Stars are still aligning Malaysia Strategy

` 5 June 2017

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com of 53

Stars are still aligning

We believe the Malaysian stock market is still in its early-stage rally. The world economy, including developed markets, is growing on an even keel, global trade is rebounding, Malaysia’s GDP is strong, the Ringgit is strengthening, capital outflows are reversing, and commodity prices are rebounding. Hence, recent market talk of profit taking is positive, in our view, as it makes the uptrend more sustainable. We remain Positive on Malaysia with a new KLCI target of 1,813 by end-2017.

Rekindling the feeling

The KLCI has done well since hitting a post-Trump election victory trough of 1,616.64 points. Admittedly, the market rebound has made investment decisions more difficult with higher valuations and thus, associated risks. Yet the stock market is still up less than 10% since then. We believe that things will improve further as we move deeper into 2017. The global outlook has improved with the IMF revising up world GDP growth to 3.5% from 3.4% in 2017. This optimism is corroborated by the EU, which boosted its 28-member country GDP growth to 1.9% from 1.8% previously. Even Japan has increased its 2017 economic expansion to 1.6%, from 1.5% previously. Meanwhile, the Fed expects the US to grow at a median 2.1% rate. On Malaysian shores, 1Q17 GDP blew past the most optimistic expectation at 5.6% yoy driven by private consumption and gross fixed-capital formation. The current account remains in a surplus of 1.7% of GNI, while fiscal consolidation is attainable at a 3% deficit in 2017E (2016: 3.1% of GDP). Headline inflation has moderated after hitting a high of 5.1% in March 2017 and should settle in at the government’s 3-4% target for 2017.

Catalysts are building up

One catalyst for the stock market is a reversal of capital outflows that have characterised emerging markets, including Malaysia, since early November 2016. In the equity market, we are very pleased to note net inflows for every month so far this year. Total inflows up to May 2017 were RM9.8bn already more than neutralising the RM8.2bn in outflows in 2016. Meanwhile, the public debt market has seen persistent selling pressure since November 2016 culminating to a sharp RM27.5bn rush to the door in March 2017 and overwhelming the RM22.9bn inflow for the first 10 months of last year. Nonetheless, green shoots have emerged with RM6.2bn in net inflows in April 2017 into government securities. This is indirectly linked to another catalyst that is also gaining momentum – Ringgit strength.

A welcome break

Our fully-diluted EPS growth at end-February 2017 was 3.7%. Fast forward to now and analysts are still conservative with the growth rate that has been revised up just marginally to 3.8%. It is small but the trajectory is a welcome break from the past three years, and hopefully, the growth rate can pick up as the year progresses. The improvement is driven by the Banking & Financial, Oil & Gas and Healthcare sectors. On the back of the EPS growth figure, we revised up our KLCI year-end target from 1,799 to 1,813 points based on an unchanged 17.9x PE. If the earnings momentum continues, we could potentially see 6.6% fully-diluted EPS growth in 2018E, bringing the KLCI to 1,933 points next year.

Change in complexion; we maintain our 8 investment themes

We have made substantial changes to our top-picks list (see right-hand column) in part due to the market rally with many stocks reaching our target prices. In total, we have kept 10 stocks on the list, deleted 8 and made 5 additions. In the past 3 months, we initiated coverage on 12 new companies. This time around, we have provided a separate list for these 12 companies (also in right hand column) instead of including them in the usual top-picks list in order to highlight the investment merits of each stock.

Strategy

Malaysia Strategy

KLCI 1,765.87 @ 31 May 2017

POSITIVE (maintain)

KLCI Target: 1,813 Previous target: 1,799

Affin Hwang’s 8 investment themes 1. Developed nation by 2020

2. Ongoing investment cycle

3. Large middle-income society

4. Shift from public to private services

5. Private consumption

6. Young demographics

7. Rapid earnings growth

8. High dividend yield Source: Affin Hwang

Key market statistics

2017E 2018E EPS growth (%) +3.8 +6.6 Fully diluted PE (x) 17.4 16.4

Source: Affin Hwang estimates and forecasts

Top calls for 2017 Stock Rating Price TP

(RM) (RM)

Top Buys

AIRASIA* BUY 2.98 3.80 BUMI ARMADA* BUY 0.78 0.95 CIMB* BUY 6.40 7.00 GAMUDA BUY 5.34 5.70 GENTING BUY 9.97 12.06 INARI* BUY 2.04 2.60 KLK BUY 24.76 29.00 KPJ BUY 4.17 4.71 MAYBANK* BUY 9.44 10.50 PETRA ENERGY BUY 1.18 1.66 PUBLIC BANK BUY 20.06 23.25 TA ANN BUY 3.47 4.57 TENAGA BUY 13.78 16.50 UOA DEVELOPMENT BUY 2.60 2.95 WCT BUY 2.22 2.46

Source: Affin Hwang, pricing as of 31 May 2017 *new additions

Stock Rating Price TP (RM) (RM)

Recent initiations CENTURY BUY 1.28 1.70 HSS ENGINEERING BUY 0.83 1.20 LPI CAPITAL BUY 18.80 21.40 OCEANCASH BUY 0.73 0.88 PERAK TRANSIT BUY 0.28 0.34 PINTARAS BUY 3.90 4.62 QL RESOURCES BUY 4.99 5.56 SERBA DINAMIK BUY 2.09 2.40 SLP RESOURCES BUY 2.35 2.87 TUNE PROTECT BUY 1.31 1.57 WZ SATU BUY 1.15 1.52 YSP SOUTHEAST ASIA BUY 2.36 2.76

Source: Affin Hwang, pricing as of 31 May 2017

Chue Kwok-Yan (603) 2146 7618

[email protected]

` 5 June 2017


Focus Charts Fig a: Malaysia’s GDP in 1Q17 highest since 1Q15

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Fig b: Summary of government forecasts

2015 2016 2017E BNM

Date announced 21-Oct-16 23-Mar-17

GDP growth (yoy) 5.0% 4.20% 4 - 5% 4.3-4.8%

Inflation (yoy) 2.1% 2.1% 2 - 3% 3 - 4%

Fiscal deficit (RM bn) 37.2 38.7 40.3 40.3

Fiscal deficit (% GDP) 3.2% 3.1% 3.0% 3.0%

Trade surplus (RM bn) 91.6 87.3 88.3 86.4

Current account surplus (RM bn) 34.7 25.2 14.8 17.4

Current account surplus (% GNI) 3.1% 2.1% 1.1% 1-2%

Source: BNM Source: BNM, MOF

Fig c: Foreign flows for equity market

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Source: Bursa Malaysia Source: Affin Hwang, BNM, BPAM

Fig e: Ringgit against foreign flows from debt market

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Fig f: Foreign reserves at BNM

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Source: Affin Hwang, Bloomberg, BNM, BPAM Source: BNM

` 5 June 2017


Fig g: Contribution to changes in M3 for March 2017

RM 1,661.65 bn

RM 1,676.02 bn

+ 21.34

- 18.64

- 5.81

+ 17.48

Feb Government Private Foreign Others Mar

Fig h: Predetermined net drains on forex reserves

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Fig i: Change in contribution to 2017E EPS growth

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Fig j: Quarterly net profit trend

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Net Profit (LHS) YoY (RHS)(RM Bn) (%)

Source: Affin Hwang estimates Source: Companies, Affin Hwang

Fig k: PER trend for KLCI

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PE (LHS) Average PE of each year(x)

Fig l: Sector positioning

Overweight Neutral Underweight

Banks & Financial Services (↑) Building Materials Auto & Autoparts (↓)

Construction Consumer

Gaming Media

Healthcare MREIT (↓)

Insurance* Oil & Gas

Property Plantation

Rubber Products (↑) Technology

Small & Mid caps* Telecoms

Timber Transport & Logistics (↑)

Utilities

Source: Affin Hwang forecasts, Bloomberg Source: Affin Hwang

` 5 June 2017


Table of Contents Section 1 : Stars still aligning Section 2 : The right sequence Section 3 : Keeping the dream alive Section 4 : New complexion Affin Hwang’s 108-stock universe Disclaimer

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53

` 5 June 2017


Stars still aligning

Rekindling of hope

After three consecutive years of contracting performance, the KLCI is up a commendable 4.3% so far in 2017 and 9.2% from its trough on 14 November 2016. Total capitalisation of the stock market has increased by an even larger amount of 9.6% ytd from RM1.67 trillion at the end of 2016 to RM1.83 trillion as of 31 May 2017. There were some initial public offerings (Serba Dinamik at current market cap of RM2.8bn being the biggest), but nothing substantial to the extent that it could distort the total market capitalisation. This implies that the increase in market capitalisation is due to a broad-based rise in stock values and not just limited to the 30 component stocks that make up the benchmark index. Fig 1: KLCI performance 2017 ytd

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KLCI

Fig 2: Total market capitalisation

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KLCI

Source: Bloomberg Source: Bloomberg

The market rise this year has rekindled the feeling of hope among investors. The KLCI was down 5.7% in 2014, 3.9% in 2015 and a further 3% in 2016. After what felt like eternity in financial market terms, it is therefore unsurprising that chatter is emerging about locking in profits. Admittedly, the market has become less clear-cut than at the start of the year after the relatively rapid rise. Market participants will know that the most difficult stock picking period is not when the market is languishing or riding high on expensive valuation, but perched in the middle. Risks have increased as valuation has expanded, but taking profit too early means missing out on a potential rally in the future. Taking a step back

While the chatter on profit-taking is positive, in our view, as it could potentially make the rally more sustainable, we point out that the current bull market, if we can prematurely use this term, is still very young. It really started in mid-November 2016 when the KLCI hit a post-Trump low of 1,616.64 points amid persistent capital outflows from the reallocation of positions from emerging markets back into US dollar-denominated assets. In other words, the current market upswing is barely seven months old with less than a 10% rally from that trough. Our approach in assessing the current market condition is simple. It is probably true that the market has reflected the improvements in the investing environment so far; hence it is imperative for us to assess if conditions can improve further going forward and warrant a continued rise in share prices.

` 5 June 2017


Macro conditions on an even keel

Globally, the International Monetary Fund (IMF) in the latest edition of its World Economic Outlook in April 2017 upgraded the 2017 global GDP growth forecast to 3.5% from 3.4% previously while holding its 2018 rate at 3.6%. Since then, corroborating the IMF’s optimism is the European Union that guided up its 28-member country GDP growth forecast to 1.9% for both 2017 and 2018, from 1.8% previously. In Japan, the Central Bank also raised its 2017 economic expansion forecast to 1.6% from the older 1.5% rate. The Federal Reserves in the US, meanwhile, has kept its 2017 GDP growth forecast unchanged at a median rate of 2.1%. The first read of the US 1Q17 GDP rate of just 0.7% yoy raised some concerns, but the second read was better at 1.2% yoy. In Malaysia’s case, the 1Q17 GDP came in way above even the most optimistic expectation. It rose by 5.6% yoy as private consumption remained strong at 6.6% (4Q16: 6.1%), public consumption rebounded from a contraction of 4.2% in 4Q16 to 7.5% yoy growth in 1Q17, private investment accelerated to 12.9% yoy (4Q16: 4.9%) and even public investment turned around from a 0.4% contraction to a 3.2% expansion. Fig 3: Malaysia’s quarterly GDP growth

2Q16 3Q16 4Q16 1Q17 2Q16 3Q16 4Q16 1Q17 2Q16 3Q16 4Q16 1Q17

GDP by Expenditure Components

Total Consumption 6.0 5.5 3.5 6.8 2.2 5.6 4.1 -4.9 3.9 3.6 2.4 4.4

Private consumption 6.2 6.3 6.1 6.6 0.6 7.1 -2.0 1.1 3.2 3.4 3.1 3.6

Public consumption expenditure 5.5 2.1 -4.2 7.5 9.7 -0.5 31.6 -25.2 0.7 0.3 -0.7 0.9

Total Investment 6.1 2.0 2.4 10.0 10.2 -6.3 -0.8 7.4 1.7 0.5 0.6 2.5

Private investment expenditure 5.6 4.8 4.9 12.9 15.2 -11.1 -23.7 44.5 1.1 0.8 0.6 2.3

Public investment expenditure 7.7 -3.8 -0.4 3.2 -1.5 6.8 51.0 -35.1 0.5 -0.3 0.0 0.2

Domestic Demand 6.1 4.5 3.2 7.7 4.4 2.1 2.8 -1.7 5.5 4.1 3.0 7.0

Net exports -1.2 8.2 6.4 -14.5 -3.3 24.0 -4.3 -25.6 -0.1 0.7 0.5 -1.2

Exports 2.0 -0.6 2.2 9.8 0.3 4.4 5.5 -0.7 1.4 -0.4 1.6 6.9

Imports 2.4 -1.8 1.6 12.9 0.8 2.0 7.0 2.7 1.5 -1.1 1.0 8.1

Changes in inventories -160.9 226.6 -211.1 -21.0 -163.0 41.7 -172.1 22.7 -1.5 -0.5 1.0 -0.2

GDP (2010 real prices) 4.0 4.3 4.5 5.6 2.4 3.5 3.4 -3.6 4.0 4.3 4.5 5.6

%yoy %qoq % pts to GDP growth

2Q16 3Q16 4Q16 1Q17 2Q16 3Q16 4Q16 1Q17 2Q16 3Q16 4Q16 1Q17

GDP by Economic Activity

Agriculture, Forestry and Fishing -7.8 -6.1 -2.5 8.3 5.7 17.7 -7.7 -5.7 -0.7 -0.6 -0.2 0.6

Mining and Quarrying 2.1 2.9 5.0 1.6 -1.3 -5.4 10.4 -1.4 0.2 0.2 0.4 0.2

Manufacturing 4.2 4.3 4.7 5.6 5.3 -0.1 4.6 -4.1 1.0 1.0 1.1 1.3

Construction 8.9 7.9 5.1 6.5 -5.4 9.6 -3.6 6.5 0.4 0.4 0.2 0.3

Services 5.7 6.2 5.5 5.8 2.2 4.1 4.1 -4.4 3.0 3.3 3.0 3.1

Import duties 4.4 5.8 1.6 8.4 -4.2 0.8 10.4 1.7 0.1 0.1 0.0 0.1

GDP (2010 real prices) 4.0 4.3 4.5 5.6 2.4 3.5 3.4 -3.6 4.0 4.3 4.5 5.6

%yoy %qoq % pts to GDP growth

Source: Affin Hwang, BNM

Both exports and imports accelerated sharply but the latter at a quicker pace. As a result, net exports contracted and subtracted from GDP growth on a real basis, though we are not too concerned given the strong global environment that is supportive of trade.

` 5 June 2017


Fig 4: Strong growth in real exports and imports

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The current account surplus dropped from 3.9% of GNI in 4Q16 to 1.7% in 1Q17 as the goods surplus account narrowed while the services account deficit widened. We believe this could be the result of the stronger domestic economy requiring both the goods and services accounts to support the rise in activities. Fig 5: Current account surplus narrows in support of higher activities

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Meanwhile, the official government forecasts are unchanged. The BNM is still expecting GDP growth of between 4.3% and 4.8% for 2017. Inflation is expected to moderate to the 3-4% range for the full year after hitting 5.1% in March 2017 (though it moderated to 4.4% in April), and the current account surplus is envisaged to fall to between 1% and 2% of GNI. The overall fiscal deficit is still expected to narrow to 3% in 2017 from 3.1% in 2016.

` 5 June 2017


Fig 6: Summary of macro government forecasts

2015 2016 2017E 2017E (BNM)

Date announced 21-Oct-

16 23-Mar-

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GDP growth (yoy) 5.0% 4.2% 4 - 5% 4.3-4.8% Inflation (yoy) 2.1% 2.1% 2 - 3% 3 - 4% Fiscal deficit (RM bn) 37.2 38.7 40.3 40.3 Fiscal deficit (% GDP) 3.2% 3.1% 3.0% 3.0% Trade surplus (RM bn) 91.6 87.3 88.3 86.4 Current account surplus (RM bn) 34.7 25.2 14.8 17.4 Current account surplus (% GNI) 3.1% 2.1% 1.1% 1-2%

Source: BNM, MOF

Fig 7: Federal government budget 2017 fiscal position

RM bn 2015 2016 2017

Date announced 21-Oct-16 21-Oct-16 21-Oct-

16

Revenue 219.1 212.6 219.7 Operating expenditure 217.0 207.1 214.8 Operating surplus 2.1 5.5 4.9 Gross development expenditure 40.8 45.0 46.0 Less: Loan recovery 1.5 0.8 0.7 Net development expenditure 39.3 44.2 45.3 Overall balance -37.2 -38.7 -40.3 Overall balance (% of GDP) -3.2% -3.1% 3.0%

Source: MOF

Recapping on the three key triggers

As we approach the second half of 2017, we are quite pleased with how the first part of 2017 has transpired. We have been positive on the Malaysian stock market even before the Trump election outcome on 8 November 2016. The unexpected defeat of Hillary Clinton initially spooked global financial markets but even at that point, we felt that the Malaysian economy was on a sustainable growth trajectory. In particular, we identified three triggers for Malaysia in 2017 that could pave the way for a long overdue stock market outperformance, as follows:

1. Foreign capital outflows from Malaysia subsides. 2. Ringgit returns toward a sustainable strengthening path. 3. Return of earnings growth.

Equity market inflows

We are pleasantly surprised by the rapid return of fund flows into Malaysia’s equity market post the Trump election outcome. In November 2016, RM4.2bn exited the Malaysian stock market followed by RM861m in December. However, that has abruptly turned into inflows for every month of 2017. Total inflows so far this year (up to May 2017) amounted to RM9.8bn compared to outflows of RM8.2bn, RM19.5bn and RM6.9bn in all of 2016, 2015 and 2014, respectively.

` 5 June 2017


Fig 8: Foreign flows for equity market

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Fig 9: Foreign stock holdings in Bursa Malaysia

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Have bond flows turned the corner?

On the other hand, the bond market has undergone stress. Up to October 2016, Malaysia saw RM22.9bn of inflows into the public debt market. However, that quickly changed to a sharp RM18.9bn outflow in November due to the Trump election outcome that sparked a global reallocation of funds away from emerging markets back to US dollar assets. The outflows continued for five consecutive months culminating in a surprisingly sharp RM27.5bn in March 2017. However, the good news is that there was a net RM6.2bn inflow for government securities in April 2017. Although it has only been a month, we hope that the bond market will see negligible outflows going forward, if at all.

` 5 June 2017


Fig 10: Foreign flows for government debt market

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Source: Affin Hwang, BNM, BPAM

Fig 11: Foreign holdings in total government debt market

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16

Apr-

17

(%)(RM bn) Foreign ownership of outstanding bills and bonds% of total domestic government securities outstanding (RHS)

Source: Affin Hwang, BNM, BPAM

Yield resilience

Interestingly, bond yields did not spike up substantially despite the sharp selldown in March. Taking the benchmark 10-year MGS, its yield in March ranged from 4.03% to 4.2%. At the start of March, the 10-year MGS yielded 4.1%, but ended the month just slightly higher at 4.13%. Part of this was due to a rally in global government securities but the sharp pull-out by foreigners from MGS also means that there was enough liquidity and domestic buyers for it.

` 5 June 2017


Fig 12: The 10-year MGS yield

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MGS Yield (RHS)(%)

Source: Bloomberg

Ringgit resilience

The other peculiarity is the Ringgit resilience despite the sharp outflows from the public debt market. The Ringgit started March at RM4.45 per USD but ended the month relatively unchanged at RM4.42 with a trading range of RM4.41-4.46. Fig 13: Ringgit against foreign flows from debt market

1.0

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2.0

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-30

-25

-20

-15

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-5

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Ap

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6

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Ap

r-17

Foreign flows in debt market (LHS) RM/USD (RHS)(RMbn)

Source: Affin Hwang, Bloomberg, BNM, BPAM

BNM’s international reserves actually increased

Another perplexing issue surrounds the BNM’s international reserves that stayed relatively stable in the midst of the foreign sell-down of public debt securities. The international reserves were at USD95bn as of end-February 2017 and in fact increased to USD95.4bn at the end of the next month.

` 5 June 2017


Fig 14: BNM’s international reserves

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7

(USD bn) International Reserve

Source: BNM

This makes little sense as when foreigners liquidate they take the money out quickly, which should mean a drop in international reserves. Looking at the money supply figures, we see that the end-March money supply as measured by M3 increased by RM14.4bn from the preceding month. The bulk of the increase, amounting to RM10.2bn, came from fixed deposits. However, the corresponding influence for the increase, according to Bank Negara Malaysia, came from loans to government and to the private sector. On the other hand, there was a reduction of RM18.6bn from M3 attributable to foreigners. This implies that a large chunk of the foreign money left Malaysia in March with the balance spilling over into early April. In fact, the Ringgit saw some weakening in early April. Fig 15: Change in M3 and influence from foreign component

RM 1,661.65 bn

RM 1,676.02 bn

+ 21.34

- 18.64

- 5.81

+ 17.48

Feb Government Private Foreign Others Mar

Source: Affin Hwang, BNM

` 5 June 2017


Foreign exchange swap lines

The final piece of the puzzle to the resilient foreign reserves at Bank Negara Malaysia despite the huge repatriation of foreign capital out of Malaysia takes the form of the foreign exchange swap lines. The claims on international reserves by way of foreign exchange swap lines stood at US$17.7bn as of end-March 2017, having increased from US$3bn as of end-October 2016. In March 2017 alone, the amount of foreign exchange swap lines increased by US$4.9bn, which explains the stable international reserves despite sharp foreign outflows. Essentially, Bank Negara Malaysia had already received US dollars to meet the demand of foreign investors for converting Ringgit to US dollar post liquidating their Ringgit bond positions. Fig 16: Predetermined net drains on foreign-exchange reserves

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17

(US$ bn)

Source: BNM

However, the US dollar received today will need to be squared off by surrendering Ringgit in the future. According to BNM, 31% of the USD17.7bn swap lines mature within one month from March 2017, 39% within one to two months and the balance 30% in more than three months to up to one year. Of course, these swap lines could be rolled over when they come due. Yet with the Ringgit strengthening recently, the pressure to keep using swap lines has diminished, in our view.

` 5 June 2017


Fig 17: US Dollar swap lines maturity profile

Up to 1 Month31%

> 1M & Up to 3 Months

39%

> 3M & Up to 1 Year30%

Source: BNM

Foreign currency positions onshore

Meanwhile, onshore foreign currency deposits in the banking system stood at the equivalent of RM132bn in March 2017, down from RM132.9bn in February. As a proportion of total deposits, this stood at 7.7% versus 7.9% a month earlier. The highest holding of foreign currency on an absolute basis was the equivalent of RM135.6bn or 8% of total deposits. The drop in this figure could be an indication of fewer bets against the Ringgit weakening, though the latest figure in April 2017 increased to RM134.1bn, or 7.8% of total deposits. Fig 18: Foreign currency onshore

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Foreign currency onshore (LHS) % of total deposits (RHS)(RMbn)

Source: BNM

` 5 June 2017


The right sequence Start low but move higher

Complementing the strengthening macro conditions both in Malaysia and globally is the earnings momentum that for the first time is looking in favour of the market. In the past 2-3 years, market earnings had tended to begin the year on a high growth rate followed by downgrades throughout the year. This time around, we are seeing the opposite happen where we hit a fully-diluted EPS growth rate of just 3.7% earlier this year but have not seen downgrades as the year progresses. We are now forecasting 3.8% growth for 2017. Though marginal, we are hopeful that the trajectory is correct and if economic activities continue as the year progresses, we believe the momentum should carry earnings growth higher to 6.6% in 2018. Fig 19: Tracking our fully diluted headline EPS growth expectations

Date Report 2016E EPS

growth (yoy)

2017E EPS growth (yoy)

2018E EPS growth (yoy)

Comments

5-Nov-15 Finding a firmer footing 7.4%

3-Dec-15 The Ringgit awakens? 8.2% Includes 3Q15 wrap

20-Jan-16 De-coupling 7.8%

29-Jan-16 Dodging a bullet 7.8%

3-Mar-16 Breathing space 8.5% 4.4% Includes 4Q15 wrap

2-Jun-16 Battling perceptions 3.0% 5.5% Includes 1Q16 wrap

24-Jun-16 Her subjects have spoken 3.0% 5.5%

14-Jul-16 An insurance policy 3.0% 5.5%

6-Sep-16 Waiting for the tide to turn 1.5% 5.6% Includes 2Q16 wrap

2-Nov-16 Mind the gap 0.0% 6.3%

10-Nov-16 Staying rational 0.0% 6.3%

15-Nov-16 Let the dust settle 0.0% 6.3%

2-Dec-16 Managing capital flight -0.3% 4.5% Includes 3Q16 wrap

2-Mar-17

Daring to dream of growth

3.7% 6.1% Includes 4Q16 wrap

2-Jun-17 Stars are still aligning 3.8% 6.6% Includes 1Q17 wrap Source: Affin Hwang

As usual, we present a breakdown of the contribution to our 2017 earnings growth forecast by sector. The three biggest sectors contributing to our 3.8% fully diluted EPS growth forecast in 2017 are Banks & Financials, Oil & Gas and Autos. Interestingly, only the Autos sector remains in the top three from three months ago. The other two sectors, Consumer and Telco, have been displaced. On the other hand, the three largest likely drags on growth in 2017 are Gaming, Transport and the recently-covered sector of Insurance. This compares with the Gaming, Transport and MREIT sectors three months ago.

http://asiaresearch.daiwacm.com/eg/cgi-bin/files/20151105my_MalaysiaStrategy.pdf#page=1
















` 5 June 2017


Fig 20: Breakdown of our contributions to growth, by sector

Sector Rating Weightage Sector contribution to EPS growth 2017E (%)

Previous Current

Auto & Autoparts UW 0.6 1.4 1.4 Banks OW 23.0 0.5 1.8 Building Materials N 0.5 0.1 (0.0) Const & Infra OW 2.7 0.0 0.0 Consumer N 4.5 1.1 0.6 Gaming OW 5.0 (1.3) (1.1) Healthcare OW 4.8 0.3 0.6 Insurance OW 0.5 n/a (0.3) Media N 1.4 0.1 0.1 MREIT N 2.5 (0.1) 0.1 Oil & Gas N 10.6 0.9 1.4 Plantation N 10.7 0.3 (0.2) Property OW 2.5 (0.1) (0.2) Rubber Products OW 1.9 0.1 0.2 Small & Mid Caps OW 0.1 n/a (0.0) Technology N 0.7 0.0 0.1 Telecoms N 12.2 1.0 0.7 Timber OW 0.3 0.0 0.0 Transport N 5.4 (1.0) (0.7) Utilities OW 10.1 0.5 (0.5) TOTAL 100.0 3.7 3.8

Source: Affin Hwang estimates and forecasts

In Fig 21 below, we provide the evolution of the 3.7% fully diluted EPS growth forecast for 2017 three months ago to the current 3.8%. It is worth pointing out that since then we have initiated coverage on the Insurance sector, which incidentally has the effect of reducing our market growth forecast for 2017. We have also introduced the Small-Mid Cap classification though its effect on the overall market is negligible due to its low weightage at this juncture. Fig 21: Change in contribution to 2017E EPS growth

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7.0

(%)

Source: Affin Hwang

The largest change from three months ago comes from Banks & Financials. This is on the back of a sector note titled ‘Upgrading: embarking on a new journey’, published on 6 April 2017, highlighting our brighter outlook for the banking sector amid improving economic activity. Among others, we increased our loans growth assumption to 6% from

` 5 June 2017


4.5% previously and made various adjustments at the company-specific level. According to the BNM figures, industry loans growth hit a trough of 4.2% yoy in August 2016 but has gradually rebounded to 6.1% yoy in April 2017. There is still capacity to give out loans as the loan-to-deposit (LD) ratio is still below 90% while the loan-to-fund ratio is lower at 82.8% as of April 2017. Fig 22: Banking system loans growth

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Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17

(RM tri) Loan (LHS) % YoY growth (RHS)

Fig 23: Loan to fund ratio

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Loan-to-Fund RatioLoan-to-Fund Ratio

Source: BNM Source: BNM

Encouragingly, we see better growth in 2017 for the banks driven by operational improvements. Besides loans growth, higher current and savings accounts together with some better pricing of new loans have caused the net interest margin (NIM) to expand slightly. Meanwhile, credit cost is falling after a few years at elevated levels on the back of improving underlying collateral while higher income growth puts less pressure on the cost-to-income ratio (CIR). Our forecasts for these items are summarised in Fig B6 and thus far, most banks are on track to meet our full-year forecasts. Fig 24: Our key assumptions for banks Calendar Year

2016A 2017E 2016A 2017E 2016A 2017E 2016A 2017E 2016A 2017E 2016A 2017E 2016A 2017E

Loans growth (%) 1.60 4.45 4.40 4.60 8.70 6.90 4.60 6.90 5.70 6.20 7.50 7.50 2.00 6.10

NIMs (bps) 2.18 2.25 1.97 2.08 2.66 2.66 2.00 2.03 2.26 2.31 2.20 2.26 2.06 2.12

Credit cost (bps) 18.70 22.60 (21.50) (4.80) 74.00 55.90 1.70 9.10 62.00 53.10 6.80 9.90 38.90 43.70

CIR (%) 47.50 51.60 60.70 52.10 53.90 51.00 44.90 40.80 47.50 47.00 32.30 31.20 50.00 49.30

1Q17 net profit over full year estimate (%) 27.05 22.47 25.27 24.26 23.69 23.39 25.62

Public Bank RHBAFG AMMB CIMB Hong Leong Maybank

Source: Affin Hwang estimates

The other big change from three months ago is contribution to growth from the Oil & Gas sector. The swing of +0.5 ppts, contributing 1.4ppts of the 3.8% growth forecast for 2017, was due to upward revisions for Petronas Chemical on the back of higher average selling prices of its chemicals and thus margin expansion. A slightly higher forecast for big cap Petronas Gas also increased the sector growth forecast. In addition, we initiated coverage on Serba Dinamik, which is likely to experience strong growth, thus boosting the overall sector forecast. The third largest change is in the Healthcare sector. The higher contribution is due to recognition of gains from the disposal of its 6.1% interest in Apollo Hospitals in India.

` 5 June 2017


Valuation looking more attractive Post the earnings adjustments on the back of the 1Q17 results season, the KLCI is currently trading at a 52-week forward PE of 17.1x while on a static basis it is trading at 17.4x 2017E and 16.4x 2018E earnings. We apply an unchanged 17.9x PE to our 2017 fully diluted EPS forecast to arrive at our 2017 year-end index target of 1,812.66 points. This represents a 0.7% upward revision from our previous KLCI target of 1,799.45 points. Though not a huge upgrade, being limited by just marginally stronger likely earnings growth, we believe that the earnings momentum that we have seen, if it continues, could carry the KLCI above 1,900 points as we enter 2018. Fig 25: PER trend for KLCI

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PE (LHS) Average PE of each year(x)

Source: Affin Hwang, Bloomberg

Fig 26: KLCI index target calculation

Units 2017E 2018E

KLCI (31 May 2017) pts 1,765.87 1,765.87

Market EPS pts 101.27 107.97

Fully diluted PE x 17.4 16.4

Index Target

Average fully diluted PE x 17.9 17.9

Current market EPS pts 101.27 107.97

KLCI target pts 1,812.66 1,932.63

Upside % 2.6% 9.4%

Revision

Old KLCI target pts 1,799.45 Change % 0.7% Source: Affin Hwang forecast

Housekeeping on stock universe Since three months ago, our stock coverage universe has expanded from 98 to 108 companies, as we initiated coverage on 12 stocks and dropped coverage on two stocks. The list of companies affected is given below. We have adjusted our database retrospectively in calculating our aggregate market growth forecast and its corresponding valuation. We use our coverage universe as a proxy for the stock market. The aggregate market cap of the 108 stocks is RM1.31 trillion as of 31 May 2017 and constitutes 72% of the total stock market capitalisation of RM1.83 trillion.

` 5 June 2017


Fig 27: Changes in our stock coverage universe

Additions Deletions

Century Logistics Amcorp Properties

HSS Engineers Aemulus

LPI Oceancash Perak Transit Pintaras Jaya

QL Resources

Serba Dinamik

SLP Resources

Tune

WZ Satu

YSP Southeast Asia

Source: Affin Hwang

` 5 June 2017


Keeping the dream alive Encouraging sign

As indicated earlier in this report, one of the three catalysts that we see for the KLCI this year is a recovery in earnings. Hence, it was important to gauge from the 1Q17 results season if we would see such a recovery in 2017. The good news is that the 1Q17 bottom line turned around from an 11.6% yoy contraction in 1Q16 to a 20.7% yoy growth. This also compares well with the 12.3% yoy fall in 4Q16. As we have explained in the previous section, we use the aggregate 108 companies in our coverage universe as the proxy for the stock market, and changes in the universe have been applied retrospectively. Fig 28: Quarterly net profit trend

(30)

(15)

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Net Profit (LHS) YoY (RHS)(RM Bn) (%)

Source: Affin Hwang, Bloomberg

In some way, the 1Q17 results are a relief as it keeps alive the prospects of a full-year recovery in earnings. Of the 20 sectors under coverage, the Oil & Gas sector reigned supreme with the highest contribution to growth. The bulk of the improvement was driven by the combination of a sharp narrowing of losses by Sapura Energy and strong growth by Petronas Chemical. The former was due to the base effect with deep losses incurred a year ago on the back of huge impairments while for the latter, better average selling prices of petro chemical products on the back of higher oil prices lifted earnings. The second largest net profit growth driver comes in the form of the Banking & Financial sector. We saw generally better contributions from most of the banks with net interest margin expansion, better loans growth and better recoveries resulting in normalising credit costs. The gaming sector was the third largest contributor to net profit growth in 1Q17, largely due to the Genting Group, which benefited from better Genting Singapore operations, the disposal of its stake in Resorts World Jeju and foreign exchange gains.

` 5 June 2017


Fig 29: 1Q17 net profit contribution by sector

Sector Rating Weightage Net profit

growth

Sector Net profit contribution to

growth

(%) (%)

Auto & Autoparts UW 0.6 13.1 0.04 Banks OW 23.0 15.6 5.36 Building Materials N 0.5 (336.9) (0.47) Const & Infra OW 2.7 98.6 1.72 Consumer N 4.5 (21.9) (0.92) Gaming OW 5.0 177.8 4.20 Healthcare OW 4.8 88.3 1.63 Insurance OW 0.5 (6.3) (0.04) Media N 1.4 (52.9) (0.88) MREIT N 2.5 10.9 0.21 Oil & Gas N 10.6 907.3 12.96 Plantation N 10.7 (4.9) (0.50) Property OW 2.5 (25.7) (0.99) Rubber Products OW 1.9 (0.5) (0.01) Small & Mid Caps OW 0.1 94.6 0.04 Technology N 0.7 38.2 0.33 Telecoms N 12.2 (16.2) (1.75) Timber OW 0.3 514.7 0.38 Transport N 5.4 (16.8) (2.08) Utilities OW 10.1 12.1 1.52

TOTAL

100 20.7 20.7 Source: Affin Hwang, Bloomberg

The 1Q17 performance was satisfactory, making up 23.7% of our prior full-year forecast. Generally, the results were within our expectations as the first quarter is usually the weakest and we are hopeful that 1Q17 would set the tone for better earnings ahead. The table below shows the quarterly net profit breakdown by sector, followed by a more detailed discussion on the overall performance of each sector.

` 5 June 2017


Fig 30: Quarterly net profit performance of our stock coverage universe

Sector Rating Market Cap Net Profit Net Profit Net Profit Net Profit Net Profit Net Profit Net Profit Net Profit Net Profit

% of Affin

Forecast

Affin

Forecast

(RMm) 1QCY15 2QCY15 3QCY15 4QCY15 1QCY16 2QCY16 3QCY16 4QCY16 1QCY17YoY %

CY17 FY17E

1 Auto & Autoparts UW 8,757 218.1 116.0 31.8 (260.3) 44.3 13.1 (90.1) (1,547.3) 50.1 13.1% 10.6 472.2

2 Banks OW 323,182 5,286.7 5,249.7 5,317.1 5,201.6 5,092.6 4,828.3 5,747.4 6,114.7 5,888.9 15.6% 25.3 23,276.1

3 Building Materials N 4,665 73.7 63.3 70.7 44.7 20.7 18.4 3.7 33.9 (48.9) -336.9% NA 149.0

4 Const & Infra OW 36,275 610.9 647.5 417.4 549.9 258.6 397.4 428.3 558.5 513.6 98.6% 27.4 1,877.2

5 Consumer N 57,149 709.4 474.5 789.5 607.5 624.7 353.4 504.4 704.7 487.7 -21.9% 19.4 2,516.7

6 Gaming OW 74,366 1,086.8 376.3 759.9 748.2 350.8 875.9 1,191.7 2,892.2 974.5 177.8% 25.7 3,785.3

7 Healthcare OW 52,449 214.7 267.5 166.5 449.5 274.5 283.2 209.7 21.6 517.1 88.3% 36.5 1,416.4

8 Insurance OW 7,226 73.7 101.9 88.7 125.7 88.0 239.1 92.1 98.0 82.5 -6.3% 22.2 371.9

9 Media N 16,968 194.5 277.8 236.0 219.1 248.1 293.8 48.3 213.4 117.0 -52.9% 10.9 1,071.1

10 MREIT N 29,172 229.2 279.6 132.5 551.2 278.6 222.5 188.1 359.0 309.1 10.9% 20.8 1,489.4

11 Oil & Gas N 130,721 1,445.3 1,489.0 1,545.0 836.6 (212.2) 503.0 1,336.5 (677.9) 1,713.2 907.3% 28.5 6,014.8

12 Plantation N 139,224 537.0 1,487.9 (214.7) 2,043.8 1,507.0 1,414.0 1,043.7 1,401.4 1,432.5 -4.9% 21.8 6,573.3

13 Property OW 36,668 660.7 993.5 551.5 845.1 574.7 806.1 581.5 1,261.2 427.0 -25.7% 14.6 2,923.9

14 Rubber Products OW 23,708 196.6 224.5 279.1 317.8 246.9 179.0 198.6 216.8 245.7 -0.5% 21.8 1,128.8

15 Small & Mid Caps OW 1,064 6.7 8.9 11.8 8.8 6.3 8.7 15.9 19.2 12.2 94.6% 18.6 65.6

16 Technology N 13,056 130.4 148.6 184.2 184.8 129.9 153.3 173.4 210.2 179.6 38.2% 23.7 757.1

17 Telecoms N 154,615 1,603.0 1,728.2 1,874.8 1,510.1 1,607.6 1,237.0 1,357.7 723.4 1,347.5 -16.2% 21.4 6,306.6

18 Timber OW 3,096 33.1 55.3 112.8 113.4 11.0 47.2 65.5 42.8 67.7 514.7% 21.9 309.5

19 Transport N 74,642 692.7 954.5 (41.1) 1,600.4 1,843.1 1,849.1 663.4 1,217.0 1,534.3 -16.8% 37.5 4,088.6

20 Utilities OW 120,853 2,814.8 2,664.8 1,420.0 2,824.5 1,863.6 3,212.4 2,230.3 2,388.6 2,089.9 12.1% 18.0 11,637.6

TOTAL 1,307,857 16,818.1 17,609.2 13,733.3 18,522.3 14,858.9 16,934.9 15,990.1 16,251.4 17,941.1 20.7% 23.7 75,793.3

YoY growth % (15.1) (5.5) (16.3) 1.3 (11.6) (3.8) 16.4 (12.3) 20.7

QoQ growth % (8.0) 4.7 (22.0) 34.9 (19.8) 14.0 (5.6) 1.6 10.4

Source: Companies, Affin Hwang forecasts

` 5 June 2017


Fig 31: Narrative on individual sector performances

Sector Net profit (% YoY)

Comment

1Q17

Auto & Autoparts

13.1% Headline earnings improved 13.1% yoy on the better performance from all companies under our coverage (UMWH, MBM and APM). This was driven by an overall improvement in total industry volumes (TIV) yoy.

Banks 15.6% The banking and financial universe (excluding Bursa Malaysia) reported a 1Q17 net profit of RM6bn (+15.7% yoy, -3.8% qoq), while normalized 1Q17 net profit actually grew by 8.5% qoq (excluding a one-off gain at Maybank in 1Q16). 1Q17 net profit was in line with our forecast of RM24bn. Most of the banks reported results, which were broadly in-line with our expectations, except for MBSB (above expectations, due to lower provisions), AMMB (below expectations, due to our higher assumption of non-interest income) and AFG (below expectations, due to our higher assumption of fund-based income). Banks with outstanding performance in 1Q17 are: i) CIMB - net profit rose substantially by 45% yoy and 38% qoq, with key drivers being a stronger topline and lower credit costs; ii) Maybank - net profit rose 19.3% yoy, driven by lower allowances (-38% yoy). We note that most banks reported an improvement of between 10-20bp yoy in NIM, underpinned by the repricing of loans, expansion of higher-yielding loans and easing of funding pressure (lower deposit cost, reduction in wholesale funding). Asset quality for most banks was sustained, while credit cost showed a notable uptick at RHB (due to higher impairments at the business banking and O&G accounts) and AMMB (GIL ratio rose from 1.54% to 1.68% qoq), while other banks saw a normalizing trend.

Building Materials

NA The only stock in building material sector, Lafarge, dipped into a loss this quarter for the first time since 2008. It posted a net loss of RM48.9m compared to a net gain of RM20.7m in 1Q17. This loss is attributable to weak cement demand and stiff pricing competition as the industry remains plagued by overcapacity (+5.2mMT). The loss was exacerbated by higher fuel and electricity costs, and one-off staff rationalization costs. The outlook seems bleak for the cement industry in 2017 as management predicted cement volume to decline by 4-5% yoy (2016: -6% yoy). While Lafarge is a proxy to the construction upcycle, the infrastructure boom is insufficient to absorb the excess cement capacity as the property market remains subdued. The infrastructure sector takes up only one third of Lafarge’s cement volume while the rest comes from the residential and commercial property segment

Const & Infra 98.6% Sector headline net profit jumped 98.6% yoy mainly due to one-off gains or absence of one-off losses for IJM Corp, WCT and Gabungan AQRS. Better operating profit for most of the construction companies under our coverage also contributed to the good results. The record-high order books for most companies and acceleration in progress billings spurred yoy earnings growth. Most construction companies also saw better construction profit margins due to rising revenue while cost pressures were contained. The results were mixed with 4 within expectations (GAM, IJM, HSS, WCTHG), 2 below expectations (SCGB, MRCB) and 2 above expectations (AQRS, PINT). We expect earnings to improve in subsequent quarters as progress billings accelerate on existing projects, new contracts are secured and property sales pick up.

` 5 June 2017



Comment

Consumer -21.9% 1Q17 headline net profit decreased by 21.9% YoY as the sector saw net profit declines from AEON (21% yoy), BAT (32% yoy), Heineken (4% yoy), and net losses from MSM and Parkson, which offset gains from the rest of the segment. Overall, the consumer segment still suffered from weak consumer sentiment, which affected the retail stocks under our coverage except Hai-O that benefited from the growth in its multi-level marketing segment. In the F&B segment, Nestle experienced growth in both domestic and export sales, in line with expectations, but MSM recorded losses this quarter due to high costs attributed to the high raw sugar cost and Ringgit weakness. Our new coverage, QL Resources, recorded growth in all segments at the top line but was slightly below expectations at the core net profit level due to a one-off gain from the disposal of a property. The tobacco segment remained challenging as BAT's net profit declined by 32% YoY because of a large volume contraction of 23% YoY as volumes have yet to recover from the excise hike-led price increase in November 2015. Of the two brewery stocks, Carlsberg performed better with earnings growth of 7% YoY versus Heineken (-4% YoY) due to higher sales in both its Malaysia and Singapore operations as compared to weaker sales for Heineken. MIER’s Consumer Sentiment Index recorded a 1Q17 reading increase of 6.8pts qoq to 76.6, an improvement but still below the 100-point confidence threshold.

Gaming 177.8% The strong headline number was due to the: 1) low-base effect for Genting Malaysia, as it recorded substantial forex-related losses in 1QFY16, and 2) better performance from Genting Singapore.

Healthcare 88.3% The 1Q17 headline net profit increased by 88.3% yoy mainly due to IHH's gains from the partial divestment of non-core assets. Excluding exceptional items, the healthcare sector core net profit would have declined by 12% yoy in 1Q17, dragged down by IHH’s 15% yoy decline vs KPJ’s 12% yoy gain in core net profit. The decline in core net profit was mainly due to IHH’s new hospital openings, which resulted in higher depreciation and operating costs. The healthcare sector's revenue increased by 8% yoy (KPJ: +6.7% yoy and IHH: +8.5%yoy) due to higher patient volumes and revenue intensity. KPJ's inpatient volume growth declined by 1% in 1Q17, while IHH reported 3-34% inpatient admission growth in its three key markets of Singapore, Malaysia and Turkey/Bulgaria. We expect KPJ to see better earnings growth in the remainder of 2017, driven by ongoing expansion plans and the expected recovery of private healthcare spending in Malaysia. On the other hand, IHH's 2017 earnings are expected to be muted due to higher operating costs from new hospital openings.

Insurance -6.3% Sector headline net profit for 1Q17 was lower by 6.3% yoy as LPI's 7.9% yoy improvement in net profit was not sufficient to offset the 47.2% yoy decline in Tune Protect's net profit. LPI’s 1Q17 performance was supported by continual strong demand at its fire insurance segment and a lower overall claims ratio. Meanwhile, Tune Protect continued to face headwinds in its travel insurance segment due to the "Opt in" regulatory changes introduced in 2H16 and also higher claims arising from the unprofitable motor franchise business.

Media -52.9% The 1Q17 media sector net profit was lower yoy mainly dragged down by a decline in contribution from the print media companies. The traditional media platforms faced weak adex and the shift towards digital media. Star Media, Media Prima and Media Chinese International Limited (MCIL) saw their print divisions’ earnings weaker yoy due to lower advertising and newspaper sales. Meanwhile, Media Prima's TV network division remained under pressure from the weak adex and higher operating costs for its digital-business initiatives.

` 5 June 2017



Comment

MREITs 10.9% Our M-REITs universe saw 1Q17 net profit rise by 11% yoy, largely bolstered by a more favourable realized net profit at YTL REIT. While IGB REIT and Axis REIT reported marginal growth of 3-3.5% yoy, KLCC Property and Pavilion REIT saw lower realized net profits due to temporary operational issues (repositioning of tenants at the mall, overall lower occupancy rates). Nonetheless, we believe that the outlook in 2HCY17 will be more favourable. The resilience of the REITs' tenancy/lease structure remains the key differentiating factor as the sector is threatened by upcoming supply in the office, retail and hotel markets. Meanwhile, YTL REIT announced the acquisition of Majestic Hotel for RM380m and a leaseback to YTL Majestic Hotel under a long-term lease agreement.

Oil & Gas NA O&G sector posted a strong rebound, which saw aggregate headline sector earnings swinging back to profitability, as all companies under coverage posted stronger yoy performance with the exception of MMHE and UMWOG. However, the admirable yoy growth in earnings is mainly contributed by heavyweights like PCHEM. Better ASPs, higher plant utilisation and a stronger EBITDA margin lifted earnings by 84% yoy.

Plantation -4.9% The plantation sector’s 1Q17 net profit was lower yoy, dragged down mainly by IOI Corp, which recognised a lower net forex translation gain and fair value on derivatives. Other companies like KLK, FGV, HAPL, GENP, SIME and IJMP showed improvements in their net profits, attributable to higher FFB production yoy post the El Nino phenomenon and stronger CPO and PK average selling prices. Results for KLK, FGV, HAPL and GENP were within expectations, while IOI, SIME and IJMP were below expectations.

Property -25.7% Sector headline net profit fell 25.7% yoy in 1Q17 due to slower progress billings and profit margin for most property developers under coverage except EAST, IOIPG and SWB. EAST and IOIPG saw better earnings, boosted by contributions from overseas projects while SWB saw higher non-property earnings. Most companies posted weaker sales yoy except UOAD, as most new property launches are planned for 2H17. The 1Q17 results were mixed with 2 above expectations (EAST and IOIPG), 1 within expectations (SWB), and 2 below expectations (SPSB and UOAD).

Rubber Products

-0.5% Rubber Products’ 1Q net profit fell 0.5% yoy largely impacted by the lower-than-expected earnings recovery by Supermax and Kossan, as they were impacted by lower internal efficiencies and a lack of capacity expansion. That aside, raw material prices also climbed significantly during the quarter, leading to a slight margin compression. However, we observe that bigger players like Top Glove and Hartalega continued to achieve sequential earnings momentum on the back of robust demand for gloves. Hartalega’s earnings particularly surprised on the upside with strong margin improvements, primarily underpinned by firmer efficiency gains.

Small & Midcaps

94.6% There are three small-and-mid-cap companies under our coverage – Oceancash, SLP Resources and Perak Transit (PT). 1Q17 net profit for PT and Oceancash increased by 40.9% yoy and 72.6% yoy respectively. PT was supported by the higher earnings from bus routes and petrol stations, while Oceancash's stronger earnings were supported by higher demand for hygienic products and recovery in the Indonesia automotive industry. SLP Resources only recorded net profit growth of 0.3% yoy for 1Q17 due to a slowdown in demand in the local market.

Technology 38.2% Strong yoy earnings growth continued to be underpinned predominantly by a weak RM vis-a-vis the US$. Moreover, companies experienced an inventory correction within the Apple supply chain in the prior year leading to a more robust set of earnings this year.

` 5 June 2017



Comment

Telecoms -16.2% Earnings for the sector were lower yoy mainly due to a stiff competitive environment and price-cutting among players, which led to a decline in the subscriber base and flat ARPU. Results for Maxis and TM were above expectations, while Axiata's and Digi's results were below expectations. Axiata was hit by higher depreciation charges and lower contributions from its associates while Digi was hit by weaker prepaid revenue, which fell 13% yoy. Maxis' stronger-than-expected earnings were, however, only due to a low effective tax rate. TM saw solid earnings in 1Q17, which led to our upgrade from Sell to Hold.

Timber 514.7% Timber’s 1Q17 net profit was higher yoy mainly due to stronger contribution from the plantation division given the higher FFB and stronger CPO ASP. However, the increase in plantation division was partially offset by the weaker timber division, underpinned by lower log export volumes and lower plywood ASPs. Jaya Tiasa and Ta Ann saw their core net profit more than double yoy mainly due to higher plantation earnings but WTK's core net profit was lower yoy partly due to the share of loss of its oil & gas associate company.

Transport -16.8% Transport’s 1Q net profit fell 16.8% yoy predominantly due to the lower earnings from the aviation-related companies. AirAsia and AirAsia X’s headline profits fell 30% and 94%, respectively, largely due to the higher staff costs, as well as higher fuel expenses amid the uptrend in fuel prices. Separately, Westport’s net profit fell 18% in the absence of investment gains and a lower margin from the port operations. On the other hand, MISC’s earnings surprised on improved offshore contributions, while Malaysia Airports also reported improved results on higher passenger traffic growth.

Utilities

12.1%

All 4 utilities companies under our coverage reported YoY net profit growth for the quarter. For Tenaga, the improvement was mainly driven by both demand growth and better associate contributions. For MLK, it was due to the contribution of its new power plant, which only started operation at the end of 1QFY16. For MMC, it was due to the better results from its associates; Malakoff and Gas Malaysia. For JAKS, the strong earnings growth was due to the absence of Vietnam EPC contract revenue recognition in 1QFY16.

Source: Affin Hwang

Marginal improvement in results scorecard

For 1Q17, 19% of the companies under our coverage came in above expectation, 51% were line and the remaining 33% were below expectation. This compares to 30% above, 38% meeting expectation and 33% below in 4Q16.

` 5 June 2017


Fig 32: Performances relative to our expectations in 1Q17

Sector Above In-Line Below

Auto & Autoparts MBMR APM Automotive

UMW

Banks AFG CIMB

AMMB Maybank

MBSB

RHB

Aeon Credit

Hong Leong Bank

Public Bank

Bursa M'sia

Building Materials Lafarge

Const & Infra Gabungan AQRS HSS Engineering MRCB

Pintaras Jaya IJM Corp Sunway Construction

Gamuda

WCT

Consumer Carlsberg Aeon Co

Heineken Bonia

Hai O Parkson

Nestle QL Resources

BAT

MSM

Gaming Genting Genting M'sia Berjaya Toto

Healthcare IHH

KPJ

Insurance Tune Protect

Media Astro MCIL Media Prima

Star

MREIT YTL Reit KLCC

Pavillion REIT

IGB Reit

Axis Reit

Oil & Gas Sapura Energy Dialog MMHE

Pchem UMW-OG

Petra Energy Alam Maritim

Petronas Gas

Serba Dinamik

Gas Malaysia

Bumi Armada

Plantation Sime Darby Hap Seng Plant IJM Plant

Genting Plant IOI Corp

KLK

Felda

Property IOI Property Sunway E&O

UOA Development

SP Setia

Rubber Products Hartalega Kossan

Top Glove Supermax

Karex

` 5 June 2017


Sector Above In-Line Below

Small & Mid Caps Oceancash

Perak Transit

Technology Inari Uchi Scicom

KESM Industries Globetronics

MPI

Unisem

Telecoms Maxis

Axiata

Telekom Digi

Timber Ta Ann WTK

Jaya Tiasa

Transport AirAsiaX AirAsia Westports

MAHB Tiong Nam

MISC

Utilities JAKS Resources Tenaga Malakoff

YTL Power

YTL Corp

MMC

Source: Affin Hwang

` 5 June 2017


Improving momentum

As usual, we provide momentum measurement of the earnings season using three metrics.

Changes in 2017 earnings forecasts.

Changes in target prices.

Changes in recommendations. On the first metric, 92 of the 108 companies (85% of total) we cover saw no revisions during this results season while we upgraded for five (5% of total) and cut for 11 (10% of total). This compares with 40% upward revisions, 35% unchanged and 26% downward revisions at the end of the 4Q16 results season. Fig 33: Changes in CY2017E earnings

Sector Rating Changes made on CY17 Upgrade Unchanged Downgrade

Auto & Autoparts 0 1 2 Banks & Financial Services 1 9 0 Building Materials 0 1 0 Construction & Infrastructure 0 6 3 Consumer 0 9 1 Gaming 0 3 0 Insurance 0 2 0 Healthcare & Pharma. 0 3 0 Media 0 4 0 MREIT 0 5 0 Oil & Gas 1 10 0 Plantation 1 5 1 Property 0 5 0 Rubber Gloves 1 4 0 Small & Mid cap 0 3 0 Technology 0 7 0 Telecoms 1 3 0 Timber 0 2 1 Transports & Logistics 0 6 1 Utilities 0 4 2 Total 5 92 11

Source: Affin Hwang

` 5 June 2017


On the second momentum metric, we upgraded target prices for 30% of our coverage, left 56% of them unchanged and downgraded 14%. This stacks up against 38%, 25% and 37% respectively in the previous quarter. The final measure is the recommendation structure. We raised the ratings for 5% of our coverage, kept 85% unchanged, and downgraded the ratings for 10%. The respective figures in 4Q16 were 18%, 79% and 3%. Fig 34: Breakdown of changes in target prices

Upgrade30%

Unchanged56%

Downgrade14%

Fig 35: Breakdown of changes in recommendations

Upgrade5%

Unchanged85%

Downgrade10%

Source: Affin Hwang Source: Affin Hwang

` 5 June 2017


New complexion Sector positioning

Our sector coverage has risen from 18 to 20 with coverage initiation of Insurance companies and the introduction of a Small & Mid Caps classification. Both join our sector positioning as Overweight. Besides these two, we have made five changes to our sector positioning, three of which are upgrades and the other two downgrades. We made an across-the-board upgrade for stocks under our Banking & Financials sector back in April assuming better economic activity would translate to higher volumes of business. As such, the sector is rated Overweight (from Neutral). The Rubber Products sector is also upgraded from Neutral to Overweight subsequent to the strong results at Hartalega, which have prompted us to change our recommendation to Buy from Hold. We see a more benign operating environment in the Rubber Products sector where glove manufacturers are able to pass through costs and increase selling prices more effectively given an improving competitive landscape. Besides that, global glove demand remains strong and we see new capacity-driven growth coming through. Raw materials costs are also moderate. The final upgrade is for Transport & Logistics. This is partly tactical as the reasonable 1Q17 net profit performance together with expectation of improving economic activity should bode well for this cyclical sector. Moreover, we have upgraded AirAsia to BUY, while also recently initiating coverage of Century Logistics with BUY call, which provides more investment opportunities in the sector. Fig 36: Positioning for the 20 sectors under our coverage

Overweight Neutral Underweight

Banks & Financial Services (↑) Building Materials Auto & Autoparts (↓) Construction Consumer Gaming Media Healthcare MREIT (↓) Insurance* Oil & Gas Property Plantation Rubber Products (↑) Technology Small & Mid caps* Telecoms Timber Transport & Logistics (↑) Utilities

Source: Affin Hwang Note: sector upgraded (↑), sector downgraded (↓)

On the other hand, we nudge MREIT down a notch to Neutral on a tactical reason. We are of the opinion that investors should allocate a higher weightage into cyclical names during an economic upturn at the expense of more defensive and high-yielding sectors like MREIT. The final change is the downgrade of Auto & Autoparts from Neutral to Underweight as we have cut both APM and UMW to Sells from Holds due to a combination of the decent share price performance (UMW) and poor miss in recent results versus our expectation (APM).

` 5 June 2017


Fig 37: Breakdown of our sector coverage by stock rating Sector Rating Total mkt cap

(RMbn) Buy Hold Sell Total Buy Hold Sell Total Buy Hold Sell Total

Auto & Autoparts UW 0.7% 8,757 - 1 2 3 - 33 67 100 - 10 90 100

Banks & Financial Services OW 24.7% 323,182 6 3 1 10 60 30 10 100 85 14 1 100

Building Materials N 0.4% 4,665 - 1 - 1 - 100 - 100 - 100 - 100

Construction & Infrastructure OW 2.8% 36,275 6 3 - 9 67 33 - 100 50 50 - 100

Consumer N 4.4% 57,149 2 5 3 10 20 50 30 100 13 80 7 100

Gaming OW 5.7% 74,366 1 1 1 3 33 33 33 100 51 45 5 100

Healthcare OW 4.0% 52,449 2 1 - 3 67 33 - 100 9 91 - 100

Insurance OW 0.6% 7,226 2 - - 2 100 - - 100 100 - - 100

Media N 1.3% 16,968 1 - 3 4 25 - 75 100 78 - 22 100

MREIT N 2.2% 29,172 2 3 - 5 40 60 - 100 25 75 - 100

Oil & Gas N 10.0% 130,721 5 5 1 11 45 45 9 100 35 65 0 100

Plantation N 10.6% 139,224 3 4 - 7 43 57 - 100 27 73 - 100

Property OW 2.8% 36,668 4 1 - 5 80 20 - 100 70 30 - 100

Rubber Products OW 1.8% 23,708 2 3 - 5 40 60 - 100 70 30 - 100

Small & Mid caps OW 0.1% 1,064 3 - - 3 100 - - 100 54 46 - 100

Technology N 1.0% 13,056 4 3 - 7 57 43 - 100 54 46 - 100

Telecoms N 11.8% 154,615 - 4 - 4 - 100 - 100 - 100 - 100

Timber OW 0.2% 3,096 2 1 - 3 67 33 - 100 86 14 - 100

Transports & Logistics N 5.7% 74,642 4 1 2 7 57 14 29 100 34 2 64 100

Utilities OW 9.2% 120,853 2 4 - 6 33 67 - 100 71 29 - 100

Total 100.0% 1,307,857 51 44 13 108

% of

market cap

Rating % of rating Rating as a % of mkt cap

Source: Affin Hwang; based on stock prices as of 31 May 2017

Fig 38: Summary of sector valuation

Market

Sector Rating Cap 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E

(RMm)

Banks & Financial Services OW 323,181.6 5.2 3.0 13.7 13.3 4.3 4.5 1.3 1.3 10.3 10.1

Auto & Autoparts UW 8,756.7 (124.6) 42.7 20.6 14.4 13.9 11.1 2.6 2.6 1.1 1.0 4.5 5.8

Building Materials N 4,664.8 (4.7) 191.9 63.8 21.9 15.8 9.8 0.6 2.2 2.4 2.4 2.3 6.8

Construction & Infrastructure OW 36,275.5 0.3 14.0 19.6 17.2 15.6 10.7 1.1 1.1 3.3 3.1 7.8 8.9

Consumer N 57,148.7 4.6 6.2 23.6 22.2 13.6 11.7 3.8 4.1 16.5 16.2 21.0 26.8

Gaming OW 74,366.3 (23.4) 14.7 18.9 16.5 9.7 5.9 1.4 1.6 0.5 0.5 4.2 4.5

Healthcare & Pharma. OW 52,448.9 96.8 3.6 36.6 35.3 19.4 15.9 0.3 0.3 5.3 5.1 5.8 5.8

Insurance OW 7,226.1 (30.3) 4.3 20.4 19.6 - - 5.0 5.0 2.4 2.2 14.5 13.9

Media N 16,967.7 22.4 10.0 17.7 16.1 6.9 7.1 5.0 5.3 4.9 2.2 18.4 11.1

MREIT N 29,171.8 5.3 4.0 18.5 17.8 15.9 15.2 5.6 5.8 1.1 1.1 6.5 6.9

Oil & Gas N 130,721.4 16.4 11.7 18.9 17.0 10.8 9.0 2.7 3.0 2.7 2.8 8.7 12.4

Plantation N 139,224.3 (1.6) 9.4 21.9 20.0 14.5 12.8 3.0 3.0 2.1 2.1 9.2 10.9

Property OW 36,667.8 (13.0) 5.5 13.1 12.4 11.3 9.5 4.6 4.8 0.8 0.9 7.8 9.9

Rubber Products OW 23,708.1 21.7 20.5 20.4 16.9 14.0 11.5 1.7 2.0 4.4 3.9 15.7 17.1

Small & Mid caps OW 1,064.0 1.5 12.6 51.3 45.8 31.0 27.6 6.5 7.2 7.7 6.9 43.0 42.8

Technology N 13,056.3 14.3 8.2 14.4 13.3 8.7 8.5 3.5 3.8 2.2 3.0 21.0 26.5

Telecoms N 154,615.1 17.5 3.8 26.0 25.0 9.2 8.6 2.8 3.0 4.7 4.6 15.6 15.8

Timber OW 3,096.5 16.7 6.9 11.7 11.0 5.7 4.8 1.8 1.8 1.1 1.2 5.2 7.0

Transports & Logistics N 74,641.9 (18.6) (0.1) 19.2 19.3 8.7 7.5 3.1 3.1 1.2 1.2 7.7 7.6

Utilities OW 120,852.8 (3.4) 8.6 11.3 10.4 7.8 6.4 3.8 4.6 1.2 1.2 9.3 11.6

Coverage 1,307,856.5 3.8 6.6 17.4 16.4 13.1 11.4 3.4 3.6 0.1 0.1 9.1 9.9

EPS Growth (%) EV/EBITDA (x) Yield (%) P/BV (x) ROE (%) PE (x)

Source: Bloomberg, Affin Hwang forecasts; based on pricing as of 31 May 2017

Stock positioning

We have made substantial changes to our top pick list. The new complexion for our top picks is a function of the recent market strength where some of the share prices have performed well and converged towards our target prices. In all, we have made eight deletions. The stocks removed are reflected in the figure below together with the respective reason.

` 5 June 2017


Fig 39: Stocks removed from the top pick list

Stocks Reason

Air Asia X Strong share price run up (until 1Q17 results, which disappointed on higher cost)

Globetronics Share price has hit our target price

IJM Plantation Tactical move as CPO price has stabilised at RM2,600 or so while KLK is still part of top pick list

IOI Properties Limited upside after reasonable stock price run-up

Pavilion REIT Tactical move to pare down on yield plays and move into more cyclical sectors

Scicom Reasonable share price performance while earnings risk higher with lower foreign student enrolments

Sunway Con Strong share price performance with limited upside

Westports Tactical move to position for higher cyclical sectors and poorer transhipment volumes Source: Affin Hwang

Meanwhile, we have added five companies to our top buy list. The names and the reasons for their additions are given below. Fig 40: Stocks added to the top pick list

Stocks Reason

Air Asia Replaces Air Asia X in the cyclical aviation space while we see clear triggers for stock price performance

Bumi Armada Exposure to upstream ongoing production oilfields through its FPSO business

CIMB Tactical move to play banks for its high beta and exposure to Indonesia

Inari Visible growth driver in its IRIS chip sensor

Maybank Being the largest bank has good exposure to play the improving growth outlook for the overall economy

Source: Affin Hwang

There are ten stocks that remain from three months ago, and with the three net deletions, our top pick list has contracted from 18 to 15 stocks. However, we are taking the unusual step just this time around of spotlighting another list. We have made 12 initiations of coverage over the past three months and Fig 43 lists the new stocks. The logic is that all 12 initiations have good investment merits and we feel that we should highlight them separately in this report. Fig 41: Stocks unchanged in the top pick list

Stocks Reason

Gamuda Tactical for big cap construction exposure

Genting Bhd Stock has done well but still at valuation that is wider than its traditional holding company discount

KL Kepong Big cap plantation exposure with more reasonable valuation

KPJ Healthcare Recovery in private healthcare adoption and four new hospital openings over next 15 months

Petra Energy Direct beneficiary of higher oil price due to its risk sharing contract for upstream oilfield

Public Bank Sound big cap bank for quality and low risk exposure to the banking sector

Ta Ann Cheap exposure to CPO with good production growth

Tenaga Big cap laggard with mispricing on fundamentals of the company

UOA Dev Strong brand name with mispriced valuation and good yield, and is now the only property stock in our list

WCT Stock hit our target price and was candidate for removal from our list but recent correction provides upside potential again

Source: Affin Hwang

` 5 June 2017


Fig 42: List of our top Buys

Stock Rating Price TP Upside Mkt Cap

(RM) (RM) (%) (RMm) CY17 CY18 CY17 CY18 CY17 CY18 CY17 CY18 FY17 FY18 FY17 FY18 FY17 FY18

Top Buys

AIRASIA BUY 2.98 3.80 27.5 6,372.8 7.8 6.6 0.38 0.4 (22.6) 17.8 1.2 1.1 10.0 5.0 3.4 1.7 15.2 16.0

BUMI ARMADA BUY 0.78 0.95 22.6 3,549.1 14.4 10.1 0.05 0.1 (640.0) 42.6 0.5 0.5 - - - - 3.8 5.3

CIMB BUY 6.40 7.00 9.4 39,996.4 12.4 12.5 0.52 0.5 31.6 (1.2) 1.2 1.1 22.9 24.3 3.6 3.8 9.7 9.4

GAMUDA BUY 5.34 5.70 6.7 11,441.7 20.3 17.4 0.26 0.3 12.9 16.3 1.7 1.6 12.0 12.0 2.2 2.2 9.9 10.7

GENTING BUY 9.97 12.06 21.0 29,998.6 18.7 16.6 0.53 0.6 7.9 12.4 0.5 0.5 6.0 6.0 0.6 0.6 2.8 3.0

INARI BUY 2.04 2.60 27.5 3,222.6 16.9 13.1 0.11 0.1 34.5 28.8 4.7 8.6 5.3 5.8 2.6 2.8 27.8 61.9

KUALA LUMPUR KEPONG BUY 24.76 29.00 17.1 25,620.1 19.5 18.5 1.27 1.3 20.5 5.0 2.8 3.0 60.0 60.0 2.4 2.4 14.5 16.0

KPJ BUY 4.17 4.71 12.9 4,445.7 29.0 27.1 0.14 0.2 2.1 6.9 2.7 2.6 7.8 8.3 1.9 2.0 9.5 9.6

MAYBANK BUY 9.44 10.50 11.2 83,584.2 13.7 13.9 0.69 0.7 13.1 (1.4) 1.4 1.4 58.0 60.0 6.1 6.4 9.8 9.5

PETRA ENERGY BUY 1.18 1.66 40.7 305.7 12.7 7.1 0.09 0.2 (193.9) 79.6 0.6 0.6 5.0 5.0 4.2 4.2 4.8 7.8

PUBLIC BANK BUY 20.06 23.25 15.9 76,555.8 14.6 13.9 1.38 1.4 3.2 5.2 2.1 1.9 60.0 62.0 3.0 3.1 14.3 13.9

TA ANN BUY 3.47 4.57 31.7 1,757.3 11.8 11.2 0.30 0.3 6.1 4.7 1.0 0.9 9.0 9.0 2.6 2.6 8.5 8.3

TENAGA BUY 13.78 16.50 19.7 78,567.4 11.2 10.3 1.23 1.3 (7.0) 8.4 1.3 1.3 49.3 60.2 3.6 4.4 12.0 12.1

UOA DEVELOPMENT BUY 2.60 2.95 13.5 3,836.3 11.1 10.2 0.23 0.3 1.7 9.4 1.1 1.0 15.0 16.0 5.8 6.2 9.7 10.1

WCT BUY 2.22 2.46 10.8 2,181.9 22.2 16.8 0.10 0.1 117.4 32.0 1.0 1.0 4.0 4.0 1.8 1.8 5.0 6.9

Core PE (x) Core EPS ROE (%)Div. Yield (%)DPS(sen)PBV

Core EPS

Growth (%)

Source: Affin Hwang forecasts, Bloomberg; prices as of 31 May 2017

` 5 June 2017


Fig 43: New initiations of coverage

Stock Rating Price TP Upside Mkt Cap

(RM) (RM) (%) (RMm) CY17 CY18 CY17 CY18 CY17 CY18 CY17 CY18 FY17 FY18 FY17 FY18 FY17 FY18

Initiation of Coverage

CENTURY BUY 1.28 1.70 32.8 330.3 19.1 18.0 0.07 0.1 14.0 6.2 1.6 1.5 2.6 2.8 2.0 2.2 8.1 8.1

HSS ENGINEERING BUY 0.83 1.20 44.6 126.0 14.6 10.5 0.06 0.1 26.7 38.6 3.4 2.7 1.7 2.4 2.0 2.9 23.3 26.1

LPI CAPITAL BUY 18.80 21.40 13.8 5,643.8 20.6 19.7 0.91 1.0 (89.6) 4.4 3.0 2.8 75.0 75.0 4.0 4.0 15.0 14.6

OCEANCASH BUY 0.73 0.88 20.5 88.1 12.4 11.3 0.05 0.1 13.0 9.6 1.9 1.7 0.8 0.9 1.1 1.2 13.8 13.2

PERAK TRANSIT BUY 0.28 0.34 21.4 128.9 12.7 11.7 0.02 0.0 15.8 9.1 1.4 1.3 1.0 1.1 3.6 3.9 11.4 11.2

PINTARAS BUY 3.90 4.62 18.5 565.8 15.6 12.9 0.26 0.3 50.3 20.7 1.9 1.8 20.0 20.0 5.1 5.1 12.7 14.1

QL RESOURCES BUY 4.99 5.56 11.4 5,441.4 28.7 24.9 0.17 0.2 13.1 15.1 3.4 3.1 5.5 5.4 1.1 1.1 11.6 12.0

SERBA DINAMIK BUY 2.09 2.40 14.8 2,002.5 8.0 7.0 0.22 0.2 18.5 13.8 2.0 1.7 5.5 7.4 2.6 3.5 20.9 20.4

SLP RESOURCES BUY 2.35 2.87 22.1 541.7 26.3 22.9 0.10 0.1 (6.7) 14.6 4.4 3.9 4.2 4.8 1.8 2.0 17.8 18.4

TUNE PROTECT BUY 1.31 1.57 19.8 1,067.5 15.5 14.4 0.09 0.1 - 7.7 1.7 1.5 5.0 5.5 3.8 4.2 12.7 11.5

WZ SATU BUY 1.15 1.52 32.2 349.3 15.6 13.2 0.08 0.1 1.4 18.9 1.2 1.0 3.0 3.2 2.6 2.8 9.3 10.6

Core PE (x) Core EPS ROE (%)Div. Yield (%)DPS(sen)PBV

Core EPS

Growth (%)

Source: Affin Hwang forecasts, Bloomberg; prices as of 31 May 2017

` 5 June 2017


Please find below more details for our top Buys. Fig 44: individual top buys

Top BUYs Rating Analysts’ Comments

AirAsia (AIRA MK)*

Target Price : RM3.80

Share Price as at

31 May 2017

: RM2.98

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17

(RM)

BUY We see AirAsia as a strong monetisation potential

candidate with a stable of operationally dominant

business units. AirAsia is looking to dispose its internal

leasing arm for USD1bn in terms of enterprise value,

while plans are in place to list its Indonesian and

Philippines operations. Management also guided for

potential special dividends to be declared every two

years to distribute the disposal proceeds after paring

down debt, which further adds to its appeal. Despite

yield pressure, we still expect AirAsia to deliver a core

EPS of 38 sen in FY17, which translates into an

attractive forward valuation of 8x CY17E EPS.

Bumi Armada (BAB MK)*


Share Price as at

31 May 2017

: RM0.78

0.00

0.50

1.00

1.50

2.00

2.50


(RM)

BUY Bumi Armada saw maiden contribution from FPSO

Olombendo and Malta FSU in 1Q17. We expect FPSO

Kraken and Sterling III to gradually come into operation

in 2H17 and hence show a further improvement in

earnings. Bumi is our big-cap top pick in the O&G

universe with a 12-month TP of RM0.95 based on

SOTP valuation. At the current share price level,

valuation appears attractive at 10x FY18E PE.

` 5 June 2017



CIMB Group (CIMB MK)*


Share Price as at

31 May 2017

: RM6.40

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00


(RM)

BUY Our optimism on a progressive improvement in CIMB

Group’s net profit is being reinforced by CIMB’s strong

1Q17 net profit (+45% yoy, +38% qoq), with CIMB

Niaga taking the lead (1Q17 net profit up 138% yoy).

Operationally, the group has continued to surprise with

NIM improvement, robust loan growth in Malaysia and

lower credit costs. NPLs have peaked in 2016, and the

group is working towards achieving its T18 operating

targets (CIR of < 50%; ROE of 15%). Operational

synergies from the JV with China Galaxy are potential

catalysts for further upsides to our 2017-19 forecasts.

Maintain BUY, PT at RM7.00 based on a 1.3x CY18E

P/BV target.

Gamuda (GAM MK)


Share Price as at

31 May 2017

: RM5.34

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00


(RM)

BUY Gamuda is our top BUY among the large-cap

Malaysian construction stocks with a fully-diluted

RNAV-based 12-month target price of RM5.70.

Gamuda and its partners have been appointed as the

project delivery partner for the RM32bn Klang Valley

Mass Rapid Transit Line 2 (MRT2) and RM27bn

Penang Transport Master Plan (PTMP). MMC Gamuda

Joint Venture was also awarded the RM15.47bn

underground works contract for MRT2, while Naim-

Gamuda JV clinched the RM1.57bn Pan-Borneo

Highway (Sarawak) (PBH) package. The three projects

should spur the long-term earnings growth of its

construction division. In addition, Gamuda is targeting

to win RM3-4bn worth of new contracts in 2017 by

bidding for the Gemas-Johor Bahru Double Tracking,

LRT Line 3 and PBH Sabah projects. The potential sale

of its 40% stake in the Splash water supply concession

would provide the funding for its PTMP project.

` 5 June 2017



Genting Berhad (GENT MK)


Share Price as at

31 May 2017

: RM9.97

5.00

6.00

7.00

8.00

9.00

10.00

11.00


(RM)

BUY Genting Berhad, in our view, is a cheaper alternative to

buy into the upside of its other listed subsidiaries,

Genting Malaysia (GENM MK), Genting Singapore

(GENS SP) & Genting Plantation (GENP MK), which

are seeing a turnaround from the weak results in

2015/16. The holding co discount is currently at around

+1 SD of its historical average.

Inari (INRI MK)*


Share Price as at

31 May 2017

: RM2.04

0.00

0.50

1.00

1.50

2.00

2.50


(RM)

BUY We like Inari’s expansion into the new IRIS IR chip,

which should provide an additional growth driver for the

group. This and a steady improvement in utilisation for

its RF business should drive our expected 3-year

forward net profit CAGR of 26%. Maintain BUY and

target price of RM2.60.

KL Kepong (KLK MK)*


Share Price as at

31 May 2017

: RM24.76

15.00

17.00

19.00

21.00

23.00

25.00

27.00


(RM)

BUY We continue to like KLK for its good management and

we expect higher FFB and CPO production as well as a

lower cost of production to drive profit growth in FY17-

19. We maintain our CPO average selling price

assumption at RM2,600/MT. Maintain BUY call on the

stock with a target price of RM29.00, based on 22x

FY18E PER.

` 5 June 2017



KPJ (KPJ MK)


Share Price as at

31 May 2017

: RM4.17

2.50

2.70

2.90

3.10

3.30

3.50

3.70

3.90

4.10

4.30

4.50


(RM)

BUY We believe the private hospital industry has excellent

growth prospects, based on expected secular demand

growth for private healthcare. KPJ has clear expansion

plans based on the expected secular demand growth in

its key home markets. The group has laid out plans to

develop 4 new hospitals and expand 6 of its existing

ones, which will probably add more than 1,100 beds to

its network in Malaysia. Maintain our BUY rating on KPJ

with a RM4.71 TP, based on SOTP valuation. We like

KPJ for its strong expansion plan and cheap valuation

among regional peers.

Maybank (MAY MK)*


Share Price as at

31 May 2017

: RM9.44

2.50

3.50

4.50

5.50

6.50

7.50

8.50

9.50

10.50


(RM)

BUY Maybank looks set for another year of operating income

expansion, as sentiment improves to drive more fund-

raising activities among corporates while operationally

NIM pressure appears to be easing (1Q17 NIM rose

9bps yoy and 10bps qoq). An improving macro outlook,

likely further upside from an allowance recovery and a

potential uplift in restructured and rescheduled (R&R)

loans are possible re-rating catalysts for the stock. The

Maybank group, being the largest lender in Malaysia,

remains a key domestic and regional player in the

banking space and capital market. Maintain BUY, with a

PT of RM10.50 (at CY18E 1.5x P/BV target).

Petra Energy (PENB MK)


Share Price as at

31 May 2017

: RM1.18

0.00

0.50

1.00

1.50

2.00

2.50

3.00


(RM)

BUY Petra is our small-cap top BUY in the Malaysia O&G

universe under our coverage. We recommend a BUY

with a target price of RM1.66 (based on an SOTP

valuation). The group looks on track to turn around its

''bread and butter'' business as Pan Malaysia work

orders look set to improve. In addition, we believe the

stabilization of oil prices at this higher level will see a

more stable RSC contribution going forward, which will

support earnings. Petra is a strong contender and

beneficiary of the upcoming maintenance, construction

and modification contracts to be rolled out this year, in

our view.

` 5 June 2017



Public Bank (PBK MK)


Share Price as at

31 May 2017

: RM20.06

15.00

16.00

17.00

18.00

19.00

20.00

21.00


(RM)

BUY Public Bank (PBB) stands out amongst peers by having

the best asset quality (GIL ratio 0.49%, LLC at 104% as

at 1Q17), lowest CIR at 34.3% (1Q17), largest market

share in domestic retail lending and largest private unit

trust arm (Public Mutual). The banking group overcame

major headwinds during the last global financial crisis

and the recent commodity downturn (2015-16), which

hit its peers. PBB's 1Q17 operating results remained

robust, with NIM improvement and above-industry loan

growth at 7% yoy. We have a BUY rating with PT at

RM23.25 (at 2017E P/B of 2.42x).

Ta Ann (TAH MK)


Share Price as at

31 May 2017

: RM3.47

2.00

2.50

3.00

3.50

4.00

4.50

5.00


(RM)

BUY We continue to like Ta Ann for its plantation earnings

prospects given the increasing mature plantation

estates as well as expected higher FFB and CPO

production. Despite the lacklustre timber division, we

believe Ta Ann's earnings will continue to grow mainly

driven by the plantation division. We have a BUY rating

on Ta Ann with an SOTP-derived 12-month target price

of RM4.57. This is based on 8x our 2017E EPS for its

timber division and 15x for its plantation division, and 1x

BV for its forest plantation.

Tenaga (TNB MK)


Share Price as at

31 May 2017

: RM13.78

8.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00


(RM)

BUY We have a BUY rating on TNB. The catalyst would be a

higher dividend payout for FY17E, in line with its new

capital optimisation plan. Post the implementation of the

Imbalance Cost Past Through (ICPT) mechanism, the

cash flow for TNB has become more predictable, which

is supportive of a higher dividend payout in the future.

The key risks would be if the government decides to

suspend the ICPT, and to continue with the tariff

rebates despite the higher fuel cost.

` 5 June 2017



UOA Development (UOAD MK)


Share Price as at

31 May 2017

: RM2.60

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00


(RM)

BUY We like UOA Development for its strong management,

good product branding as well as net cash position.

Being a niche property developer focusing on mid to

high-end mixed development projects in Greater Kuala

Lumpur, UOA is seeing good take-up rates for launches

despite the current weak market and tight bank lending

environment. The company targets to launch another

RM1.6bn worth of properties in 2017. The next key

catalyst would be its Jalan Ipoh development, to be

launched in 2018, which is expected to mirror the

success of the Bangsar South development. Our 12-

month target price of RM2.95 is based on a 30%

discount to its RNAV.

WCT (WCTHG MK)


Share Price as at

31 May 2017

: RM2.22

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40


(RM)

BUY WCT is one of our top BUYs among the mid-cap

construction stocks with a 12-month target price of

RM2.46 based on a 10% discount to its RNAV. WCT

clinched RM2bn of new contracts in FY16 to replenish

its order book to RM4.8bn. We believe WCT’s

prospects to secure more local contracts have

improved after it secured its first MRT civil works

package. WCT is pre-qualified to bid for the LRT3,

WCE and PBH projects. The change in major

shareholder could accelerate its plans to monetise its

assets such as the potential injection of two malls into a

new listed REIT in 2017 and reduce its high net gearing

of 0.95x. We expect a strong 3-year core EPS CAGR of

50% in FY17-19E.

Source: Bloomberg, Affin Hwang

*new additions

` 5 June 2017


Fig 45: Recent initiations of coverage

Initiations Rating Analysts’ Comments

Century Logistics (CLH MK)


Share Price as at

31 May 2017

: RM1.28

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40


(RM)

BUY Century Logistics is on the cusp of transforming from a

total integrated logistics pure play to an emerging

parcel delivery provider by leveraging on CJ Korex’s

strong parentage as Korea’s largest logistics provider.

Riding on the exponential growth potential in e-

commerce and the digitization of Malaysia’s retail

economy, Century aims to differentiate itself with high

service quality and superior efficiencies in automation.

The merger with CJ Korex’s Malaysian operations

could yield significant synergies, increase product

offerings and expand its client base to underpin near-

term earnings growth for its core operations.

HSS Engineering (HSS MK)


Share Price as at

31 May 2017

: RM0.83

0.00

0.20

0.40

0.60

0.80

1.00

1.20

Aug-16 Nov-16 Feb-17 May-17

(RM)

BUY HSS provides engineering consultancy and project

management services for companies and

governments. Some of their projects include MRT1 and

MRT2, LRT Ampang Line extension, RAPID

Pengerang, Westports, Kuantan Port and West Coast

Highway. We like HSS for its long and established

relationship with clients like Prasarana, MRT Corp, and

myHSR, and its recent appointment as a consultant for

ECRL. Being a well-positioned company with

predominantly Bumiputera engineers allows them an

upper hand in bidding for governmental projects. We

believe it could potentially secure more contracts from

existing clients. HSS usually earns an engineering fee

of 2-5% on the total project value, while its only cost is

manpower, which makes it highly profitable (FY16:10%

net profit margin). We are positive on its expansion

plans to regional markets like Indonesia and recurring

income businesses like seawater desalination and

facility management. We recently initiated coverage on

HSS with a BUY call and TP of RM1.20, based on a

target CY18E PER of 15x, a 20% discount to global

peers' weighted average PER of 18.6x.

` 5 June 2017



LPI Capital (LPI MK)


Share Price as

at 31 May 2017

: RM18.80

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00


(RM)

BUY LPI is the top fire insurer and one of the largest general

insurers in Malaysia. We like LPI for its superior and

disciplined underwriting expertise, lucrative

underwriting margins, strong distribution network

(including Public Bank as a key bancassurance

partner) and a high-yielding investment portfolio. We

believe LPI deserves a premium valuation relative to its

peers due to its strong track record and competitive

advantages which should help it weather against

potential industry headwinds and detariffication

challenges. We have a BUY rating and a PT of

RM21.40, based on a 3.27x 2018E P/BV.

Oceancash (OCP MK)


Share Price as at

31 May 2017

: RM0.73

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90


(RM)

BUY Oceancash is one of the small-cap stocks that we

cover that is listed on the ACE market. We recently

initiated coverage with a target price of RM0.81 based

on a 2017E PE of 15.5x. We have since rolled over our

valuation to 2018E and our new target share price is

RM0.88 based on an unchanged target PE. Oceancash

manufactures two main products: insulation and

hygienic products. Their insulation materials are mainly

used in the automotive sector and air conditioning.

Their hygienic products are used as the back sheet in

baby diapers and sanitary napkins. We think the

catalysts for this stock are the growing automotive

sector in Indonesia and demand for better quality

hygienic products in Asia. We expect a strong 2016-

19E EPS CAGR of 9.8%.

Perak Transit (PERAK MK)


Share Price as at

31 May 2017

: RM0.28

0.00

0.05

0.10

0.15

0.20

0.25

0.30

Oct-16 Nov-16 Dec-16 Jan-17 Feb-17Mar-17 Apr-17 May-17

(RM)

BUY Perak Transit (PT) is one of the small-cap stocks that

we cover which is listed on the ACE market. PT is a

monopoly business as it owns the license to run the

only terminal in Ipoh, Perak. Their business can be

divided into three core segments: terminal operations,

bus operations and petrol stations. All three segments

of its business are growing. PT’s terminal operations

enjoy high margins from the rental of advertising space

and outlets. It is also in the midst of building another

new terminal in Kampar. We recently initiated coverage

on this stock with a target price of RM0.31 based on a

2017E PE of 14.0x. We have since rolled over our

valuation to 2018E and our new target price is RM0.34

based on an unchanged target PE.

` 5 June 2017



Pintaras Jaya (PINT MK)


Share Price as at

31 May 2017

: RM3.90

2.50

2.70

2.90

3.10

3.30

3.50

3.70

3.90

4.10

4.30

4.50


(RM)

BUY Pintaras Jaya is one of the top piling and engineering

companies, with a fleet of 30 bored piles machines,

which is set to benefit from the rising demand for piling

with the implementation of large-scale infrastructure

projects like MRT Line 2 and LRT Line 3, and

commercial property development projects like Tun

Razak Exchange. We like Pintaras for its expected

strong earnings rebound in FY17E and ability to

preserve its above-industry historical average PAT

margin of 23%, more than 2x that of its direct

competitor, Econpile with a PAT margin of 10%. We

expect Pintaras to secure RM250m of new contracts in

FY18 to replenish its current orderbook of RM50m

given its available capacity and potential piling industry

capacity shortage. We recently initiated coverage on

Pintaras with a BUY call and a TP of RM4.62 based on

a CY18E PER of 15x. Its current CY18E PER 12.4x

looks attractive, lagging peers' PERs of 16.2x for

Suncon and 16.4x for Econpile. Net cash of RM172m

or RM1.00/share could support net DPS of 20sen

(attractive yield of 5.2%). Pintaras has a consistent

41% dividend payout ratio historically.

QL Resources (QLG MK)


Share Price as at

31 May 2017

: RM4.99

2.50

3.00

3.50

4.00

4.50

5.00

5.50


(RM)

BUY QL Resources is a diversified consumer play active in

3 segments: marine-product manufacturing (MPM),

integrated-livestock farming (ILF) and palm-oil activities

(POA) that have seen solid earnings growth since IPO

in 2000 and weathered through the global financial

crisis in 2008-09. We see key rerating catalysts as an

uptick in plantation earnings as its plantation estates

mature, and growth from its recent foray into the

convenience-store (CVS) space in April 2016,

benefiting its MPM segment. We recently initiated

coverage on QL at BUY with a DCF-derived TP of

RM5.56 to capture its potential growth in its plantation

and CVS segments, which we think will turn profit-

making in FY23.

` 5 June 2017



Serba Dinamik (SDH MK)


Share Price as at

31 May 2017

: RM2.09

0.00

0.50

1.00

1.50

2.00

2.50

Feb-17 Mar-17 Apr-17 May-17

(RM)

BUY We recently initiated coverage on Serba with a 12-

months target price of RM2.40 (based on 11x FY17E

EPS). Serba is one of our top BUYs among the mid-

cap Malaysia O&G stocks. We like Serba's business

model, which is involved mainly in the maintenance

space. This is a relatively more stable business

segment as maintenance generally only makes up a

small part of oil majors’ capex. We also like Serba for

its strong regional exposure in the Middle East and

attractive valuation.

SLP Resources (SLPR MK)


Share Price as at

31 May 2017

: RM2.35

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50


(RM)

BUY SLP Resources is one of the mid cap stocks that we

cover that is listed on the Main Market. We recently

initiated coverage on this stock with a target price of

RM2.87 based on a PE of 26.0x. We expect increasing

consumption to drive the demand for flexible plastic

packaging (FPP). The company has competitive

advantage as it has the expertise to manufacture FPP

products that are ultra-thin and consume less raw

materials. They also sell customized plastic products

that fetch higher margins compared to its peers in the

local plastic packaging business. As 60% of its

products are denominated in US dollar, the strong

dollar will likely boost the Group’s earnings. We expect

the Group to achieve a 2017-20E EPS CAGR of

10.1%.

Tune Protect (TIH MK)


Share Price as at

31 May 2017

: RM1.31

0.00

0.50

1.00

1.50

2.00

2.50


(RM)

BUY Tune Protect is the travel insurance partner for the

AirAsia group of airlines as well as AirArabia and Cebu

Pacific Air. We like Tune Protect for its lucrative travel

insurance segment, strong airline partners and

scalable business model. While we expect short-term

headwinds in its travel insurance segment due to the

"Opt in" regulatory changes introduced in 2H16, we

believe the company's medium to long-term outlook

remains intact. We have a BUY rating and a PT of

RM1.57, based on a 2.03x 2018E P/BV.

` 5 June 2017



WZ Satu (WENG MK)


Share Price as at

31 May 2017

: RM1.15

0.00

0.50

1.00

1.50

2.00

2.50


(RM)

BUY WZ Satu (WZS) is an established subcontractor and

partner of choice for Ekovest, IJM Corp and UEM

Builders. Its bauxite mining operation was adversely

affected by the mining ban imposed by the government

but it is still able to export its stockpile. We expect core

EPS growth of 70% yoy in FY17, driven by rising

earnings from construction and oil & gas services, and

stable mining associate earnings in FY17. We recently

initiated coverage on WZS with a BUY call and target

price of RM1.52, based on 10% discount to RNAV.

YSP Southeast Asia (YSP MK)


Share Price as at

31 May 2017

: RM2.36

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50


(RM)

BUY YSP Southeast Asia is one the top-5 listed local

generic manufacturers in Malaysia. We expect

increasing healthcare expenditure and growing

demand for generic drugs to drive YSP’s domestic

sales. At the same time, its expansion into the ASEAN

region has been progressing well given the much

larger population of other countries compared to

Malaysia. We forecast a 2016-2019E EPS CAGR of

16%. We have a BUY rating and a RM2.76 TP, based

on a 2017E PER of 12x.

Source: Bloomberg, Affin Hwang

When a report covers six or more subject companies please access important disclosures for Daiwa Capital Markets Hong Kong Limited at http://www.daiwacm.com/hk/research_disclaimer.html or contact your investment representative or Daiwa Capital Markets Hong Kong Limited at Level 26, One Pacific Place, 88 Queensway, Hong Kong.

http://www.daiwacm.com/hk/research_disclaimer.html

` 5 June 2017


Fig 46: Affin Hwang’s stock universe

Rec Price Price Upside Market

EPS

Growth

(%)

EPS

Growth

(%)

Core EPS

Growth (%)

Core EPS

Growth (%) PE (x) PE (x)

EV/EBITDA

(x)

EV/EBITDA

(x) Yield (%) Yield (%) P/BV (x) P/BV (x) ROE (%) ROE (%)

Company name Current Target /Downside Cap 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E

(RM) (RM) (%) (RMm)

Auto & Autoparts 8,757 (124.6) 42.7 (44.2) 42.7 20.6 14.4 13.9 11.1 2.6 2.6 1.1 1.0 4.5 5.8

APM AUTOMOTIVE SELL 4.11 3.55 (13.63) 828.36 30.2 13.6 30.2 13.6 12.7 11.2 2.6 2.3 2.7 2.7 0.6 0.6 5.1 5.6

MBMR HOLD 2.35 2.30 (2.13) 918.58 61.0 13.7 8.5 13.7 9.2 8.1 76.7 44.2 2.6 2.6 0.5 0.5 5.5 6.3

UMW SELL 6.00 5.05 (15.83) 7,009.76 (117.8) 52.2 (52.4) 52.2 23.7 15.6 14.7 11.7 3.3 3.3 1.0 0.9 4.1 5.8

Banks & Financial Services 323,182 5.2 3.0 7.8 3.0 13.7 13.3 4.3 4.5 1.3 1.3 10.3 10.1

AEON CREDIT SELL 19.20 15.10 (21.35) 2,764.80 3.1 8.0 3.1 8.0 10.9 10.1 0 0 3.4 3.8 2.5 2.2 24.9 22.7

AFG BUY 4.33 4.70 8.55 6,701.92 (6.9) 7.7 (6.9) 7.7 13.8 12.8 0 0 3.7 4.4 1.2 1.2 8.9 9.0

AMMB HOLD 5.21 5.20 (0.19) 15,703.90 10.7 4.9 10.7 4.9 10.7 10.2 0 0 3.7 3.8 0.9 0.9 8.7 8.7

BURSA M'SIA BUY 10.80 10.80 - 5,794.44 16.1 (1.7) 15.8 (1.7) 25.8 26.3 16.5 16.8 5.6 5.1 7.3 7.7 28.5 29.3

CIMB BUY 6.40 7.00 9.38 57,935.16 26.1 (1.2) 31.6 (1.2) 12.4 12.5 0 0 3.6 3.8 1.2 1.1 9.7 9.4

HONG LEONG BANK BUY 14.02 15.68 11.84 30,391.41 8.5 4.8 5.0 4.8 12.2 11.6 0 0 3.2 3.4 1.1 1.0 10.1 9.9

MAYBANK BUY 9.44 10.50 11.23 96,977.66 1.8 (1.4) 13.1 (1.4) 13.7 13.9 0 0 6.1 6.4 1.4 1.4 9.8 9.5

MBSB HOLD 1.28 1.25 (2.34) 7,422.43 32.7 41.5 32.7 38.5 19.7 13.9 0 0 2.3 2.3 0.7 0.6 6.8 8.6

PUBLIC BANK BUY 20.06 23.25 15.90 77,875.69 2.0 5.2 3.2 5.2 14.6 13.9 0 0 3.0 3.1 2.1 1.9 14.3 13.9

RHB BANK HOLD 5.39 5.35 (0.74) 21,614.15 11.7 3.7 0.2 3.7 11.1 10.7 0 0 2.2 2.2 0.6 0.6 8.4 8.2

Building Materials 4,665 (4.7) 191.9 (14.9) 191.9 63.8 21.9 15.8 9.8 0.6 2.2 2.4 2.4 2.3 6.8

LAFARGE HOLD 5.49 6.20 12.93 4,664.83 (4.7) 191.9 (14.9) 191.9 63.8 21.9 15.8 9.8 0.9 3.5 1.5 1.5 2.3 6.8

Construction & Infrastructure 36,275 0.3 14.0 17.7 18.8 19.6 17.2 15.6 10.7 1.1 1.1 3.3 3.1 7.8 8.9

GABUNGAN AQRS BUY 1.44 1.62 12.50 562.89 108.6 1.7 62.5 57.7 11.9 11.7 1,181.0 900.1 0.7 2.1 1.5 1.3 16.2 14.3

GAMUDA BUY 5.34 5.70 6.74 13,018.65 6.3 12.3 12.9 16.3 19.6 17.4 17.0 11.6 2.2 2.2 1.7 1.6 9.9 10.7

HSS ENGINEERING BUY 0.83 1.20 44.58 264.84 29.7 38.6 26.7 38.6 14.6 10.5 8.9 5.9 2.0 2.9 3.4 2.7 23.3 26.1

IJM CORP HOLD 3.48 3.75 7.76 12,590.54 (6.1) 11.7 19.7 18.5 19.5 17.4 13.6 10.0 2.7 2.9 1.2 1.2 6.2 6.7

MRCB HOLD 1.36 1.47 8.09 2,970.66 (70.3) 68.3 (29.8) 70.0 33.2 19.7 19.6 7.4 2.1 2.1 1.1 1.1 3.7 7.1

PINTARAS BUY 3.90 4.62 18.46 642.40 46.2 17.5 50.3 20.7 14.9 12.6 7.1 5.9 5.1 5.1 1.9 1.8 12.7 14.1

SUNWAY CONSTRUCTION HOLD 2.10 2.13 1.43 2,715.09 31.9 11.1 37.0 11.1 16.7 15.0 9.1 7.6 3.1 3.3 4.5 3.9 26.8 26.0

WCT BUY 2.22 2.46 10.81 3,109.20 82.1 32.0 117.4 32.0 22.2 16.8 23.5 16.6 1.8 1.8 1.0 1.0 5.0 6.9

WZ SATU BUY 1.15 1.52 32.17 401.21 17.5 24.3 1.4 18.9 15.9 12.8 7.5 5.6 2.6 2.8 1.2 1.0 9.3 10.6

` 5 June 2017



EPS

Growth

(%)

EPS

Growth

(%)

Core EPS

Growth (%)

Core EPS


EV/EBITDA

(x)

EV/EBITDA



(RM) (RM) (%) (RMm)

Consumer 57,149 4.6 6.2 10.1 6.2 23.6 22.2 13.6 11.7 3.8 4.1 16.5 16.2 21.0 26.8

AEON CO HOLD 2.34 2.31 (1.28) 3,285.36 49.6 20.0 34.5 20.0 27.5 22.9 7.5 6.7 1.2 1.6 1.7 1.6 6.1 7.0

BAT HOLD 44.60 46.90 5.16 12,734.64 0.2 4.6 7.1 4.6 17.6 16.8 12.8 12.2 5.6 5.9 22.0 21.8 124.7 129.5

BONIA SELL 0.62 0.50 (19.35) 499.50 12.7 13.7 2.8 13.7 17.0 14.9 5.9 5.1 1.4 1.5 1.1 2.2 6.8 15.0

CARLSBERG HOLD 14.78 14.38 (2.71) 4,581.08 17.1 9.2 18.2 9.2 18.8 17.2 12.9 12.2 5.3 5.8 13.1 13.0 69.5 75.3

HEINEKEN HOLD 19.02 18.15 (4.57) 5,745.90 (19.2) 4.7 (19.2) 4.7 20.1 19.2 13.3 12.6 4.5 4.7 12.6 24.5 62.9 127.7

HAI-O BUY 3.94 4.22 7.11 1,192.77 33.8 16.7 34.0 16.7 16.8 14.4 11.8 10.0 3.9 4.5 2.5 2.3 23.2 24.2

MSM SELL 4.28 3.63 (15.19) 3,008.75 11.8 18.2 12.3 18.2 22.3 18.9 9.5 8.8 2.9 3.4 1.4 1.3 6.2 7.1

NESTLE HOLD 82.00 79.08 (3.56) 19,229.00 9.0 6.5 14.8 6.5 27.7 26.0 18.7 17.5 3.5 3.8 18.2 17.1 65.8 65.7

PARKSON SELL 0.58 0.51 (11.30) 644.01 (50.4) (191.6) (58.4) (191.6) (8.0) 8.8 14.3 3.9 1.7 3.5 0.3 0.5 (3.2) 5.8

QL RESOURCES BUY 4.99 5.56 11.42 6,227.66 10.8 13.8 13.1 15.1 29.0 25.5 16.0 14.3 1.1 1.1 3.4 3.1 11.6 12.0

Gaming 74,366 (23.4) 14.7 9.0 14.1 18.9 16.5 9.7 5.9 1.4 1.6 0.5 0.5 4.2 4.5

BTOTO SELL 2.50 2.58 3.20 3,377.58 (3.0) 1.5 0.8 1.5 12.1 12.0 7.0 6.7 6.7 6.9 3.5 3.2 31.6 29.6

GENTING BUY 9.97 12.06 20.96 37,676.29 (6.2) 12.3 7.9 12.4 18.5 16.5 9.0 4.2 0.6 0.6 0.5 0.5 2.8 3.0

GENTING MALAYSIA HOLD 5.61 6.00 6.95 33,312.43 (46.0) 21.5 12.3 19.1 20.5 16.8 11.9 9.4 1.6 2.0 1.5 1.4 7.3 8.4

Healthcare & Pharma. 52,449 96.8 3.6 10.5 33.8 36.6 35.3 19.4 15.9 0.3 0.3 5.3 5.1 5.8 5.8

IHH HOLD 5.79 6.56 13.30 47,687.95 108.3 3.2 11.4 36.8 37.4 36.2 20.6 16.6 0.7 0.7 2.1 2.0 5.5 5.5

KPJ BUY 4.17 4.71 12.95 4,442.26 20.7 6.9 2.1 6.9 29.0 27.1 13.9 12.8 1.9 2.0 2.7 2.6 9.5 9.6

YSP SOUTHEAST ASIA BUY 2.36 2.76 16.95 318.71 14.4 15.9 14.4 15.9 10.1 8.7 5.0 4.2 3.9 4.6 1.1 1.0 10.8 11.7

Insurance 7,226 (30.3) 4.3 (89.4) 4.4 20.4 19.6 5.0 5.0 2.4 2.2 14.5 13.9

LPI CAPITAL BUY 18.80 21.40 13.83 6,241.34 (30.6) 4.4 (89.6) 4.4 20.6 19.7 0 0 4.0 4.0 3.0 2.8 15.0 14.6

TUNE PROTECT BUY 1.31 1.57 19.85 984.81 (7.9) - - 7.7 13.4 13.4 0 0 3.8 4.2 1.7 1.5 12.7 11.5

` 5 June 2017



EPS

Growth

(%)

EPS

Growth

(%)

Core EPS

Growth (%)

Core EPS


EV/EBITDA

(x)

EV/EBITDA



(RM) (RM) (%) (RMm)

Media 16,968 22.4 10.0 3.2 8.5 17.7 16.1 6.9 7.1 5.0 5.3 4.9 2.2 18.4 11.1

ASTRO BUY 2.54 3.16 24.41 13,232.19 20.0 8.5 1.0 7.0 17.7 16.3 7.3 7.3 5.1 5.5 10.1 118.9 56.9 731.9

MCIL SELL 0.58 0.49 (14.78) 970.16 19.2 11.5 0.4 4.8 10.6 9.5 4.7 4.9 6.6 7.0 0.9 3.7 8.9 38.8

MEDIA PRIMA SELL 0.98 0.80 (17.95) 1,081.47 (234.8) 6.9 63.6 6.9 13.5 12.7 3.5 3.3 4.9 5.2 0.6 0.6 4.4 4.7

STAR SELL 2.28 1.96 (14.04) 1,683.92 (32.2) 28.7 11.0 28.7 22.6 17.5 9.5 12.5 7.9 7.9 1.4 0.2 6.1 1.3

MREIT 29,172 5.3 4.0 6.3 4.0 18.5 17.8 15.9 15.2 5.6 5.8 1.1 1.1 6.5 6.9

AXIS REIT HOLD 1.72 1.67 (2.91) 1,900.90 (13.4) 4.2 (13.5) 4.2 17.9 17.2 17.2 16.6 5.6 5.8 1.4 1.4 8.0 8.4

IGB REIT HOLD 1.69 1.77 4.73 5,920.81 14.3 3.3 13.8 3.3 18.6 18.0 17.2 16.6 5.7 5.9 1.6 1.6 8.7 8.9

KLCC HOLD 7.81 8.00 2.43 14,099.65 6.3 3.3 6.3 3.3 18.5 17.9 14.9 14.4 4.9 5.1 1.2 1.2 6.3 6.4

PAVILION REIT BUY 1.72 2.00 16.28 5,205.21 (17.7) 12.9 9.0 12.9 20.2 17.9 16.8 15.9 5.1 5.7 1.4 1.4 6.7 7.6

YTL REIT BUY 1.20 1.55 29.17 2,045.27 123.8 7.0 3.3 7.0 15.2 14.2 15.7 14.4 6.6 7.0 0.8 0.8 2.5 3.3

Oil & Gas 130,721 16.4 11.7 57.6 10.6 18.9 17.0 10.8 9.0 2.7 3.0 2.7 2.8 8.7 12.4

ALAM MARITIM SELL 0.20 0.16 (20.00) 184.89 (102.1) 266.7 (103.2) 266.7 66.7 18.2 5.7 3.2 - - 0.2 0.2 0.3 1.3

BUMI ARMADA BUY 0.78 0.95 22.58 4,546.36 (116.1) 42.6 (640.0) 42.6 14.4 10.1 9.5 7.4 - - 0.5 0.5 3.8 5.3

DIALOG HOLD 1.92 1.85 (3.65) 10,624.47 7.0 12.5 13.2 12.5 32.0 28.4 27.7 25.1 1.3 1.4 3.8 7.2 12.8 27.2

GAS MALAYSIA HOLD 2.86 2.99 4.55 3,672.24 (0.5) 4.7 (0.8) 4.7 22.3 21.3 12.8 14.1 4.5 4.7 3.5 3.7 15.6 17.6

MMHE BUY 0.86 1.12 30.23 1,376.00 (117.9) 93.3 (266.7) 93.3 57.3 29.7 6.5 10.5 - - 0.5 0.5 0.8 1.6

PCHEM HOLD 7.33 7.70 5.05 58,640.00 23.4 10.4 14.1 10.4 16.2 14.7 9.5 9.4 3.2 3.5 2.0 2.1 12.5 14.1

PETRA ENERGY BUY 1.18 1.66 40.68 379.66 (125.5) 79.6 (193.9) 79.6 12.7 7.1 8.8 5.7 4.2 4.2 0.6 0.6 4.8 7.8

PETRONAS GAS BUY 18.56 20.72 11.64 36,725.27 3.2 11.8 2.7 11.8 20.5 18.3 11.3 10.0 3.2 3.6 2.9 2.7 14.0 14.7

SAPURA ENERGY HOLD 1.77 1.70 (3.95) 10,658.16 240.6 31.5 4.1 26.8 24.7 18.8 11.3 5.0 0.6 0.8 0.7 8.7 2.9 46.5

SERBA DINAMIK BUY 2.09 2.40 14.83 2,790.15 86.3 13.8 18.5 13.8 9.6 8.4 6.7 5.9 2.6 3.5 2.0 1.7 20.9 20.4

UMW-OG HOLD 0.52 0.63 21.15 1,124.24 (81.1) (21.2) (104.8) (54.9) (5.0) (6.3) 22.0 6.4 - - 0.3 0.4 (6.3) (6.0)

` 5 June 2017



EPS

Growth

(%)

EPS

Growth

(%)

Core EPS

Growth (%)

Core EPS


EV/EBITDA

(x)

EV/EBITDA



(RM) (RM) (%) (RMm)

Plantation 139,224 (1.6) 9.4 21.0 9.4 21.9 20.0 14.5 12.8 3.0 3.0 2.1 2.1 9.2 10.9

FELDA HOLD 1.75 1.87 6.86 6,385.77 711.1 16.4 83.3 10.4 24.0 20.6 9.9 5.7 2.9 2.9 1.0 1.0 4.0 5.0

GENTING PLANT BUY 10.94 13.35 22.03 8,787.96 20.2 12.4 38.5 12.4 20.3 18.0 14.1 12.9 0.9 0.9 1.8 1.8 8.8 9.9

HAP SENG PLANT HOLD 2.60 2.74 5.38 2,080.00 11.0 6.4 11.0 6.4 15.1 14.2 9.1 9.2 4.2 4.2 1.0 1.0 6.7 7.0

IJM PLANT BUY 3.15 3.73 18.41 2,773.83 52.4 21.5 52.5 23.1 19.7 16.2 11.4 9.8 2.9 3.2 1.5 5.8 7.4 35.5

IOI CORP HOLD 4.55 4.50 (1.10) 29,381.48 35.3 7.6 13.4 7.6 23.9 22.2 19.4 16.8 2.6 2.6 4.5 8.6 19.4 39.7

KUALA LUMPUR KEPONG BUY 24.76 29.00 17.12 26,431.42 (11.4) 5.0 20.5 5.0 19.5 18.5 11.7 10.6 2.4 2.4 2.8 3.0 14.5 16.0

SIME DARBY HOLD 9.32 9.03 (3.11) 63,383.82 2.0 16.0 19.2 16.0 25.9 22.3 15.6 14.3 3.2 3.2 1.8 1.8 7.1 7.9

Property 36,668 (13.0) 5.5 (20.2) 7.0 13.1 12.4 11.3 9.5 4.6 4.8 0.8 0.9 7.8 9.9

E&O BUY 1.83 3.00 63.93 2,425.06 6.8 (10.2) 12.4 (9.1) 28.6 31.8 27.8 32.8 0.7 0.6 1.5 1.4 4.3 3.5

IOI PROPERTIES BUY 2.12 2.26 6.60 11,701.37 (17.4) 2.9 (14.5) 2.9 12.3 12.0 11.0 9.9 4.0 4.0 0.6 1.2 7.1 14.2

SP SETIA HOLD 3.83 3.25 (15.14) 10,932.15 - 6.1 (12.1) 14.0 14.5 13.6 11.1 7.8 4.5 4.7 1.1 1.0 8.1 8.6

SUNWAY BUY 3.55 3.90 9.86 7,364.82 3.0 6.0 (53.7) (5.8) 11.8 11.2 11.8 9.3 3.1 3.1 0.9 0.9 8.5 9.1

UOA DEVELOPMENT BUY 2.60 2.95 13.46 4,244.39 (45.6) 9.4 1.7 9.4 11.1 10.2 6.5 6.4 5.8 6.2 1.1 1.0 9.7 10.1

Rubber Products 23,708 21.7 20.5 37.0 34.9 20.4 16.9 14.0 11.5 1.7 2.0 4.4 3.9 15.7 17.1

HARTALEGA BUY 6.07 6.70 10.38 9,978.87 37.7 20.5 37.4 20.5 26.2 21.8 18.5 15.7 1.6 1.8 4.8 4.3 18.3 19.9

KAREX HOLD 1.80 1.90 5.56 1,804.28 0.5 56.1 595.1 136.0 33.6 21.6 23.3 15.2 0.8 1.2 3.2 2.8 9.6 13.2

KOSSAN HOLD 6.12 6.30 2.94 3,913.54 26.8 9.7 26.8 9.7 18.1 16.5 11.0 9.9 2.8 3.1 3.3 3.0 18.4 18.2

SUPERMAX HOLD 2.06 1.90 (7.77) 1,393.27 (12.8) 12.3 (20.8) 12.3 16.9 15.0 12.4 9.4 2.3 2.7 1.1 1.0 6.4 6.6

TOP GLOVE BUY 5.27 5.80 10.06 6,618.16 12.7 26.2 13.9 26.2 16.4 13.0 10.9 8.5 2.5 3.1 3.0 2.7 18.8 20.9

Small & Mid caps 1,064.0 1.5 12.6 1.3 12.4 51.3 45.8 31.0 27.6 6.5 7.2 7.7 6.9 43.0 42.8

OCEANCASH BUY 0.73 0.88 20.55 162.79 14.3 9.6 13.0 9.6 14.0 12.8 10.3 9.5 1.1 1.2 1.9 1.7 13.8 13.2

PERAK TRANSIT BUY 0.28 0.34 21.43 320.03 15.8 9.1 15.8 9.1 12.7 11.7 6.2 5.5 3.6 3.9 1.4 1.3 11.4 11.2

SLP RESOURCES BUY 2.35 2.87 22.13 581.23 (6.8) 15.1 (6.7) 14.6 24.5 21.3 14.5 12.7 1.8 2.0 4.4 3.9 17.8 18.4

` 5 June 2017



EPS

Growth

(%)

EPS

Growth

(%)

Core EPS

Growth (%)

Core EPS


EV/EBITDA

(x)

EV/EBITDA



(RM) (RM) (%) (RMm)

Technology 13,056 14.3 8.2 14.1 9.2 14.4 13.3 8.7 8.5 3.5 3.8 2.2 3.0 21.0 26.5

GLOBETRONICS BUY 5.62 5.75 2.31 1,595.14 200.8 46.4 204.4 46.4 20.5 14.0 12.2 9.1 4.4 6.4 5.8 5.6 28.4 39.9

INARI BUY 2.04 2.60 27.45 4,053.41 33.8 21.3 34.5 28.8 17.0 14.0 13.1 10.8 2.6 2.8 4.7 8.6 27.8 61.9

KESM BUY 13.50 16.40 21.48 580.70 20.0 23.0 19.9 23.7 14.6 11.9 4.6 4.6 0.7 0.8 1.7 2.8 12.0 23.7

MPI HOLD 12.26 12.18 (0.65) 2,573.18 1.7 (1.9) (1.2) (1.6) 14.1 14.3 5.6 6.1 2.1 2.0 2.7 5.4 20.5 39.5

SCICOM BUY 2.35 2.74 16.60 835.32 6.6 5.8 7.9 5.8 18.1 17.2 14.0 11.9 3.6 3.8 7.1 6.2 38.9 36.0

UCHI TECH HOLD 1.85 1.81 (2.16) 820.84 1.6 1.5 1.6 1.5 14.2 14.0 11.7 13.2 5.9 5.9 3.5 2.6 28.8 21.6

UNISEM HOLD 3.54 3.11 (12.15) 2,597.76 0.5 (9.0) 9.9 (9.0) 15.9 17.5 7.3 8.4 - - 2.3 1.7 14.2 9.8

Telecoms 154,615 17.5 3.8 3.7 4.2 26.0 25.0 9.2 8.6 2.8 3.0 4.7 4.6 15.6 15.8

AXIATA HOLD 5.08 5.00 (1.57) 45,587.89 166.7 17.1 12.7 17.1 33.4 28.5 7.0 6.6 1.8 2.6 1.8 1.8 5.5 6.3

DIGI HOLD 4.95 4.88 (1.41) 38,486.25 (0.5) 1.4 (0.5) 1.4 23.7 23.3 13.9 13.9 4.2 4.3 74.1 74.1 313.5 317.1

MAXIS HOLD 6.15 6.49 5.53 46,189.58 0.3 (0.7) 2.7 (0.7) 22.9 23.0 11.4 10.0 3.3 3.3 9.1 8.2 39.9 35.4

TELEKOM HOLD 6.48 6.15 (5.09) 24,351.42 15.0 1.3 2.2 3.9 27.3 27.0 8.0 7.6 3.3 3.3 3.1 3.1 11.5 11.5

Timber 3,096 16.7 6.9 13.0 6.9 11.7 11.0 5.7 4.8 1.8 1.8 1.1 1.2 5.2 7.0

JAYA TIASA BUY 1.14 1.34 17.54 1,110.04 33.8 9.8 16.9 9.8 10.7 9.7 5.9 5.5 1.9 2.1 0.6 1.1 5.3 11.4

TA ANN BUY 3.47 4.57 31.70 1,543.61 7.7 4.7 6.1 4.7 11.8 11.2 4.9 4.1 2.6 2.6 1.0 0.9 8.5 8.3

WTK HOLD 0.92 0.90 (2.17) 442.84 (18,176.8) 35.8 (983.3) 35.8 17.4 12.8 7.7 5.0 2.7 2.7 0.3 0.3 1.7 2.4

Transports & Logistics 74,642 (18.6) (0.1) (1.3) (0.1) 19.2 19.3 8.7 7.5 3.1 3.1 1.2 1.2 7.7 7.6

AIRASIA BUY 2.98 3.80 27.52 9,958.78 (48.3) 17.8 (22.6) 17.8 7.8 6.6 7.2 6.5 3.4 1.7 1.2 1.1 15.2 16.0

AIRASIA X HOLD 0.40 0.57 42.50 1,659.26 23.2 13.0 1.5 13.0 5.8 5.1 10.7 3.0 - - 1.1 0.8 18.4 14.9

CENTURY BUY 1.28 1.70 32.81 502.04 25.2 6.2 14.0 6.2 19.7 18.6 12.7 12.2 2.0 2.2 1.6 1.5 8.1 8.1

MAHB SELL 8.70 6.30 (27.59) 14,434.97 2,027.7 29.5 365.1 29.5 43.5 33.6 10.7 8.0 1.1 1.5 1.9 1.9 4.5 5.8

MISC SELL 7.50 6.50 (13.33) 33,478.45 (24.0) (7.5) (7.0) (7.5) 17.1 18.5 7.4 6.8 4.0 4.0 0.9 0.8 5.0 4.4

TIONG NAM BUY 1.76 1.90 7.95 763.80 (2.4) 0.3 14.2 9.5 9.8 9.7 8.6 8.7 3.7 4.4 1.0 0.9 10.6 9.6

WESTPORTS BUY 4.06 4.50 10.84 13,844.60 (3.1) 0.6 (3.2) 0.6 22.4 22.3 15.0 14.8 3.3 3.3 6.2 5.8 27.8 26.0

` 5 June 2017



EPS

Growth

(%)

EPS

Growth

(%)

Core EPS

Growth (%)

Core EPS


EV/EBITDA

(x)

EV/EBITDA



(RM) (RM) (%) (RMm)

Utilities 120,853 (3.4) 8.6 (6.9) 8.4 11.3 10.4 7.8 6.4 3.8 4.6 1.2 1.2 9.3 11.6

JAKS RESOURCES HOLD 1.55 1.70 9.68 747.41 44.0 40.3 44.0 40.3 10.8 7.7 13.1 7.9 - - 1.0 0.9 9.2 11.6

MALAKOFF HOLD 1.18 1.25 5.93 5,900.00 (25.5) 37.7 (25.4) 37.7 22.3 16.2 7.4 6.7 3.6 4.4 0.9 0.9 4.1 5.5

MMC BUY 2.43 2.80 15.23 7,399.49 (0.8) 25.1 (1.1) 25.1 13.6 10.8 13.7 10.6 1.6 1.6 0.6 0.8 4.6 7.8

TENAGA BUY 13.78 16.50 19.74 77,981.23 (3.6) 8.4 (7.0) 8.4 11.2 10.3 7.1 6.3 3.6 4.4 1.3 1.3 12.0 12.1

YTL CORP HOLD 1.50 1.70 13.33 16,365.84 8.1 3.0 (6.6) (2.9) 15.0 14.6 7.2 5.1 8.0 8.0 0.9 1.7 5.9 11.8

YTL POWER HOLD 1.53 1.60 4.58 12,458.83 1.2 5.9 (0.8) 6.0 11.3 10.7 9.8 7.1 6.5 6.5 1.0 1.9 8.6 18.1

Market Total 1,307,857 3.8 6.6 2.0 7.0 17.4 16.4 13.1 11.4 3.4 3.6 0.1 0.1 9.1 9.9

Source: Bloomberg, Affin Hwang forecasts; note: prices as of close on 31 May 2017 Note: sector valuations are market-cap weighted and may differ from those in the respective sector parts of this report

` 5 June 2017


Equity Rating Structure and Definitions

BUY Total return is expected to exceed +10% over a 12-month period

HOLD Total return is expected to be between -5% and +10% over a 12-month period

SELL Total return is expected to be below -5% over a 12-month period

NOT RATED Affin Hwang Investment Bank Berhad does not provide research coverage or rating for this company. Report is intended as information

only and not as a recommendation

The total expected return is defined as the percentage upside/downside to our target price plus the net dividend yield over the next 12 months.

OVERWEIGHT Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months

NEUTRAL Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months

UNDERWEIGHT Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months

This report is intended for information purposes only and has been prepared by Affin Hwang Investment Bank Berhad (14389-U) (“the Company”) based on sources believed to be reliable. However, such sources have not been independently verified by the Company, and as such the Company does not give any guarantee, representation or warranty (express or implied) as to the adequacy, accuracy, reliability or completeness of the information and/or opinion provided or rendered in this report. Facts, information, views and/or opinion presented in this report have not been reviewed by, may not reflect information known to, and may present a differing view expressed by other business units within the Company, including investment banking personnel. Reports issued by the Company, are prepared in accordance with the Company’s policies for managing conflicts of interest arising as a result of publication and distribution of investment research reports. Under no circumstances shall the Company, its associates and/or any person related to it be liable in any manner whatsoever for any consequences (including but are not limited to any direct, indirect or consequential losses, loss of profit and damages) arising from the use of or reliance on the information and/or opinion provided or rendered in this report. Any opinions or estimates in this report are that of the Company, as of this date and subject to change without prior notice. Under no circumstances shall this report be construed as an offer to sell or a solicitation of an offer to buy any securities. The Company and/or any of its directors and/or employees may have an interest in the securities mentioned therein. The Company may also make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report. Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences and hence an independent evaluation is essential. Investors are advised to independently evaluate particular investments and strategies and to seek independent financial, legal and other advice on the information and/or opinion contained in this report before investing or participating in any of the securities or investment strategies or transactions discussed in this report. Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind relating to such data. The Company’s research, or any portion thereof may not be reprinted, sold or redistributed without the consent of the Company . The Company, is a participant of the Capital Market Development Fund-Bursa Research Scheme, and will receive compensation for the participation. This report is printed and published by: Affin Hwang Investment Bank Berhad (14389-U) A Participating Organisation of Bursa Malaysia Securities Berhad 22nd Floor, Menara Boustead, 69, Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia. T : + 603 2146 3700 F : + 603 2146 7630 [email protected] www.affinhwang.com

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