17-Feb-2015 - Morning Matters   E  F E A  F E WHAT’S INSIDE SET Intra-Day Graph ON THE PLATTER Source: Bloomberg Key Market Indices (16 February 2015) SET SET50 SET100 Dow Jones S&P500 Nasdaq FTSE FSSTI Hang Seng Nikkei KLCI SHANGHAI SE JCI SET PE (x) P/BV (x) Yield (%) Value Chg % Chg % YTD 1608.04 1064.75 2367.42 18019.35 2096.99 4893.84 6857.05 3427.16 24726.53 17926.89 1808.89 3222.36 5325.50 -7.85 -6.27 -13.53 -0.5% -0.6% -0.6% UNCHG UNCHG UNCHG UNCHG UNCHG UNCHG -16.47 0.94 43.99 -114.83 7.94 18.54 -48.67 -0.2% 0.0% 0.2% -0.6% 0.4% 0.6% -0.9% 7.4% 6.4% 7.0% 1.1% 1.9% 3.3% 4.4% 1.8% 4.8% 2.7% 2.7% -0.4% 1.9% 5-yr avg 2012 2013 2014F 15.7 2.1 3.3 18.5 2.3 2.8 15.6 2.1 2.9 13.6 2.0 3.3 Key Statistics Economic Highlights : Growth Picks Up in 4Q But Momentum Remains Weak, GDP Forecast Lowered To 3.4% For 2015 Thailand‟s real GDP growth picked up to 2.3% y-o-y in 4Q 2014, from +0.6% in the 3Q and compared with +0.4% registered in 2Q. At the same time, the 4Q GDP figure also came in above our forecast of +1.7% and the consensus‟ median estimate of +2.0%. For the full-year of 2014, the Thai economy registered the slowest growth in three years of 0.7%, slowing from +2.9% in 2013. As government spending was slow to pick-up while momentum of the private consumption and investment remained weak in 4Q, we are lowering our forecast for economic growth to 3.4% in 2015, from 4.0% expected previously. Sino-Thai Engineering & Construction (STEC TB;FVTHB31.50-Buy) : FY14 Earnings Flat And In Line As we expected, STEC booked FY14 earnings of THB1.52bn (+1.5% YoY) as it continued to recognise revenues from MRT and gas power plant projects. As such, we maintain BUY, with a TP of THB31.50 (21% upside). We expect the Pink and Orange MRT Lines and one double-track project (Jira junction-Khonkaen) totaling c.THB177bn, which will be up for bids in 1H15, to be major catalysts supporting its share price. MEDIAS HIGHLIGHTS    NBTC urged to change fee system NESDB argues for cut in policy rate to lower business costs Digital TV hikes ad spending by 16% SET Value by investor Type: Daily Buy (THBm) Sell (THBm) Net (THBm) 3,836.73 3,453.88 382.85 Institution 3,525.97 3,912.96 -386.99 Proprietary 7,459.86 8,970.63 -1,510.78 Foreign 30,144.89 28,629.97 1,514.92 Retail SET Value by investor Type MTD (THBm) YTD (THBm) Institution 306.79 10,091.45 Proprietary 333.12 8,593.60 Foreign 6,189.16 1,889.28 Retail -6,829.08 -20,574.34 SET50 Index Future Long Short Net MTD YTD Institution 13,279 12,952 327 6,316 -23,699 Foreign 8,325 6,765 1,560 -6,656 5,463 Local 26,486 28,373 Foreign Fund Flows (USDm) Last MTD -46.4 189.6 -1,887 YTD 61.9 340 18,236 YOY 7,070.7 See important disclosures at the end of this report Powered by Enhanced Datasystems‟ EFATM Platform T A F xE T A tF x T M A t xa T R tc xi G rt s ro V k o |a s w l| t u h e | | On The Platter On The Platter Siam Commercial Bank (SCB TB;FVTHB198.00-Neutral) : Measured Optimism On 2015 Outlook Economic : Growth Pickstake Up over in 4Q Momentum Remains Weak, SCB‟s new Highlights captains who will officially theBut reins from Apr 2015 are already GDP Forecast Lowered To 3.4% For 2015 hard at work, mapping out the bank‟s core thrusts for 2015. Maintain NEUTRAL and Thailand‟s up to 2.3% y-o-yof in the 4Q 2014, fromwould, +0.6% in in our the THB198.00real TP GDP (1% growth upside).picked Successful execution strategies 3Q and compared with +0.4% registered in 2Q. At the same time, the 4Q GDP figure view, sustain profitability growth. Management also unveiled its targets for 2015 that also came in above our stronger forecast of +1.7% growth and theagainst consensus‟ medianofestimate of broadly point to slightly earnings a backdrop moderate +2.0%. For the full-year of 2014, the Thai economy registered the slowest growth in economic recovery. three years of 0.7%, slowing from +2.9% in 2013. As government spending was slow to pick-up momentum of the private consumption and investment remained Veena Naidu while +66 2862 9752 (veena.na@rhbgroup.com) weakLeong in 4Q,+603 we 9207 are lowering our forecast for economic growth to 3.4% in 2015, from Fiona 7638 (fiona.leong@rhbgroup.com) 4.0% expected previously. Economist: Vincent Loo Yeong Hong | +603 9280 2172 Sino-Thai Engineering & Construction (STEC TB;FVTHB31.50-Buy) : FY14 Earnings Flat And In Line As we expected, STEC booked FY14 earnings of THB1.52bn (+1.5% YoY) as it continued to recognise revenues from MRT and gas power plant projects. As such, we maintain BUY, with a TP of THB31.50 (21% upside). We expect the Pink and Orange MRT Lines and one double-track project (Jira junction-Khonkaen) totaling c.THB177bn, which will be up for bids in 1H15, to be major catalysts supporting its share price. Analyst : Veena Naidu License No. 24418, +66 2862 9752 (veena.na@rhbgroup.com) Chun Phokaisawan Medias Highlights NBTC urged to change fee system Digital TV operators have called on the National Broadcasting and Telecommunications Commission (NBTC) to change the collection of digital TV licence fees to a flat rate throughout the 15-year period. The Radio and Television Broadcasting Professional Federation (RTBPF) yesterday submitted a letter to the NBTC on behalf of digital TV operators. They also want to delay the 2% payment to the universal service obligation fund. Meanwhile, the regulator wants to update the second licence fee payment of 24 digital TV operators, which is due in May, before making a decision. RTBPF president Chamnan Siritan said digital TV operators wanted the flat-rate licence fee because they were affected by the delay in the digital TV subsidy coupon distribution scheme and the lack of a national campaign to build awareness among the public. The RTBPF also wants the NBTC to consider extending the licence term to 20 years from 15 in order to compensate for loss of opportunities caused by the delayed subsidy voucher distribution. (Bangkok Post) Recommendation: This is positive for digital TV operators. We rate Workpoint and RS as BUY with BEC as SELL. See important disclosures at the end of this report 2 NESDB argues for cut in policy rate to lower business costs THE NATIONAL Economic and Social Development Board (NESDB) believes that the policy interest rate could be lowered to help cut business costs and support the current initial stage of economic recovery. It also urged the Bank of Thailand to come up with measures to mitigate the strength of the baht, which is deemed to be stronger than other currencies in the region. The NESDB said the gross domestic product expanded by 2.3 per cent year on year in the fourth quarter of 2014, after an increase of 0.6 per cent in the third quarter. It expects that economic expansion in the first quarter of 2015 will be better than in the final quarter of last year. Overall, GDP on a quarter-toquarter basis increased by 1.7 per cent in the final three months of the year, after seasonal adjustment, resulting in the actual GDP growth in 2014 of 0.7 per cent. The NESDB has maintained that the economy will expand by 3.5-4.5 per cent this year despite cutting its export-growth prediction for 2015 from 4 per cent to 3.5 per cent. (The Nations) Recommendation: RHB Economic team expects the BOT to keep interest rates unchanged at the current level of 2.00% in 2015, as emerging financial markets face headwinds following the end of US quantitative easing and an imminent interest rate hike by the US Federal Reserve in 2015. However, there is a possibility of the BOT cutting rates by 25 basis points in 1H 2015, should the economic recovery for 2015 come in weaker than anticipated. Digital TV hikes ad spending by 16% ADVERTISING expenditure in January was up 16 per cent year on year to Bt9.52 billion, mainly thanks to higher spending on digital TV, transit media and the Internet, according to the latest report by Nielsen (Thailand). The findings show that advertising spending in the analog, cable and satellite TV platforms had significantly shifted to terrestrial-based digital television. Cable and satellite TV operators suffered a huge combined drop in advertising revenue of 62.26 per cent - from Bt795 million to Bt300 million - in January year on year, while for the analog TV incumbents the decline was 9.85 per cent (from Bt4.71 billion to Bt4.24 billion). The 24 digital TV players registered a combined Bt2.51 billion in advertising revenue for the new category. The results supported previous comments made by Wannee Ruttanaphon, chairwoman of IPG Mediabrands and the Media Agency Association of Thailand, who said the broadcasting industry would be changed by the birth of digital TV. Leading entertainment firms and TV production houses obtained licences from the broadcasting regulator to operate digital TV channels, resulting in quality programmes being offered to attract viewers and advertisers. (The Nations) Recommendation: The high percentage growth in January at 16.5% was come from the new method of calculating the total advertising expenditure. This year, Nielsen (Thailand) includes the advertising in Cable/Satellite TV (56 channels) and Digital TV (21 Channels) which making total advertising expenditure improved. We expect digital TV will be the key driver of total advertising expenditure during 2015. See important disclosures at the end of this report 3 Outperform AMATA IVL PTT PTTEP SIRI STEC WHA Current Target Upside/ Rec. Price Price Downside PE (x) Yield (%) Buy Buy Buy Buy Buy Buy Trading Buy (Bt) 18.40 25.25 362.00 116.50 2.00 25.50 34.75 (Bt) 21.00 29.90 384.97 142.61 2.60 31.50 38.00 (%) 14.1 18.4 6.3 22.4 30.0 23.5 9.4 2014F 8.1 4.8 15.6 149.3 23.1 3.6 22.3 2014F 0.6 0.3 13.0 7.0 0.2 0.6 0.1 Top 10 Ranking Top 10 Most Active Value Symbol AOM Value ('000 Baht) SCC 1,894,768 SUPER 1,601,317 TPIPL 1,420,998 ITD 1,359,557 JASIF 1,241,108 SENA 1,097,411 TRC 1,050,534 ADVANC 1,002,661 PTT 979,089 IFEC 892,543 Top 10 Most Active Volume Symbol AOM Value (Shares) NPARK 802,469,400 TPIPL 479,582,300 IEC 355,268,800 SENA 263,116,000 SIRI 241,618,700 BMCL 191,868,900 GEL 179,140,000 TGPRO 145,127,800 ITD 144,045,400 MILL 141,342,200 Last 510 21.90 2.94 9.45 9.70 4.12 11.20 243.00 362.00 18.20 Last 0.05 2.94 0.05 4.12 2 2.04 1.11 0.49 9.45 1.89 Change(%) +12.00 (+2.41%) +1.30 (+6.31%) -0.02 (-0.68%) +0.10 (+1.07%) -0.30 (-3.00%) +0.26 (+6.74%) -0.40 (-3.45%) -5.00 (-2.02%) -7.00 (-1.90%) +0.80 (+4.60%) Top 10 Gainers Symbol AOM Value (Shares) PPP 84,490,000 CPH 5,722,800 GJS 25,523,600 GL 20,666,400 SAWANG 3,200 SPACK 19,491,700 MCOT 7,841,300 SGP 20,635,000 GSTEL 50,047,900 METCO 44,500 Last 8.6 15.40 0.06 7.70 16.70 3.40 18.80 12.70 0.14 230.00 Change(%) +1.80 (+26.47%) +2.60 (+20.31%) +0.01 (+20.00%) +0.90 (+13.24%) +1.60 (+10.60%) +0.32 (+10.39%) +1.70 (+9.94%) +1.10 (+9.48%) +0.01 (+7.69%) +16.00 (+7.48%) Change(%) - (-) -0.02 (-0.68%) - (-) +0.26 (+6.74%) - (-) +0.02 (+0.99%) - (-) +0.02 (+4.26%) +0.10 (+1.07%) -0.03 (-1.56%) Top 10 Losers Symbol AOM Value (Shares) WIIK 8,943,100 INSURE 600 TCOAT 2,600 TLUXE 8,954,200 DTCI 1,100 TPP 167,200 TSTE 19,100 TU-PF 12,300 SAMTEL 2,910,700 ASIAN 2,237,000 Last 3.96 34.50 22.10 11.70 38.00 40.00 19.50 2.12 25.75 3.84 Change(%) -0.64 (-13.91%) -5.50 (-13.75%) -3.15 (-12.48%) -1.20 (-9.30%) -3.25 (-7.88%) -3.25 (-7.51%) -1.50 (-7.14%) -0.16 (-7.02%) -1.75 (-6.36%) -0.26 (-6.34%) Source: Stock Exchange of Thailand (SET) See important disclosures at the end of this report 4 Recent Stories To access the report, please click on the following link: Sino-Thai Engineering & Construction : FY14 Earnings Flat And In Line Airports of Thailand : Earnings Could Have Been Better Total Access Communications : Light At The End Of The Tunnel Who Is Buying Into The Thai Market? Advanced Info Services : Chugging Along Higher Offtake Of Natural Gas To Malaysia Sriracha Construction : Attractive Valuation With Strong Fundamentals Thai Stanley Electric : Pessimistic View From Management Supalai PCL : High Exposure To a Slow Upcountry Market 4Q Current Account Recorded Largest Surplus In Five Years PTT : BCP Divestment Moves Forward January Prices Deflate For The First Time In Five Years Money Supply And Private Credit Trended Lower In 2014 Glow Energy : 2014 Earnings Jump, In Line With Expectation End Of A Cycle, Not The End Of Hydrocarbons TISCO Financial Group PCL : Modest Recovery in Underlying Operations VGI Global Media : Weak 3QFY15 Results During The High Season Manufacturing Output Inching Closer To Stabilisation Bangkok Dusit Medical : Expanding To 50 Hospitals By 2017 BOT Kept Rate Unchanged At 2.00% For Seventh Straight Meeting Exports Recovered Slightly In December, But Still Resulted In A Contraction For 2014 Quality Houses : Reaffirms Healthy 2015 Guidance TRUE Corp : Waiting For A Stronger Tone Pruksa Real Estate : Unexciting 2015 Target And Earnings Outlook 4Q14 – What a Quarter! Leaving The Worst Year Behind Telecommunications : Staying Connected – Jan 2015 Krung Thai Bank : 4Q14 Dampened By Higher Provisions And Opex LPN Dev : Best Earnings Growth Estimate Despite Lower Guidance Bangkok Bank : Asset Quality Stable While NIM Slipped In 4Q14 Kasikornbank : Opex Hike Overshadows NIM Improvement Land and Houses : Better Margins, Divestment Gains Key Catalysts For 2015 Siam Commercial Bank : 4Q14 Impacted By Higher Opex And Provisions Thailand Aviation - Be Selective In Picking Winners Ananda Development (ANAN TBFVTHB4.20-Buy) : Second-Highest Condo Presales In 2014 Attractive Opportunities Amidst Volatility Asia Aviation : Aggressive Expansion Ahead Airports of Thailand : Take Profit On Steep Valuation Nok Airlines : Not The Best But Yields The Highest Upside Returns Thai Airways : Turnaround In Play Going For „Seconds‟ Presales Dip In 2014 But Set To Grow c.10% YoY In 2015 PTT : LPG Price Adjustment Positive For PTT PTT Global Chemical : Minimal Impact From LPG Price Adjustment Bangkok Bank : Ending 2014 On a Stronger Note Kasikornbank : Guiding For Healthy 4Q14 Performance The Ten Tycoons Krung Thai Bank : Expect Slight Beat Of 4Q14 Earnings Estimate Thailand Research Team Veena Naidu Directo veena.na@rhbgroup.com +662 862- 752 Wanida Geisler Senior Vice President Head of Resea ch wanida.ge@rhbgroup.com +662 862-9748 Kannika Siamwalla, CFA Head of Regional Oil & Gas kannika.si@rhbgroup.com +662 862-9744 Chun Phokaisawan Senior Associate Research chun.ph@rhbgroup.com +662 862-9999 Vikran Lumyai Senior Associate Research vikran.lu@rhgroup.com +622 862-9999 Thanapol Withayaruksun Associate Research thanapol.wi@rhbgroup.com +622 862-9999 Naruedom Mujjalinkool Associate Research naruedom.mu@rhbgroup.com +622 862-9999 See important disclosures at the end of this report 5 RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but RHB does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. No part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. This report is general in nature and has been prepared for information purposes only. It is intended for circulation to the clients of RHB and its related companies. Any recommendation contained in this report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. 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