Regional Daily, Maybank KE (2014-08-11)

Daily 11 August 2014 TOP VIEWS Malaysian Airline System (MAS MK) | Acquisition Chong Hing Bank (1111 HK) | Rating change Vale Indonesia (INCO IJ) | TP revision Biostime (1112 HK) | Company update Malaysian Airline System (MAS MK) Khazanah Privatisation Offer Share Price: MYR0.24 | Target Price: MYR0.27 (+12%) | MCap (USD): 1.1B | ADTV (USD): 4.2M Khazanah Nasional has announced its privatisation offer of MYR0.27 to buy out MAS and take it private. MAS management is amenable to this offer, could possibly be concluded by 4Q 2014. We advise shareholders to take up the offer which is fair; it is 8% higher than our SOP valuation of MYR0.25. Click here for report » Chong Hing Bank (1111 HK) Potential privatization: U/G to BUY Share Price: HKD16.76 | Target Price: HKD20.83 (+24%) | MCap (USD): 941M | ADTV (USD): 0.6M Upgrade to BUY. Fair privatization price HKD25.75. Privatization should make it easier to replenish capital. SOTP valuation of YXFH is CNY28.6b, or 1.43x of its BV. Click here for report » Vale Indonesia (INCO IJ) More positives; Raise TP Share Price: IDR3,980 | Target Price: IDR4,800(+21%) | MCap (USD): 3.4B | ADTV (USD): 5M Raise TP to IDR4,800 (from IDR4,600) on higher earnings forecasts. We like management for its focus on cost efficiencies. Main share-price catalyst: nickel price rally. Potential upside risk on nickel price from suspension of four mines in the Philippines. May worsen global deficit by 55%. 1.6x 2015F P/BV, 15.8% discount to long-term mean of 1.9x. Click here for report » Biostime (1112 HK) New B2C strategies may backfire Share Price: HKD37.15 | Target Price: HKD33.10(-11%) | MCap (USD): 2.9B | ADTV (USD): 9M Reiterate contrarian SELL and Street-low TP. See downside risks to our forecasts from rising costs and sales uncertainties stemming from its new B2C/O2O strategies. Offline maternity store customers we spoke to are concerned Biostime�s new online strategies may cannibalise their sales. Also, handling online deliveries in-house will raise costs. All in all, these significant negatives may pressure margins. Maintaining our forecasts pending 1H results on 20 Aug and further details from management on the new strategies. Click here for report » COMPANY NOTES Lenovo Group (992 HK) | TP Revision Tata Communications(TCOM IN) | Results Review India Infrastructure Icon Offshore Berhad (ICON MK) | Initiating Coverage Petronas Gas (PTG MK) | Results Review SM Prime Holdings (SMPH PM) | Results Review Nam Cheong Ltd (NCL SP) | Results Review Overseas Education Ltd (OEL SP) | Company Update Ascendas REIT (AREIT SP) | Flash Note Venture Corporation (VMS SP) Singapore Banks | NEUTRAL Minor International PCL (MINT TB) | Results Review Bangkok Life Assurance (BLA TB) | Results Review Pruksa Real Estate (PS TB) | Results Review Robinson Department Store (ROBINS TB) | Results Review L.P.N. Development (LPN TB) | Company Update Lenovo Group (992 HK) Fully priced Share Price: HKD11.04 | Target Price: HKD8.80(-20%) | MCap (USD): 14.8B | ADTV (USD): 44M Maintain HOLD and raise TP to HKD8.8 from HK7.8 to reflect the earnings revision (24/14% for FY15/16). Jun-quarter earnings out 14 Aug, likely to be strong driven by solid PC sales and operating leverage. Earnings risks remain high on the two acquisitions though the uncertainties may be less than previous estimates. Click here for report » Tata Communications(TCOM IN) Data growth to stay strong Share Price: INR352 | Target Price: INR429(+22%) | MCap (USD): 1.6B | ADTV (USD): 5M Maintain BUY and SOTP TP of INR429. Completion of sale of stake in Neotel and land parcels remains near-term catalyst. 1QFY15 in line. EBITDA margin down 100bps QoQ to 13.9%. Higher tax payout resulted in net loss. Forex rate lowered to INR60 from INR62.Cut FY15E-16E EBITDA by 5-6%. Still 4-8% above consensus. Click here for report » India Infrastructure M�sia, S�pore & HK marketing takeaways Palpable excitement on infra stocks Most of the 29 clients we met are positive on India Infrastructure. They think the recent rally has made valuations rich; any correction provides a good entry point. They are looking at the new government�s policies as the catalyst since 1H earnings of infrastructure companies are unlikely to surprise positively. Of our top six picks, clients were keen on JPA, PWGR, and ILFT. Many liked our coverage of Indian affordable housing sector and their favorite was MLIFE. (Full report will be out soon) Icon Offshore Berhad (ICON MK) Riding the wave�s crest Share Price: MYR1.82 | Target Price: MYR2.00 (+10%) | MCap (USD): 0.7B | ADTV (USD): 5.0M Initiate coverage with a BUY and MYR2.00 TP (15x 2015 PER). One of the largest pure play OSV operators in Malaysia with a fleet size of 32 units. 3-year net profit CAGR of 30%, driven by improved utilisation and expected expansion in fleet to 39 units by 1Q16. Click here for report » Petronas Gas (PTG MK) Solid profit delivery Share Price: MYR21.08 | Target Price: MYR23.50(+11%) | MCap (USD): 13.0B | ADTV (USD): 5M 1H14 core net profit was in line with expectation at 50% of ours and 49% of consensus full year forecasts This should allay recent undue concerns over PTG�s earnings delivery capabilities. Maintain HOLD, TP unchanged at MYR23.50. Click here for report » SM Prime Holdings (SMPH PM) Turning point in residential Share Price: PHP16.00 | Target Price: PHP21.67(+35%) | MCap (USD): 10.2B | ADTV (USD): 5M Maintain BUY with Street-high target price of PHP21.67 on NAV-based valuation. Net profit growth sustained with 2Q14 revenues driven by additional space in malls and recovery of residential. Steady performance of mall operations, gathering strength in residential and completion of office projects will propel profits in 2H14 and beyond. Click here for report » Nam Cheong Ltd (NCL SP) Consistent delivery Share Price: SGD0.48 | Target Price: SGD0.55(+16%) | MCap (USD): 798M | ADTV (USD): 3M 2Q14 in line. Delivery consistent, with higher revenue recognition. Sustained optimism on vessel demand. Maintain BUY and TP of SGD0.55, pegged to 2.2x FY15E P/BV based on Gordon Growth model. Click here for report » Overseas Education Ltd (OEL SP) Not hitting the books yet Share Price: SGD1.01 | Target Price: SGD1.40(+39%) | MCap (USD): 334M | ADTV (USD): 0.2M 2Q14 profit could slip 2% YoY due to more students graduating at end of academic year. Enrolment only starts in 3Q14. Still, we keep our FY14E forecast on a 6-11% rise in tuition fees. Maintain BUY and TP of SGD1.40, DCF-based. More PRC students to power earnings this year. Opening of competitor�s school delayed could also benefit OEL. Click here for report » Ascendas REIT (AREIT SP) Marginal acquisition Share Price: SGD2.29 | Target Price: SGD2.66(+16%) | MCap (USD): 4.4B | ADTV (USD): 11M Buying Aperia for SGD458m (SGD613 psf), including land premium of SGD218.3m. Aperia will house tenants such as Intel, Audi & McDonald�s. Marginally accretive. Reiterate BUY with slight bump in our DDM TP to SGD2.66 from SGD2.65. Catalysts from further yield-enhancing acquisitions. Click here for report » Venture Corporation (VMS SP) Start of good trends Share Price: SGD8.03 | Target Price: SGD9.50(+18%) | MCap (USD): 1.8B | ADTV (USD): 3M 2Q14 slightly below due to higher tax and R&D costs. No concern, as better topline and margins were what we were looking for. Growth drivers intact. 3D printers shaping up nicely. Could be more significant next year. Maintain BUY. TP raised to SGD9.50 from SGD8.60, after rollover to 16x FY15E P/E based on peer average. Click here for report » Singapore Banks 1H14: Pink of health Sector update 2Q14 ended well. No signs of stress in China books, resilient NIMs and fee income. DBS stood out. Slim chances of housing fallout. Going by history, OCBC�s FY14E EPS could suffer by 14%, if property prices collapse by 30%; UOB 9% and DBS 6%. Sector still a Neutral. DBS our top pick, with catalysts from higher interest rates, followed by UOB. Cautious on OCBC. Click here for report » Minor International PCL (MINT TB) 2Q robust and in line; Stay BUY Share Price: THB33.00 | Target Price: THB37.00(+12%) | MCap (USD): 4.1B | ADTV (USD): 9M Earnings in line with our expectation but beat consensus. 1H14 sales and earnings accounting for 49%/46% of our FY14 estimates vs. 51%/45% in 1H13. 2Q14 sales/NPAT up 10%/44% YoY, bringing 1H14 sales/NPAT growth to 10%/11% YoY. EBITDA margin was 17.3% (+140bps YoY), food and hotel business showed better EBITDA margin. Maintain BUY on: i) earnings recovery; ii) lift martial law; iii) potential consensus earnings upgrade. DCF-based TP THB37 implies 26.5x PER, 4.5x P/BV and 1.1x PEG for FY15F. (Full report will be out soon) Bangkok Life Assurance (BLA TB) Disappointed earnings in 2Q14 Share Price: THB92.25 | Target Price: THB100.00(+8%) | MCap (USD): 3.5B | ADTV (USD): 2M Maintain HOLD and TP of THB100, implying 19x 2015F PE, 3.9x PBV and 22% ROE. 2Q14 earnings fell 88% YoY to THB169m, below our and consensus estimates by 87%, due to huge life policy reserves (+38% YoY) and benefits payments to policyholders (+33%). Expect earnings to recover in 3Q14 due to the dividend income from investments. (Full report will be out soon) Pruksa Real Estate (PS TB) 2Q14: Beat consensus by 17% Share Price: THB34.00 | Target Price: THB27.00(-21%) | MCap (USD): 2.3B | ADTV (USD): 4M Maintain HOLD with TP under review. We will revisit our assumptions after the analyst meeting on 13 Aug. 2Q14 net profit of THB1,871m (EPS THB0.84), up 76% QoQ and 33% YoY; Beat Bloomberg consensus by 17% on stronger-than-expected gross margin. 37 projects launched in 1H14 worth c.THB31b; Plans to launch 33 projects in 2H14 worth THB39b bringing total new launches this year to THB70b, up from THB50b initially. (Full report will be out soon) Robinson Department Store (ROBINS TB) 2Q14 net profit contracted Share Price: THB58.00 | Target Price: THB53.00(-9%) | MCap (USD): 2.0B | ADTV (USD): 2M Maintain HOLD with 12M DCF based target price of THB53. Same store sales contracted 7% YoY worse than our 4-5% expectation. 1H14 net profit is 40% of FY forecast but with six new store openings in the pipeline, including one in Vietnam, 2H will make up for weak 1H. Maintain forecasts. (Full report will be out soon) L.P.N. Development (LPN TB) 2Q14: Weak earnings in line Share Price: THB22.40 | Target Price: THB14.00(-38%) | MCap (USD): 1.0B | ADTV (USD): 4M Maintain SELL with Street-low TP THB14 pegged to 8.9x FY14 PE based on 6-mth view of likely weak presales and earnings in 2H14. 2Q14 profit in line with our estimate at THB367m (EPS THB0.25), collapsing 54% YoY but 15% below Bloomberg consensus estimate. Announced interim dividend of THB0.26/sh. XD date on 20 Aug. Recommend investors with over 12-mth investment horizon to wait for a correction in 2H14 for an entry point to capture strong earnings growth of 56% YoY in FY15. (Full report will be out soon)