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PP16832/01/2013 (031128)

Malaysia13-14 June 2013

Invest Malaysia 2013 ASEAN’s Multinational MarketplaceThe ASEAN Economic Community (AEC) is less than two years away. It marks a major milestone in the region’s integration process that began with the ASEAN Free Trade Area in 1992. AEC is expected to boost the intra-ASEAN share of ASEAN total trade to 30% by 2015 and 35% by 2020 from around 26% currently, further entrenching ASEAN’s position as one of the biggest trade blocs in the world.

The intensification of intra-ASEAN trade will have positive spillover on intra-regional FDI flows and other key “enablers” for the functioning and connectivity of the single market such as banking, insurance, capital markets, infrastructure, transportation, logistics and ICT, as well as to a whole host of business and professional services. Financial services, investment banks especially, will be one of the major beneficiaries.

The coming of the AEC will indeed herald an exciting time for ASEAN economies and capital markets. And, Malaysia is well-positioned within ASEAN’s multinational marketplace. With ASEAN as a platform, Malaysian PLCs have achieved great success in the global marketplace. Well-known Malaysian PLCs today are Maybank, Sime Darby, CIMB, AirAsia, SapuraKencana, Bumi Armada, Axiata, Felda Global, Petronas Chemicals, IHH, Genting and YTL, amongst others.

On the domestic front, the recent 13th general election has given Prime Minister Dato’ Sri Najib Tun Razak the mandate to continue with the country’s transformation programmes and reform initiatives. This is positive to Malaysia’s quest of becoming a developed nation by 2020. We expect the Malaysian economy to gain momentum after expanding 4.1% YoY in 1Q 2013, and forecast GDP growth to be 5.3% and 5.7% in 2013 and 2014 respectively, driven by domestic-demand, especially investment.

Stable macro economic conditions will provide the impetus for a sustained uptrend for Malaysian equities. Our 2013 year-end KLCI target of 1,840 is pegged to 15.5x 12M forward earnings supported by a strong banking system, healthy corporate balance sheets, and continuous corporate earnings growth. Rising foreign interests and cashed up domestic funds would provide further support to the KLCI's uptrend. Our key sector Overweights are banking, property, oil & gas and construction.

13-14 June 2013 Page 2 of 172

Invest Malaysia 2013

Contents

Page

ASEAN’s Multinational Marketplace 3

ECONOMICS: Outlook & Lookouts 13

MARKET STRATEGY: Continuing The Momentum 34

COMPANY BRIEFS

AirAsia 58 Media Chinese International Limited 110

Alliance Financial Group 60 MISC 112

Astro Malaysia Holdings 62 MMC Corporation 114

Axiata 64 Malaysia Marine and Heavy Engineering 116

Axis REIT 66 Malaysian Resources Corporation Bhd 118

Boustead Holdings 68 Oldtown Berhad 120

Bumi Armada 70 Perisai Petroleum 122

Bursa Malaysia 72 Petronas Chemicals Group 124

CIMB Group Holdings 74 Public Bank 126

Dialog Group 76 RHB Capital 128

DiGi.Com 78 SapuraKencana Petroleum 130

DRB-Hicom 80 Sime Darby 132

Felda Global Ventures 82 S P Setia 134

Glomac 84 Sunway Bhd 136

Hartalega Holdings 86 Sunway REIT 138

IHH Healthcare 88 Telekom Malaysia 140

IJM Corporation 90 Tenaga Nasional 142

IOI Corporation 92 TIME dotCom 144

Jobstreet Corporation 94 Top Glove 146

Kuala Lumpur Kepong 96 Tropicana Corporation 148

Kossan Rubber Industries 98 UEM Land Bhd 150

KPJ Healthcare 100 UMW Holdings 152

Mah Sing Group 102 UOA Development 154

Malaysia Airports Holdings 104 WCT 156

Maxis 106 YTL Corporation 158

Malayan Banking 108

Maybank KE Equity Research’s Malaysia Stock Universe 161

13-14 June 2013 Page 3 of 172

ASEAN’s Multinational Marketplace Positioning for ASEAN Economic Community, 2015

Countdown to AEC 2015. The ASEAN Economic Community (AEC) is less than two years away. It marks a major milestone in the region’s integration process. ASEAN started as a “Security Bloc” when it was formed back in 1967, followed by the decision to become an “Economic Bloc” in 1976. This led to the ASEAN Free Trade Area (AFTA) in 1992, which in essence kick-started the region’s economic integration by promoting trade in goods, mainly via tariff reductions. AEC elevates ASEAN integration process by promoting free trade and increased flows of financial and non-financial services, investments, financial capitals and human capitals, with the ultimate goal of establishing a single market for the region.

Key Milestones in ASEAN Developments and Integration

ASEAN Formation (8 Aug 1967) – originally a “Security Block”

Bali Summit 1976 – Moving on to

“Economic Block”

1992 – ASEAN Free Trade Area

(AFTA)

ASEAN Economic

Community (AEC) – Single Market

& Production Base by 2015

Source: ASEAN Secretariat

ASEAN Economic Community (AEC), 2015

Rationale Strategic Approaches Priority Actions Natural progression towards next level of

economic integration

Comprehensive strategy to enhance competitiveness of ASEAN

Emerging regional economic architecture and rise of China and India powerhouses, along with growth markets – hence the need to create stronger and congruent ASEAN

To embed resilience, cushioning any adverse impact of shocks to ASEAN whilst sustaining growth

Single Market & Production Base

Highly Competitive Economic Region

Region of Equitable Economic Development Full Integration into the Global Economy

Free Flows of Goods, Services, Investment, Capital & Skilled Labour

Competition Policy; Intellectual Property Rights; Infrastructure Development; Taxation; E-Commerce

SME Development; Initiatives for ASEAN

Integration (IAI) Coherent approach towards External

Economic Relations and enhanced participation in Global Supply Networks

Source: ASEAN Secretariat, Maybank KE


13-14 June 2013 Page 4 of 172

Limited gains from limited integration under AFTA. AFTA raised intra-ASEAN trade as a percentage of ASEAN total trade with the world to 26% in 2012 from 19% in 1990. This somewhat limited gain reflects the limited regional integration under AFTA. Further underscoring the constraint from the limited integration thus far – partly due to the national restrictions on investments – is the trend in intra-ASEAN net FDI inflows, which, for the most part, has been erratic, and on average lagged behind the more stable intra-ASEAN trade.

Intra-ASEAN Trade vs Intra-ASEAN net FDI Inflows (%)

0

5

10

15

20

25

30

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

ASEAN Intra-Regional Inward FDI (% of ASEAN Total Inward FDI)

ASEAN Intra-Regional Trade (% of ASEAN Total Trade)

Sources: ASEAN Secretariat, UNCTAD

AEC will bring intra-regional trade and investment to the next levels. According to Dr Surin Pitsuwan, the former ASEAN Secretary General, AEC can boost intra-ASEAN trade’s share of ASEAN total trade to 30% by 2015 and 35% by 2020, making ASEAN among the biggest trade bloc in the world. Even then, this estimate may be on the conservative side as we noted that the intra-regional trades of other major economic blocs are higher e.g. EU (63%); NAFTA (49%); Eurozone (47%). We also reckon the intensification of intra-ASEAN trade under AEC will boost intra-ASEAN net FDI inflows ratio to ASEAN total FDI to between 20%-25% by 2015 and further to 25%-30% by 2020 from the sub-20% level over the past 2-3 years.

ASEAN Intra-Regional Trade (% of ASEAN Total Trade)

17.9 20.3

18.8 20.1 22.0

24.9 25.4

30

35

0

5

10

15

20

25

30

35

40

1980 1985 1990 1995 2000 2005 2010 2015E 2020E

Pre-AFTA Post-AFTA AEC

Sources: ASEAN Secretariat, Dr Surin Pitsuwan


13-14 June 2013 Page 5 of 172

Intra-Regional Trade Ratio of Selected Economic & Trade Blocs, 2012 (%)

62.8

48.5

46.6

25.8

20.9

19.3

17.4

16.1

14.7

12.5

8.2

4.7

0 20 40 60 80

EU

NAFTA

EUROZONE

ASEAN

East African Community

Union of South American Nations

Central American Common Market

Commonwealth of Independent States

Caribbean Community

West African Economic & Monetary Union

League of Arab States

GCC (Gulf Cooperation Council)

Source: UNCTAD

With positive spillovers from the creation of a single market, especially finance, connectivity and business services. The expected increase in intra-ASEAN trade and FDI will be a boon for key “enablers” of AEC via business and investment opportunities. For example, financial services will be a major beneficiary. Growth in trade and corporate finance as well as insurance will gain momentum as intra-regional trade flourishes. Investment banking stands to gain from the moves toward greater capital market linkages and integration that have been – or are being – put in place e.g. the launch of ASEAN Exchanges & Trading Link; common disclosure standards for cross-listing; regional framework for secondary listing. In addition, critical success factors for AEC include connectivity and non-financial services to facilitate the operation as well as enhance the effectiveness and efficiency of the single market envisaged under AEC. This will spur growth and investment in areas like infrastructure, transportation, logistics, information & communication technology (ICT), supply-chain management, and professional services. Overall, the coming of AEC heralds an exciting time for ASEAN economies and capital markets.

ASEAN: Basic Socio-Economic Statistics, 2013E Country GDP (USDb) Population (m) GDP per capita (USD) Level of Economic

Development / Income Brunei 16 0.4 40,647 High-Income

Cambodia 16 15.4 1,017 Low-Income Indonesia 946 248.0 3,817 Lower Mid-Income

Laos 10 6.5 1,587 Lower Mid-Income Malaysia 328 30.0 10,946 Upper Mid-Income

Myanmar 57 65.0 884 Low-Income Philippines 284 97.5 2,918 Lower Mid-Income

Singapore 287 5.5 52,179 High-Income Thailand 425 64.7 6,572 Upper Mid-Income

Vietnam 156 91.5 1,705 Lower Mid-Income ASEAN 2,526 624.3 4,046 -Sources: IMF World Economic Outlook (Apr 2013), World Bank


13-14 June 2013 Page 6 of 172

MALAYSIA’S REGIONAL AND GLOBAL CHAMPS

Name Domestic / Overseas revenue Global/regional presence

AirAsia

(AIRA MK)

Market cap:

MYR9,147.9m

USD2,950.9m

1,258 1,460

1,623

384521 624

305 385 453

0

500

1,000

1,500

2,000

FY10 FY11 FY12AirAsia Berhad Thai AirAsia Indonesia AirAsia

USD m

* Thai and Indonesia are associates

Now, everyone can fly

AirAsia is the pioneer low cost carrier (LCC) in Asia. It has expanded its operations to Thailand, Indonesia, the Philippines, Japan and soon India via a joint-venture structure with local shareholders in respective countries. With a current fleet size of 124 aircraft, it is the largest LCC in Asia in terms of fleet size and passengers carried. It has an aircraft order backlog of 356, to be delivered up to 2026.

Axiata

(AXIATA MK)

Market cap:

MYR57,398.1m

USD18,515.5m

52.1% 56.5% 56.4% 56.5%

47.9% 43.5% 43.6% 43.5%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Asian aspirations

Axiata has a Pan-Asia footprint. Outside Malaysia (Celcom 100%-owned), Axiata has controlling stakes in mobile operators in Indonesia (XL 67%), Sri Lanka (Dialog 85%), Bangladesh (Robi 70%) and Cambodia (Hello 100%). It also has associates stakes in operators in Singapore (M1 29%) and India (Idea 20%).

Bumi Armada

(BAB MK)

Market cap:

MYR11,543.8m

USD3,723.8m 70.0%

84.8%64.8%

82.3%

30.0%15.2%

35.2%17.7%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Riding on global FPSO opportunities

Bumi Armada is one of the fastest growing FPSO operators in the world. All its 6 FPSOs are contracted outside Malaysia (i.e. Nigeria [2], India [2], Vietnam and Australia) on long term leases.

About two-thirds of its OSVs operate outside Malaysia while its T&I operations are based in the Caspian and Asia regions. The Offshore Field Services (OFS) operations are, at present, Malaysia-centric, but have the capabilities to extend regionally.

CIMB Group

(CIMB MK)

Market cap:

MYR62,906.9m

USD20,292.6m

48.4% 51.8% 51.8% 53.7%

51.6% 48.2% 48.2% 46.3%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

An Asian footprint

CIMB is today one of the most regionally diversified financial groups. In ASEAN countries where it lacks a commercial banking presence, RBS has filled in the gap through investment banking exposure. Moreover, RBS has effectively extended CIMB’s footprint into Asia with presence in India, China, South Korea, Taiwan and Australia. Contributions wise, Indonesia is presently the largest outside Malaysia at 30% of group pretax profit.

Domestic revenue Overseas revenue

Note: Featured are only groups which derive more than 10% of their revenues from overseas


13-14 June 2013 Page 7 of 172


Dialog

(DLG MK)

Market cap:

MYR7,159.2m

USD2,309.4m 58.0%

44.3% 50.4% 50.9% 56.8%

42.0%55.7% 49.6% 49.1% 43.2%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12 FY13

Terminal growth

Asia (ex-Malaysia) and Oceania (Australia & New Zealand) account for 32% and 18% of group’s revenue. Dialog provides a wide spectrum of services regionally: (i.e. catalyst services & plant maintenance, specialist technical services and products, provision of engineering & construction, etc).

Felda Global Ventures

(FGV MK)

Market cap:

MYR16,416.7m

USD5,295.7m

70.6%

29.4%

0%

20%

40%

60%

80%

100%

FY12

Regional aspirations

FGV is an integrated global agricultural player focused on three primary commodities – palm oil, rubber and sugar. It is the world’s third largest listed oil palm plantation operator by planted area, the world’s largest CPO producer via its 49%-associate Felda Holdings Berhad, and Malaysia’s leading refined sugar producer. It also operates a soybean crushing plant and an oleo-chemical plant in North America.

Although FGV derived ~71% of its FY12 revenue from overseas, over 90% of its group profits are generated in Malaysia. Armed with a MYR6b cash pile, FGV is keen to expand its ASEAN footprint via M&A, focusing on its three primary commodities.

Genting Berhad

(GENT MK)

Market cap:

MYR37,241.8m

USD12,013.5m

25.1%

54.0% 60.3% 58.6%

74.9%

46.0% 39.7% 41.4%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Big, going on bigger

Genting has interests in two listed integrated resorts with casinos in Malaysia (under GENM MK) and Singapore (under GENS SP), more than 40 casinos in the United Kingdom via GENM, power plants across Asia, plantations (under GENP MK) in Malaysia and Indonesia, oil & gas assets around the world and property development. Genting derived 59% of its FY12 revenue from its overseas operations.

49% owned GENM seeks to expand into Miami and New York in the United States. 52% owned GENS seeks to expand into Japan, Korea and other Asian countries. Genting itself subscribed for 19% of Union Bank of Colombo on 21 Jun 2010. This is likely the first step towards developing a casino in Sri Lanka.

Hartalega

(HART MK)

Market cap:

MYR4,066.2m

USD1,311.7m

99.2% 99.2% 97.5% 97.7%

0.8% 0.8% 2.5% 2.3%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

World’s largest in nitrile gloves

Hartalega is the world’s largest nitrile glove producer with a 10.2b pieces p.a. capacity and a global nitrile market share of around 17%. It strives to be the most influential nitrile glove-maker via continuous capacity expansion and technology advancements.

Hartalega is primarily an OEM manufacturer to a handful of key MNC glove distributors in the world. Its revenue is derived from North America (58% of total revenue), Europe (27%), Latin America (1%), Asia (10%), Oceania (3%) and the rest of the world (1%).



13-14 June 2013 Page 8 of 172


IHH Healthcare

(IHH MK)

Market cap:

MYR32,103.4m

USD10,355.9m

81.1% 81.5% 84.3%

18.9% 18.5% 15.7%

0%

20%

40%

60%

80%

100%

FY10 FY11 FY12

Best proxy to healthcare industry

IHH is one of the best proxies to the growing healthcare industry in the region. The group has a leading position in three key markets – Singapore, Malaysia and Turkey. We think this business model is highly scalable with leverage on its premium brand name, especially in Singapore, into other markets, such as the PRC, Hong Kong, India and Brunei. This is evident in its recent winning bid in Hong Kong, where it won a highly competitive bid for a greenfield private hospital.

IJM Corp

(IJM MK)

Market cap:

MYR7,935.2m

USD2,559.7m

19.3% 14.3% 13.7% 13.2%

80.7% 85.7% 86.3% 86.8%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Reaching out in all ways

IJM’s five core businesses span 10 countries, with India contributing to 92% of overseas revenue in FY12. The group has participated in the construction and upgrading of highways and commercial buildings in India, Middle East and Singapore. IJM also owns and operates regional concessions including a tollway in Argentina, 5 tollways and a power plant in India and a water treatment concession in Vietnam. Meanwhile, its building material division has diversified into China, India and Pakistan.

IJM Plantation owns oil palm land bank in Indonesia while IJM Land has expanded its property development footprint in India, China, Vietnam, Singapore and UK.

IOI Corporation

(IOI MK)

Market cap:

MYR32,752.0m

USD10,565.2m

70.0% 69.1% 67.3%78.9%

30.0% 30.9% 32.7%21.1%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Building a strong regional presence

Besides Asia, IOI Corp has manufacturing plants in Europe and North America, supplying specialty oils and fats. Although ~50% of the group’s revenue is derived from Asia, its share of profit contribution is significantly higher than the 50% given the relatively lower margin manufacturing operations in Europe and North America.

In Indonesia, 33%-owned Bumitama Agri is one of the fastest growing upstream players in the region and has planted about 100,000 ha of oil palm estates. IOI also holds a 67%-stake in Indonesian companies that have acquired the rights to another 53,000ha. Presently, IOI has five ongoing property development projects in Singapore. In China, it has two projects in Xiamen, one of which is to be launched soon.

JobStreet Corp

(JOBS MK)

Market cap:

MYR1,197.4m

USD386.3m

35.1% 38.1% 40.1% 43.8%

64.9% 61.9% 59.9% 56.2%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

ASEAN dominance

JobStreet is the premier online recruitment agency in ASEAN, being the number one player in Malaysia with over 90-95% market share in terms of job listings. Besides dominating the local market, they are also the number 1 player in Philippines and more recently Singapore, boasting a market shares of 60-65% and 45% respectively. Its Indonesian operations (30% market share) have just started to report profits since 1Q13 since its initial entry in 2007. Additionally, JobStreet also has presence in Thailand and Vietnam. Foreign revenue accounted for 47% of total revenue in 1Q13 with Philippines being the biggest contributor at 23%.



13-14 June 2013 Page 9 of 172


KL Kepong

(KLK MK)

Market cap:

MYR22,577.3m

USD7,283.0m

78.7% 78.4% 79.0% 79.3%

21.3% 21.6% 21.0% 20.7%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Still growing its regional platform

KLK is one of the largest integrated plantation players in the region with over 250k ha of plantation land in Malaysia and Indonesia, and a strong presence in oleo-chemicals. Presently, the construction of a 0.18 tpa fatty acid plant and a ~1m tpa refinery in Indonesia is ongoing. The Asian markets account for 68% of group revenue. In Dec 2012, it completed the acquisition of Collingwood Plantations, which owns 44,342 ha of land in Papua New Guinea, suitable for oil palm planting.

Maybank

(MAY MK)

Market cap:

MYR88,717.8m

USD28,618.7m

26.9% 30.2% 35.6% 35.8%

73.1% 69.8% 64.4% 64.2%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

The widest ASEAN presence

With a commercial bank in eight of the 10 ASEAN countries, an investment bank in Thailand and a representative office in Myanmar, Maybank effectively has the widest footprint in ASEAN of all the banks within the region. In 1Q13, international contributions accounted for 31% of group pretax profit, with the two largest contributors being Singapore (15%) and Indonesia (6%).

At MYR88.7b market cap, Maybank is today the second largest banking group in ASEAN, just behind DBS.

Media Chinese International

(MCIL MK)

Market cap:

MYR2,092.2m

USD674.9m

40.6% 37.7% 38.1% 38.2% 38.1%

59.4% 62.3% 61.9% 61.8% 61.9%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12 FY13

Global dragon

Media Chinese International (MCIL) is a Chinese language newspaper and magazine publisher. In Malaysia, MCIL commands >70% market share of daily circulation of Chinese newspapers. In Hong Kong, Ming Pao Daily News has the third highest daily circulation. With Yazhou Zhoukan, they are highly regarded for being credible and independent. In FY3/13, overseas operations account for 38% of group revenue and 14% of group pretax profit.

MISC

(MISC MK)

Market cap:

MYR21,694.0m

USD6,998.1m

68.6% 69.6% 73.4% 67.8%

31.4% 30.4% 26.6% 32.2%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

All aboard, full steam ahead

MISC is one of the world’s leading international shipping and maritime conglomerates. Its fleet comprises more than 130 owned and in-chartered vessels with a combined tonnage of 13m dwt. It has a fleet of 27 LNG vessels, 79 petroleum tankers and 28 chemical vessels that ply the global seas.

Oldtown

(OTB MK)

Market cap:

MYR1,107.0m

USD357.1m

16.0% 19.3% 23.7% 25.2%

84.0% 80.7% 76.3% 74.8%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Old flavor, new markets

Oldtown has two key business segments, namely café chain operation and beverage manufacturing. It owned 197 café outlets in Malaysia, 10 in Singapore, 9 in Indonesia and 4 in China as at end-2012. Beverage products carrying the “Oldtown” brand name are also exported and the company enjoys strong market share in the white coffee segment, in the Malaysia, Hong Kong and Singapore markets.



13-14 June 2013 Page 10 of 172


Petronas Chemicals Group

(PCHEM MK)

Market cap:

MYR53,120.0m

USD17,135.5m

60.0% 60.0% 60.0% 60.0%

40.0% 40.0% 40.0% 40.0%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

One of the world’s lowest cost petrochemical producers

Petronas Chemicals is Malaysia’s biggest petrochemical producer with a wide product range that encompasses Olefins, Methanol and Fertilizers. It is one of the few ethane based feedstock crackers in the world, which provides it with unrivaled cost advantage, both from an input cost and process efficiency basis. The group is very profitable, with margins ranging 20%-30% across the cycles, significantly higher than industry norms.

SapuraKencana

(SAKP MK)

Market cap:

MYR25,286.9m

USD8,157.1m

18.7%

81.3%

0%

20%

40%

60%

80%

100%

FY12

Growing bigger, globally driven

SapuraKencana is an integrated O&G service provider with 6 core operations: (i) integrated pipeline and facilities (IPF), (ii) engineering, procurement and construction (EPC), (iii) drilling services, (iv) marine services, (v) operations & maintenance, and (vi) development and production operations.

The acquisition of Seadrill’s tender rig assets offers regional coverage while its IPF operations have also embarked on a regional footprint (Asia and Australia). While it has clinched a USD1.4b (MYR4.2b) contract from Petrobras of Brazil for 3 pipelay vessels, which will kick start in 2014, it could secure another multi-billion contract there for 2-3 units of pipelay vessel charters with long-term contracts.

Sime Darby

(SIME MK)

Market cap:

MYR56,609.2m

USD18,261.0m

63.0% 67.2% 74.7% 74.5%

37.0% 32.8% 25.3% 25.5%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

A global champion

Sime Darby has strong leverage to Asia’s growing consumer spending. In terms of FY12 PBIT contributions by geography, Malaysia was the largest at 56%, followed by Indonesia (18%), Australasia (16%), China (6%), Singapore (6%) and the rest.

Sime is the world’s largest listed plantation player with 877,000 ha of plantation land in Malaysia (41%), Indonesia (34%) and Liberia (25%). In the industrial space, Sime is Caterpillar’s 3rd largest dealer globally and is highly leveraged to Australia’s mining sector. It is also the 3rd largest BMW dealer in the world and carries other marques like MINI, Ford, Hyundai, Rolls Royce, Alfa Romeo and Peugeot, to name a few. In the property division, it owns the largest development landbank among Malaysian developers with ~16,000 acres of land.



13-14 June 2013 Page 11 of 172


Top Glove

(TOPG MK)

Market cap:

MYR3,955.3m

USD1,275.9m

97.0% 97.0% 97.0% 97.0%

3.0% 3.0% 3.0% 3.0%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

World’s number one, in latex gloves

Top Glove is the world’s largest latex glove producer with a 40.7b pieces p.a. capacity. It currently has a global total market share of around 25%, and targets to achieve a market share of 30% by 2015 via a planned organic growth and potential acquisition of smaller competitors.

Top Glove is primarily an OEM manufacturer to many MNC glove distributors in the world. Its revenue is derived from Europe (34% of total revenue), North America (27%), Latin America (20%), Asia (11%), Middle East (5%) and the rest of the world (3%).

WCT

(WCT MK)

Market cap:

MYR2,872.4m

USD926.6m

79.8%

30.0% 24.2% 18.9%

20.2%

70.0% 75.8% 81.1%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Riding on the Middle East boom

WCT’s civil engineering outfit has presence in 7 countries and in FY12, the group derived 19% of its revenue from overseas, predominantly from the Middle East. Backed by its large fleet of civil construction machinery, WCT has undertaken major construction projects overseas such as the Dukhan Highway and New Doha International Airports in Qatar, F1 racing circuits in Bahrain and Abu Dhabi, Bahrain City Center and Abu Dhabi Marina Yacht Club.

WCT continues to eye for more civil and structural construction jobs in the Gulf States, riding on a boom in spending on massive infrastructure projects across the Middle East. Currently, MYR2b (40%) of WCT’s MYR5b total job tenders comprises overseas projects, mostly in the Middle East.

YTL Corp

(YTL MK)

Market cap:

MYR17,414.2m

USD5,617.5m

63.9%79.8% 79.7% 75.7%

36.1%20.2% 20.3% 24.3%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

Scouring the world

YTL Corp is a diversified conglomerate. The group’s utility assets extend globally to countries such as the UK (Wessex Water), Singapore (PowerSeraya), Australia (Electranet) and Indonesia (Jawa Power). The two REITS under the ‘Starhill’ brand also own a portfolio of international properties (in Singapore, Japan, China, and Australia).


Compiled by Maybank KE


13-14 June 2013 Page 12 of 172

Economics and Market Outlook


13-14 June 2013 Page 13 of 172

Outlook & Lookouts Uneven Global Economy

The global economy was still struggling for growth in 1Q 2013 after the steady deceleration during the course of 2012. We estimated that the world real GDP expanded by 2.9% YoY in 1Q 2013 (4Q 2012: +3.1% YoY), easing for the fourth consecutive quarter, on an assortments of slow recovery in the US, continued and deepening recession in the Eurozone, emerging monetary stimulus-driven growth in Japan, moderation in China and the other large emerging economies within the BRIC fraternity, lackluster Asian NIEs and the sustained positive growth momentum in ASEAN.

Global: Real GDP Growth (% YoY) 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013WORLD 4.0 3.8 3.2 3.1 2.9

US 2.4 2.1 2.6 1.7 1.8Eurozone (0.1) (0.5) (0.7) (0.9) (1.0) Germany 1.3 1.0 0.9 0.3 (0.2) France 0.3 0.1 0.0 (0.3) (0.4) Italy (1.7) (2.5) (2.6) (2.8) (2.3) Spain (0.7) (1.4) (1.6) (1.9) (2.0) Portugal (2.3) (3.1) (3.5) (3.8) (3.9)Japan 3.4 4.0 0.3 0.5 0.2UK 0.5 0.0 0.4 0.2 0.6Canada 2.0 2.6 1.2 1.0 2.5Australia 4.4 3.6 3.3 3.2 2.5

China 8.1 7.6 7.4 7.9 7.7India 5.1 5.4 5.2 4.7 4.8Russia 4.8 4.3 3.0 2.1 1.6Brazil 0.8 0.5 0.9 1.4 1.9

S. Korea 2.8 2.4 1.6 1.5 1.5Taiwan 0.6 (0.1) 0.7 4.0 1.7Hong Kong 0.7 0.9 1.5 2.8 2.8Singapore 1.5 2.3 0.0 1.5 0.2

Indonesia 6.3 6.4 6.2 6.1 6.0Thailand 0.4 4.4 3.1 19.1 5.3Malaysia 5.1 5.6 5.3 6.5 4.1Philippines 6.5 6.3 7.3 7.1 7.8Vietnam 4.1 4.7 5.4 5.8 4.9

Sources: Bloomberg, CEIC, Maybank KE With risk of underwhelming again in 2Q 2013. Global economic condition remains challenging in 2Q 2013, going by the trend in the purchasing managers index (PMI). After improving in 4Q 2012 – averaging 52.8 from 51.7 in 3Q 2012 – and holding up in 1Q 2013 at 53.0, the global composite PMI started the 2Q 2013 with a dip to 51.9 in April 2013 (March 2013: 53.0). Indication for May 2013 is not that encouraging as the manufacturing component hovered just above the borderline mark of 50 that separates expansion and contraction in factory activities worldwide. The softening manufacturing PMI can adversely affect the services PMI, especially if it translates into further dampening of the already sluggish global trade, with further downsides from the recent selloff in the global financial markets.

Economics2013 M’sia Real GDP: 5.3% (unchanged)

Suhaimi Ilias [email protected] (03) 2297 8680

Dr. Zamros Dzulkafli [email protected](603) 2082 6818

Ramesh Lankanathan [email protected](603) 2297 8685

William Poh [email protected] (603) 2297 8683


13-14 June 2013 Page 14 of 172

Global Purchasing Managers Index (PMI) Dashboard Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13

Composite 51.0 53.6 53.7 53.2 52.9 53.0 51.9 -

Manufacturing 48.8 49.6 50.1 51.4 50.9 51.1 50.4 50.6 US 51.7 49.9 50.2 53.1 54.2 51.3 50.7 49.0Eurozone 45.4 46.2 46.1 47.9 47.9 46.8 46.7 48.3Germany 46.0 46.8 46.0 49.8 50.3 49.0 48.1 49.4France 43.7 44.5 44.6 42.9 43.9 44.0 44.4 46.4Italy 45.5 45.1 46.7 47.8 45.8 44.5 45.5 47.3Japan 46.9 46.5 45.0 47.7 48.5 50.4 51.1 51.5UK 47.3 49.2 51.2 50.5 47.9 48.6 50.2 51.3 China 50.2 50.6 50.6 50.4 50.1 50.9 50.6 50.8China * 49.5 50.5 51.5 52.3 50.4 51.6 50.4 49.6Brazil 50.2 50.7 51.1 53.2 52.5 51.8 50.8 50.4India * 52.9 53.7 54.7 53.2 54.2 52.0 51.0 50.1 S. Korea* 47.4 48.2 50.1 49.9 50.9 52.0 52.6 51.5Taiwan* 47.8 47.4 50.6 51.5 50.2 51.2 50.7 47.1Singapore 48.3 48.8 48.6 50.2 49.4 50.6 50.3 51.1Indonesia * 51.9 51.5 50.7 49.7 50.5 51.3 51.7 51.6 Services 51.9 54.8 54.8 53.4 53.2 53.4 52.1 - US 54.8 54.8 55.7 55.2 56.0 54.4 53.1 -Eurozone 46.0 46.7 47.8 48.6 47.9 46.4 47.0 47.5Germany 48.4 49.7 52.0 55.7 54.7 50.9 49.6 49.8France 44.6 45.8 45.2 43.6 43.7 41.3 44.3 44.3Italy 46.0 44.6 45.6 43.9 43.6 45.5 47.0 47.0Japan * 50.0 51.4 51.5 51.5 51.1 54.0 51.7 -UK 50.6 50.2 48.9 51.5 51.8 52.4 52.9 52.9 China 55.5 55.6 56.1 56.2 54.5 55.6 54.5 54.3China * 53.5 52.1 51.7 54.0 52.1 54.3 51.1 -India * 53.8 52.1 55.6 57.5 54.2 51.4 50.7 -Source: Bloomberg * HSBC/Markit

Global: Composite Purchasing Managers Index (PMI) & Real GDP Growth (% YoY)

Global: Trade Value and Volume (% YoY)

(5)(4)(3)(2)(1)0 1 2 3 4 5 6 7

35

40

45

50

55

60

Jan-

07M

ay-0

7Au

g-07

Nov

-07

Feb-

08M

ay-0

8Au

g-08

Nov

-08

Feb-

09M

ay-0

9Au

g-09

Nov

-09

Feb-

10M

ay-1

0Au

g-10

Nov

-10

Feb-

11M

ay-1

1Au

g-11

Nov

-11

Feb-

12M

ay-1

2Au

g-12

Nov

-12

Feb-

13

Global Composite PMI (LHS) Global GDP (% YoY, RHS)

(40)

(30)

(20)

(10)

0

10

20

30

40

Jun-

07

Oct

-07

Feb-

08

Jun-

08

Oct

-08

Feb-

09

Jun-

09

Oct

-09

Feb-

10

Jun-

10

Oct

-10

Feb-

11

Jun-

11

Oct

-11

Feb-

12

Jun-

12

Oct

-12

Feb-

13

World Trade Volume (% YoY) World Trade Value (% YoY)

Sources: Bloomberg, CEIC, Maybank KE Sources: Netherlands Bureau for Economic Policy Analysis, Bloomberg, CEIC, Maybank KE


13-14 June 2013 Page 15 of 172

Continued slow recovery of the US economy. The current below-trend expansion reflects the negative fiscal impulses from the expirations of previous tax cuts coupled with several tax increases at the start of this year. This was followed by the 10-year government spending cuts that began in March 2013. The impact is especially visible in terms of the shrinking budget deficit and further drop in the government spending part of GDP as sequestration take effects, where the ramifications are particularly large on defence outlays. These offset the ongoing gradual recoveries in the US job and housing markets that are supporting consumer spending and residential fixed investment.

US Quarterly Real GDP Growth by Expenditure GDP Personal

Consumption Expenditure

Private Fixed Investment Expenditure

Government Consumption Expenditure

Government Investment Expenditure

Exports Imports Net Exports

% YoY 1Q12 2.4 1.8 11.9 (5.9) (5.9) 4.0 3.2 (0.3) 2Q12 2.1 1.9 9.9 (4.4) (4.4) 4.3 3.9 2.0 3Q12 2.6 1.9 6.2 (2.7) (2.7) 3.2 2.5 (0.7) 4Q12 1.7 1.8 7.2 (3.1) (3.1) 2.1 0.2 (8.0) 1Q13 1.8 2.1 5.8 (3.9) (3.9) 1.2 (0.1) (5.8)

% QoQ Annualised 1Q12 1.9 2.4 9.4 (13.3) (13.3) 4.3 3.0 (2.4) 2Q12 1.2 1.5 4.4 2.5 2.5 5.1 2.8 (7.7) 3Q12 3.1 1.6 0.9 (0.4) (0.4) 1.9 (0.6) (12.1) 4Q12 0.4 1.8 13.3 (0.9) (0.9) (2.9) (4.2) (10.6) 1Q13 2.4 3.4 4.0 (16.5) (16.5) 0.8 1.9 7.1

Source: CEIC

US: Unemployment Rate (%) & Change in Non-Farm Payrolls (‘000)

US: Key Housing Market Activity Indicators (units)

4

5

6

7

8

9

10

11

(1000)

(800)

(600)

(400)

(200)

0

200

400

600

Jan-

07

May

-07

Sep-

07

Jan-

08

May

-08

Sep-

08

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

Chg in Non Farm Payroll ('000) Unemployment Rate (%, RHS)

0.0

0.3

0.5

0.8

1.0

1.3

1.5

1.8

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

Jan-

07

May

-07

Sep-

07

Jan-

08

May

-08

Sep-

08

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

New & Existing Home Sales (LHS) Home Starts Building Permits

Source: Bloomberg Source: Bloomberg, CEIC

US: Initial Jobless Claims (4-Week Moving Average, ‘000) US: S&P/ Case Shiller Composite 20 US City Home Price Index (% YoY)

100

200

300

400

500

600

700

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

(25)

(20)

(15)

(10)

(5)

0

5

10

15

20

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13

Source: Bloomberg Source: Bloomberg


13-14 June 2013 Page 16 of 172

Deepening Eurozone recession. Notwithstanding the apparent dissipation of the sovereign debt crisis as the government bond yields of bailed out and stressed countries declined by virtue of the European Central Bank‘s (ECB) carte blanche to do “whatever it takes”, Eurozone economy is reeling from the effects of the tough austerity measures put in place as per the terms and conditions for the financial bailouts of Greece, Ireland and Portugal at the peak of the sovereign debt crisis in 2010-2011. Spain and Italy are also forced to adopt fiscal belt-tightening since last year when their sovereign bond markets came under pressures as the crisis threatened to engulf these larger Eurozone economies. This year, the latest victim of the Eurozone crisis is Cyprus. The high intra-Eurozone trade (47% of total trade in 2012) and the strong intra-regional financial links spread the downturn across the monetary union. Further exacerbating the Eurozone recession is the breakdown of the monetary policy transmission mechanism in view of the credit crunch (i.e. loans decline despite liquidity or money supply expansion) as banks focus on their balance sheets amid recapitalization, rising risk on asset quality and tighter regulations on the banking / financial sector.

Eurozone: Selected Sovereign Bond Yields (% p.a.) Eurozone: Purchasing Managers Index (PMI) & Real GDP Growth (% YoY)

0

2

4

6

8

10

12

14

16

0

5

10

15

20

25

30

35

40

Jan-

10M

ar-1

0

Ma y

-10

Jul-1

0

Sep-

10

Nov

-10

Jan-

11M

ar-1

1

May

-11

Jul-1

1

Sep-

11

Nov

-11

Jan-

12

Mar

-12

May

-12

Jul-1

2

Sep-

12

Nov

-12

Jan-

13M

ar-1

3

May

-13

GreecePortugalSpain (RHS)Italy (RHS)Ireland (RHS)

(8)

(6)

(4)

(2)

0

2

4

6

30

35

40

45

50

55

60

65

Mar

-06

Jul-0

6D

ec-0

6Ap

r-07

Aug-

07D

ec-0

7A p

r-08

Aug-

08D

ec-0

8Ap

r-09

Aug-

09D

ec-0

9Ap

r-10

Aug-

10D

ec-1

0Ap

r-11

Aug-

11D

ec-1

1Ap

r-12

Aug-

12D

ec-1

2A p

r-13

Eurozone Manufacturing PMI Eurozone Services PMIEurozone Real GDP (% YoY)

Sources: Bloomberg Sources: Bloomberg, CEIC

Eurozone: Money Supply & Loans Growth (% YoY) Eurozone: Unemployment Rates (Latest Monthly, %)

(2)

0

2

4

6

8

10

12

Sep-

07D

ec-0

7M

ar-0

8Ju

n-08

Sep-

08D

ec-0

8M

ar-0

9Ju

n-09

Sep-

09D

ec-0

9M

ar-1

0Ju

n-10

Sep-

10D

ec-1

0M

ar-1

1Ju

n-11

Sep-

11D

ec-1

1M

ar-1

2Ju

n-12

Sep-

12D

ec-1

2M

ar-1

3

Money Supply M2 (% YoY) Loans Outstanding (% YoY)

6.9

10.611.9 12.2

14.015.6

16.9

26.027.2

0

5

10

15

20

25

30

Germany France Italy Eurozone Ireland Cyprus Portugal Greece Spain



13-14 June 2013 Page 17 of 172

In Japan, the government and the central bank embarked on aggressive reflation policy dubbed “Abenomics” in late-2012 and early-2013, essentially by weakening the Japanese Yen, targeting to achieve a 2% inflation rate within the next 2-3 years, and adopting the US Federal Reserve’s aggressive money printing to spur growth and put an end to deflation that has been in existence for around two decades. In addition, the Government also announced a JPY10.3tr (2% of GDP) fiscal stimulus back in January 2013. The result is promising in that the Japanese Yen’s fall of as much as 35% against the US Dollar from last year’s high, and the stock market’s surge of up to 90% in the past one year are translating into a pick up in the economy. Real GDP growth accelerated to the annualized QoQ rate of +3.5% in 1Q 2013 from +1% in 4Q 2012, producing a “technical recovery” after the “technical recession” in 2Q 2012 and 3Q 2012 when the economy shrank -0.9% and -3.5% respectively.

Bank of Japan’s Balance Sheet (JPYb) Japan: Real GDP Growth (% QoQ annualised)

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

190,000

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

A pr-

08Ju

l-08

Oct

-08

Jan-

09A p

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11A p

r-11

Jul-1

1O

ct-1

1Ja

n-12

A pr-

12Ju

l-12

Oct

-12

Jan-

13A p

r-13

(8)

(6)

(4)

(2)

0

2

4

6

8

10

12

1Q 2010

2Q 2010

3Q 2010

4Q 2010

1Q 2011

2Q 2011

3Q 2011

4Q 2011

1Q 2012

2Q 2012

3Q 2012

4Q 2012

1Q 2013


Japanese Yen versus USD Nikkei 225 Index

75

80

85

90

95

100

105

Jan-

12Ja

n-12

Feb-

12M

ar-1

2M

ar-1

2Ap

r-12

Apr-

12M

ay-1

2Ju

n-12

Jun-

12Ju

l-12

Aug-

12Au

g-12

Sep-

12O

ct-1

2O

ct-1

2N

ov-1

2D

ec-1

2D

ec-1

2Ja

n-13

Feb-

13Fe

b-13

Mar

-13

Apr-

13Ap

r-13

May

-13

Jun-

13

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

Jan-

12Ja

n-12

Feb-

12M

ar-1

2M

ar-1

2Ap

r-12

Apr-

12M

ay-1

2Ju

n-12

Jun-

12Ju

l-12

Aug-

12Au

g-12

Sep-

12O

ct-1

2O

ct-1

2N

ov-1

2D

ec-1

2D

ec-1

2Ja

n-13

Feb-

13Fe

b-13

Mar

-13

Apr-

13Ap

r-13

May

-13

Jun-

13



13-14 June 2013 Page 18 of 172

Meanwhile, China is entering a moderate growth phase. 1Q 2013 real GDP expanded at a sub-8% YoY growth for the fourth quarter in a row, although growth was still above the official target of 7.5% for the year. The speed of growth is shifting to lower gear as the country’s new leadership steers the world’s second largest economy away from the rapid growth driven by export-and-manufacturing-oriented investment and debt to a more sustainable economy that is fuelled by services, income and consumer spending, coupled with tackling issues like corruption, pollution, urbanisation, rural development, work and food safety, rule of laws etc. At the same time, policymakers are also focusing on preventing the recent revival in house prices, real estate activities and funding, as well as the excessive credit growth – especially those off the banking system’s balance sheet – from forming real estate and credit bubbles on one hand, while forging ahead with economic and financial sector reforms on the other hand. These rebalancing and restructuring of the world’s second largest economy is bound to have some material impact, and one area of visible effect is being manifested in the current soft global commodity prices.

China: Quarterly Real GDP Growth (% YoY) China: House Price Index (% YoY, % MoM)

0

3

6

9

12

15

Mar

-07

Jun-

07Se

p-07

Dec

-07

Mar

-08

Jun-

08Se

p-08

Dec

-08

Mar

-09

Jun-

09Se

p-09

Dec

-09

Mar

-10

Jun-

10Se

p-10

Dec

-10

Mar

-11

Jun-

11Se

p-11

Dec

-11

Mar

-12

Jun-

12Se

p-12

Dec

-12

Mar

-13

(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

(2)

0

2

4

6

8

10

12

14

Aug-

06

Dec

-06

A pr-

07

Aug-

07

Dec

-07

A pr-

08

Aug-

08

Dec

-08

Apr-

09

Aug-

09

Dec

-09

A pr-

10

Aug-

10

Dec

-10

A pr-

11

Aug-

11

Dec

-11

A pr-

12

Aug-

12

Dec

-12

Apr-

13

China: House Price YoY China: House Price MoM (RHS)


China: Floor Space Under Construction (% YoY) China: Real Estate Climate Index

10

15

20

25

30

35

40

45

50

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

Floor Space Under Construction: YTD

Floor Space under Construction: YTD: Residential: Total

(15)

(10)

(5)

0

5

10

15

94

96

98

100

102

104

106

108

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

Real Estate Climate Index (RECI) % YoY

Source: Bloomberg Sources: Bloomberg


13-14 June 2013 Page 19 of 172

China: Real Estate Investment – Total Funding (% YoY) China: Real Estate Investment – Total Funding by Sources (% YoY)

0

10

20

30

40

50

60

70

80

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

(100)

(50)

0

50

100

150

200

250

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13A p

r-13

Real Estate Inv: Source of Fund: YTD: Foreign Investment

Real Estate Inv: Source of Fund: YTD: Self Raised

Real Estate Inv: Source of Fund: YTD: Others

Source: Bloomberg Sources: Bloomberg

China: New Loans (Monthly, CNYb) China: All-System Financing Aggregate, Trust & Entrusted Loans (Monthly, CNYb)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09A p

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11A p

r-11

Jul-1

1O

ct-1

1Ja

n-12

A pr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

(100)

0

100

200

300

400

500

600

700

0

500

1,000

1,500

2,000

2,500

3,000

Jan-

07

Ma y

-07

Sep-

07

Jan-

08

Ma y

-08

Sep-

08

Jan-

09

Ma y

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

Ma y

-11

Sep-

11

Jan-

12

Ma y

-12

Sep-

12

Jan-

13

All-System Financing Aggregate Trust & Entrusted Loans - RHS

Source: Bloomberg Sources: Bloomberg, CEIC

The Asian NIEs – consisting of South Korea, Taiwan, Hong Kong and Singapore – remain lackluster thus far. In 1Q 2013, Hong Kong economy expanded by a lethargic +2.8% YoY, South Korea’s and Taiwan’s expansions were paltry at 1.5% YoY, while Singapore economy barely grew at just +0.2% YoY last quarter. On a simple average basis, Asian NIEs growth continued to pace at 2.4% YoY in 1Q 2013, the same as in 2012. The group’s disappointing growth numbers came about against the backdrop of the decelerating global growth mentioned earlier, and exacerbated by the erosion in export competitiveness due to factors such as higher business operating costs and the decline in Japanese Yen, as well as domestic structural challenges that include ageing population, surge in property prices and escalating cost of living.


13-14 June 2013 Page 20 of 172

ASEAN NIEs & ASEAN: Contributions of Domestic Demand & Net External Demand to Real GDP Growth, 1Q 2013 (percentage points)

Asian NIEs & ASEAN: Contributions of Domestic Demand & Net External Demand to Real GDP Growth, 2012 (percentage points)

(6)

(4)

(2)

0

2

4

6

8

10

S. K

orea

Taiw

an

Hon

g Ko

ng

Sing

apor

e

Indo

nesia

Thai

land

Mal

aysi

a

Phili

ppin

es

Domestic Demand Net External Demand GDP Growth(8)

(6)

(4)

(2)

0

2

4

6

8

10

S. K

orea

Taiw

an

Hon

g Ko

ng

Sing

apor

e

Indo

nesia

Thai

land

Mal

aysi

a

Phili

ppin

es

Domestic Demand Net External Demand GDP Growth

Sources: Bloomberg, CEIC, Maybank KE Sources: Bloomberg, CEIC, Maybank KE

ASEAN NIEs & ASEAN: Contributions of Consumer Spending, Business Spending & Government Spending to Real GDP Growth, 1Q 2013 (percentage points)

ASEAN NIEs & ASEAN: Contributions of Consumer Spending, Business Spending & Government Spending to Real GDP Growth, 2012 (percentage points)

(1)

0

1

2

3

4

5

S. K

orea

Taiw

an

Hon

g Ko

ng

Sing

apor

e

Indo

nesia

Thai

land

Mal

aysi

a

Phili

ppin

es

Consumer Spending Gross Fixed Capital Formation Govt Consumption

(1)

0

1

2

3

4

5 S.

Kor

ea

Taiw

an

Hon

g Ko

ng

Sing

apor

e

Indo

nesia

Thai

land

Mal

aysi

a

Phili

ppin

es

Consumer Spending Gross Fixed Capital Formation Govt Consumption

Sources: Bloomberg, CEIC, Maybank KE Sources: Bloomberg, CEIC, Maybank KE

The firm spot in an otherwise still fragile world economy at the moment is ASEAN (ex-Singapore). In 1Q 2013, growth within the region’s five key economies – Indonesia, Thailand, Malaysia, Philippines and Vietnam – ranged between 4.1% YoY and 7.8% YoY. On a simple average basis, the ASEAN-5 growth momentum remained healthy at 5.6% in 1Q 2013 vs 6.1% in 2012. This robust expansion was underpinned by domestic demand – especially consumer spending and investment expenditure, thus maintaining the growth dynamics observed in 2012. Overall, these reflect a virtuous combination of flexible policies, favourable demography, strong macroeconomic and banking sector fundamentals, as well as investment upcycle to enhance infrastructure in terms of modernisation and expansion, boost competitiveness, raise productivity, and positioning for the opportunities from the expected increase in intra-regional trade and investment flows under regional free trade and economic integration initiatives e.g. ASEAN Economic Community (AEC), Regional Comprehensive Economic Partnership (RCEP), and Trans-Pacific Partnership (TPP). These have enabled ASEAN economies to weather the uncertainties and volatilities in external demand in the last 2½ years.


13-14 June 2013 Page 21 of 172

Event-and-Investment-Driven Local Economy

1Q 2013 real GDP growth pulled down by external demand. The Malaysian economy grew by a lower-than-expected +4.1% YoY in 1Q 2013, down from +6.5% YoY in 4Q 2012. Given the aforementioned global economic condition, it came as no surprise that the culprit was the bigger contraction in net external demand (1Q 2013: -36.4% YoY; 4Q 2012: -9.3% YoY) as export of goods and services contracted (1Q 2013: -0.6% YoY; 4Q 2012: -1.6% YoY) while imports of goods and services rebounded (1Q 2013: +3.6% YoY; 4Q 2012: -0.6% YoY). The weak external demand was also mirrored on the supply side of the GDP by the “flat” manufacturing sector (1Q 2013: +0.3% YoY; 4Q 2012: +5.7% YoY).

Malaysia: Quarterly Real GDP (% YoY)

1Q12 2Q12 3Q12 4Q12 1Q13

Real GDP (% YoY) 5.1 5.6 5.3 6.5 4.1 Manufacturing 4.4 5.7 3.3 5.7 0.3

Services 5.7 6.6 7.0 6.4 5.9

Agriculture 2.4 (4.6) 0.6 5.6 6.0

Mining 0.3 2.2 (1.2) 4.2 (1.9)

Construction 15.4 21.5 17.9 17.6 14.7 Domestic Demand 9.7 14.0 11.4 7.8 8.2

Private Consumption 7.3 8.6 8.6 6.2 7.5

Public Consumption 9.2 11.0 2.4 1.2 0.1

Gross Fixed Capital Formation 14.9 26.2 22.3 16.0 13.2

Net External Demand 18.7 24.6 22.9 20.1 10.9

Exports of Goods & Services 8.9 28.9 22.4 12.9 17.3

Imports of Goods & Services (25.9) (40.4) (47.6) (9.3) (36.4)

Sources: Department of Statistics, BNM's Quarterly Economic Bulletin

Malaysia: Quarterly Real GDP (1Q08 - 1Q13) Malaysia: Domestic Demand and Net Exports (% YoY)

(9)

(6)

(3)

0

3

6

9

12

90

110

130

150

170

190

210

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

RMb (LHS) % YoY (RHS) % QoQ (RHS)

(60)

(40)

(20)

0

20

40

(10)

(5)

0

5

10

15

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

Gross Domestic Product (GDP) Domestic Demand Net Exports (RHS)

Source: BNM Quarterly Economic Bulletin Sources: BNM Quarterly Economic Bulletin, Maybank-IB


13-14 June 2013 Page 22 of 172

Domestic demand stayed robust on sustained consumer spending,.. Upholding the positive momentum in the topline economic growth in 1Q 2013 was domestic demand yet again (1Q 2013: +8.2% YoY; 4Q 2012: +7.8% YoY). Consumer spending (1Q 2013: +7.5% YoY; 4Q 2012: +6.2% YoY) was buoyed by a bevy of targeted fiscal stimulus and people-friendly measures ahead of the 13th General Election (GE13) via Budget 2013’s cash handouts and financial assistances to the low income households, students, security forces and veterans, on top of the civil service salary hike and pension adjustment, the 1% income tax rate cut for the middle income taxpayers and the imposition of minimum wage which benefit especially the non-executive employees in the private sector. These add to the already favourable fundamentals such as a stable job market, steady income growth, low inflation and accommodative monetary policy.

Malaysia: Overnight Policy Rate (% p.a.) Malaysia: Inflation Rates (% YoY)

1.5

2.0

2.5

3.0

3.5

4.0

Apr-

04Au

g-04

Dec

-04

Apr-

05Au

g-05

Dec

-05

Apr-

06Au

g-06

Dec

-06

Apr-

07Au

g-07

Dec

-07

A pr-

08Au

g-08

Dec

-08

Apr-

09Au

g-09

Dec

-09

Apr-

10Au

g-10

Dec

-10

Apr-

11Au

g-11

Dec

-11

Apr-

12Au

g-12

Dec

-12

Apr-

13

(9)

(6)

(3)

0

3

6

9

12

(15)

(10)

(5)

0

5

10

15

20

Apr-

07Ju

l-07

Oct

-07

Jan-

08Ap

r-08

Jul-0

8O

ct-0

8Ja

n-09

Apr-

09Ju

l-09

Oct

-09

Jan-

10Ap

r-10

Jul-1

0O

ct-1

0Ja

n-11

Apr-

11Ju

l-11

Oct

-11

Jan-

12Ap

r-12

Jul-1

2O

ct-1

2Ja

n-13

Apr-

13

PPI (LHS) CPI Core CPI

Source: BNM Source: Department of Statistics

Malaysia: Unemployment Rate (%) Malaysia: Private Sector's Annual Salary Increment (% chg)

2

3

4

5

6

7

8

9

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

0

1

2

3

4

5

6

7

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

2007 2008 2009 2010 2011 2012 2013E

Executives Non-Executives Simple Average

Source: Department of Statistics Source: Malaysian Employers Federation's (MEF) Salary Surveys

… and continued double-digit expansion in gross fixed capital formation (1Q 2013: +13.2% YoY; 4Q 2012: +16.0% YoY), sustained by the major infrastructure and investment projects that kicked off last year 2012, particularly those under the Economic Transformation Programme (ETP) such as the Sungai Buloh-Kajang (SBK or Line 1) of the Klang Valley Mass Rapid Transit (KVMRT) and the Refinery and Petrochemical Integrated Development (RAPID) in southern Johor bordering Singapore. These are on top of a number of existing large civil engineering projects that are well into the advance or active phases or in the final or completion stages.


13-14 June 2013 Page 23 of 172

Malaysia: Major Infrastructure and Investment Projects Sector Projects MYRb 2011 2012 2013 2014 2015 Oil & Gas Gumusut-Kakap Semi-Submersible FPS 5.6 Oil & Gas Tj. Langsat Tank Terminal Project 1.0 Transport Seremban-Gemas EDT 3.5 Transport Second Penang Bridge 4.5 Transport Ipoh-Padang Besar EDT 12.5 Utilities Pahang-Selangor Raw Water Transfer (ex-Langat 2 WTP) 2.1 Oil & Gas Sabah-Sarawak Gas Pipeline 4.6 Transport KLIA2 4.0 Transport Klang Valley LRT Extension 7.7 Oil & Gas Melaka Regasification Terminal Plant 3.0 Oil & Gas Sabah Oil Gas Terminal 2.4 Utilities Janamanjung Power Plant 5.0 Utilities Kimanis Power Plant 1.5 Utilities Terengganu Hydro-Electric Dams 2.0 Oil & Gas Berantai RSC Project (until 2026) 3.0 Oil & Gas Balai RSC Project (until 2019) 3.0 Oil & Gas Lahad Datu Regasifaction Plant 1.0 Oil & Gas Malikai Tension-Legged Platform 2.0 Utilities Tanjung Bin Power Plant 6.5 Oil & Gas North Malay Basin Gas Project 15.0 - 16.0 Oil & Gas RAPID 60.0 Transport MRT1 (Sg Buloh - Kajang) 23.0 Utilities Prai Power Plant 2.5 Property Tun Razak Exchange (TRX) 26.0 (GDV) Oil & Gas 7 Centralised Processing Platforms & 70 Smaller Platforms 7.0 Transport West Coast Expressway 6.0 Property Sg Buloh RRI Land @ Kwasa Damansara (10-15 Years Project) 10.0 Oil & Gas Pengerang LNG Tank Terminal Project 4.0 Oil & Gas Pengerang Tank Terminal Project 8.7 Source: Maybank KE Compilation Start / Early Phase Advanced / Active Phase Final / Completion Phase

Growth momentum to accelerate post-GE13. The biggest event for Malaysia this year was GE13 on 5 May 2013. Pre-GE13, there were anecdotal evidence that consumers and businesses were holding back and adopting wait-and-see stance due to uncertainty over the outcome of a very close poll e.g. downtrend in the imports of consumption goods in late-2012 and 1Q 2013, and the YoY declines in banking system’s total loans applications during 2H 2012 and 1Q 2013. GE13 ended with the ruling coalition Barisan Nasional (BN) remaining in power, giving Prime Minister Najib the mandate to continue with his transformation and reform agenda that were set into motion back in 2009 for completion by 2020. Underscoring and reaffirming this commitment, the upcoming Budget 2014 is aptly themed “Fulfilling Promises, Accelerating Transformation”. Moreover, it is in the Government’s interest to see the transformations and reforms bearing results that are visible and impactful to the people – and hence the voting public – by the next GE in 2018.


13-14 June 2013 Page 24 of 172

Political continuity a major positive for investment growth momentum. The political continuity post-GE13 translates into increased certainty and consequently reduce execution risk on the infrastructure projects and investments that are already in the pipeline i.e. investment commitments under the Economic Transformation Programme (ETP) and the regional economic corridors (e.g. Iskandar Malaysia); PETRONAS’ five-year (2011-2015) capital expenditure plan; approved investment by the Malaysian Investment Development Authority (MIDA).

To note, of the MYR211.34b committed ETP investment to-date, only MYR30.8b or 14.6% was realised thus far i.e. from 2011 to 1Q 2013. After the somewhat slow start, the tempo of the annual pace of ETP-related investment should pick up this year onwards as the execution of major projects (KVMRT, oil & gas, Government land developments e.g. Sg Buloh RRI, Tun Razak Exchange) move into higher gear.

ETP: Committed and Realised ETP Investment ETP: Realised & Targeted Investment, 2011-2015

Total Committed ETP Investmentto-date = MYR211.34b

Realised in 2011 = MYR14b

Realised in 2012 = MYR11.4b Realised in 1Q 2013 = MYR5.3b

14.0

11.4

5.34

21.5

24.9

22.1

0

5

10

15

20

25

30

2011 2012 1Q 2013 2013E 2014E 2015E

Source: PEMANDU Source: PEMANDU

Similarly, of the MYR300b five-year (2011-2015) PETRONAS capital expenditure plan, just under a third was spent between 2011 and 1Q 2013 i.e. MYR96.9b. PETRONAS PCEO has verbalised a ramp up in oil & gas spending for the remaining period (2Q 2013 to 2015). In the case of Iskandar Malaysia, the cumulative total investment since its launch back in 2006 were MYR111.4b as at the end of Mar 2013, of which MYR44.8b or 40.2% have been realised.

Petronas: Planned and Realised Capital Expenditure Iskandar Malaysia: Committed and Realised Investment

Total Petronas Capex Plan2011-2015 = MYR300b

Realised in 2011= MYR41.2b

Realised in 2012 = MYR45.6b

Realisedin 1Q 2013

= MYR10b

Total Committed Investment

to-date = MYR111.4b

Realised to-date = MYR44.8b

(40.2% of total)

Source: PETRONAS Source: IRDA


13-14 June 2013 Page 25 of 172

Iskandar Malaysia: Cumulative Committed Investment by Sectors

Iskandar Malaysia: Cumulative Committed Investment by Domestic Investors & Foreign Investors

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011 2012 Jan-Mar13

Government Properties Utilities, Tourism and Others Manufacturing

22.80 25.48 28.78 34.14 38.53 38.81

18.9230.08

40.7050.64

67.78 72.56

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 Jan-Mar 13

Foreign Local

Source: IRDA Source: IRDA

Iskandar Malaysia: Committed & Realised Investment by Sectors /Industries Sectors / Industries 2006 until 31 March 2013

Cumulative Committed

Investments (MYRb)

% Share of Total Cumulative

Investment (%)

Cumulative Realised

Investments (MYRb)

% Share of Total Realised

Investment (%)

Realised as % of

Committed

Property 40.4 36.3 9.4 20.9 23.2 Residential 27.3 24.5 7.1 15.8 25.9 Retail 8.3 7.4 1.8 4.0 21.6 Industrial 4.9 4.4 0.5 1.2 10.9Manufacturing * 35.3 31.7 19.4 43.4 55.0 Utilities 9.5 8.6 3.8 8.4 39.3 Government 8.3 7.5 5.7 12.8 69.1 Petrochemicals & Oleochemicals 6.0 5.3 2.7 6.0 45.4 Logistics 4.4 4.0 2.2 4.9 49.2 Tourism 2.2 2.0 1.0 2.3 45.7 Healthcare 1.6 1.4 0.2 0.5 15.0 Education 1.6 1.4 0.4 0.8 23.9 Emerging Technologies ** 1.0 0.9 - 0.0 0.0 Financial services 0.6 0.5 - 0.0 0.0 Creative industries 0.4 0.4 - 0.0 0.0 TOTAL 111.4 100.0 44.8 100.0 40.2* Including electrical & electronics, food & agricultural processing ** Include Green Technology, Biotechnology, Solar Technology Source: IRDA

Meanwhile, MIDA’s investment approvals in the manufacturing, services and primary sectors are maintaining its upward trajectory in 2011-2012 that reversed the downtrend in 2007-2010. This followed the 44% YoY surge in approved investments during 1Q 2013 to MYR49.3b versus the MYR34.3b in 1Q 2012, supported by both approved domestic investments (+25.5% YoY to MYR31b) and approved FDI (+90.6% YoY to MYR18.3b), further indicating the broad-based and positive undercurrents on Malaysia’s current investment upcycle. In addition, actual FDI inflows totalled MYR9.1b in 1Q 2013, up +54.5% QoQ and +6.4% YoY, implying that Malaysia is on track to achieve the full-year FDI target of MYR37.2b inflows (2012: MYR31.1b), or at least maintain the annual average of MYR34b per annum since 2010.


13-14 June 2013 Page 26 of 172

MIDA Approved Investments (MYRb) FDI into Malaysia

0

20

40

60

80

100

120

140

160

180

2006 2007 2008 2009 2010 2011 2012 1Q 2012 1Q 2013

(2)

0

2

4

6

8

10

12

14

0

5

10

15

20

25

30

35

40

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

E

Full-Year 1Q of the Year

Source: MIDA Source: Department of Statistics

Plus additional boost to infrastructure investment and construction from the pledges in BN manifesto. These include the expansion of the KVMRT (Line 2 and Line 3), LRT, as well as the double-tracking and the KTMB Commuter railways; KL-Singapore High-Speed Rail; upgrades and extensions of the North-South Expressway, the East Coast Highway and the 2,300km Pan-Borneo Highway; construction of the West Coast Highway; and solving the treated water supply problems in Federal Territory, Selangor and Kelantan.

Meanwhile, continued moderate inflation and accommodative monetary policy uphold consumer spending growth momentum. Given the reduced Barisan Nasional (BN) wins in GE13 in terms of the majority in the Parliament, the number of State Assembly seats and the percentage share of the popular votes, we expect both the resumption in the Subsidy Rationalisation Programme (SRP) that was last done in May-June 2011, and the introduction of the Goods & Services Tax (GST) will be pushed later into 2014. To recap, the only post-GE13 adjustments to our macroeconomic forecasts were on inflation rate and interest rate. We now expect consumer price index to increase modestly by +1.8% (2012: +1.6%) from the previous forecast of 2.5% which had assumed some revisions to the subsidised fuel and energy prices in 2H 2013. Consequently, we see no change in the benchmark Overnight Policy Rate (OPR) this year, currently at 3.00%, against the earlier expectation of a 25bps hike in 4Q 2013. This combination of moderate inflation and continued accommodative monetary policy, together with the stable job market and steady income growth will support consumer spending growth.


13-14 June 2013 Page 27 of 172

Outlook and Lookouts

Policies and politics matter. We maintain our views expressed at the start of the year that policies and politics will be the key influences on the outlook and lookout for the global, regional and local economies. Globally, the major issues are the direction of the US Fed’s QE3; political and policy developments in Eurozone to deal with the aftermath of the sovereign debt crisis e.g. recession, record unemployment, the future of the union; bold economic overhauls under Japan’s “Abenomics” to complement the bold monetary stimulus; and the prospect of China’s growth soft-landing. Regionally, the policy issue that is playing out so far this year is balancing between supporting and sustaining growth momentum on one hand, and safeguarding macroeconomic and financial stability on the other hand, on top of regional geopolitics. Domestically, post-GE13, Malaysia must reassure markets, businesses and investors that the infrastructure and investment projects, the transformation programmes and the reform initiatives are not only staying on track but also gaining traction. Another key political event after GE13 is the UMNO General Assembly and Party Election (late-3Q 2013 or 4Q 2013) where PM Najib will seek the mandate to lead his party after securing the mandate to lead the country.

In the major economies, there is little option but to stick to the unconventional monetary policy measures. This is largely because the rooms for aggressive and huge fiscal stimulus in response to the Great Financial Crisis and Recession of 2008-2009 are constrained by the need for governments to carry on with fiscal consolidation and deleverage by cutting deficit spending and paring down debts to sustainable levels. Indeed, what we are witnessing over the past five years is major central banks playing “merry-go-round” as they take turn in passing the baton announcing measures that extend and expand unorthodox monetary stimulus via continuation of near-zero interest rates, money printing and special liquidity programmes to boost bank lending and economic activities. Within the last 12 months alone, we have seen the Bank of England’s expanded its asset purchase programme (June 2012); the US Fed’s third installment of quantitative easing and the announcement of European Central Bank’s “Outright Monetary Transactions” (September 2012); followed by the Bank of Japan’s “Qualitative and Quantitative Monetary Easing” (April 2013) and more recently, the European Central Bank cutting its policy interest rate to a record low of 0.5% (May 2013).

Eyes on US Federal Reserve in the next three months. Past several FOMC meetings plus recent speeches and comments by Fed Governors revealed discussions and debates among policymakers on the timeframe, the size and the direction of QE3. Fed Chairman Ben Bernanke added fuel to the fire at the recent testimony to the US Congress when he indicated that the size of QE3 – currently running at USD85b per month – may be increased or decreased sometime in the next few meetings, depending on economic data. Markets reacted negatively to the remark amid speculations of possible unwinding or tapering of QE3 as early as the FOMC meeting on 17-18 September 2013, and that the federal funds rate may be raised earlier than the indicated timeline of by mid-2015 at least. Between now and then, there will be two FOMC meetings (18-19 June 2013, 30-31 July 2013) which will be put under the spotlight and scrutinized by the markets.


13-14 June 2013 Page 28 of 172

Parameters set by Fed are nowhere near the required levels to reverse QE3. The FOMC meeting in December 2012 set the conditions for QE3 reversal i.e. unemployment rate falling to 6.5% and inflation rate exceeding 2.5%, based on the core private consumption expenditure (PCE) deflator. Currently, unemployment rate is at 7.5%, and the existing non-farm payroll increase averaging around +180,000 per month since 2011 suggests jobless rate will only reach 6.5% in 3Q 2014. Meanwhile, the core PCE deflator was 1.1% YoY in April 2013 and has been trending down from 2% YoY in Mar 2012, pointing to muted inflation risk.

Talks on winding down or tapering QE3 highlight the importance of communication when applying unorthodox monetary policy. On one hand, Fed’s chatters on reversing QE3 can be interpreted as signaling underlying confidence that the US recovery is sustainable and weathering the negative fiscal impulses, hence the talk on exit strategy. On the other hand, the central bank may be getting a bit nervous, not so much about conventional inflation, but on the risk of asset inflation in view of the recent frothy stock and bond markets, thus feeling the need to intervene verbally. At this juncture, what is more important is the pick up in business spending, which was dampened by the earlier fiscal policy uncertainties. This can help to supplement consumer spending that display resilience amid the fiscal drag so as to ensure that the US economy stays on the growth track, thus enabling the eventual reversal in QE3 to take place in an environment of entrenched growth.

US: Retail Sales (% YoY) US: Non-Defence Capital Goods Orders (% YoY)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4

6

8

10

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11A p

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

Retail Sales %YoY Retail Sales Ex-Auto & Gasoline % YoY (50)

(40)

(30)

(20)

(10)

0

10

20

30

40

50

60

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13


Eurozone: Make up or break up? The second recession within five years and the rising tide of unemployment, especially among the youth, have stoked anti-austerity sentiment and politics as seen in the Greek and Italian elections. Along with these come the growing calls for some easing in the austerity drive and focus on growth-promoting strategy and jobless-reduction policies. Interestingly, concessions and trade-offs are emerging as EU leaders extended the deadlines and granted more flexibility for countries to meet their budget deficit reduction targets in exchange for structural reforms. Overall, political and policy developments will be key in determining whether the current socio-political cracks and the economic and financial fragmentations within the monetary union will be cemented and glued back together by deeper integration via banking, fiscal and political unions that remain a work in progress. Otherwise, the risk is that the fissures will grow to rekindle talks of a “breakup”. The upcoming Germany election in September 2013 will also be a crucial event to watch as the outcome may well set the tone on the future of Eurozone.


13-14 June 2013 Page 29 of 172

The jury is still out on “Abenomics”. The outcome of the latest policy gambit in Japan is by no means certain and the jury is still out on the matter. What’s encouraging is that the trend in Japan’s PMI suggests the aforementioned “technical recovery” is turning into a “cyclical recovery” as the manufacturing PMI rose to 50.4 in March 2013, moving out of its sub-50 readings between June 2012 and February 2013, and climbed further to 51.1 in April 2013 and 51.5 in May 2013. Nevertheless, an end to Japan’s deflation is “incomplete” if based by the return of conventional inflation as measured by the Consumer Price Index (CPI) – which has yet to materialize – and the surge in financial asset prices. There must also be sustainable rebounds in wages and property values, which remain to be seen. This requires a “structural recovery” – especially in domestic demand – which necessitates bold economic overhauls e.g. tax-based instead of spending-based fiscal incentives and stimulus; free trade; liberalisation and deregulation of domestic sectors and industries; supply-side reforms in the labour market, education system and land rules; abolishing or relaxing stifling legislations on businesses and on portfolio as well as direct investments; greater flexibility in the job market to facilitate higher participation rate of women in the labour force etc. PM Shinzo Abe has signaled the “third arrow” of “Abenomics”, outlining the growth strategy as well as the economic reforms and restructuring agenda in his recent speeches, ahead of the Upper House Election on 21 July 2013 where his Liberal Democratic Party (LDP) is currently in the minority but is expected to replicate the win in the Lower House Election in November last year.

Japan: Headline CPI (% YoY) Japan: Core CPI (% YoY)

(3)

(2)

(1)

0

1

2

3

4

5

Jan-

90N

ov-9

0Se

p-91

Jul-9

2M

a y-9

3M

ar-9

4Ja

n-95

Nov

-95

Sep-

96Ju

l-97

Ma y

-98

Mar

-99

Jan-

00N

ov-0

0Se

p-01

Jul-0

2M

a y-0

3M

ar-0

4Ja

n-05

Nov

-05

Sep-

06Ju

l-07

Ma y

-08

Mar

-09

Jan-

10N

ov-1

0Se

p-11

Jul-1

2

(2)

(2)

(1)

(1)

0

1

1

2

2

3

3

4

Jan-

90N

ov-9

0Se

p-91

Jul-9

2M

ay-9

3M

ar-9

4Ja

n-95

Nov

-95

Sep-

96Ju

l-97

Ma y

-98

Mar

-99

Jan-

00N

ov-0

0Se

p-01

Jul-0

2M

ay-0

3M

ar-0

4Ja

n-05

Nov

-05

Sep-

06Ju

l-07

Ma y

-08

Mar

-09

Jan-

10N

ov-1

0Se

p-11

Jul-1

2


Japan: Wages (% YoY) Japan: Urban Land Price Index (% YoY)

(8)

(6)

(4)

(2)

0

2

4

6

8

Feb-

91D

ec-9

1O

ct-9

2Au

g-93

Jun-

94Ap

r-95

Feb-

96D

ec-9

6O

ct-9

7Au

g-98

Jun-

99A p

r-00

Feb-

01D

ec-0

1O

ct-0

2Au

g-03

Jun-

04Ap

r-05

Feb-

06D

ec-0

6O

ct-0

7Au

g-08

Jun-

09Ap

r-10

Feb-

11D

ec-1

1O

ct-1

2

(10)

(5)

0

5

10

15

20

Mar

-88

Feb-

89Ja

n-90

Dec

-90

Nov

-91

Oct

-92

Sep-

93Au

g-94

Jul-9

5Ju

n-96

Ma y

-97

Apr-

98M

ar-9

9Fe

b-00

Jan-

01D

ec-0

1N

ov-0

2O

ct-0

3Se

p-04

Aug-

05Ju

l-06

Jun-

07M

a y-0

8A p

r-09

Mar

-10

Feb-

11Ja

n-12

Dec

-12

Source: Bloomberg Source: CEIC


13-14 June 2013 Page 30 of 172

For the regional economies, it is shaping into a tug-of-war between growth and stability. The massive amount of liquidity generated out the major central banks’ printing presses created a host of risks and policy challenges for the emerging markets, namely the surge in capital flows, frothy financial markets and volatile currency markets, domestic credit boom and the risk of real estate or property inflation. This put authorities in the regional economies, including Malaysia, in a quandary, as governments and policymakers are caught between sustaining their internal growth momentum amid external uncertainties on one hand, and safeguarding the macroeconomic fundamentals and financial stability on the other hand.

Major Central Banks’ Balance Sheets (USDm) Global Stock Market and Bond Market Indices

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

A pr-

08Ju

l-08

Oct

-08

Jan-

09A p

r-09

Jul-0

9O

ct-0

9Ja

n-10

A pr-

10Ju

l-10

Oct

-10

Jan-

11A p

r-11

Jul-1

1O

ct-1

1Ja

n-12

A pr-

12Ju

l-12

Oct

-12

Jan-

13A p

r-13

ECB, FED, BoE and BOJ Combined Balance Sheet (USDb)

350

375

400

425

450

475

500

525

550

600

800

1,000

1,200

1,400

1,600

1,800

Jan-

07

May

-07

Sep-

07

Jan-

08

May

-08

Sep-

08

Jan-

09

Ma y

-09

Sep-

09

Jan-

10

Ma y

-10

Sep-

10

Jan-

11

Ma y

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

Ma y

-13

MSCI World Equity Index (LHS) JP Morgan Global Bond Index

Source: Bloomberg, Central Banks Source: Bloomberg

Benchmark Interest Rates (Latest, % p.a.) Nominal Effective Exchange Rates, 12 Months (% YoY)8.3

7.5 7.3 7.0

6.0 5.8

3.5 3.0 2.8 2.8 2.5

1.9

0.5 0.5 0.3 0.1 0

1

2

3

4

5

6

7

8

9

Rus

sia

Braz

il

Indi

a

Viet

nam

Chi

na

Indo

nesia

Phili

ppin

es

Mal

aysi

a

Aust

ralia

Thai

land

S. K

orea

Taiw

an

Euro

zone UK

US

Japa

n

9.3 8.5 8.2 8.0 7.3 5.6 5.5 4.3

1.3 0.7 0.5

(0.5) (1.4) (1.9)

(23.4)(30)

(25)

(20)

(15)

(10)

(5)

0

5

10

15

KRW

THB

CN

Y

PHP

MYR

SGD

EUR

TWD

AUD

USD

HKD ID

R

INR

GBP JP

Y

Source: Bloomberg, CEIC Source: Bloomberg

Global: Money Supply & Loans Growth (Latest, % YoY) Property Prices (Latest, % YoY)

Indonesia

ChinaThailandBrazil

India

Malaysia

S.KoreaUS

HKSingapore

TaiwanJapan

EUUK

PhilippinesVietnam

(5)

0

5

10

15

20

25

0 5 10 15 20 25

Loan

sG

row

th (%

YoY

)

Money Supply Growth (% YoY)

(15)

(10)

(5)

0

5

10

15

20

25

HK

Chi

na

Indi

a

Taiw

an

Sout

h Af

rica

Turk

ey

Rus

sia

Indo

nesia

Mal

aysi

a

Sing

apor

e

Aust

ralia

Ger

man

y

US

Fran

ce UK

S. K

orea

Irela

nd EU

Portu

gal

Spai

n

Gre

ece

Source: Bloomberg, CEIC Note: Latest Monthly Data (Mar/Apr/May 2013) except for EU and Greece (Dec 2012) Source: CECI


13-14 June 2013 Page 31 of 172

Consequently, this tug-of-war between spurring growth and maintaining stability have prompted most of the emerging markets to keep their interest rates unchanged and at still below pre-crisis levels, but at the same time undertake pre-emptive and prudential measures to keep in check the attendant risks to macroeconomic fundamentals and financial stability like capital flows, currency speculation as well as credit and property bubbles. Another downside risk arising from the current global policy mix is the threat of “currency war” as regional economies responded to the appreciation in their currencies amid the pursuit of cheap money and weak currency among the major economies. We have seen authorities in the likes of South Korea, Philippines, Indonesia and Malaysia restricting or even banning trades in non-deliverable currency forwards (NDFs) and offshore fixing of their currencies’ exchange rates. South Korea’s and Thailand’s central banks have also lowered their benchmark interest rate to stem the rise in their currencies amid downside risks to GDP growth performance, and these countries have mulled and proposed specific capital control measures.

Regional Economies: Policy & Measures to Sustain Growth, Safeguard Stability (late-2012, 2013 YTD) Country Interest Rate

Cut Fiscal

Stimulus Property

Measures to Curb

Speculation

Enhance Banking

Regulatory & Supervisory

Oversight

Liberalise or Relax Capital Account & FX

Rules

Restrictions or Bans on NDF

Trades & Offshore Currency Fixings

Selective Capital

Controls, “Tobin Tax”

China X X XIndia XSouth Korea X X X X X 2/HK XTaiwan XSingapore X XIndonesia X XThailand X X X 2/ Malaysia X X X XPhilippines X 1/ X X XVietnam X X1/ Special Deposit Account (SDA)Rate 2/ Proposals only Source: Maybank KE

Keep an eye on the regional geopolitics. Besides the long-standing tension between South Korea and North Korea, other potential sources of regional geopolitical hotspots include the overlapping territorial claims involving the North East Asian countries of China, Japan, South Korea and Taiwan; as well as the on-going territorial disputes in the South China Sea involving China and several ASEAN members. While things appear to be under control, there is always the attendant risk of incidents near the disputed areas leading to the escalation of the unresolved situations. The point is, amid divisive politics in the US and a fragmented Europe that have led to near-paralysis in policymaking, Asia needs to show that it can work together, fortify regional conducts and dialogues to resolve conflicts, and look at the prospect of joint developments in the disputed areas to strengthen its resilience against global headwinds and tailwinds, rather than entering into sub-regional territorial fracas that complicates growth scenario by potentially disrupting economic activities as well as trade and investment flows, and derail the process and progress in regional co-operations and integration.


13-14 June 2013 Page 32 of 172

Maintain Malaysia’s 2013 real GDP growth forecast of 5.3%, as we expect investment growth momentum to accelerate post-GE13 and consumer spending to remain resilient. We also expect improvements in manufacturing and mining as the year progress after the weak start to 2013. The key thing to watch on the Malaysian economy over the next few months / quarters will be external demand. We anticipate the current softness in the global economy and world trade to bottom and stabilise in 2Q 2013, followed by a mild improvement in 2H 2013. Consequently, we are projecting global real GDP to expand by 3.2% in 2013, the same as in 2012. The global and local indices of leading economic indicators are supportive of this outlook as they are not signaling further deterioration in global and domestic economic growth.

Global: Index of Leading Economic Indicators vs Real GDP (% YoY)

Malaysia: Index of Leading Economic Indicators vs Real GDP (% YoY)

(9)

(6)

(3)

0

3

6

9

12

15

(4.5)

(2.5)

(0.5)

1.5

3.5

5.5

7.5

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

Global GDP (RHS) BRICEast Asia ex Japan and China OECD - Total

(8)

(4)

0

4

8

12

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

Real GDP Index of Leading Econ. Indicators

Sources: OECD, Bloomberg, CEIC, Maybank KE Source: Department of Statistics, Maybank KE

Malaysia: Real GDP % chg ACTUAL MAYBANK-KE OFFICIAL 2011 2012 1Q 2013 2013E 2014E 2013E

Real GDP 5.1 5.6 4.1 5.3 5.7 5.0-6.0 Manufacturing 4.7 4.8 0.3 5.2 5.5 4.9 Services 7.0 6.4 5.9 6.2 6.5 5.5 Agriculture 5.9 0.8 6.0 1.6 2.0 4.0 Mining (5.7) 1.4 (1.9) 2.4 2.8 5.0 Construction 4.6 18.5 14.7 11.0 15.0 15.9

Domestic Demand 8.2 10.6 8.2 8.5 8.6 8.1

Private Consumption 7.1 7.7 7.5 6.6 6.5 7.1 Public Consumption 16.1 5.0 0.1 4.6 3.2 3.6 Gross Fixed Capital Formation 6.5 19.9 13.2 14.2 15.0 12.2 Private Investment 12.2 22.0 10.9 15.1 14.3 15.6 Public Investment (0.3) 17.2 17.3 13.0 15.8 7.5

Net External Demand (7.4) (29.4) (36.4) (15.3) (27.1) (19.1) Exports of Goods & Services 4.2 0.1 (0.6) 2.2 3.3 1.8 Imports of Goods & Services 6.2 4.5 3.6 4.0 5.8 3.9

Sources: MoF Economic Report 2012/2013, Department of Statistics, Maybank-KE


13-14 June 2013 Page 33 of 172

Malaysia: Other Key Economic Indicators

ACTUAL MAYBANK KE OFFICIAL 2011 2012 2013 YTD 2013E 2014E 2013E

Gross Exports (% chg) 9.2 0.6 (2.4) 3.9 5.4 1.4 Gross Imports (% chg) 8.5 5.9 5.2 6.1 8.1 5.7 Trade Balance (RMb) 124.2 94.8 16.6 87.0 86.5 70.1 Current Account Balance (RMb) 97.1 57.3 8.7 55.0 54.7 42.7 Current Account Balance (% of GDP) 11.0 6.3 3.7 5.5 5.2 4.4 Fiscal Balance (% of GDP) (4.8) (4.5) (6.4) (4.0) (3.5) (4.0) Inflation Rate (CPI, %) 3.2 1.6 1.5 1.8 2.0 - 2.5 2.0 -3.0 Overnight Policy Rate (% p.a., end-period) 3.00 3.00 3.00 3.00 3.00 - 3.25 NA Exchange Rate (RM/USD, end-period) 3.17 3.06 3.09 2.98 2.90 NA Unemployment Rate (%) 3.1 3.0 3.2 3.1 3.0 3.1 Crude Petroleum (WTI USD/bbl, average) 95.0 94.1 94.0 95.0 95.0 110.0 Crude Palm Oil (RM/tonne, average) 3,279 2,865 2,313 2,500 2,600 2,500 Sources: Bloomberg, Dept. of Statistics, BNM, Maybank KE, Maybank FX Research

Global Real GDP % chg 2010 2011 2012 2013E

World 5.2 4.0 3.2 3.2

Advanced Economies 3.0 1.6 1.2 1.1US 2.4 1.8 2.2 2.0 Eurozone 2.0 1.4 (0.6) (0.5) Japan 4.7 (0.6) 2.0 1.3 UK 1.8 0.9 0.2 0.8

BRIC 8.4 6.0 4.0 4.7Brazil 7.5 2.7 0.9 3.0 Russia 4.5 4.3 3.4 2.9 India 11.2 7.7 4.0 5.7 China 10.4 9.3 7.8 7.1

Asian NIEs 9.7 4.4 1.5 3.0South Korea 6.3 3.6 2.0 2.8 Taiwan 10.8 4.1 1.3 3.4 Hong Kong 6.8 4.9 1.4 3.4 Singapore 14.8 5.2 1.3 2.3

ASEAN-5 7.1 4.3 6.0 5.8Indonesia 6.2 6.5 6.2 6.7 Thailand 7.8 0.1 6.4 4.5 Malaysia 7.2 5.1 5.6 5.3 Vietnam 6.8 5.9 5.0 5.0 Philippines 7.6 3.9 6.6 7.5

Asia ex-Japan 10.0 8.1 6.6 6.7

World Trade Volume 12.5 6.0 2.5 3.7Sources: IMF, Consensus, Maybank-KE (for China, Singapore, ASEAN-5)


13-14 June 2013 Page 34 of 172

Continuing The Momentum 1,840 YE KLCI target. We peg our 2013 YE KLCI target to 15.5x 12M forward earnings, slightly above its mean of 14.8x, supported by solid domestic fundamentals – stable macroeconomic conditions, a strong banking system, healthy corporate balance sheets, and continuous corporate earnings growth. Despite gaining 4.2% in just one month after the 13th general election and 4.6% year to date, the KLCI has still underperformed its regional peers. Rising foreign interests and cashed-up domestic funds would provide further support to the KLCI’s uptrend.

Positive newsflow ahead. 1Q13 real GDP growth came in at 4.1% YoY, while we have retained our full-year growth projection of 5.3%, expecting the investment momentum to accelerate. Supporting this should be a pick-up in ETP projects implementation, with just MYR31b of the MYR211b committed investments realised as at end-Mar 2013. The government is also expected to give its go-ahead for the KV MRT 2 project in July, and a decision on the KL-Singapore high speed rail by year end. Government land developments are expected to start, while PETRONAS’ MYR300b 5-year capex spend will accelerate.

Growth and valuations. Our core KLCI earnings growth forecasts are 6.1%/7.6% for 2013/2014, while our research universe earnings growth forecasts are 7.8%/10.4%. Having risen 72 points (+4.2%) after the 13th general election, the KLCI’s 12M forward earnings multiple has re-rated to 15.3x presently, from 14.7x on 3 May. At the same time, its valuation gap against regional peers has widened again – it is now trading 3.9x PER points above the MSCI Asia ex-Japan vs 3.0x PER points on 3 May. On a trailing P/B basis, the KLCI now trades at 2.3x, well within its mean of 2.2x, while offering a decent net yield of 3.5%.

Key Overweights: Banking, Property, Construction, Oil & Gas. Banks are undervalued, with the sector trading at about 12.5x 12M forward earnings versus the KLCI’s 15.3x. The sector’s projected 2-year core earnings CAGR of 9.2% is ahead of the KLCI’s 6.8%, while 2013/ 2014 ROEs are higher. Elsewhere, the property sector continues to offer value, with current valuations at 19-38% below their estd RNAVs. The construction sector should see longer-term jobs visibility with several high-impact projects to be implemented, while PETRONAS’ accelerated capex spending will benefit the service providers.

High conviction BUYs. SapuraKencana and Perisai are our top picks in oil & gas, while in construction, our preferred pick is IJM Corp. In property, our top BUYs are SP Setia and Mah Sing Group, while in banking, they are AMMB, RHB Cap and BIMB. QL Resources and Tan Chong meanwhile are strong growth stocks at decent valuations; they are also among our preferred picks. Our other top BUYs are MAHB, a non-consensus call, and MISC, which offers value, trading at below its forward BVPS and our sum-of-parts valuation.

Market Strategy Current KLCI: 1,766 (3 June 2013)

YE KLCI target: 1,840 (unchanged)

Wong Chew Hann [email protected](03) 2297 8686

Malaysia Research Team

M’sia equities growth & valuation at 3 Jun 2013

2012A 2013E 2014E

KLCI 30 @ 1,766 PE (x) 18.3 15.7 14.8

Earnings Growth (%) 9.0% 6.1% 7.6%

Research Universe PE (x) 18.3 16.9 15.4

Earnings Growth (%) 7.0% 7.8% 10.4% Our sector weights OW Banking, Property (developers), Construction, Oil &

Gas, Auto, Gloves

N Building materials, Consumer, Gaming, Media, Plantation, Property (REITs), Power, Telco, Petrochem, Aviation

Our top BUY picks Stock Name Bloombg

Ticker Shr Px @

3 Jun TP

SapuraKencana SAKP 4.22 4.60

AMMB Holdings AMM 7.37 8.30

MISC MISC 4.86 5.70

RHB Capital RHBC 8.67 9.80

SP Setia SPSB 3.62 5.03

IJM Corp IJM 5.70 6.60

MAHB MAHB 6.03 7.20

Tan Chong Motor TCM 6.75 8.05

BIMB Holdings BIMB 3.99 4.20

Mah Sing MSGB 3.15 3.89

QL Resources QLG 3.18 4.00

Perisai Petroleum PPT 1.60 1.80 Source: Maybank KE


13-14 June 2013 Page 35 of 172

PART 1: YEAR TO DATE ROUNDUP

A good upswing. Malaysian equities posted a good upswing after the 13th general election (13GE) on 5 May, after the incumbent, Barisan Nasional, won, which allows it to form the government for another term. This sets the tone for continuation in policy direction and growth. The KLCI gained 94 pts (+5.5%) in the first seven trading days post the 13GE before consolidation steps in, triggered by concerns on US unwinding its quantitative easing on stronger economic datas. Year to date (as at 3 June), the KLCI has gained 4.6% but it still lags its ASEAN peers: PCOMP’s +16.4%, JCI’s +15.2% and SET’s +10.7%.

Broad indicators stable. Risk premium on Malaysian equities remain stable, at 3.1%-3.5% for the year to date versus 6.3%-8.5% for Asia ex-Japan, we estimate. Amid political headwinds ahead of the 13GE, foreigners continued to be net buyers of Malaysian equities with a record MYR5.3b net buying in April, just when the Parliament was dissolved (on 3 Apr). May saw another MYR3.8b of net foreign buying, which lifted the total net foreign buying to MYR18b for Jan-May 2013, surpassing the MYR13.7b for the whole of 2012. Consequently, market foreign shareholding has notched up to 24.8% as at end-Apr 2013, from 23.9% in end-2012 and 21.9% in end-2010.

KLCI vs. MSCI, 2013 YTD (3 Jun) KLCI vs. Regional markets, 2013 YTD (3 Jun)

90

95

100

105

110

115

1-Ja

n

1-Fe

b

1-M

ar

1-Ap

r

1-M

ayIndex

MSCI AC World MSCI Asia Ex-Japan KLCI

(1.7)(0.8)(0.4)

0.9 1.3

3.9 4.6

6.5 10.7

15.2 16.4

25.0 27.6

-10 -5 0 5 10 15 20 25 30 35

Hong KongMSCI Asia ex Jap

KoreaIndia

ChinaSingaporeMalaysia

TaiwanThailand

IndonesiaPhilippines

VietnamJapan

YTD 3 Jun (%)

Source: Bloomberg, Maybank KE (chart) Source: Bloomberg, Maybank KE (chart)

Equity market volatility (VIX), risk adversion (JPM EMBI) Equity risk premium (%)

200

250

300

350

400

450

10

15

20

25

30

35

40

45

50

Jan-

10

Apr-1

0

Jul-1

0

Oct-1

0

Jan-

11

Apr-1

1

Jul-1

1

Oct-1

1

Jan-

12

A pr-1

2

Jul-1

2

Oct-1

2

Jan-

13

A pr-1

3

VIX (pt, LHS)JPM EMBI (pt, RHS)

-123456789

10

Dec-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12

Asia ex-Japan ERPMalaysia ERP

Source: CEIC, Maybank KE (chart) Source: Maybank KE


13-14 June 2013 Page 36 of 172

Malaysia equities: Foreign net buy / (sell) (MYR b) M’sia equities: Cumulative foreign net buy / (sell) (MYR b)

-

(0.7)

1.1 0.3

(1.3)

1.8 2.3 2.9

4.3

1.8 0.9

2.6

0.1

(3.4)

(0.1)

1.2 1.6

3.2

0.6

(3.8)

(0.3)

1.4 0.6

0.7 0.2

1.3

3.4

1.6 0.5

(0.8)

3.2

1.1 1.3

1.4

(0.3)

0.8 2.5

1.7

4.7 5.3 3.8

(6.0)

(4.0)

(2.0)

-

2.0

4.0

6.0

Jan-

10

Apr-1

0

Jul-1

0

Oct-1

0

Jan-

11

Apr-1

1

Jul-1

1

Oct-1

1

Jan-

12

Apr-1

2

Jul-1

2

Oct-1

2

Jan-

13

Apr-1

3

(10.0)

-

10.0

20.0

30.0

40.0

50.0

60.0

Jan-

10

Apr-1

0

Jul-1

0

Oct-1

0

Jan-

11

Apr-1

1

Jul-1

1

Oct-1

1

Jan-

12

Apr-1

2

Jul-1

2

Oct-1

2

Jan-

13

Apr-1

3

Source: Bursa Malaysia, Maybank KE (chart) Source: Bursa Malaysia, Maybank KE (chart)

Malaysia equities: Foreign shareholding MSCI Malaysia

050 100 150 200 250 300 350 400

15

17

19

21

23

25

27

29

Dec 9

8De

c 01

Dec 0

4De

c 07

Feb 0

9M

a y 09

Aug 0

9No

v 09

Feb 1

0M

a y 10

Aug 1

0No

v 10

Feb 1

1M

ay 11

Aug 1

1No

v 11

Feb 1

2M

ay 12

Aug 1

2No

v 12

Feb 1

3

24.8% end-Apr 2013 (Dec 2012: 23.9%, Dec 2011: 22.7%)

MYR b (RHS) % (LHS)

2.0 2.4 2.8 3.2 3.6 4.0 4.4 4.8 5.2

4Q05

2Q06

4Q06

2Q07

4Q07

2Q08

4Q08

2Q09

4Q09

2Q10

4Q10

2Q11

4Q11

2Q12

4Q12

3-Ju

n-13

Weight of MSCI MY in MSCI Asia ex-JapanWeight of MSCI MY in MSCI EM Index

%

Source: Bursa Malaysia, Maybank KE (chart) Source: MSCI, Maybank KE (chart)

Malaysia equities: Foreign Ownership by Nationality, Mar 2013

Malaysia equities: Trading Participation (1Q13: Retail 16% [2012: 23%), Foreign 30% [2012: 26%])

76.2%6.1%

1.7%

2.3%

1.2%

0.1%

0.2%12.2%

Foreign nominees

Singapore

Hong Kong

UK

China/Taiwan

US

Mid-East

Others

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%0

10

20

30

40

50

60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13

Retail Foreign

Source: Bursa Malaysia, Maybank KE (chart) Source: Bursa Malaysia, Maybank KE (chart)


13-14 June 2013 Page 37 of 172

Earnings growth continues. Core net profit of our research universe, (which makes up 74.8% of the Malaysian bourse market capitalisation), grew 7% YoY in 2012. Earnings growth continues into 1Q13 at 8.7% YoY. The 1Q13 market earnings growth would have been higher if not for lower contributions from the plantation sector which has been hit by lower crude palm oil (CPO) prices which averaged MYR2,324/t in 1Q13 (-28% YoY). Double-digit earnings growth in the power, construction, property, consumer, auto and glove sectors, offset weaker earnings in plantation, telco, aviation, building material, gaming and media in 1Q13. Core earnings of the banking and oil & gas sectors were flattish.

Maybank KE research forecast revisions YoY growth (%) Early-2013 forecast Current forecast

2012 2013 2012 2013

Corporate earnings:

KLCI 30 10.8 8.0 9.0 6.1

Research universe 7.5 10.8 7.0 7.8

Malaysia real GDP 5.2 4.8 5.6 5.3

Source: Maybank KE

Quarterly recurring net profit of research universe Earnings surprises and disappointments (% of coverage)

8,000 9,000

10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000

CY 1Q

10

CY 2Q

10

CY 3Q

10

CY 4Q

10

CY 1Q

11

CY 2Q

11

CY 3Q

11

CY 4Q

11

CY 1Q

12

CY 2Q

12

CY 3Q

12

CY 4Q

12

CY 1Q

13(MYR m)

1Q13: +8.7% YoY, -9.7% QoQ

1722 21 24

1424

16 1712

8 11 14 17

68

5461

5665

51 5562 65 69

50

69

58

1525

18 20 21 2429

21 22 23

39

1624

01020304050607080

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

% Above In Line Below

Source: Maybank KE Source: Maybank KE

Quiet at the corporate front. In line with a more cautious sentiment ahead of the 13GE, corporate activities slowed. The first four months saw the listing of four IPOs which raised just a total MYR803m versus MYR22.9b in 2012. The privatisation of Tradewinds Group and the proposed spin-off of IOI Corp’s property business were the only major M&As announced, the latter on 14 May, just after the 13GE.

New equity issues & new listing

79

40

26 23 14

29 2817

4 010 20 30 40 50 60 70 80

05,000

10,000 15,000 20,000 25,000 30,000 35,000 40,000

2005 2006 2007 2008 2009 2010 2011 2011 4M 2013Rights issues (MYR m, LHS) Initial Public Offering (MYR m, LHS) New listing (no., RHS)

Source: Bank Negara Malaysia, Bursa Malaysia, Maybank KE (compilation)


13-14 June 2013 Page 38 of 172

PART 2: OUTLOOK

Activities to pick up. 1Q13 real GDP growth came in at 4.1% YoY, while our economics team has retained the full-year growth projection of 5.3% (2012: +5.6%), expecting investment momentum to accelerate, and consumer spending to remain resilient with subsidy rationalisation not expected to resume this year. The slower economic activities in 1Q13 was mirrored in the banking sector’s loans growth which slowed to 10.6% YoY in March (Feb: +11.4% YoY), due to slippage in corporate lending. We expect a pick-up, supported by ETP projects implementation. Investment commitments under the ETP totaled MYR211b of which just MYR31b was realised as at end-Mar 2013.

Calendar of major domestic events in 2013

Politics 13th general election 5 May UMNO general assembly and party election 3Q/4Q

Economics / Policies Bank Negara’s Monetary Policy Committee statement 31 Jan, 7 Mar, 9 May,

11 Jul, 5 Sep, 7 Nov 4Q 2012, 1Q-3Q 2013 GDP release Usually on the 3rd

Wednesday of February, May, August, November

Bank Negara 2012 Annual Report 20 March Mid-Term Review of the 10th Malaysia Plan (2011-15) 3Q 2013 National Budget ** October Economic Transformation Programme updates Ongoing Capital market Invest Malaysia 2013, Kuala Lumpur 13-14 June FBMKLCI component stocks review # 21 Jun, 20 Dec Financial Services Bill – royal consent received in March 2013

3Q/4Q

Securities Commission’s revision of Syariah screening methodology

November

* Maybank KE’s estimate, the norm is “second half of October” # Semi-annual review – using data from last day of trading in May and November and

implemented after the third Friday in June and December Source: Bank Negara Malaysia, Maybank KE (compilation)

Corporate activities, too. Alongside a rather benign in-house inflation forecast of 1.8% for 2013, we do not expect the Central Bank to raise the benchmark overnight policy rate this year, from the current 3%. A low and stable interest rate environment, together with ample of liquidity will continue to encourage corporate activities. IPOs should step up; notable listings expected are that of AirAsia X, Iskandar Waterfront and Westport. The re-listing of IOI Properties is expected to complete in end-2013. We also expect GLIC divestments to pick up pace as it is one of the government’s Strategic Reform Initiatives. The combined GLIC holdings in Malaysian equities is at least 35% for the top 100 market cap stocks and 39% for the KLCI, we estimate.


13-14 June 2013 Page 39 of 172

Potential IPOs in Malaysia, 2013 Sector Business Amt to be

raised

AirAsia X Airline Long distance low cost carrier USD0.23b

Ranhill Energy & Resources

Infra, O&G

Water O&M, Sabah IPP, Ranhill Worley USD0.26b

Berjaya Auto Auto Distributor of Mazda USD0.05b

Iskandar Waterfront

Property Property developer with significant landbank in Iskandar Malaysia

USD1b

Westport Port Operator of 7.5m TEU container port in Port Klang with concession expiring in 2025 (+30 year option)

USD0.5b

IMDB Energy #

Power IPP of 4,500 MW in 5 countries including Malaysia

USD2b

Malakoff Power IPP of 5,020 MW in Malaysia plus another 1,000 MW under construction

USD0.7b

FELCRA Agri-culture

FELCRA develops plantation estate involving 24,169 hectares. FELCRA also operates 9 palm oil mills, co-operative, resorts and outlets throughout Malaysia.

NA

# Former unit of Tanjong Plc which has been sold to 1MDB in early-2012 Source: Media, Maybank KE (compilation)

Market shareholding (top 100 stocks) Market shareholding (KLCI 30 stocks)

PNB, 8.0%

EPF, 10.2%Khazanah,

6.8%PETRONAS,

7.7%KWAP,

Valuecap, LTH, LTAT, Felda, 2.6%

Strategic (non-GLICs), 26.4%

Others, 38.3%

Top 100 stocks (market cap)

PNB, 9.3%

EPF, 11.2%Khazanah,

8.7%PETRONAS,

8.0% KWAP, Valuecap,

LTH, LTAT, Felda, 1.9%

Strategic (non-GLICs), 22.9%Others, 38.1%

KLCI 30 stocks (market cap)


Khazanah’s Malaysia PLC holdings Listed GLCs Maybank KE’s

call (target px) Khazanah's

stakeKhazanah's

stakeMarket

cap Khazanah's

holding worth End 2011 31-May-13 31-May-13 31-May-13

(%) (%) (RM'm) (RM'm) Astro Malaysia Buy (MYR3.40) - 20.76% 16,791 3,486Axiata Hold (MYR6.55) 39.30% 38.97% 57,566 22,434CIMB Group Hold (MYR8.70) 28.61% 30.03% 63,059 18,937IHH Healthcare Hold (MYR3.70) - 45.30% 32,421 14,686Malaysia Airports Buy (MYR7.20) 54.00% 40.18% 7,567 3,041MAS Sell (MYR0.35) 69.37% 69.37% 6,350 4,405Telekom Hold (MYR5.50) 28.73% 28.73% 19,640 5,643Tenaga Nasional Hold (MYR7.60) 35.58% 33.54% 46,788 15,693Time Engineering Not Rated 45.00% 45.03% 275 124TimedotCom Not Rated 29.61% 20.89% 2,728 570UEM Land Buy (MYR3.88) 77.14% 64.81% 15,174 9,834Total 268,359 98,852

Sources: Bloomberg, Maybank KE


13-14 June 2013 Page 40 of 172

Corporate earnings growth. Our core KLCI earnings growth forecasts are 6.1%/7.6% for 2013/2014, while our research universe earnings growth forecasts are 7.8%/10.4%. All sectors should continue registering growth this year except: (i) plantations, due to lower forecast CPO ASPs of MYR2,500/t for 2013 vs MYR2,866/t in 2012 (-13% YoY), and (ii) power, due to Tenaga’s bumper earnings in FY8/12 after recognising two years of alternate fuel compensation. We expect the core banking and telco sectors to register 8%-10% growth in 2013/ 2014. Property and oil & gas are projected to register above-market earnings growth due to record sales and strong job/contract wins.

M’sia equities growth & valuation at 3 Jun 2013 2012A 2013E 2014E

KLCI 30 @ 1,766 PE (x) 18.3 15.7 14.8


Research Universe PE (x) 18.3 16.9 15.4


Source: Maybank KE

Research universe earnings growth, PER, P/B, ROE Earnings Growth (%) PE (x) P/B (x) ROE (%) Rec Sector CY 12A CY 13E CY 14E CY 12A CY 13E CY 14E CY 12A CY 13E CY 12A CY 13E OW Banking & Finance 7.5 8.2 9.8 14.3 13.2 12.0 2.1 2.0 14.9 14.9 NT Building materials (5.5) 55.8 8.7 34.0 21.8 20.1 2.2 2.1 6.4 9.8 NT Consumer 7.7 17.0 11.2 27.7 23.7 21.3 3.6 3.4 13.0 14.3 OW Construction, Infra 10.4 9.8 12.4 17.7 16.1 14.3 2.0 1.8 11.1 11.2 NT Gaming (1.7) 6.5 9.2 14.9 14.0 12.8 1.8 1.6 12.1 11.7 OW Gloves 24.6 13.8 8.9 17.4 15.3 14.1 3.6 3.1 20.4 20.5 OW Oil & Gas 11.9 16.6 11.5 22.1 19.0 17.0 3.2 2.9 14.5 15.1 NT Media (19.6) 1.5 20.9 23.9 23.6 19.5 6.0 5.8 25.1 24.6 NT Plantation (12.5) (8.2) 7.7 17.6 19.2 17.8 2.3 2.2 13.3 11.5 OW Property 33.3 20.7 14.4 24.4 20.2 17.6 1.7 1.5 7.2 7.6 NT Telcos (4.2) 10.1 7.2 24.5 22.3 20.8 4.8 4.8 19.5 21.7 NT Transport 179.5 24.2 39.7 23.0 18.5 13.3 1.3 1.1 5.8 6.2 NT Utilities 32.9 (6.2) (1.1) 10.6 11.3 11.4 1.2 1.1 11.6 10.0

Stocks under cvrg 7.0 7.8 10.4 18.3 16.9 15.4 2.4 2.2 13.1 12.9OW = Overweight; UW = Underweight; NT = Neutral; Source: Maybank KE

Research universe: Earnings breakdown, sector – CY13 KLCI: Earnings breakdown by sector – CY2013

Banking & Finance

32%

Buildingmaterials

1%Consumer8%

Construction, Infra 3%

Gaming7%

Gloves1%

Oil & Gas11%

Media1%

Plantation11%

Property5%

Telcos10%

Transport4%

Utilities7%

Banking & Financials

39%Consumer4%

Gaming8%

Oil & Gas8%

Plantations14%

Property0%

Telcos12%

Transport2%

Utilities13% Media

0%



13-14 June 2013 Page 41 of 172

SECTOR OUTLOOK

Sector Weight Our thoughts

Automotive Overweight All Eyes On The Upcoming NAP Revision

Developments. First four months reported TIV was 210,153 units (+12.8% YoY), on target to meet our 2013 TIV forecast of 638k (+2% YoY). Monthly vehicle sales remained healthy above the 50k-unit level supported by new launches in the mass market (Perodua S-series, Nissan Almera, Honda CRV, Kia Rio) since last year.

Outlook. The upcoming National Automotive Policy (NAP) revision, to be announced in 2H13, is expected to tackle current issues such as the (i) direction of Malaysia’s auto sector, (ii) tax and duty structure of imported cars and components, and (iii) approved permit (AP) system, set to expire by 2016. We also expect the revised NAP to address the 20-30% car price reduction promised in Barisan Nasional’s Election Manifesto. Pending the announcement, we continue to foresee vehicles sales to stay healthy above the 50k-unit level monthly, supported by exciting launches ahead. We maintain our Overweight stance and keep our 2013 TIV forecast of 638k units (+2% YoY) unchanged.

We also note that the softer Yen against the MYR will continue to have a positive effect on the profitability of the auto players due to cheaper CKD components. Our sensitivity analysis suggests that every 10% variation in the Yen/MYR rate from our base case on a full year basis will affect our net profit forecasts for TCM, MBM and UMW by 18%, 21% and 5% respectively. We assume an average exchange rate of MYR3.22/JPY100 for 2013 (YTD average: MYR3.22/JPY100).

Stock picks. TCM remains our top BUY pick for its tremendous earnings growth potential, supported by strong vehicle sales as evidenced in its 1Q13 results. We continue to like MBM (BUY) as its mid term prospects of higher earnings growth from its alloy wheel plant and Hino CV manufacturing plant remains intact. UMW is a HOLD following its strong share price movement. Trading at 15x FY14 EPS, we believe that UMW is fairly valued.

2013E 2014E

PER (x) 15.4 13.4 EarningsGrowth (%)

20.0 14.6

ROE % 16.5 16.9

Banking Overweight Expecting Loan Growth To Pick Up Pace In 2H13

Developments & Outlook. Domestic loan growth todate has been stable but lackluster at just about 10.5% YoY, 8.3% on an annualized basis in April 2013. Much expectation is nevertheless pinned on faster momentum in 2H13 as ETP-related projects get off the ground. Thus we maintain our loan growth forecast of 10.7% for the year. Net interest margins meanwhile, remain under pressure and we estimate an average 7 bps compression in aggregate NIMs this year. This would nevertheless be mild relative to the 14 bp compression in 2012 and thus, we do expect operating profit for the Big 6 banks to grow at a faster clip of 10.3% this year vs 7% in 2012.

Taking a bite into growth, however, would be higher credit costs this year in the absence of the strong NPL recoveries seen in 2012 and as such, we project net profit growth to be a slower 8.3% in 2013 vs 9.5% in 2012, before picking up momentum to 10% in 2014. All in, we project a 3-year recurring net profit CAGR (2012-2015) of 9.3%.

Stock picks. Our top BUY picks include AMMB Holdings for its attractive valuations, fast-paced growth in non-interest income and as a beneficiary of the ETP. RHB Capital (BUY) is next on our list for its cheap valuations and the pick-up in loan growth to the consumer and SME segments. BIMB (BUY) meanwhile continues to see very strong earnings growth from both its Islamic bank and Takaful businesses.

2013E 2014E


8.4 10.3

ROE % 15.7 15.5

Building materials

Cement: Neutral

Steel: Overweight

Secular Demand Growth Ahead

Developments. In 1Q13, local demand for building materials was higher YoY. However, cement ASP succumbed to competitive pressure (due to a new entrant) resulting in double digit earnings decline for the cement players. While steel ASP was rather flattish, steel players saw their earnings return to the black on lower raw material costs.

Outlook. We expect the demand for both local cement and steel to surpass their 1997 peaks, underpinned by the concurrent rollout of mega infrastructure projects (KVMRT1, Tun Razak Exchange, etc). We think the steel players are likely ride on the strong local volume growth amid the falling raw material costs. As for the cement players, earnings momentum will remain lacklustre until the cement price cutting activity subsides.

Stock picks. For steel stocks, we have BUYs on AJR and Kinsteel in view of their earnings turnaround stories and the pent-up local steel demand. We have a HOLD on Lafarge as it is already trading at its historical peak PER valuation of 24x.

2013E 2014E


55.3 8.7

ROE % 9.8 10.4


13-14 June 2013 Page 42 of 172

Sector Outlook (continued)


Construction / infra

Overweight Long-term Job Conviction

Developments. 3M13 saw new jobs reported to the Construction Industry Development Board (CIDB) falling quite substantially to MYR8.1b versus 2012’s MYR112.5b. This could be due to both timing in the reporting for the new jobs, and a slow momentum of awards ahead of the 13GE with government jobs making up just MYR2.4b of the MYR8.1b. The anticipated Cabinet’s decision on the KVMRT 2 & 3 lines in March/April did not come through.

Within our construction stock coverage, there were no new jobs reported by big-caps Gamuda and IJM Corp for the year todate. Significant job replenishment was however reported by Sunway which grew its order book by MYR1.5b since early this year, followed by WCT (MYR511m), Eversendai (MYR415m) and Hock Seng Lee (MYR153m). Except for Sunway, the outstanding order books of the other construction groups shrunk from end-2012 after the normal recognition of works in 1Q13.

(MYR m) YTD job win Outstanding @ Mar 2013

Outstanding @ Dec 2012

Gamuda - 4,200 4,500 IJM Corp - 2,800 3,000 WCT 511 3,093 3,669 Sunway 1,470 4,402 3,187 Hock Seng Lee 153 1,020 1,050 Eversendai 415 1,500 1,590

Outlook. The Cabinet’s decision on the KVMRT 2 line (Sg Buloh-Serdang-Putrajaya) is now expected in July. Riding on its experience in the KVMRT 1 job, we expect MMC-Gamuda to feature once again as both project delivery partner (PDP) and main contractor for the tunnelling works. The KV MRT 2 could cost MYR24.9b (versus KV MRT 1’s MYR22.2b). This, together with the proposed KV MRT 3 (Circle Line), will provide long term order book visibility for the construction sector with works on both lines expected to complete in 2020 and 2021 respectively.

The proposed high speed rail (HSR) connecting Kuala Lumpur to Singapore, is also another catalyst for the construction sector. Works are however only expected to take off in 2015, at the earliest. The next step would be the formation of a joint committee between Malaysia and Singapore to decide on the project’s approval system and distribution of construction works. Following that, a feasibility study would need to be undertaken by the independent consultants, likely to be a time-consuming affair.

Government land development projects in the Klang Valley are expected to gain pace especially that relating to the Tun Razak Exchange (under 1MDB) and Sg Buloh RRI (under Kwasa). The next phase of major earthworks for the Tun Razak Exchange is expected to be awarded. We expect WCT, which has the most extensive fleet of heavy equipment for earthworks, to be a beneficiary.

Other major infrastructure jobs for which awards are pending are the West Coast Expressway and Kuantan Port expansion. As a major shareholder in both the concessions, we expect IJM Corp to be a major beneficiary. The total works value is an estimated MYR8b.

Stock picks. Our top BUY in construction is IJM Corp with re-rating catalysts being: (i) strong construction order book wins over the near-term, (ii) domestic volume boost at the building material division, and (iii) a re-rating for IJM Land’s strategic landbanks. IJM Corp also offers a more liquidity proxy to IJM Land.

Our other BUYs are Gamuda, WCT, Hock Seng Lee and Eversendai.

2013E 2014E


9.8 12.4

ROE % 11.2 12.0

Source: Maybank KE


13-14 June 2013 Page 43 of 172



Consumer Neutral A Mixed Bag

Brewery (Neutral): The brewers’ stock prices had soared YTD with Carlsberg rising +32.4% and Guinness +28.2%. This also marks the highest valuations point that brewers have achieved in the last 6 years, at 24x 2013 (Carlsberg) and 27x (Guinness) PERs. CY2014 net dividend yields are now projected at just 3.9%-4.5%. We are cautious that Budget 2014 might bring about an increase either in beer excise or ad valorem taxes. Recall that the last tax hike was in 2006 when excise tax was raised by MYR1.4/li. This could result in higher beer prices as companies would not be able to absorb the full tax impact themselves and seek to pass part of the tax increase on to consumers. Higher beer prices would, in turn, impact consumption volume.

We maintain Carlsberg as a BUY with a DCF-based TP of MYR18.00 equating to 23x FY14 earnings, and a net yield of 4.2%, on par with our TP for Guinness (at MYR19.50). Carlsberg is a BUY as it still trades at a discount to Guinness, at 21.6x FY14E PER vs Guinness's 24.2x PER despite similar 3-year earnings CAGR growth profile of 10-11%. Yield wise, Carlsberg's yields are also more attractive at 4.4% vs. Guinness's 3.9%. Guinness remains a HOLD.

Tobacco (Underweight): With the recent surprise 3% hike in cigarette prices (wef 3 Jun) to MYR9.00-MYR10.50/pack by BAT (which we expect to be followed by JTI), we forecast a marginal enhancement on BAT’s and JTI’s margins and bottomline profit. On the flip side, we expect a higher contraction in total industry volumes attributed to the price hike. The industry’s outlook remains lackluster amid rising regulatory risk and the growing threat of illicit trades on the market. Going forward, we expect that JTI’s cost saving initiatives to continue driving its earnings growth. JTI has stopped buying locally grown tobacco leaf from 1 Jan 2013. This will result in cost savings starting this year, although these will only be significant after 2013 when 100% foreign leaf is used. We are positive on this development as JTI could reap significant cost savings from increasing its usage of cheaper imported tobacco leaves. We maintain our BUY call on JTI with unchanged target price of MYR7.80. On the other hand, we have a SELL call on BAT with an unchanged DCF-target price of MYR52.00. BAT’s current valuation is lofty - the stock trades at a 2013 PER of 22.5x which is about +1SD over its 6-year mean.

Retail (Neutral): Both Padini and AEON showed weak retail margin in 1Q 2013 despite 1Q typically being a strong quarter with shopping activities supported by festivals. While AEON is seeing continuous growth from its mall management business both in terms of revenue and margins, Padini’s FY6/13 net profit should see a fall. Sales in Padini’s new stores has remained slow with an apparent shift towards its cheaper Brands Outlet, from Padini Concept Store which is affecting its gross profit margin. Maintain HOLD on AEON; Padini is a SELL.

F&B (Neutral): Nestle’s management has guided for more than MYR200m capex for 2013, mainly for a new plant in Shah Alam. This is higher than the earlier guidance of MYR180m and the group will continue to benefit from Halal tax incentives. Margins should be sustainable for 2013 as key raw material prices has retraced from the peak, except for milk solids. Maintain Hold.

Staples (Neutral): Going forward, we continue to expect basic foods (eg. sugar, rice) to enjoy volume growth of 3-4% for the remainder of 2013 and lower input cost as prices of raw materials have remained suppressed. As more expensively procured raw materials have been offloaded over the last two quarters, we expect both MSM and Padiberas to report better earnings from 2Q13 onwards. Operationally, we expect to see better efficiency from capex spent on improvement in capacities as well as utilisation. We see potential earnings upgrade in 2H13. For now, we remain HOLDers of both MSM and Padiberas.

Meanwhile, QL Resources’ regional expansion plan is on track. Egg glut in Peninsular Malaysia is over and the margins are improving for the livestock division while the marine products division is reaping growth from its overseas expansion. QL is the laggard within the consumer sphere, BUY QL to ride on the stable consumption growth in the region.

2013E 2014E


17.0 11.2

ROE % 14.3 14.3

Source: Maybank KE


13-14 June 2013 Page 44 of 172



Gaming NFO –Overweight

NFOs: MPHB Is Corporate Exercise Driven, Pan Malaysian Pools To Regain Market Share

Developments. 1H13 was largely corporate exercise driven for the NFO sector. MPHB’s share price has gone ex- on 27 May for the MPHB Capital (MPHBC) share subscription but from a bottom up approach, investors who buy MPHB today will receive Magnum shares and be entitled to a 48.5sen/sh capital repayment, together worth MYR3.93/sh or 12% upside. MPHB will also employ 80% DPR going forward, translating into attractive dividend yields of 5% p.a..

Outlook. We expect the NFO sector to remain resilient. Now that the 13GE has passed, we could witness the introduction of new games or more special draws. Pan Malaysian Pools (Not Listed) introduced 6D Jackpot (now replaced with 3D Jackpot) in Jun 2012 and its own 4D Jackpot branded as 1+3D Jackpot, in Nov 2012. Therefore, we estimate that its market share will rise 1 ppt to 21% (Magnum: 37%, Sports Toto Malaysia: 42%) in 2013 due to a full year’s sales from both games.

Key dates and events on the demerger of MPHBC Date Event27 May 2013 Ex-date 29 May 2013 Entitlement date of restricted offer for sale (ROS) 30 May 2013 Commencement of trading of ROS rights 31 May 2013 Prospectus despatch date 6 Jun 2013 Cessation of trading of ROS rights 13 Jun 2013 Closing date for application for ROS 17 Jun 2013 Subscription results 25 Jun 2013 MPHBC listing

Stock picks. Our top pick in this sub-sector is MPHB with an ex-MPHBC rights offer TP of MYR3.93. Investors who hold the right to subscribe to MPHBC share should subscribe. Recall that we value MPHBC at MYR1.99/sh, almost double the offer price of MYR1/sh. Investors who subscribe and hold the shares until the capital repayment date to receive MYR0.97/MPHB sh (MYR0.485/sh X 2 MPHB sh) will effectively be paying only MYR0.03/sh for MPHBC, which we value at MYR1.99/sh.

NFO 2013E 2014E


12.9 10.0

ROE % 18.7 18.9

Gloves Overweight Watch The Latex Price

Developments. Latex price exhibits atypical trend in 1H13, having fallen during the seasonal low yield period of rubber trees. Latex price is now 18% lower YoY due to a softer global demand and rising rubber supply outlook. Similarly, NBR price has plunged 30% YoY. Current input costs still favour the nitrile glove production, but the margin gap between nitrile and latex are narrowing due to the fast-rising new supply of nitrile glove. The sector has also seen the implementation of higher minimum wage in Jan 2013 and glove-makers have been able to pass on most of the higher wage cost, keeping their margins intact.

Outlook. We expect latex prices to persist at low levels given the long-term outlook of rising surplus rubber supply from Vietnam. NBR prices should also move in line with latex prices given that they are substitute materials. On the cost side, we expect an imminent gas price hike of around 19% to MYR19.12/mmbtu and given that it is industry-wide cost inflation, we believe the higher gas cost will be passed on. Additionally, the MYR/USD rate is likely to stabilize at the current level of MYR3.10.

The top four local listed glove-makers plan to add capacity of 16.4b pcs in 2013 (vs. est. new global demand of 12b pcs), with the new capacity earmarked for nitrile production. However, if we adjust for the timing and the optimal utilisation levels, we estimate that the new supply could still be slightly below the new nitrile demand growth in 2013. Currently, there is already some mild ASP competition within the nitrile segment and we think the ASP competitive environment will persist into 2015, as glove-makers compete for a greater market share of the nitrile gloves. We have already imputed for lower margins for the production of nitrile gloves.

Stock picks. We have BUYs on Top Glove (15x forward PER) and Kossan (9x) given their potential earnings upside from the falling latex cost. Meanwhile, Hartalega is a HOLD due to its modest EPS growth in FY3/14-15 and the stock is already trading at high forward PER of 16x.

2013E 2014E


13.8 8.9

ROE % 20.5 19.8

Source: Maybank KE


13-14 June 2013 Page 45 of 172



Media Neutral The Worst Is Over

Developments. 4M13 total gross adex was up 3% YoY, led by TV adex which grew 12% YoY while newspaper adex did not fare nearly as well by growing only 1% YoY. We understand that this was due to pre-13GE ad spend which traditionally favours TV as political parties seek to better connect with the voters. That said, we understand that private sector ad spend had been tepid due to uncertainties over the 13GE results.

Outlook. In 2H13, we expect adex sentiment to pick up a tad as we expect private sector ad spend to return after the 13GE. This is despite the lack of adex friendly events in 2H13. We may raise our 2013 total adex growth forecast from 2.5% to 5% as we raise our total adex growth/real GDP growth multiple from 0.5x to 1x but we do not expect the positive impact to earnings of the media companies under our coverage to be material. The risk to our view is that the government raising electricity and/or fuel prices, and/or introducing the GST now that the 13GE has passed, denting adex sentiment.

Stock picks. We rate MCIL and Star as HOLDs due to their lackluster results. Media Prima’s share price has done very well post the 13GE but at 15.1x CY13 PER, we recommend investors to take profit and we downgrade the stock from BUY to HOLD. Although there is less than a 10% upside potential for Astro at our current TP of MYR3.40, we still recommend investors to BUY the stock as we believe that it may be raising its prices soon. We estimate that every MYR1 increase in its ARPU (FY1/13: MYR93) will raise our earnings estimates by 4-5%.

2013E 2014E


1.5 20.9

ROE % 24.6 32.7

Oil & Gas Overweight Up And Running

Developments. Job flows have picked up in 1H13 (vis-à-vis 1H12), reflecting PETRONAS’ push for domestic production growth. Contracts that were dished in 1H13 were predominantly the offshore support vessel (OSVs), hook-up and commissioning (HUC) and topside major maintenance (TMM). Malaysia’s 3rd deepwater project (Malikai) was also unveiled in 1H13.

Outlook. We expect the momentum of awards to intensify into 2H13. We foresee a strong pipeline of offshore fabrication awards coming from (i) several major central processing platform [CPP] projects (Bokor, Semarang and Dulang) worth MYR3b-4b and minor wellhead platforms, (ii) drilling rigs (i.e. jack-up, tender-assisted), (iii) floating solutions (i.e. FPSO, FSO, MOPU) and (iv) continuous marginal (RSC) and rejuvenation oilfield projects. On the international front, we also see stronger push for new FPSO projects (in Europe, Africa) as well as M&A opportunities (with several Norwegian-based operators known to be eyeing an exit).

Elsewhere, the Melaka regasification project should commence operations in Jul 2013 (following a one year delay), which would bring an additional 20% of natural gas volume to the domestic system. Concurrently, the tariff revision on natural gas will also resume after a lull since Jun 2011.

Investors should look forward to traction on PETRONAS’ RAPID project kicking off from 2014 as the final investment decisions (FIDs) have been delayed to 1Q14.

Picking the winners: News and contract flows will be strong across the value chains. We see exciting prospects for the offshore fabricators such as SapuraKencana and MMHE, the likeliest candidates to capitalise on these tenders. Bumi Armada, Perisai and Yinson are our picks for plays in the offshore drilling and FPSO spaces. Meanwhile, Dialog is a primary beneficiary from PETRONAS’ RAPID project.

2013E 2014E


16.6 11.5

ROE % 15.1 15.1

Source: Maybank KE


13-14 June 2013 Page 46 of 172



Power Overweight Stars Are Currently Aligned

Developments. The pre-qualification results for both Track 3A (1,000MW coal fired plant at a brownfield site) and 3B (2,000MW coal fired plant at a greenfield site) were announced in 1H13. For 3A, two consortiums led by 1) Tenaga and 2) 1MDB respectively were shortlisted. For 3B, five consortiums led by 1) 1MDB, 2) Formis, 3) Tenaga, 4) Malakoff and 5) YTL Power were selected. The consortiums are now in the process of submitting their proposals.

The power sector has seen some relief with respect to fuel cost. Gas supply has recovered (averaging 1,087mmscfd in 1H13, not far from the stipulated 1,150mmscfd), hence the dependence on costlier oil and distillates has diminished. In addition, coal prices have stayed low throughout the half (averaging USD85/t in 1H13, -14% YoY)

Outlook. The relief in fuel cost pressure would likely continue throughout 2H13 in our view. With the recent conclusion of national elections, the government is unlikely to review electricity tariffs in 2013, which means the benefits of low coal prices currently accrue in entirety to Tenaga.

Longer term, we do not rule out the possibility of TNB’s profitability being squeezed (from current levels) as the government addresses subsidies (gas) and compensation (oil, distillates and potentially LNG-sourced gas). Tenaga is ultimately in a regulated industry and we believe the government is unlikely to allow Tenaga to make substantially higher returns.

Stock picks. Tenaga’s undemanding valuations and falling coal prices have helped boost recent sentiment, making it a good proxy to the liquidity-fuelled market rally. Nevertheless, we are conscious that Tenaga’s profitability could be squeezed in the next tariff review. Maintain HOLD, target price unchanged at MYR7.60.

YTL Power’s share price could have potentially bottomed following the resumption of share buybacks in Mar 2013. Treasury shares now represent 2% of total shares, and these could potentially be cancelled in future. Maintain BUY for its deep value, target price unchanged at MYR1.70.

2013E 2014E


(6.2) (1.1)

ROE % 10.0 9.2

Petrochem Neutral Supply-Demand Relationship In Balance, All Eyes On PMI

Developments. 1Q13 has enjoyed strong demand for petrochemicals as factory orders picks up and manufacturers re-stock their depleted inventory. However, the activity has softened post Chinese New Year, and the petrochemical prices have since abated in March.

Outlook. We are of the view that the petrochemical prices will rangebound for the remainder of the year. The supply-demand relationship is in a good balance, and there is little new capacity coming on stream to harm this harmonious relationship.

The focus is centered towards demand, in particular global manufacturing numbers. Global PMI numbers have peaked in Feb 2013, and have since remained on marginal positive territory. This indicates that the growth story is fragile and thus, inhibiting us from being overly positive.

Stock pick. Petronas Chemicals is fairly valued at 12.6x 2013 PER which is in line with regional peers. We recommend a HOLD for its attractive 4.0% dividend yields, and the fact that it has the strongest balance sheet in the industry with zero debt and MYR10.6b of cash.

2013E 2014E


14.8 (0.6)

ROE % 19.1 17.1

Source: Maybank KE


13-14 June 2013 Page 47 of 172



Plantation Neutral CPO Price To Strengthen

Developments. CPO price has diverged from other major vegetable oils since Oct 2012 on ample supply. Malaysia’s stockpile peaked at 2.63m MT (as at end-Dec 2012) but palm oil fundamentals have since improved on a MoM basis with Malaysia’s stockpile falling below 2.0m MT at 1.93m MT as at end-Apr 2013. Nonetheless, CPO price has failed to move up meaningful as market confidence appears shaken after CPO price plunged 35% from its peak in Apr 2012.

Elsewhere, the stock-to-usage ratio of 17 global oils and fats remains tight for 2012/13F. And we believe Indonesia estates are likely to enter into a rest or stress period in 2013 after two good years of good harvest which will further support CPO price recovery – see our plantation sector report on 2 May 2013 titled “CPO ASP Cut to MYR2,500-2,600/t” for more details.

Price outlook. We expect CPO price gap to soyoil to narrow. We expect CPO price to strengthen in 2H13 to around MYR2,600/t on improving fundamentals. The present price gap between CPO and soyoil of c.USD290/t or MYR900/t (vs historical 7-year average of USD176/t) has entered into an unprecedented ninth month. The last time the industry experienced such wide price gap was back in 2008 when it lasted around 7 months. Hence, we believe, it is timely for CPO price to gap up by around MYR300/t (or USD100/t) in the near term.

Risks to our CPO price view:

(i) Talk of a gradual withdraw of quantitative easing in the US may lead to weak commodity prices,

(ii) Worsening of eurozone crisis leading to weaker global growth and lower commodity prices,

(iii) Slower-than-expected China’s economic growth and ensuing demand for commodities in general may hamper CPO price recovery,

(iv) Further trade protectionism and barriers of entry by major consuming nations (to protect local farmers), and

(v) The market has priced-in a neutral weather outlook in US’s soybean planting this season. A sudden change in weather outlook could be positive for soybean and palm oil prices.

Strategy. We maintain our NEUTRAL call on the sector which is a 12M view. Although Malaysia plantation stocks continue to trade at a premium over their regional peers, they are not overly excessive on a single-market stand-alone basis at 18.3x 2014 earnings, supported by ample liquidity. While integrated players are more defensive in nature, their upside is equally limited in a CPO price recovery.

Our BUYs in large-cap size is Genting Plantations as it is deep in value with its ~5,500 acre of property development landbank in Iskandar Malaysia. GENP has the second largest land bank after UEM Land. In the mid-cap space, a recovery in CPO price will benefit purer plantation players like Ta Ann (BUY), and TSH (BUY). Ta Ann is going through a structural change to its Tasmanian veneer business model which has been loss making for the past several years on high feedstock cost. A reduced log supply by the Tasmanian government with ensuing compensation (under negotiation) could help boost Ta Ann’s overall profitability in the coming quarters.

2013E 2014E


(8.2) 7.7

ROE % 11.5 11.8

Source: Maybank KE


13-14 June 2013 Page 48 of 172



Property (developers)

Overweight This Run Will Be Strong

Developments. We expect property stocks to outperform the market amid very positive dynamics for the sector. These include strong liquidity flows, accommodative monetary policies, the eagerly awaited award of government land banks and ongoing infrastructure development.

The Malaysian property index (+42% YTD) has lagged its emerging market peer, Indonesia (+67%), but outperformed Thailand (+35%), Hong Kong (-3%) and Singapore (-1%) due to the imposition of property controls in these two markets. With increased foreign interest in the Malaysian stock market post the 13GE, as well as the resumption in investment activities by under-invested local funds, the high-beta property sector is a prime beneficiary of such liquidity flows.

Re-rating potentials include:

#1: Follow the MRT lines to the next boom areas. We have witnessed robust sales and record pricing for property projects in close proximity to the KV MRT 1. Property demand for developments deemed close to the KV MRT 3 (Circle line) has also been robust. In our view, the final alignment of the KV MRT 2 & 3 lines by end-2013 will likely create another round of buying spree on properties which are near to the new MRT stations. Key beneficiaries are SP Setia, IJML, YTL Land, UOA Development, UEML and Mah Sing.

# 2: Government land ready for tender. Government land awards should pick up pace post general election – particularly the RRIM land in Sungai Buloh, Tun Razak Exchange, Bandar Malaysia and Unilever land. Such land wins should provide short-term trading opportunities for property stocks. GLCs i.e. SP Setia, MRCB and UEML are the likely winners.

#3: Listing of giant developers could re-rate existing players. The listing / re-listing of Iskandar Waterfront Holdings and IOI Properties in 4Q 2013 could re-rate other existing players (especially for Iskandar Malaysia stocks) depending on the values assigned to their landbank on listing and the RNAV of their projects.

We continue to like developers which have large exposure to affordable housing and Iskandar Malaysia as we believe these two segments will be the key sales drivers over the short term. Landbanks at Iskandar Malaysia should revalue further on rising foreign investments and job opportunities as well as a better connectivity via the proposed JB-S’pore Rapid Transit System (RTS).

Stock picks. Our top BUY picks for the property sector – Mah Sing (with upside potential to our RNAV estimate given its aggressive landbanking plan for 2013) and S P Setia (a laggard play; surprises could come from government land awards and higher-than-expected sales).

2013E 2014E


21.1 18.4

ROE % 10.2 11.3

Property (REITs)

Neutral Less Enticing

Developments. Whilst remaining positive over its longer term prospects, we remain Neutral on M-REITs as unit prices are approaching our targets, offering limited upside potentials. Unit prices of M-REITs under our coverage have risen by +1-27% YTD and the average gross yield for M-REITs is at a rock-bottom 6.2% (2013) compared to 6.5% at end-Jan 2013 and 7.1% at end-Jan 2012. The more liquid retail M-REITs offer just 4.5% average gross yield (Jan 2013: 4.5%, Jan 2012: 5.4%).

Outlook:

Losing traction. Under a risk-on investing environment, investors would adopt a more aggressive approach for the property sector favouring the high-beta developers. This is after ≈ 2 years of defensive strategies. Moreover, valuation gaps are less enticing at this stage, at only 278bps above 10-year MGS’ 3.4%, versus 313bps in Jan 2013.

Facing new competition. We expect more business trusts (BT) to be set up in the medium term given the attractive incentives offered by the government. Digi.Com, the 3rd largest telco operator in Malaysia, is mulling over the possibility of setting up a BT, we understand. If materializes, Digi’s net dividend yield could be even more attractive than the current level of 5.2% (FY14) and more competitive than large cap M-REITs’ 4.5% (net).

Rate hike likely. We expect a 25bps hike in the benchmark OPR in 2014. Higher interest rates will not only reduce the attractiveness of M-REITs for yield-focused investors but also the profitability of M-REITs.

Stock picks. Amidst the developing backdrop affecting the sector, the 12M investment thesis for M-REITs should be to switch to those with visible, near-term yield-accretive asset injection potential to re-rate their investment proposition further. Our BUY pick for the M-REIT sector is CMMT.

2013E 2014E


20.3 9.3

ROE % 5.8 6.3

Source: Maybank KE


13-14 June 2013 Page 49 of 172



Telco Neutral No Re-rating Catalyst

Developments. The wireless operators continue to exhibit YoY margin compression, due to increasing contribution from data and handset sales. ARPUs continue to trend down as the big three added 328k prepaid and 69k postpaid subscribers in 1Q13. Maxis launched the commercial LTE services in 1Q13 on both 1,800MHz and 2,600MHz.

For fixed line operators, data and internet revenue continue to grow at the expense of voice. TM continues to gain momentum in the fibre broadband segment, gaining 49k subscribers in 1Q13 which represents 91% of industry net additions. Maxis finally launched the Astro IPTV service in May 2013 after a two months delay.

Outlook. We expect the margin compression theme for wireless players to continue into 2H13, as data contribution continues to increase. Axiata in particular, would likely experience substantial margin pressure at Indonesia due to the under-utilisation of its network. Meanwhile, accelerated depreciation for both Digi and Maxis would likely taper off in 2H13, resulting in positive earnings momentum.

Fixed line operators would face intensifying competition in the fibre broadband segment following the launch of the Maxis-Astro IPTV service. Maxis received 10k bookings within two weeks of launching the service.

Stock picks. The sector in general lacks re-rating catalysts, and valuations are at a premium to both the market and regional peers. Digi (HOLD, target price: MYR4.85) is our preferred pick due to its YTD underperformance. Earnings are on the up in FY13-14 following the normalization of accelerated depreciation. The main overhang is about to clear as the share distribution from Time dotCom nears completion.

2013E 2014E


10.1 7.2

ROE % 21.7 23.6

Transport (aviation)

Neutral Competition Intensified

Developments. 1Q13 continued to exhibit extreme challenges with airline executives warning of a depressed yield environment. The fuel price decline is a welcome relief, but it is temporary and limited to 2Q as fuel prices have surged back to high levels. MAS has seen its yields deteriorate by 5% in 1Q13, much higher than industry declines of 1%-3%. AirAsia also has seen its yields decline by 1% in the same period.

Outlook. The remainder of 2013 remains challenging due to a confluence of negative factors that is working against the airlines sector in unison: (i) still high fuel prices; (ii) a weak yield environment; and (iii) overcapacity stemming from record aircraft deliveries.

Stock picks. We maintain our HOLD call for AirAsia based on 9.0x 2013 PER and SELL on MAS at RM0.35 target price based on 1.2x 2013 P/Book. Our only positive top pick (BUY) is MAHB for its lower risk profile compared to the airlines and the fact that it is enjoying strong traffic growth.

2013E 2014E


77.4 43.5

ROE % 7.4 10.0

Transport (shipping)

Overweight On A Sustained Recovery Path

Outlook. MISC, the only representation in our shipping sector coverage, is on a sustained, steady long term recovery path, in our view. Although the petroleum and chemical shipping segments are likely to remain in the red over the next few quarters, losses are expected to narrow.

Operationally, time charter rates have recovered and are expected to hold up, especially for the chemical shipping segment. Newbuild deliveries are slowing down. Bunker costs in 2013 YTD have also averaged below 2012’s level. There are positive indicators, in our view.

Stock picks. We are BUYers of MISC. Our MYR5.70 TP is based on a 20% discount to our sum-of-parts valuations.

2013E 2014E


18.1 16.7

ROE % 5.9 6.3

Source: Maybank KE


13-14 June 2013 Page 50 of 172

PART 3: VALUATIONS

Small re-rating. Having risen 72 points (+4.2%, as at 3 June) after the 13GE, the KLCI’s 12M forward earnings multiple has re-rated by 0.6x PER points to 15.3x presently, compared to 14.7x on 3 May. The KLCI’s long-term mean PER (since 2001) is 14.8x. At the same time, its valuation gap against regional peers has widened again after the 13GE – at 3.9x PER points above the MSCI Asia ex-Japan presently vs 3.0x on 3 May. On a trailing P/B basis, the KLCI now trades at 2.3x, still within its mean of 2.2x, while offering a net yield of 3.5%.

KLCI: 12M forward PER

8

10

12

14

16

18

20

22

01 02 03 04 05 06 07 08 09 10 11 12 13

(x) 1-Yr Forward PER Mean +1 std -1 std

Source: Maybank KE, Bloomberg KLCI: Trailing P/B

1.0

1.4

1.8

2.2

2.6

01 02 03 04 05 06 07 08 09 10 11 12 13

(x)KLCI P/B Mean+1 SD -1 SD

Source: Bloomberg, Maybank KE KLCI: Dividend yield

0.0

2.0

4.0

6.0

8.0

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

(%)

Source: Bloomberg, Maybank KE


13-14 June 2013 Page 51 of 172

Regional: 2013 PER vs 2013 growth, as at 3 Jun 2013 Regional: 2013 P/B vs 2013 ROE, as at 3 Jun 2013

China

Hong Kong India

Indonesia

Korea

Malaysia

Philippines

Singapore

Taiwan

AC Asia ex JP Thailand

4.0 6.0 8.0

10.0 12.0 14.0 16.0 18.0 20.0 22.0

(10.0) (4.0) 2.0 8.0 14.0 20.0 26.0 32.0 FY13 EPS growth (%)

FY13 PER (x)

Singapore Hong Kong

India

Indonesia

Korea

Malaysia

Philippines

China

Taiwan Thailand

AC Asia ex Japan

0.81.21.62.02.42.83.23.64.0

6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0

P/B (x)

ROE (%)

Source: Factset, Maybank KE Source: Factset, Maybank KE

Asian Equity Performance and Valuation, as at 3 Jun 2013 Earnings Growth (%) PE (x) P/B (x) ROE (%) Sector 2012 2013 2014 2012 2013 2014 2012 2013 2012 2013 MSCI China 5.7 12.5 11.0 11.0 9.8 8.8 1.6 1.4 14.7 14.7 MSCI Hong Kong (8.1) 9.5 10.5 17.2 15.7 14.2 1.4 1.3 8.1 8.4 MSCI India 7.9 14.3 14.9 16.0 14.3 12.4 2.5 2.2 15.6 15.6 MSCI Indonesia 6.7 12.3 16.0 17.5 15.5 13.4 3.9 3.4 22.3 22.0 MSCI Korea 12.3 20.9 13.6 10.9 9.0 7.9 1.3 1.1 11.6 12.5 MSCI Philippines 14.2 6.7 12.0 22.6 20.8 18.5 3.3 3.1 14.8 14.8 MSCI Singapore 9.4 (6.7) 8.8 13.7 14.6 13.4 1.5 1.5 11.2 10.0 MSCI Taiwan (0.9) 30.4 16.1 19.4 14.9 12.9 1.8 1.7 9.3 11.4 MSCI Thailand 18.1 15.3 11.5 14.9 13.0 11.7 2.5 2.3 16.9 17.4 MSCI AC Asia ex JP 6.1 14.6 12.5 13.5 11.8 10.5 1.6 1.5 12.2 12.7KLCI 9.0 6.1 7.6 18.3 15.7 14.8 2.6 2.2 14.1 13.9

Asean Equity Performance and Valuation, as at 31 Dec 2012 Earnings Growth (%) PE (x) P/B (x) ROE (%) Sector 2012 2013 2014 2012 2013 2014 2012 2013 2012 2013 MSCI China (0.4) 11.4 10.9 11.1 9.9 9.0 1.6 1.5 14.7 14.7 MSCI Hong Kong (11.1) 8.6 11.7 16.6 15.3 13.7 1.4 1.3 8.2 8.4 MSCI India 11.5 13.3 14.6 16.4 14.5 12.7 2.6 2.3 15.7 15.7 MSCI Indonesia 7.6 12.6 15.9 15.5 13.8 11.9 3.5 3.0 22.4 21.9 MSCI Korea 17.4 18.9 14.1 10.2 8.5 7.5 1.2 1.1 12.2 12.9 MSCI Philippines 9.7 11.6 10.9 19.5 17.5 15.8 2.9 2.7 15.1 15.2 MSCI Singapore 5.1 (1.3) 8.7 13.7 13.9 12.8 1.5 1.4 11.1 10.4 MSCI Taiwan 1.4 26.0 15.8 18.2 14.5 12.5 1.8 1.7 9.7 11.5 MSCI Thailand 14.3 14.9 11.3 14.0 12.2 11.0 2.4 2.2 17.3 17.6 MSCI AC Asia ex JP 5.0 13.9 12.6 13.1 11.5 10.2 1.6 1.5 12.4 12.8KLCI 10.8 8.0 7.6 15.6 14.4 13.4 2.2 2.0 13.3 13.6Source: Factset: Maybank KE


13-14 June 2013 Page 52 of 172

PART 4: STRATEGY

1,840 YE KLCI target. Our 2013 YE KLCI target is pegged to 15.5x 12M forward earnings, slightly above its long-term mean PER (since 2001) of 14.8x, supported by solid domestic fundamentals – stable macroeconomic conditions, a strong banking system, healthy corporate balance sheets, and continuous corporate earnings growth. Despite gaining 4.2% in just one month after the 13GE and 4.6% year to date, the KLCI has still underperformed its regional peers. Rising foreign interests and cashed-up domestic funds would provide further support to the KLCI’s likely uptrend.

Key Overweights: Banking, property. The upside for the banking sector remains intact, with the sector trading at about 12.5x 12M forward PER vs the KLCI’s 15.3x. The sector’s projected 2-year core earnings CAGR of 9.2% is above the KLCI’s 6.8%, while 2013/2014 ROEs are higher at 15.6%/15.5% vs the KLCI’s 14.1%/13.9%. Meanwhile, the property sector still offers value, with current valuations at 19-38% below their estimated RNAVs. We think that the next thematic could return to developers with landbanks in the Klang Valley, as newsflow on government land development picks up and land values along the upcoming KV MRT 2 and 3 lines re-rate, especially in areas near the stations (taking the cue from what was seen in KV MRT 1).

Banks: Comparative valuations against historical Banks: Comparative valuations against regional peers

0

5

10

15

20

25

1/5/2001 1/5/2003 1/5/2005 1/5/2007 1/5/2009 1/5/2011 1/5/201

(x) 1-year forward PER (Jan 2001 to present)

+1sd: 15.5x

-1sd: 10.4x

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

1/2/2004 1/2/2006 1/2/2008 1/2/2010 1/2/2012

PER premium/(discount of Malaysian banks to TIPS banks)

Source: Bloomberg, Maybank KE (chart) Source: Bloomberg, Maybank KE (chart)

Property stocks valuations Rec Shr px

3 Jun (1)

Target px

Our basis (Discount to

RNAV)

RNAVest(2)

Curr disc to RNAV

[ 1 – (1)/(2) ]

Glomac BUY 1.31 1.37 -35% 2.11 -38%

Mah Sing BUY 3.15 3.89 0% 3.89 -19%

SP Setia BUY 3.62 5.03 0% 5.03 -28%

Sunway BUY 3.98 4.26 -20% 5.33 -25%

UEM Land BUY 3.41 3.88 -20% 4.85 -30%

Source: Maybank KE


13-14 June 2013 Page 53 of 172

Key Overweights: Construction, oil & gas. The government’s pending go-ahead for the KV MRT 2 & 3 lines are just a formality, we believe; we think that the proposed lines will go ahead to complement the first line now under construction. This, together with the proposed KL-Singapore high-speed rail project (presently the subject of a feasibility study), upcoming government land developments in the Klang Valley and some infrastructure projects which have yet to start eg. the West Coast Expressway, offer longer-term job visibility for the construction sector. The oil & gas sector should continue to benefit from PETRONAS’ MYR300b capex spending over 2011-15, especially as just 29% of this budget was spent in the first two years.

Our top BUYs (1). SapuraKencana and Perisai are our top BUYs in oil & gas, with catalysts being a potential new Petrobras contract (for SapuraKencana) and re-rating (for Perisai) from the upcoming listing of an oil & gas group whose business model is similar to that of Perisai. In construction, our top BUY is IJM Corp, with catalysts being: (i) strong construction order book wins of up to MYR8b over the near term, (ii) a domestic volume boost at the building material division, and (iii) a re-rating of IJM Land’s strategic landbanks in Penang, Central Region and Johor. IJM Corp also offers a more liquid exposure into IJM Land.

Our top BUYs (2). In property, our top BUYs are SP Setia, which is expected to chalk up another property sales record of MYR5.5b in FY10/13, sustaining its earnings growth momentum, and Mah Sing Group for its aggressive landbanking which could re-rate valuations further. In banking, our top BUYs are AMMB, RHB Cap, and BIMB. Valuations are still very decent for RHB Cap and AMMB while BIMB continues to see strong earnings momentum from both its Islamic banking and Takaful unit. BIMB has further re-rating potential when the Securities Commission’s Syariah stock list shortens this year-end.

Our top BUYs (3). QL Resources is our top pick in the consumer space, being a growth stock offering a 2-year forward net profit CAGR of 19% but whose valuations still offer upside, at 14.6x 2014 PER vs 20+x for more high-profile consumer stocks. We continue to like Tan Chong, backed by a 3-year forward net profit CAGR of 66%, but with valuations at just 10.9x 2014 earnings. Our other top BUYs are MAHB, which has underperformed its airport operator peers and MISC, which offers value at 0.9x 2014 P/B, supported by narrowing losses at its petroleum and chemical shipping divisions. Our SOP valuation for MISC is MYR7.10, before a 20% discount to derive our target price.

Sector weights Overweight Neutral Auto Building materials Banking Consumer Construction Gaming Gloves Media Oil & gas Plantation Property (developers) Property (M-REITS) Power Telcos Petrochemicals Transport

Source: Maybank KE


13-14 June 2013 Page 54 of 172

Top BUY picks Market Price TP EPS (sen) PE (x) EPS Growth (%) Div yld ROE P/B (x)

Cap 3 Jun CY12F CY13F CY14F CY12F CY13F CY14F CY13F CY14F CY13F CY13F CY12F Big caps: Market cap >MYR4b SapuraKencana 25,286.9 4.22 4.60 11.9 17.6 22.2 35.6 24.0 19.0 48.5 26.3 0.0 12.0 3.4 AMMB Holdings 22,214.5 7.37 8.30 53.4 58.7 64.7 13.8 12.6 11.4 9.8 10.2 3.2 13.7 1.9 MISC 21,694.0 4.86 5.70 25.7 30.3 35.4 18.9 16.0 13.7 17.9 16.8 0.0 5.9 1.1 RHB Capital 21,624.8 8.67 9.80 82.1 79.0 85.8 10.6 11.0 10.1 (3.8) 8.6 2.8 12.1 1.4 SP Setia 8,900.5 3.62 5.03 18.9 20.0 26.1 19.1 18.1 13.9 5.5 30.7 3.3 8.7 1.7 IJM Corp 7,935.2 5.70 6.60 33.4 36.9 41.6 17.1 15.5 13.7 10.5 12.8 2.1 8.5 1.4 MAHB 7,431.6 6.03 7.20 37.3 28.2 22.8 16.2 21.4 26.4 (24.4) (19.1) 2.5 7.4 1.7 Tan Chong Motor 4,406.5 6.75 8.05 24.2 50.3 62.0 27.9 13.4 10.9 107.9 23.3 1.3 14.9 2.3 BIMB Holdings 4,256.5 3.99 4.20 26.3 29.7 33.4 15.2 13.4 11.9 12.9 12.4 3.3 14.2 2.1

Mid caps: Market cap MYR1.5b-4b Mah Sing 3,538.9 3.15 3.89 20.3 24.4 28.5 15.5 12.9 11.1 20.2 16.8 3.1 16.5 2.8 QL Resources 2,645.8 3.18 4.00 16.1 18.6 21.7 19.8 17.1 14.6 15.5 16.8 1.6 15.5 3.0

Small caps: Market cap <MYR1.5b Perisai 1,498.4 1.60 1.80 11.6 10.5 12.6 13.8 15.2 12.7 (9.5) 20.0 0.0 16.8 2.8

Source: Maybank KE


13-14 June 2013 Page 55 of 172

Appendix 1

Foreign shareholding of selected stocks under coverage Foreign shareholding Dec-09 Dec-10 Dec-11 Dec-12 Latest As at (month, year) Malayan Banking 10.9 14.0 13.5 19.6 23.2 31-Mar-13 CIMB Group * 42.4 42.6 38.1 40.4 40.0 31-Mar-13 Public Bank 26.5 26.5 26.1 31.2 30.9 31-Mar-13 Axiata Group 6.7 12.2 28.0 28.0 27.0 31-Mar-13 Sime Darby 14.2 15.3 17.3 19.5 18.5 31-Mar-13 Petronas Chemicals NA NA 9.0 9.0 6.0 31-Mar-13 Maxis * 8.6 8.3 7.3 7.5 7.6 31-Mar-13 Tenaga Nasional 9.4 10.5 10.8 15.0 18.7 31-Mar-13 Petronas Gas 2.4 2.0 3.0 3.0 3.0 31-Mar-13 Genting Berhad 36.0 42.0 42.0 45.0 43.0 31-Mar-13 Digi.com 6.8 9.0 12.9 12.6 12.4 31-Mar-13 IOI Corporation 22.0 19.0 17.0 17.6 17.0 31-Mar-13 Hong Leong Bank NA NA 7.7 8.1 8.3 31-Mar-13 SapuraKencana * NA NA NA 22.0 26.6 31-Mar-13 KL Kepong 16.4 19.3 18.5 15.0 13.8 31-Mar-13 Genting Malaysia 31.0 35.0 37.0 38.0 39.0 31-Mar-13 RHB Capital 5.6 12.4 11.6 8.9 10.1 31-Mar-13 AMMB Holdings 29.6 30.0 26.2 29.0 29.0 31-Mar-13 MISC Bhd 4.3 4.9 3.9 5.5 6.4 31-Mar-13 Telekom Malaysia 9.1 11.0 19.9 16.2 13.5 31-Mar-13 British American Tobacco 22.0 25.3 26.8 28.4 28.9 31-Mar-13 YTL Corporation 22.0 23.0 23.0 27.0 27.0 31-Mar-13 UMW Holdings 5.9 11.7 13.5 25.8 25.9 31-Mar-13 UEM Land NA NA 14.6 17.3 21.6 31-Mar-13 Bumi Armada NA NA NA 18.0 11.6 31-Mar-13 Gamuda 35.0 36.0 33.0 37.0 43.0 28-Feb-13 YTL Power Int'l 5.0 5.0 9.0 8.0 8.0 31-Mar-13 S P Setia 24.0 24.0 17.6 1.7 11.7 31-Mar-13 AirAsia NA 51.4 51.0 48.3 50.0 31-Mar-13 IJM Corp NA NA 41.3 36.6 39.1 31-Mar-13 MAHB NA NA 9.5 11.3 17.0 31-Mar-13 Dialog Group NA NA NA 16.0 16.0 31-Mar-13 Genting Plantations NA NA 9.8 9.0 8.7 31-Mar-13 Malaysia Airline System NA NA 4.0 4.5 2.7 31-Mar-13 Sunway Berhad * NA NA 21.8 20.5 21.9 31-Mar-13 MMHE NA 14.1 5.4 4.6 4.8 31-Mar-13 Mah Sing 17.7 16.7 20.9 24.8 27.2 31-Mar-13 WCT 9.0 14.0 14.0 10.0 13.4 30-Apr-13 KNM 16.0 26.0 16.0 16.0 16.0 31-Mar-13

* CIMB: Inclusive of BTMU’s 5.0%; * Maxis: Excludes Saudi Telco’s 17.5% effective stake; * Sunway Berhad: Includes GIC’s 12.5%; * SapuraKencana: Includes Seadrill’s 12%

Note: Highlighted are stocks which have foreign shareholding of close to, or above 20% (based on latest data available) Source: Company, compiled by Maybank KE


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Appendix 2

Dividend stocks (Maybank KE’s coverage: Stocks with more than 4% net yield) Stocks Rec Shr px at

3-Jun-13 Market Cap

(MYR m) TP (RM) 2013 Net

Yld (%) Upside to

TP (%) Potential total

returns (%) Star Hold 2.60 1,919.1 2.65 6.9 1.9 8.8 Padiberas Nasional Hold 3.63 1,707.6 3.40 6.7 (6.3) 0.4 Quill Capita Buy 1.25 487.7 1.27 6.4 1.6 8.0 AmanahRaya REIT Hold 1.04 596.1 0.95 6.4 (8.7) (2.3) Maxis Hold 6.77 50,779.8 7.20 5.9 6.4 12.3 Maybank NR 10.22 88,717.8 NR 5.8 NA 5.8 DiGi.Com Hold 4.66 36,231.5 4.85 4.8 4.1 8.9 IGB REIT Buy 1.34 4,563.7 1.42 4.8 6.0 10.7 Axis REIT Hold 3.95 1,803.2 3.05 4.3 (22.8) (18.5) Sunway REIT Hold 1.63 4,758.7 1.60 4.3 (1.8) 2.5 CMMT Buy 1.85 3,275.2 2.01 4.3 8.6 12.9 MCIL Hold 1.24 2,092.2 1.07 4.3 (13.7) (9.4) Lafarge Hold 10.66 9,057.8 9.60 4.1 (9.9) (5.8) Carlsberg Brewery Buy 16.58 5,067.6 18.00 4.1 8.6 12.7 Axiata Hold 6.73 57,398.1 6.55 4.1 (2.7) 1.4 Pavilion REIT Hold 1.58 4,752.4 1.63 4.0 3.2 7.2 MSM Malaysia Holdings Hold 5.09 3,578.2 4.40 4.0 (13.6) (9.5) Media Prima Buy 2.96 3,226.7 2.90 4.0 (2.0) 2.0 Gas Malaysia Hold 3.18 4,083.1 2.90 4.0 (8.8) (4.8)

Source: Maybank KE


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COMPANY BRIEFS


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2013 will be supported by associates. We think that the Malaysian operations will incur YoY profit decline due to the stiffened level of competition. However, the operations in Thailand and Indonesia should do well and offset the impact of lower profits in the Malaysian operations. AirAsia’s other forays in Japan, the Philippines, and India will continue to be loss making in 2013. It has yet to reach critical size and is incurring start-up losses.

Malindo threat remains, but sufficiently priced in. We believe there will be a price war between Malindo and AirAsia in 2014. Malindo Airways, at its current size of three aircraft, does not have the necessary scale to make any significant impact to AirAsia.

HOLD, based on 9.2x 2013 adjusted EV/EBITDAR target. Earnings growth will be fairly muted in 2013 due to the challenging yield environment and other cost pressures. The stock’s valuation is on par with regional peer’s average, and therefore close to fair value.

AirAsia (AIRA MK) Market Cap (MYR m): 9,021.1 Shares Issued (m): 2,780.5

An Aviation Conglomerate Current price (MYR): 3.28 Target price (MYR): 3.00 Recommendation: Hold

FYE Dec Revenue EBITDAR Net Profit EPS EPS gwth PER EV/EBITDAR P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (x) (x) (x) (%) (%)

2012A 4,995.9 1,879.4 817.0 29.4 (1.2) 11.2 8.8 1.7 116.2 35.12013F 5,594.0 1,944.6 842.7 30.3 3.1 10.8 9.3 1.6 124.5 20.92014F 6,140.1 2,132.3 960.8 34.6 14.0 9.5 8.6 1.4 116.2 18.72015F 6,641.1 2,202.6 1,012.5 36.4 5.4 9.0 8.3 1.2 107.0 18.9

INCOME STATEMENT BALANCE SHEETFY Dec 2012A 2013F 2014F 2015F FY Dec 2012A 2013F 2014F 2015F

Revenue 4,995.9 5,594.0 6,140.1 6,641.1 Fixed Assets 9,786.0 11,121.7 12,255.6 13,343.1 EBITDAR 1,879.4 1,944.6 2,132.3 2,202.6 Other LT Assets 2,915.9 3,260.4 3,551.3 3,937.5 Depreciation & Amortisation 562.2 626.8 702.8 776.8 Cash/ST Investments 2,225.8 1,882.6 2,016.4 2,279.7 Operating Profit 1,157.7 1,103.3 1,161.0 1,157.4 Other Current Assets 1,719.4 1,837.9 1,986.5 2,097.8 Associates (303.9) (362.3) (400.3) (422.2) Total Assets 16,647.1 18,102.5 19,809.8 21,658.2Interest (Exp)/Inc (1.6) 111.1 145.1 259.0 Exceptional Items 1,201.9 0.0 0.0 0.0 ST Debt 726.2 726.2 726.2 726.2 Pre-Tax Profit 2,054.0 852.1 905.8 994.1 Other Current Liabilities 2,305.2 2,524.5 2,768.6 2,992.5 Tax (175.5) 319.3 268.3 362.9 LT Debt 7,718.2 8,450.4 9,073.0 9,741.5 Minority Interest 0.0 0.0 0.0 0.0 Other LT Liabilities 544.4 544.4 544.4 544.4 Reported Net Profit 1,878.5 1,171.4 1,174.1 1,357.0 Minority Interest 0.0 0.0 0.0 0.0 Non-cash items (1,061.5) (328.7) (213.3) (344.5) Shareholders' Equity 5,353.0 5,857.0 6,697.6 7,653.6 Core Net Profit 817.0 842.7 960.8 1,012.5 Total Liabilities-Capital 16,647.1 18,102.5 19,809.8 21,658.2

Revenue Growth % 11.1 12.0 9.8 8.2 Share Capital (m) 2,779.1 2,779.1 2,779.1 2,779.1 EBITDAR Growth (%) 1.7 3.5 9.7 3.3 Net Debt 6,218.7 7,294.0 7,782.8 8,188.1 EBIT Growth (%) (1.8) (4.7) 5.2 (0.3) Capitalised leases 1,257.9 1,592.5 1,324.1 1,055.6 Reported Net Profit Growth (%) 233.0 (37.6) 0.2 15.6 Working Capital 913.7 469.7 508.1 658.8 Core Net Profit Growth (%) (1.1) 3.1 14.0 5.4 Adjusted Net Gearing % 139.7 151.7 136.0 120.8 Tax Rate % 8.5 (37.5) (29.6) (36.5)

Sources: Company, Maybank KE

A class above the rest. AirAsia’s commanding scale coupled with low cost operations and strong brand name has enabled it to withstand the perils and challenges in the aviation industry much better than its peers. Furthermore, we think AirAsia is among the lowest risk airline given its diversified geographical reach and exposure to many businesses with different growth potential and risk profile.

World’s best low cost carrier. AirAsia’s high quality service was confirmed when it won the coveted title of world’s best low cost airline awarded by Skytrax (independent airline service quality consultants), for the years 2009-12. AirAsia is the only airline to have won this coveted title four years in a row.

AirAsia X and AirAsia Indonesia on track for listing. AirAsia’s 18.3% owned AirAsia X and 49% owned AirAsia Indonesia is slated for public listing in 2H13. This will crystallize significant value creation for AirAsia and raise its book value by 20%-30%, by our estimate. This will lower down its gearing ratio, and opens the scope for a special dividend payment for the year.


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AirAsia (AIRA MK)

Discussion points

1. How bad will the KLIA2 delay affect AirAsia?

2. What is management’s guide on the cost movements in 2013? We noticed many cost items have increased (maintenance, user station charges, staff).

3. How much new debt will AirAsia raise and what is the likely structure?

4. How is Malindo effecting AirAsia’s Peninsular to East Malaysia trunk routes?

5. Share your plans for the new foreign airlines; in particular Japan, the Philippines and India?


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Fast paced expansion in non-interest income. Establishing a niche in the SME segment is proving beneficial to AFG, which has seen its non-interest income rise from just 20.8% in FY3/11 to 28.7% in FY3/13, amid higher transaction banking and treasury activities.

Access to cheaper funds. The other positive that has emanated from the group’s focus on SME financing is that it has provided AFG with a larger pool of low cost funds. The group’s CASA ratio of 33.6% end-Mar 2013 is one of the highest in the industry.

Targets intact. Management’s medium-term (FY3/12-15) targets include a cost/income ratio of 45-48% (FY3/13: 47.9%), non-interest income of 30% (FY3/13: 28.7%) and ROE of 14.16% (FY3/13: 13.8%).

Healthy capital position. The group has one of the highest capital adequacy ratios in the industry, with a common equity Tier 1 ratio of 10.6%.

Alliance Financial Group (AFG MK) Market Cap (MYR m): 7,833.4 Shares Issued (m): 1,548.1

Healthy Growth Momentum Current price (MYR): 5.06 Target price (MYR): NA Recommendation: Not Rated

FYE Mar Op Income Pre-prov Profit Recur. Net Profit Recur.EPS EPS gwth Net DPS PER Div yield P/BV ROE ROA (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (%) (x) (%) (%)2010A 1,065 510 301 19.7 32.1 6.4 25.7 1.3 2.7 10.6 0.92011A 1,129 584 409 26.7 35.8 7.0 18.9 1.4 2.3 13.0 1.22012A 1,244 653 503 33.0 23.5 13.3 15.3 2.6 2.1 14.1 1.32013A 1,333 694 538 35.3 7.0 16.6 14.3 3.3 1.9 13.8 1.3

INCOME STATEMENT BALANCE SHEET FYE: Mar (MYR m) 2010A 2011A 2012A 2013A FYE: Mar (MYR m) 2010A 2011A 2012A 2013A

Interest income 1,063 1,203 1,321 1,429 Cash & deposits wt banks, FIs 3,715 1,014 1,974 1,450 Interest expense (478) (533) (654) (699) Investment & trading securities 6,131 12,171 11,434 12,499 Net interest income 586 670 667 730 Loans & advances 20,705 21,796 24,489 27,772 Net income from Islamic banking 246 233 257 242 Intangible assets 362 358 355 356 Non-interest income 233 226 320 360 Other assets 751 733 1,467 1,615 Operating income 1,065 1,129 1,244 1,333 Total Assets 31,664 36,072 39,719 43,692Total operating expense (555) (545) (592) (639) Operating profit 510 584 653 694 Deposits fr customers 23,628 28,346 32,187 36,004 Loan loss allowance 32 (33) 2 25 Deposits fr banks, FIs 2,290 1,952 2,161 2,010 Provision for contingencies (133) 4 22 0 Borrowings 1,200 1,201 612 612 Associate contributions 0 (1) (2) (5) Other liabilities 1,594 1,216 987 1,030 Pre-tax profit 409 553 675 714 Minority Interest 5 4 5 5 Taxation (107) (144) (172) (176) Shareholders' Equity 2,947 3,352 3,767 4,030 Minority interest (0) 0 0 0 Total Liabilities-Capital 31,664 36,072 39,719 43,692Net profit 301 409 503 538 Recurring net profit 301 409 503 538 Net NPL ratio (%) 3.8 3.3 2.5 2.1

Loan loss coverage (%) 94.4 90.1 87.7 82.5 Net interest margin (%) 2.7 2.7 2.5 2.4 Net loans/csutomer deposits (%) 87.6 76.9 76.1 77.1 Cost-to-income (%) 52.1 48.3 47.6 48.0 Net loans/total deposits (%) 79.9 71.9 71.3 73.1

Sources: Company, Consensus

Stable progress. Since Mr Sng Seow Wah’s appointment as Group CEO in Jul 2010, AFG has been charting a stable growth trajectory while fundamentals of the group have steadily strengthened with the group’s ROE moving up from just 13% in FY3/11 to 13.8% in FY3/13. Asset quality has meanwhile improved with the group’s gross NPL ratio declining to 2.1% end-Mar 2013 from 3.5% end-Mar 2011.

Healthy loan growth. Gross loans expanded 12.8% YoY in FY3/13, outpacing the industry’s 10.6% with growth drivers being mortgages and auto HP. SME lending meanwhile is expected to gather pace in 2HCY13 as ETP projects are rolled out at a faster pace.

A liquid balance sheet. Despite the loan book expanding at a relatively fast clip, AFG’s balance sheet continues to be very liquid, with a loan/deposit ratio of just 78% versus the industry’s 82%. This accords the group some leeway in terms of NIM management. The overall strategy is to eventually raise the loan/deposit ratio to 85% for more efficient balance sheet management.


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Alliance Financial Group (AFG MK)

Discussion points

1. Net interest margin compression continues to be a key challenge for the group and the industry. In management’s

opinion, how much longer can one expect this compression to continue and to what magnitude?

2. SME loan demand had been soft in 1QCY13. To what extent are we seeing a pick-up in demand in 2Q thus far?

3. Demand for non-residential property loans has been very robust thus far but are there any indications that this demand is waning?

4. What other strategies are there in place to further drive non-interest income for the group?


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Only key risk is rising content cost. Content cost comprised 33% of Astro’s TV revenue in FY1/13. Every 1 ppt increase in this content cost to revenue ratio will cut our earnings estimate by 5-7%. With >99% market share and its platform agnostic set top box (DTH TV, IPTV, OTT), there are no major competitors. The recent launch of its IPTV product will help maintain its dominance.

One more year of gestation. We forecast flattish earnings growth this year only because Astro will upgrade the remaining 1.3m standard definition set top boxes to B.yond set top boxes by year end. Thereafter, we forecast that its FY1/15 earnings will surge 44% YoY and its FY1/16 earnings will grow 25% YoY as there will be no more set top boxes to upgrade after FY1/16.

BUY, MYR3.40 TP. Our TP is based on DCF valuation methodology. Coupled with our FY1/14 DPS forecast of 6.3sen, we estimate that Astro will return 10% to investors. There is upside potential to our earnings estimates should its HD and Super Pack take-up rates continue to positively surprise.

Astro Malaysia Holdings (ASTRO MK) Market Cap (MYR m): 16,374.6 Shares Issued (m): 5,198.3

To infinity and B.yond Current price (MYR): 3.15 Target price (MYR): 3.40 Recommendation: Buy

FYE Jan Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2013A 4,265.0 1,387.6 427.0 8.2 (31.6) 4.0 38.5 13.3 1.3 32.0 405.2 85.92014F 4,899.6 1,525.3 436.3 8.4 2.2 6.3 37.7 11.9 2.0 26.4 287.8 77.02015F 5,395.1 2,027.1 629.9 12.1 44.4 9.1 26.1 9.1 2.9 21.0 261.5 90.02016F 5,869.3 2,208.8 789.6 15.1 25.4 11.3 20.8 8.2 3.6 16.8 188.5 90.0

INCOME STATEMENT BALANCE SHEETFY Jan 2013A 2014F 2015F 2016F FY Jan 2013A 2014F 2015F 2016F

Revenue 4,265.0 4,899.6 5,395.1 5,869.3 Fixed Assets 1,915.8 2,424.7 2,970.7 2,751.0EBITDA 1,387.6 1,525.3 2,027.1 2,208.8 Other LT Assets 2,113.5 2,113.4 2,113.4 2,113.3Depreciation & Amortisation (593.4) (745.9) (897.6) (867.1) Cash/ST Investments 1,607.8 1,811.0 2,225.8 2,371.1Operating Profit (EBIT) 794.2 779.4 1,129.5 1,341.6 Other Current Assets 880.8 1,012.0 1,112.0 1,208.6Interest (Exp)/Inc (216.1) (175.1) (257.1) (248.1) Total Assets 6,517.9 7,361.3 8,421.9 8,444.1Associates 5.9 (0.1) (0.1) (0.1)One-offs (9.0) - - - ST Debt 125.2 15.1 50.9 81.4Pre-Tax Profit 575.0 604.2 872.3 1,093.5 Other Current Liabilities 1,450.5 1,547.6 2,031.5 2,423.2Tax (155.2) (164.1) (236.9) (296.9) LT Debt 3,556.4 3,582.8 4,210.5 4,129.0Minority Interest (1.8) (3.8) (5.5) (7.0) Other LT Liabilities 869.7 1,586.7 1,337.1 814.0Net Profit 418.0 436.3 629.9 789.6 Minority Interest 4.3 8.1 13.7 20.6Recurring Net Profit 427.0 436.3 629.9 789.6 Shareholders' Equity 511.8 620.9 778.4 975.8

Total Liabilities-Capital 6,517.9 7,361.3 8,421.9 8,444.1Revenue Growth % 10.9 14.9 10.1 8.8EBITDA Growth (%) (1.3) 9.9 32.9 9.0 Share Capital (m) 519.8 519.8 519.8 519.8EBIT Growth (%) (19.6) (1.9) 44.9 18.8 Gross Debt/(Cash) 3,681.6 3,597.9 4,261.3 4,210.5Net Profit Growth (%) (33.6) 4.4 44.4 25.4 Net Debt/(Cash) 2,073.8 1,786.9 2,035.6 1,839.3Recurring Net Profit Growth (%) (32.1) 2.2 44.4 25.4 Working Capital 912.9 1,260.4 1,255.5 1,075.1Tax Rate % 27.0 27.2 27.2 27.2


Good proxy to Malaysia’s growth. Astro is the largest Pay TV operator in Malaysia and South East Asia with 3.3m subscribers. It also has another 209k subscribers under its non-subscription platform, NJOI. We like Astro as: (i) it is a proxy to Malaysia’s income and population growth, (ii) its HD take-up rate and ARPU growth is encouraging, and (iii) its business is recession resistant.

Malaysia says, “I’ve got time! I’ve got time... and money!” Average household income is on the rise. With higher income comes subscriber and ARPU growth. Malaysia’s Pay TV penetration rate of 52% is still below regional standards. As incomes grow, Pay TV penetration can only rise. We forecast that Malaysia’s Pay TV penetration rate will hit 70% in nine years’ time.

The future is in HD. In less than four years since launch, Astro’s HD take-up rate is already 39% (+14 ppts YoY) while its Super Pack (high ARPU subset of HD) take-up rate is already 22% (+11 ppts YoY). As HD and Super Pack command higher ARPUs of approximately MYR100 and MYR125 respectively, there is a lot of room for ARPU growth. FY1/13 ARPU was only MYR93.


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Astro Malaysia Holdings (ASTRO MK)

Discussion points

1. During Maxis’ recent 1Q13 results conference call, Maxis’ management stated that the Maxis-Astro IPTV product

garnered 10,000 subscribers in two weeks from launch. What is the current take-up rate?

2. Astro plans to upgrade the remaining 1.3m standard definition set top boxes to B.yond set top boxes by year end. That is an ambitious target. What is the current take-up rate?

3. Astro plans to utilise another 6 Ku-band transponders on the MEASAT-3C satellite. As a consumer, how many more channels (HD and SD) can we expect to receive in the future? Will they come with higher monthly charges?


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FCF generation is tight in FY13. Excluding inorganic investments, we forecast Axiata’s enterprise FCF yield at sub-4%. This is mainly due to XL, which still intends to invest aggressively in its data network. In our view, the crystallization of new investment opportunities would likely remove any possibility of a special dividend in FY13.

We forecast 4% EBITDA growth in FY13. We expect EBITDA growth in Malaysia, Sri Lanka and Bangladesh to be offset by EBITDA contraction in Indonesia. XL is experiencing weak margins due to low utilization. Nevertheless, management noted that operational trends are improving, with price points having been raised from Feb-Apr 2013 without compromising subscriber additions.

Maintain HOLD, target price of MYR6.55. We value Axiata on a sum-of-parts basis, with each operating entity valued using DCF. Celcom and XL account for MYR4.13 and MYR1.12 per Axiata share respectively. Our target price implies an FY13 PER of 20.1x, EV/EBITDA of 7.8x and net dividend yield of 4.2%.

Axiata (AXIATA MK) Market Cap (MYR m): 57,260.2

Shares Issued (m): 8,508.2

A Balancing Act Current price (MYR): 6.73 Target price (MYR): 6.55 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2012A 17,651.6 7,548.7 2,513.3 29.6 6.6 35.0 20.9 9.2 5.2 2.8 1.7 12.82013F 18,621.7 7,847.1 2,776.4 32.6 1.2 27.7 20.6 8.9 4.1 2.8 1.6 13.72014F 19,719.7 8,295.3 3,026.3 35.6 9.0 30.2 18.9 8.5 4.5 2.7 1.5 14.62015F 20,750.6 8,714.3 3,385.3 39.8 11.9 33.8 16.9 8.1 5.0 2.7 1.5 15.9

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Dec 2012A 2013F 2014F 2015F FY Dec 2012A 2013F 2014F 2015F

Revenue 17,651.6 18,621.7 19,719.7 20,750.6 Fixed Assets 16,838.2 17,914.7 18,605.5 18,905.1 EBITDA 7,548.7 7,847.1 8,295.3 8,714.3 Other LT Assets 15,629.7 15,815.3 16,021.4 16,289.8 Depr & Amort (3,339.6) (3,485.8) (3,658.5) (3,672.0) Cash/ST Investments 7,906.2 7,217.7 6,938.0 7,017.4 Operating Profit (EBIT) 4,209.1 4,361.3 4,636.8 5,042.3 Other Current Assets 2,556.5 2,803.2 3,072.2 3,338.6 Net Interest (Exp)/Inc (521.7) (505.3) (512.2) (487.1) Total Assets 42,930.6 43,751.0 44,637.2 45,550.8Assoc & JV 233.4 278.2 365.3 458.6 One-offs (225.3) 0.0 0.0 0.0 ST Debt 1,892.4 1,892.4 1,892.4 1,892.4 Pretax Profit 3,761.8 4,134.2 4,489.9 5,013.9 Other Current Liabilities 5,998.3 6,168.9 6,340.5 6,504.0 Tax (882.2) (1,015.9) (1,086.3) (1,189.0) LT Debt 10,765.7 10,765.7 10,765.7 10,765.7 Minority Interest (366.3) (341.9) (377.3) (439.6) Other LT Liabilities 2,267.0 2,267.0 2,267.0 2,267.0 Net Profit 2,513.3 2,776.4 3,026.3 3,385.3 Minority Interest 1,906.7 2,140.1 2,400.8 2,643.0 Recurring Net Profit 2,738.5 2,776.4 3,026.3 3,385.3 Shareholders' Equity 20,100.5 20,517.0 20,970.9 21,478.7

Total Liabilities-Capital 42,930.6 43,751.0 44,637.2 45,550.8Revenue Growth (%) 7.3% 5.5% 5.9% 5.2% EBITDA Growth (%) 4.8% 4.0% 5.7% 5.1% Shares Outstanding (m) 8,492.3 8,508.2 8,508.2 8,508.2 EBIT Growth (%) 3.8% 3.6% 6.3% 8.7% Gross Debt/(Cash) 12,658.1 12,658.1 12,658.1 12,658.1 Net Profit Growth (%) 7.1% 10.5% 9.0% 11.9% Net Debt/(Cash) 4,751.9 5,440.4 5,720.0 5,640.7 Recurring Net Profit Growth (%) 7.1% 1.4% 9.0% 11.9% Working Capital 2,572.0 1,959.7 1,777.4 1,959.6 Tax Rate (%) 23.5% 24.6% 24.2% 23.7%


The “invest or return cash” conundrum. There are a number of potential investments that Axiata is reported to be interested in: 1) a greenfield license in Myanmar and 2) the acquisition of Axis in Indonesia. While further investments would anchor the company’s longer term growth prospects, we sense that investors would be keener for Axiata to instead increase payouts.

Waiting for Indonesia investments to bear fruit. XL has invested aggressively in its network (it has more than doubled 3G Node Bs in the past 12 months). Management’s immediate challenge lies in raising utilization (and hence margins) amid a still competitive landscape. Management believes the industry needs to consolidate. XL is open to acquiring, but only if it makes investment sense.

Shortlisted for Myanmar. Axiata is one of twelve consortiums that have been shortlisted for two telecom licenses in Myanmar. The rest of the pool consists of established international telecom majors including France Telecom, Telenor and Singtel. We expect some element of government-to-government involvement, and Malaysia does not stand out on that front.


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Axiata (AXIATA MK)

Discussion points

1. Given the number of investment opportunities in 2013, would management contemplate lowering its dividend policy in anticipation of potential cash outflow?

2. What are management’s longer term plans on its minority stakes (M1 and Idea)?

3. Can management provide some colour on Celcom’s LTE strategy?

4. A discussion on XL’s operating trends, in particular, the EBITDA margin trajectory.

5. An update on Indonesia’s industry dynamics (competitive environment, potential industry consolidation) and XL’s potential response.


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units, or cash and new units. The electable portion and issue price is determined by management.

Placement to buy new assets. AXRB has proposed a placement of up to 90.8m new units. Assuming an issue price of MYR3.75/unit (at 5% discount to the current price), AXRB’s gearing would drop to 0.12x (without new acquisitions) from 0.34x as at end-Mar 2013. To mitigate the dilutive impact on earnings, AXRB normally matches new placements with new acquisitions.

Steady earnings growth. We expect a 6% 3-year forward EPS CAGR supported by organic growth from its existing assets. Leases expiring in 2013 and 2014 represent 22% and 29% of its total rental income respectively. Axis REIT has a weighted average lease expiry of 4.5 years (by rental).

MYR3.35 DCF-based TP, HOLD. Our DCF is based on a 6.0% WACC. The main risks are: (i) rising occupancy risks in the office market given large incoming supply, and (ii) interest risk as 60% of its debts are in floating rate.

Axis REIT (AXRB MK) Market Cap (MYR m): 1,803.2Shares Issued (m): 456.5

Awaiting New Catalyst Current price (MYR): 3.95Target price (MYR): 3.35Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth GDPS PER EV/EBITDA Div yield P/BV Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 136.2 116.1 79.7 17.4 6.2 18.6 22.6 19.9 4.7 1.8 34.5 8.92013F 143.7 125.2 88.7 19.4 11.4 19.0 20.3 18.4 4.8 1.8 34.0 9.12014F 146.1 127.3 90.8 19.9 2.4 19.5 19.9 18.1 4.9 1.8 33.4 9.52015F 149.9 130.6 94.2 20.6 3.7 20.2 19.2 17.5 5.1 1.8 32.9 9.7


Revenue 136.2 143.7 146.1 149.9 Fixed Assets 1,520.0 1,539.5 1,559.5 1,579.5 EBITDA 116.1 125.2 127.3 130.6 Other LT Assets 3.0 4.0 5.0 6.0 Depreciation & Amortisation 0.0 0.0 0.0 0.0 Cash/ST Investments 42.6 48.3 54.6 61.2 Net property income (NPI) 116.1 125.2 127.3 130.6 Other Current Assets 26.8 28.2 28.7 29.4 Interest (Exp)/Inc 22.3 25.3 25.3 25.3 Total Assets 1,592.4 1,620.0 1,647.9 1,676.2Associates 0.0 0.0 0.0 0.0 One-offs 20.9 0.0 0.0 0.0 ST Debt 340.6 208.3 208.3 208.3 Pre-Tax Profit 103.1 88.7 90.8 94.2 Other Current Liabilities 24.1 47.4 71.9 96.6 Tax 0.0 0.0 0.0 0.0 LT Debt 208.3 340.6 340.6 340.6 Minority Interest 0.0 0.0 0.0 0.0 Other LT Liabilities 26.7 28.2 28.6 29.4 Net Profit 103.1 88.7 90.8 94.2 Minority Interest 3.0 4.0 5.0 6.0 Recurring Net Profit 79.7 88.7 90.8 94.2 Shareholders' Equity 989.7 991.5 993.3 995.2

Total Liabilities-Capital 1,592.4 1,620.0 1,647.9 1,676.2Revenue Growth % 19.2 5.5 1.6 2.6 NPI Growth (%) 15.7 7.8 1.6 2.6 Share Capital (m) 456.5 456.5 456.5 456.5 Pre-tax Profit Growth (%) 27.3 (14.0) 2.4 3.7 Gearing ratio (x) 0.3 0.3 0.3 0.3 Net Profit Growth (%) 27.2 (14.0) 2.4 3.7 Working capital (24.2) (25.5) (25.9) (26.6)Recurring Net Profit Growth (%) 22.9 11.4 2.4 3.7 NAV 989.7 991.5 993.3 995.2 Tax Rate % 0.0 0.0 0.0 0.0


Proven track record. Axis REIT is a trust which specialises in office-industrial properties. To-date, it has investment properties worth MYR1.5b. We continue to like Axis REIT for its hands-on management and its proven track record in growing its dividend income stream. AXRB currently trades at a gross dividend yield of 4.9% (FY14), below the industry’s average of 6.4%. Valuations are however supported by expectations of new asset acquisitions.

More assets purchase? Negotiations for the purchase of industrial/office assets worth c.MYR444m are currently underway, we understand. The injections would add 2-3sen to our FY14 DPU forecast (improving gross div. yield to 5.4%, from 4.9%), assuming: 1) a cap rate of 8%, and 2) 70% of the acquisition is equity funded (with c.MYR340m in new placement proceeds).

First to implement income distribution reinvestment plan (IDRP). Axis REIT started the IDRP in 3Q11. The IDRP provides unitholders with greater flexibility in achieving their investment objectives by electing their income distribution (electable portion) either in cash, new


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Axis REIT (AXRB MK)

Discussion points

1. What sets you apart from the other Malaysian REITs? What are your strengths?

2. What are the potential new assets (location and their likely yields) to be injected into Axis REIT?

3. Can you share with us your views on the domestic property market for both office and industrial segments?

4. What are your criterias for asset acquisition?

5. Given the renewed interest in Johor’s property market, can we expect the same of Axis REIT managers for your coming acquisitions?


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Financials via 21%-owned Affin Holdings (AHB MK, NR). Affin Group is a home-grown financial services conglomerate. Its primary activities focus on the provision of commercial, Islamic and investment banking services, money broking, fund management, underwriting of general and life insurance business.

Pharmaceuticals. 55%-subsidiary Pharmaniaga (PHRM MK, NR) is the sole concession holder to supply and distribute drugs and medical products to 148 Government hospitals and 1,400 clinics. The concession agreement ends in 2019.

Trading and manufacturing. This comprises petrol stations (BHPetrol), LPG (Syngard) and building materials (UAC). The main unit in this segment is BHPetrol which runs more than 300 service stations nationwide.

Heavy industries via 65%-owned Boustead Heavy Industries (BHIC MK, NR). Its main activities are offshore fabrication, shipbuilding and maintenance of vessels and defense-related products. It has three shipyards in Lumut (48 acres), Penang (40 acres), and Langkawi (30 acres).

Boustead Holdings (BOUS MK) Market Cap (MYR m): 5,543.3 Shares Issued (m): 1,034.2

Conglomerate Spanning Six Industries Current price (MYR): 5.36 Target price (MYR): NA Recommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2009A 5,392.0 511.2 341.6 37.5 (57.8) 17.7 14.3 16.6 3.3 1.4 97.4 8.92010A 6,182.0 708.2 537.5 57.2 52.5 35.9 9.4 12.3 6.7 1.3 66.6 12.72011A 8,556.0 793.2 610.6 64.9 13.6 42.0 8.3 13.4 7.8 1.2 64.8 13.72012A 10,211.1 821.8 416.7 40.3 (38.0) 34.0 13.3 14.8 6.3 1.2 88.8 8.9

NCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Dec 2009A 2010A 2011A 2012A FY Dec 2009A 2010A 2011A 2012A

Revenue 5,392.0 6,181.8 8,555.8 10,211.1 Fixed Assets 3,626.4 3,767.0 5,232.6 5,930.8EBITDA 511.2 708.2 793.2 821.8 Other LT Assets 3,182.2 3,416.7 3,368.0 3,668.0Depr & Amort (105.9) (126.2) (183.9) (268.6) Cash/ST Investments 396.5 424.5 1,140.7 749.2Operating Profit (EBIT) 405.3 582.0 609.3 553.2 Other Current Assets 1,882.7 1,660.0 2,981.6 3,539.3Net Interest (Exp)/Inc 103.3 107.0 131.7 148.9 Total Assets 9,087.8 9,268.2 12,722.9 13,887.3Assoc & JV (7.0) 37.2 (4.6) (82.9) - -One-offs - - 94.6 - ST Debt 2,633.8 2,475.8 3,936.2 3,927.4Pretax Profit 501.6 726.2 831.0 619.2 Other Current Liabilities 1,737.7 1,258.9 2,301.4 1,810.1Tax (83.2) (101.3) (99.1) (101.5) LT Debt 310.6 687.4 1,159.3 2,682.2Minority Interest (76.8) (87.4) (121.3) (101.0) Other LT Liabilities 131.0 147.4 122.7 86.0Net Profit 341.6 537.5 610.6 416.7 Minority Interest 446.4 470.8 751.9 725.6Recurring Net Profit 341.6 537.5 516.0 416.7 Shareholders' Equity 3,828.3 4,227.9 4,451.4 4,656.0

Total Liabilities-Capital 9,087.8 9,268.2 12,722.9 13,887.3Revenue Growth (%) (23.3) 14.6 38.4 19.3EBITDA Growth (%) (41.8) 52.2 (6.7) 0.4 Share Capital (m) 1,002.5 1,034.2 1,034.2 1,034.2EBIT Growth (%) (34.0) 43.6 4.7 (9.2) Gross Debt/(Cash) 2,944.4 3,163.2 5,095.5 6,609.6Net Profit Growth (%) (41.0) 57.3 13.6 (31.8) Net Debt/(Cash) 2,547.9 2,738.7 3,954.8 5,860.4Recurring Net Profit Growth (%) (32.1) 57.3 (4.0) (19.2) Working Capital (2,092.3) (1,650.2) (2,115.3) (1,449.0)Tax Rate (%) 16.6 13.9 11.9 16.4


Rich in diversity. Boustead has a well diversified portfolio of six core businesses (ranked by their contributions to MYR619m group pretax profit in FY12) – plantations (33%), property (26%), finance & investments (18%), pharmaceuticals (13%), trading and manufacturing (26%), and heavy industries (-16%) which is loss making.

Well matured plantations. Boustead has 81,333 ha of land bank of which 68,375 ha has been planted with oil palm trees in Peninsular Malaysia (39%), Sabah (35%), and Sarawak (26%). Of these, 19,945 ha are leased from Al-Hadharah Boustead REIT (BIRT MK, NR). Of the total planted area, 62,777 ha (92%) are mature palms and 5,598 ha (8%) are immature.

Sitting on a property “treasure-hoard”. Boustead Properties is an established Klang Valley property developer. It has a portfolio of investment properties and owns (i) office buildings (eg. Menara Affin, Menara Boustead KL and Wisma Boustead), (ii) retail malls (The Curve and e@Curve), (iii) Nottingham Malaysia university campus, and (v) operates a hotel chain under the Royale Bintang brand (Royale Bintang Curve, Royale Bintang KL, and Royale Bintang Resort & Spa, Seremban).


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Boustead Holdings (BOUS MK)

Discussion points

1. What are Boustead’s plans for each of its six core divisions?

2. Of the six divisions, which one has the highest growth potential over the next 3-5 years?

3. Is management looking to unlock the value of Boustead’s huge investment properties?

4. Is there a possibility of Boustead further streamlining the businesses to unlock value?


13-14 June 2013 Page 70 of 172

Set to embark on an aggressive asset expansion plan. Job prospects are picking up across all segments. We see BA prospecting for new assets for growth. BA will likely double its FPSO assets, triple its SURF vessels and add 4 new OSV vessels to its fleet by 2015. This is possible as it has the balance sheet to support the heavy capex (estimated RM6.4b) for its expansion programme while keeping its net gearing below the 1.5x threshold.

Strong earnings visibility three years out. Our forecasts for a 3-year net profit CAGR of 15% assume that it wins three new FPSO jobs every two years. However, we believe BA has the capacity to undertake up to three FPSO projects in 2013 alone, a possibility considering the slew of anticipated jobs. Should this happen, it would warrant an upgrade in earnings and a re-rating of the stock, given that we have only imputed the prospect of two new FPSO projects this year. Alternatively, BA could embark on the M&A route for inorganic growth should the opportunity arise. We maintain our BUY call on the stock with an unchanged sum-of-parts derived TP of MYR4.40.

Bumi Armada (BAB MK) Market Cap (MYR m): 11,543.8 Shares Issued (m): 2,929.9

Riding On Global FPSO Opportunities Current price (MYR): 3.94 Target price (MYR): 4.40 Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 1,659.2 907.8 394.9 13.5 2.0 3.0 29.2 15.1 0.8 3.1 57.8 10.52013F 1,901.3 1,096.5 467.3 16.0 18.3 0.0 24.7 13.3 0.0 2.8 72.2 11.22014F 2,080.9 1,279.8 534.3 18.2 14.3 0.0 21.6 11.7 0.0 2.5 74.4 11.32015F 2,208.1 1,411.1 594.0 20.3 11.2 0.0 19.4 10.7 0.0 2.2 67.2 11.2


Turnover 1,659.2 1,901.3 2,080.9 2,208.1 Fixed Assets 4,734.8 5,778.9 6,722.9 7,286.9 EBITDA 907.8 1,096.5 1,279.8 1,411.1 Other LT Assets 579.8 579.8 579.8 579.8 Depreciation & Amortisation (356.0) (456.0) (557.0) (638.0) Cash/ST Investments 502.6 1,618.7 1,131.6 1,069.1 Operating Profit 551.8 640.5 722.8 773.1 Other Current Assets 1,112.5 1,223.3 1,317.7 1,423.1 Associates (123.4) (138.2) (155.7) (161.5) Total Assets 6,929.8 9,200.7 9,752.0 10,358.9Interest (Exp)/Inc 40.3 56.9 56.9 78.8 Exceptional Items (9.1) 0.0 0.0 0.0 ST Debt 614.8 614.8 614.8 614.8 Pre-Tax Profit 468.6 559.2 625.0 692.4 Other Current Liabilities 421.8 341.2 355.2 365.1 Tax (80.6) (88.9) (87.7) (95.4) LT Debt 2,052.9 4,000.0 4,000.0 4,000.0 Minority Interest (2.2) (3.0) (3.0) (3.0) Other LT Liabilities 73.3 73.3 73.3 73.3 Net Profit 385.8 467.3 534.3 594.0 Minority Interest 17.1 20.1 23.1 26.1 Recurring Net Profit 394.9 467.3 534.3 594.0 Shareholders' Equity 3,749.9 4,151.3 4,685.6 5,279.6

Total Liabilities-Capital 6,929.8 9,200.7 9,752.0 10,358.9Turnover Growth % 7.5% 14.6% 9.4% 6.1%EBITDA Growth (%) 7.4% 20.8% 16.7% 10.3% Share Capital (m) 2,928.5 2,928.5 2,928.5 2,928.5 EBIT Growth (%) 6.5% 16.1% 12.9% 7.0% Gross Debt 2,667.7 4,614.8 4,614.8 4,614.8 Net Profit Growth (%) 7.3% 21.1% 14.3% 11.2% Net Debt 2,165.1 2,996.1 3,483.2 3,545.7 Recurring Net Profit Growth (%) 2.0% 18.3% 14.3% 11.2% Working Capital 578.5 1,886.0 1,479.3 1,512.4 Tax Rate % 17.2% 15.9% 14.0% 13.8%


A formidable O&G player. Bumi Armada (BA) is an emerging global powerhouse in the O&G sector with 4 core operations – Floating Production, Storage and Offloading (FPSO), Offshore Supply Vessel (OSV), Transportation & Installation (T&I) and Offshore Field Services (OFS). Its armada of 54 vessels - 6 FPSOs, 45 OSVs, 1 pipelay barge and 2 SURF vessels, is the largest of any domestic operator and these are now deployed across the world.

Expanding footprint in the O&G market. As one of the fastest growing FPSO operators in the world, it has set its sights on becoming a Top 4 player in terms of FPSO fleet size by 2015. We see numerous opportunities for BA such as: (i) 125 potential FPSO projects worldwide over the next 5 years, (ii) the requirement for new, highly technical OSVs to support global deepwater programmes, (iii) services for the subsea umbilicals, risers and flowlines (SURF) as well as inspection, repair and maintenance (IRM) markets, and (iv) increasing number of offshore development projects in Malaysia (marginal field and Enhanced Oil Recovery (EOR) development) and the Caspian region.


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Bumi Armada (BAB MK)

Discussion points

1. What is Bumi Armada’s FPSO fleet size target and how many jobs are expected this year?

2. How many FPSO projects is Bumi Armada bidding for and where are the fields located?

3. How many T&I vessels does Bumi Armada plan to add and where is Bumi Armada bidding for these T&I jobs?

4. For the Armada Installer based in the Caspian Sea, how many more days can the barge be hired out after factoring in the Lukoil and Petronas contracts?

5. What projects are being eyed for the OFS segment, and is an RSC on the cards?

6. For the OFS segment, how many CEOR vessels/ EPC projects is Bumi Armada bidding for?

7. What sets Bumi Armada apart from the other Asian O&G service providers, besides being the largest FPSO owner?

8. What is management’s growth strategy for each segment and which countries is management targeting for project bids?

9. Can management provide an update on the group’s capex and dividend plans?


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Strategy rollout progressing well. Bursa’s four strategic intents are unchanged: (i) create a more facilitative trading environment, (ii) facilitate more tradeable alternatives, (iii) reshape the market structure and framework, and (iv) build a regional market place with global access. Management has delivered on multiple projects throughout the course of 2012, and has lined up further initiatives in 2013.

We forecast 12% earnings growth in FY13. This is premised on higher volume for both equities and derivatives. Our FY13 equities ADV assumption is MYR1.9b (+14% YoY). Every MYR100m shortfall would negatively impact our net profit forecast by 3.4%. We expect equities/derivatives trading revenue to comprise 47%/14% of operating revenue in FY13 (FY12: 46%/14%).

HOLD, target price of MYR8.00. We value Bursa at 25x current year earnings, a discount to our in-house target of 29x for SGX. Our target price implies 3.8% net yield in 2013, based on a 95% payout ratio.

Bursa Malaysia (BURSA MK) Market Cap (MYR m): 4,336.0 Shares Issued (m): 532.0

A Proxy To The Market Current price (MYR): 8.15 Target price (MYR): 8.00 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2012A 388.5 249.7 151.5 28.5 3.6 27.0 28.6 15.2 3.3 5.0 Cash 17.52013F 431.0 279.4 170.4 32.0 12.5 30.5 25.4 13.6 3.7 4.9 Cash 19.42014F 462.8 300.3 182.9 34.4 7.4 32.5 23.7 12.7 4.0 4.9 Cash 20.62015F 501.6 327.4 199.7 37.5 9.2 35.5 21.7 11.6 4.4 4.8 Cash 22.2


Operating revenue 388.5 431.0 462.8 501.6 Net Fixed Assets 271.0 263.6 255.5 246.6 Other income 38.6 41.2 44.0 47.0 Invts in Assocs & JVs 0.0 0.0 0.0 0.0 Total revenue 427.1 472.2 506.8 548.5 Other LT Assets 177.2 187.1 197.8 209.3 EBITDA 249.7 279.4 300.3 327.4 Cash & ST Invts 526.4 513.6 523.3 520.2 EBIT 216.0 243.0 261.0 284.9 Other Current Assets 1,223.8 1,357.3 1,457.0 1,578.6 Interest (Exp)/Inc 0.0 0.0 0.0 0.0 Total Assets 2,198.4 2,321.6 2,433.6 2,554.8Exceptional Items 0.0 0.0 0.0 0.0 Pre-Tax Profit 216.0 243.0 261.0 284.9 ST Debt 0.0 0.0 0.0 0.0 Tax (58.3) (65.6) (70.5) (76.9) Other Current Liab 1,263.3 1,372.0 1,467.2 1,570.1 Minority Interest (6.3) (7.1) (7.6) (8.3) LT Debt 0.0 0.0 0.0 0.0 Net Profit 151.5 170.4 182.9 199.7 Other LT Liab 43.9 43.2 42.4 41.5 Recurring Net Profit 151.5 170.4 182.9 199.7 Shareholders Equity 875.5 883.6 893.6 904.4

Minority Interest 15.8 22.8 30.4 38.7 Revenue Growth % 1.7 10.6 7.3 8.2 Total Cap. & Liab 2,198.4 2,321.6 2,433.6 2,554.8EBITDA Growth (%) 2.1 11.9 7.5 9.0 EBIT Growth (%) 4.8 12.5 7.4 9.2 Net Profit Growth (%) 3.6 12.5 7.4 9.2 Recurring Net Profit Growth (%) 3.6 12.5 7.4 9.2 Tax Rate % 27.0 27.0 27.0 27.0


A proxy to the market. Both equities and derivatives have enjoyed strong trading volumes in 2013 YTD as risk appetite returned. However, this is already reflected by Bursa’s 31% YTD share price appreciation (+23% since we upgraded our call to a BUY). Going forward, we see limited scope for upside surprises in volumes. Nevertheless, the prospect of higher dividend payouts should limit downside risk, in our view.

Slow start for equities, but liquidity has returned. 1Q13 equities average daily trading value (ADV) fell 13% YoY to MYR1.72b on cautious market sentiment prior the 13th general election (13GE). Nevertheless, volume has picked up considerably post the elections (ADV of MYR2.88b in May, MYR1.85b in Apr) as buying momentum accelerated with the political overhang removed.

Scope for further capital management. Bursa’s cash pile stood at 99sen/share as at end-Mar 2013. We do not rule out an increase in cash payouts as management has historically been proactive on capital management. We currently assume 95% payout ratio in FY13.


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Bursa Malaysia (BURSA MK)

Discussion points

1. What are your expectations for trading volume/value for the remaining of this year?

2. Market foreign shareholding has climbed to 24.8% as at end-Apr 2013, from 21.9% at end-2010; do you think that foreign shareholding can breach the high of 26/27% recorded in 2007/08?

3. How is the ASEAN Link coming along? Any other regional initiatives in the pipeline?

4. Retail participation in trade is low at just 16% in 1Q13 – it used to be up to 50% in the early-2000’s; what are the efforts to encourage more retail participation in trades?

5. Any chance of a capital management / special dividends this year, to lift ROEs?


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Cost control remains a priority. Excluding one-off costs, CIMB’s 1Q13 overheads rose 12.7% YoY, mainly due to cost consolidation from RBS, resulting in a higher cost/income ratio of 58.9% in 1Q13 vs 55.1% in 1Q12. Excluding RBS, CIMB’s core overheads would have risen just 5.9% YoY. The deal pipeline nevertheless is strong and revenue flow should pick up over the next few quarters to buffer the rise in costs. Management is thus optimistic of RBS breaking even this year.

Management maintains its 16% ROE target for the year, which we believe is attainable. We maintain our earnings forecasts, expecting a pick-up in the subsequent quarters. Meanwhile, the group’s CET1 ratio (phased-in) of 8.2% is comfortable and with the dividend reinvestment scheme in place, management targets a ratio of 8.5% by year end.

HOLD. While group fundamentals remain strong, valuations are fair at this stage, in our view. Our TP of MYR8.70 pegs valuations to a FY13 P/BV of 2x for an ROE of 15.9%.

CIMB Group Holdings (CIMB MK) Market Cap (MYR m): 62,906.9 Shares Issued (m): 7,615.8

An Asian Footprint Current price (MYR): 8.26 Target price (MYR): 8.70 Recommendation: Hold

FYE Dec Op Income Pre-prov Profit Recur. Net Profit Recur.EPS EPS gwth Net DPS PER Div yield P/BV ROE ROA (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (%) (x) (%) (%)2012 13,495 5,883 4,345 58.5 7.8 23.4 14.1 2.8 2.2 16.0 1.42013E 14,540 6,451 4,748 63.9 9.3 25.6 12.9 3.1 1.9 15.8 1.32014E 15,990 7,298 5,289 71.2 11.4 28.5 11.6 3.4 1.8 16.0 1.32015E 17,529 8,079 5,868 79.0 10.9 31.6 10.5 3.8 1.6 16.1 1.3

INCOME STATEMENT BALANCE SHEET FYE Dec (MYR m) 2012A 2013F 2014F 2015F FYE Dec (MYR m) 2012A 2013F 2014F 2015F

Interest income 13,541 15,375 17,339 19,456 Cash & deposits wt banks, FIs 35,753 38,614 41,703 45,039 Interest expense (6,145) (7,060) (7,879) (8,781) Investment & trading securities 63,576 73,892 86,414 101,654 Net interest income 7,396 8,315 9,460 10,676 Loans & advances 202,138 225,905 250,918 276,661 Net inc from Islamic banking 1,689 1,689 1,824 1,970 Intangible assets 9,858 9,858 9,858 9,858 Non-interest income 4,410 4,536 4,706 4,883 Other assets 25,731 27,606 31,538 34,674 Operating income 13,495 14,540 15,990 17,529 Total Assets 337,057 375,875 420,431 467,887Operating expense (7,612) (8,089) (8,693) (9,450) Operating profit 5,883 6,451 7,298 8,079 Deposits fr customers 243,970 282,382 313,647 345,827 Loan loss allowance (329) (552) (740) (819) Deposits fr banks, FIs 21,403 22,045 22,706 23,387 Impairments, provisions (33) 0 0 0 Debts & debt related 22,157 19,086 19,380 19,688 Associate contributions 157 301 348 402 Other liabilities 20,175 19,796 28,899 39,600 Pre-tax profit 5,678 6,200 6,906 7,662 Minority Interest 775 828 886 952 Taxation (1,281) (1,399) (1,558) (1,729) Shareholders' Equity 28,577 31,739 34,912 38,433 Minority interest (52) (53) (59) (65) Total Liabilities & Capital 337,057 375,875 420,431 467,887Net profit 4,345 4,748 5,289 5,868 Recurring net profit 4,345 4,748 5,289 5,868 Gross NPL ratio (%) 3.8 3.5 3.5 3.6 Loan loss coverage (%) 82.8 94.3 93.7 93.1 Net interest margin (%) 3.07 3.00 3.01 3.02 Net loans/customer deposits (%) 82.9 80.0 80.0 80.0 Cost-to-income (%) 56.4 55.6 54.4 53.9 Net loans/total deposits (%) 76.2 74.2 74.6 74.9


An Asian footprint. In ASEAN countries where CIMB lacks a commercial banking presence, RBS has nevertheless filled in the gap through investment banking exposure. Moreover, this footprint has extended into Asia with presence in India, South Korea, Taiwan and Australia as well. To this end, CIMB is no doubt the most regionally diversified financial group among the ASEAN banks, with 40% of its pretax profit derived from overseas operations.

Targeting credit growth of 15% YoY in FY13 vs 12% in FY12. Credit growth was 14% YoY in 1Q13 against a target of 15% for the year. Corporate deals are expected to pick up in Malaysia and Indonesia over the following quarters, providing the impetus for achieving the target.

Management guides for a 10 bp compression in NIM this year (1Q13: -15 bps QoQ). Expectations are that CIMB Niaga’s NIMs will improve once the bank’s loan/deposit ratio starts to rise again. Moreover, liquidity is more than ample in Malaysia, with an LDR of just 74%, which should provide management with much room to maneuver.


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CIMB Group Holdings (CIMB MK)

Discussion points

1. The acquisition of RBS has contributed to increased costs to the group – is there a need for further cost

rationalization? How is the deal pipeline shaping up at this stage?

2. Could management elaborate on CIMB 2.0 and the progress thus far in terms of driving synergies, particularly at the commercial bank?

3. Competition in Indonesia, particularly for deposits, has heated up in recent months and the state-owned banks have a natural size advantage. How is CIMB Niaga positioned to compete with this competition and how is the bank positioned for future growth?

4. Regional contributions outside of Indonesia are still relatively small at this stage. Where does management see more focused efforts on to drive overseas contributions?

5. The proposed acquisition of Bank of Commerce Philippines is still pending. What are the key hurdles to this deal?


13-14 June 2013 Page 76 of 172


Engaging in the redevelopment and matured field projects in Malaysia. Following the Balai Risk Sharing Contract (RSC) project with Roc Oil and Petronas Carigali as its partners, Dialog, together with Halliburton will also embark on the redevelopment of the Bayan field, off East Malaysia with Petronas Carigali. The contract, said to be worth more than USD1b, will be performance and profit sharing-driven. It will include brownfield redevelopment work to boost oil and gas output. The redevelopment work is said to carry lower operating risk than a RSC.

Focus on long-term growth trajectory. Our forecasts, which imply a solid 3-year net profit CAGR of 20%, have room for upgrade, as we have yet to factor in: (i) the Balai RSC and Bayan works, (ii) full earnings potential from the Pengerang centralised tank farm project and (iii) further expansion of the Tj. Langsat CTF (Phase 3 and beyond). Overall, Dialog offers investors a steady business model, focused management, attractive earnings growth with a rising proportion of recurring income, alongside a progressive dividend policy.

Dialog Group (DLG MK) Market Cap (MYR m): 7,160.0 Shares Issued (m): 2,402.7

Terminal Growth Current price (MYR): 2.98 Target price (MYR): 3.05 Recommendation: Buy

FYE Jun Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%) 2012A 1,633.8 194.9 177.0 7.5 (3.1) 3.1 39.7 34.7 1.0 6.1 Net Cash 19.9 2013F 2,085.0 238.1 194.1 8.2 9.7 4.1 36.2 29.3 1.4 5.5 Net Cash 17.5 2014F 2,540.0 301.0 269.6 11.4 38.9 5.7 26.1 23.4 1.9 4.8 0.0 19.0 2015F 2,640.0 321.0 306.5 13.0 13.7 6.5 22.9 22.1 2.2 4.3 0.0 19.3

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m) FY Jun 2012A 2013F 2014F 2015F FY Jun 2012A 2013F 2014F 2015F Turnover 1,633.8 2,085.0 2,540.0 2,640.0 Fixed Assets 417.3 445.8 473.6 501.4 EBITDA 194.9 238.1 301.0 321.0 Other LT Assets 36.2 36.2 36.2 36.2 Depreciation & Amortisation (21.1) (21.5) (22.2) (22.2) Cash/ST Investments 579.6 152.9 93.1 34.1 Operating Profit 173.8 216.6 278.8 298.8 Other Current Assets 1,016.8 1,306.8 1,600.4 1,832.3 Associates (4.2) (10.7) (3.6) (3.6) Total Assets 2,049.8 1,941.7 2,203.3 2,404.0 Interest (Exp)/Inc 55.3 48.0 76.8 102.9 Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 69.1 52.0 52.0 52.0 Pre-Tax Profit 224.9 253.9 352.0 398.1 Other Current Liabilities 485.1 460.4 537.5 554.5 Tax (43.1) (50.8) (70.4) (79.6) LT Debt 254.8 58.4 58.4 58.4 Minority Interest (4.8) (9.0) (12.0) (12.0) Other LT Liabilities 2.8 2.8 2.8 2.8 Net Profit 177.0 194.1 269.6 306.5 Minority Interest 44.4 53.4 65.4 77.4 Recurring Net Profit 177.0 194.1 269.6 306.5 Shareholders' Equity 1,193.6 1,314.6 1,487.2 1,658.9 Total Liabilities-Capital 2,049.8 1,941.7 2,203.3 2,404.0 Turnover Growth % 35.2% 27.6% 21.8% 3.9% EBITDA Growth (%) 5.5% 22.2% 26.4% 6.6% Share Capital (m) 2,358.3 2,358.3 2,358.3 2,358.3 EBIT Growth (%) 5.3% 24.6% 28.7% 7.2% Gross Debt 323.9 110.4 110.4 110.4 Net Profit Growth (%) 16.2% 9.7% 38.9% 13.7% Net Debt/(cash) (255.7) (42.5) 17.3 76.3 Recurring Net Profit Growth (%) 16.2% 9.7% 38.9% 13.7% Working Capital 1,042.1 947.2 1,104.0 1,259.9 Tax Rate % 19.2% 20.0% 20.0% 20.0% Sources: Company, Maybank KE

BUY with a RM3.05 SOP target price. Dialog is a primary beneficiary of PETRONAS’ domestic capex spending and the RAPID project. Executing the petroleum and LNG tank terminal works in Johor as well as delivering the Balai RSC and Bayan redevelopment projects will ensure long-term earnings, cashflows and dividend growth.

Pengerang tank terminal projects are shaping up well. Construction of the MYR1.7b Phase 1 independent terminal project, covering 150 acres with a 1.3m m³ storage capacity, is on track to meet its deadline of 1QCY14. Vopak, the joint-owner and sole user of this facility, is signed on long-term contracts. Phase 2 will likely be a dedicated tank terminal, accommodating oil majors, refineries and petrochemical operators operating within the Pengerang area (i.e. PETRONAS’ RAPID).

LNG terminal and regas plant, a new growth prospect. The planned MYR4b LNG terminal will also be built in Pengerang. While still at its infancy stage, we see much potential in this project. While it is earmarked to support LNG storage and trading activities in the region, we see Dialog owning and operating a regasification terminal there. Vitol could be its partner and customer.

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Dialog Group (DLG MK)

Discussion points

1. What are the potential projects that Dialog can capture from PETRONAS’ RAPID project and Pengerang?

2. How is the progress of the Balai RSC project and will Dialog be bidding for more RSCs?

3. How is the progress of the Bayan EOR JV with Halliburton?

4. What caused the recent quarter’s weakness at the group’s engineering segment?

5. Of the tank farms, RSCs, EOR, supply bases and E&C, which area(s) of business does Dialog see as offering the most potential for growth?

6. Could Dialog be tapping the capital market for more funds in the near future?

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Over-addressing prepaid subscriber quality? To enhance the quality of its prepaid subscriber base, Digi raised starter pack prices by 24% to MYR10.50. Consequently, Digi lost 129k prepaid subscribers in 1Q13 without a corresponding increase in ARPU (1Q ARPU was also affected by lower termination rates). It remains to be seen whether management’s move would eventually translate into revenue growth.

We forecast 3% EBITDA growth and 45% net profit growth in FY13. The spike in net profit is due to accelerated depreciation tapering off (final MYR150m in FY13, implying MYR667m YoY lower depreciation). This brings net profit closer to enterprise FCF (MYR1.9b), allowing management more flexibility with dividend distribution / capital management.

Maintain HOLD, target price of MYR4.85. We value Digi on a DCF, assuming 7.1% WACC and 2% long term growth. Our target price implies 21.6x PER, 12.5x EV/EBITDA and 4.6% net dividend yield in FY13.

DiGi.Com (DIGI MK) Market Cap (MYR m): 36,213.5 Shares Issued (m): 7,775.0

Awaiting Clarity Current price (MYR): 4.66 Target price (MYR): 4.85 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2012A 6,360.9 2,929.1 1,205.7 15.5 (3.9) 26.3 30.0 12.5 5.6 138.6 0.4 144.22013F 6,571.1 3,029.3 1,743.7 22.4 44.6 22.4 20.8 12.0 4.8 138.6 0.4 667.32014F 6,776.4 3,123.9 1,933.2 24.9 10.9 24.9 18.7 11.7 5.3 138.6 0.3 739.82015F 6,938.0 3,198.4 1,950.5 25.1 0.9 25.1 18.6 11.4 5.4 138.6 0.3 746.4


Revenue 6,360.9 6,571.1 6,776.4 6,938.0 Fixed Assets 2,007.8 2,045.2 2,233.9 2,375.4 EBITDA 2,929.1 3,029.3 3,123.9 3,198.4 Other LT Assets 601.9 601.9 601.9 601.9 Depr & Amort (1,329.8) (662.6) (511.3) (558.5) Cash/ST Investments 708.9 907.1 782.2 690.8 Operating Profit (EBIT) 1,599.3 2,366.7 2,612.6 2,639.9 Other Current Assets 695.4 584.5 602.7 616.9 Net Interest (Exp)/Inc (8.3) (41.8) (35.0) (39.3) Total Assets 4,013.9 4,138.7 4,220.6 4,285.1Assoc & JV 0.0 0.0 0.0 0.0 One-offs 0.0 0.0 0.0 0.0 ST Debt 185.9 185.9 185.9 185.9 Pretax Profit 1,590.9 2,324.9 2,577.6 2,600.6 Other Current Liabilities 2,537.0 2,661.8 2,743.7 2,808.2 Tax (385.2) (581.2) (644.4) (650.2) LT Debt 894.3 894.3 894.3 894.3 Minority Interest 0.0 0.0 0.0 0.0 Other LT Liabilities 135.4 135.4 135.4 135.4 Net Profit 1,205.7 1,743.7 1,933.2 1,950.5 Minority Interest 0.0 0.0 0.0 0.0 Recurring Net Profit 1,205.7 1,743.7 1,933.2 1,950.5 Shareholders' Equity 261.3 261.3 261.3 261.3

Total Liabilities-Capital 4,013.9 4,138.7 4,220.6 4,285.1Revenue Growth (%) 6.7% 3.3% 3.1% 2.4% EBITDA Growth (%) 5.9% 3.4% 3.1% 2.4% Shares Outstanding (m) 7,775.0 7,775.0 7,775.0 7,775.0 EBIT Growth (%) 0.1% 48.0% 10.4% 1.0% Gross Debt/(Cash) 1,080.1 1,080.1 1,080.1 1,080.1 Net Profit Growth (%) (3.9%) 44.6% 10.9% 0.9% Net Debt/(Cash) 371.3 173.1 298.0 389.3 Recurring Net Profit Growth (%) (3.9%) 44.6% 10.9% 0.9% Working Capital (1,318.7) (1,356.1) (1,544.8) (1,686.3)Tax Rate (%) 24.2% 25.0% 25.0% 25.0%


Clearing the path. There are a number of impediments to the Digi story: 1) the completion of Time dotCom’s (TDC MK) distribution of Digi shares, 2) the final decision on business trust migration and 3) whether Digi’s recent loss of prepaid subscribers is a temporary blip. These factors perhaps explain Digi’s YTD share price underperformance relative to peers.

TDC’s distribution of Digi shares approaching completion. The 137.5m Digi shares from TDC’s distribution to shareholders is a major overhang. These shares represent 1.8% of Digi’s share base. The exercise is slated for completion in Jun 2013. Post distribution, TDC would have another 137.5m Digi shares remaining.

Business trust is not essential. Digi has exhausted its retained earnings, and is thus constrained to 100% dividend payout going forward. Nevertheless, the normalisation of depreciation going forward means net profit could exceed enterprise FCF beginning FY14, allowing the company to return excess cash to shareholders, and negating the need for a business trust migration.


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DiGi.Com (DIGI MK)

Discussion points

1. What are the considerations for migrating to a business trust? In particular, what is the potential downside?

2. What is management’s strategy towards LTE deployment?

3. Can management provide updates on recent prepaid operational trends?


13-14 June 2013 Page 80 of 172

see M&A opportunities that would unlock the latent values and enhance the entity as a whole. Meanwhile, the proposed disposal of its insurance arm, Uni.Asia would turn DRBH into a Syariah-compliant stock.

Quality concessions, strategic property assets. DRBH also owns Alam Flora, PUSPAKOM and KLIA Services, which has long term contracts. On the property front, its landbank, totaling 3,113 acres (GDV: MYR8b) are located at strategic locations in the Klang Valley and Johor, directly offering a play on Iskandar development.

Earnings to accelerate. Growth will be driven by maiden contribution from the 8-year MYR7.55b government contract for armoured vehicle as well as leveraging on improved earnings at the auto division as DRBH progressively turns Proton around and grows VW and Honda further. We see much value to be unlocked in DRBH.

DRB-Hicom (DRB MK) Market Cap (MYR m): 5,567.7 Shares Issued (m): 1,933.2

Driven, Robust, Brimming Prospects Current price (MYR): 2.88 Target price (MYR): NA

Recommendation: Not Rated

FYE Mar Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2010A 6,314.1 778.0 260.9 13.5 180.4 3.0 21.3 7.5 1.0 1.7 2.0 15.12011A 6,804.1 724.6 401.3 20.8 53.8 4.5 13.9 8.4 1.6 1.5 1.9 9.92012A 6,878.2 2,015.9 316.7 16.4 (21.1) 4.5 17.6 2.2 1.6 1.0 2.7 8.22013A 13,134.7 1,770.3 162.8 8.4 (48.6) 5.5 34.2 2.0 1.9 1.0 3.7 23.4

INCOME STATEMENT BALANCE SHEETFYE Mar (MYR m) 2010A 2011A 2012A 2013A FYE Mar (MYR m) 2010A 2011A 2012A 2013A

Revenue 6,314.1 6,804.1 6,878.2 13,134.7 Fixed Assets 1,829.1 1,840.7 5,334.5 5,237.7 EBITDA 778.0 724.6 2,015.9 1,770.3 Other LT Assets 12,366.0 12,241.0 18,521.4 19,659.8 Depreciation & Amortisation 157.0 167.4 216.6 607.7 Cash/ST Investments 1,386.7 1,350.3 3,040.3 3,284.1 Operating Profit (EBIT) 621.0 557.2 1,799.2 1,162.6 Other Current Assets 10,544.6 12,863.9 13,394.2 13,948.9 Interest Inc/(Exp) (36.8) (39.6) (100.9) (242.3) Total Assets 26,126.4 28,295.9 40,290.4 42,130.5Associates 128.8 229.0 167.7 162.6 One-offs 422.9 71.2 1,278.0 825.1 ST Debt 625.6 521.2 1,892.0 2,809.2 Pre-Tax Profit 657.9 701.5 1,821.4 1,037.4 Other Current Liabilities 17,090.1 18,901.9 25,076.7 25,226.0 Tax 114.6 131.3 146.8 338.4 LT Debt 902.2 825.2 3,475.6 3,667.9 Minority Interest 71.0 97.7 79.9 123.6 Other LT Liabilities 1,686.0 1,915.5 2,075.0 2,073.1 Net Profit 472.3 472.5 1,594.7 575.3 Minority Interest 1,242.8 1,151.8 1,215.6 1,253.8 Recurring Net Profit 260.9 401.3 316.7 162.8 Shareholders' Equity 4,579.7 4,980.3 6,555.6 7,100.5

Total Liabilities-Capital 26,126.4 28,295.9 40,290.4 42,130.5Revenue Growth (%) 3.5 7.8 1.1 91.0 EBITDA Growth (%) 168.6 (6.9) 178.2 (12.2) Share Capital (m) 1,933.2 1,933.2 1,933.2 1,933.2 EBIT Growth (%) 333.4 (10.3) 222.9 (35.4) Gross Debt 1,527.8 1,346.4 5,367.5 6,477.1 Net Profit Growth (%) (28.5) 0.0 237.5 (63.9) Net Debt/(Cash) 141.0 (3.9) 2,327.2 3,192.9 Recurring Net Profit Growth (%) 180.4 53.8 (21.1) (48.6) Working Capital (5,784.4) (5,208.9) (10,534.2) (10,802.2)Tax Rate % 17.4 18.7 8.1 32.6


A diversified business model. DRB-Hicom (DRBH) is a conglomerate with 3 core business divisions: (i) automotive (ii) services (financial and non-financial) and (iii) property development. The group offers: (i) a direct consumer-play prospect (auto, Islamic financing, property development), and (ii) strong earnings growth profile with some rewarding concession and defense projects to boot.

Automotive. DRBH has arguably the most comprehensive automotive value chain in Malaysia, with presence in auto parts manufacturing, motor vehicles assembly, distribution and inspection. It owns Proton (the nation’s national car) and holds an array of non-national franchises (VW, Honda, Mitsubishi, Suzuki, VW, Audi and Mercedes Benz). With these marques, DRBH collectively controls about 27% of domestic TIV.

Financial services. Its Islamic banking operations via 70%-owned Bank Muamalat offer an exposure to the consumer financing segment, which account for >55% of its total loans. With a directive to pare down its stake to 40%, we


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DRB-Hicom (DRB MK)

Discussion points

1. Proton’s shrinking market share remains a key concern as it affects profitability and cost efficiencies. What progress

has been made by DRBH to tackle these issues?

2. As one of the major players in the domestic automotive market, what is the level of engagement with the Ministry of International Trade and Industry (MITI) to address the upcoming revision to the National Automotive Policy?

3. Has management seen progress in its effort to pare down its stakes in Bank Muamalat and UniAsia? What does management plans to do with the proceeds of the said divestments?

4. Where are the areas that management feels it could drive further efficiencies or returns within the group?

5. What are management’s targets in terms of market position and profitability of its diverse business divisions over the next 3 years?


13-14 June 2013 Page 82 of 172

Malaysia’s sugar king. FGVH, via its 51%-owned publicly listed MSM (HOLD), is also the leading sugar refiner and distributer in Malaysia with ~57% market share based on the production volume in 2011. MSM operates under a regulated environment, as sugar is a control item. We believe that MSM’s business model is relatively low risk as it practices a cost plus approach business model, providing stable cash flow to the group.

Palm oil is key contributor, followed by sugar. Over 75% of FGVH’s FY12 pretax profit is derived from its palm oil division (upstream, including downstream contributions from its associate and jointly controlled entities), followed by its sugar division at ~20%.

M&A in the cards. Armed with MYR6b cash pile, of which MYR4.5b was raised during its IPO in mid-2012, FGVH is on the look out for M&A opportunities (both upstream and downstream, greenfield or brownfield alike) in the region. As commodity prices have fallen sharply over the last 12 months, FGVH may just buy some assets at reasonable valuations compared to a year ago.

Felda Global Ventures (FGV MK) Market Cap (MYR m): 16,416.7 Shares Issued (m): 3,648.2

The MYR6b War Chest Current price (MYR): 4.50 Target price (MYR): 4.30 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/NAV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 12,796 1,059 740 0.20 -49.4 0.14 22.2 18.6 3.1 2.7 39.6 13.22013F 11,349 710 603 0.17 -18.6 0.08 27.2 27.7 1.8 2.6 31.3 9.22014F 11,946 919 722 0.20 19.9 0.10 22.7 21.4 2.2 2.4 26.6 10.72015F 12,173 977 797 0.22 10.3 0.11 20.6 20.1 2.4 2.3 21.1 11.1


Revenue 12,796 11,349 11,946 12,173 Fixed Assets 3,571 3,641 3,720 3,768EBITDA 1,059 710 919 977 Other LT Assets 5,078 4,717 4,855 5,023Depreciation & Amortisation (84) (125) (129) (134) Cash/ST Investments 5,688 6,101 6,310 6,592Operating Profit (EBIT) 975 585 790 843 Other Current Assets 2,153 2,375 2,437 2,461Share of Associates& JC 173 273 252 289 Total Assets 16,490 16,834 17,321 17,844Interest (Exp)/Inc (22) (4) 5 9Pre-Tax Profit 1,126 854 1,046 1,141 ST Debt 1,096 1,096 1,096 1,096Tax (221) (159) (210) (225) Other Current Liabilities 1,483 1,427 1,439 1,444Minority Interest (99) (106) (114) (120) LT Debt + LLA Liability 6,789 6,789 6,789 6,789PATAMI 806 589 722 797 Other LT Liabilities 162 162 162 162Core PATAMI 740 603 722 797 Minority Interest 858 964 1,078 1,197

Shareholders' Equity 6,102 6,397 6,758 7,156Revenue Growth % 71.2% -11.3% 5.3% 1.9% Total Liabilities-Capital 16,490 16,834 17,321 17,844EBITDA Growth (%) -20.1% -33.0% 29.4% 6.4%EBIT Growth (%) -18.8% -40.0% 34.9% 6.7% Share Capital (m) 3,648 3,648 3,648 3,648PATAMI Growth (%) -14.5% -26.9% 22.6% 10.3% Gross Debt 7,885 7,885 7,885 7,885Core PATAMI Growth (%) -30.9% -18.6% 19.9% 10.3% Net Cash / (Debt) (2,197) (1,784) (1,576) (1,293)Tax Rate % 19.6% 18.7% 20.1% 19.7% Working Capital 5,263 5,953 6,212 6,514

Gross gearing % 129% 123% 117% 110%CPO ASP (MYR /t) 2,843 2,500 2,600 2,600Sources: Company, Maybank-KE

An integrated global agricultural player. FGV is an integrated global agricultural player focused on three primary commodities – palm oil, rubber and sugar. It is the world’s third largest listed oil palm plantation operator by planted area, the world’s largest CPO producer via its 49%-associate Felda Holdings Berhad (FHB), and Malaysia’s leading refined sugar producer via 51%-subsidiary MSM Malaysia. The group’s midstream and downstream palm oil related businesses are mainly undertaken by FHB. Maintain HOLD and TP of MYR4.30 based on sum-of-parts.

World’s third largest oil palm operator. FGV has economic rights over 355,864 ha of plantation land leased from FELDA, its major shareholder with a 37%-stake, all located in Malaysia. Of these, 323,587 ha have been planted with oil palm trees and another 10,308 ha planted with rubber trees. FGVH is in the midst of rejuvenating its plantations, to turn relatively mature oil palm trees profile into young and productive trees using new high yielding planting materials to boost oil yields.


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Felda Global Ventures (FGV MK)

Discussion points

1. What is your view on CPO price for the rest of 2013?

2. What is your FFB production growth guidance for 2013?

3. What is your production cost outlook on a per tonne basis for 2013 compared to 2012?

4. Have vendors’ asking prices of assets in the region revised downwards significantly compared to a year ago?

5. It has been a year since listing, how soon can investors expect an M&A announcement?

6. What will be FGVH’s immediate focus – greenfield or brownfield assets?

7. What is your comfortable net gearing level at FGVH level, including LLA Liability into the calculation?


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On track to meet its MYR800m full year sales target. Glomac has locked-in property sales of MYR519m for 9MFY4/13 (+51% YoY), and met 65% of its FY4/13 sales target of MYR800m. Sales should be stronger in 4QFY4/13, boosted by Lakeside Residences’ Phase 3 and 4 launches. Meanwhile, its redevelopment project in Melbourne is not expected to kick off in the short term. The project, which has an estimated GDV of MYR1.2b, could enhance our RNAV estimate by 4sen.

Ample war chest to expand landbank. Glomac’s net gearing remains healthy at 0.21x as at end-Jan 2013, providing a potential war chest of MYR230m based on its target net gearing of 0.5x. To cater to the strong demand for affordable housing (priced below MYR500,000 per unit) while sustaining its long-term growth, Glomac continues to seek sizeable tracts of land in the Klang Valley.

BUY, MYR1.37 TP. We value Glomac at its historical peak valuation and derive a fair value of MYR1.37 TP on 35% discount to our MYR2.11 RNAV. Share price drivers include: 1) the potential en-bloc sale of its retail mall in Glomac Damansara worth MYR350m and 2) RNAV-accretive land acquisitions.

Glomac (GLMC MK) Market Cap (MYR m): 953.4Shares Issued (m): 727.8

Townships Drive Earnings Current price (MYR): 1.31Target price (MYR): 1.37Recommendation: Buy

FYE Apr Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 655.6 174.4 79.3 13.0 22.8 4.1 10.1 5.0 3.1 1.3 12.1 13.52013F 765.4 161.1 99.9 13.7 5.3 4.1 9.6 5.8 3.1 1.2 18.3 13.02014F 899.9 199.5 128.4 17.6 28.6 5.3 7.4 4.7 4.0 1.1 16.4 14.92015F 1121.9 252.2 168.6 23.1 31.3 6.9 5.7 3.7 5.3 1.0 12.7 17.3

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Apr 2012A 2013F 2014F 2015F FY Apr 2012A 2013F 2014F 2015F

Revenue 655.6 765.4 899.9 1,121.9 Fixed Assets 4.2 9.3 13.4 16.7 EBITDA 174.4 161.1 199.5 252.2 Other LT Assets 599.4 730.6 664.3 580.6 Depreciation & Amortisation 5.6 4.9 5.9 6.7 Cash/ST Investments 337.2 273.6 273.3 289.9 Operating Profit 161.3 156.2 193.6 245.5 Other Current Assets 420.9 858.2 1,004.9 1,261.1 Associates 0.0 0.0 0.0 0.0 Total Assets 1,361.6 1,871.7 1,955.9 2,148.3Interest (Exp)/Inc (6.8) (11.1) (11.1) (10.8) Exceptional Items 8.0 0.0 0.0 0.0 ST Debt 82.6 82.6 82.6 82.6 Pre-Tax Profit 171.9 145.1 182.5 234.7 Other Current Liabilities 236.0 610.2 604.5 678.9 Tax (43.9) (36.3) (45.6) (58.7) LT Debt 331.4 331.4 331.4 331.4 Minority Interest 34.2 8.9 8.4 7.4 Other LT Liabilities 17.0 17.0 17.0 17.0 Net Profit 92.3 99.9 128.4 168.6 Minority Interest 61.1 61.1 61.1 61.1 Recurring Net Profit 79.3 99.9 128.4 168.6 Shareholders' Equity 633.5 769.3 859.2 977.3

Total Liabilities-Capital 1,361.6 1,871.7 1,955.9 2,148.3Revenue Growth % 9.0 16.7 17.6 24.7 EBITDA Growth (%) 23.0 (7.6) 23.9 26.4 Share Capital (m) 609.2 729.0 729.0 729.0 EBIT Growth (%) 19.9 (3.2) 24.0 26.8 Net Cash/(Debt) (76.9) (140.5) (140.8) (124.2)Net Profit Growth (%) 36.1 16.5 28.6 31.3 Working Capital 96.3 112.4 132.2 164.8 Recurring Net Profit Growth (%) 25.8 26.0 28.6 31.3 Net Gearing % 12.1 18.3 16.4 12.7 Tax Rate % (26.8) (25.0) (25.0) (25.0)


Small but sexy. Glomac is predominantly a Klang Valley developer, well-known for its township developments. It has 1,026 acres of land remaining with GDV of MYR6.8b. We like Glomac for its relatively cheap valuations – 8.0x CY13 PER and 1.2x PBV (vs. industry average’s 16.7x / 1.8x respectively). It currently trades at a 38% discount to our RNAV estimate of MYR2.11.

Township projects continue to shine. Demand for units in Bandar Saujana Utama and Saujana Rawang remains strong with average monthly sales of MYR13-15m each, providing a solid earnings base. Given the strong demand for landed properties, Glomac is ramping up its township development projects. It recently acquired a 39-acre land in Sepang, adding to its existing 192 acres of land there with a revised GDV of MYR1.1b (previously MYR800m).

Lakeside Residences, the key catalyst. Lakeside Residences (MYR2.5b in GDV) will be the key sales driver for FY4/13-14. Recent property launches at Lake Residences have thus far received overwhelming responses with all non-bumi lots snapped up. Glomac has raised prices by 6-7% since its first launch in Sep 2012.


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Glomac (GLMC MK)

Discussion points

1. What is your view on the current property market in Malaysia?

2. What is your view on the impact of the High Speed Rail and MRT Line 2/LRT extension on property prices in the Klang Valley? Where is the next boom area(s) for the property market?

3. Do you foresee any tightening measures on the property market?

4. What is holding the company back from participating in Iskandar Malaysia right now?


13-14 June 2013 Page 86 of 172

Construction of NGC to commence soon. The construction work at the NGC plant will commence in Sep 2013 and production lines will come on stream progressively from 2QFY3/15 onwards.

Manageable nitrile competition. We believe that the current mild supply-led ASP pressure may persist for the next three years but it should be mitigated by Hartalega’s higher plant efficiency (45,000 pcs/hr vs. average 30,000 pcs.hr now) and economies of scale from its NGC plant expansion. Hartalega’s focus from now onwards is market share gains and bottomline growth, compared to the margin expansion strategy in the past.

Expect stronger growth in FY3/16. We project a modest FD EPS growth of 7%/5% in FY3/14-FY3/15. We look forward to a stronger FD EPS growth of 15% in FY3/16, underpinned by its NGC plant expansion. We have a HOLD call on Hartalega, as we think its forward PER of 16x is already fair. Our TP of MYR5.40 pegs the stock to 15x 2014 FD EPS.

Hartalega Holdings (HART MK) Market Cap (MYR m): 4,066.4 Shares Issued (m): 734.0

Dominating Nitrile Space Current price (MYR): 5.54 Target price (MYR): 5.40 Recommendation: Hold

FYE Mar Revenue EBITDA Net Profit FD EPS EPS gwth DPS FD PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2013A 1,032.0 337.9 234.7 32.1 16.1 14.5 17.3 11.5 2.6 5.3 Net Cash 30.72014F 1,202.6 390.6 265.1 34.3 6.9 16.3 16.4 10.3 2.9 4.5 Net Cash 29.12015F 1,390.0 442.2 288.8 36.1 5.1 17.8 15.6 9.3 3.2 3.9 Net Cash 27.02016F 1,590.5 513.7 331.4 41.4 14.7 20.4 13.6 8.0 3.6 3.3 Net Cash 26.5

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Mar 2013A 2014F 2015F 2016F FY Mar 2013A 2014F 2015F 2016F

Revenue 1,032.0 1,202.6 1,390.0 1,590.5 Fixed Assets 534.9 736.4 949.1 1,115.2 EBITDA 337.9 390.6 442.2 513.7 Other LT Assets 7.6 7.6 7.6 7.6 Depreciation & Amortisation (31.9) (48.6) (67.2) (83.9) Cash/ST Investments 182.4 207.2 131.8 125.0 Operating Profit 305.9 342.0 374.9 429.8 Other Current Assets 211.4 246.3 284.7 325.7 Associates (0.1) (2.1) (4.7) (4.9) Total Assets 936.3 1,197.5 1,373.2 1,573.5Interest (Exp)/Inc 0.0 0.0 0.0 0.0 Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 7.7 7.7 7.7 7.7 Pre-Tax Profit 305.9 339.9 370.2 424.9 Other Current Liabilities 107.4 122.7 139.6 157.6 Tax (70.8) (74.8) (81.4) (93.5) LT Debt 4.5 104.5 104.5 104.5 Minority Interest (0.3) 0.0 0.0 0.0 Other LT Liabilities 50.3 50.3 50.3 50.3 Net Profit 234.7 265.1 288.8 331.4 Minority Interest 1.0 1.0 1.0 1.0 Recurring Net Profit 234.7 265.1 288.8 331.4 Shareholders' Equity 765.5 911.4 1,070.2 1,252.5

Total Liabilities-Capital 936.3 1,197.5 1,373.2 1,573.5Revenue Growth (%) 10.8 16.5 15.6 14.4 EBITDA Growth (%) 17.2 15.6 13.2 16.2 Share Capital (m) 731.3 731.3 731.3 731.3 EBIT Growth (%) 18.0 11.8 9.6 14.6 Net Cash/(Debt) 170.3 95.1 19.6 12.8 Net Profit Growth (%) 16.6 13.0 8.9 14.8 Working capital 118.5 138.1 159.6 182.6 Recurring Net Profit Growth (%) 16.6 13.0 8.9 14.8 Net gearing (%) Net Cash Net Cash Net Cash Net CashTax Rate (%) 23.2 22.0 22.0 22.0

Sources: Company, Maybank-KE

The nitrile leader. Established in 1988 and listed on Bursa Malaysia in 2008, Hartalega is the world’s largest nitrile glove OEM producer with a 17% global market share in nitrile examination glove. It stands out as the most efficient and profitable glove manufacturer, testament to its strength in engineering and technological innovation. This is reflected in its financials – net profit margins, ROAs and ROEs, which are by far the most superior in the industry.

Ensuring non-disruptive growth. Having already garnered a strong technical know-how in the production of nitrile glove, Hartalega has spent the past three years in building its skilled workforce. This is to ensure a smooth execution of its ambitious 9-year Next Generation Integrated Glove Manufacturing Complex (NGC) plant expansion in Sepang, which will see its total capacity increasing to 42.5b pcs p.a. by FY3/23 (+3x post-plant 6). A successful execution will see Hartalega dominating the nitrile space with a much bigger global nitrile market share and defending its price-setter position.


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Hartalega Holdings (HART MK)

Discussion points

1. How would you interpret the global industry trends in latex and synthetic gloves, in terms of consumption, ASP etc.?

2. In view of the huge upcoming new nitrile glove capacities, do you foresee a more aggressive price competition ahead? And what is your strategy in tackling this challenge?

3. Will Europe’s nitrile glove demand becomes saturated in the next 3-5 years? And, which are the likely key growth markets after Europe?

4. Would China be a threat to Malaysia-based glove manufacturers over the next few years?


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bottom-line positive. Other low-hanging fruits such as cost-saving initiatives should also help boost profit growth in the near-term.

Execution risks do exist. Given the scale of its growth ambition, executing the expansion represents the biggest risk to earnings. Given that most of these projects are greenfield, start-up costs and delays are typical for this highly-regulated industry. There is already some evidence of this, with expansion schedules being pushed out further from the original plan a year ago.

30% net profit CAGR to FY15. We project a 3-year net profit CAGR of 30%, driven by new hospitals coming on stream, which will add more than 3000 beds. During this period, IHH will also break into new international markets such as the Middle-East, Vietnam and China. Organically, we also expect growth in patient volumes and stronger margins as operating leverage and cost savings kick in. Our target price of MYR3.70 is based on 1.5x PEG.

IHH Healthcare (IHH MK) Market Cap (MYR m): 11,567.6 Shares Issued (m): 2,928.5

In The Pink Of Health Current price (MYR): 3.95 Target price (MYR): 3.70 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 6,981.9 1,388.5 470.4 5.8 90.1 0.0 68.1 24.6 0.0 1.9 6.2 4.62013F 6,679.2 1,388.2 664.0 8.2 41.2 0.0 48.3 24.2 0.0 1.8 3.3 3.72014F 7,585.4 1,572.9 797.3 9.8 20.1 0.0 40.2 21.0 0.0 1.7 Net Cash 4.32015F 9,023.7 1,899.2 1,043.0 12.9 30.8 0.0 30.7 17.4 0.0 1.7 Net Cash 5.6


Revenue 6981.9 6679.2 7585.4 9023.7 Total Assets 23292.8 23653.7 24359.7 24368.2Services and consumables (1673.3) (1703.2) (1896.3) (2210.8) Current Assets 2623.1 2759.8 3280.3 3244.7Development cost (944.5) 0.0 0.0 0.0 Cash & ST investment 1554.3 1653.0 2033.4 1775.0Staff cost (2207.7) (2137.4) (2427.3) (2887.6) Inventories 136.9 140.0 155.9 181.7Operating expenses (983.6) (1625.5) (1863.9) (2201.1) Trade recievables 880.0 915.0 1039.1 1236.1Other income 215.8 175.0 175.0 175.0 Others 51.9 51.9 51.9 51.9

EBITDA 1388.5 1388.2 1572.9 1899.2 Non-current Assets 20669.8 20893.9 21079.4 21123.5Dep & amort. (482.5) (525.9) (564.4) (605.9) PPE 6725.2 6970.1 7178.6 7247.8Operating Profit 906.1 862.3 1008.4 1293.2 Intangibles 11732.8 11712.0 11689.0 11663.9Net Interest (127.9) (72.5) (60.0) (41.9) Associates&JV 957.3 957.3 957.3 957.3

Interest Income 72.8 85.0 85.0 85.0 Others 1254.5 1254.5 1254.5 1254.5Interest Expense (200.6) (157.5) (145.0) (126.9) Total Liabilities 5072.3 4769.2 4677.9 4686.4

JV+Assc. 106.9 100.0 125.0 150.0 Current Liabilities 1843.8 1870.2 2028.9 2287.4Net extraordinaries 112.3 0.0 0.0 0.0 Trade payables 1324.5 1399.9 1558.6 1817.1Pretax profit 997.4 889.8 1073.4 1401.3 ST borrowings 299.0 250.0 250.0 250.0Income taxes (179.3) (195.7) (236.2) (308.3) Others 220.3 220.3 220.3 220.3Minority Interest (19.2) (30.0) (40.0) (50.0) Long-term liabilities 3228.6 2899.0 2649.0 2399.0Net Profit 798.9 664.0 797.3 1043.0 Long-term debts 2329.6 2000.0 1750.0 1500.0Recurring Net Profit 470.4 664.0 797.3 1043.0 Others 899.0 899.0 899.0 899.0

Shareholder's equity 17245.0 17909.0 18706.3 18706.3Minority Interest 975.5 975.5 975.5 975.5


Healthcare proxy. IHH is one of the best proxies to the growing healthcare industry in the region. It currently operates more than 5,000 licensed beds in over 30 hospitals. It has a leading position in three key markets – Singapore, Malaysia and Turkey. We think this business model is highly scalable.

Going for a wider reach. The group’s track record and brand premium puts it in an enviable position to expand into other attractive markets such as the PRC, Hong Kong, India, Vietnam, Macedonia and Brunei. For example, IHH recently won a bid for a greenfield private hospital in Hong Kong against strong competition.

Ongoing expansion. Occupancy at its new Novena hospital in Singapore continues to ramp up since the start of operations in 3Q12, as start-up losses narrow from quarter-to-quarter. We expect Novena to break even in 2013 and start contributing positively thenafter as operating leverage kicks in. With the successful debt restructuring at Acibadem, IHH’s Turkish operations have now also turned


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IHH Healthcare (IHH MK)

Discussion points

1. What kind of trend can we expect to see for overall revenue per inpatient? Given that new hospitals may be in poorer location and have less operating history.

2. What kind of margins and equity return are IHH aiming for the new hospital in Hong Kong? Can IHH leverage upon this to further expand in that region?

3. Given that staff is typically the major challenge for healthcare operators, how does IHH intend to mitigate cost increases as well as to retain and further attract talent?

4. Who does management see as the closest competitor in each country and what are the strategies to stay ahead of the competition?

5. Given the fragmented nature of the Turkish (and surrounding region it is serving) private hospital industry, will there be an industry consolidation and what role does IHH intend to play in that?


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Penang. Planned launches worth MYR2b-3b could support its target to exceed FY3/13 property sales in FY3/14. IJM Land has a sizeable undeveloped landbank of 6,200 acres with a GDV potential of MYR38b.

Unlocking values at the ports. Kuantan Port’s expansion would feature a new deepwater terminal, an extension to its concession period, c.700 acres of new industrial land and a new Chinese shareholder. Upon completion, the port’s handling capacity is expected to double, buoyed by new throughput volumes from new potential investors on the adjacent industrial land. The proposed sale of IJM’s stake in the Kemaman Port concession and other assets for MYR240m is positive with the cash proceeds to be redeployed for Kuantan Port’s expansion.

Re-rating potential. Currently trading at 13.8x 2014 PER, at its long-term mean of 14x, we think that the stock still has upside potential. Our MYR6.60 TP, based on 16x 2014 PER target, is supported by our estimated MYR6.10 RNAV for the stock. IJM Corp also offers a more liquid exposure to IJM Land which has strategic landbanks in Penang, Central Region Peninsular Malaysia and Johor.

IJM Corporation (IJM MK) Market Cap (MYR m): 7,935.2 Shares Issued (m): 1,392.1

Unleashing Its Latent Value Current price (MYR): 5.70 Target price (MYR): 6.60 Recommendation: Buy

FYE Mar Revenue EBITDA Recur. Net Profit Recur.EPS EPS gwth Net DPS PER Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (%) (x) (%) (%)2012A 4,517.9 990.9 443.1 32.3 23.6 12.0 17.6 2.1 1.5 52.8 7.92013A 4,663.4 1,051.7 428.8 31.0 (4.0) 13.0 18.4 2.3 1.4 58.3 7.62014F 4,851.8 1,069.7 524.2 37.9 12.6 12.0 15.0 2.1 1.3 36.6 8.92015F 5,624.4 1,200.3 590.9 42.8 12.7 12.0 13.3 2.1 1.2 28.1 9.3

INCOME STATEMENT BALANCE SHEETFYE Mar (MYR m) 2012A 2013A 2014F 2015F FYE Mar (MYR m) 2012A 2013A 2014F 2015F

Revenue 4,517.9 4,663.4 4,851.8 5,624.4 Net Fixed Assets 1,330.3 1,498.2 1,542.4 1,641.3 EBITDA 990.9 1,051.7 1,069.7 1,200.3 Invts in Assocs & JVs 1,654.7 2,055.2 1,675.5 1,686.7 Depreciation & Amortisation (159.4) (172.1) (168.3) (173.1) Concession assets 2,476.1 2,690.1 2,476.1 2,476.1 Operating Profit (EBIT) 831.5 879.6 901.4 1,027.1 Other LT Assets 1,911.0 1,993.7 1,914.8 1,916.7 Interest (Exp)/Inc 2.1 (18.3) (8.7) (15.2) Cash & ST Invts 1,699.0 1,766.1 2,092.9 2,380.5 Associates 2.0 (17.6) 13.6 14.6 Other Current Assets 4,819.5 5,118.0 5,220.6 5,680.0 One-offs (34.0) (7.9) 0.0 0.0 Total Assets 13,890.6 15,121.3 14,922.2 15,781.3Pre-Tax Profit 801.6 835.8 906.3 1,026.6 Tax (251.1) (273.6) (244.7) (277.2) ST Debt 1,115.9 1,555.5 1,115.9 1,115.9 Minority Interest (141.4) (141.3) (137.4) (158.5) Other Current Liab 1,837.0 2,047.9 2,067.2 2,401.2 Net Profit 409.1 420.9 524.2 590.9 LT Debt 3,406.0 3,481.0 3,206.0 3,106.0 Recurring Net Profit 443.1 428.8 524.2 590.9 Other LT Liab 574.1 734.3 573.6 573.6

Minority Interest 1,609.6 1,695.4 1,870.4 2,028.9 Revenue Growth % 21.4 3.2 6.8 15.9 Shareholders Equity 5,348.1 5,607.2 6,089.1 6,555.7 EBITDA Growth (%) 16.3 6.1 10.2 12.2 Total Cap. & Liab 13,890.6 15,121.3 14,922.2 15,781.3EBIT Growth (%) 17.3 5.8 11.7 13.9 Net Profit Growth (%) 34.3 2.9 12.6 12.7 Shares Outstanding (m) 1,370.9 1,381.6 1,381.6 1,381.6 Recurring Net Profit Growth (%) 26.0 (3.2) 12.6 12.7 Gross Debt/(Cash) 4,521.9 5,036.4 4,321.9 4,221.9 Tax Rate % 31.3 32.7 27.0 27.0 Net Debt/(Cash) 2,822.9 3,270.4 2,229.0 1,841.4 Sources: Company, Maybank KE

Sector’s Top Pick. IJM is now our construction sector’s top pick (BUY) on expectations that it could bag up to MYR8b construction jobs and achieve another record-high property sales in FY14, backed by steady earnings from its building material division. Further latent value could emanate from its strategic property landbanks with high capital appreciation potential and Kuantan Port’s expansion.

Potential MYR8b job wins. As a major shareholder of two key infrastructures – West Coast Expressway and Kuantan Port, IJM is poised to clinch sizeable portions of the construction works that could amount to MYR8b. Both projects are expected to be finalized before year end and the tendering would be in 1H14. If these crystallise, they will boost IJM’s current outstanding orderbook of MYR2.8b (end-Mar 2013) significantly. Uptick in construction activities would also bolster demand at its building material division.

Property continues to forge ahead. IJM Land achieved record sales of MYR2b in FY3/13. In FY3/14, it is planning maiden launches at new developments Bandar Rimbayu, Pantai Sentral Park and PARC3 @ Jln Raja Laut in the Central region and also the second phase of The Light in


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IJM Corporation (IJM MK)

Discussion points

1. What is IJM’s target construction job wins for FY3/14? Is IJM planning to tender for any other key infrastructure

projects in Malaysia such as rail projects, and overseas construction jobs?

2. What is management’s thoughts on Malaysia’s property outlook and the impact on IJM Land’s property projects?

3. How would IJM benefit from the Kuantan Port expansion and development of the adjacent industrial land?

4. What is IJM Plantations’ production growth forecast for its oil palm plantation for the next 3 years?

5. Which segments of businesses would drive IJM’s earnings growth going forward?

6. Is IJM planning to monetize its matured assets including highway concessions in Malaysia and abroad?


13-14 June 2013 Page 92 of 172

One of the largest palm oil downstream players. IOI has three refineries in Malaysia and one in Rotterdam with a combined annual refining capacity of 3.3m MT. It also has two oleo-chemical plants in Malaysia (0.7m tpa capacity), and specialty oils and fats plants located in Malaysia, Netherlands, USA and Canada. Downstream manufacturing made up 10% of EBIT in FY6/12.

Plans to split up the group. IOI’s property assets have grown threefold since 2007 to MYR7.7b (FY6/12), with increased investments into Singapore and China’s property markets in the recent years. In an attempt to unlock the value of its property division and allow it to pursue its business strategy and capital management initiatives, the group has recently announced plans to split the group. In FY6/12, its property division was the 2nd largest earnings contributor, at 28% of group EBIT.

Key risk is whether IOI’s property division is able to command similar PER valuation to IOI Corp’s 18x 2014 PER upon listing as the property sector has traded at an average PER of 15.4x.

IOI Corporation (IOI MK) Market Cap (MYR m): 32,752.0 Shares Issued (m): 6,384.4

Property – Plantations Divisions to Split Current price (MYR): 5.13 Target price (MYR): 5.60 Recommendation: Hold

FYE Jun Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 15,640 2,622 1,827 28.4 (6.9) 15.5 18.0 14.1 3.0 2.7 29.8 14.22013F 15,527 2,894 1,737 27.0 (4.9) 16.4 18.9 12.8 3.2 2.5 23.5 15.42014F 15,841 2,596 1,849 28.8 6.4 14.4 17.8 14.3 2.8 2.3 17.3 12.72015F 15,886 2,689 1,937 30.1 4.8 15.1 17.0 13.8 2.9 2.2 11.2 12.4

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Jun 2012A 2013F 2014F 2015F FY Jun 2012A 2013F 2014F 2015F

Revenue 15,640 15,527 15,841 15,886 Fixed Assets 5,743 5,872 5,990 6,095EBITDA 2,622 2,894 2,596 2,689 Other LT Assets 8,136 8,569 8,671 8,788Depreciation & Amortisation (255) (271) (283) (295) Cash/ST Investments 4,361 4,541 4,880 5,338Operating Profit 2,367 2,623 2,313 2,394 Other Current Assets 4,825 4,802 4,894 4,913Associates 154 171 234 263 Total Assets 23,065 23,785 24,434 25,133Interest (Exp)/Inc (141) (211) (197) (189)One-offs 0 0 0 0 ST Debt 830 830 830 830Pre-Tax Profit 2,379 2,583 2,350 2,468 Other Current Liabilities 1,502 1,493 1,518 1,522Tax (550) (444) (465) (485) LT Debt 7,292 6,927 6,581 6,252MI (39) (26) (35) (46) Other LT Liabilities 525 536 546 557Net Profit 1,789 2,113 1,849 1,937 Minority Interest 288 314 350 396Recurring Net Profit 1,827 1,737 1,849 1,937 Shareholders' Equity 12,628 13,684 14,609 15,577

Total Capital 23,065 23,785 24,434 25,133Revenue Growth % (3.2) (0.7) 2.0 0.3EBITDA Growth (%) (14.4) 10.4 (10.3) 3.6 Share Capital (m) 6,427 6,427 6,427 6,427EBIT Growth (%) (16.0) 10.8 (11.8) 3.5 Debt 8,122 7,757 7,411 7,082Net Profit Growth (%) (19.5) 18.1 (12.5) 4.8 Net Cash/(Debt) (3,761) (3,216) (2,531) (1,744)Net Profit Ex. El Growth (%) (6.7) (4.9) 6.4 4.8 Working Capital 3,323 3,308 3,375 3,392Tax Rate % 23.1 17.2 19.8 19.7CPO ASP (MYR /t) 3,135 2,460 2,600 2,600Sources: Company, Maybank KE

A leader in plantation and property. IOI is an integrated plantation player with 157,752 of planted oil palm area, making it one of the largest plantation companies in the region. IOI is fully integrated with refinery, oleo-chemical and specialty fats operations. Besides plantation, IOI continues to unlock the value of its strategic plantation estates in Malaysia into higher value property projects. It recently announced plans to split the group into two distinct entities (ie plantation and property) by end-2013. Maintain HOLD and MYR5.60 TP on 19x 2014 PER target.

An efficient plantation player. IOI is one of the most efficient plantation player in the region. It achieved 4.9t/ha of oil yield in FY6/12. Its EBIT per mature ha was the 2nd highest in the region among our stock universe at MYR8,900 in 2012. IOI targets 8,000 ha p.a. of new planting in Indonesia, backed by its plantable reserves of ~30,000 ha. The group is still on the look out for more landbank in the region. In the meantime, its fast growing 30%-associate company Bumitama (SGX-listed; BUY) will help bolster earnings growth in the short term.


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IOI Corporation (IOI MK)

Discussion points

1. What is your view on CPO price for the rest of 2013?

2. What is your CPO production cost outlook?

3. Can you share with us your future expansion plans?

4. What is your outlook on Malaysia, Singapore and China’s property markets?

5. Is there a property bubble in those countries that IOI Property operates?

6. With near zero gearing for IOI Properties upon listing, what are the immediate plans? Will the focus be more on property development or property investments in the short term?

7. What is the comfortable net gearing level of IOI Properties in the medium term?


13-14 June 2013 Page 94 of 172

SEEK-ing M&As. In Mar 2013, JobStreet’s substantial shareholder SEEK completed the acquisition of a remaining 20% stake in rival, JobsDB. Should SEEK also raises its existing 22% stake in JobStreet, that could create cross synergies between the two groups as SEEK also has a very strong presence in Australia and New Zealand. JobStreet could further ride on SEEK’s expertise.

8.2% 3-year net profit CAGR, by concensus. Consensus currently estimates MYR59.5m/MYR66.0m net profit for JobStreet in FY13-14, implying 20.1x/18.1x PERs. Going forward, JobStreet indicated that it will not be expanding its operations regionally as the key goal would be to focus on markets in which it is presently operating in. JobStreet has also raised its DPR from 50% to 75%, implying 13.3sen DPS based on consensus’ FY13 profit forecast, or a net yield of 3.6%.

JobStreet Corporation (JOBS MK) Market Cap (MYR m): 1,197.3

Shares Issued (m): 315.1

#1 On The Street Current price (MYR): 3.80 Target price (MYR): NA Recommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2010A 117.1 52.7 41.0 13.0 46.2 6.5 29.2 21.0 1.7 7.2 Net Cash 27.82011A 139.9 56.0 43.4 13.6 4.6 7.0 27.9 19.8 1.8 6.5 Net Cash 24.52012A 160.8 66.4 58.4 18.3 34.1 6.5 20.8 16.7 1.7 5.6 Net Cash 29.13MFY13 43.2 20.5 16.8 4.9 NA 3.5 19.4 10.7 3.7 5.3 Net Cash 27.0

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Dec 2010A 2011A 2012A 3MFY13 FY Dec 2010A 2011A 2012A 3MFY13

Revenue 117.1 139.9 160.8 43.2 Fixed Assets 14.3 15.6 20.2 20.6EBITDA 52.7 56.0 66.4 20.5 Other LT Assets 114.2 114.1 128.2 131.7Depr & Amort 1.7 1.7 2.3 0.6 Cash/ST Investments 62.2 91.3 107.5 118.3Operating Profit (EBIT) 50.9 54.2 64.1 19.9 Other Current Assets 14.2 16.8 18.5 22.3Net Interest (Exp)/Inc 1.0 1.4 1.7 0.3 Total Assets 205.0 237.8 274.3 293.0Assoc & JV 3.9 5.1 3.1 0.7 One-offs (0.1) (1.1) 8.5 0.8 ST Debt 0.2 0.2 0.1 0.1Pretax Profit 55.2 59.8 77.4 21.7 Other Current Liabilities 36.1 48.9 57.7 61.6Tax 12.0 14.4 15.8 (4.9) LT Debt 0.4 0.2 0.1 0.0Minority Interest 2.2 2.1 3.1 (1.4) Other LT Liabilities - 0.0 0.0 0.0Net Profit 41.0 43.4 58.4 16.8 Minority Interest 1.1 1.5 1.7 3.6Recurring Net Profit 40.9 44.5 49.9 16.0 Shareholders' Equity 167.2 187.1 214.8 227.5

Total Liabilities-Capital 205.0 237.8 274.3 293.0Revenue Growth (%) 26.8 19.4 15.0 NA EBITDA Growth (%) 44.4 6.3 18.5 NA Shares Outstanding (m) 315.1 315.1 315.1 315.1EBIT Growth (%) 45.0 6.5 18.1 NA Gross Debt/(Cash) 0.5 0.4 0.2 0.1Net Profit Growth (%) 48.0 5.8 34.8 NA Net Debt/(Cash) (61.7) (90.9) (107.3) (118.1)Recurring Net Profit Growth (%) 48.0 5.8 34.8 NA Working Capital 40.1 59.1 68.1 7.3Tax Rate (%) 21.8 24.0 20.5 22.5


Premier online recruitment service provider. JobStreet is now the leading provider of online recruitment services in ASEAN being the number 1 in Malaysia, Philippines and Singapore and number 2 in Indonesia and Thailand. It also has a presence in India, Japan and Vietnam. JobStreet has managed to attract over 11m jobseekers with over 1.8m job postings in 2012 or over 150,000 job postings per month. In terms of market share, JobStreet controls 85-90% of the Malaysian market, 45% of Singapore, 60-65% of Philippines and 30% of Indonesia.

Good morning Vietnam! In mid-2012, JobStreet entered into a 80:20 joint venture with IDG Ventures Vietnam to form JobStreet Vietnam as a move to expand its operations into the Vietnamese market. JobStreet has mentioned that it is currently not charging employers for posting job listings on its website as it tries to build up a stronger job database to entice more job seekers to utilise its services. JobStreet believes that it will be able to start charging employers in two years. Rising internet penetration rate in Vietnam will serve to assist its business growth in the country.


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JobStreet Corporation (JOBS MK)

Discussion points

1. What are JobStreet’s strategies in expanding its market share in Vietnam, Thailand and India?

2. How recession proof is JobStreet’s business model?

3. Where does MyStarJob stand in comparison with JobStreet?

4. Is Linkedin considered as a potential threat to JobStreet?

5. How do you foresee JobStreet’s growth in the next few years?


13-14 June 2013 Page 96 of 172

Integrated operations. KLK’s oleo-chemical division have benefited from low raw material costs as margins expanded to 6.6% in 1HFY9/13 (+4.5-ppts YoY). The higher oleo-chemical division’s earnings contribution has mitigated weaker upstream earnings amidst weakened CPO ASP since Oct 2012.

Aggressive downstream expansion. KLK has recently accelerated its midstream and downstream investments in Indonesia. Construction of a 175,000 tpa fatty acid plant and a ~1m tpa refinery in Indonesia are underway and targeted for completion before the end of 2013.

Huge capex plan for FY9/13. KLK is targeting a capex of MYR1.2b in FY9/13 (FY9/12: MYR0.76b) for its upstream and downstream investments. This will be funded by its internally generated cashflows and new borrowings, given its healthy net gearing of 2% (as of 30 Sept 2012).

SELL. While positive over the long term prospects of KLK, valuations are rich at 21x forward PER. Our unchanged TP of MYR19.40 is based on 19x FY9/14 PER.

Kuala Lumpur Kepong (KLK MK) Market Cap (MYR m): 22,578.0 Shares Issued (m): 1,065.0

Benefiting From Its Integrated Model Current price (MYR): 21.20 Target price (MYR): 19.40 Recommendation: Sell

FYE Sep Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (x) (%)2012A 10,570 1,751 1,076 101 (19.0) 65.0 21.0 13.4 3.1 3.3 1.7 17.12013F 8,883 1,620 943 88 (12.3) 53.0 24.0 14.4 2.5 3.1 Net Cash 12.92014F 10,226 1,840 1,090 102 15.6 61.3 20.8 12.7 2.9 3.0 Net Cash 14.12015F 10,776 1,930 1,141 107 4.6 64.1 19.8 12.1 3.0 2.8 Net Cash 14.0

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Sept 2012A 2013F 2014F 2015F FY Sept 2012A 2013F 2014F 2015F

Revenue 10,570 8,883 10,226 10,776 Fixed Assets 5,205 5,526 5,821 5,942EBITDA 1,751 1,620 1,840 1,930 Other LT Assets 1,363 1,323 1,285 1,250Depreciation & Amortisation (270) (306) (330) (355) Cash/ST Investments 2,359 2,707 2,702 3,008Operating Profit 1,480 1,315 1,509 1,575 Other Current Assets 2,456 2,076 2,378 2,502Associates 11 11 11 12 Total Assets 11,383 11,631 12,186 12,703Interest (Exp)/Inc (66) (65) (64) (64)Exceptional Items 136 0 0 0 ST Debt 696 661 628 597Pre-Tax Profit 1,560 1,260 1,456 1,523 Other Current Liabilities 884 749 856 900Tax (300) (277) (320) (335) LT Debt 1,783 1,783 1,783 1,783MI (49) (39) (46) (48) Other LT Liabilities 513 513 513 513Net Profit 1,211 943 1,090 1,141 Minority Interest 398 437 483 530Recurring Net Profit 1,076 943 1,090 1,141 Shareholders' Equity 7,110 7,487 7,923 8,380

Total Capital 11,383 11,631 12,186 12,703Revenue Growth % (1.6) (16.0) 15.1 5.4EBITDA Growth (%) (18.0) (7.5) 13.5 4.9 Share Capital (m) 1,068 1,068 1,068 1,068EBIT Growth (%) (20.8) (11.2) 14.8 4.4 Debt 2,479 2,444 2,411 2,380Net Profit Growth (%) (22.9) (22.1) 15.6 4.6 Net Cash/(Debt) (120) 263 291 629Recurring Net Profit Growth (%) (19.0) (12.3) 15.6 4.6 Working Capital 1,572 1,327 1,522 1,602Tax Rate % 19.2 22.0 22.0 22.0CPO ASP (MYR /t) 3,075 2,400 2,575 2,600Sources: Company, Maybank KE

Sector bellweather. KLK has the highest exposure to palm oil earnings among the top four plantation stocks in Malaysia, at over 90% of its FY9/12 pretax profit. It is one of Malaysia’s largest plantation groups with a combined 251,325 ha of plantation land in Malaysia and Indonesia (as at 30 Sept 2012), of which 192,424 ha is planted with oil palm and another 19,580 ha with rubber.

Steady FFB growth of 8% pa. KLK’s weighted average oil palm tree profile is 10.4 years in age, with blended FFB yield of 21.3t/ha in FY9/12 and 21.8% OER. At this prime stage, we estimate a moderate 3-year forward FFB CAGR of 8%. Due to its prime age, KLK has a relatively low all-in cost of production at ~MYR1,200/t.

Still hungry for growth. KLK targets new planting of 5,000 – 8,000 ha each year in Indonesia backed by its remaining plantable reserves of 23,390 ha. The group is continuously on the look out for new landbank. In Dec 2012, it completed the acquisition of Collingwood Plantations Pte Ltd which owns 44,342 ha of land in Papua New Guinea, suitable for oil palm planting.


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Kuala Lumpur Kepong (KLK MK)

Discussion points

1. What is KLK’s view on CPO price for the rest of 2013?

2. Can you share with us your FY13 planting targets and planting progress YTD?

3. What is your production cost outlook?

4. Can you provide us with an update on your recent Papua New Guinea investments?

5. Can you please provide an update on your new downstream plant in Indonesia? Is it operational and how are margins looking like?

6. Can you share with us your future expansion plans?

7. What is your view of Malaysia’s plan to roll out B10 in the next 12 months? Is it workable and is KLK involved?


13-14 June 2013 Page 98 of 172

commence in Jul 2013 and completion is slated for 1Q14. The company has also initiated technology advancements for its new plants where productivity could be close to the most efficient glove player (i.e. Hartalega) and lead to better margins ahead.

High dividend payout. Management aims to raise dividend payouts gradually to 50% by FY15 from 37% in FY12, supported by its strong free cash flows. We are projecting an attractive net DPS of 16.5sen/21sen for FY13-14, which translates into net yield of 4.1%/5.2%.

Undemanding valuation. Kossan offers the strongest earnings growth play (3-year CAGR: +15%), highest net dividend yield and cheapest valuations (FY14 PER : 8.7x) in the glove sector. We have a BUY call on Kossan with a MYR4.70 target price (10x FY14 PER).

Kossan Rubber Industries (KRI MK) Market Cap (MYR m): 1,373.2 Shares Issued (m): 318.6

Turning Ambitious Current price (MYR): 4.31 Target price (MYR): 4.70 Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 1,235.5 190.5 104.5 32.7 14.3 12.0 13.2 7.8 2.8 2.3 16.3 17.02013F 1,422.8 234.9 131.7 41.2 26.1 16.5 9.9 6.0 4.1 1.9 17.4 19.02014F 1,629.7 264.0 149.0 46.6 13.1 21.0 8.7 5.3 5.2 1.7 14.3 19.22015F 1,802.3 285.0 160.6 50.2 7.8 25.1 8.1 4.9 6.2 1.5 10.5 18.7


Revenue 1,235.5 1,422.8 1,629.7 1,802.3 Fixed Assets 518.8 582.0 613.9 639.8 EBITDA 190.5 234.9 264.0 285.0 Other LT Assets 5.1 5.1 5.1 5.1 Depreciation & Amortisation (44.4) (52.1) (58.1) (64.1) Cash/ST Investments 98.4 108.0 117.7 139.0 Operating Profit 146.1 182.8 205.9 220.9 Other Current Assets 375.1 432.0 494.8 547.2 Associates (5.3) (6.1) (6.5) (6.3) Total Assets 997.3 1,127.0 1,231.5 1,331.0Interest (Exp)/Inc 0.0 0.0 0.0 0.0 Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 163.5 193.5 193.5 193.5 Pre-Tax Profit 140.9 176.7 199.4 214.6 Other Current Liabilities 130.0 148.0 167.8 184.3 Tax (33.7) (42.3) (47.7) (51.4) LT Debt 35.0 35.0 35.0 35.0 Minority Interest (2.7) (2.7) (2.7) (2.7) Other LT Liabilities 41.2 41.2 41.2 41.2 Net Profit 104.5 131.7 149.0 160.6 Minority Interest 12.2 14.9 17.6 20.3 Recurring Net Profit 104.5 131.7 149.0 160.6 Shareholders' Equity 615.4 694.5 776.4 856.7

Total Liabilities-Capital 997.3 1,127.0 1,231.5 1,331.0Revenue Growth (%) 13.1 15.2 14.5 10.6 EBITDA Growth (%) 17.8 23.3 12.4 7.9 Share Capital (m) 319.7 319.7 319.7 319.7 EBIT Growth (%) 20.0 25.1 12.6 7.3 Net Debt/(Cash) 100.1 120.5 110.8 89.5 Net Profit Growth (%) 14.3 26.1 13.1 7.8 Working capital 256.7 295.6 338.6 374.5 Recurring Net Profit Growth (%) 14.3 26.1 13.1 7.8 Net Gearing % 16.3 17.4 14.3 10.5 Tax Rate (%) 23.9 23.9 23.9 23.9


A balanced latex-to-nitrile OEM. Founded in 1979 and listed in 1996, Kossan is Malaysia’s third largest OEM producer of examination gloves by capacity (17b pcs p.a.) and the biggest Technical Rubber Product (TRP) maker, serving the manufacturing sector (i.e. automotive, marine, construction, general industries). The glove manufacturing business is Kossan’s lead earnings contributor, accounting for 87% of both the group’s revenue and EBITDA in FY12. Kossan has a balanced examination glove product sales mix of 50:50 for latex:nitrile.

Assertive growth strategy. Following the proposed acquisition of a 56-acre parcel of land in Feb 2013, Kossan is planning a more aggressive capacity expansion than in the past. It is targeting to achieve a total capacity of 26b pcs p.a. by 2017 (+86% from now), focusing on the production of higher-margin nitrile gloves.

Expansion into Indonesia. Kossan is also expanding its TRP business into Indonesia, with the plant construction to


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Kossan Rubber Industries (KRI MK)

Discussion points

1. What are the global industry trends in latex and synthetic gloves as well as technical rubber products (TRP)?

2. Major competitors are aggressively expanding capacity; do you see this as a concern and what are your plans?

3. Any plans for mergers and acquisitions to grow your capacity and clientele base?

4. What is the status of Kossan’s TRP expansion into Indonesia and what would the earnings contribution be for the next three years?

5. What is the status of Kossan’s planned purchase of a greenfield rubber plantation land in Indonesia?


13-14 June 2013 Page 100 of 172

Structural factors support demand. We believe the underlying demand is supported by structural factors such as population growth, increasing proportion of the aged and rising income levels. Additionally, the strained public healthcare provides opportunities for the private sector to play a bigger role. The government also has identified the healthcare sector as one of the 12 National Key Economic Areas (NKEAs) under the ETP.

Key risks. KPJ faces competition from the Parkway-Pantai group and many other smaller private healthcare players in the domestic market. Liberalisation of the healthcare sector could also bring in foreign competition. It also faces challenges from a shortage of healthcare professionals. As KPJ pursues its expansion plans, we believe that any delays or cost overruns in executing its plans could restrict its expected growth.

11% 3-year EPS CAGR. Consensus forecast 3-year EPS CAGR (2013-15) of 11%, driven mainly by the expected increase in hospital beds. KPJ trades at a forward PER of 25x, around 15% below the regional healthcare peers.

KPJ Healthcare (KPJ MK) Market Cap (MYR m): 4,311.7 Shares Issued (m): 652.3

Defensive Healthcare Play Current price (MYR): 6.61 Target price (MYR): NA Recommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (x) (%)2010A 1,654.6 190.0 118.9 22.6 160.6 7.5 29.3 25.6 1.1 4.8 0.2 17.02011A 1,909.0 226.2 143.7 26.3 16.6 12.1 25.1 21.5 1.8 4.3 0.2 17.32012A 2,096.1 248.7 140.0 23.9 (9.0) 11.5 27.6 19.6 1.7 4.1 0.4 14.53MFY13 545.1 52.0 26.5 4.3 NA 4.0 38.4 21.2 2.4 4.1 0.5 13.4

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY December 2010A 2011A 2012A 3MFY13 FY December 2010A 2011A 2012A 3MFY13

Revenue 1,654.6 1,909.0 2,096.1 545.1 Fixed Assets 561.6 668.0 962.5 948.9EBITDA 190.0 226.2 248.7 52.0 Other LT Assets 463.0 584.6 690.2 747.5Depreciation & Amortisation 59.4 69.3 78.5 21.4 Cash/ST Investments 191.8 252.1 201.5 232.9Operating Profit (EBIT) 130.7 156.9 170.1 30.6 Other Current Assets 463.7 454.7 395.6 410.9Interest (Exp)/Inc (6.1) (9.1) (9.3) (4.1) Total Assets 1,680.0 1,959.3 2,249.8 2,340.2Associates 23.9 54.8 37.4 8.6One-offs 6.5 0.0 0.0 0.0 ST Debt 362.7 141.0 206.6 260.4Pre-Tax Profit 168.0 204.6 196.9 35.1 Other Current Liabilities 362.2 456.7 494.8 462.6Tax 41.7 50.3 50.1 (8.6) LT Debt 36.7 302.5 385.5 443.0Minority Interest 7.3 10.6 6.7 1.4 Other LT Liabilities 55.0 62.2 59.4 62.4Net Profit 118.9 143.7 140.0 25.1 Minority Interest 94.7 103.9 67.5 69.0Recurring Net Profit 112.4 143.7 140.0 25.1 Shareholders' Equity 768.6 893.0 1,035.9 1,042.8

Total Liabilities-Capital 1,680.0 1,959.3 2,249.8 2,340.2Revenue Growth (%) 13.6 15.4 9.8 NAEBITDA Growth (%) 5.8 19.0 10.0 NA Share Capital (m) 652.3 652.3 652.3 325.2EBIT Growth (%) (1.8) 20.0 8.5 NA Gross Debt/(Cash) 399.4 443.5 592.1 703.3Net Profit Growth (%) 7.2 20.8 (2.5) NA Net Debt/(Cash) 207.6 191.4 390.6 470.4Recurring Net Profit Growth (%) 7.2 20.8 (2.5) NA Working Capital (69.4) 109.0 (104.4) 32.0Tax Rate (%) 24.8 24.6 25.4 24.5


Entrenched market leader in Malaysia. KPJ owns the largest network with 22 private specialist hospitals in Malaysia and it also has operations overseas (Indonesia, Thailand, Australia). KPJ has an asset-light structure by selling its hospital assets to Al-‘Aqar REIT, and leasing them back for its operations. KPJ also eyes a bigger share of the medical tourism pie, striving to grow revenue contribution from 3% in 2012 to 25% by 2020.

Planned new local capacity. By end-2013, KPJ expects its bed capacity to rise to 2,766 beds (+8% from now), backed by new hospitals at populated towns, such as Pasir Gudang, Kota Kinabalu and Muar. During 2014-16, KPJ’s bed capacity will jump to 4,016 (+57%), backed by its planned new hospitals at Pahang, Bandar Dato’ Onn, Perlis, Klang Bayu Emas and Miri.

Developments abroad. In 2012, KPJ acquired an 80% equity stake in a hospital in Indonesia (PT Khidmat Perawatan Jasa Medika) and also an 23.4% equity stake in the 263-bed Vejthani Public Company Limited, which bodes well for KPJ’s medical tourism agenda going forward. KPJ also has an aged care facility service in Australia via a 51% equity stake in Jeta Gardens Waterford Trust.


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KPJ Healthcare (KPJ MK)

Discussion points

1. What are your strategies to grow your medical tourism market share given the competition in the region?

2. Do you see wage cost pressures from a shortage of healthcare professionals? How do you intend to manage this?

3. What about pricing pressures? Are there any ceilings on your charges and are the bigger insurance companies bargaining for more discounts?

4. What are your long-term plans for the Indonesia, Thailand and Australia domestic markets?

5. Are your hospital expansion plans on track? How long do you expect the gestation period to be for the new hospitals?


13-14 June 2013 Page 102 of 172

Well managed gearing position. To avoid stretching its balance sheet, MSGB normally negotiates for land payment to be paid in stages that matches the project’s cashflows. Recently, it concluded a rights issue which raised MYR398m in cash and lowered its net gearing to 0.19x as at end-Mar 13 (as at end-Dec 12: 0.25x) with cash reserves of MYR822m (or 73sen/sh).

Visible near-term earnings. We expect a 32% 3-year forward EPS CAGR backed by its healthy unbilled sales of MYR3.6b (as at end-Mar 2013; 2x our 2013 revenue forecasts), providing ~2 years’ earnings visibility. Major risks include interest rate hike and/or stricter rules by the authorities which could weaken the demand on properties.

BUY, MYR3.89 TP. We value MSGB at its historical peak valuation of 1.0x P/RNAV. Potential earnings upside could come from new land acquisitions. MGSB has further strengthened its position in Iskandar Malaysia via the purchase of a 35-acre of freehold land worth MYR4.4b in GDV. It now has 363 acres of land worth MYR6.4b in Iskandar, accounting for 26% of its remaining GDV.

Mah Sing Group (MSGB MK) Market Cap (MYR m): 3,548.5 Shares Issued (m): 1,126.5

On Aggressive Landbanking Mode Current price (MYR): 3.15 Target price (MYR): 3.89Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 1,775.3 325.6 228.5 20.3 32.7 7.5 15.5 9.1 2.4 2.8 25.5 18.42013F 1,974.5 470.4 301.3 24.4 20.3 9.8 12.9 9.7 3.1 2.3 17.2 16.52014F 2,460.5 593.6 382.9 28.5 16.5 11.4 11.1 8.6 3.6 2.1 42.4 18.62015F 3,136.7 799.5 531.5 39.5 38.8 15.8 8.0 6.5 5.0 1.8 41.1 22.4


Revenue 1,775.3 1,974.5 2,460.5 3,136.7 Fixed Assets 101.5 129.5 153.5 174.0 EBITDA 325.6 470.4 593.6 799.5 Other LT Assets 574.7 654.9 1,120.0 1,219.6 Depreciation & Amortisation (19.6) (22.0) (26.0) (29.5) Cash/ST Investments 589.5 593.9 169.2 65.2 Operating Profit 305.6 448.1 567.2 769.7 Other Current Assets 2,329.5 2,942.8 3,601.7 4,405.3 Associates 0.0 0.0 0.0 0.0 Total Assets 3,595.1 4,321.1 5,044.5 5,864.1Interest (Exp)/Inc 7.8 (44.9) (55.1) (56.2) Exceptional Items 2.1 0.0 0.0 0.0 ST Debt 40.5 40.5 40.5 40.5 Pre-Tax Profit 313.4 403.2 512.0 713.5 Other Current Liabilities 1,353.5 1,501.0 1,860.8 2,361.5 Tax (83.8) (100.8) (128.0) (178.4) LT Debt 866.2 866.2 1,000.0 1,000.0 Minority Interest (1.2) (1.2) (1.2) (3.6) Other LT Liabilities 79.9 79.9 79.9 79.9 Net Profit 230.6 301.3 382.9 531.5 Minority Interest 10.1 10.1 10.1 10.1 Net Profit Ex. El 228.5 301.3 382.9 531.5 Shareholders' Equity 1,244.9 1,823.4 2,053.1 2,372.0 Total Capital 3,595.1 4,321.1 5,044.5 5,864.1Revenue Growth (%) 13.0 11.2 24.6 27.5 EBITDA Growth (%) 30.9 44.5 26.2 34.7 Net Debt/ (Cash) (317.2) (312.8) (871.3) (975.3)EBIT Growth (%) 32.0 46.6 26.6 35.7 Working Capital 1,525.0 1,995.2 1,869.7 2,068.5 Net Profit Growth (%) 36.8 30.6 27.1 38.8 Gross Gearing % 72.8 49.7 50.7 43.9 Net Profit Ex. El Growth (%) 35.6 31.8 27.1 38.8 Net Gearing % 25.5 17.2 42.4 41.1 Tax Rate (%) 26.7 25.0 25.0 25.0


Aggressive landbanking. One notable feature of MSGB is its proven “fast turnaround” strategy which enables it to monetize land value, generate strong cash flows within a short period, and lower upfront costs. MSGB has exposure to the three key growth areas in Malaysia, namely Klang Valley, Iskandar and Penang. MSGB has been aggressively replenishing its land reserve. It has sealed four land acquisitions worth MYR7.7b in GDV in 5M2013.

Aims to double its GDV. Management has an aggressive landbanking plan for 2013 and aims to raise its existing GDV to at least MYR30b by end-2013 (+MYR5.8b; end-May 2013: MYR24.2b vs end-Dec 2012: MYR16b). This could potentially add another +28-35sen to our RNAV estimates, assuming a pretax margin of 20-25%.

On track to meet MYR3.0b sales target. MSGB is on track to achieve its 2013 sales target of MYR3.0b (2012: MYR2.5b) with locked-in sales of MYR749.6m in 3M13. Among its projects, we are particularly excited on the soon-to-be-launched Southville City, which has received very strong interest so far.


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Mah Sing Group (MSGB MK)

Discussion points

1. Can you share with us the status of the government land privatizations in the Klang Valley? What are Mah Sing’s chances of securing some of these government land development projects?

2. Mah Sing has been buying land aggressively lately. Are you looking to do another fund raising exercise over the next 12 months?

3. What is Mah Sing’s long term game plan?

4. What is your view on the current property market in Malaysia? Do you foresee any tightening measures on the property market?

5. What is your view on the impact of the High Speed Rail and MRT Line 2/LRT extension on property prices in the Klang Valley? Where is the next boom area(s) for the property market?

6. With Mah Sing’s huge unbilled sales today, what measures are management taking to manage construction risks?


13-14 June 2013 Page 104 of 172

KLIA2’s start date is an overhang on the stock. We estimate KLIA2 will be ready for operations in 1Q14, a delay from its original 28 Jun target. Project cost could escalate to MYR4.3b, up from the original MYR3.9b estimate. Our analysis reveals the project IRR is still attractive at 10.3%, with a payback period of 12 years.

Solid fundamentals overlooked. Too much focus has been on the KLIA2 completion date, which has somewhat overshadowed MAHB’s solid fundamentals. For example: 1) KLIA is the fastest growing Asia Pacific airport in 1Q13 and is likely to remain so for the rest of 2013; 2) many international airlines, which are the highest paying customers, are making a comeback to KLIA; and 3) MAHB’s share price has been lagging the WAI by 5.3% and 68.0% against its regional peers in 2013 YTD.

BUY maintained for its strong fundamentals and exciting growth prospects. Our target price of MYR7.20/share is DCF-based using a 21-year cashflow projection, with 0% terminal value and a WACC of 6.2%.

Malaysia Airports Holdings (MAHB MK) Market Cap (MYR m): 6,929.2 Shares Issued (m): 1,235.0

Focus Beyond KLIA2 Current price (MYR): 6.23 Target price (MYR): 7.20 Recommendation: Buy

FYE Dec Revenue Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (x) (%)

2012A 3,548.1 442.2 37.3 (5.2) 15.5 16.6 10.4 2.5 1.7 0.53 9.82013F 3,557.7 486.3 39.4 5.6 14.8 15.7 10.7 2.4 1.4 0.50 11.02014F 3,442.1 399.5 32.3 (17.9) 17.0 19.1 8.9 2.8 1.5 0.49 8.22015F 3,060.1 482.2 39.0 20.7 19.9 15.8 7.6 3.2 1.4 0.35 9.3


Revenue 3,548.1 3,557.7 3,442.1 3,060.1 Fixed Assets 290.8 273.4 4,373.9 4,308.1 EBITDA 930.2 960.0 1,133.9 1,252.5 Other LT Assets 7,035.4 7,998.5 3,580.3 3,315.5 Depreciation & Amortisation (227.0) (224.9) (424.5) (473.3) Cash/ST Investments 774.2 430.5 636.9 1,230.8 Operating Profit (EBIT) 703.2 735.1 709.3 779.2 Other Current Assets 739.4 1,151.9 1,203.4 1,049.2 Interest (Exp)/Inc (19.0) (23.5) (140.6) (140.6) Total Assets 8,839.8 9,854.3 9,794.5 9,903.6Associates (17.8) 3.0 3.6 4.3 One-offs (68.9) 0.0 0.0 1.0 ST Debt 0.0 0.0 0.0 0.0 Pre-Tax Profit 597.5 714.5 572.3 642.9 Other Current Liabilities 833.6 858.6 1,090.1 973.6 Tax (208.5) (178.6) (143.1) (160.7) LT Debt 3,100.0 3,100.0 3,100.0 3,100.0 Minority Interest 0.0 0.0 0.0 0.0 Other LT Liabilities 546.9 542.7 532.0 521.4 Reported Net Profit 389.0 535.9 429.3 482.2 Minority Interest 0.1 0.1 0.1 0.1 Recurring Net Profit 442.2 486.3 399.5 482.2 Shareholders' Equity 4,359.3 5,353.0 5,072.3 5,308.5

Total Liabilities-Capital 8,839.8 9,854.3 9,794.5 9,903.6Revenue Growth % 28.8% 0.3% -3.2% -11.1%EBITDA Growth (%) 12.2% 3.2% 18.1% 10.5% Share Capital (m) 1,186.3 1,235.2 1,235.2 1,235.2 EBIT Growth (%) 7.4% 4.5% -3.5% 9.8% Gross Debt/(Cash) 3,100.0 3,100.0 3,100.0 3,100.0 Net Profit Growth (%) -3.1% 37.8% -19.9% 12.3% Net Debt/(Cash) 2,325.8 2,669.5 2,463.1 1,869.2 Recurring Net Profit Growth (%) 2.2% 10.0% -17.9% 20.7% Working Capital 680.0 723.8 750.2 1,306.4 Tax Rate % 34.9% 25.0% 25.0% 25.0%


Safe proxy to Malaysian aviation. MAHB offers exciting exposure to the aviation industry, with its lower risk profile compared to airlines, and sustainable cash dividends. Its primary asset (KLIA) is the world’s 27th busiest airport and is also the fastest growing Asia Pacific major airport in 2013 YTD. There are three main anchor tenants, namely Malaysian Airlines, AirAsia and AirAsia X that is underpinning the strong growth rate.

2013 looks exciting. 2013 will be a good year for MAHB stemming from the following drivers: 1) sustained economic growth of 5.3% for Malaysia and 3.5% for global; 2) record number of aircraft addition by AirAsia and Malindo Air; 3) Malaysian Airlines boosting its utilization rates and adding new routes and frequency to its route network – versus shrinking capacity back in 2012; and 4) MAHB receiving an Investment Tax Allowance for KLIA2 granted by the Ministry of Finance, we estimate. Furthermore, the rise of the third force – Malindo Air, is expected to spark a price war among the airlines and help churn strong traffic growth.


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Malaysia Airports Holdings (MAHB MK)

Discussion points

1. When will KLIA2 be operational?

2. What is management’s guide on the cost overruns relating to the delay in KLIA2’s opening date?

3. How much new debt will you raise and what is the likely structure?

4. What is the outlook like with demand from the existing airlines and also the prospects of new airlines coming into Malaysia?


13-14 June 2013 Page 106 of 172

Rising gearing would eventually become a concern. In our view, the risk profile of Maxis would increase as gearing rises, and this could potentially have an adverse impact on longer-term share price performance. For now, investors continue to focus on Maxis’ attractive dividend yield as: 1) the balance sheet is not yet excessively stretched and, 2) interest rates are likely to remain low over the next 12 months.

We forecast 2% EBITDA growth and 10% net profit growth in FY13. The slight spike in net profit is due to accelerated depreciation tapering off. We expect pedestrian EBITDA growth in FY13 (an improvement from the EBITDA contraction in FY12), driven by a mild revenue uptick and stable margins. We do not expect the much-hyped IPTV offering to have a major EBITDA impact.

Maintain HOLD, target price of MYR7.20. We value Maxis on a DCF, assuming 6.5% WACC and 2% long term growth. Our target price implies 26.4x PER, 14.0x EV/EBITDA and 5.6% net dividend yield in FY13.

Maxis (MAXIS MK) Market Cap (MYR m): 50,775.0 Shares Issued (m): 7,500.0

Dividends Dominate Current price (MYR): 6.77 Target price (MYR): 7.20 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2012A 8,967.0 4,226.0 1,856.0 24.7 (26.5) 40.0 27.4 13.4 5.9 7.2 1.6 24.52013F 9,071.6 4,327.2 2,043.6 27.2 10.1 40.0 24.8 13.3 5.9 8.3 1.8 31.12014F 9,210.6 4,393.5 2,069.0 27.6 1.2 40.0 24.5 13.3 5.9 9.8 1.9 36.82015F 9,339.3 4,454.8 2,094.0 27.9 1.2 40.0 24.2 13.3 5.9 11.9 2.0 44.5


Revenue 8,967.0 9,071.6 9,210.6 9,339.3 Fixed Assets 4,459.0 4,338.8 4,247.5 4,128.1 EBITDA 4,226.0 4,327.2 4,393.5 4,454.8 Other LT Assets 11,301.0 11,411.4 11,508.7 11,554.2 Depr & Amort (1,362.0) (1,259.7) (1,244.0) (1,223.9) Cash/ST Investments 967.0 865.6 758.9 355.1 Operating Profit (EBIT) 2,864.0 3,067.4 3,149.4 3,230.9 Other Current Assets 1,075.0 1,089.7 1,106.1 1,121.3 Net Interest (Exp)/Inc (288.0) (336.0) (384.0) (432.3) Total Assets 17,802.0 17,705.6 17,621.2 17,158.7Assoc & JV 0.0 0.0 0.0 0.0 One-offs 0.0 0.0 0.0 0.0 ST Debt 2.0 802.0 1,602.0 2,002.0 Pretax Profit 2,576.0 2,731.4 2,765.4 2,798.6 Other Current Liabilities 2,766.0 2,821.0 2,862.6 2,901.1 Tax (716.0) (682.9) (691.3) (699.7) LT Debt 6,810.0 6,810.0 6,810.0 6,810.0 Minority Interest (4.0) (5.0) (5.0) (5.0) Other LT Liabilities 1,167.0 1,167.0 1,167.0 1,167.0 Net Profit 1,856.0 2,043.6 2,069.0 2,094.0 Minority Interest 8.0 13.0 18.0 23.0 Recurring Net Profit 1,856.0 2,043.6 2,069.0 2,094.0 Shareholders' Equity 7,049.0 6,092.6 5,161.6 4,255.6

Total Liabilities-Capital 17,802.0 17,705.6 17,621.2 17,158.7Revenue Growth (%) 1.9% 1.2% 1.5% 1.4% EBITDA Growth (%) (3.5%) 2.4% 1.5% 1.4% Shares Outstanding (m) 7,500.0 7,500.0 7,500.0 7,500.0 EBIT Growth (%) (11.4%) 7.1% 2.7% 2.6% Gross Debt/(Cash) 6,812.0 7,612.0 8,412.0 8,812.0 Net Profit Growth (%) (26.5%) 10.1% 1.2% 1.2% Net Debt/(Cash) 5,845.0 6,746.4 7,653.1 8,456.9 Recurring Net Profit Growth (%) 1.9% 1.2% 1.5% 1.4% Working Capital (726.0) (1,667.7) (2,599.6) (3,426.7)Tax Rate (%) 27.8% 25.0% 25.0% 25.0%


Highest dividend yield. The investment thesis centres primarily on Maxis’ attractive dividend yield (c.6% net, the highest among domestic peers). Management has committed to a 40sen annual DPS for the next two years. Unfortunately, the dividends are in excess of Maxis’ FCF generation, meaning the company would have to borrow to sustain the committed dividends.

A quadruple-play offering. In terms of product offering, Maxis is presently the best-positioned domestic telecom in our view. It was an early adopter of “convergence”, and has invested accordingly in its infrastructure. However, Maxis is coming from a position of leadership in the high-margined mobility segment. Sustaining its high EBITDA base already represents a challenge for management.

Can FCF catch up with dividends? We expect capex to remain high at c.MYR1b annually as the company continues its network upgrades. This implies a continued shortfall in enterprise FCF for dividends. By our estimates, gearing would approach management’s previously stated net debt/EBITDA ceiling of 2x in FY15 if management continues the 40sen annual DPS policy.


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Maxis (MAXIS MK)

Discussion points

1. What would make management/the board of directors rethink the 40sen DPS dividend commitment?

2. When does management expect FCF to catch up with dividends?

3. Any updates on the CEO situation?

4. With Maxis being the first to launch LTE services commercially, how does management intend to monetize LTE?


13-14 June 2013 Page 108 of 172

for the year as corporate lending picks up pace. The group’s cost/income ratio was stable YoY at 51%. JAWS was neutral during the period but management is hopeful of positive JAWS for the year.

FY13 ROE target of 15% is maintained, slightly lower than the 16% achieved in FY12 due to the impact of the private placement of new shares issued last year.

DRP to continue. With a RWA growth target of 12% per annum and an ROE target of 15%, management guides that it would have to retain at least 80% of its earnings. To balance this with the desire to provide a decent dividend return to shareholders, Maybank will maintain its DRP moving forward, which, on an effective basis, provides for a decent yield of more than 5%.

Foreign shareholding on the rise. Foreign interest in Maybank continues to rise and foreign shareholding in the stock is currently at a historical high of 25.9% (as at 17th May 2013).

Malayan Banking (MAY MK) Market Cap (MYR m): 88,717.8 Shares Issued (m): 8,680.8

Realising Regional Aspirations Current price (MYR): 10.22 Target price (MYR): NA Recommendation: Not Rated

FYE Dec Op Income Pre-prov Profit Recur. Net Profit Recur.EPS EPS gwth Net DPS PER Div yield P/BV ROE ROA (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (%) (x) (%) (%)2012A 16,603 8,445 5,745 72.7 7.5 52.5 14.1 5.1 2.0 15.2 1.2 2013E 18,390 9,525 6,366 73.6 1.3 54.4 13.9 5.3 1.9 14.1 1.2 2014E 20,133 10,589 7,024 77.5 5.3 57.3 13.2 5.6 1.7 13.7 1.2 2015E 21,958 11,731 7,774 81.7 5.4 60.3 12.5 5.9 1.6 13.3 1.3


Interest income 14,847 16,578 18,292 20,198 Cash & deposits wt banks, FIs 51,968 56,125 57,248 58,393 Interest expense (6,366) (6,599) (7,379) (8,272) Investment & trading securities 92,820 94,834 101,154 107,903 Net interest income 8,481 9,979 10,913 11,926 Loans & advances 311,825 347,556 386,778 429,196 Net inc from Islamic banking 2,196 2,416 2,657 2,923 Intangible assets 6,531 6,531 6,531 6,531 Non-interest income 5,926 5,996 6,563 7,109 Other assets 31,723 33,549 35,804 38,216 Operating income 16,603 18,390 20,133 21,958 Total Assets 494,866 538,595 587,515 640,239Operating expense (8,158) (8,865) (9,544) (10,227) Operating profit 8,445 9,525 10,589 11,731 Deposits fr customers 347,156 386,173 429,753 476,885 Loan loss allowance (643) (874) (1,048) (1,165) Deposits fr banks, FIs 33,887 34,904 35,951 37,030 Impairments, provisions (60) 0 0 0 Debts & debt related 16,865 16,865 16,865 16,865 Associate contributions 152 160 168 177 Other liabilities 53,004 50,764 48,191 45,098 Pre-tax profit 7,895 8,812 9,709 10,743 Minority Interest 1,725 1,915 2,124 2,354 Taxation (1,977) (2,256) (2,476) (2,739) Shareholders' Equity 42,229 47,975 54,631 62,008 Minority interest (173) (190) (209) (230) Total Liabilities & Capital 494,866 538,595 587,515 640,239Net profit 5,745 6,366 7,024 7,774 Recurring net profit 5,745 6,366 7,024 7,774 Gross NPL ratio (%) 1.8 1.8 1.8 1.9 Loan loss coverage (%) 105.6 106.8 107.2 107.0 Net interest margin (%) 2.41 2.32 2.33 2.33 Net loans/customer deposits (%) 89.8 90.0 90.0 90.0 Cost-to-income (%) 49.1 48.2 47.4 46.6 Net loans/total deposits (%) 81.8 82.5 83.1 83.5


The widest ASEAN presence. With commercial banking presence in eight of the 10 ASEAN countries, investment banking operations in Thailand and a representative office in Myanmar, Maybank effectively has the widest ASEAN footprint of all banks in the region. At MYR88.7b market cap, Maybank is today the second largest bank in ASEAN, just behind DBS. Today, international contributions account for 31% of group pretax profit, with the two largest contributors being Singapore (15%) and Indonesia (6%).

Management maintains its loan growth target of 12% for FY13, (1Q13 annualized loan growth was 5.8%), on expectations that corporate loan growth will pick up momentum in Malaysia and Indonesia. Positively, 1Q13 domestic consumer loan growth was stable at 11.8% annualized while SME loan growth was a strong 15.8%. Management has stepped up its client coverage efforts for corporate loan growth in Singapore and Indonesia, while locally, ETP-related projects provide growth impetus.

1Q13 NIM was stable (+2 bps QoQ), but management continues to guide for NIM compression of up to 10 bps


13-14 June 2013 Page 109 of 172

Malayan Banking (MAY MK)

Discussion points

1. International operations currently contribute to 31% of group earnings. What are the group’s expansion plans and what

is an ideal contribution mix that management would like to see? How much of this is expected to be driven by organic versus inorganic growth?

2. Bank Internasional Indonesia (BII) has seen a turnaround in fortunes. Competition however remains stiff in Indonesia; how is BII positioned to compete with the larger domestic players on home turf?

3. Thailand remains the missing link in the ASEAN equation in the group’s commercial banking operations to support the investment banking activities. Are there any further developments on M&A on this front? Would moving on to an even higher Asian platform be a conceivable strategy in the near term?

4. Is domestic M&A still a proposition for the group and if so, what synergies would Maybank hope to realize since most of the banks are domestic focused and there could be much duplication in activities?


13-14 June 2013 Page 110 of 172

Not without challenges. Property curbs in Hong Kong and Canada have negatively impacted property ad sales at its Greater China and North American operations. Wage inflation is also a concern. We estimate that every USD25/t increase in its average newsprint price (our base case is USD650/tonne) will trim our earnings estimates by 4-5%. That said, we believe that MCIL manages its costs well.

Expect steady earnings growth. All in all, we forecast MCIL to record 7% 3-year forward earnings CAGR. While we expect prospects for its Greater China and North American operations to remain challenging, we expect its Malaysian operations to remain stable. There may be upside potential to our earnings estimates, if newsprint prices remain below our assumption of USD650/tonne.

HOLD, MYR1.07 TP. Our TP is based on 10x CY13 PER. Currently trading at 12x CY13 PER, we do not believe that MCIL is overly expensive despite its tepid earnings growth prospects as we believe that its dividend yields of 4.2% (50% dividend payout ratio) will limit share price downside.

Media Chinese International Limited (MCIL MK) Market Cap (MYR m): 2,092.1 Shares Issued (m): 1,687.2

Local Dragon With A Global Reach Current price (MYR): 1.24 Target price (MYR): 1.07 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)

2013A 1,478.2 277.7 172.5 10.2 (10.9) 5.2 12.1 8.3 4.2 3.3 33.2 18.12014F 1,508.1 308.6 180.1 10.7 4.4 5.3 11.6 7.3 4.3 2.9 21.9 26.32015F 1,559.5 328.9 195.6 11.6 8.6 5.8 10.7 6.5 4.7 2.5 6.9 25.02016F 1,613.4 350.3 211.8 12.6 8.3 6.3 9.9 5.8 5.1 2.2 Net Cash 24.0

INCOME STATEMENT BALANCE SHEET FY Mar 2013A 2014F 2015F 2016F FY Mar 2013A 2014F 2015F 2016F

Revenue 1,478.2 1,508.1 1,559.5 1,613.4 Fixed Assets 521.3 516.0 509.7 503.3EBITDA 277.7 308.6 328.9 350.3 Other LT Assets 255.9 255.5 254.6 253.7Depreciation & Amortisation (36.0) (37.4) (37.4) (37.4) Cash/ST Investments 315.0 356.0 458.8 569.3Operating Profit (EBIT) 241.6 271.2 291.6 313.0 Other Current Assets 389.8 431.4 444.4 458.1Unallocated expenses (2.3) (2.1) (2.1) (2.1) Total Assets 1,482.1 1,559.0 1,667.5 1,784.4Interest (Exp)/Inc (3.2) (25.8) (25.8) (25.8)Associates (0.4) (0.9) (0.9) (0.9) ST Debt 527.8 16.4 16.4 16.4Exceptional items 3.8 - - - Other Current Liabilities 247.8 241.0 248.1 255.6Pre-Tax Profit 239.4 242.4 262.8 284.2 LT Debt - 500.0 500.0 500.0Tax (59.2) (58.7) (63.7) (68.9) Other LT Liabilities 44.7 44.8 44.8 44.8Minority Interest (4.0) (3.5) (3.5) (3.5) Minority Interest 21.5 25.0 28.5 32.1Net Profit 176.3 180.1 195.6 211.8 Shareholders' Equity 640.4 731.8 829.7 935.6Recurring Net Profit 172.5 180.1 195.6 211.8 Total Liabilities-Capital 1,482.1 1,559.0 1,667.5 1,784.4

Revenue Growth % 2.1 2.0 3.4 3.5 Share Capital (m) 1,687.2 1,687.2 1,687.2 1,687.2EBITDA Growth (%) (5.4) 11.1 6.6 6.5 Gross Debt/(Cash) 527.8 516.4 516.4 516.4EBIT Growth (%) (5.7) 12.2 7.5 7.3 Net Debt/(Cash) 212.7 160.3 57.6 (52.9)Net Profit Growth (%) (9.0) 2.2 8.6 8.3 Working Capital (70.7) 530.0 638.7 755.4Recurring Net Profit Growth (%) (10.9) 4.4 8.6 8.3Tax Rate % 24.7 24.2 24.2 24.2Sources: Company, Consensus

Local dragon. Media Chinese International (MCIL) is a Chinese language newspaper and magazine publisher. In Malaysia, MCIL commands >70% share of daily circulation of Chinese newspapers. In Hong Kong, Ming Pao Daily News has the third highest daily circulation. In FY3/13, Malaysian operations account for 62% of group revenue and 86% of group pretax profit.

Succeeds where others fail. Daily circulation of MCIL’s Malaysian newspapers has been growing steadily at 1-2% p.a. while all the other major mainstream newspapers (The Star, New Straits Times, Berita Harian, Malaysia) have been experiencing otherwise. Its flagship, Sin Chew Daily is the second most widely circulated newspaper in Malaysia with a daily circulation of almost 400k.

Growing circulation = growing adex. In a virtuous cycle, stronger daily circulation will allow MCIL to capture a larger share of newspaper adex as advertisers switch to its newspapers which have a wider reach. While we estimate that Star Publications’ 1Q13 adex eased 3-4% YoY, we estimate that MCIL’s Malaysian 1Q13 adex still grew 4-5%.


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Media Chinese International Limited (MCIL MK)

Discussion points

1. Chinese austerity measures have had a negative impact on luxury sales in Hong Kong. Hong Kong property prices

have also normalized due to strict curbs. How is MCIL coping with potentially lower ads from these two sectors?

2. The North American operations have not been faring too well lately. What sort of turnaround measures can we expect there?

3. DPR fell from 71% in FY12 to 50% in FY13. What sort of DPR can we expect going forward? Can we expect another special dividend or capital repayment?


13-14 June 2013 Page 112 of 172

Earnings momentum to accelerate. We expect MISC to post stronger earnings in the coming quarters as its robust 1Q13 performance proves sustainable. Growth will be driven via: (i) reduced losses from petroleum and chemical shipping, (ii) order book replenishment at the heavy engineering and offshore divisions and (iii) lower bunker costs. LNG shipping will continue to anchor earnings, accounting for 93% of group pretax profit.

To remained a listed entity. PETRONAS will not be allowed to launch a new takeover within 12 months from the date of the unsuccessful takeover attempt. Recall that PETRONAS only received 86.07% of total acceptances, falling short of the 90% acceptance level that would have rendered the takeover bid successful.

Valuations are undemanding as MISC progressively turns around. Share price is 12% below PETRONAS’ failed takeover bid price of MYR5.50 and 31% below its earlier MYR7.00 rights issue price. MISC now trades at an FY13 P/BV of just 1x. Net gearing of 27% is manageable. Operationally, MISC has sailed past a turbulent period and earnings downside risk is limited, in our view.

MISC (MISC MK) Market Cap (MYR m): 21,695.0 Shares Issued (m): 4,464.0

All Aboard; Full Steam Ahead Current price (MYR): 4.86 Target price (MYR): 5.70 Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 9,658.7 2,101.5 1,147.2 25.7 375.0 0.0 18.9 4.7 0.0 1.1 19.2 4.82013F 9,731.9 2,278.0 1,354.6 30.3 18.1 0.0 16.0 11.7 0.0 1.0 17.0 6.02014F 10,442.1 2,472.8 1,580.8 35.4 16.7 0.0 13.7 3.7 0.0 0.9 14.6 6.52015F 11,101.2 2,621.4 1,704.6 38.2 7.8 0.0 12.7 3.3 0.0 0.8 12.1 6.5

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Dec 2012F 2013F 2014F 2015F FY Dec 2012F 2013F 2014F 2015F

Revenue 9,658.7 9,731.9 10,442.1 11,101.2 Fixed Assets 21,833.4 23,704.1 25,574.7 27,445.4 EBITDA 2,101.5 2,278.0 2,472.8 2,621.4 Other LT Assets 866.9 866.9 866.9 866.9 Depr & Amort (1,129.4) (1,129.4) (1,129.4) (1,129.4) Cash/ST Investments 4,023.4 4,309.3 4,713.8 5,255.2 Operating Profit (EBIT) 972.1 1,148.6 1,343.4 1,492.1 Other Current Assets 10,695.8 10,759.9 11,131.1 11,493.2 Net Interest (Exp)/Inc (294.7) (199.9) (199.9) (199.9) Total Assets 37,419.5 39,640.2 42,286.5 45,060.7Assoc & JV 187.2 198.2 274.2 274.2 One-offs (144.4) (22.3) 0.0 0.0 ST Debt 2,864.9 2,864.9 2,864.9 2,864.9 Pretax Profit 1,206.9 1,624.6 1,917.7 2,066.3 Other Current Liabilities 4,825.6 4,842.7 5,008.4 5,162.1 Tax 26.8 (44.0) (60.0) (69.0) LT Debt 6,507.1 6,507.1 6,507.1 6,507.1 Minority Interest (231.0) (248.3) (276.8) (292.7) Other LT Liabilities 737.1 737.1 737.1 737.1 Net Profit 1,002.8 1,332.2 1,580.8 1,704.6 Minority Interest 1,403.0 1,651.3 1,928.2 2,220.9 Recurring Net Profit 1,147.2 1,354.6 1,580.8 1,704.6 Shareholders' Equity 21,082.0 23,037.2 25,241.0 27,568.6

Total Liabilities-Capital 37,419.5 39,640.2 42,286.5 45,060.7Revenue Growth (%) 13.6% 0.8% 7.3% 6.3%EBITDA Growth (%) 120.8% 8.4% 8.6% 6.0% Shares Outstanding (m) 4,464.0 4,464.0 4,464.0 4,464.0 EBIT Growth (%) 7181.7% 18.2% 17.0% 11.1% Gross Debt/(Cash) 9,371.9 9,371.9 9,371.9 9,371.9 Net Profit Growth (%) NA 32.8% 18.7% 7.8% Net Debt/(Cash) 5,348.6 5,062.6 4,658.1 4,116.7 Recurring Net Profit Growth (%) 375.0% 18.1% 16.7% 7.8% Working Capital 7,028.7 7,361.6 7,971.7 8,721.4 Tax Rate (%) (2.2%) 2.7% 3.1% 3.3%


Buy with a MYR5.70 target price. MISC has started on a sustained recovery path, in our view. Although the petroleum and chemical shipping units are likely to remain in the red over the next few quarters, losses are expected to narrow. We have a BUY call on MISC with a MYR5.70 TP based on a 20% discount to our sum-of-parts valuation.

MISC, a 62.7% subsidiary of PETRONAS is one of the world’s leading international shipping and maritime conglomerates. It has six major divisions, namely (i) LNG shipping, (ii) petroleum shipping, (iii) chemical shipping, (iv) heavy engineering via 66.5%-owned MMHE, (v) offshore and (vi) tank terminal operations via 50%-owned VTTI.

Fleet profile. MISC has 139 owned (102) and in-chartered (37) vessels with a combined tonnage of 13m dwt that plies worldwide. In the LNG segment, it owns 27 LNG tankers and 2 FSUs while its petroleum and chemical divisions have 81 petroleum tankers (14 VLCCs, 4 Suezmax, 56 Aframax, 5 MR2, 2 shuttle tankers) and 29 chemical vessels respectively. 6 newbuilds are underway with 4 VLCCS and 2 DP shuttle vessels to be delivered in 2013 and 2015 respectively.


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MISC (MISC MK)

Discussion points

1. What is the outlook for petroleum and chemical shipping?

2. Among MISC’s various units, which hold the most prospects for MISC’s future growth?

3. Might MISC consider listing/divesting/spinning-off any more units separately in the next 12 months?


13-14 June 2013 Page 114 of 172

More upside from rail projects. MMC-Gamuda JV is presently the Project Delivery Partner (PDP) for the elevated portion of the first Klang Valley MRT line and stands to earn 6% of the project value (MYR14b). In addition, the JV is also the main contractor for the tunneling portion (MYR8b). Further works could come from the second and third Klang Valley MRT lines, and the proposed Kuala Lumpur-Singapore high speed rail.

Substantial profit decline in FY13 due to corporate actions. Consensus is projecting net profit of MYR372m in FY13, representing a 60% YoY decline. However, FY12 financials included cMYR1b worth of disposal gains which arose from the listing of Gas Malaysia in FY12. In addition, the present FY13 forecasts could have taken into account Malakoff’s delayed IPO.

MMC Corporation (MMC MK) Market Cap (MYR m): 7,734.4 Shares Issued (m): 3,045.1

Riding On The Infrastructure Boom Current price (MYR): 2.54 Target price (MYR): NA Recommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2010A 8,563.6 3,223.1 577.4 8.0 3.9 3.5 31.8 9.6 1.4 1.3 5.0 4.02011A 9,336.8 3,317.5 829.3 10.9 36.3 4.0 23.3 9.1 1.6 1.2 4.4 5.42012A 8,296.7 3,792.8 1,545.7 30.3 178.0 4.5 8.4 10.1 1.8 1.1 4.0 13.83MFY13 1,551.3 602.2 85.4 0.3 NA 0.0 NM 9.2 0.0 1.1 6.2 4.9


Revenue 8,560.2 7,336.6 7,381.8 2,324.3 Fixed Assets 18,647.5 18,190.6 18,790.4 17,162.7EBITDA 2,841.6 3,011.7 2,700.9 602.2 Other LT Assets 10,521.4 10,506.8 12,197.4 14,303.0Depr & Amort 1,163.9 1,115.7 1,090.6 279.5 Cash/ST Investments 4,144.4 4,665.1 6,250.3 5,777.3Operating Profit (EBIT) 1,677.7 1,896.0 1,610.4 314.7 Other Current Assets 3,155.7 3,241.4 3,096.7 2,929.5Net Interest (Exp)/Inc (1,282.5) (1,157.5) (947.6) (199.3) Total Assets 36,469.1 36,604.0 40,334.8 40,172.5Assoc & JV (52.3) 155.7 245.7 14.0One-offs 0.0 0.0 0.0 0.0 ST Debt 4,017.8 3,443.4 3,374.4 3,564.7Pretax Profit 555.7 699.8 1,729.2 129.4 Other Current Liabilities 1,666.6 1,902.9 2,139.4 1723.0Tax (21.7) 101.4 245.3 (44.0) LT Debt 16,111.1 15,674.2 18,128.1 18,252.0Minority Interest 333.5 496.7 623.9 (76.6) Other LT Liabilities 5,621.8 6,013.4 6,462.8 6,676.6Net Profit 243.9 332.6 921.8 8.8 Minority Interest 3,068.5 3,299.0 3,185.0 2,975.0Recurring Net Profit 243.9 332.6 921.8 8.8 Shareholders' Equity 5,983.2 6,271.0 7,045.1 6,981.3

Total Liabilities-Capital 36,469.1 36,604.0 40,334.8 40,172.5Revenue Growth (%) 1.5 (14.3) 0.6 NAEBITDA Growth (%) (29.7) 6.0 (10.3) NA Shares Outstanding (m) 3,045.1 3,045.1 3,045.1 3,045.1EBIT Growth (%) (23.0) 13.0 (15.1) NA Gross Debt/(Cash) 20,128.9 19,117.6 21,502.5 21,816.6Net Profit Growth (%) 4.4 36.4 177.2 NA Net Debt/(Cash) 15,984.5 14,452.4 15,252.2 16,039.4Recurring Net Profit Growth (%) 4.4 36.4 177.2 NA Working Capital 1,615.7 2,560.2 3,833.2 939.0Tax Rate (%) (3.9) 14.5 14.2 34.0


A domestic infrastructure major. MMC Corp is an infrastructure conglomerate with three main divisions, namely 1) energy and utilities, 2) ports and logistics and, 3) engineering and construction. The main contributor to PBT comes from Malakoff – Malaysia’s largest independent power producer, which MMC presently holds a 51% stake.

Malakoff IPO delayed to 1H14. The Malakoff IPO has been delayed to allow 1) the Tanjung Bin plant to complete major maintenance, and 2) for the results of various bidding tenders to be made known. The IPO was initially scheduled for 2Q13, and involved the sale of 761m shares representing 30% of Malakoff’s enlarged share base. A substantial portion of the proceeds would be used for debt redemption.

Potential listing of Johor Port. Management have announced the potential listing of Johor Port after Gas Malaysia and Malakoff. Johor Port is a multi-purpose port with dedicated terminal handling. It also houses the world’s largest palm oil terminal with storage capacity of 0.46mt. Freight volume at the port has been stable, while the port enjoyed a tariff hike in 2012.


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MMC Corporation (MMC MK)

Discussion points

1. What are some of the projects that Malakoff is tendering for?

2. Clarity on the timeline of the announcements of new rail projects – Klang Valley MRT lines 2 & 3 and Singapore-KL high speed rail.

3. Expansion plans and prospects at the ports divisions.

4. In terms of capital management, would the delay of Malakoff’s IPO push back the other potential IPOs like Johor Port?


13-14 June 2013 Page 116 of 172

Momentum in place. Orderbook replenishment has been weak over the past 12 months due to tender delays but the momentum is likely to build up from 2H13. The anticipated announcements for several ongoing major tenders worth MYR2-3b in total, including that of several centralised processing platforms (CPPs) and wellhead platforms, will likely be known soon.

HOLD, MYR3.70 TP. Earnings are expected to be soft in FY13-14 owing to the poor replenishment of its order backlog, which reflects timing lags on earnings recognition. However, the weakness has been moderately priced in. FY14 offers improved earnings visibility, sustainable order book recovery and stronger tenders pipeline. Our target price pegs MMHE at 18x FY14 PER.

.

Malaysia Marine and Heavy Engineering (MMHE MK) Market Cap (MYR m): 5,296.0 Shares Issued (m): 1,600.0

Momentum To Rise? Current price (MYR): 3.31 Target price (MYR): 3.70 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 3,329.8 328.4 276.0 17.3 34.2 10.0 19.2 13.4 3.0 2.1 Net Cash 11.22013F 2,806.9 317.4 233.9 14.6 (15.3) 5.0 22.6 14.6 1.5 2.1 Net Cash 9.22014F 3,277.6 417.5 318.9 19.9 36.4 5.0 16.6 11.1 1.5 1.9 Net Cash 11.82015F 3,809.6 473.3 366.4 22.9 14.9 5.0 14.5 9.7 1.5 1.7 Net Cash 12.4


Revenue 3,329.8 2,806.9 3,277.6 3,809.6 Fixed Assets 1,441.0 1,698.7 1,956.4 2,214.1 EBITDA 328.4 317.4 417.5 473.3 Other LT Assets 325.6 325.6 325.6 325.6 Depr & Amort (51.6) (42.3) (42.3) (42.3) Cash/ST Investments 890.3 672.9 674.9 727.1 Operating Profit (EBIT) 276.8 275.1 375.2 431.0 Other Current Assets 2,160.4 1,835.6 2,137.3 2,478.3 Net Interest Exp 0.0 0.0 0.0 0.0 Total Assets 4,817.3 4,532.9 5,094.3 5,745.2Assoc & JV (25.1) 0.0 0.0 0.0 One-offs (34.0) 0.0 0.0 0.0 ST Debt 0.0 0.0 0.0 0.0 Pretax Profit 217.7 275.1 375.2 431.0 Other Current Liabilities 2,306.4 1,948.1 2,270.6 2,635.2 Tax 25.5 (41.3) (56.3) (64.7) LT Debt 0.0 0.0 0.0 0.0 Minority Interest (1.2) 0.0 0.0 0.0 Other LT Liabilities 0.0 0.0 0.0 0.0 Net Profit 242.0 233.9 318.9 366.4 Minority Interest 4.8 4.8 4.8 4.8 Recurring Net Profit 276.0 233.9 318.9 366.4 Shareholders' Equity 2,506.1 2,580.0 2,818.9 3,105.2

Total Liabilities-Capital 4,817.3 4,532.9 5,094.3 5,745.2Revenue Growth (%) (51.8%) 55.8% (15.7%) 16.8%EBITDA Growth (%) (46.4%) 40.9% (3.3%) 31.5% Shares Outstanding (m) 1,600.0 1,600.0 1,600.0 1,600.0 EBIT Growth (%) (49.2%) 36.3% (0.6%) 36.4% Gross Debt/(Cash) 0.0 0.0 0.0 0.0 Net Profit Growth (%) (54.4%) 17.7% (3.4%) 36.4% Net Debt/(Cash) (890.3) (672.9) (674.9) (727.1)Recurring Net Profit Growth (%) (54.4%) 34.2% (15.3%) 36.4% Working Capital 744.3 560.4 541.6 570.3 Tax Rate (%) (11.7%) 15.0% 15.0% 15.0%


MMHE is Malaysia’s largest offshore fabrication operator (by yard size) with an impeccable track record to boot, directly benefiting from PETRONAS’ development programmes. It has 197ha of yard space with 129,700mt of capacity. The yard is equipped with two dry docks which can accommodate vessels up to 450,000dwt. MMHE’s yard is also the only one in Malaysia with the reputation of completing all of Malaysia’s deep-water production structures to-date (Kikeh SPAR and Gumusut-Kakap semi-submersible floating production system).

A direct proxy to PETRONAS’ domestic E&P programs. MMHE is 66.5% owned by MISC. Its market leadership and PETRONAS’ pedigree parentage put it on a unique perch in securing jobs in Malaysia. For this, MMHE is a strong beneficiary of sizeable domestic E&C and marine conversion jobs. Furthermore, Technip SA has a strategic 8.5% stake in MMHE, which allows MMHE to benefit from the transfer of engineering expertise and key personnel. A case in point is MMHE’s managing director, Dominique de Soras, who is a direct appointment from Technip.


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Malaysia Marine and Heavy Engineering (MMHE MK)

Discussion points

1. What are the major projects on MMHE’s tender book we can look forward too?

2. In what areas will MMHE further leverage off Technip? RSC? New business areas beyond just fabrication?

3. What is the cause of earnings recognition lag and what is MMHE doing to remedy the situation?

4. How does MMHE plan to face competition from the other international yards when bidding for projects overseas?


13-14 June 2013 Page 118 of 172

Disposal of non-core assets. The non-core assets which MRCB is looking to sell are: (i) the Eastern Dispersal Link (EDL) by 2H13; (ii) a 30% stake in DUKE highway; and (iii) other small investments in non-core businesses. MRCB plans to use the proceeds to pare down its debt as its current net gearing is high at 2x.

EPS dilution to be compensated. As the payments for the MYR729m acquisition of Nusa Gapurna’s three units (i.e. property, construction, surveillance security system) include new share issuance, we estimate that MRCB’s share base will increase by 29% to 1.8b shares. However, it is expected that the immediate EPS dilution will be compensated with future earnings from Nusa Gapurna.

Not Rated. Consensus is projecting a 3-year EPS CAGR (2013-15) of 39%. The stock presently trades at 1.7x 2013 P/BV and is also at a 18-34% discount to concensus’ RNAVs of MYR2.14-2.68. Key catalysts for the stock are: (i) the potential disposal of its non-core assets, especially the EDL by 2H13; and (ii) the conclusion of the Nusa Gapurna deal by 3Q13, which will provide MRCB a clearer longer-term outlook.

Malaysian Resources Corporation Bhd (MRC MK) Market Cap (MYR m): 2,359.3 Shares Issued (m): 1,387.8

Transformation In Progress Current price (MYR): 1.70 Target price (MYR): NA Recommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2010A 1,067.6 123.3 67.3 4.9 29.1 0.1 34.5 36.0 0.1 1.8 94.2 5.2 2011A 1,213.1 134.1 77.5 5.7 15.2 1.9 30.0 37.3 1.1 1.7 155.8 5.7 2012A 1,283.2 232.1 60.1 4.4 (22.4) 2.0 38.6 10.0 0.1 1.6 189.0 4.2 3MFY13 262.0 NA. 5.3 0.4 NA 0.0 NA NA NA 1.6 200.8 NM

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Dec 2010A 2011A 2012A 3MFY13 FY Dec 2010A 2011A 2012A 3M13

Turnover 1,067.6 1,213.1 1,283.2 262.0 Fixed Assets 2,082.9 2,891.8 1,700.3 1,821.5 EBITDA 123.3 134.1 232.1 n.a. Other LT Assets 287.8 340.1 351.3 354.8 Depreciation & Amortisation (13.5) (11.2) (11.2) n.a. Cash/ST Investments 795.0 616.2 644.2 546.7 Operating Profit 109.8 122.9 220.9 40.1 Other Current Assets 1,222.6 1,563.1 3,259.0 3,309.0 Associates (11.6) (4.3) 1.9 0.3 Total Assets 4,388.3 5,411.2 5,954.8 6,031.9Interest (Exp)/Inc (0.6) (11.3) (88.8) (35.3)Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 354.6 352.2 2,404.4 2,155.2 Pre-Tax Profit 97.6 107.3 134.0 5.1 Other Current Liabilities 908.3 1,102.8 1,079.1 1,075.8 Tax (23.8) (15.3) (42.8) (1.5) LT Debt 1,651.8 2,383.2 919.9 1,244.4 Minority Interest (6.5) (14.5) (31.0) (1.6) Other LT Liabilities 152.1 174.7 64.0 68.1 Net Profit 67.3 77.5 60.1 5.3 Minority Interest 35.3 38.1 69.1 67.6 Recurring Net Profit 67.3 77.5 60.1 5.3 Shareholders' Equity 1,286.2 1,360.1 1,418.2 1,420.9

Total Liabilities-Capital 4,388.3 5,411.2 5,954.8 6,031.9Turnover Growth % 15.8 13.6 5.8 (20.3)EBITDA Growth (%) 39.9 8.7 73.1 n.a. Share Capital (m) 1,366.2 1,366.2 1,366.2 1,366.2 EBIT Growth (%) 49.2 11.9 79.8 (6.2) Net Debt/(Cash) (1,211.5) (2,119.2) (2,680.1) (2,852.9)Net Profit Growth (%) 94.3 15.2 (22.4) (76.3) Working Capital 325.4 479.5 966.7 659.4 Recurring Net Profit Growth (%) 94.3 15.2 (22.4) (76.3) Net gearing (%) 94.2 155.8 189.0 200.8 Tax Rate % 21.8 13.7 32.4 28.7


An integrated property developer. MRCB is the master developer for the KL Sentral mixed development and is gradually moving to develop more non-KL Sentral properties, via the proposed acquisition of Nusa Gapurna’s property unit. Property division is MRCB’s biggest earnings contributor and this is followed by the construction division.

Bulging GDV to be further boosted. The acquisition of Nusa Gapurna’s property unit will see the injection of 33-acre prime landbanks (at PJ Sentral, Subang Jaya, Old Klang Road) into MRCB and increase MRCB’s total GDV to MYR13b (+63%). Additionally, there is also a high chance that MRCB could be the master developer of the massive government lands (e.g. 1,000-acre Sg Buloh land)

Vying for more rail works. MRCB’s outstanding order book for its construction division stands at around MYR1.5b and we expect potential job wins from ETP-related projects, namely, the KVMRT 2-3 and freight rail upgrade works in the Klang Valley (potential value: MYR3b), which MRCB is reportedly the front-runner for the job.


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Malaysian Resources Corporation Bhd (MRC MK)

Discussion points

1. What are the trends for property demand, prices and planned launches by the other developers? Do the factors have any influence on your planned projects?

2. What kind of synergies will MRCB get from the acquisition of Nusa Gapurna’s three business units?

3. What are MRCB’s chances in securing major construction works and will the margins be good?

4. Will MRCB have a role in the privatisation of government’s prime lands in the Klang Valley?

5. What is the likely outcome and disposal value of EDL?


13-14 June 2013 Page 120 of 172

Previously, only 60% of Oldtown’s outlets were Halal certified and Malays accounted for merely 20-25% of its customer base. Full Halal certification should smoothen its application for Halal status in China and Indonesia in the future, for Malaysia’s JAKIM Halal certification is said to be one of the most stringent in the region. Moreover, Oldtown was designated a syariah-compliant stock in Dec 2012 and it should see increased interest from Islamic-based funds.

Strong foreign interest. Foreign shareholding for Oldtown has ballooned from 4% in Feb 2012 to 37% as at 22 Feb 2013. This is commendable for a small-mid cap company with market cap of less than MYR1b back then.

3-year net profit CAGR of 19%; 50% dividend payout. Consensus forecasts stable growth for Oldtown with a 3-year (FY13-FY15) net profit CAGR of 19%. At its current price, the stock trades at a forward PER of 20x and offer dividend yields of 2-3% for FY13-15. The group’s dividend policy is to pay out 50% of its core net profit to reward shareholders.

Oldtown Berhad (OTB MK) Market Cap (MYR m): 1,107.0 Shares Issued (m): 363.0

Old Flavour, New Markets Current price (MYR): 3.05 Target price (MYR): NA Recommendation: Not Rated

FYE Mar Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2010A* 232.0 44.7 25.7 7.8 - - 39.2 25.0 - 16.1 0.1 37.22011A* 285.4 66.9 40.2 12.2 56.4 6.5 25.1 23.2 2.1 5.1 (1.1) 18.52013A# 421.5 96.5 55.5 15.3 25.4 9.0 20.0 23.7 2.9 3.6 (0.5) 14.3

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Mar 2010A* 2011A* 2013A# FY Mar 2010A* 2011A* 2013A#

Revenue 232.0 285.4 421.5 Fixed Assets 45.2 52.8 100.9EBITDA 44.7 66.9 96.5 Other LT Assets 17.5 66.8 108.3Depr & Amort (8.2) (13.6) (20.5) Cash/ST Investments 15.4 85.6 85.3Operating Profit (EBIT) 36.5 53.3 76.0 Other Current Assets 60.6 73.0 92.3Net Interest (Exp)/Inc (1.2) (0.7) 1.1 Total Assets 138.7 278.2 386.8Assoc & JV (0.6) (0.7) 0.5 One-offs 0.0 0.0 0.0 ST Debt 5.5 1.5 7.7Pretax Profit 34.8 52.0 74.9 Other Current Liabilities 41.9 40.9 41.8Tax (9.1) (11.7) (19.3) LT Debt 15.8 11.5 25.3Minority Interest 0.0 (0.0) (0.0) Other LT Liabilities 6.5 6.9 5.0Net Profit 25.7 40.2 55.5 Minority Interest 0.0 0.2 2.2Recurring Net Profit 25.7 40.2 55.5 Shareholders' Equity 69.0 217.1 304.9

Total Liabilities-Capital 138.7 278.2 386.8Revenue Growth (%) - 23.0 47.7EBITDA Growth (%) - 49.7 44.2 Shares Outstanding (m) 330.0 330.0 363.0EBIT Growth (%) - 47.8 42.6 Gross Debt/(Cash) 21.3 13.0 33.0Net Profit Growth (%) - 56.6 38.1 Net Debt/(Cash) 5.9 (72.6) (52.3)Recurring Net Profit Growth (%) - 56.6 38.1 Working Capital 28.6 11.61 128.1Tax Rate (%) - 22.6 25.8

Sources: Company, Consensus *FY Dec # 15 months ended 31 Mar 2013

Two complementary businesses. What started out as a homegrown brand has since sprouted wings with the regional expansion of Oldtown’s café operations and beverage manufacturing businesses. As at Dec 2012, the group has 197 café outlets in Malaysia, 10 in Singapore, 9 in Indonesia and 4 in China. These include 84 fully-owned, 20 partially-owned, 106 franchised and 10 licensed outlets. Its beverage products are exported to more than 15 countries around the world, and it is the market leader for the white coffee segment in most countries. In FY12, café operations contributed 60% and 50% of the group’s revenue and pretax profit respectively.

Ongoing regional expansion. While its domestic café operation is still growing, regional expansion is also in progress. In 2013, the target is to open 20-30 outlets in Malaysia, 2-3 outlets in Singapore, 5-8 outlets p.a. in Indonesia, as well as 30 outlets in China by end-2014.

Obtained full Halal certification. With its café business now fully Halal certified, the company is now ready to broaden its appeal to the largest segment of Malaysia’s population.


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Oldtown Berhad (OTB MK)

Discussion points

1. How large is the white coffee segment as a proportion of the total coffee market in Malaysia, and at what rate has this

segment been growing over the past few years?

2. How does management decide on its strategy for new outlets when evaluating whether an outlet should be fully owned, partially owned or franchised out?

3. What is the coffee consumption per capita in China, compare against Malaysia or other countries in the region?

4. What is the expected commercial operation date for the central kitchen in Guangzhou?

5. In Malaysia, what is the average breakeven period for an outlet and how many café outlets have been closed down or relocated in the past two years due to weaker than expected revenue?


13-14 June 2013 Page 122 of 172

with the sale of its E3 vessel. We also expect Perisai to secure a one-year charter extension for its MOPU operations before its fixed contract ends on 30 Sep 2013.

3-year net profit CAGR of 21%. Growth will largely emanate from the two new rigs (not contracted yet) that are set to be commissioned in 2014-15. There is scope for better FY15 earnings, for we have yet to incorporate profit contributions from its second jack-up rig, scheduled for delivery by 2Q15. Our forecasts do include a net profit of MYR50m p.a. from its first rig charter (i.e. Perisai Pacific 101), on a daily charter rate assumption of USD160k.

Valuations are undemanding, relative to its strong fundamentals. The stock trades at a prospective FY14 PER of 13x, which is still attractive relative to its peers average of 18x and its projected 3-year net profit CAGR of 21%. Our TP of MYR1.80 pegs Perisai to 14x FY14 EPS.

Perisai Petroleum (PPT MK) Market Cap (MYR m): 1,498.4 Shares Issued (m): 936.5

An Import Substitution O&G Play Current price (MYR): 1.60 Target price (MYR): 1.80 Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 213.0 170.8 98.6 11.6 109.4 0.0 13.8 4.7 0.0 2.8 96.7 17.52013F 266.7 226.5 102.0 10.5 (8.9) 0.0 15.2 6.4 0.0 2.5 183.0 14.22014F 461.8 327.3 136.2 12.6 19.4 0.0 12.7 4.0 0.0 2.3 130.7 15.02015F 565.0 362.4 172.6 16.0 26.7 0.0 10.0 3.1 0.0 1.9 84.9 15.2


Turnover 213.0 266.7 461.8 565.0 Fixed Assets 930.3 1,704.9 1,700.0 1,695.2 EBITDA 170.8 226.5 327.3 362.4 Other LT Assets 0.0 0.0 0.0 0.0 Depreciation & Amortisation (48.0) (78.4) (107.9) (107.9) Cash/ST Investments 24.9 97.4 133.0 233.2 Operating Profit 122.8 148.0 219.5 254.5 Other Current Assets 174.0 196.4 254.6 294.5 Associates (13.9) (34.0) (51.0) (49.2) Total Assets 1,129.2 1,998.8 2,087.7 2,222.9Interest (Exp)/Inc 0.0 12.1 20.5 20.0 Exceptional Items (6.5) 0.0 0.0 0.0 ST Debt 77.9 170.4 170.4 170.4 Pre-Tax Profit 93.3 129.1 192.0 228.3 Other Current Liabilities 73.1 73.3 74.1 74.4 Tax 25.6 0.0 0.0 0.0 LT Debt 413.6 1,038.3 934.5 841.0 Minority Interest (26.7) (27.2) (55.7) (55.7) Other LT Liabilities 0.0 0.0 0.0 1.0 Net Profit 92.2 102.0 136.2 172.6 Minority Interest 82.2 109.4 165.1 219.9 Recurring Net Profit 98.6 102.0 136.2 172.6 Shareholders' Equity 482.4 607.4 743.6 916.2

Total Liabilities-Capital 1,129.2 1,998.8 2,087.7 2,222.9Turnover Growth % 158.5% 25.2% 73.1% 22.3%EBITDA Growth (%) 224.5% 32.6% 44.5% 10.7% Share Capital (m) 851.8 966.7 1,081.6 1,081.6 EBIT Growth (%) 300.9% 20.5% 48.2% 16.0% Gross Debt 491.5 1,208.7 1,104.9 1,011.4 Net Profit Growth (%) 333.1% 10.6% 33.6% 26.7% Net Debt 466.5 1,111.3 971.9 778.2 Recurring Net Profit Growth (%) 136.6% 3.4% 33.6% 26.7% Working Capital 47.9 50.1 143.1 282.9 Tax Rate % (27.4%) 0.0% 0.0% 0.0%


Four major divisions. Perisai’s business model concentrates on production and drilling operations, these being its focus areas. Its business comprises four major divisions: (i) pipelay vessel ownership ( via Enterprise 3), (ii) offshore vessel charter via 51% Intan Offshore, which owns eight OSVs, (iii) MOPU operations and (iv) FPSO charter via 51% FPSO Arunothai. It will soon add the drilling rig division to its portfolio by 2014 as it has committed for two units of jack-up rigs (with 2014-15 delivery dates).

Operations will be Malaysia-focused, capitalising on the import-substitution demand for Malaysian-owned assets and services. Operationally, Perisai aims to secure one key job a year while maintaining its financial discipline by limiting its gearing level to sub-2x. It will only enter into a contract requiring asset ownership if the job meets its internal project IRR rate of 15%.

Hive of activity in 2H13. We expect Perisai to secure its maiden jack-up rig contract by 2H13, before the delivery of its Pacific 101 jack-up rig by end-Jul 2014. Its 51%-owned FPSO is on track for deployment in Jul 2013, coinciding


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Perisai Petroleum (PPT MK)

Discussion points

1. What new vessel asset classes might Perisai buy in the coming 1-2 years? Will Perisai be concentrating on any particular asset class or will future investments be purely opportunistic ?

2. Would Perisai consider participating in risk-service contracts (RSC)?

3. As Ezra is selling down its stake in Ezion, has Ezra shown interest in reducing/offloading its stake in Perisai?

4. Is Perisai likely to raise fresh funds over the next 1-2 years?


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Utilisation rates to improve. We expect a 2013 utilisation rate of 86%, a 3 ppt improvement from the year before. All the production plants are back in production mode, with less maintenance shutdowns planned for this year, while feedstock supply has improved. The Melaka re-gasification plant is expected to be ready in mid-2013, and this will ensure steady gas supply and notch up the reliability factor substantially.

Industry is healthy. The supply-demand relationship is in harmony with an adequate amount of inventory. Higher oil prices have also helped to push petrochemical prices up as manufacturers seek positive returns. Furthermore, the sanctions on Iran have raised supply risks, and customers may substitute Iranian shipments with those from the other regions. These factors strongly support high product prices in the near term.

RM6.70 TP, 12.8x 2013 PER. We have imputed the industry average PER of 12.8x for the petrochemical industry as the basis of our valuation. PCHEM is trading close to its fair value but provides a still attractive dividend yield of 4.0% based on a 50% payout ratio.

Petronas Chemicals Group (PCHEM MK) Market Cap (MYR m): 54,929.2 Shares Issued (m): 8,000.0

On Neutral Ground Current price (MYR): 6.53 Target price (MYR): 6.70 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (x)

2012A 16,599.0 5,464.0 3,662.0 45.8 (2.8) 22.0 14.4 7.9 3.3 2.2 Net Cash2013F 17,418.3 6,724.4 4,202.3 52.5 14.8 26.0 12.5 6.3 4.0 2.0 Net Cash2014F 17,540.3 6,657.4 4,178.6 52.2 (0.6) 27.0 12.6 6.0 4.1 1.8 Net Cash2015F 17,785.4 6,731.9 4,252.9 53.2 1.8 27.0 12.4 5.7 4.1 1.7 Net Cash


Revenue 16,599.0 17,418.3 17,540.3 17,785.4 Net Fixed Assets 11,697.0 12,332.3 12,921.0 13,563.0 Cost of services (10,935.0) (10,937.2) (11,167.9) (11,394.3) Invts in Assocs & JVs 668.0 668.0 668.0 668.0 Gross profit 5,664.0 6,481.0 6,372.4 6,391.1 Other LT Assets 689.0 689.0 689.0 689.0 Other ope. (exp)/ Inc. (1,318.0) (921.3) (926.3) (917.2) Cash & ST Invts 9,462.0 10,609.8 12,388.5 14,032.2 EBIT 4,346.0 5,559.7 5,446.0 5,473.9 Other Current Assets 3,404.0 4,275.0 4,325.6 4,394.0 Net int (exp)/ Inc (82.0) 0.0 0.0 0.0 Total Assets 25,920.0 28,574.1 30,992.1 33,346.2Associates & JV 286.0 328.9 378.2 416.1Exceptional gain/ (loss) 0.0 0.0 0.0 0.0 ST Debt 0.0 0.0 0.0 0.0 Pretax profit 4,550.0 5,888.6 5,824.3 5,890.0 Other Current Liab 2,398.0 2,544.4 2,560.7 2,593.4 Tax (713.0) (1,301.0) (1,262.5) (1,247.1) LT Debt 0.0 0.0 0.0 0.0 Minority interest (319.0) (385.4) (383.2) (390.0) Other LT Liab 1,616.0 1,616.0 1,616.0 1,616.0 Reported Net Profit 3,518.0 4,202.3 4,178.6 4,252.9 Shareholders Equity 19,511.0 22,018.6 24,420.4 26,741.8 PATAMI 3,662.0 4,202.3 4,178.6 4,252.9 Minority Interest 1,595.0 1,595.0 1,595.0 1,595.0

Total Cap. & Liab 25,920.0 28,574.1 30,992.1 33,346.2EBITDA 5,464.0 6,724.4 6,657.4 6,731.9Sales Growth (%) 2.2 4.9 0.7 1.4 Share Capital (m shares) 8,000.0 8,000.0 8,000.0 8,000.0 EBITDA Growth (%) (11.5) 23.1 (1.0) 1.1 Net Debt/(Cash) (9,462.0) (10,609.8) (12,388.5) (14,032.2)EBIT Growth (%) 25.3 9.3 25.3 (1.5) Working Capital 10,456.0 12,328.3 14,141.3 15,820.8 Effective Tax Rate (%) 15.7 22.1 21.7 21.2 Gross Debt - - - -


Quality exposure to the petrochemical sector. PCHEM is a major petrochemical producer in the region. Its efficient facility setup, technologically advanced process and its attractively priced feedstock – up to 40%-75% discount to benchmark, secured under long-term contracts with the PETRONAS Group – makes it one of the lowest cost producers in the world. Furthermore, PCHEM has MYR10.6b of cash, with no debt, and a free cashflow in excess of MYR2.0b p.a.. It undoubtedly ranks as one of the most stable petrochemical groups in the world with the healthiest balance sheet.

The global production index (PMI) is flattish. We observe from the collection of PMI numbers globally, that most regions have enjoyed better economic performance since November 2012, and sort of moved sideways after the January 2013 peak. This is a comforting sign that the manufacturing industry is not headed towards a secular decline. This in turn provides comfort that the petrochemical industry should have some degree of pricing power, and that it will not be pressured into dumping ASPs.


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Petronas Chemicals Group (PCHEM MK)

Discussion points

1. Is there room for increased dividend payouts in light with the cash balance soaring to MYR10.6b?

2. Are there any plans for an M&A?

3. Would management consider business diversification and if so, is there any particular business that management would find synergy in?

4. What is management’s reading of the global petrochemical price and demand outlook for this year?

5. Where are the areas that management feels it could drive further efficiency or returns within the group?


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Overseas contributions could be better. If there is a weakness, it would be that the group’s overseas operations have yet to contribute meaningfully, at just 6.6% of group operating profit. The operating environment remains tough in Hong Kong but positively, the group is seeing headway in Cambodia and Vietnam, albeit from a low base.

Achievable targets in 2013. Group targets in 2013 include loan growth of 11-12% (1Q13: 11.8%), deposit growth of 11-12% (1Q13: 12.9%), a cost/income ratio of <32% (1Q13: 31.9%) and ROE of >20% (1Q13: 22.2%). Judging from results thus far, achieving the targets should not be a problem.

HOLD maintained. While we continue to like the group for its strong fundamentals, current valuations, however, appear toppish with the stock trading close to 1 SD above its mean PER and P/BV, with just an 8% upside to our TP of MYR17.60. The target price tags on a 2013 P/BV target of 3.2x for a prospective ROAE of 22%.

Public Bank (PBK MK) Market Cap (MYR m): 59,326.0 Shares Issued (m): 3,502.1

Solid Expansion In Market Share Current price (MYR): 16.94 Target price (MYR): 17.60 Recommendation: Hold

FYE Dec Op Income Pre-prov Profit Recur. Net Profit Recur.EPS EPS gwth Net DPS PER Div yield P/BV ROE ROA (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (%) (x) (%) (%)2012A 7,747 5,386 3,869 110.5 5.0 50.0 15.3 3.0 3.3 22.9 1.52013E 8,211 5,741 4,114 117.5 6.3 53.0 14.4 3.1 3.1 22.1 1.42014E 8,829 6,242 4,464 127.5 8.5 56.0 13.3 3.3 2.7 21.6 1.42015E 9,525 6,763 4,820 137.6 8.0 58.0 12.3 3.4 2.4 20.5 1.4


Interest income 10,404 11,568 12,776 14,033 Cash & deposits wt banks, FIs 18,636 19,754 20,742 21,779 Interest expense (5,150) (6,080) (6,826) (7,619) Investment & trading securities 40,076 43,986 46,185 48,494 Net interest income 5,255 5,488 5,951 6,413 Loans & advances 196,052 217,302 240,176 264,541 Net inc from Islamic banking 844 911 984 1,063 Intangible assets 1,310 1,349 1,389 1,431 Non-interest income 1,648 1,812 1,894 2,049 Other assets 18,751 19,707 24,038 28,504 Operating income 7,747 8,211 8,829 9,525 Total Assets 274,824 302,098 332,530 364,749Operating expense (2,361) (2,471) (2,586) (2,762) Operating profit 5,386 5,741 6,242 6,763 Deposits fr customers 225,042 249,435 275,691 303,659 Loan loss allowance (279) (336) (376) (427) Deposits fr banks, FIs 12,849 13,492 14,166 14,875 Impairments, provisions (7) 0 0 0 Debts & debt related 1,956 1,630 1,630 1,630 Associate contributions 4 6 7 7 Other liabilities 16,258 17,582 18,241 18,965 Pre-tax profit 5,104 5,411 5,873 6,343 Minority Interest 700 710 729 750 Taxation (1,192) (1,250) (1,357) (1,465) Shareholders' Equity 18,234 19,249 22,072 24,869 Minority interest (42) (47) (52) (58) Total Liabilities & Capital 275,040 302,098 332,530 364,749Net profit 3,869 4,114 4,464 4,820 Recurring net profit 3,869 4,114 4,464 4,820 Gross NPL ratio (%) 0.7 0.7 0.7 0.7 Loan loss coverage (%) 126.0 132.5 130.1 136.9 Net interest margin (%) 2.51 2.39 2.37 2.34 Net loans/customer deposits (%) 87.1 87.1 87.1 87.1 Cost-to-income (%) 30.5 30.1 29.3 29.0 Net loans/total deposits (%) 82.4 82.6 82.9 83.0


Market share expansion. Public Bank’s stronghold in the retail market is very much reflected in the steady expansion of its market share in key retail segments. The group today boasts a 19.2% leading market share in the mortgage segment, 33.8% of commercial property lending and 26.4% of domestic hire purchase. With an AUM of MYR55.5b end-Mar 2013, Public Mutual continues to dominate the private unit trust industry with a 40.5% market share.

Above-industry loan growth. Domestic loan growth has consistently been higher than the industry’s and it was a very decent 12.5% end-Mar on an annualized basis versus the industry’s 8.4%. As a result, the group’s share of domestic loans has since expanded from 15.9% in 2009 to 16.8% end-Mar 2013.

Industry leader in terms of asset quality. With a gross NPL ratio of just 0.7% vs an industry average of 2%, Public Bank undoubtedly sets the benchmark for others to follow. Loan loss coverage of 124%, meanwhile, is much higher than the industry average of 99% as well.


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Public Bank (PBK MK)

Discussion points

1. Net interest margin compression continues to be a key challenge for the group. In management’s opinion, how much

longer can one expect this compression to continue and to what magnitude?

2. Capital preservation is one of management’s key priorities over the next few years. At the current rate of expansion, when would management hope to attain a common equity Tier 1 ratio of 10%, without having to source for funds from the capital markets?

3. Overseas operations have yet to contribute meaningfully to group earnings. What are the group’s plans for its operations in Hong Kong, Cambodia and Vietnam?

4. ROEs are on a declining trend. Is there a long-term floor that management would like to cap ROEs at and what measures are being taken to address this?

5. Despite a more “fragmented” shareholding, are there plans for a Dividend Reinvestment Programme, to preserve capital and at the same time, raise yields?


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On the flip side, overheads escalated with OSKIB’s higher cost structure plus integration costs, with the group’s cost/income ratio hitting 52.7% in 1Q13. Nevertheless, this was within expectations and OSKIB contributed MYR53m (11%) to group pretax profit during the quarter.

Targets maintained for now. With the loan and deal pipelines looking healthy, management believes it is premature to revise its FY13 targets at this stage. These include a loan growth target of 12%, a gross impaired loan ratio of <2.9%, CIR of <50% and ROE of >13%.

Acquisition of Bank Mestika still pending approval from both Bank Negara and Bank Indonesia. With the end-June deadline looming, it is possible that RHB Cap may walk away from the deal if there is no word from the central banks by then.

BUY and TP of MYR9.80 (FY13 P/BV of 1.5x) maintained. Valuations remain attractive with the stock trading at a prospective FY13 PER of just 11.0x (ROE: 12.3%) vs the industry average of 13.1x (ROE: 15.7%).

RHB Capital (RHBC MK) Market Cap (MYR m): 21,624.8 Shares Issued (m): 2,494.2

Building Its Investment Banking Base Current price (MYR): 8.67 Target price (MYR): 9.80 Recommendation: Buy

FYE Dec Op Income Pre-prov Profit Recur. Net Profit Recur.EPS EPS gwth Net DPS PER Div yield P/BV ROE ROA (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (%) (x) (%) (%)2012A 4,830 2,536 1,789 82.1 1.3 22.1 10.6 2.5 1.4 13.4 1.02013E 5,736 2,911 1,895 79.0 -3.7 24.5 11.0 2.8 1.4 12.3 1.02014E 6,233 3,223 2,140 85.8 8.6 26.6 10.1 3.1 1.2 12.9 1.02015E 6,800 3,518 2,330 93.4 8.9 29.0 9.3 3.3 1.1 12.7 1.0


Interest income 6,153 7,052 7,780 8,578 Cash & deposits wt banks, FIs 27,613 30,374 33,411 36,752 Interest expense (3,193) (3,747) (4,219) (4,672) Investment & trading securities 36,840 38,423 40,078 41,809 Net interest income 2,960 3,305 3,561 3,906 Loans & advances 109,277 122,080 135,596 150,105 Net inc from Islamic banking 490 539 593 629 Intangible assets 5,203 5,203 5,203 5,203 Non-interest income 1,379 1,892 2,079 2,265 Other assets 10,146 10,632 11,287 11,993 Operating income 4,830 5,736 6,233 6,800 Total Assets 189,078 206,711 225,575 245,861Operating expense (2,294) (2,825) (3,010) (3,282) Operating profit 2,536 2,911 3,223 3,518 Deposits fr customers 138,224 153,429 168,772 185,649 Loan loss allowance (148) (407) (395) (438) Deposits fr banks, FIs 13,450 14,123 14,829 15,570 Impairments, provisions (4) 0 0 0 Debts & debt related 10,472 10,471 10,471 10,471 Associate contributions 1 1 1 1 Other liabilities 11,591 12,773 13,839 14,601 Pre-tax profit 2,385 2,506 2,830 3,081 Minority Interest 223 225 227 230 Taxation (595) (609) (688) (749) Shareholders' Equity 15,117 15,690 17,436 19,340 Minority interest (5) (2) (2) (2) Total Liabilities & Capital 189,078 206,711 225,575 245,861Net profit 1,785 1,895 2,140 2,330 Recurring net profit 1,785 1,895 2,140 2,330 Gross NPL ratio (%) 3.0 2.9 3.0 3.0

Loan loss coverage (%) 65.8 70.5 69.0 69.0 Net interest margin (%) 2.39 2.31 2.28 2.28 Net loans/customer deposits (%) 79.1 79.6 80.3 80.9 Cost-to-income (%) 47.5 49.2 48.3 48.3 Net loans/total deposits (%) 72.0 72.9 73.9 74.6


Looking to make waves with OSKIB. With the acquisition of OSKIB, RHB Capital today has an expanded presence in the region, adding investment banking in Singapore, Thailand, Indonesia, Hong Kong, China and Cambodia to its footprint. Legal Day 1 was completed in April 2013 and Single Platform Day 1 is scheduled to complete end-2013.

An encouraging takeaway from its recent 1Q13 results is the pick-up in consumer loan growth, which more than compensated for sluggish corporate/commercial lending. While annualised loan growth of 7% thus far lags management’s 12% target for the year, the pipeline for consumer loans is stable and we envisage rising corporate loan demand in 2H13. Other positives include stable NIMs QoQ amid improved CASA market share.

Focus on higher margin segments. Within the consumer segment, management has allowed its mortgage market share to drift, but has compensated through greater focus on higher yielding market segments such as personal loans, ASB financing, credit cards and auto finance.


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RHB Capital (RHBC MK)

Discussion points

1. With the OSKIB merger completed, what is the strategy for driving the investment bank forward? Is there any progress

in the hunt for a new Managing Director for the investment bank?

2. What are the implications of the new Financial Services Act on the holding company and in management’s view, is there a need to restructure or even privatize the group e.g. for greater tax efficiency?

3. EASY kiosks have been most effective in expanding the group’s ASB financing market share. Kiosk expansion however will soon be tapering off; so, what is next in terms of strategy and product offering moving forward?

4. The end-June deadline for the Bank Mestika approval is fast approaching…what would it take to stay anchored to the deal and how agreeable would the sellers be to further extend negotiations?


13-14 June 2013 Page 130 of 172

Company (MYR108m). The momentum is set to continue. SAKP is said to soon announce a new multi-billion dollar, 2-4 units of pipelay vessel charter contract, to be secured from Petrobras. This would provide for a more longer term (5-8 years) visibility in earnings.

Undemanding valuations, room for further earnings upgrade. SAKP currently trades at 17-19x FY15F-16F PERs, which we believe is undemanding given that it is a growth stock with a projected 3-year net profit CAGR of 35%. SAKP expects its tender rig business, purchased recently from Seadrill, to contribute about MYR1b p.a. to the group’s bottomline. We see scope for our conservative estimates to be upgraded by as much as 15%-18%.

Inclusion into the FBM KLCI 30 Index? SAKP is now the 16th largest stock on the exchange in terms of market cap. It is likely to feature as a new component of the KLCI 30 come the next review in June. Its inclusion, if it comes through, will further raise the stock’s profile.

SapuraKencana Petroleum (SAKP MK) Market Cap (MYR m): 25,287.1 Shares Issued (m): 5,992.2

Growing Bigger, Globally Driven Current price (MYR): 4.22 Target price (MYR): 4.60 Recommendation: Buy

FYE Jan Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2013A 6,912.4 1,273.3 606.6 12.1 33.3 0.0 34.8 20.4 0.0 3.3 77.6 9.2 2014F 7,687.6 2,301.0 1,041.1 18.2 50.0 0.0 23.2 15.1 0.0 2.9 126.7 13.9 2015F 8,971.5 2,556.6 1,350.5 22.6 24.5 0.0 18.6 13.7 0.0 2.6 102.9 15.0 2016F 9,607.3 2,671.2 1,484.9 24.9 10.0 0.0 16.9 12.8 0.0 2.3 82.0 14.3

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Jan 2013A 2014F 2015F 2016F FY Jan 2013A 2014F 2015F 2016F

Turnover 6,912.4 7,687.6 8,971.5 9,607.3 Fixed Assets 4,222.1 11,589.9 11,957.8 12,325.6 EBITDA 1,273.3 2,301.0 2,556.6 2,671.2 Other LT Assets 5,035.0 5,035.0 5,035.0 5,035.0 Depreciation & Amortisation (232.9) (632.2) (632.2) (632.2) Cash/ST Investments 1,025.8 1,220.3 1,528.6 2,047.3 Operating Profit 1,040.4 1,668.8 1,924.4 2,039.0 Other Current Assets 4,868.8 5,398.9 6,216.8 6,744.9 Associates (227.4) (534.7) (493.7) (482.0) Total Assets 15,151.7 23,244.2 24,738.2 26,152.8Interest (Exp)/Inc 135.2 143.2 177.0 210.7 Exceptional Items (82.0) (23.0) 0.0 0.0 ST Debt 2,374.3 2,374.3 2,374.3 2,374.3 Pre-Tax Profit 829.8 1,254.3 1,607.7 1,767.8 Other Current Liabilities 2,375.3 2,631.0 3,054.5 3,264.3 Tax (166.0) (191.7) (257.2) (282.8) LT Debt 3,566.7 9,381.2 9,101.2 8,821.2 Minority Interest (139.2) (44.6) 0.0 0.0 Other LT Liabilities 92.5 92.5 92.5 92.5 Net Profit 524.6 1,018.1 1,350.5 1,484.9 Minority Interest 405.8 450.4 450.4 450.4 Recurring Net Profit 606.6 1,041.1 1,350.5 1,484.9 Shareholders' Equity 6,337.1 8,314.8 9,665.3 11,150.2

Total Liabilities-Capital 15,151.7 23,244.2 24,738.2 26,152.8Turnover Growth % 47.9% 11.2% 16.7% 7.1%EBITDA Growth (%) 67.8% 80.7% 11.1% 4.5% Share Capital (m) 5,004.4 5,724.1 5,964.0 5,964.0 EBIT Growth (%) 60.9% 60.4% 15.3% 6.0% Gross Debt 5,941.0 11,755.5 11,475.5 11,195.5 Net Profit Growth (%) 15.3% 94.1% 32.7% 10.0% Net Debt 4,915.2 10,535.2 9,946.9 9,148.2 Recurring Net Profit Growth (%) 33.3% 71.6% 29.7% 10.0% Working Capital 1,145.0 1,613.9 2,316.6 3,153.6 Tax Rate % 20.0% 15.3% 16.0% 16.0%


BUY, RM4.60 TP. SapuraKencana Petroleum (SAKP) is an emerging powerhouse with a regional reach and global aspirations and capabilities, headed by a dedicated, experienced and professional management team. It is a growth stock, asset rich and balance sheet light, well equipped to capitalize on opportunities, both locally and abroad. Our TP pegs SAKP to a FY1/15 PER of 20x.

A gamut of services. SAKP is the product of a merger between SapuraCrest and Kencana. It is now an enlarged integrated O&G service provider with six core operations providing support across the O&G exploration, development and production value chain. Its business network, which is spread across multiple continents, is testament to its proven capabilities and enterprising regional footprint.

Prospects are bright, more positives in the pipeline. Orderbook replenishment is rising following three recent job wins from Petronas Carigali (3-4 years; MYR60m), ExxonMobil Exploration and Production Inc Malaysia (3-5 years; MYR300m-600m) and PTSC Offshore Joint Stock


13-14 June 2013 Page 131 of 172

SapuraKencana Petroleum (SAKP MK)

Discussion points

1. What is the status of the reported tender bids for new pipelay barge contracts in Brazil?

2. Is PETRONAS’ entry into Brazillian E&P activity via its acquisition of a 40%stake in two oil fields likely to benefit SAKP?

3. Will SAKP be further increasing the size of its tender assisted drilling fleet? If so, what is the likely time frame and capex guidance?

4. Would SAKP consider anymore new business activities e.g. FPSOs, semi-submersible drilling rigs?

5. What are the major domestic projects that SAKP is currently bidding for?

6. Is SAKP bidding for more risk-service contracts (RSCs)?

7. How does management see the landscape for O&G contractors? Is further consolidation likely?

8. Anymore M&As?


13-14 June 2013 Page 132 of 172

Motors, on the ride. Sime is the third largest BMW dealer in the world. It operates in six countries (with Malaysia, China [including HK & Macau] and Singapore as the key markets) riding on Asia’s rising affluence. It distributes the following marques – MINI, Ford, Land Rover, Hyundai, Rolls Royce, Alfa Romeo, and Peugeot, to name a few.

Largest property landowner in Malaysia. Sime has total development land bank of ~16,000 acres which are strategically located in Peninsular Malaysia, primarily in the Klang Valley and Negeri Sembilan. Last year, it formed a JV to re-develop the Battersea project in the UK.

Energy & Utilities. Sime is growing its port operations in Shandong province of China. It also owns a power plant in Malaysia and another in Thailand (600MW in total).

Key catalysts. Sime has recently divested part of its healthcare division in Malaysia to a 50:50 JV with Ramsay Health Care of Australia, to jointly expand their healthcare businesses in Asia. Other key catalysts are the potential listings of its property and Indonesia plantation operations.

Sime Darby (SIME MK) Market Cap (MYR m): 56,608.5 Shares Issued (m): 6,009.4

Strength in Diversity & Regionalisation Current price (MYR): 9.42 Target price (MYR): 10.10 Recommendation: Hold

FYE Jun Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 47,602 7,020 4,216 70.2 15.1 35.0 13.4 8.8 3.7 2.2 18.1 16.22013F 47,755 6,179 3,425 57.0 (18.8) 28.5 16.5 10.0 3.0 2.0 13.3 12.42014F 51,094 6,174 3,346 55.7 (2.3) 27.8 16.9 10.0 3.0 1.9 11.9 11.42015F 53,093 6,317 3,442 57.3 2.9 28.6 16.4 9.8 3.0 1.8 9.9 11.1


Revenue 47,602 47,755 51,094 53,093 Fixed Assets 18,714 19,434 20,192 20,958EBITDA 7,020 6,179 6,174 6,317 Other LT Assets 4,076 4,163 4,253 4,341Depreciation & Amortisation (1,207) (1,191) (1,200) (1,208) Cash/ST Investments 5,106 6,125 6,296 6,727Operating Profit (EBIT) 5,813 4,988 4,975 5,109 Other Current Assets 20,281 20,530 22,147 23,211Interest (Exp)/Inc (207) (370) (337) (331) Total Assets 48,176 50,252 52,887 55,236Associates 115 159 161 159One-offs - - - - ST Debt 5,873 5,873 5,873 5,873Pre-Tax Profit 5,721 4,777 4,798 4,936 Other Current Liabilities 10,513 10,680 11,442 11,866Tax (1,308) (1,155) (1,252) (1,290) LT Debt 3,931 3,931 3,931 3,931Minority Interest (196) (196) (200) (204) Other LT Liabilities 970 970 970 970Net Profit 4,216 3,425 3,346 3,442 Minority Interest 875 1,072 1,272 1,476Recurring Net Profit 4,216 3,425 3,346 3,442 Shareholders' Equity 26,014 27,727 29,400 31,121

Total Liabilities-Capital 48,176 50,252 52,887 55,236Revenue Growth % 13.7% 0.3% 7.0% 3.9%EBITDA Growth (%) 7.2% -12.0% -0.1% 2.3% Share Capital (m) 6,009 6,009 6,009 6,009EBIT Growth (%) 6.0% -14.2% -0.3% 2.7% Gross Debt/(Cash) 9,803 9,803 9,803 9,803Net Profit Growth (%) 15.1% -18.8% -2.3% 2.9% Net Debt/(Cash) 4,698 3,679 3,508 3,077Recurring Net Profit Growth (%) 15.1% -18.8% -2.3% 2.9% Working Capital 9,001 10,102 11,128 12,199Tax Rate % 22.9% 24.2% 26.1% 26.1%

CPO ASP (MYR /t) 2,925 2,460 2,600 2,600Sources: Company, Maybank KE

Sime Darby is a diversified conglomerate, with six core businesses (ranked by EBIT contributions in FY6/12) – plantations (55%), heavy equipment (23%), motors (12%), property (7%), energy & utilities (5%) and healthcare (<1%). It operates in over 20 countries with a strong presence in the Asia-Pacific region. 75% of its group revenue was derived outside Malaysia in FY6/12. Sime is a HOLD with a MYR10.10 TP based on 18x 2014 PER.

World’s largest listed plantation player, with 877,000 ha of plantation land in Malaysia (41%), Indonesia (34%) and Liberia (25%). Approximately 524,000 hectares has been planted with oil palm and yielded 20.6t/ha/yr in FY6/12 with an all-in cost of production of MYR1,400/t. Sime is on a look out for more land in the region.

Heavy on industrial sector. Sime is Caterpillar’s third largest dealer globally. Its key market is Australia’s mining sector. It also benefits from equipment demand for the marine and oil & gas sectors in Malaysia and Singapore. It is also leveraged to China’s construction projects.


13-14 June 2013 Page 133 of 172

Sime Darby (SIME MK)

Discussion points

1. What is Sime’s view on CPO price for the rest of 2013?

2. What is your FFB production growth guidance for FY6/14?

3. Can you provide us with an update on your investments in Liberia and the planting progress?

4. Can you share with us your expansion plans for the plantation division?

5. Is shale gas development a concern to your industrial division when US starts to export shale gas from 2015 onwards?

6. What is the internal GDV of your property division in Malaysia?

7. Do you see renewed interest in property demand post the 13th general election?

8. What is the long term plan for the motor division? Potential new market and new franchise?


13-14 June 2013 Page 134 of 172

Likely winner of government land development projects. SPSB has demonstrated its strong business relationship with the government via three urban redevelopment projects i.e. KL Eco City, recently-secured Setia Federal Hill (a land swap deal) and the Bandar Tun Razak redevelopment in Cheras. Given its proven track record and a strong major shareholder in PNB, SPSB is likely to be a front-runner for a role in government land development including the 3,000-acre Rubber Research Institute Malaysia (RRIM) land in Sungai Buloh.

Earnings outlook. We expect a 3-year forward EPS CAGR of 23% largely supported by its domestic business. A lumpy earnings contribution from BPS will be in 2016/17 since the UK adopts a policy of recognizing development profits only on completion of the respective units.

A laggard, BUY. SPSB traded at 1.2x P/RNAV during the property upcycle. However, to compensate for Tan Sri Liew’s (CEO) earlier-than-expected departure, we peg SPSB to 1.0x P/RNAV and derive a TP of MYR5.03; +39% upside. It currently trades at 18.9x PER / 1.6x PBV.

S P Setia (SPSB MK) Market Cap (MYR m): 8,900.5Shares Issued (m): 2,458.7

Scaling Greater Heights Current price (MYR): 3.62Target price (MYR): 5.03Recommendation: Buy

FYE Oct Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 2,526.6 601.0 372.9 18.9 16.4 10.5 19.2 28.4 2.9 1.8 57.8 9.7 2013F 3,625.2 755.1 470.0 19.1 1.2 11.5 18.9 23.2 3.2 1.6 47.3 8.4 2014F 4,588.4 952.6 598.7 24.3 27.4 14.6 14.9 13.4 4.0 1.5 62.0 10.3 2015F 6,566.6 1,360.0 862.6 35.1 44.1 21.0 10.3 15.5 5.8 1.4 57.4 14.0

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Oct 2012A 2013F 2014F 2015F FY Oct 2012A 2013F 2014F 2015F

Revenue 2,526.6 3,625.2 4,588.4 6,566.6 Fixed Assets 679.6 679.6 679.6 679.6 EBITDA 601.0 755.1 952.6 1,360.0 Other LT Assets 4,693.2 4,492.5 4,312.2 4,074.8 Depreciation & Amortisation 18.5 22.9 27.1 31.1 Cash/ST Investments 1,543.6 2,454.4 2,186.1 2,602.4 Operating Profit (EBIT) 582.5 732.2 925.5 1,328.9 Other Current Assets 2,436.9 5,100.0 7,021.6 8,611.5 Interest (Exp)/Inc (15.0) (38.7) (47.1) (48.5) Total Assets 9,353.3 12,726.5 14,199.5 15,968.3Associates 0.0 0.0 0.0 0.0 One-offs 20.9 0.0 0.0 0.0 ST Debt 1,520.8 1,520.8 1,520.8 1,520.8 Pre-Tax Profit 567.5 693.5 878.3 1,280.4 Other Current Liabilities 1,429.4 2,030.1 2,556.7 3,638.4 Tax (179.9) (173.4) (219.6) (320.1) LT Debt 2,361.7 3,580.0 4,286.9 4,628.0 Minority Interest 6.2 (50.1) (60.1) (97.7) Other LT Liabilities 2.2 2.2 2.2 3.2 Net Profit 393.8 470.0 598.7 862.6 Minority Interest (4.8) (4.8) (4.8) (4.8)Recurring Net Profit 372.9 470.0 598.7 862.6 Shareholders' Equity 4,043.9 5,598.1 5,837.6 6,182.6

Total Liabilities-Capital 9,353.3 12,726.5 14,199.5 15,968.3Revenue Growth % 13.2 43.5 26.6 43.1 EBITDA Growth (%) 32.3 25.6 26.2 42.8 Share Capital (m) 1,973.4 2,458.7 2,458.7 2,458.7 EBIT Growth (%) 31.8 25.7 26.4 43.6 Gross Debt/(Cash) 3,882.6 5,100.8 5,807.7 6,148.9 Net Profit Growth (%) 20.1 19.3 27.4 44.1 Net Debt/(Cash) 2,339.0 2,646.4 3,621.6 3,546.5 Recurring Net Profit Growth (%) 26.6 26.0 27.4 44.1 Working Capital 1,030.2 4,003.4 5,130.1 6,054.7 Tax Rate % 25.0 25.0 25.0 25.0 Gross gearing % 96.0 91.1 99.5 99.5


On world radar. The recent successful launch of the MYR40b (in GDV) Battersea Power Station (BPS) project has further inked SPSB’s brandname internationally. We continue to like SPSB for its market leadership and 4,279 acre strategic landbank in Malaysia and abroad with a remaining GDV of MYR67b (as at Oct 12). Potential upside surprises could come from new government land awards.

Phase 1 BPS, almost fully-sold. BPS’s Phase 1 launch (called Circle West with 866 apartments and townhouses from GBP800psf onwards) was 95% sold (824 units worth GBP681m or ~MYR3.4b) within 5 months. The strong take-up is not a surprise to us given the site’s strategic location, supported by an upcoming Northern Line extension. Construction work on Phase 1 is expected to start in July 2013 and complete in 2016/17.

Sales may exceed targets. SPSB will very likely exceed its already high sales target of MYR5.5b (+30% YoY) for FY10/13. It has achieved MYR2.3b sales in 5MFY10/13 (excluding BPS). Unbilled sales stood at MYR5.6b as at end-Feb 2013 (1.7x our FY10/13 revenue forecast).


13-14 June 2013 Page 135 of 172

S P Setia (SPSB MK)

Discussion points

1. What is your view on the current property market in Malaysia?

2. Do you foresee any potential tightening measures by the authorities on the property market?

3. Can you share with us the status of government land privatizations in the Klang Valley? How does SP Setia rate its chances of securing a role or two?

4. What is your view on the impact of the High Speed Rail and MRT Line 2/LRT extension on property prices in the Klang Valley?

5. Given SP Setia’s high unbilled sales, how do you manage construction risks?


13-14 June 2013 Page 136 of 172

Its outstanding construction order book stands at MYR4.4b (as at 31 Mar 2013; 2.7x our FY13 construction revenue forecast) which provides 2-3 years earnings visibility.

Preparing for growth. Sunway has proposed a 1-for-3 renounceable rights issue of up to 569m rights shares at MYR2.67 issue price. The rights issue is expected to raise up to MYR1.5b cash to fund the development of Sunway’s investment properties and future land acquisitions as well as repayment of existing debts. No details have been given on its specific use but we understand that Sunway has been pre-qualified to develop the RRIM land in Sg. Buloh. The rights issue should complete in August 2013.

BUY with a MYR4.26 TP. We value Sunway at MYR4.26 on 0.8x P/RNAV, a premium to its historical peak valuation (0.1x above 0.7x historical peak) to reflect the re-rating of IM related stocks. Its landbank in IM should continue to appreciate on rising foreign investment and job opportunities as well as better connectivity via the proposed JB-Singapore Rapid Transit System. As one of the largest piling providers in Malaysia, Sunway could also gain from growing infrastructure spend.

Sunway Berhad (SWB MK) Market Cap (MYR m): 5,040.8Shares Issued (m): 1,292.5

A New Force In Iskandar Current price (MYR): 3.90Target price (MYR): 4.26Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 3,876.8 535.1 350.6 27.1 7.2 6.0 14.4 9.9 1.5 1.4 45.2 15.02013F 3,928.0 530.0 395.8 30.6 12.9 6.1 12.7 9.8 1.6 1.3 38.3 9.92014F 4,453.7 632.7 449.5 34.8 13.6 7.0 11.2 8.0 1.8 1.2 32.5 10.32015F 4,712.8 701.1 520.0 40.2 15.7 8.0 9.7 7.0 2.1 1.1 25.6 10.9


Revenue 3,876.8 3,928.0 4,453.7 4,712.8 Fixed Assets 1,965.3 1,880.5 2,007.0 2,137.3 EBITDA 535.1 530.0 632.7 701.1 Other LT Assets 2,965.2 3,271.4 3,215.4 3,034.6 Depreciation & Amortisation (31.0) (24.7) (27.0) (30.8) Cash/ST Investments 1,140.2 1,209.8 1,326.6 1,520.5 Operating Profit 504.2 505.3 605.7 670.3 Other Current Assets 2,674.1 2,944.1 3,983.7 4,017.5 Associate 152.3 73.1 80.5 87.1 Total Assets 8,744.9 9,305.8 10,532.6 10,709.8JV companies 149.3 66.0 76.5 101.1 Interest (Exp)/Inc (77.5) (51.3) (49.0) (45.1) ST Debt 782.7 782.7 782.7 782.7 Exceptional Items 0.0 0.0 0.0 0.0 Other Current Liabilities 1,636.1 1,657.3 1,875.0 1,982.2 Pre-Tax Profit 728.2 593.0 713.7 813.3 LT Debt 1,964.2 1,964.2 1,964.2 1,964.2 Tax (128.5) (148.3) (178.4) (203.3) Other LT Liabilities 493.5 579.5 1,229.1 882.9 Minority Interest (67.4) (49.0) (85.8) (89.9) Minority Interest 310.0 310.0 310.0 310.0 Net Profit 532.3 395.8 449.5 520.0 Shareholders' Equity 3,558.4 4,012.1 4,371.7 4,787.7 Net Profit Ex. El 350.6 395.8 449.5 520.0 Total Capital 8,744.9 9,305.8 10,532.6 10,709.8

Revenue Growth (%) 3.7 1.3 13.4 5.8 Share Capital (RM 'm) 1,292.5 1,292.5 1,292.5 1,292.5 EBITDA Growth (%) 34.5 (0.9) 19.4 10.8 Net Debt/ (Cash) 1,606.7 1,537.1 1,420.4 1,226.5 EBIT Growth (%) 35.8 0.2 19.9 10.7 Working Capital 1,395.5 1,713.9 2,652.5 2,773.0 Net Profit ex-EI Growth (%) 7.2 12.9 13.6 15.7 Gross Gearing (%) 77.2 68.5 62.8 57.4 Tax Rate (%) 17.7 25.0 25.0 25.0 Net Gearing (%) 45.2 38.3 32.5 25.6


An exciting year. Sunway is a well established property development and construction group. Its property exposure is large in Iskandar Malaysia (IM) with 1,858 acres worth MYR31b in GDV (or 57% of Sunway’s total GDV). Of the 1,858 acres, 1,167 acres (or 63%) are freehold land (with the remaining leasehold). We believe this freehold land is a key selling point to enable Sunway to command premium pricing over the leasehold land status of its peers (e.g. E&O and WCT) in the vicinity.

Better property sales in 2H13. Sunway has locked-in (effective) property sales of MYR202m in 1Q13, accounting for ~18% of its MYR1.1b sales target for 2013. Sales (especially luxury properties) should pick up post 13GE on MYR1.3b of new launches planned in 2H (including Novena project in Singapore, Sunway Geo and Lenang Heights in IM). Unbilled sales remain healthy at MYR1.9b as at end-Mar 2013 (1.8x our FY13 property revenue forecasts).

Strong construction orders. Sunway has secured MYR1.5b jobs YTD, including a MYR526m KLCC job, MYR452m contract for the Bus Rapid Transit Sunway Line and MYR258m refurbishment job of Sunway Putra Place.


13-14 June 2013 Page 137 of 172

Sunway Berhad (SWB MK)

Discussion points

1. What is your biggest concern on the current property market? Do you foresee any tightening measures on the property market?

2. How does Sunway differentiate itself with the other developers in Iskandar Malaysia (especially in Medini where you are most exposed to)?

3. What is your biggest concern on the Iskandar Malaysia property market?

4. Could you share with us your landbank expansion strategy (target GDV, location, and land size) and is Sunway bidding or eyeing the government’s privatization of its landbanks in the Klang Valley?

5. On your construction division, what infrastructure projects are Sunway tendering for this year and how do you view your chances of securing some of these domestic projects?

6. What is your view on China’s property market? And can you provide us with the status update on Sunway’s Tianjin Eco City in China?


13-14 June 2013 Page 138 of 172

Sunway Putra Place, the next gem. SunREIT is transforming Sunway Putra Mall (SPM) into a lifestyle urban mall, catering to mid-to-middle upper income shoppers and tourists. Total capex for the revised renovation plan is undisclosed at this juncture but SunREIT is looking to double Sunway Putra Place’s net property income post-refurbishment.

Stable earnings growth. We forecast a 7% 3-year EPU CAGR between FY6/12-15. We have factored in the refurbishment works of SPM based on its initial plan. During the closure of SPM, SunREIT will rely on Sunway Putra Tower (office) and Sunway Putra Hotel for income. New asset injections and proactive capital management will help to maintain stable earnings.

HOLD, RM1.60 DCF-based TP. SunREIT currently trades at 4.6% (net) CY14 DPU, versus large-cap REITs’ 4.5% (PavREIT’s 4.4%, CMMT’s 4.6%, IGBR’s 4.6% and KLCC’s 4.3%). Major risks include: 1) oversupply in office market (9% of SunREIT’s NPI are from office assets) and 2) cost overruns on SPM’s refurbishment works.

Sunway REIT (SREIT MK) Market Cap (MYR m): 4,758.7Shares Issued (m): 2,919.4

Ready To Grow Current price (MYR): 1.63Target price (MYR): 1.60Recommendation: Hold

FYE Jun Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Gearing ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 406.4 270.2 190.6 7.1 13.5 6.8 23.1 21.9 4.1 1.5 33.4 14.02013F 414.6 272.0 207.1 7.4 4.4 7.0 22.1 22.9 4.3 1.3 33.5 6.12014F 437.7 289.7 219.7 7.5 2.2 7.1 21.6 22.5 4.4 1.4 34.8 6.42015F 479.6 325.6 251.5 8.6 14.5 8.7 18.9 20.3 5.3 1.4 36.0 7.4


Gross Rental Income 406.4 414.6 437.7 479.6 Property, plant and equipment 0.4 0.0 0.0 0.0Interest Income 1.3 0.9 0.9 0.9 Investment Properties 4,630.0 5,100.0 5,200.0 5,300.0Gross Income 407.7 415.5 438.6 480.5 Others 8.5 0.0 0.0 0.0Property Operating Expenses (107.2) (111.3) (115.5) (119.9) Cash and receivable 44.5 38.4 31.9 35.7Non-Property Expenses (110.2) (97.1) (103.3) (109.0) Total Assets 4,683.4 5,138.4 5,231.9 5,335.7Net Trust Income 190.3 207.1 219.7 251.5Revaluation of Invt Properties 230.2 - - - Short term borrowings 1,245.0 1,245.0 1,245.0 1,245.0Income before taxation 420.5 207.1 219.7 251.5 Creditors 58.0 0.0 0.0 0.0Distribution To Unitholders (202.0) (217.0) (229.6) (253.9) Long term borrowings 318.1 478.1 578.1 678.1Taxation - - - - Total Liabilities 1,675.0 1,723.1 1,823.1 1,923.1Income after taxation (ex-revaluation)

190.6 207.1 219.7 251.5

Unitholders' Capital 2,361.5 2,578.8 2,578.8 2,578.8Turnover Growth % 24.5 1.9 5.6 9.6 Distributed income 646.8 836.5 830.0 833.8Pretax Profit Growth % (23.8) (50.7) 6.1 14.5 Unitholders' Funds 3,008.3 3,415.3 3,408.7 3,412.5Net Profit Growth (%) 13.9 8.7 6.1 14.5Recurring Net Profit Growth (%) 13.9 8.7 6.1 14.5Tax Rate % 0.0 0.0 0.0 0.0


Second largest REIT in Malaysia. SunREIT is the second largest REIT in Malaysia in term of asset size (MYR5.0b) and market cap. Its asset portfolio includes retail (68% of total NPI), hotel (23%), office (9%) and healthcare. One of the reasons we like SunREIT is due to its visible pipeline of potential assets injection by its sponsor. The trust is looking to buy another asset into its investment portfolio in 2H13.

Preparing for future acquisitions. Post recent private placement of 215m new units (at MYR1.49/sh issue price),its gearing ratio has improved to 0.32x as at end-Mar 2013. Management aims to acquire at least one property every year from its sponsor or a third party. The next acquisition (a third party asset) could take place in 2HCY13. Readily injectable assets by the sponsor include Sunway University, Monash University and Sunway Giza shopping mall.

Managing interest rate risk. Given a likely interest rate hike in 2014 with the potential roll-back in subsidies, management has converted 80% of its debt into fixed rate loan (from 37% in Dec 2012), lowering interest rate risk.


13-14 June 2013 Page 139 of 172

Sunway REIT (SREIT MK)

Discussion points

1. SunREIT has a relatively diversified portfolio of assets. Which segment of the portfolio (ie retail, office, hotel) will be the focus for expansion in the next 3-5 years?

2. Could you share with us your views on the rental markets for retail, office and hotel spaces in the Klang Valley?

3. What is the status of SunREIT’s renovation works for Sunway Putra Mall?

4. What sets you apart from the other Malaysian REITs? What are your strengths?

5. What are the potential new assets (where and likely yield) to be injected into SunREIT?

6. Are you able to provide us the lists (and value) of assets that could be potentially injected by the sponsor and the tentative timeline?


13-14 June 2013 Page 140 of 172

Competition in fibre broadband has started. The Maxis-Astro IPTV service was finally launched in early May 2013, and has garnered 10,000 bookings within a week. For now, the price points of the Maxis-Astro offering are not at ‘destructive’ levels in our view. While Unifi remains a small revenue contributor (c.11%) to TM presently, it is been a major source of revenue growth.

We forecast a 5% EBITDA growth in FY13. We expect both internet and data revenues to grow at 11% and 15% respectively, offsetting a 3% decline in voice revenue. We also expect a mild compression of EBITDA margin (by 67bps YoY). At the net profit level, we forecast a 10% decline in core net profit as taxes normalize.

Maintain HOLD, target price of MYR5.50. We value TM on a DCF, assuming 7.2% WACC and 1% long-term growth. Our target price implies 24.8x PER, 6.9x EV/EBITDA and 3.7% net dividend yield in 2013.

Telekom Malaysia (T MK) Market Cap (MYR m): 19,353.7 Shares Issued (m): 3,577.4

Intensifying Competition Current price (MYR): 5.41 Target price (MYR): 5.50 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2012A 9,993.5 3,194.5 1,263.7 35.3 38.7 22.0 22.0 7.2 4.1 2.8 2.2 18.22013F 10,579.0 3,311.2 792.7 22.2 (10.0) 19.9 24.4 6.8 3.7 2.8 2.2 11.42014F 11,246.9 3,497.8 860.4 24.1 8.5 21.6 22.5 6.4 4.0 2.7 2.0 12.32015F 11,833.3 3,680.2 941.8 26.3 9.5 23.7 20.6 6.0 4.4 2.7 1.9 13.3


Revenue 9,993.5 10,579.0 11,246.9 11,833.3 Fixed Assets 14,643.2 14,742.5 14,752.7 14,687.5 EBITDA 3,194.5 3,311.2 3,497.8 3,680.2 Other LT Assets 743.9 743.9 743.9 743.9 Depr & Amort (2,044.7) (2,099.3) (2,202.1) (2,290.0) Cash/ST Investments 4,239.3 4,098.2 4,141.7 4,256.6 Operating Profit (EBIT) 1,149.8 1,211.9 1,295.7 1,390.1 Other Current Assets 2,569.5 2,722.1 2,892.1 3,040.7 Net Interest (Exp)/Inc (191.9) (229.8) (234.1) (232.8) Total Assets 22,195.9 22,306.7 22,530.4 22,728.7Assoc & JV 0.9 0.0 0.0 0.0 One-offs 110.8 0.0 0.0 0.0 ST Debt 2,010.2 2,010.2 2,010.2 2,010.2 Pretax Profit 1,069.6 982.0 1,061.6 1,157.4 Other Current Liabilities 4,612.0 4,811.9 5,104.2 5,350.6 Tax 236.3 (147.3) (159.2) (173.6) LT Debt 5,130.2 5,130.2 5,130.2 5,130.2 Minority Interest (42.2) (42.0) (42.0) (42.0) Other LT Liabilities 3,383.5 3,213.1 3,056.4 2,912.2 Net Profit 1,263.7 792.7 860.4 941.8 Minority Interest 165.2 167.2 169.2 171.2 Recurring Net Profit 880.9 792.7 860.4 941.8 Shareholders' Equity 6,894.8 6,974.1 7,060.1 7,154.3

Total Liabilities-Capital 22,195.9 22,306.7 22,530.4 22,728.7Revenue Growth (%) 9.2% 5.9% 6.3% 5.2% EBITDA Growth (%) 2.8% 3.7% 5.6% 5.2% Shares Outstanding (m) 3,577.4 3,577.4 3,577.4 3,577.4 EBIT Growth (%) 17.3% 5.4% 6.9% 7.3% Gross Debt/(Cash) 7,140.4 7,140.4 7,140.4 7,140.4 Net Profit Growth (%) 6.1% (37.3%) 8.5% 9.5% Net Debt/(Cash) 2,901.1 3,042.2 2,998.7 2,883.8 Recurring Net Profit Growth (%) 9.2% 5.9% 6.3% 5.2% Working Capital 186.6 (1.8) (80.7) (63.5)Tax Rate (%) (22.1%) 15.0% 15.0% 15.0%


Competition has yet to bite. The key concern revolves around intensifying competition in the fibre broadband segment, with Maxis having only recently launched the Astro IPTV service in May 2013. In addition, falling FCF means the prospect of a special dividend in FY13 is slim in our view. Nevertheless, these concerns have been partially priced in following the stock’s 10% YTD decline.

Who bears the cost of lower broadband charges? Barisan Nasional in its election manifesto, has promised to lower broadband charges by 20%. In the unlikely event that TM is made to bear the full cost, we estimate a revenue loss of c.MYR550m. For now, there remains no clarity from the government on the implementation mechanism.

Falling FCF as government grant for Unifi runs out. The government’s MYR2.4b grant for Unifi rollout was fully exhausted in FY12. The capex for subsequent rollouts would have to be borne solely by TM. We forecast enterprise FCF to decline by 13% YoY to MYR842m in FY13 on the back of 1) higher net capex and 2) tax normalization. Hence, the chance of a special dividend in FY13 is slim, in our view.


13-14 June 2013 Page 141 of 172

Telekom Malaysia (T MK)

Discussion points

1. How does management view the Maxis-Astro IPTV service, and what has been the impact to TM’s net additions?

2. What potential response could TM undertake if the competition’s product gains momentum?

3. Any details on how the government plans to implement lower broadband charges? Would the telecom operators be made to partially bear the cost?

4. Any updates on the timing of the non-mandated Unifi rollout?


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Excess returns might not last. TNB is in a regulated industry, and the government is unlikely to allow substantially higher returns over the long-term, in our view. We believe excess returns from lower coal prices could potentially be eroded as the government addresses subsidies (gas) and compensation (oil, distillates and LNG-sourced gas) in the next tariff review.

We forecast a 7% net profit decline in FY13. This needs to be taken into context as FY12 net profit contained two years worth (FY11 and FY12) of compensation for oil and distillates. We assume 1) 4% Peninsular power demand growth, 2) coal price to average USD87/t in FY13 and 3) TNB continues to receive compensation for oil and distillates costs and LNG-sourced gas.

Maintain Hold, target price of MYR7.60. We value TNB on DCF, assuming 8.0% WACC, 1% long term growth and 8% long term incremental ROIC. Our target price implies 1.1x FY13 P/B and 10.1x FY13 PER respectively.

Tenaga Nasional (TNB MK) Market Cap (MYR m): 46,048.4 Shares Issued (m): 5,501.6

Stars Are Currently Aligned Current price (MYR): 8.37 Target price (MYR): 7.60 Recommendation: Hold

FYE Aug Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2012A 35,848.4 10,665.0 4,197.8 76.8 738.3 20.0 10.9 5.7 2.4 1.3 2.2 12.72013F 37,197.8 11,131.4 4,157.6 75.6 (1.6) 18.5 11.1 5.4 2.2 1.2 2.0 11.02014F 38,663.6 11,024.7 3,952.4 71.8 (4.9) 18.2 11.7 5.4 2.2 1.1 1.9 9.72015F 40,187.8 11,516.2 4,209.4 76.5 6.5 20.3 10.9 5.0 2.4 1.0 1.7 9.6

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Aug 2012A 2013F 2014F 2015F FY Aug 2012A 2013F 2014F 2015F

Revenue 35,848.4 37,197.8 38,663.6 40,187.8 Fixed Assets 68,569.0 71,280.8 73,801.6 74,844.7 EBITDA 10,665.0 11,131.4 11,024.7 11,516.2 Other LT Assets 1,228.8 1,230.4 1,232.0 1,233.6 Depr & Amort (4,268.1) (4,830.9) (5,021.9) (5,199.5) Cash/ST Investments 8,635.4 7,940.7 7,403.7 8,395.3 Operating Profit (EBIT) 6,396.9 6,300.6 6,002.8 6,316.7 Other Current Assets 10,035.9 10,395.2 11,056.9 11,696.4 Net Interest (Exp)/Inc (634.3) (781.6) (757.5) (728.6) Total Assets 88,469.1 90,847.1 93,494.2 96,170.1Assoc & JV 27.0 27.0 27.0 27.0 One-offs (252.2) 0.0 0.0 0.0 ST Debt 1,659.3 1,659.3 1,659.3 1,659.3 Pretax Profit 5,537.4 5,545.9 5,272.3 5,615.1 Other Current Liabilities 7,670.2 7,582.0 7,951.2 8,204.7 Tax (1,331.0) (1,379.7) (1,311.3) (1,397.0) LT Debt 21,467.6 20,467.6 19,467.6 18,467.6 Minority Interest (8.6) (8.6) (8.6) (8.6) Other LT Liabilities 21,273.7 21,573.7 21,873.7 22,173.7 Net Profit 4,197.8 4,157.6 3,952.4 4,209.4 Minority Interest 261.0 290.0 319.0 348.0 Recurring Net Profit 4,450.0 4,157.6 3,952.4 4,209.4 Shareholders' Equity 36,137.3 39,274.5 42,223.3 45,316.8

Total Liabilities-Capital 88,469.1 90,847.1 93,494.2 96,170.1Revenue Growth (%) 11.3% 3.8% 3.9% 3.9% EBITDA Growth (%) 105.2% 4.4% (1.0%) 4.5% Shares Outstanding (m) 5,464.5 5,501.6 5,501.6 5,501.6 EBIT Growth (%) 453.3% (1.5%) (4.7%) 5.2% Gross Debt/(Cash) 23,126.9 22,126.9 21,126.9 20,126.9 Net Profit Growth (%) 740.4% (1.0%) (4.9%) 6.5% Net Debt/(Cash) 14,491.5 14,186.2 13,723.2 11,731.6 Recurring Net Profit Growth (%) 541.6% (6.6%) (4.9%) 6.5% Working Capital 9,341.8 9,094.6 8,850.1 10,227.7 Tax Rate (%) 24.0% 24.9% 24.9% 24.9%


A liquidity proxy. TNB’s undemanding valuations and falling coal prices have helped boost recent sentiment. Longer term however, there is a possibility of TNB’s profitability being squeezed. The government is in a populist mode, while subsidies (gas) and compensation (oil and distillates) would eventually have to be addressed.

Enjoy the ride for now. Low coal prices have helped shore up TNB’s earnings while enhancing sentiment on the stock. The stock trades at sub-market valuations, making it a good liquidity proxy. With the recent conclusion of national elections, the government is unlikely to review electricity tariffs in the near term, which means the benefits of low coal prices currently accrue in entirety to TNB.

Returns are already higher than usual. A combination of 1) lower coal prices, 2) compensation for oil and distillates (from the government and PETRONAS) and 3) continued gas subsidies have allowed TNB to enjoy higher than usual ROICs in recent quarters. At the group level, our forecasts imply TNB generates positive EVA.


13-14 June 2013 Page 143 of 172

Tenaga Nasional (TNB MK)

Discussion points

1. Any shifts in policies / priorities at the national level (on electricity and subsidies) now that the new government is in place?

2. Management’s view on Energy Commission’s proposed industry reforms.

3. Updates on status and pricing of the Melaka re-gasification plant.

4. Directional movement of coal prices.


13-14 June 2013 Page 144 of 172

Participating in another submarine cable. TDC is also part of a 14 member consortium which is presently building a submarine cable (Asia-Pacific Gateway) from Malaysia to Korea and Japan. This cable is expected to be completed in 2014, following which TDC would have complete connectivity from Malaysia to the US. TDC presently has a 10% stake in the Unity cable which connects Japan to the US.

Consensus’ 30% net profit decline in FY13 needs to be taken in context. Consensus is projecting net profit of MYR135m in FY13, representing a 30% YoY decline. However, FY12 financials included a substantial tax credit, and FY13 dividend income (from its holding of Digi shares) is likely to decline post the completion of the share distribution exercise.

TIME dotCom (TDC MK) Market Cap (MYR m): 2,682.1 Shares Issued (m): 573.1

A Proxy To Rising Data Usage Current price (MYR): 4.68 Target price (MYR): N/A Recommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2010A 321.1 128.5 107.1 21.2 NM 0.0 22.1 16.9 0.0 1.9 (1.6) 9.22011A 313.9 166.6 117.4 23.2 27.1 10.0 20.2 12.8 2.1 1.3 (1.4) 7.82012A 419.1 221.0 193.7 35.4 35.6 0.0 13.2 11.2 0.0 1.0 (0.4) 9.13MFY13 133.0 48.9 36.1 6.3 - 0.0 - - - 1.1 - -


Revenue 321.1 313.9 419.1 133.0 Fixed Assets 365.5 449.0 717.2 734.7EBITDA 128.5 166.6 221.0 48.9 Other LT Assets 726.9 1,108.5 1,741.3 1,559.1Depr & Amort (44.5) (54.3) (64.4) (17.5) Cash/ST Investments 199.7 234.5 246.5 219.6Operating Profit (EBIT) 36.1 70.2 73.3 31.4 Other Current Assets 143.6 158.7 155.2 196.4Net Interest (Exp)/Inc 4.9 6.8 0.4 6.5 Total Assets 1,435.7 1,950.7 2,860.1 2,709.8Assoc & JV 0.0 0.0 0.0 0.0One-offs 47.9 42.1 83.3 0.0 ST Debt 0.0 0.0 11.5 13.0Pretax Profit 88.9 119.0 157.0 37.9 Other Current Liabilities 181.7 192.8 221.8 217.3Tax 18.2 (1.7) 36.7 (1.8) LT Debt 0.0 0.0 143.0 140.1Minority Interest 0.0 0.0 0.0 0.0 Other LT Liabilities 4.3 0.2 4.0 4.0Net Profit 107.1 117.4 193.7 36.1 Minority Interest 0.0 0.0 0.0 0.0Recurring Net Profit 59.2 75.3 110.4 29.2 Shareholders' Equity 1,249.8 1,757.7 2,479.8 2,335.4

Total Liabilities-Capital 1,435.7 1,950.7 2,860.1 2,709.8Revenue Growth (%) 11.9% -2.2% 33.5% NAEBITDA Growth (%) 28.9% 54.5% 10.6% NA Shares Outstanding (m) 506.2 506.2 547.4 573.1EBIT Growth (%) 130.0% 94.3% 4.4% NA Gross Debt/(Cash) 0.0 0.0 154.5 153.1Net Profit Growth (%) nm 9.6% 65.1% NA Net Debt/(Cash) (199.7) (234.5) (92.0) (66.5)Recurring Net Profit Growth (%) nm 27.1% 46.7% NA Working Capital 161.6 200.4 168.4 185.7Tax Rate (%) (20.4%) 1.4% (23.4%) 4.7%


Malaysia’s other fixed-line telco. Time dotCom (TDC) is a fixed-line operator in Malaysia. Anchoring its business is the 9,000km Cross Peninsular Cable System, a fibre-optic network which runs from Thailand to Singapore through Peninsular Malaysia. TDC also owns data centres and has a 10% stake in the Unity submarine cable connecting Japan and the US.

Impending completion of Digi share distribution. TDC had in Dec 2012, announced the distribution of 137.5m Digi shares to shareholders. Shareholders’ approval was recently obtained, and the proposals are expected to be completed in Jun 2013. Post distribution, TDC would have 137.5m Digi shares remaining.

Regional aspirations. The company has stated its intention to expand regionally, particularly within Asia Pacific. This could be in the form of data centres in our view. The company is open to acquisitions. With TDC presently in a net cash position, there is ample scope for the company to gear up.


13-14 June 2013 Page 145 of 172

TIME dotCom (TDC MK)

Discussion points

1. How does management evaluate target companies for acquisitions?

2. What are the plans for the remaining tranche of Digi shares, and when would TDC accumulate sufficient retained earnings to distribute the remaining Digi shares?

3. When does management see TDC moving past the growth phase?


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p.a. by Apr 2014, doubling its current capacity to 16b pieces p.a., which will see nitrile gloves comprise up to 25% of group sales (from 17% now). We think Top Glove is competing for the top nitrile glove producer spot with Hartalega, which is targeting for a total 15b pieces p.a. capacity by end-2014.

Not unduly concern about oversupply. Top Glove has already secured orders from MNC customers in North America and Europe for its new nitrile capacities coming on stream in the near-term. Going forward, management reckons that demand growth for nitrile (c.+26% YoY) will remain stronger than for latex gloves. Nevertheless, sales of latex gloves will be sustained on firm demand for powdered latex gloves, especially from the emerging markets, given relatively cheap ASPs.

BUY. We have a BUY call on Top Glove in view of its positive near-term earnings growth momentum and long-term global rubber supply surplus outlook which is positive for costs. Additionally, its forward PER of 16x is still below its 5-year historical average of 18x. Our target price of MYR7.10 pegs the stock to 18x 2014 PER.

Top Glove Corporation (TOPG MK) Market Cap (MYR m): 3,955.6 Shares Issued (m): 620.0

Competing For Nitrile Gloves’ Top Spot Current price (MYR): 6.38 Target price (MYR): 7.10 Recommendation: Buy

FYE Aug Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (x) (%)2012A 2,314.4 297.9 202.2 32.7 78.7 16.0 19.5 12.2 2.5 3.1 Net Cash 17.02013F 2,344.9 336.9 220.9 35.7 9.1 17.8 17.9 10.7 2.8 2.9 Net Cash 16.82014F 2,651.5 366.6 236.1 38.1 6.9 19.1 16.7 9.8 3.0 2.7 Net Cash 16.62015F 2,915.8 392.1 257.2 41.6 8.9 20.8 15.4 9.1 3.3 2.4 Net Cash 16.6

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Aug 2012A 2013F 2014F 2015F FY Aug 2012A 2013F 2014F 2015F

Turnover 2,314.4 2,344.9 2,651.5 2,915.8 Fixed Assets 741.2 830.1 906.9 983.1 EBITDA 297.9 336.9 366.6 392.1 Other LT Assets 44.4 44.7 44.9 45.2 Depreciation & Amortisation (69.2) (71.2) (83.2) (83.8) Cash/ST Investments 167.2 189.6 199.5 225.5 Operating Profit 228.7 265.7 283.5 308.3 Other Current Assets 652.3 659.0 725.8 783.5 Associates 0.3 0.3 0.3 0.3 Total Assets 1,605.2 1,723.3 1,877.1 2,037.2Interest (Exp)/Inc 12.2 8.9 9.8 10.7 Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 0.2 0.2 0.2 0.2 Pre-Tax Profit 241.2 274.9 293.5 319.3 Other Current Liabilities 284.5 287.6 318.8 345.7 Tax (34.4) (49.5) (52.8) (57.5) LT Debt 2.8 2.8 2.8 2.8 Minority Interest (4.6) (4.6) (4.6) (4.6) Other LT Liabilities 37.3 37.3 37.3 37.3 Net Profit 202.2 220.9 236.1 257.2 Minority Interest 24.5 29.1 33.6 38.2 Recurring Net Profit 202.2 220.9 236.1 257.2 Shareholders' Equity 1,255.9 1,366.3 1,484.4 1,613.0

Total Liabilities-Capital 1,605.2 1,723.3 1,877.1 2,037.2Turnover Growth % 12.7 1.3 13.1 10.0 EBITDA Growth (%) 52.1 13.1 8.8 6.9 Share Capital (m) 618.6 619.1 619.1 619.1 EBIT Growth (%) 70.4 16.2 6.7 8.8 Net Cash 308.5 330.8 340.7 366.7 Net Profit Growth (%) 78.8 9.2 6.9 8.9 Non-Cash Working Capital 268.9 272.5 308.1 338.8 Recurring Net Profit Growth (%) 78.8 9.2 6.9 8.9 Gross gearing (%) 0.2 0.2 0.2 0.2 Tax Rate % 14.3 18.0 18.0 18.0


An industry giant. Top Glove is the world’s largest latex glove producer, commanding around 25% of global market share. It has 23 factories located in Malaysia, Thailand and China. Armed with a capacity of 40.7b pieces annually, it is 2-4x bigger than its Malaysia-listed peers. 74% of its product is in the latex segment while nitrile, vinyl and surgical account for 17%, 7% and 2% respectively.

Latex price to sustain at low levels. In view of the rising supply (new trees planted in 2005 are ready for tapping), the International Rubber Study Group (IRSG) is projecting global rubber supply to remain in a surplus in 2013-14. In 1H13, latex price exhibited atypical trend by falling during the low yield season of rubber trees. Both latex and NBR prices plunged by 18% YoY and 30% YoY respectively. Though the current input costs still favour the nitrile glove production, we note that the margin gap between nitrile and latex have narrowed due to the fast-rising new supply of nitrile gloves.

Aggressive expansion of nitrile capacity. Top Glove plans to add nitrile glove capacity of around 7.6b pieces


13-14 June 2013 Page 147 of 172

Top Glove Corporation (TOPG MK)

Discussion points

1. What are the global industry trends in latex versus synthetic gloves?

2. The International Rubber Study Group is projecting global rubber supply surplus. What is your long-term outlook for latex cost?

3. Top Glove is expanding the nitrile glove capacity aggressively, along with other players. Do you foresee a severe price competition for the nitrile segment?

4. Top Glove’s product mix is still predominantly on the low-end latex powdered segment but sales to emerging market is only around 30%. When do you expect a strong demand from the emerging market?

5. Would China be a threat to Malaysia-based glove manufacturers over the next few years?


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De-gearing exercise continues. Tropicana targets to cut its net gearing to 0.5x within the next 12 months (from 0.72x as at end-Mar 13; 0.8x as at end-2012) via the disposals of marketable securities, investment properties (incl. Tropicana City Mall & office tower, and Dijaya Plaza), sale of raw land, and completed but unsold stocks. YTD, it has disposed a few parcels of land in the Klang Valley (66-acre in Balakong, 1.8-acre in Kepong, 1.8-acre in Sunway and 3.4-acre in Sungai Besi) and Iskandar Malaysia (4-acre in Senibong) for a combined cash of MYR219m.

Risks and concerns: 1) stiff competition in Iskandar Malaysia, and 2) regulatory changes by the state government of Johor on property sales to foreigners.

Earnings outlook. As at end-Mar 2013, Tropicana has unbilled sales of MYR1.1b, (0.8x of consensus’ revenue forecast for 2013). Consensus expects an 8% decline in FY13 core net profit but earnings are likely to pick up strongly in FY14-15 by 20-21% p.a.. Tropicana currently trades at 12x 2013 consensus PER.

Tropicana Corporation (TRCB MK) Market Cap (MYR m): 1,821.1Shares Issued (m): 863.1

Going Big Current price (MYR): 2.11Target price (MYR): NARecommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2010A 292.3 62.4 43.3 9.5 (49.5) 3.8 42.1 28.6 1.8 2.0 (3.4) 4.8 2011A 375.2 115.4 77.0 16.9 77.5 2.3 23.7 23.3 1.1 1.9 91.7 8.1 2012A 630.1 259.9 169.2 32.1 90.2 4.8 10.8 13.3 2.3 0.9 80.2 8.2 3MFY13 305.3 85.3 43.8 5.5 NA NA NA 39.6 NA 0.8 72.1 2.0


Turnover 292.3 375.2 630.1 305.3 Fixed Assets 403.5 437.2 1030.2 668.9 EBITDA 62.4 115.4 259.9 85.3 Other LT Assets 548.4 1291.0 2512.7 2,785.8 Depreciation & Amortisation (14.6) (16.4) (17.3) (4.3) Cash/ST Investments 240.6 120.1 213.7 282.9 Operating Profit 47.8 99.0 242.6 81.0 Other Current Assets 347.8 622.8 761.8 929.4 Associates (1.0) (6.0) (27.5) (15.4) Total Assets 1,540.3 2,471.1 4,518.4 4,667.1Interest (Exp)/Inc 6.6 6.3 5.5 1.2 Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 2.6 145.7 223.9 240.2 Pre-Tax Profit 53.4 99.2 220.6 66.8 Other Current Liabilities 209.2 245.1 339.3 336.8 Tax (5.7) (14.6) (41.9) (24.5) LT Debt 207.8 845.6 1642.1 1,610.9 Minority Interest (4.4) (7.6) (9.5) 1.5 Other LT Liabilities 161.2 166.0 124.4 174.2 Net Profit 43.3 77.0 169.2 43.8 Minority Interest 60.8 118.0 127.6 130.5 Recurring Net Profit 43.3 77.0 169.2 43.8 Shareholders' Equity 898.8 950.6 2,061.1 2,174.5

Total Liabilities-Capital 1,540.3 2,471.1 4,518.4 4,667.1Turnover Growth % (6.3) 28.4 67.9 NAEBITDA Growth (%) (27.9) 85.0 125.2 NA Net Debt (30.3) 871.3 1,652.3 1,568.1 EBIT Growth (%) (35.9) 107.1 145.0 NA Working Capital 376.7 352.1 412.2 635.4 Net Profit Growth (%) (14.4) 78.1 119.7 NA Gross Gearing % 23.4 104.3 90.5 85.1 Recurring Net Profit Growth (%) (14.4) 78.1 119.7 NATax Rate % 10.7 14.7 19.0 36.7


New name, new game. Tropicana Corp (previously known as Dijaya Corp) is one of the leading high-end developers in Malaysia. It completed an amalgamation exercise in which it acquired all the private property assets of Tan Sri Dato’ Danny Tan (its 60% major shareholder) in Aug 2012. It has a total landbank of ~2,000 acres spread across the Klang Valley, Iskandar Malaysia and Penang with an estd. GDV of MYR70b (including the recently acquired Canal City).

Sales to pick up in 2H13. Tropicana raked in MYR254m in property sales in 3M13, which represents 13% of its MYR2.0b sales target for 2013 (+107% YoY) driven by Tropicana Grande and Tropicana Avenue in Selangor and a project in Danga Bay, Iskandar Malaysia. It is however confident of achieving its sales target supported by MYR3.2b worth of new launches planned for 2H13.

Strategically-located projects to boost sales. Major launches in 2013 include: 1) W KL Hotel & The Residences (MYR744m new launches; MYR1.2b in total GDV), 2) Penang World City (MYR611m; MYR10b in total GDV), 3) Tropicana Danga Bay (MYR431m; MYR7.4b in total GDV).


13-14 June 2013 Page 149 of 172

Tropicana Corporation (TRCB MK)

Discussion points

1. There have been recent additions to Tropicana’s senior management team. Where are their core strength?

2. Property companies, in general, targets to keep investment properties for recurring income. Why the plan divestment of Tropicana’s investment properties?


4. Is Tropicana exploring the government’s privatisation of commercial land in the Klang Valley? How does Tropicana rate its chances in securing these projects?

5. What is your view on the infrastructure works such as the High Speed Rail and MRT Line 2/LRT extension? Where are the next boom areas?


13-14 June 2013 Page 150 of 172

Good start to the year. UEML raked in MYR956m in property sales in 3M13, or 32% of its MYR3.0b sales target for 2013 thanks to strong demand for its Teega and East Ledang projects. It is confident of achieving its sales target, which is supported by approximately MYR4b GDV in new property launches including CS1 (mixed development) and D’Estuary (residential) in Puteri Harbour. Unbilled sales stood at MYR3.0b as at end-Mar 13 (representing 1.4x our FY13 revenue forecasts).

Risks and concerns: 1) rising competition in IM, 2) oversupply situation in Mont Kiara especially for high-rise condominium projects, and 3) stricter rules to be imposed by the state government on Johor property market.

We advocate a BUY on UEML with MYR3.88 TP based on 0.8x P/RNAV (0.1x above its 0.7x peak valuation). The premium reflects the re-rating of IM related stocks. Landbanks at IM should continue to re-price on rising foreign investments and job opportunities, as well as better connectivity via the proposed JB-S’pore Rapid Transit System (RTS).

UEM Land Bhd (ULHB MK) Market Cap (MYR m): 14,789.1Shares Issued (m): 4,337.0

Biggest Winner In Iskandar Malaysia Current price (MYR): 3.41Target price (MYR): 3.88Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 1,939.7 493.7 448.4 10.3 60.1 3.0 33.0 32.0 0.9 2.8 20.0 8.4 2013F 2,758.1 697.9 520.1 12.0 16.0 3.8 28.4 23.5 1.1 3.0 29.6 9.4 2014F 2,934.5 690.8 533.8 12.3 2.7 3.9 27.7 24.0 1.2 2.8 29.8 9.02015F 3,216.2 783.9 642.0 14.8 20.3 4.7 23.0 21.1 1.4 2.6 27.5 10.1


Revenue 1,939.7 2,758.1 2,934.5 3,216.2 Fixed Assets 184.1 349.3 442.8 536.3EBITDA 493.7 697.9 690.8 783.9 Other LT Assets 4,818.4 4,602.8 4,380.8 4,158.9Depreciation & Amortisation 6.5 6.5 6.5 6.5 Cash/ST Investments 1,205.0 624.8 504.1 520.1Operating Profit 487.2 691.3 684.3 777.4 Other Current Assets 2,879.0 3,674.3 4,194.7 4,383.3Associates 89.3 51.7 81.0 132.8 Total Assets 9,086.5 9,251.2 9,522.4 9,598.6Interest (Exp)/Inc (41.4) (96.6) (99.0) (98.7)Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 125.0 125.0 125.0 125.0Pre-Tax Profit 535.1 646.4 666.3 811.5 Other Current Liabilities 895.1 825.2 733.4 373.0Tax (87.3) (126.1) (129.9) (158.2) LT Debt 1,999.4 1,999.4 1,999.4 1,999.4Minority Interest 0.5 (0.3) (2.5) (11.3) Other LT Liabilities 250.0 250.0 250.0 250.0Net Profit 448.4 520.1 533.8 642.0 Minority Interest 501.1 501.1 501.1 501.1Recurring Net Profit 448.4 520.1 533.8 642.0 Shareholders' Equity 5,316.0 5,550.5 5,913.5 6,350.1

Total Liabilities-Capital 9,086.5 9,251.2 9,522.4 9,598.6Revenue Growth % 13.9 42.2 6.4 9.6 EBITDA Growth (%) 34.0 41.4 (1.0) 13.5 Share Capital (m) 4,327.1 4,337.0 4,337.0 4,337.0EBIT Growth (%) 33.8 41.9 (1.0) 13.6 Net Cash/(Debt) (1,064.3) (1,644.5) (1,765.2) (1,749.2)Net Profit Growth (%) 48.6 16.0 2.7 20.3 Working Capital 3,063.9 3,348.9 3,840.4 4,405.4Recurring Net Profit Growth (%) 48.6 16.0 2.7 20.3 Net Gearing % 20.0 29.6 29.8 27.5Tax Rate % 16.3 19.5 19.5 19.5


Iskandar Malaysia (IM) is heating up. Rising investments and oil & gas activities will serve as re-rating catalysts for property prices in IM over the longer term. UEML, as the largest landowner in IM, is the prime beneficiary of the IM boom. Besides IM, UEML’s property development projects are also in the Klang Valley. Combined, UEML’s property activity offers a GDV of MYR81b as at end-Apr 2013.

Rising foreign investments. Recent foreign investments into IM such as those by Ascendas, CapitaLand and Country Garden have raised IM’s profile at the international level, reflecting its attractiveness as an investment destination. IM’s property prices would be further boosted by a better transportation system, we believe. With a wide range of properties on offer, UEML is set to benefit from the booming IM.

UEML, a likely frontrunner for government development lands, especially the RRIM 3,000-acres land in Sg Buloh. It has also submitted bids for other government land, including the 19-acres Unilever land in Bangsar. Securing one or several of these lands would boost UEML’s earnings and valuation.


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UEM Land Bhd (ULHB MK)

Discussion points

1. We understand that UEM Land is exploring the government land developments in the Klang Valley. How does UEM Land rate its chances of securing a role or two? When do you expect these developments to open for tender?

2. What sets you apart from the other Malaysian property companies in Iskandar Malaysia, apart from being the largest land owner?

3. What is your growth strategy beyond the Iskandar Malaysia development?



13-14 June 2013 Page 152 of 172

3-year net profit CAGR of 6%. UMW’s automotive division has consistently been the group’s main profit centre, accounting for 89% of its pretax profit in FY12. While 38%-owned Perodua will benefit from the Yen weakness, which translates into cheaper component costs, the impact is neutral for Toyota for the CKD packs are 100% transacted in USD. Vehicle sales growth is unlikely to see traction until new launches/ ace-lifts debut in 4Q13.

Maintain HOLD. Currently trading at 15x FY14 EPS, we believe that UMW is fairly valued but well supported by a 3% net yield on a 50% net profit payout (FY12: 58%, FY13: 74%). UMW has a minimum 50% DPR policy, which it has consistently surpassed over the past few years owing to the strong FCFs generated.

UMW Holdings (UMWH MK) Market Cap (MYR m): 16,917.0 Shares Issued (m): 1,168.3

Auto Driven Current price (MYR): 14.48 Target price (MYR): 14.80 Recommendation: Hold

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) (MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2012A 15,798.8 2,165.8 951.1 81.4 13.5 50.0 16.8 6.9 3.5 3.6 1.3 10.72013F 15,718.0 2,255.2 1,017.2 87.1 6.9 43.5 16.6 6.7 3.0 3.3 1.3 19.72014F 17,027.8 2,569.7 1,129.0 96.6 11.0 48.3 15.0 6.0 3.3 2.9 1.1 18.02015F 17,975.9 2,760.5 1,210.0 103.6 7.2 51.8 14.0 5.9 3.6 2.7 1.0 18.1


Revenue 15,798.8 15,718.0 17,027.8 17,975.9 Fixed Assets 3,195.6 3,955.6 4,560.0 4,704.0 EBITDA 2,165.8 2,255.2 2,569.7 2,760.5 Other LT Assets 2,194.5 2,287.4 2,378.8 2,478.6 Depreciation &Amortisation (285.5) (319.7) (395.7) (456.2) Cash/ST Investments 2,495.3 2,777.4 3,200.6 4,171.0 Operating Profit (EBIT) 1,880.3 1,935.5 2,173.9 2,304.3 Other Current Assets 3,906.9 3,821.0 4,055.1 4,231.1 Interest Inc/(Exp) (24.4) (16.4) (6.8) 7.6 Total Assets 11,792.4 12,841.2 14,194.4 15,584.7Associates 164.4 173.0 171.6 180.0 One-offs 0.0 0.0 0.0 0.0 ST Debt 1,155.0 1,155.0 1,155.0 1,155.0 Pre-Tax Profit 2,020.3 2,092.1 2,338.7 2,491.9 Other Current Liabilities 2,524.3 2,491.7 2,632.0 2,732.2 Tax (431.6) (502.1) (561.3) (596.8) LT Debt 1,726.4 1,726.4 1,726.4 1,726.4 Minority Interest (583.8) (572.8) (648.4) (685.1) Other LT Liabilities 109.2 109.2 109.2 109.2 Net Profit 1,004.9 1,017.2 1,129.0 1,210.0 Minority Interest 1,426.8 1,999.6 2,648.0 3,333.1 Recurring Net Profit 951.1 1,017.2 1,129.0 1,210.0 Shareholders' Equity 4,850.8 5,359.3 5,923.9 6,528.9

Total Liabilities-Capital 11,792.4 12,841.2 14,194.4 15,584.7Revenue Growth (%) 16.7 (0.5) 8.3 5.6 EBITDA Growth (%) 39.3 4.1 13.9 7.4 Share Capital (m) 1,168.3 1,168.3 1,168.3 1,168.3 EBIT Growth (%) 49.6 2.9 12.3 6.0 Gross Debt 2,881.4 2,881.4 2,881.4 2,881.4 Net Profit Growth (%) 106.8 1.2 11.0 7.2 Net Debt/(Cash) 386.1 104.0 (319.2) (1,289.6)Recurring Net Profit Growth (%) 13.7 6.9 11.0 7.2 Working Capital 2,723.0 2,951.6 3,468.7 4,514.9 Effective Tax Rate % 21.4 24.0 24.0 24.0


UMW has four key divisions: automotive, equipment, manufacturing & engineering (M&E), and oil & gas.

Auto: It holds the Toyota, Lexus and Perodua (via 38%-owned Perodua) franchises, which are the best selling national and non-national marques in Malaysia, and collectively control 47% of the domestic market share.

Equipment: Dominant in the domestic material handling equipment business. Its Toyota forklift has a 50% market share. It also holds the Komatsu franchise in Malaysia, Singapore, Papua New Guinea and Myanmar.

M&E: The division is involved in the lubricant business, holding the marketing and distribution rights for Repsol and Pennzoil products. It also the supplier of KYB shock absorbers and power steering pumps and systems.

O&G: The O&G business focuses on onshore and offshore drilling operations, pipe manufacturing, oilfield services and trading services. The drilling operations are profitable, underpinned largely by one semi-submersible and three jack-up rig charters. The pipe manufacturing operations in China and India are however loss-making.


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UMW Holdings (UMWH MK)

Discussion points

1. In what ways does management plan to retain its top position in the domestic automotive market?

2. What do you expect from the upcoming revision of the National Automotive Policy?

3. What does UMW plan to do with its minority stakes in countries such as China (Shanghai BSW, WSP) and India (OCTL, USTPL), etc?

4. With domestic TIV growing at a steady pace, is UMW looking to venture into the oversea market aggressively, possibly via its 38%-owned Perodua?


13-14 June 2013 Page 154 of 172

Stronger sales in 2H13. New sales are expected to pick up from 3Q13 onwards after a slower 2Q13 owing to the lack of new launches before the 13th general election. New launches planned include the Vertical II office suites (MYR350m), Desa III bungalow project (MYR350m) and South View Residence at Bangsar South (MYR600m).

Net cash position. UOAD has MYR1.1b of unbilled sales as at end-Mar 2013 (0.96x consensus’ FY13 revenue forecasts), mainly from Desa Green (30%) and Le Yuan (23%). Its net cash position of MYR369m (29.1sen) allows UOAD to develop and invest in investment properties for recurring income, and replenishment of landbank.

Decent valuation at 10x 2013 PER. Consensus forecasts core net profit growth of 62% in FY13 and 12-17% for FY14-15. It has a 30-50% dividend payout policy. UOAD now trades at 10x 2013 PER. Potential upside surprise could come from sale of existing inventories which totaled MYR272m at end-Mar 2013. These include completed properties in The Horizon, Binjai 8, Menara UOA Bangsar, Plaza Menjalara and Kepong Business Park.

UOA Development (UOAD MK) Market Cap (MYR m): 3,304.1Shares Issued (m): 1,270.8

Ample War Chest For Landbanking Current price (MYR): 2.60Target price (MYR): NARecommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2009A 427.8 241.6 146.4 11.5 13.2 - 22.6 13.5 - 7.9 Net Cash 34.82010A 375.2 183.1 179.7 14.1 22.7 - 18.4 18.7 - 4.7 16.9 39.82011A 613.6 315.7 179.7 14.1 0.0 10.0 18.4 10.1 3.8 1.7 Net Cash 21.32012A 799.2 381.8 205.1 16.1 14.1 12.0 16.1 7.7 461.5 1.5 Net Cash 14.4

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Dec 2009A 2010A 2011A 2012A FY Dec 2009A 2010A 2011A 2012A

Turnover 427.8 375.2 613.6 799.2 Fixed Assets 51.4 50.9 56.6 62.0 EBITDA 241.6 183.1 315.7 381.8 Other LT Assets 173.3 487.4 788.4 655.7 Depreciation & Amortisation 0.0 0.0 0.0 0.0 Cash/ST Investments 79.3 38.2 121.8 263.5 Operating Profit 238.2 343.3 280.5 321.4 Other Current Assets 512.1 732.2 1,173.9 1,604.0 Associates 0.0 0.0 0.2 0.7 Total Assets 816.1 1,308.7 2,140.8 2,585.3Interest (Exp)/Inc (1.7) (2.8) (4.0) (4.2) Exceptional Items 0.0 0.0 205.1 96.3 ST Debt 29.7 151.8 8.6 13.9 Pre-Tax Profit 236.5 340.6 481.8 414.2 Other Current Liabilities 291.2 384.3 200.6 319.4 Tax (58.9) (54.7) (78.9) (88.6) LT Debt 15.2 4.6 7.9 17.8 Minority Interest (31.2) (7.1) (18.1) (24.3) Other LT Liabilities 32.3 47.4 78.4 85.2 Net Profit 146.4 278.7 384.8 301.3 Minority Interest 27.7 21.1 39.3 58.4 Recurring Net Profit 146.4 278.7 179.7 205.1 Shareholders' Equity 420.1 699.5 1,805.9 2,090.7

Total Liabilities-Capital 816.1 1,308.7 2,140.8 2,585.3Turnover Growth (%) (13.2) (12.3) 63.5 30.2 EBITDA Growth (%) 14.8 (24.2) 72.5 20.9 Net Debt (34.5) 118.2 (105.4) (231.8)EBIT Growth (%) 8.1 44.1 (18.3) 14.6 Working Capital 270.5 234.2 1,086.5 1,534.3 Net Profit Growth (%) 13.2 90.4 38.1 (21.7) Gross Gearing % 10.7 22.4 0.9 1.5 Recurring Net Profit Growth (%) 13.2 90.4 (35.5) 14.1 Tax Rate (%) 24.9 16.1 16.4 21.4


A strong Klang Valley developer. UOAD is one of the leading property developers in Malaysia, with focus on the Klang Valley. It is 67.9% owned by UOA Ltd which is jointly listed in Australia (1988) and Singapore (2008). Its parent company, a developer and construction player, has more than 21 years of operating track record. More than 65% of its remaining GDV of MYR10.3b is derived from its Bangsar South project.

Relatively high profit margin. One notable feature of UOAD is its proven “fast turnaround” property development strategy which enables it to crystallize land value and generate strong cash flows within a short period, while lowering upfront costs. Also, its in-house design/ construction capabilities allow timely delivery and better-than-average profit margin (~40% pretax margin).

A good start to 2013. UOAD has raked in an astounding MYR929m in new property sales in 3M13, equivalent to 54% of its MYR1.7b sales achieved in 2012 thanks to the strong demand for its Desa Green and Horizon projects. It is confident of at least matching its 2012 sales, supported by MYR964m of new launches planned in 2H13.


13-14 June 2013 Page 155 of 172

UOA Development (UOAD MK)

Discussion points


2. What is your view on the present robust demand in Iskandar Malaysia? Will UOA Development consider joining the foray?

3. Is UOA Development keen on exploring the government’s privatisation of commercial land in the Klang Valley? And if yes, how does UOA Development rate its chances of securing a role or two?

4. Do you think the upcoming and ongoing infrastructure works such as High Speed Rail and MRT Line 2/LRT extension will lead to another property boom in the Klang Valley?

5. In your view, where is the next property boom area in Malaysia?


13-14 June 2013 Page 156 of 172

development FY14 pretax profit to double that of FY12’s. Meanwhile, WCT has a few new Première hotels and shopping malls in its expansion pipeline that would strengthen its property investment earnings. WCT expects total operating profit contribution from property development and investment to increase to 55% in 2016 from 36% in 2012.

Positive earnings growth momentum. We project 7% growth in FY13 core net profit on stellar property earnings contribution. FY14 earnings growth would receive further impetus from an expected robust orderbook replenishment and stronger property sales especially from Iskandar. We also expect Gateway Mall at KLIA2 to kick in by 2014.

Re-rating on positive news flow. As progress on the major government land development projects in the Klang Valley including Tun Razak Exchange (under 1MDB) and and Sg Buloh RRI (under Kwasa) accelerates, WCT could be a major beneficiary with its extensive fleet of heavy equipments for earthworks. We reiterate our BUY call with a MYR3.00 TP based on 14x core mid-FY14 PER.

WCT (WCT MK) Market Cap (MYR m): 2,872.4 Shares Issued (m): 1,092.2

Solidifying Earnings Base Current price (MYR): 2.63 Target price (MYR): 3.00 Recommendation: Buy

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Gearing ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) (%) (%)2012A 1,560.4 246.3 364.6 38.6 114.7 6.5 6.8 18.5 2.5 1.4 40.9 20.12013F 1,885.4 298.9 182.3 18.2 (52.7) 6.5 14.4 15.2 2.5 1.3 35.0 8.52014F 1,614.3 333.8 208.2 19.8 8.5 6.5 13.3 13.7 2.5 1.2 27.8 9.02015F 1,928.7 369.4 234.3 22.3 12.5 6.5 11.8 12.3 2.5 1.1 19.6 9.4

INCOME STATEMENT BALANCE SHEETFYE Dec (MYR m) 2012A 2013A 2014F 2015F FYE Dec (MYR m) 2012A 2013A 2014F 2015F Turnover 1,560.4 1,885.4 1,614.3 1,928.7 Fixed Assets 276.2 299.4 322.2 344.7 EBITDA 246.3 298.9 333.8 369.4 Other LT Assets 2,547.8 2,904.6 2,923.3 2,943.9 Depreciation & Amortisation (6.5) (6.8) (7.2) (7.5) Cash/ST Investments 1,077.7 764.6 676.5 631.9 Operating Profit 239.7 292.1 326.6 361.8 Other Current Assets 1,430.4 1,638.9 1,442.7 1,666.1 Associates 16.8 16.9 17.7 18.6 Total Assets 5,332.2 5,607.5 5,364.7 5,586.5Interest (Exp)/Inc (48.8) (46.0) (41.3) (37.7) Exceptional Items 211.0 0.0 0.0 0.0 ST Debt 930.7 730.7 630.7 530.7 Pre-Tax Profit 420.7 263.0 303.0 342.7 Other Current Liabilities 1,046.6 1,269.5 1,050.8 1,267.0 Tax (69.2) (69.8) (75.8) (85.7) LT Debt 890.1 790.1 690.1 590.1 Minority Interest 13.2 (10.8) (19.1) (22.7) Other LT Liabilities 591.6 591.6 591.6 591.6 Net Profit 364.6 182.3 208.2 234.3 Minority Interest 57.0 67.8 86.9 109.6 Recurring Net Profit 167.1 208.6 208.2 234.3 Shareholders' Equity 1,816.2 2,157.8 2,314.6 2,497.5

Total Liabilities-Capital 5,332.2 5,607.5 5,364.7 5,586.5Revenue Growth % 1.4 20.8 (14.4) 19.5 EBITDA Growth (%) 8.4 21.4 11.7 10.6 Share Capital (m) 946.5 1,052.0 1,052.0 1,052.0 EBIT Growth (%) 10.0 21.8 11.8 10.8 Net Debt 743.1 756.2 644.3 488.9 Net Profit Growth (%) 119.6 (50.0) 14.2 12.5 Working Capital 399.6 385.2 407.7 414.9 Recurring Net Profit Growth (%) 14.0 24.8 (0.2) 12.5 Gross Gearing (%) 100.3 70.5 57.1 44.9 Tax Rate % 33.5 26.5 25.0 25.0 Sources: Company, Maybank KE

Growing diversification. WCT’s far-sighted strategies to fortify its non-cyclical income base via growing its property development landbank and expanding its property investment portfolio will bode well for its long term earnings visibility. Medium-term earnings growth would still be driven by its construction unit, underpinned by a strong orderbook, and property development, from strong sales.

Job win momentum to persist. WCT would leverage on its substantial pipeline of contract opportunities to grow its orderbook. Its main focus are on: (i) tender jobs, (ii) Letter of Intent jobs, and (iii) local concessions and public-private partnership projects. A major contract could be close to being secured. Construction job wins YTD totaled MYR511m, lifting WCT’s outstanding order book to MYR3.09b (external jobs) as at end-Mar 2013.

Riding on the Iskandar boom. Bandar Bukit Tinggi, WCT’s flagship township in Klang, would continue to embrace its property development earnings growth. Further bolstered by accelerating billings at its Iskandar projects, 1Medini and Medini business district, we expect property


13-14 June 2013 Page 157 of 172

WCT (WCT MK)

Discussion points

1. What are WCT’s competitive advantages as a construction player that could lead WCT to outbid its competitors?

2. Which are the construction projects that WCT are vying for and what is WCT’s target job wins in FY13?

3. What drives WCT to continuously pursue construction jobs in the Middle East?

4. How will WCT Land benefit from the property boom in Iskandar?

5. What are WCT’s medium to longer term plans for its shopping malls and hotel?

6. When do you expect Gateway Mall at KLIA2 to be opened? How is the construction progress , occupancy rate and rental rate?

7. Are there plans to spin off the property business via a separate listing, like what IOI Corp is doing?


13-14 June 2013 Page 158 of 172

Intensifying competitive landscape for cement. The domestic cement sector has seen increasing pricing pressure since Nov 2012. This is largely due to the recent commercialization of Hume’s new 1.5mt plant, which added 5% to Peninsula Malaysia’s total cement capacity. Both Lafarge and YTL (the top two cement players) had recently experienced substantial QoQ decline in quarterly cement profits.

Consensus is expecting flat earnings in FY13. Consensus is projecting net profit of MYR1,173m in FY13. This is similar to FY12 levels (MYR1,181m). YTL Corp is on course to meet consensus expectations, with 9MFY13 net profit of MYR944m accounting for 80% of full year forecast.

YTL Corporation (YTL MK) Market Cap (MYR m): 17,414.2 Shares Issued (m): 10,365.6

Global Footprint Current price (MYR): 1.68 Target price (MYR): NA

Recommendation: Not Rated

FYE Dec Revenue EBITDA Net Profit Basic EPS EPS gwth DPS PER EV/EBITDA Div yield P/BV Net Debt/ ROE (MYR m) MYR m) (MYR m) (sen) (%) (sen) (x) (x) (%) (x) EBITDA (x) (%)2010A 16,392.3 3,767.6 844.2 9.5 (12.1) 1.5 17.7 9.5 0.9 1.6 4.4 8.82011A 18,211.8 3,921.2 1,034.6 11.5 21.2 2.0 14.6 9.1 1.2 1.5 3.9 10.32012A 20,049.2 4,310.6 1,181.1 12.3 6.2 2.0 13.7 8.3 1.2 1.3 3.6 10.59MFY13 14.957.5 3,211.9 1,371.4 9.1 NA 2.5 13.8 10.9 1.5 1.4 4.9 7.3

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)FY Jun 2010A 2011A 2012A 9MFY13 FY Jun 2010A 2011A 2012A 9MFY13

Revenue 16,392.3 18,211.8 20,049.2 14,947.5 Fixed Assets 21,130.1 20,872.7 22,203.6 21,601.9EBITDA 3,767.6 3,921.2 4,310.6 3,211.9 Other LT Assets 7,885.9 8,198.1 8,635.5 10,270.2Depr & Amort 904.1 1,145.1 1,348.4 1,071.6 Cash/ST Investments 11,679.7 12,794.4 13,925.3 14,692.0Operating Profit (EBIT) 2,863.4 2,776.0 2,962.1 2,140.3 Other Current Assets 5,364.4 6,401.0 6,858.9 6,656.7Net Interest (Exp)/Inc (882.6) (856.5) (797.0) (655.6) Total Assets 46,060.0 48,266.2 51,623.3 53,220.8Assoc & JV 302.8 404.0 379.9 328.4One-offs 0.0 0.0 0.0 0.0 ST Debt 5,315.9 10,440.5 11,618.8 4,428.1Pretax Profit 2,278.4 2,351.9 2,450.2 1,747.9 Other Current Liabilities 3,305.9 4,157.6 4,314.0 4,009.5Tax 659.3 516.0 476.1 376.5 LT Debt 22,791.8 17,810.6 17,864.6 26,044.5Minority Interest 774.9 801.4 793.0 427.2 Other LT Liabilities 3,314.8 3,320.5 3,446.6 3,364.9Net Profit 844.2 1,034.6 1,181.1 1,371.4 Minority Interest 1,701.5 2,171.1 2,200.6 2,485.7Recurring Net Profit 844.2 1,034.6 1,181.1 1,371.4 Shareholders' Equity 9,630.1 10,365.9 12,178.7 12,888.0

Total Liabilities-Capital 46,060.0 48,266.2 51,623.3 53,220.8Revenue Growth (%) 88.5 11.1 10.1 NAEBITDA Growth (%) 22.0 4.1 9.9 NA Shares Outstanding (m) 10,365.6 10,365.6 10,365.6 10,365.6EBIT Growth (%) 22.0 (3.1) 6.7 NA Gross Debt/(Cash) 28,107.7 28,251.2 29,483.4 30,472.6Net Profit Growth (%) 1.2 22.6 14.2 NA Net Debt/(Cash) 16,428.1 15,456.7 15,558.1 15,780.6Recurring Net Profit Growth (%) 1.2 22.6 14.2 NA Working Capital 8,422.2 4,597.3 4,851.4 1,613.1.Tax Rate (%) 28.9 21.9 19.4 21.5


A diversified conglomerate. YTL Corp is a diversified conglomerate with interests in 1) utilities, 2) cement, 3) property and hotels, and 4) technology. The company’s utilities assets extend globally to countries such as UK (Wessex Water) and Singapore (PowerSeraya). YTL Cement is the second largest player in Malaysia.

Open to taking subsidiaries private. Management has stated in the past that it is open to privatizing its subsidiaries if they are undervalued. It completed the privatization of YTL Cement back in 2012 (funded by the issuance of new YTL Corp shares). There are currently five listed entities under the YTL umbrella, the largest being 51%-owned YTL Power.

YTL Power aggressively buying back shares. YTL Power bought back 91.4m shares from Mar-May 2013, at an average cost of MYR1.49/YTLP share. This brings the total treasury shares to 148.2m shares, representing 2.0% of total shares in issue. In our view, management could potentially cancel these shares in the future, hence enhancing value for YTL Corp shareholders.


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YTL Corporation (YTL MK)

Discussion points

1. What are management’s latest views on the privatization of its entities?

2. How does management intend to deal with the increasing competitive landscape for power generation in Singapore?

3. Does management expect competition to ease in cement?

4. How does the LTE 2,600MHz spectrum fit into the overall scheme of things?

5. Some updates on the KL-Singapore high speed rail.


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Malaysia Research Universe


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Equi

ty R

esea

rch

Stoc

k U

nive

rse

Ti

cker

Co

mpa

ny

FYE

Price

Ma

rket

Targ

etRe

com

Core

Net

Pro

fitEP

SCA

GRPE

RPE

RPE

RRO

EDi

v Yld

PB

V Pr

ice C

hg

3-

Jun

Cap

Price

CY12

ACY

13F

CY14

FCY

12A

CY13

FCY

14F

12-1

4CY

12A

CY13

FCY

14F

CY13

FCY

13F

CY12

A YT

D

(RM

m)

(RM)

(RM

m)

(RM

m)

(RM

m)

(sen

) (s

en)

(sen

)(%

)(x

)(x

)(x

)(%

)(%

) (x

) (%

) Au

tosMB

M MK

MB

M Re

sour

ces

*12

4.0

0 1,5

62.5

4.85

Buy

131.2

142.7

172.1

33.6

36.5

44.1

14.6

11.9

11.0

9.19.8

1.8

1.2

24.6

TC

M MK

Ta

n Cho

ng

*12

6.7

5 4,4

06.5

8.05

Buy

158.0

328.6

404.4

24.2

50.3

62.0

60.1

27.9

13.4

10.9

14.9

1.3

2.3

45. 8

UMW

H MK

UM

W H

ldgs

*12

14

.48

16,91

6.914

.80Ho

ld95

1.11,0

17.2

1,129

.081

.4 87

.196

.68.9

17.8

16.6

15.0

19.0

3.0

3.6

21.3

Bank

ingMA

Y MK

Ma

yban

k6

10.22

88

,717.8

NRNR

6,055

.46,6

95.3

7,399

.073

.2 75

.679

.64.3

14.0

13.5

12.8

14.3

5.8

2.0

11.1

AM

M MK

AM

MB H

olding

s3

7.37

22,21

4.58.3

0Bu

y1,5

97.3

1,764

.81,9

49.8

53.4

58.7

64.7

10.0

13.8

12.6

11.4

13.7

3.2

1.9

8.4

BIMB

MK

BIMB

Hold

ings

*12

3.9

9 4,2

56.5

4.20

Buy

280.8

317.0

356.0

26.3

29.7

33.4

12.6

15.2

13.4

11.9

14.2

3.3

2.1

42.0

CI

MB M

K CI

MB

12

8.26

62,90

6.98.7

0Ho

ld4,3

44.8

4,748

.05,2

89.1

58.5

63.9

71.2

10.3

14.1

12.9

11.6

15.1

3.1

2.2

8.3

HLBK

MK

Hong

Leon

g Ban

k6

13.82

24

,859.5

15.80

Hold

1,830

.01,9

49.9

2,070

.010

5.6

108.4

115.1

4.413

.112

.712

.014

.22.4

2.0

(6

.5)

HLFG

MK

HL F

inanc

ial

6 14

.86

15,49

5.016

.40Bu

y1,2

19.7

1,306

.21,3

73.0

116.5

12

4.113

0.45.8

12.8

12.0

11.4

12.4

1.9

1.7

12.6

PB

K MK

Pu

blic B

ank

12

16.94

59

,326.0

17.60

Hold

3,869

.34,0

33.6

4,375

.411

0.5

115.2

124.9

6.315

.314

.713

.621

.03.1

3.3

4.

1 RH

BC M

K RH

B Ca

pital

12

8.67

21,62

4.89.8

0Bu

y1,7

88.6

1,895

.02,1

40.0

82.1

79.0

85.8

2.210

.611

.010

.112

.12.8

1.4

12

. 7

Build

ing M

ateria

ls

AJR

MK

Ann J

oo

*12

1.4

3 71

5.92.1

0Bu

y-1

9.165

.075

.2-3

.7 12

.414

.4n.a

.n.a

.11

.59.9

5.90.8

0.7

8.

3 KS

B MK

Ki

nstee

l *

12

0.37

385.4

0.58

Buy

-12.6

27.3

41.0

-9.5

2.84.1

n.a.

n.a.

13.2

9.04.9

0.0

0.6

23.3

LM

C MK

La

farge

*

12

10.66

9,0

57.8

9.60

Hold

330.5

373.1

389.9

38.9

43.9

45.9

8.627

.424

.323

.212

.04.1

2.9

10

. 8

Cons

tructi

on / I

nfra

EV

SD M

K Ev

erse

ndai

*12

1.4

5 1,1

22.3

1.70

Buy

115.4

118.3

129.4

14.9

15.3

16.7

5.99.7

9.58.7

13.6

2.8

0.8

9.0

GAM

MK

Gamu

da

*7

4.85

10,82

3.25.3

0Bu

y52

4.155

2.366

0.325

.2 26

.531

.712

.119

.218

.315

.312

.52.7

2.4

33

. 2HS

L MK

HSL

*12

1.9

8 1,0

97.2

2.30

Buy

90.7

98.6

106.3

16.4

17.7

19.1

7.912

.111

.210

.417

.62.0

2.3

32

.0

IJM M

K IJM

Cor

p *

3 5.7

0 7,9

35.2

6.60

Buy

459.9

509.5

574.2

33.4

36.9

41.6

11.7

17.1

15.5

13.7

8.52.1

1.4

14

.5

LTK

MK

Litra

k *

3 4.3

8 2,2

43.3

4.30

Hold

118.1

132.9

142.3

23.3

26.2

28.1

9.818

.816

.715

.628

.83.9

5.4

3.

1 W

CT M

K W

CT

*12

2.6

3 2,8

72.4

3.00

Buy

167.1

208.6

208.2

36.9

18.2

19.4

-27.5

7.114

.513

.69.7

2.5

1.4

11.9

KI

CB M

K Ki

mlun

Cor

p *

12

2.19

526.6

2.50

Buy

49.4

50.3

59.4

20.7

20.9

24.7

9.210

.610

.58.9

16.0

2.2

1.9

57.6

Cons

umer

AEON

MK

AE

ON C

o *

12

17.60

6,1

77.6

15.70

Hold

212.8

245.3

261.7

60.6

69.9

74.6

11.0

29.0

25.2

23.6

15.0

1.2

4.2

24.6

RO

TH M

K

BAT

(M)

12

64.00

18

,273.9

52.00

Sell

797.7

813.4

824.1

279.4

28

4.928

8.61.6

22.9

22.5

22.2

143.7

4.0

42.4

3.2

PNL M

K

Padib

eras

*

12

3.63

1,707

.63.4

0Ho

ld11

0.616

5.017

9.523

.5 35

.138

.227

.515

.410

.39.5

14.3

6.7

1.5

11.3

CA

B MK

Ca

rlsbe

rg B

rewe

ry 12

16

.58

5,067

.618

.00Bu

y19

1.721

2.323

5.162

.7 69

.476

.910

.726

.423

.921

.667

.84.1

18

.4 32

.4

GUIN

MK

Guinn

ess

6 21

.28

6,428

.619

.50Ho

ld21

6.823

9.126

5.371

.8 79

.287

.810

.629

.626

.924

.261

.13.5

8.5

28

. 2RJ

R MK

JT

I 12

6.8

5 1,7

91.5

7.80

Buy

113.5

115.3

125.3

44.5

44.1

47.9

3.715

.415

.514

.332

.83.2

5.1

4.

6 PA

D MK

Pa

dini H

olding

s *

6 2.1

1 1,3

88.2

1.80

Sell

90.9

92.3

103.2

13.8

14.0

15.7

6.715

.315

.113

.423

.44.0

3.9

14

.1

NESZ

MK

Ne

stle

*12

66

.00

15,47

7.058

.60Ho

ld50

7.454

5.158

2.521

5.5

232.4

248.4

7.430

.628

.426

.678

.63.3

20

.6 5.

0 QL

G MK

QL

Res

ource

s *

3 3.1

8 2,6

45.8

4.00

Buy

131.7

154.0

180.5

16.1

18.6

21.7

16.2

19.8

17.1

14.6

15.5

1.6

3.0

2.6

MSM

MK

MSM

Malay

sia

Hldi

*

12

5.09

3,578

.24.4

0Ho

ld20

1.422

1.523

7.928

.7 31

.533

.88.5

17.7

16.2

15.1

12.1

4.0

3.3

7.2

IHH

MK

IHH

*

12

3.95

32,10

3.43.7

0Ho

ld47

0.466

4.079

7.35.8

8.2

9.830

.068

.148

.240

.33.7

0.0

1.9

17.2

* S

yaria

h co

mpl

iant

; Sou

rce:

May

bank

KE

13-

14 J

une

2013

P

age

162

of 1

72

May

bank

KE

Equi

ty R

esea

rch

Stoc

k U

nive

rse

(con

tinue

d)

Tick

er

Com

pany

FY

E Pr

ice

Mark

etTa

rget

Reco

mCo

re N

et P

rofit

EPS

CAGR

PER

PER

PER

ROE

Div Y

ld

PBV

Price

Chg

3-Ju

n Ca

pPr

iceCY

12A

CY13

FCY

14F

CY12

A CY

13F

CY14

F12

-14

CY12

ACY

13F

CY14

FCY

13F

CY13

F CY

12A

YTD

(R

M m

)(R

M)(R

M m

)(R

M m

)(R

M m

)(s

en)

(sen

)(s

en)

(%)

(x)

(x)

(x)

(%)

(%)

(x)

(%)

Gami

ngMP

U MK

Mu

lti-Pu

rpos

e 12

3.5

0 4,9

95.6

3.93

Buy

300.5

380.3

451.7

21.1

26.6

31.6

22.4

16.6

13.2

11.1

10.4

3.5

1.5

0.3

Manu

factur

ingHA

RT M

K Ha

rtaleg

a Hldg

s*

3 5.5

4 4,0

66.2

5.40

Hold

226.4

258.1

282.6

31.0

32.9

35.3

6.717

.916

.815

.728

.82.2

5.5

16

.6

KRI M

K Ko

ssan

Rub

ber

*12

4.3

1 1,3

73.3

4.70

Buy

104.5

131.7

149.0

32.7

41.2

46.6

19.4

13.2

10.5

9.219

.03.8

2.2

28

.3

TOPG

MK

Top G

love

*8

6.38

3,955

.36.6

0Bu

y20

8.222

3.823

6.833

.7 36

.238

.36.6

19.0

17.6

16.7

15.9

2.8

3.1

13.3

Media

ASTR

O MK

As

tro M

alays

ia 1

3.15

16,37

4.63.4

0Bu

y44

3.843

5.561

3.88.3

8.4

11.8

19.0

37.8

37.6

26.7

71.2

1.9

31.8

5.0

MCIL

MK

MCIL

*3

1.24

2,092

.21.0

7Ho

ld18

1.817

9.519

1.710

.8 10

.711

.42.9

11.5

11.6

10.9

24.3

4.3

2.6

10. 7

MPR

MK

Media

Prim

a 12

2.9

6 3,2

26.7

2.90

Buy

215.4

226.7

237.3

18.6

19.6

20.5

5.015

.915

.114

.414

.54.0

2.2

26

.5

STAR

MK

Star

*

12

2.60

1,919

.12.6

5Ho

ld14

6.016

0.116

8.319

.8 21

.722

.87.3

13.1

12.0

11.4

13.7

6.9

1.7

0.8

No

n-Ba

nking

Fina

nce

BU

RSA

MK

Bursa

Mala

ysia

12

8.15

4,338

.08.0

0Ho

ld15

1.517

0.418

2.928

.5 32

.034

.49.9

28.6

25.5

23.7

19.3

3.7

4.9

31.0

Oil &

Gas

AMRB

MK

A

lam M

aritim

*

12

1.43

1,127

.51.5

5Bu

y54

.077

.798

.06.8

9.8

12.4

35.0

21.0

14.6

11.5

12.9

0.0

2.1

110.

3 D

LG M

K

Dial

og

*6

2.98

7,159

.23.0

5Bu

y18

5.623

1.928

8.17.9

9.8

12.2

24.7

38.0

30.4

24.4

16.6

1.6

5.6

24. 2

KNM

G MK

K

NM G

roup

*

12

0.52

755.4

0.23

Sell

24.6

11.0

44.3

1.6

0.72.8

32.3

32.2

73.6

18.4

0.60.0

0.4

13

.2 P

ETR

MK

Per

dana

Petr

o*

12

1.97

975.4

2.00

Buy

22.5

47.8

81.8

4.6

9.716

.589

.442

.820

.311

.99.4

0.0

2.1

82.4

P

TG M

K P

etron

as G

as*

12

21.20

41

,949.1

20.20

Hold

1,424

.41,5

01.5

1,691

.571

.8 75

.985

.59.1

29.5

27.9

24.8

15.5

2.4

4.6

8.6

WSC

MK

W

ah S

eong

*

12

1.88

1,451

.31.3

3Se

ll52

.542

.383

.46.8

5.5

10.8

26.0

27.6

34.2

17.4

4.23.7

1.2

15

.0

MMH

E MK

M

MHE

*

12

3.31

5,296

.03.7

0Ho

ld27

6.023

3.931

8.917

.3 14

.619

.97.3

19.1

22.7

16.6

9.11.5

2.1

(2

4.8)

B

AB M

K

Bum

i Arm

ada

*12

3.9

4 11

,543.8

4.40

Buy

394.9

467.3

534.4

13.5

16.0

18.2

16.1

29.2

24.6

21.6

11.3

0.0

3.1

(1.0

) P

PT M

K

Per

isal P

etrole

um

*12

1.6

0 1,4

98.4

1.80

Buy

98.6

102.0

136.2

11.6

10.5

12.6

4.213

.815

.212

.716

.80.0

2.8

48

.1

SAK

P MK

S

apur

aKen

cana

*

1 4.2

2 25

,286.9

4.60

Buy

594.0

980.1

1,322

.511

.9 17

.622

.236

.935

.624

.019

.012

.00.0

3.4

34

.0

GMB

MK

Gas

Mala

ysia

*12

3.1

8 4,0

83.1

2.90

Hold

157.9

179.1

203.1

12.8

13.9

15.8

11.1

24.8

22.9

20.1

17.5

4.0

4.0

23. 7

Plan

tation

GENP

MK

Genti

ng P

lantat

ion*

12

8.70

6,601

.210

.10Bu

y32

7.128

4.636

5.643

.1 37

.548

.25.8

20.2

23.2

18.0

7.80.9

1.9

(3

.3)

IOI M

K IO

I Cor

p *

6 5.1

3 32

,752.0

5.60

Hold

1,781

.91,7

93.0

1,893

.027

.7 27

.929

.53.1

18.5

18.4

17.4

12.7

3.0

2.6

0.6

KLK

MK

KL K

epon

g *

9 21

.20

22,57

7.319

.40Se

ll1,0

42.4

979.8

1,102

.897

.7 91

.810

3.32.8

21.7

23.1

20.5

12.9

2.6

3.3

(11.

7)

SIME

MK

Sime

Dar

by

*6

9.42

56,60

9.210

.10Ho

ld3,8

20.7

3,385

.53,3

94.0

63.6

56.4

56.5

-5.7

14.8

16.7

16.7

11.9

3.0

2.1

(1.1

) FG

V MK

Fe

lda G

lobal

Vntrs

*12

4.5

0 16

,416.7

4.30

Hold

740.0

602.6

722.4

20.3

16.5

19.8

-1.2

22.2

27.3

22.7

9.41.8

2.7

(2

.6)

SOP

MK

Sara

wak O

il Palm

s*

12

5.50

2,405

.86.1

8Ho

ld15

9.116

5.820

7.736

.5 38

.047

.614

.215

.114

.511

.611

.00.8

1.8

(4

.5)

TSH

MK

TSH

Reso

urce

s*

12

2.28

1,902

.32.3

8Bu

y76

.785

.312

1.18.9

9.9

14.0

25.7

25.7

23.1

16.3

9.01.3

2.2

5.

1 TH

P MK

TH

Plan

tation

s*

12

1.85

1,622

.81.2

8Se

ll84

.760

.779

.916

.0 8.3

11.0

-17.1

11.6

22.3

16.8

5.32.3

1.2

11

.6

TAH

MK

Ta A

nn

*12

3.7

0 1,3

71.0

4.33

Buy

58.3

66.3

106.9

15.7

17.9

28.8

35.4

23.6

20.7

12.8

6.62.2

1.6

5. 7

* S

yaria

h co

mpl

iant

; Sou

rce:

May

bank

KE

Inve

st M

alay

sia

2013

13-

14 J

une

2013

P

age

163

of 1

72

May

bank

KE

Equi

ty R

esea

rch

Stoc

k U

nive

rse

(con

tinue

d)

Tick

er

Com

pany

FY

E Pr

ice

Mark

etTa

rget

Reco

mCo

re N

et P

rofit

EPS

CAGR

PER

PER

PER

ROE

Div Y

ld

PBV

Price

Chg

3-

Jun

Cap

Price

CY12

ACY

13F

CY14

FCY

12A

CY13

FCY

14F

12-1

4CY

12A

CY13

FCY

14F

CY13

FCY

13F

CY12

A YT

D

(R

M m

)(R

M)(R

M m

)(R

M m

)(R

M m

)(s

en)

(sen

)(s

en)

(%)

(x)

(x)

(x)

(%)

(%)

(x)

(%)

Petro

chem

icals

PC

HEM

MK

Petro

nas C

hem

*12

6.6

4 53

,120.0

6.75

Hold

3,662

.04,2

03.7

4,180

.145

.8 52

.552

.36.9

14.5

12.6

12.7

19.1

3.9

2.0

3.7

Pr

oper

ty

AXRB

MK

Axis

REIT

*

12

3.95

1,803

.23.3

5Ho

ld82

.288

.790

.818

.0 19

.419

.95.1

21.9

20.4

19.8

8.94.8

1.9

26

.2KL

CC M

K

KLCC

Pro

p *

12

6.98

12,60

1.27.2

5Ho

ld35

5.051

3.658

7.127

.4 28

.532

.58.9

25.5

24.5

21.5

4.93.8

1.0

10

.8MS

GB M

K

Mah S

ing

*12

3.1

5 3,5

38.9

3.89

Buy

228.5

301.3

382.9

20.3

24.4

28.5

18.5

15.5

12.9

11.1

16.5

3.1

2.8

68.4

QU

IL MK

Qu

ill Ca

pita

12

1.2

5 48

7.71.2

7Bu

y34

.536

.738

.58.8

9.4

9.96.1

14.2

13.3

12.6

6.97.1

1.0

1.

6 SP

SB M

K

SP S

etia

*10

3.6

2 8,9

00.5

5.03

Buy

389.1

491.5

642.7

18.9

20.0

26.1

17.4

19.1

18.1

13.9

8.73.3

1.7

17

. 2UL

HB M

K

UEM

Land

*

12

3.41

14,78

9.13.8

8Bu

y44

8.452

0.153

3.89.3

10

.811

.19.2

36.7

31.6

30.7

9.41.0

2.8

62

.4

SWB

MK

Sunw

ay B

erha

d *

12

3.98

5,144

.24.2

6Bu

y35

0.639

5.844

9.527

.1 30

.634

.813

.314

.713

.011

.49.9

1.5

1.4

67. 2

AARE

T MK

Aman

ahRa

ya R

EIT

12

1.04

596.1

0.95

Hold

43.4

43.7

45.0

7.6

7.67.8

1.313

.713

.713

.37.3

7.1

1.0

13.0

GL

MC M

K

Glom

ac

*4

1.31

928.3

1.37

Buy

93.0

118.9

155.2

13.5

16.3

21.3

25.7

9.78.0

6.214

.33.7

1.2

57

. 8CM

MT M

K

CMMT

12

1.8

5 3,2

75.2

2.01

Buy

137.1

142.7

154.2

7.8

8.08.6

5.023

.723

.121

.56.7

4.8

1.2

2.8

SREI

T MK

Su

nway

REI

T 6

1.63

4,758

.71.6

0Ho

ld19

8.921

3.423

5.67.2

7.5

8.15.5

22.5

21.9

20.2

6.34.8

1.4

5.

2IG

BREI

T MK

IG

B RE

IT

12

1.34

4,563

.71.4

2Bu

y15

9.920

7.721

5.35.7

6.1

6.34.9

23.4

22.0

21.3

5.85.3

1.4

0.

8PR

EIT

MK

Pavil

ion R

EIT

12

1.58

4,752

.41.6

3Ho

ld19

4.620

3.521

7.76.5

6.8

7.25.2

24.3

23.2

21.9

6.24.5

1.6

13

.7

Tech

NV

B MK

No

tion V

tec

*9

0.80

208.0

0.76

Hold

44.0

30.7

38.3

16.3

11.3

14.1

-6.8

4.97.1

5.79.1

2.8

0.7

(7.5

)

Telec

ommu

nicati

ons

DI

GI M

K Di

Gi.C

om

*12

4.6

6 36

,231.5

4.85

Hold

1,205

.71,7

43.7

1,933

.215

.5 22

.424

.926

.730

.120

.818

.766

7.34.8

25

.9 (1

1.9)

T

MK

Telek

om

*12

5.4

1 19

,353.7

5.50

Hold

880.9

792.7

860.4

24.6

22.2

24.1

-1.0

22.0

24.4

22.4

11.4

3.7

2.8

(10.

4)

AXIA

TA M

K Ax

iata

*12

6.7

3 57

,398.1

6.55

Hold

2,738

.52,7

76.4

3,026

.332

.2 32

.635

.65.1

20.9

20.6

18.9

13.5

4.1

2.8

2.1

MAXI

S MK

Ma

xis

*12

6.7

7 50

,779.8

7.20

Hold

1,856

.02,0

43.6

2,069

.024

.7 27

.227

.65.7

27.4

24.9

24.5

33.5

5.9

7.2

1.8

Tran

spor

tAI

RA M

K Ai

rAsia

*

12

3.29

9,147

.93.0

0Ho

ld81

7.084

0.495

8.529

.4 30

.234

.58.3

11.2

10.9

9.514

.31.8

1.7

20

.1

MAHB

MK

MAHB

12

6.0

3 7,4

31.6

7.20

Buy

442.2

486.3

399.5

37.3

39.4

32.3

-6.9

16.2

15.3

18.7

9.12.5

1.7

15

. 7MA

S MK

MA

S *

12

0.34

5,681

.70.3

5Se

ll-5

71.4

-106

.339

2.9-1

7.1

-0.6

2.4n.a

.n.a

.n.a

.14

.2-2

.00.0

0.5

1.

8NC

B MK

NC

B Ho

lding

s *

12

4.70

2,210

.25.2

1Bu

y16

8.316

4.718

5.135

.8 35

.039

.44.9

13.1

13.4

11.9

10.7

3.6

1.5

6.6

MISC

MK

MISC

*

12

4.86

21,69

4.05.7

0Bu

y1,1

47.2

1,354

.61,5

80.8

25.7

30.3

35.4

17.4

18.9

16.0

13.7

5.90.0

1.1

13

.0

Utilit

iesTN

B MK

Te

naga

*

8 8.3

7 47

,015.1

7.60

Hold

4,352

.54,0

89.2

4,038

.176

.4 74

.373

.4-2

.011

.011

.311

.410

.22.2

1.2

20

.6

YTLP

MK

YTL P

ower

*

6 1.5

2 10

,892.3

1.70

Buy

1,121

.11,0

44.9

1,041

.915

.4 14

.414

.4-3

.39.9

10.6

10.6

9.60.9

1.1

(2

.6)

* S

yaria

h co

mpl

iant

; Sou

rce:

May

bank

KE

Inve

st M

alay

sia

2013

13-14 June 2013 Page 164 of 172

MALAYSIA RESEARCH TEAM

EQUITY RESEARCH Wong Chew Hann, CA, Head of Research +(603) 2297 8686 Strategy, Construction, Infrastructure

Institutional Research Desmond Ch’ng Lye Hoe, ACA +(603) 2297 8680 Banking

Liaw Thong Jung +(603) 2297 8688 Oil & Gas, Auto

Ong Chee Ting, CA +(603) 2297 8678 Plantation

Mohshin Aziz +(603) 2297 8692 Aviation, Petrochemicals

Tan Chi Wei, CFA +(603) 2297 8690 Telecommunication, Power

Yin Shao Yang, CPA +(603) 2297 8916 Gaming, Media

Wong Wei Sum, CFA +(603) 2297 8679 Properties, REITs

Lee Yen Ling +(65) 6432 1450 Building Materials, Gloves

Chai Li Shin +(603) 2297 8684 Plantation, Construction, Infrastructure

Kang Chun Ee +(603) 2297 8675 Consumer (Retail, F&B), REITs

Chong Ooi Ming +(603) 2297 8676 Consumer (Brewery), Oil & Gas

Ivan Yap Boon Tiong +(603) 2297 8612 Auto, Consumer (Staples)

Nathan Foo Chuan Kit +(603) 2297 8687 Consumer (Tobacco)

ECONOMICS RESEARCH Suhaimi Ilias, Group Chief Economist +(603) 2297 8682

Economics Team Dr. Zamros Dzulkafli +(603) 2082 6818 Ramesh Lankanathan +(603) 2297 8685 William Poh Chee Keong +(603) 2297 8683

RETAIL RESEARCH Lee Cheng Hooi, Technical Head/Chief Chartist +(603) 2297 8694 Wilfred Ng Kok Seng +(603) 2297 8677 Liew Weng Tang +(603) 2297 8769 Tan Jwin Hon +(603) 2297 8767

FIXED INCOME RESEARCH Tan Chee Wee, Head +(603) 2031 4829 Chia Suil Fun +(603) 2031 4834 Winson Phoon +(603) 2074 7176

FX RESEARCH Saktiandi Supaat, Head +(65) 6320 1379 Leslie Tang +(65) 6320 1378 Fiona Lim +(65) 6320 1374


13-14 June 2013 Page 165 of 172

REGIONAL SALES / DEALING

REGIONAL EQUITIES Managing Director, Head of Regional Equities Ami Moris +(603) 2297 8788 Managing Director, Head of Regional Institutional Equities Goh Keat Jin +(65) 6432 1899 MALAYSIAN TEAM Managing Director, Head of Institutional Equities Dato’ Sharifah Sofianny Binti Syed Hussain

+(603) 2297 8866

Director, Co- Head of Sales Lucy Chong +(603) 2284 5870 Kharul Hurri Khalid Abbas +(603) 2297 8931 Institutional Sales Azizah Bt Mohd Yatim +(603) 2284 3570 Nor Syakirah Bt Ahmad +(603) 2284 5814 Elina Bt Hashim +(603) 2297 8948 Rafiqa Shireen Dato’ Khalid +(603) 2284 3643 Faiz Khaleeque Ahmad +(603) 2284 6541 Sean Michael La Faber +(603) 2082 6822 Grace Yau Chooi Peng +(603) 2284 5915 Sri Idayu Ismail +(603) 2284 6498 Hiew Wee Leong +(603) 2284 2781 Wong Sit Yin +(603) 2283 4932 Ng Shui Lin +(603 ) 2082 6821 Institutional Sales Traders Adrian Tan Kar Luen +(603) 2710 2570 Mohamad Rhiaz Mohamed Zamirdin +(603) 2282 6435 Ahmad Lutfi Mahmud +(603) 2284 5849 Rommel Herbert Jacob +(603) 2710 2570

Institutional Dealers Ahmad Harith B Ahmad Kamal +(603) 2284 2746 Lee Swee Fong +(603) 2284 6460 Gary Leong Yong Kang +(603) 2710 2570 Loke Su Yen +(603) 2710 2566 Hisyam Bin Abdul Manan +(603) 2282 3325 Melissa Ho Ling Wei +(603) 2284 2746 Iskandar Zulkarlnain Ahmad +(603) 2284 6492 Nur Faizah Bt Ahmad +(603) 2284 1962 Jenny Low Jern Nee +(603) 2082 6823 Sathiskumar a/l Sannasy +(603) 2284 2746 Khairul Azman Bin Othman +(603) 2284 5782 Tracy Chong Yuen Fun +(603) 2284 5761 Institutional Sales Support Leana Leong +(603) 2297 8759 Seong Lai Mun +(603) 2297 8759 Priscilla Chong +(603) 2284 2746 Wong Chui Yen +(603) 2297 8752

REGIONAL HEADS OF SALES Regional Dealing US Director, Head of Regional Dealing, Equitiies Francis Seow +(1) 212 688 8886 Lok Eng Hong +(603) 2297 8700 UK Giles Walsh +(44) 20 7626 2828 Retail Dealing Hong Kong Head of Retail Dealing Paul Cheung +(852) 22680101 Clement Almaide A L A M Francis +(603) 2297 8739 Singapore Matthew Lutter +(65) 6432 1873 Retail Channels Thailand Head, Retail Channels +(603) 2297 8710 Tanasak Krishnasreni +(662) 658 6820 Mohamed Ariff Tun Dr. Ismail Indonesia Harianto Liong +(622) 1 2557 1177 Operations Philippines Head of Regional Operations, Equities Raphael T. Manalaysay +(63) 2 848 5642 Henry Koh Swee Ong +(603) 2297 8938


13-14 June 2013 Page 166 of 172

RESEARCH OFFICESREGIONAL

P K BASURegional Head, Research & Economics (65) 6432 1821 [email protected] WONG Chew Hann, CA Acting Regional Head of Institutional Research (603) 2297 8686 [email protected] ONG Seng Yeow Regional Products & Planning (65) 6432 1453 [email protected]

ECONOMICS Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 [email protected] Luz LORENZO Philippines (63) 2 849 8836 [email protected] Tim LEELAHAPHAN Thailand(662) 658 1420 [email protected]

JUNIMANChief Economist, BII Indonesia (62) 21 29228888 ext 29682 [email protected] Josua PARDEDEEconomist / Industry Analyst, BII Indonesia (62) 21 29228888 ext 29695 [email protected]

MALAYSIA WONG Chew Hann, CA Head of Research (603) 2297 8686 [email protected] Strategy Construction & Infrastructure Desmond CH’NG, ACA (603) 2297 8680 [email protected] Banking - Regional LIAW Thong Jung (603) 2297 8688 [email protected] Oil & Gas Automotive Shipping ONG Chee Ting, CA (603) 2297 8678 [email protected] Plantations- Regional Mohshin AZIZ(603) 2297 8692 [email protected] Aviation Petrochem YIN Shao Yang, CPA (603) 2297 8916 [email protected] Gaming – Regional MediaTAN CHI WEI, CFA (603) 2297 8690 [email protected] Power Telcos WONG Wei Sum, CFA (603) 2297 8679 [email protected] Property & REITs LEE Yen Ling (603) 2297 8691 [email protected] Building Materials Manufacturing Technology

LEE Cheng Hooi Head of [email protected] Technicals

HONG KONG / CHINA Ivan CHEUNG, CFA (852) 2268 0634 [email protected] HK Property Industrial Jacqueline KO, CFA (852) 2268 0633 [email protected] Consumer Andy POON(852) 2268 0645 [email protected] Telecom & equipment Alex YEUNG(852) 2268 0636 [email protected] Industrial Karen KWAN(852) 2268 0640 [email protected] China Property Jeremy TAN(852) 2268 0635 [email protected] Gaming Warren LAU (852) 2268 0644 [email protected] Technology – Regional

INDIA Jigar SHAH Head of Research (91) 22 6623 2601 [email protected] Oil & Gas Automobile Cement Anubhav GUPTA(91) 22 6623 2605 [email protected] Metal & Mining Capital goods Property Urmil SHAH(91) 22 6623 2606 [email protected] Technology Media Varun VARMA(91) 226623 2611 [email protected] Banking

SINGAPORE Gregory YAP Head of Research(65) 6432 1450 [email protected] Technology & Manufacturing Telcos - Regional Wilson LIEW(65) 6432 1454 [email protected] Property & REITs James KOH(65) 6432 1431 [email protected] Logistics Resources Consumer Small & Mid Caps YEAK Chee Keong, CFA (65) 6432 1460 [email protected] Offshore & Marine Alison FOK(65) 6432 1447 [email protected] Services S-chips ONG Kian Lin (65) 6432 1470 [email protected] REITs / Property Wei Bin (65) 6432 1455 [email protected] S-chips Small & Mid Caps

INDONESIA Lucky ARIESANDI, CFA (62) 21 2557 1127 [email protected] Base metals Mining Oil & Gas Wholesale Rahmi MARINA(62) 21 2557 1128 [email protected] Banking Multifinance Pandu ANUGRAH(62) 21 2557 1137 [email protected] Automotive Heavy equipment Plantation Toll road Adi N. WICAKSONO(62) 21 2557 1128 [email protected] Generalist Anthony YUNUS(62) 21 2557 1139 [email protected] Cement Infrastructure Property

PHILIPPINES Luz LORENZO Head of Research (63) 2 849 8836 [email protected] Strategy Laura DY-LIACCO(63) 2 849 8840 [email protected] Utilities Conglomerates Telcos Lovell SARREAL(63) 2 849 8841 [email protected] Consumer Media Cement Luz LORENZO / Mark RACE(63) 2 849 8844 [email protected] Conglomerates Property Ports/ Logistics Gaming Katherine TAN(63) 2 849 8843 [email protected] Banks Construction Ramon ADVIENTO(63) 2 849 8845 [email protected] Mining

THAILAND Sukit UDOMSIRIKUL Head of Research (66) 2658 6300 ext 5090 [email protected]

Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] Consumer/ Big Caps

Andrew STOTZ Strategist (66) 2658 6300 ext 5091 [email protected]

Mayuree CHOWVIKRAN (66) 2658 6300 ext 1440 [email protected] Strategy Padon Vannarat (66) 2658 6300 ext 1450 [email protected] Strategy Surachai PRAMUALCHAROENKIT(66) 2658 6300 ext 1470 [email protected] Auto Conmat Contractor Steel Suttatip PEERASUB(66) 2658 6300 ext 1430 [email protected] Media Commerce Sutthichai KUMWORACHAI(66) 2658 6300 ext 1400 [email protected] Energy Petrochem Termporn TANTIVIVAT(66) 2658 6300 ext 1520 [email protected] Property Woraphon WIROONSRI(66) 2658 6300 ext 1560 [email protected] Banking & Finance Jaroonpan WATTANAWONG(66) 2658 6300 ext 1404 [email protected] Transportation Small cap. Chatchai JINDARAT (66) 2658 6300 ext 1401 [email protected] Electronics Pongrat RATANATAVANANANDA(66) 2658 6300 ext 1398 [email protected] Services/ Small Caps

VIETNAM Michael KOKALARI, CFA Head of Research (84) 838 38 66 47 [email protected] Strategy Nguyen Thi Ngan Tuyen (84) 844 55 58 88 x 8081 [email protected] Food and Beverage Oil and Gas Ngo Bich Van (84) 844 55 58 88 x 8084 [email protected] Banking Trinh Thi Ngoc Diep (84) 844 55 58 88 x 8242 [email protected] Technology Utilities Construction Dang Thi Kim Thoa (84) 844 55 58 88 x 8083 [email protected] Consumer Nguyen Trung Hoa +84 844 55 58 88 x 8088 [email protected] Steel Sugar Resources


13-14 June 2013 Page 167 of 172

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.

The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.

This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report.

This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect.

This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report.

Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.

Singapore

This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.

Thailand The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result.

Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect.

US

This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations.

UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.


13-14 June 2013 Page 168 of 172

DISCLOSURESLegal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.

Disclosure of Interest Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies.Singapore: As of 7 June 2013, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. As of 7 June 2013, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERSAnalyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Definition of Ratings Maybank Kim Eng Research uses the following rating system:

BUY Return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends) SELL Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear): Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax


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MalaysiaMaybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194

Singapore Maybank Kim Eng Securities Pte LtdMaybank Kim Eng Research Pte Ltd9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989

Tel: (65) 6336 9090 Fax: (65) 6339 6003

LondonMaybank Kim Eng Securities (London) Ltd6/F, 20 St. Dunstan’s Hill London EC3R 8HY, UK

Tel: (44) 20 7621 9298 Dealers’ Tel: (44) 20 7626 2828 Fax: (44) 20 7283 6674

New YorkMaybank Kim Eng Securities USA Inc777 Third Avenue, 21st Floor New York, NY 10017, U.S.A.

Tel: (212) 688 8886 Fax: (212) 688 3500

Stockbroking Business: Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136

Hong Kong Kim Eng Securities (HK) LtdLevel 30, Three Pacific Place, 1 Queen’s Road East, Hong Kong

Tel: (852) 2268 0800 Fax: (852) 2877 0104

IndonesiaPT Kim Eng SecuritiesPlaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

India Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India

Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

Philippines Maybank ATR Kim Eng Securities Inc.17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200

Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

Thailand Maybank Kim Eng Securities (Thailand) Public Company Limited999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand

Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

VietnamIn association with Maybank Kim Eng Securities JSC 1st Floor, 255 Tran Hung Dao St. District 1 Ho Chi Minh City, Vietnam

Tel : (84) 844 555 888 Fax : (84) 838 38 66 39

Saudi ArabiaIn association with Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352

Tel: (966) 2 6068686 Fax: (966) 26068787

South Asia Sales Trading Kevin FOY [email protected] Tel: (65) 6336-5157 US Toll Free: 1-866-406-7447

North Asia Sales TradingEddie LAU [email protected] Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267

www.maybank-ke.com | www.maybank-keresearch.com


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