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Transcript
A
See
Ma
201
T Ot
Tem
De
Re
A b
4Qper
4Qutil
Coacq Ma
Str
Asia P
e important dis
Top story
TaiwanA9 adds to- The A9 con
- We expect
- Raise forec
ajor changes
St. Shine Opt
14 could be the t
Target price ↑19.8
ther research
REXLot (555
mporary suspens
Malaysia Ban
ep markets to su
SP Setia (SPS
latively flat core
Thailand Insu
buoyant cycle
Adaro Energy
14 results: Belowrsist
Wintermar Of
14 results: Belowization rates
Sawit Sumbe
mpany visit: Lonquisitions
acro research
China Econom
onger loan growt
Pacif
sclosures, incl
y
n Semicondo upside ntest is coming
TSMC to earn
cast/TP and re
tical (1565 TT)
trough
8% to TWD508.0
HK)
sion of Okooo sa
nking
upport system vo
SB MK)
net profit growth
urance Sector
y (ADRO IJ)
w estimates; ove
ffshore Marine
w estimates on lo
rmas Sarana (S
g-term growth th
my
th vs. M2 growth
fic D
uding any requ
ductor Man
g to an end
n most of the A
eaffirm our bul
An
He
00
Jo
ales
Ta
olatility
Sh
Itti
Ara
rsupply to
(WINS IJ) Ag
Kirower
SSMS IJ) Kri
hrough
Ke
h
aily
uired research
nufacturing
A9 order alloc
llish stance
nalyst
elen Chien
hn Choi
an Ei Leen
harifah Farah
korn Thepmani
andi Nugraha
gustinus Reza
rana
istiadi
evin Lai
certifications,
g (2330 TT)
cation
Rating
Underperform
→ Hold
Buy
Neutral
Sell
Overweigh
Reduce
Hold
Not Rated
beginning on
Page
m P.7
P.11
P.14
P.15
t P.16
P.17
P.18
P.19
P.20
Co
Dat9-112-13 19 19-23 23-
24
25-
26-27 27
27 &Ma30 1 A
Da
Dat30-1-2 21-
26-
29
1-2 Sou
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MaTPXHSHSKOTWSEFSSFBMSETPCJCIASSou*Val
page 30.
Target p
ompany Roads
te Company 3 Mar Intouch Hold13 Mar CITIC TelecMar Challenger Mar Dynam (68820 Mar Investa OfficMar CIMC Enric24 Mar Charoen Po
(CPF TB) Mar Valuetronics
(VALUE SP26 Mar Siam Globa
27 Mar Sino-OceanMar China SuntiMar China Sunti
& 30 r
China Aircra(1848 HK)
Mar- Apr
PICC Group
aiwa Asian Eve
te Company 31 Mar Daiwa TaiwApr Daiwa Taiw23 Apr Daiwa Cons
2015 27 May Daiwa Inves
2015 May Daiwa Inves
Francisco 2Jun Daiwa Inves
rce: Daiwa
egional indices
Perfor
rket 1D X 1.4 CEI 1.3 I 0.3 SPI (0.5)
WSE 0.8 NSEX* 0.9 STI (0.1) MKLCI* 0.5 T* 0.0 OMP* 0.6 * 0.4 51 1.0 rce: Thomson Reutersuation based on MSC
price: TWD17
-- Rick
shows
ldings (INTUCH TB)com (1883 HK) (CGF AU) 89 HK) ice Fund (IOF AU) c (3899 HK) okphand Food
cs Holdings Ltd P) al (GLOBAL TB)
n Land (3377 HK) tien (956 HK) tien (956 HK)
raft Leasing Group
p (1339 HK)
ents
wan Corporate Day wan Corporate Day sumer and Gaming
Daiwa’s Banner Products P.23 Economic calendar – March 2015 P.24 Rating and target-price information P.25 Recently published reports P.26
Asia Pacific Daily | 2
See important disclosures, including any required research certifications, beginning on page 5
■ What's new We believe TSMC will earn the majority of Apple’s A9 (next generation application processors) orders due to its better yield ramp than counterpart Samsung Electronics (005930 KR, not rated). As such, our earnings forecasts and TP for TSMC are raised as we had not factored this potential into our model previously. Catalyst: another round of consensus upgrades to push the stock higher. Reiterate Buy. ■ What's the impact A9 orders being finalised. Market disputes over how many A9 AP orders TSMC would gain from Apple against Samsung are coming to an end, in our opinion, and we believe TSMC will earn most of the A9 orders thanks to its superior yield ramp and manufacturing excellence in mass-production. We expect TSMC to earn all of Apple’s A9X orders (for the next generation iPad) and most of the A9 (for the next generation of iPhone), aggregating to an allocation of over 70%.
Upside to 2015E capex. We believe TSMC will have to upgrade equipment to remix its 20/16nm capacity allocation, likely from 50:50 to 25:75 by year-end, to accommodate the A9 AP, since this chip should use 16nm FinFET (FF), not 20nm SoC. 16nm FF is a 3D transistor structure, therefore TSMC needs to upgrade machines such as etchers and depositions. It budgets USD11.5-12bn in capex for 2015; we are going for USD12.5bn, meaning that we see a chance it will raise capex, which would augur well for SPE makers in the US, Japan and Taiwan. Forecast revisions. Previously, we assumed TSMC would earn only A9X orders. We now expect the addition of A9 to add a 3-4% revenue contribution to TSMC in 2015, resulting in 12%/7% hikes to our 2015/16E EPS, on top of its better 1Q order run-rates than we previously thought (click here for our results Memo). We expect most of the A9 revenue contribution to be concentrated in August-October as we see a wafer-in start from March (for A9X) and April (A9). Near-term sentiment mixed. Despite the intact fundamentals and A9 upside, we expect TSMC’s bottom-line growth to decelerate in 2H15 on a YoY basis due simply to the high comparison base, after enjoying hefty 50%+ per quarter growth over 3Q14-2Q15E. This could dampen near-term investment sentiment, but would not harm our positive stance. ■ What we recommend As our revisions lift our normalised ROE forecasts to 24-25% (previous: 23-24%), we raise our ROE-adjusted PBR to 3.7x (previous: 3.6x), resulting in a higher 12-month TP of
TWD180 based on 2015E book value. The stock has corrected recently; we suggest investors take advantage of this to buy into weakness. TSMC’s recent increase of its cash dividend (TWD4.5) should help hedge the stock against any downside. The key risk to our call is rising competition in advanced technology nodes. ■ How we differ Our 2015/16E EPS are higher than consensus as a result of our addition of A9 order potential, which should be a positive share-price catalyst.
12 March 2015
A9 adds to upside
• The A9 contest is coming to an
end • We expect TSMC to earn most
of the A9 order allocation • Raise forecast/TP and reaffirm
Forecast revisions (%)Year to 31 Dec 14E 15E 16ERevenue change - 5.5 5.3Net profit change 1.1 11.7 6.6Core EPS (FD) change 1.1 11.7 6.6
95
103
110
118
125
110
121
133
144
155
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
Share price performance
TSMC (LHS)Relative to TWSE Index (RHS)
(TWD) (%)
12-month range 112.00-154.50Market cap (USDbn) 121.273m avg daily turnover (USDm) 187.07Shares outstanding (m) 25,930Major shareholder National Development Fund (6.4%)
We revise up our 2015/16 EPS forecasts by 12%/7% to factor in the potential of TSMC gaining over 70% of the total A9 AP allocation from Apple. This is in addition to its 1Q15 revenue run-rates, which appear to be progressing ahead of our previous expectations, thanks to its fast 20nm ramp and continued 8” demand strength in 4G/LTE migration in the smartphone market ecosystem and proliferation of new IoT applications.
Incorporated in Taiwan in 1987, Taiwan Semiconductor Manufacturing Co. (TSMC) is the world’s largest semiconductor foundry in revenue terms. TSMC offers foundry services such as wafer masking, fabrication, probing and testing, to a high variety of customers including fabless chipmakers and IDMs. Its manufacturing fabs are located in Taiwan, China, the US and Singapore.
See important disclosures, including any required research certifications, beginning on page 5
■ What's new St. Shine will report its preliminary 4Q14 results in mid-March, and we expect a slight improvement on its results for 3Q14. We believe sentiment on the stock has turned positive on its new product plan for 2015; however, competition in its original brand manufacturing (OBM) business (Taiwan) and overseas OEM business remains fierce (see Still in the dark, 27 October 2014 for details). ■ What's the impact 2015: no worse than 2014. We expect the company’s sales momentum to be subdued in 2015, as it was in 2014. We forecast net profit growth of 3.5% YoY on sales growth of 5.4% YoY in 2015 (vs. a net profit decline of 3.2% YoY on sales growth of 3.6% YoY in 2014E). Competition still intense. St. Shine’s 2014 revenue in Taiwan fell by 20% YoY, affected by its competitors’ aggressive promotional activities. Also, its Taiwan market share by sales volume dropped to 20-25% in 2014, from over 30% in 2013, and we see it dipping further in 2015. Domestic peer Ginko (8406 TT, TWD334, Outperform [2])
targets its Taiwan revenue to account for 10% of overall revenue for 2015, from 8.5% in 2014 and 4% for 2013, and is eyeing the overseas OEM business. Pagavision (6491 TT, TWD138, Not rated), is aggressively targeting its Taiwan sales to grow by 60-70% YoY in 2015 vs. 50-60% YoY in 2014, and expects to increase its overseas OEM business proportion to 50% of total sales in 2015, from 40% in 2014. ASP already cut in 2015. St. Shine has lowered its ASPs to 2 of its major Japan OEM clients (c.50% of total sales) for 2015 due to the downward trend in the JPY against the USD. As such, we see its gross margin decreasing in 2015. New products in 2015. St. Shine and its major Japanese client, Seed, are set to release new contact lens products in 2Q15, which could bolster its Taiwan and Japan sales. It also plans to launch its daily disposable silicone hydrogel contact lenses in Taiwan in 2H15 (or 2016), and we think this product could be a long-term share-price catalyst. The retail price on the new lens is likely to be about 50-60% higher than the ASP for regular hydrogel lenses and could lead to an improvement in the overall gross margin. Forecast revisions. Reflecting potentially slower top-line growth in 2014-16 due to fewer orders in Taiwan and China and a contracting gross margin, we cut our 2014-16E EPS by 1.9-2.6% and our sales forecasts by 0.6-1.3%. ■ What we recommend We upgrade St. Shine to Hold (3) from Underperform (4) with a new 12-month TP of TWD508 (from a 6-month TP of TWD424), based on our revised 2015E EPS and a new
target PER of 16x (10% discount to the average of its past-1-year PER trading multiple of 18x on a similar growth trend) from 13x, as we believe 2014 could mark a trough year for St Shine, and expect better earnings momentum due to its new products. St. Shine targets to raise its dividend payout ratio in 2014 from 71% in 2013. The main risk to our view: slower-than-expected new product launches. ■ How we differ Our 2014-16E EPS is 1.5-5.3% lower than the consensus, as we are more conservative on its sales growth.
12 March 2015
2014 could be the trough
• Competition remains fierce • New products could be sales
and share-price catalysts • Upgrading to Hold (3); raising
St. Shine Optical is a leading contact lens OEM maker and the number-five contact lens player in terms of sales globally. Aside from OEM business, St. Shine also sells its products under its own brand, Ticon, which has the second-largest market share in Taiwan.
See important disclosures, including any required research certifications, beginning on page 4
■ What's new In response to a government notice, some major lottery websites have stopped selling lottery tickets online, including Okooo.com, which is 66%-owned by Rexlot. We expect this development to have a big impact on the company’s revenue from web operations in 2015 — but we expect the suspension to be temporary. We view Rexlot as the best placed to weather this event given its major presence in offline lottery sales channels (c.75% of sales in 2014). ■ What's the impact Voluntary suspension. In mid-January 2015, the Ministry of Finance, Ministry of Civil Affairs, and General Administration of Sport of China jointly issued a notice calling for regulators at the provincial level to conduct a “self-examination” of online lottery practices (commercial contract arrangements, types of online lottery products, sales channels, etc). As a
pre-emptive measure, Rexlot voluntarily suspended all online lottery sales effective 1 March 2015, to show its full cooperation. More government oversight is positive for the industry. Sales of Rexlot’s web operations, which we believe would have contributed some 30% of overall sales in 2015, will likely be severely affected (depending on the length of suspension). However, over the longer term, we view the government’s proactive approach in monitoring and regulating the online lottery as a positive development for the industry and potentially as a precursor to the long-awaited issuance of Internet lottery licences. Online suspension should be temporary. No official timeframe was given for the suspension, but we do not expect it to be in place for a full year. In our view, it is not in the government’s interest to suspend online lottery sales indefinitely, as: 1) Internet lottery has proven to be a key channel for lottery distribution (approx. 25% of lottery sales in 2014 in China were sold via the Internet), and 2) prohibiting Internet lottery sales outright could encourage an online black market to flourish. We assume a 6-month suspension this year; the actual length of the suspension will be a swing factor for our 2015 forecasts. In turn, we revise down 2015E EPS by 18%. For 2016, our EPS forecast falls by 8%, even though we expect the suspension to be over by then, due to an assumed delay in the return to normalcy of its online sales. ■ What we recommend We lower our 12-month TP to HKD0.95 (from HKD1.15), on an
unchanged 12x PER (equivalent to 1SD above the stock’s past-5-year PER) applied to our revised 2015E EPS. Despite the expected YoY drop in 2015E EPS, we still forecast an 8% dividend yield for Rexlot. Buy (1) rating reaffirmed. The main risk: unfavourable regulatory changes in the China lottery market. ■ How we differ Our 2015-16E EPS are 12-19% below the Bloomberg consensus as we factor in a 6-month suspension of online lottery sales.
12 March 2015
Temporary suspension of Okooo sales
• Online lottery suspension is
entirely voluntary • Greater government oversight
is positive for the industry • Reducing TP to HKD0.95;
REXLot is one of the leading lottery companies in China with exposure to both the Welfare and sports lottery markets. The company is engaged in traditional lotteries, scratch-card printing and validation for the Welfare Lottery. It is also one of the leading scratch-card distributors for sports lotteries, and has a presence in single-match games.
Deep markets to support system volatility According to BNM’s latest financial report, downside risks to financial stability are receding, supported by a steady household sector, while a more volatile external segment remains an increasing risk to the banking system. Deep financial markets and the presence of strong domestic institutional investors continue to ensure an orderly financial market. Maintain NEUTRAL sector view. Our top picks remain defensive banks, Public Bank and Hong Leong Bank.
Household-debt-to-GDP ratio more manageable The household indebtedness, though it remains sticky, has seen growth slowing down (2014: 9.9% yoy; 2013: 11.5% yoy) as reflected by a slower increase in the household-debt-to-GDP ratio (87.9% in 2014 vs. 86.7% in 2013). We agree that soundness in the household segment is further reinforced by a 2.1x ratio of financial-asset-holdings-to-household-debt and a declining gross impaired loan ratio (1.2% in 2014 vs. 1.3% in 2013).
High capital buffers against adverse correction in asset prices Broadly speaking, the overall banking system continues to see excess capital buffers of more than 5x the estimated losses from a 40% decline in house prices. This is largely backed by 48% of outstanding housing loans with a current LTV of below 70%, hence providing a comfortable buffer for banks against default.
Stable credit risk outlook for businesses The overall corporate balance sheets have been considered healthy, given a debt-to-equity ratio of 42.7%, a current ratio of 1.9x and quick ratio of 1.3x. Even after stress-testing, the banking sector is able to absorb up to 6x cumulative losses from this segment. We however remain cautious of the O&G related companies and those impacted by a weak Ringgit as a prolonged downturn would still impact their cash flows.
Maintain NEUTRAL rating; stick to defensive banks We reiterate our NEUTRAL sector rating, given our subdued expectation for loan growth, weakening NIM and unexciting capital market activities in 2015. Contrary to BNM’s more optimistic outlook, we stay cautious on the asset-quality front of corporate accounts (of commodity-related sectors). For sector exposure, we favour Public Bank and Hong Leong Bank, given their more stringent track record in credit underwriting standards and niche in the domestic retail financing markets: i) Public Bank (PBK MK, BUY, RM18.20, TP: RM21.80 @ 2.59x P/BV); and ii) Hong Leong Bank (HLBK MK, RM14.04, BUY, TP: RM17.00 @ 1.79x P/BV). Peer Comparison Source: Affin Hwang estimates, Bloomberg
Affin Hwang Investment Bank Bhd (14389-U) (Formerly known as HwangDBS Investment Bank Bhd)
Page 1 of 8
Asia Pacific Daily | 14
12 March 2015
Affin Hwang Investment Bank Bhd (14389-U) (Formerly known as HwangDBS Investment Bank Bhd)
Page 1 of 6
Relatively flat core net profit growth
SP Setia’s 1QFY10/15 core earnings (+2.5% yoy) came in within our
expectation (23% of FY15E earnings). Revenue growth was
underpinned by higher contribution from property and construction
segments. Maintain SELL with a TP of RM2.78, in view of persistent
uncertainty over the group’s strategic direction and leadership
transition as well as cautious domestic property outlook.
In line with expectation
Despite registering an impressive 28.3% revenue growth yoy in 1QFY10/15, SP Setia registered a flat 2.5% growth in core net profit to RM111.6m (-17.3% qoq). This was due to higher interest expense as well as higher losses from its associates - a timing mismatch between initial expenses incurred and revenue recognition for projects in the UK and Australia. SP Setia’s 1QFY10/15 core earnings accounts for 23% of our FY15E estimate but only 19% of street estimates. As expected, no dividend was declared during the quarter.
Revenue boosted by various property projects within Klang Valley
Our 1QFY10/15E core net profit excludes the RM11.0m Long Term Incentive Plan expense (LTIP). The higher 1QFY10/15 revenue was driven by a 22% increase in property development and more than doubled contribution from the construction segment. Amongst the projects which boosted sales include, Setia Alam, Setia Eco Park, Eco Hill, Eco Glades and Setia Sky Residences. For 1QFY10/15, the group achieved RM1.0bn of property sales.
Maintain SELL with an unchanged TP of RM2.78
We make no changes to our FY15E-17E earnings nor our SELL call, with an unchanged TP of RM2.78 (40% discount to its RNAV). While we like SP Setia for its strategic land bank and high unbilled sales of RM11bn, we opine that the persistent uncertainty over the group’s strategic direction and leadership transition will lead to further exodus of talent. Also, we are generally cautious on the domestic property market.
Risk to recommendation
Key risks to our negative view on SP Setia are stronger-than-expected property sales, stronger-than-expected earnings and better-than-expected improvement in the group’s internal operations.
Source: Thanachart estimates, Based on 11 March 2015 closing prices
We see the Thai insurance industry being in a mid-cycle structural growth mode. Despite a reserve hiccup, premium growth remained strong in 2014. We see 2015 as a turnaround year with sector earnings rising by 89%, followed by sustainable mid-teens growth into 2020. OVERWEIGHT with BLA becoming our top pick.
2015: A strong turnaround yearHit by extra reserves given a bond yield collapse and THREL’s one-time write-off of one unconventional project, 2014 sector earnings fell sharply despite continued strong premium growth of 14%. With falling reserves,widening margins on improving product mix and economic momentum,we forecast sector earnings to turn around by 89% in 2015 and continueat a strong rate of 19% p.a. in 2016-18F. To reflect our more positive view on the sector’s medium-term growth trend and strong 4Q14 results,we raise our 2016-18F earnings by 5.5%. Our forecasts call for a 15.4% 2015-20F sector earnings CAGR. We raise BLA’s TP by 13% to Bt65 while THREL’s is unchanged. This report marks a transfer of coverage.
Mid-cycle structural growth storyDespite growing uninterruptedly by 13% p.a. since 2004, life-insurance-premiums-to-GDP ratio was still low at 4.1% in 2014. We see the sector embarking on a strong growth story from both volume and profitability angles. We project life insurance penetration to hit 5.5% in 2018 on: 1) Thailand becoming an ageing society. The elderly as a portion of the population rose to 14.9% in 2014 and are projected to hit 20% in 2020. 2) A stronger cross-selling push from commercial banks as other fee growth has been exhausted with bancassurance emerging as a key fee-income driver. 3) Strong regulatory support via relaxation of rules offers greater flexibility to the life insurance business. There is also a possibility of increased tax allowance on health and life insurance policies. Profitabilitywise, we see margins fattening on a rising portion of protection insurancepolicies. Historical data in Japan (Ex 9) would seem to support our view.
AEC a long-term growth opportunity in our viewWe expect the ASEAN Economic Community’s (AEC) financial sector integration due in 2020 to open up opportunities for Thai life insurance firms to expand their businesses into Cambodia, Laos and Myanmar where the locals are familiar with Thai products while the insurance industries there are far less developed than in Thailand. Among life insurance stocks under our coverage, we see BLA as well positioned to capture this trend, thanks to BBL’s strong foothold in those countries.
Stay OVERWEIGHT; BLA is our new top pick We change our top pick to BLA as we see it providing a more excitingturnaround story than THREL. Besides the benefits of a rise in bond yields, its goal to focus on quality over quantity gives us more comfort. THREL remains a BUY on its strong competitive edge. However, plans by its parent THRE to lower its stake might lead to some overhang.
Than
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curit
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Than
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Please see the important notice on the back pageAsia Pacific Daily | 16
Disclosure: Bahana Securities does and seeks to do business with companies covered in its research reports. Investors should consider this report as only a single factor in
making their investment decision.
Please see the important disclaimer information on the back of this report
Disclosure: Bahana Securities does and seeks to do business with companies covered in its research reports. Investors should consider this report as only a single factor in
making their investment decision.
Please see the important disclaimer information on the back of this report
Disclosure: Bahana Securities does and seeks to do business with companies covered in its research reports. Investors should consider this report as only a single factor
in making their investment decision.
Please see the important disclaimer information on the back of this report
See important disclosures, including any required research certifications, beginning on page 2
■ Fundamentals M2 growth picked up to 12.5% YoY in February 2015 from 10.8% YoY in January 2015. To filter the Lunar New Year effect, we prefer to look at January-February together, which
shows an 11.7% YoY rise, down from 12.2% YoY for December 2014. New loans constituted CNY2,491bn in 2M15, higher than CNY1,964bn in 2M14. On a YoY basis, loan growth has picked up from 13.9% in December 2014 to 14.1% in 2M15. Loan growth has been a little faster in 2M15 because of the reserve-ratio cut in February and interest-rate cut in November. On the other hand, M2 growth has been weaker due to persistent money outflows, causing the monetary base to shrink. The positive impact of stronger loans has therefore been neutralised, explaining why activity indicators such as IP, FAI and trade have been weak so far this year. In terms of social aggregate financing, the size was CNY3,401bn in 2M15, versus CNY3,537bn in 2M14 or down by 3.9% YoY. The pick-up in loans was offset by the government’s continuous squeeze on shadow banking. Financing through entrusted, trust loans and bank acceptance was down 56%, 95% and 62% YoY, respectively.
Meanwhile, the MOF has indicated a CNY1 trillion quota for local governments to convert maturing high-cost debt into lower-yielding municipal bonds. While this programme is one of the positive steps taken by the central government to address the longstanding local-government debt problems, it has also led to several doubts in the market, including whether investors will be forced into this swap. From a monetary perspective, this programme is effectively a transfer of liabilities from the banking system to the bond market. It does not involve new money creation and hence, we believe, there will be no stimulative impact to the economy. The inherent credit risk is simply being transferred from banks to the bond market, with no reduction in toxic levels. There is also a question regarding the transparency of these new bond instruments and whether they will strain the central government’s fiscal position. Calling this programme Chinese Quantitative Easing would be far-fetched, in our view.
■ M2 growth and loan growth ■ Total social financing
Source: CEIC, Daiwa Source: CEIC, Daiwa
5
10
15
20
25
30
35
Jun-
98
Apr-9
9
Feb-
00
Dec
-00
Oct
-01
Aug-
02
Jun-
03
Apr-0
4
Feb-
05
Dec
-05
Oct
-06
Aug-
07
Jun-
08
Apr-0
9
Feb-
10
Dec
-10
Oct
-11
Aug-
12
Jun-
13
Apr-1
4
Feb-
15
(% YoY)
M2 growth Loan growth
33%
-98% -56% -62% 82%
-95% 71%
CNY loansLoans in foreign
currency
Entrusted loans
Trusted loans
Bank acceptance
bills
Corporate bonds
Equity financing
0.0
0.5
1.0
1.5
2.0
2.5
3.0(CNY tn)
2M14 2M15
12 March 2015
China Economy
Stronger loan growth vs. M2 growth
• Slight pick-up in loan growth
due to rate and RRR cuts • However, money outflows
continue to weaken M2 growth • We believe the CNY1tn debt-
swap program is a positive step but should have no stimulative impact on the economy
2015 economic outlook hinges on domestic demand BNM maintained official real GDP growth target at 4.5-5.5% for 2015 The assessment made by Bank Negara Malaysia (BNM) on the country’s macroeconomic indicators and prospects for 2015 was in line with the Government's earlier revised GDP growth and budget deficit targets. Taking the computations at mid-point, calculated based on GDP forecast at constant price, BNM expects the country’s underlying real GDP growth to be at 5%, which is at the mid-point of the official forecast of 4.5-5.5%, and in line with our long held forecast of 5% (6% in 2014). Domestic demand remains the engine of GDP growth We concur with BNM that the strength of the country’s domestic demand will remain largely intact in 2015, where growth will be led by the private sector activity, especially from both private consumption and private investment. BNM expects strong domestic demand of 6% projected for 2015, the same growth rate as in 2014, which will likely compensate for the slowdown in exports. Budget deficit forecast unchanged at -3.2% of GDP for 2015 BNM has also maintained the Government’s earlier revised budget deficit target of 3.2% of GDP projected for 2015, slightly lower from 3% under Budget 2015, but still better than -3.5% of GDP in 2014. With the implementation of the GST to support the diversification of the sources of revenue, the Government will remain committed to fiscal consolidation to meet the Eleventh Malaysia Plan (11MP) target of a balance budget by 2020. Inflation forecast revised lower to 2.0-3.0% in 2015, from 2.5-3.5% While most of the revised macroeconomic forecasts remained unchanged from earlier Government projections, the only change was the inflation rate forecast, where BNM revised downward the target to 2.0-3.0% in 2015, lower than the earlier forecast of 2.5-3.5%. This was largely in line with our expectations, but we believe inflation rate is likely to be at the upper end of the range of around 3.0% in 2015. BNM attributed the lower inflation to the decline in global energy and commodity prices, lower domestic fuel prices and moderate demand conditions to partially offset the impact from GST. Underlying fundamentals of the Malaysian economy remain sound While no emerging market, including Malaysia, can escape fully the downside risks to the global growth, especially with greater volatility in global financial markets and capital flows, BNM expects the country’s underlying fundamentals to likely act as a buffer to mitigate potential vulnerabilities arising from the external front. Healthy but narrow balance of payments surplus in current account The country’s current account surplus is projected to narrow significantly to RM21.4bn (2-3% of GNI) in 2015, a decline of -57% from RM49.5bn (4.8% of GNI) in 2014, due to sharp decline in commodity prices. However, this will be offset partially by lower deficit in the services account, partly attributed to the expected recovery in tourist arrivals. Stance of monetary policy to remain accommodative The monetary policy decision and statement, which is forward-looking and consistent with its dual mandate, will focus on stability of economic growth in view of the contained inflationary pressures. We expect BNM to leave its OPR unchanged at 3.25% throughout 2015 to support economic growth. BNM is also monitoring the ongoing concerns about the potential risk of a further build-up in financial imbalances.
12 March 2015
Affin Hwang Investment Bank Bhd (14389-U) (Formerly known as HwangDBS Investment Bank Bhd)
Page 1 of 15
Asia Pacific Daily | 21
7/810207
10/319152
3/2710255
9/199288
5/2315942
7/1914953
12/3016320
3/618979
861911/138409
1/16813511/25
82386/4
834310/5 8488
10/15
124156/13
131888/28
9/2516374
138854/11
12/818030
1452910/17
165921/16
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6000
8000
10000
12000
14000
16000
18000
20000
出所：Bloombergより大和証券作成
日経平均（週足）
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Tokyo market up on strong CME Nikkei 225 futures: The Tokyo stock market opened higher, following overnight strength in Nikkei 225 futures on CME. On Wednesday, European shares fared well, and the decline in US shares was relatively narrow. As such, participants seemed little worried about Japan shares this morning. Indeed, buying interest in Japan shares apparently remains strong given that, despite Tuesday’s steep sell-off in the US, the Tokyo market closed higher on Wednesday. Our eyes are now on whether such buying interest will remain in place even after end-March. While we cannot get a clear picture of pension funds’ buying/selling, the recent strong performance of Japan shares points to the likelihood of short squeezes driving broad market strength around end-March (details below). This morning, Japan shares broadly opened higher, excluding some basic materials, such as oil industry firms. Among others, financial and transportation sector firms advanced strongly, with an increasing number of regional banks and railway operators posting fresh highs. Short squeezes could drive broad market strength around end-Mar: History shows that the Nikkei Stock Average tends to move in a six-month (26-week) cycle: it typically hits a serious bottom six months after its peak and vice versa due to the six-month deadline for squaring margin positions. Although some margin trading has different deadlines (incl. no deadline), this pattern has still been observed in recent years (see chart). This year, buying pressure will likely increase in April as short sellers square margin positions established around October 2014 when the Nikkei hit a major bottom. However, short sellers owe the dividends if they are short on a stock on its ex-dividend date, and the ex-dividend date for firms with fiscal years ending in March is shortly before the above-noted deadlines in April. As such, position squaring could occur before this ex-dividend date. Indeed, we think this partly explains why the Nikkei’s peak came in late September last year despite its bottom in early April. Similarly, short covering often played out in around 24 weeks in 2005-06. Meanwhile, the trend of short covering tends to reflect the short-term momentum of the broader market. With this in mind, the performance of stocks for which the deadline for squaring margin long positions is around the corner warrants attention. Many construction, trading, and telecom firms—the latter particularly attracted buying interest from retail investors—posted fresh highs in September 2014, and they have recently performed weakly. If these sectors remain weak, the Nikkei would likely face selling pressure in March before gaining ground in April, along with the typical pattern described above. In contrast, a pickup in March in stocks that posted fresh highs in September 2014 would signal strong buying interest, including from pension funds, and trigger short squeezes in March. All in all, our eyes are on this group of stocks over the near term. Indeed, these stocks have gradually been gaining ground since this Wednesday. (Comment following opening of morning session—12 March 2015)
Nikkei Stock Average (weekly)
Kinouchi’s Technical Tips for Institutions
Japan Technical analysis 12 March 2015 Japanese report: 12 March 2015
Continued brisk performance of Japan shares would point to short squeezes driving broad market strength around end-Mar
Cheung Kong/Hutch’s Bold Move: Q&A on the prospect of the group becoming a global play, with a valuation to match 9 February 2015
The Cheung Kong Group’s reorganisation plan has important implications for the group’s direction, and could change the way the group, and perhaps Hong Kong family business groups as a whole, are perceived and priced in the investing world. We ask and answer 6 questions on the prospect of the group becoming a genuinely global play, with a valuation to match.
Daiwa research is available electronically on Bloomberg, Reuters, Thomson One Analytics, FactSet, Capital IQ and Daiwa’s L-ZONE. Please contact your Daiwa sales representative for more information.
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Asia Pacific Daily | 28
Japan: Notes concerning market data and investment indicators Estimates by Daiwa Shares outstanding: Common shares outstanding (excl. treasury stock) Market cap: Based on shares outstanding and closing price as of indicated date EV: Market cap + interest-bearing debt – liquidity on hand EBITDA: Operating profit + depreciation ROE: Net income / average of start-FY and end-FY shareholders’ equity (for SEC-reporting firms net income attributable to shareholders
of the parent / average of start-FY and end-FY shareholders’ equity) Share Price Chart and per-share figures retroactively adjusted to reflect stock splits/reverse stock splits
Asia Pacific Daily | 29
Disclaimer This publication is produced by Daiwa Securities Group Inc. and/or its non-U.S. affiliates, and distributed by Daiwa Securities Group Inc. and/or its non-U.S. affiliates, except to the extent expressly provided herein. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure, distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. 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Ltd., and/or its affiliates nor any of its respective directors, officers, servants and employees except where the publication states otherwise. This research report is not to be relied upon by any person in making any investment decision or otherwise advising with respect to, or dealing in, the securities mentioned, as it does not take into account the specific investment objectives, financial situation and particular needs of any person. Daiwa Securities Group Inc., Thanachart Securities, Affin Hwang Investment Bank Berhad, PT.Bahana Securities, their respective subsidiaries or affiliates, or their respective directors, officers and employees from time to time have trades as principals, or have positions in, or have other interests in the securities of the company under research including derivatives in respect of such securities or may have also performed investment banking and other services for the issuer of such securities. The following are additional disclosures. 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Other than disclosures relating to Daiwa, this research is based on current public information that Affin Hwang and Daiwa consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The analysts named in this report may have from time to time discussed with clients, including Daiwa’s salespersons and traders, or may discuss in this report, trading strategies that reference catalysts or events that may have a near-term impact on the market price of the equity securities discussed in this report, which impact may be directionally counter to the analysts' published price target expectations for such stocks. Any such trading strategies are distinct from and do not affect the analysts' fundamental equity rating for such stocks, which rating reflects a stock's return potential relative to its coverage group as described herein. 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Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Investors should review current options disclosure documents in relation to such investments. Portions of this publication are prepared by PT. 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Any view, recommendation, opinion or advice expressed in this publication constitutes the views of the analyst(s) named herein and does not necessarily reflect those of Daiwa Securities Group Inc. and/or its affiliates nor any of its respective directors, officers, servants and employees except where the publication states otherwise. This research report is not to be relied upon by any person in making any investment decision or otherwise advising with respect to, or dealing in, the securities mentioned, as it does not take into account the specific investment objectives, financial situation and particular needs of any person. Neither Daiwa Securities Group Inc. nor any of its affiliates is licensed to undertake any business within the Republic of Indonesia. Any display of any trade name or logo of the Daiwa Securities Group Inc. on this publication shall not be deemed to be an undertaking of any business within the Republic of Indonesia. Daiwa Securities Group Inc., its subsidiaries or affiliates, or its or their respective directors, officers and employees from time to time may have trades as principals, or have positions in, or have other interests in the securities of the company under research including derivatives in respect of such securities or may have also performed investment banking and other services for the issuer of such securities. The following are additional disclosures. Portions of this publication are prepared by Thanachart Securities Public Company Limited and distributed outside Thailand by Daiwa Securities Group Inc. and/or its non-U.S. affiliates except to the extent expressly provided herein. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure, distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. Neither Thanachart Securities Public Company Limited (“Thanachart Securities”), Daiwa Securities Group Inc. nor any of their respective parent, holding, subsidiaries or affiliates, nor any of their respective directors, officers, servants and employees, represent nor warrant the accuracy or completeness of the information contained herein or as to the existence of other facts which might be significant, and will not accept any responsibility or liability whatsoever for any use of or reliance upon this publication or any of the contents hereof. Neither this publication, nor any content hereof, constitute, or are to be construed as, an offer or solicitation of an offer to buy or sell any of the securities or investments mentioned herein in any country or jurisdiction nor, unless expressly provided, any recommendation or investment opinion or advice. Any view, recommendation, opinion or advice expressed in this publication constitutes the views of the analyst(s) named herein and does not necessarily reflect those of Thanachart Securities, Daiwa Securities Group Inc. and/or their respective affiliates nor any of their respective directors, officers, servants and employees except where the publication states otherwise. This research report is not to be relied upon by any person in making any investment decision or otherwise advising with respect to, or dealing in, the securities mentioned, as it does not take into account the specific investment objectives, financial situation and particular needs of any person. 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Ratings Issues are rated 1, 2, 3, 4, or 5 as follows: 1: Outperform TOPIX/benchmark index by more than 15% over the next 12 months. 2: Outperform TOPIX/benchmark index by 5-15% over the next 12 months. 3: Out/underperform TOPIX/benchmark index by less than 5% over the next 12 months. 4: Underperform TOPIX/benchmark index by 5-15% over the next 12 months. 5: Underperform TOPIX/benchmark index by more than 15% over the next 12 months. Benchmark index: TOPIX for Japan, S&P 500 for US, STOXX Europe 600 for Europe, HSI for Hong Kong, STI for Singapore, KOSPI for Korea, TWII for Taiwan, and S&P/ASX 200 for Australia. (Criteria above apply to rating assignments or updates from Jan 2015. For ratings assigned or updated prior to Jan 2015, criteria refer to performance vs. TOPIX/benchmark index over six months.)
Asia Pacific Daily | 30
Japan Conflicts of Interest: Daiwa Securities Co. Ltd. may currently provide or may intend to provide investment banking services or other services to the company referred to in this report. In such cases, said services could give rise to conflicts of interest for Daiwa Securities Co. Ltd. Daiwa Securities Co. Ltd. and Daiwa Securities Group Inc.: Daiwa Securities Co. Ltd. is a subsidiary of Daiwa Securities Group Inc. Ownership of Securities: Daiwa Securities Co. Ltd. may currently, or in the future, own or trade either securities issued by the company referred to in this report or other securities based on such financial instruments. Daiwa Securities Group has filed major shareholding reports for the following companies of which it owns over 5% (as of 27 February 2015): DAI-ICHI CUTTER KOGYO (1716); KITA KOUDENSHA (1734); DAIHO (1822); TENOX (1905); Accordia Golf (2131); Full Speed (2159); Azia (2352); ALCONIX (3036); SOLITON SYSTEMS (3040); Sansei Landic (3277); Hoshino Resorts REIT (3287); Nippon Healthcare Investment Corporation (3308); Kuriyama Holdings (3355); KFC (3420); SANKO TECHNO (3435); Tosei Reit Investment Corporation (3451); Techfirm (3625); mobcast (3664); AVANT (3836); KANTO DENKA KOGYO (4047); DAIICHI KIGENSO KAGAKU KOGYO (4082); RaQualia Pharma (4579); CHUGOKU MARINE PAINTS (4617); MORESCO (5018); SAGAMI RUBBER INDUSTRIES (5194); Arisawa Mfg. (5208); NOZAWA (5237); Nakayama Steel Works (5408); Tokyo Tekko (5445); SHINHOKOKU STEEL (5542); TechnoPro Holdings (6028); RIDE ON EXPRESS (6082); NS TOOL (6157); Rheon Automatic Machinery (6272); NISSEI ASB MACHINE (6284); NISSEI PLASTIC INDUSTRIAL (6293); Okada Aiyon (6294); Kato Works (6390); KANEMATSU ENGINEERING (6402); JUKI (6440); SANSO ELECTRIC (6518); W-SCOPE (6619); SEMITEC (6626); TERASAKI ELECTRIC (6637); Togami Electric Mfg. (6643); KYOSHA (6837); YAMAICHI ELECTRONICS (6941); SHIBAURA ELECTRONICS (6957); Astmax (7162); Nojima (7419); Daiko Denshi Tsushin (8023); MONEY SQUARE HOLDINGS (8728); Money Partners Group (8732); Shinoken Group (8909); Daiwa Office Investment Corporation (8976); Japan Rental Housing Investments (8986); The First Energy Service (9514); Cerespo (9625); Imperial Hotel (9708); Marubeni Construction Material Lease (9763); PARKER CORPORATION (9845); VITEC (9957). Lead Management: Daiwa Securities Co. Ltd. has lead-managed public offerings and/or secondary offerings (excluding straight bonds) in the past twelve months for the following companies: Nihon M&A Center (2127); Link and Motivation (2170); TOKYO ELECTRON DEVICE (2760); Kitanotatsujin (2930); ARCLAND SERVICE (3085); BRONCO BILLY (3091); Torikizoku (3193); HOTLAND (3196); Daiwa House REIT Investment Corporation (3263); Activia Properties (3279); AEON REIT Investment Corporation (3292); Hulic Reit (3295); Nippon Healthcare Investment Corporation (3308); Toridoll.corporation (3397); Tosei Reit Investment Corporation (3451); Kenedix Retail REIT Corporation (3453); COLOPL (3668); REALWORLD (3691); OPTiM (3694); GMO Research (3695); Daio Paper (3880); CrowdWorks (3900); KAYAC (3904); Datasection (3905); TAKEMOTOYOHKI (4248); QUICK (4318); Daito Pharmaceutical (4577); RIBOMIC (4591); Nihon Enterprise (4829); OAT Agrio (4979); KUNIMINE INDUSTRIES (5388); GMO TECH (6026); Adventure (6030); Interworks (6032); EXTREME (6033); MRT (6034); FIRSTLOGIC (6037); RareJob (6096); NIPPON VIEW HOTEL (6097); PUNCH INDUSTRY (6165); Imagica Robot Holdings (6879); Financial Products Group (7148); MEIWA INDUSTRY (7284); PLATZ (7813); KIKUSUI CHEMICAL INDUSTRIES (7953); Mitsui Fudosan (8801); Nippon Building Fund (8951); ORIX JREIT (8954); United Urban Investment Corporation (8960); HEIWA REAL ESTATE REIT (8966); Daiwa Office Investment Corporation (8976); Japan Hotel REIT Investment Corporation (8985); U-NEXT (9418); MTI (9438); AlphaPolis (9467); HIROSHIMA GAS (9535); ISB (9702); GAKKYUSHA (9769); ZAOH COMPANY (9986). (list as of 3 March 2015) Notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable to where report is distributed by Daiwa Securities Co. Ltd.) If you decide to enter into a business arrangement with our company based on the information described in this report, we ask you to pay close attention to the following items. In addition to the purchase price of a financial instrument, our company will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be
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Disclosure of Interest of Thanachart Securities
Investment Banking Relationship
Within the preceding 12 months, Thanachart Securities has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: NOK Airlines (NOK TB), MC Group Pcl (MC TB), MK Restaurants Group Pcl (M TB)
Disclosure of Interest of Affin Hwang Investment Bank
Investment Banking Relationship
Within the preceding 12 months, Affin Hwang Investment Bank has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following company: ALAM MARITIM (AMRB MK) Hong Kong This research is distributed in Hong Kong by Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) (“DHK”) which is regulated by the Hong Kong Securities and Futures Commission. Recipients of this research in Hong Kong may contact DHK in respect of any matter arising from or in connection with this research. Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Investment Banking Relationship For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Relevant Relationship (DHK) DHK may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage. DHK market making DHK may from time to time make a market in the securities covered by this research. Korea The developing analyst of this research and analysis material hereby states and confirms that the contents of this material correctly reflect the analyst’s views and opinions and that the analyst has not been placed under inappropriate pressure or interruption by an external party. Name of Analyst: Thomas Y. Kwon / Sung Yop Chung Disclosure of Analysts’ Interests If an analyst engaging in or a person who exercises influences on the preparation or publication of a Research Report containing recommendations for general investors to trade financial investment instruments with regard to which the analyst or the influential person has personal interests and if the recommendations contained in the Report may have impacts on the personal interests, Daiwa Securities Capital Markets Korea Co., Ltd.(“Daiwa Securities Korea”)shall ensure that the Analyst or the influential person notifies that he/she has personal interests with regard to: 1. The equity, the equity-linked bonds and the instruments with the subscription right to the equity issued by the legal entity covered in the Research Report (or the legal entity subject to the investment recommendations); 2. The stock option granted by the legal entity covered in the Research Report (or the legal entity subject to the investment recommendations); or 3. The equity futures, the equity options and the equity-linked warrants backed by the equity prescribed in the preceding Paragraph 1 as the underlying assets.
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Legal Entities subject to Research Report Coverage Restrictions Daiwa Securities Korea hereby states and confirms that Daiwa Securities Korea has no conflicts of interests with the legal entity covered in this Research Report: 1. In that Daiwa Securities Korea does NOT offer direct or indirect payment guarantee for the legal entity by means of, for instance, guarantee, endorsement, provision of collaterals or the
acquisition of debts; 2. In that Daiwa Securities Korea does NOT own one-hundredth (or 1/100) or more of the total number of outstanding equities issued by the legal entity; 3. In that The legal entity is NOT an affiliated company of Daiwa Securities Korea pursuant to Sub-paragraph 3, Article 2 of the Monopoly Regulation and Fair Trade Act of Korea; 4. In that, although Daiwa Securities Korea offers advisory services for the legal entity with regard to an M&A deal, the size of the M&A deal does NOT exceed five-hundredths (or 5/100) of
the total asset size or the total number of equities issued and outstanding of the legal entity; 5. In that, although Daiwa Securities Korea acted in the capacity of a Lead Underwriter for the initial public offering of the legal entity, more than one-year has passed since the IPO date; 6. In that Daiwa Securities Korea is NOT designated by the legal entity as the ‘tender offer agent’ pursuant to the Paragraph 2, Article 133 of the Financial Services and Capital Market Act or
the legal entity is NOT the issuer of the equity subject to the proposed tender offer; this requirement, however applies until the maturity of the tender offer period; or 7. In that Daiwa Securities Korea does NOT have significant or material interests with regard to the legal entity.
Disclosure of Prior Distribution to Third Party This report has not been distributed to the third party in advance prior to public release. The following explains the rating system in the report as compared to KOSPI, based on the beliefs of the author(s) of this report. "1": the security could outperform the KOSPI by more than 15% over the next 12 months, unless otherwise stated. "2": the security is expected to outperform the KOSPI by 5-15% over the next 12 months, unless otherwise stated. "3": the security is expected to perform within 5% of the KOSPI (better or worse) over the next 12 months, unless otherwise stated. "4": the security is expected to underperform the KOSPI by 5-15% over the next 12 months, unless otherwise stated. "5": the security could underperform the KOSPI by more than 15% over the next 12 months, unless otherwise stated. “Positive” means that the analyst expects the sector to outperform the KOSPI over the next 12 months, unless otherwise stated. “Neutral” means that the analyst expects the sector to be in-line with the KOSPI over the next 12 months, unless otherwise stated “Negative” means that the analyst expects the sector to underperform the KOSPI over the next 12 months, unless otherwise stated Additional information may be available upon request.
Singapore This research is distributed in Singapore by Daiwa Capital Markets Singapore Limited and it may only be distributed in Singapore to accredited investors, expert investors and institutional investors as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. By virtue of distribution to these category of investors, Daiwa Capital Markets Singapore Limited and its representatives are not required to comply with Section 36 of the Financial Advisers Act (Chapter 110) (Section 36 relates to disclosure of Daiwa Capital Markets Singapore Limited’s interest and/or its representative’s interest in securities). Recipients of this research in Singapore may contact Daiwa Capital Markets Singapore Limited in respect of any matter arising from or in connection with the research.
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For relevant securities and trading rules please visit SEC and PSE Link at http://www.sec.gov.ph/irr/AmendedIRRfinalversion.pdf and http://www.pse.com.ph/ respectively.
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This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available.
Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory. Regulatory disclosures of investment banking relationships are available at https://daiwa3.bluematrix.com/sellside/Disclosures.action.
Germany This document is distributed in Germany by Daiwa Capital Markets Europe Limited, Niederlassung Frankfurt which is regulated by BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) for the conduct of business in Germany.
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Bahrain This research material is distributed by Daiwa Capital Markets Europe Limited, Bahrain Branch, regulated by The Central Bank of Bahrain and holds Investment Business Firm – Category 2 license and having its official place of business at the Bahrain World Trade Centre, South Tower, 7th floor, P.O. Box 30069, Manama, Kingdom of Bahrain. Tel No. +973 17534452 Fax No. +973 535113
This material is provided as a reference for making investment decisions and is not intended to be a solicitation for investment. Investment decisions should be made at your own discretion and risk. Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document, Content herein is based on information available at the time the research material was prepared and may be amended or otherwise changed in the future without notice. All information is intended for the private use of the person to whom it is provided without any liability whatsoever on the part of Daiwa Capital Markets Europe Limited, Bahrain Branch, any associated company or the employees thereof. If you are in doubt about the suitability of the product or the research material itself, please consult your own financial adviser. Daiwa Capital Markets Europe Limited, Bahrain Branch retains all rights related to the content of this material, which may not be redistributed or otherwise transmitted without prior consent.
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Ownership of Securities:
For “Ownership of Securities” information please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Investment Banking Relationships:
For “Investment Banking Relationships” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.
DCMA Market Making:
For “DCMA Market Making” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.
Research Analyst Conflicts:
For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions.
Research Analyst Certification:
For updates on “Research Analyst Certification” and “Rating System” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analysts[s] is named on the report); and no part of the compensation of such analyst(s) (or no part of the compensation of the firm if no individual analyst[s)] is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report.
The following explains the rating system in the report as compared to relevant local indices, unless otherwise stated, based on the beliefs of the author of the report.
"1": the security could outperform the local index by more than 15% over the next 12 months. "2": the security is expected to outperform the local index by 5-15% over the next 12 months. "3": the security is expected to perform within 5% of the local index (better or worse) over the next 12 months. "4": the security is expected to underperform the local index by 5-15% over the next 12 months. "5": the security could underperform the local index by more than 15% over the next 12 months.
For stocks and sectors in Malaysia covered by Affin Hwang, the following rating system is in effect:
Stocks: BUY: Total return is expected to exceed +10% over a 12-month period HOLD: Total return is expected to be between -5% and +10% over a 12-month period SELL: Total return is expected to be below -5% over a 12-month period NOT RATED: Affin Hwang Investment Bank Berhad does not provide research coverage or rating for this company. Report is intended as information only and not as a recommendation
Sectors: OVERWEIGHT: Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months NEUTRAL: Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months UNDERWEIGHT: Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months
Conflict of Interest Disclosure: Affin Hwang
Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.
Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.
Relevant Relationships
Affin Hwang may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage.
Affin Hwang market making
Affin Hwang may from time to time make a market in securities covered by this research. For stocks and sectors in Indonesia covered by Bahana Securities, the following rating system is in effect: Stock ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. Unless otherwise specified, these ratings are set with a 12-month horizon. It is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating. "Buy": the price of the security is expected to increase by 10% or more.
"Hold": the price of the security is expected to range from an increase of less than 10% to a decline of less than 5%.
"Reduce": the price of the security is expected to decline by 5% or more.
Sector ratings are based on fundamentals for the sector as a whole. Hence, a sector may be rated “Overweight” even though its constituent stocks are all rated “Reduce”; and a sector may be rated “Underweight” even though its constituent stocks are all rated “Buy”.
“Overweight”: positive fundamentals for the sector.
“Neutral”: neither positive nor negative fundamentals for the sector.
“Underweight”: negative fundamentals for the sector.
Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.
Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.
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Relevant Relationships (Bahana Securities) Bahana Securities may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage.
Bahana Securities market making Bahana Securities may from time to time make a market in securities covered by this research. For stocks in Thailand covered by Thanachart Securities, the following rating system is in effect:
Ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. If the upside is 10% or more, the rating is BUY.
If the downside is 10% or more, the rating is SELL.
For stocks where the upside or downside is less than 10%, the rating is HOLD.
Unless otherwise specified, these ratings are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating.
For the sector, Thanachart looks at two areas, ie, the sector outlook and the sector weighting.
For the sector outlook, an arrow pointing up, or the word “Positive”, is used when Thanachart sees the industry trend improving.
An arrow pointing down, or the word “Negative”, is used when Thanachart sees the industry trend deteriorating.
A double-tipped horizontal arrow, or the word “Unchanged”, is used when the industry trend does not look as if it will alter. The industry trend view is Thanachart’s top-down perspective on the industry rather than a bottom-up interpretation from the stocks that Thanachart covers.
An “Overweight” sector weighting is used when Thanachart has BUYs on majority of the stocks under its coverage by market cap.
“Underweight” is used when Thanachart has SELLs on majority of the stocks it covers by market cap.
“Neutral” is used when there are relatively equal weightings of BUYs and SELLs.
Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action .
Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action .
Relevant Relationships (Thanachart Securities) Thanachart Securities may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage. Thanachart Securities market making Thanachart Securities may from time to time make a market in securities covered by this research.
Additional information may be available upon request.
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