Small & Mid Cap Companies 20170123 Am

23 January 2017
Great oaks from little acorns grow
The year 2017 will be fairly choppy. One key reason is the global political risk especially in the developed world,
namely Europe. Outcomes from the elections in Netherland, France and Germany could change the landscape of
the European Union (EU). Political noise is expected to emerge from elections in emerging countries.
Besides, central banks in advanced economies could gradually be coming to grips that the extremely loose
monetary policy is somewhat ineffective in boosting growth and/or inflation. They should start leaning towards a
more balanced scenario in 2017, suggesting a period of gradual normalisation of the monetary policy. In other
words, the emphasis on monetary policy is fading, overtaken by increasing call for fiscal measures to take up the
slack. Countries like China and Japan, to name a few, have announced or implemented spending programs. The
US is also expected to focus on fiscal stimulus through greater government and infrastructure spending.
Furthermore, global growth has disappointed since the Global Financial Crisis, and more so in recent years. We
expect a modest global growth in 2017 of 3.3% from 3.1% in 2016, and should improve to 3.7% in 2018. With the
global output gap exhibiting a smaller contraction, it is poised to return into positive territory by 2018. However, the
shift will not be smooth and/or evenly distributed.
With the view of modest global economic growth and low inflation, government bond yields will likely hover around
current levels in the near term. The key challenge in 2017 is to find yield at a reasonable risk. Investors could
potentially be presented with better yield levels to accumulate government bonds as economic optimism revives
on fiscal spending. But not all countries will be on the same page as some countries will be penalized, and will
need higher yields due to currency depreciation and/or government spending in countries with weak institutions
that will result in inflationary pressure. Odds for higher yields will stem from higher inflation, higher economic growth,
and the central banks repricing their monetary policy by moving away from the easy policy.
Meanwhile, fair optimism can be painted for the US and global equity markets in 2017. While it may be late in the
business cycle, the global economy and markets should continue to trail forward with the strength of the US to
compensate for the weakness from Japan and the Eurozone. The Asia ex-Japan region also remains favourable
given the income prospects, stable GDP growth, growing consumer class and benefits from a commodity play.
Looking at Malaysia, the economic growth will continue to be supported by domestic demand, primarily from the
private sector with public sector consolidating in line with the Government's efforts. Exports will complement the
economic growth with steady demand and stable commodity prices. GDP should expand by 4.5% in 2017 and
4.8% in 2018 from 4.2% in 2016. This is after taking into consideration of public debt, household debt and
consolidation of the fiscal deficit.
While the impact of higher US Treasury yields on the local Malaysian Government Securities (MGS) could be
muted and the KLCI should improve. However, the local bourse is expected to remain choppy in the 1H2017 owing
to noises from the external front, stronger USD and weaker yuan which will weigh on ringgit and potential lowering
of MSCI weighting on KLCI should the China shares be included.
Yet there is room for the KLCI to improve in the 2H2017. Support will come from (1) cyclical upturn in corporate
earnings, projected to grow by +7.6% on the back of a credible 4.5% GDP growth in 2017; (2) BNM’s
accommodative monetary policy with the OPR likely to remain at 3.00%; (3) a still favourable emerging-market
outlook with healthy growth, attractive yields and undervalued currencies that should attract portfolio investments;
(4) benefitting from firmer commodity prices; and (5) weak ringgit against the USD which we project at 4.48 as our
2017 full year average. Hence, our end-2017 KLCI target is pegged at 1,745 points.
Looking at the small and mid-cap stocks, we believe this segment will be able to offer attractive investment
opportunities as well as capture additional returns. Room for this segment to perform well is on our cards partly
supported by sustainable growth. Hence, our maiden list of 40 small and medium-sized public listed companies.
Companies were derived based on their average market capitalisation of below RM2.0bn with the ingredients to
enjoy sustainable long-term growth. Our list of companies are from automotive, insurance, construction, property
development, property investment, oil & gas, retail, food & beverages, manufacturing, and technology sectors of
the economy. Although some of these sectors are cyclical in nature, the companies in our list are well-equipped to
weather the economic cycle and emerge as the outperformers in their respective industries, with potential to
become regional champions in the future.

Table of Contents

7‐Eleven Malaysia Holdings ............................................ ........................................................................ 1
Al‐‘Aqar Healthcare REIT .......................................................................................................................... 2
Allianz Malaysia ....................................................................................................................................... 3
APM Automotive ..................................................................................................................................... 4
Ahmad Zaki Resources ............................................................................................................................. 5
Datasonic Group ...................................................................................................................................... 6
EG Industries ............................................................................................................................................ 7
Ekovest ..................................................................................................................................................... 8
GD Express ............................................................................................................................................... 9
George Kent ........................................................................................................................................... 10
GHL Systems .......................................................................................................................................... 11
Globetronics Technology ....................................................................................................................... 12
Glomac ................................................................................................................................................... 13
Hektar REIT ............................................................................................................................................ 14
Hua Yang Industries ............................................................................................................................... 15
JCY International .................................................................................................................................... 16
Kawan Food ........................................................................................................................................... 17
London Biscuits ...................................................................................................................................... 18
Matrix Concepts ..................................................................................................................................... 19
MKH ....................................................................................................................................................... 20
MRCB‐Quill REIT ..................................................................................................................................... 21
OldTown................................................................................................................................................. 22
PECCA Group.......................................................................................................................................... 23
Pintaras Jaya .......................................................................................................................................... 24
Power Root ............................................................................................................................................ 25
Prestariang ............................................................................................................................................. 26
Protasco ................................................................................................................................................. 27
Sasbadi Holdings .................................................................................................................................... 28
SYF Resources ........................................................................................................................................ 29
Tambun Indah Land ............................................................................................................................... 30
Thong Guan Industries ........................................................................................................................... 31
TRC Synergy ........................................................................................................................................... 32
Tropicana Corporation ........................................................................................................................... 33
Tune Protect .......................................................................................................................................... 34
Uchi Technologies .................................................................................................................................. 35
Unisem ................................................................................................................................................... 36
Uzma ...................................................................................................................................................... 37
VS Industry ............................................................................................................................................. 38
Yee Lee Corporation .............................................................................................................................. 39
YTL Hospitality REIT .............................................................................................................................. 40

7-ELEVEN MALAYSIA
(SEM MK Equity, SEVE.KL)
Malaysia’s leading convenient store

Company report
AmInvestment Bank
www.amesecurities.com
(03-2036 2372)
Price RM1.45 Company Profile

Fair Value RM1.62
52-week High/Low RM1.97/RM1.31 7-Eleven Malaysia (7E) is Malaysia’s largest convenience store chain,
with a market share of 82% through its 2057 outlets nationwide as of
Sep 2016. Incorporated some 30 years ago in 1984, the company has
YE to Dec FY15 FY16F FY17F
built a strong presence in the convenience store space in Malaysia.
Revenue (RMmil) 2006 2115 2369 7E has been granted the rights by 7-Eleven Inc, USA to operate
Core net profit (RMmil) 56 57 67 convenience stores in Malaysia and Brunei and this is valid to Nov
Core EPS (Sen) 4.6 4.6 5.4 2033 – renewable for an additional 10 years at the discretion of 7E.
Core EPS growth (%) (16.4) 1.8 17.5
DPS (Sen) 2.3 2.3 2.7 Highlights
PE (x) 31.9 30.5 25.9
Div yield (%) 1.6 1.6 1.9 Store expansion and refurbishment drive. Malaysia’s convenience
store segment remains largely underpenetrated relative to its ASEAN
Stock and Financial Data
peers. Malaysia’s 135 stores per million people trails that of Thailand
and Singapore, with 145 and 162 stores per million respectively. 7E’s
Shares Outstanding (million) 1,192.9
Market Cap (RMmil) 1,610.9 store expansion and refurbishment outlook of 200 additional stores
Book value (RM/share) 0.07 each per year for the foreseeable future looks to capture this
P/BV (x) 20.9 opportunity, ahead of its rivals. 7E’s recent franchising dialog with
ROE (%) 41.9
Net Cash (%) 73.1
Federal of Sundry Goods Merchants Association of Malaysia and its
10,000 strong members could further accelerate 7E’s store drive as
Major Shareholders Berjaya Retail Berhad (52.8%) well.
Isotrema Sdn Bhd (7.5%)
Franklin Resources (6.6%) Expanded fresh food offering to improve product mix. 7E’s focus
on growing its fresh food segment (10% of revenue) will gradually
Free Float 47.6
expand margins in tandem with higher revenue contribution. It
Avg Daily Value (RMmil) 1.4
commands higher margins (circa 40% GP margin) than other product
Price performance 3mth 6mth 12mth offerings such as tobacco (35% of revenue but GP margin of 9%). We
believe the tie up with Brahim’s Holdings to supply and expand its fresh
Absolute (%) (19.4) 6.6 (2.7)
food offering will support management’s aim to reach its medium-term
Relative (%) (18.4) 7.3 0.7
fresh food’s topline contribution goal of 15%-20%.
Extensive store network has additional advantages. We view 7E's
robust store network as an advantage, well ahead of its competitors at
7x larger than its closest rival. It forms opportunities unavailable to
smaller and less geographically established rivals. A perfect
embodiment of the utilisation of its extensive store network is the recent
tie-up with BOXIT. The addition of storage space shelves in 7E stores
for eCommerce delivery pickups drives commission fees and additional
foot traffic.
Valuation
Our TP of MYR1.62 is pegged to a 2017 PER of 27x. It is the average

of convenience store peers in the region. While its peers are relatively
bigger, 7E offers greater growth. 7E is projected to grow at a 2-year
EPS CAGR of 17% between FY16F and FY18F.
Source: AmInvestment Bank Bhd
Technical View
7E is oversold as RSI reading fell to 13 for the first time in the past one
year. 7E had a small doji with increased volume recently, which is an
early reversal signal. If 7E breaks the downtrend line formed since
beginning of Dec 16, it could bounce back to the resistance at RM1.50.
Otherwise, it could continue to drop to the next support at RM1.32.
1

AL-’AQAR REIT
(AQAR MK EQUITY, Alqa.KL)
World’s first listed Islamic Healthcare REIT

Company report
AmInvestment Bank
(03-2036 1290)

Fair Value RM1.64
Al-'Aqar Healthcare REIT (“Al-Aqar”) was listed on 10 August 2006.
52-week High/Low RM1.67/RM1.27
It is the world’s first listed Islamic Healthcare REIT and the only
healthcare REIT in Malaysia. Al-'Aqar is supported by its sponsor -
YE to Dec FY15 FY16F FY17F KPJ Healthcare Berhad (“KPJ”). As at Dec 2015, there were 23
assets comprising 19 hospitals and 4 healthcare related properties,
Revenue (RMmil) 113.4 114.4 109.9
Core net profit (RMmil) 67.4 61.5 63.0 bringing its total asset size to RM1.5b. In terms of geographical
Core EPS (Sen) 9.6 8.9 9.0 exposure, 22 out of the 23 assets are located in Malaysia while the
Core EPS growth (%) (5.9) 8.0 3.2 remaining one is in Australia.
DPS (Sen) 7.7 8.8 9.0
PE (x) 16.3 15.0 14.8 Highlights
Div yield (%) 4.9 5.4 5.5
The world’s first Islamic healthcare REIT. Al-‘Aqar is the only
Stock and Financial Data healthcare and the world’s 1st Islamic principle-based REIT. It
appeals in particular to shariah-compliant funds that want exposure
Shares Outstanding (million) 728.2 in the REIT market. Al-‘Aqar is 49%-owned by KPJ Healthcare.
Market Cap (RMmil) 1143.3
Book value (RM/share) 1.21 A pipeline of potential acquisitions. Al-‘Aqar has also been given
P/BV (x) 1.3
the right of first refusal (“ROFR”) to a pool of hospitals, local or
ROE (%) 8.3
Net Gearing (%) 67.1 overseas, from KPJ. Its acquisition pipeline is looking strong with the
ROFR to KPJ’s upcoming hospitals. KPJ is on a robust expansion
Major Shareholders Johor Corp (48.3%) phase, with plans for up to eight new hospitals slated for 2018-2019
LembagaTabung Haji (10.2%)
Employees Provident Fund (EPF) (9.5%)
and worth RM1.3bil in investments
Full occupancy. Occupancy is constantly at 100% as assets backed
Free Float 18.5
Avg Daily Value (RMmil) 0.8 by its’ parent KPJ come with long term leases. The Al-Aqar’s
standard lease agreement with KPJ Healthcare is for a 15-year
Price performance 3mth 6mth 12mth lease, with an option to renew for another 15 years. The lease comes
with annual review for the next three years.
Absolute (%) 4.0 3.7 16.9
Relative (%) 5.0 4.3 20.2 Valuation
We use dividend discount model (DDM)as our primary valuation
methodology. We arrive at a target price of RM RM1.64 based on
(risk free rate = 4.2%, cost of equity = 7.1%, beta = 0.5x, and
terminal growth =2.0%). Our target price implies a total return of
9.7%.
Technical View
Al-Aqar is supported by its short term moving average of 20 days.
Notwithstanding that AlAqar’s share price dipped below its medium
term support at 100 days moving average, it is likely to stay range
bound between RM1.50 and RM1.59.
2

ALLIANZ MALAYSIA
(ALLZ MK EQUITY, AINM.KL)
Poised to benefit from higher MGS yield

Company report
AmInvestment Bank
(03-2036 2294)
Company Profile
Price RM10.20
Fair Value RM11.30 Allianz is a composite insurer involved in both general and life insurance.
52-week High/Low RM10.91/9.58
Allianz General was ranked 1st in 2015 for general insurance with a
market share of 12.4% by gross written premium (GWP), ahead of
YE to Dec FY15 FY16F FY17F AmGeneral and MSIG. Meanwhile for life insurance, Allianz Life was the
5th largest with a market share of 7.3% in terms of GWP. Allianz General
Revenue (RMmil) 4,519.5 4,612.3 4,720.0
Core net profit (RMmil) 308.9 311.6 331.5 has combined ratio of 89.9% for 9MFY16 (Industry for 2015: 88.3%) and
FD Core EPS (Sen) 89.4 90.6 96.3 the ratio has been consistently kept below 90.0% for the past 5 years.
FD Core EPS growth (%) 4.0 1.3 6.4 Conservative investment portfolio with investments mainly in government
DPS (Sen) 70.0 70.0 70.0 bonds (Allianz General: 52.4% and Allianz Life: 46.6% of total investment
PE (x) 11.4 11.3 10.6
Div yield (%) 6.9 6.9 6.9 assets). Minimal investment in equities (Allianz General: Nil and Allianz
Life:10.8% of its total investments).
Highlights
Shares Outstanding (million) 172.7 Stronger growth in premiums for life than general insurance. Allianz
Market Cap (RMmil) 1,761.5
Life's GWP expanded by a 5 year CAGR (2011-2015) of 14.0%, faster than
FD Book value (RM/share) 7.6
P/BV (x) 1.3 the 5 year CAGR (2011-2015) GWP of Alliance General of 11.0%. Focus
ROE (%) 12.6 for life insurance will be on investment linked products which will yield
Net Gearing (%) Net cash higher margins. Allianz is the largest for motor insurance, hence the
Major Shareholders Allianz SE (66.4%)
persistent slowdown in car sales as well as the gradual liberalisation of fire
Pertubuhan Keselamatan Social (3.1%) and motor tariffs will likely raise competitive pressure for its general
Public Regular Savings (1.9%) insurance business in the near term. Nevertheless, we expect the stronger
performance of life insurance to offset the slower earnings growth of its
Free Float 27.0
Avg Daily Value (RMmil) 0.9 general insurance business. The 10 year bancassurance deal with CIMB
will expire on August 2017.
Price performance 3mth 6mth 12mth
Diversified business portfolio with consistent underwriting profit. The
Absolute (%) 1.6 2.6 0.1 Group has a diversified portfolio mix for general insurance with motor, fire,
Relative (%) 1.2 1.0 (0.7) personal accident & health as well as marine insurance comprising 59.3%,
18.5%, 6.4% and 3.4% respectively of Allianz General's gross premiums.
The Group consistently reported underwriting profits for its life and general
insurance business.
Earnings expected to benefit from higher MGS yield. Moving forward,

US Fed rate is likely to rise, consequently causing MGS yield to increase.
Although the potential spike in MGS yields will have a mark to market
impact on investments, the Group is expected to lower its contractual
liabilities, resulting in an overall positive impact to earnings.
Valuation
Our fair value for Allianz at RM11.30/share based on SOP valuation

which values Allianz General Insurance at a P/BV multiple of 2.0x (in line
with the recent M&A multiple for general insurance companies) and
Allianz Life Insurance at P/BV multiple of 0.8x (in line with the Group's 5
Source: AmInvestment Bank Bhd years average P/BV multiple).
Technical View
Allianz had completed its uptrend channel in June 2015. Allianz had a
triangular breakdown after 3 unsuccessful attempts to its resistance at
RM13.01 level. Since the breakdown, the strong support level of RM10.97
has turned into strong resistance. Allianz is likely to stay range bound at
RM10.00 to RM10.97. 3

APM AUTOMOTIVE
(APM MK Equity, APMA.KL)
Anchored to a mellow market

Company report
AmInvestment Bank
(03-2036 2304)
Price RM3.46
Fair Value RM3.40 Company Profile
52-week High/Low RM3.90/RM3.30 APM Automotive is one of the largest manufacturers of automotive
parts in the local market with products that include suspension
YE to Dec FY15 FY16F FY17F parts, seats, interior and exterior plastics, heat exchange and
electrical components. APM is led by CEO Low Seng Chee, who
Revenue (RMmil) 1152.8 1175.9 1199.3 has had more than 30 years of experience in automotive
Core net profit (RMmil) 60.5 61.7 62.9 component manufacturing, auto assembly and retail.
Core EPS (Sen) 30.9 31.5 32.1
Core EPS growth (%) (38.6) (0.02) (0.02)
PE (x) 11.2 12.7 10.0
Div yield (%) 5.6 5.6 5.6 Pegged to auto market performance. APM has seen topline
erosion due to continued price pressure, lower off-take from OEMs
Stock and Financial Data for certain car models and lower sales from the domestic
replacement market. More significantly, higher raw material prices
Shares Outstanding (million) 195.6 due to a weaker ringgit and a lower production volume amid
Book value (RM/share) 6.06 overheads staying relatively fixed has lowered profit.
P/BV (x) 0.6 Emphasis on regional expansion. APM has identified regional
ROE (%) 4.1 expansion as a cornerstone of its long-term plan for growth. There is
Net Cash (%) (28.7) an urgent need to diversify its revenue streams due to shrinking
Major Shareholders Tan Chong Consolidated SdnBhd(37.5%) margins, increasing competition in replacement markets, and the
Wealthmark Holdings SdnBhd(7.8%) move by OEMs to source from beyond Malaysia. APM last October
Employees Provident Fund (EPF) (6.6%) announced an RM1.5bil sukuk programme for corporate purposes
and refinancing.
Free Float 26.1
Avg Daily Value (RMmil) 0.2 Net cash position and stable dividend payout. APM remains in a
strong net cash position (of RM224mil as of end-Sept 2016, circa
Price performance 3mth 6mth 12mth 30% of market cap). It had a payout of 36% for FY14, after 72% in
FY13 which included special dividends. Payout for 9MFY16 was 30%
Absolute (%) 1.8 (4.6) (5.9)
Relative (%) 2.8 (4.0) (2.5) of net profit.
Valuation
We value APM Automotive at RM3.40 based on an FY17F PE of
10x - below its historical 3-year average of 12.7x. It is currently
trading at an FY17F PE of 10.3X.
Technical View
APM is building base at RM 3.30- 3.48 levels after 3 years of
downtrend. APM has to successfully break and stay at its 200 days
moving average at RM3.60 prior confirmation of a trend reversal.
4

AHMAD ZAKI
(AZR MK Equity, AZRB.KL)
Tremendous Value In Order Backlog, Concessions And

Plantation
Company report
AmInvestment Bank
(03-2036 2293)
Price RM0.64
A contractor first listed on the now-defunct Second Board in 1999
and subsequently transferred to the Main Board in 2003, Ahmad
YE to Dec FY15 FY16F FY17F Zaki is also engaged in oil & gas support services, property
development/management and plantation. For 9MFY16,
Revenue (RMmil) 715.0 1,125.7 1,294.6
Core net profit (RMmil) 22.9 25.2 29.0 construction contributed >50% of total PBT, with the balance
Core EPS (Sen) 4.7 5.2 6.0 coming from its oil & gas and property businesses. Its plantation
Core EPS growth (%) 42.5 10.6 15.4 unit was in the red due to the relatively young age profile of the
DPS (Sen) 2.0 2.0 2.0
trees. At the helm of the company is group managing director Dato’
PE (x) 13.5 12.3 10.7
Div yield (%) 3.1 3.1 3.1 Wan Zakariah bin Haji Wan Muda.
Stock and Financial Data Highlights

A sizeable construction orderbook. Ahmad Zaki’s strong earnings
Shares Outstanding (million) 482.1 visibility is underpinned by an outstanding construction order backlog
Book value (RM/share) 0.74 of RM4.1bil, which will keep it busy at least for the next 3-4 years.
P/BV (x) 0.9 Among the notable jobs are Package V202 of MRT2 and East Klang
ROE (%) 6.8 Valley Expressway (EKVE), with RM1.4bil each in outstanding value.
Net Gearing (%) 204.3
Steady income from concession assets. Ahmad Zaki holds the
Major Shareholders Zaki Holdings SdnBhd (59.3%) exclusive rights (due for renewal in 2023) to supply marine fuels and
LTH (4.3%)
Wan Zulkifli Bin Haji Wan (1.5%)
provide other bunkering services to Petronas production sharing
contractors at Kemaman Supply Base, Terengganu. It is currently
Free Float 29.2 replicating the same business model at Tok Bali Supply Base
Avg Daily Value (RMmil) 0.6 (TBSB), Kelantan. Its 51%-owned TBSB concessionaire is investing
Price performance 3mth 6mth 12mth RM50mil in Phase 1 of the project. The RM413mil International
Islamic University Malaysia (IIUM) Medical Centre in Kuantan was
Absolute (%) 0.8 3.8 3.8 carried out via a 25-year private finance initiative arrangement with
Relative (%) 1.8 4.5 7.2 the government and has contributed since 2QFY16.
Indonesian plantation asset. While still lossmaking, there is
tremendous value in its 15,584-ha oil palm plantations in West
Kalimantan, Indonesia, of which 47% or 7,316ha are now planted.
Acquired in 2004, we estimate that its market value has easily
doubled from RM148mil carried as biological assets in Ahmad Zaki’s
balance sheet as at 30 Sep 2016.
Valuation
We value Ahmad Zaki at RM0.74 based on 1x book value.
Technical View
Ahmad Zaki has been on a downtrend since May last year. It formed
triangular breakout in Dec 2016 but continued to stay below its 200
MA. Ahmad Zaki may need to convincingly break and stay at RM0.66
Source: AmInvestment Bank Bhd to confirm the trend of reversal.
5

DATASONIC GROUP
(DSON MK Equity, DSON.KL)
Proxy to tighter security controls

Company report
AmInvestment Bank
(03-2036 2291)
Price RM1.22
Datasonic Group (Datasonic) is engaged in the provision of
information and communications technology (ICT) solutions. This
YE to Mar FY16 FY17F FY18F includes smart card personalisation, customised solutions for
government, financial and commercial sectors, web-enabled i-Visa
Revenue (RMmil) 241.3 288.3 325.8
Core net profit (RMmil) 63.0 80.7 91.2 and e-Visa solutions, integrated security surveillance, Intelligent
Core EPS (Sen) 4.7 5.9 6.8 Transport Systems (ITS) and Total Hospital Information Systems.
Core EPS growth (%) 6.1 27.2 13.0
PE (x) 26.1 20.4 18.0
Div yield (%) 2.5 2.5 3.3 Stable cash flows from recurring need for chips. Datasonic is
currently responsible for the supply of 12 million MyKad raw cards
Stock and Financial Data and consumables until 31st December 2019. In addition, the
company has also secured contracts from the Home Affairs Ministry
Shares Outstanding (million) 1350.0 to supply 12.5 million passport chips and 13.4 million passport
Book value (RM/share) 0.19 booklets until 30th November 2021. In total, the 3 awards command
P/BV (x) 6.4 a combined contract sum of RM803mil. This ensures stable cash
ROE (%) 30.7 flows and good earnings visibility at least for the next 3-5 years.
Early foothold in ITS. Datasonic has been investing in integrated
Major Shareholders Ben Ben Chew (24.9%) security surveillance and ITS in recent years to ready itself for
Bin Noordin Abu Hanifah(15.1%)
Gerbang Subur Sdn Bhd (9.7%)
increased surveillance to fight crime rates and traffic breaches. In
Penang, Datasonic captures over 90% market share in municipal
Free Float 34.3 closed-circuit television (CCTV) projects, supplying and installing a
Avg Daily Value (RMmil) 3.6 total of 583 High Definition CCTV cameras and 8 surveillance control
Price performance 3mth 6mth 12mth centres. In Malaysia, we note that surveillance CCTV penetration
remains low. Assuming 20,000 - 30,000 potential points for CCTV
Absolute (%) (14.0) 2.3 (13.2) installation in Klang Valley, we estimate these jobs to be worth
Relative (%) (14.3) 0.7 (14.1) RM2.4bil, which is 1.5x the group's market capitalisation.
Rising biometric applications. We understand that Datasonic is
also involved in the provision of biometric solutions (fingerprint, facial
recognition and iris scan) in relation to border control, smart access
control and other security controls. With the rise of security standards
and concerns, we think Datasonic could start to see meaningful
contribution from this area. However, we cannot quantify the impact
yet due to the lack of details.
Valuation
We value Datasonic at RM1.71 based on 26x CY17F EPS, which
represents its 3-year historical average.
Technical View
DSONIC’s profile diagram shows the stock mostly transacted in
Source: AmInvestment Bank Bhd between RM1.23 to RM1.40 in the past 10 months. Outside this
range, the next resistance is at RM1.60 and the next support is at
RM1.12. This indicates traders can buy at near RM1.12 and take
profit near RM1.60.
6

EG INDUSTRIES
(EG MK Equity, EGCM.KL)
Rising up the ranks

Company report
AmInvestment Bank
(03-2036 2240)
Price RM0.86
Company Profile
Fair Value RM0.93
EG Industries (EG) is a leading electronics manufacturing services
(EMS) provider, specialising in original equipment manufacturing
(OEM) and original design manufacturing (ODM). A one-stop provider,
YE to Jun FY16 FY17F FY18F the company provides a full suite of solutions which include tooling,
plastic injection. printed-circuit-board assembly (PCBA) and final
Revenue (RMmil) 712.7 872.0 988.8
Core net profit (RMmil) 9.8 21.7 27.0 assembly for a diverse global clientele. WE Holdings Ltd has an
Core EPS (Sen) 4.6 10.3 12.8 11.8%-indirect stake in EG via Singapore-headquartered Jubilee
Core EPS growth (%) (17.4) 121.9 24.2 Industries Holdings Ltd.
DPS (Sen) 0.0 0.0 0.0
Div yield (%) 0.0 0.0 0.0
Transformation on the right track. We like EG for its strategy of
Stock and Financial Data continuously moving up the value chain as an EMS provider. From a
predominantly PCBA-oriented business, EG has ventured into box-build
Shares Outstanding (million) 211.3 and is now looking to offer "vertical-integration plus" (VI-plus) services.
Book value (RM/share) 1.17
This includes distribution services in the Asian region and a potential
P/BV (x) 0.7 plan to partner with or acquire an industrial design firm to enhance its
ROE (%) 10.1 ODM capacities.
EG plans to tap into the marketing expertise and distribution network of
Major Shareholders Jubilee Industries Holdings Ltd(11.8%) WE Holdings Ltd to offer distribution services to its customers. For
CIMB Principal Asset MgmtBhd(8.8%)
starters, it is now the sole distributor for Flic in Asia. By offering
Yeok Kian Tea (4.8%)
increasingly integrated services up and down the supply chain, we
Free Float 67.7 believe this would help EG set itself apart from other EMS suppliers and
Avg Daily Value (RMmil) 1.8 remain relevant to customers seeking simplification in outsourcing.
Price performance 3mth 6mth 12mth Rising box-build orders to drive growth. EG recently completed
construction of its new factory to expand its box-build segment and set
Absolute (%) 1.8 0..0 (22.3)
Relative (%) 2.8 0.6 (18.9) up its own injection moulding facilities. The company is targeting to
increase the revenue share of box-build segment to 30% in FY17F (from
18% in FY16), which would help drive better margins going forward due
to its higher value-add . Margin improvement was already evident in
1QFY17, where core EBIT margin rose 0.32%ppt from a year ago due to
increased box-build volume. As distribution revenue gather pace over
the next few years, we expect this to help buoy margins.
Valuation
We value the stock at a fully-diluted fair value of MYR0.93, based on
10x P/E for CY17F EPS, which is a slight discount to its peers' due to
its smaller earnings base. However, we highlight that any potential
rights issue or private placement (according to a local newspaper
report) may lead to EPS dilution.
Technical View
Source: AmInvestment Bank Bhd EG has been trading within a tight range of RM0.81 to RM0.90 in the
past 10 months with generally declining volume. However, there was a
rise in volume in December 2016. If market interest can pick up further,
EG could retest the RM0.90 resistance in the near-term. The next
resistance above the trading range is at RM1.00 and the next support
below the range is at RM0.76.
7

EKOVEST
(EKO MK Equity,EKOV.KL)
Rock-Steady Construction And Tolling Profits

Company report
AmInvestment Bank
(03-2036 2293)

Fair Value RM2.43
52-week High/Low RM2.60/RM1.01 A contractor first listed on the now-defunct Second Board in 1993
and subsequently transferred to the Main Board in 2000, Ekovest has
YE to Jun FY16 FY17F FY18F over the years expanded to become a toll road concessionaire (Duta
- Ulu Kelang Expressway or DUKE) and property developer. In FY16,
Revenue (RMmil) 793.6 814.2 936.3 construction contributed 60% of total operating profit, followed by toll
Core net profit (RMmil) 43.4 120.3 138.3 road concession (26%) and property development (14%). At the helm
Core EPS (Sen) 5.1 14.1 16.2
Core EPS growth (%) 741.1 176.5 14.9 of the company is executive chairman and controlling shareholder
DPS (Sen) 3.0 3.0 3.0 Tan Sri Dato' Lim Kang Hoo.
PE (x) 47.3 17.1 14.9
Div yield (%) 1.2 1.2 1.2 Highlights
Stock and Financial Data Strong earnings visibility. Ekovest's earnings visibility is strong,
underpinned by an outstanding construction orderbook we estimate at
Shares Outstanding (million) 855.4 RM13bil (including RM3.7bil from DUKE3 and RM6.3bil from
Market Cap (RMmil) 2,061.5 DUKE2A), recurring toll road profit and unbilled property sales
Book value (RM/share) 1.59 reported at RM576m from two mixed developments, namely the
P/BV (x) 1.5
RM2.1bil EkoCheras in Cheras and RM610mil EkoTitiwangsa along
ROE (%) 15.2
Net Gearing (%) 152.2 Jalan Pahang, Kuala Lumpur.
Major Shareholders Kang Hoo Lim (20.2%) DUKE: two bites on the same cherry. Ekovest struck gold with the
Kota JayasamaSdnBhd (13.0%) RM1.1bil DUKE - a 18km KL city bypass located between Middle Ring
Ekovest Holdings SdnBhd (12.2%) Roads 1 & 2, opened to traffic in 2009. The viability of DUKE has
provided impetus for the development of DUKE2 (RM1.2bil, 16km,
Free Float 41.4
Avg Daily Value (RMmil) 2.2 completing 1H2017), DUKE3 (RM3.7bil, 50km, completing 2020) and
DUKE2A (RM6.3bil, 75km, completing 2023). Ekovest gets "two bites
Price performance 3mth 6mth 12mth from the same cherry" from these bypass projects - construction profits
and the DCF value of the concessions. Already, Ekovest is selling a
Absolute (%) 26.2 60.7 129.4
Relative (%) 27.2 61.3 132.7 40% stake in DUKE and DUKE2 to EPF for RM1.13bil that will
translate to a RM764mil "balance sheet gain on disposal" or
89sen/share gains. Ekovest has made known its intention to distribute
RM245mil or 29sen/share back to the shareholders.
River of Life: more jobs. Ekovest has bagged more works from River
of Life (RoL) - a government initiative to clean up the Klang river and
redevelop a 10.7km stretch along the river in downtown Kuala Lumpur.
In 4Q2016, it secured two RoL contracts worth a total of RM413mil, in
addition to the first contract worth RM164mil it won in 2014.
Valuation
We value Ekovest at RM2.43 based on 15x FY18F EPS, in line with
our benchmark 1-year forward target P/E of 13-15x for Mid-cap
construction stocks.
Technical View
Ekovest started its uptrend in early 2016 and has formed triangular
breakout in September 2016. The uptrend remains intact and
supported at confluence of multiple support levels – RM2.22–RM2.32
which provides an opportunity for accumulation.
8

GD EXPRESS
(GDX MK Equity, GDEX.KL)
Going Places
Company report
AmInvestment Bank
(03-2036 2025)
Price RM1.69
GD Express Carrier Bhd (GDEX) is a local express carrier company
with core operations in last mile express delivery and logistics
YE to Jun FY16 FY17F FY18F operations. GDEX has the second largest market share in the
parcel delivery space, behind Pos Laju. The company was listed on
Revenue (RMmil) 219.8 255.8 305.2
Core net profit (RMmil) 34.4 40.3 47.9 the ACE Market in 2005 and subsequently transferred to the Main
Core EPS (Sen) 2.7 2.8 3.2 Market in 2013. At the helm of the company is Teong Teck Lean,
Core EPS growth (%) 9.5 3.7 14.3 who is the Managing Director/Group CEO and has a 37.98% stake
DPS (Sen) 1.0 2.0 2.4
in the company. Yamato Group is the second largest shareholder of
PE (x) 63.5 60.4 52.8
Div yield (%) 0.6 1.2 1.4 GDEX (22.84%), followed by Singapore Post (11.17%).

E-commerce tide to lift B2C segment. We envision the
Shares Outstanding (million) 1383.2 acceleration of the B2C segment, which currently constitutes 25% of
Book value (RM/share) 0.29 last mile delivery revenue, to be underpinned by the proliferation of
P/BV (x) 5.9 e-commerce players such as Lazada, Zalora and Astro Home
ROE (%) 13.4 Shopping. E-commerce activity in Malaysia bears attractive growth
Net Gearing (%) Net cash potential, as online retails sales currently makes up around 1% of
Major Shareholders GD Express Holdings (M) SdnBhd total retail sales, as compared to 5-8% across developed markets. In
(25.4%) anticipation of growing express delivery volume, GDEX has recently
Yamato Asia Pte Ltd (22.8%) refurbished its hub, which has resulted in over 20% capacity gain
Singapore Post Limited (11.2%)
and it is already on the lookout for a new piece of land to house
Free Float 12.1 further hub sorting capacity.
Regional expansion on the table. Following the private placement
Price performance 3mth 6mth 12mth to Yamato Asia Pte Ltd in Jan 2016, GDEX raised RM217m, which it
could deploy for strategic investment and inorganic growth
Absolute (%) (2.9) 5.6 (1.7) opportunities in ASEAN. Its recent subscription of PT Satria Antara
Relative (%) (1.8) 6.3 1.6
Prima’s (SAP) convertible bonds of RM10m (representing 40%
equity stake in SAP upon conversion within five years) marks a
milestone in regional expansion, as it partners with SAP to expand its
last mile delivery network in Indonesia, on top of its existing cross-
border collaboration with PT Pos Indonesia.
Valuation
We value GDEX at RM1.88 based on a discounted cash flow (DCF)
method.
Technical
GDEX has been on uptrend since September last year and is

approaching triangular breakout. Failing to breakout, GDEX may
consolidate at RM1.60. Should a breakout occur, we may see GDEX
testing RM1.90 before testing another level of RM2.20.
9

GEORGE KENT
(GKEN MK Equity, GKMS.KL)
A "Rail" Player
Company report
AmInvestment Bank
(03-2036 2293)
Price RM3.06
Listed on Main Board in 1974 with a core business in the
manufacture of water meters, George Kent has over the years
YE to Jan FY16 FY17F FY18F expanded into the construction of water infrastructure (Sg Selangor
Water Supply Scheme Phases 1 & 3 and Pahang-Selangor Inter-
Revenue (RMmil) 536.2 546.4 628.4
Core net profit (RMmil) 50.1 75.1 86.3 state Raw Water Transfer), rail infrastructure (system works for
Core EPS (Sen) 13.3 20.0 23.0 LRT2 and MRT2, and project delivery partner (PDP) role for LRT3)
Core EPS growth (%) 78.3 50.4 15.0 and hospitals (Kuala Lipis hospital, Pahang and TanjungKarang
DPS (Sen) 5.6 5.6 5.6
hospital, Selangor). At the helm of the company is chairman and
PE (x) 23.0 15.3 13.3
Div yield (%) 1.8 1.8 1.8 controlling shareholder Tan Sri Dato' Tan Kay Hock.

A new key player in construction. We believe George Kent has
Shares Outstanding (million) 375.5 become a force to be reckoned with in the local construction industry
Book value (RM/share) 0.95 given its significant involvement in the rail infrastructure segment in
P/BV (x) 3.21 Malaysia - the segment we believe will remain the main engine of
ROE (%) 23.7 growth for the construction sector in Malaysia, backed by MRT2,
Net Gearing (%) (66.6)
MRT3, LRT3, Gemas - Johor Bahru electrified double tracking, Kuala
Major Shareholders Star Wealth Investment Ltd (14.0%) Lumpur - Singapore high-speed rail and East Coast Rail Link
Swee Bee Tan (7.7%) (ECRL).
Hectomic Ltd (5.0%)
Scored a double. Already, George Kent has bagged two sizeable
Free Float 39.0 rail jobs over the last 18 months. In Sep 2015, it emerged the PDP
Avg Daily Value (RMmil) 2.98 for the RM9bil LRT3 via a 50:50 JV with MRCB. In Aug 2016, it won
Price performance 3mth 6mth 12mth the RM1bil system works package for MRT2 via a 51:49 JV led by
China Communications Construction Company (CCCC).
Absolute (%) 22.1 105.3 143.0
Relative (%) 23.1 106.9 146.4 Sizeable order backlog. Its earnings visibility is strong, underpinned
by an outstanding construction orderbook estimated at RM6.3bil that
will keep it busy for the next 4-5 years.
Valuation
We value Gearge Kent at RM3.22 based on 14x FY18F EPS, in line
with our benchmark 1-year forward P/E of 13-15x for mid-cap
Technical View
George Kent was on uptrend since 2015 and formed triangular

breakout in Jun 2016. After ex-bonus issue of shares, George Kent
continued the upward momentum. George Kent is likely to trade
range bound in this uptrend channel.
10

GHL SYSTEM
(GHLS MK Equity, GHLS.KL)
High growth rate and resilient business model

Company report
AmInvestment Bank
(03-2036 2113)

Fair Value RM1.15
52-week High/Low RM0.99/RM0.71 GHL System (GHL) is a payment solutions provider involved in
deploying payment infrastructure, technology and services. It mainly
operates in Malaysia, Philippines and Thailand. GHL has three main
business segments: i) shared services that provides point of sales
Revenue (RMmil) 211.4 241.0 278.8 (POS) terminals; ii) Payments solution services such as e-payment
Core net profit (RMmil) 10.3 16.8 24.31 gateway, consumer loyalty products and prepaid solutions; iii)
Core EPS (Sen) 1.6 2.6 3.8 Transaction Payment Acquisition (TPA).
Core EPS growth (%) 35.3 62.5 46.2
PE (x) 54.3 33.8 23.2
Div yield (%) 0.0 0.0 0.0 Secular rise in e-payment adoption - GHL is well positioned to benefit
from rising e-payment adoption in ASEAN, driven by improving
broadband penetration rate and growing disposable incomes. E-
payment industry in Southeast Asian (SEA) countries has enormous
Shares Outstanding (million) 648.4
Market Cap (RMmil) 571.0 market potential to be unlocked as credit card penetration is low and e-
Book value (RM/share) 0.38 payment infrastructure is still underdeveloped. Notably, only 3 out of 10
P/BV (x) 2.3 Malaysians own a credit card, according to Euromonitor. Furthermore,
ROE (%) 6.9
SEA countries (ex-Singapore) have low point-of-sales (POS) terminals
Net Gearing (%) Net Cash
penetration of 2 to 9 POS per 1,000 capita compared to Singapore's 21.
Major Shareholders Wee HianLoh(35.3%)
CYCAS (28.4%) TPA to drive long-term growth - TPA is the long-term growth driver for
Amanahraya Trustees Berhad (4.1%) GHL. This business segment accounted for 74% of the company’s total
revenue in 2015 and is expected to grow at a CAGR of 21% for FY16F-
Free Float 25.2
18F. GHL receives 50-60bps of merchant sales from POS and is
expected to add 1000 merchants per month over the next 2 years to its
Price performance 3mth 6mth 12mth current 57K merchant base.
Absolute (%) 7.4 (5.9) (9.3) BNM pushes for higher card utilisation – as it is more cost-effective
Relative (%) 8.4 (5.3) (6.0) than paper-based payments, which depend on human processing.
Initiatives include Payment Card Reform Framework (PCRF)
announced in 2014 and ‘Chip and Pin’ to be implemented in 2017. The
PCRF reduced debit card transaction costs for merchants. On the other
hand, the ‘Chip and Pin’ will greatly improve payment security. These
actions encourage both merchants and consumers to expand adoption
of card payment.
Valuation
GHL is currently trading at 0.5x PEG (PE/ growth) based on 21.3x

FY17F’s PE and EPS’s CAGR of 43% in FY16F-18F. We think this
valuation is undemanding as the company can sustain a high growth
rate in the largely untapped ASEAN markets with recurring revenues.
Our fair value for GHL is RM1.15, based on 0.7x PEG, implying a 30x
FY17F PE. We think this is reasonable compared to global e-payment
players like Mastercard and Visa, which are trading at around 1.4x PEG
or 22.5-23.5x FY17F PE.
Technical View
GHL has broken out above the long-term downtrend line and is in a
short-term uptrend with strong momentum now. Investors should buy at
any pullback to 20MA in the near-term. The next resistances are at
RM0.96 and RM1.15.
11

GLOBETRONICS
(GTB MK Equity, GNIC.KL)
New sensor excitement

Company report
AmInvestment Bank
(03-2036 2291)

Fair Value RM3.70
52-week High/Low RM6.54/RM2.69 Globetronics Technology (Gtronic) is an electronics manufacturing
services (EMS) provider for LED components, sensor devices and
quartz crystal products, of which applications are in the consumer
electronics, automotive and industrial segments.
Revenue (RMmil) 343.7 240.9 325.2 Highlights
Core net profit (RMmil) 75.3 27.6 65.0
Core EPS (Sen) 25.3 9.8 23.1 Combo light sensor could bring back earnings. Share price has
Core EPS growth (%) 10.5 (61.2) 112.0
tumbled ever since Gtronic's major client is believed to have lost the
DPS (Sen) 23.0 23.0 25.0
PE (x) 13.9 35.8 16.9 supply contract for proximity sensors (its major exposure) to a key
Div yield (%) 5.7 6.6 7.1 smartphone player. However, we understand that Gtronic will be
manufacturing combo light sensors (with ambient light and proximity
sensing capabilities) that replaces the old proximity sensors. We
believe this could bring Gtronic's earnings back to the spectrum of
RM60-70mil in FY17F, compared to only RM27mil projected for
Book value (RM/share) 1.00 FY16F.
P/BV (x) 3.5
ROE (%) 11.8 General sensor outlook reaffirms positive prospects. For 2017F,
Net Cash (%) 55.8 World Semiconductor Trade Statistics (WSTS) projects a faster 9%
growth in the sensor segment vs. 3% for the industry. We reckon that
Major Shareholders Employees Provident Fund (EPF) (12.0%)
Gtronic is well-positioned in this market segment given its products
General Produce Agency Sdn Bhd(7.3%)
Wiserite Sdn Bhd (7.3%) are applicable in smartphones. The functions of its sensors include
brightness monitoring for screen display and 3D depth sensing for
Free Float 58.3 cameras. In addition, its gesture sensor used in Bluetooth-enabled
wearable devices also offers bright prospects on rising adoption of
Price performance 3mth 6mth 12mth wireless products.
Absolute (%) (0.9) 15.3 (38.0) USD strength magnifies growth. Given that 60-70% of Gtronic's
Relative (%) (1.2) 13.7 (38.8) revenue exposure is in the USD, our USD/MYR assumption of 4.48
for 2017F vs. 4.13 for 2016F amplifies revenue growth in FY17F from
28% to 35%. Based on our sensitivity analysis, a 5% appreciation in
the USD against the MYR would increase Gtronic's net profit by 3%.
Valuation
We value Gtronic at RM3.70 based on 16x FY17F EPS, which
Technical View
The stock has been trading within a bear channel in the past three
months with thin volume. We expect GTRONIC to continue trading
within the bear channel with the next support at RM3.08.
12

GLOMAC
(GLML MK Equity, GLOM.KL)
Banking on landed residential projects

Company report
AmInvestment Bank
(03-2036 2025)

Fair Value RM0.79
52-week High/Low RM0.84/RM0.68 Glomac was founded in 1988 by Tan Sri Dato’ FD Mansor and
Datuk Richard Fong, and was listed on the Main Board of Bursa
Malaysia on 13 June 2000. The company is currently helmed by
YE to Apr FY16 FY17F FY18F
Datuk Seri FD Iskandar as the Group Managing Director / CEO.
Revenue (RMmil) 616.6 472.8 578.3 Today, the group is involved in every facet of the real estate
Core net profit (RMmil) 80.9 52.5 75.4 business including property development, property investment,
Core EPS (Sen) 11.3 7.3 10.5 construction, property management and car park management. Its
Core EPS growth (%) (6.2) (35.4) 43.8 development projects are focused mainly in Greater KL area, where
DPS (Sen) 4.0 4.1 4.2
PE (x) 6.1 9.5 6.6 the group is well established.
Div yield (%) 5.8 5.9 6.1
Highlights
RM966m of new launches in 2HFY4/17. Glomac is launching new
developments with a total GDV of RM966m in 2HFY17, with a focus
on landed residential and affordable townships. 62% of its new
Book value (RM/share) 1.50 launches will be made up of landed projects, the largest being
P/BV (x) 0.5 Saujana Perdana (Saujana Utama 4) with a GDV of RM267m.
ROE (%) 14.2 Serviced apartments and shop offices will also feature with the
launch of its Plaza Kelana Jaya Phase 4 development in 3QFY17,
Major Shareholders Bin Fateh D Mohamed Mansor (20.2%) with a GDV of RM363m.
Loong Tuck Fong (16.3%)
Mohamed Man FatehIskandar (16.0%) Healthy balance sheet. Glomac’s balance sheet has improved
significantly upon the completion of the sale of development land in
Free Float 30.9 Cheras earlier in the year for RM145.6m, with its net gearing
standing at 0.14x as at end-Oct 2016. This positions the group to
Price performance 3mth 6mth 12mth capitalise on new land banking opportunities.
Absolute (%) (8.6) (9.2) (16.5)

Strong earnings visibility. Glomac’s earnings visibility is anchored
Relative (%) (7.5) (8.5) (13.2) by its RM415m unbilled sales as at end-Oct 2016. Including the
RM966m new launches in 2HFY17, the group has in total RM6.8bn
of future GDV from upcoming developments, providing it with a
reliable future source of recurring income. Its largest project would be
the Lakeside Residences development in Puchong, an integrated
residential development on 200 acres of leasehold land with
remaining GDV of RM2.7bn.
Valuation
We value Glomac at RM0.79, based on a 55% discount to its RNAV.
Key risks to our call include slower recovery in consumer confidence
and higher property loan rejection rate.
Technical View
Glomac has been on downtrend since 2013. Share price of Glomac
likely to be supported at RM0.68. With no signs of reversal, the share
Source: AmInvestment Bank Bhd price of Glomac likely to stay at this level.
13

HEKTAR REIT
(HEKT MK EQUITY, HEKR.KL)
The friendly neighbourhood REIT

Company report
AmInvestment Bank
(03-2036 1290)

Fair Value RM1.64
52-week High/Low RM1.67/RM1.41 Hektar REIT invests in income-producing real estate primarily used
for retail. Hektar REIT’s portfolio currently consists of 5 quality
YE to Dec FY15 FY16F FY17F shopping centres situated in Subang Jaya, Melaka, Muar, Sungai
Revenue (RMmil) 125.8 129.4 133.2
Petani and Kulim with a combined value of RM1.09 billion. The
Core net profit (RMmil) 4.8 43.4 44.0 REIT’s cornerstone investor is Frasers Centrepoint Trust, which is
Core EPS (Sen) 1.2 11.4 11.6 part of the Fraser &Neave Group, headquartered in Singapore.
Core EPS growth (%) (90.5) (1.2) 1.2
PE (x) 132.8 12.8 12.7
Div yield (%) 6.6 7.0 7.0 Crown jewel –Subang Parade. Subang Parade is located in the
heart of Subang Jaya’s commercial centre. Subang Parade
continues to be Hektar REIT’s flagship mall. It is close to the train
station, LRT extension and main road links making it accessible to
shoppers. As at FY15, the mall contributed 44% to the total
Market Cap (RMmil) 633.0 portfolio NPI.
P/BV (x) 1.1 Expecting rental reversion in FY17F. For the year 2017, a total of
ROE (%) 0.4 152 tenancies will expire, representing approximately 38% of NLA
Net Gearing (%) 81.3 and 38% of monthly rental income. This provides an opportunity for
further rental revisions.
Major Shareholders Hektar Black SdnBhd (40.1%)
Frasers Centrepoint Trust (31.2%) Diversified portfolio mix. The portfolio tenancy mix is dominated by
AIA Bhd (4.1%)
department stores and supermarkets, which is led by Parkson, The
Free Float 25.9 Store and Giant, constitute approximately 36.3% of total portfolio
Avg Daily Value (RMmil) 0.2 NLA. Aside from Parkson, which contributed approximately 9.6%
monthly rental income, no other tenant contributed more than 6.0%.
Valuation
Absolute (%) 1.0 8.0 10.4
Relative (%) 0.6 6.4 9.6 We use dividend discount model (DDM). We arrive at a target price
of RM 1.64 based on (risk free rate = 4.2%, equity risk premium =
8.2%, beta = 0.7x, and terminal growth =1.5%). Our target price
implies a total return of 12.1%.
Technical View
Hektar REIT has fallen below its short term moving average of 20
days but well supported by its medium term moving average. The
uptrend of Hektar REIT remains intact, as it stays above its long
term moving average.
14

HUA YANG
(HYB MK Equity, HUAY.KL)
Affordable housing specialist

Company report
AmInvestment Bank
(03-2036 2025)

Fair Value RM1.33
52-week High/Low RM1.43/RM1.05 Hua Yang is one of Malaysia’s leading property developers in the
affordable housing segment. Founded in 1978, it was listed on the
YE to Mar FY16 FY17F FY18F Main Board of Bursa Malaysia in 2002. Throughout the years, Hua
Yang has stayed focused on its core strength of developing
Revenue (RMmil) 575.7 525.2 528.2 affordable residential properties.
Core EPS (Sen) 31.3 26.5 26.7 Highlights
Core EPS growth (%) (0.5) (15.3) 0.8
DPS (Sen) 3.8 8.0 8.0 Staying resilient. Hua Yang has stayed resilient despite the
PE (x) 3.6 4.2 4.2 slowdown in the property market, due to its leading expertise in the
Div yield (%) 3.4 7.2 7.2
affordable residential segment, which still sees a sustained demand. It
Stock and Financial Data achieved RM101.2m of new sales in 1HFY17, contributed mainly by its
ongoing projects launched in FY16 and earlier. It has set a sales target
Shares Outstanding (million) 352.0 of RM500m for FY17, supported by a combination of its upcoming new
Market Cap (RMmil) 390.7 launches and unsold properties from its ongoing projects, amounting
Book value (RM/share) 1.65 to around RM1bn.
P/BV (x) 0.7
ROE (%) 16.7 Expect a stronger 2HFY17. Hua Yang will see new launches worth a
total of RM721mil in FY17, with RM706mil coming in 2HFY17. This is
Major Shareholders Heng Holdings SdnBhd (31.1%) significantly higher than the RM277mil worth of projects launched in
AIA Bhd (4.7%) FY16. The projects with the highest gross development value (GDV)
CIMB Securities Singapore (3.3%) would be its Astetica Residences in Sri Kembangan, a mixed
development project with a total GDV of RM368mil, and Meritus
Free Float 58.4
Avg Daily Value (RMmil) 0.3 Residensi, its mixed development project in Mainland Penang, with a
GDV of RM220mil. It is also launching new phases of its townships of
Price performance 3mth 6mth 12mth Bandar Universiti Seri Iskandar, Perak (GDV RM100m) and Taman
PulaiHijauan, Johor (GDV RM18m) in 2HFY17.
Absolute (%) (19.6) (14.9) (17.8)
Relative (%) (18.5) (14.3) (14.5) Dividend policy to be maintained. Hua Yang’s dividend payout ratio
for FY16 stood at 12% compared to its historical 30% payout ratio. In
4QFY16, instead of declaring a final dividend, it proposed a 1-for-3
bonus issue. We view this as a positive move as it would better
position the company for new landbank in the current sector slowdown
once the opportunity arises. Nevertheless, management reiterated that
its dividend payout ratio will be restored to 30% in FY17 and
maintained from there.
Valuation
We value Hua Yang at RM1.33, based on a 45% discount to its RNAV.
Even during the current sector slowdown, we expect affordable
housing players to fare better due to sustained demand for their
products.
Technical View
Hua Yang has been on downtrend since 2013. Share price of Hua
Yang is oversold and forming consolidation base at RM1.06 levels. .
With no signs of reversal, share price of Hua Yang is likely to stay at
this level.
15

JCY INTERNATIONAL
(JCYH MK Equity, JCYI.KL)
High dividend yield offsets structural headwinds

Company report
AmInvestment Bank
(03-2036 2113)
Company Profile
Price RM0.50
Fair Value RM0.45 Established in 2005, JCY manufacture hard disk drive (HDD)
52-week High/Low RM0.80/RM0.48 components for global storage original equipment manufacturers
(OEM) like Western Digital and Seagate. JCY has production plants
YE to Sep FY16 FY17F FY18F in Malaysia, Thailand and China and produces base plates, top
covers, actuators and antidiscs used in HDD.
Revenue (RMmil) 1740.5 1,715.9 1,707.7
Core net profit (RMmil) (8.2) 89.2 78.4 Highlights
Core EPS (Sen) (0.4) 4.2 3.9
Core EPS growth (%) n/a n.a. (7.1) Facing structural headwinds. Global HDD sales have been on a
DPS (Sen) 6.8 5.0 5.0 structural downtrend since 2011, driven by shrinking worldwide PC
PE (x) (125.0) 12.3 13.2 shipment as consumers shift to smartphone and tablets, which
Div yield (%) 2.6 9.7 9.7 usually use solid state drives (SSD). Furthermore, adoption of cloud
storage and new technology like 3D NAND is undermining the
demand for HDD.
Growth in enterprise storage does not help. Despite growing
Book value (RM/share) 0.55 demand for HDD used in enterprise storage like servers, this is not
P/BV (x) 0.9 enough to offset the declining trend in PC and this segment
ROE (%) (0.7) accounts for less than a quarter of total HDD units sales.
Net Gearing (%) Net Cash Furthermore, rise in enterprise storage is slow as many enterprise
users migrate from onsite server to centralised cloud server to
Major Shareholders YKY Investments Ltd (73.6%)
improve cost efficiency.
CIMB Bank Bhd(2.8%)
Bank Of New York Mellon (1.4%)
Positive PC shipment data. Nevertheless, the pace of decline in
Free Float 24.7 HDD shipment has been slowing and the latest data in 3Q2016
Avg Daily Value (RMmil) 1.2 showed that HDD shipments fell 4.0% year-on-year, which was the
smallest decline in two years.
Automation to improve efficiency. JCY’s profit margin is volatile
Absolute (%) (3.4) (12.6) (36.4)
Relative (%) (2.3) (12.0) (33.0) due to its high operating leverage business model and cyclical
revenue trend. Hence, JCY has sought to improve its profitability
through automating its manufacturing process. This may help to
limit further downside to JCY’s margin, at least for the short-term.
High dividend yield is sustainable for next 2 years. Despite the

structural challenges, we expect JCY to sustain its dividend
payment of 5 sen per share in the next two FYs given its positive
free cash flow yield at 9.5% and EBITDA margin of 8%.
Valuation
The company is currently trading at 1x FY17F P/B and FY17F
dividend yield at 9.7%. Our fair value for JCY is RM0.45 derived
from Gordon Growth Model, based on FY17 DPS of 5 cent, 10%
discount rate and negative long term dividend growth rate of -1%.
Technical View
JCY is in a long-term downtrend as it is trading below 200MA and a
downtrend line. JCY has broken the previous support level of
RM0.50 and the next supports are at RM0.48 and RM0.40.
16

KAWAN FOOD
(KFB MK Equity, KWNF.KL)
Posturing for next leg of growth

Company report
AmInvestment Bank
(603-2036 2372)

Fair Value RM4.40
52-week High/Low RM3.96/RM2.97 Kawan Food (Kawan) is Malaysia’s leading frozen flour products
producer. It is a household name in the frozen sections of
YE to Dec FY15 FY16F FY17F supermarkets, producing the likes of roti paratha (roti canai),
chapatti and spring roll. Kawan derives more than 60% of its
Revenue (RMmil) 165.8 190 230 revenue from export sales to 20 over countries.
Core net profit (RMmil) 32.0 34 47
FD Core EPS (Sen) 16.4 12.8 17.6 Highlights
FD Core EPS growth (%) 42.3 6.3 38.2
DPS (Sen) 2.0 4.5 6.2 Expanded capacity signifies increased product offering.
PE (x) 23.2 30.0 21.8 Kawan’s new Pulau Indah factory triples production capacity
Div yield (%) 0.5 1.2 1.6
including a freezer warehouse capacity close to 6x larger than its
Stock and Financial Data existing warehouse. Aside from increased capacity, this allows
Kawan food to expand on its current stock keeping unit offering,
Shares Outstanding (million) 209.7 including items such as tortillas and Ready-To-Eat (RTE) meals.
Market Cap (RMmil) 1024.6 Against the backdrop of cost-effective and convenient alternative that
Book value (RM/share) 1.38 frozen food offers, we believe Kawan’s new supply and products
P/BV (x) 2.7
ROE (%) 13.2 should see ample demand.
Net Cash (%) 17.6
Geographically diversified non-discretionary earnings with
Major Shareholders Thiam Chai Gan (22.4%) positive USD exposure. Kawan’s frozen food business commands
Thiam Hock Gan (5.9%) resilient demand, with revenue registering positive growth YoY over
Sok Kay Kwan (4.6%) the past 10 years between 2005 and 2015 while growing at a CAGR
Free Float 55.9
of 20.1%. Meanwhile, its geographical customer base is well
Avg Daily Value (RMmil) 0.6 diversified, with exports spread between North America, Europe and
Asia. It is also a beneficiary of a stronger USD. Raw material
Price performance 3mth 6mth 12mth purchases like flour are in MYR against more than 60% of revenue
from exports, which are mostly priced in USD.
Absolute (%) 1.2 9.6 7.6
Relative (%) 2.2 10.2 11.0 Healthy balance sheet. Despite the extensive capital outlay in the
region of RM100m for its new Pulau Indah Factory, Kawan’s balance
sheet remains healthy. As of Sep 2016, it remained in net cash
position at 25 sen per share and gearing of 0.09x. Going forward,
Kawan’s net cash position combined with increased profitability is
expected to sufficiently fund higher working capital.
Valuation
Our fair value of MYR4.40 is based on an FY17F P/E of 25.0x. It is a
slight discount of 10% to the average of F&B peers in Malaysia.
While its peers are considerably bigger, Kawan offers greater
earnings growth going forward with an 2-year EPS CAGR of 21%.
Technical View
Kawan is in a long-term uptrend but unable to break above RM4.00
after two attempts in the past one year. The stock has been
consolidating between RM3.75 to RM4.00 in the past 3 months.
Given the benefit of long-term uptrend, Kawan could retest the High
at RM4.00 in the near-term and eventually break this long-term
resistance.
17

LONDON BISCUITS
(LBB MK Equity, LONB.KL)
Cheap valuations outweigh negatives

Company report
AmInvestment Bank
(603-2036 2372)
Company Profile
Price RM0.74
Fair Value RM0.96 London Biscuits Berhad produces and trades confectionery, its four
main categories are cakes, candy, potato chips and snacks.
Specifically, these products include corn snacks, dip cup chocolates,
YE to Jun FY16 FY17F FY18F cupcakes, layer cakes and Swiss rolls. London Biscuits holds a
19.7% stake in Khee San Berhad, a fellow public listed confectionery
Revenue (RMmil) 436.5 469 502
company, which brands include Fruit Plus.
Core EPS (Sen) 10.0 9.9 12.8 Highlights
Core EPS growth (%) 19.3 (1.0) 29.7
DPS (Sen) 0.0 0.0 0.0 Resilient demand but challenging environment curtails earnings
PE (x) 7.4 7.4 5.7
outlook. London Biscuit’s business commands resilient demand, with
Div yield (%) 0.0 0.0 0.0
revenue registering positive growth YoY over the 10 years to FY2016
Stock and Financial Data while growing at a CAGR of 15.0%. However, costly inputs and a
competitive environment have curtailed its gross margins resulting in
Shares Outstanding (million) 186.5 earnings growing 2.4% over the same period. The confectionery may
Market Cap (RMmil) 138.0 face further cost pressures with unfavourable outlook on two of its
P/BV (x) 0.3 main input costs, sugar and flour. Positively, we take comfort from its
ROE (%) 4.7 geographically well diversified customer base, with exports accounting
Net Gearing (%) 45.3 close to 50% of total revenue. Exports are well spread between South
East Asia, Asia Pacific and Middle East Region. Alongside being an
Major Shareholders MeileelanusaSdnBhd(21.5%)
RHB Asset Management SdnBhd(5.8%) exporter, London Biscuit is net beneficiary of a stronger USD too.
Employees Provident Fund (EPF) (3.6%)
Heavy capex spending likely to diminish. London Biscuit has
Free Float 69.1 consistently ploughed an average of 20% of revenue into capex over
Avg Daily Value (RMmil) 0.1 the past 10 years. The company has previously executed horizontal
acquisitions with confectionaries, Kuinos and Khee San while
expanding capacity. We gather existing utilisation rates for its various
Absolute (%) 1.4 (0.7) (10.8) production lines range between 40% and 70%, with the higher margin
Relative (%) 2.4 0.0 (7.5) potato chip product line running close to 50%. The underutilised
capacity abates the need for capex on heavy capacity addition in the
near term.
Highly levered but turnaround in progress. Due to its active M&A

and capacity addition in the past, its capex has weighed on London
Biscuit’s balance sheet. Net gearing stood at 43% in Sep 2016.
However, it has gradually improved from a 3-year high of 64%. We
expect gearing to further improve in tandem with lower capex
spending.
Valuation
Our fair value of MYR0.96 is based on a P/E peg of 8.5x CY17F,
which is the 3-year average of its historical PE trading band. Its highly
levered balance sheet and shrinking margins justifies its valuations
trading at a discount to its peers which typically command close to
Source: AmInvestment Bank Bhd 15x PER. Despite this, there is upside to its current valuations.
Technical View
In the bigger picture, the stock is making a descending triangle. The
stock could keep consolidating within the triangle and eventually make
a breakout on either direction. The next support is at RM0.65 if a
bearish breakout happens. If LONBISC breaks the trend line
resistance, it could rally to retest the high at RM0.93.
18

MATRIX CONCEPTS
(MCH MK Equity, MATR.KL)
Sustained growth momentum

Company report
AmInvestment Bank
(03-2036 2025)

Fair Value RM2.83
52-week High/Low RM2.62/RM2.09 Matrix Concepts (Matrix) is a property developer based in
Seremban, Negeri Sembilan. Founded in 1997, it was listed on the
Main Board of Bursa Malaysia in 2013. Its principal business
activities comprise property development, construction, education
Revenue (RMmil) 700.9 775.5 816.9 and hospitality. Mainly focused on Negeri Sembilan, Matrix has also
Core net profit (RMmil) 213.2 216.3 234.8 spread its reach to other areas in Malaysia namely Johor and Klang
Core EPS (Sen) 42.6 38.1 41.1
Valley, as well as overseas in Australia.
Core EPS growth (%) 24.3 (10.6) 7.9
PE (x) 5.7 6.4 5.9
Div yield (%) 6.2 6.2 6.6 Strong sales sustained. Matrix continues to record strong sales in
FY17. As of 15 Nov 2016, it had achieved RM700m of new sales for
FY17, and was on track to hit its full year sales target of RM1bn. This
was driven mainly by its affordably-priced properties in Bandar Sri
Market Cap (RMmil) 1384.6 Sendayan (BSS) township project. Its recent launches in BSS, with
Book value (RM/share) 1.62 pricing around RM600k, have recorded encouraging sales. Overall,
P/BV (x) 1.5 the group’s average take-up rate stands at 65.5%.
ROE (%) n/a
Net Gearing (%) 9.4 Attractive dividends. Matrix has consistently maintained high
dividend payouts since listing. For 1HFY17, it declared in total 6.50
Major Shareholders Tian Hock Lee (19.9%)
Shining Term SdnBhd(14.8%) sen of dividend per share, translating into a 37% payout ratio. We
AmbangKuasa (4.6%) expect the company to maintain its 40% payout ratio policy, which
would lead translate into a highly attractive 6.7% yield in FY3/18.
Free Float 39.9
Avg Daily Value (RMmil) 0.8 HSR a potential catalyst. We expect the upcoming 350km KL-
Singapore high speed railway (HSR) with 8 stations to benefit Matrix
over the long run. One of the stations will be located in Seremban,
Absolute (%) (5.7) 1.4 3.1 approximately 7km form Matrix’s land. Hence, the HSR will enhance
Relative (%) (4.7) 2.0 6.5 land value around the area and benefit Matrix, which has a remaining
1,200 acres of landbank in BSS with future GDV of RM5bn. In total,
Matrix has planned projects with a total GDV of RM9.73bn awaiting
development until 2022.
Valuation
We value Matrix at RM2.83, based on a 20% discount to its RNAV.

Matrix is well-positioned to capitalise on the expected increase in
demand for affordable housing in the next few years.
Technical View
Matrix Concept has broken down its upward channel, mid and long
term MA. Nevertheless, its share price is still supported by its short
term MA. At best, share price of Matrix Concept may be range bound
to downward bias.
19

MKH
(MKH MK Equity, METR.KL)
Anchored by property and plantations

Company report
AmInvestment Bank
(03-2036 2025)
Price RM2.87
MKH Berhad (formerly known as Metro Kajang Holdings Berhad)
was founded in 1979 was listed on Bursa Malaysia in 1995. Mainly
YE to Sep FY16 FY17F FY18F a property developer, the group has diversified into oil palm
plantation in Kalimantan, Indonesia, while being involved in
Revenue (RMmil) 1275.1 1396.4 1415.7
Core net profit (RMmil) 205.1 176.8 182.3 property investment, property management, construction, trading
Core EPS (Sen) 48.9 41.9 43.2 and furniture manufacturing activities.
Core EPS growth (%) 135.9 (14.3) 30.0
PE (x) 5.9 6.8 6.6
Div yield (%) 2.4 2.8 2.8 Strong sales sustained. Amid the overall market slowdown, MKH
has managed to maintain its FY16 new sales above at a satisfactory
Stock and Financial Data level. It registered RM776.1m of new sales in FY16, mainly due to
encouraging response to its residential developments launched in
Shares Outstanding (million) 419.4 Kajang and Greater Klang Valley with a greater focus on affordable
Book value (RM/share) 3.05 housing. Its unbilled sales as at end-Sep 2016 stood at RM800.5m,
P/BV (x) 0.9 which provides strong earnings visibility for FY17.
ROE (%) 17.2
Net Gearing (%) 40.8 Focusing of affordable housing. MKH is launching new projects
with a total GDV of RM1.6bn in FY9/17, focusing on affordable
Major Shareholders Chen Choy & Sons Realty (41.4%) residential projects, with 73% of the new launches located within
Public Bank Group (9.8%)
KooiChiew Chen (2.0%)
Greater KL. With a strong track record in the Kajang / Semenyih
area, we expect MKH’s projects to benefit from the completion of the
Free Float 48.4 MRT Sungain Buloh – Kajang Line in 2017. Beyond FY17, MKH’s
Avg Daily Value (RMmil) 0.9 future projects have in total potential new GDV of RM9bn, providing it
Price performance 3mth 6mth 12mth with a sustained income stream for up to the next 8 years.
Much improved plantation division. MKH owns 18,388 hectares of
Absolute (%) 0.3 18.5 22.5
Relative (%) 1.4 19.2 25.9 “Hak Guna Usaha” in East Kalimantan for oil palm plantation. This
division recorded a much improved performance in FY9/16. Although
revenue inched down 2% YoY due to lower CPO sales volume, core
pre-tax profit improved 219% YoY to RM24.9m. This was mainly due
to improvement in average CPO and palm kernel prices, effective
cost control measures and lower interest expenses.
Valuation
We have an SOP-based fair value of RM3.27 for MKH. MKH’s
earnings visibility is anchored by its twin drivers of property and
plantations divisions.
Technical View
MKH Berhad is about to test its resistance at RM3 after three

unsuccessful attempts to break out. While its uptrend is still intact,
MKH may gather its momentum to trade at range bound levels at
Source: AmInvestment Bank Bhd RM2.87 to RM3.00.
20

MRCB-QUILL REIT
(MQREIT MK EQUITY, MQRE.KL)
The Sentral Office Giant

Company report
AmInvestment Bank
(03-2036 1290)

Fair Value RM1.35
52-week High/Low RM1.30/RM0.95 MQREIT’s portfolio is occupied by high-quality tenants, consisting of
a mix of global MNCs, local companies and GLCs and backed by
two reputable sponsors - MRCB and Quill Group.
Highlights
Revenue (RMmil) 115.2 123.9 174.9
Core net profit (RMmil) 60.7 56.0 83.0 Occupancy above industry average.MQREIT was first listed in Jan
Core EPS (Sen) 10.2 8.5 7.8
2007 with four properties worth a combined total of RM280m. Its
Core EPS growth (%) (1.5) (6.9) (8.2)
DPS (Sen) 8.5 8.0 7.8 portfolio has since grown to 11 properties (including Menara Shell)
PE (x) 12.0 16.3 18.9 that are strategically located in the Klang Valley and Cyberjaya.
Div yield (%) 7.0 6.3 6.1 MQREIT’s properties havemaintained occupancy rates of more than
90% (vs. industry average of about 81%) over the past five years.
Blended mix of tenants. MQREIT’s portfolio is mostly occupied by
Shares Outstanding (million) 661.4 quality tenants, which comprise a mix of multi-national companies
(MNCs), government-linked companies (GLCs) as well as local
P/BV (x) 0.9 companies. MQREIT has a relatively equal mix of single-tenanted
ROE (%) 7.8 properties (c.45% of total NLA) and multi-tenanted properties (c.55%
Net Gearing (%) 71.3 of total NLA).
Major Shareholders MRCB (31.2%) Fixed borrowings. 100% of the group’s borrowings are fixed.
Capitaland Limited (17.7%) Hence, MQREIT is not subjected to any fluctuations in interest rates.
Quill Land Sdn Bhd (7.4%)
Valuation
Free Float 39.6
Avg Daily Value (RMmil) 0.4 We use dividend discount model (DDM) methodology as our primary
valuation method. We arrive at a target price of RM1.35 based on
risk free rate of 4.2%, cost of equity of 8.0%, beta of 0.7x, and
Absolute (%) 0.8 11.2 25.5 terminal growth of 2.0%. Our target price implies a total return of
Relative (%) 1.8 11.8 28.8 12.3%.
Technical View
MQREIT is in a long-term uptrend and mid-term sideway. The stock is
testing the resistance of RM1.30 with a significant surge in volume. If
this resistance is broken, the next resistance is at RM1.35. Otherwise,
the stock should remain range- bound in between RM1.22 and
RM1.30.
21

OLDTOWN
(OTB MK Equity, OLDT.KL)
Successful brew
Company report
AmInvestment Bank
(03-2036 2372)

Fair Value RM2.38
52-week High/Low RM2.03/RM1.33 OldTown’s rich and illustrious history is traced back to 1999, formulating
its own 3-in-1 instant white coffee. In the following year, OldTown’s
YE to Mar FY16 FY17F FY18F FMCG was imported to Singapore. Currently, OldTown commands the
largest market share within the white coffee sub segment in all its 3 key
Revenue (RMmil) 393.4 414.4 466.4 markets. This are Malaysia, Singapore and Hong Kong. Meanwhile not
Core net profit (RMmil) 52.3 59.8 66.5 contented with its success, OldTown expanded vertically into the food
Core EPS (Sen) 12.0 13.2 14.7
Core EPS growth (%) 9.1 8.1 11.2
services sector in 2005. Fast forward to 1QFY17, OldTown has a store
DPS (Sen) 6.0 6.6 7.4 count of 240 spanning across 4 countries.
PE (x) 15.8 14.1 12.7
Stock and Financial Data Opportunities abound in China. China’s coffee consumption of per
capita trails that of Malaysia by 35x while growing 15.5% CAGR between
Shares Outstanding (million) 451.5 2004 and2014. This bodes well for OldTown, including the fact that
Market Cap (RMmil) 857.8 instant coffee makes up 99% of total retail sales, according to
Book value (RM/share) 0.81 Euromonitor. The coffee producer is also buoyed over the sales
P/BV (x) 2.4
distribution switch through eCommerce platforms. We believe it
ROE (%) 15.7
Net Cash (%) 45.2 overcomes issues that previously plagued OldTown: 1) the virtual
platform overcomes physical limitations by leveraging on China’s already
Major Shareholders Old Town International Sdn Bhd (43.7%) established ecommerce distribution network and; 2) elimination of
Franklin Resources (10.5%)
imitated OldTown products restores consumer confidence, which was
Mawer Investment Management (9.5%)
undermined in the past.
Free Float 46.2
Avg Daily Value (RMmil) 0.9 Scale drives margin expansion. OldTown has seen its FMCG segment
PBT margins expand over the past 5 years. It is the result of both
Price performance 3mth 6mth 12mth economies of scale and management’s unrelenting initiatives to improve
profitability. Keeping in mind, revenue could more than double against a
Absolute (%) (4.5) 2.6 25.6
Relative (%) (3.5) 3.2 29.0 marginally higher OH expense base given utilisation rate at its FMCG
production remains at a low 42%.
F&B segment turnaround. We anticipate for its F&B segment to have
bottomed out in FY17. This comes off the back of tough F&B operating
conditions in FY15-16. The recovery alongside broad consumer
sentiment and favourable industry dynamics should prove positive for
OldTown’s F&B segment.
Valuation
Our TP of MYR2.38 is pegged to a FY2018 PER of 16.5x, which in turn
is pegged to a 25% discount to the average of its local FMCG peers. Its
peers are relatively larger and established but OldTown offers
diversified geography earnings base and greater earnings growth. The
stock offers an estimated dividend yield of 3.5% as well.
Technical View
OldTown remains in a long-term uptrend as the stock stayed above
200MA. Nevertheless, it is retracing from its previous up-move which
started in June 2016 and has found support at RM1.85 level. If this level
is broken, the next support is at RM1.70. On the other hand, if the
downtrend line is broken, the stock could reverse into an uptrend and
retest the recent high at RM2.07.
22

PECCA GROUP
(PECCA MK Equity, PECC.KL)
Market leader for car seat covers

Company report
AmInvestment Bank
(03-2036 2304)
Price RM1.62
Company Profile
Fair Value RM1.70
52-week High/Low RM2.04/RM1.47 Pecca Group Bhd (Pecca) makes car seat covers and serves three
different segments within the value chain of the automotive
YE to Jun FY16 FY17F FY18F industry: the Original Equipment Manufacturer (OEM), Pre-Delivery
Inspection (PDI) and Replacement Equipment Manufacturer (REM)
Revenue (RMmil) 126.3 130.1 133.9 segments. It is the dominant player in its sector with a 68% market
Core EPS (Sen) 9.7 9.9 10.3
share in 2015, having built strong relationships with its clients since
Core EPS growth (%) (24.5) 0.03 0.03 its first project from Proton in 2004. Pecca listed in April 2016 and is
DPS (Sen) 2.0 17.3 17.8 led by Datuk Teoh Hwa Cheng, who has 25 years in the leather
PE (x) 16.8 11 10 goods industry.
Div yield (%) 1.2 3.4 4.8
Highlights
Market leader. It is the dominant player in its sector, which is limited
Shares Outstanding (million) 149.4 to the provision of leather upholstery to locally-assembled passenger
Market Cap (RMmil) 304.6 cars.
P/BV (x) 2.9 Strong relationships with clients. Pecca serves the two national
ROE (%) n/a automakers which make up half of Malaysia's annual TIV, in addition
Net Cash (%) (38.9)
to Mitsubishi, Nissan, Hyundai and Toyota. About two thirds of its
Major Shareholders MRZ (45.6%) FY2015 revenue was derived from customers which it has had for at
RHB Asset Management SdnBhd (6.5%) least 6 years. These bonds are paramount in an industry where
Hwa Cheng Teoh (5.5%) barriers of entry are reducing due to fewer tariffs and non-tariff
Free Float 86.3 obstacles, and where there are no long-term contracts.
Diversified revenue sources. Pecca's core business is in the
Price performance 3mth 6mth 12mth styling, manufacturing, distribution and installation of leather
upholstery for car seat covers to the OEM, PDI and REM segments.
Absolute (%) (15.9) 0.6 (3.0) It also earns about 10% of revenue from supplying leather cut pieces
Relative (%) (14.9) 1.3 0.4
to existing clients in the OEM segment, next to earning marginal
income from the supply of car door trim covers, covers for car
accessories and the service of sewing cut pieces supplied by clients.
Valuation
We value Pecca at RM1.70 based on FY17F PE of 11x at par to
the average for its peers.
Technical View
Pecca has been on a downtrend since November 2016 and is
currently hovering at the strong support level of RM1.55. It is likely to
be stay on range bound levels – RM1.55 to RM1.66.
23

PINTARAS JAYA
(PINT MK Equity, PINT.KL)
A Piling Specialist Contractor Bracing For Busy Days

Company report
AmInvestment Bank
(603-2036 2293)
Price RM3.52
Pintaras Jaya is one of only a handful of large piling/foundation
specialist contractors in Malaysia. First starting as a private
YE to Jun FY16 FY17F FY18F company in 1989, it was listed on the now-defunct Second Board in
1994 and its listing was subsequently transferred to the Main Board
Revenue (RMmil) 136.9 191.1 229.4
Core net profit (RMmil) 17.8 42.2 50.6 in 1998. At the helm of the company is founder, chairman and
Core EPS (Sen) 10.9 25.7 30.8 managing director Dr Chiu Hong Keong. An engineer by profession,
Core EPS growth (%) (66.1) 135.8 19.8 he has more than three decades of experience in the construction
DPS (Sen) 20.0 20.0 20.0
industry.
PE (x) 32.3 13.7 11.4
Stock and Financial Data Strong prospects. The prospects for the piling/foundation sector are
strong underpinned by large-scale infrastructure projects (MRT2,
Shares Outstanding (million) 163.5 Pan Borneo highway, SUKE, DASH, LRT3, etc), as well as
Book value (RM/share) 2.12 affordable housing (particularly, mid-priced and high-rise residential
P/BV (x) 1.7 projects in the urban areas). Typically, piling/foundation works make
ROE (%) 7.0 up about 10-15% of total construction project value.
Net Gearing (%) Net cash
Competition to ease. Pintaras Jaya's focus is largely on
Major Shareholders PintarasBinaSdnBhd (36.5%) piling/foundation works for high-rise property projects that command
Hong Keong Chiu (14.5%)
YokKeeKhoo (6.8%)
better margins versus those for infrastructure projects. With
piling/foundation capacity being soaked up by infrastructure projects,
Free Float 25.7 there is reduced competition for piling/foundation works for high-rise
Avg Daily Value (RMmil) 0.26 property projects in the market - which is positive to Pintaras Jaya.
Price performance 3mth 6mth 12mth Good earnings visibility. Pintaras Jaya's earnings visibility is good.
Its RM130mil outstanding orderbook, coupled with potential job wins
Absolute (%) 2.32 6.82 12.94
Relative (%) 3.35 7.47 16.30 against a backdrop of a buoyant local construction sector, should
keep it busy over the medium term.
Valuation
We value Pintaras Jaya at RM4.00 based on 13x FY18F EPS, at a
slight premium to our 1-year forward target PE of 10-12x for small-
cap construction stocks, to reflect a relatively less competitive piling
segment vis-à-vis general contracting.
Technical View
Pintaras is on range bound with resistance level at RM3.71. Pintaras
has formed higher-low and is likely to form triangular breakout in
2017.
24

POWER ROOT
(PWRT MK EQUITY, POWE.KL)
Middle East coffee boom

Company report
AmInvestment Bank
(03-2036 2240)

Fair Value RM2.62
52-week High/Low RM2.68/RM1.85 Power Root is Malaysia’s second largest coffee producer by market
share, only behind F&B giant Nestle. Its storied history traces back
to 1999, offering energy drinks infused with herbs indigenous to
YE to March FY16 FY17F FY18F
Malaysia. A household name with Tongkat Ali, Power Root’s
Revenue (RMmil) 367.5 399.6 435.9 successful marketing team achieved another success with the
Core net profit (RMmil) 43.4 46.5 54.0 launch of the Ah Huat White Coffee brand in 2012.
Core EPS (Sen) 14.6 15.6 18.1
Core EPS growth (%) n/a 6.2 16.1 Highlights
DPS (Sen) 11.0 11.7 13.6
PE (x) 14.2 14.6 12.6 More than coffee. Over the years, Power Root has thrived in the
Div yield (%) 5.3 5.6 6.5 rather competitive Malaysian coffee beverage, with an established
position as the second largest coffee producer as of Sep 2016.
However, its comprehensive 50-odd Stock Keeping Unit (SKU)
beverage portfolio includes established localised energy drinks as
well. Another strength lies with its ability to appeal to distinct
Book value (RM/share) 0.81 customer segments. Power Root has successfully established the
P/BV (x) 2.5 Alicafe and Ah Huat brands, attracting a wider customer base as a
ROE (%) 14.8 result.
Net Cash(%) 25.2
Powering MENA production. Power Root is currently reaping the
Major Shareholders Chee Yen Low(20.0%)
benefits of the venture into the Middle East and North African
Say Swee How(19.6%)
Fuei Boon Wong (18.8%) (MENA) region more than 10 years ago. It is Power Root’s main
export market, with overall export sales constituting circa 40% of total
Free Float 26.5 revenue as of end FY-16. We believe as Power Root grows its
MENA presence, it would justify the completion of its foreign
Price performance 3mth 6mth 12mth production facility in the region.
Absolute (%) 1.2 (20.1) (21.6)

Healthy balance sheet. Power Root’s balance sheet is well
Relative (%) 2.2 (19.4) (18.3) supportive of an expansion. As of Sep 2016, it remained in net cash
position of RM57m or 18 sen per share. Its gearing of 5.0% allows
flexibility for the company to lever up, in support of its potential
overseas production facility expansion.
Valuation
Our fair value of MYR2.62 is based on a P/E peg of 14.5x FY18F,

which is the 3-year average of its historical PE trading band. The
Technical View
Power Root is supported by its short and medium term moving
average of 20 and 100 days. It is likely to trade on range bound
between RM1.99 – RM2.15. Power Root may need to break its
multiple resistance level at RM2.15 and 200 moving average to divert
into an uptrend.
25

PRESTARIANG
(PRES MK EQUITY, PSTG.KL)
Exciting projects in the pipeline

Company report
AmInvestment Bank
(03-2036 2291)

Fair Value RM2.71
52-week High/Low RM3.22/RM1.68 Prestariang is the largest information communications technology
(ICT) training and certification provider in Malaysia. A shariah-
YE to Dec FY15 FY16F FY17F compliant company, it is also involved in talent training and
certifications, talent acquisition and management, software licence
Revenue (RMmil) 115.5 149.1 284.8 distribution and management services, software asset management as
well as technology services in border security. Some of the big names
Core EPS (Sen) 3.5 2.2 11.8
Core EPS growth (%) (18.5) (38.5) 448.6 Prestariang partners with are Microsoft, Autodesk (developer of
DPS (Sen) 3.8 3.3 6.0 AutoCAD), IBM and Oracle.
PE (x) 58.4 96.7 17.6
Stock and Financial Data SKIN to beef up future revenue streams. The government recently
approved Prestariang's proposal to implement Sistem Kawalan &
Shares Outstanding (million) 482.7 Imigresen Nasional (SKIN) with the objective to enhance national border
Market Cap (RMmil) 1004.0 security. The 15-year government-led border transformation programme
Book value (RM/share) 0.34 is potentially worth RM3.5bil, with an average annual payment of
P/BV (x) 6.2
ROE (%) 6.3 RM295mil commencing on the full commissioning of the system (in year
Net Cash (%) 73.9 4). This represents 2.5x-3.7x the company's revenue of RM80-120mil in
the past 3 years.
Major Shareholders Ekohati (20.7%)
Kumpulan Wang Persaraan (11.9%) ESBLA in the offing. Prestariang has introduced an initiative that
AIA Bhd (9.5%) combines digital technology with traditional teaching and learning aids
Free Float 43.1 to provide induction training and mentoring of teachers for science,
Avg Daily Value (RMmil) 2.0 technology, engineering and mathematics. We understand that
Prestariang is currently awaiting a letter of award from the Ministry of
Price performance 3mth 6mth 12mth Education. The project is expected to contribute at least RM50mil in
Absolute (%) (7.2) 5.3 (29.0)
2017F.
Relative (%) (6.2) 5.9 (25.6)
Polytechnic Premier 2.0. Prestariang is looking to introduce
Polytechnic Premier 2.0 to provide IT equipment to two polytechnic
colleges in Besut and Bagan Datoh. The project is expected to have a
concession period of 15 years. While we are positive that it can provide
further long term earnings visibility, management is currently still in the
midst of studying the project's feasibility. For now, we have not factored
in earnings contributions from this area.
Valuation
We value Prestariang at RM2.71 based on 23x FY17F EPS. The PE of

23x represents the sector average.
Technical View
Prestariang remains range-bound between RM2.03 – RM2.52 levels
after it had broken multiple moving average lines. Prestariang may need
Source: AmInvestment Bank Bhd to convincingly break its long term 200 moving average to signal an
uptrend on the stock.
26

PROTASCO
(PRTA MK Equity, PRTO.KL)
Recurring Incomes From Road Maintenance

Concessions
Company report
AmInvestment Bank
(03-2036 2293)
Price RM1.11
A contractor specialising in road maintenance (based on
concessions and long-term contracts) listed on the Main Board in
YE to Dec FY15 FY16F FY17F 2003, Protasco expanded into property development in recent
years, anchored by the redevelopment of the 100-acre land in
Revenue (RMmil) 1,305.0 1,101.5 1,211.6
Bangithat houses the campus of its Infrastructure University Kuala
Core EPS (Sen) 15.9 13.3 14.6 Lumpur (IUKL). For 9MFY16, road maintenance contributed 45% of
Core EPS growth (%) n/a (16.4) 9.8 total PBT, followed by toll conventional construction (26%), property
DPS (Sen) 10.4 7.0 7.0 development (14%) and others (15%). At the helm of the company
PE (x) 7.0 8.3 7.6
is executive vice chairman, group managing director and controlling
Div yield (%) 9.4 6.3 6.3
shareholder Dato Sri Ir Chong Ket Pen.
Highlights
Shares Outstanding (million) 419.9 Recurring road maintenance profits. These are underpinned by:
Market Cap (RMmil) 483.6 (1) a 51%-owned 10-year concession expiring Feb 2026 for the
P/BV (x) 1.2 maintenance of federal roads in Selangor, Pahang, Kelantan and
ROE (%) 16.1 Terengganu (estimated outstanding value of RM3.9bil); (2) a wholly-
Net Gearing (%) 19.9 owned 15-year concession expiring Feb 2018 for the maintenance of
federal roads in Sibu, Bintulu and Mukah divisions in Sarawak
Major Shareholders Ket Pen Chong (22.9%)
Penmacorp Sdn Bhd (9.2%) (estimated outstanding value of RM148mil); (3) a 51%-owned 7-year
Kingdom Seekers (4.5%) contract expiring Dec 2019 for the maintenance of state roads in
Perak (estimated outstanding value of RM217mil); and (4) a 60%-
Free Float 50.5
owned 10-year contract expiring Aug 2026 for the maintenance of
state roads in Kelantan (estimated outstanding value of RM129mil).
A sizeable conventional construction orderbook. Apart from
Absolute (%) (8.7) (12.6) (8.6) recurring road maintenance profits, Protasco’s near-term earnings
Relative (%) (7.6) (11.9) (5.3) will also be well supported by a sizeable outstanding conventional
construction orderbook of RM742mil, which will keep it busy for at
least two years.
Strategic location of De Centrum. While Protasco’s RM10bil De

Centrum City integrated property project in Bangi is not spared the
downturn in the local property market, its long-term potential remains
bright given its proximity (about 30-minute drive) to both Kuala
Lumpur city centre and federal administrative centre Putrajaya.
Valuation
We value Protasco at RM1.46 based on 10x FY17F EPS, in line

with our benchmark 1-year forward target P/E of 10-12x for small-
cap construction stocks.
Technical View
Source: AmInvestment Bank Bhd Protasco broke its multiple support line in November of RM1.60 prior
to ex bonus issue of one bonus issue share for every four existing
shares on December 2016. Since then, the stock price was
supported at RM1.19. Since the breakdown from the new support
level of RM1.19 – 20 MA, the support level has turned into
resistance.
27

SASBADI HOLDINGS
(SASB MK Equity, SAHO.KL)
Educational play
Company report
AmInvestment Bank
(03-2036 2372)
Price RM1.41
Malaysia’s leading educational publisher. It is a household name for
national school curriculum-based primary and secondary students.
YE to Aug FY16 FY17F FY18F
Highlights
Revenue (RMmil) 92.7 115.3 150.7
Core net profit (RMmil) 16.7 23.9 34.9 Ace in the hole. Sasbadi recently introduced a mobile platform
Core EPS (Sen) 6.2 8.6 12.5 based learning platform: iLearn Ace. Aside from digitising its physical
Core EPS growth (%) 2.6 43.3 45.3 content, it offers interactive learning to students as well including
DPS (Sen) 1.3 4.3 6.3
performance tracking, game simulation infused with educational
PE (x) 22.8 18.0 12.4
Div yield (%) 0.9 2.8 4.1 material and video lessons. Given that the number of primary and
secondary school children is close to 5mil students against an annual
Stock and Financial Data subscription fee of MYR350 all-content access, it only requires a
penetration rate of 5% to double Sasbadi’s FY16F’ MYR93m
Shares Outstanding (million) 279.4 revenue.
Book value (RM/share) 0.53 M&A supplements growth. Since its IPO in 2014, Sasbadi has
P/BV (x) 2.7
been active on the M&A front. Over the brief period since its IPO, it
ROE (%) 13.2
Net Cash (%) 3.8 has executed 4 various M&As to grow further. 3 of which were
publishers beyond Sasbadi’s areas of expertise and Distinct Motion
Major Shareholders King Hui Law (18.3%) Group - a learning robotics technology company. Going forward, it
KaryaKencanaSdnBhd(18.2%)
Swee Hang Lee (8.5%)
leaves private publishing companies ripe for an M&A with publicly-
listed Sasbadi.
Free Float 41.5
Avg Daily Value (RMmil) 0.8 Sturdy balance sheet. Despite the active M&A and consequent
capital outlay, Sasbadi’s balance sheet remains healthy. As of Sep
Price performance 3mth 6mth 12mth 2016, it remained in a cash position of RM26mil and a gearing of
0.13x. It leaves Sasbadi considerable financial flexibility to for further
Absolute (%) 31.8 14.6 15.1
Relative (%) 32.8 15.3 18.5 M&As.
Valuation
Our fair value of MYR1.90 is based on a P/E peg of 19.5x CY17F,
stock offers an estimated dividend yield of 2.8%-4.1% for FY17F-
FY18F.
Technical View
The stock is in consolidation after making a strong up-move since
Oct 16. It is now supported by 50MA average at RM1.35. A near-
term bullish breakout above RM1.45 is likely. If this happens, the
stock could make another measured move of RM0.50 to RM1.85.
28

SYF RESOURCES
(SYF MK Equity, SYFR.KL)
Profit Expansion Underway

Company report
AmInvestment Bank
(03-2036 2240)
Company Profile
Price RM0.56
Fair Value RM0.72 SYF Resources (SYF) manufactures particle board and medium-density
52-week High/Low RM0.75/RM0.50 fibreboard (MDF), rubberwood furniture and has an upstream timber
processing unit. The company is also engaged in property development.
YE to Jul FY16 FY17F FY18F SYF is helmed by Dato’ Sri Ng Ah Chai, who is the group’s executive
chairman and CEO. Dato’ Sri Ng is also the co-founder of Seng Yip
Revenue (RMmil) 453.2 534.9 594.5 Furniture Sdn Bhd and a major shareholder of Kiara Susila Sdn Bhd -
which jointly develops several property development projects with SYF.
Core basic EPS (Sen) 6.2 7.4 8.8
Core EPS growth (%) 55.2 18.1 18.7 Dato’ Chee Hong Leong is also part of the management team. He
DPS (Sen) 0.0 0.0 0.0 serves as a non-independent executive director and is the chairman of
PE (x) 9.0 7.6 6.4 Kiara Susila.
Div yield (%) 0.0 0.0 0.0
Highlights
Board division in for rapid growth. Starting off with just a particle board
Shares Outstanding (million) 602.1 plant Gemas, SYF has started operations of its MDF plant in Rompin
Market Cap (RMmil) 343.4 earlier last month, where management expects plant utilisation to hit over
Book value (RM/share) 0.48 80% by 1H2017. SYF’s third plant (particle board) is expected to be up
P/BV (x) 1.2
ROE (%) 14.5 and running by mid-2017 and plans are already hatched to bring total
Net Gearing (%) 39.5 board capacity to 380,000 cubic metres by mid-2019. With the expansion,
earnings contribution of the boards division is expected to climb to 13%%
Major Shareholders Ah Chai Ng(51.4%)
in FY17F and to over 20% in FY18F (from approx. 7% in FY16). In our
Hong Leong Chee(11.0%)
Insas Credit & Leasing SdnBhd (9.0%) view, the recent acquisition of a controlling stake in Mieco Chipboard Bhd
(Mieco) by SYF’s major shareholder, Dato' Sri Ng Ah Chai could
Free Float 25.1 potentially bring about capacity synergies or a restructuring that could
lead to further capacity gain for SYF.
Price performance 3mth 6mth 12mth We like SYF’s vertically-integrated positioning which includes an upstream
Absolute (%) 2.8 (1.8) (11.1)
division, which would give it better control of margins by keeping input
Relative (%) 3.8 (1.1) (7.7) costs low. Its exposure across upstream, boards and furniture segments
would diversify earnings risk in the event there is a negative turn in market
dynamics for any of the segments.
More in store for property division. SYF property development at
Bandar Sungai Long and Semenyih are strategic catchment areas due to
its proximity to Universiti Tunku Abdul Rahman (UTAR) and University of
Nottingham local campuses respectively. While its current unbilled sales
and remaining GDV may only help anchor property earnings for the next
few years, we gather that SYF is already looking at potential new JV
developments, which could add a future GDV of over RM1bn, for the next
five years. Future launches would continue to harness the same strategy
of building in strategic locations, which would serve as hotbed for student
owners and buyers interested in renting out properties to students.
Valuation
We value SYF at a fully-diluted TP of RM0.72, valuing its manufacturing
division at 10x CY17F EPS and its property division based on a 30%
discount to RNAV.
Technical View
SYF Resources had triangular breakout at the end of December 2016 and
managed to break multiple levels of resistance levels. SYF has crossed its
short, medium and long term moving average to show signs of
bullishness.
29

TAMBUN INDAH
(TILB MK Equity, TAMB.KL)
Benefitting from a booming mainland Penang

Company report
AmInvestment Bank
(03-2036 2025)
Price RM1.39
Tambun Indah Land (Tambun) is a property developer based in
Mainland Penang. Listed on the Main Board of Bursa Malaysia in
YE to Dec FY15 FY16F FY17F 2011, its flagship Pearl City township project is located at Seberang
Perai Selatan, 15 minutes away from Batu Kawan and Penang
Revenue (RMmil) 367.7 379.4 386.5
Core net profit (RMmil) 101.1 98.6 99.3 Second Bridge.
Core EPS (Sen) 23.9 23.0 23.1
Core EPS growth (%) (5.1) (3.8) 0.4 Highlights
DPS (Sen) 9.0 9.2 9.3
Sales momentum sustained. Tambun recorded new sales of
PE (x) 5.8 6.0 6.0
Div yield (%) 6.5 6.6 6.7 RM211.4mil for 9MFY16, enjoying on average 81.9% take up rate for
all its ongoing projects, with a total GDV of RM1.7bn. Its total unbilled
Stock and Financial Data sales stood at RM259.6m, which should contribute positively to the
group’s earnings for the next three years. Its Pearl City flagship
Shares Outstanding (million) 424.1 township project continues to be the main driver to the group's sales,
Book value (RM/share) 1.20 making up 70% its total unbilled sales.
P/BV (x) 1.2
Net cash position. As at end-3Q16, Tambun’s balance sheet
ROE (%) 22.9
Net Gearing (%) Net cash remained healthy with a net cash position. This positions it well for
future landbanking and for it to tap into any opportunity that the
Major Shareholders Siram Permai (33.3%) current sector slowdown presents. We also expect this to enable it to
Amal Pintas (8.5%)
Kiak Seng Teh (5.9%)
sustain its historical dividend payout ratio of between 40% and 60%
in the upcoming years.
Free Float 30.3
Avg Daily Value (RMmil) 0.4 Strong earnings visibility. Tambun currently has 405 acres of
remaining landbank, with an estimated RM3.1bil of future GDV to be
Price performance 3mth 6mth 12mth launched until 2022. It is also a good proxy to the rapid development
in Mainland Penang and the Second Penang Bridge’s economic
Absolute (%) (5.4) 3.5 5.1
Relative (%) (4.4) 4.1 8.5 impact, through its Pearl City township. We expect the demand for
residential properties at Mainland Penang to remain resilient due to a
sustained economic growth in Penang and the relative affordability of
properties on the mainland compared to the island.
Valuation
We value Tambun at RM1.68, based on 30% discount to its RNAV. It

benefits from the rising land prices in Mainland Penang, and is well-
positioned capitalise on higher demand for affordable residential
properties in the region.
Technical View
Tambun Indah has broken down its mid and long term MA.
Nevertheless, its share price is still supported by its short term MA
despite broken down from its trend. At best, share price of Tambun
Indah may be range bound at RM 1.35 to RM1.55.
30

THONG GUAN
(TGI MK Equity, TGIB.KL)
Firing On All Cylinders

Company report
AmInvestment Bank
(03-2036 2240)
Company Profile
Price RM4.27
Fair Value RM5.44 Thong Guan Industries (TGI) is one of the leading stretch film
52-week High/Low RM4.55/RM2.72 manufacturers in Malaysia and a major exporter of plastic packaging
materials such as garbage bags, industrial bags and PVC food wraps.
Keeping alive its origins as a F&B player, the company also manufactures
and trades tea, coffee and noodle products. TGI was listed on the Main
Board in 1997 and is helmed by Dato' Ang Poon Chuan who brings over
Revenue (RMmil) 712.5 792.8 930.3
51 years of experience in plastic, paper, food, beverages and trading
Core EPS (Sen) 36.9 48.9 61.7 business.
Core EPS growth (%) 122.2 32.4 26.1
Highlights
DPS (Sen) 9.0 13.6 17.1
PE (x) 12.5 8.7 7.2 Stretching for more. Over the past few years, TGI has focused on
Div yield (%) 2.1 3.2 4.0 building capacity for its plastic divisions and growing margins by offering
higher value-add products. The company commissioned its first 33-layer
nano technology stretch film line in early-2016, which found encouraging
market reception. On the back of this success, management is looking to
Shares Outstanding (million) 118.5 bring in another 33-layer nano stretch film line in 3QFY17.
Book value (RM/share) 3.97 Larger PVC food wrap capacity to reinforce market leader position.
P/BV (x) 1.1
Already the largest PVC food wrap supplier in Malaysia and among the
ROE (%) 14.7
Net Gearing (%) (13.8) three largest in South-East Asia, TGI is seeing robust orders for PVC
wrap. It recently took delivery of its seventh PVC wrap line and has plans
Major Shareholders Foremost Equals SdnBhd(35.4%) to grow current output by over 70% by FY18F. PVC food wrap business is
Aminvestment BankBerhad(2.3%) the highest margin-yielding business and we expect the company's
Koon Yew Yin (1.7%) margin to grow as this division contributes a bigger share of the TGI's
revenue over the next few years.
Free Float 47.7
Avg Daily Value (RMmil) 1.1 Growing its F&B division. With the acquisition of a 60% stake in
Everprosper Food Industries Sdn Bhd in Aug 2015, Thong Guan has
Price performance 3mth 6mth 12mth expanded its F&B portfolio to now include noodle manufacturing. Its
noodle products are sold under private labels worldwide and under its
Absolute (%) 4.1 6.1 40.5
own brand names such as Golden Noodle and Vitame. TGI newly set-up
Relative (%) 5.2 6.8 43.8
factory Sungai Petani has recently received organic certifications from
authorities in Australia, Japan, China which would allow it to supply
noodles to chain retailers in these markets. While revenue share from the
noodle business is expected to be less than 10% in the near term, the
company expects this division to grow on the back of rising consumption
of organic noodles for infants and organic instant noodles in China.
Healthy financials. 9MFY16 pretax profit more than doubled, with

3.5ppts improvement in margin brought about by the weaker MYR and
higher margin-yielding products. As at 3QFY16F, TGI boasts a net cash
position of RM76.2mil, which would allow it to scoop up potential strategic
opportunities whenever they arise.
Valuation
Our fair value of RM5.44 is based on a target P/E of 13x on FY17F EPS,
which takes into account dilution from irredeemable convertible
unsecured loan stocks (ICULS). A full-dilution scenario to include both
Source: AmInvestment Bank Bhd ICULS and warrant dilutions would lower our TP to RM4.75.
Technical View
TGI is in both a long-term and short-term uptrend as it is trading above
the 200MA and the 20MA is above 50MA. The immediate resistance is at
RM4.50, which was tested four times in the past one year. If TGI
manages to break above this resistance, the next long-term technical
target would be RM5.25, which is a measured move from the beginning
of uptrend near RM4.00.
31

TRC SYNERGY
(TRC MK Equity, TRCG.KL)
A Seasoned Mega Infrastructure Contractor

Company report
AmInvestment Bank
(03-2036 2293)
Price RM0.39
Listed on the Main Board in 2002, TRC is a seasoned contractor
which stands out from its peers of comparable size by virtue of its
YE to Dec FY15 FY16F FY17F involvement in several high-profile mega infrastructure projects in
recent years including LRT2, MRT1, MRT2, Pan Borneo Highway
Revenue (RMmil) 768.0 730.0 839.5
Core net profit (RMmil) 30.4 27.6 31.7 and Brunei International Airport modernisation. It has also
Core EPS (Sen) 6.3 5.7 6.6 expanded into property development, with the newest project being
Core EPS growth (%) 765.8 (9.5) 15.8 an integrated Transit Oriented Development (TOD) on a 12.3-acre
DPS (Sen) 0.0 0.0 0.0
site in Ara Damansara, Selangor, witha GDV of about RM1bil. For
PE (x) 6.2 6.8 5.9
Div yield (%) 0.0 0.0 0.0 9MFY16, construction contributed about 90% of total PBT, with the
balance 10% coming from property development. At the helm of the
Stock and Financial Data company is managing directorTan Sri Dato' Sri Sufri bin Haji Mohd
Zin.
Market Cap (RMmil) 187.4 Highlights
P/BV (x) 0.5 A sizeable construction orderbook. TRC’s near-term earnings will
ROE (%) 8.3 be well supported by its construction order backlog estimated at
Net Gearing (%) (1.5) RM1.2bil, which will keep it busy at least for the next two years.
Major Shareholders TRC Capital Sdn Bhd (12.4%) Among the more notable projects are Pan Borneo Sarawak highway
Kolektif Aman Sdn Bhd (12.2%) (a substantial part of a RM1.3bil package secured with two Sarawak-
Leong Kam Heng (10.0%) based partners) and Eco City in KL (RM170mil outstanding).
Free Float 51.9 Strength in rail jobs.TRC is well positioned to capitalise on various
Avg Daily Value (RMmil) 0.2 mega rail projects in the pipeline including LRT3 (RM9bil), East
Price performance 3mth 6mth 12mth Coast Rail Link (RM55bil) and KL-Singapore high-speed rail (RM50-
60bil), given its experience in the construction of LRT2, MRT1 and
Absolute (%) (6.0) (3.7) 7.0 MRT2, and the specialised equipment it has invested in, particularly,
Relative (%) (5.0) (3.1) 10.3 launchers for the construction of elevated viaducts.
TOD in Ara Damansara, Selangor. Despite the soft property
market, we believe TRC's integrated TOD in Ara Damansara
comprising apartments, offices, retail outlets and hotels, should be
well received, given its highly sought after Ara Damansara address
and direct LRT connectivity. The maiden launch - an apartment block
- is scheduled in 2Q2017.
Valuation
We value TRC at RM0.66 based on 10x FY17F EPS, in line with
our benchmark 1-year forward target P/E of 10-12x for small-cap
Technical View
TRC has broken its multiple support lines since November 2016 and
Source: AmInvestment Bank Bhd is currently hovering at the strong support level of RM0.38. It is likely
to be stay on range bound levels – RM0.37 to RM0.41 in the
absence of catalysts.
32

TROPICANA
(TRCB MK Equity, TROP.KL)
Supported by its strategic landbank

Company report
AmInvestment Bank
(03-2036 2025)
Price RM1.00
Founded in 1979, Tropicana Corporation Bhd (Tropicana) is mainly
a property development company with diversified business interests
YE to Dec FY15 FY16F FY17F including property and resort development, property investment,
resort operations and investment holding. It was listed on Bursa
Revenue (RMmil) 1252.7 1307.2 1331.8
Core net profit (RMmil) 223.3 151.9 155.4 Malaysia in 1992. Today, property development contributes 90% of
Core EPS (Sen) 15.5 10.6 10.8 its total revenue.
Core EPS growth (%) (42.5) (31.6) 1.9
PE (x) 6.4 9.4 9.3
Div yield (%) 4.0 5.0 5.0 RM821m new sales in 9M16. Tropicana recorded RM821m of new
sales in 9MFY16, contributed mainly by its projects in the Klang
Stock and Financial Data Valley region, which made up 78% of its total new sales. Tropicana
Aman, Shah Alam recorded the highest sales at RM253m, followed
Shares Outstanding (million) 1439.7 by Tropicana Heights, Kajang (RM131m) and The Residences,
Book value (RM/share) 2.20 KLCC (RM108m). For FY16, it is launching projects with a total GDV
P/BV (x) 0.5 of around RM1.9bil, made up of residential and commercial
ROE (%) 3.6 properties.
RM2.67bn of unbilled sales. Tropicana’s unbilled sales remained
Major Shareholders Chee Sing Tan (30.3%) healthy at RM2.67bil as at end-Sep 2016, with projects in the Klang
AliranFirasatSdnBhd (21.2%)
Golden Diversity SdnBhd (11.8%)
Valley making up 75% of the total amount. The highest outstanding
unbilled sales as at end-Sep 2016 were Tropicana Aman, Shah Alam
Free Float 24.6 (RM620m), Tropicana Gardens, Kota Damansara (RM508m) and
Avg Daily Value (RMmil) 0.6 Tropicana Metropark, Subang Jaya (RM431m).
Price performance 3mth 6mth 12mth Positive long-term outlook. We believe Tropicana’s long-term
outlook is positive. As of end-Sep 2016, it had in total 1,283 acres of
Absolute (%) (2.9) (2.9) 1.8
Relative (%) (1.9) (2.3) 5.2 remaining land bank, with total available GDV of approximately
RM52.0bil. These projects will take up to 20 years to be completed,
providing Tropicana with a sustained income stream for foreseeable
future.
Valuation
We value Tropicana at RM1.28, based on a 60% discount to its

RNAV. Tropicana should benefit from its strategic land bank and
ongoing asset monetisation exercise.
Technical View
Tropicana has been on downtrend since 2013 .The share price of
Tropicana is likely to be supported at RM1.00. With no signs of
reversal, share price of Tropicana likely to stay range bound.
33

TUNE PROTECT
(TIH MK EQUITY, TUNE.KL)
Healthy combined ratio with conservative investments

Company report
AmInvestment Bank
(03-2036 2294)

Fair Value RM1.70
Tune Protect Group Bhd (TPG) is involved in the business of
general insurance and travel reinsurance.The company was
formerly known as Tune Ins Holdings Berhad (TIH) and listed on
YE to Dec FY15 FY16F FY17F the Main Board of Bursa Malaysia in February 2013. In September
2015, TIH was renamed to TPG. TPG operates general insurance
Revenue (RMmil) 480.2 594.2 631.9
Core net profit (RMmil) 69.0 91.7 96.4 business through its 83.3% owned subsidiary, Tune Insurance
Core EPS (Sen) 9.7 12.2 12.8 Malaysia Berhad (TIMB) and 49.0% associate in Thailand, Tune
Core EPS growth (%) (4.2) 25.8 5.2 Insurance Public Company Limited (TIPCL). Meanwhile, the travel
DPS (Sen) 5.0 4.9 5.1
PE (x) 14.9 11.8 11.2
reinsurance business is operated through its wholly-owned
Div yield (%) 3.5 3.4 3.6 subsidiary, Tune Protect Re Ltd (TPR) as well as its 49.0% owned
joint venture entity in Dubai, Middle East, Tune Protect Commercial
Stock and Financial Data Brokerage LLC (TPCB). The Group has a dividend policy of 40.0%
payout.
Market Cap (RMmil) 1082.5 Highlights
P/BV (x) 2.4 Conservative investment portfolio and diversified exposure risk
ROE (%) 15.3 by countries for travel reinsurance business. Investment portfolio
Net Gearing (%) Net cash
of TPG is conservative with 68.6% placed in deposits with financial
Major Shareholders Tune Group SdnBhd(16.6%) institutions, 20.1% invested in debt securities and 11.2% placed in
AirAsiaBerhad(13.7%) unit and property trust funds. For travel reinsurance, underwriting risk
CIMB SI II SdnBhd (9.4%) is well diversified in terms of the travel policies issued by countries.
Free Float 48.9 Stiffer competition for general insurance business from
Avg Daily Value (RMmil) 3.2 detariffication and to continue to focus on digital enhancements
Price performance 3mth 6mth 12mth to improve its combine ratio.The gradual detariffication of fire and
motor premiums is expected to raise the level of competition for
Absolute (%) (12.2) (0.7) 15.5 general insurance business operated under TIMB. TPG's continued
Relative (%) (11.2) 0.0 18.8 focus on digital enhancement for its travel reinsurance business by
enabling the other countries to adopt the digital technology by
phases as well as through digital campaigns and marketing could
potentially improve the Group's combine ratio.
Healthy combined ratio with low net commission ratio. TPG has
a healthy combined ratio of 79.2% as at end of 3Q16. With TIMB
operating with a small size of around 1,200 agents while relying on
strategic partners for travel reinsurance business, the Group has a
low net commission ratio of 17.1%. Claims ratio to travel insurance
has been low at stable of circa 7.0%.
Valuation
Our fair value of RM1.70/share is derived by pegging FY17F
BV/share to a P/BV of 2.0x (circa 1 standard deviation below its 3
year historical average P/BV of 3.1x). The forward P/BV multiple is
Source: AmInvestment Bank Bhd line with the P/BV of recent M&As of general insurance companies.
Technical View
Tune Pro had completed its downward channel in March 2016.

Currently, the trend for Tune Pro is likely to be sideways and
supported at RM1.36 – RM1.40 levels before gaining momentum to
test its long term 200 MA resistance at RM1.53.
34

UCHI TECHNOLOGIES
(UCHI MK Equity, UCHI.KL)
Attractive dividend yield

Company report
AmInvestment Bank
(03-2036 2113)

Fair Value RM1.73
52-week High/Low RM1.80/RM1.34 Uchi Technologies (UCHI) is an Original Design Manufacturer
(ODM) that designs, manufactures and assembles components of
electronic control modules (ECM). The company provides semi-
finished parts and control modules to be inserted into their
Revenue (RMmil) 112.6 118.8 115.8 customers’ finished products. It mainly produces ECM used in
Core net profit (RMmil) 49.3 57.1 56.0 coffee machines and bio-tech equipments. UCHI’s main operation
Core EPS (Sen) 11.8 13.1 12.8 is located in Penang and Dongguan, China.
Core EPS growth (%) 20.0 10.9 (1.9)
PE (x) 14.8 13.7 14.0
Div yield (%) 2.6 6.2 6.2 Stable revenue UCHI’s revenues have been generally stable over
the past 7 years from FY10 to 3QFY16 as demand for its products
are largely constant throughout the years. Management’s attempt to
grow the higher-margin Bio-Tech segment in the past has not led to
Market Cap (RMmil) 764.1 significant overall growth.
P/BV (x) 2.9 Benefit from a stronger USD The Company generates 100% of its
ROE (%) 24.0 revenue in USD as its customers are primarily from Europe. As
Net Gearing (%) Net Cash USD appreciated over 8% in 4Q16, UCHI’s 4Q16 earnings should
be boosted by higher RM revenue and favourable receivables
Major Shareholders Eastbow International Ltd (19.1%)
Ironbridge Worldwide Ltd (8.1%) exposure.
LembagaTabung Haji (7.4%)
Attractive dividend yield FY17’s dividend yield is expected to be
Free Float 46.5 at 6.2%. We think the attractive yield is sustainable due to UCHI’s
Avg Daily Value (RMmil) 0.9 long track record of profitability, strong balance sheet and highly
cash generative business model (8% free cash flow yield). UCHI is
in net cash position of RM183m or 23% of its market cap.
Absolute (%) 7.8 16.9 18.2 Furthermore, the company is highly profitable with trailing 12M
Relative (%) 8.8 17.5 21.5 EBITDA margin of 49% and ROE of 24.5%.
Valuation
The company is currently trading at a fair 13.7x FY17 PE, which is
in line with the Malaysia’s Technology peers average of 13.6x.
We assign the stock with a fair value of RM1.73 or 14x FY17 PE.
The valuation is at a marginal premium compared to its peers due
to UCHI’s attractive dividend yield at 6.2% vs. peers’ average of
4.7%.
Technical View
UCHI is in a mildly bullish uptrend with limited momentum. Hence, it
could continue to trade below the channel line with the next
resistance at RM1.85 and the support is at RM1.75. UCHI is likely
to trade within this range in the mid-term.
35

UNISEM
(UNI MK Equity, UNSM.KL)
Investing in miniaturisation of devices

Company report
AmInvestment Bank
(03-2036 2291)
Company Profile
Price RM2.38
Fair Value RM2.97 Unisem is a leading semiconductor assembly and test services
provider in Malaysia. Unisem offers turnkey solutions such as wafer
bumping, wafer probing, wafer grinding, a wide range of leadframe
YE to Dec FY15 FY16F FY17F and substrate integrated circuits packaging, wafer-level chip-scale
packaging (WLCSP), flip chip and radio frequency, analog, digital
Revenue (RMmil) 1260.4 1289.5 1398.7
Core net profit (RMmil) 155.5 148.9 167.8 and mixed-signal testing services.
Core EPS (Sen) 22.0 20.3 22.9
Highlights
Core EPS growth (%) 117.1 (7.7) 12.7
DPS (Sen) 10.0 10.0 10.0 Remain focused on wafer bumping & WLCSP. Unisem's USD-
PE (x) 10.8 11.7 10.4
Div yield (%) 4.2 4.2 4.2 denominated revenue has been underpinned by wafer bumping and
(WLCSP) services in recent years due to robust smartphone
Stock and Financial Data demand. Moving forward, most market research companies project
the segment to record low single-digit growth through 2019F.
Shares Outstanding (million) 733.8 However, we understand that Unisem is committed to winning more
jobs for its wafer bumping & WLCSP services. We are positive on
P/BV (x) 1.3 this because such services offer higher margins than those of
ROE (%) 12.7 traditional leaded and leadless packages.
Net Gearing (%) 4.6
Automotive and industrial segments drive growth. According to
Major Shareholders Jayvest Holdings SdnBhd(8.9%) PwC, global light vehicle assembly is expected to grow at a CAGR of
Bandar RasahSdnBhd(7.0%)
3.6% for 2015-2021F. Although the vehicle volume growth itself
Sin Tet Chia (5.6%)
appears unexciting, we expect stronger growth in semiconductor
Free Float 69.8 content within automobiles to boost sales in this sub-segment. In the
Avg Daily Value (RMmil) 4.3 industrial segment, growth is expected to be driven by the global
transition to "Industrie 4.0" to promote full automation and
interactions between connected devices. This would require large-
Absolute (%) (1.7) 0.0 9.1 scale replacements of both software and hardware, which benefits
Relative (%) (2.1) (1.6) 8.3 semiconductor players.
Beneficiary of USD strength. Unisem's revenue is primarily

denominated in the USD. Our USD/RM assumption of 4.48 for 2017F
vs. 4.13 for 2016F amplifies revenue growth in FY17F from flattish to
8.5%. Based on our sensitivity analysis, a 5% appreciation in the
USD against the RM would increase Unisem's net profit by 28%.
Valuation
We value Unisem at RM2.97 based on 13x FY17F EPS, which

Technical View
Unisem is in a sideway trend despite trading below the 200MA as the
stock stops declining further after breaking this benchmark indicator
for long-term trend. If the stock sees a lower low below the support of
Source: AmInvestment Bank Bhd RM2.25, it could enter a long-term downtrend.
36

UZMA
(UZMA MK Equity, UZMA.KL)
Staying resilient
Company report
AmInvestment Bank
(03-2036 2025)
Price RM1.70
Founded on 19 May 2000 by Dato’ Kamarul Redzuan Muhamed
and Datin Rozita Mat Shah, Uzma Berhad (Uzma) started out as a
YE to Dec FY15 FY16F FY17F provider of drilling project management and geoscience and
reservoir engineering software services. Today, the group has
Revenue (RMmil) 510.8 455.8 552.7
Core net profit (RMmil) 5.3 26.3 39.2 grown to become an agile geoscience, production and well-service
Core EPS (Sen) 1.9 9.03 13.5 company. Its operations consist of three core businesses:
Core EPS growth (%) (89.8) 375.2 49.5 geoscience and petroleum engineering, drilling and well services,
DPS (Sen) 3.8 0.0 0.0
and project oilfield and optimisation services.
PE (x) 89.9 18.8 12.6
Stock and Financial Data D18 Water Injection Facility commenced operations in 2H16.
Uzma’s D18 WIF project is progressing well. It commenced
Shares Outstanding (million) 1.3 operations in 2H16, with a RM200,000 daily rate for the next five
Book value (RM/share) 1.28 years. The development costs are within budget at circa US$65m.
P/BV (x) 1.3 We expect the project to contribute positively to Uzma’s revenue and
ROE (%) 10.3 earnings despite the weaker ringgit against the US dollar.
Tanjung Baram marginal oilfield in full production. Oil production
Major Shareholders MuhamedKamarulRedzua (28.4%) from the Tanjong Baram field commenced on 18 Aug 2015. We
Shah Rozita (12.6%)
LTH (9.6%)
believe that this field is producing on average 1,000-2,000 barrels of
oil per day, as per its development plan. We believe at the current
Free Float 29.6 crude oil price of around US$50 per barrel, this project is still cash
Avg Daily Value (RMmil) 0.5 flow positive, but there is a risk of the project not being viable if oil
Price performance 3mth 6mth 12mth price drops to below US$20 per barrel.
Expected to perform relatively better than the industry. We
Absolute (%) (0.6) (10.5) (15.0)
Relative (%) 0.4 (9.9) (11.6) believe that Uzma is better positioned than most of its peers to
weather the industry slowdown. Only 10-15% of its revenue is
directly exposed to the exploration stage via its geoscience and
petroleum engineering (GPE) division. Most of its exposure is to
brownfield oilfield production and maintenance services through its
project oilfield and optimisation services (POOS), which contributes
around 50% of total revenue.
Valuation
We value Uzma at RM1.87 based on 13.9x CY17 P/E, a 20%
discount to our oil & gas average CY17 sector P/E.
Technical View
Since end of December, there was a turnaround in the share price.

Uzma’s resistance level of RM1.60 has turned into support. Uzma
may need to convincingly break and stay at RM1.78 - RM1.80 levels
Source: AmInvestment Bank Bhd to signal an uptrend on the stock in the medium term.
37

VS INDUSTRY
(VSI MK Equity, VSID.KL)
Get In For A Growth Upswing

Company report
AmInvestment Bank
(03-2036 2240)

Fair Value RM1.72
VSI was listed on the Main Market in 1998 and is a vertically-
integrated EMS player offering a full suite of services comprising
tooling, plastic injection, PCBA and full-assembly. VSI was founded
YE to Jul FY16 FY17F FY18F after Datuk Beh Kim Ling (founder and Chairman) relocated his
Singapore-based manufacturing operations to Johor. VSI also has
Revenue (RMmil) 2175.6 3957.9 4342.1
Core net profit (RMmil) 124.7 153.4 204.5 manufacturing presence in China, Indonesia and Vietnam, where its
Core EPS (Sen) 10.2 9.5 12.7 China manufacturing arm is held via its 43.7% stake in Hong Kong-
Core EPS growth (%) 13.9 23.0 33.3 listed VS International Group Limited (VSIG).
DPS (Sen) 4.7 5.3 7.1
Div yield (%) 3.2 3.7 4.8
The largest, vertically integrated EMS player in Malaysia. Ranked
Stock and Financial Data as one of the top EMS players in the world and fourth largest in
South East Asia, VSI is a vertically-integrated (VI) EMS provider for
Shares Outstanding (million) 1169.9 prestigious global brands in the world, such as Keurig, Customer X
Book value (RM/share) 0.78 (renowned consumer technology company) and Zodiac. Its
P/BV (x) 1.9 positioning as a VI supplier would allow it to remain relevant at a time
ROE (%) 10.3 when customers continuously seek simplification, cost savings in
production and greater supplier accountability, which could translate
Major Shareholders Datuk Beh Kim Ling & family (20.56%) to greater job wins. VSI was recently awarded an esteemed "VI-
Datuk Gan Sem Yam & family (6.96%) status" by Customer X, making it the only supplier to have received
the endorsement, as its competitors lack PCB assembly (PCBA) or
Free Float 62.5
tooling capabilities.
Prime proxy to tap explosive growth of key customer. As
Customer X sees fast-growing demand for its consumer electronics
Absolute (%) 5.7 24.4 (4.1) products worldwide, VSI is poised to see accelerating box-build
Relative (%) 6.7 25.0 (0.7) orders. We expect sales volume to grow by 23-fold in FY17F, to be
followed by a greater surge of orders in FY18F, as more box-build
lines are added in 1H2017. VSI is a strong contender for further jobs
wins, given the spare capacity at its box-build factory and its
advantage as the only supplier with" VI- status" in Malaysia.
Regional operations to see better profitability. Leveraging on its
manufacturing base in China, VSI has bagged RM100m p.a. contract
to manufacture Diamond water filtration products from Malaysia-
based NEP Holdings, which is looking to expand into China. This, in
addition to rising orders from existing customer Perfect China would
help lift China operations to greater profitability going forward. VSI's
Indonesia arm would also chart improved profits, as it moves up the
value chain from to include box-building services, from services
limited to PCBA, plastic injection and sub-assembly currently.
Valuation
We arrive at a fair value of RM1.72, based on FY18F fully-diluted
EPS and a target P/E of 12x.
Technical View
The stock has been range-bound between RM1.30 and RM1.45 in
the past 5 months but is in a long-term uptrend as it trades above
200MA. It could continue to trade in a sideway with a positive bias.
The next resistances are at RM1.45 and 1.62.
38

YEE LEE CORP
(YEE MK Equity, YLEE.KL)
Boost to reliable growth

Company report
AmInvestment Bank
(03-2036 2372)
Price RM2.37
Yee Lee Corporation (Yee Lee) is a fully integrated manufacturer
and distributor of FMCG products. Its core business is the
YE to Dec FY15 FY16F FY17F production of the “Red Eagle” brand of cooking oil. Its associates
include a 33% stake in Spritzer Bhd, a producer of natural mineral
Revenue (RMmil) 799.2 1013 1053
Core net profit (RMmil) 31.9 43 46 water and carbonated flavour water.
Core EPS (Sen) 17.5 24.0 25.6
Core EPS growth (%) 16.5 30.4 6.7 Highlights
DPS (Sen) 3.5 4.3 4.8
Extremely resilient growth supercharged. Yee Lee’s business has
PE (x) 13.5 10.4 9.8
Div yield (%) 1.5 1.7 1.9 been extremely resilient, posting positive YoY growth over the past
14 years largely thanks to its distribution and manufacturing
Stock and Financial Data segments. It has grown at a 14-year CAGR of 9.3% between FY01-
FY15. Throughout the same period, margins have remained trended
Shares Outstanding (million) 183.9 upward to 4% from 2% as it maintains its competitive position within
Book value (RM/share) 2.97 each segment. We expect Yee Lee to see similar growth and
P/BV (x) 0.8 margins from its existing segments going forward barring the entry of
ROE (%) 9.3 Red Bull.
Net Gearing (%) 8.4
Stable growth supercharged. Its stable outlook has found a new
Major Shareholders Yee Lee Organisation Bhd (51.6%) avenue of growth with the 5-year exclusive distributorship rights of
A Heng Lim (2.9%)
Public Strategic Smallcap (2.7%)
Red Bull products. Thus far, the full year impact from the Red Bull
contract has supplemented both topline and bottomline, with
Free Float 37.8 9MFY16 already outpacing FY15’s by 26%% and 37% respectively.
Part exposure to Spritzer a boon. Yee Lee’s 33% associate stake
Price performance 3mth 6mth 12mth in Spritzer exposes it to the latter's product expansion into China.
Spritzer has launched flavoured beverages under the brand Tinge.
Absolute (%) 4.9 5.8 13.6
Relative (%) 5.9 6.5 16.9 Distribution is expected to be gradually ramped up through the
modern trade channel in tandem with advertising and promotional
(A&P) initiatives. Earnings impact is not expected to be significant
within the next 1-2 years, as 50% more A&P is ploughed to generate
brand awareness.
Valuation
Our fair value of MYR2.80 is based on a P/E peg of 11.0x FY17F,
Technical View
Yee Lee has been moving in a broad bull channel since early 2016
and could continue to advance within this channel. Trading volume
has been generally consistent throughout the past one year, which
shows a reasonable market interest on the stock.
39

YTL HOSPITALITY REIT
(YTLREIT MK EQUITY, YTLR.KL)
The only pure play hospitality

Company report
AmInvestment Bank
(03-2036 1290)
Price RM1.09
YTLREIT provides investors a gateway to the Australian hospitality
market, which sees an attractive combination of solid demand and
YE to Dec FY16 FY17F FY18F relatively constrained new supply growth. The REIT's main assets are
the Pangkor Laut, Tanjong Jara and Cameron Highlands resorts, The
Revenue (RMmil) 429.7 428.0 436.0
Core net profit (RMmil) (5.8) 108.1 129.3 Ritz-Carlton, Kuala Lumpur, and the remainder of The Residences at
Core EPS (Sen) (0.4) 7.1 7.6 The Ritz-Carlton, Kuala Lumpur, the Vistana chain of hotels in Kuala
Core EPS growth (%) 28.9 (22.3) 6.2 Lumpur, Penang and Kuantan, and Hilton Niseko Village in Japan,
DPS (Sen) 7.9 7.4 7.8
Sydney Harbour, Brisbane and Melbourne Marriott hotels in Australia in
PE (x) (247.7) 14.2 14.0
Div yield (%) 7.2 6.8 7.2 November 2013.

Gateway to Australian Hospitality Market.The Australian hotel
Shares Outstanding (million) 1,324.4 properties contribute the lion’s share of the total portfolio in terms of
Book value (RM/share) 1.48 revenue, followed by Malaysia and Japan. YTLREIT’s Australia
P/BV (x) 0.7 portfolio is expected to contribute 71.9% of FY17F revenue and 46.3%
ROE (%) 0.2 of NPI. The positive outlook for the Australian hospitality market is
Net Gearing (%) 77.0 driven by the combination of continued growth in tourist arrivals and
Major Shareholders YTL Corporation Berhad(56.4%) modest new hotel supply in Sydney and Melbourne in near term.
East-West Ventures SdnBhd(4.7%)
YTL Power Intl Bhd (3.3%)
Master lease to provide income stability and growth. YTLREIT
receives steady income from its portfolio of assets in Malaysia and
Free Float 42.5 Japan for the financial year under master lease arrangements.
Avg Daily Value (RMmil) 0.5 YTLREIT properties, except for the Australia hotel portfolio, are under
Price performance 3mth 6mth 12mth long term master lease. YTL REIT maintains the properties and
benefits from the stable income produced by this revenue structure.
Absolute (%) (1.9) 7.5 14.5 The 5% step-up in the Master Leases commenced on 15 Nov 2016.
Relative (%) (0.9) 8.1 17.9 Thereafter, the next revision period for 12%, 38% and 6% of NPI will
fall on year 2023, 2026 and 2031 respectively.
Additional boost to distributions via management contract. 45.9%
of NPI in FY17F is expected to be anchored by Management Contract.
Under the management contract structure, YTLREIT receives residual
net income after netting off all expenses. Therefore, YTLREIT is
exposed to the variable performance of the Australia assets.
Valuation
We use dividend discount model (DDM) methodology. We arrive at a
target price of RM1.32 based on risk free rate = 4.2%, cost of equity =
7.8%, beta = 0.6x, and terminal growth =1.5%. Our target price
implies a total return of 25.6%.
Technical View
Source: AmInvestment Bank Bhd YTLREIT fell below its 200 MA due to the implementation of private
placement. Notwithstanding this, the uptrend of YTLREIT remains
intact. Any weakness is an opportunity for accumulation.
40
DISCLOSURE AND DISCLAIMER
This report is prepared for information purposes only and it is issued by AmInvestment Bank Berhad (“AmInvestment”) without regard to your
individual financial circumstances and objectives. Nothing in this report shall constitute an offer to sell, warranty, representation,
recommendation, legal, accounting or tax advice, solicitation or expression of views to influence any one to buy or sell any real estate, securities,
stocks, foreign exchange, futures or investment products. AmInvestment recommends that you evaluate a particular investment or strategy
based on your individual circumstances and objectives and/or seek financial, legal or other advice on the appropriateness of the particular
investment or strategy.
The information in this report was obtained or derived from sources that AmInvestment believes are reliable and correct at the time of issue.
While all reasonable care has been taken to ensure that the stated facts are accurate and views are fair and reasonable, AmInvestment has not
independently verified the information and does not warrant or represent that they are accurate, adequate, complete or up‐to‐date and they
should not be relied upon as such. All information included in this report constituteAmInvestment’s views as of this date and are subject to
change without notice. Notwithstanding that, AmInvestment has no obligation to update its opinion or information in this report. Facts and views
presented in this report may not reflect the views of or information known to other business units of AmInvestment’s affiliates and/or related
corporations (collectively, “AmBank Group”).
This report is prepared for the clients of AmBank Group and it cannot be altered, copied, reproduced, distributed or republished for any purpose
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AmInvestment is not acting as your advisor and does not owe you any fiduciary duties in connection with this report. The Relevant Person may
provide services to any company and affiliates of such companies in or related to the securities or products and/or may trade or otherwise effect
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Malaysia’s leading convenient store

Price RM1.45 Company Profile

Our TP of MYR1.62 is pegged to a 2017 PER of 27x. It is the average

World’s first listed Islamic Healthcare REIT

Price RM1.57 Company Profile

Source: AmInvestment Bank Bhd

Poised to benefit from higher MGS yield

Earnings expected to benefit from higher MGS yield. Moving forward,

Our fair value for Allianz at RM11.30/share based on SOP valuation

Anchored to a mellow market

Source: AmInvestment Bank Bhd

Tremendous Value In Order Backlog, Concessions And

Stock and Financial Data Highlights

Proxy to tighter security controls

Rising up the ranks

Rock-Steady Construction And Tolling Profits

Price RM2.41 Company Profile

Stock and Financial Data Highlights

GDEX has been on uptrend since September last year and is

Stock and Financial Data Highlights

George Kent was on uptrend since 2015 and formed triangular

Source: AmInvestment Bank Bhd

High growth rate and resilient business model

Price RM0.88 Company Profile

GHL is currently trading at 0.5x PEG (PE/ growth) based on 21.3x

New sensor excitement

Price RM3.51 Company Profile

Source: AmInvestment Bank Bhd

Banking on landed residential projects

Price RM0.69 Company Profile

Absolute (%) (8.6) (9.2) (16.5)

The friendly neighbourhood REIT

Price RM1.58 Company Profile

Source: AmInvestment Bank Bhd

Affordable housing specialist

Price RM1.11 Company Profile

High dividend yield offsets structural headwinds

High dividend yield is sustainable for next 2 years. Despite the

Posturing for next leg of growth

Price RM3.80 Company Profile

Cheap valuations outweigh negatives

Highly levered but turnaround in progress. Due to its active M&A

Sustained growth momentum

Price RM2.42 Company Profile

We value Matrix at RM2.83, based on a 20% discount to its RNAV.

Source: AmInvestment Bank Bhd

Anchored by property and plantations

MKH Berhad is about to test its resistance at RM3 after three

The Sentral Office Giant

Price RM1.22 Company Profile

Source: AmInvestment Bank Bhd

Price RM1.90 Company Profile

Market leader for car seat covers

Source: AmInvestment Bank Bhd

A Piling Specialist Contractor Bracing For Busy Days

Source: AmInvestment Bank Bhd

Middle East coffee boom

Price RM2.06 Company Profile

Absolute (%) 1.2 (20.1) (21.6)

Our fair value of MYR2.62 is based on a P/E peg of 14.5x FY18F,

Exciting projects in the pipeline

Price RM2.08 Company Profile

We value Prestariang at RM2.71 based on 23x FY17F EPS. The PE of

Small & Mid Cap Companies 20170123 Am

Small & Mid Cap Companies 20170123 Am