Something just like this: Strait Talk

Disclosures & Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. MCI (P) 126/02/2017 MCI (P) 069/06/2017 Issuer of report: The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch View HSBC Global Research at: https://www.research.hsbc.com Votingstarts6thJulyIf youvalueourserviceandinsight,voteforHSBCClickheretovote ✔VoteinAsiamoneyBrokersPoll2017  We present stocks that we consider to be the most fundamentally sound in ASEAN  There are 22 names that we believe should be considered core holdings or at the very least be on investors’ radar  Of these there are 5 that are trading below mean PE and have more immediate foreseeable catalysts: LPPF, ALI, DFI, FCT and SCB Core holdings in ASEAN We present stocks that we consider to be the most fundamentally sound in ASEAN and often best in class in their respective sectors. Our parameters are: solid balance sheets, high profitability, consistently stronger-than-peers or resilient earnings, industry-leading standing in their industry or country, and/or good management and governance. Of the ASEAN stocks under HSBC coverage, we have 22 names that we believe should be considered core holdings or at the very least be on investors’ radar.  Banks: BCA, Public Bank, BPI, SECB, KBank, and SCB.  Consumers: Matahari, Puregold, Kalbe Farma, Dairy Farm, BAT Malaysia, HM Sampoerna, and Unilever.  Industrials: Comfort Delgro and Meralco.  Property: Ayala Land, SMPH, City Developments, Frasers Centrepoint Trust, A-REIT, and Central Pattana.  Telcos: PT Telkom. However, only seven of these are trading below historical mean 12-month fwd PE, with five possessing a more immediate foreseeable catalyst. These are Matahari (LPPF), Ayala Land (ALI), Dairy Farm (DFI), Frasers Centrepoint Trust (FCT), and Siam Commercial Bank (SCB) 25 July 2017 Ismael Pili* Head of ASEAN and South Asia Equity Research The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch ismael.pili@hsbc.com.sg +65 6658 0606 Jayant Parasramka Associate Bangalore *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations. Something just like this EQUITY STRATEGY ASEAN Table 1: Fundamentally sound stocks trading below mean with more immediate catalysts Company Ticker Curr. Rating Closing Price Target Price Upside to TP (%) M Cap (USD bn) 3m ADT (USDm) EPS Growth (%) _ PE (x) ___ _ PB (x) __ ROE (%) _ Div Yield (%) 2017e 2018e 2017e 2018e 2017e 2018e 2017e 2018e 2017e 2018e Matahari Dept. Store LPPF IJ IDR Buy 13,000 19,000 46.2 2.71 5.8 7.5 7.3 17.5 16.3 12.6 11.5 102.1 76.2 3.4 3.7 Ayala Land ALI PM PHP Buy 41.70 49.00 17.5 12.13 11.6 17.5 14.8 24.8 21.6 16.4 15.0 15.0 15.5 1.4 1.6 Dairy Farm Int'l DFI SP USD Buy 8.19 9.99 22.0 11.04 3.0 10.0 7.1 21.9 20.5 13.7 12.6 29.9 28.3 2.9 3.1 Frasers Centrepoint Trust FCT SP SGD Buy 2.11 2.30 9.0 1.43 1.5 -15.5 7.1 18.6 17.3 21.5 20.1 5.9 6.3 5.6 5.9 Siam Comm. Bank SCB TB THB Buy 153.50 177.50 15.6 15.37 23.9 -0.1 17.8 11.0 9.3 1.4 1.3 13.1 14.2 3.9 4.6 Source: Blmberg, Thomson Reuters Datastream, HSBC estimates. Prices as on 19 July 2017 Strait Talk  EQUITY STRATEGY ● ASEAN 25 July 2017 2 Core holdings in ASEAN 22 fundamentally sound names We present stocks that we consider to be the most fundamentally sound in ASEAN and often best in class in their respective sectors. Our parameters are: solid balance sheets, high profitability, consistently stronger-than-peers or resilient earnings, industry-leading standing in their industry or country, and/or good management and governance. From the stocks under our coverage in ASEAN, we have 22 names that we believe should be considered core holdings or at the very least be on investors’ radar. Our fundamental views on these companies are on pages 6 to 9.  Banks: BCA, Public Bank, BPI, SECB, KBank, and SCB.  Consumers: Matahari, Puregold, Kalbe Farma, Dairy Farm, BAT Malaysia, HM Sampoerna, and Unilever.  Industrials: Comfort Delgro and Meralco.  Property: Ayala Land, SMPH, City Developments, Frasers Centrepoint Trust, A-REIT, and Central Pattana.  Telcos: PT Telkom. Quality with value Only seven companies are trading below mean, but five have immediate catalysts Defensive and expensive may be an oft-used description for many of these names, and rightfully so given their strong fundamental standing. The fact that ASEAN markets are in the black this year has further stretched valuations, with some of the fundamentally sound names that earlier offered value now trading at unenticing share prices. However, there are still seven companies that are trading below their historical means on P/E metrics. This includes Matahari, Puregold, Dairy Farm, HM Sampoerna, Ayala Land, Frasers Centrepoint Trust and Siam Commercial Bank. Something just like this  We present stocks that we con