Monday, July 16, 2018 FBMKLCI: 1, 721 .93

THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* WWeeeekkllyy SSttrraatteeggyy

Market View, News in Brief: Corporate, Economy, and Share Buybacks

Kaladher Govindan Tel: +603-2167 9609 [email protected] www.taonline.com.my

Market View Temporary Easing of Trade Tension Provides Trading Opportunities

The local benchmark FTSE Bursa Composite Index (FBM KLCI) staged a strong comeback last week, helped by optimism stronger-than-expected US June employment data will boost corporate earnings, dovish statement from Bank Negara which left interest rates unchanged, and reducing trade war tensions despite the US threatening more tariffs on another USD200bn of Chinese imports. Key banking and utility heavyweights were the major beneficiaries as investors returned back to the market.

For the week, the FBM KLCI surged 58.07 points, or 3.5 percent to 1,721.93, as Petronas Gas (+RM1.28), HLFG (+RM1.02), Petronas Dagangan (+86sen), Hong Leong Bank (+70sen), Maybank (+54sen), Public Bank (+48sen) and CIMB (+41sen) contribute most of the gains. Average daily traded volume and value last week recovered to 2.41 billion shares worth RM2.33 billion, compared to 2.01 billion shares and RM1.67 billion respectively the previous week.

The local market took it in stride when the US president announced 10% tariff on USD200bn worth of Chinese imports last Tuesday and rallied in the last two trading days of the week. While Bank Negara’s dovish statement was interpreted as sustained monetary accommodation and helped put the wind in sail, the single largest contributor for the rally could have been the absence of China’s immediate retaliation to US’ additional USD200bn import tariff, which could take effect as early as next month, and willingness of the world’s two largest economies to go back to the discussion table to find a solution to their trade disputes.

In hindsight, one should know China’s delayed reaction to Trump’s additional tariff need not necessarily be construed as willingness to compromise as it does not have equivalent worth of imports from the US to engage on an immediate tit-for-tat action. In 2017, China imported only USD130bn worth of products from the US versus the latter’s USD505bn. Thus, the retaliation will no longer be straightforward but may evolve into other forms such as stringent enforcement of rules and regulations on US businesses already invested in China, devaluing its currency or pairing down its holdings in US treasury.

Nevertheless, news that German automaker BMW taking majority ownership in its Chinese automotive venture and Tesla will be building its first factory outside the US in China sent a strong message that the world’s second largest economy is serious about opening up its economy. On the other hand, the US’ decision to relent to President Xi Jinping’s request to lift the ban on China’s ZTE Corp. after imposing a USD1.4bn penalty can be viewed as a conciliatory approach by some, which could extend the current relief rally in the global equity markets.

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However, investors should not throw caution to the wind as this trade war is likely to prolong and China’s trade data for June, which was released last Friday, doesn’t make it easy as its surplus of USD29bn was the highest ever with the US for any single month. Total surplus stood at USD41.6bn, much higher than consensus estimate of USD27.7bn. It could be driven by exporters’ front loading their shipments ahead of import tariffs that took effect on 6 th July.

Looking ahead focus could shift to China’s second quarter GDP, industrial production and retail sales data for June that will be released today. At 6.7% YoY, consensus GDP forecast is pointing to a slight weakening versus 6.8% YoY in 1Q18, which is understandable due to government crackdown on riskier investments. On the other hand, the US beige book that will be released this Thursday could provide some anecdotal information on current economic conditions in the world’s largest economy.

Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.

Kaladher Govindan – Head of Research

TA S ECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad

Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 207 2 1277 Fax: 603 – 203 2 5048 www.ta.com.my

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News In Brief Corporate

Prasarana Malaysia Bhd will abide by the Ministry of Finance (MoF) instructions on the cost reduction for the light rail transit line 3 project . The state-owned transportation company said it was currently awaiting instructions from the MoF for the rigorous and comprehensive cost rationalisation to be approved. (Bernama)

The Real Estate and Housing Developers´ Association Malaysia Institute has proposed affordable housing price thresholds in Peninsular Malaysia , with residential units in Kuala Lumpur and the Valley topping the list at RM500,000. (Bernama)

The Ministry of Communications and Multimedia Malaysia is studying the direct telecast of English Premier League (EPL) football matches on Radio Television Malaysia (RTM) in future . Minister said that this is something that was brought to the ministry’s attention, but not for this year and next year because it may incur massive funds, but in future years. (Bernama)

Comment: We view this as a short-term reprieve for Astro. To recap, one of the government’s proposal in its manifesto include to offer free broadcasts via RTM of all major sports leagues around the world, including the EPL. As before, we view that the availability of major sporting events on RTM’s channels for free could diminish the appeal of subscribing to Astro’s sports packages resulting in downside to its ARPU, subscriber base and adex. Astro’s broadcasting rights for the EPL will end after the 2018/2019 season. Maintain Hold (RM1.65/share).

Scientex Bhd is targeting to deliver 50,000 units of affordable homes nationwide by 2028, said its managing director Lim Peng Jin. To date, Scientex’s property division has delivered nearly 16,400 affordable homes priced below RM500,000 nationwide, of which some 70% are priced below RM200,000. (The Edge)

Comment: This comes as no surprise as currently Scientex has an on-going project worth Gross Development Value (GDV) of RM1.4bn and lands for future development worth about GDV of RM9.0bn to be used in the next eight to ten years. Note that as of 9MFY18, the group recorded property sales of RM413.8mn. Moving forward, we project Scientex to achieve an average annual unbilled sales of RM650.0mn between FY18-FY20. Management guided that the group will continue to focus on the affordable housing segment as it has been achieving high take up rate of between 80% and 90% in the past projects and seeing continuous demands for this housing category. Maintain our Sell call on Scientex with unchanged target price of RM7.00/share based on CY19 EPS.

IHH Healthcare Bhd has entered into a share subscription agreement with Fortis Healthcare Ltd (Fortis), as issuer, for the proposed subscription of 235.3mn new Fortis shares by way of preferential allotment representing approximately 31.1% of the total voting equity share capital of Fortis on a fully diluted basis for a total consideration of INR 4,000 crore (RM2.3bn), at a share price of INR 170 (equivalent to RM9.98). (Bursa Malaysia)

Axiata Group Bhd ’s wholly owned unit Axiata Investments () Ltd (AIL) has entered into an agreement with Adnan Asdar Ali for the divestment of AIL’s 89% stake in Multinet Pakistan Pte Ltd for US$1 on a cash-free and debt-free basis. ()

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Digi.Com Bhd ’s 2QFY18 net profit was flat YoY at RM359mn on a pre -MFRS 15 basis. Service revenue grew 2.1% YoY to RM1,484mn anchored by solid postpaid and internet revenue growth. A second interim dividend of 4.9sen per share was announced. (Bursa Malaysia)

Malaysia Airports Holdings Bhd expects to conclude the disposal of its stake in GMR Hyderabad International Airport Ltd in India by the end of this year. (The Star)

Matrix Concepts Holdings Bhd 's wholly-owned subsidiaries, BSS Development Sdn Bhd and Matrix Concepts Sdn Bhd, have proposed to dispose of properties in Seremban, worth RM3.7mn. (Bernama)

JAKS Resources Bhd is appealing the High Court's decision ordering the release of a RM50.0mn bank guarantee to Star Media Group Bhd . (The Edge)

Bintai Kinden Corporatoin Bhd has secured a RM50.5mn contract from Tenaga Nasional Berhad to be the contractor to undertake the establishment of the new 132kV GIS switching station in . (Bursa Malaysia)

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News In Brief Economy

Malaysia Association Seeks SST Exemption on Investment Metals The Malaysia Gold Association wants investment precious metals (IPMs) and jewelleries to be exempted from the soon-to-be implemented sales and services tax (SST). Honorary secretary Datuk Louis Ng Chun Hau said the association’s representatives have met with the Finance Ministry and Customs Department officials recently to give their views on the matter but no decision was reached. “The first meeting with the authorities went well but they need to wait until the Cabinet meets on July 16. “We expect them to meet us again by the end of this month to discuss the matter further,” he told Bernama after signing a partnership agreement with the National Entrepreneurial Group Economic Fund. (Bernama)

PKA in Talks with MoF to Restructure RM3.8b Debt Authority wants to restructure its RM3.8 billion debt with the federal government, so as not to dip into its reserves, said Transport Minister . “In 2013, PKA borrowed RM3.8 billion from the federal government. The loan is undertaken with the Ministry of Finance (MoF) and the repayment has started this year,” Loke told reporters in a briefing. Also present were Deputy Transport Minister , Transport Ministry secretary general Datuk Seri Saripuddin Kasim, Klang Member of the Parliament and PKA general manager Capt Subramaniam Karuppiah. Under the loan agreement, the minister explained PKA has to make a yearly RM222 million repayment to MoF.

PKA’s annual income only amounts to RM266 million, of which RM80 million is administrative cost while RM6 million goes to maintenance. “We are looking at restructuring PKA’s RM3.8 billion debt with MoF, so as not to dip into its reserves of RM380 million. “We are only deriving an annual income of around RM80 million from renting out PKFZ industrial lots,” Loke said, adding the current utilisation rate is 85 per cent. “There are still commercial buildings which are not yet operational. We are looking for ways to increase utilisation rate of PKFZ," he said, adding that the soon-to-be appointed board of directors will be tasked to do so. (NST)

Asia China Trade Surplus With U.S. Hits Record as Tensions Rise China’s monthly trade surplus with the U.S. rose to a record in June and exports to the nation also soared, underlining the cause of an escalating trade war between the world’s two largest economies. The trade surplus with the U.S. was $28.97 billion, the highest in any month in data back to 1999. Exports climbed to $42.62 billion, the customs administration said. As the world’s largest exporter, China continues to benefit from robust global demand, but the increase in tensions and trade barriers with the U.S. is weighing on the outlook. Both China and the U.S. imposed 25% tariffs on $34 billion of the others’ imports on July 6, and Beijing has vowed to fight back against proposed tariffs on an additional $200 billion in Chinese goods.

The yuan’s decline in June was the worst in any month since 1994, dropping more than 3% against the dollar. While that may help exporters in the longer run, the yuan’s fall now is a sign of growing concern as the trade war arrives at a time when the economy is already slowing. President Xi Jinping may ultimately have to choose between softening his multi- year campaign to control debt levels or, letting growth dip below the target of 6.5%. Overall exports to all nations rose 11.3% in June in dollar terms, while imports climbed 14.1%, below a forecast of 21.3%, leaving a trade surplus of $41.61 billion. The trade surplus with the European Union rose to the highest level since 2011, while the deficit with Japan shrank. (Bloomberg) Page 5 of 9

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China Fiscal Policy Has 'Ample Room' to Support Economy China's fiscal policy has "ample room" to support the economy, the central bank's chief researcher said in an opinion column, adding that the policy has not been active enough. China's budget deficit goal this year of 2.6% indicates a contractionary fiscal policy and this year's actual deficit ratio should be higher than last year's 3%, Xu Zhong, the research head at the People's Bank of China (PBOC), wrote for the financial media website Wallstreetcn.com. Chinese officials have long stated China would maintain a proactive fiscal policy. The government should use fiscal funds to replenish the capital of state-owned financial institutions and ease the strain in financial market deleveraging, Xu wrote. "China's fiscal policy cannot be active if it still keeps a lid on local government debt," wrote Xu. Chinese regulators are in the third year of a campaign to clamp down on riskier lending practices.

The so-called shadow banking sector has been a particular headache, being a source of off- balance sheet loans for local governments and their financing vehicles (LGFVs). Local governments have been banned from providing implicit guarantee to LGFVs and some have halted several infrastructure projects. Xu said that some local governments still have room for "leveraging" and could play a key part in ensuring a stable growth rate for the economy. Policymakers have been trying to strike a delicate balance between the need for tougher supervision and reforms and ensuring the stability of the financial system, while keeping economic growth on track. (The Star)

China State Firms Draw Up Plans to Deleverage, Cut Debt Ratios Six of China’s biggest state-owned firms have drawn up plans to reduce debt and leverage in the coming two years, state media said, part of the country’s efforts to rejuvenate the debt-ridden sector. China began a new round of reforms in 2016 aimed at streamlining its lumbering state-owned enterprises (SOEs) by introducing private capital, curbing overcapacity, shutting down “zombie” subsidiaries and restructuring assets. It has already cut the total number of companies under central government control to 96, down from 117 in 2012.

The official China Securities Journal said on Friday that the six firms - including the country’s biggest refiner, the Sinopec Group - have already finished drawing up their debt- reduction plans and have submitted them to the regulator, the State Asset Supervision and Administration Commission (SASAC). Two of China’s big state power groups, Huaneng and Huadian, as well as the China Railway Construction Corporation, the China State Construction Engineering Corp and the China Merchants Group, are also among the six pilot enterprises, it said, adding that SASAC itself was also preparing to release its “work plan” to control debt ratios at the 96 firms now under its jurisdiction. (The Star)

Japan Industrial Production Falls as Estimated Japan's industrial production declined as initially estimated in May, preliminary figures from the Ministry of Economy, Trade and Industry showed. Industrial production dropped a seasonally-adjusted 0.2% month-over-month in May, reversing 0.5% rise in the previous month. That was in line with the flash data published on June 29. This was the first decrease in four months. Shipments fell 1.6% over the month, while inventories rose by 0.6%. The preliminary estimate was confirmed. On a yearly basis, industrial production growth accelerated to 4.2% in May from 2.6% in April. (RTT)

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Singapore GDP Growth Eases to 3.8% in Q2 Singapore’s economic growth moderated in the three months through June as manufacturing growth eased, according to an official advance estimate. The country’s gross domestic product grew 3.8% in the second quarter from a year earlier, figures from the Ministry of Trade and Industry showed. That was short of the 4.4% growth in the previous quarter and below a poll of economists forecasting 4%. Singapore’s manufacturing sector grew 8.6% year on year during the period, slowing from the 9.7% growth in the prior quarter. The country’s economy grew 1% compared to the previous quarter, down from 1.5% growth in Q1. The estimate is based largely on figures from April and May. (Financial Times)

United States U.S. Import Pric es Post Biggest Drop in Over Two Years U.S. import prices fell the most in more than two years in June as prices for petroleum products fell and a strong dollar weighed on the costs of other goods. Economists said the unexpected drop in import prices reported by the Labor Department on Friday was likely temporary given tariffs imposed by the Trump administration on lumber, steel and aluminum imports to protect domestic industries from what it says is unfair foreign competition.

The government has also slapped 25% duties on $34 billion of Chinese imports and President Donald Trump this week threatened 10% tariffs on $200 billion of Chinese goods. Odds are that the tariffs will begin to boost import prices. The inflationary impact of the steel and aluminum tariffs has been modest, partly because a number of countries initially were exempt, but that has changed. The Labor Department said import prices dropped 0.4% last month, the largest decline since February 2016, after jumping 0.9% in May. Economists polled by Reuters had forecast import prices edging up 0.1% in June. (Reuters)

U.S. Consumer Sentiment Dips Due to Tariff Concerns Americans’ confidence in the economy fell this month mainly because of concerns about new tariffs on imported goods. The University of Michigan said its index of consumer sentiment declined 1.1% from a month earlier to 97.1 in July. Economists surveyed by The Wall Street Journal had expected a reading of 98.0. Consumer confidence remains high historically—the index is up 4% from a year ago—driven by steady job growth and low unemployment. But households are becoming increasingly concerned about the potential economic effects of the Trump administration’s moves to impose tariffs on imported goods, including steel and aluminum, the latest survey shows.

The group voicing the most concerns: Americans whose incomes rank in the top third of all households. A slight majority of such earners said they were worried about the tariff effects. Such households account for half of all consumer spending in the U.S. Negative concerns about the impact of tariffs have recently accelerated. Despite the recent trade tensions, the U.S. economy remains strong. U.S. economic output grew at a rate of roughly 4% to 5% in the second quarter, many economists estimate, one of the best quarters during the expansion, and employers continue to hire at a solid clip. (WSJ)

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Federal Reserve Report Defends Use of New Tools to Set Interest Rates The Federal Reserve defended having the flexibility to set interest rates by using relatively new tools that include paying interest to banks, in its semiannual report to Congress on Friday. Fed Chairman Jerome Powell is scheduled to testify on Capitol Hill over two days beginning Tuesday in the Senate as part of hearings mandated by law. The Fed released its report ahead of those hearings. Some lawmakers, particularly in the House of Representatives, have criticized the Fed in recent years for the use of new facilities that enabled the central bank to guide short-term interest rates higher while maintaining a much larger portfolio of bonds and other assets than existed before the 2008 financial crisis.

Those criticisms reflect in part broader concern on the part of those lawmakers with the emergency steps the Fed undertook from 2008 through 2014 to stimulate growth after the central bank cut interest rates to near zero. The report released Friday included a three- page overview of its new tools that could serve as a pre-emptive rebuttal against any further concerns lawmakers might raise next week.

The Fed dramatically expanded its bond portfolio after the 2008 financial crisis as it unleashed successive campaigns to stimulate the economy by purchasing Treasury and mortgage securities. Those purchases swelled the amount of deposits, known as reserves that banks maintain in accounts at the Fed. (WSJ)

Europe and United Germany's Wholesale Price Inflation Accelerates Notably Kingdom Germany's wholesale price inflation accelerated sharply driven by higher cost of solid fuel and petroleum products in June, data from Destatis showed. Wholesale price inflation climbed to 3.4% in June from 2.9% in May. A similar higher rate was last seen in September 2017. Solid fuels and petroleum products prices had advanced 14.5% in June from the last year. On a monthly basis, wholesale prices gained 0.5% but slower than a 0.8% rise in the previous month. (RTT)

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Share Buy-Back: 13 July 2018 Total Treasury Company Bought Back Price (RM) Hi/Lo (RM) Shares ANALABS 15,000 2.45/2.35 2.45/2.35 4,299,600 CHINHIN 61,600 0.75 0.805/0.75 4,142,400 CHINWEL 70,600 1.51/1.50 1.52/1.49 5,613,800 CMSB 110,300 2.70/2.42 2.70/2.42 4,111,800 EMETALL 20,000 0.46 0.485/0.46 2,448,800 GLOMAC 43,000 0.44/0.435 0.44/0.435 7,368,200 HAIO 15,000 4.54/4.45 4.54/4.43 9,397,088 JCBNEXT 60,000 1.68 1.68/1.67 878,300 KENANGA 200,000 0.73/0.72 0.73/0.72 9,325,000 MKH 11,300 1.39/1.38 1.39/1.38 2,152,400 P&O 4,000 1.04 1.06/1.03 11,966,493 SALCON 489,500 0.325/0.32 0.325/0.315 5,955,062 SUNWAY 200,000 1.50 1.53/1.49 57,191,662 SYSCORP 100,000 0.37 0.37/0.355 18,534,600 TROP 221,000 0.91/0.90 0.91/0.89 11,408,742 WASEONG 50,000 1.25/1.24 1.27/1.24 2,538,338 WTHORSE 47,800 1.80/1.77 1.80/1.77 11,176,500 YILAI 96,800 0.75 0.75 13,723,208 YTL 7,912,000 1.27/1.22 1.27/1.18 288,346,818 YTLPOWR 10,597,000 1.17/1.12 1.18/1.10 369,635,112 Source: Bursa Malaysia

Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.

Kaladher Govindan – Head of Research

TA S ECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad

Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 203 2 5048 www.ta.com.my

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For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE

Company Share Price Target Price Market Cap. EPS (sen) PER (X) Div Yield (%)52weeks 52weeks % Chg % upside Recom BETA (RM) (RM) (RMm) FY18 FY19 FY18 FY19 FY18 FY19 High Price % Chg Low Price % Chg YTD 13-Jul-18 AUTOMOBILE BAUTO 2.23 2.64 18.4% Buy 2,591 0.54 12.1 17.5 18.5 12.7 4.7 5.5 2.44 -8.6 1.82 22.7 2.6 MBMR 2.40 3.19 32.9% Buy 938 0.56 31.4 31.9 7.7 7.5 3.3 3.3 2.68 -10.4 2.01 19.4 9.1 PECCA 0.86 1.30 51.2% Buy 158 1.04 6.4 7.7 13.5 11.1 7.0 7.0 1.70 -49.4 0.78 10.3 -44.5 SIME 2.39 2.97 24.3% Buy 16,254 1.63 13.2 16.3 18.1 14.6 1.4 1.7 3.06 -21.9 2.03 17.9 8.1 UMW 6.18 5.45 -11.8% Sell 7,220 0.96 28.4 39.3 21.8 15.7 2.3 3.2 6.98 -11.5 4.70 31.5 18.8

BANKS & FINANCIAL SERVICES ABMB 4.06 4.30 5.9% Hold 6,285 0.98 31.9 34.9 12.7 11.6 3.8 3.9 4.49 -9.6 3.62 12.2 -0.5 AFFIN 2.55 2.50 -2.0% Sell 4,955 0.90 25.5 26.8 10.0 9.5 3.1 3.1 2.70 -5.6 2.22 14.8 10.4 AMBANK 3.98 3.80 -4.5% Sell 11,996 1.30 37.6 41.5 10.6 9.6 3.8 4.5 5.12 -22.3 3.40 17.1 -9.8 CIMB 5.72 6.30 10.1% Buy 53,572 1.59 52.2 55.5 11.0 10.3 4.6 4.9 7.39 -22.6 5.21 9.8 -12.5 HLBANK 18.90 21.80 15.3% Buy 38,662 0.90 129.2 146.1 14.6 12.9 2.5 2.5 20.02 -5.6 14.90 26.8 11.2 MAYBANK 9.51 9.60 0.9% Buy 103,951 1.02 71.4 75.7 13.3 12.6 5.8 5.8 11.08 -14.2 8.68 9.6 -3.0 PBBANK 23.00 25.80 12.2% Buy 89,289 0.81 152.5 165.6 15.1 13.9 2.7 2.8 25.78 -10.8 19.90 15.6 10.7 RHBBANK 5.32 5.30 -0.4% Sell 21,333 1.37 54.3 59.0 9.8 9.0 2.8 2.8 5.88 -9.5 4.71 13.0 6.4 BURSA 7.79 8.07 3.6% Buy 6,290 0.91 29.2 30.0 26.7 26.0 3.1 3.1 8.20 -5.0 6.31 23.4 15.5

BUILDING MATERIALS ANNJOO 1.93 3.15 63.2% Buy 1,036 1.66 42.1 44.9 4.6 4.3 10.5 12.0 3.98 -51.5 1.63 18.4 -50.0 CHINHIN 0.80 1.15 43.8% Hold 442 1.38 8.3 9.4 9.6 8.5 6.1 6.1 1.42 -43.7 0.73 9.6 -33.9 CMSB 2.69 3.80 41.3% Buy 2,879 1.38 21.3 22.7 12.6 11.9 3.2 3.4 4.42 -39.1 1.74 54.6 -31.0 CSCSTEL 1.33 1.41 6.0% Hold 491 0.87 15.8 17.0 8.4 7.8 6.3 6.8 1.84 -27.7 1.27 4.7 -13.6 ENGTEX 1.04 1.29 24.0% Buy 453 0.93 12.9 15.3 8.0 6.8 1.9 2.9 1.34 -22.4 0.95 9.5 -5.5

CONSTRUCTION GADANG 0.71 1.10 56.0% Buy 467 1.45 14.0 16.6 5.0 4.3 4.3 4.3 1.33 -47.0 0.64 10.2 -36.5 GAMUDA 3.48 4.48 28.7% Buy 8,589 0.98 34.3 35.5 10.1 9.8 3.4 3.4 5.45 -36.1 3.00 16.0 -29.8 IJM 1.78 1.73 -2.8% Sell 6,463 1.21 9.6 15.7 18.5 11.3 3.4 3.4 3.52 -49.4 1.60 11.3 -41.6 KAB 0.25 0.37 48.0% Buy 80 na 3.1 3.7 8.1 6.8 4.0 4.8 0.33 -24.2 0.20 25.0 -16.7 PESONA 0.27 0.29 7.4% Buy 188 1.33 3.0 3.9 8.9 7.0 5.6 5.6 0.68 -60.0 0.26 5.9 -40.0 SENDAI 0.95 0.70 -25.9% Sell 738 1.46 9.9 8.7 9.6 10.8 1.1 1.1 1.21 -21.9 0.68 39.0 9.2 SUNCON 1.85 1.71 -7.6% Sell 2,391 0.98 12.7 14.2 14.5 13.0 4.3 4.9 2.64 -29.9 1.72 7.6 -26.3 WCT 0.88 1.02 15.9% Buy 1,221 0.60 10.5 10.7 8.4 8.2 3.4 3.4 1.99 -55.8 0.70 26.6 -45.7 LITRAK 4.17 5.01 20.1% Buy 2,201 0.18 43.3 47.1 9.6 8.9 6.0 6.0 6.00 -30.5 3.63 14.9 -24.9

CONSUMER Brewery CARLSBG 19.12 20.65 8.0% Hold 5,882 0.64 89.4 93.3 21.4 20.5 4.7 4.9 20.88 -8.4 14.48 32.1 25.7 HEIM 23.28 23.11 -0.7% Hold 7,033 0.48 95.2 103.5 24.4 22.5 4.0 4.3 24.02 -3.1 17.30 34.6 23.2 Retail AEON 2.27 2.53 11.5% Buy 3,187 0.49 7.9 9.2 28.9 24.7 2.0 2.2 2.65 -14.3 1.45 56.6 29.0 AMWAY 7.55 8.47 12.2% Buy 1,241 0.65 35.6 37.5 21.2 20.1 4.6 4.9 8.52 -11.4 6.97 8.3 3.3 F&N 37.90 30.69 -19.0% Sell 13,892 0.55 96.0 114.0 39.5 33.3 1.8 2.0 39.98 -5.2 23.40 62.0 40.4 HUPSENG 1.04 1.25 20.2% Buy 832 0.55 5.8 6.2 17.8 16.9 5.8 5.8 1.23 -15.4 1.02 2.0 -4.6 JOHOTIN 0.96 1.02 6.8% Buy 296 1.14 8.1 8.5 11.7 11.3 6.3 6.8 1.62 -41.0 0.89 7.3 -21.1 NESTLE 148.10 129.90 -12.3% Sell 34,729 0.58 322.2 360.2 46.0 41.1 2.0 2.2 163.00 -9.1 83.00 78.4 43.5 PADINI 5.77 5.77 0.0% Sell 3,796 0.78 25.6 29.1 22.6 19.8 2.2 2.3 6.01 -4.0 3.51 64.4 9.6 POHUAT 1.29 1.83 41.9% Buy 284 0.53 20.1 23.1 6.4 5.6 4.7 6.2 2.07 -37.6 1.15 12.2 -27.9 QL 5.99 5.42 -9.5% Sell 9,718 0.77 12.7 14.0 47.1 42.8 0.8 0.8 6.10 -1.8 3.71 61.6 37.7 SIGN 0.55 0.92 67.3% Buy 124 0.86 6.6 8.7 8.3 6.3 4.5 6.4 0.97 -43.0 0.48 14.6 -22.0 Tobacco BAT 33.20 34.72 4.6% Sell 9,480 1.29 170.8 168.8 19.4 19.7 4.8 4.8 44.94 -26.1 22.46 47.8 -17.0

GAMING Casino GENTING 8.62 11.65 35.2% Buy 33,029 0.95 58.9 66.7 14.6 12.9 1.9 1.9 9.90 -12.9 8.30 3.9 -5.6 GENM 4.95 6.77 36.8% Buy 28,000 1.27 29.7 36.7 16.7 13.5 2.4 2.6 6.09 -18.8 4.59 7.8 -10.7 NFO BJTOTO 2.44 3.34 36.9% Buy 3,287 0.69 19.6 37.4 12.4 6.5 6.6 10.7 2.62 -6.9 2.06 18.4 8.9

HEALTHCARE Hospitals/ Pharmaceutical CCMDBIO 1.29 1.52 17.8% Buy 840 0.50 6.9 7.6 18.6 17.0 3.6 3.8 1.49 -13.4 0.84 52.8 19.0 IHH 6.00 6.60 10.0% Hold 49,468 0.67 11.9 12.3 50.5 48.9 0.5 0.5 6.42 -6.5 5.42 10.7 2.4 KPJ 1.03 1.14 10.7% Buy 4,341 0.61 4.0 4.4 25.9 23.4 2.1 2.4 1.15 -10.4 0.84 22.6 6.2 Rubber Gloves HARTA 6.19 4.84 -21.8% Sell 20,529 0.99 12.6 14.5 49.2 42.8 1.3 1.4 6.64 -6.8 3.19 94.0 15.9 KOSSAN 8.47 9.76 15.2% Buy 5,416 0.51 31.7 36.1 26.7 23.4 1.5 1.7 8.79 -3.6 6.38 32.8 4.4 SUPERMX 4.36 4.75 8.9% Buy 2,859 0.63 20.0 22.6 21.8 19.3 1.8 2.0 4.61 -5.4 1.69 158.0 118.0 TOPGLOV 9.91 12.91 30.3% Buy 12,664 0.48 35.6 41.8 27.8 23.7 1.5 1.8 12.48 -20.6 5.33 85.9 24.0 KAREX 0.85 0.54 -36.1% Sell 847 0.75 1.3 1.8 62.9 47.0 0.4 0.5 1.69 -50.0 0.50 69.0 -35.0

INDUSTRIAL SCIENTX 7.34 7.00 -4.6% Sell 3,589 0.70 54.8 57.5 13.4 12.8 2.5 2.6 9.85 -25.5 6.51 12.7 -15.2 SKPRES 1.45 2.20 51.7% Buy 1,813 0.94 10.2 11.7 14.3 12.3 3.6 4.1 2.35 -38.3 1.28 13.3 -36.4

MEDIA ASTRO 1.78 1.65 -7.3% Hold 9,281 0.99 12.4 13.8 14.3 12.9 7.0 7.0 2.94 -39.5 1.31 35.9 -32.8 MEDIA PRIMA 0.53 0.38 -28.3% Sell 588 0.75 -6.0 -4.2 na na 0.0 0.0 0.94 -43.3 0.25 112.0 -30.3 STAR 1.10 1.20 9.1% Hold 812 0.92 6.3 5.9 17.6 18.6 8.2 8.2 2.22 -50.4 1.00 10.0 -33.3

For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE

Company Share Price Target Price Market Cap. EPS (sen) PER (X) Div Yield (%)52weeks 52weeks % Chg % upside Recom BETA (RM) (RM) (RMm) FY18 FY19 FY18 FY19 FY18 FY19 High Price % Chg Low Price % Chg YTD

OIL & GAS DNEX 0.38 0.64 68.4% Buy 668 1.84 4.6 4.8 8.2 7.9 2.6 2.6 0.61 -37.7 0.31 24.6 -21.6 LCTITAN 5.10 7.47 46.5% Buy 11,592 na 47.6 50.5 10.7 10.1 4.1 4.5 6.46 -21.1 4.14 23.2 8.5 MHB 0.68 0.81 20.0% Buy 1,080 1.47 -0.1 1.1 na 63.2 0.0 0.0 0.98 -31.1 0.63 8.0 -18.2 MISC 6.15 5.73 -6.8% Sell 27,452 0.88 33.1 40.9 18.6 15.0 4.9 4.9 7.90 -22.2 5.03 22.3 -17.1 PANTECH 0.63 0.77 23.2% Buy 465 1.11 6.3 6.9 9.9 9.1 4.0 4.3 0.74 -15.5 0.51 22.5 -3.1 PCHEM 8.62 9.05 5.0% Hold 68,960 0.75 54.3 54.3 15.9 15.9 3.1 3.2 8.88 -2.9 6.80 26.8 11.9 SAPNRG 0.60 0.85 42.9% Buy 3,565 2.57 -5.0 -1.6 na na 0.0 0.0 1.75 -66.0 0.40 50.6 -16.2 SERBADK 3.37 4.72 40.1% Buy 4,949 na 27.5 31.4 12.2 10.7 2.7 3.0 3.68 -8.4 1.86 81.2 4.0 VELESTO 0.29 0.35 22.8% Buy 2,341 2.17 0.3 1.0 87.6 28.9 0.0 0.0 0.48 -40.6 0.22 32.6 -6.6 UZMA 1.04 1.47 41.3% Buy 333 1.40 19.8 12.9 5.3 8.1 0.0 0.0 1.67 -37.7 0.93 12.4 -18.8

PLANTATIONS FGV 1.53 1.76 15.0% Buy 5,582 1.73 1.8 1.5 86.7 102.0 3.3 3.3 2.18 -29.8 1.45 5.5 -9.5 IJMPLNT 2.11 1.84 -12.8% Sell 1,858 0.33 7.9 7.1 26.8 29.6 2.4 2.4 3.12 -32.4 2.08 1.4 -23.0 IOICORP 4.54 5.06 11.5% Buy 27,723 0.83 19.0 19.6 23.9 23.2 5.8 3.4 4.81 -5.6 4.21 7.9 2.5 KFIMA 1.57 1.65 5.1% Hold 442 0.63 14.5 12.9 10.8 12.2 5.7 5.7 1.90 -17.4 1.44 9.0 0.0 KLK 24.28 23.75 -2.2% Sell 25,857 0.61 93.1 100.9 26.1 24.1 2.1 2.0 25.98 -6.5 23.26 4.4 -2.9 SIMEPLT 5.29 5.84 10.4% Buy 35,976 na 19.6 18.5 27.0 28.6 2.6 2.8 6.00 -11.8 4.58 15.5 -11.8 TSH 1.23 1.09 -11.4% Sell 1,698 0.38 9.3 9.6 13.2 12.8 1.9 2.0 1.74 -29.3 1.12 9.8 -25.5 UMCCA 6.10 5.59 -8.4% Sell 1,279 0.42 17.0 19.8 36.0 30.8 2.6 3.0 7.08 -13.8 5.85 4.3 -6.3

PROPERTY GLOMAC 0.44 0.50 14.9% Hold 345 0.58 1.5 2.5 30.0 17.3 3.4 3.4 0.63 -30.7 0.43 1.2 -21.6 HUAYANG 0.47 0.49 5.4% Hold 164 0.64 1.3 3.2 37.2 14.6 0.0 0.0 1.01 -54.0 0.44 5.7 -23.8 IBRACO 0.61 0.58 -4.9% Hold 303 na 4.6 7.7 13.4 8.0 3.3 3.3 0.92 -33.7 0.26 134.6 -25.2 IOIPG 1.70 1.87 10.0% Buy 9,360 0.81 14.9 14.7 11.4 11.6 3.5 3.5 2.20 -22.7 1.47 15.6 -8.1 MAHSING 1.09 1.22 11.9% Buy 2,646 0.94 9.4 9.6 11.6 11.4 4.6 4.6 1.61 -32.3 0.98 11.2 -24.8 SIMEPROP 1.22 1.28 4.9% Hold 8,297 na 6.1 5.3 19.9 23.0 3.3 2.5 1.78 -31.5 1.04 17.3 -31.5 SNTORIA 0.50 0.73 46.0% Buy 279 0.72 8.3 8.7 6.0 5.7 2.0 2.0 0.78 -36.0 0.50 0.0 -28.1 SPB 4.10 4.11 0.2% Sell 1,409 0.64 18.7 23.4 21.9 17.6 2.9 2.9 5.50 -25.5 4.05 1.2 -16.3 SPSETIA 3.01 3.23 7.3% Hold 11,742 1.18 16.1 18.1 18.6 16.6 4.0 4.0 4.00 -24.8 2.77 8.7 -24.8 SUNWAY 1.50 1.65 10.0% Hold 7,294 0.86 11.8 12.5 12.7 12.0 4.0 4.0 1.96 -23.4 1.44 4.2 -8.0 REIT SUNREIT 1.73 1.87 8.1% Hold 5,095 0.86 10.0 10.7 17.2 16.2 5.8 6.2 1.90 -8.9 1.48 16.9 -8.9 CMMT 1.22 1.48 21.3% Buy 2,490 0.58 7.9 8.4 15.4 14.6 6.7 7.0 1.83 -33.3 0.98 24.5 -33.3

POWER & UTILITIES MALAKOF 0.90 0.85 -5.0% Sell 4,399 0.95 5.8 6.7 15.4 13.3 7.8 7.8 1.17 -23.5 0.83 8.5 -8.7 PETDAG 25.66 24.13 -6.0% Sell 25,492 0.73 114.1 114.9 22.5 22.3 3.3 3.4 28.18 -8.9 20.81 23.3 6.7 PETGAS 18.20 20.23 11.2% Buy 36,013 0.78 99.3 100.0 18.3 18.2 3.8 3.8 19.50 -6.7 15.82 15.0 4.1 TENAGA 14.64 18.34 25.3% Buy 83,129 0.80 139.7 134.6 10.5 10.9 4.8 4.6 16.34 -10.4 13.54 8.1 -4.1 YTLPOWR 1.17 0.78 -33.3% Hold 9,125 0.61 7.5 7.8 15.6 14.9 4.3 4.3 1.41 -17.1 0.73 60.3 -9.3

TELECOMMUNICATIONS AXIATA 4.17 6.05 45.1% Buy 37,737 1.77 11.9 15.7 34.9 26.6 2.4 3.2 5.82 -28.4 3.76 10.9 -24.0 DIGI 4.16 5.15 23.8% Buy 32,344 0.93 19.6 20.2 21.2 20.6 4.7 4.9 5.10 -18.4 3.93 5.9 -18.4 MAXIS 5.44 5.95 9.4% Hold 42,522 0.97 24.9 24.7 21.9 22.0 3.7 3.7 6.14 -11.4 5.21 4.4 -9.5 TM 3.62 3.30 -8.8% Sell 13,604 1.37 16.8 14.8 21.5 24.5 5.2 5.2 6.53 -44.6 3.00 20.7 -42.5

TECHNOLOGY Semiconductor & Electronics ELSOFT 2.65 3.30 24.5% Buy 732 0.71 13.1 14.9 20.3 17.8 3.5 4.0 2.95 -10.2 2.22 19.4 -1.9 INARI 2.37 2.45 3.4% Buy 7,444 0.30 8.2 10.4 28.8 22.9 2.5 3.1 2.55 -6.9 1.50 58.3 4.6 MPI 10.62 11.50 8.3% Buy 2,112 0.49 69.5 79.8 15.3 13.3 3.0 3.0 14.52 -26.9 7.57 40.3 -15.8 UNISEM 2.77 2.75 -0.7% Buy 2,014 0.86 13.2 18.7 21.0 14.8 4.0 4.0 4.25 -34.8 1.60 73.1 -24.1

TRANSPORTATION Airlines AIRASIA 3.05 3.15 3.3% Buy 10,193 0.83 28.3 28.6 10.8 10.6 26.2 2.6 4.75 -35.8 2.92 4.5 -9.0 AIRPORT 8.88 8.79 -1.0% Sell 14,734 0.96 33.8 35.7 26.3 24.9 1.7 1.1 9.45 -6.0 7.98 11.3 1.0 Freight & Tankers PTRANS 0.27 0.44 66.0% Buy 353 na 2.3 3.7 11.5 7.1 2.6 4.2 0.38 -30.6 0.23 17.8 -5.4 TNLOGIS 1.02 1.10 7.8% Sell 465 0.86 10.0 9.7 10.2 10.5 0.0 3.9 1.79 -43.1 0.93 9.7 -23.9 WPRTS 3.42 3.78 10.5% Hold 11,662 0.50 15.6 20.0 21.9 17.1 3.4 4.4 3.90 -12.3 3.10 10.3 -7.6

SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE

Company Share Price Target Price Market Cap. EPS (cent) PER (X) Div Yield (%) 52week 52week % Chg % upside Recom Beta (S$) (S$) (S$m) FY18 FY19 FY18 FY19 FY18 FY19 High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 26.25 36.10 37.5% Buy 67,279 1.26 212.3 246.0 12.4 10.7 2.5 2.7 30.8 -14.7 19.68 33.4 7.4 OCBC 11.30 16.60 46.9% Buy 47,301 1.22 109.5 123.2 10.3 9.2 6.7 7.7 14.0 -19.5 10.83 4.3 -8.8 UOB 26.55 31.70 19.4% Hold 44,312 1.20 215.7 242.9 12.3 12.3 3.0 3.0 30.4 -12.6 22.79 16.5 1.1

PLANTATIONS WILMAR 3.00 3.27 9.0% Hold 19,196 0.81 22.5 25.1 13.4 12.0 3.0 3.3 3.5 -13.0 2.97 1.0 -2.9 IFAR 0.22 0.20 -9.1% Sell 316 1.09 3.0 3.0 7.2 7.3 1.9 1.9 0.5 -56.4 0.22 2.3 -43.6

BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return.

Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.