Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Gabungan AQRS (AQRS MK) Buy

V-Shaped Recovery Presents An Exciting Outlook Target Price (Return): MYR1.33 (+51%) Price: MYR0.88 Market Cap: USD101m Avg Daily Turnover (MYR/USD) 1.05m/0.24m

 Initiate coverage with a BUY and SOP-derived MYR1.33 TP, 51% upside Analysts and c.3% yield, implying 13.8x FY21F P/E, close to the sector’s 5-year mean. Our valuation appears conservative, given Gabungan AQRS’ strong Muhammad Danial bin Abd Razak earnings growth outlook until FY22, which is likely supported by its sizeable +603 9280 8682 order backlog and an improving business environment. The sector could be [email protected] fuelled by improving sentiment in anticipation of an inclusive and longer term recovery plan in Budget 2021 and the 12th Plan. Eddy Do Wey Qing  Making a name in . AQRS was appointed as turnkey contractor for +603 9280 8856 the state’s new MYR361m administrative centre, Pusat Pentadbiran Sultan [email protected] Ahmad Shah (PPSAS). The job involves constructing landed homes in the

surrounding Kota SAS development for MYR189m, thereby firming its Share Performance (%) operational presence there. Taken together, its position appears YTD 1m 3m 6m 12m strengthened when competing for the ongoing East Coast Rail Link (ECRL) Absolute (25.4) (3.8) 18.1 (27.3) (35.3) jobs. With a station located at Kota SAS and the alignment passing through the area, we see it as a strong contender given the cost and geographical Relative (21.5) (12.0) (5.1) (22.7) (27.6) advantage. Its experience in dealing with local authorities in obtaining 52-wk Price low/high (MYR) 0.60 – 1.50 approvals also enhances its prowess in executing construction works

efficiently. Gabungan AQRS (AQRS MK) Price Close  Beneficiary of rail jobs. AQRS holds a steady track record of winning Relative to FTSE Bursa Malaysia KLCI Index (RHS) several notable jobs, which were of huge contract value. Its strategic focus 1.7 113

of anchoring on government contracts should help to mitigate non-payment 1.5 105 risks in its books. Its latest outstanding orders mostly comprise of public 1.3 96 infrastructure projects, namely the Sungai Besi-Ulu Kelang Elevated Expressway (SUKE) and Light Rail Transit 3 (LRT3). Management stated 1.1 88 in the latest quarterly announcement that both projects have achieved 91% 0.9 80

and 23% completion. It appears likely that the LRT3 progress will move to 0.7 71 a peak cycle in 2022. 0.5 63

 Deeply undervalued. AQRS is trading at 10x FY21F P/E. This is a 25%

Jul-19 Jul-19

Oct-19 Oct-19 Apr-20

Jun-19 Jan-20 Jan-20 Jun-20

Feb-20 Mar-20 Feb-20 Mar-20

Aug-19 Sep-19 Dec-19 Aug-19 Sep-19 Nov-19 Dec-19 May-20 discount vs sector average of 13.4x. We believe the discount is not justified May-20 as we expect its earnings growth to outperform peers in the next two years. Source: Bloomberg Based on our estimates, EPS can potentially grow by 80-90% YoY in the next two years. Its orderbook is robust, and should keep it busy for 3-4 years. Its revenue cover ratio is well above the industry’s average.  Strong management team. Group CEO, Dato’ Azizan Jaafar was responsible in spearheading the massive restructuring exercise in 2016. Since then, his portfolio has further extended through his directorship in most of AQRS’ subsidiaries.  Key downside risks include failure to secure new contracts, a prolonged downturn in the sector, and the possible rise of liquidated ascertained damages (LAD) due to delays in delivering its property projects.

Forecasts and Valuation Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Total turnover (MYRm) 585 413 263 404 602 Recurring net profit (MYRm) 61 39 24 44 83 Recurring net profit growth (%) (8.7) (37.1) (38.9) 86.3 89.4 Recurring P/E (x) 6.74 10.71 18.52 9.94 5.25 P/B (x) 0.9 0.8 0.8 0.8 0.7 P/CF (x) na na 10.31 47.47 5.70 Dividend Yield (%) 7.2 na na 3.4 5.7 EV/EBITDA (x) 4.40 7.77 11.79 6.14 2.74 Return on average equity (%) 14.1 7.8 4.5 8.0 14.0 InterestNet debt cover to equity (x) (%) 16.95 16.2 12.72 22.9 5.24 37.3 8.30 18.3 net 13.85 cash

Source: Company data, RHB

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Financial Exhibits

Asia Financial summary (MYR) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Malaysia Recurring EPS 0.13 0.08 0.05 0.09 0.17 Construction & Engineering DPS 0.06 - - 0.03 0.05 Gabungan AQRS BVPS 1.01 1.09 1.08 1.14 1.25 AQRS MK Return on average equity (%) 14.1 7.8 4.5 8.0 14.0 Buy Valuation metrics Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Valuation basis Recurring P/E (x) 6.74 10.71 18.52 9.94 5.25 We value the group based on its SOP, derived from a P/B (x) 0.9 0.8 0.8 0.8 0.7 combination of P/E, DCF, and RNAV valuation FCF Yield (%) (7.4) (12.3) 7.7 (1.2) 14.3 methodologies. Dividend Yield (%) 7.2 - - 3.4 5.7

Key drivers EV/EBITDA (x) 4.40 7.77 11.79 6.14 2.74 EV/EBIT (x) 5.01 9.26 14.95 7.37 3.13 i. Strong contender to secure an ECRL package; ii. Potential beneficiary of Pan Borneo awards. Income statement (MYRm) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Total turnover 585 413 263 404 602 Key risks Gross profit 123 83 63 91 140 i. Potential delays in completion of projects; EBITDA 104 64 52 84 142 ii. Slower-than-expected take-up rates in property; Depreciation and amortisation (13) (10) (11) (14) (17) iii. Inability to secure new orders. Operating profit 91 54 41 70 124

Net interest (5) (4) (8) (8) (9) Company Profile Pre-tax profit 87 51 33 61 115 Gabungan AQRS is primarily engaged in construction and property development. Taxation (22) (11) (8) (15) (28) Reported net profit 61 39 24 44 83 Recurring net profit 61 39 24 44 83

Cash flow (MYRm) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F

Change in w orking capital (90) (74) (1) (59) (37) Cash flow from operations (25) (47) 42 9 76 Capex (6) (4) (9) (14) (14) Cash flow from investing activities (50) (35) (9) (14) (14) Dividends paid (30) 0 0 (15) (25)

Cash flow from financing activities (33) 14 (6) (18) (9) Cash at beginning of period 50 92 138 56 154 Net change in cash (107) (69) 27 (23) 53 Ending balance cash (151) (44) 165 32 208

Balance sheet (MYRm) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Total cash and equivalents 129 139 58 156 287 Tangible fixed assets 31 20 17 17 14 Total investments 37 38 38 38 38 Total assets 1,414 1,483 1,160 1,404 1,758 Short-term debt 177 226 226 226 226 Total long-term debt 29 32 33 35 37 Total liabilities 936 965 618 830 1,121 Total equity 477 517 542 574 637 Total liabilities & equity 1,414 1,483 1,160 1,404 1,758

Key metrics Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Revenue grow th (%) 26.6 (29.4) (36.4) 53.6 49.2 Recurrent EPS grow th (%) (20.3) (37.1) (42.2) 86.3 89.4 Gross margin (%) 21.1 20.1 23.9 22.6 23.2 Operating EBITDA margin (%) 17.8 15.6 19.6 20.7 23.5 Net profit margin (%) 10.5 9.3 9.0 10.9 13.8 Dividend payout ratio (%) 48.7 0.0 0.0 33.9 29.8 Capex/sales (%) 1.0 0.9 3.4 3.5 2.4 Interest cover (x) 17.0 12.7 5.2 8.3 13.8

Source: Company data, RHB

See important disclosures at the end of this report 2 Market Dateline / PP 19489/05/2019 (035080)

Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Valuation Figure 1: SOP valuation Construction PAT (MYRm) Target P/E (x) Total (MYRm) Remarks FY21F-22F average earnings 45.4 12 521.8 Note 1

Petronas Chemical Base Camp, Sipitang WACC DCF (MYR'm) Stake Value of PCB 8.50% 29 90% 26.3

Property Development WACC GDV Stake E'Island Lake Haven Residence, Puchong 8.50% 501.0 100% 18.2 The Peak, Bahru 8.50% 603.0 100% 18.0 One Jesselton Waterfront, , Sabah Serviced Residence 8.50% 337.9 100% 16.6 Condominium 8.50% 449.3 100% 22.1 Building and Carpark Services 100% 32.9 107.8 Shareholders' Funds (Property) 210.0 317.8 -65% discount (206.0) Note 2 RNAV of Property 111.8

Precast Manufacturing PAT (MYRm) Target P/E (x) FY21F-22F average earnings 0.4 10.0 1.7 Note 3

SOP Note 4 Outstanding number of shares (m) 495.0 SOP/share (MYR) 1.33

Fully-diluted SOP/share (MYR) 1.19

TP (MYR/Share) 1.33

Note 1: We are pegging the P/E to average construction earnings to reflect the positive trend in progress billings from FY21F to FY22F Note 2: We are giving 65% discount to its property division that is below -1SD of property sector’s discount to RNAV. This also takes into account the risk of LAD. Note 3: 49% stakes ownership with with the Sabah Economic Development Corporation (SEDCO). Topline assumption is MYR8m/year with 8-9% net margin. Note 4: On 27 Sep 2018, a total of 119,394,669 free Warrants were issued pursuant to the Deed Poll dated 5 Sep 2018 (“Deed Poll B”) to all the shareholders of the group on the basis of one (1) warrant for every four (4) existing ordinary shares held on 25 Sep 2018. The warrant strike price is MYR1.12 each. Since the warrant is currently out of the money (OTM), we do not foresee any significant dilution to the group’s EPS. We have not factored in the dilution effect in our TP. Source: RHB

Method of valuation. Our valuation is SOP driven. It comprises various income divisions, including construction, property and precast manufacturing. For the Discounted Cash Flow (DCF) valuation, we use a weighted average cost of capital (WACC) of 8.5%, which comprises equity and debt costs of 11.8% and 2.1%. Its share price is trading at a 25% discount from the sector average. The TP of MYR1.33 implies 13.8x P/E. Although it is close to the sector’s 5-year mean, we believe it is still conservative as we take into account the strength in its growth prospects over the next two years.

Figure 2: WACC Variables Percentage/Multiple Weightage Risk Free Rate 3.0% Equity Risk Premium 8.9% Beta 1.4x Ke (Cost of Equity) 11.8% 65.5% Kd (Cost of Debt) 2.1% 34.5% WACC 8.5%

Source: RHB, Bloomberg

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 3: Segmental breakdown of profit before tax (not consolidated) Profit Before Tax FY18 FY19 FY20F FY21F FY22F Assumptions (MYRm) Earnings expected to grow by 50-65% for FY21F-22F. Construction 60.0 106.0 29.3 48.1 78.7 Net margin assumption is 7-9%. Key contributor is LRT3. Earnings expected to grow by roughly 20% for Property 53.7 -11.1 2.6 3.1 3.8 FY21F- 22F with net margin assumption of 9-15%. LAD is not included. Key contributor is Sipitang Base Camp. Rental is Others 38.6 17.6 7.5 7.5 8 expected to be around MYR11m with net margin assumption of 75%. Total 152.3 112.5 39.3 58.7 90.5

Source: RHB, Bloomberg

Risk-reward looks attractive. We believe its valuation is depressed. AQRS’ share price appears to be a laggard to the KL Construction (KLCON) Index’s broad-based recovery, which has risen considerably. However, we cannot rule out its share price experiencing a sharp rebound to its mean level, supported by an improved operating environment and strong liquidity momentum in the market. Past observation tells us that share prices of construction stocks are largely influenced by market sentiment. The latest updates on -Singapore high speed rail (HSR) add to the news flow, and are seen as a positive catalyst. Interest on the sector appears crystallising, as shown by the KLCON’s 3-month recovery trend of 47%.

Figure 4: KLCON peer comparison (rail players) Earnings Company Mkt cap P/E (x) P/BV (x) ROE (%) Div yield (%) EV/EBITDA (x) FCF yield (%) growth (%) (MYRm) FY20F FY21F FY20F FY21F FY20F FY21F FY20F FY21F FY20F FY21F FY20F FY21F FY20F FY21F

Gamuda 9350.3 15.0 15.1 -10.8 -0.4 1.0 1.0 7.4 7.2 3.2 3.2 14.4 14.1 -3.0 -2.1 IJM Corp 7077.4 20.6 18.3 -16.0 13.5 0.6 0.6 3.2 3.4 2.1 2.3 10.0 9.5 8.1 10.6 Sunway 2449.7 25.6 16.6 -28.9 62.4 3.7 3.4 16.3 21.5 2.8 3.8 14.0 9.4 0.2 4.5 Construction JAKS 608.8 12.5 6.8 -56.8 81.7 0.5 0.5 4.8 5.6 na na na na 20.1 na Resources George Kent 365.2 8.6 7.6 -2.1 11.6 0.7 0.6 8.6 9.0 3.9 4.6 10.5 NA 15.2 na Gadang 353.1 8.1 6.9 20.8 22.3 0.5 0.5 6.6 7.3 1.3 2.3 5.4 4.1 na na Holdings Pintaras 437.9 8.6 8.1 -4.3 12.4 1.2 1.1 15.8 15.7 6.2 7.1 na na 8.2 11.0 Jaya Kimlun Corp 259.9 5.6 5.1 -23.1 9.9 0.3 0.3 6.2 6.4 4.1 4.4 1.9 1.7 19.3 56.6 TRC 162.6 10.5 8.9 -19.3 17.5 0.3 3.7 4.3 2.9 3.4 1.3 1.4 Synergy Average 12.8 10.4 -15.6 25.6 1.0 1.0 8.0 8.9 3.3 3.9 8.2 6.7 9.7 16.1 AQRS 439.2 9.2 8.0 50.6 17.8 0.9 0.8 9.5 11.5 4.4 4.4 7.5 6.5 0.8 19.9

Note: *as at 15 Jun 2020. Forecasts are based on consensus Source: Bloomberg, RHB

Figure 5: Implied P/E of covered stocks as at 3 Jun

18.0 17.0 16.0 15.7 16.0

14.0 12.8

12.0

10.0 9.4 8.9 8.3 7.5 8.0 6.8 6.4

6.0

4.0

2.0

0.0 MRCB Sunway IJM Corp Gamuda MGB Gabungan AQRS Pintaras George Kent Kimlun Corp Gadang Construction Malaysia

Source: RHB

See important disclosures at the end of this report 4 Market Dateline / PP 19489/05/2019 (035080)

Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 6: Construction revenue cover ratio

Source: RHB

Figure 7: Forward P/E of KLCON Index vs AQRS

28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 Jun-20 Jul-20 Jul-20 Aug-20 Sep-20 Sep-20 Oct-20 Nov-20 Nov-20 Dec-20 Jan-21 Jan-21 Feb-21 Mar-21

Deviation 1 - BEst P/E Ratio Deviation -1 - BEst P/E Ratio Deviation 2 - BEst P/E Ratio Deviation -2 - BEst P/E Ratio (KLCON Index) (KLCON Index) (KLCON Index) (KLCON Index)

Source: Bloomberg, RHB

Figure 8: KLCON Index vs trade volume since Jun 2010

400 2.5

350 Billions 2.0 300

250 1.5

200

1.0 150

100 0.5 50

0 0.0

Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20

Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19

Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20

Aug-10 Dec-10 Aug-11 Dec-11 Aug-12 Dec-12 Aug-13 Dec-13 Aug-14 Dec-14 Aug-15 Dec-15 Aug-16 Dec-16 Aug-17 Dec-17 Aug-18 Dec-18 Aug-19 Dec-19

Volume Last Price

Source: Bloomberg, RHB

See important disclosures at the end of this report 5 Market Dateline / PP 19489/05/2019 (035080)

Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Sensitivity Analysis Sensitivity of construction earnings and TP. We conducted our sensitivity analysis for FY21F earnings and TP. Our base assumption is an average yearly net margin of 8.3% for the construction division. This is also taking into account construction works being able to resume at normal rate post-COVID19.

Figure 9: Sensitivity analysis of new job replenishment of 2021 Yearly Job Replenishment Construction Earnings Net Profit Implied TP Comments (MYRm) (FY21F) Margin (%) (MYR) 400 36.1 8.3% 1.33 Our replenishment assumptions for FY21F 800 53.9 8.3% 1.62 1200 71.7 8.3% 1.91

Source: RHB

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Investment Thesis Beneficiary of rail works It is currently the turnkey contractor for Pahang’s new MYR361m administrative centre, PPSAS. Its responsibilities include constructing landed homes in the surrounding Kota SAS development for MYR189m, thereby firming its operational presence there. Taken together, AQRS’ position appears strengthened when competing for the ongoing ECRL jobs that are slated to commence in the near term. With a station located at Kota SAS and the alignment passing through the area, the group could submit a competitive tender embedded with lower mobilisation costs. Its experience in dealing with local authorities in obtaining approvals also enhances its prowess in executing construction works efficiently. As a rail player, the market will potentially see AQRS as one of the beneficiaries should mega projects materialise. We are optimistic, but approach this prospect cautiously ahead of Budget 2021 and the tabling of the 12th Malaysia Plan. Sentiment is already improving and will likely lend positive support to the KLCON Index. Among peers, AQRS remains a laggard and is trading below its and the KLCON Index’s 5-year mean. Strong contender to clinch a piece of the ECRL pie. In our estimate – assuming each package is broken down to a 15km length with cost per km of MYR65m under the revised cost structure – the total package adds up to MYR975m in value. If the group is to successfully secure a package, its outstanding orderbook – currently valued at MYR1.7bn – could increase by more than 50% to c.MYR2.7bn. We are rather conservative with the MYR400m replenishment assumption this year, as progress on package awards could remain slow. Further upside looks possible if new job value comes in above our yearly expectation of MYR400m (please see our sensitivity analysis on pg 7). Already clinched a few packages. Latest development shows that progress is already picking up and we believe it will gather momentum in 2H20 as constraints from COVID-19 ease. AQRS announced its first ECRL job win involving advanced works of drainage and arth clearance worth MYR37m. The value of ECRL job wins is expected to grow gradually, with more tenders coming in for local contractors. Figure 10: Rail-related jobs secured Value Completion Completion Projects Work Scope (MYRm) rate Year East Coast Rail Drainage Works 37 0% 2022 Link Guideway, Light Rail Transit 3 1017 23% 2022 Stations KV MRT V1 Guideway 393 100% 2018 KV MRT V1 Spur Line 48 100% 2016

Source: RHB

Growth driven by construction billings. In our forecasts, FY21 and FY22 will possibly see earnings grow by 80-90% YoY. In particular, we expect earnings from the construction division to stage a rally by 64% and 51% in FY21 and FY22. This is from the substantial improvement in billings for LRT3, as the progress moves to its peak cycle. We expect net margin for this division to come in at 7-9%. Other projects contributing to this division include SUKE, PPSAS and the newly clinched package of ECRL. Orderbook looks robust to sustain construction division in the near to medium term. The amount constitutes a visibility higher than the industry average. Based on the latest results announced, AQRS’ outstanding orderbook stands at MYR1.6bn (excluding ECRL), which is 4x the annual revenue ratio of the construction division.

See important disclosures at the end of this report 7 Market Dateline / PP 19489/05/2019 (035080)

Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 11: ECRL connectivity in the Klang Valley Figure 12: ECRL’s Section C (Mentakab-Port Klang)

Source: Malaysia Rail Link SB (MRL), RHB Source: MRL, RHB

Figure 13: ECRL’s Section A (Kota Bharu-Dungun) Figure 14: ECRL’s Section B (Dungun-Mentakab)

Source: MRL, RHB Source: MRL, RHB

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 15: ECRL project details Subject Details

Project Owner Malaysia Rail Link SB (MRL) EPCC Contractor China Communications Construction Company Ltd (CCCC) Project Cost MYR44bn Length of Alignment 640km Services Provided Passenger and Freight Train No. of Stations 20 No. of Interchanges 3 ( Sentral, Kajang/Bangi, Mentakab) No. of Cars Per Train 6-Car Electric Train Sets Travel Time Approximately 4 hours (Kota Bharu to Putrajaya) Speed 160kmph (Passenger); 80kmph (Freight) Completion Date Dec 2026 Length of Tunnels Approximately 30km Length of Bridges/Viaducts Approximately 100km Percentage of Elevated Section Approximately 15% of Alignment Type of Track Standard Gauge (1.435 meter wide) and Double-track Local Participation 40% of overall cost

Source: MRL, RHB

Pan Borneo Sabah is closer to awarding more packages Construction of the 706km Pan Borneo Sabah (PBS) project worth MYR12.9bn was expected to be completed by 2021. However, numerous delays in awarding the packages – only 12 of the 36 have been awarded – have caused the project to remain behind schedule (21.2% as at May 2020 vs the scheduled 32%). Previous termination of the project delivery partner (PDP), which was then replaced with a turnkey for the project indicates there is progress, hence works can continue without any hitches. Deputy Finance Minister I Datuk Abdul Rahim Bakri was quoted in as saying that further action must be taken to speed up implementation of the project. He added that since the recently appointed Works Minister Datuk Seri Fadhilah Yusof is experienced, it appears likely immediate steps could be taken to speed up the project. AQRS has tendered for several of the packages, forming the bulk of its yearly replenishment target. Despite numerous delays, its tenders remain valid after a series of extension requests were granted. We are positive on its chances of securing several of the state- owned highway jobs. This stems from its partnership with Suria Capital Holdings (SURIA MK, NR), a company controlled by the Sabah State Government to jointly bid for the project. AQRS has a current tie-up with Suria Capital to develop One Jesselton Waterfront, which is a mixed development project in Kota Kinabalu, Sabah.

Figure 16: Pan Borneo Sabah project details

Source: PBS PDP, RHB

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 17: AQRS’ outstanding construction orderbook Project Value (MYRm) Expected Unbilled Orders as at 31 Dec 2019 Completion (MYRm) Infrastructure 1 Sungai Besi Ulu Kelang Elevated Expressway (SUKE) Package CA3 648 2020 54 2 Light Rail Transit 3 (LRT 3)* 1017* 2022 781* 3 East Cost Rail Link – Drainage Works 37 2022 37 Building 1 The Peak, Johor Bahru 261 2020 35 2 Pusat Pentadbiran Sultan Ahmad Shah (PPSAS) 362 2020 44 3 PR1MA Gambang 424 TBA 330 4 E’Island Lake Haven 220 2023 214 5 Landed Homes in Kota SAS 189 TBA 189 6 SUKE Toll Plaza 60 2022 41 Total 1,725 Source: Company data, RHB

Relief measures introduced could stimulate property demand In FY19, the group’s revenue fell partly due to the MYR6.7m recognition in LAD. Cumulatively, it has paid total LAD of MYR33.5m in FY17-19 for late delivery of its serviced residence project, The Peak, located in Johor Bahru. The project’s completion date has now been extended to 2021 due to work stoppages caused by COVID-19. Construction re- commenced in mid-June. Risk on LAD of The Peak is capped at MYR16m per year – the potential impact has already been included in our net margin assumption. The project is 85% completed, with 30% of the units already taken up as at Dec 2019. Its property wing should recover gradually. In the next two years, we expect earnings to be supported by current unbilled sales coupled with the new sales of launched units. However, we conservatively estimate a take-up rate of lower than 10%, in view of the soft property market. As at Dec 2019, unbilled sales stood at MYR141m. Demand ought to increase from the government relief measures to incentivise potential buyers and as such, we expect earnings to relatively improve by 21-22% in FY21F-22F. E’Island Lake Haven Residence is a project situated in Putra Perdana, Puchong. It was officially launched in Apr 2019 offering affordable housing units with a GDV of MYR501m. As at Dec 2019, about MYR84.5m worth of units were sold. Accordingly, unbilled sales for E’Island and The Peak amount to MYR141m. In the near term, sales should be supported by the reduction in interest rates and E’Island’s affordable price point (starting from MYR268,000 per unit). We also welcome the re-introduction of the Home Ownership Campaign (HOC), which ought to entice buyers. Consequently, we believe E’Island and The Peak projects (with starting prices at MYR268,000 and MYR520,000) will potentially benefit from an uptick in demand. The One Jesselton Waterfront project – a JV with Suria Capital – is an integrated development covering six acres of land with a GDV of MYR1.8bn. The initial target completion for serviced suites and condominium (which is 100% owned by AQRS) was scheduled for 3Q23. However, the date has been deferred due to COVID-19. Hence, the project is not expected to contribute to earnings in the medium term.

Figure 18: Summary of property projects Land Size Development Location (Acres) GDV Take-up Status 1 The Peak Johor Bahru, Johor 5.43 603 30% Target completion by 2021 Officially launched on 26 April 2019 of 1,140 units of 2 E'Island Residence Putra Perdana, 19.03 501 18% affordable apartments. Target completion for Suria Corp Office & Retail Mall was One Jesselton 3 Kota Kinabalu, Sabah 6.28 1,800 na. 3Q22. Hotel, serviced suites & Condominium was also by Waterfront 3Q23. Completion date has been deferred. Total GDV 2,904 Source: Company data, RHB

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 19: The Peak in Johor Bahru Figure 20: E’Island Lake Haven Residence in Putra Perdana

Source: Company, RHB Source: Company, RHB

Figure 21: Overview of One Jesselton Figure 22: Integrated development of One Jesselton

Source: Company, RHB Source: Company, RHB

Launching digital platform for its property units. This is to mitigate the slowdown in marketing activities and help ease the booking process. While the current property landscape looks soft, the group is in no rush to sell off its units. AQRS’ projects, namely E’Island and The Peak, are not tied to big borrowings. In particular, debt borrowings for E’Island only forms 1.5% of the project’s GDV.

SEDCO precast earnings supported by strength in future demand AQRS has a 49% stake (remaining 51% is owned by the Sabah Economic Development Corp) in SEDCO Precast SB (SEDCO). It remains as one of the largest precast component manufacturers in Sabah, operating on an 18.67-acre parcel of land in Tuaran, adjacent to the Pan Borneo Sabah highway. The plant currently has production capacity of 150,000 tonnes pa, and is currently running at a 30% utilisation rate, close to its breakeven level. General demand for precast supplies could ramp up once the construction of the Pan Borneo Sabah highway is in full swing. In addition, SEDCO could benefit from the MYR9bn (compared to MYR5bn in 2019) in development expenditure allocated by the Federal Government to Sabah for 2020 for the construction of basic infrastructure related to water, road, and power. Further into that, the state will benefit from MYR326m allocation for rural road projects and MYR783m (for Sabah and ) for repairs on dilapidated schools.

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 23: SEDCO’s manufacturing plant Figure 24: SEDCO’s storage yard

Source: Company, RHB Source: Company, RHB

Petronas basecamp, Sipitang contract could be extended AQRS has a 5+5 years agreement (with Petronas to provide base-camp facilities to employees in Sipitang, Sabah. Income is recurring, generated from rentals. Discussions with Petronas (its client) have commenced as there is interest to extend the rental agreement by another five years until 2026. Such an extension could contribute MYR10.8-11.4m to AQRS’ yearly topline. Assuming rates are maintained, gross margin looks attractive at around 85%, with maintenance cost of only 10% of revenue. As at Dec 2019, we understand that the group has paid 79% of its borrowings. Management expects to pay the rest in full by Oct 2020. Thereafter, contribution from the rental income should support to the group’s cash flow. At 70% net margin, it is able to recognise around MYR8m in net recurring earnings per year.

Figure 25: Petronas basecamp Figure 26: Petronas basecamp

Source: Company, RHB Source: Company, RHB

Figure 27: Discounted cash flow of Sipitang base camp rental income Year 1 Year 2 Year 3 Year 4 Year 5 Remarks Rental Income 11 11 11 11 11 Stable rental Net Earnings 7.5 7.5 7.5 7.5 7.5 70% net margin assumption NPV 6.9 6.4 5.9 5.4 5.0 WACC 8.5% Total DCF 29.59 Refer to pg 3

Source: RHB

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Financial Highlights FY19 results missed consensus estimates. Its construction wing booked a massive 40.3% YoY contraction in revenue to MYR84m in 4Q19 (4Q18: MYR140.6m). The decline was due to an extension of the completion date resulting from changes in the interior design plan by the PPSAS project’s client and new work programme for the LRT3 package that led to lower work progress for this unit. At PBT level, the construction division booked MYR63.1m in 4Q19, a 85% increase vis-à- vis the previous year. This increase was underpinned by a one-off accounting adjustment – Malaysian Financial Reporting Standard (MFRS) 9’s re-measurement of expected credit loss rate – resulting in a MYR56m non-cash gain. Excluding this, the unit booked 4Q19 PBT of MYR6.8m (-79% YoY), as a result of a slowdown in the LRT3 project. Moving forward, earnings will likely reverse declines. This is owing to the expectation of better progress billings and improving environment for business activities. AQRS has been in the works to ensure progress can return to full swing, especially for big-scale projects in its orderbook, namely LRT3 and SUKE. Still, disruptions in the supply chain may persist temporarily post Movement Control Order (MCO). Constraints may ease gradually, as more restrictions are lifted. Focus on execution. AQRS is among the strong contenders and participants of local infrastructure works. Its orderbook shows strong focus in government-related jobs, namely SUKE and LRT3. In the near term, execution of these jobs is prioritised to ensure cash flow remains strong and sufficiently generated to meet its working capital. First job win announced after a dry period. Latest development shows that progress is already picking up and we believe it will gather momentum in 2H20, as constraints from COVID-19 ease. AQRS announced its first ECRL job win involving advanced works of drainage and earth clearance worth MYR37m. The value of job wins is expected to grow gradually, with more tenders coming in for local contractors. Focus is on government projects, for now due to the robust job value as well as low non- payment risk. AQRS’ track record on rail projects is extensive, comprising current works of the LRT3 and completion of MRT1 projects. We are not ruling out further talks on the potential revival of the Mass Rapid Transit 3 (MRT3) and HSR projects.

Figure 28: AQRS’ results review FYE Dec (MYRm) 4Q18 3Q19 4Q19 QoQ (%) YoY (%) FY18 FY19 YoY (%) Comments Construction revenue was Revenue 111.3 118.8 79.9 (32.7) (28.2) 585.3 413.0 (29.4) sluggish due to slower LRT3 progress billings EBIT 24.1 17.1 1.9 (88.9) (92.1) 92.7 44.9 (51.6) EBIT Margin (%) 21.7 14.4 2.4 15.8 10.9

Interest expense (9.2) (0.8) 2.2 (392.9) (123.9) (0.4) 0.3 (175.0) Associates 0.9 0.1 0.4 300.0 (55.6) 0.9 0.8 (11.1) Joint ventures 0.0 0.0 0.0 na na 0.0 0.0 na EI/Others 0.0 0.0 0.0 (6.2) 4.5 Pretax profit 15.8 16.5 4.5 (72.7) (71.5) 87.0 50.5 (42.0) Pretax Margin (%) 14.2 13.9 5.6 14.9 12.2

Tax (4.1) (5.1) 1.1 (121.6) (126.8) (21.9) (11.4) (47.9) Effective tax rate (%) (25.9) (30.9) 24.4 (25.2) (22.6)

Minority Interest (3.2) 0.0 (0.3) na (90.6) (3.9) (0.6) (84.6)

Net Profit 8.5 11.4 5.3 (53.4) (37.6) 61.2 38.5 (37.1) Core Profit 8.5 11.4 5.3 (53.4) (37.6) 67.4 34.0 (49.6) Core Net Margin (%) 7.6 9.6 6.6 11.5 8.2 Source: Company data, RHB

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Figure 29: AQRS’ segmental results FYE Dec (MYRm) 4Q18 3Q19 4Q19 QoQ (%) YoY (%) FY18 FY19 YoY (%) Comments Revenue: Due to an extension of the Construction 135.1 149.9 84.0 -44.0% -37.8% 618.7 427.4 -30.9% completion date of PPSAS Property (13.4) 0.0 5.4 na -140.3% 24.5 21.3 -13.0% Others 5.8 5.5 6.0 10.0% 3.2% 30.0 21.3 -28.9%

PBT: Construction 34.0 19.2 63.1 227.8% 85.3% 105.8 108.2 2.3% Property (18.9) (2.0) (5.2) 163.9% -72.5% (24.9) (5.8) -76.6% Others 2.1 (0.2) 8.6 <-100% 302.5% 14.6 10.3 -29.5% Source: Company data, RHB

Net gearing substantially lower YoY De-gearing initiative bears fruit. In Apr 2016, AQRS embarked on a massive restructuring exercise with the aim of addressing its inefficiencies. It admitted carrying mounting debt, dwindling construction orderbook and high operating costs. In order to solve the heavy debt problem, the group embarked on an asset monetisation strategy whereby non-core landbank was identified and disposed. As a result, net cash proceeds of MYR58m were utilised to reduce net gearing to 0.11x as at FY17, compared to 0.69x in FY16. Most of Its debt now comprise project financing, forming approximately 73% of the gross debt level. Net gearing now stands at 0.23x. This has led to better cost management, providing flexibility to the group to stay agile, especially during an economic downturn. In light of the COVID-19 pandemic, AQRS should remain resilient, supported by a steady cash flow from its large order backlog, coupled with a low debt commitment.

Capex to be kept low in the immediate term Given the slowdown in activities, AQRS is planning to keep capex low. However, it will continue to assess further developments in the industry, which could hinge on the potential revival of the country’s mega projects. Cost-cutting measures were done even before the MCO. It was part of AQRS’ strategy to be lean and in a position to weather any storm during an economic downturn. We are encouraged to know that operational expenses were cut by 35-40% in FY19. This was a result of streamlining business operations and the sharing of resources between the construction and property divisions.

Figure 30: AQRS’ net gearing Figure 31: AQRS’ interest costs

300 25.0% 14 13 258 22.9% 250 12 20.0% 206 188 10 200 16.2% 15.0% 8 150 12.9% 119 10.0% 6 5 100 77 4 52 4 5.0% 50 2 - - Dec-17 Dec-18 Dec-19 - Dec-17 Dec-18 Dec-19 Total debt Net debt Net debt to equity Interest paid

Source: Company data, RHB Source: Company data, RHB

Dividend. AQRS does not have a formal dividend policy. Based on historical trends, we observed that the payout rate was between 13% and 38%. Moving forward, it looks to distribute cash to shareholders from the cash flow of The Peak and E’Island projects. In favour of business sustainability, we believe there is a possibility of dividend being deferred due to the challenges faced by the group and the sector in general as a result of COVID-19. For FY21F-22F, we expect the group to pay DPS of 3-5 sen with yields of 3.2- 5.3%. This represents a dividend payout of c.30%. We think it is decent, considering our expectations of its near- to medium-term growth.

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Risks MCO is a near-term risk, if prolonged. Impact from the MCO. AQRS continues to remain resilient. Note that works stopped for all ongoing projects from 18 Mar, when Phase 1 of the MCO was introduced. For certain projects – namely LRT3, SUKE, and PPSAS – the group was allowed to restart works after approvals were granted by the Ministry of Trade and Industry (MITI). On track to ramp up works after almost two months of zero activity. Nonetheless, we note that it will likely take a while before operations can return to full swing. AQRS still needs to comply with strict Standard Operating Procedures imposed by the Government. Taken together, management aims to properly resume works by July. AQRS does not directly employ foreign workers. Hence, the financial impact from COVID-19 testing is negligible. However, we note that there are approximately 740 workers at the sub-contractor level. The group is not obliged to bear testing costs for workers employed by its sub-contractors. However, management has expressed its willingness to bear a portion of the cost to expedite the process. AQRS aims to focus execution on approved projects, as these have been identified as key contributors to cash flow. Management guided that the strong generation of cash flow will help to meet its working capital needs. Moving forward, the group plans to actively bid for more government projects, which should help mitigate non-payment risks and cash flow issues. The group remains on the lookout for ECRL project packages. Several small tenders have already been called since Mar 2020, involving earthworks and other small-scope packages. We understand progress is being made by the turnkey contractor to call for tenders of bigger jobs, albeit slowly. Launching digital platform for its property units. This is to mitigate the slowdown in marketing activities and help ease the booking process. While the current property landscape looks soft, the group is in no rush to sell off its units. AQRS’ projects – E’Island and The Peak – are not tied to big borrowings. In particular, debt borrowings for E’Island only forms 1.5% of the project’s GDV.

Other risks to consider Potential delays in the completion of projects. As seen in FY19, the decline in revenue was partly due to slower work progress on the LRT3 package, which stemmed from ongoing reviews by the Government. Should there be any further delays, we expect revenue and earnings to be adversely affected, due to cost overruns arising from construction jobs. Slower-than-expected take-up rate for property projects. We remain cautious on the outlook for its property sales growth, as The Peak and E’Island are located in areas that face greater downward pressure in prices, particularly Johor and Selangor. A longer- and deeper-than-expected downturn in the property market may adversely affect future cash flow of the group, leading to lower dividend payments and slower business expansion. Nevertheless, our conservative assumption only reflects around 10% of the take-up rate, which we think is achievable for FY20. Inability to secure new orders. AQRS’ current outstanding construction orderbook stands at MYR1.73bn, which should sustain earnings momentum up until FY22. However, we think failing to secure major infrastructure projects, mainly packages from ECRL and Pan Borneo Sabah, could limit the group’s growth.

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Company Background Gabungan AQRS was incorporated in 2010 as a result of the merger of four separate entities – three construction and engineering companies: Motibina SB, Gabungan Strategik SB, Pembinaan Megah Iklas SB as well as AQRS the Building Company SB (property developer). Gabungan AQRS was subsequently listed on the Main Board of Bursa Malaysia in 2012. It is principally engaged in construction and property development in Malaysia. The construction division is the key revenue contributor for the group. It is involved in securing and executing construction contracts that range from infrastructure and residential to commercial building projects. The property arm is engaged in developing residential and commercial real estate and mixed-use projects. Figure 32: Group structure

Source: Company

Figure 33: Geographical footprint of its operations

Source: Company

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Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction

Board Of Directors/Key Management Board of directors Y.M. Tunku Alizan bin Raja Muhammad Alias, independent non-executive director and chairman. Y.M. Tunku Alizan holds an LLM from the University of Bristol and LLB (Honours) from the University of Malaya. He has 27 years of legal experience, specialising in corporate and construction law. Datuk Kamarudin Bin Md Ali, senior independent non-executive director. Datuk Kamarudin graduated from the Technical College, Kuala Lumpur in 1973 with a Diploma in Engineering. In 1976, he obtained his Bachelor of Science Degree in Mechanical Engineering from the University of Strathclyde, Glasgow, United Kingdom and in 1980, he successfully obtained a Master of Science in Engineering from the University of Birmingham, United Kingdom. Dato' Azizan Bin Jaafar, executive director and group CEO. Dato’ Azizan graduated from the University of Salford, United Kingdom in 1992 with a Bachelor of Science in Quantity Surveying. He has more than 25 years of experience in the construction industry and eight years in property industry. At present, Dato’ Azizan is a director of a number of AQRS subsidiaries and holds several other directorships in several private limited companies. Dato’ Ow Chee Cheoon, executive director and group deputy CEO. Dato’ Ow has more than 26 years of experience in the construction and property development industries and is the cofounder of Motibina and AQRS The Building Company. He graduated from Monash University, Australia in 1986 with a Bachelor of Engineering. Ow Yin Yee, executive director and group chief financial officer. Ms Ow has 27 years of working experience in the areas of accounting, commercial business, finance and taxation. Ms Ow is a Certified Practicing Accountant with Certified Public Accountant (CPA) Australia since 1994 and also a member of Malaysia Institute of Accountants (MIA) since 2001. She graduated with a Bachelor’s Degree in Economics (majoring in Accounting and Finance) from Monash University, Melbourne, Australia in 1990. Loo Choo Hong, independent non-executive director. He was admitted as a member of the ACCA in 1998, and is currently a fellow member of the accountancy body. He is also a member of the MIA and an associate member of the Institute of Internal Audit since 2001 and 2005. Muk Sai Tat, independent non-executive director. Mr Muk holds a Masters of Business Administration (General Management) from the University of Bath, United Kingdom. He is a Certified Public Accountant and a member of the MIA.

Key senior management Dato’ Azizan Jaafar, Group CEO. He was responsible in spearheading the massive restructuring exercise in 2016. Since then, his portfolio has been further extended through his directorship in most of AQRS’ subsidiaries. He has more than 25 years of experience in the construction industry and eight years in property industry. Ir Bakri bin Ishak, managing director (Construction Division). Having about 32 years of working experience in the construction industry, Ir Bakri Ishak has vast hands-on experience as project manager and project director for various construction works, such as housing and shop lot development, infrastructure works, hospitals, stadiums, universities, , urban elevated highways and other public amenities. Ir Tai Jiunn Hong, managing director (Property Division). Ir Tai has more than 17 years of working experience in the civil, structural, geotechnical engineering and property development industries. He began his career with Tonkin & Taylors Malaysia as a Structural and Geotechnical engineer in 2001.

Substantial shareholders Top 3 shareholders of AQRS are Ganjaran Gembira SB (10.9% stake), Employees Provident Fund (8.2%), and Ow Chee Cheeon (6.9%). Group CEO Dato’ Azizan effectively holds 11.4% of the group through direct stakes and his interest in Ganjaran Gembira SB.

See important disclosures at the end of this report 17 Market Dateline / PP 19489/05/2019 (035080)

Gabungan AQRS Malaysia Initiating Coverage

19 June 2020 Construction & Engineering | Construction Recommendation Chart

Date Recommendation Target Price Price Price Close 2019-04-24 Not Rated na 1.51 2.2 Source: RHB, Bloomberg 2.0

1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 Jun-15 Sep-16 Dec-17 Apr-19

Source: RHB, Bloomberg

See important disclosures at the end of this report 18 Market Dateline / PP 19489/05/2019 (035080)

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Any order for the purchase or sale of all c) Being bound or required to buy the remaining securities that are not other securities discussed herein must be placed with and through such other subscribed/placed out pursuant to an Initial Public Offering*. registered U.S. broker-dealer as appointed by RHB from time to time as required by d) Managing or jointly with other parties managing such parties as referred to in the Exchange Act Rule 15a-6. This report is confidential and not intended for (a), (b) or (c) above. distribution to, or use by, persons other than the recipient and its employees, agents 2. PT RHB Sekuritas Indonesia is not a market maker in the securities or capital and advisors, as applicable. Additionally, where research is distributed via Electronic market products of the subject company(ies) covered in this report. Service Provider, the analysts whose names appear in this report are not registered 3. None of PT RHB Sekuritas Indonesia’s staff** or associated person serve as a or qualified as research analysts in the United States and are not associated persons director or board member* of the subject company(ies) covered in this report. of Auerbach Grayson AG or such other registered U.S. broker-dealer as appointed by 4. PT RHB Sekuritas Indonesia did not receive compensation for investment banking RHB from time to time and therefore may not be subject to any applicable restrictions or corporate finance services from the subject company in the past 12 months. under Financial Industry Regulatory Authority (“FINRA”) rules on communications with 5. PT RHB Sekuritas Indonesia** did not receive compensation or benefit (including a subject company, public appearances and personal trading. Investing in any non- gift and special cost arrangement e.g. company/issuer-sponsored and paid trip) in U.S. securities or related financial instruments discussed in this research report may relation to the production of this report: present certain risks. The securities of non-U.S. issuers may not be registered with, or Notes: be subject to the regulations of, the U.S. Securities and Exchange Commission. *The overall disclosure is limited to information pertaining to PT RHB Sekuritas Information on non-U.S. securities or related financial instruments may be limited. Indonesia only. Foreign companies may not be subject to audit and reporting standards and regulatory **The disclosure is limited to Research staff of PT RHB Sekuritas Indonesia only. requirements comparable to those in the United States. The financial instruments discussed in this report may not be suitable for all investors. Transactions in foreign Singapore markets may be subject to regulations that differ from or offer less protection than Save as disclosed in the following link RHB Research conflict disclosures – Jun 2020 those in the United States. and to the best of our knowledge, RHB Securities Singapore Pte Ltd hereby declares that: DISCLOSURE OF CONFLICTS OF INTEREST 1. RHB Securities Singapore Pte Ltd, its subsidiaries and/or associated companies do not make a market in any issuer covered in this report. RHB Investment Bank Berhad, its subsidiaries (including its regional offices) and 2. RHB Securities Singapore Pte Ltd, its subsidiaries and/or its associated associated companies, (“RHBIB Group”) form a diversified financial group, companies and its analysts do not have a financial interest (including a undertaking various investment banking activities which include, amongst others, shareholding of 1% or more) in the issuer covered in this report. underwriting, securities trading, market making and corporate finance advisory. 3. RHB Securities, its staff or connected persons do not serve on the board or trustee positions of the issuer covered in this report. As a result of the same, in the ordinary course of its business, any member of the 4. RHB Securities Singapore Pte Ltd, its subsidiaries and/or its associated RHBIB Group, may, from time to time, have business relationships with or hold companies do not have and have not within the last 12 months had any corporate positions in the securities (including capital market products) or perform and/or solicit finance advisory relationship with the issuer covered in this report or any other investment, advisory or other services from any of the subject company(ies) covered relationship that may create a potential conflict of interest. in this research report. 5. RHB Securities Singapore Pte Ltd, or person associated or connected to it do not have any interest in the acquisition or disposal of, the securities, specified While the RHBIB Group will ensure that there are sufficient information barriers and securities based derivatives contracts or units in a collective investment scheme internal controls in place where necessary, to prevent/manage any conflicts of interest covered in this report. to ensure the independence of this report, investors should also be aware that such

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6. RHB Securities Singapore Pte Ltd and its analysts do not receive any compensation or benefit in connection with the production of this research report or recommendation.

Analyst Certification The analyst(s) who prepared this report, and their associates hereby, certify that: (1) they do not have any financial interest in the securities or other capital market products of the subject companies mentioned in this report, except for:

Analyst Company - -

(2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

KUALA LUMPUR JAKARTA RHB Investment Bank Bhd PT RHB Sekuritas Indonesia Level 3A, Tower One, RHB Centre Revenue Tower, 11th Floor, District 8 Jalan Tun Razak - SCBD Kuala Lumpur 50400 Jl. Jendral Sudirman Kav 52-53 Malaysia Jakarta 12190 Tel : +603 9280 8888 Indonesia Fax : +603 9200 2216 Tel : +6221 509 39 888 Fax : +6221 509 39 777

HONG KONG BANGKOK RHB Securities Hong Kong Ltd. RHB Securities (Thailand) PCL 12th Floor, World-Wide House 10th Floor, Sathorn Square Office 19 Des Voeux Road Tower Central 98, North Sathorn Road, Silom Hong Kong Bangrak, Bangkok 10500 Tel : +852 2525 1118 Thailand Fax : +852 2810 0908 Tel: +66 2088 9999 Fax :+66 2088 9799

SINGAPORE RHB Securities Singapore Pte Ltd. 10 Collyer Quay #09-08 Ocean Financial Centre Singapore 049315 Tel : +65 6533 1818 Fax : +65 6532 6211

21 Market Dateline / PP 19489/05/2019 (035080)