Market View Sentiment to Improve if Trade Talks Succeed

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1 Tuesday, January 08, 2019 FBMKLCI: 1, Daily Brief THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* M a r k e t V i e w, N e w s i n B r i e f : C o r p o r a t e, E c o n o m y, a n d S h a r e B u y b a c k s Chartist: Stephen Soo Tel: stsoo@ta.com.my Market View Sentiment to Improve if Trade Talks Succeed Bursa Malaysia shares rose on Monday, lifted by last Friday s strong rally in the US as the super strong employment report and suggestion from the Federal Reserve Chairman that the US central bank may pause raising rates boosted risk sentiment. The KLCI climbed 9.39 points to close at 1,679.17, off an early high of 1, and low of 1,673.03, as gainers led losers 604 to 294 on robust turnover of 2.5bn shares worth RM1.92bn. Resistance at 1,700/1,722; Support From 1,657 Sentiment should improve further if the scheduled US-China trade talks result in resolution of key trade disputes. On the index, immediate resistance stays at the 1,700 psychological level, with subsequent resistance from 1,722, 1,742 and 1,762, the respective 61.8%FR, 50%FR and 38.2%FR levels. Immediate support would be at the June 2018 low of 1,657, with crucial supports still at the 18 Dec low of 1,626, followed by 1,617, the 123.6% (Fibonacci Projection) FP level, and 1,593, the 138.2%FP. Bargain Globetronics & Inari Globetronics should extend oversold rebound to RM1.64 or the 23.6%FR (RM1.74) before stalling for profit-taking, while crucial support cushioning downside risk is from the 4/1/19 low (RM1.39). Likewise, Inari could recover further towards RM1.42 of the 23.6%FR (RM1.54) prior to profit-taking pause, while crucial support is at the 4/1/19 pivot low (RM1.22). Japan s Nikkei Led Asian Gains Asian stock markets traded higher on Monday following the rally on Wall Street Friday as a dovish turn by the Federal Reserve and startlingly strong U.S. jobs data soothed some of the market s worst fears about the global outlook. U.S. indices soared on Friday after the Labor Department announced that employers added a better-than-expected 312,000 jobs in December. While the unemployment rate rose slightly, it was taken as a good sign that more people were looking for jobs. Gains were also supported by Federal Reserve Chairman Jerome Powell saying that the central bank will be flexible in deciding if and when it raises interest rates. Positive sentiment was also generated after China's Commerce Ministry said China and the U.S. would hold vice-ministerial level trade talks in Beijing this week. Japan s Nikkei 225 led the rally, rising more than 2 percent to close the day at 20, as exporters' shares were bolstered by a weaker yen. In down under, the benchmark ASX 200 rose 1.14 percent with most sectors seeing gains. Elsewhere, South Korea s Kospi gained 1.34 percent to close the day at 2, as shares of Donbu Steel skyrocketed almost 30 percent. Meanwhile, the Shanghai composite index rose 0.72 percent to close at 2, as sentiment picked up slightly ahead of the U.S.-Sino trade talks. Page 1 of 8

2 Wall Street Edges Up as Trade Talks Resume U.S. stocks rose Monday, boosted by rallying technology shares, as officials from Washington and Beijing kicked off their latest round of negotiations over trade policy. The continued strength on Wall Street partly reflected optimism about high-level trade talks between the U.S. and China in Beijing. Senior officials from China unexpectedly showed up for negotiations between Beijing and their counterparts in Washington in an effort to resolve longstanding trade disagreements that have triggered uncertainty in global markets. Chinese Vice Premier Liu He, a top economic adviser to Chinese President Xi Jinping, was among attendees, sparking some optimism given the symbolism of a top-level bureaucrat attending the talks, according to Bloomberg. Trade officials from both countries are looking to hammer out an agreement over the next 48 hours, but there are doubts over how to best ensure that both countries follow through on promises made during talks with Trump administration worried about enforcement. A broad rally in shares of rapidly growing technology companies pushed major indexes higher. Amazon.com, Netflix and Advanced Micro Devices jumped more than 3 percent apiece, with Amazon s gains allowing it to surpass Microsoft in market capitalization and become the largest publicly traded company. The Dow Jones Industrial Average rose points, or 0.42 percent, to 23,531.35, the S&P 500 gained points, or 0.70 percent, to 2,549.70, and the Nasdaq Composite added points, or 1.26 percent, to 6, Page 2 of 8

3 News In Brief Corporate The Ministry of Entrepreneur Development has approved close to RM20mn of funds to attract private investors to develop the prototype for the third national car. The fund was sourced from several existing grants to catalyse the development of the national car project (Bernama). After a weak Purchasing Managers Index (PMI) cast a pall over the economy, business confidence expectations for the first half of the year has weakened among corporate s and small and medium enterprises (SMEs), according to the RAM Business Confidence Index (StarBiz). JAKS Resources Bhd (JAKS) (Not Rated) has failed again in its bid to get the court's permission to appeal against the release of a RM50mn bank guarantee to Star Media Group Bhd (Star). The matter relates to a tower project awarded by Star to JAKS' 51%-owned unit JAKS Island Circle Sdn Bhd. JAKS, in a separate filing, said its unit is seeking legal advice on the next course of action (The Edge). Comment: To recap, Star had made the RM50mn bank guarantee demand from JAKS since February 2018 as the latter had failed to delivery Tower A (a 15-storey office block in Pacific Star Business Hub in Section 13) on the stipulated timeframe. While the latest development is positive to Star, we are neutral on the financial implication as management alluded that the proceeds is to compensate for the shortfalls in relation to the delays of Tower A. We maintain our Sell recommendation on Star with an unchanged TP of RM0.69/share based on 0.6x CY19 P/BV. AirAsia Group Bhd will cease charging the RM3 fee for all flights departing from the Kuala Lumpur International Airport 2 (klia2), in a move to keep air fares low. According to management, the Group has said from the very beginning that klia2 is not fit for low-cost carrier operations. Therefore, the Group will be going directly to Malaysia Airports Holdings Bhd for all the extra costs (StarBiz). Comment: Insignificant earnings impact as we believe the company would adjust the base fare higher to cover the loss of revenue amounting to estimated RM50.2mn or 0.5% of our FY19 revenue projections. Maintain Sell with unchanged target price of RM2.71/share based on 10x CY19 EPS. Former FGV Holdings Berhad chairman Tan Sri Mohd Isa Abdul Samad and former group president and chief executive officer, Datuk Mohd Emir Mavani Abdullah were ordered to file their defence in the suit brought by the company to claim RM7.69mn as compensation over the purchase of a luxury condominium in Troika, Persiaran KLCC (The Edge). Comment: We expect no fundamental change to the Group. Maintain FGV as Buy with unchanged target price of RM1.01 / share. Sapura Energy Bhd (Not Rated) has been awarded four new contracts and one extension with a combined value of RM760mn. The jobs involve three drilling contracts and two contracts for the engineering and construction segment. However, the Group did not provide a breakdown of the value of each contract (StarBiz). Page 3 of 8

4 Lion Industries Corp Bhd (Not Rated) is divesting its entire 50% stake in Singaporebased Angkasa Amsteel Pte Ltd to a South Korean steel manufacturer for SGS26.65mn (RM80.9mn) to raise funds for its flat steel business venture. The Group has signed a conditional sale and purchase agreement with Daehan Steel Co Ltd for the proposed disposal, which is expected to be completed by the first quarter of this year, if shareholders approve (The Edge). Gagasan Nadi Cergas Bhd (Not Rated) has accepted a letter of award from Putrajaya Homes Sdn Bhd (PHSB) for the proposed construction and completion of a public residential development in Putrajaya, worth RM109.99mn. The residential development would consist of two blocks of 16-storey and 17-storey apartments (463 units), 3-storey multilevel car park and common facilities block and upgrading works at part of a green area and buffer zone in Precinct 11, Putrajaya (Bernama). KKB Engineering Bhd (Not Rated) has signed a letter of award (LoA) by Petroliam Nasional Bhd, which will qualify it to bid for contract work involving the provision of engineering, procurement and construction of fixed offshore structure works. A formal contract shall be executed within three months from acceptance of the said LoA. The contract is effective from Dec 12, 2018 and will continue for a period of six years, unless terminated earlier (Bursa Malaysia). Destini Bhd (Not Rated) has received a further three-year extension from the Home Affairs Ministry to maintain, repair and overhaul safety and survival equipment for the Royal Malaysian Police's Pasukan Gerakan Udara. The Group received the letter of extension with the contract's ceiling value kept at RM10mn. The extension, which will expire on Nov 29, 2021, entails the maintenance services, technical assistance and ground support for the Royal Malaysian Police Air Force (The Edge). Ewein Bhd (Not Rated) will be embarking on the second phase of the City of Dreams project in 2020 in Penang, leveraging on its success of its maiden City of Dreams project in the state. The Group will be launching the second phase by the end of next year upon the completion of its first phase, which is expected by the end of this year (New Straits Times). Microlink Solutions Bhd (Not Rated) has secured a RM27.43mn contract from Payments Network Malaysia Sdn Bhd (PayNet) to supply and implement a real-time electronic transfer of funds and securities system (RENTAS) platform. The contract sum included five years of support and maintenance (Bursa Malaysia). SCH Group Bhd (Not Rated) has appointed De Souza Michael Lawrence as its group chief executive officer, following the resignation of Lau Mong Ling as managing director in November last year. De Souza previously served Johnson Controls as regional sales manager for Southeast Asia and South Asia regions. He later joined Aggreko as sales manager before being promoted to general manager for Southeast Asia (Bursa Malaysia). The Pelita Group of Companies (Not Rated) plans to launch an initial public offering (IPO) on the ACE Market of Bursa Malaysia to fund their business expansion and capital expenditure by next year. According to management, 30% of the company's stock would be put up on the market, and it would take at least 18 months to get the company listed (StarBiz). Page 4 of 8

5 News In Brief Economy Malaysia Tourism Tax Revenue to be Distributed to State Government in 1Q The federal government will distribute the 50% tourism tax revenue to state governments in the first quarter (1Q) of 2019, says Finance Minister Lim Guan Eng. He said the distribution would be made after the tourism tax revenue accounts for 2018 had been finalised. The distribution will be made without taking into consideration whether a state still owes or is in arrears with the federal government. This means that Sarawak will still receive the tourism tax revenue distribution even though the state still owes RM2.5 billion and with arrears of RM50 million to the federal government. Lim said according to the Federal Constitution, the tourism tax is a federal revenue and state governments were not entitled to it. Nevertheless, on the basis of the federal government s respect to the states, the distribution of 50% from the tourism tax will be made as announced in the 2019 Budget on Nov 2, last year. (The Edge) Bank Negara International Reserves Stayed Flat at US$101.4bn as at Dec 31 Bank Negara Malaysia (BNM)'s international reserves has stayed flat at US$101.4 billion as at Dec 31 this year, compared to Dec 14. The reserves position is sufficient to finance 7.4 months of retained imports and is 1.0 time the short-term external debt. Foreign currency, the biggest reserves portion, was at US$95.7 billion, while the International Monetary Fund reserves position was at US$900 million. Special drawing rights were at US$1.1 billion, gold at US$1.6 billion and other reserve assets were at US$2.1 billion. The bank s total assets came in at RM billion, while currency in circulation was recorded at RM billion. (The Edge) Figure 1: Malaysia International Reserves (Jan13-Dec18) Source: BNM, TA Securities Asia Japan Services PMI Dips in December Growth in Japan s services sector slowed at the end of 2018 as poor weather and weaker demand growth provided a drag, according to an industry gauge. The Nikkei-Markit services purchasing managers index dipped to a three-month low of 51 in December, down from 52.3 in November and bringing the reading closer to the 50-point level separating expansion from contraction. Companies surveyed reported a modest improvement in demand and a weaker increase in new export orders. Slowing growth in the services sector came in contrast to the improvement seen in the manufacturing sector in December. The manufacturing purchasing managers index rose to 52.6 in December from a 15-month low of 52.2 in the previous month, according to figures released last week. That resulted in a composite PMI of 52, down from 52.4 in the previous month. The composite level data points to a relatively solid pace of expansion over the last three months of 2018, suggesting that the Q4 GDP print should bring a bounce-back in growth. (Financial Times) Page 5 of 8

6 Japan Monetary Base Slows to 4.8% in December The monetary base in Japan was up just 4.8% on year in December, the Bank of Japan said - coming in at trillion yen. That was well shy of forecasts for 5.8% and down sharply from 6.1% in November. Banknotes in circulation were up 3.4% on year, while coins in circulation added 1.1%. Current account balances climbed 5.3%, including a 4.0% spike in reserve balances. The adjusted monetary base tumbled an annual 7.3%. For the third quarter of 2018, the base was up 5.6% on year; for all of 2018, the base jumped 7.3%. (RTT) Australia Manufacturing Sector Falls into Contraction The manufacturing sector in Australia slipped into contraction in December, the latest survey from the Australia Industry Group revealed with a Performance of Manufacturing Index score of That's down from 51.3 in November, and it falls beneath the boom-or-bust line of 50 that separates expansion from contraction. It's also the first time in 26 months that the index has failed to expand. Among the individual components, production, employment, new orders, supplier deliveries, exports and selling prices all contracted - while finished stocks, sales, input prices and average wages all continued to expand. (RTT) United States ISM Non-Manufacturing Index Hits 57.6 in December The U.S. services sector expanded at a slower-than-expected pace in December, according to data released. The Institute for Supply Management said its non-manufacturing index clocked in at 57.6 last month. Economists polled expected the ISM non-manufacturing index to slip to 59 in December. The index hit 60.7 in November. A reading above 50 reflects expansion. Prices in the services sector fell 6.7 percentage points to 57.6 last month, while employment slipped by 2.1 percentage points to December's reading is also the lowest since July. ISM's reading on the U.S. services sector comes after announcing last week its manufacturing index fell to its lowest level since November Recently, weaker-thanexpected economic data have stoked fears that the global economy may be slowing down. This has sent ripples through global markets as volatility in equities has risen sharply. (WSJ) U.S. Pushes China to Follow Through on Trade Promises With the U.S. and China having opened negotiations Monday to resolve their trade fight, a make-or-break issue stands in the way of any deal: How to ensure Beijing follows through on the offers it makes? During the negotiations, scheduled to last two days, trade officials from Washington and Beijing are looking to hammer out details on a number of broad pledges recently made by the Chinese leadership: more Chinese purchases of U.S. goods and services; increased American access to China s markets; better protection of U.S. intellectual property and reductions in Beijing s subsidies to Chinese companies. For each category, according to individuals with knowledge of the discussions, U.S. negotiators, led by Deputy U.S. Trade Representative Jeffrey Gerrish, are pressing their Chinese counterparts, headed by Vice Commerce Minister Wang Shouwen, to come up with ways to ensure that Beijing will make good on its promises. For instance, the U.S. side wants China to be specific about what it will purchase by specific dates. In addition, if Beijing revises regulations to boost U.S. access to China s markets, U.S. negotiators want assurance that it won t use government authority over licensing, environmental regulation and other areas to hinder American companies. The Trump administration s focus on how to enforce any deal with Beijing highlights what U.S. officials call China s poor follow-up record. Instead, they said, hurdles for American and other foreign firms operating in China have grown over the years despite similar market-opening pledges Beijing has made over years of previous negotiations. (WSJ) Page 6 of 8

7 Eurozone Eurozone Investor Confidence Lowest Since December 2014: Sentix Eurozone's investor confidence deteriorated for a fifth straight month in January to its lowest level in over four years, but the easing was less severe than expected, survey data from the behavioral research institute Sentix showed. The Sentix investor confidence index dropped to -1.5 from -0.3, marking the lowest level since December Economists had forecast a score of -2 for January. The current situation index dropped for a fifth month running, to 18, which was lowest level since January The expectations index of the survey fell for a third straight month -19.3, which was the lowest score since August (RTT) Eurozone Retail Sales Rise Strongly in Good News for Growth Eurozone sales rose more than expected in November for a second consecutive month as consumers bought more clothes and electrical goods in a positive sign for the bloc s growth in the last quarter. The European Union s statistics office, Eurostat, estimated retail sales in the 19 countries sharing the euro were up 0.6% month-on-month, much more than the 0.1% rise forecast by economists polled by Reuters. On the year, retail trade was up by 1.1%. Eurostat also revised upwards October data to a 0.6% month-on-month gain from a previous 0.3% reading and to a 2.3% rise year-on-year from a previous 1.7% increase. The better-than expected figures, although highly volatile and subject to frequent revisions, are positive news for the euro zone economy and could point to stronger growth in the last quarter of the year. The bloc s economy grew by only 0.2% in the third quarter, slowing from a 0.4% GDP rise in the second quarter. Before retail figures were released, the gloomier mood among Eurozone purchasing managers in December issued last week had pushed some economists to forecast that growth in the last quarter of the year would also be slow. (Reuters) Germany Retail Sales Increase; Factory Orders Fall Germany's retail sales grew at the fastest pace in seven months in November, exceeding economists' expectations. Retail sales rose a calendar and seasonally adjusted 1.4% from October, when they edged up 0.1%, revised from a 0.3% fall. Economists had expected a 0.4% increase. On a year-on-year basis, retail sales increased 1.1% in November after a 5.2% rise in October, revised from 5%. Economists were looking for a 0.4% fall. Separately, Germany's manufacturing new orders decreased for the first time in four months in November. Factory orders decreased a calendar and seasonally adjusted 1% from October, when they grew 0.2%, revised from 0.3% reported earlier. Economists had forecast a modest decline of 0.1%. The latest fall was the most severe since a 3.6% slump in June. Domestic orders increased 2.4% and decreased 3.2% from the previous month. Demand from the euro area dropped 11.6%, while orders from other countries grew 2.3%. Orders for manufacture of intermediate goods and consumer goods decreased 4.4% and 3.2%, respectively, while that for capital goods increased 1.4%. On a year-on-year basis, factory orders decreased 4.3% in November after a 3% drop in October. Economists had expected a 2.7% decline. (RTT) Page 7 of 8

8 News In Brief Share Buy-Back Company Bought Back Price (RM) Hi/Lo (RM) Total Treasury Shares ANCOM 5, / / ,513,159 BREM 15, ,103,734 CRESBLD 175, / /0.87 7,526,100 E&O 400, / ,442,696 EWEIN 60, / /0.55 6,408,900 GLOMAC 46, / / ,529,200 GRANFLO 50, / ,518,000 IGBB 30, / /2.45 5,429,020 INCKEN 749, / / ,143,800 JCBNEXT 5, / ,000 KENANGA 30, / / ,923,900 LIENHOE 420, / / ,017,600 MASTEEL 109, / / ,623,000 NYLEX 16, / /0.64 9,112,824 P&O 41, / ,123,193 RCECAP 27, / / ,767,025 SIGN 170, / / ,017,100 SUNWAY 100, / ,713,562 SYSCORP 30, / ,692,600 TEXCYCL 32, /0.57 3,104,150 TITIJYA 400, / / ,205,500 TROP 190, / ,954,842 YINSON 20, / ,550,800 Source: Bursa Malaysia Share Buy-Back: 07 January 2019 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee Kuala Lumpur Malaysia Tel: Fax: Page 8 of 8

9 SNAPSHOT OF STOCKS UNDER COVERAGE For Internal Circulation Only Company Share Price Target Price Market Cap. EPS (sen) PER (X) Div Yield (%) 52weeks 52weeks % Chg % upside Recom Beta (RM) (RM) (RMm) FY19 FY20 FY19 FY20 FY19 FY20 High Price % Chg Low Price % Chg YTD 07-Jan-19 AUTOMOBILE BAUTO % Buy 2, MBMR % Buy PECCA % Buy SIME % Buy 16, UMW % Buy 6, BANKS & FINANCIAL SERVICES ABMB % Hold 6, AFFIN % Hold 4, AMBANK % Hold 13, CIMB % Buy 53, HLBANK % Hold 42, MAYBANK % Sell 104, PBBANK % Sell 95, RHBBANK % Hold 21, BURSA % Sell 5, BUILDING MATERIALS ANNJOO % Hold CHINHIN % Hold CHINWEL % Buy CMSB % Buy 3, CSCSTEL % Sell ENGTEX % Hold CONSTRUCTION GADANG % Buy GAMUDA % Buy 6, Note: GAMUDA proposed 1 for 4 rights issue warrants. For more details please refer to report. GDB % Buy 144 na IJM % Sell 6, KAB % Buy 66 na PESONA % Buy SENDAI % Sell SUNCON % Sell 1, WCT % Sell 1, LITRAK % Hold 2, CONSUMER Brewery CARLSBG % Hold 6, HEIM % Buy 6, Retail AEON % Hold 1, AMWAY % Hold F&N % Sell 12, HUPSENG % Buy JOHOTIN % Buy NESTLE % Buy 34, PADINI % Sell 2, POHUAT % Buy QL % Sell 10, SIGN % Sell Tobacco BAT % Sell 10, GAMING Casino GENTING % Buy 23, GENM % Buy 17, NFO BJTOTO % Sell 2, HEALTHCARE Hospitals/ Pharmaceutical CCMDBIO % Buy IHH % Sell 48, KPJ % Buy 4, Rubber Gloves HARTA % Sell 19, KOSSAN % Buy 5, SUPERMX % Buy 2, Note: SUPERMX proposed bonus issue shares on the basis of 1 for 1. For more detail please refer to report. TOPGLOV % Hold 13, KAREX % Sell INDUSTRIAL SCIENTX % Buy 4, SKPRES % Buy 1, MEDIA ASTRO % Buy 7, MEDIA PRIMA % Sell na na STAR % Sell

10 SNAPSHOT OF STOCKS UNDER COVERAGE For Internal Circulation Only Company Share Price Target Price Market Cap. EPS (sen) PER (X) Div Yield (%) 52weeks 52weeks % Chg % upside Recom Beta (RM) (RM) (RMm) FY19 FY20 FY19 FY20 FY19 FY20 High Price % Chg Low Price % Chg YTD OIL & GAS DNEX % Buy LCTITAN % Sell 10,797 na MHB % Buy MISC % Sell 29, PANTECH % Buy PCHEM % Buy 71, SERBADK % Buy 5,507 na VELESTO % Buy 1, UZMA % Buy PLANTATIONS FGV % Buy 2, na na IJMPLNT % Sell 1, IOICORP % Sell 26, KFIMA % Buy KLK % Sell 25, SIMEPLT % Buy 34,423 na TSH % Sell 1, UMCCA % Buy 1, PROPERTY GLOMAC % Sell HUAYANG % Hold IBRACO % Sell 298 na IOIPG % Buy 8, MAHSING % Hold 2, SIMEPROP % Buy 6,665 na SNTORIA % Hold SPB % Accept Offer 1, SPSETIA % Buy 8, SUNWAY % Hold 7, REIT SUNREIT % Buy 5, CMMT % Buy 2, POWER & UTILITIES MALAKOF % Buy 3, PETDAG % Hold 25, PETGAS % Sell 35, TENAGA % Buy 79, YTLPOWR % Sell 6, TELECOMMUNICATIONS AXIATA % Buy 34, DIGI % Sell 34, MAXIS % Sell 44, TM % Sell 9, TECHNOLOGY Semiconductor & Electronics ELSOFT % Sell INARI % Buy 4, MPI % Buy 1, N2N % Buy UNISEM % Sell 2, TRANSPORTATION Airlines AIRASIA % Buy 9, AIRPORT % Sell 13, Freight & Tankers PTRANS % Buy 341 na TNLOGIS % Buy WPRTS % Sell 12, SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price Market Cap. EPS (cent) PER (X) Div Yield (%) 52week 52week % Chg % upside Recom Beta (S$) (S$) (S$m) FY19 FY20 FY19 FY20 FY19 FY20 High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS % Buy 60, OCBC % Buy 48, UOB % Buy 41, PLANTATIONS WILMAR % Buy 20, IFAR % Sell BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.