REGIONAL DAILY

December 26, 2012

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

MALAYSIA

Malaysia Daybreak | 6 June 2014

▌What’s on the Table…

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Banks - 1Q14 results review: tightening the belt amid weak topline

Banks have resorted to cost cutting in the light of weak topline growth. In 1Q14, the sector’s overheads slid by 3.5% yoy, mitigating the impact of a 1.1% yoy drop in operating revenue and a hike in credit costs. This helped banks to record net profit growth of 8.9% in 1Q14. Overall, banks’ 1Q14 results were 8.1% below our expectations, with weaker-than-expected earnings from Affin and BIMB. Going forward, topline growth would be constricted by weaker loan momentum but margin contraction is expected to be narrower. We reiterate our Neutral call on Malaysian banks, with RHB Capital as our top pick.

Oil & Gas - overall - Platforms for higher earnings

Long delayed, the contract awards for the fabrication of multiple central processing platforms (CPP) could be made in 3Q14 at the latest. Upstream reported that SapuraKencana and MMHE were among the local bidders for the Bardegg 2 and Baronia CPP, just one of the few CPP contracts up for grabs. The sector remains an Overweight, with the strong contract pipeline arising from Petronas’s capex as the main potential catalyst. Our top picks are SapuraKencana among the big caps and Perisai among the small caps.

▌News of the Day…

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• Alliance Financial’s CEO Sng Seow Wah not renewing his employment contract

• MAHB announced MDeC CEO Datuk Badlisham Ghazali is its new MD

• Mah Sing’s SPA purchase of 1,352 acres land near Pasir Gudang is now unconditional

• KLCC REIT to be included in FTSE Bursa Malaysia KLCI (FBM KLCI) of 30 companies

• Sona Petroleum buying 40% stake in Thailand oil&gas field offshore for US$280m

• ECB cut its deposit rate to -0.1%

Sources: CIMB. COMPANY REPORTS

Sources: CIMB. COMPANY REPORTS

Key Metrics

FBMKLCI Index

1,650

1,700

1,750

1,800

1,850

1,900

Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14

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FBMKLCI

1869 3.80pts 0.20%June Futures July Futures

1867 - (0.00% ) 1868.5 - (1.00% )———————————————————————————

Gainers Losers Unchanged380 361 349

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Turnover1494.18m shares / RM1867.345m

3m avg volume traded 1838.03m shares

3m avg value traded RM2126.27m———————————————————————————

Regional IndicesFBMKLCI FSSTI JCI SET HSI

1,869 3,280 4,936 1,453 23,110 ————————————————————————————————

Close % chg YTD % chg

FBMKLCI 1,869.00 0.2 0.1

FBM100 12,590.58 0.1 0.0

FBMSC 17,525.78 0.2 11.7

FBMMES 6,540.33 (0.3) 15.2

Dow Jones 16,836.11 0.6 1.6

NASDAQ 4,296.23 1.0 2.9

FSSTI 3,279.64 (0.0) 3.5

FTSE-100 6,813.49 (0.1) 1.0

Hang Seng 23,109.66 (0.2) (0.8)

JCI 4,935.56 0.1 15.5

KOSPI 1,995.48 (0.7) (0.8)

Nikkei 225 15,079.37 0.1 (7.4)

PCOMP 6,772.44 0.1 15.0

SET 1,453.16 0.3 11.9

Shanghai 2,040.88 0.8 (3.5)

Taiwan 9,140.72 0.2 6.1————————————————————————————————

Close % chg Vol. (m)

ETI TECH 0.100 (9.1) 123.1SONA PETROLEUM 0.565 (5.0) 116.8

YTL CORP 1.700 5.6 69.5

SALCON BHD 0.870 4.8 47.8

KNM GROUP 0.800 6.0 34.7

HUBLINE BHD 0.050 0.0 30.1

IDIMENSION 0.160 6.7 24.5

BERJAYA CORP 0.470 (1.1) 21.2————————————————————————————————

Close % chg

US$/Euro 1.3660 (0.01)RM/US$ (Spot) 3.2283 (0.04)

RM/US$ (12-mth NDF) 3.2900 (0.05)

OPR (% ) 3.00 1.01

BLR (% , CIMB Bank) 6.60 0.00

GOLD ( US$/oz) 1,254 (0.00)

WTI crude oil US spot (US$/barrel) 102.48 (0.16)

CPO spot price (RM/tonne) 2,425 0.71

Market Indices

Top Actives

Economic Statistics

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

Daybreak│Malaysia

June 6, 2014

2

Global Economic News…

The US initial jobless claims rose by 8,000 to a seasonally adjusted 312,000 in the week ended May 31 (304,000 in week ended May 24). Continuing claims fell by 20,000 to a seasonally adjusted 2.60m in the week ended May 24 (2.62m in week ended May 17). (WSJ)

The US Federal Reserve should keep borrowing costs low for another five years to ensure the economy returns to health, even if doing so generates worrying signs of financial instability, Minneapolis Fed President Narayana Kocherlakota said. (Reuters)

The European Central Bank (ECB) cut its deposit rate to -0.1%, the first major central bank to take one of its main rates negative. The benchmark refinancing rate was cut by 10 basis points to 0.15% and the marginal rate was reduced by 35 basis points to 0.4%.

ECB president Mario Draghi said the central bank will introduce new, ―targeted‖ offerings of liquidity to banks to encourage them to lend money to the real economy. Officials will also start work on purchases of asset-backed securities, he added.

The ECB will also extend its current offerings of unlimited cash to banks and will suspend the sterilization of its bond purchases at the start of the euro crisis in a bid to boost liquidity in money markets, he said.

"If required, we will act swiftly with further monetary policy easing,‖ he said, and did not rule out launching a quantitative easing asset-buying programme if needed to boost the economy. (Bloomberg, Reuters)

The European Central Bank (ECB) lowered its forecast for euro zone inflation, expecting it to reach 1.4% in 2016, further away from its target of below but close to 2%. 2014 inflation is also revised to a midpoint of 0.7% from the previous 1.0%, and 2015 inflation at 1.1% (earlier estimate of 1.3%). In terms of growth, the forecasts saw the euro zone economy growing by 1.8% in 2016 after 1.7% in 2015 and 1.0% this year. (Reuters)

Euro zone’s retail sales rose 0.4% mom in Apr (+0.1% mom in mar) and climbed 2.4% yoy in Apr (+1.0% yoy in Mar). (WSJ, Bloomberg)

China’s HSBC/Markit services purchasing managers' index (PMI) slipped to 50.7 in May from Apr’s 51.4. Composite PMI by HSBC/Markit shows an increase to 50.2 in May from 49.5 in Apr. (Reuters, Bloomberg)

Australia posted a seasonally adjusted trade deficit of A$122m (US$113.2m) in Apr (A$902m in Mar). (WSJ)

A deal on the Trans-Pacific Partnership (TPP) can be struck by the end of 2015, says Australia's Trade Minister, Andrew Robb. Robb will lead a business delegation to Canada and the United States over the coming week as talks continue on the TPP, the Australian Associated Press (AAP) reported.

"I think we can get the TPP next year," he added. "It's a very complicated thing and I think we have probably negotiated 80%. The last 20% is largely market access and we've said all along, unless there is a decent market access result, we are not interested," he added. (Bernama)

Daybreak│Malaysia

June 6, 2014

3

Taiwan's consumer price index (CPI) in May rose 1.61% yoy (+1.66% yoy in Apr). (Focus Taiwan)

Indonesian presidential frontrunner Joko Widodo will keep an export ban on mineral ores that has rattled global metals markets, his running mate for the Jul election, Jusuf Kalla, said.

Jokowi also aims to boost exports of processed minerals and give incentives for local miners, and will seek to limit the expansion of plantations to help achieve food self-sufficiency, according to a yet-to-be released 129-page policy document for his campaign.

Jokowi also told investors that he will pursue market-friendly policies and make bureaucratic reform and infrastructure-building his priorities. (Jakarta Globe)

Bank Indonesia Governor Agus Martowardojo said the current account deficit in Apr had caused fluctuations in the country’s currency and made it difficult for the rupiah to strengthen. He said extra efforts must be taken so that exports will increase again and improve the rupiahs exchange rate. (Antara News)

Philippines’ inflation rose 4.5% yoy in May (+4.1% yoy in Apr), the highest in 29-months. On the monthly basis, inflation rose 0.5% mom in May (+0.4% mom in Apr). Core inflation rose 3.1% yoy in May (2.9% yoy in Apr). (Philippines Star, Bloomberg)

Malaysian Economic News…

Bank Negara Malaysia and the Malaysia Competition Commission (MyCC) signed a memorandum of understanding (MoU) to formalise the intent of the bank and the commission to collaborate and cooperate in areas of common regulatory objectives.

This is to facilitate the efficient implementation of the Competition Act 2010, and its intended objectives to promote and protect the process of competition, while ensuring that the overall stability of the financial sector is preserved, Bank Negara said.

It said that both parties would notify each other when any infringement is detected and would endeavour to reach a prompt mutual agreement on the course of action. (Bernama)

Google Malaysia targets about 40,824 small and medium enterprises (SMEs) in Penang to join its online advertising platform AdWords, which is now available in Malay.

Head of Marketing Matthew Zaheen said Penang SMEs represent only 6% of total SMEs in Malaysia and can use the platform to reach out to new markets overseas as well as refine their reach locally.

"AdWords in Malay can help businesses expand their reach among native speakers in the language they are most comfortable with online. By using that application, more local businesses can take advantage of digital marketing, enhance their capabilities and use the platform to find new customers locally and overseas," he said.

He said of the 700,000 SMEs in Malaysia, only 15% are online compared with 20 million Internet users from a population of 29 million coupled with a high smartphone penetration rate, so there is huge potential for businesses to tap into.(Bernama)

Daybreak│Malaysia

June 6, 2014

4

Sukuk issuance in the Malaysian market is expected to see steady growth of around 10% during 2014-15, says Moody's Investors Service. Its Asean Corporate Finance Group Managing Director, Philipp Lotter, said this was in line with Moody's positive view on the long-term growth trends in the global sukuk market.

"Given the deep local capital markets and strong support from the government, Malaysia will remain the world's largest sukuk market for the foreseeable future although regional and global competition will develop over the next 2-3 years," Lotter said.

He said some two-thirds of the approximately US$290bn outstanding sukuk was issued in Malaysia. "We expect the remaining one-third to stay fragmented because a growing number of new and emerging sukuk issuance markets, such as Indonesia, Singapore and Hong Kong are tapping into this fast-growing asset class although Saudi Arabia is showing strong domestic potential," he added.

Moody's report pointed out that international issuances in Malaysia accounted for less than 10% of the US$178bn in total outstanding sukuk. Annual issuance of Malaysian sukuk grew at a compounded annual growth rate of 22% to US$33bn in 2013 from US$3bn in 2001. (Bernama)

The 67.3% broadband penetration throughout the country has enabled the people to enjoy connectivity nationwide said Communications and Multimedia Ministry's secretary-general Datuk Seri Abdul Rahim Mohamad Radzi. He said the 11.7% increase from the 55.6% in 2010, has provided better opportunities for the people to increase their income and enjoy the rapid development. (Bernama)

Traders were reminded not to take advantage of the implementation of the Goods and Services Tax (GST) by raising the price of goods indiscriminately. Deputy Finance Minister Datuk Ahmad Maslan said the prices offered by traders should be reasonable and reflect the GST fixed rate of six per cent. He said traders found to indiscriminately raise prices could face action under the Price Control and Anti-Profiteering Act 2011. (Bernama)

Malaysia needs to upscale its aerospace industry by moving into avionics maintenance technology from its niche market of aviation composite manufacturing and maintenance, repair and overhaul (MRO). BAE Systems Director of Offset Programme, Group Business Development Richard McKie said that the industry was now moving into designing which sees huge opportunities for Malaysia to go forward. To get ahead, he added, Malaysia needs to expand into the systems side of the business such as systems integration and upgrading and aeroplane system maintenance. (Bernama)

The scope of the Human Resource Development Berhad (HRDB) Act 2001 will be expanded to include 19 new sub-sectors to increase the number of highly skilled workers. HRDB chairman Datuk Dr Abdul Razak Abdul said it involves two sub-sectors from mining and quarrying and 17 sub-sectors from services, thus increasing the sub-sectors from 44 to 63. It will hopefully increase the percentage of highly skilled workers from 28% to 33% in 2015 and 50% by 2020, as outlined in the 10th Malaysia Plan (10MP). (Bernama)

Daybreak│Malaysia

June 6, 2014

5

The Work Ministry is allocating RM1.037bn this year for maintenance work of federal roads, stretching 17,458km nationwide. Its minister, Datuk Fadillah Yusof said the allocation included RM409m for routine works, while RM628m was for periodical works.

"Maintenance work of federal roads in Malaysia is privatised to eight concession companies, appointed according to zones, comprising three in the peninsula and five in Sabah, Sarawak and the Federal Territory of Labuan," he said.

Fadillah said 581 maintenance projects of federal roads, worth RM28 million, would be implemented through balloting this year. Four hundred and twelve of the projects, costing RM20m, are in the peninsula, while 81 projects are in Sarawak and the remaining 88 projects in Sarawak, he added. (Bernama)

Prime Minister Datuk Seri Najib Tun Razak launched the Ramadan Bazaar i-Micro Financing scheme, involving an RM45m allocation, for petty traders and hawkers to carry out business during Ramadan. Najib said under the scheme, which would be managed by Bank Rakyat, petty traders and hawkers could apply for interest-free loan of up to RM3,000 as business capital. He said disbursement of the loan for the eligible applicants would be made a week before Ramadan. (Bernama)

The electrical and electronics (E&E) industry has reached an inflexion point and strategies to bring it forward are critical, warned the Malaysian American Electronics Industry (MAEI). Growth in terms of exports from the American companies has been flat in recent years, hence the shift in manufacturing activities to higher value-added activities in the non-computer area that uses high labour content must be stepped up, said its chairman Datuk Wong Siew Hai.

―Although the good news is that design and development (D&D) expenditure has gone up, it still remains in the initial stage. We do not have the critical mass for Malaysia to be recognised as a D&D centre and be placed in the same league as Japan, South Korea, Taiwan and India.‖ In its 2013/2014 annual survey report, the MAEI found that D&D expenditure increased significantly last year, by 52 per cent to RM3.73bn. (NST)

Bumiputera entrepreneurs with impressive business pitch may vie for a piece of the RM30m fund that has been put aside this year for recipients of the Bumiputera New Entrepreneurs Start Up Scheme (Superb). The three-year RM100m fund, was launched on 27 Jan. In Apr, RM6.5m worth of grants were handed out to 25 bumiputera entrepreneurs. (The Star)

Home Minister Datuk Seri Dr Ahmad Zahid Hamidi said that he was confident of the Immigration Department fulfilling the US visa waiver programme (VWP) requirements sooner than the expected 18 months. US President Barack Obama had said during his visit to Kuala Lumpur in April that his administration was prepared to include Malaysia under the VWP, which would allow citizens of participating countries to travel to the United States without a visa for stays of up to 90 days for tours or business. (BT)

Daybreak│Malaysia

June 6, 2014

6

Political News…

It was vintage Datuk Seri Samy Vellu. Except this time around, he was not condemning and fighting leaders he deems as his political ―enemies‖ within the MIC but his own annointed successor as the party’s president. Supporters of Datuk Seri G. Palanivel are up in arms over an interview he gave to Sunday Star which they claim is a scathing attack on Palanivel whom Samy Vellu personally groomed for over 20 years until he took over the party’s helm in 2010 when the veteran politician finally quit after 30 years as president. It was Samy Vellu’s no-holds-barred remarks that riled up Palanivel’s supporters with some asking:‖

After riding rough shot over the party with an iron-fist for three decades, he should now play the role of an elder statesman‖. Among other things in the interview, he lambasted Palanivel as well as regretted fighting his former deputy Tan Sri S. Subramaniam. Palanivel has thus far declined to comment on the issue but party insiders have indicated he was very upset over this ―most unkind cut‖ from his former boss. (Star)

Corporate News…

Alliance Financial Group announced that Sng Seow Wah has decided not to renew his employment contract as Group CEO of the bank when it ends on 4 Jul 14 as he has to attend to important family matters in his home country. The board of directors has accepted Mr. Sng’s decision. Mr. Sng jointed the bank in Jul 10 as the Group CEO.

―The bank has a robust talent succession plan in place. We are now in the midst of evaluating a suitable candidate to assume the responsibilities of the Group CEO at the bank,‖ said Dato’ Thomas Lee, the Chairman of Alliance Bank. (BMSB)

The above came as a negative surprise to us because in the past, Mr. Sng did not express any intention to depart and he has shown good performance in further improving the bank during his tenure in the past four years. We view this negatively as under his stewardship, the bank has been improving on its fee income growth and manages to sustain its loan growth above the industry’s rate. Hence, to certain extent, there could be some hiccups to its business following the departure of Mr. Sng. However, the longer-term impact could be minimal because (1) apart from the CEO, the management team is intact, and (2) the group is supported by strong shareholder, Temasek, which can help it to scout for capable candidates for the replacement.

Malaysia Airports Holdings Bhd (MAHB) announced that Multimedia Development Corp (MDeC) CEO Datuk Badlisham Ghazali will replace Tan Sri Bashir Ahmad Abdul Majid as managing director effective 23 June. Bashir, 64, whose term expires today, will however stay on at MAHB as advisor "at the request of the board of directors". In the interim, the duties of the managing director will be covered by the executive committee under the supervision of the board. According to sources, Datuk Wan Ahmad Shihab Wan Ismail, an independent non-executive director at MDeC, will also be joining Badlisham at MAHB. However, it is unclear what role he will play in the company. Wan Ahmad Shihab currently serves as special officer and divisional director responsible for selected areas of policy and public relations related to the Prime Minister's Office. (Financial Daily)

Bashir's decision not to extend his contract into its 12th year is not a surprise as he has indicated his wish to make way for a successor since last year. His decision to stay on at MAHB as an advisor is important for a smooth transition, in our view, as Badlisham has no prior experience of managing an airport operator.

Daybreak│Malaysia

June 6, 2014

7

Malaysian businesses that have made it big have now become ―hurdles‖ to the government in its efforts to be more transparent in the award of public project contracts, Umno’s Datuk Mohd Puad Zarkashi said, with special aim at YTL Corporation Bhd. In an interview published in Malay daily Utusan Malaysia, the Batu Pahat MP also demanded YTL’s managing director Tan Sri Francis Yeoh disclose if the company — among the first generation of independent power producers in the 1990s — had gained the tender on merit.

―It is true that big firms don’t have to meet with the prime minister to lobby for projects as he claims,‖ Puad told the broadsheet, referring to Yeoh, claiming, ―but what these giant firms do is, they bribe officers in charge of tenders to rule in their favour.‖―They then go on to build empires in the particular ministries and establish mafia networks within. So YTL shouldn’t be talking big,‖ he added.

Puad, who is also an Umno supreme councillor, did not elaborate on his bribery allegation but said that YTL should allow the government to review its power agreement, which has drawn criticism and accusations of being ―lopsided‖. (Malay mail)

Mah Sing Group Bhd yesterday announced that the sale and purchase agreement (SPA) has gone unconditional for its purchase of 1,352 acres (547 ha) freehold land near Pasir Gudang, Johor intended for a township project called Bandar Meridin East. The purchase of the large tract of land by Mah Sing from the vendor, Bistari Land Sdn Bhd, had gone through some hiccups since the deal was first announced in October last year. However, in a statement yesterday, Mah Sing said the SPA has become unconditional following Estate Land Board's approval of the vendor's application for the disposal of land, as well as the completion of due diligence on the land. (The Edge)

Malaysian Resources Corp Bhd (MRCB) will shell out close to RM180m in its regeneration plan for Kuala Lumpur Sentral (KL Sentral), which includes landscape decks that connect to major tourist attractions. Expanding the more than one-decade-old transport hub would entail two parts. . ―The first is to address the needs of the fast-changing landscape in terms of development and demands of tenants and customers, while the second entails connectivity to Muzium Negara and Lake Gardens. The completion target is three years,‖ group managing director Datuk Mohamad Salim Fateh Din said. (BT)

AirAsia X Bhd is optimistic that its newly added capacity last year will start to bear fruit and help turn around its financial performance as early as 2H14, said AirAsia X CEO Azran Osman-Rani. "Every time you grow, you need time for the new capacity to mature and based on the forward sales, it looks positive for 3Q14 and 4Q14 because of the new capacity which we added last year that is showing signs of bearing fruit," he said. He added that AirAsia X expanded its capacity by 49% yoy in 4Q13 and 60% yoy in 1Q14, before scaling back. The airline had decided to deliberately accelerate its growth path in 2013 and 2014 to achieve a scale of advantage needed to be number one on its segment, said Azran. (Financial Daily)

AirAsia will recommence its Kuala Lumpur–Da Nang route with four flights each week. The flights will take off for the Vietnamese city every Monday, Wednesday, Friday and Sunday. The route will be AirAsia’s third destination to Vietnam from Malaysia, apart from flights to Ho Chi Minh City and Hanoi. (Star)

Daybreak│Malaysia

June 6, 2014

8

AirAsia India's plan to charge a fee for all check-in baggage has been red flagged by the Directorate-General of Civil Aviation (DGCA). The DGCA, on Tuesday, asked the airline to withdraw a number of proposed charges, including the fee on check-in baggage, as these were introduced without informing the aviation regulator, The Indian Express reported. While airlines in India have been allowed to unbundle services (charge for services), they have to inform the regulator before they introduce any such charge.

AirAsia, which is launching its flight between Bangalore and Goa on June 12, has done away with the concept of free check-in baggage of up to a certain minimum weight threshold and has, instead, introduced charges for all check-in baggage. All other low-cost carriers operating in the country offer free check-in baggage of up to 15 kg and full-service carriers offer up to 20 kg free check-in baggage. (Bernama)

KLCC Real Estate Investment Trust (KLCC Reit) will be included in the FTSE Bursa Malaysia KLCI (FBM KLCI) of 30 companies, replacing IOI Properties Group Bhd. "All constituent changes take effect at the start of business on June 23, 2014," Bursa and FTSE said. According to the statement, the FBM KLCI reserves list comprises the five highest-ranking non-constituents of the index by market capitalisation. They are YTL Power International Bhd, Bumi Armada Bhd, Malaysia Airports Holdings Bhd, Gamuda Bhd and UEM Sunrise Bhd. (Financial Daily)

The upcoming 10th Invest Malaysia institutional investment conference will showcase the country’s unique advantage as Asean’s Multinational Marketplace. The conference on June 9-10, organised by Bursa Malaysia Bhd and CIMB Investment Bank Bhd, will showcase more than 50 companies listed on the local bourse. Bursa Malaysia chief executive officer Datuk Tajuddin Atan said the public-listed companies at Invest Malaysia will highlight the diversity and sustainability of the exchange as a competitive marketplace in the region.

―Malaysian public-listed firms are transitioning into multinationals and competing well on the global stage,‖ he said in a joint-statement by Bursa Malaysia and CIMB. (BT)

Palm oil prices, which had been on a downtrend since mid-March, are likely nearing bottom as energy demand increasingly kicks in. ―Palm oil prices have been coming down for almost three months due to a build-up in supplies. However, the current level of around RM2,400 per tonne against Brent hovering around US$105 (RM339) per barrel should become increasingly viable for palm biodiesel production. The Indonesian and Malaysian governments are now able to meet biodiesel mandates with minimal subsidy,‖ said CIMB Futures Sdn Bhd broker representative Loh Kin Kien. ―Therefore, palm oil prices would be well supported in the region of RM2,300 per tonne but require a weather-induced supply disruption to significantly uplift prices,‖ he said. (BT)

IJM Land Bhd, the property developer arm of IJM Corp Bhd, together with its joint-venture partner Amona Development Sdn Bhd, will launch a 58-acre (23.4ha) township project called Pantai Sentral Park in Bukit Kerinchi here by end of this month, which has a gross development (GDV) of RM2.5m. IJM Land chief executive officer Datuk Soam Heng Choon said the project will be divided into 13 phases, out of which seven will be residential and six commercial. "Upon completion in 10-15 years, the township will accommodate a population of 15,000. (The Edge)

Daybreak│Malaysia

June 6, 2014

9

MEASAT Global Bhd (MEASAT) announced that the launch of the MEASAT-3b satellite had been rescheduled to September 2014. MEASAT-3b had previously been scheduled for launch on June 6, 2014 GFT (June 7, Kuala Lumpur time). The launch was postponed given the availability of the MEASAT-3b co-passenger. MEASAT-3b is designed to provide an additional 48 high powered Ku-band transponders at the 91.5E orbital slot to expand Direct-To-Home and VSAT services across Malaysia, India, Indonesia and Australia. Co-located with MEASAT-3 and MEASAT-3a, the satellite will more than double MEASAT's Ku-band capacity at 91.5E creating one of the region's most powerful and robust orbital locations. (Bernama)

Sona Petroleum Bhd is planning to buy a 40% stake in a producing oil and gas field offshore of Thailand from UK-listed Salamander Energy Plc for US$280m (RM903m). Sona, one of the three locally-listed special purpose acquisition vehicles (Spac), said it had signed a heads of agreement with Salamander for the purchase of the stake in the latter’s unit Salamander Energy (Bualuang) Ltd (SEBG) in Thailand. SEBG currently holds working interests in the B8/38 concession, containing the producing Bualuang Field, and in the surrounding G4/50 exploration concession, both in the Gulf of Thailand. B8/38 has been in production since 2008.

Salamander is an independent upstream oil and gas exploration and production company listed on the main market of the London Stock Exchange. It has a portfolio of producing, development and exploration assets in Thailand, Indonesia and Malaysia. (StarBiz)

Special purpose acquisition company Hibiscus Petroleum via Lime Petroleum has secured 5% stakes each in two oilfields located in the Norwegian Sea from North Energy, which held 20% stakes in both oilfields. The company said in a stock exchange filing on Thursday that upon completion of the acquisitions, which are subject to regulatory approval, the company’s portfolio of licenses in Norway would increase to 16. Tullow Oil Norge is the operator of the two oilfields and holds the remaining 80% stakes in both oilfields.

According to North Energy’s first-quarter results presentation, its 20% stakes in the oilfields potentially translates into a gross mean unrisked 184m barrels of oil equivalent and a net risk of 16 million barrels after applying estimated conventional probability of success of 43%. (StarBiz)

Tunnelling and underground works for Klang Valley Mass Rapid Transit (MRT) project are 60% completed and on track for its scheduled opening in July 2017. "Our tunnelling and underground job is 60% completed. We are on track for the completion of the tunnelling work by July next year," said MMC-Gamuda construction general manager Ubull Din Om at the signing of a memorandum of agreement (MoA) on a training collaboration between MMC-Gamuda KVMRT (T) Sdn Bhd and Delhi Metro. (The Edge)

Putrajaya’s one-party policy and its 40-year-old pro-Malay affirmative action programme will spell trouble for Malaysia's economy, effectively turning Malaysia into the weakest link in Asia, said Bloomberg columnist William Pesek. Citing Putrajaya’s poor handling of opposition politicians and the search for MH370, he said Malaysia will continue to hog headlines for all the wrong reasons if Putrajaya continues to be complacent in economic matters.

―Its 40-year-old, pro-Malay affirmative-action program chips away at the country's competitiveness more and more each passing year. The scheme, which disenfranchises Malaysia's Chinese and Indian minorities, is a productivity and innovation killer. It also has a corrupting influence on the political and business culture,‖ Pesek said.

Daybreak│Malaysia

June 6, 2014

10

Pesek based his observations on a new report from Sarah Fowler of UK-based Oxford Economics, which ranks Malaysia the "riskiest country in Asia of those we consider," more so than India, Indonesia and even coup-ridden Thailand.

In the report, Fowler said: ―Prompted by its high levels of public debt, rising external debt and shrinking current account surplus, there has been a shift in the perception of risks towards Malaysia and away from Indonesia."

Fowler also wrote that Putrajaya’s ―climate of entitlement amongst the Malay community limits entrepreneurialism and vested interests within Umno still resist change.‖ "The trouble is, that insularity is holding back a resource-rich economy that should be among Asia's superstars, not its weakest links." (Malaysian Insider)

The Malaysian American Electronics Industry (MAEI) expects positive growth in export value this year driven by smart mobile devices and consumer electronics segments. Chairman Datuk Wong Siew Hai said initially the committee expected export value to decline by 4.7% due to a drop in demand in the computing market. He said the members' focus had shifted towards the more popular smart mobile devices and consumer electronics segments from the computing segment. MAEI members' exposure to computing market product segment was at a majority of 46% while smart mobile devices and consumer electronics segments garnered 17% and 28%, respectively, as at end-2013. These are the three main product segments for MAEI. "The first-quarter data initially showed export value for this year was at negative 4.7 per cent. Moving to the second half, market players have already begun moving to other segments in the market, and we expect export value to be positive, although in the lower range," he told. (BT)

Asian Broadcasting Network (M) Sdn Bhd (ABNxcess), the first digital cable TV operator in the country, denied that content monopoly in the local pay-TV industry has inhibited the expansion of its business operations, but opined that a "little intervention" by the government is required to create a "more open" play field. Its president and CEO Sreedhar Subramaniam said ABNxcess is looking to achieve a subscriber base of 100,000 by the end of this year given the current momentum. He declined to reveal its subscriber figures at the moment, but according to a news report in March, it has only 30,000 subscribers. Its rivals Astro has 3.5m subscribers, while Telekom Malaysia's Hypp TV's number about 174,000. "We're still at infancy stage for network coverage, many areas already have 20% take-up rate," he told. (The Sun)

The Bank of Tokyo-Mitsubishi UFJ (BTMU) said that it is seeking to raise as much as US$500m (RM1.6bn) through a multi-currency Islamic bond programme in Malaysia, becoming the first Japanese bank to use sukuk for fund-raising. BTMU, Japan's largest bank and part of the Mitsubishi UFJ Financial Group Inc, will issue the bonds mainly in US dollars and yen. The programme will be Malaysia's first yen-denominated sukuk and one of the first Islamic bonds to be marketed by an issuer outside the Muslim world in recent years. It will be issued through BTMU's local subsidiary. CIMB Investment Bank Bhd and Mitsubishi UFJ Securities International Plc are advising the deal. (Reuters)

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BMSB: Changes in shareholdings

Type of No of Ave Price

5-Jun-14 Date transaction securities Company (RM)

EPF 2/6 Disposed 4,582,800 PUBLIC BANK

EPF 30/5 Disposed 2,126,600 AXIATA GROUP

EPF 2/6 Disposed 2,000,000 DIALOG GROUP

EPF 2/6 Disposed 495,200 BURSA MALAYSIA

EPF 30/5 Disposed 475,800 IOI PROPERTIES GROUP

EPF 30/5-2/6 Disposed 218,200 PETRONAS DAGANGAN

EPF 2/6 Disposed 90,200 AFFIN HOLDINGS

EPF 2/6 Disposed 89,800 LAFARGE MALAYSIA

EPF 29/5 Disposed 89,500 AEON CO. (M)

Kumpulan Wang Persaraan 28/5-29/5 Disposed 3,657,800 IJM CORPORATION

Kumpulan Wang Persaraan 28/5-29/5 Disposed 2,224,600 GAMUDA

Kumpulan Wang Persaraan 28/5-29/5 Disposed 180,600 TIME DOTCOM

Kumpulan Wang Persaraan 28/5-29/5 Disposed 72,000 BOUSTEAD HOLDINGS

Great Eastern Holdings Limited 2/6-3/6 Disposed 42,000 SALCON

WELLINGTON MANAGEMENT CO, LLP 29/5-3/6 Disposed 5,658,213 AIRASIA

Aberdeen Asset Management PLC 3/6-4/6 Disposed 140,200 SHANGRI-LA HOTELS

Mitsubishi UFJ Financial Group, Inc 29/5 Disposed 29,700 SHANGRI-LA HOTELS

EPF 2/6 Acquired 10,814,700 YTL CORPORATION

EPF 30/5-2/6 Acquired 6,000,000 IOI CORPORATION

EPF 2/6 Acquired 4,913,000 MAXIS

EPF 2/6 Acquired 3,000,000 TELEKOM MALAYSIA

EPF 2/6 Acquired 2,812,200 DIGI.COM

EPF 2/6 Acquired 2,432,000 IHH HEALTHCARE

EPF 2/6 Acquired 2,202,900 SIME DARBY

EPF 30/5-2/6 Acquired 2,154,500 ALLIANCE FINANCIAL GROUP

EPF 2/6 Acquired 1,988,200 AMMB HOLDINGS

EPF 30/5 Acquired 1,775,600 CIMB GROUP

EPF 2/6 Acquired 1,400,000 SAPURAKENCANA PETROLEUM

EPF 2/6 Acquired 1,000,000 PERISAI PETROLEUM

EPF 30/5-2/6 Acquired 614,800 PETRONAS CHEMICALS

EPF 2/6 Acquired 500,000 FELDA GLOBAL VENTURES

EPF 2/6 Acquired 500,000 HONG LEONG BANK

EPF 2/6 Acquired 500,000 YTL POWER INTERNATIONAL

EPF 2/6 Acquired 428,200 MALAYAN BANKING

EPF 2/6 Acquired 352,700 POS MALAYSIA

EPF 2/6 Acquired 151,100 PETRONAS GAS

EPF 2/6 Acquired 100,000 BUMI ARMADA

EPF 2/6 Acquired 75,000 AL-`AQAR HEALTHCARE REIT

EPF 30/5 Acquired 47,700 CAHYA MATA SARAWAK

EPF 2/6 Acquired 28,100 IJM LAND

EPF 2/6 Acquired 26,500 GAMUDA

Kumpulan Wang Persaraan 28/5 Acquired 980,400 FELDA GLOBAL VENTURES

Kumpulan Wang Persaraan 28/5-29/5 Acquired 360,100 GENTING PLANTATIONS

Kumpulan Wang Persaraan 29/5 Acquired 277,300 SP SETIA

QL Resources Berhad 30/5-3/6 Acquired 275,100 LAY HONG 1.87

Dato' Lim Thiam Huat 4/6 Acquired 1,800,000 BHS INDUSTRIES 

JT INTERNATIONAL HOLDING B.V. 3/6-4/6 Acquired 606,400 JT INTERNATIONAL

Aberdeen Asset Management PLC 2/6 Acquired 540,000 POS MALAYSIA

Mitsubishi UFJ Financial Group, Inc 29/5 Acquired 900,500 CIMB GROUP

Mitsubishi UFJ Financial Group, Inc 30/5 Acquired 398,800 YNH PROPERTY

Mitsubishi UFJ Financial Group, Inc 29/5-30/5 Acquired 106,200 BRITISH AMERICAN TOBACCO

Mitsubishi UFJ Financial Group, Inc 29/5-30/5 Acquired 12,400 POS MALAYSIA

WAH SEONG CORPORATION 5/6 Shares Buy Back 150,000 WAH SEONG CORPORATION 1.90

MUDAJAYA GROUP 5/6 Shares Buy Back 133,000 MUDAJAYA GROUP 2.47

KPJ HEALTHCARE 5/6 Shares Buy Back 50,000 KPJ HEALTHCARE 3.30

WCT HOLDINGS 5/6 Shares Buy Back 49,000 WCT HOLDINGS 2.16

SUPERMAX CORPORATION 5/6 Shares Buy Back 1,000 SUPERMAX CORPORATION 2.35

SOURCES: BMSB

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BMSB: ESOS & others

6-Jun-14 No Of New Shares Date of Listing Nature of transaction

UCHI TECHNOLOGIES 218,000 06-Jun-14 Exercise of ESOS

SOURCES: BMSB

BMSB: Off-market transactions

5-Jun-14 Vol

PANTECH 10,000,000

TAMBUN 5,120,000

EDUSPEC 2,550,000

CARING 2,491,000

LNGRES 1,602,000

PESTECH 1,000,000

PMETAL 700,000

CAB 676,950

HALEX 600,000

Notes:CN-Crossing deal on board lots

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

SOURCES: BMSB

BMSB: Entitlements & trading rights

6-Jun-14 Ann Date Entitlement Ex-date Entitlement

AFFIN HOLDINGS 27-Mar-14 Right issue 3:10; of 448.4m new shares @ RM2.76 10-Jun-14 12-Jun-14

SOURCES: BMSB, TE: Tax Exempt

BMSB: Dividends

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

Date

Payment

AFG Special dividend - single tier 10.50 22-May-14 9-Jun-14 11-Jun-14 26-Jun-14

SUPERMAX CORP Final dividend - single tier 3.00 9-May-14 10-Jun-14 12-Jun-14 30-Jun-14

DIALOG GROUP Cash dividend - single tier 1.10 15-May-14 10-Jun-14 12-Jun-14 26-Jun-14

PRESTARIANG Interim dividend - single tier 1.25 28-May-14 10-Jun-14 12-Jun-14 26-Jun-14

BUMI ARMADA Final dividend - single tier 3.25 14-May-14 11-Jun-14 13-Jun-14 3-Jul-14

LAFARGE MALAYSIA 1st interim dividend - single tier 9.00 22-May-14 13-Jun-14 17-Jun-14 16-Jul-14

JOBSTREET CORPORATION 1st interim dividend - single tier 1.75 5-Jun-14 18-Jun-14 20-Jun-14 3-Jul-14

MSM MALAYSIA Final dividend - single tier 14.00 19-May-14 25-Jun-14 27-Jun-14 11-Jul-14

UCHI TECHNOLOGIES Final dividend - single tier 6.00 29-Apr-14 26-Jun-14 30-Jun-14 24-Jul-14

GENTING MALAYSIA Final dividend - single tier 3.90 6-May-14 26-Jun-14 30-Jun-14 22-Jul-14

FELDA GLOBAL VENTURES Final dividend - single tier 10.00 3-Jun-14 26-Jun-14 30-Jun-14 11-Jul-14

MRCB 1st & final dividend - single tier 1.00 4-Jun-14 26-Jun-14 30-Jun-14 23-Jul-14

KOSSAN RUBBER IND. Final dividend - single tier 3.50 23-Apr-14 1-Jul-14 3-Jul-14 18-Jul-14

MCIL Interim dividend - single tier 2.19 29-May-14 9-Jul-14 11-Jul-14 8-Aug-14

ORIENTAL HOLDINGS Final dividend - single tier 3.50 14-May-14 11-Jul-14 16-Jul-14 1-Aug-14

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

BINTULU PORT Interim - single tier 6.00 28-May-14 16-Jul-14 18-Jul-14 8-Aug-14

JOBSTREET CORPORATION Final dividend - single tier 0.50 2-Jun-14 16-Jul-14 18-Jul-14 7-Aug-14

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

SOURCES: BMSB

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BMSB: Proposed cash calls & trading of rights…

6-Jun-14 Ann Date Proposed

BONIA CORPORATION 25-Apr-14 Bonus issue 1:1, share split 1:2

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

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

SOURCES: BMSB

BMSB: New Listing

Company Issue price Listing sought Tentative

Public Issue Offer for sale Private placement listing date

ICON OFFSHORE 1.85 221,745,000 289,022,000 - Main Market 25-Jun-14

BOUSTEAD PLANTATIONS 1.60 580,000,000 76,000,000 163,570,500 Main Market 26-Jun-14

No of shares

SOURCES: BMSB

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Corporate Actions

June 2014

SUN MON TUE WED THU FRI SAT

1 2 3 4 5 6 3

External Trade,

External Reserves

8 9 10 11 12 13 10

Invest Malaysia 2014 Invest Malaysia 2014 SP Setia 2Q, IPI, Manufacturing Sales

15 16 17 18 19 20 17

B-Toto 4Q, Top Glove

3Q & conf. call

CPI External Reserves

(mid-month data)

22 23 24 25 26 27 24

29 30 31

Awal Ramadhan Money Supply, PPI

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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Corporate Actions

July 2014

SUN MON TUE WED THU FRI SAT

1 2 3 4 5

MPI's Analyst Day,

External Trade

6 7 8 9 10 11 12

External Reserves IPI, BNM rate

13 14 15 16 17 18 19

CPI

20 21 22 23 24 25 26

External Reserves

(mid-month data)

27 28 29 30 31

Hari Raya Puasa Hari Raya Puasa Money supply

Source: Company, BNM, DOS, CIMB estimates

SOURCES: Company, BNM, DOS, CIMB estimates

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

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

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

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

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

Daybreak│Malaysia

June 6, 2014

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