When more interest in Davids…
Could you name which sectors that very few investors were interested in three
months ago, but are now outperforming nicely? Technology, commodity and
banks. Another one is D&G’s small-cap sector, which many small-cap analysts
have disappeared and stockbrokers do not bother to mention the research to
the investors. With the small caps having risen 38% and outperformed the MSCI
AxJ by 17% YTD, D&G gets more urgent enquiries on small caps everyday.
Riding on the small-cap rally, about one-third of D&G’s 20 Asia hidden jewels
recommended in February 2009 have surpassed our 12-month target prices. At
the same time, D&G is hearing an increasing number of manufacturers seeing a
slowdown in business momentum after the strong sequential rebound in 1Q09.
Although D&G is still a believer of a mid-term small-cap outperforming rally, he
has become cautious about the short-term share price performance of Asian
small caps. As a non-scientific judgment, the recent surge in market interest in
small caps is another sign that makes D&G be more cautious.
Picking small-cap multi-baggers is not as easy as a few months ago, but D&G
has identified some Davids, which we consider offer decent dividend with
undemanding valuation. They should provide some downside cushion but not
limit the potential upside in case of a volatile market, in our view.
The tales of Davids
Hong Kong
Techtronic – Refocus on profitability: reduce our forecasts and downgrade rating 9
China
Weigao – 1Q09 preview: takeaways from exhibition in Shenzhen and products launch in Weihai 17
Shanshui Cement – FY08 results summary – strong delivery driven by surge in unit profit 17
Xiamen Int’l Port – Though lease expensive, FY08 core operation below estimates 18
RexLot – FY08 core earnings meet expectations; scratch cards to drive further growth in 2009 18
Shanshui Cement – New report: FY08 results – strong FY08 firming up growth trend 19
CHST – FY08 results: improving outlook for wind equipment, but limited upside in the short term 19
JA Solar – Cheaper way to play China solar 20
ReneSola – Assuming coverage with NEUTRAL 20
Henan Pinggao – Disappointing 1Q09 results led by higher expenses 21
Hopson Development – Decent results, impressive sales and high earnings visibility 21
Mindray – 1Q09 Shenzhen medical equipment exports grew 23% YoY 22
New Oriental Education – Negative operating leverage in 3QFY09 well anticipated 22
China EB Int’l – Key takeaways from recent management update – upbeat outlook 23
Indonesia
United Tractors – March data reaffirm our view of stabilisation 30
Antam – To the the optimisation of FeNi III 30
Korea
Daelim Industrial – Strong petrochem margins drive a good result in 1Q09 34
CJ O Shopping – Valuation already appears to reflect the upcoming earnings upgrade potential 34
GS Home Shopping – Still too cheap 35
Megastudy – 1Q09 results: in line with expectations 35
S1 – Improvement in net subscriber add implies beginning of the new CEO effect 36
Sinagpore
Ascendas REIT – FY09 results in line: stellar results and accounts receivable management 50
Venture – New report: Still a defensive tech name 50
Frasers Centrepoint Trust – 2Q09 results: in line, testament to suburban mall resilience 51
Keppel Land – 1Q09 results: below forecasts; but balance sheet surprisingly strong 51
Taiwan
Unimicron – Best positioned for HDI growth in NB PC 57
Wistron – We are late for the party, wait for a better entry point 57
Cheng Shin – Anticipate market re-rating on good 4Q08 and potential strong 1Q09 results 58
Thailand
TISCO Financial – 1Q09 results beat our expectations 65
Bank of Ayudhya – 1Q09 results were much below our expectations 65
Airports of Thailand – Recent political violence further dampen near-term outlook 66