Regional Daily, Maybank KE (2015-01-30)

Daily 30 January 2015 TOP VIEWS Samsung Electronics - Prefs. shares (005935 KS) | Rating Change Samsung Electronics (005930 KS) | TP Revision Philippines Economics Minor International (MINT TB) | Acquisition Malaysia Gaming - NFO | NEUTRAL Samsung Electronics - Prefs. shares (005935 KS) Too attractive to pass on Share Price: KRW1,066,000 | Target Price: KRW1,540,000 (+44%) | MCap (USD): 22.4B | ADTV (USD): 31M Upgrade SEC�s pref shares to BUY from HOLD with revised TP of KRW1.54m (from KRW1.15m) to reflect the resurgence of capital management, potential stock split and 8% rise in OP. Capital management offers more total returns on pref shares while stock split improves liquidity and share price appreciates over time, evident by many empirical studies. These two corporate actions could result in stock re-rating, narrowing the valuation gap with common shares. For company analysis, refer to report on common shares. Click here for report » Samsung Electronics (005930 KS) The worst could be over Share Price: KRW1,378,000 | Target Price: KRW1,540,000 (+12%) | MCap (USD): 187.2B | ADTV (USD): 311M Raise FY15 OP by 8% - the first in 18 months factoring in weaker KRW & improved outlook for LSI. Increase TP to KRW1.54m (from KRW1.40m) but maintain HOLD. More healthy and balanced business mix could minimize earnings volatility. Capital management and expected YoY rise in OP are positives offset by intense smartphone competition and weakness in EUR. Pref shares (BUY) offer better risk/reward. Click here for report » Philippines Economics National accounts 4Q14 recovery likely to continue GDP increased 6.9% YoY in 4Q14, bringing 2014 growth to 6.1% compared with our 5.9% estimate. Government spending crept up in 4Q14; expect more robust performance this year to be major growth driver. Steep drop in fuel prices to boost domestic demand, in all expect GDP to rise 7% this year. Click here for report » Minor International (MINT TB) Acquires hotels in Brazil and Portugal Share Price: THB35.00 | Target Price: THB40.00 (+14%) | MCap (USD): 4.3B | ADTV (USD): 10M Maintain BUY on top sector pick and DCF-based TP of THB40 (9% WACC, 3% terminal growth), implying 27.8x PER, 4.8x P/BV and 1.0x PEG for FY15F. Co. trades at 4% disc. to peers. Acquired six hotels and over 1,600 keys in Brazil and Portugal for THB6.6b to expand presence in South America and Europe, aligned with MINT�s diversification plan. Deal to close in 1Q15. This acquisition could contribute 3% and 6% to group revenue and net profit in 2015. Click here for report » Malaysia Gaming - NFO Sector Update Will wait for better odds NFO sales will remain weak in 2015 due to the 6% GST. The GST itself will also cut NFO earnings by 10%. For Magnum and BST, we cut our earnings estimates by 1-10% but DPS estimates by a wider 11-21%. Maintain HOLD calls on Magnum and BST but trim their TPs by 11% and 9% to MYR2.63 and MYR3.18 respectively. Click here for report » COMPANY NOTES Bank of China (Hong Kong) (2388 HK) | Company Update Sands China (1928 HK) | Results Review Maruti Suzuki India (MSIL IN) | Rating Change Titan Co. (TTAN IN) | Company Update Bank Negara Indonesia (BBNI IJ) | Rating Change AMMB Holdings (AMM MK) | Company Update Bursa Malaysia (BURSA MK) | Results Review Genting Singapore (GENS SP) | Company Update SMRT (MRT SP) | Results Review Krung Thai Bank (KTB TB) | Company Update Bank of China (Hong Kong) (2388 HK) What if it sells NYCB? Share Price: HKD26.70 | Target Price: HKD28.75 (+8%) | MCap (USD): 36.4B | ADTV (USD): 41M Disposal of NYCB will lower BOCHK�s NPL ratio and raise its CET1 CAR and BVPS. Potential EPS and ROE dilution of 8.9% and 2.4ppts. Potential distribution of special DPS of HKD3.35. Stay BUY. Click here for report » Sands China (1928 HK) Tepid end to 2014 Share Price: HKD39.65 | Target Price: HKD39.65 (+0%) | MCap (USD): 41.3B | ADTV (USD): 92M 4Q14 and 2014 results were within expectations. Focus will be on grind mass going forward. Maintain HOLD call and HKD39.65 TP. Click here for report » Maruti Suzuki India (MSIL IN) 3Q missed; Demand less exuberant Share Price: INR3,725 | Target Price: INR3,420 (-8%) | MCap (USD): 18.3B | ADTV (USD): 20M Downgrade to HOLD from BUY. Maintain TP of INR3,420, at 22x FY16F PER. Prefer Bajaj Auto and Tata Motors in sector. 3Q EPS 9% below consensus, 13% below ours due to higher-than-expected expenses. Lower FY15F EPS by 2%. MSIL confirmed demand not so buoyant in 4Q due to excise-tax hike and incentives to lure car buyers. Click here for report » Titan Co. (TTAN IN) Low tax bucks 3Q; Upbeat now Share Price: INR440 | Target Price: INR484 (+10%) | MCap (USD): 6.3B | ADTV (USD): 8M Maintain BUY and raise TP to INR484 in view of a favourable demand trend in jewellery against consensus expectations of gold losing its investment value. 3QFY15 EPS of INR2.1, +15%, belied our expectations due to muted festive demand. 9MFY15 EPS of INR6.8 is 69% of FY15F EPS. We reduce our EPS forecast for FY15 by 7% to INR9.2. However we increase our EPS forecast for FY16 by 3% to INR12.3 and FY17 by 6% to INR16.1. Catalysts are reinstatement of Golden harvest investment scheme for six and 10 months, acceleration in Gold plus sales which will be additional growth drivers for FY16/17. Click here for report » Bank Negara Indonesia (BBNI IJ) Awaiting new board, D/G to HOLD Share Price: IDR6,150 | Target Price: IDR5,800 (-6%) | MCap (USD): 9.1B | ADTV (USD): 10M FY14 net profit of IDR10.8t was in line with our estimate. Solid base for new BOD to continue expansion. 2015F targets are in line with peers, with 15% loan and deposit growth. Downgrade to HOLD as we await new BOD in mid March. Maintain TP at IDR5,800 (FY15F: 8.8x PER & 1.6x PBV). Click here for report » AMMB Holdings (AMM MK) Group MD to leave Share Price: MYR6.30 | Target Price: MYR6.90 (+10%) | MCap (USD): 5.2B | ADTV (USD): 7M Having been at AMMB for almost 8 years, Ashok�s departure as Group MD will be a loss to the group. AMMB�S Deputy Group MD is a potential candidate to fill in the void. HOLD maintained on the stock, TP unchanged at MYR6.90 on a CY15 P/BV peg of 1.5x. Click here for report » Bursa Malaysia (BURSA MK) Slight overshot Share Price: MYR8.21 | Target Price: MYR8.40 (+2%) | MCap (USD): 1.2B | ADTV (USD): 1M MYR198m FY14 net profit slightly ahead of expectations, another year in strong earnings delivery. Our FY15/16 earnings forecasts are marginally raised; we introduce FY17 forecast. High yields to cushion downside. Maintain HOLD with a higher MYR8.40 TP (+20sen) after rolling forward valuations. Click here for report » Genting Singapore (GENS SP) Mixed vibes from MBS results Share Price: SGD1.06 | Target Price: SGD1.13 (+7%) | MCap (USD): 9.5B | ADTV (USD): 18M RWS may have ceded VIP volume share to MBS in 4Q14. Mass market should have stabilised further. Assuming normalised VIP win rates, we still expect decent 4Q14E EBITDA of SGD325m. Maintain HOLD for lack of catalysts & SGD1.13 TP at 9x FY15E EV/EBITDA. Share buybacks to provide support. Click here for report » SMRT (MRT SP) Lower operating costs Share Price: SGD1.73 | Target Price: SGD1.60 (-8%) | MCap (USD): 1.9B | ADTV (USD): 2M 3Q net income of SGD22.5m (+58% YoY) beat on lower operating costs, especially labour & energy. Raise EPS by 7-34% for this & new fares. Still no update on rail transition. Treatment of asset-purchase obligations remains hurdle. Maintain HOLD. TP at 20x FY16E PER raised to SGD1.60 from SGD1.36. Click here for report » Krung Thai Bank (KTB TB) Building crucial platform Share Price: THB23.00 | Target Price: THB27.00 (+17%) | MCap (USD): 9.8B | ADTV (USD): 28M We forecast 8% loan growth (KTB targets 6-7%) this year, driven by small SME and housing loans. Expect FY15F earnings to grow 9% vs 12% for consensus as we believe KTB will maintain high credit cost of 75bps to increase coverage ratio on par with sector average. Maintain BUY and TP of THB27, implying 10x 2015 PER, 1.5x P/BV, 16% ROE with 4.3% and 4.7% dividend yield in 2014-15. Click here for report » ECONOMICS Thailand Economics Is Mar rate cut possible? Rates: Continue to U/W local bonds In a slightly hawkish tone, the BoT saw a gradual recovery in the economy in 4Q14; inflation might pick up in 2H15. We maintain the view that BoT will continue to keep policy rate at 2.00% at MPC meeting on 11 Mar and expect a 25bps increase, but not until 2H15. We will only change our view if 4Q14 and 2014 GDP (due 16 Feb) disappoint. Rates: We continue to underweight local bonds in view of a slightly hawkish BoT and better value in other regional government bond markets especially IndoGBs. Click here for report »     Click here for full Regional Daily report »