KESM recorded a strong 2012-15 EPS CAGR of 32%. We believe the solid growth is sustainable,

Top Calls

Initiate Coverage � KESM Industries (BUY) - In the automotive sweet spot KESM recorded a strong 2012-15 EPS CAGR of 32%. We believe the solid growth is sustainable, underpinned by focused growth in the automotive business and margin expansion from improved product mix and growth in the high-margin testing business. Hence, despite the 34% stock price outperformance ytd, we think valuations remain attractive and expect a continued PE re-rating. Initiate coverage with a BUY and target price of RM11 based on 12x our calendarised 2017E EPS, for upside potential of 58%.

Other Calls

Sector Update � Construction (OVERWEIGHT, maintain) - Sustained interest

Results Note � Aemulus Holdings Berhad (SELL, maintain) - Still in the red

Economy � GDP & BOP 2Q16 - Real GDP growth slowed to 4% yoy in 2Q16

Morning News & Market Summary

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