Regional Morning Notes

UOBKayHian Regional Morning Notes Wednesday, August 04, 2010 Refer to last page for important disclosures. Page 1 of 25 REGIONAL Sector Property Page 2 After considering the risks and opportunities, we offer our stock picks in the region. CHINA Update BYD (SELL/HK$55.95/Fair: HK$45.00) Page 4 July sales miss target again. Technical Analysis Page 7 H share Index: Long term view based on weekly technicals. HONG KONG Sector Macau Gaming Page 9 July market gross gaming revenue strong with some unexpected winners. Results Pacific Basin (HOLD/HK$5.75/Fair: HK$5.90) Page 11 1H10: Net profit declines yoy on non cash derivative expenses; management remains neutral on dry bulk shipping market. MALAYSIA Sector Property Page 14 Strong sales momentum. SINGAPORE Results Sembcorp Marine (HOLD/S$4.04/Fair: S$3.85) Page 16 2Q10: Turnover down 27% yoy but net profit improves by 28% yoy. We attribute to high margin owner furnished equipment projects. ST Engineering (HOLD/S$3.26/Fair: S$2.98) Page 19 2Q10: Net profit up 12% yoy even as staff costs rise 16%. Upgrade to HOLD. Update Oversea-Chinese Banking Corp (BUY/S$9.08/Target: S$11.57) Page 22 Results briefing takeaways. KEY STORY Regional Property Page 2 After considering the risks and opportunities, we offer our stock picks in the region. Key Indices Prev Close 1D % 1W % 1M % YTD % DJIA 10636.4 (0.4) 0.9 9.8 2.0 S&P 500 1120.5 (0.5) 0.6 9.6 0.5 FTSE 100 5396.5 (0.0) 1.4 11.5 (0.3) AS30 4586.5 0.7 1.6 7.5 (6.1) CSI 300 2866.0 (1.8) 2.5 13.1 (19.8) FSSTI 3014.8 (0.3) 1.2 6.0 4.0 HSI 21457.7 0.2 2.3 7.8 (1.9) JCI 2973.7 (2.8) (2.2) 3.6 17.3 KLCI 1363.8 0.0 0.9 4.3 7.2 KOSPI 1790.6 0.5 1.3 7.1 6.4 Nikkei 225 9694.0 1.3 2.1 5.3 (8.1) SET 864.5 0.2 1.3 7.7 17.7 TWSE 7957.5 0.6 2.7 8.6 (2.8) BDI 1964 (0.7) 5.1 (13.9) (34.6) CPO (RM/mt) 2634 1.6 2.9 8.7 1.7 Nymex Crude (US$/bbl) 83 1.5 6.5 14.4 4.0 Source: Bloomberg Top BUYs/SELLs Current Target Pot. +/ Price Price (%) Ticker (lcy) (lcy) Top BUYs China Merchants Bk 3968 HK 21.20 26.50 25.0 CNOOC 883 HK 13.48 17.80 32.0 SJM Holdings 880 HK 6.97 8.00 14.8 Hong Leong Bank HLBK MK 8.96 10.00 11.6 WCT WCT MK 2.75 3.40 23.6 OCBC OCBC SP 9.05 11.57 27.8 SATS SATS SP 2.85 3.36 17.9 Swiber SWIB SP 1.04 1.54 48.1 Bangkok Bank BBL TB 137.00 181.00 32.1 PTT PTT TB 258.00 338.00 31.0 Top SELLs Top Glove TOPG MK 6.63 5.12 (22.8) TMB Bank TMB TB 2.06 0.63 (69.4) 2009 2010F 2011F GDP (% yoy) US (2.40) 3.10 2.90 Euro Zone (4.10) 1.10 1.30 Japan (5.23) 3.25 1.70 Singapore (1.25) 13.80 4.80 Malaysia (1.70) 6.10 5.10 Thailand (2.20) 5.50 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 2,194 Copper * (US$/mt) 5,178 7,102 7,508 Gold Price London * (US$/ounce) 974 1,161 1,225 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 Singapore Market Strategy 2H10 HK 4 Aug 4 Aug Analyst Presentation Luk Fook SG 4 Aug 5 Aug Post results Corporate Roadshow Thailand Political Issues BKK 5 Aug 5 Aug Luncheon Presentation CWT Limited SG 10 Aug 10 Aug Luncheon Presentation Regional Gaming Sector NY 9 Aug 9 Aug Analyst Presentation TORONTO 10 Aug 12 Aug MONTREAL 13 Aug 13 Aug Hengdeli Holdings HK 12 Aug 13 Aug Post results Corporate Roadshow SG 16 Aug 17 Aug KL 18 Aug 18 Aug Corporate Events Regional Morning Notes Wednesday, August 04, 2010 Refer to last page for important disclosures. Page 2 of 25 Property – Regional China remains our favourite market; prefer Singapore to Hong Kong for office exposure, although Hong Kong fares better on the residential front; Malaysia looks a passive choice; and near term supply a concern in Thailand What’s New After more than doubled from post financial crisis’ bottom, the performance of property stocks in the region in the past year, except for Thailand, has been unimpressive, trailing behind their respective broad market. This is even though liquidity has continued to abound, interest rates remaining low and asset prices climbing. With easy money already been made, in our regional property report released today, we explore the risks and opportunities in the five regions: China, Hong Kong, Singapore, Malaysia and Thailand. Here is the summary: China. Still our favourite among the five markets. Although the share prices of China developers have rallied 20 50% in the last two months, they are rebounding from a depressed level. The fact that many are still trading 10% below their April high and 20% the 4Q09 high gives comfort that there is still room