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Regional Morning Notes Summary

China

Core Content

• 1Q14 GDP Growth: China's GDP growth for the first quarter of 2014 came in at 7.4% yoy, slightly beating the market consensus of 7.3% yoy. However, it marked the slowest expansion since 3Q12, and was 1.4% qoq, below the expected 1.5% qoq.
• FAI Growth: Urban fixed asset investment (FAI) growth slowed to 17.6% yoy, the lowest since Dec 01, continuing a downward trend.
• Industrial Production (IP): IP growth rebounded slightly to 8.8% yoy, up from 8.6% yoy in the previous quarter.
• Retail Sales: Retail sales growth improved to 12.2% yoy, slightly above the consensus estimate of 12.1% yoy. Catering sales increased 10.2% yoy, recovering from anti-corruption-related base effects.
• Economic Outlook: The government's fine-tuning measures (railway investment and shanty town redevelopment) are expected to support growth stabilization from 2Q14, but 2H14 may see further deceleration due to a high base effect from 2013. The full-year 2014 GDP forecast of 6.9% yoy is under review.

Key Financial Indicators

Company Updates

• Asia Cement (743 HK):

  • Target Price: HK$7.46 (up from HK$6.63).
  • Upside: +12.6%.
  • Key Points:
    • Acquiring Sichuan Lanfeng Cement will increase group capacity by 5 million tons, expected to complete by end-1H14.
    • Management expects cement prices to rise in 2Q14 and is building silo and ancillary facilities in Taizhou to support operations.
    • The company is focusing on waste treatment through cement kilns, a potential growth driver with government support.
    • Earnings forecasts for 2014 and 2015 remain unchanged, pending the completion of the acquisition.
    • Risks: Natural disasters, sector de-rating, and potential slowdown in cement prices.
    • Valuation: Attractive at 0.9x 2013 P/B, with continued earnings reratings expected to support the share price.

• Yuexiu Property (123 HK):

  • Target Price: HK$1.77 (current price: HK$1.58).
  • Upside: +12.0%.
  • Key Points:
    • Aggressive sales target of 50% growth for 2014, but only 20% of the target was locked in during 1Q14, below the 39% in 1Q13.
    • Share price has declined 18% ytd, underperforming peers.
    • Discount to NAV: Currently trading at a 65% discount to NAV and at 0.5x P/B, below historical averages.
    • Next Catalyst: Disposal of Fortune World Plaza to Yuexiu REIT in 4Q14.
    • Risks: Delay in project launches, tight liquidity in the sector, and a slowdown in the broader Chinese economy affecting housing demand.

• Xingda International Holdings (1899 HK):

  • Target Price: HK$5.10.
  • Key Points:
    • Macroeconomic and industry data indicate stable downstream demand.
    • Margin outlook remains positive.
    • The company is revisiting due to a share price correction.
    • Recommendation: Maintain BUY.

• Zhuzhou CSR Times Electric (3898 HK):

  • Target Price: HK$29.24.
  • Key Points:
    • The IGBT operation creates growth opportunities.
    • Share price correction is viewed as a good entry point.
    • Recommendation: Maintain BUY.

Hong Kong

Macau Gaming

• 1Q14 Preview: Sands China and MGM China are leading the game sector.

Property

• Centaline Meeting Takeaways: Not detailed in the summary, but it's mentioned as a meeting that provided insights into the property sector.

Malaysia

Strategy

• Uzma (UZMA MK):
  • Target Price: RM7.68.
  • Key Points: Embarking on its first upstream venture in the exploration and production space.
  • Recommendation: BUY.

Results

• CapitaMalls Malaysia Trust (CMMT MK):

  • DPU: In line with estimates.
  • Recommendation: BUY.

• Malaysia Aica (MAI MK):

  • Target Price: RM1.98.
  • Key Points: Investors feel more assured after a roadshow, but need more details on landbank acquisition.
  • Recommendation: BUY.

Singapore

Results

• Keppel Corp (KEP SP):

  • Target Price: S$13.50.
  • Key Points: Another quarter of healthy O&M margins.
  • Recommendation: BUY.

• Sabana Shari'ah Compliant REIT (SSREIT SP):

  • Target Price: $1.08.
  • Key Points: Weakest quarter since IPO; downgrade to SELL.
  • Recommendation: SELL.

• First Resources (FR SP):

  • Target Price: S$2.80.
  • Key Points: 1Q14 results likely to be down qoq and yoy due to strong 2013 performance and recovery in FFB production.
  • Recommendation: BUY.

• Singapore Press Holdings (SPH SP):

  • Target Price: S$4.00.
  • Key Points: Key takeaways from a luncheon presentation.
  • Recommendation: HOLD.

Key Indices

Top Picks

Sell Recommendation

• UMWH Holdings (UMWH MK):
  • Current Price: HK$10.72.
  • Target Price: HK$10.00.
  • Potential Downside: -6.7%.

Key Assumptions

Actual data for 2013 and 2014F

Corporate Events

Analysts

• Benjamin Ho: +852 2236 6798 | benjamin ho@uobkayhian.com.hk
• Tham Mun Hon: +852 2236 6799 | munhon.tham@uobkayhian.com.hk
• Mark Po, CFA: +852 2236 6794 | mark.po@uobkayhian.com.hk