Regional Morning Notes

UOBKayHian Regional Morning Notes Thursday, July 22, 2010 Refer to last page for important disclosures. Page 1 of 28 REGIONAL Sector Gaming Page 2 Findings from the Asian leg of our regional gaming marketing trip. CHINA Sector Power Equipment Page 4 More positives for new energy. Telecommunications Page 5 Jun 10: China Unicom 3G net adds are disappointing. Results Digital China (BUY/HK$13.02/Target: HK$15.00) Page 6 FY10: Mixed results. Post-results selling pressure due to macro uncertainties create buying opportunities. Update Sinopec (BUY/HK$6.17/Target: HK$7.60) Page 9 Strong 1H10 operating data may not be sustainable in 2H10. HONG KONG Sector Banking Page 12 Who will benefit from renminbi settlement policy change? Results Luk Fook (BUY/HK$11.12/Target: HK$16.10) Page 13 FY10: Net profit soars 93% yoy, well ahead of our expectations. Stunning performance so far in FY11. Raise earnings forecasts and target price. INDONESIA Update International Nickel Indonesia (BUY/Rp3,875/Target: Rp5,000) Page 16 Expect flat revenue growth in 2Q10 due to lower production of nickel-in-matte from higher nickel price and inventory since 1Q10. SINGAPORE Results CapitaCommercial Trust (BUY/S$1.35/Target: S$1.55) Page 19 2Q10: Watch out for acquisitions. THAILAND Results Bank of Ayudhya (BUY/Bt19.80/Target: Bt25.00) Page 22 2Q10: Net profit rises 3% qoq to Bt2.1b, supported by well-contained opex and falling credit costs. Siam Commercial Bank (BUY/Bt83.75/Target: Bt123.00) Page 25 2Q10: Net profit falls 17% qoq to Bt5.3b on flat NIM and a 58% drop in forex. KEY STORY Regional Gaming Page 2 Findings from the Asian leg of our regional gaming marketing trip. Key Indices Prev Close 1D % 1W % 1M % YTD % DJIA 10120.5 (1.1) (2.4) (3.1) (2.9) S&P 500 1069.6 (1.3) (2.3) (3.9) (4.1) FTSE 100 5214.6 1.5 0.1 (1.6) (3.7) AS30 4428.7 0.2 (1.1) (3.3) (9.3) CSI 300 2747.3 0.2 3.5 (1.3) (23.2) FSSTI 2926.1 (0.8) (0.9) 1.9 1.0 HSI 20487.2 1.1 (0.4) (1.6) (6.3) JCI 3013.4 0.6 1.1 2.7 18.9 KLCI 1341.0 0.3 (0.0) 1.3 5.4 KOSPI 1748.8 0.7 (0.5) 1.0 3.9 Nikkei 225 9278.8 (0.2) (2.7) (8.2) (12.0) SET 830.9 0.8 1.4 3.3 13.1 TWSE 7701.3 (0.1) (0.2) 1.2 (5.9) BDI 1781 1.1 4.2 (31.5) (40.7) CPO (RM/mt) 2505 0.6 3.4 0.2 (3.3) Nymex Crude (US$/bbl) 77 (1.3) (0.6) (1.6) (3.5) Source: Bloomberg Top BUYs/SELLs Current Target Pot. +/- Price Price (%) Ticker (lcy) (lcy) Top BUYs China Merchants Bk 3968 HK 20.00 26.50 32.5 CNOOC 883 HK 12.84 17.80 38.6 Hong Leong Bank HLBK MK 8.73 10.00 14.5 WCT WCT MK 2.78 3.40 22.3 OCBC OCBC SP 8.80 12.38 40.7 SATS SATS SP 2.77 3.60 30.0 Swiber SWIB SP 1.04 1.54 48.1 Bangkok Bank BBL TB 136.00 181.00 33.1 PTT PTT TB 245.00 325.00 32.7 Top SELLs Top Glove TOPG MK 6.80 5.12 (24.7) TMB Bank TMB TB 2.08 0.63 (69.7) 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) 13.80 4.80 Malaysia (1.70) 6.10 5.10 Thailand (2.20) 4.30 4.70 Indonesia 4.55 6.00 6.20 Hong Kong (2.70) 4.00 4.50 China 9.10 9.50 8.30 Brent Crude Oil (US$/bbl) 62 75 85 Aluminium * (US$/mt) 1,671 2,137 2,245 Copper * (US$/mt) 5,178 7,102 7,655 Gold Price London * (US$/ounce) 974 1,161 1,144 Iron Ore * (USc/dmtu) 85 120 106 CPO (US$/mt) 670 776 716 BDI 2,617 3,000 3,300 * Bloomberg Source: UOB, UOB Kay Hian Key Assumptions Venue Beg Close Shougang Concord HK 23 Jul 23 Jul Luncheon Presentation Singapore Market Strategy 2H10 KL 26 Jul 27 Jul Analyst Presentation CDL Hospitality Trust SG 28 Jul 28 Jul Luncheon Presentation Sunway Holdings Luncheon Presentation KL 28 Jul 28 Jul Singapore Market Strategy 2H10 SG 29 Jul 30 Jul Analyst Presentation HK 4 Aug 4 Aug Luk Fook Post-results Corporate Roadshow SG 4 Aug 6 Aug CWT Limited SG 10 Aug 10 Aug Luncheon Presentation Regional Gaming Sector NY 9 Aug 10 Aug Analyst Presentation TORONTO 11 Aug 13 Aug Corporate Events Regional Morning Notes Thursday, July 22, 2010 Refer to last page for important disclosures. Page 2 of 28 Gaming – Regional Roadshow highlights What’s New • We recently completed our regional gaming roadshow in Asia. In the past week, we met over 30 fund managers in Hong Kong, Singapore and Malaysia, to convey our OVERWEIGHT call on the Macau gaming sector and BUY call on Genting Hong Kong (GENHK), a unique coverage. We maintain our SELL call on Genting Singapore (GENS). • A few key points were conveyed or repeatedly discussed: a) in Macau, a likely firm mom recovery in gross gaming revenue (GGR) in July, the