march 2017 malaysia market strategy pm najib for ever · malaysia market strategy pm najib for ever...

Malaysia Market Strategy PM Najib for ever

March 2017

+603 2723 2088; [email protected]

S.J.W. Hagger, Country Head of Malaysia

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION ™

Client-Driven Solutions, Insights, and Access

CREDIT SUISSE SECURITIES MALAYSIA

Sales commentary

mailto:[email protected]



Malaysia post 1MDB

Investment thesis: Maximum bullish

1MDB is in the price

PM Najib does whatever it takes to stay in power for a very long time

Three-consecutive years of foreign selling has turned

Three-consecutive years of earnings decline has bottomed

Rising commodity prices (oil, CPO & rubber)

MYR has stabilised

Valuations less stretched

China the new BFF

PNB reforms

Animal spirits rekindled

Country’s long term picture remains grim

2 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary

PM Najib stays PM for a very long time

GE likely to be a three-way fight with opposition split

1MDB fatigue

Greed & Feudal Loyalty

Police

Royalty

MACC

Judiciary

Cabinet & parliamentary speaker

FEAR

Press

Opposition harassment

National Security Council Act (aka Dictator Act)

PM Najib’s 187-strong special forces unit


China, the new BFF

1. 1MDB power assets sold to CGN

2. CRG to develop Bandar Malaysia

3. 1,500-acre Malaysia-China Kuantan Industrial

Park

4. Ports

5. MGS

6. KL-Singapore HSR

7. East Coast Rail, RM55 bn

8. RM144 bn investments signed

9. Solves ST political funding

10. Creates LT problem

East Coast Rail Link

Source: SPAD


Geopolitics of the South China Seas

China has successfully split the ASEAN block when the US distracted:

Cambodia has sold 20% of its coast line to China

Duterte’s U-turn

Thailand warming up to China

Indonesia, Vietnam, Singapore & Japan holding firm

Malaysia has shifted away from the US to China:

− Silent on China incursion

− Buying arms from China

− Port in the Straits of Malacca

− Land bridge (East-West)

− Other ports

One road, one belt

Source: Star


Stable MYR for now

+ves

− Oil, CPO & Rubber

− China

− Portfolio inflows

− Bond maturity risk has passed

− Fear of capital controls over

-ves

− LT capital flight

− BNM unpredictable

− Low forex reserves

− BNM’s use of forwards

− High foreign bond ownership

Credit Suisse FX forecast:

− 3M: USDMYR 4.35

− 12M: USDMYR 4.50

Oil price vs USDMYR

2.0

2.5

3.0

3.5

4.0

4.5

5.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

Jan-0

6

Aug-0

6

Mar-

07

Oct

-07

May-

08

Dec-

08

Jul-0

9

Feb-1

0

Sep-1

0

Apr-

11

Nov-

11

Jun-1

2

Jan-1

3

Aug-1

3

Mar-

14

Oct

-14

May-

15

Dec-

15

Jul-1

6

Feb-1

7

LHS - Brent in USD RHS - USDMYR


Source: the BLOOMBERG PROFESSIONAL™ service

Foreign shareholding

High foreign bond ownership Foreign equity ownership

23.1

24.4

24.0

24.3

24.1

24.0

24.1

24.1

23.7

23.4

23.3

23.1

22.8

22.8

22.5

22.3

22.3

22.5

23.0

23.0

23.0

22.8

23.0

23.0

22.8

22.8

22.6

22.3

22.3

22.3

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

2011

2012

2013

2014

Jan-

15

Feb

-15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-1

5

Aug

-15

Sep

-15

Oct

-15

Nov

-15

Dec

-15

Jan-

16

Feb

-16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Aug

-16

Sep

-16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb

-17

%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Jan

-05

Au

g-0

5

Ma

r-0

6

Oct-

06

Ma

y-0

7

Dec-0

7

Jul-

08

Fe

b-0

9

Se

p-0

9

Ap

r-10

Nov-1

0

Jun

-11

Jan

-12

Au

g-1

2

Ma

r-1

3

Oct-

13

Ma

y-1

4

Dec-1

4

Jul-

15

Fe

b-1

6

Se

p-1

6

% Foreign Holdings Government Bonds

ID KR MA TH

Source: Bursa Source: CEIC


EM funds are very underweight Malaysia

Source: EPRA


Stock ideas & themes

Crony & concept: Bursa

Special situations: AirAsia, Bumi Armada, Sime Darby

Telco bloodbath: Time

Recovery: CIMB, Bumi Armada

PNB restructuring: Sime Darby, Maybank

Chinese tourism: Gentings, AirAsia

Construction: Gamuda, IJM, Ann Joo, Ekovest, Econpile,

Small caps: Padini, Scientex, Sasbadi

Top 5 BUYs:

− Sime Darby

− CIMB

− GENM

− Gamuda

− Time


Appendix

Stock ideas & themes

Companies Reuters ticker Rating Market cap (US$mn) 6M ADV (US$mn) 2017 P/E (x) 2018 P/E (x) 2017 P/B (x) 2017 ROE (%) 2017 Div yield (%)

Maybank MBBM.KL N 20,723 17.1 12.6 11.2 1.3 10.3 6.0

Tenaga TENA.KL U 17,518 35.7 10.9 10.7 1.2 10.9 2.7

Sime Darby SIME.KL O 14,594 16.8 24.6 23.9 1.7 0.1 2.8

CIMB CIMB.KL O 11,218 16.9 11.0 9.6 1.1 9.4 3.5

Genting Bhd GENT.KL O 8,208 6.1 16.4 14.7 1.0 6.0 0.9

Genting Malaysia GENM.KL O 7,310 7.0 16.2 14.2 1.5 9.0 1.5

Gamuda GAMU.KL O 2,877 4.7 15.4 12.9 1.4 11.4 2.3

IJM IJMS.KL O 2,855 3.7 16.7 14.3 1.3 7.7 2.4

Air Asia AIRA.KL O 2,174 8.7 7.1 8.4 0.9 15.3 3.2

Time TCOM.KL O 1,130 0.6 22.3 18.7 2.1 0.1 1.1

Bumi Armada BUAB.KL O 994 3.1 10.7 9.5 0.7 6.8 0.0

Karex KARE.KL O 482 0.6 32.5 23.6 3.9 11.9 1.2

Padini PDNI.KL O 440 0.9 12.2 11.0 3.3 27.3 4.1

Bursa BMYS.KL NOT COVERED 1,208 1.7 25.4 24.3 6.3 25.0 3.9

Scientex STIK.KL NOT COVERED 763 0.4 10.3 9.0 2.2 23.0 3.0

Ekovest EKOV.KL NOT COVERED 652 2.5 n/a 17.1 n/a 10.3 n/a

Taliworks TWRK.KL NOT COVERED 454 0.3 26.8 24.1 1.6 6.1 4.8

Ann Joo ANNJ.KL NOT COVERED 300 0.5 8.0 7.5 1.1 16.3 2.9

Econpile ECOH.KL NOT COVERED 266 0.5 13.7 12.5 3.5 27.1 2.1

Destini DEST.KL NOT COVERED 209 0.6 14.3 11.6 1.7 15.9 n/a

Sasbadi SAHO.KL NOT COVERED 101 0.3 15.3 9.7 2.6 17.4 3.4

Tadmax TADM.KL NOT COVERED 51 0.1 n/a n/a n/a n/a n/a

Source: IBES for not covered companies, CS estimates for covered companies


Yield

High-yielding stocks (2017E) under CS coverage

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

May

bank

Mal

akof

f

Car

lsbe

rg

Hei

neke

n

BA

T M

alay

sia

Ast

ro

DiG

i

Pad

ini

Mah

Sin

g

Alli

ance

FG

Source: CS estimates, the BLOOMBERG PROFESSIONAL™ service


Stock performance in 2016

Which sectors have underperformed in 2016? O&G, telco, property.

Which have outperformed in 2016? Airlines, banks, CPO, gaming.

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Bum

i Arm

ada

Axi

ata

Mal

akof

f

BA

T M

alay

sia

SA

KP

RH

B C

ap

Icon

Offs

hore

Uzm

a

Tel

ekom

Max

is

Dig

i

Fel

da

MM

HE

IOI P

rop

UE

M S

unris

e

Ast

ro

IJM

Pet

Che

m

Dia

log

KLC

I

May

bank

Mah

Sin

g

IOI C

orp

HL

Ban

k

CIM

B

HLF

G

Gen

t Pla

nt

Tim

e

Ten

aga

Wes

tpor

ts

Alli

ance

FG

Gen

ting

Msi

a

Gam

uda

MyE

G

KL

Kep

ong

Pub

lic B

ank

Gen

ting

Tun

e In

s

CM

MT

Pad

ini

AirA

sia

AirA

sia

X

Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates


Stock performance in 2017 YTD

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

Mal

akof

f

Wes

tpor

ts

Top

Glo

ve

Axi

ata

Ten

aga

Nas

iona

l

Kos

san

Kar

ex

Hon

g Le

ong

Ban

k

KL

Kep

ong

IOI P

rop

Pub

lic B

ank

Gam

uda

Mal

ayan

Ban

king

Tel

ekom

Mal

aysi

a

KLC

I

Uzm

a

Dia

log

Mah

Sin

g

IOI C

orp

Gen

ting

Pla

ntat

ions

DIG

I

RH

BC

Pet

rona

s C

hem

ical

s

Alli

ance

Fin

anci

al G

roup

Tim

e do

tCom IJ

M

MyE

G

Max

is

HLF

G

Mal

aysi

a A

irpor

ts

Ast

ro

BA

T M

sia

AirA

sia

X

CIM

B G

roup

Sim

e D

arby

Gen

ting

Pad

ini

SA

KP

Fel

da G

loba

l Ven

ture

s

Gen

ting

Mal

aysi

a

AirA

sia

Icon

Bum

i Arm

ada

Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates


Valuations are attractive relative to history

KLCI P/E is in the middle of the pack KLCI P/B is in the middle of the pack

0

5

10

15

20

25

Sin

gapo

re

Hon

g K

ong

NJA

Tai

wan

Tha

iland

Mal

aysi

a

Chi

na

Japa

n

Phi

lippi

nes

Kor

ea

Indi

a

Indo

nesi

a

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Kor

ea

Sin

gapo

re

Hon

g K

ong

Japa

n

NJA

Tai

wan

Mal

aysi

a

Chi

na

Tha

iland

Indo

nesi

a

Phi

lippi

nes

Indi

a

Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates Source: the BLOOMBERG PROFESSIONAL™ service, Credit Suisse


Valuation Malaysia forward P/E Malaysia forward P/B

Mean = 1.9x

+1 Std = 2.2x

-1 Std = 1.7x

1.20

1.40

1.60

1.80

2.00

2.20

2.40

Dec-07 Apr-09 Aug-10 Dec-11 Apr-13 Aug-14 Dec-15

Mean = 15.9x

+1 Std =

17.7x

-1 Std =

14.0x

10.00

12.00

14.00

16.00

18.00

20.00

22.00

Dec-07 Jan-09 Feb-10 Mar-11 Apr-12 May-13 Jun-14 Jul-15 Aug-16

Malaysia valuations (CS coverage only) Calenderised 2011 2012 2013 2014 2015 2016 2017E 2018E

Core Market PE (x) 20.0 18.9 17.7 18.3 18.4 17.4 16.2 14.7

Core Market EPS grow th (%) 30.6 12.0 12.2 2.6 -1.5 7.1 3.1 9.6

Market PB (x) 3.6 3.4 2.8 2.2 1.9 1.8 1.7 1.6

Dividend yield (%) 3.9 3.7 4.2 3.6 3.0 2.9 3.0 3.3

Market ROE (%) 15.5 15.1 14.3 11.9 10.5 10.3 10.3 10.7

Market CF yield (%) 7.7 7.5 8.5 9.0 9.7 10.1 10.3 11.4

Market net gearing (%) 18.4 14.6 19.6 22.3 24.2 23.0 21.4 19.0

EV/EBITDA (x) 11.1 10.7 10.4 10.1 9.9 9.5 8.7 8.1

Source: CS estimates

Source for all: CS estimates


CS Research Top ideas Tourism (GENM, GENT, AIRA)

Construction (Gamuda, IJM Corp)

Small caps (Padini, Karex, TDC, BAB)

PNB restructuring (Sime)

Others (CIMB)

Top Outperforms Year Price TP Upside Mkt Cap ADV P/B

Name Ticker end (RM) Rating (RM) (%) (RM mn) (RM mn) t t+1 t+2 t+1

SIME SIME MK Jun 9.50 O 11.20 18% 64,608 87.7 25.0 25.1 24.1 1.8

CIMB CIMB MK Dec 5.60 O 5.90 5% 49,663 87.4 13.7 11.0 9.6 1.1

Genting GENT MK Dec 9.69 O 10.60 9% 36,338 30.6 16.8 16.4 14.7 1.0

Genting Msia GENM MK Dec 5.45 O 6.28 15% 32,362 37.6 16.2 16.2 14.2 1.5

IJM IJM MK Mar 3.50 O 4.00 14% 12,638 18.0 15.8 20.5 15.8 1.3

Gamuda GAM MK Jul 5.25 O 5.90 12% 12,737 25.4 20.9 16.7 14.0 1.5

AirAsia AIRA MK Dec 2.88 O 3.10 8% 9,625 47.0 5.3 7.1 8.4 0.9

TIME dotCom TDC MK Dec 8.65 O 10.20 18% 5,002 3.3 25.6 22.3 18.7 2.1

Bumi Armada BAB MK Dec 0.75 O 0.95 27% 4,400 19.2 -30.7 10.7 9.5 0.7

Karex KAREX MK Jun 2.13 O 2.72 27% 2,135 3.6 32.0 43.9 25.9 4.1

Padini PAD MK Jun 2.96 O 3.70 25% 1,947 5.6 14.2 13.0 11.6 3.6

P/E

Top Outperforms Year Price TP Upside Mkt Cap ADV P/B

Name Ticker end (RM) Rating (RM) (%) (RM mn) (RM mn) t t+1 t+2 t+1

Tenaga TNB MK Aug 13.72 U 12.50 -9% 77,550 131.5 10.0 11.1 10.7 1.2

Public Bank PBK MK Dec 19.96 U 18.90 -5% 77,487 111.6 14.9 15.1 14.4 2.1

Maxis MAXIS MK Dec 6.37 U 5.60 -12% 47,841 18.8 23.7 26.4 26.6 9.5

P/E

Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates Note: priced as of 23 Mar 2017


Sime Darby (SIME MK, RM9.50, O, TP RM11.20)

Target price of RM11.20 = SoTP of its five core business units, valued at its respective sector P/B average.

PNB’s new captains - Wahid as Chairman and Rahman as the CEO. Good track records in execution.

Enhancing Sime’s value:

− Low lying fruits - who is swimming “naked”?

− Reaping market values – HSR and Carey island. Sime’s value lies in the undervalued landbank which has been accumulated over its 106-year history.

− Under-owned and under-valued—Sime’s current P/B is 1.7x vs IOI’s 3.6x, KLK’s 2.9x, and GENP’s 1.9x. Sime’s foreign shareholding of14.3% is close to GFC.

Bbg/RIC SIME MK / SIME.KL Rating (prev. rating) O (O) Shares outstanding (mn) 6,800.84 Daily trad vol - 6m avg (mn) 8.7 Daily trad val - 6m avg (US$ mn) 16.8 Free float (%) 39.1 Major shareholders PNB (47.5%)

Price (23 Mar 17 , RM) 9.50 TP (prev. TP RM) 11.20 (11.20) Est. pot. % chg. to TP 18 52-wk range (RM) 9.50 - 7.26 Mkt cap (RM/US$ bn) 64.6/ 14.6

Performance 1M 3M 12M

Absolute (%) 4.1 18.3 18.8 Relative (%) 1.8 10.3 16.9

Year 06/15A 06/16A 06/17E 06/18E 06/19E

Revenue (RM mn) 43,729 43,963 45,018 45,981 46,855 EBITDA (RM mn) 4,352 4,238 5,400 5,798 5,965 Net profit (RM mn) 2,313 2,409 2,513 2,624 2,648 EPS (CS adj. RM) 0.37 0.38 0.38 0.39 0.40 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.35 0.40 0.42 EPS growth (%) (32.6) 2.2 (0.7) 4.4 0.9 P/E (x) 25.5 25.0 25.1 24.1 23.8 Dividend yield (%) 2.6 2.8 2.8 2.9 2.9 EV/EBITDA (x) 18.2 18.1 13.5 12.6 12.3 P/B (x) 1.9 1.9 1.8 1.7 1.7 ROE (%) 7.8 7.7 7.4 7.3 7.2 Net debt(cash)/equity (%) 46.0 34.5 21.6 21.1 20.8

Note 1: Sime Darby Berhad is a Malaysia-based investment holding company. Its six business segments are plantation, property, industrial, motors, energy and utilities, and others.

Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics


Genting Malaysia (GENM MK, RM5.45, O, TP RM6.28)

GENM is investing RM10 bn (capex can be used to offset tax expenses too) to revamp Genting Highlands.

New product mix can retain visitors for a longer period of time (previously, 85% of visitors were day-trippers). Bodes well for GGR as there is scope for higher visitations to the casino.

A tourism play, supported by: (1) weak MYR; (2) improving relationship with China (Malaysia’s new BFF); (3) new product mix in Genting Highlands.

UK and US business should no longer be a drag in 2017.

Prefer GENM to GENT.


Bbg/RIC GENM MK / GENM.KL Rating (prev. rating) O (O) Shares outstanding (mn) 5,938.04 Daily trad vol - 6m avg (mn) 6.3 Daily trad val - 6m avg (US$ mn) 6.9 Free float (%) 48.2 Major shareholders Genting Berhad

49.3%

Price (23 Mar 17 , RM) 5.45 TP (prev. TP RM) 6.28 (6.28) Est. pot. % chg. to TP 15 52-wk range (RM) 5.68 - 4.19 Mkt cap (RM/US$ mn) 32,362.3/ 7,310.2



Year 12/15A 12/16A 12/17E 12/18E 12/19E

Revenue (RM mn) 8,396 8,932 10,204 11,121 12,141 EBITDA (RM mn) 2,306 2,433 3,025 3,508 4,008 Net profit (RM mn) 1,189 1,910 1,908 2,171 2,576 EPS (CS adj. RM) 0.21 0.34 0.34 0.38 0.45 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.30 0.36 0.41 EPS growth (%) (12.2) 60.1 (0.1) 13.8 18.7 P/E (x) 25.9 16.2 16.2 14.2 12.0 Dividend yield (%) 1.3 3.0 1.5 1.8 2.1 EV/EBITDA (x) 14.0 13.0 10.8 8.9 7.9 P/B (x) 1.7 1.6 1.5 1.4 1.2 ROE (%) 6.7 9.8 9.3 9.8 10.8 Net debt(cash)/equity (%) (0.4) (3.4) 1.3 (4.9) (3.4)

Note 1: ORD/ADR=25.00. Note 2: Genting Malaysia Berhad, formerly Resorts World Bhd, is involved in a tourist resort business at Genting Highlands, and its activities cover leisure and hospitality services, which comprise gaming, hotel, entertainment and amusement.


Genting Bhd (GENT MK, RM9.69, O, TP RM10.60)

Suitable for deep value investors, in our view, as the stock is trading at a significant 37% discount to RNAV vs the long-term average of 22%.

Most of the negatives (sluggish prospects in Genting Singapore and flattish earnings growth in Genting Malaysia) have already been factored into the share price in 2016.

A laggard.

Key performance drivers:

(1) Full opening of new facilities in Genting Highlands

(2) Genting Singapore obtaining a spot in Japan’s gaming market.


Bbg/RIC GENT MK / GENT.KL Rating (prev. rating) O (O) Shares outstanding (mn) 3,750.03 Daily trad vol - 6m avg (mn) 3.3 Daily trad val - 6m avg (US$ mn) 6.1 Free float (%) 58.1 Major shareholders Kien Huat Realty

39.8%




Year 12/15A 12/16A 12/17E 12/18E 12/19E

Revenue (RM mn) 18,100 18,366 20,836 22,087 23,077 EBITDA (RM mn) 6,289 6,125 7,091 7,757 8,460 Net profit (RM mn) 1,388 2,146 2,198 2,451 2,720 EPS (CS adj. RM) 0.37 0.58 0.59 0.66 0.73 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.55 0.63 0.67 EPS growth (%) (8.8) 56.9 2.4 11.5 11.0 P/E (x) 26.4 16.8 16.4 14.7 13.3 Dividend yield (%) 0.4 1.3 0.9 1.0 1.1 EV/EBITDA (x) 9.8 9.8 9.4 9.3 9.2 P/B (x) 1.1 1.0 1.0 0.9 0.9 ROE (%) 4.7 6.4 6.1 6.5 6.8 Net debt(cash)/equity (%) (8.1) (11.2) (3.6) 1.8 5.5

Note 1: ORD/ADR=5.00. Note 2: Genting Berhad is an investment holding & management Co. having subsidiaries engaged in leisure & hospitality, plantation, the generation & supply of electric power, property dvlpt & management, genomics R&D, investments & oil & gas exploration, etc


Air Asia (AIRA MK, RM2.88, O, TP RM3.10)

The cycle for regional airlines likely peaked in 2016 when oil bottomed; the corollaries of higher jet fuel prices are lower aggregate demand and/or thinner margins.

At the same time, competitive pressures have probably troughed, as even MAS will start expanding its fleet by end of 4Q17. In mitigation, AIRA has hedged ~75% of its fuel requirements, and delivery timings point to capacity pressure only starting from 3Q17 onwards.

The key remaining positive catalyst is the leasing arm sale, which should complete by 2Q17; crystallization of substantial USD-equity means that AIRA will be a beneficiary of a weaker MYR.


Bbg/RIC AIRA MK / AIRA.KL Rating (prev. rating) O (O) [V] Shares outstanding (mn) 3,341.97 Daily trad vol - 6m avg (mn) 14.7 Daily trad val - 6m avg (US$ mn) 8.7 Free float (%) 64.5 Major shareholders Tune Air Sdn Bhd

(Tan Sri Anthony Francis Fernandes,

Datuk Kamarudin bin Meranun)



Absolute (%) 1.8 24.7 56.5 Relative (%) (0.5) 16.6 54.7

Year 12/15A 12/16A 12/17E 12/18E 12/19E

Revenue (RM mn) 5,948 6,924 8,195 9,092 9,482 EBITDAR 2,136.6 2,924.0 2,957.2 2,978.0 2,832.0 Net profit (RM mn) 730 1,520 1,349 1,151 930 EPS (CS adj. RM) 0.26 0.55 0.41 0.34 0.28 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.39 0.37 0.35 EPS growth (%) 94.5 108.2 (25.3) (15.7) (19.2) P/E (x) 11.0 5.3 7.1 8.4 10.4 Dividend yield (%) 1.0 1.4 3.2 2.9 2.4 EV/EBITDAR (x) 10.4 7.5 7.5 7.6 7.9 P/B (x) 1.6 1.2 0.9 1.0 0.9 ROE (%) 15.7 25.9 17.2 12.4 9.3 Net debt(cash)/equity (%) 228.9 133.6 91.5 78.5 69.9

Note 1: AirAsia Bhd is a short-haul, low cost carrier operating in Malaysia, with stakes in and operational control of affiliates in Thailand, Indonesia, Philippines, India and Japan. Its sister airline group, AirAsia X, focuses on long-haul routes.


Gamuda (GAM MK, RM5.25, O, TP RM5.90)

Potential near-to-medium-term order-book expansion, as it is targeting RM3-4 bn new jobs (LRT 3, Pan Borneo Sabah and

Southern Double Track).

Possible upside to 2017 new order target should govt speed up ECRL implementation

Healthy pipeline of new orders; good visibility.

Well positioned to clinch >RM40-50 bn; Penang Transport Masterplan (RM32 bn), MRT 3 (RM30 bn), KL-Sg HSR

(>RM40 bn), East Coast Railink (RM55 bn).

Potential sale of its water assets could raise >RM1 bn cash and

be distributed as special dividends.

Net profit could grow >20% pa over next three years.

Foreign ownership of 23%, close to 15-yr low and well below the GFC low of 28%.

Trading at 16x 2017 P/E (vs historical average of 17x and

ASEAN peers at 19-28x)

Assuming Gamuda secures 10% of ECRL and KL-Sin HSR, TP could be raised to RM6.40/share.


Bbg/RIC GAM MK / GAMU.KL Rating (prev. rating) O (O) Shares outstanding (mn) 2,426.11 Daily trad vol - 6m avg (mn) 4.2 Daily trad val - 6m avg (US$ mn) 4.6 Free float (%) 74.0 Major shareholders Generasi Setia 6.9%;

EPF 6.0%




Year 07/15A 07/16A 07/17E 07/18E 07/19E

Revenue (RM mn) 4,760 4,171 4,621 6,982 9,628 EBITDA (RM mn) 787 845 783 932 1,152 Net profit (RM mn) 682 626 805 974 1,182 EPS (CS adj. RM) 0.27 0.25 0.31 0.38 0.45 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.28 0.32 0.36 EPS growth (%) (4.7) (7.3) 25.3 19.2 19.7 P/E (x) 19.4 20.9 16.7 14.0 11.7 Dividend yield (%) 2.3 2.3 2.3 2.3 2.3 EV/EBITDA (x) 19.6 19.0 19.8 16.8 14.0 P/B (x) 1.7 1.6 1.5 1.3 1.2 ROE (%) 11.6 9.5 11.3 12.6 13.6 Net debt(cash)/equity (%) 40.3 46.2 34.8 33.8 33.6

Note 1: Gamuda Berhad is an investment holding and civil engineering construction company. Through its subsidiaries, the company provides earthwork construction, manufactures and supplies road-surfacing materials, and operates quarry and road-laying projects.


IJM (IJM MK, RM3.50, O, TP RM4.00)

Orderbook = RM9 bn out of which >20% awarded in FY2017. Potential wins include MRT 2 elevated works, LRT 3, NPE

extension , Light 2, ECRL.

CPO price strength will drive plantation earnings; RM100 increase in CPO price = +RM20 mn PBT.

Property sales expected to be flat in FY17. Will focus on landed property where demand is resilient

To complete the sale of its stake in a few Indian tollways to

raise another US$72 mn in FY17.

Port earnings should have bottomed as throughput set to

rebound by end-2017.

Positive catalyst : (1) orderbook expansion, (2) dividend surprise.

Assuming IJM secures 10% of works on ECRL and KL-Sin HSR, TP could be RM4.70/sh (FYMar19 net profit could have

12% upside)


Bbg/RIC IJM MK / IJMS.KL Rating (prev. rating) O (O) Shares outstanding (mn) 3,610.87 Daily trad vol - 6m avg (mn) 4.9 Daily trad val - 6m avg (US$ mn) 3.7 Free float (%) 61.9 Major shareholders EPF (14%); PNB

(11%)



Absolute (%) 3.2 10.1 1.2 Relative (%) 1.0 2.0 (0.7)

Year 03/15A 03/16A 03/17E 03/18E 03/19E

Revenue (RM mn) 5,448 5,128 7,573 8,220 8,068 EBITDA (RM mn) 1,543 1,639 1,388 1,710 1,866 Net profit (RM mn) 480.9 793.6 612.0 794.4 902.6 EPS (CS adj. RM) 0.32 0.22 0.17 0.22 0.25 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.17 0.19 0.22 EPS growth (%) (41.7) (31.0) (22.9) 29.8 13.6 P/E (x) 10.9 15.8 20.5 15.8 13.9 Dividend yield (%) 4.3 2.5 2.0 2.5 2.9 EV/EBITDA (x) 11.0 10.2 12.9 10.5 9.2 P/B (x) 0.6 1.4 1.3 1.3 1.2 ROE (%) 6.3 9.1 6.6 8.2 8.9 Net debt(cash)/equity (%) 45.2 40.4 49.7 48.4 38.2

Note 1: IJM Corporation Berhad operates in the construction, property development and investment holding activities. Through its subsidiaries, the company also operates in the construction, quarrying, plantation and educational businesses.


TIME dotCom (TDC MK, RM8.65, O, TP RM10.20)

We believe the company offers the best growth prospects among Malaysia-listed telecommunication companies (we

project FY15-18E top-line and bottom-line growth of 15-16%).

Retail segment an avenue for growth: capex has already been sunk in (registered 300k homes passed and penetration at

merely ~30%, suggesting room for growth).

Taking delivery of three new submarine cables: to cater to

demand for data within ASEAN.

Solid balance sheet with room for higher DPS; FCF turning +ve in 2017E.


Bbg/RIC TDC MK / TCOM.KL Rating (prev. rating) O (O) Shares outstanding (mn) 578.29 Daily trad vol - 6m avg (mn) 0.3 Daily trad val - 6m avg (US$ mn) 0.6 Free float (%) 66.1 Major shareholders Khazanah Nasional

Berhad (31.4)




Year 12/15A 12/16A 12/17E 12/18E 12/19E

Revenue (RM mn) 682 767 897 1,065 1,156 EBITDA (RM mn) 263.9 292.6 353.2 418.7 467.2 Net profit (RM mn) 164.0 195.7 224.8 268.2 304.7 EPS (CS adj. RM) 0.29 0.34 0.39 0.46 0.53 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.40 0.46 0.52 EPS growth (%) 20.1 18.1 14.9 19.3 13.6 P/E (x) 30.2 25.6 22.3 18.7 16.4 Dividend yield (%) 9.3 3.5 1.1 1.3 1.5 EV/EBITDA (x) 18.6 16.0 13.3 11.1 9.7 P/B (x) 2.4 2.3 2.1 2.0 1.8 ROE (%) 7.4 9.2 9.9 10.9 11.4 Net debt(cash)/equity (%) (4.5) (15.2) (12.4) (13.6) (17.1)

Note 1: Time is a fixed line telecommunications provider in Malaysia. The company offers a full suite of domestic and international connectivity, and data centre solutions to the Wholesale, Enterprise and SME & Consumer markets in Malaysia.


Padini (PAD MK, RM2.96, O, TP RM3.70)

Consumer downtrading remains a key trend in 2017. Padini is one of the best retail proxies given its affordable price points

and reasonable quality clothing offerings. SSSG in FY16 was 23%; we expect FY17 to grow by 7%.

Targeting 15 new stores in FY17. While the group has grown

volumes through its bundling offers, the co has started to unbundle the “higher range products” thus allowing for some

margin improvement.

Stock is trading at a 13x FY17E P/E offering ~4% yield. Given its net cash position and strong free cash flow, we see room for

active capital management.


Bbg/RIC PAD MK / PDNI.KL Rating (prev. rating) O (O) Shares outstanding (mn) 657.91 Daily trad vol - 6m avg (mn) 1.5 Daily trad val - 6m avg (US$ mn) 0.9 Free float (%) 48.5 Major shareholders Yong family (45%)

Price (23 Mar 17 , RM) 2.96 TP (prev. TP RM) 3.70 (3.70) Est. pot. % chg. to TP 25 52-wk range (RM) 3.06 - 1.93 Mkt cap (RM/US$ mn) 1,947.4/ 439.9



Year 06/15A 06/16A 06/17E 06/18E 06/19E

Revenue (RM mn) 978 1,301 1,489 1,679 1,900 EBITDA (RM mn) 144.3 224.0 242.6 268.9 295.6 Net profit (RM mn) 80.1 137.4 150.7 168.4 186.0 EPS (CS adj. RM) 0.12 0.21 0.23 0.26 0.28 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.23 0.26 0.27 EPS growth (%) (11.7) 71.4 9.7 11.7 10.4 P/E (x) 24.4 14.2 13.0 11.6 10.5 Dividend yield (%) 3.4 3.9 3.9 4.3 4.7 EV/EBITDA (x) 12.8 7.9 7.2 6.3 5.5 P/B (x) 4.8 4.2 3.6 3.1 2.7 ROE (%) 20.2 31.4 29.8 28.8 27.6 Net debt(cash)/equity (%) (24.2) (35.7) (34.8) (39.3) (42.9)

Note 1: A leading retailer in Malaysia that sells garments, shoes, accessories through its 9 labels. Most prominent brands are Padini and Vincci. Also exports mainly to Middle East and ASEAN countries.


Karex (KAREX MK, RM2.13, O, TP RM2.72)

Tender market is expected to rebound following a lull period. Karex with the largest production capacity put it in a sweet spot

to benefit from large emergency tender orders.

Its own brand condoms are gaining good traction, with the group aiming to launch in the UK, Singapore and Thailand in

the next 1-2 years. If successfully executed, margins should improve over time.

Latex prices have been on a rise, and this is likely to weed out smaller players without the ability to pass on costs. Karex will inevitably be hurt by the higher raw material cost as well, but is

optimistic that ASPs and utilisation rates will improve given the

better outlook for all tender, commercial and branded condoms market.


Bbg/RIC KAREX MK / KARE.KL Rating (prev. rating) O (O) Shares outstanding (mn) 1,002.38 Daily trad vol - 6m avg (mn) 1.2 Daily trad val - 6m avg (US$ mn) 0.6 Free float (%) 39.8 Major shareholders Goh family (32%)



Absolute (%) (9.7) (13.8) (15.3) Relative (%) (12.0) (21.8) (17.1)

Year 06/15A 06/16A 06/17E 06/18E 06/19E

Revenue (RM mn) 298.1 343.6 464.1 560.2 601.2 EBITDA (RM mn) 78.8 83.6 66.5 111.4 132.4 Net profit (RM mn) 59.6 66.7 48.6 82.6 98.4 EPS (CS adj. RM) 0.06 0.07 0.05 0.08 0.10 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.05 0.08 0.10 EPS growth (%) 56.5 12.0 (27.1) 69.8 19.2 P/E (x) 35.9 32.0 43.9 25.9 21.7 Dividend yield (%) 1.1 1.2 0.9 1.5 1.8 EV/EBITDA (x) 24.8 24.1 30.7 18.2 15.0 P/B (x) 4.9 4.5 4.1 3.7 3.3 ROE (%) 18.2 14.6 9.8 15.1 16.1 Net debt(cash)/equity (%) (42.7) (24.7) (17.7) (17.9) (23.8)

Note 1: One of the world's largest rubber condom manufacturer; a global market leader since 2011.


CIMB (CIMB MK, RM5.60, O, TP RM5.90)

Cash call risk has eased and mgt aims to raise CET 1 ratio to >11.5% by end-2017 (from 11.3% in 2016) and 12% by

2018.

Management believes credit cost in Thailand and Indo should have peaked in 2016 and Malaysia asset quality likely to remain

healthy.

Management intends to further reduce CIR to <53% in 2017

and 50% IN 2018 (from 54% in 2016).

Management has set 2017 ROE target of 9.5% (vs 8.3% in 2016) and indicated 2018 target should be closer to 12-13% (instead of 15%).

Foreign ownership well below GFC levels.


Bbg/RIC CIMB MK / CIMB.KL Rating (prev. rating) O (O) Shares outstanding (mn) 8,868.38 Daily trad vol - 6m avg (mn) 15.1 Daily trad val - 6m avg (US$ mn) 17.0 Free float (%) 58.5 Major shareholders Khazanah 28.6%,

EPF 12.9%

Price (23 Mar 17 , RM) 5.60 TP (prev. TP RM) 5.90 (5.90) Est. pot. % chg. to TP 5 52-wk range (RM) 5.65 - 4.13 Mkt cap (RM/US$ bn) 49.7/ 11.2



Year 12/15A 12/16A 12/17E 12/18E 12/19E

Pre-prov Op profit (RM mn) 6,146.8 7,413.6 8,043.2 9,286.0 10,544.5 Net profit (RM mn) 2,850 3,564 4,726 5,822 6,693 EPS (CS adj. RM) 0.34 0.41 0.51 0.58 0.62 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.48 0.53 0.59 EPS growth (%) (12.5) 21.8 24.4 13.9 7.1 P/E (x) 16.6 13.7 11.0 9.6 9.0 Dividend yield (%) 2.4 2.9 3.5 4.0 4.3 BVPS (CS adj. RM) 4.84 5.13 5.21 5.33 5.46 P/B (x) 1.16 1.09 1.07 1.05 1.03 ROE (%) 7.2 8.2 9.9 11.0 11.5 ROA (%) 0.7 0.8 0.9 1.1 1.2 Tier 1 ratio (%) 13.3 13.7 18.2 17.8 17.6

Note 1: CIMB Group Holdings Berhad, formerly known as Bumiputra-Commerce Holdings Berhad, is an investment holding company whose subsidiaries provide commercial and merchant banking as well as stockbroking, fund management, investment consultancy.


Bumi Armada (BAB MK, RM0.75, O, TP RM0.95)

One major FPSO has achieved first oil, the other is close to it. By 2Q17, announced in Aug, full-quarter impact should see

FCFF and earnings rebound extensively.

OSV weakest link but still slightly cash positive and offers some exposure to cyclical recovery.

Definite prospects pointing to double-digit FCFE yield once major FPSOs kick in, and indicating RM0.95 FV but potential

reversal of previous credit risks (Claire, Perdana, Perkasa) could yield another ~RM0.33/shr. Downside risk: further penalties on Kraken.


Bbg/RIC BAB MK / BUAB.KL Rating (prev. rating) O (O) Shares outstanding (mn) 5,866.27 Daily trad vol - 6m avg (mn) 20.1 Daily trad val - 6m avg (US$ mn) 3.1 Free float (%) 70.5 Major shareholders Tan Sri Ananda

Krishnan



Absolute (%) (5.1) 25.0 (5.1) Relative (%) (7.3) 17.0 (6.9)

Year 12/15A 12/16A 12/17E 12/18E 12/19E

Revenue (RM mn) 2,180 1,417 3,197 3,478 3,174 EBITDA (RM mn) 1,013 398 1,409 1,539 1,650 Net profit (RM mn) 344.1 (143.4) 412.5 464.0 593.9 EPS (CS adj. RM) 0.06 (0.02) 0.07 0.08 0.10 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.05 0.07 0.08 EPS growth (%) (23.2) n.m. n.m. 12.5 28.0 P/E (x) 12.8 n.m. 10.7 9.5 7.5 Dividend yield (%) 2.2 1.1 0 1.9 2.1 EV/EBITDA (x) 10.8 36.3 9.7 8.0 6.8 P/B (x) 0.6 0.8 0.7 0.7 0.6 ROE (%) 4.9 (2.2) 7.0 7.4 8.8 Net debt(cash)/equity (%) 89.1 176.3 151.6 121.2 98.0

Note 1: Bumi Armada leases out FPSOs (Floating Production Storage & Offloading), charters out OSVs (Offshore Support Vessels) and provides T&I (transportation and installation) services.


Economic summary 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F

National accounts, population and unemploymentReal GDP grow th (%)

(1) 5.4 5.8 6.8 5.3 5.6 6.3 4.8 -1.5 7.4 5.3 5.5 4.7 6.0 5.0 4.2 4.5 4.2

Grow th in real priv ate consumption (%) 3.9 8.1 9.8 9.1 6.6 10.4 8.7 0.6 6.9 6.9 8.3 7.2 7.0 6.0 6.1 6.0 6.0

Grow th in real fix ed inv estment (%) 0.7 2.9 3.5 4.9 6.3 10.3 2.4 -2.8 11.9 6.4 19.0 8.1 4.8 3.7 2.7 5.5 3.5

Fix ed inv estment (% of GDP) 22.8 22.1 21.5 21.4 21.5 22.3 21.8 21.5 22.4 22.7 25.6 26.4 26.1 25.8 25.4 25.6 25.5

Nominal GDP ($bn) 108.1 118.1 133.7 147.9 167.7 199.5 238.1 208.5 255.2 298.2 314.4 323.4 338.1 285.0 296.7 297.1 311.7

Population (mn) 24.9 25.5 26.0 26.4 26.9 27.4 27.8 28.3 28.7 29.2 29.6 30.1 30.1 30.9 31.4 31.8 32.3

GDP per capita ($) 4111.7 4399.6 4876.7 5252.3 6234.8 7292.6 8559.3 7373.8 8882.8 10218.7 10612.2 10752.4 11241.5 9209.0 9453.4 9341.6 9665.1

Prices, interest rates and exchange ratesCPI inflation (% y ear-on-y ear change, December ov er December) 1.7 1.2 2.1 3.3 3.1 2.3 4.5 1.0 2.1 3.0 1.3 3.0 2.8 2.7 1.6 3.4 2.4

CPI inflation (% change in av erage index for the y ear) 1.8 1.1 1.5 3.1 3.6 2.0 5.4 0.6 1.7 3.2 1.7 2.1 3.1 2.1 2.1 3.8 2.4

Ex change rate (MYR per USD, end-y ear) 3.8 3.8 3.8 3.8 3.5 3.3 3.5 3.4 3.1 3.2 3.1 3.3 3.5 4.29 4.49 4.45 4.50

Ex change rate (MYR per USD, av erage) 3.8 3.8 3.8 3.8 3.7 3.4 3.3 3.5 3.2 3.1 3.1 3.2 3.3 4.06 4.14 4.41 4.50

REER (% y ear-on-y ear change, December ov er December) (2) -0.7 -4.9 -0.1 0.0 2.0 0.2 -1.3 -1.6 5.7 -2.1 1.7 -1.4 0.0 -12.1 -2.0 -1.0 0.0

Nominal w age grow th (% y ear-on-y ear change) (3) 5.0 3.9 3.5 3.1 2.1 4.2 4.7 2.5 8.5 3.8 6.5 7.8 4.7 5.9 5.0 5.0 4.0

Ov ernight policy rate (%, end-y ear) (4) 5.0 4.5 2.7 3.0 3.5 3.5 3.3 2.0 2.8 3.0 3.0 3.0 3.3 3.3 3.0 3.0 3.0

Fiscal data (5)

General gov ernment fiscal balance (% of GDP) -4.9 -4.7 -3.8 -3.3 -3.1 -3.0 -4.5 -6.5 -5.3 -4.7 -4.3 -3.8 -3.4 -3.2 -3.1 -3.0 -2.7

General gov ernment primary fiscal balance (% of GDP) -2.6 -2.3 -1.7 -1.3 -1.1 -1.1 -2.9 -4.5 -3.4 -2.7 -2.3 -1.7 -1.3 -1.1 -1.0 -0.8 -0.5

General gov ernment ex penditure (% of GDP) 25.3 25.3 23.4 22.3 23.2 23.4 24.6 28.1 24.7 25.0 25.7 24.7 23.3 22.1 20.4 19.9 19.9

General gov ernment rev enue (% of GDP) 20.3 20.6 19.6 19.0 20.1 20.4 20.1 21.6 19.4 20.3 21.4 20.9 19.9 18.9 17.3 16.9 17.2

Gross general gov ernment debt (% of GDP, end-y ear) 40.2 42.1 42.6 40.8 39.4 38.9 38.6 49.3 49.6 50.0 51.6 53.0 52.7 54.5 52.7 51.9 51.6

Money supply and creditBroad money supply (M3, % of GDP) 93.6 95.1 105.2 110.3 117.7 115.6 113.2 133.9 128.3 132.6 136.5 141.0 139.5 137.3 133.1 127.8 124.2

Broad money supply (M3, % y ear-on-y ear change) 11.1 25.2 15.6 17.1 9.5 13.4 9.5 7.2 14.7 9.7 8.4 7.5 2.9 3.0 4.0 3.5

Domestic credit (% of GDP) 129.8 128.6 116.3 112.5 109.5 105.9 107.6 126.6 122.6 123.5 128.8 136.6 139.5 143.0 143.3 141.6 140.9

Domestic credit (% y ear-on-y ear change) 8.3 2.4 6.6 6.8 7.8 17.6 9.0 8.2 11.8 11.1 11.3 10.9 7.2 6.5 7.0 6.0

Domestic credit to the priv ate sector (% of GDP) 130.0 125.9 117.2 114.3 109.7 106.2 103.6 118.9 116.6 117.8 123.7 129.7 130.1 134.8 134.1 131.9 130.6

Domestic credit to the priv ate sector (% y ear-on-y ear change) 5.8 5.4 7.5 5.4 7.9 12.9 6.2 9.7 12.1 11.9 9.9 8.9 8.4 5.7 6.5 5.5

Balance of paymentsEx ports (goods and non-factor serv ices, % of GDP) 104.1 102.8 110.9 109.6 108.9 103.1 96.6 88.7 86.9 85.3 79.3 75.6 73.8 70.9 67.2 70.0 69.1

Imports (goods and non-factor serv ices, % of GDP) 87.5 83.9 91.3 88.3 87.7 83.8 74.9 69.1 71.0 69.7 68.5 67.1 64.5 63.3 60.8 63.2 62.6

Ex ports (goods and non-factor serv ices, % y ear-on-y ear change in $ v alue) 6.6 7.9 22.1 12.6 12.7 12.6 11.9 -19.6 19.9 14.6 -1.9 -1.9 2.0 -19.0 -1.3 4.3 3.5

Imports (goods and non-factor serv ices, % y ear-on-y ear change in $ v alue) 6.5 4.7 23.3 10.2 12.7 13.6 6.7 -19.3 25.9 14.7 3.7 0.7 0.5 -17.3 0.1 4.0 4.0

Current account balance ($bn) 8.0 13.3 15.1 20.7 26.2 29.7 39.4 31.4 25.7 32.5 16.2 11.3 14.8 8.5 6.1 7.4 7.2

Current account balance (% of GDP) 7.6 11.6 11.6 14.4 15.6 14.9 16.6 15.1 10.1 10.9 5.2 3.5 4.4 3.0 2.0 2.5 2.3

Net FDI inflow s ($bn) 1.3 1.1 2.6 1.0 0.0 -2.7 -7.8 -6.3 -4.3 -3.1 -7.9 -2.0 -5.5 1.2 4.3 2.0 2.0

Scheduled ex ternal debt amortization ($bn) 4.6 5.8 4.8 4.6 4.3 5.2 6.2 6.2 6.8 7.4 7.7 7.5 7.0 7.0 7.0 7.0 7.0

Foreign debt and reservesForeign debt ($bn) 48.9 49.1 52.8 52.3 50.9 55.9 66.6 68.3 138.8 170.1 197.2 214.4 215.0 194.3 190.0 190.0 190.0

Public ($bn) 26.5 25.5 25.5 22.8 21.2 18.4 25.2 26.3 52.6 60.4 72.2 73.4 69.9 70.9 70.9 70.9 70.9

Priv ate ($bn) 22.4 23.7 27.3 29.5 29.7 37.4 41.4 41.9 86.2 109.7 125.0 141.0 145.1 123.4 119.1 119.1 119.1

Foreign debt (% of GDP) 45.2 41.6 39.5 35.4 30.4 28.0 28.0 32.7 54.4 57.1 62.7 66.3 63.6 68.2 64.0 63.9 60.9

Foreign debt (% of ex ports of goods and serv ices) 43.4 40.5 35.6 32.3 27.9 27.2 28.9 36.9 62.6 66.9 79.1 87.7 86.2 96.1 95.2 91.3 88.2

Central bank gross FX reserv es ($bn) 33.7 44.2 66.2 70.2 82.5 101.3 91.5 96.7 106.5 133.6 139.7 134.9 115.9 95.3 98.0 98.0 98.0

Central bank gross FX reserv es, including forw ard FX transactions ($bn) 33.7 44.8 74.3 70.2 85.1 115.1 91.5 97.3 114.3 140.2 147.0 138.1 115.9 95.3 98.0 98.0 98.0

Central bank gross non-gold FX reserv es ($bn) (6) 33.4 43.9 65.9 69.9 82.2 101.1 91.2 95.4 104.9 131.8 137.8 133.5 114.6 94.0 96.7 96.7 96.7

(1) Real GDP from 2001 has been rebased to 2000=100. (2) Real ef fect ive exchange rate, increase indicates appreciat ion. (3) Salaries and wages in the manufacturing sector. (4) BNM changed the policy rate from the intervent ion rate

to the overnight rate in

Source Bank Negara Malaysia, CEIC, Credit Suisse


Which stocks could be vulnerable? Foreign ownership as a % of share capital Foreign ownership as a % of total foreign holdings

High foreign ownership (as a % of share cap) – AirAsia, GENT,

GENM, Public Bank, IJM.

High foreign ownership (as a % of total foreign holdings) –

Public Bank, Tenaga, GENT, Maybank, GENM

0% 10% 20% 30% 40% 50% 60%

MMHEStar Media

Pavillion REITMaxis

SP SetiaGenting Plantations

CMMTUEM Sunrise

YTL PowerHong Leong Bank

RHB BankPetronas Chemicals

DiGiFelda

WestportsMISCHLFG

Bumi ArmadaAxiata Group

Telekom MalaysiaSunway REIT

Sime DarbyKL Kepong

AstroIOI Properties

Mah SingPOS Malaysia

Malayan BankingBAT Malaysia

IOI CorpMalaysia Airports

IHHGamuda

BursaCIMB

AMMBTenaga Nasional

AllianceIJM

Public BankGenting Msia

GentingAir Asia

0 50 100 150 200 250 300

MMHEStar Media

Pavillion REITCMMT

Bumi ArmadaUEM Sunrise

POS MalaysiaMah Sing

Genting PlantationsSunway REIT

SP SetiaFeldaBursa

YTL PowerIOI Properties

WestportsAlliance

HLFGRHB Bank

BAT MalaysiaAstro

Malaysia AirportsGamuda

Hong Leong BankTelekom Malaysia

MaxisAMMB

KL KepongMISC

IJMDiGi

Air AsiaIOI Corp

Axiata GroupPetronas Chemicals

Sime DarbyCIMB

IHHGenting Msia

Malayan BankingGenting

Tenaga NasionalPublic Bank


P/E valuations FY17E P/E FY18 P/E

-10 0 10 20 30 40

Felda

MyEG

IOI Corp

Dialog

Maxis

Digi

Gent Plant

Kossan

Top Glove

Gamuda

Genting Msia

Icon Offshore

Padini

HLFG

Uzma

CIMB

AirAsia X

AirAsia

>40x >40x >40x

Loss-making Loss-making

0 5 10 15 20 25 30

Felda

MyEG

IOI Corp

Karex

KL Kepong

Digi

Astro

Top Glove

Pet Chem

Genting

AirAsia X

Gamuda

Padini

Maybank

Alliance FG

Uzma

Bumi Armada

AirAsia

>30x >30x >30x

Source for all: CS estimates, the BLOOMBERG PROFESSIONAL™ service


CS Malaysia Team


march 2017 malaysia market strategy pm najib for ever · malaysia market strategy pm najib for ever...

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