Regional Daily, Maybank KE (2015-03-13)

Daily 13 March 2015 TOP VIEWS Thailand Market Compass India Marketing Ayala Land (ALI PM) | Company Update ITC Ltd (ITC IN) | Company Update Thailand Market Compass Strategy Rate cut = market positive short term Surprise rate cut. At the 11 Mar monetary policy committee meeting surprised the market with a 25bps cut in the policy rate: the vote 4-3. The market reacted positively moving from mildly negative to closing positive 12.8 points. This is purely sentiment. We believe a policy rate reduction as this point will have a limited impact on the economy and even exports. Maintain the view that public spending, especially on long-term projects, could be more effective in stimulating the economy. Sectors that respond positively to a rate cut are property developers (QH is our pick) and small banks (we pick TISCO). Big banks and insurance are potential losers. Highly leveraged companies such as ITD, CK, WHA and CPALL could benefit. Quality, high-yielding companies such as ADVANC/INTUCH, BEC, DCC, BTS, ASK and LH could be targets of �yield seekers�. Click here for report » India Marketing Marketing Taiwan marketing takeaways We met 16 investors over 6 meetings in one day. We found surprisingly good interest among investors for India�s economy and market with strong understanding of corporate developments. Investors thought Indian market was slightly ahead of fundamentals and seemed a bit skeptical of consensus EPS growth of 16% p.a. for next 2 years due to lack of evidence in recent quarters. Investors were concerned about rising NPA of state-owned banks and fate of 3 key bills pending in Indian parliament (land, mining and insurance). Investors were looking for names beyond frontline and discussed several SMID names. Of our top picks in the consumer sector, clients were interested in ITC, Titan Company and United Spirits. Among our other picks clients discussed Bajaj Auto, EROS, Tata Global Beverage and SREI Infrastructure. Click here for report » Ayala Land (ALI PM) Another period of sustained growth Share Price: PHP38.60 | Target Price: PHP44.00 (+14%) | MCap (USD): 12.8B | ADTV (USD): 11M The 2020 Vision strategy will provide strong and sustainable earnings growth. Detailed plans had been laid as early as three years ago which build on the successes of the previous five-year plan. Maintain BUY and target price of PHP44. Click here for report » ITC Ltd (ITC IN) Starts displaying pricing power Share Price: INR346 | Target Price: INR420 (+21%) | MCap (USD): 44.1B | ADTV (USD): 54M As per our channel checks, ITC is raising prices on a few brands by 12-21% (weighted average price hike of 10%). The price hikes will reach markets in the next two weeks. The upcoming price hikes more than pass on the excise duty hike of 16% on ITC's cigarette portfolio. Expect further price hikes of 2-3% in the coming months. We expect volume drop in FY16 to subside despite price hikes. We stick to our forecast of 6.6% volume drop and 14% EBIT growth in cigarettes. Maintain non-consensus BUY and Street-high TP of INR420. Click here for report » COMPANY NOTES Lippo Karawaci (LPKR IJ) | Company Update Genting Malaysia (GENM MK) | Company Update Oldtown (OTB MK) | Company Update United Envirotech (UENV SP) | Results Review Malee Sampran (MALEE TB) | Company Update Thai Airways International (THAI TB) | Company Update Lippo Karawaci (LPKR IJ) Breaking down the asset value Share Price: IDR1,105 | Target Price: IDR1,200 (+9%) | MCap (USD): 1.9B | ADTV (USD): 9M Share prices of LPKR�s listed subsidiaries (LPCK and SILO) have performed better (YTD) than LPKR. In this note we look at LPKR�s asset breakdown by incorporating the market caps of its subsidiaries. We believe current market value for LPKR is still close to its average RNAV discount of 40%. Maintain HOLD with TP of IDR1,200 (38% discount to RNAV). Click here for report » Genting Malaysia (GENM MK) Holding its own Share Price: MYR4.07 | Target Price: MYR4.60 (+13%) | MCap (USD): 6.5B | ADTV (USD): 4M GITP construction (esp. Tower 2A and Sky Plaza) is on track. Gaming operations, especially mass market, remain resilient. Maintain BUY, MYR4.60 TP. More upside in Tower 3 and 4. Click here for report » Oldtown (OTB MK) Strong white coffee market share Share Price: MYR1.74 | Target Price: MYR2.15 (+24%) | MCap (USD): 214M | ADTV (USD): 0.4M Strong market share still in Malaysia, Hong Kong, Singapore for FMCG; growth to resume post set-backs earlier. F&B margins could be impacted by possibly higher A&P costs. BUY maintained, with a higher TP of MYR2.15 (+15sen) on rolling forward valuations on unchanged 2016 PER of 18x. Click here for report » United Envirotech (UENV SP) Broad-based growth Share Price: SGD1.65 | Target Price: SGD1.93 (+17%) | MCap (USD): 1.1B | ADTV (USD): 2M 3QFY3/15 beat on higher engineering revenue & external membrane sales. 9M EPS at 79% of our FY15E. CITIC�s involvement could be game changer, providing catalysts. Maintain BUY & SGD1.93 TP, at 27x FY3/16E PER, a 10% discount to peers. Click here for report » Malee Sampran (MALEE TB) No longer lost in the melee Share Price: THB32.00 | Target Price: THB37.80 (+18%) | MCap (USD): 136M | ADTV (USD): 0.2M Stay BUY, TP THB37.8. Offers profit growth, attractively valued at 10.5x 2015 PE, 5.5% potential div yield. 25bps rate cut yesterday could lure investors seeking yield. BUY this dip. Outlook for the fruit juice market has turned positive and the positioning for the market expansion in the context of the upcoming ASEAN Economic integration by YE15, particularly the Greater Mekong Sub-region, could provide upside to forecast earnings and ROE. Reconsidering acquiring a capacity in the region. Entering into a JV or co-operation with a brand owner or distributor within the ASEAN countries is also under consideration. Click here for report » Thai Airways International (THAI TB) A bumpy ride Share Price: THB11.40 | Target Price: THB12.00 (+5%) | MCap (USD): 758M | ADTV (USD): 2M We expect weak turnaround in FY15-16 from intense competition and yield pressure. Transformation plan comes with extraordinary expenses that curb earnings growth. Medium and long-term outlook remain challenging from aircraft deliveries, open skies policy and oversupply. Oil rebound is likely in the short term. Maintain SELL with TP of THB12.0, based on average value of 0.7x P/BV and 7x EV/EBITDAR. Downside risks still persist from slow recovery, oil rebound and extra expenses. (FULL REPORT WILL BE OUT SOON) ECONOMICS Malaysia Economics Industrial Production, Jan �15 Sustained broad-based growth Industrial output rose on expansions in all three sectors � manufacturing, mining, electricity Sixth consecutive months of broad-based growth Mainly on higher output of both export-based and domestic-based manufacturing industries as well as crude oil. (FULL REPORT WILL BE OUT SOON)