Petronas Gas: Forms JV with Linde. The company has executed a shareholders agreement with Linde

FEATURE CALLS Malaysia | Allianz Malaysia Attractively valued Desmond Ch'ng

COMPANY RESEARCH PECCA Group Bhd | Just getting warmed up Ivan Yap First Resources | Weak results priced in Chee Ting Ong

MACRO RESEARCH Malaysia | In line with estimate Suhaimi Ilias Malaysia | Smaller current account surplus Suhaimi Ilias

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia Initiation Allianz Malaysia (ALLZ MK) by Desmond Ch'ng Share Price: MYR9.89 Target Price: MYR12.80 Recommendation: Buy Attractively valued What investors gain from exposure to Allianz Malaysia (Allianz) is access to the leading general insurer and the fifth largest life insurer in the country, backed by Alianz SE, one of the largest insurance groups in the world. At current valuations, investors would be paying just 0.2x P/BV for the largest general insurer in the country, which is really very attractive a price. We initiate coverage with a BUY call and a SOP-TP of MYR12.80, which represents an upside of 29%. FYE Dec (MYR m) FY14A FY15A FY16E FY17E Net earned premiums 3,254.3 3,504.3 3,616.5 3,695.3 Core profit (MYR m) 295.9 308.9 320.2 337.6 BVPS (MYR) 6.6 7.6 8.5 9.6 P/B (x) 1.5 1.3 1.2 1.0 EVPS (MYR) na na na na PEV (x) na na na na VNB (MYR) na na na na VNB multiple (x) na na na na ROE (%) 0.1 0.1 0.1 0.1 ROA (%) 0.0 0.0 0.0 0.0 Desmond Ch'ng    (603) 2297 8680    desmond.chng@maybank-ib.com

Malaysia Company Update PECCA Group Bhd (PECCA MK) by Ivan Yap Share Price: MYR1.82 Target Price: MYR1.95 Recommendation: Buy Just getting warmed up We recently hosted Pecca on a 1-day Non-Deal Roadshow in Singapore, meeting 12 fund managers. The feedback was positive; one of Pecca’s catalyst is the encouraging demand for the Perodua Bezza. Sustained momentum for Perodua Bezza (>7k units per month) offers upside to our forecasts which are unchanged for now. Also, a re-rating could come on the award of leather upholstery license for the aviation industry by DCA. Pecca is our Top BUY pick in the sector; MYR1.95 TP (13x CY17 EPS) unchanged. FYE Jun (MYR m) FY14A FY15A FY16E FY17E Revenue 99.5 129.5 125.9 168.9 EBITDA 22.6 27.8 24.8 37.0 Core net profit 14.5 17.9 15.5 25.9 Core EPS (sen) 7.7 9.5 8.3 13.8 Core EPS growth (%) 37.4 23.9 (13.5) 67.0 Net DPS (sen) 5.1 4.4 4.1 6.9 Core P/E (x) 23.6 19.1 22.1 13.2 P/BV (x) 5.7 4.9 2.4 2.2 Net dividend yield (%) 2.8 2.4 2.3 3.8 ROAE (%) 25.1 27.6 14.6 17.3 ROAA (%) 16.3 17.5 11.4 15.0 EV/EBITDA (x) na na 10.5 7.2 Net debt/equity (%) net cash net cash net cash net cash Ivan Yap    (603) 2297 8612    ivan.yap@maybank-ib.com

Singapore Results Review First Resources (FR SP) by Chee Ting Ong Share Price: SGD1.63 Target Price: SGD1.80 Recommendation: Buy Weak results priced in After a dismal 1Q16 results, 2Q16 results rebounded sharply QoQ but still lagged full-year expectations on weak output. We cut our 2016-18 EPS by 6-23% on lowered FFB output forecasts. We believe FR’s weak results are largely priced in. As El Nino’s impact on output is temporary, we expect yield to normalise in 2017. BUY on revised SGD1.80 TP as we roll forward our valuation base year with a 17x 2017 PER peg. FYE Dec (USD m) FY14A FY15A FY16E FY17E Revenue 615.5 453.7 474.9 568.5 EBITDA 288.6 202.6 182.7 229.5 Core net profit 172.0 109.8 88.1 120.9 Core EPS (cts) 10.9 6.9 5.6 7.6 Core EPS growth (%) (20.7) (36.1) (19.7) 37.2 Net DPS (cts) 2.6 1.8 1.7 2.3 Core P/E (x) 11.2 17.5 21.8 15.9 P/BV (x) 1.8 2.6 2.4 2.2 Net dividend yield (%) 2.1 1.5 1.4 1.9 ROAE (%) 16.7 12.2 11.5 14.4 ROAA (%) 9.1 6.2 5.5 7.1 EV/EBITDA (x) 8.7 12.2 11.9 9.2 Net debt/equity (%) 21.8 39.3 26.8 17.6 Chee Ting Ong    (603) 2297 8678    ct.ong@maybank-ib.com

MACRO RESEARCH MY: 2Q 2016 Real GDP Economics Research by Suhaimi Ilias In line with estimate 2Q 2016 GDP growth slowed to +4.0% YoY and seasonally-adjusted +0.7% QoQ (1Q 2016: +4.2% YoY; +1.0% QoQ SA), in line with our and consensus estimates. Broad-based pick up in domestic demand negated the contraction in net external demand. No change in our 2016 and 2017 growth forecasts of +4.1% and +4.5% for now as we closely monitor key domestic indicators and developments in major economies. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Balance of Payments 2Q 2016 Economics Research by Suhaimi Ilias Smaller current account surplus Current account surplus narrowed in 2Q 2016 to MYR1.9b or +0.6% of GDP (1Q 2016: +MYR5.0b or 1.7% of GDP) on smaller goods account surplus and wider income account deficit. Current account surplus was +MYR6.9b or 1.2% of GDP in 1H 2016. Our full-year forecast is +MYR24.3b or 2.0% of GDP. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com

NEWS Outside Malaysia: U.S: Sales at retailers were little changed in July as Americans flocked to auto dealers at the expense of other merchants. The stalling of purchases followed a 0.8% gain in June that was stronger than initially estimated, Commerce Department figures showed. Excluding cars, sales retreated 0.3%, the most since the start of the year. Improving car sales drained enough cash from consumers’ accounts to cause demand at eight of 12 other major retail categories to fall. While households have been bolstered by higher stock and home values, stronger wage growth would go a long way in improving purchasing power. (Source: Bloomberg) E.U: GDP rose 0.3% in the three months through June; the European Union’s statistics office said. Growth slowed in line with economists’ forecasts in the second quarter, leaving the currency bloc vulnerable to any fallout from Britain’s vote to leave the European Union. That matches an initial estimate and marks a slowdown from an expansion of 0.6% in the first three months of this year. (Source: Bloomberg) U.K: London properties are taking longer to sell this month, despite a summer price cut, as Brexit uncertainty compounds the dampening effect of the holiday season. Homes in the U.K. capital are staying on the market for five days more than in May, the month before Britons voted to leave the European Union, property website Rightmove Plc said. To encourage buyers, owners of inner-London homes cut asking prices by 3.6% from July to an average of GBP 784,494 (USD 1m); districts further out saw values drop 1.5%. It leaves London overall up 2.1% on the year, one the slowest growth rates of any U.K. region. (Source: Bloomberg) Singapore: Worried over jobs and pay, Are glummest since 2009. Singaporeans are the most pessimistic about the economy in seven years as they’ve grown more gloomy about their quality of life, their income and job security. Mastercard’s consumer confidence index for the city-state plunged to 33.6 in the first half of 2016, down from 44.3 for the previous six months, the company said in a statement on Aug. 11. It’s at the lowest level since June 2009, when the city’s GDP contracted for four straight quarters. (Source: Bloomberg) Other News: Petronas Gas: Forms JV with Linde. The company has executed a shareholders agreement with Linde (Malaysia) Sdn Bhd for a joint-venture company to undertake the development of an air separation unit plant in Pengerang, Johor, a project that is estimated to cost USD172m. Petronas Gas will hold a 51% stake in the joint-venture company, with its portion of the cost to be an estimated USD88m. Linde will hold the remaining 49%.The source of funding for the project is expected to be via a combination of equity and debt from the respective parties. Construction on the project is to start by the third quarter of 2016 and the plant is expected to achieve commercial operation by the fourth quarter of 2018. (Source: The Sun Daily) Supermax: To increase contact lens capacity in Singapore, UK and US. The company aims to increase its contact lens capacity to two billion pieces annually in the next 10 years from 40 million currently plans to set up contact lens plants in Singapore, the US and the UK. According to the group’s managing director, expanding in Malaysia is not good enough, hence needing a multiple manufacturing sites. The challenge with Malaysia is that they are not able to get enough talent in Malaysia-noting that 95%-98% of its workforce are engineers with minimum qualification of a university degree. The group is in the midst of obtaining approval from the Singapore government to set up its contact lens plant there. It expects to get approval by next year. International Organisation for Standardisation (ISO) certifications to allow registration of its products is expected to be secured by the 4Q16 and once secured, the group will start selling the contact lens. To date, the group has spent MYR65m on its new business, with MYR30m more planned by the end of this year in order to increase its contact lens capacity to 70 million pieces annually by 1Q17. (Source: The Sun Daily) Sime Darby: To catch a ride on the high speed rail network. The company, which owns large tracts of land in Negri Sembilan and Johor, is looking to catch a ride on the HSR network. It is already in talks with the project delivery company, MyHSR Corp on the development potential of its land surrounding the proposed stations in Labu, Seremban and Pagoh. The company’s land could be the site for one of eight planned HSR stations. According to the company’s spokesman, “With the development of infrastructure in the vicinity of our land, Sime Darby will review the current use of the land to ensure that we take advantage of the opportunities available to us so we can create maximum value for all our stakeholders”. Construction of the HSR is expected to start in 2018 while revenue services are scheduled to operate in 2026. (Source: The Star)