Regional Daily, Maybank KE (2014-08-06)

Daily 06 August 2014 TOP VIEWS Boustead Plantations (BPLANT MK) | Initiation Consumer Staples | UNDERWEIGHT CH. Karnchang (CK TB) | Company visit India Banks | Macro Boustead Plantations (BPLANT MK) Plantation estates for free, anyone? Share Price: MYR1.58 | Target Price: MYR2.16(+37%) | MCap (USD): 785M | ADTV (USD): 4M Initiate with a BUY with a SOP-TP of MYR2.16; +37% upside. Boustead Plantations (BPLANT) trades at approximately half its RNAV of MYR3.08/sh; it is deep in value. ~60k ha estates are for free as current share price merely reflects the value of ~11k ha with development potential. Click here for report » Consumer Staples Marketing Feedback; 1H14 preview Sector update We met w/ 100+ investors and note the growing interest in revisiting the space given better sales/earnings growth expectations for 2H14 and sector�s underperformance YTD. We forecast names under our coverage to report ave.3% NPAT growth YoY. EBIT margin upside should be capped by fierce competition despite mix upgrade and largely soft input cost. Our Top Pick is Tingyi followed by Hengan and Want Want. We like Ajisen and China Foods among smaller caps. Reiterate SELL on Mengniu given imminent threat to its Milk Deluxe. Biostime�s risk-to-reward profile doesn�t yet justify a BUY. (Full report will be out soon) CH. Karnchang (CK TB) Key takeaways from local roadshow Share Price: THB26.00 | Target Price: THB32.00(+23%) | MCap (USD): 1.4B | ADTV (USD): 32M Reiterate BUY on sector Top Pick and SOTP-based THB32 TP. We expect CK to have the most new projects signed this year and bright outlook for its listed subsidiaries to support further re-rating. Maintain positive outlook on the construction industry. Bidding should start 4Q14 (Dark Green Line, Double Track and Suvarnabhumi Phase II) totalling THB86b. Xayaburi project is still ongoing. CK is not concerned about environmental issue from public as it has done all requirements from Mekong River Commission (MRC). Click here for report » India Banks Rates unchanged, easing only in 2015 Sector RBI said monetary easing would depend on whether its medium-term inflation target of 6% can be achieved by Jan 2016 or earlier, vs 7.3% in June'14. It has infused INR400b into the banking system by cutting the statutory liquidity ratio (SLR) by 50bps to 22% of net demand time liabilities (NDTL). It reduced the ceiling for held-to-maturity investments from 25% to 24% of NDTL. We believe the above would help free up funds for meeting anticipated credit growth of 15% by 2015 vs 13.5% in Jul'14. Click here for report » COMPANY NOTES Hero Motocorp (HMCL IN) | Rating Change Tech Mahindra (TECHM IN) | Results Review Hartalega (HART MK) | Results Review Malaysia Marine & Heavy Engineering (MMHE MK) | Results Review Philippine Long Distance Telephone (TEL PM) | Results Review OCBC Bank (OCBC SP) | Results Review OCBC Bank (OCBC SP) | Company Update StarHub (STH SP) | Rating Change Sri Trang Agro (STA TB) | Results Preview Vietnam Monthly View Hero Motocorp (HMCL IN) Double-digit growth in local demand; U/G to BUY Share Price: INR2,584 | Target Price: INR2,920(+13%) | MCap (USD): 8.5B | ADTV (USD): 20M Upgrade to BUY from HOLD. New TP of INR2920 is 39% higher than previously and is based on PER of 20x FY16F. EPS increase of 6%/7% for FY15/16 underpins this upgrade. HMCL missed consensus and our EPS estimate by 10% and 5% for 1Q. This is largely because the company confirmed discontinuation of royalty payments to Honda from 1 July�14 resulting in gross savings of INR8b/year (40% of FY14 net). We believe our EPS growth forecast for FY15/6 is conservative and we expect EPS upgrades to follow. Increased capacity and demand for scooters, higher cost savings, and strong growth in high-margin sports motorcycles are the catalysts. Click here for report » Tech Mahindra (TECHM IN) Growth intact; margin pick-up from 2Q Share Price: INR2,170 | Target Price: INR2,500(+15%) | MCap (USD): 8.3B | ADTV (USD): 28M 1QFY15 revenue (+3.6% QoQ in USD) beat our forecast but EPS of INR26.90 (+2.3% QoQ, -9% YoY) missed, due to lower EBITDA margins. EBITDA margins to pickup from 2Q. Cut FY15/16E EPS by 2-6% to factor in 1Q results but still forecast earnings CAGR of 15.6% for FY14-16. Maintain TP of INR2,500, based on 15x FY16E P/E. TECHM remains one of our top-picks for IT sector. Catalysts expected from uptick in EBITDA margin and EPS from 2Q onwards and M&A. Click here for report » Hartalega (HART MK) High take-up for new capacity Share Price: MYR6.71 | Target Price: MYR7.30(+9%) | MCap (USD): 1.6B | ADTV (USD): 0.8M 1QFY3/15 earnings (+16% QoQ, -9% YoY) within expectations. We are positive on its expansion plan, especially since existing customers have lent support to demand. Maintain BUY and TP of MYR7.30 (19x mid-2016 PER). Click here for report » Malaysia Marine & Heavy Engineering (MMHE MK) In line; changes in methods Share Price: MYR3.50 | Target Price: MYR4.60 (+31%) | MCap (USD): 1.8B | ADTV (USD): 0.8M 1H14 results within our expectation, below consensus. New profit recognition, from �milestone billing� to �square method� cuts our FY15/16 earnings forecasts by 49%/43%. We change our valuation methodology to backlog-based; TP raised to MYR4.60 (+9%), on 2.9x EV/ backlog. Maintain BUY. Click here for report » Philippine Long Distance Telephone (TEL PM) Steady single-digit growth Share Price: PHP3,150 | Target Price: PHP3,080 (-2%) | MCap (USD): 15.8B | ADTV (USD): 12M 1H14 core net income was PHP19.4b, in line with forecast. Maintain HOLD and TP of PHP3,080. Core profit up 2% YoY as expenses of 6% outpaced revenue rise of 3% with higher cash operating costs and subsidies. Investment in internet space in advanced stage and is likely to be a strategic partnership, may close within a few weeks. Click here for report » OCBC Bank (OCBC SP) Strong 1H; WHB overhang Share Price: SGD9.86 | Target Price: SGD9.63(-2%) | MCap (USD): 27.7B | ADTV (USD): 27M 2Q14 beat expectations on strong net trading income and profit from life assurance. NIM held up well, solid credit quality, ample SGD liquidity (81.6% SGD LDR), though loan growth slowed. Purchase of WHB remains a concern. Maintain HOLD and TP of SGD9.63, based on 1.24x average FY14E-15E P/BV. Top sector pick is DBS. Click here for report » OCBC Bank (OCBC SP) No fresh angle; Post-results briefing Share Price: SGD9.86 | Target Price: SGD9.63(-2%) | MCap (USD): 27.7B | ADTV (USD): 27M Management sanguine on housing credit quality and China exposure. Less positively, it expects weaker NIM in 2H due to deposit competition. Maintain HOLD and TP of SGD9.63, based on 1.24x average FY14E-15E P/BV. Top sector pick is DBS. Click here for report » StarHub (STH SP) Mobile star dimming Share Price: SGD4.23 | Target Price: SGD4.44(+5%) | MCap (USD): 5.8B | ADTV (USD): 7M 2Q14 results below, revenue guidance cut. Downgrade our least preferred telco to HOLD from BUY. TP cut to SGD4.44 (DCF, WACC 7.8%). Sharp slowdown in mobile revenue growth as fall in voice/SMS offset data growth. Broadband�s revenue free fall unlikely to end soon. Click here for report » Sri Trang Agro (STA TB) 2Q14 still weak on volume & price Share Price: THB14.30 | Target Price: THB11.50 (-20%) | MCap (USD): 569M | ADTV (USD): 1M Maintain SELL and THB11.5 TP at low end of Street, based on LTM PBV-0.5x SD. Stock�s been bucking downtrend in rubber prices but we expect trend reversion as poor prices continue Losses at operating level are expected to recur in 2Q14 (THB12m) but the bottom line will reach THB355m supported by extra ordinary gains Rubber prices continue to fall and volumes were slow on account of seasonality and high inventory Click here for report » Vietnam Monthly View Third time testing 600 level in 2014 Monthly Research VN-Index moved up to 596.07 pts, +3.1% in July�14, better than our expectations set out at the beginning of the month. However 1.2% of this gain was on the last trading day. VN-Index spent more days in 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. Click here for report »