Regional Morning Notes

UOBKayHian Regional Morning Notes Thursday, August 12, 2010 Refer to last page for important disclosures. Page 1 of 24 CHINA Economics Page 2 Retail sales and FAI growth surprisingly slower while PPI declines faster than expected. Sector Banking Page 4 July new loans lower than expected on loan clampdown. Results China South Locomotive & Rolling Stock (BUY/HK$6.40/Target: HK$7.31) Page 6 1H10: In-line results; multiple growth drivers. Zhuzhou CSR Times Electric (BUY/HK$21.45/Target: HK$26.12) Page 9 1H10: Excellent results. Strong growth ahead. HONG KONG Results Hong Kong Exchanges And Clearing (BUY/HK$129.10/Target: HK$143.40) Page 12 2Q10: Net profit of HK$1.1b, similar to 1Q10’s level. Results in line with expectations. Low velocity implies pick-up in ADT, going forward. INDONESIA Sector Cement Page 15 7M10 domestic cement sales comes in at 23.3mt (+10.7% yoy), still in line with our 2010 sales forecast of 40.0mt. Maintain OVERWEIGHT. SINGAPORE Sector Banking Page 16 2Q10 roundup: Operationally, DBS aced, followed by OCBC. Results Golden Agri-Resources (HOLD/S$0.57/Fair: S$0.60) Page 18 2Q10: Net profit declines 25% qoq on higher costs but in line with expectation. THAILAND Results Banpu Plc (BUY/Bt620.00/Target: Bt778.00) Page 21 2Q10: Robust earnings growth. KEY STORY Singapore Banking Page 16 2Q10 roundup: Operationally, DBS aced, followed by OCBC. Key Indices Prev Close 1D % 1W % 1M % YTD % DJIA 10378.8 (2.5) (2.8) 1.8 (0.5) S&P 500 1089.5 (2.8) (3.4) 1.1 (2.3) FTSE 100 5245.2 (2.4) (2.2) 2.2 (3.1) AS30 4479.7 (1.8) (1.8) 1.1 (8.3) CSI 300 2850.2 0.6 (0.9) 6.5 (20.3) FSSTI 2949.3 (1.2) (2.2) 0.8 1.8 HSI 21294.5 (0.8) (1.2) 4.0 (2.6) JCI 3035.3 (0.7) 1.7 2.6 19.8 KLCI 1352.9 (0.5) (0.7) 2.0 6.3 KOSPI 1758.2 (1.3) (1.7) 1.4 4.5 Nikkei 225 9292.9 (2.7) (2.1) (2.7) (11.9) SET 862.2 0.0 (0.6) 5.2 17.4 TWSE 7895.0 (1.0) (1.0) 3.3 (3.6) BDI 2378 7.5 21.5 25.0 (20.9) CPO (RM/mt) 2759 (1.4) 4.9 14.6 6.5 Nymex Crude (US$/bbl) 77 (0.9) (5.8) 3.1 (2.6) Source: Bloomberg Top BUYs/SELLs Current Target Pot. +/- Price Price (%) Ticker (lcy) (lcy) Top BUYs China Merchants Bk 3968 HK 20.25 26.50 30.9 CNOOC 883 HK 13.06 17.80 36.3 SJM Holdings 880 HK 6.97 8.00 14.8 Hong Leong Bank HLBK MK 8.86 10.00 12.9 WCT WCT MK 2.83 3.40 20.1 OCBC OCBC SP 8.73 11.57 32.5 SATS SATS SP 2.81 3.36 19.6 Swiber SWIB SP 1.01 1.54 52.5 Bangkok Bank BBL TB 137.00 181.00 32.1 PTT PTT TB 250.00 338.00 35.2 Top SELLs Top Glove TOPG MK 6.20 5.12 (17.4) TMB Bank TMB TB 2.04 0.63 (69.1) 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 Regional Gaming Sector TORONTO 10 Aug 12 Aug Analyst Presentation MONTREAL 13 Aug 13 Aug Hengdeli Holdings HK 13 Aug 13 Aug Post-results Corporate Roadshow SG 16 Aug 17 Aug KL 19 Aug 19 Aug Corporate Events Regional Morning Notes Thursday, August 12, 2010 Refer to last page for important disclosures. Page 2 of 24 Economics – China Slower retail sales and FAI growth; faster-than-expected fall in PPI The lower-than-expected fixed-asset investment (FAI) and retail sales figures in July indicate China’s economy is slowing down due to internal and external constraints. The consumer price index (CPI) reached a new high for the year in July, but the producer price index (PPI) fell faster than expected, showing that inflationary pressure was not as severe as the market had thought. July Economic Data Jul 10 Jun 10 Actual Consensus (%) CPI 3.3 3.3 2.9 PPI 4.8 6.0 6.4 Retail Sales 17.9 18.5 18.3 Retail Sales (ytd) 18.2 18.2 18.2 Industrial Production 13.4 13.4 13.7 Industrial Production (ytd) 17.0 16.9 17.6 FAI urban (ytd) 24.9 25.3 25.5 Source: The National Bureau of Statistics of China, Bloomberg Ytd urban FAI up 24.9% yoy in July, 0.4ppt below consensus and 0.6ppt lower than in June. The deceleration was possibly due to a seasonal slowdown in property construction, which takes up 20% of total FAI. As mentioned in our note on 11 August, new-started area