Plantation: Negative, minimal impact from New Zealand Landcorp’s decision. New Zealand state-owned

COMPANY RESEARCH Petronas Chemicals | Fantastic operations but ASP thwarts Mohshin Aziz Petronas Gas | Uptick in maintenance Chi Wei Tan UEM Sunrise | Affordable housing focus Wei Sum Wong

MACRO RESEARCH Global | Hunger & hunt for returns… Suhaimi Ilias Malaysia | Pace of Foreign Flows Sustained Winson Phoon

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia TP Revision Petronas Chemicals (PCHEM MK) by Mohshin Aziz Share Price: MYR6.60 Target Price: MYR7.35 Recommendation: Buy Fantastic operations but ASP thwarts 2Q16’s core PATAMI of MYR665m (+35% YoY and +11% QoQ) was within ours and consensus forecasts post adjusting the MYR241m write-off of the elastomer project. PCHEM delivered record factory utilisation rate of 93% in 1H16 but ASP has declined by 11% YoY. We revise our ASP growth forecast for 2016 to -5% (from -2%) to be in synch with market and lower our FY16 EPS forecast by 6%, marginally for FY17-18. Accordingly, we lower our TP to MYR7.35 from MYR7.80, based on an unchanged 18x FY16 PER. FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 14,597.0 13,536.0 13,143.4 12,420.5 EBITDA 4,650.0 5,036.0 5,962.8 6,158.9 Core net profit 2,790.0 2,754.0 3,273.9 3,350.1 Core EPS (sen) 34.9 34.4 40.9 41.9 Core EPS growth (%) (11.4) (1.3) 18.9 2.3 Net DPS (sen) 16.0 18.0 20.5 20.9 Core P/E (x) 18.9 19.2 16.1 15.8 P/BV (x) 2.3 2.1 2.0 1.9 Net dividend yield (%) 2.4 2.7 3.1 3.2 ROAE (%) 12.6 11.6 12.8 12.2 ROAA (%) 9.9 9.3 10.5 10.4 EV/EBITDA (x) 7.7 10.2 7.6 7.2 Net debt/equity (%) net cash net cash net cash net cash Mohshin Aziz    (603) 2297 8692    mohshin.aziz@maybank-ib.com

Malaysia Results Review Petronas Gas (PTG MK) by Chi Wei Tan Share Price: MYR22.16 Target Price: MYR24.00 Recommendation: Hold Uptick in maintenance We deem PTG’s 1H16 net profit as being in-line, albeit at the low end of expectations, due to an uptick in maintenance and depreciation costs. There is no indication for now, of PTG raising its dividend payout ratio, although we do not rule out such a possibility. Maintain HOLD with an unchanged MYR24.00 TP. FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 4,391.7 4,456.0 4,551.3 4,580.5 EBITDA 2,988.3 2,967.2 3,187.6 3,246.8 Core net profit 1,784.9 1,749.6 1,717.6 1,740.5 Core EPS (sen) 90.2 88.4 86.8 88.0 Core EPS growth (%) 17.9 (2.0) (1.8) 1.3 Net DPS (sen) 55.0 60.0 60.8 61.6 Core P/E (x) 24.6 25.1 25.5 25.2 P/BV (x) 4.2 3.8 3.7 3.5 Net dividend yield (%) 2.5 2.7 2.7 2.8 ROAE (%) 17.2 15.9 14.7 14.2 ROAA (%) 13.5 12.7 11.7 11.5 EV/EBITDA (x) 14.8 15.1 13.7 13.5 Net debt/equity (%) 2.3 net cash net cash net cash Chi Wei Tan    (603) 2297 8690    chiwei.t@maybank-ib.com

Malaysia TP Revision UEM Sunrise (UEMS MK) by Wei Sum Wong Share Price: MYR1.13 Target Price: MYR1.09 Recommendation: Hold Affordable housing focus UEMS’ internal sales target of MYR1.5b for FY16 seems challenging to us in view of the weak buying sentiment and stiff competition in the domestic front as well as the delay in launching its Melbourne project. Management’s focus remains on affordable housing. We adjust our FY16-18 earnings forecasts by -6% to -9%. Our RNAV-TP is largely intact at MYR1.09 on an unchanged 60% discount to RNAV. Maintain HOLD. FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 2,661.7 1,749.9 1,923.6 1,737.1 EBITDA 527.1 299.6 468.3 414.3 Core net profit 479.9 257.2 292.1 243.3 Core FDEPS (sen) 10.6 5.2 5.9 4.9 Core FDEPS growth(%) (18.8) (51.1) 13.6 (16.7) Net DPS (sen) 3.0 1.6 1.8 1.5 Core FD P/E (x) 10.7 21.8 19.2 23.1 P/BV (x) 0.8 0.8 0.7 0.7 Net dividend yield (%) 2.7 1.4 1.6 1.3 ROAE (%) 7.8 3.9 4.2 3.4 ROAA (%) 4.6 2.2 2.4 1.9 EV/EBITDA (x) 16.1 24.0 15.2 17.0 Net debt/equity (%) 25.6 25.6 22.9 21.4 Wei Sum Wong    (603) 2297 8679    weisum@maybank-ib.com

MACRO RESEARCH GBL: EM Flows, July 2016 Economics Research by Suhaimi Ilias Hunger & hunt for returns… Reversals in Emerging Markets’ (EM) portfolio capital flows to net inflows in June 2016 from net outflows in May 2016 was sustained in July 2016 i.e. +USD24.8b (June 2016: +USD13.3b; May 2016: -USD12.2b), driven by flows into both equities (July 2016: +USD14.6b; June 2016: +USD4.1b; May 2016: -USD1.2b) and debts (July 2016: +USD10.2b; June 2016: +USD9.2b; May 2016: -USD11.1b). Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Fixed Income Foreign Flows, July 16 Fixed Income Research by Winson Phoon Pace of Foreign Flows Sustained EM debt reported USD10.2b foreign inflows in July, slightly higher than USD9.2b in June with EM Asia maintaining its lead as the largest receiver, the IIF estimate. In Malaysia, the foreign holdings of MGS and GII rose to record highs of MYR185.3b/51.9% and MYR24.4b/10.6% with MoM increases of MYR3.2b and MYR2.6b respectively. Winson Phoon    (603) 2074 7176    winsonphoon@maybank-ib.com Se Tho Mun Yi    (603) 2074 7606    munyi.st@maybank-ib.com

NEWS Outside Malaysia: U.S: Productivity unexpectedly falls for third straight quarter, deepening efficiency woes that have characterized the economic expansion. The measure of employee output per hour decreased at a 0.5% annualized rate in the three months through June after dropping 0.6% in the prior quarter, a Labor Department report showed. Expenses per worker climbed at a 2% pace after being revised to a decline in the previous period. (Source: Bloomberg) U.S: Cars, credit cards boost household debt in 2Q 2016. Increased U.S. household borrowing to finance vehicles and credit-card purchases offset declines in the amounts of mortgage and student loan debt outstanding to propel total consumer debt slightly higher last quarter. The report showed that USD 427b of new mortgages were originated in the three months to end- June, roughly in line with the average over the last two years. Total student loan debt declined USD 2b to USD 1.26tr over the same period, recording the first drop on record in data going back to 2003. (Source: Bloomberg) U.K: Industrial production barely grew in June as the economy lost momentum before the Brexit referendum. Output rose 0.1% following a 0.6% drop in May, the Office for National Statistics said. Manufacturing declined for a second month. While economic growth accelerated to 0.6% in the second quarter, the improvement was heavily centered on April. Caution was taking hold in the run-up to the June 23 vote, and surveys show the surprise decision to leave the European Union has delivered a hefty blow to confidence and business activity. (Source: Bloomberg) China: Auto sales accelerated the most in 17 months, as General Motors Co. and Guangzhou Automobile Group Co. boosted deliveries and dealers offering discounts helped clear inventories in the world’s biggest auto market. Retail sales of cars, sport utility and multipurpose vehicles climbed 23% to 1.6 million units in July, the biggest monthly percentage gain since February 2015, according to the China Passenger Car Association. Deliveries increased to 12.4 million units in the seven months through July. (Source: Bloomberg) India: Central bank Governor Raghuram Rajan left interest rates unchanged at his last policy review as food prices threaten to push inflation above the nation’s target. The benchmark repurchase rate will stay at a five-year low of 6.50%, the Reserve Bank of India said. (Source: Bloomberg) Other News: Plantation: Negative, minimal impact from New Zealand Landcorp’s decision. New Zealand state-owned company Landcorp recently announced that it will cease using palm kernel cakes for its animal feed and was addressed by the Malaysian Palm Oil Council (MPOC) as being “wild allegations” made on the palm oil industry. MPOC CEO Tan Sri Yusof Basiron said the argument that the palm oil industry does not practice environmental-friendly policies is obsolete. Yusof added “We are currently in the modern world of producing sustainable palm oil. We have certifications like the RSPO, the MSPO standard, so what more do they want?”. Landcorp chief executive reportedly said last Monday that the company is “really concerned with producing food in a responsible and environmentally friendly way” and that the decision made sense from a strategic viewpoint as customers are willing to a pay a premium for natural products. NGOs have pinned the blame for the loss of wildlife resulting from large-scale deforestation of Indonesia and Malaysia. Landcorp uses about 15,000 tonnes of palm cakes each year and is one of the largest farming companies in New Zealand. (Source: The Edge Financial Daily) Shipping: Nationwide pioneer status for shipbuilders. As part of new incentives to boost the shipbuilding and ship repair industry, new shipbuilding and ship repair companies located anywhere in the country can now enjoy pioneer status or investment tax allowance (ITA). The previous incentives, which ended in 2010, were only for projects located in the Eastern Corridor, Sabah, Sarawak, Perlis, Kelantan, Terengganu, Pahang and the district of Mersing in Johor. However, the quantum of the pioneer status has been reduced to 70% of income tax exemption on statutory income compared with 100% of income tax exemption on statutory income previously. In terms of ITA, the quantum is now 60% of qualifying capex incurred within five years from the date the first qualifying capex is incurred. There are six large shipyards in the country which have repairing capabilities of more than 600 tonnes displacement, namely MMHE, Boustead Naval Shipyard Sdn Bhd, Sabah Shipyard Sdn Bhd, SapuraKencana Petroleum, Nam Cheong Ltd and Muhibbah Marine Engineering Sdn Bhd. (Source: The Edge Financial Daily) ECS ICT: Secures right to distribute iPhone in Malaysia. The company has secured the rights to distribute the Apple iPhone through its consumer and commercial channels across the country. The company said in a statement yesterday that with the iPhone on board immediately, it now distributes the full range of Apple products. According to one analyst, this is a positive development for the company although it is not expected to have much impact on the company, adding that rights to distribute iPhone will help boost sales of ECS as the company enters into the premium smartphone market. However, it is to be noted that the market share for Apple smartphones has been declining locally. The company’s wholly-owned subsidiary ECS Astar Sdn Bhd has been a distributor for Apple since 1999. (Source: The Edge Financial Daily)