PP16795/03/2013(031743) Jan-17

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1 Wednesday, 17 January, 2018 Jan-17 Feb-17 Mar- 17 Apr-17 May- 17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Research Team PP16795/03/2013(031743) Corporate News Economic News TM, TNB ink MOU to implement Nationwide Fiberisation Plan Petronas Carigali awards MCM contracts to 5 companies UMW-OG gets 3-year umbrella contract from Petronas MBSB to provide RM700m funding for 8 RUMAWIP projects Caely proposes 1-for-2 warrants bonus issue Leweko inks MoU to share know-how with Indian infrastructure firm JB-S pore rapid transit system to start by Dec 31, 2024 U.S. oil industry set to break record, upend global trade 'China's Dagong cuts US sovereign ratings to BBB+ from A- EU targets recycling as China bans plastic waste imports, some expected to go to Southeast Asia Hong Kong way ahead of Singapore, topping Asia expat rental list Bursa Malaysia Close Chg +/- Chg % YTD Chg (%) FBMKLCI 1, FBMEMAS 13, FBM100 12, FBMEMAS Shariah 13, FBM Hijrah Shariah 14, Volume (m) 6, , Value (MYR m) 3, KLCI Performance KLCI Year-End Target: 1,900 points Regional Indices Commodities (Last Close) Close Chg +/- Chg % YTD Chg (%) Close Chg +/- Chg % DJIA 25, Brent Crude (USD/bbl) NASDAQ 7, WTI Crude (USD/bbl) S&P 500 2, CPO (RM/MT) 2, FTSE 100 7, Gold (USD/ounce) 1, Nikkei , Latex (sen/kg) HSI 31, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 10, (per USD) BIMB (YE Forecast) Close Chg +/- Chg % STI 3, MYR JCI 6, JPY SET 1, EUR PSEi 8, SGD

2 Major Rates Daily Participation Market Insight % Participation Bought Sold Net KLIBOR 3-mth 3.44 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.56 Local Insti KLIBOR 12-mth 3.64 Local Retail yr MGS 3.52 Foreign yr MGS 3.83 Total , , Performance of BIMB Stock Coverage Top Gainers Source: Bank Negara Malaysia Top Losers Source: The Sun, BIMB Securities Close Chg +/- Chg % Close Chg +/- Chg % Econpile Kossan Hua Yang FGV GHL Systems Hartalega IOI Properties Petronas Gas Nestle DNeX

3 CORPORATE NEWS TM, TNB ink MOU to implement Nationwide Fiberisation Plan TM and TNB have signed an MoU to jointly develop an implementation plan to deliver the government s Nationwide Fiberisation Plan. The two GLCs said the collaboration will capitalise on the strength of both parties, enabling the most efficient cost structure and accelerating the fibre broadband network reach, in line with the government s move to drive Malaysia s digital economy. The roll-out under TM and TNB, as two of Malaysia s leading institutions, ensures the safety and security of the nation s strategic and critical infrastructure. The proposed network will also continue the existing open access participation of industry players to promote private sector competition in retail broadband. (Source: The Edge) Petronas Carigali awards MCM contracts to 5 companies 5 companies have been awarded contracts by Petronas Carigali SB (PCSB) to provide maintenance, construction and modification (MCM) services at its offshore facilities in peninsular Malaysia, Sabah and Sarawak. The companies are Carimin Engineering Services SB, Dayang Enterprise SB, Deleum Primera SB, Petra Resources SB, Sapura Fabrication SB and its JV partner, Borneo Seaoffshore Engineering SB. The five companies will carry out engineering and maintenance services, which includes topside major maintenance (TMM) as well as facilities improvement projects (FIP) for a 5-year period from September 2017, with an option to extend an additional year. (Source: The Edge) UMW-OG gets 3-year umbrella contract from Petronas UMW-OG has secured an umbrella contract from Petronas Carigali SB for the provision of hydraulic workover units (HWU). The umbrella contract was awarded to its indirect wholly-owned unit UMW Workover SB, with relevant approvals relating to the contract having been secured today. The contract is for the provision of HWU to undertake workover services for Petronas Carigali under an umbrella contract. It calls for the use of all or any of UWM-OG's five HWU, namely UMW Gait 1, UMW Gait 2, UMW Gait 3, UMW Gait 5 and UMW Gait 6 to undertake workover services, which are services rendered in performing maintenance and/or remedial treatments on an oil or gas well. (Source: The Edge) MBSB to provide RM700m funding for 8 RUMAWIP projects MBSB is planning to rollout up to RM700m in financing for the development of 8 more RUMAWIP projects. The total GDV of these projects would be RM2bn. MBSB has so far financed nine Rumawip projects with total approved funding of RM1.17bn, consisting of 5,768 units with a total GDV of RM1.66bn. MBSB will provide Hektar Aneka with a Tawarruq financing facility of RM m for the purpose of developing its condominium project, Residensi Hektar, comprising five high-rise blocks. Upon completion, Hektar Aneka will contribute 2,400 units to the Rumawip scheme. The project, situated next to the Pasar Besar Gombak along Jalan Gombak, will be built on Malay Reserve Land. (Source: The Edge) Caely proposes 1-for-2 warrants bonus issue Caely has proposed a bonus issue of 40m warrants on the basis of 1 warrant for every 2 existing shares held to reward its shareholders. Assuming an indicative exercise price of 50 sen per warrant, the exercise could potentially raise gross proceeds of RM20m, which will be used for future working capital, including for staff costs and other expenses. The company has yet to set an exercise price or entitlement date for the warrants, which will be determined at a later date. The company is embarking on the proposed bonus issue of warrants instead of other available proposals to reward existing shareholders of the company, after taking into cognisance the financial performance and financial position of the group. (Source: The Edge) Leweko inks MoU to share know-how with Indian infrastructure firm Leweko s subsidiary Dura Technology SB will lend its expertise in ultra-high performance cementitious composite technology to Indiabased Shinde Developers Pvt Ltd (SDPL). This will subsequently allow SDPL to manufacture, sell, export and market products under the brand name DURA within India and other South Asian countries, namely Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. SDPL is primarily involved in the field of infrastructure development and has worked on the construction and designing of roads and highways, bridges, tunnels, dams and canals in India. Dura entered into an MoU with SDPL today to explore a licensing agreement to obtain from Dura, an exclusive and irrevocable licence for the use of Dura s know-how, formulations, processes and intellectual property rights related to the UHPCC. (Source: The Edge) 3

4 ECONOMIC NEWS JB-S pore rapid transit system to start by Dec 31, 2024 The Johor Bahru-Singapore rapid transit system (RTS) link passenger service is targeted to commence operation by Dec 31, The cross-border rail agreement - the second such deal by both countries in as many years, following the Kuala Lumpur-Singapore high speed rail (HSR) one - which was inked today records the technical, safety and security requirements, commercial, financing, procurement and regulatory frameworks, as well as customs, immigration and quarantine (CIQ) arrangements for the RTS link.when completed, the RTS link will improve connectivity, deepen people-to-people ties and stimulate economic growth in Singapore and Johor. To facilitate commuter flow, there will be co-located CIQ arrangements similar to the HSR at each RTS link station in Bukit Chagar (Malaysia) and Woodlands North (Singapore), hence passengers will only need to undergo CIQ clearance at their point of departure. (Source: Bloomberg) U.S. oil industry set to break record, upend global trade Surging shale production is poised to push U.S. oil output to more than 10 million barrels per day - toppling a record set in 1970 and crossing a threshold few could have imagined even a decade ago. And this new record, expected within days, likely won t last long. The U.S. government forecasts that the nation s production will climb to 11 million barrels a day by late 2019, a level that would rival Russia, the world s top producer. The economic and political impacts of soaring U.S. output are breathtaking, cutting the nation s oil imports by a fifth over a decade, providing high-paying jobs in rural communities and lowering consumer prices for domestic gasoline by 37% from a 2008 peak. Fears of dire energy shortages that gripped the country in the 1970s have been replaced by a presidential policy of global energy dominance. (Source: Reuters) 'China's Dagong cuts US sovereign ratings to BBB+ from A- China's Dagong Global Credit Rating Co, among the country's most prominent ratings agencies, said that it had cut the local and foreign currency sovereign ratings of the United States to BBB+ from A-. The ratings have also been put on a negative outlook. The increasing reliance on the debt-driven mode of economic development will continue to erode the solvency of the U.S. federal government, the ratings agency said. "Deficiencies in the current U.S. political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track. (Source: Reuters) EU targets recycling as China bans plastic waste imports, some expected to go to Southeast Asia EU regulators are searching for ways to increase recycling of plastic, as waste piles up in ports after China banned imports of "foreign garbage" from the start of Announcing a new policy push on Tuesday, European Commission Vice President Jyrki Katainen said Brussels is mulling a tax, curbs on throw-away items like plastic bags, imposing quality standards and new rules at ports among other restrictions. The Commission is eyeing environmental taxes - including revenue from its carbon cap-and-trade Emission Trading System (ETS) - as a way to plug the whole left in its budget when Britain's exit from the bloc at the end of 2020 deprives it of revenue. Such proposals are opposed by some member states, who prefer to keep the revenues in national coffers, and environmental campaigners, who want to see the proceeds reinvested in efforts to stem pollution. (Source: StarBiz) Hong Kong way ahead of Singapore, topping Asia expat rental list Hong Kong retained its title as Asia s most expensive rental city for expatriates, while Singapore fell further down the ranking due to a slower economy and fewer relocations, according to consultancy firm ECA International. Hong Kong sat atop the list with an average price of $10,461 per month for an unfurnished, three-bedroom apartment in expatriate neighborhoods, according to results from ECA s September 2017 accommodation survey. Tokyo held onto the No. 2 spot. Singapore slipped one spot to eighth. This is due to a slowing of economic growth and a net reduction in inbound assignments, exacerbating the surplus of higher-end properties on the market that would normally attract expatriates, said Lee Quane, a regional director for Asia with ECA. (Source: StarBiz) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 01/17/ :50 JN Core Machine Orders MoM Nov -1.40% % -- 01/17/ :50 JN Core Machine Orders YoY Nov -1.00% % -- 01/15/ /20 NE Trade Balance Nov b -- 01/18/ :30 JN Industrial Production MoM Nov F % -- 01/18/ :30 JN Industrial Production YoY Nov F % -- 01/18/ :30 JN Capacity Utilization MoM Nov % -- 01/18/ :00 CH GDP YoY 4Q 6.70% % -- 01/18/ :00 CH GDP YTD YoY 4Q 6.80% % -- 01/18/ :00 CH Industrial Production YoY Dec 6.10% % -- 01/18/ :00 CH Industrial Production YTD YoY Dec 6.60% % -- 01/18/2018 GR Current Account Balance Nov m -- 01/19/ :00 EC ECB Current Account SA Nov b -- 01/19/ :00 EC Current Account NSA Nov b -- 01/19/ :00 SP Trade Balance Nov m -- 01/19/ :30 IT Current Account Balance Nov m -- 01/19/ :00 PD Sold Industrial Output MoM Dec -9.30% % -- 01/19/ :00 PD Sold Industrial Output YoY Dec 3.50% % -- 01/19/ :00 PD Construction Output YoY Dec 11.60% % -- 01/23/ :00 LN Industrial Production YoY Dec % -- 01/23/ :00 PD Money Supply M3 MoM Dec 1.90% % -- 01/23/ :00 PD Money Supply M3 YoY Dec 4.40% % -- 01/23/2018 RO Money Supply M3 YoY Dec % -- 01/24/ :50 JN Trade Balance Dec b 112.2b 01/24/ :50 JN Trade Balance Adjusted Dec b -- 01/24/ :50 JN Exports YoY Dec % -- 01/24/ :50 JN Imports YoY Dec % -- 01/24/ :30 JN Nikkei Japan PMI Mfg Jan P /24/ :45 US Markit US Composite PMI Jan P /24/ :45 US Markit US Services PMI Jan P /24/ :45 US Markit US Manufacturing PMI Jan P /24/ /28 GE Import Price Index MoM Dec % -- 01/24/ /28 GE Import Price Index YoY Dec % -- 01/25/ :00 IT Industrial Sales WDA YoY Nov % -- 01/25/ :00 IT Industrial Sales MoM Nov % -- 01/25/ :00 IT Industrial Orders NSA YoY Nov % -- 01/25/ :00 IT Industrial Orders MoM Nov % -- 01/25/ :45 EC ECB Main Refinancing Rate Jan % -- 01/25/ :45 EC ECB Marginal Lending Facility Jan % -- 01/25/ :45 EC ECB Deposit Facility Rate Jan % -- 01/25/ :30 US Advance Goods Trade Balance Dec -$68.5b -- -$69.7b -$70.0b 01/25/2018 CH Swift Global Payments CNY Dec % -- 01/26/ :30 CH Industrial Profits YoY Dec % -- 01/26/ :30 SW Trade Balance Dec b -- 01/26/ :00 EC M3 Money Supply YoY Dec % -- 01/26/ :30 UK GDP QoQ 4Q A 0.40% % -- 01/26/ :30 UK GDP YoY 4Q A 1.30% % -- 01/26/ :30 US Personal Consumption 4Q % -- 01/26/ :30 US GDP Annualized QoQ 4Q A 3.00% % -- 01/26/ :30 US GDP Price Index 4Q A 2.40% % -- 01/29/ :00 BP Gross External Debt Nov b -- 01/29/ :30 US PCE Core YoY Dec %

6 DEFINITION OF RATINGS BIMB Securities uses the following rating system: STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10 in the next 12 months. TRADING BUY Share price may exceed 15 over the next 3 months, however longer-term outlook remains uncertain. HOLD Share price may fall within the range of +/- 10 over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15 in the next 3 months. SELL Share price may fall by more than 10 over the next 12 months. NOT RATED Stock is not within regular research coverage. SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analyst s coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analyst s coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analyst s coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer 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 BIMB Securities Sdn may from time to time have a position in or either the securities mentioned herein. Members of the BIMB 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 judgements as of this date and are subject to change without notice. BIMB Securities Sdn accepts no liability for any direct, indirect or consequential loss arising from use of this report. Printed and published by BIMB SECURITIES SB ( X) A Participating Organisation of Bursa Malaysia Securities Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, Kuala Lumpur Tel: Fax: Azharuddin Nordin Head of Research 6