Regional Daily, Maybank KE (2014-08-14)

Daily 14 August 2014 TOP VIEWS Chinese Wind Power | OVERWEIGHT China Banks | OVERWEIGHT Bumitama Agri (BAL SP) | Results Review Universal Robina Corp (URC PM) | Results Review Chinese Wind Power Initiation Time to set sail Initiate coverage of wind power sector at OVERWEIGHT. Build-out of Ultra High Voltage (UHV) transmission network lays ground for a multi-year bull case for the sector. Sector trading at ~0.52x PEG. Share price weaknesses due to low wind speeds and concerns over higher maintenance costs provide excellent long-term buying opportunity. Favour Huaneng Renewables and China Longyuan, due to high capacity growth, stronger balance sheet, and both are key beneficiaries of the UHV transmission build-out. Click here for report » China Banks Sector Update Jul 2014: Sharp fall in RMB deposits Increased investment in WMPs, money market funds and A-shares has led to a deposit plunge. Keep OVERWEIGHT. Continued shift towards less risky loans. Decline in trust loans & bankers� acceptance. Click here for report » Bumitama Agri (BAL SP) Long-term value proposition Share Price: SGD1.19 | Target Price: SGD1.38 (+16%) | MCap (USD): 1.7B| ADTV (USD): 0.8M Maintain BUY and TP of SGD1.38, at 16x FY15E P/E, implying just 0.7x PEG. Catalyst: 21% FFB output CAGR over 2013-16 which is among the highest in the industry. 2Q14 net profit exceeded market and our expectations on higher-than-expected FFB output and ASPs. Continues to guide for 25% FFB growth for 2014. Click here for report » Universal Robina Corp (URC PM) URC delivers solid 9M results Share Price: PHP164.50 | Target Price: PHP176 (+7%) | MCap (USD): 8.2B | ADTV (USD): 6M Adjusted net income up 20% to PHP8.6b in 9MFY9/14 Sustaining robust sales, earnings and margin improvements despite tougher operating environment in main markets. Management EBIT guidance raised to PHP13.8b-14b on better-than expected results. BUY rating maintained. Click here for report » COMPANY NOTES China/HK Utilities & Renewable Energy China Banks | OVERWEIGHT Cathay Pacific (293 HK) | Results Review Mitra Adiperkasa (MAPI IJ) | Company Update Perisai Petroleum (PPT MK) | Results Review Nestle Malaysia (NESZ MK) | Company Update AirAsia (AIRA MK) | Results Preview AirAsia X (AAX MK) | Results Preview Cebu Pacific (CEB PM) | Results Review Rizal Commercial Banking Corp (RCB PM) | Results Review SIA Engineering | Company Update ST Engineering (STE SP) | Results Review First Resources (FR SP) | Results Review Mermaid Maritime (MMT SP) | Results Review Swiber Holdings (SWIB SP) | Results Review ComfortDelGro (CD SP) | Rating Change United Envirotech (UENV SP) | Results Review Sino Grandness (SFGI SP) | Results Review Erawan Group (ERW TB) | Results Review Central Plaza Hotel (CENTEL TB) | Results Review Chularat Hospital (CHG TB) | Results Review Supalai PCL (SPALI TB) | Results Review Quality Houses (QH TB) | Results Review Bangkok Life Assurance (BLA TB) | Results Review Bumrungrad Hospital (BH TB) | Results Review China/HK Utilities & Renewable Energy Sector Update Prefer clean over dirty We expect the bottleneck of clean energy development will loosen with improving infrastructure, such as transmission grids and gas pipelines. Our sector picks in order of preference are: 1) wind power, 2) city gas distribution, and 3) solar components manufacturing. We are NEUTRAL on Chinese IPPs. Our Top Picks are: Longyuan, Huaneng Renewables, China Gas and Power Assets. Click here for report » China Banks Sector Update 2Q14: Market sees limited progress Market expects net profit of large banks to grow slower than small banks. We adopt the worst scenario on asset quality Market expects stable NIM, net fees growth and credit costs We see chance of positive surprises on new NPL formation. Maintain OVERWEIGHT Click here for report » Cathay Pacific (293 HK) 1H14 in line, challenges persist Share Price: HKD14.68 | Target Price: HKD13.50 (-8%) | MCap (USD): 7.5B | ADTV (USD): 6.0M 1H14 core profit of HKD359m (+14.7% YoY) was within expectations. Management guides 2H14 will be better than 2H13, buoyed by better cost efficiency and higher load factor. Maintain SELL. No change to our earnings forecasts and HKD13.50 target price. Click here for report » Mitra Adiperkasa (MAPI IJ) Continuous margin pressure Share Price: IDR5,100 | Target Price: IDR5,500 (+8%) | MCap (USD): 724M | ADTV (USD): 1M We lower our earnings forecasts for FY15-16F by 10-14% on worse-than-expected margin pressure. Our revised earnings are 25-30% below Bloomberg consensus. We expect costs to continue rising with the higher increase in minimum wage, persistent higher rents, and electricity tariff hike. Retain HOLD and lower TP to IDR5,500. Click here for report » Perisai Petroleum (PPT MK) Remodelling in motion Share Price: MYR1.37 | Target Price: MYR1.76 (+28%) | MCap (USD): 0.5B | ADTV (USD): 1.2M Subdued 2Q results are expected; we cut 2014 earnings by 50% on longer immobilisation of its E3 vessel up to end-2015. Focus on 2015-16 as it remodels its business and improves charter visibility for E3 and MOPU. Maintain BUY and MYR1.76 TP, pegged to 14x FY15 PER. Click here for report » Nestle Malaysia (NESZ MK) 2H14 earnings to catch up Share Price: MYR67.70 | Target Price: MYR64.00 (-5%) | MCap (USD): 5.0B | ADTV (USD): 0.1M Lifted product prices should allow Nestle to play catch-up in 2H14. Maintenance and A&P costs to be more evenly incurred rather than being seasonally skewed towards year end. Maintain HOLD with an unchanged DCF-based TP of MYR64. Click here for report » AirAsia (AIRA MK) 2Q14F: Earnings growth begins Share Price: MYR2.36 | Target Price: MYR2.65 (+12%) | MCap (USD): 2.1B | ADTV (USD): 5.5M 2Q14 results will be released on 20th Aug. Expect core net profit of MYR157m, a growth of 44% YoY. Yields have stabilised and unit cost has reduced due to lower fuel prices in the period. Maintain BUY with an unchanged target price of MYR2.65 pending an analyst briefing post the results announcement. Click here for report » AirAsia X (AAX MK) 2Q14F: Test of faith Share Price: MYR0.88 | Target Price: MYR0.72 (-18%) | MCap (USD): 0.7B | ADTV (USD): 2.9M 2Q14 results will be released on 19th Aug. Expect core net loss of MYR133m (+434% YoY, +120% QoQ). Lower load factor, weak yields, and higher unit cost were the main culprits. Take profit with a lower MYR0.72 TP (from MYR0.79); 2Q14 losses will stretch Company�s capital structure. Click here for report » Cebu Pacific (CEB PM) Come and join the party Share Price: PHP58.65 | Target Price: PHP62.5 (+7%) | MCap (USD): 0.8B | ADTV (USD): 0.6M 2Q14 core net profit was above than ours and consensus. Yields have soared by 11.8% YoY to PHP3.11/RPK whilst unit cost gained a modest 1.2% YoY to PHP2.44/ASK. Maintain BUY. Expect a positive revision to our target price of PHP62.5/share, pending analyst briefing later today. Click here for report » Rizal Commercial Banking Corp (RCB PM) Lesser trading pulls down earnings Share Price: PHP53.85 | Target Price: PHP65.00 (+21%) | MCap (USD): 1.6B | ADTV (USD): 0.5M Maintain BUY with TP of PHP65, equivalent to 1.6x 2015F PBV and 12.9x PER. Weaker-than-expected earnings due to lower trading gains and absence of one-off miscellaneous income. Need for capital still a catalyst for M&A opportunities. Click here for report » SIA Engineering Hit by MAS woes? Share Price: SGD4.58 | Target Price: SGD4.20(-8%) | MCap (USD): 4.1B | ADTV (USD): 2M Reiterate SELL and TP of SGD4.20 (20x FY15 P/E). SAESL�s weakness attributed to fewer shop visits for Trent 800 engines that power B777s. Headwinds could persist due to loss of two aircraft and reduced utilisation of B777s by MAS; and improved reliability of Trent 700s that power A330s. Click here for report » ST Engineering (STE SP) Soft quarter, guidance down Share Price: SGD3.80 | Target Price: SGD3.50 (-8%) | MCap (USD): 9.5B | ADTV (USD): 7M 2Q14 dragged down by Marine and Land Systems. Lowers guidance to comparable profits in FY14. Maintain HOLD with TP lowered to SGD3.50 from SGD4, pegged at 19x FY15E P/E. Click here for report » First Resources (FR SP) Look forward to better 2H Share Price: SGD2.06 | Target Price: SGD2.43 (+18%) | MCap (USD): 2.6B | ADTV (USD): 4M Maintain BUY with a revised TP of SGD2.43 on 15x FY15E P/E after cutting our FY14E-16E EPS by 15%/9%/7%. 2Q results were below our and market expectations on low nucleus FFB output, higher tax expenses and higher costs. We expect better 2H earnings on seasonally higher FFB output, lower costs, and stronger biodiesel contribution. Click here for report » Mermaid Maritime (MMT SP) Remains well-positioned in subsea Share Price: SGD0.44 | Target Price: SGD0.60 (+38%) | MCap (USD): 492M | ADTV (USD): 0.6M 3QFY9/14 PATMI fell short on reduced contributions from MTR-2, in workover mode. Strong operating leverage behind 13.6-ppt QoQ jump in operating margins. Turnaround intact. Maintain BUY. TP raised to SGD0.60 from SGD0.59, now at 13x FY9/15E P/E. (FULL REPORT WILL BE OUT SOON) Swiber Holdings (SWIB SP) Thirsty for orders Share Price: SGD0.53 | Target Price: SGD0.57 (+9%) | MCap (USD): 257M | ADTV (USD): 0.7M Weak results within expectations. 2Q14 was a net loss of USD2.5m after adjusting for one-offs. Orderbook sank to new low of USD610m with weak replenishments. TP cut to SGD0.57 (from SGD0.59), based on 0.5x FY15E P/BV, 1SD below mean. Maintain HOLD. (FULL REPORT WILL BE OUT SOON) ComfortDelGro (CD SP) Positives priced in Share Price: SGD2.56 | Target Price: SGD2.50 (-2%) | MCap (USD): 4.4B | ADTV (USD): 11M 2Q14 net income of SGD75.7m (+9.9% YoY) in line. Strong Singapore taxi, UK bus and rail performances. Interim DPS raised 25% to 3.75 SGD cts, reflecting better profitability and payout. 30% YTD rally priced in positives. Downgrade to HOLD from BUY with unchanged TP of SGD2.50 (18x FY15E P/E). Click here for report » United Envirotech (UENV SP) Solid start to the year Share Price: SGD1.39 | Target Price: SGD1.44 (+4%) | MCap (USD): 811M | ADTV (USD): 3M 1QFY3/15 core net profit up 40.4% YoY. Potential purchase by interested investors a short-term catalyst but valuations rich against peers, especially given its smaller recurring income. Maintain HOLD. TP raised to SGD1.44 (still 27x FY3/15E P/E) from SGD1.43 after minor EPS adjustments. Prefer Hankore and SIIC in the sector. Click here for report » Sino Grandness (SFGI SP) All eyes on Garden Fresh IPO Share Price: SGD0.70 | Target Price: SGD0.76 (+9%) | MCap (USD): 327M | ADTV (USD): 0.8M Sino Grandness reported strong results with 56.5% YoY net profit growth. Rising trade receivables and low cash balance are the only minor concerns for us. Maintain HOLD on uncertainty over Garden Fresh IPO and CB settlement. TP unchanged at SGD0.76. (FULL REPORT WILL BE OUT SOON) Erawan Group (ERW TB) 2Q14: In the red, bottomed out Share Price: THB4.54 | Target Price: THB6.00(+32%) | MCap (USD): 354M | ADTV (USD): 1M Earnings within our expectations but below consensus. 1H14 sales and EBITDA accounted for 45%/36% of our FY14 estimates. 2Q14 net loss of THB83m from break-even in 1Q14 and NP THB731m in 2Q13. Occupancy rate in 2Q14 fell to 61% from 76% in 2Q13. RevPAR decreased 18% QoQ and 20% YoY. Maintain BUY with DCF-based TP of THB6.0 (10% WACC and 3% terminal growth). Medium-term outlook remains strong, earnings recovery, and expect earnings turnaround in 2015. (FULL REPORT WILL BE OUT SOON) Central Plaza Hotel (CENTEL TB) 2Q14: Weak & 67% below consensus Share Price: THB36.50 | Target Price: THB40.00(+10%) | MCap (USD): 1.5B | ADTV (USD): 3M Net profit within our expectation but missed consensus. 1H14 sales and earnings contributing 49%/39% of our FY14 estimates vs. 51%/63% in 1H13. Forecasts are unchanged. 2Q14 and 1H14 sales rose 2%/2%, while NPAT declined 78%/35% YoY on weak hotel and restaurant business. 2Q14 EBITDA fell 20% YoY with margin at 11.6% (-325bps YoY). Maintain HOLD with DCF-based TP of THB40, implying 30.2x PER, 4.3x PB/V, and 1.1x PEG for 2015F. Switch to MINT (BUY TP THB37). (FULL REPORT WILL BE OUT SOON) Chularat Hospital (CHG TB) 2Q14: Above expectation Share Price: THB13.80 | Target Price: THB15.00(+9%) | MCap (USD): 470M | ADTV (USD): 1.0M Net profit in-line with consensus estimates but beat our expectation by 8%. 1H14 sales and earnings accounted for 52%/51% of our FY14 projection vs. 46%/44% in 1H13. 2Q14 sales/NPAT increased 24%/31% YoY, bringing 1H14 sales/NPAT growth of 25%/32% YoY. EBITDA rose 31% YoY to THB171m with margin at 26.6% (+141bps YoY). Maintain HOLD with DCF-based TP of THB15, implying 30.6x PER, 5.4x PB/V, and 2.0x PEG for FY15F. We prefer BCH on solid earnings growth profile and lower PEG. Click here for report » Supalai PCL (SPALI TB) 2Q14: Beat expectations Share Price: THB24.50 | Target Price: THB25.50 (+4%) | MCap (USD): 1.3B | ADTV (USD): 5M Maintain HOLD, TP THB25.5 pegged to 9.5x FY14 PE; limited upside. Positive news on strongest earnings growth in the sector in FY14 of 60% should already be priced in. 2Q14 was 17% and 7% above our and Bloomberg consensus estimates at THB530m (EPS THB0.31), up 75% YoY. Current backlog of THB12.2b secured 87% and 95% of our and Bloomberg estimates. (FULL REPORT WILL BE OUT SOON) Quality Houses (QH TB) 2Q14: Above expectations Share Price: THB4.08 | Target Price: THB3.10(-24%) | MCap (USD): 1.2B | ADTV (USD): 6M Maintain SELL, TP THB3.1 pegged to 10.0x FY14 PE; anaemic FY14 earnings growth and lack of presales catalyst. 2Q14 earnings were 10% above our and Bloomberg consensus estimates at THB979m (EPS THB0.11) but still weak. 2Q14 net profit dropped 12% YoY. Presales target at THB21.6b is likely to be missed as majority of new launches in 2H14 will be low-rise (76%) which have a slower pace of presales than condos. (FULL REPORT WILL BE OUT SOON) Bangkok Life Assurance (BLA TB) Facing headwinds from reserves Share Price: THB90.25 | Target Price: THB84.00 (-6%) | MCap (USD): 3.5B | ADTV (USD): 2M Maintain HOLD and lower TP from THB100 to THB84 (Pre XD) /THB60 (Post XD), implying 17x 2015F PE, 3.4x PBV, 22% ROE Expect 2H14 life policy reserves to drop to normal levels of 65-70% (vs 84% in 1H14) as BLA focuses more on long term endowment and credit life insurance Cut FY14/15F earnings by 32% and 5% after raising reserve to premium to 79%/67% (from 72%/66%) for this year and next (FULL REPORT WILL BE OUT SOON) Bumrungrad Hospital (BH TB) 2Q14: No surprise Share Price: THB127.00 | Target Price: THB115.00(-9%) | MCap (USD): 2.9B | ADTV (USD): 5M Earnings in-line with our and consensus expectation. 1H14 sales and earnings accounting for 46%/47% of our FY14 estimates vs. 49%/47% in 1H13. 2Q14 sales/NPAT up 7%/9% YoY, leading to 6%/7% YoY 1H14 sales/NPAT growth. EBITDA increased 10% YoY with margin at 27.2% (+92bps YoY) as hospital revenue rose 8% YoY. Maintain HOLD with DCF-based TP of THB115, implying 34x PER, 7xPB/V, and 1.4x PEG for 2015F. Positive priced in. Stock up 48% YTD. We prefer BGH (TP THB22). Click here for report »