MALAYAN BANKING BHD (MAYBANK)

MALAYAN BANKING BHD (MAYBANK) All figures in millions of Ringgit Malaysia except per share values and ratios Analysis Date: 05/04/2013 Financial Year: 2012 31/12/2012 Latest Quarter: 31/12/2012 Price: 9.70 Stock Category: Large Capital Growing Overview: Malayan Banking Berhad (the Bank) is engaged in the commercial banking and related financial services. The Company s subsidiaries are principally engaged in the businesses of banking and finance, Islamic banking, investment banking, including stock broking, underwriting of general and life insurance, general and family takaful, trustee and nominee services, asset management and venture capital. Maybank operates in four segments: Community Financial Services (CFS), Global Wholesale Banking (GWB), Insurance, Takaful and Asset Management and International Banking. It has operations in Malaysia, Singapore, Indonesia, Philippines, Papua New Guinea, Brunei Darussalam, People s Republic of China, Hong Kong SAR, Vietnam, United Kingdom, United States of America and Cambodia and Bahrain. On June 11, 2012, the Company liquidated Aseam Malaysia Nominees (Asing) Sdn Bhd. Board: Main Board FBMKLCI: YES Industry: FINANCIALS Sub-Sector: BANKS Ownership: Corporate Owned (Local);Government & Politically Linked Investment Strategy Portfolio Strategy: Lump Sum + Top Up Averaging Down Method: Dollar Cost/Value Averaging Portfolio Execution: Buy and Hold Basis for Buying & Selling: Absolute P/E DY % EPS EY % OSCILLATOR Institutional Sponsorship Market Direction

Due-Diligence Measures 2003/6/30 2004/6/30 2005/6/30 2006/6/30 2007/6/30 2008/6/30 2009/6/30 2010/6/30 2011/12/31 2012/12/31 5-Y Avg. 10-Y Growth 5-Y Growth Sparkline Grade Profitability Consistently increasing Sales 9,147 10,521 11,216 12,702 15,179 16,154 17,586 18,560 12,885 27,532 20,611 9.03% 7.55% Revenue (Pref. 8%) Consistent and increasing ROE 14.63% 16.58% 15.03% 16.72% 16.94% 15.17% 2.78% 13.70% 7.72% 13.60% 11.10% -7.25% 8.04% (Pref. 15%) Consistent and increasing ROIC 2.66% 2283.18% 3.41% -7.71% -17.05% -6.54% 6.65% 27.76% 1.63% 3.30% 6.52% -4.88% 0.14% (Pref. 15%) Consistent (or increasing) Net 2.91% 2.93% 2.93% 2.80% 2.80% 2.70% 2.80% 2.90% 2.50% 2.40% 2.56% -1.78% -3.49% Interest Margin Declining Cost/Income Ratio (Pref. 39.90% 40.20% 39.40% 39.70% 42.80% 44.40% 52.20% 46.50% 49.70% 48.60% 48.66% 3.00% 1.32% 40%) Cash Flow Consistently increasing Net Cash 1,371 7,821 2,007 13,147 6,474-5,248-7,376 7,278 5,450-13,235-4,030-80.31% -260.22% from Ops. (Pref. 8%) Consistent and increasing CROIC N/A 7473.91% 2.71% -37.36% -47.38% 6.77% 2.01% 53.18% 10.19% -5.93% 9.27% -13.61% -0.16% (Pref. 15%) Increasing Free Cash Flow / Sales N/A 75.16% 17.85% 110.72% 58.41% -19.37% 2.04% 40.63% 126.77% -37.95% 22.56% -0.52% 0.76% (Pref. 5%) Financial Risks Debt/Equity Ratio (Pref. < 100%) 22.02% 20.54% 18.04% 23.24% 33.05% 43.90% 65.19% 59.07% 82.10% 71.93% 70.16% N/A N/A Increasing Debt Coverage Ratio (Pref. 150%) Increasing Quick Ratio (Pref. 100%) Asset Quality Consistent and increasing Tier-1 Capital% (Pref. 10%) Declining Net Impaired Loans (Pref. < 1.5%) Reporting Quality Balance Sheet Aggregate Accruals Ratio (Pref. < 8%) Cash Flow Aggregate Accruals Ratio (Pref. < 8%) N/A 263.25% 66.66% 360.89% 139.75% -36.94% 2.21% 45.79% 59.48% -34.40% 6.35% N/A 0.59% 47.40% 75.16% 32.60% 93.86% 96.21% 90.36% 86.18% 91.90% 42.59% 38.69% 56.07% -0.57% -24.01% 10.61% 10.30% 10.50% 9.70% 9.00% 10.10% 10.80% 10.55% 11.35% 1315.00% 558.63% 26.98% 97.88% 6.20% 6.00% 4.90% 3.80% 3.00% 1.90% 1.60% 1.20% 1.90% 1.10% 1.42% -20.42% -9.21% N/A 61.97% 4.96% 105.97% -40.90% 37.87% -274.30% -92.17% 1307.32% 462.15% 494.10% N/A 15.09% N/A 47.30% -2.38% 34.35% 7.98% -13.67% -0.05% -71.53% 651.10% 600.58% 409.26% N/A 13.90%

Thousands Thousands Growth Quality Performance Comparison 30000 20000 200.00% 25000 15000 180.00% 160.00% 171.51% 20000 10000 140.00% 120.00% 5000 15000 100.00% 0 80.00% 75.70% 10000-5000 60.00% 40.00% 5000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-10000 -15000 20.00% 0.00% 7.55% 12.08% 14.30% 2.44% Sales - 5Y Growth EPS - 5Y Growth Debt to Equity - 5Y Avg 16.60% 13.17% Net Profit Margin - 5Y Avg 8.00% 10.30% ROE - 5Y Avg Revenue EBIT Net Income Cash From Ops. FCF Company Sector

Shareholder Wealth Creation Buy and Hold Return (Pref. 8%) 8% 3-Y Price CAGR % 10.20% 5-Y Price CAGR % 6.51% 10-Y Price CAGR % 5.28% Full History Price CAGR % 9.72% Consistent and increasing Dividend Payout % (Pref. 60%) 60% 160.00% 140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% Dividend Payout % 0.00% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Increasing EPS EPS 0.90 0.80 0.70 0.60 0.50 0.56 0.67 0.68 0.74 0.83 0.60 0.54 0.73 0.40 0.30 0.34 0.20 0.10 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0.12

Increasing DPS DPS 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Historical Weekly Price Chart

Market Timing Absolute P/E EY % Oscillator Good PE Base PE2 Bad PE3 Expected Earnings Growth 9.65% 14 5.82% 12 5.90% 12 Dividend Yield 6.88% 7 6.88% 7 6.88% 7 Business Risk Factor Financial Risk Factor Earnings Visibility Factor Fair P/E Current EPS Fair Price Margin of Safety Buy P/E Expected DPS Expected Dividend Yield Sell P/E 1.18 1.17 12 11 11 8.68 7.65 7.68 46.95% 5.90 5.21 5.22 6.94% 1.17 0.727 0.60 7.87% 7.84% 10.11 8.70 8.73 EY% Price ($) High Green Zone EY% 7.16% Green Zone Price($) RM9.56 Low Trading Range 1.98% 6.96% Price ($) RM9.83 10% 5.38% Price ($) RM12.72 10% Low Red Zone EY% 5.18% Red Zone Price($) RM13.21 High Buy Under From 9.83 To 7.65 Sell Above 12.72 DY % 6% CU DY%: 3.94% R-4Q DY%: 6.88%

The current quarter's EPS is up more than 15% from the same quarter the year before. 0.25 Quarterly EPS 0.20 0.15 0.15 0.13 0.15 0.16 0.16 0.16 0.17 0.17 0.18 0.19 0.19 0.17 0.10 0.05 0.00 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Dec-11 0.17 Dec-12 0.17 Growth 0.41%

Notes Created Date Note 05/04/2013 Based on absolute P/E valuation, fair price for the good scenario is 8.68, which means MAYBANK is slightly overvalued. Nevertheless, if we refer back to historical EY%, there is an opportunity to buy in at this time, and the future price may increase up to 12.72. I will wait until General Election end and look for opportunity to add positions.

Basis for Buying and Selling Buy Criteria No. Method Description 1 EPS The current quarter's EPS is up more than 15% from the same quarter the year before. 2 Intrinsic Value Price is below Intrinsic Value 3 DY% Current DY% or Rolling 4Q DY% > 8% 4 Market Direction Stock price breaks out of consolidation/dip on an uptrend. 5 Institutional sponsorship Company owner, EPF, Khazanah and PNB heavily buying 6 EY % Oscillator Price is below or around the price derived from EY% High Sell Criteria No. Method Description 1 EPS Quarterly EPS drop for 5 consecutive months. 2 Intrinsic Value Has the stock risen too far from its intrinsic value? 3 DY% Current DY% or Rolling 4Q DY% < 4% for a long period 4 Market Direction Long term trend changed from bullish to bearish 5 Institutional sponsorship Company owner, EPF, Khazanah and PNB heavily selling. 6 EY % Oscillator Price is above or around the price derived from EY% Low 7 Fundamental Analysis Fundamental of business turns unattractive or bad Found a better opportunity to replace this stock