REGIONAL DAILY

December 26, 2012

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.

MALAYSIA

Malaysia Daybreak | 30 June 2014

▌What’s on the Table… ——————————————————————————————————————————————————————————————————————

Healthcare - overall - Who benefits from rising costs?

Healthcare spending in Malaysia has enormous growth potential due to the country’s ageing population and rising incomes. However, private healthcare spending growth may slow down over the next few years as medical inflation outstrips income growth. Also, higher living costs are likely to curb healthcare spending and squeeze private hospitals’ margins. We prefer pharmaceutical stocks (Pharmaniaga and Hovid) due to their cheaper valuations. For hospital exposure, we like IHH which is less exposed to Malaysian consumers than KPJ. We maintain our Overweight call on the Malaysian healthcare sector with Pharmaniaga as our top pick.

Economic Update - New fuel subsidy system in Sep?

Amid the recent escalation in global oil prices due to geopolitical tensions in Iraq, we think that where subsidised fuel prices will go in 4Q14 is the larger source of uncertainty. Reports about a new fuel subsidy system have circulated since early this month, raising concerns of whether the government can successfully pull it off this time after plans to introduce a similar system were scrapped back in 2010.

Asia Pacific Travel & Leisure - Booming Asian travel demand

We have an Overweight position on the regional (Asia Pacific ex-Japan) travel and leisure sector, given structurally growing travel demand from rising income and wealth levels in China and ASEAN. We like companies with exposure to Chinese overseas shoppers or leveraged to travel volume growth. Growing wealth and income levels in Asia are likely to help expand the region’s middle class and boost discretionary spending. Chinese tourists are likely to account for 70-80% of the growth in the next five years and we recommend investors to invest in companies with high exposure to the Chinese tourists.

▌News of the Day… ——————————————————————————————————————————————————————————————————————

• Maxis to stop its practice of borrowing to part-fund dividend payments from 2015

• Sime Darby looking to acquire a REIT to inject its commercial properties?

• Mah Sing aims to secure RM3.6bn in sales of properties this year, above 2013 levels

• MRCB targeting 11.6ha government land adjacent to its PJ Sentral project?

• Euro-area economic confidence unexpectedly declined to 102 in Jun from 102.6 in May

Sources: CIMB. COMPANY REPORTS

Sources: CIMB. COMPANY REPORTS

Key Metrics

FBMKLCI Index

1,650

1,700

1,750

1,800

1,850

1,900

Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14

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FBMKLCI

1880.93 -9.04pts -0.48%June Futures July Futures

1884 - (-0.45% ) 1886.5 - (1.00% )———————————————————————————

Gainers Losers Unchanged372 392 334

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Turnover1644.14m shares / RM1803.787m

3m avg volume traded 1794.63m shares

3m avg value traded RM2050.19m———————————————————————————

Regional IndicesFBMKLCI FSSTI JCI SET HSI

1,881 3,271 4,845 1,483 23,222 ————————————————————————————————

Close % chg YTD % chg

FBMKLCI 1,880.93 (0.5) 0.7

FBM100 12,668.25 (0.4) 0.6

FBMSC 17,938.25 0.2 14.3

FBMMES 6,695.77 (0.3) 18.0

Dow Jones 16,851.84 0.0 1.7

NASDAQ 4,397.93 0.4 5.3

FSSTI 3,271.05 (0.2) 3.3

FTSE-100 6,757.77 0.3 0.1

Hang Seng 23,221.52 0.1 (0.4)

JCI 4,845.13 (0.6) 13.4

KOSPI 1,988.51 (0.3) (1.1)

Nikkei 225 15,095.00 (1.4) (7.3)

PCOMP 6,842.15 (0.7) 16.2

SET 1,483.24 0.4 14.2

Shanghai 2,036.51 (0.1) (3.8)

Taiwan 9,306.83 (0.2) 8.1————————————————————————————————

Close % chg Vol. (m)

1 UTOPIA 0.060 (7.7) 126.2MAS 0.210 2.4 73.0

SUMATEC 0.315 5.0 69.3

SKP RESOURCES 0.535 1.9 52.9

PWORTH 0.230 4.5 27.0

JAG BHD 0.350 (5.4) 25.8

GREENYIELD 0.330 11.9 25.0

TALAM 0.105 0.0 23.1————————————————————————————————

Close % chg

US$/Euro 1.3645 (0.04)RM/US$ (Spot) 3.2135 (0.03)

RM/US$ (12-mth NDF) 3.2772 (0.35)

OPR (% ) 3.00 0.00

BLR (% , CIMB Bank) 6.60 0.00

GOLD ( US$/oz) 1,315 (0.07)

WTI crude oil US spot (US$/barrel) 105.74 (0.09)

CPO spot price (RM/tonne) 2,482.00 2.06

Market Indices

Top Actives

Economic Statistics

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Terence WONG CFA T (60) 3 2261 9088 E terence.wong@cimb.com

https://cimbequityresearch.cimb.com/EFAOnTheWeb/EFAWebAPI/GetDocPDF.asp?DocGUID=0CC7D763-EC13-4EFF-AA61-D381F789B3EC&A=CIMBhttps://cimbequityresearch.cimb.com/EFAOnTheWeb/EFAWebAPI/GetDocPDF.asp?DocGUID=0922DDFF-1611-4A27-BE41-DC4BD4F8362D&A=CIMBhttps://brokingrfs.cimb.com/5EL9s9kIc-UZaNpMrgWQ0BeMXMg6EJD1L3TnwxfhdHU7ek5yv6kvjV9RIN01_10JvKfs2y-GVY3Z1A2.pdf

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June 30, 2014

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Global Economic News…

The US Thomson-Reuters/University of Michigan final Jun sentiment index increased to 82.5 (preliminary reading of 81.2 and a final-May reading of 81.9). (WSJ)

Euro-area economic confidence unexpectedly declined to 102 in Jun from a revised 102.6 in May. Industrial confidence declined to -4.3 from -3.1 in May. Services sentiment rose to 4.2 from 3.8 while consumer confidence slipped to -7.5 (-7.4 previously reported). (Bloomberg)

The European Central Bank (ECB) currently perceives a period of extremely low inflation in the euro zone, but no deflationary pressure, ECB executive board member Yves Mersch said. (WSJ)

Overall inflation in Japan rose 3.7% yoy in May (+3.4% yoy in Apr). Inflation rose 3.4% yoy excluding food (+3.2% yoy in Apr) while the gauge excluding both food and energy advanced 2.2% yoy in May (+2.3% yoy in Apr). (Bloomberg)

Japan’s jobless rate fell to 3.5% in May (3.6% in Apr), the lowest since 1997 and a level the Bank of Japan (BOJ) says is near full employment. The jobs-to-applicants ratio rose to 1.09 in May (1.08 in Apr), which is the highest level since 1.10 in Jun 1992. (Reuters)

Japanese household spending fell 8% yoy in May (-4.6% yoy in Apr). (Reuters)

Japan retail sales was down 0.4% yoy in May (-4.3% yoy in Apr). On a monthly basis, retail sales climbed 4.6% mom (-13.6% mom in Apr). Sales from large retailers fell 1.2% yoy (-6.7% yoy in Apr). (RTT)

Australia may simplify the payment structure of its welfare system, estimated to cost A$145.8bn (US$137bn) in the year to Jun 2015, under proposals contained in an interim review.

The review proposes a structure of four basic benefits, compared with the current 20 payments and 50 supplements, Social Services Minister Kevin Andrews said in a statement. It also suggests reserving disability support to those permanently impaired and unable to work. (Bloomberg)

Indonesia’s trade balance is expected to return to a surplus of between US$15m and U$30m in May, the deputy central bank governor said. After surpluses in Feb and Mar, Indonesia’s trade balance swung to a US$1.97bn deficit in Apr. (Jakarta Globe)

The Indonesian government has issued permits for domestic companies to import beef in the third quarter this year, effective immediately. The trade ministry also issued two approvals for exports of unrefined mineral commodities for Sebuku Iron Lateritic Ores and Lumbung Mineral Sentosa. Both companies must now wait to be granted status as registered exporters before starting to export their stockpiles. (Jakarta Globe)

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Bank of Thailand (BoT) in its quarterly report said that it is hopeful the country's economy will return to normal in 2015 given the greater clarity in the political situation as a result of the May 22 coup. The recovery in the export sector remains slow however and exports are unlikely to help boost growth soon.

2014 GDP growth estimate was revised down to 1.5% (+2.7% projected in Mar), due to very sluggish growth earlier in the year. Accordingly, the BOT has also raised its 2015 GDP growth forecast to 5.5% (earlier projection of 4.8%).

It expects though that export recovery will remain slow until next year due to a decline in demand from China, Japan and Asean and to falling agricultural product prices on the global market. Export growth estimate was lowered to 3% for 2014 (previously 4.5%) and 6% for 2015 (previously 6.5%). (WSJ)

Thailand's Manufacturing Production Index (MPI) fell 4.1% yoy in May (-4.1% yoy in Apr). Capacity utilization rate was 61.41% (56.4% in Apr). (WSJ)

Thailand's military junta will install an interim constitution next month, and elections will be held around Oct 2015, its leader announced Friday. Army commander Gen. Prayuth Chan-ocha said the temporary constitution will allow an interim legislature and Cabinet to begin governing the country in Sep. He said an appointed reform council and constitution drafting committee will then work on a long-term charter to take effect Jul 2015. (AP)

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the rate of inflation is forecast to settle between 4.1% and 5% in Jun, on the back of higher food prices and transport fare hikes. (Philippines Star)

Vietnam’s gross domestic product (GDP) rose 5.25% yoy in 2Q14 (+5.09% yoy in 1Q14). In the first half of the year, GDP rose 5.18% yoy (+4.9% yoy in 1H13). (Bloomberg, CNA)

Vietnam’s exports rose 14.9% yoy YTD in Jun (+15.4% yoy YTD in May) and imports climbed 11% yoy YTD (+9.6% yoy YTD in May). The trade balance in Jun was US$200m deficit (US$369m deficit in May). (Bloomberg)

Vietnam’s industrial production rose 6.1% yoy in Jun (+5.9% yoy in May). (Bloomberg)

Malaysian Economic News…

The Malaysian bio-trade and investment mission in conjunction with the 2014 BIO International Convention in San Diego resulted in seven exchanges of documents for collaboration in the biomedical and wellness industry. The first exchange of documents was between Algae International Bhd (AIB) and Nutrigae to develop mutually beneficial programmes/projects to generate algae related products. (Bernama)

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June 30, 2014

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The Federation of Goldsmiths and Jewellers Associations is optimistic the government will exempt gold for investment purposes from the goods and services tax (GST). Its president, Ermin Siow, said the industry players had engaged the government on the matter and was waiting for a reply. "We believe the government understands the situation and we are quite optimistic it will actually exempt GST on investment bar," he said. "We are still waiting for the reply. Singapore and Thailand are not imposing GST (on investment bar). If they impose in Malaysia, a lot of money (for investment precious metals) will flow out," said Siow. (Bernama)

Malaysia is expected to register real gross domestic product (GDP) growth of 5.4% this year, according to World Bank's Malaysia Economic Monitor: Boasting Trade Competitiveness. The report said GDP was expected to decelerate to 4.6% next year due to base effects and would normalise to 5% in 2016. "The contributions of domestic demand will decline as exports pick up," said the report which was launched by Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar.

Changes in administered prices and the introduction of the goods and services tax (GST) would lead to a modest pick-up in inflation from 2.1% last year to 3.5% this year and 3.4% next year. It said the introduction of GST would support consolidation efforts in medium term, and GST was expected to eventually broaden the tax base and diversify it from oil revenue. "As a result of consolidation, debt levels are expected to decline," it said. (Bernama)

The 1Malaysia People's Takaful Insurance Group (i-BR1M) has paid out RM20.37m in claims involving 6,483 cases from January 1 to June 25 this year. Deputy Finance Minister, Datuk Ahmad Maslan, said claims due to deaths from accidents involved 476 cases worth RM14.28m. (Bernama)

Working Malaysians need to have an insurance coverage of about nine times their annual salary, according to a study by the Malaysian Takaful Association (MTA). This translates into a shortfall in insurance coverage of RM200,000 per individual and the overall "protection gap" of 12.5m working Malaysians in 2012 totalled RM2.5tr.The protection gap refers to the financial needs for working adults in Malaysia up to their retirement age, against the financial consequences of death, critical illness and disability.

According to Actuarial Partners Consulting Sdn Bhd, the company commissioned by the MTA to carry out the study, it revealed that Singapore and Taiwan had a lower protection gap over Malaysia, while for those in Indonesia, Thailand, Hong Kong and Vietnam, it was higher. Meanwhile, Deputy Finance Minister Datuk Ahmad Maslan said the government aspired to achieve a penetration rate of 75% of total population for life insurance coverage. (Bernama)

The Domestic Trade, Cooperative and Consumerism Ministry has fixed the ceiling price for 18 controlled items under the Aidilfitri Price Control Scheme 2014, which will take effect from July 20 to Aug 5. Its minister, Datuk Seri Hasan Malek, said the scheme would be implemented under the Price Control and Anti-Profiteering Act 2011. The 18 controlled items are live chicken, standard chicken, super chicken, local beef, imported beef (maximum price in Sarawak only), imported buffalo meat (India), chicken eggs - grade A, B and C, red chilies, tomatoes, whole coconuts (ceiling price at wholesale level only), grated coconut (ceiling price at retail level only), shallots (India), imported onions, garlic (China), imported potatoes (China) and ikan kembung.

On the price reduction campaign launched by Prime Minister Datuk Seri Najib Tun Razak on Jan 29 this year, Hasan said so far, 178 supermarkets

Daybreak│Malaysia

June 30, 2014

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with 1,089 branches nationwide had participated in the campaign which aimed at tackling and minimising the increase in the price of essential items. He said up to 4,000 products were being given a discount of between 10 to 70% during the campaign. (Bernama)

Four guidelines have been drawn up to check the abuse of subsidised petrol and diesel nationwide. Domestic Trade, Cooperative and Consumerism Ministry (KPDNKK) secretary-general Datuk Seri Alias Ahmad said, firstly, supply for each kiosk in the east coast of Sabah would be limited to 600,000 litres of fuel monthly from Jul 1.

"Each of the 72 stations will only get 600,000 litres of diesel and petrol monthly in the light of rampant smugglings," he said. Secondly, he said KPDNKK would decide the quota and approval of subsidised fuels for each petrol station, and not the oil and gas companies, from Aug 1. "The second step is mandatory for all stations and they must submit a monthly sale report to the state KPDNKK for diesel and petrol RON 95," he said.

Thirdly, he said all tankers transporting subsidised fuels must be painted blue with the words 'minyak subsidi' in large letters from Jan 1, 2015.

Fourthly, Alias said the ministry had decided to impose a condition on applications for additional special quotas to flipcards which were used for school bus, express bus, mini bus, state bus, rented car, taxi and ambulance. (Bernama)

The transformation of public transport starting 2010 has made good progress with modal share of urban public transport rising to 21% from 17% four years ago. Deputy Prime Minister Tan Sri Muhyiddin Yassin said it is fast approaching the target of 25% modal share of urban public transport by 2015. "By end 2013, the average monthly target of 400,000 public transport passengers during peak hours achieved average of 437,525 passengers monthly," he said. (Bernama)

The price of 32 products listed under the 'Jimat Belanja Dapur' programme will be further reduced throughout the month of Ramadan. Agriculture and Agro-based Industry Minister Datuk Seri Ismail Sabri Yaakob said the already low price of the products would be further reduced between 10 to 20 per cent at all farmers' markets nationwide. (Bernama)

Investors who are ready to invest in less-developed areas in the country will be offered new and better incentives, said Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed. He said the incentives were designed as the new encouragement from the federal government to assist states that received lower investment compared with more developed states that obtained huge investments. "The incentives are still being studied by the Malaysian Investment Development Authority (MIDA) and the Ministry of International Trade and Industry (MITI) together with the Finance Ministry, and are expected to be announced soon," he said. (Bernama)

The Small Medium Enterprises (SME) Association wants the government to extend the grace period for full implementation of the Goods and Services Tax (GST) to three years. According to the association president, Teh Kee Sin, this is to allow SME entrepreneurs become familiar with the new tax. He said based on seminars held in 11 locations, more than 80% of the SME entrepreneurs did not know or understand the GST. "The grace period to familiarise is too short. Do not penalise us, if there are some who are unable to understand the new tax, when it is implemented. "The government has given a

Daybreak│Malaysia

June 30, 2014

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two-year timeframe, but we are hoping for a three-year grace period for SMEs," he said. (Bernama)

Rubber prices, which have dipped to a low of RM1.80 per kg, is only a temporary phenomena and the market for the commodity is set to recover soon, says Sabah Rubber Industry Board Datuk Ahmad Bujang. He advised the 27,000 smallholders in the state to remain patient in facing the challenge as the government was doing its best to ease their burden following the depressed demand for natural rubber globally.

"We have requested for assistance from the government and to stabilise rubber prices The state government has given us grants that we can use to buy rubber at higher prices from the smallholders," he said, adding that the board would purchase the commodity above market prices. (Bernama)

Over a third of the Japanese companies surveyed by Japanese Chamber of Trade & Industry, Malaysia (Jactim) and Japan External Trade Organisation (Jetro) intends to expand their businesses in Malaysia. Jetro's Managing Director, Joji Ikeshita, said "the most attractive aspect of investment in Malaysia for Japanese companies operating in Malaysia is political stability and this has not changed in recent years, with 68% of the respondents marked 'political stability' as an attractive aspect of Malaysia, which has maintained the first place in the comparable studies since 2008. The survey results also showed that many of the companies appreciated the linguistic capacity of Malaysians. (Bernama)

The federal government will study the Kedah government's proposal to build a new international airport in Kulim, Transport Minister Datuk Seri Liow Tiong Lai said. However, he said, he had yet to receive the proposal. On the Penang government's request for a second runway, Liow said the ministry would also study the matter. (Bernama)

The state government will place emphasis on rural development to narrow the gap between the rich and the poor in Sarawak. Chief Minister Tan Sri Adenan Satem said there was a need to narrow down the increasingly widening disparity. "That is why I have asked for an increase in oil royalty from the federal government. I have talked to Prime Minister Datuk Seri Najib Tun Razak about this and he seems quite receptive to it. I will pursue it further," he said. (Bernama)

The hot and dry weather that the country is experiencing now is not due to the El Nino phenomenon, according to the National Antarctica Research Centre (NARC) director, Prof Datuk Dr Azizan Abu Samah. Instead, he said, it was because of the southwest monsoon which started in the middle of May and was expected to continue until Sep. "What we are facing now is normal weather which is connected to the southwest monsoon, with the weather drier than normal," he said, adding that the El Nino phenomenon had not yet begun and there were no signs of it yet. (Bernama)

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June 30, 2014

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Political News…

Umno mouthpiece Utusan Malaysia expressed sympathy for PKR's Tan Sri Abdul Khalid Ibrahim, who is facing mounting pressure from his colleagues to resign as Selangor menteri besar. Awang Selamat, the collective editorial pseudonym, said today Khalid, who previously fended off accusations of having links with Umno, now risked losing his job following his recent loss in the Kuala Selangor branch elections. “Awang sympathises with Khalid, who is facing increasingly stronger tests and pressure from his own party, PKR, and the opposition’s component parties,” said Awang. Utusan’s Sunday edition said that

Khalid’s loss was the best opportunity for his enemies in PKR to pile pressure on him. It also suggested there was foul play in the PKR elections, noting that a person with the title of menteri besar could be defeated in the Kuala Selangor division chief post by S. Manikavasagam. (Malaysian Insider)

Prominent political scientist Professor Datuk Dr Mohamad Redzuan Othman has paid a heavy price for conducting independent surveys and polls on Malaysian politics – he has been directed to quit as director of Universiti Malaya's Centre for Democracy and Elections (UMcedel) by the Education Ministry. Sources told The Malaysian Insider that not only was he ordered to leave as director of UMcedel, Redzuan’s tenure as dean of the Faculty of Arts and Social Sciences in the university was also not renewed.

In UM, though deans are elected by the academic staff, it is still subject to endorsement by the university's management. Sources said although Redzuan is said to have been given the thumbs up by his colleagues for the dean's post, political pressure compelled the university not to endorse his election.

"The university has given the excuse that Redzuan will retire next year and that is why his tenure as the dean would not be renewed," a source told The Malaysian Insider. Profesor Dr Md Sidin Ishak will take over from Redzuan as the new dean. (Malaysian Insider)

Corporate News…

Maxis Bhd plans to stop its practice of borrowing lots of money of partfund its dividend payments from 2015 onward, signalling a possible dip in payouts. Maxis chief executive officer Morten Lundal said the company would prefer to make its dividend payments solely from the free cash flow it generates and hence cannot guarantee that the telco would be able to continue the same level of dividends from 2015 onward. Maxis had been borrowing about RM1bn a year to top up the RM2bn free cash flow generated to make the RM3bn or 40 sen per share in dividend payouts since its re-listing in 2009. (StarBiz)

Sime Darby is looking to acquire a Real Estate Investment Trust (REIT) which it will use for the injection of its commercial properties. Sources say the conglomerate had a few months ago issued a request for proposal to several investment banks with regards to a potential acquisition of a REIT management company which in turn manages a Reit. It is understood that it had recently appointed a local investment bank as its sole principal adviser for the deal. According to sources, Sime Darby’s acquisition target is an independent Reit and one of the few independent ones here is the Axis Real Estate Investment Trust (Axis-REIT), managed by Axis REIT Managers Bhd. Sime Darby’s property division in its reply to StarBizWeek queries on this matter says: “Sime Darby Property realises the importance of Reits and it is one of our long-term goals. We will ensure it is done at the right time” (StarBiz)

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June 30, 2014

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Malaysian Resources Corp Bhd (MRCB) is said to be targeting an 11.6ha government land adjacent to its PJ Sentral project in Petaling Jaya under a possible privatisation deal. The plot, home to the former Hotel Singgahsana, Petaling Jaya Magistrate Court and the Chemistry Department, has a potential gross development value (GDV) of more than RM7bn.

Business Times understands that the land, owned by the Department of Director General of Lands and Mines under the Natural Resources and Environment Ministry, is valued at more than RM600m or over RM450 per square feet.

A privatisation proposal for that piece of land was submitted by a consortium led by Nusa Gapurna Development (NGD) about four years ago, although a deal did not materialise. NGD — a 60:40 partnership between Gapurna and the Employees Provident Fund (EPF) — had a 70% interest in the RM3bn PJ Sentral mixed development, but was involved in an asset injection exercise with MRCB. (BT)

There is no slowing down for Malaysia Airline System Bhd's (MAS) biggest trade union, the MAS Employees Union (Maseu), despite it having come under fire over demands that are deemed unreasonable by a key political leader. "You cannot blame the union [for doing so], it doesn't run the airline. The management of the airline does," Maseu executive secretary Mohd Jabbarullah Abd Kadir said. "At Maseu, we know what we are doing. After three years of failing to deliver, it's time for the three [MAS CEO Ahmad Jauhari Yahya and two other top officials] to go. There is no compromise on this," he added.

Nevertheless, some quarters view Maseu as a huge stumbling block to the turnaround of the ailing national carrier. That's because the union is powerful enough to stop the airline's corporate exercises, as evidenced by the unravelling of the MAS-AirAsia Bhd share swap exercise in 2012. (Financial Daily)

Former transport minister Tan Sri Ong Tee Keat has warned that a standoff between the ailing Malaysia Airlines (MAS) and its employees’ unions will only hasten the airline’s downfall. Ong said MAS already has enough problems on its plate and any action such as a strike by the unions if their demands were not met would only worsen the unprecedented critical times the airline was going through.

The MAS Employees Union (Maseu), the largest of the national carrier’s unions, picketed last Thursday at MAS’ administration office in Subang, near here, a day after the company’s annual general meeting (AGM) and demanded the resignation of the airline’s top three leaders, blaming them for losses of RM4m daily. (BT)

Mah Sing Group aims to secure RM3.6bn in sales of properties this year, surpassing last year’s sales performance of RM3bn. Group chief executive Tan Sri Leong Hoy Kum said in the first quarter ended 31 Mar 14, the company achieved approximately RM770m sales. “We expect strong buying momentum in the second half of the year, with potential buyers purchasing ahead of the Goods and Services Tax (GST) implementation next April. Fundamentals that drives the property market are still strong and we are selectively optimistic of certain segments,” he said. (StarBiz)

The property buying frenzy has cooled down, but elements of a bubble brewing are very much intact. So far, none of the major property projects have been shelved or delayed in Kuala Lumpur and Johor Baru, suggesting that developers are confident of a successful take-up despite statistics showing that there is a slowdown in demand.

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June 30, 2014

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According to Bank Negara, the evidence of a slowdown in the property market is obvious; backing the claim with statistics. It says the Malaysian House Price Index has declined to 9.6% in the fourth quarter of 2013, the first time it has dipped below 10% since the third quarter of 2011. The dip was recorded across most states and most dwellings. (StarBiz)

The Meteorology, Climatology and Geophysics Agency (BMKG) forecast that El Niño will hit the country between July and August, and its impact will peak in late August. The agency predicts that the impact of this year’s El Niño will be mild. “The El Niño phenomenon will not be as bad as the one in 1997 and the drought will be less severe too. But it will mean that the rainy season arrives later in 2014 and 2015, especially in the eastern parts of Indonesia,” BMKG head Andi Eka Sakya said. (Jakarta Post)

The Government expects to secure up to RM7bn more in investments by the end of this year from foreign automotive players looking to manufacture energy-efficient vehicles (EEVs) in the country. If approved, it will complement the existing RM7bn in investments that has already gone into the industry so far this year. Malaysian Automotive Institute (MAI) CEO Madani Sahari said the Malaysian Investment Development Authority (Mida) and MAI were conducting a cost benefit analysis on two potential companies who were looking to manufacture EEVs. The analysis is to determine the financial strength of the two companies to undertake the investments that they have proposed. “Once the cost-benefit analysis is completed, we will present it to the International Trade and Industry Ministry (Miti) and the Finance Ministry for final approval,” he told. (StarBiz)

Kulim (M) Bhd will keep its options open on Papua New Guinea (PNG)-based New Britain Palm Oil Ltd (NBPOL), a company in which it is a major shareholder but does not run the operations. Managing director Ahamad Mohamad, commenting on market talk of Kulim’s divestment in 48.97%-held NBPOL, said that Kulim had always kept its option open to strategic opportunities to realise the value for its assets. “NBPOL is a valued investment for us. It was a small plantation company with 18,000ha of oil palm when we first acquired in 1996,’’ he told StarBiz.

Ahamad said since then NBPOL had grown manifold with Kulim having played a role as a supportive major shareholder in many of the corporate exercises that NBPOL had undertaken over the years. Ahamad said that NBPOL had a separate management team and was fully responsible for all funding needs be they for operational or expansion purposes. Notably, NBPOL has also been paying steady dividends with the exception of one to two years following the acquisition of Kula Palm Oil Ltd due to high financing needs.

Meanwhile Kulim would be allocating RM600m as capital expenditure (capex) for the development of its Indonesian oil palm plantation located in North Barito, central Kalimantan. “Estimated development period for our Kalimantan estate spanning 40,645ha is expected to take between seven and 10 years,’’ said Ahamad. (StarBiz)

I-Berhad, the developer of the 28.8ha i-City, here, expects its recently launched 328-unit i-Suite II residential-cum-commercial development to garner far better sales than the first phase of i-Suite launched last year. Since the launch in Dec last year, I-Berhad director Monica Ong said the company had sold 60% of the 498 units of i-Suite I residential-cum-commercial development.

“Over 60 per cent of the i-Suite I development has been sold. If you look at the response from just the private invitation for the launching of i-Suite II, I’m very encouraged that it is (i-Suite development) opening up,” she said,

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“we think we can achieve an even better response, given the aggressive marketing and promotion that we have put in for i-Suite II.” (BT)

Ire-Tex Corp Bhd will invest RM25m over two years in subsidiary Zoomic Automation Sdn Bhd to produce high-brightness light-emitting diode (LED) tubes. Executive director E.H. Teh told that the group had just locked in a RM150m contract for the next three years to produce a 1,800 lumens LED tube using only 13 watts of power, which was more energy-efficient. The orders are from one local LED light company in Penang, which will sell the LED tubes to Japan and South-East Asia. “The conventional 1,800 lumens LED tube uses 18 watts of power, which is not energy-efficient,” he explained. Zoomic will initially produce about 50,000 sets of LED light tubes per month. “Next year, we will increase the production to 120,000 sets per month. We will gradually increase the production line to ten over the next two years from two currently,” he added. (StarBiz)

SCGM Bhd, which manufacturers and supplies disposable plastic food packaging products, will venture into making environment-friendly plastic cups, following high demand from the beverage business locally and overseas. The company has invested RM10m to build a plant to make plastic cups, which is expected to begin operation in November. The plant, to be fitted with a machine from Italy with moulds sourced from Germany, has the capacity to churn out more than 800 cups a minute, or about 1.3m cups a day. SCGM executive chairman Dato Seri Lee Hock Seng said although it is still several months away before the plant starts operations, the company have secured buyers for 70% of its production. (BT)

Nine months after being acquired by Censof Holdings Bhd, the picture is beginning to emerge on what’s in store for Time Engineering Bhd, which has since been renamed Dagang NeXchange Bhd (DNeX). Last week DNeX made a couple of major announcements that gave a taste of its future plans. The most significant was that the company named its new head honcho – seasoned oil and gas professional Zainal Abidin Abdul Jalil. Zainal is the former CEO of Malakoff Corp Bhd and had served for 28 years at oil giant ExxonMobil. DNeX also said it was diversifying into the oil and gas space with the proposed acquisition of OGPC Sdn Bhd and OGPC O&G Sdn Bhd for RM203m.

Zainal explains that the acquisition will serve as a platform for DNeX to jumpstart its venture into the robust oil and gas industry. DNeX’s existing business is the provision of e-commerce services for trade facilitation and internationally certified enterprise security services via a government concession.

“The concession business has two years to go before expiry. It (venturing into oil and gas) is our intention – to mitigate potential loss of business. We have two years to scale up our oil and gas business,” he said. OGPC has strong cash flows, no gearing and is cash rich. DNeX expects to complete the OGPC acquisition in the first quarter of 2015. (StarBiz)

Malaysia’s largest life insurer, AIA, which is banking on Generation Y to grow its business, is focusing on keeping its agency force young. Chief marketing officer Thomas Wong said despite being a 66-year-old brand, AIA is staying young and vibrant to expand its workforce and customer base. “We are proactively engaging those in the under-35 age group, or the Gen Y-ers. Last year, we recruited 5,800 Life Planners and more than 80% of them were Gen Y-ers,” he said. (BT)

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BMSB: Changes in shareholdings

Type of No of Ave Price

27-Jun-14 Date transaction securities Company (RM)

EPF 19/6-23/6 Disposed 4,807,200 TENAGA NASIONAL

EPF 20/6-23/6 Disposed 3,372,300 AXIATA GROUP

EPF 24/6 Disposed 2,950,000 SAPURAKENCANA

EPF 23/6-24/6 Disposed 2,849,100 SIME DARBY

EPF 24/6 Disposed 2,000,000 GAMUDA

EPF 24/6 Disposed 2,000,000 IOI PROPERTIES GROUP

EPF 24/6 Disposed 1,250,000 TELEKOM MALAYSIA

EPF 24/6 Disposed 1,241,300 MALAYAN BANKING

EPF 24/6 Disposed 1,213,800 AMMB HOLDINGS

EPF 24/6 Disposed 1,001,900 IOI CORPORATION

EPF 24/6 Disposed 1,000,000 DIALOG GROUP

EPF 24/6 Disposed 500,000 HARTALEGA HOLDINGS

EPF 24/6 Disposed 450,000 POS MALAYSIA

EPF 24/6 Disposed 412,100 PERDANA PETROLEUM

EPF 24/6 Disposed 385,700 IJM CORPORATION

EPF 24/6 Disposed 325,000 AEON CO. (M)

EPF 24/6 Disposed 325,000 CAHYA MATA SARAWAK

EPF 24/6 Disposed 300,000 HOCK SENG LEE

EPF 24/6 Disposed 300,000 SUNWAY REIT

EPF 24/6 Disposed 252,200 PRESTARIANG

EPF 24/6 Disposed 192,400 GENTING PLANTATIONS

EPF 24/6 Disposed 103,100 PETRONAS GAS

EPF 24/6 Disposed 51,400 ORIENTAL HOLDINGS

EPF 24/6 Disposed 48,700 KPJ HEALTHCARE

Skim Amanah Saham Bumiputera 23/6-25/6 Disposed 5,250,000 DIGI.COM

Lembaga Tabung Haji 18/6-19/6 Disposed 1,622,900 PERDANA PETROLEUM

Utilico Emerging Markets Limited 23/6 & 25/6 Disposed 539,500 MY E.G. SERVICES

Berjaya Group Berhad 25/6 Disposed 9,200,000 BERJAYA AUTO

Datuk Amar Abdul Hamed bin Haji Sepawi 17/6-24/6 Disposed 321,400 TA ANN HOLDINGS 4.30

JITUMAJU SDN BHD 27/6 Disposed 483,720 CARING PHARMACY 2.20

SOO CHAN CHIEW 27/6 Disposed 135,299 CARING PHARMACY 2.20

PNE INDUSTRIES LTD. 26/6 Disposed 5,000,000 PNE PCB 1.10

Aberdeen Asset Management PLC 25/6 Disposed 74,000 SHANGRI-LA HOTELS

EPF 24/6 Acquired 2,352,300 MAXIS

EPF 24/6 Acquired 1,777,200 PUBLIC BANK

EPF 24/6 Acquired 1,597,800 DIGI.COM

EPF 23/6 Acquired 1,427,400 CIMB GROUP

EPF 23/6-24/6 Acquired 1,400,000 PERISAI PETROLEUM

EPF 23/6-24/6 Acquired 1,057,000 MMC CORPORATION

EPF 24/6 Acquired 1,000,000 AFG

EPF 24/6 Acquired 500,000 TAN CHONG MOTOR

EPF 24/6 Acquired 500,000 YTL POWER INTERNATIONAL

EPF 23/6 Acquired 301,900 TH PLANTATIONS

EPF 23/6 Acquired 301,900 TH PLANTATIONS

EPF 24/6 Acquired 300,000 KUALA LUMPUR KEPONG

EPF 23/6 Acquired 136,900 YINSON HOLDINGS

EPF 24/6 Acquired 128,300 PETRONAS DAGANGAN

EPF 24/6 Acquired 70,300 BURSA MALAYSIA

EPF 24/6 Acquired 46,000 MBM RESOURCES

EPF 24/6 Acquired 20,000 SYARIKAT TAKAFUL

EPF 24/6 Acquired 16,400 IJM PLANTATIONS

EPF 24/6 Acquired 8,300 TOP GLOVE

Skim Amanah Saham Bumiputera 23/6-24/6 Acquired 4,000,000 SIME DARBY

Skim Amanah Saham Bumiputera 19/6-20/6 Acquired 1,798,000 TENAGA NASIONAL

Permodalan Nasional Berhad 23/6-24/6 Acquired 2,000,000 SIME DARBY

Lembaga Tabung Haji 19/6-25/6 Acquired 209,300 BHIC

Franklin Resources, Inc. 25/6 Acquired 162,700 OLDTOWN

SOURCES: BMSB

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BMSB: ESOS & others

30-Jun-14 No Of New Shares Date of Listing Nature of transaction

GAMUDA 3,441,000 30-Jun-14 Exercise of ESOS

SUNWAY 16,400 30-Jun-14 Exercise of ESOS

SOURCES: BMSB

BMSB: Off-market transactions

27-Jun-14 Vol

SUMATEC 35,000,000

YTLPOWER 15,000,000

TROP 10,330,400

BONIA 4,600,000

KINSTEL 4,500,000

EFORCE 3,400,000

DESTINI 3,000,000

RPB 2,000,000

EAH 1,700,000

CARING 1,201,300

BJAUTO 1,000,000

SWSCAP 525,000

Notes:CN-Crossing deal on board lots

MN-Married deal on board lots MO-Married deal on odd lots

SOURCES: BMSB

BMSB: Entitlements & trading rights

30-Jun-14 Ann Date Entitlement Ex-date Entitlement

DIALOG GROUP 6-May-14 Bonus issue 1:1, special share dividend 1:125 16-Jul-14 18-Jul-14

SOURCES: BMSB, TE: Tax Exempt

BMSB: Dividends

Company Particulars Gross DPS (Sen) Ann Date Ex-Date Lodgement Payment

KOSSAN RUBBER IND. Final dividend - single tier 3.50 23-Apr-14 1-Jul-14 3-Jul-14 18-Jul-14

TOP GLOVE 1st Interim - single tier 7.00 17-Jun-14 1-Jul-14 3-Jul-14 17-Jul-14

ASTRO 1st Interim - single tier 2.25 18-Jun-14 1-Jul-14 3-Jul-14 17-Jul-14

ASTRO Final dividend - single tier 1.00 20-May-14 2-Jul-14 4-Jul-14 18-Jul-14

SAPURAKENCANA Interim dividend - single tier 1.35 19-Jun-14 2-Jul-14 4-Jul-14 21-Jul-14

SAPURAKENCANA Special dividend - single tier 1.00 19-Jun-14 2-Jul-14 4-Jul-14 21-Jul-14

MCIL Interim dividend - single tier 2.19 29-May-14 9-Jul-14 11-Jul-14 8-Aug-14

GAMUDA 2nd interim dividend - single tier 6.00 26-Jun-14 10-Jul-14 14-Jul-14 23-Jul-14

ORIENTAL HOLDINGS Final dividend - single tier 3.50 14-May-14 11-Jul-14 16-Jul-14 1-Aug-14

FRASER & NEAVE Interim dividend - single tier 22.00 7-May-14 16-Jul-14 18-Jul-14 8-Aug-14

BINTULU PORT Special interim - single tier 6.00 28-May-14 16-Jul-14 18-Jul-14 8-Aug-14

JOBSTREET CORPORATION Final dividend - single tier 0.50 2-Jun-14 16-Jul-14 18-Jul-14 7-Aug-14

BERJAYA SPORTS TOTO 4th Interim - single tier 7.00 17-Jun-14 16-Jul-14 18-Jul-14 8-Aug-14

MUDAJAYA GROUP 2nd interim dividend - single tier 3.00 10-Jun-14 6-Aug-14 8-Aug-14 5-Sep-14

MUHIBBAH ENGINEERING 1st & final dividend - single tier 4.50 3-Jun-14 13-Aug-14 15-Aug-14 25-Aug-14

SOURCES: BMSB

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BMSB: Proposed cash calls & trading of rights…

30-Jun-14 Ann Date Proposed

BONIA CORPORATION 25-Apr-14 Bonus issue 1:1, share split 1:2

ECO WORLD 25-Apr-14 1 Rights @ 2 , 4 Free Warrants @ 5, Private Placement

SBC CORP 27-May-14 Bonus issue 1:2

BUMI ARMADA 12-Jun-14 Bonus issue 1:2, 1 Rights @ 2

SOURCES: BMSB

BMSB: New Listing

Company Issue price Listing sought Tentative

Public Issue Offer for sale Private placement listing date

ECONPILE HOLDINGS 0.54 90,000,000 55,000,000 114,500,000 Main Market 30-Jun-14

TANAH MAKMUR 1.25 52,140,000 49,450,000 75,184,000 Main Market 17-Jul-14

No of shares

SOURCES: BMSB

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Corporate Actions

June 2014

SUN MON TUE WED THU FRI SAT

1 2 3 4 5 6 3

External Trade, External Reserves

8 9 10 11 12 13 10

Invest Malaysia 2014 Invest Malaysia 2014 SP Setia 2Q, IPI, Manufacturing Sales

15 16 17 18 19 20 17

B-Toto 4Q, Top Glove 3Q & conf. call

Astro 1Q, CPI SapuraKencana 1Q External Reserves (mid-month data)

22 23 24 25 26 27 24

Gamuda 3Q & briefing

29 30 31

Awal Ramadhan Money Supply, PPI

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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Corporate Actions

July 2014

SUN MON TUE WED THU FRI SAT

1 2 3 4 5

MPI's Analyst Day,

External Trade

6 7 8 9 10 11 12

External Reserves IPI, BNM rate

13 14 15 16 17 18 19

CPI

20 21 22 23 24 25 26

External Reserves

(mid-month data)

27 28 29 30 31

Hari Raya Puasa Hari Raya Puasa Money supply

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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As at the time of publishing this report CIMB is phasing in an absolute recommendation structure for stocks (Framework #1). Please refer to all frameworks for a definition of any recommendations stated in this report.

CIMB Recommendation Framework #1 Stock Ratings Definition Add The stock’s total return is expected to exceed 10% over the next 12 months. Hold The stock’s total return is expected to be between 0% and positive 10% over the next 12 months. Reduce The stock’s total return is expected to fall below 0% or more over the next 12 months. The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months. Sector Ratings Definition Overweight An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation. Neutral A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation. Underweight An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation. Country Ratings Definition Overweight An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark. Neutral A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark. Underweight An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.

CIMB Stock Recommendation Framework #2 * Outperform The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 12 months. Neutral The stock's total return is expected to be within +/-5% of a relevant benchmark's total return. Underperform The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 12 months. Trading Buy The stock's total return is expected to exceed a relevant benchmark's total return by 3% or more over the next 3 months. Trading Sell The stock's total return is expected to be below a relevant benchmark's total return by 3% or more over the next 3 months. * This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand, Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

CIMB Stock Recommendation Framework #3 ** Outperform Expected positive total returns of 10% or more over the next 12 months. Neutral Expected total returns of between -10% and +10% over the next 12 months. Underperform Expected negative total returns of 10% or more over the next 12 months. Trading Buy Expected positive total returns of 10% or more over the next 3 months. Trading Sell Expected negative total returns of 10% or more over the next 3 months. ** This framework only applies to stocks listed on the Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

Daybreak│Malaysia

June 30, 2014

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Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2013. AAV – Good, ADVANC - Excellent, AMATA - Very Good, ANAN – Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH – Good, BCP - Excellent, BEC - Very Good, BGH - not available, BJC – Very Good, BH - Very Good, BIGC - Very Good, BTS - Excellent, CCET – Very Good, CENTEL – Very Good, CK - Excellent, CPALL - Very Good, CPF – Excellent, CPN - Excellent, DELTA - Very Good, DTAC - Excellent, EGCO – Excellent, GLOBAL - Good, GLOW - Very Good, GRAMMY – Excellent, HANA - Excellent, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH – Excellent, ITD – Very Good, IVL - Excellent, JAS – Very Good, KAMART – not available, KBANK - Excellent, KKP – Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR – Very Good, MAKRO – Very Good, MCOT - Excellent, MINT - Excellent, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - Excellent, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS – Excellent, SAMART – Excellent, SC – Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI – Very Good, SPALI - Excellent, STA - Good, STEC - Very Good, TCAP - Excellent, THAI - Excellent, THCOM – Excellent, TICON – Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Excellent, TTW – Excellent, TUF - Very Good, VGI – Excellent, WORK – Good.

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