BINTULU PORT. Medium term growth priced in, uncertain tariff transition HOLD. Company report. (Re-initiation) INFRASTRUCTURE

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1 Company report BINTULU PORT Thomas Soon Rationale for report: Re-initiation INFRASTRUCTURE (BPH MK EQUITY, BPOT.KL) 08 Oct 2014 Medium term growth priced in, uncertain tariff transition HOLD (Re-initiation) Price Fair Value 52-week High/Low Key Changes Fair value EPS RM7.15 RM7.36 RM7.80/RM6.96 YE to Dec FY13 FY14F FY15F FY16F Revenue (RM mil) Core net profit (RM mil) FD Core EPS (sen) FD Core EPS growth (%) (5.2) Consensus Net Profit (RM mil) DPS (sen) PE (x) EV/EBITDA (x) Div yield (%) ROE (%) Net Gearing (%) nm nm Stock and Financial Data Shares Outstanding (million) 46 Market Cap (RMmil) 3,289.0 Book Value (RM/share) 2.35 P/BV (x) 3.0 ROE (%) 18.2 Net Gearing (%) - Major Shareholders Petronas (28.5%) Sarawak State Govt (26.7%) Equisar Assets (13.0%) Free Float 32.5 Avg Daily Value (RMmil) 0.2 Price performance 3mth 6mth 12mth Absolute (%) (0.7) (3.4) (7.9) Relative (%) 1.7 (2.6) (11.1) Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 BPH MK PP 12247/06/2013 (032380) FBMKLCI Index 2,000 1,800 1,600 1,400 1,200 1, Investment Highlights We re-initiate coverage on Bintulu Port with a HOLD, at a DCF-derived fair value of RM7.36/share, which implies a PE of 21x FY15F EPS of 36 sen +1STD to its 3-year forward PE average of ~19x. We believe Bintulu Port s growth prospects have been priced in for the medium term, hinging on the Samalaju Industrial Park, a growth node of Sarawak s SCORE. Dividend yield would remain decent at ~4%, representing a 75%-76% payout of earnings. BiPort is expected to gear up for Samalaju Port with a proposed Sukuk issue, of which we estimate to be at RM700mil-RM800mil. BiPort would sooner or later have to deal with a Petronas proposal for the LNG cargo tariffs to be reduced. This could result in a substantial reduction in LNG cargo revenue, which would directly affect its bottom line. LNG remains as the single largest contributor to revenue, at 67% in the six months to 30 June 2014 (FY13: 69%). Our FY16F numbers incorporate an additional 2.5mil tonnes of LNG, ~70% of the 3.6mil tonnes additional annual output which is expected to start coming onstream upon the completion of Train 9 at the MLNG complex by early We assume the additional throughput to come with reduced rates by then. To mitigate the decline, management has proposed an increase in non-lng tariffs. We understand that BiPort has obtained the authority s nod to have the existing land lease rentals at Bintulu Port reduced. BiPort is applying to extend the existing 30-year concession, which expires in The privatisation agreement provides for such an extension option for a 30-year period. We expect a decision within this year. Management has also proposed a more favourable land lease deal with the state government for the Samalaju port project vs. Bintulu Port s rates. While management is not at liberty at this juncture to detail the proposals, we expect the anticipated reduction in LNG cargo tariff rates to be made up by increases in the non-lng cargo rates and reduction in lease rentals. We have incorporated for such a scenario by We expect earnings growth to be flat for FY14F and BiPort would also be impacted by start-up costs for Samalaju Port. A lack of liquidity is a drag on stock performance. We do not rule out corporate measures, such as a bonus issue, to at least make it more affordable to retail investors. HOLD for dividend yield of ~4%.

2 Mil tonnes RM mil RM mil Bintulu Port 08 Oct 2014 HOLD: GROWTH PRICED IN, FV: RM7.36/SHARE We re-initiate coverage on Bintulu Port with a HOLD, at a DCF fair value of RM7.36/share, which implies a PE of 21x FY15F EPS of 36 sen +1STD to its 3-year average forward PE of ~19x. We believe Bintulu Port s growth prospects have been priced in for the medium term, hinging on the Samalaju Industrial Park, a growth node of Sarawak s SCORE EXHIBIT 1: KEY P&L ITEMS Dividend yield remains decent at ~4%, representing an about 75%-76% payout vs. 80%-120% over the last seven years, in view of increased capex for Samalaju Port. The stock s lack of liquidity remains a drag on share price performance, although we do not rule out corporate measures, such as a bonus issue, to at least make it more affordable to retail investors. Notably, four major investors hold a combined 77% of the 460mil RM1 shares. They are Petronas (28.5%), Sarawak State Financial Secretary (26.7%), Equisar Asets (13%), and KWAP (9.2%). While operations are being carried out at the interim facilities, we expect Samalaju Port to contribute little in the meantime in view of start-up costs. The new port, which can handle 18mil tonnes of cargo annually, is expected to be fully operational by FINANCIALS: MEDIUM-TERM GROWTH PRICED IN We expect earnings growth to be flat for FY14F-FY16F as the new Samalaju Port is being built, while a tariff restructuring exercise is in the offing. Group revenue grew at a CAGR of 4.1% over the last six years between FY08 and FY13, while earnings grew by 2.5% per annum, peaking at RM171mil in FY11. From FY14F-FY16F, we expect a group turnover CAGR of 8.4% per annum and net profit at 3.0% per annum. For FY14F, we expect earnings growth to be flat, partly due to start-up costs at Samalaju at its infancy stage. For FY15F, we project earnings to grow by ~4% on the back of additional tonnage at the new port. For FY16F, our projected earnings growth is at ~4.6% despite a strong 17% revenue growth forecast after factoring in higher interest and expenses. To remain an LNG port for a while yet BiPort s financials over the years have been underpinned by its port services offered to the Petronas LNG complex in Bintulu Port. It segmentalises operations into port services and bulking services, which account for ~92% and 8% of group revenue, respectively F 2015F 2016F Revenue EBIT Core Net Profit Growth (%) Turnover Growth (2.2) EBIT Growth (15.7) 36.2 (0.1) (3.9) Core Net Profit Growth (14.7) (15.2) EXHIBIT 2: OPS REVENUE/GROWTH BREAKDOWN Bintulu Bulkers (RM mil) Port services (RM mil) Total Growth Bintulu Bulkers (%) Port services (%) Overall EXHIBIT 3: TOTAL CARGO TONNAGE (MIL TONNES) Total Growth AmResearch Sdn Bhd 2

3 mil tonnes Mil tonnes Bintulu Port 08 Oct 2014 EXHIBIT 4: APPROVED INVESTORS AT SAMALAJU AND PROJECTED CARGO VOLUMES Approved investors and cargo volume Import cargo (max volume) Export cargo (min volume) Total volume import/export Companies Import cargo Tonnes TEUs Export cargo Tonnes TEUs Tonnes TEUs Expected ops Press Metal Bintulu Alumina, anode carbon, others 802,000 Aluminium, anode carbon 60,000 18, ,000 18,000 Feb-13 Tokuyama Malaysia Metallic silicon, Silicon Tetrachloride 38,780 Polycrystalline silicon 5,635 44,415 Ph 1 June 2013 Ph 2 April 2014 Pertama Ferroalloys Manganese, silica quartz, Coke, Coal, 746,500 Silicomanganese 175,000 9, ,500 9,732 4Q14 charcoal, Quick Lime OM Materials Sarawak Manganese ore, silica quartz, 1,778,000 Manganese alloy, 610,000 2,388,000 2Q15 Coke, Semi Coke Ferro silicon Sakura Ferroalloys Manganese ore, coal, coke, quartz 551,945 Manganese alloy 179, ,765 2Q15 Malaysian Phospates Rock phosphate, sulphuric acid, 2,658,000 Phosphoric acid/ammonia, 1,460,000 10,570 4,118,000 10,570 4Q15 Additives (Sarawak) silica, coal, potassium hydroxide Di-Calcium Phosphate, Fertiliser grade MAP/DAP Coke & by-products Asia Advanced Materials Quartz, charcoal, coal, electrode 315,000 2,835 Metallic silicon, silica fume 7, ,000 10,365 2Q15 Dongbu Metal (Sarawak) Quartz, charcoal, woodchip, TBA Metallic silicon TBA TBA TBA low ash coal Cosmos Petroleum & Mining Metallurgical grade silica, 35,400 Polycrystalline silicon 1,390 35,400 1,390 4Q15 sodium chloride Aimbest Steel Manganese ore, coke, carbon paste 2,950 Ferro-Silico manganese 2,777 5,727 TBA Elkem Carbon Malaysia Anthracite, Pitch 293,120 Electrode paste 4, ,120 4,267 TBA Total 7,179,965 44,565 2,484,820 59,901 9,664, ,466 EXHIBIT 5: LNG & LNG CARGO TONNAGE/GROWTH LNG cargo Non-LNG cargo LNG cargo growth (%) Non-LNG cargo growth (%) EXHIBIT 6: NON-LNG TONNAGE BREAKDOWN Container Break Bulk Crude oil/condensate Petroleum products Palm products Bulk fertiliser Alumina Clinker & Gysum Others Total Non-LNG In terms of tonnage, LNG cargo accounts for ~60% of throughput. LNG and non-lng throughput tonnage grew by an annual rate of 1.9% and 2.4% between FY08 and FY13, while LNG and non-lng revenue grew by 2.1% and 6.5%, respectively. We expect LNG tonnage to grow at a CAGR of 3.4% for FY14F-FY16F on the back of another 3.6mil tonnes/per annum coming onstream by For non-lng cargo, we expect the tonnage to grow by a strong rate of 14.7% per annum over the three-year forecast period. Tariff restructuring in the offing While non-lng cargo volume is expected to increase stemming from Samalaju Port, BiPort would soon have to deal with a proposal for the LNG cargo tariffs to be reduced. This would result in a substantial reduction in LNG cargo turnover, which would directly impact its bottom line. LNG remains as the group s single largest contributor to revenue, at 67% in the six months to 30 June 2014 (FY13: 69%). AmResearch Sdn Bhd 3

4 Segment EBIT (RM mil) RM mil Mil tonnes Bintulu Port 08 Oct 2014 EXHIBIT 7: BULKERS REVENUE (RM MIL) EXHIBIT 8: BULKERS TONNAGE (MIL TONNES) Bulking tonnage (mil tonnes) Bulking services (RM mil) Growth (%) Growth (%) All in all, we expect the anticipated reduction in LNG cargo tariff rates to be more than offset by increases in the non- LNG cargo rates and the reduction in lease rentals. We have incorporated for such a scenario to occur in By FY16F, we are assuming an at least 15% decline in LNG tariff, but mitigated by a 43% rise in non-lng tariffs vs. FY13 numbers. Management cannot at this point reveal the proposed rates, but say any reduction in LNG tariffs would likely be offset by the increase in non-lng tariffs, along with the reduction in leases. EXHIBIT 9: SEGMENT EBIT (RM MIL)/GROWTH (%) Our FY16F numbers incorporate an additional 2.5mil tonnes of LNG, 70% of the 3.6mil tonnes additional annual output which is expected to start coming onstream upon the completion of Train 9 at the MLNG complex by early We assume the additional throughput to come with reduced rates by then. Factoring in the completion of Train 9 and full operations at Samalaju Port, we expect LNG revenue at 15% less and non-lng revenue at 43% more in FY16F than what would be if tariffs were maintained at FY13 rates. These translate into an FY16F group turnover that is ~3.6% higher than what it would be without any tariff adjustments and earnings at 12% more than that without. Effectively, we expect revenue for LNG cargo to fall by 2% per annum over the next three years and non-lng turnover to rise by 29% per annum over the same period. Overall, port services revenue is expected to grow by ~8% per annum over FY14F-FY16F, while bulking services turnover will rise by ~15%, for an overall CAGR at 8.4% per annum over the forecast period. Earnings-wise, we expect port services to register a net profit CAGR of 1.3% over FY14F-FY16F, and bulking services at 16.5% per annum over the same period, for an overall growth at 3% per annum F 2015F 2016F Bulking services (RM mil) Port services (RM mil) Total (RM mil) EBIT Growth 5 Bulking services (%) (1.1) Port services (%) (16.4) 32.3 (2.4) (3.8) 2.9 (1.1) Total (%) (15.7) 36.2 (0.1) (3.9) Based on our assumptions, BiPort potentially needs the tariff restructuring in order to be better off, in view of the development of the Samalaju Port. Ceteris paribus, without the tariff restructuring, the group s net profit could potentially be 11% less than what it would be with the tariff revisions; translating into a negative growth of ~8% YoY for FY16F. This would mainly be due to higher expenses stemming from the start-up phase of Samalaju Port, and higher interest expenses from the gearing up of the balance sheet. AmResearch Sdn Bhd 4

5 Net profit (RM mil) Bintulu Port 08 Oct 2014 Dividend payout EXHIBIT 10: SEGMENT NET PROFIT (RM MIL)/GROWTH (%) Gearing up F 2015F 2016F Bulking services (RM mil) Port services (RM mil) Total Growth Bulking services (%) (97.7) Port services (%) (14.0) (14.7) 8.3 (3.5) Total (14.5) (14.2) BiPort has been generous in its dividend payout over the years at over 100% from and between 82%- 88% from EXHIBIT 11: DIVIDEND PAYOUT F 2015F 2016F Gross DPS (sen) Payout ratio (%) BiPort had been at a net cash position with no borrowing until FY13, when it had debts totaling only RM58mil. However, we expect the group to gear up amid the construction of the Samalaju Port. It has proposed a Sukuk issue. We expect BiPort s net gearing to be at 0.2x and 0.5x for FY15F and FY16F, respectively. BiPort will be investing a total of RM1.8bil to develop Samalaju Port, the equity portion of which amounts to RM600mil. Of the RM600mil, ~70% was from the placement of 60mill shares to Equisar Asets, a subsidiary of The State Financial Secretary, Sarawak, while the remaining was generated from internal funds. The placement exercise was completed in June last year, and Samalaju Industrial Port Sdn Bhd s (SIPSB) paid-up capital was raised to RM600mil in October BiPort would also be receiving a facilitation grant of RM500mil from the federal government. We understand this would be provided for in stages. As such, we expect Samalaju Port to issue a Sukuk that could raise ~RM700mil-RM800mil to fund the remainder of its capital requirements for FY15F-FY16F. Given the extensive capital expenditure required for Samalaju Port, we are assuming a reduced payout at 75%- 76% over the next few years. This translates into a gross payout of between 26 sen and 29 sen/share, offering a yield of ~4% at the current price. Review of 1HFY14 performance BiPort posted a core net profit of RM70.5mil for its 1HFY14 (+16.5% YoY), accounting for 45% of our and consensus earnings forecasts. We expect its performance to be better in the third quarter. LNG accounted for ~67% of the group revenue. The additional tonnage in 2HFY14 is expected to come from Tokuyama s and Pertama Ferroalloys cargoes (See Exhibit 4). Our current cargo tonnage assumption stands at 47mil tonnes (+6.5% YoY), including 25.6mil tonnes of LNG (+0.6% YoY) accounting for 55% of total tonnage. The 1HFY14 LNG revenue of RM181mil accounts for 49% of our current full-year assumption of RM366mil. The non- LNG and bulking services revenue account for 50% and 44% of our current assumptions. AmResearch Sdn Bhd 5

6 Bintulu Port 08 Oct 2014 FY Dec 31 2QFY14 1QFY14 2QFY13 EXHIBIT 12: 1HFY14 FINANCIAL SUMMARY QoQ % Change YoY % change 1HFY14 1HFY13 YoY % change Revenue (RM mil) (5.2) Op revenue (RM mil) Net operating costs (55.5) (41.6) (54.3) (97.2) (95.0) 2.2 EBITDA (6.6) Depreciation/amor (32.4) (32.5) (30.2) (0.3) 7.5 (64.9) (64.3) 1.0 EBIT (10.2) Other income (62.2) (58.0) Net interest (6.1) (5.9) (6.8) 3.3 (10.1) (12.0) (13.9) (13.8) EIs 0.9 () n/a (10) 0.9 (0.1) (1,877) Pre-tax profit (13.1) Tax (14.9) (11.2) (8.9) (26.1) (27.8) (6.1) Net profit (RMmil) (25.8) Core net profit (RM mil) (24.1) EPS (25.8) Core EPS (sen) (24.1) Gross DPS (sen) (2) (2) Core margins (%) 2QFY14 1QFY14 2QFY13 QoQ ppt change YoY ppt change 1HFY14 1HFY13 YoY ppt change EBITDA (8.2) EBIT (6.7) Core net profit (8.7) BACKGROUND Bintulu Bintulu, a major industrial centre, is the site of the Petronas Liquified Natural Gas (LNG) Complex, which currently has an annual production of 23mil tonnes. Bintulu hosts a number of key industries in Sarawak. These include:- 1. Malaysia Liquefied Natural Gas (MLNG) plants comprising MLNG 1, MLNG 2, and MLNG Asiean Bintulu Fertilizer (ABF) plant a JV among 5 Asean countries namely Malaysia, Thailand, Indonesia, Philippines, and Singapore. It produces anhydrous ammonia and granular urea, and is one of the largest urea plants in Asia. 3. Shell Middle Distillate Synthesis plant the world's first commercial gas to liquids (GTL) plant; it started operations in May Sarawak Shell Bintulu Plant formerly Bintulu Crude Oil Terminal (BCOT), it was the first major industrial project at Tg. Kidurong in The project comprises three crude oil storage tanks, each with a capacity of 410,000 barrels. 5. Bintulu Cement plant it is the second cement plant in Sarawak constructed by CMS Cement. Situated at the Kidurong Industrial Estate, the plant has an annual production capacity of 750,000 tonnes. Bintulu Port Holdings Bhd Bintulu Port Holdings Bhd (BiPort) is an investment holding company, which was listed on Bursa Malaysia on 16 April The group offers port services and bulking services at the Bintulu Port and Samalaju Industrial Port. The core segments are:- (i) Port operations - the provision of port and construction services which include handling of cargo for liquefied AmResearch Sdn Bhd 6

7 Bintulu Port 08 Oct 2014 natural gas (LNG), petroleum products, liquefied petroleum gas, general cargo, containers, dry bulk cargo and other ancillary services; and (ii) Bulking services - the provision of bulking installation facilities for palm oil, edible oils, vegetable oils, fats and its by-products. Touted as one of the main LNG ports, Bintulu Port has been in operations for over 30 years. The main operating subsidiaries are Bintulu Port Sdn Bhd (BPSB) and Biport Bulkers Sdn Bhd (BBSB), and the newly-established Samalaju Industrial Port Sdn Bhd (SIPSB). Bintulu Port began operations on 1 January 1983, under the purview of the Bintulu Port Authority (BPA), which is a federal statutory body under the Ministry of Transport Malaysia. BPA was established on 15 August 1981 under the Bintulu Port Authority Act On 31 December 1992, BPA sold the businesses of port operations at Bintulu Port to BPSB, which officially took over the port operations on 1 January BPA became the regulatory body. Pursuant to the Privatisation Agreement, BPSB is licensed to provide port services at Bintulu Port for 30 years, with an option to extend for another 30 years. In consideration for the right to charge port users, BPSB pays a scheduled annual lease rental for the infrastructure and the land. The charges set out under a tariff structure set by BPA at the inception of the privatisation agreement have not been changed since. Bintulu Port has the capacity to handle 23mil tonnes of LNG annually, making it the single largest LNG export terminal in the world. That capacity would be increased upon the completion of Train 9. Malaysia is the second largest exporter of LNG after Qatar. It made its first LNG shipments to Japan on 29 January Bintulu Port handled 1.38mil tonnes of LNG in 1983 through one jetty. LNG volume in FY13 rose 8.30% to 25.48mil tonnes from 23.53mil tonnes in the previous year. Petronas has embarked on a new LNG train (Train 9) which will add another 3.6mil tonnes to the existing production capacity of 25.7miln tonnes. Train 9 is expected to be completed by 2Q2016. LNG remains as the group s single largest contributor to BiPort s revenue, at 67% in the six months to 30 June 2014 (FY13: 69%). For non-lng cargo, Bintulu Port intends to add additional berths and container storage yard space with new handling equipment to increase the capacity from 400,000 TEUs (twenty-foot equivalent units) currently to 650,000 TEUs annually. It handled 4.14mil tonnes of cargo in 1983 from 1,095 ship calls. The Bintulu International Container Terminal (BICT) started operations on 14 June For dry and break bulk cargoes handled at the Multi-Purpose Terminal, BPSB intends to develop additional berths, and warehouse and storage space at the 2nd Inner Harbour. Bintulu Port has identified four major growth focus areas, namely, palm oil products, dry bulk cargoes, containerised cargoes and oil & gas services. BBSB operates a vegetable oil bulking terminal to cater to the state s high-growth palm oil industry. BBSB is the only one specialising in the storage of vegetable oils in Sarawak. The terminal was built at a cost of RM55mil on a 15-acre site. The port handled 23,000 tonnes of palm oil products in 1986, which rose to 1mil tonnes in To facilitate the export and import operations, a dedicated jetty was built adjacent to the terminal, which commenced operations on 15 December The first shipment of palm oil was carried out at the new terminal on 1 January The jetty, which can accommodate two vessels of various sizes and lengths at any one time, is owned and operated by BPSB. There are currently six palm oil refineries in Sarawak, four of which are situated in Bintulu, which has been designated as a Palm Oil Industrial Cluster (POIC). The refineries in Bintulu include Wilmar s Bintulu Edible Oils (BOE), which reportedly buys some 1.75mil tonnes of CPO or more than 50% of the state s production of 3.3mil annually. BOE also has a fractionation plant in Bintulu with a capacity of 1,250 tonnes/day. The other three sited in Bintulu are Sarawak Oil Palms Bhd s SOP Edible Oils (annual capacity: 450,000 tonnes), BLD Plantations Bhd s Kirana Palm Oil Refinery (720,000 tonnes), and Sime Darby Austral Edible Oil (330,000 tonnes). It has been reported that the Rimbunan Hijau (RH) group has been granted a licence by the Malaysian Palm Oil Board (MPOB) to set up a refinery in Bintulu. No decision has been made yet to proceed with the project. SIPSB, which was incorporated on 28 August 2012, started operations in April 2014, with the completion of two barge berths and one Ro-Ro Ramp. The interim phase will allow the plant operators at Samalaju Industrial Park to import their raw materials or project cargoes using barges or smaller size vessels directly to Samalaju. The cargo can also be exported using barges to Bintulu Port for transhipment. Samalaju Port, which will hold a 40-year concession from 2016 to 2056 with an option to extend for 20 years, is expected to be fully operational by the middle of AmResearch Sdn Bhd 7

8 Bintulu Port 08 Oct 2014 EXHIBIT 13: PEER COMPARISON Company PE (x) PB (x) EV/EBITDA (x) ROE (%) Dvd Yld (%) TP (RM/ M'sian operators Price (LC) CY14F FY15F CY14F FY15F CY14F FY15F CY14F FY15F CY14F FY15F share) Rating Westports Hold Bintulu Port Hold NCB nm nm Simple average International operators Hutchison Port HT ICT DP World Cosco Pacific Tianjin Port Dalian Port Xiamen Int China Merchants Shenzen Chiwan Shanghai Int Rizhao Port Port of Tauranga Simple average Overall average , Bloomberg BiPort and SIPSB had on 9 July 2013 signed a service agreement with the state government for the development and operations of Samalaju Port. Under the agreement, SIPSB is obligated to pay to the state a scheduled annual lease rental for the land effective from the date of completion of the port facilities. In consideration for the construction of the port, the subsidiary is given the right to charge port users for the services rendered at tariff rates approved by the state government While the interim phase is in operation, construction works are on-going for Phase 1, which will cater to handymax and handysize vessels. Phase 1 will have a total capacity of 18mil tonnes per annum. In the latest development, Starbiz reported on Tuesday that BiPort would soon be inviting bidders for the final package the supply of wharf unloading equipment. Last month, BiPort awarded two packages the design, construction and completion of the conveyor system facilities to Muhibbah Engineering (M) Bhd for RM157mil, and the construction of an administrative building and associated works to Samado Sdn Bhd for RM40.4mil. BiPort CEO Datuk Mior Ahmad Baiti Mior Lub Ahmad told Starbiz that the tender for the wharf unloading equipment package is expected to open for bidding early next year. BPHB has a budget of some RM70mil to acquire the equipment. Samalaju Port is targeted to handle 6mil tonnes of cargo in its first year of full operation. Mior Ahmad said that based on seven works packages awarded so far, the combined contract value was within its planned budget of RM1.8bi. Other works packages being implemented are the capital dredging and reclamation (RM437mil), breakwater and associated works (RM306mil), wharf and associated works (RM311.1mil) as well as electrical works and navigation aids system (RM47.53mil). The RM194mil interim port facilities package was the first to have been completed and operational about six months ago. The facilities, which include two wharves and a roll-on roll-off ramp, are capable of handling up to four million tonnes of cargo a year. Starbiz reported that the new port is targeting to handle between one and three million tonnes of cargo, mostly project cargo, each in 2014 and Mior Ahmad said certain works packages were progressing behind schedule by nearly two months, adding that the delays would be addressed in a catch-up programme. He said the overall progress of the project was more than 40% and BiPort is still expecting full completion of the new port by 2Q16. CATALYSTS AND RISKS The catalysts include a lower-than-expected LNG tariff reduction, a higher-than-expected non-lng tariff hike, and the setting up of more heavy industries at the Samalaju Industrial Park. The key risks, on the other, include a higher-than-expected LNG tariff reduction, a lower-than-expected non-lng tariff hike and withdrawals of proposed industries at the industrial park. AmResearch Sdn Bhd 8

9 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Forward PE Bintulu Port 08 Oct 2014 EXHIBIT 14: BIPORT 3-YEAR FORWARD PE 24.0x 22.0x PE +1σ, 20.7x 2x PE, 20.4x PE µ, 18.9x 18.0x PE -1σ, 17.1x 16.0x 14.0x 12.0x Oct-14 Aug-14 Jun-14 Apr-14 Feb-14 Dec-13 Oct-13 Aug-13 Jun-13 Apr-13 Feb-13 Dec-12 Oct-12 Aug-12 Jun-12 Apr-12 Feb-12 Dec-11 Oct-11 EXHIBIT 15: PB BAND CHART EXHIBIT 16: PE BAND CHART δ Avg -1δ δ Avg -1δ AmResearch Sdn Bhd 9

10 Bintulu Port 08 Oct 2014 EXHIBIT 17: FINANCIAL DATA Income Statement (RMmil, YE 31 Dec) FY12 FY13 FY14F FY15F FY16F Revenue EBITDA Depreciation/Amortisation (123.0) (124.2) (132.3) (134.7) (173.4) Operating income (EBIT) Other income & associates Net interest (28.1) (23.4) (23.8) (33.0) (62.0) Exceptional items Pretax profit Taxation (32.2) (30.5) (34.7) (36.2) (37.8) Minorities/pref dividends Net profit Core net profit Balance Sheet (RMmil, YE 31 Dec) FY12 FY13 FY14F FY15F FY16F Fixed assets Intangible assets 1, , , , ,906.5 Other long-term assets Total non-current assets 1, , , , ,886.9 Cash & equivalent Stock Trade debtors Other current assets Total current assets Trade creditors Short-term borrowings Other current liabilities Total current liabilities Long-term borrowings Other long-term liabilities 1, ,708.1 Total long-term liabilities 1, , , , ,571.1 Shareholders funds , , , ,196.6 Minority interests BV/share (RM) Cash Flow (RMmil, YE 31 Dec) FY12 FY13 FY14F FY15F FY16F Pretax profit Depreciation/Amortisation Net change in working capital Others (75.3) (249.0) (152.0) (9.1) (15.4) Cash flow from operations Capital expenditure (169.5) (328.9) (645.9) (550.9) (20) Net investments & sale of fixed assets Others Cash flow from investing (143.0) (112.9) (475.0) (548.6) (197.7) Debt raised/(repaid) Equity raised/(repaid) Dividends paid (15) (133.5) (121.9) (124.2) (131.1) Others (43.4) (34.7) (454.5) Cash flow from financing (15) (15.3) (285.6) Net cash flow (53.5) (161.9) 34.5 (65.6) Net cash/(debt) b/f Net cash/(debt) c/f Key Ratios (YE 31 Dec) FY12 FY13 FY14F FY15F FY16F Revenue growth (%) EBITDA growth (%) Pretax margin (%) Net profit margin (%) Interest cover (x) Effective tax rate (%) Dividend payout (%) Debtors turnover (days) Stock turnover (days) Creditors turnover (days) estimates AmResearch Sdn Bhd 10

11 Bintulu Port 08 Oct 2014 Published by AmResearch Sdn Bhd ( P) (A member of the AmInvestment Bank Group) 1 5 t h F l o o r B a n g u n a n A m B a n k G r o u p 55 Jalan Raja Chulan Kuala Lumpur Tel: ( 0 3 ) ( r e s e a r c h ) F a x : ( 0 3 ) Printed by AmResearch Sdn Bhd ( P) (A member of the AmInvestment Bank Group) 1 5 t h F l o o r B a n g u n a n A m B a n k G r o u p 55 Jalan Raja Chulan Kuala Lumpur Tel: ( 0 3 ) ( r e s e a r c h ) F a x : ( 0 3 ) The information and opinions in this report were prepared by AmResearch Sdn Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmResearch Sdn Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmInvestment Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgement as of this date and are subject to change without notice. For AmResearch Sdn Bhd Benny Chew Managing Director AmResearch Sdn Bhd 11