PP 7767/09/2010(025354)

31 May 2010

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M
S tra tegy / Ear ni ng s R evi ew
MARKET DATELINE

1 June 2010

Downdraft Of Fear; Longer-

term Outlook Still Positive

No Major Corporate Earnings Surprises

After three consecutive quarters of positive earnings surprises, the earnings reporting season that has
just ended showed that the bulk of the corporate results that we covered were within our as
well as market expectations. Of the 93 companies that we covered, 73 of the results (78.5% of the
total) were within our expectations. Only nine companies (9.7% of the total) reported earnings that
exceeded our projections, while the remaining 11 results (11.8%) were below forecasts (see Table 1).
A fairly similar picture was reflected in the consensus numbers, where 66.7% of the reported earnings
were within expectations, while those reported earnings that were above and below forecasts were
roughly equal, i.e. 17.2% and 16.1% of the total, respectively (see Table 2).

Unlike the previous three quarters, there were no significant revisions to our individual
company’s earnings numbers during this results reporting season. Indeed, the upgrade to
downgrade ratio has fallen from 1.8 in the previous quarter to 0.78 during the current reporting
season. This suggests that major earnings upgrades have already been factored into analysts’
projections. Hence, we are unlikely to see any significant positive surprises in earnings from the
companies under our coverage in the quarters ahead. In fact, the risk is that there could be earnings
disappointment in the quarters ahead, in our view, due to : (i) A weaker-than-expected recovery in
external demand caused by the debt crisis in Europe and as effect of the global stimulus spending
packages dissipates; (ii) Impact from a stronger ringgit vis-a-vis the US dollar and the euro; (iii)
Reduction/restructuring of government subsidies, if it materialises; and (iv) Unforeseen write-downs of
companies similar to Sime Darby’s cost overruns for its engineering and utilities division.

Chart 1 : Net EPS Changes On A Sequential And Yoy Comparisons

%
60
39.1
40 32.1

20
11.7 7.8
0 4.0
4.2
-20

-40 qoq yoy

-60
1QCY06

2QCY06

3QCY06

4QCY06

1QCY07

2QCY07

3QCY07

4QCY07

1QCY08

2QCY08

3QCY08

4QCY08

1QCY09

2QCY09

3QCY09

4QCY09

1QCY10

Note : Net EPS Changes for RHBRI covered stocks in FBM KLCI

Lim Chee Sing

Please read important disclosures at the end of this report. (603) 9280 2153
cslim@rhb.com.my

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Table 1 : Comparison Of Actual Earnings Reported For 1QCY10 Against RHBRI’s Forecast

Covered Stocks Covered In Line Above Below Total reported % reported

Building Material 8 3 1 3 7 88
Semiconductor/ IT 4 2 2 4 100
Oil & Gas 8 4 2 6 75
Timber 4 2 1 3 75
Consumer 11 10 10 91
Gaming 4 3 3 75
Media 4 2 1 3 75
Motor 4 4 4 100
Construction 8 7 7 88
Infrastructure 2 2 2 100
Transportation 6 4 1 1 6 100
Telecommunication 4 3 1 4 100
Power 3 2 2 67

Banks & Finance 9 7 2 9 100

Insurance 4 3 1 4 100
Property 11 7 1 8 73
Plantation 6 5 1 6 100
Manufacturing 8 3 2 5 63

Total 108 73 9 11 93 86

% of total reported 78.5 9.7 11.8 100

Table 2 : Comparison Of Actual Earnings Reported For 1QCY10 Against Market Consensus

Covered Stocks Covered In Line Above Below Total reported % reported

Building Material 8 2 2 3 7 88
Semiconductor/ IT 4 1 3 4 100
Oil & Gas 8 4 2 6 75
Timber 4 2 1 3 75
Consumer 11 10 10 91
Gaming 4 1 1 1 3 75
Media 4 2 1 3 75
Motor 4 3 1 4 100
Construction 8 5 1 1 7 88
Infrastructure 2 1 1 2 100
Transportation 6 3 1 2 6 100
Telecommunication 4 3 1 4 100
Power 3 2 2 67
Banks & Finance 9 7 2 9 100
Insurance 4 2 2 4 100
Property 11 7 1 8 73
Plantation 6 4 1 1 6 100
Manufacturing 8 3 2 5 63

Total 108 62 16 15 93 86
% of total reported 66.7 17.2 16.1 100.0

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Despite the lack of positive earnings surprises, the overall earnings growth momentum of the stocks
under our coverage remains intact. Sequentially, net EPS for the FBM KLCI stocks under our coverage
recovered to +7.8% qoq in the 1Q, after having eased to +4.2% in 4Q 2009 (see Chart 1). On a yoy
comparison, net EPS for the FBM KLCI stocks under our coverage continued to trend up and surged to
a high of +32.1% in the 1Q, from +11.7% in the previous quarter. The strong surge in EPS growth
measured on a yoy basis, however, reflected partly a low base effect, although it points to sustained
recovery in corporate earnings. Overall, the stronger earnings momentum in the recently
concluded reporting seasons was consistent with the recovery in the economy, where real GDP
registered a stronger-than-expected growth of 10.1% yoy in the 1Q, from +4.4% in 4Q 2009. But the
lack of positive earnings surprises and the anticipated slower economic growth in the quarters ahead
suggest that earnings growth might have already peaked in the 1Q.

Most Sectors Reported Earnings That Were Within Expectations

Unlike the previous three quarters, most of the industries reported earnings that were generally within
our and market expectations. During the quarter under review, only the banking,
semiconductor/IT and manufacturing sectors reported earnings that were slightly above our
as well as consensus projections. For the banking sector, the better-than-expected results came
from Affin Holdings on account of the low allowance for impairment on loans during the quarter, and
Alliance Financial Group on the back of lower-than-expected loan loss provisioning. On the other hand,
better sales and margins bolstered earnings of both the semiconductor and manufacturing industries.
The building material and oil & gas sectors, in contrast, registered earnings that were below
expectations. The slightly poorer-than-expected earnings of the building material sector
were on account of higher raw material costs for the steel product manufacturers (Ann Joo Resources
and Sino Hua-An International) and lower-than-expected cement selling prices and higher-than-
expected operating expenses for Lafarge (M) Cement. For the oil & gas sector, KNM’s earnings
suffered from weaker-than-expected demand from China, Europe and Middle East and lower utilisation
rate, while that of Wah Seong from weaker-than-expected contribution from the engineering divison
given still weak demand from topsides fabrications and compressors.

Most of the bigger cap companies reported earnings that were within our expectations. During the
quarter under review, only earnings of MISC, IOI Corporation and TM were below our
projections. MISC’s earnings continued to be dragged down by the larger-than-expected losses at the
container liner division on the back of the persistent triple-whammy of reduced volumes and freight
rates, but increased operating cost. The variance of IOI Corporation’s earnings against our forecast
came largely from the slightly lower-than-expected average crude palm oil price achieved as well as
higher-than-expected unallocated expenses and minority interest. The weaker-than-expected results
of TM, on the other hand, was caused by lower-than-expected operating income and higher-than-
expected tax rate.

Earnings Growth Remains Intact

Despite the lack of positive earnings surprises during the current reporting season, the outlook for
corporate earnings recovery remains generally intact. We project net EPS for the FBM KLCI stocks
under our coverage to recover from -14.9% in 2009 to +18.3% in 2010 and sustain at +14.4%
in 2011 (see Table 3). The recovery in earnings, though from a sharp contraction last year, was
relatively broad base, with sharp rebounds in earnings across key industries (see Table 4).

Based on the latest FactSet Asian and IBES consensus numbers, the local market is now trading at
comparable valuations vis-a-vis the Singapore and Indonesian markets (see Table 5). Whilst it is still
trading at a premium vis-a-vis other regional peers, this, in our view, is a reflection of high domestic
liquidity and strong participation by the Government-linked funds, and will unlikely change in the
foreseeable future. It is, however, still a very under-owned market by foreign investors and
non-strategic foreign equity ownership of the Malaysian market is estimated at below 21% currently
(20.5% at end-March 2010), a sharp drop from a recent high of 27.5% at end-April 2007.

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Table 3 : Earnings Outlook And Valuations

FBM KLCI RHBRI's BASKET
COMPOSITE INDEX @1,285.01 2008a 2009a 2010f 2011f 2008a 2009a 2010f 2011f
31/5/2010
EBITDA Growth (%) 2.2 -6.6 21.9 11.7 4.5 -2.7 20.2 11.8
Pre-Tax Earnings Growth (%) -9.1 -10.0 29.3 20.0 -6.2 -2.9 24.3 19.2
Normalised Earnings Growth (%) 0.4 -10.1 22.6 14.4 -1.2 -5.0 25.5 15.1
Normalised EPS Growth (%) -0.8 -14.9 18.3 14.4 -4.2 -8.6 18.2 15.1
Prospective PER (x) 16.3 18.0 15.2 13.3 16.3 17.5 14.5 12.6
Price/EBITDA (x) 8.7 9.4 7.7 6.9 8.6 8.6 7.3 6.5
Price/Bk (x) 2.4 2.2 2.1 2.0 2.3 2.0 1.9 1.8
Price/NTA (x) 2.8 2.9 2.5 2.3 2.7 2.3 2.2 1.1
Net Interest Cover (x) 6.5 5.9 6.0 8.1 6.2 7.0 7.2 7.9
Net Gearing (%) 71.3 61.3 52.6 49.0 64.0 52.9 48.5 46.5
EV/EBITDA (x) 6.8 7.6 6.4 5.6 7.0 7.5 6.4 5.7
ROE (%) 15.2 12.4 14.6 14.9 13.6 11.8 13.4 14.1

Table 4 : Sector Weightings & Valuations

Covered Stocks MKT CAP Weight EPS GWTH (%) EPS GWTH (%) PER (x) Recommendation
RMbn % Before After Before After# FY10 FY11
FY10 FY10 FY11 FY11
Banks & Finance 182.5 25.6 19.5 20.1 14.5 14.5 13.8 12.1 Overweight
Plantation 102.3 14.3 3.1 0.5 23.8 24.3 18.5 14.9 Overweight
Telecommunications 100.6 14.1 15.9 16.8 10.9 11.3 16.5 14.8 Overweight
Power 58.3 8.2 24.4 29.6 9.1 10.2 11.5 10.5 Overweight
Gaming 48.1 6.7 8.6 19.6 14.2 6.0 13.0 12.3 Overweight
Oil & Gas 29.2 4.1 21.3 22.9 11.3 14.4 14.5 12.6 Overweight
Motor 17.1 2.4 44.1 58.1 7.0 9.3 9.8 8.9 Overweight
Property 15.4 2.2 18.0 -13.8 25.6 23.2 11.7 9.4 Overweight
Insurance 3.4 0.5 17.6 20.1 11.3 13.8 9.5 8.3 Overweight
Semiconductors & IT 2.8 0.4 67.6 106.8 50.4 65.7 9.3 4.6 Overweight
Transportation* 53.3 7.5 22.3 41.3 13.9 -2.3 20.2 14.9 Neutral
Consumer 28.6 4.0 9.1 8.5 6.7 7.1 14.9 13.9 Neutral
Construction^ 18.4 2.6 26.6 29.3 7.6 7.5 15.6 14.5 Neutral
Infrastructure 17.6 2.5 -1.4 -1.4 48.2 47.6 13.4 9.1 Neutral
Media# 14.1 2.0 38.4 39.6 17.9 7.0 12.2 11.4 Neutral
Building Materials 11.0 1.5 29.1 32.3 10.8 -37.4 9.4 7.2 Neutral
Manufacturing 7.8 1.1 32.7 33.1 16.1 19.1 11.2 9.4 Neutral
Timber 3.2 0.4 101.5 81.5 36.6 41.0 9.9 7.0 Neutral
713.8 100.0
# Exclude Astro
* Exclude MAS earnings in 2010
Note : RHBRI's basket

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Table 5 : Regional Comparisons

M'sia S'pore Thailand Philippines Indonesia Hong Kong Taiwan Korea
FactSet Asian Consensus Trends report dated 29 April 2010
EPS growth (%)
2009a 6.4 -1.0 32.7 33.2 41.8 9.5 46.8 42.2
2010f 22.2 10.1 15.3 9.7 24.7 22.2 61.8 60.7
2011f 11.4 9.4 15.3 4.6 22.1 17.4 15.1 8.9
PER (X)
2009a 18.2 16.3 11.8 13.0 16.0 16.1 22.5 14.2
2010f 14.6 14.7 11.1 12.4 15.1 13.8 14.2 9.6
2011f 13.1 13.5 9.7 11.9 12.4 11.8 12.4 8.8
IBES Consensus dated 20 May 2010
EPS growth (%)
2009a -19.2 -9.0 28.0 19.6 5.2 17.3 46.8 -13.6
2010f 29.7 22.5 16.0 19.7 31.8 17.4 86.6 56.6
2011f 14.6 12.6 17.0 11.5 19.8 12.7 14.4 9.5
PER (X)
2009a 18.8 16.6 12.9 15.3 18.7 15.4 24.8 24.1
2010f 14.2 13.4 11.2 12.8 14.1 13.0 13.5 9.2
2011f 12.4 11.9 9.6 11.5 12.0 11.5 11.8 8.4
Performance (%)
2008 (yoy) -39.3 -49.2 -47.6 -48.3 -50.6 -48.3 -46.0 -40.7
2009 (yoy) +45.2 +64.5 +63.2 +63.0 +87.0 +52.0 +78.3 +49.7
2010 (ytd)* +1.0 -5.0 +2.2 +7.2 +10.4 -9.6 -9.9 -2.5
* as at 31st May 2010

The Fear Returns; Markets Under Siege

Despite the sharp double-digit 10.1% yoy surge in real GDP growth registered in the 1Q, the market
appears to be caught in a downdraft of fear sparked off by the Europe’s sovereign debt
crisis. While a bailout package was put in place to deal with Greece’s immediate funding needs,
doubts linger as to whether its government has the political will to push through the accompanying
austerity measures in the face of public protests. And the other concern is whether the package will
send Greece into another economic recession. Similarly, the massive 750 billion euros emergency
stabilisation loan package to fund European countries that could come under speculative attacks met
with scepticism. Investors were fearful that by the time all the approvals needed are secured, it may
be a little late to stabilise the whole region. In addition, individual country’s debt-cutting measures
also threaten to undermine the region’s growth.

Subsequently, investor confidence took a turn for the worse when Germany unexpectedly banned
naked short-selling and prohibited speculation against European government bonds using credit default
swaps. These created uncertainty about regulations affecting financial markets which, coupled with US
regulators looking at restricting risk-taking activities of banks, sent financial markets reeling. In
addition, credit tightening measures implemented by China to cool down the surge in asset
prices also created concerns on the sustainability of China’s economic expansion that
threatens to undermine the global economic recovery.

The heightened market anxiety is reflected in the sudden surge in the gauges like the Chicago Board
Options Exchange’s volatility index, or the VIX index, frequently known as Wall Street’s fear gauge,
which surged above the 45 mark for the first time since March 2009 (see Chart 2), after hitting its
lowest level for more than two years on April 12 at 15.23. Similarly, the spread between the London
Interbank Offered Rate (Libor) and the Overnight Indexed Swaps (OIS) -- a measure of banks’
willingness to lend to each other -- reached 31.5 basis points on 26 May, its highest since July last
year.

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Chart 2 : Sudden Surge In The VIX Index Points To Market Anxiety

Index

60
55
50

45
40
35
30
25

20
15
10
39817
39835
39854
39874
39891
39910
39930
39947
39967
39986
40004
40023
40042
40059
40079
40098
40115
40134
40154
40171
40192
40212
40232
40249
40268
40288
40305
40324
Risk Is A Sharper-than-expected Slowdown In 2H, Not A “Double-dip”

Whilst Europe’s sovereign debt problems and China’s credit tightening plans have dampened optimism
about the health of the world economy, we believe the risk of a “double-dip” is manageable.
This is mainly on account of : (i) Emergency stabilisation packages have already been put in place in
Europe to prevent contagion and confidence from spiralling downward. Consequently, the European
debt problems will unlikely snowball into a much bigger issue that will jeopardise the global economic
recovery; (ii) Many of the eastern and central European countries have already suffered double-digit
economic contraction last year and are undergoing restructuring; (iii) With US and Asia ex-Japan
economies firmly on recovery path, Germany, being financially stable and the largest economy in
Europe, can export and provide the cushion to stabilise the European region; (iv) More sustainable US
economic recovery where consumer spending is picking up and labour market conditions are
improving; and (v) Economic recovery in Asia ex-Japan is building momentum relatively well and
appears sustainable in the absence of a major exogenous shock.

Nevertheless, the austerity measures undertaken by each of the major economies in Europe, such as
Greece, Spain, Portugal, Italy and UK, to reduce the fiscal deficit and restructure the debt suggest that
the economic recovery could stall and fall back in these countries. This would imply weaker external
demand for export-dependent economies and hence, a significant risk of a sharper-than-expected
slowdown in the global economy in the 2H of 2010 that could persist into the 1H of 2011, in
our view. Malaysia would not be spared as Europe accounts for about 10.6% of its total exports
directly which have been growing robustly by 29.1% yoy in the 1Q. At the same time, the indirect
impact via the other export markets such as China where Europe is its largest export market, could
also be significant. Consequently, we continue to anticipate real GDP slowing down to 4.8% yoy in the
2H, from +8.8% in the 1H.

Lack Of Domestic Leads

As the economic growth has peaked and will likely moderate in the 2H, and in the absence of major
positive corporate earnings surprises, the market may have already fallen into a downshift, in our view.
The impending move by the Government to reduce/restructure subsidies (purportedly over a period of
five years), though positive in increasing efficiency in the allocation and utilisation of the country’s
resources over the longer term, will raise cost of doing business and impact consumer sentiment and

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dampen market performance in the near term. Under such circumstances, the impending release of
the Tenth Malaysia Plan, 2011-15 in June 2010 and the second part of the New Economic Model, will
unlikely excite the market and reverse the market direction in the near term.

Greater Volatility And A Near-term Market Downshift

On balance, more negative than positive news flow ahead suggests that global equities may move
into a phase of greater volatilities, which in our view, could persist for the next three to four
months until a clearer picture emerges on the strength of the global economic recovery. Although we
are looking at the FBM KLCI trading towards 1,200 in the immediate term (i.e. another 6.6% downside
from the current level), the risk of more downside is likely to be greater than the potential for an
upside surprise in the immediate term. Whilst the FBM KLCI benchmark has bounced back by 20.22
points and 15.85 points on 27 and 31 May to 1,285.01 currently, after nine consecutive days of losing
streaks since turning downwards on 13 May, we expect the market to remain volatile. The downside,
as highlighted by RHBRI’s technical research, is towards the technical support levels of 1,229 and
1,154.

Whilst we envisage a strong support at the important psychological 1,200 level, there is still a risk of
the market overshooting on the downside in the near term given the adverse external developments.
If the FMB KLCI fails to hold at the important psychological threshold of 1,200, we would expect a
strong technical support at 1,154. This implies a 2010 PER of 13.3x based on the stocks under our
coverage, which coincidentally is one standard deviation (SD) below the average one-year forward PER
for the FBM KLCI stocks since 2000 (estimated to be around 15x).

Value Re-emerging As Long-term Outlook Still Positive

Looking beyond this downshift, we believe the long-term outlook for the market is still positive
given our expectation of the sustained economic and corporate earnings growth. We believe the global
economic recovery is more sustainable than feared, although there is a risk of a sharper-than-expected
slowdown in the 2H. Domestically, the Government’s push for reduction/restructuring of subsidies,
liberalisation and the implementation of a new economic model should bode well for a more market-
oriented economic structure that could gradually induce greater foreign participation in the local
market. We also expect more M&A activities under such an environment to spice up activities in the
local market.

On balance, while we expect a potential downshift of the market in the near term and envisage greater
volatility in the market over the next three to four months, we believe the market will likely come back
towards the 4Q when there is more certainty on the strength of the global economic recovery.
Consequently, our year-end FBM KLCI target remains unchanged at 1,400 or 14.5x 2011
earnings.

Market Strategy : Accumulate On Weakness And Ride The Volatility

In our view, the long-term economic picture remains positive although we acknowledge that the revival
of past concerns about the strength of the global economic recovery will continue to cause volatility in
the market. We believe investors should view the downshift in the market as an opportunity
to buy on weakness although we recommend focusing on fundamentally-robust stocks with positive
and visible earnings outlook, good management and are attractively valued. A list of our top picks is
reflected in Table 6. Meanwhile, investors may find greater price stability in companies that have little
or hedged exposure to overseas markets or imported costs. These domestic plays include Maxis, TNB,
PLUS, Allianz, AEON, KFC, KPJ and B-Toto. In addition, Asian consumer plays such as Carlsberg
(expanding in Singapore), Axiata (expanding mobile footprint across Asia) and Parkson (expanding in
china and Vietnam) are also likely to be relatively sheltered given the higher savings rate, growing
consumption spending and large young population.

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Table 6 : RHBRI’s Top Picks

FYE Price Fair Mkt EPS EPS GWTH PER P/BV P/CF GDY
Value Cap (sen) (%) (x) (x) (x) (%)
31/5/2010 (RM/s) (RM/s) (RM m) FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
Maybank Jun 7.34 8.96 51,950 51.3 60.7 35.7 18.1 14.3 12.1 1.9 n.a. 4.0
CIMB Dec 6.78 8.12 47,891 47.8 56.3 20.2 17.9 14.2 12.0 2.2 n.a. 1.8
Maxis Dec 5.22 6.20 39,150 33.2 36.2 6.6 9.1 15.7 14.4 3.9 10.2 6.4
Tenaga Aug 8.35 10.40 36,185 70.7 80.9 42.0 14.4 11.8 10.3 1.3 4.6 3.4
Genting Dec 6.80 8.95 25,193 53.4 56.4 68.8 5.7 12.7 12.1 1.6 13.6 1.4
KLK Sep 15.90 18.25 16,973 87.5 123.3 23.7 40.8 18.2 12.9 2.8 14.6 2.8
Top Glove Aug 12.28 15.50 3,730 89.0 96.2 55.3 8.1 13.8 12.8 3.6 11.3 3.7
IJM Land^ Mar 2.19 3.06 2,416 18.4 34.4 88.5 87.2 11.9 6.4 1.3 4.5 0.9
Media Prima Dec 2.12 2.55 2,004 16.3 18.0 +>100 10.1 13.0 11.8 2.1 6.6 4.7
Sunway City Dec 3.83 5.33 1,800 34.8 38.8 9.8 11.6 11.0 9.9 0.8 7.0 2.1
Unisem Dec 2.79 4.06 1,447 27.1 36.1 +>100 33.5 10.3 7.7 1.4 3.3 1.8
Kossan Dec 7.27 10.74 1,162 82.6 103.0 10.3 24.7 8.8 7.1 2.4 7.7 1.4
Faber Dec 2.43 3.40 882 26.5 24.2 16.4 -8.8 9.2 10.0 1.9 5.7 2.9
Evergreen Dec 1.48 2.35 759 21.3 23.3 26.1 9.4 6.9 6.3 1.0 9.8 3.4
Notion Vtec Sep 2.73 4.68 422 34.7 46.8 35.3 35.1 7.9 5.8 2.0 5.8 2.4
Daibochi Dec 2.94 4.20 223 35.1 38.0 16.9 8.3 8.4 7.7 1.6 7.0 7.7
^ FY10-11 valuations refer to those of FY11-12

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IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions
and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to
opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an offer,
invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever and no
reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an
interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of
persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate particular
investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on
an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts any liability for any loss or
damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB Group may
at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans of any
company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors, officers,
employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other services from the
companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect information
known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon
various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over a
period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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subject to the duties of confidentiality, will be made available upon request.

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