INITIATE COVERAGE

TA Securities A Member of the TA Group

www.bursamids.com
Thursday, 26 May 2017
MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Sector: Property
+

Selangor Properties Berhad TP: RM5.98 (+18.4%)

Deep Value Waiting to be Unearthed Last traded: RM5.05
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY Buy
Thiam Chiann Wen Tel: +603-2167 9615 cwthiam@ta.com.my www.taonline.com.my

We are initiating coverage on Selangor Properties Bhd (SPB) with a Buy Stock Return Information
recommendation. SPB operates 3 major business segments, namely: 1) KLCI 1,771.01
property investment, 2) property development, and 3) investment holdings. Expected Share Price Return (%) 18.4

We like the groups prized assets in Damansara Heights and believe it is Expected Dividend Return (%) 2.4
Expected Total Return (%) 20.8
entering a new chapter with the launch of Aira Residence. SPB is more than
just an undervalued property company and we believe it will draw greater
Share Information
investor recognition over time. Based on a target FY18 P/B multiple of 0.8x,
Bloomberg Code SPR MK
we value SPB at RM5.98. Stock Code 1783

Investment Case Listing Main Market

Issued Share (mn) 343.6

Owns prized assets in Damansara Heights
Market Cap (RMmn) 1735.3

Entering a new chapter with the launch of Aira Residence
Par Value (RM) 1.00

Undervalued with strong balance sheet
52-wk Hi/Lo (RM) 5.19/4.32
Key Risks Estimated Free Float (%) 25.6
Beta (x) 0.6

Perception of a boring and unexciting company
3-Month Average Volume ('000) 93.6

Foreign currency risk
Forecasts Top 3 Shareholders (%)
Our FY17/18/19 earnings projections are premised on the following Kayin Holdings Sdn Bhd 68.2
assumptions Credit Suisse 4.1

FY17/18/19 property sales of RM340mn/RM370mn/RM430mn Value Cap 2.1
respectively, with a blended EBIT margin assumptions of 20%.

Overall portfolio occupancy rate of 95% with an average rental growth Share Performance (%)
Price Change SPB FBM KLCI
of 3% p.a.
1 mth 9.3 0.3
Valuation 3 mth 10.3 4.3
In our opinion, SPB is more than just an undervalued property company. While 12 mth 4.9 8.6
the company has been quieter than other property peers such as SP Setia, Eco
Financial Info
World, Mah Sing and Sunway, we think SPB has and will be able to continue
FY17 FY18
generating decent returns for shareholders. We also believe it is entering a new
Debt to Equity Ratio Net Cash Net Cash
phase in its business operations, which would draw greater investor recognition
ROA (%) 2.4 3.1
over time. Based on a targeted FY18 P/B multiple of 0.8x, we value SPB at 2.1 2.7
ROE (%)
RM5.98. We are initiating coverage on the company with a Buy NTA/Share (RM) 7.4 7.5
recommendation. Price/NTA (x) 0.7 0.7

Earnings Summary (RM mn)

(12-Mth) Share Price relative to the FBM KLCI
FYE Oct 2015 2016 2017F 2018F 2019F
Revenue 99.5 120.9 163.4 294.5 476.0
EBITDA 51.1 80.4 111.2 136.8 164.6
EBITDA margin (%) 51.4 66.5 68.1 46.5 34.6
Reported pretax profit 629.1 98.8 80.3 105.4 136.6
Normalised pretax profit 37.2 65.6 80.3 105.4 136.6
Reported net profit 593.7 67.4 61.0 80.1 103.8
Normalised net profit 35.1 44.7 61.0 80.1 103.8
Reported EPS (sen) 172.8 19.6 17.8 23.3 30.2
Normalised EPS (sen) 10.2 13.0 17.8 23.3 30.2
EPS growth (%) (9.7) 27.4 36.4 31.2 29.7
PER (x) 49.4 38.8 28.4 21.7 16.7
GDPS (sen) 50.0 20.0 12.0 12.0 12.0
Div yield (%) 9.9 4.0 2.4 2.4 2.4 Source: Bloomberg
Core ROE (%) 1.5 1.8 2.4 3.1 4.0

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 TA Securities
A Member of the TA Group 25-May-17

Background
SPB was listed on the Main Board of Bursa Malaysia on 6 November, 1963,
making it one of the oldest property companies that is listed on Bursa Malaysia.
It is also known for being the master developer of Damansara Heights, a suburb
carved from 1,000-acres of rubber plantation that the company bought in the
1960s.

Currently, SPB operates 3 major business segments, namely: 1) property

investment, 2) property development, and 3) investment holdings. It has 30.6
acres of undeveloped land in Damansara Heights, a total of 242 acres of land in
Gombak, Selayang and Ulu Langat, a few investment properties located in
Damansara Heights, 2 retail centres in Australia and a large portfolio of financial
assets in the form of unit trusts, fixed deposits, equity funds, real estate funds,
and hedge funds.

Major Shareholders & Management Structure

The low-profile company is founded by the late Tan Sri Datuk Wen Tien Kuang
and Puan Sri Datin Chook Yew Chong Wen in Oct 1963. It was listed on the Main
Board of Bursa Malaysia a month later. Puan Sri Datin Chook Yew Chong Wen,
the chairperson, is the single largest shareholder SPB. With an indirect holdings
of 234.4mn shares via her privately-held vehicle Kayin Holdings Sdn Bhd, Pn Sri
Datin Chook owns 68.23% in the company.

Pn Sris son, Mr Wen Chiu Chi is the managing director of SPB. He joined the
company in 1979 and assumed the position of managing director of the company
in 2000. Mr Wen is assisted by Mr Chong Koon San (Chief Operating Officer) and
Mr Lee Tart Choong (Director of Finance) in formulating the groups
development strategies.

Business Overview
SPBs core businesses are classified into 3 divisions, namely: 1) property
investment, 2) property development, and 3) investment holdings. Currently,
SPB has a resilient revenue base, with more than 70% from rental income,
especially from the commercial properties in Malaysia (of about RM50mn per
year) and retail centers in Australia (rental revenue of RM40mn per year). Other
main contributors include property development and investment holdings.
Bottom-line wise, the groups net profit are underpinned by gains from the
disposal of properties, periodic gains from the revaluation of properties and
returns from its financial assets portfolio.

Property Investment
SPB has a number of investment properties presently held for rental income.
Most of the assets were built in the 1960s to 1970s and also can be redeveloped
at a later stage. Its portfolio of investment properties are strategically located
within Damansara Heights and in Bukit Tunku. These properties include:

Menara Millennium. A 25-storey corporate office tower with 550k sq ft
of NLA

Kompleks Pejabat Damansara five blocks of 4-storey office buildings
on 3.9 acres with 210,000 sq ft of NLA.

Plaza Batai 16 units of retail shops

SPB Towers a 17-storey apartment building sitting on 3 acres along
Jalan Batai.

Taman Tunku Flats 1.9 acres of land in Bukit Tunku. Comprises 86
units of apartments and 9 units of shops.

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 TA Securities
A Member of the TA Group 25-May-17

In Australia, it has a shopping mall in Claremont, Perth, namely Claremont

Quarter, with a NLA of 311,869 sq ft. It is currently fully tenanted. In addition,
SPB operates 7 Bayview Terrace under a joint venture arrangement with an
Australian state investment corporation. 7 Bayview Terrace is a two-storey shop
located within the retail hub of Claremonts town center with NLA of 3,035 sq ft.

Property Development
SPB has 30.6 acres of undeveloped land in the Damansara Heights Area, a total
of 242 acres of land in Gombak, Selayang and Ulu Langat. Contribution from its
property development operations are currently insignificant as SPB has not
been active in launching new projects for several years. However, the property
development division is set to shine again as the group has lined up 3 projects
for launch in FY16 FY19. For a start, SPB unveiled Aira residence in Oct-16.
Located on 3 acres of land along Jalan Batai, Damansara Heights, Aira Residence
is expected to generate a gross development value (GDV) of RM850mn.

Next, the group is looking to relaunch Phase 4 of Bukit Permata, Gombak by end
2017. With an estimated GDV of RM120mn, this phase will feature 36 units of
semi-detached houses and 24 units of bungalow. After Aira Residence, the
company will begin the redevelopment of 7.9 acres of Wisma Damansara in
2018/2019. We understand that the company aims to focus on one project at a
time to ensure the quality of its deliveries.

Investment Holding
The groups investment holding operation in Malaysia include financial assets in
the form of placements of short-term funds in unit trusts. Meanwhile, its
overseas investments comprise equity funds, real estate funds, hedge funds and
fixed deposits. The group usually place the proceeds from asset disposal in
short-term funds in Malaysia. This was intended to provide working capital for:
1) capex improvements in its investment properties, 2) financing of initial
capital for property development and land acquisition, and 3) payment of
dividends. Separately, the groups overseas investment are long-term
placements until there is a need for liquidation to fund any viable business
opportunities that arise in Malaysia or overseas.

Figure 1: FY12-16 Revenue Breakdown Figure 2: Reported PBT Breakdown by Segment

Source: Bursa Malaysia, TA Research

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 TA Securities
A Member of the TA Group 25-May-17

Investment Thesis

1) Owns Prized Assets in Damansara Heights/Pusat Bandar Damansara

SPB is one of the largest landowners in the matured Damansara Heights area,
with 31 acres of undeveloped land. Within that area, it also has a number of
commercial properties held for rental income see Figure 3. SPBs property
investment portfolio within Damansara heights consists of Menara
Millennium, Komplex Pejabat Damansara, SPB Tower and Plaza Batai. The
jewel in the crown is Menara Millennium, a 25-storey office tower with 550k
sq ft of net lettable space on 3.8 acres of land. Although the building was
completed way back in 2000, the 17-year old building is fully tenanted. In
terms of rental, we note that monthly asking rental of Menara Millennium is
around RM5psf as compared to RM7psf in Damansara City. We foresee
upside to rental income post the refurbishment exercise, which will set the
company back by some RM50mn to upgrade. Multimedia Super Corridor
features will also be incorporated in Menara Millennium over the next 3 5
years.

SPB has 31 acres of land in Damansara Heights, out of which, 15 acres is

located within the Damansara Town Centre, adjacent to Menara Millennium
and two mega projects GuocoLands Damansara City (DC) and Tan Sri
Desmond Lims Pavilion Damansara Heights (PDH) see Figure 4. This
makes SPB the second largest land owner of the 46-acres triangular piece of
land sandwiched between the Sprint Highway and Jalan Joha. Note that part
of Pavilion Damansara Height (6.34 acres of the 15.8 acres) is located on land
earlier sold by SPB back in 2014 to Tan Sri Desmond Lim at RM1,629psf.

Meanwhile, we believe the newly commissioned MRT Line will elevate

Damansara Heights into a property hotspot. In addition, we believe SPBs
landbank in Damansara Heights is poised to reap a boost in its value from the
surrounding new developments such as DC and PDH. GuocoLands DC is an
RM2.5bn integrated luxury commercial development on 8.5 acres of prime
freehold land. Completed in 2016, we note the current asking price for
Damansara City Residence is around RM1,600psf at the sub-sale market.
Meanwhile, Tan Sri Desmond Lims 15.84 acres PDH mixed development, is
expected to generate a potential GDV of RM7bn. Upon completion of these
high profile developments, we envisage SPBs landbank to yield higher value
in the future, making the redevelopment of Kompleks Pejabat Damansara a
highly lucrative project.

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 TA Securities
A Member of the TA Group 25-May-17
Figure 3: SPBs Damansara Heights Land

Source: The Star

Figure 4: Key Players in Pusat Bandar Damansara

Source: The Star

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 TA Securities
A Member of the TA Group 25-May-17
2) Entering a new chapter with the launch of Aira Residence
After decades of laying low, SPB made a comeback with the launch of its
luxury condominium, the Aira Residence in October last year. Located on 3
acres of land along Jalan Batai, Damansara Heights, Aira Residence is
expected to generate a gross development value (GDV) of RM850mn.
Featuring 105 units of condominium with sizes ranging from 2,679 sq ft to
7,730 sq ft, the units are priced at an average RM1,700 per sq ft. We believe
the low-density condominium will mark the beginning of SPBs new era. To
date, more than 60% of the units have been booked and SPB targets about
50% of the 105 units to be sold by the end of the year. The project is
expected to complete and handed over in 2020.

The groups property game plan does not stop here. According to
management, the company will now take on a new direction that will see it
move to develop the land it owns instead of selling parcels like it had done in
recent times for cashflow and profit. It plans to redevelop the 7.9 acres
Wisma Damansara after Aira Residence, and later the 3.59 acres near the
Semantan MRT station, known as Kompleks Pejabat Damansara where SPBs
headquarters, Wisma UN and other low-rise office buildings are located.

The redevelopment of Komplex Pejabat Damansara will be exciting as the

land can be integrated with the Semantan Station. However, we understand
that it may not materialise over the medium term as it will take time to
relocate SPBs headquarter and provide sufficient time for its existing
tenants to vacate the buildings. Nonetheless, the 7.9 acres Wisma Damansara
is ripe for redevelop as it is currently vacant. According to management,
Wisma Damansara is slated for a mixed development, comprising retail,
residential blocks and corporate offices. With a potential GDV of RM1.2bn,
SPB intends to launch the project in 2018/2019.

3) Undervalued company with strong balance sheet

From an asset standpoint, SPB is undervalued. SPBs 15acres freehold,
vacant commercial land within the Damansara Town Centre is recognised in
its balance sheet at a book value of measly RM85mn or around RM131psf.
Benchmarking it to Tan Sri Desmond Lims acquisition price of RM1,629 psf,
the groups land within Damansara Town Centre could easily worth RM1.1bn
(representing 69% of the groups market cap of RM1.6bn).

SPBs earnings have been rather volatile in the past. However, future
earnings are set to be substantially stronger as we expect new property
launches such as Aira Residence, Bukit Permata and Wisma Damansara, to
take off the ground. We are looking at an impressive 52% earnings CAGR
from FY16-19f. After excluding gains from the asset sale, periodic gains from
the revaluation of properties and returns from its financial assets portfolio,
we see the groups P/E multiple to normalise to 17x in FY19 from 39x in
FY16.

SPBs balance sheet is solid, largely strengthened by the sale of assets in

recent years, and a portfolio of short-term financial assets. Note that SPB is
one of the few developers with net cash position. As at Oct 2016, the group
had net cash and short term unit trust funds equivalent to RM151mn, or
44sen per share. If we include its other short-term financial assets totaling
RM624mn, the groups net liquid assets would stand at RM775mn or a
substantial RM2.25/share. This makes up 49% of the groups market
capitalization.

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 TA Securities
A Member of the TA Group 25-May-17
Although part of the internal funds will be used to finance its launch of Aira
Residence, we believe SPB will still have plenty of room to gear up - for the
redevelopment of Wisma Damansara and/or landbank replenishment. In
terms of dividends, the group has traditionally been paying consistent
dividends of 10-12 sen per year over the past 5 years (excluding special
dividends). We expect this trend to be maintained, providing a decent bank-
equivalent net yield of 3.0%.

Sector Outlook
It was a lacklustre 2016 for Malaysian property market as cooling measures
introduced by the government in 2014 continued to bite and dampen buying
sentiment. Stringent bank lending policies had also contributed to softer sales.
The Malaysian property sector, which is represented by four major states namely,
Kuala Lumpur, Selangor, Penang and Johor - experienced softer market activities
in 2016. Both residential transaction volume and value for these four states
collectively decreased by 8% and 10% respectively in 2016 against the
corresponding period last year (see Figure 5 and Figure 6).

Figure 5: Residential Transaction Volume Figure 6: Residential Transaction Value

Source: Napic

We continue to see developers re-strategising their product mix and launches in

2017, to cater for the mass market segment. While sector headwinds such as
weak consumer sentiments and stringent lending environment persist,
developers appear more optimistic now. This is evidenced by developers
expressing their intention to roll out more projects this year, as compared to
2015 and 2016. Overall, we see developers guiding for flattish to moderate sales
growth in 2017. That said, we continue to project for developers under our
coverage to post modest sales growth in 2017. Meanwhile, the sectors unbilled
sales remain steady, providing the sector with earnings visibility for about 1.3
years.

While we are mindful of the challenges premised by the lacklustre property

sector, we see pockets of opportunities in the local property scene over the
longer term. This will be supported by the young demographic, favorable
demand and supply conditions for the right products in selected locations,
healthy employment conditions and on-going infrastructure projects to upgrade
the public transportation system. Specifically, we believe Greater KL will remain
relatively resilient due to its potential for growth backed by population growth -
which is forecasted to 10mn by 2020 from 7.6mn, rising household income and
new growth corridors benefitting from on-going and proposed infrastructure
projects that include various new expressways, MRT 1 and 2, LRT extensions
and LRT3, and the KL-Singapore High Speed Rail.

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 TA Securities
A Member of the TA Group 25-May-17
Financial Outlook
SPBs earnings outlook for 2017-19 will be underpinned by: 1) steady rental
income from its investment properties, 2) maiden revenue recognition from
Aira Residence, and 3) redevelopment of Wisma Damansara.

We expect earnings to balloon by 30-33% between FY17-19. Our earnings

projections are premised upon the following key assumptions:

1) Property Investment:
We are projecting an overall portfolio occupancy rate of 95% with an
average rental growth of 3-5% p.a. For its Australian retail centre, we
assume an AUD/MYR rate of RM3.10 for our forecast horizon.

2) Property development Division:

We expect property sales to reach RM340mn in FY17, and rise to
RM370mn in FY18 and RM430mn in FY19. New sales are expected to be
largely driven by new projects such Aira Residence, Bukit Permata and the
redevelopment of Wisma Damansara in FY17, 18 and 19 respectively. We
forecast a blended EBIT margin of about 20%.

3) Investment Holdings
We conservatively project a 3% growth p.a. for the investment holdings
division. Note that we exclude unrealised forex gain on investment
securities from our normalised net profit calculation.

Projecting an Earnings CAGR of 52%

Future earnings are set to be substantially stronger as we expect new property
launches such as the Aira Residence, Bukit Permata and Wisma Damansara to
take off the ground. We are looking at an impressive 52% earnings CAGR
between FY16-19. Except for Wisma Damansara, our forecasts do not take into
account any disposal/redevelopment of its investment properties. We also have
not factored in any impact related to strengthening/weakening of the Ringgit
that affects the groups earnings contribution from Australian operation and
value of its foreign financial assets.

Dividend Payout Ratio

The company has traditionally been paying consistent dividend of 12 sen per
year (excluding special dividend). We expect this to be maintained translating
to a yield of 3% at current price levels.

Figure 7: Net Cash and Dividend Payment

Source: SPB, TA Research

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 TA Securities
A Member of the TA Group 25-May-17
Potential Bonus Issue?
As management recognises concerns over the stocks liquidity, which would
affect investors interest on the stock, we believe a bonus issue could be on the
cards. The no-par value regime has come into force on 31 January 2017. This
means that the issuance of all shares no longer carries a par value. That also
means that there is no more concept of prohibiting the issuance of shares at a
discount. Having said that, the companys share premium account and capital
redemption reserve account will now be merged with the companys share
capital. There is a transitional period of 24 months to utilise the amounts in the
share premium account and the capital redemption reserve account. We believe
SPB can take this opportunity to utilise its share premium account to reward
shareholders by issuing new bonus shares or dish out dividend in specie. Based
on the groups latest audited balance sheet, it has share premium of about
RM273mn, which is sufficient to do a 1-for-6 bonus issue.

Key Risks
Boring and Unexciting Perception
Other than the Malaysian/Australian economy and property market, one risk
we see is that the group is generally perceived to be a boring and unexciting
company. Despite its quality landbank, the company is not in the same league
with other major developers when it comes new launches or land acquisitions.
The concern always lies with how will the current managing director - Pn Sris
son, Mr Wens, who is 61 years old this year, will unlock the tremendous hidden
value in the group.

While the company may have largely missed out on the recent property
upcycle, we believe it is catching up with the launch of Aira residence, relaunch
of Bukit Permata project and redevelopment of Wisma Damansara. We are
encouraged by this pipeline of pocket sized but big-in-value projects, signaling a
more aggressive stance by management in the coming years.

Foreign Currency Risk

For FY12-16, 48-54% of the groups total revenue was denominated in
Australian Dollar (AUD). Hence, fluctuations in the AUD/MYR rate may
materially and adversely impact the groups financial performance.
Nevertheless, we expect the reliant to the Australian business will reduce
significantly when earnings from local property development kicks in. We
estimate that 85% of the groups revenue will be derived from its Malaysian
operations by FY19. Conducting a sensitivity analysis, we note that for every 10
sen (3.2%) increase/decrease in the AUD/MYR rate will increase/decrease
FY17/18/19 earnings by ca.1.5%/1.2%/1.0%, ceteris paribus.

Figure 8: Revenue Breakdown by Geographical Region

Source: SPB, TA Research

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 TA Securities
A Member of the TA Group 25-May-17
Valuation
We value SPB at RM5.98, which is based on a 20% discount to our projected
FY18 BPS. Our target 0.8x P/B multiple is consistent with our implied target
P/B (0.6-1.2x P/BPS) for small and mid-cap. Although SPBs earnings can be
volatile due to asset sales, exceptional items and uncertain investment returns,
its shares are backed by strong assets and offer good, consistent, dividend of
about 12 sen per year. Lastly, although SPB may not be a developer that makes
news headline on large scale marketing campaigns to promote its new
launches, it has been generating healthy returns for its shareholders. We also
believe that the company is entering a brand new phase, drawing with it,
greater investor recognition over time. We rate SPB as a Buy.

Peers Comparison
Peers Comparison
Company Price Target price EPS growth (%) PER (x) ROE (%) Div Yield (%) P/BV (x)
Call (RM) (RM) CY17 CY18 CY17 CY18 FY17 FY18 FY17 FY18 FY17 FY18
IOIPG Hold 2.10 2.25 11.5 (0.6) 12.1 12.1 5.6 5.2 3.3 3.6 0.6 0.6
SP Setia Buy 3.80 4.10 (10.1) (11.3) 14.9 16.8 7.6 6.6 3.7 3.7 1.1 1.1
Sunway Hold 3.63 3.40 2.6 6.7 13.3 12.5 7.4 7.5 3.3 3.3 1.0 1.0
Mah Sing Hold 1.54 1.67 7.7 (4.2) 10.6 11.1 10.3 9.2 3.9 3.9 1.0 1.0
SPB Buy 5.05 5.98 35.3 30.9 27.0 20.7 2.4 3.1 2.4 2.4 0.7 0.7
Glomac Sell 0.71 0.69 3.6 31.7 12.1 9.2 2.4 4.5 5.7 5.7 0.5 0.4
Ibraco Hold 0.85 1.00 33.3 53.5 11.7 7.6 10.5 14.9 4.1 4.7 1.2 1.1
Hua Yang Sell 1.08 1.07 (20.8) (1.2) 6.0 6.0 12.4 9.9 3.7 3.2 0.6 0.6
Sentoria Hold 0.85 0.80 18.8 39.9 11.8 8.5 7.4 10.4 1.2 1.2 1.0 0.9
Sector (Simple Average) 9.1 16.2 13.3 11.6 7.3 7.9 3.5 3.5 0.9 0.8
Sector (Market Weighted) 2.4 (1.1) 12.4 12.7 6.9 6.5 3.4 3.4 0.9 0.8
Big cap (Simple Average) 3.0 (2.3) 12.7 13.1 7.7 7.1 3.6 3.6 1.0 0.9
Mid/Small Cap (Simple Average) 14.0 31.0 13.7 10.4 7.0 8.6 3.4 3.4 0.8 0.7

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 TA Securities
A Member of the TA Group 25-May-17
Earnings Summary
Profit & Loss (RMm) Balance Sheet (RMm)
YE Oct 31 2015 2016 2017f 2018f 2019f YE Oct 31 2015 2016 2017f 2018f 2019f
Revenue 99.5 120.9 163.4 294.5 476.0 Fixed assets 387.9 477.0 476.3 465.9 459.4
EBITDA 51.1 80.4 111.2 136.8 164.6 Others 1,235.5 1,293.9 1,312.5 1,331.0 1,349.5
Dep. & amortisation (0.7) (1.3) (20.6) (20.4) (16.5) Total 1,623.4 1,770.9 1,788.8 1,796.9 1,808.9
Net finance cost (13.2) (13.5) (10.3) (11.1) (11.5) Cash 339.2 233.1 204.5 224.7 243.0
Reported PBT 629.1 98.8 80.3 105.4 136.6 Others 1,026.2 913.4 958.1 995.9 1,048.0
Normalised PBT 37.2 65.6 80.3 105.4 136.6 CA 1,365.4 1,146.5 1,162.6 1,220.5 1,291.1
Taxation (35.4) (31.4) (19.3) (25.3) (32.8) Assets held for sale - - - - -
MI 0.0 0.0 0.0 0.0 0.0 Total assets 2,988.8 2,917.4 2,951.4 3,017.5 3,100.0
Net profit 593.7 67.4 61.0 80.1 103.8
Normalised net profit 35.1 44.7 61.0 80.1 103.8 ST debt 12.0 4.0 6.5 9.0 11.5
Reported EPS (sen) 172.8 19.6 17.8 23.3 30.2 Other liabilities 42.9 38.3 42.5 49.7 59.6
Core EPS (sen) 10.2 13.0 17.8 23.3 30.2 CL 54.9 42.3 49.0 58.7 71.1
PER (x) 49.4 38.8 28.4 21.7 16.7 Shareholders' funds 2,600.6 2,510.3 2,530.1 2,568.9 2,631.5
GDPS (sen) 50.0 20.0 12.0 12.0 12.0 LT borrowings 228.8 239.5 247.0 264.5 272.0
Div Yield (%) 9.9 4.0 2.4 2.4 2.4 LT liabilities 104.4 125.4 125.4 125.4 125.4
Total long term Liabilities 333.2 364.9 372.4 389.9 397.4

Total Equity and Liabilities 2,988.8 2,917.4 2,951.4 3,017.5 3,100.0

Cash Flow (RMm)
YE Oct 31 2015 2016 2017f 2018f 2019f Ratio
PBT 629.1 98.8 80.3 105.4 136.6 YE Oct 31 2015 2016 2017f 2018f 2019f
Adjustments (601.7) (71.4) (19.3) (25.3) (32.8) Profitability ratios
Dep. & amortisation 0.7 1.3 20.6 20.4 16.5 ROE (%) 1.5 1.8 2.4 3.1 4.0
Changes in WC (3.4) (65.1) (40.5) (30.5) (42.3) ROA (%) 1.3 1.5 2.1 2.7 3.4
Operational cash flow 24.7 (36.4) 41.2 69.9 78.1 EBITDA Margins (%) 51.4 66.5 68.1 46.5 34.6
Capex 0.0 0.0 0.0 0.0 0.0 PBT Margins (%) 37.4 54.2 49.1 35.8 28.7
Others (24.7) 121.6 (38.5) (28.5) (28.5)
Investment cash flow (24.7) 121.6 (38.5) (28.5) (28.5) Liquidity ratios
Debt raised/(repaid) (18.2) (8.0) 10.0 20.0 10.0 Current ratio (x) 24.9 27.1 23.7 20.8 18.1
Equity raised(repaid) 0.0 0.0 0.0 0.0 0.0 Quick ratio (x) 18.7 21.6 19.6 17.0 14.7
Dividend (41.2) (171.8) (41.2) (41.2) (41.2)
Others (14.0) (8.5) 0.0 0.0 0.0 Leverage ratios
Financial cash flow (73.4) (188.3) (31.2) (21.2) (31.2) Total liabilities / equity (x) 0.1 0.2 0.2 0.2 0.2
Net cash flow (73.4) (103.2) (28.6) 20.2 18.3 Net debt / Equity (x) (0.2) (0.1) (0.0) (0.0) (0.0)

Growth ratios
Assumptions Revenue (%) (1.6) 21.5 35.1 80.3 61.6
YE Oct 31 2017f 2018f 2019f Pretax Profit (%) (11.6) 76.3 22.4 31.2 29.7
New Sales (RM mn) 340.0 370.0 430.0 Core net earnings (%) (9.7) 27.4 36.4 31.2 29.7
Inv Prop Occupancy (%) 95.0 95.0 95.0 Total assets (%) 24.6 (2.4) 1.2 2.2 2.7

Stock Recommendation Guideline

BUY : Total return within the next 12 months exceeds required rate of return by 5%-point.
HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point.
SELL : Total return is lower than the required rate of return.
Not Rated: The company is not under coverage. The report is for information only.

Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from
total return if dividend discount model valuation is used to avoid double counting.
Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are
subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any
direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies
mentioned herein.

This report has been prepared by TA SECURITIES HOLDINGS BERHAD for purposes of Mid and Small Cap Research Scheme ("MidS") administered by Bursa Malaysia
Berhad and will be compensated to undertake the scheme. TA SECURITIES HOLDINGS BERHAD has produced this report independent of any influence from the MidS or the
subject company.
For more information about MidS and other research reports, please visit Bursa Malaysias website at:
www.bursamids.com
for TA SECURITIES HOLDINGS BERHAD(14948-M)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Kaladher Govindan Head of Research

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