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BNP PARIBAS Summary

Core Content

BNP Paribas provides a comprehensive analysis of market trends and company research across different regions, focusing on Asia, Japan, and Australia. The report includes macroeconomic insights, equity strategy updates, and specific company analyses with target prices, earnings forecasts, and investment ratings.

Main Points

Hong Kong Property Market

• Weak Volume During CNY Holidays: Primary market sales dropped by 33.3% compared to the previous weekend, with only one unit sold in the secondary market.
• Market Outlook: Developers plan to re-launch projects in the coming weeks, including Sino Land's Providence Peak and SHKP's Riva.
• Centaline Index: The Centa-City Leading Index fell by 0.54% w-w to 117.56, marking a YTD decline of 1.3%.

Indonesia: Light at the End of the Tunnel

• IDR Stability: Indonesia's currency (IDR) has remained stable despite global volatility, attributed to tighter monetary policy and reduced external financing needs.
• Trade Data: December saw a USD1.5bn trade surplus, the largest in over two years, indicating a narrowing current account deficit.
• Risks: Continued concerns over China's growth and financial stability could limit further IDR appreciation.

Australia: RBA Decision (Feb 2014)

• Cash Rate Unchanged: The RBA kept the cash rate at 2.5%, signaling a move toward a neutral policy stance.
• Inflation Outlook: Inflation is expected to remain within the target band (2–3%) over the medium term, with a potential Q1 2014 spike due to lagged effects of the weaker AUD.
• Economic Conditions: Growth is expected to remain below trend for some time, with uneven performance across sectors.

Key Companies Analysis

Quanta Computer (2382 TT)

• Rating: REDUCE (unchanged)
• Target Price: TWD66.00 (up from TWD57.00)
• Performance: Market share gains do not guarantee structural recovery in a shrinking market.
• Earnings: 2014E and 2015E earnings are raised by 6.1% and 5.8%, respectively.
• Valuation: Current P/E and P/B ratios are seen as stretched, with a 12% downside risk.

SK Innovation (096770 KS)

• Rating: BUY (unchanged)
• Target Price: KRW180,000 (up from KRW127,000)
• Performance: 4Q13 reported a surprise operating loss of KRW25b, driven by inventory and FX losses.
• Outlook: Near-term prospects are clouded, but expected to improve in 2H14 with PX plant restarts.
• Risks: Sharp crude price declines or a hard landing in China could negatively impact performance.

Bank of Yokohama (8332 JP)

• Rating: BUY (unchanged)
• Target Price: JPY690.00 (up from JPY486.00)
• Performance: 3Q NP was slightly above forecast, and the bank is on track for a stronger full-year performance.
• Valuation: P/BV at the low end of its range, suggesting potential for further appreciation.
• Catalysts: Share buybacks and possible dividend hikes are expected to support the stock.

Chiba Bank (8331 JP)

• Rating: BUY (unchanged)
• Target Price: JPY860.00 (up from JPY610.00)
• Performance: 3Q NP in line with forecast.
• Valuation: P/B at 0.7x, with P/E at 10.5x.
• Risks: None highlighted, but the bank's performance is expected to improve.

Dainippon Screen (7735 JP)

• Rating: HOLD (unchanged)
• Target Price: JPY550 (up from JPY459)
• Performance: Strong orders expected in Apr-Jun, but tablet shipments are under pressure.
• Valuation: P/E at 19.5x, P/B at 1.3x.
• Risks: Weak tablet demand could affect sales.

Fujifilm Holdings (4901 JP)

• Rating: HOLD (unchanged)
• Target Price: JPY2,900 (down from JPY3,001)
• Performance: T705 conditional approval expected, with 3Q OP outperforming expectations.
• Valuation: P/E at 19.0x, P/B at 0.7x.
• Risks: Uncertainty around the approval process.

Ibiden Co (4062 JP)

• Rating: HOLD (unchanged)
• Target Price: JPY1,900 (up from JPY1,742)
• Performance: 3Q OP outperformed consensus and forecasts.
• Valuation: P/E at 15.8x, P/B at 0.8x.
• Risks: None highlighted, but the company is seen as positive.

Kao Corp (4452 JP)

• Rating: HOLD (unchanged)
• Target Price: JPY3,100
• Performance: Outperformed in 2013, with a positive outlook for 2014.
• Valuation: P/E at 23.7x, P/B at 2.4x.
• Risks: Market volatility could affect performance.

Godrej Consumer Products (GCPL IN)

• Rating: BUY (unchanged)
• Target Price: INR850.00 (down from INR960.00)
• Performance: Growth challenges moderate, with margin disappointment greater than expected.
• Valuation: P/E at 31.8x, P/B at 6.4x.
• Risks: Uncertain demand and inflationary pressures.

Jubilant Foodworks (JUBI IN)

• Rating: BUY (unchanged)
• Target Price: INR1,200.00 (down from INR1,335.00)
• Performance: 3Q weakness but long-term prospects intact.
• Valuation: P/E at 53.1x, P/B at 12.5x.
• Risks: Continued challenges in the food sector.

NHPC Ltd (NHPC IN)

• Rating: HOLD (unchanged)
• Target Price: INR19.30 (down from INR19.50)
• Performance: Disappointing 3Q results due to under-recoveries on new projects.
• Valuation: P/E at 8.1x, P/B at 0.7x.
• Risks: Continued under-recoveries could impact future performance.

Tech Mahindra (TECHM IN)

• Rating: BUY (unchanged)
• Target Price: INR2,060.00
• Performance: 3QFY14 results beat estimates with strong revenue, EBIT, and EPS growth.
• Valuation: P/E at 14.7x, P/B at 4.3x.
• Risks: Potential inflationary pressures and market volatility.

Events and Roadshows

• Asia Pacific TMT Conference: Scheduled for 19–21 May 2014 in Hong Kong.
• Company Roadshows:
  • Hong Kong/China: CapitaCommercial Trust (20–21 Feb 14), HongKong Land (14 Mar 14)
  • Europe: Galaxy Entertainment (12 Feb 14), Sino Land (3–6 Mar 14)
  • US: Shinsei Bank (20–23 May 14)

Summary

BNP Paribas provides detailed market and company insights across multiple regions, emphasizing the need for caution in the face of global economic uncertainties. The Hong Kong property market showed weak activity during the CNY holidays, with developers planning to re-launch projects soon. Indonesia's IDR remains stable, supported by strong trade data and policy adjustments. In Australia, the RBA maintained a neutral stance, with inflation expected to remain within target ranges. Company-specific analyses highlight mixed performance, with some firms showing resilience and others facing challenges. Key investment ratings and target prices are provided, along with potential catalysts for stock movements.