The Underdog is Back - The case for an Emerging Equities Bull Market
28 July 2014 | 6:05 am

This report makes the bull case for emerging market equities. The asset class’s underperformance from late 2010 to 1Q14 was, in our view, primarily cyclical. Both monetary and fiscal policy was too accommodative in 2009/10. This led to inflation, and then EM central banks tightened, reducing growth and earnings. The growth tourist left EM. We believe this will change with EM forward EPS outperforming DM into 2015. The growth tourist will return, in our view.
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CSE Global - Lean And Mean Undervalued Machine
28 July 2014 | 5:51 am

CSE Global (CSE) is an international technology group with clients from the oil & gas (O&G), mining and infrastructure sectors. CSE provides engineering solutions throughout the entire O&G supply chain - upstream (automation systems), midstream (pipeline monitoring) and downstream (telecommunications). It also has a unit that provides environmental furnace systems.
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Herd Instinct - Key Emerging Markets and Developed Asia Fund Flow Weekly, 17 - 23 July 2014
28 July 2014 | 5:47 am

During the week to 23 July, there were net subscriptions of US$204million in EM equity funds. For the week, total redemptions in ETFs came at US$408million. YTD redemption in EM is US$21.7billion (redemption US$4.5billion in EM ETF’s).

The net flows by mandate were:
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Parkson Retail Group Ltd - 1Q weakness likely to have persisted into 2Q
28 July 2014 | 5:29 am

China/ HK Consumer - 1H14 Results Preview and Top Picks

We forecast 1H14 earnings at RMB226mn, down 30% y/y. Parkson had announced weak 1Q14 results, with earnings declining 34% y/y due to weak sales (sales down 2% and SSSG down by 8%. At its 1Q14 earnings call (15 May-14), management noted that SSS remains in negative territory 2Q YTD. Therefore, we are looking for a c20% earnings decline in 2Q which we expect to lead to c30% earnings decline for 1H14.
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Dairy Farm International Holdings Limited - Margin Pressures in Food
28 July 2014 | 5:16 am

China/ HK Consumer - 1H14 Results Preview and Top Picks

We forecast Dairy Farm to report 1H14 net profit at US$235mn, up c2% y/y. For 1H14, we expect Dairy Farm to report revenue growth of 5% on a reported basis (we estimate 9% on local currency terms, implying 4% FX impact). We expect EBIT margins to contract 20bp to 4.9% mainly driven by margin pressure in its food business. 

In early May 2014, Dairy Farm issued its interim management statement providing qualitative commentary on the performance of the company covering the period from 1 Jan to 6 May 2014. Of note, it disclosed that profits for the period were “largely unchanged from the prior year”. Management continued to flag margin weakness in the food business which has led to “slightly lower profits in the segment” despite higher sales.
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