ASEAN Conference 2017:Indonesia supplants Philippines

Indonesia: In high demand. Indonesian corporates saw the most demandfor meetings, as they made up half of the top 10 requested companies at theevent, with lots of attention on the banks. Mining and property saw the leastattention at the conference. Despite that, coal companies were amongst themost upbeat given buoyant thermal coal prices. Our top conference idea isBCA where we see potential for NIM uplift on balance sheet management in2H17 and continued investment in the mortgage franchise as drivers.

SG: more positive corporate tone. This was a key change from our last fourevents. That said valuations have re-rated a lot YTD, much to clients’ lament(our index target implies only 3% TSR). We do still see value in banks andproperty, and were encouraged by the relevant presentations (OCBC is ourpost-conference pick, edging out CAPL). We are more cautious on industrialsand commodities, but do flag positive commentary from SMM and Wilmar.

Philippines: Just one of the guys. In contrast with its standout status in theprevious ASEAN conferences, the Philippines gave merely a neutral to slightlynegative bias on the back of mild macro concerns and sector-specific issueslike competition, margins and sustainability of growth. Among the Philippinescorporate attendees, property company Megaworld (MEG) and infrastructurestock Metro Pacific (MPI) were the most positive.

Malaysia: the big disconnect. Whilst investors appeared more receptivetowards Malaysia in the wake of the market’s recent pullback and robust 2QGDP growth (+5.8%), high valuations and lack of earnings recovery remainkey sticking points, as does lack of breadth re ideas i.e. mostly constructionrelatedin the run-up to general elections. The two best received names at ourconference were our top mid-cap construction pick Econpile and utilityTenaga which ticks the boxes on valuations, yield upside and liquidity. At thebroader market level, investor interest was centred on the banks (CIMB) andlogistics (POS(M)) sectors. Interest re GLC Reform, a key market theme,appears to have waned as tangible follow-through is awaited.

Thailand: Selective growth prospects. Companies with strong growthprospects are due to their specific drivers, not due to general economicconditions. The overall growth prospects of the Thai market remains underpressure due to ongoing weak economic recovery and the high base of 2016market EPS growth of 28.2% with 2017E market EPS growth having beenrevised down YTD by 1.8%. SAWAD and IVL provide the most excitingoutlooks both in terms of top line growth and profitability.