lumpur and Hong Kong recently and found only 20% of the ASEAN and around 1/3 of the HK investors are positive on the sector. Most of the bearish fund managers said they need to see sustained growth in property sales volumes before changing their stance. Other key data points they are monitoring include mortgage loan changes and sell-through ratios. Within our coverage, investors asked us the most about COLI, CRL, Sunac, R&F and KWG. Outside of our coverage, we see most interest in Vanke-H, followed by Greentown. Click here for report » China Banks Sector Update China trip: Banks still in good shape Maintain OVERWEIGHT following company visits and on potential earnings upgrade of consensus forecasts. Banks raised lending spread and charged consultancy fees to reduce negative impact of rising funding costs. Sustainable high div. payouts. Top Picks: ABC, CCB and CQRB. Click here for report » Singapore Banks Sector Update Mid-year result preview We believe OCBC could post positive earnings surprises, with UOB delivering another uninspiring performance. Key trends: Sequentially weaker NIM, slower loan growth, benign credit quality and weaker market-related income. Sector weighting cut to NEUTRAL post our recent downgrade on UOB. DBS remains our top sector pick. Click here for report » COMPANY NOTES Tata Consultancy Services (TCS IN) | Results Review CMC Ltd (CMC IN) | Results Review Sentul City (BKSL IJ) | Company Update CapitaMalls Malaysia Trust (CMMT MK) | Results Review Pavilion REIT (PRETI MK) | Results Review Security Bank Corp (SECB PM) | Company Update Genting Singapore (GENS SP) | Company Update Dynasty Ceramic (DCC TB) | Results Preview AP (Thailand) (AP TB) | TP Revision Thailand Hotels | OVERWEIGHT Siam Commercial Bank (SCB TB) | Results Review Kasikornbank (KBANK TB) | Results Review Bangkok Bank (BBL TB) | Results Review Tech-Tracks Tata Consultancy Services (TCS IN) FY15 begins with a bang Share Price: INR2,381 | Target Price: INR2,909(+22%) | MCap (USD): 77.6B | ADTV (USD): 46M Reiterate BUY. 1QFY15 results were robust and inline. TCS is one of our Top Picks among the IT large caps, as we remain bullish on its ability to continue to outperform the sector. Given our confidence in TCS, our Street-high TP of INR2,909 is based on 22x FY16F PER, the top end of its one-year forward PER band of 16-22x for the past three years. TCS outlined a strong business environment and deal pipeline for FY15 vs. FY14. Our FY15F EPS of INR112.7 (+15% YoY) and FY16F EPS of INR131.5 (+17% YoY) are unchanged. Click here for report » CMC Ltd (CMC IN) 1Q in line; FY15 growth intact Share Price: INR1,979 | Target Price: INR2,214(+12%) | MCap (USD): 997M | ADTV (USD): 0.9M Maintain BUY and TP of INR2,214 based on PER of 16x FY16F. In line w/ our expectations, recurring 1QFY14 EPS fell 9% QoQ to INR19.3 but rose 17% YoY. Muted rev. growth (-1.9% QoQ) + sharp rise in depreciation largely drove QoQ decline. We expect growth momentum to pick up in 2Q and sustain in FY15-16F. We factor higher depreciation going forward and tweak our EPS estimates to INR105.2 (+26% YoY) for FY15F and INR137 (+30%) for FY16F. Click here for report » Sentul City (BKSL IJ) Improving 2Q14 pre-sales Share Price: IDR132 | Target Price: IDR140(+6%) | MCap (USD): 354M | ADTV (USD): 2M Sentul City�s 2Q14 pre-sales up 35% QoQ to IDR531bn. 1H14 pre-sales down 9% YoY to IDR924bn; 37% of FY14 target. KPK maintain CEO�s status as witness to bribery case. Maintain HOLD with TP of IDR140 (87% discount to RNAV). Click here for report » CapitaMalls Malaysia Trust (CMMT MK) No surprises Share Price: MYR1.48 | Target Price: MYR1.74 (+18%) | MCap (USD): 828M | ADTV (USD): 0.4M 1H14 realised net profit of MYR75m (+4% YoY) was in line. Reconfiguration and asset enhancement works to lift yields at Gurney Plaza and East Coast Mall. No change to earnings forecasts, MYR1.74 DCF-based TP; BUY. Click here for report » Pavilion REIT (PRETI MK) Continues to grow Share Price: MYR1.36 | Target Price: MYR1.52 (+12%) | MCap (USD): 1.3B | ADTV (USD): 0.4M 1H14 core net profit of MYR112m (+6% YoY) was in line. Space reconfiguration to yield additional 11,000 sq ft NLA. Raising our earnings forecasts by 1-1.2%. Maintain BUY with DCF-based TP of MYR1.52 (+2sen). Click here for report » Security Bank Corp (SECB PM) Easing foreign ownership level Share Price: PHP119.40 | Target Price: PHP141.00(+18%) | MCap (USD): 1.7B Maintain BUY with TP of PHP141, equivalent to 1.9x 2014F PBV and 13.4x PER. Successfully issued voting preferred shares, improving foreign ownership level to 21.03% from 38.17%. Opens up opportunities for more foreign investors that could potentially support share price and trading activities. (FULL REPORT WILL BE OUT SOON) Genting Singapore (GENS SP) MBS�s 2Q14 results: A mixed bag Share Price: SGD1.33 | Target Price: SGD1.24(-7%) | MCap (USD): 13.1B | ADTV (USD): 14M Marina Bay Sands� 2Q14 VIP volume fell 27% YoY to its lowest since 4Q11 despite a higher rebate rate. On the other hand, 2Q14 mass market GGR grew at a surprisingly strong 4% YoY despite a weaker property market in Singapore and lower visitor arrivals from China. Neutral read across for GENS. No change to our earnings forecasts. Maintained HOLD and SGD1.24 TP. Click here for report » Dynasty Ceramic (DCC TB) Soft 2Q expected but better 2H Share Price: THB58.75 | Target Price: THB68.00(+16%) | MCap (USD): 746M | ADTV (USD): 0.3M Reaffirm non-consensus BUY. 12M TP THB68 � DDM based. A 16% upside to our TP is not as enticing given low stock liquidity but we see strong earnings upgrade potential, especially for FY15F. A 10% increase in sales can lift net profit by 18-21% due to high operating leverage. Multiple earnings growth drivers: 1) strong resurgence in provincial renovation; 2) sales growth from new products and wholesale to new construction; and 3) growth from the AEC markets, especially Indochina, making the stock attractive. Click here for report » AP (Thailand) (AP TB) 2Q14: Expect a stellar quarter Share Price: THB6.50 | Target Price: THB7.50(+15%) | MCap (USD): 578M | ADTV (USD): 3M Reiterate BUY and raise TP to THB7.5 based on 10x FY14 PE; Strongest presales growth in 1H14 at 10% YoY justified rerating. 2Q14 net profit should be THB642m (EPS THB0.22), up 147% QoQ and 42% YoY, driven by completion of Life Ratchdapisek (THB1.4b transferred in 2Q14). Results due out on 13 Aug. Positive outlook intact. Expect FY14 earnings to grow 10% YoY, accelerating to 18% next year. Click here for report » Thailand Hotels Sector Update Bad beginning but good ending Tourist arrivals in Jun14 down 10% QoQ and 24% Y0Y to two-year low of 1.56m due to seasonal weakness, coup, and martial law. For 1H14 visitors down 9% YoY. We strongly believe in industry recovery in 3Q14 and become more positive on 4Q14-1Q15. Sector has bottomed. Tourist arrivals in 2015 could grow 9.5% to 29m. Maintain OVERWEIGHT. MINT remains our top BUY on the back of diversified hotel portfolio, strong RevPAR, and food business recovery. HOLD CENTEL. Click here for report » Siam Commercial Bank (SCB TB) Impressive earnings in 2Q14 Share Price: THB185.50 | Target Price: THB210.00(+14%) | MCap (USD): 19.6B | ADTV (USD): 41M 2Q14 earnings of THB14.7b, up 12% QoQ and 16% YoY, beat consensus and our forecast by 6% due to strong NIM and lower than expected credit costs. Raise FY14F earnings by 1% to reflect lower than expected credit costs and OPEX in 2Q14. Maintain BUY with revised TP of THB210 (from THB195), implying 13x 2014PE, 2.5 x P/BV and 21% ROE. Click here for report » Kasikornbank (KBANK TB) An excellent NIM in 2Q14 Share Price: THB212.00 | Target Price: THB240.00 (+13%) | MCap (USD): 15.8B | ADTV (USD): 41M 2Q14 earnings grew 7% YoY and 2% QoQ to THB11.7b, beat our forecast by 5%, thanks to stronger than expected NIM Raise FY14F earnings by 2% to reflect the better NIM from the lower deposit cost in 2Q14 Maintain BUY and raise TP to THB240 (from THB225), implying 2.2x P/BV and 20%ROE in 2014 Click here for report » Bangkok Bank (BBL TB) 2Q earnings in line, no S-T catalyst Share Price: THB197.50 | Target Price: THB205.00(+4%) | MCap (USD): 11.7B | ADTV (USD): 40M 2Q14 net profit of THB9b (flat QoQ but down 12%YoY), in line with our and consensus estimates; 1H14 earnings accounts for 50% of our FY14 forecast. Weak loan and non-interest income are offset by the stronger NIM and lower tax in 2Q14; Expect NIM to drop in 2H14 due to higher deposit competition. Maintain HOLD and TP of THB205, implying 1.2x 2014 P/BV and 12.2% ROE. Limited upside due to weak earnings momentum; prefer SCB, KBANK & KTB. Click here for report » Tech-Tracks Regional Quants ASEAN funds flow momentum remains strong Global equity funds flow rose by USD4.9b, driven by USD4.8b ETF inflows. Funds continued to flow into Malaysia, Philippines, Thailand and Vietnam, albeit at a slower pace. With the exception of Indonesia, most ASEAN nations continued to gain positive momentum. Top BUYS: Elsoft Research Berhad (ELSR MK), Zhejiang Shibao Company Limited (1057 HK), ComfortDelGro (CD SP), PT Catur Sentosa Adiprana Tbk (CSAP IJ), Pruksa Real Estate (PS TB), Conception Industrial Corporation (CIC PM and Song Da 9.09 JSC (S99 VN). Click here for report » ECONOMICS Singapore Economics Singapore Exports, June �14 �Structural� NODX, �Cyclical� NORX NODX in Jun 2014 declined by -4.6% YoY (May 2014: -6.6% YoY). In contrast, NORX grew by +7.5% YoY (May 2014: -4.7% YoY). Trend in NODX is �structural�, while trend in NORX is �cyclical�. Click here for report »