13 September 2013

REGIONAL DAILY December 26, 2012

MALAYSIA Malaysia Daybreak | 13 September 2013

Key Metrics ▌What’s on the Table… —————————————————————————————————————————————————————————————————————— FBMKLCI Index Telco - overall - Opportunity calls with GST 1,850 The likely introduction of the goods and services tax (GST) should be positive 1,800 for the mobile carriers as they would no longer have to absorb the 6% sales tax 1,750 for prepaid users. DiGi would benefit the most as 71% of its revenues are 1,700 prepaid vs 58% at Celcom and 55% at Maxis. The sector and our stock calls 1,650 remain a Neutral across the board despite this potential development as the 1,600 impact would be limited. Assuming that the telcos are able to recover only half 1,550 the tax since we think that some consumers would reduce their usage when Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 GST is imposed, we estimate a 3-6% lift for CY15 core net profit and 3-5% for

——————————————————————————— target prices. M1 is our top pick in the region. FBMKLCI Dry Bulk Shipping - Will the capesize rally spread? 1772.4 3.92pts 0.22% SEP Futures OCT Futures 1765 - (-0.34%) 1766 - (1.00%) The BDI rally over the past month has narrowly focused on capesizes, driven by ——————————————————————————— robust Chinese restocking of iron ore. Capesize rates should rise for a couple Gainers Losers Unchanged more weeks, supported by good steel demand in China, though the action may 418 291 326 ——————————————————————————— not spread to the smaller vessels. We stay Neutral on the sector, with Pacific Turnover Basin and Maybulk as top picks as they are fundamentally strong and trading 1457.82m shares / RM1752.682m below their SOP. Stock catalysts include a gradual but broad recovery in dry 3m avg volume traded 1620.87m shares 3m avg value traded RM2080.41m bulk rates from 2014. We have an Underperform call on PSL on valuation ——————————————————————————— grounds, and particularly highlight STXPO as our top sell as it is technically Regional Indices insolvent. We lower our target for STXPO to W295 (from W1,380) in this FBMKLCI FSSTI JCI SET HSI 1,772 3,121 4,357 1,398 22,954 report. ———————————————————————————————— Market Indices Close % chg YTD % chg FBMKLCI 1,772.40 0.2 4.9 ▌News of the Day… FBM100 12,038.21 0.2 6.5 —————————————————————————————————————————————————————————————————————— FBMSC 14,883.23 0.6 29.6 • EPF and KWAP are net buyers of shares during their recent declines FBMMES 5,117.49 0.4 21.4 Dow Jones 15,300.64 (0.2) 16.8 • Global sugar prices may fall 68% NASDAQ 3,715.97 (0.2) 23.1 • Salcon to sell its Chinese water concessions, focus on properties FSSTI 3,121.08 0.4 (1.5) FTSE-100 6,588.98 0.0 11.7 • Altel Communications defends its award of spectrum Hang Seng 22,953.72 0.1 1.3 JCI 4,356.61 0.2 0.9 • Richard Branson’s Virgin enters Malaysia’s telecom market KOSPI 2,004.06 0.0 0.4 • Khazanah sells Time Engineering to Censof Holdings Nikkei 225 14,387.27 (0.3) 38.4 PCOMP 6,195.61 (0.3) 6.6 • Malton edges closer to take over Pusat Bandar Damansara complex SET 1,397.90 (0.9) 0.4 • Narra to become a division of Hong Leong Group Shanghai 2,255.60 0.6 (0.6) Taiwan 8,225.36 0.2 6.8

Top Actives Close % chg Vol. (m) SOLID AUTOMOTIVE 0.640 14.3 110.6 PESONA METRO 0.475 (5.9) 80.8 PATIMAS COMPUTER 0.040 14.3 33.6 JAKS RESOURCES 0.535 5.9 33.6 LFE CORP 0.275 111.5 32.9 SILVER BIRD 0.105 10.5 27.4 CHINA STATIONERY 0.205 (2.4) 24.2 INTEGRATED RUBBER 0.390 (1.3) 22.5

Economic Statistics Close % chg US$/Euro 1.3297 (0.02) RM/US$ (Spot) 3.2773 (0.05) RM/US$ (12-mth NDF) 3.3380 (0.10) OPR (% ) 3.00 0.33 BLR (% , CIMB Bank) 6.60 0.00 GOLD ( US$/oz) 1,323 0.10 WTI crude oil US spot (US$/barrel) 108.60 0.97 CPO spot price (RM/tonne) 2,363 (0.67) ———————————————————————————————————————— Terence WONG CFA T (60) 3 20849689 E [email protected]

Sources: CIMB. COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Sources: CIMB. COMPANY REPORTS Daybreak Malaysia September 13, 2013

Global Economic News… The US budget deficit narrowed to US$147.9bn in Aug (-US$190.5bn in Aug 2012) from a year earlier as a stronger job market boosted revenue, propelling the world’s largest economy toward its smallest annual shortfall since 2008. The median estimate in a Bloomberg survey of 19 economists was for a US$146bn deficit in Aug.  Revenue rose 3.6% yoy to US$185.4bn while spending totaled US$333.3bn compared with US$369.4bn a year earlier.  In the 11 months through the fiscal year that ends 30 Sep, the deficit was US$755.3bn, the narrowest for that period in five years. (Bloomberg)

The Bloomberg Consumer Comfort Index rose to -32.1 in the week ended 8 Sep from -32.3, suggesting that confidence among American consumers stabilized last week after four straight declines even as their views of the economy deteriorated. The drop was within the survey’s margin of error of 3% pts. (Bloomberg)

US jobless claims declined by 31,000 to 292,000 in the week ended 7 Sep, the lowest level since Apr 2006 as work on computer systems in two states caused those employment agencies to report fewer applications. The median forecast in a Bloomberg survey called for 330,000 applications.  The four-week moving average of claims, a less volatile measure than the weekly figures, fell to 321,250 last week, the lowest since Oct 2007, from 328,750.  The number of people continuing to receive jobless benefits dropped by 73,000 to 2.87m in the week ended 31 Aug. (Bloomberg)

US import price index was unchanged in Aug (+0.1% in Jul). The median forecast called for a 0.5 percent advance. The cost of imported goods minus fuels fell 0.2% (-0.4% in Jul). Prices of autos made overseas fell 0.1%. (Bloomberg)

Euro-area industrial output contracted 1.5% mom in July (+0.6% in Jun) as manufacturers struggled to shake off the legacy of a record-long recession. That’s more than the 0.3% contraction forecast by economists. In the year, output fell 2.1%. (Bloomberg)

Japan's core machinery orders were unexpectedly flat in July (-2.7% in Jun). It was weaker than a median market forecast for a 2.4% increase, Cabinet Office data showed on Thursday. (Reuters)

Japan's prime minister has decided to hike the nation's sales tax to 8% in Apr next year from the current 5%, but will soften the blow with a US$50bn (RM163.5bn) stimulus package aimed at protecting a budding economic recovery, reports said yesterday. Parliament has already passed a law to hike the rate but Abe has yet to make a decision on whether to enact it amid concerns higher taxes will hit consumer demand and blunt a nascent recovery in Japan.  The reports from the Kyodo and Jiji Press news agencies yesterday did not make clear if another scheduled tax rise to 10% by late 2015 was still in the pipeline.

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 However, Abe will also launch a fresh economic package worth about ¥5tr (RM164.4bn) to cushion the increase, the news agencies and top-selling daily Yomiuri said, with Kyodo citing a source close to the prime minister.  Abe is expected to formally announce the plan on 1 Oct at the earliest, they said. (AFP)

Australia's jobless rate edged up to 5.8% in Aug (5.7% in Jul), a level not seen since the global financial crisis, with the sluggish economy shedding 10,800 jobs as the mining investment boom unwinds. It was in line with forecasts. (AFP)

Bank Indonesia raised its benchmark reference rate by 25bps to 7.25% yesterday, confounding expectations it would leave rates unchanged. The central bank raised the overnight deposit facility rate, or FASBI, by 25bps to 5.50%, to help prop up the ailing rupiah. Eight out of 11 analysts surveyed by Reuters expected Bank Indonesia to hold the benchmark reference rate steady at 7%. (Reuters)

The Philippine central bank held its benchmark rate and the rate on its special deposit account (SDA) facility steady yesterday, as fully expected because inflation is slowing and economic growth remains strong. The overnight borrowing rate has been kept at a record low 3.5% since Dec 2012, while the SDA rate has been unchanged since Jun at 2%. (Reuters)

Indian industrial production unexpectedly rose 2.6% yoy in July (-1.8% in Jun). The median of 28 estimates in a Bloomberg News survey was for a 0.9% fall. (Bloomberg)

Malaysian Economic News… Bank Negara does not foresee a higher inflation rate following the rise of fuel prices, as the global economy was still growing modestly, Governor Tan Sri Dr Zeti Akhtar Aziz said yesterday. “If global commodity prices, including fuel prices, increase substantially, then of course it would contribute to higher inflation, and when fuel prices increase, it is a global price that is beyond our control. There are limits to which the government can support. Any government in the world that tries to contain such price increases through subsidies will finally experience a financial burden that is not sustainable," she said.  On the threat to the domestic economy, Zeti said Bank Negara has been both "anticipatory" as well as pre-emptive in its policy.  "If we see any imminent risks, we address them - whether it is becoming excessive indebtedness or they cause financial institutions to experience any financial stress. But, right now, our banks are very well-capitalised and strong. Our policies are across the board to support the entire economy (businesses and consumers)," she added. (Bernama, BT)

Flour and sugar prices will not increase despite a subsidy rationalisation exercise for RON95 petrol and diesel recently, said Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek. He said several flour and sugar producers and manufacturers gave this assurance to the ministry at a meeting on Tuesday. They said that the supply of sugar and flour is sufficient. (Bernama)

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Bank Negara will not review its decision on the 10-year limit repayment period, said Governor Tan Sri Dr Zeti Akhtar Aziz. Responding to Cuepacs' appeal to review the personal loan repayment limit, Zeti said: "In the world, 10 years for personal loan repayment is the highest and usually it is about six years in other countries.”  Personal loans are different from housing loans because when a borrower purchases a house, they will own an asset once they have settled the loan.  In personal loans, they finish spending the money within a few days and then they have to undergo the misery of having to pay the debt for the next 10, 15 or, 20 years. “No, no revision," she stressed. (Bernama)

Petronas is in talks with producers, buyers and traders on setting up a new mechanism to price oil produced in the Asia-Pacific to better reflect regional supply and demand, sources familiar with the matter said. The plan comes two years after the second largest oil producer in Southeast Asia switched to dated Brent pricing after dropping a more volatile Asian price marker.  That move also prompted Vietnam and Brunei to change to the dated Brent benchmark published by pricing agency Platts.  Petronas is studying several options including working with an exchange in Singapore to start a futures contract based on four Malaysian crude grades - Labuan, Miri, Kikeh and Kimanis, one source said.  “It’s more to reflect regional supply and demand more accurately. Dated Brent sometimes can be detached from the regional market,” a second source said.  Petronas’ renewed interest in a new crude marker could also stem from a potential rise in its output when its new oil terminal in Sabah starts operation later this year, another source said.  Petronas has started talks with regional producers such as Indonesia and Vietnam to get them involved and provide a bigger basket of crudes to attract participants, source said. (BT)

Petronas clarified yesterday that it has no plans to change the Brent-based pricing mechanism. It has adopted the Brent-based pricing mechanism since Jun 2011, it said in a statement Thursday. (Bernama)

Malaysia must intensify efforts to become an advanced nation by 2020 by leveraging on high-tech and knowledge-based industries and Islamic Finance, PM Datuk Seri Najib Tun Razak said Thursday. He concurred with the Japanese Chambers of Trade and Industry Malaysia (Jactim) that for Malaysia to enter into the next phase of development, it needs to create a balanced and advanced economy. He said the country was expanding into new growth areas such as the halal market while the new Tun Razak Exchange would help transform Kuala Lumpur into a regional financial centre. (Bernama)

The Japanese Chambers of Trade and Industry Malaysia (Jactim) expects Malaysia-Japan bilateral trade to continue to strengthen this year from last year's RM145bn, driven by trade from new industries such as halal, city and railway developments. President Masato Nakamura said the two countries should explore the halal industry, which had huge potential, capitalising on the strength of Malaysia's halal certification.  Besides the Halal industry, new collaborative areas between the two countries are city and railway developments.

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 On another issue, Nakamura said the over concentration on risk in China was becoming prevalent and the strategy of investing outside China, especially in Asean countries, was gaining attention.  He said Malaysia had the advantage to attract investors especially in the electric and electronics industries that are diverting from China.  He said the chambers was also closely following the formation of the Asean Economic Community in 2015 and its impact on the Japanese businesses. (Bernama)

The government's fuel subsidy rationalisation has raised investor confidence in the the country's economic growth, said Deputy Finance Minister Datuk Ahmad Maslan. The ringgit has strengthened in a period of three weeks to RM3.259 against the US dollar in the wake of the subsidy reduction announcement. "This is a positive message from investors who have seen the government's commitment in handling the nation's fiscal deficit," he said.  Households earning below RM3,000 a month use only 30% of RON95 petrol, spending an average of RM132 a month on the fuel. Those with monthly incomes above RM5,000 on average buy RM375 a month of RON95, meaning this group benefit more from the subsidy, he said.  The fuel subsidy reduction was made by the government to ensure the nation's subsidies are more equitably distributed to lower-income groups, he added. (Bernama)

The government remains focus on developing inclusive social and economic development, along with balanced programmes of political and economic reform, PM Datuk Seri Najib Tun Razak said yesterday. The 10th Malaysia Plan has prioritised the 2.4m most vulnerable households, with a particular focus on women, youth and indigenous communities.  Among objectives of the policies are to open up opportunities outside cities by improving infrastructures, economy and quality of life in rural communities.  The policies are also designed to address rising living costs and continue the fight against hardcore poverty by enabling small businesses to flourish and enhance human capital component with strong emphasis on early education, he said.  "We have also sought to address the non-income dimensions of exclusion by promoting greater gender equality and empowerment. To this end, we have initiatives to increase the participation of women at senior level in both public and private sectors," he said. (Bernama)

PM Datuk Seri Najib Razak wants to see more efforts undertaken by relevant parties to create a wider access to credit and financial facilities for the people. He said more can be done although Malaysia has been ranked number one in terms of providing access to credit facilities.  "The government's vision is to equip all people with an essential understanding of sound financial management. We want to provide Malaysians the opportunity to improve their financial position and assure their rights to fair treatment as consumers," he said.  He said such vision can only be materialised with the commitment and cooperation of all parties and stakeholders, including the government, regulators, financial industry players and the people. (BT)

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Malaysia hopes to earn RM630m from medical tourism this year from the rising number of patients flying in for healthcare, with 11 more hospitals being built to get a larger slice of the regional market. Malaysia Healthcare Travel Council (MHTC) chief executive Dr Mary Wong said yesterday the number of medical tourists jumped from 392,000 in 2010 to 671,000 in 2012.  The council expects to receive 700,000 medical visitors this year.  Data from the council has shown the market growing in revenue from RM511m in 2011 to RM594 last year.  The global medical tourism market is worth US$40bn-60bn (RM130.2bn-195.3bn) with an estimated 7m people flying annually to make such trips. (Malaysian Insider)

The Ministry of International Trade and Industry (Miti) is optimistic that Malaysia will maintain its export value for halal products at RM7.8bn in 2Q13. Its minister Datuk Seri Mustapa Mohamed said the country's halal export activity has shown steady growth over the years despite global economic uncertainties.  He added that the halal export value for 2Q13 will be announced by early Oct.  Malaysia's halal exports rose by 0.5% yoy in 1Q13 to RM7.8bn, from RM7.7bn recorded in 1Q12.  Halal exports contributed 4.6% to the country's total export value for 1Q13, he said.  Multinational companies remained the biggest contributors to the country's halal exports which stood at 72%, or RM4.1bn, he said.  Some 3,237 halal certificates had been issued to manufacturers, premises and slaughterhouses as of Apr this year, of which 748 are exporters. (BT)

Political News… The way things are stacking up for the coming UMNO election indicates that Prime Minister Najib Razak will win the presidency unopposed, while his deputy Muhyiddin Yassin is also likely to be retained as the No.2 man in the party.  But for the 3 elected vice-presidencies, there are at least 5 contestants with Hishamuddin Hussein, Zahid Hamidi and Shafie Apdal being the incumbents. Former chief ministers Ali Rustam and Isa Samad will be out to unseat them. And it looks like Musa Aman, the Sabah chief minister, will soon confirm throwing his hat into the ring.  At the Women's wing or Wanita, it looks like the scandal-tainted Shahrizat will retain her seat as the head after Pengerang MP Azalina Othman decided to withdraw. For the Wanita No. 2 spot, Suraya Yaakob and Azizah Mohd Dun will be contesting while outgoing Puteri chief Rosnah Abdul Rashid has been mentioned as a third contestant.  Umno Youth Chief Khairy too will not be challenged but deputy Razali Ibrahim will automatically be disqualified due to age limit. As a result, there will be at least two aspirants for the post of Umno Youth deputy and these are Jamawi Jaafar and Lokman Adam. Whoever wins, Najib will be assured of complete support because they are loyal to Khairy and Khairy owes 'everything' to Najib. (Malaysia-chronicle)

Former prime minister Dr Mahathir Mohamad yesterday deflected claims that he lied under oath about his ignorance of 'Project IC' and urged his critics to

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instead question Anwar Ibrahim's silence about the matter when he was in government.  Without naming Anwar, Mahathir said "a Pakatan Rakyat leader" who served as his deputy prime minister had never questioned him about 'Project IC', allegedly a clandestine scheme to issue citizenship to Muslim migrants in Sabah to alter the state's voter demographics.  Mahathir said that if 'Project IC' really took place during his tenure as prime minister, Anwar could have stopped him. “He was in the government, he knew the government's policy. If that was the government's policy, why didn’t he stop it?” he asked. (Malaysiakini)

Corporate News… The EPF said it was a net buyer of shares during their recent declines as foreign investors cut their holdings. The EPF bought "good quality" and "fundamentally sound" shares, Mohamad Nasir Ab Latif, deputy CEO of the fund, said.  "Being the biggest investor in Malaysia, we view any market extremes as an opportunity for us to rebalance our portfolio for continuous return and risk diversification. We believe Malaysia is on a stronger footing [going] forward and we expect investor interest to come back to this region, especially emerging countries."  Kumpulan Wang Persaraan also said it bought local equities during the recent regional market rout. (Bloomberg, Financial Daily)

Palm oil may extend a decline as supply of the most used cooking oil from Indonesia and Malaysia climbs and biodiesel demand peaks, said Dorab Mistry, director at Godrej International Ltd, signalling a third year of losses. A rally in futures since the end of July was over and prices would drop from now, Mistry said. "It would not surprise me to see new lows in vegetable oil and particularly in palm and lauric oil in early January," he added. (Bloomberg)

The global sugar surplus could fall by 68% in the 2013/14 season from the year-earlier period due to rising global consumption, Datagro commodities consultancy said on Wednesday. The surplus should shrink to 3.06m tonnes in the season that officially starts in October from 9.5m tonnes previously, as world top producer Brazil's output of the sweetener holds steady, São Paulo-based Datagro said at an event. The upcoming season ends in September 2014.  "Global demand continues to grow, at 3-4m tonnes per year and if the grand motor of the global surplus, which is Brazil, maintains its production the surplus will begin to shrink," Plínio Nastari, Datagro's president, said at a news conference.  The International Sugar Organization expects the global surplus to slide to 4.5m tonnes in 2013/14 but says that might not help prices of the sweetener, which have been low for years. (Reuters)

Sarawak has denied reports of exporting illegal logs as all of its timber have proper certification. The state’s Second Minister of Resource Planning and Environment, Datuk Amar Awang Tengah Ali Hassan, said there was no proof to the allegation that the state was exporting logs to Japan illegally. He said the logs produced in the state were checked thoroughly by relevant agencies and were only issued permits after inspection. (Malaysian Insider)

Salcon has proposed to sell all its water treatment concessions in China for RM518.28m cash. After netting of liabilities and minority interest, Salcon would

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pocket RM284m cash. Salcon is considering capital repayment or special dividend to return part of the proceeds to shareholders. With fresh cash in hand, Salcon will team up with Eco World Development, which is controlled by Tan Sri Liew Kee Sin of SP Setia, to develop two tracts in Johor Baru that Eco World bought in Jan. Salco also announced that Eco World has taken over Kembar Makmur Sdn Bhd, which owns 49.99% of Salcon's property subsidiary. (Financial Daily)

Salcon expects its property development business to overtake its water and wastewater services business in a year or two. Executive director Datuk Eddy Leong said this was due to higher volatility in the water business. He said there could be periods of draught which will affect the water earnings. He added that once the property projects are lined up, Salcon would see more consistent earnings. (Starbiz)

Petroliam Nasional Bhd (Petronas) has refuted claims that it plans to discard the Brent-based pricing mechanism. "Petronas has adopted the Brent-based pricing mechanism since June 2011 and has no plans to change this basis," it said in a statement. Reuters recently reported that Petronas is in talks with producers, buyers and traders on setting up a new mechanism to price oil produced in the Asia-Pacific to better reflect regional supply and demand. (Starbiz)

Altel Communications, a subsidiary of tycoon Tan Sri Syed Mokhtar Al-Bukhary's Puncak Semangat Sdn Bhd which has been in the spotlight for receiving the "lion's share" of the LTE spectrum awarded by Malaysian Communications and Multimedia Commission (MCMC), has come out to defend the award saying that it received the spectrum fair and square. Altel CEO Nik Abdul Aziz Nik Yaacob said when MCMC called for proposals, the opportunity was opened to all existing players and a few new players who were required to submit detailed business plans for MCMC's evaluation. "It (the spectrum) is not something that we were given. I don't quite like the term 'given'. Like everybody else, we went through the process, we did the necessary submissions and we went through the same due diligence," he said. (sun)

Tycoon Sir Richard Branson's Virgin Mobile has set up shop in Malaysia with a prepaid telco called FRiENDi to tap the country's crowded but vibrant cellular phone service market. FRiENDi is a joint venture with Kumpulan Perangsang Selangor Berhad, a Selangor state-run infrastructure and utility firm.  The new mobile operator is hoping to break into the market with a different model that charges users per second instead of applying the commonly used charge block policy.  “We studied the Malaysian market for 18 months and we found that customers in Malaysia are frustrated with the mobile rates being seen as confusing and expensive, that the current market practice of charging either per minute or per 30 seconds is leading to unfairly higher costs for the customers, and the validity of prepaid cards is perceived as being much too short,” FRiENDi CEO Jonathan Marchbank said.  It is unclear what the charges are for FRiENDi since the network is still at the registration stage. The company also claims that its rate “will save customers up to 40% on their mobile phone costs” and allows a 30-day validity extension for calls, messaging, data usage or reload – eliminating the need to extend the prepaid number’s validity by reloading.  The firm is starting off with 1,500 dealers across Malaysia to cover its base with the option to expand later. (Malaysian Insider)

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Censof Holdings fended off a challenge from 10 others to win a competitive bid to purchase a 45.03% stake in TIME Engineering Bhd (TEB). Censof will pay Khazanah Nasional Bhd RM69.9m or 20 sen per share for the interest in TEB.  Upon completion of the transaction, Censof will emerge as the new controlling shareholder in TEB in which it will be obliged to extend a mandatory general offer (MGO) to the shareholders of TEB at an offer price of 20 sen per share. The last closing price is 28 sen.  Tan Sri Azman Mokhtar, Khazanah managing director, said Censof was selected out of 10 interested parties based on the merit of its overall bid and a defined strategy in line with Khazanah's divestment objectives for TEB. (Financial Daily)

Malton yesterday won its shareholders' approval to proceed with a proposed asset exchange exercise with Johor Corp (JCorp), bringing the developer of Pavilion KL a step closer to completing the takeover of Pusat Bandar Damansara office complex in Kuala Lumpur. "The resolution has been passed 100% on both sides. The next move is to complete it (the exercise) by November but this would depend on the developer (JCorp)," Malton's deputy chairman Paul Ravelli said. (sun)

KUB Malaysia will further expand its operations in the plantation sector with the development of 7,284ha of oil palm plantation in Sabah and Sarawak by 2015. KUB Agro CEO Zainal Abideen Salleh said the plan is currently in the final stage and several areas have been identified for the development of new palm plantations. Zainal declined to comment on the cost to develop the new oil palm plantations, adding that an official announcement will be made soon. (Bernama)

Malindo Air, Malaysia's hybrid airline, is offering 10,000 free seats one-way in conjunction with Malaysia Day this year. Malindo Air said the free seats are available for flights departing from Kuala Lumpur to Penang, Kuala Lumpur to Johor Bahru, Kuala Lumpur to Langkawi, Johor Baharu to Kota Kinabalu and Kuala Lumpur to Jakarta and Bali. "Our customers need to pay only airport tax and fees of RM39 one-way to all domestic destinations and RM75 one-way to Jakarta and Bali," the airline said. Bookings are available from 13-22 Sep 2013, for travel periods from now to 30 Nov 2013. (Bernama)

Express Rail Link (ERL), controlled by YTL Corp, wants to embark on new rail projects such as the highspeed rail (HSR) linking Kuala Lumpur and Singapore, boosting its portfolio. CEO, Noormah Mohd Noor said the company is ready to help the government develop an intelligent rail infrastructure here.  For the HSR link, a consortium, led by YTL, will be formed to bid for the project. The consortium will comprise key players either from Europe, Japan or China, "We are waiting for the government to call for tenders. As a rail operator, ERL will operate the HSR line while YTL will undertake the civil works. For rolling stocks and systems work, we will get foreign experts.  "We are open to negotiations with foreign companies from Spain, China and Japan as far as the systems portion is concern. We are evaluating the suitability of the system," Noormah said. (BT)

Narra Industries will become the building materials division of the Hong Leong group following another round of proposed restructuring involving

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assets that used to be controlled by Hume Industries, which was privatised in April 2010. In an announcement yesterday, Narra said it has proposed to acquire a restructured Hume Industries (Malaysia) Sdn Bhd from Hong Leong Industries Bhd (HLI) for RM48m. The subsidiaries under Hume Industries are essentially involved in the production and marketing of concrete and concrete products.  Narra also proposed to acquire Hume Cement for RM100m and 175m non-cumulative ICPS tied to Hume Cement for RM300m from Hong Leong Manufacturing. The ICPS, issued in 2011 are to be converted into shares in 2017 which will effectively be equivalent to 75% of Hume Cement.  The issuance of new shares will result in HLI holding 72.64% of the company. However, the company has proposed to distribute its shares to its shareholders on the basis of 1,080 Narra Shares for every 1,000 HLI shares.  At the end of the exercise, Hong Leong Management (HLM) and its parent company Hong Leong Company, which are controlled by Tan Sri Quek Leng Chan, will end up with close to 80% of Narra. (The Edge)

TSH Resources Bhd has proposed a private placement of up to 20.86m shares at an issue price to be determined later. The placement would be in six tranches and money raised will be used for its working capital and future investment. The share closed at RM2.33 yesterday. (Malaysian Reserve)

Major shareholders of loss-making Major Team Holdings Bhd (MTHB), comprising Kong See Kuan, Excellent Avenue (M) Sdn Bhd (EASB) and Ample Potential Sdn Bhd (APSB), have proposed to acquire the remaining stake in MTHB at 17 sen per share. The major shareholders collectively own 62.7% of MTHB, with Kong regarded as the main offeror by virtue of her substantial interests in APSB and Exclusive Vest Holdings Sdn Bhd, which has a 50% stake in APSB. They intend to delist MTHB upon completion of the planned privatisation of the company. (The Edge)

Eco World Developments Sdn Bhd, a company set up by former directors and executives of SP Setia, is looking to launch projects with a GDV of RM30bn on 1,214ha of land. CEO Datuk Chang Khim Wah said at present, it was focusing on the Klang Valley, Johor and Penang.  "Up next, we would have two projects in Penang, two in the Klang Valley and four in Iskandar region," he said. On how the company managed to secure such a huge tract of land since it is a relatively new company, he attributed it to its major shareholders, Datuk Eddie Leong Kok Wah and Tan Sri Abdul Rashid Abdul Manaf, who have been in the industry for some time now.  Eco Wrold has 5.26ha in Air Itam, Penang Island; 24.28ha in Seberang Prai, Penang; 433ha in Semenyih, Selangor, 497.76ha in Tebrau, Johor; and 154.99ha in Senai, Johor. Two of the projects to be first launched by the budding developer is a 109.27ha township development known as EcoBotanic in Nusajaya, Iskandar Malaysia, and a 4.05ha integrated mixed-use development known as EcoSky along Jalan Ipoh. Chang said the launch of its EcoBotanic and EcoSky gallery, scheduled for Sep 22, would signify the birth of Eco World. (Starbiz)

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BMSB: Changes in shareholdings Type of No of Ave Price 12-Sep-13 Date transaction securities Company (RM) EPF 6/9-9/9 Disposed 9,519,500 SIME DARBY EPF 5/9-9/9 Disposed 5,655,100 TENAGA NASIONAL EPF 9/9 Disposed 3,371,900 DIGI.COM EPF 9/9 Disposed 2,169,400 SAPURAKENCANA PETROLEUM EPF 9/9 Disposed 2,000,000 IOI CORPORATION EPF 9/9 Disposed 1,411,400 MAXIS EPF 9/9 Disposed 1,000,000 YTL CORPORATION EPF 9/9 Disposed 810,000 TELEKOM MALAYSIA EPF 4/9-6/9 Disposed 779,200 PETRONAS CHEMICALS EPF 9/9 Disposed 747,400 BIMB HOLDINGS EPF 9/9 Disposed 702,900 PERISAI PETROLEUM EPF 9/9 Disposed 558,700 HONG LEONG BANK EPF 9/9 Disposed 500,000 BURSA MALAYSIA EPF 9/9 Disposed 476,000 MALAYSIA AIRPORTS EPF 9/9 Disposed 369,700 UOA DEVELOPMENT EPF 9/9 Disposed 350,000 GAMUDA EPF 9/9 Disposed 338,300 KUALA LUMPUR KEPONG EPF 9/9 Disposed 250,200 LAFARGE MALAYSIA EPF 9/9 Disposed 211,800 PUBLIC BANK EPF 9/9 Disposed 123,000 DIALOG GROUP EPF 9/9 Disposed 102,400 IGB CORPORATION EPF 9/9 Disposed 100,000 PPB GROUP EPF 9/9 Disposed 96,000 SUNWAY REIT EPF 9/9 Disposed 75,300 PETRONAS GAS EPF 9/9 Disposed 65,500 PETRONAS DAGANGAN EPF 9/9 Disposed 60,500 IJM CORPORATION EPF 9/9 Disposed 50,000 BRITISH AMERICAN TOBACCO EPF 9/9 Disposed 18,900 GENTING PLANTATIONS Skim Amanah Saham Bumiputera 5/9-9/9 Disposed 3,919,900 TENAGA NASIONAL Skim Amanah Saham Bumiputera 6/9-9/9 Disposed 2,954,900 MAXIS Skim Amanah Saham Bumiputera 6/9 Disposed 207,100 SIME DARBY Lembaga Tabung Haji 4/9-10/9 Disposed 10,110,500 SILVER BIRD GROUP Lembaga Tabung Haji 6/9-10/9 Disposed 777,600 PROTASCO Lembaga Tabung Haji 19/8-9/9 Disposed 630,200 UZMA Lembaga Tabung Haji 5/9 Disposed 202,000 SCICOM (MSC) Kumpulan Wang Persaraan 6/9 Disposed 58,400 TOP GLOVE CORPORATION Kumpulan Wang Persaraan 4/9-5/9 Disposed 65,000 PETRONAS GAS Oversea-Chinese Banking Corp 9/9 Disposed 46,700 STAR PUBLICATIONS Great Eastern Holdings Limited 6/9 Disposed 43,000 CYPARK RESOURCES Prudential Plc 5/9-9/9 Disposed 9,200 AMMB HOLDINGS Aberdeen International Fund Managers 6/9-10/9 Disposed 598,400 AEON CO. (M) Aberdeen International Fund Managers 6/9-10/9 Disposed 454,500 ORIENTAL HOLDINGS Aberdeen International Fund Managers 10/9 Disposed 327,400 POS MALAYSIA Aberdeen Asset Management Asia 6/9-10/9 Disposed 598,400 AEON CO. (M) Aberdeen Asset Management Asia 6/9-10/9 Disposed 454,500 ORIENTAL HOLDINGS Aberdeen Asset Management Asia 10/9 Disposed 327,400 POS MALAYSIA Aberdeen Asset Management Asia 11/9 Disposed 3,200 SHANGRI-LA HOTELS Aberdeen Asset Management PLC 6/9-10/9 Disposed 598,400 AEON CO. (M) Aberdeen Asset Management PLC 6/9-10/9 Disposed 454,500 ORIENTAL HOLDINGS Aberdeen Asset Management PLC 10/9 Disposed 327,400 POS MALAYSIA Aberdeen Asset Management PLC 11/9 Disposed 23,000 SHANGRI-LA HOTELS Mitsubishi UFJ Financial Group, Inc. 6/9 Disposed 194,200 ORIENTAL HOLDINGS Mitsubishi UFJ Financial Group, Inc. 6/9 Disposed 52,200 CIMB GROUP Mitsubishi UFJ Financial Group, Inc. 6/9 Disposed 17,400 UNITED PLANTATIONS Mitsubishi UFJ Financial Group, Inc. 6/9 Disposed 16,900 BRITISH AMERICAN TOBACCO Mitsubishi UFJ Financial Group, Inc. 6/9 Disposed 10,700 AEON CO. (M) Mitsubishi UFJ Financial Group, Inc. 6/9 Disposed 1,300 POS MALAYSIA EPF 9/9 Acquired 2,892,700 IHH HEALTHCARE EPF 9/9 Acquired 2,218,100 AMMB HOLDINGS SOURCES: BMSB

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BMSB: Changes in shareholdings Type of No. of Ave Price 12-Sep-13 Date transaction securities Company (RM) EPF 9/9 Acquired 1,985,400 MALAYAN BANKING EPF 9/9 Acquired 568,900 PERDANA PETROLEUM EPF 9/9 Acquired 300,000 TAN CHONG MOTOR EPF 9/9 Acquired 300,000 CAHYA MATA SARAWAK EPF 9/9 Acquired 299,200 ORIENTAL HOLDINGS EPF 9/9 Acquired 255,400 STAR PUBLICATIONS EPF 9/9 Acquired 103,400 TIME DOTCOM EPF 9/9 Acquired 100,000 KULIM (MALAYSIA) EPF 9/9 Acquired 86,800 UEM SUNRISE EPF 9/9 Acquired 55,800 FELDA GLOBAL VENTURES EPF 9/9 Acquired 10,000 HAP SENG PLANTATIONS Skim Amanah Saham Bumiputera 6/9-9/9 Acquired 151,300 CAPITAMALLS MALAYSIA TRUST Skim Amanah Saham Bumiputera 4/9-5/9 Acquired 32,700 FRASER & NEAVE Permodalan Nasional Berhad 6/9 Acquired 1,192,900 SIME DARBY Lembaga Tabung Haji 3/9-6/9 Acquired 3,250,000 HOVID Lembaga Tabung Haji 28/8 Acquired 735,600 AL-`AQAR HEALTHCARE REIT Lembaga Tabung Haji 22/8-5/9 Acquired 540,000 MALAYSIA MARINE AND HEAVY ENG Lembaga Tabung Haji 4/9 Acquired 28,200 MUDAJAYA GROUP Kumpulan Wang Persaraan 6/9 Acquired 950,000 BENALEC HOLDINGS Kumpulan Wang Persaraan 6/9 Acquired 201,800 JT INTERNATIONAL T. Rowe Price Associates, Inc 6/9 Acquired 104,000 ASTRO MALAYSIA Long Investment Mgmt International 2/9-9/9 Acquired 1,200,000 LBS BINA GROUP Aberdeen Asset Management PLC 6/9-10/9 Acquired 16,100 UNITED PLANTATIONS YTL POWER INTERNATIONAL 12/9 Shares Buy Back 11,862,800 YTL POWER INTERNATIONAL 1.69 HAP SENG CONSOLIDATED 12/9 Shares Buy Back 550,500 HAP SENG CONSOLIDATED 2.14 IGB CORPORATION 12/9 Shares Buy Back 457,100 IGB CORPORATION 2.59 CAHYA MATA SARAWAK 12/9 Shares Buy Back 150,000 CAHYA MATA SARAWAK 4.43 SOURCES: BMSB

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BMSB: ESOS & others 13-Sep-13 No Of New Shares Date of Listing Nature of transaction MUHIBBAH ENGINEERING 6,820,883 13-Sep-13 Exercise of Warrants-13 SOURCES: BMSB

BMSB: Off-market transactions 12-Sep-13 Vol PDZ 63,710,000 MARCO 38,122,500 KELADI 35,828,000 GPA 31,775,000 IBRACO 19,287,700 FCW 13,185,600 JASKITA 9,808,400 MAICA 5,927,700 HSL 4,800,000 FCW-WB 4,215,840 UBB 2,583,000 SERSOL 2,000,000 CFM 1,936,400 GOPENG 1,844,000 LONBISC 1,009,500 SERSOL-WA 1,000,000 TECGUAN 651,300 Notes:CN-Crossing deal on board lots MN-Married deal on board lots MO-Married deal on odd lots SOURCES: BMSB

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BMSB: Dividends Company Particulars Gross DPS (Sen) Ann Date Ex-Date Lodgement Payment BINTULU PORT Interim - single tier 7.50 29-Aug-13 18-Sep-13 20-Sep-13 11-Oct-13 CAHYA MATA SARAWAK Interim 5.00 30-Aug-13 19-Sep-13 23-Sep-13 18-Oct-13 LAFARGE MALAYSIA 2nd Interim -single tier 8.00 27-Aug-13 23-Sep-13 25-Sep-13 31-Oct-13 DRB-HICOM Final ( 4.0 sen tax exempt ) 4.50 27-Aug-13 23-Sep-13 25-Sep-13 18-Oct-13 BIMB HOLDINGS Interim - single tier 3.50 28-Aug-13 23-Sep-13 25-Sep-13 31-Oct-13 UMW HOLDINGS Interim - single tier 10.00 4-Sep-13 24-Sep-13 26-Sep-13 8-Oct-13 STAR PUBLICATIONS Interim - single tier 6.00 14-Aug-13 25-Sep-13 27-Sep-13 18-Oct-13 CARLSBERG Interim - single tier 5.00 27-Sep-13 25-Sep-13 27-Sep-13 11-Oct-13 DIGI.COM Interim - single tier 2.00 30-Aug-13 25-Sep-13 27-Sep-13 18-Oct-13 JT INTERNATIONAL Interim - single tier 11.00 23-Aug-13 26-Sep-13 30-Sep-13 25-Oct-13 GENTING PLANTATIONS Interim 3.75 28-Aug-13 26-Sep-13 30-Sep-13 17-Oct-13 GENTING MALAYSIA Interim 4.30 29-Aug-13 26-Sep-13 30-Sep-13 22-Oct-13 ASTRO MALAYSIA 2nd Interim - single tier 2.00 11-Sep-13 26-Sep-13 30-Sep-13 18-Oct-13 E&O BHD 1st & Final 4.50 29-Oct-13 8-Oct-13 10-Oct-13 7-Nov-13 MUDAJAYA 2nd Interim - single tier 3.00 28-Aug-13 23-Oct-13 25-Oct-13 22-Nov-13 SOURCES: BMSB

BMSB: Proposed cash calls & trading of rights… 13-Sep-13 Ann Date Proposed Kossan Rubber Iindustries 2-Sep-13 Bonus issue 1:1 SOURCES: BMSB

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Corporate Actions September 2013

SUN MON TUE WED THU FRI SAT

1 2 3 4 5 6 7 MPC External Reserves, External Trade

8 9 10 11 12 13 14 Lafarge briefing IPI, Manufacturing Sales, Astro 2Q

15 16 17 18 19 20 21 Malaysia Day CPI

22 23 24 25 26 27 28 External Reserves SP Setia 3Q

29 30 Money Supply, PPI

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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Corporate Actions October 2013

SUN MON TUE WED THU FRI SAT

1 2 3 4 5 External Trade

6 7 8 9 10 11 12 External Reserves IPI, Manufacturing Top Glove 4Q Umno Youth and Sales Puteri elections

13 14 15 16 17 18 19 Hari Raya Qurban Umno supreme council elections

20 21 22 23 24 25 26 External Reserves CPI Budget 2014

27 28 29 30 31 Money Supply, PPI

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates. United Kingdom and Europe: In the United Kingdom and European Economic Area, this report is being disseminated by CIMB Securities (UK) Limited (―CIMB UK‖). CIMB UK is authorised and regulated by the Financial Services Authority and its registered office is at 27 Knightsbridge, London, SW1X 7YB. This report is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are persons that are eligible counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the ―Order‖); (c) are persons falling within Article 49 (2) (a) to (d) (―high net worth companies, unincorporated associations etc‖) of the Order; (d) are outside the United Kingdom; or (e) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with any investments to which this report relates may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as ―relevant persons‖). This report is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will be engaged in only with relevant persons. Only where this report is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent "investment research" under the applicable rules of the Financial Services Authority in the UK. Consequently, any such non-independent report will not have been prepared in accordance with legal requirements designed to promote the independence of investment research and will not subject to any prohibition on dealing ahead of the dissemination of investment research. United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand) Co. Ltd, CIMB Securities Limited, CIMB Securities (Australia) Limited, CIMB Securities (India) Private Limited,and is distributed solely to persons who qualify as "U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc. Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

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, Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

Recommendation Framework #2 ** Stock Sector OUTPERFORM: Expected positive total returns of 10% or more over the next 12 months. OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a 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 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) 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 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a 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 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, has a 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 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, has a 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 Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2012. AAV – not available, ADVANC - Excellent, AEONTS – Good, AMATA - Very Good, ANAN – not available, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH – not available, BCP - Excellent, BEC - Very Good, BGH - not available, BJC – Very Good, BH - Very Good, BIGC - Very Good, BTS - Excellent, CCET - Good, CENTEL – Very Good, CK - Very Good, CPALL - Very Good, CPF - Very Good, CPN - Excellent, DELTA - Very Good, DTAC - Very Good, EGCO – Excellent, ERW – Excellent, GLOBAL - Good, GLOW - Very Good, GRAMMY – Excellent, HANA - Very Good, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH – Very Good, ITD – Very Good, IVL - Very Good, JAS – Very Good, KAMART – not available, KBANK - Excellent, KK – Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR - Good, MAKRO – Very Good, MCOT - Excellent, MINT - Very Good, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - Excellent, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS – Excellent, SAMART – Excellent, SC – Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI - Good, SPALI - Very Good, SRICHA – not available, SSI – not available, STA - Good, STEC - Very Good, TCAP - Very Good, THAI - Excellent, THCOM – Very Good, TICON – Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Very Good, TTW – Very Good, TUF - Very Good, VGI – not available, WORK – Good.

Daybreak Malaysia September 13, 2013