REGIONAL DAILY

December 26, 2012

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.

MALAYSIA

Malaysia Daybreak | 14 July 2014

▌What’s on the Table…

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Tenaga Nasional - More gas used in 3Q14

Tenaga's 3Q14 results, which are due to be released on Wednesday, are expected to show higher-than-expected costs due to the burning of more LNG and distillates. This should be offset by either a tariff hike or the utilisation of IPP savings worth c.RM500m currently. While we remain optimistic that the tariff hike will happen, we think that a lack of clear indication pertaining to the tariff hike at its conference call this Wednesday would likely be a reason to put Tenaga on the back burner as it deserves a wider discount to the target market P/E. For now, we keep our target price of RM14.14 based on 14.5x FY15 P/E, implying a 10% discount to the market P/E.

▌News of the Day…

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• GLICs have taken stakes in SPAC Reach Energy

• MAHB in talks for a new concession to build and operate an Asian airport

• Sumatec Resources buying 100% interest in Borneo Energy Oil for US$250m

• SIPP Energy has not approached Malakoff Corp over the 4A power plant project

• Genting Plantations selling 25% stake in Genting Integrated Biorefinery for RM72m

• Tan Sri Low Yow Chuan has "first right of refusal" for a second casino licence?

Sources: CIMB. COMPANY REPORTS

Sources: CIMB. COMPANY REPORTS

Key Metrics

FBMKLCI Index

1,650

1,700

1,750

1,800

1,850

1,900

Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14

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FBMKLCI

1883.15 -9.47pts -0.50%July Futures Aug Futures

1885.5 - (-0.16% ) 1886 - (1.00% )———————————————————————————

Gainers Losers Unchanged291 533 336

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Turnover2041.83m shares / RM2452.876m

3m avg volume traded 1747.65m shares

3m avg value traded RM2004.57m———————————————————————————

Regional IndicesFBMKLCI FSSTI JCI SET HSI

1,883 3,294 5,033 1,518 23,233 ————————————————————————————————

Close % chg YTD % chg

FBMKLCI 1,883.15 (0.5) 0.9

FBM100 12,722.13 (0.4) 1.1

FBMSC 18,409.04 (0.2) 17.3

FBMMES 6,754.33 (0.6) 19.0

Dow Jones 16,943.81 0.2 2.2

NASDAQ 4,415.49 0.4 5.7

FSSTI 3,293.73 0.7 4.0

FTSE-100 6,690.17 0.3 (0.9)

SENSEX 25,024.35 (1.4) 18.2

Hang Seng 23,233.45 (0.0) (0.3)

JCI 5,032.60 (1.3) 17.7

KOSPI 1,988.74 (0.7) (1.1)

Nikkei 225 15,164.04 (0.3) (6.9)

PCOMP 6,901.09 (0.5) 17.2

SET 1,518.01 0.7 16.9

Shanghai 2,046.96 0.4 (3.3)

Taiwan 9,495.84 (0.7) 10.3————————————————————————————————

Close % chg Vol. (m)

SUMATEC 0.375 21.0 357.2

AIRASIA X BHD 0.730 5.8 39.9

CIMB GROUP 7.000 (3.3) 34.9

PUC FOUNDER 0.215 2.4 32.4

KNM GROUP 1.060 5.0 32.1

MBSB 2.460 5.1 29.8

BERJAYA CORP 0.485 2.1 27.0

OSK HOLDINGS 2.210 (3.1) 25.8————————————————————————————————

Close % chg

US$/Euro 1.3608 (0.01)

RM/US$ (Spot) 3.1772 (0.06)

RM/US$ (12-mth NDF) 3.2501 (0.10)

OPR (% ) 3.00 0.67

BLR (% , CIMB Bank) 6.60 0.00

GOLD ( US$/oz) 1,336.05 0.02

WTI crude oil US spot (US$/barrel) 102.93 0.63

CPO spot price (RM/tonne) 2,432.00 0.08

Market Indices

Top Actives

Economic Statistics

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Terence WONG, CFA T (60) 3 2261 9088 E terence.wong@cimb.com

Daybreak│Malaysia

July 14, 2014

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Global Economic News…

The US budget deficit from Oct through Jun was US$365.9bn compared with US$509.8bn deficit in the same period a year earlier. In Jun, the government posted a US$70.5bn surplus compared with a US$116.5bn excess a year earlier. (Bloomberg)

The US Federal Reserve Bank of Atlanta President Dennis Lockhart said he still believes the most likely timing for the central bank to raise interest rates lies well into next year. (WSJ)

The US inflation will remain below the Federal Reserve’s 2% target for the next few years, bolstering the case for keeping monetary policy accommodative, said Chicago Fed president Charles Evans. (Bloomberg)

The US Philadelphia Federal Reserve Bank President Charles Plosser said the central bank is moving closer to its policy objectives, and therefore should begin thinking about the right time to raise interest rates. (WSJ)

The European Central Bank (ECB)’s newest stimulus package has had an impact on markets and there is no urgency to take additional steps, according to Governing Council member Ewald Nowotny. (Bloomberg)

India’s industrial production grew at 19-month high of 4.7% yoy in May (+3.4% yoy in Apr) due to improved performance of manufacturing, mining and power sectors and higher output of capital goods. (India Times)

The number of Australian home-loan approvals was unchanged in May from Apr. Meanwhile, the value of loans for investment housing fell 0.9% mom (+1.3% mom in Apr). (WSJ)

The Conference Board Leading Economic Index (LEI) for Korea declined 0.6% mom in May to 122.8 (+1.0% mom in Apr). Coincident Economic Index (CEI) declined 0.5% mom in May to 117.9, following a 0.1% mom decline in Apr. (Conference Board)

Indonesia’s economy will continue to weaken in the second quarter of 2014, Bank Indonesia (BI) said, adding that household consumption is predicted to slow, though its growth is still quite strong. (Jakara Post)

Bangko Sentral ng Pilipinas (BSP) has lowered surplus projections for the current account and balance of payments (BOP) this year, with current account surplus expected to reach US$6bn (US$11.1bn projected earlier this year) while the BOP surplus to settle at US$1.1bn (US$5.3bn previously forecast) at end-2014, citing higher demand from electronic manufacturers and the reconstruction of areas devastated by Typhoon Yolanda. (Philippines Star)

Most Philippines banks were strict on consumer borrowers, but kept credit standards to big businesses unchanged in a relatively open manner in 2Q14 due to steady demand, a Bangko Sentral ng Pilipinas survey showed.

The respondent banks considered households and middle-market business borrowers as riskier customers, according to the survey.

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July 14, 2014

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Overall credit standards for enterprises were unchanged as banks' tolerance for risk remained steady, the central bank said. (Philippines Star)

Malaysian Economic News…

SME Bank has approved RM1.3bn in loans to 600 small- and medium-scale entrepreneurs (SMEs) in the first five months of this year, said managing director, Datuk Mohd Radzif Mohd Yunus. He said the amount was part of the RM2.5bn allocated for lending to the SMEs for this year. "The biggest amount was for those involved in services sector," he said. (Bernama)

The construction of the RM500m International Furniture Exhibition Centre in Jalan Tangkak-Muar here is expected to start at the end of the year. Deputy International Minister of Trade and Industry, Datuk Ir Hamim Samuri, said the first phase of the project was expected to cost RM150m. "The Malaysian Investment Development Authority is in the final stage of the evaluation regarding the incentives for the project," he said. (Bernama)

The government will continue to emphasise inclusiveness and sustainability towards achieving Malaysia's goal of becoming a developed and high income nation by 2020. Datuk Seri Abdul Wahid Omar, the Minister in the Prime Minister's Department (Economic Planning) said it is the government's desire that no one is left behind in reaching for the goal. "It will be managed in such a way that we will live within our means to achieve the high income nation status," he said. (Bernama)

The government is encouraging more palm oil companies to venture into downstream activities to realise Malaysia's ambition of becoming an international hub for the industry. Minister of Plantation Industries and Commodities Datuk Amar Douglas Uggah Embas said the ministry will dish out more incentives and programmes to attract an increased number of palm oil companies into downstream activities

Malaysia's palm oil industry needs to expand into downstream activities as its Crude Palm Oil (CPO) production is limited, alongside land for plantations.

In 2020, Malaysia's oil palm plantations are expected to reach the limit of 5.5m hectares, producing 30m tonnes of palm oil products, while the downstream industry has no such limitations.

Last year he said, palm oil exports were highly biased towards the upstream and mid-stream segments, with the total contribution to the overall industry at 74%, while for downstream, it was a mere 17%.

According to Uggah, the ministry has introduced two programmes, the EPP 6 (to produce high-value derivatives) and the EPP 8 (food and health) to drive more Malaysian palm oil companies into downstream activities.

He said RM2.27bn in investment had been committed to date for both the EPP 6 and EPP 8, while RM427m in grants have also been disbursed to ten Malaysian palm oil companies involved in downstream activities.

"So far, grants have been disbursed for the production of higher-value added palm oil derivatives such as surfactants, agro-chemicals, bio-polypols, bio-lubricants, glycerol derivatives, tocotrienols and carotenes," he added. (Bernama)

Daybreak│Malaysia

July 14, 2014

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The value of Sarawak's exports registered RM50.477m between Jan to May this year, while imports for the same period was at RM17.345m. Sarawak Malaysia External Trade Development Corporation (Matrade)director Leany Mokhtar said the principal export markets for the state was Japan, South Korea, Taiwan, China and also Asean, which also accounted for 70%. "Sarawak's main exports were natural gas, petroleum, palm oil, black pepper, timber as well as wood-based products," she added. (Bernama)

CIMB Group's Group Chief Executive Officer Datuk Seri Nazir Razak has lambasted Asean member states for continuing to place obstacles to trade, such as Non-Tariff Barriers (NTB), which are a clear impediment to the realisation of the Asean Economic Community (AEC). He said while Asean has spawned a number of excellent initiatives, the more serious concern about the regional grouping is, the national rules and regulations designed to protect domestic industries and interests. (Bernama)

The Malaysian External Trade Development Corporation (Matrade) has given RM13m out of the RM20m from the Market Development Grant (MDG) to almost 1,000 entrepreneurs to expand their businesses overseas. The number of recipients comprising Bumiputera entrepreneurs increased to 19% this year from 18% last year under the grant given by the government, the Senior Manager for the MDG Grant, Mohamad Noor Azhab, said.

As of May this year, Matrade received applications from the food and beverages, furniture, pharmaceuticals, cosmetics, construction and building materials as well as machinery and equipment sectors. Last year, he said that the government allocated RM46.7m under the MDG Grant where 3,000 entrepreneurs benefited. (Bernama)

Maybank will be revising its deposit and base lending rates effective July 16, in line with the increase in the Overnight Policy Rate (OPR) by 25bp. Maybank's deposit rates will be revised upward by up to 15bp, with its base lending rate (BLR) increasing 25bp from 6.60% per annum to 6.85% per annum, Maybank said. (Bernama)

The Royal Malaysian Customs Department expects more than 100,000 businesses to register their operations by year-end for implementation of the Goods and Services Tax (GST).

Director-General Datuk Seri Khazali Ahmad said compulsory registration by the department would begin in Sep. Since June, more than 4,000 businesses had voluntarily registered, with 3,900 granted approval for the new tax regime. "We are undertaking the registration through our system, MyGST, which will operate the GST Malaysia," he said.

"The export cost will be cheaper. Under the GST, exporters can claim back the input tax. At the export level, there is no GST. "That is why our exports will become more competitive at the international level," he added.

Khazali noted that the Customs Department was now actively pursuing the "Hand-Holding Programme", which caters for specific industries to create awareness of the GST. He said registered businesses would be taken through six modules of the programme to prepare them for the GST implementation. (Bernama)

Daybreak│Malaysia

July 14, 2014

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The government is likely to announce a new mechanism next month to attract youths to be involved in the furniture industry, in an effort to increase the number of local workers to 70% by 2020 from 34% at present. Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the mechanism was aimed at addressing the dependency on foreign workers in the industry. In the first quarter of the year, furniture exports increased 16.4% to RM2bn compared with the corresponding period in 2013. Total furniture exports were expected to hit RM8bn this year from RM7.3bn recorded last year. (Bernama)

Johor Corporation (JCorp), through its subsidiary Johor Land Bhd, will undertake a RM1bn integrated development project, the "Larkin Central Park" in Larkin next year. President & Chief Executive Datuk Kamaruzzaman Abu Kassim said the project covering more than 40 hectares belonging to the group and the Johor state government focuses on development that will benefit the people. To ensure the project proceeds smoothly, JCorp has allocated RM270m for upgrading and widening works of roads as well as other infrastructure for the local community. (Bernama)

The Royal Malaysian Customs Department has urged companies and businesses to register and be Goods and Services Tax (GST) compliant at the soonest. Director-General Datuk Sri Khazali Ahmad said the businesses, especially small and medium enterprises (SMES) should register early to take advantage of the E-Voucher Subsidy programme. Early registrants will be given a RM1,000 E-Voucher subsidy to purchase GST compliant accounting software from suppliers who have been certified by the Customs Department. Businesses offering goods and services have to be registered for the GST if their annual sales turnover exceeds the prescribed RM500,000. (Bernama)

Consumers have been advised to lodge an appeal with the Goods and Services Tax (GST) Monitoring Committee over exorbitant charges when the tax system is implemented on Apr 1 next year.

Executive Director of Tax Advisory and Management Services Sdn Bhd Yong Poh Chye said consumers can make a comparative study on prices of related items affected by the GST, once the shopper's guide with about 1,000 consumer items is published by year-end.

"With the shopper's guide, you know what (consumer item) price is going up or down (after the implementation of GST). The government has established the GST Monitoring Committee to ensure the smooth implementation of the tax system in the country.

The Finance Ministry had said the committee is responsible for ensuring policies, laws and guidelines pertaining to the GST are ready, while monitoring the readiness for its implementation by government agencies and industries. According to Yong, the government will recruit 472 new staff to enforce activities related to the GST in 222 parliamentary constituencies with each having enforcement officers monitoring more than 10,000 products.

Meanwhile, Yong said the Finance ministry had conducted a price impact study to see the effect of the GST implementation on 729 types of consumer goods and services from 95 industries. He said based on the study, only 10.6% or 73 items will see increases, while 287 items (41.65%) will decrease, with the price of 329 items (47.75%) remaining unchanged. (Bernama)

Daybreak│Malaysia

July 14, 2014

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The government will decide whether RON 95 and diesel will be exempted from the Goods and Services Tax (GST), when the subsidy rationalisation programme is completed in the fourth quarter of this year, said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah. "Under the subsidy that we are giving now, we have exempted RON 95 and diesel (from sales tax). We will make the decision on whether to exempt RON 95 and diesel (from GST)," Husni told reporters after opening the National GST Conference jointly organised by Malaysian National News Agency and Tax Advisory and Management Services Sdn Bhd here yesterday. (The Sun)

The government will issue a new guideline on relief for the property industry under the Goods and Services Tax (GST) after taking into consideration requests from the Real Estate and Housing Developers Association (Rehda) and the public. The Deputy Director of the Royal Malaysian Customs Department from the GST Division, Tan Sim Kiat, said the department was still getting feedback and suggestions that could be taken into consideration for better relief to the entire supply chain of the industry ranging from manufacturers, distributors, retailers and end-users. (The Sun)

The Domestic Trade, Cooperatives and Consumerism Ministry is preparing a database on 10,000 products per parliamentary constituency to study the impact of the Goods and Services Tax (GST) when it is implemented on April 1, 2015. Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said based on the database, the ministry would gather information on whether there was an increase in margins or cost after the implementation of such a tax structure. (The Sun)

The increase in the overnight policy rate (OPR) will not impact much investments or investor sentiment and confidence, says International Trade and Industry Minister, Datuk Seri Mustapa Mohamed. "Malaysia will continue to be an attractive destination for investments and attract not only those from overseas but also the domestic front.

"The OPR increase is minimal and it has to do with the bigger picture in terms of the economic position, such as the slight increase in the inflation rate and domestic debt," he said.

Mustapa said there is a need to make some adjustments as concerns have been expressed of late on the size of the household debt and believed this had been taken into consideration.

"This move (OPR increase) will provide some cushioning towards the increase in household debt. "There might be a small impact on domestic consumption. But in my view, it is not going to be much. "In the meantime, Malaysians need to be a little cautious in terms of consumption," he added. (Bernama)

Registered retailers who derive cost savings from the Goods and Services Tax (GST) should pass them on to consumers or else it is going to be an unreasonable profit, says Royal Malaysian Customs Department Assistant Director from the GST Division, Annie Thomas.

"Since the registered retailer is entitled to claim the input tax, GST is not a cost to the registered retailer and therefore, the cost of goods or services before charging GST should not include the GST incurred on the input.

"Mark up for the price at the point of sales should be done on actual cost, not on consideration price to the supplier, which is an incorrect method," she said.

Daybreak│Malaysia

July 14, 2014

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The portion of GST incurred claimed as input tax has to be deducted from the price of the goods supplied to the registered retailer before the registered retailer marks up (value add) to the cost of sale.

This is important because the registered retailer has claimed the amount of GST on acquisition of the goods and that the GST on input is not a cost to him. Annie added that a non-registered retailer will face difficulties to compete with those registered retailers as their costs are much higher. (Bernama)

Political News…

Tan Sri Low Yow Chuan revealed that he has the "first right of refusal" for a second casino licence and plans to build an integrated resort, if the government approves one. The licence was granted in 1970 by Malaysia's first PM Tunku Abdul Rahman to the 81-year-old patriarch of the Low Yat group and reaffirmed in 1993. According to Yow Chuan, Tunku offered to issue him with a casino licence in 1970, when the former was in his late 30s, on condition the Low Yat group builds a hotel and a country club in Langkawi. (StarBiz)

Corporate News…

On 25th June 2014, the Monetary Authority of Singapore (MAS) released the Consultation Paper (CP) on the Proposed Framework for Systemically Important Banks in Singapore. Under the framework, domestic systemically important banks (D-SIBs) are classified into three types: (1) Locally-incorporated bank groups: local banks headquartered in Singapore, (2) Foreign bank groups: locally-incorporated foreign bank subsidiaries and sister branches (if any); and (3) Foreign bank branches: foreign banks that operate only as branches.

MAS have proposed to adopt an indicator-based approach to assess banks’ systemic importance which will be based on the following four factors – (1) size, (2) interconnectedness, (3) substitutability, and (4) complexity.

The CP also outlines that a bank with a significant retail presence, satisfying the following criteria will be designated as a D-SIB and will be required to locally incorporate – (1) share of resident non-bank deposits of ≥3%, and (2) number of depositors with accounts less than or equal to SGD250,000 ≥ 150,000.

As a locally incorporated foreign bank deemed as a D-SIB, it will be subject to policy measures namely - higher loss absorbency requirement, liquidity coverage ratio (LCR) requirement, recovery and resolution planning, enhanced disclosure, and effective risk data aggregation and risk reporting.

The applicable capital requirement for locally-incorporated banks is 2% points higher than the minimum capital requirements imposed by the Basel Committee on Banking Supervision.

The proposed all-currency LCR requirement is 50% and the SGD LCR requirement is 100% with effect from 1 January 2016.

Maybank is a Qualifying Full Bank in Singapore. Maybank Singapore’s operations currently services 27 locations through 22 branches and more than 35 ATMs in both the Singapore business districts as well as suburban estates.

Maybank Management is currently assessing the CP proposal and will engage MAS to further understand this requirement while considering the optimal deployment of capital. (Company’s announcements)

The above is not a surprise as Maybank has been waiting for the release of the guidelines in the past 1-2 years. This would be negative for Maybank (for its Singapore operations) as the (1) capital requirements would be higher, and (2)

Daybreak│Malaysia

July 14, 2014

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there could be additional costs to comply with other requirements, like liquidity coverage ratio and risk management systems. However, we think that the overall impact on Maybank’s earnings and ROE would not be significant.

CIMB Bank has scored a first in Malaysia with the completion of live bank payment obligation (BPO) transaction with receivables financing. CIMB Bank said this marked the first cross-border collaboration involving inter-bank BPO between CIMB Bank and China CITIC Bank. With the completion of this maiden BPO transaction, CIMB Bank has become the 11th banking group worldwide to have done a BPO transaction, it said.

The BPO transaction, introduced by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and the International Chamber of Commerce (ICC) back in 2013, is an undertaking of a buyer's bank to pay a seller's bank upon successful data matching on the SWIFT's unified electronic platform. It is a trade transformer that combines the best of both letter of credit and open account trade in terms of risk mitigation and flexibility in facilitating international trade.

CIMB Bank said in addition to leading the first BPO in Malaysia, it was also proud to offer post-shipment financing for BPO transaction in helping customers to unlock trapped cash and generate liquidity to fuel business growth. (Bernama)

Malaysia Airports Holdings Bhd (MAHB) is in talks for a new concession to build and operate an Asian airport as it ramps up its overseas operations. According to sources close to MAHB, the company is positive of securing the deal within the next six to nine months. “MAHB is upbeat on this development. Negotiations are ongoing and it is beyond the preliminary stage,” a source told. The source could not elaborate on the negotiations due to the sensitivity of the issue. The source said MAHB is exploring new opportunities to manage other airports in Asia, including India and the Middle East. (BT)

Sumatec Resources Bhd signed a framework agreement with Abu Talib Abdul Rahman and Dr Murat Safin for the proposed acquisition of 100% interest in Borneo Energy Oil and Gas Ltd valued at US$250m (RM800m). In a statement, Sumatec said the framework agreement gave Sumatec access to all data and information regarding parties and assets under the proposed acquisition for technical, legal and financial due diligence purposes.

Subject to a satisfactory results from due diligence studies, a sale and purchase agreement was expected to be executed within six months, and would be satisfied in cash and shares, said Sumatec. Sumatec CEO Chris Dalton said the Buzachi fields presented a very attractive proposition to Sumatec. "The 2P reserves reported to be 68m barrels of oil are sizeable and they fit in nicely within our new asset selection and acquisition criteria.

The fields are currently producing between 400 and 600 barrels of oil per day, which means Sumatec can easily ramp up production as soon as it completes the proposed acquisition,” he said. (StarBiz)

Ranhill Group, whose oil & gas business contributed to its failed listing last year, will now be going to the market without that unit. Its planned RTO of Symphony House will have its water and power businesses that include a valuable water concession in Johor and operation of two power plants in Sabah. When Ranhill first announced its intention of reversing its businesses into Symphony back in Mar, it comprised the utility divisions and the oil & gas portfolio.

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July 14, 2014

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But in late Jun, Ranhill said the RM800m RTO would only include its water and power assets. A Symphony spokesperson explains that the omission of Ranhill’s oil & gas division into the current RTO exercise was because the latter had slipped into the red in 2013. (Star)

In a monumental move, government-linked investment companies Lembaga Tabung Haji (LTH), Koperasi Permodalan Felda and Pelaburan Mara have taken stakes in special purpose acquisition company (SPAC) Reach Energy, which is slated to be listed sometime in Aug. LTH will in fact be a cornerstone investor. Prior to this, GLICs do not have the mandate to invest in SPACs.

It appears that LTH, Felda and Mara obtained the mandate to invest in Reach after the new guidelines were released earlier this year, as they took comfort mainly in the investor protection clause.

A source says some of the other cornerstone investors include MTD Capital, Paul Poh and Chua Sai Men. A source says the cornerstones make up some 20% of Reach's share base while institutions make up about 15%. The remainder shareholders are made up of corporates and individuals.

Other asset managers that have taken up stakes in Reach include Kenanga Investors, Norway’s sovereign fund Norges, Areca Asset Management and Allianz Investment. (Star)

Genting Plantations Bhd proposes to dispose of a 25% stake, or 72m shares, in Genting Integrated Biorefinery Sdn Bhd to Elevance Renewable Sciences Singapore Pte Ltd (ERS Singapore) for RM72m. The latter is a wholly-owned subsidiary of US’ Elevance Renewable Sciences, Inc. Both parties have entered into a share sale and purchase agreement as well as a master agreement for collaboration to produce high-value palm oil derivatives such as olefins, specialty chemicals and saturated methyl esters. Genting Plantation said the master agreement would involve a licence and catalyst supply accord and a project design and consultancy agreement between Genting Integrated and Elevance for US$28.05m (RM89.4m), payable to the latter. (StarBiz)

Boustead Plantations Bhd is sitting on thousands of acres of landbank in the Klang Valley and Johor that the group may consider converting into townships once its oil palm estates are past their prime. Although it has yet to firm up any plans, Boustead Plantations vice chairman Tan Sri Lodin Wok Kamaruddin told that the group's 4,074ha in Desaru and 567ha in Kulai, both in Johor and less than 405ha in Semenyih, have medium to long term potential for property development. "We believe these three parcels are prime," he said. (StarBiz)

Mohamed Ali Rasheed Alabbar, the chairman of Dubai-based Emaar Group, is helping Tradewinds Corp to embark on its first mega property project in Nusajaya, Johor, that will generate some RM18bn in GDV. Tradewinds plans to kick-start the integrated township called "One nu" by Dec. The development covering about 202ha will see a freehold integrated mixed-use upscale township in Nusajaya, which will be benchmarked against global world-class developments. (BT)

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July 14, 2014

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Johor Corp, through its subsidiary Johor Land Bhd, will undertake a RM1bn integrated development project, the “Larkin Central Park”, in Larkin next year. President/CEO Datuk Kamaruzzaman Abu Kassim said the project covers more than 40ha. Larkin Central Park will embrace the building of sports infrastructure, including a swimming pool and an indoor stadium, and upgrading of the existing football stadium. The football stadium seats up to 30,000 spectators now and with the upgrading, the number will go up to 40,000. (NST)

Now in the final stages of its restructuring exercise, Pelikan International Corp Bhd’s focus is to separate the wheat from the chaff. The stationery manufacturer and distributor, which is hoping to return to the black in the current financial year ending Dec 31, 2014, says it is in the process of separating its profitable businesses from the unprofitable ones in the hope that the move could accelerate the group’s growth, says the President and CEO Loo Hooi Keat.

“Once we complete this exercise, we will be able move forward very strongly,” he adds, pointing out that the group’s profitable units have the potential to grow at a rate of 20% to 30% a year. Loo reveals that among Pelikan’s profitable businesses that the group intends to expand are its own brand stationery unit, sales and distribution network and several key manufacturing units, while the unprofitable ones that the group intends to rationalise include third-party manufacturing and hardcopy units. “Private label business may be big, but margins are very thin,” Loo says.

According to Loo, up to 60% of Pelikan’s manufacturing capacity had previously been dedicated to private labels, while the group’s own brand would only need 30%-40% of its manufacturing. (StarBiz)

Land & General plans to reward its shareholders by issuing bonus shares, likely to be done in the first half of next year, said its CFO KC Ng. "Our ICULS got listed in Sep last year, and I think that, including the major shareholders, everyone will go for the conversion of ICULS into shares sometime by Sep this year. The ruling is that there has to be a moratorium period of six months before embarking on another corporate exercise," said Ng. (Financial Daily)

Land & General Bhd (L&G)’s aim of becoming a mid to large-tier property player is near realisation as the group believes it could exceed the RM500m market capitalisation mark before the year-end or early 2015. The bump up has long been a goal of the company whose current market cap is RM379m. When the current management took over six years ago, L&G’s market cap was only about RM150m.

At that point, the group was RM200m in debt, but since its restructuring L&G now has a gearing of 0.04x. The management believes that its irredeemable convertible unsecured loan stocks issued in September last year will boost the group’s market cap in time. (StarBiz)

The proposed Kulim International Airport, Pulau Bunting seaport and Sungai Petani-Kulim Expressway (Spike) are among the critical infrastructure projects that will support Kedah’s industrialisation process over the next few years. State Industry and Investment Committee chairman Datuk Dr Ku Abd Rahman Ku Ismail said the projects will be the catalysts in achieving the vision of making Kedah a developed state in a developed country by 2020. He said the projects were proposed to the Federal government for consideration under the 11th Malaysia Plan. (NST)

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Federal Government-owned public transport operator Syarikat Prasarana Negara Bhd is keen to participate in the Penang integrated transportation masterplan that is estimated to cost RM27bn. Prasarana group managing director Datuk Seri Shahril Mokhtar says the company had been invited by the state government six months ago to give its views on the proposed public transport masterplan for Penang Island. “We were invited to give our views on the island’s public transport masterplan about six months ago and we are keen to participate in this massive project given our extensive portfolio in the sector,” says Shahril. (StarBiz)

SIPP Energy Sdn Bhd, which has secured the contract for the development of Project 4A, has not approached Malakoff Corp over the power plant project. SIPP Energy said that it had never made any overtures to Malakoff for the project to develop a new 1,000 megawatt (MW)-1,400MW combined cycle gas turbine power plant in Johor. The Sultan of Johor owns a 51% stake in SIPP Energy, while the rest is owned by two company directors - Datuk Daing A Malek Daing A Rahaman (24.5%) and Anuar Ahmed (24.5%). (StarBiz)

SME Bank has approved RM1.3bn in loans to 600 small- and medium-scale entrepreneurs (SMEs) in the first five months of this year, said MD, Datuk Mohd Radzif Mohd Yunus. He said the amount was part of the RM2.5bn allocated for lending to the SMEs for this year. "The biggest amount was for those involved in services sector," he said. (Bernama)

South Korea’s Ssangyong Engineering & Construction (Ssangyong E&C) has clinched a US$81m (RM258.4m) deal to build a six-star St Regis hotel in Langkawi, the main hotel for the Asean Plus Three Summit scheduled to be held in Malaysia next year. The company said it has signed a contract with Indonesia-based Rajawali Group to build the St Regis hotel and a convention centre in Langkawi. (BT)

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BMSB: Changes in shareholdings

Type of No of Ave Price

11-Jul-14 Date transaction securities Company (RM)

EPF 8/7 Disposed 3,598,300 MALAYAN BANKING

EPF 8/7 Disposed 2,507,300 DIALOG GROUP

EPF 4/7-7/7 Disposed 2,412,100 MISC

EPF 8/7 Disposed 2,246,000 SAPURAKENCANA

EPF 8/7 Disposed 1,950,000 IJM LAND

EPF 7/7-8/7 Disposed 1,742,700 SIME DARBY

EPF 8/7 Disposed 930,000 HONG LEONG BANK

EPF 8/7 Disposed 645,300 MAXIS

EPF 8/7 Disposed 636,500 IJM CORPORATION

EPF 8/7 Disposed 585,400 DRB-HICOM

EPF 8/7 Disposed 476,500 AFG

EPF 8/7 Disposed 321,800 PETRONAS DAGANGAN

EPF 8/7 Disposed 241,600 BUMI ARMADA

EPF 8/7 Disposed 240,500 CAPITAMALLS MALAYSIA TRUST

EPF 8/7 Disposed 224,000 AMMB HOLDINGS

EPF 8/7 Disposed 129,800 POS MALAYSIA

EPF 8/7 Disposed 127,800 SUNWAY REIT

EPF 8/7 Disposed 114,400 FELDA GLOBAL VENTURES

EPF 8/7 Disposed 95,500 AEON CO. (M)

Skim Amanah Saham Bumiputera 7/7-8/7 Disposed 1,506,200 UMW HOLDINGS

Lembaga Tabung Haji 8/7-9/7 Disposed 144,300 Y.S.P.SOUTHEAST ASIA

M N C WIRELESS BERHAD 7/7-10/7 Disposed 426,600 MEXTER TECHNOLOGY

Yong Mian Thong 10/7 Disposed 62,000 YOKOHAMA INDUSTRIES 1.41

Tan Sri Abu Sahid Mohamed 8/7-10/7 Disposed 17,700,000 SCOMI GROUP

ASSAR Industri Sdn. Bhd. 9/7-10/7 Disposed 1,500,000 WEIDA (M) 

CHONG YEOW SIANG 10/7 Disposed 8,000 CARING PHARMACY GROUP 2.20

Genesis Investment Management, LLP 9/7 Disposed 52,800 7-ELEVEN MALAYSIA

Aberdeen Asset Management PLC 7/7 Disposed 10,700 BAT

Aberdeen Asset Management PLC 4/7-8/7 Disposed 7,900 POS MALAYSIA

Mitsubishi UFJ Financial Group, Inc 4/7 Disposed 407,100 POS MALAYSIA

Mitsubishi UFJ Financial Group, Inc 7/7 Disposed 327,900 CIMB GROUP

Mitsubishi UFJ Financial Group, Inc 7/7 Disposed 10,700 BAT

EPF 8/7 Acquired 3,000,000 TELEKOM MALAYSIA

EPF 8/7 Acquired 1,575,800 DIGI.COM

EPF 8/7 Acquired 1,284,800 KNM GROUP

EPF 8/7 Acquired 1,011,500 SP SETIA

EPF 4/7-8/7 Acquired 918,500 TENAGA NASIONAL

EPF 8/7 Acquired 842,400 PRESTARIANG

EPF 8/7 Acquired 550,000 CAHYA MATA SARAWAK

EPF 8/7 Acquired 437,200 GAMUDA

EPF 7/7 Acquired 300,000 TA ANN HOLDINGS

EPF 8/7 Acquired 285,400 TOP GLOVE

EPF 8/7 Acquired 272,700 PUBLIC BANK

EPF 8/7 Acquired 134,700 GENTING PLANTATIONS

EPF 8/7 Acquired 40,700 UNITED PLANTATIONS

EPF 7/7 Acquired 20,100 FRASER & NEAVE

EPF 8/7 Acquired 6,000 ORIENTAL HOLDINGS

Kumpulan Wang Persaraan 4/7 Acquired 2,459,100 GAMUDA

Kumpulan Wang Persaraan 3/7-4/7 Acquired 685,600 PRESTARIANG

Kumpulan Wang Persaraan 3/7 Acquired 560,200 POS MALAYSIA

Kumpulan Wang Persaraan 2/7-3/7 Acquired 60,200 AXIS REIT

Kumpulan Wang Persaraan 8/7 Acquired 15,900 MMHE

Lembaga Tabung Haji 7/7-8/7 Acquired 300,000 MRCB

Lembaga Tabung Haji 9/7 Acquired 96,000 GLOMAC

SOURCES: BMSB

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BMSB: Changes in shareholdings

Type of No. of Ave Price

11-Jul-14 Date transaction securities Company (RM)

Franklin Resources, Inc. 9/7 Acquired 228,800 OLDTOWN

Insas Plaza Sdn. Bhd. 8/7-9/7 Acquired 300,000 HO HUP CONSTRUCTION

Datuk (Dr.) Kelvin Tan Aik Pen 11/7 Acquired 100,000 TSH RESOURCES

GOH NAI KOOI @ GAH MAI KWAI 9/7 Acquired 292,400 JMR CONGLOMERATION 1.10

DATO' SRI LEE HOCK CHAI 11/7 Acquired 120,000 SCGM BHD 2.07

Aberdeen Asset Management PLC 8/7 Acquired 668,000 AEON CO. (M)

Aberdeen Asset Management PLC 8/7-9/7 Acquired 153,600 UNITED MALACCA

Aberdeen Asset Management PLC 4/7 Acquired 33,000 YNH PROPERTY

Aberdeen Asset Management PLC 8/7-9/7 Acquired 11,800 ORIENTAL HOLDINGS

Aberdeen Asset Management PLC 4/7 Acquired 5,500 GUINNESS ANCHOR

Mitsubishi UFJ Financial Group, Inc 7/7 Acquired 8,200 UNITED PLANTATIONS

Mitsubishi UFJ Financial Group, Inc 4/7 Acquired 5,500 GUINNESS ANCHOR

KPJ HEALTHCARE 11/7 Shares Buy Back 50,000 KPJ HEALTHCARE 3.50

SOURCES: BMSB

BMSB: Off-market transactions

11-Jul-14 Vol

DNEX 45,000,000

QL 25,000,000

EG 19,504,316

AMEDIA 15,500,000

MAYBANK 12,500,000

PJDEV 12,000,000

MERGE 10,015,000

SNTORIA 4,000,000

JAG 4,000,000

EG-WB 3,704,058

DESTINI 3,000,000

TITIJYA 2,000,000

INARI 1,502,000

CHHB 1,257,700

VIS-WA 580,000

Notes:CN-Crossing deal on board lots

MN-Married deal on board lots MO-Married deal on odd lots

SOURCES: BMSB

BMSB: ESOS & others

14-Jul-14 No Of New Shares Date of Listing Nature of transaction

GAMUDA 6,084,000 14-Jul-14 Exercise of ESOS

SOURCES: BMSB

BMSB: Entitlements & trading rights

14-Jul-14 Ann Date Entitlement Ex-date Entitlement

DIALOG GROUP 6-May-14 Bonus issue 1:1, special share dividend 1:125 16-Jul-14 18-Jul-14

BONIA

CORPORATION

25-Apr-14 Bonus issue 1:1, share split 1:2 18-Jul-14 22-Jul-14

SOURCES: BMSB, TE: Tax Exempt

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BMSB: Dividends

Company Particulars Gross DPS (Sen) Ann Date Ex-Date Lodgement Payment

IOI CORPORATION 2nd interim dividend - single tier 12.00 1-Jul-14 14-Jul-14 17-Jul-14 25-Jul-14

FRASER & NEAVE Interim dividend - single tier 22.00 7-May-14 16-Jul-14 18-Jul-14 8-Aug-14

BINTULU PORT Special interim - single tier 6.00 28-May-14 16-Jul-14 18-Jul-14 8-Aug-14JOBSTREET

CORPORATIONFinal dividend - single tier 0.50 2-Jun-14 16-Jul-14 18-Jul-14 7-Aug-14

BERJAYA SPORTS TOTO 4th Interim - single tier 7.00 17-Jun-14 16-Jul-14 18-Jul-14 8-Aug-14

KUALA LUMPUR KEPONG Interim dividend - single tier 15.00 21-May-14 17-Jul-14 21-Jul-14 12-Aug-14

MUDAJAYA GROUP 2nd interim dividend - single tier 3.00 10-Jun-14 6-Aug-14 8-Aug-14 5-Sep-14

MUHIBBAH ENGINEERING 1st & final dividend - single tier 4.50 3-Jun-14 13-Aug-14 15-Aug-14 25-Aug-14

SOURCES: BMSB

BMSB: Proposed cash calls & trading of rights…

14-Jul-14 Ann Date Proposed

ECO WORLD 25-Apr-14 1 Rights @ 2 , 4 Free Warrants @ 5, Private Placement

SBC CORP 27-May-14 Bonus issue 1:2

BUMI ARMADA 12-Jun-14 Bonus issue 1:2, 1 Rights @ 2

SOURCES: BMSB

BMSB: New Listing

Company Issue price Listing sought Tentative

Public Issue Offer for sale Private placement listing date

TANAH MAKMUR 1.25 52,140,000 49,450,000 75,184,000 Main Market 17-Jul-14

SASBADI HOLDINGS 1.19 21,200,000 35,950,000 32,400,000 Main Market 23-Jul-14

HENG HUAT RESOURCES 0.45 46,500,000 14,660,000 26,860,000 ACE Market 25-Jul-14

No of shares

SOURCES: BMSB

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Corporate Actions

July 2014

SUN MON TUE WED THU FRI SAT

1 2 3 4 5

Cypark 2Q MPI's Analyst Day, External Trade

6 7 8 9 10 11 12

External Reserves IPI, BNM rate

13 14 15 16 17 18 19

Nuzul Al-Quran Tenaga 3Q & briefing, CPI

DiGi 2Q, Bursa 2Q, Pavilion REIT 2Q, CMMT 2Q

20 21 22 23 24 25 26

Maxis 2Q, External Reserves (mid-month data)

27 28 29 30 31

Hari Raya Puasa Hari Raya Puasa Money supply

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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Corporate Actions

August 2014

SUN MON TUE WED THU FRI SAT

31 1 2

National Day

3 4 5 6 7 8 9

External Trade External Reserve (month-end data)

10 11 12 13 14 15 16

IPI GDP, BoP Current

Account Balance

17 18 19 20 21 22 23

CPI Eco World 3Q External Reserves (mid-month data)

24 25 26 27 28 29 30

UOA Dev 2Q, E&O 1Q

UEM Sunrise 2Q Mah Sing 2Q, Money supply

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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Only where this report is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent "investment research" under the applicable rules of the Financial Services Authority in the UK. Consequently, any such non-independent report will not have been prepared in accordance with legal requirements designed to promote the independence of investment research and will not subject to any prohibition on dealing ahead of the dissemination of investment research.

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As at the time of publishing this report CIMB is phasing in an absolute recommendation structure for stocks (Framework #1). Please refer to all frameworks for a definition of any recommendations stated in this report.

CIMB Recommendation Framework #1 Stock Ratings Definition Add The stock’s total return is expected to exceed 10% over the next 12 months. Hold The stock’s total return is expected to be between 0% and positive 10% over the next 12 months. Reduce The stock’s total return is expected to fall below 0% or more over the next 12 months. The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months. Sector Ratings Definition Overweight An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation. Neutral A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation. Underweight An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation. Country Ratings Definition Overweight An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark. Neutral A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark. Underweight An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.

CIMB Stock Recommendation Framework #2 * Outperform The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 12 months. Neutral The stock's total return is expected to be within +/-5% of a relevant benchmark's total return. Underperform The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 12 months. Trading Buy The stock's total return is expected to exceed a relevant benchmark's total return by 3% or more over the next 3 months. Trading Sell The stock's total return is expected to be below a relevant benchmark's total return by 3% or more over the next 3 months. * This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand, Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

CIMB Stock Recommendation Framework #3 ** Outperform Expected positive total returns of 10% or more over the next 12 months. Neutral Expected total returns of between -10% and +10% over the next 12 months. Underperform Expected negative total returns of 10% or more over the next 12 months. Trading Buy Expected positive total returns of 10% or more over the next 3 months. Trading Sell Expected negative total returns of 10% or more over the next 3 months. ** This framework only applies to stocks listed on the Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

Daybreak│Malaysia

July 14, 2014

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Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2013. AAV – Good, ADVANC - Excellent, AMATA - Very Good, ANAN – Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH – Good, BCP - Excellent, BEC - Very Good, BGH - not available, BJC – Very Good, BH - Very Good, BIGC - Very Good, BTS - Excellent, CCET – Very Good, CENTEL – Very Good, CK - Excellent, CPALL - Very Good, CPF – Excellent, CPN - Excellent, DELTA - Very Good, DTAC - Excellent, EGCO – Excellent, GLOBAL - Good, GLOW - Very Good, GRAMMY – Excellent, HANA - Excellent, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH – Excellent, ITD – Very Good, IVL - Excellent, JAS – Very Good, KAMART – not available, KBANK - Excellent, KKP – Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR – Very Good, MAKRO – Very Good, MCOT - Excellent, MINT - Excellent, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - Excellent, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS – Excellent, SAMART – Excellent, SC – Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI – Very Good, SPALI - Excellent, STA - Good, STEC - Very Good, TCAP - Excellent, THAI - Excellent, THCOM – Excellent, TICON – Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Excellent, TTW – Excellent, TUF - Very Good, VGI – Excellent, WORK – Good.