PP16832/01/2013 (031128) Malaysia

Initiating Coverage 27 November 2012

Buy (new) Astro Malaysia Holdings To Infinity and B.yond Share price: MYR2.68 Target price: MYR3.70 (new) Initiate coverage with a BUY call and MYR3.70 TP. Astro Malaysia Holdings (Astro) is Malaysia’s largest Pay TV operator. We like Astro because (i) it is a proxy to Malaysian income and population growth (ii) Yin Shao Yang its HD take up rate and ARPU growth potential provides for stronger [email protected] earnings growth and (iii) its business is recession resistant. Our TP of (603) 2297 8916 MYR3.70 is based on end-FY14 DCF valuation methodology. With 38% upside potential, Astro is a BUY.

Making a come back. Astro is Malaysia’s largest Pay TV operator with 3.2m residential subscribers and commands 99% market share. Astro houses Astro All Asia Networks’ (AAAN) local businesses but not its

loss-making international businesses. AAAN had struggled to keep ARPU >MYR80 and churn <10%. The Astro of today’s 1HFY13 ARPU stood at MYR92 and its FY12 churn of 6.6% is the lowest in 11 years.

Malaysia says, “I’ve got time! I’ve got time... and money!” Average household income is on the rise and rising fastest is that of the Malay household, who watch the most TV at 4.1 hours a day. With higher

income comes subscriber and ARPU growth. To boot, Malaysia’s Pay Stock Information TV penetration rate of 50% is still below regional standards. As incomes Description: Pay TV and radio operator. Largest Pay TV grow, we believe that Pay TV penetration can only rise. operator in Malaysia and South East Asia. The future is in HD. We studied four other Pay TV operators and Ticker: ASTRO MK observed that all of them recorded higher ARPUs with higher HD take Shares Issued (m): 5,198.3 Market Cap (MYR m): 13,931.4 up rates. In less than three years since launch, Astro’s HD take up rate 3-mth Avg Daily Turnover (USD m): 30.77 is already 34% or higher than the four Pay TV operators’ take up rates KLCI: 1,607.88 Free float (%): 28.9 in their full third year! As a result, Astro’s ARPU grew from MYR82 in FY10 to MYR92 in 1HFY13; we believe that it will continue growing. Major Shareholders: % Astro Networks (Malaysia) 70.8 Good things come to those who wait. We estimate that Astro’s FY13

net profit will fall 30% YoY due to marketing and installation expenses incurred by migrating all its subscribers to Astro B.yond STBs by end- FY14, before rebounding to MYR675m by FY15. That said, we estimate Historical Chart that revenue and EBITDA will grow by a healthy 11% and 13% 3-year 3.1 ASTRO MK Equity CAGR on steady subscriber and ARPU growth. An alternative 3.0 EV/EBITDA valuation methodology based on 12x FY14 multiple returns 2.9 an equity value of MYR3.35/sh. 2.8 Source: Maybank KE 2.7 Astro Malaysia Holdings – Summary Earnings Table FYE Jan (MYR m) 2011A 2012A 2013F 2014F 2015F 2.6 Revenue 3,664.1 3,888.8 4,274.7 4,748.7 5,259.6 2.5 EBITDA 1,369.8 1,414.7 1,367.9 1,599.1 2,036.2 Recurring Net Profit 823.5 624.1 439.6 505.4 675.0 2.4 Recurring Basic EPS (cents) 15.8 12.0 8.4 9.7 12.9 Oct-12 Oct-12 Nov-12 Nov-12 Nov-12 EPS growth (%) 34.1 (24.2) (29.6) 15.0 33.6 DPS (cents) - - 6.3 7.3 9.7

PER 17.0 22.4 31.8 27.7 20.7 Performance: EV/EBITDA (x) 10.3 12.1 11.6 9.8 7.8 52-week High/Low MYR3.11/MYR2.59 Div Yield (%) - - 2.4 2.7 3.6 P/BV(x) 12.1 28.8 30.6 23.9 18.6 1-mth 3-mth 6-mth 1-yr YTD Net Gearing (%) 14.4 669.2 429.8 295.3 259.5 Absolute (%) (6.3) na na na na ROE (%) 84.0 76.4 93.7 97.4 101.3 ROA (%) 27.1 12.8 6.6 7.2 8.6 Relative (%) (2.5) na na na na Consensus Net Profit (MYR m) N/A N/A 509.1 556.4 635.1

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Astro Malaysia Holdings Contents

Page Making a come back 3 Malaysia’s media industry dynamics – Television 7 – Radio 10

KEY INVESTMENT MERITS Merit 1: Malaysia has got time and money for Astro 11 Merit 2: Plenty of headroom for subscriber growth 13 Merit 3: HD and Super Packs to boost ARPU 15 Merit 4: Plenty of headroom for adex growth too 20 Merit 5: Leading position virtually unassailable 22

Financials 25 Risk factors 29 Valuations 32 Financial statements 35

APPENDICES Appendix 1 – Astro’s businesses – Pay TV 36 – Radio 42 – Other businesses 43 Appendix 2 – Key management and Board of Directors 44 Appendix 3 – DTH broadcasting license 47 Appendix 4 – DTH Pay TV business process 48 Appendix 5 – Glossary of technical terms 49

27 November 2012 Page 2 of 53 Astro Malaysia Holdings

Making a come back

Malaysian media mogul. Astro Malaysia Holdings (Astro) is Malaysia’s leading integrated consumer media group, engaging in the creation, aggregation and distribution of content over multiple delivery platforms including Pay TV, radio, publications and digital media. It broadcasts 156 television (TV) channels as at 31 Jul 2012, of which 68 are Astro- created and branded.

Rejuvenated. Substantially all of Astro’s businesses were part of Astro All Asia Networks PLC’s (AAAN) domestic businesses. AAAN was listed on 29 Oct 2003 on the then Main Board (now known as the Main Market) of the Malaysian bourse. In 2010, Astro Holdings Sdn Bhd undertook a conditional takeover offer to acquire all the voting shares in AAAN. AAAN was delisted from the Main Market on 14 Jun 2010.

And without the loss-making operations. Astro does not house AAAN’s international businesses i.e. (i) library licensing and distribution via Celestial Pictures and (ii) a 20% stake in Indian DTH Pay TV operator, Sun Direct TV. Both were loss generating before AAAN was delisted. In FY10 (FYE Jan), AAAN reported that the library licensing and distribution business generated operating losses of MYR61.5m and its share of Sun Direct TV’s losses was MYR81m.

New services have galvanised ARPU growth after a long struggle. Before AAAN was delisted, it struggled to maintain ARPU above MYR80 and keep churn rate below 10%. After Astro launched its plethora of valued added services such as Astro B.yond HD, PVR, IPTV and Super Packs beginning Dec 2009, its ARPU has begun to steadily grow to MYR89 in FY12 and MYR92 in 1HFY13. Its FY12 churn of 6.6% is also the lowest in 11 years.

Chart 1: ARPU vs churn rate

ARPU (MYR) (LHS) Churn (%) (RHS) 95 16.0 13.4 14.0 90 11.4 12.0 10.1 9.7 10.0 9.0 8.8 10.0 85 7.8 7.9 7.9 8.0 6.9 6.6 8.0 5.4 92 80 89 6.0 3.7 84 85 83 82 82 82 4.0 75 80 81 81 81 80 79 78 2.0 70 - FY99 FY01 FY03 FY05 FY07 FY09 FY11 1HFY13

Source: AAAN annual reports, Astro

27 November 2012 Page 3 of 53 Astro Malaysia Holdings

Chart 2: Organisational chart

Astro Malaysia

Management TV & Radio Digital Media Shared Services Content Others 100% 100% 100% 100% 100% 100% 100% 100%

Astro Group Astro M BNS M ultim edia MBNS Astro Productions Astro Brunei Astro Digital Services Entertainment Technologies Astro Shaw 48.9% 25%

Advanced Wireless Kristal-Astro Technologies 100%

UMTS (Malaysia)

100% 100% 100% 100% 100% 100%

100% 100% 100% 50%

Perfect *MEASAT Meastra MEASAT Radio Radio Tayangan Nusantara Nusantara Astro Radio Excellence Karya Anggun Digicast Broadcast Communications Lebuhraya Unggul Film s Edaran Filem Waves

100% 100% 100% 80% 100% 100% 50%

*Maestro DVR Astro Astro Awani Endemol Astro Digital 5 Talent and Astro Arena Player.com Publications Network Malaysia Management

Legend:

Jointly-controlled entities and associated companies

* Inactive

Source: Astro

22 November 2012 Page 4 of 53 Astro Malaysia Holdings

Overwhelmingly dominant in Pay TV. Astro distributes content to its subscribers via broadcast and on-demand programmes through Direct- To-Home (DTH), Internet Protocol (IP) and Over-The-Top (OTT) platforms (please refer to Appendix 5). As at end-1HFY13, it has 3.2m residential Pay TV subscribers, commanding 50% penetration rate of Malaysian TV households and 99% market share of residential Pay TV subscribers.

Chart 3: Residential subscribers (‘000)

3,500 3,166 3,067 2,930 2,931 3,000 2,646 2,500 2,272 2,016 2,000 1,784 1,566 1,500 1,283 984 1,000 778 541 500 183 297 35 135 - FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 1HFY13 Source: AAAN annual reports, Astro

Leads in radio as well. Astro’s radio business comprises nine FM and 11 direct-to-user radio stations and is available over FM, DTH TV, IPTV, mobile platform and the Internet. Its stable includes the highest rated radio stations in the Malay, Chinese, Indian and English languages in terms of listenership. As at Apr 2012, Astro has 13m weekly listeners capturing 52% listenership market share and commanding 53% radio adex share.

Table 1: Salient information

. Largest operator in ASEAN by subscriber base – 3.2mn subscribers

. Only operator in ASEAN with close to 100% market share

Pay TV . Largest content producer in Malaysia - > 40,000 hours of content produced or commissioned

. 156 channels including 68 Astro-created and branded channels

. Multi-platform delivery via DTH, IPTV and OTT

. 20 stations, including the top stations across all four major languages Radio . Largest share of radio listenership (52%) and radio adex (53%) in Malaysia

. Seven publications including Malaysia’s most widely circulated magazine

Publications, digital . One of the largest film studios in Malaysia with seven films released in FY 12 media and others . Aggregation of digital media and online services

Source: Astro

22 November 2012 Page 5 of 53 Astro Malaysia Holdings

Earnings driven by Pay TV. In FY12, Pay TV accounted for an overwhelming 93% of total revenue and the majority of Astro’s pretax profit. Although Astro also leads the radio industry, radio (primarily adex driven) only accounted for 5% of total revenue and 10% of pretax profit. At Pay TV, subscription accounted for 91% of Pay TV revenue while adex made up 7%.

Table 2: FY12 revenue and pre-tax profit breakdown Revenue Pre-tax profit MYRm % MYRm % TV 3,609.7 92.8% 1,334.6 154.4% Radio 199.4 5.1% 86.6 10.0% Others 79.7 2.0% 1,117.8 129.3% Inter-company elimination - 0.0% (1,674.6) -193.7% Total 3,888.8 100.0% 864.3 100.0%

Source: Astro

Chart 4: FY12 Pay TV revenue breakdown 2.4%

7.0%

Subscription Airtime sales (adex) 90.7% Others

Source: Astro

22 November 2012 Page 6 of 53 Astro Malaysia Holdings

Malaysia’s media industry dynamics

. Television

Two FTA TV competitors. They are Media Prima (MPR MK; HOLD; TP: MYR2.47) and RTM (an agency under the Ministry of Information, Communication and Culture) with six channels between them, and they compete with Astro for viewership and adex. Media Prima is one of the largest integrated media groups in Malaysia, operating four FTA TV channels. They are TV3 (Malay and English channel), 8TV (Chinese and English channel), ntv7 (English, Chinese and Malay channel) and TV9 (Malay channel). RTM operates two channels (RTM1, RTM2).

Only one small Pay TV competitor. In the Pay TV segment, Telekom Malaysia (T MK; BUY; TP: MYR6.61) is Astro’s sole active competitor. It launched Hypp TV, its IPTV service complementing its high speed broadband service, UniFi, in Mar 2010. Based on our research, Hypp TV currently offers >50 channels to paying subscribers and 19 channels to UniFi but non-Hypp TV subscribers. As at 2QCY12, UniFi has 384k subscribers but only c.80k are believed to be Hypp TV subscribers.

Chart 5: UniFi subscribers (’000)

450.0 400.0 384.0 350.0 315.7 300.0 236.5 250.0

200.0 164.4 150.0 109.0 100.0 63.5 50.0 32.9 2.0 4.1 13.9 - 1QCY10 2QCY10 3QCY10 4QCY10 1QCY11 2QCY11 3QCY11 4QCY11 1QCY12 2QCY12

Source: Telekom Malaysia

Several other Pay TV licensees but none are active. Asia Broadcasting Network (ABN) has announced plans to launch its cable service targeting lower income groups in 2012. Five other competitors (Table 3) have also obtained licenses to provide Pay TV services but none are currently active.

Table 3: Other Pay TV licensees Holder Description DE Multimedia Utilises a TV decoder connected to a user’s ADSL. Launched in 2010 as a REDtone and Zhong Nan Enterprise JV. Strong focus on Chinese segment. DMD Fone Unconfirmed; Unknown launch date. MahaSemerak IPTV; Unconfirmed infrastructure; Unknown launch date. VassetiDatatech IPTV using self owned fibre to home network; Plans to launch IPTV services by 3QCY12. YTL Communications IPTV using own 4G network as part of a quadruple play service; Expected to launch by end-2012 Source: Value Partners

22 November 2012 Page 7 of 53 Astro Malaysia Holdings

Table 4: Pay TV platforms

. Utilises a satellite to transmit TV signals to receiver dishes DTH . Astro is the exclusive provider of DTH*

. Utilises fibre broadband connection to deliver TV feeds IPTV . Largely Astro and Hypp TV

. Utilises cable to deliver TV feeds Cable . ABN is expected to launch cable services by end-2012

. Utilises any internet connection to deliver content OTT . Largely Astro, Media Prima and telcos

* Exclusive license until 2017 and non-exclusive license until 2022 Source: Media Partners Asia (published Apr 2012), Value Partners analysis

Astro leads total and Chinese viewership, gaining on Malay. As exhibited on the charts below, Astro’s channels dominate both total and Chinese viewership, which in our opinion is due to its enviable content portfolio. Astro’s increased investments in Malay content have also translated into rising Malay viewership share. Currently, its Malay viewership share is second only to Media Prima’s flagship TV3.

Chart 6: 2011 total viewership share Chart 7: 2011 Chinese viewership share

TV3 TV3 3% NTV7 ASTRO 28% 19% 40% ASTRO NTV7 48% 8TV 5% RTM2 RTM2 24% 8% 4% 8TV RTM1 TV9 6% TV9 RTM1 5% 1% 1% 8% Source: Nielsen Audience Measurement Source: Nielsen Audience Measurement

Chart 8: 2011 Malay viewership share

ASTRO TV3 31% 37%

RTM2 10%RTM1TV9 8% 10% NTV7 8TV 2% 2%

Source: Nielsen Audience Measurement

22 November 2012 Page 8 of 53 Astro Malaysia Holdings

Table 5: Top 10 channels as at 3QCY12* Total Chinese Malay Channel Rating Channel Rating Channel Rating TV3 26 8TV 26 TV3 36 TV9 8 ntv7 18 TV9 10 RTM2 7 HUAHEE 8 RTM2 8 8TV 6 WLT 7 RTM1 7 RTM1 5 AEC 4 RIA 5 ntv7 5 RTM2 4 PRIMA 4 RIA 4 TV3 3 WARNA 3 SUN-TV 4 XHE 3 CERIA 3 PRIMA 3 SHX 2 CITRA 2 CERIA 2 TVBC 2 ntv7 2

* Bold denotes Astro channels Source: Nielsen Audience Measurement

TV adex share should catch up going forward. Although Astro’s channels command 40% of total viewership share in 2011, its net TV adex share stood at only 26%. We believe that its net TV adex share should catch up with viewership share as advertisers become more aware of the latter going forward. We believe that advertisers will seek to advertise more on Astro’s Malay channels going forward.

Table 6: CY11 gross and net TV adex Total Station Total

Gross adex Share 23.8% 9.5% 8.6% 6.5% 1.6% 5.1% 45.0% 100.0% MYRm 1,304.7 519.0 469.3 354.5 85.9 280.5 2,468.2 5,482.1

Discount factor Discount -58.1% -75.8% -75.0% -80.0% -60.0% -60.0% -86.0% -75.3% MYRm (758.3) (393.3) (352.0) (283.6) (51.5) (168.3) (2,123.2) (4,130.2)

Net adex Share 40.4% 9.3% 8.7% 5.2% 2.5% 8.3% 25.5% 100.0% MYRm 546.4 125.7 117.3 70.9 34.4 112.2 345.0 1,351.9

Source: Nielsen Media Research, Media Prima, Astro

22 November 2012 Page 9 of 53 Astro Malaysia Holdings

. Radio

Radio competition stiffer. Astro Radio’s competitors are Media Prima, Star RFm (a unit under Star Publications (Malaysia) [STAR MK; HOLD; TP; MYR2.80]) and RTM. Media Prima’s top ranking station is Hot FM which ranks among the top five radio stations in Malaysia. It also has English and Chinese stations, Fly FM and One FM. Star RFm has four radio stations. Its top ranked station is Suria FM, which is among the top five radio stations in Malaysia. It also has one Chinese station, 988, and two English stations, RedFM and Capital FM.

Chart 9: Listenership share

Astro Radio Radio Televisyen Malaysia Media Prima Star RFm Others 120%

100% 7% 6% 5% 5% 6% 0% 6% 6% 7% 9% 11% 13% 14% 10% 80% 14% 15% 13% 12% 21% 25% 60% 24% 22% 20% 21%

40% 49% 51% 54% 52% 50% 52% 20%

0% CY07 CY08 CY09 CY10 CY11 1QCY12

Source: Nielsen Advertising Information Service

Table 7: Radio adex share CY10 CY11 CY12 1QCY13 Astro Radio 57% 52% 53% 53% RTM 6% 5% 5% 5% Media Prima 21% 24% 21% 27% Star RFm 16% 19% 21% 15% Total 100% 100% 100% 100%

Source: Nielsen Media Research

22 November 2012 Page 10 of 53 Astro Malaysia Holdings

Merit 1: Malaysia has got time and money for Astro

Malaysians love their TV. Malaysians, on average, watch 3.5-4 hours of TV every day, more than any other medium. Conversely, the average time spent by Malaysians on newspapers has been flattish at 0.6 hours every day. By ethnicity, Malays and Indians watch the most TV at an average of c.4 hours every day. As Malays are heavy TV consumers, Astro has been recalibrating its content portfolio to meet their demands.

Chart 10: Hours per day spent on media

Radio Television Newspapers Internet 4.5 3.9 4.0 3.5 3.6 3.5 3.5

3.0 3.4 3.3 2.5 2.5 3.0 1.9 2.0 1.6 2.4 2.2 1.5 1.0 0.7 0.6 0.6 0.6 0.5 - CY08 CY09 CY10 CY11

Source: Nielsen Media Index

Table 8: Hours per day spent on media by ethnicity in 2011 TV Radio Internet Newspaper Malay 4.1 2.2 2.4 0.5 Chinese 3.5 1.8 2.8 0.6 Indian 3.9 2.5 2.3 0.6

Source: Nielsen Media Index

Malay household income growth robust. Thanks to the commodities boom, the average Malay household income grew the fastest at a CAGR of 9% from 2007-2011. Again, the average rural household income grew at a CAGR of 7% from 2007-2011 compared to the average urban household income CAGR of 5% over the same period thanks to the commodities boom. Thus, we expect Malay and rural households to drive subscriber and ARPU growth going forward.

Chart 11: Average monthly household income by ethnicity (MYR ‘000)

CY07 CY09 CY11F 6.0 5.3 4.9 5.0 5.0 4.4 4.3 3.8 4.0 4.0 3.6 3.2 3.0

2.0 9% CAGR 2% CAGR 3% CAGR 1.0

- Malay Chinese Indian

Source: Economic Planning Unit (EPU)

22 November 2012 Page 11 of 53 Astro Malaysia Holdings

Chart 12: Average monthly urban vs rural household income (MYR ’000)

Urban Rural 6.0 5.3 5% CAGR 4.7 5.0 4.4 4.0 7% CAGR 3.0 3.0 2.5 2.3 2.0

1.0

- CY07 CY09 CY11F

Source: EPU

Future reception is bright. Although average monthly household income forecasts beyond 2011 are not available, perusing through GDP per capita forecasts provided by the International Monetary Fund (IMF) we expect average monthly household income to grow in tandem at c.6% p.a.. We believe that strong income growth not only encourages subscriber but ARPU growth as well, either via price hikes or higher take up rates for value added services.

Chart 13: Malaysian GDP per capita growth

20.0%

15.0%

10.0%

5.0%

0.0% CY07 CY08 CY09 CY10 CY11 CY12F CY13F CY14F CY15 CY16F -5.0%

-10.0%

Source: IMF

22 November 2012 Page 12 of 53 Astro Malaysia Holdings

Merit 2: Plenty of headroom for subscriber growth

Population growth provides fertile ground for organic growth. Malaysia's population grew at 1.8% CAGR from 2000-2011. With the average household size shrinking from 4.5 persons in 2000 to 4.3 in 2011, Malaysia’s households grew at a higher 2.3% CAGR over the past 11 years. We forecast population growth of 1.3% p.a. from 2011- 2021 translating into 2% p.a. household growth with the average household size shrinking further to 4 persons. With more households, the addressable market for subscriber additions grows.

Chart 14: Malaysian households and population

Households ('000) (LHS) Population (m) (RHS) 8,000.0 35

7,500.0 1.8% CAGR 30 7,000.0 25 6,500.0 2.3% CAGR 20 6,000.0 15 5,500.0 10 5,000.0 4,500.0 5.0 4,000.0 - CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11

Source: Department Of Statistics, MCMC, Bank Negara Malaysia

Penetration rate still low by regional standards. Malaysia currently has a Pay TV penetration rate of only 50% of Malaysian TV households. Compared to the high income countries of South Korea, Taiwan, Hong Kong and Singapore where the Pay TV penetration is above 70%, there is a lot of headroom for Pay TV to grow in Malaysia. As Malaysian incomes grow, we believe that its Pay TV penetration rate will rise. We forecast that Malaysia’s Pay TV penetration rate will hit 70% in 10 years time, similar to Singapore today.

Chart 15: 2011 Pay TV penetration rate by country 140% 122% 120% 97% 100% 93% 81% 80% 70% 61% 60% 50% 47% 33% 40% 27% 19% 14% 10% 20% 4% 0% India Hong Kong s New New China South Korea Japan Zeland Taiwan Vietnam Thailand Australia Malaysia Indonesia Philippine Singapore

Source: Media Partners Asia

22 November 2012 Page 13 of 53 Astro Malaysia Holdings

Chart 16: GDP per capita (USD) (x) vs Pay TV penetration rate (y)

140.0% South Korea 120.0% Taiwan Hong Kong 100.0% India 80.0% Singapore New Zealand 60.0% Malaysia Australia 40.0% China Japan Vietnam 20.0% Philippines Thailand 0.0% Indonesia - 10,000 20,000 30,000 40,000 50,000 60,000 70,000

Source: Media Partners Asia, IMF, Maybank KE

Piracy not a major issue. In many Asian countries, individuals are able to illegally watch Pay TV channels without paying or by paying substantially less to an illegal operator. The Cable & Satellite Broadcasting Association of Asia (CASBAA) estimates that Pay TV piracy in Malaysia was only 2% of all viewers in 2011, compared to 69% in Indonesia and 61% in Thailand. This is due to the sophistication of the STB deployed by Astro which makes piracy difficult in Malaysia.

Chart 17: 2011 Pay TV piracy rates by country 80.0% 68.9% 70.0% 60.8% 60.0% 50.0% 40.0% 33.7% 30.4% 30.0% 23.2% 20.0% 10.1% 10.0% 1.8% 1.1% 1.1% 0.8% 0.0% India Taiwan Vietnam Thailand Australia Malaysia Indonesia Singapore Phillippines Hong Kong

Source: CASBAA

22 November 2012 Page 14 of 53 Astro Malaysia Holdings

Merit 3: HD and Super Packs to boost ARPU

ARPU finally on a clear uptrend thanks to new services. Before FY10, Astro struggled to maintain ARPU above MYR80 and keep churn rate below 10%. After it launched its value added services, Astro B.yond HD, PVR, IPTV and Super Pack beginning Dec 2009, its ARPU has begun to steadily grow to MYR89 in FY12 and MYR92 in 1HFY13. To boot, its FY12 churn of 6.6% was also the lowest in 11 years.

Chart 18: ARPU vs churn rate

ARPU (MYR) (LHS) Churn (%) (RHS) 95 16.0 13.4 14.0 90 11.4 12.0 10.1 9.7 10.0 9.0 8.8 10.0 85 7.8 7.9 7.9 8.0 6.9 6.6 8.0 5.4 92 80 89 6.0 3.7 84 85 83 82 82 82 4.0 75 80 81 81 81 80 79 78 2.0 70 - FY99 FY01 FY03 FY05 FY07 FY09 FY11 1HFY13

Source: AAAN annual reports, Astro

Table 9: Services evolution Before After Product Launch date Standard Definition High Definition Dec 2009

‘One size fits all’ Bundling May 2011

Living room only Multiple rooms 2012

Multi-Room Linear channels On-demand channels Jan 2011

Homebound Content ‘anytime, May 2012 anywhere’

Source: Astro, Maybank KE

Overseas experience of HD suggests that Astro’s ARPU growth is just starting. Globally, new service launches especially HD appear to have a positive impact on ARPU. We did case studies on four Pay TV operators: Austar in Australia, Sky Network Television in New Zealand (Sky NZ), BSkyB and Virgin Media in the United Kingdom. All of them recorded higher ARPUs with higher HD take up rates. Their HD take up rates have been strongest over the last three years likely due to major sporting events such as the Summer Olympics and FIFA World Cup.

22 November 2012 Page 15 of 53 Astro Malaysia Holdings

Chart 19: Austar HD take up rate Chart 20: Austar ARPU (AUD) 23% 86.3 25% 88.0 85.1 86.0 20% 84.0 81.7 82.0 78.9 15% 11% 80.0 78.0 75.9 10% 76.0 74.2 74.0 5% 3% 72.0 0% 0% 0% 70.0 0% 68.0 CY06 CY07 CY08 CY09 CY10 CY11 CY06 CY07 CY08 CY09 CY10 CY11

Source: Austar Source: Austar

Chart 21: Sky NZ HD take up rate Chart 22: Sky NZ ARPU (NZD)

45% 38% 74.0 71.8 40% 72.0 69.5 35% 70.0 67.4 27% 30% 68.0 66.0 25% 63.5 64.0 62.0 20% 16% 62.0 60.3 15% 7% 60.0 10% 58.0 5% 0% 0% 56.0 0% 54.0 CY06 CY07 CY08 CY09 CY10 CY11 CY06 CY07 CY08 CY09 CY10 CY11

Source: Sky NZ Source: Sky NZ

Chart 23: BSkyB HD take up rate Chart 24: BSkyB ARPU (GBP)

45% 40% 50.0 45.3 40% 35% 44.7 45.0 35% 41.0 30% 40.0 25% 21% 37.0 35.1 20% 35.0 32.8 15% 8% 10% 5% 30.0 2% 5% 0% 25.0 CY06 CY07 CY08 CY09 CY10 CY11 CY06 CY07 CY08 CY09 CY10 CY11

Source: BSkyB Source: BSkyB

Chart 25: Virgin Media HD take up rate Chart 26: Virgin Media ARPU (GBP) 70% 48.0 47.3 59% 46.2 60% 47.0 46.0 50% 39% 45.0 44.1 40% 44.0 42.2 30% 24% 43.0 42.2 41.9 42.0 20% 15% 8% 41.0 10% 2% 40.0 0% 39.0 CY06 CY07 CY08 CY09 CY10 CY11 CY06 CY07 CY08 CY09 CY10 CY11

Source: Virgin Media Source: Virgin Media

22 November 2012 Page 16 of 53 Astro Malaysia Holdings

Astro seems to be doing even better! Astro launched its HD service in Dec 2009. In less than three years, its HD take up rate has already hit 34%. This is better than all the four Pay TV operators that we studied on in their full third year. We forecast that Astro’s HD take up rate will rise to 65% over the next several years, not unlike Virgin Media. This will translate into robust ARPU growth for Astro.

Chart 27: HD take up rate of selected Pay TV operators as at CY11

70% 59% 60%

50% 38% 40% 40% 40% 34% 35%

30% 25%

20% 10% 10% 1% 0% Foxtel BskyB SKY NZ SKY Astro (FY10) Astro (FY11) Astro (FY12) Astro Virgin Media Dish Network Dish Astro (1HFY13)

Source: Astro, Dish Network, Sky NZ, BSkyB, Foxtel, Virgin Media

MEASAT-3B to boost HD take up rate. As at 31 Jul 2012, Astro broadcasts 134 SD and 22 HD channels. Come 2014, it will expand its broadcasting capacity to 180 SD and 102 HD channels thanks to the launch of MEASAT-3B. We believe that its HD take up rate will receive a boost then as subscribers will be offered a wider selection of HD channels.

Satellite and transponders

Astro utilises 11 high powered Ku-band transponders on MEASAT-3 and 6 high powered Ku-band transponders on MEASAT-3A to transmit its signal across Malaysia and Brunei. MEASAT-3 and MEASAT-3A are owned by MEASAT Satellite Systems Sdn Bhd, a subsidiary of MEASAT Global. Astro and MEASAT Global are related parties.

The number of TV and radio channels that can be broadcast to subscribers is dictated by the amount of capacity available on the Ku-band transponders. With these two capacities, Astro has the capacity to broadcast up to 179 TV channels, including 36 HD channels, over its DTH platform.

MEASAT-3 was launched into orbit in Dec 2006 at 91.5 degrees east, entered commercial service on 1 Feb 2007 and has a design lifetime of 15 years. MEASAT-3A, which also has a design lifetime of 15 years, entered into commercial service in Jul 2009 and is co-located at the same orbital slot as MEASAT-3.

Both satellites are controlled from the Measat Teleport and Broadcast Centre located in Cyberjaya, in the same facility as the Cyberjaya Broadcast Centre. A backup satellite control facility is located at the All Asia Broadcast Centre.

MEASAT-3B is expected to be launched into orbit in 2014 and will have 18 transponders. Once MEASAT-3B enters commercial service, Astro expects to be able to expand its broadcasting capacity to 180 SD and 102 HD channel.

Source: Astro

22 November 2012 Page 17 of 53 Astro Malaysia Holdings

Super Packs will be the biggest boost to ARPU growth. Each of the four Super Packs offers more value to subscribers by bundling the most popular packages (including HD and PVR services) for MYR125- MYR155 each. Each Super Pack is priced much higher than Astro’s 1HFY13 ARPU of MYR92. Higher Super Pack take up rates will again, translate into robust ARPU growth for Astro.

Figure 1: Astro Super Pack details

Source: www.astro.com.my

22 November 2012 Page 18 of 53 Astro Malaysia Holdings

ARPU growth trend sustainable. Before FY10, Astro had to rely on across the board or sports package price hikes for ARPU growth. From FY10, ARPU growth was driven by subscribers opting for value added HD and Super Pack services which are more sustainable. We believe Astro’s ARPU can only rise as Malaysian disposable incomes grow. ARPU as a percentage of GDP per capita has fallen to <4% in FY12 from 8% in FY99, underscoring Astro’s potential for ARPU growth.

Chart 28: ARPU as % of GDP per capita

9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Source: AAAN annual reports, Astro, IMF

New STB rollout has been crucial. The launch of the new services especially HD and PVR have been enabled by Astro’s new Astro B.yond STBs which support all its HD, IPTV, PVR and VOD services. As at 1HFY13, 50% of Astro’s subscribers have converted to the Astro B.yond STB and 34% of its subscribers have subscribed to HD services. This implies that two out of every three conversions results in an upgrade to HD services! Astro expects to migrate the majority of its subscribers to the Astro B.yond STB by end-FY14.

Chart 29: Astro B.yond STB subscribers Chart 30: HD subscribers Astro B.yond STB subscribers ('000) HD subscribers('000) Astro B.yond STB penetration rate (%) HD penetration rate (%) 1,599 1,200 1,600 1,081 1,400 1,000 1,167 772 1,200 800 50% 1,000 38% 600 800 34% 304 25% 600 400 400 200 24 10% 1% 200 - - FY10 FY11 FY12 1QFY13 FY12 1QFY13

Source: Astro Source: Astro

NJOI not a lame duck. Astro launched its prepaid services to its NJOI (DTH non-subscription TV) subscriber base on 19 Jul 2012. It offers three packages and each is priced at MYR20 for 15 days of viewing. If an NJOI subscriber chooses to upgrade his or her subscription, Astro will incur almost nil customer acquisition cost as the STB, satellite dish and installation charges would have been paid for by the subscriber. Furthermore, Astro will have added reach to the lower income groups for advertisers to advertise to.

22 November 2012 Page 19 of 53 Astro Malaysia Holdings

Merit 4: Plenty of headroom for adex growth too

Adex growth driven by economic growth and consumer sentiment. Although adex only comprised 12% of Astro’s FY12 revenue (TV: 7%, radio: 5%), we believe that there is room for growth. As a whole, adex is driven by economic growth (R2=0.86 based on data since 1998, we estimate) and to a lesser extent, consumer sentiment (R2=0.60 based on data since 1998, we estimate). Historically (1998-2011), total gross adex (before discounts) grew at 2.2x real GDP growth.

Chart 31: Total gross adex vs real GDP growth Chart 32: Total gross adex growth vs consumer sentiment Total gross adex growth Real GDP growth Total adex % change YoY (LHS) 30% Consumer sentiment index (RHS) 50.0 150.0 25% 40.0 140.0 20% 30.0 130.0 15% 20.0 120.0 10% 10.0 110.0 5% - 100.0 0% (10.0) 90.0 -5% 1998 2000 2002 2004 2006 2008 2010 (20.0) 80.0 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 -10% (30.0) 70.0 -15% (40.0) 60.0 (50.0) 50.0 -20% Source: Nielsen Media Research, Bank Negara Malaysia Source: Nielsen Media Research, Malaysian Institute of Economic Research

Viewership share is rising and still rising. Every year, Astro expends one third of its TV revenue in content cost. Astro’s content cost even exceeded the FTA TV industry net adex since FY09! All these have paid off with rising viewership share. Its total viewership share jumped 13 ppts from 2006 to 40% in 2011 and its Malay viewership share doubled from 15% in 2006 to 31% in 2011. We expect these viewership numbers to rise even further in step with higher penetration rates for both residential Pay TV and NJOI.

Chart 33: Content cost

Content cost (MYRm) (LHS) Content cost as % of TV revenue (RHS) 1,400.0 50.0 45.0 1,200.0 38.6 34.5 34.6 40.0 32.8 32.0 32.0 1,000.0 30.3 30.1 29.3 29.7 35.0 800.0 30.0 25.0 600.0 1,154.0 1,101.6 20.0 916.8 1,052.3 400.0 762.7 15.0 523.6 587.6 10.0 200.0 399.3 460.7 383.5 5.0 - - FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Source: AAAN annual reports, Astro

22 November 2012 Page 20 of 53 Astro Malaysia Holdings

Table 10: TV viewership share Station CY06 CY07 CY08 CY09 CY10 CY11

Total TV3 33% 33% 32% 30% 28% 28% NTV7 9% 7% 6% 6% 5% 5% 8TV 5% 5% 5% 5% 5% 6% TV9 3% 8% 7% 9% 8% 8% RTM1 10% 7% 7% 5% 6% 5%

RTM2 13% 9% 10% 10% 10% 8% ASTRO 27% 31% 33% 35% 38% 40% Total 100% 100% 100% 100% 100% 100%

Chinese TV3 12% 7% 5% 4% 4% 3% NTV7 15% 16% 18% 21% 19% 19% 8TV 15% 17% 16% 19% 21% 24% TV9 1% 2% 2% 2% 1% 1% RTM1 2% 2% 1% 1% 1% 1%

RTM2 11% 10% 10% 6% 4% 4% ASTRO 44% 46% 48% 48% 50% 48% Total 100% 100% 100% 100% 100% 100%

Malay TV3 43% 45% 44% 42% 39% 37% NTV7 7% 4% 3% 2% 2% 2% 8TV 3% 2% 2% 2% 1% 2% TV9 3% 10% 8% 10% 10% 10% RTM1 14% 11% 11% 7% 9% 8%

RTM2 15% 9% 9% 12% 12% 10% ASTRO 15% 19% 23% 25% 27% 31% Total 100% 100% 100% 100% 100% 100%

Source: Nielsen Media Research

FY12 EBITDA could have been 11% higher. Although Astro’s channels commanded 40% of total viewership share in 2011, its net TV adex share stood at only 26%. If Astro had commanded 40% of net TV adex share in 2011, its FY12 net TV adex would have been c.MYR200m higher. Less 20% agency commissions, its FY12 revenue would have been c.MYR160m or 4% higher. As the marginal cost would have been almost nil, the additional c.MYR160m would translate into 11% higher FY12 EBITDA.

Table 11: CY11 gross and net TV adex Total Station Total

Gross adex Share 23.8% 9.5% 8.6% 6.5% 1.6% 5.1% 45.0% 100.0% MYRm 1,304.7 519.0 469.3 354.5 85.9 280.5 2,468.2 5,482.1

Discount factor Discount -58.1% -75.8% -75.0% -80.0% -60.0% -60.0% -86.0% -75.3% MYRm (758.3) (393.3) (352.0) (283.6) (51.5) (168.3) (2,123.2) (4,130.2)

Net adex Share 40.4% 9.3% 8.7% 5.2% 2.5% 8.3% 25.5% 100.0% MYRm 546.4 125.7 117.3 70.9 34.4 112.2 345.0 1,351.9

Source: Nielsen Media Research, Media Prima, Astro

22 November 2012 Page 21 of 53 Astro Malaysia Holdings

Merit 5: Leading position virtually unassailable

Technology favours Astro. As Astro is the exclusive provider of DTH Pay TV services in Malaysia, it has the most headroom for growth as it can cover 100% of Malaysia (save for 150k homes due to unsuitable terrain). Its nearest competitor, Hypp TV is dependent on the rollout of the High Speed Broad Band network which is currently available to only 1.2m household or 20% of TV households.

Chart 34: 2011 TV household penetration by platform

Penetration Headroom 120%

100%

80% 50% 60%

40% 50% 20% 19% 0% DTH IPTV

Source: Astro, Telekom Malaysia, Maybank KE

Hypp TV not hip enough. Not only is Hypp TV constrained by the geographical roll out of the High Speed Broad Band network, it is also constrained by its positioning as an ‘add on’ to UniFi which means that its content is of limited quality especially in terms of top tier sports and fewer movies. Also, it lacks locally produced content and has limited news and documentary channels.

Even then, Astro is now playing in Hypp TV’s backyard. On 30 Aug 2012, Maxis (MAXIS MK, HOLD, TP: MYR7.00) announced that it signed a strategic partnership contract with Astro to exclusively develop and co-market Astro B.yond IPTV and Astro On-The-Go services unique to Maxis’ subscribers with its fibre, mobile, wireless internet and ADSL services. Recall that Maxis also utilises UniFi’s High Speed Broad Band fibre network. The salient terms of the contract are as follows:-

(i) The collaboration is for 10 years and is automatically renewed annually thereafter unless requested otherwise by both parties.

(ii) The collaboration is exclusive for the first three years after commercial launch of co-marketed services.

(iii) Astro will provide tailored content services developed exclusively for Maxis customers within an agreed availability window.

(iv) Maxis commits to a minimum annual investment in the first year of the collaboration.

(v) Astro will be appointed as Maxis’ fibre services billing and collection agent. Astro will incorporate the Maxis’ fibre service charges in a single integrated Astro customer bill.

(vi) Both parties will each commit to an annual marketing budget to jointly promote and grow services offered under this collaboration.

22 November 2012 Page 22 of 53 Astro Malaysia Holdings

Table 12: Astro vs Hypp TV

Brand

Launch date . DTH services: 1996; IPTV services: 2011 . IPTV services: 2010

. 100% DTH coverage . HSBB reaches 1.3mn premises (19% coverage) Reach . IPTV based on TIME network . IPTV based on HSBB network . 99% market share1 . 1% market share1 Market position . Sole DTH player in Malaysia with 3.2mn . Launching IPTV service as part of its triple play residential subscribers UniFioffering

CY11 ARPU2 . MYR89/sub/month . MYR24/sub/month (Freemium model)

. 156 channels (including 68 Astro created and . Over 50 channels (incl.19 free channels, 12 HD Number of channels branded channels, 22 HD and 22 NVOD and 17 VOD channels; no self-created channels) channels) . Triple play bundling through partnership with . Triple play bundling service based on UniFi Bundling capability TIME for its IPTV service since 2011 service since 2010 Sports

Movies

Selected Entertainment 23 other entertainment channels channel offerings News

Documentaries & education

1Based on estimates that 20% of UniFi households are Hypp TV paying subscribers 2 Astro based on DTH ARPU and Hypp TV based on IPTV ARPU as per Value Partners analysis Source: Astro, Telekom Malaysia, Media Partners Asia (published Apr 2012), Value Partners

New competitors to likely meet the same fate of bygone competitors. Despite the issuance of multiple licenses in the Pay TV segment, there are significant challenges, which in our opinion, are likely to prevent potential entrants from gaining significant market share.

(i) Exclusive DTH broadcasting license. As Astro’s DTH broadcasting license is exclusive until 28 Feb 2017, cable or fibre based competitors will be limited by coverage.

(ii) High capex requirements. Another DTH TV operator may appear after 28 Feb 2017 but it must secure expensive satellite transponder capacity.

(iii) Incumbency. The Astro B.yond STB which was launched together with Astro’s HD service in Dec 2009 is also IPTV enabled, even before Hypp TV was launched. NJOI is currently preempting ABN by targeting lower income groups.

(iv) Content. The ability to obtain popular content is subject to any exclusivity rights held by Astro. Potential entrants are also unlikely to start with significant in-house production capabilities.

(v) Deep startup losses. Recall that despite being a pioneer in the DTH Pay TV business, AAAN took seven years to break even. Potential entrants will likely take much longer due to rising capex.

22 November 2012 Page 23 of 53 Astro Malaysia Holdings

Figure 2: Past, present and future competitors

• Cable television • Pay TV arm of mobile • Telekom Malaysia’s IPTV offering broadcaster operator U mobile • Constrained by HSBB rollout • Shutdown in 2001 • Shutdown in 2006 • Limited content offering

1996 2005 2010 2011 Future

• Broadband band on-demand • Plans to launch service by end-2012 television services • Targeting low income segment, in which • Marginal players Astro already enjoys first mover advantage

Source: TheStar, Fine TV, DE TV, Telekom Malaysia, Astro

22 November 2012 Page 24 of 53 Astro Malaysia Holdings

Financials

Major assumptions. We believe that the most important drivers to Astro’s earnings are household creation and rising disposable income. With more households, the addressable market for subscriber additions grows. We derive historical TV households by multiplying total households sourced from the Department Of Statistics with 97%. The MCMC estimates that 97% of Malaysian households are TV households. In addition, rising disposable incomes will drive ARPU growth. Our main assumptions are:-

1. TV households, penetration rate and net additions. We assume that TV households will grow at 2.2% p.a.. For penetration rates, we assume +2-3 ppts p.a. for Pay TV (FY12: 47%) and +2 ppts p.a. for NJOI (FY12: 0%). This translates into net additions of c.200k p.a. for Pay TV and c.150k for NJOI.

2. Churn rate. 1HFY13 churn rate was 8% vs FY12’s 7%. We assume that churn rate will remain at the higher 8% as Astro aggressively markets its new services especially HD and the Super Packs.

3. HD take-up rate. 1HFY13 HD take-up rate was 34%. We assume that HD take-up rate will rise 10 ppts p.a. over the next two years and rise by a slower 8 ppts in the third. HD services command a MYR20 surcharge per month while Super Packs are priced at MYR125-MYR155 per month.

4. Residential and NJOI ARPU. 1HFY13 residential ARPU stood at MYR92. Residential ARPU growth going forward will be driven by HD and Super Pack take ups as explained above. For NJOI, we assume that every subscriber will make one MYR20 prepaid purchase every two months, resulting in a MYR10 ARPU.

5. Content cost. We assume that content cost will make up 33% of TV revenue in FY13 (FY10-FY12: 32%-35%) due to Euro Cup and Olympics content before normalizing at 32% thereafter. Content cost in absolute terms is projected to grow by an average of 11% over the next three years vs an average of 5% from FY10-FY12.

6. Customer acquisition (CAC) cost per new subscriber. We assume that CAC will fall to MYR600 in FY13 before rising back to MYR660 in FY14, and stabilise in the third year as Astro discontinues distributing SD STBs and distributes only Astro B.yond STBs. The CAC breakdown between a STB and satellite dish, and marketing and installation expense is c.60%:40%.

Note: The Astro B.yond STBs component of CAC will be capitalised and depreciated over three years vs the SD STBs which were immediately expensed. The same accounting treatment applies to SD STBs migrated to Astro B.yond STBs. The marketing and installation expenses component of CAC will continue to be immediately expensed.

7. Astro B.yond STBs converted. In line with Astro’s plans, we assume that all of its subscribers will be migrated from SD to Astro B.yond STBs by end-FY14. This will be instrumental in driving HD take up as to date, two thirds of Astro B.yond subscribers have taken up HD services.

22 November 2012 Page 25 of 53 Astro Malaysia Holdings

Table 13: Assumptions FY10A FY11A FY12A FY13F FY14F FY15F

TV households ('000) 6,211* 6,348* 6,488* 6,629 6,772 6,917 Pay TV penetration rate 47%** 46%** 47%** 50% 52% 54% NJOI penetration rate 0% 0% 0% 2% 4% 6%

Churn rate 11% 10% 7% 8% 8% 8% Pay TV residential subscribers ('000) 2,930 2,931 3,067 3,284 3,509 3,741 NJOI subscribers ('000) - - - 133 271 415

HD take-up ('000) 24 304 772 1,150 1,579 1,964 As % of Pay-TV residential subscribers 1% 10% 25% 35% 45% 53%

Residential ARPU (MYR) 82 85 89 93 97 101 NJOI ARPU (MYR) - - - 10 10 10

Content costs (MYRm) 1,052.3 1,101.6 1,154.0 1,312.6 1,417.9 1,574.4 Content cost as % of TV revenue 35% 32% 32% 33% 32% 32% CAC per new subscriber (MYR) 691 630 636 600 660 660

Increase in Astro B.yond STBs converted ('000) N/A N/A N/A 950 950 N/A

* Number of households multiplied by 97% ** Number of Pay TV residential subscribers divided by number of TV households Source: Department Of Statistics, MCMC, Astro (historical), Maybank KE

Migration costs to weigh on earnings in the next two years. We estimate that Astro’s FY13 net profit will fall 30% YoY due to additional marketing and installation expenses incurred by migrating all its subscribers to Astro B.yond STBs by end-FY14 before rebounding to MYR675m by FY15. We quantify these costs at c.MYR250m p.a. in FY13 and FY14. We also foresee FY13 net profit being suppressed by Euro Cup and Olympics content cost. That said, we forecast that Astro’s revenue and EBITDA will grow by a healthy 11% and 13% 3- year CAGR respectively on steady subscriber and ARPU growth.

Chart 35: Reported financials (MYRm)

EBITDA Net profit EBITDA margin 2,500.0 45% 37% 39% 36% 2,036.2 40% 34% 2,000.0 32% 30% 35% 1,599.1 1,414.7 30% 1,500.0 1,369.8 1,367.9 25% 986.2 20% 1,000.0 823.5 614.1 624.1 675.0 15% 439.6 505.4 500.0 10% 5% - 0% FY10 FY11 FY12 FY13F FY14F FY15F

Source: Astro (historical), Maybank KE

Strong FCF generation. Although Astro will incur additional costs in migrating all of its subscribers to Astro B.yond STBs, the ‘capex’ cost of the Astro B.yond STBs will only be paid three year later thanks to vendor financing. Therefore, we estimate that Astro’s FCF generation will almost double to MYR787.2m in FY14 or 56% higher than earnings and rise further to MYR1.2b in FY15 or 78% higher than earnings. Astro has committed to pay >75% of its earnings as dividends going forward. Given its strong FCF generation, we believe that it can easily pay more.

22 November 2012 Page 26 of 53 Astro Malaysia Holdings

Chart 36: FCF generation (MYRm)

1,400.0 1,202.0 1,200.0

1,000.0 787.2 800.0

600.0 483.9 424.5 400.0

200.0

- FY12 FY13F FY14F FY15F

Source: Astro (historical), Maybank KE

‘Real’ debt lower. As of end-FY12, MYR739.4m or 20% of Astro’s total debt obligations of MYR3.7b were finance lease liabilities for its lease rentals of satellite transponders. The present value of the lease rentals is recognised as a liability. This ‘liability’ is periodically expensed to the income statement as finance costs but it does not actually attract finance costs per se. If we exclude finance lease liabilities, Astro’s FY12 net debt would stand at a lower MYR2.5b. The rise in its finance lease liabilities in FY15 is only due to the launch of MEASAT-3B.

Chart 37: Net debt (MYRm)

Reported net debt Net debt/(cash) ex-finance lease 4,000.0 3,500.0 3,231.7 3,000.0 2,492.3 2,500.0 1,958.5 1,948.1 2,000.0 1,718.8 1,500.0 1,218.2 1,027.1 1,000.0 593.0 500.0 - FY12 FY13F FY14F FY15F

Source: Astro (historical), Maybank KE

22 November 2012 Page 27 of 53 Astro Malaysia Holdings

Net gearing high at first but easily pared down. Including finance lease liabilities, we estimate that Astro’s net gearing position will stand at 4.3x by end-FY13. Excluding finance lease liabilities, we estimate that its net gearing will stand at a lower 2.7x by end-FY13. While both are high, they will easily be pared going forward due to Astro’s strong FCF generation. We also estimate that its net debt/EBITDA ratio going forward will not exceed 1.5x.

Chart 38: Net gearing

Net gearing (%) Net gearing ex-finance lease liabilities (%) 800.0 700.0 669.2 600.0 516.1 500.0 429.8 400.0 295.3 300.0 267.3 259.5 176.5 200.0 79.0 100.0 - FY12 FY13F FY14F FY15F

Source: Astro (historical), Maybank KE

We project base case dividends of MYR330m-MYR506m p.a. over FY13-FY15. This is based on 75% dividend payout ratio (DPR) from FY13-FY15 net profits and it translates into net dividend yields of 2.4% for FY13, 2.7% for FY14 and 3.6% for FY15. Again, given its strong FCF generation, we believe that Astro can easily pay more.

22 November 2012 Page 28 of 53 Astro Malaysia Holdings

Risk factors

1. Licensing. Astro’s DTH broadcasting license expires on 28 Feb 2022 (Appendix 3). While the Communications and Multimedia Act 1998 (CMA) provides that licensees may apply for renewal of licenses, there can be no assurance that the renewed licence will be on identical terms or that renewals will be granted at all.

Our views: That said, we take the view that Astro’s DTH broadcasting license will be extended indefinitely in the public’s interest lest millions of subscribers be denied their Pay TV services once it expires.

2. Regulation. The CMA allows licensees to set rates in general but there are provisions in the CMA which stipulate the circumstances in which the Minister of Information, Communication and Culture of Malaysia may intervene to set rates.

Our views: Notwithstanding some public disquiet over Astro’s previous rate hikes, there have been no attempts by the Minister of Information, Communication and Culture of Malaysia to intervene in setting Astro’s rates.

3. Competition. Despite Astro’s dominance, there can be no assurance that any non-operational licence holder will not commence operations or that there will not be any new entrants to the Pay TV industry. Astro’s exclusivity in DTH broadcasting will expire on 28 Feb 2017 and more competition may follow.

Our views: In Merit 5: Leading position virtually unassailable, we have explained that Astro, as the current sole DTH Pay TV operator, has better reach than IPTV operators who are limited by coverage of the High Speed Broad Band network.

While there may be new DTH Pay TV operators after 28 Feb 2017, they will likely be hampered by the inability to obtain popular content which is subject to exclusivity rights held by Astro, significant investment in local content and infrastructure and deep startup losses.

4. ARPU. Astro’s attempts to gain new subscribers from relatively less affluent households in the rural areas, could result in downward pressure on ARPU. Furthermore, increasing competition may put pressure on Astro to lower its prices.

Our views: We estimate that every MYR1 decrease in ARPU will cut our earnings estimates by 3-5%. That said, this risk is constantly being addressed by up-selling subscribers HD, Super Packs or IPTV services. We deem the latter risk as negligible as Astro has 99% share in the residential Pay TV market.

5. Content cost. Popular sporting events such as Barclays Premier League (BPL), FIFA World Cup and European Football Championship are licensed for limited periods and with increasing competition, there can be no assurance that Astro can secure these rights in the future or secure them at reasonable rates.

22 November 2012 Page 29 of 53 Astro Malaysia Holdings

Our views: Content cost comprised 32% of Astro’s TV revenue in FY11-12. We estimate that every 1 ppt increase will cut our earnings estimate by 5-7%. Hypp TV may outbid Astro for the BPL broadcasting rights in the future but we believe that this risk is remote as Hypp TV is unlikely to have enough subscribers to absorb the content cost.

Interestingly, StarHub’s EBITDA actually improved when it lost its BPL broadcasting rights to SingTel’s Mio TV back in 3QCY10. This was because the Pay TV revenue loss was more than offset by the content cost saving from having not to secure the BPL rights. If Astro were to lose its BPL rights, we would not be overly concerned.

Table 14: Selected financial information on StarHub 1QCY10 2QCY10 3QCY10 4QCY10 1QCY11 2QCY11 3QCY11 4QCY11 Pay TV revenue (SGDm) 101.6 109.6 92.4 91.8 91.6 92.3 93.4 98.7 Change YoY % (0.4) 9.1 (7.9) (10.5) (9.8) (15.8) 1.1 7.5 Group EBITDA (SGDm) 118.3 141.1 174.5 167.6 159.8 163.7 167.2 185.5 Change YoY % (29.6) (12.5) 1.2 10.2 35.1 16.0 (4.2) 10.7 Group EBITDA margin (%) 22.4 25.9 32.7 31.1 30.1 30.4 30.8 33.2

Source: StarHub

6. Content sharing. On 18 Apr 2012, the MCMC made a determination cited as the Ministerial Determination on Sports Events of National Significance that requires both Pay and FTA TV operators to offer certain of their acquired sports broadcasting rights to other FTA TV operators based on reasonable commercial terms.

Our views. The Ministerial Determination has been withdrawn and mandatory content sharing of ‘sports events of national significance’ is not in force. That said, broadcasting rights are usually priced en bloc and would therefore, be difficult to re-price individual matches as their ratings differ. Notwithstanding, Astro is already sharing some sports content with FTA TV operators.

7. Foreign exchange. Astro incurs international content costs, transponder lease payments and purchase STBs primarily in USD. In 1QFY13, its expenses paid in USD amounted to MYR288.5m, which constituted c.29% of revenue.

Our views: We estimate that every 10% depreciation in the MYR against the USD will impact our earnings estimates by 14%.

8. Recessions. Astro’s subscribers, especially from the lower income group, may be pressured to reduce their ARPUs or terminate their accounts (more commonly known as churn) in the event of a recession due to falling disposable incomes.

Our views: AAAN’s ARPU during recessionary years, FY99, FY02 and FY10, were stable YoY. To boot, AAAN continued to grow its subscriber base then. We believe that this was due to the fact that Astro’s products are viewed as a necessity rather than a discretionary for Malaysians. We expect Astro’s operations to be similarly recession resistant going forward.

22 November 2012 Page 30 of 53 Astro Malaysia Holdings

Chart 39: ARPU vs churn rate

ARPU (MYR) (LHS) Churn (%) (RHS) 95 16.0 13.4 14.0 90 11.4 12.0 10.1 9.7 10.0 9.0 8.8 10.0 85 7.8 7.9 7.9 8.0 6.9 6.6 8.0 5.4 92 80 89 6.0 3.7 84 85 83 82 82 82 4.0 75 80 81 81 81 80 79 78 2.0 70 - FY99 FY01 FY03 FY05 FY07 FY09 FY11 1HFY13

* Grey denotes recessionary years Source: AAAN annual reports, Astro

Chart 40: Residential subscribers (‘000)

3,500 3,166 3,067 2,930 2,931 3,000 2,646 2,500 2,272 2,016 2,000 1,784 1,566 1,500 1,283 984 1,000 778 541 500 183 297 35 135 - FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 1HFY13 * Grey denotes recessionary years Source: AAAN annual reports, Astro

9. Satellite transponders. Astro is dependent on MEASAT-3 and MEASAT-3A and has the capacity to broadcast up to 179 TV channels, including 36 HD channels. Should MEASAT-3 and MEASAT-3A service levels significantly degrade or should the satellites become unavailable, Astro may not be able to secure any replacement satellite transponders.

In the event that MEASAT-3 service levels significantly degrade or the satellite becomes unavailable, MEASAT-3A can only be used to provide 100% of HD services for 36 HD channels but no SD channels, or be used to provide 78 SD channels but no HD channel or a combination of both.

In the event that MEASAT-3A service levels, which currently carry only HD services, significantly degrade or become unavailable, MEASAT-3 could be used to restore 100% of its HD services, using six transponders while the remaining five transponders could be used to maintain 65 SD channels, or a combination of both.

Astro has leased 18 transponders on MEASAT-3B, which is expected to be launched in 2014. Once MEASAT-3B enters commercial service, Astro will be able to expand its broadcasting capacity to 180 SD and 102 HD channels. A delay in or a failure of the launch of MEASAT-3B may delay its channel expansion plans.

22 November 2012 Page 31 of 53 Astro Malaysia Holdings

Valuation and recommendation

We believe that the DCF valuation methodology is best. Astro’s cash flows are easy to predict, which is why we advocate the DCF valuation methodology. On the other hand, its near-term earnings and hence, earnings based valuations (e.g. PER) are artificially suppressed due to three reasons:-

(i) Depreciation policy on Astro B.yond STBs. The Astro B.yond STBs are depreciated over three years although its lifespan is at least six years, suppressing near term earnings.

(ii) Time value of vendor financing. DCF reflects the time value of money of Astro not having to pay for the STBs immediately but three years later. Earnings based valuations do not reflect this.

(iii) Accounting policy on satellite transponders. Over the next two years, we estimate that Astro will pay c.MYR100m cash p.a. but expense c.MYR120m p.a. or 20% more for its transponders lease rentals.

This is because the accounting policy for finance lease liabilities front-loads finance costs to earlier years, suppressing near-term earnings.

9.3% WACC. This assumes 4.0% risk-free rate, 6.5% market risk premium and 0.9 beta, which is in-line with the five-year average of its global peers of 0.87. As the five-year average beta of its global peers is less than 1.0, this suggests that Pay TV is a defensive industry. Astro is no different as we earlier explained that we believe its business is recession resistant and thus, deserves a beta of less than 1.0 as well.

Table 15: WACC calculation Risk free rate Rf 4.0% 10-year government bond yield Beta B 0.90 Five-year average of global peers Market risk premium Rm-Rf 6.5% Maybank KE in-house estimate Cost of equity Re 9.9% Rf+B(Rm-Rf)

Cost of debt Rd 5.4% Weighted average interest rate on borrowings Cost of debt less tax Rd post tax 4.1% Less 25% tax

Debt/(Debt+equity) Wd 10% Target net debt/EBITDA of 1.5x Equity/(Debt+equity) We 90% 1-Wd WACC 9.3% We(Re)+Wd(Re)

Source: Maybank KE

Table 16: Five year average beta of global peers Company Beta Austar* 0.72 Sky Network Television 1.00 BSkyB 0.82 Virgin Media 0.84 Dish Network 1.20 DirecTV 0.91 StarHub 0.57 True Corp 1.09 Media Nusantara Citra 0.87 ABS-CBN 0.64 Average 0.87 * Before delisting on 27 Apr 2012 Source: Bloomberg

22 November 2012 Page 32 of 53 Astro Malaysia Holdings

Our main DCF valuation assumptions are:-

1. TV households annual growth rate to slow from 2.2% to 2% in FY22 and into perpetuity.

2. Pay TV penetration rate to rise by 2-3 ppts p.a. to 70% in FY22. NJOI penetration rate to rise by 2 ppts p.a. to 20% in FY22.

3. HD take-up rate to peak at 65% of residential subscribers in FY17 or eight years after launch.

4. Residential ARPU to peak at MYR109 in FY18 and grow at 1% p.a. thereafter.

5. NJOI ARPU to be maintained at MYR10 (one MYR20 prepaid transaction every two months).

6. Content cost to remain at 32% of TV revenue and CAC per new subscriber to be maintained at MYR660.

7. Terminal growth rate of 2.5%, comprising 1.5% from TV household growth and 1% from household income growth.

Initiate coverage with a BUY and MYR3.70 TP. Our end-FY14F DCF based methodology returns a valuation of MYR3.70/sh. With 38% upside potential, we initiate coverage on Astro with a BUY. We like Astro because:-

(i) It is an excellent proxy to both Malaysian income and population growth.

(ii) The correlation between HD take up rate and ARPU is proven worldwide. Again, its HD take up rate is already higher than the four Pay TV operators’ that we studied in their full third year.

(iii) Its cash flows are easy to predict and its business is recession resistant.

Table 17: End-FY14 DCF valuation Equity value Comments MYRm MYR/sh DCF 20,402.6 3.93 9.0% WACC, g=2.5% Net debt ex-finance lease liabilities (1,027.1) (0.20) Total 19,375.5 3.72 TP 3.70 (rounded)

Source: Maybank KE

Sensitivity analysis. The table below sets out the equity values/sh of Astro under various terminal growth (g) and discount rate (WACC) assumptions.

Table 18: DCF valuation matrix g WACC 2.0% 2.5% 3.0% 8.5% 4.04 4.27 4.55 9.0% 3.71 3.91 4.13 9.3% 3.55 3.72 3.93 9.5% 3.43 3.59 3.78 10.0% 3.18 3.32 3.48

Source: Maybank KE

22 November 2012 Page 33 of 53 Astro Malaysia Holdings

EV/EBITDA valuation methodology as an alternative. This is premised on a 12x 1-year forward EV/EBITDA multiple and it returns an equity value of MYR3.35/sh. The 12x multiple follows that of India’s DISH TV and Indonesia’s MNC Sky Vision. While this 12x multiple is higher than most of its other global peers, we believe that it is warranted for the following reasons:-

1. Platform. As explained in the preceding pages, DTH Pay TV operators have much wider coverage compared to cable/IPTV Pay TV operators. Consequently, they tend to trade at a premium to their cable/IPTV peers. As a DTH Pay TV operator, Astro deserves a premium.

2. National penetration rate. The EV/EBITDA multiples of Pay TV operators in developing countries (India, Indonesia) tend to be higher as their national penetration rates are lower, leaving more headroom for growth. As Malaysia is a developing country, Astro’s Malaysian operations deserve a higher valuation than the global average.

3. Competition. Although DISH TV and MNC Sky Vision trade at higher EV/EBITDA multiples presumably for their larger headroom for growth, both have several national competitors each. Astro is one of very few Pay TV operators with 99% market share. Therefore, it deserves to trade at a premium.

Table 19: EV/EBITDA comparisons Company Country Platform Mkt cap EV/EBITDA (x) USDm 2012 2013 2014 ABS-CBN Corp Philippines Cable 607.1 6.2 5.2 6.0 Virgin Media Inc United Kingdom Cable 9,136.1 6.9 6.6 6.1 True Corp Thailand Cable/DTH 2,335.6 8.7 7.4 6.7 StarHub Singapore Cable 5,120.0 9.3 8.9 8.6 Dish Network USA DTH 16,138.6 6.8 6.3 6.2 DirecTV USA DTH 29,898.6 6.0 5.6 5.2 Sky Network Television New Zealand DTH 1,624.9 6.9 6.5 6.2 British Sky Broadcasting United Kingdom DTH 20,424.5 8.6 8.3 7.9 DISH TV India DTH 1,452.0 14.8 11.7 9.3 MNC Sky Vision Indonesia DTH 1,612.3 16.2 11.9 9.4 Average 9.0 7.8 7.2 DTH average 9.9 8.4 7.4 Developing countries average 11.5 9.1 7.8

Source: Bloomberg

MYR3.35 EV/EBITDA derived equity value/sh. Based on their respective attributes, we believe that DISH TV and MNC Sky Vision, are Astro’s most directly comparable peers. Ascribing their average 1- year forward EV/EBITDA of 12x, we derive an equity value/sh of MYR3.35 for Astro.

Table 20: EV/EBITDA valuation FY14F EBITDA EV/EBITDA EV MYRm x MYRm 1,599.1 12.0 19,188.7

Less net debt (1,718.8) Equity value 17,469.9 FD no. of shares (m) 5,219.2 Equity value/sh 3.35

Source: Maybank KE 22 November 2012 Page 34 of 53 Astro Malaysia Holdings

Financial statements

INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m) FY Jan FY12A FY13F FY14F FY15F FY Jan FY12A FY13F FY14F FY15F

Revenue 3,888.8 4,274.7 4,748.7 5,259.6 Fixed Assets 1,654.2 2,025.1 2,376.9 2,945.9 EBITDA 1,414.7 1,367.9 1,599.1 2,036.2 Other LT Assets 3,453.6 1,953.6 1,953.5 1,953.4 Depreciation & Amortisation* (424.3) (568.3) (730.6) (854.8) Cash/ST Investments 478.2 1,752.3 1,943.4 2,377.5 Operating Profit (EBIT) 990.4 799.7 868.4 1,181.4 Other Current Assets 927.8 986.5 1,069.5 1,157.8 Interest (Exp)/Inc (126.0) (190.9) (168.4) (246.6) Total Assets 6,513.8 6,717.5 7,343.3 8,434.7 Associates (0.1) (0.1) (0.1) (0.1) One-offs - - - - ST Debt 43.5 48.6 15.1 50.9 Pre-Tax Profit 864.3 608.7 699.9 934.8 Other Current Liabilities 1,733.4 1,660.2 1,651.3 2,194.2 Tax (234.7) (165.3) (190.1) (253.9) LT Debt 3,666.4 3,662.2 3,647.1 4,274.7 Minority Interest (5.5) (3.9) (4.5) (5.9) Other LT Liabilities 579.1 878.4 1,430.9 1,141.3 Net Profit 624.1 439.6 505.4 675.0 Minority Interest 8.6 12.4 16.9 22.8 Recurring Net Profit 624.1 439.6 505.4 675.0 Shareholders' Equity 482.9 455.7 582.0 750.8 Total Liabilities-Capital 6,513.8 6,717.5 7,343.3 8,434.7 Revenue Growth % 6.1 9.9 11.1 10.8 EBITDA Growth (%) 3.3 (3.3) 16.9 27.3 Share Capital (m) 0.1 519.7 519.7 519.7 EBIT Growth (%) (7.2) (19.3) 8.6 36.0 Gross Debt/(Cash) 3,709.9 3,710.8 3,662.2 4,325.6 Net Profit Growth (%) (24.2) (29.6) 15.0 33.6 Net Debt/(Cash) 3,231.7 1,958.5 1,718.8 1,948.1 Recurring Net Profit Growth (%) (24.2) (29.6) 15.0 33.6 Working Capital (370.9) 1,030.0 1,346.5 1,290.3 Tax Rate % 27.2 27.2 27.2 27.2

CASH FLOW (MYR m) RATES & RATIOS FY Jan FY12A FY13F FY14F FY15F FY Jan FY12A FY13F FY14F FY15F

Profit before taxation 864.3 608.7 699.9 934.8 EBITDA Margin % 36.4 32.0 33.7 38.7 Depreciation& Amortisation** 727.3 894.5 1,083.0 1,246.1 Op. Profit Margin % 25.5 18.7 18.3 22.5 Net interest receipts/(payments) 88.0 190.9 168.4 246.6 Net Profit Margin % 16.0 10.3 10.6 12.8 Working capital change (553.7) (652.4) (508.1) (468.2) ROE % 76.4 93.7 97.4 101.3 Cash tax paid (164.2) (189.8) (181.3) (231.3) ROA % 12.8 6.6 7.2 8.6 Others (incl'd exceptional items) 60.7 0.1 0.1 0.1 Net Margin Ex. El % 16.0 10.3 10.6 12.8 Cash flow from operations 1,022.4 852.0 1,262.1 1,728.0 Dividend Cover (x) - - 1.3 1.3 Capex (538.5) (427.5) (474.9) (526.0) Interest Cover (x) 7.9 4.2 5.2 4.8 Disposal/(purchase) 0.5 6.4 - - Asset Turnover (x) 0.6 0.6 0.6 0.6 Others (1,446.5) 75.6 83.1 91.4 Asset/Debt (x) 1.8 1.8 2.0 1.9 Cash flow from investing (1,984.5) (345.5) (391.8) (434.5) Debtors Turn (days) 62.5 62.5 62.5 62.5 Debt raised/(repaid) 2,216.8 0.9 (48.6) (15.1) Creditors Turn (days) 128.1 128.1 128.1 128.1 Equity raised/(repaid) - 1,362.9 - - Inventory Turn (days) 1.7 1.7 1.7 1.7 Dividends (paid) (1,330.7) (329.7) (379.1) (506.3) Net Gearing % 669.2 429.8 295.3 259.5 Interest payments (124.3) (266.5) (251.6) (338.0) Net debt/ EBITDA (x) 2.3 1.4 1.1 1.0 Others - - - - Debt/ Market Cap (x) 0.3 0.3 0.3 0.3 Cash flow from financing 761.9 767.7 (679.2) (859.4) Change in cash (200.2) 1,274.1 191.1 434.1 Forex (0.1) - - - * Depreciation & Amortisation under the income statement excludes amortisation of film library and programme rights ** Depreciation & Amortisation under cash flow from operations includes amortisation of film library and programme rights Source: Astro, Maybank KE

22 November 2012 Page 35 of 53 Astro Malaysia Holdings

Appendix 1

Astro’s businesses

. Pay TV

Largest in Malaysia and South East Asia. Astro has 3.2m residential Pay TV subscribers and 3.3m total subscribers, which puts it way ahead of its nearest regional peer (see chart below). As at Jun 2012, Astro’s Pay TV services reached an average of 10.4m resident viewers. Its broadcast centre, the All Asia Broadcast Centre, houses Malaysia’s first HD TV studio that supports the production of feature films, original games and reality shows, variety specials, live sports, news and current affairs programmes, documentaries, drama series and children’s content. Please refer to Appendix 4 for the Pay TV business process.

Table 21: Subscribers breakdown ex-NJOI as at 2QFY13 (‘000) Category Subscribers Residential 3,166 Commercial 12 Hotel rooms 136 Public schools 12 Total 3,326

Source: Astro

Chart 41: Number of subscribers of leading ASEAN Pay TV operators* 3,500.0 3,326.0

3,000.0

2,500.0

2,000.0 1,601.0 1,411.4 1,500.0

1,000.0 700.0 543.0 500.0

- Astro True Corp Indovision Skycable StarHub

* Astro as at 1HFY13, rest as at 30 Jun 2012 Source: Astro, True Corporation, MNC Sky Vision, ABS-CBN, StarHub

22 November 2012 Page 36 of 53 Astro Malaysia Holdings

156 channels and counting, STBs platform agnostic. As at 31 Jul 2012, Astro broadcasts 156 TV channels (both SD and HD), of which 68 are Astro-created and branded channels. It provides broadcast and on-demand programmes to its subscribers through DTH TV, IPTV and OTT platforms, making its TV services platform agnostic. The breadth of its content portfolio enables it to greatly differentiate itself from its competitors, both old and new.

Table 22: Channels breakdown as at 31 Jul 2012 SD HD Total Subscription 91 20 111 Pay-per-view 10 2 12 NVOD 22 - 22 Service related 2 - 2 Free to air 6 - 6 Other local 3 - 3 Total 134 22 156

Source: Astro

Figure 3: Distribution platform evolution

1996 Today

Over The Top DTH Hybrid DTH Fibre broadband Internet delivery to Basic satellite Premium satellite Triple play bundling connected devices

• Cost-effective • Hybrid via any • IPTV service in • Significantly expand platform for mass broadband partnership with addressable market Reach / market reach connection TIME to individuals Technology • 100% coverage • 50% converted to Astro B.yond platform

• Currently provides • Astro B.yond, • Astro B.yond • Astro On-The-Go for 156 TV channels and including: including: PCs, smartphones 20 radio channels o SD, HD/3D, PVR o SD, HD/3D, PVR and tablets Products o Interactive & VOD o Interactive & VOD o Linear and VOD • HSBB & voice content

Source: Astro

16 year veteran of the Malaysian Pay TV scene. Astro launched its DTH Pay TV services in 1996 and was granted by the MCMC the exclusive right to provide DTH Pay TV services in Malaysia until 28 Feb 2017. Although it loses its exclusivity in 2017, its license from the MCMC goes on for another 5 years, expiring in 28 Feb 2022 – but it is renewable. Please refer to Appendix 3 for further details.

22 November 2012 Page 37 of 53 Astro Malaysia Holdings

First and only HD Pay TV service provider in Malaysia. In Dec 2009, Astro launched its Astro B.yond hybrid DTH Pay TV platform, which is a HD STB and broadcasting platform that is also broadband enabled to access IPTV services. In Apr 2011, it launched Astro B.yond IPTV, a triple play service that comprises Pay TV services delivered through fibre optics, high speed broadband and telephony services, in partnership with TIME.

Venturing into OTT and non-subscription TV services. In May 2012, Astro launched Astro On-The-Go, its OTT online and mobile application service. It currently offers 11 linear TV channels and a wide selection of non-linear content. In Feb 2012, it launched NJOI, its DTH non- subscription TV service. As at 31 Jul 2012, NJOI offers 18 TV and 20 radio channels.

Local content focus. Astro has developed content creation, aggregation and distribution capabilities in 10 major languages and dialects to cater to Malaysia’s three main ethnic groups. It has to date, produced or commissioned for production >40,000 hours of TV content of which c.8,000 hours (80% in Malay) was in FY12 alone. Astro also develops, licenses and supplies Asian language content to local and regional TV operators.

Many ‘firsts’. Astro was the first company in Malaysia to develop a local news channel, Astro Awani, and a local sports channel, Astro Arena. It also has popular local content, such as Maharaja Lawak Mega, Astro Classic Golden Melody and Vaanavil Super Star, which hit peak ratings of 15.5, 17.2 and 26.2 respectively and peak viewership of 1.0m, 0.4m and 0.3m respectively. These rating and viewership figures rival those on FTA TV.

22 November 2012 Page 38 of 53 Astro Malaysia Holdings

Localised international sports content. Astro has also created its own series of Astro SuperSport channels broadcasting popular international sports content such as the European Football Championship, German Bundesliga, NBA, Roland Garros (French Open), FIFA World Cup and Barclays Premier League, where a portion of the matches are broadcast on the ESPN and StarSports channels.

Enviable line-up of exclusive content. As at 31 Jul 2012, Astro also exclusively broadcasts channels such as National Geographic Channel, Disney Channel, Discovery Channel, AXN, ESPN and FOX Movies Premium. Coupled with its extensive portfolio of local and international sports content, Astro offers the largest and most diverse selection of content to Malaysian viewers.

Figure 4: Astro local content with >1m viewers

World Cup 2014 Qualifier Malaysia Cup Final Anugerah Industri Muzik Malaysia vs Singapore

Viewership : 1.3m Viewership : 1.3m Viewership : 1.1m

Akademi Fantasia 9 Raja Lawak 5 Finale MasterChef Finale

Viewership : 1.2m Viewership : 1.2m Viewership : 1.2m

Source: Astro

Table 23: Significant milestones Year Key Milestone / Achievements / Awards / Recognitions 1996 Commenced digital DTH Pay TV services with 22 TV and five radio channels. Introduced format radio programming, the first broadcaster to introduce this into Malaysia. 1997 Granted a renewable 25 year broadcasting licence with exclusivity on DTH Pay TV services until 2017. 2003 Surpassed 1m residential Pay TV subscribers. 2007 Surpassed 2m residential Pay TV subscribers. Introduced Astro On Demand, Malaysia’s first TV NVOD service. 2009 Launched Astro B.yond platform, a hybrid DTH and broadband enabled STB and distribution platform. Launched Astro B.yond with the first HD transmission in Malaysia. Won the ‘CASBAA Chairman’s Award’ for outstanding contribution to the Pay TV industry in the region. 2010 Broadcast the first 3D transmission in Malaysia and Southeast Asia for the 2010 FIFA World Cup. Launched Astro B.yond PVR. Launched the popular Astro Tutor TV UPSR examination revision channel. 2011 Launched Astro B.yond IPTV, to deliver IPTV services through TIME’s fibre optic broadband network. Launched Astro First, the first movie pay-per-view with near cinema window services in Malaysia, via its STBs. Launched Super Packs which comprises Astro’s best content, with HD and PVR services, to enhance its value proposition for its subscribers. Surpassed 3m residential Pay TV subscribers. 2012 Launched Astro On-The-Go, an OTT service for smartphones, tablets and PCs, as well as broadband based VOD. Launched NJOI, Malaysia’s first DTH non-subscription TV services with 18 TV and 20 radio channels. Source: Astro

22 November 2012 Page 39 of 53 Astro Malaysia Holdings

Wide array of services to suit every subscriber. Astro offers current and potential subscribers choice and flexibility. All packages include 41 basic channels and services (Basic Family package) plus 20 radio channels. In addition, subscribers have the option to choose from:-

(i) Three Prime packages

 Sports

 Movies

 Dynasty

(ii) Four Mini packages

 News

 Learning

 Variety

 Kids

(iii) Six Plus packages, which appeals to various ethnicities

 Mustika

 Gold

 New Emperor

 Maharaja

 Metro

 Indo Pek

 Special interest channels

(iv) Four Super Packs, each of which offers more value to subscribers by bundling the most popular channels by customer segment, demographic, and ethnic groups.

(v) Premium and pay-per-view content such as Astro On Demand, Astro Box Office Movies, Astro First and Astro Box Office Sports.

(vi) HD channels

(vii) PVR and VOD services

NJOI not entirely free. NJOI subscribers are able to watch 18 TV channels and listen to 20 radio channels with no monthly subscription fees. NJOI subscribers will only need to make a one-time payment of MYR300 for the STB, satellite dish and installation charges. On 19 Jul 2012, Astro launched its NJOI prepaid services. It offers three package selections and each is priced at MYR20 for 15 days of viewing upon activation.

22 November 2012 Page 40 of 53 Astro Malaysia Holdings

Table 24: Subscription packages as at 31 Jul 2012

Basic Family Packages  TV1*  NTV7  TV9  Makkai TV*  TVB Classic  CCTV News  Astro TVIQ  TLC  TV2*  Zee Variasi  I130*  Astro AEC*  Astro Xiao Tai  Nat Geo Wild  Astro Ceria  8TV  TV3  Arab Radio & TV  Tvi*  iVIEW* Yang*  Astro Tutor TV  AXN  Astro Arena  Astro Ria Variety(ART)  Astro Vaanavil*  Jia Yu*  CCTV4* UPSR*  DIVA Universal  ESPNews  Astro Prima*  TV AlHijrah  Astro Vellithirai  KBS World  Astro Tutor TV  Asian Food  ITV Granada (preview)  Astro Oasis  Astro Awani* PMR* Channel  Bernama TV*  Astro Tutor TV  Astro HITZ TV SPM*

Mini Packages Prime Packages News Learning Variety Kids Sports Movies Dynasty  CNN  National Geographic  Star World  Nickelodeon  Astro Supersport  HBO Asia  Astro Wah Lai Toi  CNBC Asia Channel  FOX  Disney Channel  ESPN  MAX  TVB Entertainment News  BBC World  Discovery Channel  MTV  Cartoon  Star Sports  FOX Movies  Phoenix Chinese Cannel  Bloomberg  Discovery Science  E! Network  Eurosport Premium  TVB Xing He  Australia  History Channel Entertainment  Disney Junior  Golf Channel  NHK World Network  Animal Planet  Animax  Astro Supersport 2  TVBS Asia  Al-Jazeera  Astro Supersport 3  Astro Shuang Xing English Plus Packages Mustika Gold New Emperor Maharaja Metro Indo Pek Special Interest  Astro Citra  CTI Asia  Phoenix Chinese  Sun TV  The Biography  Bintang  Baby TV  Astro Wama  Phoenix InfoNews Channel  Chutti TV Channel  Pelangi  Astro Stocklink  Astro Bella Channel  CTI Asia  Sun Music  Crime &  Astro Hua Hee Dai  Celestial Movies  Adithya TV Investigation  Phoenix InfoNews  Discovery Home & Channel Health  Astro Shuang Xing  Discovery Turbo  Astro Hua Hee Dai Premium Packages Pay Per Event / Pay-Per-View  Astro Box Office Movies Thangathirai  Astro On Demand Dragon Pack  Astro Box Office Sports  Astro Box Office Tayangan Hebat  Astro First

HD Channels Basic HD Movies Variety Learning Sports Local/Vernacular/Others  One HD  Celestial HD  HBO HD  Star World HD  Discovery HD World  Astro SuperSport HD  Astro Zhi Zun HD (Chinese)  BeTV HD  Astro Lifestyle HD:  FOX Movies Premium HD  National Geographic  Astro SuperSport HD 2  Astro Mustika HD  AXN HD Food Network Asia  Sundance Channel HD Channel HD  ESPN HD  Astro First HD  FX HD HD & Life Inspired  History HD  Astro ‘Signature’ HD  KIX HD (Li)

* Offered on the NJOI platform. Source: Astro

20 November 2012 Page 41 of 53 Astro Malaysia Holdings

. Radio

Wide array of radio channels. Astro Radio broadcasts radio content through 20 different stations, nine of which are commercial radio stations which are delivered as FM stations and broadcasted on DTH TV, IPTV, mobile and Internet platforms while the other 11 additional direct-to-user radio channels are only broadcasted on DTH TV, IPTV, mobile and Internet platforms.

Dominates the Malaysian radio waves. Its radio business reached 13m weekly radio listeners in Apr 2012, representing 52% share of listenership. In 1QFY13, its share of radio adex was 53%. Astro Radio sports the highest rated Malay (ERA), Chinese (MY FM), Indian (THR Raaga) and English (Hitz.FM) radio stations in terms of listenership. Its Sinar FM is also the second highest rated Malay radio station.

Also a 16-year veteran of the Malaysian radio scene. Astro Radio commenced operations in 1996 with five radio stations. It was the first broadcaster to introduce format radio programming in Malaysia. Since 1995, Astro Radio has worked with Austereo Group Limited, Australia’s leading radio group, and maintains its relationship with Southern Cross Austereo which is the successor entity of a 2011 merger between Southern Cross Media Group and Austereo Group Limited.

Plays the best hits. Despite intensifying competition from Media Prima and Star RFm in recent years, Astro Radio has consolidated its market leadership, retaining the top spot in terms of listenership in total radio channel market share, and the top position across all main languages. According to the Independent Market Report, in Apr 2012:-

(i) ERA, its Malay radio station, is the country’s most popular radio network with c.5m weekly listeners,

(ii) MY FM, its Chinese radio station, is the most popular Chinese language network with c.2.7m weekly listeners,

(iii) THR Raaga, its Indian radio station, is the most popular Indian radio network with c.2.2m weekly listeners,

(iv) Hitz.fm, its English radio stations, remains the most popular English language network with c.2.2m weekly listeners.

Table 25: FM radio stations Station Target listeners Format Language Weekly listeners(1) Adex share(2) Age m % ERA 18 – 34 Adult contemporary Malay 5.0 7 Sinar FM 35 – 49 Malay retro tunes Malay 4.8 10 THR.fm Raaga 18 – 39 Adult contemporary Tamil 2.2 4 THR.fm Gegar 18 – 34 Adult contemporary Malay 1.7 2 MY FM 10 – 29 Adult contemporary Mandarin, Cantonese 2.7 13 Hitz.fm 25 – 39 Top 40 English 2.2 10 Mix FM 25 – 39 Adult contemporary English 0.6 4 Lite FM 35 – 49 Easy Listening English 0.4 2 XFM(3) 18 - 39 By teens for teens of latest music Malay 0.2 * Total 13.4 52

(1) As at Apr 2012 (2) 1QCY12 (3) XFM was discontinued on 9 July 2012 * <1% Source: Independent Market Report

27 November 2012 Page 42 of 53 Astro Malaysia Holdings

Base stations located across Malaysia. Astro Radio broadcasts its nine FM stations in 16 locations and their surrounding areas namely in the Klang Valley, Alor Setar, Langkawi, Penang, Ipoh, Tapah, Seremban, Melaka, Johor Bahru, Taiping, Kuantan, Kuala Trengganu, Kota Bahru, Kuching, Kota Kinabalu and Miri. The 11 direct-to-user radio stations broadcast on its DTH TV and IPTV platforms through Astro Radio are:-

Table 26: Direct-to-user radio stations Channel Descriptions India Beat Hindi and Tamil pop and movie music Golden Oldies Good times and great oldies Jazz Living history of the jazz genre Opus Fine classical music Rock Legendary rock music Osai Southern Indian channel with Tamil music Bayu Indigenous music catered to Sabah Kenyalang Indigenous music catered to Sarawak Nasional FM National radio station operated by RTM Sabah V FM RTM station operating in Sabah Wai FM RTM station operating in Kuching

Source: Astro

. Other businesses

AstroView, the most widely circulated magazine in Malaysia. Astro Publications publishes seven print magazines, including its TV viewing guide, AstroView, which is the most widely circulated magazine in Malaysia with a circulation of c.6m in 2010. Its other commercial publications include English titles Four Four Two, Style and FHM, the Malay language title inTrend and the Chinese titles Men’s Uno and iFeel, with a combined circulation of 1.7m in 2010.

>7m monthly page views across its digital platform. Astro Digital develops and manages online and mobile portals to provide sports, entertainment and other key content to online audiences. These digital services allow it to expand its reach and engage subscribers and viewers. In addition, the digital media platforms provide it with another medium for advertisements. Based on internal tracking via Google Analytics, Astro’s digital platforms recorded >7m monthly page views across its digital platform in Apr 2012.

27 November 2012 Page 43 of 53 Astro Malaysia Holdings

Appendix 2

Key management and Board of Directors

Key management Name Designation Profile

Dato’ Rohana Binti Tan Executive She is also the Chief Executive Officer of MBNS, a wholly-owned subsidiary, a position she Sri Datuk Haji Rozhan Director/ held since 2006. Prior to being appointed as Chief Executive Officer, she was the Group Chief Chief Financial Officer of AAAN, where she was instrumental for AAAN’s listing on the then Executive Main Board of the Kuala Lumpur Stock Exchange (now known as the Main Market) in 2003. Officer She sits on various boards including Media Innovations Pte Ltd, Astro Overseas Limited and Malaysian Airline System Berhad. Prior to joining Astro, Rohana was with the Unilever group of companies for nine years, both in the UK and Malaysia, where she gained substantial experience in financial and business management in fast-moving consumer goods operations. She holds a Bachelor of Arts (Honours) degree in Accounting and Economics from University of Kent, Canterbury, UK. She is a Fellow Member of the Chartered Institute of Management Accountants, UK since November 1996 and member of the Malaysian Institute of Accountants since May 1997. She completed the Advanced Management Programme at Harvard Business School in 2006.

Ahmad Fuaad Bin Mohd Chief He joined Astro in Aug 2010. He is responsible for overseeing its finance related matters Kenali Financial including financial management and reporting, risk management and business process, Officer treasury and taxation. He has 18 years of experience in accounting, assurance and finance. Prior to joining Astro, he was a partner with Ernst and Young, Malaysia for more than two years. He also served as the Executive Director Finance in Petaling Garden Berhad, which was then a listed property group, where he was involved in strategy, governance, IT and risk management for seven years. Prior to that, he was with Arthur Andersen for seven years in both Assurance and Corporate Finance divisions. Ahmad graduated from University of East Anglia, UK with a degree in Computerised Accountancy. He is a fellow of the Association of Chartered Certified Accountants, a member of the Malaysian Institute of Accountants and a member of the Malaysian Institute of Certified Public Accountants.

Henry Tan Poh Hock Chief Henry joined Astro in May 2008 and is currently responsible for content, marketing, branding Operating and airtime sales. He has 24 years of experience in the media industry. Prior to joining Officer Astro, he served as Chief Executive Officer of GroupM, Malaysia and Singapore, a leading media investment management company. Prior to that, he was Chief Executive Officer of Mindshare Malaysia. He holds a double degree in Marketing and Communications from Chisholm (now known as Monash University), Australia.

Brian Wendell Lenz Chief Brian joined Astro in Dec 2011 and is currently responsible for strategy, service and Innovation business development as well as technology infrastructure. He has 18 years of experience Officer in service, technology, strategy and business development roles and has spent the last nine years focused in the Pay TV and media industry. Prior to joining Astro, he spent four years with British Sky Broadcasting Group PLC, most recently as Director of Service Design & Development, responsible for setting and delivering the service roadmap. Before that, he worked at Virgin Media Inc. for three years, in the role of Head of Strategic Planning, and prior to that, as Head of Service Strategy and Business Development. His other roles include time at L.E.K Consulting LLC in corporate strategy and merger and acquisitions advisory, and prior to that, a consultant position with Walt Disney Company on broadband content strategy. Prior to attending business school, he spent seven years in business strategy and software development in the aviation industry. He holds a degree in Industrial and Operations Engineering as well as an English Literature degree, both earned at the University of Michigan. He attended the London Business School and received a Masters in Business Administration with Distinction.

Liew Swee Lin Chief Liew joined Astro in Nov 2010 and is responsible for driving customer franchise and topline Commercial growth to strengthen its market position. She also oversees service management, sales, Officer marketing, customer management, service, operations and supply chain management. She brings with her 22 years of management experience in the media and financial services sectors with broad industry exposure spanning from retail banking, insurance, fast-moving consumer goods, manufacturing and direct marketing across Asia Pacific. Prior to joining Astro, she was Executive Vice President – Consumer Banking, Alliance Bank Malaysia Berhad and served as a Director on the board of Alliance Islamic Bank Berhad. She has also held senior positions in Standard Chartered Bank Malaysia Berhad where she led the Credit Cards, Personal Loans and Wealth Management portfolios. Her media experience was garnered during her stint at OgilvyOne Worldwide, part of the WPP Group, where she was responsible for driving the profitability of its agency business. She holds a Master of Science (MSc) in International Marketing from University of Strathclyde, UK and is an accredited Certified Financial Planner (CFP, US). Source: Astro 27 November 2012 Page 44 of 53 Astro Malaysia Holdings

Board of Directors Name Designation Profile

Tun Dato’ Seri Zaki Bin Independent He had his early education in Malaysia before obtaining a Barrister-at-Law qualification from Tun Azmi Non- the Lincoln’s Inn in 1969. He joined the Malaysian Judicial and Legal Services as a Executive Magistrate in 1970 and later transferred to the Attorney General’s Chambers where he held Chairman several positions for 15 years before going into private legal practice in 1985. While in practice, Zaki was a director as well as chairman or member of audit committees of the board of directors of several public listed companies including Petroliam Nasional Berhad, Malaysia Airport Holdings Berhad and S P Setia Berhad. He left legal practice in 2007 when he was appointed as a Judge of the Federal Court of Malaysia and shortly thereafter, he was appointed as the President of Court of Appeal of Malaysia, the second highest judicial office. On 18 October 2008, he was appointed as the 12th Chief Justice of Malaysia. He became the first chairman of the Judicial Appointment Commission on 16 February 2009 until his retirement as Chief Justice in September 2011. During his tenure as the Chief Justice of Malaysia, he reduced substantially the backlog of cases pending at the Malaysian courts and also introduced technological and managerial systems that enabled cases at the High Courts to be disposed of within nine months to one year from the date of filing and within six months from the date of filing at the Sessions Courts and Magistrates’ Courts. Currently, he is the Chancellor of MAHSA University College and the Multimedia University.

Augustus Ralph Marshall Non- Augustus was admitted as a member of the Institute of Chartered Accountants in England Independent and Wales (ICAEW) in 1975. He started his career as an audit senior with Ernst & Young in Executive 1976 before joining Inchcape Malaysia Holdings Berhad in 1979 and in 1982, was promoted Deputy to Group Finance Director. Chairman In 1988, he joined Usaha Tegas Sdn Bhd (UTSB) where he currently serves as an executive director. He has been with the Group since 1994 as a director of MBNS and was its Chief Executive Officer from 1995 to 2006. He was later appointed as a director of AAAN in July 2003 upon its incorporation and became its Deputy Chairman and Group Chief Executive Officer in August and September 2003, respectively prior to AAAN’s listing on the then Kuala Lumpur Stock Exchange. Since the delisting of AAAN in Jun 2010, he was appointed as Group Chief Executive Officer of Astro Holdings Sdn Bhd. He is also the Executive Deputy Chairman of ASTRO Overseas Limited, a position he has held since April 2011. He is currently an executive director of Tanjong Public Limited Company and a nonexecutive director of Maxis, Maxis Communications Berhad and Johnston Press plc, in which UTSB has significant interests. In addition, he is also a director in an independent non-executive capacity and the Chairman of the audit committee of KLCC Property Holdings Berhad and a non-executive director of MEASAT Global Berhad. He is a member of the Malaysian Institute of Certified Public Accountants.

Chin Kwai Yoong Independent After his tertiary education in Malaysia, Chin completed his articleship with Middletons, a firm Non- of chartered accountants in London and was admitted as a member of the ICAEW in 1974. Executive He joined Price Waterhouse, London as an audit assistant in 1974 and remained with the Director firm until 1976. Subsequently, he took up a position as an audit senior with Price Waterhouse, Kuala Lumpur and was promoted to partner in 1982, a position he held until his retirement in 2003. During his tenure as a partner, he was an executive director in charge of the Consumer and Industrial Products and Services Group. He also served as a director of the Audit and Business Advisory Services Division and the Management Consulting Services Division. He has extensive experience in the audits of major companies in the banking, oil and gas and automobile industries as well as in the heavy equipment, manufacturing, construction and property development industries. He was also involved in corporate advisory services covering investigations, mergers and acquisitions and share valuations. He sits on the board of Deleum Berhad and Genting Berhad and was also appointed as a director of Bank Negara Malaysia in 2010. He is currently a fellow of the ICAEW and a member of the Malaysian Institute of Certified Public Accountants as well as the Malaysian Institute of Accountants.

Dato’ Mohamed Khadar Independent Khadar has more than 30 years of experience in financial and general management. He Bin Merican Non- began his career in 1983 when he joined Hanafiah Raslan & Mohamed, the then member Executive firm of Touch Ross International, as an auditor and consultant. Director. In 1986, he joined Kompleks Kewangan Malaysia Bhd, as the Senior Manager of Financial Planning, until 1988 when he joined Perbadanan Nasional Bhd, where his last position was as the Senior Vice President of Corporate Services. In 1996, as a result of a reorganisation, he joined Pernas International Holdings Bhd as the President and Chief Operating Officer. He resigned in 2003 to start his own financial consulting business, which he manages currently. He is a member of the ICAEW since 1983, and is also a Chartered Accountant of the Malaysian Institute of Accountants. His other directorships in public companies include RHB Capital Berhad and RHB Investment Bank Berhad where he is the independent non- executive chairman of both companies, as well as AirAsia Berhad.

27 November 2012 Page 45 of 53 Astro Malaysia Holdings

Board of Directors (continued) Name Designation Profile

Bernard Anthony Cragg Non- Bernard is a Chartered Accountant by profession and was with Price Waterhouse from 1976 Independent to 1985. He graduated with a degree in Mathematics from Liverpool University, UK in Non- 1976.He began his career with Price Waterhouse as a trainee Chartered Accountant where Executive he qualified and stayed until 1985 after which he joined Carlton Communications plc initially Director as its Group Financial Controller. He held various senior management positions in Carlton Communication plc from 1985 to 2001 including as the Company Secretary and Group Finance Director. He has previously served as the chairman of Datamonitor plc and i-Mate plc as well as a director of Arcadia Group plc and Bristol & West Plc, a part of the Bank of Ireland (UK) Financial Services. Currently, he is also a director of Workspace Group plc, Mothercare plc and Progressive Digital Media Group plc.

Hisham Bin Zainal Non- Hisham is currently a director in the Investments Division of Khazanah. He joined Khazanah Mokhtar Independent in May 2005 from Tricubes Berhad where he was an executive director and Vice President Non- of Corporate and Financing Planning. He started his career in the insurance industry at Executive Universal Life & General Insurance in 1987 and after that, William M. Mercer Sdn Bhd in Director 1988 before becoming an investment analyst initially with Crosby Research (M) Sdn Bhd in 1991 before joining Barings Research (Malaysia) Sdn Bhd in 1994 and subsequently, UBS Research (Malaysia) Sdn Bhd in 1996. In 1998, he became a financial consultant at Sithe Pacific LLC, a regional independent power producer before he ventured out to set up a boutique investment advisory firm, KE Malaysian Capital Partners Sdn Bhd with another partner. He graduated with a Bachelor of Science and Masters of Science in Mathematics from Illinois State University, US in 1984 and 1986 respectively and a Masters of Business Administration from Massachusetts Institute of Technology, US under the Sloan Fellows Program at the MIT Sloan School of Management in 2010.

Dato’ Rohana Binti Tan Executive She is also the Chief Executive Officer of MBNS, a wholly-owned subsidiary, a position she Sri Datuk Haji Rozhan Director/ held since 2006. Prior to being appointed as Chief Executive Officer, she was the Group Chief Chief Financial Officer of AAAN, where she was instrumental for AAAN’s listing on the then Executive Main Board of the Kuala Lumpur Stock Exchange (now known as the Main Market) in 2003. Officer She sits on various boards including Media Innovations Pte Ltd, Astro Overseas Limited and Malaysian Airline System Berhad. Prior to joining Astro, Rohana was with the Unilever group of companies for nine years, both in the UK and Malaysia, where she gained substantial experience in financial and business management in fast-moving consumer goods operations. She holds a Bachelor of Arts (Honours) degree in Accounting and Economics from University of Kent, Canterbury, UK. She is a Fellow Member of the Chartered Institute of Management Accountants, UK since November 1996 and member of the Malaysian Institute of Accountants since May 1997. She completed the Advanced Management Programme at Harvard Business School in 2006.

Lim Ghee Keong Alternate Lim has more than 20 years of experience in treasury and credit management. He has been Director to with the UTSB Group since 1995 where he is currently the Chief Financial Officer of UTSB. Augustus Prior to joining UTSB Group, he was attached to the former Ban Hin Lee Bank in Malaysia Ralph from 1993 to 1995, initially as a senior credit officer and later promoted to the position of Marshall branch head of credit. Between 1989 and 1993, he was attached to General Electric Capital Corporation in the US where his last position was as a credit analyst. His other directorships include Bumi Armada Berhad, an offshore oil and gas service provider and Paxys Inc., a business process outsourcing company. He is also a director of Yu Cai Foundation, a charitable organisation and Bond Pricing Agency Malaysia Sdn Bhd, a bond pricing agency registered with the SC. He holds a Bachelor of Business Administration degree, majoring in Finance, from the University of Hawaii at Manoa, US, which he obtained in 1989. Source: Astro

27 November 2012 Page 46 of 53 Astro Malaysia Holdings

Appendix 3

DTH broadcasting license Permit/ Licence/ Licensee/ Approving Description of Date of grant/ Status of Registration Expiry date Salient conditions Contractor authority licences renewal Compliance Number MBNS Minister CASP/I/2000/29 Individual license for 2 Feb 2010 28 Feb 2022 (i) The licensee shall notify the Minister of any changes in the substantial Complied content applications shareholdings of the company as defined under the Act. service granted (ii) The licensee shall comply with all relevant laws or rules under any pursuant to Sections legislation or guidelines issued by the Government or Government 30, 205 and 281 of the agencies pertaining to the restriction of foreign shareholdings in the CMA. licensee. (iii) The licensee shall notify the Minister of any joint ventures or consortiums which it enters into with any other licensees after the grant of the license. (iv) The licensee shall comply with the provisions of the CMA. (v) The licensee shall indemnify the Minister and MCMC against any claims or proceedings arising from any breaches or failings on the part of the licensee. (vi) The licensee shall take all reasonable steps to ensure that its employees, agents, consultants or other third party suppliers who are engaged in the licensee’s business or who have access to the licensee’s customer information do not disclose information about a customer of a licensee which has been acquired in the course of the licensee’s business without the prior written consent of that customer. (vii) In the event the licensee wishes to provide any content applications services other than (a) satellite broadcasting, (b) subscription broadcasting and (c) non-subscription broadcasting, the licensee shall obtain the prior written approval from the Minister before commencing any such service. (viii) The licensee shall have the exclusive right and privilege to provide satellite broadcasting services by transmitting to any satellite for the direct reception by the general public from any satellite until 28 Feb 2017. (ix) The licensee shall provide content applications services authorized in this license under the name “ASTRO”. (x) The licensee shall comply with any consumer codes and content codes registered under the CMA which are relevant to the activities of the licensee. (xi) The licensee shall observe and comply with the special rate regulation regime as may be determined by the Minister under Section 200 of the CMA.

Source: Astro

22 November 2012 Page 47 of 53 Appendix 4

DTH Pay TV business process

Astro’s digital broadcasting infrastructure conforms fully to the standards set by the European Digital Video Broadcasting Group and the European Telecommunications Standards Institute for digital satellite broadcasting. Its Pay TV services comprise three types of channels:-

(i) Direct pass through channels – FTA and international channels that are received, digitalised and retransmitted without any further modification to the content.

(ii) Content controlled channels – international channels that are received, digitalised, delayed and edited for content compliance purposes before being retransmitted; and

(iii) Local playout channels – channels fully packaged and originated by Astro from its broadcast centres.

Astro follows the following process to distribute these channels to subscribers via DTH and IPTV:-

(i) Content acquisition – content is acquired and received through various means. International and FTA channels are received through C-band satellite downlink and dedicated fibre link. Content for local playout channels is received in the form of digital video tapes or digital files.

(ii) Content processing – content is processed, converted into digital format and routed for further processing. Content controlled channels will be routed to the content control system for editing and replacement of foreign commercials. Pass through channels are retransmitted without any further editing.

(iii) Content playout – content for the local playout channels is scheduled and played out locally from both All Asia Broadcast Centre and Cyberjaya Broadcast Centre.

(iv) Content compression and protection (headend) – content for all three types of channels is compressed to optimize bandwidth utilisation. Content is also encrypted to limit viewing to customers who have subscribed to the service.

(v) Content transmission – for DTH service, content is converted into a Ku-band signal and transmitted to the satellites. For IPTV service, the content is converted into an IP stream and distributed through a managed IP network.

(vi) Content distribution – content is received either via a 60cm satellite dish or broadband connection. Astro’s STB is connected to the satellite dish via a coaxial cable or to the broadband connection directly via an ethernet cable. It includes a smart card- based CAS which decodes the signals into outputs to a TV.

All the steps above take place at both the All Asia Broadcast Centre in Technology Park Malaysia and Cyberjaya Broadcast Centre which have similar broadcast infrastructure design.

27 November 2012 Page 48 of 53 Appendix 5

Glossary of technical terms Adex Advertising expenditure. Generally used to refer to the total advertising expenditure in the market as a whole. Sometimes used to refer to “advertising revenue” in a company

ADSL Asymmetric Digital Subscriber Line. A means of high speed data transmission using copper telephone lines. Allows users to talk on the phone while surfing.

CAS Conditional access system. The technology used to control subscribers’ access to services, thereby ensuring that they only receive those services that they have subscribed for or which the service provider allows them to access. The CAS will scramble and encrypt content at the point of transmission, and will then ensure that the set-top box only decrypts and descrambles the signal if the set-top box is authorised to do so. This authorisation is done by matching a smart card or unique hardware ID to a database of entitlements and subscribers

Churn The number of subscribers over a given period whose subscriptions have been terminated either voluntarily or involuntarily (as a result of non-payment), net of reconnections within a given period.

DTH Direct-To-Home

DTH satellite A satellite capable of transmitting services directly to reception equipment sited at end users’ premises. Such satellites are commonly flown in geostationary orbit and use frequencies in the Ku-band at high power which permits direct reception using small, fixed satellite dish

Fibre broadband Broadband delivered via a fibre optic network, with practical current limits at up to 1,000 Mbps, but typically used to deliver broadband below 30 to 40 Mbps

Fibre optic A means of providing high speed data transmission using pulses of light to send signals through glass fibres

FM Frequency modulation, commonly refers to the delivery of music and speech via terrestrial radio broadcast

FTA Free-to-air

HD High-definition, commonly refers to TV or video at a resolution of either 720p, 1080i or 1080p

HD TV HD TV referring to either a TV capable of receiving and properly displaying an HD resolution TV signal, or referring to high definition television services in general

IP Internet protocol; a standard that keeps track of network addresses for different nodes, routes outgoing messages, and recognises incoming messages

IPTV IP TV, generally referring to multi-channel digital television distributed over a managed IP network with a managed quality of service and dedicated bandwidth

Linear content Content that progresses without navigational control for the viewer (e.g. movies)

Ku-band Microwave frequency spectrum in the range of 10.7 GHz to 14.8 GHz, typically reserved and used for satellite based communications and broadcast services, such as DTH satellite TV services

MCMC Malaysian Communications and Multimedia Commission

MPEG2 Digital compression standard for the generic coding of moving pictures and associated audio information. This is the earliest generation digital coding standard capable of supporting HD video signals

MPEG4 A later generation follow-on standard to MPEG2, MPEG4 is a more efficient method of encoding, resulting in 20.0% to 30.0% bandwidth savings versus an MPEG2 encoding of the same signal

NVOD Near Video-On-Demand

OTT Over-The-Top, refers to the ability to deliver a service to an end user over someone else’s network or the open Internet, usually in reference to video services

PC Personal computer

PVR Personal Video Recorder, refers to a set-top box with a hard disk drive installed inside it, on which recordings of broadcast TV signals passing through the set-top box can be saved and viewed at a later time

Residential ARPU Average Revenue Per User. ARPU is the monthly average revenue per residential Pay TV subscriber. ARPU is calculated by dividing monthly average revenue derived from active Pay TV residential subscribers with monthly average number of active residential Pay TV subscribers during the fiscal year/period

SD Standard definition

Transponder(s) A device mounted on a satellite that receives, converts and retransmits radio frequency signals

TV Households Households with at least one TV set. In the Malaysian context, we only consider Malaysian citizens as part of TV households and excluded non-citizens

VOD Video-On-Demand, the common phrase for a service where the user can choose a programme from a menu or list, and instantly begin watching it from the start. The delivery of VOD is usually a ’unicast’ – one-to-one delivery method, versus broadcast television channels, which is a one-to-many delivery method

Source: Astro, Maybank KE

27 November 2012 Page 49 of 53 RESEARCH OFFICES REGIONAL ECONOMICS P K BASU Suhaimi ILIAS Regional Head, Research & Economics Chief Economist (65) 6432 1821 [email protected] . Singapore | Malaysia (603) 2297 8682 [email protected] WONG Chew Hann, CA Acting Regional Head of Institutional Research Luz LORENZO (603) 2297 8686 [email protected] Economist

ONG Seng Yeow . Philippines | Indonesia (63) 2 849 8836 [email protected] Regional Products & Planning (852) 2268 0644 [email protected]

MALAYSIA SINGAPORE THAILAND WONG Chew Hann, CA Head of Research Gregory YAP Head of Research Sukit UDOMSIRIKUL Head of Research (603) 2297 8686 [email protected] (65) 6432 1450 [email protected] (66) 2658 6300 ext 5090 . Strategy . Technology & Manufacturing [email protected] . Construction & Infrastructure . Telcos - Regional Maria LAPIZ Head of Institutional Research Desmond CH’NG, ACA Wilson LIEW Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 (603) 2297 8680 [email protected] (65) 6432 1454 [email protected] [email protected] . Banking - Regional . Hotel & Resort . Consumer/ Big Caps LIAW Thong Jung . Property & Construction (603) 2297 8688 [email protected] James KOH Andrew STOTZ Strategist . Oil & Gas (65) 6432 1431 [email protected] (66) 2658 6300 ext 5091 . Automotive . Logistics [email protected]

. Shipping . Resources Mayuree CHOWVIKRAN ONG Chee Ting, CA . Consumer (66) 2658 6300 ext 1440 [email protected] (603) 2297 8678 [email protected] . Small & Mid Caps . Strategy . Plantations YEAK Chee Keong, CFA EERASUB Mohshin AZIZ (65) 6433 5730 [email protected] Suttatip P (603) 2297 8692 [email protected] . Healthcare (66) 2658 6300 ext 1430 [email protected] . Aviation . Offshore & Marine . Media . Petrochem Alison FOK . Commerce . Power (65) 6433 5745 [email protected] Sutthichai KUMWORACHAI YIN Shao Yang, CPA . Services (66) 2658 6300 ext 1400 [email protected] (603) 2297 8916 [email protected] . S-chips . Energy . Gaming – Regional Bernard CHIN . Petrochem . Media (65) 6433 5726 [email protected] Termporn TANTIVIVAT . Power . Transport (Land, Shipping & Aviation) (66) 2658 6300 ext 1520 [email protected] TAN CHI WEI, CFA ONG Kian Lin . Property (603) 2297 8690 [email protected] (65) 6432 1470 [email protected] Woraphon WIROONSRI . Construction & Infrastructure . REITs / Property (66) 2658 6300 ext 1560 [email protected] . Power Wei Bin . Banking & Finance ATTANAWONG WONG Wei Sum, CFA (65) 6432 1455 [email protected] Jaroonpan W (603) 2297 8679 [email protected] . S-chips (66) 2658 6300 ext 1404 [email protected] . Property & REITs . Small & Mid Caps . Transportation

LEE Yen Ling . Small cap. INDONESIA Chatchai JINDARAT (603) 2297 8691 [email protected] Katarina SETIAWAN Head of Research . Building Materials (66) 2658 6300 ext 1401 [email protected] (62) 21 2557 1125 [email protected] . Electronics . Manufacturing . Consumer . Technology Pongrat RATANATAVANANANDA . Strategy (66) 2658 6300 ext 1398 [email protected] LEE Cheng Hooi Head of Retail . Telcos . Services/ Small Caps [email protected] Lucky ARIESANDI, CFA . Technicals (62) 21 2557 1127 [email protected] VIETNAM . Base metals HONG KONG / CHINA Michael KOKALARI, CFA Head of Research . Coal Edward FUNG Head of Research (84) 838 38 66 47 [email protected] . Oil & Gas (852) 2268 0632 [email protected] . Strategy Rahmi MARINA . Construction Nguyen Thi Ngan Tuyen (62) 21 2557 1128 [email protected] Ivan CHEUNG, CFA (84) 844 55 58 88 x 8081 [email protected] . Banking (852) 2268 0634 [email protected] . Food and Beverage . Multifinance . Property . Oil and Gas Pandu ANUGRAH . Industrial Ngo Bich Van (62) 21 2557 1137 [email protected] Ivan LI, CFA (84) 844 55 58 88 x 8084 [email protected] . Auto (852) 2268 0641 [email protected] . Banking . Heavy equipment . Banking & Finance Trinh Thi Ngoc Diep . Plantation Jacqueline KO, CFA (84) 844 55 58 88 x 8242 [email protected] . Toll road (852) 2268 0633 [email protected] . Technology Adi N. WICAKSONO . Consumer Staples . Utilities (62) 21 2557 1130 [email protected] Andy POON . Construction . Generalist (852) 2268 0645 [email protected] Dang Thi Kim Thoa Anthony YUNUS . Telecom & equipment (84) 844 55 58 88 x 8083 [email protected] (62) 21 2557 1134 [email protected] Alex YEUNG . Consumer . Cement (852) 2268 0636 [email protected] Nguyen Trung Hoa . Infrastructure . Industrial +84 844 55 58 88 x 8088 [email protected] . Property Warren LAU . Steel Arwani PRANADJAYA (852) 2268 0644 [email protected] . Sugar (62) 21 2557 1129 [email protected] . Technology - Regional . Resources . Technicals Karen Kwan (852) 2268 0640 [email protected] PHILIPPINES . China Property Luz LORENZO Head of Research

INDIA (63) 2 849 8836 [email protected] Jigar SHAH Head of Research . Strategy (91) 22 6623 2601 [email protected] Laura DY-LIACCO . Oil & Gas (63) 2 849 8840 [email protected] . Automobile . Utilities . Cement . Conglomerates Anubhav GUPTA . Telcos (91) 22 6623 2605 [email protected] Lovell SARREAL . Metal & Mining (63) 2 849 8841 [email protected] . Capital goods . Consumer . Property . Media Ganesh RAM . Cement (91) 226623 2607 [email protected] Kenneth NERECINA . Telecom (63) 2 849 8839 [email protected] . Contractor . Conglomerates . Property . Ports/ Logistics Katherine TAN (63) 2 849 8843 [email protected] . Banks . Construction Ramon ADVIENTO (63) 2 849 8842 [email protected] . Mining

27 November 2012 Page 50 of 53 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 fluctuate 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 from 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 Bank 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 herein 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 forward-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. 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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 the 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 law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without 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 report. 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 valuations 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 Research 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 Singapore 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 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 evaluation 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. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect. US This research report prepared by MKE 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. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. 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. UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services 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.

27 November 2012 Page 51 of 53 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 material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission.Philippines:MATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Kim Eng Vietnam Securities Company (“KEVS”) (License Number: 71/UBCK-GP) is licensed under the StateSecuritiesCommission 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 (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) 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 Services 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 27 November 2012, 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 employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. As of 27 November 2012, KESHK and the authoring analyst do not have any interest in any companies recommended in this 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.

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 report.

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 reference 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 involved 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 Total return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Total return is expected to be between -10% to +10% in the next 12 months (excluding dividends) SELL Total return is expected to be below -10% in the next 12 months (excluding 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. Some common terms abbreviated in this report (where they appear): Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax

27 November 2012 Page 52 of 53  Malaysia  Singapore  London  New York Maybank Investment Bank Berhad Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Securities Maybank Kim Eng Securities (A Participating Organisation of Maybank Kim Eng Research Pte Ltd (London) Ltd USA Inc Bursa Malaysia Securities Berhad) 9 Temasek Boulevard 6/F, 20 St. Dunstan’s Hill 777 Third Avenue, 21st Floor 33rd Floor, Menara Maybank, #39-00 Suntec Tower 2 London EC3R 8HY, UK New York, NY 10017, U.S.A. 100 Jalan Tun Perak, Singapore 038989 50050 Kuala Lumpur Tel: (44) 20 7621 9298 Tel: (212) 688 8886 Tel: (603) 2059 1888; Tel: (65) 6336 9090 Dealers’ Tel: (44) 20 7626 2828 Fax: (212) 688 3500 Fax: (603) 2078 4194 Fax: (65) 6339 6003 Fax: (44) 20 7283 6674

Stockbroking Business:  Hong Kong  Indonesia  India Level 8, Tower C, Dataran Maybank, Kim Eng Securities (HK) Ltd PT Kim Eng Securities Kim Eng Securities India Pvt Ltd No.1, Jalan Maarof Level 30, Plaza Bapindo 2nd Floor, The International 16, 59000 Kuala Lumpur Three Pacific Place, Citibank Tower 17th Floor Maharishi Karve Road, Tel: (603) 2297 8888 1 Queen’s Road East, Jl Jend. Sudirman Kav. 54-55 Churchgate Station, Fax: (603) 2282 5136 Hong Kong Jakarta 12190, Indonesia Mumbai City - 400 020, India

Tel: (852) 2268 0800 Tel: (62) 21 2557 1188 Tel: (91).22.6623.2600 Fax: (852) 2877 0104 Fax: (62) 21 2557 1189 Fax: (91).22.6623.2604

 Philippines  Thailand  Vietnam  Saudi Arabia Maybank ATR Kim Eng Securities Maybank Kim Eng Securities In association with In association with Inc. (Thailand) Public Company Kim Eng Vietnam Securities Anfaal Capital 17/F, Tower One & Exchange Plaza Limited Company Villa 47, Tujjar Jeddah Ayala Triangle, Ayala Avenue 999/9 The Offices at Central World, 1st Floor, 255 Tran Hung Dao St. Prince Mohammed bin Abdulaziz Makati City, Philippines 1200 20th - 21st Floor, District 1 Street P.O. Box 126575 Rama 1 Road Pathumwan, Ho Chi Minh City, Vietnam Jeddah 21352 Tel: (63) 2 849 8888 Bangkok 10330, Thailand Fax: (63) 2 848 5738 Tel : (84) 838 38 66 36 Tel: (966) 2 6068686 Tel: (66) 2 658 6817 (sales) Fax : (84) 838 38 66 39 Fax: (966) 26068787 Tel: (66) 2 658 6801 (research)

 South Asia Sales Trading  North Asia Sales Trading Connie TAN Eddie LAU [email protected] [email protected] Tel: (65) 6333 5775 Tel: (852) 2268 0800 US Toll Free: 1 866 406 7447 US Toll Free: 1 866 598 2267 www.maybank-ke.com | www.kimengresearch.com.sg

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