Regional Daily, Maybank KE (2014-08-01)

Daily 01 August 2014 TOP VIEWS Philippines monetary policy TSMC (2330 TT/TSM US) | Company Update Samsung Electronics (005930 KS) | Results Review Wilmar Int'l (WIL SP) | Company Update Philippines monetary policy Macro First policy rate hike since 2011 Monetary board increased policy rate by 25bps to 3.75%. We thought the rate hike was inevitable but is earlier than anticipated. Growth prospects likely to remain robust with measured tightening. Click here for report » TSMC (2330 TT/TSM US) Clear and present danger Share Price: TWD121.00/USD20.72 | Target Price: TWD120.00/USD20.00 | MCap (USD): 104.5B | ADTV (USD): 543M We analyse the potential impact of QCOM and Apple diversifying their 14nm production from FY15 and beyond. TSMC stands to lose USD2b of business or worst case USD5b, resulting in weaker sales outlook (or down 2-3% YoY bear case) and higher capex intensity of 50% in FY15. TSMC�s market share in 14nm in FY15 may be minimal as rivals capture lion share. The race for 7nm/10nm node in the next five years will be as dynamic if not more unpredictable. The uncertainty will adversely impact TSMC�s valuations. Reiterate SELL and Street-low TP of TWD120. Click here for report » Samsung Electronics (005930 KS) Same old, same old Share Price: KRW1.3M | Target Price: KRW1.4M (+6%) | MCap (USD): 193.9B | ADTV (USD): 314M Delay in providing details of capital management is a let-down again despite its growing cash pile. 1H cash dividend of KRW500 or 2H outlook remains challenging and may lead to further downward earnings revisions. FY14 OP is on track to drop 20% YoY and ROE dip to 15% in FY14F from 22% in FY13. Therefore, the stock may continue to underperform; Suggest re-enter at 1x PB FY15 or KRW1.125m. Reiterate HOLD. Click here for report » Wilmar International (WIL SP) Stronger foothold in food chain Share Price: SGD3.27 | Target Price: SGD3.94 (+21%) | MCap (USD): 16.8B | ADTV (USD): 16M Two growth drivers � recovering soybean crushing margins and sugar price rebound � are intact, in our view. YTD acquisitions to diversify revenue sources and strengthen position along the food value chain. Stay invested despite short-term earnings volatility. Maintain BUY and TP of SGD3.94, set at 15x FY14E P/E. Click here for report » COMPANY NOTES Hong Kong Banks | NEUTRAL FIH Mobile (2038 HK) | TP Revision Bharat Forge (BHFC IN) | Rating Change Star Publications (Malaysia) (STAR MK) | Company Update Aboitiz Power Corp (AP PM) | Results Review Holcim Philippines Inc (HLCM PM) | Results Review Ezion Holdings (EZI SP) | Results Review United Overseas Bank (UOB SP) | Results Review OUE Hospitality Trust (OUEHT SP) | Results Review OSIM International (OSIM SP) | Results Review Bangkok Life Assurance (BLA TB) | Results Preview CH. Karnchang (CK TB) | Company Update Malaysia Banks | NEUTRAL Hong Kong Banks Sector Update 2Q14: More cautious on China loans Reverse migration from RMB to HKD and USD deposits. Shift towards less risky syndicated loans and mortgages. NIM should remain stable albeit rising funding costs. Click here for report » FIH Mobile (2038 HK) Beneficiary of commoditization Share Price: HKD4.39 | Target Price: HKD6.00(+37%) | MCap (USD): 4.4B | ADTV (USD): 7M Reiterate BUY. We think FIH has kept its solid position in Xiaomi�s projects. We fine tune estimates and TP to reflect smartphone demand uncertainties. 1H results out mid-Aug. Street doesn�t think FIH can have iPhone 6 but we believe the progress is on track to kick in late-2H. Contribution is insignificant but a milestone for further diversification. FIH is not the technology leader but a low-cost expert. Smartphone commoditization trend is a long-term tailwind on the reference from previous feature phone cycle. Click here for report » Bharat Forge (BHFC IN) 1Q outperformance is in the price Share Price: INR721 | Target Price: INR660(-9%) | MCap (USD): 2.8B | ADTV (USD): 10M Downgrade to HOLD on high valuation, which prices in doubling of EPS over the next two years. Stock is up 45% since our last note on 29 May. It now trades at a PER of 27x FY15F and 22x FY16F. 1Q EPS of INR6.2 jumped 60% YoY, surprising the Street and us. However, BHFC confirmed EBITDA margin expansion of 570bps YoY to 28.5% may have attained its peak for at least this year. (FULL REPORT WILL BE OUT SOON) Star Publications (Malaysia) (STAR MK) More to come? Share Price: MYR2.63 | Target Price: MYR2.50(-5%) | MCap (USD): 610M | ADTV (USD): 0.4M We trim our FY14-16 earnings estimates by 4-6% assuming 2014 print adex will ease 5% YoY (+0% YoY previously). That said, we note that Star�s e-paper, partnership with Bloomberg TV Malaysia and potential M&A of online assets are new platforms that may drive earnings growth. Maintain HOLD call with a trimmed TP of MYR2.50 (-2%); dividends yields remain attractive at 5.7%. Click here for report » Aboitiz Power Corp (AP PM) 1H14 earnings decline expected Share Price: PHP36.70 | Target Price: PHP37.75(+3%) | MCap (USD): 6.2B | ADTV (USD): 3M 2Q14 core profit down 33% YoY, bringing 1H14 core income to PHP8.6b, 48% of our full-year forecast. Power generation still the culprit due to higher costs. Maintain HOLD and TP of PHP37.75. (FULL REPORT WILL BE OUT SOON) Holcim Philippines Inc (HLCM PM) Higher power cost in 2Q temporary Share Price: PHP13.52 | Target Price: PHP19.00 (+41%) | MCap (USD): 2.0B | ADTV (USD): 0.1M Maintain BUY on under-researched stock and TP of PHP19. 1H14 earnings up 8.8% on the back of a 10.3% sales increase. Flattish 2Q14 earnings due to temporary increase in power costs in Mindanao. Better 2H14 earnings growth expected on sustained healthy cement demand and improvement in margins. Click here for report » Ezion Holdings (EZI SP) Catalysts intact; bonus issue Share Price: SGD2.11 | Target Price: SGD2.85(+35%) | MCap (USD): 2.0B | ADTV (USD): 10M Results in line. Excluding one-off disposal gain of USD18m in 1H13, 1H14 PATMI rose 40% YoY to USD90.5m. Proposed 1-for-5 bonus issue. Maintain BUY. TP raised to SGD2.85 (SGD2.38 post-bonus issue) as we roll over to 11x FY15E P/E. Click here for report » United Overseas Bank (UOB SP) 2Q14: Conflicting signals Share Price: SGD24.16 | Target Price: SGD25.70(+6%) | MCap (USD): 31.3B | ADTV (USD): 39M Poor earnings quality: Earnings beat expectations on volatile investment income. Key negatives: Weaker-than-expected NIM, deteriorating SGD funding profile and a slight erosion in asset quality. Maintain HOLD; no change to our earnings forecasts and TP. Click here for report » OUE Hospitality Trust (OUEHT SP) Expect stronger 2H Share Price: SGD0.91 | Target Price: SGD0.93(+11%) | MCap (USD): 955M | ADTV (USD): 2M 2Q14 dented by weaker tourist arrivals and accelerated renovation of Mandarin Orchard Singapore. OUEHT is positive on 2H14 tourism. So are we. Maintain BUY and TP at SGD0.93, based on DDM. Further catalysts from potential yield-accretive acquisitions. Click here for report » OSIM International (OSIM SP) New products to sustain growth Share Price: SGD2.87 | Target Price: SGD3.50(+22%) | MCap (USD): 1.8B | ADTV (USD): 2M 2Q14 met expectations. Results could have been stronger if not for World Cup. Maintain BUY and SGD3.50 TP, based on 19x FY15E P/E, similar to its regional and global peers. Strong China momentum in 2Q14 positive for 2H14. uDiva just launched in June in China. Maintain above-consensus FY14 forecast, given new product launches and GNC Taiwan�s turnaround. Click here for report » Bangkok Life Assurance (BLA TB) Still good but pricey; D/G to HOLD Share Price: THB93.00 | Target Price: THB100.00(+7%) | MCap (USD): 3.5B | ADTV (USD): 2M Downgrade to HOLD with TP THB100, implying 19x 2015F PE, 3.9x PBV and 22% ROE, due to limited upside. Expect 2Q14 earnings to grow 18% QoQ to THB1.3b, thanks to healthy investment income from rise in investment assets. 2H14 premium income should come from high margin products; expect strong investment income in 2H14. (FULL REPORT WILL BE OUT SOON) CH. Karnchang (CK TB) Dressed and ready to rock Share Price: THB26.50 | Target Price: THB32.00(+21%) | MCap (USD): 1.4B | ADTV (USD): 30M Reiterate BUY, Top Pick, TP THB32 based on SOTP, implying 3.1x FY14F PBV. Divesting 1,025m BMCL shares (5% of BMCL�s shares) at THB1.65/sh. (cost THB0.66/sh.), amounting to THB1.7b. Expect gain of THB820m net of tax (EPS THB0.48) to be booked in 3Q14. Positive on the transaction. This is preparation for upcoming infrastructure investment cycle. Expect CK�s net D/E to drop to 2.0x from 2.3x by year-end. Click here for report » Malaysia Banks Sector Update Loan growth down YoY but up MoM Industry loan growth slipped to 9.3% YoY in June from 9.7% YoY in May. MoM loan growth, however, has picked up pace and was up 0.9% in June vs a low of just 0.2% MoM in Feb. BUYs are AFG, MPHB Cap, AMMB, HL Bank, HLFG. Click here for report » ECONOMICS Thailand Economics First current account surplus in 3 months Likely to avoid technical recession Current account recorded the first surplus in three months as a result of export improvement and import contraction. 2Q14 GDP data available 18 Aug. We don�t expect the economy to contract for two straight seasonally-adjusted quarters, a technical recession. We revise our USD/THB forecast and now look for stronger baht at 31.80, from 33.50 previously, for end-2014. Click here for report »