Regional Daily, Maybank KE (2014-08-12)

Daily 12 August 2014 TOP VIEWS Beijing Tong Ren Tang (8138 HK) | Company update Ayala Land (ALI PM) | Results review Super Group (SUPER SP) | Rating change Mah Sing Group (MSGB MK) | Rating change Beijing Tong Ren Tang (8138 HK) Growth on track Share Price: HKD9.49 | Target Price: HKD10.80 (+14%) | MCap (USD): 1B | ADTV (USD): 0.8M Maintain BUY with TP & earnings intact following 2-day post-results NDR. Our TP is pegged to27/24X 2014/15F PER on the basis of 3-yr base-case 26% NPAT CAGR. GL/GLSPC sales in China, new product launches and contribution from recent acquisitions in HK & NZ should be major earnings growth drivers, while star product Angong Niuhuang pills are a steadily growing cash cow. In near term, bottom-line growth should normalize to35% vs 50% in 1H14 given larger OPEX associated with its new HK healthcare centre, new store openings and new product A&P should kick in in remaining quarters. Click here for report » Ayala Land (ALI PM) No signs of slowdown Share Price: PHP31.05 | Target Price: PHP40.30 (+30%) | MCap (USD): 10B | ADTV (USD): 8M Maintain BUY on strong operating performance across all ALI�s product lines, 30% upside on our Street-high TP of PHP40.30. Strong earnings growth of 25.4% is seen to be sustained for the rest of the year. No signs of slowdown as ALI�s sales take-up reached all-time high in 2Q14. Click here for report » Super Group (SUPER SP) Wings clipped; D/G to SELL Share Price: SGD1.45 | Target Price: SGD1.18(-18%) | MCap (USD): 1.3B | ADTV (USD): 2M 2Q14 below. Coverage transferred. Cut from HOLD to SELL with de-rating catalysts from rising selling & distribution costs, higher tax rate and currency weakness. New SGD1.18 TP, at 15x FY15E P/E, its 5-year mean. EPS cut by 14-17% as Super struggles with growth in core markets. Click here for report » Mah Sing Group (MSGB MK) Stronger into affordable housing; U/G BUY Share Price: MYR2.37 | Target Price: MYR2.72 (+15%) | MCap (USD): 1.1B | ADTV (USD): 0.9M Positive on MSGB�s latest land purchase in Negeri Sembilan. The new landbank enhances our RNAV/shr est. by +23sen; it will start contributing to earnings from 2H16 onwards. Upgrade to BUY with a higher TP of MYR2.72 (+18sen) on unchanged 0.79x P/RNAV target (MYR3.44 RNAV [+23sen]). Click here for report » COMPANY NOTES Sunway REIT (SREIT MK) | Results Review Petronas Gas (PTG MK) | Company Update TIME dotCom (TDC MK) | Company Update Petronas Chemical Group (PCHEM MK) | Results Review TSH Resources (TSH MK) | Company Update Kuala Lumpur Kepong (KLK MK) | Company Update KLCC Property (KLCCSS MK) | Results Review Alliance Financial Group (AFG MK) | Results Review Regional Plantations | NEUTRAL Catcher Technology (2474 TT) | TP Revision Credit China Holdings (8207 HK) | Results Review Metropolitan Bank & Trust Co. (MBT PM) | TP Revision Manila Water Co. (MWC PM) | Results Review Sarine Technologies (SARIN SP) | Rating Change Q&M Dental Group (QNM SP) | Results Review Malee Sampran (MALEE TB) | Results Review Sunway REIT (SREIT MK) Above expectations Share Price: MYR1.42 | Target Price: MYR1.42 (+0%) | MCap (USD): 1.3B | ADTV (USD): 0.5M FY6/14 core net profit of MYR232m (+6% YoY) beat our expectations. NPI margin to be better in coming quarters on higher service charge and potential reversal of assessment charges. DCF-based TP raised to MYR1.42 (+17sen). Maintain HOLD. Click here for report » Petronas Gas (PTG MK) All is well Share Price: MYR21.32 | Target Price: MYR23.50(+10%) | MCap (USD): 13.2B | ADTV (USD): 6M No new negatives from PTG�s 2Q14 results call; expect stable earnings going forward. Recent share price correction was likely tactical, but valuations are not yet compelling. Maintain HOLD, TP unchanged at MYR23.50. Click here for report » TIME dotCom (TDC MK) Another Trans-Pacific cable Share Price: MYR4.50 | Target Price: MYR5.00(+11%) | MCap (USD): 804M | ADTV (USD): 0.6M Participation in the FASTER cable would raise TDC�s trans-pacific bandwidth capacity (presently through Unity cable). Management still views the trans-pacific route as being lucrative; FASTER would also allow TDC the ability to offer redundancy services. Muted earnings impact; maintain HOLD, MYR5.00 TP. Click here for report » Petronas Chemical Group (PCHEM MK) 2Q14 below expectations Share Price: MYR6.66 | Target Price: MYR6.90 (+4%) | MCap (USD): 16.7B | ADTV (USD): 6.1M 2Q14 core PATAMI of MYR555m (-42% YoY, -26% QoQ) was below expectations; our FY15 earnings cut by 12%. Plant utilization rates to pick up in absence of major maintenance, ASP to be higher YoY in 2H14. Maintain HOLD. Rollover to FY15 as base year and raise target price marginally to MYR6.90 (from MYR6.85). Click here for report » TSH Resources (TSH MK) Proposes a 1-for-2 bonus issue Share Price: MYR3.57 | Target Price: MYR3.40(-5%) | MCap (USD): 1.0B | ADTV (USD): 0.8M Bonus issue will lift share base by 50%, to c.1.35m shares. This will improve its trading liquidity and affordability. Earnings unchanged. Maintain HOLD at MYR3.40 TP. Click here for report » Kuala Lumpur Kepong (KLK MK) Buys a small downstream player Share Price: MYR23.80 | Target Price: MYR24.00(+1%) | MCap (USD): 7.9B | ADTV (USD): 5M KLK�s acquisition of a global supplier of surfactants for EUR16m (or ~MYR70m) cash is long-term positive. Expect muted earnings impact relative to KLK�s MYR11.7b asset size and MYR0.9b net profit in FY13. Maintain HOLD with an unchanged TP of MYR24.00. Click here for report » KLCC Property (KLCCSS MK) No earnings surprises Share Price: MYR6.40 | Target Price: MYR6.49 (+1.4%) | MCap (USD): 3.6B | ADTV (USD): 0.9M 1H14 core net profit of MYR335m (+67% YoY) was in line. Unit price would continue to be supported by strong demand from the Shariah/FBMKLCI Index funds. Maintain earnings but raise TP to MYR6.49 (+4%). KLCCP is fairly priced at 5% yield (net) vs. industry�s 6%. HOLD. Click here for report » Alliance Financial Group (AFG MK) Expect better NIMs ahead Share Price: MYR4.88 | Target Price: MYR5.50 (+13%) | MCap (USD): 2.4B | ADTV (USD): 4.0M 1QFY15 core net profit within expectations at 24% of our full-year forecast and consensus. Expect earnings to gather pace on better NIMs and cost control. BUY, with an unchanged MYR5.50 TP; 4.7% dividend yield. Click here for report » Regional Plantations Limited CPO price downside Sector update MPOB�s July 2014 stockpile was marginally higher MoM mainly due to seasonally higher July production. We believe there is limited downside to current CPO price as we anticipate stronger demand from the energy sector. It is important for stockpile to stay below 2m MT level for the rest of 2014. Maintain our 12M NEUTRAL view. Click here for report » Catcher Technology (2474 TT) Concentration & competition; HOLD Share Price: TWD271.00 | Target Price: TWD290.00(+7%) | MCap (USD): 6.8B | ADTV (USD): 58M Raise estimates and TP toTWD290 from TWD220 (12x multiple unchanged) to reflect better-than-expected NRE fees but maintain HOLD due to concentration risk on single client/project. Order dilution from existing smartphone customers such as HTC/Blackberry/Sony. We agree they are fairly irrelevant vs iPhone but we argue Catcher�s increasing profit concentration toward iPhone 6 (4.7 inch only) will cap its valuation re-rating. Casetek should try to leverage Pegatron�s market share win on iPhone 6 this year and turn more aggressive on attacking next iPhone in 2H15 due to lucrative metal casing profits(figure 3)for the benefits of its shareholders. Click here for report » Credit China Holdings (8207 HK) Too early to gain from P2P business Share Price: HKD1.89 | Target Price: HKD1.85(-2%) | MCap (USD): 768M | ADTV (USD): 2M Higher P2P fees to offset lower financial consultancy fees Potential fall in cost-income ratio; slightly higher credit costs Maintain HOLD and keep TP at HKD1.85 Click here for report » Metropolitan Bank & Trust Co. (MBT PM) Accrual income boosts 2Q14 profits Share Price: PHP87.00 | Target Price: PHP95.00(+9%) | MCap (USD): 5.4B | ADTV (USD): 8M Maintain HOLD with just 9% upside to our new TP of PHP95. Marginal revision in FY14-15 earnings to factor in strong core lending business, lower-than-expected trading profits, and non-recurring gains. Surprise came from a 64% rise in interest income on trading and investment securities. Click here for report » Manila Water Co. (MWC PM) Decent 1H14 results but dispute still on Share Price: PHP28.20 | Target Price: PHP23.40(-17%) | MCap (USD): 1.3B | ADTV (USD): 2M 1H14 earnings grew 8% YoY, exceeding our forecast. Earnings rose at a faster pace than EBITDA due to lower depreciation costs. Final memorandum to arbitration panel expected by Nov and resolution by year end hoped for. Maintain HOLD. (Full report will be out soon) Sarine Technologies (SARIN SP) Fairly priced; cut to HOLD Share Price: SGD3.01 | Target Price: SGD3.16(+5%) | MCap (USD): 838M | ADTV (USD): 1M 2Q14 net profit of USD8.6m (+3.5% YoY, -5.6% QoQ) in line. 19 GalaxyTM systems delivered in 2Q14, bringing installed base to 176. With TP reached, cut to HOLD from BUY. DCF-based TP raised marginally to SGD3.16 from SGD3.09 after rollover. Click here for report » Q&M Dental Group (QNM SP) Aoxin to boost 2H earnings Share Price (current): SGD0.47 | Share Price (ex-rights): SGD0.41 | TP (ex-rights): SGD0.54 (+32%) | MCap (USD): 230M | ADTV (USD): 0.6M 2Q14 core in line on organic and acquisition-led growth. We expect another major acquisition, Aidite, to fuel growth in FY15E. New rights-adjusted TP of SGD0.54 from SGD0.55, based on unchanged 39x FY15E EPS (rolled over from FY14E). Maintain BUY for upcoming record earnings. Click here for report » Malee Sampran (MALEE TB) 2Q poor, earnings downgrade Share Price: THB37.00 | Target Price: THB43.00(+16%) | MCap (USD): 161M | ADTV (USD): 0.7M Maintain BUY with lower GGM-based TP of THB43 and rolled over to 2014. The lower profit stream reduced 3-yr avg ROE from 42% to 34%. 2Q14 net profit was down 11% YoY to THB81m, bringing cumulative 1H14 net profit to THB165m, just 32% of our FY forecast � hence the downgrade. Possible negative share price movement on the weak results. We suggest long term investors pick up the stock. Two of the three long term value drivers continued to improve. Branded sales grew 14.8% YoY in 1H14 while exports rose 66% YoY and gross margins (GM) on weighted basis rose to 32.4% vs 26% in 1H13. What�s missing is the CMG volumes. Click here for report » ECONOMICS Industrial Production, Jun�14 Malaysia Economics Another knock-out quarter� Economics Industrial production growth hit an 11-month high of +7.0% YoY in June2014 (revised May 2014: +5.9% YoY). It expanded +5.9%YoYin 2Q 2014 (1Q 2014: +4.7% YoY). Consequently, 2Q 2014 real GDP growth is likely to sustain the momentum in 1Q 2014. (Full report will be out soon)