Regional Morning Note

UOBKayHian Regional Morning Notes Friday, April 30, 2010 Please see important notice on last page Page 1 of 27 CHINA Initiate Coverage Angang Steel (SELL/HK$11.92/Fair: HK$10.30) Page 2 Chances of major M&As at listed company level are remote. Maanshan Iron & Steel (SELL/HK$4.06/Fair: HK$3.20) Page 5 No immediate benefit from spending on high-speed trains. Results Bank of Communications (HOLD/HK$8.86/Fair:HK$9.45) Page 7 1Q10: Net profit in line, but NIM a negative surprise. LDR remains high at 78% and mild slippage in asset quality. China Construction Bank (BUY/HK$6.16/Target: HK$8.00) Page 9 1Q10: Profit ahead of expectations, 0.7 for 10 rights issue plan announced. Maintain BUY. Industrial & Commercial Bank of China (BUY/HK$5.66/Target: HK$6.80) Page 11 1Q10: Solid results driven by NIM expansion, provision build-up continued over the quarter. Ping An Insurance (BUY/HK$64.70/Target:HK$86.30) Page 13 1Q10: Net profit up 94.0% yoy on strong premium growth. Update Tsingtao Brewery (BUY/HK$37.20/Target: HK$46.60) Page 15 Feedback from US roadshow. INDONESIA Results Kalbe Farma (SELL/Rp2,025/Fair: Rp1,700) Page 17 1Q10: Sales meet expectations, but net profit was slightly above due to better-than-expected margins. MALAYSIA Update PLUS Expressways (BUY/RM3.43/Target: RM4.00) Page 19 Domestic traffic volume grows 9.1% yoy in 1Q10, implying strong 1Q10 results. Maintain BUY. SINGAPORE Results Ho Bee Investment (HOLD/S$1.66/Fair: S$1.90) Page 21 1Q10: Running out of landbank. Update Singapore Telecommunications (HOLD/S$3.04/Fair: S$3.01) Page 23 Bharti Airtel – spend and spend. Maintain HOLD. THAILAND Update Bangkok Dusit Medical Services (BUY/Bt24.80/Target: Bt29.29) Page 25 Expect strong 1Q10 results. Political unrest may lead to soft 2Q10 but growth momentum is expected to resume in 2H10. Maintain BUY. KEY STORY China Angang Steel (SELL/HK$11.92/Fair: HK$10.30) Page 2 Chances of major M&As at listed company level are remote. Maanshan Iron & Steel (SELL/HK$4.06/Fair: HK$3.20) Page 5 No immediate benefit from spending on high-speed trains. 2009 2010F 2011F GDP (% yoy) US (2.40) 3.00 3.00 Euro Zone (4.10) 1.15 1.50 Japan (5.20) 1.90 1.90 Singapore (2.00) 5.80 4.50 Malaysia (1.70) 4.90 5.10 Thailand (2.30) 4.30 4.70 Indonesia 4.50 6.00 6.20 Hong Kong (2.70) 4.00 4.50 China 8.50 9.50 8.30 Brent Crude Oil (US$/bbl) 62 75 85 Aluminium * (US$/mt) 1,671 2,133 2,228 Copper * (US$/mt) 5,178 7,028 7,508 Gold Price London * (US$/ounce) 974 1,163 1,192 Iron Ore * (USc/dmtu) 85 126 137 CPO (US$/mt) 670 776 716 BDI 2,617 3,000 3,300 * Bloomberg Source: UOB, UOB Kay Hian Key Assumptions Venue Beg Close PT Pembangunan Perumahan Spore 29 Apr 30 Apr Corporate Roadshow TCL Com. Tech. HK 29 Apr 30 Apr Corporate Road Show Ascott Residence Trust Spore 3 May 3 May Luncheon Presentation BW Plantations Spore 5 May 5 May Luncheon Presentation Berjaya Sports Toto KL 6 May 6 May Luncheon Presentation Corporate Events Key Indices Prev Close 1D % 1W % 1M % YTD % DJIA 11167.3 1.1 0.3 2.5 7.1 S&P 500 1206.8 1.3 (0.2) 2.9 8.2 FTSE 100 5617.8 0.6 (0.8) (1.6) 3.8 AS30 4816.1 (0.8) (3.3) (1.6) (1.4) CSI 300 3060.1 (1.2) (4.4) (8.5) (14.4) FSSTI 2959.0 0.9 (0.7) 2.5 2.1 HSI 20778.9 (0.8) (3.2) (2.2) (5.0) JCI 2926.9 0.8 0.0 5.4 15.5 KLCI 1335.9 0.2 (0.1) 1.2 5.0 KOSPI 1728.4 (0.3) (0.6) 2.1 2.7 Nikkei 225 10924.8 (2.6) (1.5) (0.6) 3.6 SET 753.2 0.5 (1.0) (4.4) 2.5 TWSE 8054.1 (0.3) 0.9 1.7 (1.6) BDI 3359 0.9 11.7 11.2 11.8 CPO (RM/mt) 2556 (0.4) 2.0 (1.8) (1.3) Nymex Crude (US$/bbl) 85 2.3 1.8 3.7 7.3 Source: Bloomberg Top BUYs/SELLs Current Target Pot. +/- Price Price (%) Ticker (lcy) (lcy) Top BUYs China Merchants Bk 3968 HK 18.82 26.50 40.8 CNOOC 883 HK 13.44 17.80 32.4 Zhuzhou CSR 3898 HK 16.50 18.58 12.6 Hong Leong Bank HLBK MK 8.70 10.00 14.9 KL Kepong KLK MK 16.60 19.00 14.5 WCT WCT MK 2.90 3.40 17.2 OCBC OCBC SP 8.69 12.65 45.6 SATS SATS SP 2.82 3.60 27.7 S'pore Press Hldgs SPH SP 4.14 4.60 11.1 Bangkok Bank BBL TB 115.50 161.00 39.4 PTT PTT TB 251.00 325.00 29.5 Top SELLs BAT ROTH MK 43.30 39.20 (9.5) TMB Bank TMB TB 1.32 0.63 (52.3) Regional Morning Notes Friday, April 30, 2010 Please see important notice on last page Page 2 of 27 Angang Steel Chances of major M&As at listed company level are remote We re-initiate coverage with SELL and fair price of HK$10.30, implying 14% downside. Trading at 15x PE on 2011F earnings, Angang is unattractive as chances of M&As seem remote and cost pressure is mounting. Angang’s 1Q10 results reinforced our SELL call because the net profit of Rmb1,148m is below market expectation, amounting to 20% of market consensus. We think downward revisions are necessary