Regional Daily, Maybank KE (2015-02-05)

Daily 05 February 2015 TOP VIEWS Singapore Banks | OVERWEIGHT Indonesia Construction | OVERWEIGHT AirAsia X Bhd (AAX MK) | Rating change Inari Amertron (INRI MK) | Results review Singapore Banks T&I soft patch won�t break banks Sector 4Q14 results may fall short on unusually poor market-related income. Could have affected DBS, though operating metrics likely stayed strong. Consensus too optimistic on OCBC. Maintain OVERWEIGHT with higher rates as catalysts further out. DBS still our top pick. Click here for report » Indonesia Construction All eyes on capital stimulus for SOEs Sector Concern over rights issue price at way below market price overdone, as approval of the capital-injection programme has not been decided yet. No approval = no rights issue. Our recent conversation with several SOE contractors suggests parliament has not approved nor disapproved capital-injection proposal. We will closely monitor this, as a decision should be made soon. Maintain sector OVERWEIGHT with PTPP and ADHI remaining our Top Picks. BUY on weakness. Click here for report » AirAsia X Bhd (AAX MK) Rights issue and new management Share Price: MYR0.66 | Target Price: MYR0.49 (-25%) | MCap (USD): 428M | ADTV (USD): 2M AAX�s rights issue with free warrants is highly dilutive; share base up 75% after the warrants conversion. Principal shareholder taking an active role as Group CEO. Downgrade to SELL (from HOLD) with a new TP of MYR0.49. Click here for report » Inari Amertron (INRI MK) Scaling greater heights Share Price: MYR2.86 Target Price: MYR3.70 (+29%) MCap (USD): 493M ADTV (USD): 2M 1HFY6/15 earnings beats our and consensus forecasts. Set to accelerate on two short-term catalysts: (i) positive exposure to strengthening USD and (ii) capacity expansion. Forecasts unchanged pending briefing today. Maintain BUY with an unchanged ex-rights TP of MYR3.70 (17x CY15 PER). Click here for report » COMPANY NOTES MY & SG Bond Market Watch Regional Plantations | NEUTRAL Wynn Macau (1128 HK) Power Impulse PVR (PVRL IN) | Results review Alam Sutera Realty (ASRI IJ) | Rating change Fixed Income Foreign Flows, Dec 14 Eco World Development (ECW MK) | Rating change Puregold Price Club (PGOLD PM) | Company update SATS (SATS SP) | Rating change Central Plaza Hotel (CENTEL TB) | Results preview Vietnam Monthly View MY & SG Bond Market Watch On Bull-Flattening Stance Fixed Income Research Malaysia: MGS staged a rebound in January with bond yields in general recovering back to/close to the pre-selloff level in November. BNM released the Dec-14 foreign holdings data which shows -MYR10.6b outflow from total debt securities, but MGS foreign holdings stayed resilient as outflow was wholly driven by discount instruments. With mostly dovish global rates and MGS seemingly shrugs off Malaysia's idiosyncratic weakness, there seems to be more reason to suggest bond yield will stay strong in the near term. Singapore: SGS curve was pretty much tracking the UST on a bull flattening stance except for short-term rates which jump after the unexpected MAS move to reduce the slope of policy band slowing the pace of SGD appreciation. Click here for report » Regional Plantations Indonesia mulling higher subsidy? Sector We doubt the Indonesian government will approve a higher biodiesel subsidy. But if it does, the move will be positive for palm biodiesel demand and CPO price. Sarawak freezes new applications for big scale plantation development. Its impact will not be immediate, in our view. 12M Neutral view maintained. Top BUYs in the region: BAL, FR, GENP, SOP, and SIME. SELL IOI Corp for steep valuation. Click here for report » Wynn Macau (1128 HK) Uncertain outlook Share Price: HKD21.80 | Target Price: HKD19.30 (-11%) | MCap (USD): 14.6B | ADTV (USD): 20M EBITDA outperformed slightly. Wynn Palace opening delayed. Outlook uncertain as smoking ban may be extended to VIPs. Maintain forecasts, HOLD call and HKD19.30 TP for now. Click here for report » Power Impulse Utilities & renewables weekly Sector HK Utilities was the best performing sector (28 Jan � 3 Feb), up 1.2% WoW, while solar fell 2.4% WoW. Spot polysilicon price fell 0.2% WoW to USD19.08/kg. Spot wafer price dropped 1.3% to USD0.853/piece. The Qinhuangdao spot coal price (5,500 kcal/kg, Shanxi Premium Blended) declined 1% WoW to CNY500/tonne. Click here for report » PVR (PVRL IN) Good picture Share Price: INR689 | Target Price: INR838 (+22%) | MCap (USD): 446M | ADTV (USD): 0.7M Maintain BUY and TP of INR838 based on 11x FY16F EV/EBITDA. Catalysts from increasing penetration of multiplexes in India & acquisitions of regional players. 3QFY15 EBITDA margin of 19.8% beat our 18.2%. But PAT only in line because of higher-than-expected D&A and interest cost. Click here for report » Alam Sutera Realty (ASRI IJ) Still holding up Share Price: IDR595 | Target Price: IDR650 (+9%) | MCap (USD): 924M | ADTV (USD): 5M Upgrade to HOLD and raise TP to IDR650 (64% disc. to RNAV) on attractive valuations. ASRI booked pre-sales of IDR4.3t (-10% YoY) which missed its FY14 target. ASRI targets pre-sales of IDR5.8t (+36% YoY). Our pre-sales estimate for FY15 is IDR5.27t (+24% YoY). Pushbacks are still on the highly leveraged balance sheet and heavy investment in GWK Cultural Park in Bali. Click here for report » Fixed Income Foreign Flows, Dec 14 MGS steady, discount instrument shaky Fixed Income Research Malaysia: In December, foreign holdings of total debt securities posted another large MoM decrease of MYR10.6b to MYR225.9b, in line with our estimate MYR8-13b, as foreigners were still aggressive in shedding positions in discount instruments, but against our expectation of seeing accelerated outflows from MGS, foreign holding stayed resilient at MYR145.3b/44.1%. Regional: For the countries that we cover for foreign holdings of government bonds, Dec-14 data turns red with USD0.9b outflows, but in January regional bond sentiment was broadly positive; higher frequency data from Indonesia shows a record monthly inflow of IDR38.6t propelling foreign holdings to a new high of IDR500t as of 29th January 2015. Click here for report » Eco World Development (ECW MK) Seals Pudu Jail deal, finally Share Price: MYR2.29 | Target Price: MYR2.18 (-5%) | MCap (USD): 326M | ADTV (USD): 0.3M Neutral on ECW�s latest tripartite agreement to redevelop Pudu Jail (Bukit Bintang City Centre). JV to enhance our post-share split RNAV/shr est. by +27sen. Share price now above our post-share split TP of MYR2.18 (on an unchanged 0.73x P/RNAV peg). Downgrade to HOLD. Click here for report » Puregold Price Club (PGOLD PM) Positive indications and acquisition Share Price: PHP41.95 | Target Price: PHP42.50 (+1%) | MCap (USD): 2.6B | ADTV (USD): 3M PGOLD to acquire nine supermarkets in Central Luzon. No details yet but deal likely to be value accretive. FY14 earnings could hit PHP4.4b-4.5b, in line with forecast. Forecasts unchanged for now as we await additional details on deal. Maintain BUY. Click here for report » SATS (SATS SP) Renewed focus on profitability Share Price: SGD2.97 | Target Price: SGD2.80 (-6%) | MCap (USD): 2.5B | ADTV (USD): 3M 3QFY3/15 ahead on further headcount reductions & better cargo performance. EPS raised by 2-6% for lower costs. TFK continues to cede market share on overcapacity at Narita Airport. Upgrade to HOLD from SELL. TP lifted to SGD2.80 from SGD2.70, still at 16x FY3/16E EPS. Click here for report » Central Plaza Hotel (CENTEL TB) Higher occupancy but still expensive Share Price: THB33.75 | Target Price: THB38.00 (+13%) | MCap (USD): 1.4B | ADTV (USD): 3M Maintain HOLD on high valuations with TP of THB38, implying 30x PER, 4x P/BV for FY15F. Prefer MINT (BUY TP THB40) or ERW (BUY TP THB6) on hotel and food business recovery. Occupancy rate in 4Q14 was 81% (vs 73% in 3Q14, 80% in 4Q13) and ARR increased 4%. Thus, RevPAR grew 5% YoY. Totals system sales up 9% with same-store-sales growth and outlet expansion of 1.6% and 5%. Expect net profit of THB388m in 4Q14, +131% QoQ and +34% YoY on hotel business recovery and margin expansion. Consensus expects NP of THB478m. Click here for report » Vietnam Monthly View Recovery in Jan to extend Strategy The VN-Index gained 5.6% in Jan'15, recovering 11.1% since 18 Dec last year. Banks led the gain, rallying 18.5%, spearheaded by BID and CTG. Total volumes on the two bourses however fell by nearly 11% to USD122m as many investors remained doubtful of a sustainable market recovery and missed the rally in bank stocks. Click here for report »