Malaysia Company Guide Version 7 Bloomberg: UEMS MK Reuters: UEMS.MK Refer to important disclosures at the end of this report DBS Group Research. Equity 22 Mar 2018 HOLD Last Traded Price ( 21 Mar 2018): RM0.99 (KLCI : 1,865.80) Price Target 12-mth: RM1.05 (7% upside) (Prev RM1.10) Analyst QUAH He Wei, CFA +603 2604 3966 hewei@alliancedbs.com What s New Expect weak 1H18 results due to the absence of overseas contribution pursuant to adoption of MFRS15 Cut FY18-19F earnings by 20%/3% No imminent turnaround in Iskandar Malaysia property market Maintain Hold with lower TP of RM1.05 Price Relative 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.1 0.9 RM 0.7 36 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 (LHS) Relative KLCI (RHS) Relative Index Forecasts and Valuation FY Dec (RMm) 2017A 2018F 2019F 2020F Revenue 2,903 2,706 3,023 1,104 EBITDA 350 292 373 221 Pre-tax Profit 439 386 284 144 Net Profit 280 268 197 98.5 Net Pft (Pre Ex.) 106 121 197 98.5 Net Pft Gth (Pre-ex) (%) (28.9) 14.7 62.8 (50.0) EPS (sen) 6.17 5.91 4.34 2.17 EPS Pre Ex. (sen) 2.33 2.67 4.34 2.17 EPS Gth Pre Ex (%) (29) 15 63 (50) Diluted EPS (sen) 2.33 2.67 4.34 2.17 Net DPS (sen) 1.54 1.48 1.08 0.54 BV Per Share (sen) 156 160 163 164 PE (X) 16.0 16.7 22.7 45.4 PE Pre Ex. (X) 42.4 37.0 22.7 45.4 P/Cash Flow (X) nm 5.8 6.7 2.6 EV/EBITDA (X) 23.2 25.9 19.1 25.1 Net Div Yield (%) 1.6 1.5 1.1 0.6 P/Book Value (X) 0.6 0.6 0.6 0.6 Net Debt/Equity (X) 0.4 0.4 0.3 0.1 ROAE (%) 4.0 3.7 2.7 1.3 Earnings Rev (%): (20) (3) N/A Consensus EPS (sen): 5.60 6.10 4.80 Other Broker Recs: B: 3 S: 2 H: 11 Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P 216 196 176 156 136 116 96 76 56 Headwinds ahead Weak sentiment in Iskandar Malaysia. (UEMS) continues to be severely affected by the weak sentiment towards Iskandar Malaysia s properties with its Johor sales plunging from RM1.9bn in FY13 to RM290m/RM690m/RM408m in FY15-FY17. Also, the market has started to grapple with increasing property supply, especially high-end condos, which have been exacerbated by the aggressive entry of Chinese developers with their condo projects being completed progressively. Maintain HOLD as we do not foresee any recovery in Iskandar Malaysia property market in the near term. Where we differ? Our earnings forecast is much lower than consensus, probably due to our more conservative stance on the property market in Iskandar Malaysia. Strong sales replenishment is critical to sustain UEMS earnings momentum. Potential catalyst? As 75% of UEMS land bank is located in Iskandar Malaysia due to its role as the master developer, a recovery in the sentiment towards the property market in the area will be the much-needed catalyst for the company. We believe the commencement of works for Malaysia-Singapore High Speed Rail and Rapid Transit System will be the next rerating catalyst. Valuation: We maintain our HOLD call for UEMS with a lower TP of RM1.05, based on unchanged 70% discount to our RNAV. UEMS may not be able to monetise the deep value of its Johor land bank anytime soon given the weak sentiment towards Iskandar Malaysia properties. Key Risks to Our View: Potential oversupply of high-end condos in Iskandar Malaysia. Property prices there are also comparable to more matured areas (KL and Penang), which may not be sustainable. At A Glance Issued Capital (m shrs) 4,537 Mkt. Cap (RMm/US$m) 4,469 / 1,141 Major Shareholders (%) UEM Group 66.1 Lembaga Tabung Haji 6.9 Free Float (%) 23.6 3m Avg. Daily Val (US$m) 0.88 ICB Industry : Financials / Real Estate ed: JS / sa:bc, PY, CS
2010 2010 2011 2012 2013 2014 2015 2016 2017 2010 2010 2011 2012 2013 2014 2015 2016 2017 Company Guide WHAT S NEW No imminent turnaround Is the worst over? We believe UEMS 1H18 results will remain weak in view of the absence of profit contribution from its Australian projects. Effective Jan 2018, UEMS has adopted the Malaysian Financial Reporting Standards (MFRS) 15 which will only allow revenue recognition for its international projects upon completion of the projects. This is in contrast to UEMS prior practice of progressive recognition for both its local and overseas development projects. Therefore, both its on-going Australian projects, namely Aurora Melbourne Central, Melbourne (RM2.4bn GDV) and Conservatory, Melbourne (RM991m GDV) which have attained construction progress of ~60% as at Jan 2018 will only contribute from 2H18 onwards as per its completion schedule. Note that overseas projects contributed RM1.34bn revenue in FY17, which is 46% of FY17 revenue of RM2.9bn. This is expected to result in a much weaker 1H18 financial performance given the smaller revenue recognition merely from Malaysian projects which may not commensurate with the operating expenses to be incurred. This led us to revise down our FY18-19F earnings by 20%/3% respectively as we incorporate the impact of MFRS 15 in our forecast. Dependent on overseas market: UEMS unbilled sales stood at RM4.8bn as at Dec 2017, of which only 29% or RM1.37bn came from its Malaysian projects. While the remaining 71% or RM3.4bn unbilled sales from Australia will provide lumpy profit recognition upon completion of the respective projects, sales replenishment from its local market remains a key concern as >99% of its land bank is located in Malaysia. Breakdown of unbilled sales Australia 71% Johor 12% Klang Valley 17% RM1.2bn sales target in FY18. UEMS has set its FY18 sales target at RM1.2bn (FY17: RM1.5bn) while launch pipeline stands at RM1bn. It is also actively working on selling its completed inventory which stood at RM610m as at Dec 2017. Nevertheless, we believe that the uncertainty arising from the upcoming general election which has to be held by Aug 2018 will continue to be a drag for property sales as potential buyers will likely defer their purchase decision until election is over. Johor market remains lacklustre. We believe the overall market conditions in Iskandar Malaysia remains subdued as the concern of oversupply in high-rise projects continues to dampen market sentiment. Supply-demand dynamics remains the worst in Johor relative to other states in Malaysia due to the large incoming supply, no thanks to the frenzied launches in Iskandar Malaysia prior to 2014. We are of the view that it may take several years for the market to absorb the excess supply in Johor, hence UEMS may find it challenging to develop its massive landbank despite being the master developer of Iskandar Puteri. Also, it is set to launch only RM275m worth of new projects in Johor in 2018, out of its launch pipeline of RM1bn. UEMS property sales in Johor RMm 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 UEMS overall property sales RMm 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Page 2
Huge incoming supply in Johor (units) 2016 KL Selangor Johor Penang Melaka Others Malaysia Existing Stock 460,296 1,419,474 744,256 408,732 173,445 1,831,734 5,037,937 % of Msia 9% 28% 15% 8% 3% 36% 100% Incoming supply 80,941 203,248 200,330 95,843 32,123 367,963 980,448 % of stock 18% 14% 27% 23% 19% 20% 19% Planned supply 92,914 107,513 188,818 50,968 14,780 253,512 708,505 % of stock 20% 8% 25% 12% 9% 14% 14% *Includes data from serviced apartments which is classified under commercial properties Maintain Hold. We reiterate our HOLD recommendation with a lower TP of RM1.05 after incorporating our earnings revision. This is based on 70% discount to our RNAV as a stiffer competition amid a challenging property market in Malaysia may affect its property sales replenishment. Page 3
RNAV Stake Land Value Value Eff Value Acres RMpsf RMm RMm Puteri Harbour 100% 68 350 1,043 1,043 CS-3, Puteri Harbour 50% 7 350 102 51 SILC 100% 207 80 721 721 East Ledang 100% 129 65 365 365 Horizon Hills 50% 566 80 1,971 986 Afiat Healthpark 100% 43 50 94 94 Nusa Idaman 100% 27 60 69 69 Nusa Bayu 100% 66 50 145 145 Residential North 40% 100 110 479 192 Bio Xcell 40% 61 80 213 85 Lifestyle Retail Mall & Residences 55% 30 150 196 108 Residential South 80% 208 90 814 651 Gerbang Nusajaya - Motorsports City 30% 300 45 588 176 Gerbang Nusajaya - Eco-Industrial Par 40% 519 45 1,017 407 Gerbang Nusajaya 40% 500 45 980 392 Gerbang Nusajaya 100% 3,232 40 5,631 5,631 Nusajaya remaining landbank 100% 531 65 1,503 1,503 6,593 55 15,932 12,619 Reserves area 1,081 - - Total Nusajaya 7,674 55 15,932 12,619 Desaru 51% 679 18 532 271 Frasers Metropolis 60% 2,500 8 871 523 Symphony Hills @ Cyberjaya 100% 24 50 52 52 Bangi Land, Selangor 100% 449 16 313 313 Seremban Forest Heights 50% 241 10 105 52 Sinaran Hills, Kajang 100% 65 30 85 85 Angkasa Raya, KLCC 100% 2 3,300 230 230 Floresta Solaris 3 62% 19 300 244 152 Jelutong Commercial Center 50% 19 150 127 63 Undeveloped landbank 2,884 715 715 Klang Valley 100% 44 45 87 87 Mersing 100% 431 5 94 94 Tapah 100% 2,405 5 524 524 Canada 100% 4 60 10 10 Total Outside Nusajaya 4,381 2,403 1,934 Grand Total 12,055 18,335 14,553 NTA ex-land & JV/associates 1,198 NPV of unbilled sales (10% WACC) 238 UEML RNAV 15,989 No of shares 4,537 RNAV/share 3.52 Page 4
CRITICAL DATA POINTS TO WATCH Critical Factors Weak sales momentum in Iskandar Puteri. UEMS is predominantly the master developer of Iskandar Puteri, one of the flagship zones within Iskandar Malaysia. Its properties in Iskandar Puteri were selling like hot cakes a few years ago but the trend has reversed since three years ago when Iskandar Puteri property sales in FY15-17 dipped to RM290m/RM690m/RM408m from RM1.9bn in FY13. The weak sentiment in the property market in Iskandar Malaysia, brought about by a deluge of competing property launches by other developers, coupled with the tightening measures implemented by the government, has resulted in much slower sales for UEMS property projects in Iskandar Puteri. RM1.2bn sales target in FY18. UEMS achieved FY17 sales of RM1.49bn, exceeding its sales target of RM1.2bn, thanks to the overwhelming response from its sales in Solaris Parq due to the strategic location. Nevertheless, at Iskandar Puteri, we remain cautious given the weak market sentiment and oversupply situation. Good product offerings are critical to kick off sales. Given the challenging outlook for Iskandar Malaysia s property market, UEMS may have to review its product offerings and be strategic and discerning in the timing of future launches to beat the competition. We believe that luxury high-rise buildings in Iskandar Malaysia will face a much tougher time in view of the current supply glut and high prices, which are unsustainable. 1506.6 1291.4 1076.2 860.9 645.7 430.5 215.2 0.0 2920.4 2336.3 1752.2 1168.1 584.1 0.0 13.51 10.81 8.11 5.41 2.70 Property sales 1492 1369 1057 966 843 2016A 2017A 2018F 2019F 2020F property revenue 2863 2249 2214 1602 944 2016A 2017A 2018F 2019F 2020F EBIT margin 13.2 10.3 10.3 10.1 8.58 RM4.8bn unrecognised revenue. This will offer near-term earnings visibility, from progress billing for several projects that have been sold. Nevertheless, UEMS will need to achieve its sales target in order to sustain its growth momentum going forward. Potential land sales to boost earnings. Given UEMS large land bank in Iskandar Puteri, there could be strategic land sales to third parties, which would help to expedite the overall development and de-risk its exposure progressively. We have not included any potential strategic land sales in our earnings forecast, although we understand management is talking to some parties, which may present upside surprises to our numbers. 0.00 2016A 2017A 2018F 2019F 2020F pretax margin 15.1 15.3 14.3 13 12.2 11.8 9.4 9.2 6.1 3.1 0.0 2016A 2017A 2018F 2019F 2020F Page 5
Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Company Guide Appendix 1: A look at Company's listed history what drives its share price? Share price vs FBM KLCI RM 3.50 3.00 2.50 A 2.00 1.50 B 1.00 0.50 C 0.00 Index 2000 1900 1800 1700 1600 1500 1400 1300 1200 Remarks A Iskandar Malaysia was the property hotspot in Malaysia as the government poured in massive investments and introduced various incentives to make it the destination of choice for locals and investors. UEMS benefited as it is the master developer of Iskandar Puteri one of the flagship zones of Iskandar Malaysia B Concern on property oversupply in Iskandar Malaysia affected the sentiment, and the entry of aggressive developers from China exacerbated the situation Source: Bloomberg L.P., AllianceDBS UEMS (LHS) FBM KLCI (RHS) C Share price remains undervalued given the absence of potential recovery in Johor property market Share price vs property sales RM 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 RMm 2000 1800 1600 1400 1200 1000 800 600 400 200 0 Remarks There is little correlation between share price performance and property sales. UEMS property sales have been coming under pressure due to the challenging property market in Johor though it has started to diversify into the Australian property market. UEMS (LHS) Property sales (RHS) Source: Bloomberg L.P., AllianceDBS Page 6
Balance Sheet: Healthy gearing enables the group to land bank strategically. UEMS balance sheet remains healthy with 44% net gearing as at end-dec 2017. The group has embarked on cash consolidation exercise to divest its non-core assets and land to strengthen its balance sheet. 0.60 0.50 0.40 0.30 0.20 Leverage & Asset Turnover (x) 0.3 0.3 0.2 0.2 0.1 Share Price Drivers: Improved property sales at Iskandar Puteri could re-rate stock. Given the challenging outlook for Iskandar Malaysia properties because of excess supply, UEMS would have to come up with innovative and differentiated products to boost demand, which remains weak. Strong property sales in Iskandar Malaysia will be a key catalyst for UEMS as this will underline buyers confidence in its products. This will also bode well for its growth prospects as the bulk of its land bank is located within Iskandar Puteri. Key Risks: Oversupply of high-end condos. There could be a potential oversupply of high-end condos in Iskandar Malaysia with a slew of launches over the past three years. Property prices are now comparable to more matured areas (KL and Penang), which may not be sustainable. Iskandar Malaysia lacks critical mass. While the infrastructure is in place, more economic drivers and crowd-pulling aspects are required to improve vibrancy. Company Background UEMS is the largest landowner in Iskandar Malaysia and Mont Kiara. It also has land bank in other parts of Greater KL (Bangi and Cyberjaya) and Melbourne. 0.10 0.1 0.00 0.0 2016A 2017A 2018F 2019F 2020F Gross Debt to Equity (LHS) Asset Turnover (RHS) Capital Expenditure RMm 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2016A 2017A 2018F 2019F 2020F Capital Expenditure (-) ROE (%) 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2016A 2017A 2018F 2019F 2020F Forward PE Band (x) (x) 58.1 53.1 +2sd: 53.7x 48.1 43.1 38.1 33.1 28.1 23.1 +1sd: 46.1x Avg: 38.4x -1sd: 30.8x -2sd: 23.2x 18.1 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 (x) 2.0 PB Band (x) 1.8 1.6 +2sd: 1.48x 1.4 1.2 +1sd: 1.19x 1.0 Avg: 0.89x 0.8 0.6-1sd: 0.59x 0.4-2sd: 0.3x 0.2 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Page 7
Key Assumptions FY Dec 2016A 2017A 2018F 2019F 2020F Property sales 1,369 1,492 843 1,057 966 property revenue 1,602 2,249 2,214 2,863 944 EBIT margin 10.3 10.3 8.58 10.1 13.3 pretax margin 11.8 15.1 14.3 9.40 13.0 Lower than management s target Income Statement (RMm) FY Dec 2016A 2017A 2018F 2019F 2020F Revenue 1,841 2,903 2,706 3,023 1,104 Cost of Goods Sold (1,629) (2,580) (2,443) (2,683) (919) Gross Profit 213 323 262 340 185 Other Opng (Exp)/Inc (24.0) (25.3) (30.2) (34.8) (39.0) Operating Profit 189 298 232 305 146 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 75.8 27.0 29.7 32.7 36.0 Net Interest (Exp)/Inc (46.9) (60.7) (72.3) (53.7) (38.7) Exceptional Gain/(Loss) 0.0 175 196 0.0 0.0 Pre-tax Profit 218 439 386 284 144 Tax (69.3) (157) (116) (85.2) (43.1) Minority Interest 0.0 (1.5) (2.0) (2.0) (2.0) Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 148 280 268 197 98.5 Net Profit before Except. 148 106 121 197 98.5 EBITDA 289 350 292 373 221 Growth Revenue Gth (%) 5.2 57.7 (6.8) 11.7 (63.5) EBITDA Gth (%) (18.0) 21.3 (16.6) 27.5 (40.6) Opg Profit Gth (%) (29.4) 57.7 (22.0) 31.4 (52.1) Net Profit Gth (Pre-ex) (%) (32.3) (28.9) 14.7 62.8 (50.0) Margins & Ratio Gross Margins (%) 11.6 11.1 9.7 11.2 16.8 Opg Profit Margin (%) 10.3 10.3 8.6 10.1 13.2 Net Profit Margin (%) 8.1 9.6 9.9 6.5 8.9 ROAE (%) 2.2 4.0 3.7 2.7 1.3 ROA (%) 1.1 1.9 1.9 1.4 0.7 ROCE (%) 1.1 1.5 1.2 1.7 0.8 Div Payout Ratio (%) 0.0 25.0 25.0 25.0 25.0 Net Interest Cover (x) 4.0 4.9 3.2 5.7 3.8 Expect low earnings due to weak property sales replenishment Page 8
Quarterly / Interim Income Statement (RMm) FY Dec 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 Revenue 625 542 898 716 748 Cost of Goods Sold (569) (454) (834) (612) (692) Gross Profit 55.2 88.1 63.4 104 55.8 Other Oper. (Exp)/Inc (4.6) 0.0 0.0 (6.2) (7.5) Operating Profit 50.6 88.1 63.4 98.0 48.3 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 39.2 11.5 5.92 7.33 2.24 Net Interest (Exp)/Inc (7.0) (16.7) (16.6) (15.2) (12.2) Exceptional Gain/(Loss) 0.0 6.87 86.7 36.9 44.1 Pre-tax Profit 82.8 89.7 139 127 82.5 Tax (29.6) (27.9) (44.3) (40.1) (44.8) Minority Interest 0.07 (0.6) (0.5) (0.4) 0.0 Net Profit 53.3 61.3 94.6 86.6 37.7 Net profit bef Except. 53.3 54.4 7.86 49.7 (6.5) EBITDA 94.4 99.6 69.3 112 58.0 Growth Revenue Gth (%) 48.3 (13.3) 65.7 (20.3) 4.5 EBITDA Gth (%) 25.5 5.4 (30.4) 61.0 (48.0) Opg Profit Gth (%) (17.1) 74.0 (28.1) 54.8 (50.7) Net Profit Gth (Pre-ex) (%) 46.7 2.1 (85.6) 532.2 (113.0) Margins Gross Margins (%) 8.8 16.3 7.1 14.6 7.5 Opg Profit Margins (%) 8.1 16.3 7.1 13.7 6.5 Net Profit Margins (%) 8.5 11.3 10.5 12.1 5.0 Mainly from land sales Thin margin Balance Sheet (RMm) FY Dec 2016A 2017A 2018F 2019F 2020F Net Fixed Assets 300 377 435 487 536 Invts in Associates & JVs 1,614 1,553 1,583 1,616 1,652 Other LT Assets 5,665 5,109 5,355 5,405 5,455 Cash & ST Invts 789 933 1,291 1,554 2,909 Inventory 585 610 627 700 256 Debtors 1,731 2,640 2,255 2,159 789 Other Current Assets 2,866 3,175 2,766 2,400 1,997 Total Assets 13,550 14,397 14,310 14,321 13,593 ST Debt 1,310 1,486 1,486 1,486 1,486 Creditor 804 889 801 880 301 Other Current Liab 497 496 496 496 496 LT Debt 2,404 2,734 2,534 2,334 2,134 Other LT Liabilities 1,342 1,361 1,361 1,361 1,361 Shareholder s Equity 6,832 7,069 7,267 7,397 7,446 Minority Interests 362 363 365 367 369 Total Cap. & Liab. 13,550 14,397 14,310 14,321 13,593 Non-Cash Wkg. Capital 3,882 5,041 4,350 3,884 2,245 Net Cash/(Debt) (2,926) (3,287) (2,729) (2,266) (711) Debtors Turn (avg days) 343.2 331.9 304.2 260.7 260.7 Creditors Turn (avg days) 166.1 120.9 127.8 115.8 245.0 Inventory Turn (avg days) 112.4 85.3 93.5 91.4 198.2 Asset Turnover (x) 0.1 0.2 0.2 0.2 0.1 Current Ratio (x) 2.3 2.6 2.5 2.4 2.6 Quick Ratio (x) 1.0 1.2 1.3 1.3 1.6 Net Debt/Equity (X) 0.4 0.4 0.4 0.3 0.1 Net Debt/Equity ex MI (X) 0.4 0.5 0.4 0.3 0.1 Capex to Debt (%) 0.7 2.1 2.2 2.3 2.4 Z-Score (X) 1.1 1.3 1.3 1.3 1.3 Healthy gearing Page 9
Cash Flow Statement (RMm) FY Dec 2016A 2017A 2018F 2019F 2020F Pre-Tax Profit 218 439 386 284 144 Dep. & Amort. 24.0 25.3 30.2 34.8 39.0 Tax Paid (69.3) (157) (116) (85.2) (43.1) Assoc. & JV Inc/(loss) (75.8) (27.0) (29.7) (32.7) (36.0) Chg in Wkg.Cap. (994) (1,280) 691 467 1,639 Other Operating CF 187 849 (196) 0.0 0.0 Net Operating CF (710) (150) 765 668 1,742 Capital Exp.(net) (25.2) (87.6) (87.6) (87.6) (87.6) Other Invts.(net) 0.0 (125) 0.0 0.0 0.0 Invts in Assoc. & JV 0.0 50.0 0.0 0.0 0.0 Div from Assoc & JV (248) 0.0 (50.0) (50.0) (50.0) Other Investing CF 62.2 (15.2) 0.0 0.0 0.0 Net Investing CF (211) (178) (138) (138) (138) Div Paid (85.3) 0.0 (70.0) (67.0) (49.2) Chg in Gross Debt 946 541 (200) (200) (200) Capital Issues 0.0 0.0 0.0 0.0 0.0 Other Financing CF (151) (175) 0.0 0.0 0.0 Net Financing CF 710 367 (270) (267) (249) Currency Adjustments (5.0) (19.2) 0.0 0.0 0.0 Chg in Cash (217) 19.5 357 263 1,355 Opg CFPS (sen) 6.26 24.9 1.64 4.43 2.28 Free CFPS (sen) (16.2) (5.2) 14.9 12.8 36.5 Target Price & Ratings History 1.37 1.32 1.27 1.22 1.17 1.12 1.07 1.02 0.97 RM 1 2 3 4 5 6 7 8 9 S.No. Date of Report Closing Price 12-mth Target Rating Price 1: 18 May 17 1.29 1.25 HOLD 2: 13 Jun 17 1.27 1.25 HOLD 3: 24 Aug 17 1.16 1.25 HOLD 4: 31 Oct 17 1.11 1.25 HOLD 5: 01 Nov 17 1.12 1.25 HOLD 6: 21 Nov 17 1.06 1.10 HOLD 7: 13 Dec 17 1.04 1.10 HOLD 8: 03 Jan 18 1.17 1.10 HOLD 9: 28 Feb 18 1.09 1.10 HOLD 0.92 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 Note : Share price and Target price are adjusted for corporate actions. Source: AllianceDBS Analyst: QUAH He Wei, CFA Page 10
AllianceDBS recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame) Share price appreciation + dividends Completed Date: 22 Mar 2018 01:40:28 (MYT) Dissemination Date: 22 Mar 2018 14:37:09 (MYT) Sources for all charts and tables are AllianceDBS unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). 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Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. Page 11
DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making. ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests 2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group. COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 28 Feb 2018. 2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report. Compensation for investment banking services: 3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively. Disclosure of previous investment recommendation produced: 4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months. 1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant. Page 12
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