Malaysia Market Focus

Results Roundup
DBS Group Research . Equity

Worst may not be over

Refer to important disclosures at the end of this report

2 Jun 2015
KLCI :

1,743.41

Disappointing 1Q15 earnings season but the

worst may not be over due to post-GST slump

Analyst
Bernard CHING
bernard@alliancedbs.com

Cut CY15F/16F earnings by 3.2%/3.6%; CY15

growth revised to 7.3% from 9.3%

Malaysia Research Team

general@alliancedbs.com

Valuation still rich amid political noises and

dismal earnings outlook

TOP STOCK PICKS

Stay defensive; employ bottom-up stock

picking strategy

Disappointing 1Q15 results. The share of stocks missing

estimates surged from 21% in 4Q14 to 32%, while stocks
that met expectations fell from 65% to 60%. Automotive,
aviation, chemical, oil & gas, plantation and
telecommunication sectors were the key contributors to the
negative earnings surprises. The banking sector (in line) also
contributed to the cut in CY15F/16F earnings.

Valuation still unattractive despite selloff. Amid

concerns over domestic politics and a disappointing 1Q15
earnings season, the benchmark FBMKLCI fell 3.9% in May.
But valuation remains rich at 16.6x CY15 P/E given that
CY15 growth of 7.3% (previously 9.3%) is now the lowest
among the ASEAN 5.
We maintain our base case end-2015 KLCI target of 1,750
(15x 2016 PE), while the worst case target is 1,585 (13.6x PE
at -1SD of mean). We continue to advocate a defensive
strategy and focus on a bottom-up stock selection strategy.
Sector weightings and top picks. We continue to like
construction (government infrastructure spending
underpinned by 11MP), technology (resilient demand for
smartphone/tablets and strong USD) and utilities (stable
earnings amid energy reform) sectors.
Our top picks for 2H15 include Tenaga, Petronas Gas,
Gamuda, Muhibbah, Time dotCom, Globetronics, and
Unisem.

www.dbsvickers.com
ed: SGC / sa: WMT

Mkt Cap Target Price

Performance (%)

US$m

RM

3 mth

12 mth

Rating

13.40 20,486
21.94 11,760
5.00 3,227
6.29
978
2.47
456
5.97
455
2.42
307

16.00
25.40
6.00
7.05
3.05
7.50
3.50

(9.0)
(4.9)
(5.1)
12.5
17.6
24.6
5.7

11.1
(10.4)
13.4
44.6
93.0
55.9
(13.6)

BUY
BUY
BUY
BUY
BUY
BUY
BUY

RM

Source: AllianceDBS

Earnings downgrade streak may not be over yet.

Earnings risk is still high as domestic consumption is expected
to slow down from 2Q onwards following the
implementation of GST on 1 Apr 2015. Other earnings
growth dampeners include a cyclical slowdown in credit
growth and depressed commodity prices. Sectors with high
earnings risk include banks and plantation.

603 2604 3333

Price

Tenaga Nasional
Petronas Gas Bhd
Gamuda
TIME dotCom Bhd
Unisem
Globetronics
Muhibbah
Engineering

603 2604 3918

Market Focus
Results Roundup

1Q15 earnings season a let down

1Q15 summary of financial performance

Overall, 1Q15 earnings season was disappointing as only 60%

of stocks in our coverage universe reported results which met
our expectations, compared to 65% in 4Q14. On the other
hand, the percentage of stocks that missed estimates surged
from 21% to 32%.

Performance
Above

vs Alliance
AllianceDBS
llianceDBS (%)
8

vs Consensus (%)
9

In line

60

55

Below

32

36

Source: AllianceDBS

Automotive (poor sales), aviation (lower-than-expected load

factors and yields), chemical (low product prices), oil & gas
(slower activity), plantation (low ASP and poor yield) and
telecommunication (intensifying competition) sectors reported
results that were below expectations.
Sector performance
Sector

1Q15
Q15
(RM m)

1Q14
Q14
(RM m)

Automotive

200.30

258.97

(22.7%)

Below

Poor auto sales resulted in earnings coming in below

expectations.

Aviation

427.56

221.76

92.8%

Below

Airlines' load factor was disappointing while fare/RPK

remained weak. MAHB's earnings were dragged by
additional amortisation due to the revaluation of ISG's net
assets.

Banking

5,360.78

5,656.65

(5.2%)

In line

Lower net interest income from NIM contraction dragged

earnings.

Building Materials

131.12

112.82

16.2%

In line

Earnings were largely underpinned by lower energy costs.

Construction activities are still robust, but Peninsular
Malaysia players are facing intense competition.

Chemicals

605.00

749.00

(19.2%)

Below

Slightly below expectations due to lower than expected

prices of olefins.

95.68

23.58

305.8%

In line

Stronger earnings for energy and utilities and ports lifted

MMC's earnings.

Construction

362.46

258.08

40.4%

In line

No revisions in earnings made. Generally construction

earnings were stronger y-o-y with improving margins.

Consumer

613.83

511.77

19.9%

In line

We do observe there were pre GST purchases for selected

companies under coverage such as BAT and Padini.

Financial nonnon-bank

214.19

252.13

(15.0%)

In line

Earnings contraction was mainly due to TA Enterprise which

recorded one-off forex losses realised upon dissolution of
foreign subsidiaries and fair value loss on investment
securities.

Gaming

895.09

1,061.99

(15.7%)

In line

Broadly inline.

Glove

178.95

156.40

14.4%

In line

Supermax was the only glove stock that disappointed

expectations. Successful execution of its expansion plans
remain a big question mark.

Healthcare
Healthcare

205.38

189.27

8.5%

In line

KPJ continues to churn out decent growth driven by the

new capacities introduced in FY14 and higher utilisation
rate. IHH continues to deliver better operating margins and
higher revenue intensity.

Conglomerate

Page 2

Y-o-y
vs
change % expectation

Comments

Market Focus
Results Roundup

Sector performance (contd)

Sector

1Q15
(RM m)

1Q14
Q14
(RM m)

Media

232.96

206.85

12.6%

In line

Adex growth is weak, but overall earnings were supported

by lower newsprint prices and cost-saving initiatives.

Oil & Gas

532.41

519.95

2.4%

Below

Weaker than expected quarter as offshore activity slowed in

Malaysia following PETRONAS's move to cut opex. Poor
weather in 1Q also exacerbated lower earnings for some
companies.

Plantation

590.43

1,807.54

(67.3%)

Below

Production broadly plunged given the low cropping season

worsened by harsh weather conditions. Refining margins
were poor as export taxes were nil in 1Q.

13.40

15.04

(10.9%)

In line

Suria Capital was dragged lower CPO exports from Sabah.

Property

308.90

296.03

4.3%

In line

Supported by progress billings of township developments

though smaller niche players disappointed.

REIT

434.75

423.86

2.6%

In line

Minimal reversions seen as expiries are weighed towards

later in the year, though renewals were at mildly positive
rates.

Shipping

649.57

595.73

9.0%

Below

MISC hit by weaker LNG and tank terminal earnings.

68.86

21.08

226.7%

In line

The better earnings were driven by decent sales volume

(despite seasonal slow quarter) and a stronger USD.

Telecommunication

1,715.94

1,836.75

(6.6%)

Below

Competition is heating up in the mobile segment, especially

for prepaid. Higher operating costs and consolidation of P1
losses are affecting TM.

Utilities

2,389.80

1,767.78

35.2%

In line

Steady earnings for major utility players in tandem with the

regulated pricing mechanism.

Port

Technology

y-o-y
vs
change % expectation

Comments

Source: AllianceDBS

Page 3

Market Focus
Results Roundup

Cut earnings estimates

Following 1Q15 results season, we trimmed our FBMKLCI
earnings (free float adjusted) for CY15F and CY16F by 3.2%
and 3.6%, respectively. Key contributors to the earnings cut
include Sime Darby, Axiata, MISC, IOI, FGV and Maybank
Our revised earnings growth estimate for CY15F is now 7.3%
(previously 9.3%).
FBMKLCI earnings change (calendarised)
2929-MayMay-15
CY16
CY15
RM m
RM m
AMMB Holdings Bhd
Astro Malaysia Holdings Bhd
Axiata Group Bhd
British American Tobacco Malaysia
CIMB Group Holdings Bhd
DiGi.Com Bhd
Felda Global Ventures Holdings
Genting Bhd
Genting Malaysia Bhd
Hong Leong Bank Bhd
Hong Leong Financial Group Bhd
IHH Healthcare Bhd
IOI Corp Bhd
KLCCP Stapled Group
Kuala Lumpur Kepong Bhd
Malayan Banking Bhd
Maxis Bhd
MISC Bhd
Petronas Chemicals Group Bhd
Petronas Dagangan Bhd
Petronas Gas Bhd
PPB Group Bhd
Public Bank Bhd
RHB Capital Bhd
Sapurakencana Petroleum Bhd
Sime Darby Bhd
Telekom Malaysia Bhd
Tenaga Nasional Bhd
UMW Holdings Bhd
YTL Corp Bhd*
FBMKLCI (free float weighted)

1,044.86
209.79
1,393.74
467.19
2,263.80
1,044.06
150.63
1,028.96
700.36
774.10
366.71
310.23
566.69
178.34
470.08
3,106.79
726.81
774.60
981.39
217.83
695.13
474.31
3,913.03
567.59
710.49
1,102.48
547.27
3,674.25
443.82
719.83
29,625.14

1,120.29
281.26
1,542.42
473.48
2,624.81
1,146.04
185.13
1,155.33
813.32
839.88
399.26
367.47
739.21
183.54
516.20
3,590.24
778.58
830.94
1,031.19
225.43
716.19
484.04
4,354.12
624.24
758.32
1,262.00
641.98
3,889.18
466.06
743.04
32,783.21

3030-AprApr-15
CY15
RM m
1,033.55
209.79
1,533.75
467.19
2,263.80
1,044.06
232.91
1,070.44
700.36
814.29
396.55
308.88
660.55
178.34
476.93
3,175.48
726.87
881.38
981.39
208.22
695.13
474.31
3,913.03
567.59
736.64
1,373.17
581.64
3,674.25
483.11
726.02
30,589.63

* Earnings for stocks not under coverage are based on consensus estimates
Source: AllianceDBS, Bloomberg Finance L.P

Page 4

CY16
RM m

1,169.38
281.26
1,704.34
473.48
2,624.81
1,146.04
276.05
1,213.28
813.32
900.23
442.49
364.37
876.78
183.54
557.39
3,669.62
778.65
926.08
1,031.19
216.55
716.19
484.04
4,354.12
624.24
761.79
1,606.22
667.11
3,889.18
533.57
737.84
34,023.16

Change
CY16
CY15
RM m
RM m
11.3
0.0
-140.0
0.0
0.0
0.0
-82.3
-41.5
0.0
-40.2
-29.8
1.3
-93.9
0.0
-6.9
-68.7
-0.1
-106.8
0.0
9.6
0.0
0.0
0.0
0.0
-26.2
-270.7
-34.4
0.0
-39.3
-6.2
-964.5

-49.1
0.0
-161.9
0.0
0.0
0.0
-90.9
-58.0
0.0
-60.3
-43.2
3.1
-137.6
0.0
-41.2
-79.4
-0.1
-95.1
0.0
8.9
0.0
0.0
0.0
0.0
-3.5
-344.2
-25.1
0.0
-67.5
5.2
-1,239.9

% Change
CY16
CY15

1.1%
0.0%
-9.1%
0.0%
0.0%
0.0%
-35.3%
-3.9%
0.0%
-4.9%
-7.5%
0.4%
-14.2%
0.0%
-1.4%
-2.2%
0.0%
-12.1%
0.0%
4.6%
0.0%
0.0%
0.0%
0.0%
-3.5%
-19.7%
-5.9%
0.0%
-8.1%
-0.9%
-3.2%

-4.2%
0.0%
-9.5%
0.0%
0.0%
0.0%
-32.9%
-4.8%
0.0%
-6.7%
-9.8%
0.9%
-15.7%
0.0%
-7.4%
-2.2%
0.0%
-10.3%
0.0%
4.1%
0.0%
0.0%
0.0%
0.0%
-0.5%
-21.4%
-3.8%
0.0%
-12.7%
0.7%
-3.6%

Market Focus
Results Roundup

FBMKLCI earnings growth (calendarised)

Company Name

AMMB Holdings Bhd

Astro Malaysia Holdings Bhd
Axiata Group Bhd
British American Tobacco Malaysia
CIMB Group Holdings Bhd
DiGi.Com Bhd
Felda Global Ventures Holdings
Genting Bhd
Genting Malaysia Bhd
Hong Leong Bank Bhd
Hong Leong Financial Group Bhd
IHH Healthcare Bhd
IOI Corp Bhd
KLCCP Stapled Group
Kuala Lumpur Kepong Bhd
Malayan Banking Bhd
Maxis Bhd
MISC Bhd
Petronas Chemicals Group Bhd
Petronas Dagangan Bhd
Petronas Gas Bhd
PPB Group Bhd
Public Bank Bhd
RHB Capital Bhd
Sapurakencana Petroleum Bhd
Sime Darby Bhd
Telekom Malaysia Bhd
Tenaga Nasional Bhd
UMW Holdings Bhd
YTL Corp Bhd
Total
% coverage / earnings growth
Current implied P/E

% Weight
in Index

2.4
1.0
6.5
1.8
7.3
4.0
1.5
4.2
2.3
1.6
0.6
2.3
3.7
0.6
2.5
8.0
3.4
1.8
3.7
1.4
3.7
1.7
11.6
1.1
3.2
5.7
2.5
7.3
1.4
1.6

Market Cap
RM m

Free Float
Weighted
Mkt Cap
RM m

18,989.4
16,229.4
56,634.0
17,702.9
48,137.1
43,617.8
7,186.9
31,677.6
24,099.4
24,571.7
16,275.8
47,899.9
25,297.6
12,727.6
22,044.8
86,089.3
51,735.9
37,049.5
50,080.0
19,769.7
43,334.2
18,090.7
71,437.6
19,931.3
15,759.4
51,676.8
27,077.0
75,398.6
12,524.1
16,565.6
1,009,611.6
98.36

11,013.8
4,864.7
32,785.8
8,851.4
29,862.7
20,936.5
3,665.3
18,885.0
12,612.5
8,288.4
3,255.2
15,970.7
14,842.2
3,181.9
11,061.8
38,869.3
18,086.2
12,226.3
18,028.8
5,930.9
17,333.7
9,045.4
57,499.8
5,348.5
10,086.0
25,949.7
15,365.7
41,868.8
7,101.5
8,536.5
491,354.9
98.26

Under
Coverage

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No

Free Float Weighted NP

2014
RM m

2015
RM m

2016
RM m

1,093.3
154.4
1,296.6
451.7
1,866.6
974.9
90.0
1,067.1
712.2
725.4
346.7
251.5
657.0
172.3
485.9
3,032.5
665.3
614.8
887.4
150.8
675.5
462.6
3,637.2
546.9
646.6
1,213.0
492.9
3,203.6
369.7
652.6
27,596.9
-4.7

1,044.9
209.8
1,393.7
467.2
2,263.8
1,044.1
150.6
1,029.0
700.4
774.1
366.7
310.2
566.7
178.3
470.1
3,106.8
726.8
774.6
981.4
217.8
695.1
474.3
3,913.0
567.6
710.5
1,102.5
547.3
3,674.3
443.8
719.8
29,625.1
7.3

1,120.3
281.3
1,542.4
473.5
2,624.8
1,146.0
185.1
1,155.3
813.3
839.9
399.3
367.5
739.2
183.5
516.2
3,590.2
778.6
830.9
1,031.2
225.4
716.2
484.0
4,354.1
624.2
758.3
1,262.0
642.0
3,889.2
466.1
743.0
32,783.2
10.7

17.8

16.6

15.0

Source: AllianceDBS

Page 5

Market Focus
Results Roundup

Valuation still unattractive despite selloff

ASEAN 5 CY15 earnings growth comparison

Amid concerns over domestic politics and a disappointing

1Q15 earnings season, the benchmark FBMKLCI fell by 3.9%
in May to 1,747.52, taking YTD losses to 0.8%. While our
bearish view of the Malaysian market is vindicated with the
market achieving our end-2015 FBMKLCI target of 1,750, we
see no reasons to look for broad base accumulation
opportunities yet.

18.5%

Indonesia

14.7%

Thailand

12.7%

Philippines

10.8%

South East Asia

9.2%

Singapore

For one, valuation is still expensive at CY15 P/E of 16.6x, which

is still almost +1SD above mean. Secondly, after the earnings
downgrade, Malaysia now has the lowest earnings growth of
7.3% among the ASEAN 5. Furthermore, earnings risk is still
high as domestic consumption is expected to slow down from
2Q onwards following the implementation of GST on 1 Apr
2015. Other earnings growth dampeners include a cyclical
slowdown in credit growth and depressed commodity prices.
Sectors with high earnings risk include banks and plantation,
the former contributing 39% of overall FBMKLCI earnings
growth in CY15.

7.3%

Malaysia

0%

5%

10%

15%

20%

Source: Bloomberg Finance L.P, AllianceDBS

FBMKLCI CY15F earnings growth contributors by sector

KLCI CY15 Earnings Growth Contributors

45%
40%

38.9%

35%

27.5%

30%
25%

As such, we will remain cautious of the market and maintain

our base case end-2015 FBMKLCI target of 1,750 (15x 2016
PE). Our worst case target is 1,585 (13.6x PE at -1SD).

16.9%

20%

13.9%

15%
10%
0%

FBMKLCI forward P/E trend

20

Banking

18

+ 1 s.d.
16.8x

16

Mean:
15.2x

14

- 1 s.d.
13.6x

10
8
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Source: Bloomberg Finance L.P, AllianceDBS

Page 6

3.2%

-5%

(x)

12

4.6%

2.7%

5%

Media

Telco

Consumer Plantation Oil & Gas Utilities

Source: Bloomberg Finance L.P, AllianceDBS

Others

Market Focus
Results Roundup

Key themes for 2H15

We continue to advocate a defensive strategy and focus on a
bottom-up stock selection strategy. Looking into 2H15, we
would advise investors to focus on utilities, technology and
construction sectors.
Construction remains an Overweight due to continued
government spending on infrastructure projects as well as
projects under the Economic Transformation Programme (ETP).
This is further supported by PMs reassurance in mid-Jan that
development expenditure for 2015 will not be cut despite the
slump in oil-related revenues. Over the medium term,
th
government-led infrastructure spending under the 11
Malaysia Plan that will span 2016-2020 will underpin
orderbook visibility for the sector.
We continue to like the Technology sector as the steady
recovery in the US has boosted exports of E&E products, which
has led to a cyclical recovery in this sector. Although export
growth may slow down, it will be from a higher base in 2014.
Furthermore, these companies will also benefit from a weaker
MYR against the USD.
Utilities sector also remains an Overweight as we continue to
like its resilience. It is also a beneficiary of energy sector reform
in Malaysia which will lead to improved earnings visibility over
the longer term, boosting prospects of higher dividend
payouts.

Top stock picks

Our top picks for 2H15 reflect our defensive stance until
sentiment and outlook improve:
Tenaga Nasional (TP: RM16.00) has strong earnings visibility
from full implementation of the fuel cost pass-through
mechanism as it will no longer bear the risk of volatile fuel
costs. It will also benefit from the expansion of its internal
power generation capacity (Janamanjung 4 commissioned in
Mar 15) which will reduce its generation cost.

Petronas Gas (TP: RM25.40) is defensive with steady recurring

income from the processing and distribution of gas, but
without exposure to the volatility in energy prices. Pengerang
regasification plant is the next earnings growth catalyst when
it commences operation by 2018.
Gamuda
Gamuda (TP: RM6.00) is the best proxy to the transportation
project play. After clinching the PDP role for MRT line 2, it will
be a front-runner for tunnelling works for MRT line 2 as tunnel
boring machines used for line 1 are a sunk cost. It is also a
front runner for Penang Integrated Transport and LRT Line 3.
Muhibbah (TP: RM3.50) has been excessively sold down along
with other oil & gas stocks, which is not justified given its
exposure to various segments of infrastructure other than oil &
gas. It remains in a good position to secure jobs in RAPID and
is our favoured mid-cap pick for exposure to RAPID.
Globetronics (TP: RM7.50) continues to see healthy volume
growth for its proximity sensors which are used in
smartphones and tablets, and wearable sensors. The ongoing
ramp up in capex for a new depth imaging sensor will double
its capacity by 1H16. Despite a good run in the share price,
Globetronics should trade at a premium to its historical P/E
given impressive 3-year earnings CAGR of 25%. Globetronics
is also our sole High Conviction BUY.
Unisem (TP: RM3.05) is poised to see improving margins due
to strong demand for its high-margin wafer bumping and
wafer-level chip scale packaging segment (WLCSP) and cost
rationalisation exercises. Furthermore, it is a net beneficiary of
a stronger USD as all its sales are in USD, compared to only 5060% of total cost.
Time dotCom (TP: RM7.05) is a prime beneficiary of the secular
growth trend in data, amid the rapid expansion of its global
bandwidth and data centre business. The recent disposal of
68.7m DiGi shares will boost its war chest for regional
expansion, consolidation of the data centre market in
Malaysia, and/or raising dividend payout.
Please refer to page 15 and 16 for detailed key investment merits
of our top stock picks.

Page 7

Market Focus
Results Roundup

Sector Outlook
Sector

Outlook

Automotive

Tighter consumer conditions could further dampen consumer sentiment. This may be
partly offset by aggressive product launches and promotions.

For manufacturers, the USD would increase the cost of imported material and
pressure margins. Hence, 2015 will be a challenging year for auto players.

Malaysia Airlines (MAB) is in the midst of a restructuring exercise to return the airline
to profitability by 2017. It plans to cut capacity by 10% in 2015, the bulk of which
will be the European and Middle-Eastern routes. Thereafter, MAB plans to grow
domestic and ASEAN route capacity by 6-7% per annum, and Asia-Pacific route
capacity by 5% per annum. In the near-term, MABs plan to shed 6,000 or 30% of
its existing workforce (at the old entity i.e. Malaysian Airline System) will be closely
watched as a key milestone of the restructuring exercise.

The cheaper fuel cost is a boon for airlines, but we expect the airlines to pass on a
significant portion of the fuel cost savings to consumers. AirAsia and AAXs decision
to remove fuel surcharge suggests that a significant portion of the fuel cost savings
will be passed on to consumers. Meanwhile, the stronger USD will weigh on the
airlines profitability, as USD-denominated OPEX (fuel, maintenance, operating lease)
and finance cost (from USD-borrowings) will be more expensive. Note that the
majority of Malaysian-listed airlines revenues are denominated in local and regional
currencies (i.e. RM, IDR, THB, SGD).

MAHBs near-term earnings outlook remains bleak, bogged down by weak passenger
traffic and higher depreciation and finance charges. MAB is planning to cut capacity
by 10% in 2015, and will focus on yield management going forward. Meanwhile, the
other domestic airlines are also toning down their capacity growth going forward, in
a bid to reduce the downward pressure on airfares. Also, the implementation of GST
could reduce consumer discretionary spending another dampener of travel
demand. In light of all these challenges, the airport operator is only targeting 3%
growth in passenger traffic in 2015, but even this seem to be a tall order to achieve,
going by the YTD passenger statistics (-1.5% y-o-y in 1Q15).

Revenue growth will be capped by flat loan growth (our sector loan growth
assumption is 8%) and largely business-driven amid weaker consumer sentiment
from fiscal tightening measures and stricter consumer lending rules

NIM compression will persist in 2015, pressured mainly by deposit competition as

banks prepare to meet the Liquidity Coverage Ratio requirements under Basel III. The
outlook for capital markets is sluggish. Provisions are likely to normalise with fewer
recoveries, and with the softer macro environment, we would not discount credit
costs inching up.

We would stay defensive and stick to PBK and HLB. Both banks have the advantage
of strong credit culture and liquidity. However, HLB may consider a capital raising
exercise to beef up its capital position.

Competition among cement players is likely to intensify in 2015 as YTL Cement will
add 8% to industry capacity when its expansion is completed early 2015.

The saving grace for the industry is the prevailing low coal prices. Meanwhile, subsidy
rationalisation measures for electricity tariff have been put on hold.

CMS is on a better footing as the Sarawak-based company will not be impacted by

price competition, unlike its Peninsular peers.

Neutral

Aviation

Neutral

Banks

Neutral

Building materials

Neutral

Page 8

Top Stock Picks

None

None

Public Bank, Hong Leong

Bank

None

Market Focus
Results Roundup
Sector Outlook (contd)
Sector

Outlook

Construction

11MP to lay foundation.

foundation The tabling of the 11MP in late May will create the
foundation for the sector over the next five years (2015-2020) and provide some
indication of what projects would be rolled out. A headline number above the
RM230bn allocated under the 10MP would be a sentiment booster, although we
would not read too much into this.

Timely rollout and execution is more crucial.

crucial We feel the priority should be the
scheduled rollout of key high-multiplier projects. Based on our conversation with
contractors, they are more bullish now on potential contract flows compared to
beginning of the year. We expect some overlap of projects mentioned in Budget
2015 as well as the ETP, such as five highways (RM16bn), MRT Line 2 (RM25bn), LRT
3 (RM9bn), High Speed Rail (RM40bn). and Pan Borneo Highway (RM27bn). MRT Line
2 public display will be from May 15 to August 17, suggesting no more delays to the
tender scheduled for end-2015 and awards by mid-2016. Recently, PDP fees for LRT
3 had been finalized at 6% and an award is expected by July 2015.

Top picks Gamuda, Muhibbah, Kimlun. For larger caps, we prefer Gamuda over IJM.
Gamuda is the best proxy to transportation projects (MRT, High Speed Rail and
Penang Transport) while it also has ample capacity now to take on more projects. For
exposure to smaller cap names, we like Muhibbah which is a good all-round proxy to
civil engineering, marine and oil & gas works. Kimlun is also a good proxy to MRT
Line 2 given its niche in tunnelling lining segment and segmental box girders.

1Q15 consumer sentiment index slumped 10.4 points q-o-q to a six-year low of 72.6
(4Q14: 83), indicating a potentially sharp drop in consumer spending in the coming
quarters as consumers are increasingly wary of the future and becoming more
cautious due to rising cost of living.

Although the recently concluded 1QCY15 results largely came within expectation
partly supported by pre GST purchases, we anticipate near term earnings prospects of
the sector to be sluggish due to (1) slower consumer spending, and. (2) an
increasingly competitive operating environment.

In view of the uninspiring near-term earnings prospects, we are maintaining our

Underweight call for the sector. OldTown remains our top pick for the following
reasons: (1) undemanding valuation compared to regional peers, and (2) the group is
well-positioned to capitalise on rising coffee consumption in Asia, particularly China.

We do not see any major re-rating catalysts for the sector in the near term. We had
downgraded earnings for gaming players in February, as we understand they would
fully absorb the 6% GST imposed without lowering prize payouts. Nonetheless,
weakening domestic consumer sentiment could slow down discretionary spending,
which could in turn further drag Genting Malaysias domestic leisure & hospitality
operations and NFO ticket sales.

Also, the sector may be exposed to the risk of higher sin tax at the next budget.

Overweight

Consumer

Underweight

Gaming

Neutral

Top Stock Picks

Gamuda, Muhibbah and
Kimlun

OldTown

None

Page 9

Market Focus
Results Roundup

Sector Outlook (contd)

Sector

Outlook

Gloves

The top four Malaysian-listed glovemakers are set to grow production capacity by
14%/11%/11% in 2015/16/17. While this will exceed forecast global glove
consumption growth of 6-8% p.a., the additional output will be readily absorbed as
(1) these are mainly nitrile gloves where global demand remains strong (i.e. the 6-8%
global glove consumption growth are mainly driven by this product segment), and (2)
increasing trend for outsourcing to Malaysian shores (Halyard Health will close one of
its Thai glove facilities and outsource the production of 3bn gloves p.a. to Malaysian
glovemakers). Meanwhile, progressive commissioning of the production lines and
potential delays in some expansion plans present downside risk to the incoming
supply forecast.

Nevertheless, competition would likely still heat-up among the glovemakers.

Hartalega with its best-in-class operating structure (i.e. lowest breakeven utilisation)
could choose to be more aggressive in its pricing to: (1) grab market share, (2)
maximise utilisation and profits, and (3) derail competitors expansion plans by
depressing IRRs for future projects. Already, the price competition could be
underway, with Hartalega registering a decline in EBIT/k gloves in 1Q15.

We no longer have any BUY rating for glove stocks after downgrading Hartalega and
Kossan following the recent run up in the share prices, as investors took shelter in the
sector amid the stock market volatility. We downgraded Supermax due to its
disappointing 1Q results as well as limited earnings visibility. The execution of its
expansion plans remain a key risk for the stock.

We remain optimistic of the growth prospects for private hospitals operators due to
None
increasing demand for quality healthcare amid rising disposable income. Capacity
constraint at government healthcare facilities is also expected to drive affluent
patients to private hospitals. The constraint is expected to worsen with public
healthcare development expenditure cut from RM3.7bn in 2010 to RM1.6bn in 2015.

Generic pharmaceutical players are expected to enter a new growth phase with the
approach of the patent cliff. This provides an opportunity for them to launch new
products and improve sales. Valuation are also more palatable vis--vis the hospital
operators.

There is increasing competition within the retail pharmacy segment with the
emergence of several independent retail pharmacies. The exceptionally high ROEs of
30-40% will be a thing of the past. We expect an industry-wide price war to drive
margins down going forward.

GST implementation will dampen adex in 2015, although adex should recover slightly
in the absence of negative events. Thus, our view is that adex would remain flat in
2015 as consumers slowly get used to the new tax system and consumer sentiment
gradually normalises.

Low newsprint cost is a blessing for newspapers publishers, though this will be partly
offset by the weaker Ringgit.

Nonetheless, downside risks are limited given decent dividend yields for the sector.

Neutral

Healthcare

Neutral

Media

Neutral

Page 10

Top Stock Picks

Supermax

None

Market Focus
Results Roundup
Sector Outlook (contd)
Sector

Outlook

Oil & Gas

Our view for the year is that crude oil prices will average USD55-65/barrel. While
there are some catalysts emerging, like US stockpiles inching down, there remains a
possibility of Iran flooding the market with more output. The confluence of these
factors, we believe, will keep crude oil prices range-bound.

The decision by PETRONAS to cut capex and opex is beginning to take its toll on
companies in the sector. There are similar cuts at other oil majors like Shell and
Exxons Malaysia operations. 4Q14 and 1Q15 results have started to show weakness
as companies find that work orders have slowed, there is pressure to cut chartering
rates, and services costs are rising. Furthermore, tender books are shrinking as many
projects, local and abroad, are either delayed or re-tendered, or taken off the table.

We continue to find room for earnings downgrades, especially in FY15 estimates, but
view that earnings could start to normalise from FY16 onwards. We forecast FY16
crude oil prices will be stronger at USD65-75/barrel as demand and supply forces
adjust to the new crude oil price equilibrium. This will bring many projects back to
the market, although we expect cautiousness to ensue, which suggests lingering
margin pressure for contractors.

For a play on the recovery of crude oil prices, SapuraKencana is a good proxy given its
upstream exposure. However, we reiterate our HOLD recommendation for now, as
weaker earnings on the back of a sluggish contracting market have not been fully
priced in. In the small cap space, we like Pantech for its RAPID exposure. Tendering
activity is picking up at RAPID, and the group is poised to see improving orderflow
from late FY15 onwards. We continue to recommend avoiding fabricators like MMHE
and TH Heavy which are seeing depleting orderbooks with no replenishment in sight.
We would also avoid pure play rig owner UMW Oil & Gas, which is fighting an uphill
battle with an oversupply of rigs coupled with declining drilling activity.

Genting Plantations
After hitting a low of RM2,082 at end Apr15, palm oil futures recovered by 7% to
RM2,225 by mid-May. This was largely driven by a similar jump in soybean oil prices.
Unless El Nino conditions worsen dramatically, we do not expect recent price recovery
to maintain its current trajectory; as we understand fruit formation is currently set for
a strong peak season.

So far, 1QCY15 results revealed a more pronounced low crop season. While some
producers have attributed the lower yields to dry weather in 1QCY14, comparisons
were made against a high base. Lower CPO output did not prevent CPO prices (in
USD terms) from dropping 23% y-o-y in 1QCY15 - given record global soybean crop
in the current season. While stronger USD YTD helped to buffer earnings in Ringgit
and Rupiah, it also encouraged South American farmers to plant more soybeans and
caused translation FX losses for planters with USD borrowings.

Assuming Indonesias B15 programme kicks off on 1 July 2015, we expect Indonesian
biodiesel production to reach 2.6m MT by the end of this year representing a 28%
drop y-o-y. While we believe efforts to channel palm oil exports for domestic
biodiesel consumption should necessitate faster crushing of global soybean supply to
replace the oil, we believe this would only impact CY16 prices rather than CY15.

In the short term, Indonesian B15 export levies will have negative impact on
Indonesian planters earnings as well as on Malaysian planters with significant
contribution from Indonesian subsidiaries. Our earnings forecasts are under review
pending the publication of Indonesian regulations.

We remain cautious of CPO prices and plantation earnings in the near term, subject
to a deterioration of El Nino conditions and recovery in crude oil prices. Based on our
sensitivity analysis, at current CPO price, biodiesel production would breakeven at
Brent price of US$78/bbl.

Neutral

Plantation

Neutral

Top Stock Picks

SapuraKencana and
Pantech

Page 11

Market Focus
Results Roundup

Sector Outlook (contd)

Sector

Outlook

Property

We expect slower property sales volumes in 2015 although prices should hold up due MKH, SP Setia
to cost-push factors. Sentiment should remain subdued following the recent
tightening measures and inflationary pressures, but mass-market products at strategic
locations will continue to enjoy robust sales as affordability remains a factor among
purchasers.

Rising building material prices as well as tight foreign labour supply could heighten
execution risk and dampen developers' margins. There is no property bubble for now
but we fear an oversupply of KL office space, hybrid high-rise units and Iskandar
Malaysia high-end condos.

MKH is our pick for the sector given its large exposure to affordable housing and
landed properties in the Kajang-Semenyih growth corridor. We also like SP Setia for
its strong earnings visibility and focus on sustainable township developments.

Rental reversion growth is expected to be moderate-to-low for all subsectors. Retail

Sunway REIT
rents and occupancy should remain resilient at prime locations, but weak consumer
sentiment and the GST implementation will dampen spending, thus reducing tenants
ability to stomach higher rentals. Office spaces continue to be in an oversupply, and
will focus more on maintaining occupancy than hiking rents. Industrial rents should
maintain a steady growth pace, but is also subject to the general climate of softer
business and consumer sentiment.

Inorganic growth via acquisitions is the theme for the year in the face of weak
organic growth. MRCB-Quill, Axis and Sunway REIT had completed some planned
purchases in 1Q; while CapitaMalls Malaysia Trust, Amanah Harta Tanah, Amfirst
REIT, and Al-Aqar Healthcare REIT have each announced proposed acquisition
targets. However, the key point remains whether the REITs will manage to inject
assets at a value that will be DPU-accretive to unitholders.

Overall, the prospects for REITs in 2015 are neutral. Valuation-wise, spreads of largercap REITs of c.1.9% are near the longer-term average of 2% against the 10-year
Malaysian Government Security yield of c.3.9%. We deem this comfortable barring
interest rate changes, as spreads historically have narrowed to below 1.7% before.

Our top pick is Sunway REIT predicated on strong DPU growth from the completion
of Sunway Putra refurbishments, as well as a visible pipeline of potential asset
injections from sponsor Sunway Bhd.

Neutral

REITs

Neutral

Page 12

Top Stock Picks

Market Focus
Results Roundup

Sector Outlook (contd)

Sector

Outlook

Shipping

LNG rates are expected to remain under pressure due to smaller cargo following
delays in several major LNG projects, as well as the burgeoning LNG orderbook which
is largely driven by financial investors and private equity funds. Japans bid to restart
its nuclear power plants could lead to a more acute oversupply situation in the LNG
tanker markets, as it will dampen the LNG trade.

Crude tanker rates will continue to trend up. Increasing long-haul trade (i.e. West
Africa to China and India) is expected to generate higher tonne-miles, which will lead
to higher deadweight demand (+2.3% in 2015). This comes at a time when crude
tanker supply is expected to contract (+1.1% in 2015). Product tanker rates are
expected to remain lacklustre, with tonnage supply expected to grow at a faster
5.7% vs tonnage demand growth of 4.4% in 2015.

Chemical tanker rates are expected to remain lacklustre on slower eastbound trade,
due to weak Chinese chemical imports. Rates for the transatlantic eastbound routes
are most affected by this.

Dry bulk recovery is expected to be punctuated with volatile rates, as the reversal of
slow-steaming could unwind the trapped capacity and pressure rates. The risk of this
happening is higher if oil prices remain at current depressed levels. Meanwhile,
Chinas determination to tackle air pollution and excess steel capacity may put a
brake on Chinese iron ore and coal imports. This will reduce demand for capesize and
panamax bulkers.

We like MISC for its resilient cash flow, backed by its-long-term LNG charters and
offshore Oil & Gas assets. In addition, its petroleum segment has firmly turnaround,
and will be a key earnings driver in FY15F. However, valuation is rich at the moment,
which lead us to rate the stock as a HOLD.

Earnings of Malaysian semiconductor players have been largely underpinned by

healthy demand growth and the weaker Ringgit. Forward guidance remains positive
with most players busy expanding their capacity to meet customers demand. This is
mainly driven by the smartphone segment, where their key customers (mainly in RF)
are gaining additional content wins in new smartphone models amid the secular
growth trend in rising 4G LTE adoption.

We like Globetronics for its healthy balance sheet and strong earnings growth,
underpinned by new product wins for a key customer of its sensor division.

We also expect better performance by Unisem given robust demand and capacity
expansion of its high-margin wafer bumping and wafer level chip-scale packaging
(WLCSP) segment in FY15.

We believe expectations of the positive impact of passing on the 6% GST to prepaid

subscribers have been priced in, and hence, a reversion will be a setback for mobile
operators.

Recent quarterly results of mobile operators have also been lacklustre, while there are
signs that competition is heating up especially in the prepaid segment.

For TM, the positives from HSBB2, SUBB, and its venture into mobile segment
appears to have been priced in. We think execution will be key before the stock can
re-rate further.

We prefer TIME given its compelling valuation and growth potential from submarine
cable investments and regional expansion.

Neutral

Technology

Overweight

Telecommunication

Neutral

Top Stock Picks

None

Globetronics, Unisem

Time dotCom

Page 13

Market Focus
Results Roundup

Sector Outlook (contd)

Sector

Outlook

Utilities

Expect promising energy demand growth with the implementation of infrastructure

projects, export recovery and urbanisation. The resilient and growing recurring
income for utilities players could re-rate the sector further.

Tenaga Nasional and Petronas Gas are the biggest beneficiaries of the sector reform
(fuel subsidy rationalisation and fuel diversification).

Our top pick is TNB for more attractive valuation and improving earnings visibility
after the implementation of the incentive-based regulated return (IBR). We also like
Petronas Gas for its solid fundamentals with no fuel and pricing risks, as well as
potential upside from gas subsidy rationalisation plan.

Overweight

Page 14

Top Stock Picks

TNB, Petronas Gas

Market Focus
Results Roundup
Top Stock Picks
Stocks

Key Buy Reasons

Tenaga
Nasional

Strong earnings visibility. The full implementation of fuel cost pass through mechanism will be a strong re-rating catalyst
for TNB as the national utility will no longer bear the burden of volatile fuel cost.

Capacity expansion.
expansion TNBs coal-fired Janamanjung 4 (1010 MW) plant will be commissioned by Mar15. All in, we
estimate TNBs net generation capacity would increase by 15% by 2017. Ultimately, the new power plants will reduce
generation cost because of more efficient technology.

Top pick.
pick Current valuation remains undemanding despite the strong performance of the share price in FY14. The tariffsetting mechanism and robust outlook for electricity demand will support strong earnings ahead.

Steady recurring earnings. The new Gas Processing Agreement and Gas Transportation Agreement will continue to
underpin earnings visibility going forward. With the higher reservation charges, Petgas will enjoy more resilient earnings
which will help to offset the lower charge under the performance-based earnings.

Pengerang regas plant the next growth driver. The recently announced Pengerang regasification terminal is expected to
enhance Petgas earnings by 6-7% when the plant is operational by 2018. The LNG will be mainly supplied to
PETRONAS Refinery and Petrochemical Integrated Development (RAPID) and there will be no fuel risk to Petgas.

Maintain BUY with RM25.40 TP. We continue to like Petgas for its promising outlook, supported by rising gas demand,
solid balance sheet, and strong parentage. Our DCF-derived TP is based on 7% WACC and 3% terminal growth.

Best transportation proxy.

proxy Gamuda has ample capacity to take on large scale projects given MRT line 1 is at its tail end.
We expect it to be a front runner for more transportation related works such as MRT line 2, Penang Integrated Transport
and also LRT 3. The recent finalisation of the public display for MRT Line 2 also suggests that the project is on track.

Earnings uptrend to resume in FY17.

FY17 FY15 is expected to be a peak year for earnings with earnings expected to decline
in FY16 as MRT Line 2 will not yet contribute. Starting FY17, we expect its high quality earnings to start its uptrend again
once it beefs up its orderbook.

BUY, TP RM6.00.
RM6.00 Our preference is for Gamuda among the large caps as we think there will be more catalysts to look
out for. Given its less diversified nature compared to IJM, it also represents a more leveraged proxy to the sector.

Infrastructure division most promising. Muhibbah believes the infrastructure sector is on a multi-year upcycle with
potentially RM140bn worth of projects (Table 1) up for grabs. Also, raw material costs are more benign now with
cement and steel prices 5% and 15% cheaper y-o-y, respectively. Muhibbah will be bidding for major projects such as
RAPID, MRT Line 2 and West Coast Expressway, and is quietly confident of clinching two other jobs with a combined
value of RM900m. One is for a local port and the other an overseas job. YTD win is RM277m, and it should close the
year better than the RM504m wins in 2014.

Cambodian airports double capacity. Effective July, the Siam Reap and Phnom Penh airports will double their existing
capacity to 12m passengers. The US$85m capex was financed by only one year of operating cashflow, which suggests
the airports are cash cows. Passenger arrivals reached 5.7m in 2014 (+12 % y-o-y) led by a recovery in Chinese tourists
(20% of total; +22% y-o-y). We estimate its 21% stake is worth RM580m (DCF, WACC of 10%, RM/USD3.65 and
average passenger growth of 5% until 2040) which is already 63% of its market cap.

Favco capitalising on other revenue streams. Favco has been receiving increasing orders in the US for tower cranes, and is
beefing up its maintenance division (c.10% of revenues). This should cushion potentially softer orders for oil and gas
cranes. We still expect a record year for Favco as it runs down its high-margin peak RM1bn orderbook. It is also exploring
supplying cranes to RAPID.

Separating wheat from chaff - BUY. We remain convinced the stock had been unfairly sold down for its implied O&G
exposure. Petronas has reiterated that RAPID will proceed as planned, and it represents just one of the many projects
Muhibbah is looking to capitalise on. At current price, the market is assigning negligible value for the infrastructure,
shipyard, Roadcare and Petronas license. BUY for 58% upside to our TP of RM3.50, which is pegged to 15x CY15 EPS
(sector average).

Petronas Gas

Gamuda

Muhibbah

Page 15

Market Focus
Results Roundup

Top Stock Picks (contd)

Stocks

Key Buy Reasons

Time dotCom

Leveraging on secular growth in data.

data TIME is a prime beneficiary of the secular growth trend in data (>80% of revenue)
amid the rapid expansion of its global bandwidth and data centre business. Investment into 3 new submarine cable
systems (i.e. APG, FASTER, and AAE-1) will underpin near-term earnings growth once they start to come online in 20162017

Domestic business still growing healthily.

healthily Demand for higher speed bandwidth services and fibre connectivity
requirements by Malaysia mobile operators for their LTE network rollout will drive further growth for TIME domestic
wholesale bandwidth business in 2015.

Beefing up war chest.

chest The company recently disposed 68.7m DiGi shares (out of 137.5m shares it owned) and raised
RM424m cash. This could potentially be utilized in the near term for its regional expansion, consolidation of the data
centre market in Malaysia, and/or higher dividend payout.

Undemanding valuation.
valuation Our SOP-based RM7.05 TP implies a FY16 valuation of 18.5x PE for TIME core business
(excluding net cash, dividend income, and the value of DiGi stake), cheapest among the Malaysian telcos.

Strong growth in sensor business. GTB continues to see healthy volume for proximity sensors (built into smartphone) and
wearable sensors from its Swiss customer. In addition, the company is also ramping up capex for a new depth imaging
sensor which will more than double its existing capacity upon completion by 1H16. We expect contribution from the
sensor division to rise to 41-53% in FY15-16F, vs. 32% in FY14.

Quartz devices and LED/SSL divisions remain solid. Monthly production volumes for its quartz devices and LED/SSL
divisions remain healthy given robust demand and new product transfers by existing key customers i.e. Epson Toyocom,
Osram and Cree.

HighHigh-conviction BUY, RM7.50 TP pegged to 18x FY16 EPS, which is +2 SD of its 5-year historical P/E band. This is
reasonable given GTBs strong earnings growth (3-year earnings CAGR of 25%) and healthy balance sheet with net cash
position. A key re-rating catalyst will be its new depth imaging sensor going into mass production.

Improving margins.
margins The companys margins and profitability have been improving, thanks to: 1) strong demand for its
high-margin wafer bumping and wafer-level chip scale packaging segment (WLCSP); and 2) cost rationalisation exercises.

WLCSP and wafer bumping a sweet spot.

spot Unisem is targeting 8% revenue growth (in USD terms) in FY15, largely
underpinned by the 25-40% capacity expansion of its wafer bumping and WLCSP segment. The strong demand for its
advanced packaging segment is stemming from its top 2 customers i.e. Skyworks Solutions and Qorvo.

Benefiting from weaker Ringgit.

Ringgit The company is a net beneficiary of a stronger USD as its sales are 100% based in USD,
while only 50-60% of total cost is based in USD.

Compelling valuation.
valuation Our RM3.05 TP is pegged to 1.7x FY16 BV (with 14% ROE). We believe rising contribution from
advanced packages amid strong relationship with RF customers should drive a re-rating in Unisems valuation.

Globetronics

Unisem

Page 16

Market Focus
Results Roundup

Appendix: 1Q15 Earnings Summary

Company

Sector

Financial
quarters

EPS
Change

vs Alliance
AllianceDBS
llianceDBS
estimates

vs consensus
estimates

UMW Holdings
MBM Resources
AirAsia
AirAsia X
MAHB
Affin Holdings
AMMB
CIMB Group
Hong Leong Bank
Hong Leong Financial Group
Maybank
Public Bank
RHB Capital Bhd
Cahya Mata Sarawak
Lafarge
Petronas Chemical
MMC
Gamuda
IJM Corp
Muhibbah Engineering
Kimlun Corporation
WCT Holdings
BAT
MSM Malaysia
Oldtown
Padini
Petronas Dagangan
QL Resources
Sasbadi Holdings

Automotive
Automotive
Aviation
Aviation
Aviation
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Building Materials
Building Materials
Chemicals
Conglomerate
Construction
Construction
Construction
Construction
Construction
Consumer
Consumer
Consumer
Consumer
Consumer
Consumer
Consumer

1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
4QFY15
1QFY15
3QFY15
3QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
2QFY15
4QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
4QFY15
3QFY15
1QFY15
4QFY15
2QFY15

Below
Inline
Below
Inline
Below
Below
Inline
Inline
Below
Below
Inline
Inline
Inline
Above
Inline
Below
Inline
Below
Inline
Inline
Inline
Inline
Below
Inline
Inline
Above
Above
Inline
Inline

Below
Inline
Below
Below
Below
Below
Inline
Inline
Below
Below
Inline
Inline
Inline
Inline
Inline
Below
Inline
Below
Inline
Inline
Inline
Inline
Below
Inline
Inline
Above
Above
Inline
Inline

AEON Credit

Finance non-bank

4QFY15

Above

Above

Bursa Malaysia
BIMB Holdings
TA Enterprise
Berjaya Sports Toto
Genting
Genting Malaysia

Finance non-bank
Finance non-bank
Finance non-bank
Gaming
Gaming
Gaming

1QFY15
1QFY15
4QFY15
3QFY15
1QFY15
1QFY15

Inline
Inline
Below
Inline
Below
Inline

Inline
Inline
Below
Inline
Below
Inline

Magnum
Hartalega
Kossan
Supermax
Top Glove
IHH Healthcare
KPJ Healthcare
Astro
Media Chinese
Media Prima
Star
Bumi Armada
Coastal Contracts
Dayang Enterprises

Gaming
Glove
Glove
Glove
Glove
Healthcare
Healthcare
Media
Media
Media
Media
Oil & Gas
Oil & Gas
Oil & Gas

1QFY15
4QFY15
1QFY15
1QFY15
2QFY15
1QFY15
1QFY15
4QFY15
4QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15

Inline
Inline
Inline
Below
Inline
Inline
Inline
Inline
Above
Below
Inline
Inline
Inline
Inline

Inline
Inline
Inline
Below
Above
Inline
Inline
Inline
Above
Below
Inline
Inline
Inline
Below

Page 17

Market Focus
Results Roundup

Company

Sector

Financial
quarters

EPS
Change

vs Alliance
AllianceDBS
llianceDBS
estimates

vs consensus
estimates

Deleum
Dialog Group Bhd
MMHE
Pantech Group
UMW Oil & Gas
CB Industrial Product
Genting Plantation
IJM Plantations
IOI Corporation
KL Kepong
Sime Darby
Felda Global Ventures
TSH Resources
Suria
Eastern & Oriental
MKH
SP Setia
UEM Sunrise
Eco World Development
Sunway
Axis REIT
CapitaMall Malaysia Trust
KLCC Stapled
IGB REIT
Pavilion REIT
Quill Capita
Sunway REIT
MISC
Westports Holdings
Malaysian Pacific Industries
Globetronics
Unisem
Axiata
Digi
Maxis
TIME dotCom
TM
Gas Malaysia
Petronas Gas
Tenaga
YTL Power

Oil & Gas

Oil & Gas
Oil & Gas
Oil & Gas
Oil & Gas
Plantation
Plantation
Plantation
Plantation
Plantation
Plantation
Plantation
Plantation
Port
Property
Property
Property
Property
Property
Property
REIT
REIT
REIT
REIT
REIT
REIT
REIT
Shipping
Shipping
Technology
Technology
Technology
Telecommunication
Telecommunication
Telecommunication
Telecommunication
Telecommunication
Utilities
Utilities
Utilities
Utilities

1QFY15
3QFY15
1QFY15
4QFY15
1QFY15
1QFY15
1QFY15
4QFY15
3QFY15
2QFY15
3QFY15
1QFY15
1QFY15
1QFY15
4QFY15
2QFY15
1QFY15
1QFY15
2QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
3QFY15
1QFY15
1QFY15
3QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
1QFY15
2QFY15
3QFY15

Below
Inline
Below
Below
Below
Inline
Below
Below
Below
Below
Below
Below
Below
Inline
Below
Below
Inline
Inline
Inline
Inline
Inline
Inline
Inline
Above
Inline
Inline
Inline
Below
Above
Inline
Inline
Inline
Below
Inline
Inline
Inline
Below
Inline
Inline
Inline
Inline

Below
Inline
Below
Below
Below
Inline
Below
Below
Below
Below
Below
Below
Below
Inline
Below
Below
Inline
Inline
Inline
Inline
Below
Inline
Inline
Above
Inline
Below
Inline
Inline
Below
Above
Inline
Inline
Below
Inline
Inline
Inline
Below
Above
Inline
Inline
Inline

Source: AllianceDBS

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Market Focus
Results Roundup

AllianceDBS recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e.> -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by AllianceDBS Research Sdn Bhd (ADBSR), a subsidiary of Alliance Investment Bank Berhad (AIBB) and an associate of
DBS Vickers Securities Holdings Pte Ltd (DBSVH). This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities
(Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the DBS Vickers Group) only and no part of
this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of
ADBSR.
The research set out in this report is based on information obtained from sources believed to be reliable and ADBSR, its holding company AIBB,
their respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the
Alliance Bank Group) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are
subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not
have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the
information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate
independent legal or financial advice. The Alliance Bank Group accepts no liability whatsoever for any direct, indirect and/or consequential loss
(including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation
to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The Alliance Bank
Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this
document. The Alliance Bank Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or
seek to perform broking, investment banking/corporate advisory and other banking services for these companies. They may also have received
compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject
companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there
can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or
condensed and it may not contain all material information concerning the company (or companies) referred to in this report.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from
actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE
RELIED UPON as a representation and/or warranty by the Alliance Bank Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein.They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.
DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research
department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months.
ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies
and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation
was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 31 July 2014, the analyst and
his/her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report
(interest includes direct or indirect ownership of securities).

COMPANYCOMPANY-SPECIFIC / REGULATORY DISCLOSURES

1.
DBS Vickers Securities (Singapore) Pte Ltd (DBSVS), their subsidiaries and/or other affiliates do not have a proprietary position in
the securities recommended in this report as of 29 May 2015.
2.

DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may beneficially own a total of 1% of any class of
common equity securities of the company mentioned as of 2 Jun 2015.

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Market Focus
Results Roundup

3.

Compensation for investment banking services:

DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may have received compensation, within the past 12
months, and within the next 3 months may receive or intends to seek compensation for investment banking services from the
company mentioned.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking
transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information,
including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document
should contact DBSVUSA exclusively.

RESTRICTIONS ON DISTRIBUTION
General
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.
Australia

This report is not for distribution into Australia.

Hong Kong

This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the
Hong Kong Securities and Futures Commission.

Indonesia

This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

Malaysia

This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimerfound at the preceding page, recipients of this report are advised that
ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and
associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of
them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to
perform broking, investmentbanking/corporate advisory and other services for the subject companies. They may also have
received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other
services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore

This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law.Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,
or in connection with the report.

Thailand

This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only
intended for institutional clients only and no other person may act upon it.

United
Kingdom

This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of
the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is
intended only for institutional clients.

Dubai

This research report is being distributed in The Dubai International Financial Centre (DIFC) by DBS Bank Ltd., (DIFC Branch)
having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC),
Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This
research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon
it.

United States

Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in
compliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSVUSA, which
accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities
referred to herein should contact DBSVUSA directly and not its affiliate.

Other
jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

AllianceDBS
AllianceDBS Research Sdn Bhd (128540 U)
th
19 Floor, Menara Multi-Purpose, Capital Square,
8 Jalan Munshi Abdullah 50100
Kuala Lumpur, Malaysia.
Tel.: +603 2604 3333 Fax:+603 2604 3921 email : general@alliancedbs.com

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