Regional Daily, Maybank KE (2014-11-06)

Daily 06 November 2014 TOP VIEWS Regional Gaming | OVERWEIGHT Want Want China (151 HK) | Company Visit Central Pattana (CPN TB) | Results Preview Riverstone Holdings (RSTON SP) | Company Visit Regional Gaming Sector update Positive data points is key Roadshow feedback was positive; Clients are looking out for narrower Macau GGR YoY contractions before investing. We believe it will happen as Oct 2014 Macau GGR contraction was the worst on record and comparisons will get easier. BUY Galaxy, MGM China, Sands China, and Wynn Macau for Macau exposure. BUY GENM and Travellers for ASEAN exposure. Click here for report » Want Want China (151 HK) BUY on mispricing opportunity Share Price: HKD10.06 | Target Price: HKD12.30 (+22%) | MCap (USD): 17.1B | ADTV (USD): 22M Our discussion with WWC should clear up market concerns. Maintain BUY on recovering Hot-Kid milk sales and normalizing channel inventory. New TP remains pegged at 25x FY15F PER. Forecast 10.3% EPS CAGR for FY15-16. We believe 2015 EPS growth acceleration largely guaranteed given: i) cheap NZ milk powder cost; ii) CNY festival sales; iii) new products contribution and better POS efficiency. Overall, WWC reassures 2H14F sales growth broad-based to be better than 1H14. GPM should benefit from soft input cost while SG&A control should be stable as earlier guided. Click here for report » Central Pattana (CPN TB) A laggard play Share Price: THB48.50 | Target Price: THB60.00 (+24%) | MCap (USD): 6.7B | ADTV (USD): 7M Maintain BUY and DCF-based TP of THB60 (8.8% WACC and 5% terminal growth). Potential ST catalyst from strong earnings momentum in 4Q14 & FY15 and high season for tourism in 4Q14. CPN is an indirect play on tourism recovery. Expect 3Q14F earnings to be THB1.9b (EPS THB0.42), up 2% QoQ and 28% YoY. Gain from Chiang Mai will be booked in 3Q and amortized over 30 years. Results on 14 Nov. Expansion plan is intact; three malls in FY15 and four malls in FY16. Project in Malaysia is still under market study; opening in 2Q17. Click here for report » Riverstone Holdings (RSTON SP) NDR feedback: In growth mode SShare Price: SGD0.98 | Target Price: SGD1.21 (+23%) | MCap (USD): 281M | ADTV (USD): 0.2M Keen interest in company�s capacity expansion and dominance of lucrative cleanroom gloves. Good earnings visibility from long-term order commitments for new capacity and strong product demand. Maintain BUY & SGD1.21 TP (15x FY15E EPS). Catalysts from faster capacity expansion and above-average cleanroom-glove growth. Click here for report » COMPANY NOTES Power Impulse Sinotrans (598 HK) | Company Update Express Transindo (TAXI IJ) | Company Visit Malaysia Marine & Heavy Engineering (MMHE MK) | Company Update Perisai Petroleum (PPT MK) | Results Review Tenaga Nasional (TNB MK) | Company Update Petronas Gas (PTG MK) | Company Update Gas Malaysia (GMB MK) | Company Update Puregold Price Club (PGOLD PM) | Results Review StarHub (STH SP) | Results Review Sembcorp Marine (SMM SP) | Results Review Valuetronics (VALUE SP) | Results Review Thanachart Capital (TCAP TB) | TP Revision Tech-Tracks Power Impulse Sector Update Utilities & renewables weekly Chinese IPP was the best performing sector (29 Oct to 4 Nov), up 8.8% WoW, while gas distribution fell 1.6% WoW. Spot polysilicon price was unchanged at USD20.8/kg. Spot wafer price was unchanged at USD0.88/piece. Qinhuangdao spot coal price (5500 kcal/kg, Shanxi Premium Blended) was unchanged at CNY500/tonne. Click here for report » Sinotrans (598 HK) Over-reaction to parent-asset issue Share Price: HKD5.15 | Target Price: HKD7.30 (+42%) | MCap (USD): 3.1B | ADTV (USD): 14M Reiterate BUY as the fraudulent cases are related to the parent company assets, not any subsidiaries of the listco. Sinotrans has small presence (CNY50m revenue in FY14) in collateral management, 2.3% of storage/terminal revenue (0.1% of total revenue); And it has strict internal control measures. No earnings revisions. Plunge in share price is an over-reaction, and we think 11.5x FY15F PER is not expensive. Click here for report » Express Transindo (TAXI IJ) NDR feedback + results review Share Price: IDR1,280 | Target Price: IDR1,350 (+5%) | MCap (USD): 226M | ADTV (USD): 1M We met over 40 funds and feedback was generally neutral to slightly positive. New fleet expansions remain on track. Less impact from the upcoming fuel-price hike on partnership business model suggests potential room to raise daily collection rate on new partnership contract. Maintain HOLD with slightly lower TP of IDR1,350 (18x 2015 PER) on marginal FY14 earnings revision. Click here for report » Malaysia Marine & Heavy Engineering (MMHE MK) In line; downgrade earnings & TP Share Price: MYR2.20 | Target Price: MYR2.30 (+5%) | MCap (USD): 1.1B | ADTV (USD): 0.5M 9M14 results within our expectation, above consensus. Cut 2016 earning by 13%, on expected lower order wins in 2015 (-20%); maintain 2014/15 forecasts. Downgrade to HOLD. TP reduced to MYR2.30, on lower EV/ order backlog valuation peg of 2.4x (-1SD) vs. 2.9x (mean). Click here for report » Perisai Petroleum (PPT MK) Sub-par 3Q, downgrade to HOLD Share Price: MYR1.00 | Target Price: MYR1.00 (+0%) | MCap (USD): 357M | ADTV (USD): 1M Results significantly disappoint. Cut 2014-16 earnings by 37%-84%, on lower DCRs for its upcoming 2 JUs, MOPU and E3 vessels, and higher OPEX. Downgrade to HOLD with a lower MYR1.00 TP (14x 2015 PER); rising risk of immobilisation of E3 and MOPU. Click here for report » Tenaga Nasional (TNB MK) Getting compensated Share Price: MYR13.46 | Target Price: MYR16.00 (+19%) | MCap (USD): 22.8B | ADTV (USD): 25M To receive MYR848m for its higher-than-budgeted fuel costs from Jan 2014 to Dec 2014; this effectively signifies the presence of a pass-through mechanism. That TNB�s fuel cost would still be above budget in 2H14 suggests its base earnings could be higher than we expected. Reiterate BUY with an unchanged TP of MYR16.00. Click here for report » Petronas Gas (PTG MK) On dividends and Pengerang Share Price: MYR21.80 | Target Price: MYR23.50 (+8%) | MCap (USD): 13.0B | ADTV (USD): 8M PTG is still maintaining a 70% dividend payout target for 2014, to be paid on a quarterly basis. Parent PETRONAS could soon announce the award of the Pengerang re-gasification plant to PTG; commissioning date could be earlier than we expected. Maintain HOLD, TP unchanged at MYR23.50. Click here for report » Gas Malaysia (GMB MK) Downside to volume growth? Share Price: MYR3.50 | Target Price: MYR3.40 (-3%) | MCap (USD): 1.4B | ADTV (USD): 0.5M It appears GMB�s purchase price for subsidised gas was raised by MYR1.50/mmBTU, in tandem with its recent MYR0.45/ mmBTU average selling price increase. This implies a lower proportion of LNG (assuming spreads are maintained), which indicates lower overall volumes. FY14/15/16 earnings are lowered by 1%/7%/10%, TP lowered to MYR3.40 (-11%), maintain HOLD. Click here for report » Puregold Price Club (PGOLD PM) Margins normalize in 9M14 Share Price: PHP36.15 | Target Price: PHP36.75 (+2%) | MCap (USD): 2.2B | ADTV (USD): 4M 9M14 earnings up 14% YoY, 77% of full-year forecast. From 101-bp YoY decline in 1H14, 9M14 GPM of 17.1% down only 18bps YoY due to timing of supplier discount booking. Competitive pricing among retailers may not be as damaging as initially thought. Keep HOLD as we review our forecasts. Click here for report » StarHub (STH SP) No surprises; iPhone hump ahead Share Price: SGD4.20 | Target Price: SGD4.40 (+5%) | MCap (USD): 5.6B | ADTV (USD): 5M 3Q14 in line, with 9M14 profit forming 74% of our FY14E forecast. Weaker 4Q expected from margin pressure from popular new handset models. Trim EPS by 1-2%. Maintain HOLD on lack of catalysts, but supported by 4.8% yields. DCF TP down to SGD4.40 from SGD4.44. Click here for report » Sembcorp Marine (SMM SP) Margins & repair disappointed Share Price: SGD3.68 | Target Price: SGD3.80 (+3%) | MCap (USD): 5.9B | ADTV (USD): 11M 3Q14 PATMI of SGD132.0m missed on weaker margins and flat ship-repair revenue. Management expects ship repair to jump in 4Q14. Cut FY14E-16E EPS by 2-8% for lower margins. Maintain HOLD & SGD3.80 TP (0.71x FY15E EV/backlog). Click here for report » Valuetronics (VALUE SP) Down the hill, as expected Share Price: SGD0.34 | Target Price: SGD0.25 (-26%) | MCap (USD): 99M | ADTV (USD): 1M 2QFY3/15 results in line. Revenue and net profit down 0.7% and 8.4% YoY respectively. Continues to face fierce competition and price pressure in lighting, a de-rating catalyst. EPS trimmed by about 1%. Maintain contrarian SELL and SGD0.25 TP, at 4.4x FY16E EPS. Click here for report » Thanachart Capital (TCAP TB) Cut TP & earnings on slower recovery Share Price: THB35.00 | Target Price: THB33.00 (-6%) | MCap (USD): 1.4B | ADTV (USD): 4M Maintain HOLD and cut TP to THB33 (from THB37), implying 7.5x 2015 PER and 0.8x P/BV. Stick with big banks and TISCO. Bank expects -1% and 5% loan growth for this year and next; slow recovery on HP asset quality given weak agricultural prices (rice and rubber). Lower earnings forecast by 8%/10% on weak loan growth of -2%/+2% for 2014/15 as auto loan demand remains slow. Click here for report » Tech-Tracks Regional Quants BoJ�s QQE2 stunts regional green shoots In tandem with developed markets, all markets in Asia ex-Japan made temporary lows in mid Oct. Japan�s QQE2 stimulus plan announced on 31 Oct 2014 has lifted US Dollar/Yen as well as other regional currency pairs. The concomitant pressure on Asian currencies has caused investors to be slightly cautious on regional equity markets. Top BUYs: Jack Chia Industries (Thailand) PCL (JCT TB), D&L Industries Inc (DNL PM), Hap Seng Consolidated Berhad (HAP MK), Pax Global Technology Limited (327 HK), PT Pembangunan Perumahan Persero Tbk (PTPP IJ), Danang Housing Investment Development Company (NDN VN) and QAF Ltd (QAF SP). Click here for report » ECONOMICS Thailand Economics Thailand Macro Thailand Economics Neutral MPC statement But BoT likely to be slightly hawkish As expected, MPC members voted (6-1) in favour of maintaining its benchmark interest rate at 2% for the fifth straight meeting, with one member voting to reduce the policy rate by 0.25%. We view the post-decision statement as neutral and do not expect a rate cut, continuing to believe it is possible that a slightly hawkish tone will start to be perceived from the MPC statement, maybe from this December's meeting. Maybank FX Research looks for 32.70 USD/THB for end-2014, peak at 32.85 3Q15, given the expectations US Fed rate normalization would begin in 2H15. Click here for report » Thailand Macro Promoting SMEs Funding � the main concern SME promotion is a national agenda and a National SME Promotion Committee, to be chaired by the PM, will be established. High-growth sectors including electronics, automobile parts, F&B, energy, tourism, healthcare, ICT businesses, education, spa and wellness will be supported. Funding is the main concern for SMEs, with potential solutions including a proposal to boost the credit guarantee limit and SME venture capital fund. Enhance the competitiveness of SMEs through e-commerce and producing new digital entrepreneurs are in line with the current government�s policy highlight of the digital economy. Click here for report »     Click here for full Regional Daily report »