Regional Daily Ideas Troika Top Stories

Transcription

Regional Daily, 12 November 2014
5
Regional Daily
Ideas Troika
Top Stories
Goldpac Group (3315 HK)
Technology
BUY HKD7.70 TP: HKD9.50
Mkt Cap : USD824m
Pg3
We initiate coverage on Goldpac, China's largest supplier of financial cards.
We believe the company is a key beneficiary of the country's migration
towards smart cards. We expect Goldpac to experience strong earnings
growth in FY13-16.
Analyst: Jackson Yu ([email protected])
GD Express Courier (GDX MK)
Transport - Logistics
BUY MYR2.01 TP: MYR2.42
Mkt Cap : USD505m
Pg4
We initiate coverage on GDEX with a BUY recommendation and DCF
derived TP of MYR 2.42. We believe GDEX will continue its strong earnings
growth trend and opportunity in AEC is a key catalyst to drive GDEX's
earnings higher.
Analyst: Jerry Lee ([email protected])
Nam Cheong (NCL SP)
Energy & Petrochemicals - Oil & Gas Services
BUY SGD0.41 TP: SGD0.61
Mkt Cap : USD667m
Pg5
Nam Cheong’s 9M14 PATMI met 93/99% of our/street full-year FY14
estimates as shipbuilding margin surged to 24% from 17-20%. Raise
estimates by 11-13% for FY14-16F. Shallow water operations are unaffected
by oil price fall.
Analyst: Lee Yue Jer, CFA ([email protected])
Pg6
Reaching a Pinnacle
Other Key Stories
Indonesia
Tower Bersama Infrastructure (TBIG IJ)
Communications
NEUTRAL IDR9,000 TP: IDR8,600
Malaysia
Tambun Indah Land (TILB MK)
Property- Real Estate
Tune Ins (TIH MK)
Financial Services – Insurance
Singapore
Ezion Holdings (EZI SP)
BUY SGD1.48 TP: SGD2.65
Analyst: Jeffrey Tan ([email protected])
Pg7
Analyst: Loong Kok Wen, CFA ([email protected])
Pg8
Rejuvenating Its Multi-Channel Growth
Analyst: Kong Ho Meng ([email protected])
Pg9
New Strategy Takes Shape
Analyst: Lee Yue Jer, CFA ([email protected])
Genting Singapore (GENS SP)
Consumer Cyclical – Gaming
NEUTRAL SGD1.04 TP: SGD1.14
Pg10
Silverlake Axis (SILV SP)
Technology - Software & Services
SELL SGD1.35 TP: SGD1.03
Pg11
See important disclosures at the end of this report
Land Deal Terminated
Just Plain Unlucky
Analyst: Kong Heng Siong ([email protected])
Valuations a Tad Too Rich
Analyst: Jarick Seet ([email protected])
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1
Regional Daily, 12 November 2014
Thailand
BEC World (BEC TB)
Communications – Media
SELL THB49.3 TP: THB36.4
Pg12
Analyst: Wanida Geisler ([email protected])
Indorama Ventures PCL (IVL TB)
Energy & Petrochemicals
BUY THB22.50 TP: THB29.90
Pg13
Jay Mart (JMART TB)
Consumer Cyclical - Distribution & Wholesale
Pg14
Land and Houses (LH TB)
Property - Real Estate
Pg15
Quality Houses (QH TB)
Pg16
Thai Oil (TOP TB)
Pg17
Results Continue To Be Sluggish
Better Prospects In 2015
Analyst: Kannika Siamwalla, CFA ([email protected])
9M14 Core Earnings Decline 16.6% YoY
Analyst: Veena Naidu ([email protected])
Unexciting 3Q14 Results
3Q14 Should Be This Year’s Best Quarter
Getting Stronger After The Worst Is Over
Analyst: Kannika Siamwalla, CFA ([email protected])
2
Initiating Coverage, 12 November 2014
Goldpac Group (3315 HK)
Buy
Technology - Technology
Market Cap: USD824m
Target Price:
Price:
HKD9.50
HKD7.70
Macro
Risks
Unique Play On China's Smart Card Migration
Growth
Value
Goldpac (3315 HK)
Relative to Hang Seng Index (RHS)
9.90
191
9.40
181
8.90
171
8.40
161
7.90
151
7.40
141
6.90
131
6.40
121
5.90
111
Source: Bloomberg
Avg Turnover (HKD/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (HKD)
Free float (%)
Share outstanding (m)
Shareholders (%)
4.50m/0.59m
23.6
23.4
5.39 - 9.50
25
830
Mr. Lu Run Ting
Gemalto
BOCI
43.4
18.4
10.9
Share Performance (%)
Absolute
Relative





Technology leader. As a fully-integrated financial card supplier in
China, Goldpac is one of few providers in the country capable of
delivering international EuroPay, Mastercard and Visa (EMV)-standard
integrated solutions, the first personalisation services provider in China
and the only domestic manufacturer certified by all six leading payment
card organisations.
Explosive growth of smart card industry. We foresee explosive
shipment volume growth in smart cards in FY14-16F, driven by the rapid
migration of chip-based banking cards in China. We forecast that 2015
could be the strongest ever year for Goldpac, given that all new financial
cards issued in China will be smart cards. Additionally, Goldpac is wellpositioned to capture this robust growth in demand. As the ASP for a
smart card is about 10 times that of a magnetic one, we expect a 40%
turnover CAGR in FY13-16F, mainly driven by the enhanced profit mix
from the smart cards segment.
New products to drive long-term growth. We believe Goldpac is wellpositioned to develop new revenue streams beyond banking cards. New
products like social security cards and smart city cards are in the
pipeline. Following its IPO, increasing research & development (R&D)
will be the key to standing out from traditional card manufacturers and
becoming a full-services solution provider and the leader in smart
payment, similarly to its strategic shareholder, Gemalto (GTO NA, NR).
Initiate coverage with a BUY and TP of HKD9.50 We set our TP at 17x
FY15F P/E, on par with its post IPO 1-year forward P/E average.
Goldpac currently trades at 14x FY15F P/E, substantially below its
A-share peers' 30x and Gemalto's 15x FY15F P/Es.
Risks: i) ASP dropping faster than expected, ii) fluctuations in market
prices for IC chips, and iii) new payment technologies. See page 22 for
more details on risks.
YTD
1m
3m
6m
2.7
7.2
3.5
25.6
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
17.9
Total turnover (CNYm)
677
1,112
1,546
2,478
3,082
Reported net profit (CNYm)
115
141
227
362
471
Recurring net profit (CNYm)
103
168
257
379
481
Recurring net profit growth (%)
67.8
63.6
53.0
47.1
27.0
1.7
5.2
8.0
12m
Shariah compliant
Recurring EPS (CNY)
0.20
0.30
0.30
0.44
0.56
Jackson Yu +852 2103 9424
DPS (CNY)
0.10
0.17
0.07
0.11
0.14
[email protected]
Recurring P/E (x)
30.1
20.6
20.5
13.9
10.9
P/B (x)
14.5
2.3
3.2
2.7
2.3
P/CF (x)
13.4
32.8
15.3
11.3
8.5
1.6
2.8
1.1
1.8
2.3
EV/EBITDA (x)
20.1
9.0
12.6
7.8
5.4
Return on average equity (%)
63.9
17.5
15.3
21.2
23.4
Dividend Yield (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)


2

.
2
0
.
3
0
0
.
1
0
0
We initiate coverage on Goldpac, China's largest supplier of financial .
0
cards by value and volume, with a BUY and HKD9.50 TP (17x FY15F 0
P/E), implying a 23% upside. We believe the company is a key 0
beneficiary of the country's migration towards smart cards, which enjoy
higher ASP vs traditional magnetic ones. For FY13-16, we forecast
Goldpac to deliver CAGRs of 40% in turnover and 42% in recurring net
profit.
Sep-14
May-14
Jul-14
91
Mar-14
101
4.90
160
140
120
100
80
60
40
20
Jan-14
5.40
Dec-13
Vol m
Price Close




Source: Company data, OSK-DMG
net cash net cash net cash net cash net cash
(2.0)
2.4
(2.6)
3
Initiating Coverage, 12 November 2014
Buy
Transport - Logistics
Market Cap: USD505m
Target Price:
Price:
MYR2.42
MYR2.01
Macro
Risks
Poised For a New Quantum Leap
Growth
Value
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.20
219
2.00
199
1.80
179
1.60
159
1.40
139
1.20
119
1.00
99
0.80
8
7
6
5
4
3
2
1
79


Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Shareholders (%)
GD Express (M) SB
Singapore Post
GD Holdings International
0.62m/0.19m
20.4
20.4
0.93 - 2.22
27
841
31.1
25.8
9.7


About GD Express Courier (GDEX). GDEX is a leading express
delivery service provider in Malaysia that is growing strongly. It is
currently expanding aggressively on the back of increased business
volume and is embarking into the logistics solutions segment. FY15
(Jun) is an investment year for GDEX and we opine that the company is
poised for stronger growth in FY16 and FY17.
Strong earnings growth track record. GDEX has posted 5-year
revenue and net profit CAGRs of 18% and 39% respectively, with steady
improvement in its operating margins. Growing its business through
quality deliveries, prudent cost management and high staff productivity
are the key competitive components to the company’s success.
Growth potential. GDEX has more room to grow, as it believes that ecommerce has changed the way business is done and that it is in the
sweet spot to ride on this bandwagon. Street thinks improvements in
regional internet infrastructure will facilitate transaction volumes and
allow the company to grow its business. Note that GDEX not only
focuses on Malaysia’s 30m population, but the ASEAN region’s 600m
inhabitants as well. We believe this gives it huge growth potential.
Risks. The industry is very compeititve and pricing power has not been
great. Any economic slowdown may result in lower business volumes,
which should directly impact GDEX’s profitability.
Initiate at BUY with a MYR2.42 TP. We derived our MYR2.42 TP using
a 5-year DCF on its free cash flow to firm (FCFF) with a WACC of 4.5%
and a 1% terminal growth rate. With a 20.4% upside from its last closing
price, we initiate coverage on GDEX with a BUY call. The stock may be
trading at very high P/E valuations, but we believe its high potential
growth could justify the high valuations.
YTD
1m
3m
6m
12m
Absolute
74.8
6.9
(5.2)
12.9
97.6
Relative
76.9
5.8
(4.0)
15.0
96.3
Total turnover (MYRm)
Shariah compliant
Jerry Lee 603 9207 7622
[email protected]
Jun-13
Jun-14
Jun-15F
Jun-16F
135
159
182
208
238
Reported net profit (MYRm)
13.6
23.4
27.6
34.8
44.6
Recurring net profit (MYRm)
14.5
23.2
27.6
34.8
44.6
65.7
59.8
19.2
25.9
28.2
Recurring EPS (MYR)
0.02
0.02
0.03
0.04
0.05
DPS (MYR)
0.02
0.03
0.04
0.05
0.06
129
81
68
54
42
28.8
19.3
16.3
13.6
11.2
Recurring P/E (x)
P/B (x)
Jun-17F
P/CF (x)
110
70
62
47
37
Dividend Yield (%)
0.9
1.6
1.9
2.4
3.0
EV/EBITDA (x)
69.8
59.5
41.8
33.5
26.4
23.2
28.8
26.0
27.5
12.7
net cash


3

.
2
0
.
3
0
0
.
3
0
0
We initiate coverage on GDEX with a BUY call and DCF-derived .
0
MYR2.42 TP (a 20.4% upside), valuing the stock at an implied 81x FY15F 0
P/E. It has seen 10 years of strong earnings growth, which is expected 0
to remain resilient in the coming years on the capacity expansion of its
express delivery service and logistics arm as the drivers. Opportunity in
the AEC is a key catalyst to drive GDEX’s earnings higher.

Sep-14
Jul-14
Mar-14
May-14
239
Jan-14
2.40
Nov-13
Vol m
Price Close




net cash
0.0
net cash
0.0
29.3
net cash
0.0
4
Results Review, 12 November 2014
Nam Cheong (NCL SP)
Buy (Maintained)
Market Cap: USD667m
Target Price:
Price:
SGD0.61
SGD0.41
Macro
Risks
Citius, Altius, Fortius
Growth
Value


2

.
2
0
.
3
0.51
180
0.46
162
0.41
144
0
0
.
3
0
0
Nam Cheong delivered such a stellar 3QFY14 PATMI of MYR126m that .
0
its 9M14 PATMI has met 93%/99% of our/street FY14 forecasts, as 0
shipbuilding margins surged to 24% from the 17-20% range. Maintain 0
BUY. We raise our TP to SGD0.61 from SGD0.58 (49% upside) as we roll
over to a higher weight on FY15F earnings, offset by a lower 9x (from
10x) multiple as a concession to market sentiment. We also raise FY1416 forecasts by 11-13% as we increase margin assumptions.
0.36
126

0.31
108
0.26
70
90
Nam Cheong (NCL SP)
Price Close
Relative to Straits Times Index (RHS)
60

50
40
30
20

Sep-14
Jul-14
May-14
Mar-14
Jan-14
10
Nov-13
Vol m




Source: Bloomberg
Avg Turnover (SGD/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (SGD)
Free float (%)
Shareholders (%)
3.41m/2.69m
-7.3
48.8
0.29 - 0.50
42
2,098
SK Tiong Enterprise Sdn Bhd
Hung Yung Enterprise Sdn Bhd
Su Kouk Tiong
27.3
15.2
7.8

Home run quarter. Nam Cheong’s 3QFY14 PATMI is nearly as high as
FY12’s bottomline, in a sign of how far the company has come within two
years. Revenue this quarter was particularly high as a record 16 vessels
were sold, compounded by a margin surge to 24% from 17-20% in the
previous four quarters. Net gearing stood at a healthy 44.6%.
Shallow-water developments to surge according to IHS-Petrodata.
The number of shallow-water developments could grow steadily to 593 in
2020 from 76 in FY15 (See Figure 2), according to IHS-Petrodata,
requiring shallow-water vessels which are Nam Cheong’s specialisation.
This is in line with our view that the lower oil prices are unlikely to have a
significant impact on shallow-water operations, or future sales.
Raise FY14-16 estimates by 11%/11%/13%. Nam Cheong’s prospects
look bright with a net orderbook of MYR1.4bn (a figure which has
remained stable over the last three quarters even after MYR1.4bn in
revenue recognitions), with strong sales prices combining with improved
yard efficiencies resulting in margin boosts. We raise margin
assumptions in each year by up to 1.5ppts, resulting in our FY14-16
forecasts rising by 11-13%. Our FY14F PATMI implies a conservative
MYR50m bottomline.
Citius, Altius, Fortius (Faster, Higher, Stronger). Like an Olympic
competitor pushing his performance limits, we believe Nam Cheong has
yet to hit peak earnings, with the 20 diesel-electric vessels to begin
contributions next year and margins still holding strong. The stock trades
at compelling valuations of 5.7/4.9x FY15/16F P/E and with ROEs
improving towards 30%. We raise our TP to SGD0.61 (from SGD0.58)
as we roll over to a heavier weightage on FY15F earnings, but make a
concession to the weaker market sentiment by adjusting our P/E multiple
to 9x from 10x. Maintain BUY. Nam Cheong remains one of our Top
Picks in the sector.
YTD
1m
3m
6m
12m
Absolute
30.2
(2.4)
(11.8)
12.3
41.4
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Relative
26.4
(4.3)
(11.7)
11.2
38.0
877
1,257
1,866
2,455
2,969
137
206
311
391
452
137
193
311
391
452
46.6
41.6
60.6
25.9
15.6
Recurring EPS (MYR)
0.07
0.09
0.15
0.19
0.22
DPS (MYR)
0.01
0.03
0.04
0.05
0.06
Recurring P/E (x)
14.8
11.5
7.2
5.7
4.9
P/B (x)
3.42
2.38
1.90
1.50
1.21
Jesalyn Wong +65 6232 3872
P/CF (x)
27.6
[email protected]
Dividend Yield (%)
Shariah compliant
Lee Yue Jer, CFA +65 6232 3898
[email protected]
9.1
15.4
1.2
2.5
3.5
4.4
6.1
EV/EBITDA (x)
15.7
12.8
8.7
6.4
5.5
25.6
26.9
29.5
29.5
27.2
39.4
52.1
55.5
34.6
27.1
17.6
29.1
40.4
na
na
5
Communications - Telecommunications Infrastructure
Market Cap: USD3,548m
Neutral (Maintained)
Target Price:
Price:
IDR8,600
IDR9,000
Macro
Risks
Reaching a Pinnacle
Growth
Value
Price Close
Relative to Jakarta Composite Index (RHS)
9,300
142
8,800
135
8,300
127
7,800
120
7,300
112
6,800
105
6,300
97
5,800
90
5,300
120
82


80
60

Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Vol m
40
Source: Bloomberg
Avg Turnover (IDR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (IDR)
Free float (%)
Shareholders (%)
41,499m/3.47m
-16.4
-4.4
5,650 - 9,050
41
4,797

30.2
28.7

Wahana Anugerah Sejahtera PT
Provident Capital Indonesia PT
Broadly in line. Tower Bersama Infrastructure’s (TBI) 9M14 EBITDA of
IDR1.99trn (+25% YoY) made up 72-73% of our and consensus’ fullyear estimates.
XL and ISAT contributed less in 3Q14. Rental revenues from both XL
Axiata (XL) (EXCL IJ, BUY, TP: IDR6,280) and Indosat (ISAT) (ISAT IJ,
BUY, TP: IDR4,590) fell 0.3-3% QoQ, as the telcos were busy
integrating and modernising their networks respectively. The slack was,
however, taken up by Telkomsel (TBI’s largest customer), which
continued to aggressively roll out its 3G network. Telkomsel’s rental
revenue grew 18% QoQ (9M14: +34%).
2,430 additional tenancies to-date. TBI added 818 new tenants and
completed 464 tower builds in 3Q14, translating into a stable tenancy
ratio of 1.67. The impending consolidation of Mitratel will see its tower
portfolio expanding to over 13k but at the expense of its tenancy ratio,
given Mitratel’s significantly lower tenancy ratio of 1.1x.
Net debt/EBITDA remains high. TBI’s net debt/last quarter annualised
(LQA) EBITDA remains high albeit down slightly QoQ to 4.6x vs 4.9x in
2Q14. This could limit opportunities to further grow inorganically given its
debt covenant of 5x. We note that the recent acquisition of a 49% stake
in Mitratel entails a share swap. We believe TBI is keen to procure the
remaining towers owned by ISAT, which the latter had said would be put
up for sale in 2015.
Forecasts and risks. We maintain our FY14 forecast but lower our
FY15 core EPS forecast by 6% to factor in new shares to be issued for
the purchase of Mitratel, which is slated for completion by year-end. Key
earnings risks: i) pressure on lease rentals, ii) slower-than-expected
tenancy growth, and iii) lower-than-expected capex spending from
telcos.
YTD
1m
3m
6m
12m
Absolute
55.2
8.4
10.1
39.5
46.3
Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
Relative
38.5
7.9
11.4
37.7
34.9
Total turnover (IDRbn)
970
1,715
2,691
3,432
4,006
Reported net profit (IDRbn)
474
842
1,248
1,405
1,798
Recurring net profit (IDRbn)
389
667
1,266
1,405
1,798
188.7
71.7
89.7
11.0
28.0
92
145
268
293
375
DPS (IDR)
25.0
0.0
60.0
67.4
86.2
Recurring P/E (x)
97.9
62.1
33.6
30.7
24.0
P/B (x)
16.3
10.5
10.8
8.5
6.7
P/CF (x)
73.6
32.5
23.4
23.7
17.8
Shariah compliant
Jeffrey Tan +603 9207 7633
[email protected]
Recurring EPS (IDR)
Dividend Yield (%)
EV/EBITDA (x)


3

.
1
0
.
3
0
0
.
3
0
0
TBI’s 9M14 results were within our and consensus expectations. It is .
0
set to become the largest tower infrastructure company post the 0
consolidation with Mitratel in 4Q14. We remain NEUTRAL on the stock 0
as its valuations at 18x CY15 EV/EBITDA are fair (vs 17-19x of global
peers) on the back of its visibly-stretched balance sheet. Our TP of
IDR8,600 (<10% downside) is premised on target 17x FY15 EV/EBITDA.
100
20




0.3
0.0
0.7
0.7
1.0
57.1
37.1
25.3
20.9
18.2
20.4
25.9
31.3
31.0
31.2
105.7
188.7
294.5
245.9
197.7
(6.7)
(3.9)
6
Company Update, 12 November 2014
Buy (Maintained)
Property- Real Estate
Market Cap: USD270m
Target Price:
Price:
MYR2.50
MYR2.18
Macro
Risks
Land Deal Terminated
Growth
Value
Price Close
2.80
207
2.60
192
2.40
177
2.20
162
2.00
147
1.80
132
1.60
117
1.40
102
1.20
7
87

5
4
2
Sep-14
Jul-14
May-14
Mar-14
Jan-14
1
Nov-13
Vol m
3
Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
2.24m/0.70m
30.7
14.7
1.37 - 2.62
50
412

39.0

Ir. Teh Kiak Seng
YTD
1m
3m
6m
12m
Absolute
44.4
(0.5)
(8.4)
11.8
54.6
Relative
46.7
(1.3)
(7.0)
14.1
53.5
The deal is off. Tambun Indah Land (Tambun) has terminated the deal
to acquire 209.5 acres of land from TPPT Sdn Bhd. The land, which is
adjacent to the southern side of Tambun’s Pearl City, costs MYR150m
(MYR16.50 psf). As certain conditions cannot be met, and given that
expensive charges could be incurred if the period is extended,
management has decided to call off the deal. The MYR15m deposit paid
earlier will be refunded.
Other opportunities still aplenty. While the market could be
disappointed with the news, we think Tambun’s solid management team
and its over 500 acres of landbank in Seberang Perai are still the
company’s key selling points. Management’s execution track record is
proven and the strategically-located Pearl City is still the key township in
Seberang Perai Selatan to capture the rising housing demand there.
Meanwhile, we also do not rule out the possibility that the deal could
happen again, given that only Tambun has access to the land. Moving
ahead, the company can still embark on other landbanking opportunities
which should be RNAV-accretive.
3Q14 earnings likely on track. Tambun is scheduled to release its
3Q14 results in two weeks’ time. Underpinned by the MYR493m unbilled
sales, earnings should be largely on track to reach our full-year forecast.
In view of better earnings this year, we also expect the interim dividend
to be higher than 2 sen declared last year. New sales, however, will
likely be slightly weaker due to the lack of new launches during the
quarter.
Maintain BUY. Our forecasts are unchanged as the land is not planned
to be developed over the next 2-3 years. Nevertheless, we expect the
latest news to bring some weakness to share price, but we continue to
like Tambun as an affordable housing player. For now, without the new
land, our TP is lowered to MYR2.50 (from MYR3.00). We maintain our
BUY rating.
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
297
376
466
580
673
41
65
98
117
134
41
65
98
117
134
74.6
59.2
51.1
18.9
14.7
Recurring EPS (MYR)
0.13
0.16
0.24
0.28
0.31
DPS (MYR)
0.05
0.06
0.09
0.10
0.11
Recurring P/E (x)
16.6
13.2
9.0
7.8
7.0
P/B (x)
3.04
2.77
2.32
1.96
1.67
Shariah compliant
Loong Kok Wen, CFA +603 9207 7614
[email protected]
Dividend Yield (%)
2.1
2.8
4.0
4.7
5.2
21.6
24.4
28.4
27.6
26.2
Return on average assets (%)
10.7
13.8
16.4
15.3
15.2
(4.6)
(8.9)
17.6
6.5
(4.0)
3.4
(0.1)
4.4


3

.
2
0
.
3
0
0
.
3
0
0
Tambun has terminated the deal to acquire 209.5 acres of land, as .
0
certain terms were not met. Although this could disappoint the market, 0
we still like Tambun for its solid management team and >500-acre land 0
at Seberang Perai. Moving forward, management can still embark on
other landbanking opportunities. For now, without the new land, we
lower our TP to MYR2.50 (14.7% upside). Maintain BUY.

6




7
Results Preview, 12 November 2014
Tune Ins (TIH MK)
Buy (Maintained)
Financial Services - Insurance
Market Cap: USD479m
Target Price:
Price:
MYR3.00
MYR2.12
Macro
Risks
Rejuvenating Its Multi-Channel Growth
Growth
Value
Tune Insurance Holdings (TIH MK)
Price Close
2.60
137
2.50
132
2.40
127
2.30
122
2.20
117
2.10
112
2.00
107
1.90
102
1.80
97
1.70
14
92

10
8

Sep-14
Jul-14
May-14
Mar-14
Jan-14
2
Nov-13
Vol m
4
Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
AirAsia Group
CIMB SI II SB
Capital Research Global
2.03m/0.63m
27.4
41.6
1.80 - 2.53
41
752
13.7
9.4
6.6
YTD
1m
3m
6m
12m
Absolute
8.7
(0.5)
(14.2)
(4.1)
15.2
Relative
11.0
(1.3)
(12.8)
(1.8)
14.1


We expect Tune Ins to report 3Q14 travel premiums of ~MYR23m
(3Q13: MYR26m), assuming a 26-32% take-up rate. AirAsia’s (AIRA MK,
BUY, TP: MYR2.73) passenger numbers expanded by 1%: i) AirAsia
Indonesia (-10%), ii) AirAsia Thailand (12%), iii) AirAsia Malaysia (0.5%),
iv) AirAsia Philippines (-15%), and v) AirAsia X (AAX MK, SELL, TP:
MYR0.68) (24%). AirAsia India reported passenger numbers for 3Q14 as
well. All in, passengers carried by the AirAsia group and Cebu Pacific
(CEB PM, NR) dropped 4%, reflecting weaker regional travel demand.
Nevertheless, YTD total passengers made up 75% of our 50m
passenger assumption, as we had expected this short-term trend.
Undergoing a leadership transition. In the first week of November,
Tune Ins conducted a briefing for investors. It announced that Mr Junior
N Cho will replace Mr Peter Miller as the CEO of the group, while Mr AlIshsal bin Ishak is designated as digital director. Both were former staff
at AirAsia. We see this transition to be positive as we believe Cho’s
credentials are the right fit to the group’s business model and could
enhance its customer acquisition strategies. His experience working in
aviation groups and insurance groups (MetLife and Allianz), and his
hands-on knowledge of digital/technology solutions, would help the
company’s long-term aspirations to be a global leader in travel
insurance, and direct business-to-customer (B2C) e-consumer products.
Forecast retained. Tune Ins is expected to report results on 18 Nov.
Despite a lack of signs for recovery in the travel industry, we expect 2H
to be robust due to full contributions from the Middle East joint venture
and its Thailand associate. A sensitivity analysis suggests that every 1%
change in the take-up rate could impact its profit by 2%.
Maintain BUY with a MYR3.00 TP (24x FY15F P/E), a premium to
sector valuations of 14-20x, implying a 16% 3-year forward earnings
CAGR vs the sector’s 13%. Tune Ins is a growth stock with valuations
supported by a swift global expansion, as well as partnerships with
airlines, travel providers and e-commerce players. Diversification away
from AirAsia is pivotal to support our BUY call. Other risks may include
an uptick in expenses as Tune Ins realigns its B2C focus and sharpens
its multiplatform capabilities.
Shariah compliant
Kong Ho Meng +603 9207 7620
[email protected]
Net premium revenue (MYRm)
Net profit growth (%)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
217
241
268
309
354
41
68
80
96
110
(15.9)
64.4
17.5
19.9
14.8
50
70
80
96
110
Recurring EPS (MYR)
0.07
0.09
0.11
0.13
0.15
DPS (MYR)
0.00
0.04
0.04
0.05
0.06
Recurring P/E (x)
32.1
22.8
19.9
16.6
14.5
P/B (x)
13.1
4.4
3.8
3.4
2.9
0.0
1.8
2.0
2.4
2.8
1.2
(1.9)
(2.4)
Dividend Yield (%)


3

.
2
0
.
3
0
0
.
1
0
0
We expect no major surprises from Tune Ins’ 3Q14 results, as .
0
passengers carried by its airline partners are on track to meet our full- 0
year forecast, which had factored in lower travel demand. Reiterate BUY 0
and MYR3.00 TP (24x FY15F P/E, 41.6% upside). We see a long-term
transformation in this growth stock, buoyed by its new leadership, a
swift global expansion and sharpening of its multichannel capabilities.
12
6




8
Corporate News Flash, 11 November 2014
Buy (Maintained)
Target Price:
Price:
SGD2.65
SGD1.48
Macro
Risks
New Strategy Takes Shape
Growth
Value
2.10
122
2.00
116
1.90
111
1.80
105
1.70
100
1.60
94
1.50
88
1.40
83
1.30
40
35
30
25
20
15
10
5
77

Sep-14
Jul-14
May-14
Mar-14
Jan-14
Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Chew Thiam Keng
GuoLine Capital
Franklin Resources
13.9m/11.0m
48.0
79.1
1.42 - 2.03
70
1,578
14.2
7.6
7.0
YTD
1m
3m
6m
12m
Absolute
(20.3)
(16.7)
(17.7)
(21.3)
(8.9)
Relative
(24.1)
(17.7)
(16.4)
(22.7)
(11.4)
Shariah compliant


Up to 8.33% stake in well-qualified Triyards (ETL SP, NR). Ezion has
subscribed for 29.5m Triyards warrants for USD1 consideration in total at
an exercise price of USD0.563 per share, exercisable on condition (see
below) over a period of three years. The USD16.6m exercise quantum
represents 8.33% of the enlarged share capital in the vessel builder.
Triyards is well-qualified for Ezion’s work, having built Ezra’s (EZRA SP,
NEUTRAL, TP: SGD0.85) Lewek Constellation, one of the most
technologically sophisticated offshore vessels in the world today, as well
as its own liftboat and drilling rig designs.
Read-through: Ezion is confident of signing three new contracts in
the next 120 days. The exercise conditions stipulate the introduction of
shipbuilding contracts worth at least USD150m to Triyards within the
next 120 days. This indicates that Ezion is confident of securing at least
three new service rig contracts during this period, assuming each rig
costs USD60m. This should assuage investor concerns that the lower oil
price may affect future contract flows.
6-month implied payback. From the start of this year, we have
gradually trimmed our FY14/FY15 core PATMI forecast to
USD190m/USD296m from USD228m/USD307m respectively due to
delays in deliveries. This implies that the opportunity cost of such delays
is actually USD38m/USD11m in FY14/FY15 respectively. We view this
USD16.6m as a small price to pay to avoid such losses, with a payback
period under six months if Triyards can help Ezion save USD38m a year.
Still one of our Top Picks for strong locked-in growth. Ezion remains
one of our Top Picks for its 35%/56% growth with strong contract
coverage over the next three years (See Figure 1). Maintain BUY and
SGD2.65 TP based on 12x blended FY14F/15F P/E.
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
159
282
410
612
684
Reported net profit (USDm)
79
160
230
296
339
Recurring net profit (USDm)
65
141
190
296
339
38.4
115.0
35.2
55.9
14.5
Total turnover (USDm)
0.08
0.11
0.13
0.19
0.21
0.001
0.001
0.001
0.001
0.001
Recurring P/E (x)
15.1
10.1
9.1
6.1
5.3
P/B (x)
3.29
1.93
1.55
1.23
1.00
Jesalyn Wong +65 6232 3872
P/CF (x)
11.4
9.9
5.2
4.4
3.7
[email protected]
Dividend Yield (%)
0.1
0.1
0.1
0.1
0.1
EV/EBITDA (x)
16.0
13.2
9.0
5.9
4.3
21.8
27.7
24.6
22.5
20.7
75.5
115.0
92.6
70.4
32.5
(8.2)
3.1
(0.6)
Lee Yue Jer, CFA +65 6232 3898
[email protected]
Recurring EPS (USD)
DPS (USD)


2

.
2
0
.
3
0
0
.
3
0
0
Ezion has entered into a subscription agreement for 29.5m Triyards .
0
warrants, on condition it directs at least USD150m of newbuild 0
contracts to the vessel builder. Maintain BUY and SGD2.65 TP (79.1% 0
upside). This is the execution of a long-term strategy to manage its rigs
delivery schedule, which should avoid future rig delay opportunity
costs. The USD16.6m investment in Triyards has an implied payback of
under six months.

Nov-13
Vol m
Price Close




9
Neutral (Maintained)
Consumer Cyclical - Gaming
Target Price:
Price:
SGD1.14
SGD1.04
Macro
Risks
Just Plain Unlucky
Growth
Value
Price Close
1.60
110
1.50
104
1.40
97
1.30
91
1.20
84
1.10
78
1.00
71
0.90
70
65
0
0
.
1
0
Genting Singapore’s 9M14 core earnings of SGD535.7m fell below 0
.
expectations as 3Q14 VIP luck factor closed below 2.0% (vs theoretical 0
0
hold of 2.85%), while volume shed 5.0% YoY on tighter credit control. 0
Management reaffirmed its cautious medium-term outlook in view of a
potential slowdown in China’s GDP growth. We revise our TP to
SGD1.14 (9.6% upside) as we peg a lower FY15 EV/EBITDA of 8.5x (from
10.0x) and following our earnings revision. Maintain NEUTRAL.

60
50

40
30
Sep-14
Jul-14
May-14
Mar-14
Jan-14
10
Nov-13
Vol m
20

Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
25.4m/20.2m
26.9
9.6
1.04 - 1.51
48
12,237.8
Genting Bhd
51.9
Absolute
Relative

Bad luck. Genting Singapore’s 9M14 revenue grew 3.3% YoY to
SGD2.22bn, lifted by both its VIP and mass market gaming segments.
However, its core earnings of SGD535.7m (+7.7% YoY) fell below our
projection but exceeded consensus estimate at 64.6% and 80.0% of the
respective full-year forecasts, as 3Q14 numbers were dragged down by
the subpar VIP luck factor of below 2.0%. We estimate that 9M14 core
earnings would have amounted to SGD640m-650m (at 77-78% of our
previous forecast) at the theoretical VIP hold rate of 2.85%.
Key highlights. 3Q14 VIP rolling volume shed 5.0% YoY, marking its
first decline over the past two years, as management turned more
cautious on credit extension in anticipation of a potential slowdown in
China’s GDP growth. The move, in our view, would help to contain
further pressure on its impairment on receivables, which registered at
SGD39.7m in 3Q14 (vs SGD81.6m in 2Q14).
Forecasts and risks. We cut our FY14F EPS by 12.1%, taking into
account the subpar VIP luck factor YTD. We also lower our FY15-16 net
profit forecasts by 8-9%, factoring in slower VIP growth as we believe
management’s more selective approach on credit offerings, coupled with
the lack of independent junkets’ presence in Singapore, would likely
impede medium-term growth. Key risks include volatility in VIP win rates
and further weakness in Singapore’s tourist arrivals.
Maintain NEUTRAL. We are now pegging a revised FY15 EV/EBITDA
of 8.5x (from 10.0x) to Genting Singapore’s valuation. This is premised
on an unchanged 25% discount to its Macau gaming peers, that
witnessed recent share price retracements, which we deem justified
given the more stringent regulatory control in Singapore’s gaming
industry. With that, our new TP now stands at SGD1.14 (from SGD1.39).
Maintain NEUTRAL.
YTD
1m
3m
6m
12m
(30.4)
(5.5)
(19.1)
(21.8)
(27.3)
(30.4)
Total turnover (SGDm)
(34.2)
(7.4)
(18.5)
(22.9)
Shariah compliant
Kong Heng Siong +603 9207 7666
[email protected]
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
2,948
2,847
3,023
3,076
3,175
Reported net profit (SGDm)
680
707
729
777
802
Recurring net profit (SGDm)
624
620
729
777
802
(39.1)
(0.8)
17.7
6.6
3.2
Recurring EPS (SGD)
0.05
0.05
0.06
0.06
0.07
DPS (SGD)
0.01
0.01
0.01
0.01
0.01
Recurring P/E (x)
20.3
20.5
17.5
16.4
15.9
P/B (x)
1.92
1.73
1.60
1.48
1.37
P/CF (x)
13.1
17.2
12.4
11.0
10.5
1.0
1.0
1.0
1.0
1.0
EV/EBITDA (x)
10.2
10.8
9.2
8.6
7.9
10.7
10.1
9.5
9.4
7.4
10.4
7.1
2.6
8.8
7.4
Dividend Yield (%)


2

.
2
0
.
2




9.0
net cash
1.8
10
Sell (from Neutral)
Technology - Software & Services
Target Price:
Price:
SGD1.03
SGD1.35
Macro
Risks
Valuations a Tad Too Rich
Growth
Value
Price Close
1.40
173
1.30
162
1.20
150
1.10
139
1.00
127
0.90
116
0.80
104
0.70
30
93
0
0
.
2
0
0
Silverlake’s 1QFY15 (Jun) revenue rose 15% YoY to MYR116.3m while .
0
NPAT grew 17% YoY to MYR59.7m, in line with our estimates. However, 0
we find the current price level resulting in a valuation of 27x FY15 P/E a 0
tad too rich, especially when its NPAT growth has slowed to around 1315% per year from 20-40%. Also, its peers are trading at a much lower
21x CY14 P/E average. Downgrade to SELL with a lower SGD1.03 TP
(23.7% downside), pegged to a peer average of 21x CY14 P/E.


25
20
15

Sep-14
Jul-14
May-14
Mar-14
Jan-14
5
Nov-13
Vol m
10
Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
2.12m/1.67m
-8.9
-23.7
0.84 - 1.36
24
2,245
Peng Ooi Goh
67.6


2

.
1
0
.
2





Bigger peers are trading at much lower valuations. In our peer
comparison table (see Figure 1), Silverlake Axis’ (Silverlake) peers which
are much larger in size, average 21x CY14 P/E and 1.4x CY14 PEG, vs
Silverlake which is trading at a premium of 27.5x and 1.9x respectively.
NPAT growth momentum slowing. Previously, Silverlake grew at an
average 29.2% NPAT CAGR from FY11 to FY14. Going forward,
management is only guiding stable growth of about 15% per year, which
is at a much slower pace. We feel that Silverlake’s current valuations
may be too rich, especially when it is not growing as fast as it was in the
past.
Execution risks and unclear orderbook. Despite having a good track
record on its execution, the execution risks still persist for Silverlake,
especially in the North Asian segment, which could be key to its future
growth. In addition, there is uncertainty regarding its orderbook as the
company has not announced any new contract wins for quite some time,
despite management saying it has a 15-month backlog of contracts to
tap on.
Downgrade to SELL with a lower SGD1.03 TP. We expect the
financial impact of the massive deals from potential mergers such as
OCBC-Wing Hang and CIMB-RHB-MBSB to only come through from
FY16 onwards. Given: i) its future growth likely slowing to about 15% a
year, ii) its rich valuations at current levels vs its peers, and iii) potential
execution risks, we downgrade our call to SELL (from Neutral), with a
lower TP of SGD1.03 (from SGD1.12), pegged to a peer average of 21x
CY14 P/E.
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
400
399
501
537
598
162
196
249
285
318
162
196
249
285
318
40.8
20.8
27.0
14.5
11.5
Recurring EPS (MYR)
0.08
0.09
0.11
0.13
0.14
DPS (MYR)
0.05
0.08
0.10
0.11
0.11
Jarick Seet +65 6232 3891
Recurring P/E (x)
45.1
37.7
31.4
27.5
24.6
[email protected]
P/B (x)
24.6
12.6
12.7
12.0
10.8
P/CF (x)
51.7
40.0
27.9
36.2
25.7
1.4
2.2
2.9
3.2
3.2
29.9
28.4
23.3
20.8
18.6
63.6
44.3
41.3
44.9
46.1
YTD
1m
3m
6m
12m
Absolute
53.4
3.8
19.5
50.0
57.0
Relative
49.6
1.9
19.6
48.9
53.6
Shariah compliant
Terence Wong CFA +65 6232 3896
Dividend Yield (%)
[email protected]
EV/EBITDA (x)
5.8
18.0
11
BEC World (BEC TB)
Sell (Maintained)
Communications - Media
Target Price:
Price:
THB36.4
THB49.3
Macro
Risks
Results Continue To Be Sluggish
Growth
Value
BEC World (BEC TB)
Relative to Stock Exchange of Thailand Index (RHS)
99
55.0
94
53.0
89
51.0
84
49.0
79
47.0
74
45.0
69
43.0
8
7
6
5
4
3
2
1
64
Jul-14
Mar-14
Sep-14
57.0
May-14
104
Jan-14
59.0
Nov-13
Vol m
Price Close



99.4m/3.08m
-1.8
-26.1
44.5 - 56.8
47
2,000
Maleenont Family
Chase Nominees
47.0
9.4

Airtime revenue still grew at 3.4% YoY and 3.9% QoQ to THB3.96bn.
This was a surprise amid weak TV adex and poor sentiments during the
transitional of analog TV into digital platform. Other revenue from
concerts, shows, copyrights, and other rebounded QoQ by 65.5% after
the political turmoil subsided.
Gross margins plunged. 3Q14 gross margin collapsed to 43.8% from
48.3% in 2Q14 and 51.9% in 3Q13. This was mainly due to higher costs
(licenses fee, and network rental fee) from the start-up of three digital TV
channels. However, BEC was able to tighten its SG&A expenses
causing SG&A expenses to sales ratio to decline to 11.7%, from 12.3%
in 2Q14.
Earnings slipped to THB1.08bn (-22% YoY, -8% QoQ). We note that
3Q14 actual earnings were slightly above the consensus estimate of
THB1.05bn.
9M14 earnings came in at THB3.4bn (-19% YoY),
representing 76% of our full year forecast.
Maintain our conservative earnings forecast for 2014-15. This year
we forecasted its earnings to slip by 20% YoY to THB4.5bn assuming a
3% YoY drop in average airtime revenue per minute and 30% net
margin. Next year we expect its earnings to decline further by 12% YoY
to THB3.9bn assuming another 10% YoY decline in average airtime
revenue per minute and 25% net margin. We note that our 2015
earnings forecast is on the low-range of consensus estimates.
Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover (THBm)
12,804
14,886
16,429
14,834
16,049
Reported net profit (THBm)
3,530
4,777
5,589
4,494
3,939
Recurring net profit (THBm)
3,530
4,777
5,589
4,494
3,939
6.6
35.3
17.0
(19.6)
(12.4)
Recurring EPS (THB)
1.77
2.39
2.79
2.25
1.97
DPS (THB)
1.80
2.27
2.66
2.13
0.95
Wanida Geisler 66 2862 9748
Recurring P/E (x)
27.9
20.6
17.6
21.9
25.0
[email protected]
P/B (x)
13.6
12.2
11.2
11.7
11.7
P/CF (x)
17.2
15.3
13.8
16.0
14.9
3.7
4.6
5.4
4.3
1.9
13.7
11.5
10.4
12.1
12.5
47.4
62.3
66.1
52.0
46.8
YTD
1m
3m
6m
12m
Absolute
(2.5)
4.2
8.2
(1.0)
(12.1)
Relative
(23.2)
3.3
5.1
(14.8)
(23.6)
Shariah compliant
Dividend Yield (%)
EV/EBITDA (x)
(7.1)
(22.5)


2

.
3
0
.
1
0
0
.
1
0
0
BEC’s 9M14 earnings came in at THB3.4bn (-19% YoY), representing .
0
76% of our full year forecast. We are downbeat on BEC’s outlook amid 0
changes in technology and industry structure. Although BEC can still 0
maintain its number two ranking during the initial start-up of digital TV
platform, we see more challenges ahead which should dampen its
performance in the medium term. Maintain SELL with TP of THB36.4,
pegged to 18.5x P/E (-0.5SD to its long-term mean PE).
Source: Bloomberg
Avg Turnover (THB/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (THB)
Free float (%)
Shareholders (%)




12
Indorama Ventures PCL (IVL TB)
Buy (Maintained)
Energy & Petrochemicals - Downstream Products
Target Price:
Price:
THB29.90
THB22.50
Macro
Risks
Better Prospects In 2015
Growth
Value
Indorama Ventures (IVL TB)
28.0
110
26.0
104
24.0
97
22.0
90
20.0
84
18.0
100
90
80
70
60
50
40
30
20
10
77
Sep-14
Jul-14
Mar-14
May-14
117
Jan-14
30.0
Nov-13
Vol m
Price Close


194m/6.01m
2.2
33.0
19.5 - 29.3
34
4,814
63.7
4.8
3.2
YTD
1m
3m
6m
12m
Absolute
12.5
(8.5)
(17.4)
(8.5)
(10.0)
Relative
(9.2)
(11.2)
(21.2)
(21.2)
(20.9)

9M14 net profit was at THB2.4bn (+35.9% YoY). Indorama Ventures’
(IVL) 9M14 revenue grew 10% YoY to THB189.2bn, as it recorded
higher sales volume and value as a result of acquisitions,
debottlenecking activities, better utilization rates and a higher proportion
of contributions from high value-added (HVA) businesses which
accounted for 21% of total volume in 9M14. Core EBITDA increased to
THB14.4bn in 9M14 (+32% YoY), while core EBITDA per ton grew to
USD94/tonne in 9M14 from USD83/tonne in 9M13. IVL’s inventory loss
totaled THB1.1bn for 9M14, compared with an inventory loss of
THB552mn in 9M13. Other items include acquisition costs of THB37m, a
THB403m gain on a bargain purchase and other extraordinary expenses
valued at THB435m.
2015 volumes to grow from acquisitions. Next year, the company
expects to fully benefit from its acquisitions and debottlenecking efforts
that are completed in 2014, which comprise Adana in Turkey (a 139
thousand ton per annum (ktpa) polyethylene terephthalate (PET) plant),
the debottlenecking of its Poland PET polymers facility, Polychem
(Indonesia) and PHP Fibers.
Inventory markdowns expected in 4Q14, but IVL should book
improvements in 2015. In terms of prices, IVL expects a markdown in
industry inventory in 4Q14, which would imply lower product prices. This
would lead to destocking across the value chain. Next year, it also
expects to reap the benefits of restocking as well as lower absolute raw
material prices. IT also expects purified terephthalic acid (PTA) and PET
margins in the US and Europe to remain stable over time, due to the
more steady demand from both regions. IVL also expects its monoethylene glycol (MEG) business to benefit from the tight supply situation
and the softening of ethylene prices. Note that Asia’s PTA margins are
still weak and are now close to regional variable operating cost levels.
Dec-11
Dec-12
Dec-13F
Dec-14F
Dec-15F
186,096
210,729
229,120
253,500
265,200
15,568
2,740
1,326
4,461
4,673
10,695
1,560
414
4,461
4,673
8.3
(85.4)
(73.5)
978.8
4.7
Recurring EPS (THB)
2.22
0.32
0.09
0.93
0.97
DPS (THB)
1.00
0.29
0.14
0.47
0.50
10
69
262
24
23
1.85
1.93
1.79
1.72
1.65
40
9
562
8
8
4.4
1.3
0.6
2.1
2.2
Shariah compliant
Kannika Siamwalla, CFA 66 2862 9744
[email protected]
Recurring P/E (x)
P/B (x)
P/CF (x)
Dividend Yield (%)
EV/EBITDA (x)


2

.
2
0
.
3
0
0
.
3
0
0
9M14 earnings rose 35.9% YoY to THB2.4bn, as sales and volume rose .
0
from acquisitions, debottlenecks, better utilization rates and larger 0
contributions from its HVA business. BUY, with our TP at THB29.90 0
(2.2x 2015 P/BV, 33% upside). We expect an inventory markdown in 4Q
as absolute prices fall further, in line with crude oil prices, which may
lead to destocking across the value chain. We expect a better 2015, as it
reaps the full-year benefits from acquisitions/debottlenecking efforts.
Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Indorama Resources Co Ltd
Bangkok Bank Pcl
Thai NVDR




9.3
14.4
16.0
9.7
9.5
74.2
134.4
131.4
119.0
108.1
0.0
0.0
0.0
13
Jay Mart (JMART TB)
Buy (Maintained)
Consumer Cyclical - Distribution & Wholesale
Market Cap: USD195m
Target Price:
Price:
THB15.70
THB12.20
Macro
Risks
9M14 Core Earnings Decline 16.6% YoY
Growth
Value
Jay Mart (JMART TB)
16.0
104
15.0
95
14.0
87
13.0
79
12.0
70
11.0
16
14
12
10
8
6
4
2
62


Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Mr. Adisak Sukumvitaya
Miss Yuvadee Pong-acha
Miss Juthamas Sukumvitaya
24.2m/0.75m
50.8
28.3
12.2 - 16.6
47
524
18.9
17.9
7.8


Below expectations. Jay Mart’s 9M14 core earnings fell 16.6% YoY
and accounted only 54%/48% of our previous/consensus FY forecasts.
The sharp drop in earnings was caused mainly by lower-than-expected
mobile sales. 9M14 core earnings from its debt management business
JMT Network Services (JMT TB, NR) surged 23.8% YoY to THB76.76m,
accounting for 24.9% of total group net profit as its amortisation declined.
Key highlights. 3Q14 revenue declined to THB2.22bn (-0.2% QoQ, 10.9% YoY) accounting for 58.6% of our previous full-year estimate.
Mobile business revenue fell to THB1.91bn (-0.6 QoQ, -13.2% YoY) due
to lower selling prices of Chinese-branded smartphones and the wait for
flagship models scheduled to be launched in 4Q14. Its rental business’
revenue climbed to THB103.1m (+4.0 QoQ, +19.2% YoY) as rental rates
and areas increased, while its debt collection and management business
revenue surged to THB126.9m (+10.9% QoQ, 35% YoY) on lower
amortisation. Cost of sales dropped by 11.4% YoY due to slower sales.
As a result, EBITDA and net profit fell 17.7%/36.5% YoY, and net margin
declined 1.6ppts to 2.5% (from 4.1% in 2Q14) on the back of weak sales
volumes.
Forecasts and risks. Management trimmed its 2014 revenue growth
guidance for the second time to <15% (from 15% previously). The key
risks to our earnings forecasts are: i) rising competition among
smartphones retailers, ii) lower-than-expected ASPs, and iii)
continuously weak consumer sentiment going forward.
Valuation. We cut our FY14/FY15 revenue forecasts by 14.7%/14.3%
to reflect the slower sales, and trim our unit sales assumption to 1.33m
units (from 1.5m). We also pare our FY14/FY15 earnings estimates by
10.5%/10% to THB403m and THB444m respectively (from THB450 and
THB496m). Maintain BUY, as we believe that its revenue bottomed out
in 3Q14. Our THB15.70 TP is premised on a FY15 P/E of 14.4x.
YTD
1m
3m
6m
12m
Absolute
(24.1)
(9.6)
(9.0)
(13.5)
(24.1)
Relative
(45.6)
(11.3)
(12.8)
(28.1)
(36.4)
Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
5,922
7,944
9,665
9,509
10,972
171
363
400
403
444
171
311
400
403
444
80.4
81.1
28.9
0.6
10.2
Recurring EPS (THB)
0.57
0.87
0.96
0.85
0.85
DPS (THB)
0.34
0.39
0.69
0.67
0.74
Recurring P/E (x)
21.3
14.0
12.7
14.3
14.4
P/B (x)
5.39
3.27
2.95
3.38
3.28
Vikran Lumyai +66 2862 9999 Ext 2028
P/CF (x)
32.0
50.2
38.6
[email protected]
Dividend Yield (%)
6.1
Shariah compliant
Veena Naidu License No. 24418, 66 2862 9752
[email protected]
na
na
2.8
3.2
5.7
5.5
EV/EBITDA (x)
13.5
10.7
13.1
9.6
8.5
26.4
32.6
24.4
22.2
23.1
96.5
68.4
97.7


3

.
2
0
.
3
0
0
.
2
0
0
9M14 core earnings fell 16.6% YoY to THB230.7m from weak consumer .
0
sentiment and intensified competition. Maintain BUY, with lower 0
THB15.70 TP (28.3% upside, 14.4x FY15F P/E) as revenue has bottomed 0
out. 9M14 mobile sales revenue fell 10% YoY, mainly from a lower ASP
and a drop in sales volume. While its rental and debt management units
grew robustly by 19.2%/35% YoY, we trim our FY14/FY15 earnings
estimates by 10.5%/10% due to stronger-than-expected competition.
Sep-14
Jul-14
Mar-14
May-14
112
Jan-14
17.0
Nov-13
Vol m
Price Close




124.1
161.6
(12.1)
(20.2)
14
Buy (Maintained)
Target Price:
Price:
THB12.50
THB9.85
Macro
Risks
Unexciting 3Q14 Results
Growth
Value
Price Close
11.5
113
11.0
109
10.5
104
10.0
100
9.5
96
9.0
92
8.5
87
8.0
140
83

100

60
Sep-14
Jul-14
May-14
Mar-14
Jan-14
20
Nov-13
Vol m
40
Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Mr. Anant Asavabhokin
Thai NVDR
Government of Singapore
Investment Corp
204m/6.40m
16.8
26.9
8.30 - 11.3
52
10,986

23.8
17.9
16.1


3Q14 residential sales slipped to THB5.96bn (-5% YoY, -16% QoQ).
9M14 residential sales of THB18.6bn (+8.5% YoY) accounted for 74% of
the company’s full-year forecast of THB25bn (+9% YoY). Rental income,
on the other hand, rebounded 9% YoY and 13% QoQ to THB603m in
3Q14, after the political turmoil subsided. We note that 9M14 rental
income of THB1.6bn (+5.3% YoY) represented 64% of the company’s
full-year forecast of THB2.5bn, weaker than expected due to poor
sentiment during 1H14.
Residential gross margin weakened with rising SG&A expense-tosales ratio. Residential gross margin slipped to 36.3% in 3Q14, down
slightly QoQ from 37.2% in 2Q14, but still higher than 35.4% in 9M13.
Selling, general and administrative (SG&A) expense-to-sales ratio rose
to 14.4%, up 1ppt YoY and QoQ, as the company spent more to boost
3Q14 presales to its record high of THB11bn. However, financing costs
declined meaningfully to THB98m (-35% YoY and -25% QoQ).
3Q14 profit contribution from associates was flat QoQ at THB584m.
9M14 numbers were THB1.64bn (+6% YoY). The company forecasted
share of profit from associates at THB2.3bn (+13% YoY).
3Q14 net profit came in at THB1.73bn (-6% YoY, -13% QoQ), slightly
below consensus estimate of THB1.77bn. 9M14 earnings of THB5.14bn
(+4.5% YoY) represented 76% of our full-year forecast.
Record high presales in 3Q14 at THB11bn (+10% YoY, +24% QoQ).
Land and Houses’ 9M14 presales grew 12% YoY. We note that among
the seven major listed developers, only three, including Land and
Houses, saw positive 9M14 presales growth.
Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
YTD
1m
3m
6m
12m
19,229
24,103
25,075
28,234
35,186
Absolute
10.1
(0.5)
0.5
2.1
(2.5)
5,609
5,636
6,478
6,717
7,975
Relative
(11.4)
(2.2)
(3.3)
(12.5)
(14.8)
3,634
5,636
6,447
6,717
7,975
(2.5)
55.1
14.4
4.2
18.7
Recurring EPS (THB)
0.36
0.56
0.64
0.65
0.72
DPS (THB)
0.40
0.45
0.40
0.55
0.61
Recurring P/E (x)
27.2
17.5
15.3
15.3
13.8
P/B (x)
3.36
3.14
2.94
2.80
2.70
31.9
18.7
Shariah compliant
Wanida Geisler +66 2862 9748
[email protected]
P/CF (x)
Dividend Yield (%)
na
15.9
na
4.1
4.6
4.1
5.6
6.2
EV/EBITDA (x)
22.8
14.3
13.4
13.4
11.4
19.7
18.5
19.9
18.8
19.9
87.2
79.8
94.7
76.6
60.5
7.5
8.4


3

.
2
0
.
1
0
0
.
2
0
0
Despite a healthy YTD presales growth, Land and Houses posted .
0
unexciting 3Q14 results with revenue, margins and net profit down both 0
QoQ and YoY. Its 9M14 earnings of THB5.14bn (+4.5% YoY) represented 0
76% of our 2014 forecast. Early conversion of its warrants (LH-W3) still
pressures the stock price. Keep BUY on this laggard stock with a TP of
THB12.50 (27% upside) (core business is worth THB11.10 on its longterm mean P/E of 15.5x and its investment portfolio is worth THB1.40).
120
80




15
Buy (Maintained)
Target Price:
Price:
THB5.50
THB4.18
Macro
Risks
3Q14 Should Be This Year’s Best Quarter
Growth
Value
4.60
152
4.10
140
3.60
128
3.10
116
2.60
104
2.10
160
140
120
100
80
60
40
20
92


Sep-14
Jul-14
May-14
Mar-14
Jan-14
Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Land and Houses
Government of Singapore
Investment Corp
136m/4.24m
12.4
31.6
2.38 - 4.46
63
9,184
24.9
10.8
Thai NVDR


Revenue grew 13.3% QoQ to THB6.43bn. Residential sales continued
to increase by 13.5% QoQ while rental income growth rebounded to
10.4% QoQ after the political turmoil subsided. 9M14 revenue increased
10% YoY to THB16.2bn.
Residential gross margin weakened. Residential gross margin slipped
below 32% for the first time in over five quarters, but 9M14 gross margin
remained healthy at 32.6%, up from 9M13’s 32%.
Well-controlled sales, general and administrative (SG&A) expenses
to sales ratio but financing costs surged. SG&A expenses to sales
ratio slid to 15.4% in 3Q14, down from over 16% in 1H14. We note that
Quality Houses has so far launched fewer new projects when compared
to last year and its 9M14 presales are estimated to fall 7% YoY to
THB15.7bn. Financing costs, on the other hand, surged 53% YoY and
33% QoQ on higher borrowings.
Better profit contribution from associates. Equity accounted profit
rose 30% YoY and 3.5% QoQ thanks to higher profit contributions from
Home Product Center (HMPRO TB, BUY, TP: THB11.00) and LH
Financial (LHBANK TB, NR).
Net profit grew 9.2% QoQ to THB1.07bn. This was in line with
consensus estimates. 9M14 earnings of THB2.68bn (+4% YoY)
accounted for 88% of our full-year forecast. Another round of earnings
forecast adjustments are likely after attending today’s analyst meeting.
6.7
Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
9,849
13,077
19,699
18,057
22,282
853
2,450
3,307
3,051
3,808
850
1,536
3,190
3,051
3,808
(51.6)
80.7
107.6
(4.4)
24.8
Recurring EPS (THB)
0.10
0.17
0.35
0.33
0.41
DPS (THB)
0.01
0.11
0.16
0.17
0.21
Recurring P/E (x)
41.7
24.0
12.0
12.6
10.1
Wanida Geisler 66 2862 9748
P/B (x)
2.69
2.43
2.22
2.04
1.82
[email protected]
P/CF (x)
YTD
1m
3m
6m
12m
Absolute
58.3
2.5
2.5
37.5
50.4
Relative
36.8
0.8
(1.3)
22.9
38.1
Shariah compliant
Dividend Yield (%)
EV/EBITDA (x)
na
na
0.2
2.7
21.3
6.4
161.7
18.4
na
na
3.9
4.0
5.0
15.6
8.8
11.7
10.2
16.9
20.0
16.9
19.1
131.1
108.2
96.7
93.0
(5.1)
3.7


3

.
3
0
.
2
0
0
.
2
0
0
3Q14 should be Quality Houses’ best quarter this year in terms of .
0
revenue and earnings. Maintain BUY and THB5.50 TP (31.6% upside), ie 0
core property business worth THB4.50 pegged at 11x long-term mean 0
P/E and valuing its investment portfolio at THB1.00. We expect results
to soften in 4Q14 on fewer condominium sales. As its THB2.68bn 9M14
earnings were still better than our estimates, another round of net profit
forecast adjustments are likely.

Nov-13
Vol m
Price Close




16
Company Update, 11 November 2014
Thai Oil (TOP TB)
Buy (Maintained)
Target Price:
Price:
THB53.50
THB45.30
Macro
Risks
Getting Stronger After The Worst Is Over
Growth
Value
Thai Oil (TOP TB)
65.0
103
60.0
93
55.0
83
50.0
73
45.0
63
40.0
20
18
16
14
12
10
8
6
4
2
53
0
0
.
2
0
0
We expect Thai Oil to record a stronger 4Q14, with product spreads .
0
from its major business being either stable or having improved. Thus, 0
we maintain BUY, with a THB53.50 TP (1.1x 2015 P/BV) offering an 0
upside of 18.2%. However, should the price of crude oil remain at
c.USD85/barrel (bbl), we anticipate further losses in 4Q14. We believe
that after its refinery has recognised the bottom of crude oil prices, its
earnings and share price would start improving again.

Sep-14
Jul-14
Mar-14
May-14
113
Jan-14
70.0
Nov-13
Vol m
Price Close

Source: Bloomberg
Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
PTT Pcl.
Thai NVDR
State Street Bank Europe
Limited
167m/5.15m
75.7
18.2
42.5 - 64.5
50
2,040
49.1
7.1
3.7

Potential investments in Myanmar. The Myanmar Petrochemical
Enterprise (MPE) issued an invitation for parties to tender for various
projects. The deadline for proposals to be submitted was in Oct 2014,
and it will make the announcement of the results by 1Q15. There are two
projects: i) revamping the existing Thanlyin Refinery (c.USD60m), and ii)
building a greenfield refinery. The refinery upgrade is scheduled for 2016
with an initial capacity of 15,000 barrels per day (bpd). Thai Oil is in
alliance with PTT (PTT TB, BUY, TP: THB374.00) for this project. Apart
from this, Thai Oil and PTT Group are looking at a long-term plan to
develop refining and petrochemical capacity in Myanmar. Myanmar
consumes c.70,000bpd of petroleum compared with Thailand’s
c.950,000bpd, even though the population sizes of both countries are
similar.
Mitigation plans in place. Management presented short-term mitigation
plans for a lower crude oil price environment. These are: i) to minimise
crude oil and inventory stocks, ii) optimise its company-wide benefit
recovery program, iii) push its plants to full operations after maintenance,
and iv) optimise the margin improvement programs it has completed in
order to attain higher margins. The company also plans to lower its cost
of fuel and fuel loss in the refining process.
Capex plans are on track. Thai Oil’s capex investment plans have not
been compromised by the current environment of lower crude oil prices.
All committed capex remains as planned, and its total capex over 20142019 is valued at USD1.1bn. Its capex plans cover improvements made
to upgrade plant reliability, efficiency, flexibility, environmental- and fuelefficiency as well as to enhance its value chain.
YTD
1m
3m
6m
12m
Absolute
(19.6)
(8.1)
(12.1)
(13.4)
(27.9)
Relative
(41.3)
(10.8)
(15.9)
(26.1)
(38.8)
Shariah compliant
Kannika Siamwalla, CFA 66 2862 9744
[email protected]


2

.
2
0
.
2




Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
446,241
447,432
414,599
394,008
412,003
14,853
12,320
10,394
5,117
10,198
14,853
12,320
10,394
5,117
10,198
65.8
(17.1)
(15.6)
(50.8)
99.3
Recurring EPS (THB)
7.28
6.04
5.09
2.51
5.00
DPS (THB)
3.30
2.70
2.30
1.13
2.26
6.2
7.5
8.9
18.0
9.1
1.16
1.07
1.02
0.99
0.93
P/CF (x)
5.9
4.3
29.6
7.4
5.8
Dividend Yield (%)
7.3
6.0
5.1
2.5
5.0
EV/EBITDA (x)
4.50
5.90
5.60
6.77
5.97
19.9
14.8
11.7
5.5
10.6
31.0
20.3
32.7
44.5
39.4
0.0
0.0
Recurring P/E (x)
P/B (x)
17
RHB Guide to Investment Ratings
DMG & Partners Research Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading
Buy:
Share
may10%
exceed
over 12
themonths
next 3 months, however longer-term outlook remains uncertain
Buy: Share
price
mayprice
exceed
over15%
the next
Neutral: Buy:
ShareShare
price price
may fall
within
the 15%
rangeover
of +/the next
12 months
Trading
may
exceed
the10%
nextover
3 months,
however
longer-term outlook remains uncertain
Take Profit:
Target
been attained.
accumulate
lower
Neutral:
Share
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may has
fall within
the rangeLook
of +/-to10%
over theatnext
12 levels
months
Sell: Share
may
fall has
by more
10% over
next 12 months
Take
Profit:price
Target
price
beenthan
attained.
Look the
to accumulate
at lower levels
Not
is not
regular
coverage
Sell:Rated:
Share Stock
price may
fallwithin
by more
thanresearch
10% over
the next 12 months
Not Rated: Stock is not within regular research coverage
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