Regional Daily, Maybank KE (2014-08-05)

Daily 05 August 2014 TOP VIEWS Malaysia Strategy | NEUTRAL HSBC (5 HK) | Rating Change International Housewares Retail (1373 HK) | Initiation DHG Pharma (DHG VN) | Initiation Malaysia Strategy Roadshow feedback Strategy Catalysts, sector themes and stock ideas were the focal points during our meetings with 36 funds in Singapore/HK. We highlighted underperformers and value stocks, and reiterated our Overweight on Construction and Oil & Gas. 2014 KLCI target unchanged at 1,940. Glove sector now an Overweight after we upgraded Hartalega last week. Click here for report » HSBC (5 HK) Recovery on a slow track Share Price: HKD82.05 | Target Price: HKD70 (-15%) | MCap (USD): 199.4B | ADTV (USD): 129M Downgrade to SELL; lower TP from HKD78.05 to HKD70. Concerns over sharp NIM decline & rise in cost-income ratio Uncertainty on capital requirement will delay share buyback Click here for report » International Housewares Retail (1373 HK) Growth-and-value combo; Initiate BUY Share Price: HKD3.09 | Target Price: HKD4.00 (+29%) | MCap (USD): 288M | ADTV (USD): 0.5M Initiate at BUY with HKD4 TP. Singapore expansion will give IHR multi-year earnings growth. Margins set to improve from rising contribution of direct sourcing and the growing scale of its Singapore operations. Stock�s recent pullback creates good buying opportunity. Trading at 13.9x FY15F PER or a 36%/17% discount to regional peer�s average and its historical mean. Also we are positive on IHR due to its stable growth from HK and it�s less susceptible to cyclical risks as its products are non-discretionary. Click here for report » DHG Pharma (DHG VN) Solid business in a growing industry; Initiate BUY Share Price: VND94,500 | Target Price: VND115,600 (+22%) | Mcap (USD): 387m | ADTV (USDm): 0.2m Initiate at BUY with TP of VND115,600. Trading at undemanding 15.0x 2014 PER vs regional average of >40x. DHG among top 3 pharmaceutical companies in Vietnam. Its market share is only behind international giants Sanofi and GSK. DHG is well positioned to benefit from increasing health awareness in Vietnam. DHG has an extensive distribution network, excellent relationship with pharmacists and will double production capacity this year. Also, the most rapidly growing company with 18.9% sales and 35.5% earnings CAGR in 2008-13. We estimate average NPAT growth to remain above 15% pa until 2018. Click here for report » COMPANY NOTES Hang Seng Bank (11 HK) | TP Revision Maruti Suzuki India (MSIL IN) | Company Update Matahari Department Store (LPPF IJ) | Results Review Express Transindo (TAXI IJ) | Results Review Axis REIT(AXRB MK) | Company Update Bloomberry Resorts (BLOOM PM) | Results Review SIIC Environment (SIIC SP) | Results Review Sembcorp Marine (SMM SP) | Results Review Vietnam Monthly View Tech-Tracks Hang Seng Bank (11 HK) Potential capital replenishment Share Price: HKD131.50 | Target Price: HKD101.35(-23%) | MCap (USD): 32.4B | ADTV (USD): 16M Maintain SELL with TP cutting from HKD107.20 to HKD101.35 No near-term catalysts to boost revenue Potential capital replenishment of HKD14b in 2015 (Full Report will be out soon) Maruti Suzuki India (MSIL IN) 1Q in line; upgrades to follow Share Price: INR2,587 | Target Price: INR2,900(12%) | MCap (USD): 12.8B | ADTV (USD): 16M Maintain BUY with unchanged TP of INR2900 based on PER of 20x FY16F. 1Q EPS of INR26.4 (+20% YoY) was in line and forms 21% of our FY15F EPS of INR123. EBIDTA margin improved YoY due to better utilization of capacity. We are confident of better performance in the following quarters and maintain our forecast of 24% EPS growth p.a. for each of the next two years. The Gujarat plant controversy is now behind and MSIL�s sustained market share and margin improvement have brought back investor attention to its fundamentals. (Full report will be out soon) Matahari Department Store (LPPF IJ) 6M14 results in line Share Price: IDR14,500 | Target Price: IDR12,000(-17%) | MCap (USD): 3.7B | ADTV (USD): 3M 6M14 net earnings up 37% YoY to IDR362b, in line with our estimates (25% of our FY14F earnings forecasts). TP under review. Gross revenue rose16% YoY to IDR6ton 13% SSSG as per 6M14 and 2new stores opening this year to June. EBIT margin expanded 60bps from 2Q13to 13.3%. Click here for report » Express Transindo (TAXI IJ) Strong 2Q14, but cost pressure could resume Share Price: IDR1,365 | Target Price: IDR1,400(+3%) | MCap (USD): 253M | ADTV (USD): 2M Maintain HOLD with TP of IDR1,400 (16.7x FY15E P/E). Recent share-price recovery was expected, given significant correction. 2Q14 operating profit beat forecast. Earnings in line. On track to add around 2,000 taxis in 2014. Cost pressure to resume in 3Q14 on higher interest expense from bond issuance. Click here for report » Axis REIT(AXRB MK) Results in line; buying new assets Share Price: MYR3.40 | Target Price: MYR3.14 (-8%) 1H14 core net profit of MYR43m (+3% YoY) was in line. The proposed acquisitions in Shah Alam are yield accretive. Adjust FY14/15/16 earnings forecasts by -2%/+19%/+19%. Maintain HOLD; DCF-based TP raised to MYR3.14 (+12%). (Full report will be out soon) Bloomberry Resorts (BLOOM PM) Building up to a better 2H14 Share Price: PHP11.96 | Target Price: PHP14.00(+17%) | MCap (USD): 2.9B | ADTV (USD): 1M Maintain BUY and EV/EBITDA-based TP of PHP14.00. 1H14 net profit rose 37x YoY to PHP2.31b, 56% of consensus estimate and 40% of our full-year expectations. Opening of Phase 1A and possibly City of Dreams Manila in 2H14 likely to result in 2H14 earnings exceeding 1H14�s. (Full report will be out soon) SIIC Environment (SIIC SP) War chest for acquisitions Share Price: SGD0.16 | Target Price: SGD0.20(+27%) | MCap (USD): 1.1B | ADTV (USD): 6M 2Q14 results in line, driven by acquisitions. With recent CNY700m share placement and strong balance sheet, SIIC can make more acquisitions to power its growth. Maintain BUY and TP of SGD0.20, set at 30x FY15E P/E. Click here for report » Sembcorp Marine (SMM SP) Brazil developments on track Share Price: SGD4.10 | Target Price: SGD4.04(-1%) | MCap (USD): 6.9B | ADTV (USD): 7M 2Q14 PATMI of SGD131.6m (+5.4% YoY, +7.5% QoQ) in line. Interim DPS of 5.0 SGD cts declared. Ship repair revenue flat at SGD150m. Operating margin up 0.4ppt QoQ to 11.5%. Maintain HOLD on muted order outlook. TP still at SGD4.04, 0.71x EV/backlog or 0.5SD below its 10-year mean. Click here for report » Vietnam Monthly View 3rd time testing 600 level in 2014 Monthly report The VN-Index moved up to 596.07 pts, +3.1% in July�14, better than our expectation set out at the beginning of the month. However 1.2% of this gained was on the last trading day. The VN-Index spent more days in the red territory (12) than in the green area (10), suggesting challenges remain testing the 600 level. Foreign investors continued to be net buyers of USD16m or USD350m YTD, compared with USD320m for the whole of last year. (Full report will be out soon) Tech-Tracks Asia ex Japan stable despite global volatility Quants Markets in Hong Kong and Asia ex-Japan remained generally buoyant despite US and European market volatility. The 2014 Argentine debt default also led to some regional movements and switching. Top SELL: Petronas Dagangan Berhad (PETD MK), Top BUYS: Dongjiang Environmental Company Limited (895 HK), Health Management International Limited (HMI SP), PT Logindo Samudramakmur Tbk (LEAD IJ), Master Ad PCL (MACO TB), Nickel Asia Corporation (NIKL PM) and Hoa Phat Group JSC (HPG VN). Click here for report » OTHERS Regional Materials Sector | OVERWEIGHT Materials Sector 1H Preview reveals high expectations Sector update Based on the 1H14 trend of expected earnings vs. the consensus full year 2014 estimates we see the most downside risk for the coal and steel companies and for Chalco. The main reason is our more conservative selling price assumptions for coal, steel, and aluminum. While prices and profit margins bottomed during 1Q14 the upside is expected to be limited due to oversupply. A number of company results are expected to include mark to market adjustments to reflect lower raw materials prices or currency rates that we consider part of recurring earnings (Angang Steel, Yanzhou Coal, Jiangxi Copper). Click here for report »