gd express carrier bhd outperformgdexpress.listedcompany.com/misc/kenanga_research...2016/12/27 ·...

Initiating Coverage

27 December 2016

PP7004/02/2013(031762) of 18

GD Express Carrier Bhd OUTPERFORM Riding the E-commerce Boom

Price: RM1.70 Target Price: RM1.97

By Steven Chan l [email protected]

We believe GDEX has a solid earnings growth story w ith 3-year CAGR of 22.3%, riding on the booming e-commerc e scene, with utilisation overload the only obstacle to overcome before achieving exponential growth. We al so believe regional expansions through acquisitions ar e very likely and will serve as another major re-rating ca talyst. We are initiating coverage on GDEX with an OUTPERFORM call at TP of RM1.97/DCF share. Second largest market share. Founded in 1997, GDEX grew to become the second largest domestic parcel delivery player in the country, behind POS, in terms of market share. Since listing in 2005, its bottom-line grew at an impressive CAGR of 28.2%. Its parcel express delivery can be categorised into business-to-business (B2B), and business-to-customer (B2C) which represents the company’s e-commerce delivery business with revenue mix as at FY16 standing at 26% and 74%, respectively. E-commerce delivery as the main growth driver. Riding the growing domestic trend of e-commerce, we project its B2C delivery to grow 50%-70% in the next three years, surpassing B2B delivery revenue by FY19. The company saw 70% to as high as 500% growth in B2C delivery in the past three years, with a CAGR of 246%. Meanwhile, its B2B delivery business is expected to remain resilient, as we project a constant 3%-5% growth moving forward, leveraging on GDEX’s strong-standing relationships with its client base. Overcoming a bottle-neck. We believe FY16 express delivery revenue growth could be higher (13.5% vs. 17.6% average 3-year prior), if not for capacity constrains faced in its sorting hub. Management recently restructured its sorting hub work-flow, which effectively increased its sorting capacity by 28%, from an average of 78k to c.100k pcs/day, which should be fully reflected in FY17. With the express delivery revenue projection growth of 15%-19%, we reckon this temporary fix will only last 1-2 years before reaching full capacity again. Management is currently on the hunt for an additional sorting hub to run concurrently to remove the existing growth constraint. Regional expansion as a re-rating catalyst. Earlier in the year, GDEX underwent a private placement, with Yamato emerging as its second largest shareholder with 22.84% stake, raising RM209m cash for GDEX -a sizeable war chest for inorganic growth which GDEX has already tapped into to make a few early moves. Furthermore, we believe GDEX does not need to raise fresh fund to finance any capex for existing business as its current strong cash flows generating ability is more than sufficient. With the entire war chest solely for inorganic growth, we believe GDEX would end up with multiple acquisitions, with Indonesia the most likely target country. OUTPERFORM with DCF derived-target of RM1.97 , based on assumed (i) 7.8% WACC, (ii) terminal growth of 5%, and (iii) Beta of 0.9. Although the share price had already rallied 90% from its recent low in Aug 2015, we still see great upside potential in view of its strong earnings growth of 16%-31% for the next 3 years. Our TP implies a forward PER of 77x on FY17E, which is +0.5 SD above its 5-year mean of 63x. We believe the valuation is justifiable given: (i) that it has always traded at similar forward PER levels historically, reaching as high as 100x in June 2014, (ii) its superior margins over logistic peers (15.7% vs 5.7%), and (iii) its superior ROA, ROE and ROIC (11%, 13% and 9.3% vs domestic logistic peers’ average of 4.2%, 7.7% and 5.6% respectively), arising from its asset-light and operationally efficient business model, while FCF-yield and PEG are broadly in line with similar domestic and international peers. Risks to our call include: (i) higher than assumed capex, and (ii) lower than assumed volume growth.

Share Price Performance

1.45

1.50

1.55

1.60

1.65

1.70

1.75

1.80

Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

KLCI 1617.15 YTD KLCI chg -4.5% YTD stock price chg -1.7%

Stock Information Shariah Compliant Yes Bloomberg Ticker GDX MK Equity Market Cap (RM m) 2,351.5 Issued shares 1,383.2 52-week range (H) 1.80 52-week range (L) 1.46 3-mth avg daily vol: 273,641 Free Float 41% Beta 0.9

Major Shareholders Gd Express Hldgs (M) 25.4% Yamato Asia Pte Ltd 22.8% Singapore Post Limited 11.2%

Summary Earnings Table FYE Jun (RM m) 2017E 2018E 2019E Revenue 255.2 304.5 399.4 EBIT 48.5 58.0 76.0 PBT 47.1 56.4 74.1 Net profit 40.0 47.9 63.0 Core Net Profit 40.0 47.9 63.0 Consensus (NP) 41.6 49.7 59.1 Earnings Revision (%) - - - Core EPS (sen) 2.6 3.1 4.0 Core EPS growth (%) 16.1 19.9 31.3 DPS (sen) 1.0 1.2 1.6 BV/Share (RM) 0.3 0.3 0.3 Core PER 66.4 55.4 42.2 PBV (x) 6.5 6.0 5.6 Gearing -0.1 -0.1 -0.3 Div. Yield (%) 0.6 0.7 0.9

GD Express Carrier Berhad Initiating Coverage

27 December 2016

PP7004/02/2013(031762) of 18

EXECUTIVE SUMMARY

We are initiating coverage on GD Express Carrier Bhd (GDEX) with OUTPERFORM rating at RM1.97/DCF share. We believe GDEX has a solid earnings-growth story, with projected 16-31% bottom-line growth for the next 3 years, driven by a growing e-commerce sector, boosting its B2C delivery, while its B2B delivery business is expected to remain resilient. Additionally, we also like GDEX for its: (i) asset-light and operationally efficient business model, resulting in superior ROA, ROE and ROIC (11%, 13% and 9.3% vs domestic logistic peers’ average of 4.2%, 7.7% and 5.6% respectively), (ii) consistent undisrupted yearly earnings growth, (iii) healthy balance sheet, consistently being in a net-cash position (net cash position of RM14.7m as at FY16) (iii) inorganic growth through acquisitions which could be a rerating catalyst. Although the share price had already rallied 90% from its recent low in Aug 2015, we still see great upside potential due to its earnings prospect. Our TP implies a forward PER of 77x on FY17E, which is +0.5SD above its 5-year mean of 63x and we believe the high PER valuation is justifiable, in view of: (i) it being traded at similar forward PER levels historically, reaching as high as 100x in June 2014, (ii) its superior margins over logistic peers (15.7% vs 5.7%), and (iii) comparable profitability ratios with closely related peers.

INVESTMENT MERITS

Key growth driver in e-commerce delivery. We believe GDEX is strategically positioned to capitalise on the booming e-commerce trend in the region. With the region’s e-commerce industry entering into a growth stage, GDEX is positioned to ride this rising tide as the industry undergoes a period of robust growth in the coming few years. Currently making up 26% of its express delivery revenue, we project its business-to-customer (B2C) delivery to grow at a pace of 50%-75% for the next three years, which we believe is achievable given that it enjoyed growth of 70% to as high as 500% in the last three years, with a CAGR of 246%. As GDEX only started e-commerce B2C delivery less than five years ago, we believe that the base is still low, with high growth potential leveraging on the emerging e-commerce market in the country. In FY16, B2C growth revenue of 74% was fairly impressive. This growth is further underpinned by GDEX’s key partnerships with household names in e-commerce platforms, as well as a potential second sorting hub, which will overcome its capacity constrain issues. Coupled with the fact that GDEX is the only pure parcel last-mile delivery player listed in Bursa with the greatest e-commerce exposure, this makes GDEX a great investment-proxy for the country’s growing e-commerce industry.

B2C revenue growth

0 1.3

9.2

32.0

55.6

83.4

125.1

0%

100%

200%

300%

400%

500%

600%

700%

0

20

40

60

80

100

120

140

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E FY2018E

B2C Revenue (RM mil) Growth (%)

Source: Company, Kenanga Research

Resilient B2B delivery. Being GDEX’s biggest earnings contributor, making up 74% of its express delivery revenue, we expect its business-to-business (B2B) delivery to remain resilient moving forward; with our projection ascribing a 3%-5% growth-rate assumption, on the back of GDEX’s strong-standing relationships with its clientele, as well as GDEX’s ability to provide additional value-added services to better cater to clients’ need. This gives GDEX a competitive edge as well as better margins; given that many of its B2B clients would prioritise quality of service over price.

Overcoming capacity constraints. Over-utilisation of its sorting hub capacity remains one of the only stumbling blocks for GDEX to unlock its full potential towards exponential volume growth. Express delivery revenue saw a growth of just 13.5% in FY16, as compared to an average of 17.6% three years before. We believe that FY16 growth could be higher, if not for capacity constraint faced in its only sorting hub in Petaling Jaya, which capped its volume growth. We estimate that the sorting hub typically runs at about c.80-85% utilisation rate, and full utilisation during peak festive periods. Management has restructured the work-flow of its sorting hub earlier this year by converting the staff parking lots into a loading bay. This helped eased the bottle-neck of the sorting congestion, and effectively increased its sorting capacity by 28%, from 78k pieces of packages per day to c.100k pieces per day. With our express delivery revenue projection growth of 15%-19%, we reckon this temporary fix can only last another 1-2 years before reaching full sorting capacity yet again. Management is currently on the hunt to acquire new land for an additional sorting hub to run concurrently. Once completed, we believe it will remove existing barriers, thus allowing volume to grow exponentially beyond FY19.


27 December 2016

PP7004/02/2013(031762) of 18

Average Sorting Capacity ( Pieces of Packages Per Day)

60,000 60,000

72,000 72,000

78,000

100,000 100,000

-

20,000

40,000

60,000

80,000

100,000

120,000

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E FY2018E Source: Company, Kenanga Research

Warehousing another hidden-gem? As at FY16, GDEX’s logistics segment (which operates its warehouses) only contributed 2.7% of total revenue. While we do not expect growth in its logistics segment to outpace express delivery, we do believe that it will still expand significantly moving forward, leveraging on the growth of its express delivery core business as clients gradually utilise GDEX’s warehouse services to adopt its entire value-chain. Our projection inputs a 10%-50% revenue growth in the next 5 years for the segment. It currently manages 106k sq ft of warehouse space, which pales in comparison to other full-fledged warehousing players, but understandable given it is not GDEX’s core business. Furthermore, sticking to the company’s asset-light business model, all of the warehouses operated are leased instead of owned. This gives the company flexibility to expand rapidly whenever necessary, or to easily reduce storage spaces when demand is low.

Logistics Segment – Operating Profit (RM mil)

-0.2 -0.1

2.2

3.8

1.9

2.6

3.4

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5



Logistics Segment – Warehouse Storage Space

59,886

68,361 68,361

86,426

126,266130,000

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2011 2012 2013 2014 2015 2016

Warehouse Storage Space (sq ft) Growth (%)



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Regional acquisitions as a re-rating catalyst. Recall that earlier in the year, GDEX undergone a private placement, with Yamato, Japan’s largest last-mile delivery company by market share, ending up with an effective stake of 22.84% to emerge as its second largest shareholder. This gave GDEX a cash impact of RM209m, or RM0.13/share – a sizeable war chest for inorganic regional growth. Furthermore, with GDEX’s strong financials and asset-light business model, there is no need to dig into the cash raised to fund any internal capex or organic expansions as strong internal cash flows would be more than sufficient. Thus, with the entire war chest solely for inorganic growth, we reckon it may end up with multiple acquisitions, with Indonesia the most likely target country for expansion. The company has already launched the firsts of many strikes, namely a 30% acquisition of Web Bytes for RM5.5m and a subscription of PT Satria Antaran Prima’s convertible bonds of approximately RM10m (more details below, under Company Outlook). Moving forward, as we foresee more acquisitions to be made, we believe that any major M&As would either complement existing operational efficiencies, or bring about a new stream of income altogether.

COMPANY OUTLOOK

Strong earnings growth. On the back of the healthy growths from e-commerce-related express delivery and logistics sector, coupled with resilience in GDEX’s B2B express delivery, we project core net profit to grow 17%-29% in the next three years, implying a CAGR of 31.9% from FY11 to FY19. We believe GDEX will be a major beneficiary of the booming e-commerce scene in Malaysia and the ASEAN region as consumers begin embracing online shopping into their spending behaviours. We deem our projections to be fairly conservative, given that the company has recorded core net profit growths of 24%-57% in the past five years.

Earnings Growth Trend

7.08.7

13.6

23.4

28.3

34.4

40.4

49.3

63.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E FY2018E FY2019E

Core Net Profit (RM mil) YoY % Growth


Capex to be funded internally. Management has guided that they have allocated c.RM30m capex for FY17. These funds will be used to increase its fleet size, improve IT infrastructure and network expansion. However, we reckon that management may have included more leeway in its capex budgeting, as we expect actual capex spending to be closer to RM20m. Regardless, internally generated cash flow would be more than sufficient to fund a capex level of RM20-30m. Beyond FY17E, GDEX is expected to have further capex outlay for a new sorting hub to run concurrently with the existing one, as we expect the current one to be maxed out within the next two years, even after the workflow restructuring. Our projection includes a total capex assumption of RM120m for the next five years, taking into account both organic growth driven capex, as well as capex outlay for a new sorting hub.

Operating Cash Flow vs Capex (RM mil)

0

20

40

60

80

100

120

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E FY2018E FY2019E FY2020E FY2021E

Operating Cash Flow (RM mil)

Capex (RM mil)



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Tax incentives. Being awarded Pioneer Status by the Malaysian Investment Development Authority (MIDA), currently GDEX is enjoying a tax exemption of 70% of its logistics-related earnings for five years, which will end in Sep 2017, with potential of renewal for an additional five years upon initial expiry. As a result, this helped to reduce GDEX’s effective tax rate to 4%-14% in FY14-16, as compared to an average of 29.1% the three years prior. Moving forward, we ascribed a 15% tax-rate assumption into our projection, similar to the effective tax rate in FY16, on the basis of the likely tax incentive renewal with MIDA.

Income Tax Expense Trend

2.3

2.9

3.5

5.6

0.9

3.0

5.7

7.1

8.7

0%

5%

10%

15%

20%

25%

30%

35%

0

1

2

3

4

5

6

7

8

9

10

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E FY2018E

Tax expense (RM mil) Tax expense rate (%)


Ready for regional acquisitions. As previously highlighted, internally generated cash flow would be sufficient to fund organic growth, and thus, we believe the entire RM209m raised through the private placement with Yamato will be for the sole purpose of inorganic growth regionally, with Indonesia being the most likely target country. GDEX has just started the ball rolling, with a 30% acquisition of Web Bytes for RM5.5m – a company that specialises in Retail Management Solutions, and a subscription of PT Satria Antara Prima’s convertible bonds of c.RM10m. Through future acquisitions, we believe that the company will most likely seek to acquire companies that may improve the current operational flow, such as IT or logistics systems-related companies, or other last-mile delivery companies in the ASEAN region, introducing to the company a new stream of earnings.

More on 30% stake in Web Bytes for RM5.5m: Web Byes is a company that specialises in Retail Management Solutions. Management has guided that GDEX may leverage onto Web Byte’s expertise to further improve GDEX’s operational efficiency in the long run. Likewise, GDEX would also serve as a platform for Web Byte’s to grow, by leveraging onto GDEX’s wide client-base, allowing them to venture beyond the retail sector. We believe this to be a first in many future acquisitions that GDEX may undergo in pursuit of regional expansions and improving operational efficiencies.

More on subscription of PT Satria Antara Prima’s conve rtible bonds: GDEX’s subscription of approximately RM10m of the convertible bonds represents a 40% equity stake, convertible within five years. PT Satria Antara Prima is a last-mile delivery companies in Indonesia, and also one the pioneers in Indonesia to use real-time systems throughout their branch network. It serves an extended coverage, with more than 6,000 domestic delivery points and more than 40 branches in Indonesia. This subscription marks a milestone for GDEX towards its long-term goal of regional expansions. Once converted, we believe this will be earnings-accretive towards GDEX on an associate level. With most of its war-chest still intact, we expect many more regional acquisitions to come.

Private Placement to Yamato / War-Chest for Regional Growth Details of utilisation RM mil Total proceeds raised from the Private Placement 217.31 Estimated expenses in relation to the Private Placement (8.0) Net cash raised from Private Placement 209.31 Acquisition of 30% stake in Web Bytes (5.5) Subscription of PT Satria Antara Prima’s convertible bonds (10.0) Funds remaining 193.81

Source: Bursa Malaysia, Company, Kenanga Research

INDUSTRY OUTLOOK

E-commerce in Malaysia at growing stage, underpinned by growing internet usage. While internet usage among Malaysian individuals has been on the rise, only 38% of the user base engages in online shopping and reservation (up 13.5 ppts from 2011), ranking 8th on the list of purpose of use of the internet. Coupled with the fact that only c.1% of retails sales were done online, this represents vast growth opportunity as users gradually embrace online purchasing, with the young adults in the age group of 20-24 years old having the highest percentage of user base, in tandem with the growing population of that demographic in the country. Furthermore, Malaysia’s high penetration rates of internet usage (represented here by household broadband), especially against Asia and China, also further reflects the country’s growing internet use and the e-commerce potential growth.


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ICT Services and Equipment Use by Individuals, Malays ia

Source: Department of Statistics Malaysia, 2015

Percentage Distribution of User by Purpose of In ternet Use

Source: Malaysian Communications and Multimedia Commission, 2014

Retail sales made online (as percentage of total re tail sales)

5.8%

7.5%

7.8%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%

Malaysia

Thailand

Philippines

Indonesia

Vietnam

Singapore

USA

China

Europe

Around or below 1%

4-5%

Source: Company, 2014


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Percentage Distribution of Internet Users by Age Gro up Malaysia’s Househo ld Broadband Penetration Rate

Source: Malaysian Communications and Multimedia Commission, 2014 / 2Q16

Malaysia vs Worldwide Internet Usage Penetration Rat e

76.7

45.6

52.2

73.9

28.7

89.0

73.3

0 10 20 30 40 50 60 70 80 90 100

Malaysia Broadband

Asia

China

Europe

Africa

North America

Oceania / Australia

Source: Malaysian Communications and Multimedia Commission (2Q16), Internet World Stats, Internet Live Stats

Delivery volume on gradual rise. Courier traffic has grown on a 4-year CAGR of 5.6% from 2010, mostly driven by a rise in domestic parcel delivery, coupled with an uptick of inbound international parcels to overtake outbound international parcels in 2013. We believe growth will be sustained through the gradual embracement of online purchasing, as well as a growing population of the country. GDEX will definitely be a direct beneficiary of rising parcel volumes, leveraging on its strong client-base on its B2B front, while riding the e-commerce growth on forged partnerships with several online trading platforms. We should highlight that this will be crucial for GDEX in maintaining its market share, especially against smaller delivery companies which tend to be more disruptive, as a rise in delivery volumes would be felt on a macro-level among all the players within the parcel delivery industry.

Parcel Courier Traffic (mil pieces)

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2010 2011 2012 2013 2014 1H2015

Total

Domestic

International issued

International received

Source: Malaysian Communications and Multimedia Commission, 1H15


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RISKS

Capacity constraints. As previously mentioned, one of the more significant stumbling block towards GDEX’s volume growth is capacity issues in its only sorting hub in Petaling Jaya. Earlier in the year, management has restructured the workflow of the sorting hub to increase its capacity by 28%, from 79k to c.100k parcels per day. However, given GDEX’s strong volume growth, we reckon that this quick fix would only last the company another 1-2 years before hitting full utilisation yet again. The biggest risk for GDEX is its ability to increase sorting capacity on time, most probably through securing a second sorting hub to run concurrently, before the capacity constraints starts to limit volume growth. However, we are not overly concerned by this given that management is already actively seeking land for its second sorting hub.

Intense competition. The parcel courier sector is deemed to be a fragmented industry in Malaysia with intense competition. While there are only two other Bursa-listed companies purely in the delivery business - Pos Malaysia Bhd (POS) and Nationwide Express Carrier Bhd (NATWIDE), the industry is also saturated with a slew of other non-listed players. Prominent non-listed players in the country include Citi-Link Express, Skynet and ABX Express. Furthermore, with the low barriers to entry, the introduction of many new start-up parcel and express delivery players may be disruptive to the already fragmented industry. Start-ups generally position themselves competitively in terms of pricing by undercutting competition in order to gain market share. While GDEX may not be able to compete in terms of price, GDEX can rely on its competitive advantages that it currently has, such as; (i) value-added services, such as prepaid, cash-on-delivery and customised packaging, (ii) better economies of scale and operational efficiency, and (iii) strong-standing relationships with its client-base that GDEX has been serving for many years. All these will play well with bulk-delivery customers, such as larger scale e-commerce traders and B2B delivery, as well as customers who seek quality over price. This leaves most of the start-up competition scrambling for market share in the C2C scene.

Rising staff costs. Being the largest component of opex for GDEX, making up almost half of its revenue, staff costs has been growing at a slightly faster rate than revenue, at a CAGR of 18.7% from the period FY10 to FY16, compared to revenue CAGR of 17.9% of the same period. This stems from the fact that 100% of GDEX’s delivery staffs are locals due to regulation requirements, which commands higher wages, while foreign workers can only be found in its sorting hub. From our understanding, GDEX is mitigating the rising costs risk by implementing incentive-based remunerations for its staffs. Delivery workers are being rewarded based on the number of parcels delivered, amounting to as much as 50% of their remuneration. This is in effort to promote higher productivity as well as ensuring better correlation between staff costs growth and revenue growth.

Staff Cost vs R evenue

0%

5%

10%

15%

20%

25%

30%

-

50

100

150

200

250

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Revenue (RM mil)

Staff costs (RM mil)

Revenue growth %

Staff costs growth %



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FINANCIAL ANALYSIS

Rising profits and margins . GDEX has posted an undisrupted yearly growth in earnings since FY06. In the latest 7-year period, earnings have expanded at a CAGR of 34%, from RM6.0m in FY10 to RM34.4m in FY16. During the same period, PBT margins have also been seeing undisrupted yearly improvements, from a PBT margin of 10.1% in FY10 to 18.3% in FY16, reflecting the gradual improvements in operational efficiencies. Moving forward, CNP is expected to grow 16%-31% for the next three years, extending the trend of undisrupted yearly bottom-line growth, at projected PBT margins of 18.4%-18.6%.

Core Net Profits and Margins

6.0 7.0

8.7

13.6

23.4

28.3

34.4

9.50%

10.50%

11.50%

12.50%

13.50%

14.50%

15.50%

16.50%

17.50%

18.50%

19.50%

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Core Net Profit (RM mil) Core Net Profit Margin (%)


Net cash position . Likewise, GDEX has also been consistently in a net cash position since FY14. As of FY16, GDEX is in a net-cash position of RM14.7m. Moving forward, we expect GDEX to maintain a healthy balance sheet at a net-cash position RM22.9m into FY17. Similar to the past, we expect most of the company’s capex to be funded by cash, rather than debt, given that its cash flow is more than sufficient, with our capex assumption for FY17E at RM20-30m, with a 5-year total of RM120m, taking into account both organic growth driven capex, as well as capex outlay for a new sorting hub.

Dividend pay-out ratio of c.40%. We expect total dividend payments to maintain at a level around 40% of net profits, as the company conserves cash for re-investment in its business. Dividend yield, however, is expected to be only at <1% due to the high share price base. Our projection implies a forward DPS of 1.0-1.2 sen for FY17E/FY18E.

Divid end Payments

0.2

0.5

0.7

0.91.0 1.0

1.2

35%

37%

39%

41%

43%

45%

47%

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4


Dividend per share (sen) Payout ratio (%)



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VALUATION

Initiating coverage on GDEX with OUTPERFORM call and D CF-derived TP of RM1.97. Our TP implies a forward PER of 77x on FY17E, which is roughly +0.5SD above its 5-year mean of 63x. Comparatively, GDEX’s closest competitor POS, is trading at a forward PER of 47.8x, while global peers’ average is at 29.7x. We believe the premium PER implied on GDEX is justifiable, given its: (i) earnings-growth story, (ii) asset-light and operationally efficient business model, resulting in superior ROA, ROE and ROIC against peers (11%, 13% and 9.3% vs domestic logistic peers’ average of 4.2%, 7.7% and 5.6% respectively), while FYF-yield and PEG ratio are broadly in-line with closely related peers, (iii) favourable margins against local logistic peers (1-year historical CNP margin of 15.7% vs logistics sector average of 5.7%), and (iv) similar traded PER levels historically (5-year average forward PER of 63x). We also like to highlight that any future acquisitions GDEX makes that are value-accretive would serve as a rerating catalyst. With our positive outlook on the company, given its (i) favourable economies of scale due to high capacity utilisations, (ii) expansion plans in acquiring a new sorting hub to run concurrently, which will unlock exponential growth, (iii) strong earnings story from B2C delivery, while B2B delivery remains resilient, we are initiating coverage on GDEX with an OUTPERFORM call.

DCF Assumptions Valuation Basic Assumption Equity weightage 93.00% Debt weightage 7.00% Risk free rate 3.60% Market risk 8.50% Beta 0.90 Cost of equity 8.01% Financing cost 5.25% Tax rate 15.00% Cost of debt 4.46% WACC 7.76% Terminal year FY2027 Terminal growth 5.00%

Source: Kenanga Research

PEERS COMPARISON

Second largest market share. Apart from GDEX, we have identified only two other listed companies in Bursa which are involved in the parcel/express delivery business – Pos Malaysia Berhad (POS) and Nationwide Express Courier Berhad (NATWIDE). We gathered that GDEX has the second largest market share in the country among local express delivery players (including listed and non-listed), behind POS in first. Other prominent non-listed players in the country include Citi-Link Express, Skynet and ABX Express.

Market share of Bursa -listed parcel / express delivery players – by revenue

GDEX

11%

POS

85%

NATWIDE

4%

Source: Kenanga Research, Bloomberg


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Only one with undisrupted growth . Among all three listed parcel delivery players of POS, GDEX and NATWIDE, GDEX is the only one that has posted undisrupted top-line and bottom-line yearly growth, posting higher YoY results every year since FY06. Comparatively, POS has been posting declining net profits since FY14, while NATWIDE is currently in a net loss position.

Bursa -Listed Parcel / Express Delivery Players – Revenue Growth Trend (RM mil)

0

200

400

600

800

1000

1200

1400

1600

1800

2000

0

50

100

150

200

250

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011* FY 2012* FY 2013 FY 2014 FY 2015 FY 2016

GDEX (RM) (Left side) NATWIDE (RM) (Left side) POS (RM) (Ride side)

Source: Kenanga Research, Bloomberg *FY 2012 for POS consists of 15 months as it changed year-end date from December to March. FY 2011 for POS is thus CY 2011.

Bursa -List ed Parcel / Express Delivery Players – Net Profit Growth Trend (RM mil)

-50

0

50

100

150

200

-10

-5

0

5

10

15

20

25

30

35

40

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011* FY 2012* FY 2013 FY 2014 FY 2015 FY 2016

GDEX (RM) (Left side) NATWIDE (RM) (Left side) POS (RM) (Ride side)

Source: Kenanga Research, Bloomberg *FY 2012 for POS consists of 15 months as it changed its year-end date from December to March. FY 2011 for POS is thus CY 2011.


27 December 2016

PP7004/02/2013(031762) of 18

Favourable margins reflecting operational efficiency . In comparison to our coverage stocks and other peers within the entire sector of “Shipping, Ports and Logistics”, Shipping/Ports stocks appear to have more favourable margins than GDEX. However, GDEX has the one of the best margins among not just parcel delivery couriers, but across the entire logistics sector as well. Its superior margins against its peers, especially closely comparable peers such as POS and NATWIDE, reflects GDEX’s efficiency in its operations, benefiting from better economies of scale through higher capacity utilisation.

Ports, Shipping & Logistics Sector – Margins Compariso n

Company PBT margins (%) CNP margins (%)

1-year Historical

1-year forward

2-year forward

1-year Historical

1-year forward

2-year forward

GDEX 18.29% 18.44% 18.52% 15.67% 15.67% 15.75% Core coverage: Shipping and Ports BIPORT 30.8% 33.6% 33.9% 23.3% 24.9% 25.1% MISC 23.5% 22.4% 23.2% 28.3% 20.6% 21.3% MMCCORP 38.8% 14.6% 17.3% 2.4% 10.2% 12.6% WPRTS 38.7% 39.0% 37.7% 30.0% 31.9% 33.2% Logistics POS 5.5% 7.8% 10.1% 3.7% 5.8% 7.6% On Our Radar – logistics stocks: TNLOGIS 18.6% 17.9% 19.3% 8.5% 12.3% 13.3% TASCO 8.6% 5.9% 6.0% 4.9% 4.4% 4.5% Other logistics stocks not under coverage (consensus figures): NATWIDE -6.6% N.A. N.A. -6.7% N.A. N.A. CENTURY 13.8% N.A. N.A. 10.7% N.A. N.A. XINHWA 15.6% N.A. N.A. 13.9% N.A. N.A. FREIGHT 6.0% 6.7% 6.8% 4.8% 5.2% 5.6%


Comparison with global peers. Among global peers, we identified Blue Dart Express (India) and CJ Express (Korea) to be the closest comparisons, as both are domestic non-national last-mile delivery players, with high earnings growth – characteristics that are similar to GDEX. As such, we see PER valuations of these two companies to be more similar with GDEX’s, as compared to other national postal companies (POS, Singapore Post) or international delivery providers (FedEX, UPS, and Yamato).

Comparable profitability. GDEX gives superior ROA, ROE, and ROIC against closely-comparable local and global logistic peers, reflecting its efficient use of assets and investments in churning profits, and highlighting its operational efficiency arising from its asset-light business model. Meanwhile, FCF-Yield and PEG ratio are also broadly in-line with the rest of its peers.

GD Express Carrier Berhad Initiating Coverage 27 December 2016

PP7004/02/2013(031762) of 18

Logistics Sector – Profitability Ratios Comparison

FCF-Yield* ROIC** ROE ROA PEG

NAME Curr. 1-Yr Hist.

1-Yr Fwd

2-Yr Fwd

1-Yr Hist.

1-Yr Fwd

2-Yr Fwd

1-Yr Hist.

1-Yr Fwd

2-Yr Fwd

1-Yr Hist.

1-Yr Fwd

2-Yr Fwd

1-Yr Hist.

1-Yr Fwd

2-Yr Fwd

GDEX MYR 1.6% 1.1% 1.7% 9.3% 10.3% 12.0% 13.0% 9.7% 10.9% 11.0% 8.6% 9.7% 336.9 411.9 279.0

Shipping & Ports - Under Coverage

BIPORT MYR 6.2% -1.9% -0.6% 13.2% 13.2% 13.3% 11.5% 12.1% 12.4% 5.0% 5.4% 5.8% -207.0 251.6 404.9

MISC MYR 6.3% 1.1% 4.4% 8.5% 4.9% 5.1% 7.8% 5.6% 5.8% 5.5% 4.0% 4.3% 26.2 -46.7 182.1

MMCCORP MYR -2.6% 5.0% 14.7% 0.7% 2.1% 2.7% 20.1% 4.0% 5.1% 5.0% 1.7% 2.2% -79.3 9.1 45.1

WPRTS MYR 3.3% 2.4% 4.0% 19.8% 21.0% 18.7% 27.6% 31.1% 31.4% 12.8% 13.7% 13.8% -1,988.9 84.7 214.3

Logistics - Under Coverage POS MYR 4.8% 0.7% 5.7% 7.7% 3.6% 3.9% 5.6% 5.7% 6.5% 3.6% 3.2% 3.4% -60,297.5 -94.9 228.5

Logistics - Not under Coverage (Consensus Figures)

NATWIDE MYR -3.7% N.A. N.A. -11.4% N.A. N.A. -10.5% N.A. N.A. -8.6% N.A. N.A. -0.5 N.A. N.A.

TNLOGIS MYR -12.7% 2.1% 4.8% 4.3% 7.1% 8.6% 14.6% 13.1% 14.4% 5.7% 5.5% 5.7% -38.6 11.2 31.1

TASCO MYR 15.0% N.A. N.A. 9.2% N.A. N.A. 9.9% N.A. N.A. 6.9% N.A. N.A. -66.6 -226.9 154.9

CENTURY MYR -0.1% N.A. N.A. 11.1% N.A. N.A. 11.4% N.A. N.A. 7.5% N.A. N.A. -257.3 N.A. N.A.

XINHWA MYR -1.4% N.A. N.A. 10.6% N.A. N.A. 13.5% N.A. N.A. 9.0% N.A. N.A. N.A. N.A. N.A.

FREIGHT MYR 11.1% N.A. N.A. 7.5% 8.4% 9.5% 9.2% 9.7% 10.4% 5.3% N.A. N.A. -906.7 66.8 60.9

Global Peers (Consensus Figures)

Blue Dart Express INR 2.1% N.A. 0.0% 37.1% N.A. N.A. 53.4% 29.8% 35.4% 16.6% N.A. N.A. 108.2 8,352.6 439.8

CJ Korea Express KRW 2.1% 0.2% 2.7% 1.3% 2.0% 3.2% 2.0% 3.7% 5.9% 1.0% 2.3% 3.2% -451.1 56.7 45.9

Singapore Post SGD -4.8% 2.3% 4.7% 18.5% 8.9% 10.4% 20.2% 10.2% 11.1% 10.8% 5.9% 6.4% 21.8 -52.1 120.3

Fedex USD 1.7% 1.2% 2.3% 12.5% 12.2% 12.3% 12.6% 21.3% 20.8% 4.4% 6.7% 7.1% 97.2 244.6 129.6

Yamato JPY 1.2% 1.9% 2.2% 8.5% 8.0% 7.9% 7.1% 7.5% 7.6% 3.6% 5.1% 5.4% 502.0 858.8 370.9

United Parcel Service USD 5.0% 5.2% 5.3% 40.8% 37.6% 37.0% 210.1% 165.6% 183.4% 13.1% 14.8% 14.7% 133.9 321.8 468.8

Source: Kenanga Research, Bloomberg *FCF-Yield is calculated by FCF / Market Cap. **ROIC is calculated by CNP / (Net Debt + Shareholder’s equity).

GD Express Carrier Berhad Initiating Coverage 27 December 2016

PP7004/02/2013(031762) of 18

Sector Peers Comparison

NAME Curr. Price Mkt Cap PER (x) Est.

NDiv. Yld.

Hist. ROE

Hist. P/BV Net Profit (mil)

NP Growth 1-yr fwd

NP Growth 2-yr fwd

TP Rating

(mil) 1-Yr Hist.

1-yr Fwd

2-yr Fwd (%) (%) (x) 1-Yr Hist. 1-yr Fwd 2-yr Fwd (%) (%)

Shipping & Ports - Under Coverage BIPORT MYR 6.28 2,888.8 22.6 20.9 19.9 3.8% 11.4% 2.6 127.6 138.2 145.0 8.3% 4.9% 6.72 MARKET PERFORM

MISC MYR 7.23 32,273.2 10.5 15.8 14.6 2.8% 8.7% 0.9 3,084.0 2,039.0 2,203.0 -33.9% 8.0% 7.97 MARKET PERFORM

MMCCORP MYR 2.35 7,155.9 60.2 19.3 14.6 1.5% 1.3% 0.8 118.8 371.5 491.6 212.7% 32.3% 2.70 OUTPERFORM

WPRTS MYR 4.20 14,322.0 28.4 22.4 20.5 3.3% 26.6% 7.5 504.9 638.6 699.6 26.5% 9.6% 4.49 MARKET PERFORM

Logistics - Under Coverage GDEX MYR 1.70 2,351.5 77.1 66.4 55.4 0.6% 8.9% 6.9 34.4 40.0 47.9 16.1% 19.9% 1.97 OUTPERFORM

POS MYR 3.85 3,013.7 23.7 47.8 40.6 3.9% 11.4% 2.7 127.0 63.1 74.3 -50.3% 17.7% 2.23 UNDERPERFORM

Logistics - On Our Radar TNLOGIS MYR 1.56 650.7 13.4 7.9 6.5 3.2% 8.1% 1.1 48.4 82.5 99.8 70.5% 21.0% 1.76 NR

TASCO MYR 1.50 300.0 11.9 12.6 11.7 2.4% 7.9% 0.9 25.2 23.8 25.6 -5.6% 7.6% 1.60 NR

Logistics - Not under Coverage (Consensus Figures)

NATWIDE MYR 0.89 107.0 -17.8 N.A. N.A. N.A. -10.7% 1.9 (6.0) N.A. N.A. N.A. N.A. NR NR

CENTURY MYR 0.87 332.8 10.4 N.A. N.A. N.A. 11.1% 1.2 31.9 N.A. N.A. N.A. N.A. NR NR

XINHWA MYR 1.21 217.8 14.5 N.A. N.A. N.A. 11.8% 1.7 15.0 N.A. N.A. N.A. N.A. NR NR

FREIGHT MYR 1.13 207.0 10.4 9.2 8.1 4.4% 8.8% 0.9 19.9 22.6 25.6 13.7% 13.3% NR NR

Global Peers (Consensus Figures) Blue Dart Express INR 4,310.00 102,267.4 53.1 52.7 47.6 0.7% 46.5% 24.7 1,927.5 1,939.7 2,149.5 0.6% 10.8% NR NR

CJ Korea Express KRW 179,500.00 4,094,815.7 89.1 48.2 29.4 0.0% 2.0% 1.8 45,943.0 84,967.2 139,401.2 84.9% 64.1% NR NR

Singapore Post SGD 1.45 3,138.2 12.6 21.4 18.5 3.8% 20.7% 2.6 248.9 146.9 169.5 -41.0% 15.4% NR NR

Fedex USD 190.89 50,874.0 16.9 15.8 14.3 0.8% 21.9% 3.7 3,016.0 3,211.3 3,564.9 6.5% 11.0% NR NR

Yamato JPY 2,424.00 997,088.1 25.3 24.6 23.1 1.1% 7.3% 1.9 39,424.0 40,552.7 43,083.0 2.9% 6.2% NR NR

United Parcel Service USD 116.30 101,489.8 16.3 15.5 15.1 2.7% 199.3% 32.5 4,923.0 5,160.6 5,326.3 4.8% 3.2% NR NR



27 December 2016

PP7004/02/2013(031762) of 18

APPENDIX

Company Background

GD Express Carrier Berhad (GDEX) is engaged in the primary business of express delivery services. It operates in two segments – Express Delivery, and Logistics. It was first established in 1997, with the entry of Mr Teong Teck Lean as a controlling stakeholder in 2000; he and his team overhauled the business model of GDEX and turned it profitable. GDEX was successfully listed on the ACE Market of Bursa Malaysia in 2005, and was subsequently transferred to the Main Market of Bursa Malaysia on 2013. In 2011, Singapore Post became a substantial shareholder of GDEX, and recently this year, Yamato subsequently emerged as the second-largest shareholder of GDEX through a private placement.

Currently, GDEX operates a network of 211 stations comprising of 66 branches, 1 affiliate, 54 agents, 23 lodge-in centres and 67 reseller agencies throughout Peninsular and East Malaysia. As of 30 June 2016, GDEX has a fleet of 654 trucks and vans, and staff strength of 2,984.

GDEX Corporate Structure

Source: Company

History and Operations

Year History 1997 Established in 1997 to provide express delivery service for both the domestic and international markets. 2000 Entry of Mr Teong Teck Lean as controlling stakeholder. He and his team overhauled the business model of

GDEX and turned it profitable. 2003 First local express delivery company to obtain ISO 9001 : 2000 (Quality Management System) 2005 Successfully listed on Ace Market of Bursa Malaysia. 2007 Set up operations in Singapore. 2008 First local express carrier to deploy conveyor system for both parcel and document sorting. 2009 Upgraded (Quality Management System) to ISO 9001 : 2008 2011 Entry of Singapore Post as substantial shareholder. 2012 Obtained ISO 14001 : 2004 (Environmental Management System) 2013 Successfully transferred listing to Main Market of Bursa Malaysia. Completed 1:2 bonus issues with free

warrants and 2:1 stock split. 2015 Completed 1:3 bonus issues with free warrants and proposed 10% private placement exercise. 2016 Completion of 10% private placement to Yamato Asia which then subsequently emerged as the second largest

shareholder of GDEX

Source: Company


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PP7004/02/2013(031762) of 18

Fleet Size Staff Strength

331 335

397

453

578

654

0

100

200

300

400

500

600

700

FY11 FY12 FY13 FY14 FY15 FY16

17181826

2013

2315

2761

2984

0

500

1000

1500

2000

2500

3000

3500

FY11 FY12 FY13 FY14 FY15 FY16 Source: Company

This section is intentionally left blank


27 December 2016

PP7004/02/2013(031762) of 18

Income Statement Financial Data & Ratios FY June (RM m) 2014A 2015A 2016A 2017E 2018E FY June (RM m) 2014A 2015A 2016A 2017E 2018E Revenue 158.7 196.8 219.8 255.2 304.5 Growth (%) Operating Profit 26.7 33.0 42.2 49.0 58.6 Revenue 17.4 24.0 11.7 16.1 19.3 EBIT 25.7 32.7 41.7 48.5 58.0 Operating Profit 24.2 23.7 27.8 16.2 19.5 Finance costs -1.4 -1.4 -1.5 -1.5 -1.6 EBIT 24.2 27.5 27.4 16.5 19.6 PBT 24.3 31.3 40.2 47.1 56.4 PBT 26.1 29.0 28.4 17.1 19.9 Taxation -0.9 -3.0 -5.7 -7.1 -8.5 C. Net Income 71.7 21.0 21.7 16.1 19.9 Minority Interest 0.0 0.0 0.0 0.0 0.0

Net Profit 23.4 28.3 34.4 40.0 47.9 Profitability (%)

Core Net Profit 23.4 28.3 34.4 40.0 47.9 Op. Margin 16.8 16.8 19.2 19.2 19.2 EBIT Margin 16.2 16.6 19.0 19.0 19.1 Balance Sheet PBT Margin 15.3 15.9 18.3 18.4 18.5 FY June (RM m) 2014A 2015A 2016A 2017E 2018E C. Net Margin 14.7 14.4 15.7 15.7 15.7 Fixed Assets 57.6 67.1 68.0 86.2 191.3 Eff. Tax Rate 3.7 9.6 14.3 15.0 15.0 Intangibles 0.0 0.0 0.0 0.0 100.0 ROE 24.0 20.0 8.9 9.7 10.9 Prepaid Leases 21.7 21.2 20.7 21.0 20.8 ROA 16.7 15.0 7.9 8.6 9.7 Other FA 0.0 0.0 0.0 0.0 0.0

Inventories 1.3 1.6 1.2 1.3 1.5 DuPont Analysis

Receivables 32.1 49.2 47.6 51.0 60.9 C. Net Margin (%) 14.7 14.4 15.7 15.7 15.7 Fixed deposits 34.4 53.3 286.1 286.1 186.1 Asset T/over(x) 1.1 1.0 0.5 0.6 0.6 Cash 8.0 11.3 21.3 29.2 43.4 Levg Factor (x) 1.4 1.3 1.1 1.1 1.1 Total Assets 139.8 189.2 434.6 462.7 493.9 ROE (%) 24.0 20.0 8.9 9.7 10.9 Payables 4.0 3.2 2.1 2.6 3.0 Leverage

ST Borrowings 1.5 0.6 0.9 3.3 3.1 Debt/Asset (x) 0.1 0.1 0.0 0.0 0.0 Other ST Liability 13.0 17.1 22.0 18.7 22.3 Debt/Equity (x) 0.2 0.1 0.0 0.0 0.0 LT Borrowings 15.5 11.7 5.7 2.9 1.4 N. Cash/(Debt) 9.0 1.1 -14.7 -23.0 -38.9 Other LT Liability 8.4 15.1 17.0 24.5 24.5 N. Debt/Eqty (x) -0.1 -0.1 -0.1 -0.1 -0.1 Minorities Int. 0.0 0.0 0.0 0.0 0.0 Net Assets 97.4 141.4 386.8 410.8 439.6 Valuations

EPS (sen) 1.5 1.8 2.2 2.6 3.1 Share Capital 41.9 61.8 69.2 69.2 69.2 Core EPS (sen) 1.5 1.8 2.2 2.6 3.1 Reserves 55.4 79.5 317.6 341.6 370.4 DPS (sen) 0.7 0.9 1.0 1.0 1.2 Equity 97.4 141.4 386.8 410.8 439.6 BVPS (RM) 0.1 0.1 0.2 0.3 0.3

PER (x) 113.6 93.9 77.1 66.4 55.4 Cashflow Statement Core PER (x) 113.6 93.9 77.1 66.4 55.4 FY June (RM m) 2014A 2015A 2016A 2017E 2018E Div. Yld (%) 0.4 0.5 0.6 0.6 0.7 Operating CF 27.3 21.4 41.9 39.5 48.6 P/BV (x) 27.3 18.8 6.9 6.5 6.0 Investing CF -10.3 -20.1 -245.6 -2.5 100.8 Financing CF 0.3 6.3 199.3 -33.0 -18.6 Change In Cash 17.4 7.6 -4.4 4.0 130.7 Free CF 23.1 14.3 38.1 27.0 41.1 Capex 10.2 18.3 10.6 25.0 15.0 Source: Kenanga Research

Fwd Core PER Band Fwd PBV Band

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16

PRICE (RM) PER 35.2 x PER 51.5 x

PER 67.7 x PER 83.9 x PER 100.2 x

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16

PER (X)

FWD PER FWD AVG PER S.Dev +1 S.Dev -1 S.Dev +2 S.Dev -2

Source: Bloomberg, Kenanga Research


27 December 2016

PP7004/02/2013(031762) of 18

Stock Ratings are defined as follows: Stock Recommendations OUTPERFORM :A particular stock’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). MARKET PERFORM :A particular stock’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERPERFORM :A particular stock’s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). Sector Recommendations*** OVERWEIGHT :A particular sector’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). NEUTRAL : A particular sector’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERWEIGHT : A particular sector’s Expected Total Return is LESS than 3% (an approximation to the

12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). ***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage.

This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies.

Published and printed by: KENANGA INVESTMENT BANK BERHAD (15678-H) 12th Floor, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia Chan Ken Yew Telephone: (603) 2172 2626 Website: www.kenanga.com.my Head of Research

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