Asia Pacific Daily Summary - 27 February 2014
Core Content
Top Story: Mega Financial (2886 TT)
- Hedging China's tighter liquidity
- Rating: Buy (unchanged)
- Target Price: TWD28.00 (down from TWD29.00)
- Upside: 15.9%
- Current Price (TWD): 24.15
- Key Points:
- Mega is expected to benefit from China's tighter liquidity, leading to higher USD loan growth and improved USD NIM (Net Interest Margin).
- Strong capital position following capital raising in December 2013; share price upside of 17% post dilution.
- Potential catalysts from the consolidation of Taiwan government-owned banks.
- We raise 2014-15 net profit forecasts by 2-3% due to higher loan growth assumptions, but reduce EPS forecasts by 7-8% due to share dilution and financial sales tax increase to 5%.
- Key risks include overpayment for acquisitions and weak execution of the consolidation plan.
Daiwa Investment Conference
- Tokyo 2014 March 3rd - 7th: Interact with over 350 leading companies from Japan and the Asia-Pacific region.
- Other Events:
- Daiwa Consumer and Gaming Conference (15-17 Mar, HK)
- Daiwa Investment Conference New York (27-28 Mar, 2014)
- Daiwa Investment Conference San Francisco (30 May, 2014)
- Daiwa Investment Conference London 2014 (2-3 Jun, 2014)
Regional Indices Performance (as of 26 Feb)
| Market |
1D (%) |
1M (%) |
YTD (%) |
EPS Growth 13E (%) |
EPS Growth 14E (%) |
PER 13E (x) |
PER 14E (x) |
| TPX |
-0.7 |
-3.1 |
-5.9 |
72.7 |
8.2 |
14.7 |
13.6 |
| HSCEI |
0.7 |
-2.1 |
-9.3 |
8.4 |
10.2 |
5.8 |
5.3 |
| HSI |
0.5 |
-0.1 |
-3.7 |
6.4 |
9.5 |
9.8 |
9.0 |
| KOSPI |
0.3 |
1.6 |
-2.0 |
28.6 |
15.8 |
9.9 |
8.6 |
| TWSE |
0.3 |
0.0 |
-0.1 |
9.8 |
10.3 |
14.4 |
13.1 |
| SENSEX* |
0.6 |
-0.7 |
-0.9 |
17.7 |
14.6 |
13.7** |
12.0** |
| FSSTI |
-0.5 |
0.4 |
-2.5 |
8.4 |
10.1 |
13.4 |
12.2 |
| FBMKLCI* |
-0.6 |
1.1 |
-2.4 |
3.8 |
9.8 |
15.7** |
14.3** |
| SET* |
0.1 |
-0.8 |
0.5 |
11.6 |
11.3 |
11.4** |
10.2** |
| PCOMP* |
0.4 |
2.1 |
7.3 |
7.8 |
15.0 |
18.1** |
15.7** |
| JCI* |
-1.0 |
2.1 |
6.0 |
10.4 |
13.5 |
13.8** |
12.2** |
| AS51 |
0.1 |
3.7 |
1.6 |
8.0 |
8.3 |
15.4 |
14.2 |
*Valuation based on MSCI Universe
**MSCI index priced as of 25 Feb
Company Highlights
Mega Financial (2886 TT)
- Financial Summary:
- Net Profit (2013E): TWD22,477m
- Net Profit (2014E): TWD27,001m
- Core EPS (2013E): TWD1.881
- Core EPS (2014E): TWD2.169
- ROE (2014E): 11.3%
- PBR (2014E): 1.2x
- Dividend Yield (2014E): 5.8%
- Share Price Performance:
- 12-month range: 21.85-25.41
- Market Cap (USD bn): 9.11
- 3m Avg Daily Turnover (USD m): 17.10
- Shares Outstanding (m): 11,450
- Major Shareholder: Government (22.0%)
AirAsia X (AAX MK)
- Sector: Transport & Logistics
- Current Price (RM): 0.94
- Rating: Sell (downgraded from Add)
- Target Price: RM0.74 (down)
- Performance:
- 1M: -5.1%
- 3M: +12.1%
- 12M: NA
- Relative to KLCI:
- Earnings:
- 4Q13 core net loss: RM37.8m (-100% yoy)
- Discrepancy due to:
- Lower-than-expected average fares (RM492 vs. RM582 in 4Q12)
- Higher-than-expected staff costs (+30% yoy)
- Excludes RM127.1m deferred tax rebate and RM176.2m forex loss
- No dividend declared
Other Research Highlights
| Company |
Analyst |
Rating |
Page |
| Felda Global Ventures (FGV MK) |
Ong Keng Wee |
Add |
P.30 |
| Parkson (PKS MK) |
Mandy Teh |
Reduce |
P.31 |
| MRCB (MRC MK) |
Ong Keng Wee |
Buy |
P.32 |
| Genting Plant (GENP MK) |
Ong Keng Wee |
Reduce |
P.33 |
| WCT Holdings (WCTHG MK) |
Ong Keng Wee |
Buy |
P.34 |
| Kossan (KRI MK) |
Mandy Teh |
Buy |
P.35 |
| JT International (RJR MK) |
Mandy Teh |
Reduce |
P.36 |
| Petra Energy (PENB MK) |
Isaac Chow |
Sell |
P.37 |
| Bonia (BON MK) |
Mandy Teh |
Add |
P.38 |
| Uchi Tech (UCHI MK) |
Chris Ong |
Add |
P.39 |
| China Aviation Optical (002179 CH) |
Kelvin Lau |
P.43 |
|
| HK Exchanges and Clearing (388 HK) |
Jonas Kan |
P.44 |
|
| Sembcorp Industries (SCI SP) |
Adrian Loh |
P.47 |
|
| SembCorp Marine (SMM SP) |
Adrian Loh |
P.48 |
|
| Xinyi Glass (868 HK) |
Joey Chen |
P.49 |
|
Company Roadshows
| Date |
Company |
Event |
Venue |
| 27 Feb |
Hang Lung Properties (101 HK) |
Video Con. |
Tokyo |
| 27 Feb |
KPJ Healthcare Bhd (KPJ MK) |
NDR |
HK |
| 28 Feb |
China Fiber Optic (3777 HK) |
Luncheon |
HK |
| 28 Feb |
China Fiber Optic (3777 HK) |
Video Con. |
SG |
| 4-5 Mar |
Dah Chong Hong (1828 HK) |
NDR |
US |
| 6 Mar |
Crompton Greaves Ltd (CRG IN) |
NDR |
SG |
| 10 Mar |
Prosperity REIT (808 HK) |
Video Con. |
Tokyo |
| 10 Mar |
Lifestyle (1212 HK) |
NDR |
Tokyo |
| 10-11 Mar |
Shin Corp PCL (INTUCH TB) |
NDR |
SG |
| 12 Mar |
L’Occitane (973 HK) |
NDR |
Tokyo |
| 13 Mar |
ASM Pacific (522 HK) |
NDR |
US |
| 13-14 Mar |
Bank Negara Indonesia (BBNI LJ) |
NDR |
Tokyo |
| 17 Mar |
Investa Office Fund (IOF AU) |
NDR |
Tokyo |
| 18 Mar |
Dah Chong Hong (1828 HK) |
NDR |
London |
| 18-19 Mar |
Texhong Textile Group (2678 HK) |
NDR |
Tokyo |
| 24 Mar |
Federation Centres Ltd (FDC AU) |
NDR |
Tokyo |
| 24 Mar |
AMVIG Holdings (2300 HK) |
NDR |
HK |
| 24-28 Mar |
CSCI (3311 HK) |
NDR |
EU |
Key Ratios and Forecasts
Forecast Revisions (%)
| Year to 31 Dec |
13E |
14E |
15E |
| PPOP change |
- |
2.2 |
2.4 |
| Net profit change |
-2.9 |
2.7 |
1.6 |
| Core EPS change |
-8.3 |
-7.0 |
-7.9 |
Key Ratios (%)
| Metric |
2008 |
2009 |
2010 |
2011 |
2012 |
2013E |
2014E |
2015E |
| Net-interest margin |
1.4 |
1.1 |
1.0 |
1.1 |
1.2 |
1.2 |
1.3 |
1.4 |
| Loan growth |
9.3 |
-1.6 |
4.1 |
9.7 |
2.8 |
10.0 |
10.0 |
10.0 |
| Loan to deposit ratio |
94.3 |
86.3 |
85.7 |
92.0 |
87.4 |
86.4 |
88.0 |
92.1 |
| Provision coverage |
77.5 |
102.7 |
233.5 |
432.0 |
647.4 |
794.0 |
850.0 |
850.0 |
| ROAA |
0.0 |
0.6 |
0.6 |
0.7 |
0.8 |
0.8 |
0.9 |
0.9 |
| ROAE |
0.2 |
7.7 |
7.6 |
8.8 |
10.3 |
10.0 |
11.3 |
11.9 |
| Net-interest spread |
1.4 |
1.2 |
1.1 |
1.2 |
1.3 |
1.4 |
1.4 |
1.5 |
| Total cost/total income |
57.2 |
42.4 |
50.4 |
46.8 |
39.6 |
39.2 |
37.7 |
37.1 |
| Effective tax |
91.1 |
22.7 |
17.2 |
15.4 |
15.7 |
17.3 |
15.9 |
15.8 |
| Dividend-payout |
938.8 |
77.2 |
65.9 |
53.5 |
58.1 |
63.8 |
64.5 |
57.9 |
Summary
- Mega Financial is highlighted as a key beneficiary of China's tighter liquidity, with a Buy rating and a revised target price of TWD28.00.
- The Daiwa Investment Conference in Tokyo (March 3rd–7th, 2014) is a major event, alongside other conferences in different regions.
- The regional indices show mixed performance, with TPX and HSCEI underperforming, while KOSPI and TWSE showing some growth.
- AirAsia X faced a core net loss in 2013 due to lower fares and higher staff costs, leading to a downgrade to Sell.
- Company roadshows are scheduled for multiple companies in March 2014, with events in Tokyo, Singapore, and other locations.
- Other research highlights include positive outlooks for Felda Global Ventures and MRCB, and negative ratings for Parkson and Genting Plant.
