Construction: CIDB projects 8% growth for construction sector. Construction Industry Development Bhd (CIDB) is rooting for 8% growth in the construction industry after dipping to 7.4% last year from 8.2% in 2015, which the agency believes will be steered by mega projects such as Mass Rapid Transit, Petronas’ Rapid project in Pengerang, Johor and the Pan-Borneo highway in Sabah and Sarawak. Construction volume is expected to increase to MYR170b this year from MYR166b in 2016 with 6,305 projects and MYR140b in 2015 which came from 7,455 projects. (Source: The Sun Daily)

FEATURE CALLS Malaysia | AEON Co. (M) Awaiting retail’s comeback; U/G to HOLD Kevin Wong

COMPANY RESEARCH Heineken Malaysia | 1Q17: Within expectations Liew Wei Han

MACRO RESEARCH Malaysia | MISC sailed into horizon Tee Sze Chiah

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia Company Update AEON Co. (M) (AEON MK) by Kevin Wong Share Price: MYR2.40 Target Price: MYR2.20 Recommendation: Hold Awaiting retail’s comeback; U/G to HOLD Post meeting with management, we came out slightly more positive on 2017’s earnings growth outlook. We upgrade AEON to HOLD (from SELL) (i) given limited downside to our unchanged MYR2.20 TP after share price fell 18% over the past twelve months, (ii) new AEON malls are gaining more traction and we believe some recovery in Retailing segment’s earnings would come in soon. Our earnings forecasts are intact; our MYR2.20 TP is pegged to 28x FY18 PER (+0.5 SD of mean). FYE Dec (MYR m) FY15A FY16A FY17E FY18E Revenue 3,834.6 4,038.7 4,196.7 4,352.6 EBITDA 443.9 448.8 504.9 530.9 Core net profit 133.4 79.7 98.8 110.3 Core EPS (sen) 9.5 5.7 7.0 7.9 Core EPS growth (%) (32.5) (40.2) 23.8 11.7 Net DPS (sen) 4.0 3.0 3.5 3.9 Core P/E (x) 25.3 42.3 34.1 30.6 P/BV (x) 1.8 1.8 1.8 1.7 Net dividend yield (%) 1.7 1.3 1.5 1.6 ROAE (%) 7.4 4.3 5.2 5.7 ROAA (%) 3.6 1.9 2.2 2.4 EV/EBITDA (x) 9.9 10.0 8.5 8.1 Net debt/equity (%) 30.1 46.3 45.4 44.3 Kevin Wong    (603) 2082 6824    kevin.wong@maybank-ib.com

Malaysia Rating Change Heineken Malaysia (HEIM MK) by Liew Wei Han Share Price: MYR18.38 Target Price: MYR18.30 Recommendation: Hold 1Q17: Within expectations 1Q17 results were in line with expectations. Weaker YoY results were mainly due to earlier timing of Chinese New Year as HEIM saw earlier sell-in in 4QCY16. Given no further upside, we now rate HEIM as a HOLD. While in the near term that demand may remain subdued, we believe HEIM’s ongoing cost management drive (eg. global procurement initiatives with Heineken N.V) could help support growth in the near term. We keep our earnings forecasts and DCF-TP of MYR18.30. FYE Jun (MYR m) FY15A FY16A FY17E FY18E Revenue 1,748.9 2,810.3 1,918.0 1,993.3 EBITDA 329.0 620.4 437.8 455.1 Core net profit 214.2 427.3 289.5 303.2 Core EPS (sen) 70.9 141.4 95.8 100.4 Core EPS growth (%) 8.1 99.5 (32.2) 4.7 Net DPS (sen) 71.0 145.0 95.0 100.0 Core P/E (x) 25.9 13.0 19.2 18.3 P/BV (x) 14.8 14.1 13.5 13.0 Net dividend yield (%) 3.9 7.9 5.2 5.4 ROAE (%) 58.4 111.2 72.1 72.5 ROAA (%) 30.7 57.1 36.4 37.8 EV/EBITDA (x) 13.2 8.1 12.6 12.1 Net debt/equity (%) 6.0 17.8 net cash net cash Liew Wei Han    (603) 2297 8676    weihan.l@maybank-ib.com

MACRO RESEARCH MY: TRADERS’ ALMANAC MISC sailed into horizon by Tee Sze Chiah Technical Research FBMKLCI rose 8.24pts to 1,744.08 yesterday, helped by last minute buying spurt in selected blue chips. Broader market, however, remained subdued with losers outpaced gainers by 506 to 427. A total of 4.02b shares worth MYR2.57b changed hands. Yesterday’s rebound could signal a reversal in recent downtrend. But we still need the benchmark to close above 1,750 to confirm the reversal. We expect the benchmark index to hover between 1,740 and 1,750 today. Tee Sze Chiah    (603) 2082 6858    szechiah.t@maybank-ib.com

NEWS Outside Malaysia: U.S: Trump says China not FX manipulator, sees Dollar too strong. President Donald Trump said he won’t brand China a currency manipulator, retreating from a core campaign promise, though he argued that a strong dollar is hampering the ability of American firms to compete. Trump, in an interview with the Wall Street Journal, appeared to acknowledge that China hasn’t been intervening to weaken its currency recently. “They’re not currency manipulators," he said. It’s a shift of opinion after Trump accused China during last year’s election campaign of manipulating its currency to gain the upper hand in trade and vowed to label the country a manipulator on his first day. (Source: Bloomberg) Brazil: Pledge for aggressive rate cuts to help recovery. Brazil’s central bank signaled further aggressive key rate cuts are in store after slashing borrowing costs by the most in nearly eight years to help boost growth. Policy makers led by central bank President Ilan Goldfajn voted unanimously to reduce the benchmark rate by a full percentage point to 11.25% following two 75 basis-point cuts. The monetary authority has lowered borrowing costs 300 basis points since beginning the easing cycle in October. "This moderate intensification of the pace of monetary easing, relative to the pace set in the January and February Copom meetings, is, at this time, appropriate," bank officials wrote in the statement accompanying the rate decision. They reiterated that the disinflation process is more widespread, and that food prices are providing a favorable supply shock. (Source: Bloomberg) U.K: London housing in its deepest slump since the financial crisis. London’s housing market is in its worst slump since the depths of the financial crisis eight years ago, part of a broader slowdown that may continue. The Royal Institution of Chartered Surveyors said its price balance for the city fell to the lowest since February 2009 last month. It declined to minus 49, indicating that a greater percentage of agents reported drops in March. Still, more respondents than not still expect prices in London to rise over the next year, the report showed. Nationally, the RICS price index stayed at 22, though the expectations for both values and sales over the next year weakened. New buyer inquiries and sales were stagnant, with prime properties among the worst performers, according to report. (Source: Bloomberg) Singapore: Economy contracts annualized 1.9% in 1Q 2017. Preliminary estimates from the Ministry of Trade and Industry showed gross domestic product declined on an annualized basis compared with an expansion of 12.3% in the fourth quarter. Compared to a year ago, GDP rose 2.5% YoY in the first quarter (Source: Bloomberg) Other News: Construction: CIDB projects 8% growth for construction sector. Construction Industry Development Bhd (CIDB) is rooting for 8% growth in the construction industry after dipping to 7.4% last year from 8.2% in 2015, which the agency believes will be steered by mega projects such as Mass Rapid Transit, Petronas’ Rapid project in Pengerang, Johor and the Pan-Borneo highway in Sabah and Sarawak. Construction volume is expected to increase to MYR170b this year from MYR166b in 2016 with 6,305 projects and MYR140b in 2015 which came from 7,455 projects. (Source: The Sun Daily) Lion Industries: Sells steel plant to Yinson for MYR47.7m. Its unit Lion Metal Industries S/B had entered into a sale and purchase agreement with Yinson for the disposal of a 3.23-ha parcel of land in Klang, Selangor, for MYR45m excluding tax. It said that the Amsteel plant in Klang was valued by PPC International S/B at MYR45m, which is a premium of MYR22.51m over the audited net book value of the property as at June 30, 2016. (Source: The Star) MNC Wireless: To tie up with M3Tech for DFTZ venture. MNC Wireless and M3 Technologies (Asia) have emerged as among the first technology firms to establish a presence in the Malaysia Digital Free Trade Zone (DFTZ) after entering a memorandum of understanding for the development of an e-commerce platform. MNC said that the collaboration would entail an inclusive e-commerce platform with integrated payment gateway solutions and end-to-end logistics support, which will be operated in the DFTZ. (Source: The Star)