Regional Morning Notes

UOBKayHian Regional Morning Notes Friday, July 09, 2010 Refer to last page for important disclosures. Page 1 of 25 CHINA Strategy Page 2 China will extend the resources tax nationwide. Earnings of oil majors and coal miners will be affected. Sector Property Page 4 1H10: Outperformers and underperformers in developers’ contract sales. Update Intime Department Store (BUY/HK$7.82/Target: HK$10.40) Page 6 Strong sales in 1H10 surprises market; momentum remains intact. HONG KONG Update Hang Lung Properties (SELL/HK$30.45/Fair: HK$27.72) Page 9 A quality large-cap stock with expanding earnings base and defensive assets, only way too pricey. Technical Analysis Page 12 Hang Seng Index: Continues to move within the downward channel. MALAYSIA Strategy Page 13 2H10 outlook: Remain defensive through 3Q10 on external concerns, but market recovery expected in 4Q10. Sector Banking Page 15 Bank Negara raises OPR by 25bp to 2.75%, positive for sector’s margins. Stay OVERWEIGHT. CIMB remains the top large-cap pick. SINGAPORE Sector Telecommunications Page 17 Highlights from our marketing trips in Malaysia and Singapore. Update Genting Singapore (SELL/S$1.19/Fair: S$0.97) Page 19 Maintain SELL on expectation of weakening gaming revenue trends post-2Q10. Proposed sale of Genting UK already factored in. THAILAND Update Major Cineplex (BUY/Bt10.20/Target: Bt12.60) Page 22 Despite a hiccup in 2Q10, we expect MAJOR to shine going forward, given a recovery in consumer confidence and spending. Key Indices Prev Close 1D % 1W %1M % YTD %DJIA 10139.0 1.2 3.7 2.0 (2.8) S&P 500 1070.3 0.9 3.8 0.8 (4.0) FTSE 100 5105.5 1.8 6.2 1.5 (5.7) AS30 4374.0 2.2 2.6 (0.6) (10.4) CSI 300 2575.9 (0.2) 2.0 (7.4) (28.0) FSSTI 2897.2 1.3 2.7 5.5 (0.0) HSI 20050.6 1.0 (0.4) 2.2 (8.3) JCI 2915.9 0.5 1.4 4.7 15.1 KLCI 1316.0 0.3 0.6 2.0 3.4 KOSPI 1698.6 1.4 0.7 3.1 0.9 Nikkei 225 9535.7 2.8 3.7 1.0 (9.6) SET 817.6 0.4 2.5 7.0 11.3 TWSE 7608.9 1.0 4.9 7.6 (7.1) BDI 1940 (3.9) (17.5) (45.8) (35.4) CPO (RM/mt) 2406 0.8 (1.0) (5.5) (7.1) Nymex Crude (US$/bbl) 76 0.6 4.0 2.0 (4.4) Source: Bloomberg Top BUYs/SELLs Current Target Pot. +/- Price Price (%) Ticker (lcy) (lcy) Top BUYs China Merchants Bk 3968 HK 18.62 26.50 42.3 CNOOC 883 HK 12.86 17.80 38.4 Zhuzhou CSR 3898 HK 17.54 18.58 5.9 Hong Leong Bank HLBK MK 8.61 10.00 16.1 WCT WCT MK 2.73 3.40 24.5 OCBC OCBC SP 8.93 12.42 39.1 SATS SATS SP 2.77 3.60 30.0 Swiber SWIB SP 0.99 1.54 56.3 Bangkok Bank BBL TB 127.50 161.00 26.3 PTT PTT TB 247.00 325.00 31.6 Top SELLs Top Glove TOPG MK 13.70 10.23 (25.3) TMB Bank TMB TB 1.64 0.63 (61.6) 2009 2010F 2011F GDP (% yoy) US (2.40) 3.00 2.92 Euro Zone (4.10) 1.20 1.40 Japan (5.23) 2.15 1.90 Singapore (1.25) 9.00 4.80 Malaysia (1.70) 6.10 5.10 Thailand (2.20) 4.30 4.70 Indonesia