malaysia industry focus property - dbs bank | singapore 06-dec-10 uem sunrise bangi 463.5 268.5 13.3...
Post on 16-Aug-2018
223 Views
Preview:
TRANSCRIPT
www.dbsvickers.com
ed: SGC / sa: WMT
New urbanization trend: Evolution of KL South •
KL south migration gaining traction, driven by MRT connectivity, strong population growth, and larger supply of affordable homes
• Kajang-Semenyih growth corridor the most promising hotspot within Greater KL given availability of cheap land bank and ready infrastructure
• KL-SG High Speed Rail - the wildcard to shift city center towards KL South
• Top beneficiaries: MKH (high-conviction Buy), Eco World (Initiate coverage), SP Setia (Upgrade to Buy)
Huge price disparity driving KL south migration. Escalating land prices within Greater KL have reduced the supply of affordable landed properties, which remain in demand. The MRT connectivity at Kajang (ready by 2017) and the ready infrastructure with several highways have made Kajang/Semenyih the natural choice for developers to expand township developments. This is supported by the availability of large tracts of land and these districts recording the among the strongest population growth in Selangor. The close proximity to KLCC and Putrajaya federal administrative centre will ensure KL South continues to thrive.
Follow the infrastructure. The terminal station of the proposed KL-SG High Speed Rail (HSR) link at Bandar Malaysia could accelerate migration to KL south given the more integrated public transport system by then. The MRT Line 2 which has been approved by the cabinet could link southward to Putrajaya, which would drive more development in Kajang/Semenyih.
Top pick: MKH. Its large exposure to affordable housing and landed residential projects in its stronghold Kajang-Semenyih growth corridor (490 acres), coupled with its low land cost at prime locations, will make MKH the largest beneficiary of the KL south migration.
ESESESES
KLCIKLCIKLCIKLCI : : : : 1,872.971,872.971,872.971,872.97
Analyst QUAH He Wei, CFA +603 2604 3966 hewei@alliancedbs.com
STOCKS
Source: AllianceDBS
Increasing property sales and prices
100
120
140
160
180
200
220
0
20
40
60
80
100
120
140
160
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Yr 2000=100Yr 2000=100Yr 2000=100Yr 2000=100RMbnRMbnRMbnRMbn
Value of property transaction house price index
Source: AllianceDBS, NAPIC
DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity 21 Jul 2014
Malaysia Industry Focus
Property Refer to important disclosures at the end of this report
Price Price Price Price Mkt CapMkt CapMkt CapMkt Cap Target PriceTarget PriceTarget PriceTarget Price Performance (%)Performance (%)Performance (%)Performance (%)
RMRMRMRM US$mUS$mUS$mUS$m RMRMRMRM 3 mth3 mth3 mth3 mth 12 mth12 mth12 mth12 mth RatingRatingRatingRating
UEM Sunrise Bhd 2.10 2,863 2.20 (11.8) (30.9) HOLD SP Setia 3.52 2,788 4.10 20.6 5.4 BUY Sunway Bhd 3.18 1,722 3.70 2.6 (4.2) BUY Eastern & Oriental Bhd
2.99 1,039 3.80 19.6 51.0 BUY MKH Berhad 4.01 528 5.85 22.1 123.0 BUY Eco World 5.08 404 6.00 (1.0) 605.6 BUY Wing Tai Malaysia Bhd
2.15 218 2.25 (9.7) (16.3) HOLD Hunza Properties 2.00 143 2.20 0.0 2.0 HOLD
Industry Focus
Property
Page 2
QUAH He Wei, CFA +603 2604 3966
hewei@alliancedbs.com
Table of Contents
Why KL South migration? 3 Map of improved public transport connectivity 6 Catalyst from major infrastructure projects 7 Malaysia property market remains healthy 9 Investment strategy 12 Risks 13 Peer comparison 14 Stock Profiles 17
MKH (High-conviction Buy) 18
SP Setia (upgrade to Buy) 20
Eco World (coverage initiation) 22
MICA (P) 043/10/2009MICA (P) 043/10/2009MICA (P) 043/10/2009MICA (P) 043/10/2009
Industry Focus
Property
Page 3
Why KL South migration?
Escalating land prices within Greater KL have reduced the
supply of affordable landed properties, for which there is still
strong demand. The connectivity of MRT into Kajang (ready by
2017) and the ready infrastructure with several highways, have
made Kajang/Semenyih the natural choice for developers to
expand township developments, with the availability of large
tracts of land bank and the area recording one of the strongest
population growth in Selangor (26% of total transactions).
Greater KL/Klang Valley remains the core of the government’s
economic transformation program – the government wants to
grow the Greater KL population to 10m by 2020 from an
estimated 7m currently. This means the Greater KL population
has to grow by 5.2% p.a. on average, much higher than the
national average of ~1.4%. If the goal materializes, this would
translate into stronger demand for housing of 80k units p.a. in
Greater KL alone vis-à-vis 78k units completed for the whole
country in 2013.
Greater KL – economic growth driver
Population
(m)
Density
(ppl/sq km) Urbanisation
Selangor 5.46 674 91.4%
KL 1.67 6,891 100%
Putrajaya 0.07 1,478 100%
Malaysia 28.3 86 71%
Source: AllianceDBS, Department of Statistics
Greater KL prices much higher than national average
-
100
200
300
400
500
600
700
800
900
2006 2007 2008 2009 2010 2011 2012 2013
RM'000RM'000RM'000RM'000
KL Putrajaya Selangor Msia
Source: AllianceDBS, NAPIC
Housing demand in Greater KL is likely to remain healthy going
forward, but buyers will be picky because of steep pricing, no
thanks to a slew of cost-push factors including inflationary
pressure, subsidy rationalisation, and implementation of
minimum wages. Faced with the risk of margin compression,
property developers will naturally look to landbank in areas
where land cost is relatively low, and there is ready
infrastructure and a growing population.
The construction of the MRT Sg. Buloh-Kajang line has drawn
interest to the Kajang/Semenyih growth corridor which is
located within the Hulu Langat district, Selangor, because of
the availability of vast land bank there. The 51-km MRT line will
have 31 stations including 16 with park-and-ride facilities and
four interchange stations. The line will link Sungai Buloh in the
northwest and Kajang in the southeast.
Indeed, the much-needed catalyst – three MRT stations within
Kajang - has driven several public-listed property developers to
grab land in the area. Other major developers such as SP Setia,
Mah Sing, UEM Sunrise, Eco World, and Tropicana, have also
jumped on the bandwagon as the areas gains recognition as
strategic townships at a relatively comfortable distance from KL
city center, that offer affordable housing and ready
infrastructure:
i) Education hub: there are several education institutions in
the vicinity, including New Era University College, Universiti
Kebangsaan Malaysia, Universiti Putra Malaysia,
Nottingham University campus, Universiti Tenaga Malaysia,
the German Malaysia Institute, and the Australia
International School;
ii) Easy access with the opening of several highways that link
Kajang/Semenyih to other major townships within Klang
Valley. These include the Kajang SILK Highway and
Persiaran Kajang-Semenyih. Other links to the area are
Lebuhraya Utara Selatan, Lebuhraya Cheras-Kajang and
Lebuhraya Klang Selatan; and
iii) Strong population growth driven by urban migration.
According to Department of Statistics data, Kajang’s
population was close to 800,000 in 2010, or 15% of
Selangor’s population of 5.4m. The local town council
(MPKj) expects Kajang’s population to exceed 1m by 2013.
Industry Focus
Property
Page 4
Public-listed developers rushing to buy land in Semenyih/Kajang
Da teDa teDa teDa te Buye r Buye r Buye r Buye r Loca tionLoca tionLoca tionLoca tion RMmRMmRMmRMm RMpsfRMpsfRMpsfRMpsf Rema rksRema rksRema rksRema rks
02-Jul-14 Eco World Semenyih 492.7 225.3 10.5 near Bandar Rinching
25-Apr-14 Eco World Semenyih 1,073.1 950.0 20.3 near Bandar Rinching
21-May-12 Mah Sing Bangi 412.0 333.3 18.6 3.2km away from UKM
01-Mar-12 Knusford Semenyih 13.3 14.2 24.5 near Taman Kajang Perdana and Taman Jelok Impian
03-Oct-11 SP Setia Semenyih 673.3 381.3 13.0 13km south of Kajang in Rinching
08-Sep-11 Ireka Corp Kajang 20.6 22.4 25.0 within Bukit Angkat Industrial Zoning
05-Sep-11 Tropicana Corp Semenyih 198.5 228.0 26.4 Kajang Hills
06-Dec-10 UEM Sunrise Bangi 463.5 268.5 13.3 near Bandar Seri Putra
Siz e Siz e Siz e Siz e
(a c re )(a c re )(a c re )(a c re )
Source: AllianceDBS, Companies
Land prices in KL Northern areas such as Sg. Buloh, Petaling
Jaya and Kota Damansara have long been valued at a premium
to KL Southern areas. But the MRT line will change the
dynamics, it will revitalise the Kajang/Semenyih corridor. In
fact, land prices in Kajang/Semenyih have almost tripled
compared to 3-4 years ago, albeit coming from a low base.
Huge disparity in land price between North and South of KL for parcels near MRT stations
AreaAreaAreaArea
Es t. land Es t. land Es t. land Es t. land
pricepricepriceprice
Es t. Es t. Es t. Es t.
property property property property
ASPASPASPASP Deve loperDeve loperDeve loperDeve loper
RMps fRMps fRMps fRMps f RMps fRMps fRMps fRMps f
Sg. Buloh 200-300 600-700
Kota Damansara 200-300 600-700 Meda Inc
1300-1800 1450 Guoco Land
Dataran Sunway 350-450 1000-1200 Tropicana
Kajang city 80-100 350-450 MKH
Mah Sing,
Selangor Dredging
Pusat Bandar
Damansara
Source: AllianceDBS, Various
We compare Kajang (in Hulu Langat district) and Sg. Buloh (in
Petaling district) because these two areas have similar
demographics and public transport connectivity. Kajang and
Sg. Buloh are among the most populous districts in Selangor,
and the existing KTM railway runs through both areas.
Similarly, the terminal stations of the MRT line which will be
ready by 2017 will be located at Sg. Buloh and Kajang.
However, there is a stark contrast in property prices between
the two areas, in favour of the northern region. We believe the
completion of the MRT Sg Buloh-Kajang Line will reduce the
disparity as property buyers will likely decide mainly on price
then.
Also, property affordability is increasingly an issue for the
general public with prices surging in recent years and demand
outpacing new supply of houses by a large margin, particularly
for low-to-medium cost units.
Population in Selangor
Dis trict in Se langorDis trict in Se langorDis trict in Se langorDis trict in Se langor
Gombak 668,694
Klang 842,146
Kuala Langat 220,214
Kuala Selangor 205,257
Petaling 1,765,495
Sabak Bernam 103,709
Sepang 207,354
Hulu Langat 1,138,198
Ulu Selangor 194,387
Source: AllianceDBS, Department of Statistics
Industry Focus
Property
Page 5
Hulu Langat property prices catching up with Petaling
100
120
140
160
180
200
220
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2000=1002000=1002000=1002000=100
Selangor Petaling Hulu Langat
Source: AllianceDBS, NAPIC
Wide disparity for terraced house price
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
RM/unit RM/unit RM/unit RM/unit
Petaling Hulu Langat KL
Source: AllianceDBS, NAPIC
Hulu Langat terraced house price growth outperform
-5%
0%
5%
10%
15%
20%
25%
30%
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
Petaling Hulu Langat KL
Source: AllianceDBS, NAPIC
We noticed Hulu Langat district terrace house prices have
consistently outperformed those in KL and Petaling district,
which is most likely due to the huge price disparity. Based on
National Property Information Center (NAPIC) 1Q14 data,
average price of terrace houses in KL and Petaling district are
121% and 65% higher than those in Hulu Langat. Therefore,
we believe the huge price difference is expected to drive more
property buying interest to Kajang/Semenyih growth corridor
where lifestyle gated-and-guarded developments have been
mushrooming due to the strong demand.
Indeed, since the announcement of the MRT Sg. Buloh-Kajang
Line, demand for landed properties in Kajang/Semenyih has
been rising. Property sales have been resilient, driven by the
strong population growth in the second most populous district
in Selangor. The KL South migration is imminent; major
developers in Kajang/Semenyih rushing to buy land there
reinforces our view that this will be one of the best hotspots in
the years to come, possibly more visible when the MRT stations
are completed by 2017.
Hulu Langat properties sell like hot cake
La unchLa unchLa unchLa unch Pro je c tPro je c tPro je c tPro je c t De ve lope rDe ve lope rDe ve lope rDe ve lope r
Ta ke Ta ke Ta ke Ta ke
upupupup TypeTypeTypeType
Pric e / Pric e / Pric e / Pric e /
uni tuni tuni tuni t
Sep13 Southville City Mah Sing >90% high rise >280k
Oct13 Setia Eco Hill SP Setia >90% landed >450k
Nov13 Diamond City Country Garden-Mayland>80% landed >900k
Feb14 Tropicana Heights Tropicana >90% landed >740k
Apr14 Saville Kajang MKH >80% high rise >290k
May14 Eco Majestic Eco World >80% landed >590k
Source: AllianceDBS, various
Developers are still launching high-priced products and fewer
affordable projects, as land prices within Klang Valley have
risen sharply that it is no longer feasible to launch affordable
housing. The MRT network reaching out to Kajang has also
reshaped public perception on residential projects in
Kajang/Semenyih; they were previously associated with long
travel distance from KL city center.
The availability of landed properties in Kajang/Semenyih at
lower prices than in other established townships such as
Petaling Jaya and Kota Damansara and good public transport
connectivity, appeal most to the general public. An additional
advantage is the close proximity to Putrajaya federal
administrative center, which has contributed to robust property
sales in the area. Upgraders from Cheras, Putrajaya and
Cyberjaya also naturally look at Kajang/Semenyih when it
comes to buying gated and guarded residential projects with
lifestyle amenities.
Industry Focus
Property
Page 6
Ripe for KL south migration with improved infrastructure
KL-SG HSR
terminal station
Possible MRT
Line 2
alignment
Possible MRT Line
3 (circle line)
allignment
LRT extension
alignment (under
construction)
KLCC
MRT Line 1
(under
construction)
Source: Ho Chin Soon Research, AllianceDBS
Industry Focus
Property
Page 7
More catalyst from major infrastructure projects
MRT Line 2 gets green light from federal government. MRT Line 2 gets green light from federal government. MRT Line 2 gets green light from federal government. MRT Line 2 gets green light from federal government. This line
will link Sg. Buloh and Putrajaya in the South. We expect the
contracts to be awarded by 2H15. Although the alignment has
yet to be finalised, proposals to extend the line to areas like
Serdang and Putrajaya could help to drive KL South migration.
The combined coverage of MRT Line 1 and 2 will create a huge
catchment area to further spur property development in the area.
Malaysia’s most modern public transport mode will enable the
residents to reach major destinations within Greater KL with
relative ease. The appeal of better quality of life at relatively
lower price in the Kajang/Semenyih growth corridor will
transform the property landscape there.
Transit-oriented developments (TODs) are also positioned to take
off strongly with the extension of MRT connectivity to KL South.
The convenience of TODs has not been fully appreciated by the
public vis-à-vis property buyers in Singapore and Hong Kong, as
this single largest infrastructure project is a first for Malaysia.
High High High High SSSSpeed peed peed peed RRRRailailailail. The ambitious High-Speed Rail (HSR) project due
for completion by 2020 would reduce the journey from
Singapore to Kuala Lumpur to just 90-minutes, from up to 4.5
hours currently. The location of the terminal in Singapore has yet
to be finalised, but it has been reported Bandar Malaysia would
house the terminal station in Malaysia.
There are plans for the 330km line to make stops in Negri
Sembilan, Malacca and Johor, which could extend the journey
time to 2 hours, but this is still preliminary. We understand the
Malaysian government is conducting technical surveys, socio-
economic analyses on the proposed stations, and the proposed
alignment, among others. The HSR service is expected to boost
travel between the two countries and result in significant
economic gains for both.
The decision to place the Malaysian terminal at Bandar Malaysia
in Sungai Besi, at the current site of the Royal Malaysian Air Force
base, is a welcome surprise for KL South migration, as there
could be spillover effects on the Malaysian property sector.
The positive impact of an integrated HSR and MRT Line 1 and 2
in the future is likely to benefit Kajang/Semenyih the most, since
it is coming from a relatively lower base than more established
townships in Greater KL.
Industry Focus
Property
Page 8
Developers with exposure to KL South
Deve loperDeve loperDeve loperDeve loper ProjectProjectProjectProject LandLandLandLand
% of % of % of % of
land land land land
bankbankbankbank LocationLocationLocationLocation GDVGDVGDVGDV
% of % of % of % of
tota l tota l tota l tota l
GDVGDVGDVGDV
% of % of % of % of
RNAVRNAVRNAVRNAV RemarksRemarksRemarksRemarks
(acre)(acre)(acre)(acre) (RMm)(RMm)(RMm)(RMm) (RMm)(RMm)(RMm)(RMm)
MKH Various 491 44%
Kajang/Semenyih, Cheras,
Seri Kembangan 5,087 69% 46%
Various projects including Kajang 2,
Pelangi Semenyih, Hillpark Homes
Tropicana Tropicana Heights 199 10% Kajang 1,456 2% n.a. township development
SHL Bandar Sg. Long 328 55% Sg. Long n.a. n.a. 50% Include 160-acre golf course@Sg. Long
SP Setia Setia EcoHill 1,447 30% Bandar Rinching, Semenyih 7,360 11% 6% township development
Eco World EcoMajestic 1,566 32% Bandar Rinching, Semenyih 14,640 31% 14% township development
Hua Yang
One South,
Mines South 22 3% Seri Kembangan 1,035 n.a. n.a. mixed development
UEM Sunrise
Serene Heights,
Sinaran Hills 513.6 7% Bangi, Kajang 3,270 4% 2% residential projects
Mah Sing Southville City 428 15% Bangi 8,300 32% n.a. township development
Source: AllianceDBS, Various, Companies
Our ground checks revealed that property projects within
Kajang/Semenyih have been doing exceptionally well. The
presence of established developers such as SP Setia, MKH,
Tropicana, Eco World and Mah Sing, supports our optimistic
outlook for property developments in an area that had been
overlooked by property buyers previously because of perceived
haphazard planning, lack of quality products, and weaker
infrastructure.
Gated and guarded landed properties are the main attractions
for genuine buyers/upgraders because of relatively more
attractive pricing. This type of products are increasingly beyond
the affordability of young working adults in other prime areas
of Greater KL, as developers price in rising construction costs
and land prices.
The Kajang/Semenyih/Bangi areas provide golden opportunity
for developers to tap into the strong demand for landed
properties, because of the availability of large tracts of land
bank in the area. This is virtually the last area within Greater KL
that is still available at reasonable prices, yet offer strong
growth prospects as the improving infrastructure and facilities
would enhance its appeal.
Kajang/Semenyih will be the next hotspot going forward. For
property developers, the resilient demand for landed properties
will create a more stable market vis-à-vis high-end condo
projects which are heavily dictated by market sentiment.
Typical bread-and-butter terrace houses have been selling well
over the years as supply and demand are driven by sector
fundamentals.
We understand that MKH, one of the oldest names in Kajang/Semenyih, has never employed the developers’ interest bearing scheme (DIBS) incentive to sell their products, even during the down cycle when many developers in town introduced that to address slowing sales. This is strong testament to the booming yet resilient property sales in the growth corridor, the dynamics greatly enhanced by the MRT connectivity.
Industry Focus
Property
Page 9
Malaysian property market remains healthy
Despite the relatively weaker property sentiment due to
tightening measures, property prices remain at record highs as
supply continue to lag demand. Property demand in Malaysia is
supported by favourable demographics - young and growing
population (and labour force), increasing urbanisation, and
shrinking household size. The Malaysian economy is expected to
grow by 5.3% in 2014 (vs 4.7% in 2013), while unemployment
rate is healthy at 3%.
Relatively healthy economic indicators
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
-10%
-5%
0%
5%
10%
15%
20%
2008 2009 2010 2011 2012 2013
GDP growth (LHS) GNI growth (LHS) Savings % (RHS)
Source: AllianceDBS, BNM
Lower impaired loan ratio despite rising household debt
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0
500
1,000
1,500
2,000
2009 2010 2011 2012 2013
%%%%RMbnRMbnRMbnRMbn
HH debt (LHS)
HH financial asset (LHS)
impaired loan ratio of HH sector (RHS)
Source: AllianceDBS, BNM
There are concerns rising household debt could pose a serious
threat to the economy, but more stringent lending guidelines
adopted by financial institutions could help to ease the pressure.
Household debt also grew at a slower pace of 11.7% in 2013,
compared to 13.5% in 2012. We believe the risk of a property
bubble is well contained by strong fundamentals in Malaysia’s
economy and a robust banking system. Overall household
financial health is stable as indicated by 45% household gearing
and a gross national savings-to-gross national income ratio of
31%.
Healthy gross domestic savings
0%
10%
20%
30%
40%
50%
60%
Indonesia Singapore Thailand Malaysia Philippines
Source: AllianceDBS, World Bank
Meanwhile, non-performing loans for residential property
mortgage have been improving over the years. The gross
residential mortgage loan NPL ratio has improved from 3.5% in
2010 to 1.5% recently. We understand banks have been more
cautious with loan approvals, as some property buyers have been
facing difficulty in getting mortgage loans. Nevertheless, loan
applications and approvals have started to pick up in recent
months.
Mortgage NPLs trending down
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
(4)
(2)
0
2
4
6
8
10
12
14
16
Dec-04 Mar-06 Jun-07 Sep-08 Dec-09 Mar-11 Jun-12 Sep-13
RMbnRMbnRMbnRMbn
Gross NPL Chg NPL Mortgage NPL%
Source: AllianceDBS, BNM
Industry Focus
Property
Page 10
Affordability supported by cheap financing
-
1
2
3
4
5
6
7
8
-
100
200
300
400
500
600
700
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
(x)(x)(x)(x)RM'000RM'000RM'000RM'000
affordable house price (LHS) affordability ratio (RHS)
Source: AllianceDBS, BNM
Despite the rapid increase in property prices in recent years,
affordability remains healthy thanks to the low financing rates
and rising household income. We note that 87% of the value of
residential property transactions in 2013 were priced below
RM500,000, and Malaysia still has the lowest house price-to-
income ratio in the region.
Malaysia’s house priceMalaysia’s house priceMalaysia’s house priceMalaysia’s house price----totototo----income still lowest in the regionincome still lowest in the regionincome still lowest in the regionincome still lowest in the region
Source: URA, Singstat, Demographia, Bank of Thailand, BNM
The recent interest rate hike of 25 basis points is unlikely to cause
a major slowdown in the property market. A 25 basis point
increase in the base lending rate would lift a 30-year RM500k
mortgage loan instalment payment by RM74/month, an increase
of only 3% over the current monthly instalment of ~RM2,445.
Nevertheless, sentiment may be affected temporarily after rates
are adjusted by commercial banks.
The rate hike was due to BNM concern over the risk of broader
economic and financial imbalances that could undermine the
growth prospects of the Malaysian economy. Should there be
more interest rate hike in tandem with the growing economy, it
is unlikely to adversely affect property sales growth judging by
historical trend though consumer sentiment may be affected.
We believe property prices are likely to remain steady at current
levels, after the steep appreciation over the past few years. The
supply deficit will continue to support prices as the young labour
force (60% below 40 years old) will be seeking residential
properties. Newly completions have ranged from 65k-80k units
p.a. in recent years, while Malaysia household formation has
exceeded 100k p.a., underpinning strong demand for properties.
Demand is further supported by easy access to credit.
Property prices reaching all-time high
100
120
140
160
180
200
220
240
1Q00
4Q00
3Q01
2Q02
1Q03
4Q03
3Q04
2Q05
1Q06
4Q06
3Q07
2Q08
1Q09
4Q09
3Q10
2Q11
1Q12
4Q12
3Q13
2000=1002000=1002000=1002000=100
All Terraced High-rise Detached Semi-D
Source: AllianceDBS, NAPIC
Healthy inventory levels
KLKLKLKL Se langorSe langorSe langorSe langor JohorJohorJohorJohor PenangPenangPenangPenang OthersOthersOthersOthers Ma lays iaMa lays iaMa lays iaMa lays ia
Existing Stock 424,324 1,358,054 705,929 377,942 1,852,285 4,718,534
% of Msia 9% 29% 15% 8% 39% 100%
Completions 1,281 19,003 12,402 12,583 32,996 78,265
% of stock 0% 1% 2% 3% 2% 2%
Incoming supply 52,714 149,644 118,191 64,482 311,526 696,557
% of stock 12% 11% 17% 17% 17% 15%
total unsold 8,567 11,935 15,385 2,259 27,429 65,575
Unsold/stock 2.0% 0.9% 2.2% 0.6% 1.5% 1.4%
Source: AllianceDBS, NAPIC
Industry Focus
Property
Page 11
Rising construction cost
80
90
100
110
120
130
140
150
160
170
180
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
Source: AllianceDBS, Langdon Seah
Cost-push factors such as rising construction cost and the
implementation of 6% Goods & Services Tax (GST) effective
Apr15 will continue to create upward pressure on selling prices.
New tenders for construction contracts have been seeing higher
quotations, partly due to intense competition for raw materials
and labour with the rollout of mega infrastructure projects in
Malaysia. We understand property developers have started to
factor in GST in selling prices for new projects.
The sticky prices could translate into softer demand for certain
properties, but demand for landed properties is likely to remain
resilient although there will be limited supply of affordable units
in view of the escalating land prices within Greater KL. The
scarcity of large tracts of land bank in prime areas has also
resulted in developers opting to build high-rise projects to
optimize yields (gross development profit/acre).
Other challenges include the increasing compliance cost. These
include bumi discount/quota (5-15%/30-60% depending on
location and land status), low-medium cost housing quota (30-
50% depending on land size), and government reserve/public
area, which have led to cross-subsidy of products. We
understand developers incur ~RM100k losses/unit for each low-
cost house built because the RM42k cap implemented by the
government has stayed despite rising construction costs.
Industry Focus
Property
Page 12
Investment strategy
Despite generally weaker sentiment in the property market,
property sales in Kajang/Semenyih growth corridor has been
outperforming those in more established townships within
Greater KL. We like the mass-market township developments
in Kajang/Semenyih, for which demand will remain resilient
with the improvements to overall infrastructure as well as
public transport connectivity.
MKH and Eco World will be among the largest beneficiaries of
the booming Kajang/Semenyih growth corridor, as the
potential GDV from their land bank account for 69% and
31%, respectively, of their overall GDV in the pipeline.
Promising sales at their projects will underpin long-term
earnings visibility.
The undisputed advantage of cheaper land cost - to supply
landed properties - in the area will ensure property and land
prices converge rapidly towards average prices in KL. This
could create a multi-year re-rating for both MKH and Eco
World which enjoy strong branding.
TopTopTopTop/High conviction/High conviction/High conviction/High conviction pick: MKHpick: MKHpick: MKHpick: MKH. The company will be the
largest beneficiary of the upcoming MRT connectivity given its
high exposure to the booming Kajang/Semenyih growth
corridor. MKH is a rare gem that offers both deep value and
strong earnings growth
MKH has an unrivalled competitive advantage in
Kajang/Semenyih property development because of their low
land cost of RM10psf (vs peers’ >RM20psf). Affordable homes
- MKH’s stronghold - remains the key theme for the property
sector. Their large tract of prime property land bank in
Kajang/Semenyih (490 acres) makes them the prime
beneficiary of rising land prices there. Scarcity of land within
Kajang also provides a distinct advantage for MKH’s future
launches, which are expected to see strong demand and fetch
premium pricing.
MKH is on track to achieve its record high property sales target
of RM800m for FY14 (vs RM580m in FY13). It booked
RM410m sales in 1HFY14, of which RM96m is pre-sale
booking. This has yet to include overwhelming sales from
Saville@Kajang (RM280m GDV) which has achieved impressive
80% take-up although the project was only launched in April.
As a result, unbilled sales is at an unprecedented RM602m as
at March, or 1.3x its FY13 property revenue.
Record high unbilled sales
0
100
200
300
400
500
600
700
FY10 FY11 FY12 FY13 2QFY14
RMmRMmRMmRMm
unbilled sales
Source: AllianceDBS, Company
Initiate coverageInitiate coverageInitiate coverageInitiate coverage:::: Eco World Eco World Eco World Eco World ((((BUY, RM6.BUY, RM6.BUY, RM6.BUY, RM6.00000 TP)0 TP)0 TP)0 TP). Eco World has
been gaining prominence in Malaysia’s property market, as the
new company is backed by a solid ex-SP Setia management
team that have a proven and impeccable track record during
their tenure in SP Setia. The company is in the midst of a major
corporate exercise to be completed in 3Q14, which will turn
the company into a large scale developer with 4.4k acres of
land bank that could generate RM43.5bn GDV.
Eco World has direct exposure to the Kajang/Semenyih growth
corridor through 1,566 acres of land bank in Semenyih which
has the potential to generate RM14.6bn GDV. Management’s
impressive execution track record is the strongest confidence
bestowed by the general public towards its property projects.
Eco World’s EcoMajestic@Semenyih received overwhelming
response for the 1st phase, Cradleton, where more than 2,000
property buyers queued on launch day to grab the 612 units
available for sale at end May.
Industry Focus
Property
Page 13
Eco World may bring forward subsequent phases of
EcoMajestic in view of strong demand for its landed products,
despite the premium pricing starting at RM586k/unit for a
terrace house. Property sales should gain momentum as more
of its eco-themed projects are introduced to the market.
The company is on track to achieve its RM5bn sales target over
FY14-15 given its presence in Malaysia’s property hotspots in
the Klang Valley, Iskandar Malaysia, and Penang. We project
the company will achieve 3-year earnings CAGR of 102% over
FY13-16F
Land bank upon completion of corporate exercise
Source: AllianceDBS, Company
SP SetiaSP SetiaSP SetiaSP Setia (Upgrade(Upgrade(Upgrade(Upgrade to Bto Bto Bto BUY,UY,UY,UY, TP TP TP TP RM4.10RM4.10RM4.10RM4.10).).).). SP Setia will be one of
the beneficiaries of the rising prominence of KL South, through
it 1,447 acres of undeveloped land bank in Semenyih which
was acquired in 2011 at a blended cost of RM10.6psf. Setia
Eco Hill launched in Oct13 was met with astounding success;
the project had more than 26,000 registrants for 760 units on
offer during the launch. We understand the ballot numbers
were snapped up within five hours, and over 2,000 people
turned up for the sales launch.
The company’s fundamentals remain solid given its record high
unbilled sales of RM11.2bn, which translates into 4x FY13
property development revenue. Therefore, we project SP Setia
to deliver 3-year earnings CAGR of 18%. Also, SP Setia
remains one of the largest developers in Malaysia with sizeable
prime land bank that was acquired at relatively lower prices
few years ago.
SP Setia’s prime 4,782-acre land bank (RM71bn GDV) has low
holding cost, which means the company stands to benefit the
most the steep land price appreciation in recent years.
Therefore, SP Setia is poised to benefit from resilient demand
for its established township developments in Setia Alam (712
acres undeveloped; RM3.50psf land cost) and Setia Eco Hill
(1,447 acres; RM10.6psf) which should continue to see strong
sales.
We believe the concern over SP Setia’s management departure
has been priced in and the overhang has now been removed
after the departure of its CEO. Re-rating catalyst could come
from potential M&A exercise which is likely to be done above
put option exercise price granted to Tan Sri Liew Kee Sin at
RM3.95/share.
Risk
Margin compression.Margin compression.Margin compression.Margin compression. Developers may not be able to pass
through to property buyers the incremental costs resulting
from rising land prices and construction costs, as the market
may not be receptive of higher selling prices in view of record
high house prices. We understand there is also labour shortage
in some areas such as Iskandar Malaysia where the situation is
more severe, which will result in contractors demanding higher
quotations for construction works.
Slowing salesSlowing salesSlowing salesSlowing sales. Property sales may slow down in certain
locations as property buyers could be deterred by the high
entry price and tightening measures, with banks adopting
more cautious lending practice for mortgage loans.
Rising householRising householRising householRising household debtd debtd debtd debt. The unprecedented household debt
level could strain purchasing power and demand for future
properties, in view of rising inflationary pressure and the
impending interest rate hike which will lower disposable
incomes.
Enla rge d la nd ba nkEnla rge d la nd ba nkEnla rge d la nd ba nkEnla rge d la nd ba nk Ac re sAc re sAc re sAc re s GDV (RMm)GDV (RMm)GDV (RMm)GDV (RMm)
Eco Ce ntra lEco Ce ntra lEco Ce ntra lEco Ce ntra l Saujana Glenmarie 25.9 90
Eco Sky 9.6 974
Eco Majestic 1073.1 11,144
Eco Sanctuary 308.7 8,000
1417.31417.31417.31417.3 20,20820,20820,20820,208
Eco SouthEco SouthEco SouthEco South Eco Botanic 325.1 3,794
Eco Spring 613.8 5,871
Eco Tropics 743.6 3,400
Eco Business Park 1 612 3,799
Eco Business Park 2 383.6 3,009
Eco Business Park 3 248 2,000
2 ,9262,9262,9262,926 21,87321,87321,87321,873
Eco NorthEco NorthEco NorthEco North Eco Terraces 12.8 338
Eco Meadows 75.7 916
Eco Macalister 1.1 190
89.689.689.689.6 1,4441,4441,4441,444
4 ,4334,4334,4334,433 43,52543,52543,52543,525
Industry Focus
Property
Page 14
Peer comparison
MMMMarket arket arket arket capcapcapcap
PEPEPEPE
PBPBPBPB
ROEROEROEROE CompanyCompanyCompanyCompany FYEFYEFYEFYE RatingRatingRatingRating PricePricePricePrice TPTPTPTP P/RNAVP/RNAVP/RNAVP/RNAV CY14CY14CY14CY14 CY15CY15CY15CY15 CY14CY14CY14CY14 CY15CY15CY15CY15 CY14CY14CY14CY14 CY15CY15CY15CY15
UEM Sunrise Dec Hold 2.10 2.20 9,529 52% 17.5 24.1 1.5 1.4 8% 6%
SP Setia Oct Buy 3.52 4.10 8,876 40% 18.8 13.9 1.5 1.5 8% 10%
Sunway Dec Buy 3.18 3.70 5,482 23% 10.9 9.1 1.0 0.9 9% 10%
E&O Mar Buy 2.99 3.80 3,307 33% 30.0 20.7 2.2 2.0 7% 10%
MKH Sep Buy 4.01 5.85 1,682 33% 11.3 7.9 1.5 1.3 14% 17%
Eco World Oct Buy 5.08 6.00 1,287 32% n.m. 34.1 1.3 1.3 1% 4%
Wing Tai M'sia Jun Hold 2.15 2.25 676 52% 7.6 5.7 0.6 0.6 8% 10%
Hunza Jun Hold 2.00 2.20 456 59% 18.6 8.1 0.5 0.5 3% 7%
AverageAverageAverageAverage 40%40%40%40% 16.416.416.416.4 15151515.5.5.5.5 1.31.31.31.3 1.21.21.21.2 7%7%7%7% 9%9%9%9%
MKH PE band MKH PB band
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Eco World PE band Eco World PB band
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
(x)
Average
+1 Std dev
+2 Std dev
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
(x)
+1 Std dev
+2 Std dev
Average
Industry Focus
Property
Page 15
SP Setia PE band SP Setia PB band
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
10.0
12.0
14.0
16.0
18.0
20.0
22.0
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
1.0
1.2
1.4
1.6
1.8
2.0
2.2
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
UEM Sunrise PE band UEM Sunrise PB band
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev1.0
1.5
2.0
2.5
3.0
3.5
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Wing Tai Malaysia PE band Wing Tai Malaysia PB band
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Industry Focus
Property
Page 16
Hunza Properties PE band Hunza Properties PB band
Average
+1 std dev
+2 std dev
-1 std dev
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
0.2
0.3
0.3
0.4
0.4
0.5
0.5
0.6
0.6
0.7
0.7
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
E&O PE band E&O PB band
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Average
+1 std dev
+2 std dev
-1 std dev
-2 std dev
0.0
0.5
1.0
1.5
2.0
2.5
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
(x)
Sunway PE band Sunway PB band
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Aug-11
Feb-12
Aug-12
Feb-13
Aug-13
Feb-14
(x)
+2 std dev
+1 std dev
-1 std dev
-2 std dev
Average
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
Aug-11
Feb-12
Aug-12
Feb-13
Aug-13
Feb-14
(x)
+2 std dev
+1 std dev
-1 std dev
-2 std dev
Average
Source: AllianceDBS, Companies, Bloomberg L.P.
Industry Focus
Property
Page 17
Stock ProfilesStock ProfilesStock ProfilesStock Profiles
Page 18
www.dbsvickers.com
ed: SGC / sa: WMT
Bloomberg: MKH MK | Reuters: METR.KL Refer to important disclosures at the end of this report
BUYBUYBUYBUY RMRMRMRM4.014.014.014.01 KLCIKLCIKLCIKLCI : : : : 1,872.971,872.971,872.971,872.97 Price Target :Price Target :Price Target :Price Target : 12-Month RM 5.85
Potential Catalyst: Potential Catalyst: Potential Catalyst: Potential Catalyst: Stronger property sales and FFB production
AllianceDBSAllianceDBSAllianceDBSAllianceDBS vs Consensus:vs Consensus:vs Consensus:vs Consensus: First to cover the stock Analyst QUAH He Wei, CFA +603 2604 3966 hewei@alliancedbs.com
Price Relative
8 4
1 3 4
1 8 4
2 3 4
2 8 4
3 3 4
3 8 4
4 3 4
0 .6
1 .1
1 .6
2 .1
2 .6
3 .1
3 .6
4 .1
J u l - 1 0 J u l - 1 1 J u l - 1 2 J u l - 1 3 J u l - 1 4
R e la t i v e In d e xR M
M K H B h d ( L H S ) R e la t i v e K L C I IN D E X ( R H S ) Forecasts and Valuation
FY FY FY FY SepSepSepSep ((((RMRMRMRM m) m) m) m) 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Turnover 688 775 983 1,374 EBITDA 183 208 287 403 Pre-tax Profit 136 184 261 377 Net Profit 103 135 191 275 Net Pft (Pre Ex.) 119 135 191 275 EPS (sen) 24.7 32.3 45.5 65.7 EPS Pre Ex. (sen) 28.4 32.3 45.5 65.7 EPS Gth (%) 15 31 41 44 EPS Gth Pre Ex (%) 63 14 41 44 Diluted EPS (sen) 24.7 32.3 45.5 65.7 Net DPS (sen) 7.5 8.3 8.3 12.5 BV Per Share (sen) 272.4 253.1 290.2 347.5 PE (X) 16.3 12.4 8.8 6.1 PE Pre Ex. (X) 14.1 12.4 8.8 6.1 P/Cash Flow (X) 15.4 7.5 10.9 9.3 EV/EBITDA (X) 11.4 9.7 7.0 4.9 Net Div Yield (%) 1.9 2.1 2.1 3.1 P/Book Value (X) 1.5 1.6 1.4 1.2 Net Debt/Equity (X) 0.4 0.3 0.3 0.2 ROAE (%) 12.0 13.4 16.7 20.6 Earnings Rev (%):Earnings Rev (%):Earnings Rev (%):Earnings Rev (%): 0 0 0 Consensus EPS Consensus EPS Consensus EPS Consensus EPS (sensensensen):::: 31.0 40.5 66.0 Other Broker Recs:Other Broker Recs:Other Broker Recs:Other Broker Recs: B: 2 S: 0 H: 0 ICB IndustryICB IndustryICB IndustryICB Industry : Real Estate ICB Sector: ICB Sector: ICB Sector: ICB Sector: Real Estate Investment & Services Principal Business:Principal Business:Principal Business:Principal Business: MKH is an established township developer in Kajang/Semenyih and Greater Klang Valley. Its 16k ha oil palm estates in Indonesia has started to contribute significantly Source of all data: Company, AllianceDBS, Bloomberg
At A Glance Issued Capital (m shrs) 419 Mkt. Cap (RMm/US$m) 1,682 / 528 Major Shareholders Chen Choy & Sons Realty (%) 43.1 Public Bank Grp Off Fund (%) 9.8 Free Float (%) 47.1 Avg. Daily Vol.(‘000) 572
Company Focus
MKH Bhd
Best proxy to booming Kajang • Resilient property sales riding on booming
Kajang/Semenyih growth corridor
• Exponential growth from plantation driven by 3-year FFB volume CAGR of 20%
• Maintain high-conviction BUY, RM5.85 TP
Record high unbilled sales. MKH is on track to meet its
record high property sales target of RM800m for FY14 (vs
RM580m in FY13). It booked RM410m sales in 1HFY14, of
which RM96m is pre-sale booking. This has yet to include
the strong sales from Saville@Kajang (RM280m GDV)
which has seen 80% take-up despite being launched only
in late April. Thanks to the robust sales, unbilled sales is at
a record high of RM602m as at March, or 1.3x its FY13
property revenue.
Strong launch pipeline. MKH’s large tract of property
land bank in Kajang/Semenyih (490 acres) makes them the
prime beneficiary of rising land prices at this hotspot.
Upcoming launches for MKH include MKH Avenue
2@Kajang City (RM200m GDV, shop offices),
Saville@Cheras (RM280m, high-rise), and Hill Park Homes
3@Semenyih (RM173m, 2-storey terrace houses). These
should be well-received due to their strategic locations and
affordable pricing.
Plantation a potential catalyst. FFB output hit 130k MT
in 1HFY14 (48% of our full-year forecast), and we
understand April FFB yield was strong. We expect
plantation contribution to rise to 33%/38% of FY14/15
group earnings (from 17% in FY13).
High conviction pick. We project MKH to register 32%
earnings CAGR over FY13-16F. MKH’s unrivalled strong
growth prospects in both the Property and Plantation
segments will drive a multi-year re-rating of the stock.
Company Focus
MKH Bhd
Page 19
Income Statement (RM m) Balance Sheet (RM m)
FY FY FY FY SepSepSepSep 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF FY FY FY FY SepSepSepSep 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF Turnover 688 775 983 1,374 Net Fixed Assets 163 243 323 403 Cost of Goods Sold (441) (416) (536) (801) Invts in Associates & JVs 28 31 34 37 Gross ProfitGross ProfitGross ProfitGross Profit 247247247247 359359359359 447447447447 572572572572 Invt & Devt Properties 264 264 264 264 Other Opng (Exp)/Inc (90) (154) (163) (173) Other LT Assets 713 763 784 806 Operating ProfitOperating ProfitOperating ProfitOperating Profit 158158158158 205205205205 284284284284 400400400400 Cash & ST Invts 123 191 208 252 Other Non Opg (Exp)/Inc 0 0 0 0 Dev Props held for sale 280 203 262 392 Associates & JV Inc 11 3 3 3 Inventory 41 61 77 108 Net Interest (Exp)/Inc (17) (23) (26) (26) Debtors 113 134 170 238 Exceptional Gain/(Loss) (16) 0 0 0 Other Current Assets 561 526 637 865 PrePrePrePre----tax Profittax Profittax Profittax Profit 136136136136 184184184184 261261261261 377377377377 Total AssetsTotal AssetsTotal AssetsTotal Assets 1,8511,8511,8511,851 2,0162,0162,0162,016 2,2502,2502,2502,250 2,6272,6272,6272,627 Tax (29) (46) (65) (94) Minority Interest (3) (3) (5) (8) ST Debt 107 107 107 107 Preference Dividend 0 0 0 0 Other Current Liab 182 199 252 353 Net ProfitNet ProfitNet ProfitNet Profit 103103103103 135135135135 191191191191 275275275275 LT Debt 40 77 96 125 Net Profit before Except. 119 135 191 275 Other LT Liabilities 152 152 152 152 EBITDA 183 208 287 403 Shareholder’s Equity 951 1,061 1,216 1,457 Minority Interests 3 6 11 19 Sales Gth (%) 26.2 12.5 26.9 39.7 Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab. 1,8511,8511,8511,851 2,0162,0162,0162,016 2,2502,2502,2502,250 2,6272,6272,6272,627 EBITDA Gth (%) 59.8 13.8 38.1 40.4 Opg Profit Gth (%) 69.7 30.1 38.6 40.8 Non-Cash Wkg. Capital 339 250 289 388 Net Profit Gth (%) 38.5 30.9 40.8 44.5 Net Cash/(Debt) (399) (331) (313) (270) Effective Tax Rate (%) 21.3 25.0 25.0 25.0 Cash Flow Statement (RM m) Rates & Ratio
FY FY FY FY SepSepSepSep 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF FY FY FY FY SepSepSepSep 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF Pre-Tax Profit 136 184 261 377 Gross Margins (%) 36.0 46.3 45.5 41.7 Dep. & Amort. 14 0 0 0 Opg Profit Margin (%) 22.9 26.4 28.9 29.1 Tax Paid (36) (9) (46) (65) Net Profit Margin (%) 15.0 17.5 19.4 20.0 Assoc. & JV Inc/(loss) (11) (3) (3) (3) ROAE (%) 12.0 13.4 16.7 20.6 Chg in Wkg.Cap. (6) 52 (58) (128) ROA (%) 6.2 7.0 8.9 11.3 Other Operating CF 13 0 0 0 ROCE (%) 8.4 9.1 11.7 14.8 Net Operating CFNet Operating CFNet Operating CFNet Operating CF 109109109109 224224224224 154154154154 181181181181 Div Payout Ratio (%) 25.3 25.8 18.3 19.0 Capital Exp.(net) (174) (80) (80) (80) Net Interest Cover (x) 9.2 8.7 10.9 15.3 Other Invts.(net) (24) (50) (21) (22) Asset Turnover (x) 0.4 0.4 0.5 0.6 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 54.9 58.1 56.5 54.2 Div from Assoc & JV 34 0 0 0 Creditors Turn (avg days) 137.6 167.2 153.5 137.7 Other Investing CF 0 0 0 0 Current Ratio (x) 2.1 1.9 1.9 1.9 Net Investing CFNet Investing CFNet Investing CFNet Investing CF (164)(164)(164)(164) (130)(130)(130)(130) (101)(101)(101)(101) (102)(102)(102)(102) Quick Ratio (x) 0.7 0.8 0.8 0.8 Div Paid (13) (26) (35) (35) Net Debt/Equity (X) 0.4 0.3 0.3 0.2 Chg in Gross Debt 49 0 0 0 Net Debt/Equity ex MI (X) 0.4 0.3 0.3 0.2 Capital Issues 52 0 0 0 Capex to Debt (%) 33.4 15.3 15.3 15.3 Other Financing CF 0 0 0 0 Z-Score (X) 0.0 0.0 0.0 0.0 Net Financing CFNet Financing CFNet Financing CFNet Financing CF 88888888 (26)(26)(26)(26) (35)(35)(35)(35) (35)(35)(35)(35) N. Cash/(Debt)PS (sen) (114.2) (79.0) (74.8) (64.3) Currency Adjustments (20) 0 0 0 Opg CFPS (sen) 27.6 41.1 50.5 73.6 Chg in Cash 13 68 18 44 Free CFPS (sen) (15.5) 34.4 17.6 24.0 Quarterly / Interim Income Statement (RM m) Segmental Breakdown / Key Assumptions
FY FY FY FY SepSepSepSep 3Q3Q3Q3Q2013201320132013 4Q4Q4Q4Q2013201320132013 1Q1Q1Q1Q2014201420142014 2Q2Q2Q2Q2014201420142014 FY FY FY FY SepSepSepSep 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF Turnover 185 218 182 188 Revenues (RM m) Cost of Goods Sold (115) (142) (118) (113) Property development & 476 489 610 964 Gross ProfitGross ProfitGross ProfitGross Profit 70707070 76767676 64646464 76767676 Hotel & property investment 32 34 36 38 Other Oper. (Exp)/Inc (22) (16) (16) (24) Trading 67 72 78 85 Operating ProfitOperating ProfitOperating ProfitOperating Profit 48484848 60606060 49494949 52525252 Manufacturing 9 9 10 10 Other Non Opg (Exp)/Inc 0 0 0 0 Plantation 101 170 249 277 Associates & JV Inc 0 1 1 1 TotalTotalTotalTotal 688688688688 775775775775 983983983983 1,3741,3741,3741,374 Net Interest (Exp)/Inc (6) (2) (5) (7) EBIT (RM m) Exceptional Gain/(Loss) 2 (33) (20) 29 Property development & 115 118 153 239 PrePrePrePre----tax Profittax Profittax Profittax Profit 44444444 27272727 25252525 75757575 Hotel & property investment 15 15 16 17 Tax (12) (2) (6) (19) Trading 4 5 5 6 Minority Interest 0 0 (2) (5) Manufacturing 0 0 0 0 Net ProfitNet ProfitNet ProfitNet Profit 32323232 24242424 17171717 51515151 Plantation 29 67 109 138 Net profit bef Except. 30 57 37 21 TotalTotalTotalTotal 163163163163 205205205205 284284284284 400400400400 EBITDA 48 61 50 53 EBIT Margins (%) Property development & 24.2 24.1 25.1 24.7 Sales Gth (%) 35.1 17.5 (16.2) 3.1 Hotel & property investment 46.9 45.0 45.0 45.0 EBITDA Gth (%) 88.8 27.3 (18.6) 6.4 Trading 6.7 7.0 7.0 7.0 Opg Profit Gth (%) 91.6 25.4 (19.4) 6.3 Manufacturing (2.3) 1.0 1.5 1.8 Net Profit Gth (%) 155.0 (25.2) (30.8) 203.1 Plantation 28.3 39.2 43.8 49.9 Gross Margins (%) 37.8 35.0 35.3 40.2 TotalTotalTotalTotal 23.723.723.723.7 26.426.426.426.4 28.928.928.928.9 29.129.129.129.1 Opg Profit Margins (%) 26.0 27.7 26.7 27.5 Key Assumptions Net Profit Margins (%) 17.4 11.1 9.2 26.9 CPO ASP (RM/MT) 2,525.5 2,545.1 2,617.9 FFB production (MT) 271,681. 340,780. 382,445. property sales (RMm) 580.8 728.6 896.6 1,058.0 Source: Company, AllianceDBS
Page 20
www.dbsvickers.com
ed: SGC / sa: WMT
Bloomberg: SPSB MK | Reuters: SETI.KL Refer to important disclosures at the end of this report
BUYBUYBUYBUY RMRMRMRM3.523.523.523.52 KLCIKLCIKLCIKLCI : : : : 1,872.971,872.971,872.971,872.97 (Upgrade from Hold)
Price Target :Price Target :Price Target :Price Target : 12-Month RM 4.10 (Prev RM 2.95)
PPPPotential Catalyst: otential Catalyst: otential Catalyst: otential Catalyst: M&A by largest shareholder PNB
DBSV vs Consensus:DBSV vs Consensus:DBSV vs Consensus:DBSV vs Consensus: More conservative sales assumptions Analyst QUAH He Wei, CFA +603 2604 3966 hewei@alliancedbs.com
Price Relative
6 6
8 6
1 0 6
1 2 6
1 4 6
1 6 6
1 8 6
2 0 6
2 .4
2 .9
3 .4
3 .9
4 .4
4 .9
J u l - 1 0 J u l - 1 1 J u l - 1 2 J u l - 1 3 J u l - 1 4
R e la t i v e In d e xR M
S P S e t ia ( L H S ) R e la t i v e K L C I IN D E X ( R H S ) Forecasts and Valuation
FY FY FY FY OctOctOctOct ((((RMRMRMRM m) m) m) m) 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Turnover 3,061 4,095 5,658 7,732 EBITDA 554 847 1,203 1,703 Pre-tax Profit 570 725 986 1,456 Net Profit 418 436 612 703 Net Pft (Pre Ex.) 431 436 612 703 EPS (sen) 16.9 17.6 24.7 28.4 EPS Pre Ex. (sen) 17.4 17.6 24.7 28.4 EPS Gth (%) 6 4 40 15 EPS Gth Pre Ex (%) 9 1 40 15 Diluted EPS (sen) 16.9 17.6 24.7 28.4 Net DPS (sen) 10.6 7.9 11.1 12.8 BV Per Share (sen) 235.1 242.5 252.9 264.9 PE (X) 20.9 20.0 14.3 12.4 PE Pre Ex. (X) 20.3 20.0 14.3 12.4 P/Cash Flow (X) 13.0 184.4 25.5 17.6 EV/EBITDA (X) 19.9 14.4 10.9 7.9 Net Div Yield (%) 3.0 2.2 3.2 3.6 P/Book Value (X) 1.5 1.5 1.4 1.3 Net Debt/Equity (X) 0.4 0.6 0.7 0.6 ROAE (%) 8.7 7.8 10.5 11.6 Earnings Rev (%):Earnings Rev (%):Earnings Rev (%):Earnings Rev (%): 0 0 0 Consensus EPS Consensus EPS Consensus EPS Consensus EPS (sensensensen):::: 19.6 26.2 31.6 Other Broker Recs:Other Broker Recs:Other Broker Recs:Other Broker Recs: B: 4 S: 4 H: 15 ICB ICB ICB ICB IndustryIndustryIndustryIndustry : Real Estate ICB Sector: ICB Sector: ICB Sector: ICB Sector: Real Estate Principal Business:Principal Business:Principal Business:Principal Business: Sector leader - largest residential property developer by market cap and sales
Source of all data: Company, AllianceDBS, Bloomberg
At A Glance Issued Capital (m shrs) 2,522 Mkt. Cap (RMm/US$m) 8,876 / 2,788 Major Shareholders Permodalan Nasional (%) 53.1 Skim Amanah Saham (%) 15.5 KWAP (%) 7.2 Free Float (%) 19.3 Avg. Daily Vol.(‘000) 1,154
Company Focus
SP Setia
Poised to recover • CEO departure priced in; historical low PE and
P/BV valuation (at -1SD of mean)
• Large tract of quality and prime land bank to sustain long-term growth
• Record high RM11.2bn unbilled sales to support earnings visibility
• Upgrade to Buy with RM4.10 TP
Robust outlook. Despite relatively weaker sentiment in
the property sector, we project SPSB will deliver strong 3-
year earnings CAGR of 18%, underpinned by record high
unbilled sales of RM11.2bn (4x FY13 property
development revenue). 7MFY14 property sales stood at
RM3.2bn, suggesting it is on track to meet FY14 target of
RM5bn. The strong 95% take-up for Battersea Phase 2
(GBP800m GDV; 2.3k psf ASP) launched in May will help
to grow unbilled sales in 2HFY14. We expect exponential
growth in FY16/17 following the handover of Battersea
Phase 1.
Strategic land bank. Given SPSB’s prime 4,782-acre land
bank (RM71bn GDV) at low holding cost, SPSB stands to
benefit the most from the steep land price appreciation in
recent years. It is poised to benefit from resilient demand
for its established township developments in Setia Alam
(712 acres undeveloped; RM3.50psf land cost) and Setia
Eco Hill (1,447 acres; RM10.2psf) which should continue to
see strong sales.
Upgrade to BUY, RM4.10 TP. Our TP is based on smaller
30% discount (50% previously) to our RNAV of RM5.86.
The CEO departure has been priced in as PE and P/BV
multiples are at historical lows at -1SD of mean. Strong
fundamentals should limit downside to the share price,
which is also supported by 3.2% FY15 dividend yield,
based 60% historical payout. Re-rating catalyst could
come from potential M&A exercise which is likely to be
done above put option exercise price granted to Tan Sri
Liew Kee Sin at RM3.95/share.
Company Focus
SP Setia
Page 21
Income Statement (RM m) Balance Sheet (RM m)
FY FY FY FY OctOctOctOct 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF FY FY FY FY OctOctOctOct 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Turnover 3,061 4,095 5,658 7,732 Net Fixed Assets 122 894 1,463 1,361 Cost of Goods Sold (2,506) (3,248) (4,455) (6,028) Invts in Associates & JVs 58 28 4 (16) Gross ProfitGross ProfitGross ProfitGross Profit 554554554554 847847847847 1,2031,2031,2031,203 1,7031,7031,7031,703 Invt & Devt Properties 5,932 5,833 5,737 5,642 Other Opng (Exp)/Inc (13) (66) (154) (184) Other LT Assets 220 220 220 220 Operating ProfitOperating ProfitOperating ProfitOperating Profit 541541541541 781781781781 1,0491,0491,0491,049 1,5191,5191,5191,519 Cash & ST Invts 2,243 1,911 1,885 2,293 Other Non Opg (Exp)/Inc 0 0 0 0 Dev Props held for sale 2,693 1,922 2,163 2,992 Associates & JV Inc 0 (30) (24) (19) Inventory 43 36 45 60 Net Interest (Exp)/Inc (8) (25) (39) (43) Debtors 1,058 1,204 1,529 2,090 Exceptional Gain/(Loss) (13) 0 0 0 Other Current Assets 73 654 1,108 1,242 PrePrePrePre----tax Profittax Profittax Profittax Profit 570570570570 725725725725 986986986986 1,4561,4561,4561,456 Total AssetsTotal AssetsTotal AssetsTotal Assets 12,44212,44212,44212,442 12,70312,70312,70312,703 14,15314,15314,15314,153 15,88515,88515,88515,885 Tax (151) (181) (246) (364) Minority Interest (1) (81) (94) (349) ST Debt 614 614 614 614 Preference Dividend 0 0 0 0 Other Current Liab 2,343 1,547 1,937 2,621 Net ProfitNet ProfitNet ProfitNet Profit 418418418418 436436436436 612612612612 703703703703 LT Debt 40 40 40 40 Net Profit before Except. 431 463 645 743 Other LT Liabilities 5 5 5 5 EBITDA 554 847 1,203 1,703 Shareholder’s Equity 5,526 5,700 5,944 6,226 Minority Interests (1) 80 175 524 Sales Gth (%) 21.1 33.8 38.2 36.7 Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab. 12,44212,44212,44212,442 12,70312,70312,70312,703 14,15314,15314,15314,153 15,88515,88515,88515,885 EBITDA Gth (%) 4.4 52.9 42.0 41.6 Opg Profit Gth (%) 4.6 44.3 34.4 44.7 Non-Cash Wkg. Capital 1,485 2,230 2,868 3,723 Net Profit Gth (%) 6.1 4.3 40.3 15.0 Net Cash/(Debt) (2,286) (3,420) (4,168) (4,176) Effective Tax Rate (%) 26.5 25.0 25.0 25.0 Cash Flow Statement (RM m) Rates & Ratio
FY FY FY FY OctOctOctOct 2020202013131313AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF FY FY FY FY OctOctOctOct 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Pre-Tax Profit 570 725 986 1,456 Gross Margins (%) 18.1 20.7 21.3 22.0 Dep. & Amort. 13 66 154 184 Opg Profit Margin (%) 17.7 19.1 18.5 19.6 Tax Paid (244) (151) (181) (246) Net Profit Margin (%) 13.7 10.6 10.8 9.1 Assoc. & JV Inc/(loss) 0 30 24 19 ROAE (%) 8.7 7.8 10.5 11.6 Chg in Wkg.Cap. 455 (582) (602) (876) ROA (%) 3.8 3.5 4.6 4.7 Other Operating CF (125) (42) (38) (42) ROCE (%) 4.4 5.5 6.8 9.0 Net Operating CFNet Operating CFNet Operating CFNet Operating CF 670670670670 47474747 342342342342 495495495495 Div Payout Ratio (%) 59.6 42.7 42.7 42.7 Capital Exp.(net) (235) (839) (723) (82) Net Interest Cover (x) 67.4 30.8 26.7 35.2 Other Invts.(net) (1,434) 0 0 0 Asset Turnover (x) 0.3 0.3 0.4 0.5 Invts in Assoc. & JV (94) 0 0 0 Debtors Turn (avg days) 107.5 100.8 88.2 85.4 Div from Assoc & JV 17 0 0 0 Creditors Turn (avg days) 272.1 223.1 147.8 142.3 Other Investing CF 34 0 0 0 Current Ratio (x) 2.0 2.6 2.6 2.6 Net Investing CFNet Investing CFNet Investing CFNet Investing CF (1,713)(1,713)(1,713)(1,713) ((((839)839)839)839) (723)(723)(723)(723) (82)(82)(82)(82) Quick Ratio (x) 1.1 1.4 1.3 1.3 Div Paid (254) (261) (367) (422) Net Debt/Equity (X) 0.4 0.6 0.7 0.6 Chg in Gross Debt 642 802 721 417 Net Debt/Equity ex MI (X) 0.4 0.6 0.7 0.7 Capital Issues 1,329 0 0 0 Capex to Debt (%) 5.2 15.7 11.9 1.3 Other Financing CF 26 (81) 0 0 Z-Score (X) 1.5 1.7 1.8 1.9 Net Financing CFNet Financing CFNet Financing CFNet Financing CF 1,7431,7431,7431,743 459459459459 354354354354 (5)(5)(5)(5) N. Cash/(Debt)PS (sen) (97.3) (145.5) (177.3) (177.7) Currency Adjustments 0 0 0 0 Opg CFPS (sen) 8.6 25.4 38.1 55.3 Chg in Cash 700 (332) (26) 408 Free CFPS (sen) 17.5 (31.9) (15.4) 16.7 Quarterly / Interim Income Statement (RM m) Segmental Breakdown / Key Assumptions FY FY FY FY OctOctOctOct 3Q3Q3Q3Q2013201320132013 4Q4Q4Q4Q2013201320132013 1Q1Q1Q1Q2014201420142014 2Q2Q2Q2Q2014201420142014 FY FY FY FY OctOctOctOct 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Turnover 762 900 722 952 Revenues (RM m) Cost of Goods Sold (590) (685) (546) (748) Construction 122 122 122 122 Gross ProfitGross ProfitGross ProfitGross Profit 172172172172 215215215215 175175175175 204204204204 Property Development 2,810 3,844 5,407 7,481 Other Oper. (Exp)/Inc (4) (4) (6) (7) Property & Investment 129 129 129 129 Operating ProfitOperating ProfitOperating ProfitOperating Profit 168168168168 211211211211 170170170170 197197197197 TotalTotalTotalTotal 3,0613,0613,0613,061 4,0954,0954,0954,095 5,6585,6585,6585,658 7,7327,7327,7327,732 Other Non Opg (Exp)/Inc 0 0 0 0 Pretax profit (RM m) Associates & JV Inc 0 0 (9) (15) Construction 5 5 5 5 Net Interest (Exp)/Inc (12) (19) (14) (16) Property Development 533 714 988 1,463 Exceptional Gain/(Loss) (12) (12) 0 0 Property & Investment 32 32 32 32 PrePrePrePre----tax Profittax Profittax Profittax Profit 144144144144 180180180180 147147147147 165165165165 0 (25) (39) (43) Tax (40) (52) (30) (47) TotalTotalTotalTotal 570570570570 725725725725 986986986986 1,4561,4561,4561,456 Minority Interest (2) 0 (20) (44) Pretax Margins (%) Net ProfitNet ProfitNet ProfitNet Profit 102102102102 127127127127 97979797 74747474 Construction 4.1 4.1 4.1 4.1 Net profit bef Except. 113 139 97 74 Property Development 19.0 18.6 18.3 19.6 EBITDA 172 215 167 189 Property & Investment 24.7 24.7 24.7 24.7 TotalTotalTotalTotal 18.618.618.618.6 17.717.717.717.7 17.417.417.417.4 18.818.818.818.8 Sales Gth (%) 7.1 18.2 (19.8) 32.0 Key Assumptions EBITDA Gth (%) 16.7 25.0 (22.4) 13.4 Property sales 10,501.3 5,477.2 4,521.2 4,275.1 Opg Profit Gth (%) 17.1 25.7 (19.6) 15.8 Net Profit Gth (%) 6.4 24.9 (24.0) (23.3) Gross Margins (%) 22.5 23.9 24.3 21.4 Opg Profit Margins (%) 22.1 23.4 23.5 20.7 Net Profit Margins (%) 13.4 14.1 13.4 7.8 Source: Company, AllianceDBS
www.dbsvickers.com
ed: TH / sa: WMT
BUYBUYBUYBUY RMRMRMRM5.085.085.085.08 KLCIKLCIKLCIKLCI : : : : 1,872.971,872.971,872.971,872.97
(Initiating Coverage)
Price Target :Price Target :Price Target :Price Target : 12-Month RM 6.00
Reason for Report :Reason for Report :Reason for Report :Reason for Report : Initiation
Potential Catalyst: Potential Catalyst: Potential Catalyst: Potential Catalyst: Strong property sales, aggressive property
launches, earnings delivery Analyst QUAH He Wei, CFA +603 2604 3966 hewei@alliancedbs.com
Price Relative
7 6
5 7 6
1 0 7 6
1 5 7 6
2 0 7 6
0 .1
1 .1
2 .1
3 .1
4 .1
5 .1
J u l - 1 0 J u l - 1 1 J u l - 1 2 J u l - 1 3 J u l - 1 4
R e la t i v e In d e xR M
E c o W o r l d D e v e lo p m e n t B h d ( L H S ) R e la t i v e K L C I IN D E X ( R H S ) Forecasts and Valuation
FY FY FY FY OctOctOctOct ((((RMRMRMRM m) m) m) m) 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Turnover 156 84 942 2,318 EBITDA 34 13 241 446 Pre-tax Profit 30 10 103 267 Net Profit 24 8 77 200 Net Pft (Pre Ex.) 24 8 77 200 EPS (sen) 9.6 1.2 11.8 30.4 EPS Pre Ex. (sen) 9.6 1.2 11.8 30.4 EPS Gth (%) 237 (87) 882 159 EPS Gth Pre Ex (%) 237 (87) 882 159 Diluted EPS (sen) 9.6 1.2 11.8 30.4 Net DPS (sen) 0.0 0.0 0.0 0.0 BV Per Share (sen) 125.8 378.6 390.3 420.8 PE (X) 53.0 423.9 43.2 16.7 PE Pre Ex. (X) 53.0 423.9 43.2 16.7 P/Cash Flow (X) 42.5 122.1 nm nm EV/EBITDA (X) 39.0 380.7 22.7 12.8 Net Div Yield (%) 0.0 0.0 0.0 0.0 P/Book Value (X) 4.0 1.3 1.3 1.2 Net Debt/Equity (X) 0.1 0.7 0.8 0.8 ROAE (%) 7.9 0.6 3.1 7.5 Consensus EPS Consensus EPS Consensus EPS Consensus EPS (sensensensen):::: 4.7 5.5 10.8 Other Broker Recs:Other Broker Recs:Other Broker Recs:Other Broker Recs: B: 4 S: 1 H: 0 ICB IndustryICB IndustryICB IndustryICB Industry : Financials ICB Sector: ICB Sector: ICB Sector: ICB Sector: Real Estate Investment & Services Principal Business:Principal Business:Principal Business:Principal Business: Township developer with 4,400 acres of land bank offering comprehensive range of products *13-month period for FY14 due to FYE change to Oct from Sep
Source of all data: Company, AllianceDBS, Bloomberg Finance L.P
At A Glance Issued Capital (m shrs) 253 Mkt. Cap (RMm/US$m) 1,287 / 404 Major Shareholders Liew Tian Xiong (%) 35.1 Eco World Development Holdings (%) 20.0 Free Float (%) 24.5 Avg. Daily Vol.(‘000) 967
DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity
21 Jul 2014
Malaysia Company Focus
Eco World Development Bhd Bloomberg: ECW MK | Reuters: ECOW.KL Refer to important disclosures at the end of this report
New kid with old hands • New lease of life with RM43bn GDV pipeline
projects under reinvigorated corporate identity, back by a highly experienced management team
• RM5bn sales target for the next two years to spearhead complete transformation
• Initiate with BUY and RM6.00 TP
DNA of DNA of DNA of DNA of a a a a property bellwetherproperty bellwetherproperty bellwetherproperty bellwether. . . . ECW (formerly known as
Focal Aims), a relatively new property developer, is helmed by
former top executives of SP Setia. Since the takeover by Eco
World Development Holdings Sdn Bhd (20% stake; EWH) and
Liew Tian Xiong (35% stake; eldest son of Tan Sri Liew Kee
Sin – founder of SP Setia) in Nov13, ECW has proposed to
acquire development rights of eight subsidiaries from Eco
World Development Sdn Bhd (EWSB; 50% owned by EWH)
that will position the Group as the fastest-rising property
developer in Malaysia.
4,4004,4004,4004,400----acre acre acre acre land bank worth RM43.5bn GDVland bank worth RM43.5bn GDVland bank worth RM43.5bn GDVland bank worth RM43.5bn GDV will offer ECW
immediate presence in Klang Valley, Iskandar Malaysia and
Penang – Malaysia’s top property hotspots. The Group targets
to achieve RM5bn sales over two years, given the new
projects to be launched over FY14-15F.
ValueValueValueValue----accretive land acquisitionaccretive land acquisitionaccretive land acquisitionaccretive land acquisition in the pipelinein the pipelinein the pipelinein the pipeline. . . . Thanks to its
management’s track record, ECW is participating in the
redevelopment of the former Pudu Jail site at a 20-acre prime
Bukit Bintang land which could carry RM7bn GDV. The board
is still deliberating on the offer to acquire a 1.18-acre land in
Parramatta, Australia, and it could secure the 470-acre land in
Batu Kawan which we understand it is the frontrunner in the
request for proposal from the Penang state government.
Initiate with BUYInitiate with BUYInitiate with BUYInitiate with BUY. . . . We arrive at our TP of RM6.00, based on a
20% discount to our RNAV methodology (pre-share split). On
ex-all basis, we value ECW at RM2.00 (excluding 7-yr warrant
dilution). We expect ECW’s earnings to grow substantially to
RM77m in FY15 from RM24m in FY13, thanks to the
unprecedented property sales boosted by the management
team’s undisputed brand name.
Company Focus
Eco World Development Bhd
Page 23
SWOT Analysis
StrengthsStrengthsStrengthsStrengths WeaknessWeaknessWeaknessWeakness
• Impressive Impressive Impressive Impressive execution track recordexecution track recordexecution track recordexecution track record underpinned by former SP Setia management team which had grown SP Setia into the Malaysian property bellwether from a relatively small establishment.
• Strong Strong Strong Strong market confidencemarket confidencemarket confidencemarket confidence. Despite being a relatively new property developer, ECW has been able to sell properties at an unprecedented pace, reflecting property buyers’ confidence in the management team’s strong brand name.
• Huge land bankHuge land bankHuge land bankHuge land bank. ECW is now in the midst of a corporate exercise that will leapfrog its land bank from 1,300 to 4,400 acres upon completion of the deal.
• Innovative product offeringsInnovative product offeringsInnovative product offeringsInnovative product offerings. ECW is likely to offer
innovative products via well-crafted township planning, given its large parcel of land bank
• Building up from scratchBuilding up from scratchBuilding up from scratchBuilding up from scratch. Historically, ECW has not had successful large-scale projects to boast of.
• Relatively more expensive land costRelatively more expensive land costRelatively more expensive land costRelatively more expensive land cost. ECW is acquiring vast land banks at relatively higher prices due to the steep appreciation over the past few years.
• Premium pricingPremium pricingPremium pricingPremium pricing. ECW’s higher selling price relative to some of its peers may not be sustainable if the economic outlook deteriorates.
OpportunitiesOpportunitiesOpportunitiesOpportunities ThreatsThreatsThreatsThreats
• Favourable demographicsFavourable demographicsFavourable demographicsFavourable demographics. Young and growing population and workforce will continue to support property demand, especially in Greater KL which is also the employment hub.
• Urban migrationUrban migrationUrban migrationUrban migration. Malaysian government’s aspiration to grow the Greater KL population to 10m by 2020 from an estimated 7m currently will serve as a major demand driver
• MMMMRRRRT connectivity T connectivity T connectivity T connectivity will help support demand, especially in the
suburban areas given the availability of vast land bank
• Relatively weaker property sentiment.Relatively weaker property sentiment.Relatively weaker property sentiment.Relatively weaker property sentiment. The strong property price surge over the last few years, coupled with recent tightening measures, could weaken property sales as property buyers are becoming more cautious.
• Tighter bank lendingTighter bank lendingTighter bank lendingTighter bank lending. Stricter lending guidelines by banks due to rising housing debt may lead to softer sales.
• Rising costRising costRising costRising cost. Construction and building material costs have been on the uptrend which may erode developers’ profitability.
Source: AllianceDBS
Company Focus
Eco World Development Bhd
Page 24
Company Background New lease of lifeNew lease of lifeNew lease of lifeNew lease of life.... EWH and Liew Tian Xiong took over ECW
(previously known as Focal Aims) with a 65% stake in Nov13
after months of speculation that ECW would be Tan Sri Liew
Kee Sin’s listed vehicle after his exit from SP Setia. With the
recent proposed acquisition and fund raising exercise
(expected completion by Oct14), ECW will be propelled to
the forefront of the Malaysian property sector, given its
massive 4,400-acre land bank with RM43.4bn GDV potential.
Massive corporate exercise to transform ECWMassive corporate exercise to transform ECWMassive corporate exercise to transform ECWMassive corporate exercise to transform ECW. The proposed
corporate exercise announced in Apr14 entails:
a) Proposed acquisition of development rights to eight
projects from EWSB
b) Proposed subscription of shares in ECW by shareholders
of EWSB to partially fund the acquisitions and ensure
continuity of ownership
c) Proposed rights issue with warrants and up to 20%
proposed private placement
It also includes the acquisition of two EWSB subsidiaries, Eco
World Project Management Sdn Bhd (project management
team) and Eco Macalister Development Sdn Bhd (investment
property asset in Penang).
Currently, ECW has only one ongoing project in Kota Masai,
with 991.6 acres left for development. The proposed
corporate exercise will offer immediate presence in the key
property hotspots in Malaysia – Klang Valley, Iskandar
Malaysia and Penang. This will offer ECW the much needed
platform to drive exponential growth prospects, leveraging
on its execution capability and track record.
Proposed acquisitions and corporate structure
Source: AllianceDBS, Company
Proposed fund raising
s h a re ss h a re ss h a re ss h a re s R e ma rksR e ma rksR e ma rksR e ma rks
(m)(m)(m)(m)
share base 253.3
share split 506.6
share subscription 806.8 1,371.6
1,313.5
656.7 788.0
1,970.2
20% placement 394.0 634.4
2,364.3
warrants 525.4 1,035.0
2,889.7
Pro c e e d s Pro c e e d s Pro c e e d s Pro c e e d s
(R M m)(R M m)(R M m)(R M m)
@ RM1.70/share by
Sinarmas and EWH
rights issue with
warrants
Illustrative@RM1.20;
entitlement not fixed
Illustrative@RM1.61;
Price not fixed
Source: AllianceDBS, Company
Sales Trend Profitability Trend
-50.0%
150.0%
350.0%
550.0%
750.0%
950.0%
0
500
1,000
1,500
2,000
2012A 2013A 2014F 2015F 2016F
RM m
Total Revenue Revenue Growth (%) (YoY)
7
57
107
157
207
257
307
357
407
2012A 2013A 2014F 2015F 2016F
RM m
Operating EBIT Pre tax Profit Net Profit
Source: Company, AllianceDBS
Sinarmas EWH
EWSB
Liew TianXiong
50% 50%
ECW
20%
35%
- 8 subsidiaries- Eco Macalister- Eco World project management
Present
- Proposed acquisition of development rights of 8 subsidiaries- Proposed acquisition of Eco Macalister and Eco World project management
Company Focus
Eco World Development Bhd
Page 25
Chronology of EWSB’s rise prior to the proposed corporate exercise
Source: Company
Raring to goRaring to goRaring to goRaring to go. . . . EWSB’s 3,107 acres of land bank (RM30bn GDV
potential) will also come in handy for ECW to grow its
earnings as several projects, such as the RM11bn Eco
Majestic@Semenyih and RM5.9bn Eco Spring@Tebrau, were
introduced to the public in May14. The land bank would also
help address the skyrocketing land prices which have made it
challenging for developers to acquire sizeable land banks.
With the ready launch pipeline, ECW will be able to just focus
on delivering the products and values to its stakeholders.
Growing on a solid footingGrowing on a solid footingGrowing on a solid footingGrowing on a solid footing. EWSB was incorporated in
Dec11 and it has been on an aggressive land bank acquisition
trail to accumulate 3,106.8 acres of land within Klang Valley,
Penang and Iskandar Malaysia. ECW’s access to the land
banks will set the stage for explosive growth over the next
few years. Though ECW is still a relatively new property
developer in Malaysia, the execution ability of its key
management team has never been in doubt. The strong
response to its EcoSky and EcoBotanic projects launched late
last year has been more than impressive, judging by the
lengthy queues and buying frenzies witnessed at the project
launches, which is unprecedented by any standard for a new
developer.
Ready launch pipeline with the land bank acquisitions
Source: AllianceDBS, Company
En l a rge d la n d b a n kEn l a rge d la n d b a n kEn l a rge d la n d b a n kEn l a rge d la n d b a n k Ac re sAc re sAc re sAc re s GDV (RM m)GDV (RM m)GDV (RM m)GDV (RM m)
Ec o Ce ntra lEc o Ce ntra lEc o Ce ntra lEc o Ce ntra l Saujana Glenmarie 25.9 90
Eco Sky 9.6 974
Eco Majestic 1073.1 11,144
Eco Sanctuary 308.7 8,000
1 41 7 .31 41 7 .31 41 7 .31 41 7 .3 2 0,2 082 0,2 082 0,2 082 0,2 08
Ec o So u thEc o So u thEc o So u thEc o So u th Eco Botanic 325.1 3,794
Eco Spring 613.8 5,871
Eco Tropics 743.6 3,400
Eco Business Park 1 612 3,799
Eco Business Park 2 383.6 3,009
Eco Business Park 3 248 2,000
2 ,9 2 62 ,9 2 62 ,9 2 62 ,9 2 6 2 1,8 732 1,8 732 1,8 732 1,8 73
Ec o No rthEc o No rthEc o No rthEc o No rth Eco Terraces 12.8 338
Eco Meadows 75.7 916
Eco Macalister 1.1 190
8 9 .68 9 .68 9 .68 9 .6 1,4 441,4 441,4 441,4 44
4 ,4 3 34 ,4 3 34 ,4 3 34 ,4 3 3 4 3,5 254 3,5 254 3,5 254 3,5 25
Company Focus
Eco World Development Bhd
Page 26
Property projects in the pipeline
Source: AllianceDBS, Company
Geographical breakdown of land bank
Geographical breakdown of GDV
Eco Central
32%
Eco South66%
Eco North2%
Eco
Central,
46%Eco South,
50%
Eco North,
3%
Source: AllianceDBS, Company Source: AllianceDBS, Company
Exi s tin g l a n dExi s tin g l a n dExi s tin g l a n dExi s tin g l a n d Loc a tio nLoc a tio nLoc a tio nLoc a tio n typ etyp etyp etyp e Te n u reTe n u reTe n u reTe n u re R Mp s fR Mp s fR Mp s fR Mp s f
Eco Sanctuary Kota Kemuning Mixed dev. LH 308.7 8,000
Saujana Glenmarie Glenmarie, Shah Alam residential township FH 25.9 90
Eco Tropics Pasir Gudang, Johor Mixed dev. FH 743.6 3,400
Eco Business Park 3 Pasir Gudang, Johor business park FH 248 2,000
13 2 613 2 613 2 613 2 6 13 ,4 9013 ,4 9013 ,4 9013 ,4 90
To a c qu i reTo a c qu i reTo a c qu i reTo a c qu i re
Eco Terraces Paya Terubong, Penang niche dev. FH 12.8 338 61 109.4
Eco Meadows Batu Kawan, Penang integrated commercial FH 75.7 916 116 35.2
Eco Macalister George Town, Penang Serviced apartments FH 1.1 190 48 1,001.8
Eco Sky Taman Wahyu, KL integrated commercial FH 9.6 974 118 282.2
Eco Majestic Semenyih, Selangor mixed dev FH 1073.1 11,144 950 20.3
Eco Botanic Nusajaya, Johor mixed dev FH 325.1 3,794 726 51.3
Eco Spring Tebrau, Johor mixed dev FH 613.8 5,871 670 25.1
Eco Business Park 1 Tebrau, Johor business park FH 612 3,799 598 22.4
Eco Business Park 2 Senai, Johor business park FH 383.6 3,009 546 32.7
31 0 731 0 731 0 731 0 7 30 ,0 3530 ,0 3530 ,0 3530 ,0 35 3,83 33,83 33,83 33,83 3
ma rke t ma rke t ma rke t ma rke t
va l ua tio n va l ua tio n va l ua tio n va l ua tio n
(R M m)(R M m)(R M m)(R M m)
s iz e s iz e s iz e s iz e
(a c re )(a c re )(a c re )(a c re )
GDV GDV GDV GDV
(R Mm)(R Mm)(R Mm)(R Mm)
Company Focus
Eco World Development Bhd
Page 27
Location of Eco Central in Klang Valley
Source: Company Location of Eco North in Penang
Source: Company
Company Focus
Eco World Development Bhd
Page 28
Location of Eco South in Iskandar Malaysia, Johor
Source: Company
Company Focus
Eco World Development Bhd
Page 29
Management
Highly experienced teamHighly experienced teamHighly experienced teamHighly experienced team. ECW is helmed by Dato’ Chang
Khim Wah – Group President and CEO. Dato’ Chang has 26
years of experience in the property development industry and
he was the Executive Vice President in charge of Southern
and Northern Property divisions of SP Setia where he served
for c.20 years. Also, Mr. Heah Kok Boon, Executive Director
and CFO, was the Head of Corporate Affairs in SP Setia and
has more than 24 years of experience in audit, corporate
finance and corporate investments.
Credible shareholdersCredible shareholdersCredible shareholdersCredible shareholders. The board of directors comprises the
likes of Tan Sri Abdul Rashid bin Abdul Manaf and Dato’
Leong Kok Wah who were also formerly non-executive
directors in SP Setia. Meanwhile, Mr. Liew Tian Xiong,
Executive Director, is likely to have honed his skills under the
guidance of his father, Tan Sri Liew Kee Sin, who himself has
achieved tremendous success as the founder of SP Setia. Tan
Sri Liew has also been appointed as a non-independent and
non-executive director of ECW recently.
Board of Directors
NameNameNameName PositionPositionPositionPosition BackgroundBackgroundBackgroundBackground Tan Sri Abdul Rashid bin Abdul Manaf
Non-Independent Non-Executive Chairman
- Barrister at Law (Middle Temple London)
- Former President of Session Courts in Klang
- Former Senior Federal Counsel for Income Tax Department
Dato' Leong Kok Wah Non-Independent Non-Executive Deputy Chairman
- MBA from University of Hull, UK
- Extensive experience in construction as well as stockbroking industry
- Executive Director of Salcon Berhad
Dato' Chang Khim Wah
President and CEO - Bachelor of Engineering, University of New South Wales
- 26 years of experience in property development
- Former director of SP Setia, EVP in charge of Southern and Northern property divisions
Heah Kok Boon Executive Director - Bachelor in Commerce (Accounting and Commercial Law), University of Melbourne
- 24 years of experience in audit, corporate finance and corporate investment
- Former head of corporate affairs in SP Setia
Liew Tian Xiong Executive Director - Bachelor's degree in Commerce, University of Melbourne
- Working experience from attachments with Pheim Asset Management and AmBank
Tan Sri Liew Kee Sin Non-Independent Non-Executive Director
- Bachelor of Economics Degree, University of Malaya
- Former President and CEO of SP Setia
- Property Man of the Year by FIABCI Malaysia in 2007
Tan Sri Lee Lam Thye Independent Non-Executive Director
- Former Assemblyman and Member of Parliament
- Chairman of National Institute of Occupational Safety and Health
Tang Kin Kheong Independent Non-Executive Director
- Certified Public Accountant, Malaysia
- 23 years of experience as a practicing accountant
Dato' Idrose bin Mohamed
Independent Non-Executive Director
- Bachelor Degree in Civil Engineering, UiTM
- 30 years of experience in construction, project and infrastructure implementation
Company Focus
Eco World Development Bhd
Page 30
Replicating a highly successful SP Setia? Another ‘SP Setia’ in the makingAnother ‘SP Setia’ in the makingAnother ‘SP Setia’ in the makingAnother ‘SP Setia’ in the making???? Given that most of the
management and employees come from SP Setia, there is
little doubt in terms of the execution track record of ECW.
The more pertinent concern would be the extent of ECW in
emulating the success in SP Setia as we believe that the ‘SP
Setia DNA’ within the senior management team would lend
credence to what lies ahead for this new developer which has
been dominating the news headlines of late.
SP Setia’s record-breaking property sales
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
(RMb)
Source: AllianceDBS, SP Setia
SP Setia’s revenue growing rapidly
(15)
(10)
(5)
0
5
10
15
20
25
30
0
500
1,000
1,500
2,000
2,500
3,000
3,500
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
%%%%RMmRMmRMmRMm
Revenue revenue growth
Source: AllianceDBS, Company
Visionary leadershipVisionary leadershipVisionary leadershipVisionary leadership. Under the stewardship of Tan Sri Liew
Kee Sin, SP Setia has been charting new highs year after year
when it comes to financial as well as operational
performance. SP Setia was the first property developer to
introduce the innovative 5/95 scheme during the financial
crisis where property buyers only had to fork out 5% of the
purchase price upon signing the sales & purchase agreement.
It turned out that other developers also followed suit on the
scheme which has proven to be critical to avert the severe
downturn back then.
Undisputed property bellwetherUndisputed property bellwetherUndisputed property bellwetherUndisputed property bellwether. The ECW’s existing
management team was instrumental in growing SP Setia to
where it is today. SP Setia’s market cap was less than RM2bn
back in 2006 and today the company is worth more than
RM8bn, implying substantial returns to its shareholders. This
is largely attributable to the entrepreneurial drive of the
management which had been relentlessly expanding the
company’s property development activities.
SP Setia’s rising market cap
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Jan
-00
Jan
-01
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
Jan
-10
Jan
-11
Jan
-12
Jan
-13
Jan
-14
RMmRMmRMmRMm
Source: AllianceDBS, Bloomberg Finance L.P.
Relentless expansion driveRelentless expansion driveRelentless expansion driveRelentless expansion drive. SP Setia has established a solid
brand name within Malaysian households, thanks to its
outstanding delivery throughout the years. Value-adding
projects with lifestyle-enhancing features for their township
developments have been sought after by buyers in
anticipation of future appreciation. Tan Sri Liew and his key
executives had also brought SP Setia to expand beyond
Malaysia, penetrating into Melbourne, London, Vietnam and
Singapore. The tremendous success of the company led to
numerous The Edge Malaysia and FIABCI awards.
Poised for successPoised for successPoised for successPoised for success. Therefore, ECW stands to leverage on the
vast experience of its management team to add value to the
4,400 acres of land bank that it will own upon completion of
the proposed corporate exercise.
Company Focus
Eco World Development Bhd
Page 31
Competitive Strengths Strong brand nameStrong brand nameStrong brand nameStrong brand name. While the “Eco World” brand name was
only introduced to the market last year, the management and
key shareholders behind ECW have long been widely
acclaimed for their strong delivery and execution track record.
The sell-outs of EWSB’s first launch at Eco Botanic@Nusajaya
and Eco Sky@Taman Wahyu (both to be injected into ECW)
underline the overwhelming confidence bestowed by the
public. As at Mar14, EWH had already achieved RM1.1bn
sales from the two projects. We expect subsequent phases of
the projects to continue garnering keen interest from
property buyers.
ECW showcased its EcoMajestic@Semenyih, Eco
Spring@Tebrau, EcoTropics@Pasir Gudang and Eco Business
Park 1 in May14, collectively accounting for RM20.8bn GDV.
The first phase of EcoMajestic@Semenyih attracted
overwhelming response from buyers where 95% of the 612
units of terraced homes with varying sizes priced from
RM586k onwards were sold over a weekend. Meanwhile,
both EcoSpring and EcoTropics managed to achieve 85%
take-up for the total 197 cluster (>RM1m/unit) and semi-
detached units (>RM1.5m/unit), as well as 497 terraced
homes (>RM650k/unit).
ComprehComprehComprehComprehensive product rangeensive product rangeensive product rangeensive product range. ECW will boast a wide range
of products including affordable, upgrader and luxury homes,
as well as integrated high-rise developments and green
business parks, catering to all walks of life. ECW has targeted
RM5bn sales within two years as the proposed corporate
exercise will increase its project pipeline to 11 projects from
just three at the moment.
Top developer in the makingTop developer in the makingTop developer in the makingTop developer in the making. Upon completion of the
corporate exercise, ECW’s land bank will consist of 1,417
acres in Klang Valley, 2,926 acres in Iskandar Malaysia and 90
acres in Penang. The land bank will be enough to sustain
ECW’s growth over the next 10 years.
Execution team in placeExecution team in placeExecution team in placeExecution team in place. ECW will also have the project
management team that is overseeing and executing EWSB’s
property projects. There will also be a heritage building at its
Eco Macalister site which will be refurbished into a sales and
marketing office to showcase ECW’s portfolio of investment-
grade properties.
Growth Strategies Rein in rising land pricesRein in rising land pricesRein in rising land pricesRein in rising land prices. Upon completion of the corporate
exercise, ECW will have a ready launch pipeline for its
property projects, thanks to the massive land bank which is
strategically situated within Malaysia’s property hotspots of
Klang Valley, Penang and Iskandar Malaysia. Development
land typically account for 10-20% of a project GDV while
construction costs (labour, building materials, etc) will
account for 50-60%. Given the scale of ECW projects, we
believe its initial cost will be higher, as the Group strives to
add value by providing world-class eco living through
innovative designs.
Right productRight productRight productRight productssss at right locationsat right locationsat right locationsat right locations. Most of ECW’s projects will
be gated and guarded landed properties which are expected
receive stronger demand than high-rise projects, particularly
in Iskandar Malaysia where there will be massive supply of
condos flooding the market when the launched projects over
the past few years are completed in the near term.
Aggressive launch pipelineAggressive launch pipelineAggressive launch pipelineAggressive launch pipeline. Despite the ambitious sales target
amid weaker sentiments after the cooling measures
announced by the government in Oct13, ECW’s
management’s previous track record suggests that achieving
the feat may not be far-fetched. The overwhelming response
for some of the launches in recent months further reinforces
our view that ECW’s unrivalled brand name is likely to attract
buyers at an unprecedented pace.
Explosive earnings trajectoryExplosive earnings trajectoryExplosive earnings trajectoryExplosive earnings trajectory. We expect ECW’s earnings to
grow exponentially to RM77m in FY15 from RM24m in FY13,
implying an impressive 2-year earnings CAGR of 78%.
StrengthStrengthStrengthStrengthening balance sheetening balance sheetening balance sheetening balance sheet. As part of the proposed
development rights acquisition, ECW will also undertake a
share subscription by EWSB to partly finance its proposed
acquisition of development rights, as well as a proposed
rights issue with warrants to raise RM788m gross proceeds.
The larger balance sheet will enable ECW to pursue its land
banking activity and scale up its business operations to
support its expansion plans.
Company Focus
Eco World Development Bhd
Page 32
More catalyst in the pipeline Track record speaks for itselfTrack record speaks for itselfTrack record speaks for itselfTrack record speaks for itself. ECW has been roped in to
participate in the former Pudu Jail redevelopment project,
known as Bukit Bintang City Centre (BBCC) via a 40% equity
stake in the consortium with EPF (20%) and UDA Holdings
Bhd (40%; landowner). It has been reported that the
execution track record of the management team has been
the winning factor for the partnership.
BBCC will be developed on the 20-acre prime land in Bukit
Bintang with a potential GDV of RM7bn. The mixed
development will comprise three residential towers housing
2,000 units, a 40-storey block, a 1m-sf shopping mall, a
Malaysian grand bazaar, mosque, al fresco dining terraces
and a food court to complete this 5m NLA project.
At this juncture, ECW is still working closely in consultation
with UDA Holdings to come up with a conceptual master
plan. Assuming the project is developed over a 10-year period
with a pretax margin of 20%, we estimate that BBCC will
enhance our ex-all RNAV by 8 sen (3%).
Venture into AustraliaVenture into AustraliaVenture into AustraliaVenture into Australia. ECW has also received an offer from
EWSB to sell 1.18 acres of land in Church Street, Parramatta,
NSW 2150, Australia at the same price and on the same
terms as that secured by EWSB from the vendor. The
purchase price of AUD28m implies a land cost of AUD545psf.
The land is located on the southern fringe of the Parramatta
CBD retail precinct, close to the Westfield Shopping Precinct,
railway station and bus interchange. ECW’s board has yet to
make a decision on the offer, and an EGM will be convened
should the board accept the offer.
Batu KawanBatu KawanBatu KawanBatu Kawan landlandlandland. Pursuant to the request of proposal (RFP)
by the Penang Development Corporation in Aug13 for the
development of an international theme park and an 18-hole
golf resort development at Bandar Cassia in Batu Kawan,
ECW has participated in the RFP for golf course development,
where the winning bidder will have to develop a golf course
on 60 ha of the total 190 ha land. While there is no official
confirmation on the status of the successful bidders, we
understand that ECW is the only company that has expressed
interest to bid where the opening bid started at RM45psf.
These potential land bank acquisitions clearly illustrate the
management’s unbridled desire to grow ECW into one of the
top property developers in Malaysia. As it is, ECW already has
ready launch pipeline which could keep the company busy
over the next decade, by virtue of its massive 4,400-acre land
bank.
Key Risks Relatively weaker property sentimentRelatively weaker property sentimentRelatively weaker property sentimentRelatively weaker property sentiment. The strong property
price surge over the last few years, coupled with recent
tightening measures, could hamper property sales as property
buyers are getting more cautious with their property
purchase decisions.
Tighter bank lendingTighter bank lendingTighter bank lendingTighter bank lending. Stricter lending guidelines by banks due
to rising housing debt may lead to softer sales as certain
property buyers have been facing difficulty in obtaining
mortgage loans.
Rising costRising costRising costRising costssss. In tandem with rising property prices,
construction and building material costs have been on the
uptrend and may erode developers’ profitability.
Company Focus
Eco World Development Bhd
Page 33
Key Assumptions
FY FY FY FY OctOctOctOct 2011201120112011AAAA 2012201220122012AAAA 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Property sales (RMm) 1,769.8 1,945.1 3,092.5
Sensitivity Analysis 2012012012015555
Sales +/- 1% Net Profit +/-
0.5%
Income Statement (RM m)
FY FY FY FY OctOctOctOct 2011201120112011AAAA 2012201220122012AAAA 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Revenue 56 65 156 84 942 2,318
Cost of Goods Sold (44) (43) (108) (59) (559) (1,524)
Gross ProfitGross ProfitGross ProfitGross Profit 12121212 22222222 48484848 26262626 383383383383 793793793793
Other Opng (Exp)/Inc (11) (11) (15) (13) (141) (348)
Operating ProfitOperating ProfitOperating ProfitOperating Profit 0000 11111111 34343434 13131313 241241241241 446446446446
Other Non Opg (Exp)/Inc 0 0 0 0 0 0
Associates & JV Inc 0 0 0 0 0 0
Net Interest (Exp)/Inc (2) (3) (4) (3) (138) (179)
Exceptional Gain/(Loss) 0 0 0 0 0 0
PrePrePrePre----tax Profittax Profittax Profittax Profit (2)(2)(2)(2) 8888 30303030 10101010 103103103103 267267267267
Tax 0 (1) (5) (2) (26) (67)
Minority Interest 0 0 0 0 0 0
Preference Dividend 0 0 0 0 0 0
Net ProfitNet ProfitNet ProfitNet Profit (2)(2)(2)(2) 7777 24242424 8888 77777777 200200200200
Net Profit before Except. (2) 7 24 8 77 200
EBITDA 0 11 34 13 241 446
Growth
Revenue Gth (%) nm 17.2 139.4 (46.0) 1,015.6 146.2
EBITDA Gth (%) nm 13,233.3 201.3 (61.2) 1,743.0 84.5
Opg Profit Gth (%) nm 12,881.0 207.2 (60.9) 1,743.0 84.5
Net Profit Gth (%) nm nm 237.0 (67.6) 882.3 158.6
Margins & Ratio
Gross Margins (%) 20.6 33.7 30.9 30.5 40.6 34.2
Opg Profit Margin (%) 0.2 16.7 21.4 15.5 25.6 19.2
Net Profit Margin (%) (3.7) 11.0 15.5 9.3 8.2 8.6
ROAE (%) (1.4) 2.5 7.9 0.6 3.1 7.5
ROA (%) (0.9) 1.5 5.0 0.3 1.5 3.2
ROCE (%) 0.0 2.2 6.2 0.4 3.7 6.3
Div Payout Ratio (%) N/A 0.0 0.0 0.0 0.0 0.0
Net Interest Cover (x) 0.0 3.9 8.6 3.7 1.7 2.5
Source: Company, AllianceDBS
Margins Trend
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
21.0%
23.0%
25.0%
27.0%
2012A 2013A 2014F 2015F 2016F
Operating Margin % Net Income Margin %
Underpinned by strong unbilled sales of RM1.1bn as at Mar14
Company Focus
Eco World Development Bhd
Page 34
Balance Sheet (RM m) FY FY FY FY OcOcOcOctttt 2011201120112011AAAA 2012201220122012AAAA 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Net Fixed Assets 2 1 1 1 101 201
Invts in Associates & JVs 0 0 0 0 0 0
Other LT Assets 319 303 302 4,110 4,230 4,146
Cash & ST Invts 4 7 25 413 412 208
Inventory 29 29 40 21 157 386
Debtors 14 45 40 21 238 586
Other Current Assets 81 106 82 79 553 1,094
Total AssetsTotal AssetsTotal AssetsTotal Assets 447447447447 491491491491 489489489489 4,6464,6464,6464,646 5,6925,6925,6925,692 6,6216,6216,6216,621
ST Debt
26 30 47 2,057 2,057 2,057
Creditor 17 54 40 22 471 1,159
Other Current Liab 0 0 4 2 26 67
LT Debt 38 34 5 5 500 500
Other LT Liabilities 74 74 72 72 72 72
Shareholder’s Equity 289 296 319 2,486 2,564 2,763
Minority Interests 3 3 3 3 3 3
Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab. 447447447447 491491491491 489489489489 4,6464,6464,6464,646 5,6925,6925,6925,692 6,6216,6216,6216,621
Non-Cash Wkg. Capital 107 126 118 98 451 840
Net Cash/(Debt) (61) (57) (27) (1,648) (2,145) (2,349)
Debtors Turn (avg days) 46.3 165.5 98.7 131.5 50.3 64.9
Creditors Turn (avg days) 69.7 299.9 158.7 191.4 160.8 195.1
Inventory Turn (avg days) 118.0 245.4 116.5 189.6 58.2 65.0
Asset Turnover (x) 0.2 0.1 0.3 0.0 0.2 0.4
Current Ratio (x) 3.0 2.2 2.0 0.3 0.5 0.7
Quick Ratio (x) 0.4 0.6 0.7 0.2 0.3 0.2
Net Debt/Equity (X) 0.2 0.2 0.1 0.7 0.8 0.8
Net Debt/Equity ex MI (X) 0.2 0.2 0.1 0.7 0.8 0.9
Capex to Debt (%) 0.5 0.1 0.1 0.0 3.9 3.9
Source: Company, AllianceDBS
Asset Breakdown Net Fixed Assets -0.3%
Assocs'/JVs -0.0%
Bank, Cash and Liquid Assets -90.4%
Inventory -4.7%
Debtors -4.7%
Debt assumed from proposed corporate exercise
Company Focus
Eco World Development Bhd
Page 35
Cash Flow Statement (RM m)
FY FY FY FY OctOctOctOct 2011201120112011AAAA 2012201220122012AAAA 2013201320132013AAAA 2014201420142014FFFF 2015201520152015FFFF 2016201620162016FFFF
Pre-Tax Profit (2) 8 30 10 103 267
Dep. & Amort. 0 0 0 0 0 0
Tax Paid 0 0 0 (4) (2) (26)
Assoc. & JV Inc/(loss) 0 0 0 0 0 0
Chg in Wkg.Cap. 28 (1) 6 21 (295) (345)
Other Operating CF (8) (3) (6) 0 0 0
Net Operating CFNet Operating CFNet Operating CFNet Operating CF 17171717 4444 30303030 27272727 (194)(194)(194)(194) (105)(105)(105)(105)
Capital Exp.(net) 0 0 0 0 (100) (100)
Other Invts.(net) 0 0 0 (427) (203) 0
Invts in Assoc. & JV 0 0 0 0 0 0
Div from Assoc & JV 0 0 0 0 0 0
Other Investing CF 0 0 0 0 0 0
Net Investing CFNet Investing CFNet Investing CFNet Investing CF 0000 0000 0000 (427)(427)(427)(427) (303)(303)(303)(303) (100)(100)(100)(100)
Div Paid 0 0 0 0 0 0
Chg in Gross Debt (19) (5) (11) 0 495 0
Capital Issues 0 0 0 788 0 0
Other Financing CF 0 0 0 0 0 0
Net Financing CFNet Financing CFNet Financing CFNet Financing CF (19)(19)(19)(19) (5)(5)(5)(5) (11)(11)(11)(11) 788788788788 495495495495 0000
Currency Adjustments 0 5 (1) 0 0 0
Chg in Cash (2) 3 18 388 (1) (205)
Opg CFPS (sen) (4.1) 2.1 9.5 0.9 15.4 36.7
Free CFPS (sen) 6.7 1.5 11.9 4.2 (44.7) (31.2)
Source: Company, AllianceDBS
Capital Expenditure
0
20
40
60
80
100
120
2014F 2015F 2016F
Capital Expenditure (-)
Cash consideration for the proposed acquisitions
Proceeds from rights issue
90% balance payment for Semenyih land acquisition
Company Focus
Eco World Development Bhd
Page 36
Quarterly / Interim Income Statement (RM m)
FY FY FY FY OctOctOctOct 1Q1Q1Q1Q2013201320132013 2Q2Q2Q2Q2013201320132013 3Q3Q3Q3Q2013201320132013 4Q4Q4Q4Q2013201320132013 1Q1Q1Q1Q2014201420142014 2Q2Q2Q2Q2014201420142014
Revenue 35 34 44 44 23 27
Cost of Goods Sold (25) (23) (28) (32) (18) (20)
Gross ProfitGross ProfitGross ProfitGross Profit 10101010 11111111 16161616 12121212 5555 7777
Other Oper. (Exp)/Inc (3) (4) (3) (5) (3) (3)
Operating ProfitOperating ProfitOperating ProfitOperating Profit 7777 7777 13131313 7777 2222 3333
Other Non Opg (Exp)/Inc 0 0 0 0 0 0
Associates & JV Inc 0 0 0 0 0 0
Net Interest (Exp)/Inc (1) 0 0 (3) 0 0
Exceptional Gain/(Loss) 0 0 0 0 0 0
PrePrePrePre----tax Profittax Profittax Profittax Profit 6666 7777 13131313 4444 2222 3333
Tax 0 0 (2) (4) (1) 0
Minority Interest 0 0 0 0 0 0
Net ProfitNet ProfitNet ProfitNet Profit 7777 7777 11111111 0000 1111 3333
Net profit bef Except. 7 7 11 0 1 3
EBITDA 7 7 13 7 2 3
Growth
Revenue Gth (%) 42.4 (3.7) 31.1 0.0 (48.6) 18.7
EBITDA Gth (%) 40.7 (1.8) 85.4 (48.9) (64.0) 45.1
Opg Profit Gth (%) 40.7 (1.8) 85.4 (48.9) (64.0) 45.1
Net Profit Gth (%) 98.8 0.6 63.8 (99.8) 2,814.8 226.8
Margins
Gross Margins (%) 28.9 32.1 35.9 26.6 21.9 24.6
Opg Profit Margins (%) 20.3 20.7 29.3 15.0 10.5 12.8
Net Profit Margins (%) 19.0 19.9 24.9 0.1 3.5 9.6
Margins Trend
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2Q2012
3Q2012
4Q2012
1Q2013
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
Operating Margin % Net Income Margin %
Source: Company, AllianceDBS
Company Focus
Eco World Development Bhd
Page 37
Valuation Premium valuationPremium valuationPremium valuationPremium valuation. ECW is currently trading at 53x FY13 PE.
While the valuation appears excessive at this juncture, we
expect it to moderate to a more palatable level by FY16,
when the full impact of its aggressive property sales will be
reflected. Based on its current share price, we estimate fully-
diluted (before warrant dilution) FY15F PE of 43x and FY16F
PE of 17x, after taking into consideration the RM788m rights
issue with warrants.
We derive our implied TP of RM6.00 after applying a 20%
discount to our ex-all RNAV of RM2.00 (based on
benchmark price of RM5.35). Our property sales
assumptions of RM1.7bn and RM2bn for FY14 and FY15 are
below management’s total target of RM5bn for the coming
two years. This is mainly to account for the weaker property
sentiment amid more cautious spending by potential
property buyers.
Expect strong earnings growthExpect strong earnings growthExpect strong earnings growthExpect strong earnings growth. Given that EWSB has
already achieved RM1.1bn sales as at Mar14, we believe
ECW will continue to ride on the strong sales momentum for
the other pipeline projects. Nevertheless, ECW’s net gearing
level may remain elevated at 0.7x by FY14, as ECW will
assume RM2bn debt from the proposed corporate exercise,
as well as the requirement for more working capital to roll
out its projects.
Solid backing from substantial shareholdersSolid backing from substantial shareholdersSolid backing from substantial shareholdersSolid backing from substantial shareholders. Upon
completion of the proposed corporate exercise (share split,
share subscription, rights issue with warrants, placement),
EWH will be the largest shareholder with a 32% stake, while
Sinarmas Harta and Liew Tian Xiong will own 26% and 11%
respectively. We believe the substantial shareholders will be
committed to drive ECW to greater heights, given its
ambitious plan to catapult ECW into one of the top property
developers in Malaysia.
RNAV
Pro j e c tPro j e c tPro j e c tPro j e c t GDV (R Mm)GDV (R Mm)GDV (R Mm)GDV (R Mm) Pro j e c t NPV@ 1 0%Pro j e c t NPV@ 1 0%Pro j e c t NPV@ 1 0%Pro j e c t NPV@ 1 0%
Ec o Ce n tra lEc o Ce n tra lEc o Ce n tra lEc o Ce n tra l Saujana Glenmarie 90 18
Eco Sky 974 102
Eco Majestic 11,144 820
Eco Sanctuary 8,000 544
Eco Majestic 2 3,500 199
23 ,7 0823 ,7 0823 ,7 0823 ,7 08 1,6 831,6 831,6 831,6 83
Ec o Sou thEc o Sou thEc o Sou thEc o Sou th Eco Botanic 3,794 301
Eco Spring 5,871 280
Eco Tropics 3,400 195
Eco Business Park 1 3,799 416
Eco Business Park 2 3,009 349
Eco Business Park 3 2,000 232
21 ,8 7321 ,8 7321 ,8 7321 ,8 73 1,7 721,7 721,7 721,7 72
Ec o No rthEc o No rthEc o No rthEc o No rth Eco Terraces 338 46
Eco Meadows 916 109
Eco Macalister 190 29
1 ,4 441 ,4 441 ,4 441 ,4 44 1 841 841 841 84
Tota lTota lTota lTota l 47 ,0 2547 ,0 2547 ,0 2547 ,0 25 3,6 403,6 403,6 403,6 40
R NAVR NAVR NAVR NAV
After tax 2,730
proforma shareholders fund 3,113
5,843
R NAV/s h a reR NAV/s h a reR NAV/s h a reR NAV/s h a re 2.47 Excluding 7-year warrants
e x-ri g hts TPe x-ri g hts TPe x-ri g hts TPe x-ri g hts TP 2 .002 .002 .002 .00 20% discount
I mpl i e d TP (c u m)I mpl i e d TP (c u m)I mpl i e d TP (c u m)I mpl i e d TP (c u m) 6 .006 .006 .006 .00
Source: AllianceDBS
Company Focus
Eco World Development Bhd
Page 38
DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUYSTRONG BUYSTRONG BUYSTRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY BUY BUY BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLDHOLDHOLDHOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUEDFULLY VALUEDFULLY VALUEDFULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL SELL SELL SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER This report is prepared by AllianceDBS Research Sdn Bhd (“ADBSR”) (formerly known as HwangDBS Vickers Research Sdn Bhd), a subsidiary of Alliance Investment Bank Berhad (“AIBB”) and an associate of DBS Vickers Securities Holdings Pte Ltd (“DBSVH”). This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers Group”) only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of ADBSR. The research set out in this report is based on information obtained from sources believed to be reliable and ADBSR, its holding company AIBB, their respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “Alliance Bank Group”) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The Alliance Bank Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The Alliance Bank Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The Alliance Bank Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other banking services for these companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the Alliance Bank Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months.
ANALYST CERTIFICATIONANALYST CERTIFICATIONANALYST CERTIFICATIONANALYST CERTIFICATION The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the analyst and his/her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).
COMPANYCOMPANYCOMPANYCOMPANY----SPECIFIC / RESPECIFIC / RESPECIFIC / RESPECIFIC / REGULATORY DISCLOSURES GULATORY DISCLOSURES GULATORY DISCLOSURES GULATORY DISCLOSURES
1.1.1.1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 17 Jul 2014.
2.2.2.2. DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may beneficially own a total of 1% of any class of common equity securities of the company mentioned as of 21 Jul 2014.
3.3.3.3. Compensation for investment banking services:Compensation for investment banking services:Compensation for investment banking services:Compensation for investment banking services:
Company Focus
Eco World Development Bhd
Page 39
DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services fromthe company mentioned.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
RESTRICTIONS ON DISTRIBUTIONRESTRICTIONS ON DISTRIBUTIONRESTRICTIONS ON DISTRIBUTIONRESTRICTIONS ON DISTRIBUTION
GeneralGeneralGeneralGeneral This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
AustraliaAustraliaAustraliaAustralia This report is not for distribution into Australia.
Hong KongHong KongHong KongHong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission.
IndonesiaIndonesiaIndonesiaIndonesia This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.
MalaysiaMalaysiaMalaysiaMalaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR") (formerly known as HwangDBS Vickers Research Sdn Bhd). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR
SingaporeSingaporeSingaporeSingapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.
ThailandThailandThailandThailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only intended for institutional clients only and no other person may act upon it.
United United United United KingdomKingdomKingdomKingdom
This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is intended only for institutional clients.
DubaiDubaiDubaiDubai
This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3
rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC),
Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.
United StatesUnited StatesUnited StatesUnited States Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.
Other Other Other Other jurisdictionsjurisdictionsjurisdictionsjurisdictions
In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
AllianceDBS ResAllianceDBS ResAllianceDBS ResAllianceDBS Research Sdn Bhdearch Sdn Bhdearch Sdn Bhdearch Sdn Bhd (128540 U) (formerly known as HwangDBS Vickers Research Sdn Bhd)
19th
Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100
Kuala Lumpur, Malaysia. Tel.: +603 2604 3333 Fax: +603 2604 3921 email : general@alliancedbs.com
top related