My One Academy: Regional Daily, Maybank KE (2014-09-19)

Friday, September 19, 2014

Daily

19 September 2014

TOP VIEWS

FIH Mobile (2038 HK)

Seeing is believing; Stay BUY

Share Price: HKD4.16 | Target Price: HKD6.00 (+44%) | MCap (USD): 4.2B | ADTV (USD): 8M

Reiterate BUY and TP HKD6.0 for improving demand outlook, margin expansion and strong competitiveness.
FIH renewed contract with Hon Hai and significantly raised contract values (Fig 1), possibly indicating strong demand in the pipeline. Besides, we think FIH�s metal casing capacity is tight due to demand from Xiaomi, Meizu and iPhones. Hence, FIH also raised its equipment purchase from Hon Hai.
1x FY15F P/BV, net cash of 40% market cap. We believe it is attractive to long-term investors due to the company's ROIC expansion to 24% in FY15F from 10% in FY13, driven by margin expansion and production efficiency improvements.

Malaysia Construction

SCORE is scoring well

Sector update

Upbeat on significant progress in SCORE as more construction works has since rolled out and more detailed development plans have been made to ensure sustainable growth.
Ample construction jobs to be dished out which is medium term positive for Sarawak based contractors and those from Peninsular with track record.
OVERWEIGHT on Sarawak construction with HSL as Top Pick.

BNM Monetary Policy

OPR paused at 3.25%

Economics

In contrary to our expectation, Bank Negara Malaysia (BNM) kept Overnight Policy Rate (OPR) at 3.25%, citing moderating domestic demand going forward and stable inflation for the rest of this year.
Although Monetary Policy Statement (MPS) maintained reference to �destabilising financial imbalances� and added �further adjustment to the degree of monetary may be taken�, it appears growth is taking precedence now given the remarks on ensuring �the sustainability of the growth prospect of the Malaysian economy�.
With OPR to be on pause for the rest of 2014, it is more likely that OPR will be adjusted in 2H 2015 as underlying inflation trend get clearer post-GST introduction and as US interest rate normalises.

COMPANY NOTES

Sinopec Y izheng Chemical Fibre (1033 HK)

Farewell and welcome

Share Price: HKD3.13 | Target Price: na | MCap (USD): 3.1b | ADTV (USD): 6M

SNP Yizheng announced a 3-way reorganisation with Sinopec Corp (386 HK) and Sinopec Group. Once completed, this vehicle will be transformed into an oil services arm entity.
According to the announcement, the potential market capitalization will be USD5-6bn, of which around 13.9% and 2.9% will be the free float of the H-shares and A-shares.
Based on the company�s own earnings projections, the fully diluted PER for 2014 and 2015 will be ~15.7x and 10.8x.

Chong Hing Bank (1111 HK)

New AT1 capital lowers CET1 CAR

Share Price: HKD17.38 | Target Price: HKD20.83 (+20%) | MCap (USD): 975M | ADTV (USD): 1M

Issue of AT1 capital will dilute EPS by 4.6% for 2015.
CET1 CAR will drop below 11% in 2015.
Potential privatization (at HKD25.75 per share) before equity capital replenishment in 1H15. Maintain BUY.

Jasa Marga (JSMR IJ)

Organic growth on track

Share Price: IDR6,375 | Target Price: IDR7,000 (+10%) | MCap (USD): 3.6B | ADTV (USD): 3M

Maintain BUY & IDR7,000 DCF-based TP DCF-based. Full implementation of land acquisitions law in 2015 to accelerate toll-road development.
Kualanamu � Tebing Tinggi (44km) new toll road to support long-term growth.
Tariff adjustments for two routes in Jakarta, Cikampek and Sedyatmo, in September-October.

MY Banking

OPR unchanged at 3.25%

Sector update

No impact to our earnings forecasts which incorporate a full 50bp increase only for 2015.
Operating environment still challenging.
Stay NEUTRAL. BUY AFG, HL Bank and HL Financial Group.

My One Academy