Although Malaysia Airports’ earnings (released last week) may not look good on the surface, its core earnings are in fact higher than our expectations. We are also bullish on Bangkok Dusit Medical, as it continues to increase its number of hospitals and beds. Meanwhile, Sunac is an exciting option in the red-hot Hong Kong equities market.

Although Malaysia Airports (MAHB MK, BUY, TP: MYR8.11) posted a MYR20.6m core net loss on higher-than-expected amortisation charges –deemed as a non-cash item – its actual earnings appear to be higher than expected. It will have to incur this annually until 2030 on the expiry of the Istanbul Sabiha Gokcen (ISG) concession. Given the significant amortisation costs (MYR181m) that Malaysia Airports will incur annually, this decreases our FY15F/FY16F earnings by 83%/50% respectively. Had this not been the case, our earnings would have been raised by 46% (FY15) and 77% (FY16). Our higher revised EBITDA projections lift our DCF (WACC: 7.6%)-derived TP from MYR7.35. MAHB’s FY15F-17F EV/EBITDA is at a discount of 29-30% vs Airport of Thailand (AOT TB, TAKE PROFIT, TP: THB251.00). The strong passenger volume growth at ISG is one key catalyst to MAHB’s share price performance. Malaysia Airports : Not As Bad As It Looks.

We like Thai healthcare player Bangkok Dusit Medical (BDMS TB, BUY, TP: THB24.20). We estimate 1Q15 core earnings rising 9% YoY, mainly on strong non-hospital revenue, partially offset by higher depreciation expenses.Revenue from Bangkok Dusit’s 28 pre-existing hospitals slowed down (+4% YoY) on weak domestic consumption, and declining international patient volume in tourist destinations like Pattaya (-6% YoY) and Phuket (flat YoY). By contrast, the 12 new hospitals that it opened in 2013-2014 grew by double digits on a lower base. International patient numbers rose 15% YoY on United Arab Emirates (UAE), Oman and China patients. Bangkok Dusit will open a new hospital (Samitivej Chonburi) in May while another two new hospitals (Paolo Rangsit and Jomtien) are scheduled to open in 2016. It now owns 40 hospitals with 7,174 beds in total (4Q14: 7,071 structured beds). Our TP is DCF-based (WACC: 7.12%, TG: 2.5%). Bangkok Dusit Medical : Expect High Single-Digit Earnings Growth

On 5 May, Sunac China (Sunac) (1918 HK, BUY, TP: HKD12.30) reached an agreement with Greentown (3900 HK, NEUTRAL, TP: HKD6.90) to acquire its JV projects. Sunac will take over Greentown’s stake in 19 projects that are mainly located in Shanghai, Hangzhou, Suzhou and Wuxi. On the other hand, Greentown will acquire Sunac’s stakes in three projects for CNY3.9bn, located in Shanghai, Beijing and Hangzhou. After the transaction, Sunac and Greentown will only have one project left in Tianjin for the joint development. An EGM will be held to obtain the approval from shareholders of both companies. We view this as a win-win situation for both, as: i) based on our estimates, Sunac and Greentown will acquire the assets at 47% and 39% discounts to their fair value (ENAV) respectively; ii) the execution of the projects will likely proceed more smoothly; iii) Sunac will be able to consolidate and expand its presence in the Eastern region, while Greentown will gain three prime projects in Tier-1 cities. We raise our end-FY15F ENAV to HKD17.60/share (from HKD14.40). We also narrow our target ENAV discount to 30% (from 45%), reflecting a higher sector valuation. Sunac China : Acquiring Greenton's Stake In JV Projects