Berjaya Corporation Berhad

Transcription

1 This report has been prepared by CIMB for the CMDF-Bursa Research scheme. INITIATING COVERAGE CIMB Research Report Berjaya Corporation Berhad 28 March 2011 RECOM Hold PRICE RM1.08 Gaming holds the aces MKT CAPITALISATION RM4,547.4m BOARD Main SECTOR Conglomerate INDEX COMPONENT Nil BC MK / BGRO.KL Tee Sze Chiah + 60 (3) szechiah.tee@cimb.com Investment highlights Begin coverage with a HOLD recommendation. Berjaya Corporation s (B-Corp) most valuable asset is its 50.1% stake in Berjaya Sports Toto. The gaming business is its single largest earnings contributor, accounting for more than 60% of the group s FY10 EBIT. However, its dominance in the NFO market could be challenged by rising interest in Magnum s 4D Jackpot game. On the property front, the group s future earnings hinge on 1) the state of Vietnam s property market where there is execution risk, and 2) the Berjaya Hills and Berjaya City (Socfin land) developments which are progressing slowly. Cosway on the other hand is on an aggressive expansion. We initiate coverage on B-Corp with a HOLD recommendation. Our target price of RM1.25 factors in a 40% discount to its SOP to account for its holding company status, volatile earnings track record and potential delays in the development of Berjaya City or the Berjaya Hills landbank. For big cap exposure to conglomerates, investors should opt for Sime Darby. Forecasting a 3-year EBIT CAGR of 2.1%... We are forecasting a modest 3-year EBIT CAGR of 2.1% for FY10-13, mainly driven by growth of Cosway and the group s property development arm, which will more than offset the lower contribution from B-Toto arising from stiff competition from Magnum and market saturation. Cosway s free store concept allows the company to penetrate into both existing and new markets like Europe and China. As for property, development profits could more than double in 3-5 years time if the Vietnam projects take off according to schedule. but actual earnings could be volatile. In the past, B-Corp s earnings have been volatile due partly to write-offs, start-up costs of its businesses and its exposure to cyclical industries. Earnings from stockbroking, insurance and property investment and development hinge on the state of the economy. For the gaming division, luck can be a swing factor Key stock statistics FYE Apr F EPS (sen) P/E (x) Dividend/Share (sen) NTA/Share (RM) (0.04) (0.03) Book Value/Share (RM) Issued Capital (m shares) 4, weeks Share Price Range (RM) RM0.92/RM1.80 Major Shareholders: % Tan Sri Dato' Seri Vincent Tan 19.9 Hotel Resort Ent 12.2 Per share data FYE Apr F Book Value (RM) Cash Flow (sen) Earnings (sen) 20.5 (1.7) Dividend (sen) Payout Ratio (%) P/E (x) 5.3 nm P/Cash Flow (x) P/Book Value (x) Dividend Yield (%) ROE (%) 0.0% -0.6% 1.0% 1.8% Net Gearing (%) 47.0% 57.1% 49.3% 41.0% Source: Company, CIMB estimates, Bloomberg Please read carefully the important disclosures at the end of this publication.

2 Background Corporate profile A gaming-based conglomerate. Berjaya Corporation (B-Corp) is Tan Sri Dato Seri Vincent Tan s main investment holding company. It is a conglomerate with diverse business activities, including gaming and lottery, property investment and development, consumer, financial services, food and beverages as well as automotive. Within the group, B-Corp s prize asset is its stake in Berjaya Sports Toto (BST MK, Neutral), one of the three number forecasting operators (NFOs) in Malaysia which commands 39.4% share of the NFO market. Figure 1: Corporate structure key units Berjaya Corporation Property investment & development, hotels & resorts Consumer & retail Financial services Food & beverages M otor Gaming Other investment 56.6% Berjaya Land 67% Cosway 70% Berjaya Sompo 74.6% Berjaya Food 70% BerM az M otor 50.1% Berjaya Sports Toto 39.3% Taiga Buildings 100% Berjaya Hills 13% Berjaya Retail 100% Inter-Pacific Securities 50% Berjaya Starbucks 88.3% Berjaya Philippines 18.2% Berjaya M edia 100% BerjayaCity 20.9% Silver Bird 34.2% Informatics Education 26.3% M agni-tech Industries 31.5% TM C Life Source: Company, CIMB Research Gaming and lottery. The gaming division is the single largest earnings contributor, accounting for more than 60% of the group s EBIT in FY10. B-Corp owns 50.1% of B- Toto, one of the three NFOs in Malaysia. The latter has 680 outlets throughout the country, offering a variety of games digit-type games (namely, 4D, 5D and 6D) and lotto-type games (namely, Supreme 6/58, Power Toto 6/55 and Mega Toto 6/52). Property development. Within the group, most of its property development projects are carried out by B-Land. It has more than 5,000 acres of landbank, 90% of which are in Vietnam, South Korea, China and Thailand. B-Corp also has two huge pieces of development land Berjaya Hills and Berjaya City (Socfin land). Berjaya Hills, measuring 13,885 acres, is located at the foothills of Genting Highlands. It is a holiday resort with some tourist attractions. Meanwhile, the 13,202-acre Socfin land is located near Bukit Beruntung, a 40-minute drive from Kuala Lumpur. [ 2 ]

3 Figure 2: B-Corp s local projects, landbank and GDV Stake Acres GDV (RM m) B-Corp The Ritz-Carlton Residences 100% 3.0 2,430.0 B-Land (56.6%-owned subsidiary) Vasana 25, Kuala Lumpur 100% Covillea, Kuala Lumpur 100% Savanna 2, Kuala Lumpur 100% KM 1 West, Kuala Lumpur 100% KM 1 East, Kuala Lumpur 100% Hazel 2, Selangor 80% & 3 storey shop office, Berjaya Park, Selangor 80% Petaling, Kuala Lumpur 100% Petaling Indah, Kuala Lumpur 100% The Taman TAR, Kuala Lumpur 100% Kuantan Perdana, Pahang 100% Total ,704.8 Source: Company, CIMB estimates Figure 3: Some of B-Land s ongoing local development projects Vasana 25 Covillea Savanna 2 Hazel 2 [ 3 ]

4 1Petaling The Peak Source: Company Property investment. B-Corp, via its subsidiary B-Land, owns and manages two commercial buildings within the Kuala Lumpur Golden Triangle Plaza Berjaya and Kota Raya Complex as well as Berjaya Megamall in Kuantan, Pahang. Plaza Berjaya is a mixed development comprising a retail podium, office tower and apartment block, situated in Jalan Imbi within the Golden Triangle commercial area. Kota Raya Complex is a shopping complex located close to Chinatown at the junction of Jalan Tun Tan Siew Sin and Jalan Cheng Lock. It is conveniently accessible by bus and LRT, and is surrounded by financial institutions, hotels and learning institutions. Kota Raya Complex is a 6-storey building containing a retail podium and kiosks. Berjaya Megamall is a shopping complex located in the heart of Kuantan's central business district that provides shopping and entertainment for the east coast of Malaysia. Figure 4: Investment assets Property Total NLA Average occupancy rate (sq 30/4/2010 Plaza Berjaya, Kuala Lumpur 386,535 (gross) 74% 214,459 (owned) Kota Raya Complex, Kuala Lumpur 209,276 (gross) 79% 140,180 (owned) Berjaya Megamall, Pahang 596,830 (gross) 92% 435,409 (owned) Average 82% Source: Company, CIMB estimates Consumer. Cosway Corporation Limited (288 HK, Not Rated), is listed on the Hong Kong Stock Exchange. It is a multi level marketing (MLM) company which operates mainly in countries such as Malaysia, Singapore, Brunei, Hong Kong, Macau, Taiwan, Korea, Thailand, Australia, USA, UK and Japan. Cosway offers more than 2,000 consumer products covering healthcare, slimming products, personal care, skincare, cosmetics, household products and water filtration systems. The company has recruited over 1m members globally. It also has an extensive distribution network covering major cities in Asia. Currently, the company has 1,700 stores in total, thanks to the mushrooming of free stores under the free store concept where franchisees place a deposit with the company, which in turn, pays for all capital expenditure and monthly costs. Meanwhile, Berjaya Retail is engaged in the operation of the 7-Eleven chain in Malaysia and Singer Group. [ 4 ]

5 Financial services. B-Corp is involved in stockbroking and general insurance. Combined EBIT from these businesses made up about 8% of the group s FY10 EBIT. The stockbroking business includes stock & futures broking, online stock trading, share underwriting, share margin financing, nominees services, share custodian services, research, corporate finance, investment advisory, fund management and unit trust management. Its associate, SaigonBank Berjaya Securities Joint Stock Company, is licensed by the Vietnam authorities to provide a full range of stockbroking and related services. In Nov 2010, B-Corp s subsidiary Inter-Pacific Securities Sdn Bhd (IPS) proposed to dispose of its stock and futures broking business to Kim Eng Holdings Limited, a leading SGX-listed broking group. In return, the group will get up to RM106.5m cash and up to 30% equity interest in an SPV jointly held by Kim Eng and/or key employees of the SPV. The collaboration will strengthen the stockbroking unit s presence in the region. However, B-Corp will incur a nominal loss of about RM0.3m due to the charge-out of the carrying goodwill. Although Maybank is proposing to acquire Kim Eng, we gathered from management that the IPS-Kim Eng deal is still ongoing. Meanwhile, Berjaya Sompo Insurance Berhad is one of the leading general insurance companies in Malaysia with a network of 23 offices and an agency force of more than 2,500 throughout Malaysia. Food & beverages. B-Corp holds the master franchise rights for Kenny Rogers Roaster restaurants (KRR) for the Asia-Pacific region and is the brand owner for KRR worldwide. There are currently about 250 outlets operating in USA, Malaysia, China, the Philippines, Singapore, Indonesia and Bahrain. Recently, the group injected the Kenny Rogers Roaster (KRR) restaurant chain in Malaysia into its subsidiary Berjaya Food (BFD MK, Not Rated). B-Corp also has Starbucks Coffee, Wendy's restaurants, Papa John s Pizza and Krispy Kreme under its stable. Other divisions. The group operates eight local and eight overseas hotels and resorts. The average occupancy rate rose from 54% in FY4/09 to 57% in FY4/10 while revenue per available room also improved by 5% to RM158. But the industry remains highly challenging due to intense competition, weak market conditions and a decline in corporate events. B-Corp s club and recreation division, on the other hand, saw a 3.5% increase in FY4/10 revenue due to higher membership recruitment. As at 30 April 2010, the group owned and operated seven clubs in Malaysia with a total membership of 22,000. B-Corp s other business segments include vacation timeshare, charter services, motor trading and distribution, Borders bookstores and environment and clean technology services. It also has a strategic stake in Taiga Building Products which is listed on the Canada Stock Exchange, SGX-listed Informatics Education and Malaysia-listed Silver Bird, Magni-Tech and TMC Life Sciences. [ 5 ]

6 Figure 5: List of hotels and resorts Local Location Tenure Stake No. of 30/6/10 B-Corp Colmar Tropicale, Berjaya Hills Pahang NA 100% 248* The Chateau Spa & Wellness Resort, Berjaya Hill Pahang NA 100% 211* B-Land (56.6%-owned subsidiary) Berjaya Tioman Resort Johor Leasehold 86% 268 Berjaya Langkawi Resort Kedah Leasehold 100% 350 Berjaya Redang Resort Terengganu Leasehold 100% 220 Berjaya Times Square Hotel Kuala Lumpur Freehold 100% 660 Berjaya Penang Hotel Penang Leasehold 100% 320 Piccolo Hotel Kuala Lumpur Registered lease 60% 168 Overseas B-Land (56.6%-owned subsidiary) Berjaya Singapore Hotel Singapore Leasehold 100% 49 Berjaya Eden Park United Kingdom Freehold 100% 113 Berjaya Beau Vallon Bay Resort & Casino Seychelles Freehold 100% 232 Long Beach Resort Vietnam Leasehold 70% 71 InterContinental Hanoi Westlake Vietnam Leasehold 75% 359 Sheraton Hanoi Hotel Vietnam Leasehold 70% 299 Berjaya Hotel Colombo Sri Lanka Freehold 93% 75 Berjaya Praslin Resort Seychelles Freehold 100% 79 * As t 31 Dec 2009 Source: Company Figure 6: List of recreation clubs Club Bukit Kiara Equestrian & Country Resort Kelab Darul Ehsan Staffield Country Resort Bukit Baneng Golf & Country Club Bukit Jalil Golf & Country Resort Tioman Island Golf Club Berjaya Hills Golf & Country Club Location Kuala Lumpur Selangor Negeri Sembilan Johor Kuala Lumpur Pahang Pahang Source: Company Figure 7: Segmental breakdown for FY10 Revenue EBIT 6% 8% 0% 7% 26% 20% 50% Financial services Property investment & development Gaming 6% 4% Consumer Hotels and resorts Others 65% Financial services Property investment & development Gaming 0% Consumer Hotels and resorts Others 8% Source: Company [ 6 ]

7 Earnings outlook Gaming is the core earnings contributor. Within the group, the gaming business contributed about 65% of B-Corp s FY10 EBIT. B-Toto, the market leader which commands 39.4% market share, will continue to do well, thanks to strong interest in its flagship 4D game and a fairly recent addition, lotto variant 6/58 Power Toto which has a minimum jackpot prize of RM8.88m. However, we expect its lead to be eroded by strong interest in Magnum s 4D Jackpot game. Our gaming analyst sees downside risks to our flat to 3% annual topline growth projections for B-Toto for FY Having said that, these negatives are cushioned by the stock s attractive dividend yield in excess of 6%, which is supported by its minimum 75% dividend payout policy. Growth is the key word in Cosway. Cosway is embarking on an aggressive expansion plan. Apart from penetrating the existing market, management is targeting new markets like Europe and China. This is evident from a 40% jump in its sales outlets to 1,480 stores in FY10 (1,058 stores in FY09). We are forecasting a 3-year revenue CAGR of 18% for FY10-13, driven mainly by the opening of new Free Stores, intensified recruitment activities and widening of product offerings. Besides having a strong distribution network, Cosway s competitive edge over its peers lies in the wide variety and unique products it offers at competitive and highly affordable prices. Throughout the year, the company offers aggressive sales promotions to its members, which currently number more than 1m members globally. Domestic property sector remains resilient. Within the group, B-Land undertakes most of the property development jobs, both locally and abroad. Our economic research team forecasts GDP to grow 5.5% in 2011, which augurs well for the property market. The government s efforts to transform Malaysia into a high-income nation, the rollout of major infrastructure projects, low interest rates and ample liquidity in the system also underpin property demand in Malaysia. For the overseas jobs, earnings contribution could be insignificant in the early years as these projects will be developed over years. The company also needs time to get up the learning curve overseas. Figure 8: Growth is expected to be broad-based with positive contribution from all sectors % yoy MOF CIMB % yoy % share % pt contr. % yoy % share % pt contr B 2011B 2011B 2011F 2012F 2011F 2012F 2011F 2012F Real GDP Agriculture Mining Construction Manufacturing Services Source: BNM, MOF, CIMB Research Figure 9: Overseas landbank and GDV Stake Acres GDV (RM m) Thach Ban Garden City, Hanoi, Vietnam 80% ,792.2 Vietnam Financial Center, Ho Chi Minh City, Vietnam 100% ,981.1 Bien Hoa City Square, Dong Nai Province, Vietnam 75% Vietnam International University Township, Vietnam 100% 2, ,912.8 Nhon Trach New City Township, Vietnam 100% 1, ,387.9 The Great Mall of China 51% ,323.3 Berjaya Jeju Resort, South Korea 51% ,109.0 Clear Lake Colony, Thailand 40% ,356.5 Total 4, ,424.5 Source: Company, CIMB estimates [ 7 ]

8 Figure 10: Real GDP growth for key countries in the region Countries Real GDP growth (%) F China India Indonesia Malaysia Singapore South Korea Thailand Vietnam Note: 2010 GDP number for India, Malaysia and Thailand are estimated figures. Source: CEIC, Bank Negara Malaysia, IMF, CIMB Research More M&A for B-Food? Berjaya Food (B-Food) made its debut on the Bursa Malaysia on 8 March It holds the exclusive master franchise rights to the Kenny Rogers Roasters brand in Malaysia with 52 restaurants nationwide as at 31 January Kenny Rogers is a full-service mid-casual dining restaurant offering good valuefor-money meals. Management is in expansion mode, targeting to open at least 8-10 restaurants per year. According to a study by Converging Knowledge in 2005, the typical Malaysian spends about 31% of household expenditure on food and nonalcoholic beverages. Given the rise in national household income, consumers will spend more on food services which bodes well for B-Food. On a separate note, we gathered that there is a plan for B-Corp to inject more F&B-related businesses into B- Food. Potential M&As include Starbucks Coffee, which is 50% owned by B-Corp. Other F&B businesses within the group are Papa John s Pizza, Wendy s restaurants and Krispy Kreme. [ 8 ]

9 Figure 11: Consumer spending habits Composition of Malaysian household expenditure 2004/05 Household income RM 10,000 Top 20% earners Middle 40% earners not much better than bottom 40% Bottom 40% earners having the slowest growth 69% Food and non-alcoholic beverages 20% 8,000 6,000 5,617 6,268 7,425 7,809 8,157 Restaurants and hotels 11% 4,000 2, ,269 3,354 3,881 1,378 1,409 2,022 2,204 2,574 2,663 2,957 1,016 1, , Source: Department of statistics Unlocking the value of other assets. We gather that B-Corp plans to continue nurturing and potentially unlocking the value of its existing businesses. Apart from B- Retail and B-Food, another potential listing candidate within the group is BerMaz Motor, which is the sole distributor and retailer of Mazda cars in Malaysia. We understand that BerMaz has sold some 4,000 Mazda cars in FY11 YTD. Privatisation of Berjaya Retail. Berjaya Retail received on 11 March 2011 a notice of an unconditional takeover offer from Premier Merchandise Sdn Bhd, in which Tan Sri Vincent Tan has an indirect 100% stake. The offer price of RM0.65 represents a whopping 30% premium over its IPO price of RM0.50. The move came less than seven months after its listing on 16 August 2010, making it one of the shortest listings ever. We think B-Retail's undervalued share price is one of the key reasons for the privatisation plan. Minority shareholders are likely to accept the offer given the steep premium over the IPO price. Figure 12: P&L analysis (RM m) FYE Apr F Revenue 3, , , ,164.3 Operating Profit (EBIT) Depreciation (109.6) (128.0) (145.9) (216.3) Interest Expenses (342.3) (289.8) (295.6) (262.6) Pretax Profit 1, Effective Tax Rate (%) -3.4% -60.3% -34.4% -30.0% Net Profit (416.8) (32.0) Operating Margin (%) 13.5% 10.9% 12.9% 11.0% Pretax Margin (%) 34.4% 4.3% 8.9% 7.1% Net Margin (%) -12.0% -0.5% 0.9% 1.8% Source: Company, CIMB estimates Figure 13: Balance sheet (RM m) Balance Sheet (RM m) FY08 FY09 FY10 Total Assets 16, , ,825.4 Fixed Assets 2, , ,704.0 Current Asset 4, , ,045.4 Other LT Assets 9, , ,076.0 Current Liabilities 2, , ,138.9 LT Liabilities 3, , ,933.6 Share Capital 3, , ,021.9 Shareholders' Funds 10, , ,753.0 Source: Company, CIMB estimates Investment risks Competitive NFO market. Our gaming analyst sees downside risks to B-Toto s FY11-12 earnings growth due to 1) competitive threat from Magnum s 4D Jackpot game, 2) saturated NFO market, and 3) common draw days for the operators which will dampen the topline growth of the NFO sector. The group s plan to ride on Berjaya Jeju s casino venture could also be delayed as we gathered that more capital expenditure will be required to pour into the Berjaya Jeju Resort in Seogwipo City [ 9 ]

10 before the regulators would even considering relaxation of the foreigners-only ruling. Longer gestation for property projects. Unlike other established players like Mah Sing (MSGB MK, Outperform) which have large footprints in Malaysia, the majority of B-Land s property development projects hinge on the state of Vietnam s property market. The need to deal with different legal, regulatory and logistic systems will be a major drag. Meanwhile, management s efforts to develop Berjaya Hills and Berjaya City (Socfin) have been slow. Valuation Earnings are volatile. In the past, B-Corp s earnings have been volatile due partly to write-offs, start-up costs of its businesses and its exposure to cyclical industries. Earnings from its stockbroking and insurance businesses as well as the property investment and development hinge on the state of the economy while the gaming division is affected by the luck factor, i.e. the prize payout ratio. Balance sheet remains fairly healthy. B-Corp s net gearing stood at 45% as at Oct 10. Dividend income from B-Toto will be used to part-finance its debt obligations. We, therefore, expect the dividend payout from B-Toto to remain high at over 75%. The group, however, may have to gear up as B-Land s property projects are capital intensive and Cosway needs funds for its Free Store outlets and expansion into new markets. 3-year EBIT CAGR of 2.1%. We are forecasting a moderate 3-year EBIT CAGR of 2.1%. Cosway s expansion and more property launches will more than offset the lower contribution from B-Toto arising from stiff competition from Magnum and market saturation. B-Food should also benefit from the opening of more Kenny Rogers Roasters restaurants. Figure 14: Comparative valuations B-Corp Sime Darby Share Price 25/3/ Mkt. Cap (RM m) 4, ,986.6 Ave. Daily Vol. (m) P/E FY09 (x) nm 0.2 P/E FY10 (x) P/BV (x) Yield (%) 1.4% 1.5% Source: Company, CIMB estimates Figure 15: Share price chart of B-Corp and comparables (RM) BC Sime 0.6 Jul-10 Sep-10 Nov-10 Jan-11 Source: Bloomberg [ 10 ]

11 Privatisation of B-Toto? On 23 December 2010, B-Toto confirmed that it was in preliminary discussions on a possible corporate exercise which may result in the entry of a strategic investor. Management indicated that while there had been initial contact with several potential investors, it was not in negotiations as it was still in internal discussions and the planning phase. We would not be surprised if B-Toto took a similar route as Magnum in its 2007 privatisation. A special purpose vehicle (SPV) could be set up, jointly owned by B-Corp and a new strategic investor which would then acquire the assets and liabilities of B-Toto on completion of its privatisation from B-Land. We note that B-Toto s net gearing inched up from 0.56x at end-fy10 to 0.69x at end-2qfy11, again similar to Magnum which increased its borrowings despite being in a net cash position. Recommendation Trading at 48% discount to SOP. In view of the diversity of B-Corp s businesses, we believe the appropriate valuation method for the group is sum of parts (SOP). In our SOP model, we: (1) value B-Land at our SOP-based target price of RM1.24 per share (2) value B-Retail at the GO price of RM0.65 per share (3) value B-Corp s property investment and development as well as hotel and resorts at their RNAV (4) value the group s holdings in listed investments at their latest market prices (5) value other businesses on P/NBV, P/E or NBV basis depending on the most appropriate valuation methods for each business (6) deduct the net borrowings of the investment holding company, excluding the listed subsidiaries net cash/debt Based on this methodology, we arrived at a fully diluted SOP value of RM2.08 for B- Corp. This represents a 48% discount to its last traded price. Initiate with a HOLD recommendation. We initiate coverage on B-Corp with a HOLD recommendation. Our target price of RM1.25 factors in a 40% discount to its SOP to account for its holding company status, volatile earnings track record and potential delays in the development of Berjaya City or the Berjaya Hills landbank. RM1.25 works out to 33x CY12 FD P/E. For big-cap exposure to conglomerates, investors should opt for Sime Darby (SIME MK, Trading Buy). Financial summary FYE Apr F 2012F 2013F Revenue (RM m) 6, , , , ,247.9 EBITDA (RM m) , ,074.9 EBITDA margins (%) Pretax profit (RM m) Net profit (RM m) (32.0) EPS (sen) (1.7) EPS growth (%) % % +14.7% +34.6% +36.8% P/E (x) nm Core EPS (sen) (1.0) Core EPS growth (%) -92.7% % +61.3% +34.6% +36.8% Core P/E (x) nm FD EPS (sen) (0.8) FD P/E (x) nm Gross DPS (sen) Dividend yield (%) 0.0% 1.4% 1.2% 1.3% 1.3% P/NTA (x) nm nm nm nm 27.8 ROE (%) -0.6% 1.0% 1.8% 2.4% 3.2% Net gearing (%) 57.1% 49.3% 41.0% 34.6% 26.9% P/CF (x) EV/EBITDA (x) Source: Company, CIMB Research, Bloomberg [ 11 ]

12 Figure 16: SOP valuation of Berjaya Corporation Description Landbank Method Stake Size Unit Price Value (RM m) (RM sq ft/ per unit) Berjay a Hills Estimated RNAV 100.0% 13,884.6 ac 2.5 1,536.2 Berjay a City (Socfin Land) Estimated RNAV 100.0% 13,201.8 ac 2.2 1,288.2 Ritz Estimated RNAV 100.0% 3.0 ac 3, Colmar Tropicale Estimated RNAV 100.0% 248 units 200, The Chateau Spa Estimated RNAV 100.0% 211 units 200, Method Stake Price No of share (local curr) (m) Berjay a Land CIMB's target price 56.6% , ,526.3 Consumer Method Stake Price No of share (local curr) (m) Cosw ay Corporation Marked to market 67.0% , Berjay a Retail GO price 13.0% , Financial services Method Stake Inter Pacific Buy out price 91.5% Berjay a Sompo 1.4x BV 70.0% Food and beverages Method Stake Price No of share (local curr) (m) Berjay a Food Marked to market 74.6% Starbucks 10x CF 50.0% 83.0 Listed investment Method Stake Price No of share (local curr) (m) Berjay a Media Marked to market 18.2% Taiga Products Canada Marked to market 39.3% Silv er Bird Marked to market 20.9% Magni-Tech Marked to market 26.3% TMC Life Marked to market 31.5% Others Method Estimated profit Mazda franchise 10x P/E Sanitary landfill NBV 60.0 Total v alue 8,682.0 Cash As at Oct10 (ex cluding cash of listed subsidiaries) Debt As at Oct10 (ex cluding debt of listed subsidiaries) (351.5) Total SOP 9,001.6 No of shares - basic (m) 4,021.9 No of shares - FD (share + cash option) RM ICULS (m) 4,178.6 No of shares - FD share option (2ICULS for 1 share) (m) 4,335.3 SOP (RM/share) 2.24 SOP - FD (share and cash option) (RM/share) 2.17 SOP - FD (share option) (RM/share) 2.08 Source: Company, CIMB estimates, Bloomberg [ 12 ]

13 CIMB INVESTMENT BANK BHD DISCLOSURE & DISCLAIMER This report has been prepared by CIMB Investment Bank Bhd ( CIMB ) for purposes of CMDF-Bursa Research Scheme ("CBRS") administered by Bursa Malaysia Berhad and has been compensated to undertake the scheme. CIMB has produced this report independent of any influence from CBRS or the subject company. For more information about CBRS and other research reports, please visit Bursa Malaysia s website at: By accepting this report, the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth below and agrees to be bound by the limitations contained herein (including the Restrictions on Distributions set out below). Any failure to comply with these limitations may constitute a violation of law. This publication is being supplied to you strictly on the basis that it will remain confidential. 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The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBI has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBI. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations. [ 13 ]

14 Malaysia: This report is issued and distributed by CIMB. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB. New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of their business, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act Singapore: This report is issued and distributed by CIMB Research Pte Ltd ( CIMBR ). Recipients of this report are to contact CIMBR in Singapore in respect of any matters arising from, or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only. If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR. As of 25 March 2011 CIMB Research Pte Ltd does not have a proprietary position in the recommended securities in this report. Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell to any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden. Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered with the Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China through a public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approval of the Financial Supervisory Commission of the Republic of China. Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBS. 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United Kingdom: This report is being distributed by CIMB Securities (UK) Limited only to, and is directed at selected persons on the basis that those persons are (a) persons falling within Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the Order ) who have professional experience in investments of this type or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order, (all such persons together being referred to as relevant persons ). A high net worth entity includes a body corporate which has (or is a member of a group which has) a called-up share capital or net assets of not less than (a) if it has (or is a subsidiary of an undertaking which has) more than 20 members, 500,000, (b) otherwise, 5 million, the trustee of a high value trust or an unincorporated association or partnership with assets of no less than 5 million. Directors, officers and employees of such entities are also included provided their responsibilities regarding those entities involve engaging in investment activity. Persons who do not have professional experience relating to investments should not rely on this document. United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research Pte Ltd solely to persons who qualify as "Major U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of This communication is only for Institutional Investors and investment professionals whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not an Institutional Investor must not rely on this communication. However, the delivery of this research report to any person in the United States of America shall not be deemed a recommendation to effect any transactions in the securities discussed herein or an endorsement of any opinion expressed herein. For further information or to place an order in any of the abovementioned securities please contact a registered representative of CIMB Securities (USA) Inc. Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions STOCK RECOMMENDATIONS BUY: HOLD: SELL: Expected positive total returns of 15% or more over the next 12 months Expected total returns of between -15% and +15% over the next 12 months. Expected negative total returns of 15% or more over the next 12 months. CIMB Research Pte Ltd (Co. Reg. No M) [ 14 ]