may bank kim eng.pdf

7/25/2019 May Bank Kim Eng.pdf

1/19

November 25, 2015

STR

ATEGY

RESEARCH|

Indonesia

SEE PAGE 17 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Indonesia Strategy

Every Cloud Has A Silver Lining

More positive on the market, with catalysts expected from

2016 economic & earnings recoveries. Index target at 6,000,

14.9x FY17 P/E. Top picks: AALI, ACES, ASII, BBRI, BSDE,

GGRM, JSMR, LPCK, TLKM & WSKT.

Worst case already priced in. Expect further economic &

earnings improvements in 4Q15/2016.

Further monetary easing possible in 1Q16.

More positiveWe have turned more positive on the market as we believe the

worst case has been priced in. Our index target is 6,000, 14.9x

2017 P/E or 1SD above its 6-year mean. We like interest-rate-

sensitive, infrastructure, cigarette and telecommunication sectors.

Our top picks are AALI, ACES, ASII, BBRI, BSDE, GGRM, JSMR, LPCK,

TLKM and WSKT.

Gradual recoveryGDP growth stabilised at 4.73% in 3Q15. We anticipate an uptick to

4.86% in 4Q15. IDR has been stable and we expect no big bang on

the currency from any Fed rate hike. On corporate earnings, we

forecast earnings recovery to continue in 4Q15 and 2016. We

forecast market EPS to grow 11% YoY in 2016, led by domestic

sectors.

Further monetary easing possible

Following a 50bp cut in the reserve requirement in the last

monthly meeting, we think BI will start cutting its benchmark rate

in 1Q16, given high real rates and lower external risks. A total cut

of 50bps is possible in 2016, in our view. ASII, banks and property

stocks should benefit.

Long-term outlook intactWe believe the economic outlook is still positive. The government

continues to promote infrastructure projects, with 2.4% of GDP set

aside in 2016 budget. It is also trying to simplify the investment-

licensing process. Regulated annual minimum-wage increases,

which are based on GDP growth and inflation, should be positivefor investment climate. AALI, BEST, KLBF, LPPF, MAPI, and RALS will

be beneficiaries.

Analyst

JCI vs MSCI

Isnaputra Iskandar(62) 21 2557 1129

[email protected]

580

620

660

700

740

780

820

860

900

4,000

4,200

4,400

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Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15

Jakarta Composite Index - (LHS) MSCI Asia ex JP - (RHS)

Ticker Rating Mkt cap* Price** TP**

+/- toTP (%)

P/E (x) P/BV (x) Yield (%) EPS growth (%) ROE (%)

2015F 2016F 2015F 2016F 2016F 2015F 2016F 2015F 2016F

1 AALI IJ BUY 2,110 18,250 24,000 31.5 44.6 17.4 2.4 2.2 0.9 -74.2 156.1 5.5 12.9

2 ACES IJ BUY 944 750 850 13.3 22.9 20.2 4.5 3.8 0.7 1.3 13.2 19.8 18.8

3 ASII IJ BUY 18,722 6,300 7,500 19.0 15.8 13.5 2.4 2.2 2.9 -15.7 17.1 15.5 16.5

4 BBRI IJ BUY 19,919 11,000 13,000 18.2 11.0 10.4 2.3 2.0 2.7 1.8 5.7 23.2 20.8

5 BSDE IJ BUY 2,366 1,675 2,100 25.4 13.0 12.1 1.7 1.5 0.9 -35.0 7.2 12.9 12.3

6 GGRM IJ BUY 7,238 51,250 60,000 17.1 17.8 15.6 2.7 2.4 2.0 3.0 14.6 15.1 15.4

7 JSMR IJ BUY 2,508 5,025 6,500 29.4 25.9 19.6 3.2 2.9 1.6 -5.9 31.9 12.4 14.7

8 LPCK IJ BUY 399 7,800 11,000 41.0 5.6 5.5 1.5 1.2 0.0 15.8 2.7 26.7 21.5

9 TLKM IJ BUY 21,569 2,915 3,300 13.2 17.8 16.1 3.7 3.3 2.0 12.8 10.5 21.0 20.210 WSKT IJ BUY 1,402 1,735 2,200 26.8 23.9 19.9 2.2 2.4 0.5 59.3 47.8 9.0 12.0

Total 60 cos (simple average) 17.4 14.2 3.7 2.5 3.2 9.8 24.2 18.1 17.8Total 60 cos (aggregate) 15.1 13.6 2.4 2.4 2.2 6.8 10.9 16.1 16.3

Pricing as of 20 November 2015* In USD; ** in IDR

Source: Bloomberg & Maybank KE


2/19

November 25, 2015 2

Strategy Research

Economic update

The economy has started to improve. Although still vulnerable to internal

and external shocks, we believe that the worst is behind us and has been

factored in by the market.

GDP growth stabilisingThe economy grew 4.73% YoY in 3Q15, below the governments estimate of

4.85%. Still, it didnt deteriorate from 1Q15s +4.71% and 2Q15s +4.67%.

Rising government spending and investments were behind the slight

improvement. Government spending grew 6.56% YoY in 3Q15, beating

2Q15s 2.13% YoY. The increase was felt in domestic cement sales, which

started to grow MoM in August. Investments grew 4.62% YoY in 3Q15, also

higher than 2Q15s 3.69%. Even though 3Q15 FDI was still down 0.8% YoY, it

was up 0.4% QoQ. Another GDP component, non-profit institutions serving

households, grew 4.62% YoY, an improvement over 2Q15s 3.69%.

The same could not be said about household consumption, exports and

imports. Household consumption grew 4.96% YoY, relatively in line with2Q15s 4.97%. The effects were felt in car and motorcycle sales, down

17.7% and 11.0% YoY in 3Q15. Exports declined another 0.69% YoY

(2Q15: -0.09% YoY), following persistently lower commodity prices. Imports

were down 6.11% YoY (2Q15: -6.98% YoY) due to the domestic economic

slowdown and weakening currency.

Figure 1: GDP stabilised in 3Q15

Source: Bloomberg

Figure 2: 3Q15 GDP breakdown

Source: BPS

Figure 3: Domestic cement sales started to grow in August


Figure 4: Stable FDI in 3Q15

Source: Investment Coordinating Board

0.00%

1.00%

2.00%

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7.00%

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2Q15

3Q15

Householdconsumption,

55.0%

Non-profitinstitutions

servinghousehold,

1.1%Investments,

33.3%

Government

spending,9.8%

Exports, 20.7%

Imports, -19.9%

0.00

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Mn tonnes

Monthly sales 12-month MA

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(USDm)

Primary Sector Secondary Sector Tertiary Sector


3/19

November 25, 2015 3

Strategy Research

Figure 5: Domestic 4W sales


Figure 6: and 2W sales


Figure 7: More than 50% of exports are commodities

Source: BI & Maybank KE

Figure 8: Oil prices remain weak

Source: Bloomberg

Figure 9: Coal prices have been heading south

Source: Global coal

Figure 10: CPO prices are propped up by El Nino

Source: Bloomberg

Growth to resume in 4Q15

Our economist, Juniman ([email protected]), expects the economy to

improve by 4.86% YoY in 4Q15. The recovery would be led by higher

government capex and economic stimulus. It should be further supported

by better commodity prices and exports, along with improvements in the

US and European economies.

0

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Oil & gas

10%

Hardcommodities

26%

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18%

Manufactureproducts

46%

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USD/bbl

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MYR/tonne
mailto:[email protected]:[email protected]:[email protected]:[email protected]


4/19

November 25, 2015 4

Strategy Research

Figure 11: Budget absorption at 60% in 9M15

Source: Ministry of Finance & Maybank KE

Figure 12: GDP to start recovering in 4Q15

Source: BPS & Maybank KE

More stable IDR

The currency has been stable since the beginning of October. It does not

seem at risk of being tossed and turned by any rate hike by the Fed in

December. Its stability is helped, among other things, by an improving CAD

to 1.9% of GDP in 3Q15, down from 2Q15s -2.0% and 3Q14s -3.0%. Bank

Indonesia (BI) estimates that CAD will end the year at 2% of GDP.

Figure 13: Volatility is back to pre-October levels


Figure 14: A more stable currency

Source: Bloomberg

Figure 15: A trade surplus helps..

Source: Bloomberg

Figure 16:..as is a better CAD

Source: Bloomberg

19%

39%

60%

0%

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1Q15 1H15 9M15

4.72%

4.67%

4.73%

4.86%

5.04%

4.40%

4.50%

4.60%

4.70%

4.80%

4.90%

5.00%

5.10%

1Q15 2Q15 3Q15 4Q15F 2016F

0.0%

0.2%

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0.6%

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Jan-15

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IDR/USD

(3,000)

(2,000)

(1,000)

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USD m


5/19

November 25, 2015 5

Strategy Research

Figure 17: Foreign ownership remains high in bond markets


Figure 18: Foreign flows into equity markets

Source: Bloomberg

Low inflation + stable currency = lower rate?

Low inflation on the cardsFollowing Septembers deflation, Octobers CPI contracted another 0.08%

MoM, but up 6.25% YoY. So far, since the beginning of the year, the YoY

inflation has been stable at 6.3-7.3%. We believe the year-end YoY

inflation could be below 4% due to, among other things, high base effect.

Assuming the next two months inflation comes in at 0.5-1.0%, year-end

inflation could be 3.2-3.7%.

Our house currently forecasts 3.2% vs the BIs 3.6%. The likelihood of a

3.2% year-end rate is quite good, as MoM inflation in December is usually

less than Lebaran-month inflation. Inflation in July, the month of Lebaran

this year, was 0.9%.

Widening gap

With the BI rate at 7.5% and YoY inflation of 6.3% in October, the real

benchmark rate was 1.2%. If inflation ends the year at 3.2-3.7%, the real

rate could reach 3.7-4.2%.

But such a high rate may not be sustainable. Monthly real rates in the last

six years averaged only 1.0%. Although there were times when the rate

breached 3.0%, as in Mar 2000 and Aug 2014, its high levels were not

sustainable, lasting, in fact, only one month.

The direction of inflation is more important for BI, in our view, than

prevailing inflation. Having said that, we think there is upside to ourinternal forecast of no-rate cut. We think BI might act either by end-2015

or the beginning of 1Q16.

There might be some concerns that IDR volatility could be an obstacle for

the rate cut, especially with the Fed has indicated a possible rate hike in

December. We are not much concerned on this because the guidance by

the Fed should be able to manage market expectation and should not be a

surprise factor when the rate is finally raised. On top of that, the latest

data suggests that IDR volatility (based on 5-day moving average) has

declined significantly in the last couple of weeks and we expect the

volatility to remain stable, if not decline.

0%

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(IDR tn) SBI (BI certificate) owned by non resident (LHS)

SBN (Govt bond) owned by non resident (LHS)

% Foreign ownership/Total outstanding (RHS)

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(IDR tn)

Cumulative Foreign net buy (sell) since Jan10


6/19

November 25, 2015 6

Strategy Research

Figure 19: CPI & MoM inflation

Source: Bloomberg

Figure 20: Real rates could be higher by year-end


Beneficiaries of declining rates

A lower benchmark rate in Indonesia should be positive for ASII, banks andproperty companies, at least for sentiment.

ASII should benefit as 60-70% of its 2Ws and 4Ws are sold through

credit. Lower rates are not only good for its automotive division but also

financial services. Note that in 9M15 earnings from automotive and

financial services divisions accounted for 60% of ASIIs earnings.

Banks costs of funds could drop and NIMs temporarily improve, from a

time lag in adjusting lending rates. Among the big banks, BBRI has the

most time deposits in its customer deposits, followed by BBNI, BMRI and

BBCA.

Property companies tend to benefit as mortgages account for a chunkof their sales, except for SMRA. BSDE has the highest exposure of 40%,

followed by BKSL (36%), CTRA (35%), LPKR (21%), ASRI (21%) and SMRA

(5%).

Figure 21: Time deposits to total deposits

Source: Companies & Maybank KE

Figure 22: Payment methods

Company MortgageCash

instalmentsFull cash

ASRI 21% 54% 25%

BKSL 36% 51% 13%

BSDE 40% 50% 10%

CTRA 35% 57% 8%

LPKR 21% 59% 20%

SMRA 6% 80% 14%


Lower reserve requirement: indication of an easing policy

At its last monthly meeting, BI kept its benchmark rate at 7.5% but

lowered its reserve requirement by 0.5% to 7.5%. We took this to suggest:1) policy prudence, in view of a looming Fed rate hike in the near term;

and 2) its understanding of the need for monetary easing to stimulate the

economy.

-1.0%

-0.5%

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CPI (LHS) MoM inflation (RHS)

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YoY inflation Real benchmark rate Nominal benchmark rate

45%

40%37%

25%

0%

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25%

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50%

BBRI BBNI BMRI BBCA


7/19

November 25, 2015 7

Strategy Research

Liquidity in the banking sector is not tight, even though interbank rates

keep moving up (Figure 23), because 1) loan growth remains positive

(Figure 24) and 2) interbank loans are not a significant portion of banks

portfolios. We think easing the reserve requirement could increase

liquidity. The BI seems to be signalling that there should greater currency

stability before rates are cut. With an improving economy and year-endinflation potentially falling below 3%, we expect a rate cut in 1Q16.

Figure 23: Interbank rates remain high

Source: Bloomberg

Figure 24: Loans grew ~11% YoY in September

Source: BI & Myabank KE

2016 budget: unwavering commitment to infrastructure

Not much different

The 2016 state budget is not much different from 2015s in its size, sources

of income, budget allocations and budget deficit. The budget is IDR2,096t,up 5.6% YoY. Revenue target is IDR1,823t, up 3.5% YoY. Some 84.9% of this

will come from taxes and customs duties. The budget deficit is set at

IDR273t, or 2.2% of GDP.

The government continues to allocate money to core productive sectors.

Its infrastructure budget is IDR314t, up 8.0% YoY to form 15.0% of its total

budget or 2.4% of GDP. The budget for subsidies continues to slide, down

13.1% YoY to IDR201t.

5.5

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8/19

November 25, 2015 8

Strategy Research

Figure 25: 2016 budget not much different from 2015

2015 (APBNP) 2016 (APBN) Change

ASSUMPTIONSGDP growth 5.7% 5.3% -0.4%

Exchange rate, IDR/USD 12,500 13,900 11.2%

Inflation 5.0% 4.7% -0.3%

SPN 3-month rate 6.2% 5.5% -0.7%

Oil price, USD/barrel 60 50 -16.7%

Oil lifting, 000 bpd 825 830 0.6%

Gas lifting, 000 boepd 1,221 1,155 -5.4%

STATE BUDGET, IDR t

A. REVENUES (IDRt) 1,762 1,823 3.5%

I. Domestic revenues 1,758 1,821 3.5%I.1. Tax & customs 1,489 1,547 3.9%

I.1. Non-tax & customs 269 274 1.8%

II. Grants 3 2 -39.4%

B. EXPENDITURES (IDRt) 1,984 2,096 5.6%I. Central government 1,320 1,326 0.4%

I.1. K/L (Kementerian & Lembaga) 796 784 -1.4%

I.1. Non K/L 524 541 3.3%

I.1.a. Subsidies 232 201 -13.1%

I.1.b. Interest payments 156 183 17.8%

I.1.c. Others 137 157 14.7%

II. Tranfers to regions & village funds 665 770 15.9%

C. SURPLUS (DEFICIT) 223 273 22.7%

Deficit to GDP 1.9% 2.2% 0.3%

Source: Ministry of Finance and Maybank KE

Figure 26: Infrastructure budget remains high


Figure 27: at over 2% of GDP


Realistic or not?

Given the low achievements this year, is the 2016 budget realistic? 10M15

revenue from taxes and customs was still less than 60% of the 2015 targetof IDR1,758t. Without expenditure cuts of at least 7%, we believe the

deficit could top 2.5% of GDP this year, way above the governmentstarget

of 1.9%.

The government has launched or will be launching stimulus measures

aimed at meeting its 2016 budget target and pump-priming the economy in

general. Initiatives include, among other things: 1) a tax amnesty, with the

supporting law to be finalised by end-2015; 2) a lower tax for asset

revaluation; 3) potential cuts in income tax for individuals; and 4)

prefunding of infrastructure projects which should be positive to stimulate

the economy and accelerate economic recovery, in our view.

On tax revenues from the tax amnesty and asset revaluation, the

government targets IDR60tn and IDR10tn, respectively. The figure suggests

2.2% and 0.4% of GDP in our estimate. Our conversations with a couple of

state-owned listed companies suggest that they are interested in

7.6%8.7%

9.8% 9.4% 9.5%

14.6% 15.0%

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2010 2011 2012 2013 2014 2015F 2016F

Infrastructurebudget, IDR t

Infra budget/totalbudget

1.3%1.5%

1.7% 1.6%

1.7%

2.5% 2.4%

0.0%

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2010 2011 2012 2013 2014 2015F 2016F

Infra budget /GDP


9/19

November 25, 2015 9

Strategy Research

participating in the asset revaluation programme, enticed by its lower tax

rates. Meanwhile, the effectiveness of the tax amnesty will partly depend

on government guarantees that the assets brought into Indonesia will not

be exposed to future lawsuits, in our view.

Figure 28: YTD tax income is less than 60% of the target

Source: Ministry of Finance

Figure 29: implying the state deficit will blow up withoutcapex cuts

2015F 2015 (APBNP)

Tax income 1,099 1,294

Customs 176 195

Non-tax & customs 269 269

Grants 3 3

Total 1,547 1,762

Expenditure 1,984 1,984Budget deficit 437 223

Budget deficit/GDP 3.7% 1.9%


Economic stimulus

In order to stimulate the economy, the government has launched six

economic packages. Some policies, like those on investments, will have a

long-term impact, in our view.

Figure 30: Economic stimulus attempted by the government so far this year

No Economic stimulus Potential impact and stock(s) affected

1 Simplification of investment processes (including tax holidays and taxincentives) in Indonesia. There are also incentives for special economiczones.

Positive for Indonesia's investment competitiveness in the long term.

2 Lower income tax rate for exporters who deposit their money inIndonesia.

Positive for the currency as the policy will add dollar supply in thedomestic market. Mining companies such as ADRO, ANTM, INCO, ITMGand PTBA could be the biggest beneficiaries.

3 Lower retail energy prices (LPG, subsidised diesel and Pertalite). Positive for purchasing power, especially among low-income people.Companies which sell products to the mass market, such as RALS, INDF,GGRM, to benefit.

4 Lower non-subsidised diesel prices Coal companies (ADRO & ITMG) will be big beneficiaries of lower dieselprices. PTBA will also benefit but not as much.

5 Cuts in electricity prices and incentives for consumption during certainperiods.

Positive for SMGR, INTP, INDF.

6 Lower jet fuel prices More competitive domestic jet fuel prices. GIAA will be a bigbeneficiary as 35-40% of its costs are fuel-related.

7 Lower upstream gas prices through distribution efficiencies and lowering

governments revenue portion.

Positive for PGAS as it will remove overhang on potential cuts of its

distribution tariffs by the government.8 Setting annual minimum-wage increases based on inflation and

economic growth.Positive as it will reduce investment uncertainties and provide wage-cost visibility to corporates. Companies that stand to benefit includethose with a high proportion of labour costs such as AALI, LPPF, MAPI,KLBF and RALS. Industrial land companies such as DMAS and BEST shouldalso gain.

9 Discount on income tax for asset revaluation if it is done until end of2016. The normal tax rate is 10%, but it can be lowered to 3% (if doneuntil end of 2015), 4% (if done in 1H16) and 6% (if done in 2H16).

Positive, especially for highly-geared companies such as the Bakriegroup which includes BUMI & VIVA. Telco companies, especially TLKM,and two others with high debts (ISAT, EXCL), could be candidates ofasset-revaluation programme.

10 Removal of double taxation for REITs issued in Indonesia. More REIT listings in Indonesia with SMRA, PWON, LPKR being potentialcandidates.

Source: Bappenas and Maybank KE

773 758

1,294

0

200

400

600

800

1,000

1,200

1,400

YTD Oct 2014 YTD Oct 2015 Target 2015


10/19

November 25, 2015 10

Strategy Research

Earnings growth

Bottomed out

We think that corporate earnings bottomed out in 2Q15. We understand

that 3Q15 earnings, based on the companies we cover which have reported

results, were still down 2% YoY. Only banking, mining and telco earningsgrew YoY. However, the contractions in 3Q15 were better than 1Q15s -

10.1% and 2Q15s -8.6%, suggesting the worst is over.

Figure 31: Earnings bottomed out in 3Q15


Figure 32: A handful of sectors posted growth


Where could we miss, come next year?

We expect earnings to recover in 2016, in line with the economy. We are

eyeing growth of 7% in 2015 and 11% in 2016 vs consensus estimates of -9%

and +14%. But as 9M15 market EPS was still down 7% YoY, we think 2015growth could range between -5% and 0%. This would be below our forecast

with the potential culprits being the consumer, banking, infrastructure

(especially PGAS) and property sectors.

For 2016, market EPS could grow 11% YoY on the back of almost all

sectors, except cement, in our view. This is because recent years

oversupply is likely to persist. If 2015-16 EPS growth turns out to be 5% and

5-10% below our forecasts respectively, our 2016 earnings estimates could

be cut by 13-17%.

Figure 33: YoY earnings growth

1Q15 2Q15 3Q15 9M15 2015F9M15 -2015F 2016F

Automotive -16% -20% -16% -17% -16% -2% 17%

Cement -4% -26% -22% -18% -16% -2% 1%

Consumer -10% -3% -2% -5% 31% -41% 27%

Commodity -57% 2% -19% -31% -42% 9% 27%

Financial services 6% -10% 5% 1% 11% -11% 14%

Infrastructure -27% -24% -45% -32% 11% -43% 37%

Property 18% -46% -70% -34% 17% -50% 27%

Telco -44% 134% 90% 21% 14% 7% 16%

Others 11% 15% 36% 21% 12% 8% 19%

Market -10% -9% -2% -7% 7% -11% 11%


11%

3% 4%

1%

-10%-9%

-2%

-15%

-10%

-5%

0%

5%

10%

15%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15


11/19


Strategy Research

Index target and valuation

Index target and top picks

We set our new index target at 6,000, or 16.0-14.9x 2016-17 P/Es. Our

target is based on 1SD above the markets 6-year P/E mean of 14.0x.

During a recovery, the JCI can trade at up to 2SD above its mean.We are OVERWEIGHT on the interest-rate-sensitive automotive, banking

and property sectors, as well as infrastructure and telecommunications.

We are NEUTRAL on cement, commodities, consumer and retailers. Our top

picks are AALI, ACES, ASII, BBRI, BSDE, GGRM, JSMR, LPCK, TLKM and

WSKT.

Figure 34: Top picks and valuations

No Ticker Rating Mkt cap* Price** TP**+/- toTP (%)

P/E (x) P/BV (x) Yield (%) EPS growth (%) ROE (%)

2015F 2016F 2015F 2016F 2016F 2015F 2016F 2015F 2016F

1 AALI IJ BUY 2,110 18,250 24,000 31.5 44.6 17.4 2.4 2.2 0.9 -74.2 156.1 5.5 12.9

2 ACES IJ BUY 944 750 850 13.3 22.9 20.2 4.5 3.8 0.7 1.3 13.2 19.8 18.83 ASII IJ BUY 18,722 6,300 7,500 19.0 15.8 13.5 2.4 2.2 2.9 -15.7 17.1 15.5 16.5

4 BBRI IJ BUY 19,919 11,000 13,000 18.2 11.0 10.4 2.3 2.0 2.7 1.8 5.7 23.2 20.8

5 BSDE IJ BUY 2,366 1,675 2,100 25.4 13.0 12.1 1.7 1.5 0.9 -35.0 7.2 12.9 12.3

6 GGRM IJ BUY 7,238 51,250 60,000 17.1 17.8 15.6 2.7 2.4 2.0 3.0 14.6 15.1 15.4

7 JSMR IJ BUY 2,508 5,025 6,500 29.4 25.9 19.6 3.2 2.9 1.6 -5.9 31.9 12.4 14.7

8 LPCK IJ BUY 399 7,800 11,000 41.0 5.6 5.5 1.5 1.2 0.0 15.8 2.7 26.7 21.5

9 TLKM IJ BUY 21,569 2,915 3,300 13.2 17.8 16.1 3.7 3.3 2.0 12.8 10.5 21.0 20.2

10 WSKT IJ BUY 1,402 1,735 2,200 26.8 23.9 19.9 2.2 2.4 0.5 59.3 47.8 9.0 12.0

Total 60 cos (simple average) 17.4 14.2 3.7 2.5 3.2 9.8 24.2 18.1 17.8

Total 60 cos (aggregate) 15.1 13.6 2.4 2.4 2.2 6.8 10.9 16.1 16.3

Pricing as of 20 November 2015

* In USD; ** in IDR


1. Astra Agro Lestari (AALI IJ).After a disappointing 2015, 2016 should be

much better, from a potential big drop in production triggered by severe

droughts, forest fires and prolonged smog. These may boost CPO prices.

Lesser production is also expected from smallholders, which own 43% of

Indonesiasplanted areas. These farmers cut their fertiliser usage this year

following lower margins. As the sectors bellwether with the highest

liquidity and market cap in the sector, AALIs share price will likely react

first to any positive sentiment. In addition, its plantations are well-

dispersed, with only 40% located in the severely affected areas. Rupiah

stability should also shield it from huge forex losses.

2. Ace Hardware (ACES IJ). Maintain BUY and IDR850 TP. We believe

cannibalisation risks will ease from a normalisation of store openings. We

also expect lower financing costs next year along with lower debt.

Competition is milder for home improvement and lifestyle retail segment

than for other non-food segments such as fashion and electronics. Even

with more moderate expansion, we expect ACES to retain its dominance. It

operated 116 stores as of Sep 2015 vs IKEAs one and DIB Pongs 13, mainly

in Greater Jakarta. The stocks 20.6x 2016 P/E is at a 10.4% discount to its

3-year mean of 23x.

Figure 35: AALI vs JCI

Source: Bloomberg

Figure 36: ACES vs JCI

Source: Bloomberg

3,500

4,000

4,500

5,000

5,500

6,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

32,000

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

AALI (LHS) JCI (RHS)

3,5

4,0

4,5

5,0

5,5

6,0

400

500

600

700

800

900

1,000

1,100

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

ACES (LHS) JCI (RHS)


12/19


Strategy Research

3. Astra International (ASII IJ).Maintain BUY and IDR7,500 TP. Its stock

retreat of more than 25% since its March peak has likely factored in weak

automotive demand. Domestic 4W and 2W sales bottomed out in Jun-Jul

and have been improving with new models. We forecast earnings growth of

17.1% and 17.4% for 2016-17, led by its automotive, financing and

plantation units.

4. Bank Rakyat Indonesia (BBRI IJ). We believe managements attention

to loan quality should protect its balance sheet. BBRI has managed to keep

its NPLs and special-mention loans stable at 2.2% and 6.9% respectively.

Whatsmore encouraging are the increase in its NPL coverage to 150% in

9M15 from 142% in 6M15. BBRI should be able to maintain this ratio in2016-17, provided there are no major setbacks in the economy. With EPS

growth set to improve in 2016-17 to 5.7% and 6.8% from 2015s 1.8%, it

remains one of our top BUYs with a TP of IDR13,000, at 12.3x FY16 P/E and

2.4x P/BV.

5. Bumi Serpong Damai (BSDE IJ). Maintain BUY with a TP of IDR2,100, at

a 35% discount to RNAV. BSDE remains our top pick among residential

property developers as its assets have monetisation potential. During an

economic slowdown, we prefer developers with strong balance sheets suchas BSDE. Its main appeal is its huge land bank in BSD City, Greater Jakarta,

where we believe BSDE can continue to capitalise on urbanisation. The

company is also expanding in other cities to diversify its portfolio.

6. Gudang Garam (GGRM IJ). Reiterate BUY with a TP of IDR60,000, at 18x

FY16 P/E on the back of potential industry growth and shifts in consumer

preference. GGRMs valuation also appears undemanding at a 60% discount

to peer HMSPs 36xP/E. We expect GGRM to raise its ASPs again towardsyear-end to pass on part of the excise-tax increase next year. We estimate

ASP increases of 10-12% YoY pa for 2015-16, which should protect its EBIT

margins. Easing pressure on the IDR and milder inflation are also expected

to improve affordability and cigarette sales. We project a volume decline

of 5.2% YoY in 2015, before a 0.2% YoY recovery next year.

Figure 37: ASII vs JCI

Source: Bloomberg

Figure 38: BBRI vs JCI

Source: Bloomberg

Figure 39: BSDE vs JCI

Source: Bloomberg

Figure 40: GGRM vs JCI

Source: Bloomberg

3,500

4,000

4,500

5,000

5,500

6,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

ASI I (LHS) JCI (RHS)

3,500

4,000

4,500

5,000

5,500

6,000

6,000

7,000

8,0009,000

10,000

11,000

12,000

13,000

14,000

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

BBRI (LHS) JCI (RHS)

3,500

4,000

4,500

5,000

5,500

6,000

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

BSDE (LHS) JCI (RHS)

3,500

4,000

4,500

5,000

5,500

6,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

GGRM (LHS) JCI (RHS)


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Strategy Research

7. Jasa Marga (JSMR IJ). Earnings should grow by double digits again in

2016, from tariff adjustments in an even year. Upside could stem from

higher-than-expected traffic volume, as the company is constructing more

than 312km of new roads. Most will be completed in 2018. With

government-intervention risks subsiding, we expect a share-price recovery.

Maintain BUY with a DCF-based TP of IDR6,500.

8. Lippo Cikarang (LPCK IJ). Maintain BUY and IDR11,000 TP, at a 51%

discount to RNAV. Orange County is its unique development in an industrial

estate, buffering Lippo Cikarang from the property slowdown. The

company is set to sell five towers of apartments in 2015. Recently, it also

signed a cooperation agreement with Mitsubishi to part-develop USD100mof projects in Orange County.

9. Telekomunikasi Indonesia (TLKM IJ). Benign competition has allowed

the telco to raise cellular tariffs and sustain its market leadership. FY16

revenue could grow by double digits, in our estimation. This would be led

by data growth with the continued migration from 2G to 3G, low

smartphone penetration, early adoption of 4G LTE and considerably lower

data tariffs than the regional. Data is expected to compensate for

saturation in its legacy business. On top of that, net gearing is the lowest

in the sector. Maintain BUY and IDR3,300 TP, at 6.4x FY16 EV/EBITDA.

10. Waskita Karya (WSKT IJ). WSKT has the strongest capital structure to

support a robust new-order target of IDR30t for 2015. YTD new orders

already amount to IDR25t. WSKT has been aggressively participating in keyprojects not only as contractor but also as majority/minority investor. It

was recently appointed by the government to build a IDR7t Light Rail

Transit system in Palembang, South Sumatra. With a soaring order book,

we are eyeballing an earnings CAGR of 34% for 2016-2017. Our TP of

IDR2,200 is set at 25x 2016 P/E, in line with the sector.

Figure 41: JSMR vs. JCI

Source: Bloomberg

Figure 42: LPCK vs JCI

Source: Bloomberg

Figure 43: TLKM vs. JCI

Source: Bloomberg

Figure 44: WSKT vs. JCI

Source: Bloomberg

3,500

4,000

4,500

5,000

5,500

6,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

JSMR (LHS) JCI (RHS)

3,500

4,000

4,500

5,000

5,500

6,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

LPCK (LHS) JCI (RHS)

3,500

4,000

4,500

5,000

5,500

6,000

1,700

1,900

2,100

2,300

2,500

2,700

2,900

3,100

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

TLKM (LHS) JCI (RHS)

3,500

4,000

4,500

5,000

5,500

6,000

0

200

400

600

800

1,000

1,200

1,4001,600

1,800

2,000

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

WSKT (LHS) JCI (RHS)


14/19


Strategy Research

Valuation

At 4,500, the index trades at 12.0x 2016 P/E and 2.1x 2016 P/BV. These

are 1SD below its 6-year mean. If 2015-16 market EPS contracts 5% and

grows 10% respectively, the market would trade at 13.7x P/E, pretty much

in line with its 6-year mean.

Figure 45: JCIsP/E


Figure 46: andP/BV


10.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

Jan-10

May-10

Sep-10

Jan-11

May-11

Sep-11

Jan-12

May-12

Sep-12

Jan-13

May-13

Sep-13

Jan-14

May-14

Sep-14

Jan-15

May-15

Sep-15

PER, x

PER 1x SD 6-year mean -1x SD

2.0

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

Jan-10

May-10

Sep-10

Jan-11

May-11

Sep-11

Jan-12

May-12

Sep-12

Jan-13

May-13

Sep-13

Jan-14

May-14

Sep-14

Jan-15

May-15

Sep-15

PBV, x

PBV 1x SD 6-year mean -1x SD


15/19


Strategy Research

Risks to our view

Although we believe the economy has bottomed out, the following could

upset our forecasts, among others:

1. IDR volatility. Currency volatility remains the largest risk, especially

for foreign investors. Potential rate hikes by the Fed and uncertain Chinesepolicies are among the variables. We believe BI has an eye on currency

volatility before potentially easing its monetary policy further.

2. Subdued global economies. We dont expect global economies to

recover strongly in 2016. Commodities account for more than 50% of

Indonesiasexports while 20-25% of its GDP is commodity-related. Also, a

global economic slowdown could hurt domestic consumption, which is the

largest GDP component.

3. Uneven economic recovery.Our expected economic recovery in 4Q15

may not be smooth, given shaky global economies and uncertainties in tax

collection and budget spending.

4. Almost similar budget.2016 state budget is not significantly different

from 2015 in terms of size, allocations, deficit and sources of revenue.

Execution remains key for effective economic stimulus.


16/19


Strategy Research

Research Offices

REGIONAL

Sadiq CURRIMBHOY

Regional Head, Research & Economics

(65) 6231 5836 [email protected]

WONG Chew Hann, CA

Regional Head of Institutional Research


ONG Seng Yeow

Regional Head of Retail Research

(65) 6231 [email protected]

TAN Sin Mui

Director of Research


ECONOMICS

Suhaimi ILIASChief Economist

Singapore | Malaysia(603) 2297 8682 [email protected]

Luz LORENZOPhilippines(63) 2 849 [email protected]

Tim LEELAHAPHANThailand(66) 2658 6300 ext [email protected]

JUNIMANChief Economist, BIIIndonesia(62) 21 29228888 ext 29682

[email protected]

STRATEGY

Sadiq CURRIMBHOY

Global Strategist


Willie CHAN

Hong Kong / Regional


MALAYSIA

WONG Chew Hann, CAHead of Research(603) 2297 8686 [email protected]

StrategyDesmond CHNG, ACA(603) 2297 [email protected] Banking & Finance

LIAW Thong Jung(603) 2297 8688 [email protected] Oil & Gas Services- Regional

ONG Chee Ting, CA(603) 2297 8678 [email protected] Plantations - Regional

Mohshin AZIZ(603) 2297 8692 [email protected] Aviation - Regional Petrochem

YIN Shao Yang, CPA(603) 2297 8916 [email protected] Gaming Regional Media

TAN Chi Wei, CFA(603) 2297 8690 [email protected] Power Telcos

WONG Wei Sum, CFA

(603) 2297 8679 [email protected] Property

LEE Yen Ling(603) 2297 8691 [email protected] Building Materials Glove Ports Shipping

CHAI Li Shin, CFA(603) 2297 8684 [email protected] Plantation Construction & Infrastructure

Ivan YAP(603) 2297 8612 [email protected] Automotive Semiconductor Technology

Kevin WONG(603) 2082 6824 [email protected] REITs Consumer Discretionary

LIEW Wei Han

(603) 2297 8676 [email protected] Consumer Staples

LEE Cheng Hooi Regional Chartist(603) 2297 [email protected]

Tee Sze Chiah Head of Retail Research(603) 2297 6858 [email protected]

Cheah Chong Ling(603) 2297 8767 [email protected]

HONG KONG / CHINA

Howard WONG Head of Research(852) 2268 [email protected] Oil & Gas - Regional

Benjamin HO

(852) 2268 0632 [email protected] Consumer & Auto

Jacqueline KO,CFA(852) 2268 0633 [email protected] Consumer Staples & Durables

Ka Leong LO, CFA(852) 2268 0630 kl [email protected] Consumer Discretionary & Auto

Mitchell KIM(852) 2268 0634 [email protected] Internet & Telcos

Osbert TANG, CFA(86) 21 5096 [email protected] Transport & Industrials

Stefan CHANG,CFA(852) 2268 [email protected] Technology

Steven ST CHAN(852) 2268 0645 [email protected] Banking & Financials - Regional

Warren LAU(852) 2268 [email protected] Technology Regional

INDIA

Jigar SHAH Head of Research

(91) 22 6623 2632 [email protected]

Oil & Gas Automobile Cement

Anubhav GUPTA


Metal & Mining Capital Goods Property

Vishal MODI


Banking & Financials

Abhijeet KUNDU(91) 22 6623 2628 [email protected]

Consumer

Neerav DALAL


Software Technology Telcos

SINGAPORE

Gregory YAP(65) 6231 5848 [email protected] SMID Caps Technology & Manufacturing Telcos

YEAK Chee Keong, CFA(65) 6231 [email protected] Offshore & Marine

Derrick HENG,CFA(65) 6231 5843 [email protected] Transport Property REITs (Office)

Joshua TAN(65) 6231 5850 [email protected] REITs (Retail, Industrial)

John CHEONG,CFA(65) 6231 5845 [email protected] Small & Mid Caps Healthcare

TRUONG Thanh Hang(65) 6231 5847 [email protected] Small & Mid Caps

INDONESIA

Isnaputra ISKANDARHead of Research(62) 21 2557 [email protected] Strategy Metals & Mining Cement

Rahmi MARINA

(62) 21 2557 [email protected] Banking & Finance

Aurellia SETIABUDI(62) 21 2953 [email protected] Property

Pandu ANUGRAH(62) 21 2557 [email protected] Infra Construction Transport Telcos

Janni ASMAN(62) 21 2953 [email protected] Cigarette Healthcare Retail

Adhi TASMIN(62) 21 2557 [email protected] Plantations

Anthony LUKMAWIJAYA(62) 21 2557 [email protected] Aviation

PHILIPPINES

Luz LORENZOHead of Research(63) 2 849 [email protected] Strategy Utilities Conglomerates Telcos

Lovell SARREAL(63) 2 849 [email protected] Consumer Media Cement

Rommel RODRIGO(63) 2 849 [email protected] Conglomerates Property Gaming Ports/ Logistics

Katherine TAN(63) 2 849 [email protected] Banks Construction

Michael BENGSON(63) 2 849 [email protected] Conglomerates

Jaclyn JIMENEZ(63) 2 849 [email protected] Consumer

Arabelle MAGHIRANG(63) 2 849 [email protected] Banks

THAILAND

Maria LAPIZ Head of Institutional ResearchDir (66) 2257 0250 | (66) 2658 6300 ext [email protected]

Consumer Materials Ind. Estates

Sittichai DUANGRATTANACHAYA(66) 2658 6300 ext [email protected] Services Sector Transport

Yupapan POLPORNPRASERT(66) 2658 6300 ext [email protected] Oil &Gas

Sukit UDOMSIRIKULHead of Retail Research(66) 2658 6300 ext [email protected]

Mayuree CHOWVIKRAN(66) 2658 6300 ext [email protected] Strategy

Padon VANNARAT(66) 2658 6300 ext 1450

[email protected] Strategy

Surachai PRAMUALCHAROENKIT(66) 2658 6300 ext [email protected] Auto Conmat Contractor Steel

Suttatip PEERASUB(66) 2658 6300 ext [email protected] Media Commerce

Sutthichai KUMWORACHAI(66) 2658 6300 ext 1400

[email protected] Energy Petrochem

Termporn TANTIVIVAT(66) 2658 6300 ext [email protected] Property

Jaroonpan WATTANAWONG(66) 2658 6300 ext [email protected] Transportation Small cap

VIETNAM

LE Hong Lien, ACCAHead of Institutional Research(84) 8 44 555 888 x [email protected] Strategy Consumer Diversified Utilities

THAI Quang Trung, CFA, Deputy Manager,Institutional Research

(84) 8 44 555 888 x [email protected] Real Estate Construction Materials

Le Nguyen Nhat Chuyen(84) 8 44 555 888 x [email protected] Oil & Gas

NGUYEN Thi Ngan Tuyen,Head of Retail Research(84) 8 44 555 888 x [email protected] Food & Beverage Oil&Gas Banking

TRINH Thi Ngoc Diep(84) 4 44 555 888 x [email protected] Technology Utilities Construction

PHAM Nhat Bich(84) 8 44 555 888 x [email protected] Consumer Manufacturing Fishery

NGUYEN Thi Sony Tra Mi(84) 8 44 555 888 x [email protected] Port operation Pharmaceutical Food & Beverage

TRUONG Quang Binh(84) 4 44 555 888 x [email protected] Rubber plantation Tyres and Tubes Oil&Gas


17/19


Strategy Research

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 asan 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 fluctuateand that each securitys price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamentalratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price andvolume-related information extracted from the relevant jurisdictions stock exchange in the equity analysis. Accordingly, investorsreturns may be less thanthe original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investmentadvice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or readthis report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investmentstrategies 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 MaybankInvestment Bank Berhad, its subsidiary and affiliates (collectively, MKE) and consequently no representation is made as to the accuracy or completeness ofthis 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 reli ance of thisreport. 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 mightoccur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to usand are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward lookingstatements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update orrevise 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 solicitbusiness from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or otherinvestments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extentpermitted 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 MKEs clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party inwhole 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 forthe 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 onlyunder such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certaincategories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based ongeographical 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 fundamentalratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa MalaysiaSecurities 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 Rese arch Pte. Ltd. (MaybankKERPL) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contactMaybank 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 accreditedinvestor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legallyliable 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 theOffice 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 Thailandand the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from theperspective 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) PublicCompany 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 theSecurities 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 inthe 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. Youshould satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevantlegislation 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 ServicesAuthority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the FinancialServices 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 anyresponsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered asconstituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.


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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 furtheract as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investmentbanking services, advisory and other services for or relating to those companies.

Singapore:As of 25 November 2015, 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 theresearch report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connectedparties 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 Paragraph16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

As of 25 November 2015, 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 inissues 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 orinvestment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from thecompanies covered in this report.

OTHERS

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part ofthe research analysts 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 capableof understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and politicalfactors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit qualityof any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with itsown 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 systemBUY 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 onlyapplicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investmentratings as we do not actively follow developments in these companies.

DISCLOSURES

Legal Entities Disclosures

Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of BursaMalaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore:This material is issued anddistributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim EngSecurities (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 ExchangeCommission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam. HongKong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (KESI) is aparticipant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and isregulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: MaybankKESUSA 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 bythe Financial Services Authority.


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Strategy Research

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

SingaporeMaybank Kim Eng Securities Pte Ltd

Maybank Kim Eng Research Pte Ltd

50 North Canal Road

Singapore 059304

Tel: (65) 6336 9090

LondonMaybank Kim Eng Securities

(London) Ltd

5thFloor, Aldermary House

10-15 Queen Street

London EC4N 1TX, UK

Tel: (44) 20 7332 0221

Fax: (44) 20 7332 0302

New YorkMaybank Kim Eng Securities USA

Inc

777 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 KongKim Eng Securities (HK) Ltd

Level 30,

Three Pacific Place,

1 Queens Road East,

Hong Kong

Tel: (852) 2268 0800

Fax: (852) 2877 0104

IndonesiaPT Maybank Kim Eng Securities

Plaza Bapindo

Citibank Tower 17thFloor

Jl Jend. Sudirman Kav. 54-55

Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188

Fax: (62) 21 2557 1189

IndiaKim 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

PhilippinesMaybank 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

ThailandMaybank Kim Eng Securities

(Thailand) Public Company Limited

999/9 The Offices at Central World,

20

th

- 21

st

Floor,Rama 1 Road Pathumwan,

Bangkok 10330, Thailand

Tel: (66) 2 658 6817 (sales)

Tel: (66) 2 658 6801 (research)

VietnamMaybank Kim Eng Securities Limited

4A-15+16 Floor Vincom Center Dong

Khoi, 72 Le Thanh Ton St. District 1

Ho Chi Minh City, Vietnam

Tel : (84) 844 555 888

Fax : (84) 8 38 271 030

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 TradingKevin Foy

Regional Head Sales Trading

[email protected]

Tel: (65) 6336-5157

US Toll Free: 1-866-406-7447

North Asia Sales TradingAndrew Lee

[email protected]

Tel: (852) 2268 0283

US Toll Free: 1 877 837 7635

MalaysiaRommel Jacob

[email protected]: (603) 2717 5152

ThailandTanasak Krishnasreni

[email protected]:(66)2 658 6820

IndonesiaHarianto [email protected]: (62) 21 2557 1177

New YorkAndrew [email protected]: (212) 688 2956

IndiaManish [email protected]:(91)-22-6623-2601

VietnamTien [email protected]

Tel: (84) 44 555 888 x8079

PhilippinesKeith [email protected]:(63) 2 848-5288

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