Asia Pacific Daily

REGIONAL DAILY
December 3, 2013
ASIA PACIFIC
Asia Pacific Daily

Equity Research Reports
REGIONAL/ASIA PACIFIC
| 3 December 2013
Key Metrics
Market Indices
Australia China 'A' China 'H' Hong Kong India Indonesia Japan Korea Malay sia Philippines Singapore Taiw an Thailand ASX 200
Shanghai A
ASIAN Banks Weekly - Remain cautious on Indonesia; RHB stock of the week | P4
HSCEI HSI Sensex JCI Nikkei

Korea Comp
FBMKLCI PSEi STI

Taiwan Wgtd
SET
Close 5,280 2,311 11,548 24,039 20,898 4,322 15,655 2,031 1,818 6,223 3,189 8,415 1,374
1D -0.8% -0.6% 0.9% 0.7% 0.5% 1.5% 0.0% -0.7% 0.3% 0.2% 0.4% 0.1% 0.2%
1M -2.4% 2.7% 8.1% 3.4% -1.4% -2.5% 10.2% -0.4% 0.4% 3.6% -0.4% 0.3% -3.8%
YTD 13.6% -2.7% 1.0% 6.1% 7.6% 0.1% 50.6% 1.7% 7.6% -5.5% 0.7% 9.3% -1.3%
AUSTRALIA
Metcash - From Foe to Friend | P5 Navitas - Student enrolments continue to improve in S3_13 | P6 Ramsay Health Care - Gaining scale in France | P7 SMS Mgt & Technology - Trimming | P8 Building Materials - Oct 2013 approvals up 21% | P9 Strategy - Monthly Market Review November 2013 | P10
KOREA
Autos - November sales data | P11 Telco - Overall - High MNP expected for 4Q13, MVNOs gain further traction | P12
TAIWAN
First Financial - Heading south in 2H13 | P13
MSCI Asia Pacific XJ
530
MALAYSIA
Alliance Financial Group - Change of focus to counter weaker property loan growth | P14 Oriental Holdings - Another disappointing quarter | P15 Autos - No significant impact on per unit costs from electricity hike | P16 Building Materials - Watts up! | P17 Economic Update - Counting the impact of power hike | P18 Strategy Note - Best revision ratio since 1Q12 | P19 Strategy Flash Note - Shariah non-compliant stocks | P20
480
430
380 Nov-12
Feb-13
May-13
Aug-13
Nov-13
IBES/MSCI Market Valuations

Forward P/E (x) 14.52 9.25 14.95 14.38 13.47 8.94 15.53 16.20 18.22 13.99 14.19 11.78 11.29 11.98
SINGAPORE
CIMB Yearbook - Beyond the taper | P21
Australia China Hong Kong India Indonesia Korea Malay sia New Zealand Philippines Singapore Taiw an Thailand Asia ex -Japan Asia Pac ex -Japan
2 yr EPS Forward Div Growth (%) Yield (%) 8.00 4.65 9.99 3.46 9.72 2.97 13.11 1.70 11.64 2.96 17.40 1.14 3.41 3.17 8.63 5.00 7.96 2.38 2.54 3.61 19.11 3.35 12.83 3.59 12.38 10.41 2.73 3.23
CIMB Rec. Weight N OW n.a. UW UW N UW n.a. n.a. OW N N n.a. OW
CHINA/HONG KONG
China Resources Land - MIXc: a competitive model for commercial properties | P22 SJM Holdings - Decent growth in 2014 | P23 Gaming - Strong finish to the year | P24
INDONESIA
Bank Negara Indonesia - Tying the knot | P25 Wintermar Offshore Marine - Day in the sun | P26 Economic Update - Oct trade On the mend | P27 Economic Update - Nov CPI Inflation stabilises | P28
THAILAND
Economic Update - Nov CPI inflation edges higher | P29 Strategy Flash Note - Violence offers no solution | P30
(to US$1) Australian Dollar China Renminbi Hong Kong Dollar Indian Rupee Indonesian Rupiah Japanese Yen Korean Won Malay sian Ringgit New Zealand Dollar Philippine Peso Singapore Dollar Taiw an Dollar Thai Baht
Regional Currencies
CY13 forecast Close 1.14 0.91 6.24 6.09 7.85 7.75 62.0 62.32 10,500 11,770 101.0 102.77 1,145 1,057.17 3.30 3.21 1.30 0.82 44.3 43.66 1.29 1.25 30.6 29.60 32.0 32.13
1D 0.4% 0.0% 0.0% 0.2% 1.7% -0.5% 0.1% 0.5% 0.8% 0.2% 0.0% 0.1% -0.2%
YTD -10.4% 3.3% 0.2% -14.9% -22.9% -25.2% 9.0% -1.3% 5.6% 0.4% 3.3% 2.3% -1.8%
INDIA
Auto & Parts - Overall - Falling off the festival cliff | P31 Oil & Gas Exp & Prodn - Gujarat HC orders higher royalty | P32
Upcoming Major Data Releases Event/data Country Nov ex t. trade & foreign reserv es South Korea Nov CPI & Oct ex t. trade Indonesia Nov CPI Thailand 3Q13 GDP & Oct factory orders United States Oct ex t. trade & Nov foreign reserv es Malay sia Commodities
Close 93 1,253 1,865
Date 01 Dec 02 Dec 02 Dec 05 Dec 06 Dec

YTD 0.8% -24.6% 166.8%
WTI spot (US$/bbl) Gold (US$/oz) Baltic Dry Index
% chg 0.0% 0.0% 2.4%
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Page 1
Compiled as @:
12/3/2013 3:31:19 AM
ASIA PACIFIC DAILY

December 3, 2013
Calendar of Events
Calendar of Events
| 2013
November 2013
SUN MON TUE WED THU FRI
1
PHI: All Saints' Day SIN,KL: Deepavali
SAT
2 9
3
JPN: Culture Day
4
KL, IND: Awal Muharram
10
KL: PTTEP NDR US: Veterans Day KL: SJM NDR
11
KL: PTTEP NDR
12
13
14
SIN: Minth NDR
15
16
17
18
19
20
LDN: Annual North Asia Conference
21
LDN: Annual North Asia Conference
22
23
24
25
26
27
US: Thanksgiving Day
28
29
30
SOURCES: CIMB, COMPANY REPORTS
Page 2
ASIA PACIFIC DAILY

December 3, 2013
CIMB Daily Revisions

CIMB Daily Revisions
Reuters/ Market BBG Date Company Mkt Cap (USD M) Lead Analyst
| as at 3 December 2013
Recommendation Curr Prev
Price Target Curr Prev
Year EPS Forecasts End Chg%
Australia
MTS AU MTS.AX
2-Dec-13
Metcash
$2,641.73
Daniel BROEREN
Outperform
Outperform
A$
3.60 -7.7%
3.90
2014 2015 2016
-9.2 -20.3 -13.2 n.c. 1.1 1.9 -0.1 2.0 0.9 3.0 9.6 10.5 -7.9 -3.2 -2.5 16.7 12.5 11.1 -12.7 -12.9 -9.5 3.5 -3.5 -5.9
Australia
NVT AU NVT.AX
2-Dec-13
Navitas
$2,077.08
Tim PLUMBE
Neutral
Neutral
A$
5.65 +2.7%
5.50
2014 2015 2016
Australia
RHC AU RHC.AX
2-Dec-13
Ramsay Health Care
$7,235.05
Dr Derek JELLINEK
Neutral
Neutral
A$
38.44 +10.5%
34.79
2014 2015 2016
Australia
SGH AU SGH.AX
2-Dec-13
Slater & Gordon
$830.29
Alexandra CLARKE
Neutral
Neutral
A$
4.51 +18.7%
3.80
2014 2015 2016
Australia
SMX AU SMX.AX
2-Dec-13
SMS Mgt & Technology
$262.19
Julian GUIDO
Neutral
Neutral
A$
4.18 -12.9%
4.80
2014 2015 2016
Indonesia
WINS IJ WINS.JK
2-Dec-13
Wintermar Offshore Marine
$199.63
YEO Zhi Bin
Outperform
Neutral
Rp
800 +29.0%
620
2013 2014 2015
Malaysia
ORH MK OTLS.KL
2-Dec-13
Oriental Holdings
$1,660.61
Lucius CHONG
Underperform Underperform
RM
8.04 -0.4%
8.07
2013 2014 2015
Taiwan
2892 TT 2892.TW
2-Dec-13
First Financial
$5,248.01
Nora HOU
Neutral
Neutral
NT$
18.50 +1.1%
18.30
2013 2014 2015
Page 3
December 2, 2013
ASIA PACIFIC
ASIAN BANKS WEEKLY
SHORT TERM (3 MTH)
LONG TERM
Conviction| |
CIMB Analyst(s)
Remain cautious on Indonesia; RHB stock of the week

We see downside risks for Indonesian banks from high inflation, rupiah depreciation and political uncertainties. Earnings headwinds could come from a policy-induced slowdown in loan growth and higher NPLs. Much of this has been priced in for the big banks, ex-BCA.
Figure 1: Indonesian banks performances
230 MSCI Indonesia banks absolute performance MSCI Indonesia banks relative to MSCI Indonesia Index
Trevor KALCIC, CFA Lydia XU
T (852) 2539 1323 E trevor.kalcic@cimb.com T (852) 2539 1325 E lydia.xu@cimb.com
210
190 170 150
Winson NG, CFA
T (60) 3 20849686 E winson.ng@cimb.com
Kenneth NG, CFA
T (65) 6210 8610 E kenneth.ng@cimb.com
130
110 90
May-10
May-12
May-13
May-11
Jul-10
Jul-11
Jul-12
Jan-10
Jan-11
Jan-12
Nov-10
Nov-11
Nov-12
Jan-13
Jul-13
Sep-10
Sep-11
Sep-12
T (62) 21 30061722 E hadi.soegiarto@cimb.com
Monchai JATURANPINYO, CFA

T (66) 2 6579224 E monchai.ja@cimb.com
SOURCE: DATASTREAM
Daehyun KIM
T (82) 2 67306128 E daehyun.kim@cimb.com
John BUONACCORSI Ashley DALZIELL
T (61) 2 96946062 E john.buonaccorsi@cimb.com T (61) 2 96946061 E ashley.dalziell@cimb.com
Jatinder AGARWAL Vivek VERMA Umang SHAH Nora HOU
T (91) 22 6602 5158 E jatinder.agarwal@cimb.com T (91) 22 6602 5162 E vivek.verma@cimb.com T (91) 22 6602 5163 E umang.shah@cimb.com T (886) 2 8729 8373 E nora.hou@cimb.com
Last week, we made across-the-board adjustments to our earnings and target prices for Indonesian banks and downgraded Mandiri and BNI to Neutral (from Outperform). In Malaysia, we raised estimates and target prices for HLB and Affin while cutting both for Alliance Financial and BIMB. We also raised our estimates for RHB. We remain Overweight on the overall sector.
factor for the sector is the timing of international liquidity tightening, as Indonesian banks could potentially be the worst hit in Asia by a stronger US$ (-0.7% correlation) and higher US rates (-0.81% correlation).
Regional performances
Cautious on Indonesia
Grace WANG
T (886) 2 8729 8375 E grace.wang@cimb.com
We remain cautious on Indonesian banks, and downgrade industry behemoths Mandiri and BNI to Neutral. In our opinion, BRI continues to provide the best exposure to the sector. BIs hawkish stance will result in slower loan growth for the sector, and we see NPLs rising. Our caution is tempered by greater regulatory depth and stronger financial positions than during the 2005/08 cycle. We are most worried about the smaller banks, although we do not expect systemic risks. The biggest external unknown
Risers over the past week were led by India (+3.5%) and the Philippines (+3.4%). Decliners were led by Indonesia (-2.2%). Most other banking indices were flat or up modestly.
Model portfolio
Over the past week, CIMBs Asian banks model portfolio was up 0.83% against a 0.89% rise for its benchmark. Performance was held back by our short position in SBI, which continues to rebound.
We raise estimates for RHB following its stellar 3Q13 results. We see upside from continued market-share gains in investment banking and its planned entry into Indonesia.
RHB stock of the week
Page 4
Designed by Eight, Powered by EFA
Sep-13
Nov-13
Mar-10
Mar-11
Mar-12
Mar-13
Hadi SOEGIARTO
RetailAustralia
December 2, 2013
Metcash
1H14 RESULTS NOTE

Current A$3.28 A$3.60 A$3.90 9.8%
Conviction| |
MTS AU / MTS.AX
US$2,632m
A$2,889m
Market Cap
US$16.09m
A$17.76m
Avg Daily Turnover
100.0%
Free Float
Target Prev. Target Up/Downside
768.9 m shares
CIMB Analyst(s)
From Foe to Friend

Our analysis of best-practice food wholesaling demonstrates that the most notable deficiency of MTS's model is a lack of constructive cooperation with its retailers. Today's strategy 'preview' demonstrates that MTS is willing to make concessions, an important step forward. Retailer buy-in remains the critical missing link
Todays update provides an idea of managements vision, without the strategy or framework to get there. What was clear to us though is that MTS will make an upfront investment for future growth, and hence we take this opportunity to revise down our forecasts. We lower FY14F NPAT by 7% to A$252m and FY15F by 18% to A$239m. On our revised forecasts MTS is trading on FY15 PE of 12x. We lower our blended price target to A$3.60 (from A$3.90) but retain our Outperform recommendation. MTS suggested that prior company strategies had been too focused on wholesale outcomes rather than the consumer. New strategies will be built around a more collegiate aim of shopper-led volume expansion . In particular MTS highlighted the need for: 1) better prices and promo offers across branded grocery; 2) enhanced private label range and pricing; and 3) improvements to the independent fresh offer.
Daniel BROEREN Alexander BEER
T (61) 2 9694 6072 E daniel.broeren@cimb.com T (61) 2 9694 6073 E alexander.beer@cimb.com
Who funds the strategy?
Share price info

Share price perf. (%) Relative Absolute Major shareholders WESTPAC BANKING COR PERENNIAL INVESTMEN NATIONAL AUSTRALIA B 1M -0.3 -2.7 3M -1.5 0.3 12M -21.6 -4.4 % held 11.2 11.2 6.1
All about volume
MTS today confirmed that upfront funding will be required to drive shopper-led volume growth. Beefed-up in-house marketing and a subsidised private label range have already been highlighted as examples of how the MTS will contribute to volume growth. MTS called out a 3% COGS disadvantage to the major chains which it is looking to address. Co-operation by retailers in streamlining costs-to-serve will be key to tapping that funding. Management today highlighted recent cost-cutting as a short-term solution. As such, reinvestment in the business began in 1H14. The reinstating of the DRP and lower dividend pay-out suggest the balance sheet is also being positioned to support further growth initiatives.
% chg (0.8) 0.5 (8.4) 6.6 (8.7) (1.0) (10.0) (16.0) (6.7) (32.1) (7.0) nmf (14.4) (9.2) (2.2) Comments
Preparing for growth
FYE Apr (A$m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort EBIT Net Interest expense Other non operating income/(Expense) Associates contrib Pre-tax profit Tax Tax rate (%) Minority interests Net profit Exceptionals Reported net profit EPS (cts) DPS (cts)
1H14 (actual) 6,645 -6,426 218.4 3.29 -25 193.3 -27.00 0 0.00 166.3 -46.60 28.02 -0.70 119.0 -20.10 98.90 13.51 9.50
1H14 Variance 1H13 (f'cast) (%) (actual) 6,588 0.9 6,394 -6,341 (1.3) -6,165 247.1 (11.6) 228.9 3.75 3.58 -29 12.9 -23 218.3 (11.4) 206.2 -35.08 23.0 -29.80 0 0 0.00 0.00 183.2 (9.2) 176.4 -54.96 15.2 -53.10 30.00 30.10 2.54 (127.5) -2.00 125.7 (5.3) 121.3 0.00 nmf -39.30 125.7 (21.3) 82.00 14.62 (7.6) 15.83 10.00 (5.0) 11.50
% chg yoy 3.9 (4.2) (4.6) (10.6) (6.3) 9.4 (5.7) 12.2 65.0 (1.9) 48.9 20.6 (14.6) (17.4)
FY14F (new) 13,395 -12,918 477.5 3.56 -53 424.8 70.49 0 0.00 354.3 99.21 0.28 3.50 251.6 -20.10 231.5 28.57 22.50
FY14F (prev) 13,503 -12,982 521.5 3.86 -56 465.1 71.22 0 0.00 393.9 118.2 0.30 5.15 270.6 0.00 270.6 31.47 23.00
Price reinvestment in MF&G
1H14 dividend 9.5cps below forecast 10cps
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Page 5
EducationAustralia
December 2, 2013
Navitas
COMPANY NOTE
Current A$6.05 A$5.65 A$5.50 -6.6%
Conviction| |
NVT AU / NVT.AX
US$2,070m
A$2,271m
Market Cap
US$7.32m
A$7.99m
Avg Daily Turnover
65.0%
Free Float
375.4 m shares
Notes from the Field
Student enrolments continue to improve in S3_13

The Australian University Program student recovery continues and overall student growth reached double digits, which bodes well for top line growth in FY14 and FY15. That said, as per the recent FY14 guidance, EBITDA growth will be lower given one-off cost increases.
Beyond FY14 strong top line growth, combined with the operating leverage inherent within the business, gives potential for over 20% EPS growth. However we think this is reflected in the share price, with NVT trading on a PE of 27.3x in FY14 and 22.1x in FY15. We make minor changes to our earnings forecasts, our blended target price (PE, EV/EBITDA and DCF) increases to A$5.65 and we maintain our Neutral recommendation. with Canada +21% and the US +45% yoy. The only negative region was Asia/Africa, where enrolments fell by -8% (vs. -10% in S2_13). Whilst S3_13 was marginally ahead of our expectations (+13% vs. CIMB +11.5%), management cautioned that S3_13 enrolments had been factored into the recent FY14 guidance.
Tim PLUMBE
T (61) 2 9694 6086 E tim.plumbe@cimb.com
Julian GUIDO
T (61) 2 9694 6085 E julian.guido@cimb.com
Matthew NICHOLAS Brewin KWONG
T (61) 2 9694 6087 E matthew.nicholas@cimb.com T (61) 2 9694 6088 E brewin.kwong@cimb.com
Company Visit Channel Check
Expert Opinion Customer Views
Positive trajectory
S3_13 enrolments
6.5 6.0 5.5 5.0 4.5 4.0 15
Learning is the beginning of wealth.

Jim Rohn
S3_13 University program (UP) enrolment numbers were impressive, increasing by +13% yoy (vs. +4.6% in S2_13 and +4% in S1_13). Australia continued to show positive signs of a recovery, with new enrolments above +30% (vs. +15% in S2_13 and +12% in S1_13) and total Australian enrolments up +13% (vs. +5% in S2_13 and -0.5% in S1_13). Importantly, this was the first time Australia has reported double digit enrolment growth since S3_09. UK enrolments grew +23%, a strong recovery after the +2% recorded in S2_13. North America EFTSUs increased +27% (vs. +22% in S2_13),
Financial Summary
Revenue (A$m) Operating EBITDA (A$m) Net Profit (A$m) Normalised EPS (A$) Normalised EPS Growth FD Normalised P/E (x) DPS (A$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Jun-12A 688 126.8 73.1 0.19 (8.4%) 31.04 0.20 3.22% 18.82 35.46 50.1% 9.68 30.8%
NVT remains on track to deliver mid-teens revenue growth, however in FY14, reinvestment in the cost base has resulted in FY14 EBITDA guidance of A$138-148m, which represents growth of 6-14%. That said, in FY15 we forecast a return of the operating leverage inherent within the business model, with EPS growth of +24% off 12% revenue growth.
But priced in
We remain positive on the longer term structural story of increasing wealth in developing countries leading to increased demand for Western tertiary education. However on an FY15 PE of 22.1x, we think this is reflected in the share price.
Price Close
Relative to S&P/ASX 200 (RHS) 141 132 123 114 105 96
10
Vol m
5
Dec-12 Mar-13 Jun-13 Sep-13
Source: Bloomberg
52-week share price range

4.30
6.05
6.37
Current
Target
5.65
Jun-13A 730 130.0 74.6 0.20 1.9% 30.45 0.20 3.22% 18.19 20.98 40.2% 9.58 31.6%
Jun-14F 841 143.0 83.0 0.22 11.3% 27.35 0.18 2.89% 16.48 38.80 34.0% 8.94 33.8% (0.00%) 0.99
Jun-15F 943 171.1 103.0 0.27 24.0% 22.05 0.22 3.64% 13.61 31.78 21.4% 8.28 39.0% 1.24% 0.99
Jun-16F 1,028 198.5 122.8 0.33 19.3% 18.49 0.26 4.30% 11.57 24.84 9.0% 7.58 42.8% 1.87% 0.99
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Page 6
HospitalsAustralia
December 2, 2013
Ramsay Health Care

RHC AU / RHC.AX Current A$38.74 A$38.44 A$34.79 -0.8%
Conviction| |
COMPANY NOTE
Free Float
US$7,133m
A$7,829m
Market Cap
US$14.33m
A$15.32m
Avg Daily Turnover
57.3%
202.1 m shares
Gaining scale in France

French subsidiary Ramsay Sant has finalised its acquisition of mental health group Medipsy. While we believe the move plays to RHCs core strengths in managing psychiatric hospitals and its track record of delivering margin gains, the near- to medium-term earnings impact appears incremental and is reflected in current trading levels.
Our FY14 EPS estimate remains largely unchanged, while FY15-16F increases up to 210bp. We adjust our multiples to better reflect historical levels and Asian-based comps, with our blended price target increasing to A$38.44. We retain our Neutral rating. Ramsay Sant, a 57%-owned French subsidiary, has successfully concluded negotiations with Gnrale de Sant Group (GDS) paying 149.4m (A$222.8m) for mental health group Medipsy. Medipsy operates 30 hospitals (more than 2,600 beds) across France, with 27 mental health clinics, the largest number in the country and covering a broad range of services (eg general psychiatry, adolescent mental health, gerontology) as well as three facilities devoted to drug/alcohol rehabilitation, with an annual turnover of ~150m (A$223.7m). The cash/debt funded acquisition, with top-up funds provided by RHC and minority interest holder Predica, is expected to close by YE13, with EPS accretion in 12 months.
Dr Derek JELLINEK
T (61) 2 9694 6074 E derek.jellinek@cimb.com
Scale but also challenges
France expansion finalised
We are very excited about the opportunityand the scale it will bring to our portfolio in France.
Chris Rex, MD
We view the acquisition as both opportunistic (favourable terms EV/EBITDA ~7.5x) and strategic (track record of driving margin gains from acquired underperforming assets and scale gained as now the third largest operator in France with 40 hospitals and 4,100 beds) and believe underlying fundamentals are supportive: 11.8% healthcare GDP expenditure versus 9.8% OECD average; ageing population (60-year-olds represent 23% of the population, 27% by 2025F, according to WHO); and compulsory health insurance (87% national, 8% private extra-cover, 5% self-pay). However, the operating environment remains challenging (pricing pressure, growing regulatory constraints and the rationalisation of services) possibly limiting strong gains and margin uplift, with flagged plans to expand some assets increasing capex (up to ~A$15m) and prolonging adequate ROI.
Its in the price
We believe current trading levels (forward PE 24.3x) capture acquisition upside.
Price Close 39 34 29 24 2 2 1
Vol m
Relative to S&P/ASX 200 (RHS) 127 116 105 94
Financial Summary
Revenue (A$m) Operating EBITDA (A$m) Net Profit (A$m) Normalised EPS (A$) Normalised EPS Growth FD Normalised P/E (x) DPS (A$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Jun-12A 3,956 583.5 241.9 1.19 17.9% 32.71 0.60 1.55% 14.86 81.16 63.7% 5.52 17.6% Jun-13A 4,175 627.7 264.4 1.36 13.7% 28.83 0.71 1.82% 13.95 28.72 64.1% 5.08 18.4% Jun-14F 4,723 724.2 301.5 1.53 12.5% 25.44 0.80 2.07% 12.37 43.00 66.1% 4.63 19.1% (0.11%) 0.97 Jun-15F 5,165 792.7 339.1 1.71 12.3% 22.66 0.89 2.30% 11.26 34.28 57.6% 4.22 19.6% 2.10% 0.97 Jun-16F 5,550 861.9 373.2 1.88 9.4% 20.71 0.98 2.53% 10.31 31.06 50.0% 3.85 19.5% 0.89% 0.96
1
Dec-12 Source: Bloomberg Mar-13 Jun-13 Sep-13

25.85
38.74
39.46
Current
Target
38.44
Page 7
IT ServicesAustralia
December 2, 2013
SMS Mgt & Technology

SMX AU / SMX.AX Current A$4.09 A$4.18 A$4.80 2.1%
Conviction| |
COMPANY NOTE
Free Float
US$261.2m
A$286.7m
Market Cap
US$1.52m
A$1.61m
Avg Daily Turnover
96.6%
70.10 m shares
Trimming
Channel checks suggest that while corporate IT demand has not worsened, equally there is no current pick-up in activity. While most participants are optimistic and hopeful on a recovery in 2H14, this is yet to feed into lead indicators which are still patchy.
Julian GUIDO
T (61) 2 9694 6085 E julian.guido@cimb.com
Matthew NICHOLAS Tim PLUMBE
T (61) 2 9694 6087 E matthew.nicholas@cimb.com T (61) 2 9694 6086 E tim.plumbe@cimb.com
We currently factor in a mild 2H14 recovery, however believe that pricing pressure will mitigate higher volumes and limit historical operating leverage in the short term. We cut EPS by 7% and 3% across FY14-15F. Our blended (PE/EBIT) price target falls to A$4.18. We maintain a Neutral rating. Channel checks across the IT industry suggest little has changed in the months post the federal election. While there is an increased sense of optimism and hope for increased activity in 2H14, this is not yet evident in the current December quarter. However, while activity has not increased post-election, equally important is that activity has not deteriorated further but rather has exhibited stabilisation. We have trimmed utilisation rates by 1% (across both halves) causing Normalised FY14F EPS to fall 7%. This change is based entirely on the organic business, with no changes to our forecasts for the two recent
Brewin KWONG
T (61) 2 9694 6088 E brewin.kwong@cimb.com
No change yet
acquisitions (Indicium and Birchman Asia Pacific). We expect SMX to report Normalised 1H14 EBITDA down 42% yoy in February (-56% yoy on an organic basis). In our view, this level of decline is likely to feature as the worst relative to the majority of listed peers. On an organic basis we expect a 46/54 1H/2H EBITDA split. But on a group normalised basis (ie, including acquisitions) the split is more heavily skewed to the 2H, ie, 41/59 given the heavy 2H skew of the recent acquisitions.
Maintain Neutral
5.4 4.9 4.4 3.9 2 2 1

Vol m
Management is confident of a significantly stronger result in the second half

Tim Stianos CEO
Weak 1H & strong 2H skew
Lead indicators remain patchy for corporate IT spend, including surveys for business confidence and IT vacancies, with no evident pick-up yet. While our existing forecasts assume some demand recovery in 2H14 we believe this will be offset by strong competition, with industry pricing pressure continuing to remain at elevated levels thereby limiting historic operating leverage benefits (ie, margin expansion). Currently SMX does not offer valuation appeal (17x PE and 12x EBIT).
Price Close
Relative to S&P/ASX 200 (RHS) 99 86 74 61
Financial Summary
Revenue (A$m) Operating EBITDA (A$m) Net Profit (A$m) Normalised EPS (A$) Normalised EPS Growth FD Normalised P/E (x) DPS (A$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Jun-12A 335.5 43.98 30.60 0.44 0.1% 9.23 0.31 7.46% 5.67 11.02 (25.1%) 2.35 26.9% Jun-13A 278.5 28.57 21.12 0.29 (33.8%) 13.94 0.26 6.23% 8.57 10.21 (29.8%) 2.29 16.6% Jun-14F 296.6 24.38 15.29 0.24 (17.9%) 16.99 0.20 4.89% 11.29 NA (8.1%) 2.29 13.5% (7.66%) 0.93 Jun-15F 321.5 30.94 21.03 0.30 24.6% 13.63 0.21 5.13% 9.20 42.07 (1.7%) 2.18 16.4% (3.38%) 0.93 Jun-16F 342.3 36.04 24.54 0.35 16.7% 11.69 0.25 6.11% 8.01 24.09 1.5% 2.07 18.1% (2.50%) 0.96
1
Dec-12 Source: Bloomberg Mar-13 Jun-13 Sep-13

4.09
4.06 5.49
Current
4.18
Target
Page 8
December 2, 2013
AUSTRALIA
BUILDING MATERIALS
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
Oct 2013 approvals up 21%

October 2013 building approvals increased 21% versus the pcp. Detached houses contributed to the improvement but growth continued to be led by the apartments segment, which displays lower materials intensity. With valuations relatively full, we retain a cautious sector stance and our preference for Fletcher Building (Outperform).
SECTOR FLASH NOTE
Andrew SCOTT Niraj SHAH
T (61) 2 9694 6081 E andrew.scott@cimb.com T (61) 2 9694 6083 E niraj.shah@cimb.com
Figure 1: Building approvals chg vs pcp

80%
60% 40% 20% 0%
-20%
-40% -60% Oct-89 Oct-93 Oct-97 Oct-01 Oct-05 Oct-09 Oct-13
SOURCES: ABS
We focus on the original data relative to the pcp, but we note that October seasonally-adjusted approvals declined 2% from September 2013. On an original basis, building approvals were 21% ahead of October 2012 levels. QLD (+34% versus the pcp) was the key contributor to the growth in October 2013 building approvals. Importantly, VIC, which has been relatively weak for some time, saw a 25% increase in approvals. WA (+20%) also delivered strong growth. NSW, which has outperformed in recent months, delivered a relatively modest 5% improvement. We focus on detached houses and townhouses as key drivers of materials intensity. These segments improved by a robust 10% versus the pcp. However, apartments, which exhibit lower materials intensity, increased by 53% versus the pcp. Within this segment, four or more storey apartments rose
by 87% relative to October 2012 levels. The value of building approvals for non-residential construction activity increased by 13% versus the pcp.
What We Think
What Happened
Building approvals have improved for 13 of the past 14 months. Allowing for lags, we believe materials demand should gather pace in CY14. However, this improvement may lag the headline data if the apartments segment continues to capture overall housing market share.
What You Should Do
We believe the focus should remain on mid-cycle leverage in the sector. However, current share prices appear to be reflecting much of this leverage. Against this backdrop, we retain a cautious sector stance with a preference for Fletcher Building (Outperform). We retain a Neutral rating for CSR, Adelaide Brighton and James Hardie, and an Underperform rating for Boral.
Page 9
December 2, 2013
AUSTRALIA
STRATEGY
Conviction| |
CIMB Analyst(s)
Monthly Market Review November 2013

US October non-farm payrolls were much stronger than expected and the minutes from the October FOMC suggested Fed tapering was likely in the coming months. High-yielding defensive sectors and the price of gold were under pressure, but sectors that benefit from a stronger USD tended to outperform.
Figure 1: Sector performance November 2013
Sector S&P/ASX 200 Consumer Discretionary Energy Healthcare Information Technology Materials Industrials Property Consumer Staples Telecommunication Services Utilities Financials ex Property Price curr 5320.0 1801.8 13187.8 14199.9 732.0 9976.5 3895.5 1016.6 9881.3 1747.0 5379.6 7051.0 Price -12m 4506.0 1315.8 12226.1 11331.7 592.1 10108.1 3376.1 961.4 8770.7 1472.7 5099.5 5273.3 Absolute performance (%) Relative performance (%) 1m 3m 6m 12m 1m 3m 6m 12m -1.9 3.6 8.0 18.1 -1.4 3.5 13.2 36.9 0.6 -0.1 5.2 18.9 -6.3 -4.2 -0.6 7.9 -4.4 -7.8 -8.6 -10.2 -0.4 1.5 10.3 25.3 1.5 -2.1 2.3 7.2 -1.4 4.8 1.2 23.6 0.6 1.2 -6.8 5.6 -0.7 3.8 5.6 -1.3 1.2 0.2 -2.4 -19.4 -3.6 2.8 5.1 15.4 -1.6 -0.9 -2.9 -2.7 -2.8 0.8 -3.7 5.7 -0.8 -2.8 -11.6 -12.3 -2.9 -1.0 2.1 12.7 -0.9 -4.6 -5.9 -5.4 -2.6 3.3 7.0 18.6 -0.6 -0.3 -1.0 0.6 -3.1 -1.8 -1.7 5.5 -1.2 -5.4 -9.7 -12.6 -1.3 7.0 14.6 33.7 0.6 3.4 6.6 15.6
Priced at close of business, 29 November 2013. SOURCE: IRESS
Thiva NAGARATNAM, CFA

T (61) 2 9694 6056 E thiva.nagaratnam@cimb.com
Shane LEE
T (61) 2 9694 6054 E shane.lee@cimb.com
Muditha WEERATUNGA, CFA

T (61) 2 9694 6057 E muditha.weeratunga@cimb.com
In local currency, the All Ordinaries (-2.0%) underperformed the US S&P500 (+2.8%), the MSCI World ex Australia Index (+1.8%) and the MSCI Regional ex Japan Index (-1.3%). The best performers for the month were Healthcare (-0.4%), Materials (-0.7%) and Financials ex Property (-1.3%). The worst performers were Energy (-6.3%), Industrials (-3.6%) and Utilities (-3.1%). The top five performers from the S&P/ASX200 (price) Index for the month were Mount Gibson Iron (17.4%), James Hardie Industries (14.7%), Myer Holdings (14.0%), Arrium (13.7%) and Atlas Iron (10.6%). The bottom five performers were Forge Group (-83.0%), Ausdrill (-49.0%), St Barbara (-41.7%), Silver Lake Resource (-39.6%) and Perseus Mining (-35.6%). The top five upgrades were Henderson Group (8.3%), James Hardie Industries (8.0%), Arrium (5.5%), Macquarie Group (4.6%) and BlueScope Steel (3.0%). The top five downgrades were Qantas Airways (-115.4%), OZ Minerals (-35.4%), Alumina (-28.0%), WorleyParsons (-20.0%) and Whitehaven Coal (-13.7%).
Australias performance versus the world
The best- and worst-performing sectors
The top five and bottom five performing S&P/ASX 200 stocks
Consensus earnings revisions
Page 10
December 2, 2013
SOUTH KOREA
AUTOS
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
November sales data
SECTOR FLASH NOTE
HMC/KIAs combined Nov ex-factory sales of 666k units brought 11M13 sales to 93-94% of our 2013 targets as overseas remained intact. The weak domestic sales (-12.0% yoy, -3.5% mom) are due to the high base effect from last years individual consumption tax cut.
KJ Hwang Miles Yoo
Figure 1: HMC/KIAs global ex-factory sales summary

(Units, %) Total HMC KIA Domestic HMC KIA Overseas HMC Nov-13 666,006 408,533 257,473 93,254 54,302 38,952 572,752 354,231 218,521 yoy -1.8% -2.8% -0.2% -12.0% -11.9% -12.1% 0.0% -1.3% 2.2% mom -0.4% -2.6% 3.3% -3.5% -5.6% -0.3% 0.1% -2.1% 4.0% % to target 93.2% 92.7% 93.9% 87.6% 88.2% 86.8% 94.2% 93.5% 95.4% Nov-12 678,435 420,368 258,067 105,932 61,608 44,324 572,503 358,760 213,743 Oct-13 668,721 419,532 249,189 96,605 57,553 39,052 572,116 361,979 210,137
T (82) 2 6730 6123 E kj.hwang@cimb.com T (82) 2 6730 6126 E miles.yoo@cimb.com
Highlighted Companies Hyundai Motor (005380 KS)

We foresee strong ROE accretion from the companys 113% capex efficiency, which is the highest in the industry. We expect the new China capacity and full model changes for the new Genesis and Sonata to trigger an ROE-accretion cycle in 2H13-2014.
KIA
KIA Motor (000270 KS)
KIA leads its global peers in cash costs, at US$13,986 per unit. We believe that its competitive cost structure, backed by a solid 2H13 new model cycle, will give it the highest ASP-to-cash-cost spread in the coming quarters.
We remain Overweight on the Korean auto sector, with HMC as our top pick. The upcoming ASP hikes for the enhanced model cycle, backed by the direct/indirect overseas capacity expansion, remain the key catalysts. HMC reported global ex-factory sales of 408,533 units in Nov, bringing 11M13 sales to 92.7% of its 2013 target. Domestic sales fell 11.9% yoy and 5.6% mom, no thanks to last years high-base effect from the individual consumption tax cut and fewer working hours (on 5 and 8 Nov) due to the labour union leader election. HMCs US plant sales fell 6.8% yoy and 18.5% mom due to the fewer working days (19 days with thanksgiving holidays) vs. 23 days in Oct 13 vs. 20 days in Nov 12. Sales from the Turkey plant increased 14.1% mom as it took over the production of the new i10 from India after HMC's capacity was expanded in Turkey. Sales from the China plant rose 1.2% yoy and 15% mom due to the new Mistras sales of c.6k units whose production started on 19 Nov. KIA posted global ex-factory sales of 257,473 units in Nov, bringing 11M13 sales volume to 93.9% of its 2013
What Happened
target. Overseas sales increased to 218,521 units (+2.2% yoy, +4.0% mom, 11M13 at 95.4% of 2013 target of 2.27m). The US plant posted weak sales due to fewer working days; but as for the U.S retail sales in Nov, sales of the new Soul rose 165.8% mom and that of the new Facelift Sportage rose 107.1% yoy and 87% mom. The China plant posted sales of 53,012 units (+1.8% yoy, +16.5% mom) due to strong sales of the K2 (+8.1% yoy, +26.4% mom), K3 (+19% yoy, +3.6% mom), K5 (+0.5% yoy, +15.9% mom), and Sportage (+3.2% yoy, +9.2% mom).
What We Think
We expect strong sales momentum in 4Q13-2014 to come from: 1) HMCs overseas capacity expansion (150k units in China, 90k in CHMC, 100k in Turkey, 20k in Brazil via the adoption of three shifts), KIAs 150k additional China capacity in 1H14, and 2) the new model cycle starting in the local market, whose output is normalising. Stay invested. We remain positive on HMC/KIAs solid 11M13 sales and margin prospects due to the improving model cycle, backed by the potential capacity expansion in 2014.
What You Should Do
Page 11
December 2, 2013
SOUTH KOREA
TELCO - OVERALL
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
High MNP expected for 4Q13, MVNOs gain further traction

KTOAs (Korea Telecom Operators Association) mobile number portability (MNP) data for Nov show mom and yoy dips. Still, MNP remained high, with the 2-month MNP in Oct-Nov being the highest since Jan-Feb, which does not bode well for 4Q results.
Figure 1: MNP
(K subs) 3,500 3,000
SECTOR FLASH NOTE
Samuel Martens Jacob Rhee
T (82) 10 88938680 E samuel.martens@cimb.com T (82) 2 6730 6127 E jacob.rhee@cimb.com
2,500
2,000 1,500
Highlighted Companies SK Telecom

SKT is our top pick in the sector because of its higher margins, healthy profit & cash-flow growth as well as subscribers ongoing migration to 4G services. As with the shift to 3G, we expect SKT to maintain its dominance in the 4G era.
1,000 500 0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 OctNov
KT Corp
We foresee an uphill battle for KT in regaining its market share in LTE. But we believe gradual ARPU growth and solid dividend yields will limit its share-price downside. Longer term, we are positive on its new growth areas.
LG Uplus
We feel LGU and the market are too optimistic about potential gains from LTE. We also believe LGU will find it difficult to maintain its aggressive marketing promotions and simultaneously provide attractive returns to shareholders.
We remain Neutral on the sector, expecting sentiment on telcos to weaken on the back of heated marketing, lacklustre results as well as mobile virtual network operators (MVNOs) further traction with consumers. SK Telecom (SKT) remains our top pick. MNP in Nov was down 24% mom to 750k (Oct: 989k) and down 2% yoy (Nov 12: 763k). However, Oct-Nov MNP was the highest 2-month MNP since the beginning of 2013. 4Q13 MNP appears likely to exceed 2Q-3Q13 numbers, coming in perhaps close to 1Q13 levels. MNP winners in the month were the MVNOs (+54k vs. +47k in Oct), as they gained further traction with cost-sensitive consumers, while LG Uplus (LGU) also posted positive MNP (+22k in Nov, +36k in Oct).
Meanwhile, SKT (-53k vs. -54k in Oct) and KT (-23k vs. -29k in Oct) continued to be MNP losers, although at slower rates. In sync with the MNP data and press reports, our channel checks suggest that promotions remain active, which should result in weaker 4Q results for the telcos from higher marketing costs. This should be particularly true for KT which is looking to regain lost market share as well as LGU which is trying to maintain its momentum. We continue to recommend caution on the sector with SKT being our only Outperform recommendation on improving ARPU growth and solid dividend yields. We rate KT a Neutral and LGU an Underperform.
What We Think
What Happened
What You Should Do
Page 12
BanksTaiwan
December 2, 2013
First Financial
2892 TT / 2892.TW Current NT$17.95 NT$18.50 NT$18.30 3.1%
Conviction| |
3QFY13 RESULTS NOTE

Avg Daily Turnover Free Float
US$5,242m
NT$155,330m
Market Cap
US$5.06m
NT$149.7m
70.0%
8,389 m shares
CIMB Analyst(s)
Heading south in 2H13

First FHCs 9M13 earnings were better than we had expected due to strong fees. The momentum, however, has tapered off since 2H13 due to additional provisioning. Going forward, revenue expansion could be capped due to a lack of significant growth drivers.
Nora HOU
T (886) 2 8729 8373 E nora.hou@cimb.com
Grace WANG
T (886) 2 8729 8375 E grace.wang@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Ministry of Finance Bank of Taiwan 1M -1 -1.1 3M -1.3 5 12M -3.2 8.9 % held 13.4 7.7
9M13 net profit came in at 83% of our original FY13 forecast. We raise our FY13 earnings estimate by 4% for reduced credit costs but trim FY14-15 by 4-6% as we expect lower investment returns to offset fee expansion. We remain Neutral while raising our SOP-based target price by 1% to NT$18.5 (1x FY14 P/BV). Overseas operations will continue to drive sentiment on the stock.
Earnings for its flagship First Bank shrank 11% qoq in 3Q13, leading to a flat yoy net profit for 9M13 due to mounting provisions (+1,688% qoq). Excluding income from financial products/investment activities, core revenues (net interest income and net fees) grew 9% yoy in 9M13. 9M13 total loans stagnated YTD due to strategically reduced government exposure (-28% YTD). However, NIM was unchanged (1.26%) for three quarters, dragged down by the falling LDR (86.5% in 3Q13 vs. 89.5% in 4Q12) despite rising NT$ and FX spreads. The 10% yoy rise in total fees in 9M13 was a nice surprise, coming from wealth management (+14% yoy) and loan-related fees (+15% yoy). NPL ratio and reserve
9MFY13 19,219 7,239 4,774 2,465 26,458 (14,035) 12,423 (987) 11,436 (2,143) 9,293 1.07 9MFY12 yoy % chg Prev. FY13F 18,790 2.3 25,226 7,638 (5.2) 9,460 4,493 6.3 6,003 3,145 (21.6) 3,457 26,428 0.1 34,686 (14,055) (0.1) (18,370) 12,373 0.4 16,316 (1,526) (35.3) (3,166) 10,847 5.4 13,150 (1,724) 24.3 (1,926) 9,123 1.9 11,224 1.06 0.9 1.34
Stronger fees but more provisions anticipated
coverage closed at 0.64% and 191.5%, respectively, at end-3Q13 after the write-off of TMT exposure of NT$3.6bn. Annualised (net) credit cost rose to 34bp in 3Q13 (2bp in 2Q13), and loan coverage and Tier 1 asset coverage both exceeded 1%. Management guided that it will make additional provisions to raise reserve coverage to above 200% for FY13. For FY14, the guidance is for SME/FX-driven total loans to grow 4-5%, NIM to rise 5bp (on portfolio adjustment), fees to increase 15% yoy and gross credit costs to normalise at 40-45bp (with at least NT$2bn in recoveries). Although no extra provisions are expected to be needed in FY14, First FHCs topline could be capped given its mediocre credit expansion and an overoptimistic fee growth target, in our view. We forecast average growth of 8% p.a. for banking PPOP and 11% p.a. for group earnings in FY13-15.
Unconfirmed outlook
No re-rating in sight
The stock is trading at around 1x FY14 P/BV, which we think is a fair reflection of its return prospects (below 9% ROEs in FY13-15, by our estimates).
FYE Dec (NT$m) Net interest income Non-interest income Fee income Other income Total income Overhead expenses Pre-provision profit Loan loss provisions & reserves Pretax profit Tax Net profit Core EPS (NT$)
Results Comparison
3QFY13 6,524 2,734 1,731 1,003 9,258 (4,648) 4,610 (972) 3,638 (707) 2,931 0.34
3QFY12 yoy % chg qoq % chg 6,345 2.8 2.2 2,653 3.1 20.3 1,385 25.0 9.5 1,268 (20.9) 45.2 8,998 2.9 6.9 (4,774) (2.6) (2.8) 4,224 9.1 19.0 (1,356) (28.3) (362.0) 2,868 26.8 (14.3) (425) 66.4 (17.2) 2,443 20.0 (13.6) 0.28 21.4 (8.1)
Comments Flat credit expansion, flat NIM Driven by wealth management and banking related fees
To write down TMT exposure
SOURCES: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Page 13
BanksMalaysia
December 2, 2013
Alliance Financial Group

AFG MK / ALFG.KL Current RM4.94 RM4.88 RM4.88 -1.2%
Conviction| |
FLASH NOTE
Free Float
US$2,372m
RM7,648m
Market Cap
US$1.69m
RM5.43m
Avg Daily Turnover
71.0%
1,548 m shares
CIMB Analyst(s)
Change of focus to counter weaker property loan growth

During todays analyst briefing, Alliance indicated that it is still aiming for a sustained loan growth of circa 13% in 2014, despite a possible slowdown in industrys loan growth. We laud such a move but the pressures on margins will continue to constrict its topline growth.
It is also soothing to note that the bank does not see any strains on asset quality. We retain our DDM-based target price (COE of 10.6%; LT growth of 4%) and Underperform call, given the concerns over margin compression and an expected upturn in credit costs. Its CY14 P/E of 12.7x is also above the sectors 12.1x. We prefer RHB Capital. During todays conference call on its 2QFY14 results, Alliance Banks group CEO/ED Sng Seow Wah outlined the groups strategies and prospects. The key takeaways are (1) its loan growth target of 13% for 2014, (2) that the bank faces no strains on asset quality, and (3) its continuous focus on developing fee income. mortgages, it has partly shifted its focus to other loan segments, like the financing of the purchase of plantation lands and auto loans. In this aspect, we are more conservative by projecting a loan growth of 9%+ for Alliance in FY3/14-15. Also, the expansion in net interest income (in the region of 5-8%) would trail its loan growth due to the impact of margin squeeze. The keen competition for low-cost deposits, whereby some banks even pay interests of up to 3% p.a. for these deposits, will restrict the room for the group to reduce its cost of fund. That said, its loan growth will have to be funded by the increase in more expensive fixed deposits. Despite its strong loan growth, we do not advise investors to accumulate Alliance due to (1) its above-sector P/E valuation, (2) margin compression, and (3) an upturn in credit costs.
Winson NG, CFA
T (60) 3 2084 9686 E winson.ng@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Duxton Investment (controlled by Temasek) Langkah Bahagia EPF 1M -3.1 -3.3 3M -5.6 0.8 12M 7.7 20.5 % held 14.5 14.5 12.8
What Happened
What We Think
What You Should Do
A commitment to a 13% loan growth in 2014 is somewhat a positive surprise, given the general expectation for a slowdown in industry loan growth. To cushion the weaker traction in residential
Financial Summary
Net Interest Income (RMm) Total Non-Interest Income (RMm) Operating Revenue (RMm) Total Provision Charges (RMm) Net Profit (RMm) Core EPS (RM) Core EPS Growth FD Core P/E (x) DPS (RM) Dividend Yield BVPS (RM) P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-12A 667.1 577.2 1,244 2.50 502.6 0.32 22.8% 15.22 0.14 2.76% 2.43 2.03 14.1%
Price Close 6.3 5.8 5.3 4.8 4.3
Relative to FBMKLCI (RHS) 134 126 118 110 102
Vol m
3.8 6 5 4 3 2 1
94
Source: Bloomberg

4.04
4.94 5.73
Current
4.88
Mar-13A 730.4 602.6 1,333 24.50 538.0 0.35 7.0% 14.21 0.17 3.36% 2.60 1.90 13.8%
Target
Mar-14F 806.8 627.7 1,434 (51.13) 551.7 0.36 2.5% 13.86 0.18 3.61% 2.63 1.88 13.6% 0% 0.97
Mar-15F 914.8 658.4 1,573 (62.68) 620.5 0.40 12.5% 12.33 0.20 4.06% 2.83 1.75 14.7% 0% 0.99
Mar-16F 997.7 704.9 1,703 (64.13) 689.4 0.45 11.1% 11.09 0.22 4.51% 3.04 1.62 15.2% 0% 0.99
Page 14
ConglomerateMalaysia
December 2, 2013
Oriental Holdings
ORH MK / OTLS.KL Current RM8.61 RM8.04 RM8.07 -6.6%
Conviction| |
3QFY13 RESULTS NOTE

US$1,657m
RM5,341m
Market Cap
US$0.24m
RM0.77m
42.1%
620.4 m shares
CIMB Analyst(s)
Another disappointing quarter

3Q13 results were well below expectations with 9MFY13 accounting for 56% of our full-year forecast. Losses from the autos and plastics divisions continued to be the main drag.
We cut our FY13-15 forecasts by 10-13% and lower our target price, which continues to be at a 20% discount to RNAV. We factor in a negative operating margin for the plastics business but we continue to assume that the auto distribution business will break even next year as losses are narrowing. Continued auto losses are downside catalysts. Underperform maintained. Switch to IOI for plantations and Tan Chong for exposure to the auto sector. Adjusting for the forex losses recognised on the yen debt in the plantation business relative to the weakness of the rupiah during the period, we estimate operating profits in the plantation division fell 35% yoy to RM22.9m. This was in line with expectations given lower CPO prices and lower seasonal output. We project a much better 4Q13 and we leave our forecasts in the business unchanged. We continue to expect the plantation division to be the main driver of the groups
qoq % chg -4.4 3.7 -27.8 -4.6 -38.7 -37.5 -4.3 20.8 351.9 -63.0 -46.1 216.3 -30.7 29.9 -30.7 29.9 7.0 5.5 27.8 -1.7 63.2 -5.4 29.8 70.3 206.0 -0.3 -23.2 1,196 600.3 309.4 600.3 309.4 3QFY13 cum 2,004 -1,265 104.7 15.2 -75.8 77.4 -4.9 58.5 52.7 -15.5 168.2 -22.1 13% -9.7 113.3 128.8 18.3 20.8 3QFY12 yoy % cum chg 2,063 -1,719 450.7 16.7 -77 152.8 -7.2 58.7 66.2 -10.5 260 -53 20% (46.9) 159.9 170.4 25.8 27.5 -79.3 -29.1 -24.4 -29.1 -24.4 -1.6 -49.4 -31.9 -0.3 -20.4 47.4 -35.3 -58.5 -2.9 -26.4 -76.8 3,185 Lower CPO prices -3,332 474.0 well below because of losses in plastics and autos 14.0 -107.4 In line at 73% of full year 292.7 -14.9 Depreciation of Yen debt 116.6 RM2.6bn cash is defensive buffer 57.1 Boon Siew Honda doing better with new plant 0.0 Depn of Rupiah vs Yen debt in plantation business 334.9 -73.7 22% higher than normal tax rate because of auto and plastics losses -60.3 230.1 230.1 At only 56% of full year but earnings could be bottoming 37.1 37.1 FY13F Comments
Lucius CHONG
T (60) 3 2084 9869 E lucius.chong@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Boon Siew Sdn Bhd EPF Honda Japan 1M -3 -3.2 3M 0 6.4 12M -5.2 7.6 % held 53.8 9.5 4.1
bottomline, with its contribution going from 37% of core earnings to 42% by FY15. We also expect the likelihood of M&A to increase, with valuations of Indonesian plantation land coming down. ORH targets to double its 70,000ha of Indonesian land bank over the next three years, putting its RM2.6bn cash to use.
Motorcycles doing well
Plantations in line
We estimate ORHs 49% stake in Boon Siew Honda saw a 21% yoy and 70% qoq improvement in contribution to RM21m in 3Q13, illustrating the expanded capacity utilisation of the new Batu Kawan plant. ORH could be a good proxy for the motorcycle business in the country with its 45% market share but it only accounts for 17% of EPS.
The continued losses in the auto and plastics divisions continue to be the main worry but 3Q13 shows signs that auto losses are narrowing, which is key for overall group earnings to bottom out. .
Earnings recovery in 2014
FYE Dec (RM m) Revenue Operating costs
Results Comparison
3QFY13 708.4 -649.7 58.7 8.3 -24.7 34.0 -1.5 24.3 21.5 -46.5 31.8 -9.6 30% 15.7 37.9 84.4 6.1 13.6
3QFY12 yoy % chg 740.9 -626.6 81.4 15.4 -25.9 55.5 -2.4 25.4 17.8 -10.3 86.0 -17.8 21% -13.5 54.7 65.0 8.8 10.5
EBITDA margin (%) Depn & amort. EBIT Interest expense Interest & invt inc Associates' contrib Exceptionals Pretax profit Tax Tax rate (%) Minority interests Net profit Core net profit EPS (sen) Core EPS (sen)
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. CIMB Securities Limited has had an investment banking relationship with Geely Automobile Holdings within the preceding 12 months.
Page 15
December 2, 2013
MALAYSIA
AUTOS
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
No significant impact on per unit costs from electricity hike

The pressure on per unit production cost from higher electricity tariffs should be mitigated by a ramp-up in volumes over the next two years as the industry makes a concerted effort to push unit sales ahead of the GST and potentially tighter credit in 2015 and beyond.
Figure 1: Major players ramping up unit sales over the next two years
250,000
200,000
SECTOR FLASH NOTE
Lucius CHONG
T (60) 3 20849869 E lucius.chong@cimb.com
Highlighted Companies Tan Chong Motor Holdings

Although it is the most exposed to higher electricity prices in theory because of its pure auto exposure, TCMs momentum in doubling its volume growth on the same SG&A cost base over the next three years should mitigate the impact.
150,000 100,000 50,000
Toyota
Nissan
Proton
UMW Holdings
UMW Toyota and Perodua have achieved significant economies of scale due to being number one in market share in both the non-national and national segments, respectively. The recovery in Toyotas unit sales in 2014 following the launch of the new Vios should also help to spread out higher per unit production costs. Both UMW Toyota and Perodua are operating on two shifts and we do not think that they will add another.
2013
2015 target
DRB-Hicom
Proton is likely to be more vulnerable to higher electricity prices as we estimate that it is just breaking even at the EBIT level. However, like UMW and TCM, it is expected to see a significant pick-up in volumes with the introduction of the new Saga SV to spread out the higher per unit costs for electricity.
With enough capacity in the system and with the number of production shifts unlikely to increase, economies of scale should offset some of the impact from higher electricity tariffs. However, this is yet another cost pressure added to the uncertainties in the sector which is facing greater currency volatility and greater competition. We maintain a Neutral rating on the sector, with Tan Chong as our top pick. Electricity prices have been raised by an average of 14.85%. Industrial users are expected to experience an average increase of 16.85%.
companies in our coverage should not see a material impact because they have all achieved a sufficient amount of scale. They are more concerned about the effect of forex movements on costs, and the credit environment on keeping unit sales up.
What You Should Do
What Happened
What We Think
Electricity currently makes up 11-12% of assembly line and manufacturing costs in the Malaysian auto sector. However, when supply chain activities, the distribution business and other SG&A are included, the percentage of electricity costs to total opex falls to around 4-6%. Most of the
We see no significant impact on the auto sector, particularly the auto conglomerates UMW and DRB, as their diversified earnings base should cushion the impact on EPS. For Tan Chong, the higher electricity prices could result in a 4-5% cut in EPS in theory, but as its operations ramp up from assembling and selling 50,000 units a year to its end-target of 100,000 units p.a., the higher fixed cost of electricity is spread out over the production shifts and diluted. This event nevertheless adds another negative variable to the sector and is another reason to remain selective. Tan Chong is our only Outperform and is our top pick in the sector.
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. CIMB Securities Limited has had an investment banking relationship with Geely Automobile Holdings within the preceding 12 months.
Page 16
December 2, 2013
MALAYSIA
BUILDING MATERIALS
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
Watts up!
SECTOR FLASH NOTE
The Malaysian government has announced a 16.85% industrial power tariff hike effective Jan 2014. Although widely expected, this increase is a net-negative on building material players given the current industry conditions. The biggest losers are likely to be steel makers, while cement players are more insulated.
Sharizan ROSELY
T (60) 3 20849864 E sharizan.rosely@cimb.com
Figure 1: Sensitivity analysis on impact of the electricity tariff increase

Companies Estimated electricity as % of total prod. cost Lafarge Tasek Ann Joo 8-10% 10-12% 8-10% EPS impact from 10% increase 3-4% 4-5% 8-9% Stronger, given leading industry position Weaker - competitive pressures Weaker - macro risks and import threats
Pricing power/ability to fully pass on cost
EPS forecasts are intact as we have modelled in 8-15% hikes in power tariffs p.a. Our sensitivity analysis shows that for every 10% increase in electricity tariff, the EPS of cement and steel players would be shaved by 3-10%, assuming no pass through. Current industry conditions may limit the ability to fully pass on the higher costs given the competition in cement, and sustained macro risks for steel companies. Maintain Neutral. The government has announced an 16.85% average increase in power tariffs for industrial consumers effective 1 Jan 2014. Special Industrial Tariff (SIT) consumers will also continue to benefit from discounted rates.
Lafarge's and Tasek's EPS, while Ann Joo's EPS would be reduced by 9-10%. Based on our channel checks, the good news is that the actual impact on earnings could be smaller, as selected efficient manufacturers will enjoy special tariff rates for the SIT. This is in line with the recent expectations of cement companies like Lafarge. The level of discount was undisclosed. Stay on the sidelines. Medium term cost risks have emerged. The main question is whether companies can fully pass on the cost. Selling price increases may be inevitable but the impact could be muted by the current competitive environment for cement players (higher price rebates), and sustained macro risks for steel companies (dumping from China and forex risks). These factors continue to weigh on the selling prices of cement and steel products. The prevailing threats from imported steel and forex losses suggest Ann Joo is the biggest loser, though it has the cost advantage of switching to its blast furnace facility. We maintain Neutral calls on all three stocks. Switch to contractors.
What Happened
What You Should Do
Highlighted Companies Lafarge

Electricity makes up 8-10% of total production cost. Every 10% increase in power tariff would shave EPS by 3-4%. Lafarge's leading position should allow it pass on higher costs, but this is limited by the sustained competitive environment.
What We Think
Tasek Corporation
Electricity makes up c.10-12% of total production cost. For every 10% hike in power tariffs, we estimate a 4-5% impact on EPS, assuming no pass-through. The 20% power tariff increase would be net negative to Tasek, given the competitive landscape.
Ann Joo Resources
Electricity constitutes 8-12% of production cost. Every 10% increase in power tariff would cut EPS by 9-10%, but this is mitigated the ability to switch to its blast furnace facility. Ann Joo could emerge as the biggest loser in view of the sustained macro risks.
The 16.85% quantum in power tariff increase was widely expected given the government's move to scale back subsidies. The last industrial tariff hike in 2011 was 8.35%, on average. Under our coverage, we estimate that electricity usage constitutes 8-10% of total production cost for Lafarge and Tasek (cement), while it makes up 8-12% of Ann Joo's (steel). Assuming no pass through, every 10% hike in power tariff would shave 3-5% off
Page 17
December 2, 2013
MALAYSIA
ECONOMIC UPDATE
CIMB Analyst(s)
Counting the impact of power hike

We expect the average electricity tariff hike of 10.6% for domestic users effective from 1 Jan 2014 to add 0.2% pt to headline CPI growth as electricity consumption carries a weight of 2.88% in the CPI basket. The chain-effect from the power hike will be somewhat muted if history is any guide. We keep our headline inflation forecasts of 2.2% for 2013 and 3.0% for 2014, which continue to bake in some administered price adjustments, especially for fuel. On interest rates, we do not think that Bank Negara Malaysia (BNM) will react immediately to counter the anticipated rise in cost-induced inflation, which could be temporary.
The government has approved a 14.89% hike in power rates effective from 1 Jan 2014, taking the average tariff rate to 36.22 sen per kWh for industrial users (from 31 sen previously) or an increase of 16.85%, 47.67 sen per kWh for commercial users (from 40.8 sen previously) or +16.85% and 31.85 sen per kWh for domestic users (from 28.8 sen previously) or +10.6%. The electricity tariff was last revised in Jun 2011.
LEE Heng Guie
T (60) 3 20849667 E hengguie.lee@cimb.com
The reduction in fuel subsidies for the power sector was essential to stabilise the economy."
Datuk Loo Took Gee, Secretary-General of Energy, Green Technology and Water Ministry
14.89% hike for electricity tariff rates
Who is hit hardest on the street?
Industrial and commercial users which collectively consume 78% of the electricity generated will be hit the most. The heavy users of power include electronics & electrical, transport, rubber gloves, building materials, consumer and automotive industries. For consumers, the low-income group will be partially sheltered via 1) free electricity to those who use less than RM20 per month, which was implemented in 2008; 2) the decision to maintain a Lifeline Band on electricity tariff for the first 200kWh at a highly subsidised rate of 21.8 sen/kWh, which was unchanged since 1997; and 3) the decision to maintain the rate at 33.4 sen/kWh for those who consume less than 300kWh per month. This will mean no tariff increase for 4.6m consumers or 70.7% of total households. As electricity consumption makes up a 2.88% weightage in the CPI basket, a 10.6% hike in power rates for domestic users will add 0.2% pt to Jan 2014's headline inflation. The second-round impact of higher power rates depends on the degree of pass-through to end-users. If previous episodes of tariff hikes are any guide, the impact on inflation could be rather muted. Thus, we maintain our CPI growth estimates of 2.2% for this year and 3.0% for 2014, which continue to factor in some administered price adjustments, especially for fuel.
Figure 1: Tariff reviews over the years
Effective date May 1997 01 Jun 2006 01 July 2008 01 Mar 2009 01 Jun 2011 01 Jan 2014 Average increase/decrease in tariffs (%) +8.30 +12.00 +24.00 -3.66 +7.12 +14.89
SOURCES: TENAGA NASIONAL BHD (TNB), CIMB RESEARCH
Impact on inflation
Page 18
December 2, 2013
MALAYSIA
STRATEGY
Conviction| |
Best revision ratio since 1Q12

The Nov results season showed signs of promise as our revision ratio improved from 0.46x to 0.6x. This is the best performance since May 2012 and is in line with our belief that the worst could be over for Malaysia and the virtuous cycle is starting to take hold.
Terence WONG CFA
Figure 1: 3Q13 results by sectors

Rec Automotive Aviation NEUTRAL OVERWEIGHT NEUTRAL NEUTRAL OVERWEIGHT OVERWEIGHT NEUTRAL NEUTRAL OVERWEIGHT OVERWEIGHT NEUTRAL OVERWEIGHT OVERWEIGHT OVERWEIGHT OVERWEIGHT NEUTRAL NEUTRAL NEUTRAL NEUTRAL OVERWEIGHT OVERWEIGHT 3Q13 performance qoq chg -31.4% -6.1% -33.7% 1.1% -47.0% -13.6% -0.8% 10.6% -26.7% 3.1% 7.9% -5.7% 17.2% 46.5% 10.0% -15.2% 5.9% -49.6% 7.5% 43.8% -19.9% -31.5% yoy chg -33.7% -231.9% -14.4% -14.3% -37.4% -13.8% 7.4% 12.9% 63.1% 80.6% -3.6% 7.4% -4.9% 32.2% 41.4% 26.7% 219.5% -24.0% 17.2% 17.6% 13.4% -11.7% Results vs. expectations In Line Below In Line In Line Below Below Above Below In Line Above Below Below Below Below Above Below In Line Below Above Above In Line Below
T (60) 3 20849689 E terence.wong@cimb.com
Chemicals Commodities Conglomerate Construction and Materials Consumer Banking & Finance Healthcare Insurance Media Oil and Gas Oil Equipment and Services Property Services Shipping Technology Telecommunications Transport Infrastructure Travel & Leisure Utilities
While supporting the growth momentum, we are fully aware of the need to be fiscally responsible. We are also pursuing better targeted, efficient and effective government expenditure. One of the measures towards this goal is to gradually carry out subsidy rationalisation, with complementary measures to assist the vulnerable groups.
Datuk Seri Najib Razak, Prime Minister and Minister of Finance Malaysia
Industrial Goods and Services NEUTRAL
SOURCES: CIMB ESTIMATES, COMPANY REPORTS
Highlighted Companies AirAsia

AirAsia's 9M13 core net profit was below expectations because yield pressure from 2Q13 continued into the third quarter, caused by aggressive price discounting from MAS and Malindo. As a result, we cut our core FY13-15 EPS forecasts by 16-20% for lower yields, and downgraded the stock to Neutral from Outperform.
Malayan Banking
There are no changes to our end-2014 KLCI target of 1,920 points, based on an unchanged 10% premium to the 3-year moving average P/E. We continue to prefer the sectors which are likely to benefit from the Economic Transformation Programme oil & gas, construction and property. Though overall still negative, Nov's results showed signs of promise. Our earnings revision ratio improved significantly from 0.46x in Aug to 0.6x in Nov. Although a higher 29% of the stocks in our universe missed expectations vs. 24% during the Aug season, some 17% came in above compared with only 11% in Aug. This helped boost our revision ratio to its
Thanks to robust foreign exchange gains in 3Q, Maybank's 9MFY13 net profit rose by 12.5% yoy, topping our expectations. The 11.5% increase in our projected non-interest income helped to push up our forecasted FY13 EPS by 3.7%. .
Results are turning up
highest in 18 months. In terms of companies that met expectations, the proportion fell from 66% to 53%. The sectors that disappointed still far outnumbered those that beat expectations. All in, 11 sectors disappointed (10 previously) while only five (four previously) beat expectations. The sectors that came in below expectations included autos, aviation and media.
Weak 2013 EPS growth
UEM Sunrise
Land sale gains of around RM120m in 3Q13 pushed UEMSs 9M13 net profit above expectations, at 92% of our full-year forecast. Management indicated that the property cooling measures have so far not made a major impact on buyer interest in Iskandar Malaysia and Nusajaya
It looks like 2013 will be another weak year. Our core market EPS growth for 2013 stands at only 3.3%. We forecast the 2014 growth to accelerate to 11.7%, driven by higher growth from the plantations and oil & gas sectors.
Page 19
December 2, 2013
MALAYSIA
STRATEGY FLASH NOTE

Conviction| |
CIMB Analyst(s)
Shariah non-compliant stocks

Last week, the Securities Commission released a list of companies that are no longer Shariah compliant based on new regulations related to cash and debt levels. Unsurprisingly, the share prices of the non-compliant companies took a hit.
Terence WONG CFA
T (60) 3 20849689 E terence.wong@cimb.com
Figure 1: Companies that are not Shariah compliant

AirAsia Bumi Armada MRCB Unlikely to become shariah compliant as conventional aircraft financing is cheaper BAB is looking at Islamic financing but it has to be in US$, which may be restrictive FY12 accounts are not shariah compliant, but FY13 YTD numbers are compliant Difficult as MCIL cannot guarantee that its non-Halal revenue will not exceed 5% No immediate plans to address non-compliance. Conserving cash for plantation M&A Will seek to address the non-compliance, but may take quite a while Plans to run up inventory going into 2014 and cash levels will fall by the end of 2013 Will utilise more Islamic trade financing in the short term to be compliant Complied recently, transferred more than 1/3 cash holdings to shariah FD The issue with its debt is being looked into but unlikely to be compliant anytime soon
Ann Joo Resources Ann Joo is still in discussions, no immediate plans to become syariah compliant
Highlighted Companies AirAsia

Most of AirAsia's aircraft financing is non-Shariah compliant but is the cheapest forms of financing. AirAsia is likely to continue to secure new conventional debt financing as it is in the best interest of shareholders. As at 31 December 2012, AirAsia's conventional debt comprised 38.5% of its total assets. AirAsia is expected to take action to increase its Islamic debt but we think that this will not be enough to reverse its non-Shariah compliant status.
Media Chinese Int'l Oriental Holdings SP Setia Bhd Tan Chong Motor Tasek Corporation Wellcall Holdings YTL Power
Oriental Holdings
Oriental Holdings has total cash of RM2.6bn and its cash to assets ratio is above the 33% threshold. It is conserving the cash for M&A purposes in Indonesia as it seeks to double its plantation landbank. Although this event is likely to occur in the near term due to the current macro conditions in Indonesia, Oriental Holdings will still wait for the right valuations and will not accelerate its plans because of non-compliance with the cash to assets threshold.
SP Setia
SP Setia has total borrowings of RM4.54bn and its debt to asset ratio of 37% as at 31 July 2013 is above the 33% Shariah threshold. The group will seek ways to address the issue but this will likely take some time. The likely departure of CEO Tan Sri Liew Kee Sin in Mar 2014, when the third put option for the sale of his remaining stake in SP Setia is due, is of greater concern to us.
Most of the companies under our coverage that are no longer Shariah compliant are taking steps to meet the new requirements as Shariah-compliant funds have a six-month grace period before they have to take action. There are no changes to our end-2014 KLCI target of 1,920pts and preference for the oil & gas, construction and property sectors. On 29 Nov, the Securities Commission (SC) approved an updated list of stocks that were classified as Shariah compliant based on a revised methodology. 16 companies have been added to the approved list while 158 companies have been removed from the previous list that was issued in May 2013. The SC now adopts a 2-tier quantitative approach, measuring: 1) the business activity benchmark, where companies exposure to certain businesses cannot exceed 5% or 20%, and 2) the financial ratio benchmark, where the cash/debt over total assets that are not in Islamic accounts and
financing cannot exceed 33%. Investors are given six months from 29 Nov to dispose of securities that are not in compliance if the market price is equal or higher than their investment cost. If the market price is below the investment cost, investors are allowed to hold the stock until the market price is equal to the cost.
What We Think
What Happened
There are 11 companies under our coverage that have been removed from the previous list and are now not Shariah compliant. Most of the companies are seeking ways to meet the new rules in the next six months but several may not meet the deadline. We believe that these would include AirAsia, Ann Joo, Oriental and SP Setia. As these new SC rules are not a surprise, any excessive selldown of non-compliant stocks may provide investors a buying opportunity as the underlying fundamentals of these companies have not changed.
What You Should Do
Page 20
November 29, 2013
SINGAPORE
NAVIGATING SINGAPORE
CIMB Analyst(s)
Beyond the taper

After five years of a rally built on QE, one has to be edgy on how an end to QE will change the game. Sure, Singapore does not have a gearing issue but corporate earnings have sputtered as domestic businesses grapple with rising costs and overseas growth slows.
Kenneth NG, CFA
Figure 1: Singapores slowing population growth

200,000
99,800
Singapore Research Team
150,000
191,200
T (65) 6210 8610 E kenneth.ng@cimb.com
Increase in net foreign population
Increase in Singapore residents
800%
600%
77,500
130,000
89,400
60,200
57,600
58,100
57,000
57,000
51,300
52,500
44,600
43,700
46,400
54,500
57,200
100,000
59,600
91,200
400%
37,800
28,900
25,500
Highlighted Companies Del Monte

Success in closing its US acquisition will pave the way for DELMs transformation. Success looks likely as DELM has been in this business and is familiar with its acquired target a previous client.
5,500
50,000
17,600
26,600
200%
0%
(50,000)
-200%
First Resources
SOURCES: CIMB Research, Singapore Department of Statistics
Best proxy for rising CPO prices. Stronger CPO prices coupled with its refinery expansion in 2H13 will be tailwinds for earnings. Free cash flow should improve markedly in FY14 as capex is scaled down.
Global Logistic Properties
GLP is a NAV growth story. The establishment of a US$3bn China logistics fund will accelerate its asset recycling in China while assets in Japan are poised for recycling as cap rates shrink.
In 2H13, the FSSTI failed to reclaim its May high as rate-sensitive sectors stumbled. A market selloff in 2014 is possible, but it is unconstructive to worry about and position for. The only way to outperform is to select companies bottom-up, looking for those with the right business models and products. Our end-2014 FSSTI target is 3,600, based 14.4x CY15 P/E. Our top picks include DBS, FR, GLP, KEP and WIL.
Domestic woes overhyped
Top five big-cap buys
We prefer stocks with some catalysts, at reasonable valuations. Our top five big-cap picks are DBS, FR, GLP, KEP and WIL. As long as the threat of rising interest rates hangs in the air, property and REITs will have little reason to do well. GLP is preferred because it can accelerate its RNAV growth with its China logistics fund. DBS is the best proxy for rising interest rates, in our view. Keppel has fewer catalysts in 2014, but margin catalysts should come back in 2015. We like the plantations sector on Indonesias intention to use crude palm oil in its biodiesel mix.
Population growth in Singapore is slowing as the country weans itself off foreign labour. Housing vacancy will rise and rents, soften bad for developers. Still, implications from the labour restructuring have been overblown. Some smaller companies may have closed but the larger ones are coping. Banks asset quality remains pristine. Singapore companies have been expanding out of their small market for years, so their share-price driver should now be execution in overseas markets.
Top five small-cap picks
Our top five smaller-cap conviction picks are Del Monte, Ezion, Goodpack, Midas and Sarin Tech. DELM should be able to digest its major acquisition. The next half of EZIs new fleet should contribute in 2014. GPACK has a new auto catalyst. MIDAS should benefit from a revival of train orders in China. SARIN has high earnings-growth potential from its new products.
Page 21
Property DevelopmentHong Kong

December 2, 2013
China Resources Land

1109 HK / 1109.HK Current HK$21.35 HK$26.50 HK$26.50 24.1%
Conviction| |
COMPANY NOTE
Free Float
US$16,057m
HK$124,484m
Market Cap
US$20.51m
HK$159.1m
Avg Daily Turnover
34.5%
5,826 m shares
MIXc: a competitive model for commercial properties

CRLs property tour of its commercial projects revealed a slight divergence in the performance of the MIXc projects in Nanning and Chengdu. That said, we believe CRL will be a long-term winner in the commercial property segment.
Maintain Outperform and our target price, pegged to a 10% discount to RNAV. Robust rental growth in 2014-15 is a catalyst and sizeable rental income cushions the companys earnings and operations. 40% in 3Q13. CRL Chengdu MIXc is located on the east second ring road, a newly-developed business area. Phase 1 opened in May 2012. Its offices have currently only achieved an occupancy rate of 53% while its shopping mall records a satisfactory occupancy rate of over 90%.
Johnson HU, CFA
T (852) 2532 1117 E johnson.hu@cimb.com
A differentiated business model (property development + IP+ value-added services), the right product ideas and strong support from the parent company are the key drivers of the success of CRL.
Wu Xiangdong, chairman
Nanning MIXc: first-mover advantage
Located in the new CBD of Nanning, CRL MIXc is an unparalleled complex project and dominates the citys top-end office and residential segments. The shopping mall opened in Sep 2012 with an initial occupancy rate of 92%. The rent for its offices of Rmb160/sqm/month and ASP of Rmb23k/sq m for apartments top the market in Nanning. Our site visit also showed that MIXc offers customers an excellent shopping experience given a convenient location and access, spacious interiors and a wide range of mid-end to luxury brands.
Chengdu: a tough market
Chengdu is an oversupplied market, with average office vacancy hitting
Apart from Chengdu MIXc, CRL proves excellent performance at its four other MIXc projects, with high occupancy rates of 93-99%. We believe CRL will be a long-term winner in the commercial property segment given its prime project locations, first-mover advantage, quality design and very competitive funding cost (3.6% in 1H13). The strong pipeline, with another seven MIXc in operation in 2014-15, should strengthen its portfolio. We project CRLs rental income to post a 31% two-year CAGR to HK$8.9bn in 2015, contributing 9% of its total topline and 14% of operating profit.
Robust rental portfolio and rental income growth
Price Close 25.0 24.0 23.0 22.0 21.0 20.0 19.0 18.0 60 40
Relative to HSI (RHS) 120 116 111 107 103 99 94 90
Financial Summary
Total Net Revenues (HK$m) Operating EBITDA (HK$m) Net Profit (HK$m) Core EPS (HK$) Core EPS Growth FD Core P/E (x) DPS (HK$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-11A 35,795 10,502 8,121 1.02 33.1% 20.93 0.28 1.30% 16.11 51.46 68.9% 2.05 10.5% Dec-12A 44,364 12,986 10,569 1.25 21.9% 17.14 0.34 1.58% 13.04 14.39 49.6% 2.00 11.2% Dec-13F 75,896 15,951 8,626 1.48 18.7% 14.42 0.40 1.87% 10.91 NA 49.7% 1.65 11.9% 0% 0.95 Dec-14F 89,610 20,703 11,607 1.99 34.6% 10.72 0.54 2.52% 8.69 75.32 49.4% 1.46 14.4% 0% 1.02 Dec-15F 105,552 25,269 14,049 2.41 21.0% 8.85 0.65 3.05% 7.39 46.22 48.9% 1.28 15.4% 0% 1.00
Vol m
20
Source: Bloomberg

21.35 18.90
24.20
Current
Target
26.50
Page 22
GamingHong Kong
December 2, 2013
SJM Holdings
880 HK / 0880.HK Current HK$24.95 HK$28.55 HK$28.55 14.4%
Conviction| |
FLASH NOTE
US$17,872m
HK$138,555m
Market Cap
US$27.45m
HK$212.3m
27.0%
5,553 m shares
CIMB Analyst(s)
Decent growth in 2014

During our recent NDR in Kuala Lumpur, SJM presented the outlook for its own and Macaus growth. While SJM remains capacity constrained in terms of hotel rooms, additional premium-mass table capacity in 2014 can boost its EBITDA.
Michael TING
T (852) 2532 1121 E michael.ting@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders STDM On Kei Leong Capital Research Global 1M -7.3 -3.9 3M 17.9 26.3 12M 27.4 36.5 % held 55.2 7.7 2.6
We maintain our Outperform rating and target price of HK$28.55, still based on 11x FY15 EV/EBITDA (1 s.d above its 3-year historical average) plus HK$7.21 for the valuation of its Cotai assets in 2017. Further share price drivers could come from higher- than-expected industry GGR growth, as well as dividends and EBITDA growth that top expectations.
What Happened
SJM plans to open 30 tables at Grand Lisboa (GL) by mid-2014. This new table area will be located at the mezzanine level of GL that will undergo renovation. In 4Q14, SJM will open the new Casino Jai Alai which will include around 40 premium-mass tables. The Jai Alai will also incorporate a hotel and retail facilities. Beyond 2014, some additional property renovations at GL may be carried out to add tables. We believe that SJMs market share could see a negative impact in 2015 and 2016 as the operator will be capacity constrained while its competitors will open new properties
in Cotai over those years. SJM should be in a much better position from 2017 onwards due to the opening of its Cotai site, along with the possible staggered opening of additional hotel rooms and theme parks in Angela Leungs adjacent Cotai plot. While a deal with Angela has not been struck yet, we believe that SJMs net cash of HK$24bn and future cashflows can sufficiently cover the future capex requirements. Hence, SJMs ~75% payout ratio should be maintained.
What You Should Do
What We Think
While SJMs near-term growth prospects are likely to trail its competitors, we see limited downside to its share price given its yield and discounted valuation. SJM is a more defensive stock compared to its Macau gaming competitors. SJM is currently trading at a 23% discount to the sector average on a consensus forward EV/EBITDA basis. Over the past three years, SJM has traded within a 10-30% discount range to the gaming sector average.
Price Close 28 26
Relative to HSI (RHS) 145 135
Financial Summary
Revenue (HK$m) Operating EBITDA (HK$m) Net Profit (HK$m) Core EPS (HK$) Core EPS Growth FD Core P/E (x) DPS (HK$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-11A 76,092 6,457 5,308 0.97 42.0% 26.80 0.73 2.93% 19.45 21.69 (66.8%) 8.01 35.0% Dec-12A 79,519 7,722 6,745 1.22 26.2% 20.66 0.90 3.61% 16.55 71.83 (51.2%) 6.96 36.4% Dec-13F 88,522 8,556 7,521 1.36 11.3% 18.53 1.03 4.13% 14.47 17.65 (64.5%) 6.15 35.5% 0% 1.01 Dec-14F 95,959 9,275 8,325 1.50 10.7% 16.74 1.14 4.57% 12.91 14.12 (74.0%) 5.50 34.9% 0% 0.99 Dec-15F 101,887 9,848 8,973 1.62 7.8% 15.54 1.23 4.93% 11.77 13.68 (80.5%) 4.97 33.9% 0% 0.96
24
22 20 18
125
115 105 95
Vol m
16 50 40 30 20 10
85
Source: Bloomberg

17.06
24.95
27.40
Current
Target
28.55
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. CIMB Securities Limited has had an investment banking relationship with Macau Legend Development Ltd within the preceding 12 months. Designed by Eight, Powered by EFA
Page 23
December 2, 2013
HONG KONG
GAMING
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
Strong finish to the year

Macaus Nov gross gaming revenue (GGR) met market expectations. With a strong Dec finish, 2013 GGR growth could reach 18-20% yoy.
Figure 1: Monthly GGR
SECTOR FLASH NOTE
Michael TING
40,000 35,000
30,000 25,000 20,000 15,000 10,000 5,000 -
40% 35%
30% 25% 20% 15% 10% 5% 0%
T (852) 2532 1121 E michael.ting@cimb.com
Highlighted Companies Galaxy Entertainment

As we head into 2014, we believe that Galaxy has the greatest potential for a re-rating of the stocks under our coverage as the market looks forward to its new property opening in 2015.
GGR (MOP m) LHS
yoy chg
SOURCES: DICJ
We maintain our long-term Overweight position on Macaus gaming sector. Catalysts could come from stronger-than-expected industry GGR over the next few months. Longer term, we prefer Galaxy and Sands China due to their stronger earnings visibility from mass-gaming growth on Cotai. Macaus Nov GGR reached MOP30.2bn (+21% yoy, -17% mom). This brought 11M13 GGR to MOP327.3bn (+18.6% yoy). Nov is typically a slower month for GGR after Chinas Golden Week holidays in Oct. Yet, Novs GGR growth exceeded our expectation of 17% which we forecasted at the beginning of Nov. We believe that mass-gaming growth in Nov was probably in the mid-20% range and VIP growth, at 15-20%. For Dec, we are projecting GGR of MOP31.2bn (+11% yoy, +3% mom). Decs yoy growth rates are likely to slow from a higher base as the VIP hold rate was 3.4% in Dec 12, which helped to boost VIP revenue then. Full-year 2013
GGR should reach at least MOP358.5bn (+18% yoy). In Nov, Sands China and MGM gained the most GGR market share while Galaxy and SJM lost the most. The market-share shifts were likely due to changes in VIP hold rates. After outperforming the Hang Seng Index in Sep-Oct, Macaus gaming stocks on average traded in line with the index in Nov. Cotai related shares outperformed Peninsula shares. Macau gaming stocks are now at 15x forward consensus EV/EBITDA on average, 2 s.d. above the sectors 3-year average. Such levels historically mark the ceiling for near-term valuation re-rating. We expect Macaus gaming stocks to be range-bound until early 2014 when consensus GGR growth estimates of 10-14% for 2014 could get upgraded. 2014 GGR will likely be driven continued growth in premium mass coupled with new table and hotel capacity on Macau Fishermans Wharf. We currently forecast GGR growth of 15% for 2014.
What You Should Do
What Happened
What We Think
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. CIMB Securities Limited has had an investment banking relationship with Macau Legend Development Ltd within the preceding 12 months.
Page 24
BanksIndonesia
December 2, 2013
Bank Negara Indonesia

BBNI IJ / BBNI.JK Current Rp4,100 Rp4,625 Rp4,625 12.8%
Conviction| |
FLASH NOTE
Free Float
US$6,390m
Rp76,459,488m
Market Cap
US$7.56m
Rp85,544m
Avg Daily Turnover
40.0%
18,649 m shares
CIMB Analyst(s)
Tying the knot

Though Sumitomo Lifes Rp4.2tr acquisition of 40% of BNIs life insurance subsidiary is at a rich P/BV of 30x pre-money, it is not out of line with recent similar transactions. BNI could see 4-6% upside to its 2014 net profit, in addition to a new source of fee income.
Hadi SOEGIARTO, FRM

T (62) 21 3006 1722 E hadi.soegiarto@cimb.com
We maintain our EPS targets, GGM-based target price and Neutral rating on BNI. BNI announced that Sumitomo Life has acquired a 40% stake in subsidiary BNI Life for Rp4.2tr. As the stake was in the form of new shares issued by BNI Life, the full Rp4.2tr will go into BNI Life as capital. The new life insurance partnership aims to cultivate BNIs captive market as well as sell to non-BNIs customers through BNI Lifes branches. The multiple for the transaction pre-money was 30.1x 2012 P/BV and 174.9x 2012 P/E pre-money. The transaction looks rich on paper. However, if it is evaluated on the basis of BNIs client base, the valuation is comparable with recent similar transactions. Earlier this year, Dai-Chi Life bought a 40% stake in Panin Life for Rp3.3tr, giving it exclusive rights to the latters client base. Asset-wise, Panin Bank is about 40% the size of BNI. An upfront fee is likely to be paid to
What Happened
Share price info

Share price perf. (%) Relative Absolute Major shareholders Government of Indonesia 1M -7.4 -14.1 3M 3.5 7.2 12M 16.2 14.7 % held 60.0
What We Think
BNI for the access to its client base. As a comparison, Manulifes partnership with Danamon involved an upfront fee of Rp500bn and Panin Bank is also likely to receive a similar upfront fee. Assuming that BNI will be paid a fee in the range of Rp2tr-4tr and that it will be disbursed in the form of loans at a 10% rate, it could translate to 2-3% upside in the banks FY14 net profit. In the income statement, the upfront fee is also to be amortised over the life of the contract. Assuming the contract is for 10 years, it will bring another 2-3% upside to net profit. There is minimal impact on BNIs equity. The development of this transaction has been well covered by the newswires. The stocks recent valuation strength and increase in foreign ownership indicate high optimism of the transaction going through. This might limit further upside from the announcement.
What You Should Do
Price Close 5,700 5,200
Relative to JCI (RHS) 146 134
Financial Summary
Net Interest Income (Rpb) Total Non-Interest Income (Rpb) Operating Revenue (Rpb) Total Provision Charges (Rpb) Net Profit (Rpb) Core EPS (Rp) Core EPS Growth FD Core P/E (x) DPS (Rp) Dividend Yield BVPS (Rp) P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-11A 13,196 7,601 20,797 (2,421) 5,826 285.3 30.7% 14.37 66.0 1.61% 2,023 2.03 15.0% Dec-12A 15,459 8,446 23,905 (2,525) 7,046 366.7 28.6% 11.18 62.5 1.52% 2,331 1.76 16.8% Dec-13F 18,999 9,992 28,991 (3,473) 8,484 443.7 21.0% 9.24 75.6 1.84% 2,706 1.51 17.6% 0% 1.04 Dec-14F 22,799 11,433 34,233 (5,554) 9,466 496.4 11.9% 8.26 91.0 2.22% 3,119 1.31 17.0% 0% 1.02 Dec-15F 26,663 12,950 39,612 (6,716) 10,785 567.1 14.2% 7.23 101.5 2.48% 3,591 1.14 16.9% 0% 0.99
4,700
4,200 3,700 3,200
123
111 99 88
2,700 200
150 100
76
Vol m
50
Source: Bloomberg

3,000
4,100
5,550
Current
Target
4,625
Page 25
Offshore & MarineIndonesia

December 2, 2013
Wintermar Offshore Marine

WINS IJ / WINS.JK Current Rp650.0 Rp800.0 Rp620.0 23.1%
Conviction| |
3QFY13 RESULTS NOTE

SHORT TERM (3 MTH) LONG TERM
US$199.4m
Rp2,386,330m
Market Cap
US$0.05m
Rp572.4m
Avg Daily Turnover
25.3%
Free Float
3,610 m shares
CIMB Analyst(s)
Day in the sun

While the JCI has shed 10% since May on current-account-deficit and inflation concerns, Wintermar has gained 22%, thanks to its exposure to the resilient O&G sector and US$. Its 9M13 earnings beat estimates, demonstrating the health of Indonesias E&P sector.
YEO Zhi Bin
T (65) 6210 8669 E zhibin.yeo@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Wintermarjaya Lestari PT Dwiprimajaya Lestari PT Kamanda Daminathan PT 1M 11.5 4.8 3M 18.9 22.6 12M 49.2 47.7 % held 36.2 27.8 8.7
At 88% of our FY13 forecast, 9M13 core EPS was above on higher-than-expected revenue and margins. We increase our FY13-15 EPS by 13-19% to incorporate the above. Our target price rises as we roll over to 8x CY15 P/E (average for international OSV peers) and factor in a stronger US$ vs. Rp. We upgrade the stock to Outperform from Neutral with catalysts anticipated from further earnings strength and contract wins.
owned vessels jumped to 51% in 9M13 (9M12: 46.4%). In addition, the strict implementation of the cabotage rule restricted supply and supported an increase in day rates. A stronger US$ also helped to widen margins as wages and HQ costs are in Rp.
Chartered-in vessels did well too
Margin strength
9M overall gross margins rose t0 31.2% from 29.3% in 9M12. The improvement sprang from the addition of mid-high-tier vessels with higher margins. Eleven of such units were added in 9M while we had only expected eight for the whole year. Mid-higher-tier vessels now account for 60% of its fleet, while utilisation remains at 75%. Gross margins for
With an uptick in E&P, 9M13 chartered vessel revenue surged 82% yoy. Margins also improved to 6.2% (9M12: 5.4%), thanks to the cabotage rule.
With the strict implementation of the cabotage rule (restricted supply) and heightened E&P (higher demand), this is Wintermars day in the sun. A potential listing of other Indonesian offshore companies could fuel interest in the sector.
Upgrade to Outperform
FYE Dec (US$ m) Revenue Operating costs EBITDA
Results comparison
3QFY13 48.9 (31.6) 17.3 35.3 (4.6) 12.7 (1.9) 0.2 0.9 (1.4) 10.6 (0.7) 6.8 (2.8) 7.0 0.2 8.3 0.2
3QFY12 28.2 (19.5) 8.7 30.7 (3.5) 5.2 (1.2) 0.5 0.6 0.3 5.4 (0.4) 7.1 (0.8) 4.2 0.1 3.9 0.1
yoy % chg 73.5 61.9 99.5 30.5 146.4 57.8 (65.2) 56.8 (537.6) 96.5 90.4 246.4 67.9 62.9 114.7 108.3
qoq % 3QFY13 chg Cum 14.3 130.8 16.7 10.3 0.3 14.5 (25.1) 423.5 570.4 nm 26.8 (9.4) 37.3 28.1 26.5 48.2 46.4 (85.4) 45.4 34.7 (13.2) 32.2 (5.8) 0.1 1.4 (1.0) 26.9 (2.2) 8.0 (6.5) 18.3 0.5 19.2 0.5
3QFY12 Cum 85.0 (56.5) 28.6 33.6 (9.9) 18.6 (3.5) 0.5 2.7 1.6 19.9 (1.8) 9.1 (3.6) 14.5 0.4 13.0 0.4
yoy % chg 53.8 51.2 59.0 32.6 73.1 65.0 (77.4) (47.3) (163.0) 35.4 20.0 78.5 26.5 24.5 47.9 45.6
Prev. Comments FY13F 150.5 Above, higher-than-expected owned as well as chartered vessel revenues (97.8) Above, in line with higher revenue 52.7 35.0 36.1 0.6 2.3 0.5 32.1 8.5 22.3 0.6 21.9 0.6 Above, higher gross margins of 51% due to higher value of OSVs Above Above, in line with higher EBITDA Below In line Disposal loss of US$1.1m Above, in line with higher EBIT Broadly in line Above, in line with higher PBT Above 52% above on stronger revenue & margins. 9M forms 88% of full-year (3Q at 38%)
EBITDA margin (%) Depn & amort. EBIT Interest expense Interest & invt inc Associates' contrib Exceptionals Pretax profit Tax Tax rate (%) Minority interests Net profit EPS (US cts) Core net profit Core EPS (US cts)
(16.6) Above, higher asset base (7.5) In line
(2.7) Broadly in line (7.0) Above
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Page 26
December 2, 2013
INDONESIA
ECONOMIC UPDATE
CIMB Analyst(s)
Oct trade On the mend

In Oct, Indonesia enjoyed a massive reversal in exports (+2.6% yoy vs. -7.5% in Sep) and imports (-8.9% vs. +1.1% in Sep), turning the trade deficit to an unexpected surplus of US$42m (deficit of US$803m in Sep). While we think Nov will likely see the return of trade deficit, as the substantial jump in gas exports is most likely a short-lived boost, the Oct numbers represent a step in the right direction i.e. one of increased exports and depressed imports and reinforces our view of an improving current account deficit going into 2014 (-2.7% of GDP vs. -3.5% in 2013).
Exports grew for the first time in 19 months, expanding 2.6% yoy in Oct (-7.5% in Sep), beating our forecast (-6.3%) and the market consensus (-2.6%). Imports, on the other hand, fell 8.9% yoy (+1.1% in Sep), the largest annual contraction since Oct 2009. The potent combination of rising exports and falling imports yielded a trade surplus of US$42m in Oct. The one blip in an otherwise upbeat trade report was a revision in the Sep trade deficit to US$0.80bn from an earlier estimate of US$0.66bn. The sharp improvement in the O&G deficit to US$0.75bn from US$1.30bn in Sep was due to a pick-up in gas exports (+19.3% yoy vs. -28.7% in Sep) as well as a sharp contraction in O&G imports (-9.2% vs. +7.9% in Sep). In the non-O&G sector, broad-based gains in commodity-based and manufactured goods helped to increase non-O&G exports (+2.5% yoy in Oct vs. -6.4% in Sep). Conversely, slowing domestic demand held down import demand across consumer, raw material and capital goods.
Michelle CHIA
T (60) 3 20849617 E michellelt.chia@cimb.com
Trade balance rebounds to a surplus of US$42m
[The current account] should not have to be a surplus but a deficit with a sustainable figure, which is in a range of between 0.25% and 2.5% of GDP.
Agus Martowardojo, Bank Indonesia Governor
driven by narrowing O&G deficit
A step in the right direction
We read the surprise surplus in Oct as an anomaly propelled by the large jump in gas exports and expect the gains to be given back in Nov. Nevertheless, Octs data are encouraging, especially the upturn in non-O&G exports and signs of lower oil imports. They strengthen our view that the external imbalances will narrow, with the current account deficit improving in 2014 (-2.7% of GDP vs. -3.5% in 2013) on the back of better export shipments and curtailed import demand.
Figure 1: Indonesia's external trade
Oct 13 % of total share* % yoy 100.0 2.6 17.3 2.8 82.7 2.5 100.0 -8.9 6.7 -0.2 76.3 -6.9 17.0 -19.5 0.04 Sep 13 % mom 6.8 12.8 5.7 1.1 -3.1 2.8 -4.7 % yoy -7.5 -12.8 -6.4 1.1 0.6 1.4 -0.4 % mom 12.4 -11.2 18.6 19.2 19.9 16.1 33.9 -0.80 10M13 % yoy -5.5 -15.4 -3.0 -2.0 -1.8 2.2 -17.1 -6.36
Exports: Total Oil and gas Non-oil and gas Imports: Total Consumption goods Raw materials Capital goods Trade Balance (US$ bn)
US$ bn 15.72 2.72 12.99 15.67 1.06 11.96 2.66
*May not sum to 100% due to rounding errors
SOURCES: BPS, CEIC, CIMB RESEARCH
Page 27
December 2, 2013
INDONESIA
ECONOMIC UPDATE
CIMB Analyst(s)
Nov CPI Inflation stabilises

Inflation was fairly steady at 8.37% yoy in Nov (8.32% in Oct) as a dip in food inflation helped to equalise the rise in electricity prices. Echoing the headline trend, core prices were only marginally higher at 4.8% (4.73% in Oct). We think inflation is likely to undershoot our end-year forecast of 8.8% to 8.4% and will normalise following a drop in the statistical base in 2H14, giving BI the space to cut policy rates in 2H14. In the interim, potential surprises to the policy rate remain on the upside as BI negotiates the headwinds against the rupiah and current account.
Headline inflation was a tad higher at 8.37% yoy in Nov (8.32% in Oct), below our forecast of 8.6% and consensuss 8.45%. Sequentially, the increase was a shallow 0.12% mom (+0.09% in Oct). Core inflation held its ground at 4.80% yoy (4.73% in Oct). The administered index ticked up to 16.16% yoy (15.49% in Oct) due to higher electricity tariffs while the volatile index eased to 13.97% (13.49% in Oct) as food prices continued to moderate.
Michelle CHIA
T (60) 3 20849617 E michellelt.chia@cimb.com
CPI inflation inched higher to 8.37% yoy in Nov
The low core inflation is affected by policies such as interest rates, and the fact that it remains lower than headline inflation reflects a stabilisation in our economy.
Suryamin, head of Central Statistics Agency
Lower food prices make up for higher electricity costs
Food inflation stayed on a downward trajectory, easing to 12.24% (12.62% in Oct) as prices of chicken, chili and eggs slipped. These made up for a rise in housing and utility costs (5.94% vs. 5.37% in Oct), which reflected the quarterly hike in electricity tariffs. Inflation for clothing, health and education items also recorded small increases. With few clear upward risks to prices, headline inflation is likely to undershoot our end-2013 target of 8.8% to around 8.4%. With Bank Indonesia (BI) projecting an inflation rate of 9.2-9.8% following the fuel price hike, the milder inflation turnout will be a relief. Inflation is expected to moderate substantially in 2H14, giving room to reduce the BI rate to 7% by end 2014. Despite this, potential policy rate surprises in 1H14 remain on the upside given the need to address the current account deficit and the persistent weakness of the rupiah.
Inflation likely to undershoot our end-year target of 8.8%
Figure 1: Inflation inched higher to 8.37% yoy in Nov

% yoy 20 % mom 10 8 15 6 10 4 2 5 0 0 Jan 03 -2
Jan 04
Jan 05
Jan 06
Jan 07
Jan 08
Jan 09 Headline CPI
Jan 10
Jan 11 Core CPI
Jan 12
Jan 13
Headline CPI (RHS)
SOURCES: BPS, CEIC, CIMB RESEARCH
Page 28
December 2, 2013
THAILAND
ECONOMIC UPDATE
CIMB Analyst(s)
Nov CPI inflation edges higher

Higher food and energy prices fed into headline inflation which rose to 1.92% yoy in Nov (1.46% in Oct), almost smack in the middle of our estimate of 2.0% and market consensus of 1.8%. Core inflation, an indicator of demand price pressures, also edged higher to 0.8% (0.7% in Oct), albeit within BOTs target range. The CPI is up 2.2% yoy in 11M13, in line with our forecast of 2.2% this year. Given weaker economic conditions and expectations of moderate oil prices next year, we are lowering our 2014 inflation forecast to 2.4% (vs. 2.8% previously; Commerce Ministry forecast of 2.0-2.8%).
Headline inflation rose to 1.92% yoy in Nov (1.46% in Oct), falling in between our estimate of 2.0% and market consensus of 1.8%. On a mom basis, consumer prices edged up 0.1% (0.2% in Oct). YTD, the CPI is up 2.2% yoy. Core inflation rose to 0.8% yoy (0.7% in Oct), at the lower end of the Bank of Thailands (BOT) target range of 0.5-3.0% and closely in line with our and market estimates of 0.8%. All CPI components rose except for clothing & footwear and housing & furnishing, which slowed marginally. Food and beverage (33.5% weight) increased 3.9% yoy (2.9% in Oct), transportation and communication rose 0.8% vs. 0.6% (25.5% weight), and tobacco & alcoholic beverages rose 3.9% vs. 3.5% (1.2% weight). Inflation of the energy component (11.4% weight) rose to 2.3% (1.7% in Oct) and raw food (15.5% weight) price inflation also accelerated to 6.2% (4.8% in Oct). BOT cut the policy rate by 25bp to 2.25% on 27 Nov amid brewing political and macroeconomic risks. The benign inflation outlook and decelerating private credit growth provide room for the central bank to focus on mitigating the downside risks to the economy. We expect the ongoing political turmoil to weigh heavily on consumer sentiment and private spending over the next few months. While BOT will need to weigh the impact of impending Fed QE tapering actions on capital flows, we think that shoring up domestic demand will be a priority and lower rates will ease the consumer debt burden and spur spending. As such, we think that there is downside risk for rates in 1H14.
Figure 1: Headline and core inflation
% yo y, % p .a. 5 4 3 2 1 0 -1 -2 -3 -4 -5 Jan -09 Jun -09 No v-09 Ap r-10 Sep -10 Feb-11 Jul-11 Dec-11 May-12 Oct-12 Po licy rate Mar-13 Aug -13
Julia GOH
T (60) 3 20849698 E julia.goh@cimb.com
Inflation pops up 1.92%
Given the benign inflation outlook and moderating household credit growth, there is room for monetary policy to mitigate downside risks to the economy.
Bank of Thailand, Monetary Policy Committee (MPC) Nov statement
Key subcomponents
Further rate cuts to shore up growth
In flatio n rate
Co re in flation
SOURCES: BUREAU OF TRADE AND ECONOMIC INDICES, BLOOMBERG, CIMB RESEARCH
Page 29
December 2, 2013
THAILAND
STRATEGY FLASH NOTE

Conviction| |
CIMB Analyst(s)
Violence offers no solution

As expected, protest leaders escalated the crisis over the weekend in attempts to force the government to dissolve Parliament. There were some clashes between the protesters and government supporters. We believe the tension will last for some time, although the violence may subside a little during the Kings birthday this week.
Figure 1: Tourists' net revenue as % of GDP
12.0% 10.0%
8.0%
Kasem Prunratanamala CFA
T (66) 2 6579221 E kasem.prunratanamala@cimb.com
Highlighted Companies Indorama Ventures

There have been clear signs of an earnings recovery on the back of higher product margins and a rebound in MEG volume.
6.0% 4.0% 2.0% 0.0%
Total Access Communication
We like DTAC for its: 1) higher proportion of young and urban customers; 2) higher degree of regulatory cost-savings; 3) more conservative 3G capex; and 4) more aggressive capital management.
Tourists' net revenues as % of GDP
Linear (Tourists' net revenues as % of GDP)
Bangkok Bank
A stronger balance sheet and efforts to raise its fee income make BBL attractive in the current volatile environment. Undemanding valuations also provide a buffer against downside.
Last month, we believed that the political crisis could last for some time and recommended a switch to more defensive stocks or those with less exposure to domestic demand. We retain that view and keep our 1,500 index target for end-CY14, based on 11.5x forward P/E, the markets last upcycle average. Our top picks are still BBL, IVL, PTTGC, BGH and DTAC. Over the weekend, anti-government protesters clashed with the redshirts (government supporters) in the Ram Kamheang area in eastern Bangkok, resulting in three deaths and the injury of about 50 people. Anti-government protesters are still rallying against the government in many areas, notably outside the Government House, Metropolitan Police Bureau and police headquarters. Over the weekend, the
police was forced to fire tear gas and water cannons at the crowds to prevent them from entering the premises.
What We Think
What Happened
We still believe that the government will not do anything; it will not arrest the protest leaders or use force to disperse the crowds. We also believe that Prime Minister Yingluck will not dissolve the House or resign. The redshirts decision to call off their rally on Sunday (1 Dec) confirms our view.
We remain cautious and advise investors to stick to defensive stocks. The timing of the political turmoil is unfortunate as it coincides with Thailands peak tourism season. If the situation drags on into 2014 (which we are expecting), the Thai economy will only suffer more.
What You Should Do
Page 30
December 2, 2013
INDIA
AUTO & PARTS OVERALL

|
SHORT TERM (3 MTH)
LONG TERM
SECTOR FLASH NOTE
CIMB Analyst(s)
Falling off the festival cliff

The record mom dip in demand across the board was substantially worse than we had expected. Hero is the only company to record yoy growth and is the least disappointing. The buoyancy in rural demand and cost-cutting measures support our Add rating on Maruti and Hero Motocorp.
Pramod AMTHE Kunal JHAVERI
T (91) 22 6602 5167 E pramod.amthe@cimb.com T (91) 22 6602 5168 E kunal.jhaveri@cimb.com
Figure 1: Recommendation summary

Company Maruti Suzuki Hero MotoCorp Tata Motors Mahindra Bajaj Auto Ashok Leyland Eicher Motors Bharat Forge Bosch Limited Exide Limited Apollo Tyres Recommen Current Target Earning dation Price Price EPS (Rs.) EPS (Rs.) P/E(x) P/E(x) P/BV(x) CAGR Rs. Rs. FY14F FY15F FY14F FY15F FY14F FY13-15F ADD 1,661 1,900 97.6 127.6 17.0 13.0 2.4 26.9% ADD 2,064 2,409 114.6 166.0 18.0 12.4 7.1 25.1% REDUCE 400 336 38.2 45.1 10.5 8.9 2.6 19.8% REDUCE 960 893 53.5 56.5 11.2 10.6 2.1 1.7% HOLD 1,961 2,046 113.0 127.3 17.4 15.4 6.0 11.3% REDUCE 17 13 (0.7) 0.3 na 59.1 1.5 -29.3% REDUCE 4,999 3,472 144.4 190.7 34.6 26.2 6.7 26.0% REDUCE 303 224 13.1 18.9 23.1 16.0 2.6 0.8% REDUCE 8,890 8,067 307.3 396.6 28.9 22.4 4.4 14.5% HOLD 114 120 6.67 7.8 17.0 14.5 2.5 12.7% ADD 81 89 12.3 13.1 6.6 6.2 1.0 3.5%
Highlighted Companies Maruti Suzuki

Easing competition and a revival in petrol car demand augur well for leader Maruti. It has a large capacity headroom for medium-term growth and an attractive P/BV valuation, with cost-cutting measures and benefits from the yen depreciation as potential catalysts.
Hero Motocorp
The strong rural demand and its aggressive line-up of new product launches will help it to surpass industry growth. With savings from royalties and its cost-cutting initiative, we expect our EPS estimates that are 10-12% above consensus to come through.
The fall in demand from the festival peak in Oct was worse than expected. Except for Hero and Mahindra tractors, all the companies in our coverage recorded a yoy dip in sales volumes. We recently downgraded the sector to Neutral, with Maruti and Hero Motocorp as our top picks. A continued sharp mom fall in trucks highlights our Reduce call on truck and truck component makers. All the companies in our coverage recorded a sharp mom drop as the festival euphoria has passed. The high base of last years festival season also led to a sharp yoy dip. Rural demand remains robust, as reflected in Hero Motocorps (5.6%) and Mahindra tractors (13%) growth. Contrary to our expectation, the major disappointments were Ashok Leyland (-28%), Eicher CV (-28%) and Tata Motors (-21%). Our channel checks indicate a relatively comfortable dealer inventory for Maruti and Hero Motocorp.
What Happened
With the best of the demand season behind us, the triggers for a revival in retail demand will be the marriage season, year-end discounts and new products. A strong new product pipeline, coupled with rural demand, augurs well for Hero Motocorp and Maruti. The collapse of MHCV sales volumes to the 2008 levels and the trend of declining LCV volumes concern us. Our top picks are Maruti and Hero Motocorp, due to their relatively superior sales volumes and attractive P/BV valuations. Tata Motors continued mom weakness across its domestic product lines and JLR reaching the peak of the benefits of its product mix in the near term are the reasons for our non-consensus Reduce ratings on the stocks. With the best of tractor demand behind Mahindra, we rate it a Reduce. A continued downcycle in the CV segment drives our Reduce ratings on Eicher, Bosch and Bharat Forge.
What We Think
What You Should Do
Tata Motors
We feel that JLR is on the last leg of benefits from its enriched product mix, with RR sport ramping up and operational challenges from its China JV and Baby Jaguar underestimated at the current valuations. We rate it an Underperform as the business capital intensity risk is on the rise and its P/BV valuations are above the mean.
Page 31
December 2, 2013
INDIA
OIL & GAS EXP & PRODN
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
Gujarat HC orders higher royalty

The Gujarat High Courts ruling that the royalty on onshore crude be paid on gross billing (currently on oil price net of subsidy) is potentially negative for PSUs upstream earnings. However, it may not be implemented as a likely stay by the Supreme Court (ONGC to appeal) may be followed by the central governments intervention.
SECTOR FLASH NOTE
Avadhoot SABNIS Vinod BANSAL
T (91) 22 6602 5151 E avadhoot.sabnis@cimb.com T (91) 22 6602 5165 E vinod.bansal@cimb.com
Figure 1: Impact of the Gujarat HC order on ONGC/OIL

FY15 current EPS ONGC OIL 36.9 64.9 FY15 new EPS 34.8 49.6 % change -5.5% -23.6% One time BV impact (Rs/sh) 6.8 46.0
We retain our Neutral stance on the sector. We prefer a cheaper OIL India (6.5% dividend yield) over ONGC. As per media reports, the Gujarat High Court has directed ONGC to pay the royalty on crude produced onshore Gujarat on the gross billing rate and also to pay the underpaid amount for FY08-FY13. Under the current system, ONGC/OIL bear the fuel subsidy burden by providing a discount to OMCs on the crude purchased by the latter. Since royalty on crude (20% for onshore crude paid to respective state government & 10% for offshore crude paid to central govt.) is payable on the actual net back price to ONGC, the royalty liability is computed on the net oil price to the upstream companies (net of subsidy discount). The Gujarat state had contested this system, arguing that royalty should be paid on gross billing and not on the net (of subsidy) billing. Note that till FY08, royalty was paid on gross billing.
What Happened
Highlighted Companies ONGC

Our Hold rating is premised on the poorer oil production growth from the own domestic fields, despite managements optimistic guidance
Oil India
Our Add rating is based on its cheaper valuations (6.5% dividend yield) compared to the larger peer ONGC.
What We Think
applied on gross billing, then it might compensate upstream via a lower subsidy burden. It is unlikely that the upstream firms would be the ultimate losers in the state vs. the centre issue (subsidy sharing is driven by GOI's mandate). Yet, assuming this order applies, it would be negative for PSUs upstream earnings. Firstly the cumulative liability for FY08-FY13 for ONGC is Rs86bn or Rs7/share impact on book value (net of tax). Also, on a recurring basis, it would cut earnings by 5.5% (Rs2/sh) & DCF valuation by Rs16/sh. This assumes the new royalty basis would apply to all the onshore crude produced in the country and not just Gujarat crude (3.8% hit on EPS). It is logical to assume that other states would follow in Gujarat's footsteps. Similarly it would hit OILs EPS by Rs15/sh (24%) and DCF valuation by Rs45/sh apart from the one-time book value impact of Rs46/sh. Note, the higher impact on OIL is because the whole of its crude is produced in onshore assets, unlike ONGC for which onshore forms a smaller proportion. The royalty headwinds might subside if SC stays Gujarat HCs order, which is quite likely in our view. We maintain Hold on ONGC (target price of Rs290) and Add on OIL (target price of Rs530).
While the HC order is negative for ONGC/OILs earnings, we see little probability of its implementation. Firstly, ONGC is likely to appeal against this order in the Supreme Court (within 60 days). Also, we believe GOI would step in to resolve the dispute. Indeed, if royalty is
What You Should Do
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CIMB Recommendation Framework #1

Stock Ratings Add Hold Reduce
Definition The stocks total return is expected to exceed 10% over the next 12 months. The stocks total return is expected to be between 0% and positive 10% over the next 12 months. The stocks total return is expected to fall below 0% or more over the next 12 months.
The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months. Sector Ratings Overweight Neutral Underweight Country Ratings Overweight Neutral Underweight Outperform Neutral Underperform Trading Buy Trading Sell Definition An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation. A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation. An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation. Definition An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark. A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark. An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark. The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 12 months. The stock's total return is expected to be within +/-5% of a relevant benchmark's total return. The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 12 months. The stock's total return is expected to exceed a relevant benchmark's total return by 3% or more over the next 3 months. The stock's total return is expected to be below a relevant benchmark's total return by 3% or more over the next 3 months.
CIMB Stock Recommendation Framework #2 *
* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand, Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)
CIMB Stock Recommendation Framework #3 **

Outperform Neutral Underperform Trading Buy Trading Sell
Expected positive total returns of 10% or more over the next 12 months. Expected total returns of between -10% and +10% over the next 12 months. Expected negative total returns of 10% or more over the next 12 months. Expected positive total returns of 10% or more over the next 3 months. Expected negative total returns of 10% or more over the next 3 months.
** This framework only applies to stocks listed on the Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.
Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2012. AAV not available, ADVANC - Excellent, AEONTS Good, AMATA - Very Good, ANAN not available, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH not available, BCP - Excellent, BEC - Very Good, BGH - not available, BJC Very Good, BH - Very Good, BIGC - Very Good, BTS - Excellent, CCET Good, CENTEL Very Good, CK - Very Good, CPALL - Very Good, CPF - Very Good, CPN - Excellent, DELTA - Very Good, DTAC - Very Good, EGCO Excellent, ERW Excellent, GLOBAL - Good, GLOW - Very Good, GRAMMY Excellent, HANA - Very Good, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH Very Good, ITD Very Good, IVL - Very Good, JAS Very Good, KAMART not available, KBANK - Excellent, KK Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR - Good, MAKRO Very Good, MCOT - Excellent, MINT - Very Good, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - Excellent, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS Excellent, SAMART Excellent, SC Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI - Good, SPALI - Very Good, SRICHA not available, SSI not available, STA - Good, STEC - Very Good, TCAP - Very Good, THAI - Excellent, THCOM Very Good, TICON Very Good, TISCO - Excellent, TMB Excellent, TOP - Excellent, TRUE - Very Good, TTW Very Good, TUF - Very Good, VGI not available, WORK Good.
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CIMB Daily Revisions

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2014 2015 2016

Ramsay Health Care

2014 2015 2016

Slater & Gordon

2014 2015 2016

SMS Mgt & Technology

2014 2015 2016

Wintermar Offshore Marine

YEO Zhi Bin

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ASIAN BANKS WEEKLY

SHORT TERM (3 MTH)

Remain cautious on Indonesia; RHB stock of the week

Trevor KALCIC, CFA Lydia XU

T (852) 2539 1323 E trevor.kalcic@cimb.com T (852) 2539 1325 E lydia.xu@cimb.com

Winson NG, CFA

T (60) 3 20849686 E winson.ng@cimb.com

Kenneth NG, CFA

T (65) 6210 8610 E kenneth.ng@cimb.com

T (62) 21 30061722 E hadi.soegiarto@cimb.com

Monchai JATURANPINYO, CFA

T (82) 2 67306128 E daehyun.kim@cimb.com

John BUONACCORSI Ashley DALZIELL

T (61) 2 96946062 E john.buonaccorsi@cimb.com T (61) 2 96946061 E ashley.dalziell@cimb.com

Jatinder AGARWAL Vivek VERMA Umang SHAH Nora HOU

T (886) 2 8729 8375 E grace.wang@cimb.com

RHB stock of the week

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1H14 RESULTS NOTE

Avg Daily Turnover

Target Prev. Target Up/Downside

From Foe to Friend

Daniel BROEREN Alexander BEER

T (61) 2 9694 6072 E daniel.broeren@cimb.com T (61) 2 9694 6073 E alexander.beer@cimb.com

Who funds the strategy?

Share price info

All about volume