PP16795/03/2013(031743) Jan-17

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1 Friday, 19 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 CCM plans to reactivate Pasir Gudang Works 1 to grow its chlor-alkali business IGB Corp shares to be suspended tomorrow for Goldis takeover Green Packet confirms it's in talks with MYTV for supply deal Crest Builder gets RM149.5m hotel building job G Reka Perunding emerges as substantial shareholder in Atta Global Khazanah's RM1.27b sukuk 5.5 times oversubscribed Economic News Indonesia, Malaysia condemn European move to limit palm oil use Malaysia: 2018 automotive TIV seen higher at 586, ,000 units OPEC sees more oil supply from rivals, countering its cuts and Venezuelan woes US housing starts fall; jobless claims hit 45-year low China posts first full-year growth pickup since 2010 Australia, Japan committed to signing Asia Pacific trade pact by March, Turnbull says Bursa Malaysia Close Chg +/- Chg % YTD Chg (%) FBMKLCI 1, FBMEMAS 13, FBM100 12, FBMEMAS Shariah 13, FBM Hijrah Shariah 14, Volume (m) 4, 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 26, 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 32, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 11, (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 % 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 3.91% 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 % Westport UMW OG Hap Seng Plantations Hua Yang Kawan Food DNex Top Glove Hibiscus Petroleum Kossan Petronas Gas

3 CORPORATE NEWS CCM plans to reactivate Pasir Gudang Works 1 to grow its chlor-alkali business CCM is planning to reactivate its Pasir Gudang Works 1 (PGW1) with an expected cost of RM68.5m, which includes the cost of equipment purchase and installation. CCM said the project will take about 18 mths to complete and is expected to be ready in the 2Q2019. The reactivation of PGW1 is necessary in order to enable CCMC to grow its Chlor-alkali Business and seize market opportunities in Malaysia for its chlor-alkali products, adding that it is expected to increase the production capacity for the chlor-alkali products by about 50%. The reactivation of PGW1 will also allow CCMC to leverage on the shorter lead time and lower cost to increase its production capacity in relation to starting on a green field site as most of the required infrastructure is already in place, said CCM. (Source: The Edge) IGB Corp shares to be suspended tomorrow for Goldis takeover IGB has announced suspension of its securities with effect from 9am tomorrow, in order to facilitate takeover of the company by Goldis Bhd. Goldis, which holds a 73.4% stake in IGB, has targeted to complete its takeover by March this year, while subsequently taking on the group s listing status and renaming it Ipoh Goldis Bersatu Bhd. IGB Corp affirmed it would undertake a members scheme of arrangement which will enable its shareholders to be compensated either 100% in cash, 30% in cash (at 90 sen/share) and 70% in Goldis shares, or 12% in cash (36 sen) and 88% in seven-year new redeemable convertible cumulative preference shares (RCCPS) in Goldis at RM3.28 each. (Source: The Edge) Green Packet confirms it's in talks with MYTV for supply deal Green Packet Bhd has confirmed that it is in talks with MYTV Broadcasting Sdn Bhd for a supply contract. It said it will make the appropriate announcements upon execution of any definitive contracts. The Edge Financial Daily reported that Green Packet will soon announce it has bagged a deal worth RM300m from television broadcasting company MYTV. The contract will entail Green Packet supplying set-top boxes to MYTV the company selected back in 2014 to spearhead the country's national digital terrestrial television (DTT) roll-out. It is understood that the contract was awarded directly to Green Packet, which has been contracted to develop the decoders and supply 4.2m units to MYTV. (Source: The Edge) Crest Builder gets RM149.5m hotel building job Crest Builder has clinched a RM149.50m contract to build a 44-storey hotel with a car park podium at Jalan Imbi here. Its wholly-owned subsidiary Crest Builder Sdn Bhd secured the contract from Mega Capital Development SB. The contract spans 39 months from Jan 12 this year. The group said the contract will begin to contribute positively to its earnings from the financial year ending Dec 31, 2018 and onwards. (Source: The Edge) G Reka Perunding emerges as substantial shareholder in Atta Global G Reka Perunding has emerged as a substantial shareholder in Atta Global Group, after acquiring 37.5m shares or a 24.27% stake in the steel processing and trading company on Tuesday (Jan 16). Atta said G Reka had purchased the shares at RM1 per share or a total of RM37.5m. The acquisition makes G Reka Atta s second-largest shareholder after Tan Kim Hee, who emerged as a substantial shareholder last month and now holds a 28.37% stake. Yesterday, Atta chairman Ooi Chieng Sim was revealed to have disposed of 1.88 million shares in the company via his private vehicle, Skylitech Resources SB. (Source: Bernama) Khazanah's RM1.27b sukuk 5.5 times oversubscribed Khazanah Nasional said its US$320.8m (RM1.27bn) exchangeable sukuk sale drew demand for 5.5 times of its book size. The bonds, which are exchangeable into equity or cash, will be issued via a Labuan-incorporated independent special purpose vehicle Cindai Capital Ltd and will reference the value of H-shares in CITIC Securities Co Ltd China s largest securities brokerage firm. "The exchangeable sukuk, with a tenure of five years and an investor put option exercisable at the end of Year 3, was priced through an accelerated bookbuilding process. Structured with a zero periodic payment and 0.00% yield to maturity, the exchangeable sukuk achieved the tightest end of the initial guidance at an exchange premium of 40% above the volume weighted average price of CITIC Securities shares on Jan 17, 2018," said Khazanah in a statement today. (Source: The Edge) 3

4 ECONOMIC NEWS Indonesia, Malaysia condemn European move to limit palm oil use Top palm oil producers Indonesia and Malaysia on Thursday criticised the European Union for backing a ban on the use of palm oil in biofuels, with a Malaysian minister calling the move a protectionist trade barrier and a form of "crop apartheid". European lawmakers approved draft measures on Wednesday to reform the power market there and reduce energy consumption to meet more ambitious climate goals. The plan includes a ban on the use of palm oil in motor fuels from Indonesia and Malaysia are the world's top two palm oil producing countries, accounting for nearly 90% of global supply. A large portion of European palm oil imports are used to make biofuels, giving the industry's top two producers cause for concern as they fear overall demand will fall. (Source: Reuters) Malaysia: 2018 automotive TIV seen higher at 586, ,000 units The TIV for the Malaysian automotive sector is projected to grow by 2% this year to between 586,000 and 591,000 units, said MITI. The total production volume (TPV), which provides a holistic reflection of the vehicles produced locally for both domestic consumption and exports, is expected to hit between 530,000 and 535,000 units this year, a 4% increase from last year. Its minister Datuk Seri Mustapa Mohamed disclosed these numbers in an update on the automotive industry in 2017 and outlook for 2018 programme here today. (Source: Bernama) OPEC sees more oil supply from rivals, countering its cuts and Venezuelan woes OPEC has raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage US shale drillers to pump more, offsetting an OPEC-led deal to clear a supply glut and a deepening plunge in Venezuelan production. The Organization of the Petroleum Exporting Countries said outside producers would boost supply by 1.15 million bpd this year, up from 990,000 bpd expected previously. Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil. OPEC, Russia and several other non-opec producers began to cut supply a year ago to get rid of a global glut of crude that had built up since They have extended the pact until the end of The forecast was balanced by figures in the report showing OPEC's compliance with the supply cuts remained high in December and a further sharp slide in Venezuelan oil output. Oil prices edged higher after the report was released to trade above $69 a barrel and later steadied. Prices are close to the highest since December (Source: Reuters) US housing starts fall; jobless claims hit 45-year low US homebuilding fell more than expected in December, recording its biggest drop in just over a year, amid a steep decline in the construction of single-family housing units following two months of hefty gains. Other data showed the number of Americans filing for unemployment benefits dropped to a 45-year low last week. The decline in claims for jobless benefits, however, probably exaggerated the health of the labor market as data for seven states, including California, were estimated. Housing starts decreased 8.2% to a seasonally adjusted annual rate of million units. November's sales pace was revised up to million units from the previously reported million units. The percentage drop for housing starts in December was the largest since November (Source: The Edge) China posts first full-year growth pickup since 2010 China s economy sealed its first full-year acceleration since 2010, underpinning global growth and giving authorities more room to purge excessive borrowing. A reflation of the industrial sector and a global upswing that s boosting exports are providing room for President Xi Jinping to tackle debt risks, one of Beijing s top goals for the coming 3 years. With consumer inflation still contained and the currency firm, the central bank has been able to tighten the screws in some areas without benchmark interest rate increases, though a minority of economists are beginning to anticipate such a move. Reflation was also key to boosting company profits and raising their ability to service debt. The GDP deflator for the full year, a gauge of economy-wide inflation, came in at 4.33 ppts, while nominal growth accelerated to 11.2%. GDP in those terms grew to 82.7tn yuan (US$12.9tn) up 8.4tn yuan in the year. (Source: Bloomberg) Australia, Japan committed to signing Asia Pacific trade pact by March, Turnbull says Australia and Japan are committed to signing an Asia Pacific trade deal by March with countries in the region ready to forge a pact to replace the derailed Trans Pacific Partnership (TPP). Prime Minister (Shinzo) Abe and Turnbull are personally committed to having this deal signed and sealed by March. 11 countries met at an Asia-Pacific Economic Cooperation (APEC) summit in Vietnam last November to keep alive a Trans Pacific trade deal, after U.S. President Donald Trump in early 2017 announced that the United States was withdrawing in the name of protecting U.S. jobs. (Source: Reuters) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 01/19/ :00 GE PPI MoM Dec 0.20% % -- 01/19/ :00 GE PPI YoY Dec 2.30% % -- 01/19/ :00 EC ECB Current Account SA Nov b -- 01/19/ :00 EC Current Account NSA Nov b -- 01/19/ :30 UK Retail Sales Ex Auto Fuel MoM Dec -1.00% % -- 01/19/ :30 UK Retail Sales Ex Auto Fuel YoY Dec 2.60% % -- 01/19/ :30 UK Retail Sales Inc Auto Fuel MoM Dec -1.00% % -- 01/19/ :30 UK Retail Sales Inc Auto Fuel YoY Dec 2.60% % -- 01/19/ :30 IT Current Account Balance Nov m -- 01/19/ :30 CA Manufacturing Sales MoM Nov 2.00% % -- 01/19/ :30 CA Int'l Securities Transactions Nov b -- 01/19/ :00 US U. of Mich. Sentiment Jan P /19/ :00 US U. of Mich. Current Conditions Jan P /19/ :00 US U. of Mich. Expectations Jan P /19/ :00 US U. of Mich. 1 Yr Inflation Jan P % -- 01/19/ :00 US U. of Mich Yr Inflation Jan P % -- 01/19/2018 RU Budget Balance YTD Dec b b b 01/22/ :00 JN Tokyo Condominium Sales YoY Dec % -- 01/22/ :00 JN Convenience Store Sales YoY Dec % -- 01/22/ :30 CA Wholesale Trade Sales MoM Nov % -- 01/22/ :30 US Chicago Fed Nat Activity Index Dec /22/ :00 CA Bloomberg Nanos Confidence Jan /23/ :30 JN All Industry Activity Index MoM Nov 0.90% % -- 01/23/ :30 JN Nationwide Dept Sales YoY Dec % -- 01/23/ :30 JN Tokyo Dept Store Sales YoY Dec % -- 01/23/ :00 JN Machine Tool Orders YoY Dec F % -- 01/23/ :30 UK Public Finances (PSNCR) Dec b -- 01/23/ :30 UK Central Government NCR Dec b -- 01/23/ :30 UK Public Sector Net Borrowing Dec b -- 01/23/ :30 UK PSNB ex Banking Groups Dec 5.0b b -- 01/23/ :00 GE ZEW Survey Current Situation Jan /23/ :00 GE ZEW Survey Expectations Jan /23/ :00 EC ZEW Survey Expectations Jan /23/ :00 UK CBI Trends Total Orders Jan /23/ :00 UK CBI Trends Selling Prices Jan /23/ :00 UK CBI Business Optimism Jan /23/ :00 US Richmond Fed Manufact. Index Jan /23/ :00 EC Consumer Confidence Jan A /23/2018 JN BOJ 10-Yr Yield Target Jan % -- 01/23/2018 JN BOJ Policy Balance Rate Jan % -- 01/23/ /24 RU Industrial Production YoY Dec 0.00% % -- 01/24/ :50 JN Trade Balance Dec 530.0b b 112.2b 01/24/ :50 JN Trade Balance Adjusted Dec 250.9b b -- 01/24/ :50 JN Exports YoY Dec 10.00% % -- 01/24/ :50 JN Imports YoY Dec 12.50% % -- 01/24/ :30 JN Nikkei Japan PMI Mfg Jan P /24/ :00 JN Leading Index CI Nov F /24/ :00 JN Coincident Index Nov F /24/ :00 FR Markit France Manufacturing PMI Jan P /24/ :00 FR Markit France Services PMI Jan P /24/ :00 FR Markit France Composite PMI Jan P

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