Regional Daily, Maybank KE (2015-03-16)

Daily 16 March 2015 TOP VIEWS Malaysia O il & Gas | OVERWEIGHT Philippine Strategy | OVERWEIGHT Indonesia Strategy Lenovo Group (992 HK) | TP revision Malaysia O il & Gas Key takeaways from conference Sector update The pitch reaffirms a challenging 2015 for the industry. FPSO awards are set to fall to 5-8 units in 2015. UMWOG�s tone suggests 2015 earnings may fall short. PVD is not ruling out rig fleet expansion, overseas JV opportunities. No rating change. BArmada, Yinson, Perdana and Dialog remain our key BUYs. Click here for report » Philippine Strategy PSEi not held back by politics etc Strategy update Optimism over growth prospects remains the market�s driving force. Index rise not deterred by politics and regulatory uncertainty because due processes being followed. Model portfolios outperform the PSEi by 241bps as of Friday, replace JFC with FPH. Click here for report » Indonesia Strategy US-dollar exposure Strategy update Remain NEUTRAL, index target 5,500. Prefer mass consumption, infrastructure, industrial estate, healthcare and banking sectors. Top-100 listed companies have limited exposure to USD debts. Negative earnings impact could come from pricing mismatch. The impact could be mitigated by lower commodity prices. Click here for report » Lenovo Group (992 HK) Proceed with caution Share Price: HKD10.94 | Target Price: HKD8.80 (-20%) | MCap (USD): 15.6B | ADTV (USD): 57M Lower TP to HKD8.80 (from HKD9.00) as we cut 4Q15/2016 EPS by 4%/2% to factor in lower PC shipment and potential weakness in end demand in EM/EU/JP markets. Maintain Sell. With PC upgrade cycle largely over, Lenovo has to rely on cost cutting and accelerate turnaround of Moto & server business or risk future earnings falling behind expectations. Rapid fall of global FX against USD led Lenovo to re-price its goods which could curb demand. Cos with high exposure to EM/EU with USD as functional FX & slim margins are at risk. Click here for report » COMPANY NOTES Piggy Banks & Crystal Ball China Banks | OVERWEIGHT TCL Communication (2618 HK) | Rating change BIMB Holdings (BIMB MK) | Results review KNM Group (KNMG MK) | Company update SP Setia (SPSB MK) | Company update UMW Oil & Gas (UMWOG MK) | Company update Vard Holdings (VARD SP) | Flash Note WHA Corporation (WHA TB) | Flash note Piggy Banks & Crystal Ball Regional Banks Bi-weekly No. 9 Sector update Potential rebound in Singapore banks. Recent fall in share price could be related to the surge in SIBOR. We believe the rising SIBOR will be positive to the NIM of Singapore banks, especially for DBS given its strong deposit franchise. More earnings & net rating downgrades for Thai banks. Recent share price rebound was related to the surprising rate cut. Market has concerns over weak loan demand and deteriorating asset quality. We recently downgraded KBANK and SCB to HOLD. Click here for report » China Banks Feb 2015: Rebound in M2 growth Sector update M2 growth & loan growth higher than Bloomberg consensus. Local government trust loans to be replaced by bonds. We expect credit costs of large state-owned banks will rise to 60-120bps in 4Q14, with chance to fall in 2015. Keep O/W. Click here for report » TCL Communication (2618 HK) Risk & reward neutralized; Cut to HOLD Share Price: HKD8.18 | Target Price: HKD8.00 (-2%) | MCap (USD): 1.3B | ADTV (USD): 4M Downgrade to HOLD and cut TP to HKD8 (8x FY15PER) from HKD10 (FY10x PER). Rapid fall of global EM/EU FX against USD/HKD will lead TCL to re-price its goods which could curb future demand. Companies with high exposure to EM with USD/HKD as functional FX and slim margins could be most at risk. Click here for report » BIMB Holdings (BIMB MK) FY14 results above expectations Share Price: MYR3.99 | Target Price: MYR4.40 (+10%) | MCap (USD): 1.6B | ADTV (USD): 0.8M Net profit of MYR532m positively surprises on lower-than-expected credit cost. Expect slower financing growth and further NIM compression, mitigated by lower credit costs; FY15 net profit raised 4%, trimmed 1% for FY16. Maintain HOLD with a higher SOP-derived TP of MYR4.40 (MYR4.20 previously). Click here for report » KNM Group (KNMG MK) A foot into Thai�s renewable energy Share Price: MYR0.78 | Target Price: MYR1.00 (+28%) | MCap (USD): 346M | ADTV (USD): 6M A sound purchase, at 3-5x earning multiple, if executed well. Earnings pending review, can add net profit of MYR27m p.a.. Maintain BUY, MYR1.00 TP (0.6x EV/backlog) under review. Click here for report » SP Setia (SPSB MK) Largest developer in the making? Share Price: MYR3.35 | Target Price: MYR4.07 (+21%) | MCap (USD): 2.3B | ADTV (USD): 1M Positive on potentially Sime Darby emerging as a major shareholder, leading to a GO. The take-over should reduce flight risk of key management and allow SPSB to tap onto Sime�s huge landbank. No change to earnings forecasts, MYR4.07 TP (0.73x P/RNAV) and BUY rating. Click here for report » UMW Oil & Gas (UMWOG MK) Tough year but selling overdone Share Price: MYR2.14 | Target Price: MYR2.60 (+21%) | MCap (USD): 1.3B | ADTV (USD): 3M Cut FY15-17 EPS forecasts by 18%-31% (steepest in FY15) on lower operating days and higher dry docking costs. Cut SOP-based TP by 26% to MYR2.55 post EPS adjustments, incorporating a 10% discount for a weak short-term outlook. Selling overdone (-10% YTD). Value emerging, close to replacement value. Reiterate non-consensus BUY. Click here for report » Vard Holdings (VARD SP) Delays & terminations Share Price: SGD0.52 | Target Price: SGD0.58 (+12%) | MCap (USD): 441M | ADTV (USD): 2M Two PSV contracts terminated after E.R. Offshore�s bankruptcy. No losses expected, aided by 10% prepayment for one. Delivery of four other vessels postponed by six months. Cut FY15E-17E EPS by up to 6%. GGM TP drops from SGD0.60 to SGD0.58. Maintain HOLD as depressed valuations may make it an M&A/privatisation target. Click here for report » WHA Corporation (WHA TB) Reports getting >50% of HEMRAJ Share Price: THB34.25 | Target Price: THB42.40 | MCap (USD): 1.4B | ADTV (USD): 3M Maintain BUY with 12M TP of THB4.2, DCF-based or THB42 on pre-par split basis. WHA reported it received commitments to purchase equivalent to over 50% of HEMRAJ. Tender offer for remaining shares at THB4.5 continues until 10 Apr. New forecast and target price include the first purchase of 22.5% of HEMRAJ, capital increase bringing in THB8b. Our units are on par split basis. With the acquisition of HEMRAJ looking certain, financial risks heighten. However with interest rate trend remaining low and management that is very savvy in financial matters, our BUY call tacitly assumes it can find a way to break down accumulated debt load without stripping HEMRAJ too much. Click here for report »