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January 14, 2020
Malaysia Construction POSITIVE [Upgrade]
Improving optics
U/G to POSITIVE Analyst Near-term sector re-rating catalyst would be the formalization of the Adrian Wong, CFA PTMP PDP agreement, allowing the Bayan Lepas LRT to officially roll-out. (603) 2297 8675 Job awards are also expected to gradually pick up in 2020 with the ECRL [email protected]
subcontracting works in focus. While the KL-SG HSR and KVMRT 3 remain wildcards at this juncture, any announcement of their revival in 2020 will excite the market. We are upbeat on the sector’s outlook in 2020; U/G to POSITIVE with Gamuda as our preferred BUY pick. 2020: Job awards to pick up
Construction We expect the value of new job awards to gradually pick up in 2020 with the ECRL subcontracting packages in focus. With the 3-month long public display of the realignment of the Kota Bahru-Dungun stretch set to complete by Feb 2020, we believe tenders for the subcontracting civil work packages could start by 2Q20 with awards in 2H20. We also expect awards of the remaining packages from the on-going projects in East Malaysia such as the Pan Borneo Sabah Highway, Sarawak Coastal and Second Link Road (details of projects in Fig 9) in 2020.
Malaysia 2020: PTMP close to fruition The Penang State Government had, in Oct 2019, received a Federal Government Guarantee to raise bonds to fund the Bayan Lepas LRT (e.MYR8b), which will expedite the start of the Penang Transport Master Plan (PTMP) project. Assuming the Project Delivery Partner (PDP) agreement is finalized within 1Q20, we could see the first awards by end- 2020. An official start for the PTMP could re-rate the sector with Gamuda as an early beneficiary. We see earnings upside potential for Gamuda, pending finalization of SRS Consortium’s PDP agreement (Gamuda has a 60% stake in SRS Consortium). Sector BUY picks In the near term, finalization of the PTMP’s PDP details and securing the necessary bond funding to kick start the PTMP’s Bayan Lepas LRT project could present the sector with a re-rating catalyst. Gamuda (GAM MK; U/G to BUY) is our preferred sector pick as an early beneficiary of the PTMP. We also like Sunway Construction (SCGB MK; U/G to BUY) for its strong replenishment pipeline, supported by in-house development projects from its parent, Sunway Berhad (SWB MK; HOLD; TP: MYR1.74). CMS (CMS MK; maintain BUY) remains a proxy to development activities in Sarawak as the State heads for a State Election before Sep 2021.
Stock Bloomberg Mkt cap Rating Price TP Upside P/E (x) P/B (x) Div yld (%) code (USD'm) (LC) (LC) (%) 19E 20E 19E 20E 19E 20E Gamuda GAM MK 2,424 Buy 3.99 4.50 16 12.7 13.6 1.1 1.2 3.2 3.0 IJM Corp IJM MK 1,991 Hold 2.23 2.10 (3) 20.4 20.7 0.8 0.8 1.8 2.7 Lingkaran Trans Kota LTK MK 613 Buy 4.70 5.21 11 9.4 9.5 2.4 2.3 5.9 5.3 Cahya Mata S. CMS MK 606 Buy 2.30 2.85 26 12.8 11.8 0.9 0.9 2.4 2.6 Sunway Const'n SCGB MK 574 Buy 1.81 2.05 17 17.5 15.1 3.7 3.3 3.9 3.9 Hock Seng Lee HSL MK 179 Hold 1.33 1.40 7 12.0 11.2 0.9 0.8 1.8 1.8 Kimlun KICB MK 103 Buy 1.23 1.50 25 6.5 6.2 0.6 0.5 3.1 3.2
THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD PP16832/01/2013 (031128) SEE PAGE 10 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Malaysia Construction
A recap of 2019
Renewed optimism
With a series of major infra projects (KVMRT 2, KVLRT 3) having undergone their cost reviews in the previous year, 2019 brought some relief to the sector with the revival of key projects such as the i) East Coast Rail Link (ECRL) [MYR44b]; ii) Bandar Malaysia (GDV: e.MYR140b) and iii) Johor-SG RTS Link (e.MYR3.2b). The slightly higher Gross Development Expenditure (GDE) allocation of MYR56b for 2020 (+4.3% YoY) announced in Budget 2020 also signals the Government’s commitment to develop public infrastructure and rural development especially in the deeper parts of Sabah and Sarawak.
Fig 1: Status of revived major infrastructure projects Estimated Projects Value Updates (MYR b) ECRL 44.0 Project to be implemented at a lower cost of MYR44b which includes infrastructure, tunneling, system & track works except for land acquisition. Up to 50% of project cost could be for civil/infra works, of which local participation is expected to make up 40% of the civil works portion. Kota Bahru to Dungun stretch (Package A; 210km) is undergoing its public inspection process. Subcontracting awards expected to start in 2H20. Site clearing and earthworks for the Dungun to Mentakab stretch (Package B; 223km) currently in full swing. Johor-SG RTS Link 3.2 Malaysia Government intends to continue with the implementation of the Johor-SG RTS Link as announced in Budget 2020. Singapore and Malaysia to defer the project implementation till 30 Apr 2020, pending review of the costs. Bandar Malaysia 140.0 Bandar Malaysia to be developed over 20 years with IWH-CREC reinstated as its master developer. The project will house a 28.3ha People’s Park and 10,000 units of affordable housing and greater Bumiputera participation.
Source: Various
No expropriation of tolled highways
In Jun 2019, the Government of Malaysia has offered to acquire Gamuda’s four urban highway concessions – KESAS, LDP, SPRINT and SMART - for a total cash consideration of MYR6.2b (details in Fig 2). We deemed the implied effective equity value of MYR2.36b (MYR0.96/Gamuda shr) for the four highways to be fair when compared against our DCF value of MYR2.56b. The proposed acquisition by the Government essentially alleviates concerns of any potential expropriation of the tolled highways and could set the precedence for future takeovers.
Fig 2: Individual highway equity value based on proposed offer price Highways Purchase consideration Gamuda’s effective stake Anticipated equity value, Gamuda's share of anticipated (MYR b) (%) calculated by Gamuda (MYR b) equity value (MYR b) (a) (b) (a)x(b) KESAS 1.377 70.0% 1.23 0.86 LDP 2.470 43.6% 2.34 1.02 SPRINT 1.984 51.8% 0.87 0.45 SMART 0.369 50.0% 0.06 0.03 Total 6.200 4.50 2.36
Source: Gamuda announcement *Purchase consideration figures have yet to deduct any form of indebtedness (outstanding dividends, interests, loans etc)
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Malaysia Construction
What’s in store for 2020?
1) Job awards to gradually pick up
We believe the momentum on contract awards and job flows would gradually pick up in 2020. With the proposed new alignment of the Kota Bharu-Dungun stretch (Package A; 210.4km) of the ECRL currently undergoing its 3-month public inspection process till 24 Feb 2020, we expect tenders for the ECRL’s subcontracting civil work packages to start in 2Q20. We estimate local contractors stand to secure up to MYR10b of jobs from the ECRL based on the rule of thumb that 40% of total civil works will be awarded to local contractors.
Fig 3: Selected contractors with exposure/interest in the original ECRL project Companies Details Civil works IJM Corp Supply of spun piles to the ECRL and potential station works near Kuantan Port. Its 60%-owned Kuantan Port is also a long-term beneficiary of the ECRL. Gabungan AQRS Submitted tender for a sub-contracting package under CCCC previously. AQRS is also the master developer of KotaSAS in Pahang. Kimlun, WCT, Sunway Expressed interest to bid for construction works from the ECRL. Construction Supply of materials Malayan Cement Awarded a MYR270m contract to supply cement to ECRL. Others HSS Engineering Secured consulting engineering works for ECRL with a value of MYR82.5m. Econpile Expressed interest to bid for piling works from the ECRL. Advancecon Expressed interest to bid for land clearing works from ECRL.
Gabungan AQRS (AQRS MK, Not Rated), WCT (WCTHG MK, Not Rated), Malayan Cement (LMC MK, HOLD, TP: MYR3.30), HSS Engineering (HSS MK, Not Rated), Econpile (ECON MK, Not Rated), Advancecon (ADVC MK, Not Rated); Source: Company data, Maybank Kim Eng; List is non-exhaustive
KL-SG HSR and KVMRT 3 projects remain wildcards. To recall, both Malaysia and Singapore have set 31 May 2020 as a deadline to decide on the High-Speed Rail (HSR) project pending on-going cost reviews. As for the KVMRT 3, newsflow from the earlier part of 2019 indicated that the project could be revived with a lower cost of MYR22.5b (50% discount). We believe both major infra projects are likely to feature under the 12th Malaysia Plan (2021-2025).
2) PTMP close to rolling out
The Penang State Government had, in Oct 2019, received a Federal Government Guarantee to raise bonds to fund the Bayan Lepas LRT (e.MYR8b) portion of the Penang Transport Master Plan (PTMP). This development is positive, suggesting that the execution of the Bayan Lepas LRT will not solely be contingent upon funding from the Penang South Reclamation (PSR) which would require at least four to five years before its reclaimed land can be monetized.
Assuming the Project Delivery Partner (PDP) agreement between the Penang State Government and SRS Consortium (60%-owned by Gamuda) is finalized within 1Q20, we could see the first job awards for the Bayan Lepas LRT to start by end-2020. An official start for the PTMP could re-rate the sector with Gamuda as an early beneficiary. Contractors with experience from KVMRT 1 and 2 are also expected to be contenders for work packages from the LRT project. Within our coverage, contractors with rail experience such as IJM Corp (IJM MK; HOLD) and Sunway Construction are the potential contenders for the LRT work packages.
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Malaysia Construction
Fig 4: PTMP components under SRS Consortium Bayan Lepas LRT Estimated cost MYR8b Length 29.9km (27 stations) Alignment Komtar to Penang / Bayan Lepas International Airport with a potential extension to the future 3 reclaimed islands in the south of Penang Details Phase 1 (22km) from Komtar to Bayan Lepas is estimated to cost MYR8b Under Phase 2, the LRT is extendable into the future 3 reclaimed islands in the south of Penang Status LRT project undergoing final EIA assessement Pan Island Link 1 (PIL 1) Highway Estimated cost MYR8b Length 19.5km toll-free highway Alignment Gurney Drive to Bayan Lepas through six interchanges Details 7.6km of viaduct sections, four underground tunnels totalling 10.5km in length and embankment sections totalling 1.8km Status EIA report for the PIL 1 has been approved by the DoE Penang South Reclamation (PSR) Estimated cost MYR16b Size Reclamation of 3 man-made islands totaling 4,500ha Details Expected development period over 15 to 20 years 800 acres out of the 2,300 acres on Island A has been earmarked for a Smart Industrial Park Status National Physical Planning Council has agreed to the implementation of the PSR project
Source: Company data, Maybank Kim Eng
3) Conclusion to Gamuda’s tolled highways takeover
Final approval from the Cabinet of Malaysia for the takeover of Gamuda’s four toll highways was disclosed in Budget 2020. We gather that the Definitive Agreements are in the midst of being finalized with the targeted date to sign the agreements sometime in Jan 2020. Based on this timeline, Gamuda’s shareholders EGM to approve the sale would likely be held in Mar 2020, with deal completion by Apr/May 2020.
Elsewhere, the Government of Malaysia is understood to be mulling over a potential sale of Project Lebuhraya Utara Selatan (PLUS) Malaysia (Not Listed), Malaysia’s biggest highway operator. PLUS is presently jointly owned by Khazanah Nasional and EPF. Based on an article in the Malay Mail dated 13 Jan 2020 (link), the Cabinet of Malaysia is expected to make a decision on Wednesday, 15 Jan 2020 regarding the proposed takeover offers for PLUS. We are unsure at this juncture if the Government’s decision regarding the takeover of PLUS could in any way affect the takeover offer/decision of Gamuda’s four highways.
January 14, 2020 4
Malaysia Construction
Fig 5: PLCs in Malaysia with highway concessions Company Highways Effective Stake (%) IJM Corp Besraya Highway 100.0 New Pantai Expressway (NPE) 100.0 Kajang-Seremban Highway (LEKAS) 50.0 West Coast Expressway (WCE) 40.9 Taliworks Cheras-Kajang Highway 51.0 New North Klang Straits Bypass 50.3 Ahmad Zaki East Klang Valley Expressway (EKVE) 100.0 Gamuda Shah Alam Expressway (KESAS) 70.0 SMART Tunnel 50.0 Western KL Traffic Dispersial System (SPRINT)* 51.9 Damansara-Puchong Highway (LDP)* 43.7 Ekovest Duta-Ulu Kelang Expressway (DUKE) Phase 1 60.0 Duta-Ulu Kelang Expressway (DUKE) Phase 2 60.0 Duta-Ulu Kelang Expressway (DUKE) Phase 3 100.0 Litrak Damansara-Puchong Highway (LDP) 100.0 Western KL Traffic Dispersial System (SPRINT) 50.0 MRCB Eastern Dispersal Link (EDL) 100.0
Taliworks (TWK MK, Not Rated), Ahmad Zaki (AZR MK, Not Rated), Ekovest (EKO MK, Not Rated), Litrak (LTK MK, BUY, TP: MYR5.21), MRCB (MRC MK, Not Rated) Source: Company data, Maybank Kim Eng *Effective stake include Gamuda’s 43.7% stake in Litrak
4) Development for the masses to remain a priority
Spending on public infrastructure & amenities will continue to be in focus as the Government continues to reduce the development gap between the urban and rural areas. Allocation for the construction and upgrading of hospitals, schools and affordable housing units with an estimated spend of at least e.MYR10.2b has been set aside under Budget 2020.
Elsewhere, rural developments would include construction and upgrading of physical infrastructure such as roads, bridges and basic infrastructure for the provision of water and electricity, which is estimated to make up MYR13.3b of the Government’s GDE in 2020. Majority of the rural development budget will continue to focus in the underdeveloped areas of Sarawak and Sabah. CMS (CMS MK; BUY) remains a key beneficiary of developments in Sarawak as the sole cement and key building materials supplier within the State.
Fig 6: Govt’s GDE: MYR56b for 2020F (2019E: MYR53.7b) Fig 7: Construction sector real output
(MYR m) Gross GDE Construction Macro GDP
60,000 25% 20% 50,000 15% 40,000 10% 5% 30,000 0%
20,000 -5%
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 -10% 1986 10,000 2020F -15% 0 -20%
-25%
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
1986 -30% 2020F
Source: Economic Reports (Treasury), Maybank KE (chart) Source: Economic Reports (Treasury), Maybank KE (chart) *2018F/2019E figures include reclassification of items from Government’s operating to development expenditure
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Malaysia Construction
Fig 8: Selected contractors with public infrastructure & amenities experience Government Education Sports Affordable Company Hospitals Airports Institutions complex Housing Projects Ahmad Zaki x x x Ekovest x Eversendai x x x Gabugan AQRS x Gadang x x Gamuda X x Hock Seng Lee x IJM x x x x Kimlun x x Mitrajaya x x x MRCB x x x Mudajaya x x x Muhibbah Eng. x Protasco x x x Sunway Construction x x x WCT x x x
Ahmad Zaki (AZR MK, Not Rated), Ekovest (EKO MK, Not Rated), Eversendai (EVSD MK, Not Rated), Gabungan AQRS (AQRS MK, Not Rated), Gadang (GADG MK, Not Rated), Mitrajaya (MHB MK, Not Rated), MRCB (MRC MK, Not Rated), Mudajaya (MDJ MK, Not Rated), Muhibbah (MUHI MK, Not Rated), Protasco (PRTA MK, Not Rated), WCT (WCTHG MK, Not Rated) Source: Company websites, Maybank KE *List is non-exhaustive
Fig 9: Major infrastructure projects in focus Estimated Projects Value Updates (MYR b) Rail Projects ECRL 44.0 Project to be implemented at a lower cost of MYR44b which includes infrastructure, tunneling, system & track works except for land acquisition. Up to 50% of project cost could be for civil/infra works, of which local participation is expected to make up 40% of the civil works portion. Kota Bahru to Dungun stretch (Package A; 162km) is undergoing its public inspection process. Subcontracting awards expected to start in 2H20. Site clearing and earthworks for the Dungun to Mentakab stretch (Package B; 223km) currently in full swing. Kuching LRT (Phase 1) 5.0 Phase 1 from Kuching to Samarahan expected to start first. Project was put on hold in Oct 2018 citing lack of funds. Total cost estimated to be less than MYR5b (from MYR10.8b quoted previously). Johor-SG RTS Link 3.2 Malaysia Government intends to continue with the implementation of the Johor- SG RTS Link as announced in Budget 2020. Singapore and Malaysia to defer the project till 30 Apr 2020, pending review of the costs. Serendah-Port Klang Rail Bypass and 8.3 Serendah-Port Klang Rail bypass to be used for cargo shipments. Klang Logistics Corridor. Klang Logistics Corridor is a dedicated privatized highway connecting Northport and Westport for commercial vehicles. Feasibility studies for both projects are expected to commence.
Source: Various *Estimated GDV value
January 14, 2020 6
Malaysia Construction
Fig 9: Major infrastructure projects in focus (continued) Estimated Projects Value Updates (MYR b) Highways and Roads Pan Borneo Sabah Highway 12.8 The PDP role has been passed on to Sabah State’s Public Works Department. Majority of the 15 out of 35 packages in Phase 1 have been awarded to local Sabah contractors with a value of e.MYR10.1b. The remaining 20 packages are expected to be executed under the 12th Malaysia Plan (2021-2025). Pan Borneo Sarawak Highway (Phase 2) from 5.5 Proposed 415km route from Miri to Lawas through Limbang (without passing Miri to Lawas Brunei) at a construction cost of e.MYR5.5b. First package of the highway from Lawas to Long Sukang to Long Lopeng to Kg Pa’ Berunut expected to cost e.MYR1.18b. Works expected to start in 2020. Trans-Borneo Highway NA 165km highway connecting Sabah & Sarawak to Eastern Kalimantan. Key component is a package worth MYR600m for a 40km stretch from Jalan Kalabakan-Serudong and construction of the Customs, Immigration, Quarantine and Security Complex (CIQS) and government housing quarters. Sarawak Coastal Road, Second Link Road 11.0 A total of 23 sub-packages for the upgrading and rehabilitation of the Sarawak Coast Road undergoing tender and evaluation processes. Tenders for Second Link Road to open end-2019/early-2020. Others Penang Transport Master Plan 32.0 EIA report for the PIL 1 Highway has been approved by the DoE. (PSR, PIL 1, Bayan Lepas LRT) National Physical Planning Council has agreed to the implementation of the Penang South Reclamation (PSR) project Bayan Lepas LRT project undergoing final EIA assessment post the 3-month public display. PDP agreement expected to be signed in Jan 2020. Bandar Malaysia 140.0 The project will house a 28.3ha People’s Park and 10,000 units of affordable housing and greater Bumiputera participation. Bandar Malaysia to be developed over 20 years with IWH-CREC reinstated as its master developer. Projects under review KVMRT 3 45.0 On-going negotiations to revive the Circle Line with potential 50% reduction to its original cost of e.MYR45b. KL-SG HSR 110.0 Deadline for negotiations between Malaysia and Singapore on 31 May 2020. Minconsult and Ernst & Young have been appointed the Technical Advisory Consultant (TAC) and Commercial Advisory Consultant (CAC) respectively. to review the cost of the project.
Source: Various *Estimated GDV value
January 14, 2020 7
Malaysia Construction
Valuations
With the revival of selected major infra projects in 2019, sentiment for the sector has improved. The recovery in sentiment has been reflected in the KL Construction (KLCON) Index which gained 46% in 2019, having retraced by 50% in 2018. The KLCON Index is now trading at mean levels to both the 10Y and 15Y trailing PERs (versus -1SD 12M ago).
We believe downside risk is limited, with the formalization of the PDP agreement for the PTMP a near-term re-rating catalyst. Despite being a wildcard at this juncture, the potential revival of the KVMRT 3 and KL-SG HSR could also further excite the market in 2020. With the improving outlook on the sector, we upgrade the sector to POSTIVE with Gamuda as our preferred BUY pick as the early beneficiary of the PTMP project.
Fig 10: KLCON 10Y Trailing PER Fig 11: KLCON 15Y Trailing PER
60 35
30 50 + 1sd: 22.8x 25 40 20 Mean: 18.0x + 1sd: 30.5x 30 15 Mean: 21.6x 20 10 - 1sd: 13.1x - 1sd: 12.7x 5 10 0
0
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-05
Source: Company data, Maybank Kim Eng Source: Company data, Maybank Kim Eng
Fig 12: Peer comparison Stock Rating Mkt cap Price TP P/E (x) P/B (x) ROE (%) Dvd yld (%) (MYR 'm) (LC) (LC) 19F 20F 19F 20F 19F 19F Gamuda BUY 9,908 4.00 4.50 13.7 13.5 1.2 1.1 8.8 3.0 IJM HOLD 8,130 2.24 2.10 20.7 19.6 0.8 0.8 4.1 2.5 Cahya Mata Swk BUY 2,446 2.28 2.85 12.7 11.7 0.9 0.7 7.2 2.5 Sunway Cons. BUY 2,385 1.85 2.05 17.8 15.4 3.8 3.4 21.1 3.8 Hock Seng Lee HOLD 725 1.32 1.40 11.9 11.1 0.9 0.8 7.4 1.8 Kimlun BUY 408 1.20 1.50 6.6 6.3 0.5 0.5 8.4 3.2 Litrak BUY 2,476 4.66 5.21 9.7 9.1 2.4 2.1 25.0 5.4
Non Rated MRCB NR NR 3,287 NR NM 38.9 0.7 0.7 0.6 1.8 Ekovest NR NR 2,018 NR NA NA NA NA NA NA Kerjaya Prospek NR NR 1,627 NR 11.1 10.0 1.6 1.4 13.9 2.5 WCT NR NR 1,142 NR 9.1 8.3 1.0 0.9 10.8 2.6 Muhibbah Eng. NR NR 1,131 NR 12.6 10.9 0.4 0.4 3.3 1.9 Econpile NR NR 970 NR 21.8 14.8 2.3 2.1 10.7 1.1 Gabungan AQRS NR NR 587 NR 10.9 7.3 1.3 1.2 11.9 3.8 Pintaras Jaya NR NR 514 NR 9.7 8.3 0.6 0.6 7.1 1.8 Vizione NR NR 504 NR NA NA NA NA NA NA Gadang NR NR 499 NR 12.7 9.3 1.5 1.4 12.1 6.8 George Kent NR NR 478 NR 9.6 8.7 0.9 0.8 9.3 4.6 HSS Engineering NR NR 407 NR NM 19.2 1.9 1.8 1.3 0.0 Eversendai NR NR 297 NR 12.2 10.2 NA NA NA 0.0 Mudajaya Group NR NR 262 NR NM NM 0.3 0.3 (4.7) 1.0 Mitrajaya NR NR 257 NR NA NA NA NA NA NA Ahmad Zaki NR NR 227 NR NA NA NA NA NA NA TRC Synergy NR NR 202 NR 7.7 6.6 NA NA NA 4.2 Protasco NR NR 184 NR NM 38.9 0.6 0.6 3.2 3.2
Average 12.6 12.7 1.2 1.1 8.5 2.8 Source: Maybank Kim Eng, Bloomberg (Last Price as of 10 Jan 2020)
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Malaysia Construction
Research Offices
MACRO REGIONAL EQUITIES SINGAPORE THAILAND
Sadiq CURRIMBHOY Anand PATHMAKANTHAN CHUA Su Tye Maria LAPIZ Head of Institutional Research Head of Regional Macro Research Head of Regional Equity Research (65) 6231 5842 [email protected] Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 (65) 6231 5836 (603) 2297 8783 • REITs [email protected] [email protected] [email protected] • Strategy • Consumer • Materials • Services LAI Gene Lih, CFA Teerapol UDOMVEJ, CFA ECONOMICS WONG Chew Hann, CA (65) 6231 5832 [email protected] • Technology • Healthcare (66) 2658 6300 ext 1394 Head of ASEAN Equity Research [email protected] Suhaimi ILIAS (603) 2297 8686 Chief Economist Thilan WICKRAMASINGHE • Healthcare [email protected] (65) 6231 5840 [email protected] Malaysia | Philippines | Global Jesada TECHAHUSDIN, CFA (603) 2297 8682 • Banks • Consumer (66) 2658 6300 ext 1395 ONG Seng Yeow [email protected] Research, Technology & Innovation TAN Chin Poh Head of Retail Research [email protected] • Banking & Finance CHUA Hak Bin (65) 6231 5839 (65) 6231 5928 [email protected] Regional Thematic Macroeconomist [email protected] Kaushal LADHA, CFA Eric ONG (65) 6231 5830 (66) 2658 6300 ext 1392 (65) 6231 5924 [email protected] [email protected] MALAYSIA [email protected] • Retail Research • Oil & Gas LEE Ju Ye Anand PATHMAKANTHAN, Head of Research Ekachai TARAPORNTIP Head of Retail Research (603) 2297 8783 Matthew SHIM Singapore | Thailand (65) 6231 5929 (66) 2658 5000 ext 1530 (65) 6231 5844 [email protected] [email protected] • Strategy [email protected] [email protected] • Retail Research Surachai PRAMUALCHAROENKIT Desmond CH’NG, BFP, FCA (66) 2658 5000 ext 1470 Linda LIU Kareen CHAN (603) 2297 8680 [email protected] Singapore | Vietnam (65) 6231 5926 [email protected] • Auto • Conmat • Contractor • Steel (65) 6231 5847 [email protected] • Retail Research Suttatip PEERASUB [email protected] • Banking & Finance (66) 2658 5000 ext 1430 INDIA [email protected] Dr Zamros DZULKAFLI LIAW Thong Jung • Media • Commerce (603) 2082 6818 (603) 2297 8688 [email protected] Jigar SHAH Head of Research • Oil & Gas Services- Regional [email protected] (91) 22 4223 2632 [email protected] Jaroonpan WATTANAWONG • Automotive • Strategy • Oil & Gas • Automobile • Cement (66) 2658 5000 ext 1404 Ramesh LANKANATHAN [email protected] ONG Chee Ting, CA (603) 2297 8685 Neerav DALAL • Transportation • Small cap [email protected] (603) 2297 8678 [email protected] • Plantations - Regional (91) 22 4223 2606 [email protected] Thanatphat SUKSRICHAVALIT • Software Technology • Telcos (66) 2658 5000 ext 1401 William POH [email protected] (603) 2297 8683 YIN Shao Yang, CPA Kshitiz PRASAD • Media • Electronics [email protected] (603) 2297 8916 [email protected] • Gaming – Regional • Media (91) 22 4223 2607 Wijit ARAYAPISIT FX [email protected] (66) 2658 5000 ext 1450 TAN Chi Wei, CFA • Banks [email protected] Saktiandi SUPAAT (603) 2297 8690 [email protected] • Strategist Head of FX Research • Power • Telcos INDONESIA Kritsapong PATAN (65) 6320 1379 (66) 2658 5000 ext 1310 [email protected] WONG Wei Sum, CFA Isnaputra ISKANDAR Head of Research [email protected] (603) 2297 8679 [email protected] (62) 21 8066 8680 • Chartist Christopher WONG • Property [email protected] (65) 6320 1347 • Strategy • Metals & Mining • Cement VIETNAM [email protected] LEE Yen Ling • Autos • Consumer • Utility (603) 2297 8691 [email protected] LE Hong Lien, ACCA TAN Yanxi • Glove • Ports • Shipping • Healthcare Rahmi MARINA Head of Institutional Research (65) 6320 1378 (62) 21 8066 8689 (84 28) 44 555 888 ext 8181 [email protected] Kevin WONG [email protected] [email protected] (603) 2082 6824 [email protected] • Banking & Finance • Strategy • Consumer • Diversified Fiona LIM • REITs • Consumer Discretionary • Technology Aurellia SETIABUDI (65) 6320 1374 (62) 21 8066 8691 LE Nguyen Nhat Chuyen Adrian WONG, CFA (84 28) 44 555 888 ext 8082 [email protected] [email protected] [email protected] (603) 2297 8675 [email protected] • Property STRATEGY • Constructions • Building Materials • Oil & Gas Luthfi RIDHO QUAN Trong Thanh Willie CHAN Jade TAM (62) 21 8066 8690 (84 28) 44 555 888 ext 8184 Regional (603) 2297 8687 [email protected] [email protected] • Macro/Strategy [email protected] (852) 2268 0631 • Consumer Staples • Banks [email protected] TEE Sze Chiah Head of Retail Research PHILIPPINES NGUYEN Thi Sony Tra Mi Anand PATHMAKANTHAN (603) 2082 6858 [email protected] (84 28) 44 555 888 ext 8084 Katherine TAN [email protected] ASEAN (63) 2 8849 8843 Nik Ihsan RAJA ABDULLAH, MSTA, CFTe • Consumer (603) 2297 8783 [email protected] [email protected] (603) 2297 8694 [email protected] • Banks • Conglomerates • Ports Tyler Manh Dung Nguyen • Chartist (84 28) 44 555 888 ext 8180 FIXED INCOME Romel LIBO-ON [email protected] (63) 2 8849 8844 Amirah AZMI • Utilities Winson PHOON, ACA [email protected] (603) 2082 8769 [email protected] (65) 6812 8807 • Property NGUYEN Thi Ngan Tuyen • Retail Research [email protected] Head of Retail Research Kayzer LLANDA (84 28) 44 555 888 ext 8081
SE THO Mun Yi (63) 2 8849 8839 [email protected] (603) 2074 7606 [email protected] • Food & Beverage • Oil&Gas • Banking [email protected] • Utilities NGUYEN Thanh Lam Fredrick De GUZMAN (84 28) 44 555 888 ext 8086 (63) 2 8849 8847 [email protected] [email protected] • Technical Analysis • Consumer
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Malaysia Construction
APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES
DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluct uate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ fr om fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Ban k Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained her ein are subject to change at any time, without prior notice. This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these f orward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solic it business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report to the extent permitted by law. This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for t he actions of third parties in this respect. This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable la w. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. With out prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this repor t. Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical val uations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Rese arch Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapo re in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. Thailand Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Kim Eng Securities (Thailand) Public Company Limited. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) accepts no liability whatsoever for the actions of third parties in this respect. Due to different characteristics, objectives and strategies of institutional and retail investors, the research reports of MBKET Institutional and Retail Research Department may differ in either recommendation or target price, or both. MBKET Retail Research is intended for retail investors (http://kelive.maybank-ke.co.th) while Maybank Kim Eng Institutional Research is intended only for institutional investors based outside Thailand only. The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evalua tion of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MBKET does not confirm nor certify the accuracy of such survey result. The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Tha ipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company. The assessment result is therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the ac curacy and completeness of the assessment result. US This third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security mentioned within must do so with: Maybank Kim Eng Securities USA Inc. 400 Park Avenue, 11th Floor, New York, New York 10022, 1-(212) 688-8886 and not with, the issuer of this report. UK
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Malaysia Construction
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Conduct Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers. DISCLOSURES
Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938- H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This report is distributed in Singapore by Maybank KERPL (Co. Reg No 198700034E) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Maybank Kim Eng Securities (“PTMKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the Financial Services Authority (Indonesia). Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and t he Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of India (“SEBI”) (Reg. No. INZ000010538). KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) and as Research Analyst (Reg No: INH000000057) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Conduct Authority.
Disclosure of Interest Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies.
Singapore: As of 14 January 2020, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employe es may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.
Hong Kong: As of 14 January 2020, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.
India: As of 14 January 2020, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst or their associate / relative does not hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the subject companies except as otherwise disclosed in the research report. In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits fr om the subject companies or third party in connection with the research report on any account what so ever except as otherwise disclosed in the research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.
OTHERS Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the re port. Reminder Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or refe rence issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involve d in making such a purchase. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE. Definition of Ratings Maybank Kim Eng Research uses the following rating system BUY Return is expected to be above 10% in the next 12 months (including dividends) HOLD Return is expected to be between 0% to 10% in the next 12 months (including dividends) SELL Return is expected to be below 0% in the next 12 months (including dividends)
Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.
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Malaysia Construction
Malaysia Singapore London New York Maybank Investment Bank Berhad Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Securities Maybank Kim Eng Securities USA (A Participating Organisation of Maybank Kim Eng Research Pte Ltd (London) Ltd Inc Bursa Malaysia Securities Berhad) 50 North Canal Road PNB House 400 Park Avenue, 11th Floor 33rd Floor, Menara Maybank, Singapore 059304 77 Queen Victoria Street New York, New York 10022, 100 Jalan Tun Perak, London EC4V 4AY, UK U.S.A. 50050 Kuala Lumpur Tel: (65) 6336 9090 Tel: (603) 2059 1888; Tel: (44) 20 7332 0221 Tel: (212) 688 8886 Fax: (603) 2078 4194 Fax: (44) 20 7332 0302 Fax: (212) 688 3500
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Indonesia London Iwan Atmadjaja Greg Smith [email protected] [email protected] (62) 21 8066 8555 Tel: (44) 207-332-0221
New York India James Lynch Sanjay Makhija [email protected] [email protected] Tel: (212) 688 8886 Tel: (91)-22-6623-2629
Philippines Keith Roy [email protected] Tel: (63) 2 848-5288
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