SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

25 July 2012

Regional

Daily

Top Views The Big Picture Tham Mun Hon P3 Defensive or Precariously Expensive?

- EPFR’s data and feedback from our recent client meetings suggest that overweighting consumer names in Asia ex-Japan, and ASEAN in particular, has become a consensus trade.

- Some consumer stocks have outperformed MSCI Indonesia by almost 50pp year to date. But, with the sell-side analysts already penciling in very robust earnings growth forecast, we see risks that these stocks may not enjoy similar gains in 2H12.

- We believe that a better trade in the short term are the cyclicals in industrials, materials and financials given the more attractive valuations. We would recommend rotating into Alam Sutra, Bank Rakyat Indonesia, Bukit Asam, Indocement and United Tractors.

TH: Thai Banking Sector Woraphon W 4 Play the laggards | OVERWEIGHT - The 2Q12 earnings show that growth momentum is still intact for Thai

banks. Post 2Q we maintain our positive stance on Thai banks with an expected 27% and 22% earnings growth for 2012-13F, respectively. As we roll over our price target to 2013 we still see over 20% upside.

- However we do not see any catalyst in the short term. For the recent outperformers, BAY, KBANK, SCB and BBL – they delivered strong earnings but were largely inline with expectations

- We recommend laggard stocks, KTB, TCAP and KK as these are the names that delivered earnings that beat market expectations. We see the earnings drivers as sustainable so we expect the market to re-rate earnings in due course.

VISIT NOTE Mcap USD1.0b ADTV USD0.4m MY: Sarawak Oil Palms (SOP MK) Ong Chee Ting 5 Energy | Hits Another Milestone | BUY | Upside 16% - Visit to Bintulu. An opportunity to view SOP’s newly completed

downstream operations has reaffirmed our bullish view on SOP’s execution ability and its potential to scale greater heights going forward.

- Its downstream endeavour is viewed as a strategic move amidst shortage of refinery capacity in Sarawak and upcoming peak production season.

- SOP continues to trade at an unjustifiable discount to its peers. Reiterate BUY with unchanged TP of MYR8.00 on 13x FY13 PER.

P K BASU pk.basu@maybank-ke.com.sg (65) 6432 1821 ONG Seng Yeow ongsengyeow@maybank-ke.com (852) 2268 0644 Jeremy TAN jeremytan@kimeng.com.hk (852) 2268 0635

Today’s Content… Country Regional The Big Picture Thailand Thai Banks Malaysia Sarawak Oil Palms Thailand SNC Former Indonesia Larsen & Toubro Philippines Property Sector Malaysia Plantation Sector

Top Buys… Company Ticker Spot Target Upside (%) Siam Makro MAKRO TB 337.00 478.00 41.84 Philex Mining Corp PX PM 21.65 30.61 41.39 Vinamilk VNM VN 87000.00 118000.00 35.63 LICHF LICHF IN 250.80 332.00 32.38 KLCC Property KLCC MK 4.87 6.38 31.01 SembMarine SMM SP 4.82 6.20 28.63 Yes Bank YES IN 341.75 434.00 26.99 China State Construction 3311 HK 7.46 9.45 26.68 Venture Corp VMS SP 7.62 9.65 26.64 Kiatnakin Bank KK TB 39.50 49.00 24.05 First Philippine Holdings FPH PM 78.90 97.80 23.95 B. Armada BAB MK 3.96 4.88 23.23

Top Sells… Company Ticker Spot Target Downside (%) Jai Prakash Associates JPA IN 73.90 47.00 36.40 GMA Network Inc GMAP PM 10.16 6.90 32.09 Ayala Land ALI PM 19.94 15.00 24.77 Uni-President 220 HK 7.42 5.60 24.53

Maybank-KE Events Date Event Location 25, 27 Jul Malaysia Oil & Gas, and Petrochem analysts

marketing SG

26 Jul Malaysia Oil & Gas, and Petrochem analysts marketing

HK

25 July 2012

Regional Daily

Company Notes INITIATION | SMID CAPs Mcap USD243m ADTV USD0.3m TH: SNC Former (SNC TB) Pongrat R 6 Industrials | A Cash Cow but no Catalyst | HOLD | Upside 10.5% - SNC is one of the few OEM producers in Thailand that enjoys consistent

profitability mainly because of economies of scale and strong bargaining power in buying raw materials mainly, copper.

- However, its 3-yr forward earnings CAGR is only 12.5%pa due to molding change and the AC/compressor industry adjusting post flood.

- At 1x PEG, our 12mth fair value for SNC is Bt29. With a potential upside of 10.5% plus the prospective yield, TR could be 15.5%. Initiate HOLD

- SNC has been a SET laggard for awhile now but we don’t see scope for a sustained share price rally. Nonetheless its 4.5-5.0% yield in 2012/13 should cushion downside risk.

1Q13 RESULTS Mcap USD14.8b ADTV USD9.3m IN: Larsen & Toubro (LT IN) Anubhav Gupta 7 Industrials | ROE erosion to bring about de-rating | Sell | Downside 29% - 1Q recurring profit of Rs7.6bn (unchanged YoY) was 7% below

consensus estimate as EBITDA margin suffered owing to execution of low-margin civil work.

- The solid order inflow of 1Q (+20% YoY) may not repeat as majority of the orders comprised spillover from FY12.

- For FY13, we expect profit to decline 15%, which would make the stock expensive at current PER of 21.2x FY13F. We expect ROE to decline to 12.2% from the historic 3-yr avg of 20%.

PH: Property Sector Kenneth Nerecina 8 Focus on FTI Bid - We looked at the cash and leverage levels of the seven developers that

joined the pre-bid conference last week for the sale of the government’s lots totaling 74 hectares at the Food Terminal Inc, a 120-hectare agro-industrial commercial complex

- We think the bids will probably range between PHP15b (PHP20,000/sqm) and PHP20b (PHP27,000/sqm) compared with a base price of PHP10.25b (roughly PHP13,784/sqm)

- Among the seven developers, Ayala Land Inc (ALI) has the most cash and net D/E of 0.20x. However, Empire East Land Holdings Inc (ELI) has the backing of Megaworld Corp (MEG), which is cash-rich. And SM Land Inc clearly has the backing of parent SM Investments Corp (SM)

- On the other hand, we aren’t sure if the perennial issue about existing long-term lease contracts that cover parts of FTI is or has already been resolved. This could just turn out to be another flop.

MY: Plantation Ong Chee Ting 9 Soy’s Lonely Rally | NEUTRAL - The 23% rally in 3M soybean prices since early June was driven by the

worst drought in the US since 1988. But soyoil prices (+8%) have lagged, and so have prices of palm (+0%) and rapeseed (+2%) oil.

- While soyoil price has further upside should soybean crop prospects worsen, palm oil’s discount to soyoil is likely to stay high given that upcoming high production months for palm oil.

- We maintain our Neutral view on the sector over the next 12 months. Our preferred BUYs are the high production growth stocks: First Resources, Sarawak Oil Palms, Ta Ann. Wilmar remains a SELL.

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Regional Market Strategy 25 June 2012

The Big Picture Defensive or Precariously Expensive? The spin. A young population and rising household income in emerging ASEAN have been the bedrocks of economic growth in the ASEAN region as a whole for the past decade. Foreign fund inflows into Thailand, Indonesia and the Philippines amounted to USD4.2b in 1H12, compared to USD6.3b for the full year of 2007.

Growth priced in. In this report, we focus on Indonesia, where some consumer stocks have outperformed MSCI Indonesia by almost 50pp year to date. But, with the sell-side analysts already pencilling in very robust earnings growth forecast, we see risks that these stocks may not enjoy similar gains in 2H12. Moreover, the income inequality and tighter requirements on auto and housing loans could keep a lid on future household spending growth.

Valuation is demanding. EPFR’s data and feedback from our recent client meetings suggest that overweighting consumer names in Asia ex-Japan, and ASEAN in particular, has become a consensus trade. With many domestic oriented consumer stocks trading at >20x 12m forward PER, we believe that the sector is priced to perfection. Thus within the consumer space, we prefer consumer staples due to their relatively cheaper valuations and better pricing power; we have BUY calls on Indofood CBP and CP Indonesia.

Cyclicals beckon. Investors looking for stocks in defensive sectors can consider rotating into laggard names like Indosat, but a better trade in the short term are the cyclicals in industrials, materials and financials given the more attractive valuations. We would recommend rotating into Alam Sutra, Bank Rakyat Indonesia, Bukit Asam, Indocement and United Tractors.

Figure 1: Consumer sector earnings growth is slowing (%)

Source: Bloomberg, Maybank-KE

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Consumer staples trailing EPS Consumer discretionary trailing EPSNominal retail sales (3mma)

THAM Mun Hon, CFA thammunhon@kimeng.com.hk (852) 2268 0630 Jeremy Tan jeremytan@maybank-ke.com.hk (852) 2268 0635

Maybank Kim Eng Securities (Thailand) is a subsidiary of Malayan Banking Berhad SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

25 July 2012

Thailand

Sector Update

Banking Sector 2Q12 results…Play the laggards KTB, TCAP and KK are top picks: The 2Q12 earnings shows growth momentum intact for the Thai banks. KK, TCAP and KTB beat market estimates. We maintain our positive stance on Thai banks with an expected 27% and 22% earnings growth for 2012-13F, respectively. We recommend laggard stocks, KTB, TCAP and KK as sector play. 2Q12 results recap – a great quarter: The nine banks under our coverage reported aggregated 2Q12 earnings of Bt44.1bn, up 8% qoq and 24% yoy. BBL, KTB, KBANK, BAY and TISCO posted new record highs. KK, TCAP and KTB showed better-than-expected results. The sector outperformers BAY, KBANK, BBL, and SCB reported earnings that were inline. Overall, loans growth continued in a clip pace and NIMs remaining resilient as well as the fee and Non-NII growth. Cost-to-income ratios remained under control with a decline in tax expenses. However, credit costs did increase in tandem with the strong loan growth. Management’s held firm to conservative stance of continuing to decrease NPLs. Outlook for 2H12F and 2013F: We remain positive on the loan growth outlook, forecasting 14% this year with a pace accelerating in 2H12F due to seasonality. The improving NIMs should continue as pricing power moved remained with the banks amidst tightening liquidity. However, deposit competition could pressure funding costs in 2H12F. Fee income growth is expected at 17%, tracking loan expansion trends and buoyant business activity. We forecast PPOP growth of 13% this year, while corporate tax reduction to 23% will be a fillip bringing total net profit growth to 27%. The earnings growth trajectory will accelerate in 3Q before slowing in 4Q – as per seasonality. For 2013F, we forecast 22% earnings growth underpinned by continuing loan expansion, improving NIM and further reduction in tax rate at 20%. Play the laggards. We maintain our positive view on the banks’ fundamentals with the momentum in loan growth continuing, driving earnings while keeping balance sheets solid. As we rollover our target prices to 2013, we see over 20% upside potential. However, we do not see any short-term catalyst post results except for those banks beating market estimates: KTB, KK, TISCO and TCAP. We expect the market to upgrade the earnings forecast on these names. We choose KTB, TCAP and KK as our top picks on good earnings momentum, cheap valuations and share price underperformance. For the recent outperformers, BAY, KBANK, SCB and BBL, we recommend an accumulate-on-a-dip strategy for medium/long term investment. Key stock highlights Price as of: Current Target Upside 2012F 20 Jul 12 Mkt cap Price Price +/- P/BV P/UP PER Yield ROE Stock Rec (Btbn) (Bt) (Bt) (%) (x) (x) (x) (%) (%) BAY Buy 192.9 31.75 38.0 20 1.72 6.5 13.2 3.1 13.6 BBL Buy 363.6 190.50 232.0 22 1.37 7.1 10.8 3.7 13.2 KBANK BoW 386.5 161.50 200.0 24 2.12 6.9 11.1 2.2 20.7 KK Buy 24.9 39.25 49.0 25 1.02 4.8 8.4 5.1 11.5 KTB Buy 182.3 16.30 23.0 41 1.25 4.8 8.1 4.3 16.4 SCB BoW 511.6 150.50 190.0 26 2.38 8.5 12.2 2.7 20.8 TCAP Buy 41.3 31.00 41.0 32 0.93 2.5 6.6 4.5 14.9 TISCO Buy 28.0 38.50 49.0 27 1.55 4.8 7.9 6.4 20.7 TMB Hold 66.6 1.53 1.64 7 1.20 8.7 14.2 2.3 8.7 Source: Company reports and KELIVE Research estimates.

OVERWEIGHT (unchanged) Sector Index : 465.82 SET Index : 1,208.55 Woraphon Wiroonsri, CFA Woraphon.w@maybank-ke.co.th (02) 658-6300 Maria Lapiz Maria.l@maybank-ke.co.th +662-257-0250 Rating Target Price Upside BAY Buy 38.0 19.7% BBL Buy 232.0 21.8% KBANK BoW 200.0 23.8% KK Buy 49.0 24.8% KTB Buy 23.0 41.1% SCB BoW 190.0 26.2% TCAP Buy 41.0 32.3% TISCO Buy 49.0 27.3% TMB Hold 1.64 7.2%

Historical Chart

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Performance 52-week High/Low Bt480.79/Bt317.16 1-mth 3-mth 6-mth 1-yrs YTD Absolute (%) 3.7 1.5 23.2 10.0 23.9 Relative (%) 0.6 0.3 8.4 0.5 5.1

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Company Update 25 July 2012

PP16832/01/2013 (031128)

Malaysia

Sarawak Oil Palms Hits Another Milestone

Visit to Bintulu. An opportunity to view SOP’s newly completed downstream operations has reaffirmed our bullish view on SOP’s execution ability and its potential to scale greater heights going forward. Its downstream endeavour is viewed as a strategic move amidst shortage of refinery capacity in Sarawak and upcoming peak production season. SOP continues to trade at an unjustifiable discount to its peers. Reiterate BUY with unchanged TP of MYR8.00 on 13x FY13 PER.

Up and running. We visited SOP’s newly constructed refining and fractionation plants, and palm kernel crushing plant (PKCP) in Bintulu, which were commissioned in June 2012 with minor hiccups. SOP has exported its first batch of refined products to Bangladesh. SOP expects the plants to be in commercial operation by Aug 2012. It is strategically timed in conjunction with the high FFB crop season in 2H12 and to alleviate the shortage in refining capacity in Sarawak.

No earnings impact for 2012. Built at a cost of c.MYR200m, we have assumed a breakeven scenario in its first year of operation (given the potential operational hiccups as with any new investments). In 2013-14, we expect SOP’s downstream to contribute MYR26m- MYR29m respectively (6-7%) to EBIT (assuming MYR70/t refining margin).

Plantation growth remains bullish. SOP posted 1H12 FFB production of 355,876 tonnes (-2% YoY), which met just 38% of our previous 2012 forecast due to tree stress. Management guides for a stronger 2H12 production outlook judging from the fruit formations on the oil palm trees (coupled with ~9,500 ha coming into maturity throughout 2012). Despite trimming our 2012 FFB forecast by 4%, we still expect SOP to produce a decent ~11% FFB growth for 2012.

Maintain BUY. Buoyed by its consistent planting and young oil palm trees of 8 years, SOP will still deliver 13% 3-year CAGR for 2011-14, we estimate. Its current valuation remains relatively cheap compared to peers, with its EV/planted ha of c.MYR49,000 at a c.27% discount to its peer average despite its better growth prospects. Following the adjustment to our FFB assumption, we lower our 2012’s net profit estimate by 6% while 2013-14 remain unchanged.

Sarawak Oil Palms– Summary Earnings Table Source: Maybank IB FYE: Dec (MYR m) 2010A 2011A 2012F 2013F 2014F Revenue 728.2 1,166.3 1,158.6 1,181.0 1,310.4 EBITDA 278.2 428.4 404.3 475.4 536.4 Recurring Net Profit 151.5 242.9 224.1 267.0 295.6 Recurring Basic EPS (cents) 35.3 56.0 51.6 61.5 68.0 EPS growth (%) 51.2% 58.9% (8.0)% 19.2% 10.7% DPS (cents) 3.0 3.8 3.8 3.8 3.8 PER 19.6 12.3 13.4 11.2 10.1 EV/EBITDA (x) 10.4 6.8 7.2 5.8 4.8 Div Yield (%) 0.4 0.5 0.5 0.5 0.5 P/BV(x) 3.0 2.5 2.1 1.8 1.5 Net Gearing (%) NA NA NA NA NA ROE (%) 16.8% 22.2% 17.0% 17.3% 16.3% ROA (%) 9.8% 13.1% 10.3% 11.1% 10.9% Earnings Revision (%) - - (6.3) - - Consensus Net Profit (MYR m) - - 241.0 297.0 -

BUY (unchanged) Share price: MYR6.90 Target price: MYR8.00 (unchanged) Ong Chee Ting, CA ct.ong@maybank-ib.com (603) 2297 8678 Chai Li Shin lishin.c@maybank-ib.com (603) 2297 8684

Stock Information Description: Pure Sarawak plantation player with milling and downstream operation. (Planted land 2010 = 58,940 ha) Ticker: SOP MK Shares Issued (m): 436.3 Market Cap (MYR m): 3,010.2 3-mth Avg Daily Turnover (USD m): 0.42 KLCI: 1,632.57 Free float (%): 35.2 Major Shareholders: % SHIN YANG HOLDING SD 29.0 PELITA HOLDINGS SDN 28.6 Datuk Ling Chiong Ho 7.1 Key Indicators Net cash / (debt) (MYR m): 42.5 NTA/shr (MYR): 2.89 Net gearing (x): (0.0)

Historical Chart

Performance: 52-week High/Low MYR7.04/MYR3.72 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) 10.2 3.0 75.6 67.9 23.4 Relative (%) 8.4 0.0 56.1 63.2 16.8

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SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Initiating Coverage 25 July 2012

Thailand

SNC Former Plc A cash cow but no catalyst

Initiate with HOLD with a 12m price target of Bt29: SNC is one of the few OEM producers in Thailand that enjoys consistent profitability mainly because of economies of scale. Its high volume base lends bargaining power in buying raw materials mainly, copper. However, its 3-yr forward earnings CAGR is only 12.5%pa due to molding change and the AC/compressor industry adjusting post flood. At 1x PEG, SNC’s fair value is Bt29 (rounded off) – our 12mth price target. With a potential upside of 10.5% plus the prospective yield, TR could be 15.5%. Thus, we initiate coverage with a HOLD rating. SNC has been a SET laggard for awhile now but we don’t see scope for a sustained share price rally. Nonetheless its 4.5-5.0% yield in 2012/13 should cushion share price.

Strong customer base: SNC’s customer list is comprised of the major players in the auto and residential AC parts such as Toyota, Mitsubishi, Sanyo, Toshiba, LG Electronics & Fujitsu. Based on installed capacity we estimate its market share to be around 50-55%.

Growing demand: AC manufacturing from both industries have been growing 4.0-7.8% in the last five years driven by domestic demand and increasing exports with Thailand fast becoming a regional production hub. This year auto AC could be growing faster because of the high production target, 2.2mn units in FY12, up 50.9% YoY.

Risks: First risk is copper price—it accounts for 90% of production costs. Thus far, SNC has been able to pass on the increases in copper costs equivalent to 90% of revenues but there is no guarantee that this will be so for always. Size could help. With ~Bt9bn revenues, SNC is one of the largest local buyers of copper and this gives it some purchasing power. Second risk is the excise tax planned to be levied on ACs. If approved, affordability of ACs could be negatively impacted raising the potential for a drop in orders for SNC’s parts. In this aspect, SNC is most vulnerable in OEM for local use, which is about 40% of total AC production.

SNC - Summary Earnings Table

FY ends Dec 31 (Btm) 2010A 2011A 2012F 2013F 2014F Revenue 8,267 8,349 7,796 8,845 9,825 EBITDA 636 736 829 923 1,057 Recurring earnings 381 520 583 641 741 Recurring Basic EPS 1.3 1.8 2.0 2.2 2.6 EPS Growth (%) 177.1 36.1 12.0 9.8 15.6 DPS (Bt) 1.0 1.6 1.2 1.3 1.5 PER (x) 14.0 12.1 13.1 11.9 10.3 EV/EBITDA (x) 9.6 9.1 9.8 8.7 7.6 Div Yield (%) 5.4 7.3 4.6 5.0 5.8 P/BV (x) 3.0 3.3 3.6 3.2 2.8 Net Gearing (%) Net cash Net cash Net cash Net cash Net cash ROE (%) 21.1 26.8 27.5 26.8 27.3 ROA (%) 11.0 16.8 16.2 16.3 16.5 Consensus Net Profit

616.0 651.0 Na

Closing price: July 23. Source: Institutional Research, MBKET

HOLD Share price: Bt26.25 Target price: Bt29.00 (initiation) Pongrat Ratanatavanananda Pongrat.R@maybank-ke.co.th (662) 658 6300 ext 1398 Stock Information Description: SNC Former Plc (SNC) is one of the leading OEM producers of air-condition parts for autos and houses, including compressor parts. SNC was listed in October 2004. Ticker: SNC. TB Shares Issued (m): 287.8 Market Cap (US$ m): 243.9 3-mth Avg Daily Turnover (US$ m): 0.301 SET Index: 1214.3 Free float (%): 22 Major Shareholders: % Thaisanguanvorakul family 31.6 Asia Investment Partners Limited 17.4 Key Indicators ROE – 2013 (%) 26.8 Net Gearing (%): Net cash NTA/shr (Bt): 8.31 Interest cover (x): Not applicable

Historical Chart

Performance: 52-week High/Low Bt32.00/Bt13.50 1-mth 3-mth 1-yr YTD Absolute (%) 9.8 -12.5 -9.5 19.9 Relative (%) 6.5 -12.1 -14.6 4.3 Closing price: July 23

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

1Q13 RESULTS 25 July 2012

India

Larsen & Toubro (LT) ROE erosion to bring about de-rating

Earnings disappointment started in Q1. Q1 recurring profit of Rs7.6bn (unchanged YoY) was 7% below consensus estimate as EBITDA margin suffered owing to execution of low-margin civil work. The solid order inflow of Q1 (+20% YoY) may not repeat as majority of the orders comprised spillover from FY12. For FY13, we expect profit to decline 15%, which would make the stock expensive at current PER of 21.2x FY13F. We expect ROE to decline to 12.2% from the historic 3-yr avg of 20%. Maintain SELL. Q1 order inflow performance was an aberration. In Q1, LT secured orders worth Rs196bn, +20% YoY. Out of this, 65% came from low-margin civil work as against the trend of 40% in the past. This shows that company is compromising EBITDA margin to fill in the order book. Q1 orders were high also due to slippages in FY12 orders, which created a low base. LT’s guidance of 15-20% revenue growth for FY13 is highly optimistic. A sudden pickup in construction pace in Q1, which boosted revenue unexpectedly, is an aberration as LT’s backlog is fast dwindling: backlog-to-sales ratio is down 25%. We maintain our FY13 revenue growth forecast of 6% as Q1 forms just 17% of full-year revenue forecast. EBITDA margin would continue to suffer. Q1 margin declined 150bp YoY to 10.4% as LT executed low-margin contracts. With civil contracts comprising 50% of LT’s backlog (vs. 38% in past), the EBITDA margin will continue to decline. For full-year, we expect margin to decline 290bp to 10.7%. Q1 net was boosted by high other income. In Q1, LT earned Rs6bn from treasury gains/dividend income vs. an expected Rs3.5bn. The company also incurred notional FX loss of Rs1.6bn due to INR depreciation. After adjusting these items, we estimate that LT’s Q1 recurring profit was unchanged YoY at Rs7.6bn (vs net increase of 15%). We forecast FY13 recurring profit to decline 15% on slowdown in revenue growth and decline in EBITDA margin. Maintain TP of Rs962/sh and SELL recommendation We expect LT’s ROE to decline to 12.2% in FY13 from its historical avg of 20% due to profit decline and low returns on build-operate-transfer (BOT) projects. Our sum-of-the-parts based TP of Rs962/sh factors in LT’s investments in other businesses. However, in the current economic scenario, unlocking of value of its investments appears extremely difficult.

LT – Summary Earnings Table FY Mar 31 (Rs bn) FY10 FY11 FY12 FY13F FY14F Revenue 439.7 520.9 643.1 685.9 733.9 EBITDA 63.7 76.9 87.7 73.4 78.6 Recurring Net Profit 33.3 43.9 46.4 39.0 41.1 Recurring Basic EPS (Rs) 55.2 72.0 76.2 64.0 67.5 EPS growth (%) 10 30 6 -16 6 DPS (Rs) 12.5 14.5 16.5 18.2 20.0 PER (x) 24.5 18.8 17.8 21.2 20.1 EV/EBITDA (x) 19.0 16.8 15.6 11.2 10.5 Div Yield (%) 0.9 1.1 1.2 1.3 1.5 P/BV(x) 3.9 3.3 2.8 2.6 2.4 Net Debt/Equity (%) 92.1 116.5 131.2 145.8 156.7 ROE (%) 26.0 17.8 16.0 12.2 11.9 ROA (%) 7.7 4.7 3.9 3.0 2.9 Consensus Net Profit (Rs bn) - - - 51.5 57.3

Source: Company data, Bloomberg, KESI estimates

SELL (unchanged) Share price: Rs1,355sh Target price: Rs962/sh (unchanged) Anubhav Gupta anubhav@maybank-ke.co.in (91) 22 66232605

Stock Information Description: LT is country's largest private contractor involved in building roads, railways, power and oil & gas and urban infrastructure. The construction business accounts for 72% of revenue. Balance comes from industrial & electrical equipment manufacturing, financing and IT businesses. Ticker: LT IN Shares Issued (m): 609 Market Cap (US$ bn): 14.8 6-mth Avg Daily Volume (US$m): 9.3 SENSEX: 16,918 Free float (%): 87.8 Major Shareholders: % Life Insurance Corporation of India 18.03 L&T Employees Welfare Foundation 12.2 Unit Trust of India 8.2

Key Indicators (FY13F) ROE – annualised (%) 12.2 Net debt (Rs bn): 466.7 NTA (Rs/sh): 525.6 Interest cover (x): 2.3

Historical Chart

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Performance: 52-week High/Low Rs1,864/971 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) 0.9 9.5 7.6 -25.8 36.3 Relative (%) 1.5 10.8 6.8 -15.2 27.5

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Philippines Sector Update 25 July 2012

Property sector Focus on FTI bid

What’s for sale? The Food Terminal Inc (FTI) is a 120-hectare agro-industrial commercial complex located about 2.4 km north of Bicutan Interchange, 2.3 km southeast of the Fort Bonifacio overpass and about 4.4 km southeast of EDSA. FTI complex is a mixture of commercial, residential, industrial districts and community centers within a five-kilometer radius. After failed biddings during the past three years (the main issue being the long-term lease contracts that cover parts of FTI), the government’s Privatization and Management Office (PMO) early this month issued a public bid invitation for the sale of certain FTI commercial/industrial lots with an aggregate area of 74 hectares on an “as-is-where-is” basis and as one whole lot. The base price is almost PHP10.25b (roughly PHP13,784/sqm), which may be paid in cash or in installments, provided that: (1) upfront payment of at least PHP2.2b is made on closing date, (2) full payment is made on or before 30 Jan 2016 and (3) minimum NPV of the bid is almost PHP8.1b. Big-name developers joined the pre-bid conference. Last week the following property developers joined the pre-bid conference: (1) Robinsons Land Corp (RLC – HOLD), (2) Empire East Land Holdings Inc (ELI – Not rated), (3) Ayala Land Inc (ALI – SELL), (4) Rockwell Land Corp (ROCK – Not rated), (5) Century Properties Group Inc (CPG – Not rated), (6) SM Land Inc and (7) Filinvest Land Inc (FLI – HOLD). Submission and opening of the bids will be held on 8 Aug 2012. The bidders were asked to pay PHP500,000 each consisting of a non-refundable participation fee of PHP250,000 and a due diligence fee of PHP250,000. Bidders are also required to submit a bid deposit of PHP500m. FTI vs other mixed-use projects. While smaller than some mixed-use development projects such as those developed by ALI (Nuvali) and the Filinvest group (Filinvest Alabang), FTI with the 74 hectares being offered is probably most comparable to MEG’s Eastwood City (18 hectares), Newport City (25 hectares), and Mckinley Hill (50 hectares). We think the bids will probably range between PHP15b (PHP20,000/sqm) and PHP20b (PHP27,000/sqm). Anything higher than PHP20b is too much, we think. Who’s got the cash? Looking at cash levels (based on latest 17Q disclosures), ALI beats the other six developers that are interested in FTI. ALI has PHP21.8b cash and net D/E of 0.20x. SM Land has its parent firm SM Investments Corp (SM – Not rated) to rely on with cash of PHP37.3b. FLI, ELI, ROCK and CPG are at the bottom of the cash rung. MEG is likely to back up ELI given the former’s net cash position and PHP30.5b cash. FLI just had a PHP7b bond offering last month. Based on financial capability, we think CPG and ROCK are least likely to win the bid. While RLC is financially capable, it might focus more on striking a deal with Japan-based Universal Entertainment Corp through subsidiary Tiger Resorts, Leisure and Entertainment Inc for potential gaming-related property investment opportunities. Of course, one could overbid for the FTI property and worry about raising capital later. On the other hand, we aren’t sure if the perennial issue about existing long-term lease contracts that cover parts of FTI is or has already been resolved. This could just turn out to be another flop.

Neutral (unchanged) Kenneth Nerecina Kenneth_Nerecina@maybank-atrke.com (632) 849 8839

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Sector Update 25 July 2012

PP16832/01/2013 (031128)

Regional

Plantation Soy’s Lonely Rally

Other oil prices have yet to follow. The 23% rally in 3M soybean prices since early June was driven by the worst drought in the US since 1988. But soyoil prices (+8%) have lagged, and so have prices of palm (+0%) and rapeseed (+2%) oil. While soyoil price has further upside should soybean crop prospects worsen, palm oil’s discount to soyoil is likely to stay high given that upcoming high production months for palm oil. We maintain our Neutral view on the sector over the next 12 months. Our preferred BUYs are the high production growth stocks: First Resources, Sarawak Oil Palms, Ta Ann. Wilmar remains a SELL.

Soybean crop conditions worsen. Yesterday, the USDA said that US soybean crop conditions had worsened for the seventh consecutive week. Crop conditions for soybeans have declined to their lowest since 1988; only 31% of planted area nationwide is rated “good or excellent” (against 65% at the start of the season and 62% a year ago), and 35% is rated “poor or very poor” (against 6% at the start of the season and 11% a year ago). This is reflected in the 23% rally in 3M soybean prices since early June to an unprecedented high of USD15.82/bu. Meanwhile, soy meal prices jumped 30% and soyoil rose 8%.

Bullish factors for CPO. (i) Soyoil’s premium to CPO has widened to USD251/t (23 Jul; 3M CPO price at USD2,990/t) vs. a 5-year historical average of USD168/t. This should encourage substitution from soyoil to palm oil, but buyers may also consider switching from soyoil to rapeseed oil as soyoil’s discount to rapeseed oil has narrowed to USD24/t (5-year average: USD131/t). (ii) If US crop conditions worsen in the coming 2-3 weeks, there will be further upside to soyoil, which may lift CPO price as well.

Bearish factors for CPO. (i) Palm oil is entering seasonally high production months, which will ensure ample supply. (ii) Recent changes in India’s import taxes on refined palm oil are likely to disrupt trade flow in the short term. (iii) Soybean prices at unprecedented highs will encourage farmers in South America to plan even bigger soybean planting areas in 4Q12, which should see soybean prices ease by then.

The missing elements for a convincing CPO price rally are: (i) the absence of a rally in crude oil prices (in the 2008 commodity price rally, Brent crude prices hit a peak of USD143/bbl vs. USD103/bbl on 23 Jul), and (ii) the return of a strong El Niño. Recent SOI readings by the Australian Bureau of Meteorology suggests a diminishing threat in recent days, after indicators turned neutral (see overleaf).

Neutral on a 12M view. We retain our average CPO ASP forecasts of MYR3,150/t for 2012 (6M2012: MYR3,200/t), and MYR3,000/t (2013-14). We maintain our Neutral sector weighting on a 12M view, with key risks to our view being: (i) a worsening eurozone crisis impacting the global economy (negative for CPO prices) and (ii) monetary easing in the eurozone and/or the US (positive for prices).

Neutral (unchanged) Ong Chee Ting, CA ct.ong@maybank-ib.com (603) 2297 8678 Chai Li Shin lishin.c@maybank-ib.com (603) 2297 8678 Pandu Anugrah panugrah@kimeng.co.id (62) 21 2557 1137 James Koh jameskoh@maybank-ke.com.sg (65) 6432 1431 Regional CPO price forecast 2012 2013 MYR/t MYR/t Full year average (FOB) 3,150 3,000

MDEX:

3M CPO price (24 Jul) 2,926

Regional Plantation coverage Company Rec Price TP Upside Malaysia listed MYR MYR % Sime Darby Hold 9.93 10.80 8.8

IOI Corp Hold 5.30 5.38 1.5

KL Kepong Hold 23.70 21.10 -11.0

Gent Plant Hold 9.50 9.10 -4.2

Swk Oil Palms Buy 6.90 8.00 15.9

TSH Res Hold 2.63 2.50 -4.9

Ta Ann Buy 4.80 6.25 30.2

TH Plant Hold 2.51 2.45 -2.4

Singapore listed SGD SGD % Wilmar Sell 3.59 3.25 -9.5

First Resources Buy 2.00 2.15 7.8

Indonesia listed IDR IDR % Astra Agro Hold 22150 18000 -18.7

London Sumatra Buy 2875 3000 4.3

25 July 2012

Regional Daily

RESEARCH OFFICES REGIONAL

P K BASU Regional Head, Research & Economics (65) 6432 1821 pk.basu@maybank-ke.com.sg

WONG Chew Hann, CA Acting Regional Head of Institutional Research (603) 2297 8686 wchewh@maybank-ib.com

THAM Mun Hon Regional Strategist (852) 2268 0630 thammunhon@kimeng.com.hk

ONG Seng Yeow Regional Products & Planning (852) 2268 0644 ongsengyeow@maybank-ke.com.sg

ECONOMICS Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 suhaimi_ilias@maybank-ib.com

Luz LORENZO Economist Philippines | Indonesia (63) 2 849 8836 luz_lorenzo@maybank-atrke.com

MALAYSIA WONG Chew Hann, CA Head of Research (603) 2297 8686 wchewh@maybank-ib.com Strategy Construction & Infrastructure Desmond CH’NG, ACA (603) 2297 8680 desmond.chng@maybank-ib.com Banking - Regional LIAW Thong Jung (603) 2297 8688 tjliaw@maybank-ib.com Oil & Gas Automotive Shipping ONG Chee Ting (603) 2297 8678 ct.ong@maybank-ib.com Plantations Mohshin AZIZ (603) 2297 8692 mohshin.aziz@maybank-ib.com Aviation Petrochem Power YIN Shao Yang, CPA (603) 2297 8916 samuel.y@maybank-ib.com Gaming – Regional Media Power WONG Wei Sum, CFA (603) 2297 8679 weisum@maybank-ib.com Property & REITs LEE Yen Ling (603) 2297 8691 lee.yl@maybank-ib.com Building Materials Manufacturing Technology

LEE Cheng Hooi Head of Retail chenghooi.lee@maybank-ib.com Technicals

HONG KONG / CHINA Edward FUNG Head of Research (852) 2268 0632 edwardfung@kimeng.com.hk Construction Ivan CHEUNG (852) 2268 0634 ivancheung@kimeng.com.hk Property Industrial Ivan LI (852) 2268 0641 ivanli@kimeng.com.hk Banking & Finance Jacqueline KO (852) 2268 0633 jacquelineko@kimeng.com.hk Consumer Staples Andy POON (852) 2268 0645 andypoon@kimeng.com.hk Telecom & equipment Alex YEUNG (852) 2268 0636 alexyeung@kimeng.com.hk Industrial Jacky WONG, CFA (852) 2268 0107 jackywong@kimeng.com.hk Special Situations Quants Anita HWANG, CFA (852) 2268 0142 anitahwang@kimeng.com.hk Consumer Discretionaries Special Situations

INDIA Jigar SHAH Head of Research (91) 22 6623 2601 jigar@kimeng.co.in Oil & Gas Automobile Cement Anubhav GUPTA (91) 22 6623 2605 anubhav@kimeng.co.in Metal & Mining Capital goods Property Haripreet BATRA (91) 226623 2606 haripreet@kimeng.co.in Software Media Ganesh RAM (91) 226623 2607 ganeshram@kimeng.co.in Telecom Contractor Darpin SHAH (91) 226623 2610 darpin@kimeng.co.in Banking & Financial Services Gagan KWATRA (91 )226623 2612 gagan@kimeng.co.in Small Cap

SINGAPORE Stephanie WONG Head of Research (65) 6432 1451 swong@maybank-ke.com.sg Strategy Small & Mid Caps Gregory YAP (65) 6432 1450 gyap@maybank-ke.com.sg Technology & Manufacturing Telcos - Regional Wilson LIEW (65) 6432 1454 wilsonliew@maybank-ke.com.sg Hotel & Resort Property & Construction James KOH (65) 6432 1431 jameskoh@maybank-ke.com.sg Logistics Resources Consumer Small & Mid Caps YEAK Chee Keong, CFA (65) 6433 5730 yeakcheekeong@maybank-ke.com.sg Healthcare Offshore & Marine Alison FOK (65) 6433 5745 alisonfok@maybank-ke.com.sg Services S-chips Bernard CHIN (65) 6433 5726 bernardchin@maybank-ke.com.sg Transport (Land, Shipping & Aviation) ONG Kian Lin (65) 6432 1470 ongkianlin@maybank-ke.com.sg REITs / Property WeiBin (65) 6432 1455 weibin@maybank-ke.com.sg S-chips Small & Mid Caps

INDONESIA Katarina SETIAWAN Head of Research (62) 21 2557 1125 ksetiawan@kimeng.co.id Consumer Strategy Telcos Lucky ARIESANDI, CFA (62) 21 2557 1127 lariesandi@kimeng.co.id Base metals Coal Oil & Gas Rahmi MARINA (62) 21 2557 1128 rmarina@kimeng.co.id Banking Multifinance Pandu ANUGRAH (62) 21 2557 1137 panugrah@kimeng.co.id Auto Heavy equipment Plantation Toll road Adi N. WICAKSONO (62) 21 2557 1130 anwicaksono@kimeng.co.id Generalist Anthony YUNUS (62) 21 2557 1134 ayunus@kimeng.co.id Cement Infrastructure Property Arwani PRANADJAYA (62) 21 2557 1129 apranadjaya@kimeng.co.id Technicals

PHILIPPINES Luz LORENZO Head of Research +63 2 849 8836 luz_lorenzo@maybank-atrke.com Strategy Laura DY-LIACCO (63) 2 849 8840 laura_dyliacco@maybank-atrke.com Utilities Conglomerates Telcos Lovell SARREAL (63) 2 849 8841 lovell_sarreal@maybank-atrke.com Consumer Media Cement Mining Kenneth NERECINA (63) 2 849 8839 kenneth_nerecina@maybank-atrke.com Conglomerates Property Ports/ Logistics Katherine TAN (63) 2 849 8843 kat_tan@maybank-atrke.com Banks Construction Ramon ADVIENTO (63) 2 849 8842 ramon_adviento@maybank-atrke.com Mining

THAILAND Mayuree CHOWVIKRAN Head of Research (66) 2658 6300 ext 1440 mayuree.c@maybank-ke.co.th Strategy

Maria BRENDA SANCHEZ LAPIZ Co-Head of Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 Maria.L@maybank-ke.co.th

Andrew STOTZ Strategist (66) 2658 6300 ext 5091 Andrew@maybank-ke.co.th

Suttatip PEERASUB (66) 2658 6300 ext 1430 suttatip.p@maybank-ke.co.th Media Commerce Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 sutthichai.k@maybank-ke.co.th Energy Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 termporn.t@maybank-ke.co.th Property Woraphon WIROONSRI (66) 2658 6300 ext 1560 woraphon.w@maybank-ke.co.th Banking & Finance Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 jaroonpan.w@maybank-ke.co.th Transportation Small cap. Suchot THIRAWANNARAT (66) 2658 6300 ext 1550 suchot.t@maybank-ke.co.th Automotive Construction Materials Soft commodity

VIETNAM Michael KOKALARI, CFA Head of Research +84 838 38 66 47 michael.kokalari@kimeng.com.vn Strategy Nguyen Thi Ngan Tuyen +84 844 55 58 88 x 8081 tuyen.nguyen@kimeng.com.vn Food and Beverage Oil and Gas Ngo Bich Van +84 844 55 58 88 x 8084 van.ngo@kimeng.com.vn Banking Nguyen Quang Duy +84 844 55 58 88 x 8082 duy.nguyenquang@kimeng.com.vn Rubber Dang Thi Kim Thoa +84 844 55 58 88 x 8083 thoa.dang@kimeng.com.vn Consumer Nguyen Trung Hoa +84 844 55 58 88 x 8088 hoa.nguyen@kimeng.com.vn Steel Sugar Macro

25 July 2012

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Some common terms abbreviated in this report (where they appear): Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share

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