June 02, 2014 Malaysia MARKET STRATEGY | SEE PAGE 17 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS PP16832/01/2013 (031128) MY Strategy NEUTRAL (unchanged) 1Q report card: Relatively neutral 1Q14 core net profit of our research universe expanded 3.4% YoY; 65% of the results were in line. Our 2014/2015 KLCI core earnings estimates are shaved by 0.7%/1.1%; we now expect slightly slower 7.0%/8.0% growth. Do not expect much of a re-rating; no change to our YE KLCI target of 1,940. What’s New 1Q14 core net profit of our research universe expanded 3.4% YoY but was softer QoQ, at -3.2% (seasonal). Most of our stock coverage reported results that were within our expectations (65%). Except for the auto, telco and transport (in particular airlines) sectors where their results disappointed, the other sectors were largely in line. Power was the only sector that positively surprised. Sectors that reported both YoY and QoQ growth in core earnings were plantation and consumer. Sectors that saw both YoY and QoQ weaker core earnings were transport (airlines), oil & gas, property (developers), auto, media and the glove producers. Among the big caps, stocks whose earnings surprised on the upside were Malaysia Airports, KL Kepong, HLFG, YTLP and TNB. Stocks that negatively surprised were Malaysian Airlines, AirAsia X, Bumi Armada, Guinness, Felda Global, Axiata, Telekom and Dialog. We observe that results disappointment at the airlines came from a still challenging environment while dismal at the auto sector came partly from lower volume sales and margins compression on higher A&Ps as competition heats up. Pockets of disappointment at the consumer related sector came from weaker consumer sentiment (volume sales were down) and poorer adex sentiment (media). Our 2014/2015 KLCI core earnings estimates are shaved by 0.7%/ 1.1%, and we now expect slightly slower 7.0%/8.0% growth vs 8.1%/8.0% previously. The revised core earnings growth of our research universe is now 7.9%/10.4% vs 12.3%/9.5% previously. What’s Our View There is no change to our 1,940 end-2014 KLCI target which implies 16.0x 12M forward earnings. At its 1,873 close on 30 May, the KLCI trades at 16.7x/15.5x PERs for 2014/2015 and 16.1x on 12M forward PER, +0.7SD of its long-term mean. The KLCI has neither re-rated nor de-rated much in the last 5M, trading within the 15.8x-16.3x 12M forward PER range (2013: 15.3-16.6x). PEG is about 2x now, above that of its regional peers. There is no change to our sector weights; we remain OVERWEIGHT on construction, oil & gas, power and gloves. We also remain selective on stocks, with no major changes in our stock picks. Analyst Wong Chew Hann (603) 2297 8686 [email protected]Current KLCI: 1,873 (30 May) YE KLCI target: 1,940 (unchanged) M’sia equities growth & valuation 2013A 2014E 2015E KLCI @ 1,873 PE (x) 18.0 16.7 15.5 Earnings Growth (%) 5.4% 7.0% 8.0% Research Universe PE (x) 18.7 17.4 15.7 Earnings Growth (%) 6.8% 7.9% 10.4% Our sector weights OW Auto, Construction, Oil & Gas, Power, Gloves N Aviation, Banking, Building materials, Consumer, Gaming, Media, Non-banking finance, Plantation, Property, Petrochem, Telco, Ports UW - Our top BUY picks Stock Name BB Ticker Shr Px @ 30 May TP Tenaga TNB 12.06 14.00 Genting Malaysia GENM 4.07 4.74 Hong Leong Bank HLBK 13.88 16.20 AMMB Holdings AMM 7.34 8.50 Bumi Armada BAB 3.52 4.55 IJM Corp IJM 6.69 7.20 MPHB Capital MPHB 2.05 2.42 Source: Maybank KE
19
Embed
MY Strategy NEUTRAL - I3investor2014/06/02 · MY Strategy NEUTRAL (unchanged) 1Q report card: Relatively neutral 1Q14 core net profit of our research universe expanded 3.4% YoY;
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
June 02, 2014
Mala
ysi
a
MA
RK
ET S
TR
AT
EG
Y |
SEE PAGE 17 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS PP16832/01/2013 (031128)
MY Strategy NEUTRAL (unchanged)
1Q report card: Relatively neutral 1Q14 core net profit of our research universe expanded 3.4%
YoY; 65% of the results were in line.
Our 2014/2015 KLCI core earnings estimates are shaved by
0.7%/1.1%; we now expect slightly slower 7.0%/8.0% growth.
Do not expect much of a re-rating; no change to our YE KLCI
target of 1,940.
What’s New
1Q14 core net profit of our research universe expanded 3.4% YoY
but was softer QoQ, at -3.2% (seasonal). Most of our stock coverage
reported results that were within our expectations (65%). Except
for the auto, telco and transport (in particular airlines) sectors
where their results disappointed, the other sectors were largely in
line. Power was the only sector that positively surprised.
Sectors that reported both YoY and QoQ growth in core earnings
were plantation and consumer. Sectors that saw both YoY and QoQ
weaker core earnings were transport (airlines), oil & gas, property
(developers), auto, media and the glove producers.
Among the big caps, stocks whose earnings surprised on the upside
were Malaysia Airports, KL Kepong, HLFG, YTLP and TNB. Stocks
that negatively surprised were Malaysian Airlines, AirAsia X, Bumi
Armada, Guinness, Felda Global, Axiata, Telekom and Dialog.
We observe that results disappointment at the airlines came from a
still challenging environment while dismal at the auto sector came
partly from lower volume sales and margins compression on higher
A&Ps as competition heats up. Pockets of disappointment at the
consumer related sector came from weaker consumer sentiment
(volume sales were down) and poorer adex sentiment (media).
Our 2014/2015 KLCI core earnings estimates are shaved by 0.7%/
1.1%, and we now expect slightly slower 7.0%/8.0% growth vs
8.1%/8.0% previously. The revised core earnings growth of our
research universe is now 7.9%/10.4% vs 12.3%/9.5% previously.
What’s Our View
There is no change to our 1,940 end-2014 KLCI target which implies
16.0x 12M forward earnings. At its 1,873 close on 30 May, the KLCI
trades at 16.7x/15.5x PERs for 2014/2015 and 16.1x on 12M
forward PER, +0.7SD of its long-term mean. The KLCI has neither
re-rated nor de-rated much in the last 5M, trading within the
15.8x-16.3x 12M forward PER range (2013: 15.3-16.6x). PEG is
about 2x now, above that of its regional peers.
There is no change to our sector weights; we remain OVERWEIGHT
on construction, oil & gas, power and gloves. We also remain
selective on stocks, with no major changes in our stock picks.
Auto In line In line Below Mixed Mixed In line In line In line Below
Banking In line Above Above In line In line Mixed Mixed In line In line
Building materials In line Below Below Mixed Below In line Below Mixed Mixed
Construction / infra In line In line Mixed In line Mixed Mixed Below Mixed In line
Consumer Mixed In line Mixed In line In line In line Below In line In line
Gaming Below In line Mixed In line Mixed Mixed Mixed Mixed In line
Gloves In line In line In line In line In line In line In line In line In line
Media Below In line Below In line In line In line Above In line In line
Oil & Gas Mixed In line Mixed In line In line In line In line In line In line
Petrochemicals In line Below Below In line Above In line Below Below In line
Plantation Below Below Below In line Above Below Below Mixed Mixed
Power In line In line In line Mixed Mixed In line Mixed Mixed Above
Property (ex-REITs) In line In line Mixed Mixed In line In line In line In line In line
REITs In line In line In line In line In line In line In line In line In line
Telecommunications In line In line Mixed Below In line In line Mixed Mixed Below
Transport (shipping, aviation) In line Mixed Mixed Mixed Mixed Below Below Below Mixed
Source: Maybank KE
0.85 1.14
0.87 0.83
1.45
1.00
1.79
1.27
1.82
3.00
3.50
1.15 1.29
2.08
1.63
1.10
1.82
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
xBelow/Above ratio
17
22 2124
14
24
16 17
12
8
1114
18
13
1921
12
0
5
10
15
20
25
30
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
% Above
15
25
18 20 2124
29
21 22 23
39
16
2426
31
23 22
0
5
10
15
20
25
30
35
40
45
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
% Below
June 02, 2014 5
Strategy
Stock specific surprises
Among the big caps:
Stocks that surprised on the upside were Malaysia Airports, KL
Kepong, HLFG, YTLP and TNB.
Stocks that negatively surprised were Malaysian Airlines, AirAsia X,
Bumi Armada, Guinness, Felda Global, Axiata, Telekom and Dialog.
1Q 2014 results roundup: Outperformers and underachievers
Stock Core net profit
vs. MBB-KE’s forecasts
Comments (on current quarter results)
OUTPERFORMERS
Ann Joo 1Q14 at 67% of our full-year
Exceptionally strong sales volume at manufacturing (+70% YoY, +34% QoQ) on aggressive inventory run down in view of the attractive ASPs.
Ta Ann 1Q14 at 35% of our full year
Logs division outperformed on stronger logs export volume, while plywood division could have turned profitable – these offset weaker-than-expected plantation earnings.
Malaysia Airports 1Q14 at 31% of our full-year
Lower-than-expected taxes, while most revenue and cost indicators performed largely as expected.
Magnum 1Q14 at 30% of our full-year
Lower-than-expected price payout, but revenue fell YoY despite an equal number of draws.
KL Kepong 2QFY14 at 29% of our full-year
Strong downstream (mainly oleo-chemical) earnings, while YoY growth was also lifted by higher CPO ASP which offset lower FFB output.
TSH Resources 1Q14 at 28% of our full-year
Lower-than-expected cost of production which could be due to streamlining of operations at the estates, and manuring process which could be slightly behind schedule.
HLFG 3QFY14 at 27% of our full-year
Higher-than-expected contributions from the insurance division, which has benefited from lower reserving amid rising bond yields.
Sunway REIT 3QFY6/14 at 26% of our full-year
Stronger performance at Sunway Pyramid (positive rental reversions) and better-than-expected occupancy rates at its hotels due to aggressive marketing and promotion activities, and a pick-up in corporate bookings at the hotels.
YTL Power 3QFY14 at 26% of our full-year
Lower-than-expected taxes, while segmental results were mixed with other op-cos (except Power Seraya) performing well. Power Seraya was impacted by competitive pressures.
TNB 2QFY8/14 at
23% of our full year
Lower taxes, lower coal costs and lower IPP charges.
UNDERACHIEVERS
Malaysian Airlines System
Core loss of MYR470m
Challenging yield environment – yields contracted 9% YoY, much greater than regional peers‟ experience.
AirAsia X Core loss of MYR60m
Australian sectors continue to struggle, responsible for the losses.
NCB Holdings 1Q14 at 4% of our full-year
Softer throughput, provision of monthly port lease rental, higher repair/maintenance costs and higher depreciation with the start of operations at the new CT4; logistics remained in the red.
TH Plantations 1Q14 at 7% of our full-year
Higher-than-expected cost of production per tonne.
Source: Maybank KE
June 02, 2014 6
Strategy
1Q 2014 results roundup: Outperformers and underachievers (continued)
Stock Core net profit vs. MBB-KE’s forecasts
Comments (on current quarter results)
UNDERACHIEVERS
Tan Chong 1Q14 at 14% of our full-year
Weaker vehicle sales (-11% QoQ, -19% YoY) and depressed EBITDA margin (-2ppts QoQ to 8.1%), impacted by intense price wars in the B-segment (50% of TCM‟s total vehicle sales).
Bumi Armada 1Q14 at 14% of our full-year
OSV hit by low utilisation and scheduled dry-dock costs, T&I impacted by timing of the Lukoil operations.
MPHB Capital 1Q14 at 14% of our full-year
Higher-than-expected claims at the insurance business.
Eversendai 1Q14 at 15% of our full-year
Longer-than-expected contract execution for projects in Middle East and India given the intricate fabrication requirements, extra cost incurred for the development of its fabrication yard at UAE.
Guinness 3QFY14 at 16% of our full-year
Weak consumption with revenue down 16% YoY and 25% QoQ.
Hock Seng Lee 1Q14 at 16% of our full-year
Timing of projects, with major new jobs at their commencement phase resulting in 15% YoY and 20% QoQ decline in works recognition.
TIME dotCom 1Q14 at 16% of our full-year
Sequential contraction in revenue (which could be lumpy), tax rate was also higher than expected.
MSM Malaysia 1Q14 at 17% of our full-year
Lower domestic and export sales.
Star Publications 1Q14 at 17% of our full-year
Shortfall in print and new media segment, due to poor adex sentiment.
Felda Global Ventures
1Q14 at 17% of our full-year
Poor FFB output and losses at its North American downstream operations, hampered by logistical challenges following the extreme cold weather.
Axiata 1Q14 at 18% of our full-year
Higher-than-expected taxes (at XL in particular).
MBM Resources 1Q14 at 18% of our full-year
Weaker associates‟ contributions (start-up losses at new Perodua and Hino facilities, lower
Perodua vehicle sales), lower EBIT at auto parts manufacturing (higher utility costs, start-up losses at the alloy wheel plant), and weaker motor trading EBIT (higher A&Ps).
Telekom 1Q14 at 19% of our full-year
Higher depreciation (accelerated depreciation charge) and taxes.
Dialog 3QFY14 at 20% of our full-year
Lower contributions from associate due to higher pre-operating expenses at the Pengerang tank terminal operations, and lower EPCC works.
Source: Maybank KE
Some observations
Results surprises from Malaysia Airport, the two telco stocks (Axiata,
Telekom) and the two power stocks (TNB, YTLP) came partly or largely
from taxes, while their operational performances have been in line.
Results disappointment from the airlines came from a still challenging
environment (yield contraction for Malaysian Airlines, losses at the
Australian sectors for AirAsia X).
Results disappointment from the auto sector came partly from lower
volume sales (Tan Chong, Perodua for MBM) and margins compression
on higher A&Ps as competition heats up.
Pockets of results disappointment at the consumer sector came from
weaker consumer sentiment (volume sales were down at Guinness,
MSM) and poorer adex sentiment (Star Publications).
June 02, 2014 7
Strategy
Stock upgrades and downgrades
We have raised our call on just one stock and downgraded on seven stocks,
compared to seven upgrades and eight downgrades in the previous quarter.
Ann Joo is now a BUY due to limited downside to its profitability and
the stock is already trading at below trough P/B.
Of our seven downgrades, three stocks are now SELLs – Malaysian
Airlines, TH Plantations and NCB.
1Q 2014 results roundup: Stock upgrades and downgrades
Stock Old Call New Call Old TP New TP Reason for upgrades / downgrades
UPGRADES
Ann Joo Hold Buy 1.20 1.60 Limited downside to share price given improved profitability,
preliminary trade actions against dumping activities, and the stock is already trading at below trough P/BV of 0.7x.
DOWNGRADES
Tan Chong Buy Hold 6.80 5.25 Earnings forecasts slashed by up to 34%; current valuations (12.8x FY15 PER) fair.
Malaysian Airlines System
Hold Sell 0.22 0.175 We project a larger net loss of MYR1.2b in FY14, and expect MAS
to be loss making up till 2016. From a standalone basis, there is no investment case to own MAS.
AirAsia X Buy Hold 0.86 0.79 No near term catalyst – 2Q14 losses expected to be larger than 1Q14, being seasonally a weak quarter.
Star Publications Buy Hold 2.55 2.55 Significant share price outperformance (+17%) since our BUY call; current share price at our TP.
TH Plantations Hold Sell 1.65 1.65 Share price has significantly overshot our TP; valuations are pricey.
TSH Resources Buy Hold 3.40 3.40 Significant share price outperformance (+26%) since our BUY call; current share price at our TP.
NCB Hold Sell 3.60 2.75 Weak operating outlook; valuations are pricey after our earnings downgrade.
Source: Maybank KE
June 02, 2014 8
Strategy
Market earnings & valuations
Market earnings shaved
Our KLCI core earnings estimates are shaved by 0.7% for 2014 and 1.1% for
2015 post the 1Q14 results reporting season, after tweaking our forecasts
for a few of the banks, utility and oil & gas stocks. At the same time, our
research universe core earnings forecasts are lowered by a higher 1.8% for
2014 and 1.0% for 2015, after incorporating our major downgrade on
Malaysian Airlines‟ earnings – we now project a larger net loss of MYR1.2b
in FY14 vs MYR0.2b loss previously, and we expect Malaysian Airlines to be
loss making up to FY16 vs profitability in FY15 previously.
Growth estimates lowered
We now expect KLCI‟s core earnings to grow a slower 7.0%/8.0% in
2014/2015 vs 8.1%/8.0% previously. The revised core earnings growth of
our research universe, which makes up 75% of the market capitalisation of
the Malaysian bourse, is now 7.9%/10.4% for 2014/2015 vs 12.3%/9.5%
previously. With the exception of the auto and gaming (NFO) sectors where
we anticipate earnings to contract, and the aviation sector where we
expect the combined earnings to remain in the red, we expect all other
sectors to record earnings growth this year.
Malaysia market earnings growth & valuation as at 30 May 2014
2013A 2014E 2015E
KLCI 30 @ 1,873.4 PE (x) 18.0 16.7 15.5
Earnings Growth (%) – current 5.4% 7.0% 8.0%
Earnings Growth (%) – Mar‟ 14 est 5.1% 8.1% 8.4%
Earnings Growth (%) – Nov „13 est 5.3% 8.1% 8.0%
Maybank IB’s Research Universe PE (x) 18.7 17.4 15.7
Earnings Growth (%) – current 6.8% 7.9% 10.4%
Earnings Growth (%) – Mar‟ 14 est 4.5% 12.3% 9.5%
Earnings Growth (%) – Nov „13 est 5.0% 10.1% 9.2%
Source: Maybank KE
Research Universe: Earnings breakdown by sector – CY2014
KLCI 30: Earnings breakdown by sector – CY2014
Source: Maybank KE Source: Maybank KE
Banking & Finance
33%
Building materials
1%Consumer7%
Construction, Infra 3%
Gaming6%
Gloves1%
Oil & Gas8%
Media1%
Plantation10%
Property5%
Telcos11%
Transport3%
Utilities11%
Banking & Financials
40%Consumer
2%Gaming
6%
Oil & Gas10%
Plantations12%
Property1%
Telcos13%
Transport3%
Utilities12% Media
1%
June 02, 2014 9
Strategy
Maybank IB Research Universe earnings growth, PERs, P/B, ROE
Earnings Growth (%) PE (x) P/B (x) ROE (%)
Rec Sector CY 13A CY 14E CY 15E CY 13A CY 14E CY 15E CY 13A CY 14E CY 13A CY 14E
NGUYEN Thi Sony Tra Mi (84) 8 44 555 888 x 8084 [email protected] • Port operation • Pharmaceutical
• Food & Beverage
June 02, 2014 17
Strategy
APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES
DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate
and that each security‟s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction‟s stock exchange in the equity analysis. Accordingly, investors‟ returns may be less than
the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank
Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connec ted parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking
statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit
business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report.
This report is prepared for the use of MKE‟s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect.
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. This report is for distribution only
under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the
perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result.
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect.
US
This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the
Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You
should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations.
UK
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any
responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.
June 02, 2014 18
Strategy
Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies.
Singapore: As of June 02, 2014, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.
Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph
16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
As of June 02, 2014, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in
issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.
OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst‟s personal views about any and all of the subject securities or issuers; and no part of the research analyst‟s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable
of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.
Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
SELL Return is expected to be below -10% in the next 12 months (excluding dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.
DISCLOSURES
Legal Entities Disclosures
Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng
Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange
Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank
KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.