>REGIONAL VALUATIONS (CLSA)

DOUBLE BAGGERS

We asked our country teams which of mid- to larger-cap stocks under coverage could double in the next 3 years if business conditions normalise’. Our list of 15 is weighted towards companies benefiting from domestic or Asian-led recovery i.e. banks, regional airlines, steel, property and some manufacturers. Although with average market cap of US$11.6bn, these are not all Tier I names. Greater upside however comes precisely through emerging from clouds they may currently be under.

China/HK
■ Recovery to lead to EBITDA almost doubling for Air China coming 3 years.
■ Baidu’s DCF value on 13% discount rate estimated to rise to US$590 by 2012.
■ Current over-supply will ease over next two years leading to earnings recovery for Nine Dragons.
■ StanChart to get to 1.8x PB implied by 10% market cap to assets.
■ Hang Lung Prop disciplined whilst ambitious, only half way completing its HK$40bn China investment plan.

North Asia
■ Upside for Japanese auto manufacturers will doubling estimated for Nissan.
■ Fujifilm has strong upside from restructuring and potential improvement in ROE which should the stock above book over the medium-term.
■ Doosan Heavy on 8x EBITDA should double - leading nuclear plant contractor

India
■ 2.75x PB for FY3/13 would take ICICI Bank to Rs1,550 through consolidating loan book, improving liability-mix and life insurance breaking even.
■ SAIL’s production capacity increasing 70% and will see improved product mix.
■ Strong volume growth aided by Indian recovery could lead to doubling in price for JSW Steel on undemanding 5x EV/EBITDA.

ASEAN
■ SIA moving to 1.7x PB in upcycle would double as book value increases.
■ KasikornBank has above average ROE with upside as provisions decline and enjoying operational gearing from heavy investment in new platform.
■ 15x PER for 2012 will lead to doubling in stock price for United Tractors.
■ Olam been growing at 27% Cagr; recent capital points to more acquisitions.

To see full report: REGIONAL VALUATIONS