Thursday, July 2, 2009



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.

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


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.


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