Small Acquisition in Bangsar South

UOA Development Bhd Small Acquisition in Bangsar South By Sarah Lim l sarahlim@kenanga.com.my News UOAD announced that it has acquired 2 ordinary shares of RM1.00 each in Fabullane Development S/B which in turn owns 1.92 ac of freehold land adjacent to Bangsar South City (BSC) (same row as UOAD s Southview). The implied cost of the land is around RM24.4m (RM2,91psf) as UOAD will assume the liabilities of Fabullane. Comments No GDV guidance as the company will only be embarking on the land s development in 1-2 years time. However, based on Southview s GDV per acre of RM225m, we derive a GDV of c. RM0.43b. The land price is fair considering that market prices in the area (for small plots) are going for RM250-300psf. We are unable to compare land prices with Southview as the acquisition was made some years back. Based on our assumed GDV, land cost makes up some 6% of GDV, which is attractive considering that land cost tends to make up 10%-15% of GDV nowadays. The acquisition will be funded internally and impact to its net cash position is minimal. We are NEUTRAL on the acquisition. While it bodes well for the group in the medium to longer term for landbank, the acquisition is quite small and contributions from this project is unlikely in the next 1-2 years. Impact on RNAV is minimal. Based on our GDV estimates, this increases our FD RNAV by 3 sen (+0.9%) to RM3.73. We are also taking the opportunity to update our FD RNAV to RM3.75 after taking into account the net positive impact arising from its increased share base from the DRPs and higher GDV for Southview and Scenaria. Assuming unchanged RNAV discount of 46%, this would increase our TP to RM2.04 (from RM2.00). Outlook We do not expect any new launches in 4Q14 as the group will concentrate on converting its booking sales into SPA (e.g. Southbank, Sentul Village). Key launches for FY15 are expected to amount to a total GDV of RM2.23b. Forecast No changes to earnings. Rating Valuation Our CALL/TP is pending our upcoming sector strategy report. We are increasingly concerned about the challenging property landscape. Our previous recommendation was MARKET PERFORM with a TP of RM2.00. Price: Target Price: Share Price Performance RM2.10 KLCI 1,765.52 YTD KLCI chg -5.4% YTD stock price chg 8.2% Stock Information Bloomberg Ticker UOAD MK Equity Market Cap (RM m) 3,005.1 Issued shares 1,431.0 52-week range (H) 2.42 52-week range (L) 1.79 3-mth avg daily vol: 608,416 Free Float 28% Beta 1.0 Major Shareholders PAK LIM KONG 63.9% EMPLOYEES PROVIDENT 4.7% SKIM AMANAH SAHAM BU 3.5% Summary Earnings Table FYE Dec (RM m) 2013A 2014E 2015E Turnover 1,246 958 1,097 EBIT 512 359 395 PBT 578 420 422 Net Profit (NP) 363 304 296 Core NP 345 267 296 Consensus (CNP) n.a. 274 328 Earnings Revision n.a. n.a. n.a. Core EPS (sen) 24.1 18.6 20.7 Core EPS growth (%) 14% -23% 11% NDPS (sen) 13.0 13.0 13.0 BV/Share (RM) 1.71 1.91 1.98 Core PER (x) 8.7 11.3 10.2 Price/BV (x) 1.2 1.1 1.1 Net Gearing (x) (0.1) (0.3) (0.3) Dividend Yield (%) 6.2% 6.2% 6.2% Risks to Our Call Unable to meet its sales target or better-thanexpected sales/earnings. Unexpected en-bloc sales of office inventories. Sector risks, including further negative policies. PP7004/02/2013(031762) Page 1 of 5

OTHER POINTS FD RNAV On-going projects and unbilled sales Stake Assumed Duration (Yrs) Remaining GDV + Unbilled Sales (RM'm) Remaining Net Profit *** (RM'm) WACC (%) DCF Value (RM m)*** Camellia 100% 1 55 19 15% 17 Le Yuen Residence 100% 3 239 82 15% 63 Vertical Office Suites - Phase 1 & 2 100% 4 525 163 15% 117 @ BSC Desa 8 85% 2 25 7 15% 5 Scenaria @ North Kiara Hills 60% 5 664 110 15% 74 Desa Green 70% 5 510 123 15% 104 Kencana Square 39% 7 1,290 139 15% 76 Kepong Business Park 100% 3 58 20 15% 15 Villa Pines 100% 3 23 8 15% 6 One @ Bkt Ceylon 54% 2 84 16 15% 13 South View Residence 100% 4 830 229 15% 165 Desa III 70% 2 14 3 15% 3 Sub-total 15% 658 Future Projects Stake Assumed Duration (Yrs) GDV (RM'm) Remaining Net Profit *** (RM'm) WACC (%) DCF Value (RM m)*** Desa II (Commercial) - Phase II 85% 4 300 88 15% 55 Bangsar South Land (Commercial) 100% 8 3,000 932 15% 462 Bangsar South Land (Residential) 100% 8 1,977 614 15% 266 Jalan Ipoh Land + extension 100% 5 2,910 904 15% 466 Kepong V Land 100% 5 1,500 414 15% 186 Land around Bangsar South 100% 5 800 221 15% 99 Land near Southview (1.92ac) 100% 3 430 119 15% 53 Sentul Land 100% 5 2,000 552 15% 284 Jln Klang Lama 60% 4 500 72 15% 36 Sub-total 1,908 Projects Stake Book Value (RM'm) Market Value (RM'm) Surplus / (Deficit) after tax (RM'm) *** Inventory 100% 272 453 136 Investment Property 100% 684 684 0 *** after shareholding Revised Asset Value 2,702 Shareholder's Funds (at 30/9/14) 2662.5 RNAV 5,364 RNAV per share (RM) MYR 3.75 No of paid-up shares ('m) 1,432 Applied Discount (based on slight premium to peer's discount) Target Price (RM) Under Review Under Review PP7004/02/2013(031762) Page 2 of 5

Income Statement Financial Data & Ratios FY Dec (RM m) 2011A 2012A 2013E 2014E 2015E FY Dec (RM m) 2011A 2012A 2013E 2014E 2015E Revenue 614 799 1246 958 1097 Growth (%) EBITDA 286 328 522 371 408 Revenue 63.5 30.2 55.9-23.1 14.5 Depreciation -6-7 -10-12 -13 EBITDA 45.3 46.7 41.1 41.9 38.7 EBIT 280 321 512 359 395 EBIT 45.7 40.2 41.1 37.4 36.0 Interest Expense -4-4 -5-5 -4 Pre-tax Income 78.5 51.8 46.4 43.9 38.5 Investing 0 0 0 0 0 Net Income 38.1-21.7 20.4-16.3-2.7 Associate/JCE 0 1 6 28 32 Core Net Income 77.3 55.4 14.4-22.6 10.8 Exceptionals/FV 205 96 65 39 0 PBT 482 414 578 420 422 Profitability (%) Taxation -79-89 -172-97 -106 EBITDA Margin 46.7 41.1 41.9 38.7 37.2 Minority Interest -18-24 -43-19 -21 EBIT Margin 45.7 40.2 41.1 37.4 36.0 Net Profit 385 301 363 304 296 PBT Margin 78.5 51.8 46.4 43.9 38.5 Core Net Profit 194 301 345 267 296 Core Net Margin 31.6 37.7 27.7 27.8 27.0 Effective Tax Rate -28.5-27.9-33.6-25.5-25.0 Balance Sheet ROE 30.7 15.5 16.0 11.7 10.6 FY Dec (RM m) 2011A 2012A 2013E 2014E 2015E ROA 11.2 12.7 12.1 8.4 8.7 Fixed Assets 807 766 921 923 924 Intangibles 0 0 0 0 0 Other FA 38 43 43 43 43 DuPont Analysis Inventories 333 378 146 112 129 Net margin (%) 62.7 37.7 29.1 31.7 27.0 Receivables 255 643 426 295 304 Assets Turnover (x) 0.4 0.3 0.4 0.3 0.3 Other CA 586 556 1228 1111 1204 Leverage Factor (x) 1.4 1.2 1.3 1.2 1.2 Cash 123 204 336 796 877 ROE (%) 30.7 15.5 16.0 11.7 10.6 Total Assets 2142 2590 3099 3281 3480 Leverage Payables 194 326 448 286 331 Debt/Asset (x) 0.01 0.01 0.01 0.01 0.01 ST Borrowings 9 23 17 14 15 Debt/Equity (x) 0.04 0.05 0.03 0.04 0.03 Other ST Liability 6 0 0 0 0 Net Debt/(Cash) (105) (174) (304) (768) (851) LT Borrowings 8 7 15 14 11 Net Debt/Equity (x) (0.06) (0.08) (0.12) (0.27) (0.28) Other LT Liability 78 85 76 98 98 Minority Int. 39 58 98 142 189 Valuations Net Assets 1806 2091 2445 2727 2836 Core EPS (sen) 13.6 21.1 24.1 18.6 20.7 NDPS (sen) 10.0 12.0 13.0 13.0 13.0 Share Capital 60 64 67 72 72 BV/share (RM) 1.26 1.46 1.71 1.91 1.98 Reserves 1746 2027 2378 2655 2765 Core PER (x) 15.5 10.0 8.7 11.3 10.2 Shareholders Equity 1806 2091 2445 2727 2836 Net Div. Yield (%) 4.8 5.7 6.2 6.2 6.2 PBV (x) 1.7 1.4 1.2 1.1 1.1 Cashflow Statement EV/EBITDA (x) 10.1 8.6 5.2 6.0 5.3 FY Dec (RM m) 2011A 2012A 2013E 2014E 2015E Operating CF -62 30 584 439 241 Investing CF -279 56-172 19-1 Financing CF 425-5 -279 1-160 Net Change in Cash 84 81 132 460 80 Free Cash Flow -71-169 803 425 240 Core PER Band Fwd PBV Band RM PRICE (RM) Core EPS 6.0 x 7.0 x 8.0 x 9.0 x 10.0 x 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 1.00 x 1.75 1.55 1.35 1.15 0.95 0.75 0.55 Fwd Average PBV +0.5SD Fwd Average PBV -0.5SD Fwd Average PBV +1SD Fwd Average PBV -1SD Fwd Average PBV +1.5SD Fwd Average PBV -1.5SD Fwd Average PBV +2SD Fwd Average PBV -2SD Fwd PBV Average Fwd PBV since listing Source: Bloomberg, Kenanga Research PP7004/02/2013(031762) Page 3 of 5

Peer Comparison NAME Price / TEAP (10/12/14) Mkt Cap PER (x) Est. NDiv. Yld. Historical ROE P/BV Net Profit (RMm) FY13/14 NP Growth FY14/15 NP Growth Target Price (RM) (RMm) FY13/14 FY14/15 FY15/16 (%) (%) (x) FY13/14 FY14/15 FY15/16 (%) (%) (RM) Rating UEM Sunrise* 1.59 7,215 15.7 13.6 18.5 2.5% 10.2% 1.1 459.1 528.8 389.9 15.2% -26.3% IOI Properties* ^ 2.29 7612 18.0 16.6 13.5 3.1% 4.3% 0.7 479.2 521.5 641.4 8.8% 23.0% SP Setia* 3.28 8,326 19.3 24.8 16.0 3.1% 8.7% 1.3 417.9 325.3 504.6-22.2% 55.1% Sunway Berhad 3.30 5676 11.8 10.5 9.9 3.0% 33.6% 1.0 482.7 540.0 572.2 11.9% 6.0% IJM Land* 3.30 5,144 15.3 15.3 14.6 1.8% 17.7% 1.5 335.2 336.0 352.1 0.2% 4.8% Mah Sing Group 2.25 3,320 11.8 9.9 8.6 4.0% 17.6% 1.5 280.6 334.6 385.3 19.2% 15.2% UOA Development* 2.10 3,005 8.7 11.3 10.2 6.2% 16.0% 1.1 344.6 266.8 295.7-22.6% 10.8% Tropicana 1.07 1,469 8.2 5.1 6.2 3.9% 15.3% 0.4 145.3 232.8 191.7 60.2% -17.6% Matrix Concepts 2.67 1,220 7.9 7.2 6.3 6.2% 29.8% 1.9 152.9 167.2 190.2 9.4% 13.8% Crescendo* 2.65 603 10.9 7.2 7.2 5.7% 18.4% 0.8 84.2 84.4 93.2 0.3% 10.5% Hua Yang 2.06 544 6.6 5.3 5.0 6.4% 22.8% 1.2 82.2 102.9 109.6 25.2% 6.5% Crest Builder 1.28 210 6.4 18.4 11.7 1.4% 8.9% 0.5 32.7 11.4 17.9-65.0% 56.5% MRCB 1.31 2,306-58.9 24.8 18.2 0.9% -2.5% 1.4-36.7 87.1 119.1-337.1% 36.8% * Core NP and Core PER ** Crescendo per share data is based on non-fully Diluted ^ Post Rights Estimates. Last Price is based on TEAP. BERJAYA LAND BHD 0.80 3,992 109.6 n.a. n.a. n.a. 0.7% 0.7 36.4 n.a. n.a. n.a. n.a. 0.93 NEUTRAL IGB CORPORATION BHD 2.71 3,618 18.0 16.4 15.1 2.5% 5.3% 0.8 200.5 220.3 240.3 9.9% 9.1% 4.80 NEUTRAL YNH PROPERTY BHD 2.02 831 16.9 12.6 10.9 2.6% 5.6% 1.0 49.1 65.9 76.1 34.2% 15.6% 1.97 NEUTRAL YTL LAND & DEVELOPMENT BHD 0.83 684 30.6 n.a. 34.4 n.a. 3.2% 0.7 22.4 n.a. 19.9 n.a. n.a. n.a. NEUTRAL GLOMAC BHD 1.01 734 9.3 8.2 7.2 4.9% 12.0% 0.8 78.6 89.4 101.8 13.7% 13.8% 1.02 SELL KSL HOLDINGS BHD 4.29 1,676 8.3 5.5 6.1 5.4% 14.9% 1.2 201.9 304.8 273.5 51.0% -10.3% n.a. BUY PARAMOUNT CORP BHD 1.45 612 8.0 8.5 8.5 6.2% 9.1% 0.7 76.2 71.8 71.8-5.8% 0.0% 1.71 BUY IVORY PROPERTIES GROUP BHD 0.43 189 8.4 n.a. n.a. n.a. 1.5% 0.5 22.6 n.a. n.a. n.a. n.a. n.a. BUY TAMBUN INDAH LAND BHD 1.82 760 7.3 7.6 6.3 5.1% 30.3% 2.1 104.7 99.4 120.2-5.1% 21.0% 2.30 BUY PP7004/02/2013(031762) Page 4 of 5

Stock Ratings are defined as follows: Stock Recommendations OUTPERFORM : A particular stock s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). MARKET PERFORM : A particular stock s Expected Total Return is WITHIN the range of 3% to 10%. UNDERPERFORM : A particular stock s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). Sector Recommendations*** OVERWEIGHT : A particular sector s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). NEUTRAL : A particular sector s Expected Total Return is WITHIN the range of 3% to 10%. UNDERWEIGHT : A particular sector s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). ***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage. This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies. Published and printed by: KENANGA INVESTMENT BANK BERHAD (15678-H) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 Website: www.kenanga.com.my Chan Ken Yew Head of Research PP7004/02/2013(031762) Page 5 of 5