EPS, TP and Rating changes

EPS TP                                                                                            

(% change) T+1 T+2 Chg Up/Dn Rating

Hidili Industry

International

Initiation (14) U (NA)

Shougang Fushan

Resources Group Ltd.

Initiation 73 O (NA)

Winsway Coking Coal

Holdings Limited

Initiation 10 N (NA)

Mongolian Mining

Corporation

Initiation 15 N (NA)

Ashok Leyland Ltd (20) (15) (14) 33 O (O)

HCL Technologies 5 4 13 27 O (O)

Jindal Stl & Power Ltd 0 (8) (6) 26 O (O)

Yes Bank Ltd 4 1 3 (6) U (U)

Astra Agro Lestari (3) (2) (3) 18 O (O)

ITMG (7) (4) (5) 4 N (N)

United Tractors (4) (4) (4) 11 N (N)

Fujitsu (6) (9) (20) 1 N (N)

Japan Tobacco 0 0 10 12 O (O)

Robinsons Land Corp. 0 0 17 (4) N (O)

Biosensors

International Grp. Ltd.

(70) 20 0 51 O (O)

MCT

SATS 0 0 0 3 N (O)

Daewoo E&C 3 24 0 11 U (U)

LG Electronics (14) (7) 0 16 N (N)

AU Optronics n.m 0 (17) 58 O (O)

UMC 16 7 0 40 O (O)

Unimicron Tech. Corp (3) (4) 0 11 N (N)

Banpu (6) (4) (5) 26 O (O)

C3: Connecting clients to corporates

Hong Kong / China

China Medical System Holdings Ltd. (0867.HK) Post 2Q

results

Date 15-17 August, Hong Kong

Coverage Analyst Lefei Sun

CS Energy: Green Dragon Gas site visit

Date 21-22 August, Shanxi, China

Coverage Analyst David Hewitt / Horace Tse

Sembcorp Industries Limited (SCIL.SI) Post results

Date 23-24 August, Hong Kong

Coverage Analyst Gerald Wong

China Internet/Education Corporate Days

Date 24-30 August, Hong Kong, New York, Boston,

San Francisco

Coverage Analyst Wallace Cheung

Singapore

Orient Overseas International (0316.HK) Post results

Date 07 August, Singapore

Coverage Analyst Timothy Ross

DBS Group (DBSM.SI) 2Q12 results

Date 13 August, Singapore

Coverage Analyst Anand Swaminathan

Others

ASEAN and India Conference

Date 06-07 August, Singapore

Asian Technology Conference

Date 05-07 September, Taipei

Contact [email protected] or Your usual sales

representative.

Top of the pack ...

China Unicom Hong Kong Ltd (762 HK) – Maintain O Colin McCallum, CA (4)

LTE vs 3G tests in Hong Kong - a positive read-through for China Unicom

China Coking Coal Sector Frankie Zhu (5)

New report: What's special about HCC

... and the whole pack

Global

Global Equity Strategy Andrew Garthwaite (6)

July 2012 Investor Survey

Regional

Australian Health Services Saul Hadassin (7)

Path overspend confirmed, DI/GP visits strong

Australia

Macquarie Group (MQG AU) – Maintain O James Ellis (8)

Costs driving FY13E

China

China Coking Coal Sector Frankie Zhu (5)

New report: What's special about HCC

Hidili Industry International (1393 HK) – Initiating Coverage with U Frankie Zhu (9)

Shrinking earnings and slow growth

Shougang Fushan Resources Group Limited (639 HK) – Initiating Coverage with O Frankie Zhu (10)

Defensive margin, attractive valuation

Winsway Coking Coal Holdings Limited (1733 HK) – Initiating Coverage with N Frankie Zhu (11)

Margin squeezed, growth remains unclear

Global Micro-acoustic Component Sector Yan Taw Boon (12)                                               

New report: AAC / DOV implications from Apple / Goertek

China Unicom Hong Kong Ltd (762 HK) – Maintain O Colin McCallum, CA (4)

LTE vs 3G tests in Hong Kong - a positive read-through for China Unicom

Hong Kong

Hong Kong Economics Christiaan Tuntono (13)

HKMA allows banks to offer RMB services to non-resident individuals in Hong Kong

Thursday, 26 July 2012

Asian Daily

- 2 of 55 -

Asian indices - performance

(% change) Latest 1D 1W 3M YTD

ASX300 4,111 (0.2) 0.0 (6.0) 1.5

CSEALL 4,884 0.2 1.3 (10.3) (19.6)

Hang Seng 18,877 (0.1) (1.9) (9.3) 2.4

H-SHARE 9,219 0.0 (0.8) (15.5) (7.2)

JCI 4,001 0.2 (2.0) (4.3) 4.7

KLSE 1,635 0.2 (0.6) 3.5 6.8

KOSPI 1,769 (1.4) (1.4) (9.9) (3.1)

KSE100 14,565 0.4 (0.2) 2.4 28.3

NIFTY 5,110 (0.4) (2.0) (1.8) 10.5

PCOMP 5,162 0.0 (1.1) (1.1) 18.1

RED CHIP 3,672 (0.5) (1.7) (9.9) (0.3)

SET 1,189 0.1 (2.6) (1.7) 15.9

STI 2,991 (0.3) (0.9) 0.3 13.0

TWSE 6,979 (0.4) (1.0) (7.2) (1.3)

VNINDEX 413 (0.7) (1.4) (12.2) 17.5

Thomson Financial Datastream

Asian currencies (vs US$)

(% change) Latest 1D 1W 3M YTD

A$ 1.0 (0.4) (0.5) (0.4) 1.0

Bt 31.6 0.1 0.2 (2.2) (0.3)

D 20,885.0 0.1 (0.1) (0.1) 0.7

NT$ 30.2 0.2 (0.6) (2.3) 0.3

P 42.1 0.0 (1.1) 1.3 4.0

PRs 94.6 (0.9) (0.3) (3.9) (4.9)

Rp 9,508.0 0.1 (0.6) (3.2) (4.6)

Rs 56.2 0.3 (1.2) (6.4) (5.5)

S$ 1.3 0.1 0.1 (1.0) 3.2

SLRs 131.0 0.0 1.9 1.1 (13.1)

W 1,151.0 0.0 (0.7) (0.8) 0.1

Thomson Financial Datastream

Global indices

(% change) Latest 1D 1W 3M YTD

DJIA 12,699 0.6 (1.6) (3.0) 3.9

S&P 500 1,339 0.1 (2.4) (3.7) 6.5

NASDAQ 2,864 0.0 (2.7) (5.5) 9.9

SOX 371 3.0 1.9 (8.7) 1.8

EU-STOX 2,373 (0.2) (3.6) (1.4) 0.1

FTSE 5,498 0.0 (3.3) (3.9) (1.3)

DAX 6,407 0.3 (4.2) (4.4) 8.6

CAC-40 3,082 0.2 (4.7) (4.7) (2.5)

NIKKEI 8,366 (1.4) (4.1) (12.5) (1.1)

TOPIX 706 (1.6) (4.6) (12.8) (3.0)

10 YR LB 1.42 2.2 (5.1) (28.5) (24.4)

2 YR LB 0.22 2.6 (1.3) (17.6) (8.4)

US$:E 1.21 0.7 (1.1) (8.1) (6.3)

US$:Y 78.2 (0.1) 0.7 4.0 (1.7)

BRENT 104.5 0.4 (1.9) (12.3) (2.9)

GOLD 1,609.7 1.8 2.3 (2.1) 2.9

VIX 19.6 (4.1) 21.5 16.7 (16.1)

Thomson Financial Datastream

MSCI Asian indices – valuation & perf.

EPS grth. P/E (x) Performance

MSCI Index 12E 13E 12E 13E 1D 1M YTD

Asia F X Japan 14 14 10.9 9.5 0.0 0.8 2.2

Asia Pac F X J. 10 13 11.2 9.9 0.0 2.0 2.3

Australia (1) 6 12.1 11.5 0.2 4.7 2.6

China 7 11 8.6 7.8 (0.5) (1.5) (1.7)

Hong Kong (12) 11 14.2 12.8 (0.6) 2.7 6.3

India 14 14 12.8 11.3 (0.1) 1.5 3.9

Indonesia 11 14 13.3 11.7 (0.8) 1.9 (5.5)

Korea 40 15 8.6 7.5 0.4 (2.3) 0.6

Malaysia 12 11 15.2 13.7 (0.5) 1.7 4.5

Pakistan 8 8 7.0 6.4 (0.1) 7.8 17.9

Philippines 12 13 16.8 14.8 0.4 1.3 22.3

Singapore 8 9 13.7 12.5 0.7 7.8 18.0

Sri Lanka 19 17 11.5 9.9 (0.2) (4.3) (14.2)

Taiwan 18 23 14.6 11.9 (0.4) (4.1) (2.1)

Thailand 20 16 11.3 9.7 0.2 1.8 12.0

* IBES estimates

Hong Kong Banks Sector – Maintain MW Franco Lam (14)

Allowance of personal RMB business to non-HK residentsanother step forward

Hong Kong Wireless Sector – Maintain MW Chate Benchavitvilai (15)

SmarTone's 4G mythbusters, compeititon remains the key concern for the sector

Mongolian Mining Corporation (975 HK) – Initiating Coverage with N Frankie Zhu (16)

Fast growth has been priced in

Power Assets Holdings Limited (6 HK) – Maintain N Edwin Pang (17)

Accretive M&A in the UK

Standard Chartered Plc (2888 HK) – Maintain N Sanjay Jain (18)

1H2012 earnings preview

India

Ashok Leyland Ltd (AL IN) – Maintain O Jatin Chawla (19)

Attractive valuations but bleak near term outlook

HCL Technologies (HCLT IN) – Maintain O Anantha Narayan (20)

New report: Jun-12 results underline comfort on execution

Jindal Steel & Power Ltd (JSP IN) – Maintain O Neelkanth Mishra (21)

New report: Weak 1Q13 results; underlying resilience

Yes Bank Ltd (YES IN) – Maintain U Ashish Gupta (22)

Slowdown in loan growth needed as the bank appears stretched on deposits, capital

Indonesia

Astra Agro Lestari (AALI IJ) – Maintain O Agus Sandianto (23)

2Q12 started to show recovery in cost structure

PT Indo Tambangraya Megah (ITMG IJ) – Maintain N Paworamon (Poom) Suvarnatemee (24)

Cutting volume and capex guidance

PT Tambang Batubara Bukit Asam Tbk (PTBA IJ) – Maintain O Ami Tantri (25)

Slightly lower-than-expected 1H12 earning, but strong export volume

United Tractors (UNTR IJ) – Maintain N Dian Haryokusumo (26)

New report: 2Q12A still intact but the worst is yet to come

Japan

Canon Inc. (7751 JP) – Maintain N Yu Yoshida (27)

Economic deterioration really the main reason behind earnings shortfall?

Fujitsu (6702 JP) – Maintain N Hideyuki Maekawa (28)

Awaiting earnings improvement overseas

Japan Tobacco (2914 JP) – Maintain O Satsuki Kawasaki (29)

Domestic price hike a potential catalyst; quake impact to boost profit growth

Pakistan

Fauji Fertilizer Company Limited (FFC PA) – Maintain N Farhan Rizvi, CFA (30)

2Q12 earnings rise 67%QoQ, 23% above consensus

Philippines

Robinsons Land Corporation (RLC PM) – Downgrade to N Haj Narvaez (31)

Resiliency appears priced in

Singapore

Singapore Banks Anand Swaminathan (32)

Singapore system loan growth 5.2% YTD as of June; system LDR touches 95%

Biosensors International Group Ltd. (BIG SP) – Maintain O Lefei Sun (33)

1Q13 results: Slowing but continued revenue growth, gross margin expansion surprise, profit in-line

Mapletree Commercial Trust (MCT SP) – Maintain O Yvonne Voon (34)

1Q13 DPU in lineGrowth driven by strong reversions at VivoCity, PSAB and BoAML HF

SATS (SATS SP) – Downgrade to N Su Tye Chua (35)

1Q13 in line: Valuation at 12-month high

Singapore Airlines (sial.si) – Maintain N Timothy Ross (36)

1QFY13 results - no surprises, but storm clouds hang over 2H12

South Korea

Daewoo E&C (047040 KS) – Maintain U Minseok Sinn (37)

Results in line

Thursday, 26 July 2012

Asian Daily

- 47 of 55 -

China Life Taiwan ------------------------------------------------------------ Maintain OUTPERFORM

Key Q&A after our initiation EPS: ◄► TP: ◄►

Chung Hsu, CFA / Research Analyst / 8862 2715 6362 / [email protected]

Frances Feng / Research Analyst / 852 2101 6693 / [email protected]

Arjan van Veen / Research Analyst / 852 2101 7508 / [email protected]

Michelle Chou, CFA / Research Analyst / 886 2 2715 6363 / [email protected]

● In this note, we summarised a few key Q&As following our China

Life (2823.TW) initiation (click here). Following are the takeaways:

● Management is confident to achieve 10–15% VNB growth in 2012

despite a 20% YoY FYP decline in 1H12. This is due to positive

product mix shift to higher-margin traditional products, which grew

substantially in 1H12. We have modelled for 6% VNB growth.

● 1H12 profit of NT$2 bn tracks well against consensus estimate as

the company heads into its seasonally strong 3Q with NT$1.9 bn

cash dividend income. This means there could be upside surprise

to consensus number if there is no major external shock in 3Q.

● Exposure to peripheral Europe is only € mn Spanish government

bonds and the aggregate Europe fixed income portfolio actually

has a small unrealised gain with bulk of portfolio seeing falling

yields. The stock has been sold along with other insurers largely

to reflect market’s concern on Europe. We believe this is a good

opportunity to buy the stock, as we believe the stock will lead the

rebound given its better fundamentals and long-term growth.

Q: Can China Life still achieve its VNB target of 10–15%

this year with FYP -20% in 1H12?

A: The 20% decline in 1H12 FYP is because of sharp decline in low

margin and single premium products. Higher margin traditional

products have grown substantially in 1H12 and this will help to drive a

significant part of its VNB growth this year. Product strategy will

largely stay the same in 2H12, and so the management remains

confident for its 10–15% VNB growth target for 2012, despite our

estimate of a 6% VNB growth this year to account for lower volumes.

Q: Consensus is looking for a profit decline in 2012 and

what is driving our above consensus estimate for 2012?

A: China Life is not a well-covered stock and consensus estimate is likely

built on their weaker 1Q12 profit due to higher FX hedging cost. The

company reported 2Q12 profit of NT$1 bn (hence, 1H12 profit of NT$2

bn) last week with hedging cost declining notably and 1H profit is tracking

well with our full year estimates. In 3Q, China Life will receive NT$1.9 bn

cash dividend income that will provide significant earnings support and

could see upside surprises if there is no major negative shock from

equity/FX markets in 2H12.

Q: Concerns on overseas fixed income portfolio.

A: China Life’s more risky exposure (with regard to Portugal, Ireland, Italy,

Greece and Spain) amounts to only € mn in Spanish government bonds.

According to the management, China Life is actually sitting on a small

unrealised gain from its European fixed income portfolio (as well as their

US and Taiwan fixed income portfolio), as their portfolio is mainly in core

Europe where bond yield actually decreased notably.

The stock has been sold along with other insurers largely to reflect the

market’s concern on Europe. We believe this is a good opportunity to

accumulate the stock, as we believe the stock will lead the rebound given

its better fundamentals and long-term growth from its China JV.

Q: When to factor in the China upside?

A: While the JV only started in July 2011, it has been profitable (Rmb 33

mn profit in 2011) with FYP growing six-fold YoY in 5M12. China Life

raised capital last year that will be able to support growth for the next 3–4

years, by which CCB Life could be listed. While we estimate the JV could

bring NT$5–10/share valuation upside for China Life, this is not in our

current valuation for the stock as crystallising the value may take 3–4

years but we do see this as a free call option for owning the stock now.

Q: What are the key valuation assumptions?

A: We used 3.5% investment return assumption for VIF and 2.5% for

new business to arrive at an EV of NT$21.5 (versus NT$36.8 reported

by the company). Our target price of NT$40 is based on 5x VNB. We

think 3.5% return for VIF is arguably a bit conservative if we compare

to China Life’s 4.1–5.0% return in the past eight years; but judging the

current capital market and interest rate backdrop, we stay on the

conservative side with 3.5% return, which is just slightly above its

recurring yield of 3.2–3.3%. Based on a 4% investment return

assumption, China Life is trading below its EV.

Figure 1: China Life target price sensitivity

Unit: NT$

40.0 2.75% 3.00% 3.25% 3.50% 3.75% 4.00% 4.25%

9.00% 32.6 36.7 40.8 44.9 49.0 53.1 57.2

10.00% 27.7 31.8 35.9 40.0 44.1 48.2 52.3

11.00% 22.7 26.9 31.0 35.1 39.2 43.3 47.4

Discount rate

Investment return assumption

Source: Credit Suisse estimates.

Bbg/RIC 2823 TT / 2823.TW

Rating (prev. rating) O (O)

Shares outstanding (mn) 2,318.31

Daily trad vol - 6m avg (mn) 16.1

Daily trad val - 6m avg (US$ mn) 15.2

Free float (%) 70.0

Major shareholders Koo family 30%

Price (25 Jul 12 , NT$) 27.85

TP (prev. TP NT$) 40.00 (40.00)

Est. pot. % chg. to TP 44

52-wk range (NT$) 40.6 - 21.1

Mkt cap (NT$/US$ mn) 64,565.0/ 2,139.1

Performance 1M 3M 12M

Absolute (%) 2.0 7.9 (28.4)

Relative (%) 4.6 15.2 (7.8)

Year 12/10A 12/11A 12/12E 12/13E 12/14E

Life GWP (NT$ mn) 107,384 128,923 128,227 132,585 140,200

P&C GWP (NT$ mn) — — — — —

Net profit (NT$ mn) 3,363 4,207 4,563 5,436 6,266

EPS (NT$) 1.97 1.91 2.07 2.47 2.85

- Change from prev. EPS (%) n.a. n.a. 0 0 0

- Consensus EPS (NT$) n.a. n.a. 1.75 2.03 2.62

EPS growth (%) 8.8 (2.8) 8.5 19.1 15.3

P/E (x) 14.1 14.6 13.4 11.3 9.8

NTA per share (NT$) 18.6 14.9 15.6 15.6 15.6

EV per share (NT$) 22.7 17.3 21.5 23.5 25.7

Dividend yield (%) 2.9 2.5 1.0 1.7 1.4

EV/EBITDA (x) 6.9 1.2 (2.9) (4.1) (5.2)

P/B (x) 1.5 1.9 1.8 1.8 1.8

ROE (%) 11.9 13.0 13.6 15.8 18.2

P&C combined ratio (%) — — — — —

Note 1: China Life was established in 1963 and listed in 1995. China Life is the third largest life

insurers in Taiwan in terms of FYP in 2011, with over 1.5mn policy holders.

Thursday, 26 July 2012

Asian Daily

- 48 of 55 -

Unimicron Technology Corp -----------------------------------------------------Maintain NEUTRAL

Q2 results a mixed bag; HDI to drive H2 growth EPS: ▼ TP: ◄►

Pauline Chen / Research Analyst / 886 2 2715 6323 / [email protected]

Josette Chang / Research Analyst / 886 2 2715 6367 / [email protected]

● Unimicron’s Q2 results were operationally weaker, hurt by

consolidation of loss-making subsidiary and higher opex.

Unimicron managed to offset the weaker operating profits from FX

gains and income tax reversal. Net net, EPS of NT$0.63 was

roughly in line with our/street estimates of NT$0.56–0.62.

● We expect Q3 revenue to grow by 5–10% QoQ, below 10-15%

QoQ seasonality growth. A better product mix (towards HDI) and

benefits from softening raw material prices should offset the impact

from rising labour costs/utility prices and lead to margin expansion.

● We fine tune our FY12–14 EPS estimates by 3–4%. While we are

not convinced by the profitability of the Intel business, we do not

expect any financial impact from this investment in 2012.

● After 22% stock price rebound from the 3-month low, the stock is

trading at 1x P/B and 12x FY12 P/E. Its valuation looks fair for a cycle-

ROE of 9–11%. As a result, we maintain our NEUTRAL rating.

2Q12 results hurt by consolidation of UniDisplay

Unimicron reported 2Q12 EPS of NT$0.63, up 59% QoQ / down 32%

YoY, versus our / street estimates of NT$0.56–0.62. The result was

operationally weaker than expected, hurt by: (1) consolidation of lossmaking

subsidiary—UniDisplay and (2) higher opex (up 14% QoQ, off

a 2% QoQ revenue growth), albeit there were benefits from IC

substrates restocking and falling raw material prices. Unimicron

managed to offset the weaker operating profits from FX gains (NT$39

mn) and one-time income tax reversal (NT$92 mn). In Q2, FPCB and

IC substrates (FC-BGA) outperformed, while HDI underperformed,

hurt by customers’ model transition.

Figure 1: Unimicron—2Q12 results review

(NT$mn) Actual CS +/- (%) YoY % QoQ % Street +/- (%)

Net sales 16,669 16,669 0 5 2 16,586 1

Gross profits 2,361 2,424 -3 -10 -1

Operating profits 1,036 1,237 -16 -34 -15 1,293 -20

Pretax income 1,102 1,164 -5 -31 21

Net income 969 856 13 -32 59 948 2

EPS (NT$) 0.63 0.56 13 -32 59 0.62 2

Gross margin (%) 14.2 14.5

Op. margin (%) 6.2 7.4 7.8

Net margin (%) 5.8 5.1 5.7

Source: Company data, Credit Suisse estimates, Bloomberg I/B/E/S estimates.

Sub-seasonal Q3; HDI to lead the growth

We expect Q3 revenue to grow by 5–10% QoQ, below 10–15% QoQ

seasonality growth. Monthly sales should pick up from August and likely

to peak in November, driven by new smartphones/ tablets/consumer

products. A better product mix (to HDI) and benefits from softening raw

material prices should offset the impact from rising labour costs/utility

prices, and lead to margin expansion. FPCB is likely to be flattish QoQ,

given Unimicron’s intention to fine tune its customer mix. IC substrates

should witness a pause in Q3, after a strong Q2.

Fine tune estimates

We fine tune our FY12–14 EPS estimates by 3-4%, factoring in Q2

results and updated H2 outlook. Advanced substrates, advanced HDI

and FPCB should remain the key growth drivers in 2012–13. While we

are not convinced by the profitability of the Intel business, we do not

expect any financial impact from this investment (building construction

will not be ready until year end and revenue contribution will not come

till 2H13). Its valuation at 1x P/B/ 12x FY12 P/E looks fair. NEUTRAL.

Figure 2: Unimicron earnings revisions

2012E 2013E

(NT$ mn) New Old +/- (%) New Old +/- (%)

Sales 70,360 71,545 -2 76,423 79,229 -4

Gross profits 10,956 11,308 -3 12,427 12,964 -4

Gross margins (%) 15.6% 15.8% 16.3% 16.4%

Operating profits 5,771 6,407 -10 6,903 7,563 -9

Operating margin (%) 8.2% 9.0% 9.0% 9.5%

Net income 4,458 4,616 -3 5,441 5,643 -4

EPS (NT$) 2.90 3.00 -3 3.54 3.67 -4

Source: Company data, Credit Suisse estimates.

Figure 3: Unimicron’s rolling P/B band

0.5x

1x

1.6x

2x

0

20

40

60

80

Dec-

00

Dec-

01

Dec-

02

Dec-

03

Dec-

04

Dec-

05

Dec-

06

Dec-

07

Dec-

08

Dec-

09

Dec-

10

Dec-

11

NT$

Source: Company data, Credit Suisse estimates.

Bbg/RIC 3037 TT / 3037.TW

Rating (prev. rating) N (N)

Shares outstanding (mn) 1,538.61

Daily trad vol - 6m avg (mn) 7.8

Daily trad val - 6m avg (US$ mn) 9.3

Free float (%) 56.0

Major shareholders UMC (6%)

Price (25 Jul 12 , NT$) 34.15

TP (prev. TP NT$) 38.00 (38.00)

Est. pot. % chg. to TP 11

52-wk range (NT$) 55.0 - 28.1

Mkt cap (NT$/US$

mn)

52,543.4/ 1,740.8

Performance 1M 3M 12M

Absolute (%) 0.9 2.2 (36.5)

Relative (%) 3.5 9.5 (15.9)

Year 12/10A 12/11A 12/12E 12/13E 12/14E

Revenue (NT$ mn) 65,048 66,147 70,360 76,423 84,076

EBITDA (NT$ mn) 15,051 13,434 13,938 16,054 17,977

Net profit (NT$ mn) 7,116 5,010 4,458 5,441 6,084

EPS (NT$) 4.60 3.26 2.90 3.54 3.95

- Change from prev. EPS (%) n.a. n.a. (3) (4) (3)

- Consensus EPS (NT$) n.a. n.a. 2.93 3.69 4.11

EPS growth (%) 95.6 (29.2) (11.0) 22.0 11.8

P/E (x) 7.4 10.5 11.8 9.7 8.6

Dividend yield (%) 7.6 4.4 3.9 4.8 5.3

EV/EBITDA (x) 3.8 4.4 4.2 3.5 2.9

P/B (x) 1.1 1.1 1.0 1.0 0.9

ROE (%) 15.5 10.3 8.7 10.1 10.7

Net debt(cash)/equity (%) 8.7 12.4 12.7 6.9 0.1

Note 1: Unimicron Technology Corp. is principally engaged in the manufacture, processing &

distribution of printed circuit boards (PCBs) & integrated circuit (IC) substrates. It provides testing

& burn-in services of IC substrates & PCBs & the manufacture of LCD.

Thursday, 26 July 2012

Asian Daily

- 49 of 55 -

Thailand

Banpu ---------------------------------------------------------------------------- Maintain OUTPERFORM

Capex and volume cuts EPS: ▼ TP: ▼

Paworamon (Poom) Suvarnatemee, CFA / Research Analyst / 662 614 6210 / [email protected]

Wattana Punyawattanakul / Research Analyst / 66 2 614 6215 / [email protected]

● Banpu has guided down its volume target and capex budget. The

sales volume target is cut by 6% in FY12 and 11% in FY15. Fiveyear

capex budget during 2011-15 is cut by 30% from US$1.7bn.

● Management is still working on its mine plans. The biggest cut in

terms of tonnage in 2012 is to come from Hunnu, the development

of which would be delayed. The impact to our forecast is low as

we have never included Hunnu’s output in our forecast.

● Our earnings forecast is cut by 5.6% for FY12 and 4% for FY13 to

reflect volume and price cut in FY12 and volume cut in FY13. The

impact of a volume cut is less severe than that of a price cut. Our

net profit forecasts for FY12 and FY13 are 17% and 11% below

consensus respectively.

● On our EV-based SOTP target price (TP) for Banpu, the impact of

lower volume is offset partly by the improved net debt position due

to a lower capex plan. Our cut in TP to Bt553 (from Bt580) reflects

our lower TP for ITMG (Bt16) and earnings downgrade (Bt11).

Maintain OUTPERFORM.

Biggest volume cut at Hunnu

Management is still working on its mine plans. The biggest cut in

terms of tonnage in 2012 is to come from Hunnu, the development of

which would be delayed. Originally, Banpu had guided for Hunnu’s

volume to increase from 1 mn t in 2012 to 5 mn t in 2015. The impact

to our forecast is low as we have never included Hunnu’s output in our

forecast.

At ITMG, the 3% cut in 2012 reflects the cut in spot volume. The 2013

target, now being reviewed by management, is expected to fall to 28-

29 mn t compared to our earlier forecast of 29.5 mn t. Our new

forecast is now factoring in 28 mn t.

At CEY, the cut comes in the later part of the forecasting period as the

Newstan expansion project is delayed. We cut our forecast in FY14 by

11%. The cut in 2012 reflects production problems in Mandalong and

Springvale.

Figure 1: Assumptions revision

2012E 2013E 2014E

Sales volume - Indonesia (mn t) New 26.3 28.0 30.0

Old 27.0 29.6 32.0

% Chg -3% -5% -6%

Sales volume - Australia (mn t) New 15.2 16.2 15.9

Old 15.7 16.3 17.9

% Chg -3% -1% -11%

Sales volume - China (mn t)* New 2.0 2.9 3.3

Old 2.0 2.9 3.3

% Chg 0% 0% 0%

Benchmark prices (US$/t) 98.3 100.0 110.0

ASP-Indonesia (US$/t) New 92.4 82.1 83.5

Old 93.4 82.1 84.6

% Chg -1% 0% -1%

ASP-Australia (A$/t) New 73.4 74.6 78.5

Old 72.8 82.9 91.0

% Chg 1% -10% -14%

ASP-China (US$/t) New 95.2 109.5 113.6

Old 95.2 109.5 113.6

% Chg 0% 0% 0%

Net profit (Bt mn) New 11,484 12,270 13,937

Old 12,170 12,764 15,467

% Chg -6% -4% -10%

*Our forecast has never factored in Hunnu’s output, Source: Credit Suisse estimates.

Capex cut and delay biggest at CEY

Management cut its capex budget by 30%. For the remaining four

years of its five-year capex plan, Banpu has cut spending by

US$250mn at CEY by delaying the expansion of the Newstan project;

this results in our volume cut in FY14. For Hunnu, the cut (which is

partly factored into our forecast) reflects the delay in its development

plan until pricing situation, infrastructure development, and regulations

improve. For ITMG, the budget is cut by US$100mn to US$185mn by

delaying port expansion and overland conveyor at East Block.

Figure 2: Capex estimate from 2012-15 (four years)

Original Cut New Note

CEY 650 -250 400 Delay expansion of Newstan

Hunnu 400 -150 250 Delay project development

ITMG 285 -100 185 Delay port expansion and conveyor at East Block

Total 1,335 -500 835

Source: Credit Suisse estimates.

Earnings cut by 5.6%

Our earnings forecast is cut by 5.6% in FY12 and 4% in FY13 to

reflect the volume and price cut in FY12 and volume cut in FY13. The

impact of a volume cut is less severe than that of a price cut. Our

forecasts for FY12 and FY13 are 17% and 11% below consensus

respectively.

Target price cut to Bt553

On our EV-based SOTP TP for Banpu, the impact of lower volume is

offset partly by the improved net debt position due to a lower capex

plan. Our cut in TP to Bt553 (from Bt580) reflects our lower TP for

ITMG (Bt16) and earnings downgrade (Bt11). Maintain

OUTPERFORM. Its three-year CAGR of volume growth would be

lower from 9.7% earlier to a revised target of 7.7%.

Bbg/RIC BANPU TB / BANP.BK

Rating (prev. rating) O (O)

Shares outstanding (mn) 271.75

Daily trad vol - 6m avg (mn) 1.8

Daily trad val - 6m avg (US$ mn) 30.9

Free float (%) 70.0

Major shareholders Vongkusolkit Family

(24%)

Price (24 Jul 12 , Bt) 440.00

TP (prev. TP Bt) 553.00 (580.00)

Est. pot. % chg. to TP 26

52-wk range (Bt) 748.0 - 432.0

Mkt cap (Bt/US$ bn) 119.6/ 3.8

Performance 1M 3M 12M

Absolute (%) 0.5 (20.9) (40.9)

Relative (%) (3.0) (19.1) (46.7)

Year 12/10A 12/11A 12/12E 12/13E 12/14E

Revenue (Bt mn) 65,285 112,404 118,017 116,392 124,093

EBITDA (Bt mn) 12,901 33,436 28,767 26,357 27,699

Net profit (Bt mn) 24,728 20,060 11,484 12,270 13,937

EPS (Bt) 91.0 73.8 42.3 45.2 51.3

- Change from prev. EPS (%) n.a. n.a. (6) (4) (10)

- Consensus EPS (Bt) n.a. n.a. 49.7 51.9 59.4

EPS growth (%) 73.8 (18.9) (42.8) 6.9 13.6

P/E (x) 4.8 6.0 10.4 9.7 8.6

Dividend yield (%) 4.7 6.8 2.9 3.1 3.5

EV/EBITDA (x) 15.0 5.5 6.1 6.2 5.6

P/B (x) 2.0 1.6 1.4 1.3 1.2

ROE (%) 45.4 29.4 14.4 13.9 14.3

Net debt(cash)/equity (%) 106.6 73.6 58.5 43.1 31.1

Note1:Banpu Public Company Limited is a Thailand-based company engaged in the coal mining,

power and new energy businesses. The Company has operations in Thailand and overseas,

including Indonesia, China, and Australia..