Regional Daily, Maybank KE (2014-07-22)

Daily 22 July 2014 TOP VIEWS Regional Materials | Sector update OSIM International (OSIM SP) | Transfer coverage Universal Robina Corp (URC PM) | Acquisition Supalai PCL (SPALI TB) | Rating change Regional Materials Gems, Picks & Shovels Sector update Consensus expectations for metals prices in 2015 appear low for copper and nickel, and too high for thermal coal and steel. Finding equity laggards is a bit easier in copper than nickel. Our materials ranking (best to worst): nickel, copper, zinc, aluminum, gold, coking coal, thermal coal, steel. For copper exposure, we like high beta play Jiangxi Copper (358 HK; HKD13.86; BUY; TPHKD15). For long-term copper growth (1-2 years) and zinc exposure we like MMG (1208 HK; HKD2.71; BUY; 6MO TP2.75). Our top regional small cap copper play is Atlas Mining (AT PM; PHP15.26; BUY; TP19.72). VALE Indonesia (INCO IJ; IDR3,790; BUY; TPIDR4,600) has lagged relative to other nickel/nickel ore plays, but should get a boost if nickel prices rise next year as we forecast to USD9.50/lb (+19% YoY; our forecast is 12% above consensus). We reiterate SELL on China Coal (1898 HK; HKD4.12; SELL) with consensus EPS downgrades ahead and likely capex cuts on decreasing cash flows. Either avoid the sector or trade in at lower levels for the seasonal upswing later this year. Click here for report » OSIM International (OSIM SP) Breaking new ground; BUY Share Price: SGD2.78 | Target Price: SGD3.50 (+26%) | MCap (USD): 1.7B | ADTV (USD): 3M TWG Tea to strengthen OSIM�s brand and help to generate higher sales per outlet for massage chairs. New uInfinity and uDiva massage chairs are the best ever, with uDiva�s 30% price rise a powerful revenue catalyst. Raising FY14E-15E forecasts by 4% and 5%; TP raised to SGD3.50. Maintain BUY. Click here for report » Universal Robina Corp (URC PM) URC makes major acquisition Share Price: PHP158.00 | Target Price: PHP176.00(+11%) | MCap (USD): 7.9B | ADTV (USD): 6M URC acquires Griffin�s, New Zealand�s leader in biscuits. Deal is value accretive based on our EV/EBITDA estimate. Forecasts & PHP176 TP unchanged for now. Reiterate BUY. Click here for report » Supalai PCL (SPALI TB) The party is over; d/g to HOLD Share Price: THB24.70 | Target Price: THB25.50(+3%) | MCap (USD): 1.3B | ADTV (USD): 5M Downgrade to HOLD due to limited upside. TP intact at THB25.5 based on 9.5x FY14 PER which equal to +1SD over LTM. Prefer AP given more attractive upside and valuations. 2Q14 earnings should be THB453m (EPS THB0.26), up 50% YoY but down 39% QoQ. Expect earnings growth to be 60% this year dropping to 13% next year. Click here for report » COMPANY NOTES Bank Danamon (BDMN IJ) | Rating Change Tambang Batubara Bukit Asam (PTBA IJ) | Results Review Mitra Adiperkasa (MAPI IJ) | Company Update M1 (M1 SP) | Results Review Keppel REIT (KREIT SP) Cache Logistics Trust (CACHE SP) | Results Review Thailand Banks | NEUTRAL Bank of Ayudhya (BAY TB) | Results Review Krung Thai Bank (KTB TB) | Results Review Malaysia Construction,O&G | Overweight Bank Danamon (BDMN IJ) Weak 1H, slashing forecast: D/G SELL Share Price: IDR4,025 | Target Price: IDR3,500(-13%) | MCap (USD): 3.3B | ADTV (USD): 0.8M Downgrade to SELL from HOLD with lower TPofIDR3,500 (10.6x PER,1.0x P/BVFY15F)due to slow loan growth and worrying shift towards low-yield segment. SlashingFY14Fearnings by 24% to IDR3.1t on weak 1H14, with flat profit projected until FY16. Early evidence of rising NPLs. NIM unlikely to rebound in the event of BDMN passing on its rising CoF to creditors. Click here for report » Tambang Batubara Bukit Asam (PTBA IJ) 2Q earnings +15.6% QoQ Share Price: IDR10,575 | Target Price: IDR11,100(+5%) | MCap (USD): 2.1B | ADTV (USD): 4M Strong 2Q14 earnings, up 15.6% QoQ to IDR620b, on the back of volume ramp-up, relatively flat ASP and declining inventory. Maintain BUY, TP of IDR11,100 on efficient costs. Click here for report » Mitra Adiperkasa (MAPI IJ) Challenges remain Share Price: IDR5,100 | Target Price: IDR5,600(+10%) | MCap (USD): 729M | ADTV (USD): 1M Expect the impact from inventory build-up to persist in the near to medium term. Potential minimum wage increase along with fuel price hike may incite further margin pressure. Maintain HOLD with TP of IDR5,600as challenges remain. Prefer to wait for better entry point. Click here for report » M1 (M1 SP) Underlying trends still positive Share Price: SGD3.63 | Target Price: SGD4.24(+17%) | MCap (USD): 2.7B | ADTV (USD): 2M 2Q14 results within expectations. Interim DPS raised to 7 SGD cts. Maintain BUY, TP SGD4.24. Underlying momentum for tiered data migration and strong growth in data traffic remained strong. Balance sheet remains strong and supportive of higher dividend payouts. Click here for report » Keppel REIT (KREIT SP) 2Q14/1H14 results dented by MBFC rental support expiry Share Price: SGD1.28 | Target Price: SGD1.32(+3%) | MCap (USD): 2.9B | ADTV (USD): 5M 2Q14/1H14 DPU fell 3.6%/1.8% YoY on expiry of MBFC rental support and higher borrowing costs. All eyes on OFC to meet its breakeven rent when its income support ends in 2017. No news of MBFC Tower 3 acquisition; equity fund raising remains on the horizon. Forecasts and TP stay unchanged. Click here for report » Cache Logistics Trust (CACHE SP) Reducing concentration risk; step in right direction Share Price: SGD1.24 | Target Price: SGD1.23(-1%) | MCap (USD): 778M | ADTV (USD): 0.9M 2Q14/1H14 results in line with our and consensus forecasts. Working with the sponsor to transform to a more multi-tenanted property portfolio over time. No changes to our DPU forecasts and TP. Reiterate HOLD with a DDM-derived TP of SGD1.23. Click here for report » Thailand Banks Deposit war returns Sector update Banks offer special 8-12 month fixed deposit accounts with 2.6-2.8% interest rate vs normal rate of 1.4-1.8% for 6-12 months. Expect NIMs to drop in 2H14 due to higher funding costs and high base effect in 2Q14. Large banks remain safer bets due to strong network coverage to gain deposits, diversified revenue structure and healthier asset quality. Top Picks: SCB, KBANK and KTB. Click here for report » Bank of Ayudhya (BAY TB) 2Q14 earnings hit by provisions Share Price: THB47.00 | Target Price: THB31.00(-34%) | MCap (USD): 8.9B | ADTV (USD): 0.6M Maintain SELL with TP THB31, implying 1.4x 2014 P/BV, 12x PER with 13% ROE. We prefer SCB, KBANK and KTB as valuation looks pricey. 2Q14 earnings grew 6% QoQ and 14% YoY to THB3.5b, below our and market forecasts by 4% and 10% due to higher than expected provisions. Expect better loan and fee income growth in 2H14 while auto loans should remain weak this year. Click here for report » Krung Thai Bank (KTB TB) Strong PPoP in 2Q14 Share Price: THB22.40 | Target Price: THB24.00(+7%) | MCap (USD): 9.7B | ADTV (USD): 37M 2Q14 earnings down 9% YoY to THB7.5b, below our and market estimates by 11% and 13% due to extra provisions. PPoP jumped 18% YoY and 22% QoQ, beating our forecast by 3% thanks to strong NIMs and non-interest income. Maintain BUY with THB24 TP, implying 10x PER, 1.5x 2014 P/BV, and 15.5% ROE. One of our banking sector Top Picks. Click here for report » Malaysia Construction,O&G From Construction to O&G Sector update Construction-based Muhibbah and KKB are on track to win several O&G related projects, a major re-rating catalyst. Maiden O&G contracts would give them direct exposure to the booming sector, lifting earnings and allowing them to re-rate closer towards O&G�s valuations. We derive up to MYR3.90/MYR2.75 fair values for Muhibbah/ KKB, assuming O&G job wins, offering 17%/15% upside. Click here for report »