The

Stockmarket Specialist

14/05/2015Vol 26 No 35

In i Capital® this week Lic IA.22 KDN PP 6235/08/2013(032671)

Section A : Market OpinionEconomic Fundamentals

· Malaysia· US, Europe, China, Japan,

AustraliaInternational Perspectives

· New York· Tokyo· Hong Kong· China on the move

Technical – Weekly FBM Palm Oil Plantation Index

KLSE ConclusionThe KLSE & Major Markets – Stop Press

Section B : Stock Selections· Carlsberg· Charting Carlsberg· Brilliance China Automotive· Charting Brilliance China Automotive

Section C : The Capital Dynamics Portfolio

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Section C2 : i Capital Global

Section D : The C D Timer

Section D2 : The 2nd ChanceSection E : Updates

Stock Selection· Announcements· Ratings

Trading Portfolio

Section F :Directors & Significant ShareholdersFeature of Section F : UZMA

Section G : The Eclectic Trader

Section H : Trader’s Portfolio

· Panamy· Lian Beng

Section i : The Capital Dynamics’ Treasures

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41-42This publication is based on information obtained from sources believed to be reliable but we do not make any presentations as to its accuracy or completeness. Any recommendation contained in this publication does not have any regard to the specific investment objectives, financial situation and particular needs of any specific addressee. It is published for the assistance of recipients but it is not to be relied upon as authoritative or taken in substitution for the exercise of judgements by any recipient. This document is not nor should it be construed as an offer or a solicitation of an offer to buy or sell any securities mentioned herein. Readers should not assume that recommendations made in the future will be profitable or will equal performance listed here or recommended in the past. All information and opinions expressed are subject to change without notice. The publisher, its associates and/or employees may from time to time have a position in the securities mentioned in any issue.

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Note from Publisher :

Warren Buffett once said “only when the tides go out do you discover who has been swimming naked”. In other words, when times are good, everyone is an investment genius. However, only those who have withstood the tests of crises and bear markets and still come out strong are the true successful investors.

At Capital Dynamics, while not all our calls are right and we may not outperform the benchmark indices every single year, however, over the long term, our track records have withstood the tests of wars, mild and severe recessions, as well as minor and major financial crises. Hence, i Capital is not boasting when it said it is a stock market specialist.

Section A :Market Opinion

This section is based on a top-down/market-timing approach. In each issue of i Capital®, Capital Dynamics will look at the major economic variables, locally and abroad, major equity markets plus some technical indicators before reaching its conclusion for the KLSE Composite Index. In other words, Section A should be read in toto.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 2

A.1. Economic FundamentalsData to be expected (Date in parentheses is actual release date).

May 18 – May 24 May 25 – May 31Malaysia (20 May) Apr consumer price index Apr producer price index

Apr money supplyApr bank lending

US (19 May) Apr housing starts Apr durable goods orders(21 May) 16 May initial claims Apr new home sales(21 May) Apr leading index May consumer confidence index(21 May) Apr existing home sales 23 May initial claims(21 May) Apr money supply(22 May) Apr consumer price index

Japan (18 May) Mar core machinery orders Apr external trade(20 May) 1Q GDP Apr retail sales

Apr industrial productionApr consumer price indexApr employment reportApr household spendingApr housing starts

China (18 May) Apr house prices

A.1. (i). MalaysiaIndustrial productionIn Mar 2015, industrial production rose by 6.9%, year-on-year, supported by steady expansion in manufacturing, mining, and electricity output – see table 1. In the export-oriented industries, growth was driven by a 13% expansion in the electrical and electronic products industry and a 4.5% rise in the petroleum, chemical, rubber and plastic products industry. On the other hand, the construction-related cluster remained the main driver of growth for the domestic-oriented industries.

In 1Q 2015, industrial production rose by a firm 6.4%, year-on-year, signifying continued healthy economic growth in the first 3 months of 2015 – see figure 1.

Table 1: Industrial Production (y-o-y % change)2014 2015 2015Dec Jan Feb Mar Jan-Mar

Total 7.4 7.0 5.2 6.9 6.4Manufacturing 7.9 6.6 4.0 6.3 5.6Mining 6.9 8.3 9.2 9.2 8.9Electricity 3.0 6.3 1.9 3.8 4.0

Sales valueIn Mar, manufacturing sales value rose by 4.4%, year-on-year, after declining for the first time in nearly 2 years in Feb – see table 2. The rebound was supported by steady growth in the electrical and electronics cluster, while the sales value of manufactured of rubber gloves and basic organic chemicals also registered double-digit growth. Weak prices continued to cause the growth of manufacturing sales value to lag behind manufacturing output growth. Table 2 : Sales Value (y-o-y % change)

2015 2015Mar Jan-Mar

Total 4.4 1.6Veneer sheets & plywood 19.0 5.3Refined petroleum products -11.8 -14.3

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 3Basic iron & steel products -0.8 -4.3Plastics in primary forms 6.3 12.2Communication equipment -15.0 -13.8Diodes, transistors and semiconductor devices 17.3 6.5Industrial gases -1.3 2.4Computers & computer peripherals -9.8 -3.0Motor vehicles 3.1 5.8

EmploymentContinuing a lacklustre performance, employment in the manufacturing sector in Mar slipped 0.1% from Feb, but edged up 0.4%, year-on-year. Employment in the manufacturing sector has been relatively flat since the middle of last year – see figure 2.

The average salaries and wages per employee in Mar rose 3.7%, month-on-month, and 6.0%, year-on-year, to RM2,994.

A.1. (ii). International

USNon-farm payrolls increased by 223,000 in Apr – see figure 3. However, job gains in the previous two months were revised downwards by 39,000. As shown in table 3, employment in the construction sector rose in Apr as weather conditions improved. Meanwhile, the service-providing industries continued to add jobs at a stable pace.

The unemployment rate slipped to 5.4% in Apr, the lowest since May 2008. The labour force participation rate in Apr edged up 0.1 percentage point from Mar to 62.8%. The average hourly earnings increased by 3 cents in Apr to US$24.87, while the average workweek remained at 34.5 hours.

How much longer can the Federal Reserve ignore the steady increase in employment ?

Table 3: Non-farm Payrolls (’000)Monthly change

Feb 2015 Mar 2015 Apr 2015Non-farm employment 266 85 223Goods-producing industries 20 -21 31     Construction 31 -9 45     Manufacturing 3 0 1Service-providing industries 241 115 182     Retail trade 23.1 24.5 12.1 Transportation and warehousing 9.4 8.1 15.2     Information 7 0 3     Professional & business services 49 35 62     Education & health services 61 35 61     Leisure & hospitality 61 -6 17Government 5 -9 10

In Apr, retail sales were flat compared with the preceding month, but rose 0.9%, year-on-year, the weakest growth rate since Nov 2009 – see table 4. The weak performance was due mainly to lower sales at gasoline stations. Excluding gasoline, retail sales rose 0.1%, month-on-month, and 3.5%, year-on-year, in Apr. Although the moderation in growth is milder, as shown in figure 4, the growth rate of retail sales excluding gasoline is also on a downtrend. This mediocre performance adds further

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 4uncertainty to the timing of US interest rate hike.

Table 4 : Retail Sales (% change)Change from prior month Change from prior year

Total 0.0 0.9Ex-auto & parts 0.1 0.0Motor vehicles & parts -0.4 4.5Furniture & home furniture -0.9 1.5Electronics & appliance -0.4 -3.5Food & beverages -0.1 2.1Health & personal care 0.8 5.3Gasoline stations -0.7 -22.0Clothing & clothing accessories 0.2 1.2General merchandise -0.5 -1.3

The seasonally adjusted initial claims for the week ending 2 May 2015 was 265,000, up 3,000 from the previous week, while its 4-week moving average fell by 4,250 from the previous week to 279,500. Continuing jobless claims for the week ending 25 Apr 2015 registered a seasonally adjusted 2.228 mln, down by 28,000 from the previous week, while its 4-week moving average fell by 20,000 to 2.272 mln.

ChinaThe People’s Bank of China (PBC) cut interest rates again, lowering the benchmark one-year lending rate by 25 basis points to 5.10%, effective 11 May 2015. This is the third interest rate cut in 6 months. Low inflation rate allows the PBC to reduce the cost of borrowing to support economic activity. At the same time, as part of interest rate liberalisation efforts, banks are allowed to set deposit rates 50% above the benchmark level, up from 30% previously.

In Apr, although exports and imports dropped by 6.4% and 16.2%, year-on-year, to US$176.3 bln and US$142.2 bln respectively, China still recorded a respectable trade surplus of US$34.13 bln. In the first 4 months of 2015, exports rose by 1.6%, while imports contracted by 17.3%, giving rise to a trade surplus of US$157.8 bln.

The weak performance in exports was due mainly to weak external demand as the US is the only major developed economy that has recorded significant recovery. Meanwhile, despite lower commodity prices, rising labour, finance, and other costs of production, as well as the appreciating Renminbi, have reduced the competitiveness of China’s exports. Going forward, China’s exports will continue to face substantial challenges. Apr’s export leading index fell to 35.9, one of the lowest levels since records began.

In Apr, retail sales rose by 10.0% from a year ago. After factoring out the price factor, real retail sales rose by 9.9%, year-on-year, still a reasonably strong performance – see figure 5. Given the stable employment conditions, retail sales should continue to grow at a steady rate. Total vehicle sales in Apr fell 11.0%, month-on-month, and 0.5%, year-on-year, to 1.99 mln units – see table 5. This is the first year-on-year decline in auto sales since Sep 2012 due to a 17.6% plunge in commercial vehicle sales. Meanwhile, passenger vehicle sales continued to grow, albeit at a slow pace.

Table 5: Vehicle Sales mln units year-on-year % changeApr 2015 Jan-Apr 2015 Apr 2015 Jan-Apr 2015

Total 1.99 8.14 -0.49 2.77Passenger 1.67 6.97 3.72 7.67Commercial 0.33 1.17 -17.61 -19.13

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 5In Apr, industrial production rose 5.9% from a year ago, up slightly from a weak performance in Mar – see figure 6. While output from textiles and other traditional industries remained weak, high-tech and new industries such as telecommunication equipment and biomedical industries continued to register double-digit growth. This is in line with China’s structural transformation.

Fixed asset investment (excluding rural households) in Jan-Apr 2015 expanded by 12.0% from the same period a year ago, continuing its downtrend – see figure 7. However, the implementation of infrastructure projects worth over RMB1 trillion and the easing of monetary policy should support investment activities in 2015.

Renminbi bank loans outstanding at the end of Apr were RMB86.61 trillion, up 14.1% from a year ago. New bank loans totalling RMB707.9 bln were created in Apr. The steady bank lending growth reflects the efforts to support economic growth.

The annual growth rate of money supply, M2, at the end of Apr moderated to 10.1%. The easing of monetary policy recently is expected to put a stop to the downtrend in money supply soon.

There was little change in the pricing environment in Apr. The consumer price index (CPI) in Apr fell 0.2%, month-on-month, but rose 1.5%, year-on-year – see table 6. Non-food prices rose 0.2%, month-on-month, and 0.9%, year-on-year. Excluding food and energy, the CPI rose by 0.2%, month-on-month, and 1.5%, year-on-year.

The ex-factory producer price index, a leading indicator of the CPI, fell by 4.6%, year-on-year, in Apr, contracting for the 38th month in a row. Hence, inflationary pressure should stay low, albeit stable.

Table 6: Consumer Price Index % change from the prior yearFeb 2015 Mar 2015 Apr 2015

Total 1.4 1.4 1.5 Ex-food and energy 1.6 1.5 1.5 Ex-fresh fruits and vegetables 1.2 1.3 1.3Food 2.4 2.3 2.7Tobacco, liquors & articles -0.6 -0.5 -0.5Clothing 2.9 3.0 2.9Household apparatus & maintenance services 1.5 1.2 1.1Medicines, medical care, & personal articles 1.9 1.6 1.8Transportation & communications -1.7 -1.5 -1.6Recreational, educational & cultural services 1.8 1.6 1.6Residence 0.6 0.6 0.6

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 6In 1Q 2015, Eurozone’s real GDP grew by 0.4% on a quarter-on-quarter basis – see figure 8. The performance of the major Eurozone economies differed as the growth rates of France, Italy and Spain accelerated while that of Germany slowed – see table 7. Year-on-year, real GDP grew by 1.0%. GDP growth in the first quarter was mainly driven by stronger consumer spending as a result of falling energy prices.

Table 7: Real GDP Growth (%)quarter-on-quarter year-on-year

4Q 2014 1Q 2015 4Q 2014 1Q 2015Eurozone 0.3 0.4 0.9 1.0Germany 0.7 0.3 1.5 1.0Spain 0.7 0.9 2.0 2.6France 0.0 0.6 0.0 0.7Italy 0.0 0.3 -0.5 0.0Portugal 0.4 0.4 0.6 1.4

In Mar, industrial production declined by 0.3% from the previous month. Most categories deteriorated in Mar with energy production leading the way. The only exception is the production of non-durable consumer goods, which grew by 2.3% – see table 8. On a year-on-year basis, industrial production rose by 1.8% in Mar.

Table 8: Industrial Production% change from prior month % change from prior year

Feb 2015 Mar 2015 Feb 2015 Mar 2015Total 1.0 -0.3 1.9 1.8Intermediate goods 0.2 -0.3 -0.2 0.0Energy 1.0 -1.7 7.0 3.8Capital goods 0.7 -0.9 1.2 0.3Durable consumer goods 0.7 -0.9 0.8 -1.7Non-durable consumer goods 1.6 2.3 2.6 5.7

Industrial production in Germany declined while Spain and Italy showed some improvement – see table 9. Going forward, overall industrial production is expected to stay tepid.

Table 9: Industrial Production by Country% change from prior month % change from prior year

Feb 2015 Mar 2015 Feb 2015 Mar 2015Germany 0.2 -0.7 1.0 -0.1France 0.5 -0.2 1.6 1.6Spain 0.7 1.0 1.1 3.5Italy 0.7 0.4 -0.1 1.5

JapanIn Apr, the year-on-year bank lending growth stayed at 2.7% despite major banks registering a stronger increase in lending – see table 10. The stable bank lending growth is underpinned by improved business sentiment – see figure 9.

Table 10: Bank LendingYear-on-year % change Amount Outstanding (trillion Y en)

Feb 2015 Mar 2015 Apr 2015 Apr 2015Total 2.6 2.7 2.7 425.3Major banks 1.3 1.5 1.6 204.9Regional banks I 4.1 4.1 4.1 174.1Regional banks II 3.2 3.0 3.0 46.2

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 7In Apr, the year-on-year growth rate of money supply, M2, stayed unchanged at 3.6%. This mirrored similar performance in bank lending in Apr.

Aided by the weaker Yen and falling oil price, Japan’s current account recorded a surplus for the 9th consecutive month. In fact, it was the largest surplus since Mar 2008. As shown in table 11, goods, services, and primary income accounts all recorded surpluses. This favourable performance bodes well for the 1Q GDP growth.

Table 11: Current Account Balance (100 mln Yen)Mar 2015 Feb 2015 Mar 2014

Goods 6,714 -1,431 -11,770 Exports 71,360 59,588 64,999 Imports 64,646 61,020 76,769Services 1,678 -1,087 -555Primary income 23,265 18,622 17,830Secondary income -3,704 -1,702 -4,199Current Account 27,953 14,401 1,306

AustraliaIn seasonally adjusted terms, the total value of dwelling finance commitments in Mar rose by 3.5% from Feb, reversing the 1.0% decline in the previous month. The value of commitments in investment housing returned to growth in Mar, while the growth of owner occupied housing also accelerated – table 12. Month-on-month, the number of home loans approved rose by 1.6% in Mar.

Year-on-year, the total value of owner occupied housing finance commitments rose 11.9%, while the total value of investment housing commitments increased 20.9%. Looking forward, the RBA rate cut recently is expected to boost housing finance in the coming months.

Table 12: Housing Finance (% change)From Feb 2015 From Mar 2014

Total dwelling commitments 3.5 15.4Owner occupied housing 1.6 11.9Construction -2.7 -4.0Purchase of new dwellings 2.2 10.7Purchase of established dwellings 1.9 4.1Investment housing 6.4 20.9

A.2. International Perspectives

A.2. (i). New York

The job report for Apr was more or less in line with expectations although the downward revision for Mar surprised. Then, US GDP growth for the 1st quarter was very weak, again expected although the extent of the slowdown also surprised. This weakness was apparently due to numerous temporary factors that would not repeat after the 1st quarter, with the possible exception of a strengthening US$. The consensus view is that US GDP growth would revert to its 2.0-3.0% growth path again in the coming quarters. If these consensus views are right, what would it mean for the US employment market ? What would this imply for US monetary policy ?  

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 8Assuming that US GDP growth in the coming quarters reverts to an apparently neither too hot nor too cold rate of 2.0-3.0% per annum, this would be in line with what the US economy has been experiencing since 2009. During that time, US unemployment rate has plunged from about 10% to 5.4% in Apr 2015 – see figure 1. A neither too hot nor too cold GDP growth rate of 2.0-3.0% per annum in the next 1-2 years would most likely see the same rate of improvement in the US job market. The US unemployment rate would fall to 4.5-4.7% by end 2015/early 2016 and would drop below 4.0% by end 2016. The key question to ask would be, what would US monetary policy be in such an environment ? Can Janet Yellen and gang continue to tell all of us that it would be data–dependent ? Would such a vague policy make sense and most importantly, would it be responsible ? Would US wage growth still be so timid ? If not, what would happen to US headline and core inflation rates ? Still tame ? Can the Federal Reserve dig up more esoteric data to justify an almost zero-rate monetary policy? i Capital does not think so. i Capital has shown many evidences that the US economy has normalised. In fact, Tan Teng Boo has warned that the US economy has normalised to such an extent that it is ready or almost ready for the next recession.  While US wage growth has so far been tame, it does not make sense that the same will be true as the US unemployment rate drops further. Despite the severity of the 2008-2009 recession, the US economy does not have an endless pool of low wage or unemployed workers to rely on. The unemployment rate for those unemployed for 26 weeks or less has already dropped to very normal levels. By Apr 2015, it was 3.8%. Even China, with 1.4 bln people, does not have an endless pool of low wage or unemployed workers. The current US recovery is already old by historical standards. As it progresses, a data-dependent US monetary policy becomes less and less appropriate. A data-dependent US monetary policy then would mean that increases in US interest rate cannot be postponed anymore.

As i Capital sees the NYSE priced for perfection, i Capital retains its bearish short-term outlook of the NYSE at a range of 1,550 to 2,150 for the S&P 500. See Stop Press for the latest. For the medium-term, i Capital is retaining its bearish outlook at a range of 1,350 to 2,150. i Capital will review its long-term outlook of the NYSE at a later stage.

A.2. (ii). Tokyo

The Nikkei 225 has benefitted from Abe’s massive efforts in manipulating and driving down the value of the Yen’s exchange rate. While the Nikkei has gone up and the Yen has plunged, nothing else seems to have worked. This result is expected as Shinzo Abe did not implement any painful reforms.

Japan needs a new model of growth and development. She is caught in the high-income trap. Everyone knows that simple pump priming and super easy monetary policy cannot work. The signs are everywhere that Japan needs to undergo severe transformation. Take the problems faced by two famous Japanese corporations that used to have well known global brands : Toshiba and Sharp.

Toshiba Corp is postponing the release of its group earnings for the year ended in Mar as the company needs more time to investigate possible improper accounting practices used for some infrastructure projects. The global Japanese company now intends to announce its results in Jun or even later. It also withdrew its earnings estimates for fiscal year 2014. Toshiba first revealed the possibility of an improper accounting practice in Apr. There are instances where total costs were underestimated and losses were not recorded in a timely manner as a result of the use of the percentage-of-completion accounting method for unfinished projects.

It is extraordinary for a major company like Toshiba to put off announcing earnings results. Then, Sharp Corp, another Japanese icon, is now set to reduce its capital to ¥500 mln to wipe out its cumulative loss. The struggling electronics maker initially planned to reduce the capital to only ¥100

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 9mln from ¥121.8 bln as of the end of Mar 2014 in order to become eligible for tax benefits given to small and medium-size companies. However, such large capital reductions are unusual for a major Japanese corporation that has not gone bust.

Capitalism is about creative destruction. The old, the irrelevant, and the dinosaurs go extinct. The new ones would come in and replace the destroyed. Japan has, in her more than 2 Lost Decades, lost many but has not been able to replace them with any new one. The NEC, the Akai, the Sansui, the Fujitsu, the Sanyo, the Olympus, and many more are all long gone. The Toshiba and Sharp will soon join this long list of irrelevant global icons. What has Japan produced to replace them ? None. What has Shinzo Abe done to allow Japan to produce new global competitors ? Nothing. Instead, Shinzo Abe is going all over the world and either throwing money away to win friends or blindly kowtowing to America. It is hard to believe that the Japanese people cannot find a better prime minister than Shinzo Abe who goes around embarking on all kinds of military adventures that would potentially reduce the number of an already shrinking Japanese population in a substantial manner.

So, here are the stark facts again. One, Japan is running out of children. Two, Japan’s population is shrinking fast.  Three, Shinzo Abe is taking the Japanese people down a journey of annihilation. Four, Shinzo Abe is not doing anything to find a new model of growth and development for Japan and global Japanese brands are declining fast. With the Tokyo stock market trading at a PE multiple higher than the NYSE, i Capital retains its short-term outlook at a range of 16,000 to 22/23,000. See Stop Press for the latest. i Capital is retaining its bearish longer-term outlook of the Nikkei.

A.2. (iii). Hong Kong

Figure 2 is interesting. It shows the Hang Seng Index on a monthly basis with its major resistance line and the 4 circled areas.

The first circle represents the time around mid-1997. We all know what happened to the Hong Kong stock market after that time. It tumbled 10,000 points. The second circle represents 2000. After that, global stock markets tumbled thanks to the US-led technology bubble bursting. The Hang Seng Index only bottomed out in early 2003, after falling 54%. The third circle centers on 2010. Even though there were no global crashes then, the Hang Seng plunged 35% then and bottomed out in Oct 2011, a pretty severe bear market that few have noticed. Now we are at the fourth circle. Will it lead to another bear market ? If yes, will it be the more tame 2010-2011 type ? Or will it be the severe 60% 1997 plunge or the multiple year bear market of 2000-2003 ? This really depends on the external leads – primarily the NYSE or Shanghai. The bear market in 2010-2011 was tame because it was localised, while 1997 and 2000 were global in nature. Should the fourth circle represent a peak triggered by a crash in NYSE, then, the fall could be nasty. What about the time in late 2007 when the Hang Seng pierced above its major resistance line and reached 33,000 before plunging with the rest ? The push above the major resistance was triggered by the massive rally in Shanghai. It was, to use a technician term, a false break. Although something like this short bull could happen again, given the bullish momentum in Shanghai, i Capital thinks it is unlikely this time. Why ? The NYSE is the worrying part. All it needs is

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 10either for investors to be convinced that US interest rate is going up or for the US economic data to shock or disappoint.

For the short-term, i Capital retains its outlook of the Hong Kong stock market at a range of 23,000 to 28,000. The 28,000 level is a major resistance region and needs to break above this tough level decisively, which does not look like it is happening now, thanks to Janet Yellen who has finally confirmed the worries of i Capital. See Stop Press for the latest. For the medium-term, i Capital retains its outlook of the Hang Seng Index at a range of 23,000 to 32,000. In the long-term , i Capital retains its outlook. While it still expects the Hang Seng Index to test the 50,000 mark, the Hang Seng is expected to decline first before it can try to reach that target.

A.2. (iv). China on the move

On 18 Mar 2004, i Capital started an exclusive section on China, an immensely important, huge, and complex nation. As our managing director described it, the emergence of China is an event that happens only once in a millennium. Tracking its fast emergence and understanding its development will therefore be useful not only for investors but also for businessmen and management. This exclusive series “China on the move” started with “A Brief History of China”, made up of 8 parts, started with the Xia Dynasty (夏朝) and rounded up by examining Deng’s reforms.China Today

China today is the world’s most exciting, dynamic, and successful economy. What drove China’s phenomenal growth in the past few years ? In the previous parts of China Today, we examined her economic structure, sources of growth, the current conditions, and her future.

The PBC Panicking ?

Since Nov 2014, the People’s Bank of China (PBC) has cut the reserve requirement ratio (RRR) two times and interest rates 3 times – see figure 1. Notably, the one percentage point reduction in the RRR last month was the largest in terms of quantum since Dec 2008. Does this signal a change in China’s monetary policy stance ? Is this a sign that the Chinese government is panicking over the economic slowdown? Can we expect more stimulus measures to come ?

To a large extent, the slowdown in China’s economic growth has been within expectations. Despite the slowdown in the pace of growth, job creation has remained stable and the unemployment rate has also held steady. In addition, the slower economic growth was accompanied with an improved economic structure and better quality of growth. In 1Q 2015, the tertiary industry accounted for 51.6% of the GDP, the highest level on record. With investment and export growth slowing down, consumption has assumed the leading role as the major source of growth. Strong rural household income growth has pushed the ratio of urban to rural household income to 2.61 in 1Q 2015, the lowest since the turn of the century. New industries and high-technological sectors have sprung up to provide new impetus of growth to the Chinese economy. Hence, given the positive developments behind the slower headline GDP number, it is unlikely that the Chinese government is panicky over the slower rate of growth.

However, the following developments have made it necessary for the Chinese government to adjust its monetary policy in order to achieve a stable growth.

First, China’s consumer price inflation rate has moderated to below 2%, while at the producer level, the ex-factory producer price index has been contracting for more than 3 years. The fall in inflation rate will push up real interest rate should nominal interest rate stay unchanged, which will in turn results in a tightening of monetary policy. Hence, in order to maintain a stable real interest rate, nominal interest rate needs to come down – see figure 2.

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 11

Secondly, the cuts in RRR are necessary to maintain liquidity in the economy. Figure 3 shows the year-on-year change in the position of foreign exchange purchase (PFEP) since 2008. As the Renminbi is not freely convertible, foreign exchange capital needs to be converted into Renminbi before it can be used in China’s domestic economy. Hence, the PFEP is the corresponding increase in Renminbi supply when the PBC buys foreign exchange assets. It has been a major source of liquidity in the economy. However, in recent months, the year-on-year increase in the PFEP has slowed significantly, and in Mar 2015, it turned negative for the first time since Dec 2007. This has adversely affected the liquidity conditions of the economy. When liquidity is tight, small and medium-sized businesses will experience even greater difficulties in having access to credit. Hence, releasing liquidity by lowering the RRR is necessary for the banking system to carry out its credit functions smoothly.There are a few reasons for the decline in the PFEP in recent months. One, the US$ has risen significantly in anticipation of a US interest rate hike. This has resulted in capital outflow and businesses choosing to park their foreign exchange earnings outside of the country. Figure 4 shows that the capital and financial accounts of China’s balance of payment has experienced net outflows in the last three quarters of 2014. Two, in Mar, China’s trade surplus fell to a mere US$3.1 bln, one of the lowest levels in recent years. Although the trade surplus rebounded to US$34.1 bln in Apr, the combined numbers of the last two months remained the smallest in a year. Three, Chinese companies have been responding to the government’s call to “go out” of China. With many countries easing monetary policies to improve the competitiveness of their currencies, the Renminbi has appreciated strongly on a trade weighted basis – see figure 5. This, coupled with the “One Belt, One Road” project, has accelerated the outflow of capital.

Thirdly, 7 years after the 2008 US-led global financial crisis, the US, among the major developed economies, is the only one that has shown some strength, while Japan and Europe are still struggling. Growth in emerging markets has also been mediocre. This has adversely affected China’s exports and made domestic demand the main source of growth. With investment activities slowing sharply, adjustments in monetary policy are needed to maintain stable economic growth.

Given that the side effects of the RMB4 trillion stimulus package introduced in 2008 have not been completely unwound, rolling out a new massive stimulus package now will put past efforts to waste. By lowering the RRR and interest rates, the Chinese government is merely showing great flexibility and pragmatism in its economic management.

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 12

A.3. Technical(one technical indicator is shown per issue)

The KLSE CI has moved below its 30-day, 50- day and 50-week moving averages. Its daily MACD and DMI are bearish.

This week’s i Capital updates the weekly KL FBM Palm Oil Plantation Index. The index made a sharp increase of 40% and hit a high of 18,878 points. As a result of ample supply from Southeast Asia and faltering demand arising from slower economic growth, the Plantation index subsequently formed a retracement of 61.8% before making a rebound. Once again, the resistance line showed its presence in 2014 when the index failed to penetrate it for the third time and eventually fell below its 30-week exponential moving average. Its weekly MACD has shaped a bearish crossover. With the recent report on rising inventory and irregular exports, the bears would be more aggressive should the support line fail to hold.A.4. KLSE Conclusion and Recommendation

TWO MANY DEFICITS

It has been a crazy period. There were the 2015 Gatherings of the i Capital International Value Fund held on 26th Apr in Kuala Lumpur and 30th Apr in Sydney. Then, they were followed by a whole day seminar on 9th May, which ended only after 6.30 pm. Held as part of the 25th anniversary of i Capital, the unique seminar attracted nearly 1,000 people – must be the largest investment seminar in Malaysia and at RM299, must easily be the best value for money event.

Shortly after that, the forever young CEO of Capital Dynamics gave a 2-hour investment talk at Monash University on 12th May 2015. Photos of this evening talk can be found at https://www.facebook.com/capitaldynamics.icapital?fref=photo. Next week, he will deliver a luncheon talk to 25 CFOs from the Asia-Pacific region of a multi-national corporation.

Last week, i Capital started examining the major sources of economic growth for Malaysia over the medium-term. It reviewed the role of private consumption. Although it has been a prime driver of GDP growth since 2008, it is reaching its limits. Household debts are high and major items like cars and houses are already overbought. Malaysia has only 29 mln odd people. Subscribers know the fundamental equation in economics tells us that ΔGDP = ΔC + ΔI + ΔG + Δ(X-M) where C stands for consumption, I for investment, G for government spending, X for exports and M for imports. Growth in C, I, G or X will lead to economic growth.

Since private consumption has exhausted its potential in driving GDP growth, the burden now lies with government and investment spending and exports (which will be reviewed next week). How much room have these two factors got to contribute to Malaysia’s medium-term GDP growth ?

Figure 1 shows Malaysia’s budget deficit over the decades. In the medium-term, government spending, in terms of public consumption and investment, is not expected to play a major role in driving Malaysia’s GDP. Why ? Malaysia has always been experiencing budget deficit. While her budget deficit has been dropping as a percentage of GDP in recent years, any further improvement would be hard to come by in the medium-term and would have to rely a lot on revenue growth rather than spending cuts.

KLSE Composite Index : Market Valuation

14.05.15 07.05.15 15.05.14

PE Ratio 18.48 18.45 17.68

Div Yield 3.10 3.13 3.00

Price/Bk Value 2.20 2.20 2.41

FBM KLCI 1,807.55 1,805.10 1,879.83

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 13While the deficit has to be further reduced, many of the deficit reducing measures available like implementing the GST and cutting the subsidies are already in place. Further reduction in the budget deficit would have to come from increase in revenue which has got to come from an export driven GDP growth. However, the prospects for the global economy do not look promising in the medium-term.

Besides, the government has lot of debt to reduce – see figure 2. Hopefully, the Ringgit does not come under more outflows or attacks. If the Ringgit weakens further, the central bank would find it difficult not to raise Malaysia’s interest rate. This would be bad for our public and household debt burden.

So, if government spending cannot play its role as a growth driver, what about private investment spending ? Here, we are also unfortunately reaching or close to reaching our limits – see figure 3. In the past, whenever Malaysia’s investment spending as a percentage of her GDP exceeds 30%, her external account gets into a serious problem. Whenever her investment spending as a percentage of GDP exceeds 30%, Malaysia suffers scary and damaging current account deficits. Whenever Malaysia experiences a current account deficit, Malaysia would sooner or later end up in a major crisis. Witness the 1985/86 Depression and the 1997 Great Asian Crisis – not surprisingly, both crises suffered serious current account deficits and broke out under the same 4th prime minister who cannot seem to learn from his gross mistakes. Now, investment spending as a percentage of GDP has, in recent years, been rising and is close to exceeding 30% again. And not surprisingly, Malaysia’s current account surplus has been plunging.

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 14Figure 4 shows a zoom up of this worrying trend and shows that Malaysia’s current account surplus was dangerously low in 2013 and 2014. To reverse this trend, domestic demand in Malaysia has to be curtailed as export growth has been weak in the last 4 years or so. Curbing domestic demand would have to comprise curtailing private consumption (as shown in last week’s i Capital, household debt is at a very high level), which would then lead to lower imports. Reducing government spending is also a wise option. Finally, it would also mean that investment spending as a % of GDP has to fall, which would also lead to lower imports.

Figure 5 adds on a few more key variables to Malaysia’s current account and investment spending. Malaysia’s foreign reserves and external debts are added on to give a more complete picture. Reserves have been falling. External debt has been rising. The IMF has redefined external debt. Under this new definition, Malaysia’s external debt is a lot higher, and more importantly, Malaysia’s external debt is significantly higher than her foreign exchange reserves, a similar trend developed before the 1997 Great Asian Crisis.Increasing investment spending would boost GDP growth but this would, at the same time, mean that Malaysia’s current account deficit problem would quickly come back to haunt the economy. A budget deficit with a current account deficit, amidst a turbulent and deflationary global economy, would cause the Ringgit to drop further and may trigger another crisis.

In the next few issues, i Capital will critically review the other sources of Malaysia’s GDP growth and show that Malaysia’s future economic growth path is uncertain.

T he KLSE

China has decided to cut interest rates again. The People’s Bank of China has acted more aggressively and decisively as it needed to ensure that China’s economic growth does not lose further momentum. With Japan losing momentum and the US trying to regain her growth momentum, the next few months are crucial for the global economy. Will it be similar to the last few years when a soft patch is replaced by a spurt ? Or we are seeing a broad based slowdown that would snowball ?

i Capital retains its outlook of the KLSE at a range of 1,750 to 1,860 for the immediate-term. See Stop Press for the latest. For the short-term, i Capital retains its bearish outlook at a range of 1,300 to 1,860. For now, the bearish medium-term outlook of i Capital is retained with a possible target range of 800-900. Over the longer-term, i Capital remains concerned over Malaysia’s uncertain political and economic future. For its long-term outlook, i Capital still expects the KLCI to drop below 1,000 points before reversing.

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 15

Section B :Stock

Selections

Stocks selected under this section are meant for medium and/or long-term investments. Capital Dynamics could use either a top-down/market-timing approach or a strictly bottom-up style or a combination of both when selecting stocks. When stocks are recommended under Section B, it does not mean that its price will take 1 or 2 years to move. If the price moves too fast, i Capital® may recommend a sell. Or if it is still attractive after holding for a while and its price has gone up, we may still recommend holding or even buying more. Or if it declines, i Capital® quotes Warren Buffett who was supposed to have said this : “If you aren’t prepared to see your stocks go down 50%, you shouldn’t own them. Be prepared for declines – and arrange your financial affairs such that you won’t have to sell out”.

(1) Carlsberg Brewery Malaysia (CARLSBG, 2836)Principal activities Major shareholder/sProduction, packaging, marketing and distribution of malt beverages

Carlsberg Breweries A/S

Financial highlights (RM mln) – 31 December

2010 2011 2012 2013 2014Sales 1,368 1,489 1,585 1,555 1,635Pre-tax profit 176.5 220.4 245.7 236.4 274.3Net profit 133.2 166.2 191.6 183.9 211.6Adjusted net profit 132.3 180.3 194.1 184.0 214.0

Depreciation 17.70 19.09 21.87 22.30 23.49Finance cost 4.59 4.39 4.97 5.32 5.20

Current assets 362.0 369.5 365.4 381.8 436.5Current liabilities 276.1 253.8 241.6 295.7 314.4Fixed assets 143.9 146.6 158.4 165.0 154.3Return on equity (%) 25.69 73.49 68.01 61.54 68.55

Latest paid-up: 4th quarter 31/12/2014 31/12/2013308.1 mln shares of RM0.50 each RM mlnMarket capitalisation: Sales 423.8 387.7RM3.88 bln @ RM12.58 Pretax profit 77.19 76.672016 PE Ratio: Net profit 62.93 64.04Around 16 times @ RM12.58 Finance cost 1.500 1.474

i Capital provides an update on Carlsberg Brewery Malaysia Bhd (Carlsberg). Carlsberg is involved in the production, packaging, marketing and distribution of malt beverages like beer and stouts. The brands under Carlsberg are Carlsberg Green Label, Carlsberg Special Brew, Kronenbourg 1664, Kronenbourg 1664 Blanc, Asahi Super Dry, Somersby Apple Cider, Somersby Pear Cider, SKOL beer, SKOL Super beer, Danish Royal Stout, Corona Extra, Jolly Shandy Lemon as well as non-alcoholic Nutrimalt drink. The group also imports international beer brands such as Hoegaarden, Stella Artois, Budweiser, Grimbergen and Beck’s. Carlsberg is aiming to increase the contribution from its premium beers to around 40% in the longer-term. Distributors are only appointed on an exclusive basis.

In late 2009, Carlsberg acquired Carlsberg Singapore Pte Ltd for RM370 mln and its Singapore business is contributing around 25% of total revenue. Following Carlsberg Singapore’s acquisition of a 51% stake in MayBev Pte Ltd, the sole distributor of Asahi in Singapore, in Apr 2014, Carlsberg is expected to make further inroads in the Singapore premium beer segment while expanding the distribution of Asahi Super Dry, currently the second biggest premium lager in Singapore. The Singapore beer market is different from Malaysia’s with no import duties and a much more competitive market. The stock rationalisation programme, which ended in quarter one 2014, did much to improve its supply chain efficiency and its Singapore operations rebounded in 2014.

The group’s exposure to Sri Lanka is through its 24.6% stake in Lion Brewery (Ceylon) Plc (Lion Brewery). In 2014, Lion Brewery acquired its biggest competitor and enlarged its market share to 87%. Sri Lanka has beer consumption of only 5 litres per person versus 35 litres in Southeast Asia. The population of Sri Lanka is around 20 mln people.

Although revenue in financial year (FY) 2014 grew only 5%, earnings grew at a better pace, thanks partly to a RM40 mln cost reduction. Carlsberg increased spending on consumer facing marketing

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 16while reduced agency fees, etc. Its core product, Carlsberg Green Label, managed to increase its market share slightly while the Sommersby cider doubled in volume from a low base. While Carlsberg Green Label is still the biggest contributor, the premium brands have generated doube digits growth. The weakness in Ringgit did not have much adverse impact as the imported beer made up less than 5% of the business. However, over the years, Carlsberg has transformed. Before 2009, its revenue and earnings were flat. Since its Singapore acquisition and the addition of a number of premium brands, Carlsberg has found a new life. This shows in its financial results – see table 1.

Table 1: (RM mln) 05 06 07 08 09 10 11 12 13 14

Revenue 867.2 929.7 897.5 960.2 1,046 1,368 1,489 1,585 1,555 1,635

Profit before tax 112.4 110.4 97.7 101.3 102.6 176.5 220.4 245.7 236.4 274.2

Profit after tax 88.7 85.9 78.5 76.1 76.7 134.1 167.4 193.8 186.6 216.9

Dividends 110.1 86.8 82.6 79.2 28.7 58.5 127.3 171.6 192.6 186.5

PPE & Intangible 169.6 160.7 158.1 156.4 521.5 152.3 158.6 168.2 174.3 164.4Investment in asso-ciate 18.0 14.8 13.8 13.9 24.3 26.3 33.4 34.7 40.9 58.2

Net current asset 314.9 323.4 318.9 316.2 43.1 85.9 115.6 123.7 86.1 122.1

502.5 498.9 490.8 486.5 588.9 264.5 307.6 326.6 301.3 344.7

Conclusion and AdviceAt RM12.58, Carlsberg is capitalised at RM3.88 bln. For this, what do investors get in return ?

Over a 10-year period, the fixed assets of Carlsberg have not grown. In fact, its net current assets and total assets have both declined. At the same time, its revenue, earnings and dividends paid out have increased, especially after 2009. In our investment seminar held on 9 May 2015, we showed the powerful use of the DuPont method. Applying this to Carlsberg tells us that it has substantially improved its asset turnover ratio. A consequence of this is that its return on assets has jumped up to an impressive level – see figure 1. The brewery business does not have high re-investment needs. This means that its decent profit margin and high asset turnover create generous “owners earnings” which Carlsberg has been giving back in the form of higher and higher dividends. Its dividend per share for FY2014 was 71 sen giving a dividend yield of 5.6% based on RM12.58. i Capital revises its rating for Carlsberg Brewery Malaysia to a Buy at below RM12.00.

(2) Brilliance China Automotive Holdings (Brilliance China, 1114)

Principal activities Major shareholder/sAutomobile manufacturer Huachen (PRC state-owned company),

Templeton Asset ManagementFinancial highlights (RMB mln) – 31 December

2010 2011 2012 2013 2014Sales 8,949 6,443 5,916 6,103 5,515Pretax profit 1,465 1,949 2,295 3,325 5,343Net profit 1,271 1,812 2,301 3,374 5,403Adjusted net profit 1,303 1,812 2,301 3,374 5,403

Depreciation 139 138 140 139 139Finance cost 171 194 174 139 156

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i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 17Current assets 7,098 6,032 6,417 6,524 6,345Current liabilities 7,962 6,572 6,857 6,793 7,134Fixed assets 1,377 1,393 1,442 1,686 1,960Return on equity (%) 25.96 28.65 32.92 33.69 44.50

Latest paid-up 1st half 30/06/2014 30/06/20135,026 mln @ US$0.01 each RMB mlnMarket Cap Sales 2,496 2,572HK$66.44 bln @ HK$13.22 Pretax profit 3,585 2,0022015 P/E ratio Net profit 3,628 2,030Around 9 times @ HK$13.22 Finance cost 76.69 70.41

This week, i Capital features Brilliance China (Brilliance), a Chinese automobile manufacturer founded in 1992 as a government owned enterprise. In 2003, it formed a 50% owned joint venture (JV) with BMW, called “BMW Brilliance” to manufacture BMW cars in China. This JV manufacturers BMW automobiles and sells them directly to BMW dealerships in China. Brilliance also produces vans and multi-purpose vehicles (MPVs) under its wholly owned domestic brands which are mainly used for commercial purposes but this business is currently loss making and the group’s profits are entirely derived from its BMW JV. In fact, over the last 8 years, the group’s 50% share of profits from the BMW JV has contributed to more than 100% of the group’s total profit in all but 1 year, meaning that the group’s wholly owned auto brands have been unprofitable in 7 out of the last 8 years – see table 1. As of 2014, China is BMW’s largest market in the world, accounting for 22% of total BMW global sales. Of all the BMWs sold in China in 2014, the BMW Brilliance JV produced 61% of the total volume while the balanced was imported (imported BMWs are not a part of the JV). The proportion produced by the JV will continue to rise in the future as BMW will allow the JV to produce more models in the future.

Table 1: Income from Joint Venture vs total consolidated net income (RMB mln)2007 2008 2009 2010 2011 2012 2013 2014

Equity income from Joint Venture 192 285 376 1,066 1,912 2,526 3,641 5,766Consolidated net income 97 81 -2,744 1,519 1,891 2,237 3,316 5,300Equity income /total net income (%)

198 352 NM 70 101 113 110 109

Before analysing the company, a few comments on China’s auto industry are necessary to understand the competitive landscape. China is already the world’s largest automobile market. In 2014, around 23.5 mln vehicles were sold in China compared with 16.5 mln vehicles in the United Sates. However, China’s car penetration rate is still quite low at around 10% as of 2014 compared with over 50% in many developed countries. Hence, China is perhaps the single most attractive car market in the world in terms of both current size and future growth potential.

To understand the current structure of the Chinese car market, a look at its historical development is useful. In the 1980s when the automobile industry in China was in an early stage of development, the government wanted to develop home grown companies. In addition to imposing high tariffs on imported cars, the government also required that foreign car companies seeking to manufacturer cars in China had to form JV with local partners and the local partner had to have at least a 50% equity stake. Each foreign automaker was allowed to form up to two local JVs to produce the same category of cars, although BMW has chosen to work with just one partner in China as its production volume does not justify having more than one partner. The Chinese partner is also allowed to set up multiple JVs with different foreign partners and most have done so. For example, SAIC, which is China’s largest automaker, has JVs with both Volkswagen and General Motors while some of the other Chinese automakers have even more JVs with different foreign partners. 7 of the top 10 Chinese automakers now derive the majority of their revenue from JVs with foreign car makers, and all 7 have state-owned enterprises as their controlling shareholder. Although the Chinese partner in these JVs has at least a 50% stake, the foreign partner controls the brand and the product. For example, a consumer buying a BMW in China is buying it because it is a BMW, not because it is being made by the BMW Brilliance JV. In the case of BMW Brilliance, BMW controls which models will be manufactured by the JV and which models will be imported into China from BMW itself.

Analysing Brilliance’s financial statements is challenging as all profits are generated by its BMW JV but such profits are reported using the equity accounting method rather than being consolidated into the group. The equity accounting method is used because the group owns just 50% of the JV. This severely limits the degree of financial transparency. For example, when analysing the group’s income statement, contribution from the BMW JV is reported in one single line item which is equity income.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 18Brilliance does provide a limited amount of financial disclosure for its BMW JV but such disclosure is still limited to a few key items.

The group’s revenue and operating profit, which does not include contribution from its BMW JV, has been declining over the last 5 years due to declining sales of its self-branded vans and multi-purpose vehicles (MPVs) – see table 2. In fact, operating profit has been negative for the last 3 years. In contrast, BMW Brilliance’s revenue and operating profit have seen explosive growth over the last several years – see table 3. BMW Brilliance’s revenue has grown due to both growth in overall BMW sales in China and the group taking an increasing share of such sales as opposed to imported BMWs which are not a part of the BMW Brilliance JV.

Table 2: Key income statement figures (RMB mln)2010 2011 2012 2013 2014

Revenue 8,949 6,443 5,916 6,103 5,515Gross Profit 1,224 856 696 687 562Operating Profit 431 107 -182 -321 -424

Table 3: BMW Brilliance Joint Venture key figures (RMB mln)2009 2010 2011 2012 2013 2014

Revenue 14,674 21,285 37,532 56,151 73,173 94,545Operating profit 751 2,117 3,435 7,073 9,222 14,778Operating profit margin 5.1% 9.9% 9.2% 12.6% 12.6% 15.6%

The group’s gross profit margin for its self-owned brands has declined from 14% in 2010 to 10% in 2014 which reflects declining competitiveness of its self-branded vans and MPVs – see table 4. Meanwhile, operating expenses have increased in both absolute terms and as a percentage of revenue over the same time – see table 4. Hence, operating profit margin has declined by even more than gross profit margin – see table 4.

Table 4: Margins and expenses not including BMW Joint VentureMargins (%) 2010 2011 2012 2013 2014Gross Profit 13.7 13.3 11.8 11.2 10.2EBITDA 6.4 3.8 -0.7 -3.0 -5.2Operating profit 4.8 1.7 -3.1 -5.3 -7.7Net income (adj) 17.3 29.4 37.8 54.3 96.1

Expense as % of revenueSales & distribution 5.2 6.0 9.1 10.0 10.6Admin 3.7 5.6 5.7 6.5 7.3Total SG&A 8.9 11.6 14.8 16.5 17.9

Meanwhile, operating profit margin for the BMW JV has increased from 5.1% in 2009 to 15.6% in 2014 due to increasing scale economies as sales volume has increased – see table 3. BMW Brilliance’s operating profit margin is currently among the highest of any major automaker in the world and is higher than BMW Global’s operating profit margin of 9.6% in 2014. This partly reflects BMW’s differing operating strategy in different markets. For example, BMW makes slightly lower margin in USA from new car sales as it also has a large auto financing business there which contributes to total profit. The higher margin also reflects the fact that cut throat competition is slightly lower in the luxury car market in China compared with some other countries. As the Chinese market for luxury cars becomes more saturated in the future, BMW Brilliance’s profit margin may come under pressure in the longer term.

Over the last 5 years, the group’s annual free cash flow (FCF) generation has generally been positive and has shown strong growth since 2011 – see table 5. Over the last 3 years, the group’s positive FCF is due entirely to the dividends it receives from the BMW Brilliance JV which has grown strongly on an annual basis – see table 5. The BMW Brilliance JV itself has been FCF positive over the last 5 years and hence the group has not had to contribute any money for the JV’s capital expenditures. In contrast to the robust cash flow generation of the JV, the group’s self-owned brand car business generated negative FCF from 2011 to 2013 and reached roughly breakeven FCF in 2014.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 19

The group’s dividend payout rate to its shareholders was only 8% in 2014 which was less than 1/3 of its FCF – see table 5. The reason for the group’s cautiousness in paying out dividends is because it does not have complete control of how much dividends it receives from its BMW JV and such dividends currently generate all of the group’s FCF. Such dividends could also see large yearly swings as it will depend on the JV’s own cash flow situation. The group would rather see a steadily growing dividend per share rather than large fluctuations in the dividend it pays to shareholders. Nevertheless, there remains ample room for the group to increase its dividends.

The group’s debt level has been very low over the last 5 years, with net debt/equity at below 1% as of Dec 2014 – see table 6. Given the group’s strong FCF generation, net debt as a percentage of total equity will likely remain low in the foreseeable future. The risk of financial distress is minimal.

Table 6: Debt (RMB mln)2010 2011 2012 2013 2014

Net debt (cash) (5.0) 611.0 225.0 450.8 40.3Net debt/equity (%) NM 9.8 2.4 3.5 0.2Gross debt 165.0 1,296.6 1,119.0 1,528.0 1,365.0Gross debt/equity (%)

3.1 20.8 12.2 11.7 8.1

Conclusion and Advice

At a price of HK$13.22, Brilliance China is capitalised at HK$66.4 bln. For this, what do investors get in return ?

Over the next 5 to 15 years, China’s passenger car market will continue to be the most attractive car market in the world. The premium segment should also continue to grow faster than the overall car market. So, BMW Brilliance stands to benefit from that trend. In addition to the three models that the JV currently produces, it will produce an additional 3 new models from the BMW product range within the next 1-3 years, including a new sports utility vehicle (SUV) and two smaller cars that will be relatively lower-priced within the BMW range. Such new launches should allow the JV to maintain a high growth rate in revenue and profits over the next several years. However, the JV’s high profit margins may face downside pressure in the long term as the luxury car market in China becomes more saturated, thus making competition between different brands more intense. Although the group’s wholly owned van and MPV segments have seen declining revenue and profits over the last few years, its performance may have already bottomed in 2014. The group targets to achieve a 28% sales volume growth for this segment in 2015 following a 7% decline in 2014. The group will focus more on the passenger vehicle segment in the future as opposed to commercial vehicles and has already launched a new MPV model at the end of 2014 which will drive growth for this business in 2015. Over the next 1-2 years, it will also likely introduce more passenger models, including a SUV. The group aims to achieve positive net profit for this segment in 2016. Over the longer term, the number of Chinese automobile brands competing for market share is likely to decline and whether Brilliance’s wholly owned brands will flourish is uncertain. The group’s heavy reliance on BMW for its profits is unlikely to change over the next few years. Hence, the group’s fortunes will be closely tied to the ability of BMW to introduce popular vehicles for the Chinese market.

The group’s relationship with BMW may change in the long term depending on how China’s regulations for foreign automakers change. The terms of the BMW Brilliance JV currently last until 2028 but whether the JV will be renegotiated or renewed is uncertain. If regulations permit, BMW may take a

Table 5: Free Cash Flow and Dividends (RMB mln)

2010 2011 2012 2013 2014

Operating Cash Flow 1,180.0 -627.6 -1.6 -153.8 769.6Dividends received from joint venture 18.8 294.5 579.9 1,084.0 1,355.0Capex -430.7 -306.3 -526.1 -616.2 -737.3Free Cash Flow (Operating cash slow - capex) 768.1 -639.4 52.2 314.0 1,387.3

Regular Dividend per share (RMB) 0.000 0.000 0.000 0.078 0.087Dividend payout rate (%) 0.0 0.0 0.0 11.7 8.1Total Div/FCF (%) 0.0 NM 0.0 125.4 31.5

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 20majority stake in the JV or buy out the group’s 50% stake entirely. It may also become a strategic shareholder of the group itself. The Chinese government, being the ultimate controlling shareholder of the group, would likely not let BMW buy out the JV completely without paying reasonable compensation. Even in a worst case scenario where the group is just left with a small business selling its self-branded cars, minority shareholders may still be able to exit at a profit if the group’s parent company buys them out and takes a 100% ownership of the group.

The group is currently trading at around 9 times forecasted 2015 earnings, which is lower than its 5-year historical average of around 16 times. In comparison, BMW itself is trading at 11 times 2015 earnings. Setting aside the group’s wholly owned brands which may take a long time to become a large profit generator, Brilliance can be viewed as a proxy for BMW’s business in China. Hence, it is useful to compare the group’s valuation versus BMW’s valuation. On the one hand, BMW’s growth in China will be faster than in many matured markets. The even more important difference between BMW and Brilliance, however, is that the BMW Brilliance JV only acts as a manufacturer for BMW and such a relationship will probably not last indefinitely in its current form. On that basis, Brilliance deserves to trade at a P/E discount to BMW.

Despite the challenges and risks mentioned above, the group will still likely enjoy healthy profit growth from its BMW JV over the next 5-10 years while its wholly owned brands may see an improvement in profitability over the next few years or at least stop being loss making. Thus, Brilliance would be an attractive investment at the right price.

i Capital rates Brilliance China Automotive Holdings a Buy at HK$8.00 or below. At HK$8.00, the group would trade at 5 times 2015 earnings and be at a substantial discount to BMW’s own P/E. At this price, i Capital believes the potential downside for the business would be reflected in the share price. One potential upside catalyst could include better-than-expected performance of the group’s self-owned brands. In addition, as mentioned previously, a future restructuring of the BMW JV or of the group itself may occur in the future. If the terms of such a restructuring are better than expected for the group’s minority shareholders, that would also serve as a positive catalyst for the share price.

Section C:The CapitalDynamicsPortfolio

This section is based on a paper portfolio that is supervised by Capital Dynamics. Purchases/sales are based on the daily closing prices. The date of purchase and sale can be any day, any time. The objective of this portfolio is capital appreciation and the emphasis will be on medium and long-term investments. The investment approach used by Capital Dynamics is what we term as “intelligently eclectic”. There are no restrictions on the type of shares or stock exchanges that will be invested in. It started with RM 55,000 cash on 5 Sept 1991. The KLSE CI was 562.50 points.

(Only available in i Capital)

Counter Date bought Qty Price KLSE CI Total cost Current price +/-ICAP 20.10.2005 20,000 RM1.03 911.69 RM20,661.80 RM2.33 +RM1.30ICAP 20.04.2006 7,000 RM1.20 946.62 RM8,425.20 RM2.33 +RM1.13ICAP 26.04.2007 13,000 RM1.62 1315.97 RM21,123.18 RM2.33 +RM0.71ICAP 07.06.2007 5,000 RM1.58 1364.41 RM7,923.70 RM2.33 +RM0.75Parkson 09.10.2007 36,933 RM0.862 1369.39 RM31,817.63 RM2.05 +RM1.188Parkson 09.10.2007 23,466 RM0.95 1369.39 RM22,290.79 RM2.05 +RM1.10Parkson 09.10.2007 4,693 RM0.982 1369.39 RM4,613.68 RM2.05 +RM1.068PIE 01.11.2007 38,000 RM3.50 1409.16 RM133,399.00 RM6.81 +RM3.31Padini 14.02.2008 40,000 RM0.66 1436.10 RM26,479.20 RM1.38 +RM0.72Padini 28.02.2008 25,000 RM0.672 1368.27 RM16,850.40 RM1.38 +RM0.708MSC 07.10.2010 6,000 RM4.75 1481.45 RM28,585.50 RM2.71 -RM2.04MSC 02.12.2010 10,000 RM4.25 1503.22 RM42,627.50 RM2.71 -RM1.54Total RM364,797.58

Cash balance at 7 May 2015 RM 1,136,284.96 Asset Allocation Percent (%) Amount (RM)Add : INTEREST RM 2,904.86 Cash 64 1,139,189.82Less : RM - Equities 36 630,128.60

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 21Net cash balance available RM 1,139,189.82 Total 100 1,769,318.42

CommentsThe Capital Dynamics Portfolio received RM2,904.86 as interest for Mar 2015

Section C2:i CapitalGlobal

This global portfolio is supervised by Capital Dynamics. Purchases/sales are based on the daily closing prices. The date of purchase and sale can be any day. The objective of this portfolio is capital appreciation and the emphasis will be on medium and long-term investments. The investment approach used by Capital Dynamics is what we term as “intelligently eclectic”. There are no restrictions on the type of shares or stock exchanges that will be invested in. It started with US$100,000,000 cash on 4 January 2007. The reporting currency will be US$.

Counter Date bought Qty Price KLCI Total cost US$ FX Current price +/-

Porsche 04.01.2007 77,000 €98.129 1118.18 €7,578,601 1.309 €81.362 -16.767REXLot* 06.11.2008 40,000,000 HK$0.201 895.95 HK$8,064,120 0.129 HK$0.61 +0.409REXLot* 04.12.2008 40,000,000 HK$0.23 846.86 HK$9,227,600 0.129 HK$0.61 +0.38REXLot* 11.12.2008 10,000,000 HK$0.255 860.68 HK$2,557,650 0.129 HK$0.61 +0.355REXLot* 08.01.2009 20,000,000 HK$0.224 910.52 HK$4,493,440 0.129 HK$0.61 +0.386REXLot* 05.02.2009 50,000,000 HK$0.26 879.95 HK$13,039,000 0.129 HK$0.61 +0.35REXLot* 26.03.2009 50,000,000 HK$0.244 885.47 HK$12,236,600 0.129 HK$0.61 +0.366CONCORD NEW E23.02.2012 100,000,000 HK$0.425 1556.66 HK$42,627,500 0.129 HK$0.65 +0.225CONCORD NEW E01.03.2012 50,000,000 HK$0.395 1573.45 HK$19,809,250 0.129 HK$0.65 +0.255CONCORD NEW E08.03.2012 25,000,000 HK$0.40 1578.36 HK$10,030,000 0.129 HK$0.65 +0.25CONCORD NEW E24.05.2012 15,000,000 HK$0.275 1548.25 HK$4,137,375 0.129 HK$0.65 +0.375DCH Holdings* 22.11.2012 6,500,000 HK$7.83 1618.55 HK$51,047,685 0.129 HK$4.97 -2.86DCH Holdings* 29.11.2012 2,000,000 HK$8.00 1607.32 HK$16,048,000 0.129 HK$4.97 -3.03DCH Holdings* 20.12.2012 2,000,000 HK$8.18 1670.60 HK$16,409,080 0.129 HK$4.97 -3.21QBE Insurance 04.07.2013 400,000 A$16.18 1771.34 A$6,491,416.00 0.910 A$14.42 -1.76REXLot* 11.07.2013 25,000,000 HK$0.52 1781.15 HK$13,039,000 0.129 HK$0.61 +0.09REXLot* 01.08.2013 15,000,000 HK$0.51 1777.82 HK$7,672,950 0.129 HK$0.61 +0.10

Cash balance at 7 May 2015 US$ 104,487,441.06 Asset Allocation Percent (%) Amount (US$)Add : US$ - Cash 66 104,487,441.06Less : US$ -

-Equities 34 54,028,082.00

Net cash balance available US$ 104,487,441.06 Total 100 158,515,523.06

US$ FX (14 May 201 5 ) US$ FX ( 14 May 201 5 ) Euro 1.127 £ STG 1.569S$ 0.751 HK$ 0.129A$ 0.803 CHF 1.082

4 Jan 2007 14 May 2015 % ChangeMSCI All Country World Index 367.76 points 441.22 points +19.97Section C2: i Capital Global US$99,970,330.11 US$158,515,523.06 +58.56

Note : The MSCI All Country World Index includes 48 stock markets plus the stock markets of China, which the i Capital Global cannot invest at this time.Note: REXLot = REXLot Holdings Ltd. (Formerly Rexcapital Financial Holdings); DCH Holdings= Dah Chong Hong Holdings Limited; CONCORD NEW E = Concord New Energy Group Ltd (Formerly China WindPower Group Ltd).

CommentsThe i Capital Global retains its portfolio.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 22

Section D :The C DTimer

The objective of this portfolio is capital appreciation. The investment approach used by Capital Dynamics will be our own eclectic market timing. In terms of time, it lies somewhere between our Capital Dynamics Portfolio (Section C) and our Eclectic Trader (Section G). There are no restrictions on the type of shares or stock exchange that will be invested in. It started with RM 100,000 cash on 7 April 1994. The KLSE CI was 966.18 points. This paper portfolio is supervised by Capital Dynamics. Purchases /sales are based on daily closing prices. Purchases/sales can be made any day.

Counter Date bought Qty Price KLSE CI Total Cost Current price +/-PIE 31.01.2007 6,000 RM2.50 1189.35 RM15,045.00 RM6.81 +RM4.31Padini 07.06.2007 25,000 RM0.44 1364.41 RM11,033.00 RM1.38 +RM0.94PIE 07.06.2007 2,400 RM2.933 1364.41 RM7,061.12 RM6.81 +RM3.877Parkson 09.10.2007 9,746 RM0.539 1369.39 RM5,247.68 RM2.05 +RM1.511Parkson 09.10.2007 12,516 RM0.674 1369.39 RM8,432.49 RM2.05 +RM1.376Parkson 09.10.2007 6,257 RM0.625 1369.39 RM3,905.21 RM2.05 +RM1.425PIE 28.02.2008 3,600 RM4.208 1368.27 RM15,195.45 RM6.81 +RM2.602ICAP 30.10.2008 40,000 RM1.20 853.56 RM48,144.00 RM2.33 +RM1.13Padini 08.01.2009 40,000 RM0.484 910.52 RM19,418.08 RM1.38 +RM0.896Bstead 02.04.2009 11,000 RM3.045 905.07 RM33,575.38 RM4.50 +RM1.455Bstead 13.08.2009 4,400 RM2.491 1186.19 RM10,962.56 RM4.50 +RM2.009Suria 06.05.2010 30,000 RM1.48 1331.87 RM44,533.20 RM2.41 +RM0.93Total RM222,553.17

Cash balance at 7 May 2015 RM 969,360.70 Asset Allocation Percent (%) Amount (RM)Add : INTEREST RM 2,475.54 Cash 68 971,836.24Less : RM - Equities 32 464,683.95Net cash balance available RM 971,836.24 Total 100 1,436,520.19

Comments The CD Timer received RM2,475.54 as interest for Mar 2015.

Section D2 :The 2ndChance

The objective of this portfolio is capital recovery. In terms of time, we hope it would not take too long. The investment approach used by Capital Dynamics will be a mixture of our eclectic market timing and trading. There are no restrictions on the type of shares or stock exchange that will be invested in. Its funds will come from the sales of the dead ducks. The 2nd part started with RM57,591.50 cash on 30th Oct 2014. The KLSE CI was 1,842.78 points. This paper portfolio is supervised by Capital Dynamics. Purchases /sales are based on daily closing prices. Purchases/sales can be made any day.

Counter Date bought Qty Price KLSE CI Total Cost Current price +/-

Cash balance at 7 May 2015 RM 58,184.30 Asset Allocation Percent (%) Amount (RM)Add : INTEREST RM 148.96 Cash 100 58,333.26Less : RM - Equities - -Net cash balance available RM 58,333.26 Total 100 58,333.26

Comments Section D2 was set up, at our own initiative, to assist our subscribers who may have followed our stock selections that have subsequently not worked out. The first part was started with RM15,274.69 cash on 7 Dec 2000. The KLCI was 735.97 points. Subsequently, The 2nd Chance Portfolio reached the original cost of RM80,000 and was closed.

On 30 Oct 2014, i Capital re-activated Section D2. It assumed that our subscribers initially invested RM10,000 (or its percentage equivalent) for each dead duck and the quantity bought was derived from there. Any dividends received have been ignored. We sold these dead ducks on 30 Oct 2014 and would re-invest the proceeds at the right time. The objective is to recover our principal as soon as it is realistically possible. Once this is achieved, we will close this special portfolio again. So far, we have sold 16 counters at a cost of RM160,000.

The 2nd Chance received RM148.96 as interest for Mar 2015.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 23

Section E : Updates Part E.1 of this Section updates our Stock Selections recommended in Section B. Part E.2 updates our Trader’s Portfolio in Section H.

E.1. Updates On Section B : Stock Selection

E.1. (i) Announcements

(1). AUSNETWith reference to the Australian Tax Office’s (ATO) appeal of the Federal Court decision relating to intellectual property deductions claimed by the company between 1998 and 2011, the Full Court of the Federal Court of Australia has allowed the ATO’s appeal in respect of the pre-tax consolidation years, and ordered to remit back to the primary judge of the Federal Court for further hearing and determination with regards to the post-tax consolidation years. Of the total A$93.5 mln exposure, A$17.1 mln was paid to ATO as part of a 50/50 payment arrangement and A$40.1 mln represents deductions that have not been claimed and are carried as deferred tax asset, leaving a net cash tax exposure of A$26.9 mln.

(2). BestWorldRevenue for 3 months ending 31/3/2015 gained 5.51% to S$13.51 mln. Pretax profit declined 13.10% to S$0.451 mln. Net profit surged 105.79% to S$0.249 mln. Net earnings per share were 0.11 cents. No dividend declared. i Capital retains its Hold rating.

(3). BHICRevenue for 3 months ending 31/3/2015 inched down 1.26% to RM63.40 mln. Pretax profit soared 956.4% to RM8.57 mln. Net profit soared 980.6% to RM8.42 mln. Net earnings per share were 3.39 sen. No dividend declared. i Capital retains its Hold rating.

(4). CENTURYIts wholly owned subsidiary, Century Total Logistics S/B has entered into a sale and purchase agreement with Top Glove Properties S/B to dispose a vacant commercial land measuring 6,070.3 square metres in the District of Petaling, Selangor for a cash consideration of RM20.26 mln.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 24(5). CHIPENGS

Revenue for 3 months ending 31/3/2015 fell 15.48% to S$167.2 mln. Pretax profit decreased 19.97% to S$21.71 mln. Net profit dropped 15.52% to S$18.25 mln. Net earnings per share were 2.91 cents. No dividend declared. i Capital retains its Buy below S$0.71/Hold rating.

(6). ComfortDelGroRevenue for 3 months ending 31/3/2015 inched up 1.34% to S$963.5 mln. Pretax profit inched up 3.42% to S$102.9 mln. Net profit gained 6.79% to S$67.6 mln. Net earnings per share were 3.16 cents. No dividend declared. i Capital retains its Hold rating.

(7). CSE-GlobalRevenue for 3 months ending 31/3/2015 advanced 13.24% to S$105.5 mln. Pretax profit rose 20.85% to S$11.12 mln. Net profit remained flat at S$7.60 mln. Net earnings per share were 1.47 cents. No dividend declared. i Capital retains its Hold rating.

(8). DAIBOCIRevenue for 3 months ending 31/3/2015 edged down 4.69% to RM86.16 mln. Pretax profit slid 8.34% to RM8.15 mln. Net profit dipped 6.31% to RM6.19 mln. Net earnings per share were 5.45 sen. 3.50 sen dividend declared. i Capital retains its Buy below RM3.00 rating.

(9). EZIONRevenue for 3 months ending 31/3/2015 inched down 4.57% to S$90.12 mln. Pretax profit slid 9.51% to S$41.30 mln. Net profit slid 9.36% to S$41.01 mln. Net earnings per share were 2.60 cents. No dividend declared. i Capital retains its Sell rating.

(10). FEORCHARDRevenue for 3 months ending 31/3/2015 rose 36.47% to S$103.8 mln. Pretax profit plunged 65.50% to S$5.68 mln. Net profit plummeted 67.99% to S$3.80 mln. Net earnings per share were 0.95 cents. No dividend declared. i Capital retains its Hold rating.

(11). GABRevenue for 9 months ending 31/3/2015 advanced 12.82% to RM1.35 bln. Pretax profit advanced 12.48% to RM226.9 mln. Net profit advanced 12.49% to RM170.2 mln. Net earnings per share were 56.33 sen. No dividend declared. i Capital retains its Buy at RM11.50 or below/Hold rating.

(12). GALLANTRevenue for 3 months ending 31/3/2015 climbed 9.71% to S$577.3 mln. Pretax and net losses worsened to S$6.30 mln and S$10.41 mln respectively. Net loss per share was 0.216 cents. No dividend declared. i Capital revises its rating to a Sell.

(13). GENMIts indirect wholly owned subsidiary, Resorts World Ltd proposed to seek shareholders’ approval for the disposal of a 17.81% stake in Genting Hong Kong Ltd. The disposal is expected to provide the group with additional balance sheet capacity to pursue other core investments for growth and to enable it to partially fund the Genting Integrated Tourism Plan.

(14). HMI[1] It has received non-binding expressions of interest for Mahkota Medical Center (MMC) in Malacca, Malaysia. The company has not made any definitive decision nor entered into any definitive agreement to sell MMC. [2] Revenue for 9 months ending 31/3/2015 increased 16.64% to RM249.9 mln. Pretax profit increased 30.01% to RM40.63 mln. Net profit surged 83.83% to RM19.81 mln. Net earnings per share were 3.43 sen. No dividend declared. i Capital retains its Buy below S$0.15/Hold rating.

(15). MermaidIt has established a US$500 mln multicurrency debt issuance programme for general corporate purposes, including refinancing of existing borrowings, and financing of working capital investments and capital expenditure requirements of the group.

(16). MISC

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 25Its wholly owned subsidiary, Bunga Kasturi (L) Pte Ltd has been dissolved as part of its initiative to reduce the number of dormant companies in the group and to eliminate unnecessary administrative costs.

(17). MSCRevenue for 3 months ending 31/3/2015 fell 11.06% to RM381.6 mln. Pretax and net profits turned into a loss of RM1.93 mln and RM2.89 mln respectively. Net loss per share was 2.90 sen. No dividend declared. i Capital retains its Hold rating.

(18). MUIINDWith reference to the share sale agreement entered into by its subsidiaries to dispose the 69.19% stake in Pan Malaysia Holdings Bhd (PMH), all parties have mutually agreed to extend the cut-off date to fulfil the conditions precedent for a further period of one month to 11 Jun 2015. On the other hand, the Securities Commission Malaysia has rejected the associated company of PMH―PM Securities Sdn Bhd’s application for change of controlling shareholder.

(19). NewWorldChina [1] With reference to the master purchase agreement between the company and Chow Tai Fook Jewellery Group Limited (CTFJ) on 19 Mar 2013 as part of its marketing strategy, upon expiry of its initial term on 30 Jun 2015, the agreement will be automatically renewed for a successive period of 3 years up to and including 30 Jun 2018. The amount to be paid to CTFJ group will not exceed HK$185.9 mln, HK$207.1 mln and HK$241.0 mln respectively for the next three years. [2] With reference to the master services agreement entered into on 21 May 2012 between the company and New World Development Company Ltd (NWD), upon expiry of its initial term on 30 Jun 2015, the agreement will be automatically renewed for three years ending 30 Jun 2018, subject to the approval of its independent shareholders.

(20). PanUnitedRevenue for 3 months ending 31/3/2015 advanced 16.26% to S$206.9 mln. Pretax profit declined 45.90% to S$6.79 mln. Net profit declined 48.40% to S$5.02 mln. Net earnings per share were 0.90 cents. No dividend declared. i Capital retains its Buy below $0.84/Hold rating.

(21). PERISAIRevenue for 3 months ending 31/3/2015 soared 421.9% to RM56.73 mln. Pretax profit soared 21,038% to RM11.2 mln. Net loss turned into a profit of RM7.03 mln. Net earnings per share were 0.01 sen. No dividend declared. i Capital retains its Hold rating.

(22). PETRA DIAMONDSIt has priced its US$300 mln senior secured second lien notes due 2020 at a rate of 8.25% per annum, payable semi-annually. The notes will be issued by its wholly owned subsidiary, Petra Diamonds US$ Treasury Plc.

(23). ROTARYRevenue for 3 months ending 31/3/2015 plunged 55.12% to S$89.39 mln. Pretax profit declined 46.31% to S$8.73 mln. Net profit tumbled 50.74% to S$7.07 mln. Net earnings per share were 1.20 cents. No dividend declared. i Capital retains its Hold rating.

(24). SINGTEL [1] Its wholly owned subsidiary, Singtel Innov8 Pte Ltd has entered into an agreement to acquire an additional 30.2% interest in MassiveImpact International Ltd (MassiveImpact) for a cash consideration of US$1.5 mln, thereby increasing its shareholdings to 48.9%. MassiveImpact is a Taiwan-based company operating a performance mobile advertising platform. [2] The ATO has published a Class Ruling whereby the outcome is consistent with information previously advised, in relation to Singtel’s delisting of CHESS Depository Interests from ASX.

(25). STEMLFERevenue for 3 months ending 31/3/2015 grew 10.72% to RM4.27 mln. Pretax profit increased 12.35% to RM0.27 mln. Net profit rose 16.67% to RM0.21 mln. Net earnings per share were 0.08 sen. No dividend declared. i Capital retains its Sell rating.

(26). TAANN

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 26Its wholly owned subsidiaries, Ta Ann Plywood S/B and Lik Shen Shawmill S/B are cooperating fully with the Malaysian Anti-Corruption Commission’s (MACC) ongoing investigations into illegal logging activities in Sarawak. The investigation does not affect the overall operations of the group and it has been its policy to use only legal logs for timber processing at the group’s plywood mill and sawmill.

(27). TATHONGIts wholly owned subsidiary Tat Hong HeavyEquipment (Pte) Ltd (THHE) has disposed its property at 11 Gul Crescent, Singapore for S$25 mln with 1-year rent free use by THHE. The divestment is part of its programme to optimise operations in land-scarce Singapore.

(28). TCHONGRevenue for 3 months ending 31/3/2015 increased 24.51% to RM1.57 bln. Pretax profit dropped 31.52% to RM43.78 mln. Net profit dropped 36.47% to RM26.35 mln. Net earnings per share were 4.04 sen. No dividend declared. i Capital retains its Sell rating.

(29). TECKWAHRevenue for 3 months ending 31/3/2015 increased 15.68% to S$43.47 mln. Pretax profit surged 50.21% to S$4.32 mln. Net profit soared 58.39% to S$3.19 mln. Net earnings per share were 1.37 cents. No dividend declared. i Capital retains its Buy below S$0.40/Hold rating.

(30). TECNICWith reference to the disposals of its wholly owned subsidiaries, Plastictecnic (M) S/B, Sun Tong Seng Mould-Tech S/B and Bangi Plastic S/B to SKP Resources Bhd, it is in the process of identifying new businesses and/or assets that have the requisite track record and future prospects to be acquired and has approximately 11 months to regularise its condition and maintain its listing status.

(31). VALUEMAXRevenue for 3 months ending 31/3/2015 dropped 28.78% to S$65.10 mln. Pretax profit inched down 1.09% to S$3.17 mln. Net profit inched down 3.81% to S$2.78 mln. Net earnings per share were 0.52 cents. No dividend declared. i Capital retains its Buy at S$0.35 or below/Hold rating.

(32). WASEONGWith reference to arbitration cases commenced by Socotherm SpA (Socotherm) against the company and Wasco Coatings Ltd and another by its indirect subsidiary, Wasco Coatings Malaysia S/B against Socotherm, it has received the signed final award issued by the Arbitral Tribunal (Tribunal) in the International Court of Arbitration of the International Chamber of Commerce (ICC) in Paris to pay Socotherm US$13.02 mln and S$1.74 mln (totaling approximately RM51.54 mln) for the breach of agreement and Socotherm’s costs and expenses respectively. Meanwhile, it shall receive from Socotherm S$2.37 mln and EUR0.60 mln (totaling approximately RM10.94 mln) for the breach of agreement. The company and Socotherm shall bear US$0.46 mln (approximately RM1.67 mln) of the Tribunal’s and ICC’s fees and expenses.

(33). WheelockRevenue for 3 months ending 31/3/2015 soared 292.5% to S$99.24 mln. Pretax profit fell 15.54% to S$14.55 mln. Net profit dropped 14.04% to S$12.26 mln. Net earnings per share were 1.02 cents. No dividend recommended. i Capital retains its Hold rating.

(34). YEELEERevenue for 3 months ending 31/3/2015 edged up 2.87% to RM178.0 mln. Pretax profit fell 10.95% to RM10.24 mln. Net profit decreased 19.10% to RM7.40 mln. Net earnings per share were 4.09 sen. No dividend declared. i Capital revises its rating to a Sell.

(35). YUE YUEN Its wholly owned subsidiary, Frensham Investments Limited (Frensham) and Well Success Investment Limited in which Frensham has an effective interest of approximately 42.67%, plan to dispose of their stakes of 2.36% and 24.87% respectively in Symphony Holdings Ltd at a price of

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 27not lower than HK$0.60. The potential disposal will allow it to redeploy its resources over its core operation of shoe manufacturing and related business activities.

There is a list of counters under our completed transactions (that is, counters already recommended to be sold). Please let us know if you require this list. Our uncompleted transactions are shown below.

E.1. (ii) Ratings

Rating Change New Rating Reason1. Gallant Venture SELL. Uncertain outlook.2. YEELEE SELL. Uncertain outlook.3. Carlsberg Buy at Below RM12.00 See stock selection

Existing Rating RecommendedDate Price Current

Price +/- Latest advice. Rating change in italics.Date refer to ex-dividend, bonus, etc.

1. 1300 SMILES A$6.43 Buy below A$4.70.2. AGL 18/12/2014 A$12.88 A$14.90 -2.02 SELL.3. AIRPORT 03/08/2000 RM3.238 RM6.21 +2.972 19/05/15D. HOLD.4. ALAM 08/05/2014 RM1.54 RM0.68 +0.86 SELL.5. AMTEK ENG 12/09/2013 S$0.475 S$0.65 +0.175 BUY/HOLD.6. ANTA 09/01/2014 HK$11.14 HK$17.74 -6.60 SELL.7. APM 19/09/2002 RM2.98 RM5.15 +2.17 03/06/15D. Buy below RM4.00.8. Aquarius Platinum 03/11/2011 A$1.01 A$0.18 -0.83 HOLD.9. Asciano A$6.48 Buy below A$4.10.10. AUSDRILL 06/11/2014 A$0.555 A$0.445 -0.11 BUY.11. AUSNET 25/06/2013 A$1.11 A$1.46 +0.35 Buy at A$1.135 or below/HOLD. Ann.

12. AUST PHARMA A$1.635 Buy at A$0.43 or below.13. AXIATA 24/04/2008 RM3.823 RM6.79 +2.967 HOLD.14. Bank of East Asia 04/10/2007 HK$39.91 HK$33.40 -6.51 HOLD.15. BARAKAH 22/05/2014 RM1.64 RM0.875 +0.765 SELL.16. BAT RM63.74 XD. Buy at RM45.00 or below.17. BEN BANK A$12.33 Buy at A$9.85 or below.18. Best World 11/03/2010 S$0.34 S$0.23 -0.11 HOLD. Announcement.19. BHIC 04/10/2007 RM4.52 RM2.16 -2.36 HOLD. Announcement.20. BIPORT 26/04/2012 RM7.30 RM6.90 -0.40 XD. HOLD.21. BKAWAN 20/02/1997 RM4.13 RM18.22 +14.09 HOLD.22. BONIA 25/09/2008 RM0.363 RM1.08 +0.717 HOLD.23. BPPLAS RM0.915 Buy at RM0.50 or below.24. BRADKEN 28/01/2015 A$2.64 A$2.51 -0.13 HOLD.25. BSTEAD 10/05/2007 RM2.331 RM4.50 +2.169 HOLD.26. CABCHARGE 16/10/2014 A$4.58 A$4.91 +0.33 Buy at A$4.64 or below/HOLD.27. CALTEX A$32.66 Buy at A$15.92 or below.28. CANONE 30/03/2006 RM1.01 RM2.58 +1.57 18/05/15D. HOLD.29. CARLSBG 01/04/1999 RM5.10 RM12.58 +7.48 See Stock Selection.30. CCMDBIO 03/03/2005 RM2.40 RM3.90 +1.50 27/05/15D. HOLD.31. CENTURY 29/05/2008 RM0.593 RM0.845 +0.252 01/06/15D. HOLD. Announcement.32. CHANGYU-A 26/06/2014 RMB24.03 RMB50.70 -26.67 SELL.33. CHANGYU-B 26/06/2014 HK$17.20 HK$38.70 -21.50 SELL.

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34. CHINA CHILDCARE HK$1.64 10/06/15D. Buy at HK$1.10 or below.35. Chip Eng Seng 20/06/2013 S$0.705 S$0.855 +0.15 Buy below S$0.71/HOLD. Announcement.

36. CHOW SANG SANG26/03/2015 HK$16.60 HK$17.66 +1.06 04/06/15D. Buy at HK$17.00 or below/HOLD.

37. CHOW TAI FOOK 03/03/2015 HK$ 9.00 HK$9.24 +0.24 Buy at HK$9.00 or below/HOLD.38. CLEAN SEAS 26/02/2015 A$ 0.076 A$0.059 +0.017 SELL.39. Clear Media 16/02/2012 HK$3.92 HK$9.30 +5.38 03/06/15D. BUY/HOLD.40. Clover 21/04/2011 A$0.315 A$0.18 -0.135 HOLD.41. CMMT RM1.46 Buy below RM1.00.42. CNTD HK$0.47 Buy at HK$0.27 or below.43. Coca-Cola Amatil 11/04/2014 A$9.74 A$10.14 +0.40 HOLD.44. COCOLND 15/03/2007 RM0.90 RM1.86 +0.96 BUY/HOLD.45. ComfortDelGro 07/08/2008 S$1.55 S$3.06 +1.51 HOLD. Announcement.46. CONCORD NEW E 24/11/2011 HK$0.32 HK$0.65 +0.33 HOLD.47. CREDIT CORP A$11.28 Buy at A$9.71 or below.48. CRESNDO 12/08/2004 RM1.18 RM2.33 +1.15 HOLD.49. CSE Global 21/11/2013 S$1.025 S$0.59 -0.435 HOLD. Announcement.50. CWT 23/07/2009 S$0.555 S$1.92 +1.365 Buy below S$0.80/HOLD.51. Dah Chong Hong 22/11/2012 HK$7.83 HK$4.97 -2.86 BUY.52. DAIBOCI RM4.29 26/05/15D. Buy below RM3.00. Ann.

53. DAYANG RM2.64 Buy at RM2.00 or below.54. DELEUM 01/07/2010 RM0.43 RM1.61 +1.18 HOLD.55. DIAL 27/04/2006 Rs 20.00 Rs11.80 -8.20 17/06/15D. HOLD.56. DIGI RM5.98 XD. Buy below RM3.00.57. DLADY 20/05/1993 RM1.89 RM46.82 +44.93 HOLD.58. DOMINO PIZZA 08/05/2014 A$19.27 A$38.69 -19.42 SELL.59. DRBHCOM 21/07/2000 RM2.64 RM1.87 -0.77 HOLD.60. DRBHCOM 21/07/2000 RM2.63 RM1.87 -0.76 HOLD.61. DYNA-MAC 11/12/2014 S$0.325 S$0.295 +0.03 SELL.62. ENGKAH 31/01/2007 RM3.636 RM2.02 -1.616 HOLD.63. ENGTEX 21/07/2005 RM0.703 RM1.00 +0.297 11/06/15D. HOLD.64. ERM POWER 11/09/2014 A$1.81 A$2.45 +0.64 Buy at A$1.85 or below/HOLD.65. EZION 25/09/2014 S$1.835 S$1.19 +0.645 SELL. Announcement.66. F&N 21/10/2004 RM4.24 RM18.50 +14.26 20/05/15D. HOLD.67. Far East Orchard 22/11/2012 S$1.91 S$1.695 -0.215 XD. HOLD. Announcement.68. First Reit 19/02/2009 S$0.469 S$1.425 +0.956 BUY/HOLD.69. FLEETWOOD 31/03/2014 A$2.53 A$1.30 -1.23 BUY/HOLD.70. Franshion Properties 09/09/2011 HK$1.49 HK$3.11 +1.62 12/06/15D. Buy at HK$1.50 or below/HOLD.

71. FREIGHT 18/08/2005 RM0.357 RM1.55 +1.193 HOLD.72. G8 10/07/2014 A$4.54 A$4.11 +0.43 SELL.73. GAB 28/02/1991 RM5.35 RM14.82 +9.47 Buy at RM11.50 or below/HOLD. Ann.

74. Gallant Venture 07/07/2011 S$0.35 S$0.23 -0.12 See Rating Change. Announcement.75. GCE 09/04/2015 RM0.82 RM0.725 +0.095 SELL.76. Gem Diamonds 02/02/2012 £2.155 £1.455 -0.70 HOLD.77. GENM 18/08/2010 RM3.04 RM4.32 -1.28 Sell above RM3.00. Announcement.78. GENTING 08/12/1994 RM3.80 RM9.20 +5.40 HOLD.

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79. GHLSYS 11/09/2008 RM0.137 RM1.22 -1.083 SELL.80. GIORDANO 09/01/2014 HK$6.40 HK$4.12 -2.28 28/05/15D. Buy at HK$4.00 or below/HOLD.

81. GOODBABY HK$3.51 Buy at HK$2.30 or below.82. GREATWALL MOTOR HK$50.70 XD. Buy at HK$30 or below.83. HAPSENG 15/01/2015 RM4.09 RM4.30 -0.21 SELL.84. Health Mgt Intl 12/02/2009 S$0.084 S$0.37 +0.286 Buy below S$0.15/HOLD. Announcement.

85. HIAPTEK 12/09/2008 RM0.748 RM0.515 -0.233 HOLD.86. HKET 01/07/2010 HK$2.20 HK$2.23 +0.03 HOLD.87. HOMELOANS A$0.595 Buy at A$0.40 or below.88. HSPLANT 04/07/2013 RM2.68 RM2.60 -0.08 Buy below RM2.90/HOLD.89. HUAYANG 19/07/2012 RM1.206 RM2.10 +0.894 Buy below RM2.625/HOLD.90. HUISHAN 17/12/2014 HK$1.20 HK$1.65 +0.45 Buy at HK$1.25 or below.91. HUNTER HALL A$2.10 Buy at A$1.81 or below.92. HUNZPTY 10/06/2010 RM1.28 RM2.35 +1.07 HOLD.93. Hyflux 19/03/2009 S$0.96 S$0.865 -0.095 HOLD.94. ICAP 19/10/2005 RM1.00 RM2.33 +1.33 Buy at RM3.40 and below/HOLD.95. ICON 25/09/2014 RM1.56 RM0.585 +0.975 SELL.96. IJMPLNT 09/01/2014 RM3.42 RM3.50 -0.08 SELL.97. IMDEX 19/12/2013 A$0.465 A$0.28 -0.185 BUY.98. INCITEC A$3.70 19/05/15D. Buy at A$1.93 or below.99. IOICORP 13/11/2008 RM2.467 RM4.21 +1.743 HOLD.100. IP Group PLC 01/12/2011 £0.71 £2.087 +1.377 HOLD.101. JES 09/12/2010 S$0.345 S$0.026 -0.319 HOLD.102. JTIASA 24/05/2007 RM1.556 RM1.65 +0.094 HOLD.103. Kathmandu Holdings 22/12/2014 A$2.07 A$1.37 -0.70 03/06/15D. Buy at A$2.42 or below.104. KAWAN 25/06/2008 RM0.378 RM1.90 +1.522 HOLD.105. KepLand 24/03/2011 S$4.35 S$4.45 +0.10 HOLD.106. KEPPEL INFRA TR 17/02/2011 S$1.11 S$1.165 +0.055 HOLD.107. KESM 15/05/1997 RM3.18 RM3.51 +0.33 HOLD.108. KLCC 05/03/2015 RM6.85 RM7.20 -0.35 18/05/15D&ID. SELL.109. KMLOONG 11/04/2013 RM2.23 RM2.82 +0.59 BUY/HOLD.110. KOTRA 15/05/2014 RM1.06 RM1.18 +0.12 SOLD.111. KUCHAI 05/08/1993 RM0.37 RM1.38 +1.01 HOLD.112. KWANTAS RM1.87 Buy at RM1.50 and below.113. LBS 23/10/2013 RM1.82 RM1.65 -0.17 HOLD.114. LIAN BENG 10/10/2013 S$0.535 S$0.525 -0.01 Buy below S$0.54/HOLD.115. LIONDIV 19/06/2003 RM0.099 RM0.12 +0.021 HOLD.116. LUK FOOK 23/04/2014 HK$21.90 HK$24.40 +2.50 Buy below HK$22.00/HOLD.117. M1 19/03/2015 S$ 3.78 S$3.52 -0.26 BUY/HOLD.118. MAXIS 26/09/2013 RM7.02 RM7.03 -0.01 27/05/15D. SELL.119. MBMR 18/07/2013 RM3.77 RM3.40 -0.37 HOLD.120. Mermaid Marine Aus 16/12/2009 A$2.904 A$0.59 -2.314 HOLD.121. Mermaid Maritime 15/07/2010 S$0.391 S$0.225 -0.166 BUY/HOLD. Announcement.122. Metro Holdings 13/12/2012 S$0.81 S$1.005 +0.195 BUY/HOLD.123. MISC 06/12/2007 RM9.75 RM8.40 -1.35 HOLD. Announcement.

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124. MSC 01/04/2010 RM3.10 RM2.71 -0.39 HOLD. Announcement.125. MUIIND 31/03/2005 RM0.12 RM0.205 +0.085 HOLD. Announcement.126. MYSTATE 30/04/2015 A$5.20 A$5.22 +0.02 Buy at A$5.20 or below/HOLD.127. NESTLE 07/08/2008 RM27.00 RM73.00 +46.00 XD. HOLD.128. New World China 16/02/2006 HK$2.563 HK$5.27 +2.707 HOLD. Announcement.129. New World Dpt Store13/08/2009 HK$6.30 HK$2.40 -3.90 HOLD.130. NTPM 15/02/2007 RM0.222 RM0.72 +0.498 HOLD.131. NUPLEX 17/04/2014 A$3.10 A$3.24 +0.14 Buy at A$2.20 or below.132. OLDTOWN 11/09/2014 RM1.92 RM1.61 +0.31 SELL.133. ORICA 07/08/2014 A$20.80 A$21.00 -0.20 SELL.134. ORIENT 14/10/1999 RM4.141 RM7.80 +3.659 HOLD.135. PADINI 29/06/2006 RM0.285 RM1.38 +1.095 HOLD.136. PanUnited 28/11/2014 S$0.835 S$0.805 -0.03 Buy below S$0.84/HOLD. Ann.137. PARAMON 19/08/2004 RM0.892 RM1.64 +0.748 08/06/15D. HOLD.138. PARKSON 09/10/2007 RM0.39 RM2.05 +1.66 BUY/HOLD.139. Patties Food 11/04/2014 A$1.18 A$1.155 -0.025 Buy at A$1.20 or below/HOLD.140. PAVREIT RM1.56 Buy below RM1.20.141. PBBANK 01/10/1992 RM2.002 RM19.16 +17.158 HOLD.142. PENERGY 31/10/2013 RM2.25 RM1.50 +0.75 SELL.143. PERDANA 06/09/2013 RM1.236 RM1.50 +0.264 Buy at RM1.24 or below/HOLD.144. PERISAI 16/10/2014 RM0.955 RM0.54 -0.415 HOLD. Announcement.145. Petra 26/07/2007 S$1.62 S$3.60 +1.98 SOLD.146. Petra Diamonds 23/02/2012 £1.55 £1.76 +0.21 HOLD. Announcement.147. PHARMA 22/04/2010 RM1.975 RM6.85 +4.875 HOLD.148. PIE 23/11/2006 RM2.25 RM6.81 +4.56 27/05/15D. HOLD.149. Porsche AG 04/01/2007 € 98.129 €81.362 -16.767 BUY/HOLD.150. PPB 14/10/1999 RM1.47 RM15.38 +13.91 XD. HOLD.151. PTB A$0.35 Buy at A$0.20 or below.152. PUNCAK 19/07/2007 RM3.72 RM2.51 -1.21 HOLD.153. PWROOT RM1.74 Buy below RM0.90.154. QL 09/01/2008 RM1.603 RM3.90 +2.297 HOLD.155. R. STAHL AG 02/04/2014 € 34.973 €39.785 +4.812 26/05/15D. Buy at EUR35.00 and below/HOLD.

156. Renewable EnergyA 15/11/2007 S$0.242 S$0.021 -0.221 HOLD.157. REXLot 04/12/2008 HK$0.23 HK$0.61 +0.38 16/06/15D. BUY/HOLD.158. Rotary 03/11/2010 S$1.04 S$0.515 -0.525 HOLD. Announcement.159. Roxy-Pacific 06/11/2009 S$0.142 S$0.515 +0.373 Buy below S$0.60/HOLD.160. SALCON 21/10/2010 RM0.73 RM0.865 +0.135 HOLD.161. SCGM RM2.81 Buy at RM1.50 and below.162. Servcorp 26/04/2012 A$2.92 A$5.97 +3.05 Buy at A$4.60 or below/HOLD.163. Shanghai Industrial 24/04/2008 HK$32.90 HK$29.25 -3.65 03/06/15D. HOLD.164. Sheng Siong 05/10/2012 S$0.41 S$0.835 +0.425 Buy below S$0.44/HOLD.165. SHENGMU 18/09/2014 HK$2.45 HK$1.95 -0.50 BUY.166. Singtel 13/06/2013 S$3.60 S$4.36 +0.76 Buy below S$3.96/HOLD. Announcement.

167. SKPRES 09/02/2012 RM0.293 RM1.01 +0.717 Buy at below RM0.55.168. SKPRES* 23/04/2015 RM0.00 RM1.01 +1.01 Buy at below RM0.55.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 31

169. SMRT 09/10/2008 S$1.80 S$1.615 -0.185 14/07/15D. HOLD.170. Sonic Healthcare 06/09/2007 A$15.20 A$19.32 +4.12 Buy at A$12.60 or below.171. SOUND GLOBAL 12/03/2015 HK$7.18 HK$7.00 +0.18 SELL.172. Spark Infrastructure 13/12/2013 A$1.56 A$1.95 +0.39 Buy at A$1.58 or below/HOLD.173. SPB 12/05/1994 RM2.50 RM5.50 +3.00 HOLD.174. StarHub 11/04/2013 S$4.43 S$4.24 +0.19 SELL.175. STEMLFE 23/11/2006 RM0.50 RM0.42 +0.08 SELL. Announcement.176. SUNREIT RM1.69 XD. Buy below RM1.25.177. Suntec Reit 15/08/2013 S$1.575 S$1.78 -0.205 SELL.178. SURIA 16/08/2007 RM2.40 RM2.41 +0.01 HOLD.179. TAANN 24/05/2007 RM6.25 RM3.79 -2.46 HOLD. Announcement.180. TALIWRK 16/06/2005 RM1.2708 RM2.30 +1.029 HOLD.181. TASCO 05/05/2011 RM1.55 RM4.11 +2.56 HOLD.182. TASSAL 09/03/2015 A$3.67 A$3.26 -0.41 Buy at A$3.75 or below/HOLD.183. TATHONG 13/11/2014 S$0.795 S$0.62 +0.175 SELL. Announcement.184. TCHONG 02/01/2014 RM6.05 RM3.00 +3.05 01/06/15D. SELL. Announcement.185. TDM 06/06/2013 RM0.788 RM0.75 -0.038 XD. Buy below RM1.01/HOLD.186. Teckwah 24/02/2011 S$0.32 S$0.385 +0.065 Buy below S$0.40/HOLD. Ann.187. TECNIC 08/03/2012 RM3.72 RM0.845 -2.875 HOLD. Announcement.188. TGUAN RM2.02 Buy below RM1.70.189. TGUAN-LA RM1.80 Buy below RM1.46.190. TGUAN-WA 05/03/2015 RM0.915 RM0.90 -0.015 Buy below RM0.92/HOLD.191. THPLANT 19/12/2013 RM1.89 RM1.55 +0.34 20/05/15D. SELL.192. Tiffany & Co 06/11/2012 US$54.32 US$85.54 +31.22 HOLD.193. TINGYI 04/12/2014 HK$17.64 HK$16.24 -1.40 01/06/15D. Buy at HK$18.00 or below/HOLD.

194. TONGHER 16/12/2004 RM2.533 RM2.04 -0.493 12/06/15D. HOLD.195. Tox Free Solutions 31/05/2012 A$2.47 A$3.09 +0.62 Buy at A$2.50 or below/HOLD.196. TRS 16/12/2010 A$13.25 A$7.05 -6.20 BUY/HOLD.197. UMCCA 11/12/2008 RM3.667 RM6.39 +2.723 HOLD.198. UMW 15/12/2005 RM3.00 RM10.82 +7.82 Buy at RM11.80 or below/HOLD.199. UMWOG 04/12/2014 RM2.56 RM2.07 +0.49 SELL.200. UNIMECH 10/10/2013 RM1.40 RM1.40 +0.00 BUY/HOLD.201. UNI-PRESIDENT 08/01/2015 HK$6.72 HK$7.65 -0.93 19/05/15D. SELL.202. UOB S$24.05 Buy below S$20.00.203. UTDPLT 05/06/2014 RM28.02 RM25.60 +2.42 SELL.204. VALUEMAX 27/03/2015 S$ 0.35 S$0.33 -0.02 XD. Buy at S$0.35 or below/HOLD. Ann.

205. Venture 01/08/2013 S$7.41 S$7.91 +0.50 BUY.206. VINTAGE 04/12/2014 A$0.40 A$0.40 +0.00 BUY.207. VIS 08/05/2008 RM0.127 RM0.29 +0.163 HOLD.208. VISIONEYE A$0.705 Buy at A$0.59 or below.209. VS RM3.82 Buy at RM1.90 or below.210. WARISAN 16/12/1999 RM0.00 RM2.98 +2.98 02/06/15D. HOLD.211. WASEONG 14/08/2014 RM1.94 RM1.29 +0.65 SELL. Announcement.212. Wheelock 08/10/2009 S$1.76 S$1.83 +0.07 XD. HOLD. Announcement.213. WMH 03/03/2011 £1.884 £3.892 +2.008 HOLD.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 32

214. WPRTS 19/06/2014 RM2.70 RM4.29 +1.59 Buy below RM3.00/HOLD.215. XTEP 28/11/2013 HK$4.13 HK$3.10 +1.03 21/05/15D. SELL.216. YEELEE 12/08/2010 RM1.16 RM1.94 +0.78 See Rating Change. Announcement.217. YOKO 04/09/2014 RM1.30 RM1.64 -0.34 SELL.218. YST HK$1.01 Buy at HK$0.50 and below.219. YUE YUEN 19/05/2014 HK$21.60 HK$29.20 +7.60 03/06/15D. Buy below HK$22.00/HOLD. Ann.

*Note: Dividend in specie given by TECNIC.

E.2. Updates On Section H : Trading Portfolio[for new readers, see our brief on technical analysis for explanation of stop-loss and trailing stop. This is sent separately].

Malaysia1. AWC2. ASTRO3. ALAM4. LATITUD5. GENP6. MISC7. GOLDIS8. MNRB9. HARTA10. MIECO

: Rated trading Sell.: Rated trading Buy in www.icapital.biz on May 08.: Rated trading Buy in www.icapital.biz on May 08.: Rated trading Sell in www.icapital.biz on May 11.: Rated trading Sell in www.icapital.biz on May 12.: Rated trading Sell in www.icapital.biz on May 12.: Rated trading Sell in www.icapital.biz on May 13.: Rated trading Buy in www.icapital.biz on May 13.: Rated trading Sell in www.icapital.biz on May 14.: Rated trading Sell in www.icapital.biz on May 14.

Singapore1. NeraTel2. Frencken3. CSE Global4. Mencast5. Design Studio

: Rated trading Sell.: Rated trading Buy in www.icapital.biz on May 08.: Rated trading Buy in www.icapital.biz on May 12.: Rated trading Buy in www.icapital.biz on May 13.: Rated trading Sell in www.icapital.biz on May 14.

Section F :Directors & Significant

Shareholders

In USA, insider transactions, buying/selling by company officials or owners of 10% or more of its capital are reported to their SEC. The data are analysed and used as additional market indicators. While we do not have the exact version, following changes in directors and substantial shareholdings may reveal additional insight.

Date B/S Counter Quantity Shareholder New Balance

30/4-8/5/2015 B AEON 2.560 m EPF 102.700 m

30/4-8/5/2015 B AFG 3.177 m EPF 270.217 m

5-8/5/2015 B AIRASIA 634,880 Wellington Mgmt Company, LLP 156.699 m

7/5/2015 B AIRPORT 218,800 EPF 217.208 m

30/4-8/5/2015 B AMBANK 7.067 m EPF N/A

5-8/5/2015 B ANCOM 119,300 Siew Ka Wei 22.289 m

7-11/5/2015 B APPASIA 2.669 m Toh Hong Chye 5.475 m

6/5/2015 B ARMADA 3.000 m EPF 530.029 m

5-7/5/2015 B AXIATA 6.278 m ASB 835.000 m

30/4-8/5/2015 B AXIATA 20.813 m EPF 1172.191 m

30/4-8/5/2015 B BAT 134,200 EPF N/A

8/5/2015 B BERTAM 393,500 Koo Jenn Man N/A

6-7/5/2015 B BIMB 3.000 m KWAP 90.501 m

27/4-7/5/2015 B BIMB 2.500 m Lembaga Tabung Haji 862.316 m

30/4-6/5/2015 B BJAUTO 900,000 EPF 42.027 m

5-6/5/2015 B BJAUTO 39,800 Lee Kok Chuan 900,000

8-11/5/2015 B BONIA 89,000 Chiang Fong Seng 1.140 m

7/5/2015 B CHHB 634,300 Lim Wee Hang 15.422 m

6/5/2015 B CICB 4.578 m Gan Lock Yong 4.578 m

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 33

6/5/2015 B CICB 6.410 m Mohtar b. Abdullah 6.410 m

6/5/2015 B CICB 3.662 m Tan Ban Aik 3.662 m

29/4-7/5/2015 B CIMB 22.854 m EPF 1440.342 m

30/4-7/5/2015 B CMSB 15.308 m EPF N/A

23/4/2015 B DGB 12.000 m Pang Chow Huat 18.000 m

8/5/2015 B DIALOG 2.792 m EPF 565.449 m

30/4-6/5/2015 B DIGI 3.540 m EPF N/A

11/5/2015 B DIGISTA 260,100 Lee Wah Chong 38.915 m

7/5/2015 B E&O 243,800 Billford Holdings Ltd 6.895 m

30/4-6/5/2015 B F&N 93,600 EPF N/A

12/5/2015 B GAMUDA 3.036 m Dato' Lin Yun Ling 73.536 m

8/5/2015 B GAMUDA 1.000 m EPF N/A

6-7/5/2015 B GENP 45,000 EPF N/A

28-30/4/2015 B GENP 249,900 KWAP N/A

5-8/5/2015 B GUNUNG 106,500 Ooi Hock Lai 13.083 m

29-30/4/2015 B HARTA 704,800 EPF 59.909 m

30/4-8/5/2015 B HLBANK 1.669 m EPF 243.774 m

5-7/5/2015 B HSPLANT 117,000 Hap Seng Consolidated Bhd 422.404 m

30/4-8/5/2015 B IGBREIT 1.949 m EPF 198.756 m

30/4/2015 B IGBREIT 926,100 KWAP 215.245 m

30/4-8/5/2015 B IHH 9.545 m EPF N/A

30/4-8/5/2015 B IJM 5.906 m EPF N/A

5/5/2015 B INARI 275,000 EPF 39.399 m

27/4-5/5/2015 B INARI 3.657 m KWAP 25.444 m

30/4-8/5/2015 B IOICORP 5.516 m EPF 579.049 m

30/4-8/5/2015 B IOIPG 1.094 m EPF 314.494 m

7-13/5/2015 B JADI 2.000 m Liew Kim Siong 19.032 m

27/4/2015 B KIANJOO 113,100 See Teow Chuan 35.217 m

5-8/5/2015 B KLK 546,500 ASB 61.295 m

30/4/2015 B KLK 300,000 EPF 145.190 m

29/4-7/5/2015 B KOSSAN 1.061 m EPF 35.436 m

11-12/5/2015 B KPSCB 41,000 Koh Poh Seng 65.163 m

8/5/2015 B LIONCOR 200.000 m Lion Diversified Holdings Bhd N/A

7/5/2015 B LITRAK 32,600 ASB 36.018 m

29/4/2015 B LNGRES 12.105 m Tan Ching Ling 12.105 m

30/4-8/5/2015 B MAHSING 1.194 m EPF 153.533 m

30/4-8/5/2015 B MAXIS 7.813 m EPF 442.288 m

30/4-7/5/2015 B MAYBANK 14.839 m EPF N/A

30/4-8/5/2015 B MBMR 1.958 m EPF 55.943 m

29-30/4/2015 B MISC 1.801 m EPF N/A

7/5/2015 B MLGLOBAL 199,700 LBS Bina Group Bhd 21.360 m

7/5/2015 B MSM 500,000 Amanahraya Trustees Bhd 38.181 m

12/5/2015 B MYEG 100,000 Wong Thean Soon 85.452 m

13/3/2015 B N2N 10,000 Tiang Boon Hwa 4.502 m

5-6/5/2015 B NICE 367,000 Yee Shia Ming 20.967 m

5-8/5/2015 B ORIENT 1.014 m EPF 53.658 m

27/4/2015 B PANAMY 95,900 KWAP N/A

30/4-8/5/2015 B PBBANK 11.967 m EPF 559.556 m

6-8/5/2015 B PETGAS 1.712 m EPF N/A

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 34

30/4-5/5/2015 B POS 178,700 Aberdeen Asset Management PLC N/A

30/4-8/5/2015 B POS 634,500 EPF 51.761 m

30/4-6/5/2015 B PPB 255,000 EPF 90.713 m

30/4-6/5/2015 B PRESBHD 1.121 m KWAP 55.815 m

6-11/5/2015 B PRTASCO 10,800 Tey Por Yee N/A

6-8/5/2015 B RAPID 1.778 m Yu Kuan Huat 5.274 m

7/5/2015 B REDTONE 76,000 Juara Sejati S/B 335.865 m

7/5/2015 B REDTONE 76,000 Vincent Tan Chee Yioun 7.000 m

8/5/2015 B REV 1.621 m Catcha Group Pte Ltd 78.668 m

30/4-8/5/2015 B SIME 5.725 m EPF 799.999 m

30/4-8/5/2015 B SKPETRO 9.599 m EPF N/A

7/5/2015 B SPRITZER 22,000 Chok Hooa 219,500

6/5/2015 B STEMLFE 15.894 m Citigroup Global Markets Ltd 15.894 m

30/4-8/5/2015 B SUNREIT 1.962 m EPF 304.577 m

30/4/2015 B SUNWAY 1.400 m Sungei Way Corporation S/B 876.929 m

30/4-11/5/2015 B TAGB 2.647 m Tiah Thee Kian 642.745 m

5/5/2015 B TAKAFUL 115,400 EPF N/A

8/5/2015 B TATGIAP 2.196 m Giapxin S/B 52.259 m

7-8/5/2015 B TCHONG 107,100 EPF 57.892 m

5-8/5/2015 B TENAGA 4.465 m ASB 472.627 m

29/4-7/5/2015 B TENAGA 14.241 m EPF N/A

27-29/4/2015 B THPLANT 41,800 Lembaga Tabung Haji 640.278 m

8/5/2015 B TIMECOM 1.158 m EPF N/A

30/4-8/5/2015 B TM 1.911 m EPF 508.975 m

6/5/2015 B TMAKMUR 2.834 m T.A.S Industries S/B 52.507 m

6-12/5/2015 B TOPGLOV 852,300 Northcape Capital Pty Ltd 33.128 m

30/4/2015 B TUNEINS 180,000 KWAP 45.195 m

5-6/5/2015 B UMW 355,300 PNB N/A

5/5/2015 B UNISEM 350,000 Alexander Chia Jhet-Wern 1.350 m

28/4/2015 B WCT 22,500 KWAP N/A

6-7/5/2015 B YINSON 1.200 m EPF 54.003 m

7-13/5/2015 B YNHPROP 5.765 m Yu Kuan Chon 72.488 m

30/4/2015 B YOKO 114,500 Fordington Pte Ltd 82.194 m

5-7/5/2015 S AEON 1.681 m Aberdeen Asset Management PLC 279.255 m

30/4-6/5/2015 S AEON 653,800 EPF 101.583 m

30/4-6/5/2015 S AFG 1.045 m EPF 268.039 m

6/5/2015 S AMBANK 128,300 EPF N/A

30/4/2015 S ANCOMLB 100,000 Synergy Tanker S/B N/A

30/4/2015 S ASIAPLY 5.254 m Michael Foong Ka-Meng Ceased

6/5/2015 S ASIAPLY 10.000 m Teoh Cheng Chuan 10.000 m

5/5/2015 S ASTRO 7.778 m T.Rowe Price Associates, Inc. Ceased

5/5/2015 S AXIATA 2.360 m EPF 1159.010 m

30/4-5/5/2015 S AXREIT 178,200 EPF N/A

274-5/5/2015 S AXREIT 198,800 KWAP N/A

8/5/2015 S BAT 134,000 EPF 22.632 m

26-31/3/2015 S BERTAM 17.400 m Bond Resources S/B N/A

30/4-8/5/2015 S BJAUTO 2.606 m EPF 40.983 m

30/4-5/5/2015 S CCB 255,800 EPF 5.778 m

6/5/2015 S CICB 14.650 m ASB Ceased

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 35

30/4-8/5/2015 S CMMT 643,900 EPF 180.757 m

30/4-11/5/2015 S CMSB 1.867 m EPF N/A

8/5/2015 S CVIEW 3,000 Sadiah bt. Suleiman 1.024 m

11/5/2015 S DGB 9.000 m Pang Chow Huat 0

30/4-7/5/2015 S DIALOG 4.857 m EPF 562.657 m

30/4-8/5/2015 S DIGI 12.149 m EPF 1093.451 m

6-7/5/2015 S F&N 230,000 EPF 29.717 m

7/5/2015 S FGV 300,000 EPF 191.222 m

27/4-6/5/2015 S FGV 5.101 m KWAP 197.540 m

30/4-8/5/2015 S GAMUDA 3.336 m EPF 218.505 m

27/4-6/5/2015 S GAMUDA 4.494 m KWAP 172.534 m

30/4-7/5/2015 S GENP 367,600 EPF 112.491 m

30/4/2015 S GENP 20,500 KWAP 39.096 m

30/4-6/5/2015 S HLBANK 220,000 EPF 242.958 m

6-11/5/2015 S HOHUP 726,700 Insas Plaza S/B 36.432 m

28/4-5/5/2015 S HOVID 978,000 KWAP 38.569 m

6-8/5/2015 S IHH 1.505 m EPF 724.378 m

7-8/5/2015 S IJM 5.285 m EPF 211.489 m

30/4-8/5/2015 S INARI 2.414 m EPF 39.085 m

6/4/2015 S INTEGRA 40.869 m Golden Initiative S/B Ceased

6/4/2015 S INTEGRA 40.869 m Hanna bt. Amin Rasip Ceased

6/4/2015 S INTEGRA 55.847 m Nor'aini bt. Hashim Ceased

5/5/2015 S IOICORP 686,300 EPF 575.534 m

23-30/4/2015 S JMR 150,000 PLB Land S/B 7.169 m

8/5/2015 S KANGER 16.270 m Leng Xingmin 77.407 m

11/5/2015 S KAWAN 3.000 m Gan Thiam Hock 11.990 m

11/5/2015 S KAWAN 1.000 m Goshenite Ltd 36.093 m

7/5/2015 S KENANGA 36.515 m Deutsche Asia Pacific Hldgs Pte Ltd 64.735 m

29/4/2015 S KLK 145,400 EPF 144.890 m

29/4-6/5/2015 S KOSSAN 730,000 EPF N/A

5-8/5/2015 S KPJ 7.573 m Lembaga Tabung Haji N/A

27-30/4/2015 S KULIM 1.073 m KWAP N/A

12/5/2015 S LBS 1.300 m Lim Hock Seong 1.010 m

12/5/2015 S LBS 1.300 m Lim Hock Sing 825,000

12/5/2015 S LBS 1.000 m Lim Mooi Pang 716,900

8/5/2015 S LIONCOR 200.000 m Graimpi S/B N/A

5-8/5/2015 S MAYBANK 1.644 m EPF N/A

29/4-8/5/2015 S MEDIA 442,000 EPF 173.984 m

7/5/2015 S MENANG 450,000 Abdul Mokhtar Ahmad 7.920 m

29/4-5/5/2015 S MISC 3.255 m EPF 305.094 m

27-30/4/2015 S MUHIBAH 296,300 Lembaga Tabung Haji 44.891 m

8-11/5/2015 S OFI 354,000 Hoo Beng Lee 70,221

5/5/2015 S OLDTOWN 135,300 Franklin Resources, Inc. 45.036 m

28/4/2015 S ORIENT 57,100 Aberdeen Asset Management PLC N/A

27/4/2015 S PANAMY 100,000 KWAP 2.373 m

2/4/2015 S PANPAGE 220,000 Tan Tian Sin 57.358 m

6/5/2015 S PERISAI 100,000 Lembaga Tabung Haji 79.776 m

30/4-8/5/2015 S PETGAS 463,500 EPF 237.509 m

27/4-6/5/2015 S PETGAS 775,000 KWAP 107.350 m

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 36

5-6/5/2015 S POS 42,900 Aberdeen Asset Management PLC 46.829 m

7/5/2015 S POS 98,200 EPF 51.221 m

30/4-6/5/2015 S PUNCAK 495,100 EPF Ceased

6-12/5/2015 S RAPID 360,100 Yu Kuan Chon 15.928 m

8/5/2015 S REDTONE 18.270 m Wei Chuan Beng Ceased

1/5/2015 S SEM 48,500 Genesis Invstmnt Management, LLP 78.357 m

5-7/5/2015 S SIME 1.000 m EPF 798.192 m

30/4-8/5/2015 S SKPETRO 16.605 m EPF 872.045 m

30/4-6/5/2015 S SUNREIT 1.962 m EPF 304.047 m

30/4/2015 S SUPER 220,000 Lim Pei Tiam Ceased

5/5/2015 S TAKAFUL 20,000 EPF N/A

7-11/5/2015 S TECNIC 1.337 m Gan Kim Huat 10.535 m

5-7/5/2015 S TENAGA 5.341 m EPF 838.896 m

30/4-8/5/2015 S TIMECOM 2.690 m EPF 32.126 m

5-7/5/2015 S TM 475.213 m ASB 472.849 m

30/4-7/5/2015 S TM 3.516 m EPF 508.760 m

7-8/5/2015 S TMAKMUR 610,000 Tengku Uzir b. Tengku Ubaidillah 38.058 m

6/5/2015 S UZMA 3.000 m Rozita bt. Mat Shah 40.200 m

7-8/5/2015 S VIS 354,500 Ong Hui Peng 4.200 m

27/4-6/5/2015 S WCT 1.861 m KWAP 77.396 m

5/5/2015 S WELLCAL 62,200 Mondrian Investment Partners Ltd 28.823 m

7-13/5/2015 S YNHPROP 5.546 m Yu Kuan Huat 40.220 m

5-8/5/2015 S YTL 3.251 m EPF 744.739 m

30/4/2015 S YTLPOWR 1.800 m EPF 379.619 m

7-13/5/2015 B AMPROP 425,100 Share Buy Back Treasury

7/5/2015 B CSCSTEL 47,000 Share Buy Back Treasury

7-13/5/2015 B DAIBOCI 66,500 Share Buy Back Treasury

12-13/5/2015 B ILB 128,800 Share Buy Back Treasury

7-12/5/2015 B IOICORP 2.859 m Share Buy Back Treasury

12-13/5/2015 B KENANGA 325,900 Share Buy Back Treasury

7-13/5/2015 B KULIM 901,500 Share Buy Back Treasury

7-13/5/2015 B LBICAP 254,000 Share Buy Back Treasury

11/5/2015 B LBS 12.320 m Treasury Shares Sold Treasury

7/5/2015 B MELATI 5,000 Share Buy Back Treasury

12-13/5/2015 B MYEG 321,800 Share Buy Back Treasury

7-12/5/2015 B N2N 81,000 Share Buy Back Treasury

7-13/5/2015 B PARKSON 2.260 m Share Buy Back Treasury

7-13/5/2015 B RCECAP 202,500 Share Buy Back Treasury

11-13/5/2015 B SMPC 144,000 Share Buy Back Treasury

7-12/5/2015 B SMRT 35,000 Share Buy Back Treasury

7-13/5/2015 B YNHPROP 4.728 m Share Buy Back Treasury

Feature of Section F : UZMA – Still Oozing?

(Only available in i Capital)

Uzma Bhd (UZMA) is engaged in the provision of geoscience and reservoir engineering, drilling, project and operations services, etc in the oil and gas industry. In Jul 2014, executive directors Dato’ Kamarul Redzuan (DKR), Datin Rozita, Dato’ Che Nazahatuhisamudin (DCN) and Peter Knowles subscribed to rights shares totaling 68.23 mln. After the rights, none of the directors reduced their shareholdings in a major way, with DKR and Datin Rozita having a net purchase of 31.42 mln shares

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 37and 27.60 mln respectively after selling 5.13 mln shares and 3.00 mln shares respectively. DCN purchased an additional 400,000 on top of his 1.00 mln rights shares subscribed. Institutional investors were quite active in their trading, whereby Lembaga Tabung Haji (LTH) acquired and disposed shares from Jul 2014 with a 3-month period of inactivity between Dec 2014 and Feb 2015. LTH’s last disclosed transaction was in Mar 2015 bringing its total net purchase amounting to 16.75 mln shares, which includes 9.92 mln rights shares subscribed. Kumpulan Wang Persaraan (Diperbadankan) served its notice of interest in Jan 2015, and since then conducted direct purchases of 3.56 mln shares.  Listed on Main Board in Aug 2008, Uzma Bhd’s share price was sideways for more than 4 years within the range of RM0.46 to RM0.93 before it decisively broke out, accompanied by an increase in trading volume. Announcement of the completion of the Setegap Venture Petroleum’s 30% equity acquisition as well as higher earnings saw this breakout forming a bull run until it reached its historic high of RM4.30, a 330% increase from its breakout point. Although its share price took a deep dive when global oil price plunged, it was able to sustain itself at a level higher than its breakout point and subsequently made a rebound. With its weekly directional movement index converging bullishly and its MACD still bullish, is Uzma still oozing?

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 38

Section G :The Eclectic

Trader

This section is an actual portfolio supervised by Capital Dynamics. There are actual trades with contracts. Purchase/sale can be made on any day. The objective of this portfolio is capital gains. The emphasis is on short-term trading. While the approach used will include technical analysis, we do not rely on them exclusively – it will be “intelligently eclectic”. There are no restrictions on the type of shares that will be invested in. We would try to hold at least 6 or more counters. But due to the relatively small sum, some counters may have higher weightings. Stop-loss or trailing-stop will be used. This portfolio started with RM50,000 cash on 1st Dec 1993. The KLSE CI was 1,015.42 points.

Counter Date bought Qty Price KLSE CI Total Cost Current price +/-

Cash balance at 7 May 2015 RM 209,773.54 Asset Allocation Percent (%) Amount (RM)Add : INTEREST RM 530.99 Cash 100 210,304.53Less : RM - Equities - -Net cash balance available RM 210,304.53 Total 100 210,304.53

CommentsThe Eclectic Trader received RM530.99 as interest for Mar 2015.STOCK SELECTION CONTINUED : Carlsberg Brewery Malaysia Berhad

Only available in i Capital A Technical Analysis Of

Carlsberg Brewery Malaysia Berhad

Listed on the Mainboard of the KLSE, Carlsberg’s share price was trading for less than RM1.00 for 11 years before it broke out of this level and rallied to its old peak at RM7.90 before the Great Asian Crisis. Nonetheless, it could not escape the impact of the Great Asian crisis where consumer’s demand decreased during the downturn of the economy and its shared price plunged 59%. It took Carlsberg more than 14 years before it succeeded in surpassing its previous high of RM7.90 and it subsequently rocketed 110% within 1.5 years, marking its new historic high of RM17.06 on May 2013 thanks to resilient demand from domestic consumers. A rebound was formed after the retracement of 61.8% when it announced that Carlsberg Singapore acquired a 51% stake in MayBev Pte Ltd and Lion Brewery acquired its biggest competitor in Sri Lanka. Its monthly MACD is still bearish while its monthly directional movement index is trying to turn bullish. Carlsberg is expected to see test its minor support at around RM11.80 before deciding on the major next direction.

STOCK SELECTION CONTINUED : Brilliance Chin

A Technical Analysis OfBrilliance China

Listed on the Hong Kong Stock Exchange in 1999, Brilliance China was travelling in a falling price channel for 10 years due to challenging market conditions. The partnership with BMW to establish the BMW JV in 2003 drove the share price to a period high of HK$4.125, before the implementation of macro-economic policies and austerity

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 39measure in China in 2004 resulted in a significant slowdown in the automobile business. Adding to it, the 2008 US-led global financial crisis pushed the share price further down to a historic low of HK$0.32. However, it was not long before China’s economy rebounded strongly and the auto industry recovered strongly. The group’s decision to abandon the loss-making Zhonghua business in 2009 to focus on its core business of minibus and BMW joint venture, with the announcement of capacity expansion plan to increase 300,000 units, propelled the share price to surge and broke the upper resistance. Over the past few years, it has been rising in a well-defined price channel as BMW Brilliance revenue and operating profit seen explosive growth. Although its monthly MACD is uncertain, the lower support may hold.The KLSE and Major Markets : STOP PRESS Only available in i Capital

NYSE [2,121]: i Capital is of the view that when a market is overvalued, every step forward is like stepping on a potential minefield.

NIKKEI [19,570]: The Nikkei is richly valued. HKSE [27,286]: Still major resistance at about 28,000 for Hong Kong. SGX [3,455]: A drop below 3,440 would see the STI testing 3,300.

KLSE [1,807]: i Capital sees more downside for the KLCI after a pause from its oversold position.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 40

 

Section H :Trader’s Portfolio

Shares selected under this section are based on chart/technical analysis and are meant for short-term traders. It is not intended for contra trading. Traders should note that in actual trading conditions, stop-loss targets may not be fulfilled. This section is not for the novice or the uninitiated. The arithmetic of trading or investing is not symmetrical. If you lose 50%, you need to make 100% to get back to the level of your original sum. i Capital® quotes Paul Tudor Jones : “everything gets destroyed a hundred times faster than it is built up.”

FOR NEW READERS, PLEASE SEE OUR BRIEF ON TECHNICAL ANALYSIS FOR EXPLANATION OF STOP-LOSS AND TRAILING STOP. IT IS SENT SEPARATELY.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 41

PANAMY (3719) > Current Price RM22.90

Panasonic Manufacturing Malaysia Berhad has retreated from the upper boundary of its descending price channel and is testing its 30-day exponential moving average. Its daily demand index has formed a bearish diver-gence. Meanwhile, its daily MACD remains solidly bearish. While i Capital rates Panasonic Manufacturing Malaysia as a trading Sell with a target price of RM17, there is a minor support at around RM21.20.

Section H for the printed edition has added features for traders – see table on the right. However, the rating for this Section re-mains based on chart and technical ana-lysis

PANAMY (3719)

No. of Shares Outstanding 60,746,000

Trailing EPS (sen) 155.7

Trailing PER (times) 14.71

Trailing Dividends (sen) 73.00

Gross Dividend Yield (%) 3.19

Book Value per Share (RM) 11.58

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 42

Lian Beng (L03) > Current Price S$0.525

Lian Beng Group Ltd has penetrated the lower boundary of its rising price channel and fallen weel below its 20-week exponential moving average. Its weekly directional movement index is diverging bearishly. Meanwhile, its weekly MACD remains solidly bearish. As such, i Capital rates Lian Beng Group as a trading Sell with an initial target price of S$0.35.

Section H for the printed edition has added features for traders – see table on the right. However, the rating for this Section remains based on chart and technical analysis.

TOTAL R A

MSC

INC

Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14-20%

0%

20%

40%

60%

80%

100%

MSCI ACWI

ICIVF Total Return

ASX200

RECENT P

ICI

OBJECTIVE & IN1. i Capital International Value Fund

This is achi

INTRODUC

manag

FU

S E C T I O N i: T H E C A P I T A L D Y N A M I C S’ T R E

A S U R E S

This section updates the performance of the funds managed

Lian Beng (L03)

No. of Shares Outstanding 510,125,000

Trailing EPS (S$ cents) 17.65

Trailing PER (times) 2.97

Trailing Dividends (S$ cents) 3.25

Gross Dividend Yield (%) 6.19

Book Value per Share (S$) 0.81

NAV (as at 30 Apr 2015)

A$1.1433

Fund Manager Capital Dynamics (Australia) LtdStructure Open-end

Minimum Initial A$20,000Investment

Features No entry and exit fees, short selling, derivatives and no borrowings.

i Capital® Volume 26 Number 35 · Capital Dynamics Sdn Bhd 43

31-Mar 30-Apr % Change2015 2015

ICGF (US$) 1,279.37 1,308.45 2.27MSCI ACWI (US$) 424.76 436.30 2.72

P

10/2

0/20

051/

13/2

006

4/6/

2006

6/27

/200

69/

13/2

006

12/4

/200

62/

27/2

007

5/18

/200

78/

3/20

0710

/23/

2007

1/15

/200

84/

8/20

086/

26/2

008

9/15

/200

812

/4/2

008

3/3/

2009

5/21

/200

98/

6/20

0910

/27/

2009

1/18

/201

04/

9/20

106/

28/2

010

9/15

/201

012

/6/2

010

3/2/

2011

5/20

/201

18/

5/20

1110

/28/

2011

1/19

/201

24/

13/2

012

7/2/

2012

9/21

/201

212

/12/

2012

3/8/

2013

5/28

/201

38/

15/2

013

11/4

/201

31/

27/2

014

4/16

/201

47/

4/20

149/

25/2

014

12/1

5/20

143/

10/2

015

80

120

160

200

240

280

320

ICAP NAV

KLCI

ICAP PRICE

Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14-60%

-40%

-20%

0%

20%

40%

60%

ICGF NAV

MSCI ACWI

2. i Capital Global Fund

ICG

IN

*Special Dividend of 9.5 sen per share less Income

TOTAL

A

TO

ICA

RE

FU

INTROD

and

3. i Capital.biz Berhad (ICAP,5108)

FU

R

KL

IN

RECENT P

the fi

INTRODUC

NAV (as at 30 Apr 2015)

US$ 1,308.450

Fund Manager Capital Dynamics (S) Pte LtdStructure Open-end

Minimum InitialInvestment

US$200,000

Features No entry and exit fees, short selling, derivatives and no borrowings.

NAV (as at 13 May 2015)

RM2.93

Share Price RM2.33Premium(+)/

Discount(-)-20.48%

KLCI 1,803.02Fund Manager Capital Dynamics Asset

Management Sdn BhdPaid-up Capital 140 million shares

Listed on Bursa Malaysia’s Main MarketStructure Closed-end

Since inception Annual compound return(%) (%)

203.21 12.29140.16 9.59

97.23 7.36

13-Apr 13-May % Change2015 2015

ICAP NAV(RM) 2.92 2.93 0.34ICAP PRICE (RM) 2.37 2.33 -1.69KLCI (RM) 1,842.08 1,803.02 -2.12