10 October 2019

Industrial builder
AME Elite Consortium Bhd (AME) is a total solutions provider for Initiate Coverage
industrial parks and factory units. Starting out as a contractor for
industrial buildings in 1995, it has since expanded into industrial
park development, leasing of industrial properties and managed
workers’ dormitories. AME benefits from rising demand for industrial
AME Elite
Sector: Construction
properties in Malaysia due to trade diversion amidst the ongoing US-
China trade war. We initiate coverage on AME with a BUY call and
target price of RM1.83, based on 30% discount to RNAV.
BUY (initiate coverage)

Integrated industrial solutions provider

AME provides integrated and comprehensive solutions encompassing the Retail IPO price: RM1.30
design and construction of customised large manufacturing plants,
development of industrial parks, and the sale and lease of industrial factory
Target price: RM1.83
units. It has a proven track record of completing about 200 large
manufacturing and industrial buildings for various industries as well as four
industrial parks in Johor.

High order book and remaining gross development value

Details of IPO
AME has a high remaining construction and engineering services order Listing date 14 Oct 2019
book of RM376.9m, equivalent to 1.4x FY19 revenue, to be completed by
2Q21. For the property development division, it has remaining industrial Share base (m)
land with gross development value (GDV) of RM1.61bn, mainly in 2 of its Existing share base
industrial parks in Johor, ie, i-Park@Indahpura and i-Park@Senai Airport Post IPO enlarged share base 427.1
City (SAC). The RM150m acquisition of a 77-acre land for i-Park@SAC
Phase 3 expansion added another RM555m to the total GDV. Total no of shares on offer (m)
New share issues 85.4
Valuation Offer for sales 42.7
We initiate coverage on AME with a BUY call and target price of RM1.83,
based on 30% discount to RNAV. CY20E core PER of 9.5x based on IPO IPO share for application (%)
price is attractive compared to our Construction Sector (excluding GAM, Institutional offering 13.3%
IJM and MRC) weighted average core PER of 13.8x. We like AME for (1) Retail offering 86.7%
its niche gated and guarded industrial park development projects; (2) a
total solutions provider for local and multinational companies to build
manufacturing plants and logistic warehouses; and (3) its value Utilisation of proceeds (%)
engineering expertise to reduce construction cost. Land acquisition and JVs 62.2%
Working capital for i-Park@SAC 20.7%
Earnings & Valuation Summary Precast concrete expansion 8.1%
FYE 31 Mar 2018 2019 2020E 2021E 2022E Listing expenses 9.0%
Revenue (RMm) 341.3 339.0 361.8 384.9 354.9
EBITDA (RMm) 67.7 66.1 80.6 83.3 86.2 Source: Affin Hwang, IPO Prospectus
Pretax profit (RMm) 95.2 72.6 67.1 74.1 80.2
Net profit (RMm) 71.0 47.3 53.6 59.2 64.2
EPS (sen) 16.6 11.1 12.6 13.9 15.0
EPS growth (%) 23.1 (33.3) 13.3 10.4 8.4
PER (x) 7.8 11.7 10.4 9.4 8.7
Core net profit (RMm) 42.9 31.5 56.6 59.2 64.2 Loong Chee Wei, CFA
(603) 2146 7548
Core EPS (sen) 10.0 7.4 13.3 13.9 15.0
cheewei.loong@affinhwang.com
Core EPS growth (%) 4.6 (26.6) 79.9 4.6 8.4
Core PER (x) 12.9 17.6 9.8 9.4 8.7
Net DPS (sen) 0.0 0.0 2.5 2.8 3.0
Dividend Yield (%) 0.0 0.0 1.9 2.1 2.3
EV/EBITDA (x) 9.8 10.1 6.8 6.4 5.5
Source: Company, Affin Hwang estimates
*PE based on indicative price of RM1.30 / EPS and DPS based on enlarged share base of 427.1m

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

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10 October 2019

Business Overview
Niche industrial property developer
AME stands out as a niche industrial property developer that is seeing
growing demand, compared to other listed property developers that are
more focused on residential and commercial property development. AME
has established track record in industrial park development under the “i-
Park” brand in three locations in Johor. AME is utilising the bulk of the IPO
cash proceeds (62% of RM111m) to acquire land and form joint ventures
(JVs) to expand its industrial property development business. Currently,
AME’s property development activities are concentrated in Johor and plans
to diversify geographically in other major industrial areas in Malaysia, such
as Penang and Klang Valley, to tap on new markets and offer customers
more location choices.

Fig 1: AME’s industrial park locations in Johor

Source: Company

In-house construction expertise

It has in-house construction and engineering expertise, including
mechanical and electrical (M&E) engineering, and industrialised building
system (IBS) involving steel structure and precast concrete fabrication. Its
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com
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10 October 2019

current precast concrete production capacity is 24k m 3 p.a. in its existing

facility (measuring 100.9k sq ft). AME is building a new facility (measuring
126k sq ft) with initial capacity of 12k m3 p.a., utilising RM9m or 8% of the
IPO proceeds to partially finance the expansion (total investment of
RM16.2m). This is to meet the strong demand for precast concrete
products and produce higher volume and customised products. The new
facility is expected to complete by 4Q19.

Fig 2: Existing and new precast concrete facility

Source: Company

Property investment generates recurrent earnings

AME’s property investment and management arm owns industrial
properties and workers’ dormitories that generate recurrent rental income.
Its investment property portfolio comprises 35 industrial properties
tenanted by third parties. Aggregate total expected rental income is
RM2.2m per month currently, contributing 7.6% of total revenue. It also
owns 2 workers’ dormitories in 2 of the industrial parks developed by the
company with 5,770 beds in total. Current occupancy rate is high at 75-
83% for the 2 dormitories.

Property investment complements its property development arm

AME’s property investment division complements its industrial park
development business. Some completed units can be retained to generate
recurrent rental income. There are opportunities to realise higher value for
its investment properties when sold with existing tenants to REITs and
property investment companies. We understand that it has a good
business relationship with Axis REIT (AXIS MK – RM1.84 – BUY – TP:
RM2.04), which has acquired industrial properties from AME previously
and formed a joint venture to develop SME City industrial park. The
established relationship with a listed industrial REIT with a strong franchise
provides a vehicle for AME to realise the value of its investment properties
in the future.

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

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10 October 2019

Fig 3: AME’s historical milestones

Source: Company

Major customers
AME’s major customers are multinational and local companies involved in
various industries such as consumer and food products, electronics,
oleochemical, oil and gas-related industry, aerospace components and
logistics warehouse. It has a strong track record in the construction of
large purpose-built factories and modern warehouses. AME has business
relationships with some of its major customers for as long as 4 years. This
is a testament to its in-house expertise, quality control and customer
service to retain its customers.

Fig 4: AME’s top 5 major customers by revenue contribution

Source: Company

Strong management team

The major shareholders are also the key management of AME. The Group
Managing Director Kelvin Lee Chai and 3 Executive Directors will retain a

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

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10 October 2019

70% stake in AME after the offer for sale of 17.1m shares in AME to the
public and employees as part of the IPO exercise. The directors have vast
experience in the construction industry ranging from 25 to 47 years, while
being involved in the property development sector for about 8 years.

Fig 5: Key management team and major shareholders

Source: Company

Industry overview
Strong industrial property demand
The strong demand for industrial property in Malaysia is reflected in the
latest 1H19 national property statistics. Malaysia’s industrial property
transaction volume jumped 24.8% yoy to 3,137 in 1H19, outpacing
commercial and residential property transaction volume growth of 6.1%
yoy and 20.4% yoy respectively. The overhang units (completed and
unsold for over 9 months) in the industrial segment was also reduced by
11.5% yoy to 1,047 units in 1H19. The unsold industrial properties under
construction and not constructed also fell 1.6% to 799 units and 83.0% yoy
to 30 units respectively in 1H19.

Fig 6: Malaysian property transaction volume by sub-sectors

Source: NAPIC

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

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10 October 2019

Beneficiary of trade diversion due to US-China trade war

Industrial property is seeing strong demand in Malaysia due to rising
foreign direct investment (FDI). Malaysia’s competitive advantages include
the country’s good infrastructure and international air and sea
transportation connectivity, and the availability of English and Mandarin-
speaking skilled labour. Malaysia is expected to benefit from the plant
relocations or global expansion of multinational companies (MNCs) to
avoid tariffs due to the US-China trade war.

AME benefits from rising industrial property demand in Johor

We believe AME’s industrial park development in Johor will benefit from
the rising investments especially in the manufacturing sector in Iskandar
Malaysia. The southern economic corridor has secured cumulative
committed investment of RM302.1bn since its inception in 2006 until 1H19.
According to Knight Frank Malaysia managing director Sarkunan
Subramaniam, RM172.2bn of the total has been realised as of 1H19. In
1H19, 39% of the investments were FDIs, mainly from China (RM40.7bn)
and Singapore (RM20.6bn).

Financial highlights
Construction is the main earnings contributor
The construction arm remains the key revenue and gross profit contributor
to the group currently at 67% and 47% of total respectively. Its engineering
business complements its construction operation by offering M&E and
customised fit-out services to its customers after the plant buildings are
constructed. Engineering services contribute an additional 11-12% of
group revenue and gross profit in FY19. Its property development and
investment operations contribute the balance of revenue and gross profit.
We expect the earnings contribution from its property development and
investment businesses to expand going forward with the launch of the i-
Park@SAC Phase 3.

Fig 7: Segmental revenue breakdown in FY19 Fig 8: Segmental gross profit breakdown in FY19

Source: Company Source: Company

Strong 1QFY20 results

AME announced a good set of 1QFY20 results. Revenue jumped 61% yoy
to RM94.4m in 1QFY20, driven by the jump in property development
revenue (+12.3x yoy) as progress billings accelerated. Gross profit surged
117% yoy to RM31.2m, mainly driven by higher construction earnings
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com
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10 October 2019

(+34% yoy) and the turnaround of its property development division. Net
profit also saw strong 96% yoy growth to RM13.1m in 1QFY20, despite the
charging of listing fees of RM1m. Its net gearing was at a manageable
level of 0.29x as at 30 June 2019. Post-IPO, we estimate its net gearing
will improve to 0.06x with the cash proceeds and higher equity.

Fig 9: Quarter result summary

Year to 30 Jun 1QFY19 1QFY20 Change
(RMm) (RMm) (% YoY)
Revenue 58.7 94.4 61
Cost of sales (44.3) (63.1) 43
Gross profit 14.4 31.2 117
Other income 0.6 0.3 (48)
Administrative expenses (7.1) (8.9) 25
Distribution expenses (0.6) (1.2) 108
EBIT 7.4 21.4 191
Interest Income 0.7 0.7 1
Interest Expense (1.2) (4.1) 258
Associates 1.4 1.1 (24)
Forex gain/(loss) 0.0 0.0 (67)
Exceptional gain/(loss) (0.0) 0.0 (1,750)
Pre-tax Profit 8.3 19.1 130
Taxation (1.5) (4.5) 198
Minority Interest (0.1) (1.4) 2,478
Net profit 6.7 13.1 96
Core net profit 6.7 13.1 96

Gross margin (%) 24.5 33.1

EBIT margin (%) 12.5 22.7
Pre-tax margin (%) 14.1 20.2
Effective Tax (%) 18.3 23.8
Source: Company, Affin Hwang

Sustainable profit margins

We estimate its core net profit (excluding fair value gains and listing
expenses) fell 27% yoy to RM31.5m in FY19. Lower revenue, mainly from
its property development division, and higher costs led to a compression in
EBIT margin to 17.9% in FY19 compared to 18.2% in FY20. Effective tax
rate also jumped to 29.8% in FY19 compared to 17.9% in FY18 due to real
property gains tax charged on the disposal of investment properties. EBIT
margin improved to 22.7% in 1QFY20 compared to 12.5% in 1QFY19 as
revenue jumped with higher progress billings for its property development
projects due to higher sales in FY19. We believe the higher profit margin is
sustainable with the higher progress billings in FY20 boosting revenue.

Business Prospects
High GDV to sustain property development activities
AME owns industrial land with remaining gross development value (GDV)
of RM1.61bn, equivalent to 37.2x FY19 property development revenue.
The RM150m acquisition of a 77-acre land, which was completed on 27
August 2019, for i-Park@SAC Phase 3 expansion added another RM555m
to the total GDV. AME has seen good demand for its industrial park
projects with cumulative sales of RM1.15bn to date. It has unbilled sales of
about RM71m currently, which will contribute to FY20E revenue.

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

Page 7 of 15
10 October 2019

Fig 10: Property development projects

Source: Company

Large construction order book

AME has a high remaining construction and engineering services order
book of RM376.9m, equivalent to 1.4x FY19 revenue, to be completed by
2Q21. It specialises in the construction of industrial buildings and has the
expertise to build large purpose-built factories. This is AME’s competitive
advantage as there are few peers that are able to build large factories with
customised specifications. Good prospects for AME to grow its order book
given the rising demand for manufacturing plants (higher FDIs) and
logistics warehouses (strong growth in e-commerce activities) in Malaysia.

Rising FDI and sustained manufacturing GDP growth

Approved investments in Malaysia’s manufacturing sector saw 5-year
CAGR of 10.9% to RM87.4bn in 2013-2018, while gross foreign direct
investment (FDI) saw 5-year CAGR of 6.8% to RM144.2bn in 2013-2018.
Malaysia’s approved FDI jumped 97.2% y-o-y to RM49.5bn in 1H19,
indicating that FDI growth is gaining momentum. AME is a potential
beneficiary of the rising demand for industrial properties with the sustained
growth in manufacturing sector. The government expects manufacturing
sector real GDP to grow 4.1% in 2020E, slightly higher than the estimated
growth of 4.0% in 2019E.

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

Page 8 of 15
10 October 2019

Fig 11: Construction order book

Source: Company

Earnings outlook
Higher profitability for property division
The expansion of the group’s property development business will improve
overall profitability in the future. Gross profit (GP) margins for property
development and property investment segments were at 50.3% and 82.6%
respectively in FY19. This was higher than GP margins for construction
and engineering divisions at 19.0% and 24.9% respectively. The property
development arm also generates in-house construction works to expand
its order book.

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

Page 9 of 15
10 October 2019

Fig 12: Segmental gross profit and margin in FY19

Source: Company, Affin Hwang estimates

Strong 3-year core EPS CAGR of 27%

We believe earnings prospects are good for AME, driven by its current
high construction order book and remaining property development GDV.
We are also positive on its prospects to win new construction contracts
and drive property sales with the launch of i-Park@SAC Phase 3. We
assume AME will secure new construction contracts worth RM120m in
FY20E, RM150m in FY21E and RM200m in FY22E. We expect AME to
generate property sales of RM180m p.a. in FY20-22E in our earnings
forecasts. We project 3-year core EPS CAGR of 27% in FY20-22. We
calculate core EPS growth by removing the impact of exceptional items.
such as fair value gains/losses for its investment properties and shares,
gains/losses on fixed asset disposals and listing expenses.

Fig 13: Core net profit and yoy growth

Source: Company, Affin Hwang estimates

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

Page 10 of 15
10 October 2019

Valuation
Initiate coverage with BUY call and RM1.83 target price
We initiate coverage on AME with a BUY call and target price of RM1.83,
based on 30% discount to RNAV. We like AME for (1) its niche gated and
guarded industrial park development projects; (2) a total solutions provider
for local and multinational companies to build manufacturing plants and
logistic warehouses; and (3) its value engineering expertise to reduce
construction cost. Based on IPO price of RM1.30, current FY20E core
PER of 9.8x is attractive, considering strong core EPS CAGR of 27% in
FY20-22E. AME’s CY20E core PER of 9.5x based on IPO price is
attractive compared to our Construction Sector (excluding GAM, IJM and
MRC) weighted average core PER of 13.8x.

Fig 14: Construction peer comparison

Company Name Stock Code Rating Share TP Upside Mkt Core PE Core EPS gr (%) EV/EBITDA P/BV ROE Div Yield
Price Cap (x) (x) (x) (%) (%)
(RM) (RM) (%) (RMm) CY19E CY20E CY19E CY20E CY20E CY20E CY20E CY20E

Gamuda GAM MK BUY 3.75 4.30 14.7 9.3 19.2 14.6 (8.3) (7.6) 10.8 1.2 7.4 3.2
IJM Corp IJM MK HOLD 2.27 2.17 (4.4) 8.2 20.5 19.4 5.2 5.7 10.8 0.7 3.8 2.6
MRCB MRC MK HOLD 0.76 0.74 (2.6) 3.4 102.1 78.5 (32.9) 30.1 50.7 0.7 0.9 2.3
WCT WCT MK HOLD 0.96 0.96 0.5 1.3 13.9 10.5 (5.9) 28.9 13.7 0.4 3.8 1.8
Sunway Construction SCG MK BUY 2.00 2.25 12.5 2.6 18.2 15.8 (5.7) 14.6 8.7 3.7 23.1 4.0
Gabungan AQRS AQR MK BUY 1.31 1.82 38.9 0.6 9.5 7.2 (7.2) 31.4 6.0 1.7 16.9 3.1
WZ Satu WEN MK SELL 0.27 0.14 (47.2) 0.2 N/A N/A (45.8) 74.0 (109.7) 0.9 (4.8) 0.6
Pintaras Jaya PINT MK BUY 3.25 4.07 25.2 0.5 11.2 9.5 98.0 38.2 5.1 1.5 16.1 6.2
Taliworks TWK MK BUY 0.92 1.12 21.7 1.9 30.3 19.5 72.9 55.1 15.1 2.0 10.0 7.8
HSS Engineering HSS MK BUY 0.88 1.18 34.9 0.4 57.4 19.2 (65.7) 198.9 10.2 1.8 9.3 0.0
AME Elite Consortium N/A BUY 1.30 1.83 40.8 0.6 11.8 9.5 46.6 16.4 6.5 0.9 9.6 0.5
Average 28.4 18.7 17.2 (1.0) 6.2 11.8 1.5 5.3 3.2
Avg ex Gamuda, MRCB, IJM 7.6 19.3 13.8 13.1 28.9
Source: Bloomberg, Affin Hwang estimates

Target price RM1.83 is based on 30% discount to RNAV

Our RNAV/share estimate for AME is RM2.62. This is based on a sum-of-
the-parts assuming PER of 14x to value its construction and engineering
divisions, DCF at discount rate of 7.5% for its property division and book
value or market value for its property investment arm. We apply a 30%
discount to RNAV to derive our RM1.83 target price. The discount is based
on the average target price discount to RNAV for the construction and
property stocks under our coverage. We believe the implied target CY20E
PER is fair at 13.3x for AME.

Fig 15: RNAV/share and target price

Segments Stake (%) RNAV
(RMm)
Construction @ PE 14x sustainable PAT of RM25m 100 350
Engineering @ PE 14x sustainable PAT of RM5m 100 70
Property development @ DCF (WACC 7.5%) 100 348
Property investment @ Market value 100 346
Net cash/(debt) 3
RNAV 1,118
No. of shares (m shrs) 427
RNAV/share (RM) 2.62
Target price at 30% discount to RNAV/share 1.83
Source: Affin Hwang estimates

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

Page 11 of 15
10 October 2019

Fig 16: Target price discount to RNAV for construction/property stocks

Source: Affin Hwang estimates

Dividend payout of at least 20% of PAT

AME’s Board of Directors has the intention to recommend and distribute a
dividend of at least 20% of annual adjusted profit after tax (PAT)
attributable to shareholders, ie, PAT less any fair value gain on investment
properties. Assuming dividend payout ratio of 20%, we forecasts net DPS
of 2.5-3.0 sen in FY20-22E. Based on IPO price of RM1.30, net yield of
about 2% is reasonable given AME’s good growth prospects and the need
to reinvest in acquiring land bank and investment properties and expand its
pre-cast concrete manufacturing capacity to drive earnings growth.

Key risks
Key downside risks to our BUY call are (1) inability to secure new contracts
to grow its construction order book; (2) not able to acquire suitable land
bank for future development projects; (3) its profitability is affected by the
market value of its investment properties; and (4) earnings forecast risks
given the lack of forward-looking statements and earnings guidance from
management in the IPO prospectus.

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

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10 October 2019

Appendix 1: Salient features of the IPO

Source: Prospectus

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

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10 October 2019

AME Elite – FINANCIAL SUMMARY

Profit & Loss Statement Key Financial Ratios and Margins
FYE 31 Mar (RMm) 2018 2019 2020E 2021E 2022E FYE 31 Mar (RMm) 2018 2019 2020E 2021E 2022E
Revenue 341.3 339.0 361.8 384.9 354.9 Growth
Operating expenses (273.6) (272.9) (281.1) (301.6) (268.7) Revenue (%) 14.2 (0.7) 6.7 6.4 (7.8)
EBITDA 67.7 66.1 80.6 83.3 86.2 EBITDA (%) 18.9 (2.4) 22.0 3.3 3.5
Depreciation (5.6) (5.4) (5.7) (6.1) (6.5) Core net profit (%) 4.6 (26.6) 79.9 4.6 8.4
EBIT 62.1 60.7 74.9 77.2 79.8
Net int income/(expense) (0.4) (3.4) (4.9) (3.2) 0.5 Profitability
Associates' contribution 5.5 (0.6) 0.0 0.0 0.0 EBITDA margin (%) 19.8 19.5 22.3 21.6 24.3
Forex gain/(loss) 0.0 0.0 0.0 0.0 0.0 PBT margin (%) 27.9 21.4 18.5 19.2 22.6
Exceptional gain/(loss) 28.1 15.9 (3.0) 0.0 0.0 Net profit margin (%) 20.8 14.0 14.8 15.4 18.1
Pretax profit 95.2 72.6 67.1 74.1 80.2 Effective tax rate (%) 17.9 29.8 20.0 20.0 20.0
Tax (17.0) (21.6) (13.4) (14.8) (16.0) ROA (%) 8.6 5.4 5.2 5.0 5.2
Minority interest (7.2) (3.6) 0.0 0.0 0.0 Core ROE (%) 12.7 8.1 11.1 9.3 9.3
Net profit 71.0 47.3 53.6 59.2 64.2 ROCE (%) 11.6 9.9 10.0 8.3 8.0
Dividend payout ratio (%) 0.0 0.0 20.0 20.0 20.0
Balance Sheet Statement
FYE 31 Mar (RMm) 2018 2019 2020E 2021E 2022E Liquidity
Fixed assets 77.3 95.4 109.6 123.5 137.1 Current ratio (x) 1.9 2.0 3.4 3.5 4.0
Other long term assets 292.9 322.9 376.9 376.9 376.9 Op. cash flow (RMm) 100.2 45.9 36.3 53.2 87.5
Total non-current assets 370.2 418.3 486.6 500.5 514.0 Free cashflow (RMm) 83.7 22.4 16.3 33.2 67.5
FCF/share (sen) 20.5 5.4 3.8 7.8 15.8
Cash and equivalents 109.8 102.5 318.4 335.2 386.1
Stocks 231.6 234.1 225.1 241.7 215.3 Asset management
Debtors 142.5 134.3 127.8 136.0 125.4 Debtors turnover (days) 161.9 149.0 129.0 129.0 129.0
Other current assets 3.4 4.3 4.3 4.3 4.3 Stock turnover (days) 343.5 347.0 327.0 327.0 327.0
Total current assets 487.3 475.1 675.6 717.2 731.1 Creditors turnover (days) 211.7 239.7 249.7 249.7 249.7

Creditors 162.2 159.5 171.9 184.6 164.4 Capital structure

Short term borrowings 0.0 0.0 0.0 1.0 2.0 Net gearing (%) 0.3 0.3 net cash net cash net cash
Other current liabilities 89.8 82.9 26.2 20.6 15.9
Total current liabilities 252.0 242.4 198.1 206.2 182.3

Long term borrowings 0.0 0.0 0.0 1.0 2.0 Quarterly Profit & Loss
Other long term liabilities 209.8 214.3 316.0 315.0 314.0 FYE 31 Mar (RMm) 1Q19 1Q20
Total long term liabilities209.8 214.3 316.0 316.0 316.0 Revenue 58.7 94.4
Minority interests 26.6 30.3 32.0 32.0 32.0 Operating expenses (50.0) (71.6)
Shareholders' Funds 369.1 406.4 616.1 663.5 714.8 EBITDA 8.7 22.8
Depreciation (1.3) (1.4)
Cash Flow Statement EBIT 7.4 21.4
FYE 31 Mar (RMm) 2018 2019 2020E 2021E 2022E Net int income/(expense) (0.5) (3.5)
PAT 71.0 47.3 53.6 59.2 64.2 Associates' contribution 1.4 1.1
Depreciation & Amortisation 5.6 5.4 5.7 6.1 6.5 Forex gain/(loss) 0.0 0.0
Working capital changes 48.7 0.1 (23.1) (12.1) 16.8 Exceptional items (0.0) 0.0
Others (25.1) (6.9) 0.0 0.0 0.0 Pretax profit 8.3 19.1
Cashflow from operation 100.2 45.9 36.3 53.2 87.5 Tax (1.5) (4.5)
Capex (16.4) (23.5) (20.0) (20.0) (20.0) Minority interest (0.1) (1.4)
Disposal/(purchases) 3.9 0.7 0.0 0.0 0.0 Net profit 6.7 13.1
Others (41.6) (17.8) 0.0 0.0 0.0 Core net profit 6.7 13.1
Cash flow from investing (54.1) (40.6) (20.0) (20.0) (20.0)
Debt raised/(repaid) (31.2) (3.9) 99.2 (4.6) (3.7) Margins (%)
Net interest income/(exp) (0.4) (3.4) (4.9) (3.2) 0.5 EBITDA 14.8 24.2
Dividends paid (10.3) (10.0) (10.7) (11.8) (12.8) PBT 14.1 20.2
Others (9.0) 5.0 116.0 3.2 (0.5) Net profit 11.4 13.9
Cash flow from financing (51.0) (12.2) 199.7 (16.5) (16.5)

Free Cash Flow 83.7 22.4 16.3 33.2 67.5

Source: Company, Affin Hwang forecasts

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com

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10 October 2019

Equity Rating Structure and Definitions

BUY Total return is expected to exceed +10% over a 12-month period

HOLD Total return is expected to be between -5% and +10% over a 12-month period

SELL Total return is expected to be below -5% over a 12-month period

NOT RATED Affin Hwang Investment Bank Berhad does not provide research coverage or rating for this company. Report is intended as information
only and not as a recommendation

The total expected return is defined as the percentage upside/downside to our target price plus the net dividend yield over the next 12 months.

OVERWEIGHT Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months

NEUTRAL Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months

UNDERWEIGHT Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months

This report is intended for information purposes only and has been prepared by Affin Hwang Investment Bank Berhad (14389-U) (“the Company”) based on sources believed
to be reliable and is not to be taken in substitution for the exercise of your judgment. You should obtain independent financial, legal, tax or such other professional advice,
when making your independent appraisal, assessment, review and evaluation of the company/entity covered in this report, and the extent of the risk involved in doing so,
before investing or participating in any of the securities or investment strategies or transactions discussed in this report. However, such sources have not been independently
verified by the Company, and as such the Company does not give any guarantee, representation or warranty (expressed or implied) as to the adequacy, accuracy, reliability
or completeness of the information and/or opinion provided or rendered in this report. Facts, information, estimates, views and/or opinion presented in this report have not
been reviewed by, may not reflect information known to, and may present a differing view expressed by other business units within the Company, including investment
banking personnel and the same are subject to change without notice. Reports issued by the Company, are prepared in accordance with the Company’s policies for
managing conflicts of interest. Under no circumstances shall the Company, be liable in any manner whatsoever for any consequences (including but are not limited to any
direct, indirect or consequential losses, loss of profit and damages) arising from the use of or reliance on the information and/or opinion provided or rendered in this report.
Under no circumstances shall this report be construed as an offer to sell or a solicitation of an offer to buy any securities. The Company its directors, its employees and their
respective associates may have positions or financial interest in the securities mentioned therein. The Company, its directors, its employees and their respective associates
may further act as market maker, may have assumed an underwriting commitment, deal with such securities, may also perform or seek to perform investment banking
services, advisory and other services relating to the subject company/entity, and may also make investment decisions or take proprietary positions that are inconsistent with
the recommendations or views in this report. The Company, its directors, its employees and their respective associates, may provide, or have provided in the past 12 months
investment banking, corporate finance or other services and may receive, or may have received compensation for the services provided from the subject company/e ntity
covered in this report. No part of the research analyst’s compensation or benefit was, is or will be, directly or indirectly, related to the specific recommendations or views
expressed in this report. Employees of the Company may serve as a board member of the subject company/entity covered in this report.

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completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind
relating to such data.

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