Equity researchSeptember 9, 2016

Asia Pacific Daily - 9 September 2016 Equity Research Reports

IDEA OF THE DAY | Malaysia Strategy Note-Alpha - Dialogue with Finance Minister II | P2 We recently hosted a dialogue session between Malaysias newly-appointed Finance Minister II YB Datuk Johari Abdul Ghani and our clients. We came away positive as the minister had all the economic numbers at his fingertips, and was engaging and keen to promote governance and transparency. The minister plans to focus on high-impact projects that are rakyat-centric and carry large multiplier effects that could benefit rail contractors, such as Gamuda. We reiterate our KLCI target of 1,730 for end-2016. Our top three picks are Tenaga Nasional, Prestariang and DRB-Hicom. Australia Freedom Foods (HOLD, tp:A$5.20) - Healthy profit growth | P3 Regis Healthcare (ADD, tp:A$5.13) - Attractive yield helps outcome uncertainty | P4 China/Hong Kong China Maple Leaf Educational (ADD, tp:HK$8.32) - Fundamentally strong, overhang gone soon | P5 Consumer Staples - Overall (UNDERWEIGHT) - Expect a better 2H16 | P6 Property - Overall (OVERWEIGHT) - High dividend plays to benefit from increasing demand | P7 Strategy Flash Note - Stock Connect III Hong Kong market to welcome insurance funds | P8 India Bharat Heavy Electricals (REDUCE, tp:Rs125.00) - Too early to rejoice | P9 Tata Consultancy Services (HOLD, tp:Rs2,550.00) - All is not well yet | P10 Indonesia Perusahaan Gas Negara (ADD, tp:Rp3,250.00) - Growth recovery in the pipeline | P11 South Korea KT&G (ADD, tp:W140,000.00) - Concerns largely priced in | P12 Malaysia Berjaya Auto (ADD, tp:RM2.69) - Lacking torque | P13 Property Development (OVERWEIGHT) - New lending club | P14 Singapore Accordia Golf Trust - Osaka golf course visit | P15 Taiwan Hanpin Electron Co Ltd - Benefiting from the revival of vinyl records | P16 Thailand Banks (OVERWEIGHT) - Slow start in Jul 16 | P17

Showcasing CIMB Research Ideas

IND: Indofood Sukses Makmur 07/09 White Knight rises >PDF

CHN: Strategy Note-Alpha 06/09 1H16 earnings lukewarm interim results but brighter outlook for 2H >PDF

ASEAN: REIT 05/09 Accommodating ASEAN new economy >PDF

SIN: Thai Beverage 02/09 Fortune lies in the hands of the beer holder >PDF

CHN: Economic Update 01/09 Things may not be that bad II reading through falling private investment >PDF

Regional Equity Research Contacts

Michael GREENALL, CFP Regional Head of Research T: (60) 3 2261 9088 E: michael.greenall@cimb.com

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CIMB Conference / Events |

CIMB Malaysia Public Sector Corporate Day 10 October 2016 Theme: Malaysia Location: Kuala Lumpur

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH.

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MalaysiaEquity researchSeptember 8, 2016

Strategy Note Alpha series

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH.

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Malaysia Strategy Dialogue with Finance Minister II

We recently hosted a dialogue session between Malaysias newly-appointed Finance Minister II YB Datuk Johari Abdul Ghani and our clients.

We came away positive as the minister had all the economic numbers at his fingertips, and was engaging and keen to promote governance and transparency.

The minister plans to focus on high-impact projects that are rakyat-centric and carry large multiplier effects that could benefit rail contractors, such as Gamuda.

We reiterate our KLCI target of 1,730 for end-2016. Our top three picks are Tenaga Nasional, Prestariang and DRB-Hicom.

Dialogue session with Malaysias Finance Minister II We recently hosted a dialogue session between Finance Minister II Datuk Johari Abdul Ghani and our clients. We came away positive as the minister was well-versed with the economy, had all the economic numbers at his fingertips, and was engaging and keen to promote governance and transparency. His pro-growth measures are: (1) improve export competitiveness; (2) boost the attractiveness of the tourism sector; and (3) ensure successful diversification into higher value-added activities.

Five key takeaways from the session The five takeaways are: (1) key focus of the 2017 Budget will be to address the peoples rising cost of living; (2) plans are in place to introduce measures to facilitate financing for first-time house buyers of affordable homes; (3) he is confident of achieving the target fiscal deficit of 3.1% via more prudent government spending and efficient tax collection; (4) focus on projects that benefit the people and provide large multiplier effects; and (5) plans to reduce its reliance on foreign workers, except in labour-intensive industries.

Rail contractors key beneficiary of more rakyat-centric projects On the implementation of large-scale infrastructure, Datuk Johari said the governments focus will continue to be on high-impact projects that are rakyat-centric and carry huge multiplier effects. This is positive, and suggests that public transport upgrades, particularly in rail services, will continue to be the key feature over the next few years. Among contractors under our coverage, the biggest rail play is Gamuda.

Other potential beneficiaries We have identified LBS Bina, UOA Development and Mah Sing as potential beneficiaries of the governments plan to assist first-time buyers of affordable homes. Tobacco player BAT and brewers, such as Carlsberg and Heineken, could benefit from the governments plan to shrink the shadow economy and impose tighter laws on duty-free islands.

Reiterate KLCI target of 1,730 for end-2016 We reiterate our KLCI year-end target of 1,730 for 2016 and 1,880 for 2017, still based on 16x forward P/E (or 3-year historical average P/E). Our top three picks are Tenaga Nasional, Prestariang and DRB-Hicom.

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Figure 1: Breakdown of government revenue (RM m)

SOURCES: MoF MALAYSIA, CIMB RESEARCH

Malaysia

Highlighted companies

Gamuda ADD, TP RM5.92, RM4.85 close

Gamuda remains the biggest play on domestic rail jobs. FY17 is set to be a big turnaround year for the company, driven by new profits from the MRT 2 project. Potential new tender opportunities now include the KL-Singapore High-Speed Rail project.

LBS Bina Group ADD, TP RM1.95, RM1.71 close

Rising sales and earnings, and attractive dividend yields of 6-8% in 2016F-2017F are the key reasons to own this stock.

MY E.G. Services ADD, TP RM3.22, RM2.17 close

Earnings growth in FY17F should continue to come from the re-hiring programme and the Celcom partnership.

Analyst(s)

Ivy NG Lee Fang, CFA

T (60) 3 2261 9073 E ivy.ng@cimb.com

79.0102.2

116.9 126.7 116.8 125.6

30.5

32.6

34.737.5 53.3

58.0

48.9

49.4

54.953.9 50.1

39.6

1.3

1.1

1.42.5 2.3 2.5

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

0

50

100

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250

2010 2011 2012 2014 2015E 2016B

Direct Tax Indirect Tax Non Tax Revenue Non-Revenue generating % yoy

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Food & BeveragesAustraliaEquity researchSeptember 8, 2016

IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE THE SUBJECT OF THIS REPORT AND AN EXPLANATION OF RECOMMENDATIONS CAN BE FOUND AT THE END OF THIS DOCUMENT. MORGANS FINANCIAL LIMITED (ABN 49 010 669 726) AFSL 235410 - A PARTICIPANT OF ASX GROUP

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Freedom Foods Group

Healthy profit growth

During a strategically busy time for the group, FNP delivered 68% underlying EBITDA growth and 129% NPAT growth.

With strong leverage to healthy eating trends, new categories, additional channels to market, recent acquisitions, new low cost facilities and a significant opportunity in China, we expect FNP will become a large FMCG business over coming years.

We remain happy holders of FNP with a new price target of A$5.20.

FNP posts another solid performance in FY16 FNP's FY16 result was slightly below our forecast due to a softer performance from Pactum Dairy Group (PDG). However, group underlying EBITDA was up a solid 68% and NPAT rose 129%. The result benefited from strong industry trends across dairy, health, allergen free food and beverage, new product launches, offshore sales and recent capital investment. All business units reported improved results except Seafood (less than 10% of group EBITDA). The US operations continued to report a small loss but should break even in FY17. Strategically, FY16 was a busy time f