JF Apex Securities Berhad Newsletter Daily As Highlights 12 December Malaysia News & Highlights. Foreign News

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1 JF APEX SECURITIES BERHAD (47680-X) KDN PP13226/04/2013 (032022) JF Apex Securities Berhad Newsletter Daily As Highlights 12 December 2013 Malaysia News & Highlights Malaysia's Oct industrial production up 1.7% Coastal secures RM148mil contracts RM5b boost for Rawang TM, Casabello ink ATM pact 'Tenaga planning to issue RM3.7b sukuk' Kelantan to open tender for first phase of Machang-Kuala Krai highway in Jan CDS account holders to get e-statements PLUS proposes Lekas-NSE toll road Malaysia has 100 active oil production sharing contract, highest ever BAssets to replicate resort in JB? Foreign News U.S. Stocks Drop as Budget Deal Spurs Bets on Fed Cuts European Stocks Fall as Investors Consider U.S. Budget China s Stocks Retreat Most in Month on Economic Target Israel s Fischer Said to Be Top Choice for Fed Vice Chairman Budget Deficit in U.S. Narrows as Job Gains Bolster Revenue Crude Falls From Six-Week High as U.S. Fuel Supply Rises FBM KLCI Daily Chart Closing: Support: 1800 Resistance: 1850 Please read carefully the important disclosures at end of this publication

2 Market Thoughts US stocks dropped sharply for a second session Wednesday, with the S&P 500 and Nasdaq seeing their biggest losses in nearly five weeks, as the provisional budget deal in Washington raised speculation that the Federal Reserve could pull back on its stimulus program soon. Similarly, European equities closed slightly lower, tracking Wall Street, after a U.S. budget deal added to expectations the Fed will scale back stimulus soon. On the local market, the FBM KLCI shed 1.03 points to points. Following the bearish performance in the US, we expect the KLCI to follow suit and decline today. Immediate support is seen at 1826 points. Stocks in focus are: Coastal Contracts, after the group has secured RM148m orders for the sale of vessels; and Tenaga, as the group plans to issue RM3.7b sukuk. Malaysia News & Highlights Malaysia's Oct industrial production up 1.7% Malaysia s industrial production index (IPI) in October grew a stronger-than-expected 1.7% year-on-year following a rebound in manufacturing, and surprised economists who forecast of a 0.8% increase. The Statistics Department said yesterday the October IPI was boosted by manufacturing, which rose 3.3% and electricity, up 4.8%. Mining fell 3.6%. It said September s IPI was unchanged at 1.0% on-year. In seasonally adjusted terms, the IPI in October 2013 increased by 1.9% month-on-month. The increase was particularly due to the increases of manufacturing index and mining index of 0.8% and 4.4% respectively. Meanwhile, the electricity index decreased by 0.9%, it said. (Source: The Star) Coastal secures RM148mil contracts Coastal Contracts Bhd has secured contracts to sell three vessels totalling about RM148mil. The sale of its one unit of subsea support maintenance vessel and two units of low-end vessels were transacted via wholly-owned subsidiaries Thaumas Marine Ltd andcoastal Marine Pte Ltd. One of the low-end vessels were purchased by a new customer. This is the fifth batch of vessel sales order secured by the group for the financial year 2013, placing the group s vessel sales order book at about RM1.34bil. (Source: The Star) RM5b boost for Rawang DA Land Bhd, founded by former lawyer Derek Chew who also owns the Houz Depot home improvement chain, has launched a RM5 billion project to help make Rawang a "cool" place like Subang and Shah Alam. DA Land said the mega development on a 20.6-hectare site, dubbed The TWO, is poised to help transform Rawang into a property hotspot. Rawang has already seen key property players such as Glomac Bhd, Mah Sing Group Bhd and Guocoland Bhd launching big projects over the years. (Source: Business Times) TM, Casabello ink ATM pact Telekom Malaysia Bhd (TM) and Bumiputera company Casabello Consortium Sdn Bhd have signed an RM87 million deal that paves the way for a new era of heightened security and safety of automatic teller machines (ATM) users. They will introduce an electronic kiosk, billed as "Kiosk Perbankan 1Malaysia", featuring a combination of up to eight ATMs and deposit machines. The kiosk, which costs RM250,000, will use TM's Internet Protocol Virtual Private Network (IPVPN) technology and be located within the Royal Malaysian Police's (PDRM) compound initially. (Source: Business Times) 'Tenaga planning to issue RM3.7b sukuk' Tenaga Nasional Bhd (TNB), Malaysia's biggest power producer, plans to sell as much as RM3.7 billion ringgit of sukuk to part-finance the building of a new plant, according to two people with knowledge of the deal. The state-owned corporation hired BNP Paribas SA and CIMB Group Holdings Bhd to manage the offering, said the sources who asked not to be named as the information is private. TNB is seeking to sell the Islamic notes as soon as this month, said one of the sources. (Source: The Star)

3 Kelantan to open tender for first phase of Machang-Kuala Krai highway in Jan After more than a year of collecting donations from the public for the 73km highway from here to Kuala Krai, the Kelantan government will open tender next month for the first phase of the project covering 30km. State Infrastructure, Utility and Information Technology committee chairman DatukHanifa Ahmad said any construction company could bid for the project, which covers the stretch from Machang to Kuala Krai. The tender for the project will be advertised in the newspapers next year. We are willing to consider local companies with a joint-venture partnership with foreign companies and we expect to close the tender in February while works on the first phase are expected to start on the highway by May, he said after attending the executive councillors meeting chaired by Mentri Besar Datuk Ahmad Yakob. (Source: The Star) CDS account holders to get e-statements Bursa Malaysia Bhd will introduce a new electronic statement (estatement) service for its Central Depository System (CDS) account holders. The implementation of the system would see CDS account holders being able to request CDS statements of accounts, notices and other communication from Bursa Malaysia to be delivered to their address in place of the present hard copies that are mailed to them. (Source: The Star) PLUS proposes Lekas-NSE toll road PLUS Expressway Bhd, the operator of the North South Expressway (NSE), has proposed to build a toll road in Senawang, Negri Sembilan, linking the Kajang-Seremban Expressway (Lekas) to the NSE. PLUS was hoping to reduce the increasingly serious traffic congestion on the NSE, and to increase revenue from toll collection on this link, said sources. Presently, there are some 11 traffic lights between Lekas and the NSE, although that stretch is less than 10km. The proposed direct link, which would be shorter in distance by 3km to 5km, will bypass these lights and at the same time divert some of the congestion on the NSE between Kuala Lumpur and Seremban. While there may be some loss of revenue from diverting traffic to another highway, PLUS is hoping to counter this by erecting toll gates on the connecting road and collecting toll, said a source. IJM Corp Bhd owns 50% of Lekas highway, while Lebuh Raya Sdn Bhd is the other stakeholder. Some years back, IJM Corp had put in a similar proposal to the Government, but was rejected. Now it appears that PLUS is looking to champion this cause as the congestion in the Kuala Lumpur-Seremban stretch has become much worse. (Source: The Star) Malaysia has 100 active oil production sharing contract, highest ever Petroliam Nasional Bhd (Petronas) has awarded a production sharing contract (PSC) to Salamander Energy Malaysia Ltd in the busy Straits of Malacca, which is a relatively unconventional place to look for oil. This is the first exploration acreage in the Straits to have been awarded by Petronas since Only six wells had been drilled in that area. The PSC also marked a significant milestone as it is the 100th active PSC by Petronas, the most that the oil company has had at any point in time. Under the terms of the contract, Salamander Energy Malaysia, a UK-based first-time upstream player in Malaysia, will operate the block with an 85% equity stake, while Petronas Carigali Sdn Bhd owns the remaining 15%. They will drill one exploration well in the Block PM323 to a minimum depth of 1,400 metres and to acquire and process 600 square kilometres of new 3D seismic data. (Source: The Star) BAssets to replicate resort in JB? There are bigger things in store for Berjaya Assets Bhd (Bassets) in Johor following its partnership with Sultan Ibrahim Ismail Sultan Iskandar of Johor, who will be taking up a 20% stake in Berjaya Times Square Sdn Bhd (BTSSB). Sources said that as part of a bigger plan for Bassets, the group plans to build a mini Bukit Tinggi in Berjaya Waterfront in Johor Baru. The plans are there to replicate a Bukit Tinggi in JB. It requires approval, though, from the state and federal governments, said a source. (Source: The Edge) Foreign News U.S. Stocks Drop as Budget Deal Spurs Bets on Fed Cuts U.S. stocks fell a second day, giving the Standard & Poor s 500 Index its biggest back-to-back drop in two months, as a congressional budget accord fueled speculation the Federal Reserve could trim stimulus next week. The S&P 500 dropped 1.1 percent to 1, at 4 p.m. in New York, extending its two-day slide to 1.5 percent from a record on Dec. 8. Today s retreat was the biggest since Nov. 7. The Dow Jones Industrial

4 Average fell points, or 0.8 percent, to 15, About 6.5 billion shares changed hands on U.S. exchanges, 6.5 percent above the three-month average. European Stocks Fall as Investors Consider U.S. Budget European stocks fell for a second day as investors weighed an accord between U.S. lawmakers to limit automatic spending reductions and avoid another government shutdown, as well as a possible cut in Federal Reserve stimulus. The Stoxx Europe 600 Index fell 0.5 percent to at the close of trading. The equity gauge has rallied 12 percent this year as central banks around the world pledged to leave interest rates near record lows for a prolonged period of time. China s Stocks Retreat Most in Month on Economic Target China s stocks fell, dragging the benchmark index to its biggest loss in a month, as coal producers retreated and investors speculated the government may cut growth targets at an economic policy meeting this week. The Shanghai Composite Index (SHCOMP) dropped 1.5 percent to 2, at the close, the biggest loss since Nov. 13. The Hang Seng China Enterprises Index (HSCEI) sank 2.8 percent in Hong Kong. China s government may cut its 2014 economic growth target to 7 percent from 7.5 percent at the conference which ends tomorrow, the Economic Information Daily reported Dec. 4. Policy makers should phase out proactive fiscal stimulus, the China Securities Journal said in a front page commentary today. Israel s Fischer Said to Be Top Choice for Fed Vice Chairman Former Bank of Israel Governor Stanley Fischer is President Barack Obama s leading candidate to become vice chairman of the Federal Reserve, people familiar with the selection process said. Fischer, 70, would replace Janet Yellen as the Fed s No. 2 official, according to the people, who asked for anonymity because the decision isn t final. There are no plans by the White House to announce the choice this week, one of the people said. Budget Deficit in U.S. Narrows as Job Gains Bolster Revenue The budget deficit in the U.S. last month narrowed more than economists forecast as rising employment and a rallying stock market boosted revenue to a November record. Declining unemployment has helped reduce the country s deficit as a share of gross domestic product by more than half in the past four years to $680.3 billion in fiscal year ended Sept. 30 from a record $1.42 trillion in The Congressional Budget Office has projected the shortfall will shrink further this year and next as stronger economic growth lifts individual and corporate taxes. Crude Falls From Six-Week High as U.S. Fuel Supply Rises West Texas Intermediate crude fell from a six-week high after gasoline and diesel inventories rose more than forecast last week as refineries boosted output. Prices dropped 1.1 percent. The Energy Information Administration said stockpiles of the fuels jumped about three times as much as estimated in a Bloomberg survey of analysts, gaining the most since January. The increase contributed to the biggest slide in oil stocks in about a year. (Source: Bloomberg) Futures Kuala Lumpur Composite Index Futures Crude Palm Oil *As at 8.00am 12 December 2013

5 Technical Review: FBM KLCI Index Closing: Support: (S1) 1826 / (S2) 1800 Resistance: (R1) 1850 / (R2) 1900 Comments: The FBM KLCI shed 1.03 points to points after coming off its record high. Technical indicators are mixed with the RSI hovering in the overbought zone while the MACD crossed above its signal line. In early May, the index rallied to an all time high of points after the general election but has since been moving sideways until August s selldown to a 4-month low followed by a rebound in September, which extended to a historical high this week. Profit taking could kick in and we see support at 1826 points. Medium term outlook remains positive due to year-end window dressing. FKLI Spot Month Contract FKLI Closing: 1842 Support: (S1) 1834 / (S2) 1824 Resistance: (R1) 1850 / (R2) 1900 Comments: The spot-month FKLI futures lost 5.50 points to points. The contract represents 0.82 points discount to the cash market compared to 1.85 points discount in the previous trading day. Technical indicators are mixed with the RSI dropping out of the overbought zone while the MACD climbed above its signal line. We expect profit taking and consolidation with medium term outlook maintained as positive.

6 3 rd Month Crude Palm Oil Contract CPO Closing: RM2630 Support: (S1) 2630 / (S2) 2600 Resistance: (R1) 2690 / (R2) 2755 Comments: The 3rd month CPO futures contract fell RM9 to RM2630. Technical indicators are mixed with the MACD crossing below its signal line from below while the RSI hovered below the overbought zone. The rally since last month failed to beat the resistance of RM2630 and remains in the long-term sideways trend since October We expect the support level of RM2630 to hold before embarking on an up-trend. The contract needs to breach the RM2690 resistance level to kick start its rally.

7 JF APEX SECURITIES BERHAD CONTACT LIST JF APEX SECURITIES BHD Head Office: 6 th Floor, Menara Apex Off Jalan Semenyih Bukit Mewah Kajang Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) PJ Office: 15 th Floor, Menara Choy Fook On No. 1B, Jalan Yong Shook Lin Petaling Jaya Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) DEALING TEAM Head Office: Kong Ming Ming (ext 3237) Shirley Chang (ext 3211) Norisam Bojo (ext 3233) Wong Wing Haur, Alvin (ext 3226) Institutional Dealing Team: Lim Teck Seng Sanusi Bin Mansor (ext 740) Fathul Rahman Buyong (ext 741) Ahmad Mansor (ext 744) Lum Meng Chan (ext 743) Zairul Azman (ext 746) PJ Office: Mervyn Wong (ext 363) Mohd Hanif Wan Said (ext 111) Fong Jia Wen (ext 822) Nursyazaleen Hazwani (ext 362) RESEARCH TEAM Head Office: Lee Chung Cheng (ext 758) Lee Cherng Wee (ext 759) Jessica Low Jze Tieng (ext 756) Soong Wei Siang (ext 754) Gabriela Fang Minn Fern (ext 753) Elliya Harisna binti Junaedi (ext 752) JF APEX SECURITIES BERHAD - DISCLAIMER Disclaimer: The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of JF Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report. Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of JF Apex Securities Berhad and are subject to change without notice. JF Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. JF Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against JF Apex Securities Berhad. JF Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of JF Apex Securities Berhad. Published & Printed by: JF Apex Securities Berhad (47680-X) (A Participating Organisation of Bursa Malaysia Securities Berhad)