Regional Morning Notes

UOBKayHian Regional Morning Notes Friday, August 20, 2010 Refer to last page for important disclosures. Page 1 of 30 CHINA Results China Automation Group (BUY/HK$5.42/Target: HK$7.50) Page 2 1H10: In-line results. Potential JV consolidation to provide additional growth dynamic. China Mobile (BUY/HK$81.75/Target: HK$98.20) Page 5 1H10: Earnings beat expectations on solid growth in data usage. CNOOC (BUY/HK$13.00/Target: HK$17.80) Page 8 1H10: Higher-than-expected earnings. This would trigger an earnings upgrade in the market. ZTE Corporation (BUY/HK$25.45/Target: HK$34.00) Page 11 1H10: Expect high growth to resume from 2H10 onwards. Update CITIC Resources Holdings (BUY/HK$1.79/Target: HK$2.70) Page 14 Progress well under way for Yuedong Oilfield. INDONESIA Strategy 2011 State Budget Page 17 The government announces the draft 2011 state budget with a 6.3% GDP growth target and 1.7% fiscal deficit. We view the budget positively. MALAYSIA Results Hong Leong Bank (BUY/RM8.84/Target: RM10.00) Page 19 FY10: Net profit of RM988m (+9.1% yoy). Results above expectations. Lower LPP and tax rate with higher contribution from Bank of Chengdu. PLUS Expressways (HOLD/RM3.98/Fair: RM4.30) Page 22 2Q10: Net profit of RM319.6m (+13.6% yoy, +6.8% qoq), driven by strong traffic volume growth. Downgrade to HOLD. SINGAPORE Sector Banking Page 25 What is the upside? Update Genting Singapore (HOLD/S$1.53/Fair: S$1.58) Page 27 While it is a ‘must-own’ stock for regional gaming exposure in view of the profit magnitude, share price could ease in the near term. Key Indices Prev Close 1D % 1W % 1M % YTD % DJIA 10271.2 (1.4) (0.5) 1.2 (1.5) S&P 500 1075.6 (1.7) (0.7) 0.4 (3.5) FTSE 100 5211.3 (1.7) (1.0) 1.2 (3.7) AS30 4509.6 0.1 2.0 2.1 (7.6) CSI 300 2955.4 0.6 4.9 7.8 (17.3) FSSTI 2946.8 0.9 0.7 (0.1) 1.7 HSI 21072.5 0.2 (0.2) 4.0 (3.7) JCI 3105.4 1.1 2.3 3.7 22.5 KLCI 1392.6 0.5 3.2 4.1 9.4 KOSPI 1779.6 1.0 3.4 2.5 5.8 Nikkei 225 9362.7 1.3 1.6 0.7 (11.2) SET 891.2 1.3 3.4 8.1 21.3 TWSE 7928.9 0.1 1.3 2.8 (3.2) BDI 2644 3.4 8.5 52.7 (12.0) CPO (RM/mt) 2757 (0.4) (0.2) 10.7 6.5 Nymex Crude (US$/bbl) 74 (1.3) (1.7) (2.8) (6.2) Source: Bloomberg Top BUYs/SELLs Current Target Pot. +/- Price Price (%) Ticker (lcy) (lcy) Top BUYs China Merchants Bk 3968 HK 20.60 26.50 28.6 CNOOC 883 HK 13.00 17.80 36.9 SJM Holdings 880 HK 7.33 8.00 9.1 Zhuzhou CSR 3898 HK 20.40 26.12 28.0 Hong Leong Bank HLBK MK 8.84 10.00 13.1 WCT WCT MK 2.82 3.40 20.6 OCBC OCBC SP 8.73 11.57 32.5 SATS SATS SP 2.78 3.36 20.9 Swiber SWIB SP 1.00 1.54 54.8 Bangkok Bank BBL TB 140.00 181.00 29.3 PTT PTT TB 266.00 338.00 27.1 Top SELLs Top Glove TOPG MK 6.08 5.12 (15.8) TMB Bank TMB TB 2.18 0.63 (71.1) 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 5.00 Malaysia (1.70) 6.80 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 Wasion Group HK 25 Aug 26 Aug Corporate Roadshow Singapore Property Sector KL 25 Aug 26 Aug Analyst Presentation HK 27 Aug 27 Aug SG 30 Aug 30 Aug Corporate Events KEY STORY China CNOOC (BUY/HK$13.00/Target: HK$17.80) Page 8 1H10: Higher-than-expected earnings. This would trigger an earnings upgrade in the market. Regional Morning Notes Friday, August 20, 2010 Refer to last page for important disclosures. Page 2 of 30 China Automation Group – China BUY (Maintained) Company Results Share Price HK$5.42 Target Price HK$7.50 Upside +38.4% Company Description The company, through its subsidiaries, provides safety and critical control system specialised for petrochemical and railway industries, along with related maintenance and engineering services. Stock Data GICS sector Industrials Bloomberg ticker: 569 HK Shares issued (m): 1,019.4 Market cap (HK$m): 5,525.0 Market cap (US$m): 711.0 3-mth avg daily t'over (US$m): 0.8 Price Performance (%) 52-week high/low HK$6.60/HK$3.50 1mth 3mth 6mth 1yr YTD 11.5 (3.2) 8.4 44.1 (14.9) Major Shareholders % Consen Investments Holdings 50.6 FY10 NAV/Share (Rmb) 1.