Initiating Coverage

17 February 2015

KSL Holdings Bhd OUTPERFORM Price: RM 2. 15 Deep Hidden Value Target Price: RM 2.76 By Adrian Ng l [email protected]; Sarah Lim l [email protected]

Initiating coverage with OUTPERFORM recommendation and TP of RM2.76. Share Price Performance Despite its large exposure which has been perceived to be overplayed due to rising incoming house supplies (especially high-rises), we like KSL given its exposure in the locally driven mass market segment coupled with its ability to price its product competitively due to their low land costs. That aside, one third of their income stream is derived from investment properties which offer earnings resiliency should property sales performed worse than expected; notably, KSL City Mall and Hotel is one of the larger malls and better managed hotel in town centre. Hence, we are conservatively estimating FY15-16E earnings of RM310m (+6%, YoY) and RM348m (+12%, YoY), based on FY15-16E sales assumptions of RM988m- RM993m, respectively. Our TP of RM2.76 is based on 61% discount applied to its FD RNAV of RM7.07 which is within the discount range (60%-65%) pegged to Johor-based developers under our coverage i.e. CRESNDO and UEMS. At KLCI 1,808.89 our TP, the implied FY14-15E PER of 7.4x-7.0x is still cheaper compared to its YTD KLCI chg 2.7% mid-cap peers which are trading at 8.2x-7.5x, respectively. We admit that the YTD stock price chg 15.0% Malaysian property landscape will be challenging this year, particularly 6-9 months after GST implementation, so share price could be volatile. However, Stock Information we reckon that the deep values of KSL should offer some valuation downside risks to current levels while we believe this year’s volatility in property share Bloomberg Ticker KSL MK Equity prices should offer good entry points for long-term positioning of the stock. Market Cap (RM m) 1,962.3 Low land cost = better margins and pricing flexibility . The group’s land cost is Issued shares 912.7 relatively low considering that the majority of its Johor landbanks were acquired 52-week range (H) 2.49 back in 2002-07. This allows KSL better pricing flexibility which enables them to 52-week range (L) 1.03 continue catering for the affordable market segment with different products while 3-mth avg daily vol: 1,545,252 maintaining its decent margins. KSL’s 3-year operating income margins averaged at Free Float 50% 42.2% which is far superior to the overall developers’ 3-year average operating margins of 25.2%. Beta 1.1

Earnings diversification through strong recurring income stream . Its investment properties in Johor has done relatively well, reporting segmental Major Shareholders operating profits of RM107m in FY13 or a 2-year CAGR of 85%. It makes up a third PREMIERE SECTOR SDN 32.8% of their income and helps provide some earnings safety, cushioning the impact from CHENG HAI KHOO 8.9% slower sales, should the property market remains soft. Notably, their investment HWA SENG KU 8.2% property assets are severely undervalued by RM1.55b considering FY15E operating income of RM144m and conservative 7% cap rate and FY15E operating Summary Earnings Table income of RM144m yields a valuation of RM2.05b! If they do revalue their assets, it FY Dec (RM m) 2014E 2015E 2016E could raise their BV/sh by 104% to RM3.90, while further strengthening their balance sheet. Turnover 938 983 1,090 EBIT 399 420 467 Deep pockets with more gearing headroom. As at 9M14, the company’s net gearing remains fairly low at 0.01x, providing ample flexibility to gear up by another PBT 391 413 464 RM750.0m for either further land banking activities in Klang Valley/Johor or to fund Net Profit (NP) 293 310 348 its CAPEX for property investment in Klang which is slated to be developed over 10 Cor e Net Profit (NP) 293 310 348 to 15 years. Going forward, we are estimating its net gearing to inch up to 0.03x Consensus (NP) n.a. 273 n.a. levels post its recent acquisition of its agriculture land for RM90.6m. Earnings Revision n.a. n.a. n.a. Potential dividend policy? Over FY11-13, the company held back dividend EPS (sen) 37.3 39.5 44.3 payment. Prior to this ‘quiet’ period, KSL’s dividend yield ranged between 4%-6%. In Core EPS (sen) 37.3 39.5 44.3 the recently concluded 9M14 results, the board has proposed an interim single-tier FD Core EPS (sen) 30.4 32.1 36.0 DPS of 5.0 sen post the 1-for-1 bonus entitlement. Dividend Reinvestment Plan (DRP) will apply to this interim dividend where shareholders will be given an option EPS growth (%) 57% 42% 62% to elect to reinvest in whole or part of the electable portion. Following its maiden Core EPS growth (%) 57% 35% 66% dividend payment and DRP, we believe that there is a high likelihood of a formalised NDPS (sen) 11.2 11.8 13.3 dividend policy. For the full FY14, we are anticipating single-tier DPS of 11.2 sen BV/Share (RM) 1.89 2.17 2.48 (5.2%) based on a payout ratio of 30%. PER (x) 5.8 5.4 4.9 Estimating FY14-15-16E core earnings growth of +66%, +6% and +12% YoY, Core PER (x) 5.8 5.4 4.9 respectively. Current record high property unbilled sales of RM1b provides up to 1 FD Core PER (x) 7.1 6.7 6.0 year visibility. PBV (x) 1.1 1.0 0.9 Attractive valuations vis-à-vis peers. KSL is currently trading at FY14-15E core Net Gearing (x) 0.1 0.0 -0.1 PERs of 5.8x-5.4x which is attractive against its mid-cap peer average of 8.2x-7.5x, and not to mention that it is also the most undervalued developer amongst our list of Dividend Yield (%) 5.2% 5.5% 6.2% mid-cap peers. We would also like to point out that: (i) KSL’s earnings growth is also stronger than its peers, (ii) developers that deliver close to RM300m core earnings annually are typically large cap developers with a minimum market cap of RM3.0b.

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KSL Holdings Bhd Initiating Coverage

17 February 2015

EXECUTIVE SUMMARY Initiating coverage with OUTPERFORM and TP of RM2.76 . Despite its large Johor exposure which has been perceived to be overplayed due to rising incoming house supplies (especially high-rises), we like KSL given its exposure in the locally driven mass market segment coupled with its ability to price its product competitively due to their low land costs. That aside, one third of their income stream is driven by investment properties that offer earnings resiliency should property contributions weaken; notably, KSL City Mall and Hotel is one of the larger malls and better managed hotel in Johor Bahru town centre. Our TP of RM2.76 is based on 61% discount applied to its FD RNAV of RM7.07 that is in-line with the discount rate (60%-65%) pegged to Johor-based developers under our coverage i.e. CRESNDO and UEMS. At our TP, the implied FY14-15E PER of 7.4x-7.0x is still cheaper as compared to its mid-cap peers that are trading at 8.2x-7.5x. On a fully diluted basis, assuming all warrants are converted, KSL’s valuations remains decent as our TP of RM2.76 still implies FY14-15E core PER of 9.1x-8.6x only which is in- line with peers. We admit that the Malaysian property landscape will be challenging this year, particularly 6-9 months after GST implementation, so share price could be volatile. However, we reckon that the deep values of KSL should offer some valuation downside risks to current levels while we believe this year’s volatility in property share prices should offer good entry points for long-term positioning of the stock. 1. Investment Merit A township player with c.2,422 acres landbank in prime and upcoming locations, of which 78% is located in Johor while the balance is mostly in Klang. KSL’s landbanks are mainly township development in nature and are situated in more locally- populated areas of Johor. They have four on-going townships in Johor (Nusa Bestari, Indah, Bestari Indah, ) and one in Klang (Bandar Bestari). The 2,422 acres of landbank are inclusive of the 42 acres of land acquired back in 2014 and also the recent proposed acquisition of 297 acres of land in Batu Pahat.

Location of Properties in Johor

Source: Company, Kenanga Research

High-density and well-connected Johor projects. Most of its Johor township like Nusa Bestari, Kempas Indah, and Bestari Indah are well located being just 5–10 minutes away from the North-South Highway and only 15–20 minutes away from Johor Bahru City Centre and the new CIQ. In the past, their products in these townships were mainly landed residentials although the company is moving towards high-rise residential developments which would yield a higher value extraction per acre.. Positively, they have secured quite a number of approvals for high-rise developments (min. of 4x plot ratio), which is handy considering that landbanks in good locations are tougher to come by or are exorbitantly priced. High density ratios also enable them to continue operating in the resilient local buyers’ market.

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Affordable pricing to target local buyers. In light of a lot of high-rise residential supply coming into the Johor market (which are mainly priced above RM600k/unit), we are comforted to hear that most of its high-rise developments in Johor will fall in the RM400-700k/unit price range which tends to be supported by local demand. Its landed residentials will be priced at RM700- 800k/unit for terraces and clusters/semi-detached units will be priced above RM1m/unit; landed residentials tend to see more favourable demand. However, the biggest component will be highrises (78% of its on-going GDV), followed by landed residential products (22% of its on-going GDV). While their Johor property sales are largely driven by locals, we would like to remind investors that foreign buyers floor prices for Johor is now at RM500k/unit instead of RM1m/unit.

Location of Properties in Klang Valley

Source: Company, Kenanga Research

Bandar Bestari Klang, KSL’s flagship development in Klang Valley, that was first started in 2012. The township spans over 448ac of land located approximately 6km from AEON Bandar Bukit Tinggi via Jalan Langat main road access that is to be developed over the next 7-8 years. Neighbouring residential developments include: (i) The Landmark by WCT, (ii) Bayu Emas by I&P Group, (iii) Bandar Parklands by WCT, (iv) Bandar Botanic by Gamuda Land, and (v) Bandar Bukit Tinggi by WCT Berhad. Its residential products offered in Phase 1 of Bandar Bestari consists of: (i) Cluster (22x75) units priced at RM788,000 at launch 2-2.5 years ago and currently is being priced at RM1.1m, (ii) 2-storey Semi-D (40x80) now priced at RM1.4m, and (iii) 3-storey Semi-D now priced at RM1.7m. KSL’s strategy for Bandar Bestari has always been to price slightly below their neighbours as their branding in Klang Valley is not as prominent as other developers in the area (e.g. WCT, Gamuda). Going forward, they hope to launch service apartments namely Commercial City in Bandar Bestari by end CY15 at RM600psf, while the remaining shoplots and other commercial components (possibly offices, hotel) at a later stage. The soft launch for the shoplots behind Commercial City which consist of 66 units has achieved a take up rate of 50%. These shoplots measures 22ft x 75ft with ASP of RM600psf. Aspiring to build a regional size mall in Klang. That aside, KSL also has big plans for commercial development in Bandar Bestari whereby they had earmarked c.100acres of land for a retail mall measuring GFA of c.1.8m floor space and also other commercial components like shoplots that is expected to be priced at the range of RM600psf. The development of its retail mall is expected to be phased out over 10 years (refer to ‘Outlook’ for further details). Luxury high-end developments. Apart from its mid-ranged developments, KSL also have a small exposure in the high-end luxury market in Jalan Ampang namely 18 Madge. 18 Madge is a low density development that comprises only 50 units of apartments with an estimated GDV of RM180m which is targeted to be launched in FY15. The rationale of this project is to provide KSL an opportunity to test waters in the high-end market. Impact of this project is not significant as it only makes up less than 7% of total GDV.

(For further project details, please refer to the Appendix.)

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Low land cost = better margins or pricing flexibility . The group’s land cost is relatively low considering that the majority of its Johor landbanks were acquired back in 2002-07. Given that property prices in Johor and Klang has soared substantially over the last few years, historical low land cost is an advantage as it allows KSL better pricing flexibility so they can continue to cater towards the affordable market segment with different products while maintaining its decent margins. KSL’s 3-year operating income margins averaged at 42.2% (development margins: 35.8%) which is far superior to the overall developers’ 3-year average operating margins of 25.2%

Property Developers EBIT Margin Performance FY11/12 FY12/13 FY13/14 FY11/12 FY12/13 FY13/14 FY11/12 FY12/13 FY13/14 EBIT EBIT EBIT Y/E Developer Revenue Revenue Revenue EBIT EBIT EBIT Margin Margin Margin Oct SPSETIA 2,527 3,061 3,810 583 628 813 23% 21% 21% Jun IOIPG 1,052 1,323 1,454 508 651 597 48% 49% 41% Dec UEMS 1,703 1,940 2,425 364 487 588 21% 25% 24% Dec SUNWAY 3,692 3,849 4,734 322 322 806 9% 8% 17% Mar IJMLAND 1,206 1,250 2,046 253 307 659 21% 25% 32% Dec MAHSING 1,571 1,775 2,006 242 318 375 15% 18% 19% Dec UOADEV 614 799 1,246 280 321 512 46% 40% 41% Dec MRCB 1,227 1,283 753 130 221 -12 11% 17% -2% Dec TROP 375 630 1,476 102 246 489 27% 39% 33% Dec MATRIX 624 456 575 107 144 209 17% 32% 36% Jan CRESNDO 290 283 310 80 76 121 28% 27% 39% Mar HUAYANG 306 409 510 75 95 113 24% 23% 22% Dec CRESBLD 500 566 223 37 46 66 7% 8% 30% Average – excluding KSL 23% 26% 27% 3-year average – excluding KSL 25% Dec KSL 272 403 680 124 175 256 46% 43% 38% 3-year average 42%

Source: Company, Kenanga Research

Potential GDV of RM40.9b. Management has not provided us guidance on GDV as they strongly believe it is a moving target particularly as some of its landbanks are long-gestational ones. We are estimating that KSL’s total GDV could amount to c.RM40.9b which is comparable to developers like IJMLAND (total GDV of RM38.8b) and MAHSING (total GDV of RM44.8b). Our estimates are conservative because areas like Kempas and are seeing the following prices: (i) new launches of condominiums in these areas are above RM600psf while we are assuming RM500-600psf for these areas, (ii) landed residential are also reasonably priced at RM700k/unit which is at the low-end of the scale of terrace homes in the area. Additionally, we also accounted for very low property values for landbanks in , and . Our assumptions are on a net land basis (effective 60% of gross land area) as we assume 65%-70% land utilisation for lands allocated for high-rise and 55% for landed after taking into account infrastructure and common areas i.e. road, recreational park, retention pond and etc. For high-rises, we have assumed a building utilisation rate of 75% while for landed residentials, we have assumed a density ratio of 10 (for more established townships) to 14 units (for more mass market type townships) per acre (net land basis).

Estimated Total GDV (Part 1 of 2) Assumed Assumed Assumed Johor Stake Gross Land (ac) Net Land (ac) Land Allocation: High-rise / Land Allocation: Landed Commercial Bestari Indah, Tebrau, Ulu 100% 236.2 148.8 70% 30% Tiram, Johor Kempas Indah, Johor 100% 80.4 50.7 70% 30% Bahru, Johor Nusa Bestari, , 100% 18.4 12.0 100% 0% Johor Other Johor Bahru Land 100% 402.0 241.2 50% 50% (fragmented landbanks) Taman Mengkibol, , 100% 150.0 82.5 0% 100% Johor Segamat 100% 592.0 325.6 0% 100% Muar 100% 138.0 75.9 0% 100% Mersing 100% 19.2 13.4 0% 100% Batu Pahat 100% 3.6 2.9 0% 100% Mukim Tebrau, District of 100% 17.0 11.0 43% 57% Johor Bahru Batu Pahat, Agriculture 100% 297.2 193.2 n.a. n.a. land* Klang Valley Bandar Bestari, Klang, 100% 367.4 227.8 70% 30% Commercial @ Bdr Bestari, 100% 99.6 64.8 100% 0% Klang, Selangor 18 Madge @ Ampang KL 100% 0.8 0.7 100% 0% Total 2421.8 1450.4

Source: Kenanga Research * assuming GDV/acre ratio of RM0.7m or approximately 53% discount to CRESNDO’s industrial land

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Estimated Total GDV (Part 2 of 2) Assumed Assumed Assumed Assumed Estimated Johor NSA ('m sf) - ASP (RM psf) - For Density Ratio (units per Price per unit GDV (RM'm) For High Rise/ High-Rise/Commercial acre) for Landed only (RM/unit) - Commercial Landed only Bestari Indah, Tebrau, , 16 600 14 700,000 9,884 Johor Kempas Indah, Johor Bahru, Johor 5 600 10 700,000 3,342 Nusa Bestari, Skudai, Johor 2 500 n.a. n.a. 783 Other Johor Bahru Land (fragmented 17 500 13 500,000 9,254 landbanks) Taman Mengkibol, Kluang, Johor n.a. n.a. 14 400,000 462 Segamat n.a. n.a. 14 300,000 1,368 Muar n.a. n.a. 14 300,000 319 Mersing n.a. n.a. 14 200,000 38 Batu Pahat n.a. n.a. 14 400,000 16 Mukim Tebrau, District of Johor 1 600 14 700,000 431 Bahru Batu Pahat, Agriculture land* n.a. n.a. n.a. n.a. 208 Klang Valley Bandar Bestari, Klang, Selangor 1 450 10 1,000,000 10,435 Commercial @ Bdr Bestari, Klang, 8 500 n.a. n.a. 4,232 Selangor 18 Madge @ Ampang KL 0 1,300 n.a. n.a. 180 Total 40,952

Source: Kenanga Research * assuming GDV/acre ratio of RM0.7m or approximately 53% discount to CRESNDO’s Kota Tinggi industrial land

Severely undervalued at GDV/mkt cap ratio of 25x. At a GDV of RM40.9b, this implies that the company is trading at 25x GDV/mkt cap ratio vs. developers' average of 12x. Based on their forecasted revenue trajectory of RM1b and a 10% YoY growth in revenue p.a., this would provide the company with 17 years of visibility, which is significantly higher than typical developers’ visibility of 7–10 years.

GDV vs Market Cap GDV (RM'b) Market Cap (RM'b) @ 19/1/2015 GDV/Mkt Cap SPSETIA 73.6 9.01 8.2 IOIPG 98.1 8.01 12.2 UEMS 101.8 5.99 17.0 SUNWAY 31.1 5.60 5.6 IJMLAND 38.8 5.30 7.3 MAHSING 44.8 3.34 13.4 UOADEV 15.9 3.01 5.3 MRCB 23.2 1.65 14.0 TROP 66.7 1.44 46.2 MATRIX 4.8 1.23 3.9 CRESNDO 7.2 0.55 13.2 HUAYANG 3.5 0.55 6.4 CRESBLD 0.7 0.20 3.5 Average 12.0 KSL 40.9 1.65 24.8

Source: Kenanga Research

Strong recurring income stream…. KSL City Shopping Mall, KSL Hotel & Resort which is its integrated investment property in the heart of Johor Bahru and other investment properties (Giant@Nusa Bestari, Giant@Muar, KSL Resort) have done relatively well, reporting segmental operating profit of RM107m in FY13 or a 2-year CAGR of 85%. The major driver of its investment property is KSL City Shopping Mall and KSL Hotel & Resort, and we gather that occupancy for its mall and hotel are very healthy at >90% and 75%, respectively. Notably, most developers under our coverage (save for SUNWAY) do not have prominent recurring income streams. This does set KSL apart as it helps them to (i) weather against cyclical downturns (ii) strengthen cash flow to fund landbanking or investment property ambitions without having to repeatedly go to the market for fresh cash calls or heavy gearing. Given its strategic location which is just c.5.0km away from Johor Bahru CIQ Checkpoint, its mall and hotel (5-star) targets the local masses and also frequent travellers from Singapore. As of 9M14, its 5- star hotel namely KSL Hotel & Resort that has achieved occupancy rate of 75% vis-à-vis 70% a year ago, which is deemed as a healthy level.

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Investment Properties Operating Margin Trend 140%

120%

100%

80%

60%

40%

20%

0% 2009 2010 2011 2012 2013

Source: Kenanga Research

Investment properties severely undervalued by 3.1x. The net book value of their investment property assets are extremely low at RM497m (30/9/14) considering such strong operating income. Assuming a very conservative 7% cap rate and FY15E operating income of RM144m, their investment properties should be worth at least RM2.05b or an undervaluation RM1.55b! If they were to revalue their mall at our assumed valuations, their BV/share will increase by 104% to RM3.90. We note that such revaluation gains are non-cash items but based on our observations of what happened to HUNZPTY when was completed, it will ‘reset base book value valuations’ to higher levels, if such revaluations take place, as PBVs will likely remain quite similar. It will also further strengthen their balance sheet. (Refer to chart below). HUNZPTY Share Price Movement HUNZPTY’s share price reacted to the revaluation of its balance sheet. 2.40

2.20

2.00

1.80 Share price corrected to RM1.80 levels after that and had been 1.60 hovering around there since.

1.40

1.20

1.00 Jan Oct Jan Oct Jan Oct Jan Oct Jan Oct Jan Apr Apr Apr Apr Apr Jul Jul Jul Jul Jul ------10 11 12 13 14 10 11 12 13 14 10 11 12 13 14 10 11 12 13 14 15

Source: Kenanga Research

Feather light balance sheet , even with investment properties. KSL’s net gearing has decreased to 0.01x in 3Q14 from 0.07x a year ago, where most of its borrowings are related to investment properties rather than for land financing. Currently, KSL’s balance sheet is at an extremely comfortable level which will enable them to undertake more landbanking or CAPEX for its investment properties (e.g. retail space in Bandar Bestari Klang). Based on our land cost to GDV assumption ratio of 15%, KSL could easily replenish up to RM1.0b worth of GDV for every 0.10x increase on its current net gearing of 0.01x. This means if the group were to leverage up to 0.5x net gearing, they could easily add another RM5.0b worth of new GDV. Going forward, we are assuming its net gearing will inch up to 0.03x in FY15 after factoring in the recently proposed acquisition of agriculture land measuring 297.2 acres in Batu Pahat for a total consideration of RM90.6m.

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Landbanking Scenario’s Net Gearing Land Cost to GDV Additional Funds Available for Landbanking Potential GDV Replenishment (RM'b) (x) Assumption (RM'm)

0.11 15% 150 1.00

0.21 15% 310 2.07

0.31 15% 450 3.00

0.41 15% 600 4.00

0.51 15% 750 5.00 Source: Kenanga Research

Resumption of dividends… Over FY11-13, the company held back dividend payment which could be largely attributed to its KSL Mall heavy working capital requirements. Prior this ‘quiet’ period, KSL’s dividend yield ranged between 4%-6%. In the recently concluded 3Q14 results, the board resumed dividends and has already paid out an interim dividend (ex 1-for-1 bonus entitlement) single-tier DPS of 5.0 sen. …and introduction of a Dividend Reinvestment Plan (DRP). Concurrent with its interim dividend announcement relating to 3Q14 results, KSL introduced a DRP program which will apply to this interim dividend where shareholders will be given an option to elect to reinvest in whole or part of the electable portion. Dividend reinvestment plans are generally good for shareholders as it allows shareholders to reinvest their cash dividends by purchasing more company shares at a discounted price. This also benefits KSL as it means more cash retention for its company. Thus far, there is only one developer in town that offers this program, namely UOAD where their DRP has been well received. The DRP is expected to be completed by the end of Feb-15. Potential dividend policy… Following their resumption of dividend payment and introduction of a DRP, we gather that management is considering a dividend payout policy in the future. We think the likelihood of a formalized dividend policy is high in the near to medium term is most likely in the regions of 20%-30% payout of distributable PATAMI. (Refer to financials section for more details). …will be a re-rating catalyst . We note that small-mid cap developers that have implemented formalized dividend policies enjoyed re-rating of their share prices. Several key examples would be MATRIX and TAMBUN that have formalized dividend policy of paying out 40%-60% of profit after tax. With a dividend policy in place, these two stocks are trading at an average of 6.4x-6.5x Fwd PER since their listing and used to trade up to a high of 8x-10x. Hence, we believe that it stands to reason that if KSL implements a dividend policy, we should see a similar impact as observed with the said examples. MATRIX’s Share Price Performance in 2013 TAMBUN’s Share Price Performance in 2013 PRICE (RM) PER 4.2 x PER 5.8 x PER 7.5 x PER 9.1 x PER 10.8 x

PRICE (RM) 4.8 x 5.6 x 6.4 x 7.2 x 8.0 x

3.50 3.50 3.30 3.10 3.00 2.90 2.50 2.70

2.50 2.00

RM 2.30 2.10 1.50 1.90 1.00 1.70

1.50 0.50

0.00

Source: Bloomberg, Kenanga Research

More bonus issue in the future? To recap, in our previous On Our Radar report dated back in 28-Aug-14, we highlighted there might be a potential 1-for-1 bonus issue from KSL due to its relatively small share base of 386m shares (par value: 50 sen) and they would benefit from better liquidity if their share base is widened. This came true as the 1-for-1 bonus issue exercise was completed back in Dec-2014. Post this 1-for-1 bonus issue, its RM1.2b of distributable reserves as of 9M14 (distributable retained earnings and share premium) would come down to c.RM1.0b and we believe that it is more than sufficient to provide investors with at least one round of 1-for-1 and another one round 1-for-2 in the future.

2. Outlook Company Outlook Quietly acquiring landbanks. To recap, KSL has acquired approximately 42 acres of land in Johor for a total consideration of RM121.9m back in 2014 that is slated for high-rise development; note that these were largely fragmented landbanking which were below the reportable levels. Based on a conservative land cost to GDV ratio assumption of 15%, these 42 acres of land could translate to a GDV of c.RM800.0m that has been accounted in our GDV estimates of RM40.9b.

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Announced sizeable landbanking in Jan-2015 . KSL has proposed to acquire 297.2 acres of agriculture land in Batu Pahat for a total consideration of RM90.6m. For this particular parcel of land, we are estimating a potential GDV of RM208m with an assuming GDV/acre ratio of RM0.7m or approximately 53% discount to CRESNDO’s Kota Tinggi industrial land that has GDV/acre of RM1.5m. We are being more conservative on Batu Pahat land as its location is less strategic compared to Kota Tinggi. Note that we have built this potential GDV into our total GDV estimates and RNAV. On the lookout for more landbanks . We expect the group to continue landbanking in both Klang Valley and Johor region as the group is constantly on the lookout for reasonably priced landbanks as they know the property development game is about securing landbanks at attractive prices for future development. Given its light balance sheet of 0.01x as of 9M14, KSL could easily gear up to 0.51x that is by c.RM750.0m for landbanking purposes, which in turn could easily translate to a GDV of RM5.0b based on the conservative cost to GDV ratio assumption of 15%, as highlighted above. Johor Map

Source: Google Maps, Kenanga Research

Future plans to grow recurring income streams . As mentioned earlier, the group has c.100ac in Bandar Bestari Klang, which has been allocated for commercial development, out of which 50ac has been earmarked for a retail mall. Our back-of-the envelope calculations revealed that the group could yield a total NLA of 2.5-3.0m sf which is similar to the combined spaces of MidValley and The Gardens (2.6m sf NLA). We estimate that the construction cost of the entire mall could come up to around RM0.8b. While this is clearly a sizeable investment, the company has assured us that this will be done gradually over a 15-20 year development period over many phases. Assuming a 15-year development period, this works out to be RM50m CAPEX p.a. which is digestible by the group given their light balance sheet and existing recurring income streams. Currently, the group is in the midst of planning and submission of approvals. They are targeting to commence works within 2 years. REIT-ing is possible in the future. We believe the group will eventually unlock the value of these assets by REIT-ing its investment properties once it reaches a critical size. It is clear that the investment property assets in Johor are ready for REIT-ing in the next cycle, although we believe establishment of a meaningful size REIT may require more investment property assets. However, the mall development in Klang will take much longer considering construction time and gestation period. Industry Outlook Transacting new highs in Johor. As of 3Q14, Johor residential sales are at a record high, seeing 12k units of residential properties transacted (+37%, YoY), while the average transacted price has also seen an increase from RM295k/unit to RM388k/unit (+32%, YoY). The trend was quite surprising compared to Klang Valley and which was weaker trends. We believe that the surge in transaction volume and average price per unit was mainly driven by landed residential properties in the secondary market i.e. terraces, clusters, and detached houses. Bulk of the transactions was from 2-storey terraces in Johor Bahru making up a quarter of the total residential transactions of 12k in 3Q14, and these 2-storey terraces are transacted at an average price of RM440k (+24%, YoY). However, we opine that the demand for residential properties in the Johor region could soften especially post implementation of GST on April-15, while threats of oversupply of high-rises may add pressure. Nonetheless, KSL has the edge as they are more competitively priced while still having good locations vis-à-vis other developers.

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Flattish sales in Klang Valley. As compared to the Johor property market, the overall transaction for residential properties in Klang Valley remains rather flattish at 19.4k units (-1.1%, YoY) in 3Q14. However, the average transacted price per unit has continued to increase from the average RM461k/unit to RM502k/unit (+8.9%, YoY). The flattish to declining sales in Klang Valley was not entirely surprising given the constant increase in property prices and affordability issue for middle-income households and also first home buyers. Property sales to be “flat at best” to declining. In our last sector report, we stated that average sales growth rate for the current year is showing a 14% decline based on the average in developers under our coverage. As for next financial year’s sales guidance, most developers have yet to make a commitment but seem to lean towards the side of caution. Many of them cited that the next few months would serve as indicators for FY15 sales. However, we are expecting a slower year ahead with developers registering flat-to declining property sales in FY15 due to: (i) wait and see stance by buyers due to the impending GST, (ii) tighter lending environment by banks due to asset quality issues, and (iii) potential interest rate hike closer towards the end of 2HCY15 that could further hamper property sales in 2015. Hence, we are reiterating our NEUTRAL call on the sector with a slight negative bias. (Refer to our 1Q15 strategy report dated 30-Dec-2015. Johor could benefit from a weaker Ringgit. In the past 6 months, SGD has strengthened against RM by 5% since its low of RM2.52 back in Aug-14 to current levels of RM2.65. We view that a weaker RM could be good for Johor buying activities as it would encourage more Malaysians working in Singapore to own a landed property in Johor by leveraging SGD’s strength.

SGDMYR Currency Movements

Source: Bloomberg, Kenanga Research

3. Risks

High concentration risks . As 89.5% of the group’s on-going GDV of RM2.9b is highly concentrated in Johor region with the balance in the Klang Valley, the lack of geographical diversification would pose a huge risk to the group’s earnings as it is highly dependent on the property market outlook in Johor. Positively, the group does enjoy a strong source of recurring income from its Johor investment properties, while will offer some earnings cushion if the Johor property market continues to be challenging. Structural de-rating risk? As highlighted in our last strategy report dated 30-Dec-2015, there are risks of a sector de-rating once GST is implemented as we view this as a ‘structural change’ in the sector. Whilst many industry players have stated that the 6% GST will only result in a 2%-3% increase in costs, we take a different view as we think the inflationary multiplier effect from GST will have higher cost repercussions over the medium to longer term. To recap, we had highlighted in our GST studies on other countries’ property market (28/10/13 Property Sector Report), that secondary properties may gain traction over primary ones as replacement costs for the latter may significantly widen the gap between primary and secondary ones. This is also supported by the feedbacks of banks, where they are concerned about primary asset qualities given the massive run-up in prices over the last few years. Tight lending environment. According to our banking analyst, the excess liquidity in the system has shrunk to 18% (-2ppts lower than in Oct 2012) which has led banks to aggressively dishing out attractive rates to secure term deposits; in the latest campaign, deposit rates being offered at 15-78bps premium to prevailing board rates for conventional fixed deposits. However, deposits do not appear to be picking up as much as anticipated. The shrinking excess liquidity could lead to a tighter lending environment as banks are concerned over asset qualities of primary properties because prices have soared significantly over the last few years. Hence, banks could manage their asset quality risks by offering lower LTVs on primary properties, which either deter buyers or add burden to buyers with regards to cash outlays. However, Johor does have an upper edge as compared to Klang Valley as developers could still target locals that are working in Singapore.

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Absence of dividend policy. Apart from the risks above, we also highlight that the absence of a formalized dividend policy could potentially be a risk to the stock’s share price, as it would greatly disappoint the investment community which could potentially lead to lower confidence from them in the future.

4. Financials 9M14 earnings improved 15%, YoY. KSL’s 9M14 core earnings saw an increase by 15% to RM210.4m in tandem with revenue (+12%), due to billings from strong property sales, while its investment property segment continues to chalk up strong increases of 15%. The strong growth of its investment property segment was largely due to the lack of retail spaces in Johor, which is expected to continue for the next 2-3 years. The group has a record-high property unbilled sales of RM1b as of 9M14, and achieved property sales of RM695m for 9M14 or 70% of our full-year estimates of RM986m. Result Highlight FYE: 31st Dec (RMm) 3Q14 2Q14 QoQ 3Q13 YoY 9M14 9M13 YoY Revenue 206.4 220.1 -6% 216.8 -5% 634.4 565.9 12% Op costs w/o depn/amort -114.5 -117 -2% -124 -8% -358.7 -320.4 12% Other Op Income 2.5 2.9 -13% 1.8 42% 7.2 4.7 52% EBITDA 94.5 106 -11% 94.6 0% 282.9 250.2 13% EBIT 94.5 106 -11% 94.6 0% 282.9 250.2 13% Net interest -2.3 -2.3 3% -2.5 -8% -6.64 -7.8 -14% Pretax profit 92.2 103.8 -11% 92 0% 276.3 242.4 14% Taxation -22 -24.6 -10% -23.6 -7% -66 -59.5 11% Net profit 70.1 79.2 -11% 68.4 3% 210.4 182.9 15% Core net profit 70.1 79.2 -11% 68.4 3% 210.4 182.9 15% EPS (sen) 18.14 20.5 -12% 17.7 2% 54.44 29.64 84% Diluted EPS (sen) 16.03 19.23 -17% 16.78 -4% 50.08 28.53 76% DPS (sen) 10 0 n.a. 0 n.a. 10 0 n.a. NTA/share (RM) 3.89 3.7 3.34 3.89 3.34 Net gearing/(cash) (x) 0.01 0.08 0.07 0.01 0.07 EBITDA margin 46% 48% 44% 45% 44% Pretax margin 45% 47% 42% 44% 43% Effective tax rate -24% -24% 26% 24% 25% Source: Company, Kenanga Research Weaker QoQ. In 3Q14, KSL’s core earnings of RM70.1m was weaker (-11%) in tandem with its revenue (-6%) due to lower revenue contribution from its property segment (-7%) attributable to slower progressive billings coupled with EBIT margins compressed by -2.5ppt to 44.6% mainly due to the property, and property investment division from higher administrative and marketing expenses. Segnental Review Revenue 3Q14 2Q14 QoQ 3Q13 YoY 9M14 9M13 YoY Property Development 167.1 180.6 -7% 182.2 -8% 520 466.9 11% Property Investment 38.5 38.6 0% 34.1 13% 111.8 97.4 15% Car Park Operator 0.8 0.9 -20% 0.5 52% 2.6 1.6 64% Investment Holding 0 0 n.a. 0 n.a. 0 0 n.a. Others 0 0 n.a. 0 n.a. 0 0 n.a. Total 206.4 220.1 -6% 216.8 -5% 634.4 565.9 12%

Pre -tax Profit Property Development 75 83.8 -11% 76.4 -2% 223.6 197.6 13% Property Investment 21.8 23.4 -7% 18 22% 65.2 56.4 15% Car Park Operator 0.7 0.9 -20% 0.4 64% 2.4 1.4 71% Investment Holding 1 1.8 -44% -1.7 -160% 3.2 -0.3 -1029% Others -4 -3.8 6% -0.1 3781% -11.4 -4.9 131% Total 94.5 106 -11% 93.1 2% 282.9 250.2 13%

Pre -tax margins Property Development 45% 46% 42% 43% 42% Property Investment 57% 61% 53% 58% 58% Car Park Operator 94% 94% 87% 94% 89% Investment Holding n.a. n.m. n.m. n.m. n.m. Source: Company, Kenanga Research Note on 4Q13 results. Although FY13 was a fantastic year for KSL in which they achieved 35%, YoY growth, we note that in 4Q13 recorded a net loss of RM10.5m, which was a massive shock to investors. This was due to a one-off fair value adjustment of RM9.4m and provision of deferred taxation for RPGT of RM13m. Stripping-out this one-off item, the group would have recorded core net loss of RM6.9m in 4Q13. This is due to a sharp 118% rise in selling and marketing expenses due to financing schemes relating to projects that were launched. Going forward, we do not expect such severe hiccups in the next 12 months.

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Warrants as of 9M14. KSL has a remaining 94.3m (cum-bonus) warrants left unexercised with an exercise price of RM1.60 (cum-bonus). To recap, these warrants listed back in 2011 and are set to expire in 2016, it has a conversion ratio of 1-to-1 which investors can exercise their rights to convert into shares at any point of time before its expiry in 2016. Exercising the remaining warrants will increase its share base by 24%. Post-bonus issue, its warrants exercise price are adjusted down to RM0.80 and currently it is in the money as its trading slightly below its mother.

Year 2013 Segmental Breakdown Property development Property investment Investment holding Carpark operation Property management Total Revenue 542.9 134.7 10.4 2.4 0.0 Segment Expenses 385.2 27.6 0.1 0.5 (0.1) Segment Profit 157.7 107.1 10.3 2.0 0.1 Segment Profit Margin 29% 80% 99% 81% 0%

Source: Company, Kenanga Research

Year 2013 Segment Revenue vs Segment Profit Margin

Segment Revenue vs Segment Profit Margin

Segment Expenses Segment Profit Segment Profit Margin

600 100% 90% 500 80% 70% 400 60%

300 50% 40% 200 30% 20% 100 10% 0 0% Property Property Investment Carpark Property development investment holding operation management

Source: Company, Kenanga Research

Year 2013 Segment Revenue Year 2013 Segment Profit

Total Revenue Segment Profit 0% 1% 1% 0% 4% 0% 20%

Property development Property development Property investment Property investment 39% Investment holding Investment holding Carpark operation 56% Carpark operation Property management Property management

79%

Source: Company, Kenanga Research

Estimating FY14-15-16E core earnings of RM293m, RM310m and RM348m (+66%, +6% and +12% YoY), respectively. The group has a record-high property unbilled sales of RM1b as of 9M14, that provides at least 1 year of earnings visibility to the group. As of 9M14, KSL has achieved property sales of RM695m vs. our full-year estimates of RM986m which we believe is highly achievable. For property development in FY15-16E, we are estimating flattish sales of RM988m-RM993m given the current challenging property market with an effective take-up rate of 61% based on our assumed launches of RM1.6b for each year. Out of the RM988m-RM993m sales estimates for FY15-16E, Johor makes up a major proportion of 91% and Klang Valley makes up the remaining 9%;while assuming a 40% development margins (EBIT) for most of its projects. As for their investment properties, we estimate that operating income will grow by 15% p.a. over FY14-15E as the mall is still in its growth stage with an assumed operating margin of 55%. We gather than lease renewals are quite equal over a 3 year period.

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Expecting dividend yields of 5.2%, 5.5%, 6.2% for FY14,15,16E , on the back of single-tier DPS of 11.2, 11.8sen and 13.3sen (net dividend yield of 5.2%, 5.5%, 6.2%), respectively, based on a payout ratio of 30% of core PATAMI for each year. For now, we are assuming 30% payout because approximately a third of its earnings are from its recurring income stream arising from its investment properties which would remain the case for the next 2-3 years.

5. Valuation Attractive valuations vis-à-vis peers. KSL is currently trading at FY14-15E core PERs of 5.8x-5.4x which is attractive against its mid-cap peers’average of 8.2x-7.5x. In terms of PBV, KSL is still trading at 1.1x which is still below its peers average of 1.2x. We also like to point out that: (i) KSL’s earnings growth is also stronger than its peers (refer peer comparison table part 2), (ii) developers that deliver close to RM300m core earnings annually are typically large cap developers with a minimum market cap of RM3b. In terms of dividend yield, KSL’s dividend yield is decent at 5.3% close to its mid-cap peers’ average of 5.0%.

Peer Comparison (Part 1 of 2) NAME Price Mkt Cap PER (x) PER (x) Est. NDiv. Yld. P/BV (RM) (RMm) FY14/15E FY15/16E (%) (x) MATRIX CONCEPTS 2.88 1,319 6.8 6.8 6.6% 1.6 YNH PROPERTY ^ 1.98 813 12.4 10.7 2.6% 0.9 GLOMAC ^ 1.02 741 8.2 6.9 4.6% 0.8 TAMBUN INDAH LAND ^ 1.94 818 6.7 6.3 5.1% 2.1 PARAMOUNT CORP ^ 1.51 638 8.9 8.9 6.0% 0.8 HUA YANG 2.22 586 5.7 5.7 6.0% 1.3 CRESCENDO * 2.55 580 8.9 7.4 4.6% 0.9 Mid-Cap Average 8.2 7.5 5.1% 1.2

KSL * 2.15 1,962 5.8 5.4 5.2% 1.1

S P SETIA BHD* 3.43 8,717 19.1 17.0 2.9% 1.3 IOI PROPERTIES * 2.08 7,860 18.3 16.1 3.4% 0.6 UEM SUNRISE BHD* 1.39 6,307 11.9 16.8 1.8% 1.0 SUNWAY BHD 3.29 5,668 10.5 10.4 3.0% 1.0 IJM LAND BHD* 3.63 5,659 16.8 16.1 1.7% 1.6 MAH SING GROUP BHD^^ 1.60 3,840 10.1 9.3 4.1% 1.2 UOA DEVELOPMENT BHD* 2.05 2,934 11.0 9.9 6.3% 1.1 Large Cap Average 14.0 13.7 3.3% 1.1 * Core NP and Core PER * Crescendo per share data is based on non-fully diluted figures ^ Estimates are from Bloomberg

Source: Bloomberg, Kenanga Research

Peer Comparison (Part 2 of 2) Net Profit Net Profit FY13/14 NP NAME Price Mkt Cap FY14/15 NP Growth (RMm) (RMm) Growth (RM) (RMm) FY14/15 FY15/16 (%) (%) MATRIX CONCEPTS 2.88 1,319 190 191 4% 0% YNH PROPERTY ^ 1.98 813 66 76 35% 16% GLOMAC ^ 1.02 741 91 108 15% 18% TAMBUN INDAH LAND ^ 1.94 818 121 129 14% 7% PARAMOUNT CORP ^ 1.51 638 72 72 -6% 0% HUA YANG 2.22 586 103 103 25% 0% CRESCENDO * 2.55 580 66 79 -22% 20% Mid-Cap Average 9% 9%

KSL * 2.15 1,962 293 310 66% 6%

S P SETIA BHD* 3.43 8,717 457 511 27% 12% IOI PROPERTIES * 2.08 7,860 429 487 -11% 14% UEM SUNRISE BHD* 1.39 6,307 529 376 15% -29% SUNWAY BHD 3.29 5,668 540 543 12% 0% IJM LAND BHD* 3.63 5,659 336 352 0% 5% MAH SING GROUP BHD^^ 1.60 3,840 380 411 12% 8% UOA DEVELOPMENT BHD* 2.05 2,934 267 296 -23% 11% Large Cap Average 5% 3%

* Core NP and Core PER ** Crescendo per share data is based on non-fully diluted figures ^ Estimates are from Bloomberg

Source: Bloomberg, Kenanga Research

Initiating coverage with OUTPERFORM on KSL with a Target Price of RM2.76 based on 61% discount to our FD RNAV of RM7.07. Our RNAV is driven by DCF of future development profits (RM40b GDV @ 20% net margin over 20 years) at 11% WACC. Our net margin assumption is conservative considering that he company has recorded an average core net margin of 29.6% over the last 3 years. We have also re-valued its investment properties based on a conservative cap rate of 7% on FY15E investment property EBIT.

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The applied RNAV discount is in-line with the discount range of 60%-65% applied to the Johor based developers under our coverage i.e. CRENSDO and UEMS; this is to take into account the market’s wariness of Johor. Our Target Price of RM2.76 offers 37% total returns and implies FY14-15E core PER of 7.4x-7.0x, which is still cheaper than its mid-cap peer averages of 8.2x-7.5x. On a fully diluted basis, assuming all of its warrants are converted, KSL valuation remains attractive as our Target Price of RM2.76 still implies FY14-15E core PER of 7.4x-7.0x only, which is closer to its peer average of 8.2x-7.5x. We admit that the Malaysian property landscape will be challenging this year, particularly 6-9 months after GST implementation, so share price could be volatile. However, we reckon that the deep values of KSL should offer some valuation downside risks to current levels while we believe this year’s volatility in property share prices should offer good entry points for long-term positioning of the stock. Hence, we are commencing full coverage on KSL with an OUTPERFORM recommendation. Note that we published an On Our Radar report on KSL (21-Aug-2014) with a Trading Buy call and a FV of RM6.63 (cum-bonus issue).

FD RNAV Stake Land (ac) Duration Est. GDV Est. Net WACC DCF* (yrs) (RM'm) Profit (RM'm) (RM'm) Johor Bestari Indah, Tebrau, Ulu Tiram 100% 236 20 9,884 1,977 11% 787 Kempas Indah, Johor Bahru 100% 80 10 3,342 668 11% 394 Nusa Bestari, Skudai 100% 18 8 783 157 11% 101 Other Johor Bahru Land (fragmented 100% 402 20 9,254 1,851 11% 737 landbanks) Taman Mengkibol, Kluang 100% 150 462 92 11% - Segamat 100% 592 15 1,368 274 11% 131 Muar 100% 138 15 319 64 11% 31 Mersing 100% 19 10 38 7 11% 4 Batu Pahat 100% 4 5 16 3 11% 2 Mukim Tebrau 100% 17 8 431 86 11% 56 Batu Pahat, Agriculture land 100% 297 20 208 42 11% 17 Klang Valley - Bandar Bestari, Klang, Selangor 100% 367 15 10,435 2,087 11% 1,001 Commercial @ Bdr Bestari, Klang, Selangor 100% 100 15 4,232 846 11% 329 18 Madge @ Ampang KL 100% 1 4 180 36 11% 28 Sub-total 2,422 40,952 8,189 3,616 * After Stake NBV FY14E Applied Revalued Suplus / (RM'm) EBIT Cap Rate Asset (Deficit) (RM'm) (RM'm) (RM'm) Investment Properties (KSL City Mall, KSL 497 144 7% 2055 1558 Resort, Giant @ Muar, Giant @ Nusa Bestari) @ 30/9/14 Total Surplus 5,174 Shareholder’s Funds @ 30/9/14 1,503 RNAV 6,677 Dilution Impact 156 FD RNAV 6,833 FD No. of Shares ('m) 966.0 FD RNAV/sh (RM) RM7.07 Applied Discount 61% FV (RM) RM2.76

Source: Kenanga Research

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6. Appendix

Company background. KSL Holdings Bhd (KSL) is an investment holding company that provides management services to subsidiaries. It is listed on the main board of Bursa Malaysia in February 2002. The Company is involved in property development, property management, property investment, investment holding and car park operation via its subsidiaries. The Group performs all aspects of development from land purchasing to final property inspection. It focuses on building township, which comprises commercial buildings, gated residential, shopping malls and high-rise condominiums. The Group has landbank for residential and commercial development in Johor and Selangor. The Group has a number of successful housing projects in Johor Bahru, which include Taman Nusa Bestari 2, Taman Nusa Bestari, Taman Bestari Indah and Taman Kempas Indah. The Groups townships include Canary Garden, Bestari Indah, Kempas Heights, Taman Mengkibol, and Bestari Heights. The group’s high-rise luxury residences include Ampang 18 Madge, D’ Esplande Residence, D’ Inspire Residence, and D’ Secret Garden. The group has a shopping mall known as KSL City Mall, and a Hotel and Hospitality Resort, most of which are located in Johor and some in Klang. The Group’s current projects include the development of Bandar Bestari in Klang with a gross development value of RM2.5b.

Corporate Structure

Source: Company, Kenanga Research

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Board of Directors’ Profile Name Position Background Ku Hwa Seng Executive Chairman • Has approximately 30 years of experience in property development industry • Overseas the day-today management, decision-making and operations of Johor Bahru offi ce and is involved in the KSLH Group’s business development and operations in south Johor • A director of most of the subsidiary companies within the KSL Holdings Berhad (KSLH) Group and several other private limited companies Khoo Cheng Hai Group Managing Director / Members • Founder of KSLH Group, he is responsible for the KSLH Group’s @ Ku Cheng Hai of Remuneration Committee and business development and day-to-day operations of the KSLH Group Risk Management Committee • Helped to see the KSLH Group through 2 recessions in the last 30 years • A director of most of the subsidiary companies within the KSL Holdings Berhad and several other private limited companies Ku Tien Sek Executive Director • Responsible for the development of the KSLH Group’s future expansion plans and is involved in the KSLH Group’s business development and operations in Klang Valley • A director of most of the subsidiary companies within the KSL Holdings Berhad and several other private limited companies Lee Chye Tee Executive Director • A fellow member of the Chartered Association of Certified Accountants and a member of the Malaysian Institute of Accountants and the Malaysian Institute of Taxation • Has many years experience in accounting, auditing, taxation and management consultancy • Responsible for the overall accounting and corporate finance functions of the KSLH Group Gow Kow Independent Non-Executive Director • A fellow member of he Association of Chartered Certified Accountants / Chairman of Audit Committee and and the Malaysian Institute of Taxation and a member of the Risk Management Committee / Malaysian Institute of Accountants, the Institute of Certified Public Members of Nomination Committee Accountants of Singapore and the Institute of Chartered Secretaries and Remuneration Committee and Administrators • A managing partner of a public accounting firm, Gow & Tan and has over 30 years ofd public practice experience, including accounting, auditing, taxation, liquidation and management consultancy Goh Tyau Soon Independent Non-Executive Director • Holds a Master of Law degree (LLM) from Kings College, University of / Chairman of Nomination Committee London; Bachelor of Law (LLB) from Hull University and Barrister-at- / Members of Audit Committee, Law (Middle Temple) Remuneration Committee and Risk • Has more than 40 years experience in private practice principally Management Committee engged in conveyance and bank work • A practicing lawyer and Principal Partner of Andrew T.S. Goh & Khairil, Tey Ping Cheng Independent Non-Executive Director • A member of the Malaysian Institute of Accountants and the CPA / Chairman of Remuneration Australia Committee / Members of Audit • A Partner of Tey Consultancy, a company secretarial and tax Committee, Nomination Committee consultancy firm since 1992 and Risk Management Committee • Currently, he is the Council Member of Malaysian Association of Company Secretaries and the Independent Director of Lii Hen Industries Bhd

Source: Company; Kenanga Research

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Property Portfolio Details

Taman Bestari Indah Taman Bestari Indah

On-going Project Name: Taman Bestari Indah Location: Tebrau, Ulu Tiram, Johor GDV (RM'm): 9,884 Type Double storey terrace and shop house Tenure Freehold Built up/unit (sf) Double storey terrace (Jasmine 2) 2,405 Double storey shop house: 3,080 Single storey shop house: 1,540 Double storey terrace (Puteri Park @ KSL): 3,120 Start date: Completion Date Double storey terrace (Puteri Park @ KSL): Mar 2016 Take-up rate

Sources: Company

Taman Bestari Indah comprises an estimated GDV of RM9,884.0m. It is a 715 acres mixed development township with more than 15,000 units of residential and commercial hubs. It is located about 19.0km north of Johor Bahru City Centre and about 40.km west of Ulu Tiram town. It has easy accessibility to Tebrau Highway, Hingway, North-South Highway & - Highway. The facilities include 8 acres of recreational pond area, Bestari Mall, petrol kiosk, school and kindergardens, children playground and commercial centre.

Taman Kempas Indah Taman Kempa s Indah

On-going Project Name: Taman Kempas Indah Location: Johor Bahru, Johor GDV (RM'm): 3,342 Type Cluster house, link bungalow, double storey shop office Tenure Freehold Built up/unit (sf) Cluster house: 3,124 Link bungalow: 3,492 Double storey shop office: 3,080 Start date: Completion Date Cluster house and link bungalow: Dec 2011 Take-up rate

Sources: Company

Taman Kempas Indah comprises an estimated GDV of RM3,342.0m. Taman Kempas Indah has an estimated area of 237 acres and it is located about 18.0km north of Johor Bahru City Centre and situated along the North-South Highway, Jalan Maju Jaya and is adjacent to the north-east of the Kempas Interchange. It is closely connected to and Tebrau Highway via North-South Highway. The nearest rail station is KTM Kempas Baru, which is approximately 7 minutes drive away. It provides enhanced security feature, which include 24-hour security guard patrolling, guarded entrance, smart card access, perimeter fencing with surveillance, gated community, CCTV and security alarm system. The latest development is Kempas Heights, a newly established gated community township with cluster houses in Kempas Indah.

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D’Secret Garden @ Kempas Indah D’Secret Garden @ Kempas Indah

On-going Project Name: D’Secret Garden @ Kempas Indah Location: GDV (RM'm): Type Condominium Tenure Built up/unit (sf) Start date: Completion Date Take-up rate

Sources: Company

D’Secret Garden @ Kempas Indah is It is 8 minutes to the JB City Centre and 10 minutes drive away from CIQ via Eastern Dispersal Link Expressway (EDL). It is closely connected to Pasir Gudang Highway and Tebrau Highway via North-South Highway. The nearest rail station is KTM Kempas Baru, which is approximately 7 minutes drive away. The facilities include sky spa, jogging track, jacuzzi, gymnasium & fitness centre, foot reflexology paths and golf putting greens. It also provides enhanced security features such as gated and guarded security, 24 hours guardhouse, CCTV and access card system. The upcoming Kempas Sentral, an integrated transportation hub that offer bus and taxi services, Rapid Transit System (RTS) railway link and High Speed Rail (HSR) that connects Singapore and .

Taman Nusa Bestari Taman Nusa Bestari

On-going Project Name: Taman Nusa Bestari Location: Skudai, Johor GDV (RM'm): 783 Type Cluster house, semi-detached, shop office and serviced apartment Tenure Freehold Built up/unit (sf) Cluster house: 3,940 (Type D), 3,007 (Aster), 3,236 (Begonia), 3,494 (Clover) Semi-detached: 4,819 Shop office: 4,659 (3+1 storey), 3,080 (2 storey) Serviced apartment: 446 to 5,103 Start date: Completion Date Cluster house: Aug 2012 (Aster, Begonia, Clover), Dec 2014 (Type D) Semi detached: Jan 2011 Take-up rate

Sources: Company

Taman Nusa Bestari comprises an estimated GDV of RM783.0m. It has 2 parcels of freehold land with a total area of approximately 227 acres. It is located along Jalan Sungai Danga and both sides of the Second Link Highway from Johor Bahru to Singapore. It can be accessible via North South Highway and Iskandar Coastal Highway. The nearest rail station is KTM Kempas Baru, which is approximately 16 minutes drive away. It provides enhanced security feature, which include 24-hour security guard patrolling, guarded entrance, smart card access and perimeter fencing with surveillance. The facilities available include school and colleges, hospital, hypermart, banks, petrol station and commercial centre.

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D’Inspire Residence @ Nusa Bestari D’Inspire Residence @ Nusa Bestari

On-going Project Name: D’Inspire Residence @ Nusa Bestari Location: Taman Nusa Bestari, Johor Bahru, Johor GDV (RM'm): Type Condominium Tenure Built up/unit (sf) Start date: Completion Date Take-up rate

Sources: Company

D’Inspire Residence @ Nusa Bestari is located in the prime district of Nusajaya and it is close to the shopping and entertainment hotspots along Jalan Sutera Danga. It is accessible via the New Coastal Highway, Skudai Highway, North-South Highway and Second Link Interchange to Singapore. The nearest rail station is KTM Kempas Baru, which is approximately 16 minutes drive away. The facilities include jogging track, jacuzzi, gymnasium & fitness centre, foot reflexology paths and golf putting greens.

Taman Mengkibol Taman Mengkibol

On-going Project Name: Taman Mengkibol Location: Kluang, Johor GDV (RM'm): 462 Type Single and double storey terrace house, double storey shop office Tenure Freehold Built up/unit (sf) Single storey terrace house: 1,131 Double storey terrace house: 2,096 Double storey shop office: 3,080 Start date:

Completion Date Single and double storey terrace house: June 2014 Take-up rate

Sources: Company

Taman Mengkibol comprises an estimated GDV of RM462.0m. It is located in Kluang and has easy accessibility via North- South Highway. It only takes approximately 4 minutes to the nearest rail station, KTM Mengkibol. The facilities available around the area comprises country club, wet market, commercial centre, shopping amenities and hypermart.

KSL Residence @ KSL Residence @ Taman Daya

On-going Project Name: KSL Residences @ Daya Location: Tebrau, Johor Bahru GDV (RM'm): Approximately 700 Type Condominium Tenure Built up/unit (sf) Start date: Completion Date Take-up rate

Sources: Company

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KSL Residence @ Taman Daya is located at the junction of Jalan and Jalan Daya within Kangkar Tebrau, which is about 12.0km north of Johor Bahru City Centre. It is near to Pasir Gudang Highway and North South Highway next to EX IT 256. It has been designated as an integrated public transportation hub for . It comprises of one block of hotel with 360 units and 3 blocks of service apartment with 1,022 units. The nearest industrial area is Kawasan Perindustrian Tebrau II & IV and pandan Industrial area while the nearest rail station is KTM Kempas Baru, which is approximately 14 minutes drive away. The facilities include poolside gymnasium, guard house, jazuzzi and reflexology area.

D’Esplanade Residence @ KSL City D’Esplanade Residence @ KSL City

On-going Project Name: D’Esplanade Residence @ KSL City Location: KSL City, Johor Bahru, Johor GDV (RM'm): Type Condominium Tenure Built up/unit (sf) Start date: Completion Date Take-up rate

Sources: Company

D’Esplanade Residence @ KSL City is a condominium located above the KSL City Mall. is located at the heart of Johor Bahru City Centre and it takes only 5 minutes drive to Johor Bahru new custom, Immigration and Quarantine (CIQ). The nearest rail station is KTM Danga City Mall, which is approximately 5 minutes drive away. The facilities include swimming pool, wading pool, gymnasium, sauna and jacuzzi. It provides enhanced security features such as CCTV, individual drop off and security check point for individual block entrance and access card system.

Canary Garden @ Bandar Bestari Canary Garden @ Bandar Bestari

On-going Project Name: Canary Garden @ Bandar Bestari Location: Klang, Selangor GDV (RM'm): 10,435 Type 2-storey Semi-Detached link, 2 and 3- storey Semi-Detached and bungalows Tenure Freehold Built up/unit (sf) 2 storey semi d-link: 2,848 (Bluet), 2,847 (Fraise) 2 storey semi d: 3,467 (Alisier), 3,447 (Tulipe) 3 storey semi d: 4,739 (Pervenche), 5,013 (Argentine) Start date: Completion Date May 2014 Take-up rate

Sources: Company

Canary Garden @ Bandar Bestari comprises an estimated GDV of RM10,435.0m. It is a mixed development township on approximately 465 acres in Klang. It is located along Jalan Klang-Banting and about 15 minutes from Klang town centre. It is close to shopping centres such as AEON Bukit Tinggi and Bukit Raja Jusco and it can be conveniently connected via North Klang Valley Expressway (NKVE), Kesas, Federal Highway and South Klang Valley Expressway (SKVE). The nearest rail station is KTM Klang, which is approximately 20 minutes drive away. The Canary Garden integrates 52 acres of French-inspired garden on both sides of the Blackwater River and the Canary Garden Commercial City, a 90 acre area of retail and commercial business centre.

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KSL Holdings Bhd Initiating Coverage

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Commercial City at Canary Garden @ Bandar Bestari Commercial City at Canary Garden @ Bandar Bestari

On-going Project Name: Commercial City at Canary Garden @ Bandar Bestari Location: Klang, Selangor GDV (RM'm): 4,232 Type Retail space, three storey shoplots, SOHO, serviced residences and condominiums Tenure Built up/unit (sf) Retail space: 1,500,000 (KSL City Mall 2) Three storey shoplots: 4,950 (The Boulevard Mall) Shop offices: 1,540 Start date: Completion Date Take-up rate

Sources: Company

Commercial City at Canary Garden @ Bandar Bestari comprises an estimated GDV of RM4,232.0m. It covers 90 acre area of retail and commercial business centre, which is inclusive of KSL City Mall 2, the Boulevard Mall and SOHO, serviced residences and condominiums. The KSL City Mall 2 covers a total retail space of 1.5m square feet, which is larger than KSL City Mall, the biggest shopping mall in Johor Bahru covering 880,000 square feet. The Boulevard Mall is three storey shoplots that situated near to the Blackwater River. SOHO, serviced residences and condominiums are located above the KSL City Mall 2 and it is provided with concierge and hotel management services.

18 Madge 18 Madge

On-going Project Name: 18 Madge Location: Ampang, Kuala Lumpur GDV (RM'm): 180 Type Condominium Tenure Built up/unit (sf) Start date: Completion Date Take-up rate

Sources: Company

18 Madge comprises an estimated GDV of RM180.0m. It is a 10 storey high-end property residential project with a total of 50 units offered at 8 classic designs. It is located within the golden triangle of Kuala Lumpur, at Jalan Madge off Jalan U-Thant Ampang Hilir, around the U-thant Embassy Area and it is near to Petronas Twin Towers, Kuala Lumpur City Centre (KLCC) and leading 5-star restaurants and hotels along Jalan Sultan Ismail and Jalan Ampang. The nearest rail station is LRT , which is approximately 4 minutes drive away.

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KSL Holdings Bhd Initiating Coverage

17 February 2015

Investment Properties Details

KSL City Mall KSL City Mall

On-going Project Name: KSL City Mall Location: Jalan Seladang, Taman Abad, Johor Bahru, Johor GDV (RM'm): Type Retail shops, condominium Tenure Built up/unit (sf) Start date: Completion Date 2013 Take-up rate

Sources: Company

KSL City Mall comprises of retail shops, hypermarts, cinemas, hotel and condominium. It is located at the heart of Johor Bahru City Centre and it takes only 5 minutes’ drive to Johor Bahru new custom, Immigration and Quarantine (CIQ). The nearest rail station is KTM Danga City Mall, which is approximately 5 minutes drive away. The tenants in KSL City Mall include upmarket shopping, garment, entertainment and recreational experience. The construction of condominium was completed in year 2013.

KSL Hotel & Resort KSL Hotel & Resort

On-going Project Name: KSL Hotel & Resort Location: Jalan Seladang, Taman Abad, Johor Bahru, Johor GDV (RM'm): Type Retail shops, condominium Tenure Built up/unit (sf) Start date: Completion Date 2013 Take-up rate

Sources: Company

KSL Hotel & Resort is the largest integrated resort in Johor Bahru. It is located within KSL City Mall, whereby 868 rooms and suites with luxurious interior and first class facilities are available. The facilities provided include Infusion Café I Restaurant, a local and international cuisine, Twilight Lounge & Bar that serves afternoon snacks and tea, and Mission Bar & Grill, an open bar with BBQ dinner offered. A dinosaur water theme park can also be accessed here. The nearest rail station is KTM Danga City Mall, which is approximately 5 minutes drive away.

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KSL Holdings Bhd Initiating Coverage

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Income Statement Financial Data & Ratios FY Dec (RM m) 2012A 2013A 2014E 2015E 2016E FY Dec (RM m) 2012A 2013A 2014E 2015E 2016E Revenue 403 680 938 983 1090 Growth (%) EBITDA 178 266 410 433 480 Revenue 48% 69% 38% 5% 11% Depreciation -4 -11 -11 -12 -13 EBITDA 42% 49% 54% 6% 11% EBIT 175 256 399 420 467 EBIT 41% 46% 56% 5% 11% Net Interest Expense -10 -8 -8 -7 -4 Pre-tax Income 54% 48% 53% 6% 12% Associate/JCE 10 8 0 0 0 Net Income 57% 42% 62% 6% 12% Exceptionals/FV 3 -5 0 0 0 Core Net Income 57% 35% 66% 6% 12% PBT 173 255 391 413 464 Taxation -45 -74 -98 -103 -116 Profitability (%) Minority Interest 0 0 0 0 0 EBITDA Margin 44% 39% 44% 44% 44% Net Profit 128 182 293 310 348 EBIT Margin 43% 38% 43% 43% 43% Core Net Profit 130 176 293 310 348 PBT Margin 43% 38% 42% 42% 43% Net Margin 32% 27% 31% 32% 32% Core Net Margin 32% 26% 31% 32% 32% Balance Sheet Effective Tax Rate 26% 29% 25% 25% 25% FY Dec (RM m) 2012A 2013A 2014E 2015E 2016E ROE 12% 14% 20% 18% 18% Fixed Assets 1156 1184 1237 1375 1412 ROA 8% 10% 14% 14% 15% Intangibles 0 0 0 0 0 Other FA 9 7 7 7 7 DuPont Analysis Inventories 339 323 370 388 432 Net margin (%) 32% 27% 31% 32% 32% Receivables 53 148 298 307 331 Assets Turnover (x) 0.2 0.4 0.5 0.4 0.5 Other CA 25 22 22 22 22 Leverage Factor (x) 1.5 1.4 1.4 1.3 1.2 Cash 45 106 101 157 158 ROE (%) 12% 14% 20% 18% 18% Total Assets 1627 1789 2034 2256 2361 Leverage Payables 72 104 134 139 151 Debt/Asset (x) 0.14 0.11 0.10 0.09 0.02 ST Borrowings 80 82 50 50 50 Debt/Equity (x) 0.21 0.15 0.13 0.12 0.03 Other ST Liability 97 85 85 85 85 Net Debt/(Cash) 185.1 84.9 99.1 43.0 -107.8 LT Borrowings 150 109 150 150 0 Net Debt/Equity (x) 0.2 0.1 0.1 0.0 -0.1 Other LT Liability 120 129 129 129 129 Minority Int. 0 0 0 0 0 Valuations Net Assets 1108 1280 1485 1702 1946 EPS (sen) 10.3 16.3 23.1 37.3 39.5 Core EPS (sen) 10.6 16.6 22.5 37.3 39.5 Share Capital 256 254 254 254 254 FD Core EPS (sen) 8.6 13.5 18.3 30.4 32.1 Reserves 851 1026 1231 1448 1692 NDPS (sen) 0.0 0.0 0.0 11.2 11.8 Shareholders Equity 1108 1280 1485 1702 1946 BV/share (RM) 2.54 2.87 3.35 1.89 2.17 PER (x) 20.8 13.2 9.3 5.8 5.4 Cashflow Statement Core PER (x) 20.3 13.0 9.6 5.8 5.4 FY Dec (RM m) 2012A 2013A 2014E 2015E 2016E FD Core PER 25.0 15.9 11.8 7.1 6.7 Operating CF 35 153 146 306 309 Net Div. Yield (%) 0.0% 0.0% 0.0% 5.2% 5.5% Investing CF -151 -59 -64 -150 -50 PBV (x) 0.85 0.75 0.64 1.14 0.99 Financing CF -10 -39 -86 -100 -258 EV/EBITDA (x) 15.3 10.5 6.7 4.4 4.0 Net Change in Cash -126 55 -5 56 1 Free Cash Flow -87 145 179 260 375 Source: Kenanga Research

Fwd Core PER Band Fwd PBV Band

Source: Bloomberg, Kenanga Research

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KSL Holdings Bhd Initiating Coverage

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Peer Comparison Est. FY13/14 FY14/15 Price Historical Target Mkt Cap PER (x) NDiv. P/BV Net Profit (RMm) NP NP Rating (16/2/15) ROE Price NAME Yld. Growth Growth (RM) (RMm) FY13/14 FY14/15 FY15/16 (%) (%) (x) FY13/14 FY14/15 FY15/16 (%) (%) (RM)

DEVELOPERS UNDER COVERAGE S P SETIA BHD* 3.43 8,717 24.1 19.1 17.0 2.9% 6.8% 1.3 361.0 457.0 510.9 26.6% 11.8% 3.95 OUTPERFORM

IOI PROPERTIES GROUP BHD* 2.08 7,860 16.4 18.3 16.1 3.4% 4.3% 0.6 479.2 428.6 487.3 -10.6% 13.7% 2.12 MARKET PERFORM UEM SUNRISE BHD* 1.39 6,307 13.7 11.9 16.8 1.8% 10.2% 1.0 459.1 528.9 376.2 15.2% -28.9% 1.60 MARKET PERFORM SUNWAY BHD 3.29 5,668 11.7 10.5 10.4 3.0% 33.6% 1.0 482.7 540.1 542.6 11.9% 0.5% 3.65 OUTPERFORM

IJM LAND BHD* 3.63 5,659 16.9 16.8 16.1 1.7% 17.7% 1.6 335.2 336.0 352.1 0.2% 4.8% 3.55 ACCEPT OFFER

MAH SING GROUP BHD^ 1.60 3,840 11.3 10.1 9.3 4.1% 16.1% 1.2 339.2 380.3 411.3 12.1% 8.2% 1.74 MARKET PERFORM UOA DEVELOPMENT BHD* 2.05 2,934 8.5 11.0 9.9 6.3% 16.0% 1.1 344.6 266.8 295.7 -22.6% 10.8% 2.00 MARKET PERFORM MALAYSIAN RESOURCES CORP 1.44 2,573 -64.7 27.3 20.0 0.8% -2.5% 1.5 -36.7 87.1 119.1 -337.1% 36.8% 1.27 MARKET BHD PERFORM KSL HOLDINGS BHD 2.15 1,962 9.6 5.8 5.4 5.2% 13.8% 1.1 176.4 293.3 310.0 66.2% 5.7% 2.76 OUTPERFORM

TROPICANA CORP BHD 1.06 1,456 3.9 6.1 8.8 2.1% 11.9% 0.4 304.5 191.7 133.0 -37.0% -30.6% 1.15 MARKET PERFORM MATRIX CONCEPTS HOLDINGS 2.88 1,319 7.1 6.8 6.8 6.6% 29.5% 1.6 182.6 190.2 190.5 4.1% 0.2% 3.05 OUTPERFORM BHD CRESCENDO CORPORATION BHD* 2.55 580 6.9 8.9 7.4 4.6% 18.4% 0.9 84.2 65.7 78.8 -21.9% 19.9% 2.46 MARKET PERFORM HUA YANG BHD 2.22 586 7.1 5.7 5.7 6.0% 22.8% 1.3 82.2 102.9 102.8 25.2% -0.1% 2.20 MARKET PERFORM CREST BUILDER HOLDINGS BHD 1.20 197 6.0 18.6 11.8 1.3% 8.9% 0.5 32.7 10.6 16.7 -67.5% 57.6% 1.30 MARKET PERFORM

CONSENSUS NUMBERS BERJAYA LAND BHD 0.80 3,992 121.2 n.a. n.a. n.a. 0.6% 0.8 32.9 n.a. n.a. n.a. n.a. 0.93 SELL IGB CORPORATION BHD 2.74 3,658 18.3 16.6 15.2 2.5% 4.7% 0.8 199.8 220.3 240.3 10.2% 9.1% 4.10 NEUTRAL YNH PROPERTY BHD 1.98 813 16.7 12.4 10.7 2.6% 5.7% 0.9 48.8 65.7 76.0 34.7% 15.6% 1.88 NEUTRAL YTL LAND & DEVELOPMENT BHD 0.82 680 30.9 n.a. 34.2 n.a. 2.4% 0.7 22.0 n.a. 19.9 n.a. n.a. n.a. NEUTRAL GLOMAC BHD 1.02 741 9.4 8.2 6.9 4.6% 8.9% 0.8 78.7 90.9 107.6 15.4% 18.4% 0.97 SELL PARAMOUNT CORP BHD 1.51 638 8.4 8.9 8.9 6.0% 8.6% 0.8 76.4 71.8 71.8 -6.0% 0.0% 1.54 NEUTRAL IVORY PROPERTIES GROUP BHD 0.43 189 8.3 n.a. n.a. n.a. 6.0% 0.4 22.8 n.a. n.a. n.a. n.a. n.a. BUY TAMBUN INDAH LAND BHD 1.94 818 7.7 6.7 6.3 5.1% 30.2% 2.1 106.1 121.4 129.4 14.4% 6.6% 2.15 BUY

* Core NP and Core PER ** Crescendo per share data is based on non-Fully Diluted ^ Ex-rights and Ex-Bonus Source: Kenanga Research

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KSL Holdings Bhd Initiating Coverage

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Stock Ratings are defined as follows:

Stock Recommendations

OUTPERFORM : A particular stock’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). MARKET PERFORM : A particular stock’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERPERFORM : A particular stock’s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

Sector Recommendations***

OVERWEIGHT : A particular sector’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). NEUTRAL : A particular sector’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERWEIGHT : A particular sector’s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage.

This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies.

Published and printed by:

KENANGA INVESTMENT BANK BERHAD (15678-H) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Chan Ken Yew Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 Website: www.kenanga.com.my Head of Research

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