1. business and industrial
2. company
3. earnings

Regional Daily, 22 January 2015
5
Regional Daily
Ideas Troika
Top Stories
Land and Houses (LH TB)
Property - Real Estate
BUY THB8.95 TP: THB11.00
Mkt Cap : USD3,019m
Pg2
Although Land and Houses is bullish on demand, improving margins and
potential divestment gains are key catalysts for 2015. Strong 2014 earnings
from THB1.5bn divestment gain will lead to a special dividend payment. A
rebound in core profit is expected in 2016.
Analyst: Wanida Geisler (wanida.ge@rhbgroup.com)
Keppel Land (KPLD SP)
Property - Real Estate
BUY SGD3.65 TP: SGD4.05
Mkt Cap : USD4,228m
Pg3
KPLD’s 4Q14/FY14 results were in line with our expectations. We expect
demand from upgraders and first-timers to be sustained for the rest of the
year on the relaxation of mortgage rules and easing credit in China. BUY
with a higher RNAV-derived TP of SGD4.05 (11.1% upside).
Analyst: Ong Kian Lin (kianlin.ong@sg.oskgroup.com)
CIMB (CIMB MK)
Financial Services - Banks
SELL MYR5.87 TP: MYR5.20
Mkt Cap : USD13,670m
Pg4
We are downgrading our call on CIMB to Sell from Neutral, with a revised
GGM-derived TP of MYR5.20 (from MYR6.10). We revised down our 201416F net profit forecasts by 6.5-7.5% as CIMB warned of higher loan
provisioning and softer revenue growth expectations ahead.
Analyst: David Chong, CFA (david.chong@rhbgroup.com)
Pg5
Overnight ‘Materials Matters’
Other Key Stories
Regional
Materials & Mining (Asia ex-Japan)
Analyst: Shekhar Jaiswal (shekhar.jaiswal@sg.oskgroup.com)
Hong Kong
CT Environmental (1363 HK)
Industrial - Environment Control
BUY HKD7.78 TP: HKD9.80
China Railway & Construction Sector
OVERWEIGHT
Pg6
Positive Endorsement By GIC
Analyst: Laurent Wong (laurent.wong@rhbgroup.com)
Pg7
The Merger Moving To The Next Stage
Analyst: Winston Cao (winston.cao@rhbgroup.com)
Malaysia
Auto & Autoparts
NEUTRAL
Pg8
A Strong Finish To 2014
Analyst: Alexander Chia (alexander.chia@rhbgroup.com)
Hua Yang (HYB MK)
Property - Real Estate
BUY MYR2.15 TP: MYR2.28
Singapore
CapitaCommercial Trust (CCT SP)
Property - REITS
BUY SGD1.84 TP: SGD1.95
SGX (SGX SP)
Financial Services - Exchanges
See important disclosures at the end of this report
Pg9
Bucking The Trend
Analyst: Alia Arwina (alia.arwina@rhbgroup.com)
Pg10
CapitaGreen Roaring To Full Occupancy In FY15
Analyst: Ong Kian Lin (kianlin.ong@sg.oskgroup.com)
Pg11
A Strong Quarter From Derivatives Market
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1
Regional Daily, 22 January 2015
Analyst: Singapore Research
NEUTRAL SGD7.90 TP: SGD7.65
Thailand
Bangkok Bank (BBL TB)
Financial Services - Banks
BUY THB185.00 TP: THB212.20
Robinson Department Store (ROBINS TB)
Consumer Cyclical - Retail
SELL THB45.80 TP: THB41.60
See important disclosures at the end of this report
Pg12
Asset Quality Stable While NIM Slipped In 4Q14
Analyst: Fiona Leong (fiona.leong@rhbgroup.com)
Pg13
Weak Spending Environment In Upcountry
Analyst: Juliana Cai (juliana.cai@sg.oskgroup.com)
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2
Company Update, 21 January 2015
Land and Houses (LH TB)
Buy (Maintained)
Property - Real Estate
Market Cap: USD3,019m
Target Price:
Price:
THB11.00
THB8.95
Macro
Better Margins, Divestment Gains Key Catalysts For 2015
Risks
Growth
Value
Land and Houses (LH TB)
Price Close
Relative to Stock Exchange of Thailand Index (RHS)
11.5
119
11.0
113
10.5
108
10.0
102
9.5
96
9.0
90
8.5
85
8.0
140
79

100

60
Nov-14
Sep-14
Jul-14
May-14
Mar-14
20
Jan-14
Vol m
40
Source: Bloomberg
Avg Turnover (THB/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (THB)
Free float (%)
Share outstanding (m)
Shareholders (%)
Anant Asavabhokin
Thai NVDR
GIC Private
170m/5.18m
20.7
22.9
8.35 - 11.3
52
10,996
22.1
20.1
15.0

Presales, revenue slightly below 2014 guidance. Land and Houses
achieved 2014 presales of THB31.5bn, up 4% YoY but 2% lower than its
guidance of THB32bn. We estimate its realised sales at THB26.7bn, up
16% YoY and 7% above its guidance of THB25bn. Rental income, on
the other hand, should come in at THB2.2bn, up 5% YoY but 9% below
its guidance of THB2.5bn. As residential gross margin for 9M14 was
already 36.2%, the company is confident that full-year gross margin
should come in better than its guidance of 35%.
2015 guidance looks achievable. Land and Houses targets 2015
presales at THB34bn (+8% YoY) and realised residential revenue at
THB28bn (single-digit growth YoY). Rental income should fall to
THB1.5bn (-32% YoY) after the divestment of Terminal 21 shopping
complex to LH Shopping Centers Leasehold REIT (LHSC TB, NR) at
end-2014. The company sets to maintain its gross margin YoY with an
upside surprise amid a reduction in construction material prices. New
launches this year will be worth THB37bn, down from THB41bn in 2014.
However, value of its existing projects remains huge at THB70bn.
Core profit growth may be unexciting for 2014-2015 but is likely to
rebound in 2016. We estimate core profit to grow by a single-digit rate
in 2014-2015, but 2014 bottomline will be boosted by gains on the sale
of asset into LHSC worth THB1.5bn. For 2015, we have yet to include
any upside gain as Land and Houses also plans to sell some
apartments/hotels into another new REIT. A rebound in 2016 core
earnings is likely upon completion of major condominium projects like the
THB7.5bn Sathorn Bangkok, the THB7bn 333 Riverside, and the Room
Sukumvit 69 worth THB2.6bn.
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
(1.1)
(1.7)
(8.2)
(12.3)
0.0
Relative
(2.4)
(1.9)
(7.5)
(11.3)
(17.2)
Shariah compliant
Forecasts and Valuations
Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover (THBm)
19,229
24,103
25,075
29,002
29,889
Reported net profit (THBm)
5,609
5,636
6,478
8,346
7,428
Recurring net profit (THBm)
3,634
5,636
6,447
7,028
7,428
Recurring net profit growth (%)
(2.5)
55.1
14.4
9.0
5.7
Recurring EPS (THB)
0.36
0.56
0.64
0.67
0.66
DPS (THB)
0.40
0.45
0.40
0.71
0.56
Wanida Geisler +66 2862 9748
Recurring P/E (x)
24.7
15.9
13.9
13.4
13.6
wanida.ge@rhbgroup.com
P/B (x)
3.05
2.85
2.67
2.50
2.49
28.1
50.1
P/CF (x)
Dividend Yield (%)
na
14.5
na
4.5
5.0
4.5
8.0
6.3
EV/EBITDA (x)
21.2
13.3
12.5
11.7
12.0
Return on average equity (%)
19.7
18.5
19.9
22.9
18.4
Net debt to equity (%)
87.2
79.8
94.7
61.0
61.4
3.6
0.0
Our vs consensus EPS (adjusted) (%)
Source: Company data, RHB
See important disclosures at the end of this report


3

.
3
0
.
1
0
0
.
2
0
0
Although Land and Houses is not so upbeat on demand, improving .
0
margins and potential divestment gains are key catalysts for 2015. 0
Maintain BUY with a new THB11.00 TP (23% upside). Strong 2014 0
earnings were mainly driven by the THB1.5bn divestment gains, which
should lead to a special dividend payment. Core profit growth may be
unexciting for 2014-2015 but is likely to rebound in 2016 upon
completion of several major condominium projects.
120
80




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3
Results Review, 22 January 2015
Keppel Land (KPLD SP)
Buy (Maintained)
Property - Real Estate
Market Cap: USD4,228m
Target Price:
Price:
SGD4.05
SGD3.65
Macro
Risks
Big Is Beautiful; Shareholders Included
Growth
Value
Keppel Land (KPLD SP)
Price Close
Relative to Straits Times Index (RHS)
3.70
107
3.60
105
3.50
103
3.40
101
3.30
99
3.20
97
3.10
95
3.00
12
93
0
0
.
2
0
0
Keppel Land’s 4Q14/FY14 results largely met our expectations, with its .
0
full-year dividend of 14 cents (39% payout ratio) matching our forecast. 0
Reiterate BUY with a higher RNAV-derived TP of SGD4.05 (11% upside). 0
In China, it sold 1,900 homes in FY14 (4Q14: 490 units) vs 3,870 units a
year ago (4Q13: 360 units). We expect demand from upgraders and firsttimers to be sustained for the rest of the year on the relaxation of
mortgage rules and easing credit in China.

10
8

6
Nov-14
Sep-14
Jul-14
May-14
Mar-14
2
Jan-14
Vol m
4
Source: Bloomberg
Avg Turnover (SGD/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (SGD)
Free float (%)
Share outstanding (m)
Shareholders (%)
Keppel Corp Ltd
Matthews International
Blackrock
6.82m/5.20m
5.2
11.1
3.10 - 3.65
45
1,545
54.6
2.4
0.9
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
6.7
10.3
14.8
5.5
12.3
Relative
7.6
8.6
10.0
4.8
5.7
Shariah compliant
Ong Kian Lin +65 6232 3895
kianlin.ong@sg.oskgroup.com


2

.
2
0
.
2





4Q14/FY14 results in line. Keppel Land recorded 4Q14/FY14 core
PATMI of SGD224.3m/SGD532.2m (-11.5%/-4.1% YoY), driven mainly
by divestment gains and development profits. In FY14, it divested its
stakes in Marina Bay Financial Centre Tower 3, Equity Plaza and two
data centres in Singapore, as well as its overseas projects – Elita
Garden Vista in Kolkata, India, Al Mada Towers in Jeddah, Saudi Arabia,
and BG Junction, its shopping mall in Surabaya, Indonesia, unlocking
SGD1bn net proceeds and lowering its net gearing to 20% (3Q14: 37%)
Highline Residences and The Glades are 30% and 34% sold
respectively. Keppel Land sold about 304 residential units in Singapore
(FY13: ~370 units), of which about half were from Highline Residences.
Outside Singapore, the company sold about 2,100 residential units, of
which about 1,900 units were in China, mostly from Central Park City,
The Botanica, Stamford City and The Springdale. Buyer sentiment
improved after the mortgage rule relaxation and rate cut. In Vietnam, the
group saw steady home sales with about 160 units sold, mainly from The
Estella and Riviera Point. The new foreign property ownership rule which
will take effect from 1 July 2015 is expected to boost the market.
Our view. Trading in Keppel Land shares has been halted, with the
market shrouded by privatisation chatter, which we estimate could cost
Keppel Corp (KEP SP, BUY, TP: SGD11.30) SGD3.4bn-4.2bn, pegged
to FY14 NTA and RNAV, if it goes through. In FY15, we expect Keppel
Land to maintain its focus on growing its operations in Singapore, China,
Indonesia and Vietnam. The mortgage relaxation for second-home
buyers (downpayment down to 30% from 60%) and the lower mortgage
rate of a 5-10% discount to the 5.6% benchmark rate in China should
help sustain demand. At 0.58x P/RNAV, we maintain that the stock’s
valuation is undemanding. Reiterate BUY with a RNAV-derived TP of
SGD4.05.
Forecasts and Valuations
Total turnover (SGDm)
Dec-13
Dec-14 Dec-15F Dec-16F Dec-17F
1,461
1,497
1,375
989
2,074
Reported net profit (SGDm)
922
894
497
357
477
Recurring net profit (SGDm)
623
704
484
344
463
Recurring net profit growth (%)
10.4
13.0
(31.3)
(28.9)
34.6
Recurring EPS (SGD)
0.40
0.46
0.31
0.22
0.30
DPS (SGD)
0.13
0.19
0.06
0.05
0.06
9.0
8.0
11.7
16.4
12.2
0.81
0.74
0.76
0.75
0.73
3.6
5.3
1.7
1.3
1.8
6.3
Recurring P/E (x)
P/B (x)
Ivan Looi +65 6232 3841
Dividend Yield (%)
ivan.looi@sg.oskgroup.com
Return on average equity (%)
14.0
12.2
6.6
4.8
Return on average assets (%)
7.3
6.3
3.5
2.8
38.3
19.8
21.2
26.5
Net debt to equity (%)
3.4
(29.4)
Source: Company data, RHB
See important disclosures at the end of this report
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4
Company Update, 22 January 2015
CIMB (CIMB MK)
Sell (from Neutral)
Financial Services - Banks
Market Cap: USD13,670m
Target Price:
Price:
MYR5.20
MYR5.87
Macro
Risks
More Earnings Headwinds Ahead
Growth
Value
CIMB (CIMB MK)
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
7.90
110
7.40
104
6.90
98
6.40
93
5.90
87
5.40
81
4.90
50
45
40
35
30
25
20
15
10
5
75

Nov-14
Sep-14
Jul-14
May-14
Mar-14
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Khazanah
EPF
MUFG
48.8m/14.1m
7.3
-11.4
5.18 - 7.53
47
8,424
29.4
14.7
8.6
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
5.6
6.0
(8.4)
(15.7)
(17.5)
Relative
6.2
4.0
(5.8)
(9.3)
(13.9)


4Q14 to see books cleaned up. Management warned that 4Q14 is
going to be a ‘bad quarter’ due to higher loan provisioning for CIMB
Niaga’s coal portfolio as well as some provisioning for its domestic
corporate book. The ‘clean-up’ exercise is expected to spill over into
1Q15, although the quantum should not be as significant then. With that,
CIMB said that its loan loss coverage should rise to >80% from 74% as
at 30 Sep 2014. There was no guidance on 2014 credit cost except that
it would be “higher than the usual run rate”, while guidance for 2015
credit cost will only be provided in the 4Q14 results briefing.
It’s all about costs. The key area of focus ahead for CIMB is costs.
Recall that management had previously set a cost-to-income ratio (CIR)
target of 50% by 2015 (from 56% in 2012 while 9M14 CIR was 58%), to
be driven by a combination of strong income growth and improved cost
efficiency. However, given the current environment, management has
dialled back expectations on income growth and hence, the increased
focus on cost control. CIMB said the issues faced currently are partly
structural and partly cyclical, especially for investment banking (IB).
Hence, management is looking at operational reorganisation and some
rationalisation to streamline some businesses and to improve operational
efficiency.
Forecasts. We lower our 2014-2016 net profit projections by 6.5-7.5%
with the two key revisions being: i) revised credit cost assumption of
41bps for 2014F from 37bps. This implies 4Q14 credit cost of 65bps
(annualised) vs 3Q14’s 56bps and 4Q13’s 53bps, and ii) a 7-8.5% cut to
our 2014-2016 non-interest income projections.
Investment case. Following the earnings revisions above, we lower our
GGM-derived TP to MYR5.20 from MYR6.10, and downgrade our call on
the stock to SELL from Neutral. We expect management’s guidance
yesterday to trigger another round of earnings downgrades by
consensus. Even then, the downgrade cycle may not have bottomed out.
We continue to see markets-related income and asset quality as key risk
areas to earnings.
Forecasts and Valuations
Shariah compliant
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Net interest income (MYRm)
9,085
9,547
10,222
10,925
11,641
Reported net profit (MYRm)
4,305
4,540
3,773
4,289
4,711
6.8
5.5
(16.9)
13.7
9.9
4,305
4,540
3,773
4,289
4,711
Recurring EPS (MYR)
0.58
0.60
0.45
0.50
0.53
DPS (MYR)
0.23
0.24
0.18
0.20
0.21
Recurring P/E (x)
10.1
9.8
13.0
11.8
11.1
P/B (x)
1.54
1.50
1.32
1.23
1.16
4.0
4.1
3.1
3.5
3.6
11.0
10.7
10.7
Net profit growth (%)
Recurring net profit (MYRm)
David Chong, CFA +603 9207 7618
Dividend Yield (%)
david.chong@rhbgroup.com
Return on average equity (%)
15.8
15.5
Return on average assets (%)
1.4
1.3
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


2

.
2
0
.
2
0
0
.
2
0
0
We downgrade our call on CIMB to SELL from Neutral, with a revised .
0
GGM-derived TP of MYR5.20 (11.4% downside). This is after we lowered 0
our 2014-2016 net profit forecasts by 6.5-7.5%, as CIMB warned of 0
higher loan provisioning and softer revenue growth expectations
ahead. Even then, we think there is still downside risk to earnings, with
markets-related income and asset quality as key risk areas.

Jan-14
Vol m
Price Close




Source: Company data, RHB
1.0
1.0
1.0
(4.0)
(2.9)
(5.5)
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5
Sector News Flash, 21 January 2015
Materials & Mining (Asia ex-Japan)


1

1

1
Overnight ‘Materials Matters’
1
Key commodities
Change (%)
MTD
Coal
YTD




Price
1-day
Aluminium (USD/t)
1,816
(1.3)
(0.5)
(0.5)
Copper (USD/t)
5,709
(1.0)
(10.3)
(10.3)
Lead (USD/t)
1,846
0.2
0.1
0.1
Nickel (USD/t)
14,417
(2.1)
(4.4)
(4.4)
Zinc (USD/t)
2,074
(0.8)
(4.3)
(4.3)
Tin (USD/t)
19,294
(0.2)
(0.7)
(0.7)
1,276
(0.4)
7.7
7.7
18
(0.6)
12.7
12.6
68
(0.8)
(4.4)
(4.5)




Newcastle coal (USD/t)
59
-
(7.1)
(2.0)
Other metals/minerals
Qinhuangdao coal (USD/t)
97
-
(0.8)
(0.8)
Non-ferrous metals
Precious metals
Gold (USD/oz)
Silver (USD/oz)
Steel
Iron ore (USD/t)
Energy
Brent Crude (USD/barrel)
49
3.6
(13.8)
(13.8)
Source: Bloomberg.Note: MTD:month till date, YTD:year till date
ArcelorMittal sells its Kuzbass coal mines to Russian NTK
Rise in Newcastle coal terminals' ship queues should be short-lived
RBCT targeting export of 74m tonnes of coal in 2015
India taking steps to permit standalone miners into coal sector
Iron and steel



Rio’s payout under threat in tough times
Krakatau Steel to build USD390m hot rolled coil factory
Citic to write down Sino Iron project by USD2bn as ore prices slide
Australia iron-ore ports reopen as cyclone threat eases
Rio Tinto's mines across globe produce 128,300 tonnes copper in Q4
Nickel Asia Corporation nickel ore output soars in 2014
Indonesia warns Freeport may lose export permit if smelter delayed
Market cap weighted daily price performance
Iron & Steel
-5.2%
Coal
-2.4%
Cement
-2.3%
Metals
0.4%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
Source: Bloomberg
Shekhar Jaiswal +65 6232 3894
shekhar.jaiswal@sg.oskgroup.com
Arshath Mohamed +65 6232 3897
arshath.mohamed@sg.oskgroup.com
See important disclosures at the end of this report
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6
Company Update, 21 January 2015
CT Environmental (1363 HK)
Buy (Maintained)
Industrial - Environment Control
Market Cap: USD1,447m
Target Price:
Price:
HKD9.80
HKD7.78
Macro
Risks
Positive Endorsement By GIC
Growth
Value
CT Environmental (1363 HK)
Price Close
Relative to Hang Seng Index (RHS)
8.60
8.10
192
7.60
180
7.10
168
6.60
156
6.10
144
5.60
132
5.10
120
4.60
108
4.10
96
3.60
70
84

50

30
Nov-14
Sep-14
Jul-14
May-14
Mar-14
10
Jan-14
Vol m
20

Source: Bloomberg
Avg Turnover (HKD/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (HKD)
Free float (%)
Share outstanding (m)
Shareholders (%)
30.8m/3.97m
2.2
26.0
4.05 - 8.27
33
1,442
Tsui Cham To
Gu Yaokun
GIC
57.6
4.2
5.7
Share Performance (%)

GIC Pte Ltd (GIC) to hold 5.7%. CT Environmental (CTEG) announced
the issuance of 87.1m new shares to GIC last night at HKD7.12, an 8.5%
discount to yesterday’s closing price. The new shares represent 6.04%
of its existing share capital, or 5.7% of its enlarged capital. There is a
1-year lock-up period. The HKD614m net proceeds have been
earmarked for the Guangzhou Lvyou (GZLY) M&A announced last year,
future M&As and working capital. The CNY800m GZLY M&A (inclusive
of debt acquired) is slated for completion before mid-February.
GIC onboard is a positive move. Singapore-based GIC is one of the
world's leading sovereign funds. It focuses on long-term investments.
The fund’s investment in CTEG is indicative of its confidence in the
company’s outlook and ability to deliver lucrative returns.
Zero impact on FY15/FY16 EPS. We estimate that the 6% dilution can
be offset by the HKD40m savings in interest costs, ie ~6% earnings,
implying no change to FY15 EPS. Given that CTEG’s gearing will be
lowered to 65% by end-2015 (pre-issuance: 110%), it can continue to
secure more projects. Thus, we lift FY15/FY16 earnings estimates by 6%
each due to the interest cost savings. We also factored in a small project
(Zengcheng – 40,000 cu m annual capacity) announced on 7 Jan.
Reiterate BUY and HKD9.80 TP. Our DCF-based TP implies 24x
FY15F P/E, higher than its HK-listed waste water treatment peers’
average of 17x. We believe the premium is justified by CTEG's superior
3-year EPS CAGR forecast of 39% vs the sector’s 22%. This, in turn, is
mainly driven by the new earnings drivers (sludge and hazardous waste
treatment through the Guangzhou Lvyou acquisition) via build-ownoperate (BOO) models that enjoy lucrative IRR of 20% vs build-operatetransfer’s (BOT) 10-12%.
YTD
1m
3m
6m
12m
Absolute
(2.4)
(0.6)
11.8
39.2
67.0
Forecasts and Valuations
Dec-12
Dec-13
Relative
(3.0)
(3.3)
8.9
38.0
63.5
Total turnover (HKDm)
384
485
1,036
1,820
2,192
Reported net profit (HKDm)
177
224
385
614
833
Recurring net profit (HKDm)
180
225
365
614
833
Recurring net profit growth (%)
10.0
25.2
62.1
68.3
35.7
Recurring EPS (HKD)
0.18
0.20
0.26
0.41
0.54
DPS (HKD)
0.00
0.03
0.05
0.07
0.10
Recurring P/E (x)
44.2
38.6
30.1
18.8
14.3
P/B (x)
27.5
9.6
6.2
4.0
3.2
P/CF (x)
32.8
98.5
78.4
28.0
13.9
Shariah compliant
Laurent Wong +852 2103 9432
laurent.wong@rhbgroup.com
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


3

.
2
0
.
3
0
0
.
1
0
0
CTEG announced yesterday that GIC was acquiring an enlarged 5.7% .
0
stake. Maintain BUY and DCF-based HKD9.80 TP (26% upside). We 0
deem the placement as positive because the leading Singapore-based 0
sovereign fund is focused on long-term investment. The proceeds can
also help lower gearing to 65% by end-2015 (pre-placement: 110%).
FY15 EPS impact is nil as the 6% dilution will largely be offset by
interest cost savings.
60
40




Source: Company data, RHB
Dec-14F Dec-15F Dec-16F
0.0
0.4
0.6
1.0
1.3
20.9
24.0
22.8
13.6
10.1
58.6
29.6
26.2
25.7
25.0
150.3
9.4
74.2
65.9
33.5
(4.3)
14.5
21.3
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7
Sector News Flash, 21 January 2015
China Railway & Construction Sector
Overweight (Maintained)
Macro
Risks
The Merger Moving To The Next Stage
Growth
Value






3

1

3
2
China CNR
What’s new?
China CNR (6199 HK, BUY, TP HKD16.28) and CSR Corp (1766 HK, BUY,
TP HKD14.66) both made announcements yesterday regarding the
latest update on their merger after the market closed. Key points:


Source: Bloomberg
CSR Corp
EGMs on 9 Mar to seek approval for the merger. China CNR and
CSR Corp will both host EGMs on 9 Mar in Beijing to seek approval for
the merger and the draft report for the corporate exercise.
Disclosure of 10M14 financial data. In the draft report for the merger,
China CNR and CSR Corp disclosed 10M14 financial data based on
China GAAP accounting standards. By end-Oct 2014, China CNR and
CSR Corp posted CNY4.46bn and CNY4.56bn in earnings respectively,
ie both 8% higher than their 2013 full-year net profit. China CSR had
higher GPM of 21.3% vs CNR Corp’s 19.4% for the first 10 months of
2014. By end-Oct 2014, China CNR booked a 35% net gearing ratio with
a net operating cash outflow of CNY1.1bn (end-1H14: net cash position)
due mainly to its H-share listing. In the same period, China CSR’s
gearing ratio improved significantly to 1%, (end-3Q14: 26%) and
recorded a net operating cash-inflow of CNY1.9bn.
Our view

Source: Bloomberg

Winston Cao +852 2103 9414
winston.cao@rhbgroup.com
Moving to the next stage. Amid negative news flow over rumours of
insider trading with regards to the managements of both parties, the
China CNR-CSR Corp merger has moved to next stage, ie the EGMs on
9 Mar. We assume another 1-2 months for the Central Government to
review and approve the merger after approvals are received at the
EGMs, with the entire merger process possibly completed within 1H15.
Operations remain intact, maintain positive on both China CNR and
CSR Corp. We do not see a major operating impact from the merger
process based on both companies’ 10M14 results. We maintain our
positive stance on both China CNR and CSR Corp on the back of the
huge growth potential of the future merged company. This is because of
the: i) monopoly scenario in China market after the merger, and ii)
enhanced competitiveness in terms of the global railway equipment
market post merger. China CNR and CSR Corp are currently trading at
15.6x and 16.7x FY15F P/Es respectively. Our HKD16.28 TP for China
CNR (50% upside) and HKD14.66 TP for CSR Corp (42% upside) are
both set at 21x FY15F P/E, ie 1SD above the past 5-year historical
forward P/Es mean. Major risks to our positive stance on both stocks
are: i) a cancellation or changes to the merger plan, and ii) fatal train
accidents.
Company Name
Ticker
China CNR
CSR Corp
Price
(HKD)
Target
(HKD)
P/E (x) P/E (x) Rating
Dec-14F Dec-15F
6199 HK 10.84
16.28
16.6
15.6
BUY
1766 HK 10.30
14.66
19.2
16.7
BUY
China State Construction Int'l
3311 HK 11.22
14.63
12.0
8.4
BUY
China Railway Group
390 HK
5.93
7.78
9.1
7.3
BUY
China Railway Construction
1186 HK 9.49
9.90
7.9
7.3
NEUTRAL
China Communications Construction
1800 HK 9.08
7.88
9.2
8.7
SELL
Source: Company data, RHB
See important disclosures at the end of this report
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8
Sector Update, 22 January 2015
Auto & Autoparts
Neutral (Maintained)
Macro
Risks
A Strong Finish To 2014
Growth
Value






3

2

1
2
2014 market share
2014
Others
17.4%
Proton
17.4%
Mazda
1.7%
Auto sales ended 2014 on a high note with a record month in December.
We remain NEUTRAL on the sector with Berjaya Auto and MBM
Resources as our Top Picks. Total industry volume (TIV) for 2014 grew
1.6% YoY to 666,465 units, missing our earlier forecast of 675,000 units.
The GST implementation and other macroeconomic headwinds will
likely pose challenges for auto sales in 2015.

Honda
11.6%
Perodua
29.3%
Nissan
7.0%
Toyota
15.6%
Source: MAA
2013 market share
Others
17.5%
2013

Proton
21.2%
Mazda
1.4%
Honda
7.9%
Nissan
8.1%
Perodua
29.9%
Toyota
14.1%

Source: MAA

A record December. According to data from the Malaysian Automotive
Association (MAA), December TIV was an all-time monthly sales record
with 64,660 units registered (+16.9% MoM, +6.9% YoY), bringing 2014
sales to 666,465 units, up 1.6% YoY. As expected, this missed our
earlier sales target of 675,000 units after tepid monthly sales from
August to November. Most marques reported strong MoM sales in
December as distributors pushed hard to meet their 2014 sales targets
with year-end sales promotions. We believe the strong sales numbers
achieved were a function of aggressive discounting and should not be
interpreted as a positive shift in consumer discretionary spending
pattern.
Proton sales stay tepid, Perodua makes headway. Proton was one of
the worst-performing marques in 2014 with sales diving 16.6% YoY.
Proton sales have yet to see a recovery despite the launch of the new
Iriz in September. This was attributed to a slow ramp-up in production as
management was careful not to repeat legacy quality control issues.
Another reason given was the unanticipated market preference for the
1.3 auto variant, for which Proton had low channel inventories. Perodua
had no reported production hiccups of the new Axia and is targeting total
sales of 208,000 units in 2015.
Honda topples Toyota in the passenger segment. Honda is officially
the number one non-national passenger vehicle (PV) marque, toppling
Toyota in 2014 with sales of 77,495 units (+50.4% YoY). Honda sales
were driven by strong product offerings in all PV sub-segments.
However, Toyota remained the top non-national vehicle brand after
adding commercial vehicles with total sales (including Lexus) of 103,636
units, up 12% in 2014 helped by strong sales of the Vios and Corolla
Altis. For the year, non-national PV sales rose 14.5% YoY with nonnational PV market share reaching 47.1% (2013: 41.9%).
NEUTRAL. We expect TIV to slip slightly to 650,000 units in 2015 after
three consecutive years of growth. The implementation of the goods and
services tax (GST), macroeconomic headwinds combined with rising
living costs will likely put pressure on consumer discretionary spending.
Factors supporting sales include a strong product pipeline and a
competitive market place with distributors prepared to discount. We
remain bullish on Berjaya Auto’s prospects, with growth coming from
market share gains.
Price
Target
FY15F
P/E (x)
FY15F
P/B (x)
Net Yield
(%)
Rec
APM
MYR4.87
MYR4.75
8.3
0.91
4.5
SELL
Alexander Chia +603 9207 7621
Berjaya Auto^
MYR3.39
MYR4.50
8.1
4.1
3.5
BUY
alexander.chia@rhbgroup.com
DRB-HICOM^
MYR1.76
MYR2.90
9.2
0.4
2.6
BUY
MBM
MYR3.03
MYR3.55
7.1
0.7
2.0
BUY
Tan Chong
MYR3.19
MYR3.10
10.8
0.7
3.4
NEUTRAL
UMW^
MYR10.70
MYR11.00
11.7
2.1
5.6
NEUTRAL
Company
See important disclosures at the end of this report
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Source: Company data, RHB ^FY15 valuations refer to FY16 data
9
Results Review, 22 January 2015
Hua Yang (HYB MK)
Buy (Maintained)
Property - Real Estate
Market Cap: USD157m
Target Price:
Price:
MYR2.28
MYR2.15
Macro
Risks
Bucking The Trend
Growth
Value
Hua Yang (HYB MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.60
128
2.50
124
2.40
119
2.30
115
2.20
110
2.10
106
2.00
101
1.90
97
1.80
92
1.70
88
1.60
6
83

4
3

Dec-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Vol m
1
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Heng Holdings S/B
Cham Poh Meng
0.49m/0.15m
64.7
6.1
1.75 - 2.50
63
264
30.3
6.5


Beating expectations. Hua Yang’s 3QFY15 core profit of MYR30.9m
(+57.0% YoY, +19.1% QoQ) brought 9MFY15 core profit to MYR80.9m
(+83.5% YoY), above our but within consensus estimates. 9M revenue
grew 38.5% YoY, underpinned by progress billings from its ongoing
township projects such as Taman Pulai Hijauan, Bandar Universiti Seri
Iskandar (BUSI) and high-rise projects such as One South (OS), Metia
Residences (MR) and Sentrio Suites (SS). Gross profit margin continued
to improve to 28.2% in 3QFY15 vs 25.6% in 2QFY15. It also declared an
interim dividend of 5 sen per share this quarter.
Still on track to meet sales target. 3QFY15 total new sales of
MYR149.8m were up 35.8% QoQ (2QFY15: MYR110.3m), despite the
softening market conditions. This brought 9MFY15 sales to MYR342.0m
(1HFY15: MYR192.2m), still on track to meet its MYR500m full-year
target. The new sales growth was attributed to new phases of its existing
projects as well as maiden contributions from Phase 6 of OS and
Citywoods in Johor. Meanwhile, its unbilled sales remained strong at
MYR733.3m (2QFY15: MYR717.9m), with its Klang Valley projects
(namely OS, MR and SS) making up close to 70% of the unbilled sales
amount. Net gearing was stable at 0.5x during the quarter.
Earnings forecasts. We are keeping our earnings forecasts unchanged,
pending a briefing later today.
Maintain BUY. Our TP is maintained at MYR2.28, based on an
unchanged 25% discount to RNAV, pending today’s briefing. We believe
that despite the challenging outlook for the overall property segment,
Hua Yang should continue to fare better than some of its peers, given its
affordable product offerings.
Share Performance (%)
YTD
1m
3m
6m
12m
4.9
4.9
(2.3)
(8.5)
9.1
Mar-13
Mar-14
Mar-15F
Mar-16F
Mar-17F
409
510
612
729
751
Reported net profit (MYRm)
70
81
93
103
109
Recurring net profit (MYRm)
70
81
93
103
109
Recurring net profit growth (%)
33.1
14.6
14.7
11.6
5.1
Recurring EPS (MYR)
0.37
0.36
0.35
0.39
0.41
Alia Arwina +603 9207 7608
DPS (MYR)
0.12
0.12
0.12
0.14
0.14
alia.arwina@rhbgroup.com
Recurring P/E (x)
5.88
6.01
6.13
5.49
5.23
P/B (x)
1.27
1.47
1.27
1.10
0.97
5.6
5.6
5.7
6.4
6.7
Return on average equity (%)
23.5
22.4
22.2
21.5
19.8
Return on average assets (%)
13.0
11.1
10.6
10.6
10.2
Net debt to equity (%)
25.6
55.6
49.6
43.9
41.7
(8.9)
(11.1)
(6.5)
Absolute
Relative
5.4
2.7
0.1
(2.3)
12.5
Shariah compliant
Forecasts and Valuations
Total turnover (MYRm)
Dividend Yield (%)
Our vs consensus EPS (adjusted) (%)
Source: Company data, RHB
See important disclosures at the end of this report


2

.
2
0
.
3
0
0
.
3
0
0
Hua Yang’s 3QFY15 (Mar) results came in above our expectations. .
0
Maintain BUY and RNAV-based TP of MYR2.28 (6% upside), pending a 0
briefing today. Despite the softening market conditions, Hua Yang’s 0
total new sales were up 35.8% QoQ, driven by maiden contributions
from its new launches. Its strong unbilled sales of MYR733.3m should
help to sustain near-term earnings growth.
5
2




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10
Results Review, 21 January 2015
CapitaCommercial Trust (CCT SP)
Buy (Maintained)
Property - REITS
Market Cap: USD4,041m
Target Price:
Price:
SGD1.95
SGD1.84
Macro
Risks
CapitaGreen Roaring To Full Occupancy In FY15
Growth
Value
CapitaCommercial Trust (CCT SP)
Price Close
Relative to Straits Times Index (RHS)
1.90
119
1.80
115
1.70
111
1.60
107
1.50
102
1.40
98
1.30
35
94
0
0
.
2
0
0
CCT’s results met the high-end of our expectations. Management .
0
expects CapitaGreen to achieve 100% occupancy in 2015 and 0
contribute to distributable income in 2016. Reiterate BUY with a DDM- 0
derived SGD1.95 TP (CoE: 7.8%, TG: 2%), implying a 10.9% total return.
CCT has until Dec 2017 to exercise its option to purchase the remaining
60% stake from CapitaLand and Mitsubishi Estate Asia.

30
25
20
15

Nov-14
Sep-14
Jul-14
May-14
Mar-14
5
Jan-14
Vol m
10
Source: Bloomberg
Avg Turnover (SGD/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (SGD)
Free float (%)
Share outstanding (m)
Shareholders (%)
11.1m/8.49m
-5.4
6.3
1.39 - 1.84
65
2,945
Capital Limited
CBRE Clarion Securities
Lasalle Investment
Management
40.0
5.9
1.9

Results met the high-end of our expectations. CapitaCommercial
Trust (CCT) saw a 2.9%/3.9% YoY increase in 4Q14/FY14 DPU to
2.15/8.46 cents, accounting for 26%/103% of our forecasts, without
contributions from CapitaGreen. Balance sheet remained strong, with a
lower gearing of 29.3% (3Q14: 30.2%) and 83% of borrowings were
fixed (3Q14: 80%). Assuming a gearing of 40%, CCT has an ample debt
headroom of SGD1.3bn. Portfolio occupancy rate dropped 2.6ppt to
96.8% (3Q14: 99.4%), mainly due to the recent completion of
CapitaGreen. The monthly average office portfolio gross rent continued
its uptrend, increasing 2.3% QoQ and 5.9% YoY to SGD8.61 psf.
CapitaGreen’s Temporary Occupation Permit (TOP) on 18 Dec 2014.
As of 31 Dec 2014, CapitaGreen has secured leases for 486,800 sqf or
69.3% of its net lettable area (NLA), above management’s expectation of
50%. Financial institutions took up 55% of NLA, while Technology, Media
and Telecoms (TMT) companies as well as Energy, Commodities and
Maritime corporations accounted for 12% and 22% respectively. Given
that South Beach Development (expected TOP: 1Q15) has already
achieved a pre-committed rate of 80-90%, we expect CapitaGreen to hit
at least 85% occupancy rate by 1Q15, with average rentals signed at
SGD11-12 psf/month. We also foresee CCT to acquire the remaining
60% stake of CapitaGreen in due course, providing a catalyst to CCT.
Next re-development target: Golden Shoe Car Park? With the
completion of CapitaGreen, CCT has freed up its 10% development cap.
We envision possibilities for CCT to redevelop the old Golden Shoe Car
Park, unlocking value for unit-holders in the longer run. We forecast an
uplift of 7% in rentals for Grade A office space in 2015 (vs 15% in 2014),
and hence we adjust our growth assumptions. Reiterate BUY with a
higher TP of SGD1.95 (from SGD1.80).
Forecasts and Valuations
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
4.6
9.2
14.0
7.3
24.8
Relative
6.3
8.3
10.0
7.4
19.1
Dec-13
Dec-14 Dec-15F Dec-16F Dec-17F
Total turnover (SGDm)
251
263
277
284
285
Net property income (SGDm)
197
205
210
214
215
Reported net profit (SGDm)
220
256
156
160
164
Total distributable income (SGDm)
234
249
237
270
279
0.08
0.08
0.09
0.09
0.09
DPS (SGD)
Shariah compliant


2

.
2
0
.
2




DPS growth (%)
1.3
3.9
4.6
3.0
(2.1)
Recurring P/E (x)
23.9
20.6
35.3
35.5
35.4
Ong Kian Lin +65 6232 3895
P/B (x)
1.08
1.09
1.09
1.09
1.13
kianlin.ong@sg.oskgroup.com
Dividend Yield (%)
4.4
4.6
4.8
5.0
4.9
Return on average equity (%)
4.6
5.2
3.1
3.1
3.2
Return on average assets (%)
3.3
4.1
2.5
2.5
2.6
3.86
4.73
4.73
4.82
5.21
Ivan Looi +65 6232 3841
ivan.looi@sg.oskgroup.com
Interest coverage ratio (x)
Source: Company data, RHB
See important disclosures at the end of this report
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11
Results Review, 22 January 2015
SGX (SGX SP)
Neutral (Maintained)
Financial Services - Exchanges
Market Cap: USD6,343m
Target Price:
Price:
SGD7.65
SGD7.90
Macro
Risks
A Strong Quarter From Derivatives Market
Growth
Value
Singapore Exchange (SGX SP)
Relative to Straits Times Index (RHS)
7.70
105
7.50
102
7.30
100
7.10
98
6.90
96
6.70
93
6.50
9
8
7
6
5
4
3
2
1
91
Sep-14
May-14
0
0
.
2
0
0
SGX’s 2QFY15 (Jun) results met our and consensus expectations. .
0
Maintain NEUTRAL with a revised TP of SGD7.65 (3.2% downside). 0
2QFY15 securities market ADV improved 4% YoY/8% QoQ but it was the 0
derivatives market that had a standout quarter. Daily average derivative
contracts surged 50% YoY/41% QoQ to 634,000, as the liberalisation of
the Shanghai stock market helped lift interest in the China A50 futures.


Dec-14
107
Jul-14
7.90
Mar-14
109
Jan-14
Vol m
Price Close
8.10
Source: Bloomberg
Avg Turnover (SGD/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (SGD)
Free float (%)
Share outstanding (m)
Shareholders (%)
SEL Holdings
Tokyo Stock Exchange
15.9m/12.1m
-5.1
-3.2
6.68 - 7.97
71
1,071


23.4
5.0

Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
1.2
2.2
15.2
13.3
12.5
Relative
2.1
0.5
11.1
12.7
6.1
Shariah compliant
Singapore Research
2QFY15 results improved, with net profit of SGD87m (+16% YoY,
+12% QoQ) bringing 1HFY15 net profit to SGD164m (-2% YoY), or 48%
of our and consensus full-year net profit estimates.
Stellar performance from derivatives. Average daily value (ADV) for
securities market improved 8% QoQ and 4% YoY to SGD1.04bn, while
turnover velocity was higher at 36% vs 32% in 1QFY15 (2QFY14: 35%).
The derivatives market, however, was the star performer for the quarter
with 2QFY15 derivatives volume rising to 40m contracts vs 28.8m in
1QFY15 and 26.3m in 2QFY14. The rise was mainly driven by higher
China A50 Index futures and iron ore product volumes. Overall, 2QFY15
revenue climbed 19% YoY and 16% QoQ on the back of stronger
contribution from derivatives market (+46% YoY, +42% QoQ). While
operating leverage for exchanges tends to be high, SGX’s 2QFY15
operating profit growth was only in line with topline growth due to higher
staff costs (higher headcount and salary adjustments) as well as higher
processing and royalties (due to a rise in derivatives volumes).
Management revised the opex guidance for FY15 to SGD360-370m from
SGD330m-340m.
Dividend. As expected, SGX declared an interim DPS of 4 cents
(2QFY14: 4 cents). We are forecasting FY15 total DPS of 28 cents
(FY14: 28 cents), based on a net payout ratio of 90% (FY14: 93%).
Forecasts. We tweak our FY15-16 net profit forecasts higher by 2-3%
mainly due to an upward revision in our FY15/FY16 average daily
derivative
volume
assumptions
to
600,000/660,000
from
460,000/504,000 respectively.
Valuation and recommendation. Our TP is revised up to SGD7.65
from SGD7.40, based on an unchanged target 2015 P/E of 22.5x (a 10%
discount to the stock’s 5-year average P/E to reflect the volatile
securities market conditions). Maintain NEUTRAL.
Forecasts and Valuations
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
Total turnover (SGDm)
648
715
687
766
824
Reported net profit (SGDm)
292
336
320
346
378
Recurring net profit (SGDm)
292
336
320
346
378
Recurring net profit growth (%)
(1.0)
15.1
(4.6)
8.0
9.2
Recurring EPS (SGD)
0.27
0.31
0.30
0.32
0.35
DPS (SGD)
0.27
0.28
0.28
0.29
0.32
Recurring P/E (x)
28.9
25.1
26.4
24.4
22.3
P/B (x)
10.1
9.5
9.2
8.8
8.5
P/CF (x)
24.4
21.5
22.4
20.4
19.0
Dividend Yield (%)
EV/EBITDA (x)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


2

.
2
0
.
2




Source: Company data, RHB
3.4
3.5
3.5
3.7
4.0
19.6
16.8
18.6
16.4
15.0
net cash
net cash
net cash
net cash
net cash
2.2
(0.9)
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12
Results Review, 21 January 2015
Bangkok Bank (BBL TB)
Buy (Maintained)
Financial Services - Banks
Market Cap: USD10,806m
Target Price:
Price:
THB212.20
THB185.00
Macro
Risks
Asset Quality Stable While NIM Slipped In 4Q14
Growth
Value
Bangkok Bank (BBL TB)
Price Close
Relative to Stock Exchange of Thailand Index (RHS)
220
104
210
101
200
97
190
94
180
91
170
87
160
30
84


20
15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Vol m

5

Source: Bloomberg
Avg Turnover (THB/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (THB)
Free float (%)
Share outstanding (m)
Shareholders (%)
Thai NVDR
State Street Bank & Trust Co
793m/24.2m
23.2
14.7
169 - 215
66
1,909
30.8
3.3
Share Performance (%)
12m


FY14 results in line. Bangkok Bank posted net profit of THB8.76bn (8% QoQ) for 4Q14 and THB36.33bn (+1% YoY) for FY14, which were in
line with consensus and our forecasts.
4Q14 pre-impairment profit fell 23%. This was on: i) a 2% QoQ drop in
net interest income (NII) as net interest margin (NIM) fell 12bps QoQ, ii)
an 18% QoQ decline in non-II mainly on lower investment gains (-75%
QoQ), and iii) a 13% QoQ rise in opex for distribution channel expansion
and seasonal marketing and promotions. NIM was compressed by the
strong 7% QoQ growth in deposits, particularly high-rate fixed deposits.
Loans grew 2% QoQ in 4Q14. This enabled Bangkok Bank to end 2014
with a 2% YoY increase in loan assets. For 9M14, loans contracted by
an annualised 0.6% due to loan repayments by large corporates.
Asset quality remained benign in 4Q14. Gross non-performing loans
(NPLs) were down 2% QoQ to THB45.07bn while gross NPL ratio eased
to 2.53% (Sep 2014: 2.65%). Impairment charges fell 72% QoQ
following the sharp 42% QoQ rise in 3Q14. This lowered annualised
credit cost to 21bps in 4Q14 (3Q14: 76bps). For FY14, credit cost was
49bps (FY13: 51bps). Loan loss coverage was a high 204%.
Earnings forecasts lowered. We have lowered our projected net profit
by 3% for FY15 and 6% for FY16 on lower estimates for loans growth,
NIMs and non-II. We have also factored in higher provisions. We now
expect earnings growth of 9%/8% for FY15-16 vs 10%/13% previously.
Maintain BUY. The cuts in our earnings forecasts led to a reduction in
our GGM-based TP to THB212.20 (from THB220.00). Still, we retain our
BUY rating as valuations are undemanding at 1x FY15F P/BV (historical
mean: 1.2x) against resilient asset quality, strong balance sheet and
decent earnings growth.
YTD
1m
3m
6m
Absolute
(4.6)
(4.6)
(4.9)
(5.4)
5.4
Forecasts and Valuations
Dec-13
Dec-14
Dec-15F
Dec-16F
Dec-17F
Relative
(7.1)
(6.0)
(5.5)
(5.5)
(13.6)
Net interest income (THBm)
55,879
58,997
62,400
66,500
70,400
Reported net profit (THBm)
35,906
36,332
39,399
42,766
46,744
12.7
1.2
8.4
8.5
9.3
35,906
36,332
39,399
42,766
46,744
Recurring EPS (THB)
18.8
19.0
20.6
22.4
24.5
DPS (THB)
7.52
7.80
8.25
9.00
10.00
Recurring P/E (x)
9.84
9.72
8.96
8.26
7.55
P/B (x)
1.19
1.09
1.03
0.96
0.89
4.1
4.2
4.5
4.9
5.4
Return on average equity (%)
12.6
11.7
11.8
12.0
12.2
Return on average assets (%)
1.4
1.4
1.4
1.5
1.5
(2.5)
(6.1)
0.0
Shariah compliant
Net profit growth (%)
Recurring net profit (THBm)
Fiona Leong +603 9207 7638
fiona.leong@rhbgroup.com
Dividend Yield (%)
Our vs consensus EPS (adjusted) (%)
Source: Company data, RHB
See important disclosures at the end of this report


2

.
2
0
.
1
0
0
.
3
0
0
Bangkok Bank’s FY14 earnings were flat YoY at THB36.33bn, reflecting .
0
the economic downturn, but NPLs were benign and credit cost was 0
stable at 49bps. We maintain our BUY rating given the undemanding 0
FY15F P/BV of 1x, resilient asset quality and decent earnings growth of
8-9% for FY15-16F. However, we lower our TP to THB212.20 (from
THB220.00), implying 14.7% upside, as we trim our earnings forecasts.
25
10




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13
Company Update, 21 January 2015
Robinson Department Store (ROBINS TB)
Consumer Cyclical - Retail
Market Cap: USD1,559m
Sell (Maintained)
Target Price:
Price:
THB41.60
THB45.80
Macro
Risks
Weak Spending Environment In Upcountry
Growth
Value
Robinson Department Store (ROBINS TB)
Price Close
Relative to Stock Exchange of Thailand Index (RHS)
65.0
119
60.0
109
55.0
99
50.0
89
45.0
79
40.0
6
69

4

Nov-14
Sep-14
Jul-14
May-14
Mar-14
1
Jan-14
Vol m
2

Source: Bloomberg
Avg Turnover (THB/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (THB)
Free float (%)
Share outstanding (m)
Shareholders (%)
Central Group
86.5m/2.64m
28.6
-9.1
42.5 - 60.8
37
1,111
62.9
Share Performance (%)
YTD
1m
3m
6m
12m
1.7
4.0
(12.0)
(22.1)
(2.1)


3

.
2
0
.
2
0
0
.
2
0
0
Robinson is the largest departmental store operator in Thailand, with .
0
the widest coverage nationwide. We downgrade Robinson to SELL with 0
a TP of THB41.60 (9.2% downside) on expectation of a slower recovery 0
in discretionary spending in the upcountry region. The increase in
lifestyle centers will help to improve margins through rental income, but
we think that significant growth in net profit would only come in FY17F
when the new stores mature. Coverage is transferred to the authors.
5
3





Expansion plans on track. Robinson intends to open 4-5 new
departmental stores in Thailand each year till FY18F. Most of these
would be in the standalone lifestyle center format in upcountry. This will
help to boost rental income (investment income) from tenants. We
expect investment income to grow at approximately 26.6% CAGR from
FY14F-FY18F. Nonetheless, this will only make up approximately 9% of
total revenue in FY18F, up from 5% in FY14F. Robinson opened two
departmental stores in Vietnam in FY14F and it targets to open about
two stores per year over the next five years.
Consumption spending still weak in upcountry. Of the 37 Robinson
departmental stores, 26 are located in the upcountry. High household
debt and falling agricultural prices are likely to weigh down on consumer
spending, especially in the upcountry region.
Lacklustre 4Q14F, slow recovery in FY15F. Same-store sales growth
(SSSG) would likely end in the red for FY14F, as SSSG in October and
November remained negative according to management. We think
SSSG could turn around to 5% in FY15F, coming off from a lower base
in FY14F, as well as driven by last year’s pent-up demand, coming
mainly from Bangkok. Competition from fast fashion retailers is
intensifying in major malls. We note that Robinson would shift its product
focus to footwear and home products in the affected stores.
Valuation remains rich, downgrade to SELL. We downgrade
Robinson to SELL (from Neutral), with a TP of THB41.60 (from
THB62.00), pegged to a 19.3x FY15F P/E, based on -1x SD due to
lower-than-expected growth. We expect EPS to grow at an 8.8% CAGR
over FY14F-FY16F. While we like Robinson’s brand positioning to
leverage on the long-term growth of Thailand’s upcountry, we think that
recovery in the upcountry and discretionary products is likely to be slow
in the near-term.
Forecasts and Valuations
Dec-12
Dec-13 Dec-14F Dec-15F Dec-16F
Total turnover (THBm)
22,709
25,600
26,237
30,102
34,834
Reported net profit (THBm)
1,658
1,986
1,923
2,394
2,558
Recurring net profit (THBm)
1,658
1,986
1,923
2,394
2,558
Recurring net profit growth (%)
14.1
19.8
(3.2)
24.5
6.9
Recurring EPS (THB)
1.49
1.79
1.73
2.16
2.30
DPS (THB)
0.65
0.90
0.87
1.09
1.16
Recurring P/E (x)
30.6
25.6
26.4
21.2
19.9
P/B (x)
4.92
4.48
4.13
3.76
3.44
James Koh +65 6232 3839
P/CF (x)
11.0
15.8
12.9
10.6
9.1
james.koh@sg.oskgroup.com
Dividend Yield (%)
1.4
2.0
1.9
2.4
2.5
EV/EBITDA (x)
13.9
13.3
12.7
10.7
9.7
Return on average equity (%)
16.0
18.3
16.3
18.6
18.1
Absolute
Relative
(0.8)
2.6
(12.6)
(22.2)
(21.1)
Shariah compliant
Juliana Cai +65 6232 3871
juliana.cai@sg.oskgroup.com
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report
Source: Company data, RHB
net cash net cash
8.4
12.4
18.6
(2.8)
(1.7)
(13.2)
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Take Profit: Target price has been attained. Look to accumulate at lower levels
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Not Rated: Stock is not within regular research coverage
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