CPI for June 2014 rose to 2.3% yoy, slightly below the consensus expectation of 2.4%.
PPI fell to -1.1% yoy, below the expected -1.0%.
Food inflation moderated to 3.7% yoy (from 4.1% yoy in May), contributing to the lower CPI.
Core inflation remained at 1.7% yoy, unchanged from May.
The moderation in pork prices and the decline in fresh vegetable prices helped reduce food inflation.
Producer goods prices continued to decline, but the rate of decline slowed for the third consecutive month.
Inflation is considered benign, below the official limit of 3.5% yoy, allowing for a monetary easing bias.
Hong Kong: Chow Tai Fook (1929 HK)
1QFY15 sales declined within expectations.
Same-store sales growth (SSSG) dropped 40% yoy, primarily due to a high base effect from the previous year's gold rush.
The company plans to close underperforming POSs and downsize stores to improve productivity.
Target price is HK$12.03, with an upside of +1.6%.
Key factors influencing the stock include quarterly sales data and gold price movements.
Indonesia: Banking Sector
Loan growth slowed to 17.4% yoy, down from the peak in September 2013.
Consumer loans grew by 12.9% yoy, outperforming other segments.
Deposits increased by 10.8% yoy, with time deposits growing the fastest at 12.3% yoy.
Time deposit rates increased faster than lending rates, putting pressure on net interest margin (NIM).
Broad money (M2) increased by 10.5% yoy, with net foreign assets growing 13.5% yoy.
Market weight for major banks remains unchanged, with BMRI, BBRI, and BBNI as top picks.
Malaysia: Yinson (YNS MK)
Downgraded to HOLD due to current valuation prices in a potential FPSO contract win.
The stock is at RM2.96 with a target price of RM3.10.
Singapore: Sino Grandness Food (SFGI SP)
IPO application is still in progress.
Risk-adverse investors should only accumulate when the listing becomes more apparent.
Target price is S$1.02 with a buy recommendation.
Thailand: Company Updates
Charoen Pokphand Foods (CPF TB): Earnings are expected to improve both qoq and yoy in 2Q14.
Dynasty Ceramic (DCC TB): Weak 2Q14 results are expected, but better prospects are seen in 2H14 and 2015.
Target price raised to Bt67.00 as valuation is rolled over into 2015.
Key Indices (as of 10 July 2014)
Index
Prev Close
1D %
1W %
1M %
YTD %
DJIA
16985.6
0.5
0.2
0.3
2.5
S&P 500
1972.8
0.5
(0.0)
1.1
6.7
FTSE 100
6718.0
(0.3)
(1.4)
(2.3)
(0.5)
AS30
5442.2
(1.0)
0.0
(0.1)
1.7
CSI 300
2148.7
(1.5)
(1.0)
(0.6)
(7.8)
FSSTI
3275.5
(0.2)
0.4
(0.6)
3.4
HSCEI
10341.0
(1.6)
(1.0)
(1.7)
(4.4)
HSI
23176.1
(1.6)
(1.6)
(0.6)
(0.6)
JCI
5024.7
0.7
2.9
2.9
17.6
KLCI
1891.2
(0.1)
0.2
0.8
1.3
BDI
863
(2.0)
(3.0)
(13.6)
(62.1)
CPO (RM/mt)
2449
(0.3)
0.9
1.4
(4.8)
Nymex Crude
102
(0.4)
(2.5)
(2.4)
3.5
Top Picks (BUY)
Company
Ticker
Current Price
Target Price
Pot. +/-
CNBM
3323 HK
7.07
9.82
38.9
ICBC
1398 HK
4.95
6.15
24.2
Bank Mandiri
BMRI IJ
10,150.00
10,800.00
6.4
Gamuda
GAM MK
4.89
5.60
14.5
DBS
DBS SP
17.01
22.60
32.9
Pacific Radiance
PACRA SP
1.44
1.55
8.0
Bangkok Bank
BBL TB
201.00
237.00
17.9
PTT
PTT TB
322.00
361.00
12.1
Sell Recommendation
Company
Ticker
Current Price
Target Price
Pot. +/-
UMWH Holdings
UMWH MK
11.36
10.00
(12.0)
Key Assumptions
Country
2013
2014F
2015F
GDP (% yoy)
US
2.8
3.0
3.0
Euro Zone
-0.7
1.0
1.0
Japan
2.0
2.1
2.1
Singapore
1.9
4.2
4.2
Malaysia
5.6
5.6
5.6
Thailand
6.4
1.5
1.5
Indonesia
6.2
5.5
5.5
Hong Kong
1.5
3.5
3.5
China
7.8
7.1
7.1
Commodity
2013
2014F
2015F
Brent (US$/bbl)
110
110
110
Aluminium (US$/mt)
1,886
1,713
1,650
Copper (US$/mt)
7,354
6,850
6,750
Gold (US$/ounce)
1,407
1,200
1,300
Iron Ore (US$/mt)
135
120
110
CPO (US$/mt)
736
858
858
BDI
1,219
1,500
1,800
Key Risks and Concerns
Chow Tai Fook: Risk of slower growth in gem-set sales, potential depreciation of gold prices, increasing competition, and higher promotional activities.
Banking Sector (Indonesia): Potential pressure on NIM due to rising time deposit rates and slower loan growth, though consumer loans remain a growth area.
