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Regional

Morning Pack

August 12, 2016

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Sales Team & Regional Sales Team & Singapore Hong Kong / China Malaysia Thailand

Indonesia Korea

Summary The Big Pictures

• DBS Economics: Indonesia: tax revenues slipping: 11 August 2016

Stocks to Watch

Singapore

• Ascendas Hospitality Trust: In-line 1Q17 results

• Delfi Ltd: 1H16 performance tracking expectations

• IREIT Global: 2Q16 results in line

• Nam Cheong Ltd: Outlook remains bleak despite profits this quarter

• Wilmar International: A long term story

China / Hong Kong

• China Mobile: 1H16 results beat expectation; mobile ARPU on growth path

• HKT Trust: In line results, with more cost synergies to be realised in 2H16

• Li Ning: Solid turnaround in 1H16

• Sun Art Retail Group: Intensifying Competition

• Wharf: Firm rental performance despite market challenges

Thailand

• Bangkok Airways: Core earnings above, headline loss as expected

• Bangkok Expressway and Metro: Awaiting new catalysts

• CP ALL: 2Q16 earnings beat estimates

• Central Pattana: Keeps growing

Refer to important disclosures at the end of each report

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Regional

Morning Pack

• The Erawan Group: 2Q16 bottom-line turns positive

• Indorama Ventures: Extra gains boosted 2Q16 profit

• Interlink Communication: Waiting for the next underground project

• PTT Global Chemical: 2Q16 performance was in line

• Quality Houses: 2Q16 earnings slightly above estimates

• Samart Telcoms: APCO is out of the picture

• SVI PCL: No more disappointment

• Taokaenoi Food & Marketing: Sky rocket growth is just the beginning

• Workpoint Entertainment PCL: New record-high quarterly profit

Indonesia

• Indo Tambangraya Megah: Margins shrink on lower ASP

Philippines

• Jollibee Foods Corp.: 2Q16 net profit rose 17% - below expectations

The Big Pictures DBS Economics

Indonesia: tax revenues slipping

Gundy Cahyadi

• On current trends, 2016 tax revenue will only reach 80% of target

• Even if the tax amnesty program brings the tax / GDP ratio up to 11.5%, it would still be low relative to regional peers

• More tweaks in the tax regime are necessary but these will take time. For now, pressure remains on the central bank to support growth

Read more ...

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Morning Pack

Stocks to Watch

Singapore Ascendas Hospitality Trust (ASCHT SP): BUY

Market Cap: US$614m | Average Daily Value: US$0.84m

Last Traded Price: S$0.74; Price Target: S$0.80 (Upside 8.8%)

Mervin SONG / Derek TAN

In-line 1Q17 results

• 1Q17 DPU of 1.29 Scts (+1% y-o-y), in line with expectations

• Higher contribution from Hotel Sunroute Namba partially offset by weaker AUD and CNY

• Steady growth for remainder of FY17

Read more ...

Delfi Ltd (DELFI SP): HOLD

Market Cap: US$1,137m | Average Daily Value: US$0.42m

Last Traded Price: S$2.50; Price Target: S$2.42 (Downside 3.0%) (Prev S$2.56)

Andy SIM

1H16 performance tracking expectations

• 2Q16 within expectations

• Recovery on track

• Valuations may have priced in earnings turnaround

• Maintain HOLD; TP adjusted to S$2.42 to account for cash paid out for capital reduction

Read more...

IREIT Global (IREIT SP): HOLD (downgrade from BUY)

Market Cap: US$348m | Average Daily Value: US$0.10m

Last Traded Price: S$0.76; Price Target: S$0.77 (Upside 2.0%)

Mervin SONG / Derek TAN

2Q16 results in line

• 2Q16 DPU of 1.60 Scts (+45% y-o-y) in line

• Growth underpinned by acquisition of Berlin property

• Trimmed FY16-17F DPU by 1% each as we assume a lower EURSGD rate for hedging distributions

Read more...

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Morning Pack

Nam Cheong Ltd (NCL SP): FULLY VALUD

Market Cap: US$80m | Average Daily Value: US$0.14m

Last Traded Price: S$0.05; Price Target: S$0.04 (Downside 19.0%) (Prev S$0.07)

Suvro SARKAR / SINGAPORE Research Team

Outlook remains bleak despite profits this quarter

• Reports minor net profits of RM2.6m in 2Q16 on higher revenue recognition this quarter

• Profitability may not be sustained as net orderbook declines to RM490m

• Ability to meet debt repayment schedules over FY17- 19 remains suspect

Read more...

Wilmar International (WIL SP): HOLD (downgrade from BUY)

Market Cap: US$14,556m | Average Daily Value: US$18.30m

Last Traded Price: S$3.09; Price Target: S$3.13 (Upside 1.0%) (Prev S$3.76)

Ben SANTOSO

A long term story

• Booked 2Q16 net loss of US$220m – as guided in profit warning

• Steep losses in Oilseeds & Grains, manufacturing and sugar were the main drags

• FY16F/17F earnings cut by 26%/7%, TP cut to S$3.13

• No significant near-term catalysts seen. HOLD

Read more...

Hong Kong China Mobile (941 HK) : BUY

Market Cap: US$255,270m | Average Daily Value: US$176.9m

Last Traded Price: HK$96.70; Price Target: HK$114.0 (18% Upside)

Tsz Wang TAM

1H16 results beat expectation; mobile ARPU on growth path

• Earnings grew by 5.6% to Rmb60.6m in 1H16, above market expectations

• Mobile ARPU resumed its growth trajectory to Rmb62, vs. Rmb60 in 1H15; expect momentum to continue with increasing 4G penetration

• Management has agreed to review the current dividend payout ratio of 43%; dividend hike is possible in the future

• Maintain BUY with TP of HK$114.0

Read more ...

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Morning Pack

HKT Trust (6823 HK): BUY

Market Cap: US$11,675m | Average Daily Value: US$8.90m

Last Traded Price: HK$11.96; Price Target 12-mth: HK$12.90 (8% Upside)

Tsz WANG TAM / Chris KO

In line results, with more cost synergies to be realised in 2H16

• 1H16 dividend increased by 5% mainly supported by cost synergies from the CSL integration

• Results were in line with market expectations

• Expect further cost synergies from consolidating the mobile switching centres in 2H16

• Maintain BUY and HK$12.90 TP

Read more ...

Li Ning (2331 HK) : BUY

Market Cap: US$1,007m | Average Daily Value: US$4.5m

Last Traded Price: HK$4.13; Price Target 12-mth: HK$4.80 (16% Upside)

Alice HUI

Solid turnaround in 1H16

• 1H16 profit turnaround was in line, with encouraging improvement in sales momentum, profitability and cash flow

• Expect sales growth to accelerate in 2H with further room to enhance margins

• Maintain BUY, with TP at HK$4.80

Read more ...

Sun Art Retail Group (6808 HK): HOLD

Market Cap: US$6,691m | Average Daily Value: US$3.1m

Last Traded Price: HK$5.44; Price Target: HK$4.86 (11% Downside) (Prev HK$5.20)

Mavis HUI

Intensifying Competition

• 1H16 earnings submerged 2.7% y-o-y as e-commerce losses lingered. We cut our profit estimates by 6-8% in FY16-17, and adjust TP to HK$4.86 on 16x 12-mth rolling PE.

• SSSG for Jul 2016 rebounded, while more attention is needed on potentials for escalated e-grocery competition in near-term.

• Maintain HOLD; await potential catalysts.

Read more ...

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Morning Pack

Wharf (4 HK): HOLD

Market Cap: US$20,399m | Average Daily Value: US$30.30m

Last Traded Price: HK$52.20; Price Target 12-mth: HK$51.25 (2% Downside) (Prev HK$46.55)

Jeff YAU / Andrew Robert LAM

Firm rental performance despite market challenges

• Excluding impairment provision for China development projects, core profit was slightly better than our estimate.

• Interim DPS went up 5% y-o-y

• Too early to see light at the end of tunnel for retail market.

• Valuation not particularly enticing given the retail market headwinds; HOLD with HK$51.25 TP

Read more ...

Thailand Bangkok Airways (BA TB) : BUY

Mkt. Cap: US$1,438m I 3m Avg. Daily Val: US$4.6m

Last Traded Price: Bt23.90; Price Target: Bt28.30 (Upside 18%)

Marvin KHOR / Paul YONG

Core earnings above, headline loss as expected

• Additional taxation lead to headline losses, but core profit exceeded expectations at Bt319m

• Volume increase offset the mild yield decline; savings from cheaper fuel reined in costs

• Maintain Buy, Bt28.30 TP

Read more…

Bangkok Expressway and Metro (BEM TB): HOLD

Market Cap: US$3,526m | Average Daily Value: US$34.3m

Last Traded Price: Bt8.05; Price Target: Bt8.40 (Upside 4%) (Prev Bt6.40)

Nantika WIANGPHOEM / Chanpen SIRITHANARATTANAKUL

Awaiting new catalysts

• 2Q16 earnings came in at Bt504m (+2% y-o-y, -28% q-o-q); the q-o-q drop was due to seasonality

• As per Section 44 order, we pencilled in the extension of MRT Blue Line Existing concession in our forecasts

• Maintain HOLD with new SOP-based TP of Bt8.4

Read more…

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Morning Pack

CP ALL (CPALL TB) : BUY

Mkt. Cap: US$14,143m I 3m Avg. Daily Val: US$36.5m

Last Traded Price: Bt54.75; Price Target: Bt60.00 (Upside 10%)

Namida ARTISPONG

2Q16 earnings beat estimates

• 2Q16 earnings jumped 34% y-o-y on strong convenient store operations, surge in operating income, decline in interest expense, and lower effective tax rate

• Revenue grew 13% y-o-y from outlet expansion and positive SSSG in both convenient store and cash and carry businesses

• Strong earnings growth remains promising, with stamp campaign providing an additional boost

Read more…

Central Pattana (CPN TB): BUY

Market Cap: US$7,324m | Average Daily Value: US$10.7m

Last Traded Price: Bt56.75; Price Target: Bt70.00 (Upside 23%)

Chanpen SIRITHANARATTANAKUL

Keeps growing

• 2Q16 results in line with our and market expectations

• Profit rose14% y-o-y on the back of contribution from the four new projects launched in 2015, increased revenue from Central Pinklao

• 1H16 earnings represent 51% of our 2016 forecast

Read more…

The Erawan Group (ERW TB) : BUY

Mkt. Cap: US$358m I 3m Avg. Daily Val: US$1.2m

Last Traded Price: Bt5.00; Price Target: Bt5.70 (Upside 14%)

Namida ARTISPONG

2Q16 bottom-line turns positive

• ERW recorded an earnings turnaround in 2Q16, profitable for the first time in three years during Thailand’s low tourism season, in line with our expectation

• Three Hop Inn hotels in Thailand and one in the Philippines will be added in 2H16

• We expect no more losses in low seasons going forward, thanks to stronger profit quality

Read more…

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Morning Pack

Indorama Ventures (IVL TB) : BUY

Mkt. Cap: US$4,742m I 3m Avg. Daily Val: US$49.6m

Last Traded Price: Bt34.25; Price Target: Bt40.00 (Upside 17%)

Chaipat THANAWATTANO

Extra gains boosted 2Q16 profit

• Gains from new acquisition lifted 2Q16 profit

• Core EBITDA/ton improved from high value-added products

• Volume increased strongly from new acquisitions

• Maintain BUY on strong earnings outlook

Read more…

Interlink Communication (ILINK TB): HOLD (downgrade from BUY)

Market Cap: US$237m | Average Daily Value: US$4.2m

Last Traded Price: Bt22.70; Price Target: Bt22.20 (Downside 2%)

Wasu MATTANAPOTCHANART

Waiting for the next underground project

• 2Q16 earnings beat forecasts by 16%

• Samui project could be approved by the Cabinet within this month

Read more…

PTT Global Chemical (PTTGC TB) : BUY

Mkt. Cap: US$7,824m I 3m Avg. Daily Val: US$18.9m

Last Traded Price: Bt61.00; Price Target: Bt70.00 (Upside 15%)

Chaipat THANAWATTANO

2Q16 performance was in line

• Profit increased q-o-q despite unplanned shutdown

• Inventory gain has come to the rescue

• Olefins margin remained favourable

• Reaffirm BUY rating on undemanding valuation

Read more…

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Morning Pack

Quality Houses (QH TB) : HOLD

Mkt. Cap: US$850m I 3m Avg. Daily Val: US$5.7m

Last Traded Price: Bt2.76; Price Target: Bt3.00 (Upside 9%)

Wasu MATTANAPOTCHANART

2Q16 earnings slightly above estimates

• 2Q16 earnings came in at Bt895m, up 33% y-o-y and 20% q-o-q

• Declared interim dividend of Bt0.19 per share

• Earnings growth supported by associate income; Maintain HOLD

Read more…

Samart Telcoms (SAMTEL TB): FULLY VALUED

Market Cap: US$m | Average Daily Value: US$m

Last Traded Price: Bt13.70; Price Target: Bt13.10 (Downside 4%) (Prev Bt14.00)

Wasu MATTANAPOTCHANART

APCO is out of the picture

• Cut FY16/17F earnings by 30%/42%

• 2Q16 earnings came in at Bt60m (-54% y-o-y)

Read more…

SVI PCL (SVI TB) : BUY

Mkt. Cap: US$317m I 3m Avg. Daily Val: US$1.2m

Last Traded Price: Bt4.86; Price Target: Bt5.50 (Upside 13%)

Nantika WIANGPHOEM / Chanpen SIRITHANARATTANAKUL

No more disappointments

• 2Q16 normalised profit came in at Bt136m (-43% y-o-y; +46% q-o-q), in line with our estimate

• Received insurance claim of Bt474m and expect to receive additional Bt0.8bn in 2H16

• Maintain our full-year forecast and BUY rating with TP of Bt5.5, pegged to 15x FY17F PE

Read more…

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Taokaenoi Food & Marketing (TKN TB): BUY

Market Cap: US$929m | Average Daily Value: US$7.2m

Last Traded Price: Bt23.40; Price Target: Bt27.00 (Upside 15%) (Prev Bt23.00)

Nantika WIANGPHOEM / Chanpen SIRITHANARATTANAKUL

Sky rocket growth is just the beginning

• 2Q16 profit came in at Bt185m (+146% y-o-y, +15% q-o-q) on the back of strong revenue growth and lower expenses

• Declared interim dividend of Bt0.19 per share

• We lift FY16/FY17 earnings by 21%/28%; Maintain BUY with new TP of Bt27

Read more…

Workpoint Entertainment PCL (WORK TB): BUY

Market Cap: US$435m | Average Daily Value: US$0.80m

Last Traded Price: Bt36.25; Price Target: Bt45.00 (Upside 24.1%)

Nantika WIANGPHOEM / Chanpen SIRITHANARATTANAKUL

New record-high quarterly profit

• 2Q16 came in at Bt134m (+18% y-o-y, +366% q-o-q), driven by strong revenue growth and wider margin; on track with our full-year forecast

• We maintain our full-year forecast, BUY call and DCF-based TP of Bt45

Read more...

Indonesia Indo Tambangraya Megah (ITMG IJ) : FULLY VALUED

Market Cap: US$1,069m | Average Daily Value: US$0.92m

Last Traded Price: Rp12,400; Price Target: Rp6,100 (Downside 51%)

William SIMADIPUTRA

Margins shrink on lower ASP

• NPAT slightly below our expectation

• Revenue and EBIT were in-line

• Higher cash cost hit margins

• Maintain FULLY VALUED and TP of Rp6,100

Read more...

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Morning Pack

Philippines Jollibee Foods Corp. (JFC PM): FULLY VALUED (downgrade from HOLD)

Market Cap: US$5,799m | Average Daily Value: US$3.75m

Last Traded Price: P252.20; Price Target: P209.00 (Downside 17.1%) (Prev P212.00)

Regional Research Team

2Q16 net profit rose 17% - below expectations

• 2Q16 net profit rose 17% y-o-y to P1.65bn, trailing expectations

• Consolidated SSSG was up 9%, driven by domestic operations (+11%)

• Downgrade to FULLY VALUED, TP lowered to P209 as we cut FY16F/F17 earnings by 12%/8%

Read more...

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Morning Pack

Market Data

Source: DBS Bank, DBS Vickers

Key Indices

Closed % chg vs

as of Previous YTD QTD MTD Indices 11 Aug16 close (%) (%) (%) Asia

Hang Seng 22,581 0.4 3.0 8.6 3.1 MXFEJ index 510 0.2 9.1 8.2 3.5 HSCEI Index 9,423 1.2 -2.5 8.2 5.2 JCI Index 5,419 -0.1 18.0 8.0 3.9 SET 1,553 0.3 20.5 7.4 1.9 Nikkei 225 16,735 -0.2 -12.1 7.4 1.0 HSCCI Index 3,856 0.2 -4.8 6.4 3.8 Taiex 9,132 -0.7 9.5 5.4 1.6 KOSPI 2,049 0.2 4.5 4.0 1.6 BSE Sensex 27,860 0.3 6.7 3.2 -0.7 Shanghai A 3,003 -0.5 -15.2 2.5 0.8 PCOMP 7,981 -0.9 14.8 2.4 0.2 KLCI 1,679 0.3 -0.8 1.5 1.5 STI 2,870 -0.2 -0.4 1.0 0.0 U.S./Others

Dow Jones 18,614 0.6 6.8 3.8 1.0 S&P 2,186 0.5 6.9 4.1 0.6 NASDAQ 5,228 0.5 4.4 8.0 1.3 FTSE 100 6,915 0.7 10.8 6.3 2.8 DAX Index 10,743 0.9 0.0 11.0 3.9

Source: Bloomberg Finance L.P., DBS Bank Commodity Indicators

Source: Bloomberg Finance L.P., DBS Bank

Earnings Gth (%) PE (x) 16F 17F 16F 17F

Singapore 2.0 7.4 14.7 13.7

HK HSI (3.4) 9.0 12.3 11.2 HK HSCCI (Red) (0.1) 22.4 12.1 9.9 HK HSCEI (H) (5.3) 9.9 7.4 6.7 CSI300 2.6 12.6 13.4 11.9 SH Comp 14.5 12.8 13.9 12.3 SZ Comp 86.4 28.3 23.7 18.5 Malaysia (3.4) 9.0 12.3 11.2 Thailand 31.6 9.4 16.3 14.7

Indonesia 7.1 15.1 19.3 16.8

Commodities Latest Closing

Previous Closing

Nickel Spot USD/mt 10,691 10,815 Coal Spot USD/mt 62 - Tin USD/mt 18,340 18,550 Steel RMB/mt 2,606 2,612 Copper USD/lb 4,848 4,821 Gold Spot USD/t. oz 1,339 1,339 Soybean Oil Spot USD/pound 30 30 Soybean Spot USD/bushel 10 10 Sugar #11 USD/lb 20 20 Rice USD/cwt 9 10 Wheat Spot USD/bushel 4 4 TSL Crude Palm Oil USD/mt 730 660 Palm Oil Spot (FOB Msia) RM/mt 2,587 2,563 Crude Oil Brent Spot USD/barrel 45 45 Corn Spot USD/bushel 3 3 TSR20 Rubber Forward EUR/kg 120 119

Credit Spreads Latest

Closing Previous Closing

US Junk Bond 521 527 US IG CDS 12 12

21.8%

-2.0%

26.0%

30.2%

3.0%

26.2%

2.1%

15.5%

28.6%

-24.7%

-13.5%

27.0%

17.6%25.7%

-12.5%

9.4%

-40% -20% 0% 20% 40% 60%

Nickel Spot

Coal Spot

Tin

Steel

Copper

Gold Spot

Soybean Oil Spot

Soybean Spot

Sugar #11

Rice

Wheat Spot

TSL Crude Palm Oil

Palm Oil Spot (FOB Msia)

Crude Oil Brent Spot

Corn Spot

TSR20 Rubber Forward

YTD % chng

-24%

-36%

-40% -35% -30% -25% -20% -15% -10% -5% 0%

US Junk Bond

US IG CDS

YTD % chng

High Conviction Stock Picks

Company

Exch Sector

Price

11 Aug 16

LCY)

Target

Price

(LCY)

Total Return

(%)

% Chg

-1w

% Chg since Entry Date

Date of Entry

to List Mcap US$m

3mths Avg

Daily T/O US$m

Big Caps (>US$2bn)

Capitaland CAPL SP SG Real Estate 3.220 3.70 18 2.2 4 16-Oct-15 10,154 21.2

Mapletree Greater China Commercial Trust MAGIC SP SG Reits 1.090 1.13 10 3.8 10 27-Jun-16 2,248 2.9 Brilliance China Automotive * 1114 HK HK Consumer Goods 8.58 8.80 4 (0.6 15 27-Jun-16 5,572 13.4 China Everbright Ltd 165 HK HK Financial 16.56 23.84 49 9.7 (4) 18-Dec-15 3,598 5.8 China Railway Construction 1186 HK HK Industrials 10.08 11.60 17 8.7 (5) 28-Aug-15 2,698 10.5 Nine Dragons * 2689 HK HK Basic Materials 6.49 6.70 5 1.9 (0) 18-Jul-16 3,904 5.8 Tencent * 700 HK HK Technology 188.70 205.00 9 3.3 18 16-May-16 230,299 369.0 Gamuda GAM MK MY Industrials 4.83 5.80 22 (0.4

) (1) 18-Apr-16 2,918 3.1

Hong Leong Bank HLBK MK MY Banks 13.20 14.70 14 1.1 (2) 18-Apr-16 6,765 1.7 Public Bank PBK MK MY Banks 19.66 21.80 14 0.3 3 18-Apr-16 18,958 24.0 Airports of Thaiand AOT TB TH Industrials 420.00 470.00 13 7.7 9 11-Apr-16 17,274 35.2 KASIKORNBANK * KBANK TB TH Banks 199.50 205.00 5 5.6 8 16-Aug-13 13,746 45.1 Minor International MINT TB TH Consumer Services 41.50 50.00 21 1.8 13 11-Apr-16 5,266 10.8 Korea Zinc Co Ltd 010130 KS KR Basic Materials 519,000 620,000 21 (0.4

) (3) 8-Jul-16 8,904 20.5

* Target Price under review Source: Bloomberg Finance L.P, DBS Bank, DBS Vickers, AllianceDBS

Company

Big Caps (>US$2bn) Reasons for Picks / Potential Catalysts

Capitaland Main business units delivering steady increases in performance. Asset recycling of mature assets into REITs/Funds. Growing recurring income base as retail malls in China stabilize.

Mapletree Greater China Commercial Trust

We believe the strong market positioning of Festival Walk makes it well placed to weather the current headwinds. Full year contribution from Sandhill Plaza from FY17.

Brilliance China Automotive

Multiple new BMW products planned for the next 12 months should drive sales. Laggard within sector and valuation de-rated to ~9x FY16 PE. The company had a net cash balance of Rmb1.5bn at end-Dec-15. The development cost for the new MPV should have peaked and new

capex requirement is limited.

China Everbright Ltd A-share IPO resumption to help private equity business exit projects. Parent’s consolidation of China Everbright Securities and Everbright Bank stakes held by CEL can resume as regulators unwind A-share

supportive measures which prohibited large stake changes. Restructuring should narrow CEL’s discount to NAV. A-share market recovery to enhance CEL’s NAV from stakes in Everbright Securities and Everbright Bank.

China Railway Construction

Chinese policy makers are helping infrastructure funding by lowering borrowing costs and project capital requirements, and this will help domestic demand.

Decline in borrowing costs to help high gearing companies like CRCC. Company can win overseas contracts as part of China’s “one belt one road” strategy.

Nine Dragon Indirect consumer play that can benefit from more domestic spending caused by accelerated CNY depreciation against most non-USD currencies.

Does not face online competition or brand risks of retailers and brand owners. Demand and supply dynamics are favorable in the near term as paper companies were cautious to expand capacity in recent years.

Tencent New advertising offerings help drive revenue growth; Tencent only has 5% market share in online ads. We foresee Tencent can better monetize its >800m users through new ad offerings and new apps. Mobile gaming revenues are counter-cyclical; new gaming strategy focusing on games with intellectual properties and mobile games should

drive gaming revenue growth in 2016.

DBS Group Research . Equity 12 Aug 2016

Regional Market Focus

High Conviction Picks

Refer to important disclosures at the end of this report

Regional Market Focus

High Conviction Pick

Company

Big Caps (>US$2bn) Reasons for Picks / Potential Catalysts

Gamuda Best proxy for transport-related infrastructure project after its JV company with MMC secured the project delivery partner (PDP) role and the tunnelling contract for the MRT Line 2

Will be vying for other transport-related tenders like LRT 3, Pan Borneo Highway, Southern Double Tracking and eventually the High Speed Rail.

Resolution of SPLASH disposal to the government will mitigate the need for rights issue to fund the implementation of Penang Transport Master Plan project

Hong Leong Bank Poised for re-rating as overhang from capital raising has been removed

Strong liquidity position with the lowest loan-to-deposit ratio among peers NPLs from associate Bank of Chengdu have stabilised

Public Bank Expected to defy headwinds and grow at above industry average rates given its track record and asset quality Sustainable earnings growth of c. 10% Premium valuation is justified given its solid growth and asset quality

Airports of Thailand OT has a deemed monopoly profile and high exposure to the rising number of tourist arrivals in Thailand

Expect strong air traffic growth to boost revenues and earnings Airport expansion will support sustainable growth BUY with Bt470, based on DCF

KASIKORNBANK Quality earnings thanks to well-diversified credit portfolio and revenue structure and high non-NII proportion to operating income KBANK is proactive and well-prepared for uncertainties. The bank has guided for further increases in NPLs and credit costs, given that the

economic outlook remains fragile. Should the economy recover fast, KBANK may then opt to lower its credit cost, which would provide upside to our forecasts

BUY with Bt205 TP, based on the Gordon Growth Model and implied 1.5x 16F PBV

Minor International MINT has been delivering consistent earnings growth and has the most resilient earnings base among listed hospitality operators in Thailand Consolidation of Tivoli hotel acquisition, sales of residential units, hotel room expansion, and improving operations of Thailand food hub are

the key earnings drivers M&A would be an upside potential BUY with Bt50 TP, based on DCF

Korea Zinc It’s key beneficiary from strong precious metal prices as gold and silver account for 37% of its revenue Demand-supply for zinc is expected to shortage due to tightened supply of refined zinc, which will be a key driver for strong zinc prices We expect the company's earnings to display stair-step growth, backed by sales volume growth following higher utilisation rate of newly added

facilities and strong metal prices with favourable forex rate compared to 2015

Regional Market Focus

High Conviction Picks

Company

Exch Sector

Price

11 Aug 16

(LCY)

Target Price

(LCY)

Total Return

(%)

% Chg

-1w

% Chg since Entry Date

Date of Entry

to List Mcap US$m

3mths Avg

Daily T/O US$m

Small & Mid Caps (<US$2bn) ARA Asset Management ARA SP SG Financial 1.380 1.76 31 2.6 18 28-Mar-16 1,024 0.6 Cityneon Holdings CITN SP SG Consumer Services 1.035 1.20 16 9.5 22 3-Jun-16 188 3.0 Frasers Centrepoint Trust * FCT SP SG Reits 2.130 2.29 13 (1.8) 6 27-Jun-16 1,456 1.5 Jumbo Group * JUMBO SP SG Consumer Services 0.675 0.72 8 6.3 17 3-Jun-16 322 2.9 M1 M1 SP SG Telecommunications 2.740 3.30 26 0.4 9 27-Jun-16 1,896 3.8 mm2 Asia MM2 SP SG Consumer Services 0.700 0.83 18 3.7 11 3-Jun-16 268 1.0 Sheng Siong Group * SSG SP SG Consumer Services 1.030 1.09 10 1.0 19 4-Mar-16 1,153 1.3 China Resources Cement * 1313 HK HK Industrials 3.030 3.35 11 6.3 33 20-May-16 2,552 3.5 Li Ning Co Ltd * 2331 HK HK Consumer Goods 4.390 4.80 9 7.1 21 27-Jun-16 1,067 4.8 Texhong Textiles * 2678 HK HK Consumer Goods 11.820 12.50 8 9.9 28 25-Jul-16 1,348 1.0 SKP Resources SKP MK MY Industrials 1.18 1.55 33 (4.1) (13) 18-Apr-16 346 0.6 Bangkok Airways BA TB TH Consumer Services 24.50 28.30 19 7.9 (6) 11-Apr-16 1,481 5.2 Group Lease GL TB TH Consumer Services 42.75 50.00 17 0.6 64 11-Apr-16 1,877 6.9

* Target Price under review Source: Bloomberg Finance L.P, DBS Bank, DBS Vickers, AllianceDBS

Company Small & Mid Caps (<US$2bn) Reasons for Picks / Potential Catalysts

ARA Asset Management Country desk localisation strategy to reap dividends for the group in the medium term Managed REITs have close to S$5bn of debt funded headroom Attractive valuations

Cityneon Holdings Creator of innovative and interactive exhibitions, with the acquisition of VHE Scalable business model with low execution risk Potential for third IP, and to tap on other Walt Disney characters

Frasers Centrepoint Trust Strong earnings resilience amongst REITs with downside risk protection Upside to earnings growth from AEI on major asset (northpoint) Yields of c.6% atttractive

Jumbo Group Growth underpinned by new outlets, M&A and higher productivity from existing operations Milking its success in Shanghai, the most cosmopolitan Chinese city Project FY15-18F earnings growth CAGR of 27%, led by new stores and growth in China business

M1 M1 is one of the cheapest in the region in terms of forecast price-to-earnings ratio. M1 also stands to benefit the most among the three telcos if there is no fourth telco entry. It has a very attractive risk/reward ratio with potential risk of -5% versus total returns of +40%.

mm2 Asia Expect higher contributions from North Asia New revenue stream from UnUsUal; cinemas to build recurring income base

Sheng Siong Group On track towards its 50-store target; margin expansion trend is performing to our expectations Dividend attractive at c.4%

China Resources Cement We expect South China’s cement prices can recover in mid-2016; YTD price recovery has stalled due to rainy weather. Cement demand can see a slight uptick this year due to recovery in fixed asset investments, due to property FAI and Public-Private-

Partnership (PPP) FAI projects. CR Cement’s P/BV should re-rate if the company’s ASP and gross profit recover after declining for multiple years.

Li Ning Current valuation has not yet fully reflected the turnaround potential, with room for further re-rating in view of solid demand for sportswear in China.

With order book recording low double-digit growth in its recent 3Q16 trade fair, we expect Li Ning is on track to achieve double-digit sales growth for FY16.

Stock should be in list of HK stocks that will be eligible for mainland investors through SZ-HK connect.

Texhong Textiles Texhong margins on its yarn products are correlated with cotton prices. Texhong has 6 months of cotton inventory and can benefit from higher yarn prices while tapping cheap inventory.

New contribution from Xinjiang and Vietnam plants to boost FY16 volumes. Key risks are a decline in cotton price and rapid CNY depreciation.

Regional Market Focus

High Conviction Pick

Company

Small & Mid Caps (<US$2bn) Reasons for Picks / Potential Catalysts

SKP Resources Proxy to Dyson’s aggressive expansion plans following the award of two cordless vacuum cleaner manufacturing contracts worth RM5bn in 2015

Well positioned for further contract awards as its new manufacturing plant in Senai has 75% available floor space for future expansion Recent acquisition of Tecnic will facilitate the expansion of clientele base and reduce reliance on Dyson

Bangkok Airways High growth company with its successful business operation in Cambodia as the key growth driver. GL now has overseas operations in Cambodia and Laos, while Indonesia operation is ready to start, once GL is granted the finance license from the country’s government (expected in 2016). New overseas investments (potentially in Vietnam and China) are expected after the Indonesia business is up and running

To report new high profits quarter over quarter in 2016, driven by the fast-growing Cambodian operation BUY with Bt50 TP, based on the Gordon Growth Model

Group Lease Samui Airport dominance is a unique competitive advantage for BA which accounts for c.50% of total passenger revenue. BA expects to maintain its dominance as it takes up >80% of the daily flights

Impressive growth in tourist arrivals into Thailand, 20.5% in 2015 and strong growth is expected this year as well as 2M16 figures are already up 15% y-o-y, driven by 32% y-o-y China tourists

The benign jet fuel prices are another positive factor which remains enticingly low around the US$50/bbl level tracking crude oil prices, even after a 42% plunge in 2015 and expect to remain low in this year

BUY with Bt28.3 TP, based on sum-of-the-parts method

Regional

Morning Pack

DBS Bank Ltd recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

Completed Date: 12 Aug 2016 07:50:22

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Regional

Morning Pack

ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in the report. The DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. As of 12 Aug 2016, the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately.

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5.

Compensation for investment banking services: DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for investment banking services from Mapletree Greater China Commercial Trust, ARA Asset Management as of 31 Jul 2016.

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For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at equityresearch@dbs.com.

Regional

Morning Pack

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