Wednesday, 19 September 20181 Refer to last page for important disclosures. Regional Morning Notes PLEASE CLICK ON THE PAGE NUMBER TO MOVE TO THE RELEVANT PAGE. CHINA Sector Education Page 2 High regulatory risks suppress stock valuations. INDONESIA Small/Mid Cap Highlights Catur Sentosa Adiprana (CSAP IJ/NOT RATED/Rp595) Page 4 Scaling up expansion of Mitra 10. MALAYSIA Sector Construction Page 7 The uncertainty looming in the sector continues to dampen sector valuations, but sector valuations are likely to recover on the back of future pipeline projects. Update VS Industry (VSI MK/BUY/RM1.51/Target: RM1.75) Page 9 Although the worst is over after VSI’s washout 3QFY18 results, more patience is needed for upcoming new capacities to bear fruit. SINGAPORE Update CapitaLand (CAPL SP/BUY/S$$3.27/Target: S$3.78) Page 12 Acquisition of US multi-family portfolio. THAILAND Update Dynasty Ceramic (DCC TB/BUY/Bt2.80/Target: Bt3.30) Page 15 Earnings have bottomed out in 2Q18. We are now looking for a better performance from 3Q18 onwards. Upgrade to BUY. Khon Kaen Sugar Industry (KSL TB/SELL/Bt3.32/Target: Bt3.10) Page 18 Very weak sugar prices pressure FY19 earnings. KEY INDICES Prev Close 1D % 1W % 1M % YTD % DJIA 26247.0 0.7 1.1 2.3 6.2 S&P 500 2904.3 0.5 0.6 1.9 8.6 FTSE 100 7300.2 (0.0) 0.4 (3.4) (5.0) AS30 6269.5 (0.4) (0.3) (2.4) 1.7 CSI 300 3269.4 2.0 1.4 1.2 (18.9) FSSTI 3139.3 (0.1) 0.9 (2.2) (7.7) HSCEI 10557.0 0.9 2.2 0.4 (9.8) HSI 27084.7 0.6 2.5 (0.5) (9.5) JCI 5811.8 (0.2) (0.3) 0.5 (8.6) KLCI 1792.9 (0.6) (0.3) 0.5 (0.2) KOSPI 2309.0 0.3 1.1 2.8 (6.4) Nikkei 225 23420.5 1.4 4.7 5.2 2.9 SET 1744.4 1.5 4.3 3.2 (0.5) TWSE 10760.2 (0.6) 0.1 0.6 1.1 BDI 1357 (0.7) (5.7) (21.2) (0.7) CPO (RM/mt) 2209 (0.1) (0.1) 1.3 (7.6) Brent Crude (US$/bbl) 79 1.3 (0.0) 10.0 18.2 Source: Bloomberg TOP PICKS Ticker CP (lcy) TP (lcy) Pot. +/- (%) BUY Baoshan Iron & Steel 600019 CH 7.59 9.53 25.6 Gudang Garam GGRM IJ 72,200.00 85,000.00 17.7 PP Persero PTPP IJ 1,475.00 3,700.00 150.8 CIMB CIMB MK 6.04 6.70 10.9 OCBC OCBC SP 11.04 13.68 23.9 SingTel ST SP 3.11 3.98 28.0 Siam Cement SCC TB 448.00 530.00 18.3 SELL Hartalega HART MK 6.74 4.02 (40.4) KEY ASSUMPTIONS GDP (% yoy) 2017 2018F 2019F US 2.2 2.7 2.3 Euro Zone