4 August 2011 Asia Equities Daily Focus Periodicalimg.jrjimg.cn/2011/08/20110804135109463.pdfAsia Pan-Asia Strategy 4 August 2011 Asia Equities Daily Focus Today's research headlines

Asia Pan-Asia Strategy

4 August 2011

Asia Equities Daily Focus Today's research headlines Asian Edition

Deutsche Bank AG/Hong Kong

All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 146/04/2011.

Periodical

Asian Index Closings EQUITIES Close 1D Chg %Chg

SHSZ300 2954.87 -0.05 -5.54 HSCEI 12007.10 -2.21 -5.40 HSI 21992.72 -1.91 -4.53 TWSE 8456.86 -1.49 -5.75 KOSPI 2066.26 -2.59 0.74 FSSTI 3130.34 -1.47 -1.87 KLCI 1545.10 -0.63 1.72 SENSEX 17940.55 -0.94 -12.52 NIFTY 5404.80 -0.95 -11.90 SET 1133.46 -0.54 9.75 JCI 4136.51 -0.99 11.69 PCOMP 4488.45 -1.16 6.84 ASX200 4332.80 -2.27 -8.69 FOREX (vs US$) Close 1D Chg YTD %Chg Rmb 6.43 0.06 2.69 HK$ 7.80 -0.05 -0.33 NT$ 28.90 -0.21 1.40 Won 1060.38 -0.91 6.19 S$ 1.21 0.00 6.40 M$ 2.97 -0.45 3.06 Rupee 44.31 -0.08 0.88 Baht 29.76 0.13 1.01 Rupiah 8489.00 -0.15 5.97 Peso 42.24 -0.10 3.71 A$ 1.07 -0.28 5.04

Source: Bloomberg Finance LP

Latest Commodity Prices COMMODITIES Close 1D %Chg YTD %Chg West Texas 92.21 -1.68 0.91 Brent 112.81 -2.18 19.63 CRB 337.32 -1.32 1.36 Copper 432.00 -1.57 -2.69 Gold (Spot) 1663.60 0.15 17.09 Alum. (LME) 2583.00 -0.08 4.58 Baltic Dry 1253.00 -0.24 -29.33

Source: Bloomberg Finance LP

DB CORPORATE ACCESS

DB Access Taiwan Biotechnology Corporate Day - Taipei 8/10 DB Access Philippines Corporate Days - LDN 9/12 - 13 DB Access Malaysia and Singapore Corporate Day - SG 9/14 - 15 DB Access Taiwan Conference 2011 - Taipei 11/7 - 8 DB Access Korea Conference 2011 - Seoul 11/10 - 11 DB Access Indonesia Conference 2011 - Jakarta 11/29 - 12/1 DB Access China Conference 2012 - Beijing 1/9 - 11 DB Access Asia Conference 2012 - Singapore 5/28 - 30

Research Team

Carissa Szeto Equity Focus (+852) 2203 6171 [email protected]

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TOP STORIES HPH Trust (HPHT.SI),USD0.74 Buy Price Target USD0.94

1H11 results review Karen TangPage 5

Thai Market Strategy Policy Elucidation Catalysts Derek Bloomfield Page 6

Indonesia strategy Resilient Indonesia Heriyanto Irawan Page 7

ESTIMATE & TARGET PRICE CHANGES

Shinhan FG (055550.KS),KRW49,000.00 Buy Price Target KRW74,000.00

2Q11 results: good earnings sustainability

Jeehoon Park

Page 8

SK Broadband (033630.KQ),KRW4,465.00 Buy Price Target KRW7,000.00

Improving but at slower pace; TP lowered to W7,000

John Kim

Page 9

United Microelectronics (2303.TW),TWD12.65 Hold Price Target TWD14.00

Weakening fundamentals; Hold Michael Chou

Page 10

Astra Agro Lestari (AALI.JK),IDR22,900.00 Buy Price Target IDR26,700.00

Adjusting for rupiah appreciation Rachman Koeswanto Page 11

CP All (CPALL.BK),THB49.75 Buy Price Target THB54.00

Strong 2Q11 earnings expected Chalinee Congmuang Page 12

STRATEGY/ECONOMICS

Asia Economics Daily India: Weak Manufacturing, Strong Services

Taimur BaigPage 13

Global Commodities Daily

Gold Still Not Trading Rich Adam Sieminski Page 15

India Insight RBI meeting takeaways Kaushik DasPage 17

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4 August 2011 Strategy Asia Equities Daily Focus

Page 2 Deutsche Bank AG/Hong Kong

ADDITIONAL RESEARCH China TMT Daily DB CONFERENCE/CORPORATE DAY

China VC & internet; also, 1688.HK, 0728.HK

Alan Hellawell III Page 18

ASM Pacific Technology (0522.HK),HKD82.05 Sell Price Target HKD77.00

DB Access Taiwan Biotechnology Corporate Day - Taipei 8/10

The negative implication of Kulicke & Soffa’s 3Q11 guidance

Michael ChouPage 19

China Ovs Grand Oceans (0081.HK),HKD14.48 Buy Price Target HKD15.20

DB Access Philippines Corporate Days - LDN 9/12 - 13 DB Access Malaysia and Singapore Corporate Day - SG 9/14 - 15 DB Access Taiwan Conference 2011 - Taipei 11/7 - 8 DB Access Korea Conference 2011 - Seoul 11/10 - 11 DB Access Indonesia Conference 2011 - Jakarta 11/29 - 12/1 DB Access China Conference 2012 - Beijing 1/9 - 11

Results meeting takeaways; strong growth ahead

Tony TsangPage 20

Pacific Basin Shipping Ltd (2343.HK),HKD4.11 Buy Price Target HKD5.30

Core 1H NP only 22% of FY11 forecast

Joe LiewPage 21

SouFun (SFUN.N),USD19.45 Buy Price Target USD27.14

D B Access Asia Conference 2012 - Singapore 5/28 - 30

NDRs Pacific Basin (2343 HK) - HK 8/4 - 5 SAP AG (SAPG DE) - HK 8/4, SG 8/5, KUL 8/8

Expecting strong 2Q; buy ahead of earnings release

Alex YaoPage 22

Hutchison Whampoa (0013 HK) - HK 8/5 China Overseas Grand Oceans Group (0081 HK) - HK 8/5Hutchison Port Holdings Trust (HPHT SP) - HK 8/8 Lifestyle International Holdings (1212HK) - HK 8/9 -10 Pearson Plc (PSON LN) - SHA 8/10, PEK 8/11, HK 8/12

Hyundai Dev. Co. (012630.KS),KRW29,950.00 Buy Price Target KRW45,700.00

Margin fine in 2Q and PF turning to land bank

Sanghi HanPage 23

Woori FH (053000.KS),KRW13,700.00 Buy Price Target KRW19,000.00

2Q11 results: underlying credit cost decline under way

Jeehoon ParkPage 24

China Overseas Land Investment Ltd (688 HK) - HK 8/10 & 12 NEW: Mindray Medical (MR N) - Conf. call 8/10 - 12 Lianhua Supermarket (980HK) - Conf. call 8/11 PT Kalbe Farma (KLBF IJ) - HK 8/11 - 12 SJM Holdings (0880 HK) - HK 8/11 - 12

OCBC (OCBC.SI),SGD9.88 Buy Price Target SGD10.40

Strong GEH trends continue in 2Q11 Andrew HillPage 25

Telecommunications NBN premises reached - out of reach?

Wei-Shi WuPage 26

Axis Bank (AXBK.BO),INR1,308.20 Buy Price Target INR1,425.00

Analyst roundtable takeaways – growth with profitability

Manish Shukla

Page 27

Bharti Airtel Limited (BRTI.BO),INR426.75 Buy Price Target INR460.00

1QFY12: in line results, miss on minutes growth

Srinivas Rao

PCCW (0008 HK) - HK 8/15 - 16, SG 8/19 ComfortDelGro Corporation - SG 8/16 CapitaMalls Asia (CMA SP) - HK 8/18 - 19 NEW: West China Cement (2233 HK) - HK 8/19 & 22, SG 8/23 China State Construction Int'l Holdings (3311 HK) - HK 8/22 PT Charoen Pokphand Indonesia (CPIN IJ) - SG 8/23 NEW: SGL Carbon SE (SGL GR) - HK 8/24, SG 8/25 China Longyuan Power (0916 HK) - HK 8/25 Franshion Properties - SG 8/25 - 26 NEW: Central China Real Estate (832 HK) - HK 8/30 - 31, SG 9/1 - 2

Page 28

China Rongsheng Heavy Industries Group (1101 HK) - SG 8/31 & 9/1

DLF (DLF.BO),INR222.95 Buy Price Target INR275.00

Inline 1Q operations with better than expected EBITDA

Abhay Shanbhag Page 29

Astra Int'l (ASII.JK),IDR70,650.00 Buy Price Target IDR86,500.00

Record high four-wheeler sales in July

AIA Group Ltd (1299 HK) - SG 9/13 P T Summarecon Agung (SMRA IJ) - HK 9/26

DB ANALYST/SALES ROADSHOWS Rachman Koeswanto Page 30

PGN (PGAS.JK),IDR3,825.00 Buy Price Target IDR5,100.00

PGAS signs HoA for 20mmscfd gas supply

Cherie KhoengPage 31

PGN (PGAS.JK),IDR3,825.00 Buy Price Target IDR5,100.00

James Kan & Johnson Wan : HK/China Coal & Cement - PEK 8/4, SHA 8/5 Joelian Tseng: Taiwan Market - HK 8/4 - 5, SG 8/15 -16 Judy Zhang : China Banking - SHA 8/10 NEW: Tracy Yu : Chinese & Asian Banks & Top Picks - SG 8/10 - 11, KL 8/12 Abhay Laijawala: India Strategy/Metals & Minings - SG 8/11 - 12

BPMigas calls for a reneg on gas cost; risk still manageable

Cherie KhoengPage 32

Thanachart Capital (TCAP.BK),THB30.00 Hold Price Target THB33.00

Confirmed no delay on integration plan

Worawat Saisuphatphol Page 33

John Kim : Korean Telecommunications - HK 8/18

DB INTERNATIONAL PRODUCT ROADSHOWS

The notes and reports contained in this Daily are all excerpts of previously published documents. Please refer to the published notes on our web site for details on risks, valuations and earnings changes

Ben Fidler: Aerospace & Defence - HK 8/11, SG 8/12 Reinaldo Santana & Renata Coutinho: LatAm Retail - SG 8/29, HK 8/30, PEK 8/31, SEL 9/1 Matt Spick: Banks Northern Europe - SG 9/1 Elaine Dunphy: Pan European Oil & Gas - HK 9/14, SG 9/15 Warwick Okines : UK Retailers General - SG 9/16

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Deutsche Bank AG/Hong Kong Page 3

DAILY REVISIONS: RATING CHANGES

Company Ticker Date New Previous

Bank Tabungan Pensiunan BTPN.JK 02-Aug Hold NR

TARGET PRICE CHANGES

Company Ticker Date New Previous Chg (%)

Astra Agro Lestari [Buy] AALI.JK 03-Aug ▼ 26,700.00 32,150.00 -17.0

BCA [Buy] BBCA.JK 02-Aug ▲ 9,750.00 8,900.00 9.6

Bank Tabungan Pensiunan [Hold] BTPN.JK 02-Aug 4,200.00

Boshiwa [Buy] 1698.HK 02-Aug ▼ 5.53 6.36 -13.1

CP All [Buy] CPALL.BK 03-Aug ▲ 54.00 50.00 8.0

Ctrip [Hold] CTRP.OQ 02-Aug ▼ 45.70 46.80 -2.4

Golden Eagle Retail [Hold] 3308.HK 02-Aug ▲ 21.00 18.80 11.7

HPH Trust [Buy] HPHT.SI 03-Aug ▼ 0.94 1.08 -13.0

HSBC Holdings [Hold] 0005.HK 02-Aug ▲ 98.20 97.00 1.2

Parkson Retail Group [Hold] 3368.HK 02-Aug ▼ 13.10 13.60 -3.7

SK Broadband [Buy] 033630.KQ 03-Aug ▼ 7,000.00 7,500.00 -6.7

Sembcorp Marine [Buy] SCMN.SI 02-Aug ▼ 6.70 7.00 -4.3

Shinhan FG [Buy] 055550.KS 03-Aug ▼ 74,000.00 76,000.00 -2.6

United Microelectronics [Hold] 2303.TW 03-Aug ▼ 14.00 15.00 -6.7

EPS REVISIONS

Company Ticker Date FY New Previous Chg (%)

Astra Agro Lestari [Buy] AALI.JK 03-Aug Dec 11 ▼ 1,651.47 1,891.57 -12.7

Dec 12 ▼ 1,777.22 2,349.74 -24.4

Dec 13 ▼ 1,876.30 2,518.65 -25.5

Astra Int'l [Buy] ASII.JK 03-Aug Dec 11 ▲ 4,394.79 4,391.59 0.1

Dec 12 ▲ 5,087.69 5,075.83 0.2

Dec 13 ▲ 5,758.04 5,739.99 0.3

BCA [Buy] BBCA.JK 02-Aug Dec 10 ▲ 0.34 0.34 0.5

Dec 11 ▲ 0.39 0.38 2.9

Dec 12 ▲ 0.44 0.43 3.0

Dec 13 ▲ 0.53 0.52 2.9

Bank Tabungan Pensiunan [Hold] BTPN.JK 02-Aug Dec 10 150.22

Dec 11 203.13

Dec 12 261.14

Dec 13 341.26

Boshiwa [Buy] 1698.HK 02-Aug Dec 11 ▼ 0.18 0.20 -11.6

Dec 12 ▼ 0.25 0.29 -13.6

Dec 13 ▼ 0.30 0.34 -12.9

CP All [Buy] CPALL.BK 03-Aug Dec 13 ▲ 2.55 2.54 0.1

Ctrip [Hold] CTRP.OQ 02-Aug Dec 11 ▼ 7.35 7.63 -3.7

Dec 12 ▼ 9.93 10.26 -3.2

Dec 13 ▼ 12.34 12.73 -3.0

DLF [Buy] DLF.BO 03-Aug Mar 12 ▼ 12.00 13.23 -9.3

Mar 13 ▼ 17.14 18.54 -7.5

Mar 14 ▼ 23.76 25.56 -7.0



DAILY REVISIONS: Company Ticker Date FY New Previous Chg (%)

Gajah Tunggal [Buy] GJTL.JK 02-Aug Dec 11 ▼ 250.84 251.20 -0.1

Dec 12 ▲ 305.70 305.67 0.0

Dec 13 ▲ 358.99 358.80 0.1

Golden Eagle Retail [Hold] 3308.HK 02-Aug Dec 10 ▼ 0.49 0.49 0.0

Dec 11 ▲ 0.61 0.61 0.2

Dec 12 ▲ 0.76 0.76 0.1

Dec 13 ▲ 0.93 0.92 0.9

HPH Trust [Buy] HPHT.SI 03-Aug Dec 11 ▼ 0.25 0.27 -5.3

Dec 12 ▼ 0.27 0.30 -10.6

Dec 13 ▼ 0.31 0.35 -12.3

Hyundai Dev. Co. [Buy] 012630.KS 03-Aug Dec 11 ▼ 3,747.10 4,109.04 -8.8

Dec 12 ▼ 4,073.22 4,235.65 -3.8

Dec 13 ▼ 3,742.72 3,899.93 -4.0

NTPC Limited [Hold] NTPC.BO 02-Aug Mar 11 ▼ 11.34 11.47 -1.1

Mar 12 ▼ 12.22 12.70 -3.7

Mar 13 ▼ 13.85 15.15 -8.6

New World Dept Store China [Buy] 0825.HK 02-Aug Jun 11 ▲ 0.30 0.29 1.9

Jun 12 ▼ 0.36 0.38 -4.2

Jun 13 ▼ 0.45 0.46 -3.0

Parkson Retail Group [Hold] 3368.HK 02-Aug Dec 11 ▼ 0.41 0.41 -0.6

Dec 12 ▼ 0.50 0.51 -1.4

Dec 13 ▼ 0.61 0.62 -1.4

SK Broadband [Buy] 033630.KQ 03-Aug Dec 11 ▼ 94.27 188.84 -50.1

Dec 12 ▼ 339.49 389.52 -12.8

Dec 13 ▼ 531.94 651.47 -18.3

Sembcorp Marine [Buy] SCMN.SI 02-Aug Dec 11 ▼ 0.37 0.39 -5.5

Dec 12 ▼ 0.40 0.42 -3.9

Dec 13 ▼ 0.45 0.47 -4.6

Shinhan FG [Buy] 055550.KS 03-Aug Dec 10 0.00 nm

Dec 11 0.00 nm

Dec 12 0.00 nm

Dec 13 0.00 nm

Singapore Exchange [Buy] SGXL.SI 02-Aug Jun 11 ▲ 0.29 0.28 3.7

Jun 12 ▲ 0.34 0.34 0.0

Jun 13 ▲ 0.41 0.41 0.0

Jun 14 0.49

United Microelectronics [Hold] 2303.TW 03-Aug Dec 10 ▼ 1.90 1.91 -0.5

Dec 11 ▼ 1.04 1.15 -9.4

Dec 12 ▼ 1.01 1.11 -9.4

Dec 13 ▼ 1.07 1.17 -8.5

Woori FH [Buy] 053000.KS 02-Aug Dec 10 0.00 nm

Dec 11 0.00 nm

Dec 12 0.00 nm

Dec 13 0.00 nm Source: Deutsche Bank

Asia Hong Kong Conglomerates

3 August 2011

HPH Trust Reuters: HPHT.SI Bloomberg: HPHT SP Exchange: SES Ticker: HPHT

1H11 results review

Karen Tang Research Analyst (+852) 2203 6141 [email protected]

Gregory Lui, CFA Strategist (+65) 6423 5958 [email protected]

1H throughput below guidance though valuation already reflecting this, Buy With 3.5 months of operating history, HPH Trust reported 1H11 EBITDA of HK$2,018m and DPU of HKc14.3 (ex-distribution date 10 Aug). Both throughput and revenue per TEU were below mgmt expectations. At the conf call, mgmt said there is downside risk to full year guidance of 6-8% throughput growth in 2011 though this may be partially offset by cost savings and slightly higher revenue per TEU in 2H11. We lower our 2011 throughput growth from 8% to 4%, and cut 2011-12 DPU by 5-8%. The Trust is now trading at 8% 2012 distribution yield.

Forecasts and ratios

Year End Dec 31 2009A 2010A 2011E 2012E 2013E

Sales (HKDm) 10,262.8 11,562.0 12,042.0 12,916.5 14,004.2

EBITDA (HKDm) 6,099.8 6,639.2 6,918.3 7,519.7 8,296.3

Reported NPAT (HKDm) 2,590.0 2,988.5 2,206.8 2,353.9 2,658.2

DB EPS FD (HKD) 0.30 0.34 0.25 0.27 0.31

OLD DB EPS FD (HKD) 0.30 0.34 0.27 0.30 0.35

% Change 0.0% 0.0% -5.3% -10.6% -12.3%

PER (x) – – 22.6 21.2 18.8

EV/EBITDA (x) – – 12.7 11.7 10.6

DPS (net) (HKD) 0.00 0.00 0.43 0.46 0.47

Yield (net) (%) – – 7.5 8.0 8.3Source: Deutsche Bank estimates, company data

1 DB EPS is fully diluted and excludes non-recurring items 2 Multiples and yields calculations use average historical prices for past years and spot prices for current and future years, except P/B which uses the year end close

Forecast Change

Buy Price at 3 Aug 2011 (USD) 0.74Price target - 12mth (USD) 0.9452-week range (USD) 1.01 - 0.74Straits Times Index 3,177

Key changes

Price target 1.08 to 0.94 -13.0%Sales (FYE) 12,580 to 12,042 -4.3%Op prof margin (FYE) 34.7 to 34.6 -0.3%Net profit (FYE) 2,329.9 to 2,206.8 -5.3%

Price/price relative

0.7

0.8

0.9

1.0

1.1

3/11 6/11HPH Trust

Straits Times Index (Rebased)

Performance (%) 1m 3m 12mAbsolute -13.5 -19.2 –Straits Times Index 1.2 0.7 5.4

Stock data

Market cap (USDm) 6,401Market cap (USDm) 6,401Shares outstanding (m) 8,709Major shareholders Hutchison Whampoa (27.6%)Free float (%) 58Avg daily value traded (USDm) 18.3

Key indicators (FY1)

ROE (%) 5.2Net debt/equity (%) 21.7Book value/share (HKD) 9.30Price/book (x) 0.6Net interest cover (x) 7.7Operating profit margin (%) 34.6

Upcoming events Date

HK: Post-results Group Lunch 8 Aug 2011Ex-distribution 10 Aug 2011Books closure 5pm 12 Aug 2011Payment of distribution 22 Sept 2011

Pearl River Delta’s throughput growth slower than in rest of China Owning to slower-than-expected economic recovery in Europe & the US, and the shifting of export-oriented manufacturing away from Pearl River Delta, the Trust’s throughput only grew 3% yoy (HIT 4.6% yoy, Yantian 2.1% yoy), significantly falls behind growth in Yangtze River Delta (12% yoy). Mgmt also said that there is little visibility into the peak season as end-customers are shortening order lead time, pushing peak shipping season later in the year (from Sept to October). For now, mgmt is maintaining its 2011 DPU guidance of HKc37.4.

Revenue per TEU may improve in 2H11 In 1H11, revenue per TEU remained flat in HK as higher tariff was offset by deterioration in box mix (more transhipment). In Yantian, revenue per TEU edged up 1% yoy thanks to fewer empty boxes. For 2H11, mgmt is hopeful that revenue per TEU will improve as higher tariff negotiated during 1H11 starts to take effect. Also, some shipping lines are switching to RMB-based tariff. We slightly trim our 2011 revenue per TEU growth from 2.1% to 1.6%.

Lower DDM-based target price to US$0.94 We lower our TP by 13% to US$0.94. Our DDM model assumes 8.4% cost of equity and 3% terminal growth. For ease of comparison, our report shows 2011 forecasts on an annualized basis (even though the Trust only has 9.5 months of operating history in 2011). Key risks include slowdown in China’s foreign trade and divergence of regional performance between Pearl River Delta and rest of China.



Asia ASEAN Thailand Strategy Update

3 August 2011

Thai Market Strategy

Policy Elucidation Catalysts

Incoming cabinet will have much to say

Derek Bloomfield, CFA Tisco Securities Co, Ltd Research Analyst (+66) 2 633 6468 [email protected]

MARKET SUMMARY SET Index: 52-week high 1,144.1452-week low 860.55Avg. daily turnover Bt33.36bnAvg. daily turnover US$1.10bnMarket capitalization: Bt9,320.76bnMarket capitalization: US$312.67bn

Set Index

500

600

700

800

900

1000

1100

1200

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Index

Source: SET

Performance (%) -1m -3m -12m SET 5.07 6.11 31.83

KEY ECONOMIC INDICATORS

2009 2010 2011F

GDP YoY (%) -2.3 7.8 4.4 Exports (f.o.b.) YoY (%) -14.0 28.5 25.2 Imports (c.i.f.) YoY (%) -25.2 36.8 28.5 Trade Balance US$, bn 19.4 14.0 11.7 Inflation YoY (%) -0.8 3.3 3.9 Policy Rate 1/ % 1.25 2.00 3.75 MLR 1/ % 5.86 6.12 7.38 Baht 1/ Bt/US$ 33.36 30.15 29.25

Note : 1/ Period end

We expect improving clarity surrounding policy proposals of the incoming government to move to the fore as a driver for stocks in the near term. With Parliament in session Aug-1, formal selection of the new cabinet should be finalized by mid-August, and incoming ministers will begin to articulate their plans.

Fiscal profligacy allegations premature Fears of adverse fiscal and inflationary consequences of PT’s (Puea Thai) platform are premature, in our view. The annual costs of on-budget programs proposed thus far amount to only 8% of pre-existing spending baseline. Recall also that during the first Shinawatra administration, average fiscal deficit was 0.4% of GDP versus average 2.2% the four years prior and 1.5% the four years subsequent.

Corporate tax cut the standout positive The proposal to reduce the corporate tax rate from 30% to 23% in 2012 and 20% in 2013 stands out as a key potential policy catalyst for earnings and stocks. We think the plan is feasible as it could be comfortably funded by a 1-2 ppt increase in the VAT rate. If implemented, level adjustments to earnings work out to 9-12% on average with banks, telecoms, property, petrochems and retail key winners.

Minimum wage plan may be scaled back The proposed Bt300 per day minimum wage (39% hike) would raise Thailand’s national wage bill by 18% in aggregate, and 15% excluding agriculture, by our estimates. The burden, however, would fall disproportionately on SMEs (78% of workforce), multitudes of which pay no tax and hence would see no offsetting tax cut benefit. Hence we would not be surprised if the plan is ultimately scaled back.

SET big caps key policy beneficiaries We expect upcoming cabinet appointments, elucidation of existing and new policy proposals, and renewed assurances of fiscal rectitude to combine for a favorable backdrop for stocks, especially banks, telecoms and retail which appear likeliest net beneficiaries of PT’s emerging policy platform. Our top picks are KBANK, KTB, SCB, SCC, CPALL, CPF and STA. The Thai market currently trades at 11.3x PE on 22% EPS growth for a PEG ratio of 0.52x for FY12E, the lowest in the region. Key risk is funds flow reversal following a Bt38bn foreign net buying surge in the month of July.



Asia ASEAN Indonesia Strategy Update

3 August 2011

Indonesia strategy

Resilient Indonesia

Heriyanto Irawan PT Deutsche Bank Verdhana Indonesia Research Analyst (+62) 21 318 9521 [email protected]

Nicholas Nugroho PT Deutsche Bank Verdhana Indonesia Research Analyst (+62) 21 318 9558 [email protected]

Days like this remind us that Indo market is still very much influenced by external events. However, the lesson from the past few sell-downs is that the current weakness in the market is likely to be short-lived, and presents yet another buying opportunity. Indeed, we believe the market is supported by strong domestic fundamental and a conducive macro environment, e.g. easing inflation, contrary to the fear earlier in the year; hence, monetary conditions should be supportive. Importantly, the rupiah remains strong/stable. In addition, 2Q results have been surprisingly positive, mostly in-line to ahead of estimates; market top line +27%yoy with an EBIT margin of 26% (+8ppt yoy); non-resources top line +21%yoy with an EBIT margin of 26% (+5ppt yoy). See Figures 2 to 6. In terms of liquidity flow, using the two largest Indonesia ETFs as a gauge shows decent inflow in the past couple of months. Interestingly the total volume of shares being traded is still off the late-November peak, which suggests much of the outflow from EM-DM trade hasn't completely reversed despite the market being 13% higher than the previous peak. See Figure 1. We reiterate our year-end index target of 4,500. While this implies modest upside potential of 7-8%, we expect increasingly divergent performances across sectors and stocks. We think the prospect of the Indonesian economy doubling again over the next five years will have UNEQUAL benefits, i.e. some would see intensifying competition and hence margin compression. As valuation re-rating tends to precede future profitability changes, bottom-up stock selection will become increasingly more important, in our view. Our top picks are Astra International (ASII), Gudang Garam (GGRM), United Tractors (UNTR), Bank BNI (BBNI), Indofood CBP (ICBP), Gajah Tunggal (GJTL) and Agung Podomoro (APLN).



Asia Korea, Republic of Banking/Finance Banks

4 August 2011

Shinhan FG Reuters: 055550.KS Bloomberg: 055550 KS Exchange: KSC Ticker: 055550

2Q11 results: good earnings sustainability Jeehoon Park Research Analyst (+82) 2 316 8908 [email protected]

Clara Jung Research Associate (+82) 2 316 8835 [email protected]

Solid set of earnings again; most reliable company in the sector, in our view Shinhan FG posted 2Q11 net profit of W965bn, up 4.4% QoQ, beating consensus by 11%, which we believe is meaningful given that Shinhan's earnings are usually the most stable and predictable in the sector. We believe IFRS adoption and the delay in earnings model changes were the key reasons for the lower consensus estimates, and expect earnings upgrades to follow soon. With 1H11 earnings, we believe Shinhan has shown it can generate 13-14% ROE sustainably. Shinhan looks attractive, at only 1.0x 2011E book, and we maintain Buy.



Provisioning (KRWbn) 1,614.3 1,117.5 933.5 920.0 920.0

Pre-prov profit (KRWbn) 3,712 4,353 5,544 5,656 6,016

Net profit (KRWbn) 1,036.2 2,181.0 3,176.7 3,189.0 3,447.0

EPS (KRW) 2,119.39 4,460.85 6,497.38 6,522.49 7,050.20

EPS growth (%) -49.4 110.5 45.7 0.4 8.1

PER (x) 17.1 10.2 7.5 7.5 7.0

Price/book (x) 1.2 1.3 1.0 0.9 0.8

DPS (net) (KRW) 400.00 750.00 1,200.00 1,500.00 1,800.00

Yield (net) (%) 1.1 1.7 2.4 3.1 3.7

ROE Adj(%) 6.5 11.6 14.6 12.8 12.6Source: Deutsche Bank estimates, company data


Forecast Change

Buy Price at 3 Aug 2011 (KRW) 49,000Price target - 12mth (KRW) 74,00052-week range (KRW) 53,800 - 41,950KOSPI 2,066.26

Key changes

Price target 76,000.00 to 74,000.00 -2.6%Provisioning (FYE) 911.7 to 933.5 2.4%Net int margin (FYE) 2.77 to 2.77 -0.2%Net profit (FYE) 3,315.8 to 3,176.7 -4.2%


36000

4000044000

48000

52000

56000

60000

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11Shinhan FG

KOSPI (Rebased)

Performance (%) 1m 3m 12mAbsolute -4.7 -6.5 0.8KOSPI -2.8 -6.1 15.4

Stock data

Market cap (KRWbn) 23,957Market cap (USDm) 22,590Shares outstanding (m) 488.9Major shareholders BNP Paribas (6.4%)Free float (%) 92Avg daily value traded (USDm) 75.739


ROE (%) 11.9Loan/deposit ratio (%) 123.1Book value/share (KRW) 48,291.18Price/book (x) 1.0NPL/total loans (%) 1.4Net int margin (%) 2.8Adjusted ROE (%) 14.6

Recurring level quarterly earnings coming in at around W800bn NIM was flat but loan growth was 2.5% QoQ, helping to generate a 3.8% QoQ increase in net interest income. The gain from the Hyundai E&C share sale was a big boost to non-interest income, like for most other banks, contributing W352bn in pre-tax gains, although bonus payments and payments for stock options contributed to higher-than-expected SG&A. Stripping out the special items, we believe Shinhan has shown during 1H11 that it can deliver around W800bn of net profit per quarter on a recurring basis, which represents about 13-14% ROE.

Asset quality looking steady Shinhan’s NPL ratio and NPL coverage as of June 2011 was 1.42% and 147%, respectively, at or close to sector-best levels. With new NPL formation on a downtrend since mid-2010 and write-backs helping to lower credit costs in both 1Q11 and 2Q11, we believe Shinhan should continue to deliver above-average quality credit costs, which we expect to be in the 40-55bp range.

Fine-tuning estimates and target price; risks We are fine-tuning our estimates and, accordingly, lowering our target price to W74,000 (from W76,000), derived using a Gordon Growth model P/B=(ROE-g/(COE-g), assuming 13.1% ROE, 9.3% COE and 2% growth. A potential risk is heated competition in the credit card industry, which could lower returns from the business.



Asia Korea, Republic of Telecommunications Fixed Line

3 August 2011

SK Broadband Reuters: 033630.KQ Bloomberg: 033630 KQ Exchange: KSC Ticker: 033630

Improving but at slower pace; TP lowered to W7,000John Kim Research Analyst (+82) 2 316 8979 [email protected]

Jou-Yong Yoo Research Associate (+82) 2 316 8916 [email protected]

William Bratton Research Analyst (+852) 2203 6186 [email protected]

Positive direction intact, but pace of improvement slows We reduce our target price by c.7% to W7,000 from W7,500 and lower our 2011E/12E earnings by 50% and 13%, respectively. The substantial estimate changes are due to very small earnings base this year. Although the earnings improvements now appear to be occurring at a slower pace, we believe the path for sharp recovery remains intact. We maintain our Buy rating and pick the stock as our favorite in our Korean telco coverage.



Sales (KRWbn) 1,905 2,138 2,323 2,452 2,585

EBITDA (KRWbn) 331 452 591 630 661

Reported NPAT (KRWbn) -263.1 -119.6 28.8 103.0 160.0

Reported EPS FD(KRW) -969.66 -390.66 94.27 339.49 531.94

DB EPS FD(KRW) -970 -391 94 339 532

OLD DB EPS FD(KRW) -970 -391 189 390 651

% Change -0.0% -0.0% -50.1% -12.8% -18.3%

DB EPS growth (%) – 59.7 – 260.1 56.7

PER (x) – – 47.4 13.2 8.4

EV/EBITDA (x) 8.4 6.5 4.3 3.7 3.2

DPS (net) (KRW) 0 0 0 0 0

Yield (net) (%) 0.0 0.0 0.0 0.0 0.0Source: Deutsche Bank estimates, company data


Forecast Change


Key changes

Price target 7,500.00 to 7,000.00 -6.7%Sales (FYE) 2,326 to 2,323 -0.1%Op prof margin (FYE) 6.1 to 5.1 -17.3%Net profit (FYE) 57.6 to 28.8 -50.1%


3000

4000

5000

6000

7000

8000

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11SK Broadband

KOSPI (Rebased)

Performance (%) 1m 3m 12mAbsolute 9.4 3.4 -16.4KOSPI -2.8 -6.1 15.4

Stock data

Market cap (KRWbn) 1,321Market cap (USDm) 1,258Shares outstanding (m) 296.0Major shareholders SKT (50.6%)Free float (%) 49Avg daily value traded (USDm) 4.774


ROE (%) 2.5Net debt/equity (%) 108.8Book value/share (KRW) 3,865Net interest cover (x) 1.4Operating profit margin (%) 5.1

Remains our preferred pick in the sector We continue to maintain a positive outlook on SK Broadband (SKBB) shares for three reasons. First, the company’s earnings fundamentals remain relatively immune from regulatory pressures. Second, we continue to expect sequential earnings improvement in 3Q and 4Q. Third, we expect SKBB to deliver the sharpest earnings recovery of the Korean telcos in 2012. Additionally, the planned platform business spinoff by the parent SKT should bode well for SKBB’s struggling BB Media subsidiary restructuring possibility in the future.

2Q11 was weaker than expected, but still directionally positive SKBB’s 2Q11 consolidated earnings entailed W19bn in OP and -W1bn in net loss, which were lower than our expectations largely due to larger-than-expected marketing costs. However, SKBB’s OP still improved 25% QoQ and net loss narrowed. We continue to expect SKBB’s earnings to improve the sharp earnings improvement trajectory over the next 2-3 years.

Valuation and risks We derive our W7,000 target price using a DCF valuation, based on an 8% WACC and terminal value from the average of 4x EBITDA and 0% terminal growth rate. Our target price reflects a 10% discount applied to gross NPV. Key risks are irrational competition, unfavorable regulatory developments, and changes to parent SKT’s strategy of supporting SKBB.



Asia Taiwan Technology Semiconductor & Semiconductor Equipment

3 August 2011

United Microelectronics Reuters: 2303.TW Bloomberg: 2303 TT Exchange: TAI Ticker: 2303

Weakening fundamentals; Hold Michael Chou Research Analyst (+886) 2 2192 2836 [email protected]

Kevin Wang Research Associate (+886) 2 2192 2823 [email protected]

Several issues need to be addressed We continue to see several challenges after UMC's weaker-than-expected 3Q11 guidance, including 1) 65nm market share loss to SMIC and 2) slow 40/28nm progress. These may lead to more earnings downside in 2012, despite our expectation that inventory headwinds are likely to ease in the near term. We maintain our Hold rating on fair valuation.



Sales (TWDm) 88,618 120,431 105,849 102,931 105,274

Net Income (TWDm) 3,874 23,830 13,025 12,641 13,347

DB EPS FD(TWD) 0.30 1.90 1.04 1.01 1.07

DB EPS growth (%) – 537.6 -45.3 -3.0 5.6

Price/BV (x) 1.0 0.9 0.8 0.8 0.7

EV/EBITDA (x) 3.5 3.2 4.4 4.2 4.2

DPS (net) (TWD) 0.50 1.12 0.63 0.60 0.63

Yield (net) (%) 3.9 7.4 5.0 4.7 5.0

ROE (%) 1.9 11.0 6.2 6.2 6.4Source: Deutsche Bank estimates, company data


Forecast Change

Hold Price at 3 Aug 2011 (TWD) 12.65Price target - 12mth (TWD) 14.0052-week range (TWD) 18.10 - 12.65TWSE 8,457

Key changes

Price target 15.00 to 14.00 -6.7%Sales (FYE) 105,528 to 105,849 0.3%Op prof margin (FYE) 13.1 to 10.8 -17.6%Net profit (FYE) 14,380.6 to 13,025.2 -9.4%


12

14

15

17

18

20

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11United Microelectron

TWSE (Rebased)

Performance (%) 1m 3m 12mAbsolute -11.2 -15.4 -12.2TWSE -3.2 -5.5 6.3

Stock data

Market cap (TWDm) 164,092Market cap (USDm) 5,691Shares outstanding (m) 12,971.7Major shareholders Hsun Chieh Investment (3.5%)Free float (%) 85Avg daily value traded (USDm) 17.9


ROE (%) 6.2Net debt/equity (%) 10.6Book value/share (TWD) 16.2Price/book (x) 0.8Net interest cover (x) –Operating profit margin (%) 10.8

DB estimates vs. consensus

Year 2011E 2012E 2013EDB estimates (NT$) 1.04 1.01 1.07Consensus (NT$) 1.13 1.24 1.35DB vs. consensus (%) -8% -18% -21%

2Q11 in line; disappointing 3Q11 EPS came in at NT$0.26 in 2Q11, lower than our forecast of NT$0.28 and consensus forecast of NT$0.27. This stemmed from lower-than-expected margins. Management guided for a low-teen percentage QoQ sales decline in 3Q11, weaker than our estimate of a 9% decline and consensus estimate of a 6% decline. Management expected OPM to fall to low single digits in 3Q11, which is below our estimate of 10.7% and consensus estimate of 12.6% as a result of a lower utilization rate. Management anticipated the utilization rate to decline from 87% in 2Q11 to a level in low 70s in 3Q11, below our estimate of 75%. (i.e., the breakeven utilization rate is around 70%).

Adjusting estimates We cut our EPS forecasts by 9% for 2011-13. We assume weaker sales and margin momentum in light of macro headwinds and market share risk. We continue to argue that the company needs to accelerate the 40nm ramp up to improve its structural profitability and defend its market share.

Valuation and risks; catalysts we are looking for Our target price of NT$14 (NT$15 previously) is based on 0.9x 2012E PB, in line with the 2006-10 trough and midcycle average. This reflects our concerns about the progress in the company’s advanced nodes. Faster ramp in 40nm and capex cut should lead to upside risks to our 2012-13 EPS forecast. Up/downside risks: the pace of 40nm ramp and price decline, demand, and the pace of NTD appreciation vs. the USD.



Asia ASEAN Indonesia Consumer Agriculture

3 August 2011

Astra Agro Lestari Reuters: AALI.JK Bloomberg: AALI IJ Exchange: JKT Ticker: AALI

Adjusting for rupiah appreciationRachman Koeswanto PT Deutsche Bank Verdhana Indonesia Research Analyst (+62) 21 318 9524 [email protected]

Maintaining Buy The stock is still attractive trading at 13.3x 2012F earnings, at par with regional peers, and offering some 15% upside from current levels. Astra Agro is one of the best run plantation companies in Indonesia, supported by prudent management and a strong balance sheet.



Sales (IDRbn) 7,424 8,844 10,457 11,207 11,720

EBITDA (IDRbn) 2,898 3,336 3,950 4,158 4,335

Reported NPAT (IDRbn) 1,660.6 2,016.8 2,600.7 2,798.7 2,954.7

Reported EPS FD (IDR) 1,054.55 1,280.70 1,651.47 1,777.22 1,876.30

DB EPS FD (IDR) 1,055 1,281 1,651 1,777 1,876

OLD DB EPS FD (IDR) 1,055 1,281 1,892 2,350 2,519

% Change 0.0% 0.0% -12.7% -24.4% -25.5%

DB EPS growth (%) -36.9 21.4 29.0 7.6 5.6

PER (x) 17.0 17.7 14.0 13.1 12.4

EV/EBITDA (x) 9.5 10.4 9.0 8.5 8.0

DPS (net) (IDR) 300 524 857 885 945



Forecast Change

Buy Price at 2 Aug 2011 (IDR) 23,200Price target - 12mth (IDR) 26,70052-week range (IDR) 27,100 - 18,950Jakarta Comp. Index 4,177.85

Key changes

Price target 32,150.00 to 26,700.00 -17.0%Sales (FYE) 11,081 to 10,457 -5.6%Op prof margin (FYE) 40.5 to 34.5 -14.9%Net profit (FYE) 2,978.7 to 2,600.7 -12.7%


16000

20000

24000

28000

32000

36000

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11Astra Agro Lestari

Jakarta Comp. Index (Rebased)

Performance (%) 1m 3m 12mAbsolute -0.2 -3.3 19.6Jakarta Comp. Index 6.4 8.5 36.6

Stock data

Market cap (IDRbn) 36,534Market cap (USDm) 4,315Shares outstanding (m) 1,574.7Major shareholders Astra International (80%)Free float (%) 20Avg daily value traded (USDm) 2.415


ROE (%) 33.9Net debt/equity (%) -15.6Book value/share (IDR) 5,159Price/book (x) 4.50Net interest cover (x) –Operating profit margin (%) 34.5

Lowering palm oil price to adjust for stronger rupiah assumption The crude palm oil (CPO) price has been firm at US$1,000-1,100/ton, supported by rising demand from emerging markets coupled with higher prices of other soft commodities. This is in line with our price expectation of US$1,080/ton (unchanged) in 2011F and US$1,050/ton (unchanged) in 2012F. Nevertheless, rupiah appreciation (from Rp9,000/US$ to Rp8,500/US$) has forced us to lower our rupiah CPO price assumptions by 6-8% for 2011-13F. Lowering EBIT forecasts by 20-31% for 2011-13F Lower palm oil price explains 70% of this earnings downgrade, and the rest we attribute to higher production costs for labor and an intensification program. Post our earnings downgrade, our forecast for 2011F (2012-13F) is now some 4% below (in line) market consensus for 2011F. Lowering target price from Rp32,150 to Rp26,700 The target price downgrade reflects lower earnings forecasts and earnings multiple. Our target price is based on an mid-cycle earnings valuation of 15x (from 17x) in 2012F. The key risk is the company’s inability to replant old (over 25 years) trees and maintain its costs through efficiencies (see pages 3-4 for details).



Asia ASEAN Thailand Consumer Food & Beverage

2 August 2011

CP All Reuters: CPALL.BK Bloomberg: CPALL TB Exchange: SET Ticker: CPALL

Strong 2Q11 earnings expected Chalinee Congmuang Tisco Securities Co, Ltd Research Analyst (+66) 2 633 6482 [email protected]

Expect CPALL to deliver another strong quarterly earnings performance Despite moderate SSSG expectation of 5%, we anticipate CPALL to post strong 2Q11 sales and net profit growth of 18.8% and 20.3% YoY respectively. Besides SSSG, store expansion is another key growth driver. As beverage sales should continue to be low during 2Q11, we expect weaker gross margins compared to the previous year. However, low gross margins should more than be offset by lower SG&A to sales. Maintain Buy with revised TP of Bt54.



EBITDA (THBm) 9,357.4 12,017.6 14,110.5 16,814.8 19,448.9

Reported NPAT (THBm) 4,998.1 6,770.1 8,149.3 9,652.0 11,455.0

Reported EPS FD(THB) 1.11 1.50 1.81 2.14 2.55

DB EPS FD (THB) 1.11 1.50 1.81 2.14 2.55

EV/EBITDA (x) 6.4 10.8 14.6 11.9 9.7

DPS (net) (THB) 0.80 1.09 1.36 1.67 2.49



Forecast Change

Buy Price at 2 Aug 2011 (THB) 49.75Price target - 12mth (THB) 54.0052-week range (THB) 50.00 - 31.75SET 1,144

Key changes

Price target 50.00 to 54.00 8.0%


10

20

30

40

50

60

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11

CP All SET (Rebased)

Performance (%) 1m 3m 12mAbsolute 12.4 15.0 55.5SET 9.9 4.6 32.5

Stock data

Market cap (THBm) 223,527Market cap (USDm) 7,522Shares outstanding (m) 4,500.0Major shareholders The Charoen Pokphand Group Free float (%) 42Avg daily value traded (USDm) 14.1


ROE (%) 41.6Net debt/equity (%) -81.5Book value/share (THB) 4.71Price/book (x) 10.6Net interest cover (x) –Operating profit margin (%) 6.4

Strong revenue and net profit growth anticipated We expect CPALL to report revenue of Bt39.4bn, up 18.8% YoY and 6.1% QoQ. SSSG of 5% and almost 600 new stores added from 2Q10 should be the main drivers. We also expect its net profit to come in at Bt2.1bn, up 20.3% YoY and 2.2% QoQ. The main reason for its net profit growth at a higher rate than sales despite relatively weaker gross margins is lower SG&A to sales ratio given lower utilities bills expected and economies of scale earned.

Weather continued to impact beverage sales Beverage sales usually account for 30% of sales and carries high gross margins of 30%. As weather continued to be cooler and rainier than usual, CPALL’s beverage sales are low, resulting in relatively lower gross margins of 25.2% in 2Q11, down from 27.1% in 2Q10.

Recommend BUY with a new DCF-based TP of Bt54; key risks Based on our DCF valuation, we derived CPALL’s 2012 TP of Bt54 (up 8% from previous 2011 TP of Bt50). CPALL is now trading at 27.3x 2011 PER and 23.1x 2012 PER. Although the valuation looks lofty, we believe CPALL deserves a premium given 20% 2010-12 EPS CAGR, dominant position and undervalued franchise network. Key risks are possible termination of its license by the brand owner, political uncertainty and natural disaster that may disrupt store operations.



Asia

3 August 2011

Asia Economics Daily

India: Weak Manufacturing, Strong Services

Michael Spencer, Ph.D Chief Economist, Asia (+852) 2203 8303 [email protected]

Jun Ma, Ph.D Chief Economist, Greater China (+852) 2203 8308 [email protected]

Taimur Baig, Ph.D Chief Economist, India (+65) 6423 8681 [email protected]

Juliana Lee Senior Economist (+852) 2203 8312 [email protected]

Kaushik Das Economist (+91) 22 6658 4909 [email protected]

Eco

no

mic

s

HIGHLIGHTS

India – Service sector PMI rises to a 3-month high UPCOMING RELEASES

Malaysia – Exports (June) DB forecast 6.0% (5.4% in May)

NEWS IN BRIEF

INDIA PMI (July). The HSBC India composite index rose to 57.9 in July, from 56.8 in May. Services PMI rose to 58.2 (from 56.1 in the previous month), while the manufacturing PMI fell to a 20-month low of 53.6 (from 55.3 in June). Improved service sector figures reflect continued rise in trade and tourism activities. In contrast, the weak manufacturing PMI suggests subdued activities on the back of rising interest rate and input cost. Input prices rose substantially in July, driven by higher raw material costs, which has adverse implication for corporate profitability and cost-push inflation. While the manufacturing PMI reading is worrisome, the services PMI mitigates some of the concerns on growth. With the latter making up over 60% of GDP (while manufacturing makes up less than 20%), the overall economy’s direction is still upward.



FINANCIAL MARKETS

Today's % chg vs Today's abs chg vs Today's bps chg vs Today's bps chg vsClosing prev day Closing prev day Closing prev day Closing prev day

China 11997 -2.3 6.44 0.0 3.50 0 4.12 0Hong Kong 21976 -2.0 7.80 0.0 0.27 0 2.33 1India 17899 -1.2 44.36 -0.1 8.15 0 8.43 -3Indonesia 4124 -1.3 8480 -15.0 7.05 0 7.45 -3Malaysia 1547 -0.5 2.98 0.0 3.29 0 3.83 -2Philippines 4488 -1.2 42.1 0.0 2.41 1 6.31 9Singapore 3118 -1.9 1.21 0.0 0.44 0 2.00 -3S. Korea 2066 -2.6 1060 -8.0 3.59 0 4.21 -2Taiwan 8457 -1.5 28.9 -0.1 0.80 0 1.55 -4Thailand 1127 -1.1 29.8 0.0 3.76 0 3.50 0

US 11867 -2.2 na na 1.28 0 2.61 -14Japan 9637 -2.1 77.0 0.0 0.20 0 1.05 -3Euroland na na 1.42 0.0 1.61 0 0.00 -5

Stockmarkets FX Markets Money Markets Bond Markets

Sources: DB Global Markets Research, Bloomberg Finance LP and Reuters

ECONOMIC DIARY Count ry Release Per iod DB Expected Consensus Actua l Previous

Monday , Aug 1Hong Kong Retail Sales (value) Jun-YoY 29.7% NA 28.8% 27.8%

Retail Sales (volume) Jun-YoY 24.5% NA 22.2% 21.1%India Exports Jun-YoY 46.4% NA 46.5% 56.9%

Imports Jun-YoY 42.4% NA 42.5% 54.1%Trade Balance Jun -USD7.7bn NA -USD7.7bn -USD14.9bn

Indonesia CPI Jul-YoY 4.7% 4.8% 4.6% 5.5%Exports Jun-YoY 42.5% 45.0% 49.3% 45.3%Imports Jun-YoY 30.0% 32.0% 28.3% 48.5%Trade Balance Jun USD2.3bn USD2.4bn USD3.3bn USD3.5bn

South Korea CPI Jul-YoY 4.5% 4.4% 4.7% 4.4%Core CPI Jul-YoY 3.7% 0.3% 0.7% 3.7%Exports Jul-YoY 18.0% 17.1% 27.3% 13.6%Imports Jul-YoY 27.0% 26.1% 24.8% 27.5%Trade Balance Jul USD1.9bn USD2.6bn USD7.2bn USD2.8bn

Sri Lanka CPI Jul-YoY 7.3% 7.1% 7.5% 7.1%Thailand CPI Jul-YoY 4.2% 4.2% 4.1% 4.1%

Core CPI Jul-YoY 2.9% 2.7% 2.6% 2.6%

Tuesday , Aug 2South Korea FX Reserves Jul NA NA USD311.03bn USD304.5bnEvents and Meeting:Australia:RBA Meeting (No change in rate)

Wednesday , Aug 3Philippines Fiscal Balance Jun -PHP25.0bn NA -PHP7.7bn -PHP9.6bn

Thursday , Aug 4Indonesia FX Reserves Jul NA NA USD119.7bnMalaysia Exports Jun-YoY 6.0% 7.1% 5.4%

Imports Jun-YoY 5.5% 3.8% 5.6%Trade Balance Jun MYR6.7bn MYR9.3bn HKD8.5bn

Fr iday , Aug 5Malaysia FX Reserves Jul NA NA USD134.33bnPhilippines CPI Jul-YoY 5.3% 4.9% 4.6%

Core CPI Jul-YoY 4.1% NA 4.0%Gross International Reserves Jul NA NA USD69.0bn

Singapore FX Reserves Jul NA NA USD242.3bnTaiwan CPI Jul-YoY 2.3% 2.0% 1.9%

Core CPI Jul-YoY 1.3% NA 1.2%FX Reserves Jul NA NA USD400.3bn

Thailand FX Reserves Jul NA NASources: DB Global Markets Research, Bloomberg Finance LP and Reuters



Global 3 August 2011

Global Commodities DailyGold Still Not Trading Rich

Co

mm

od

itie

s

The Day Ahead

Time(EST) Country Event Previous Market View 03:55 Germany PMI services (MoM) (Jul) 56.7 04:00 EZ PMI services (MoM) (Jul) 51.4 51.4

05:00 EZ Retail sales (MoM) (Jun) -1.1% 0.5%

07:00 US MBA mortgage applications (Jul 23) -5%

08:15 US ADP employment change (MoM) (Jul) 157K 100K

10:00 US ISM non manufacturing (MoM) (Jul) 53.3 53.5

10:00 US Factory orders (MoM) (Jun) 0.8% -0.8%

10:30 US EIA crude inventories 2.3M

Overview Gold advanced to fresh all time highs as market focus shifted from US debt ceiling to widening bond spreads in peripheral Europe. Also supportive for the gold price were reports of further central bank diversification into gold this time by the Bank of South Korea, which stated it had increased its gold holdings by 25 tonnes over the past two months, their first purchases in more than a decade. However, even at these levels, we believe gold prices need to surpass USD2,000/oz to be considered excessive.

Financial markets will also be on alert to any further negative growth surprises from the US. We believe the main casualties in this environment will be crude oil and specifically a further widening in the discount of WTI to Brent. Moreover the weaker ISM will also sustain downside risks to Asian export growth and dry freight rates.

In agriculture, corn has climbed on concern about damage from hot weather- despite USDA crop conditions being unchanged recently. Soybean futures were pressured early by China rolling 550,000 tonnes of soybeans previously purchased for 2010-11 delivery into 2011-12 positions. This shows that near term demand in China remains weak. Tightness in wheat later in the year could result from too much wheat feeding due to expensive corn.

European prompt gas markets fell further, closing almost 5p/th below the fuel-switching price (including coal transportation cost), and 26p/th below the oil-indexed contract price. This is consistent with our view that the overhang of contractual gas is not yet completely eliminated. Gas for the winter closed at 69.75p/th, the lowest since 28 June. Prices were held from further declines by higher Interconnector exports, which rose from 31 to 45mcm/d, and lower imports on the BBL pipeline, which fell from 14 to 8mcm/d. Looking forward to next week, we expect that colder weather will result in additional heating demand of 10mcm/d, but it is unclear whether this will be enough to lift prices. Meanwhile, E.ON has announced that it is entering arbitration with Gazprom on its long-term contract pricing dispute, confirming that (i) it has not yet reached a satisfactory conclusion to its negotiations, and (ii) it continues to suffer from the spot-to-contract spread.

Looking at today’s calendar, in Eurozone market will focus on PMI services and retail sales. In the US, MBA mortgage applications and ADP employment will provide guidance on the housing and labour markets. ISM non-manufacturing and factory orders will also be released.

Commodities & Global Markets

Commodities News In Brief

• US API crude oil inventories fell 3.3 mn bbls, distillates rose 1.4 mn bbls, gasoline rose 2.5 mn bbls.

• Ukraine’s coal output in 2011 rose 9.8% to 47.5 mn tonnes in the January to July period when compared to 2010, the Energy and Coal Industry Ministry said.

• Russian oil production rose less than 1% in July to 10.26 mn b/d, the Energy Ministry said.

• Russian natural-gas producers pumped 1.56 bn cubic meters of the fuel a day last month, 6.1% more than in July 2010, the Energy Ministry said.

• China’s crude oil processing volume may rise 8.5% from a year earlier to 460 mn tonnes, while the crude oil demand may rise 6.5% to 468 mn tonnes, MIIT said.

• China’s 2011 natural gas demand may rise 16.1% from a year earlier to 124.6 bn cubic meters, while the output may increase 12.5% to 106.3 bn cubic meters, MIIT said.

• Indonesia’s July cocoa exports from South Sulawesi rose to 9,274.28 tonnes from 8,100.18 tonnes in June, the Indonesian Cocoa Associtation said.

• China Iron and Steel Association will begin publishing an iron ore pricing index this month, Vice Chairman Zhang Changfu said.

• Fresnillo Plc, the world’s largest primary silver producer, produced 21.5 mn ounces of the metal in the first six months, and is targeting annual output ofabout 44 mn ounces.

Global Markets News In Brief

• US personal income for June fell to 0.1% from 0.3% in May.

• US personal consumption expenditure fell to -0.2% in June from 0% in May.

Event Risks

• Germany factory orders on Aug 4. • BoE interest rate decision on Aug 4. • ECB interest rate decision on Aug 4. • Japan leading economic index on Aug 5.• Germany industrial production on Aug 5.• US unemployment rate on Aug 5. • US non farm payrolls on Aug 5.

Research Team Adam Sieminski Xiao Fu Research Analyst Research Analyst (1) 20 2662 1624 (44) 20 7547 1558 [email protected] [email protected]



Figure 1: Gold price vs Italy, Spain 5y bond yield Figure 2: Sub-par recovery of the US labour market

2

2.5

3

3.5

4

4.5

5

5.5

6

Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-111000

1100

1200

1300

1400

1500

1600

1700Italy 5Y bond yieldSpain 5Y bond yieldGold

-8

-4

0

4

8

12

0 4 8 12 16 20 24 28 32 36 40 44 48

1974-75 1981-82

1990-91 2001-02

2008-09

Cum

ulat

ive

% jo

b lo

sses

Months since first decline in payroll employment

Source: Bloomberg Finance LP, Deutsche Bank Source: Bloomberg Finance LP, Deutsche Bank

Commodity Price Summary

Energy WTI (bbl) Brent (bbl) Nat Gas (mmBtu) RBOB Gas (g) Heating Oil (g) API 4 (t)

Close (USD) 93.79 116.46 4.16 3.04 3.09 120.53 Daily price change -1.2% -0.3% -0.8% -0.5% -0.2% 0.3% YTD price change 2.6% 22.9% -5.7% 23.8% 21.5% 4.2% Precious Metals & FX Comex Gold Comex Silver Nymex Platinum Nymex Palladium EURUSD USDJPY Close (USD/oz) (level) 1641.90 40.09 1793.50 826.90 1.42 77.15 Daily price change 1.4% 2.0% -0.1% -0.3% -0.3% -0.1% YTD price change 15.5% 29.7% 0.9% 2.9% 6.1% -5.1% Industrial Metals Aluminium Copper Lead Nickel Tin Zinc LME close 3M (USD/t) 2583 9680 2561 24800 27250 2440

LME close 3M (USc/lb) 117.2 439.1 116.2 1124.9 1236.0 110.7

Daily price change -0.1% 0.3% -0.2% 1.0% -3.0% -0.9%

YTD price change 4.6% 0.8% 0.4% 0.2% 1.3% -0.6% LME Stocks (t) 4,437,475 465,625 310,750 102,942 21,465 889,300

Daily change (t) -8,125 -400 75 -156 650 -25

Agriculture & Livestock Corn (bsh) Cotton (lb) Live Cattle (lb) Soybeans (bsh) Sugar (lb) Wheat (bsh) NY close (USc) 711.25 107.17 112.55 1373.00 28.16 718.00 Daily price change 4.4% 1.5% -0.7% 1.0% -2.8% 6.1%

YTD price change 13.1% -26.0% 4.3% -1.5% -12.3% -9.6%

Other prices Baltic Dry Index

Iron Ore Steel US HRC Ethanol EUA (CO2)

Dec12 (Euro) U3O8 USD/lb

Close (level) 1253 177.4 691 2.84 12.32 51.85 Daily change -0.2% 0.7% -2.9% 0.1% -2.0% 0.0% YTD change -29.3% 4.3% 1.6% 19.5% -15.8% -16.5%

Indices DBLCI-OY DBLCI-MRE DB Harvest SPGSCI DJUBS SPWCI NY close (level) 1360 423 292 5184 329 416 Daily change 0.0% 0.0% 0.0% 0.0% 0.6% -0.4% YTD change 6.3% -1.4% 3.3% 4.9% 0.7% 16.3%

Source: Reuters, Bloomberg Finance LP, UxC, Metals Bulletin, Deutsche Bank



Asia India

3 August 2011

India Insight

RBI meeting takeaways

Periodical

Research Team

Kaushik Das Economist (+91) 22 6658-4909 [email protected]

Core inflation above 7%, a big concern

-3

0

3

6

9

12

2007 2008 2009 2010 2011

Non-food manufactured goodsWPI inflation

% yoy

Source: CEIC, Deutsche Bank

WPI inflation likely to peak in August

4

5

6

7

8

9

10

4

6

8

10

12

2010 2011 2012

WPI, lhs Forecast, lhsRepo, rhs Forecast, rhs

%% yoy

Source: CEIC, Deutsche Bank

Mild slowdown in non-farm sector

40

45

50

55

60

65

2006 2007 2008 2009 2011

Manufacturing PMI Services PMIComposite PMI

3mma

Source: Haver Analytics, Deutsche Bank. To construct the composite PMI, we have assigned weights to the sectors according to their relative share in the non-farm sector GDP – 80.1% in case of services and 19.9% for manufacturing.

Eco

no

mic

s

Our takeaways from recent meetings with key RBI officials:

Two considerations which will influence the RBI’s near-term policy path are demand side inflation and global commodity prices. The RBI would like to see core WPI inflation to moderate from the current 7%+ level to its long-term trend of 4%. Though this might take significant time, the key is if a moderating trend is detected in the next few months. On commodities, the central bank is tracking the net long non-commercial positions of commodities such as oil, soybeans, copper etc. closely. Since we expect inflation pressure to sustain in the coming months and global commodity prices to hold at current levels, we do not anticipate any change in RBI’s monetary policy stance, at least for the 16 September monetary policy review. According to our forecasts, WPI inflation will probably peak in August at about 10%, with core inflation hovering around 7%. This would likely nudge the central bank to raise the policy rate by 25bps on 16 September. However, beyond the September review, it is unlikely that the RBI would hike rates any more given that inflation would start moderating thereafter, albeit gradually and from a high base, and given that lagged impact of previous rate hikes will tend to reduce demand side pressure.

The central bank expects growth to remain around 8%. Monetary transmission of previous rate hikes and tight liquidity is affecting the growth momentum of rate sensitive sectors, but a broad based slowdown is yet to materialize. Exports growth has been exceptionally robust in recent months, services sector growth seems to be holding up, bank credit growth is still above the targeted rate of 18% and private and government consumption expenditure trend continues to be buoyant. For FY11/12, the RBI expects services sector to maintain a growth rate of 9-10%. This should be consistent with 8% real GDP growth, even with lower growth in agriculture sector (3-4% compared to 6.6% in FY10/11) and some slowdown in manufacturing. With respect to corporate performance, the central bank’s view is that profitability has slowed down somewhat, though not to the extent that would prompt the central bank to abandon its anti-inflationary stance at this stage. This is a critical area to continue monitoring, in the central bank’s view.

While in this fiscal year (FY11/12), there are risks of fiscal slippage (around 1% of GDP) due to over shooting of fuel subsidies, the next union budget would be crucial as it will indicate the government’s resolve to carry with fiscal consolidation, as envisaged in the Fiscal Responsibility and Budget Management Act. While fiscal contraction can reduce demand to some extent in the near term, it will definitely help to improve the longer-term growth outlook, both in terms of sustainability as well as quality. In the absence of material fiscal improvement, investment demand could take a further hit and pose to be a threat for the growth outlook even beyond FY11/12.



Asia China Technology

3 August 2011

China TMT Daily China VC & internet; also, 1688.HK, 0728.HK

(Please click through to the .pdf version of this document for a full overview of today's

news and views.)

Periodical

TOP CHINA TMT PICKS Company Rating Target Price AsiaInfo-Linkage Buy USD 26.30 China Telecom Buy HKD 5.70 ZTE Buy HKD 35.65

CHINA TMT STOCKS Company Rating Close Price 1D% 3M%

TELCOS as on 02/08China Comm Service Buy 3.9 -2.7 -19.4China Mobile Hold 76.8 -0.9 7.7China Telecom Buy 5.1 -1.0 14.1China Unicom Buy 15.6 -0.6 -1.6 INTERNET/ONLINE GAMING Alibaba.com Hold 11.4 -1.2 -16.9Baidu Buy 152.9 -3.8 3.7Ctrip.com Int'l Hold 40.1 -10.9 -17.8Netease.com Buy 47.6 -3.6 -4.4Shanda Hold 34.4 -1.2 -29.0Shanda Games Hold 5.7 -2.9 -23.3Sina Corp Hold 101.8 -4.6 -24.6Sohu.com Hold 80.6 1.8 -22.3Tencent Buy 206.8 -0.7 -5.1 TECHNOLOGY AsiaInfo-Linkage Buy 13.9 -5.1 -28.4ChinaCache Buy 7.7 -5.0 -50.9Foxconn Int'l Hldgs Hold 3.8 1.4 -14.8SouFun Buy 19.5 -4.4 -17.4Synnex Technology Buy 77.1 1.3 3.1ZTE Buy 24.0 -2.2 -11.8 Indices Close 1D% 3M% as on 02/08HSI 22421.5 -1.1 -5.1HSCEI 12278.8 -2.1 -6.3Nasdaq 2669.2 -2.7 -6.8Sources: DB, Bloomberg Finance LP

Research Team

Alan Hellawell III Research Analyst (+852) 2203 6240 [email protected]

Eva Leung, CFA Research Analyst (+852) 2203 6190 [email protected]

FEATURE:

Overall Chinese VC flat YoY, but internet investment up sharply Part of our still relatively guarded thesis toward China’s internet sector relates to the continued overhang of IPO hopefuls emerging from rounds of previous venture investment. Dow Jones VentureSource in a recently concluded study showed that mainland companies raised US$3.2b from 145 venture deals in the first half of the year, driven largely by enthusiasm for areas such as social networking, group-buying and other internet companies in China. The median size of venture capital deals in 2Q11 jumped 50% YoY to US$10.5m, while that of the first quarter was US$15m, up 20% YoY. Additionally, 54 venture-backed companies went IPO in 1H11 and raised US$9.2b, similarly in-line with 57 IPOs in 1H10 raised US$10.1b.

Consumer internet companies – most popular venture investment area VentureSource revealed that the consumer services industry was the most popular venture investment area, notching 69 deals with total value of US$1.7b in 1H11, representing a 57% increase YoY. The main drivers of investment were social media, entertainment and e-commerce companies. These companies raised US$942m through 44 deals in 1H11, tripling the amount raised in the 23 deals in the same period last year.

Investment focus on China internet sector largely fed by expectations of high internet penetration Despite the lag in corporate investment activities back in 2009 and the first half of 2010, VentureSource saw investment activity start to pick up in the fourth quarter of 2010, when five deals raised about US$38m. Corporations invested a record US$584m through six transactions with venture-backed mainland firms in the first half of 2011. One of these transactions was Baidu’s US$306m investment on Qunar, a Beijing-based online travel site for air and rail tickets, hotels, and tour packages, to obtain a controlling stake on the company, as travel has become one of the main focus areas of Baidu. In addition to the Baidu-Qunar investment, leading online group-buy site Lashou.com closed on a financing round of US$110m in April. The company has raised a total of US$166m in venture capital since it was founded in March 2010, only a little over one year after its launch. Although we are currently witnessing something of an abeyance in China internet IPO activity, we envision a marked resumption in IPO activity after the end of the summer, and expect the return of IPO aspirants to weigh heavily in the internet sector, along with lingering concern over issues such as accounting practices etc.



Asia Hong KongTechnology Semiconductor & Semicon‐ductor Equipment

03 Aug 2011 - 10:14:06 AM CST

COMPANY ALERT Company Update

ASM Pacific Technology Sell

The negative implication of Kulicke & Soffa’s 3Q11 guid‐ance

Reuters:0522.HK Exchange:HKG Ticker:0522

Price (HKD) 84.15

Price target (HKD) 77.00

52‐week range (HKD) 117.50 ‐62.75

Market cap (USDm) 4,254

Shares outstanding (m) 394.5

Net debt/equity (%) ‐20.5

Book value/share (HKD) 16.67

Price/book (x) 5.0

FYE 12/31 2010A 2011E 2012E

Sales(HKDm)

9,515 13,536 12,085

Net Profit(HKDm)

2,841.7 2,473.7 2,152.6

DB EPS(HKD)

7.18 6.25 5.44

PER (x) 9.8 13.5 15.5

Yield (net)(%)

5.8 4.3 3.8

ASMP may see more downside in 2H11 ‐ We foresee downside risks toour sales forecast of a 18% QoQ decline in 3Q11 and a 10% QoQ decreasein 4Q11 for ASMP post Kulicke & Soffa's disappointing guidance. Kulicke &Soffa's (K&S) management guided for sales decline of 41‐47% QoQ in3Q11, weaker than consensus estimate of a 28% QoQ decline. K&S' man‐agement highlighted substantial order cut from semiconductor packaging/testing companies recently due to macro headwinds. We believe ASMPmay also face significant order cuts from customers in 2H11. We reiterateour Sell rating based on the unattractive valuation.

Michael ChouResearch Analyst(+886) 2 2192 [email protected]

Kevin WangResearch Associate(+886) 2 2192 [email protected]



Asia China Property Property

3 August 2011

China Ovs Grand Oceans Reuters: 0081.HK Bloomberg: 81 HK Exchange: HKG Ticker: 0081

Results meeting takeaways; strong growth aheadTony Tsang Research Analyst (+852) 2203 6256 [email protected]

Jason Ching, CFA Research Analyst (+852) 2203 6205 [email protected]

Reiterating Buy; HK$15.2 target price on 1H2011 strong results COGO’s 1H2011 interim results far exceeded our expectations, and contracted sales recorded strong YoY growth, highlighting management’s strong execution ability. This reaffirmed our view that under CSCEC’s umbrella and the senior leadership of COLI, COGO should enjoy strong backing from its parents. We see strong sales and NAV upside potential ahead, as the company demonstrates its strong execution capability in the tier three and four cities, where we see strong volume growth potential but fewer policy risks.



Sales (HKDm) 2,707.9 3,512.9 5,621.1 10,289.6 13,782.9

Reported NPAT(HKDm) -279.7 996.1 1,400.0 2,349.4 4,298.8

Reported EPS FD(HKD) -0.53 1.30 1.82 3.06 5.60

DB EPS FD (HKD) -0.39 0.90 1.82 3.06 5.60

DB EPS growth (%) – – 101.9 67.8 83.0

PER (x) – 5.6 7.5 4.4 2.4



Results

Buy Price at 2 Aug 2011 (HKD) 13.62Price target - 12mth (HKD) 15.2052-week range (HKD) 13.62 - 4.40HANG SENG INDEX 22,421


0

4

8

12

16

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11China Ovs Grand Ocea

HANG SENG INDEX (Rebased)

Performance (%) 1m 3m 12mAbsolute 34.1 23.8 186.1HANG SENG INDEX 0.1 -5.5 4.7

Stock data

Market cap (HKDm) 13,815Market cap (USDm) 1,772Shares outstanding (m) 1,014.3Major shareholders COLI (40.18%)Free float (%) 35Avg daily value traded (USDm) 1.8


ROE (%) 35.5Net debt/equity (%) -31.8Book value/share (HKD) 5.13Price/book (x) 2.7Net interest cover(x) –Operating profit margin (%) 45.3

High sales and margin in 1H; 2011 contracted sales likely to reach HK$10bn In 1H11, COGO achieved contracted sales of HK$4.2bn vs. its HK$7bn full-year target, while revenue increased 100.3% and core profit increased 1084% YoY. Gross margin during the period further increased from an already high base of 26% to 52%. In our view, this highlights the management team’s strong execution strategy, high profitability model of focusing on high-quality products, and scalable business structure in Tier 3/4 cities.

Results meeting takeaways – a market with two tales and winner takes all It is management’s belief that the China real estate market is unlikely to see any relaxation in policy in 2H2011, and the Home Purchase Restriction (HPR) may be extended to more cities. In Chairman Hao’s view, real estate sector consolidation is inevitable, and this will help to weed out the smaller or financially weak players. As a survivor, COGO can grow its market share. Not all developers are created equal. In a booming market, there is little differentiation, as anybody can sell, but in a tough market like today’s, in which buyers are becoming more selective in terms of brand and quality, consolidation is inevitable, and winner takes all.

Convincing valuations at 28% NAV discount, 7.5x 2011E P/E, 4.4x 2012E P/E Our target price of HK$15.20 is based on a 20% discount to our NAV estimate of HK$19/share, which factors in a 5-20% drop in property prices from the current level. Risks: competition with the parent company and its subsidiaries and COLI’s potential inability to keep a controlling interest in COGO. (See pages 10-11.)



Asia Hong KongTransportation Marine

03 Aug 2011 - 11:51:23 PM HKT

COMPANY ALERT Results

Pacific Basin Shipping Ltd Buy

Core 1H NP only 22% of FY11 forecast

Reuters:2343.HK Exchange:HKG Ticker:2343

Price (HKD) 4.11

Price target (HKD) 5.30

52-week range (HKD) 6.11 - 4.05


Shares outstanding (m) 1,929.5

Net debt/equity (%) 17.8

Book value/share (USD) 0.84

Price/book (x) 0.6

FYE 12/31 2010A 2011E 2012E

Sales (US-Dm)

1,269 1,219 1,306

Net Profit(USDm)

112.5 141.5 118.1

DB EPS(USD)

0.06 0.04 0.06

PER (x) 12.5 11.9 8.6

Yield (net)(%)

3.7 7.0 5.8

Results review. Pacific Basin reported a net profit of US$3m in 1H2011 inthe weak market environment. The disappointing result is mainly draggeddown by a US$ 80m non-cash impairment of RoRo investment, while par-tially offset by a net gain of US$56m on the sale of the company's remainingholding of Green Dragon Gas and a US$8m unrealized mark-to-market non-cash net derivative income. Stripping out these exceptionals, core earningswould have been US$19m.The company declared an interim dividend of HK 5 cents per share, reaf-firming its dividend policy of paying out at least 50% of profits excludingvessel disposal gains. Balance sheet remains healthy with 15% Net debt/Equity position.

Management outlook. The management expects a lackluster dry bulkmarket remainder this year. The performance in 2011 is generally weakerthan 2010 due to the significant new deliveries and cloudy global economy.Management is not optimistic on RoRo services and they think the poorperformance will continue into to 2012. The management is quite comfort-able with the newbuildings they have committed to and will investigatemore vessel acquisition opportunities with reasonable costs.

Our View. We have a similar view to Pacific Basin and we expect supplygrowth to continuously outstrip demand growth over 2011-2012E despitea recent uptick in scrapping rate. Given the poor 1H2011 results, our 2011Eforecast now looks optimistic.Nevertheless, the outlook of the smaller handysize segment is more posi-tive than that of the larger capesize vessels as supply growth is a lot moredaunting in larger bulk market. Pacific Basin's earnings for the year appearto be less volatile with 86% locked-in contracts. The stock is now tradingat inexpensive 0.63x 2011E P/B, but stock price will likely remain subduedin the short term if BDI remains weak.

Joe Liew, CFAResearch Analyst(+852) 2203 [email protected]



Asia ChinaTechnology Software & Services

03 Aug 2011 - 08:29:56 PM CST


SouFun Buy

Expecting strong 2Q; buy ahead of earnings release

Reuters:SFUN.N Exchange:NYS Ticker:SFUN

Price (USD) 19.45

Price target (USD) 27.14

52-week range (USD) 26.94 - 15.28


Shares outstanding (m) 74.7

Net debt/equity (%) -127.3

Book value/share (USD) 1.47

Price/book (x) 13.2

FYE 12/31 2009A 2010E 2011E

Sales (US-Dm)

127 224 311

Net Profit(USDm)

52.7 63.1 103.5

DB EPS(USD)

0.68 0.79 1.25

PER (x) – 24.5 15.6

Yield (net)(%)

– 0.0 0.0

Expecting GAAP EPADS of USD 0.17. We expect SouFun to book top lineof USD58m in 2Q11. SouFun will report its 2Q11 results at 8PM HK timeon August 11. We expect Non-GAAP EPADS of USD0.20. We expect strongrevenue growth in marketing services (DBe 53% YoY), which could lead toa positive surprise vs our forecast.

Strong spend from real estate advertisers. Despite weak property mar-ket fundamentals, we believe real estate advertisers (especially primaryproperty developers) have been allocating increasing ad budget to onlinechannels to stoke demand in a cost-efficient way. SouFun is a key benefi-ciary of this trend. We believe competition is intensifying among develop-ers, especially small to medium-sized developers that can't afford primelocation land. As such, developers need to allocate ad budget to more effi-cient channels, notably online. In our view, the value proposition of onlineads (e.g. high ROI, ability to interact with potential customers, ability to or-ganize events, etc) stands out in such a weak environment. SouFun's strongbrand recognition should help it gain ad budget.

SouFun announces cash dividend. On July 31, SouFun announced a cashdividend of USD1 per ADS. This will result in a cash payment of approxi-mately USD78m in total. SouFun has a large cash balance and robust cash-generating ability. As of March 31, the co had net cash of USD260m. Sou-Fun reported USD35m in cash flow from operations in 1Q11. It paid US-D46m for its Wall Street property in early July 2011. We believe the rationalefor the dividend includes: 1) few better means to utilize the cash in the nearterm (e.g. M&A, invt, etc), 2) a mgmt belief that the stock price is under-valued, 3) healthy cash from operations, 4) mgmt confidence regardingbusiness operations over the next several quarters.

Implications of the dividend. We expect the dividend payment to lead to1) interest expense (DBe USD1.6m a year) to a financial intermediary thatwill facilitate the payment (SouFun will make the payment in RMB to thefinancial intermediary, which will make the payment in USD to the registry)and 2) withholding tax of 5-10% on the dividend (e.g. USD3.9-7.8m) to bebooked in 3Q. We do not expect the co to undertake major M&A or invt inthe next several quarters. We believe the current weakness, ahead of the2Q results, represents a particularly attractive opportunity; maintain Buyand TP.Alex YaoResearch Analyst(+86) 21 3896 [email protected]

Alan Hellawell IIIResearch Analyst(+852) 2203 [email protected]



Asia Korea, Republic of Transportation Infrastructure

3 August 2011

Hyundai Dev. Co. Reuters: 012630.KS Bloomberg: 012630 KS Exchange: KSC Ticker: 012630

Margin fine in 2Q and PF turning to land bankSanghi Han, CFA Research Analyst (+82) 2 316 8900 [email protected]

Dianna Kang Research Associate (+82) 2 316 8901 [email protected]

No more write-offs; reiterating our top pick Although 2Q earnings were below our estimates due to one-off losses, we maintain our Buy recommendation and target price of W45,700 because 1) margin enhancement is on track, along with a rising in-house housing portion; 2) the written-off PF loan amount in Daegu likely will be classified as a land bank in the near future; and 3) the company is the only direct beneficiary of a housing market recovery. Thanks to a recent market correction, valuation remains attractive at 7.9x PER and 0.9x PBR.



Sales (KRWbn) 2,705 3,502 4,216 4,207 4,153

Reported NPAT (KRWbn) 24.8 88.5 279.0 303.4 279.5

Reported EPS FD(KRW) 336.7 1,202.6 3,791.4 4,123.4 3,797.8

PER (x) 116.1 26.0 8.0 7.4 8.0

DPS (net) (KRW) 400 500 1,000 1,000 900



Results


Key changes

Sales (FYE) 4,162 to 4,216 1.3%Op prof margin (FYE) 11.7 to 10.8 -8.4%Net profit (FYE) 305.6 to 279.0 -8.7%


20000

30000

40000

50000

60000

70000

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11Hyundai Dev. Co.

KOSPI (Rebased)

Performance (%) 1m 3m 12mAbsolute -3.2 -7.0 10.1KOSPI -0.2 -3.6 18.5

Stock data

Market cap (KRWbn) 2,255Market cap (USDm) 2,146Shares outstanding (m) 75.3Major shareholders Mong Gyu Chung (13.3%)Free float (%) 74Avg daily value traded (USDm) 14.641


ROE (%) 11.8Net debt/equity (%) 57.9Book value/share (KRW) 32,596Price/book (x) 0.92Net interest cover (x) 4.8Operating profit margin (%) 10.8

2Q11 review: resilient housing profitability, but write-off came In-house housing gross margin improved to 36% in 2Q11 (35% in 1Q11), which we believe is supporting a structural profitability enhancement. Parent base sales and gross profit came in at W827bn (+25% YoY and +46% QoQ) and W155bn (+78% YoY and + 33% QoQ), respectively, in line with our forecast. Due to a write-off of W80bn from turning PF loan to land bank, operating profit of W53bn missed our estimate by 45%. Based on the company’s guidance, there are unlikely to be any more write-offs related to the housing business as PF loan and unsold homes decreased to W380bn and 2,500units, respectively. We think 2H11 net profit should grow 287% YoY, thanks to: 1) rising gross margin (1H11 20% → 2H11 22%) and 2) a low base effect in 2H10.

Housing indicators strong; tax benefit for multiple-home owners Recent data points have increased our confidence about a housing-market recovery: 1) YoY growth of secondary housing prices is strengthening (June 5.3% → July 5.9%); 2) YoY growth in transaction volume has stayed robust (June 13.3%); and 3) number of unsold homes continues to be lower than average since 1993 (July 72,667 units vs. average of 81,922 units). The Korean government has signaled a deregulation of the property market by lifting the heavy capital-gains tax from multiple home owners. We expect exemption of price cap as a next step.

PER-based target price of W45,700 gives 52% potential upside; risks Our target price of W45,700 is derived by applying a PER of 11x (as per Deutsche Bank’s KOSPI target PER) to 2012E EPS of W4,123. The stock is trading at a 47% and 59% discount to the Deutsche Bank Korea construction universe PER and PBR. Key risks to our bullish call are Hyundai Development not starting to buy additional land bank besides that purchased in May, and a sharp retreat in the housing market.



Asia Korea, Republic of Banking/Finance Banks

2 August 2011

Woori FH Reuters: 053000.KS Bloomberg: 053000 KS Exchange: KSC Ticker: 053000

2Q11 results: underlying credit cost decline under wayJeehoon Park Research Analyst (+82) 2 316 8908 [email protected]

Clara Jung Research Associate (+82) 2 316 8835 [email protected]

Visible asset quality improvement; maintain Buy Woori FH posted 2Q11 net profit of W791bn, up 57.3% QoQ, mainly on the back of a big one-off gain from the sale of Hyundai E&C shares. Our key take-away from the results is that the underlying asset-quality improvement was much better than expected. While 2011E bottom-line earnings remain a tough guess, given the continuous bad-asset reduction efforts likely to be made by Woori, the visibly improving asset quality gives us comfort that there is more visibility on stronger earnings from 2012 on lower credit cost. We maintain our Buy rating on Woori.



Provisioning (KRWbn) 2,522.6 2,889.6 2,557.5 1,600.0 1,680.0

Pre-prov profit (KRWbn) 3,916 4,766 5,510 4,782 4,952

Net profit (KRWbn) 1,026.0 1,242.1 2,004.3 2,186.3 2,253.4

EPS (KRW) 1,272.96 1,540.99 2,486.62 2,712.44 2,795.67

EPS growth (%) 126.3 21.1 49.8 17.5 3.1

PER (x) 9.3 9.6 6.0 5.1 5.0

Price/book (x) 0.8 0.9 0.7 0.6 0.6

DPS (net) (KRW) 120.00 250.00 500.00 600.00 700.00

Yield (net) (%) 1.0 1.7 3.6 4.3 5.0

ROE Adj(%) 7.9 8.8 12.8 12.4 11.7Source: Deutsche Bank estimates, company data


Forecast Change


Key changes

Provisioning (FYE) 2,263.1 to 2,557.5 13.0%Net int margin (FYE) 2.45 to 2.46 0.3%Net profit (FYE) 2,377.3 to 2004.3 -15.7%


12000

14000

16000

18000

20000

22000

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11Woori FH

KOSPI (Rebased)

Performance (%) 1m 3m 12mAbsolute -0.4 -4.5 -5.4KOSPI -0.2 -4.8 19.0

Stock data

Market cap (KRWbn) 11,244Market cap (USDm) 10,700Shares outstanding (m) 806.0Major shareholders KDIC (57%)Free float (%) 22Avg daily value traded (USDm) 35.463


ROE (%) 9.8Loan/deposit ratio (%) 122.2Book value/share (KRW) 20,743.60Price/book (x) 0.7NPL/total loans (%) 1.6Net int margin (%) 2.5Adjusted ROE (%) 12.8

Recurring PPOP flat QoQ We did not see much operational improvement at Woori, given flat NIM and loan growth with muted non-interest income growth in 2Q11 vs. 1Q11, which resulted in little change at the recurring PPOP level (down 2% QoQ). The special items during the quarter were W961bn gains from the Hyundai E&C share sale, W42bn for ERP and W57bn special bonus. Given management’s focus on balance sheet clean-up through bad-asset reduction for 2011, we do not expect a big PPOP improvement in the near term.

Credit cost from new NPLs at only 21bps Woori’s credit cost from new NPLs in 2Q11 was only W110bn and 12.5% of total provisions during the quarter, while the rest was mainly due to additional provisions from write-offs and for existing NPLs. We also estimate that new NPL formation and delinquencies remain on a declining trend, which we believe is a result of continuous balance sheet restructuring and provisioning effort since 2008. Woori’s group-level RWA as of 2Q11 has actually declined 1% vs. year-end 2008.

Cutting earnings for 2011E, but increasing for 2012E-13E We cut our 2011E net profit by 16% on a higher bad asset reduction cost assumption, but raise 2012E-13E earnings by 7-9% on a better credit cost outlook. We keep our target price of W19,000, derived using the Gordon Growth model, assuming 11.1% ROE, 11.9% COE, and 2% growth. Downside risks are further delays in privatisation and asset-quality improvement.



Asia ASEAN SingaporeBanking/Finance Banks

03 Aug 2011 - 02:56:09 AM GMT


OCBC Buy

Strong GEH trends continue in 2Q11

Reuters:OCBC.SI Exchange:SES Ticker:OCBC

Price (SGD) 10.01

Price target (SGD) 10.40

52-week range (SGD) 10.32 - 8.60


Shares outstanding (m) 3,230

NPL/total loans (%) 1.1

Price/book (x) 1.7

FYE 12/31 2010A 2011E 2012E

Provisioning(SGDm)

134.0 271.7 315.3

Pre-provprofit(SGDm)

3,071 3,628 4,072

EPS (SGD) 0.66 0.74 0.83

PER (x) 13.6 13.5 12.1

Yield (net)(%)

3.4 3.4 3.8

Reported profit -26% QoQ to $118mOCBC's 87%-owned insurance subsidiary Great Eastern Holdings (GELA.SI,$14.87/share) effectively delivered a $36m, or 6% sequential earnings head-wind to OCBC over the $628m group profit reported in 1Q11, broadly in linewith our expectations. As usual, the profit swing is driven by market volatil-ity, with life insurance profits falling $44m to $106m. This near-term volatilityobviously impacts OCBC's reported profits, but in our view is not a goodguide to underlying performance.Underlying drivers remain very strongNew business sales were up by 14% YoY and 7% QoQ, with a strong con-tribution from single premium business which grew 39% YoY and 7% QoQ.The embedded value of new business increased 21% YoY and 12% QoQ.With these strong underlying trends in place, we suspect GEH will remaina key positive value driver for OCBC.

GEH 2Q11 new business summary

Source: Deutsche Bank, Company data

Andrew Hill, CFAResearch Analyst(+65) 6423 [email protected]



Asia ASEAN SingaporeTelecommunications

03 Aug 2011 - 09:52:21 AM GMT

INDUSTRY ALERT Industry UpdateTelecommunications NBN premises reached - out of reach?

Focus stocksStarhub (STAR.SI),SGD2.84 Buy,Price Target SGD3.00

M1 (MONE.SI),SGD2.60 Sell, PriceTarget SGD1.90

Singapore Telecom(STEL.SI),SGD3.38 Hold, Price Tar‐get SGD3.35

SINGAPORE TELECOMS: The NBN rollout has generated considerable in‐terest around future revenue opportunities for the three S'pore telcos. Inparticular, relative share price performances appear to reflect dispropor‐tionate optimism around M1 given its previous lack of a fixed‐line productand hence in theory, greater leverage to the structural opportunities. Ourconcerns about such an argument are well‐flagged, including our relativeskepticism about near‐term fibre demand (see "Wiring up the nation: thetelecoms transformation", 24 Jan 2011).But the rate of fibre take‐up could be even slower than we expected. Whilethe proportion of NBN "premises passed" (i.e. fibre deployed into buildings)has apparently surpassed 70% and is on track to achieve the 95% targetcoverage by mid‐2012, M1's management recently indicated that "premisesreached" (i.e. fibre deployed into individual residential units) is less than40%. Although none of the telcos has disclosed actual subscriber numbers,we think it is safe to assume, especially given the relatively modest premis‐es reached, service take‐up has so far been anemic.Several issues have been identified as constraining the number of premisesreached (e.g. home/building owners' resistance to surface trunking provid‐ed by NetCo). But we think the key issue boils down to a general lack ofdemand for fibre‐enabled services and the fact that most subscribers con‐tinue to be tied into existing contracts. Apart from M1, we suspect market‐ing of fibre services by the other two operators may remain relatively muted,at least until 2012. By then, it is possible a significant proportion of homeowners would have missed the initial free installation offered by NetCo.Post the initial installation period, it would cost home owners S$220‐450 tohave fibre pulled into their homes ‐ this could potentially be a further im‐pediment to service adoption going forward.The above issues suggest it would be challenging for M1 to achieve anysignificant upside from fixed‐line over the near‐term. The disconnect be‐tween market expectations and delivery by the company could potentiallywiden, in our view. Our cautious view on M1 therefore remains unaltered ‐Sell.

Wei-Shi WuResearch Analyst(+65) 6423 4114wei‐[email protected]

William BrattonResearch Analyst(+852) 2203 [email protected]



Asia India Banking/Finance Banks

3 August 2011

Axis Bank Reuters: AXBK.BO Bloomberg: AXSB IN Exchange: BSE Ticker: AXBK

Analyst roundtable takeaways – growth with profitabilityManish Shukla Research Analyst (+91) 22 6658 4211 [email protected]

Above-average growth with strong profitability; reiterating Buy Axis Bank organised an analysts’ roundtable with the bank's senior management. The meeting reinforced our view that the bank is well positioned to grow at rates higher than the system while maintaining strong profitability. Infrastructure, SME and retail will likely be the key growth drivers for loans and fee income. There is no visible stress on asset quality, including power and SME loans. The stock is trading at 2.5x FY12E P/B with FY12E RoE of 20%. We maintain Buy with a target price of INR1,425.


Year End Mar 31 2010A 2011A 2012E 2013E 2014E

Provisioning (INRm) 14,135.1 9,701.8 14,611.0 19,346.5 25,057.7

Pre-prov profit (INRm) 52,648.8 61,058.4 77,005.0 94,873.8 117,355.9

Net profit (INRm) 25,145.4 33,884.9 41,180.0 49,848.0 60,916.8

EPS (INR) 65.81 83.08 100.31 121.42 148.38

EPS growth (%) 30.0 26.2 20.7 21.0 22.2

PER (x) 13.7 16.0 13.0 10.8 8.8

Price/book (x) 2.95 3.03 2.44 2.10 1.77

DPS (net) (INR) 12.45 14.51 23.51 30.67 30.67

ROE (%) 19.2 19.3 20.1 20.9 21.8Source: Deutsche Bank estimates, company data


Company Update

Buy Price at 3 Aug 2011 (INR) 1,308.20Price target - 12mth (INR) 1,425.0052-week range (INR) 1,588.70 - 1,159.45BSE 30 18,110


800

1000

1200

1400

1600

8/09 11/09 2/10 5/10 8/10 11/10 2/11 5/11Axis Bank

BSE 30 (Rebased)

Performance (%) 1m 3m 12mAbsolute -0.2 6.3 -3.7BSE 30 -3.5 -2.3 0.0

Stock data

Market cap (INRm) 537,076Market cap (USDm) 12,120Shares outstanding (m) 357.7Major shareholders SUUTI (24%)Free float (%) 57Avg daily value traded (USDm) 42.9


ROE (%) 20.1Loan/deposit ratio (%) 78.9Book value/share (INR) 536.63Price/book (x) 2.4NPL/total loans (%) 1.1Net int margin (%) 3.44

DB vs Consensus FY12E (INR/share)

EPS TPMean 98.2 1563High 112.9 1850Low 89.7 1210DB 100.3 1425

BUYs HOLDs SELLs51 9 2

Source: Bloomberg Finance LP, DB

Infrastructure, SME and retail to drive growth; target NIM of 3.25% to 3.50% The key focus areas for the bank are retail banking, infrastructure, payment systems and SME business. The bank will likely continue to capitalise on its leadership position in the infrastructure and SME spaces while building its retail asset book. As in the past, the bank expects to maintain the combined share of CASA and retail term deposits in total deposits at ~58-62%. The bank reiterated that the sustainable NIM is likely to be 3.25-3.50%.

Strong fee income franchise; asset quality under control The bank indicated that fee income should continue to grow in sync with overall balance sheet growth, with corporate fee income (primarily debt placement and loan syndication fees) being the main growth driver. For power sector disbursements the bank continues to take adequate precautions like promoter due diligence, insisting on environmental clearances, fuel linkages, etc. As yet, the bank is not seeing any stress on its power or SME exposure. However, the sharp rise in interest rates in recent months could potentially hurt some of the SMEs, and the bank is being cautious in increasing lending rates to these.

P/BV-RoE valuation; higher slippages from SME book the key risk We value Axis on a single-stage GGM - P/BV = (RoE–g)/(CoE–g) with a premium over this theoretical P/BV based on a historical perspective (FY12E RoE 20.1%, schematic RoE 19%, COE 14.5% and TGR 5%). Key risks: sharp reduction in its high CASA (low cost deposit ratio) due to rising term deposit rates and higher slippages, particularly in the SME portion, due to strong growth in the recent past.



Asia IndiaTelecommunications

03 Aug 2011 - 03:15:14 PM IST


Bharti Airtel Limited Buy

1QFY12: in line results, miss on minutes growth

Reuters:BRTI.BO Exchange:BSE Ticker:BRTI

Price (INR) 432.05

Price target (INR) 460.00

52-week range (INR) 440.25 -306.05

Market cap (USDm}) 37,062



Book value/share (INR) 124.97

Price/book (x) 3.5

FYE 3/31 2010A 2011E 2012E

Sales (INRm) 396,150 592,974 720,578

Net Profit(INRm)

91,023.2 65,374.2 101,659.8

DB EPS(INR)

20.53 17.21 26.77

PER (x) 17.3 25.1 16.1

Yield (net)(%)

0.3 0.2 0.2

Bharti's 1QFY12 results are satisfactory broadly in line with our expecta-tions. Consolidated revenues at Rs 169.7bn (+4% QoQ) and EBITDA at Rs56.9bn (+5% QoQ) were in line with our expectations. PAT at Rs 12.1bn(-11% QoQ) was marginally lower than our estimates due to higher thanexpected derivative/foreign exchange fluctuations.

India business: India wireless revenues came at Rs 94.7bn (3.7% QoQ,1% below DB est). Wireless minutes at 221.5bn (4.6% QoQ, 1.4% belowDB est) was relatively lower than peers and was the only disappointing as-pect in the Indian operations. Revenue/min trends (Rs 0.428, -1% QoQ)continued to be in line with expectations. Wireless EBITDA margin at 34.2%(+90bps QoQ) came in as a positive surprise.

Africa operations: Robust minutes (16.3bn, +9.5% QoQ, 6% above DBest) and revenue/min 5.99 cents (-3% QoQ) led to strong revenues($979mn, +6% QoQ, 3% above DB est). EBITDA margins came in line at25%. Capex at $420mn is a negative surprise. The anualised capex basedon last two quarters comes to $1.6bn which is higher than the company'sguidance at $1-1.2bn.Maintain Buy on Bharti with a target price of Rs 460.

Srinivas Rao, CFAResearch Analyst(+91) 22 6658 [email protected]

Amyn PiraniResearch Analyst(+91) 22 6658 [email protected]



Asia IndiaProperty Property

03 Aug 2011 - 08:26:39 AM IST


DLF Buy

Inline 1Q operations with better than expected EBITDA

Reuters:DLF.BO Exchange:BSE Ticker:DLF

Price (INR) 227.85

Price target (INR) 275.00

52-week range (INR) 392.75 -209.50




Book value/share (INR) 165.41

Price/book (x) 1.4

FYE 3/31 2011A 2012E 2013E

Sales (INRm) 95,606 110,406 136,998

Net Profit(INRm)

16,432.5 20,373.2 29,093.8

DB EPS(INR)

9.68 12.00 17.14

PER (x) 30.7 19.0 13.3

Yield (net) 0.6 0.8 0.8

DLF: Revised estimates (INRm)

Source: Deutsche Bank

Inline operational performance in seasonally weak 1Q: (1) Good resi-dential presales of 2.2msf (1.9 in previous 1Q & 3.8 in 4Q) of which 1.3msfis plots but weak leasing of office space of 0.73msf (0.98, 1.4 gross). De-livery of ~1.9msf made entirely of office space (1.37, 3.39). This is on trackfor FY12e guidance of ~12msf of pre-sales, ~3msf of leasing &~12msf ofdeliveries (2) Expected slow monetisation at INR 1.6bn on targeted INR60bn over 2-3 years. Recent higher than expected increase in interest ratescould delay monetisation to 2H (3) B/S is largely similar to Mar'11 - netgearing at ~80%

13% EBITDA growth (DBe 10%) with margins bouncing-back: (1) 21%yoy revenue growth to INR 24.4bn against DBe of 36% with 24% growthin lease income (2) Most of the impact of higher budgeted costs seems tohave been absorbed in 4Q. Hence EBIDTA margins bounced to 45.4%against DBe 38.8% (48.3% in last 1Q, 24.8% in 4Q). EBITDA grew 13% yoyto INR 11.1bn against DBe of INR 10.7bn (3) Other income collapsed 57%yoy to INR 0.6bn with PBT dropping 12% to INR 5.0bn against DBe of -2%(4) PAT dropped 13% to INR 3.6bn against DBe of 1% drop

Cut estimates by upto 9%; Retain Buy with TP of INR 275: (1) We awaitmore details during the conference call scheduled at 4 PM today (2) We cutestimates - upto 9% for revenues & PAT and upto 3% for EBITDA (seenarrow column) (3) However with the inline operational performance, wemaintain our DCF based TP of INR 275 and Buy rating.

DLF: In-line operational 1Q; margins bounce-back

Source: Company, Deutsche Bank

Abhay ShanbhagResearch Analyst(+91) 22 6658 [email protected]

Mayank KankariaResearch Associate(+91) 22 6658 [email protected]



Asia ASEAN IndonesiaConglomerates

03 Aug 2011 - 03:20:26 AM GMT


Astra Int'l Buy

Record high four-wheeler sales in July

Reuters:ASII.JK Exchange:JKT Ticker:ASII

Price (IDR) 71,200

Price target (IDR) 86,500

52-week range (IDR) 75,000.00 -46,500.00




Book value/share (IDR) 15,358

Price/book (x) 4.64

FYE 12/31 2010A 2011E 2012E

Sales(IDRbn)

129,991 152,336 171,569

Net Profit(IDRbn)

14,366.0 17,791.7 20,596.8

DB EPS(IDR)

3,549 4,395 5,088

PER (x) 13.2 16.2 14.0

Yield (net)(%)

2.7 1.4 1.7

Four-wheeler July sales: 88,751 units (+23% YoY; +27% MoM)We attribute the record high four-wheeler sales in July to 1) faster thanexpected production recovery from Japan's catastrophe, 2) launching ofnew models, 3) seasonal pre-Lebaran holidays, and 4) still abundant afford-able financing. Meanwhile, we expect Astra to also post strong numbersgiven record high sales from its two main brands, Toyota (30,009 units: +8%YoY; +15% MoM) and Daihatsu (14,075 units: +22% YoY; +27% MoM).Expect momentum to continueWe believe the current strong 4-wheeler sales will continue, especially onthe back of new model launches. Overall, we expect there is still upside riskon our numbers - we would only need to see sales of 65k units/month inAug-Dec to achieve our full year forecast of 863k units in 2011F, and averagemonthly sales of 81k units in 2012F.Reiterate Buy rating on Astra Int'l with TP of Rp86,500We remain upbeat on the long-term outlook for Astra, which is the primebeneficiary of credit expansion in Indonesia, high consumer confidence andthe doubling of the middle-income population. The stock is trading at 16.2x2011F earnings, 2% discount to the market, offering 24% upside potentialfrom current levels.

Industry 4-wheeler sales volume

Source: Deutsche Bank

Rachman KoeswantoPT Deutsche Bank Verdhana In-donesiaResearch Analyst(+62) 21 318 [email protected]



Asia ASEAN IndonesiaUtilities Utilities

03 Aug 2011 - 02:11:43 AM GMT


PGN Buy

PGAS signs HoA for 20mmscfd gas supply

Reuters:PGAS.JK Exchange:JKT Ticker:PGAS

Price (IDR) 4,000


52-week range (IDR) 4,600.00 -3,550.00




Book value/share (IDR) 744

Price/book (x) 5.38

FYE 12/31 2010A 2011E 2012E

Sales(IDRbn)

19,766 20,014 22,527

Net Profit(IDRbn)

6,239.4 6,885.0 7,867.9

DB EPS(IDR)

288 284 325

PER (x) 13.9 14.1 12.3

Yield (net)(%)

3.2 3.6 4.1

PGAS signed an initial agreement (Heads of Agreement, HoA) to buy 20mm-scfd of gas from PT Indogas Kriya Dwiguna (subsidiary of Jakarta-listed PTPrime Petroservices), starting Jan 2012. PT Indogas had earlier secured thesupply contract from upstream producer, Energi Mega Persada (ENRG). Thegas will be used to meet end-user demand throughout East Java.The volume would represent a small 2% addition to our volume forecast forPGAS in FY12. Nevertheless is one of the ways for the company to addressnear-term supply shortage, as some old contracts are declining also. Of late,there have been several cases in which middle-men have secured supplyfrom the upstream (either by bidding on more aggressive terms or throughcertain connections) without having the infrastructure or capability to deliverthe gas.Given the pent-up demand for gas (ie. severe shortage), we believe PGAScan easily pass on the higher cost of buying the gas from a middleman toits end-customers - even for example, if the gas were purchased at US$6.5/mmbtu, applying a US$3.5/mmbtu spread on top of that, we would arriveat an end-user price of US$10/mmbtu, still significantly lower than the priceof diesel of US$27/mmbtu. This may also give the company a basis to raiseits overall gas selling price next year (on a blended basis); we have factoreda 5% price hike in 2012 to about US$7.2/mmbtu.We maintain our Buy rating on the company; we believe possible positivecatalysts could come from potential upstream investments which couldbring in more secure supply allocation and progress of the LNG receivingprojects - less so from near-term earnings direction.

Cherie KhoengPT Deutsche Bank Verdhana In-donesiaResearch Analyst(+62) 21 318 [email protected]

Heriyanto IrawanPT Deutsche Bank Verdhana In-donesiaResearch Analyst(+62) 21 318 [email protected]



Asia ASEAN IndonesiaUtilities Utilities

03 Aug 2011 - 03:39:06 AM GMT


PGN Buy

BPMigas calls for a reneg on gas cost; risk still manageable

Reuters:PGAS.JK Exchange:JKT Ticker:PGAS

Price (IDR) 4,000


52-week range (IDR) 4,600.00 -3,550.00




Book value/share (IDR) 744

Price/book (x) 5.38

FYE 12/31 2010A 2011E 2012E

Sales(IDRbn)

19,766 20,014 22,527

Net Profit(IDRbn)

6,239.4 6,885.0 7,867.9

DB EPS(IDR)

288 284 325

PER (x) 13.9 14.1 12.3

Yield (net)(%)

3.2 3.6 4.1

In Bisnis Indonesia newspaper, Mr. R. Priyono, head of BPMigas, statedboth that the company wants PGAS to increase its gas purchase price andsome of its contracts are set at a price as low as US$1.8/mmbtu vs recentlysigned domestic contracts of US$5.5/mmbtu. He said the governmentneeds to consistently apply such requirement on domestic players, in-linewith the planned re-negotiation on LNG price to Fujian (originally priced atUS$2/mmbtu). BPMigas has apparently notified PGAS of its intentions andplans to also notify PGAS' largest shareholder, the State Owned EnterpriseMinistry about this issue.

DB comment: We believe this plan is still preliminary, though certainly il-lustrates the less-than-friendly relationship between BPMigas & PGAS.In any case, in our recent meeting with them, PGAS says that it would ac-tually consider such a renegotiation, IF it can get certainty/guarantee fromBP of getting its rightful allocation on the gas; If that is the case, then itshould actually be positive for the company.Most importantly, given the high oil price (diesel px at equiv to US$27/mmbtu) & significant domestic gas shortage, PGAS should be able to easilypass on the higher cost to its end-customers. Assuming in the worst casethat its Conoco gas cost gets adjusted to US$5.5/mmbtu, in order to main-tain its current spread of US$4/mmbtu and therefore effectively sell at US$9.5/mmbtu, crude oil price would need to fall to around US$40/bbl for itscustomers to be indifferent.

Cherie KhoengPT Deutsche Bank Verdhana In-donesiaResearch Analyst(+62) 21 318 [email protected]

Heriyanto IrawanPT Deutsche Bank Verdhana In-donesiaResearch Analyst(+62) 21 318 [email protected]



Asia ASEAN ThailandBanking/Finance Banks

03 Aug 2011 - 01:38:51 PM GMT


Thanachart Capital Hold

Confirmed no delay on integration plan

Reuters:TCAP.BK Exchange:SET Ticker:TCAP

Price (THB) 30.00

Price target (THB) 33.00

52-week range (THB) 41.25 - 27.50


Shares outstanding (m) 1,261

NPL/total loans (%) 5.7

Price/book (x) 1.1

FYE 12/31 2010A 2011E 2012E

Provisioning(THBm)

1,785.5 3,906.9 4,677.9

Pre-provprofit(THBm)

16,562 15,415 18,363

EPS (THB) 4.23 3.25 3.82

PER (x) 7.0 9.2 7.9

Yield (net)(%)

3.7 3.4 4.0

Highlight from TCAP's analyst meeting1. Management expects moderate loan growth in the next few years ataround 7-10%. The main focus remains Auto loan.2. TCAP will try to sustain NIM at around 3.0-3.5% in the next 3 years. NIMwas 3.1% in 1H11, declining from 3.3% last year.3.Credit cost could fall further to below 50bps vs. prior target of 70-80bpsto loan outstanding after adapting collective approach for provision calcu-lation as early as next year.4. The integration process has been on track thus far, without delays. TheEntire Business Transfer (EBT) between Thanachart Bank (TBANK) and SCIBis to go live on 1 October 1 2011.5. TCAP will book more extra gains in a range of Bt300-420mn this year fromtax shield from sales of its securities subsidiary and amortizing gains fromthe sale of TBANK shares to Scotia Bank in 2009.6. Management confirms there will be no capital injection although TBANK'stier 1 ratio will fall to 8.7% from 11.1% after EBT starts.7. Management is confident that it will be able to at least maintain the ab-solute dividend of Bt1.2/ share in the foreseeable future.

Our take: We expect TCAP's core operation to remain inferior to peersgiven its slower loan growth outlook, capped by relatively lower capitalbase. We also expect TCAP to continue losing market shares in corporateand SMEs lending in the foreseeable future. Moreover, NIM should remainunder pressure due to its tight liquidity (LDR with B/E at 99% as of 2Q11)and intensified competition on liquidity. Improvement in cross-selling effi-ciency should be slow as we believe it will take time to train people fromtwo banks to get used to new cultures. However, TCAP earnings couldcome with the surprise from extra gains of its non-core business. Provisioncould even fall further from this year if the collective approach is imple-mented. We also believe there will be no capital injection in the foreseeablefuture. Overall, we believe the stock is quite defensive at this level due toits cheap valuation (2011E PE of 8x vs. peers of 12x) and dividend yield(~4%). However, it should be difficult for the stock to outperform due to itsinferior core earnings outlook and we therefore maintain Hold rating on thestock with TP of Bt33.

Worawat Saisuphatphol,CFATisco Securities Co, LtdResearch Analyst(+66) 2 633 [email protected]




Appendix 1 Important Disclosures

Additional information available upon request

For disclosures pertaining to recommendations or estimates made on a security mentioned in this report, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr.

Analyst Certification

This report covers more than one security and was contributed to by more than one analyst. The views expressed in this report accurately reflect the views of each contributor to this compendium report. In addition, each contributor has not and will not receive any compensation for providing a specific recommendation or view in this compendium report.

Equity rating key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes: 1. Newly issued research recommendations and target prices always supersede previously published research.2. Ratings definitions prior to 27 January, 2007 were:

Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12-month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period

6%

35%

59%

8%12%18%

0

100

200

300

400

Buy Hold Sell

Asia-Pacific Universe

Companies Covered Cos. w/ Banking Relationship


http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr



Regulatory Disclosures

1. Important Additional Conflict Disclosures

Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

2. Short-Term Trade Ideas

Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the SOLAR link at http://gm.db.com.

3. Country-Specific Disclosures

Australia: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. Brazil: The views expressed above accurately reflect personal views of the authors about the subject company(ies) and its(their) securities, including in relation to Deutsche Bank. The compensation of the equity research analyst(s) is indirectly affected by revenues deriving from the business and financial transactions of Deutsche Bank. EU countries: Disclosures relating to our obligations under MiFiD can be found at http://globalmarkets.db.com/riskdisclosures. Japan: Disclosures under the Financial Instruments and Exchange Law: Company name - Deutsche Securities Inc. Registration number - Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA, The Financial Futures Association of Japan. Commissions and risks involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan unless “Japan” is specifically designated in the name of the entity. New Zealand: This research is not intended for, and should not be given to, "members of the public" within the meaning of the New Zealand Securities Market Act 1988. Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a license in the Russian Federation.

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Deutsche Bank AG/Hong Kong

Asia-Pacific locations

Deutsche Bank AG Deutsche Bank Place Level 16 Corner of Hunter & Phillip Streets Sydney, NSW 2000 Australia Tel: (61) 2 8258 1234

Deutsche Bank AG Filiale Hongkong International Commerce Centre, 1 Austin Road West,Kowloon, Hong Kong tel: (852) 2203 8888

Deutsche Equities India Pte Ltd 3rd Floor, Kodak House 222, Dr D.N. Road Fort, Mumbai 400 001 SEBI Nos: INB231196834 INB011196830, INF231196834

Deutsche Securities Inc.

Tel: (91) 22 6658 4600

2-11-1 Nagatacho Sanno Park Tower Chiyoda-ku, Tokyo 100-6171 Japan Tel: (81) 3 5156 6770

Deutsche Bank (Malaysia) Berhad Level 18-20 Menara IMC 8 Jalan Sultan Ismail Kuala Lumpur 50250 Malaysia Tel: (60) 3 2053 6760

In association with Deutsche Regis Partners, Inc. Level 23, Tower One Ayala Triangle, Ayala Avenue Makati City, Philippines Tel: (63) 2 894 6600

Deutsche Securities Korea Co. 17th Floor, YoungPoong Bldg., 33 SeoRin-Dong, Chongro-Ku, Seoul (110-752) Republic of Korea Tel: (82) 2 316 8888

Deutsche Bank AG Singapore One Raffles Quay South Tower Singapore 048583 Tel: (65) 6423 8001

Deutsche Securities Asia Ltd Taiwan Branch Level 6 296 Jen-Ai Road, Sec 4

In association with In association with TISCO Securities Co., Ltd PT Deutsche Verdhana Indonesia TISCO Tower Deutsche Bank Building, 48/8 North Sathorn Road 6th Floor, Jl. Imam Bonjol No.80,

Taipei 106 Bangkok 10500 Central Jakarta,

Taiwan Thailand Indonesia Tel: (886) 2 2192 2888 Tel: (66) 2 633 6470 Tel: (62 21) 318 9541

International locations

Deutsche Bank Securities Inc. Deutsche Bank AG London Deutsche Bank AG Deutsche Bank AG 60 Wall Street 1 Great Winchester Street Große Gallusstraße 10-14 Deutsche Bank Place New York, NY 10005 London EC2N 2EQ 60272 Frankfurt am Main Level 16 United States of America United Kingdom Germany Corner of Hunter & Phillip Streets Tel: (1) 212 250 2500 Tel: (44) 20 7545 8000 Tel: (49) 69 910 00 Sydney, NSW 2000

Australia Tel: (61) 2 8258 1234

Deutsche Securities Inc. Deutsche Bank AG Filiale Hongkong 2-11-1 Nagatacho International Commerce Centre, Sanno Park Tower 1 Austin Road West,Kowloon, Chiyoda-ku, Tokyo 100-6171 Hong Kong Japan Tel: (852) 2203 8888 Tel: (81) 3 5156 6770

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Deutsche Bank may engage in securities transactions, on a proprietary basis or otherwise, in a manner inconsistent with the view taken in this research report. In addition, others within Deutsche Bank, including strategists and sales staff, may take a view that is inconsistent with that taken in this research report.

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In August 2009, Deutsche Bank instituted a new policy whereby analysts may choose not to set or maintain a target price of certain issuers under coverage with a Hold rating. In particular, this will typically occur for "Hold" rated stocks having a market cap smaller than most other companies in its sector or region. We believe that such policy will allow us to make best use of our resources. Please visit our website at http://gm.db.com to determine the target price of any stock.

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