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24 March 2014 DBS Group Research Summary

Core Content Overview

This report provides an analysis of stock performance and recommendations for various companies in Hong Kong, Malaysia, and Thailand, along with market data and commodity indicators. The main focus is on investment ratings, price targets, and key factors influencing stock performance.

Hong Kong Highlights

China Overseas Land (0688 HK)

• Rating: BUY
• Current Price: HK$19.44
• Price Target: HK$29.84
• Key Points:
  • Management plans to maintain a stable dividend policy.
  • Weak YTD sales due to insufficient supply after strong 2013 performance, especially in tier I/II cities.
  • Presales in March are improving.
  • Gross margin is expected to improve as public housing projects' impact on GPM lightens.
  • Near historical trough valuation and strong execution support the BUY recommendation.

Dongyue Group (189 HK)

• Rating: HOLD
• Current Price: HK$3.17
• Price Target: HK$2.90
• Key Points:
  • Industry overcapacity remains a concern.
  • FY13 earnings were 10% above estimates due to a one-off gain.
  • Maintain HOLD with unchanged price target.

GOME (0493 HK)

• Rating: BUY
• Current Price: HK$1.20
• Price Target: HK$1.90 (up from HK$1.80)
• Key Points:
  • FY13 net profit of RMB892m beat expectations due to differentiated product sales, higher telecom income, and cost control.
  • Special DPS of HK2cts and higher payout guidance to 40% (from no more than 30%) is a positive surprise.
  • Strong store performance, strategic alliances, and e-commerce development improve outlook.
  • Raise FY14F/FY15F earnings by 3%/6% and reiterate BUY.

Henderson Land (0012 HK)

• Rating: HOLD
• Current Price: HK$40.70
• Price Target: HK$44.35 (down from HK$45.60)
• Key Points:
  • Enhanced income quality and growing recurrent income.
  • Bonus issue for the second consecutive year is a positive signal.
  • Maintain HOLD with revised price target.

Li & Fung (0494 HK)

• Rating: BUY
• Current Price: HK$10.30
• Price Target: HK$11.30 (down from HK$11.60)
• Key Points:
  • FY13 results were in line with estimates but at the lower end of market consensus.
  • Targeting low teens growth in core operating profit under a new 3-year plan.
  • Margin uptrend continues.
  • Maintain BUY with revised price target.

Malaysia Highlights

MISC

• Rating: BUY
• Reason: Positive streamlining exercise.
• Key Points:
  • Streamlining initiatives are expected to improve efficiency and performance.
  • BUY recommendation is based on the positive outlook for the company's restructuring efforts.

Thailand Highlights

Siam Commercial Bank (SCB TB)

• Rating: HOLD (Downgraded from BUY)
• Current Price: Bt156.00
• Price Target: Bt170.00 (down from Bt180.00)
• Key Points:
  • FY14F earnings revised down by 8% due to softer loan growth and higher credit costs.
  • 1Q14F earnings could contract by 10% y-o-y.
  • Downgrade to HOLD with lower price target due to reduced earnings expectations.

Corporate Access Events (24 Mar - 10 Apr 2014)

Market Data and Indices (21 Mar 2014)

Commodity Indicators (Latest Closing)

Credit Spreads (Latest Closing)

High Conviction Stock Picks

Small & Mid Caps Highlights

Reasons for Picks / Potential Catalysts (Small & Mid Caps)

• Ezon Holdings: Sequential improvement with new service rigs and contracts; strong EPS growth.
• Goodpack: Prime beneficiary of US/Europe recovery; new auto part contract.
• Nam Cheong: Early beneficiary of OSV market revival; potential for 22% CAGR.
• Vard Holdings: Major vessel order; increased net profit forecasts.
• Dah Chong Hong: Laggard in 2013 due to weak sales; improved earnings expected.
• Sa Sa: Strong performance in consumer sector; potential for growth.
• Sound Global: Utilities sector; stable earnings and dividends.
• Bursa Malaysia: Financials sector; growth and resilience.
• MKH Bhd: Real Estate; potential for growth.
• Muhibbah Engineering: Industrials; growth and recovery.
• TA Enterprise: Financials; growth and recovery.
• WCT Bhd: Industrials; growth and recovery.
• KCE Electronics: Technology; improved performance and growth.
• Quality House: Real Estate; growth and potential for recovery.
• Supalai: Real Estate; growth and potential for recovery.
• Nongshim: Consumer Goods; potential for growth.

Key Takeaways

• BUY recommendations are given to companies showing strong performance, improved margins, and positive outlooks.
• HOLD is assigned to companies with stable earnings and no clear upside.
• Dividend policy, cost control, and strategic initiatives are key drivers for several stocks.
• Market data indicates mixed performance across indices, with some showing positive growth while others are in decline.
• Commodity prices remain stable with some fluctuations in nickel, tin, and others.
• Corporate access events are scheduled for the coming weeks, indicating active investor engagement.
• High conviction picks highlight companies with strong fundamentals and growth potential.