China Merchants Holdings Pacific

China Merchants Holdings Pacific: CIMB initiates coverage with Add call and $1.06 TP. The house expect China Merchants Holdings Pacific's (CMH) strategic expansion to be firmly supported by its very cheap financing and the strong nationwide footprint of its parent, China Merchants Group (CMG). The company pays the highest dividend among its peers while having significant scope to further ramp up its investment returns. The toll road operator’s recent success in exiting a nonperforming property development business has refreshed its outlook. While the house expect strong expansion ahead through acquisitions, current target price is conservatively based on the organic growth of its toll income. Initiate coverage with an Add rating and a target price of $1.06 based on CY14 residual income value.