20130912-Maybank_KERPL-Hire_Purchase_Sector_Don_t_Miss_This_Cheap_Stock_13页_889kb

Sector Update Summary - 12 September 2013

Sector Overview

• Sector Index: 1,474.24
• SET Index: 1,393.17
• Overall Rating: Neutral
• Key Focus: Hire Purchase Sector

Core Content and Main Points

Hire Purchase Sector

• The share prices of hire purchase players have been sharply impacted over the past 4-5 months due to the slowing economy, poor car market, and asset quality issues.
• Current valuations are considered very cheap and attractive for long-term investment.
• Recommended Strategy: Accumulation strategy due to lack of short-term catalysts.

Stock Highlights

• KKP:

  • Rating: Buy
  • Target Price: 70.00
  • Upside: 68.7%
  • P/E (12/13F/14F): 8.6/7.5/6.3
  • P/BV (12/13F/14F): 1.1/1.0/0.9
  • EPS Growth (12/13F/14F): 35.6/13.8/19.5
  • ROE (12/13F/14F): 11.9/13.5/14.9
  • Dividend Yield (12/13F/14F): 5.8/6.5/7.8

• TCAP:

  • Rating: Buy
  • Target Price: 50.00
  • Upside: 52.7%
  • P/E (12/13F/14F): 7.6/4.3/5.8
  • P/BV (12/13F/14F): 1.0/0.8/0.7
  • EPS Growth (12/13F/14F): 9.6/79.4/-26.6
  • ROE (12/13F/14F): 13.4/20.7/13.3
  • Dividend Yield (12/13F/14F): 4.3/4.9/5.5

• TISCO:

  • Rating: Buy
  • Target Price: 57.00
  • Upside: 47.1%
  • P/E (12/13F/14F): 7.6/6.6/6.0
  • P/BV (12/13F/14F): 1.6/1.4/1.2
  • EPS Growth (12/13F/14F): 13.4/15.6/10.5
  • ROE (12/13F/14F): 21.5/22.0/21.3
  • Dividend Yield (12/13F/14F): 6.2/6.5/6.7

• ASK:

  • Rating: Buy
  • Target Price: 30.00
  • Upside: 80.7%
  • P/E (12/13F/14F): 10.2/8.5/7.1
  • P/BV (12/13F/14F): 1.6/1.5/1.4
  • EPS Growth (12/13F/14F): 13.1/19.2/21.0
  • ROE (12/13F/14F): 17.5/18.3/20.3
  • Dividend Yield (12/13F/14F): 6.0/8.1/9.9

• THANI:

  • Rating: Buy
  • Target Price: 9.40
  • Upside: 91.8%
  • P/E (12/13F/14F): 13.4/8.4/6.9
  • P/BV (12/13F/14F): 2.6/2.4/1.9
  • EPS Growth (12/13F/14F): 74.0/59.8/21.6
  • ROE (12/13F/14F): 21.1/29.9/30.9
  • Dividend Yield (12/13F/14F): 0.6/5.5/7.1

• TK:

  • Rating: Buy
  • Target Price: 18.00
  • Upside: 68.2%
  • P/E (12/13F/14F): 7.5/8.6/6.2
  • P/BV (12/13F/14F): 1.4/1.3/1.2
  • EPS Growth (12/13F/14F): 14.0/-12.5/38.8
  • ROE (12/13F/14F): 19.3/15.9/20.2
  • Dividend Yield (12/13F/14F): 7.5/6.5/9.3

Car Market

• The used car market has hit bottom and is expected to recover from early next year.
• New car sales dropped after the end of the first car buyer scheme, but are expected to remain at 90-100,000 units/month for the rest of the year.
• Domestic car sales forecast for 2013F: 1.3m units (down 9.4% from last year), and 1.25m units for 2014F.
• Asset quality on first car loans remains solid with low NPL problems.
• NPL ratios have increased in 1Q13 and will accelerate in 2Q13, but are expected to stabilize as the market recovers.

Commercial Truck Industry

• Demand remains strong due to border trade growth.
• Loan, income, and earnings for ASK and THANI have hit new records quarter after quarter.
• NPL ratios are low (0.8% for ASK and 2.3% for THANI).
• The market is expected to grow by 25% in 2013F, following a 52% increase in 2012F.
• ASK and THANI are recommended for their strong growth prospects and attractive valuations.

Motorcycle Industry

• Slowing domestic consumption due to poor agricultural prices depresses motorcycle sales.
• Earnings are expected to hit bottom in 2Q13 and gradually recover in 2H13F.
• Full year motorcycle sales forecast for 2013F: 2.1m units (flat YoY).
• TK is recommended as a dividend play with a 50% share price drop already pricing in negative factors.
• Valuation: 6.1x 2014F PER and a dividend yield of over 6.5%.

Key Information

• Market Sentiment: Negative sentiment on hire purchase sector is not justified as economic slowdown and asset quality issues have been factored in.
• Valuation: Current valuations are very attractive with high dividend yields and reasonable P/E and P/BV ratios.
• Earnings Outlook: Earnings growth is expected to continue, with ASK and THANI showing strong 3-year CAGR forecasts.
• Catalysts: No near-term catalysts are expected, so accumulation strategy is recommended.

Research Team Contact Information

Regional

• Wong Chew Hann, CA: Regional Head, Institutional Research
  Email: wchewh@maybank-ib.com
  Phone: (603) 2297 8686

• Alexander Gart Hoff: Institutional Product Manager
  Email: agarthoff@maybank-ke.com.sg
  Phone: (852) 2268 0638

• Ong Seng Yeow: Regional Head, Retail Research
  Email: ongsengyeow@maybank-ke.com.sg
  Phone: (65) 6432 1453

Economics

• Suhaimi Lijas: Chief Economist (Singapore | Malaysia)
  Email: suhaimi_ilias@maybank-ib.com
  Phone: (603) 2297 8682

• Luz Lorenzo: Chief Economist (Philippines)
  Email: luz_lorenzo@maybank-atrke.com
  Phone: (63) 2849 8836

• Tim Leelahaphan: Chief Economist (Thailand)
  Email: tim.l@maybank-ke.co.th
  Phone: (662) 658 6300 ext 1420

• Juniman: Chief Economist (Indonesia)
  Email: Juniman@bankbii.com
  Phone: (62) 21 29228888 ext 29682

• Josua PardeDE: Economist / Industry Analyst (Indonesia)
  Email: JPardede@bankbii.com
  Phone: (62) 21 29228888 ext 29695

Malaysia

• Wong Chew Hann, CA: Head of Research
  Email: wchewh@maybank-ib.com
  Phone: (603) 2297 8686

• Desmond Ch'ng, ACA: Construction & Infrastructure
  Email: desmond.chng@maybank-ib.com
  Phone: (603) 2297 8680

• LiaW Thong Jung: Banking - Regional
  Email: tjliaw@maybank-ib.com
  Phone: (603) 2297 8688

• Ong Chee Ting, CA: Oil & Automotive
  Email: ct.ong@maybank-ib.com
  Phone: (603) 2297 8678

• Mohshin Aziz: Plantations-Regional
  Email: mohshin.aziz@maybank-ib.com
  Phone: (603) 2297 8692

• Yin Shao Yang, CPA: Aviation - Regional
  Email: samuel.y@maybank-jb.com
  Phone: (852) 2268 0633

• Tan Chi Wei, CFA: Gaming - Regional
  Email: chiwei.t@maybank-ib.com
  Phone: (603) 2297 8690

China / Hong Kong

• Alexander Gart Hoff: Acting Head of Research
  Email: agarthoff@maybank-ke.com.sg
  Phone: (852) 2268 0638

• Jacqueline Ko, CFA: Metals & Mining - Regional
  Email: jacquelineko@kimeng.com.hk
  Phone: (852) 2268 0633

• Terence Lok: Consumer
  Email: terencelok@kimeng.com.hk
  Phone: (852) 2268 0630

• Jeremy Tan: Gaming
  Email: jeremytan@kimeng.com.hk
  Phone: (852) 2268 0635

• Karen Kwan: HK & China Property
  Email: karenkwan@kimeng.com.hk
  Phone: (852) 2268 0640

• Philip Tse: HK & China Property
  Email: philiptse@kimeng.com.hk
  Phone: (852) 2268 0643

• Warren Lau: Technology - Regional
  Email: warrenlau@kimeng.com.hk
  Phone: (852) 2268 0644

India

• Jigar Shah: Head of Research
  Email: jigar@maybank-ke.co.in
  Phone: (91) 22 6623 2601

• Anubhav Gupta: Oil & Automobile
  Email: anubhav@maybank-ke.co.in
  Phone: (91) 22 6623 2605

• Urmil Shah: Metal & Capital Goods
  Email: urmil@maybank-ke.co.in
  Phone: (91) 22 6623 2606

• Varun Varma: Technology & Manufacturing
  Email: varun@maybank-ke.co.in
  Phone: (91) 22 6623 2611

• Gregory Yap: Banking
  Email: gyap@maybank-ke.com.sg
  Phone: (65) 6432 1450

• Wilson Liew: Technology & Manufacturing
  Email: wilsonliew@maybank-ke.com.sg
  Phone: (65) 6432 1454

• James Koh: Property Developers
  Email: jameskoh@maybank-ke.com.sg
  Phone: (65) 6432 1431

• YEAK Chee Keong, CFA: Consumer - Regional
  Email: yeahcheekeong@maybank-ke.com.sg
  Phone: (65) 6432 1460

• Alison Fok: Offshore & Marine
  Email: alisonfok@maybank-ke.com.sg
  Phone: (65) 6432 1447

• ONG Kian Lin: Small & Mid Caps
  Email: ongkianlin@maybank-ke.com.sg
  Phone: (65) 6432 1470

• Wei Bin: S-REITs
  Email: weibin@maybank-ke.com.sg
  Phone: (65) 6432 1455

• Derrick Heng: Logistics
  Email: derrickheng@maybank-ke.com.sg
  Phone: (65) 6432 1446

• John Cheong: Transportation
  Email: johncheong@maybank-ke.com.sg
  Phone: (65) 6432 1461

Vietnam

• Michael Kokalari, CFA: Head of Research
  Email: michael.kokalari@maybank-kimeng.com.vn
  Phone: (84) 838 38 66 47

• Nguyen Thi Ngan Tuyen: Food and Beverage
  Email: tuyen.nguyen@maybank-kimeng.com.vn
  Phone: (84) 844 55 58 88 x 8081

• Hang Yu: Banking
  Email: hang.vu@maybank-kimeng.com.vn
  Phone: (84) 844 55 58 88 x 8087

• Trinh Thi Ngoc Diep: Technology
  Email: diep.trinh@maybank-kimeng.com.vn
  Phone: (84) 844 55 58 88 x 8242

• Dang Thi Kim Thoa: Construction
  Email: thoa.dang@maybank-kimeng.com.vn
  Phone: (84) 844 55 58 88 x 8083

• Nguyen Trung Hoa: Steel
  Email: hoa.nquyen@maybank-kimeng.com.vn
  Phone: +84 844 55 58 88 x 8088

• Nguyen Thi Kim Thoa: Sugar
  Email: thoa.dang@maybank-kimeng.com.vn
  Phone: (84) 844 55 58 88 x 8083

Disclaimer

• This report is for general circulation and informational purposes only.
• No representation is made regarding the accuracy or completeness of the information.
• Opinions or recommendations are subject to change and not personal investment advice.
• Forward-looking statements are based on assumptions and are subject to risks and uncertainties.
• MKE and its representatives are not liable for any losses or damages arising from reliance on this report.