2018 Outlook & Lookouts: Positive alignments for Malaysia's economy and equities

INVEST MALAYSIA 2018
Research Guide
Invest Malaysia Kuala Lumpur 2018 Conference will feature 61 Malaysian

PLCs with a combined market capitalisation of MYR768b (USD195b),
comprising an almost equal mix of 31 large caps and 30 mid-small caps
(<MYR4b market cap). The Conference will be held on 23-24 January
2018.
THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD PP16832/01/2013 (031128)
SEE PAGE 93 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Invest Malaysia 2018
Contents
Page
ECONOMICS & MARKET STRATEGY: POSITIVE ALIGNMENTS 1-30
COMPANY BRIEFS
Advancecon Holdings 31 Malaysia Airports Holdings 61

AEON Co. (M) 32 ManagePay Systems 62
AWC 33 Malayan Banking 63
Axiata Group 34 Malaysian Resources Corporation 64
Axis REIT 35 Maxis 65
Bermaz Auto 36 MMC Corporation 66
Bursa Malaysia 37 OCK Group 67
Cahya Mata Sarawak 38 Padini Holdings 68
CIMB Group Holdings 39 Pecca Group 69
Datasonic Group 40 Petronas Chemicals Group 70
Dialog Group 41 Press Metal Aluminium Holdings 71
DiGi.Com 42 QL Resources 72
Econpile Holdings 43 Sapura Energy 73
Eco World Development Group 44 Sarawak Oil Palms 74
Eco World International 45 Serba Dinamik Holdings 75
Ekovest 46 Sime Darby Plantation 76
Gamuda 47 Sime Darby Property 77
Genting 48 Sunway 78
Genting Malaysia 49 Sunway Construction Group 79
George Kent 50 Suria Capital Holdings 80
GHL Systems 51 Telekom Malaysia 81
Hock Seng Lee 52 Thong Guan Industries 82
Hong Leong Bank 53 Tiong Nam Logistics Holdings 83
HSS Engineers 54 Tomypak Holdings 84
IJM Corporation 55 Top Glove Corporation 85
Karex 56 Vizione Holdings 86
Kerjaya Prospek Group 57 V.S. Industry 87
Kimlun Corporation 58 Yinson Holdings 88
KLCCP Stapled Group 59 Yong Tai 89
Mah Sing Group 60 YTL Corporation 90
(Note: Valuations in this report are based on closing share prices on 11-12 Jan 2018)
January 21, 2018

January 21, 2018
2018 Outlook & Lookouts

Positive alignments
ECONOMICS & MARKET STRATEGY
Analysts
Why are we writing this & recommended action
We expect global growth momentum to be sustained in 2018, expanding

at +3.6%, the same pace as 2017, on the back of synchronized expansions
Suhaimi Ilias (Economics)
of G3 economies i.e. “slow and shallow” US Fed rate hikes, with fiscal
(+603) 2297 8682
stimulus via tax cuts and reforms, which are supportive of current US
Suhaimi_ilias@maybank-ib.com
growth cycle, the third longest on record; coupled with broad-based
growth across Eurozone and reflation in Japan. This G3-led global
Wong Chew Hann (Equity Strategy)
economic growth fuels world trade growth, which is positive for ASEAN
(+603) 2297 8686
economies as we see spillover to domestic demand from export recovery.
wchewh@maybank-ib.com
Key point 1
A key macroeconomic theme is the outlook of “benign normalization and Malaysia Research & Economics Team
unsynchronized unwinding” in major central banks’ monetary policies. (please refer to back pages for the full list)
Key risks are inflation and financial stability. In particular, inflation
surprise will alter major central banks’ policy outlook and can trigger
“re-pricing” in global financial markets, which in 2017 had been
characterized by buoyant equity market amid the prolonged decline and Country Index vs. MSCI
Malaysia
depressed risk-free yields. China’s “de-leveraging and de-risking” also

1,850 1,000
warrants close monitoring, as our baseline case is growth soft landing
instead of hard landing. 1,800 900
Key point 2
1,750 800
Malaysia’s macro outlook remains positive in 2018 as we forecast another
year of above-5% real GDP growth, at +5.3%, continuing the momentum 1,700 700
from 2017 (MKE’s estimate: +5.8%). This will be driven by continued

1,650 600
growth in both consumption and investment, while exports & imports
will expand further on the back of the sustained global growth 1,600 500
Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18
momentum. For the currency, we expect the MYR’s strength to continue
with an end-2018 USDMYR forecast of 3.90, reflecting the positive Kuala Lumpur Composite Index - (LHS) MSCI Asia ex JP - (RHS)
underlying fundamentals for the currency.

Key point 3
For Malaysian equities, the key influences and lookouts (besides macro
data points and MYR’s direction) are: (i) crude oil price direction, (ii)
BNM’s overnight policy rate, (iii) consumer sentiment, (iv) 14th general
election (GE14) and (v) mid-term review of the 11th Malaysia Plan. GE14
will be a major driver of investors’ sentiment in early 2018, in our view.
Post GE14, we expect the focus to return to fundamentals which are well
supported. We highlight five thematic considerations for 2018 and the
longer-term.
THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD PP16832/01/2013 (031128)
SEE PAGE 93 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Invest Malaysia 2018: Economics & Market Strategy
MALAYSIAN ECONOMY
Continued 5%-plus growth

“Growth recovery” in 2017 after “growth slowdown” in 2015-2016. The
Malaysian economy benefited from the global economic pick up that fueled world
trade growth, lifted commodity prices and buoyed external demand which
revived exports of goods and services (Jan-Sep 2017: +10.4%; 2016: +1.1%) and
private investment (Jan-Sep 2017: +9.3%; 2016: +4.3%). Notwithstanding the
prolonged weakness in consumer sentiment (sub-100 MIER Consumer Sentiment
Index since 3Q14) and the acceleration in inflation (Jan-Nov 2017: +3.9%; 2015-
2016: +2.1%), consumer spending surprised on the upside (Jan-Sep 2017: +7.0%;
2016: +6.0%), thanks to monetary, fiscal and administrative measures to address
cost of living issue which boosted disposable income. Public consumption (Jan-
Sep 2017: +4.9%; 2016: +0.9%) and public investment (Jan-Sep 2017: +0.8%; 2016:
-0.5%) recovered as the growth recovery and rebound in crude oil price
resuscitate Government revenues and PETRONAS profits. With 1Q-3Q17 real GDP
growth at +5.9% (1Q-3Q16: +4.1%), we penciled in a +5.8% expansion for full-year
2017 (2016: +4.2%).
5%-plus growth momentum to continue in 2018. We expect the 5%-plus growth

momentum to be sustained in 2018, albeit at a slower pace of +5.3%. Domestic
demand (2018E: +6.4%; 2017E: +6.8%) remains the growth driver on the back of
continued growth in consumer spending (2018E: +6.5%; 2017E: +7.0%), public
consumption (2018E: +5.8%; 2017E: +5.1%) and gross fixed capital formation
(2018E: +6.6%; 2017E: +7.5%) on expansions in both private investment (2018E:
+9.0%; 2017E: +9.5%) and public investment (2018E: +1.5%; 2017E: +3.5%).
Exports (2018E: +4.9%; 2017E: +8.8%) and imports (2018E: +5.7%; 2017E: +11.0%)
of goods and services will expand further in 2018 on the back of the sustained
global and domestic growth momentum, but the paces are expected to moderate
after the high base in 2017.
Fig 1: Malaysia: Real GDP

% chg ACTUAL MAYBANK KE OFFICIAL
% Share of 2016 Jan-Sep 2017E 2018E 2017E 2018E
GDP * 2017
Real GDP 100.0 4.2 5.9 5.8 5.3 5.2-5.7 5.0-5.5
Manufacturing 23.4 4.4 6.2 6.1 5.8 5.5 5.3

Services 55.1 5.6 6.2 6.1 5.9 5.9 5.8
Agriculture 8.2 (5.1) 6.0 7.1 3.8 5.6 2.4
Mining 8.6 2.2 1.6 1.3 1.5 0.5 0.9
Construction 4.7 7.5 6.9 7.0 7.0 7.6 7.5
Domestic Demand 92.4 4.3 6.7 6.8 6.4 6.4 5.5

Private Consumption 54.2 6.0 7.0 7.0 6.5 6.9 6.8
Public Consumption 12.1 0.9 4.9 5.1 5.8 2.7 1.3
Gross Fixed Capital Formation 26.1 2.7 6.8 7.5 6.6 7.4 5.0
Private Investment 18.9 4.3 9.3 9.5 9.0 9.3 8.9
Public Investment 7.1 (0.5) 0.8 3.5 1.5 3.7 (3.1)
Net External Demand 7.6 1.5 (3.5) (7.2) (2.2) (6.3) 1.0
Exports of Goods & Services 73.0 1.1 10.4 8.8 4.9 8.0 2.3
Imports of Goods & Services 65.5 1.1 12.3 11.0 5.7 9.9 2.5
* Based on actual GDP data for Jan-Sep 2017
Sources: Dept. of Statistics, MoF (Economic Report 2017/2018, Oct 2017), MKE Economics Research
January 21, 2018 2

Fig 2: Other Key Economic Indicators

ACTUAL MAYBANK KE OFFICIAL
2016 2017 YTD * 2017E 2018E 2017E 2018E
Gross Exports (% chg) 1.2 20.4 (Jan-Nov) 19.6 5.9 16.6 3.4
Gross Imports (% chg) 1.9 21.2 (Jan-Nov) 20.6 5.8 17.8 2.5
Trade Balance (MYRb) 88.1 90.0 (Jan-Nov) 97.3 103.7 94.6 97.0
Current Account Balance (MYRb) 29.0 27.4 (Jan-Sep) 38.4 40.9 32.3 32.9
Current Account Balance (% of GDP) 2.4 2.8 (Jan-Sep) 2.8 2.9 2.4 2.3
Fiscal Balance (% of GDP) (3.1) (3.3) (Jan-Sep) (3.0) (2.8) (3.0) (2.8)
Inflation Rate (CPI, %) 2.1 3.9 (Jan-Nov) 4.0 2.5.3.0 3.0-4.0 2.5-3.5
Overnight Policy Rate (% p.a., end-period) 3.00 3.00 3.00 3.25 - -
Exchange Rate (MYR/USD, end-period) 4.49 4.05 4.05 3.90 - -
Exchange Rate (MYR/USD, average) 4.14 4.30 4.30 3.98 4.35 4.35
Unemployment Rate (%) 3.5 3.4 (Jan-Oct) 3.4 3.3 3.4 3.3
Crude Oil (USD/bbl, Brent average) 44.1 54.4 54.4 60.0 50.0 52.0
Crude Palm Oil (MYR/tonne, average) 2,652 2,791 2,800 2,600 2,700 2,750
* As at 31 Dec 2017 unless stated otherwise
Sources: Bloomberg, Dept. of Statistics, MoF (Economic Report 2017/2018, Oct 2017), MKE Economics Research, Maybank FX Research
Consumer spending in 2018 – a year of two halves…?

Consumer spending growth picked up 2017. Real private consumption
expenditure growth upward momentum was sustained for the third quarter in a
row in 3Q17 at +7.2% YoY (2Q17: +7.1% YoY; 1Q17: +6.6). Besides the steady rise
in employment (3Q17: +2.1% YoY to 14.54m; 2Q17: +2.1% YoY to 14.52m; 1Q17:
+1.6% YoY 14.42m) and private sector wages and salaries (3Q17: +7.4% YoY;
2Q17: +7.3% YoY; 1Q17: +4.5% YoY), consumer spending growth in 3Q17 was also
supported by other factors like final disbursement of 2017’s BR1M (Aug 2017),
cash handouts of MYR5,000 each to 94,956 eligible FELDA settlers totaling
MYR475m (Sep-Oct 2017), as well as spending by domestic consumers and foreign
tourists during the South East Asian Games (19-30 Aug 2017) and Para-ASEAN
Games (17-23 Sep 2017). In view of the +7.0% growth in consumer spending in
1Q-3Q17, we estimated the same growth for full-year 2017 (2016: +6.0%).
We expect consumer spending growth to remain around +7% in 1H18 on

continuation of - and additional - measures to boost disposable incomes in Budget
2018 which essentially maintains the momentum in consumer spending stimulus
of the previous budgets (Fig 3). In particular, the bulk of BR1M handouts (two-
thirds of the MYR6.8b) and all of the “bonus” for civil servants and pensioners as
well as other direct cash aid and one-off payments to target groups (e.g.
farmers, fishermen, rural folks) will be disbursed in 1H18. These are on top of
the 2ppt personal income tax rate cut that will boost consumer disposable
income by MYR1.5b.
January 21, 2018 3

Fig 3: Budget and non-budget measures to boost disposable income, 2016-2018

Key Measures 2016 2017 2018
BR1M MYR5.4b (+1.5%) MYR6.8b (+25.9%) MYR6.8b (0%)
Civil service salary & pension adjustments MYR1.4b - -
“Bonus” for civil servants & pensioners MYR1.0b MYR1.0b MYR3.0b
(MYR500 for Civil (MYR500 for Civil (MYR1,500 for Civil
Servants, MYR250 for Servants, MYR250 for Servants, MYR750 for
Pensioners) Pensioners) Pensioners)
Other direct cash aids & one-off payments to target groups e.g. farmers, MYR0.7b MYR1.3b MYR1.0b
fishermen, rural folks
Personal Income Tax Increase tax reliefs for Introduce tax reliefs 2ppts cut in tax rates
spouse, children, for childcare centre / equal to MYR1.5b.
education fees. kindergarten fees & Extend tax relief for
Introduce tax relief for “lifestyle” education savings
parental care (SSP1N) until 2020
Employees’ Monthly EPF Contribution Option for 8% rate instead of 11% rate Back to 11% rate
(Mar 2016 – Dec 2017)
BNM Overnight Policy Rate (OPR) -25bps cut to 3.00% in Maintain at 3.00% Expect +25bps to 3.25%
July
Minimum Wage 11%-15% increase w.e.f. “Full-year effect” of Under review
1 July 2016’s hike
Source: Budget 2016-2018, MKE Economics Research
However, some of the consumer spending stimulus in 2016-2017 has expired

and reversed in early-2018 i.e. normalisation of workers’ contribution to EPF;
expected BNM interest rate hike.
Workers’ monthly contribution rate to the Employees Provident Fund (EPF) has
returned to 11% on 1 Jan 2018 after the option for lower contribution of 8%
between Mar 2016 and Dec 2017 “expired”. Reportedly, half of the employees
opted for this, which is estimated to have directly boosted disposable income by
a total of MYR4b during the period.
BNM’s Monetary Policy Statement (MPS) issued after the final Monetary Policy
Committee (MPC) meeting for 2017 on 8-9 Nov turned “hawkish” by saying that
the MPC may consider reviewing the current degree of monetary accommodation.
This signals upside bias in Overnight Policy Rate (OPR) in 2018 after it was cut by
-25bps to 3.00% in July 2016 and was unchanged in 2017. This is in line with our
expectations of a +25bps hike in OPR in 2018. Given our view of a post-election
OPR hike by BNM, and our expectation that the 14th General Election will be held
within the Feb-Apr 2018 “window”, our eyes are on the 9-10 May 2018 MPC
meeting as the earliest timing for an OPR hike. Our expectation for a single OPR
hike in 2018 also takes into account the expected moderation in inflation rate to
2.5%-3.0% in 2018 (2017E: +4.0%).
Consequently, we expect consumer spending growth to moderate in 2H18,

pulling down full-year 2018 growth. We expect consumer spending growth to
ease to around +6.0% in 2H18, “normalizing” back to the average growth in 2015-
2016. This, in turn, will pull down full-year 2018 growth to +6.5% (2017: +7.0%).
January 21, 2018 4

Higher Government spending in the election year

Government consumption expenditure grows on rebound in operating
expenditure thanks to the fiscal space afforded by the impact of firmer
growth and crude oil prices on revenues (Fig 4). We expect Government
consumption growth of +5.8% in 2018 (2017E: +5.1%). The forecasts mainly
reflect the impact of back-to-back growth in Government operating expenditure
of +6.5% to MYR234.3b under Budget 2018 after the +4.6% increase to MYR219.9b
in 2017, reversing the back-to-back declines in 2015-2016. The increase in 2017-
2018 operating spending is afforded by the “fiscal space” generated by economic
growth recovery and firmer crude oil prices as reflected by the upward revision
in the official crude oil (Brent) forecast for 2017 to USD50/bbl (original Budget
2017: USD45/bbl) and a firmer USD52/bbl in 2018, hence the recovery in 2017-
2018 revenues after the declines in 2015-2016.
Fig 4: Federal Government Revenues & Expenditures

2015 2016 1Q-3Q 2017 2017E Budget 2018
Crude Oil Price (USD/bbl) 52 44 52 50 * 52 *
Total Revenue, MYRb 219.1 212.4 155.8 225.3 239.9
% chg (0.7) (3.0) 2.1 6.1 6.4
Total Expenditure, MYRb 256.3 250.8 189.0 265.2 279.7
% chg (0.5) (2.1) 1.0 5.7 5.4
Operating Expenditure, MYRb 217.0 210.2 159.3 219.9 234.3
% chg (1.2) (3.1) (0.5) 4.6 6.5
Development Expenditure (Net), MYRb 39.3 40.6 29.6 45.3 45.4
% chg 2.2 3.5 9.8 11.5 0.2
* Official estimate for 2017, forecast for 2018
Source: Ministry of Finance, Bloomberg
Potential upside surprise in Government spending? The official crude oil price
forecasts look conservative. We expect crude oil price to average USD60/bbl in
2018 (2017E: USD54/bbl), and estimated that every USD10/bbl increase in annual
average crude oil price would boost Government’s oil & gas revenues excluding
PETRONAS dividend by MYR4b, and can be as much as MYR7b-MYR8b including
PETRONAS dividend. Given that 2018 is an election year, the potential upside to
Government revenue provides room for increase in targeted spending.
For example, the flipside to the revenue-enhancing crude oil price increase is the
upward pressures on inflation and cost of living via higher retail fuel prices for
petrol and diesel. The Government has indicated that it may consider measures
to ease the impact of higher global crude oil prices on inflation and cost of living
if RON95 and diesel prices were to increase and remain above MYR2.50/litre for
three consecutive months. The extra revenues can be used to enhance existing
targeted cash handouts and financial assistance, namely BR1M, which can be
raised to accommodate the impact to lower income groups. The Government can
also allocate additional fuel subsidies for the existing allocations provided to
public and rural transportation (e.g. diesel subsides for stage, express and school
buses; rural air transport in Sabah-Sarawak) and maybe even subsidising special
fares for LRT/MRT during the periods of above-MYR2.50/litre fuel prices, to
further encourage usage of public transport and support the country’s target to
reduce carbon emissions.
January 21, 2018 5

Investment underpinned by infrastructure delivery &

earnings recovery
2018 investment growth underpinned by progress and rollout of major
infrastructure and investment projects. We expect gross fixed capital
formation growth of +6.6% in 2018 (2017E: +7.5%), driven by expansions in both
private investment (2018E: +9.0%; 2017E: +9.5%) and public investment (2018E:
+1.5%; 2017E: +3.5%).
Investment activities are predominantly underpinned by ~MYR278b worth of

multi-year major infrastructure projects that are on-going and in the pipeline,
including the Klang Valley’s Mass Rapid Transit 2 and 3 and Light Rail Transit 3
(KVMRT2, KVMRT3 & KVLRT3); East Coast Rail Line (ECRL); Kuala Lumpur -
Singapore High Speed Rail (KL-SG HSR); Gemas – Johor Bahru Electrified Double
Track Rail (EDTR); and Pan Borneo Highway, as well as progress in major
catalytic and high-impact investments such as the Refinery and Petroleum
Industry Development (RAPID) in Pengerang, Johor that is set for completion and
operation in early-2019; Kuantan Port expansion and Malaysia-China Kuantan
Industrial Park (MCKIP); as well as investments in oil & gas and metals industries
in Sabah and Sarawak.
Earnings recovery is also positive for private investment growth. Maybank KE’s
research universe core earnings growth estimate of +7.1% for 2017 and forecast
of +9.1% for 2018 after the “no growth” years of 2014-2016 is positive for real
private investment growth given the correlation between the two (Fig 5).
The forecast of moderation in real private and public investment growth in

2018 takes note of several factors i.e. slowdown in MIDA’s investment approvals
seen in Jan-Sep 2017 (Fig 6) after the elevated trends in 2013-2016, caused by
the dips in approved investments in manufacturing (largely due to the drop in
Petroleum Products after the surge in 2014-2016 related to RAPID project),
services and real estate, despite the rebound in the oil & gas-dominated primary
sector; the unchanged allocation for Government gross development expenditure
(GDE) of MYR46b (2017: +9.4% to MYR46b); as well as news of slight delay in the
start of KVLRT3.
Fig 5: Corporate Earnings vs. Real Private Investment Fig 6: Approved Investment (MYRb)
25 300
239.7
20 250 219.5 14.4 212.8
19.7 193.0 8.2
167.8 3.8
15 200 148.8 154.6 3.8 154.3
137.0 28.1 1.9
10 150 111.3 22.5 24.1 104.9 153.4
105.6 113.5
9.8 147.7 114.5 146.1 9.3
33.6 21.7
5 100 66.4 50.1 70.4 122.9 111.0
55.5 36.7 69.3
0 50 38.7
71.9 74.7 58.5
46.0 59.9 62.8 32.6 47.2 56.1 41.1 52.1 41.4 35.0
(5) 0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Jan-Sep 2016
Jan-Sep 2017
2012 2013 2014 2015 2016 Jan-Sep 2017E 2018E

2017
MKE Research Universe Core Earnings (% chg) Manufacturing Services (incl. Real Estate)
Real Private Investment (% chg) Primary Total Approved Investment
Jan-Sep 2017 MKE Research Universe Core Earnings refers only to the Source: Malaysian Investment Development Authority (MIDA)
companies that reported on their Aug/Sep 2017 quarters
Source: MKE Equity Research, Dept of Statistics
January 21, 2018 6

Moderate external trade growth in 2018 after 2017 surge

External trade growth surge in 2017. Global economic growth recovery in 2017
uplifted world GDP growth (2017E: +3.6%; 2016: +3.2%), reflate world trade
activities and commodity prices, in turn boosting Malaysia’s gross exports to
+19.6% (Jan-Nov 2017: +20.4%; 2016: +1.2%) and gross imports to +20.6% (Jan-Nov
2017: +21.2%; 2016: +1.9%) respectively, translating into firmer growth in real
exports and imports of goods and services of +8.8% (Jan-Sep 2017: +10.4%; 2016:
+1.1%) and +11.0% (Jan-Sep 2017: +12.3%; 2016: +1.1%) respectively.
External trade growth to moderate in 2018 after the high base in 2017, with
gross exports and gross imports easing to +5.9% and +5.8% respectively, feeding
into slower real exports and imports of goods and services growth of +4.9% and
+5.7% respectively. 2018 external trade growth forecasts also reflect the
assumption of steady - rather than stronger - global economic growth (2018E:
+3.6%; 2017E: +3.6%); slower increase in average crude oil price (2018E: +10.4%
to USD60/bbl; 2017E: +23.2% to USD54.4/bbl); lower average CPO price (2018E:
MYR2,600/tonne; 2017: MYR2,791/tonne); firmer MYR vs. USD (2018E: year-end
of 3.90 & year average of 3.98; 2017: year-end of 4.05 & year average of 4.30);
and World Semiconductor Trade Statistics’ (WSTS) guidance of slower global chip
sales growth of +7.0% in 2018 after the +20.6% rise in 2017 (2016: +1.1%).
Continued export growth to sustain trade and current account surpluses.

Following the above forecasts of sustained exports and imports growth, trade
surplus in 2017 is estimated at +MYR97.3b (Jan-Nov 2017: +MYR90.0b; 2016:
+MYR88.1b), followed by +MYR103.7b forecast for 2018. Consequently, current
account surplus is also sustained at +MYR38.4b or +2.8% of GDP (Jan-Sep 2017:
+MYR27.4b or +2.8% of GDP; 2016: +MYR29.0b or +2.4% of GDP) and +MYR40.9b or
+2.9% of GDP in 2018.
MYR’s reversal of fortune

Expect trend of firmer MYR vs. USD in 2017 to continue in 2018. In 2017, MYR
gained 11% against USD to 4.05 (Fig 7) after enduring four straight years of losses
against the greenback totaling -31.8% in 2013-2016. Maybank FX Research
expects the momentum in USDMYR to continue in 2018 with the year-end target
of 3.90 to average 3.98 (2017 average USDMYR: 4.30), although there will be
some volatility in the interim as we expect some selling pressure to emerge
potentially in 2Q18 after BNM’s expected OPR hike and the general election. On
the end of quarter basis, USDMYR is expected to be at 3.95 at end-1Q18E, 4.02 at
end-2Q18E, 4.00 at end-3Q18E, and 3.90 at end-4Q18E.
Oversold and undervalued amid supportive fundamentals and flows. MYR is

oversold given the prolonged losses in 2013-2016, and undervalued in view of the
supportive fundamentals and flows as per the firmer crude oil prices, external
reserves rebuilding, sustained trade and current account surpluses, progress in
fiscal consolidation, receding foreign holdings risk in the bond market, as well as
resumption in the repatriation of export earnings (Fig 8-12). Maybank FX
Research’s fair value estimate for USDMYR is around 3.70.
January 21, 2018 7

Fig 7: USDMYR Fig 8: USDMYR & Crude Oil Prices

2.9 140 2.90
3.1 3.10
120
3.30
3.3
100 3.50
3.5 3.70
80
3.7 3.90
3.9 60 4.10
4.30
4.1 40
4.50
4.3 20 4.70
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
4.5
4.7
Jul-13
Jan-11
Jun-11
Nov-11
Apr-12
Feb-13
Dec-13
Oct-14
Mar-15
Jan-16
Jun-16
Nov-16
Apr-17
Sep-12
May-14
Aug-15
Sep-17
Brent USDMYR (Avg, RHS)
USDMYR (RHS)
Source: Bloomberg Source: Bloomberg
Fig 9: USDMYR & External Reserves Fig 10: USDMYR, Trade Balance & Current Account Balance
150 3.00 50.0 2.80
3.20 40.0
140 3.30
3.40
130 30.0
3.60 3.80
120 3.80 20.0
4.00 4.30
110 10.0
4.20
100 0.0 4.80
4.40
1Q 2010
3Q 2010
1Q 2011
3Q 2011
1Q 2012
3Q 2012
1Q 2013
3Q 2013
1Q 2014
3Q 2014
1Q 2015
3Q 2015
1Q 2016
3Q 2016
1Q 2017
3Q 2017
90 4.60
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
Sep-15
Jan-16
May-16
Sep-16
Jan-17
May-17
Sep-17
Current Account Balance (MYRb, LHS)

Trade Balance (MYRb, LHS)
External Reserves (USD b) USDMYR end-period (RHS) USDMYR (end period)
Source: Bloomberg, CEIC Source: Bloomberg, CEIC
Fig 11: Figure 47: USDMYR & Cumulative Net Foreign Flows Fig 12: USDMYR & Net Repatriation of Exports Earnings
in Equity & Bond Markets
250 2.85 60 47.8
3.10 38
225 40
3.35 28
22.6
200 3.60 20 9.2
8.8
3.85 0.9 1
175 0
4.10
150 4.35 (20)
125 4.60
(40) (31.4)
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
Sep-15
Jan-16
May-16
Sep-16
Jan-17
May-17
Sep-17
2006-2010 Jan 2011-Nov 2016 Dec 2016-Nov 2017

Net Export Earnings Repatriated (USDb)
Cumulative Net Foreign Flows into Equities & Debts (MYRb) Net Export Earnings Repatriated (% of Tade Surplus)
MYR vs USD (RHS) MYR per USD (% chg)
Source: Bloomberg, CEIC Source: Bloomberg, BNM
January 21, 2018 8

EQUITIES: OTHER KEY INFLUENCES, LOOKOUTS
(i) Crude oil price direction

Dated Brent price rebounded +20.6% in 2017 to USD66.82/bbl on 29 Dec,
averaging USD54/bbl (+23% YoY) for 2017, and we forecast a higher ASP of
USD60/bbl (+11% YoY) in 2018. On 30 Nov 2017, OPEC and its allies extended
their agreement to cut oil production until end-2018, while signaling a possible
early exit from the deal if the market overheats. Their next review is in Jun
2018. The original agreement was to cut 1.8m bpd (OPEC: 1.2m bpd, non-OPEC:
0.6m bpd) over six months starting Jan 2017, and this was subsequently extended
by 9 months until Mar 2018 with the option to extend by another 3 months.
A key positive for Malaysia’s macro is that the government’s fiscal deficit target
of -2.8% of GDP for 2018 is based on a conservative USD52/bbl Brent ASP. Based
on our sensitivity analysis, every USD10/bbl higher annual average crude oil price
will impact: (i) the government’s oil & gas related revenue (excluding dividend
from PETRONAS) by +MYR4b, while (ii) fiscal/current account balance will
improve by +0.3%/+0.4% of GDP.
2017 saw lower correlation between the KLCI’s movement with crude oil price
direction, unlike 2014-16 when both were highly correlated (Fig 13). This could
be due to the fact that oil related revenue is an increasingly smaller contributor
to the government’s revenue – e.14.9% in 2017, from 31.2% in 2013 and a high of
40.3% in 2009 (Fig 14). That said, we believe that crude oil price direction will
still be a key influence to equities due to its macro impact, which in turn,
provides the support to broad investment sentiment. Our expectation of higher
crude oil price in 2018 should be positive for equities.
Fig 13: Lower correlation in 2017 for KLCI vs. Brent Fig 14: Oil related revenue is an increasingly smaller
contributor to the Government’s revenue
1,900 120 80,000 39.7 40.3 45
36.8 37.0 35.4 35.8 33.7 31.2
70,000 30.0 40
1,850 105
60,000 29.1 35
1,800 90
30
50,000 20.9
1,750 75 15.7 25
40,000 14.9
1,700 60 14.6 20
30,000
1,650 45 15
20,000 10
30,959
45,502
51,730
63,358
63,959
56,445
66,301
70,105
66,556
66,096
45,825
30,967
33,632
1,600 KLCI (pts, LHS) 30 37,763

10,000 5
1,550 Brent (USD/bbl, RHS) 15
0 0
2017E
2018E
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
1,500 0
Jul-14
Jul-15
Jul-16
Jul-17
Jan-14
Mar-14
May-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Sep-17
Nov-17
MYRm (LHS) % of Total Revenues
Source: Bloomberg, Maybank KE (chart) Source: Ministry of Finance, Maybank KE (chart)
(ii) MYR’s direction

The USDMYR had started 2017 on a weak footing before rebounding from a low of
4.498 on 4 Jan, to 4.047 on 29 Dec. Throughout 2017, the MYR has strengthened
10.7% against the USD and Maybank FX Research forecasts USDMYR to end 1Q18
at 3.95, 2Q18 at 4.02, 3Q18 at 4.00 and 4Q18 at 3.90 (Fig 15), offering an upside
of 3.9%. On an average basis, we forecast USDMYR 3.98 in 2018 vs. 4.30 in 2017.
January 21, 2018 9

BNM Financial Market Committee’s announcement on 2 Dec 2016 to ban offshore

MYR non-delivery forward trades and re-impose the rule on repatriation of export
earnings has helped to stabilise the MYR while its initiatives on 13 Apr 2017,
allowing investors to actively hedge 100% of their invested assets vs. 25% in the 2
Dec 2016 announcement, has helped to bring back foreign participation in the
capital market. The MYR received another shot-in-the-arm after BNM signaled
OPR upward bias on 9 Nov 2017. Throughout 2017, the USDMYR 30-day implied
volatility has averaged a lower 2.8% (2016: 9.3%, 2015: 10.5%, 2014: 5.2%; Fig
16). For 2018, our base case considers a pick-up in MYR volatility in 1H18 amid an
expected BNM’s OPR hike and GE14, but our forecast of a firmer MYR at end-2018
ultimately reflects the positive underlying fundamentals for the currency. A
firmer MYR in 2018 should also be positive for equities.
Fig 15: MYR’s expected path

Forecast 1Q18E 2Q18E 3Q18E 4Q18E
USDMYR 3.95 4.02 4.00 3.90
EURMYR 4.62 4.74 4.80 4.72
JPYMYR 3.38 3.50 3.45 3.36
MYRCNY 1.68 1.64 1.65 1.68
GBPMYR 5.21 5.39 5.44 5.38
SGDMYR 2.90 3.00 3.00 2.94
Source: Maybank FX Research
Fig 16: USDMYR vs. USDMYR 30D implied volatility

20 USDMYR 30D volatility (LHS) 4.800
USDMYR (LHS)
15 4.300
10 3.800
5 3.300
0 2.800
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
May-10
Sep-10
May-11
Sep-11
May-12
Sep-12
May-13
Sep-13
May-14
Sep-14
May-15
Sep-15
May-16
Sep-16
May-17
Sep-17
Source: Bloomberg (data), Maybank KE (compilation)
Fig 17: KLCI vs. MYRUSD, 2014-2017

1,900 0.33
1,850 0.32
1,800 0.30
1,750 0.29
1,700 0.27
1,650 0.26
1,600 KLCI (pts, LHS) 0.24
1,550 MYRUSD (RHS) 0.23
1,500 0.21
Jul-14
Jul-15
Jul-16
Jul-17
Jan-14
Mar-14
May-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Sep-17
Nov-17
January 21, 2018 10

(iii) BNM’s overnight policy rate

In the last Monetary Policy Statement (MPS) for 2017 (dated 9 Nov), BNM kept the
OPR at 3.00% but signaled upward bias in 2018. This is in line with our view of a
post-GE14 +25bps hike in 2018, with a likelihood of the hike happening at the
May 2018 Monetary Policy Committee (MPC) meeting. BNM’s MPC will meet on 24-
25 Jan, 6-7 Mar, 9-10 May, 10-11 Jul, 4-5 Sep, 7-8 Nov.
The Nov 2017 MPS highlighted a shift in monetary policy stance, stating that “the
MPC may consider reviewing the current degree of monetary accommodation” in
view of BNM’s assessment that global economic growth has become more
entrenched and synchronized, and will be sustained in 2018, in turn generating
positive spillovers to the domestic economy to remain strong in 2018 in terms of
consumption and investment. At the same time, BNM sees inflation rate
moderating to the +2.5% to +3.5% range in 2018 (2017E: +3.0% to +4.0% range) on
smaller effect from global cost factors.
In our view, the impact of a 25bps OPR rise on overall corporate earnings is
small. The positive impact on banks’ earnings is also marginal with NIMs expected
to normalise 3-6 months post rate hike, based on observations on 2016’s -25bps
reduction in the OPR.
Fig 18: Banking system BLR and OPR

(%) Nov 17: BLR 6.68%, OPR 3.00%
8
7
6
5
4
3
2
1
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Source: BNM, Maybank KE (compilation)
(iv) Consumer sentiment

That said, we are cautious on the impact of higher OPR on the households, on the
back of high household debts at 85% of GDP end-3Q17 and still weak consumer
sentiment. MIER’s 3Q17 consumer sentiment index (CSI) has remained below the
threshold level of confidence for the 13th quarter (since 3Q14) at 77.1, which also
seems a disconnect between what the man-on-the-street feels and what the hard
numbers show. The Department of Statistics’ retail trade index continued to
expand +10.4% YoY in 3Q17 (2Q17: +11.5% YoY, 1Q17: +7.8% YoY), which could be
helped by government’s measures to boost disposal income and higher tourism
spending (as reflected in the +19.6% YoY growth in spending by foreign credit
card holders in 11M17). Tourism remains a major driver to GDP (14.8% in 2016).
January 21, 2018 11

Into 2018, consumer spending for smaller ticket items should remain supported
by Budget 2018 measures (i.e. sustained BR1M handouts, lower personal income
taxes, higher bonuses to civil servants and pensioners) to help offset the impact
from (i) the restatement of workers’ contribution to the EPF to a higher rate (it
was reduced to 8% of gross salary from 11%, from Mar 2016 till Dec 2017), and (ii)
a possible rise in the OPR (assuming just +25bps). That said, the recovery in
consumer sentiment is still important for big ticket item purchases (like cars,
residential properties). On that basis, we forecast just a small +3% YoY auto TIV
(total industry volume) recovery in 2018 (11M17: +1% YoY, 2016: –13% YoY).
Fig 19: Consumer Sentiment Index Fig 20: Retail Trade Index & real private consumption
expenditure (% YoY)
150 14 1000
MIER consumer sentiment index
140 12
5-year (2009-13) average
130 10
120
8
110
6
100
4
90 Pre-GST Post-GST
80 2 0
1Q 2013
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
1Q 2015
2Q 2015
3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
4Q 2016
1Q 2017
2Q 2017
3Q 2017
70
60
50 GST Introduction (1 Apr 2017)
Retail Trade Index
1Q98
1Q99
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14
1Q15
1Q16
1Q17
Real Private Consumption Expenditure
Source: MIER, Maybank KE (chart) Source: Department of Statistics, Maybank KE (chart)
Fig 21: Motor Vehicles Trade Index (% YoY) Fig 22: Auto TIV’s 11M17 +1% YoY to 521,939 units
10 1000 Others Nissan Honda
units
8 700,000 Toyota Perodua Proton
6 600,000
4 500,000
2 400,000
Pre-GST Post-GST
0 300,000
1Q 2013
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
1Q 2015
2Q 2015
3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
4Q 2016
1Q 2017
2Q 2017
3Q 2017
(2) 200,000
(4) 100,000
(6) 0 0
11M17
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
GST Introduction (1 Apr 2017) Motor Vehicles Trade Index
Source: Department of Statistics, Maybank KE (chart) Source: Malaysian Automotive Association, Maybank KE (chart)
January 21, 2018 12

(v) 14th general election

Malaysia’s current electoral term will automatically dissolve on 24 Jun 2018 and
a general election must be held within 60 days. Compared to GE13 when 11.26m
people voted, out of a total 13.27m registered voters (vs. 17.88m voting age
population), there are now 7.8% more registered voters (ie. 14.31m end-1Q17,
out of total 18.16m voting age population), with the additions being
predominantly young voters who have attained the voting age of 21. A possible
window for GE14 in 2018, as we can see, is post-Chinese New Year (CNY; 16-17
Feb) and before Ramadhan (15 May). If the Parliament dissolves within the 15
days of CNY celebration (there is already a precedent in GE12 when Parliament
was dissolved on the 7th day), then polling could be held during the first term
school holidays (17-25 Mar). Our base case is a status-quo outcome.
Fig 23: Malaysia’s 2018 calendar of events Fig 24: 5 of 8 Malaysia’s GEs were held in 1H of the year
Events Dates GE Year Dissolution Polling date Sitting Prime
st date Minister
1 payment of Budget 2018 ‘goodies’ January
2013 3 Apr 5 May Najib
Chinese New Year 16 - 17 Feb
2008 13 Feb 8 Mar Badawi
School holidays (Term 1) 17 - 24 Mar
2004 4 Mar 21 Mar Badawi
2nd / Remaining payments of Budget 2018 Before Eid
‘goodies’ 1999 11 Nov 29 Nov Mahathir
Ramadhan & Eid 15 May – 15 Jun 1995 6 Apr 25 Apr Mahathir
School holdings (Mid year) 8 – 23 Jun 1990 5 Oct 21 Oct Mahathir
BN Government 5-year term in office ends 24 Jun 1986 19 Jul 3 Aug Mahathir
School holidays (Term 2) 17 - 25 Aug 1982 29 Mar 22 Apr Mahathir
Last date for GE14 24 Aug

Source: Various, Maybank KE (compilation) Source: Election Commission, Maybank KE (compilation)
Fig 25: Past GE results Fig 26: Current Lower House of Parliament seats composition
13GE, 2013 59.9 Pakatan Harapan: BN: 132 MPs
12GE, 2008 63.1 70 MPs UMNO: 86
11GE, 2004 90.4 DAP: 36 MCA: 7
10GE, 1999 76.7 PKR: 28 MIC: 4
9GE, 1995 84.4 PAN: 6 GERAKAN: 2
8GE, 1990 70.6 Others: 20 MPs EAST M’SIA PARTIES: 33
7GE, 1986 83.6 PAS: 14 (Sarawak 25, Sabah 8)
6GE, 1982 85.7 WARISAN: 2
5GE, 1978 84.4 INDEPENDENT: 2
4GE, 1974 86.8 PSM: 1
3GE, 1969 51.4 PRIBUMI: 1
2GE, 1964 86.0
1GE, 1959 71.2
0 20 40 60 80 100
% Parliament seats won by BN % Majority votes by BN
Source: Election Commission, Maybank KE (compilation) Source: Election Commission, Maybank KE (compilation)
January 21, 2018 13

(vi) Mid-term review of the 11MP

2018 is the mid-point of the 11th Malaysia Plan (11MP, 2016-2020) where the focus
is on developing the people’s economy in addition to the capital economy. The
destination is a high-income economy by 2020. Some of the 11MP’s targets (based
on the blueprint unveiled in May 2015) are a balanced government budget by
2020 and a lower government debt to GDP ratio by 2020. That said, the targets
were based on average crude oil price at USD70/bbl while 2016-2017’s average
has been USD49/bbl; therefore, a reset of the targets are necessary.
One item in our wish list, to be addressed either in the 11MP mid-term review or
the other forums, is a detailed road-map on the transition to a digital economy;
the latter is a catalyst for continued sustainable and inclusive macro growth. In
addition, we hope for more details on the National Transformation 2050 (TN50)
initiative. Since it was introduced in Budget 2017, the only “details” that we are
aware of is its aspiration - to elevate Malaysia as among the top 20 nations
globally, ranked by economic development, social enhancement and innovation.
Fig 27: 11th Malaysia Plan’s (2016-2020) major macro targets

Targets Achievements
GDP growth 5-6% p.a. 2016-1H17: 4.7% p.a.
GNI per capita MYR54,100 by 2020 (2015: MYR36,093) 2016: MYR37,760
1H17: MYR39,758
Average monthly household income MYR10,540 by 2020 (2014: MYR6,141) 2016: MYR6,958
Median monthly salaries & wages MYR2,500 by 2020 (2015: MYR1,600) 2016: MYR1,703
Salaries as a % of GDP At least 40% by 2020 (2014: 34.9%) 2016: 35.3%
Malaysian Wellbeing Index (MWI) +1.7% p.a. (10MP: +1.2% p.a.) NA
Current account as a % of GNI 2.6% by 2020 (2015: 3.1%) 2016: 2.4%
1H17: 2.3%
Ratio of federal government debt to <45% by 2020 End-2016: 52.7%
GDP Jun 2017: 52.3%
Government fiscal position Balanced budget, by 2020 * End-2016: -3.1% of GDP
End-2017E: -3.0% of GDP
* Government revenue is targeted to expand by 7.9% p.a. and its dependence on oil-related revenue is targeted to decline to
15.5% by 2020 (2015: 21.5%); Based on average crude oil price at USD70/bbl (2016-17 USD49/bbl)
Source: 11MP blueprint
January 21, 2018 14

EARNINGS GROWTH & VALUATIONS
Growth resumes in 2017, to continue into 2018

2017 quarterly earnings reportings have provided positive relief after a long
streak of shoft-falls. With core net profit of our research universe expanding
+6.6% YoY in 9M17 (this figure refers only to stocks that reported on their Aug/
Sep 2017 quarters), we are confident of market earnings growth resuming in
2017, after three years (2014-2016) of “no growth” (Fig 29). We now forecast
2017 core earnings of our research universe (we cover 74% of Malaysian equities’
market value) to grow +7.1% YoY, sustaining into 2018 at +9.1% YoY. For the KLCI,
we forecast core earnings to grow +7.4% in 2017, and +5.0% in 2018. In 2018, we
expect all sectors to grow (except media, property, ports).
Fig 28: Malaysia market core earnings growth

2016A 2017E 2018E
KLCI
- post KLCI constituent change (2.1%) 7.4% 5.0%
- before KLCI constituent change (2.1%) 7.5% 7.4%
Maybank KE’s Research Universe (0.9%) 7.1% 9.1%

Source: Maybank KE
KLCI constituents change and the impact on 2018 KLCI core earnings growth
The KLCI constituents change, fully effective from 18 Dec 2017, are: (i) Sime Darby
Plantation (SDPL MK) featuring as a constituent, post its demerger from Sime Darby
Berhad (SIME MK) and listing on 30 Nov 2017; (ii) Westports (WPRTS MK) deleted, to
make way for Sime Darby Plantation, (iii) Nestle (NESZ MK) and Press Metal Aluminium
(PMAH MK) featuring, following the routine semi-annual review of the KLCI constituents
on 30 Nov 2017, (iv) British American Tobacco (ROTH MK) and IJM Corp (IJM MK) OUT.
For the KLCI core earnings estimates, we have put through the constituents change into
our 2018 estimates to derive +5.0% core earnings growth for 2018. This compares 2018
KLCI core earnings (after the constituents change) against 2017 core earnings (before).
The deceleration in 2018 KLCI core earnings growth (2018E: +5.0% vs. 2017E: +7.4%)
reflects: (i) the base effect from a higher core earnings base for 2017, and (ii) a slightly
reduced core earnings for 2018 post the demerger of Sime Darby Berhad, with the
property operations under newly listed Sime Darby Property (SDPR MK) no longer in the
calculation, as well as lower free-floated earnings from the other new constituents.
Source: Maybank KE
Fig 29: Maybank KE Research Universe core earnings growth

(YoY %)
20
15
10
(5)
2011 2012 2013 2014 2015 2016 2017E 2018E
Source: Maybank KE
January 21, 2018 15

Fig 30: Maybank KE Research Universe core earnings growth, PERs, P/B, ROE (12 Jan 2018)
Earnings Growth (%) PE (x) P/B (x) ROE (%)
Sector CY16A CY17E CY18E CY16A CY17E CY18E CY17E CY18E CY17E CY18E
Banking & Finance (2.1) 14.0 6.2 15.8 13.9 13.1 1.5 1.4 11.0 10.9
Non-banking Finance 3.2 4.4 6.6 16.0 15.3 14.4 1.7 1.7 10.8 11.8
Building material 115.5 (94.7) NM 28.4 537.7 22.9 1.7 1.7 0.3 7.6
Consumer (12.9) 2.1 10.3 26.9 26.3 23.9 7.1 6.8 26.9 28.5
Healthcare (5.0) (29.1) 42.2 53.2 75.0 52.8 2.2 2.2 3.0 4.2
Automotive (41.9) (23.8) 30.6 22.7 29.8 22.8 0.7 0.9 2.3 4.0
Construction, Infra (7.2) 14.7 15.5 20.9 18.2 15.8 1.6 1.5 8.6 9.4
Gaming – NFO (15.8) 6.8 6.2 12.5 11.7 11.1 1.8 1.8 15.4 15.8
Gaming – Casino 25.3 8.7 33.5 21.7 20.0 15.0 1.2 1.2 6.1 7.9
Gloves 5.7 19.1 22.7 44.1 37.1 30.2 7.7 6.9 20.7 22.8
Media (17.2) (9.5) (4.6) 19.2 21.2 22.3 4.1 4.4 19.2 19.8
Oil & Gas (95.6) 205.0 36.5 407.0 133.5 97.8 1.1 1.1 0.8 1.1
Petrochemical 34.5 17.8 6.8 16.6 14.1 13.2 2.2 1.9 15.5 14.5
Plantation 18.4 28.2 8.4 35.2 27.4 25.3 2.5 2.3 9.2 9.1
Property – Developer 12.8 12.4 (3.9) 18.3 16.3 17.0 1.2 1.1 7.5 6.2
Property – REIT 4.0 3.5 5.9 19.6 18.9 17.9 1.2 1.1 6.2 6.3
Technology 2.5 37.2 32.3 37.9 27.6 20.9 7.0 6.1 25.5 29.1
Telcos (8.9) (2.7) 3.0 26.6 27.3 26.5 4.2 3.9 15.3 14.6
Transport – Aviation NM 2.8 2.2 16.6 16.2 15.8 1.8 1.8 11.1 11.6
Transport – Shipping (30.7) 6.9 2.6 17.3 16.2 15.8 0.9 0.9 5.5 5.5
Transport – Ports 22.1 (2.7) (5.2) 19.2 19.8 20.9 5.7 5.3 29.0 25.6
Utilities 0.2 (5.8) 10.0 13.9 14.8 13.4 1.7 1.6 11.5 12.1
Diversified 36.8 (9.1) 12.2 10.7 11.8 10.5 1.0 1.0 8.7 9.3
Stocks under cvrg (0.9) 7.1 9.1 20.3 18.9 17.4 1.8 1.7 9.5 9.9
Source: Maybank KE
Fig 31: Research Universe’s earnings breakdown by sector Fig 32: KLCI’s earnings breakdown by sector – CY18
– CY18
Transport Utilities Utilities Media Building
Telcos
6% 13% Transport 20% 1% materials
8% Petrochem
REITs 2% 3%
3% 7% Telcos
8%
Banking &
Property - Property
Finance
Developer 2%
33%
4%
Plantations
6%
Plantation
6% Petrochemical Banking &
Consumer 5% Gaming Financials
Construction, Healthcare 3% 7% Consumer 44%
Media Gloves Gaming Infra 1% 2%
1% 1% 7% 3%
Source: Maybank KE Source: Maybank KE
January 21, 2018 16

Market valuations hugging at about-mean

Based on our market core earnings estimates and market close as of 12 Jan 2018
(KLCI at 1,822.7), the KLCI’s valuations are at:
 16.5x 12M forward PER, which is 0.6SD above its long-term mean (since
2001) of 15.5x (1SD is 1.6x).
 1.71x trailing P/B, which is 0.3SD below its long-term mean (since 2001) of
1.80x (1SD is 0.32x).
Equity risk premium/yield gap, as measured by the inverse of KLCI’s 12M forward
PER over the 10-year MGS yield is at 223bps, close to 238bps end-2016.
Fig 33: Malaysia market earnings growth & valuations as at 12 Jan 2018
2016A 2017E 2018E
KLCI @ 1,822.7 PE (x) 16.7 16.8 16.5

Earnings Growth (%) (2.1%) 7.4% 5.0%
Maybank KE’s Research Universe PE (x) 20.3 18.9 17.4
Earnings Growth (%) (0.9%) 7.1% 9.1%
Source: Maybank KE
Fig 34: KLCI‘s 12M forward PER at 16.5x (12 Jan) Fig 35: KLCI’s trailing P/B at 1.71x (12 Jan)
(x) 1-Yr Forward PER Mean +1 SD -1 SD (x)
22 2.6 Trailing P/B Mean +1 SD -1 SD
20
2.2
18
16
1.8
14
12
1.4
10
8 1.0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Source: Maybank KE, Bloomberg Source: Maybank KE, Bloomberg
Fig 36: KLCI’s dividend yield at 3.19% (12 Jan) Fig 37: Equity risk premium at 223bps (12 Jan)
8.0 (%)
(%) 6
6.0 5
4
4.0
3
2
2.0
1
0.0 0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 06 07 08 09 10 11 12 13 14 15 16 17 18
Source: Maybank KE, Bloomberg Source: Maybank KE, Bloomberg
January 21, 2018 17

Premium over regional peers have narrowed

Relative to regional peers, the KLCI’s 12M forward PER is presently almost at par
with the SET and JCI (due to its peers’ relative outperformance since 2014).
Previously, the KLCI had traded on higher multiples than its peers. Based on
Bloomberg’s earnings estimates for these other markets, our calculated 12M
forward PER for the SET is 16.1x and JCI is 16.4x vs. KLCI’s 16.5x. PSEi’s 19.1x is
2.6x above the KLCI.
Fig 38: KLCI’s 12M forward PER vs. regional EM peers (12 Fig 39: KLCI’s 12M forward PER valuation gap over regional
Jan) EM peers (12 Jan) (= KLCI’s PER minus peers’ PER)
24 6 SET JCI PSEI
KLCI SET
22
JCI PSEI 4
20
2
18
16 0
14
(2)
12
(4)
10
8 (6)
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Source: Bloomberg, Maybank KE (chart) Source: Maybank KE, Bloomberg
Fig 40: KLCI’s 2017 journey, major events

3/5: IWH- 1/6: RHB- 29/12: 1,796.8,
1,800 4/1: 2/3: BNM
CREC's Bdr AMMB gets 14/6: 1,792.4, 2017 high
USDMYR 15/2: leaves OPR
M'sia SSA 9/11: BNM
hits a high of Maturity of unchanged BNM's nod to 1H high
lapses leaves OPR
4.498 MYR8.8b start merger
unchanged,
MGS 15/3: Maturity talks
signals
17/1: of MYR10.5b review ahead
Theresa May 16/2: M'sia MGS 8/6: UK GE - 7/9: BNM
1,750 confirms UK 4Q16 GDP Conservatives 18/8: M'sia leaves OPR
to leave EU, +4.5% YoY 7/5: French lost their 2Q17 GDP
presidential majority unchanged
indicating a up 5.8% YoY
'Hard Brexit' 27/2: Saudi 13/4: BNM election 27/10: 13/12: US
FMC 12/9: PM National Fed ups FF
Aramco to 14/6: US Fed 22/8: RHB-
announces 12/5: BNM ups FF by 11/7: Najib meets Budget 2018 by 25bps to
19/1: BNM invest AMMB calls with
initiatives leaves OPR 25bps to UMWH- 17/11: M'sia 1.25%-1.50%
leaves OPR USD7b in 15/3: US Fed off merger President
1,700 unchanged RAPID ups FF by for onshore unchanged 1.00%-1.25%,UMWOG 3Q17 GDP range
financial completes talks Trump at up 6.2% YoY
25bps to announces
markets 19/5: M'sia gradual demerger White House 26/12: Govt
19/1: UMWH 0.75%-1.00%
1Q17 GDP balance sheet 30/11: Listing says no
announces range 14/9: PM
14/4: SP +5.6% YoY reduction 11/7: LCT of SDPL, change in
demerger wt Najib meets
Setia lists on Bursa SDPR electricity
UMWOG 23/3: BNM with PM
enters into 24/5: Proton- 19/6: Brexit tariff for RP2
Annual Theresa May
1,650 20/1: Report 2016 MoI for I&P Geely heads talks starts 13/7: BNM (2018-20)
acquisition of agreement leaves OPR at Downing
Trump's Street
unchanged 31/12:
inauguration 29/3: UK 30/6: Govt
3/1: 1,635.5 25/5: OPEC &maintains USDMYR
invoking 24/9:
25/1: SIME year low Article 50, allies extend 1.52sen/kWh
German
closed at
announces output cut electricity tariff year low of
Lisbon Treaty elections
demerger 9+3 mths rebate 4.047
1,600
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17
Note: KLCI at 1,797 (29 Dec 2017) vs. 1,642 (30 Dec 2016); KLCI’s record high close was 1,893 on 8 Jul 2014
Source: Maybank KE (compilation)
January 21, 2018 18

KEY RISK: FINANCIAL IMBALANCES, INSTABILITY
Equity and bond market bubbles?

Global equity market has been buoyant in 2017 and early-2018, amid continued
search for returns in an environment of falling and prolonged low risk-free yield,
on top of the “goldilocks economy” of growth recovery and subdued inflation
that fuels earnings growth. This is encapsulated by the US stock market (S&P500)
valuation and depressed US 10 Year Treasury yield (Fig 41). Historically, US stock
market is vulnerable to major corrections when the S&P500’s cyclically-adjusted
PE ratio is around or exceeds 25x. It is 32.5x as at Dec 2017, the second highest
on record after 44.2x in Dec 1999.
Fig 41: US Stock Market Valuation & Government Bond Yield

50 18
45 16
40 14
35
12
30
10
25
8
20
6
15
10 4
5 2
0 0
Jul-31
Jul-54
Jul-77
Jul-00
Jan-20
Jan-43
Jan-66
Jan-89
Jan-12
Nov-23
Sep-27
May-35
Mar-39
Nov-46
Sep-50
May-58
Mar-62
Nov-69
Sep-73
May-81
Mar-85
Nov-92
Sep-96
May-04
Mar-08
Nov-15
S&P500 Cyclically-Adjusted PE Ratio (x) US Treasury 10-Year Yield (% p.a., RHS)
Source: Online Data Robert Shiller (http://www.econ.yale.edu/~shiller/data.htm)
Inflation and major central banks’ policy response

Another key risk is the divergence between US Fed’s guidance and market
expectations on the fed funds rate path, as well as between risks and volatility.
Markets are currently factoring in a more “dovish” or less interest rate hikes in
2018-2020 than what Fed is guiding (Fig 42), mainly reflecting differing views
between Fed and markets on long-term inflation outlook/expectation.
Meanwhile, the gap between risks (represented by Global Economic Policy
Uncertainty Index) and market volatility (equity, bond and currency markets’
volatility indices) have not only widened but persisted, whereas historically – and
logically – risks and volatilities move in tandem and any divergence was
unsustainable (Fig 43). These gaps pose “re-pricing” risk in the global financial
markets, and could be triggered by factors such as faster than expected
inflation; more hawkish-sounding major central banks – including comments on
the financial markets; and domestic/global political risks.
January 21, 2018 19

Fig 42: US Fed Funds Rate (% p.a.) – Fed’s Guidance vs. Fig 43: Risks vs. Volatility
Market Expectation
3.25 250 80
3.00
200 60
2.75
2.50 150
2.25 40
100
2.00
50 20
1.75
1.50 0 0
1.25
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
Jan-17
Sep-05
May-06
Sep-07
May-08
Sep-09
May-10
Sep-11
May-12
Sep-13
May-14
Sep-15
May-16
Sep-17
1.00
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Dec-17
Feb-18
Jun-18
Aug-18
Dec-18
Feb-19
Jun-19
Aug-19
Dec-19
Feb-20
Jun-20
Aug-20
Dec-20
Global Economic Policy Uncertainty Index (12MMA)
Bond Mkt Volatility Index (MOVE)
Futures Implied Fed Fund Rate as at 12 Jan 2018
Equity Mkt Volatility Index (VIX, RHS)
FOMC Fed Fund Rate Median Forecast, Dec 2017 FX Mkt Volatility Index (CVIX, RHS)
Source: FOMC, Bloomberg Source: Bloomberg
Unintended consequences from China’s de-leveraging and

de-risking
China’s private sector leveraging trend is similar to pre-crisis Japan and ASEAN
(Fig 44) i.e. rapid buildup in debt relative to GDP – as well as the surge in asset
markets - preceded the outbreak of financial crises. Positively, steps were taken
to curb debt growth and cool the asset market with the impact being seen,
among others, in the sharp slowdowns in domestic credit growth, property price
increase and growth of wealth management products amount outstanding, as
well as the drop in the equity market since late-Nov 2017. Given the risk of
unintentionally causing economic “hard landing” that in turn triggers financial
crisis, the de-leveraging and de-risking process is being managed. At the same
time, the accelerating growth in corporate profits could mitigate a particular
downside of the de-leveraging process i.e. rising debt servicing costs as a direct
result of higher market interest rates.
Fig 44: China’s Private Sector (Household & Corporate) Debt to GDP Ratio (%)
250 Japan's
Bubble Burst US
200 Subprime
Crisis; GFC
AFC
150
100
50
0
1Q 1980
2Q 1981
3Q 1982
4Q 1983
1Q 1985
2Q 1986
3Q 1987
4Q 1988
1Q 1990
2Q 1991
3Q 1992
4Q 1993
1Q 1995
2Q 1996
3Q 1997
4Q 1998
1Q 2000
2Q 2001
3Q 2002
4Q 2003
1Q 2005
2Q 2006
3Q 2007
4Q 2008
1Q 2010
2Q 2011
3Q 2012
4Q 2013
1Q 2015
2Q 2016
Japan US China ASEAN ex-SG (ID, TH, MY)
Source: BIS
January 21, 2018 20

EQUITY STRATEGY & INVESTMENT THEMES
Higher volatility pre and post GE14

GE14, in our view, will be a major driver of investors’ sentiment in early 2018,
with pressure points on domestic macro receding and market earnings growth
resuming. During GE13, the KLCI and USDMYR volatility were largely unchanged
after the dissolution of Parliament but they spiked up +57% and +50% respectively
on the first trading day post polling day (after the incumbent coalition retained
its simple majority win in Parliament). KLCI’s volatility continued to climb
thenafter; it only started to recede after six weeks.
For GE14, we expect volatility in both equities and MYR to be higher in the run-
up to, and post polling day, on expectation for sizeable amount of political
newsflow having an impact on investors’ sentiment. Assuming the Parliament
dissolves just after CNY, we could potentially see higher activity in equities from
January onwards (some trading opportunities may manifest). During GE13, the
KLCI moved up +3.0% in the one month leading to Parliament dissolution, +0.6%
from dissolution to polling day, and +4.7% in the one month post polling day.
Fig 45: KLCI 30-day volatility Fig 46: USDMYR 30-day volatility
25 20
GE13, 5 May 2013 GE13, 5 May 2013
20
15
15
10
10
5
5
0 0
Jul-12
Jul-17
Jul-12
Jul-17
Jan-10
Jun-10
Apr-11
Oct-13
Mar-14
Jan-15
Jun-15
Apr-16
Jan-10
Jun-10
Apr-11
Oct-13
Mar-14
Jan-15
Jun-15
Apr-16
Nov-10
Sep-11
Feb-12
Dec-12
May-13
Aug-14
Nov-15
Sep-16
Feb-17
Dec-17
Nov-10
Sep-11
Feb-12
Dec-12
May-13
Aug-14
Nov-15
Sep-16
Feb-17
Dec-17
Source: Bloomberg, Maybank KE (chart) Source: Bloomberg, Maybank KE (chart)
Fig 47: KLCI’s performance during general elections

GE Year Dissolution Polling Dissolution Dissolution Dissolution Dissolution Dissolution Polling + Polling + Dissolution Dissolution
date Date - 3Months - 1Month - 1Day + 1Day to Polling 1Month 3Months to Polling to Polling
Day + 1Month + 3Months
2013 3-Apr 5-May (0.4%) 3.0% 0.0% 0.2% 0.6% 4.7% 5.3% 5.3% 5.9%
2008 13-Feb 8-Mar 2.8% (5.6%) 0.4% 0.9% (8.9%) (5.4%) (3.7%) (13.9%) (12.3%)
2004 4-Mar 21-Mar 12.1% 9.3% 0.6% 0.4% 2.5% (4.5%) (8.7%) (2.1%) (6.4%)
1999 11-Nov 29-Nov (0.6%) (2.8%) (0.5%) (0.5%) 2.9% 7.9% 31.7% 11.0% 35.5%
1995 6-Apr 25-Apr 2.4% 3. 3% (2.0%) (1.2%) (0.4%) 6.6% 7.6% 6.2% 7.2%
1990 5-Oct 21-Oct (20.8%) (14.1%) 0.6% 0.0% 1.4% (0.2%) 0.7% 1.2% 2.2%
1986 19-Jul 3-Aug 17.7% (4.0%) 0.0% 0.0% (0.8%) 15.9% 29.8% 15.0% 28.8%
1982 29-Mar 22-Apr (20.2%) (5.3%) (0.8%) 0.9% 5.1% 1.0% (16.0%) 6.1% (11.8%)
January 21, 2018 21

Back to basics (fundamentals) thenafter

As the euphoria of GE14 tapers post the event (our base case is a status quo
outcome), we expect investors’ focus to return to basic fundamentals. For
Malaysia, the positive considerations are above-5% real GDP growth in 2018, and
market core earnings growth resuming for the second year. Also, the prospects of
a higher OPR would continue to lend support to the MYR which has gained 5.7%
against the USD since BNM signaled for an upward bias on 9 Nov 2017.
Externally, we believe the backdrop – sustained global growth recovery, which is

supportive of higher commodity prices – are the added pluses for Malaysia’s
macro and equities. Meanwhile, an orderly and benign pace of monetary policy
normalisation in the US should not be disruptive to capital flows in this region, as
we expect interest rates in this region to rise too. For ASEAN equities, our
Regional Strategist recommends a rotation from China to ASEAN.
Cautiously constructive
On the above-mentioned reasons, we remain “constructive” on Malaysian
equities into 2018. That said, we are “cautious” too, as we are mindful that amid
positive global macros and momentum, there are still pockets of risks, with
financial imbalances and instability being a key risk factor. Our Malaysia equity
strategy for 2018 is still a defensive portfolio as core holdings.
Investment themes
We highlight three thematic considerations for 2018 (two of which are for 1H18)
and two other thematics for the longer-term (2018 and beyond):
 Fiscal stimulus pre-GE14 (for 1H18).
 BNM’s OPR hike (for 1H18).
 Multi-year orderbook replenishment in infrastructure construction (for 2018).
 Tourism (for 2018 and beyond).
 Look East, Malaysia (for 2018 and beyond).
#1: Fiscal stimulus pre-GE14. National Budget 2018, passed in Parliament on 28

Nov 2017, provided for the continuation of fiscal stimulus to boost disposal
income in 2018. The disbursements of these cash handouts will be largely front-
loaded in 1H18 (before, and at about the timing of GE14), in particular, BR1M
handouts (one-third of the MYR6.8b in early-2018, another one-third before Eid),
bonus for civil servants and pensioners (entire MYR3b in early-2018), and other
direct cash aids and one-off payments to target groups like farmers, fishermen,
rural folks (totaling MYR1b). This will boost consumption in early-2018, in
addition to the seasonal festive spending ahead of the CNY celebration.
January 21, 2018 22

Arising from this, we expect the well-known consumer brands to benefit from
higher volume sales – stocks under our coverage in this category are Nestle
(staples), Berjaya Food (Starbucks), OldTown (F&B and FMCG), Padini (fashion),
AEON Co. (broad-based retail) and those in the sin sectors like BAT, Carlsberg and
Heineken. In addition, election campaigning, which normally comes with food
catering (as Malaysians do love to eat!) will benefit brands under Nestle like
Nescafe, Milo, Maggi (including seasonings) and its other ready-to-drink products.
The higher consumers’ spending power could also prompt the private sector to
raise ad spend to benefit from this. In addition, political parties and public
sector ad spend could also rise. Media groups like MPR, STAR and MCIL are
potential beneficiaries.
Fig 48: Consumption expenditure growth at previous GEs Fig 49: Adex growth during previous GEs
16 40
YoY (%) GEs Consumption Expenditure: Private YoY (%)
14
30
12
10 20
8
10
6
4 0
2
(10)
0
-2 0 (20)
Jul-11
Jun-01
Apr-03
Mar-04
Jan-06
Oct-08
Jun-12
Apr-14
Mar-15
Jan-17
May-02
Feb-05
Dec-06
Nov-07
Sep-09
Aug-10
May-13
Feb-16
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Source: Department of Statistics, Maybank KE (chart) Source: Nielsen Media Research, Maybank KE (chart)
#2: BNM’s OPR hike. As we have highlighted in the earlier part of this write-up,
the positive impact of a +25bps rise in the OPR on banks’ earnings is marginal
(we estimate +2.7% increase in aggregate net profit) with NIMs expected to
normalise within 3-6 months post rate hike, as deposit rates adjust and
competition, particularly for deposits, persists. During the Jul 2016 -25bps cut,
banks have performed admirably in protecting their NIMs. Back then, the average
NIM in 3Q16 held steady QoQ at about 2.18% and expanded further in 4Q16 to
2.26%, predominantly on more active deposit mix management. Within our
coverage, Alliance Bank would benefit the most, Hong Long Bank would benefit
the least in the upcoming OPR hike, based on their latest loan:funding structure.
With higher interest rates being generally negative on the REITs (with unit prices
expected to adjust down amid higher fixed income yields), we would position to
accumulate the quality REITs on weaknesses in their unit prices. Our picks are
those which will continue to see positive rental reversions due to their strategic
asset locations and active asset management, coupled with clear asset pipeline
to provide the growth. M-REITs in this category are IGBREIT, Sunway REIT,
KLCCP, Pavilion REIT and YTL Hospitality REIT.
Fig 50: Impact of a 25 bps hike in interest rates on banks’ earnings

Alliance AMMB BIMB CIMB HLBK MAY PBK RHBC
CASA 37.3% 20.7% 34.2% 36.1% 25.9% 35.0% 25.5% 27.1%
Floating rate loans/total loans 90.3% 71.0% 87.0% 83.5% 76.5% 70.8% 76.9% 82.5%
Loan/deposit ratio 91.1% 99.3% 89.4% 94.0% 81.8% 94.0% 93.4% 93.8%
Impact of 25 bps hike 5.1% 1.6% 3.9% 2.1% 0.8% 2.7% 2.0% 3.1%
in int rates on earnings
Source: Banks, Maybank KE
January 21, 2018 23

#3: Multi-year orderbook replenishment in infrastructure construction. Our

thesis for this thematic and our continued OVERWEIGHT call on the construction
sector are built on our convictions that Malaysian contractor(s) will remain
prominently involved in the mega infrastructure projects, in particular, taking on
the Project Delivery Partner (PDP) role for the KL-SG HSR civil infrastructure (for
the Malaysia alignment) and at least 30% of the KVMRT 3 civil works.
In early-Nov 2017, investors were shocked that the KVMRT 3 project will be
undertaken via a ‘turnkey’ structure which requires the turnkey contractor to
provide project financing over a minimum of 30 years. This is a departure from
the KVMRT 1 & 2’s PDP structure. Investors’ perception is that the financing
requirement will almost preclude the participation of Malaysian contractors in
the turnkey role as this means carrying a mega project debt on their balance
sheets, thus limiting their ability to expand on opportunities. The concern is that
a foreign-led turnkey contractor would limit Malaysian contractors’ participation
in the civil works, unlike the KVMRT 1 & 2’s PDP structure where the entire civil
works went to Malaysians. Tender for the turnkey role closed on 29 Dec 2017.
While what was to follow has lifted the odds for Malaysian contractors’ lead
participation in the KL-SG HSR construction, investors’ confidence has remained
affected by the KVMRT 3 announcement. In mid-Nov 2017, MyHSR Corporation
Sdn Bhd issued a tender notice for the PDP role for the KL-SG HSR’s civil
infrastructure (Malaysia alignment); this tender limits the participation to those
that have undertaken railway projects in Malaysia. Tender for the PDP role will
close on 30 Jan 2018.
On this matter, our conviction is for Malaysian contractors to lead in the PDP for
the KL-SG HSR civil infrastructure, thus restoring investors’ confidence. For the
KVMRT 3 project, we expect Malaysian contractors to take on at least 30% of the
civil works if the turnkey contractor is foreign-led. Precedents are the ECRL given
to China Communications Construction Company Ltd as EPCC contractor where at
least 30% of the contract value must be undertaken by Malaysian contractors,
and the Gemas-JB double track rail given to CRCC-CREC-CCCC as main contractor
where the “local content” must be at least 50%. Besides KVMRT 3 and KL-SG HSR,
sub-contracting works for the ECRL will also be the focus in 2018.
We continue to favour proven contractors who have delivered over the years, in
winning in the upcoming mega works. We continue to like Gamuda, IJM Corp and
Sunway Construction. Kimlun’s precast division also stands to benefit from the
KL-SG HSR, supported by their track record in supplying to KVMRT projects and
the MRT expansion in Singapore. CMS, besides a beneficiary of the Pan Borneo
Sarawak Highway construction (being the largest construction materials supplier
in Sarawak), it will also benefit from the turnaround of its 25%-owned, OMS.
Fig 51: Infrastructure job awards surged in 2016, expect Fig 52: Outstanding orderbook of selected construction
similar momentum in 2018-19 groups (as of Sep 2017)
MYR’b
MYR'b
10 9.4
160
137 9
140 8 7.3
6.8
120 7
5.8
100 6
80 5
4
60 46 2.7 2.7
38 35 3 2.1
40 32 31 29
25 22 27 1.5
2
20 10
1
0 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17 IJM GAM SCGB WCT EVSD HSL KICB CMS
Source: CIDB Note: As at end-Oct 2017 for Gamuda; Source: Companies, Maybank KE
January 21, 2018 24

#4: Tourism – inbound and domestic. We introduced the broad tourism thematic
in second half 2016 and reiterated this in our 2017 Outlook & Lookouts report.
Big-cap beneficiaries which we had highlighted – GENM, MAHB, AirAsia - have
performed well in stock prices since. In 2017, we have added on coverage of mid-
small cap stocks related to this thematic – Atlan and YTL Hospitality REIT – both
still offer decent upside to our TPs.
The investment thesis for Atlan is also its huge asset value, in particular, its 772
acres of land in Bukit Kayu Hitam (in Kedah, bordering Thailand) which has been
earmarked for a major development, and is awaiting catalyst(s) to kick-start the
development. A potential catalyst, in our view, is the Malaysian government’s
recent proposal to the Thai government for better land connectivity between
Songkhla Port in southern Thailand and Penang Port (which passes Atlan’s Bukit
Kayu Hitam land), to speed up economic activities in that region.
As for YTL Hospitality REIT, it has ten hotels in Malaysia, one in Japan (Hokkaido)
and three in Australia. The REIT offers a pure hospitality play in the M-REIT
sector. The trust also offer a net yield of 6.3%, highest in our M-REIT coverage.
Inbound tourist arrivals in 10M17, as reported by Tourism Malaysia, was down -

2.5% YoY to 21.5m pax (total arrivals) but up +1.6% YoY (total arrivals, excluding
from Singapore). Arrivals from China rose +8.1% YoY to 1.9m pax, continuing the
uptrend from 2016’s +26.7% YoY. Despite total arrival numbers being marginally
down YoY in Jan-Oct 2017, spending by foreign credit card holders jumped +19.9%
YoY in 10M17, implying higher-quality / higher-spend tourists.
In 2018, the government targets to welcome 28m tourists (2016: 26.8m) and it
has declared 2020 as Visit Malaysia Year 2020. The last two Visit Malaysia Years
were 2007 and 2014. In 2007, tourist arrivals surged +19% YoY while tourism
receipts surged +27% YoY. In 2014, tourist arrivals grew +7% YoY while tourism
receipts grew +10% YoY. In fact, tourist arrivals and tourism receipts hit record
highs in both years. Visit Malaysia Year 2020 ought to be similarly productive.
Fig 53: Tourist arrivals Fig 54: Credit card purchases by foreign cardholders
YoY (%) Total Fr China Fr Singapore 40 YoY (%)
30%
30
25%
20
20%
10
15%
10% 0
5% (10)
0% (20)
2009 2010 2011 2012 2013 2014 2015 2016 10M17
-5%
(30)
-10%
Dec-13
Mar-14
Jun-14
Dec-14
Mar-15
Jun-15
Dec-15
Mar-16
Jun-16
Dec-16
Mar-17
Jun-17
Sep-14
Sep-15
Sep-16
Sep-17
-15%
Note: Singaporeans accounted for 48% of 10M17 arrivals, Chinese 9% Source: BNM, Maybank KE (chart)
Source: Tourism Malaysia, Maybank KE (chart)
January 21, 2018 25

Fig 55: Annual tourist arrivals and tourism receipts (MYR m)

Tourist arrivals (m) (LHS) Tourism receipts (m) (RHS)
30.0 90,000
80,000
25.0
70,000
20.0 60,000
50,000
15.0
40,000
10.0 30,000
20,000
5.0
10,000
- -
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Note: Grey-shaded boxes denotes Visit Malaysia Year; Source: Tourism Malaysia
#5: Look East, Malaysia. We think there is latent potential in the East – East
Malaysia and East Coast Peninsular Malaysia – which forms our thematic
consideration for 2018 and the longer term. The investment thesis is supported
by major back-bone infrastructure currently under construction which will lift
economic activities: (i) Pan Borneo Sarawak Highway (e.786km), (ii) Pan Borneo
Sabah Highway (e.706km), (iii) East Coast Rail Link (e.707km). For Sarawak, the
Development Bank of Sarawak and PETROS (Petroleum Sarawak Bhd) and for
Sabah, the Sabah International Petroleum Sdn Bhd (in 2014) are also catalysts.
Long-term potential beneficiaries of this thematic, in our view, are:
 East Malaysia:
(i) Multi-year infrastructure construction - Cahya Mata Sarawak (largest

building material supplier in Sarawak, holds 51% of Samalaju
Industrial Park); Hock Seng Lee and KKB Engineering (KKB MK; Not
Rated) where both are home-grown Sarawakian contractors.
(ii) Rising trade and industrial activities – Bintulu Port (BPH MK; Not
Rated) and Suria Capital (SURIA MK; Not Rated) where both are port
operators and/or port holding companies.
 East Coast Peninsular Malaysia: IJM Corporation, for its 60% stake in Kuantan
Port and 20.4% effective stake in the Malaysia-China Kuantan Industrial Park.
Fig 56: Investments in Samalaju Industrial Park, Sarawak Fig 57: Invts in M’sia-China Kuantan Industrial Park, Pahang
Investor Product Investment Investor Project Investment
(USD) (MYR)
Tokuyama Polycrystalline silicon 2.5 bil Alliance Steel (M) Modern integrated steel 5.6 bil
mill
Press Metal Aluminium 2.0 bil
Prinx Chengshan Tyre manufacturer 2.6 bil
AML (Pertama Manganese ferroalloy 325 mil
(Shandong) Tire
Ferroalloy)
Guangxi Zhongli Clay porcelain 2.0 bil
Asia Advanced Metallic silicon 203 mil
Enterprise Group manufacturing
Materials
Guangxi Investment Aluminium components 0.6 bil
Sakura Ferro manganese & silicon 328 mil
Group processing
Ferroalloys manganese
Sichuan Migao Potash fertilizer 0.3 bil
Cosmos High quality solar and 1.6 bil
Chemical Fertilizer manufacturer
Chemicals electronics grade polysilicon
Industry
OM Materials Ferrosilicon alloys & manganese 458 mil
(Sarawak) alloys Maxtrex Tyre Limited Production of passenger 1.6 bil
MPA (Sarawak) Phosphate products & coke 545 mil car radial (PCR) tyres
New Ocean Energy Oil refinery & bunkering 5.0 bil
Holdings * services
Source: Cahya Mata Sarawak * New investment in Kuantan Port; Source: IJM Corporation
January 21, 2018 26

Maybank KE Equity Research Stock Universe
Ticker Company FYE Price Market TP Rec Core Net Profit EPS CAGR PER PER PER ROE Div Yld PBV Px chg
12 Jan Cap CY16A CY17E CY18E CY16A CY17E CY18E 16-18 CY16A CY17E CY18E CY18E CY18E CY18E YTD
MYR MYR m MYR |---------- MYR m ----------| |--------- MYR sen --------| (%) |------------- (x) ------------| (%) (%) (x) (%)
Autos
BAUTO MK Bermaz Auto * 4 2.34 2,710 3.25 Buy 146 130 205 12.6 11.1 17.5 18.1 18.6 21.0 13.3 36.4 4.5 5.1 6.4
MBM MK MBM Resources * 12 2.39 934 2.96 Buy 103 82 107 26.2 20.8 27.3 2.1 9.1 11.5 8.8 6.1 2.5 0.5 8.6
TCM MK Tan Chong * 12 1.80 1,175 2.15 Buy (48) (77) (24) (7.4) (11.8) (3.6) n.a. n.a. n.a. n.a. (0.9) 0.6 0.4 27.7
UMWH MK UMW Holdings * 12 6.60 7,711 6.65 Buy 287 70 302 24.6 6.0 25.9 2.6 26.8 110.0 25.5 7.6 2.0 1.9 26.9
PECCA MK Pecca Group * 6 1.57 290 1.80 Buy 16 17 21 8.4 9.4 11.3 16.3 18.8 16.8 13.9 11.8 3.8 1.6 1.3
SIME MK Sime Darby * 6 2.70 18,362 2.10 Hold 870 825 757 13.3 12.1 11.1 (8.5) 20.4 22.3 24.3 5.7 2.7 1.4 22.2
Banking
MAY MK Maybank 12 9.85 106,248 NR NR 6,118 7,188 7,579 60.0 69.0 69.7 7.8 16.4 14.3 14.1 9.8 5.8 1.4 0.5
AMM MK AMMB Holdings 3 4.76 14,348 4.80 Hold 1,251 1,344 1,496 41.7 44.6 49.8 9.3 11.4 10.7 9.6 8.3 4.1 0.8 7.9
BIMB MK BIMB Holdings * 12 4.06 6,649 5.10 Buy 559 577 597 36.2 36.3 37.6 1.9 11.2 11.2 10.8 16.1 3.7 1.9 (7.7)
AFG MK AFG 3 4.15 6,425 4.00 Hold 515 515 531 33.7 33.7 34.7 1.5 12.3 12.3 12.0 9.5 4.0 1.1 1.7
CIMB MK CIMB 12 6.78 62,549 7.70 Buy 3,414 4,458 4,850 39.3 50.3 54.7 18.0 17.3 13.5 12.4 9.7 4.1 1.2 3.7
HLBK MK Hong Leong Bk 6 17.54 35,880 15.90 Hold 2,110 2,300 2,518 106.9 111.3 120.7 6.3 16.4 15.8 14.5 10.5 3.0 1.6 3.2
HLFG MK HL Financial 6 17.78 20,362 18.40 Buy 1,549 1,676 1,792 137.8 146.5 156.7 6.6 12.9 12.1 11.3 10.5 2.6 1.2 (0.6)
PBK MK Public Bank 12 20.88 80,628 20.00 Hold 5,146 5,370 5,488 133.0 139.0 142.0 3.3 15.7 15.0 14.7 13.5 3.1 2.0 0.5
RHBBANK MK RHB Bank 12 5.18 20,772 5.40 Hold 1,682 2,046 2,214 43.6 53.1 56.5 13.8 11.9 9.8 9.2 8.7 3.3 0.8 3.6
Cement/Steel
AJR MK Ann Joo * 12 3.75 1,934 3.85 Hold 167 211 215 31.9 37.6 38.4 9.7 11.8 10.0 9.8 15.7 4.4 1.4 (2.8)
LMC MK Lafarge * 12 6.14 5,217 6.90 Hold 85 (197) 97 10.0 (23.2) 11.4 6.8 61.4 n.a. 53.9 3.4 1.7 1.8 (1.0)
Construction / Infra
EVSD MK Eversendai 12 0.85 660 1.14 Hold (81) 66 74 (10.4) 8.5 9.5 n.a. n.a. 9.9 8.9 7.2 0.9 0.6 (2.3)
GAM MK Gamuda * 7 5.16 12,672 5.60 Buy 657 726 787 27.2 29.9 32.4 9.3 19.0 17.3 15.9 9.7 2.3 1.5 4.0
HSL MK HSL * 12 1.47 808 1.61 Hold 57 44 74 10.3 8.0 13.4 14.1 14.3 18.4 11.0 9.3 1.6 1.0 2.8
IJM MK IJM Corp * 3 2.97 10,776 3.40 Buy 506 520 602 14.1 14.4 16.7 8.8 21.1 20.7 17.8 5.9 2.4 1.1 (2.6)
LTK MK Litrak * 3 5.68 2,997 6.10 Hold 209 225 238 39.9 42.9 45.3 6.5 14.2 13.2 12.5 26.6 4.4 3.3 2.3
CMS MK CMS * 12 4.15 4,459 4.50 Buy 212 221 259 19.8 20.6 24.1 10.3 21.0 20.1 17.2 10.4 2.3 1.8 6.4
SCGB MK Sunway Con * 12 2.62 3,386 2.63 Hold 124 146 213 9.6 11.3 16.4 30.7 27.3 23.2 16.0 29.3 2.2 4.7 4.4
KICB MK Kimlun Corp * 12 2.28 731 2.61 Buy 81 67 80 26.4 22.0 26.1 (0.6) 8.6 10.4 8.7 12.4 3.1 1.1 2.7
Consumer
AEON MK AEON Co * 12 1.68 2,359 2.20 Buy 80 93 110 5.7 6.6 7.9 17.7 29.5 25.5 21.3 5.6 2.3 1.2 (4.5)
ROTH MK BAT (M) 12 33.80 9,651 45.60 Hold 675 565 631 236.4 197.8 220.8 (3.4) 14.3 17.1 15.3 98.9 6.4 15.2 (15.5)
CAB MK Carlsberg 12 15.90 4,891 15.60 Hold 205 230 246 67.0 75.4 80.3 9.5 23.7 21.1 19.8 70.5 5.0 13.9 3.9
HEIM MK Heineken Msia 12 19.16 5,788 18.30 Hold 285 287 302 94.3 95.0 99.8 2.9 20.3 20.2 19.2 71.4 5.2 13.7 1.4
PAD MK Padini Holdings * 6 5.23 3,441 4.75 Hold 147 167 183 22.4 25.4 27.8 11.5 23.4 20.6 18.8 25.1 1.9 4.7 (0.9)
NESZ MK Nestle * 12 104.00 24,388 86.70 Hold 598 639 674 255.2 272.3 287.2 6.1 40.8 38.2 36.2 102.8 2.7 37.3 0.8
QLG MK QL Resources * 3 4.79 7,771 4.00 Sell 187 203 228 11.6 12.5 14.1 10.3 41.4 38.4 34.0 11.7 1.2 4.0 10.1
OTB MK OldTown * 3 3.06 1,418 3.18 Buy 63 69 74 13.6 14.9 16.1 8.6 22.5 20.6 19.0 17.4 2.9 3.3 (1.0)
SEM MK 7 - Eleven 12 1.54 1,710 1.24 Sell 54 46 58 4.4 3.8 4.8 4.4 35.0 40.5 32.1 66.5 1.6 22.0 0.0
MNHB MK Mynews Holdings 10 1.48 1,010 1.50 Hold 20 25 31 3.2 4.0 4.6 18.6 45.8 37.1 32.5 11.5 0.9 4.6 2.8
ALN MK Atlan Holdings 2 4.28 1,086 6.00 Buy 40 39 41 15.9 15.5 16.0 0.3 26.9 27.6 26.7 12.5 4.0 3.3 (0.2)
BFD MK Berjaya Food 4 1.84 692 1.95 Buy 20 22 27 5.2 5.7 7.2 18.3 35.6 32.5 25.4 6.8 2.1 1.7 (0.5)
* Shariah compliant, based on Securities Commission’s latest Shariah compliant list effective 24 Nov 2017; Source: Maybank KE
January 16, 2018 27

… continued
chg
Gaming
BST MK BToto 4 2.34 3,152 2.90 Buy 271 281 302 20.1 20.9 22.5 5.7 11.6 11.2 10.4 34.3 7.4 3.3 4.5
MAG MK Magnum 12 1.84 2,618 2.00 Buy 189 210 220 13.3 14.8 15.4 7.6 13.8 12.4 11.9 8.6 5.7 1.0 5.7
GENT MK Genting Bhd 12 9.36 35,806 12.25 Buy 1,525 2,020 2,569 40.8 48.6 60.9 22.2 22.9 19.3 15.4 6.8 2.0 0.9 1.7
GENM MK Genting Msia 12 5.46 30,950 5.25 Hold 1,547 1,321 1,894 27.3 23.2 33.3 10.4 20.0 23.5 16.4 8.7 2.1 1.4 (3.0)
Glove
HART MK Hartalega Hldgs * 3 11.22 18,546 7.60 Hold 277 387 466 16.7 23.2 27.9 29.3 67.2 48.4 40.2 22.5 1.3 9.0 5.1
KRI MK Kossan Rubber * 12 8.50 5,435 9.10 Buy 171 198 243 26.7 31.0 37.9 19.1 31.8 27.4 22.4 18.0 1.8 4.0 4.8
TOPG MK Top Glove * 8 9.00 11,296 9.85 Hold 352 366 460 28.1 29.1 36.3 13.7 32.0 30.9 24.8 19.9 2.0 4.9 12.6
Healthcare
IHH MK IHH * 12 5.90 48,614 6.30 Buy 866 563 850 10.5 6.8 10.3 (1.0) 56.2 86.8 57.3 3.7 0.5 2.1 0.7
KPJ MK KPJ Healthcare * 12 0.97 4,136 1.05 Hold 125 140 150 2.9 3.3 3.5 9.9 33.4 29.4 27.7 8.6 1.9 2.4 0.0
Media
ASTRO MK Astro Malaysia 1 2.68 13,973 2.55 Hold 663 768 666 12.7 14.7 12.7 - 21.1 18.2 21.1 78.6 4.0 13.6 1.1
MCIL MK MCIL * 3 0.41 683 0.39 Hold 90 59 56 5.3 3.6 3.3 (21.0) 7.6 11.4 12.2 7.0 5.7 0.8 2.5
MPR MK Media Prima 12 0.74 821 0.59 Sell 39 (80) (26) 3.5 (7.2) (2.3) n.a. 21.1 n.a. n.a. (2.2) 0.0 0.7 (2.6)
STAR MK Star * 12 1.47 1,085 1.47 Hold 70 33 48 9.5 4.5 6.5 (17.3) 15.5 32.7 22.6 5.0 10.2 1.1 (10.9)
Oil & Gas
AMRB MK Alam Maritim * 12 0.19 171 0.08 Sell (133) (31) (8) (14.4) (3.4) (0.8) n.a. n.a. n.a. n.a. (1.1) 0.0 0.2 2.8
DLG MK Dialog * 6 2.67 15,054 3.00 Buy 295 341 399 5.6 6.4 7.5 15.9 48.1 42.0 35.8 11.5 1.2 4.1 6.4
WSC MK Wah Seong * 12 1.30 1,005 1.80 Buy (23) 84 113 (3.0) 10.9 14.7 n.a. n.a. 11.9 8.8 10.6 0.0 0.9 17.1
MMHE MK MMHE * 12 0.89 1,424 0.75 Hold (1) (25) (25) (0.1) (1.5) (1.6) n.a. n.a. n.a. n.a. (1.1) 0.0 0.6 7.9
BAB MK Bumi Armada 12 0.86 5,016 0.68 Hold (83) 231 616 (1.4) 3.9 10.5 n.a. n.a. 21.9 8.1 9.5 0.0 0.8 11.8
YNS MK Yinson * 1 4.04 4,396 4.45 Buy 216 362 343 20.2 34.0 32.2 26.1 20.0 11.9 12.6 10.4 2.5 1.3 (0.2)
BARAKAH MK Barakah * 12 0.35 285 0.13 Sell 10 (172) (90) 1.2 (19.9) (10.5) n.a. 28.8 n.a. n.a. (55.9) 0.0 1.6 19.0
KNMG MK KNMG * 12 0.28 645 0.25 Hold (262) 7 46 (12.3) 0.3 2.1 n.a. n.a. 91.7 13.1 1.9 0.0 0.3 22.2
SAPE MK Sapura Energy * 1 0.90 5,393 1.20 Buy 494 (330) (377) 8.3 (5.5) (6.3) n.a. 10.9 n.a. n.a. (3.1) 3.1 0.4 26.8
Plantation
GENP MK Genting Plant * 12 10.58 8,498 11.16 Hold 295 341 397 37.2 42.9 50.0 15.9 28.4 24.7 21.2 8.2 0.9 1.7 0.8
IOI MK IOI Corp * 6 4.64 29,157 5.03 Buy 987 1,057 1,156 15.5 16.8 18.4 8.8 29.9 27.6 25.3 13.9 2.0 3.5 2.2
KLK MK KL Kepong * 9 25.18 26,816 26.20 Hold 884 1,067 1,106 82.9 100.2 103.9 12.0 30.4 25.1 24.2 9.1 2.5 2.2 0.7
SDPL MK Sime Plantation * 6 5.53 37,609 5.63 Hold 951 1,202 1,287 14.0 17.7 19.0 16.3 39.5 31.2 29.2 8.8 1.7 2.6 (7.8)
BPLANT MK Boustead Plant * 12 1.66 2,656 1.78 Hold 82 117 101 5.1 7.3 6.3 11.1 32.5 22.7 26.3 4.0 3.7 1.1 0.6
SOP MK SOP * 12 4.05 2,312 5.85 Buy 130 222 235 29.5 39.0 41.2 18.2 13.7 10.4 9.8 10.5 2.0 1.0 3.8
TSH MK TSH Resources * 12 1.67 2,306 1.65 Hold 73 118 141 5.4 8.7 10.2 37.4 30.9 19.2 16.4 8.3 1.9 1.4 1.2
THP MK TH Plantations * 12 1.08 955 1.22 Hold 46 51 50 5.2 5.7 5.7 4.7 20.8 18.9 18.9 3.4 1.6 0.6 (6.1)
TAH MK Ta Ann * 12 3.55 1,578 3.86 Hold 126 114 117 28.2 25.7 26.4 (3.2) 12.6 13.8 13.4 8.2 3.4 1.1 (3.0)
January 16, 2018 28

… continued
chg
Non-Banking Finance
BURSA MK Bursa Malaysia 12 10.60 5,698 10.30 Hold 194 221 229 36.2 41.3 42.6 8.5 29.3 25.7 24.9 28.1 3.8 7.0 4.7
MPHB MK MPHB Capital 12 1.63 1,165 1.34 Hold 41 38 43 5.8 5.3 5.9 0.9 28.1 30.8 27.6 2.5 0.0 0.7 33.6
ALLZ MK Allianz Malaysia 12 13.18 2,301 16.30 Buy 306 292 315 90.8 84.7 91.3 0.3 14.5 15.6 14.4 8.8 0.8 1.3 (2.4)
RCE MK RCE Capital 3 1.57 537 1.95 Buy 65 82 88 21.0 22.6 23.7 6.2 7.5 7.0 6.6 15.5 4.3 1.0 4.7
Technology
INARI MK Inari Amertron * 6 3.41 7,012 3.38 Buy 181 244 311 8.9 11.7 14.9 29.8 38.5 29.1 22.9 30.7 3.3 7.0 0.3
VITRO MK ViTrox Corp * 12 6.47 3,042 4.68 Sell 61 82 98 13.0 17.4 20.8 26.6 49.8 37.2 31.1 24.7 0.8 7.7 4.2
GTB MK Globetronics * 12 6.62 1,889 5.50 Sell 26 46 86 9.0 16.0 30.1 82.9 73.6 41.4 22.0 29.0 3.3 6.3 0.3
VSI MK V.S. Industries * 7 3.07 3,985 3.55 Buy 152 204 267 9.6 12.9 16.9 32.2 31.8 23.8 18.2 21.5 2.7 3.9 2.0
Petrochemical
PCHEM MK Petronas Chem * 12 8.08 64,640 8.50 Buy 3,183 4,202 4,205 39.8 52.5 52.6 15.0 20.3 15.4 15.4 14.2 3.3 2.2 4.9
TTNP MK Lotte Chemical * 12 5.08 11,547 7.85 Buy 1,397 1,194 1,556 80.8 52.5 68.5 (7.9) 6.3 9.7 7.4 11.4 4.4 0.8 (21.8)
Property Dev
MSGB MK Mah Sing * 12 1.48 3,591 1.44 Hold 320 291 334 13.3 12.1 13.8 1.9 11.1 12.2 10.7 9.1 3.7 1.0 2.1
UEMS MK UEM Sunrise * 12 1.16 5,263 1.32 Buy 147 271 155 2.9 5.2 3.0 1.7 40.0 22.3 38.7 2.1 0.0 0.7 11.5
SWB MK Sunway Berhad * 12 1.72 8,422 1.97 Buy 547 544 662 12.6 11.2 13.6 3.9 13.7 15.4 12.6 8.1 3.5 1.0 5.5
ECW MK Ecoworld * 10 1.46 4,299 1.71 Buy 127 123 196 5.2 4.2 6.7 13.8 28.3 34.6 21.9 4.4 0.1 0.8 5.8
ECWI MK Ecoworld Intl * 10 1.04 2,496 1.10 Hold (198) (44) 209 (75.4) (3.6) 8.7 n.a. n.a. n.a. 12.0 7.6 0.6 0.9 1.0
GLMC MK Glomac * 4 0.61 437 0.68 Hold 43 30 41 6.0 4.2 5.7 (2.5) 10.1 14.3 10.6 3.6 1.9 0.4 (0.8)
TILB MK Tambun Indah * 12 1.06 459 1.08 Hold 107 90 41 25.1 20.8 9.6 (38.2) 4.2 5.1 11.0 6.7 3.6 0.7 3.9
SDPR MK Sime Darby Prop * 6 1.59 10,813 1.58 Hold 679 719 685 10.0 10.6 10.1 0.8 16.0 15.1 15.7 6.8 1.3 1.1 (10.7)
REITS
AXRB MK Axis REIT * 12 1.40 1,725 1.50 Hold 90 92 104 8.2 8.3 8.9 4.2 17.1 16.9 15.7 6.6 5.4 1.1 (6.7)
SALAM MK Al-Salam REIT * 12 0.98 568 1.10 Buy 36 37 38 6.2 6.4 6.6 3.2 15.8 15.3 14.8 6.2 5.7 0.9 (2.0)
KLCCSS MK KLCC Prop * 12 7.85 14,172 7.95 Hold 719 721 741 39.8 39.9 41.0 1.5 19.7 19.7 19.1 5.3 4.4 1.0 (9.1)
MQREIT MK MRCB-Quill REIT 12 1.20 1,282 1.35 Buy 59 90 94 9.0 8.4 8.7 (1.7) 13.3 14.3 13.8 6.9 6.3 0.9 (4.0)
CMMT MK CMMT 12 1.42 2,894 1.50 Hold 164 162 168 8.1 7.9 8.2 0.6 17.5 18.0 17.3 6.3 5.6 1.1 (22.4)
SREIT MK Sunway REIT 6 1.72 5,066 1.90 Buy 267 284 302 9.1 9.7 10.2 6.2 19.0 17.8 16.9 7.2 5.3 1.2 (9.5)
IGBREIT MK IGB REIT 12 1.62 5,692 1.85 Buy 278 291 304 8.0 8.6 8.7 4.3 20.3 18.8 18.6 8.1 5.4 1.5 (10.0)
PREIT MK Pavilion REIT 12 1.62 4,909 1.70 Hold 235 227 263 7.8 7.5 8.1 1.9 20.8 21.6 20.0 5.6 4.8 1.1 0.6
YTLREIT MK YTL REIT 6 1.20 2,045 1.40 Buy 111 124 139 7.4 7.3 8.2 5.3 16.2 16.6 14.6 5.6 6.3 0.8 (6.3)
Telecommunications
DIGI MK DiGi.Com 12 4.70 36,543 4.80 Hold 1,633 1,513 1,559 21.0 19.5 20.0 (2.4) 22.4 24.1 23.5 300.1 4.3 67.1 (7.8)
T MK Telekom * 12 6.00 22,548 6.00 Hold 848 869 856 22.6 23.1 22.8 0.4 26.5 26.0 26.3 10.9 3.4 2.9 (4.8)
AXIATA MK Axiata * 12 5.55 50,217 5.50 Hold 1,418 1,301 1,462 16.0 14.5 16.3 0.9 34.7 38.3 34.0 6.0 2.5 2.0 1.1
MAXIS MK Maxis * 12 6.01 46,941 6.20 Hold 1,928 2,061 2,006 25.7 26.4 25.7 - 23.4 22.8 23.4 27.1 3.3 6.3 0.0
TDC MK Time dotCom * 12 8.95 5,204 8.40 Hold 247 163 201 42.8 28.1 34.7 (10.0) 20.9 31.9 25.8 8.6 1.0 2.2 (1.6)
January 16, 2018 29

… continued
chg
Transport
AIRA MK AirAsia 12 3.82 12,766 3.90 Hold 1,518 1,521 1,303 54.5 45.5 39.0 (15.4) 7.0 8.4 9.8 18.1 2.1 1.8 14.0
AAX MK AirAsia X * 12 0.39 1,618 0.38 Hold 206 65 121 5.0 1.6 2.9 (23.8) 7.8 24.4 13.4 9.7 0.0 1.1 18.2
MAHB MK MAHB 12 9.07 15,049 7.93 Sell 48 235 436 2.9 14.1 26.3 201.1 312.8 64.3 34.5 4.9 1.0 1.7 3.2
WPRTS MK Westports * 12 3.48 11,867 3.80 Hold 617 600 569 18.1 17.6 16.7 (3.9) 19.2 19.8 20.8 24.1 3.6 5.0 (5.9)
HALG MK Harbour-Link * 6 0.81 322 0.76 Hold 43 30 34 10.7 7.4 8.6 (10.3) 7.5 10.9 9.4 8.9 2.4 0.8 0.6
MISC MK MISC * 12 7.50 33,478 7.60 Hold 1,914 2,071 2,120 42.9 46.4 47.5 5.2 17.5 16.2 15.8 5.4 4.1 0.8 1.1
CLH MK Century Logistics * 12 1.05 413 1.08 Hold 23 16 18 5.8 4.1 4.5 (11.9) 18.1 25.6 23.3 5.4 1.0 1.3 4.0
Utilities
TNB MK Tenaga * 12 15.78 89,409 16.00 Hold 7,449 6,990 7,648 134.1 123.5 135.1 0.4 11.8 12.8 11.7 12.3 4.3 1.4 3.4
PTG MK Petronas Gas * 12 19.00 37,596 23.00 Buy 1,747 1,682 1,951 88.3 85.0 98.6 5.7 21.5 22.4 19.3 14.9 3.6 2.9 8.7
GMB MK Gas Msia * 12 2.87 3,685 3.00 Hold 165 161 170 12.9 12.5 13.2 1.2 22.2 23.0 21.7 16.7 4.6 3.6 (0.7)
MLK MK Malakoff Corp * 12 0.99 4,948 1.25 Buy 356 334 303 7.1 6.7 6.1 (7.3) 13.9 14.8 16.2 5.0 5.1 0.8 1.0
YTLP MK YTL Power 6 1.30 10,305 1.34 Hold 774 718 801 10.0 9.2 10.3 1.5 13.1 14.1 12.7 5.8 3.8 0.7 0.8
Diversified
CSCS MK CSC Steel * 12 1.57 580 2.02 Buy 69 61 71 18.6 16.6 19.2 1.6 8.4 9.5 8.2 8.1 6.1 0.7 1.9
TOMY MK Tomypak Hldgs * 12 1.02 428 1.05 Buy 20 19 26 5.7 4.5 6.4 6.0 17.9 22.7 15.9 12.0 2.5 1.9 4.6
AF MK Asia File Corp * 3 2.94 570 3.19 Hold 59 54 53 30.5 28.0 27.6 (5.0) 9.6 10.5 10.7 8.8 4.7 0.9 1.7
January 16, 2018 30

COMPANY BRIEFS
January 16, 2018

Advancecon Holdings (ADVC MK)
Not Rated
Earthworks specialist Share Price MYR 0.88
Investment case: Another construction sector proxy Company Description

Advancecon Holdings is an investment company,
Advancecon, an earthwork and civil engineering specialist, benefits from
which engages in the provision of earthworks and
the robust construction sector, underpinned by steady jobs flow from civil engineering services.
infrastructure and property development projects. Its order book of
>MYR600m provides earnings visibility up to 2019. The group also
provides support services such as the sale of construction materials, Statistics
Industrials
hiring of machinery and ad hoc general construction services to Shariah status Yes
complement its core business. The stock is NOT RATED. 52w high/low (MYR) na/na
3m avg turnover (USDm) 0.2
Free float (%) 30.3
Catalysts: Riding the construction wave
Issued shares (m) 402
The group has an order book of MYR578m at end-Sep 2017. With another Market capitalisation MYR351.8M
project secured on 28 Dec – the Alam Perdana project – Advancecon’s USD88M
order book now surpasses the MYR600m mark. Some other on-going jobs Major shareholders:
include: 1) civil works for West Coast Expressway Interchange; 2) site PHUM ANG KIA 23.8%
clearing and earthworks for Pan Borneo Highway in Sarawak; and 3) LIM SWEE CHAI 12.8%
PHAM SOON KOK 7.3%
construction works for South Klang Valley Expressway; just to name a
Malaysia
few. Note that the group also undertakes land clearing works for Price Performance
property development projects. 1.25 190
1.20 180
Valuations: Annualized FY17 PER of 14.8x 1.15 170

1.10 160
Historical valuations are not meaningful as the company was only listed 1.05 150
on the Main Market of Bursa Malaysia Securities Bhd on 10 Jul 2017. For 1.00 140
0.95 130
9M17, the group reported a revenue of MYR202m and a net profit of
0.90 120
MYR17.7m. At its current price, Advancecon trades at 14.8x its 0.85 110
annualized 9M17 EPS and at an end-Sep 2017 P/BV of 2x. 0.80 100
0.75 90
Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18
Risks: Slow growth in the construction sector Advancecon - (LHS, MYR)
Advancecon / Kuala Lumpur Composite Index - (RHS, %)
The primary risk would be of slower-than-expected economic growth
which could impede the scale of jobs in the construction sector. Also, -1M -3M -12M
spike in construction costs. Absolute (%) 2 (18) na
Relative to index (%) (4) (21) na
Source: FactSet
(Valuations table not applicable as the stock was listed on 10

Jul 2017)
Tee Sze Chiah

szechiah.t@maybank-ib.com
(603) 2082 6858
31
AEON Co. (M) (AEON MK)
BUY
Regaining strength Share Price
12m Price Target
MYR 1.68
MYR 2.20 (+31%)
Previous Price Target MYR 2.20
Investment case: Anticipating better sentiment Company Description

Consumer Discretionary
AEON Co. (Malaysia) Bhd. owns and operates general

In expectation of a gradual recovery in consumer spending, we are
merchandise stores, supermarkets, and malls.
positive on a rebound retailing segment profit in the near to mid-term.
Meanwhile, earnings continue to be supported by stable income from its
property management services segment. BUY with MYR2.20 TP pegged to
28x FY18 PER (+0.5SD of mean). Statistics
Shariah status Yes
Catalysts: Retail sales to improve earnings 52w high/low (MYR) 2.57/1.65
We believe the worst is over for AEON’s retailing business whereby the Free float (%) 37.1
retailing segment, since FY16, had been significantly impacted by the Issued shares (m) 1,404
slowdown in consumer spending, higher opex incurred at new malls and Market capitalisation MYR2.4B
the major refurbishment of its outlet in MidValley Megamall (contributes USD592M
approximately 5% net revenue to the segment p.a.). Going forward, we Major shareholders:
think retailing earnings could recover from FY18 onwards, backed by a AEON Co., Ltd. 51.7%
gradual recovery in consumer sentiment and stabilising new malls. Aberdeen Asset Management (Asia) Ltd. 12.4%
Employees Provident Fund 7.6%
Meanwhile, long-term growth would also be enhanced by its upcoming
Malaysia
malls whereby AEON has planned for one new mall p.a. in FY18-19. Price Performance
3.20 130
Valuations: Attractive entry point 3.00 120
We think current valuation of 21x FY18 PER (at 10-year PER mean and 2.80 110
below its high at +2SD) is attractive, given its 3-year EPS CAGR (FY16- 2.60 100
19E) of 14%. Our MYR2.20 TP offers a favourable capital upside of 31%. 2.40 90
2.20 80
Risks: Consumer spending is the key 2.00 70
1.80 60
AEON caters to the mass market, particularly to the low and middle-
1.60 50
income groups. Hence, an economic downturn could soften consumer Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
spending and in turn, place a drag on AEON’s retailing business. AEON Co. (M) - (LHS, MYR)
AEON Co. (M) / Kuala Lumpur Composite Index - (RHS, %)
Meanwhile, in the event of increasing operating costs (i.e. rental in
malls, utilities and labour), AEON’s profit margins would face downside -1M -3M -12M
risks too. Absolute (%) (7) (14) (33)
Relative to index (%) (12) (17) (39)
Source: FactSet
FYE Dec (MYR m) FY15A FY16A FY17E FY18E FY19E

Revenue 3,835 4,039 4,160 4,353 4,498
EBITDA 444 449 501 531 552
Core net profit 133 80 93 110 119
Core EPS (sen) 9.5 5.7 6.6 7.9 8.5
Core EPS growth (%) (32.5) (40.2) 16.9 18.3 7.7
Net DPS (sen) 4.0 3.0 3.3 3.9 4.2
Core P/E (x) 17.7 29.6 25.3 21.4 19.9
P/BV (x) 1.3 1.3 1.2 1.2 1.2
Net dividend yield (%) 2.4 1.8 2.0 2.3 2.5
ROAE (%) 7.4 4.3 4.9 5.7 5.9
ROAA (%) 3.6 1.9 2.1 2.4 2.5
EV/EBITDA (x) 9.9 10.0 6.5 6.2 5.9
Net gearing (%) (incl perps) 30.1 46.3 46.1 44.5 43.1
Consensus net profit - - 93 110 121
MKE vs. Consensus (%) - - (0.0) 0.0 (1.7)
Kevin Wong
kevin.wong@maybank-ib.com
(603) 2082 6824
32
AWC Bhd (AWCF MK) Not Rated
Turning trash into treasure Share Price MYR 0.89
Investment case: Specialist in waste management Company Description

AWC is an investment holding company, which
AWC’s core business lies in the provision of building management services
engages in the provision of integrated facilities
(i.e. maintenance, waste collection systems, and mechanical & electrical management and engineering services.
engineering services). It currently provides facilities management
services to an array of federal government buildings and commercial
clients on a concession basis. AWC also supplies waste collection systems Statistics
Industrials
under its proprietary brand ‘STREAM’ which have been gaining traction Shariah status Yes
internationally. Additionally, AWC acts as both distributor and contractor 52w high/low (MYR) 1.17/0.89
for heating, ventilation & air conditioning (HVAC) systems along with 3m avg turnover (USDm) 0.1
plumbing related works for several mega-infrastructure projects in Free float (%) 43.8
Malaysia and Singapore. The stock is NOT RATED. Issued shares (m) 272
Market capitalisation MYR240.4M
USD60M
Catalyst: STREAM-lining its orderbook Major shareholders:
Additional job awards from high-profile projects (i.e. KL118, TRX and K-Capital Sdn. Bhd. 29.9%
Changi Airport) could lift AWC’s earnings and further enhance its Employees Provident Fund 6.5%
Evli Fund Management Co. Ltd. 4.5%
reputation for the benefit of other job tenders in future. Given the niche
Malaysia
market in which STREAM operates, AWC could see higher earnings Price Performance
contribution from its proprietary pneumatic waste collection system due 1.20 400
to its successful track record and growing international exposure in 1.10 360
Singapore and UAE. 1.00 320
0.90 280
Valuations: In a net cash position 0.80 240
Based on consensus, AWC now trades at 10x FY18 PER, in line with its 5- 0.70 200
year mean of 10x PER. Its healthy balance sheet (net cash position: 0.60 160
MYR63m as at end-Sep 2017) adds to its appeal. 0.50 120
0.40 80
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Risks: Consistent job wins is vital
AWC Bhd - (LHS, MYR) AWC Bhd / Kuala Lumpur Composite Index - (RHS, %)
AWC’s key risks include: (i) termination or failure of renewal of existing
concessions (eg. recent termination of 5-year maintenance contract for -1M -3M -12M
Terminal Bersepadu Selatan in Oct 2017), (ii) execution and project Absolute (%) (8) (11) (13)
delays, and (ii) potential losses in members of senior management which Relative to index (%) (13) (14) (20)
could impair its decision making process and adversely affect AWC’s Source: FactSet
bottom line.
FY E June (MY R m) FY 13A FY 14A FY 15A FY 16A FY 17A

Revenue 145.0 119.5 128.0 248.5 296.5
EBITDA 11.4 15.0 14.0 31.6 41.6
Net profit 4.6 7.0 8.1 17.1 22.0
EPS (sen) 2.0 3.1 3.6 6.9 8.3
EPS growth (%) (33.3) 55.0 16.1 91.7 20.3
Net DPS (sen) 2.5 - - 2.5 2.0
P/E (x) 44.3 28.5 24.6 12.8 10.7
P/BV (x) 2.8 2.5 2.2 1.9 1.7
Net dividend yield (%) 2.8 - - 2.8 2.3
ROAE (%) 6.4 9.3 9.5 16.3 16.9
ROAA (%) 3.0 4.6 5.4 8.8 8.3
EV/EBITDA (x) 2.0 2.1 1.6 1.6 1.2
Net debt/equity (%) net cash net cash net cash net cash net cash
Jade Tam
jade.tam@maybank-ib.com
(603) 2297 8687
33
Axiata Group (AXIATA MK) HOLD
An attractive portfolio Share Price
12m Price Target
MYR 5.57
MYR 5.50 (-1%)
Investment case: A recovery story Company Description

Axiata Group owns a portfolio of mobile telcos,
Having endured operational challenges in recent years, Axiata’s main
Telecommunications
network infrastructure and digital internet

subsidiaries, Celcom and XL, are finally poised to deliver EBITDA growth companies in 10 countries across Asia.
beginning 2017. Dividends should rise in 2018 as dividend policy
normalises, while the future listing of edotco would likely be value
accretive. We have a HOLD rating with a SOTP-based TP of MYR5.50. Statistics
Shariah status Yes
Catalysts: EBITDA surprises and improved disclosure 52w high/low (MYR) 5.69/4.29
We forecast EBITDA growth of 2%/11% in 2018 for Celcom/XL Free float (%) 60.1
respectively. Stronger-than-expected EBITDA growth at either entity Issued shares (m) 8,926
could potentially pose upside risk to Axiata’s share price. Market capitalisation MYR49.5B
Other developments that could potentially enhance sentiment include: USD12.5B
1) accretive corporate actions, 2) improved disclosure on edotco’s Major shareholders:
Khazanah Nasional Bhd. (Investment Compa 37.8%
financial and operational metrics, and 3) Ncell successfully repatriating Permodalan Nasional Bhd. 15.7%
dividends to Axiata. Employees Provident Fund 15.1%
Malaysia
Price Performance
Valuations: Fairly valued
6.20 120
With Axiata having slightly surpassed our target price, we view risk- 6.00 115
reward as being largely balanced. Our SOTP TP of MYR5.50 is derived 5.80 110
5.60 105
from assigning DCF values to each of its telco units. While Axiata’s 5.40 100
dividend should increase in 2018 following a scheduled normalisation of 5.20 95
payout ratio (DPR was reduced in 2016 and 2017 to conserve cash), its 5.00 90
4.80 85
dividend yield would still rank as the lowest among the big-cap telcos. 4.60 80
4.40 75
Risks: Competition and spectrum fees 4.20

4.00
70
65
The key risk revolves around competition hypothetically intensifying in
markets (which would affect monetisation) which Axiata’s entities Axiata - (LHS, MYR) Axiata / Kuala Lumpur Composite Index - (RHS, %)
operate in. In addition, punitive spectrum fees could potentially have an

-1M -3M -12M
adverse impact on balance sheet health and dividend payments.
Absolute (%) 4 5 18
Relative to index (%) (2) 1 8
Source: FactSet

Revenue 19,883 21,565 24,373 25,786 27,222
EBITDA 7,284 8,013 9,378 10,089 10,897
Core net profit 2,071 1,418 1,301 1,462 1,798
Core EPS (sen) 23.9 16.0 14.5 16.3 20.0
Core EPS growth (%) (8.6) (33.1) (9.2) 12.4 23.0
Net DPS (sen) 20.0 8.0 7.2 13.8 17.0
Core P/E (x) 23.3 34.9 38.4 34.2 27.8
P/BV (x) 2.1 2.1 2.1 2.0 2.0
ROAE (%) 11.5 2.1 5.4 6.0 7.3
ROAA (%) 3.9 2.2 1.8 2.0 2.4
EV/EBITDA (x) 9.4 8.0 7.6 7.1 6.4
Consensus net profit - - 1,293 1,506 1,773
MKE vs. Consensus (%) - - 0.6 (3.0) 1.4
Tan Chi Wei, CFA Syairah Malek

chiwei.t@maybank-ib.com syairah.am@maybank-ib.com
(603) 2297 8690 (603) 2297 8641
34
Axis REIT (AXRB MK) HOLD
The acquisition-focused REIT Share Price
12m Price Target
MYR 1.40
MYR 1.50 (+7%)
Investment case: M&A-driven growth Company Description

Axis Real Estate Investment Trust operates as a real
Axis is maintaining its strategy to actively acquire yield-accretive
estate investment trust,which owns and invests in
properties, namely industrial assets and we believe this would remain as commercial, office, and industrial real estate.
Axis’ primary earnings growth driver. Meanwhile, about 2/3 of its
portfolio’s NLA consists of industrial assets with long-term leases which
provide stable, recurring income to the trust. HOLD with MYR1.50 DDM- Statistics
TP and 5.4% CY18 net yield. Shariah status Yes
52w high/low (MYR) 1.72/1.40
Catalysts: Big plans with Axis PDI Centre 3m avg turnover (USDm) 0.1
REITs
Free float (%) 89.8

We expect near-term earnings to be enhanced by the upcoming Issued shares (m) 1,105
completion of Phase 1 of Axis PDI Centre which will contribute rental Market capitalisation MYR1.5B
income from mid-2018 onwards (6%/9% to Axis’ FY18/19E NPI). The asset USD388M
will be leased to Nestle Products Sdn Bhd for 10 years (with another 6- Major shareholders:
year extension option). We believe Axis would have similar major plans Employees Provident Fund 12.4%
for its remaining 50% of Axis PDI Centre’s 50-acre land (Phase 2). We have Public Mutual Bhd. 7.8%
Lembaga Tabung Haji 6.0%
not imputed Phase 2’s contributions into our earnings forecasts pending
Malaysia
further confirmation of plans. Elsewhere, Axis intends to maintain its Price Performance
strategy to actively seek and acquire more quality properties. We believe 1.85 120
the future acquisitions would still be largely centred on industrial assets 1.80 115
with long-term leases. 1.75 110
1.70 105
Valuations: Fair for now 1.65 100
1.60 95
We think the current valuation of 1.1x FY18 P/NTA (in-line with sector’s
1.55 90
average) is fair, backed by FY18 net DPU yield of 5.4%. Meanwhile, we
1.50 85
now factor in 125m new units (11% of unit base) which are part of its
1.45 80
private placement exercise (approved for up to 20% of its unit base), 1.40 75
hence the downward revision in our TP by 12%. Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Axis REIT - (LHS, MYR) Axis REIT / Kuala Lumpur Composite Index - (RHS, %)
Risks: Oversupply of office lowers demand -1M -3M -12M

We are cautious on Axis’ exposure to office space (c.26% of its portfolio’s Absolute (%) (5) (9) (14)
NLA), namely the multi-tenanted office buildings. Axis could face Relative to index (%) (11) (12) (21)
occupancy risks due to the ongoing oversupply of office space, Source: FactSet
particularly in the Klang Valley.

Revenue 166 171 170 200 216
Net property income 142 144 145 171 186
Core net profit 92 90 92 104 118
Core EPU (sen) 8.4 8.2 8.3 8.9 9.6
Core EPU growth (%) 12.6 (2.4) 2.3 6.4 7.8
Net DPU (sen) 7.6 7.4 7.5 7.6 8.6
Net DPU growth (%) (14.9) (1.8) 1.2 1.0 13.6
P/NTA (x) 1.1 1.1 1.1 1.1 1.1
Net DPU yield (%) 5.4 5.3 5.4 5.4 6.2
ROAE (%) 7.2 8.9 6.6 7.0 7.5
ROAA (%) 4.3 4.1 4.1 4.2 4.3
Debt/Assets (x) 0.34 0.35 0.35 0.39 0.39
Consensus Net DPU - - 7.7 7.7 8.2
MKE vs. Consensus (%) - - (1.8) (2.0) 5.2
Kevin Wong
(603) 2082 6824
35
Bermaz Auto Berhad (BAUTO MK)
BUY
The best ride in this upcycle Share Price
12m Price Target
MYR 2.37
MYR 3.25 (+37%)
Investment case: Asset-light, nimble business model Company Description

Franchise holder and sole distributor of Mazda
BAuto’s modus operandi is one that is asset-light and nimble, allowing it
vehicles in Malaysia and Philippines. Also owns 30%
to ride an upcycle quickly while offering resilience in weathering through
stake in Mazda Malaysia and 29% stake in Inokom.
tough times. Backed by Mazda’s strong franchise and an attractive model
launch pipeline, BAuto is set to expand its exclusive distributorship
operations in both Malaysia and the Philippines. Alongside a stronger MYR
Automotive
Statistics
against JPY, BAuto’s earnings should be back on growth trajectory (3-year Shariah status Yes
expected earnings CAGR of 32%). BUY maintained. 52w high/low (MYR) 2.37/1.85
Catalysts: MYR’s strength to power margin expansion Free float (%) 60.5
A refreshed model line-up (i.e. bestseller CX-5) and attractive new Issued shares (m) 1,160
launches ahead (i.e. CX-8, Mazda6) by Mazda should benefit BAuto, Market capitalisation MYR2.7B
which is an exclusive distributor in Malaysia as well as the Philippines. USD689M
Stronger sales are expected as Mazda continues to introduce new models Major shareholders:
in line with the advancement of its SkyActiv-X technology by 2019. Permodalan Nasional Bhd. 16.0%
Furthermore, margin expansion will be fuelled by lower JPY/MYR on two Dynamic Milestone Sdn. Bhd. 15.1%
Malaysia

fronts: (i) lower importation cost of CBU vehicles (~34% of FY19E Mazda
vehicle sales in Malaysia) and (ii) lower imported component cost for CKD Price Performance
vehicles at the associates’ level (via 30%-owned MMSB).
2.50 150
Valuations: Compelling risk/reward ratio 2.40 140
2.30 130
Prior to the recent earnings plunge caused by a sizeable margin
2.20 120
compression from a weaker MYR, BAuto traded at a mean valuation of
14.5x which is the basis of our PER peg. As such, at 11.6x CY19 PER 2.10 110
currently, we believe that BAuto is undervalued considering its growth 2.00 100
outlook. BAuto’s balance sheet is also strong, with a net cash position of 1.90 90
MYR120m as at end-Oct 2017. 1.80 80
Risks: Stiff competition at BAuto’s key segments Bermaz Auto - (LHS, MYR)
Bermaz Auto / Kuala Lumpur Composite Index - (RHS, %)
Mazda thrives in the SUV segment in the Malaysian market with a wide
-1M -3M -12M
range of model offerings (CX-3, CX-5, CX-7, CX-9). The aforementioned
Absolute (%) 10 14 16
segment accounts for 55-65% of total domestic volume sales. Price wars
Relative to index (%) 3 10 6
in this segment by key competitors (i.e. Honda CR-V, Nissan X-Trail,
Source: FactSet
Subaru XV, Forester) may limit BAuto’s margin recovery. A sudden
upswing in JPY/MYR may also reverse BAuto’s expected earnings growth.
FYE Apr (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 2,095 1,660 1,966 2,359 2,548
EBITDA 267 166 210 344 390
Core net profit 201 119 136 239 272
Core FDEPS (sen) 17.3 10.2 11.6 20.5 23.3
Core FDEPS growth(%) (9.6) (40.8) 14.0 76.4 13.7
Net DPS (sen) 16.9 11.7 7.0 12.3 14.0
Core FD P/E (x) 13.7 23.2 20.4 11.6 10.2
P/BV (x) 5.2 6.2 5.5 4.7 3.9
ROAE (%) 39.3 24.1 28.8 43.8 42.0
ROAA (%) 23.9 12.5 14.2 22.7 22.4
EV/EBITDA (x) 8.4 14.2 12.5 7.2 6.2
Net gearing (%) (incl perps) net cash net cash net cash net cash net cash
MKE vs. Consensus (%) - - (8.9) 14.2 17.0
Ivan Yap
ivan.yap@maybank-ib.com
(603) 2297 8612
36
Bursa Malaysia (BURSA MK) HOLD
Diversified marketplace Share Price
12m Price Target
MYR 10.60
MYR 10.30 (-3%)
Investment case: Ample value proposition Company Description

Bursa Malaysia Bhd. is an exchange holding company,
Bursa offers a diversified marketplace - equities, derivatives, Islamic
which engages in treasury management and provision
capital. It is one of the largest stock markets in ASEAN and the global of management and administrative services.
benchmark for CPO settlement price. Capital management has been
active with >90% DPR (for normal dividends) since FY05, and five special
dividends in FY06, FY07, FY13, FY14 and FY17. Its proposed 1-for-2 bonus Statistics
issue will help to raise liquidity, and make the stock more affordable. 52w high/low (MYR) 11.06/8.73
Financials
The stock remains a HOLD. 3m avg turnover (USDm) 2.4

Free float (%) 74.5
Catalysts: Rising activities
Market capitalisation MYR5.7B
Equity average daily value (ADV) was an e.MYR2.52b in 2017 (+28% YoY), USD1.4B
the highest ever (2012-17 CAGR: +8.6%). Meanwhile, derivative contracts Major shareholders:
traded dipped a marginal 2% YoY to 14.0m in 2017 after strong growth Capital Market Development Fund 18.7%
since 2010 (2010-16 CAGR: +15%). FCPO made up 85% of 2017 derivative Kumpulan Wang Persaraan 18.0%
volume, FKLI 14%. Equity ADV remains strong at e.MYR3.72b in the first 9
trading days of 2018; this momentum could sustain in the near term on
Malaysia
Price Performance
higher volatility ahead and immediately post GE14. Trading revenue from 11.5 130
equities/derivatives made up 50%/15% of 9M17 operating revenue. 11.0 125
10.5 120
Valuations: Fairly priced
10.0 115
Our earnings model imputes equity ADV forecast of MYR2.6b for 2018. At
9.5 110
current levels, the stock is fairly valued, trading at 24.9x 2018 PER (LT
9.0 105
mean: 26.6x) and compared to the average of its peers of 23.7x. Our TP
of MYR10.30 pegs the stock on 25x PER. 8.5 100
8.0 95
Risks: Liquidity & volatility Bursa Malaysia - (LHS, MYR)
Bursa Malaysia / Kuala Lumpur Composite Index - (RHS, %)
The main upside/downside risks to our earnings forecasts are liquidity
and volatility, both impacting volumes traded. Aside from that, Bursa’s -1M -3M -12M
operations and financials are well managed (stable 9M17 CIR of 44%, Absolute (%) 10 5 19
strong net cash of MYR212m or 39sen/shr as at end-Sep 2017). Foreign Relative to index (%) 4 1 10
shareholding on the stock was 25.1% end-2017 (+2.5 ppts YoY). Source: FactSet

Revenue 519 507 552 571 589
EBITDA 303 295 334 344 353
Core net profit 199 194 221 228 234
Core EPS (sen) 37.2 36.2 41.3 42.6 43.7
Core EPS growth (%) 0.0 (2.8) 14.1 3.3 2.6
Net DPS (sen) 34.5 34.0 53.5 40.5 42.5
Core P/E (x) 28.5 29.3 25.7 24.9 24.3
P/BV (x) 7.0 6.5 7.1 7.0 6.9
ROAE (%) 25.6 23.2 26.5 28.2 28.7
ROAA (%) 10.6 8.6 9.1 9.3 9.2
EV/EBITDA (x) 13.8 15.1 16.7 16.1 15.7
MKE vs. Consensus (%) - - (0.7) (0.7) (0.3)
Wong Chew Hann

wchewh@maybank-ib.com
(603) 2297 8686
37
Cahya Mata Sarawak (CMS MK)
BUY
Gem of Sarawak Share Price
12m Price Target
MYR 4.00
MYR 4.50 (+13%)
Investment case: A proxy to Sarawak’s development Company Description

Cahya Mata Sarawak engages in cement
A home-grown conglomerate of Sarawak, CMS is poised to benefit from
manufacturing, construction, road maintenance,
the Pan Borneo Sarawak Highway development as the sole cement and building materials and property development.
major building materials supplier within Sarawak. Growth in FY18 will be
supported by stronger contribution from OMS upon full commissioning of
Construction
its blast furnaces. There is potential earnings upside should ferrosilicon Statistics
prices increase significantly. Maintain BUY with a SOP-TP of MYR4.50. Shariah status Yes
52w high/low (MYR) 4.65/3.37
Catalysts: The ‘OMS’ factor & accelerated works 3m avg turnover (USDm) 0.7
Free float (%) 48.2
CMS’ 25%-owned ferrosilicon smelter under OMS was in the black as of Issued shares (m) 1,074
the latest 9M17 results, contributing a small profit of e.MYR2m. With 15 Market capitalisation MYR4.3B
furnaces already up and running, OMS expects to commission the last USD1.1B
blast furnace by end-2017. Based on current prices of ferrosilicon Major shareholders:
hovering within the USD1,300/t range and with production increasing Majaharta Sdn. Bhd. 12.5%
steadily, CMS expects OMS to continue to be profitable in 4Q17E with Employees Provident Fund 11.9%
Estate of Lejla Taib 10.3%
significant contribution upon full commissioning in FY18E.
Malaysia
Catalyst s: Ke y building materials supplier in Sarawak
Price Performance
As the sole cement and major building materials supplier in the state of
5.40 115
Sarawak, earnings from its cement and construction material divisions 5.20 110
are poised to benefit from the acceleration of physical works on Pan 5.00 105
4.80 100
Borneo Sarawak Highway in 2018. Additionally, its construction and road
4.60 95
maintenance division will likely see improved contribution from its 4.40 90
MYR1.36b Pan Borneo package (70:30 JV with Bina Puri). 4.20 85
4.00 80
3.80 75
Valuations and risks 3.60 70
3.40 65
We value CMS based on an SOP basis with i) cement, construction 3.20 60
materials and construction & road maintenance pegged to target PERs
Cahya Mata S. - (LHS, MYR)
while ii) property and technology (telco infrastructure) are based on the Cahya Mata S. / Kuala Lumpur Composite Index - (RHS, %)
DCF method. Risks to CMS’ core operations would stem from i) delay in
-1M -3M -12M
Pan Borneo Sarawak Highway works, ii) lower demand for building
Absolute (%) 6 3 3
materials and iii) unfavourable ferrosilicon ASPs.
Relative to index (%) 0 (1) (6)
Source: FactSet

Revenue 1,788 1,551 1,951 2,198 2,333
EBITDA 395 419 388 420 485
Core net profit 245 212 221 259 277
Core EPS (sen) 22.8 19.8 20.6 24.1 25.8
Core EPS growth (%) 7.0 (13.2) 4.2 17.0 6.8
Net DPS (sen) 4.5 6.3 8.2 9.6 10.3
Core P/E (x) 17.6 20.2 19.4 16.6 15.5
P/BV (x) 2.1 1.9 1.8 1.7 1.6
ROAE (%) 13.0 8.0 9.7 10.7 10.7
ROAA (%) 8.1 6.4 6.1 6.6 6.6
EV/EBITDA (x) 14.3 10.5 11.2 10.4 8.9
MKE vs. Consensus (%) - - 0.0 0.8 (0.6)
Adrian Wong Wong Chew Hann

adrian.wkj@maybank-ib.com wchewh@maybank-ib.com
(603) 2297 8675 (603) 2297 8686
38
CIMB Group Holdings (CIMB MK)
BUY
Ongoing ROE expansion Share Price
12m Price Target
MYR 6.75
MYR 7.70 (+14%)
Investment Case: ROE expansion and decent yields Company Description

CIMB Group Holdings engages in the provision of
We continue to view CIMB favourably for the ongoing recovery in overall
consumer and investment banking services. It holds a
ROEs (expanding to 10.4% in FY19E from 9.6% in FY17E) amid stable majority stake in PT CIMB Niaga.
earnings growth and decent valuations. Moreover, dividend yields of ~4%
provide support to share price. We maintain a BUY on the stock with an
unchanged TP of MYR7.70. Statistics
52w high/low (MYR) 7.08/4.72
Catalysts: 9% earnings growth per annum 3m avg turnover (USDm) 22.1
Free float (%) 42.2
Banks
We forecast 9% earnings growth per annum (FY18-19E), key assumptions Issued shares (m) 9,052
being loan growth of about 4% per annum, 8% growth in non-interest Market capitalisation MYR61.1B
income, improvements in cost efficiencies and gradually reducing credit USD15.3B
costs. The offset is that net interest margins are expected to compress, Major shareholders:
particularly at CIMB Niaga, as the bank continues to focus on lower Khazanah Nasional Bhd. (Investment Compa 27.8%
yielding but better quality corporate customers. Employees Provident Fund 14.5%
CIMB Group Holdings Bhd. 9.8%
The impact of MFRS9 is expected to be manageable, shaving about 50bps
Malaysia
Price Performance
off the group’s CET1 ratio (estd. fully loaded 10.6% currently) but
management continues to target a CET1 ratio of 12% by end-2018, 7.50 170
enhanced in part by asset disposals. Positively, preliminary assessment is 7.00 160
that there is likely to be little change to the group’s credit cost guidance 6.50 150
post-MFRS9, which currently stands at <60bps for FY18. 6.00 140
5.50 130
Valuations: ROE expansion supports valuations 5.00 120
4.50 110
The stock currently trades at a FY18 PER of 12.3x, which is still a
4.00 100
discount to its long-term forward PER mean of 13.3x. Our TP of MYR7.70
3.50 90
pegs on an FY19 P/BV target of 1.3x, which is supported by ROEs of Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
about 10.4%.
CIMB Group - (LHS, MYR) CIMB Group / Kuala Lumpur Composite Index - (RHS, %)
Risks: Elevated credit costs -1M -3M -12M

Absolute (%) 13 7 40
The key risk, in our view, is of slower-than-expected recovery in
Indonesia and Thailand’s economies, which would result in ongoing asset
Source: FactSet
quality issues in these countries and thus elevated credit costs. Also a
risk would be of a larger-than-expected compression in NIMs.

Operating income 15,396 16,065 16,935 17,450 18,208
Pre-provision profit 6,147 7,414 7,994 8,328 8,896
Core net profit 3,411 3,414 4,458 4,850 5,298
Core EPS (MYR) 0.40 0.39 0.50 0.55 0.60
Core EPS growth (%) 5.6 (2.4) 27.9 8.8 9.2
Net DPS (MYR) 0.14 0.20 0.26 0.28 0.31
Core P/E (x) 16.8 17.2 13.4 12.3 11.3
P/BV (x) 1.4 1.3 1.3 1.2 1.1
Book value (MYR) 4.87 5.24 5.37 5.64 5.92
ROAE (%) 8.7 7.9 9.6 10.0 10.4
ROAA (%) 0.8 0.7 0.9 1.0 1.0
MKE vs. Consensus (%) - - (2.1) (6.3) (8.5)
Desmond Ch'ng, ACA

desmond.chng@maybank-ib.com
(603) 2297 8680
39
Datasonic Group (DSON MK)
Not Rated
Largest security-based ICT Share Price MYR 1.23
solutions provider
Investment case: Market leader in security ICT Company Description
Datasonic Group is an investment holding company,
solutions in Malaysia
which engages in the provision of ICT solutions and
Datasonic (DSON) is the market leader in the provision of national management services.
security ICT solutions, best known for developing (i) personalised
identification solutions for the MyKad and other chip-based bank cards
and (ii) being the sole provider of Malaysian passport booklets, Statistics
Technology
polycarbonate data pages and e-passport chips to the Department of Shariah status Yes
52w high/low (MYR) 1.36/1.05
Immigration Malaysia. Its smart card personalisation segment accounted
for the bulk of DSON’s revenue in FY17 (96%) while its manufacturing
Free float (%) 41.1
segment contributed a lesser 4% of total revenue. Additionally, it also
Issued shares (m) 1,350
caters to security and surveillance projects for various government and
financial institutions. The stock is NOT RATED.
USD416M
Major shareholders:
Catalysts: Further overseas expansion BIN NOORDIN ABU HANIFAH 15.1%
CHEW BEN BEN 13.4%
While maintaining its dominant presence locally, DSON is well-positioned
Gerbang Subur Sdn. Bhd. 9.7%
Malaysia
to expand its business overseas after upgrading both its technology and
increasing capacity at its passport manufacturing facility. At present, Price Performance
DSON has ventured into both Indonesia and Tanzania through a 67% stake 1.70 135
in a border-control related security contract and an MOU with its 1.60 125
Indonesian partner to produce debit and other smart cards in the country 1.50 115
by 2020, respectively.
1.40 105
Valuations: Trading at FY19 PER of 16x 1.30 95
1.20 85
DSON reported a net profit of MYR35.2m for 1HFY18 (-4% YoY) and
1.10 75
consensus forecasts a full-year FY18 net profit of MYR87.9m (+41% YoY),
with a further net profit growth of 18% YoY in FY19. Based on street 1.00
65
estimates, DSON current trades at a prospective FYE3/19 PER of 16x. Datasonic Group - (LHS, MYR)
Datasonic Group / Kuala Lumpur Composite Index - (RHS, %)
Risks: Execution is key -1M -3M -12M

Absolute (%) 4 4 (3)
Key risks include: (i) failure to renew concessions as a result of poor
execution, (ii) lower-than-expected demand for Malaysian passports and Relative to index (%) (2) 0 (11)
Source: FactSet
MyKad identification cards, and (ii) slow orderbook replenishment.
FY E Mar (MY R m) FY 12/12 FY 12/13 15M FY 15 FY 16A FY 17A

Revenue 178.7 260.7 285.2 241.3 318.4
EBITDA 38.5 116.9 119.5 99.9 112.6
Net profit 28.1 81.9 71.8 62.9 62.5
EPS (sen) 2.1 6.1 5.3 4.7 4.6
EPS growth (%) nm 191.8 (12.2) (12.4) (0.6)
Net DPS (sen) 5.0 9.5 2.0 3.0 4.0
P/E (x) 59.1 20.3 23.1 26.3 26.5
P/BV (x) 1.0 4.7 7.5 6.8 6.4
ROAE (%) 50.8 56.8 35.8 26.9 24.7
ROAA (%) 23.4 27.3 19.8 16.3 14.2
EV/EBITDA (x) 1.5 5.3 7.8 7.2 6.9
Net debt/equity (%) 0.5 0.7 0.4 0.4 0.5
Jade Tam
(603) 2297 8687
40
Dialog Group (DLG MK) BUY
Direct proxy to Pengerang play Share Price
12m Price Target
MYR 2.67
MYR 3.00 (+12%)
Investment case: On an expansion mode Company Description

The largest tank terminal operators in Malaysia with
Demand for tank terminal facilities in Asia is rising and Dialog aims to
EPCC works
leverage on that via its Tanjung Langsat and Pengerang operations.
Dialog is Malaysia’s largest, most profitable and most efficiently-run tank
terminal operator with up to 5.8m cu m capacity. It is already on a
progressive capacity expansion drive (both green and brownfield Statistics
facilities) and its land there will be tapped to realise this aspiration – Shariah status Yes
Oil & Gas
BUY. 52w high/low (MYR) 2.72/1.53

Free float (%) 65.1
Catalysts: Tank terminals growth at two key areas
The acquisition of JCorp’s storage facilities at Tanjung Langsat, Market capitalisation MYR15.1B
measuring 35 acres for MYR62m, on a 30-year lease (which equates to USD3.8B
MYR910/cu m) will enable Dialog to triple its storage capacity to 300k cu Major shareholders:
m over time. Notwithstanding Tanjung Langsat, Dialog has plans to Employees Provident Fund 10.0%
expand its tank storage operations at Pengerang too. Its Pengerang Azam Utama Sdn. Bhd. 8.2%
Wide Synergy Sdn. Bhd. 7.6%
operations have the resources to quadruple the storage capacity (Phase
Malaysia
3, SPV 5; to be built over the next 5-10 years) from 4.2m cu m now. Price Performance
2.80 160
Valuations: Attractive long-term values 2.60 150
We remain an enthusiast of its business and management. We posit that 2.40 140
Dialog will continue to offer visible prospects post RAPID. We expect 2.20 130
Dialog to optimise its untapped capacity (5m cu m) over time. Our
2.00 120
model/TP incorporates new capacity at Tanjung Langsat (300k cu m) and
1.80 110
Pengerang (3m cu m; 25% of Phase 3). Our MYR3.00 TP is SOP-based.
1.60 100
Risks: Non extension to KCTF’s concession 1.40

90
Dialog’s 20-year concession for its 30%-owned Kertih Centralised Tankage Dialog Group - (LHS, MYR)
Dialog Group / Kuala Lumpur Composite Index - (RHS, %)
Facility (KCTF), which houses 400k cu m storage capacity will end in
2020. While we do not rule out an extension, there is a possibility that -1M -3M -12M
the rates could be revised lower. KCTF contributes about MYR30m p.a. to Absolute (%) 10 21 72
group’s earnings. Execution delay/failure of new, planned tank terminal Relative to index (%) 4 17 58
facilities will be detrimental to its business reputation. Source: FactSet
FYE Jun (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 2,534 3,393 3,534 3,669 3,787
EBITDA 385 475 461 486 521
Core net profit 261 328 339 445 521
Core EPS (sen) 5.0 6.1 6.3 8.3 9.7
Core EPS growth (%) (0.9) 20.8 3.2 31.3 17.1
Net DPS (sen) 2.2 2.7 2.7 3.6 4.2
Core P/E (x) 52.9 43.8 42.4 32.3 27.6
P/BV (x) 5.7 4.6 4.3 4.0 3.7
ROAE (%) 13.4 13.4 10.6 12.9 13.8
ROAA (%) 6.7 6.6 5.8 7.4 8.3
EV/EBITDA (x) 20.7 21.9 32.7 30.9 28.7
Net gearing (%) (incl perps) net cash net cash 18.0 14.8 12.6
MKE vs. Consensus (%) - - (16.4) 0.3 (1.6)
Liaw Thong Jung

tjliaw@maybank-ib.com
(603) 2297 8688
41
DiGi.Com (DIGI MK)
HOLD
Telenor backing Share Price
12m Price Target
MYR 4.70
MYR 4.80 (+2%)
Investment case: Highest dividend-yielding telco Company Description

Digi is a leading mobile telecommunication company
Digi offers a dividend yield of c.4%, the highest among Malaysia telcos.
Telecommunications
in Malaysia.
Operations (prepaid) have stabilised following a recent strategy shift,
while its cost optimisation efforts are bearing fruit. We have a HOLD
rating with a DCF-based TP of MYR4.80.
Statistics
Catalysts: Revenue growth and Shariah status 52w high/low (MYR) 5.18/4.41
The de-emphasis on IDD voice and SIM sales in 1Q17 means Digi’s service Free float (%) 46.0
revenue is poised for a sharper decline (to peers) in 2017 (-5.8% YoY as at Issued shares (m) 7,775
9M17). With revenue trends seemingly stabilising on a quarterly basis, a Market capitalisation MYR36.5B
return to growth in 2018 would be viewed positively by the market. USD9.2B
Separately, the loss of its Shariah status in Nov 2017 had resulted in a Major shareholders:
Telenor ASA 49.0%
knee-jerk selldown, although part of the loss has since been recovered. Employees Provident Fund 12.9%
The reinstatement of its Shariah status (Digi is already in compliance) Permodalan Nasional Bhd. 7.2%
possibly in May 2018 could potentially enhance sentiment on the stock.
Malaysia
Price Performance
Valuations: Fairly valued, below historical mean 5.30 130

5.20 125
With Digi approaching our target price, we view risk-reward as being 5.10 120
largely balanced. Digi is presently trading at an FY18 EV/EBITDA of 13x, 5.00 115
4.90 110
i.e. 1.2x below its 3-year mean of 14.2x, while dividend yield is at
4.80 105
slightly above mean of 4%. Given Digi’s revenue challenges in 2017 and 4.70 100
the (temporary) loss of its Shariah status, the current valuation discount 4.60 95
is probably justified, in our view. 4.50 90
4.40 85
4.30 80
Risks: Competition and spectrum allocation Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
The key risk revolves around competition hypothetically intensifying in DiGi.com - (LHS, MYR) DiGi.com / Kuala Lumpur Composite Index - (RHS, %)
the Malaysia mobile space. This would have an adverse impact on Digi’s
-1M -3M -12M
ability to monetise optimally. An additional risk is if Digi receives a lower
Absolute (%) 0 (4) (4)
allocation (relative to peers) of the reasonably-priced 700MHz spectrum.
Source: FactSet

Revenue 6,914 6,597 6,385 6,616 6,850
EBITDA 2,982 2,955 2,873 2,977 3,083
Core net profit 1,723 1,633 1,513 1,559 1,629
Core EPS (sen) 22.2 21.0 19.5 20.0 20.9
Core EPS growth (%) (15.2) (5.2) (7.3) 3.0 4.5
Net DPS (sen) 22.0 20.9 19.5 20.0 20.9
Core P/E (x) 21.2 22.4 24.2 23.4 22.4
P/BV (x) 70.4 70.4 70.4 70.4 70.4
ROAE (%) 285.8 314.4 291.3 300.1 313.7
ROAA (%) 38.4 32.1 27.7 28.4 29.3
EV/EBITDA (x) 14.4 13.4 13.5 13.0 12.5
MKE vs. Consensus (%) - - 0.7 3.5 5.3

(603) 2297 8690 (603) 2297 8641
42
Econpile Holdings (ECON MK )
Not Rated
Piling into wealth Share Price MYR 1.30
Investment case: Substantial orderbook Company Description

Econpile Holdings is an investment company, which
Econpile is a leading integrated player in piling and foundation services
engages in the provision of general construction and
in Malaysia. As of Dec 2017 (for FYE3/18), the Group had secured a total piling works.
of MYR307.5m worth of contracts. Given its June financial year end,
Econpile appears to be on track to hit management’s target of MYR600m
worth of new contracts per annum. Its current outstanding orderbook Statistics
Industrials
stands at more than MYR1.2b, to be recognized over the next 2 years. Shariah status Yes
The stock is NOT RATED. 52w high/low (MYR) 1.33/0.78
Free float (%) 46.8
Catalysts: Proxy to domestic infrastructure projects
Backed by its strong presence in the piling and foundation services Market capitalisation MYR1.7B
industry, Econpile has the capability in winning more jobs in the future. USD438M
We understand that Econpile is tendering for over MYR1.0b of new jobs Major shareholders:
including East Coast Rail Link, KL-Singapore High-Speed Rail, and the THE CHENG ENG 27.3%
KVMRT3, and it is eyeing opportunities in Pavilion Damansara Heights 2 PANG SAR 21.8%
CIMB-Principal Asset Management Bhd. 4.7%
and Bukit Bintang City Centre. Econpile has a low net gearing of less than
Malaysia
0.1x as of end-1QFY6/18, which will provide the Group flexibility for Price Performance
expansion. The Group is expected to strengthen its fleet with MYR30m- 1.40 300
MYR40m worth of earmarked capex this year. 1.30 280
1.20 260
1.10 240
Valuations: Premium for its market leadership 1.00 220
0.90 200
Its strong jobs pipeline underpins consensus’ 12% 3-year (FY6/17-20E) 0.80 180
earnings CAGR. At current price, the stock is trading at 16.0x consensus 0.70 160
FY6/19 EPS of 8.2sen, above its 3-year historical average P/E of 14.1x. 0.60 140
0.50 120
0.40 100
Risks: Uncertainty of steel prices 0.30
80
Fluctuation in steel prices may significantly impact Econpile’s bottom

Econpile - (LHS, MYR) Econpile / Kuala Lumpur Composite Index - (RHS, %)
line. Also of risk would be a slowdown in the domestic economy, which
could result in reduced construction activity. -1M -3M -12M
Absolute (%) 5 6 65
Source: FactSet

Revenue 386 419 429 462 582
EBITDA 52 61 81 109 137
Net profit 28 31 47 68 81
EPS (sen) 2.1 2.8 3.5 5.1 6.0
EPS growth (%) nm 34.6 24.4 45.0 19.6
Net DPS (sen) - - 1.0 1.4 1.8
P/E (x) 62.5 46.4 37.3 25.7 21.5
P/BV (x) 0.2 10.4 8.7 7.0 5.7
Net dividend yield (%) - - 0.8 1.1 1.4
ROAE (%) nm 24.3 25.4 30.2 29.3
ROAA (%) nm 12.5 15.0 18.1 17.4
EV/EBITDA (x) 0.4 10.2 8.7 7.0 5.8
Net debt/equity (%) 0.4 net cash net cash net cash 0.0
Mohd Hafiz Hassan

mohdhafiz.ha@maybank-ib.com
(603) 2082 6819
43
Eco World Development (ECW MK)
BUY
Strong management with Share Price
12m Price Target
MYR 1.44
MYR 1.71 (+19%)
impeccable track record Previous Price Target MYR 1.71
Investment case: A solid reputation Company Description

Eco World Development is principally involved in the
A relatively young real estate group backed by experienced hands. In our
property development business.
view, the management team’s strong creative reputation and intimate
knowledge of the property industry will form a solid backbone for ECW
and take it from strength to strength. In < 5 years, ECW has accumulated
5,096 acres of land (worth MYR74b in GDV) throughout major cities in Statistics
Real Estate
Malaysia. We maintain a BUY with an RNAV-TP of MYR1.71. Shariah status Yes

52w high/low (MYR) 1.71/1.34
Catalysts: Proven track record 3m avg turnover (USDm) 0.3
Free float (%) 30.5
ECW is backed by a strong management team which has a proven track Issued shares (m) 2,944
record spanning over two decades. While its balance sheet is rather Market capitalisation MYR4.2B
stretched due to aggressive landbanking over the past four years, it has USD1.1B
delivered impressive sales despite the slowdown in the property sector. Major shareholders:
We like its strategy in growing market share by strengthening customer Syabas Tropikal Sdn. Bhd. 32.0%
relationship and services especially in times of uncertainty. Elsewhere, Eco World Development Holdings Sdn. Bhd. 21.3%
LIEW TIAN XIONG 13.7%
ECW is addressing its gearing issue with a new ‘Business Model’, inviting
Malaysia
strong partners (e.g. EPF) to participate directly in the joint Price Performance
development of some of its land in order to reduce upfront costs. It may, 1.75 140
we believe, also consider new share issues to fund future acquisitions. 1.70 135
1.65 130
1.60 125
Valuations: A RNAV play 1.55 120
1.50 115
ECW has lowered its sales target for 2018 to MYR3.5b (FY17: MYR4b, -13% 1.45 110
YoY). We value ECW at 0.6x P/RNAV, in line with the P/RNAV peg that we 1.40 105
1.35 100
have assigned to big cap entrepreneur-driven property stocks under our
1.30 95
coverage. Near-term earnings visibility will be backed by MYR6.4b of 1.25 90
unbilled sales (MYR4.8b Malaysia; MYR1.6b via its 27%- owned ECWI). 1.20
85
Eco World Dev - (LHS, MYR)
Risks: Stretched balance sheet Eco World Dev / Kuala Lumpur Composite Index - (RHS, %)
Net gearing was 0.7x in end Oct 2017, on aggressive land acquisitions -1M -3M -12M
over the last 4 years. Since much of its land was acquired during the Absolute (%) (1) (5) 6
property upcycle in 2012-2013, it would have less flexibility in pricing/ Relative to index (%) (6) (9) (3)
product during times of uncertainty. Source: FactSet
FYE Oct (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 2,546 2,925 3,862 4,821 6,338
EBITDA 595 606 687 884 1,167
Core net profit 129 113 170 325 525
Core EPS (sen) 5.4 3.9 5.8 11.0 17.8
Core EPS growth (%) 105.9 (28.1) 47.5 91.6 61.3
Net DPS (sen) 0.0 0.0 0.0 1.1 1.8
Core P/E (x) 26.5 36.8 25.0 13.0 8.1
P/BV (x) 0.9 1.0 1.0 0.9 0.8
ROAE (%) 3.7 5.2 3.9 7.1 10.6
ROAA (%) 1.6 1.2 1.6 2.8 4.2
EV/EBITDA (x) 9.3 12.4 10.8 8.4 6.2
MKE vs. Consensus (%) - - (6.9) 31.2 69.9
Wong Wei Sum, CFA

weisum@maybank-ib.com
(603) 2297 8679
44
Eco World International (ECWI MK)
HOLD
One of a kind Share Price
12m Price Target
MYR 1.03
MYR 1.10 (+7%)
Investment case: Growing horizons Company Description

EWI engages in the development of real estate
ECWI is the first and only Malaysia listed developer with pure overseas
properties. Its activities include development,
exposure in the UK and Australia property markets. Earnings growth is management and investment of real properties.
expected to be strong in FY18-FY20 with staggered contributions from its
London and Sydney/Melbourne projects. Upside potential could come
from the acquisition of a 70% stake in Willmott Dixon’s property arm in Statistics
Real Estate
UK. Maintain HOLD with an unchanged MYR1.10 RNAV-TP (0.75x P/RNAV). 52w high/low (MYR) na/na
Catalysts: 2018, a turning point Free float (%) 57.7
Maiden earnings should start coming in from Apr 2018 onwards with the Market capitalisation MYR2.5B
completion of London City Island’s (LCI) blocks A and M, and Embassy USD620M
Garden A04. As for Wardian, Yarra One and West Village, construction Major shareholders:
works are on track to meet their 2020 completion deadline. Elsewhere, Gll Ewi Hk Ltd. 27.0%
the acquisition of a 70% stake in Willmott Dixon’s development arm, LIEW KEE SIN 10.3%
Syabas Tropikal Sdn. Bhd. 3.3%
which involves the development of 12 property sites in UK, will ensure
the continuity of ECWI’s business in UK. More importantly, it could more
Malaysia
Price Performance
than double ECWI’s initial GDV of MYR13.6b during its IPO. 1.30 110
1.25 105
Valuations: Backed by MYR7.7b cumulative sales 1.20 100
In deciding the RNAV multiple, we have also drawn on macro factors such 1.15 95
as the property industry cycle and specific factors such as project
1.10 90
locations, the management team and sales record. We value EWI at
1.05 85
MYR1.10 based on 0.75x P/RNAV (MYR1.47 RNAV/sh). ECWI is backed by
cumulative sales of MYR7.7b end-Oct 2017. 1.00 80
0.95 75
Apr-17 Jun-17 Aug-17 Oct-17 Dec-17
Risks: Brexit could weigh on currency and sales Eco World Int'l - (LHS, MYR)
Eco World Int'l / Kuala Lumpur Composite Index - (RHS, %)
EWI has high exposure to the UK’s economic conditions and the GBP
movement as 88% of its total GDV is derived from its London projects. -1M -3M -12M
The results of UK’s general election on 8 June 2017 in which no single Absolute (%) 5 (2) na
political party garnered a majority in Parliament brings back concerns of Relative to index (%) (1) (5) na
UK’s eventual Brexit terms. This may continue to weigh on the currency Source: FactSet
and foreign buying interest in the London property market until the
precise economic impact becomes clearer.
FYE Oct (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 1 1 1 1,694 na
EBITDA (38) (53) (89) 1,602 na
Core net profit (220) (88) 174 383 542
Core EPS (sen) (89.3) (5.8) 7.2 16.0 22.6
Core EPS growth (%) nm nm nm 120.6 41.5
Net DPS (sen) 0.0 0.0 0.0 4.0 5.6
Core P/E (x) nm nm 14.2 6.5 4.6
P/BV (x) 2.4 0.6 0.9 0.8 0.7
ROAA (%) (35.9) (4.5) 6.2 12.8 16.2
EV/EBITDA (x) na nm nm 1.2 na
Net gearing (%) (incl perps) 803.5 net cash net cash net cash net cash
MKE vs. Consensus (%) - - 38.6 5.2 (10.7)
Wong Wei Sum, CFA

(603) 2297 8679
45
Ekovest (EKO MK)
Not Rated
On strong growth past 5 years Share Price MYR 1.08
Investment case: Beneficiary of major infra jobs Company Description

It operates through the following business segments:
Ekovest has three well-diversified core businesses - construction,
Construction Operations, Property Development, Toll
property development and infrastructure-concession. Growth in all three Operations, and Others.
businesses has led to a doubling in net profit from FY6/13-FY6/17,
underpinned by a seven-fold increase in revenue. With its strong
Construction
construction order book, and six ongoing / upcoming property Statistics

development projects in KL, Kuantan and JB with potential combined Shariah status Yes
GDV in excess of MYR7b in the 10-year development master plan, the 52w high/low (MYR) 1.46/0.89
street is estimating further upside to FY17 earnings in the coming years. 3m avg turnover (USDm) 4.6
Ekovest is NOT RATED. Free float (%) 44.7
Catalysts: Strong orderbook, unlocking values?
USD579M
Ekovest has an orderbook of more than MYR13b (based on 1QFY6/18 Major shareholders:
briefing pack), which is 16x its FY6/17 construction revenue. Major LIM KANG HOO 20.2%
construction contracts relate to DUKE and the River of Life project, Ekovest Holdings Sdn. Bhd. 12.2%
Lim Seong Hai Holdings Sdn. Bhd. 6.6%
providing earnings visibility over the next 3-5 years. It is looking to
Malaysia
replenish its orderbook with a tender book in excess of MYR5b.

Clic k he re to enter text.
Price Performance
DUKE 2 Expressway commenced commercial operation in 4Q17, providing 1.60 400
further a steady stream of revenue to complement its construction and 1.40 350
property development. The media reports that Ekovest is mulling a 1.20 300
possible listing of its DUKE 1 & 2 Expressways in the coming years, for its 1.00 250
60% equity stake. EPF bought a 40% stake in Konsortium Lebuhraya Utara-
0.80 200
Timur (KL) Sdn Bhd, the concessionaire for the above expressways, from
0.60 150
Ekovest for MYR1.13b cash in 2017.
0.40 100
Valuations and risks 0.20

50
We do not have a rating on Ekovest. The stock now trades at 20x

Ekovest - (LHS, MYR) Ekovest / Kuala Lumpur Composite Index - (RHS, %)
historical FY17 PER, in line with its 5-year mean. Potential risks to
Ekovest would include i) slower-than-expected construction progress at -1M -3M -12M
major infra projects, ii) unexpected construction costs escalation, and ii) Absolute (%) 17 0 21
weak demand for its property development projects. Relative to index (%) 10 (4) 11
Source: FactSet
FYE Jun (MYR m) FY13A FY14A FY15A FY16A FY17A

Revenue 141 229 438 794 1,089
EBITDA 36 71 107 148 292
Core EPS (sen) 4.6 2.9 0.9 7.3 5.4
Core EPS growth (%) (38.3) (37.2) (70.2) 745.3 (26.1)
Net DPS (sen) 0.2 0.8 0.8 1.2 2.0
Core P/E (x) 23.5 37.4 125.6 14.9 20.1
P/BV (x) 2.3 2.1 2.0 1.8 1.2
ROAA (%) 3.8 1.7 0.5 4.1 1.7
EV/EBITDA (x) 36.1 17.1 16.6 18.8 16.4
Ong Chee Ting, CA

ct.ong@maybank-ib.com
(603) 2297 8678
46
Gamuda (GAM MK)
BUY
Riding on the infra wave Share Price
12m Price Target
MYR 5.12
MYR 5.60 (+9%)
Investment case: Sector bellwether Company Description

Gamuda Bhd engages in engineering and construction,
Gamuda’s outstanding orderbook of MYR7.3b will continue to support
property development and water and expressway
earnings growth into FY20E. Its MYR6b-8b of job win target for CY18 will concessions.
be supported by potential contracts from the East Coast Rail Link (ECRL),
KVMRT 3, KL-SG HSR and the Pan Borneo Sabah Highway (PBSaH). There
Construction
is potential earnings upside as we have not included any contribution Statistics

from the above-mentioned projects. Gamuda is our top BUY pick for the Shariah status Yes
construction sector with a RNAV-based TP of MYR5.60. 52w high/low (MYR) 5.50/4.58
Free float (%) 75.9
Catalysts: Construction its core growth driver
Gamuda’s outstanding orderbook stands at MYR7.3b as of end-Oct 2017, Market capitalisation MYR12.6B
presenting earnings growth visibility into FY20E. Additionally, Gamuda is USD3.2B
currently targeting MYR6b-8b of new job wins in CY18. Leveraging on its Major shareholders:
experience with the PDP role in KVMRT 1 and 2, Gamuda is vying for the Employees Provident Fund 12.0%
KL-SG HSR PDP together with MRCB (MRCB MK; Not Rated). Its Permodalan Nasional Bhd. 9.9%
RAJA AZLAN SHAH ELEENA 4.4%
replenishment target would also be supported by potential job wins from
Malaysia
other major infra projects such as the ECRL, KVMRT 3 and the PBSaH. Price Performance
Gamuda is also well on track to achieving its FY18E presales target of 5.60 124
MYR3.5b, having locked in MYR903m (+110% YoY) in 1QFY18 alone. 5.40 120
Unbilled sales stood at MYR2.1b as of end 1QFY18.
5.20 116
Valuations: Weakness represents buying opportunity 5.00 112
4.80 108
Gamuda’s share price dipped after news on the KVMRT 3 PDP role being
4.60 104
replaced by a turnkey contractor role instead. Our RNAV-based TP of
MYR5.60 implies a PER of 17.9x to FY18E EPS (+1SD). We believe 4.40 100
Gamuda’s valuations are justified given its status as the sector 4.20
96
bellwether and potentially sizeable major infrastructure job wins from

ECRL, KL-SG HSR, KVMRT 3 and the PBSaH. Gamuda - (LHS, MYR) Gamuda / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M

Risks: Project delays Absolute (%) 7 (3) 4
Earnings risk from i) major delays in the KVMRT 2 construction, and ii) Relative to index (%) 1 (6) (5)
slower-than-expected rollout of major infra projects. Source: FactSet
FYE Jul (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 2,122 3,211 4,032 4,032 4,250
EBITDA 549 831 805 907 996
Core net profit 626 701 762 823 795
Core EPS (sen) 26.0 28.8 31.4 33.9 32.7
Core EPS growth (%) (10.2) 11.0 8.7 8.1 (3.5)
Net DPS (sen) 12.0 12.0 12.0 12.0 12.0
Core P/E (x) 19.7 17.8 16.3 15.1 15.7
P/BV (x) 1.8 1.7 1.6 1.5 1.3
ROAE (%) 9.5 8.4 9.9 10.1 9.0
ROAA (%) 4.6 4.7 4.7 4.9 4.6
EV/EBITDA (x) 29.0 21.5 22.3 19.1 17.0
MKE vs. Consensus (%) - - (3.3) (6.7) (19.5)

(603) 2297 8675 (603) 2297 8686
47
Genting Bhd (GENT MK) BUY
Best of both worlds Share Price
12m Price Target
MYR 9.18
MYR 12.50 (+36%)
MYR 12.25
Investment Case: Cheaper proxy to GENM and GENS Company Description

Genting Bhd. engages in the leisure and hospitality,
We continue to see value in GENT, with the stock trading at a 42%
oil palm plantations, property development,
discount to SOP/sh or -2SD to its post-1997 mean discount to SOP/sh of biotechnology, and oil and gas businesses.
21%. PER is also unreasonably low at 15x FY18 (GENS: >20x FY18, GENM:
>15x FY18). In our view, GENT is a cheaper proxy to GENS and GENM. Our
MYR12.50 TP is based on a 21% discount to end-FY18E SOP/sh valuation. Statistics
In FY18, GENT may also benefit from GENS potentially securing a 52w high/low (MYR) 10.00/8.20
Japanese casino license. BUY. 3m avg turnover (USDm) 7.9
Gaming
Free float (%) 54.4

Catalysts: Gets to ‘double dip’ into RWG Issued shares (m) 3,852
Catalysts include (i) higher Resorts World Genting (RWG) visitor arrivals –
USD8.9B
not only will GENT recognise more profit from 49% owned GENM, it will
Major shareholders:
also receive more highly profitable licensing & management fees (ii) VIP: LIM FAMILY 42.7%
mass market mix – both RWG and RWS are tilting towards mass market OppenheimerFunds, Inc. 4.8%
which will expand margins due to less junket commissions and direct VIP GIC Pte Ltd. (Investment Management) 3.2%
rebates; and (iii) Regional expansion – 53% owned GENS is keen to secure
Malaysia
Price Performance
a Japanese casino license, which may be tendered in 2H18/1H19.
10.5 130
Valuations: Trading at large discount to SOP/share 10.0 125
9.5 120
Our MYR12.50 TP is based on 21% discount to end-FY18E SOP/sh
9.0 115
valuation, in-line with its 20-year mean discount to SOP/sh. GENT
currently trades at a 42% discount to SOP/sh or double the mean. Recall 8.5 110
that when GENS won the Sentosa casino license in Dec 2006, GENT even 8.0 105
traded at 20% premium to SOP/sh. A Japanese casino license win is a 7.5 100
strong share price catalyst; assuming GENT trades at par to SOP/sh, the 7.0 95
upside potential is a whopping 73%. Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Genting Bhd - (LHS, MYR)
Risks: Fewer than expected visitors and tax hikes Genting Bhd / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M

Risks include (i) Gaming tax hike – We estimate that every 1ppt hike in
Absolute (%) 5 (3) 11
the Malaysian/Singaporean gaming tax rate will trim our EPS estimates
Relative to index (%) (1) (7) 2
by 2%/1%; (ii) Regional expansion – new gaming jurisdictions like Japan
Source: FactSet
may require high capex without guaranteed returns (iii) weaker USD –
while we estimate that every 10% appreciation of the MYR vs USD would
trim our EPS estimates by <1%, GENT may recognise substantial
translation losses as most of its financial assets are USD denominated.

Revenue 18,100 18,366 19,370 21,782 24,058
EBITDA 5,394 6,028 7,413 8,518 9,677
Core net profit 1,298 1,525 2,123 2,546 3,120
Core FDEPS (sen) 34.8 40.8 50.9 60.4 73.3
Core FDEPS growth(%) (24.3) 17.1 24.9 18.6 21.3
Net DPS (sen) 3.5 12.5 15.3 18.1 22.0
Core FD P/E (x) 26.4 22.5 18.0 15.2 12.5
P/BV (x) 1.0 1.0 0.9 0.9 0.8
ROAE (%) 4.7 6.4 5.2 6.9 8.0
ROAA (%) 1.6 1.7 2.3 2.7 3.2
EV/EBITDA (x) 8.3 7.6 7.7 6.8 5.9
MKE vs. Consensus (%) - - (8.4) 4.1 12.4
Yin Shao Yang

samuel.y@maybank-ib.com
(603) 2297 8916
48
Genting Malaysia (GENM MK)
HOLD
King of the hill Share Price
12m Price Target
MYR 5.46
MYR 5.35 (-2%)
Previous Price Target 5.25
MYR 5.35
Investment case: New and improved RWG Company Description

Owns and operates Resorts World Genting, the only
Flagship casino, Resorts World Genting (RWG), embarked on a MYR10.4b
integrated resort in Malaysia. Also owns casinos in
rejuvenation and expansion called Genting Integrated Tourism Plan the UK, US and Bahamas.
(GITP) in Dec 2013. The first GITP amenities opened in Dec 2016 and its
pièce de résistance, 20th Century Fox World theme park, will open in
4Q18. We expect the GITP amenities to drive visitor arrivals to RWG and Statistics
long-term earnings growth – a good proxy to Malaysian tourism. We rate 52w high/low (MYR) 6.20/4.73
GENM at HOLD with MYR5.35 TP. 3m avg turnover (USDm) 8.4
Gaming
Free float (%) 47.2

Catalysts: More quality visitors and dividends Issued shares (m) 5,668
(i) Higher-than-expected visitor arrivals - the whole purpose of the GITP
USD7.8B
is to attract more visitors. We estimate that every 1m more than
Major shareholders:
expected RWG visitor arrivals will raise our EPS estimates by 2-3%; (ii) Genting Bhd. 47.1%
VIP: mass market mix – tilt towards mass market will expand margins due Genting Malaysia Bhd. 4.5%
to less junket commissions and direct VIP rebates; (iii) Higher dividends – OppenheimerFunds, Inc. 2.4%
we estimate that capex will peak in FY18, enabling FCF to expand in

Malaysia
Price Performance
FY19 and potentially pave the way for more dividends then.
6.50 145
Valuations: In-line with long-term mean 6.00 135
Our MYR5.35 TP is SOP-based and the discounted future cash flows of

5.50 125
RWG account for 75% of our TP. As a sanity check, our TP implies 7x FY19
EV/EBITDA which is in-line with its 20-year 12M forward EV/EBITDA 5.00 115
mean. Note that FY19 is the year when all the amenities under the GITP
will be operating on a full-year basis, the much awaited 20th Century Fox 4.50 105
World theme park included. We may raise our TP if GENM employs higher 4.00 95
DPRs (MKE forecast: 33%) after the GITP is completed. Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Genting Malaysia - (LHS, MYR)
Risks: Fewer visitors and tax hikes Genting Malaysia / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M

(i) Lower-than-expected visitor arrivals - We forecast RWG visitor arrivals
Absolute (%) 3 4 13
to grow from 20.2m in FY16 to 26.2m in FY19. We estimate that every
1m fewer than expected RWG visitor arrivals would trim our EPS
Source: FactSet
estimates by 2-3% (ii) Gaming tax hike – We estimate that every 1ppt
hike in the Malaysian gaming tax rate would trim our EPS estimates by 3-
4% (iii) Weaker USD and GBP - We estimate that every 10% appreciation
of the MYR against the USD and GBP would trim our EPS estimates by 1%.

Revenue 8,396 8,932 9,343 10,916 12,679
EBITDA 2,013 2,395 2,338 2,989 3,711
Core net profit 1,155 1,547 1,341 1,921 2,558
Core FDEPS (sen) 20.4 27.3 23.6 33.7 44.9
Core FDEPS growth(%) (15.0) 34.0 (13.7) 43.2 33.1
Net DPS (sen) 7.1 16.5 7.9 11.4 15.1
Core FD P/E (x) 26.8 20.0 23.2 16.2 12.2
P/BV (x) 1.6 1.6 1.5 1.4 1.3
ROAE (%) 7.1 14.8 5.6 9.1 11.3
ROAA (%) 4.8 5.6 4.6 6.2 7.9
EV/EBITDA (x) 12.3 10.5 13.2 10.4 8.0
Net gearing (%) (incl perps) 0.1 net cash 0.8 2.3 net cash
MKE vs. Consensus (%) - - (4.3) 13.9 27.8
Yin Shao Yang

(603) 2297 8916
49
George Kent (GKEN MK)
Not Rated
A construction & water play Share Price MYR 3.62
Investment case: Proxy for rail investment Company Description

George Kent engages in the manufacturing, trading
George Kent is an established metering and engineering company listed
and investment, development of water infrastructure
on Bursa Malaysia. Its engineering division provides turnkey construction projects, and construction services.
services for rail systems, water infrastructure and hospital projects,
while the metering division, which manufactures and supplies water
metering products, also serves water authorities of several countries Statistics
Industrials
such as Hong Kong and Singapore. The stock is NOT RATED. Shariah status Yes
52w high/low (MYR) 3.74/1.90
Catalysts: Expansion in construction & water works 3m avg turnover (USDm) 0.8
Free float (%) 52.7
George Kent’s engineering division has a strong pipeline, with an order Issued shares (m) 563
book of MYR5.7b as at end-Oct 2017. Besides being jointly appointed as Market capitalisation MYR2.0B
the Project Delivery Partner for the MYR9b KVLRT 3, it was also awarded USD511M
the SSP-SY-204 work package for KVMRT 2, valued at MYR1b. Other Major shareholders:
notable projects include construction works for Hospital Tanjung Karang Star Wealth Investment Ltd. 14.0%
in Selangor, Hospital Endocrine in Putrajaya as well as Ampang LRT Line TAN SWEE BEE 7.7%
TAN KAY HOCK /JOHAN/ 4.8%
Extension work.
Malaysia
Price Performance
For its metering business, George Kent has more than a 50% market share
in Malaysia. It is also a major supplier and distributor of water metering 4.00 400
products to water authorities in ASEAN and other parts of the world. 3.50 350
Among some of its customers include Water Supply Department of Hong 3.00 300
Kong and Public Utility Board of Singapore. At present, it is capable to 2.50 250
produce 2.5m water meters p.a..
2.00 200
Valuations: Prospective FY19 PER of 16x 1.50 150
1.00 100
George Kent reported a net profit of MYR72.5m for 9MFYE1/18 (+22%
0.50 50
YoY) and consensus estimates a net profit of MYR117m for the full year Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
FY1/18), and a 2-year (FY18-20E) net profit CAGR of 8%. At its current George Kent - (LHS, MYR)
George Kent / Kuala Lumpur Composite Index - (RHS, %)
price, and based on consensus estimates, George Kent presently trades
at a prospective FY1/19 PER of 16x. -1M -3M -12M
Risks: Slower-than-expected economic growth Relative to index (%) (2) 8 61
Source: FactSet
Dependent on construction works in the country, slower-than-expected
economic growth would put a dampener on new construction projects in
the country and this would negatively impact its outlook.
FYE Jan (MYR m) FY14A FY15A FY16A FY17A FYna

Revenue 506 353 536 599 na
EBITDA 48 57 90 145 na
Core net profit 36 28 50 101 na
Core EPS (sen) 6.4 5.0 8.9 18.0 na
Core EPS growth (%) 42.5 (22.5) 78.2 102.2 na
Net DPS (sen) 2.8 2.8 3.7 6.7 na
Core P/E (x) 56.2 72.5 40.7 20.1 na
P/BV (x) 8.2 7.1 6.3 5.1 na
Net dividend yield (%) 0.8 0.8 1.0 1.8 na
ROAA (%) 8.3 5.0 7.8 12.7 na
EV/EBITDA (x) 1.4 4.6 2.9 5.3 na
Tee Sze Chiah

szechiah.t@maybank-ib.com
(603) 2082 6858
50
GHL Systems (GHLS MK)
Not Rated
Riding on the rise of digital Share Price MYR 1.53
economies
Investment case: Proxy to ASEAN’s e-payment surge Company Description
GHL operates through the following segments: Shared
GHL is a third party payment acquirer in ASEAN for online and offline
Services, Solutions Services, and Transaction Payment
merchants, mainly for credit card payments and other alternative
Acquisition.
payment methods (i.e. local debit, Alipay, BitCoin). With more than 160k
point-of-sale (POS) terminals in place, GHL aims to capitalise on its
extensive ASEAN foothold in SEA countries (i.e. Malaysia, Thailand, the Statistics
Technology
Philippines) in the near future, riding on the wave of growth in e- Shariah status Yes
commerce as demand for cashless transaction grows, aided by 52w high/low (MYR) 1.78/0.88
government initiatives to reduce cash transactions. GHL is NOT RATED. 3m avg turnover (USDm) 0.3
Free float (%) 28.4
Catalysts: A cashless future to drive growth Issued shares (m) 659
GHL is a beneficiary of the Government’s Economic Transformation Market capitalisation MYR1.0B
Programme (ETP) as Bank Negara Malaysia (BNM) is tasked to reduce cash USD253M
transactions to 63% by 2020 from over 90% currently through an increase Major shareholders:
in POS terminal deployment to 800k POS terminal by 2020 (~323k Actis Stark (Mauritius) Ltd. 44.2%
LOH WEE HIAN 19.0%
terminals in 2016). Outside Malaysia, GHL’s presence in ASEAN countries
Malaysia
Kumpulan Wang Persaraan 5.9%

(>65k POS terminals) with sizeable cash-intensive population, such as
Thailand and the Philippines, will provide growth angles to GHL’s Price Performance
earnings base. Furthermore, in a recent tie-up with Alipay, GHL would be 1.80 190
able to accept Alipay payment from Malaysian in-store and online
1.60 170
merchants; this is mainly to target the ~2m tourists from China yearly.
1.40 150
Valuations: Fair, according to consensus 1.20 130
With share price having risen 69% in the last 12 months, GHL trades at a 1.00 110
prospective 2018 PER of 30x based on consensus’ estimates. Beyond
0.80 90
2018, consensus expects GHL to grow by another 28% YoY in 2019 which
will bring its forward PER down to 25x. 0.60
70
GHL Systems - (LHS, MYR)
Risks: e-payment concerns GHL Systems / Kuala Lumpur Composite Index - (RHS, %)
As with all online transactions, concerns over possible security breaches -1M -3M -12M
at the e-payment gateway is the key deterrent to users’ adoption of a Absolute (%) 17 (9) 69
cashless system. Elsewhere, a drastic swing in consumer spending of key Relative to index (%) 10 (12) 55
countries whereby GHL has a presence could impact earnings. Source: FactSet
FYE Dec (MYR m) FY12A FY13A FY14A FY15A FY16A

Revenue 53 64 165 211 246
EBITDA 2 1 14 23 28
Core EPS (sen) 1.9 2.1 1.2 1.6 2.8
Core EPS growth (%) nm 7.3 (42.5) 35.3 73.3
Net DPS (sen) 0.0 0.0 0.0 0.0 0.5
Core P/E (x) 79.3 73.9 128.6 95.0 54.8
P/BV (x) 8.4 7.5 4.4 4.2 3.9
ROAA (%) 6.5 7.2 3.3 3.0 4.7
EV/EBITDA (x) 12.4 72.8 29.2 27.1 19.3
Ivan Yap
(603) 2297 8612
51
Hock Seng Lee (HSL MK) HOLD
Benefiting from Sarawak’s infra Share Price
12m Price Target
MYR 1.47
MYR 1.61 (+10%)
growth Previous Price Target MYR 1.61
Investment case: Experienced Sarawak contractor Company Description

Hock Seng Lee is a marine engineering, civil
Leveraging on its experience within the Sarawak construction space,
engineering and building construction group.
HSL’s outstanding orderbook hit a high of MYR2.7b as of end-Sept 2017,
presenting earnings visibility into FY19E. However, slower-than-expected
work progress has affected FY17E earnings. We believe its undemanding
Construction
valuation of 10.9x FY18 PER (-1.5SD) reflects the temporary overhang Statistics
from its weak construction earnings – HOLD. Shariah status Yes
52w high/low (MYR) 1.75/1.41
Catalysts: Record level of construction orderbook 3m avg turnover (USDm) 0.0
Free float (%) 30.6
HSL secured MYR643m of job wins in 2017, lifting its outstanding Issued shares (m) 606
orderbook to a record high of MYR2.7b as of end-Sept 2017. Notable Market capitalisation MYR891.1M
projects within its outstanding orderbook include i) a package for Pan USD223M
Borneo Sarawak Highway worth MYR1.71b (HSL holds a 70% stake in the Major shareholders:
JV), ii) Kuching Centralised Sewerage Package 2 worth MYR750m (HSL Hock Seng Lee Enterprise Sdn. Bhd. 55.1%
holds a 75% stake in JV) and iii) Package A of the Centralised Wastewater Permodalan Nasional Bhd. 14.5%
Hock Seng Lee Bhd. 5.7%
Management System for Miri City (Phase 1) worth MYR333m. Its strong
Malaysia
orderbook replenishment provides earnings growth visibility into FY19E. Price Performance
2.20 105
Valuations: Overhang on construction earnings 2.10 100
We value HSL using PER, with our FY18E EPS pegged to 12.0x. This is 2.00 95
based on -1SD to its 5-year mean of 15.1x. We derive a MYR1.61 TP. 1.90 90
Overhang on the stock (in 2017) stems from the timing uncertainty of 1.80 85
earnings recognition, as a result of slower-than-expected progress at the 1.70 80
Pan Borneo Sarawak Highway. 1.60 75
1.50 70
Risks: Timing uncertainty for earnings recognition 1.40

65
Earnings risks stem from i) slower-than-expected works recognition at Hock Seng Lee - (LHS, MYR)
Hock Seng Lee / Kuala Lumpur Composite Index - (RHS, %)
the Pan Borneo Sarawak Highway and other major projects, ii) significant
upwards fluctuation in raw material prices and iii) slower-than-expected -1M -3M -12M
property sales. Absolute (%) 1 1 (11)
Source: FactSet

Revenue 655 499 405 635 838
EBITDA 109 84 68 109 141
Core EPS (sen) 13.9 10.3 8.0 13.4 17.6
Core EPS growth (%) (0.9) (25.9) (22.4) 68.4 31.1
Net DPS (sen) 2.4 2.4 2.4 2.4 2.4
Core P/E (x) 10.6 14.3 18.4 10.9 8.3
P/BV (x) 1.2 1.2 1.1 1.0 0.9
ROAA (%) 9.4 6.7 5.1 8.2 9.5
EV/EBITDA (x) 8.6 9.5 9.5 5.9 4.4
MKE vs. Consensus (%) - - (5.0) 3.9 11.4

(603) 2297 8675 (603) 2297 8686
52
Hong Leong Bank (HLBK MK)
HOLD
Strong fundamentals Share Price
12m Price Target
MYR 17.46
MYR 15.90 (-9%)
Investment Case: Valuations fair, prefer HLFG Company Description

Hong Leong Bank offers integrated financial services
While we continue to favour HL Bank’s strong fundamentals which
and is predominantly a retail bank. It also holds a
include its (i) impeccable asset quality, (ii) liquid balance sheet and (iii) 20% stake in Bank of Chengdu, China.
a turnaround for Bank of Chengdu (BOC), valuations are fair at this stage,
in our view, with the stock trading at a prospective FY19 PBV of 1.5x for
an ROE of 10.7%. HOLD maintained - we prefer Hong Leong Financial Statistics
Group (HLFG MK; BUY) for a cheaper entry into HL Bank. 52w high/low (MYR) 17.60/13.10
Catalysts: Prudently managed Free float (%) 216,771.9
Banks

What differentiates HL Bank from its peers is the strength of its financial Market capitalisation MYR37.8B
position, with its emphasis on maintaining a liquid balance sheet USD9.5B
(loan/deposit ratio of 82% and liquidity coverage ratio of 119% end-Sep Major shareholders:
2017), and strong asset quality (gross impaired loan ratio of just 1% end- Hong Leong Financial Group Bhd. 61.2%
Sep 2017) with a very comfortable loan loss coverage (including Employees Provident Fund 12.2%
Hong Leong Bank Bhd. 3.7%
regulatory reserves) ratio of 148%.
Malaysia
Price Performance
20%-owned BOC seems to have turned the corner, and we expect positive
earnings growth to continue, driven by loan expansion that focuses on 18.0 150
17.5 145
mortgages and government funded projects, better non-interest income, 17.0 140
and lower credit costs on the back of more stable asset quality. We 16.5 135
16.0 130
expect BOC to contribute to 16% of group pretax profit in FY18E.
15.5 125
15.0 120
Valuations: Prefer HLFG 14.5 115
14.0 110
Our TP of MYR15.90 for HL Bank pegs on a CY18 P/BV of 1.4x (ROE: 13.5 105
10.2%). At the current prices, parent HLFG’s market cap of MYR20b does 13.0 100
12.5 95
not even reflect the value of its 64% stake in HL Bank, which is valued at Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
MYR23b (11% discount). This implies that investors would be gaining Hong Leong Bank - (LHS, MYR)
Hong Leong Bank / Kuala Lumpur Composite Index - (RHS, %)
entry into the bank at a discount, while also getting HLFG’s life and
general insurance businesses for free. -1M -3M -12M
Risks: Asset quality issues at BOC Relative to index (%) 1 6 20
Source: FactSet
The risk is of a relapse in asset quality issues at BOC if there is much
slower-than-expected economic growth in China. Meanwhile, weaker
consumer sentiment would dampen HL Bank’s domestic operations,
which are predominantly retail-oriented.

Core net profit 2,075 2,145 2,454 2,581 2,738
Core EPS (MYR) 1.09 1.05 1.18 1.24 1.31
Core EPS growth (%) (16.7) (3.6) 12.2 5.1 6.1
Net DPS (MYR) 0.41 0.45 0.51 0.53 0.56
Core P/E (x) 16.0 16.6 14.8 14.1 13.3
P/BV (x) 1.8 1.7 1.6 1.5 1.5
Book value (MYR) 9.74 10.47 10.87 11.32 11.81
ROAE (%) 11.0 9.8 10.6 10.7 10.9
ROAA (%) 1.1 1.1 1.2 1.2 1.3
MKE vs. Consensus (%) - - 1.9 1.0 0.2
Desmond Ch'ng, ACA

(603) 2297 8680
53
HSS Engineers (HSS MK) Not Rated
Leading engineering Share Price MYR 1.56
consultancy firm
Investment case: At the heart of construction Company Description
HSS Engineers operates as an investment holding
HSS Engineers is one of the leading engineering consultancy firms in
company, which engages in the provision of
Malaysia with more than 30 years of experience. It has an outstanding engineering and project management services.
orderbook of MYR400m as of 3Q17, which translates to 2.6x its FY16
revenue cover. The Group also has recently received approval from Bursa
Malaysia to acquire 100% of SMHB Engineering Sdn Bhd for MYR270m. This Statistics
Industrials
will extend its services into water resources and water supply Shariah status Yes
development. HSS is NOT RATED. 52w high/low (MYR) 1.61/0.42
Free float (%) 14.0
Catalysts: Riding on booming infrastructure projects
Having a proven track record in high-impact infrastructure projects in Market capitalisation MYR497.8M
Malaysia, HSS is well-positioned to secure more new contracts for design USD125M
work and the independent consultant engineer role from the rolling out Major shareholders:
of key infrastructure projects including East Coast Rail Link, KL- Flamingo Works Sdn. Bhd. 31.3%
Singapore High Speed Rail and Pan Borneo Sabah Highway. In addition, its Victech Solutions Sdn. Bhd. 31.3%
BALASUBRAMANIAM NITCHIANANTHAN 2.7%
strong relationship with reputable clients puts it in good stead to land
Malaysia
new contracts. HSS is also set to benefit from engineering services for Price Performance
the much needed water treatment projects in the light of rising demand 1.80 380
from a growing population and industrialization. 1.60 340
1.40 300
Valuations: Reflects its potential robust growth 1.20 260
HSS reported a 9M17 net profit of MYR9.0m (+33% YoY) and consensus 1.00 220
forecasts a full-year net profit of MYR15m, with an 84% 2-year (FY17- 0.80 180
19E) net profit CAGR of 84%, underpinned by its strong outstanding 0.60 140
orderbook and potential new contracts. Reflecting its growth potential, 0.40 100
the stock is trading at an FY18 PER of 17x. 0.20 60

Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17
HSS Engineers - (LHS, MYR)
Risks: Slower contract awards HSS Engineers / Kuala Lumpur Composite Index - (RHS, %)
The overall outlook on construction sector remains upbeat with many -1M -3M -12M
upcoming sizeable infrastructure projects by the government and private Absolute (%) 14 39 235
sector. However, any slower-than-expected rollout of these projects will Relative to index (%) 8 34 209
negatively affect HSS’ new job order replenishments. Source: FactSet
FY E Dec (MY R m) FY 15A FY 16A

Revenue 121.5 139.0
EBI TDA 16.2 22.2
Net profit 10.1 14.0
EPS (sen) 4.0 5.0
EPS growth (%) nm 25.2
Net DPS (sen) - 0.6
P/E (x) 39.3 31.4
P/BV (x) 1.4 6.3
Net dividend yield (%) - 0.4
ROAE (%) 28.2 24.5
ROAA (%) 13.1 13.8
EV/EBI TDA (x) 1.5 6.0
Net debt/equity (%) 0.1 net cash
Mohd Hafiz Hassan

(603) 2082 6819
54
IJM Corporation (IJM MK)
BUY
Beneficiary of ‘Belt & Road’ Share Price
12m Price Target
MYR 3.00
MYR 3.40 (+13%)
Investment case: Latent value within assets Company Description

IJM Corp. is a conglomerate with operations in
IJM’s near-medium term earnings growth will be underpinned by its
construction, property development, manufacturing
record high construction orderbook and potentially higher cargo and quarrying, plantation, and infrastructure.
throughput from Alliance Steel’s new plant. IJM is also a proxy to the
Chinese investments in the East Coast of Peninsular Malaysia through
Construction
MCKIP and Kuantan Port. With matured highways (NPE, Besraya) within Statistics
its portfolio of domestic infrastructure concessions, monetisation of its Shariah status Yes
infrastructure assets would help unlock further value. BUY. 52w high/low (MYR) 3.56/2.73
Catalysts: Record level of outstanding orderbook Free float (%) 61.0
IJM’s latest outstanding orderbook stands at a record high of MYR9.4b
after securing MYR2.76b YTD FY18, which mainly came from new building
USD2.7B
jobs and the Solapur-Bijapur India Highway four-laning project Major shareholders:
(MYR1.26b). IJM is more than capable of meeting its MYR3b of job wins Permodalan Nasional Bhd. 17.2%
for FY18 which could potentially come from WCE, KVLRT 3, ECRL, KL-SG Employees Provident Fund 14.5%
HSR and the Pan Borneo Sabah Highway. Earnings from construction and Lembaga Tabung Haji 6.3%
Malaysia
infrastructure would likely support earnings in FY18E. Price Performance
Catalysts: Proxy to Chinese investments in Kuantan 3.70

3.60
125
120
IJM is a key development partner of the Malaysia-China Kuantan 3.50 115

3.40 110
Industrial Park (MCKIP), with pockets of strategic landbank suitable for
3.30 105
both industrial, property and commercial developments. Its 60%-owned 3.20 100
Kuantan Port is also a prime beneficiary of China’s ‘Belt and Road’ 3.10 95
initiative and the growth of industries within MCKIP would help support 3.00 90
2.90 85
cargo throughput in the later years.
2.80 80
2.70 75
Valuations and risks Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
We value IJM on a SOP basis by applying target PERs to its construction, IJM Corp - (LHS, MYR) IJM Corp / Kuala Lumpur Composite Index - (RHS, %)
building materials and plantation segments while its infrastructure and

-1M -3M -12M
property operations are valued using DCF. Recent share price weakness
Absolute (%) 8 (9) (11)
from its removal as a FBMKLCI constituent represents an opportunity for
Relative to index (%) 1 (12) (18)
entry. IJM is currently trading at 18.3x CY18 PER (-0.5SD). Potential risks
Source: FactSet
would include i) slower-than-expected progress at major infra projects,
ii) weaker CPO ASP and iii) lower cargo throughput at Kuantan Port.
FYE Mar (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 5,128 6,065 7,223 7,877 8,346
EBITDA 1,167 1,126 1,041 1,220 1,303
Core net profit 509 505 525 628 673
Core EPS (sen) 14.3 14.0 14.5 17.4 18.6
Core EPS growth (%) (12.5) (2.0) 3.9 19.8 7.2
Net DPS (sen) 10.0 7.5 7.0 7.0 7.0
Core P/E (x) 21.0 21.5 20.7 17.3 16.1
P/BV (x) 1.2 1.1 1.1 1.1 1.0
ROAE (%) 9.1 7.1 5.4 6.3 6.4
ROAA (%) 2.6 2.5 2.5 2.9 3.0
EV/EBITDA (x) 15.4 15.5 15.7 13.2 12.2
MKE vs. Consensus (%) - - (6.6) (5.6) (8.0)

(603) 2297 8675 (603) 2297 8686
55
Karex Bhd (KAREX MK)
Not Rated
In a dominant market position Share Price MYR 1.29
Investment case: Long-term prospects remain intact Company Description

Karex engages in the manufacture and sale of sexual
Earnings may have already bottomed in the recent two quarters as the
wellness, medical and other health related products.
recent improvement in ASPs for the tender market could lift its earnings
Consumer Staples
ahead. However, the quantum of the earnings rebound could be offset by

the weaker USD/MYR. Karex’s long-term prospects remain intact given its
position as the world’s largest condom maker and its aspirations in the Statistics
OBM segment. The stock is NOT RATED. Shariah status Yes
52w high/low (MYR) 2.50/1.20
Catalysts: Better near-term earnings 3m avg turnover (USDm) 0.2
Free float (%) 39.0
Earnings could be better in the near term as Karex successfully pushed Issued shares (m) 1,002
through higher tender ASPs in 1QFY18, signaling easing competition in Market capitalisation MYR1.3B
the tender market. The higher ASP will only be reflected in 3QFY18 upon USD322M
the delivery of the orders. Meanwhile, Karex is also trying to improve its Major shareholders:
operational efficiencies and reduce its distribution/administrative LAM JIUAN JIUAN 34.1%
expenses in order to reduce its overall costs. That said, the weakness in LAM YIU PANG 6.4%
GOH LENG KIAN 3.6%
USD/MYR from Nov 2017 may partially offset the higher ASPs.
Malaysia
Price Performance
Valuations: Trading at a premium to the glove sector 3.20 150
3.00 140
Consensus is forecasting a 2-year (FY17-19) net profit CAGR of 23% on the 2.80 130
back of a 2-year revenue CAGR of 13% and margin expansion. Based on 2.60 120
consensus’ forecasts, the stock is trading at 35x CY18 PER (5-year mean: 2.40 110
2.20 100
38x), above that of the glove sector’s average of 24x. 2.00 90
1.80 80
Risks: Weaker USD/MYR, higher latex price 1.60

1.40
70
60
Key downside risks to earnings include: (i) A weaker USD/MYR. 1.20 50

1.00 40
Approximately 90% of its sales are derived from the export market, Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
mainly in USD; and (ii) a higher latex price. Around 30% of its total cost is
Karex Bhd - (LHS, MYR) Karex Bhd / Kuala Lumpur Composite Index - (RHS, %)
contributed by latex.
-1M -3M -12M
Absolute (%) (10) (14) (45)
Source: FactSet
FY E June (MY R m) FY 14A FY 15A FY 16A FY 17A

Revenue 285.3 298.1 343.6 361.5
EBITDA 59.8 78.8 83.6 47.0
Net profit 45.2 59.6 66.7 27.9
EPS (sen) 5.2 6.3 6.7 2.8
EPS growth (%) nm 21.2 4.9 (58.0)
Net DPS (sen) 2.5 2.5 2.0 1.0
P/E (x) 24.7 20.3 19.4 46.2
P/BV (x) 2.3 2.0 2.7 2.6
Net dividend yield (%) 1.9 1.9 1.6 0.8
ROAE (%) 20.2 18.2 14.6 5.7
ROAA (%) 15.6 15.1 12.6 4.9
EV/EBITDA (x) 2.1 1.6 2.5 2.5
Net debt/equity (%) net cash net cash net cash net cash
Lee Yen Ling

lee.yl@maybank-ib.com
(603) 2297 8691
56
Kerjaya Prospek Group (KPG MK)
Not Rated
Builder of premium properties Share Price MYR 4.10
Investment case: Substantial order book Company Description

Kerjaya Prospek Group operates as an investment
Kerjaya Prospek is a builder of premium properties, which involves the
holding and engages in the business of building
construction of high-end properties, with industry leaders. It has a strong construction.
earnings pipeline, with its latest outstanding orderbook standing at
MYR3.2b. This implies 4x its FY16 revenue cover. In addition to this, its
property arm has property unbilled sales of MYR67m, underpinned by its Statistics
Industrials
maiden project, Vista Residences at Genting Highlands (GDV: MYR300m). Shariah status Yes
Kerjaya is NOT RATED. 52w high/low (MYR) 4.14/2.22
Free float (%) 25.8
Catalysts: Banking on property projects
Kerjaya is eyeing at least MYR1.0b worth of new contracts this year and Market capitalisation MYR2.3B
it could leverage on its relationship with notable property developers to USD583M
replenish its orderbook from property development by the latter. As Major shareholders:
Kerjaya is equipped with own machinery and equipment, this should help Egovision Sdn. Bhd. 50.1%
the Group to maintain its leading industry profit margin of about 12-13%, Amazing Parade Sdn. Bhd. 20.3%
Eastspring Investments Bhd. 3.0%
while ensuring timely execution and delivery. Meanwhile, its property
Malaysia
arm has a few more projects in the pipeline namely Genting Permai and Price Performance
Monterez, Shah Alam year to be launched this year with a total GDV of 4.50 320
MYR500m.
4.00 280
Valuations: Net cash position 3.50 240
Kerjaya reported a 9M17 net profit of MYR96.2m (+30% YoY) and 3.00 200
consensus forecasts an FY17 net profit of MYR129m, with a 2-year (FY17- 2.50 160
19E) net profit CAGR of 18%. Kerjaya sits on net cash of MYR163m end-
2.00 120
Sep 2017, or 32sen/share. At current share price, the stock trades at a
prospective FY18 PER of 15.5x, based on consensus estimates. 1.50 80
Kerjaya Prospek - (LHS, MYR)
Risks: A weak property market Kerjaya Prospek / Kuala Lumpur Composite Index - (RHS, %)
The outlook for the premium property segment remains challenging in -1M -3M -12M
view of the current oversupply/weak demand situation. Thus, Kerjaya’s Absolute (%) 3 7 88
construction orderbook replenishment could be adversely affected by the Relative to index (%) (2) 3 73
lack of new property launches stemming from slower sales and/or Source: FactSet
potential regulatory curbs for the high end segment.
FYE Dec (MYR m) FY12A FY13A FY14A FY15A FY16A

Revenue 158 42 62 79 799
EBITDA 23 13 20 20 123
Core EPS (sen) 25.8 12.7 16.9 17.7 26.8
Core EPS growth (%) 215.9 (50.9) 33.7 4.7 51.0
Net DPS (sen) 0.0 0.0 3.0 3.0 4.0
Core P/E (x) 15.9 32.4 24.2 23.1 15.3
P/BV (x) 5.1 4.6 4.0 3.5 2.9
ROAA (%) 20.9 9.6 13.9 11.9 16.4
EV/EBITDA (x) na nm 3.1 7.4 5.8
Mohd Hafiz Hassan

(603) 2082 6819
57
Kimlun Corporation (KICB MK)
BUY
Positive sentiments ahead Share Price
12m Price Target
MYR 2.30
MYR 2.61 (+13%)
Investment case: A value BUY Company Description

Kimlun Corp engages in the engineering and
Kimlun’s diversification into infrastructure construction from property
construction services and is a manufacturer of
construction has paid dividends, securing packages from high profile concrete products.
infrastructure projects such as the Pan Borneo Sarawak Highway and
KVMRT 2. It is still vying for potential work packages from the ECRL, KL-
Construction
SG HSR, Pan Borneo Sabah Highway and the affordable housing segment Statistics
(PPA1M, PR1MA). Kimlun’s valuations remain undemanding with the stock Shariah status Yes
trading at a 38% discount to the KLCON Index FY18 PER of 14.3x. BUY. 52w high/low (MYR) 2.40/2.08
Free float (%) 30.1
Catalysts: Growing construction segment supported
by recovery in manufacturing earnings Market capitalisation MYR737.5M
Kimlun’s outstanding orderbook of MYR2.05b as of end-Sept 2017 would USD185M
continue to support earnings growth into FY18E as works recognition Major shareholders:
from major projects accelerate. Kimlun is also vying for work packages PHIN Sdn. Bhd. 36.4%
PANG KHANG HAU 5.9%
from Pan Borneo Sabah Highway, ECRL, KL-SG HSR and the affordable
PANG YON TIN 5.2%
Malaysia
housing segment (PR1MA, PPA1M). Additionally, its manufacturing division

is expected to report stronger earnings in FY18 after a lacklustre Price Performance
performance in FY17 due to the completion of major projects in early 2.40 200
2017, while supplies to KVMRT 2 only began in 4Q17. Leveraging on its

2.20 180
proven track record in Singapore, Kimlun is also eyeing for further
precast jobs from the MRT expansion project, DTTS 2 and KVLRT 3. 2.00 160
1.80 140
Valuations: Undemanding 1.60 120
Valuations remain undemanding with Kimlun trading at 8.8x FY18 PER (5-
1.40 100
year mean), a 38% discount to the Malaysia KLCON Index’s 14.3x FY18
PER (based on Bloomberg consensus figures). We have a BUY on Kimlun 1.20
80
with a TP of MYR2.61 pegged to 10x FY18 PER (+0.5SD). Stronger-than-

expected earnings in FY18 could further re-rate the stock. Kimlun - (LHS, MYR) Kimlun / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M

Risks: Project progress and cost-related issues Absolute (%) 0 0 7
Risks to earnings from i) slower-than-expected progress of projects and Relative to index (%) (6) (4) (2)
ii) slower recovery of manufacturing earnings. Significant movements in Source: FactSet
raw material prices and intense competition on the precast business

could also lead to margin compression.

Revenue 1,054 941 1,238 1,216 1,163
EBITDA 113 131 109 126 129
Core EPS (sen) 21.4 26.4 22.0 26.1 26.6
Core EPS growth (%) 90.5 23.0 (16.8) 18.9 2.0
Net DPS (sen) 5.8 6.5 5.9 7.1 7.2
Core P/E (x) 10.7 8.7 10.5 8.8 8.6
P/BV (x) 1.5 1.3 1.2 1.1 1.0
ROAA (%) 6.8 8.2 6.3 6.9 6.8
EV/EBITDA (x) 4.3 5.1 6.7 5.9 5.2
Net gearing (%) (incl perps) 14.3 6.7 4.2 6.1 net cash
MKE vs. Consensus (%) - - 6.3 0.1 (0.6)

(603) 2297 8675 (603) 2297 8686
58
KLCCP Stapled Group (KLCCSS MK)
HOLD
Standing tall Share Price
12m Price Target
MYR 7.85
MYR 7.95 (+1%)
Investment case: Resilient office towers Company Description

KLCCP principally invests in and manages a portfolio
KLCCP continues to be the largest security in the Malaysia REITs sector,
of real-estate assets, such as offices, retail and
constituting 1/3 of the sector’s market capitalisation. Its portfolio largely hotels.
consists of high quality office towers within the prominent Kuala Lumpur
city centre (i.e. PETRONAS Twin Towers) which are on long-term and
triple net lease structures - providing resilient rental income to KLCCP. Statistics
HOLD with DDM-TP of MYR7.95. Shariah status Yes
52w high/low (MYR) 8.64/7.70
Catalysts: Mid-term quality injections 3m avg turnover (USDm) 0.8
REITs
Free float (%) 23.3

Major earnings growth catalysts could come from the sizeable pipeline of Issued shares (m) 1,805
new assets from its parent (KLCC Holdings) such as Lot 185 (JV with Market capitalisation MYR14.2B
Qatari Diar) and Lot 91 (JV with Sapura Resources). Meanwhile, the USD3.6B
redevelopment of City Point, Kompleks Dayabumi is also on the way. Major shareholders:
These developments are expected to be completed by 2020. Separately, Petroliam Nasional Bhd 75.5%
we also anticipate earnings growth from its prime shopping mall, Suria Permodalan Nasional Bhd 7.6%
KLCC, via sustained occupancy rates and positive rental reversions –
Malaysia
backed by its prominent location in the city centre which entails strong Price Performance
shopper traffic and high demand for its retail space. 8.8 145
8.6 140
Valuations: P/NAV and gearing are undemanding 8.4 135

8.2 130
KLCCP trades at an FY18E P/NAV of 1.0x which is comparable to the 8.0 125
sector average of 1.1x. Elsewhere, we estimate end-FY18 gross gearing 7.8 120
7.6 115
at 0.14x which provides sizeable debt headroom for future asset
7.4 110
acquisition(s). Share price is supported by its FY18 net dividend yield of 7.2 105
4.4%. 7.0 100
6.8 95
Risks: Minimal, on retail and hospitality KLCCP Stapled Group - (LHS, MYR)
KLCCP Stapled Group / Kuala Lumpur Composite Index - (RHS, %)
Key risk to earnings would be occupancy risks at (i) Suria KLCC – due to
the oversupply of retail malls in the Klang Valley, and (ii) Mandarin -1M -3M -12M
Oriental – from the oversupply of hotel rooms from surrounding hotels. Absolute (%) 1 1 1
That said, their strategic location provides a comfort. Elsewhere, its Relative to index (%) (5) (3) (8)
office segment’s earnings remain resilient due to the long-term lease Source: FactSet
structures of its office towers.

Revenue 1,340 1,344 1,423 1,495 1,537
Net property income 1,004 1,020 1,068 1,107 1,157
Core net profit 725 719 721 741 766
Core EPU (sen) 40.1 39.8 39.9 41.0 42.4
Core EPU growth (%) 5.1 (0.8) 0.2 2.8 3.5
Net DPU (sen) 32.5 33.4 33.2 34.2 35.4
Net DPU growth (%) 2.6 2.7 (0.5) 3.0 3.7
P/NTA (x) 1.1 1.1 1.1 1.0 1.0
Net DPU yield (%) 4.1 4.3 4.2 4.4 4.5
ROAE (%) 9.2 7.0 5.5 5.4 5.4
ROAA (%) 4.2 4.1 4.0 4.1 4.2
Debt/Assets (x) 0.15 0.14 0.14 0.14 0.14
Consensus Net DPU - - 31.8 32.9 34.9
MKE vs. Consensus (%) - - 4.3 3.9 1.6
Kevin Wong
(603) 2082 6824
59
Mah Sing Group (MSGB MK)
HOLD
Proven “fast turnaround” Share Price
12m Price Target
MYR 1.49
MYR 1.44 (-3%)
strategy Previous Price Target MYR 1.44
Investment case: Focus on affordable housing Company Description

Mah Sing Group Bhd is principally involved in
One notable feature of MSGB is its proven “fast turnaround” strategy
property development and plastic manufacturing
which enables it to monetize land value, generate strong cash flows businesses.
within a short period, and lower upfront costs. MSGB has exposure to the
three key growth areas in Malaysia, namely Klang Valley, Iskandar in
Johor and Penang. It has sealed two land acquisitions worth MYR3.5b in Statistics
Real Estate
GDV in 2017 to meet affordable housing demand. We value Mah Sing at Shariah status Yes
an unchanged MYR1.44 RNAV-TP (on 0.6x P/RNAV). Reiterate HOLD. 52w high/low (MYR) 1.62/1.39
Free float (%) 56.3
Catalysts: On track to meet MYR1.8b sales target
Management is on track to achieve its 2017 sales target of MYR1.8b with Market capitalisation MYR3.6B
locked in sales of MYR1.26b in 9M17 (70% of 2017 sales target) in view of USD907M
the decent responses to its new projects - M Centura, M Vertica, M Vista Major shareholders:
and Fern in Meridin East. Management is actively looking for new Mayang Teratai Sdn. Bhd. 27.0%
landbank for both township and fast-turnaround developments, we Permodalan Nasional Bhd. 14.8%
understand. We expect a +1sen/shr enhancement in our RNAV estimate
Malaysia
for every MRY500m in GDV worth of new projects, assuming a Price Performance
development period of 5 years and an 18% pretax margin. 1.70 135
1.65 130
Valuations: Fairly priced 1.60 125

1.55 120
We value Mah Sing at 0.6x P/RNAV. This is in line with the P/RNAV peg
1.50 115
that we have assigned to big cap entrepreneur-driven developers. MSGB’s 1.45 110
near term focus will continue to be on affordable housing, we 1.40 105
understand. As at end-Sep 2017, MSGB had unbilled sales of MYR2.8b 1.35 100
which is 0.9x of our FY18F revenue forecast. 1.30 95
1.25 90
Risks: Intensifying competition in affordable housing Mah Sing Group - (LHS, MYR)
Mah Sing Group / Kuala Lumpur Composite Index - (RHS, %)
We have turned cautious on the affordable housing segment in view of
the high volume of new properties launched under this segment in recent -1M -3M -12M
years, as developers have been switching their focus. In addition to the Absolute (%) 1 (1) 1
private sector developers, the various state governments and the federal Relative to index (%) (4) (5) (7)
government also have their respective affordable housing schemes which Source: FactSet
add onto the stockpile.

Revenue 3,109 2,958 2,980 3,117 2,937
EBITDA 528 509 585 657 614
Core net profit 339 320 291 334 297
Core FDEPS (sen) 14.1 13.3 12.1 13.8 12.3
Core FDEPS growth(%) (23.5) (5.7) (8.8) 14.5 (10.9)
Net DPS (sen) 6.5 6.5 4.8 5.5 4.9
Core FD P/E (x) 10.6 11.2 12.3 10.8 12.1
P/BV (x) 1.1 1.1 1.0 1.0 0.9
ROAA (%) 5.7 5.0 4.3 4.6 4.0
EV/EBITDA (x) 6.9 6.9 5.0 4.3 4.2
Net gearing (%) (incl perps) 3.7 2.0 net cash net cash net cash
MKE vs. Consensus (%) - - (16.4) 0.0 (13.7)
Wong Wei Sum, CFA

(603) 2297 8679
60
Malaysia Airports (MAHB MK)
SELL
Operational challenges in 2018 Share Price
12m Price Target
MYR 8.99
MYR 7.93 (-12%)
Investment case: Operation risk tilting to the upside Company Description

Malaysia Airports Holdings Bhd. manages and
Operational risk is tilting to the upside as many key domestic airports are
operates airports in Malaysia and Turkey.
currently operating above their design capacity and we are concerned
over potential penalties from MAVCOM should service levels drop below
thresholds as the quality of service framework will commence in 3Q18.
The positives have been factored in, we believe, and MAHB now trades Statistics
above our DCF-TP of MYR7.93 - hence, a SELL. 52w high/low (MYR) 9.40/6.15
Transport

Free float (%) 60.5
Catalysts: Three pillars of revenue growth
The PSC equalisation for all long-haul flights will provide an additional Market capitalisation MYR14.9B
MYR105m of revenue in 2018, by our estimate. MAHB is unlikely to USD3.7B
continue with its airline assistance incentive programme that expired at Major shareholders:
the end of 2017 and this could help it save a further MYR20m-30m. Its Khazanah Nasional Bhd. (Investment Compa 36.7%
Turkish operations are also progressing well and the proportion of Permodalan Nasional Bhd. 17.7%
international passenger mix is steadily recovering to historical levels.
Malaysia
Price Performance
Valuations: Rich relative to its historicals 9.5 170
MAHB currently trades at an FY18 PER of 34x, which is well above its 9.0 160
long-term forward PER mean of 21x. On an EV/EBITDA basis, it trades at 8.5 150
8.7x vs. peers’ 13x but it is important to note that MAHB’s debt burden is 8.0 140
considerably higher than peers. Our TP of MYR7.93 is DCF-based (WACC: 7.5 130
9.2%, terminal growth: 2%). 7.0 120
6.5 110
Risks: Faster traffic growth, lower operating costs 6.0 100
5.5 90
Upside risks to our earnings forecasts include: 1) passenger traffic growth Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
exceeding 7% in 2018; 2) MAHB pays just modest amount of airline Malaysia Airports - (LHS, MYR)
Malaysia Airports / Kuala Lumpur Composite Index - (RHS, %)
incentives; and 3) lower-than-expected operating cost variables, such as
staff and maintenance costs. -1M -3M -12M
Absolute (%) 9 8 47
Source: FactSet

Revenue 3,870 4,173 4,545 4,971 5,294
EBITDA 1,342 1,489 1,643 1,851 1,917
Core net profit (113) 48 235 436 503
Core EPS (sen) (7.1) 2.9 14.1 26.3 30.3
Core EPS growth (%) nm nm 386.7 86.0 15.3
Net DPS (sen) 1.0 1.7 8.3 9.0 12.0
Core P/E (x) nm 310.2 63.7 34.3 29.7
P/BV (x) 1.6 1.7 1.7 1.7 1.6
ROAE (%) 0.5 0.8 3.6 5.6 6.2
ROAA (%) (0.5) 0.2 1.1 2.1 2.4
EV/EBITDA (x) 10.1 9.4 11.5 9.8 9.0
MKE vs. Consensus (%) - - (13.6) 8.7 (8.2)
Mohshin Aziz
mohshin.aziz@maybank-ib.com
(603) 2297 8692
61
ManagePay Systems (MPSB MK)
Not Rated
A major Fintech player in the Share Price MYR 0.23
making
Investment case: First mover advantage Company Description
ManagePay Systems is an investment holding
Having secured numerous licences from the authorities, and having been
company, which engages in the provision of
in compliance since 2013 with PCIDSS Level 1, which is the highest
electronic payment solutions.
security standard for the payments industry, ManagePay (MPay) is
strongly positioned to establish its reputation as a serious provider of
Fintech solutions, not only in Malaysia, but in ASEAN as well. MPay is NOT Statistics
Technology
RATED. Shariah status Yes

52w high/low (MYR) 0.29/0.19
Catalysts: New licences pave the way for expansion 3m avg turnover (USDm) 0.3
Free float (%) 74
MPay received approval from Bank Negara (BNM) to operate its payment Issued shares (m) 710
systems in 2013 and for the issuance of e-Money in 2015, which has since Market capitalisation MYR163.4M
enabled it to package an end-to-end ecosystem to retailers in Malaysia. USD41M
2016 saw the award of a Domestic Remittance License by BNM and the Major shareholders:
inaugural Peer-to-Peer Financing Market Operator Licence by the Dato’ Chew Chee Seng 21.2%
Securities Commission. These licenses have essentially paved the way for
MPay’s business transformation into a serious Fintech player in the
Malaysia
industry, with much potential to establish itself as a major regional end- Price Performance
to-end payment and financial service solution and services provider. 0.300 135
0.280 125
Valuations: Still loss-making presently 0.260 115
In the midst of scaling up its business, MPay is still loss-making at this 0.240 105
stage, with a net loss of MYR7.1m for 9M17. Against a net book value of 0.220 95
MYR0.13/shr as at end-Sep 2017, the group trades at a historical P/BV of 0.200 85
1.8x. 0.180 75
0.160 65
Risks: Ensuring a sustainable ecosystem 0.140

55
One of the challenges for MPay is in ensuring the speedy launch of new
products as well as in securing new customers for its products and Managepay - (LHS, MYR) Managepay / Kuala Lumpur Composite Index - (RHS, %)
services. What is also a challenge would be in building a sustainable -1M -3M -12M
ecosystem for its Fintech businesses. Absolute (%) 7 (10) 15
Relative to index (%) 1 (13) 6
Source: FactSet
FY E Dec (MY R m) FY 12A FY 13A FY 14A FY 15A FY 16A

Revenue 7.6 8.8 10.6 8.7 6.1
EBITDA 2.4 3.1 5.4 (7.9) (2.2)
Net profit 0.1 0.9 1.3 (11.1) (4.4)
EPS (sen) 0.0 0.3 0.3 (2.1) (0.6)
EPS growth (%) nm >100 26.9 nm (70.0)
Net DPS (sen) - - - - -
P/E (x) 575.0 88.5 69.7 nm nm
P/BV (x) 1.9 1.9 1.8 1.5 1.6
Net dividend yield (%) - - - - -
ROAE (%) 0.4 2.1 2.7 (14.1) (4.3)
ROAA (%) 0.4 2.1 2.5 (13.4) (4.1)
EV/EBITDA (x) 1.4 1.5 1.5 1.3 1.4
Net debt/equity (%) net cash net cash net cash net cash net cash
Desmond Ch’ng, ACA

(603) 2297 8680
62
Malayan Banking (MAY MK)
Not Rated
Regional ambitions Share Price MYR 9.84
Investment case: Geographically positioned in ASEAN Company Description

Malayan Banking provides investment and commercial
Maybank is one of the most geographically diversified banking groups in
banking, and financial services.
ASEAN and it is positioned for eventual regional liberalization.
International operations accounted for 29% of group pretax profit in
9M17, with the largest contributors being Singapore (10%) and Indonesia
(9%). Maybank is NOT RATED. Statistics
52w high/low (MYR) 9.85/8.05
Catalysts: High capital base 3m avg turnover (USDm) 26.2
Free float (%) 931,791.4
Banks
With one of the highest capital ratios in the industry (CET1 ratio of 13.5% Issued shares (m) 9,319
end-Sep 2017), Maybank is positioned to capture business opportunities Market capitalisation MYR91.7B
moving forward and to expand market share domestically and reach USD23.0B
abroad. Earnings wise, consensus is looking at a 2-year (FY17-19E) CAGR Major shareholders:
of 8%. Upside potential, if any, could emanate from lower-than-expected Permodalan Nasional Bhd. 39.0%
credit costs, especially from improved asset quality in the O&G sector, Employees Provident Fund 12.3%
Bumiputra Investment Foundation 6.4%
and/or further NIM expansion.
Malaysia
Price Performance
Valuations: Over 5% dividend yields 10.0 110
Maybank’s Dividend Reinvestment Plan (DRP) has accorded it with a high

9.5 105
dividend payout ratio that has averaged 76% over the past five years.
Yields are also one of the highest in the industry at over 5%. According to 9.0 100
consensus estimates, Maybank currently trades at a prospect FY18 PER of
8.5 95
13.6x, and a P/BV of 1.4x for a prospective ROE of 10.2%.
8.0 90
Risks: Economic slowdown
7.5 85
As the largest bank in Malaysia, Maybank is essentially a barometer of Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
the economic health of the country. Any slowdown in domestic activity Malayan Banking - (LHS, MYR)
Malayan Banking / Kuala Lumpur Composite Index - (RHS, %)
would undoubtedly affect earnings. Meanwhile, volatility in oil prices
could further affect activity in the O&G sector, leading to prolonged -1M -3M -12M
asset quality issues for the local banking industry. Absolute (%) 6 3 19
Relative to index (%) 0 (1) 9
Source: FactSet

Core net profit 5,746 6,552 6,716 6,489 6,118
Core EPS (sen) 68.1 73.9 72.1 66.5 60.0
Core EPS growth (%) nm 8.6 (2.5) (7.8) (9.7)
Net DPS (sen) 52.5 53.5 57.0 54.0 52.0
P/E (x) 14.5 13.3 13.7 14.8 16.4
P/BV (x) 2.0 1.9 1.7 1.6 1.5
ROAE (%) 15.9 14.9 13.6 11.9 10.4
ROAA (%) 1.2 1.2 1.1 1.0 0.9
Desmond Ch’ng, ACA

(603) 2297 8680
63
Malaysian Resources Corp (MRC MK)
Not Rated
Four core businesses Share Price MYR 1.24
Investment case: Potentially stronger balance sheet Company Description

Malaysian Resources Corp. Bhd. is involved in
MRCB is the master developer for the KL Sentral mixed development cum
construction related activities, environmental
transportation hub. It has four core businesses, namely: (i) property; (ii) engineering, property development and investment.
engineering, construction and environment (E&C); (iii) infrastructure;
and (iv) facilities management & parking. In Sep 2017, majority of the
group’s profit was from the property division (52%), while E&C and Statistics
Real Estate
infrastructure contributed 19-21% each. According to MRCB, the potential Shariah status Yes
sale of the EDL highway could potentially turn it into a net cash position, 52w high/low (MYR) 1.55/0.81
from 0.35x net gearing post-rights issue. MRCB is NOT RATED. 3m avg turnover (USDm) 4.0
Free float (%) 82.6
Catalysts: Potential EDL sale, beneficiary of HSR
MRCB has been invited by the Ministry of Works to commence negotiation USD606M
for the mutual termination of the Eastern Dispersal Link (EDL) highway Major shareholders:
concession in Johor. According to MRCB, the EDL sale, would place the Employees Provident Fund 38.4%
group in a net cash position and allow it to re-deploy capital to other Gapurna Sdn. Bhd. 16.7%
businesses. Elsewhere, MRCB has teamed up with Gamuda (GAM MK,
Malaysia
BUY) to bid for the project delivery partner (PDP) role in the KL-SG high- Price Performance
speed rail (HSR) project. MRCB and Gamuda will have a 50% stake each in 1.60 150
the JV entity. As at Sep 2017, MRCB had an outstanding orderbook of 1.50 140
MYR5.3b (construction) and MYR1.6b unbilled sales (property). 1.40 130
Valuations: Stronger balance sheet post-rights issue 1.30 120
1.20 110
MRCB has completed the issuance of 2.2b new MRCB shares and 439m 1.10 100
new warrants B, pursuant to the rights issue exercise in Nov 2017. Total 1.00 90
proceeds of c.MYR1.7b from the rights issue are expected to lower its
0.90 80
net gearing from 1.1x (as at Sep 2017) to 0.35x. Consensus is projecting a
0.80 70
net profit growth of -58% in 2017 but +30-37% in 2018 and 2019. MRCB Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
presently trades at 40x 2018 PER, based on consensus estimates. Malaysian Resources Corp Bhd - (LHS, MYR)
Malaysian Resources Corp Bhd / Kuala Lumpur Composite Index - (RHS, %)
Risks: A weak property market -1M -3M -12M

Potential risks include 1) a prolonged slowdown in the property sector, 2) Absolute (%) 8 26 (6)
rising building/construction material prices which could hit its operating Relative to index (%) 4 20 (15)
margins; and 3) execution risks. Source: FactSet

Revenue 1,244 941 1,515 1,697 2,408
EBITDA 234 36 406 580 608
Net profit 60 (109) 153 330 267
EPS (sen) 3.8 (6.4) 7.8 16.1 12.0
EPS growth (%) (37.0) nm nm 107.2 (25.4)
Net DPS (sen) 1.8 0.9 2.2 2.2 2.4
P/E (x) 32.7 nm 15.9 7.7 10.3
P/BV (x) 1.4 1.4 1.3 1.1 1.0
ROAE (%) 4.2 (7.1) 8.4 15.5 10.3
ROAA (%) 1.1 (1.7) 2.2 4.7 3.7
Net debt/equity (%) 2.8 2.5 2.2 1.7 1.3
Source: Bloomberg, Company Annual Reports
Wong Wei Sum, CFA

(603) 2297 8679
64
Maxis Bhd (MAXIS MK)
HOLD
Monetising well Share Price
12m Price Target
MYR 6.01
MYR 6.20 (+3%)
Investment case: The premier mobile telco Company Description

Maxis is a leading mobile telecommunication
Maxis positions itself at the top end of the market by leveraging on its
Telecommunications
company in Malaysia.
network superiority. Its monetisation efforts are impressive, having
gained revenue share for three consecutive years. We have a HOLD
rating with a DCF-based TP of MYR6.20.
Statistics
Catalysts: Revenue growth, dividend surprises? Shariah status Yes
52w high/low (MYR) 6.57/5.49
The termination of UMobile’s 3G RAN sharing (over 18 months) by end- 3m avg turnover (USDm) 5.4
2018 could potentially result in c.3% of foregone revenue on an annual Free float (%) 34.8
basis. Thus, Maxis delivering revenue growth in 2018 would likely be seen Issued shares (m) 7,811
in a positive light. Market capitalisation MYR46.9B
With its enhanced balance sheet health (post its equity-raising in Jul USD11.8B
2017) and the announcement of non-punitive 700MHz spectrum fees, Major shareholders:
Binariang GSM Sdn. Bhd. 64.9%
there is theoretically scope for Maxis to raise dividends from the present Permodalan Nasional Bhd. 10.8%
20sen annual DPS. Employees Provident Fund 6.5%
Malaysia
Price Performance
Valuations: Fairly valued, below historical mean
6.80 115
Maxis’ previously lofty EV/EBITDA multiples were partly supported by an
6.60 110
aggressive (but unsustainable) dividend payout. Maxis is presently trading
6.40 105
at an FY18E EV/EBITDA of 11.5x, i.e. 0.9x below its 3-year mean of
6.20 100
12.4x, while dividend yield is at slightly above mean of 3.2%. The current
6.00 95
valuation discount is partly attributable to the slight value dilution
5.80 90
arising from its primary placement exercise in Jul 2017.
5.60 85
5.40 80
Risks: Competition and spectrum allocation 5.20 75
The key risk revolves around competition hypothetically intensifying in
the Malaysia mobile space. This would have an adverse impact on Maxis’ Maxis - (LHS, MYR) Maxis / Kuala Lumpur Composite Index - (RHS, %)
ability to monetise optimally. An additional risk is if Maxis hypothetically

-1M -3M -12M
receives a lower allocation (relative to peers) of the reasonably-priced
Absolute (%) 1 3 (2)
700MHz spectrum.
Source: FactSet

Revenue 8,601 8,612 8,795 8,974 9,151
EBITDA 4,398 4,469 4,573 4,666 4,758
Core net profit 1,810 1,928 2,061 2,006 2,089
Core EPS (sen) 24.1 25.7 26.4 25.7 26.7
Core EPS growth (%) 4.3 6.5 2.8 (2.6) 4.1
Net DPS (sen) 20.0 20.0 20.0 20.0 20.0
Core P/E (x) 24.9 23.4 22.8 23.4 22.5
P/BV (x) 10.8 9.6 6.8 6.4 5.9
ROAE (%) 39.1 45.2 35.3 28.0 27.3
ROAA (%) 9.8 10.0 10.1 9.4 9.5
EV/EBITDA (x) 13.6 12.1 11.8 11.5 11.1
MKE vs. Consensus (%) - - 0.9 0.2 7.4

(603) 2297 8690 (603) 2297 8641
January 12, 2018 65
MMC Corporation (MMC MK)
Not Rated
A diversified conglomerate Share Price MYR 2.11
Investment case: Earnings turnaround potential Company Description

A conglomerate with businesses in ports,
MMC stands to benefit from strong trade growth given its four port assets construction and power.
across Peninsular Malaysia. It is also an important infrastructure proxy
with an outstanding construction orderbook of c.MYR20b. Consensus
expects earnings recovery in 2018 on better port throughput and higher
recognition of construction works (KVMRT 2, Pan Borneo Sabah Highway). Statistics
Industrials
The stock presently trades at 14x 2018 PER. MMC is NOT RATED. Shariah status Yes
52w high/low (MYR) 2.60/1.78
Catalysts: Strong trade growth/construction jobs 3m avg turnover (USDm) 0.4
Free float (%) 42.6
Key catalysts include: (i) strong local/global trade growth which would Issued shares (m) 3,045
see spillover to container throughput at the ports (PTP: +1% YoY in 9M17; Market capitalisation MYR6.3B
Johor Port: +8%, Northport: -6%, Penang Port: +7%)); and (ii) strong USD1.6B
construction orderbook replenishment. Together with its JV partner Major shareholders:
Gamuda, MMC is a contender for the KVMRT 3 tunnelling jobs; (iii) AL BUKHARY SERI SYED MOKHTAR SHAH BIN SY 51.8%
potential listing of its port assets in 2018-19, which could unlock value Permodalan Nasional Bhd. 21.6%
for MMC and reduce its gearing level (net gearing: 85% as at Sep 2017).
Malaysia
Price Performance
Valuations: 14x 2018 PER
Consensus projects an FY18 net profit of MYR438m, 34% higher than -1M -3M -12M
FY17E net profit but 20% below that of 2016 (boosted by land sale gain). Absolute (%) na na na
In terms of PER valuation, the stock trades at 14x 2018 PER, based on Relative to index (%) na na na
consensus estimates and a prospective FY18E P/BV of 0.6x. Source: FactSet
Risks: A slowdown in trade and economic activity

Key risks include: (i) slower trade growth; (ii) poor execution of its
construction jobs; and (iii) a weaker property market which could
undermine its land value in Johor.

Revenue 9,199 7,445 8,766 5,057 4,627
EBITDA 4,081 2,586 3,469 3,416 1,613
Net profit 922 224 493 1,669 550
EPS (sen) 30.3 7.3 16.2 54.8 18.1
EPS growth (%) 178.0 (75.9) 121.9 238.3 (67.0)
Net DPS (sen) 4.0 3.8 3.5 3.0 4.5
P/E (x) 6.9 28.6 12.9 3.8 11.5
P/BV (x) 0.9 0.9 0.8 0.7 0.7
ROAE (%) 13.9 3.2 6.7 20.2 5.9
ROAA (%) 2.4 0.5 1.1 5.0 2.5
EV/EBITDA (x) 0.8 3.6 3.6 1.5 1.5
Net debt/equity (%) net cash 2.7 2.8 0.8 0.8
Lee Yen Ling

(603) 2297 8691
66
OCK Group (OCK MK)
Not Rated
Building an ASEAN towerco Share Price MYR 0.90
Investment case: Full-fledged network service provider Statistics

Shariah status Yes
OCK is Malaysia’s largest telecommunication network service provider
Telecommunications
52w high/low (MYR) 0.98/0.76

with more than one-third of the group’s revenue sourced regionally (35% 3m avg turnover (USDm) 0.1
of 9M17 total revenue). OCK also operates solar farms in Malaysia and Free float (%) 54.5
provides mechanical and electrical engineering services. Over the years, Issued shares (m) 871
OCK has diversified its business into tower leasing. Re-rating catalysts Market capitalisation MYR780.0M
could stem from sustained earnings delivery, potential M&As in the USD196M
towerco space, and additional site tenancies. The stock is NOT RATED. Major shareholders:
Aliran Armada Sdn. Bhd. 36.7%
12.4%
Catalysts: Growth anchored by its tenant addition Lembaga Tabung Angkatan Tentera
Affin Hwang Asset Management Bhd. 3.7%
OCK derives the bulk of its revenue from providing telecommunication
network services, which made up of 88% of 9M17 revenue. To date, OCK Price Performance
has approximately 2,845 towers in Malaysia, Myanmar and Vietnam, and 1.00 160
has contracted another ~3,400 towers. Revenue contribution from the 0.95 150
recurring tower leasing business has widened to 22% of 9M17 group total 0.90 140
revenue (from just 4% in FY16). OCK’s earnings upside can be driven by
Malaysia
0.85 130
improved tenancies in Myanmar and Vietnam. In Myanmar, OCK has
0.80 120
secured a built-to-lease and co-location agreement with MPT (largest
0.75 110
telco operator in Myanmar) and a new player, Mytel. OCK is currently in
talks with Ooredoo to be the fourth tenant. Additionally, in Vietnam, OCK 0.70 100
is in discussion to acquire smaller towercos. 0.65 90

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18
Valuations: Prospective PER of 23x OCK Group - (LHS, MYR) OCK Group / Kuala Lumpur Composite Index - (RHS, %)
Consensus projects a 2-year (FY17-19E) net profit CAGR of 6% -1M -3M -12M
underpinned by its regional expansion. Valuation wise, OCK trades at a Absolute (%) 1 1 16
prospective FY18 PER of 23x, based on consensus estimates. Relative to index (%) (4) (3) 7
Source: FactSet
Risks: Execution risks

Key risks include 1) delay in site execution, 2) consolidation within the
telco space, and 3) margin pressure.

Revenue 138.6 152.2 185.9 315.9 401.5
EBITDA 22.4 26.0 32.3 50.6 62.5
Net profit 13.1 13.6 15.6 24.8 26.6
EPS (sen) 3.0 2.9 2.9 4.6 3.2
EPS growth (%) nm (2.0) (1.7) 61.0 (30.1)
Net DPS (sen) 0.5 - - - 0.6
P/E (x) 30.2 30.8 31.4 19.5 27.9
P/BV (x) 7.1 5.5 3.0 2.1 1.9
Net dividend yield (%) 0.6 - - - 0.7
ROAE (%) 35.3 20.0 12.1 9.7 7.1
ROAA (%) 13.5 8.7 6.4 5.9 3.9
EV/EBITDA (x) 4.6 3.7 2.6 1.9 1.9
Net debt/equity (%) 0.4 0.4 net cash net cash 0.0
Syairah Malek
syairah.am@maybank-ib.com
(603) 2297 8641
67
Padini Holding (PAD MK)
HOLD
Steadily growing Share Price
12m Price Target
MYR 5.32
MYR 4.75 (-11%)
Investment case: Maintaining its prominent position Company Description

Consumer Discretionary
Padini is the owner and operator of fashion retail

Padini is a prominent chain fashion retailer in Malaysia, offering
outlets such as Padini, Brands Outlet, Seed and
competitively-priced merchandises which appeal to the mass market. We Vincci.
expect Padini’s Malaysian outlets (which contribute to over 90% of
Padini’s revenue p.a.) to drive its near- to mid-term earnings growth via
organic sales volume growth and new outlet openings. HOLD with Statistics
MYR4.75 TP (pegged to 17x FY18 PER, +2SD to mean). Shariah status Yes
52w high/low (MYR) 5.46/2.29
Catalysts: Larger domestic base 3m avg turnover (USDm) 1.2
Free float (%) 50.5
We expect Padini’s near-term earnings to be mainly driven by (i) stronger Issued shares (m) 658
organic growth which will be supported by year-long promotions (i.e. Market capitalisation MYR3.5B
bundling offers, discounts), and (ii) establishing new outlets every year USD878M
(opened 13 new stores in FY17 and plans for at least 12 outlets in FY18). Major shareholders:
Meanwhile, Padini intends to maintain its strategy to offer merchandise Yong Pang Chaun Holdings Sdn Bhd 43.7%
at competitive prices. This, in turn, could maintain/nudge up its market Thian Min Yang 2.9%
FMR LLC 2.6%
share in Malaysia. We are projecting FY18-20 EPS growth of 2%-14% YoY.
Malaysia
Price Performance
Valuations: Neutral for now 5.50 400
We believe Padini’s current valuation of 20x CY18 PER (vs. 3-year 5.00 360
earnings CAGR of 7%) is fair. Nevertheless, its balance sheet remains 4.50 320
strong with net cash of 39sen/share (end-Aug 2017). This would sustain 4.00 280
our estimated near-term DPS of 10.0sen p.a. (ex- special distributions). 3.50 240
3.00 200
Risks: Slower consumer spending 2.50 160
2.00 120
Padini’s sales volume would be affected by slower consumer spending
1.50 80
(due to higher cost of living, economy downturn, etc.). However, we Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
believe Padini’s sales would be more resilient as compared to its

Padini - (LHS, MYR) Padini / Kuala Lumpur Composite Index - (RHS, %)
competitors as most of its merchandises have competitive price tags
which continue to appeal to most income groups. -1M -3M -12M
Absolute (%) 4 18 111
Source: FactSet

Revenue 1,301 1,571 1,794 2,019 2,206
EBITDA 222 249 283 306 319
Core net profit 138 156 178 188 192
Core EPS (sen) 21.0 23.7 27.0 28.6 29.2
Core EPS growth (%) 71.9 13.2 13.9 6.0 2.0
Net DPS (sen) 11.5 11.5 10.0 10.0 10.0
Core P/E (x) 25.4 22.4 19.7 18.6 18.2
P/BV (x) 7.5 6.3 5.3 4.4 3.8
ROAE (%) 31.4 30.8 29.2 25.9 22.3
ROAA (%) 19.7 18.6 18.7 17.1 15.3
EV/EBITDA (x) 5.8 7.8 10.8 9.7 9.0
MKE vs. Consensus (%) - - (2.9) (7.1) (14.1)
Kevin Wong
(603) 2082 6824
68
PECCA Group (PECCA MK)
BUY
The Myvi factor Share Price
12m Price Target
MYR 1.56
MYR 1.80 (+15%)
Investment case: Rising adoption of leather car seats Company Description

Pecca is involved in the styling, manufacturing,
Pecca is a market leader in the oligopolistic leather car upholstery
distribution & installation of leather car seat covers,
market, commanding >50% market share with its attractive and patented
primarily for the Msia's automotive industry.
product offerings (i.e. Quick Fit, Smart Fit). Despite its dominance,
there is still plenty of room for growth given >60% of passenger vehicles
produced in Malaysia still come with standard fabric upholstery. As the
Automotive
Statistics
perceived value of leather upholstery by consumers is usually higher than Shariah status Yes
its cost, car manufacturers have been increasingly offering it to induce 52w high/low (MYR) 1.70/1.30
sales, rather than cash rebates, which hurt secondary car market values. 3m avg turnover (USDm) 0.1
We maintain a BUY on Pecca. Free float (%) 49.0
Catalysts: Riding on Perodua’s bestseller model Market capitalisation MYR293.3M
Pecca is the sole supplier of leather car seat covers to Perodua which USD74M
launched its all-time bestseller model, the new Myvi, in mid-Nov 2017. Major shareholders:
Since then, Perodua has recorded 28k bookings for the Myvi with over 8k MRZ Leather Holdings Sdn. Bhd. 45.6%
RHB Asset Management Sdn. Bhd. 6.9%
units delivered by end-2017; we have assumed avg. monthly sales of 5.8k
Malaysia
CIMB-Principal Asset Management Bhd. 5.5%

units in 2018. To spice it up further for Pecca, it was also revealed in a
recent interview with Perodua’s CEO that 85% of buyers for the new Myvi Price Performance
opted for the 1.5L variants (i.e. Premium and Advance). Due to a narrow 2.10 150
price gap between the two 1.5L variants (additional MYR3,500 for 1.5L 2.00 140
Advance variant), we believe that Myvi buyers will likely opt for the 1.90 130
Advance variant which comes with (i) standard leather car seats and (ii) 1.80 120
Advance Safety Assist (a feature that cannot be added externally). 1.70 110
1.60 100
Valuations: Supported by a huge cash ‘war chest’ 1.50 90
Currently trading at 9x CY18 ex-cash PER (MYR93m net cash end-FY17), 1.40 80
valuations are inexpensive. Our target PER peg of 14.5x is based on 20% 1.30
Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
70
above peers valuation. Dividend yield is a decent 3.8% (55% DPR). PECCA Group - (LHS, MYR)
PECCA Group / Kuala Lumpur Composite Index - (RHS, %)
Risks: Externally driven -1M -3M -12M

A sudden dip in consumer sentiment could impact the purchase of cars, Absolute (%) 2 4 (1)
especially the higher-end model variants which come with leather seats. Relative to index (%) (4) 0 (9)
Leather hide prices have been depressed in recent years; a rebound in Source: FactSet
prices would raise input costs for Pecca which would be unfavourable.

Revenue 126 122 145 151 159
EBITDA 23 21 29 32 34
Core EPS (sen) 8.8 7.9 10.8 11.8 13.0
Core EPS growth (%) (8.0) (10.5) 37.6 9.2 9.9
Net DPS (sen) 4.0 5.0 6.0 6.0 7.0
Core P/E (x) 17.8 19.9 14.4 13.2 12.0
P/BV (x) 1.9 1.8 1.7 1.6 1.5
ROAE (%) 12.7 9.2 11.9 12.3 12.7
ROAA (%) 11.3 8.0 10.5 10.9 11.3
EV/EBITDA (x) 9.4 10.0 6.9 6.0 5.2
MKE vs. Consensus (%) - - 11.9 9.8 11.2
Ivan Yap
(603) 2297 8612
69
Petronas Chemicals (PCHEM MK)
HOLD
World class petrochemical Share Price
12m Price Target
MYR 8.11
MYR 8.50 (+5%)
producer Previous Price Target MYR 8.50
Investment case: A play on rising crude oil prices Company Description

Petronas Chemicals Group Bhd manufactures,
PCHEM is a diversified petrochemicals producer with access to
markets, and sells petrochemicals.
attractively priced natural gas feedstock locked under a long-term fixed
contract. Petrochemical prices are trending upwards, tracking the rise in
crude oil prices. This is advantageous to PCHEM as it provides profit
margin expansion potential. PCHEM is a HOLD post share price gain. Statistics
Shariah status Yes
Materials
Catalysts: Global PMI, global GDP and global inflation 52w high/low (MYR) 8.19/6.85
Global PMI is the barometer for industrial demand. The latest reading of Free float (%) 35.5
54.5 (Dec 2017) indicates that industrial demand is firmly in an Issued shares (m) 8,000
expansion phase and this will drive demand for basic petrochemicals. Market capitalisation MYR64.9B
Secondly, strong GDP and modest core inflation will boost consumer USD16.2B
spending, and ultimately drive demand for basic petrochemicals. Major shareholders:
Government of Malaysia 64.4%
Valuations: Fairly priced Employees Provident Fund
Permodalan Nasional Bhd.
10.1%
7.0%
Malaysia
At current levels, PCHEM is fairly valued, trading at 8.8x FY18E

Price Performance
EV/EBITDA which is close to the industry average. Our TP of MYR8.50
pegs the stock to 9.1x 2018 EV/EBITDA, which is a 10% premium to peers, 8.5 104
to reward it for its strong balance sheet, low-cost feedstock cost and
8.0 100
superior cashflows.
7.5 96
Risks: Operational and feedstock costs

7.0 92
PCHEM’s key risks, in our view, include: 1) an extended downtime at its
Kertih integrated petrochemical complex (IPC); 2) higher-than-expected 6.5 88
methane gas price escalation. The Kertih IPC is due for its 5-year
6.0 84
turnaround cycle and management guides a downtime of 6-8 weeks. Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Management is tight lipped on the price escalation of methane gas, but Petronas Chem. - (LHS, MYR)
Petronas Chem. / Kuala Lumpur Composite Index - (RHS, %)
indicates similarity to the 2016 ethane gas contract renewal. We assume
a one-time escalation of 10% coupled with an annual increase of 1%. -1M -3M -12M
Source: FactSet

Revenue 13,536 13,860 16,926 17,116 17,385
EBITDA 4,660 5,291 6,464 6,548 7,233
Core net profit 2,780 3,183 4,202 4,205 4,656
Core EPS (sen) 34.8 39.8 52.5 52.6 58.2
Core EPS growth (%) 9.0 14.5 32.0 0.1 10.7
Net DPS (sen) 18.0 19.0 27.0 27.0 30.0
Core P/E (x) 23.3 20.4 15.4 15.4 13.9
P/BV (x) 2.6 2.4 2.4 2.2 2.0
ROAE (%) 11.7 11.3 15.4 14.8 15.1
ROAA (%) 9.4 10.1 13.1 12.7 13.2
EV/EBITDA (x) 11.0 9.4 9.3 8.8 7.8
MKE vs. Consensus (%) - - 1.3 1.5 8.4
Mohshin Aziz
mohshin.aziz@maybank-ib.com
(603) 2297 8692
70
Press Metal Aluminium (PMAH MK)
Not Rated
SEA’s aluminium giant Share Price MYR 5.53
Investment case: More than just a coke can Company Description

Press Metal Aluminium Holdings provides investment
Press Metal Aluminium (PMAH) is the largest integrated aluminium
holdings in aluminum production.
producer in South East Asia (SEA) with total annual smelting and
extrusion capacity of 760,000 tonnes and 160,000 tonnes respectively. Its
manufacturing facilities are located in Malaysia and China supplying to
Construction
the transportation, construction and electrical sectors. Earnings growth Statistics

could emanate from healthy global aluminium demand and the rally in Shariah status Yes
aluminium price. PMAH’s production cost is also vigilantly monitored in 52w high/low (MYR) 5.53/1.84
order to remain in the first quartile of its overall smelter cash cost. In 3m avg turnover (USDm) 13.3
FY16, Malaysia sales accounted for 24% of total revenue while other Free float (%) 27.2
countries in the Asian and European region contributed 39% and 33% Issued shares (m) 3,833
respectively. PMAH is NOT RATED.
USD5.3B
Major shareholders:
Catalysts: Stronger ASPs and excess global demand Alpha Milestone Sdn. Bhd. 22.7%
In light of China’s extended crackdown on factory pollution, restrictions KOON POH KEONG 15.6%
KOON POH MING 6.7%
on overall industrial output bodes well for PMAH’s earnings outlook as a
Malaysia
reduction in global supply could drive up aluminium ASPs. Additionally, Price Performance
the aluminium supply cut from China might also result in excess global 6.00 1,100
demand which will ensure steady sales volume for PMAH in the near 5.50 1,000
5.00 900
term.
4.50 800
4.00 700
Valuations: 23x FY18E PER 3.50 600

3.00 500
Based on consensus, PMAH is currently trading at 23x FY18E PER, above 2.50 400
2.00 300
its 5-year average PER of 13x. Given its positive earnings outlook,
1.50 200
prudent cost management and recent inclusion as a constituent of the 1.00 100
FBMKLCI Index, PMAH’s premium valuations seem justified. 0.50
0
Risks: Market-driven volatility Press Metal - (LHS, MYR) Press Metal / Kuala Lumpur Composite Index - (RHS, %)
Key risks to PMAH’s earnings include: (i) a correction in aluminium ASPs, -1M -3M -12M
(ii) rise in raw material costs (i.e. alumina, silica, carbon), (iii) Absolute (%) 9 44 199
fluctuations in the USD/MYR currency exchange. Relative to index (%) 3 39 175
Source: FactSet

Revenue 2,384.4 3,121.7 4,091.0 4,321.3 6,649.5
EBITDA 319.4 324.8 697.6 585.2 1,196.3
Net profit 183.9 15.0 214.9 132.3 483.6
EPS (sen) 7.2 0.5 7.2 3.7 13.2
EPS growth (%) 79.8 (93.0) 1,340.0 (48.6) 256.8
Net DPS (sen) 0.5 0.4 5.7 2.7 8.5
P/E (x) 76.9 1,106.0 76.8 149.5 41.9
P/BV (x) 12.5 12.5 9.1 10.4 9.3
ROAE (%) 16.7 1.2 13.7 6.9 23.3
ROAA (%) 4.4 0.3 4.1 2.1 6.4
EV/EBITDA (x) 4.1 4.1 4.3 5.3 10.6
Net debt/equity (%) 1.9 1.9 1.1 1.6 1.4
Jade Tam
(603) 2297 8687
71
QL Resources (QLG MK)
SELL
A diversified resource group Share Price
12m Price Target
MYR 4.84
MYR 4.00 (-17%)
Investment case: Three-pronged growth story Company Description

QL Resources Bhd. engages in the livestock farming,
QL’s diversified consumer-based activities provide a three-pronged
surimi manufacturing, and palm oil businesses.
growth strategy and earnings resilience. It has three business divisions,
Consumer Staples
namely (i) integrated livestock farming (ILF) - one of the largest egg
producers and feed raw materials distributors in Malaysia; (ii) marine
products manufacturing (MPM) - fishmeal, surimi and frozen food Statistics
production; and (iii) palm oil related activities (PO). On the back of Shariah status Yes
incremental capacity expansion, the livestock and marine divisions are 52w high/low (MYR) 4.84/2.92
poised to sustain growth momentum. That said, near-term positives/ 3m avg turnover (USDm) 0.5
growth potential are priced in with the share price having exceeded our Free float (%) 41.5
target – hence our SELL call. Issued shares (m) 1,622
Catalysts: Of expansion plans and FamilyMart USD2.0B
Major shareholders:
QL has planned capex of about MYR350m p.a. (MYR150m each for MPM CBG Holdings Sdn. Bhd. 42.1%
and ILF, and MYR50m for PO) over FY18/19 and this will go mainly Farsathy Holdings Sdn. Bhd. 12.1%
towards the expansion of its surimi lines, food manufacturing, prawn Public Mutual Bhd. 2.4%
Malaysia
aquaculture and egg production capacity. The fourth leg of growth would Price Performance
be its convenience store segment in Malaysia. QL has, since Nov 2016,
5.00 190
opened 28 FamilyMart Stores (as at end-Nov 2017) and it plans to open 4.80 180
up to 300 stores by 2020/2021. It aims to be a food centric chain and is 4.60 170
targeting >50% of total sales from Food and Beverage. 4.40 160
4.20 150
4.00 140
Valuations: Has done well 3.80 130
3.60 120
Valuations wise, QL is trading at 31.3x CY19 PER (about 1.5SD above its 3.40 110
5-year mean). This compares against Malaysia’s Consumer sector average 3.20 100
of 21-22x CY19 PER. We maintain our earnings forecasts. Our DCF-TP is 3.00 90
2.80 80
MYR4.00 (WACC: 7.0%, long-term growth: 2.0%). Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
QL Resources - (LHS, MYR)
Risks: Raw material prices and USDMYR movement QL Resources / Kuala Lumpur Composite Index - (RHS, %)
Key earnings upside risks include lower-than-expected raw material -1M -3M -12M
prices on a stronger MYR against USD, with circa 80% of its COGS in the Absolute (%) 13 23 45
livestock division purchased in USD. However, an offsetting factor would Relative to index (%) 7 19 33
be its export sales from its MPM division (est. 60% of marine sales; est. Source: FactSet
16% of total sales).
FYE Mar (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 2,854 3,012 3,242 3,492 3,789
EBITDA 368 395 411 469 503
Core net profit 192 186 208 235 256
Core EPS (sen) 11.8 11.5 12.8 14.5 15.8
Core EPS growth (%) 4.9 (3.2) 11.9 12.9 9.1
Net DPS (sen) 4.3 7.3 5.2 5.8 6.0
Core P/E (x) 40.9 42.2 37.7 33.4 30.6
P/BV (x) 4.9 4.5 4.3 3.9 3.6
ROAE (%) 12.7 11.7 11.6 12.3 12.4
ROAA (%) 7.1 6.2 6.4 6.9 7.2
EV/EBITDA (x) 16.5 16.4 21.4 18.9 17.8
MKE vs. Consensus (%) - - (2.8) (4.7) (8.8)
Liew Wei Han

weihan.l@maybank-ib.com
(603) 2297 8676
72
Sapura Energy (SAPE MK)
BUY
A recovering O&G play Share Price
12m Price Target
MYR 0.87
MYR 1.20 (+38%)
Investment case: A high-beta O&G stock Company Description

Sapura Energy operates as an investment holding
SAPE is an integrated O&G service provider – tender rigs drilling (largest
company, which provides integrated oil and gas
in the world), engineering & construction (E&C), EPC and fabrication services and solutions.
businesses. It is also an independent E&P company with oil & gas blocks
in Malaysia. Overall, SAPE’s mid-term strategy remains intact, which is to
conserve cash, be capital disciplined and cost prudent. Optimising Statistics
utilisation to overcome DCR disruption and turning prospects into new Shariah status Yes
Oil & Gas
orders are also a current focus. BUY maintained. 52w high/low (MYR) 2.09/0.68
Free float (%) 71.1
Catalysts: Rising orders & monetising gas assets
Recovery in contract flows/values, in a sustainable manner to build up Market capitalisation MYR5.2B
its replenishment orders, will serve as a potential positive. Further cost- USD1.3B
down initiatives to operating at USD50/bbl level should make SAPE a Major shareholders:
stronger player in a cycle upturn. Notwithstanding that, discoveries of Sapura Holdings Sdn. Bhd. 16.7%
new gas fields will be a catalyst to sentiment and NAV. Unlocking the Employees Provident Fund 13.8%
Permodalan Nasional Bhd. 11.3%
value of such assets could provide upside. Its long-term target is to
Malaysia
achieve USD500m p.a. cashflow by 2023 from its E&P fields. SAPE’s net Price Performance
reserve & resources stood at 243m mmboe (6% oil, 94% gas). 2.20 190
2.00 170
Valuations: An attractive trading opportunity 1.80 150
The recent steep fall in share price, which reflects earnings 1.60 130
disappointment, offers trading opportunity on this stock. SAPE now 1.40 110
trades at 0.5x BV, which is a historical low. Our TP is SOP-based. 1.20 90
1.00 70
Risks: Costs, backlog, financial distress, impairment 0.80 50
0.60 30
SAPE’s overall operations are sensitive to weakness in oil/gas prices. Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Continuous depletion of its order backlog will be detrimental to its Sapura Energy - (LHS, MYR)
Sapura Energy / Kuala Lumpur Composite Index - (RHS, %)
operations. Poor cost management could further exacerbate the
situation. Failure to meet debt repayment/covenant would be a sign of -1M -3M -12M
financial distress. With low assets utilisation expected, an asset Absolute (%) 2 (40) (48)
impairment exercise (i.e. on its rigs) is likely. Relative to index (%) (3) (42) (52)
Source: FactSet
FYE Jan (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 10,184 7,651 5,918 6,202 7,645
EBITDA 3,056 3,913 2,162 2,118 2,855
Core net profit 1,009 447 (400) (375) 450
Core EPS (sen) 16.9 7.5 (6.7) (6.3) 7.6
Core EPS growth (%) (16.8) (55.5) nm nm nm
Net DPS (sen) 1.4 1.0 1.0 3.0 4.2
Core P/E (x) 5.1 11.6 nm nm 11.5
P/BV (x) 0.4 0.4 0.4 0.4 0.4
ROAE (%) (6.5) 1.6 (4.1) (3.1) 3.7
ROAA (%) 2.8 1.2 (1.1) (1.1) 1.3
EV/EBITDA (x) 9.0 6.5 9.5 9.7 7.0
Consensus net profit - - (235) 110 240
MKE vs. Consensus (%) - - (121.0) (442.1) 87.7
Liaw Thong Jung

(603) 2297 8688
73
Sarawak Oil Palms (SOP MK)
BUY
Strong output growth ahead Share Price
12m Price Target
MYR 4.01
MYR 5.85 (+46%)
Investment case: A growth stock Company Description

Sarwak Oil Palms is a Sarawak-based integrated palm
A pure Malaysian-based planter with 87,875ha of oil palm estates in
oil producer with refinery and biodiesel plants in
Sarawak (mature: 77,960ha) as at 30 June 2017; making it Malaysia’s 6th Malaysia.
largest listed plantation company by planted area. Given its size, SOP
has aptly diversified downstream to be an integrated player with a
1,500tpd refinery, a 300tpd biodiesel plant, a 800tpd palm kernel Statistics
Plantations
crushing plant and a 15tpd phytonutrient plant, all within a complex in Shariah status Yes
Bintulu. Over the long run, SOP targets at least 100,000ha of oil palm 52w high/low (MYR) 4.71/3.39
planted area in Sarawak, Malaysia. BUY maintained. 3m avg turnover (USDm) 0.2
Free float (%) 31.0
Catalysts: Riding on strong organic growth
With a relatively young trees age profile of 10.5 years, the group is USD574M
poised for a strong 21% 2016-19E CAGR in FFB output. Besides organic Major shareholders:
growth, SOP’s longer term plan is to monetise a part of its 4,858ha of Shin Yang Group of Cos. 28.6%
existing Taniku estate located at the fringe of Miri city, into property State of Sarawak 28.2%
LING CHIONG HO 7.0%
development.
Malaysia
Price Performance
Valuations: Undervalued and under-appreciated 4.80 115
The market has under-appreciated this growth stock. The stock trades at 4.60 110
just 10x 2018 PER (vs sector’s 25x) and its EV/planted ha of ~MYR30,000 4.40 105
(without assigning any property development value to its existing 4.20 100
estates) is barely above replacement cost. We believe this stock deserves 4.00 95
better recognition. Our MYR5.85 TP is based on an unchanged 15x 2017 3.80 90
PER (its 3-year mean). 3.60 85
3.40 80
Risks: Low CPO price and price volatility 3.20

75
SOP’s earnings is sensitive to CPO price movement given its all-in Sarawak Oil Palms - (LHS, MYR)
Sarawak Oil Palms / Kuala Lumpur Composite Index - (RHS, %)
operating cost of production of ~MYR1,500/t (for FY16). We estimate for
every MYR100/t change to our MYR2,600/t CPO ASP assumption, our FY18 -1M -3M -12M
net profit forecast changes by +/-9.0%. Furthermore, any sharp fall in Absolute (%) (1) (4) 3
CPO price or extreme CPO price volatility over a short period would Relative to index (%) (7) (7) (6)
likely hurt downstream margins. Source: FactSet

Revenue 3,671 4,303 4,976 4,791 4,831
EBITDA 271 333 520 539 629
Core net profit 88 130 222 235 295
Core EPS (sen) 20.0 29.5 39.0 41.2 51.8
Core EPS growth (%) (21.9) 47.0 32.3 5.7 25.7
Net DPS (sen) 5.0 5.0 7.8 8.2 10.4
Core P/E (x) 20.0 13.6 10.3 9.7 7.7
P/BV (x) 1.3 0.9 1.1 1.0 0.9
ROAE (%) 6.5 7.9 11.3 11.0 12.5
ROAA (%) 3.1 3.5 5.0 5.2 6.2
EV/EBITDA (x) 9.6 6.5 5.7 5.1 4.0
MKE vs. Consensus (%) - - 3.5 13.5 33.9
Ong Chee Ting, CA

(603) 2297 8678
74
Serba Dinamik Holdings (SDH MK)
Not Rated
Domestic name, regional reach Share Price MYR 3.32
Investment case: Resilient despite low oil prices Company Description

Serba Dinamik Holdings engages in the provision of
Serba Dinamik (Serba), listed in Feb 2017, is an energy services company
investment and management services.
that provides engineering solutions to the O&G and power generation
industries. It has: (i) a diverse geographical operating exposure (70:30;
overseas: domestic), particularly in the Middle East and is (ii) proven to
be resilient to operating in a low oil price environment, for 80% of its Statistics
Industrials
operations are O&M related. Serba is NOT RATED. Shariah status Yes
52w high/low (MYR) na/na
Catalysts: Improving orderbook momentum 3m avg turnover (USDm) 2.3
Free float (%) 30.5
Recovery in contract flows/values, on a sustainable manner to build up Issued shares (m) 1,335
its replenishment orders will serve as a potential catalyst. In addition, a Market capitalisation MYR4.4B
successful venture into the asset ownership business model and/or higher USD1.1B
exposure to the O&M businesses relative to EPCC works will ensure Major shareholders:
business/margin/earnings resiliency. BIN ABDULLAH MOHAMMAD ABDUL KARIM 25.3%
BIN SAHIB ABDUL KADLER 20.8%
BIN AWANG PUTERA AWANG DAUD 11.7%
Valuations: In sync with peers
Malaysia
Price Performance
Consensus estimates earnings growth of 21% in FY18 and the stock
currently trades at a prospective PER of 12x, based on consensus 4.00 280
forecasts. This is underpinned by its MYR4b+ order backlog.

3.50 240
Risks: Business, currency and country 3.00 200
Further weakness in oil/gas prices will hurt its operations, albeit with a 2.50 160
lag effect as a service provider. Serba’s business model is orderbook
driven. Replenishment of order backlog of MYR3-4b p.a. is key to 2.00 120
sustaining momentum. Margin erosion and poor cost management are

1.50 80
unfavourable factors to its operations. Notwithstanding that, loss/non- Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17
renewal of operating license (i.e. PETRONAS) is also a risk. In addition, Serba Dinamik - (LHS, MYR)
Serba Dinamik / Kuala Lumpur Composite Index - (RHS, %)
Serba’s overseas businesses (i.e. Middle East) are subject to currency/
political risks of the countries where it has operations. Any adverse -1M -3M -12M
development may affect business prospect. Absolute (%) 7 26 na
Relative to index (%) 1 21 na
Source: FactSet
FY E Dec (MY R m) 7MFY 16A

Revenue 1,408.6
EBITDA 217.1
Net profit 198.1
EPS (sen) 14.3
EPS growth (%) nm
Net DPS (sen) -
P/E (x) 23.2
P/BV (x) 4.4
Net dividend yield (%) -
ROAE (%) 24.5
ROAA (%) 10.0
EV/EBITDA (x) 4.9
Net debt/equity (%) 0.6
Liaw Thong Jung

(603) 2297 8688
75
Sime Darby Plantation (SDPL MK)
HOLD
Malaysian estates prime for Share Price
12m Price Target
MYR 5.52
MYR 5.63 (+2%)
property development Previous Price Target MYR 5.63
Investment case: Largest listed planter in the world Company Description

SDPL is an integrated plantation company with the
SDPL has several unique selling points:- 1) a well-diversified portfolio of
largest oil palm planted area, and largest CPO and
oil palm estates and downstream operations spread across Malaysia, CSPO producer in the world.
Indonesia, Papua New Guinea & Solomon Islands (PNG), Liberia and EU,
and 2) largest freehold land owner in Malaysia (~208,908ha) with
property development potential. Hence, to value SDPL solely on its Statistics
Plantations
plantation prospects would undermine its intrinsic value. By our Shariah status Yes
estimate, its estates with property development potential have a 52w high/low (MYR) na/na
combined market value of MYR48.5b, larger than the group’s current 3m avg turnover (USDm) 14.7
market cap. This valuable landbank boosts our RNAV est. to MYR9.45/sh. Free float (%) 48.0
Catalysts: Awaiting asset disposal for special div Market capitalisation MYR37.5B
USD9.4B
Organic FFB growth from the ongoing aggressive replanting exercise (of Major shareholders:
its older trees) using higher yielding materials will only materialise from Permodalan Nasional Berhad (total) 52.4%
2020 onwards. In the absence of near-term organic growth and higher EPF 11.1%
CPO price, we believe the next potential upside catalyst will depend on KWAP 5.6%
Malaysia
SDPL’s initiative(s) to unlock the value of its prime estates via Price Performance
monetisation and rewarding shareholders with special dividends.
6.20 130
Valuations: High PER justified given its high RNAV 6.00 125
5.80 120
We like SDPL for its quality assets, size and geographical diversity. 5.60 115
However, we believe the recent run-up in share price is unsustainable for 5.40 110
now, in lack of near-term catalyst to propel its share price higher. SDPL is 5.20 105
presently a HOLD with unchanged TP of MYR5.63, pegged at 30x FY18 5.00 100
PER, implying a P/RNAV of 0.6x. This sector bellwether deserves to trade 4.80 95
at a premium to Malaysia’s large cap plantation peers (average PER of 4.60 90
25x) given our RNAV estimate of MYR9.45/sh. Nov-17 Dec-17 Dec-17 Dec-17 Dec-17 Jan-18 Jan-18
Sime Darby Plantation - (LHS, MYR)
Risks: Low CPO price

Sime Darby Plantation / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M

SDPL’s earnings is sensitive to CPO price movement given its relatively
Absolute (%) 3 na na
high all-in operating cost of production at MYR1,800/t for FY17 (industry
Relative to index (%) (3) na na
peers: MYR1,580/t). By our estimate, every MYR100/t change to our
Source: FactSet
MYR2,600/t CPO ASP assumption impacts FY18E net profit by 13.7%.

Revenue 11,947 14,779 16,357 17,456 17,897
EBITDA 2,177 3,424 3,386 3,500 3,589
Core net profit 773 1,129 1,276 1,299 1,316
Core EPS (sen) 11.4 16.6 18.8 19.1 19.3
Core EPS growth (%) 14.4 46.1 13.0 1.8 1.3
Net DPS (sen) 10.3 13.2 9.4 9.6 9.7
Core P/E (x) 48.6 33.3 29.4 28.9 28.5
P/BV (x) 3.9 3.0 2.6 2.5 2.4
ROAE (%) 10.5 31.8 14.6 8.9 8.6
ROAA (%) 2.8 3.9 4.3 4.3 4.2
EV/EBITDA (x) na na 13.4 12.9 12.4
MKE vs. Consensus (%) - - 53.2 (2.0) (11.5)
Ong Chee Ting, CA

(603) 2297 8678
76
Sime Darby Property (SDPR MK)
HOLD
The goliath is stirring Share Price
12m Price Target
MYR 1.57
MYR 1.58 (+1%)
Investment case: Best of both worlds Company Description

A developer cum land seller which owns about 20,798
Sime Darby Property (SDPR) is more than just an ordinary developer.
acres of land in Malaysia and Australia.
Blessed with a huge landbank (20,798 acres with market valuation of
MYR18.8b) throughout Malaysia, SDPR has an advantage over many
developers – as a land seller, it can monetize land/assets for quick gains
to either self-fund its property developments or reward shareholders. Statistics
Real Estate
The stock, however, is fairly priced, in our view - HOLD maintained. Shariah status Yes
52w high/low (MYR) na/na
Catalysts: Land developer + seller = Sime Property 3m avg turnover (USDm) 5.8
Free float (%) 84.0
Thanks to its huge landbank, SDPR enjoys the best of both worlds, being Issued shares (m) 6,801
a developer and land/asset seller at the same time. While the former Market capitalisation MYR10.7B
ensures a more stable earnings stream, the latter will provide an USD2.7B
immediate boost to income. SDPR has the right product mix in strategic Major shareholders:
locations to weather the slowdown in Malaysia’s property market. 58% of Permodalan Nasional Bhd. 42.6%
SDPR’s remaining landbank is located in the Klang Valley and more Employees Provident Fund 10.8%
Bumiputra Investment Foundation 5.2%
importantly, almost all its landbank or 82% of its GDV comprises township
Malaysia
developments, which usually provide steadier sales vs. the high-rises. Price Performance
1.80 160
Valuations: Fairly priced 1.70 150
Given its similar business structure and earnings patent, we have 1.60 140
benchmarked its valuation against UEM Sunrise. Our TP of MYR1.58 pegs 1.50 130
SDPR to 0.55x P/RNAV (+0.1x above UEMS’ P/RNAV peg). The higher peg
1.40 120
is justified by SDPR’s larger and more diversified landbank and healthier
1.30 110
balance sheet. An improved track record under the new management
team post-demerger would help to narrow the discount to RNAV. 1.20 100
1.10 90
Nov-17 Dec-17 Dec-17 Dec-17 Dec-17 Jan-18 Jan-18
Risks: Volatile earnings trend Sime Darby Property - (LHS, MYR)
Sime Darby Property / Kuala Lumpur Composite Index - (RHS, %)
Property sales are likely to stay challenging and there are still no clear
signs of a broad-based pick-up for the sector, Due to the nature of its -1M -3M -12M
business which also involves land/asset sales, SDPR’s earnings trend Absolute (%) 15 na na
tends to be more volatile than the other developers and likewise for its Relative to index (%) 8 na na
profit margins. A further risk is that large capex may be needed for Source: FactSet
greenfield projects such as Malaysia Vision Valley.

Revenue 2,591 2,564 1,713 2,343 2,666
EBITDA 1,033 556 1,019 916 1,030
Core net profit 749 608 829 541 576
Core EPS (sen) 11.0 8.9 12.2 8.0 8.5
Core EPS growth (%) 33.6 (18.8) 36.4 (34.7) 6.4
Net DPS (sen) 0.0 0.0 2.4 1.6 1.7
Core P/E (x) 14.3 17.6 12.9 19.7 18.5
P/BV (x) 2.0 1.7 1.1 1.0 1.0
ROAE (%) 18.2 10.7 10.2 5.4 5.5
ROAA (%) 6.2 4.5 5.7 3.5 3.4
EV/EBITDA (x) na na 12.4 14.7 13.5
MKE vs. Consensus (%) - - 32.5 7.7 0.0
Wong Wei Sum, CFA

(603) 2297 8679
77
Sunway (SWB MK)
BUY
An all-rounder Share Price
12m Price Target
MYR 1.76
MYR 1.97 (+12%)
Investment case: Strength in diversity Company Description

Sunway Bhd is involved in property development,
Unlike the other big-cap developers, Sunway has a more diversified
investment properties and construction businesses
earnings base with a 54.4% stake in Sunway Construction Group (SCG)
and 37.3% in SunREIT. The slowdown in its property development business
would be partially cushioned by rising earnings contribution from the
construction business as job wins increase and steady dividend income Statistics
Real Estate
from the REIT vehicle. BUY maintained. Shariah status Yes

52w high/low (MYR) 1.96/0.80
Catalysts: Listing of healthcare business in 5 years 3m avg turnover (USDm) 2.2
Free float (%) 31.5
Sunway is aggressively expanding its healthcare business and intends to Issued shares (m) 4,919
list the unit in 2022. Construction of Sunway Medical Centre (SMC) 3 in Market capitalisation MYR8.7B
Subang and SMC Velocity are underway and will complete by end-2017 USD2.2B
and 1Q 2019, while another three hospitals in Penang, Kota Damansara Major shareholders:
and Perak will be completed by 2020-2023. Total beds are expected to Active Equity Sdn. Bhd. 54.8%
grow to 1,488 (+299%). Elsewhere, SCG’s outstanding construction Permodalan Nasional Bhd. 8.0%
orderbook is at a record high of MYR6.8b, providing SCG earnings growth
Malaysia
visibility into FY19. As at Sep 2017, Sunway’s unbilled sales (property) Price Performance
totalled MYR776m, 0.5x of FY18F revenue. 2.00 170
1.80 150
Valuations: Our top pick in the property sector
1.60 130
We value Sunway at MYR1.97/sh based on an unchanged 0.75x P/RNAV,
implying a potential upside of 12%. Unlike the other big cap developers, 1.40 110
Sunway’s earnings are also supported by its 54%-owned Sunway 1.20 90

Construction Group (SCGB MK, HOLD, TP: MYR2.63), 37.3%-owned
1.00 70
Sunway REIT (SREIT MK, BUY, TP: MYR1.90) and healthcare.
0.80 50
Risks: Large exposure in Iskandar Malaysia
Sunway - (LHS, MYR) Sunway / Kuala Lumpur Composite Index - (RHS, %)
Risks include 1) a prolonged slowdown in the property sector. 30% of
Sunway’s PATMI is from its property business, and 2) high exposure to the -1M -3M -12M
over-supplied Iskandar Malaysia property market. 53%/48% of its Absolute (%) 8 (2) 38
effective GDV/landbank are derived from the Iskandar Puteri and Medini Relative to index (%) 2 (6) 27
projects. Source: FactSet

Revenue 4,448 4,656 5,398 7,008 6,731
EBITDA 427 1,596 788 1,085 1,013
Core net profit 591 547 544 662 671
Core EPS (sen) 14.4 12.6 11.2 13.6 13.8
Core EPS growth (%) (1.6) (12.5) (11.3) 21.7 1.4
Net DPS (sen) 17.0 5.7 5.0 6.1 6.2
Core P/E (x) 12.2 13.9 15.7 12.9 12.7
P/BV (x) 1.1 1.1 1.1 1.0 1.0
ROAA (%) 4.1 3.2 2.9 3.5 3.4
EV/EBITDA (x) 21.7 6.1 17.1 13.3 15.4
MKE vs. Consensus (%) - - 6.1 10.2 0.2
Wong Wei Sum, CFA

(603) 2297 8679
78
Sunway Construction Group (SCGB MK) HOLD
Awaiting next catalyst Share Price
12m Price Target
MYR 2.62
MYR 2.63 (+0%)
Investment case: Largest pure play contractor Company Description

Sunway Construction Group offers integrated
A testament to its name and track record, SCG has secured work
construction services and has precast concrete
packages from several major infrastructure projects such as the Sunway business in Singapore.
BRT, KVMRT 2, KVLRT 3 and even affordable housing projects such as the
PPA1M. Not resting on its laurels, SCG is also vying to move up the value
Construction
chain by taking on the tender for the KL-SG HSR PDP role for the civil Statistics
infrastructure works portion. We have a MYR2.63 TP for SCG. Stronger- Shariah status Yes
than-expected earnings and/or job wins in FY18 could be a further re- 52w high/low (MYR) 2.62/1.68
rating catalyst – HOLD for now. 3m avg turnover (USDm) 1.0
Free float (%) 24.2
Catalysts: Record orderbook a platform for growth Issued shares (m) 1,293
SCG had a phenomenal year of job replenishment with MYR4b of job wins
USD850M
(including precast) in 2017, double its initial internal target of MYR2b. Major shareholders:
Notably, SCG was awarded the largest package for KVLRT 3 (MYR2.2b) for Sunway Bhd. 54.4%
the construction of Package GS07-08. Its record outstanding orderbook of Active Equity Sdn. Bhd. 10.1%
MYR6.8b provides for decent earnings visibility and the platform for True Paragon Sdn. Bhd. 3.9%
Malaysia
earnings growth. Moving up the value chain, SCG has also teamed up Price Performance
with IJM (IJM MK; BUY) and another two private parties to bid for the KL-
2.80 250
SG HSR PDP role for the Malaysian civil works portion. Its MYR2b FY18 job
2.60 230
win target would also be supported by potential awards from TRX,
2.40 210
KVMRT 3, and the property developments within Sunway Group.
2.20 190
Valuations: Fair for now 2.00 170
1.80 150
With SCG currently trading at 15.9x FY18 PER (+1.5SD), we believe 1.60 130
valuations are fair. Our TP of MYR2.63 pegs the stock to 16x FY18 PER. 1.40 110
We continue to like the stock for its strong construction delivery track 1.20 90
record; we await the next catalyst. Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Sunway Const'n - (LHS, MYR)
Risks: Slower-than-expected work progress

Sunway Const'n / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M

Earnings risks include i) slower-than-expected progress at major
infrastructure projects, ii) delay of precast supplies to main contractors
and iii) significant increases in material costs.
Source: FactSet

Revenue 1,917 1,789 2,347 2,814 3,272
EBITDA 178 188 211 293 302
Core net profit 127 124 146 213 220
Core EPS (sen) 9.8 9.6 11.3 16.4 17.0
Core EPS growth (%) 11.4 (2.9) 18.4 45.4 3.5
Net DPS (sen) 4.0 5.0 4.0 5.8 6.0
Core P/E (x) 26.6 27.4 23.2 15.9 15.4
P/BV (x) 7.5 6.9 5.8 4.7 3.9
ROAE (%) 32.4 26.2 27.0 32.4 27.6
ROAA (%) 9.5 8.2 8.0 9.4 8.2
EV/EBITDA (x) 8.7 9.9 13.2 8.9 8.0
MKE vs. Consensus (%) - - 0.1 12.5 3.6

(603) 2297 8675 (603) 2297 8686
79
Suria Capital Holdings (SURIA MK)
Not Rated
Perfect Sabah play Share Price MYR 1.88
Investment case: Proxy to Sabah’s economic growth Company Description

Suria Capital engages in the provision of investment
Suria’s earnings is highly leveraged to Sabah’s growing economy: (i)
with interests in port infrastructure and providing
Sabah state government projects Sabah’s GDP to expand 5-5.5% in 2018 integrated port services.
(2017F: 4-4.5%); (i) the State is Malaysia’s largest producer of CPO and
liquid bulk throughput could rise on new downstream industrial
investments; (iii) given the rising oil price, there could be throughput Statistics
spillover from higher oil & gas exploration/production in Sabah waters. Shariah status Yes
Transport
The stock is NOT RATED. 52w high/low (MYR) 2.28/1.84

Free float (%) 44.5
Catalysts: Stronger throughput and property market
Key catalysts for the stock include the following: (i) higher throughput at Market capitalisation MYR541.8M
its ports in Sabah (conventional cargoes: +4% YoY in 9M17, container USD135M
volume: -2% YoY). Port operation accounted for 97% of Group’s total Major shareholders:
revenue and >100% of PBT in 9M17; (ii) Suria is redeveloping its existing State of Sabah 47.1%
Kota Kinabalu Port into a mixed property development (i.e. Jesselton Lembaga Tabung Haji 9.3%
Sabah Foundation Yayasan Sabah 3.7%
Quay, One Jesselton Waterfront) and a stronger property market could
Malaysia
see faster launches/upside to its property values; (iii) a minority stake Price Performance
sale to MMC. In Aug 2017, MMC confirmed that it was in talks with Suria 2.40 130
for a stake in Suria’s 100%-owned Sabah Ports S/B.
2.30 120
Valuations: Trading below book value 2.20 110
There is no coverage of the stock by brokers. The group reported a net 2.10 100
profit of MYR31.2m for 9M17 (-31% YoY) and a 9M17 EPS of 10.8sen. 2.00 90
Based on its net book value of MYR3.59 as at end-Sep 2017, the stock
1.90 80
trades at a historical P/BV of 0.5x.
1.80 70
Risks: Cash call, amongst others Suria Capital - (LHS, MYR)
Suria Capital / Kuala Lumpur Composite Index - (RHS, %)
Key downside risks include: (i) slower economic growth in Sabah; (ii) a
stronger MYR/USD which may result in slower tourist arrivals to Sabah -1M -3M -12M
(2010-16 CAGR: +5%); (iii) a potential cash call in 2018. Suria plans to Absolute (%) (1) (8) (4)
build an International Cruise Terminal at its existing Kota Kinabalu Port Relative to index (%) (5) (9) (12)
site and will need to undertake landbanking exercise which could amount Source: FactSet
to MYR350m, bringing the total capex for the Group to MYR610m in 2018
(net debt: MYR24m as at Sep 2017).

Revenue 262.9 263.3 273.1 496.7 258.5
EBI TDA 118.4 123.6 122.4 193.1 126.9
Net profit 50.3 56.9 52.1 125.7 66.7
EPS (sen) 17.7 20.0 18.4 44.6 23.1
EPS growth (%) (6.3) 13.0 (8.0) 142.4 (48.2)
Net DPS (sen) 6.2 7.0 7.0 7.0 7.0
P/E (x) 10.6 9.4 10.2 4.2 8.1
P/BV (x) 0.7 0.7 0.6 0.6 0.5
ROAE (%) 6.5 7.1 6.3 13.8 6.7
ROAA (%) 4.0 4.4 4.1 9.7 5.0
EV/EBI TDA (x) 0.9 0.7 0.7 0.6 0.6
Net debt/equity (%) 0.2 0.1 0.0 0.0 0.0
Lee Yen Ling

(603) 2297 8691
80
Telekom Malaysia (T MK)
HOLD
Dominant fixed-line player Share Price
12m Price Target
MYR 6.00
MYR 6.00 (-0%)
Investment case: Championing convergence Company Description

Telekom Malaysia is the dominant fixed-line
Convergence (between fixed and mobile) represents a relatively
Telecommunications
telecommunication company in Malaysia

attractive long-term proposition for telcos. We see TM, with its new
mobile network now fully operational, as being best-positioned to ride
this trend. We have a HOLD rating with a DCF-based TP of MYR6.00.
Statistics
Catalysts: An improvement in operating outlook Shariah status Yes
52w high/low (MYR) 6.65/5.95
Fixed-line operations saw growth tapered in 2017, with marginal softness 3m avg turnover (USDm) 3.5
being seen across the enterprise and wholesale segments. A hypothetical Free float (%) 97.7
improvement in the outlook of both segments could potentially lead to Issued shares (m) 3,758
upwards earnings revisions. Market capitalisation MYR22.5B
Meanwhile, TM’s mobile losses have remained substantial over a year USD5.7B
into commercial operation. This has weighed down on earnings and Major shareholders:
Khazanah Nasional Bhd. (Investment Manag 28.7%
consequently dividends. A quicker-than-expected breakeven of the Permodalan Nasional Bhd. 18.6%
mobile entity would similarly result in upwards earnings revisions. Employees Provident Fund 11.2%
Malaysia
Price Performance
Valuations: Fairly valued, below historical mean
6.90 130
TM is presently trading at 0.5x below its 3-year mean on EV/EBITDA of 6.80 125
7.5x, while dividend yield is at slightly above mean of 3.2%. In our view, 6.70 120
the euphoria over convergence in the initial years of TM’s entry into 6.60 115
6.50 110
mobile has since tapered given the still substantial mobile losses. The
6.40 105
regulatory threat arising from Budget 2017’s announcement on 6.30 100
broadband prices could have also contributed to the stock’s derating, in 6.20 95
our view. 6.10 90

6.00 85
5.90 80
Risks: Retail over-competition and regulatory issues Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Telekom Msia - (LHS, MYR)

With retail being the main growth driver for fixed-line operations in Telekom Msia / Kuala Lumpur Composite Index - (RHS, %)
Malaysia, the key risk revolves around competition hypothetically

-1M -3M -12M
intensifying in the segment. In addition, fixed-line broadband is also not
Absolute (%) 0 (2) (2)
immune to potential regulatory risks in the form of price restrictions or
new entrants among others.
Source: FactSet

Revenue 11,722 12,061 12,488 12,990 13,437
EBITDA 3,677 3,820 3,921 4,157 4,300
Core net profit 895 848 869 856 912
Core EPS (sen) 23.8 22.6 23.1 22.8 24.3
Core EPS growth (%) (8.1) (5.3) 2.5 (1.5) 6.5
Net DPS (sen) 21.4 21.5 20.8 20.5 21.8
Core P/E (x) 25.2 26.6 25.9 26.3 24.7
P/BV (x) 2.9 2.9 2.9 2.9 2.8
ROAE (%) 9.1 10.0 11.2 10.9 11.5
ROAA (%) 3.8 3.4 3.5 3.4 3.6
EV/EBITDA (x) 7.9 7.1 7.3 7.0 6.7
MKE vs. Consensus (%) - - 0.4 (4.7) (6.0)

(603) 2297 8690 (603) 2297 8641
81
Thong Guan Industries (TGI MK)
Not Rated
Made out of plastic Share Price MYR 4.11
Investment case: A leading plastic packaging player Company Description

Thong Guan has two business divisions, namely (i)
TGI is one of the leading plastic packaging manufacturers in Asia. Growth
plastic products and (ii) food and beverage products.
could mainly be driven by the continuous incremental expansion of
capacity (eg. nano-layer stretch film, PVC food wrap) in the plastic
division. TGI exports to over 60 countries (eg. Japan, ASEAN, Australia).
Meanwhile its F&B division provides a good earnings base. The stock is Statistics
Industrials
NOT RATED. Shariah status Yes

52w high/low (MYR) 4.79/4.02
Catalysts: Plastic … the primary growth engine 3m avg turnover (USDm) 0.3
Free float (%) 55.0
TGI is one of the largest plastic packaging manufacturers in Asia with
more than 120,000 MT per annum in combined capacity. Growth in the
Market capitalisation MYR555.9M
medium term should mainly be driven by the continuous incremental
USD139M
expansion of capacity (eg. nano-layer stretch film, PVC food wrap) in the
Major shareholders:
plastic division. The group’s plastic products comprise four main Foremost Equals Sdn. Bhd. 32.4%
categories - stretch film, garbage bags, industrial bags and PVC food CIMB-Principal Asset Management Bhd. 2.0%
wrap. It has manufacturing plants in East and West Malaysia, Suzhou CHEAM HENG MING 1.5%
Malaysia
(China) and Bangkok (Thailand). Price Performance

In terms of sales by geographical segment, TGI exports to more than 60 4.80 180
countries and overseas sales account for about 80% of the division’s 4.60 170
sales. The plastic products division’s contribution to group revenue and 4.40 160
4.20 150
EBIT was 93%/90% in FY16, with F&B and others making up the balance.
4.00 140
Meanwhile, its F&B division provides a stable earnings base to the group. 3.80 130
TGI manufactures and trades coffee and tea. Elsewhere, TGI is also a 3.60 120
franchisee of Marche Movenpick (Swiss cuisine) restaurant in Malaysia. It 3.40 110

3.20 100
opened its first outlet in Pavilion, Kuala Lumpur in Aug 2017.
3.00 90
2.80 80
Valuations: 2-year CAGR of 15% Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Thong Guan Industries - (LHS, MYR)

Consensus forecasts a 2-year (FY17-19) net profit CAGR of 15% and the Thong Guan Industries / Kuala Lumpur Composite Index - (RHS, %)
stock currently trades at a prospective FY18 PER of 7.8x, based on the

-1M -3M -12M
street’s estimates.
Absolute (%) (3) (6) (4)
Risks: Raw material prices and USDMYR Relative to index (%) (9) (9) (12)
Source: FactSet
Key risks include a sharp increase in raw material prices and volatility of
USDMYR. Export sales accounted for 79% of group total sales in FY16.

Revenue 631.2 720.3 740.2 711.0 742.9
EBITDA 46.5 49.4 37.7 62.2 84.5
Net profit 27.2 28.2 17.5 38.5 55.9
EPS (sen) 25.9 26.8 16.6 36.6 52.0
EPS growth (%) 0.7 3.6 (38.0) 120.2 42.2
Net DPS (sen) 7.0 8.0 7.0 9.0 12.0
P/E (x) 15.9 15.3 24.7 11.2 7.9
P/BV (x) 1.7 1.5 1.3 1.1 1.0
ROAE (%) 10.8 10.2 5.5 10.5 13.6
ROAA (%) 7.1 6.7 3.5 7.1 9.6
EV/EBITDA (x) 1.5 1.4 1.3 1.0 0.9
Net debt/equity (%) net cash net cash 0.0 net cash net cash
Liew Wei Han

(603) 2297 8676
82
Tiong Nam Logistics (TNL MK)
Not Rated
Leading supply chain solutions Share Price MYR 1.29
provider
Investment case: Two pillars of growth Company Description
It operates through the following segments: Logistics
TNL provides integrated transportation and warehousing services and it is
and Warehousing Services£pv£ Investment£pv£ and
one of Malaysia’s largest trucking companies. It has presence in over Property Development
seven countries in Asia (mainly ASEAN and China). TNL also provides
exposure to the domestic property market as it is also a developer of
industrial parks and commercial properties. TNL currently has an Statistics
undeveloped land bank of 152.6 acres (in Shah Alam, SiLC, Kempas, Kota Shariah status Yes
Logistics
Masai). The stock is NOT RATED. 52w high/low (MYR) 1.82/1.29

Free float (%) 38.5
Catalysts: REIT-ing? E-commerce?
The potential planned creation of a REIT of its logistics assets could help Market capitalisation MYR593.8M
provide capital for TNL’s expansion plans and improve its balance sheet. USD149M
TNL had a net gearing ratio of 1.1x as at end-Sep 2017. As of end-Sep Major shareholders:
2017, TNL manages 5.5 million sq ft of warehouse space of which it owns Tntt Realty Sdn. Bhd. 24.8%
3.2 million sq ft (57.7% of total warehouse capacity). On its existing ONG YOONG NYOCK 19.9%
logistics business, TNL has plans to grow its warehousing capacity to 7.1
Malaysia
million sq ft by FYE3/20 from 5.5 million sq ft currently to serve both the Price Performance
growing domestic and regional markets. On e-commerce, TNL started its 1.90 165
last-mile delivery service in May 2017. Moving forward, as this new 1.80 155
venture contributes more meaningfully to the group’s earnings, there 1.70 145
could be room for upward re-rating. 1.60 135
1.50 125
Valuations: Trades at a prospective FY19 PER of 9x 1.40 115
TNL reported a 6MFYE3/18 net profit of MYR15.8m (-42% YoY) and 1.30 105
consensus estimates a full-year FY18 contribution of MYR49.9m, with 1.20 95
strong growth to MYR67.4m in FY19. Based on consensus estimates, TNL 1.10 85

now trades at a prospective FY19 PER of 9.0x (versus its 5-year mean of Tiong Nam Logistics - (LHS, MYR)
10.1x). Tiong Nam Logistics / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M

Risks: The need to gear up Absolute (%) (3) (16) (15)
Potential risks include higher-than-expected opex for its current business Relative to index (%) (9) (19) (22)
and new business ventures. Slower consumption and economic growth Source: FactSet
may also impact TNL as customers may demand less movement of goods.
FY E Mar (MY R m) FY 13A FY 14A FY 15A FY 16A FY 17A

Revenue 340.0 533.1 618.0 568.5 573.4
EBI TDA 46.1 135.4 143.4 145.4 151.7
Net profit 21.8 91.6 82.7 82.8 82.9
EPS (sen) 4.1 17.8 17.4 18.5 19.5
EPS growth (%) >100 >100 (2.1) 6.3 5.7
Net DPS (sen) 12.0 2.5 4.0 5.0 4.8
P/E (x) 31.3 7.3 7.4 7.0 6.6
P/BV (x) 0.4 1.4 1.2 0.9 0.8
ROAE (%) 7.7 26.5 19.3 15.7 13.2
ROAA (%) 3.0 10.1 7.5 6.2 5.3
EV/EBI TDA (x) 1.4 2.2 2.1 1.8 1.9
Net debt/equity (%) 1.0 0.9 1.0 0.9 1.1
Liew Wei Han

(603) 2297 8676
83
Tomypak Holdings (TOMY MK)
BUY
In an expansion mode Share Price
12m Price Target
MYR 1.00
MYR 1.05 (+5%)
Investment case: A trusted packaging producer Company Description

Tomypak is the second largest flexible food packaging
Tomypak is the second largest flexible food packaging producer in
producer in Malaysia, with an estimated 35-40%
Malaysia, with an estimated 35-40% market share based on revenue. Its domestic market share.
product quality strength is reflected in its international certifications,
which are vital to enhancing customer confidence. We believe its weaker
3Q17 earnings following higher operating costs from the new plant was a Statistics
Industrials
temporary setback to pave the way for better earnings growth – BUY. Shariah status Yes
52w high/low (MYR) 1.07/0.64
Catalysts: Opportunities to grow 3m avg turnover (USDm) 0.1
Free float (%) 31.6
Tomypak’s next phase of growth is now being driven by the increase in Issued shares (m) 420
production along with product quality following its new 6,000 mtpa Market capitalisation MYR419.6M
capacity addition at its Senai plant in Johor in 2Q17, and there will be USD105M
another 6,000 mtpa and 7,000 mtpa of capacity in the next phases in Major shareholders:
FY18 and FY19 respectively. We estimate its production will increase New Orient Resources Sdn. Bhd. 24.4%
significantly by a 5-year CAGR of 15.7% from incremental sales to new LIM HUN SWEE /JOHORE/ 16.2%
Zalaraz Sdn. Bhd. 5.2%
local and international customers, along with growing contributions from
Malaysia
existing customer. According to Euromonitor, global consumption of Price Performance

flexible F&B packaging products is expected to continue to grow at a 5- 1.10 125
year CAGR of 2.7% (food) and 3.8% (beverage). 1.05 120
1.00 115
Valuations: Capturing its long-term positives 0.95

0.90
110
105
We forecast Tomypak’s core earnings to chalk up double-digit growth of 0.85 100

0.80 95
more than 20% for FY18E and FY19E. Our TP of MYR1.05 is based on an
0.75 90
FY18E target PER of 16.5x, 1SD above its three-year historical forward 0.70 85
average of 13.6x, to capture Tomypak’s strong earnings growth potential. 0.65 80
0.60 75
Risks: Rise in raw materials
Tomypak - (LHS, MYR) Tomypak / Kuala Lumpur Composite Index - (RHS, %)
Raw materials (resins and films) costs make up almost 70% of Tomypak’s
COGS and resin prices tend to move in tandem with oil prices. As such, -1M -3M -12M
higher resin prices in response to the increase in oil prices would have an Absolute (%) 3 6 53
adverse impact on Tomypak’s earnings. Relative to index (%) (3) 2 41
Source: FactSet

Revenue 214 211 221 281 341
EBITDA 43 36 36 46 57
Core FDEPS (sen) 7.0 5.7 4.5 6.4 7.7
Core FDEPS growth(%) 184.2 (18.9) (21.1) 41.9 21.9
Net DPS (sen) 3.3 3.4 1.8 2.5 3.1
Core FD P/E (x) 14.3 17.6 22.3 15.7 12.9
P/BV (x) 2.7 2.2 2.0 1.9 1.7
ROAE (%) 19.5 11.7 10.4 12.4 14.0
ROAA (%) 13.3 8.6 6.6 8.3 9.0
EV/EBITDA (x) 7.2 6.4 12.1 10.2 8.5
MKE vs. Consensus (%) - - 0.5 0.1 (2.8)
Mohd Hafiz Hassan

(603) 2082 6819
84
Top Glove Corporation (TOPG MK)
HOLD
Increasing market dominance Share Price
12m Price Target
MYR 9.00
MYR 9.85 (+9%)
Investment case: Acquisition-led EPS growth Company Description

Top Glove is world's biggest glove manufacturer with
The operating environment is presently favourable due to the tight
a balanced product mix in latex/nitrile examination
supply situation. Additionally, Top Glove’s proposed acquisition of Aspion gloves and non-examination gloves.
(surgical glove specialist) would also lead to stronger earnings, margin
enhancement and greater market dominance for Top Glove. We project
robust earnings growth ahead (2-year EPS CAGR: 23%) as we have already Statistics
Industrials
incorporated for earnings from Aspion. Our fair value for the stock is Shariah status Yes
MYR9.85, based on 24x 2019 PER (+2SD to mean). The stock is a HOLD. 52w high/low (MYR) 9.16/4.57
Free float (%) 50.2
Catalysts: More supply cut from China
Key catalysts for the stock include the following: (i) more supply cuts Market capitalisation MYR11.3B
from China, which would result in protracted tight supply situation and USD2.8B
potentially result in stronger sales volume and margin expansion for the Major shareholders:
Malaysian glove players; (ii) a stronger USD/MYR could also benefit Top LIM WEE CHAI 29.3%
Glove as almost all of its sales receipts is USD-denominated; (ii) lower Employees Provident Fund 6.0%
Firstway United Corp. 5.1%
latex and NBR prices (c.48% of its total costs), which would lift margins.
Malaysia
Price Performance
Valuations: Trading at 23x 2019 PER 9.5 160
9.0 150
We project robust earnings growth ahead (2-year EPS CAGR: 23%) as we 8.5 140
have already incorporated for earnings from Aspion. Given its strong 8.0 130
7.5 120
earnings growth, margin improvement and greater market dominance,
7.0 110
we have ascribed a 24x PER target (+2SD to mean) to its 2019 EPS to 6.5 100
derive our target price of MYR9.85. The EGM to seek shareholders’ 6.0 90
5.5 80
approval on the proposed acquisition of Aspion will convene in Mar 2018
5.0 70
and the deal is targeted to complete in Apr 2018. 4.5 60
4.0 50
Risks: Oversupply situation may recur
Top Glove - (LHS, MYR) Top Glove / Kuala Lumpur Composite Index - (RHS, %)
The tight supply situation may ease in 2H18 in view of large capacity
coming onstream from Malaysia and potential resumption of supply from -1M -3M -12M
China. This would lead to ASP competition and margin erosion for the Absolute (%) 37 52 71
Malaysian glove players. We estimate that the new capacity from Relative to index (%) 30 46 57
Malaysia’s Top 4 + Riverstone would total 18.2b pcs p.a. in 2018 (or Source: FactSet
capacity growth of 14% YoY); this is more than what was added in 2015
(14.2b pcs p.a.), which led to heated ASP competition in 2H15-1H16.
FYE Aug (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 2,889 3,409 4,142 5,084 5,632
EBITDA 523 485 652 825 926
Core net profit 361 333 434 511 552
Core EPS (sen) 28.9 26.5 34.4 40.1 43.3
Core EPS growth (%) 27.9 (8.0) 29.6 16.5 8.0
Net DPS (sen) 14.5 14.5 17.2 20.0 21.6
Core P/E (x) 31.2 33.9 26.2 22.5 20.8
P/BV (x) 6.2 5.6 5.1 4.6 4.2
ROAE (%) 21.1 17.4 20.5 21.7 21.1
ROAA (%) 13.5 11.9 11.3 10.6 11.1
EV/EBITDA (x) 9.6 14.4 19.6 15.6 13.7
Net gearing (%) (incl perps) net cash net cash 64.7 54.2 42.5
MKE vs. Consensus (%) - - 8.2 13.9 11.8
Lee Yen Ling

(603) 2297 8691
85
Vizione Holdings (VZH MK )
Not Rated
Niche in affordable housing Share Price MYR 0.18
Investment case: Heeding the Government’s call Company Description

Vizione Holdings engages in the property
With over 20 years of experience in the construction industry, Vizione
development, construction, and property investment
seeks to enhance its presence and strength in the construction of low business.
cost and affordable homes, this being a key segment of the property
market that the Government actively promotes and for which there is
much ongoing demand. Vizione is NOT RATED. Statistics
Industrials
Shariah status Yes

Catalysts: Much demand for affordable housing 52w high/low (MYR) 0.18/0.10
The acquisition of Wira Syukur Sdn Bhd (WSSB) in 2017 further Free float (%) 51.7
strengthens Vizione’s position in the affordable homes space, and on a Issued shares (m) 3,538
combined basis, the group now has a combined outstanding orderbook of Market capitalisation MYR636.9M
MYR3.6b spanning 29 projects in hand. Meanwhile, its tender book size USD159M
currently stands at about MYR2.9b. That there is much demand for low Major shareholders:
cost/affordable homes is reflected in Budget 2018, which calls for the LAU CHEW MEE 21.2%
construction of over 257k units across various housing programs. About NG AUN HOOI 15.5%
BEE JIAN MING 2.0%
20-30% of Vizione’s new tenders are from the Government’s affordable
Malaysia
housing projects. On the regional front, Vizione is currently exploring Price Performance
opportunities to develop low cost housing in Indonesia and other 0.200 220
neighbouring countries, with plans to venture into ASEAN infrastructure
0.180 200
construction as well.
0.160 180
Valuations: Profit guarantee provides upside 0.140 160
0.120 140
Attached to the acquisition of WSSB is a profit guarantee of MYR82.6m
0.100 120
for CY17/18, which has yet to be reflected in Vizione’s results, and this
should provide the impetus for a jump in its FY18/19 earnings. Consensus 0.080 100
is forecasting a surge in FY18 net profit to MYR31m from MYR0.6n in FY17 0.060
80
and to MYR62m in FY19, which translates to an FY19E PER of 9.7x. Vizione Holdings - (LHS, MYR)
Vizione Holdings / Kuala Lumpur Composite Index - (RHS, %)
Risks: Competition could narrow margins -1M -3M -12M

We expect the demand for low cost/affordable housing to be stable but Absolute (%) 24 20 38
competition has heated up, for this is a target segment of most property Relative to index (%) 17 16 27
developers. There is thus the risk that margins could narrow, as a result. Source: FactSet
FY E May (MY R m) FY 12/12 FY 12/13 17M FY 15 FY 16A FY 17A

Revenue 11.0 4.2 96.4 36.7 49.1
EBITDA 1.4 (24.7) 1.9 0.7 2.0
Net profit 0.4 (25.6) (0.9) 0.1 0.6
EPS (sen) 0.3 (11.1) (0.3) 0.0 0.1
EPS growth (%) nm nm (97.1) nm >100
Net DPS (sen) - - - - -
P/E (x) 70.0 nm nm 437.5 145.8
P/BV (x) 1.5 3.0 3.2 3.1 2.0
Net dividend yield (%) - - - - -
ROAE (%) 2.4 (141.8) (5.6) 0.7 1.3
ROAA (%) 1.7 (109.4) (3.1) 0.4 1.1
EV/EBITDA (x) 1.6 2.8 3.1 15.7 6.0
Net debt/equity (%) 0.1 net cash net cash 12.6 3.9
Desmond Ch’ng
(603) 2297 8680
86
V.S. Industry (VSI MK)
BUY
Valuations backed by visible Share Price
12m Price Target
MYR 3.10
MYR 3.55 (+15%)
earnings growth Previous Price Target MYR 3.55
Investment case: A world class EMS player Company Description

VS Industry Bhd is one of the Top 50 EMS providers in
VSI is the largest listed electronics manufacturing services (EMS) provider
the world engaged in the manufacturing and assembly
in Malaysia (ranked No. 28 in MMI’s Top 50 EMS players globally) and an
of consumer electronic products.
established one-stop shop for its globally renowned clients, which
include prominent consumer electronics brands. Aggressive floor space
expansion in line with its key client’s ambitious growth target (backed by Statistics
Technology
strong demand) would likely place VSI on a multi-year growth trajectory. Shariah status Yes
Catalysts: Aggressive expansion by key clients 52w high/low (MYR) 3.16/1.44
Key earnings driver this year will come from VSI’s exposure to an
Free float (%) 58.4
undisclosed premium consumer electronic company for the latter’s key
products (i.e. household cleaning, beauty care), supplemented by
contributions from Keurig, an American single-serve coffee maker. VSI’s
USD1.0B
key client, Customer X, is seeing significant growth in its China and
Major shareholders:
Japan markets and aims to double its shipment volume of all key BEH KIM LING 8.3%
products over the next 3 years; Customer X accounted for 34% of VSI’s GAN CHU CHENG 7.7%
Malaysia
FY7/17 revenue and this is expected to expand to 50% in FY7/18, driven Kumpulan Wang Persaraan 7.1%
by strong volume growth. For this, we see strong order visibility which
Price Performance
will power our 26% 3-year projected earnings CAGR (FY17-20) for VSI.
3.50 260
Valuations: Best is yet to come
3.00 220
We see more legs to VSI’s earnings growth, especially in its China
operation (under 43.6%-owned VSIG) which is anticipating major contract 2.50 180
wins, as indicated in its recently concluded rights issue announcement.

2.00 140
Elsewhere, VSI is also looking to adopt further automation in the
Malaysian ops, having seen success in its Zhuhai, China plant. Successful 1.50 100
efforts to raise efficiency could improve margins over the long run, in
view of rising labour costs in both Malaysia and China. Our TP of MYR3.55 1.00
60
pegs VSI’s earnings to a target CY19 PER of 17.5x, in line with peers. V.S. Industry - (LHS, MYR)
V.S. Industry / Kuala Lumpur Composite Index - (RHS, %)
Risks: Customer concentration & currency
-1M -3M -12M
While most of VSI’s contracts are now denominated in MYR, ~18-22% of
FY18/19 revenue is still denominated in USD which may see forex risk
following MYR’s persistent recovery against the USD in 2017 and YTD
Source: FactSet
2018. Weaker-than-expected demand for Customer X’s (50-55% of
FY18/19 revenue) products could also derail VSI’s growth trajectory.
FYE Jul (MYR m) FY16A FY17A FY18E FY19E FY20E
Revenue 2,176 3,281 4,490 5,309 5,989
EBITDA 226 322 459 537 610
Core net profit 135 176 244 298 353
Core EPS (sen) 8.6 11.1 15.4 18.9 22.3
Core EPS growth (%) (18.0) 29.7 39.0 22.3 18.2
Net DPS (sen) 4.7 5.9 7.7 9.4 11.2
Core P/E (x) 36.2 27.9 20.1 16.4 13.9
P/BV (x) 5.6 4.6 4.2 3.7 3.3
ROAE (%) 14.2 16.1 21.8 23.8 24.9
ROAA (%) 7.1 7.2 7.9 8.6 9.4
EV/EBITDA (x) 10.9 12.6 12.3 10.5 9.1
MKE vs. Consensus (%) - - 0.4 (5.3) (5.4)
Ivan Yap
(603) 2297 8612
87
Yinson Holdings (YNS MK)
BUY
A growth stock with improving Share Price
12m Price Target
MYR 4.06
MYR 4.45 (+10%)
visibility Previous Price Target MYR 4.45
Investment case: Steady as it grows Company Description

Yinson is the Top 6 FPSO operator in the world by
Yinson is one of our key O&G picks. We are upbeat on Yinson for its
fleet size. OSV and non-O&G (transport & trading)
business direction; the ability to create value, steady earnings growth, a operations are complementary businesses.
visible tender pipeline and cashflow strength. Our SOP-based TP has
upside should Yinson crystalize its prospects into job wins – BUY.
Statistics
Catalysts: Strong growth prospects & stake sale Shariah status Yes
Oil & Gas
52w high/low (MYR) 4.29/2.99

We expect Yinson to finalise the LOA for FPSO Lam Son by 1QCY18. That, 3m avg turnover (USDm) 2.1
in our view (on LOI since Jul 2017) could potentially add between 4-10 Free float (%) 51.9
sen (on a 3-year firm contract period) and 6-13 sen (3-year extension) Issued shares (m) 1,093
respectively to NPV/shr, based on DCR estimates of USD50k-100k Market capitalisation MYR4.4B
(previous: USD200k). We also expect Yinson to officially announce its USD1.1B
Layang charter, which will deploy FPSO Four Rainbow. That aside, tender Major shareholders:
prospects for 2018 remain strong. Yinson is prospecting for 2-3 firm LIM HAN WENG 16.0%
tenders. Winning any of these could lead to upside to earnings and NPV. Kumpulan Wang Persaraan 14.0%
Malaysia
Clic k he re to enter text.
The sale of the earlier agreed 26% stake in FPSO JAK to a Japanese Price Performance
consortium (Sumitomo Corp-K-Line-JGC Development Bank of Japan) for
4.40 140
USD117m is also expected to be finalised by 1QCY18. In this deal, Yinson 4.20 135
gets to: (i) de-risk, recouping 45% of its equity value on this project; (ii) 4.00 130
de-gear, lowering its pro forma net debt/gearing by 18%/20-ppt (0.9x 3.80 125
3.60 120
currently); and (iii) form a strategic partnership & access a new pool of
3.40 115
strong capital partners and vessels for future conversion bids with 3.20 110
options on lower refinancing rates. All in, Yinson offers investor resilient 3.00 105
growth prospect, improving balance sheet and cashflows and 2.80 100
undemanding valuations. 2.60 95

2.40 90
Valuations & risks: Execution, among others Yinson Holdings - (LHS, MYR)
Yinson Holdings / Kuala Lumpur Composite Index - (RHS, %)
Our TP is SOP-based, valuing its FPSOs on an NPV basis. Poor

-1M -3M -12M
counterparties, cost overruns during conversion works, delivery delays
and inability to secure final asset acceptance, are some of the key risks
associated with this business.
Source: FactSet
FYE Jan (MYR m) FY16A FY17A FY18E FY19E FY20E

Revenue 1,039 764 1,001 1,140 1,140
EBITDA 261 284 561 698 704
Core net profit 173 219 375 341 357
Core EPS (sen) 16.2 20.6 35.2 31.9 33.5
Core EPS growth (%) 17.5 26.8 71.0 (9.3) 4.9
Net DPS (sen) 1.5 16.8 10.4 10.0 10.0
Core P/E (x) 25.0 19.7 11.5 12.7 12.1
P/BV (x) 1.9 1.8 1.4 1.3 1.2
ROAE (%) 12.0 8.5 13.7 10.7 10.4
ROAA (%) 4.8 3.9 5.6 4.8 4.8
EV/EBITDA (x) 15.6 21.4 11.8 8.9 8.4
MKE vs. Consensus (%) - - 8.1 2.0 3.0
Liaw Thong Jung

(603) 2297 8688
88
Yong Tai (YTB MK)
Not Rated
Reliving Melaka’s glory days Share Price MYR 1.67
Investment case: Best proxy to Melaka tourism Company Description

Yong Tai is a tourism related property developer. It
Yong Tai is a Melaka-centric tourism related property developer which
also owns and operates the Encore Melaka theatre.
also holds a 30-year concession to stage Encore Melaka that will retell
the rich history of Melaka. Encore Melaka is the tenth instalment of the
Impression Series, a popular series of live musical shows in China co-
founded by critically acclaimed Chinese director, Zhang Yimou. The stock Statistics
Real Estate
is NOT RATED. 52w high/low (MYR) 1.69/1.21

Catalysts: Rapid infrastructure development Free float (%) 39.9
Earnings catalysts include: (i) rapid infrastructure development such as Market capitalisation MYR802.7M
the Melaka International Airport extension, Kuala Lumpur-Singapore High USD202M
Speed Rail and Melaka-Port Dickson-Klang Coastal Highway. Improved Major shareholders:
connections should aid in driving more tourists through Melaka to visit Co-Prosperity Holdings Ltd. 31.2%
Encore Melaka; (ii) a largely undeveloped land bank - Yong Tai still has BOO KUANG LOON 13.3%
LEE EE HOE 7.0%
104 acres or 73% of undeveloped land bank which yield latent upside
potential.
Malaysia
Price Performance
1.80 320
Valuations: Strong growth prospects 1.60 280
Consensus forecasts Yong Tai’s earnings to surge from MYR14m in FY6/17
1.40 240
to MYR54m in FY6/18 before stabilising at MYR158m in FY6/19. According
to consensus estimates, Yong Tai is trading at FY18/FY19E PER of 18x/7x 1.20 200
and FY18/FY19E P/BV of 1.4x/1.7b. Consensus does not expect Yong Tai 1.00 160
to declare a dividend in FY18 due to the heavy capex requirement for
0.80 120
Encore Melaka (MYR300m-MYR400m).
0.60 80
Risks: Lower-than-expected Encore Melaka ticket sales
Yong Tai - (LHS, MYR) Yong Tai / Kuala Lumpur Composite Index - (RHS, %)
Risks include: (i) Lower-than-expected Encore Melaka utilisation rate
should visitor numbers fail to meet targets. That said, Yong Tai has -1M -3M -12M
procured six travel agents to underwrite 1m tickets p.a.; (ii) negative Absolute (%) 17 4 30
regulatory changes in the property sector; and (iii) Chinese capital Relative to index (%) 11 (0) 20
controls – Yong Tai does target Chinese property investors who are Source: FactSet
subject to capital controls.
FYE Jun (MYR m) FY13A FY14A FY15A FY16A FY17A

Revenue 67 48 66 18 85
EBITDA (3) 3 4 2 19
Core net profit (6) (1) 2 1 14
Core FDEPS (sen) (14.8) (0.9) 3.2 0.5 3.2
Core FDEPS growth(%) na nm nm (83.2) 492.7
Net DPS (sen) 0.0 0.0 0.0 0.0 0.0
Core FD P/E (x) nm nm 52.1 nm 52.5
P/BV (x) 2.9 4.3 3.2 3.0 1.5
ROAE (%) na (16.5) 3.7 1.0 6.9
ROAA (%) na (0.7) 1.6 0.7 3.9
EV/EBITDA (x) nm 23.0 nm 72.4 29.8
Net gearing (%) (incl perps) 92.2 153.1 net cash net cash net cash
Yin Shao Yang

(603) 2297 8916
89
YTL Corporation (YTL MK)
Not Rated
International footprint Share Price MYR 1.46
Investment case: Positioned for long-term growth Company Description

YTL Corp. is an investment holding company, which
YTL is a diversified conglomerate with over 70% of revenue derived from
engages in the ownership and management of
outside Malaysia. The utilities segment (via 54%-owned YTL Power, HOLD, regulated utilities and infrastructural assets.
TP: MYR1.34) is YTL’s largest earnings contributor (53% of YTL’s FY17 pre-
tax profit), while cement is a distant second (13%). Two new power plant
projects have been secured in recent years, which would materially Statistics
enhance utilities earnings upon commissioning (after 2020). The stock is 52w high/low (MYR) 1.53/1.13
NOT RATED. 3m avg turnover (USDm) 2.2
Utilities
Free float (%) 34.7

Catalysts: Financial close and cement recovery
Of the two new power plant projects, construction of 45%-owned Attarat USD4.1B
Power in Jordan has commenced, while 80-%-owned Tj Jati A in Indonesia Major shareholders:
has yet to achieve financial close. The commencement of construction Yeoh Tiong Lay & Sons Holdings Sdn. Bhd. 47.1%
for Tj Jati A would likely be viewed positively. Cement’s profitability has Employees Provident Fund 6.1%
YTL Corp Bhd. 3.4%
been suppressed in recent years due to industry overcapacity. An
improvement in the overall demand-supply dynamics would lead to
Malaysia
Price Performance
improved earnings. 1.80 140
For construction, YTL’s 100%-subsidiary, Syarikat Pembinaan YTL Sdn Bhd, 1.70 130
is one of the two sub-contractors for the Gemas-Johor Bahru electrified 1.60 120
double-tracking rail project (source: The Star, 13 Jan 2018), and it is also 1.50 110
tendering for other Malaysia rail projects, notably the Kuala Lumpur-
1.40 100
Singapore high-speed rail (according to press reports). A sizeable award
1.30 90
would significantly enhance YTL’s construction order book.
1.20 80
Valuations: Lower dividend yield 1.10

70
Based on consensus forecasts, YTL trades at 22.8x FY18E PER while

YTL Corp - (LHS, MYR) YTL Corp / Kuala Lumpur Composite Index - (RHS, %)
offering a 4.0% dividend yield. Dividend yield has trended down, with
consensus expecting YTL to maintain a low DPS in lieu of impending -1M -3M -12M
capex (DPS was cut sharply to 5.0sen in FY17 from 9.5sen in FY16). Absolute (%) 27 8 (3)
Relative to index (%) 20 4 (11)
Risks: Execution hiccups and cement deterioration Source: FactSet
Key risks include 1) execution hiccups pertaining to the construction of

the two new power plants and 2) further erosion of cement margins.

Revenue 20,033 19,269 16,755 15,378 14,729
EBITDA 4,615 5,320 4,997 4,914 4,322
Net profit 1,267 1,555 1,018 916 813
EPS (sen) 12.2 15.0 9.8 8.8 7.7
EPS growth (%) (0.4) 23.0 (34.7) (10.2) (12.0)
Net DPS (sen) 2.5 12.0 9.5 9.5 5.0
P/E (x) 12.0 9.7 14.9 16.6 18.9
P/BV (x) 1.1 1.1 1.0 1.0 1.0
ROAE (%) 10.1 11.3 7.0 6.3 5.5
ROAA (%) 2.4 2.7 1.6 1.4 1.1
EV/EBITDA (x) 2.5 2.5 2.7 2.7 3.1
Net debt/equity (%) 1.3 1.4 1.6 1.6 2.0
Tan Chi Wei, CFA

chiwei.t@maybank-ib.com
(603) 2297 8690
90
Research Offices
REGIONAL MALAYSIA HONG KONG / CHINA THAILAND
Sadiq CURRIMBHOY WONG Chew Hann, CA Head of Research Christopher WONG Maria LAPIZ Head of Institutional Research
Regional Head, Research & Economics (603) 2297 8686 wchewh@maybank-ib.com (852) 2268 0652 Dir (66) 2257 0250 | (66) 2658 6300 ext 1399
(65) 6231 5836 • Strategy christopherwong@kimeng.com.hk Maria.L@maybank-ke.co.th
sadiq@maybank-ke.com.sg • HK & China Properties • Strategy • Consumer • Materials • Ind. Estates
Desmond CH’NG, ACA • Oil & Gas • Telcos
WONG Chew Hann, CA (603) 2297 8680 Jacqueline KO, CFA
Sittichai DUANGRATTANACHAYA
desmond.chng@maybank-ib.com (852) 2268 0633 jacquelineko@kimeng.com.hk
Regional Head of Institutional Research (66) 2658 6300 ext 1393
• Banking & Finance • Consumer Staples & Durables
(603) 2297 8686 Sittichai.D@maybank-ke.co.th
wchewh@maybank-ib.com Ka Leong LO, CFA • Services Sector • Transport • Property • Telcos
LIAW Thong Jung
(603) 2297 8688 tjliaw@maybank-ib.com (852) 2268 0630 kllo@kimeng.com.hk Tanawat RUENBANTERNG
ONG Seng Yeow • Consumer Discretionary & Auto
• Oil & Gas Services- Regional (66) 2658 6300 ext 1394
Regional Head of Retail Research Tanawat.R@maybank-ke.co.th
(65) 6231 5839 Mitchell KIM • Banks & Diversified Financials
ONG Chee Ting, CA
ongsengyeow@maybank-ke.com.sg (852) 2268 0634 mitchellkim@kimeng.com.hk
(603) 2297 8678 ct.ong@maybank-ib.com Ornmongkol TANTITANATORN
• Internet & Telcos
• Plantations - Regional (66) 2658 6300 ext 1395
TAN Sin Mui
Ning MA, CFA ornmongkol.t@maybank-ke.co.th
Director of Research Mohshin AZIZ • Oil & Gas
(852) 2268 0672 ningma@kimeng.com.hk
(65) 6231 5849 (603) 2297 8692 mohshin.aziz@maybank-ib.com • Insurance Sukit UDOMSIRIKUL Head of Retail Research
sinmui@kimeng.com.hk • Aviation - Regional • Petrochem
(66) 2658 5000 ext 5090
Ricky NG, CFA Sukit.u@maybank-ke.co.th
ECONOMICS YIN Shao Yang, CPA (852) 2268 0689 rickyng@kimeng.com.hk
(603) 2297 8916 samuel.y@maybank-ib.com • Regional Renewables Ekachai TARAPORNTIP Deputy Head
Suhaimi ILIAS • Gaming – Regional • Media • HK & China Properties 66) 2658 5000 ext 1530
Chief Economist Ekachai.t@maybank-ke.co.th
Malaysia | Philippines | China TAN Chi Wei, CFA Sonija LI, CFA, FRM Surachai PRAMUALCHAROENKIT
(603) 2297 8682 (603) 2297 8690 chiwei.t@maybank-ib.com (852) 2268 0641 sonijali@kimeng.com.hk (66) 2658 5000 ext 1470
suhaimi_ilias@maybank-ib.com • Power • Telcos • Gaming Surachai.p@maybank-ke.co.th
• Auto • Conmat • Contractor • Steel
CHUA Hak Bin WONG Wei Sum, CFA Stefan CHANG, CFA
Regional Thematic Macroeconomist (603) 2297 8679 weisum@maybank-ib.com (852) 2268 0675 stefanchang@kimeng.com.hk Suttatip PEERASUB
(65) 6231 5830 • Technology – Regional (66) 2658 5000 ext 1430
• Property
chuahb@maybank-ke.com.sg suttatip.p@maybank-ke.co.th
LEE Yen Ling Bonny WENG • Media • Commerce
LEE Ju Ye (603) 2297 8691 lee.yl@maybank-ib.com (852) 2268 0644 bonnyweng@kimeng.com.hk Sutthichai KUMWORACHAI
Singapore • Building Materials • Glove • Ports • Shipping • Technology – Regional (66) 2658 5000 ext 1400
(65) 6231 5844 sutthichai.k@maybank-ke.co.th
leejuye@maybank-ke.com.sg Ivan YAP Tony REN, CFA • Energy • Petrochem
(603) 2297 8612 ivan.yap@maybank-ib.com (852) 2268 0640 tonyren@kimeng.com.hk
• Healthcare & Pharmaceutical Termporn TANTIVIVAT
Dr Zamros DZULKAFLI • Automotive • Semiconductor • Technology (66) 2658 5000 ext 1520
(603) 2082 6818 termporn.t@maybank-ke.co.th
zamros.d@maybank-ib.com Kevin WONG INDIA
• Property
(603) 2082 6824 kevin.wong@maybank-ib.com Jigar SHAH Head of Research
Ramesh LANKANATHAN • REITs • Consumer Discretionary Jaroonpan WATTANAWONG
(91) 22 6623 2632 jigar@maybank-ke.co.in (66) 2658 5000 ext 1404
(603) 2297 8685
ramesh@maybank-ib.com LIEW Wei Han • Strategy • Oil & Gas • Automobile • Cement jaroonpan.w@maybank-ke.co.th
(603) 2297 8676 weihan.l@maybank-ib.com • Transportation • Small cap
Vishal MODI
FX • Consumer Staples Sorrabhol VIRAMETEEKUL
(91) 22 6623 2607 vishal@maybank-ke.co.in Head of Digital Research
Saktiandi SUPAAT Adrian WONG • Banking & Financials (66) 2658 5000 ext 1550
Head, FX Research (603) 2297 8675 adrian.wkj@maybank-ib.com sorrabhol.V@maybank-ke.co.th
(65) 6320 1379 • Construction • Healthcare Neerav DALAL • Food, Transportation
saktiandi@maybank.com.sg (91) 22 6623 2606 neerav@maybank-ke.co.in Wijit ARAYAPISIT
Jade TAM • Software Technology • Telcos (66) 2658 5000 ext 1450
Christopher WONG
(65) 6320 1347 (603) 2297 8687 jade.tam@maybank-ib.com wijit.a@maybank-ke.co.th
• Media • Building Materials Vishal PERIWAL • Strategist
wongkl@maybank.com.sg
(91) 22 6623 2605 vishalperiwa@maybank-
Leslie TANG Mohd Hafiz Hassan ke.co.in VIETNAM
(603) 2082 6819 mohdhafiz.ha@maybank-ib.com • Infrastructure
(65) 6320 1378
• Small & Mid Caps LE Hong Lien, ACCA
leslietang@maybank.com.sg
INDONESIA Head of Institutional Research
Syairah bt Abdul Malik (84 28) 44 555 888 x 8181
Fiona LIM
(603) 2297 8641 syairah.am@maybank-ib.com Isnaputra ISKANDAR Head of Research lien.le@maybank-kimeng.com.vn
(65) 6320 1374
• Telcos (62) 21 8066 8680 • Strategy • Consumer • Diversified
fionalim@maybank.com.sg
isnaputra.iskandar@maybank-ke.co.id
Siti Nor Amirah bt Mohd Azmi • Strategy • Metals & Mining • Cement THAI Quang Trung, CFA,
STRATEGY Deputy Head, Institutional Research
(603) 2297 8769 amirah.azmi@maybank-ib.com Rahmi MARINA
Sadiq CURRIMBHOY • Plantations (84 28) 44 555 888 x 8180
(62) 21 8066 8689 trung.thai@maybank-kimeng.com.vn
Global Strategist rahmi.marina@maybank-ke.co.id
TEE Sze Chiah Head of Retail Research • Real Estate • Construction • Materials
(65) 6231 5836 • Banking & Finance
sadiq@maybank-ke.com.sg (603) 2082 6858 szechiah.t@maybank-ib.com
Aurellia SETIABUDI LE Nguyen Nhat Chuyen
Nik Ihsan Raja Abdullah, MSTA, CFTe (62) 21 8066 8691 (84 28) 44 555 888 x 8082
Willie CHAN
(603) 2297 8694 aurellia.setiabudi@maybank-ke.co.id chuyen.le@maybank-kimeng.com.vn
Hong Kong / Regional • Oil & Gas
nikmohdihsan.ra@maybank-ib.com • Property
(852) 2268 0631
williechan@kimeng.com.hk Janni ASMAN NGUYEN Thi Ngan Tuyen,
SINGAPORE (62) 21 8066 8687 Head of Retail Research
FIXED INCOME Neel SINHA Head of Research
janni.asman@maybank-ke.co.id (84 28) 44 555 888 x 8081
• Cigarette • Healthcare • Retail tuyen.nguyen@maybank-kimeng.com.vn
Winson Phoon, ACA (65) 6231 5838 neelsinha@maybank-ke.com.sg
• Strategy • Food & Beverage • Oil&Gas • Banking
(603) 2074 7176 PHILIPPINES
winsonphoon@maybank-ib.com • SMID Caps – Regional
TRUONG Quang Binh,
Minda OLONAN Head of Research Deputy Head, Retail Research
CHUA Su Tye
Se Tho Mun Yi (63) 2 849 8840
(65) 6231 5842 chuasutye@maybank-ke.com.sg (84 28) 44 555 888 x 8087
(603) 2074 7606 minda_olonan@maybank-atrke.com
• REITs binh.truong@maybank-kimeng.com.vn
munyi.st@maybank-ib.com • Strategy • Rubber Plantation • Tyres & Tubes • Oil & Gas
Derrick HENG, CFA Katherine TAN
(65) 6231 5843 derrickheng@maybank-ke.com.sg (63) 2 849 8843 TRINH Thi Ngoc Diep
• Property • REITs (Office) kat_tan@maybank-atrke.com (84 28) 44 555 888 x 8208
• Banks • Construction diep.trinh@maybank-kimeng.com.vn
Luis HILADO • Technology • Utilities • Construction
(65) 6231 5848 luishilado@maybank-ke.com.sg Luis HILADO
• Telcos (65) 6231 5848 luishilado@maybank-ke.com.sg NGUYEN Thi Sony Tra Mi
• Telcos (84 28) 44 555 888 x 8084
John CHEONG, CFA
mi.nguyen@maybank-kimeng.com.vn
(65) 6231 5845 johncheong@maybank-ke.com.sg
• Port Operation • Pharmaceutical
• Small & Mid Caps • Healthcare • Transport
• Food & Beverage
NG Li Hiang
(65) 6231 5840 nglihiang@maybank-ke.com.sg NGUYEN Thanh Lam
• Banks (84 28) 44 555 888 x 8086
thanhlam.nguyen@maybank-kimeng.com.vn
LAI Gene Lih • Technical Analysis
(65) 6231 5832 laigenelih@maybank-ke.com.sg
• Technology
January 21, 2018 91

Maybank Investment Bank: Sales Team
Lucy Chong
Regional Co-Head, Institutional Sales
Regional Head, Corporate Access
lchong@maybank-ib.com
Kharul Hurri b Khalid Abbas Loke Su Yen

Head of Institutional Sales, Malaysia Deputy Head of Institutional Sales, Malaysia
kharul.hurri@maybank-ib.com suyen@maybank-ib.com
Wong Sit Yin Norly bt Abdul Khalim

Institutional Sales Institutional Sales
sityin@maybank-ib.com nkhalim@maybank-ib.com
Hiew Wee Leong Ahmad Lutfi b Mahmud

wee.leong@maybank-ib.com lutfi@maybank-ib.com
Nor Syakirah bt Ahmad Rafiqa Shireen bt Datok Khalid

Institutional Sales Instituional Sales
syakirah@maybank-ib.com rafiqa@maybank-ib.com
Sean Michael La Faber Ng Shui Lin

sean.michael@maybank-ib.com shuilin@maybank-ib.com
January 21, 2018 92

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as
an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate
and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental
ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and
volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than
the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment
advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read
this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment
strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank
Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of
this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees
(collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this
report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”,
“intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might”
occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us
and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking
statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or
revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence
of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law,
from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit
business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other
investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. One or more directors,
officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report to the extent permitted by law.
This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in
whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for
the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only
under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain
categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on
geographical location of the person or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental
ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia
Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank
KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact
Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited
investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally
liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank
Kim Eng Securities (Thailand) Public Company Limited. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) accepts no liability
whatsoever for the actions of third parties in this respect.
Due to different characteristics, objectives and strategies of institutional and retail investors, the research reports of MBKET Institutional and Retail Research
Department may differ in either recommendation or target price, or both. MBKET Retail Research is intended for retail investors (http://kelive.maybank-
ke.co.th) while Maybank Kim Eng Institutional Research is intended only for institutional investors based outside Thailand only.
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the
Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand
and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the
perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the
Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MBKET does not confirm nor certify the
accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made
in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission.
Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-
corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed
company. The assessment result is therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment of operation and is not
based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after
that date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the accuracy and completeness of
the assessment result.
US
This third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities
Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under
Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne
by Maybank KESUSA. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it
available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you
under relevant legislation and regulations. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security mentioned
within must do so with: Maybank Kim Eng Securities USA Inc. 777 Third Avenue 21st Floor New York, New York 1- (212) 688-8886 and not with, the issuer of
this report.
January 21, 2018 93
UK
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Conduct
Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial
Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any
responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as
constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.
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 Bursa
Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This report is distributed in
Singapore by Maybank KERPL (Co. Reg No 198700034E) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Maybank Kim Eng Securities
(“PTMKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the Financial Services Authority (Indonesia).
Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and
Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities
and Exchange Commission. Vietnam: Maybank Kim Eng Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of
Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited
(“KESI”) is a participant of the National Stock Exchange of India Limited and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of
India (“SEBI”) (Reg. No. INZ000010538). KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) and as Research Analyst (Reg
No: INH000000057) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538)
is authorized and regulated by the Financial Conduct Authority.
Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further
act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment
banking services, advisory and other services for or relating to those companies.
Singapore: As of 21 January 2018, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the
research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected
parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.
Hong Kong: As of 21 January 2018, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.
India: As of 21 January 2018, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst or
their associate / relative does not hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the
subject companies except as otherwise disclosed in the research report.
In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or
third party in connection with the research report on any account what so ever except as otherwise disclosed in the research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in
issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or
investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the
companies covered in this report.
OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of
the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable
of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political
factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality
of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its
own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.
Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
SELL Return is expected to be below -10% in the next 12 months (excluding dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only
applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment
ratings as we do not actively follow developments in these companies.
January 21, 2018 94

 Malaysia  Singapore  London  New York

Maybank Investment Bank Berhad Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Securities Maybank Kim Eng Securities USA
(A Participating Organisation of Maybank Kim Eng Research Pte Ltd (London) Ltd Inc
Bursa Malaysia Securities Berhad) 50 North Canal Road PNB House 777 Third Avenue, 21st Floor
33rd Floor, Menara Maybank, Singapore 059304 77 Queen Victoria Street New York, NY 10017, U.S.A.
100 Jalan Tun Perak, London EC4V 4AY, UK
50050 Kuala Lumpur Tel: (65) 6336 9090 Tel: (212) 688 8886
Tel: (603) 2059 1888; Tel: (44) 20 7332 0221 Fax: (212) 688 3500
Fax: (603) 2078 4194 Fax: (44) 20 7332 0302
Stockbroking Business:  Hong Kong  Indonesia  India

Level 8, Tower C, Dataran Maybank,
Kim Eng Securities (HK) Ltd PT Maybank Kim Eng Securities Kim Eng Securities India Pvt Ltd
No.1, Jalan Maarof 28/F, Lee Garden Three, Sentral Senayan III, 22nd Floor 2nd Floor, The International,
59000 Kuala Lumpur
1 Sunning Road, Causeway Bay, Jl. Asia Afrika No. 8 16, Maharishi Karve Road,
Tel: (603) 2297 8888
Hong Kong Gelora Bung Karno, Senayan Churchgate Station,
Fax: (603) 2282 5136
Jakarta 10270, Indonesia Mumbai City - 400 020, India
Tel: (852) 2268 0800
Fax: (852) 2877 0104 Tel: (62) 21 2557 1188 Tel: (91) 22 6623 2600
Fax: (62) 21 2557 1189 Fax: (91) 22 6623 2604
 Philippines  Thailand  Vietnam  Saudi Arabia

Maybank ATR Kim Eng Securities Inc. Maybank Kim Eng Securities Maybank Kim Eng Securities Limited In association with
17/F, Tower One & Exchange Plaza (Thailand) Public Company Limited 4A-15+16 Floor Vincom Center Dong Anfaal Capital
Ayala Triangle, Ayala Avenue 999/9 The Offices at Central World, Khoi, 72 Le Thanh Ton St. District 1 Villa 47, Tujjar Jeddah
Makati City, Philippines 1200 20th - 21st Floor, Ho Chi Minh City, Vietnam Prince Mohammed bin Abdulaziz
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Tel: (63) 2 849 8888 Bangkok 10330, Thailand Tel : (84) 844 555 888 Jeddah 21352
Fax: (63) 2 848 5738 Fax : (84) 8 38 271 030
Tel: (66) 2 658 6817 (sales) Tel: (966) 2 6068686
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 South Asia Sales Trading  North Asia Sales Trading

Kevin Foy Andrew Lee
Regional Head Sales Trading andrewlee@kimeng.com.hk
kevinfoy@maybank-ke.com.sg Tel: (852) 2268 0283
Tel: (65) 6636-3620 US Toll Free: 1 877 837 7635
US Toll Free: 1-866-406-7447
Malaysia Thailand
Joann Lim Tanasak Krishnasreni
joann.lim@maybank-ib.com Tanasak.K@maybank-ke.co.th
Tel: (603) 2717 5166 Tel: (66)2 658 6820
Indonesia London
Harianto Liong Mark Howe
harianto.liong@maybank-ke.co.id mhowe@maybank-ke.co.uk
Tel: (62) 21 2557 1177 Tel: (44) 207-332-0221
New York India

James Lynch Sanjay Makhija
jlynch@maybank-keusa.com sanjaymakhija@maybank-ke.co.in
Tel: (212) 688 8886 Tel: (91)-22-6623-2629
Vietnam Philippines
Patrick Mitchell Keith Roy
[Type a quote from the document
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January 21, 2018 96

2018 Outlook & Lookouts: Positive alignments for Malaysia's economy and equities

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INVEST MALAYSIA 2018

Invest Malaysia Kuala Lumpur 2018 Conference will feature 61 Malaysian

ECONOMICS & MARKET STRATEGY: POSITIVE ALIGNMENTS 1-30

Advancecon Holdings 31 Malaysia Airports Holdings 61

January 21, 2018

2018 Outlook & Lookouts

We expect global growth momentum to be sustained in 2018, expanding

depressed risk-free yields. China’s “de-leveraging and de-risking” also

from 2017 (MKE’s estimate: +5.8%). This will be driven by continued

underlying fundamentals for the currency.

Continued 5%-plus growth

5%-plus growth momentum to continue in 2018. We expect the 5%-plus growth

Fig 1: Malaysia: Real GDP

Manufacturing 23.4 4.4 6.2 6.1 5.8 5.5 5.3

Domestic Demand 92.4 4.3 6.7 6.8 6.4 6.4 5.5

January 21, 2018 2

Fig 2: Other Key Economic Indicators

Consumer spending in 2018 – a year of two halves…?

We expect consumer spending growth to remain around +7% in 1H18 on

January 21, 2018 3

Fig 3: Budget and non-budget measures to boost disposable income, 2016-2018

However, some of the consumer spending stimulus in 2016-2017 has expired

Consequently, we expect consumer spending growth to moderate in 2H18,

January 21, 2018 4

Higher Government spending in the election year

Fig 4: Federal Government Revenues & Expenditures

January 21, 2018 5

Investment underpinned by infrastructure delivery &

Investment activities are predominantly underpinned by ~MYR278b worth of

The forecast of moderation in real private and public investment growth in

2012 2013 2014 2015 2016 Jan-Sep 2017E 2018E

January 21, 2018 6

Moderate external trade growth in 2018 after 2017 surge

Continued export growth to sustain trade and current account surpluses.

MYR’s reversal of fortune

Oversold and undervalued amid supportive fundamentals and flows. MYR is

January 21, 2018 7

Fig 7: USDMYR Fig 8: USDMYR & Crude Oil Prices

Current Account Balance (MYRb, LHS)

2006-2010 Jan 2011-Nov 2016 Dec 2016-Nov 2017

January 21, 2018 8

EQUITIES: OTHER KEY INFLUENCES, LOOKOUTS

(i) Crude oil price direction

1,600 KLCI (pts, LHS) 30 37,763

MYRm (LHS) % of Total Revenues

Source: Bloomberg, Maybank KE (chart) Source: Ministry of Finance, Maybank KE (chart)

(ii) MYR’s direction

January 21, 2018 9

BNM Financial Market Committee’s announcement on 2 Dec 2016 to ban offshore

Fig 15: MYR’s expected path

Fig 16: USDMYR vs. USDMYR 30D implied volatility

Source: Bloomberg (data), Maybank KE (compilation)

Fig 17: KLCI vs. MYRUSD, 2014-2017

Source: Bloomberg (data), Maybank KE (compilation)

January 21, 2018 10

(iii) BNM’s overnight policy rate

Fig 18: Banking system BLR and OPR

Source: BNM, Maybank KE (compilation)

(iv) Consumer sentiment

January 21, 2018 11

Real Private Consumption Expenditure

Source: MIER, Maybank KE (chart) Source: Department of Statistics, Maybank KE (chart)

GST Introduction (1 Apr 2017) Motor Vehicles Trade Index