MCH MK 12Feb20

13 Feb 2020 Matrix Concepts Buy Relative outperformer; Initiate at Buy Price We initiate coverage of Matrix Concepts (MCH) with Buy and TP of RM2.25, based on a

Property RM1.91 25% discount to our RNAV of RM3.00. We expect its sales to hold (peers are

| | experiencing declining sales) with stable earnings in FY20F and to expand by 9% in

Target Price RM2.25 FY21F. MCH offers better cash return to shareholders with high dividend yields of 5- 6% (industry: 2-3%). It also offers further upside on potential monetisation of Sendayan

Icon Park and its Indonesia’s project. MCH is trading at a PBR of 1.0x FY20F and PNAV Market Data of 0.6x FY20F, at a premium to the industry. We believe the premium is justifiable given Bloomberg Code MCH MK its strong balance sheet, stable earnings, and high dividend yields. No. of shares (m) 822.8 Financial Highlights Market cap (RMm) 1,571.6 FYE Mar 2017 2018 2019 2020F 2021F 52-week high/low (RM) 2.02 / 1.87 Revenue (RMm) 775 818 1,046 1,054 1,150 Avg daily turnover (RMm) 0.7 Core net profit (RMm) 185 213 218 217 237 KLCI (pts) 1,551.5 Core EPS (Sen) 31.5 28.2 28.8 24.4 26.6 Source: Bloomberg, KAF EPS growth (%) (31.2) (10.4) 2.1 (15.2) 9.1 DPS (Sen) 13.8 12.8 12.6 10.6 11.6 Core PE (x) 6.1 6.8 6.6 7.8 7.2 Div yield (%) 7.2 6.7 6.6 5.6 6.1 Equity | Malaysia | Equity Major Shareholder (%) ROE (%) 19.4 19.1 17.2 14.4 13.5 Dato' Lee Tian Hock (34.7%) Net Gearing (%) 15.3 2.9 7.4 6.2 4.2 EPF (8.1%) PBV(x) 1.1 1.2 1.1 1.0 0.9

Asia Core Properties (4.4%) Source: Company, KAF *Prices as of 11-Feb-2020

Free Float 439.9 Source: Bloomberg, KAF Further upside on Indonesia project and Sendayan Icon Park. MCH has a 30% stake in a JV company with Salim Group, Agung Sendayu, and PT Nikko Sekuritas for a project called Islamic Twin Tower at PIK2, Jakarta (Indonesia) with a GDV of c.USD250m. Future development of the remaining acreage of PIK2 would potentially represent more Performance opportunities for MCH to expand into Jakarata. 3M 6M 12M In addition, Sendayans’ remaining GDV of RM5.3b excludes the 110-acre of land that had Absolute (%) - 1.1 (4.4) been earmarked for Sendayan Icon Park. The icon park would be developed into a CBD and Rel Market (%) 3.7 5.2 4.1 will be the key highlight of the entire Sendayan township. Potential GDV to be churned out from the icon park is estimated to be c.RM6.0b. As the icon park is still at preliminary stage 2.2 and would only start in year 2025 with 10-15 years of development period, we exclude the number from the icon park from our RNAV calculation. The improvement in the speed of 2.0 monetising the 110-acre of land would potentially provide an upside to the company.

1.8 Higher margin from low land cost and low gearing. Low land cost and low gearing give MCH a competitive edge over other developers in the industry. Its land cost only makes up 1.6 Feb-19 May-19 Aug-19 Nov-19 c.6-7% (industry: c.15-20%) of its GDV. MCH’s low borrowings had translated into low net MCH MK FBMKLCI Index gearing for the group. MCH had a net gearing of 7% (industry: c.36%). All things considered, it managed to consistently registered higher net profit margin (>20%) than the industry Source: Bloomberg, KAF (c.12%). As we expect its sales to hold up, its profit margin would likely to maintain in FY20- 21F. Healthy inventory level. MCH had consistently recorded healthy inventory level than its peers i.e., inventory-to-sales ratio of less than 10% (industry’s 5-year average: 28%). Its fast- moving inventory was also illustrated in its days of inventory outstanding (DIO) of 56 days (peers’ range: 134-240 days). The healthy inventory-level trend is indebted to its price-point strategy. A cash yield company. From stable earnings and strong balance sheet, MCH has able to provide generous dividend payout in the range of 40-45% of its earnings in recent years. (dividend policy: 40% of earnings). Price-to-dividend ratio measures actual cash received by investors. A lower price-to-dividend multiple translates to better cash return for shareholders. MCH has a price-to-dividend multiple of 15.1x in FY19 (industry: 23.6x, bigger peers: >30.0x). The inverse for price-to-dividend is dividend yield. MCH has consistently reported higher Analyst dividend yields than the industry. At current market price, the dividend payout by MCH Izzul Hakim Abdul Molob translates into a yield of 6-7% (industry: 3-4%). Despite the private placement, conversion of (603) 2171 0502 warrants, and ESOS in FY20F, we estimate that MCH is still able to provide a payout that [email protected] would potentially translate into a yield of 5.6% (industry: 2.9%) this year.

Produced by KAF Equities Sdn Bhd Important disclosures can be found in the Disclosure Appendix

Matrix Concepts Company Background

Matrix Concepts Berhad (MCH)’s core business is property development. MCH is a renowned property developer in Negeri Sembilan. Its primary projects are The Sendayans (Negeri Sembilan) and Bandar Seri Impian (Johor). These made up c.75% of its overall remaining GDV of RM10.4b. About 85% of its projects are residential-type, of which mainly are landed properties.

MCH has recently made its debut in the Klang Valley with the launch of a 33-storey serviced apartment project called Chambers worth RM333m of GDV. It was launched on Aug-2018 and is located close to Putra World Trade Centre (PWTC). MCH is planning to launch 2 more projects in Klang Valley i.e., Puchong and Cheras with a combined GDV of c.RM800m in FY21-22F.

As for its overseas projects, MCH had ventured into several projects in Melbourne (Australia) and PIK2 Sendayu Indo City – North Jakarta (Indonesia). Other segments include education and hospitality.

Core operation – property development This segment comprises development of residential and commercial properties. MCH is a property developer in Malaysia that offers sizable properties at affordable prices with a strong presence in Negeri Sembilan. Other locations include Kuala Lumpur, Selangor, Australia, and Indonesia. More than 50% of its remaining GDV is located in Negeri Sembilan. Property development is the core operation of MCH, comprising c.97% of the group’s total revenue.

Other operation – hospitality & education

These segments provide diversification to its property development business. MCH involves in managing and operating a clubhouse (d'Tempat Country Club) and hotel (d'Sora Boutique Business Hotel). It also owns Matrix Medicare that provides services in healthcare centres relating to non-clinical matters including financial, administration and management of resources in return for management fees.

For its education business, it has a 51% stake in Matrix Educare that operates Matrix International School, Matrix Private School, and early years’ education. However, its non- property development segment only contributed c.3% of the group’s total revenue in FY19.

Exhibit 1: MCH’s revenue composition

100% 90% 80% 70% 60% 50% 100% 98% 97% 96% 97% 40% 30% 20% 10% 0% 2014 15MFY16 FY17 FY18 FY19

Property Development Hospitality Education and others

Source: Company, KAF

Major shareholders – Dato’ Lee Tian Hock MCH was established in Malaysia in 1996 and was listed on the main market of Bursa Malaysia in 2013. MCH’s major shareholder is Dato’ Lee Tian Hock. The holdings are directly via his own and his private limited companies i.e., Shining Term, Ambang Kuasa, Magnitude Point, and Yakin Teladan. Ultimately, he owns about 35% stake of MCH. Other shareholders are Employee Provident Fund (EPF) with 8% stake and Asia Core Properties with 4% stake

KAF Equities Sdn Bhd 2 Matrix Concepts Investment Thesis

We initiate coverage of Matrix Concepts (MCH) with a Buy and TP of RM2.25, based on a 25% discount to our RNAV of RM3.00, based on the following premises:

1) Higher margin supported by low land cost and low gearing

2) Adequate lanbanks to support earnings contribution for the next 8 years

3) Strong balance sheet

4) A cash yield company

5) Sizeable GDV from Sendayan Icon Park – yet to be accounted for

6) Potential further upside from the JV with Salim Group

7) Healthy inventory level with minimal DIOs

Higher margin supported by low land cost and low gearing Low land cost and low gearing give MCH a competitive edge against other developers in the industry. About 10 years ago, MCH bought its land in Bandar Sri Sendayan (BSS) for about RM3psf. In 4Q19, MCH had entered into separate SPAs with individual land owners to acquire 86 parcels of vacant agriculture lands measuring c.68.2 hectares, situated in BSS for a total consideration of RM73.4m or RM10psf.

BSS has a remaining GDV of RM3.3b with a weighted average GDV psf of RM160. Despite the higher land acquisition cost based on the latest transacted price of RM10psf, the land cost only makes up c.6% of its remaining GDV. Therefore, MCH still enjoys a high development margin.

As a result of low land cost, MCH had consistently registered the higher gross profit margin than the industry. Based on latest audited report, MCH reported a gross profit margin of c.50% while the industry recorded a much lower margin at 37%. Refer to Exhibit 2.

In addition, MCH’s low borrowings had translated into low net gearing for the group. Based on its latest audited annual report, MCH had a net gearing of 7%. This is much lower than the industry at c.36%. Refer to Exhibit 3.

All things considered, it managed to consistently registered higher net profit margin than the industry. Based on its latest audited annual report, MCH had registered a net profit margin of c.21%. This was much higher than the industry at c.12%. Refer to Exhibit 4. Given a prolonged property down cycle, a comfortable margin would give a competitive edge to MCH against other developers.

Exhibit 2: Gross profit margin (MCH vs industry – KLPRP Index) % 70.0 60.4 57.1 60.0 54.8 56.2 49.9 49.9 50.0 42.3 43.4 39.5 40.2 37.3 36.7 40.0 34.1 34.7 34.0 31.5 30.0

20.0

10.0

- 2012 2013 2014 15MFY16 FY17 FY18 FY19 FY20F MCH Industry

Source: Bloomberg , Company, KAF

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Exhibit 3: Net gearing (MCH vs industry – KLPRP Index) % 37.6 40.0 35.9 33.2 30.5 30.0 27.6 26.6 24.4 22.0 20.0 14.3 15.3

10.0 7.4 6.2 2.9 - 2012 2013 2014 15MFY16 FY17 FY18 FY19 FY20F (2.7) (2.8) (10.0) (9.2)

(20.0) MCH Industry

Source: Bloomberg , Company, KAF

Exhibit 4: Net profit margin (MCH vs industry – KLPRP Index) % 35.0 30.4 30.0 28.5 28.6 26.4 26.1 23.9 25.0 22.7 20.7 20.9 20.6 19.3 20.0 18.7 15.1 14.4 15.0 12.0 11.1 10.0

5.0

- 2012 2013 2014 15MFY16 FY17 FY18 FY19 FY20F MCH Industry

Source: Bloomberg , Company, KAF

Adequate landbanks to support earnings contribution for the next 8 years MCH offers sustainable earnings contribution from its current lanbanks. From close to 2,000 acres of landbanks, it has a remaining GDV of RM10.4b. With an estimated annual launches of RM1.2b, this implies a sustainable earnings contribution for more than 8 years. In-term of location, its remaing GDV would be derived from Sendayans (52%), Bandar Seri Impian (24%), Klang Valley (11%), and others (13%).

For near-term earnings recognition, MCH has healthy unbilled sales of RM1.0b. That is, the unbilled sales would last the group at least 1 year. About 80% of its unbilled sales are from Sendayans. These are expected to be recognised in the next 1-2 years. Refer to Exhibit 5 for its unbilled breakdown’s timeline.

We believe that healthy unbilled sales are crucial during a soft period as they help to cushion cash flow while developers try to generate new sales. As all of MCH’s unbilled sales are from local projects, they can be recognised progressively. Hence, this should help to improve cash flow generation.

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Exhibit 5: Unbilled sales timeline Total – by Project/Year 2019 2020 2021 2022 % by project project Bandar Sri Sendayan 38.9 82.7 81.7 - 203.3 19% Tiara Sendayan - 297.1 199.2 - 496.3 47% Ara Sendayan 37.2 72.8 34.2 - 144.2 14% Bandar Seri Impian 36.7 - 1.1 - 37.8 4% Klang Valley - - - 151.8 151.8 14% Others - 4.6 14.1 - 18.7 2% Total – by year 112.8 457.2 330.3 151.8 1,052.1 % by year 11% 43% 31% 14%

Source: Company, KAF

Strong balance sheet Gearing level is just a snapshot of the group’s financial position at a reported date as developers are geared at different levels in different stages of business expansion. Therefore, we need to observe the gearing trend over several years.

Based on Exhibit 6, MCH has consistently reported a low net gearing ratio (lower than the industry’s average). We are of the view that being less geared makes a developer less vulnerable to market/economic uncertainty. In addition, during market downturn with low sales and revenue recognition, a low-geared developer’s bottom-line will be less impacted from lower financing costs. Inversely, when property market recovers, MCH looks set to exploit any opportunities for future expansion from its strong balance sheet position.

Exhibit 6: A consistent low net gearing vs industry – KLPRP Index % 40.0 35.9 37.6 33.2 30.5 30.0 27.6 26.6 24.4 22.0 20.0 14.3 15.3

10.0 7.4 6.2 2.9 - 2012 2013 2014 15MFY16 FY17 FY18 FY19 FY20F (2.7) (2.8) (10.0) (9.2)

(20.0) MCH Industry

Source: Bloomberg , Company, KAF

A cash yield company As a result of higher profit margin and strong balance sheet, MCH has able to provide generous dividend payout over the years. From stable earnings, MCH has able to pay 40- 45% of its earnings as dividends (dividend payout policy: 40% of earnings) in recent years.

Price-to-dividend ratio is a more stable and close to cash return than PE ratio. It does not just measure accounting profit, but actual cash received by investors. A lower price-to- dividend multiple translates to better cash return for shareholders. MCH has a price-to- dividend multiple of 15.1x in FY19 while the industry was trading at 23.6x. Its bigger peers are however, trading at more than 30x multiple. Also, MCH consistently reported a low price- to-dividend multiple over the years. Refer to Exhibit 7. We are of the view that MCH provide better cash return to shareholders than the industry.

The inverse for price-to-dividend is dividend yield. MCH has consistently reported higher dividend yields than the industry. At current market price, the dividend payout by MCH translates to a yield of 6-7% (industry: 3-4%). Refer to Exhibit 8. Despite the private

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placement, conversion of warrants, and ESOS in FY20F, we estimate that MCH is still able to provide a payout that would potentially translate into a yield of 5.6% (industry: 2.9%) this year. From sustainable earnings visibility in the coming years, we expect MCH is able to maintain its generous dividend payout and deliver a sustainable cash return to its shareholders with a dividend yields of 5-6% in FY20-21F.

Exhibit 7: Price-to-dividend multiple (MCH vs industry – KLPRP Index) x 45.0 39.2 40.0 35.4 34.1 35.0 30.0 28.2 23.6 25.0 22.7 20.0 17.8 13.9 14.9 15.1 15.0 11.8 10.3 10.0 5.0 - 2014 15MFY16 FY17 FY18 FY19 FY20F MCH Industry

Source: Bloomberg , Company, KAF

Exhibit 8: Dividend yields (MCH vs industry – KLPRP Index) % 12.0

9.7 10.0 9.1

8.0 7.2 6.7 6.6 5.6 6.0 4.4 4.2 3.5 4.0 2.9 2.8 2.5 2.0

- 2014 15MFY16 FY17 FY18 FY19 FY20F MCH Industry

Source: Bloomberg , Company, KAF

Sizeable GDV from Sendayan Icon Park – yet to be accounted for Sendayans’ remaining GDV of RM5.3b represents c.52% of the group’s remaining GDV of RM10.4b However, Sendayan’s remaining GDV excludes the 110-acre of land that had been earmarked for Sendayan Icon Park. The icon park would be developed into a central business district (CBD). It will be the key highlight of the entire Sendayan township. Proposed development includes office towers, high-rise residential, shopping mall, convention centre, hotel, and hospital.

Sendayan Icon Park would take c.10-15 years to be developed. Potential GDV to be churned out from the icon park is estimated to be c.RM6.0b. However, the icon park is still at preliminary stage and would only start in year 2025. Hence, we exclude the number from Sendayan Icon Park from our RNAV calculation. The improvement in the speed of monetising the 110-acre of land would potentially provide an upside to the company.

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Exhibit 9: Sendayan Icon Park (1 of 2) Exhibit 10: Sendayan Icon Park (2 of 2)

Source: Company, various Source: Company, various

Potential further upside from the JV with Salim Group MCH has a 30% stake in a JV company with Salim Group, Agung Sendayu, and PT Nikko Sekuritas for a project called Islamic Twin Tower at PIK2 Sendayu Indo City – North Jakarta (Indonesia). PIK2 is a masterpiece project collaboration between 2 developers Agung Sendayu Group and Salim Group. It is a mixed-development (5,800-acre) international waterfront city located along the Coastal Growth Corridor in North Jakarta. It is set to be Jakarta’s next financial centre. PIK2 is easily accessible from all parts of Jakarta and just a short distance from Soekarno-Hatta Airport (15 minutes driving). The accessibility would be further enhanced with the completion of connecting bridge from PIK1 to PIK2. Upon completion, PIK2 would be well connected via tram, LRT, BRT, and local buses.

Leveraging on the success of PIK1 and due to limited office spaces in PIK1, Islamic Twin Tower is set to reap the benefit from the potential demand for office spaces. The twin tower is located at PIK2’s Financial District and would be developed on a 9-acre of land, with more than 1m sq ft GFA. Potential GDV to be churned out from this project is c.USD250m, with a target completion year in 2021.

The Islamic Twin Tower project would be funded by the JV. To fund for the project, MCH had issued 70m new shares (via private placement) worth ~RM139m. The capital was injected into the JV company called PT Fin Centerindo Satu (FCS) for a 30% stake. The remaining stakes were owned by Salim Group and Agung Sendayu (40% stake) and a fund managed by PT Nikko Sekuritas Indonesia (30%). The followings are the summary of its partners.

a) Salim Group

One of the largest conglomerates in Indonesia with presence in ASEAN, China, Australia, North America, and Europe.

b) Agung Sendayu

One of the largest property developers in Indonesia with numerous townships, large residential superblocks/apartments, office towers, shopping malls, hotels, industrial estates, and resorts.

c) Nikko Sekuritas

A leading securities brokerage services in Indonesia. Also provides investment banking services like underwriting, M&A advisory, restructuring, private placement, and asset disposal.

Although the twin tower would only be developed on a 9-acre of land, the future development

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of the remaining acreage of PIK2 would potentially represent more opportunities for MCH to expand into Jakarata. This would provide further upside for MCH to leverage on.

Exhibit 11: Islamic Twin Tower @ Financial District (PIK2) Exhibit 12: Financial District (PIK2)

Source: Company Source: Company

Exhibit 13: Plot for Islamic Twin Tower (PIK2) Exhibit 14: The connectivity of PIK2

Source: Company Source: Company

Healthy inventory level with minimal DIOs MCH had consistently recorded healthy inventory level than its peers. In recent years, it managed to achieve an inventory-to-sales ratio of less than 10%. Lower is preferred. For the developers under our coverage, on a 5-year average, they had recorded an inventory-to- sales ratio of c.28% (3-years average: c.39%). Refer to Exhibit 15.

In term of inventory-to-share capital, MCH was among the healthiest. In 2018, it recorded inventory-to-share capital ratio of 12%. In other words, only 12% of shareholders’ capital were locked in its inventory. For the developers under our coverage, on a 5-year average, they had recorded an inventory-to-share capital ratio of c.22% (3-years average: c.26%). Refer to Exhibit 16.

MCH’s fast-moving inventory was further illustrated in its days of inventory outstanding (DIO)’s trend. MCH had consistently recorded DIO of less than its peers. In 2018, it recorded a DIO of 56 days (peers’ range: 134-240 days). DIO gauges the duration (in days) a company’s cash is locked in its inventory. A smaller number indicates that a company is more

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efficient with higher frequency in selling off its inventory. Refer to Exhibit 17.

Despite ramping up its launches in recent years, its inventory levels are still well below its peers’. The healthy inventory-level trend is indebted to its price-point strategy. As the property market is experiencing a downcycle, affordable products deem to be more appealing. This is because Malaysia has younger populations. The median age for Malaysian is 29-year old. Therefore, the pent-up demand for starter homes is there. Given the right location with the right pricing, starter homes would be snapped by the young working adults or young families, that view homes as necessity.

There are other developers that focus on affordable products but still reported high inventory level. This is due to their product diversification. Most of their unsold inventories are the units that are priced more than RM1m each. The premium products had inflated their inventory’s number on balance sheet. The take-up rate or their affordable products were actually healthy.

For MCH, most of its products are either priced affordably or in the mid-range. For instance, only c.2% of its delivered properties were priced above RM1m. Its price-point strategy did well in maintaining healthy inventory level with minimal DIOs.

Exhibit 15: Inventory-to-sales

100%

90% MCH 80% SP Setia UEM Sunrise 70% Mah Sing 69% E&O 60% LBS Bina

50% 47% 40% 32% 30% 31% 20% 19%

10% 9% 0% 2014 2015 2016 2017 2018

Source: Company, KAF

Exhibit 16: Inventory-to-share capital 70% MCH SP Setia 60% UEM Sunrise Mah Sing 50% E&O LBS Bina 40% 40% 32% 30% 19% 20% 16% 12% 10% 9% 0% 2014 2015 2016 2017 2018

Source: Company, KAF

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Exhibit 17: Days of inventory outstanding (DIO)

Days 300

250 240

200 200 MCH SP Setia 154 150 UEM Sunrise 142 Mah Sing 134 LBS Bina 100 E&O

56 50

- 2014 2015 2016 2017 2018

Source: Company, KAF

Key risks

A prolong downcycle in local property market. Oversupply of residential properties and low residential loan approval rate of c.43% had been some of the contributors to the current property downcycle. Most of the unsold residential properties are priced less than RM300k. Solely on the price bracket, we suspect these units are from government related projects (PR1MA, RumahWIP, Rumah Selangorku, etc.).

However, as Malaysia has younger populations (median age: 29-year old), the pent-up demand for starter homes is there. Given the right location with the right pricing, starter homes would be snapped by the young working adults or young families, that view homes as necessity. The owner-occupier/ genuine demand is still intact.

Overhang of high-rises in Klang Valley. As of 1H19, the number of unsold (completed and under construction) high-rise units in the country totalled to 56,973 units or about 50% of the country’s totalled unsold units. About one-third of the unsold high rises were from Klang Valley. Close to 40% of the unsold high rise units in Klang Valley were priced more than RM600k.

MCH’s maiden launch (Aug-2018) in Klang Valley i.e., Chambers KL (33-storey apartment) had enjoyed an overall take-up rate of close to 70% to-date. The encouraging take-up rate was due to its strategic location (3km away from KL city centre) at attractive pricing. The average selling price for Chambers KL is RM650k per unit (less than RM1,000psf).

MCH is planning to launch 2 more projects in Klang Valley i.e., Puchong and Cheras with a combined GDV of c.RM800m in FY21-22F. As the locations of these 2 upcoming launches are further away from KL city centre, we believe that they may face a greater challenge in securing sales.

Considering the locations, the average price for these 2 locations should be less than RM650k, ceteris paribus. In addition, these 2 projects would have to compete with the existing unsold high rise units in Klang Valley that were priced less than RM600k. These existing units exceeds 11,000 units. However, as MCH’s exposure in Klang Valley is small (11% of group’s remaining GDV), we deem this risk to be mild.

Inflated construction costs from higher cost of building materials. As building materials are a part of construction cost, any increase in the price of building materials would eventually increase the construction cost. Without having any contingency plan, this would compress

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the operating margin of property developers as they have to incur higher development cost.

Delays in handing over of vacant possession. If there is a delay in construction process, it may eventually lead to a delay in handing over of vacant possession. As a result, purchasers may claim Liquidated and Ascertained Damages (LAD) which may affect the reputation of property developers.

Impending higher land acquisition cost. It is crucial for developers to replenish their lanbanks to support their future earnings growth. Currently, MCH has an advantage of having high gross margin (from low land price) as compared to the industry. However, as the company progresses, its landbanks would diminish. From (1) diminishing of current landbanks and (2) the replenishment with the new ones, MCH’s competitive advantage of low land cost may diminish as well. The margin gap that it has against the industry may narrow in the future. In fact, we have seen that its gross margin has been trending downward in recent years from 60% to 50%. However, as its current landbanks are sufficient for the next 8 years, we believe that MCH would still enjoy a relatively higher margin than its peers in the next couple of years.

Trading on richer valuation than larger peers. MCH is trading at a PBR of 1.0x FY20F and PNAV of 0.6x FY20F, at a premium to its overall peers in-term of book and net asset values. The industry is trading at PBR of 0.5x and PNAV of 0.5x.

Although MCH is trading at a premium to its peers, we believe the premium is justifiable given that it is outperforming its peers, as we expect its sales to hold (peers are experiencing declining sales) with stable earnings. Considering that MCH is better off in many aspects e.g., balance sheet, profit margins, dividend yields, etc., than its peers, we believe that the counter deserves to be traded at premium. Historically, MCH has been trading at a premium than its peers at around 0.4-0.5x PB spread. Hence, current valuation spread between MCH and the industry is nothing out of ordinary.

Key Projects

Bandar Sri Sendayan (Negeri Sembilan) – The key contributor to the group’s projects

Bandar Sri Sendayan (BSS) is banking on its well-developed industrial estate i.e., Sendayan TechValley (STV). MCH has equipped a 15km of natural gas line in STV to accommodate an alternative source of energy for potential buyers/occupants. Also, STV is attractive to foreign investors due to its competitive land price. Its average land price is only c.RM26psf (Klang Valley: c.RM100psf). Location-wise, STV is near to Nilai Inland Port (distance: 25km) and Kuala Lumpur International Airport (KLIA) (distance: 31km).

To name a few, some of foreign companies that had bought lands in STV are as per the following.

• Messier-Bugatti-Dowty (world's largest manufacturer of aircraft landing gear)

• Schmidt + Clemens (German’s special steel solutions)

• Daihatsu Motor (Japanese engine manufacturers)

• Hino Motors (Japanese motor vehicle manufacturer)

• Kayaku Safety Systems (Japanese safety system manufacturer).

Due to the offerings by STV, Malaysian Investment Development Authority (Mida) has been heavily promoting Sendayan TechValley. STV’s net saleable land is 768-acre, of which 713- acre had been sold.

From the well-received STV, it had led to jobs creation and provided strong demand for the residential units. Since its first launch in 2008, MCH had delivered close to 8,000 residential units with only 26 unsold completed units. In addition, the Sendayans are highly accessible via PLUS highway, Seremban-Port Dickson Highway, and KLIA Linkage.

The Sendayans (consist of Bandar Seri Sendayan, Tiara Sendayan, Ara Sendayan) are

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close to readily available amenities such as Tesco Seremban (distance: 7km), AEON Shopping Centre (distance: 8km), Mydin Shopping Centre (distance: 8km), Columbia Asia Hospital (distance: 7km), KPJ Hospital (distance: 9km), Seremban Hospital (distance: 8km), and police and fire stations (distance: 5km). Nearby attractions are Port Dickson and Sepang International Circuit.

Sendayans’ remaining GDV of RM5.3b represents c.52% of the group’s remaining GDV of RM10.4b. About 70% of Sendayans’ remaining GDV are planned for residential development. Sendayan’s remaining GDV excludes the 110-acre of land that had been earmarked for Sendayan Icon Park. Potential GDV to be churned out from the icon park is estimated to be c.RM6.0b. However, the icon park is still at preliminary stage and would only start in year 2025. Hence, we exclude the number from Sendayan Icon Park from our RNAV calculation.

On the back of, 1) encouraging take-up rate of its previous products in Sendayans, 2) being a major and leading developer in Negeri Sembilan with the advantage of strong branding, 3) matured township with readily available amenities, we believe that, the upcoming launches in Sendayans would replicate the success stories of the previous launches.

Exhibit 18: BSS – Resort Homes Exhibit 19: BSS – Sendayan Tech Valley

Source: Company Source: Company

Exhibit 20: Tiara Sendayan – Residential Exhibit 21: Tiara Sendayan – Tiara Biz

Source: Company Source: Company

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Exhibit 22: Ara Sendayan – Residential Exhibit 23: Ara Sendayan – Aerial view

Source: Company Source: Company

Bandar Seri Impian (Johor) – To benefit from Kluang rail station rejuvenation

Bandar Seri Impian (BSI) is located in the district of Kluang, Johor Bahru. Founded in 1915, Kluang used to be British’s administrative capital of central Johor and Japanese forces’ headquarter in the 1940s. Kluang's economy had transitioned from rubber to palm oil, and presently a home to Malaysia's largest organic farms. The organic farming sector has boosted Kluang as an ecotourism destination. The industrial sector has also grown significantly, especially in tile manufacturing.

Fast forward to the present, BSI would potentially be benefit from Gemas-JB electrified double-tracking project (EDTP), which is expected to be completed by Oct-2021. The track runs from Gemas (Negeri Sembilan) to JB Sentral (Johor) and covers 197km.

As part of this project, there will be a rail viaduct almost 3km long and an elevated station at current Kluang rail station. The elevated track will allow two halves of the town to be connected and integrated via land. Currently the towns are being separated by the rail track.

The elevation of the track would open up the possibility of repurposing the land for public spaces such as green parks and recreational areas. This would bring new life and rejuvenation into the town. The rejuvenation may spur residential demand in the nearby area. BSI is located c.10km away from the station. BSI is about one-and-a-half-hour drive to Johor Bahru and c.2hrs drive to Singapore.

BSI’s remaining GDV of RM2.5b represents almost one-fourth of the group’s remaining GDV of RM10.4b. More than 70% of BSI’s remaining GDV are planned for residential development. On the back of, 1) encouraging take-up rate of its previous products in BSI and 2) the improved connectivity and integration from the rejuvenated Kluang railway station, we believe that, the upcoming launches in BSI would replicate the success stories of the previous launches.

KAF Equities Sdn Bhd 13 Matrix Concepts

Exhibit 24: BSI – Residential (1 of 2) Exhibit 25: BSI – Residential (2 of 2)

Source: Company Source: Company

Exhibit 26: BSI – Impiana Square Exhibit 27: BSI – Location

Source: Company Source: Company

Exhibit 28: BSI – Aerial view 1 Exhibit 29: BSI – Aerial view 2

Source: Company Source: Company

Chambers KL – Diversifying into Klang Valley

In order not to miss out on the size of Klang Valley’s market, MCH is diversifying into the market. About one-third of the country’s residential transactions are from Klang Valley. MCH made its debut in the Klang Valley with the launch of a 33-storey serviced apartment project

KAF Equities Sdn Bhd 14 Matrix Concepts

called Chambers worth RM333m of GDV.

It is located close to Putra World Trade Centre (PWTC) and Sunway Putra Mall (about 400m away or 5 minutes walking). Closest LRT station is only about 210m away. Other amenities surrounding the area are convention centre (650m away) and hospital (700m away). It is also located close to KL city centre (3.3km away or 12 minutes driving).

Launched in Aug-2018, Chambers KL had enjoyed a take-up rate of close to 70% to-date. Following the encouraging take-up rate in Klang Valley, MCH is planning to launch 2 more projects in Klang Valley i.e., Puchong and Cheras with a combined GDV of c.RM800m in FY21-22F.

Exhibit 30: Chambers KL Exhibit 31: Chambers KL – Construction progress (Nov-2019)

Source: Company Source: Company

KAF Equities Sdn Bhd 15 Matrix Concepts Valuation

Deserves a premium

MCH is trading at a PBR of 1.0x FY20F and PNAV of 0.6x FY20F, at a premium to its overall peers in-term of book and net asset values. The industry is trading at PBR of 0.5x and PNAV of 0.5x.

However, as compared to its historical valuation, MCH is trading at slightly below -1SD of its 5-year forward PBR mean. It is trading at its all-time low valuation. We think that current valuation is attractive. Initiate at Buy on (1) better sales momentum, (2) stable earnings, (3) high dividend yields, (4) strong balance sheet, and (5) further upside on potential monetisation of Sendayan Icon Park and its Indonesia’s project.

Exhibit 32: MCH’s launches and sales trends

RMm 1,600 1,456 1,300 1,400 1,299 1,289 1,230 1,184 1,239 1,200 1,052 1,0061,031 1,000 893 817 860 800 657630 621 600 429 400

200 55 92 2 5 45 - FY14 15FY16 FY17 FY18 FY19 FY20F

Launches Sales Unbilled sales Inventories

Source: Company, KAF

Exhibit 33: Forward PBR band Exhibit 34: Forward PER band 9.0x 1.4x 8.0x 1.3x 7.0x +1SD, 7.0x 1.2x Mean, 6.4x +1SD, 1.1x 6.0x -1SD, 5.9x 1.1x Mean, 1.1x 5.0x 1.0x -1SD, 1.0x

0.9x 4.0x

Feb-17 Feb-18 Feb-15 Feb-16 Feb-19 Feb-20

Nov-16 Nov-17 Nov-15 Nov-18 Nov-19

Aug-16 Aug-17 Aug-15 Aug-18 Aug-19

May-16 May-17 May-15 May-18 May-19

Feb-16 Feb-17 Feb-18 Feb-19 Feb-15 Feb-20

Aug-15 Nov-15 Aug-16 Nov-16 Aug-17 Nov-17 Aug-18 Nov-19 Nov-18 Aug-19

May-15 May-16 May-17 May-19 May-18

PBR Mean +1SD -1SD PER Mean +1SD -1SD

Source: Bloomberg, KAF Source: Bloomberg, KAF

KAF Equities Sdn Bhd 16 Matrix Concepts

Exhibit 35: Peers comparison Bloomberg MCap P/NAV Net EBITDA Net profit Company ROE (%) Div yield (%) PE (x) PB (x) Ticker (RMm) (x) gearing (%) margin % margin % 2018 2019F 2018 2019F 2018 2019F 2018 2019F IOI Properties IOIPG MK 6,332 3.7 3.5 2.6 3.6 9.6 9.3 0.3 0.3 0.3 51.3 37.8 28.4 Sime Darby Property SDPR MK 5,339 na 5.4 na 3.4 -22.4 10.8 na 0.5 0.6 -- 25.0 16.9 SP Setia SPSB MK 5,336 3.4 2.4 6.5 4.0 7.5 16.3 0.4 0.4 0.4 55.8 18.8 7.9 UOA Development UOAD MK 3,834 8.9 7.9 7.7 7.3 9.2 9.4 0.8 0.8 0.8 -10.1 43.4 30.5 MRCB MRC MK 2,868 0.9 0.6 2.7 2.0 28.3 108.3 0.6 0.6 0.6 19.2 8.2 1.4 UEM Sunrise UEMS MK 2,768 1.6 3.3 1.6 1.5 10.2 12.0 0.4 0.4 0.4 47.7 16.1 8.9 IGB IGBB MK 2,250 8.2 5.6 0.6 0.6 9.4 11.4 0.7 0.6 0.6 85.1 na 14.7 OSK Holdings OSK MK 2,019 9.2 na 5.6 na 5.9 na 0.4 na 0.4 41.7 na na Eco World Int'l ECWI MK 1,956 7.2 10.0 - 2.9 10.5 6.8 0.7 0.6 na 38.0 17.6 33.8 Eco World ECW MK 1,884 4.6 4.6 - 1.6 9.3 9.1 0.4 0.4 0.4 74.9 12.7 9.5 Mah Sing MSGB MK 1,651 5.3 4.2 9.6 4.9 2.5 13.6 0.4 0.4 0.5 -13.6 33.4 11.0 Matrix Concepts MCH MK 1,572 16.3 15.7 6.5 6.6 6.6 6.7 1.0 1.0 1.0 7.4 30.9 21.2 YNH Property YNHB MK 1,437 2.3 na - na 91.6 na 1.2 na 1.2 83.3 na na Tropicana Corp TRCB MK 1,290 4.3 na 3.0 na 7.9 na 0.4 na 0.4 25.7 na na TA Global TAGB MK 1,224 -0.4 na 7.0 na 7.7 na 0.4 na 0.4 13.6 na na MKH MKH MK 955 5.2 5.2 2.4 2.4 11.7 11.8 0.6 0.6 0.6 16.6 20.0 7.5 Paramount Corp PAR MK 789 8.6 na 4.7 na 8.5 na 0.7 na 0.7 56.7 na na Eastern & Oriental EAST MK 781 1.0 1.3 5.5 3.5 11.6 27.3 0.4 0.4 0.4 27.3 21.1 4.7 Berjaya Assets BJAB MK 767 -3.5 na - na -9.4 na 0.4 na 0.4 32.7 na na KSL Holdings KSL MK 722 8.3 na - na 3.2 na 0.2 na 0.2 -4.5 na na Weighted average 3,448 4.4 4.0 3.4 2.9 8.4 15.4 0.5 0.5 0.5 33.3 19.8 13.9

Source: Bloomberg , KAF *Prices as of 11-Feb-2020

Exhibit 36: Quarterly trend Year to 31 December Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 % chg Cumulative KAF RM m 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 qoq yoy 6M19 6M20 % chg 2020F 6M/F Revenue 170 230 253 286 279 249 283 14 12 483 531 10 1,054 50% Cost of sales (67) (110) (126) (157) (152) (123) (144) 17 14 (235) (266) 13 (527) 50% Gross profit 103 120 127 128 127 126 139 10 9 248 265 7 526 50% Other income 1 1 1 1 5 2 1 (60) 23 1 3 127 8 36% OPEX (39) (51) (52) (56) (48) (53) (59) 13 14 (103) (112) 9 (228) 49% EBITDA 65 70 76 74 84 75 80 7 5 146 156 6 306 51% Depreciation (3) (2) (3) (3) (3) (3) (3) 3 3 (5) (5) 5 (11) 49% Amortisation ------nm nm 0 0 nm 0 nm EBIT 62 68 74 71 81 73 78 7 5 141 150 6 295 51% Interest income 2 1 2 1 1 1 2 26 (5) 3 3 4 7 46% Finance costs (1) (1) (1) (1) 1 (1) 0 (110) (110) (2) (1) (51) (5) 19% Associates ------nm nm 0 0 nm 0 nm EBT 64 68 74 72 83 73 79 9 7 142 152 7 297 51% Taxation (20) (18) (21) (23) (18) (18) (21) 13 (4) (39) (39) (0) (79) 49% Profit (before MI) 44 50 53 49 66 55 59 8 11 103 113 10 217 52% EI ------nm nm 0 0 nm 0 nm Non-controlling interest ------nm nm 0 0 nm (0) 0% Net profit 44 50 53 49 66 55 59 8 11 103 113 10 218 52% Distibution to perp sukuk ------nm nm 0 0 nm 0 nm Distibution to perp securities ------nm nm 0 0 nm 0 nm Core net profit 44 50 53 49 66 55 59 8 11 103 113 10 218 52%

Source: Company, KAF

KAF Equities Sdn Bhd 17 Matrix Concepts

Exhibit 37: RNAV table Division Value (RM) Method mil per share Development Properties NPV of development properties @9% % of NAV Sub Centre @ Nusari Bayu 3.7 0.00 0.1 Sub Centre @ Nusari Hijayu 1.5 0.00 0.1 Sub Centre @ STV 1A 7.8 0.01 0.3 Hijayu Resort Homes Phase 3 (SDB2A) 21.9 0.02 0.8 Hijayu Resort Homes Phase 3 (SDB2B) 5.7 0.01 0.2 Hijayu Resort Homes (Phase 4) 52.9 0.06 2.0 Hijayu Resort Homes (Phase 5) 23.5 0.03 0.9 Hijayu Aman P1 34.5 0.04 1.3 Ara Sendayan Phase 2 (Precint 4) 22.4 0.03 0.8 Ara Sendayan Phase 3 (Precint 3B) 23.4 0.03 0.9 Ara Sendayan Phase 4 ((Precint 2A) 26.4 0.03 1.0 Ara Sendayan Phase 5 (Precint 3A1) 11.5 0.01 0.4 Ara Sendayan Phase 6 (Precint 3A2[1]) 1.5 0.00 0.1 Ara Sendayan Phase 7 (Precint 3A2[2&3]) 10.4 0.01 0.4 Tiara Sendayan 1 28.7 0.03 1.1 Tiara Sendayan 2 49.1 0.06 1.8 Tiara Sendayan 3 (Precint 4) 57.4 0.06 2.1 Tiara Sendayan 4 (Precint 3) 60.9 0.07 2.3 Tiara Sendayan 5 (Precint 5) 24.0 0.03 0.9 Tiara Biz 8.7 0.01 0.3 Tiara Biz - Petrol Station 0.7 0.00 0.0 Impiana Square (Phase 1) 13.9 0.02 0.5 Impiana Casa 3A 13.3 0.01 0.5 Impiana Bayu 3A 8.7 0.01 0.3 Chambers KL 78.8 0.09 2.9 Lobak Commercial Centre (Phase 2) 3.8 0.00 0.1 Residensi SIGC (Phase 2) 9.9 0.01 0.4 Sendayan Merchant Square 1 (Phase 3) 0.5 0.00 0.0 Hijayu Resort Villa(Phase 1-3) 15.5 0.02 0.6 Hijayu Residence (Phase 1) 43.9 0.05 1.6 Hijayu Residence (Phase 2) 22.5 0.03 0.8 Sendayan Merchant Square 2 68.1 0.08 2.5 Sendayan Metropark 3 8.8 0.01 0.3 Sub Centre @ Sendayan TechValley 1A 3.8 0.00 0.1 Sendayan Icon Park 0.0 0.00 0.0 Sendayan - Lot Institution 4.1 0.00 0.2 Hijayu Aman P2 12.3 0.01 0.5 RMMK @ TBS 0.6 0.00 0.0 Sendayan Aman (RMMK) 1.8 0.00 0.1 Sendayan Tech Park 20.0 0.02 0.7 Suriaman Biz 0.6 0.00 0.0 Sendayan Metropark 2A 0.3 0.00 0.0 Bayu Sendayan 144.1 0.16 5.4 Tiara Sendayan 6 (Precint 6) 25.8 0.03 1.0 Tiara Sendayan 7-9 30.4 0.03 1.1 Ara Sendayan (Phase 7) Precint 3A2(2) 0.2 0.00 0.0 Ara Sendayan (Phase 7) Precint 2B 6.0 0.01 0.2 Ara Sendayan - Agriculture Lot 2.2 0.00 0.1 Bukit Eka Project 68.7 0.08 2.6 Impiana Avenue Point 1.9 0.00 0.1 Impiana Height (Phase 2 & 3) 6.0 0.01 0.2 Impiana Bayu 2 (Phase 5) 0.2 0.00 0.0 Impiana Alam 14.6 0.02 0.5 Impiana Biz 1.7 0.00 0.1 Impiana Square (Phase 2 to 5) 36.1 0.04 1.3 Impiana Damai 2A 11.6 0.01 0.4 Impiana Damai 2B 14.3 0.02 0.5 Impiana Bayu 3B 26.0 0.03 1.0 BSI 2 96.9 0.11 3.6 Residensi SIGC 2.5 0.00 0.1 Lobak Commercial Centre (Phase 2) 0.4 0.00 0.0 Cove Bay - PD 4.9 0.01 0.2 Taman Anggerik Tengara 10.4 0.01 0.4 Puchong high rise 44.2 0.05 1.7 Cheras high rise 44.2 0.05 1.7 Hijayu 3 (Phase 1-4) - Inventory 0.5 0.00 0.0 Residensi SIGC - Inventory 1.8 0.00 0.1 Sendayan Metropark 2B - Inventory 2.7 0.00 0.1 Ara Sendayan (Phase 1A) - Inventory 0.3 0.00 0.0 Impiana Damai 1 - Inventory 1.2 0.00 0.0 Impiana Casa 3B - Inventory 0.1 0.00 0.0 Ara Sendayan (Phase 1B) - Inventory 3.7 0.00 0.1 M.Greenvale 7.0 0.01 0.3 M.St. Kilda 16.8 0.02 0.6 Total 1,434.8 1.61 53.7 Net book value 1,327.1 1.49 49.6 Net cash (debt) (98.1) (0.11) (3.7) Assumed full conversion of convertibles (plus interest savings) 10.5 0.01 0.4 NAV 2,674.3 3.00 100.0 FD no of shares 890.8 FD RNAV/share 3.00 Fair Value - less 25% discount (RM) 2.25

Source: Company, KAF

KAF Equities Sdn Bhd 18 Matrix Concepts

Income Statement FYE Mar (RMm) 2017 2018 2019 2020F 2021F

Revenue 775.0 818.5 1,045.5 1,053.8 1,150.0 EBITDA 274.6 304.1 305.2 305.7 333.6 Depreciation/Amortisation (9.0) (9.7) (10.5) (10.6) (11.6) Operating income (EBIT) 265.6 294.5 294.7 295.0 322.0 Other income & associates 0.0 0.0 0.0 0.0 0.0 Net interest (5.3) 0.7 3.1 1.6 1.6 Exceptional items 0.0 0.0 0.0 0.0 0.0 Pretax profit 260.3 295.2 297.8 296.7 323.6 Taxation (75.0) (81.9) (79.5) (79.2) (86.4) Minorities/pref dividends 0.0 0.0 (0.2) (0.2) (0.2) Net profit 185.3 213.3 218.4 217.6 237.3 Core net profit 185.3 213.3 218.2 217.4 237.2

Balance Sheet FYE Mar (RMm) 2017 2018 2019 2020F 2021F Fixed assets 982.5 869.3 710.3 848.1 984.9 Intangible assets 0.0 0.0 0.0 0.0 0.0 Other long-term assets 11.8 15.9 26.9 227.6 185.6 Total non-current assets 994.3 885.1 737.2 1,075.6 1,170.5 Cash & equivalent 117.3 280.4 264.2 263.0 263.0 Stock 176.8 389.8 671.4 753.1 750.5 Trade debtors 252.1 274.0 373.4 326.3 356.1 Other current assets 14.7 35.4 51.6 51.6 51.6 Total current assets 560.9 979.6 1,360.7 1,394.0 1,421.2 Trade creditors 125.2 190.0 174.7 183.8 200.6 Short-term borrowings 92.9 133.8 162.1 164.3 151.5 Other current liabilities 106.7 144.5 232.0 232.0 232.0 Total current liabilities 324.7 468.4 568.8 580.1 584.1 Long-term borrowings 181.3 181.3 200.2 202.9 187.0 Other long-term liabilities 25.3 8.1 1.0 1.0 1.0 Total long-term liabilities 206.6 189.4 201.1 203.8 188.0 Shareholders’ funds 1,024.0 1,206.5 1,327.1 1,684.8 1,818.8 Minority interests 0.0 0.5 0.8 0.8 0.8

Cash flow Statement FYE Mar (RMm) 2017 2018 2019 2020F 2021F Pretax profit 260.3 295.2 297.8 296.7 323.6 Depreciation/Amortisation 9.0 9.7 10.5 10.6 11.6 Net change in working capital (142.5) (32.4) (131.5) (22.0) (23.3) Others (73.3) (90.1) (99.0) (80.9) (88.1) Cash flow from operations 53.5 182.3 77.9 204.4 223.9 Capital expenditure (24.1) (10.2) (31.4) (148.4) (148.4) Net investments & sale of fixed assets 0.1 0.5 0.6 0.6 0.6 Others (3.7) (57.2) 18.1 0.0 0.0 Cash flow from investing (27.8) (66.9) (12.8) (147.8) (147.8) Debt raised/(repaid) 56.7 37.4 28.7 30.9 29.9 Equity raised/(repaid) 22.5 60.8 3.5 10.5 10.5 Dividends paid (83.2) (85.2) (101.5) (94.8) (103.4) Others 0.0 0.5 0.5 0.0 0.0 Cash flow from financing (4.0) 13.5 (68.8) (53.3) (62.9) Net cash flow 21.8 129.0 (3.7) 3.3 13.1 Cash b/f 46.7 71.0 194.5 187.4 187.3 Cash c/f 71.0 194.5 187.4 187.3 197.0

Source: Bloomberg, KAF

KAF Equities Sdn Bhd 19 Matrix Concepts Disclosure Appendix

Recommendation structure

Absolute performance, long term (fundamental) recommendation: The recommendation is based on implied upside/downside for the stock from the target price and only reflects capital appreciation. A Buy/Sell implies upside/downside of 10% or more and a Hold less than 10%.

Performance parameters and horizon: Given the volatility of share prices and our pre-disposition not to change recommendations frequently, these performance parameters should be interpreted flexibly. Performance in this context only reflects capital appreciation and the horizon is 12 months.

Market or sector view: This view is the responsibility of the strategy team and a relative call on the performance of the market/sector relative to the region. Overweight/Underweight implies upside/downside of 10% or more and Neutral implies less than 10% upside/downside.

Target price: The target price is the level the stock should currently trade at if the market were to accept the analyst's view of the stock and if the necessary catalysts were in place to effect this change in perception within the performance horizon. In this way, therefore, the target price abstracts from the need to take a view on the market or sector. If it is felt that the catalysts are not fully in place to effect a re-rating of the stock to its warranted value, the target price will differ from 'fair' value.

Disclaimer - KAF Equities Sdn Bhd

This report has been prepared solely for the information of clients of KAF Group of companies. It is meant for private circulation only, and shall not be reproduced, distributed or published either in part or otherwise without the prior written consent of KAF Equities Sdn Bhd.

The information and opinions contained in this report have been compiled and arrived at based on information obtained from sources believed to be reliable and made in good faith. Such information has not been independently verified and no guarantee, representation or warranty, express or implied, is made by KAF Equities Sdn Bhd as to the accuracy, completeness or correctness of such information and opinion.

Any recommendations referred to herein may involve significant risk and may not be suitable for all investors, who are expected to make their own investment decisions at their own risk. Descriptions of any company or companies or their securities are not intended to be complete and this report is not, and should not, be construed as an offer, or a solicitation of an offer, to buy or sell any securities or any other financial instruments. KAF Equities Sdn Bhd, their Directors, Representatives or Officers may have positions or an interest in any of the securities or any other financial instruments mentioned in this report. All opinions are solely of the author, and subject to change without notice.

Dato' Ahmad Bin Kadis Managing Director KAF Equities Sdn Bhd (Reg No. 198501002182)

KAF Equities Sdn Bhd 20