Thomson One Asia (15 Aug 13)

REGIONAL DAILY
August 15, 2013
ASIA PACIFIC
Asia Pacific Daily

Equity Research Reports
REGIONAL/ASIA PACIFIC
Plantations- Fear of rising supplies (14/8) | P7
| 15 August 2013
Key Metrics
Market Indices
Australia China 'A' China 'H' Hong Kong India Indonesia Japan Korea Malay sia Singapore Taiw an Thailand ASX 200
Shanghai A
HSCEI HSI Sensex JCI Nikkei

Korea Comp
FBMKLCI STI
Taiwan Wgtd
SET
Close 5,157 2,198 10,186 22,541 19,368 4,700 14,050 1,924 1,794 3,249 7,951 1,461
1D 0.0% -0.3% 0.0% 0.0% 0.7% 1.0% 1.3% 0.6% -0.1% 0.1% -0.4% 0.1%
1M 3.7% 3.0% 8.0% 5.9% -3.0% 1.4% -3.1% 2.9% 0.5% 0.4% -3.3% 0.5%
YTD 10.9% -7.5% -10.9% -0.5% -0.3% 8.9% 35.2% -3.7% 6.2% 2.6% 3.3% 4.9%
AUSTRALIA
MSCI Asia Pacific XJ
530
Carsales.com.au- Solid result, but 2H slightly softer (14/8) | P8 Commonwealth Bank- Net interest margins peaking (14/8) | P9 Computershare- Still cant get no corporate action (14/8) | P10 Goodman Fielder- Its all about DME now (14/8) | P11 Leighton Holdings- A$1.1bn 2H13 cash flow, in theory (14/8) | P12 Oz Minerals- Positive cash flow returns in 2014 (14/8) | P13 Primary Health Care- Strength continues (14/8) | P14 SAI Global- Downgrade cycle ending? (14/8) | P15 STW Group- A believable 2H story (14/8) | P16 Sydney Airport- Ringing in the changes (14/8) | P17 WorleyParsons- Not yet (14/8) | P18 Economic Update- Lowering our risk-free rate (14/8) | P19
480
TAIWAN
430
380 Aug-12
Nov-12
Feb-13
May-13
Aug-13
IBES/MSCI Market Valuations

Forward P/E (x) 13.97 8.46 14.35 12.85 13.97 8.19 15.31 15.84 18.91 13.89 13.48 11.77 10.69 11.38
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 (%) 8.27 4.84 9.81 3.76 10.61 3.16 12.72 1.87 14.11 2.78 19.19 1.24 4.79 3.19 12.93 5.10 8.26 2.22 4.00 3.63 21.26 3.44 15.15 3.61 13.27 11.13 2.90 3.40
CIMB Rec. Weight UW OW n.a. UW UW N N n.a. n.a. OW N N OW n.a.
Asia Cement- Momentum in 2H13 (14/8) | P20 Fubon Financial- Outperformer (14/8) | P21 Gourmet Master- Faster recovery after 1H13 (14/8) | P22 Grape King Inc.- The grape is still sweet (14/8) | P23 Quanta Computer- Notebook weakness overshadows growing cloud (14/8) | P24 Synnex Technology- Still a long way to go (14/8) | P25 Taiwan Cement- Harvest season comes early (14/8) | P26 Taiwan Fertilizer- Execution risks emerge again (15/8) | P27
MALAYSIA
Malaysia Marine & Heavy Eng- Not a heavyweight set of results (14/8) | P28 Tan Chong Motor Holdings- Assembling Mitsubishi vehicles for the local market (14/8) | P29
SINGAPORE
(to US$1) Australian Dollar China Renminbi Hong Kong Dollar Indian Rupee Indonesian Rupiah Japanese Yen Korean Won Malay sian Ringgit New Zealand Dollar Philippine Peso Singapore Dollar Taiw an Dollar Thai Baht
Regional Currencies
ComfortDelGro- Changing our view (14/8) | P30 Indofood Agri Resources- Hit by lower yields and price (14/8) | P31 Midas Holdings- Banking on a strong 2H (14/8) | P32 Overseas Education Ltd- Earnings visibility high! (14/8) | P33 Pan-United Corp- Some doubts linger on (14/8) | P34 SingTel- 1QFY3/14 below expectations; guidance lowered (14/8) | P35 SingTel- Currency headwinds (14/8) | P36 Swiber Holdings- Still better than peers (14/8) | P37
CY13 forecast Close 1.00 0.91 6.45 6.12 7.85 7.76 56.0 61.44 10,000 10,297 88.0 98.23 1,130 1,118.74 3.15 3.27 1.25 0.80 43.0 43.77 1.27 1.27 30.0 29.97 32.0 31.29
1D 0.2% 0.0% 0.0% -0.4% 0.1% -0.1% -0.3% -0.4% 0.7% -0.1% -0.4% 0.0% -0.1%
YTD -10.6% 2.9% 0.2% -13.6% -11.9% -21.7% 3.0% -3.2% 3.3% 0.2% 2.0% 1.0% 0.8%
CHINA/HONG KONG
Cathay Pacific Airways- Still gaining altitude (14/8) | P38 SJM Holdings- Dividend surprise (14/8) | P39 Banks- 2Q13 sector data: very positive (14/8) | P40
INDONESIA
Indo Tambangraya Megah- Facing a multitude of risks (14/8) | P41 Property - Overall- Treading it lightly (14/8) | P42
THAILAND
Upcoming Major Data Releases Event/data Country Date Jul new y uan loans China 10-15 Aug 2Q13 GDP Singapore 12 Aug Jul FDI China 14-18 Aug Jul CPI & Jun net TIC flow s United States 15 Aug Bank Indonesia reference rate Indonesia 15 Aug
Airports of Thailand- On top of its game (14/8) | P43 Bangkok Dusit Med Service- In doctors we trust (14/8) | P44 Central Plaza Hotel- Thriving in the land of smiles (14/8) | P45 CH. Karnchang- Nailing it with strong margins (14/8) | P46 Siam Global House- Building a power house (14/8) | P47 Economic Update- Juls external reserves: reversal of fortunes (14/8) | P48
Commodities
WTI spot (US$/bbl) Gold (US$/oz) Baltic Dry Index
Close 107 1,327 1,060
% chg 0.0% 0.0% 5.3%
YTD 16.3% 0.0% 51.6%
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Page 1
Compiled as @:
8/15/2013 2:49:15 AM
REGIONAL DAILY
August 15, 2013
INDIA
Bharti Airtel- Deep dive into Africa losses (14/8) | P49 Eros International Media- Getting closer to big releases (14/8) | P50 GMR Infra- Execution on course (14/8) | P51 Hindalco Industries- Novelis faces the heat (14/8) | P52 IVRCL Ltd- Record losses (14/8) | P53 Tata Steel- Margins improve in Europe (14/8) | P54 Wockhardt Ltd- Weak 1Q; uncertainties galore (14/8) | P55
PHILIPPINES
Cebu Air- Cost-driven outperformance (14/8) | P56
Page 2
Compiled as @:
8/15/2013 2:49:15 AM
ASIA PACIFIC DAILY

August 15, 2013
Calendar of Events
Calendar of Events
| 2013
August 2013
SUN MON TUE WED THU
1 4 5 6 7 8
FRI
2 9
SAT
3 10
NZ: Centuria Property Trust Deal RS Mumbai: Castro India NDR
SYD: Centuria Property Trust Deal RS SYD: Australia Origin Energy Marketing
SIN: Ezion Post Results Lunch MEL AU: Centuria Property Trust Deal RS HK: HK/China Insurance Initiation The Distribution Advantage Marketing SYD: Australia Origin Energy Marketing
HK: Texhong Textile Group NDR HK: HK/China Insurance Initiation The Distribution Advantage Marketing SYD: Australia Origin Energy Marketing SYD: Centuria Property Trust Deal RS KL, IND, SIN: Hari Raya Puasa SIN: Texhong Textile Group NDR SIN: HK/China Insurance Initiation The Distribution Advantage Marketing SYD: SAI Global Results Briefing SYD: REA Group Results Briefing SYD: Skilled Group Resutls Briefing HK: Fufeng Group Post Results RS US: Singapore Consumer Marketing
HK: CITIC Telecom NDR HK: HK/China Insurance Initiation The Distribution Advantage Marketing SYD: Australia Origin Energy Marketing SYD: Centuria Property Trust Deal RS KL, IND: Hari Raya Puasa SIN: National Day SIN: HK/China Insurance Initiation The Distribution Advantage Marketing
11
US: Singapore Consumer Marketing
12
SYD: Reckon Limited Results Briefing SIN: HK/China Small Mid Cap Marketing US: Singapore Consumer Marketing
13
SIN: Stelux Holdings NDR SIN: HK/China Small Mid Cap Marketing SYD: STW Communications Group Results Briefing SYD: Boom Logistics Results Briefing US: Singapore Consumer Marketing
14
15
16
17
IND: Independence Day
18
SYD: Automotive Holdings Group Results Briefing SIN: UMW Oil & Gas PDIE
19
KL: PTTGC NDR KL: UMW Oil & Gas PDIE SIN: Shin Corp NDR SYD: Hills Holdings Results Briefing SYD: Breville Group Results Briefing
20
SIN: Shin Corp NDR HK: Shenguan Post Results RS KL: UMW Oil & Gas PDIE KL: Nam Cheong NDR KL: PTTGC NDR SYD: SMS Management & Technology Results Briefing SYD: Bendigo and Adelaide Bank Results Briefing PHI: Ninoy Aquino Day HK: Luen Thai NDR HK: Goodbaby International Post Results RS HK: Want Want China Post Results Luncheon HK: Samsonite Post Results RS SYD: Fletcher Building NDR SYD: Arden Leisure Group Corporate Meeting LDN: UMW Oil & Gas PDIE
21
KL: Shin Corp NDR KL: UMW Oil & Gas PDIE SYD: GWA Group Results Briefing SYD: Oakton Results Briefing HK: Tongda Group NDR HK: Shenguan Post Results RS
22
KL: Shin Corp NDR HK: Future Bright Post Results RS SYD: Mortgage Choice Ltd NDR SYD: Thinksmart Limited Results Breakfast SIN: UMW Oil & Gas PDIE
23
24
25
KL: Siam Commercial Bank NDR HK: China Wireless NDR HK: UMW Oil & Gas PDIE SYD: APA Group Results Lunch SYD: Transpacific Industries Results Lunch MEL AU: Fletcher Building NDR
26
MEL AU: Sydney Airport Results Briefing SYD: Fletcher Building NDR HK: UMW Oil & Gas PDIE
27
28
HK: Emperor Watch & Jewellery NDR HK: Luen Thai NDR HK: Samsonite Post Results RS LDN: UMW Oil & Gas PDIE
29
HK: Emperor Watch & Jewellery NDR MEL AU: Dr Michelle Foss, Center For Energy Economics, Bureau of Economic Geology Expert RS
30
31
UK: Summer Bank Holiday ; PHIL: National Heroes Day
KL: National Day
SOURCES: CIMB, COMPANY REPORTS
Page 3
ASIA PACIFIC DAILY

August 15, 2013
Calendar of Events
September 2013
SUN
1
MON
LDN/UK: Quality House NDR Abu Dhabi: SK Innovation NDR SYD: Dr Michelle Foss, Center for Energy Economics, Bureau Of Economic Geology Expert Speaker RS
TUE
2
SYD: Mermaid Marine Australia Results Briefing SYD: Forge Group Results Briefing SYD: Dr Michelle Foss, Center for Energy Economics, Bureau Of Economic Geology Expert Speaker RS SYD: Emeco Holdings Results Briefing LDN/UK: Quality House NDR Doha: SK Innovation NDR SYD: IMF Australia Corporate Meeting Taipei: Want Want China NDR
WED
3
SYD: Growthpoint Properties Australia Results Briefing LDN/UK: Quality House NDR LDN: SK Innovation NDR
THU
4
LDN/UK: Quality House NDR LDN: SK Innovation NDR HK: Mr Shao MingJun, China Dairy Association, Expert Speaker Roadshow
FRI
5
LDN/UK: Quality House NDR LDN: Korea Refiners & Petrochemicals Marketing
SAT
6 7
US: Labor Day
10
KL: PTT NDR HK: Smartphone Corporate Day Taipei: Want Want China NDR
11
KL: PTT NDR
12
13
14
15
16
KL: Malaysia Day JPN: Respect for the Aged Day
17
18
CHN: Mid-Autumn Festival
19
HK: Mid-Autumn Festival
20
21
22
LDN/UK: Digi NDR JPN: Autumnal Equinox Day
23
LDN/UK: Digi NDR
24
LDN/UK: Digi NDR
25
26
27
28
29
30
Page 4
ASIA PACIFIC DAILY

August 15, 2013
CIMB Daily Revisions

Reuters/ Market
Australia
| as at 15 August 2013
Mkt Cap Date

14-Aug-13
Recommendation Lead Analyst
Price Target Curr

A$ 8.45 +9.7%
Year EPS Forecasts Prev

7.70
BBG
CRZ AU CRZ.AX
Company
Carsales.com.au
(USD M)
$
Curr
Prev
End
2014 2015 2016
Chg%
-2.6 -4.0 -3.2 1.7 1.5 2.0 -11.0 -8.8 -6.0 -10.5 -5.2 -6.7 -3.4 -9.4 -10.8 165.9 214.6 -37.4 -1.5 -0.8 -1.5 4.2 1.0 1.2 -1.6 -1.5 -1.4 -3.0 4.3 2.4 -25.1 -11.7 -9.7 -5.2 3.1 -5.9 -2.0 -2.9 -4.3 -24.5 -17.8 -14.3 -356.9 -34.2 -18.5 29.0 0.4 0.6 -15.5 -12.6 -16.0 -20.4 -19.4 -1.4 n.c. n.c. n.c. n.c. n.c. n.c. 11.1 22.6 18.6 -4.6 -1.9 -2.1 -10.9 n.c. n.c.
2,311.54 Alan STUART
Underperform Underperform
Australia
CBA AU CBA.AX
14-Aug-13
Commonwealth Bank
$ 108,495.90 John BUONACCORSI
A$
60.35 +3.0%
58.59
2014 2015 2016
Australia
CPU AU CPU.AX
14-Aug-13
Computershare
4,950.64 Richard COLES
Neutral
Neutral
A$
9.50 -4.0%
9.90
2014 2015 2016
Australia
GFF AU GFF.AX
14-Aug-13
Goodman Fielder
1,312.14 Alexander BEER
Outperform
Outperform
A$
0.82 +2.5%
0.80
2014 2015 2016
Australia
LEI AU LEI.AX
14-Aug-13
Leighton Holdings
4,999.68 Andrew HODGE
A$
17.33 -11.3%
19.54
2013 2014 2015
Australia
OZL AU OZL.AX
14-Aug-13
OZ Minerals
1,166.33 Michael EVANS
Outperform
Outperform
A$
6.30 -12.5%
7.20
2013 2014 2015
Australia
PRY AU PRY.AX
14-Aug-13
Primary Health Care
2,364.56 Dr Derek JELLINEK
Outperform
Outperform
A$
5.71 -0.9%
5.76
2014 2015 2016
Australia
SAI AU SAI.AX
14-Aug-13
SAI Global
772.54 Julian GUIDO
Outperform
Neutral
A$
4.62 +17.3%
3.94
2014 2015 2016
Australia
SGN AU SGN.AX
14-Aug-13
STW Group
554.83 Matthew NICHOLAS
Outperform
Outperform
A$
1.62 -0.6%
1.63
2013 2014 2015
Australia
SYD AU SYD.AX
14-Aug-13
Sydney Airport
6,116.76 Michael NEWBOLD, CFA
Outperform
Neutral
A$
3.83 +9.7%
3.49
2013 2014 2015
Hong Kong
293 HK 0293.HK
14-Aug-13
Cathay Pacific Airways
7,233.14 Andrew ORCHARD
Outperform
Outperform
HK$
16.00 n.c.
16.00
2013 2014 2015
India
EROS IN EROS.BO
15-Aug-13
Eros International Media
193.44 Srinivas SESHADRI
Outperform
Neutral
Rs
168.0 -4.5%
176.0
2014 2015 2016
India
GMRI IN GMRI.BO
15-Aug-13
GMR Infra
845.72 Pramod AMTHE
Outperform
Outperform
Rs
32.8 -2.4%
33.6
2014 2015 2016
India
HNDL IN HALC.NS
14-Aug-13
Hindalco Industries
3,059.91 Rahul JAIN
Neutral
Neutral
Rs
100.3 -16.8%
120.6
2014 2015 2016
India
IVRC IN IVRC.BO
14-Aug-13
IVRCL Ltd
55.69 Pramod AMTHE
Rs
10.8 -36.5%
17.0
2014 2015 2016
India
TATA IN TISC.NS
14-Aug-13
Tata Steel
3,953.23 Rahul JAIN
Rs
237.4 -11.1%
267.0
2014 2015 2016
India
WPL IN WCKH.BO
15-Aug-13
Wockhardt Ltd
785.65 Prakash AGARWAL
Neutral
Neutral
Rs
500.0 -30.1%
715.0
2014 2015 2016
Indonesia
ITMG IJ ITMG.JK
14-Aug-13
Indo Tambangraya Megah
3,248.11 Erindra KRISNAWAN, CFA
Rp
20,000 -3.6%
20,750
2013 2014 2015
Singapore
CD SP CMDG.SI
14-Aug-13
ComfortDelGro
3,274.35 Gary NG
Outperform
Neutral
S$
2.18 +12.4%
1.94
2013 2014 2015
Singapore
IFAR SP IFAR.SI
14-Aug-13
Indofood Agri Resources
936.48 Ivy NG Lee Fang, CFA
S$
0.81 -20.6%
1.02
2013 2014 2015
Singapore
OEL SP OVER.SI
14-Aug-13
Overseas Education Ltd
261.40 William TNG, CFA
Outperform
Outperform
S$
0.95 +4.4%
0.91
2013 2014 2015
Singapore
ST SP STEL.SI
14-Aug-13
SingTel
$ 47,785.24 Kelvin GOH, CFA
Neutral
Neutral
S$
3.80 -1.6%
3.86
2014 2015 2016
Singapore
SWIB SP SWBR.SI
14-Aug-13
Swiber Holdings
338.55 LIM Siew Khee
Outperform
Outperform
S$
0.91 n.c.
0.91
2013 2014 2015
Page 5
ASIA PACIFIC DAILY

August 15, 2013

Reuters/ Market BBG Date
contd
Mkt Cap Company (USD M) Lead Analyst Recommendation Curr Prev Price Target Curr Prev Year EPS Forecasts End Chg%
Taiwan
1102 TT 1102.TW
15-Aug-13
Asia Cement
4,037.43 Andre CHANG, CFA
Outperform
Outperform
NT$
42.00 n.c.
42.00
2013 2014 2015
-1.3 3.2 2.3 -1.8 -5.9 -8.7 -27.7 -18.4 -11.5 0.0 -0.1 -1.5 -4.6 -4.7 -5.8 8.1 3.4 1.0 7.5 7.5 7.1 -18.0 0.2 2.0 11.6 13.0 13.4 n.c. n.c. n.c. n.c. n.c. n.c.
Taiwan
2881 TT 2881.TW
14-Aug-13
Fubon Financial
$ 14,068.63 Nora HOU
Outperform
Outperform
NT$
48.60 -3.6%
50.40
2013 2014 2015
Taiwan
2723 TT 2723.TW
14-Aug-13
Gourmet Master
849.95 Jack LIN
Outperform
Outperform
NT$
200.00 -2.4%
205.00
2013 2014 2015
Taiwan
1707 TT 1707.TW
14-Aug-13
Grape King Inc.
606.22 Jack LIN
Outperform
Outperform
NT$
155.00 n.c.
155.00
2013 2014 2015
Taiwan
2382 TT 2382.TW
14-Aug-13
Quanta Computer
8,193.47 Wanli WANG
Neutral
Neutral
NT$
67.00 -6.3%
71.50
2013 2014 2015
Taiwan
2347 TT 2347.TW
14-Aug-13
Synnex Technology
2,191.83 Felix PAN
NT$
34.00 +3.0%
33.00
2013 2014 2015
Taiwan
1101 TT 1101.TW
14-Aug-13
Taiwan Cement
Outperform
Outperform
NT$
45.00 +2.3%
44.00
2013 2014 2015
Taiwan
1722 TT 1722.TW
15-Aug-13
Taiwan Fertilizer
Underperform
Neutral
NT$
65.00 -13.3%
75.00
2013 2014 2015
Thailand
AOT TB AOT.BK
14-Aug-13
Airports of Thailand
8,309.36 Monchai JATURANPINYO, CFA
150.0 +11.1%
135.0
2013 2014 2015
Thailand
CENTEL TB 14-Aug-13 CENT.BK
Central Plaza Hotel
1,510.07 Kasem PRUNRATANAMALA, CFA
Outperform
Outperform
43.0 +4.9%
41.0
2013 2014 2015
Thailand
CK TB CK.BK
14-Aug-13
CH. Karnchang
1,087.99 Kasem PRUNRATANAMALA, CFA
Outperform
Outperform
33.6 -4.0%
35.0
2013 2014 2015
Page 6
August 14, 2013
ASEAN
PLANTATIONS
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
Fear of rising supplies

Malaysias palm oil stocks improved 1% mom to 1.66m tonnes at end-July. This is 3% below our forecast but 3% above consensus. We are neutral on this news and project that CPO prices will remain range-bound as the fear of rising supplies offsets the low stocks.
SECTOR FLASH NOTE
Ivy NG Lee Fang CFA

T (60) 3 2084 9697 E ivy.ng@cimb.com
Figure 1: Negative correlation between CPO price and stocks

('000 tonnes)
2,800
2,600 2,400 2,200 2,000 1,800 1,600
Stock (LHS)
CPO price (RHS)
(US$ /tonne)
1,400
1,300
1,200
1,100
1,000
900
800
700
1,400
1,200
600
500
1,000
400
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
SOURCES: CIMB, MPOB
Highlighted Companies First Resources

We like the favourable age profile of its estates (average age of nine years). Its downstream expansion has also boosted earnings. The stock is trading at a forward P/E of only 10x, below the sector average of 14x, and offers 25% upside to our target price of S$2.22.
The big surprise came from the higher-than-expected mom improvement in production signalling the beginning of the high production season. We project palm oil stocks to rise in August as the improvement in production more than offsets the exports and domestic consumption. We keep our Neutral sector call. First Resources, Wilmar and IOI Corp remain our top picks. Palm oil stocks in Malaysia increased for the first time since Dec 2012. Malaysia's stocks at end-July were up 1% mom at 1.66m tonnes, which is 3% below our forecast but 3% above consensus. The stocks were below our expectation as the better-than-expected exports offset stronger production.
What Happened
Wilmar International
We favour the group's strong agribusiness model and believe that its share price has bottomed-out after its disappointing FY12 earnings. We expect higher palm and laurics segment earnings and crushing margins to drive FY13 earnings recovery and cause the stocks re-rating.
first 10 days of August and the surprise 5% cut in US soybean crop forecasts by the USDA. But this rally may not sustain due to the rising concern that stocks will increase again during the peak production season. The strong 18% mom increase in production, which represents the highest increase since Sept 2012, also indicates that the palm trees are entering the high production season. On the demand front, CPO may start to face stiffer competition from soybean oil because of the narrowing price discount to soybean oil. We project that end-Aug stocks will rise 4% mom to 1.73m tonnes and expect CPO prices to trade in the range of RM2,200-2,400 per tonne in the near term.
What You Should do
IOI Corporation
We favour IOI Corp as we believe that the market has not fully priced-in the value of its property division, which will be demerged and listed in 4Q13. The property division is expected to deliver up to 66% earnings growth in the next two years.
What We Think
We are neutral on the end-July palm oil stocks figure and project that the CPO price will stay range-bound. The CPO price traded higher (+2%) yesterday, buoyed by the strong 26% mom rise in palm oil exports in the
For exposure to the sector, our preferred stocks are First Resources (owns one of the youngest and most profitable estates), Wilmar (a prime beneficiary of higher palm oil supplies and stocks) and IOI Corp (upside from the listing of its property arm).
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Page 7
IT ServicesAustralia
August 14, 2013
Carsales.com.au
CRZ AU / CRZ.AX Current A$10.72 A$8.45 A$7.70 -21.2%
Conviction| |
FY13 RESULTS NOTE

SHORT TERM (3 MTH) LONG TERM
US$2,307m
A$2,532m
Market Cap
US$7.99m
A$8.55m
Avg Daily Turnover
85.0%
Free Float
Target Prev. Target Up/Downside
235.7m shares
CIMB Analyst(s)
Solid result, but 2H slightly softer

The result was in line, delivering robust growth in key operating segments despite a slight 2H slowdown in display and data services. We view the near-term growth outlook as solid, underpinned by price rises, and believe a premium for the quality of management is justified. Our concern remains in the medium term with car sales at cyclical highs and scope for slower growth in display. Underperform maintained.
We have made minor changes to our forecasts +3% in FY14F EPS. We roll forward our DCF-based target price, which increases by 10% to A$8.45. The stock is trading at a FY14F PE of 26x, with a three-year EPS CAGR of 14.5%, which we view as expensive. Key catalysts include: 1) weakness in the car market; 2) slower online display advertising growth; 3) launch of new products; 4) positive signs of overseas investment performance. and uptake of additional products. We see scope for price increases in premium in FY14F, given it is over 20 months since the previous A$20 rise was implemented. Display growth of 25% slowed slightly in 2H (+22%). Data services growth of 16% was also slightly weaker in 2H (+13%). We are comfortable with the near-term growth outlook for the company. However, our key concerns lie with: 1) the potential impact of a weaker car market; and 2) scope for a slowdown in display advertising growth, particularly as mobile access increases as a percentage of traffic.
Alan STUART
T (61) 2 9694 6071 E alan.stuart@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Hyperion Asset Management Walter Pisciotta Fidelity 1M 6.8 10.5 3M 8 6.8 12M 35.2 55.4 % held 12.6 8.2 7.5
Concerns on medium term
Steady growth in segments
Group revenue increased by 17%, while EBITDA grew 19%. We see scope for further margin expansion in FY14F given costs of a one-off nature booked in 1H13 and also through the inherent operating leverage in the business. Dealer revenue grew 17%, benefiting from a 7% increase in enquiries and the lead fee increase pushed through in February. We expect this to also drive growth in FY14F. Private grew 7% supported by listing growth, premium penetration
Results comparison FYE Jun (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) FY13 (actual) 215 -95 120 55.8 -3 118 1 0 0 119 -35 29.6 83 0 34.8 27.4 FY13 Variance (f'cast) (%) 219 (1.8) -98 3.2 121 (0.8) 55.2 -3 0.9 118 (0.8) 2 (12.3) 0 (30.9) 0 nmf 120 (1.1) -36 2.3 30.0 nmf 84 (0.58) 0 nmf nmf 35.6 (2.28) 27.4 FY12 (actual) 184.2 -83 101 55.0 -3 97.9 1 0 0 99 -28 27.8 72 0 30.1 24.5 % chg yoy 16.8 (14.5) 18.6 23.5 20.1 3.6 (65.8) nmf 19.6 (27.3) nmf 16.7 nmf nmf 15.6 11.8 FY14F (new) 249 -108 141 56.8 -3 138 -4 0 5 139 -42 30.2 97 0 40.4 31.0 FY14F (prev) 249 -107 142 56.9 -3 139 2 0 0 141 -42 30.0 99 0 41.8 31.0
Underperform maintained
Management has been consistent in delivering solid operational results and growing through new innovative products, which justifies a premium in our view. However, at current levels we view the stock as expensive .
% chg (0.1) (0.2) (0.2) (17.2) (0.6) nmf nmf nmf (1.4) 0.8 nmf (1.6) nmf nmf (3.3) -
Comments Dealer the strongest revenue driver (+17%) Expect margins to improve in FY14F Post acquisitions net debt stands at $39.4m Associate contribution to flow through in FY14F
Payout ratio maintained at 80%

SOURCE: CIMB, COMPANY REPORTS
Page 8
BanksAustralia
August 14, 2013
Commonwealth Bank
CBA AU / CBA.AX Current A$73.73 A$60.35 A$58.59 -18.1%
Conviction| |
FY13 RESULTS NOTE

US$108,294m
A$118,848m
Market Cap
US$249.3m
A$269.0m
Avg Daily Turnover
100.0%
Free Float
1,612 m shares
CIMB Analyst(s)
Net interest margins peaking

CBAs strong 2H13 result benefited from asset repricing, gains from Treasury hedging, favourable short-term spreads and better credit quality. The result was also clean, in our view. The cautious stance on dividends and capital checked the stocks recent rally, but we still view CBA as too pricey.
CBA's FY13 cash NPAT and cash EPS exceeded our forecasts by just over 2%. Following todays result we have upgraded FY14-FY15F cash EPS by 2%. As a result, our target price increases to A$60.35. We maintain our Underperform rating, and at current pricing the bank remains our #4 pick among the majors.
John BUONACCORSI
T (61) 2 9694 6062 E john.buonaccorsi@cimb.com
Sector read through
Ashley DALZIELL,CFA
T (61) 2 9694 6061 E ashley.dalziell@cimb.com
Share price info

Share price perf. (%) Relative Absolute 1M 0.2 3.9 3M 3.5 2.3 12M 12.6 32.8
FY14 to be less stellar
Strength in net interest margin was the big surprise. We expect margins to fall in FY14 on lower hedging gains, less support from basis risk and fading mortgage repricing benefits. The group highlighted a ~2.5% step-up in operating costs in FY14, from software amortisation, regulatory spend and pension accounting changes. We expect the 2H13 bad debt charge (17bp of loans) will mark the trough for CBA this cycle, and the bank remains cautious on the economic backdrop.
All of the banks should benefit from the mortgage repricing, easing funding pressures and hedge gains that boosted CBAs result. CBA was the first of the big four to concede that a D-SIB capital surcharge is likely to be launched, which we think will eventually lift target capital ratios above 9.00% and cut sector ROEs by 2%.
Premium too great
Despite beating consensus forecasts, we think that the three big drivers of CBA's 2H13 earnings beat higher margins, strong markets revenue and a benign credit quality outlook - are sector-wide trends. Therefore, we remain cautious on CBA in light of its 19% PE premium to peers (IBES cons). CBAs current P/NTA multiple of 3.6x far outstrips the 2.7x we think is justified by its 24% ROTE.
CBA Results comparison

Is Earnings changes Average interest earnings assets Net interest margin Net interest income Other operating income Total revenue Operating expenses Underlying earnings Bad and doubtful debt expense Pre-tax earnings Tax, OEIs and preference dividends Cash earnings Dilutive adjustments Diluted shares on issue Cash earnings per share (c) Dividends per share (c) FY13A 2.13% 13,944 7,555 21,499 -9,605 11,894 -1,082 10,812 -3,033 7,779 193 1,692 471.2 364 FY14F 2.11% 14,430 8,023 22,453 -10,128 12,325 -1,200 11,125 -3,149 7,976 196 1,699 481.1 373 FY15F 2.09% 14,967 8,581 23,548 -10,558 12,991 -1,305 11,685 -3,304 8,381 196 1,703 503.7 391 FY13A 2.10% 13,771 7,513 21,284 -9,529 11,754 -1,176 10,578 -2,999 7,579 190 1,693 458.8 359 Was FY14F 2.07% 14,141 7,992 22,133 -9,908 12,225 -1,253 10,972 -3,108 7,864 190 1,708 471.5 370 FY15F 2.06% 14,665 8,550 23,215 -10,330 12,885 -1,322 11,564 -3,273 8,291 190 1,715 494.4 390 % change FY13A -0.3% 1.6% 1.3% 0.6% 1.0% 0.8% 1.2% -8.0% 2.2% 1.1% 2.6% 1.6% -0.1% 2.7% 1.4% FY14F 0.1% 1.9% 2.0% 0.4% 1.4% 2.2% 0.8% -4.3% 1.4% 1.3% 1.4% 3.2% -0.6% 2.0% 0.8% FY15F Comment 0.2% Momentum improving 1.9% Good result 2.1% Upgrades 0.4% Lending fees stronger 1.4% Upgrades 2.2% 45.1% FY14F C/I 0.8% Upgrades -1.2% FY14F BDDs/Loans 21bps 1.1% Upgrades 1.0% Tax rate = 27.8% 1.1% Upgrades 3.2% -0.7% 1.9% Upgrades 0.3% Payout ~75%
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
653,673 682,508 714,779 655,592 681,569 713,584
Page 9
Financial Services - OthersAustralia

August 14, 2013
Computershare
CPU AU / CPU.AX Current A$9.75 A$9.50 A$9.90 -2.5%
Conviction| |
RESULTS NOTE
US$4,941m
A$5,423m
Market Cap
US$22.38m
A$25.19m
Avg Daily Turnover
100.0%
Free Float
555.0 m shares
CIMB Analyst(s)
Still cant get no corporate action

CPUs 1H13 result was broadly in line with market expectations but FY14 guidance for 5% EPS growth disappointed. While margin income and FX will impact earnings into next year, we still find it hard to get comfort on the current level of underlying earnings deterioration experienced by CPU.
Overall, it was hard to see many positives in todays result ex balance sheet strengthening and strong growth in the recently-acquired SLS business. We downgrade FY14F EPS by 9%, reflecting lower management guidance on the back of a continuing difficult operating environment. We have lowered our DCF-based target price to A$9.50 and maintain a Neutral rating.
Richard COLES
Key takeaways
T (61) 2 9694 6064 E richard.coles@cimb.com
Michael LEONARD
T (61) 2 9694 6063 E michael.leonard@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders CJ Morris CSAM Janus 1M -8 -4.3 3M -7.6 -8.8 12M 0.8 21 % held 9.6 7.7 6.1
Result key elements
CPU's FY13 management EPS of US54.85cps was up 11.7% on the pcp but slightly below our expectations. The EBITDA margin of 25.2% was flat on the prior year, but the implied 2H13 margin of 25.9% was up on the 24.4% in 1H13. Below-the-line items were again a significant feature of the result, with CPU booking US$44m of losses on disposal of businesses. FY14 guidance for around 5% EPS growth was below Bloomberg consensus expectations for c10% growth, with margin income declines and a higher USD the main impacts.
Our key takeaways were: 1) Guidance was the key disappointment. Given Shareowner Services synergies will provide 10% EPS growth into FY14, the 5% growth guidance figure suggests further underlying earnings deterioration; 2) Intensifying registry competition, in particular in the US and Canada. Other areas of weakness being the transactional environment (particularly in HK), US bankruptcy administration and Canadian operations; 3) Business disposals US$44m booked below the line this half, with potential for further asset sales in our view; and 5) Broader positives SLS doubling its revenue and CPUs balance sheet strengthening with net debt/EBITDA falling to 2.47x.
CPU continues to face a difficult operating environment, with underlying earnings still under pressure. With no clear change likely in the macro environment we see the stock as fully valued on 15.5x FY14 PE.
Maintain Neutral
Results comparison FYE Jun (A$m) FY13 FY13 Variance (actual) (f'cast) (%) Revenue 2,025 2,062 (1.80) Operating costs 1,515 -1,541 nmf EBITDA 510 521 (2.14) EBITDA margin (%) 25.17 25.26 Depn & amort -150 -140 (7.42) EBIT 359 381 (5.65) Net Interest expense -67 -64 (4.44) Other non operating income/(Expense) 0 0 nmf Associates contrib 0 0 nmf Pre-tax profit 293 317 (7.68) Normalised Tax 16 -5 nmf Tax rate (%) -5.33 1.65 Minority interests -4 -3 (10.24) Net profit 305 309 (1.23) Exceptionals -148 -100 (47.85) Reported net profit 157 209 (24.75) EPS (cts) 0.55 0.55 (0.78) DPS (cts) 0.28 0.28 FY12 (actual) 1,819 -1,360 459 25.23 -122 337 -48 0 0 289 -13 4.40 -3 273 -116 156 0.49 0.28 % chg yoy 11.33 nmf 11.08 (23.32) 6.65 (37.95) (100.00) nmf 1.42 nmf (10.24) 11.77 (27.12) 0.36 12.29 FY14F (new) 2,102 1,554 548 26.09 -130 418 -62 0 0 356 -28 7.90 -4 324 -118 206 0.58 0.30 FY14F (prev) 2,141 -1,575 566 26.43 -120 446 -60 0 0 386 -27 7.04 -3 356 -80 276 0.64 0.34 % chg (1.81) nmf (3.08) (8.66) (6.24) (4.10) nmf nmf (7.84) (3.35) (10.24) (8.87) (47.31) (25.17) (8.43) (11.76) Comments Weakness in registry maintenance and corp actions Well controlled Improved 2H13 margin as synergies accrue Slightly higher than expected
Benefits from significant benefit relating to abnormals Relatively in line Impacted by losses from asset sales Have lowered dividend forecasts in outer years
Page 10
Food & Beverages AUSTRALIA

August 14, 2013
Goodman Fielder
GFF AU / GFF.AX Current A$0.74 A$0.82 A$0.80 11.2%
Conviction| |
FY13 RESULTS NOTE

US$1,310m
A$1,437m
Market Cap
US$5.81m
A$6.19m
Avg Daily Turnover
100.0%
Free Float
1,956 m shares
CIMB Analyst(s)
Its all about DME now

Todays FY13 result marks the half-way point of Project Renaissance. Share price growth (to date) has been driven by delivery of A$51m in cumulative savings. The next leg of growth will now be determined by the effectiveness of DME investment in arresting volume declines.
Alexander BEER
T (61) 2 9694 6073 E alexander.beer@cimb.com
Daniel BROEREN
T (61) 2 9694 6072 E daniel.broeren@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Wilmar International Ellerston Capital Harris Associates LP 1M -3.7 0 3M -2.7 -3.9 12M 18.5 38.7 % held 10.0 9.0 6.0
We retain our Outperform rating and our SOTP DCF target price increases to A$0.82 (from A$0.80), reflecting a lower risk-free rate offset by a 3% downgrade to our FY14 EBIT forecast. GFF did not provide guidance for FY14, but confirmed that 1H14F EBIT will be in line with 2H13, suggesting EBIT growth will be weighted toward 2H14. While in isolation this would be a concern, we expect the bulk of FY14 EBIT uplift is largely de-risked given an increase in PL bread pricing (A$10m) and continued cost savings from Project renaissance (A$20m). Management highlighted a significant lift in DME will take place in 1H14, expected to drive revenue growth in both Fresh Baking and Grocery from 2H14. In Fresh Baking, Helgas and Wonder White TV advertising (TVC) (first in 3 years) and Freyas brand re-launch in the NZ market will make up the bulk of this spend. We expect a smaller DME uplift in Grocery via NPD & packaging improvements.
Fresh Baking opportunity
Fresh Baking should see solid FY14 EBIT growth aided by the recently renegotiated PL contract and the lion's share of A$37m Project Renaissance savings forecast this year. A substantial investment in TVC advertising in this category should generate a recovery of recent volume losses, but not until 2H14. A continuation of irrational price competition is the largest threat.
Risks in Dairy and Grocery
DME to accelerate in 1H14
A pricing solution is yet to be found for higher emerging input costs in Dairy. Intense retail competition in NZ has seen resistance from retailers, which may persist longer than expected. Volume contraction in the Grocery category remained steady at 10% over FY13, largely reflecting the success of PL in dressings. It appears the bulk of DME going forward is directed to Fresh Baking, suggesting Grocery volumes may remain under pressure.
FYE Jun (A$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)
FY13 (actual) 2,128 -1,880 248 11.66 -66 182 -67 0 0 115 -35 30.71 -7 73 27 99.4 3.71 3.00
FY13 Variance (f'cast) (%) 2,232 (4.69) -1,978 4.99 254 (2.35) 11.38 -65 (1.54) 189 (3.67) -64 (4.68) 0 nmf 0 nmf 125 (7.96) -34 (4.67) 27.00 -7 (4.29) 84 (14.03) 18 53.14 102 (2.50) 4.32 (14.03) 1.68 78.08
FY12 (actual) 2,514 -2,214 300 11.93 -67 233 -90 0 0 143 -40 27.62 -7 97 -243 -146.9 5.49 0.00
% chg yoy (15.36) 15.10 (17.21) 1.50 (21.71) 25.42 nmf nmf (19.38) 10.38 (4.29) (24.78) nmf nmf (32.43) nmf
FY14F (new) 2,158 -1,888 271 12.54 -62 208 -60 0 0 148 -42 28.29 -7 99 0 99.0 5.06 3.29
FY14F % chg (prev) 2,255 (4.31) -1,976 4.47 279 (3.16) 12.39 -64 2.93 215 (3.23) -51 (17.80) 0 100.00 0 nmf 164 (9.73) -46 8.32 27.86 -7 (4.29) 112 (11.19) 0 nmf 112 (11.19) 5.70 (11.19) 4.56 (27.84)
Comments Limited pricing in Fresh Baking and Grocery
Guidance indicates EBIT growth weighted to 2H
Tax rate to c29%
Page 11
ConstructionAustralia
August 14, 2013
Leighton Holdings
LEI AU / LEI.AX Current A$16.24 A$17.33 A$19.54 6.7%
Conviction| |
1H13 RESULTS NOTE

US$4,990m
A$5,477m
Market Cap
US$32.24m
A$34.76m
Avg Daily Turnover
43.6%
Free Float
307.1m shares
CIMB Analyst(s)
A$1.1bn 2H13 cash flow, in theory

In our view LEIs share price performance over the next six months rests entirely on its ability to collect its targeted A$500m of underclaims. Successfully collected, they will reduce gearing and prove todays 1H13 profit number to be correct. However, given their leverage, if they are not collected we believe LEI will significantly miss guidance.
We have retained our previous operating assumptions, but lowered our FY13 NPAT forecast by 3.5% to A$510.2m due to higher net interest expense. Our blended target price falls from A$19.54 to A$17.33 due partly to earnings revisions, but predominantly to a discount attached to the risk of underclaim collection in 2H13. We maintain Underperform. If LEI is successful in collecting A$500m in underclaims and has sufficient operating cash flow to achieve its expected minimum A$265m UNPAT, then 2H13 operating cash flow should be cA$1.1bn. The underclaim collection would also have a significant impact on gearing with the full effect being worth 9ppt, on our estimates. It would also have a meaningful impact on the P&L. We expand on this idea later in this report, but the impact would be a drop through to the bottom line (ex tax).
% chg FY13F FY13F yoy (new) (prev) 3.8 23439.2 23439.2 0.2 -21549.5 -21549.5 57.9 1889.7 1889.7 8.1 8.1 -100.0 -1034.7 -1037.3 92.1 855.0 852.4 20.3 -141.0 -112.5 nmf 0.0 0.0 nmf 0.0 0.0 nmf 714.0 739.9 -220.0 -196.8 -204.7 27.6 27.7 nmf -7.0 -7.0 nmf 510.2 528.2 nmf 0.0 0.0 nmf 510.2 528.2 nmf 151.6 157.0 nmf 88.0 91.5
Andrew HODGE Liam CUMMINS
T (61) 2 9694 6080 E andrew.hodge@cimb.com T (61) 2 9694 6082 E liam.cummins@cimb.com
Environment still tough
Share price info

Share price perf. (%) Relative Absolute Major shareholders Hochtief Ltd 1M -14.2 -10.5 3M -15.4 -16.6 12M -26.9 -6.7 % held 56.4
Huge 2H13 cash flow
Apart from the collections issue, the environment remains very difficult. We do not believe reduced resources or government-related spending will reverse to any great extent in the next 12 months. Although LEI has only 20% work to be won for FY14 flat revenue, we believe this figure has some risk. This is not the time in the cycle to own contractors. We believe this down-cycle could last for several years, and it is only nine months old.
Still too early and too risky
We retain our Underperform recommendation given our concerns around the groups ability to fully collect revenues that have already been recognised. Even in the event we are wrong on this issue, LEI is trading on 10x one-year-forward PE, compared to DOW on 8x, where DOW has a better investment metrics across every measure, in our view.
Results comparison Results comparison 1H13 1H13 Variance 1H12 (actual) (f'cast) (%) (actual) Revenue 11484.9 11210.8 2.4 11068.0 Operating costs -10287.9 -10288.5 0.0 -10310.0 EBITDA 1197.0 922.3 29.8 758.0 EBITDA margin (%) 10.4 8.2 6.8 Depn & amort 0.0 502.7 -100.0 529.0 EBIT 440.0 419.6 4.9 229.0 Net Interest expense 111.9 79.1 41.4 93.0 Other non operating income/(Expense) 0.0 0.0 nmf Associates contrib 349.0 0.0 nmf 43.0 Pre-tax profit 349.0 340.5 2.5 136.0 Tax -96.0 -94.2 -1.9 -30.0 Tax rate (%) 27.5 27.7 22.1 Minority interests 2.0 -2.5 nmf Net profit 255.0 243.8 4.6 115.0 Exceptionals 111.0 0.0 nmf Reported net profit 366.0 243.8 50.1 EPS (cts) 108.6 70.0 55.1 34.0 DPS (cts) 45.0 40.0 12.5 20.0 FYE Dec (A$m) % chg 0.25 0.31 (25.35) nmf nmf (3.50) 3.85 (3.41) nmf (3.41) (3.41) (3.83) Comments
Higher net debt saw a surprise on net interest
Telco sale assisted reported NPAT
Page 12
MiningAustralia
August 14, 2013
OZ Minerals
OZL AU / OZL.AX Current A$4.21 A$6.30 A$7.20 49.6%
Conviction| |
FY13 RESULTS NOTE

US$1,164m
A$1,278m
Market Cap
US$13.90m
A$14.88m
Avg Daily Turnover
100.0%
Free Float
303.5m shares
CIMB Analyst(s)
Positive cash flow returns in 2014

Oz Minerals 1HCY13 underlying loss of A$36m was overshadowed by higher-than-expected cash outflows driven largely by high ongoing pre-strip requirements and project capital commitments. While we estimate further cash outflows in 2H13, we believe increasing mined grades and lower capital should return Oz to cash positive in 2014.
We have pushed through higher unit operating costs and near-term pre-strip requirements, which, along with 1HCY13 adjustments, have decreased our NPV-based target price to A$6.30ps (previously A$7.20ps). We have changed our CY13F and CY14F earnings estimates (see Figure 3) to reflect changes in assumed capitalised waste expenditure. Given Prominent Hill had planned to mine a strip ratio substantially higher than the life-of-mine (LOM) average in 2013, we expected a large pre-strip would capital outlay throughout the year. The company expects the higher strip ratio required in 2HCY13 will lead to a deferred stripping capital cost of A$180m in 2HCY13 compared to A$112m in 1HCY12, bringing the CY13 total to A$292m. However, we expect this to fall to A$118m in CY14 and zero from CY15 onwards as the remaining strip ratio moves below the LOM average.
1H13 Variance 1H12 % chg yoy (f'cast) (%) (actual) 361.4 (3.27) 521.2 (32.92) -308.0 2.72 -317.2 5.55 53.4 (6.40) 204.0 (75.49) 14.8 39.1 -108.7 (2.16) -74.1 (49.80) -55.2 (10.43) 129.9 (146.96) 10.2 (51.79) 11.4 (57.02) 0.0 nmf 0.0 nmf 0.0 nmf 0.0 nmf -45.1 (24.47) 141.3 (139.70) 13.5 47.91 -42.8 nmf 30.0 30.3 0.0 nmf 0.0 nmf -31.6 (14.42) 98.5 (136.65) 0.0 nmf 21.0 (1,204.29) -31.6 (749.42) 119.5 (324.27) -10.40 (14.53) 32.35 (136.81) 15.00 (33.33) 19.41 (48.48) FY13F (new) 735.3 -610 125.6 17.08 -211 -85.40 10.87 0.0 0.00 -74.5 25.53 34.25 0.00 -49.0 -231.9 -280.9 -16.15 15.00 FY13F (prev) 762.1 -685 76.84 10.08 -209 -131.81 19.92 0.0 0.00 -111.9 33.57 30.00 0.00 -78.3 0.0 -78.3 -25.81 20.00
Michael EVANS Amit RAMDEV
T (61) 2 9694 6090 E michael.evans@cimb.com T (61) 2 9694 6093 E amit.ramdev@cimb.com
The known unknowns
Share price info

Share price perf. (%) Relative Absolute Major shareholders M&G Group Blackrock Investments BAML 1M -2.3 1.4 3M 1.2 0 12M -67.1 -46.9 % held 16.9 7.7 7.1
Despite our understanding of cash flows around the Prominent Hill open cut, capital expenditure over the next few years will be dependent on the successful outcomes of both the Carrapateena pre-feasibility study, due in early 2014, and whether the Malu underground resource, due in late 2013, is a viable mining option.
The known knowns
Notwithstanding the uncertainty around investment expenditure over the next two years and its potential to limit free cash flows, we believe Oz Minerals has appealing flexibility to either develop brown and/or greenfield projects in Malu and Carrapateena, respectively, make acquisitions or return more to shareholders over the medium term. A strategic sell-down in Carrapateena in 2014 could be the catalyst Oz Minerals needs.
Optionality remains appealing
Results comparison 1H13 (actual) Revenue 349.6 Operating costs -299.6 EBITDA 50.0 EBITDA margin (%) 14.3 Depn & amort -111.0 EBIT -61.0 Net Interest expense 4.9 Other non operating income/(Expense) 0.0 Associates contrib 0.0 Pre-tax profit -56.1 Tax 20.0 Tax rate (%) 35.7 Minority interests 0.0 Net profit -36.1 Exceptionals -231.9 Reported net profit -268.0 EPS (cts) -11.91 DPS (cts) 10.00 FYE Dec (A$m) % chg (3.52) 11.03 63.45 (1.12) 35.21 (45.41) nmf nmf 33.39 (23.95) nmf 37.44 nmf (258.64) 37.44 (25.00) Comments Provisional pricing creates the difference EBITDA includes A$32.1m forex gain
Writedown relating to Prominent Hill assets
Page 13
Medical Equipment & SvsAustralia

August 14, 2013
Primary Health Care

PRY AU / PRY.AX Current A$5.14 A$5.71 A$5.76 11.1%
Conviction| |
FY13 RESULTS NOTE

US$2,365m
A$2,590m
Market Cap
US$10.15m
A$10.80m
Avg Daily Turnover
86.4%
Free Float
492.1 m shares
CIMB Analyst(s)
Strength continues
We view the FY13 result as solid, with a strong operational performance and margin uplift across the main divisions, improving cash flow and a strengthening balance sheet. We believe the momentum will continue and we see upside potential to FY14 EBITDA guidance of A$395-410m.
We modestly lower our FY14-16F NPAT estimates up to 1.6% to account mainly for higher D&A, with our DCF/PE/SOP-based target price decreasing to A$5.71. We maintain our Outperform recommendation. We remain encouraged by the continued EBITDA margin expansion across the main divisions including: Medical centres (80bps to 56%) on stable GP acquisition costs and strong growth in non-GP revenue growth; Pathology (80bp to 17.7%) on solid underlying growth (6.3%), despite a 1.3% funding cut with the MOU, efficiency gains and stabilised rents; and Imaging (400bp to 23.3%) on a 5% increase in billing and continued adoption of a fee-for-service billing model (50-60% radiologists transitioned). We believe momentum is sustainable, with shares supported by a forward EV/EBITDA of 8.8x (versus 8.4x long-term average) and a PER of 1.05x (a 5% discount to SHL), with a three-year EPS CAGR of 9.5% and improving FCF/dividend yields.
Dr Derek JELLINEK
T (61) 2 9694 6074 E derek.jellinek@cimb.com
Margin gains continue
Share price info

Share price perf. (%) Relative Absolute Major shareholders Commonwealth Bank of Australia Caledonia Investments Ltd Dr E Bateman 1M 0.6 4.3 3M 3.4 2.2 12M 46.1 66.3 % held 8.6 8.4 7.4
A quality result
We believe FY13 earnings showed a strong operational performance, with net profit increasing 28.7% to A$150.1m, EBITDA of A$385.1m (+9.7% yoy), with margins expanding 120bp to 26.4%, and revenues of A$1,456m (+4.6% yoy). Cash conversion remains strong (101%), with operating cash flow increasing 18% yoy to A$269m, FCF at an all-time high (A$194.5m, +30% yoy), which helped to support an 83% increase in the fully franked dividend (11cps; 60% 2H payout ratio), and the balance sheet continues to strengthen (ND/ND+E of 27.9% (-130bps yoy). We believe FY14 EBITDA guidance of A$395-410m and EPS growth of 7-13% may prove conservative.
We remain buyers
Results comparison FYE Jun (A$m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort EBIT Interest expense Interest & invt income Associates contrib Exceptionals Pre-tax profit Tax Tax rate (%) Minority interests Net profit Core net profit EPS (cts) Core EPS (cts) FY13 (actual) 1,456.3 -1,071.2 385.1 26.4 -91.6 294.4 -72.0 0.0 -5 0 217.9 -65.9 30.2 -2 150.1 150.1 29.9 29.9 FY13 Variance (f'cast) (%) 1,483 (1.8) -1,096.3 (2.3) 386.6 (0.4) 26.1 -90.7 (1.0) 295.9 (0.5) -69.7 3.3 0.3 (100.0) -5 (0.6) 0 nmf 222.0 (1.8) -66.0 0.3 29.8 -3 nmf 152.8 (1.7) 152.8 (1.7) 30.45 (2.0) 30.45 (2.0) FY12 (actual) 1,392.1 -1,041.0 351.1 25.2 -85.9 265.2 -82.0 0.0 -6 0 176.9 -52.1 29.4 -2 116.6 122.5 23.3 24.5 % chg yoy 4.6 (2.3) 9.7 (6.7) 11.0 12.2 nmf nmf nmf 23.1 (26.4) nmf 28.7 22.5 28.1 21.8 FY14F (new) 1,530.5 -1,122.9 407.6 26.6 -97.2 310.3 -69.1 0.8 -5 0 236.9 -70.5 29.8 -2 164.4 164.4 32.8 32.8 FY14F (prev) 1,569.0 -1,157.0 412.0 26.3 -96.0 316.0 -68.44 0.4 -5 0 242.7 -72.2 29.8 -3 167.1 167.1 33.3 33.3 % chg (2.5) (3.0) (1.1) 1.3 (1.8) 0.9 (0.6) nmf (2.4) 2.4 nmf (1.6) (1.6) (1.6) (1.6) Comments Slighly lower than expectations Lower opex Amortisation (+15% yoy) Net debt A$1,041m
Lower FX gains, softer sound processor upgrades In-line with expectations In-line with expectations
Page 14
Services - Infrastructure AUSTRALIA

August 14, 2013
SAI Global
SAI AU / SAI.AX Current A$4.04 A$4.62 A$3.94 14.3%
Conviction| |
FY13 RESULTS NOTE

US$771.1m
A$846.2m
Market Cap
US$3.14m
A$3.42m
Avg Daily Turnover
99.5%
Free Float
209.4 m shares
CIMB Analyst(s)
Downgrade cycle ending?

After a sustained period of operating underperformance, we believe the stock has finally reached an inflexion point. While there is still work to do, we believe newsflow from this point will be more positive than negative and earnings risks have now moved to the upside.
Julian GUIDO Tim PLUMBE
T (61) 2 9694 6085 E julian.guido@cimb.com T (61) 2 9694 6086 E tim.plumbe@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
Therefore, we upgrade our rating to Outperform. Our thesis is supported by: 1) a slight beat in the FY13 result (versus six downgrades in 18 months), 2) improving 4Q13 trends for two of SAI's three divisions, 3) weak FY14 results for Compliance now well-known, and 4) the expected impairment now complete. We lift normalised FY14F EPS by 4% and our blended (PE/DCF) target price t0 A$4.62ps. The key feature of the result was the improving trends evident in the 2H13. Property Services was a standout with FY13 EBITDA up 21% (1H13 -14%). However, the Standards business also showed solid improvement with FY13 EBITDA up 5% (flat in 1H13). Assurance showed the usual 2H seasonal margin improvement (+2%), although we were more encouraged by 4Q sales trends returning to growth. Compliance was weak, but importantly not weaker than our expectations. Furthermore, the
business has now shown stable customer renewal rates for six months.
FY14 growth drivers
Share price info

Share price perf. (%) Relative Absolute Major shareholders CBA Perpetual Northcape 1M 0.7 4.4 3M -0.8 -2 12M -26.5 -6.3 % held 13.8 13.1 6.4
2H13 trends improving
We forecast 10% EBITDA growth in FY14, from A$104m to A$114m. The biggest driver is Property Services (full year from contracts ramp-up) followed by FX gains, but also including modest growth in Assurance and Standards following improving trends. However, we also allow for weaker results in Compliance (EBITDA -9%).
Valuation undemanding
Despite the recent rally, SAI is only trading on a 7% PE premium to the Small Industrials, well below its average of 20% and peak of 30%. Relative to offshore comps, SAIs 9x EBITDA multiple represents a 27% discount compared with a 18% discount a year ago, highlighting increasing appeal versus global Publishing and Certification peers.
Results comparison
FYE Jun (A$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)
FY13 (actual) 479.2 -375 104 21.65 -32 71.4 -14 0 0 58 -15 26.58 0 42 -86 -43.2 24.40 15.00
FY13 Variance (f'cast) (%) 485.9 (1.38) -385 2.41 101 2.55 20.82 -33 1.34 68.4 4.41 -13 (2.80) 0 (22.50) 0 (26.00) 55 4.70 -14 (11.37) 24.99 0 28.87 41 2.66 0 nmf 41.3 (204.79) 23.86 2.26 15.00 -
FY12 (actual) 451.8 -353 99.0 21.91 -26 72.7 -14 0 0 59 -14 24.30 0 45 -2 42.4 26.38 15.00
% chg yoy 6.05 (6.40) 4.79 (22.78) (1.72) (0.46) nmf (23.97) (2.20) (6.98) 28.87 (5.15) (3,622) (202.0) (7.50) -
FY14F (new) 525.3 -411 114 21.68 -37 77.0 -11 0 0 66 -17 26.59 0 48 0 48.2 27.03 15.40
FY14F % chg (prev) 513.5 2.31 -406 (1.35) 108 5.95 20.94 -34 (7.93) 73.3 5.03 -12 8.24 0 (131.82) 0 (52.00) 61 7.52 -16 (7.89) 26.50 0 28.87 45 7.59 0 nmf 44.8 7.57 26.09 3.60 15.40 -
Comments 3.4% of growth attributable to organic growth In line with guidance; 3.6% of growth acq related Strong 2H13 margin of 22.6% vs. 19.9% in 1H13
Higher quality tax rate In line with guidance of A$40.5m-44m A$86m impairment in Compliance division
In line with targeted > 60% payout ratio

Page 15
Media - Integrated AUSTRALIA

August 14, 2013
STW Group
SGN AU / SGN.AX Current A$1.51 A$1.62 A$1.63 7.5%
Conviction| |
1HFY13 RESULTS NOTE

US$553.8m
A$607.8m
Market Cap
US$1.23m
A$1.33m
Avg Daily Turnover
81.0%
Free Float
397.6 m shares
CIMB Analyst(s)
A believable 2H story
While the interim result was behind expectations, the drivers of the miss have been well articulated and, more importantly, rectified. While SGN requires a strong 2H to achieve guidance, the implied 2H result is consistent with historical seasonality and is underpinned by contract wins and acquisitions.
We have made marginal (-1-2%) changes to our EPS forecasts, with our yield-based target price falling 1c to A$1.62. While acknowledging the stock has performed well (up 35% ytd), it still offers a 5.9% (fully-franked) yield in CY13, which compares favourably to the CIMB Small Industrials average of 4.2%. We maintain our Outperform rating. Operating NPAT of A$19.3m was 6% below our expectations. The modest miss was driven by: 1) issues at three separate businesses (which have now been resolved), 2) the delay in finalising a minor acquisition in the Research space, and 3) the carrying of upfront costs to support the significant tendering activity in the 2Q. In addition, while cash flow of A$7m was weaker than our estimate of A$23m, this was impacted by a number of customer-specific working capital issues that should unwind in the 2H. Given the miss at the NPAT level, the interim dividend of 3.3cps was behind our estimate but consistent with a 70% payout ratio.
Matthew NICHOLAS Julian GUIDO Tim PLUMBE
T (61) 2 9694 6087 E matthew.nicholas@cimb.com T (61) 2 9694 6085 E julian.guido@cimb.com T (61) 2 9694 6086 E tim.plumbe@cimb.com
Required 2H is achievable
Brewin KWONG
T (61) 2 9694 6088 E brewin.kwong@cimb.com
1H softer than expected
Share price info

Share price perf. (%) Relative Absolute Major shareholders Cavendish Square Holdings Perpetual Eley Griffiths Group 1M -8.5 -4.8 3M 2.2 1 12M 25.2 45.4 % held 18.6 8.1 5.1
Management maintained guidance for 15% NPAT growth. This implies a 38/62 split at the NPAT level (broadly similar to SGNs long-term average of a 40/60 skew). We see scope for a stronger-than-normal 2H through: 1) benefits from new contract wins late in 1H, 2) finalisation of the Research acquisition, and 3) tailwinds from the federal election (which management has not factored in).
Yield will provide support
Given our view that a stronger 2H will be achieved (consistent with previous years), SGN offers a reliable 5.9% fully franked yield in CY13. We maintain our Outperform rating, also noting managements track record in leveraging a flexible cost base should conditions not materialise as expected.
Results comparison FYE Dec (A$m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort EBIT Net Interest expense Pre-tax profit Tax Tax rate (%) Net profit Exceptionals Reported net profit EPS (cts) DPS (cts) 1H13 (actual) 176.0 -140 35.70 20.28 -4 31.70 -4.70 27.00 -7.70 28.52 19.30 -0.60 18.70 4.85 3.30 1H13 Variance 1H12 (f'cast) (%) (actual) 185.5 (5.14) 163.2 -147 4.81 -130 38.15 (6.42) 33.40 20.56 20.47 4 (190.91) -4 33.75 (6.08) 29.40 -4.35 (8.05) -3.90 29.40 (8.16) 25.50 -8.82 12.70 -7.50 30.00 29.41 20.58 (6.22) 18.00 0.00 nmf 20.58 (9.14) 18.00 5.17 (6.27) 5.04 3.6 (8.89) 3.30 % chg yoy 7.84 (8.09) 6.89 7.82 (20.51) 5.88 (2.67) 7.22 nmf 3.89 (3.77) FY13F (new) 395.9 -308 87.81 22.18 -9 79.11 -9.06 70.05 -19.96 28.50 50.09 0.00 12.60 8.82 FY13F (prev) 403.1 -313 89.77 22.27 -9 80.89 -8.53 72.36 -21.35 29.50 51.01 0.00 12.83 8.98 % chg (1.78) 1.66 (2.18) 1.96 (2.20) (6.23) (3.19) 6.48 (1.82) nmf nmf (1.82) (1.82) Comments Impacted by delay in expected acquisition Underperformance by 3 businesses
Lower tax rate given offshore earnings
In line with stated 70% payout ratio
Page 16
AirportsAustralia
August 14, 2013
Sydney Airport
SYD AU / SYD.AX Current A$3.60 A$3.83 A$3.49 6.3%
Conviction| |
FLASH NOTE
US$6,105m
A$6,700m
Market Cap
US$19.67m
A$20.91m
Avg Daily Turnover
77.6%
Free Float
1,861 m shares
CIMB Analyst(s)
Ringing in the changes

We believe that by simplifying its structure and settling the ATO tax dispute, SYD is now a more attractive investment opportunity for potential investors. Additionally, with foreign ownership at multi-year lows, we see a potentially large base of incremental buyers.
Michael NEWBOLD, CFA Alexander LU
T (61) 2 9694 6066 E michael.newbold@cimb.com T (61) 2 9694 6096 E alex.lu@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Macquarie Bank Unisuper FMR LLC & FIL 1M -1.7 2 3M 1.6 0.6 12M -1.6 18.8 % held 22.4 6.3 6.0
With a key risk to ongoing cash flow now behind it and a robust growth outlook, SYD has increased its appeal, in our view. With the stock trading on a best-in-sector 6.3% FY13F yield, we upgrade SYD to Outperform. Our DCF-based target price increases to A$3.83 (from A$3.49) reflecting minor changes to our earnings forecasts.
What We Think
What Happened
SYD announced a number of initiatives today, each of which was positive for the overall story. These included: 1) moving to 100% ownership of Sydney Airport by issuing equity and acquiring minority interests; 2) settling the ATO tax issue at a total cost of A$69m, which was less than the potential liability under the original position paper (which only included 28% of Group RPS); and 3) simplification of the corporate structure enabling the foreign ownership cap to be lifted from 40% to 49%. SYD also confirmed FY13 distribution guidance of 22.5cps with the 1H13 distribution to be covered by net operating receipts.
We believe that simplification of the structure and removal of the tax issue is net positive for the stock. Structural simplification improves transparency and allows SYD to raise the current foreign ownership cap from 40% to 49% (and potentially free up the current register and get new investors on board). Resolution of the tax issue could also increase offshore interest with SYD likely to continue paying unfranked distributions over the medium term and foreign ownership is at historic lows. Foreign ownership has dipped from 36.7% in December 2012 to 29.6% last reported (May 2013), the lowest level since pre-2005 on our records. We upgrade our rating to Outperform. While SYD is trading in line with recent average 16x FY13F EV/EBITDA, it is still offering a best-in-sector 6.3% FY13F yield, with a three-year DPS CAGR of 6.3% in a declining interest rate environment and a 12-month TSR of 13%.
What You Should Do
Price Close 3.9 3.7
Relative to S&P/ASX 200 (RHS) 115 112 108 105 101 98 94 91 87 84 80
Financial Summary
Revenue (A$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) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Dec-11A 973 712.4 (239.9) 0.065 (4.5%) 55.16 0.21 5.83% 17.73 3.48 238% 2.92 3.36% Dec-12A 1,038 833.2 179.2 0.096 47.5% 37.39 0.21 5.83% 15.34 NA 283% 3.27 8.25% Dec-13F 1,094 879.2 21.1 0.065 (32.6%) 55.51 0.23 6.25% 15.29 18.16 221% 2.75 5.20% (2.76%) 0.74 Dec-14F 1,158 934.8 159.6 0.073 12.0% 49.57 0.24 6.67% 15.48 16.95 217% 2.62 5.41% 4.15% 0.73 Dec-15F 1,225 992.3 192.7 0.087 20.3% 41.19 0.26 7.08% 14.88 15.77 212% 2.47 6.16% 3.12% 0.74
3.5
3.3
3.1
40 2.9 30 20 10
Aug-12 Nov-12 Source: Bloomberg Feb-13 May-13
Vol m
52-week share price range

3.05
3.60
3.82
Current
Target
3.83
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 17
Oil & Gas - Equipment & SvsAustralia

August 14, 2013
WorleyParsons
WOR AU / WOR.AX Current A$22.65 A$23.17 A$26.10 2.3%
Conviction| |
FY13 RESULTS NOTE

US$5,025m
A$5,514m
Market Cap
US$25.99m
A$27.91m
Avg Daily Turnover
82.0%
Free Float
245.7m shares
CIMB Analyst(s)
Not yet
WORs FY13 result was in line with its recently downgraded guidance, but importantly was clean and demonstrated good operating cash flow. We believe the hydrocarbon cycle has several years to run but in our view WOR currently does not offer an attractive entry price for its likely earnings profile over the next 12 months.
Our FY14 NPAT forecast of A$351.8m represents 9% growth. Although on paper WOR should have little trouble achieving this figure given the benefit of two acquisitions, a falling AUD and lower restructuring costs, we still see the environment as somewhat difficult. Our A$23.17 target price reflects our view of WOR as a stronger operator within its sector and a belief the hydrocarbon cycle has at least several years to run. However, our Neutral rating is a function of this already being priced in and our view that any upside earnings surprise in the next 12 months is highly unlikely. Once again the Hydrocarbon result was the cornerstone of the company performance. Although we are of the view that resources-related capex has turned with the commodity cycle downturn, we view the global hydrocarbon cycle as still having a multi-year upswing and expect WOR to benefit from this growth in demand over the next several years. We still see difficult operating conditions for areas related to resources. We believe this will continue to hold WOR back from providing upside earnings surprise in the next 12-24 months. We noted under our previous coverage that we expected WOR to improve its margin, but highlighted FY08 margins were unrealistic for the foreseeable future. This is because FY08 margins represented a culmination of events that are very unlikely to be replicated for some time, and while they technically peak margins, in our view they should instead be considered abnormal.
Andrew HODGE Liam CUMMINS
T (61) 2 9694 6080 E andrew.hodge@cimb.com T (61) 2 9694 6082 E liam.cummins@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Wilcai CBA 1M 1.6 5.3 3M -3.2 -4.4 12M -36.9 -16.7 % held 6.9 4.8
Margin improvement
Hydrocarbons remain key
Needs to be cheaper
We would be positive on WOR below A$20 or when non-hydrocarbon demand looks more positive or has at least stabilised on a sustained basis.
Results comparison
FYE Jun (A$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) FY13 (actual) 8,832 -8,220 612 6.93 -102 510 -59 0 23 474 -129 27.32 -22 339 0 322 136.4 92.50 FY13 (f'cast) 8,689 -8,113 576 6.63 -96 481 -45 0 36 472 -120 25.38 -23 329 0 329 132.8 93.00 Variance (%) 1.64 (1.31) 6.15 (6.65) 6.05 (33.30) nmf (35.62) 0.28 (7.94) 5.15 2.87 nmf (2.13) 2.76 (0.54) FY12 (actual) 7,408 -6,803 606 8.18 -103 503 -44 0 28 486 -117 24.13 -23 346 0 346 139.5 93.00 % chg yoy 19.21 (20.83) 1.02 0.68 1.37 (34.69) nmf (15.22) (2.59) (10.32) 5.15 (2.04) nmf (6.80) (2.17) (0.54) FY14F (new) 9,775 -9,121 654 6.69 -94 560 -69 0 25 516 -142 27.59 -22 370 0 352 148.8 92.00 FY14F (prev) 9,217 -8,600 618 6.70 -91 527 -45 0 39 521 -140 26.82 -23 358 0 358 144.4 98.00 % chg 6.05 (6.06) 5.88 (3.51) 6.29 (52.76) 40.00 (35.62) (0.88) (1.95) 5.15 3.25 nmf (1.71) 3.02 (6.12)
SOURCE: CIMB FORECASTS, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Comments WOR achieved record aggregated revenues
Underlying EBIT of A$527m was flat yoy
Page 18
August 14, 2013
AUSTRALIA
ECONOMIC UPDATE
CIMB Analyst(s)
Lowering our risk-free rate

We have lowered our risk-free rate from 5.5% to 4.25% and our analysts will implement the change during this reporting season. We retain our estimate of the equity risk premium (6.0%). We also lower our medium-term forecasts for the RBA target cash rate.
Shane LEE
T (61) 2 9694 6054 E shane.lee@cimb.com
Andrew TANG
T (61) 2 9694 6076 E andrew.tang@cimb.com
Rather than use a historical estimate of the 10-year bond yield, we will use our estimate of the neutral cash rate to discount company earnings. The real neutral cash rate is difficult to measure and estimate, but we think it is the best interest rate to use. At any point in time, the real neutral rate represents the general equilibrium level of the risk-free rate. We estimate that the real neutral cash rate is between 1.5% and 2.0%, or 4.0% and 4.5% in nominal terms. We identify a clear fall in the real neutral cash rate since the financial crisis and we dont expect it to reverse over the medium term.
The risk-free rate
My sense is that the appropriate interest rate for the economys circumstances is in fact the pretty low one we have, not because we face an emergency like we did back then but because we face some other forces of a more slowly evolving nature that combine to mean that the correct rate really is lower than it was a couple of years ago. So I am not uncomfortable with this setting of rates.
Glenn Stevens, RBA Governor
Implications for the RBA
The fall in the real neutral cash rate since the financial crisis has not only important implications for stock price valuations, but it also has important implications for monetary policy. As result of the fall in the real neutral rate, we have lowered our forecast for the cash rate at end-2014 from 3.0% to 2.75% and we have lowered our forecast for end-2015 from 3.75% to 3.25%. Our forecast for end-2013 is unchanged 2.25%, but the risk is that it falls beyond this level in the current cycle. The real cash rate is currently around 0.2% and this suggests that policy is working hard to support growth. Our economic growth forecasts are unchanged and we expect growth to average 2.5% in 2013 and 2.9% in 2014. In 2015 we currently expect growth to average 3.5%.
Despite a lower real neutral rate, policy is firmly supportive
We use a methodology outlined in a paper by the Norges Bank to estimate the real neutral rate. In the first instance we calculate a trend estimate of the real cash rate. We estimate that it has fallen from around 2.5% prior to the financial crisis to around 1.2%. We use a Taylor rule in another estimate and it suggests the real neutral rate is now around 2.5%, but also lower than it was prior to the financial crisis (3.3%). Our other estimate is made using a Kalman Filter and it suggests the real neutral rate is around 1.7% and down from 4% just prior to the financial crisis.
Estimating the real neutral rate
Factors affecting the real neutral rate
In this report, we identify a list of factors that have probably lowered the real neutral rate in recent years. Furthermore, we think these factors are likely to continue putting downward pressure on the real neutral rate. The decline in the terms of trade, population ageing and a weaker credit multiplier are likely to keep the real neutral rate under downward pressure. The prospect of a productivity improvement in the years ahead, in part due to rising resources exports, should offset these factors and put some upward pressure on the real neutral rate. The AUD depreciation that is underway will increase the return on goods and services sold overseas from Australias capital stock and also add to the upward pressure on the real neutral rate.
Page 19
CementTaiwan
August 14, 2013
Asia Cement
1102 TT / 1102.TW Current TWD37.45 TWD42.00 TWD42.00 12.1%
Conviction| |
FLASH NOTE
US$4,037m
TWD120,998m
Market Cap
US$4.55m
TWD136.4m
Avg Daily Turnover
70.0%
Free Float
3,231 m shares
CIMB Analyst(s)
Momentum in 2H13
We expect Asia Cement (ACC) to deliver strong earnings growth in China in 2H13 on aggressive capacity expansion, after a solid improvement in 2Q13. Non-cement businesses may post positive surprises, like the utility profit in 2Q13.
Andre CHANG, CFA Jack LIN
T (886) 2 8729 8372 E andre.chang@cimb.com T (886) 2 8729 8387 E jack.lin@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Far Eastern New Century Far Eastern Medical Foundation Yue Yuan Investment 1M 3.3 0 3M 3 -0.7 12M -8.9 -2.6 % held 22.3 5.4 5.2
ACCs 2Q13 EPS of NT$0.83 is better than Bloomberg consensus NT$0.65, though just slightly better than our NT$0.8 forecast. 1H13 EPS of NT$1.23 formed 53% of our original FY13 estimate. We cut FY13 earnings by 1% as we were too aggressive on its China profit, but raised FY14-15 earnings by 2-3% given the long-term outlook remains positive. We maintain Outperform and SOP-based target price NT$42. Catalysts include the capacity ramp-up and seasonal demand pick-up in China.
business and non-core investment income. We believe its 2H13 China profit will surge 84% hoh as it ramps up two new production lines in Jiangxi to boost its capacity by nearly 30%, and 2014 China profit should grow another 36%. We forecast its China gross profit per tonne to improve from Rmb46 in 1H13 to Rmb58 in 2H13. We also see upside potential to its utility profit, as we now still conservatively forecast its operating profit to drop by 35% yoy as TaiPower may ask it to cut ASP to reflect lower coal cost. We think ACC provides good growth, dividend and valuation. Its aggressive capacity expansion in China will be a unique story in 2H13. Our target price translates to 18x FY13 and 15x FY14 P/Es.
What We Think
What Happened
ACC reported net profit of NT$2,500m, up 106% qoq and 35% yoy. The growth is largely driven by the cement business, whose operating profit grew 401% qoq and 191% yoy. However, that number still came in 26% short of our forecast, as its China gross margin of 23.7% in 2Q13 was below our estimate of 27%. Luckily the gap was largely filled by the stronger profit from its utility
What You Should Do
Price Close 39.0 38.0 37.0 36.0 35.0 34.0 150 33.0
Vol m
Relative to TAIEX (RHS) 101 98 95 92 89 86 83
Financial Summary
Revenue (TWDm) Operating EBITDA (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) DPS (TWD) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Dec-11A 68,827 13,882 10,016 3.10 30.5% 11.73 2.30 6.14% 13.75 10.58 52.6% 1.40 12.1% Dec-12A 64,244 9,122 6,235 1.93 (37.8%) 19.41 1.70 4.54% 20.77 14.81 52.8% 1.43 7.3% Dec-13F 68,216 10,858 7,468 2.31 19.8% 16.20 1.80 4.81% 17.56 26.31 53.1% 1.40 8.7% (1.33%) 1.01 Dec-14F 75,444 12,495 8,946 2.77 19.8% 13.53 2.10 5.61% 15.12 14.18 50.3% 1.37 10.2% 3.18% 1.08 Dec-15F 76,957 13,182 9,265 2.87 3.6% 13.06 2.20 5.87% 14.03 10.86 45.5% 1.33 10.3% 2.27% 1.05
100 50

33.95
37.45
38.01
Current
Target
42.00
Page 20
Insurance - LifeTaiwan
August 14, 2013
Fubon Financial
Conviction| |
FLASH NOTE
US$14,071m
TWD421,623m
Market Cap
US$36.01m
TWD1,069m
Avg Daily Turnover
60.0%
Free Float
9,876 m shares
CIMB Analyst(s)
Outperformer
Fubon FHC has outperformed the TAIEX for more than 12 months, and it now trades at 1.2-1.3x FY13 P/BV (12-month range: 0.9-1.3x). The company remains among our top picks given its solid core banking operations and aggressive/effective expansion in China.
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 Tsai Family Taipei City Government 1M 3.3 0 3M 3.6 -0.1 12M 27.5 33.8 % held 35.0 14.1
Fubon FHCs 1H13 net profit was largely in line at 49% of our original FY13 forecast. We raise our FY13-14 earnings by 1-2% to factor in higher investment returns and assumptions for the life insurance arm. We maintain an Outperform with a lower SOP-based target price of NT$48.6 (1.5x FY13 P/BV). The China theme remains a key share price catalyst. In 1H13, Fubon FHC posted a 65% yoy earnings expansion, contributed by Taipei Fubon Bank (48%) and Fubon Life (51%). The banking arm saw its PPOP grow 24% yoy driven by net interest income (+3% yoy), share disposal gains (NT$984m), TMU income, and virtually zero credit costs, while the stop-selling effect dragged down bancassurance sales and total fees. The life insurers net profit grew by 582% yoy in 1H13 driven by investment income (+38% yoy) and lower overheads (-20% yoy). The annualised investment return closed at 4.2% (FY12: 4.0%) due to portfolio adjustments, while hedging costs inched up (76bp in 2Q13; 50bp in 1Q13) due to strong US$. Guidance is for investment returns to rise further
Financial Summary
Dec-11A 15,270 343,826 421,134 (1,060) 30,543 3.48 45.7% 11.85 1.00 2.43% 25.93 1.59 13.5%
the rest of the year given the sizable dividend income to be recognised. FYP dropped 44% yoy in 1H13 while it picked up in 2Q13 (+54% qoq), but we remain reserved about its new business margin expansion. We believe the banking arm will remain a key earnings driver, given sustained PPOP and contained credit costs. We expect the acquisition of First Sino Bank (FSB, scheduled to be completed in 3Q13) to enhance Fubon FHC's China presence, and FSB to immediately add 5% to the groups bottomline. We project Fubon FHCs net profit to grow by 6-28% yoy for FY13-15, assuming 1) total loans grow 8-9%; 2) NIMs range at 1.09-1.11%; and 3) net fees rise by 5-12% while credit costs trend down to 8bp from 29bp. We foresee the value of new business growing 13% and the embedded value 6% in FY13. We see further share upside for Fubon FHC given its diversified business model and the superior cross-selling as a result, both of which facilitate an earnings expansion.
What We Think
What Happened
What You Should Do
Price Close
Relative to TAIEX (RHS) 142 136 131 125 120 114 109 103 98 92
42 37 32 150 27
Vol m
100 50

29.20
41.20
44.00
Current
Target
48.60
Net Interest Income (TWDm) Total Gross Premiums (TWDm) Total Net Revenues (TWDm) Total Provision Charges (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) DPS (TWD) Dividend Yield BVPS (TWD) P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x)
Dec-12A 16,017 413,763 505,103 542 28,983 3.13 (10.1%) 13.18 1.00 2.44% 32.04 1.29 10.8%
Dec-13F 16,057 362,495 454,670 (3,173) 37,124 3.76 20.2% 10.96 1.32 3.19% 33.14 1.24 11.5% (1.80%) 1.13
Dec-14F 17,489 387,527 485,555 (1,221) 39,445 3.86 2.6% 10.68 1.35 3.28% 36.01 1.14 11.2% (5.92%) 1.08
Dec-15F 18,788 419,613 524,299 (1,015) 43,486 4.25 10.2% 9.69 1.49 3.61% 39.16 1.05 11.3% (8.66%) 1.11
Page 21
Food RetailTaiwan
August 14, 2013
Gourmet Master
Conviction| |
FLASH NOTE
US$850.1m
TWD25,472m
Market Cap
US$1.02m
TWD31.81m
Avg Daily Turnover
25.0%
Free Float
141.1 m shares
CIMB Analyst(s)
Faster recovery after 1H13

Due to a seasonally low quarter and one-time expenses, Gourmet Master posted a record low net profit of NT$140m in 2Q13, down 41% yoy and 24% qoq. Nevertheless, we believe this marks the trough for restructuring and its operations will begin to see a turnaround.
Jack LIN
T (886) 2 8729 8387 E jack.lin@cimb.com
Andre CHANG, CFA
T (886) 2 8729 8372 E andre.chang@cimb.com
1H13 core net profit are below expectations, at 31% of our full year forecast. We cut our FY13-15 earnings forecasts by 12-28% to factor in lower operating margin assumption and adjusted our tax rate. We lowered our DCF-based target price to NT$200, which implies 25x CY14 P/E.
impact on operating margin. Our check with management suggests the China business started to see progress from the restructuring with Jul SSSG turning positive at 0.5%. It said store expansion will pick up in 2H13, by net adding 30-40 stores. This will raise utilisation of central kitchens to 40-50% (now at 20-30%). With more stores turning profitable, tax rates are also expected to normalise to 25-30%. The US operation will see its central kitchen completed by end-Sep. Based on the latest store opened in Chino Hills, California, monthly sales reached US$550k-600k. with operating margin at 15%. We expect a faster margin recovery after 4Q13 when US expansion kicks off. We have previously highlighted that FY13 is a restructuring year for the company, and that investors should position for better growth prospects in FY14 (47% profit growth), especially after the disappointing 2Q13 results. We see near-term share price weakness as a good entry point.
What We Think
Share price info

Share price perf. (%) Relative Absolute Major shareholders Management & Employees 1M 2.2 -1.1 3M 13.1 9.4 12M -25.4 -19.1 % held 70.0
What Happened
Gourmet Master reported the worst quarter since its IPO, with 2Q13 net profit at NT$140m (EPS NT$0.99), down 41% yoy and 24% qoq, 46% below our forecast and 36% below Bloombergs. Though we expected the 2Q13 results to be disappointing, the degree of decline was larger than anticipated due to the higher tax rate at 33.7% vs. 24.6% in 2Q12. From a seasonality perspective, the 21.9% qoq decline in operating profit is actually better than the historical trend. However, its operating margin remained anaemic at 6.4%, due to expenses booked from the completion of its central kitchen, higher labour cost ratio, and store closures. The low utilisation of its newly opened central kitchens during the restructuring period (China only net increased by 12 stores in 1H13) also had a negative
Financial Summary
What You Should Do
Price Close 240 220
Relative to TAIEX (RHS) 117 111 105 99 93 87 81 75 69 63 57
200
180
160
3 140 2 2 1 1

148.5
180.5
233.0
Current
Target
200.0
Revenue (TWDm) Operating EBITDA (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) DPS (TWD) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x)
Dec-11A 11,456 1,778 1,121 8.34 16.2% 21.64 3.33 1.85% 11.37 67.22 (70.2%) 4.18 21.0%
Dec-12A 13,479 1,862 977 6.93 (17.0%) 26.06 3.81 2.11% 11.93 NA (52.7%) 4.16 16.4%
Dec-13F 15,356 1,731 767 5.43 (21.6%) 33.23 5.00 2.77% 13.15 NA (53.4%) 5.11 13.8% (27.7%) 0.64
Dec-14F 18,453 2,134 1,129 8.00 47.3% 22.56 3.80 2.11% 10.59 37.40 (50.3%) 4.52 21.3% (18.4%) 0.79
Dec-15F 22,423 2,724 1,491 10.56 32.0% 17.09 5.60 3.10% 8.23 27.13 (47.0%) 3.98 24.8% (11.5%) 0.84
Vol m
Page 22
Health ProductsTaiwan
August 14, 2013
Grape King Inc.

Conviction| |
FLASH NOTE
US$606.3m
TWD18,168m
Market Cap
US$6.19m
TWD184.4m
Avg Daily Turnover
70.0%
Free Float
130.2 m shares
CIMB Analyst(s)
The grape is still sweet

Grape Kings record quarterly earnings in 2Q13 suggest that its network growth remained healthy, which helped to widen the gross margin to 88.1%. We expect a softer 3Q13 as the 1st-round rank advancement ended in July but sales should pick up again in 4Q13.
Jack LIN
T (886) 2 8729 8387 E jack.lin@cimb.com
Andre CHANG, CFA
T (886) 2 8729 8372 E andre.chang@cimb.com
1H13 core earnings are largely in line, at 47% of our full-year forecast. We retain our earnings forecasts for FY13-14 but shave FY15 by 1.5% to factor in interest expense on the loan for its new HQ. Our target price stays at NT$155, pegged to 20x CY14 P/E, in line with its consumer peers.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Chairman and family 1M 25.7 22.4 3M 22.9 19.2 12M 118 124.3 % held 22.0
What Happened
Grape King posted a 45% yoy and 16% qoq rise in 2Q13 net profit to NT$201m (EPS NT$1.54). Despite being a record for the company and beating Bloomberg consensus forecasts by 8%, it was 7% below our forecast. The deviation stemmed mainly from a higher opex ratio in 2Q13, which rose 0.8% pts qoq. We believe that it may relate to higher travel bonus expenses booked during the period as Grape Kings multi-level marketing company, Pro-Partner rewarded some of its high-ranking distributors with a trip to Europe. Meanwhile, gross margin continued to widen by 0.6% pts qoq to 88.1%, thanks to higher sales contribution from Pro-Partner (89.9% of total sales vs. 89% in 1Q13).
Given that May-July is typically the period when distributors make a push for their rank advancement, 3Q sales growth may come in slightly softer. We now expect 3Q13 sales to rise 23% yoy but fall 6% qoq. However, the sales momentum will pick up again in 4Q13 as the next round of rank advancement will be in Oct-Dec. We also believe that the launch of new products in 2H13 will help to drive the sales pace. We expect to see further margin improvement as the 10% ASP hike in July should leave more profit margin for the company. We also expect the upcoming annual convention to help boost distributors momentum.
What You Should Do
What We Think
Price Close 171 151 131 111 91 71 5 51 4 3 2 1
We maintain our positive view on the stock as we believe that Pro-Partner is set to deliver years of strong earnings on the back of high demand for its products and its healthy network growth. The share price has risen by 15% since our initiation in July. We would view any near-term correction in response to softer monthly sales as a good entry point into the companys long-term growth story.
Financial Summary
Revenue (TWDm) Operating EBITDA (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) DPS (TWD) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x)
|

60.80
139.5
152.0
Current
Target
155.0
Dec-11A 3,771 871 473 3.63 10.6% 38.40 2.50 1.79% 19.93 34.1 (43.3%) 8.17 22.0%
Dec-12A 4,612 1,082 619 4.75 30.8% 29.35 3.00 2.15% 15.71 34.8 (53.6%) 7.46 26.6%
Dec-13F 5,802 1,387 802 6.16 29.6% 22.66 3.70 2.65% 12.63 NA (30.5%) 6.15 29.8% (0.02%) 1.08
Dec-14F 7,153 1,824 1,008 7.74 25.7% 18.02 4.93 3.53% 9.53 193.9 (28.6%) 4.92 30.3% (0.15%) 1.06
Dec-15F 8,810 2,376 1,237 9.50 22.7% 14.68 6.19 4.44% 7.97 NA 8.3% 3.97 29.9% (1.52%) 0.98
Vol m
SOURCE: CIMB, COMPANY REPORTS Designed by Eight, Powered by EFA
Page 23
Tech Manufacturing ServicesTaiwan

August 14, 2013
Quanta Computer
Conviction| |
FLASH NOTE
US$8,195m
TWD245,550m
Market Cap
US$14.18m
TWD422.1m
Avg Daily Turnover
39.6%
Free Float
3,840 m shares
CIMB Analyst(s)
Notebook weakness overshadows growing cloud

We are afraid that an improving operating margin (in 2Q13) and stable cloud growth (15% of Quanta sales) will not be able to offset the impact of shrinking notebook (NB) demand (65% of Quanta's sales). It needs to accelerate its cloud growth or find new growth drivers.
Quantas 1H13 net profit was in line with our expectation, making up 46% of our full-year forecast at the halfway stage. We maintain Neutral, but cut our FY13-15 EPS forecasts by 4.6-5.8% to reflect its poor 2H13 outlook. We also cut our target price to NT$67, still based on 13x CY14 P/E or its historical average over the past three years. Our FY14 EPS forecast is 13% lower than consensus.
Wanli WANG Felix PAN
T (886) 2 8729 8378 E wanli.wang@cimb.com T (886) 2 8729 8386 E felix.pan@cimb.com
What We Think
Share price info

Share price perf. (%) Relative Absolute Major shareholders Chien Yu Investment Barry Lam Capital 1M -4.2 -7.5 3M 9 5.3 12M -24.7 -18.4 % held 14.9 11.6 10.5
What Happened
Quanta's 2Q13 results were generally in-line. Its net profit of NT$4.0bn is 2% and 1% below our and consensus forecasts, respectively. Its operating margin came in at 1.45% (up from 1.30% in 1Q13), slightly better than our forecast of 1.35% but below consensus expectation of 1.50%. Quanta's 2Q13 sales dropped 1.8% qoq and 18.3% yoy, which suggests a tough NB environment. Meanwhile, margin improvements mainly came from efficiency gains (NB production being moved to the Chongqing area), according to management.
Quanta has guided for a conservative 2H13 outlook and tweaked its sales proportion expectation for 1H13:2H13 from 40:60 previously to 45:55. We cut our 2013 NB shipment forecast from 47.2m units previously to 43.5m units (-19% yoy). Quanta is expected to see 8.7% and 9.8% qoq NB unit shipment growth in 3Q13 and 4Q13, respectively. Its cloud business accounts for 15% of total sales with stable growth. Our previous forecast that Quanta will ship 20m tablets in 2013 (+26% yoy) is intact.
Quanta trades at 12.4x FY14 P/E, in line with its historical average. We think that this is undemanding but there are limited catalysts in the near term. We advise that investors revisit Quanta around end-3Q13, prior to the shopping season. There may be some tablet volume upside surprises. Inventec is our preferred stock in ODMs space.
What You Should Do
Price Close 84 79 74 69 64 59 30 54
Vol m
Financial Summary
Revenue (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) Price To Sales (x) DPS (TWD) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Dec-11A 1,109,728 23,052 6.00 23.8% 10.63 0.22 3.60 5.64% 12.27 1.70 13.4% 2.11 20.2% Dec-12A 1,017,545 23,039 5.99 (0.3%) 10.66 0.24 4.00 6.27% 12.22 NA 0.6% 1.98 19.2% Dec-13F 839,900 18,591 4.84 (19.1%) 13.18 0.29 4.00 6.27% 12.52 6.58 (15.7%) 1.93 14.8% (4.62%) 0.89 Dec-14F 892,688 19,689 5.13 5.9% 12.44 0.27 3.23 5.06% 12.48 NA 4.6% 1.82 15.1% (4.67%) 0.87 Dec-15F 963,713 20,408 5.31 3.7% 12.01 0.25 3.42 5.35% 11.02 9.29 (4.5%) 1.73 14.8% (5.79%) 0.82
20 10

63.80
56.80 80.20
Current
67.00
Target
Page 24
Technology - OthersTaiwan
August 14, 2013
Synnex Technology
2347 TT / 2347.TW Current TWD41.55 TWD34.00 TWD33.00 -18.2%
Conviction| |
FLASH NOTE
US$2,192m
TWD65,687m
Market Cap
US$15.41m
TWD460.6m
Avg Daily Turnover
80.0%
Free Float
1,584 m shares
CIMB Analyst(s)
Still a long way to go

Synnexs 2Q13 gross margin improvement is a positive surprise. Although gross margin may have bottomed-out, this does not alleviate our concerns about the shrinking handset business and weak PC outlook. Servers, tablets, and Xboxes will be sales drivers in 2H13.
Felix PAN
T (886) 2 8729 8386 E felix.pan@cimb.com
Wanli WANG
T (886) 2 8729 8378 E wanli.wang@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Mitac Inc Oppenheimerfunds Oppenheimer Develop 1M 8.8 5.5 3M -13.4 -17.1 12M -45.3 -39 % held 13.7 4.6 4.5
Synnexs 1H13 net profit was slightly better than our expectation, at 44% of our full-year forecast. We raise our FY14-15 EPS forecasts by 1-3% due to the better-than-expected gross margin performance. Thus, we also raise our target price to NT$34, still based on 9x CY14 P/E (its historical trough). We maintain Underperform due to the de-rating catalysts of weaker handset and PC sales, and the gloomy China outlook.
What Happened
Synnex posted 2Q13 net profit of NT$1.5bn, which is 19% above our forecast and 21% higher than consensus, thanks to the better than expected margin and unexpected forex gain of NT$400m. Gross margin increased from 3.2% in 1Q13 to 3.7% in 2Q13 due to the greater economies of scale and the absence of the one-off loss in 1Q13.
One will be the main drivers. Its handset business suffered from Nokias shrinking market share and Taiwan Mobiles insourcing. We have yet to see any demand pick-up or new clients in this space. PCs accounted for 60% of sales in 1H13. We expect that PC sales momentum will be muted in 2H13 due to the deteriorating sales outlook. Tablet revenue accounted for only 10-15% of total revenue in 2Q13/1H13 and is not expected to offset the decline in PC sales in 2H13. We believe that high-end (iPads) and low-end tablets (white brands) will be the key drivers for tablet sales in FY13. Unfortunately, Synnex has limited exposure to both segments. It also has low exposure to the growing smartphone brands (Apple, Samsung and Lenovo). This leads us to believe that it will take time for Synnexs earnings to recover. It will be difficult for server, tablet and game console sales to offset the negative impact of weak PC demand.
What You Should Do
Synnex guides for qoq growth in 2H13 sales. We forecast sales growth of 7.7% in 3Q13 and 2.2% in 4Q13. Tablets, servers and the new Xbox
What We Think
Price Close 74 69 64 59 54 49 44 39 40 34 30 20 10
Aug-12 Nov-12 Source: Bloomberg Feb-13
Relative to TAIEX (RHS) 111 102 94 85 76 67 59 50 41
Financial Summary
Revenue (TWDm) Operating EBITDA (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) DPS (TWD) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Dec-11A 310,673 5,341 7,237 4.61 29.7% 8.91 1.00 2.41% 13.28 12.52 39% 1.52 18.4% Dec-12A 312,585 4,821 5,816 3.67 (20.3%) 11.27 1.50 3.61% 16.75 8.53 64% 1.61 13.9% Dec-13F 324,008 4,419 5,682 3.62 (1.4%) 11.46 2.00 4.81% 17.67 5.21 58% 1.51 13.6% 8.13% 1.03 Dec-14F 332,856 5,286 5,923 3.74 3.3% 11.07 1.95 4.70% 15.41 13.91 65% 1.42 13.2% 3.40% 0.93 Dec-15F 378,878 6,175 6,539 4.13 10.4% 10.02 2.04 4.90% 16.72 NA 108% 1.32 13.6% 1.00% 0.95
Vol m
May-13

41.55
37.25 68.30
34.00
Current
Target
Page 25
CementTaiwan
August 14, 2013
Taiwan Cement
Conviction| |
FLASH NOTE
US$4,756m
TWD142,518m
Market Cap
US$10.19m
TWD306.1m
Avg Daily Turnover
85.0%
Free Float
3,692 m shares
CIMB Analyst(s)
Harvest season comes early

We believe that the new supply in Southern China may turn out to be less than expected, leading to further profit improvement from a solid 2Q13. Its 2Q13 utility profit was ahead of expectations, and we see long-term upside potential as TaiPower continues to restructure.
Share price info

Share price perf. (%) Relative Absolute Major shareholders China Trust Investment China Synthetic Rubber Government Employee Pension Fund 1M 5.3 2 3M 2.4 -1.3 12M 3 9.3 % held 3.3 2.3 1.9
Taiwan Cement's (TCC) 2Q13 EPS of NT$0.7 is ahead of Bloomberg consensus's NT$0.6, though slightly behind our estimate of NT$0.72. Its 1H13 EPS of NT$1.08 was in line, forming 46% of our previous full-year forecast. As we have a positive outlook for the China cement sector and utility profits, we raise our FY13-15 EPS by 7-8%. We maintain our Outperform call with a higher SOP-based target price of NT$45.
What Happened
TCC reported a 2Q13 net profit NT$2,587m (up 83% qoq and 7% yoy). Although this is slightly below our estimate due to non-operating items, its operating profit actually came in 18% higher than our forecast, mainly due to the strong performance of its utility unit whose operating profit surged 161% qoq and 45% yoy, thanks to lower coal cost and new accounting rules under IFRS.
seasonal demand pick-up. Its 56%owned HK-listed subsidiary, TCC International (TCCI), expects its July shipment volume to increase 23% yoy to a historical high, with its inventory level in major markets staying below 60% (20% in Guizhou). While the market was concerned about the new capacity in Guangdong, TCCI only foresees three new clinker lines being completed in 2H13, suggesting that the supply pressure may turn out to be weaker than expected. We forecast that TCCs 2H13 China profit will rise 50% hoh, with its gross profit per tonne rising from Rmb47 in 1H13 to Rmb60.
What You Should Do
We expect its earnings in 3Q13/4Q13 to stay above that of 2Q13. TCC's utility profits should get a boost from a hot summer, while its China cement profits should improve further on a
Price Close 41 39 Relative to TAIEX (RHS) 115 113 110 108 105 103 100 98 95 93 90
What We Think
We still think that TCC offers a good mix of robust growth (18% FY13-15 EPS CAGR), solid dividend yields (5%-7% in FY13-15), and attractive valuation (12.9x FY14 P/E). There may be more upside if the cement industry consolidation accelerates in Southwest China, and TaiPower achieves headway in its restructuring efforts such as pushing for power tariff hikes in Taiwan. Our target price of NT$45 implies P/Es of 18x FY13 and 15x FY14.
Financial Summary
Revenue (TWDm) Operating EBITDA (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) DPS (TWD) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Dec-11A 118,497 24,252 8,620 2.33 7.3% 16.53 1.90 4.92% 9.82 NA 48.8% 1.47 9.0% Dec-12A 119,455 21,775 7,735 2.09 (10.3%) 18.43 1.90 4.92% 10.65 17.63 43.6% 1.43 7.9% Dec-13F 111,894 23,847 9,275 2.51 19.9% 15.37 1.90 4.92% 9.45 NA 38.0% 1.40 9.2% 7.55% 1.03 Dec-14F 115,756 26,115 11,081 3.00 19.5% 12.86 2.30 5.96% 8.34 23.98 31.8% 1.36 10.7% 7.50% 1.10 Dec-15F 118,056 27,296 12,788 3.46 15.4% 11.14 2.60 6.74% 7.65 16.29 24.5% 1.32 12.0% 7.10% 1.16
37
35
33
40 31 30 20 10
Vol m

32.50
38.60
40.45
Current
Target
45.00
Page 26
ConglomerateTaiwan
August 15, 2013
Taiwan Fertilizer
1722 TT / 1722.TW Current TWD72.60 TWD65.00 TWD75.00 -10.5%
Conviction| |
FLASH NOTE
US$2,374m
TWD71,148m
Market Cap
US$8.17m
TWD244.9m
Avg Daily Turnover
75.0%
Free Float
980.0 m shares
CIMB Analyst(s)
Execution risks emerge again

Taiwan Fertilizers (Taifer) big miss on 2Q13 profit showed again its lack of control over its business. Many investment plans in the pipeline may not generate the positive returns the company wants. We think the stock deserves more discount on its asset value.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Council of Agriculture Cathay Life Insurance Nan Shan Life Insurance 1M 3.2 -0.1 3M 2.3 -1.4 12M -5.7 0.6 % held 24.0 5.5 2.1
Taifers 2Q13 EPS NT$0.02 is far below Bloombergs estimate of NT$0.55 and our NT$0.61. 1H13 EPS formed 58% of our previous FY13 forecast due to project completion in 1Q13. We cut FY13 EPS by 18% due to the disappointing 2Q13. We downgrade it to Underperform with a new target price of NT$65, at a 40% discount to its NAV, 1 s.d. below its ten-year average (from 0.5 s.d.). Negative catalysts include delaying land development and negative return from new investments.
What Happened
Taiwan Fertilizer reported a 2Q13 net profit of NT$24m, vs. NT$2,257m in 1Q13 and NT$638m in 2Q12, which we think the market did not anticipate. Management attributed that to the longer-than-expected debottlenecking of its urea plant (part of its JV with SABIC in Saudi Arabia). We do not believe Taifer made it clear that the process would take so long (almost the entire quarter in our view). The only bright spot is that capacity should increase by over 10%, meaning future upside.
This is not the first time Taifer has miscommunicated with investors on the Saudi Arabian JV (shipment delay, donation to Saudi Arabian government, etc.). We feel its control over the JV has not improved over the years. Also, although Taifer aims to find a leasehold tenant for its C3 landblock, proceeds from its land development/disposal have not been effectively used, in our view. The company has invested in its new fertilizer plant in Taichung (whose profitability may be lower than old plants given the depreciation), and the deep-ocean-water products and park (still loss-making).
What We Think
What You Should Do
We do not think asset value will mean much to shareholders if the company cannot improve ROE after unlocking asset value. We believe Taifer deserves a deeper discount to its NAV than its peers. Its foreign ownership still stands at nearly 30%, and we see downside there.
Price Close
Relative to TAIEX (RHS) 111 108 105 103 100 97 94 92 89 86
Financial Summary
Revenue (TWDm) Operating EBITDA (TWDm) Net Profit (TWDm) Normalised EPS (TWD) Normalised EPS Growth FD Normalised P/E (x) DPS (TWD) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Dec-11A 16,978 681 3,011 3.07 74.7% 23.63 2.30 3.17% 99.50 NA (6.5%) 1.37 5.93% Dec-12A 17,828 1,352 3,339 3.41 10.9% 21.31 2.70 3.72% 51.49 81.39 (2.9%) 1.36 6.41% Dec-13F 16,080 1,686 3,219 3.28 (3.6%) 22.10 2.70 3.72% 40.45 15.65 (5.5%) 1.34 6.11% (18.0%) 0.86 Dec-14F 18,044 2,947 3,929 4.01 22.1% 18.11 3.20 4.41% 24.79 39.66 3.5% 1.32 7.36% 0.2% 0.85 Dec-15F 18,704 3,899 4,274 4.36 8.8% 16.65 3.50 4.82% 19.79 21.41 11.0% 1.30 7.88% 2.0% 0.91
81 76 71 25 66 20 15 10 5
Vol m

67.60
72.60
81.60
65.00
Current
Target
Page 27
Oil & Gas - Equipment & SvsMalaysia

August 14, 2013
Malaysia Marine & Heavy Eng

MMHE MK / MHEB.KL Current RM4.18 RM4.00 RM4.00 -4.3%
Conviction| |
2QFY13 RESULTS NOTE

US$2,052m
RM6,688m
Market Cap
US$3.79m
RM11.70m
Avg Daily Turnover
18.6%
Free Float
1,600 m shares
CIMB Analyst(s)
Not a heavyweight set of results

At 36% of our full-year forecast and 38% of consensus, 1H13 net profit was far from exciting, but we deem it broadly within expectations as we anticipate a better 2H. Given the approval of certain change orders in 1H, we expect more to be realised in 2H, along with Malikai's profit.
Norziana MOHD INON
T (60) 3 2084 9645 E norziana.inon@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders MISC Technip PNB 1M 7.2 7.7 3M 9.1 9.4 12M -24.1 -15.6 % held 66.5 8.5 6.4
We continue to value the stock at 21.8x CY14 P/E, a 40% premium to our target market P/E of 15.6x, but still within the historical P/E range for oil & gas big caps. We maintain our Neutral call. Our top sector picks are SapuraKencana for big caps and Perisai for small caps.
but we understand that the bulk of the claims are still being negotiated and will be booked in 2H if management is successful. See overleaf for more briefing highlights. We are pleased that the Gumusut-Kakap FPS project, which was plagued by multiple delays and ballooning costs, was finally completed in May. MMHE is now putting its best foot forward in the execution of the Malikai TLP, the first such floating solution to be deployed in Malaysia. We expect the first profit from Malikai to materialise in 2H.
Malikai's first profit in 2H
14% fall in 1H net profit yoy
MMHE delivered the long-delayed Gumusut-Kakap floating production system (FPS), Telok B topside and OSX turret projects in 1H. However, 1H net profit fell 14% yoy due to change orders for selected projects, notably Tapis, Telok A and Kebabangan. Furthermore, the company has yet to book any profit contribution from the Malikai tension-leg platform (TLP) project, which was secured in Feb. The bright spot of the results was the recovery of some change orders in 2Q, which management revealed at a briefing today. The amount was not disclosed,
RM1.8bn order book
As at 30 Jun, MMHE had contracts worth RM1.8bn (Figure 1), boosted by the Malikai TLP contract that contributed an estimated 60% to the order book. Other sizable contracts were Kebabangan and Tapis.
FYE Dec (RM m)
Results comparison
2QFY13 2QFY12 786.7 (737.1) 6.3% 3.4 (0.4) 52.7 (4.8) 9.1 (0.3) 47.6 3.0 965.7 (921.4) 4.6% (0.9) 9.4 7.7 60.5 (5.0) 8.2 (0.2) 55.3 3.5
Revenue Operating costs EBIT margin (%) Interest expense Interest & invt inc Associates' contrib Exceptionals Pretax profit Tax Tax rate (%) Minority interests Net profit EPS (sen)
yoy % chg (18.5) (20.0) na (63.6) (104.5) na (13.0) (4.1) 58.2 (14.0) (14.0)
qoq % 2QFY13 2QFY12 chg Cum Cum (14.7) 1,708.5 1,631.0 (15.5) (1,609.2) (1,515.8) 5.8% 7.1% na (1.6) (43.3) 9.4 24.2 (133.5) 0.7 9.5 na (7.2) 109.4 147.3 (22.2) (10.9) (13.6) 10.0 9.3 na (0.4) (0.0) (6.0) 98.1 133.6 (6.0) 6.1 8.3
yoy % Prev. chg FY13F 4.8 3,584.2 6.2 (3,363.8) 6.1% (100.0) (61.1) 61.5 (92.6) 18.4 na (25.7) 300.2 (20.2) (25.6) 7.4 8.5 1,857.9 (26.5) 274.6 (26.5) 17.2
Comments Deliveries of Gumusut-Kakap FPS & Telok B topside Change orders for selected projects, i.e. Tapis, Telok A & Kebabangan, as well as additional costs for FPSO Cendor Above; RM190m drawdown on revolving credit facilities Below; cash rose 24% to RM803m. Net cash. Missed expectations Broadly in line; some change order approvals trickled in Broadly in line; tax benefits from yard optimisation programme Broadly in line; 36% of our full-year forecast & 38% of cons Malikai profit & more change order approvals expected in 2H
One third
Half page
Two thirds
Full page
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 Termbray Petro-king Oilfield Services Ltd within the preceding 12 months.
Page 28
AutosMalaysia
August 14, 2013
Tan Chong Motor Holdings

TCM MK / TNCS.KL Current RM6.47 RM8.00 RM8.00 23.6%
Conviction| |
FLASH NOTE
US$1,296m
RM4,224m
Market Cap
US$0.76m
RM2.38m
Avg Daily Turnover
49.6%
Free Float
672.0 m shares
CIMB Analyst(s)
Assembling Mitsubishi vehicles for the local market

Tan Chong Motors' (TCM) deal to assemble vehicles for Mitsubishi for the local market is not a surprise and we expect more JV announcements to follow to enable TCM to reach its 100,000-unit volume target a year.
No change to our EPS or RNAV-based target price for now, which is pegged to the sector's 11x 2014 P/E average. Catalysts are expected from a depreciation of the yen and the launch of new models. Outperform maintained. According to StarBiz, Mitsubishi Motors Corp has formed a JV with TCM to assemble cars for the Japanese automotive giant after terminating its collaborative agreement with Proton. Mitsubishi Malaysia has confirmed the agreement but production may not start so soon and the cars would only be meant for the domestic market. volumes first before getting access to Mitsubishis key segments. The JV could also require some capital commitments as it could be taking over a few production lines in Proton's Shah Alam plant if DRB-Hicom relocates all of Proton's manufacturing to Tanjung Malim. We are more excited about TCM's other future potential JVs which could involve a budget A-segment car. This will have the biggest impact in reaching 100,000 units a year target. TCM should remain your top pick in the auto sector. We expect positive newsflow throughout 2013 and its ASEAN positioning to stand out further. It is the only local player to have made material progress outside Malaysia which is increasingly becoming saturated. TCM's exclusive rights to Indochina and Myanmar are well supported by its sister company, APM Automotive, which is one of the top-3 autoparts companies in ASEAN.
Lucius CHONG
T (60) 3 2084 9869 E lucius.chong@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Tan Chong Consolidated Nissan Motor Corp Employees Provident Fund 1M -2.2 -1.7 3M 7.4 7.8 12M 38 47 % held 44.8 5.6 7.2
What Happened
What You Should Do
What We Think
The JV is line with managements intentions to broaden TCM's assembly footprint and produce 100,000 units a year group-wide. We believe the JV will have a marginal impact in the immediate term as TCM would have to prove itself on small
Price Close
Relative to FBMKLCI (RHS)
Financial Summary
164
154 144 134
7.5
7.0 6.5 6.0
5.5
5.0 4.5 3 4.0 2 2 1 1
124
114 104 94

4.35
6.47 7.01
Current
Target
8.00
Revenue (RMm) Operating EBITDA (RMm) Net Profit (RMm) Core EPS (RM) Core EPS Growth FD Core P/E (x) DPS (RM) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
Dec-11A 3,854 386.3 216.1 0.32 (36%) 20.12 0.12 1.85% 11.93 48.70 14.8% 2.36 12.3%
Dec-12A 4,086 317.1 158.0 0.24 (27%) 27.51 0.12 1.85% 15.46 29.11 29.6% 2.24 8.4%
Dec-13F 5,147 641.3 364.1 0.54 130% 11.94 0.20 3.09% 7.53 19.70 22.8% 1.98 17.6% 0% 1.07
Dec-14F 5,405 717.7 448.2 0.67 23% 9.70 0.25 3.86% 6.53 18.18 14.1% 1.72 19.0% 0% 1.13
Dec-15F 5,618 749.8 461.3 0.69 3% 9.43 0.30 4.64% 6.05 15.55 7.1% 1.53 17.2% 0% 1.04
Vol m
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. Designed by Eight, Powered by EFA
Page 29
Public TransportationSingapore
August 14, 2013
ComfortDelGro
CD SP / CMDG.SI Current S$1.97 S$2.18 S$1.94 10.7%
Conviction| |
2QFY13 RESULTS NOTE

US$3,304m
S$4,184m
Market Cap
US$15.68m
S$19.81m
Avg Daily Turnover
59.0%
Free Float
2,086 m shares
CIMB Analyst(s)
Changing our view

The share price withstood a selldown from major shareholder SLF since the previous results announcement. The latest showing only confirms that CD has a sustainable story and dividend angle that allow us to sleep peacefully at night.
Gary NG
T (65) 6210 8699 E gary.ng@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Blackrock Capital Group Silchester Int'l Investors 1M 2.4 2.6 3M 3.4 -2 12M 13.1 19 % held 6.7 6.4 4.9
The 2Q13/1H result is in line with consensus and our expectations, meeting 27%/49% of our FY13 numbers. EPS forecasts stay unchanged though we have raised our target price (DCF, now 7.1% WACC from 7.3%) to S$2.18. The overseas business acts as catalyst, with the stock supported by a 3% dividend yield. Upgrade to Outperform from Neutral. 2Q13 revenue rose by 3% yoy on broad-based growth. Lower energy costs (-6% yoy) in 2Q13 and better operating performance in the UK bus segment are positive. The group has now hedged 80% of its diesel needs for 2013 at unit costs below those of last year. We see this trend persisting through this year. Overseas business accounted for 39% of the groups revenue and 47% of its operating profit. Group 1H13 PATMI is up 7% yoy to S$127m as a result.
Good showing in 2Q13
The groups EBIT margin improved sequentially to 12.4% in 2Q13 (vs. 11.0% in 1Q13). Rail was the only segment whose EBIT margin declined by 3.1% pts qoq to 4.5% due to costs related to Downtown Line. Net cash inflow enhanced the balance sheet. We appreciate CDs positive cashflow generating abilities, and the current predictable capex trend. At only 2% net gearing ratio, there is room to gear up the balance sheet for opportunities.
Warrant an upgrade
Improving margins
Results Comparison
FYE Dec (S$ m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort. EBIT Interest expense Interest & invt inc Associates' contrib Pretax profit Tax Tax rate (%) Minority interests Net profit EPS (S cts) 2Q FY13 908.4 (712.2) 196.2 21.6 (83.6) 112.6 (7.0) 2.1 0.5 108.2 (23.2) 21.4 (16.1) 68.9 3.3 2Q FY12 884.9 (699.7) 185.2 20.9 (79.7) 105.5 (7.7) 1.8 0.6 100.2 (21.1) 21.1 (14.8) 64.3 3.1 yoy % chg 2.7 1.8 5.9 4.9 6.7 (9.1) 16.7 nm 8.0 10.0 8.8 7.2 4.5 qoq % 2QFY13 2QFY12 chg cum cum 4.3 1,779.2 1,740.3 3.0 (1,403.8) (1,382.4) 9.5 375.4 357.9 21.1 20.6 0.4 (166.9) (158.4) 17.4 208.5 199.5 (1.4) (14.1) (15.9) (22.2) 4.8 4.0 1.8 1.7 16.6 201.0 189.3 13.2 (43.7) (41.2) 21.7 21.8 10.3 (30.7) (29.6) 19.4 126.6 118.5 27.0 6.0 5.6
We believe the earnings model in Singapore is sustainable, while overseas success will yield better profitability for the group. CD remained true to its committed 50% payout policy by declaring an interim dividend of 3Scts/share. Management said that there were good vibes coming from the Region 4 bus tender in Australia. A brighter outlook makes this a good pair-trade stock against SMRT. Upgrade to Outperform from Neutral.
yoy % Prev. Comments chg FY13F 2.2 3,684.2 In line, 2Q13 25% of FY13 est. 1.5 (2,925.2) Higher staff costs offset by lower energy. 4.9 758.9 In line, 2Q13 26% of our FY13 est. 20.6 Margins were stable. 5.4 (323.8) Newer bus fleet & COE for taxis replacement 4.5 435.2 Overseas ops accounted for 47% (11.3) (35.2) Australia contributed 47% to overseas ops profit 20.0 7.4 5.9 7.4 6.2 414.7 In line with our forecasts 6.1 (87.1) 21.0 3.7 (73.7) 6.8 254.0 In line, 2Q13 met 27% of our FY13 est. 6.4 12.1 In line, 1H13 met 49% of our FY13 est.
Page 30
PlantationsSingapore
August 14, 2013
Indofood Agri Resources

IFAR SP / IFAR.SI Current S$0.83 S$0.81 S$1.02 -2.4%
Conviction| |
2QFY13 RESULTS NOTE

US$940.3m
S$1,190m
Market Cap
US$1.29m
S$1.62m
Avg Daily Turnover
30.4%
Free Float
1,448 m shares
CIMB Analyst(s)
Hit by lower yields and price

Indofood Agris 2Q13 core earnings were below consensus but in line with our forecast. 1H13 earnings made up only 21% of consensus but accounted for 26% of our full-year forecast. Lower FFB output and selling prices were the key reasons for the weaker earnings.
Ivy NG Lee Fang, CFA

T (60) 3 2084 9697 E ivy.ng@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Indofood Singapore Holdings 1M -11.2 -10.8 3M -19.2 -24.6 12M -47 -41.8 % held 69.6
We are keeping our earnings forecasts for now as we expect 2H earnings to be stronger due to higher sugar contribution and production. However, we cut our SOP-based target price to S$0.81, as we apply a 15% discount against its SOP to reflect the earnings risk from its newly acquired sugar assets in Brazil. Maintain Underperform, with the key de-rating catalysts coming from earnings disappointments.
weaker qoq, following its decision to cut cooking oil and margarine prices by 10% in Apr 2013.
Challenging prospects
Key 2Q result highlights
2Q13 core net profit plunged 75% yoy and 40% qoq, largely because of lower CPO prices (-18% yoy), weaker FFB production (-9% yoy) and higher production costs. The decline in nucleus FFB production was due to weaker production recorded by its estates in South Sumatra. Production costs were driven up by rising wages and new mature palm oil areas. Earnings from the edible oils and fats (EOF) division improved yoy in 2Q due to the higher refining margin. However, profit from EOF was
2QFY13 cum 6,455 (5,578) 876 14 (359) 517 (252) 98 (30) (4) 329 (109) 33 (47) 173 177 120 122 2QFY12 cum 6,980 (5,223) 1,757 25 (267) 1,490 (274) 138 (9) 1 1,346 (299) 22 (416) 631 629 438 435 yoy % chg (8) 7 (50) nm 34 (65) (8) (29) nm nm (76) (63) nm (89) (73) (72) (72) (72) Prev. FY13F 11,186 (8,289) 2,897 26 (971) 1,926 (616) 153 1,464 (337) 23 (451) 676 676 467 467
We expect 2H earnings to benefit from seasonally stronger palm production and higher sugar contribution from Indonesia. The group commenced the sugar harvest season in May and projects most of its sugar sales to be realised in 2HCY13. However, this may be partially offset by potential losses from its newly acquired sugar assets in Brazil due to current low international raw sugar and start-up costs. Also, the pick-up in 2H FFB production may not be sufficient to cover weak production in 1H. We maintain our earnings but cut our SOP-based target price by 21%. Though the stock has underperformed the market, it may stay weak until it is able to boost the profitability of its estates
Maintain Underperform
Results comparison
FYE Dec (Rp bn) Revenue Operating costs EBITDA 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 (Rp) Core EPS (Rp) 2Q FY13 3,358 (2,941) 417 12 (215) 202 (124) 43 (21) 99 (32) 32 (1) 66 66 46 46 2Q FY12 3,780 (2,947) 833 22 (147) 686 (134) 60 (9) (14) 588 (142) 24 (192) 254 268 176 186 yoy % chg (11) (0) (50) nm 46 (70) (7) (29) nm nm (83) (77) nm (99) (74) (75) (74) (75) qoq % chg 8 11 (9) nm 50 (36) (2) (22) nm nm (57) (58) nm (97) (38) (40) (37) (40) Comments Within, making up 58% of our full-year forecast Higher operating costs due to rising wages in Indonesia In line, as we project a stronger 2H earnings Weaker CPO price and yields lower profit margin Higher new mature areas and expanded facilities Sugar earnings to lift 2H performances Broadly in line with expectations Within expectations Larger-than-expected losses from associates Absence of biological assets gain/losses Broadly in line, project better 2H Lower taxes in line with weaker earnings Higher effective tax due to associates loss Lower contribution from subsidiaries Broadly in line, project sugar div to boost 2H earnings
Page 31
Ind Goods & ServicesSingapore

August 14, 2013
Midas Holdings
MIDAS SP / MIDA.SI Current S$0.52 S$0.70 S$0.70 35.8%
Conviction| |
2QFY13 RESULTS NOTE

US$495.3m
S$627.1m
Market Cap
US$2.66m
S$3.41m
Avg Daily Turnover
79.2%
Free Float
1,218 m shares
CIMB Analyst(s)
Banking on a strong 2H
2Q13 net profit recovered from a net loss in 1Q. This was due to strong core revenue and positive contributions from its associate, NPRT. We expect 2H13 to compensate for the weak 1H13. Midas is on track to meet our full-year target given the current earnings momentum.
Kenneth NG, CFA Jessalynn CHEN
T (65) 6210 8610 E kenneth.ng@cimb.com T (65) 6210 8672 E jessalynn.chen@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Chen Wei Ping Patrick Chew 1M 12.8 13.2 3M 19.8 14.4 12M 44.1 49.3 % held 10.8 10.0
1H13 net profit formed 25% of our full-year estimate and 11% of consensus. We deem this in line as we expect FY13 revenues to be back-end loaded with the resumption of high speed rail (HSR) contracts in 2H. We maintain our Outperform call and target price, still based on 1.29x CY13 P/BV (20% discount to 2010-11 P/BV). The catalyst is the resumption of HSR contracts.
full-year net Rmb40m.
profit
estimate
of
Evidence points strongly to HSR contracts in 2H
Turnaround in net profit
2Q13 revenue of Rmb284m (+40.3% qoq, +29.2% yoy) was strong on the back of steady contributions from the transport industry. However, gross profit margins fell to 22.5% (1Q: 25.2%) due to a change in product mix and lower capacity utilization. Its associate, NPRT saw a turnaround in 2Q after winning Rmb3.8bn metro contracts in 1H13, and contributed Rmb3.1m to Midas PBT. The group reported a net profit of Rmb14.9m in 2Q13 (vs. a net loss of Rmb4.9m in 1Q). Given the earnings momentum in 2Q13, Midas is on track to meet our
Last month, Chinas cabinet revised its railway investment budget to Rmb3.3tr for the remainder of its five-year plan that ends in 2015. This is Rmb500bn more than the figure announced in the previous plan. Since train car manufacturers typically take between 18-24 months for delivery, China Railway Corp. has to issue HSR orders by the end of 2013 to meet its 2015 investment target. Thus, we are fairly certain that Midas can expect to receive HSR orders in 2H13, which would bolster earnings in 2H after a weak 1H.
Maintain Outperform
Midas is currently trading at 0.95x CY13 P/BV, still below its historical mean of 1.46x. We believe the resumption of HSR contracts will be a major price catalyst.
FYE Dec (RMB m)
Results comparison
2QFY13 2QFY12 284.0 (226.2) 57.8 20.4 (31.5) 26.3 (19.6) 9.6 3.1 19.5 (5.5) 28.1 0.9 14.9 14.9 1.2 1.2 219.8 (155.9) 63.9 29.1 (25.5) 38.4 (19.9) 3.9 (14.1) 8.4 (6.8) 81.0 1.6 1.6 0.1 0.1
Revenue Operating costs EBITDA 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 (cts) Core EPS (cts)
yoy % chg 29.2 45.1 (9.5) 23.5 (31.5) (1.4) 144.1 122.3 133.0 (19.0) 834.1 834.1 834.1 834.1
qoq % 1HFY13 1HFY12 chg Cum. Cum. 40.3 486.4 450 45.1 (382.1) (322.4) 24.5 104.3 127.8 21.4 28.4 4.5 (61.7) (52.2) 61.6 42.6 75.6 2.5 (38.7) (33.4) 263.1 12.2 4.9 (177.8) (0.9) (18.7) (559.6) 15.2 28.35 275.1 (6.9) (11.5) 45.6 40.6 1.7 (404.7) 10.0 16.9 (404.7) 10.0 16.9 (382.1) 0.8 1.4 (382.1) 0.8 1.4
yoy % chg 8.0 18.5 (18.4) 18.3 (43.7) 15.7 151.0 (95.2) (46.3) (39.7) 12.3 (40.8) (40.8) (43.1) (43.1)
Prev. FY13F 865.2 (615.9) 249.3 28.8 (120.6) 128.7 (81.3) 5.0 1.8 54.2 (13.5) 25.0 40.6 40.6 3.3 3.3
Comments Slightly above, on strong contributions from the transport industry. Slightly above, due to higher revenues. In line. In line. In line. In line. Above. Other income rose on higher income from disposal of scrap materials. In line. Broadly in line. In line. Broadly in line. Turnaround in 2Q net profit due to positive order momentum from metro contracts and positive contributions from Midas' associate, NPRT.
Page 32
EducationSingapore
August 14, 2013
Overseas Education Ltd

OEL SP / OVER.SI Current S$0.79 S$0.95 S$0.91 20.3%
Conviction| |
2QFY13 RESULTS NOTE

US$259.2m
S$328.1m
Market Cap
US$0.42m
S$0.53m
Avg Daily Turnover
24.3%
Free Float
415.4 m shares
CIMB Analyst(s)
Earnings visibility high!

1H13 sales were in line with expectations but core net profit was 7% above. Results benefitted from the hike in tuition fees. The next news flow that will excite the market is further updates on the progress of its new campus in Pasir Ris.
William TNG, CFA
T (65) 6210 8676 E william.tng@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders PDAC Pte Ltd WLH Pte Ltd Prudential SP Holdings 1M 10.3 10.5 3M 18.3 12.9 % held 32.6 31.3 6.8 12M
1H13 core net profit came in 7% above. Our cost assumptions were too aggressive. Moderating our cost assumptions and factoring in the latest tuition fee guidance, core EPS rises 10-22% over FY13-15. With a WACC of 8.1% (previously 7.6%), our DCF-based target price rises to S$0.95. Outperform maintained. Catalysts will be an earnings step-up when the new campus is completed. The key variance in 2Q13 results stems from the lower-than-expected growth in operating expenses. Personnel costs (74% of 2Q, 75% of 1H) grew just 2.7% yoy in 2Q13 and 3.1% yoy for 1H13. Although we pare down our operating expenses, we leave room for earnings upside as our cuts are not too aggressive. Why not reduce costs estimates aggressively? Inflationary pressure remains and with personnel expenses taking the lions share of operating costs, it
remains prudent to adopt a balanced view on costs.
They have the land
We were too pessimistic?
2Q13 cash flow shows S$29.4m being paid for the acquisition of PPE. This payment is for the alienation premium for the new campus at Pasir Ris. The Letter of Offer states that the project completion period will expire on 26 July 2016 and any extension is subject to conditions. OEL should still have enough time to execute its plan for a new campus.
Earnings appear resilient
Earnings visibility for the next three years remains high. Single-digit fee hikes appear certain with earnings variation likely to be a function of cost management. More players have entered the IB market in Singapore. Prominent education provider GEMS Education is slated to have a similar-sized campus in Yishun by September next year.
Results Com parison FYE Dec (S$ m ) 2QFY13 2QFY12 Revenue 26 24 Operating costs (17) (17) EBITDA 8.6 7.0 EBITDA margin (%) 33.00 29.86 Depn & amort. (1.0) (1.1) EBIT 7.6 6.0 Interest expense Interest & invt inc Associates' contrib Exceptionals Pretax profit 7.6 6.0 (1.3) (1.0) Tax Tax rate (%) 17.7 16.8 Minority interests Net profit 6.3 5.0 Core net profit 6.3 5.0 EPS (S cts) 1.5 1.9 Core EPS (S cts) 1.5 1.9 2Q12 per share data based on pre-IPO
yoy % chg 10.5 5.6 22.1 (8.9) 27.7 nm nm nm nm 27.7 34.4 26.4 26.4 (20.6) (20.6)
1QFY13 25 (17) 8.4 33.36 (1.0) 7.4 (1.1) 6.3 (1.1) 17.2 5.2 6.3 1.9 2.3
qoq % 2QFY13 2QFY12 chg Cum Cum 3.4 51 46 3.9 (34) (33) 2.3 17.0 13.3 33.18 28.74 (5.5) (2.0) (2.0) 3.4 15.0 11.3 (1.1) 21.1 13.9 11.3 (2.4) (1.9) 24.8 17.4 17.0 20.4 11.5 9.4 (0.3) 12.5 9.4 (20.4) 3.0 3.5 (34.0) 3.0 3.5
yoy % chg 10.4 3.6 27.5 0.3 nm nm 26 nm 33.7 nm (13.7)
Prev. FY13F 101 (70) 30.4 30.13 (4.0) 26.4 (1.1) 25.3 (4.3) 17.0 21.0 22.1 5.2 5.5
Com m ents In line, driven by fee hike Low er than expected on muted personnel cost increase Higher Higher Low er, some assets w ere fully depreciated
No exceptional item in 2Q13 In line w ith Singapore corporate tax rate Above on low er than expected cost increase Above on low er than expected cost increase
Page 33
Building MaterialsSingapore
August 14, 2013
Pan-United Corp
PAN SP / PANU.SI Current S$0.91 S$0.90 S$0.90 -0.8%
Conviction| |
2QFY13 RESULTS NOTE

US$399.8m
S$506.2m
Market Cap
US$0.26m
S$0.33m
Avg Daily Turnover
26.5%
Free Float
87.27 m shares
CIMB Analyst(s)
Some doubts linger on

PANs reported 2Q13 numbers are satisfactory. However, the recent increase in its CXP stake suggests that it has regional ambitions. Although we are positive on CXPs future earnings contribution, we question the seemingly high acquisition price.
Gary NG
T (65) 6210 8699 E gary.ng@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Ng family 1M 0.4 0.6 3M 1.7 -3.7 12M 44.9 50.8 % held 73.5
1H13 EPS is in line, at 52% of our FY13 forecast and slightly below consensus at 47%. We keep our FY13-15 EPS and residual income-based target price unchanged. We maintain our Neutral rating as we think that the stocks near-term potential has been priced in. The main theme for PAN now is the latest CXP acquisition's earnings contribution. We will elaborate on this post-analyst briefing.
Raised CXP stake to 85.5%
2Q13 results in line
PANs 1H13 revenue was up 4% yoy to $357m, driven by the BBR division but partly offset by lower trading activities from the shipping division. In 1H13, the port division maintained healthy levels of revenue and cargo volume. There was a S$2.2m provision for doubtful debts related to one of the main contractors of the Downtown Line 2 project that filed for insolvency in 2Q13. Dividends of 1.5Scts/share were declared (28% payout ratio based on the 1H13 interim results).
2Q13 Cum 357.0 (316) 40.8 11.4 (10.2) 30.6 (2.5) 0.8 (1.2) 30.9 (6.7) 21.6 (3.9) 20.3 21.5 3.60 3.81
PAN entered into a sales and purchase agreement with Macquarie International Infrastructure Fund Limited (MIIF) to acquire 18m shares in Singapore Changshu Development Company Pte Ltd (SCDC) for S$101m in cash. This will raise PAN's effective shareholding in Changshu Xinghua Port Co Ltd (CXP) from 51.3% to 85.5%. The rationale for the higher stake is to build up its port and logistics division, which is in line with its plans to increase revenue streams. Internal funding and debt will be used to fund this acquisition.
Neutral for now
We are net neutral on whether PAN divests or adds to its existing CXP stake. The latest acquisition price seems to be on the high side at 20x historical P/E. We will provide more details post-analyst briefing. Other near-term catalysts appear priced in. and we maintain our Neutral rating for now.
Results comparison
FYE Dec (S$ m) Revenue Operating costs EBITDA EBITDA margin (%) Dept & Amortisation EBIT Net interest income Associates' contrib Exceptionals Pretax profit Tax Tax rate (%) Minority interests Net profit Core Net Profit EPS (Scts) Core EPS (Scts)
2Q13 190.0 (170) 20.0 10.5 (5.1) 14.9 (1.2) 0.5 (1.3) 15.2 (3.2) 21.1 (2.0) 10.0 11.3 1.78 2.01
2Q12 yoy % chg 181.8 4.5 (161) 5.5 20.6 (2.9) 11.4 (5.0) 1.1 15.6 (4.2) (1.2) (2) 0.5 (3.4) 1.6 nm 18.7 (18.8) (3.7) (13.1) 19.7 (1.8) 9.0 13.2 (24.1) 11.7 (2.9) 2.40 (25.9) 2.12 (5.1)
qoq % chg 13.8 16.2 (3.4) (0.1) (4.5) (6.5) 19.6 nm (2.9) (7.3) 4.0 (2.7) 11.5 (2.7) 11.5
2Q12 yoy % Prev. Cum chg FY13F Comments 344.0 3.8 761.1 In line. Higher BBR contribution offset by lower trading activities from shipping division (304) 4.1 (677) 2Q13 staff cost flat yoy, raw materials and subcon cost +4% yoy 40.1 1.6 83.7 In line 11.7 11.0 (10.3) (0.9) (21.0) In line 29.8 2.5 62.7 In line (2.4) 3 (4.6) In line 0.8 0.8 1.7 In line 1.5 nm Provision for Alpine insolvency S$2.2m 32.9 (6.3) 63.7 In line (6.8) (2.0) (13.5) In line 20.6 4.6 21.3 (3.4) 13.9 (9.4) 22.7 (10.7) 40.7 Profit turnaround in 4Q12-1Q13 continues 21.2 1.2 40.7 1Q13 core profit anchored by BBR 4.13 (12.8) 7.38 In line. 2Q13 core EPS formed 27% of our FY13 expectations 3.86 (1.2) 7.38 1H13 core EPS formed 52% of our FY13 expectations
Page 34
Telco - IntegratedSingapore
August 14, 2013
SingTel
1QFY14 RESULTS NOTE

Current S$3.82 S$3.86 S$3.86 1.0%
Conviction| |
ST SP / STEL.SI
SHORT TERM (3 MTH)
LONG TERM
US$48,104m
S$60,904m
Market Cap
US$65.04m
S$82.12m
Avg Daily Turnover
43.6%
Free Float
15,944 m shares
CIMB Analyst(s)
1QFY3/14 below expectations; guidance lowered

SingTels annualised 1QFY14 core net profit was 7% and 8% below CIMB and consensus expectations respectively. This was due to a weaker A$ and disappointing revenue at Optus. Core net profit was supported by lower opex in Singapore and growth at associates.
SingTel lowered its FY14 guidance, now expecting group revenue and EBITDA to decline by mid-single digits (flat guidance earlier) and low single digits (low-single-digit growth earlier) respectively. Maintain EPS, Neutral rating and SOP target price pending a conference call later this morning. M1 and Telkom Indo remain our telco picks in ASEAN. lower-thanexpected revenue, Optus's 1Q14 EBITDA was in line with forecast, up 4.9% yoy. However, depreciation appeared to be running slightly higher than forecast with EBIT and NPAT a little below. These rates normally improve in subsequent quarters.
Kelvin GOH, CFA Ian MARTIN
T (60) 3 2084 9699 E kelvin.goh@cimb.com T (61) 3 9631 1018 E ian.martin@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Hldgs 1M -1.2 -1 3M 2.8 -2.6 12M 6.8 12.7 % held 54.3
Associates shone
Lower opex in Singapore
Singapores core net profit was in line due to lower-than-expected opex even as revenue was flat qoq and yoy. SingTel no longer breaks out its opex by country.
SingTels associates were its primary growth drivers with Telkomsel and Globe delivering strong results. Bharti is turning around with its second quarter of sequential growth, up 19% qoq and yoy.
Optus disappointed
Optuss core net profit contributions disappointed on tepid revenue (caused by weak ARPUs) and A$ weakness. The A$ fell 3% qoq and 45 yoy against the S$. Despite its
SingTel now expects group revenue to decline by mid-single digits yoy from flat guidance earlier, and EBITA to fall by low single digits yoy from low-single-digit growth. Its guidance for capex and FCF is unchanged.
Guidance lowered
FYE Mar (S$ m)
1QFY14 1QFY13 yoy % 4QFY13 qoq % 1QFY14 1QFY13 yoy % Prev. chg chg Cum Cum chg FY14F Comments Revenue 4,293 4,533 (5.3) 4,481 (4.2) 4,293 4,533 (5.3) 17,844 A little below exp, weaker qoq and yoy due to weaker A$ Operating costs (2,997) (3,291) (8.9) (3,144) (4.7) (2,997) (3,291) (8.9) (12,666) Below expectation due to cost management at EBITDA 1,296 1,242 4.3 1,337 (3.1) 1,296 1,242 4.3 5,179 In line EBITDA margin (%) 30.2 27.4 29.8 30.2 27.4 29.0 Broadly in line. Depn & amort. (540) (518) 4.2 (551) (1.9) (540) (518) 4.2 (2,254) In line EBIT 756 724 4.4 787 (3.9) 756 724 4.4 2,925 Above expectation Net interest inc/(exp) (49) (71) (31.0) (89) (45.2) (49) (71) (31.0) (202) In line Associates' contrib 578 506 14.2 540 7.0 578 506 14.2 2,277 A little above expectation Exceptionals 88 nm (150) nm 88 nm Reclassified as post-tax item Pretax profit 1,285 1,247 3.0 1,205 6.6 1,285 1,247 3.0 5,000 A little above expectation Tax (386) (301) 28.2 (337) 14.6 (386) (301) 28.2 (1,180) Higher than exp on withholding tax on assoc divs, Tax rate (%) 30.0 24.1 0.8 30.0 24.1 23.6 and Bharti Minority interests (2.0) (1.0) 100.0 1.4 (242.9) (2.0) (1.0) 100.0 Net profit 1,011 945 7.0 868 16.5 1,011 945 7.0 3,820 Less post-tax EI (gains)/loss (114) nm nm 114 nm Core net profit 897 850 5.5 1,001 (10.4) 897 850 5.5 3,820 7% below CIMB and 8% consensus due to EPS (cts) 6.3 5.9 7.0 5.4 16.5 6.3 5.9 7.0 24.0 higher-than-expected tax Core EPS (cts) 5.6 5.3 5.5 6.3 (10.4) 5.6 5.3 5.5 24.0 DPS (cts) nm 10.0 nm nm 18.0 In line
Page 35
Telco - IntegratedSingapore
August 14, 2013
SingTel
FLASH NOTE
Current S$3.81 S$3.80 S$3.86 -0.3%
Conviction| |
ST SP / STEL.SI
SHORT TERM (3 MTH)
LONG TERM
US$47,978m
S$60,745m
f
Market Cap
US$65.37m
S$82.07m
Avg Daily Turnover
43.6%
Free Float
15,944 m shares
CIMB Analyst(s)
Currency headwinds
We turn a little more cautious on SingTel after its 1QFY3/14 results conference call, largely on the weakening regional currencies vs. the S$. This is despite strong growth at Bharti, Globe and Telkomsel. SingTel may step up its aggression to counter Starhubs cross carry rebate.
Kelvin GOH, CFA Ian MARTIN
T (60) 3 2084 9699 E kelvin.goh@cimb.com T (61) 3 9631 1018 E ian.martin@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Hldgs 1M -1.7 -1.3 3M 0.9 -4.5 12M 8.2 13.4 % held 54.3
We cut our FY14-16 core EPS by 2-4% and SOP-based target price by 2% after imputing a higher tax in FY14 and revising our currency assumptions to reflect its new guidance. SingTel remains a Neutral as it lacks rerating catalysts. We prefer M1 and Telkom Indonesia in the regional telco space.
plans to list the business. Exchange rates are working against SingTel. The AUD, IDR and INR have fallen 12%, 4% and 11%, respectively, against the S$ since 1 Apr 13. Units from these countries contribute about 52% of SingTels PBT. Should the regional currencies weaken substantially from the forward rates of 31 Jul, this could warrant another revision to its guidance, in our view. We think SingTel will intensify its efforts to gain pay TV market share by bundling services more aggressively. This is to counter the S$30/mth rebate offered by Starhub for customers cross-carrying the Barclays Premier League broadcast from SingTel. The rebate will dampen SingTels ability to gain market share and monetise its investment in the BPL, in our view.
What We Think
What Happened
SingTel hosted a post-1QFY3/14 results conference call. The key takeaways are: SingTel lowered its group revenue and EBITDA guidance because of the weakening regional currencies. Management attributed the groups higher margin to: 1) the higher adoption of tiered data plans which jumped from 24% to 31%; 2) lower sales of low-margin devices, a trend similar to its peers; and 3) cost management. Optuss 1Q revenue was weak across all key lines although its EBITDA held up well through strong cost control. After reviewing Optuss satellite business, management has decided to retain it. It does not have any firm
What You Should Do
Switch to M1 which is the key beneficiary of the rising take-up of tiered data plans. We also like Telkom Indonesia for its moderate growth and fairly low competitive risks.
Price Close 4.2 4.0 3.8 3.6 3.4 3.2 600 3.0
Relative to FSSTI (RHS) 116 112 108 104 99 95 91
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Operating EBITDA Margin Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-12A 18,825 5,115 27.2% 3,761 0.23 (3.3%) 16.52 0.16 4.15% 13.33 13.69 31.8% 15.4% Mar-13A 18,183 5,083 28.0% 3,536 0.23 (1.8%) 16.82 0.17 4.41% 13.34 25.28 29.3% 15.2% Mar-14F 17,057 4,961 29.1% 3,651 0.23 1.1% 16.64 0.17 4.51% 13.55 17.70 25.9% 14.9% (4.42%) 0.95 Mar-15F 17,615 5,208 29.6% 4,087 0.26 11.9% 14.86 0.19 5.05% 12.80 17.40 22.5% 16.0% (1.94%) 0.97 Mar-16F 18,244 5,485 30.1% 4,528 0.28 10.8% 13.42 0.21 5.59% 11.90 13.03 16.3% 16.8% (1.91%) 1.00
Vol m
400 200

3.12
3.81
4.07
Current
Target
3.80
Page 36
Offshore & MarineSingapore

August 14, 2013
Swiber Holdings
SWIB SP / SWBR.SI Current S$0.75 S$0.91 S$0.91 21.3%
Conviction| |
2QFY13 RESULTS NOTE

US$361.6m
S$457.8m
Market Cap
US$3.58m
S$4.51m
Avg Daily Turnover
70.0%
Free Float
605.4 m shares
CIMB Analyst(s)
Still better than peers

Forays into new markets such as Mexico could have stalled Swibers margin expansion. Still, it is better off than its international peers (Saipem and McDermott), which are reeling from profit warnings and project operating losses.
LIM Siew Khee
T (65) 6210 8664 E siewkhee.lim@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Yoke Min Pang UBS AG/ London Yeo Chee Neng 1M 1.2 1.4 3M 28.4 23 12M 21.2 27.1 % held 9.0 4.5 4.3
1H13 was below our expectation (49% of FY13) and 46% of consensus; we had expected front-loading with 1H at about 60%. The shortfall was due to lower-than-expected revenue and margins. We cut our EPS by 10% for FY13 accordingly. Nevertheless, maintain Outperform and target price at 0.9x CY13 P/BV (30% below its 5-year mean). Stronger order wins are still expected to catalyse its shares.
Brunei and Indonesia margins) in 2H13.
(higher
Order book at US$1.2bn
Margins could have been better
Tender book is still strong at about US$2bn for contracts to be announced within the next 12 months, if successful. These include US$500m in Mexico, US$800m in Indonesia, US$400m in Brunei, and US$400m in India. YTD contracts have reached US$578m, within our target of US$800m for FY13.
Revenue in 2Q13 of US$242m (+5% yoy, -22% qoq) was below our expected US$350m from lower than-expected project recognition from South-East Asia, India and Mexico. Gross margins were 15.3% (1Q13: 16.1%) due to higher-than-expected costs incurred for its first project in Mexico (gross margins about 9%). We believe Swiber will take some time (FY14/15) to improve its margins in Mexico as it climbs the learning curve. We look to the execution of jobs mainly from
qoq % chg (21.9) (21.1) (26.6) (6.1) (1.6) (32.4) 32.6 nm 19.4 nm (41.4) 18.3 101.7 52.6 (73.5) (78.6) (73.5) nm 2QFY13 Cum 551.8 (475.8) 76.0 13.8 (16.5) 59.5 (21.6) 0.8 10.4 49.1 (11.7) 23.9 (10.1) 27.3 4.0 27.3 4.0 2QFY12 Cum 424.0 (366.9) 57.1 13.5 (12.6) 44.5 (13.5) 0.7 6.6 4.9 43.2 (9.7) 22.5 (9.7) 23.8 3.0 18.9 2.4 yoy % chg 30.1 29.7 33.2 2.3 30.8 33.8 59.8 10.4 57.3 (100.0) 13.7 20.5 5.9 3.9 15.0 32.9 44.9 67.4
Swiber is better off than its other offshore construction peers such as Saipem (profit warnings for two consecutive quarters) and McDermott (operating losses for projects in Asia and Middle East) due to their aggressive bidding after GFC.
Better than international peers
FYE Dec (US$ m) Revenue Operating costs EBITDA 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)
2QFY13 242.1 (209.9) 32.2 13.3 (8.2) 24.0 (12.3) 0.8 5.6 18.2 (6.3) 35.0 (6.1) 5.7 0.7 5.7 0.7
2QFY12 229.6 (199.1) 30.4 13.2 (6.6) 23.8 (7.3) 0.3 4.1 4.9 25.9 (5.0) 19.2 (5.8) 15.1 1.5 10.2 0.9
yoy % chg 5.4 5.4 5.8 0.3 24.5 0.6 69.4 174.6 37.1 (100.0) (29.9) 27.3 81.6 4.9 (62.1) (54.4) (44.0) (22.4)
1QFY13 309.7 (265.9) 43.8 14.1 (8.3) 35.5 (9.3) 4.7 31.0 (5.4) 17.3 (4.0) 21.6 3.2 21.6 3.2
Prev. FY13F 1,192.1 (1,024.5) 167.7 14.1 (29.5) 138.2 (45.3) 1.0 14.8 108.7 (29.3) 27.0 (23.8) 55.5 9.2 55.5 9.2
Comments Below, 1H13 accounts for 46% of FY13F Below, 1H13 accounts for 46% of FY13F Below Above Below, 1H13 forms 43% of FY13F In line Above Above Below Below Below Below, 1H13 accounts for 49% of FY13F Below, 1H13 accounts for 49% of FY13F
Page 37
AirlinesHong Kong
August 14, 2013
Cathay Pacific Airways

293 HK / 0293.HK Current HK$14.26 HK$16.00 HK$16.00 12.2%
Conviction| |
1HFY13 RESULTS NOTE

US$7,233m
HK$56,097m
Market Cap
US$5.82m
HK$45.14m
Avg Daily Turnover
30.0%
Free Float
3,934 m shares
CIMB Analyst(s)
Still gaining altitude

Although Cathays core net profit of HK$24m was well below our 1H13 forecast of HK$735m, a large part of the disappointment stemmed from slower associate income and higher finance and tax charges. Operating trends, especially passenger yields, remain on an upswing.
Andrew ORCHARD
T (852) 2539 1331 E andrew.orchard@cimb.com
Raymond YAP, CFA
T (60) 3 2084 9769 E raymond.yap@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders The Swire Group Air China 1M 0.2 6.1 3M 1.7 -0.3 12M -1 11.2 % held 45.8 30.0
We reiterate our Outperform rating on the stock. We lower our FY13-15 EPS by 10-25%, even though we cut EBIT by only 2-6% because of still weak cargo markets. Our target price is however unchanged, still based on a CY14 EV/EBITDAR multiple of 6.6x, its mid-cycle average. Catalysts include continued supply discipline and better yields from an improved passenger route mix.
persistent strength on long-haul routes, while some of the concerns on short-haul sectors, such as in Japan, should begin to moderate.
Cargo still lacks clarity
Core profit in 1H13 of HK$24m was well below our forecasts of HK$735m. However, operating profit of HK$1bn in 1H13 was just below our estimate of HK$1.2bn. Passenger yields continued to rise, improving 4% yoy as the company saw improvements in business travel demand and underlying fares. The change in route mix towards more short-haul sectors also helped to push up passenger yields. Management believes that this should continue into 2H13 due to
yoy % chg -1 -4 50 6 n.m 118 42 n.m 204 n.m n.m n.m n.m n.m hoh % chg -4 -2 -17 5 -51 n.m 8 -85 -52 -92 -99 -99 -99 -99 Prev FY13F 99,528 88,512 11,016 11 7,166 3,850 892 -879 3,863 502 13 3,361 -240 3,121 3,121 0.79 0.79
1H13 disappointment masked passenger gains
Cargo yields declined 3% yoy, with management highlighting that demand is still weak. Cathay believes that some of the new tech launches in September may bolster its peak season demand, but demand for air freight remains uncertain.
Non-operating revenues dragged
Cathay highlighted that its profit was adversely affected by weaker associate income. We had forecast associate earnings of HK$182m in 1H13, but there was instead a loss of HK$155m. This weakness stemmed primarily from a yoy decline in Air Chinas operations, while Air China Cargo also remained a soft spot. Cathays new cargo terminal also incurred larger-than-expected expenses in the period.
Results summary
Half end 30 June (HK$ m) Revenue Operating expenses EBITDA EBITDA margin (%) Depreciation & amortisation EBIT Other income/losses Net interest income Profit before tax Tax Tax rate (%) Profit after tax Minority interests Profit to shareholders Core net profit EPS (HK$) Core EPS (HK$) 1HFY13 48,584 44,008 4,576 9 3,541 1,035 -155 -542 338 173 51 165 -141 24 24 0.01 0.01 1HFY12 48,861 45,818 3,043 6 3,354 -311 -71 -381 -763 57 -7 -820 -109 -929 -749 -0.24 -0.19 2HFY12 50,515 45,031 5,484 11 3,385 2,099 712 -503 2,308 360 16 1,948 -103 1,845 1,845 0.47 0.47 Comments Better than expected passenger yield growth of 4.4% in 1H13 Higher than forecast in 1H13 due to a rise in staff and operating lease charges
Broadly in-line with forecasts in 1H13 HK$150m below forecasts due to higher than expected cost increase Loss in 1H13 as opposed to our forecast of HK$182m profit Higher than projected on lower interest incomes 67% below forecast largely due to non-operating items Higher effective tax rates due to writeback of tax credits
Below our forecast of HK$735m in 1H13
Page 38
GamingHong Kong
August 14, 2013
SJM Holdings
880 HK / 0880.HK Current HK$19.96 HK$22.09 HK$22.09 10.7%
Conviction| |
1HFY13 RESULTS NOTE

US$14,284m
HK$110,782m
Market Cap
US$21.23m
HK$164.7m
Avg Daily Turnover
27.0%
Free Float
5,548 m shares
CIMB Analyst(s)
Dividend surprise
Discounting one-off impacts, SJMs EBITDA was relatively in-line with our expectations. Due to a high cash balance, we view SJM as a quality dividend investment. The interim dividend surprised on the upside which could lead to a higher full-year payout ratio.
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 3.2 9.1 3M -3 -5 12M 19.6 31.8 % held 55.2 7.7 2.6
1H13s net profit came in at 52% of our full-year forecast. We maintain our Outperform call on SJM and make no changes to our earnings or target price. Our target price is based on 10x EV/EBITDA for CY14 (the multiple we assign to Cotai operators), along with HK$4.11 for SJM Cotai. The higher-than-expected dividends could catalyse the shares. SJM reported a 2Q13 adjusted EBITDA of HK$2.1bn (+13% yoy, +1% qoq) and 10% higher than our expectation of HK$1.9bn (up 2% yoy). Excluding the one-time HK$149m receivable from Macau Legend Development, 2Q13 EBITDA would only have been 2% above our forecast, and EBITDA margins would have been flat on a yoy and qoq basis at 9.8% based on gaming revenue. SJMs dividend of 20HKcents per share (up 100% yoy) surprised on the upside and represents a payout of 29% vs. 16% in 1H12.
Better 4Q for Grand Lisboa
2Q13 results
Grand Lisboas EBITDA fell by 12% on a qoq basis, mainly due to a lower hold rate, in addition to some VIP tables being temporarily removed from the property. With additional junket and premium mass tables added to the property in 2H, we expect Grand Lisboa to see better revenue growth in 2H. For 3Q13, we currently project group EBITDA reaching HK$2.1bn, up 11% yoy.
In 1H13, SJM had a cash balance of HK$25bn with only HK$1.6bn worth of debt. We expect SJM Cotai to be the last property to open in 2017 and hence SJM should be able to sustain its dividend until at least 2015. While management maintains its 75% dividend payout ratio, we believe that upside exists to this payout ratio given the low gearing and low capex until 2016. SJM is currently trading at 9x forward consensus EV/EBITDA, in-line with its three year averages.
Strong dividend play
Results Comparison
FYE Dec (HK$ m) Rev enue Operating costs Operating EBITDA EBITDA margin (%) Depn & amort. EBIT Interest ex pense Interest & inv t inc Associates' contrib Ex ceptionals Pretax profit Tax Tax rate (%) Minority interests Net profit Core net profit EPS (HK cts) Core EPS (HK cts) 1HFY13 42,453 (38,131) 4,322 10.2 (577) 3,745 (46) 147 (3) 3,843 (21) 0.5 (5) 3,828 3,828 69.0 69.0 1HFY12 yoy % chg 39,258 (35,384) 3,874 9.9 (550) 3,324 (56) 174 (5) 3,437 (14.0) 0.4 (13) 3,411 3,411 61.7 61.7 8.1 7.8 11.6 0.3 4.8 12.7 -17.7 -15.6 -48.0 nm 11.8 46.4 0.1 -61.5 12.2 12.2 11.9 11.9 2HFY12 40,261 (36,413) 3,848 9.6 (575) 3,273 (60) 180 (11) 8 3,390 (61) 1.8 7 3,336 3,328 60.3 60.2 hoh % chg 5.4 4.7 12.3 0.6 0.3 14.4 -22.7 -18.4 -76.4 nm 13.4 -66.3 -1.3 -174.6 14.8 15.0 14.4 14.6 Prev. Comments FY13F 87,536 In-line w ith ex pectation (79,075) 48% of our full y ear forecast 8,461 51% of our full y ear forecast 9.7 (1,043) 7,418 (71) 198 Slightly higher than ex pected Higher than ex pected In-line w ith ex pectation Higher than ex pected Higher than ex pected
7,545 51% of our full y ear forecast (82.8) low er than ex pected 1.1 (37) 7,425 52% of our full y ear forecast 7,425 133.8 133.8
Page 39
August 14, 2013
CHINA
BANKS
SHORT TERM (3 MTH)
LONG TERM
CIMB Analyst(s)
2Q13 sector data: very positive

CBRC 2Q13 sector level data point to solid NIMs, asset quality and profit progression. This supports our view that 2Q results for H-share banks should provide a positive short-term catalyst for the sector.
Figure 1: 2Q13 banking sector data showed improvement on a qoq basis
SECTOR FLASH NOTE
2Q12 ASSET QUALITY NPL outstanding [Rmb bn] NPL ratio [%] LLR coverage ratio [%] PROFITABILITY Net profit [Rmb bn, accumulated] ROA [%] ROE [%] NIM [bp] Non-interest income ratio [%] CAPITAL ADEQUACY Total CAR [%] Tier-I ratio [%] LIQUIDITY Liquidity ratio [%] Loan-to-deposit ratio [%] 456 0.94% 290% 662 1.41% 22.29% 273 20.63% 12.91% 10.41% 46.69% 64.33%
3Q12 479 0.95% 290% 981 1.39% 21.54% 277 19.47% 13.03% 10.58% 45.23% 65.28%
4Q12 493 0.95% 296% 1,239 1.28% 19.85% 275 19.83% 13.25% 10.62% 45.83% 65.31%
1Q13 527 0.96% 292% 369 1.37% 21.00% 257 23.84% 12.28% 9.85% 45.36% 64.68%
2Q13 540 0.96% 291% 753 1.38% 21.19% 259 23.73% 12.24% 9.85% 43.68% 65.17%
qoq [%] 2.5% 0.00% -0.65% 4.2% 0.01% 0.2% 2 -0.1% 0.0% 0.0% -1.7% 0.5%
yoy [%] 18.2% 0.02% 1.1% 14.5% -0.03% -1.1% (14) 3.1% -0.7% -0.6% -3.0% 0.8%
Indicator
Trevor KALCIC, CFA Hans FAN, CFA Lydia XU
T (852) 2539 1323 E trevor.kalcic@cimb.com T (852) 2539 1311 E hans.fan@cimb.com T (852) 2539 1325 E lydia.xu@cimb.com
SOURCES: CBRC, CIMB
Highlighted Companies CCB

China Construction Bank is an Outperform and our top pick. We like its high profitability, excellent funding franchise and strong capital position.
As noted in our 2Q13 preview published on 18 July (PDF), we expect a 5% yoy net profit growth. CMB will kick off the 2Q13 results announcement this Friday. We stay Overweight on the sector with ICBC, CCB and ABC as top picks. Catalysts include 2Q13 results, better-than-expected asset quality and stabilising macro data. The CBRC released 2Q13 operating data for the commercial bank sector today. Four areas disclosed: 1) Asset quality seems to have stabilised with the NPL ratio flat at 96bp and NPLs outstanding up by only 2.5% qoq. State-owned banks showed much more solid asset quality than joint-stock banks, recording a flat NPL outstanding vs. +7% qoq at joint-stock banks. 2) Banks booked solid profit progression in the quarter. NIM rebounded nicely by 2bp qoq to 259bp after consecutive declines over the past two quarters, contributing positively to a strong net profit growth of 14.5% yoy (vs. 13% in 1Q13). Non-interest income accounted for 24% of gross revenue (vs. 20% in FY12), pointing to a strong fee income growth being recorded in the quarter.
ROA and ROE expanded by 1bp and 19bp to 1.38% and 21.19%, respectively. 3) Capital adequacy remained stable, with the tier-1 ratio standing comfortably at 9.85%. 4) Liquidity stance deteriorated slightly with the loan-to-deposit ratio increasing by 0.5% to 65.2%, but still at a comfortably level.
What Happened
What We Think
ICBC
We have an Outperform call on ICBC. We like its strong liquidity (lowest LDR among state-owned banks), strong capital position and, by our estimates, the lowest rate-sensitivity among the big banks.
ABC
Agricultural Bank of China is an Outperform. We like its strong position in higher-margin county banking and strong funding franchise. Its weaker capital position is not an immediate concern.
Sector level data point to a solid quarter, which we expect to be mirrored in the results of the H-share banks. Firstly, the signs of asset quality stabilisation affirm our view that distressed credits are being actively addressed behind the scenes. Secondly, the NIM recovery and strong fee income contribution should represent positive surprises from the 2Q13 results. Finally, we think that commercial banks balance sheets remain strong with sufficient NPL coverage (291%), solid capital positions and still-comfortable liquidity stance. Overweight maintained. We expect state-owned banks to outperform joint-stock banks on both asset quality and earnings more broadly.
What You Should Do
Page 40
Coal MiningIndonesia
August 14, 2013
Indo Tambangraya Megah

ITMG IJ / ITMG.JK Current Rp29,600 Rp20,000 Rp20,750 -32.4%
Conviction| |
2QFY13 RESULTS NOTE

US$3,245m
Rp33,445,782m
Market Cap
US$2.91m
Rp28,755m
Avg Daily Turnover
22.4%
Free Float
1,130 m shares
CIMB Analyst(s)
Facing a multitude of risks

ITMGs 1H13 core net profit came in below our expectation as a steeper-than-expected ASP drop dragged down margins. Despite a stable cost trend, margin contraction and potential asset write-downs remain the key risks if coal price fails to recover to above US$85/t.
Erindra KRISNAWAN, CFA

T (62) 21 3006 1732 E erindra.krisnawan@cimb.com
Laura TASLIM
T (62) 21 3006 1723 E laura@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Centralink Wisesa International (Banpu) 1M 11.6 13 3M -2.4 -9.9 12M -35.8 -21.8 % held 65.0
1H13 core net profit disappointed, forming only 38% of our and consensus full-year forecasts. We cut our FY13-15 EPS by 2-21 % for lower ASPs, and slash our DCF-based target price to Rp20,000 (WACC 11%, LT growth 0%). Our Underperform call is intact as we foresee a limited recovery for coal prices and earnings risks.
Hit by weak coal prices
ITMGs weaker-than-expected 1H13 core net profit and negative earnings trend in 2Q13 (-19% qoq) mainly reflect a weaker ASP (US$76.8/t in 2Q13, -4% qoq). On a more positive note, 2Q13 cost was flat qoq and came in at US$62.9/t, as the stripping ratio was maintained at 11.7x in 2Q13. Its 1H13 sales volume of 14Mt (+13% yoy) was slightly ahead of our expectation and helped support 1H13 earnings.
previous guidance of US$80/t). ITMG has contracted 95% of its 2013 volume, with 84% sold at a fixed price but 16% (11% index-linked and 5% unsold) still exposed to market prices. If coal price fails to recover above US$85/t, it could face potential asset write-downs. Deferred stripping and development & exploration costs in 1H13 rose to US$79m and US$147m, respectively collectively accounting for 24% of its book value.
Dwindling yield
Margin, write-down risks
The key concerns still revolve around the potential impact of weak coal prices. Management is now guiding for 2013 ASP to come in slightly lower than 1H13s ASP of US$78/t (vs. its
FYE Dec (US$ m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort. EBIT Interest expense Interest & invt inc Exceptionals Pretax profit Tax Tax rate (%) Net profit Core net profit EPS (US$) Core EPS (US$)
Thanks to positive surprises from Chinas industrial output growth, ITMG's share price has recently outperformed on growth recovery expectations. Our base-case coal price scenario still expects a price recovery to be capped by supply growth, hence limiting ITMGs earnings recovery upside and re-rating potential. Our revised FY14 EPS forecast implies a 2014 dividend yield of 5%, which is higher than its peers but insufficient to justify its premium valuation, in our view.
Result Comparison
2Q13 527 (442) 85 16% (15) 70 (0) 3 0 73 (21) 29% 52 54 0.05 0.05
2Q12 626 (460) 166 27% (14) 152 (1) 3 0 154 (32) 21% 122 127 0.11 0.11
yoy % chg (15.9) (4.0) (48.7) 7.3 (53.9) (86.4) (8.5) 39.1 (52.6) (32.4) (57.8) (57.9) (57.8) (57.9)
1Q13 563 (463) 99 18% (14) 85 (0) 2 8 94 (22) 24% 72 66 0.06 0.06
qoq % chg (6.4) (4.7) (14.2) 3.9 (17.2) 11.5 20.8 (95.3) (22.6) (4.2) (28.3) (19.1) (28.3) (19.1)
6M13 1,090 (905) 184 17% (29) 155 (0) 5 8 167 (44) 26% 123 118 0.11 0.10
6M12 1,204 (856) 349 29% (27) 321 (2) 6 4 330 (83) 25% 247 244 0.22 0.22
yoy % chg (9.5) 5.8 (47.1) 8.0 (51.8) (81.5) (24.0) 122.0 (49.2) (46.9) (50.0) (51.8) (50.0) (51.8)
FY 13F Comment 2,323 Lower ASP; slightly-ahead volume (1,864) Slightly lower cost 459 20% (52) 407 Below due to ASP miss 0 8 0 415 (110) 26% 305 Below due to ASP miss 305 0.27 0.27
Page 41
August 14, 2013
INDONESIA
PROPERTY - OVERALL
SHORT TERM (3 MTH)
LONG TERM
Conviction| |
Notes from the Field
Treading it lightly
Current Indonesia property valuations imply a 10% bond yield or 250bp above the current level, suggesting that the sector has entered a global bear case scenario. Is it time to be more cautiously positive?
Figure 1: Earnings yield gets a little bit more attractive
Lydia TOISUTA
T 6221 30061724 E lydia.toisuta@cimb.com
20%
18% 16% 14% 12%
Linda LAUWIRA
T 6221 30061734 E linda.lauwira@cimb.com
10%
8% 6% 4% 2%
During the 1998 Indonesian property market collapse, debt problems arose with loans to property developers, not loans to property buyers (regarding the new LTV policy).
Anton Sitorus, head of Research, Jones Lang LaSalle
0% Dec-07
Dec-08
Dec-09 Earnings yield
Dec-10 Govt bond yield
Dec-11
Dec-12
Highlighted Companies Ciputra Development

As it is the only bigger-cap with a steady upward ROCE trajectory, we continue to like the group. The fact that it has earlier entry into the second- and third-tier cities in Indonesia should give it a competitive advantage.
We still think companies with better risk management and growth prospects amid the uncertainty will be winners. We stay Overweight and our top picks are CTRA, ASRI and SMRA. Catalysts are good presales number and solid project launches. Foreign money outflow combined with unsavoury signals from Bank Indonesia (BI) on interest rates and its mortgage policy have brought the sector down by 45% from the peak. The good news is that we are at the tail end, if not back to square one, of the foreign outflow if we compare Jul 13 to Jan 13. Yet, the likelihood of a tighter policy regarding property purchases and mortgage rate hike have caused market jitters. We are confident that the change in target segment to the mass market in the long term is a natural structural shift in any developing market. In our view, the preventive measure pulled by the BI will keep the sector and its buyers relatively healthy and reduce long-term default risk. Some developers have shown the ability to improve ROCE not solely through
ASP and we believe those will be rewarded accordingly.
Strong balance sheet
Tail end of sell-off?
Summarecon Agung
One of the solid property developers out there with good investment assets and growing to boot, the companys current valuation combined with its steadier return outlook, in our view, offer buying opportunities.
Cash is important, even more so nowadays given the uncertainty in the external financing market, huge backlog development and increasing borrowing cost. On average, 70% of the cash as of 1H13 is free cash for expansion and near-term working capital, indicating that developers ability to stay solvent in this uncertain hour is high. Also, while D/E has inched up, more than half of reporting companies are still in net cash positions.
Alam Sutera
Its valuation is attractive with more upside risk from one-off asset sales. The Serpong asset is still the main cash generator and we view the success of new project launches and eventually earnings growth as the main re-rating catalysts for the stock.
Selective picks
The correlation between bond yield and equity performance shows an arbitrary buying opportunity. While the 10-year government bond is now trading at 7.5%, the implied risk-free rate reflected by property stocks is much higher at 10% or 250bp above. While keeping in mind these facts as well as macro and outflow risk, we believe that stocks with the highest conviction of turnover growth will win.
Page 42
AirportsTHAILAND
August 14, 2013
Airports of Thailand
AOT TB / AOT.BK Current THB182.0 THB150.0 THB135.0 -17.6%
Conviction| |
3QFY13 RESULTS NOTE

US$8,317m
THB260,000m
Market Cap
US$26.30m
THB810.7m
Avg Daily Turnover
30.0%
Free Float
1,429 m shares
CIMB Analyst(s)
On top of its game

AOTs 9MFY13 core earnings reached 86% of the consensus full-year estimate (80% is considered in line) as its airport traffic surpassed expectations. Nevertheless, the stocks rich valuation seems to be allowing little deviation from the prevailing blue-sky scenario.
Monchai JATURANPINYO, CFA

T (66) 2 657 9224 E monchai.ja@cimb.com
Raymond YAP, CFA
Share price info

Share price perf. (%) Relative Absolute Major shareholders Ministry of Finance Nortrust Nominees State Street Bank and Trust 1M 6.3 6.7 3M 29.9 20.1 12M 159.2 178.9 % held 70.0 5.0 2.9
With 9MFY13 core earnings forming 90% of our full-year forecast, we raise our FY13-15 forecasts by 12-14% as we up our traffic estimates. We also raise our DCF-based target price (9.8% WACC, 5% long-term traffic growth). AOT stays at an Underperform. Traffic growth normalisation due to an enlarged base can challenge its rich valuations.
Fairy tale continued
AOTs 3QFY13 core profit weakened 20% qoq due to seasonality. More relevant was the 106% yoy surge, which showcased its operating leverage as the 19% gain in pax traffic was achieved on a flat cost base. The balance sheet continued to strengthen. Cash & investments piled up to THB40.9bn while loans were paid down further to THB42.5bn. AOT raised the hedge ratio of its yen loans from 78% to 94%, with the remaining unhedged portion being only THB7.6bn. This should contain any mark-t0-market impact from these loans.
qoq % chg (9.4) (0.2) (15.3) 0.7 (19.2) 14.1 7.4 49.5 (67.6) (30.2) (29.8) 162.3 (30.1) (30.1) (19.9) (19.9) 3QFY13 cum 27,284 (11,432) 15,852 58.1 (3,539) 12,313 (1,484) 968 110 2,953 14,860 (3,758) 25.3 (8) 11,094 7.77 8,896 6.23 3QFY12 cum 22,573 (10,424) 12,149 53.8 (3,426) 8,723 (1,558) 939 45 (31) 8,118 (3,155) 38.9 (7) 4,956 3.47 4,976 3.48 yoy % chg 20.9 9.7 30.5 3.3 41.2 (4.7) 3.1 144.1 9,497.5 83.1 19.1 11.8 123.9 123.9 78.8 78.8
Tourism should remain the brightest spot for the Thai economy. Tourist arrivals jumped 20% yoy to 12.7m during Jan-Jun 2013. The key growth contributor is likely to still be Chinese travellers (18% of the total), who surged 95% yoy and accounted for half of Thailands total rise in tourist arrivals during the period. We raise our international pax traffic growth forecast for FY13 from 20% to 23% while keeping the domestic growth forecast at 17%. We assume no pax fee hikes until FY17, when Suvarnabhumi Phase 2 will be completed. AOT has turned from the stock that could do no right to the one that can do no wrong. This shift is too extreme. In our estimate, for AOT to be priced above THB200/share (+10% from here), the current pace of 20% p.a. pax traffic growth must be sustained over the next two years. That sounds like a tall order.
Outlook
Once doubted, now adored
Results comparison
FYE Sep (THB m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort. EBIT Interest expense Interest & invt inc Other income Exceptionals Pretax profit Tax Tax rate (%) Minority interests Net profit EPS (THB) Core net profit Core EPS (THB) 3QFY13 8,877 (3,811) 5,066 57.1 (1,180) 3,886 (531) 335 65 412 4,167 (1,021) 24.5 6 3,152 2.21 2,841 1.99 3QFY12 7,601 (3,959) 3,642 47.9 (1,135) 2,507 (506) 324 65 (1,042) 1,347 (650) 48.3 6 702 0.49 1,380 0.97
yoy % chg 16.8 (3.7) 39.1 3.9 55.0 4.8 3.6 0.0 139.6 209.4 57.0 11.9 348.9 348.9 105.9 105.9
2QFY13 9,802 (3,819) 5,983 61.0 (1,171) 4,811 (465) 312 43 1,271 5,973 (1,454) 24.3 (10) 4,509 3.16 3,547 2.48
Prev. FY13F 35,078 (17,047) 18,031 51.4 (4,831) 13,200 (1,935) 1,509 2,700 15,473 (3,559) 23.0 11,914 8.34 9,835 6.88
Comments Pax and flight traffic +19% and +17% yoy Well controlled
No addition of major assets
Further cash accumulation JPY loans now 94% hedged
Statutory rate at 23% in FY13, 20% in FY14
9M at 86% of FY13 consensus estimates

Page 43
HospitalsTHAILAND
August 14, 2013
Bangkok Dusit Med Service

BGH TB / BGH.BK Current THB148.5 THB192.0 THB192.0 29.3%
Conviction| |
2QFY13 RESULTS NOTE

US$7,342m
THB229,501m
Market Cap
US$16.12m
THB497.1m
Avg Daily Turnover
35.4%
Free Float
1,545 m shares
CIMB Analyst(s)
In doctors we trust
2Q13 core profit met our forecast and consensus. With aggressive network expansion, we believe BGHs strong growth will continue over the next few years.
1H13 core profit forms 43% of our full-year forecast. With 2H normally stronger than 1H, we are keeping our EPS, Outperform and target price at 34x CY14 P/E, an 8% discount to its 2006 peak. Continued earnings strength on the back of an expanded network should catalyse its share price. Its current weakness (related to general market weakness) offers good buying opportunities, in our opinion. On the other hand, gross margins weakened from 32.2% in 2Q12 and 34.5% in 1Q13 to 31.5% in 2Q13. BGH had recruited more nurses to meet higher demand for its current services and in preparation for its new hospitals, which should be up-and-running next year. And as it had to add non-clinical staff to cater to an expanded network, its SG&A as a percentage of revenue also rose from 18.9% in 2Q12 to 21.1% in 2Q13; the figure was 17.6% in 1Q13. In 1Q13, BGH had raised its stake in the Thonburi Medical Center (formerly Krungdhon Hospital) from 20% to 45%. It also raised its stake in Medic Pharma from 49% to 86.2%. Revaluation of its investments in both resulted in a THB131m gain on fair-value adjustments.
Kasem PRUNRATANAMALA, CFA

T (66) 2 657 9221 E kasem.prunratanamala@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Prasartthongorsoth family Thongtang family 1M -3.4 -3 3M -5.4 -15.2 12M 32.2 51.9 % held 30.5 15.2
Still double-digit topline growth
Revenue grew 11% yoy in 2Q13, though down 4% qoq. Thai-patient revenue grew 10% yoy, while international-patient revenue jumped 11% yoy. International patients still accounted for 27% of its revenue in 2Q13. Outpatient revenue grew 10% yoy while inpatient revenue rose 11% yoy.
THB131m revaluation gain
Gross margins weakened
FYE Dec (THB m)
Result comparison
2QFY13 11,548 (10,531) 1,017 8.8 617 1,633 (246) 16 253 1,657 (256) 15.5 (54) 1,347 1,216 0.87 0.79
2QFY12 10,393 (9,128) 1,265 12.2 422 1,687 (212) 16 206 1,697 (345) 20.3 (71) 1,280 1,280 0.83 0.83
Revenue Operating costs EBITDA EBITDA margin (%) Others EBIT Interest expense Interest & invt inc Associates' contrib Pretax profit Tax Tax rate (%) Minority interests Net profit Core net profit EPS (THB) Core EPS (THB)
yoy % chg 11.1 15.4 (19.6) 46.2 (3.2) 15.9 0.6 23.1 (2.3) (25.7) (24.4) 5.2 (5.1) 5.2 (5.0)
1QFY13 12,007 (10,121) 1,886 15.7 441 2,327 (212) 10 312 2,437 (410) 16.8 (79) 1,948 1,948 1.26 1.26
qoq % chg (3.8) 4.0 (46.1) (43.9) 39.9 (29.8) 16.0 59.8 (18.8) (32.0) (37.4) (31.6) (30.9) (37.6) (30.9) (37.6)
2QFY13E Cum 23,555 (20,652) 2,903 12.3 1,057 3,960 (458) 27 565 4,094 (666) 16.3 (133) 3,295 3,164 2.13 2.05
2QFY12 Cum 21,059 (18,179) 2,880 13.7 2,634 5,515 (405) 32 281 5,423 (803) 14.8 (146) 4,475 2,680 2.90 2.90
yoy % chg 11.9 13.6 0.8 (59.9) (28.2) 13.1 (16.4) 100.8 (24.5) (17.0) (8.8) (26.4) 18.1 (26.3) (29.3)
Prev. FY13F Comments 50,067 In line (43,017) Under control 7,051 14.1 Lower than expected 1,982 Higher than expected 9,033 (961) 48% net gearing 60 935 Better than expected 9,066 (1,382) 15.2 In line (347) 7,337 THB131m revalation of KDH & Medic Pharma 7,337 In line with our forecast and consensus 4.7 4.7
Page 44
HotelsTHAILAND
August 14, 2013
Central Plaza Hotel

CENTEL TB / CENT.BK Current THB36.25 THB43.00 THB41.00 18.6%
Conviction| |
2QFY12 RESULTS NOTE

US$1,565m
THB48,938m
Market Cap
US$2.40m
THB73.92m
Avg Daily Turnover
45.0%
Free Float
1,350 m shares
CIMB Analyst(s)
Thriving in the land of smiles

Centels 2Q13 results met our forecast and consensus expectations. We expect it to deliver strong growth over the next few years on the back of Thailands tourism boom and network expansion for both the hotel and food businesses.

Share price info

Share price perf. (%) Relative Absolute Major shareholders Chirathivat family 1M 15.6 16 3M 4.6 -5.2 12M 115.7 135.4 % held 45.0
1H13 core profit was in line, at 51% of our full-year forecast. We keep our EPS numbers but raise our target price by 5% to THB43 as we now apply a CY14 P/E of 29x, 2 s.d. above its 3-year historical average instead of 28x based on 1.5 s.d. given the better outlook. We reiterate our Outperform call as strong tourist arrivals and higher same-store-sales growth (SSSG) should allow it to sustain its share price outperformance. Centels 2Q13 hotel revenues advanced 28% yoy, thanks to both higher occupancy and average daily room rate (ADR), which in turn was driven by the 21% rise in tourist arrivals. Revenue per available room (RevPar) jumped 35% yoy. Its hotel gross margins also improved nicely from 26.8% in 2Q12 to 27.7% in 2Q13.
With tourist arrivals expected to rise 20% this year and 12% next year, its hotel business should perform well.
Centels F&B revenues rose 11.7% yoy, largely due to an increase in outlets as SSSG softened to 2.2% in 2Q13 from 3.2% in 1Q13. However, its F&B gross margin showed a nice uptick from 45.9% in 2Q12 and 44.6% in 1Q13 to 47.2% in 2Q13. We expect its margins to remain healthy for the rest of the year.
Decent showing from food business
Strong hotel performance
SG&A as a percentage of revenues moved up slightly to 30.6% in 2Q13 from 29.1% in 2Q12 and 26.1% in 1Q13. Net gearing also edged up slightly to 116% in 2Q13 from 110% in 1Q13 but was better than 2Q12s 155%.
SG&A and net gearing under control
FYE Dec (THB m)
Result comparison
2Q13 4,248.9 (3,802.0) 446.9 10.5 446.9 (129.0) (8.0) 309.9 (123.6) 39.9 2.4 188.7 0.14 188.7 0.14 2Q12 3,566.4 (3,170.7) 395.8 11.1 395.8 (122.6) (28.9) 244.3 (122.1) 50.0 (9.0) 113.2 0.08 113.2 0.08
Revenue Operating costs EBITDA EBITDA margin (%) EBIT Interest expense Associates' contrib Pretax profit Tax Tax rate (%) Minority interests Net profit EPS (THB) Core net profit Core EPS (THB)
yoy % chg 19.1 19.9 12.9 12.9 5.2 (72.3) 26.9 1.3 126.7 66.7 66.7 66.7 66.7
1Q13 4,538.3 (3,670.8) 867.5 19.1 867.5 (120.6) 37.6 784.5 (100.8) 12.8 (34.6) 649.1 0.48 649.1 0.48
qoq % chg (6.4) 3.6 (48.5) (45.0) (48.5) 7.0 (121.3) (60.5) 22.7 106.9 (70.9) (70.9) (70.9) (70.9)
2Q13 Cum 8,787 (7,473) 1,314 15.0 1,314 (250) 30 1,094 (224) 20.5 (32) 838 0.62 838 0.62
2Q12 Cum 7,646 (6,209) 1,438 18.8 1,438 (242) 28 1,224 (238) 19.5 (33) 952 0.71 952 0.71
yoy % chg 14.9 20.4 (8.6) (8.6) 3.1 4.5 (10.6) (5.8) (2.4) (12.0) (12.0) (12.0) (12.0)
Prev. FY13F 17,937 (15,380) 2,557 14.3 2,557 (531) 70 2,096 (419) 20.0 (46) 1,631 1.21 1,631 1.21
Comments In line Under control Better than expected In line 116% net gearing
In line
In line with our forecast and consensus
Page 45
ConstructionTHAILAND
August 14, 2013
CH. Karnchang
CK TB / CK.BK Current THB20.90 THB33.60 THB35.00 60.8%
Conviction| |
2QFY13 RESULTS NOTE

US$1,105m
THB34,539m
Market Cap
US$35.19m
THB1,084m
Avg Daily Turnover
57.3%
Free Float
1,653 m shares
CIMB Analyst(s)
Nailing it with strong margins

CKs 1H13 core earnings met our and consensus expectations. Revenues jumped 87% and the company was able to sustain double-digit gross margins. With its hefty order backlog and tame building material prices, CK can be counted on for a continued strong showing.

Share price info

Share price perf. (%) Relative Absolute Major shareholders Trivisvavet family Bangkok Bank 1M 10.8 11.2 3M -12.1 -21.9 12M 178.9 198.6 % held 39.9 2.3
1H13 core earnings came in at 54% of our full-year forecast, which we deem in line. Our forecasts are, therefore, intact, along with our Outperform call. But our SOP target price is reduced slightly due to the lower market values for listed units. We believe that success in landing more government infrastructure projects will catalyse its share price. CKs construction revenues rose 87%, thanks to its heavy order backlog of THB108bn, equivalent to more than three years of revenue. There is, therefore, no concern on this front even though public infrastructure projects may be delayed if the Constitution Court rules against the governments THB2tr infrastructure spending bill.
We think that it can sustain high margins over the next few years given the weak competition and tame building material prices. However, we are still concerned about its high net gearing of 165%, which entails a heavy interest burden.
Construction boom
THB1.1bn from sale of BMCL stake
CK reduced its stake in Bangkok Metro (BMCL) from 24.61% to 16.64%, booking THB1.1bn gains from the sale in 2Q13. It booked only THB20m gain from the sale of some shares in Thai Tap Water (TTW) in 2Q12, a fraction of 1Q13s THB2.2bn gain. CK had also booked THB3.8bn gain from fair value adjustment for its holding in TTW in 1Q13 but did not make any FV adjustments in 2Q13 and 2Q12.
Margins still high
As expected, CK maintained double-digit gross margins in 2Q13.
FYE Dec (THB m) Revenue Operating costs EBITDA
Result comparison
2QFY13 8,716 (7,729) 988 11.3 (152) 1,090 1,926 (409) (180) 1,336 (75) 6 (12) 1,248 224 0.76 0.14
2QFY12 4,764 (4,058) 706 14.8 (112) 594 (327) (26) 241 (102) 42 (7) 132 132 0.08 0.08
yoy % chg 83 90 40 36 224 25 595 454 (26) 88 843 69 843 69
1QFY13 8,481 (7,515) 965 11.4 (105) 6,025 6,885 (382) (73) 6,431 (1,358) 21 (3) 5,070 434 3.07 0.26
qoq % chg 3 3 2 45 (72) 7 149 (79) (94) 313 (75) (48) (75) (48)
2QFY13 Cum 17,197 (15,244) 1,953 11.4 (257) 7,115 8,811 (791) (253) 7,768 (1,434) 18 (15) 6,318 658 3.82 0.40
2QFY12 Cum 9,221 (8,042) 1,178 12.8 (217) 961 (632) 78 407 (155) 38 (12) 241 241 0.15 0.15
yoy % chg 87 90 66 18 817 25 (426) 1,807 824 33 2,526 173 2,526 173
Prev. FY13F Comments 32,496 Higher than expected (29,852) Under control 2,644 Higher than expected 8.1 Higher than expected (500) In line 7,603 Gain from selling BMCL 9,747 Higher than expected (1,509) In line (150) Worse than expected 8,088 Higher than expected (445) Higher than expected 6 (30) 7,613 1,229 In line with our forecast and consensus 4.61 consensus 0.74
EBITDA margin (%) Depn & amort. Others EBIT Interest expense Associates' contrib Pretax profit Tax Tax rate (%) Minority interests Net profit Core net profit EPS (THB) Core EPS (THB)
Page 46
Retail THAILAND
August 14, 2013
Siam Global House

GLOBAL TB / GLOB.BK Current THB21.00 THB32.50 THB32.50 54.8%
Conviction| |
2Q13Y RESULTS NOTE

US$1,756m
THB54,878m
Market Cap
US$3.86m
THB117.2m
Avg Daily Turnover
38.7%
Free Float
2,152 m shares
CIMB Analyst(s)
Building a power house

Globals 1H13 core profit formed 41% of our full-year estimate and 43% of consensus. However, this was mainly due to the front-loaded SG&A and interest expenses for store openings. 2H13 outlook remains bright with increasing store numbers ahead of the peak season in 4Q.
Marcin SPIEWAK, CFA

T (66) 2 657 9223 E marcin.sp@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Suriyawanakul family Siam Cement Plc Mr. Jiranai Lertratchakul 1M 2.5 2.9 3M -9.1 -19.2 12M 66.8 85.7 % held 37.0 30.0 2.4
We deem the results as broadly in line and maintain our earnings estimates and DCF-based target price of THB32.5. It remains an Outperform with store openings and margin expansion as catalysts.
Demand remains robust
Globals 2Q13 revenue of THB3.8bn was broadly in line at 42% of our FY13 estimate, despite the low SSSG of 6.4% in 2Q (and 7% in 1H13). Management kept its full-year forecast of 10% SSSG in FY13 as it expects a pickup in 4Q13. Gross margin in 2Q fell 30bp on seasonality, while 1H13 gross margin was on track to achieve the companys full-year target of near 16%, helped by higher private label goods contributions in 2H13. SG&A expenses spiked in 2Q due to four store openings (vs. one in 1Q). 2Q13 core profit of THB231m (-22%qoq, +60%yoy) brought the 1H13 core profit to THB527m, 41% of our FY13 forecast. However, we are not concerned as we expect higher
qoq % chg 1 3 -14 9 -19 163 n/a n/a n/a -23 -22 n/a -22 -22 -22 -22 2QFY13 cum 7,473 -6,615 858 11.48 -177 680 -26 0 0 0 655 -131 20 3 527 527 0.24 0.24 2QFY12 cum 5,225 -4,633 592 11.33 -131 461 -81 0 0 0 380 -97 26 0 283 283 0.18 0.18 yoy % chg 43 43 45 35 48 -68 n/a n/a n/a 72 35 -22 n/a 86 86 38 38
earnings in 2H13, especially in 4Q. Management confirmed that the demand remains robust (we agree) and it is on track to meet its store expansion, sales and margin targets (which closely match our assumptions). Its first distribution centre (DC) is also on track to open in 1H14.
Big improvements in 4Q
We expect 3Q numbers will remain soft (echoed by the management) given the rainy season and high SG&A expenses as seven stores are due to open in 2H13. However, we believe that 4Q will benefit as the store openings will be in time for the peak season for home construction.
Top pick in the sector
We believe that Globals earnings growth justifies its high P/E valuation and the stock will continue to re-rate due to 1) robust product demand; 2) rapid store expansion; and 3) improved inventory days once its DC is operational.
Results Comparison FYE Dec (THB m) Revenue Operating costs EBITDA 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 (THB) Core EPS (THB) 2Q FY13 3,751 -3,354 397 10.58 -92 304 -19 0 0 0 286 -57 20 2 231 231 0.11 0.11 2Q yoy % FY12 2,681 -2,376 305 11.39 -68 237 -43 0 0 0 194 -50 26 0 144 144 0.08 0.08 chg 40 41 30 35 28 -57 n/a n/a n/a 47 16 n/a 60 60 31 31 1QFY13 3,722 -3,261 461 12.38 -85 376 -7 0 0 0 369 -74 20 1 296 296 0.14 0.14 Prev. Comments FY13F 17,691 Branch sales 42% of our full-year estimate, 43% of consensus -15,533 2Q13 Gross margin 15.2% (flat yoy), SG&A/sales increased 2,158 12.20 -486 1,672 -66 0 0 0 1,606 -321 20 0 1,285 1,285 0.60 0.60 to 9.7% from 8.2% in 1Q13 - given 4 store openings in 2Q expected to increase in 2H with more store openings in line with increased leverage in 2Q
in line
1H core profit formed 41% of our full-year estimates and 43% of consensus.
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 Prince Frog International within the preceding 12 months.
Page 47
August 14, 2013
THAILAND
ECONOMIC UPDATE
CIMB Analyst(s)
Juls external reserves: reversal of fortunes

Thailands foreign reserves bucked two months of decline to rise by US$1.4bn to US$172.2bn at end-Jul, thanks to renewed capital inflows into the countrys equity and bond markets on subsiding risk aversion. Although we remain wary of capital-flow volatility given the prospective unwinding of quantitative easing in the US, should there be any sharp pullback in capital flows, we believe its strong accumulation of reserves can help absorb the financial volatility. Backed by still-positive pull factors, we maintain our year-end foreign-reserve estimate of US$160bn-170bn.
The Bank of Thailand (BOT)'s foreign-exchange reserves reversed two months of sharp decline (-US$7.6bn in May-Jun) to post a US$1.4bn gain to US$172.2bn at end-Jul (US$170.8bn at end-Jun). This level was sufficient to cover 9.4 months of imports, and was equivalent to 2.6x short-term external debt. 7M13 reserves were down US$9.4bn against +US$0.3bn a year ago. Investors fears of an early end to ultra-easy monetary policies in the US had subsided, as demonstrated by portfolio investors re-entry into equity and bond markets: 1) foreign investors bought a net THB41.3bn (US$1.3bn) of government bonds in Jul, reversing their net selling of THB46bn (US$1.5bn) in the past two months. Foreign holdings of government bonds dipped to 17.9% in Jun (18.9% in May), just as we had anticipated last month; and 2) net purchases of equities amounted to THB0.5bn (US$17.4m) in Jul, reversing three months of decline totalling THB80.5bn (US$2.6bn). Foreign holdings of equities at month-end inched up to 35.9% from 35.6% in Jun.
Julia GOH
T (60) 3 20849698 E julia.goh@cimb.com
Despite poor market sentiment, investors will soon return to hunt for bargains on the back of listing companies' healthy performances and the sound economy.
Paiboon Nalinthrangkurn, Chairman of the Federation of Thai Capital Market Organizations
Foreign reserves reversed two months of decline...
...as risk aversion subsided
Breather for the baht
The recent pullback in capital flows from Thai financial markets had helped to take some steam off the baht, which fell sharply by 6.3% in May-Jul, though the decline narrowed to 0.2% in early Aug to THB31.3/US$1 on 14 Aug. This was a welcome relief to the BOT, which was earlier contemplating capital controls to curb the bahts strong gains (prior to its recent correction), which had threatened to undermine the countrys export competitiveness. We believe that economic fundamentals should remain supportive of a gradual appreciation of the baht over the medium term. However, in the near term, we think policymakers would not be too averse to a weaker exchange rate, if triggered by a sharp retrenchment of capital. Our Treasury desk estimates that the baht could touch THB32/US$1 by end-Dec 13.
Figure 1: Thailands external reserves
End-period: Stock of external reserves US$ bn THB tr Change (US$ bn) Net forward position (US$ bn) Oct-12 181.4 5.6 -2.2 26.3 Nov-12 181.6 5.6 0.2 24.8 Dec-12 181.6 5.6 0.0 24.1 Jan-13 181.7 5.4 0.1 23.6 Feb-13 179.3 5.3 -2.4 23.1 Mar-13 177.8 5.2 -1.5 23.7 Apr-13 178.4 5.2 0.6 23.6 May-13 175.3 5.3 -3.1 23.5 Jun-13 170.8 5.3 -4.5 23.7 Jul-13 172.2 5.4 1.4 23.0
SOURCES: BOT, CIMB RESEARCH
Page 48
Telco - IntegratedIndia
August 14, 2013
Bharti Airtel
US$22,423m
Rs1,372,307m
FLASH NOTE
Current Rs343.3 Rs310.0 Rs310.0 -9.7%
Conviction| |
BHARTI IN / BRTI.BO
SHORT TERM (3 MTH)
LONG TERM
Market Cap
US$23.73m
Rs1,393m
Avg Daily Turnover
34.8%
Free Float
3,799 m shares
CIMB Analyst(s)
Deep dive into Africa losses

The FY13 annual report revealed that losses for the companys growth initiatives (Africa, Bangladesh, Sri Lanka & DTH operations) expanded to Rs9.7/share in FY13 (vs. Rs7.3/share in FY12). Managements priority in Africa shifts to generate free cash, PAT and reduction in net debt.
The key to watch for is the turnaround in profitability for the five African countries, which contributed 84% of Airtel Africas net loss in FY13. We maintain our Underperform rating and SOP-based target price. The de-rating catalysts are spectrum payouts for licence renewals and greater competition from Reliance Industriess TD-LTE launch. FY12), and 2) the start-up losses in Rwanda (Figures 5 and 6). In the FY13 annual report, management highlighted the following priorities for its African operations, by stating that, Priority will be on registering absolute revenue growtheliminate wastage to drive superior margins. Focus on free cash, PAT and reduction in net debt will be our other key priorities in the coming year. This is in comparison to the following excerpt from the FY12 annual report, Key focus areas would include grow non-voice revenues, deeper distribution, superior network quality and Africa leadership development.
Piyush CHOUDHARY Sanjesh JAIN
T (91) 22 6602 5170 E piyush.choudhary@cimb.com T (91) 22 6602 5169 E sanjesh.jain@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Bharti Telecom Sing Tel Indian Continent 1M 15.4 12.4 3M 10 8.2 12M 22.4 31.6 % held 43.6 14.8 6.7
Airtels FY13 annual report reveal ed that losses in its growth initiatives (Africa, Bangladesh, Sri Lanka and DTH operations) expanded to Rs9.7/share in FY13 (vs. Rs7.3/share in FY12). However, the losses in the Bangladesh and Sri Lanka operations have stabilised at Rs3.9/share in FY13 (Figures 1 and 2). Under its African operations, five countries (Nigeria, Kenya, Ghana, DRC and Uganda) contributed ~84% of Airtel Africas net losses (Figure 4). Africas losses expanded yoy due to: 1) the Malawi operations registered a net loss in FY13 (vs. net profit in
Losses remain elevated in growth initiatives
86% floating rate debt
Of the FY13 gross debt of Rs733bn, 66% were US$-denominated (vs. FY12s 70%) and 86% were floating rate borrowings (vs. FY12s 91%). A 1% pt increase in interest rate for US$ borrowings would lower pretax profit by Rs4.8bn (~6% of FY14 pretax profit).
Price Close 380 360 340 320 300 280 260 240 25 220 20 15 10 5
Aug-12 Nov-12 Source: Bloomberg Feb-13
Relative to SENSEX (RHS) 130 125 120 115 110 105 100 95 90
Financial Summary
Revenue (Rsm) Operating EBITDA (Rsm) Net Profit (Rsm) Normalised EPS (Rs) Normalised EPS Growth FD Normalised P/E (x) DPS (Rs) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x) Mar-12A 715,058 237,123 42,594 11.22 (30%) 30.61 1.00 0.291% 8.36 89 122% 2.58 8.6% Mar-13A 803,590 248,704 22,757 5.99 (47%) 57.31 1.00 0.291% 7.88 54 104% 2.27 4.2% Mar-14F 897,412 292,065 50,513 12.63 111% 27.19 1.00 0.291% 6.64 NA 74% 2.00 8.0% 0% 1.12 Mar-15F 977,223 325,458 67,090 16.77 33% 20.48 1.00 0.291% 5.53 1,944 49% 1.83 9.3% 0% 0.99 Mar-16F 1,064,694 362,365 87,866 21.95 31% 15.64 1.00 0.291% 4.51 135 24% 1.64 11.1% 1.00
Vol m
May-13

242.3
343.3
367.4
Current
310.0
Target
Page 49
Media - IntegratedIndia
August 14, 2013
Eros International Media

EROS IN / EROS.BO Current Rs129.3 Rs168.0 Rs176.0 29.9%
Conviction| |
1QFY14 RESULTS NOTE

US$193.4m
Rs11,885m
Market Cap
US$0.54m
Rs31.43m
Avg Daily Turnover
25.1%
Free Float
91.92 m shares
CIMB Analyst(s)
Getting closer to big releases

Above-expected 1Q14 results hold Eros in good stead to meet our FY14 forecasts, as timely execution on future releases is visible. Structural drivers, such as DAS driving TV rights/library monetisation and scale-up of HBO partnership and of box office potential, are intact.
Srinivas SESHADRI Anubhav JAIN
T (91) 22 6602 5160 E srinivas.seshadri@cimb.com T (91) 22 6602 5161 E anubhav.jain@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Eros PLC Indus Capital Advisors Government Pension Fund 1M -3.9 -6.9 3M -20.3 -22.1 12M -34.9 -25.7 % held 74.9 4.7 1.5
1Q14 EPS at 16% of our full year forecast, was above expectations due to more releases and base cost control. We revise FY14/15/16 EPS by -6%/+3%/-6%, finetuning movie release assumptions. With the stock down 22% (last three months), without much change in prospects, we upgrade it to Outperform, but cut our DCF-based target of Rs168 (from Rs176). Key catalyst is big movie releases in 3Q.
forecast.
FY14 outlook steady
Good show in 1Q14
1Q topline of Rs1.86bn was ahead of our forecast of Rs1.61bn, as Eros capitalised on late stage overseas distribution opportunities. Gross margin at 29.5% was up 114bp yoy, on the strong performance of the quarters mid-budget releases and the mark-up on overseas rights transferred to the parent. EBITDA margin at 21.2% was up 106bp yoy (CIMB est. 18.3%), as G&A costs fell c42% on tight cost control. With below-the-line provision writebacks, PAT at Rs293m beat our Rs175m
The FY14 movie release pipeline on the whole remains steady, with a couple of mid-small budget movie slippages into FY15 being offset by other additions. Eros is confident of releasing scheduled big-budget movies in FY14, which supports our forecasts. We do not rule out upside to our box office forecasts, given the upsurge in collections seen for recent movies. DAS should drive up broadcasting rights pricing, while monetisation through new revenue streams like digital and HBO partnership augur well for margins.
3Q releases are a catalyst
We believe big-budget releases that are bunched in 3Q will drive the stocks performance, even as FY15 pipeline should take better shape by then. While we believe there are risks to margins on overseas transfer pricing, these are factored into our forecasts.
Results Comparison
FYE Mar (Rs m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort. EBIT Interest expense (net) Other income Pretax profit Tax Tax rate (%) Minority interests Net profit EPS (Rs) 1Q FY14 1,863 1,468 395 21.19 13 382 -46 79 415 -135 32.51 13 293 3.19 1Q FY13 2,570 2,053 517.4 20.13 17 501 -21 22 502 -205 40.83 18 314 3.42 yoy % chg -27.51 -28.48 -23.68 -25.60 -23.61 nm 255.4 -17.26 -34.11 nm -6.68 -6.73 4Q FY13 2,123 1,707 417 19.62 15 401 -18 16 399 -90 22.51 9 318 3.46 qoq % Comments chg -12.25 Revenues were down 27.5% as no major movies were scheduled during the quarter, as against a -13.97 strong release quarter in the previous year -5.19 EBITDA margin expansion despite a small base was due to tight control on base costs -18.83 -4.66 nm 390.1 Other income was higher yoy due to reversal of certain bad debt provisions 3.98 50.17 nm -7.71 -7.80 Strong margin performance helped arrest yoy EPS decline to 6.7% yoy
Page 50
AirportsIndia
August 14, 2013
GMR Infra
Market Cap
1QFY14 RESULTS NOTE

Current Rs13.35 Rs32.78 Rs33.65 145.6%
Conviction| |
GMRI IN / GMRI.BO
SHORT TERM (3 MTH)
LONG TERM
US$849.1m
Rs51,964m
US$2.61m
Rs150.7m
Avg Daily Turnover
28.4%
Free Float
3,892 m shares
CIMB Analyst(s)
Execution on course
1Qs EBITDA growth of 8% yoy was in line with our estimate. The airport divisions profit improvement and recovery in power division receivables surprised us. The improved capacity utilisation of new projects and divestment programme will help ease debt servicing.
Pramod AMTHE Kunal JHAVERI
T (91) 22 6602 5167 E pramod.amthe@cimb.com T (91) 22 6602 5168 E kunal.jhaveri@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Carmignac Gestion A/c LIC New Leaina Investment 1M -21.6 -24.6 3M -35.7 -37.5 12M -47.4 -38.2 % held 3.6 2.9 2.1
1Qs core loss was Rs3.3bn vs. our FY14 forecast loss of Rs3.8bn. We deem the results in line as we expect a return to profitability in 4Q with the stabilisation of new project capacity utilisation. Maintain Outperform and estimates, but with a slightly lower SOP-based target price for the impact of new airport competition for its Istanbul asset from FY18. A lower debt burden and better valuations for its asset divestment are stock triggers.
and tax increased by 13% qoq to Rs1.6bn but recovered Rs6.5bn in dues pending from Tamil Nadu SEB. Management has reaffirmed its strategy to operationalise pending projects as well as undertake debt refinancing and divestments to bring the company back into the black and reduce its debt burden (+6% qoq to Rs358bn). With the new projects utilisation levels improving in the coming quarters, we expect losses to ease from 2Q onwards, and hence maintain our financial estimates. We incorporate the risk of the third Istanbul airport bid that was out recently on its GMR Istanbul airport asset in form of traffic growth limitation post FY18. This trims our SOP-based target price to Rs.32.8, at which it will be trading at 1.14x FY15 P/E.Maintain Outperform.
Maintain estimates
EBITDA inline
GMRs 1Q EBITDA increased by 8% yoy to Rs.6.4bn, in line with our expectation. But with the new project commissioning leading to higher depreciation expenses (14% qoq), net loss increased by 140% yoy and 68% qoq to Rs3.3bn. In terms of divisional EBIT, airports and roads recorded sharp yoy improvements with the help of new tariffs and new project commissioning, respectively. The power divisions loss before interest
Outperform maintained
Results Comparison
FYE Mar (Rs m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort. EBIT Interest expense Other Income Pretax profit Tax Tax rate (%) Minority Interest Net profit Exceptionals Core net profit EPS (Rs) Core EPS (Rs) 1Q 1Q 4Q Prev. yoy % chg qoq % chg Comments FY14 FY13 FY13 FY14F 21,637 23,101 (6.3) 20,011 8.1 119,788 1.5% surprise in net sales driven by airport division 15,209 6,429 29.71 3,109 3,320 6,098 538 (2,240) 652 (29) 442 (3,260) 74 (3,335) (0.8) (0.9) 17,134 5,967 25.83 2,530 3,437 4,804 652 (714) 850 (119) (157) (943) 464 (1,407) (0.2) (0.4) (11.2) 12,402 7.7 388.1 22.9 (3.4) 26.9 (17.6) 213.6 (23.3) nm nm 245.7 nm nm nm nm 7,609 38.02 2,722 4,887 6,082 742 (453) 687 (152) 842 5,792 7,773 (1,981) 1.5 (0.5) 22.6 (15.5) (831.3) 14.2 (32.1) 0.3 (27.5) 394.7 (5.0) nm nm (156.3) nm nm nm nm 81,154 38,634 32.25 15,245 23,552 26,257 2,395 (309) 1,951 (630) 1,562 (3,822) High losses disappoint due to power plants low utilisation (3,822) (1.0) (1.0)
Inline EBITDA, as higher power division higher losses are covered by airport profits
Interes cost flatten qoq
Page 51
MiningIndia
August 14, 2013
Hindalco Industries
HNDL IN / HALC.NS Current Rs91.40 Rs100.3 Rs120.6 9.8%
Conviction| |
1QFY14 RESULTS NOTE

US$2,859m
Rs174,993m
Market Cap
US$13.89m
Rs807.3m
Avg Daily Turnover
67.9%
Free Float
1,915 m shares
CIMB Analyst(s)
Novelis faces the heat

1QFY14 standalone EBITDA at Rs4.8b (+3% yoy and -26% qoq) was in line with our estimate. Noveliss EBITDA, however, disappointed at US$204m (-21% yoy and -15% qoq) which was 7% below estimates as it faced pricing pressures across region.
Rahul JAIN
T (91) 22 6602 5172 E rahul.jain@cimb.com
Rahul KUMAR
T (91) 22 6602 5171 E rahul.kumar@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Promoter Group LIC India Franklin Templeton 1M -6.5 -10.2 3M -10.6 -13 12M -33.8 -24.7 % held 32.1 10.1 3.8
1Q standalone EPS was 31% above our estimates due to non-recurring other income of Rs2.0bn. However, we cut our EPS estimates by 14-25% for FY14-16 as we lower our commodity forecasts by 8-9% and Novelis volumes by 2%. We maintain a Neutral rating with a lower SOP-based target price of Rs100.
India business in line
-16.2% qoq) was impacted by i) a 48% yoy drop in the North American segments income due to lower can volumes and pricing pressures, ii) a 16% yoy drop in the South American segments income due to unfavourable conversion costs and iii) flat income in the Asia segment despite a 16% yoy increase in volumes due to lower conversion premiums. However, Novelis may have hit a prolonged rough patch over the medium term due to i) a structural shift in North American can sheet demand and ii) a sharp slowdown in Brazil coupled with inflationary pressures. However, the capacity ramp-up and recycling initiatives which are likely to be gradual over FY14-16 would partially offset the slowdown in the can sheet businesses.
1QFY14 EBITDA was in line with our estimate at Rs4.8b (down 26% qoq, up 3% yoy). Standalone aluminium output was 137kt (+5.3% yoy) and copper output was 68kt (-1.4% yoy). Aluminium EBIT at Rs2.5b was down 7.8% yoy and copper EBIT at Rs0.8b was up 7.2% yoy. However, it awaits the commissioning of Rs250bn of projects for its India operations. Trial runs have begun at the i) 0.36mt Mahan aluminium smelter and ii) Utkal alumina refinery.
Cut Earnings
Novelis hits a rough patch
Novelis reported 1Q14 volumes at 708kt (-1.9% yoy). Adjusted EBITDA/t at US$288/t (-19.7% yoy &
YoY% (3) (4) 3 7 83 42 12 14 12 12 4QFY13 69,938 63,505 6,432 9.2 1,726 1,577 2,312 5,442 621 11 4,820 2.5 QoQ% (17) (16) (26) 6 (6) 85 6 62 (2) (2) Prev. FY14F 874,735 787,634 87,101 10.0 34,250 26,950 7,430 33,331 8,200 25 25,131 13.1
We cut our EBITDA estimates by 6-10% for FY14-16 as we lower our commodity forecasts by 8-9% and Novelis volume forecasts by 2%.
Result Comparison
(Rs m) Revenue Operating costs EBITDA EBITDA margins (%) Depreciation Interest expense Other income Pre tax profit Tax Tax rate (%) Net profit EPS (Rs.) 1QFY14 58,379 53,595 4,785 8.2 1,831 1,487 4,279 5,746 1,005 17 4,741 2.5 1QFY13 60,279 55,648 4,631 7.7 1,705 815 3,014 5,126 878 17 4,248 2.2 Comments 1Q revenues in line 1Q EBITDA in line
Non-recurring other income of Rs2.0b
1Q PAT 31% above estimates
Page 52
ConstructionIndia
August 14, 2013
IVRCL Ltd
Market Cap
1QFY14 RESULTS NOTE

Current Rs11.40 Rs10.80 Rs17.00 -5.3%
Conviction| |
IVRC IN / IVRC.BO
SHORT TERM (3 MTH)
LONG TERM
US$57.17m
Rs3,499m
US$2.80m
Rs161.0m
Avg Daily Turnover
86.3%
Free Float
306.9 m shares
CIMB Analyst(s)
Record losses
IVRCL reported its biggest-ever quarterly core net loss of Rs695m in 1QFY3/14 as EBITDA margin collapsed to a historic low on a 17% decline in sales. We keep it at Underperform as its net debt continues to rise and bankruptcy risk is high.
Pramod AMTHE Kunal JHAVERI
T (91) 22 6602 5167 E pramod.amthe@cimb.com T (91) 22 6602 5168 E kunal.jhaveri@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders HSBC Global investment fund ICICI Pru Life Insurance Soma Hotels & Resorts 1M -26.2 -29.9 3M -38.7 -41.1 12M -84.1 -75 % held 5.2 4.1 3.8
1Q EBITDA fell 47% yoy to Rs653m, 39% below our estimate. Instead of Rs221m net profit, we now expect a net loss in FY14 and also cut FY15-16 forecasts by 19-35%. We think IVRCL will gradually return to profits by 4QFY14. We slash our SOP-based target price as we lower our FY15 P/E target to 5x (lower end of sector range of 5-7x) from 8x to reflect poor profitability and equity dilution risks from funding of new projects. IVRCLs EBITDA margin collapsed by nearly 380bp yoy to hit a historic low of 6.5% on the back of a 17% sales dip, leading to nearly 47% yoy decline in EBITDA. Even though interest expenses eased marginally (-7% yoy and -4% qoq), the sharp margin collapse pushed its net loss to a historic high of Rs695m. Net debt rose 22% qoq to Rs290bn in a seasonally weak quarter. The results were sharply below estimates 8% on sales and 39% on EBITDA.
Record quarterly loss
After returning to PAT breakeven level in 4QFY13, the company again slipped into red in 1QFY14. Considering the deterioration in the economy in recent months, we cut our EBITDA forecast by 20% for FY14 and around 3% for FY15-16. We now expect a net loss in FY14, while it should return to profitability in the seasonally good 4QFY14. The management expects to monetise its Chennai desalination plant in the Sep quarter.
EPS cut after 1Q loss
Maintain Underperform
Considering that the prolonged economic slowdown will delay turnaround of leveraged companies such as IVRCL, we cut our FY15 target P/E from 8x to 5x (lower end of the sector range of 5-7x) to reflect its poor ROE and equity funding requirements for its BOT road projects. This reduces our SOP-based target price to Rs10.8.
Results Comparison
FYE Mar (Rs m) Revenue Operating costs EBITDA EBITDA margin (%) Depn & amort. EBIT Interest expense Other Income Pretax profit Tax Tax rate (%) Net profit Exceptionals Core net profit EPS (Rs) Core EPS (Rs) 1Q FY14 10,068 9,416 653 6.48 226 427 1,279 77 (775) (81) 10 (885) 190 (695) (2.9) (2.3) 1Q yoy % chg FY13 12,071 (16.6) 10,830 1,241 10.28 214 1,026 1,376 452 102 162 159 (60) (60) (0.2) (0.2) (13.1) (47.4) (379.7) 5.2 (58.4) nm (83.0) (859.1) (149.7) nm 1,374.2 nm 1,057.6 1,374.2 1,057.6 4Q qoq % chg FY13 14,943 (32.6) 13,604 1,338 8.96 217 1,121 1,327 256 50 170 339 60 180 (120) 0.2 (0.4) (30.8) (51.2) (247.7) 3.8 (61.9) (3.6) (69.9) (1,645.4) (147.4) nm (1,569.9) nm 479.9 (1,569.9) 479.9 Prev. Comments FY14F 57,308 Revenue missed estimates by 8.5% 52,066 5,242 9.15 896 4,346 4,575 550 321 99 31 221 221 0.7 0.7
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 China Machinery Engineering within the preceding 12 months.
EBITDA 39% below our estimates, as margins are 318bp below our estimates
Interest expense 16% above our estimates
Loss agianst our estimate of Rs10m profit
Page 53
SteelIndia
August 14, 2013
Tata Steel
1QFY14 RESULTS NOTE

Current Rs241.4 Rs237.4 Rs267.0 -1.7%
Conviction| |
TATA IN / TISC.NS
SHORT TERM (3 MTH)
LONG TERM
US$3,831m
Rs234,451m
Market Cap
US$26.40m
Rs1,540m
Avg Daily Turnover
69.4%
Free Float
971.4 m shares
CIMB Analyst(s)
Margins improve in Europe

Consolidated EBITDA at Rs36.9b (+8% yoy and -16% qoq) was 10% above our estimate due to an improvement in EBITDA/t for its European operations. Standalone EBITDA at Rs28.3bn (+2% yoy and -14% qoq) was, however, 3% below our estimate.
Rahul JAIN
T (91) 22 6602 5172 E rahul.jain@cimb.com
Rahul KUMAR
T (91) 22 6602 5171 E rahul.kumar@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Promoter Group LIC India Government of Singapore 1M -4.4 -8.1 3M -18.6 -21 12M -48.1 -39 % held 31.4 15.0 1.7
1Q core PAT was 87% above our estimate due to higher tax credits. Hence, we raise our FY14 earnings by 29% but maintain FY15-16 earnings. Maintain Underperform with a lower target price of Rs237, based on 5.5x FY15 EV/EBITDA as we roll forward . Soft economic conditions and domestic pricing pressures remain key de-rating catalysts.
at 4.0mt (+1.7% yoy & -5% qoq). The steel ASP was US$1,045/t (-11% yoy & flat qoq). Its international operations reported EBITDA/t of US$38/t (-7% yoy & +16% qoq).
Key highlights
1QFY14 consolidated EBITDA was 10% above estimates at Rs36.9b. Standalone EBITDA was 3% lower than our estimate at Rs28.3b. However, reported PAT rose sharply to Rs11.4b due to lower tax on the back of tax credits from actuarial gains and deferred taxes. Standalone steel sales volumes were at 2.0mt (+27% yoy & -12% qoq). The steel ASP at US$799/t (-16% yoy & -2% qoq) was 2% above estimates. EBITDA/t at US$253/t (-22% yoy & -6% qoq) was 6% below estimates. International steel sales volumes were
A seasonal swing in profitability
Key highlights from the earnings call: i) management is yet to decide on the Stemcors assets, ii) Tata Steel incurred capex of Rs37.6bn in 1QFY14, primarily for its greenfield expansion in Orissa, iii) the company has so far incurred capex of Rs95bn for Orissa out of the total planned capex of Rs230bn and iv) an improvement in margins for its European operations was on the back of actions taken over the last several years despite weak market conditions.
Roll forward our valuations
We roll forward our valuations to FY15 and lower our target price to Rs237. We believe that the improvement in EBITDA for its international operations is seasonal in nature.
(Rs m)
Result comparison
1QFY14 328,048 (291,168) 36,880 11.2 (14,033) (9,924) 1,836 178 14,937 (3,514) 11,423 29 (62) 11,390 11,213 11.5
1QFY13 338,212 (304,179) 34,033 10.1 (13,080) (9,690) 2,894 14,157 (8,986) 5,170 410 399 5,979 5,979 6.2
yoy% (3) (4) 8 7 2 (37) 6 121
4QFY13 346,505 (302,815) 43,689 12.6 (14,696) (9,947) (679) (74,128) (55,760) (11,015) (66,775) 1,391 99 (65,285) 8,843 9.1
qoq% (5) (4) (16) (5) (0)
Prev. FY14F Comments 1,414,401 1Q revenues 4% above estimates 1,291,815 122,587 1Q EBITDA 10% above estimates 8.7 (64,092) (45,647) 11,972 24,820 (16,133) Lower taxes due to deferred taxes and tax credits 8,687 2,359 813 11,859 11,859 12.2
Revenue Operating costs EBITDA EBITDA margins (%) Depreciation Interest expense Other income Extraordinary Pre tax profit Tax Reported profit Minority Interest Associate Income PAT after MI Core Profit Core EPS
nm nm nm
91
nm
Page 54
PharmaceuticalsIndia
August 14, 2013
Wockhardt Ltd
WPL IN / WCKH.BO Current Rs440.6 Rs500.0 Rs715.0 13.5%
Conviction| |
1QFY14 RESULTS NOTE

US$785.7m
Rs48,273m
Market Cap
US$13.94m
Rs802.6m
Avg Daily Turnover
26.4%
Free Float
706.7 m shares
CIMB Analyst(s)
Weak 1Q; uncertainties galore

Wockhardt reported weak financials with a 5% yoy decline in revenues and a 320bp yoy decline in EBITDA margins. While 1QFY3/14 core EPS was 32% of our FY14 estimate, it was 7% below our expectation as we expect weaker revenues across markets in FY14.
Prakash AGARWAL Nishith SANGHVI
T (91) 22 6602 5153 E prakash.agarwal@cimb.com T (91) 22 6602 5152 E nishith.sanghvi@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders LIC SBI Vanguard 1M -51 -54 3M -73.1 -74.9 12M -73.7 -64.5 % held 1.7 1.1 0.6
As a result, we reduce our FY14-16 EPS by 13-16%. Given the increasing regulatory uncertainties at its facilities (483 observation at Chikalthana, the delay of inspection at Shendra and ongoing issues at Waluj), we raise our P/E discount to the mid-cap pharma sector to 50% which leads to a lower target price, based on 6x FY15 P/E. A successful resolution of the USFDA issues is an upside to our Neutral rating.
business was weak on account of ongoing pricing policy issues and the early impact of the ban on its key product. Thus, the weakness in its higher-margin businesses resulted in a 320bp yoy (570bp qoq) decline in EBITDA margins to 31%. These factors, coupled with a lower tax-rate of 10% resulted in PAT (adjusted for forex loss) at Rs3.38bn (-16% yoy). Apart from the ongoing uncertainties regarding the USFDA resolution timeline for Wockhardts Waluj facility (13% of FY13 revenues), there have been 483 observations for its Chikalthana facility (23% of FY13 revenues, includes Toprol). While Wockhardt states that it is now better prepared to resolve USFDA queries, the risk of a USFDA warning letter remains. Also, the planned site transfer from Waluj to the Shendra injectables facility could be delayed as the proposed inspections have not happened yet but are expected within the next couple of months.
Uncertainties galore
Weak 1Q on all counts
1QFY14 revenues declined by 5% yoy (1% growth on a like-for-like basis) led by the US (7% in US$ terms and 11% in Rs terms), the EU (-10%) and India (+3%). We note that the qoq decline in US revenues (from US$152m to US$125m) was due to a seasonal impact, pricing pressure for key products and the early impact of the USFDA import alert. Also, its Europe business was weak on account of negative growth for Pinewood and the early impact of the recall/import alert for its UK business. Its India
Results Comparison
YE Mar (Rs m) Revenue Operating costs Core EBITDA EBITDA margin (%) Depreciation Interest expense Forex loss/ (gain) Exceptionals Profit / (loss) Pretax profit Tax rate (%) Reported profit Core net profit Reported EPS (Rs/ share) Core EPS (Rs/ share) 1Q FY14 13,584 9,372 4,212 31.0 323 174 210 47 3,613 10.5 3,234 3,380 29.56 30.89 1Q FY13 14,260 9,240 4,590 34.2 300 460 190 -70 4,090 7.3 3,780 4,040 34.55 36.93 -14.4 -16.3 -14.4 -16.3 7.7 -62.2 10.4 -11.7 yoy % chg -4.7 1.4 -8.2 4Q FY13 14,855 9,398 5,457 36.7 328 607 254 -107 4,271 21.6 3,348 3,631 30.60 33.19 -3.4 -6.9 -3.4 -6.9 -1.3 -71.3 -17.4 -15.4 13,074 18.0 10,721 10,721 7% lower than estimates 98.00 98.00 qoq % chg -8.6 -0.3 -22.8 Prev. FY14F Comments 51,198 10% lower than estimates 37,208 13,990 15% lower than estimates 27.3 1,357 -42 -41
Page 55
AirlinesPhilippines
August 14, 2013
Cebu Air
2QFY13 RESULTS NOTE

Current PHP66.05 PHP112.0 PHP112.0 69.6%
Conviction| |
CEB PM / CEB.PS
SHORT TERM (3 MTH)
LONG TERM
US$915.0m
PHP40,023m
Market Cap
US$0.61m
PHP25.90m
Avg Daily Turnover
0.2%
Free Float
613.2 m shares
CIMB Analyst(s)
Cost-driven outperformance
Cebu Air reported 1H13 core net profits that comprised 61% of full-year forecasts against a typical 55%. However, we consider the results as broadly in line with expectations in anticipation of a tougher 2H13 due to the peso depreciation and likely initial losses on the A330 flights.
Raymond YAP, CFA
Share price info

Share price perf. (%) Relative Absolute Major shareholders JG Summit Holdings PCD Nominee (non-Filipino) PCD Nominee (Filipino) 1M -2 -2.3 3M -9 -18.8 12M -27.2 -2.9 % held 67.2 23.6 8.9
We maintain our Outperform call and target price basis of 11x CY14 P/E (sector average). Our EPS forecasts are unchanged pending this afternoons analyst conference call. We believe Cebu Air is poised to benefit from a return to rationality in the domestic aviation market and this will re-rate the stock. Cebu Air posted a Php257m net profit for 2Q13, two-thirds below last years 2Q. However, this was mainly due to Php1.5m in foreign exchange translation losses, which in turn was caused by the impact of the 5.4% depreciation of the peso over the 2Q. Stripping these and other one-offs out, Cebu Airs 2Q13 core net profit was 42% higher yoy while 1H13 core net profit was 93% more yoy. This was driven by 9-10% ASK capacity growth, 10-12% RPK demand growth as load factors rose and a 6-7% fall in unit costs as fuel prices fell 5-9% yoy. This was partially offset by 3.7% yoy lower
Highlights of 2Q13
yield in 2Q13 although 1H13 yield was flat yoy. We believe yields fell because (1) Easter was celebrated in Apr last year against Mar this year, (2) fuel surcharges may have declined, (3) the two recent airplane incidents may have required some discounting to rebuild consumer confidence, and/or (4) Cebu Air intentionally discounted to gain market share as PLFs rose.
A tougher 2H13?
It will likely be challenging for Cebu Air to repeat 1Hs stellar earnings in the next half-year because of the weaker peso and start-up losses on the A330 operations to Dubai. The 2H is also seasonally weaker than 1H. During the conference call, we hope to clarify the real reasons behind the surprising yoy decline in 2Q passenger yields after the impressive 5% yoy rise in 1Q13 yield, which may shed light on the current competitive landscape.
Key questions
Results comparison
FYE Dec (Php m) Revenue Operating costs EBITDA 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 (Php) Core EPS (Php) 2QFY13 2QFY12 11,184.2 10,388.3 (8,826.6) (8,708.3) 2,357.6 1,680.0 21.1 16.2 (835.1) (669.4) 1,522.5 1,010.6 (207.7) (190.2) 66.5 116.6 18.1 17.6 (1,491.7) 20.8 (92.3) 975.4 349.7 (202.0) 378.8 20.7 257.3 773.4 1,366.4 962.7 0.42 1.26 2.23 1.57 yoy % chg 7.7 1.4 40.3 24.7 50.7 9.2 (43.0) nm (109.5) 273.1 nm (66.7) 41.9 (66.7) 41.9 qoq % 2QFY13 chg Cum 6.1 21,726.5 4.7 (17,257.3) 11.7 4,469.1 20.6 5.4 (1,627.2) 15.4 2,841.9 9.9 (396.6) (25.7) 156.0 37.2 nm (1,346.0) (106.7) 1,292.4 253.5 121.8 (9.4) nm (77.8) 1,414.2 (1.4) 2,752.2 (77.8) 2.31 (1.4) 4.49 2QFY12 yoy % Cum chg 19,729.2 10.1 (16,970.4) 1.7 2,758.8 62.0 14.0 47.1 22.5 (1,328.1) 1,430.7 98.6 (365.3) 8.6 247.4 (37.0) 36.0 778.7 (272.9) (39.3) 2,127.4 (391.7) 131.1 18.4 nm (18.5) 1,735.8 93.0 1,425.8 2.83 (18.5) 2.33 93.0 Prev. FY13F 45,844.9 37,822.5 8,022.4 17.5 (3,244.8) 4,777.6 (886.6) 555.1 80.0 4,526.0 (362.1) 8.0 4,163.9 4,526.0 6.79 7.38 Comments 2Q13 revenue increased 8% yoy as capacity and RPKs expanded. This was partially offset by the 4% drop in yield, as the peak (and higher yielding) Easter travel was in 1Q13, as opposed to 2Q12. The drop in fuel prices further aided EBITDA, which rose 40% yoy in 2Q13. Depreciation expense increased as the number of owned aircraft has increased from 27 in 2Q12 to 32 in 2Q13. Forex losses of Php1.4bn in 2Q13 as US$ strengthened against peso; classified as exceptionals. Positive taxes in 2Q13, but no explanation offered. 1H13 core profit accounted for 61% of full-year forecast, as opposed to a more typical 55%, due to lower fuel price partially offset by drop in 1H13 yield. Still, we think the results are broadly in line, as 2H13 could be tougher.
Page 56
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ASIA PACIFIC DAILY

August 15, 2013
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If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR.. As of August 14, 2013, CIMBR does not have a proprietary position in the recommended securities in this report. South Korea: This report is issued and distributed in South Korea by CIMB Securities Limited, Korea Branch ("CIMB Korea") which is licensed as a cash equity broker, and regulated by the Financial Services Commission and Financial Supervisory Service of Korea. The views and opinions in this research report are our own as of the date hereof and are subject to change, and this report shall not be considered as an offer to subscribe to, or used in connection with, any offer for subscription or sale or marketing or direct or indirect distribution of financial investment instruments and it is not intended as a solicitation for the purchase of any financial investment instrument. This publication is strictly confidential and is for private circulation only, and no part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB Korea. Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell to any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden. Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered with the Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China through a public offering or in circumstances which constitutes an offer or a placement within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approval of the Financial Supervisory Commission of the Republic of China. Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBS. Corporate Governance Report: The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. CIMBS does not confirm nor certify the accuracy of such survey result. Score Range: 90 100 80 89 70 79 Below 70 or No Survey Result Description: Excellent Very Good Good N/A United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates. United Kingdom and Europe: In the United Kingdom and European Economic Area, this report is being disseminated by CIMB Securities (UK) Limited (CIMB UK). CIMB UK is authorised and regulated by the Financial Services Authority and its registered office is at 27 Knightsbridge, London, SW1X 7YB. This report is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are persons that are eligible counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the Order); (c) are persons falling within Article 49 (2) (a) to (d) (high net worth companies, unincorporated associations etc) of the Order; (d) are outside the United Kingdom; or (e) are pe rsons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with any investments to which this report relates may otherwise lawfully be communicated or caused to be communicated (all such persons together being refe rred to as relevant persons). This report is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will be engaged in only with relevant persons.
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ASIA PACIFIC DAILY

August 15, 2013
Only where this report is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent "investment research" under the applicable rules of the Financial Services Authority in the UK. Consequently, any such non-independent report will not have been prepared in accordance with legal requirements designed to promote the independence of investment research and will not subject to any prohibition on dealing ahead of the dissemination of investment research. United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand) Co. Ltd, CIMB Securities Limited, CIMB Securities (Australia) Limited, CIMB Securities (India) Private Limited,and is distributed solely to persons who qualify as "U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc. Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
Recommendation Framework #1 * Stock Sector OUTPERFORM: The stock's total return is expected to exceed a relevant OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 12 months. expected to outperform the relevant primary market index over the next 12 months. NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected benchmark's total return. to perform in line with the relevant primary market index over the next 12 months. UNDERPERFORM: The stock's total return is expected to be below a relevant UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 12 months. expected to underperform the relevant primary market index over the next 12 months. TRADING BUY: The stock's total return is expected to exceed a relevant TRADING BUY: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 3 months. expected to outperform the relevant primary market index over the next 3 months. TRADING SELL: The stock's total return is expected to be below a relevant TRADING SELL: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 3 months. expected to underperform the relevant primary market index over the next 3 months. * 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)
Recommendation Framework #2 ** Stock Sector OUTPERFORM: Expected positive total returns of 10% or more over the next 12 OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of +10% or better over the next 12 months. NEUTRAL: Expected total returns of between -10% and +10% over the next 12 NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) months. an equal number of stocks that are expected to have total returns of +10% (or better) or -10% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +10% to -10%; both over the next 12 months. UNDERPERFORM: Expected negative total returns of 10% or more over the next 12 UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of -10% or worse over the next 12 months. TRADING BUY: Expected positive total returns of 10% or more over the next 3 TRADING BUY: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of +10% or better over the next 3 months. TRADING SELL: Expected negative total returns of 10% or more over the next 3 TRADING SELL: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of -10% or worse 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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REGIONAL DAILY

August 15, 2013

Asia Pacific Daily

HSCEI HSI Sensex JCI Nikkei

MSCI Asia Pacific XJ

IBES/MSCI Market Valuations

CIMB Rec. Weight UW OW n.a. UW UW N N n.a. n.a. OW N N OW n.a.

WTI spot (US$/bbl) Gold (US$/oz) Baltic Dry Index

Close 107 1,327 1,060

% chg 0.0% 0.0% 5.3%

YTD 16.3% 0.0% 51.6%

Cebu Air- Cost-driven outperformance (14/8) | P56

ASIA PACIFIC DAILY

NZ: Centuria Property Trust Deal RS Mumbai: Castro India NDR

US: Singapore Consumer Marketing

IND: Independence Day

UK: Summer Bank Holiday ; PHIL: National Heroes Day

KL: National Day

SOURCES: CIMB, COMPANY REPORTS

ASIA PACIFIC DAILY

US: Labor Day

KL: PTT NDR

LDN/UK: Digi NDR JPN: Autumnal Equinox Day

LDN/UK: Digi NDR

LDN/UK: Digi NDR

SOURCES: CIMB, COMPANY REPORTS

ASIA PACIFIC DAILY

CIMB Daily Revisions

Mkt Cap Date

Recommendation Lead Analyst

Price Target Curr

Year EPS Forecasts Prev

2,311.54 Alan STUART

$ 108,495.90 John BUONACCORSI

2014 2015 2016

4,950.64 Richard COLES

2014 2015 2016

1,312.14 Alexander BEER

2014 2015 2016

4,999.68 Andrew HODGE

2013 2014 2015

1,166.33 Michael EVANS

2013 2014 2015

Primary Health Care

2,364.56 Dr Derek JELLINEK

2014 2015 2016

772.54 Julian GUIDO

2014 2015 2016

554.83 Matthew NICHOLAS

2013 2014 2015

6,116.76 Michael NEWBOLD, CFA

2013 2014 2015

Cathay Pacific Airways

7,233.14 Andrew ORCHARD

2013 2014 2015

Eros International Media

193.44 Srinivas SESHADRI

2014 2015 2016

845.72 Pramod AMTHE

2014 2015 2016

3,059.91 Rahul JAIN

2014 2015 2016

55.69 Pramod AMTHE