A Developer on Steroids with YTD New Sales of Over RM1.1Bn, UOA Dev Has Exceeded Its Full-Year Target of Rm1bn

Property Devt & Invt MALAYSIA July 25, 2012

UOA Development COMPANY NOTE UOAD MK / UOAD.KL Current RM1.58 SHORT TERM (3 MTH) LONG TERM Market Cap Avg Daily Turnover Free Float Target RM2.18 US$594.4m US$0.62m 32.0% Previous Target RM1.84 RM1,889m RM1.97m 1,196 m shares Up/downside 37.7%

Conviction

Notes from the Field A developer on steroids With YTD new sales of over RM1.1bn, UOA Dev has exceeded its full-year target of RM1bn. At this rate, we would not be surprised if it beat its target by 50-100%. The strong sales will allay concerns over its earnings and dividend sustainability.

In view of the stronger-than-expected Strong ability to adapt new sales, we raise FY12-14 EPS. We Terence Wong CFA One of the reasons for the strong new also up our target price after raising T (60) 3 20849689 sales is UOA Dev’s ability to adapt to RNAV by 4% to RM2.72 and cutting E [email protected] changing market conditions. Even in the target basis from 30% discount to the office space market where there is RNAV to 20% due to the company’s a glut, its projects are selling very well. brighter outlook. UOA Dev remains a Also, the group has spent the last two Trading Buy and is our new top pick years accumulating landbank in the in the sector. The stock is not an periphery of Kuala Lumpur for outperform because of election risks. Company Visit Expert Opinion development of medium-cost Channel Check Customer Views YTD sales exceed RM1.1bn residential properties priced around RM500k for which demand is robust. Concerns over UOA Dev’s earnings This lays the foundations for strong “The group has a strong sensitivity to economic and property new sales over the next few years. pipeline of new launches cycles have made it a huge flop share in 2012 with an estimated price wise since its listing last year. Very attractive valuations But this may be about to change. We Among the property stocks we cover, GDV of RM1.5bn. The new are pleasantly surprised to discover UOA Dev trades at the lowest P/E of launches are all centred that the group is thriving despite a 5-6x while its dividend yield is the around the Greater Kuala tougher property market highest at 7-9% or nearly triple the environment. For the 1st seven Lumpur area and the industry average. We believe there is months, new sales exceed RM1.1bn, group intends to continue further upside to our earnings which is more than the company’s forecasts given the high YTD sales this geographical focus.” full-year sales target of RM1bn. It has and strong pipeline of new projects to several more projects in 2H that – Tan Sri Dato’ Alwi be launched over the next 18 months. could drive new sales to RM1.5bn-2bn, Jantan, UOA Dev The sustainability of profits and which would be very commendable as Chairman dividends is a major attraction and UOA Dev enjoys pretax margins of will help rerate the stock. 40-50%, double the industry average.

Price Close Relative to FBMKLCI (RHS) Financial Summary

2.4 108 Dec-10A Dec-11A Dec-12F Dec-13F Dec-14F 2.2 101 Revenue (RMm) 375 614 951 1,332 1,524 2.0 94 1.8 87 Operating EBITDA (RMm) 166.5 294.1 429.1 492.0 542.6 1.6 79 Net Profit (RMm) 272.5 384.8 300.1 340.2 393.9 1.4 72 1.2 65 Core EPS (RM) 0.15 0.19 0.25 0.28 0.33 150.0 58 Core EPS Growth (12.2%) 25.7% 33.4% 13.3% 15.8% 40 30 FD Core P/E (x) 10.56 7.27 6.30 5.55 4.80 Vol m Vol 20 DPS (RM) 0.03 0.10 0.12 0.13 0.14 10 Dividend Yield 2.14% 6.33% 7.59% 8.23% 8.86% Jul-Source:11 BloombergOct-11 Jan-12 Apr-12 EV/EBITDA (x) 9.03 5.73 4.28 3.99 3.75

52-week share price range P/FCFE (x) 70.95 NA 13.55 17.58 23.99 1.58 Net Gearing 17.9% (12.0%) (4.7%) (0.5%) 0.6% 1.19 2.20 P/BV (x) 2.03 1.05 0.96 0.88 0.80 2.18 Recurring ROE 23.8% 18.1% 15.9% 16.6% 17.4% Current Target % Change In Core EPS Estimates 0.4% 2.2% 10.1% CIMB/consensus EPS (x) 1.13 1.15 1.37

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Sources: CIMB. COMPANY REPORTS Designed by Eight, Powered by EFA

UOA Development July 25, 2012

PEER COMPARISON

Research Coverage Bloomberg Code Market Recommendation Mkt Cap US$m Price Target Price Upside UOA Development UOAD MK MY TRADING BUY 594 1.58 2.18 37.7% UEM Land Holdings ULHB MK MY TRADING BUY 2,723 2.00 2.56 27.8% SP Setia SPSB MK MY TRADING BUY 2,188 3.62 4.30 18.7% Mah Sing Group MSGB MK MY TRADING BUY 553 2.11 2.51 18.9%

Eastern & Oriental EAST MK MY TRADING BUY 518 1.45 1.77 22.1%

Rolling P/BV (x) Rolling FD Core P/E (x) 4.0 50 3.5 45 40 3.0 35 2.5 30 2.0 25 1.5 20 15 1.0 10 0.5 5 0.0 0 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

UOA Development UEM Land Holdings SP Setia UOA Development UEM Land Holdings SP Setia Mah Sing Group Eastern & Oriental Mah Sing Group Eastern & Oriental

Peer Average: P/BV vs Recurring ROE Peer Average: FD Core P/E vs FD Core EPS Growth 3.0 25% 35 60%

2.5 21% 30 44% 25 29% 2.0 17% 20 13% 1.5 13% 15 -3% 1.0 8% 10 -19%

0.5 4% 5 -34%

0.0 0% 0 -50% Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Rolling P/BV (x) (lhs) Recurring ROE (rhs) Rolling FD Core P/E (x) (lhs) FD Core EPS Growth (rhs)

Valuation FD Core P/E (x) P/BV (x) EV/EBITDA (x) Dec-11 Dec-12 Dec-13 Dec-11 Dec-12 Dec-13 Dec-11 Dec-12 Dec-13 UOA Development 7.27 6.30 5.55 1.05 0.96 0.88 5.73 4.28 3.99 UEM Land Holdings 28.31 26.25 19.48 1.79 1.67 1.54 24.53 18.93 12.99 SP Setia 21.76 18.70 15.65 1.91 1.81 1.70 15.51 13.99 11.64 Mah Sing Group 10.40 7.54 6.14 1.64 1.43 1.22 8.53 6.33 4.89 Eastern & Oriental 25.60 14.41 11.86 1.24 1.20 1.11 20.01 10.35 7.10

Growth and Returns FD Core EPS Growth Recurring ROE Dividend Yield Dec-11 Dec-12 Dec-13 Dec-11 Dec-12 Dec-13 Dec-11 Dec-12 Dec-13 UOA Development 45.2% 15.5% 13.3% 18.1% 15.9% 16.6% 6.33% 7.59% 8.23% UEM Land Holdings 44.2% 7.9% 34.7% 8.0% 7.5% 9.3% 0.00% 0.38% 0.75% SP Setia 25.3% 16.4% 19.4% 10.9% 11.2% 12.6% 2.97% 3.37% 3.63% Mah Sing Group 42.9% 38.0% 22.7% 16.9% 20.2% 21.4% 3.91% 4.27% 4.62% Eastern & Oriental 50.5% 77.6% 21.5% 5.6% 9.9% 11.1% 1.91% 2.50% 2.78%

SOURCE: CIMB, COMPANY REPORTS

Calculations are performed using EFA™ Monthly Interpolated Annualisation and Aggregation algorithms to December year ends

UOA Development July 25, 2012

BY THE NUMBERS

Share price info P/BV vs Recurring ROE FD Core P/E vs FD Core EPS Growth Share px perf. (%) 1M 3M 12M 2.5 60% 14 900% Relative 0.8 -1.9 -34.4 12 757% 2.0 48% Absolute 2.6 1.3 -30.1 10 614% 1.5 36% Major shareholders % held 8 471% 1.0 24% 6 329% UOA Holdings Ltd 68.0 4 186% 0.5 12% PNB 7.1 2 43% 0.0 0% 0 -100% EPF 5.0 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Rolling P/BV (x) (lhs) Recurring ROE (rhs) Rolling FD Core P/E (x) (lhs) FD Core EPS Growth (rhs)

Profit & Loss

(RMm) Dec-10A Dec-11A Dec-12F Dec-13F Dec-14F UOA Dev enjoys one of the Revenue 375 614 951 1,332 1,524 highest profit margins in the Other Operating Income property sector due to the Cost Of Sales (170.7) (259.1) (421.8) (675.9) (789.0) Gross Profit 204.1 354.5 529.5 656.0 734.9 capture of construction Total Operating Costs (42.7) (64.8) (105.4) (169.0) (197.3) margins and its slow release Operating Profit 161.4 289.8 424.1 487.0 537.6 strategy. Operating EBITDA 166.5 294.1 429.1 492.0 542.6 Depreciation And Amortisation (5.05) (4.30) (5.00) (5.00) (5.00) Operating EBIT 161.4 289.8 424.1 487.0 537.6 Net Interest Income 2.74 0.74 4.67 1.48 (0.30) Exchange Gains - - - - - Other Income - - - - - Associates' Profit 0.00 0.22 3.26 25.24 45.59 Profit Before Tax (pre-EI) 164.2 290.7 432.0 513.8 582.9 Exceptional Items 168.3 191.1 0.0 0.0 0.0 Pre-tax Profit 332.4 481.8 432.0 513.8 582.9 Taxation (52.8) (78.9) (108.0) (128.4) (145.7) Exceptional Income - post-tax Profit After Tax 279.6 402.9 324.0 385.3 437.2 Minority Interests (7.15) (18.11) (23.83) (45.12) (43.29) Other Adjustments - post-tax Net Profit 272.5 384.8 300.1 340.2 393.9 Recurring Net Profit 130.9 225.0 300.1 340.2 393.9

Cash Flow

(RMm) Dec-10A Dec-11A Dec-12F Dec-13F Dec-14F Pre-tax Profit 332.4 481.8 432.0 513.8 582.9 Dividends paid may come in Depreciation And Non-cash Adj. 2.32 3.34 (2.92) (21.71) (40.30) lower-than-expected due to Change In Working Capital (161.1) (585.3) 72.9 (97.0) (82.8) the dividend reinvestment Tax Paid (49.3) (65.2) (108.0) (128.4) (145.7) Other Operating Cashflow 0.00 (0.22) (3.26) (25.24) (45.59) plan Cashflow From Operations 124.3 (165.6) 390.7 241.3 268.5 Capex (4.58) (10.02) (15.00) (15.00) (15.00) Disposals Of FAs/subsidiaries (229.7) (385.4) (205.2) (205.4) (205.7) Acq. Of Subsidiaries/investments - - - - - Other Investing Cashflow 12.30 89.50 0.00 0.00 0.00 Cash Flow From Investing (222.0) (305.9) (220.2) (220.4) (220.7) Debt Raised/(repaid) 114.4 (119.8) (35.7) 85.1 31.3 Equity Raised/(Repaid) 5.8 740.2 0.0 0.0 0.0 Dividends Paid (29.6) (119.6) (143.5) (155.5) (167.4) Net Cash Interest 2.74 0.74 4.67 1.48 (0.30) Other Financing Cashflow (41.5) (93.6) 54.7 118.7 139.1 Cash Flow From Financing 51.9 407.9 (119.9) 49.8 2.6 Total Cash Generated (45.82) (63.55) 50.58 70.72 50.41 Change In Net Cash (160.3) 56.3 86.3 (14.4) 19.1 Free Cashflow To Equity 19.5 (590.6) 139.4 107.5 78.8

SOURCE: CIMB, COMPANY REPORTS

UOA Development July 25, 2012

BY THE NUMBERS

Balance Sheet

(RMm) Dec-10A Dec-11A Dec-12F Dec-13F Dec-14F UOA Dev is one of few Fixed Assets 50.93 56.65 66.65 76.65 86.65 developers with net cash on Intangible Assets 0.00 22.16 22.16 22.16 22.16 its balance sheet. The Other Long Term Assets 403 766 971 1,177 1,383 Total Non-current Assets 454 845 1,060 1,276 1,491 company manages its Total Cash And Equivalents 62.7 287.4 124.2 126.7 129.3 balance sheet carefully due Inventories 184.1 332.7 366.0 402.6 442.8 to its slow sales release Accounts Receivable 207.4 255.2 395.6 553.9 633.7 Other Current Assets 382.4 420.4 441.5 463.5 486.7 strategy which carries higher Total Current Assets 837 1,296 1,327 1,547 1,693 risk but higher margins Trade Creditors 160.3 192.5 298.5 417.9 478.1 Short-term Debt 149.4 5.3 4.8 4.3 3.9 Other Current Liabilities 226.6 11.4 7.4 7.9 8.1 Total Current Liabilities 536.3 209.2 310.7 430.1 490.1 Total Long-term Debt 39.0 60.1 24.7 110.1 141.6 Other Liabilities 2.54 5.79 5.96 6.14 6.33 Deferred Tax 10.50 20.45 20.45 20.45 20.45 Total Non-current Liabilities 52.0 86.3 51.1 136.7 168.4 Shareholders' Equity 681 1,806 1,963 2,147 2,374 Minority Interests 21.1 39.3 63.2 108.3 151.6 Preferred Shareholders Funds Total Equity 702 1,845 2,026 2,256 2,525

Key Ratios

Dec-10A Dec-11A Dec-12F Dec-13F Dec-14F Revenue Growth (12.4%) 63.7% 55.0% 40.0% 14.4% Operating EBITDA Growth (31.9%) 76.6% 45.9% 14.7% 10.3% Operating EBITDA Margin 44.4% 47.9% 45.1% 36.9% 35.6% Net Cash Per Share (RM) (0.14) 0.19 0.08 0.01 (0.01) BVPS (RM) 0.78 1.51 1.64 1.80 1.98 Gross Interest Cover 103.3 71.8 281.0 212.8 130.0 Tax Rate 15.9% 16.4% 25.0% 25.0% 25.0% Net Dividend Payout Ratio 10.9% 31.1% 47.8% 45.7% 42.5% Accounts Receivables Days 160.4 137.6 125.2 130.1 142.2 Inventory Days 613.7 364.0 303.1 207.5 195.5 Accounts Payables Days 473.0 248.5 213.0 193.4 207.3 ROIC (%) 24.9% 25.4% 28.4% 31.9% 32.3% ROCE (%) 24.0% 21.0% 21.7% 22.2% 21.5%

Key Drivers

Dec-10A Dec-11A Dec-12F Dec-13F Dec-14F Unbooked Presales (m) (RM) N/A N/A N/A N/A N/A Unbooked Presales (area: m sm) N/A N/A N/A N/A N/A Unbooked Presales (units) N/A N/A N/A N/A N/A Unsold attrib. landbank (area: m sm) 0.4 0.4 0.5 0.5 0.6 Gross Margins (%) 44.4% 47.9% 45.1% 36.9% 35.6% Contracted Sales ASP (per Sm) (RM) N/A N/A N/A N/A N/A Residential EBIT Margin (%) 43.7% 47.3% 42.9% 36.0% 34.3% Investment rev / total rev (%) 3.2% 5.4% 5.1% 4.4% 4.0% Residential rev / total rev (%) 96.8% 94.6% 94.9% 95.6% 96.0% Invt. properties rental margin (%) 66.7% 58.6% 48.2% 58.7% 66.5% SG&A / Sales Ratio (%) N/A N/A N/A N/A N/A

SOURCE: CIMB, COMPANY REPORTS

UOA Development July 25, 2012

A developer on steroids

1. BACKGROUND 1.1 Share price collapse from IPO UOA Dev’s share price since its listing last June has been anything but hugely disappointing. From an IPO price of RM2.60, the stock fell by more than half to a low of RM1.16 before rebounding slowly to current levels. There are two key reasons for the massive share price underperformance, i.e.: 1) the unfortunate timing of the IPO and 2) investors’ perception of UOA Dev’s higher risk profile. Recall that in mid-2011 investors started to shy away from cyclical sectors not only in Malaysia but globally due to concerns about the Eurozone debt crisis. UOA Dev was the largest property listing in Malaysia last year and many institutional funds that bought into the stock, including foreign funds, sold down and exited. Foreign shareholding in the stock went from 5% at the time of the IPO to only 2% currently.

Figure 1: UOA Dev share price since listing

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UOAD MK Equity PX_LAST

SOURCES: CIMB, BLOOMBERG

Figure 2: KL Property Index

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SOURCES: CIMB, BLOOMBERG

UOA Development July 25, 2012

Investors’ perception, which is not entirely wrong, is that due to UOA Dev’s small landbank of only slightly over 100 acres (which is entirely concentrated in the Klang Valley), the group is highly exposed to the high-end condo and commercial space markets. The condo and office space markets are very sensitive to property cycles and during property downturns when confidence is weak and buyers very cautious, demand for condo and office space can evaporate. Hence, there are fears that a Eurozone recession or depression could affect economies around the world, including Malaysia. Should Malaysia’s economy fall into recession, the view is that the market for UOA Dev’s products would greatly diminish. As a result of these concerns, UOA Dev’s shares were heavily sold down. 1.2 Other concerns weighing down on stock Other factors that contributed to UOA Dev’s poor share price performance include 1) government measures to cool down the property sector, 2) general election risks, and 3) fears that the company is a one-hit wonder with its flagship Bangsar South project. Home prices in Malaysia have been on the rise and Kuala Lumpur has seen some of the strongest appreciation in the past two years. This has caused alarm with the authorities and the government has introduced several measures to curb speculation including i) the 70% loans-to-value ratio for the third residential property loan, ii) higher real property gains tax of 10% from 5% previously for the first two years, and iii) calculating loans eligibility based on net pay instead of gross pay. These measures have succeeded in cooling-off property demand as evidenced by the slowdown in housing loans approvals and softer demand for high-end condos this year. Some developers have had a difficult time in locking in sales and even reputable developers such as Sunway recently announced the postponement of RM500m worth of launches to a later date.

Figure 3: House price indices

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Malaysia house price index KL house price index Selangor house price index Klang Valley price index Johor price index Penang price index

SOURCES: CIMB, PMR

UOA Development July 25, 2012

Figure 4: House price appreciation 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 10-yr avg Sabah 5.6% 3.9% 5.9% 18.0% -2.7% 0.9% 20.8% 13.7% 7.8% 10.6% 9.8% 8.6% Terengganu 2.4% 2.1% 4.3% 19.5% 16.1% 6.3% 10.6% -0.5% 8.5% 7.5% 13.2% 8.2% Perlis 3.5% 16.1% -0.3% 12.9% 3.6% 2.8% 6.9% 7.0% -2.5% 5.5% 13.3% 6.2% Pahang 5.3% 7.3% -1.4% 16.4% 4.7% 5.5% 6.8% 3.7% -0.4% 0.9% 16.1% 5.9% K. Lumpur 1.6% 5.5% 0.9% 6.5% 6.5% 5.3% 7.9% 4.4% -2.5% 12.2% 12.2% 5.5% Perak 6.0% 6.8% 4.6% 5.1% 1.5% 3.6% 3.9% 6.5% 0.6% 5.1% 10.6% 4.9% Kedah 3.5% 6.4% 6.3% 8.7% 0.0% 1.1% 3.3% 5.5% 5.8% 5.8% 7.8% 4.9% Penang 2.9% -0.3% 12.6% 3.0% 3.9% 1.9% 4.7% 6.1% 4.0% 3.5% 8.9% 4.6% Sarawak 1.5% 3.5% 4.7% 1.2% 6.9% 4.1% 9.0% 5.0% 0.8% 6.9% 5.1% 4.4% Kelantan 1.1% 15.0% -3.0% 0.5% -4.6% 5.1% 6.4% 3.8% 6.8% 9.8% 6.3% 4.3% Selangor 3.5% 2.1% 2.8% 5.2% 0.7% 3.2% 3.2% 4.6% -0.9% 9.0% 11.3% 4.1% Malaysia 1.1% 2.5% 4.0% 4.8% 2.4% 1.9% 5.3% 4.7% 1.5% 6.7% 9.9% 4.1% N. Sembilan 4.2% 4.7% 2.3% 1.7% 3.4% 0.9% 5.1% 3.8% 0.5% 3.8% 12.6% 3.9% Malacca 7.8% -0.4% 6.6% -1.2% 4.9% -2.3% 2.5% 4.5% 6.3% 7.6% 4.7% 3.7% Johor -12.3% -4.1% 2.1% 1.9% -0.2% 0.7% 3.1% -0.1% 5.5% 2.7% 7.0% 0.6% SOURCES: CIMB, PMR

Figure 5: Klang Valley house price indices (2000-2011)

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As for election risks, the impending 13th general election is not due until mid-2013 but there were strong speculation that elections would be called in end-2011 or later in mid-2012. However, both dates did not materialise. As a result of the election concerns, the biggest winners in the Economic Transformation Programme including the oil & gas, construction and property sectors have been some of the biggest laggards this year. Finally, some investors have voiced their concerns that UOA Dev appears to be a one-hit wonder with its 60-acre RM8bn Bangsar South urban township. While it is indeed difficult for UOA Dev or any developer for that matter to acquire as large a tract of land in Kuala Lumpur as Bangsar South due to the scarcity of land, we note that UOA Dev has not been quiet on the landbanking front and has in fact been scouting actively to add to its landbank. But UOA Dev is discerning in its landbank preference as i) it does not buy vast township landbank (which is SP Setia and Mah Sing’s preference) as it is a high-rise specialist and 2) it will not overpay for landbank as it has high profit hurdles to meet such as a minimal 35% pretax margin for its new projects. Also, UOA Dev has been selective in its landbanking efforts as it has been repositioning its emphasis away from the high-end residential properties to affordably priced ones. This has been an astute move as demand in the affordable price range remains robust.

UOA Development July 25, 2012

2. OUTLOOK 2.1 Over RM1.1bn new sales up to Jul We are pleasantly surprised at how strong YTD sales for UOA Dev have been. Although it is not the company’s practice to provide annual new sales targets, management indicated at the beginning of the year that it was confident of locking in RM1bn in new sales for 2012. Given the group’s conservative nature in general and especially in terms of providing sales guidance, this would appear to be particularly true for 2012. Up to Jul the group has already secured more than RM1.1bn in new sales. This is hugely positive as it is a record for the group. Should the group decide not to launch and sell anything for the rest of the year, it would have already exceeded its full year new sales target. Moreover, UOA Dev’s pretax margins are in the 40-50% range, which is double the industry average. This means that selling RM1.1bn worth of property is equivalent to RM2.2bn for the average developer in terms of profit contribution. That level of sales and profits would put the group high up in the league of developers and not far from the big-2, UEM Land and SP Setia.

Figure 6: New sales and 2012 target (RM m)

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SOURCES: CIMB, COMPANY REPORTS

For 1H, UOA Dev recorded around RM900m in new sales, of which 43% came from residential and commercial projects in Bangsar South. The newly launched strata-titled office space called Vertical in Bangsar South contributed RM223m or 25% to group sales. Other major contributors to the group include the medium cost Le Yuan Residence in Sri Petaling (RM185m or 21%) and office space at Kencana Square (RM140m or 16%) in Glenmarie. Roughly 40% of total 1H sales came from residential properties while close to 60% was from commercial space. Including the sale of two office buildings to Tabung Haji in Jul, the residential-to-commercial split is even more lopsided at around 35:65. However, this ratio is likely to balance out, if not, reversed when the group launches two major residential projects in the coming months. For 2H, UOA Dev plans to launch three blocks of medium cost condos near Taman Desa with a GDV of RM600m and villas and condos in Kiara IV, Segambut, with a GDV of around RM500m.

UOA Development July 25, 2012

Figure 7: 1H new sales

(RM m) Commercial 504.91 56.4% Residential 365.24 40.8% Industrial 25.03 2.8% Total 895.18 100.0% SOURCES: CIMB, COMPANY REPORTS

2.2 RM1.5bn-2bn new sales for full year? We believe that if UOA Dev pushed really hard, it could secure up to RM2bn in new sales for 2012. However, several projects that are close to being ready for sale will likely be launched closer to end-2012 or early-2013. Nonetheless, achieving 2012 new sales of around RM1.5bn is quite realistic as long as the three blocks of Desa Green condos worth RM600m are released into the market. The units are estimated to be priced at around RM550 psf with sizes ranging from 500 – 1,000 sq ft. For residential properties priced at RM250k-550k in Kuala Lumpur, demand can be expected to be very strong. Up to Jul, total sales including two en bloc sales to Tabung Haji worth RM204m is in excess of RM1.1bn. We consider en bloc sales as regular property sales as UOA Dev often builds office blocks to full completion, adds value by securing tenancy, then selling the properties en bloc. Sister company UOA REIT has the first right of refusal to any such buildings. 2.3 Pipeline of launches for 2013 is strong For 2013, we believe UOA Dev has a pipeline of nearly RM2bn in new launches that will sustain strong new sales. The GDV of its 16-acre Jalan Ipoh land is massive at RM1.75bn. UOA Dev has quietly accumulated substantial landbank in this matured neighbourhood and we expect demand from the upgraders market to be good. However, this project will likely be launched in stages as the market may not be able to absorb all the supply in one go. Another affordably priced residential project that we expect to be very successful is the company’s upcoming RM600m bite-size apartments in Bangsar South. Measuring around 600 sq ft and priced at around RM500 psf, the freehold property should be well received given Bangsar South’s growing popularity. Other potential launches in 2013 include the commercial component of Desa Green with a GDV of RM300m and the condo portion of Kiara IV worth RM450m.

Figure 8: Possible new launches in 2013 RM m Timing Desa Green Phase 2 300 2Q Jalan Ipoh Phase 1 300 4Q Kiara IV Phase 2 450 2Q Kerinchi Apartments 600 2Q Kencana Square Phase 2 300 2Q Total 1950 2013 SOURCES: CIMB, COMPANY REPORTS

2.4 Significant value enhancement It is impressive how much UOA Dev has added to the value of several projects that have yet to take off. As we mentioned in an earlier visit note dated Apr 6, the Kiara IV and Vertical projects originally had GDVs of RM189m and RM821m respectively, but now have enhanced GDVs of RM500m and over RM1bn. The Kiara IV project was originally slated for landed properties but now has a large high-rise component. As for Vertical, the selling price of around RM850 psf came in higher than the originally targeted RM700 psf. More impressive is the Desa Green project which originally had a GDV of below RM400m has now been increased to RM900m. Originally, the commercial component of Desa Green was much larger but the group has successfully converted its use to residential where demand is better.

UOA Development July 25, 2012

2.5 SWOT analysis The biggest surprise from UOA Dev is how well it has adapted to the changing market conditions despite its small landbank and concentration in one geographical location. The property market in 2012 has been far more challenging than in 2011 when developers across the board enjoyed brisk sales. This year, there is a clear distinction between companies that can deliver come rain or shine, as evidenced by SP Setia and Mah Sing’s strong new sales, and many others that are struggling. UOA Dev appears to be firmly in the company of SP Setia and Mah Sing and has laid the foundations for continued outperformance. Its quiet accumulation of landbank in strategic locations in the Klang Valley such as Segambut, Jalan Ipoh, Bangsar South and Jalan Kepong attests to its strong landbanking skills and will enable it to chalk up healthy sales in 2012/13. Despite focusing on the affordable price range, UOA Dev continues to enjoy superior pretax margins of 40-50%.

Figure 9: SWOT analysis Strengths Opportunities Prime landbank in the Klang Valley, particularly Kuala Lumpur. Can replicate successful earnings model in other markets. Has been able to adapt to changing market conditions. Has not expanded to Johor, Penang or overseas property markets. Quick turnaround model allows developers to maximise profits. Has not moved into township development. Very wide profit margins accord significant buffer and flexibility. Economic Transformation Programme to throw up lots of opportunities. Strong following in the commercial and residential sub-sectors. Involved in upstream construction and downstream REIT. Very short construction time due to in-house construction activities. Good access to landbank as UOA Dev can be buyer of first choice. Strong brand name in commercial and residential properties. Solid balance sheet and >RM300m cash flow from operations annually

Weakness Threats No township landbank to hedge against downturns. Other developers moving into UOA Dev's quick turnaround domain. Gradual sale strategy could result in unsold stock in bad times. Other developers will try to copy UOA Dev's successful earnings model. Limited landbank and no exposure to other key geographical locations. Exposed to mostly high-rise commercial and residential development. Senior management incentives may not be aligned with shareholders. SOURCES: CIMB, COMPANY REPORTS

Relative to its peers on the SWOT analysis for stocks under our coverage, UOA Dev stands only behind SP Setia and Mah Sing. The biggest risk for UOA Dev lies with its past earnings volatility. But its performance in 2011/12 in terms of new sales has been very encouraging as that is the key driver for earnings and a good indicator for a company’s ability to execute. Should UOA Dev manage to maintain its strong new sales into 2013 and grow profits steadily over the next 2-3 years, the group should improve on its SWOT rankings.

Figure 10: Sector SWOT analysis SP Setia Mah Sing UOA Dev Sunway UEM Land UM Land E&O Strengths/weaknesses Track record strong strong strong moderate moderate moderate weak Financial resources strong strong strong strong moderate moderate moderate Political connections strong strong moderate strong strong moderate moderate Operational efficiency strong strong strong strong moderate moderate moderate Professionalism strong strong strong strong strong strong strong Corp governance/transparency strong strong moderate strong strong strong strong Earnings volatility low low moderate moderate moderate moderate high Opportunities Ability to take advantage strong strong strong strong strong strong moderate Business acumen strong strong strong strong moderate moderate moderate Threats Policy risks moderate moderate low moderate high low moderate Business risks low low high moderate moderate moderate high Overall strong strong strong strong moderate moderate moderate SOURCES: CIMB, COMPANY REPORTS

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3. RISKS 3.1 No geographical diversification Unlike other developers that have projects in other major property markets in Malaysia such as Johor, Penang and Sabah, UOA Dev is 100% exposed to the Klang Valley with a significant bias towards Kuala Lumpur. While this may not be ideal in terms of diversification, it does provide the group economies of scale and an intense focus on the most important property market in Malaysia. The Klang Valley remains by far the largest property market in the country and is nearly 4x larger than its next closest rival, Johor. In 2011, property transactions in the Klang Valley amounted to RM66.65bn or 49% of the country’s total.

Figure 11: Transaction value in 2011

Title: Source: Others 30% Please fill in the values above to have them entered in your report

Klang Valley 49%

Penang 9% Johor 12%

SOURCES: CIMB, PMR

3.2 Big exposure to office space The office space market in the Klang Valley is feeling the effects of oversupply with rental rates relatively stagnant. While the oversupply situation will worsen in the coming years, UOA Dev is fortunate that the bulk of its office space exposure is in Bangsar South. The Bangsar belt from KL Sentral to Bangsar South is enjoying some of the strongest demand and highest rental rates due to its excellent transportation links and close proximity to affluent residential areas. Even in its most recent launch of the strata-titled office space in Bangsar South, UOA Dev astutely priced the Vertical at RM800-850 psf, which are at a 15-20% discount to the prices of en bloc office buildings in Horizon I and II. This has ensured strong take-up. 3.3 Not a township developer UOA Dev does not buy vast landbank as what SP Setia, UEM Land and Mah Sing do. Instead, it focuses on building high-rise structures on much smaller parcels of land. This strategy may not be as disadvantageous as previously thought given that UOA Dev can also launch affordable homes priced in the RM500k range. Though smaller and without land for gardening, such residential properties are located in Kuala Lumpur with good accessibility and convenience. There is huge demand for such properties. In fact, as we argued in our property sector note dated Apr 17, landed properties including link houses are no longer for the masses but now considered a luxury few can afford. Therefore, affordably priced high-rise residential homes increasingly appear to be the trend of the future for developers in the Klang Valley.

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Figure 12: Residential stock - 2011 Low cost Terrace Semi-D Bungalow High rise Condo/Apt Flats Total KL 99,433 95,462 6,190 6,835 206,645 156,489 50,156 414,565 Selangor 279,100 574,725 39,104 44,775 364,751 213,457 151,294 1,302,455 Klang Valley 378,533 670,187 45,294 51,610 571,396 369,946 201,450 1,717,020 Penang 69,772 106,839 23,676 6,606 147,435 38,241 109,194 354,328 Johor 169,725 333,267 42,023 85,051 52,428 30,558 21,870 682,494 Other states 426,871 766,983 185,090 259,695 118,142 81,609 36,533 1,756,781 Malaysia 1,044,901 1,877,276 296,083 402,962 889,401 520,354 369,047 4,510,623 SOURCES: CIMB, PMR

Figure 13: Supply of residential property in Kuala Lumpur - 2011

Flats Title: 12% Low cost Source: 24% Please fill in the values above to have them entered in your report

Condo/Apt 38% Terrace 23%

Bungalow Semi-D 2% 1%

SOURCES: CIMB, PMR

3.4 Election risks Property stocks are often high beta plays on the broader market and perform poorly when the stockmarket is depressed. On the other hand, over the past 6-12 months the KLCI has been on an uptrend and has hit new all-time highs on a daily basis in recent weeks. Property stocks, however, continue to languish. This means that investors continue to shun sectors they consider to be riskier due to possible implications of the upcoming general elections. An unfavourable election outcome could result in dampened sentiment not only for stocks but also for physical properties. While this would affect the sale of commercial properties, we believe affordably priced residential properties will continue to enjoy firm demand due to population and demographic trends. UOA Dev could be partially insulated from any election fallout as it will be concentrating on affordable homes over the next 12-18 months.

4. FINANCIALS 4.1 Group GDV has bloated up Since our initiation on the stock a year back, undeveloped GDV of the group has increased by 41% from RM11.1bn to RM15.7bn. This was achieved from a combination of value-add to existing projects such as Kiara IV, Glenmarie (now named Kencana Square) and Desa II (renamed Desa Green) and landbanking in Jalan Kepong and Jalan Ipoh. We believe the GDV estimates by the company are still conservative as Bangsar South could easily be worth a lot more. For example, the Vertical Office Suites originally had a GDV of RM821m but Phase 1 & 2 alone have a revised GDV of RM850m. Phase 3 is a 4-star hotel that will be constructed at a later date. The higher overall group GDV could enhance profit margins for certain projects and flow down to bottom line.

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Figure 14: Landbank and undeveloped GDV as at Jul 2011 Stake Acres GDV (RM m) Bangsar South 100% 41.6 7,477 Glenmarie land 39% 10.4 1,044 Lot 2507, Bangsar South 100% 4.0 637 Sri Petaling land 100% 5.0 400 Desa II & III 70-85% 6.3 395 Binjai 8 60% 0.9 393 Setapak Green 100% 3.3 196 Kepong Business Park 100% 18.7 193 Kiara IV 60% 9.8 189 Ceylon Hills 54% 0.4 160 Total 100.4 11,083 SOURCES: CIMB, COMPANY REPORTS

Figure 15: Undeveloped landbank and GDV as at Jul 2012 Stake Acres GDV (RM m) Bangsar South 100% 41.6 7,477 Jalan Ipoh land 100% 16.0 1,750 Jalan Kepong 100% 10.0 1,500 Kencana Square 39% 10.4 1,044 Desa Green 85% 6.3 900 Lot 2507, Bangsar South 100% 4.0 800 Kerinchi Apartments 100% 4.0 600 Kiara IV 60% 9.8 500 Le Yuan 100% 5.0 400 Binjai 8 60% 0.9 393 Kepong Business Park 100% 18.7 193 Ceylon Hills 54% 0.4 160 Total 127.1 15,717 SOURCES: CIMB, COMPANY REPORTS

4.2 Raising EPS forecasts We are raising 2012-2014 EPS forecasts by up to 10% to factor in higher than expected GDV for existing projects such as Desa Green and Kiara IV as well as to incorporate contributions from new projects such as the Kerinchi Apartments. Other projects that have yet to start such as that at the Jalan Ipoh and Jalan Kepong land have also seen a significant increase in GDV due to the accumulation of larger land parcels and approvals for higher density. Although our revised forecasts are 13-37% above consensus, we believe our forecasts are conservative as we have not factored in construction profit from Kencana Square where margins should range between 10% and 15%. This is UOA Dev’s only associate project but the group is undertaking 100% of the construction work. Furthermore, we have assumed moderate take up rates of 60% in the first year, 80% in the second year and 100% in the third year for projects such as that at the Jalan Ipoh and Jalan Kepong land due to their sizeable GDV.

5. VALUATION AND RECOMMENDATION 5.1 A misunderstood company Many investors are baffled by UOA Dev as the company has a unique business model that is very different from most Malaysian developers. Investors cannot believe why UOA Dev’s profit margins are so high when the group’s landbank is so small and the company has to build high rise developments where margins are typically narrower than landed properties. Also, they are sceptical whether earnings and dividends of the group are sustainable when UOA Dev has such high exposure to the condo and office space market where demand can be fickle. As we acknowledge the higher risks associated with UOA Dev’s business model, we have therefore assigned a wider discount to RNAV compared with township

UOA Development July 25, 2012

developers such as SP Setia and Mah Sing. Nonetheless, UOA Dev’s valuations are still excessively depressed and the stock is ripe for a re-rating. 5.2 UOA Dev’s model working well We believe UOA Dev’s 40-50% pretax margins are sustainable as the group 1) undertakes all construction work in-house and therefore saves 5-10% in margins that would have otherwise been paid to subcontractors, 2) saves on land holding costs by constructing its properties in a much shorter time frame than its competitors, and 3) practices gradual release and mark up of prices during the construction period to enjoy widening margins as the project reaches near completion. However, this model carries with it higher risks as the property market could turn south during the construction period and UOA Dev would be saddled with unsold stock. That is why the company watches its cash flow and balance sheet very closely as it needs to weather any downturn that could affect the group more than its competitors. As for sustainability of earnings and dividends, we too have flagged concerns should there be a downturn as the sale of high-end condos and office space would evaporate. However, we are pleasantly surprised to see how well UOA Dev has been able to adapt to changing market conditions. The management had the foresight to quietly acquire landbank over the past two years for medium cost housing where demand remains insatiable. It is this market segment that will drive earnings for the group in 2013/14. Even in the Klang Valley office space market which is plagued by oversupply, UOA Dev has managed to chalk up high take-up rates for office space in Bangsar South by focusing on a niche market (medical practitioners in Vertical) and pricing its products competitively. Furthermore, the group has built up a very strong following in the office space market and should weather any downturn better than the rest. 5.3 Valuations are most attractive UOA Dev’s P/Es are in the single-digits, which is the lowest for property stocks under our coverage. Its dividend yield of 7-9% is by far the highest and nearly triples the sector average. The cheap valuations are due partly to the collapse in share price post IPO and we continue to view the discount ratings as excessive. On an RNAV basis, UOA Dev is trading at a 42% discount vs. the sector average of 32%. Even on a NTA basis, UOA Dev is trading close to parity vs. a premium of 41% for the sector average. Only United Malayan Land is trading at a discount to NTA and that is probably why its major shareholders proposed to take the company private. Should UOA Dev’s share price remain at current depressed levels, we would not be surprised if its major shareholders are also tempted to consider a privatisation.

Figure 16: Discount to RNAV and NTA

Share price RNAV/shr (Discount)/ NTA/shr (Discount)/ Target Upside (RM) (RM) Premium (RM) Premium (RM) E&O 1.45 2.53 -42.7% 1.17 23.9% 1.77 22.1% Mah Sing 2.11 2.79 -24.4% 1.29 63.6% 2.51 19.0% SP Setia 3.62 4.30 -15.8% 1.88 92.6% 4.30 18.8% UEM Land 2.00 2.69 -25.7% 1.12 78.6% 2.56 28.0% UM Land 2.49 4.20 -40.7% 3.04 -18.1% 2.50 0.4% UOA Dev 1.58 2.72 -41.9% 1.54 2.6% 2.18 38.0% Average -31.9% 40.5% 21.0% SOURCES: CIMB, COMPANY REPORTS

UOA Development July 25, 2012

5.4 New property sector top pick We believe investors will gradually warm up to UOA Dev knowing that its dividends are sustainable at the 7-9% range (payout policy of 30-50%). For 2011, UOA Dev proposed a 10 sen single-tier tax dividend and gave investors the choice of either a cash payment or taking up the dividend reinvestment scheme with shares priced at RM1.39. While the reinvestment scheme could result in some EPS dilution, it does strengthen its balance sheet further and provides the group with greater ammunition to accumulate more landbank. UOA Dev’s 1H results should be released on Aug 23 and we expect earnings to be very much in line with our full year forecasts, which is 13% above consensus. In line with our more bullish outlook for UOA Dev, we are upgrading the stock to our top pick in the property sector. Our target price has also been raised from RM1.84 to RM2.18 as RNAV has revised from RM2.62 to RM2.72 after adjusting for the appreciation in landbank values over the past year and new landbank quietly acquired. Also, we are cutting the target basis discount to RNAV from 30% to 20% to factor in the more positive outlook for the group given its strong new sales and pipeline of new projects. No changes to our Trading Buy recommendation in view of election risks faced by the property sector. Potential re-rating catalysts include 1) strong new sales in 2012/13, 2) significantly higher than industry dividend yield and 3) sustainable earnings growth going into 2013/14.

Figure 17: Recommendations, basis and target prices Target price Rec (RM) Target basis E&O Trading Buy 1.77 30% discount to RNAV Mah Sing Trading Buy 2.51 10% discount to RNAV SP Setia Trading Buy 4.30 Parity with RNAV UEM Land Trading Buy 2.56 5% discount to RNAV UM Land Neutral 2.50 In line with unconditional offer UOA Dev Trading Buy 2.18 20% discount to RNAV Sector Trading Buy SOURCES: CIMB, COMPANY REPORTS

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Figure 18: UOA Development RNAV

Type Location Size/units Area (sq. ft.) Price (RMpsf/unit) Stake Value (RM m) Completed buildings The Horizon I Bangsar South, Kuala Lumpur 108,000 750.00 100.0% 81.0 The Horizon II Bangsar South, Kuala Lumpur 735,000 700.00 100.0% 514.5 Menara UOA Bangsar Bangsar, Kuala Lumpur 21,892 950.00 100.0% 20.8 The Sphere Bangsar South, Kuala Lumpur 7.06 ac 307,607 550.00 100.0% 169.2 The Village Bangsar South, Kuala Lumpur 0.99 ac 78,700 400.00 100.0% 31.5 Car parks Bangsar South, Kuala Lumpur 3,000.00 40,000.00 100.0% 120.0 On-going developments Park Residences I & II Bangsar South, Kuala Lumpur 16.69 ac 727,104 600.00 100.0% 436.3 Camelia - residential Bangsar South, Kuala Lumpur 2.63 ac 114,563 600.00 100.0% 68.7 Vertical - residential & commercial Bangsar South, Kuala Lumpur 9.72 ac 423,447 800.00 100.0% 338.8 Bukit Ceylon Kuala Lumpur 0.39 ac 16,858 1,800.00 54.0% 16.4 Desa Green residential Kuala Lumpur 1.13 ac 49,223 400.00 85.0% 16.7 Desa Green commercial Kuala Lumpur 4.53 ac 197,327 500.00 85.0% 83.9 Desa III Kuala Lumpur 0.61 ac 26,479 300.00 70.0% 5.6 Kencana Square Selangor 10.44 ac 454,941 300.00 39.0% 53.2 Lot 2507 Kuala Lumpur 3.98 ac 173,408 700.00 100.0% 121.4 Kerinchi Apartments Kuala Lumpur 4.00 ac 174,240 400.00 100.0% 69.7 Kepong Business park - industrial Kuala Lumpur 18.72 ac 815,443 200.00 100.0% 163.1 Villa Pines Kuala Lumpur 0.97 ac 42,055 250.00 100.0% 10.5 Binjai 8 KLCC, Kuala Lumpur 0.93 ac 40,613 2,500.00 60.0% 60.9 Kiara IV Segambut, KL 9.81 ac 427,331 300.00 60.0% 76.9 Setapak Green Kuala Lumpur 3.31 ac 144,184 200.00 100.0% 28.8 Sri Petaling Kuala Lumpur 4.90 ac 213,444 300.00 100.0% 64.0 Jalan Ipoh Kuala Lumpur 16.00 ac 696,960 270.00 100.0% 188.2 Jalan Kepong Kuala Lumpur 9.80 ac 426,888 270.00 100.0% 115.3

Total value of properties 2,855.3 Associates 22.2 Available for sale financial assets 21.2 Other long term assets 16.8 Net current assets less dev. prop and investmt. prop inventory 429.2 Long term liabilities (92.7) Total RNAV (RM m) 3,252.1

No. of shares (m) 1,195.9 RNAV per share (RM) 2.72 SOURCES: CIMB, COMPANY REPORTS

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Figure 19: Sector Comparison Bloomberg Price Tgt Px Mkt Cap Core P/E (x) RNAV Prem./(Disc.) P/BV (x) Div. Yield (%) Company Recom. Ticker (local curr) (local curr) (US$ m) CY2012 CY2013 CY2012 to RNAV (%) CY2012 CY2012 Bukit Sembawang Estates BS SP Outperform 4.87 5.72 1,001 5.8 5.5 9.54 -49% 1.02 4.1% CapitaLand CAPL SP Outperform 2.89 3.64 9,755 43.8 18.6 4.85 -40% 0.81 1.3% CapitaMalls Asia CMA SP Underperform 1.58 1.42 4,863 27.4 25.6 1.89 -17% 0.95 1.9% City Developments CIT SP Underperform 11.60 9.05 8,377 22.6 17.1 11.32 2% 1.53 1.1% Fraser & Neave FNN SP Neutral 8.00 7.20 9,034 18.1 16.1 8.47 -6% 1.54 2.3% Global Logistic Properties GLP SP Outperform 2.24 2.40 8,177 25.7 22.7 2.40 -7% 1.03 1.7% Ho Bee Investments HOBEE SP Neutral 1.21 1.20 677 7.6 6.7 2.00 -40% 0.51 3.3% Keppel Land KPLD SP Neutral 3.31 3.43 4,059 10.0 12.7 4.58 -28% 0.86 3.3% Overseas Union Enterprise OUE SP Outperform 2.34 2.98 1,691 21.0 17.2 3.98 -41% 0.74 2.4% Singapore Land SL SP Outperform 5.85 6.76 1,916 12.5 9.6 12.28 -52% 0.54 3.4% United Engineers UEM SP Outperform 1.94 2.14 428 2.2 5.7 3.86 -50% 0.42 5.2% UOL Group UOL SP Outperform 5.10 5.47 3,113 12.1 12.0 7.29 -30% 0.74 1.8% Wheelock Properties (S) WP SP Neutral 1.83 1.78 1,739 20.3 14.6 2.54 -28% 0.75 3.3% Wing Tai Holdings WINGT SP Outperform 1.38 1.60 857 6.6 6.5 2.13 -35% 0.52 3.8% Singapore average 18.6 15.4 -26% 0.96 2.0%

Agile Property 3383 HK Neutral 9.84 9.40 4,375 6.5 6.0 19.18 -49% 1.14 3.9% China Overseas Grand Oceans 81 HK Outperform 6.92 8.30 2,036 8.8 6.7 9.14 -24% 2.34 1.1% China Overseas Land 688 HK Outperform 16.94 20.50 17,846 9.0 8.0 22.61 -25% 1.68 2.2% China Resources Land 1109 HK Outperform 14.88 18.00 11,177 13.6 11.9 22.53 -34% 1.33 2.0% Evergrande Real Estate 3333 HK Outperform 3.70 6.30 7,134 4.6 3.8 10.45 -65% 1.15 6.5% Guangzhou R&F 2777 HK Neutral 9.80 8.90 4,071 5.4 5.1 14.91 -34% 1.02 7.4% KWG Property Holding 1813 HK Neutral 4.30 5.00 1,604 4.7 4.2 9.07 -53% 0.68 6.8% Longfor Properties 960 HK Outperform 11.56 16.00 7,700 9.1 7.5 21.40 -46% 1.91 3.3% Poly Hong Kong 119 HK Outperform 4.04 5.80 1,879 6.9 6.1 9.67 -58% 0.55 1.5% Shimao Property 813 HK Outperform 10.96 15.10 4,906 6.4 5.6 21.55 -49% 0.94 5.0% Sino-Ocean Land 3377 HK Neutral 3.84 3.20 2,857 7.6 7.1 8.90 -57% 0.48 3.3% SOHO China 410 HK Neutral 5.67 5.70 3,792 6.0 4.8 9.66 -41% 0.99 5.8% Hong Kong average 7.7 6.7 -55% 1.20 3.5%

Alam Sutera ASRI IJ Outperform 475.0 780.0 982 9.1 8.3 1,068 -56% 2.47 2.8% Bumi Serpong Damai BSDE IJ Outperform 1,150 1,600 2,116 17.9 15.3 2,486 -54% 2.57 0.7% Ciputra Development CTRA IJ Outperform 660.0 850.0 1,053 19.8 13.1 1,088 -39% 1.82 1.0% Ciputra Property CTRP IJ Outperform 680.0 870.0 440 17.0 9.9 1,336 -49% 1.11 1.1% Lippo Karawaci LPKR IJ Outperform 840.0 920.0 2,039 19.6 17.2 1,099 -24% 2.33 1.6% Metropolitan Land MTLA IJ Outperform 470.0 650.0 375 19.1 13.2 1,231 -62% 2.41 1.1% Summarecon Agung SMRA IJ Neutral 1,600 1,800 1,156 23.4 21.3 2,619 -39% 3.90 0.8% Indonesia average 17.1 14.0 -42% 2.33 1.3%

Eastern & Oriental EAST MK Trading Buy 1.45 1.77 518 12.8 10.4 2.86 -49% 1.20 2.5% KLCC Property Holdings KLCC MK Trading Buy 4.87 4.99 1,431 14.0 13.1 5.32 -9% 0.72 2.3% Mah Sing Group MSGB MK Trading Buy 2.11 2.51 553 7.5 6.1 3.07 -31% 1.43 4.3% SP Setia SPSB MK Trading Buy 3.62 4.30 2,188 16.6 13.9 4.51 -20% 1.81 3.4% UEM Land Holdings ULHB MK Trading Buy 2.00 2.56 2,723 23.2 17.2 2.82 -29% 1.67 0.4% UOA Development UOAD MK Trading Buy 1.58 2.18 594 6.3 5.7 2.78 -43% 0.96 7.6% Malaysia average 14.3 11.9 -27% 1.28 2.5%

Amata Corporation AMATA TB Outperform 17.30 25.44 581 15.1 9.5 21.77 -21% 2.73 2.4% Asian Property AP TB Outperform 7.40 9.12 662 9.3 7.3 7.00 6% 1.72 4.3% Hemaraj HEMRAJ TB Outperform 2.98 2.72 911 15.6 14.2 2.80 6% 2.99 3.5% Land And Houses LH TB Outperform 7.85 7.46 2,478 24.1 21.5 6.00 31% 2.66 4.0% LPN Development LPN TB Neutral 17.10 15.70 795 11.3 9.3 7.40 131% 3.04 4.4% Pruksa Real Estate PS TB Outperform 17.20 24.32 1,197 9.7 7.1 22.80 -25% 1.90 3.1% Quality Houses QH TB Underperform 1.73 1.19 500 27.9 15.9 3.60 -52% 1.15 3.2% Sansiri Public Co SIRI TB Outperform 2.38 2.75 544 7.6 5.6 2.48 -4% 1.52 6.6% Supalai PCL SPALI TB Neutral 17.60 15.44 951 9.3 8.6 9.05 94% 2.25 4.3% Thailand average 13.0 10.2 8% 2.17 4.0% Average (all) 11.1 9.5 -42% 1.15 2.8% SOURCES: CIMB, BLOOMBERG, COMPANY REPORTS

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UOA Development July 25, 2012

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Recommendation Framework #1 *

Stock Sector OUTPERFORM: The stock's total return is expected to exceed a relevant OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 12 months. expected to outperform the relevant primary market index over the next 12 months. NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected benchmark's total return. to perform in line with the relevant primary market index over the next 12 months. UNDERPERFORM: The stock's total return is expected to be below a relevant UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 12 months. expected to underperform the relevant primary market index over the next 12 months. TRADING BUY: The stock's total return is expected to exceed a relevant TRADING BUY: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 3 months. expected to outperform the relevant primary market index over the next 3 months. TRADING SELL: The stock's total return is expected to be below a relevant TRADING SELL: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 3 months. expected to underperform the relevant primary market index over the next 3 months.

* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

UOA Development July 25, 2012

Recommendation Framework #2 ** Stock Sector OUTPERFORM: Expected positive total returns of 10% or more over the next 12 OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of +10% or better over the next 12 months. NEUTRAL: Expected total returns of between -10% and +10% over the next 12 NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) months. an equal number of stocks that are expected to have total returns of +10% (or better) or -10% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +10% to -10%; both over the next 12 months. UNDERPERFORM: Expected negative total returns of 10% or more over the next 12 UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of -10% or worse over the next 12 months. TRADING BUY: Expected positive total returns of 10% or more over the next 3 TRADING BUY: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of +10% or better over the next 3 months. TRADING SELL: Expected negative total returns of 10% or more over the next 3 TRADING SELL: The industry, as defined by the analyst's coverage universe, has a months. high number of stocks that are expected to have total returns of -10% or worse over the next 3 months.

** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2011. ADVANC - Excellent, AMATA - Very Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCP - Excellent, BEC - Very Good, BECL - Very Good, BGH - not available, BH - Very Good, BIGC - Very Good, BTS - Very Good, CCET - Good, CK - Very Good, CPALL - Very Good, CPF - Very Good, CPN - Excellent, DELTA - Very Good, DTAC - Very Good, GLOBAL - not available, GLOW - Very Good, GRAMMY – Excellent, HANA - Very Good, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH – Very Good, ITD - Good, IVL - Very Good, JAS – Very Good, KBANK - Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR - Very Good, MCOT - Excellent, MINT - Very Good, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - not available, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, SC – Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI - Very Good, SPALI - Very Good, STA - Very Good, STEC - Very Good, TCAP - Very Good, THAI - Very Good, THCOM – Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Very Good, TUF - Very Good.