Market Access. Morning Call. h vwa PP14767/09/2012(030761) M&A Securities. Monday, October 31, 2016

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1 M&A Securities h vwa PP14767/09/2012(030761) FBMKLCI inched up 1.24 points and closed at 1,670.27, mirroring the general weak sentiment in the US and Asian markets...(see full report next page) Corporate Highlights Perstima (CP: RM6.40): 2Q earnings crimped by lower margins; pays 20 sen dividend Ikhmas Jaya (CP: RM0.64): Lembaga Tabung Haji emerges as substantial shareholder CIMB (CP: RM5.03): Niaga registers 390% jump in net profit in 9MFY16 Economic Update Malaysia: Dept of Stats: FDI rose to RM43.4 bil in 2015 U.S.: Exports boost growth in Q3; consumer spending slows UK: Consumers worry as weaker pound raises prices Bursa Malaysia FBMKLCI 1, FBMEMAS 11, FBMEMAS SHA 12, FBM100 11, Volume (mn) 1, Value (RMmn) 1, FBMKLCI YTD Chg Daily Trading Position (RM mn) Participation (%) Net(RMm) Institution Retail Foreign Top Gainers BRIT AMER TOBAC HONG LEONG IND KWANTAS CORP Top Losers PANASONIC MAN GADANG HLDGS KLK World Indices DJIA 18, NASDAQ 5, S&P 500 2, FTSE 100 6, DAX 10, Nikkei , HSI 22, KOSPI 2, STI 2, KLCI Futures 1, USDMYR 3M USDMYR 6M USDMYR 12M Other Key Economics Data WTI (USD/bbl) % Brent (USD/bbl) % Gold(USD/ounce) 1, % Coal (USD/mt) % CPO (RM/mt) 2, % Rubber % RM/USD % EUR/USD % YEN/USD % / AT THE END OF THIS PUBLICATION 1

2 What To Expect U.S. Market The Dow Jones Industrials Average dropped 8.49 points to 18, and S&P 500 declined 6.63 points to 2, Nasdaq shed points to 5, U.S. stocks declined in a volatile session on Friday but were able to partially recover from a sharp drop spurred by news the FBI will review more s related to Democratic presidential candidate Hillary Clinton's private use. While the economic data supported the case for an interest rate hike, the Federal Reserve is unlikely to make a move at its meeting next week, as it falls just days ahead of the U.S. presidential election. Many market participants are instead expecting a rate hike in December. FBMKLCI inched up 1.24 points and closed at 1,670.27, mirroring the general weak sentiment in the US and Asian markets. There were 335 gainers and 428 decliners in total value traded of RM1.66 billion. Among the winners on Bursa Malaysia were BAT recovered 48 cent to RM48.68, Hong Leong Industries rose 35 cent to RM9.90, Kwantas increased 20 cent to RM1.49 and Ajinomoto lifted 18 cent to RM Strategy Our 2016 year-end FBMKLCI target is 1,790 based on PER of 17.1x. FBMKLCI is NEUTRAL. We have OVERWEIGHT call on construction, telco and oil and gas respectively. We predict Malaysia to grow by 4.3% in CORPORATE HIGHLIGHTS Perstima (CP: RM6.40): 2Q earnings crimped by lower margins; pays 20 sen dividend Perusahaan Sadur Timah Malaysia (Perstima) Bhd s net profit fell 6% to RM13.25 million in the second quarter ended Sept 30, 2016 (2QFY17), from RM14.08 million a year ago, due to lower profit margin. Revenue was up 13% at RM million from RM million a year earlier, due to higher sales volume despite lower selling price, according to its filing with Bursa Malaysia today. The group also declared an interim single-tier dividend of 20 sen per share, payable on Dec 8. (Source: The Edge) Ikhmas Jaya (CP: RM0.64): Lembaga Tabung Haji emerges as substantial shareholder Lembaga Tabung Haji (LTH) has emerged as a substantial shareholder in piling and engineering specialist Ikhmas Jaya Group Bhd, after acquiring 26.9 million ext. 258,221,229,249 AT THE END OF THIS PUBLICATION 2

3 shares or 5.17% stake in the company. According to a bourse filing, LTH bought the stake via direct transaction on Oct 25. This means LTH is now the second largest shareholder of Ikhmas Jaya, after Ikhmas Jaya Holdings Sdn Bhd, which holds a 65% stake with 338 million shares. Ikhmas Jaya Holdings is owned by the founder, Datuk Ang Cheng Siong, who is also the group managing director. (Source: The Edge) CIMB (CP: RM5.03): Niaga registers 390% jump in net profit in 9MFY16 PT Bank CIMB Niaga Tbk's net profit for the nine months ended Sept 30 (9MFY16) spiked 390% year-on-year to 1.3 trillion rupiah (RM418 million), contributed by higher net interest income (NII) and non-interest income (NoII). In a statement today, it said the better NII and NoII were due to improved treasury and capital market businesses and a 5% year-on-year (y-o-y) decline in provision expense. "We have managed operating expenses, controlling it at 1.9% y-o-y growth. However, the slower economy resulted in slower loans growth. We will continue our cautious growth trajectory with asset quality selection remaining a priority. (Source: The Edge) Guocoland (CP:RM1.18): Stake in Eco World gets a yes vote Guocoland s participation in Eco World Development Group s planned IPO of Eco World International (EWI) has CIMB maintaining its add call with a target price of S$2.59. In a Thursday note, lead analyst Lock Mun Yee notes that the shareholders agreement would expand Guocoland s geographic footprint into Australia and UK, where EWI has developments in. EWI currently has 75% stakes in three ongoing developments in London and wholly owns a development in West Sydney, Australia, which has a combined development value of S$4.1 billion. As of Oct 16, EWI has about S$1.7 billion worth of sales from these projects. (Source: The Star) IGB (CP: RM2.46): Raising RM1bil to part finance one of Johor's biggest malls IGB Corp Bhd is raising RM1bil to part finance one of Johor s biggest retail malls in a move to replicate its Mid Valley Megamall success. IGB Corp Bhd group managing director Datuk Seri Robert Tan said: We cannot promise that it will be as successful as the Mid Valley Megamall... it may be 70% as successful. The 32.5-acre joint venture development, to be undertaken by JV company Southkey Megamall Sdn Bhd, will be a blend of Mid Valley Megamall and The Gardens, Tan told a press conference to announce the proposed RM1bil financing via a medium term notes (MTN) programme. (Source: The Star) APM (CP: RM3.31): Plans RM1.5b Sukuk, eyes mergers Auto parts company APM Automotive Holdings Bhd plans to undertake a RM1.5bil Sukuk as it seeks mergers and acquisition opportunities to expand its overseas operations. RAM Rating Services Bhd had on Friday assigned an AA2/Stable rating to the proposed RM1.5bil Islamic MTN programme (2016/2036) and a P1 rating to the group s proposed RM1.5bil Islamic CP Programme (2016/2023). The two programmes are subject to a combined limit of RM1.5bil. The ratings agency said APM s credit profile is supported by its position as one of the leading automotive-parts manufacturers in Malaysia. (Source: The Star) ext. 258,221,229,249 AT THE END OF THIS PUBLICATION 3

4 TMC Life Sciences (CP: RM0.95): 4Q net profit doubles to RM5.87m TMC Life Sciences Bhd's net profit doubled to RM5.87 million for the fourth quarter ended Aug 31, 2016 (4QFY16) from RM2.89 million a year earlier, due to interest income in the quarter under review and higher corporate exercise cost previously. Revenue rose 12% to RM33.81 million from RM30.07 million following an increase in recruitment of doctors by the group as well as the offering of additional services. For the 15-month period ended Aug 31, 2016, TMC's net profit swelled by 62% to RM20.77 million from RM12.82 million during a similar period previously. (Source: The Edge) ECONOMIC UPDATES Malaysia: Dept of Stats: FDI rose to RM43.4 bil in 2015 Foreign direct investment (FDI) in Malaysia rose 21.9% to RM43.4 billion in 2015 compared to RM35.6 billion in 2014, according to the Department of Statistics. In a statement yesterday, the DoS said FDI stock recorded a value of RM504.9 billion as at the end of 2015 while investment income came in at RM51.3 billion. By component, equity and investment fund shares was the main contributor of FDI flows at RM36.7 billion or 84.6%. By region, Asia was the main source of FDI flows at 64.7%, followed by the Americas (16.4%) and Europe (14.1%). The main countries of FDI flows in Asia were Japan and Singapore. In term of stock, Asia was also the highest contributor by region (47.9%), followed by Europe (31.5%) and Americas (17.4%). At the same time, Asia generated 40.0 % of investment income followed by Americas (35.5%) and Europe (23.4%). (Source: The Edge) U.S.: Exports boost growth in Q3; consumer spending slows The U.S. economy grew at its fastest pace in two years in the third quarter, as a surge in exports and a rebound in inventory investment offset a slowdown in consumer spending. Gross domestic product increased at a 2.9% annual rate after expanding at a 1.4% pace in the second quarter, the Commerce Department said on Friday in its first estimate. That was the strongest growth rate since the third quarter of Economists polled by Reuters had forecast GDP rising at a 2.5% annual rate in the third quarter. (Source: The Edge) UK: Consumers worry as weaker pound raises prices British consumers turned less optimistic this month as sterling's slump began to eat into their disposable income, according to two surveys on Friday which will raise concerns about the strength of future spending growth. Britain's economy has performed better than most forecasts since June's referendum decision to leave the European Union, in large part thanks to strong consumer spending. But finance minister Philip Hammond warned on Thursday that did not mean the economy would dodge a slowdown next year. (Source: The Edge) Singapore: Job creation continues negative descent in 3Q Singapore s headline employment remained unchanged at 2.1% at a seasonally adjusted level better than the consensus of 2.2% while resident and citizen unemployment rates each edged down 0.1 percentage point from the previous quarter to 2.9 and 3% respectively. According to preliminary unemployment ext. 258,221,229,249 AT THE END OF THIS PUBLICATION 4

5 details from the Ministry of Manpower (MoM), total employment fell by 3,300 in the quarter amid subdued global economic conditions and internal economic restructuring. Job creation turned negative in 3Q16, led by net job losses in construction and manufacturing. While construction saw its first losses since 1Q15 due to declines in private sector construction activities, job creation in services was at its eighth consecutive quarter of job losses and at the slowest since 1Q15. (Source: The Edge) Russian central bank holds key interest rate at 10% Russia's central bank kept its key interest rate unchanged at 10% on Friday, but said it might cut rates in the first or second quarter of next year. The central bank, which has twice cut its key rate this year, said in a statement on its website it would hold the key rate at 10% until the end of "The Bank of Russia will assess inflation risks and compliance of economic performance and inflation with the baseline scenario when it makes its key rate decision in the upcoming months," it said. (Source: The Edge) ext. 258,221,229,249 AT THE END OF THIS PUBLICATION 5

6 M&A Securities STOCK RECOMMENDATIONS BUY Share price is expected to be +10% over the next 12 months. TRADING BUY Share price is expected to be +10% within 3-months due to positive newsflow. HOLD Share price is expected to be between -10% and +10% over the next 12 months. SELL Share price is expected to be -10% over the next 12 months. SECTOR RECOMMENDATIONS OVERWEIGHT The sector is expected to outperform the FBM KLCI over the next 12 months. NEUTRAL The sector is expected to perform in line with the FBM KLCI over the next 12 months. UNDERWEIGHT The sector is expected to underperform the FBM KLCI over the next 12 months. DISCLOSURES AND DISCLAIMER This report has been prepared by M&A SECURITIES SDN BHD. Readers should be fully aware that this report is for informational purposes only and no representation or warranty, expressed or implied is made as to the accuracy, completeness or reliability of the information or opinion contained herein. The recommendation and opinion are based on information obtained or derived from sources believed to be reliable. This report contains financial forecast/projection based on our assumptions which may defer from the actual financial results announced by the companies under coverage. All opinions, estimates and assumptions are subject to change without notice. Analysts will initiate, update and cease coverage solely at the discretion of M&A SECURITIES SDN BHD. Investors are to be cautioned that value of any securities invested may fluctuate from time to time. We advise investors to seek financial, legal and other advice for investing based on the recommendation of our report as we have not taken into account each investors specific investment objectives, risk tolerance and financial position. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. M&A SECURITIES SDN BHD can accept no liability for any consequential loss or damage whether direct or indirect. Investment should be made at investors own risks. M&A SECURITIES SDN BHD and INSAS GROUP of companies, their respective directors, officers, employees and connected parties may have interest in any of the securities mentioned and may benefit from the information herein. M&A SECURITIES SDN BHD and INSAS GROUP of companies and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. This report may not be reproduced, distributed or published in any form or for any purpose. M & A Securities Sdn Bhd (15017-H) (A wholly-owned subsidiary of INSAS BERHAD) A Participating Organisation of Bursa Malaysia Securities Berhad Level 1,2,3 No & 43-6 The Boulevard, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur Tel: Fax: Website: Head Of Research Rosnani Rasul M&A Securities ext. 258,221,229,249 AT THE END OF THIS PUBLICATION 6