Regional Morning Notes

UOBKayHian Regional Morning Notes Friday, August 06, 2010 Refer to last page for important disclosures. Page 1 of 29 CHINA Economy Inflation Page 2 July CPI could reach 3.3% yoy, fuelled by the recent surge in pork prices and low base effect. Sector Banking Page 4 Recent newsflow may present buying opportunities for those who have missed out on the recent rally. HONG KONG Results Orient Overseas International (BUY/HK$63.65/Target: HK$85.50) Page 6 1H10:Core earnings beat expectations and special dividend declared as expected. Swire Pacific (BUY/HK$98.00/Target: HK$116.70) Page 9 1H10 : Results boosted by Cathay Pacific and non-recurring gains. Swire remains our favourite landlord. MALAYSIA Sector Automobile Page 12 2Q10 results preview: Maintaining our earnings forecasts for Proton but trim our forecasts for UMW. Update AirAsia (BUY/RM1.65/Target: RM2.00) Page 14 Compelling valuations. Maintain BUY. SINGAPORE Initiate Coverage Marco Polo Marine (BUY/S$0.43/Target: S$0.53) Page 17 Proxy to Indonesian coal-fired power plant play. Results CWT (BUY/S$1.01/Target: S$1.38) Page 20 1H10: Results broadly in line. Declared special dividend of. 6 cents/share. StarHub (BUY/S$2.33/Target: S$2.80) Page 23 2Q10: EBITDA margin recovers. Tiger Airways (SELL/S$2.24/Fair: S$1.52) Page 26 1QFY11: Dismal results with net profit at 2.4% of consensus. KEY STORY China Inflation Page 2 July CPI could reach 3.3% yoy, fuelled by the recent surge in pork prices and low base effect. Banking Page 4 Recent newsflow may present buying opportunities for those who have missed out on the recent rally. Key Indices Prev Close 1D % 1W % 1M % YTD % DJIA 10675.0 (0.1) 2.0 10.2 2.4 S&P 500 1125.8 (0.1) 2.2 10.1 1.0 FTSE 100 5365.8 (0.4) 2.0 11.2 (0.9) AS30 4584.9 0.6 1.1 6.6 (6.1) CSI 300 2850.8 (0.9) (0.9) 11.2 (20.3) FSSTI 3006.8 0.2 0.3 4.8 3.8 HSI 21551.7 0.0 2.2 7.3 (1.5) JCI 3044.9 2.1 (1.7) 4.6 20.1 KLCI 1362.1 (0.0) 0.3 4.2 7.0 KOSPI 1783.9 (0.3) 0.7 5.9 6.0 Nikkei 225 9653.9 1.7 (0.4) 3.4 (8.5) SET 874.9 0.9 2.4 7.3 19.1 TWSE 7936.9 (0.4) 1.8 5.1 (3.1) BDI 1978 1.1 1.9 (10.7) (34.2) CPO (RM/mt) 2662 1.2 4.1 9.9 2.8 Nymex Crude (US$/bbl) 82 (0.6) 4.7 13.7 3.3 Source: Bloomberg Top BUYs/SELLs Current Target Pot. +/- Price Price (%) Ticker (lcy) (lcy) Top BUYs China Merchants Bk 3968 HK 20.90 26.50 26.8 CNOOC 883 HK 13.48 17.80 32.0 SJM Holdings 880 HK 6.87 8.00 16.4 Hong Leong Bank HLBK MK 9.05 10.00 10.5 WCT WCT MK 2.81 3.40 21.0 OCBC OCBC SP 8.96 11.57 29.1 SATS SATS SP 2.86 3.36 17.5 Swiber SWIB SP 1.04 1.54 48.1 Bangkok Bank BBL TB 139.50 181.00 29.7 PTT PTT TB 261.00 338.00 29.5 Top SELLs Top Glove TOPG MK 6.49 5.12 (21.1) TMB Bank TMB TB 2.10 0.63 (70.0) 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 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 Friday, August 06, 2010 Refer to last page for important disclosures. Page 2 of 29 Economics – China July CPI could reach 3.3% yoy, fuelled by the recent surge in pork prices and low base effect The CPI may peak at around 3.3% in July due to the recent rebound in pork prices and the low base effect. The rapid surge of the index may raise the possibility that the People’s Bank of China may increase its deposit rate once by 27bp, but it is not a signal of tightening measures and the lending rate will remain unchanged. What’s New • A survey by the National Bureau of Statistics suggested pork prices rebounded about 12% yoy or 14% mom to Rmb20.3/kg in July in 50 major cities. Meanwhile, information from the Ministry of Agriculture showed that pork prices surged 16% mom natio