August 1, 2016

SP Setia (SPSB MK) BUY Share Price MYR 3.05 Sales may fall short Company Description S12mP Setia PriceBhd Targetis involved MYRin the 3.63real (+19%)estate businesses. ItsPreviousreputable Price Targetprojects includingMYR 3.86Setia Alam and Setia Eco Park.

A defensive offering; maintain BUY Statistics Shariah status Yes Based on launches in the pipeline and weak buying sentiment in both 52w high/low (MYR) 3.40/2.80 and UK, the latter post-Brexit, SPSB’s internal sales target of 3m avg turnover (USDm) 0.5 MYR4b for FY16 seems challenging. We adjust our FY16/17/18 earnings Free float (%) 22.0 forecasts by -1% to +7% and our TP to MYR3.63 (-6%; on unchanged 30% Issued shares (m) 2,628 discount to RNAV). Despite a lower TP, the implied capital upside is >10%. Market capitalisation MYR8.0B The stock also offers a 12M forward net yield of 6.3%. Maintain BUY. USD2.0B Major shareholders: More new launches in 2H Bumiputra Investment Foundation 51.0% Kumpulan Wang Persaraan 9.4% Management is keeping its MYR4b sales target for 2016 despite weak Employees Provident Fund 6.0% RealEstate sales in 4M16 (MYR696m) on the lack of new launches. It intends to Price Performance intensify its property launches in 2H16 and has lined up MYR3b worth of new launches. In view of the weak buying sentiment and tight lending 3.70 135 requirements in Malaysia and potentially slower sales in Battersea Power 3.60 130

Station (BPS) phase 3A post-Brexit, we think SPSB’s sales target for 2016 3.50 125

is a big challenge. Our revised sales assumption is MYR3.6b (-3%). 3.40 120 3.30 115 3.20 110 Brexit uncertainties 3.10 105

Malaysia Sales have been slow at BPS3A (GBP962m GDV, GBP1,600psf, 60%-sold) 3.00 100 post-Brexit. In addition, there is the impact of the weaker GBP, which 2.90 95 2.80 90 coincides with BPS’s phase 1 delivery soon. Every 5% decline in the GBP Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 from our base case of MYR5.30/GBP negatively impact our FY16/17 earnings forecasts by -0.3%/-2%. Elsewhere, construction of BPS1 SP Setia - (LHS, MYR) SP Setia / Composite Index - (RHS, %) (GBP846m; 99% sold) and BPS2 (GBP779m; 90% sold) are on track. Lump -1M -3M -12M sum profit recognition from BPS1 should come in between 4Q16-2Q17. Absolute (%) 5 (5) 0 Relative to index (%) 5 (4) 4 Earnings adjustments Source: FactSet

We fine-tune our FY16/17/18 earnings forecasts by +7%/-3%/-1% to factor in: 1) stronger progress billings at the Malaysia township projects, 2) lower sales assumptions by -3%/-11% for FY16/17, and 3) the issuance of 1.1m new RCPS-i. For our RNAV estimate, we now factor in higher discount rates for high-rise projects and BPS’ subsequent phases. All in, our RNAV/shr is lowered to MYR5.18 (-6%) resulting in a lower TP of MYR3.63 (-6%) based on an unchanged 30% discount.

FYE Dec (MYR m) FY14A FY15A FY16E FY17E FY18E Revenue 3,810 6,746 5,494 6,244 4,649 EBITDA 1,108 2,063 1,209 1,374 1,023 Core net profit 376 918 705 909 542 Core EPS (sen) 14.9 35.7 26.6 34.3 20.5 Core EPS growth (%) (17.2) 140.1 (25.4) 28.8 (40.4) Net DPS (sen) 9.7 23.0 15.6 19.0 10.7 Core P/E (x) 20.5 8.6 11.5 8.9 14.9 P/BV (x) 1.0 0.8 0.7 0.7 0.6 Net dividend yield (%) 3.2 7.5 5.1 6.2 3.5 ROAE (%) 6.6 13.9 8.7 10.1 5.8 ROAA (%) 2.9 6.2 4.0 4.6 2.6 EV/EBITDA (x) 10.1 4.9 9.1 8.1 11.5 Net debt/equity (%) 32.5 19.5 17.0 18.0 24.0 Consensus net profit - - 669 763 642 MKE vs. Consensus (%) - - 5.5 19.1 (15.6)

Wong Wei Sum, CFA [email protected] (603) 2297 8679

THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD PP16832/01/2013 (031128) SEE PAGE 10 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS SP Setia

Intensifying property launches

Launching MYR3b new properties in 2H16

After a slow start to the year (4M16 sales was MYR696m), SPSB has intensified its new property launches from June 2016 onwards. It targets to launch MYR3b worth in GDV in 2H16. Major new launches includes: 1) new phases at the mature Setia Alam township project, 2) Setia Ecohill and Ecohill 2 (MYR734m GDV; terraces, superlink, semi-D and affordable apartments), 3) KL Eco City’s ViiA Residences (MYR444m GDV; service apartments), 4) Sky Seputeh (MYR406m GDV; luxury condominium) and 5) Setia Sky Ville (MYR477m GDV; condominium).

Property launches in 2016 Project To be launched product type GDV (MYRm) Remarks Setia Alam, Service apartments, Rumah 839 From MYR560k/unit onwards Selangorku, terraces except for Rumah Selangorku (MYR170k/unit); so far, the properties are well-received with an average take-up rate of 95%. Setia Ecohill, Selangor Superlink, affordable 222 Average take-up rate is more apartments than 90% so far.

Setia Ecohill 2, Selangor Terraces, Semi-D 512 MYR580k/unit onwards; Ecohill was launched on 24-25 June 2016. Take-up rate is about 40-50%. Setia Eco Park, Selangor Semi-D, bungalows 184 Setia Eco Glades, Selangor Low rise apartments 90 Setia Eco Templer, Superlink, Semi-D, bungalow, 270 The new launch was well- Selangor apartments, shop lots received with 100% sold.

Kl Eco City, KL Service apartments 444 MYR1,555 psf ASP (semi- furnished). Setia Trio, Klang Service apartments 351 Setia Putrajaya Condominium 231 Sky Seputeh, KL Luxury condominium 406 MYR1,300 psf targeting high- end market. Setia Eco Gardens, Rumah Mampu Milik 47 Iskandar M’sia Setia Tropika, Iskandar Cluster home 94 M’sia Setia Business Park II, Rumah Mampu Milik 127 Social housing for the Iskandar M’sia community of Business Park II and surrounding area. Isle of Palm Semi-D 71 Setia Sky Ville, Condominium 477 MYR800psf ASP, catering mid- to high-end markets. Pansa Puri Rimbun Low cost flat 23 , Office, boutique hotel 302 Carnegie, Melbourne Apartments 95 AUD31m in GDV; 48 units of apartments. Eco Xuan, Vietnam Villa 3 USD0.65m in GDV Total: 4,788 Source: Company

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Mixed outlook

We are less bullish on high-rise

Among the new projects, we are less bullish on the high-rise especially a) KL Eco City’s ViiA Residences (MYR444m GDV; MYR1,550psf ASP), b) Sky Seputeh (MYR406m GDV; MYR1,300psf ASP) and c) Setia Sky Ville (MYR477m GDV; from MYR800psf) in view of the huge incoming supply of high-rise in the Klang Valley and Penang as well as the projects’ relatively premium pricing (>MYR1m/unit in absolute pricing). Incoming supply and overhang in the high-rise segment (service apartments and condominiums) have jumped tremendously by +34% YoY and +38% YoY in 4Q15, respectively, nationwide. To entice buyers and to provide more time for buyers to secure financing, the Setia 10:90 package (10% to be billed at the point of signing SPA, remaining 90% to be invoiced upon delivery of vacant possession) will be offered to these three projects, we understand.

Landed properties still receive good take-ups

SPSB’s landed property offerings at strategic locations and mature areas however continue to garner good demand. Thus far, new launches (landed properties) at existing and new township projects have been well received. All landed property launches at Eco Templer (Selayang), Setia Ecohill (Semenyih) and Setia Alam (Klang) were >95% sold thanks to the strong upgrader markets there while Ecohill 2, which was launched in end-June 2016, also receive commendable take-up of 40-50% in just over 1.5 months. This is despite the strong competition from a nearby project - Eco Majestic by Eco World (ECW MK; BUY).

Brexit uncertainties

Sales have been slow at Battersea Power Station (BPS) 3A (GBP962m GDV, GBP1,600psf, 60% sold; to be completed by 4Q19) post-Brexit. Management is currently seeking approvals to convert the larger units at BPS 3B and BPS 4 into smaller units so that the absolute pricing per unit would be more affordable to buyers. The two phases are slated to be launched by 4Q20 and 2019, respectively.

Elsewhere, construction works at BPS1 (GBP846m; 99% sold) and BPS2 (GBP779m; 90% sold; to be completed by 2Q20) are on track. Lump sum profit recognition from BPS1 should come in between 4Q16- 2Q17. Our FX assumption is MYR5.30/GBP. The weaker GBP post-Brexit will result in lower translated profits. Every 5% depreciation in the GBP vis-à-vis the MYR will negatively impact our FY16/17 earnings forecasts by -0.3%/-2%.

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Challenging MYR4b sales target

Management is keeping its 2016 sales target of MYR4b for now despite weak sales of MYR696m (17% of sales target) in 4M16 (versus MYR4.3b in 2015). Based on the products to be launched (mostly high-rise) and the current climate in the Malaysia property market – weak buying sentiment and tight lending criteria - as well as uncertainties at the UK property market post-Brexit, we think SPSB’s MYR4b sales target for 2016 is a big challenge.

Our estimated sales for 2016 is 10% below management guidance Project GDV (MYRm) Take-up rate** Estimated sales (%) (MYRm) Actual sales in end-4M16 696 Setia Alam* 711 95% 675 Setia Ecohill 222 95% 211 Setia Ecohill 2 512 75% 384 Setia Eco Park 185 50% 93 Setia Eco Glades 90 50% 45 Setia Eco Templer 270 100% 270 Kl Eco City 444 20% 89 Setia Trio 351 30% 105 Setia Putrajaya 231 50% 116 Sky Seputeh 406 20% 81 Setia Eco Gardens 47 90% 42 Setia Tropika 94 75% 71 Setia Business Park II 127 90% 114 Isle of Palm 71 50% 36 Setia Sky Ville 477 20% 93 Pangsa Puri Rimbun 23 90% 21 Aeropod 302 20% 59 Carnegie, Melbourne 95 70% 66 Eco Xuan 3 100% 3 Inventories as at Mar 2016 832 40% 329 Total: 3,597 * Excluding Edulis (terraces)0 and Retusa (semi-D) worth MYR128m in GDV, which is already reflected in 4M16 sales ** Our assumption Source: Company, Maybank KE

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Valuation and recommendation

We fine-tune our FY16/17/18 earnings forecasts by +6.9%/-3.4%/-1.1% to factor in:

1) Stronger progress billings and take up rates at its township projects namely Setia Ecohill and Eco Templer.

2) Lower sales assumptions of MYR3.6b (-3%) and MYR4.6b (-11%) for FY16 and FY17, respectively, after assuming slower take-ups at BPS phase 3A, KL Eco City’s ViiA Residences, Sky Seputeh (luxury condominium) and Setia Sky Ville (in Penang island).

3) New Melbourne projects in Carnegie (sub-urban; AUD34m; to be launched by 4Q16), Prahran (sub-urban; AUD38m; to be launched by 2017) and 308 exhibition (CBD; AUD640m; to be launched by 2018). These projects are expected to start contributing from 2018 onwards.

4) Up to 1,069.7m new perpetual RCPS-I priced at MYR1.00 issue price. The RCPS-I carries a preferential dividend rate of 6.49% p.a. to be paid semi- annually. The RCPS-I can be converted anytime at two SPSB shares for seven RCPS-I held (implied conversion price is MYR3.50/sh).

The RCPS-I issuance will affect the dividend amount to ordinary shareholders albeit the dividend payout ratio remaining unchanged at 60% of net profits. Hence, we advocate investors to subscribe for the RCPS-I for the steady dividend rate of 6.49% (versus M-REITs’ FY17 average net yield of 5.1%). We now expect NDPS of 16sen/19sen/11sen in FY16/17/18 for the ordinary shareholders (vs. 15sen/21sen/12sen previously).

In addition, for our RNAV estimate, we have factored in:

5) Higher discount rates for a) the Malaysia high-rise high-end projects in view of the rising incoming supply/overhang in the high-rise property segment and b) BPS’ subsequent phases to reflect a higher earnings risk post-Brexit.

All in, our new RNAV/shr estimate is MYR5.18 (-6%) and our new TP is MYR3.63 (from MYR3.86; based on an unchanged 30% discount to RNAV). We continue to like SPSB for its earnings defensiveness (backed by MYR8.6b in unbilled sales, 1.5x of our 2017E property revenue forecast) and attractive net dividend yield of 5.1% (2016) and 6.3% (2017). SPSB is a defensive investment offering.

Foreign shareholdings were at 6.3% in end-June 2016

(%)

7.0

6.8 6.7 6.7 6.6 6.6

6.5

6.3

6.0 Jan 16 Feb 16 Mar 16 Apr 16 May 16 June 16

Source: Company

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Our RNAV estimate

Remaining MV BV Surplus landbank Landbank Stake acres (MYRm) (MYRm) (MYRm) Malaysia Southern region Bukit Indah 100% 90.8 118.7 21.8 96.9 Setia Indah 100% 19.4 16.9 2.4 14.5 Setia Cascadia 100% 116.2 101.2 75.9 25.3 Setia Tropika 100% 218.7 190.5 67.2 123.4 Setia Eco Gardens 70% 272.5 356.1 65.3 203.5 Setia Business Park II 100% 91.6 79.8 43.9 35.9 Central region Setia Eco Glades @ Cyberjaya 70% 84.5 147.3 132.5 10.3 Setia Eco Hills 100% 303.1 264.0 171.6 92.4 Semenyih land 100% 1,010.5 880.3 396.2 484.2 Setia Alam 100% 719.4 1,880.2 109.4 1,770.8 Setia Eco Park 50% 302.0 789.3 105.2 342.0

Northern region Setia Pearl 100% 20.9 75.1 26.0 49.0 Setia Greens 100% 12.3 44.3 29.0 15.3 Sub-total: 4,943.7 1,246.4 3,263.7 DCF (discount factor: 12-13%) NPV Malaysia Stake (MYRm) Setia Sky Residences, Klang Valley 70% 5.8 Setia City, Klang Valley 100% 456.2 KL Eco City, Klang Valley 100% 499.8 Setia Federal Hill at Bangsar, Klang Valley 50% 226.9 Seputeh Land, Klang Valley 100% 39.3 Setia V Residences, Penang 100% 14.5 Setia Raintrees Residences 100% 118.0 Aeropod - Tg Aru, Sabah 70% 39.7 Setia Sky 88, Bahru 100% 25.1 British High Comm 100% 64.7 Templer Park 100% 112.0 Vietnam Eco Lakes 55% 0.0 Eco Xuan 100% 0.0 Singapore Eco Sanctuary, Chestnut Avenue 100% 32.8 Australia ^ Parque Melbourne 100% 124.3 Carnegie, Melbourne 100% 8.6 Prahran, Melbourne 100% 8.5 308 Exhibition, Melbourne 100% 108.0 United Kingdom* Battersea Power Station 40% 1,725.2 Sub-total: 3,609.3

Grand total 6,873.0 Shareholders fund - 2015 7,394.6 RCPS-i (issue price: MYR1.00; conversion price: MYR3.50) 1,069.7 RNAV 15,337.3

RCPS-i ^* 305.6 Existing share capital (m shares) 2,650.6 Enlarge share capital (m shares) 2,956.3 FD RNAV (MYR/share) 5.19 Target price (MYR/share) (based on -0.1x to historical P/RNAV mean of 0.8x) 3.63 ^* implied conversion price: MYR3.50; can be converted into shares anytime on a conversion ratio of 2 SPSB shares for 7 RCPS-i held Source: Company, Maybank KE

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FYE 31 Dec FY14A FY15A FY16E FY17E FY18E Key Metrics P/E (reported) (x) 19.0 8.6 11.5 8.9 14.9 Core P/E (x) 20.5 8.6 11.5 8.9 14.9 P/BV (x) 1.0 0.8 0.7 0.7 0.6 P/NTA (x) 1.3 1.1 0.9 0.9 0.9 Net dividend yield (%) 3.2 7.5 5.1 6.2 3.5 FCF yield (%) 5.8 21.5 10.9 13.5 9.1 EV/EBITDA (x) 10.1 4.9 9.1 8.1 11.5 EV/EBIT (x) 13.0 4.9 10.5 8.5 14.0

INCOME STATEMENT (MYR m) Revenue 3,810.1 6,746.3 5,493.6 6,244.1 4,648.6 Gross profit 1,107.6 2,063.3 1,208.6 1,373.7 1,022.7 EBITDA 1,107.6 2,063.3 1,208.6 1,373.7 1,022.7 Depreciation 0.0 0.0 0.0 0.0 0.0 Amortisation 0.0 0.0 0.0 0.0 0.0 EBIT 860.4 2,063.3 1,046.8 1,324.2 843.5 Net interest income /(exp) (60.0) (110.3) (36.8) (37.6) (40.6) Associates & JV (78.0) (105.0) 0.0 0.0 0.0 Exceptionals 0.0 0.0 0.0 0.0 0.0 Other pretax income 0.0 0.0 0.0 0.0 0.0 Pretax profit 722.4 1,426.4 1,010.0 1,286.6 802.9 Income tax (250.7) (415.4) (252.5) (321.6) (200.7) Minorities (111.0) 92.8 52.0 56.1 60.1 Perpetual securities 0.0 0.0 0.0 0.0 0.0 Discontinued operations 0.0 0.0 0.0 0.0 0.0 Reported net profit 405.7 918.3 705.5 908.8 542.1 Core net profit 376.0 918.3 705.5 908.8 542.1

BALANCE SHEET (MYR m) Cash & Short Term Investments 2,412.0 3,752.1 4,368.7 4,212.8 3,604.8 Accounts receivable 744.0 1,450.5 1,520.2 1,727.8 1,286.3 Inventory 46.0 878.9 51.2 58.2 43.3 Property, Plant & Equip (net) 135.1 260.1 260.1 260.1 260.1 Intangible assets 0.0 0.0 0.0 0.0 0.0 Investment in Associates & JVs 866.3 1,214.3 1,214.3 1,214.3 1,214.3 Other assets 8,904.2 8,866.8 11,652.7 12,816.2 14,510.0 Total assets 13,107.6 16,422.7 19,067.0 20,289.4 20,918.8 ST interest bearing debt 931.1 1,782.9 1,782.9 1,782.9 1,782.9 Accounts payable 1,924.0 2,134.0 2,738.5 3,553.8 3,928.5 LT interest bearing debt 3,387.9 3,414.0 4,078.6 4,078.6 4,078.6 Other liabilities 73.0 699.0 712.0 714.0 710.0 Total Liabilities 6,315.9 8,030.3 9,312.3 10,129.5 10,500.4 Shareholders Equity 5,858.6 7,394.6 8,757.0 9,162.1 9,420.6 Minority Interest 933.1 387.0 387.0 387.0 387.0 Total shareholder equity 6,791.7 7,781.7 9,144.0 9,549.1 9,807.6 Perpetual securities 0.0 610.8 610.8 610.8 610.8 Total liabilities and equity 13,107.6 16,422.7 19,067.0 20,289.4 20,918.8

CASH FLOW (MYR m) Pretax profit 722.4 1,426.4 1,010.0 1,286.6 802.9 Depreciation & amortisation 0.0 0.0 0.0 0.0 0.0 Adj net interest (income)/exp 0.0 (238.1) (36.8) (37.6) (40.6) Change in working capital 100.2 652.1 0.0 0.0 0.0 Cash taxes paid (263.0) (301.6) (252.5) (321.6) (200.7) Other operating cash flow (111.4) 146.0 146.0 146.0 146.0 Cash flow from operations 448.2 1,685.0 883.4 1,094.6 733.2 Capex 0.0 0.0 0.0 0.0 0.0 Free cash flow 448.2 1,685.0 883.4 1,094.6 733.2 Dividends paid (115.3) (30.1) (551.0) (412.9) (503.6) Equity raised / (purchased) 637.6 22.6 1,069.7 0.0 0.0 Perpetual securities 0.0 0.0 0.0 0.0 0.0 Change in Debt 353.9 796.4 0.0 0.0 0.0 Perpetual securities distribution 0.0 0.0 (17.4) (69.4) (69.4) Other invest/financing cash flow (1,082.8) (1,224.5) (768.2) (768.2) (768.2) Effect of exch rate changes 0.0 0.0 0.0 0.0 0.0 Net cash flow 241.6 1,249.4 616.6 (155.9) (608.1)

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FYE 31 Dec FY14A FY15A FY16E FY17E FY18E Key Ratios Growth ratios (%) Revenue growth 24.5 77.1 (18.6) 13.7 (25.6) EBITDA growth 64.5 86.3 (41.4) 13.7 (25.6) EBIT growth 37.1 139.8 (49.3) 26.5 (36.3) Pretax growth 26.7 97.4 (29.2) 27.4 (37.6) Reported net profit growth (2.9) 126.4 (23.2) 28.8 (40.4) Core net profit growth (10.0) 144.2 (23.2) 28.8 (40.4)

Profitability ratios (%) EBITDA margin 29.1 30.6 22.0 22.0 22.0 EBIT margin 22.6 30.6 19.1 21.2 18.1 Pretax profit margin 19.0 21.1 18.4 20.6 17.3 Payout ratio 60.5 64.5 58.5 55.4 52.3

DuPont analysis Net profit margin (%) 10.6 13.6 12.8 14.6 11.7 Revenue/Assets (x) 0.3 0.4 0.3 0.3 0.2 Assets/Equity (x) 2.2 2.2 2.2 2.2 2.2 ROAE (%) 6.6 13.9 8.7 10.1 5.8 ROAA (%) 2.9 6.2 4.0 4.6 2.6

Liquidity & Efficiency Cash conversion cycle (193.1) (61.9) (68.3) (134.9) (249.7) Days receivable outstanding 85.2 58.6 97.3 93.6 116.7 Days inventory outstanding 5.9 35.6 39.1 4.0 5.0 Days payables outstanding 284.2 156.0 204.7 232.6 371.4 Dividend cover (x) 1.7 1.6 1.7 1.8 1.9 Current ratio (x) 2.3 1.9 2.3 2.2 2.2

Leverage & Expense Analysis Asset/Liability (x) 2.1 2.0 2.0 2.0 2.0 Net debt/equity (%) 32.5 19.5 17.0 18.0 24.0 Net interest cover (x) 14.3 18.7 28.5 35.3 20.8 Debt/EBITDA (x) 3.9 2.5 4.8 4.3 5.7 Capex/revenue (%) 0.0 0.0 0.0 0.0 0.0 Net debt/ (net cash) 1,907.0 1,444.8 1,492.7 1,648.6 2,256.7 Source: Company; Maybank

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Research Offices

REGIONAL HONG KONG / CHINA INDONESIA Surachai PRAMUALCHAROENKIT (66) 2658 6300 ext 1470 Sadiq CURRIMBHOY Howard WONG Head of Research Isnaputra ISKANDAR Head of Research [email protected] Regional Head, Research & Economics (852) 2268 0648 (62) 21 8066 8680 • Auto • Conmat • Contractor • Steel (65) 6231 5836 [email protected] [email protected] [email protected] • Oil & Gas - Regional • Strategy • Metals & Mining • Cement WONG Chew Hann, CA Suttatip PEERASUB (66) 2658 6300 ext 1430 Regional Head of Institutional Research Benjamin HO Rahmi MARINA (852) 2268 0632 [email protected] (62) 21 8066 8689 [email protected] (603) 2297 8686 [email protected] • Media • Commerce • Consumer & Auto [email protected] ONG Seng Yeow • Banking & Finance Regional Head of Retail Research Jacqueline KO, CFA Sutthichai KUMWORACHAI (65) 6231 5839 (852) 2268 0633 [email protected] Aurellia SETIABUDI (66) 2658 6300 ext 1400 [email protected] • Consumer Staples & Durables (62) 21 8066 8691 [email protected] [email protected] • Energy • Petrochem TAN Sin Mui Ka Leong LO, CFA • Property (852) 2268 0630 [email protected] Director of Research Termporn TANTIVIVAT • Consumer Discretionary & Auto Pandu ANUGRAH (65) 6231 5849 [email protected] (66) 2658 6300 ext 1520 (62) 21 8066 8688 [email protected] Mitchell KIM [email protected] ECONOMICS • Property (852) 2268 0634 [email protected] • Infra • Construction • Transport• Telcos Suhaimi ILIAS • Internet & Telcos Chief Economist Janni ASMAN Jaroonpan WATTANAWONG Ning MA (62) 21 8066 8687 (66) 2658 6300 ext 1404 Singapore | Malaysia (852) 2268 0672 [email protected] (603) 2297 8682 [email protected] [email protected] [email protected] • Insurance • Cigarette • Healthcare • Retail • Transportation • Small cap Luz LORENZO Philippines Sonija LI, CFA Adhi TASMIN (63) 2 849 8836 (852) 2268 0641 [email protected] (62) 21 8066 8694 VIETNAM • Gaming [email protected] [email protected] LE Hong Lien, ACCA • Plantations Tim LEELAHAPHAN Stefan CHANG, CFA Head of Institutional Research (84) 8 44 555 888 x 8181 Thailand (852) 2268 0675 [email protected] Anthony LUKMAWIJAYA [email protected] (66) 2658 6300 ext 1420 • Technology – Regional (62) 21 8066 8690 • Strategy • Consumer • Diversified • Utilities [email protected] [email protected] INDIA • Aviation JUNIMAN THAI Quang Trung, CFA, Deputy Manager, Chief Economist, BII Jigar SHAH Head of Research PHILIPPINES Institutional Research Indonesia (91) 22 6623 2632 [email protected] (84) 8 44 555 888 x 8180 (62) 21 29228888 ext 29682 • Oil & Gas • Automobile • Cement Luz LORENZO Head of Research [email protected] [email protected] (63) 2 849 8836 • Real Estate • Construction • Materials Anubhav GUPTA [email protected] STRATEGY (91) 22 6623 2605 [email protected] • Strategy Le Nguyen Nhat Chuyen (84) 8 44 555 888 x 8082 • Metal & Mining • Capital Goods • Property • Utilities • Conglomerates • Telcos Sadiq CURRIMBHOY [email protected] Global Strategist Vishal MODI Lovell SARREAL • Oil & Gas (65) 6231 5836 [email protected] (63) 2 849 8841 (91) 22 6623 2607 [email protected] [email protected] NGUYEN Thi Ngan Tuyen, Head of Retail Research Willie CHAN • Banking & Financials • Consumer • Media • Cement (84) 8 44 555 888 x 8081 Hong Kong / Regional [email protected] (852) 2268 0631 [email protected] Abhijeet KUNDU Rommel RODRIGO • Food & Beverage • Oil&Gas • Banking (91) 22 6623 2628 [email protected] (63) 2 849 8839 MALAYSIA • Consumer [email protected] TRINH Thi Ngoc Diep • Conglomerates • Property • Gaming (84) 4 44 555 888 x 8208 WONG Chew Hann, CA Head of Research Neerav DALAL • Ports/ Logistics [email protected] (603) 2297 8686 [email protected] (91) 22 6623 2606 [email protected] • Technology • Utilities • Construction • Strategy Katherine TAN • Software Technology • Telcos (63) 2 849 8843 Desmond CH’NG, ACA [email protected] PHAM Nhat Bich (603) 2297 8680 SINGAPORE • Banks • Construction (84) 8 44 555 888 x 8083 [email protected] [email protected] Gregory YAP • Banking & Finance Michael BENGSON • Consumer • Manufacturing • Fishery (65) 6231 5848 [email protected] LIAW Thong Jung (63) 2 849 8840 • SMID Caps [email protected] (603) 2297 8688 [email protected] • Technology & Manufacturing • Telcos NGUYEN Thi Sony Tra Mi • Oil & Gas Services- Regional • Conglomerates (84) 8 44 555 888 x 8084 YEAK Chee Keong, CFA [email protected] ONG Chee Ting, CA Jaclyn JIMENEZ (65) 6231 5842 • Port operation • Pharmaceutical (603) 2297 8678 [email protected] (63) 2 849 8842 [email protected] • Food & Beverage • Plantations - Regional [email protected] • Offshore & Marine • Consumer Mohshin AZIZ TRUONG Quang Binh (603) 2297 8692 [email protected] Derrick HENG, CFA THAILAND (84) 4 44 555 888 x 8087 • Aviation - Regional • Petrochem (65) 6231 5843 [email protected] [email protected] • Transport • Property • REITs (Office) YIN Shao Yang, CPA Maria LAPIZ Head of Institutional Research • Rubber plantation • Tyres and Tubes • Oil&Gas Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 (603) 2297 8916 [email protected] Joshua TAN [email protected] • Gaming – Regional • Media (65) 6231 5850 [email protected] • Consumer • Materials • Ind. Estates TAN Chi Wei, CFA • REITs (Retail, Industrial) (603) 2297 8690 [email protected] Sittichai DUANGRATTANACHAYA John CHEONG, CFA • Power • Telcos (65) 6231 5845 [email protected] (66) 2658 6300 ext 1393 WONG Wei Sum, CFA • Small & Mid Caps • Healthcare [email protected] (603) 2297 8679 [email protected] • Services Sector • Transport • Property Ng Li Hiang (65) 6231 5840 [email protected] Yupapan POLPORNPRASERT LEE Yen Ling • Banks (66) 2658 6300 ext 1394 (603) 2297 8691 [email protected] [email protected] • Building Materials • Glove • Ports • Shipping • Oil & Gas CHAI Li Shin, CFA (603) 2297 8684 [email protected] Tanawat RUENBANTERNG (66) 2658 6300 ext 1395 • Plantation • Construction & Infrastructure [email protected] Ivan YAP • Banks & Diversified Financials (603) 2297 8612 [email protected] • Automotive • Semiconductor • Technology Sukit UDOMSIRIKUL Head of Retail Research (66) 2658 6300 ext 5090 Kevin WONG (603) 2082 6824 [email protected] [email protected] • REITs • Consumer Discretionary Mayuree CHOWVIKRAN LIEW Wei Han (66) 2658 6300 ext 1440 (603) 2297 8676 [email protected] [email protected] • Consumer Staples • Strategy

LEE Cheng Hooi Regional Chartist Padon VANNARAT (603) 2297 8694 (66) 2658 6300 ext 1450 [email protected] [email protected] Tee Sze Chiah Head of Retail Research • Strategy (603) 2297 6858 [email protected] Cheah Chong Ling (603) 2297 8767 [email protected]

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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. MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report. 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 third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through Maybank Kim Eng Securities USA Inc. This report is not directed at you if it 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.

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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: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (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 1 August 2016, 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 1 August 2016, 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 and may receive compensation for the services provided from the companies covered in this report.

OTHERS Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the 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.

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Historical recommendations and target price: SP Setia (SPSB MK)

4 Feb 11 Dec 23 Feb 26 Feb 1 Aug Buy : RM4.1 Buy : RM3.9 Buy : RM3.8 Buy : RM3.9 Buy : RM3.6 3.8

3.6

3.4

3.2

3.0

2.8

2.6 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16

SP Setia

Definition of Ratings Maybank Kim Eng Research uses the following rating system BUY Return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends) SELL 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.

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 Malaysia  Singapore  London  New York Maybank Investment Bank Berhad Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Securities Maybank Kim Eng Securities USA (A Participating Organisation of Maybank Kim Eng Research Pte Ltd (London) Ltd Inc Bursa Malaysia Securities Berhad) 50 North Canal Road PNB House 777 Third Avenue, 21st Floor 33rd Floor, Menara Maybank, Singapore 059304 77 Queen Victoria Street New York, NY 10017, U.S.A. 100 Jalan Tun Perak, London EC4V 4AY, UK 50050 Kuala Lumpur Tel: (65) 6336 9090 Tel: (212) 688 8886 Tel: (603) 2059 1888; Tel: (44) 20 7332 0221 Fax: (212) 688 3500 Fax: (603) 2078 4194 Fax: (44) 20 7332 0302

Stockbroking Business:  Hong Kong  Indonesia  India Level 8, Tower C, Dataran Maybank, Kim Eng Securities (HK) Ltd PT Maybank Kim Eng Securities Kim Eng Securities India Pvt Ltd No.1, Jalan Maarof Level 30, Sentral Senayan III, 22nd Floor 2nd Floor, The International, 59000 Kuala Lumpur Three Pacific Place, Jl. Asia Afrika No. 8 16, Maharishi Karve Road, Tel: (603) 2297 8888 1 Queen’s Road East, Gelora Bung Karno, Senayan Churchgate Station, Fax: (603) 2282 5136 Hong Kong Jakarta 10270, 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 Inc. Maybank Kim Eng Securities Maybank Kim Eng Securities Limited In association with 17/F, Tower One & Exchange Plaza (Thailand) Public Company Limited 4A-15+16 Floor Vincom Center Dong Anfaal Capital Ayala Triangle, Ayala Avenue 999/9 The Offices at Central World, Khoi, 72 Le Thanh Ton St. District 1 Villa 47, Tujjar Jeddah Makati City, Philippines 1200 20th - 21st Floor, Ho Chi Minh City, Vietnam Prince Mohammed bin Abdulaziz Rama 1 Road Pathumwan, Street P.O. Box 126575 Tel: (63) 2 849 8888 Bangkok 10330, Thailand Tel : (84) 844 555 888 Jeddah 21352 Fax: (63) 2 848 5738 Fax : (84) 8 38 271 030 Tel: (66) 2 658 6817 (sales) Tel: (966) 2 6068686 Tel: (66) 2 658 6801 (research) Fax: (966) 26068787

 South Asia Sales Trading  North Asia Sales Trading Kevin Foy Andrew Lee Regional Head Sales Trading [email protected] [email protected] Tel: (852) 2268 0283 Tel: (65) 6336-5157 US Toll Free: 1 877 837 7635 US Toll Free: 1-866-406-7447

Malaysia Thailand Rommel Jacob Tanasak Krishnasreni [email protected] [email protected] Tel: (603) 2717 5152 Tel: (66)2 658 6820

Indonesia Harianto Liong [email protected] Tel: (62) 21 2557 1177

New York India Andrew Dacey Manish Modi [email protected] [email protected] Tel: (212) 688 2956 Tel: (91)-22-6623-2601

Vietnam Philippines Tien Nguyen Keith Roy [email protected] [email protected] Tel: (84) 44 555 888 x8079 Tel: (63) 2 848-5288 www.maybank-ke.com | www.maybank-keresearch.com

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