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PP 7767/09/2010(025354)

28 July 2010

Malaysia Corporate Highlights


RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

V is it Note
28 July 2010
MARKET DATELINE

MY E.G. Services Share Price


Fair Value
:
:
RM0.79
RM0.96
More To Come Not Rated

Table 1. Investment Statistics (MYEG; Code: 0138) Bloomberg: MYEG MK


Net EPS Net
FYE Revenue Profit EPS Growth PER C. EPS * P/NTA P/CF Gearing ROE NDY
June (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (%) (%)
2009 52.5 17.5 2.9 16.6 27.2 - 8.3 21.8 Net Cash 29.4 1.2
2010f 65.8 22.3 3.7 27.9 21.2 3.5 5.3 18.7 Net Cash 27.3 1.3
2011f 87.7 31.1 5.2 39.1 15.3 3.9 4.3 14.9 Net Cash 29.5 1.9
2012f 108.9 48.6 8.1 56.5 9.8 - 3.3 14.5 Net Cash 36.1 3.0
Main Market Listing / Syariah-Approved Stock By The SC * Consensus Based On Bloomberg Estimates

♦ E-Government. MYEG is the sole concessionaire for the E-Government


Issued Capital (m shares) 601.1
transformation initiative mandated to provide online services for the
Market Cap (RMm) 474.8
Government. Daily Trading Vol (m shs) 1.2
♦ Expansion plans. Management highlighted it would be expanding its
52wk Price Range (RM) 0.49-0.85
Major Shareholders: (%)
revenue base by launching several new services as well as providing online
Asia Internet Holdings 32.2
services for other government agencies in coming quarters. Already, we Utilico Emerging Markets 8.8
understand the company plans to launch online passport renewal services Edisi Firma 6.1
for the Immigration Department and provide import permit services for the Goldman Sachs 6.0
Malaysian International Trade and Industry (MITI).
FYE June FY10 FY11 FY12
♦ Tax monitoring to drive earnings higher. MYEG plans to start its pilot EPS chg (%) - - -
project for online service tax monitoring by end-2010 through its 40%- Var to C.EPS (%) +5.7 +33.3 -
owned SPV. The project entails the installation of network devices into
Share Price Chart
cashiers of 2,000 selected entertainment and eatery outlets in Klang
Valley. The devices are essentially designed to capture “under-declared”
service taxes by operators. Note that the SPV is entitled to 20% of the
incremental tax revenue collected by the Government. This potentially
could be a significant earnings booster to MYEG. Further out, we
understand that the tax monitoring system would likely serve as a platform
for the eventual implementation of GST.

♦ Risks. 1) Entrance of competitors; 2) Execution risk from the high start-up


cost for the tax monitoring project; and 3) Delay in project approval.
Relative Performance To FBM KLCI
♦ Forecasts. We forecast FY09-12 CAGR net profit of 40.7% driven by: 1)
growing adoption for e-government due to increasing awareness amongst
the public as well as growing demand for more efficient and convenient
service; 2) higher market share for government services e.g. we expect MY E.G. Services
MYEG to gain 10%-pts market share p.a. for its road tax renewal for FY11-
12; and 3) additional revenue stream stemming from the roll-out of new
services i.e. foreign worker permits. Furthermore, we highlight there could
FBM KLCI
potentially be upside to our FY11-12 forecasts driven by higher-than-
expected market share gain and higher incremental tax revenue.

♦ High risk, high return. While FY11 PER of 15.3x suggests that medium-
term earnings growth has been priced in, our sensitivity analysis suggests
significant upside to our estimates (potentially >50% uplift to FY11 EPS)
Yap Huey Chiang
and DCF fair value (from RM0.96 currently to RM1.12 on more aggressive
(603) 9280 2166
assumptions). However, the risks are also great and we are cautious on yap.huey.chiang@rhb.com.my
MYEG’s ability to deliver better earnings in the next 12-18 months.

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E-Government Services Provider

♦ Background. MY E.G. Services (MYEG) is principally involved in online services for various government agencies
as a concessionaire under the E-Government Initiative. MYEG was incorporated in 2000 as I.T. Marvel Sdn Bhd
and changed its name to MY E.G. Dot Com Sdn Bhd before assuming the present name in 2001. MYEG was listed
on MESDAQ in 2005 and was subsequently transferred to the Main Market in 2009. Currently, the company
provides online services for the Kuala Lumpur City Hall (DBKL), Jabatan Insolvency Malaysia (JIM), Road
Transport Department (JPJ), Royal Malaysia Police (PDRM), Tenaga Nasional Berhad (TNB), Immigration
Department of Malaysia (IMI), National Registration Department (JPN) and Telekom Malaysia Berhad (TM).

Table 2. Group Structure


Subsidiaries Ownership (%) Remarks
mySpeed.com 100 Operating electronic activities i.e. electronic commerce delivery services
Gale Vector 100 Software solutions and maintenance services
My E.G. Commerce 100 Providing intermediary auto insurance services
Source: Company

♦ Business categories. The company derives its revenue from two business divisions:

o Government to Citizen (GSC). Functions as an online intermediary through online between agencies and
the general public as well as at designated kiosk or e-service centres throughout the country. MYEG derives
its revenue by charging a fee for its services.

o Government/Enterprise Solution (GES). These are non-Internet based services such as software and
enterprise solutions, system development and maintenance. Also, it provides services at E-Services Centres
for digital imaging for security, purchase of test cards and test takings. These services are typically for
driving schools, insurance companies, financial institutions and etc.

Table 3. Government Agencies And Services


Government Agency* Services Rendered
Kuala Lumpur City Hall (DBKL ) Assessment and compound payment, info service, and business premise advertising
National Registration Department (JPN) Updating the content and replacement of the MyKad
Road Transport Department (JPJ) Checking and payment of summons, renewal of driving licences, renewal of road tax,
renewal of auto insurance, driving licence expiry notification services via SMS, and
points checking via SMS.
Jabatan Insolvency Malaysia (JIM) Bankruptcy and liquidation status search and E-Fulfilment Delivery Services
Royal Malaysia Police (PDRM) Checking and payment of summons
Telekom Malaysia (TM) Checking and payment of telephone bills
Tenaga Nasional (TNB) Checking and payment of electricity bills
Immigration Department of Malaysia (IMI) Domestic helper working permit renewal
* As at July 2010
Source: Company

Existing Services

♦ JPJ remains a bright spot. About 50% of MYEG’s revenue is derived from online services for JPJ mainly for
renewal of driving licence, road tax and auto insurance. Currently, we understand 2,500-3,000 and 150-200
renewals of road tax and auto insurance are transacted per day respectively. Going forward, MYEG intends to
dominate road tax renewals, with a target of 50% market share in the next three years. Note that the company
already controls 20% of the market for road tax renewals and 2% for auto insurance renewals after only two
years of inception which are also provided by JPJ, Pos Malaysia, and insurance agents. In the same vein, renewal
of driving licences will likely continue to support earnings growth driven by the increasing number of registered
drivers – see Chart 1.

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Chart 1. Total Registered Drivers

14,000,000 4.5%

12,000,000 4.4%

10,000,000 4.3%

8,000,000 4.2%

6,000,000 4.1%

4,000,000 4.0%

2,000,000 3.9%

0 3.8%
2006 2007 2008 2009 2010f 2011f 2012f

To tal Registered Drivers (RHS) A nnual gro wth

Source: JPJ, RHBRI

♦ Expanding E-Service Centres. According to management, the company will expand its E-Service Centres as
well as Kiosks to further increase its customer base in strategic locations including rural areas that have limited
access online. The company expects to increase its centres to 98 from 65 currently by end-2010. We highlight
these centres allow users to collect and print documents, thus giving more flexibility as an alternative to delivery
services.

♦ Maid working permit renewal. MYEG recently launched an online service for renewal of maid permits in
conjunction with IMI that includes delivery services as well as insurance cover for the maids. The service includes
an added security measure to ensure certified printed permits are attached to passports. While the service is
currently heavily dominated by maid agencies, we believe there will be a positive uptake in the service given its
lower fee of RM38-58 per application vs. RM200 per renewal by agencies.

New Services, New Earnings Catalysts

♦ Building more growth drivers. MYEG has outdone itself by launching several new services a year, more than
its internal target of two services per year. It is set to launch two new services and a pilot project by end-2010.

o Foreign worker permit renewal. Management expects to expand its IMI services by providing new
applications and renewal for foreign workers in addition to the renewal service for maids. We believe this
could be a solid catalyst with a huge potential market with estimated 21-23m foreign workers in Malaysia
currently.

o Malaysian passport renewal. In addition, MYEG plans to launch an online service for passport renewal. We
believe the service is ready for roll-out, pending approval from the authorities. While we have not included
any revenue contribution in our forecast as yet, we believe this would also provide huge earnings catalyst for
the company with 150,000-200,000 issuance of passports monthly, according to IMI.

o Customs tax monitoring system. MYEG will commence its pilot project (Phase 1) for online service tax
monitoring under its 40%-owned SPV, in collaboration with the Royal Malaysian Customs Department
(Customs). The monitoring system is designed to capture service tax “under-declared” by businesses e.g. if a
company declares RM10m taxable revenue, we think as much as RM4m may be under-declared. We
understand a network device will be installed in cashiers of 2,000 selected outlets of Group C (restaurants
with annual sales turnover of taxable services exceeding RM3.0m) and Group D (entertainment outlets) in
Klang Valley. In theory, the devices are able to collect and monitor real time data of every sales transaction
to ascertain the chargeable amount of sales and service tax. The concept is essentially to reduce leakages as
well as to gain additional tax revenue.

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Customs Tax Monitoring To Provide The Kicker – Our Assumptions

♦ Targeting the Group C and Group D outlets. According to the database (as at 1 Oct 2009) from the Customs
website, 232 and 33 registered restaurants are subject to service tax in Wilayah Persekutuan and Selangor
respectively. On this basis, we have assumed a total of 265 outlets for group C. On that assumption, we believe
the remaining balance of the 1,735 outlets to be in group D. Given that entertainment outlets in Group D are not
subjected to a minimum taxable threshold i.e. taxable regardless of sales turnover (unlike Group C with a
minimum threshold of RM3.0m sales turnover) we have assumed annual turnover of RM3m for Group C and
RM6m for group D.

♦ Capex. The SPV expects to spend RM40m in capex of which we estimate RM35m will be spent on network
devices and the remaining to be spent on servers. We understand RM20m of that portion will be funded by bank
borrowings.

♦ Staff and other costs. Other assumptions include an additional 200 staff with an average salary of
RM2,000/month. We have assumed the network devices and system servers will have an estimated life span of 3
and 10 years respectively. Therefore, we have assumed total depreciation of RM12.2m for the year.

♦ Timeline. While the pilot project is targeted for roll-out by end-2010, we believe earnings will only fully
materialise in FY06/12. We have assumed 40% incremental tax collection in 2012 although we note that this is
an arbitrary assumption.

Table 4. Custom Tax Monitoring Assumption in 2012f


Annual Sales
No. of Outlets RMm
(RMm)
Group C* 265 3.0 795.0
Group D# 1,735 6.0 10,410.0
Total 2,000 11,205.0
Total Taxable Revenue 11,205.0
5% service tax 560.3

Incremental service tax (based on 40% of declared tax) 224.1

20% profit sharing 44.8

Depreciation (assuming capex of RM35m for network devices and


RM5m for servers) (12.2)
- Network device (3 years)
- Servers (10 years)
Total staff cost (200 staff @ RM2,000 monthly salary) (4.8)

Other overheads (1.2)


Finance costs (@ 6% interest rate) (1.2)
Total costs (19.4)

Total Profit SPV 25.5


40% Share of profits for MYEG 10.2
* Based on list of restaurants subject to service tax according to Royal Malaysian Customs
# We have assumed 1,735 of entertainment outlets after accounting 265 restaurant outlets based on the database from the Royal
Malaysian Customs
Source: RHBRI, Royal Malaysian Customs Department

♦ Tax monitoring to boost earnings. According to management, the SPV is entitled to 20% of the incremental
tax revenue (while the remaining 80% will go to the Customs Department). The incremental revenue calculated
against the Customs expected tax revenue (in line with the preceding year and GDP growth) against the tax
revenue captured under the tax monitoring. Based on these assumptions, we forecast MYEG to earn RM10.2m of
profits in FY12 through this project (see Table 4).

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♦ Phase 2 to expand outlets. Further out, MYEG plans to commence Phase 2 which will include other categories
of outlets within and outside Klang Valley. However, this hinges on the success of the pilot project. While we have
not forecast any additional outlets beyond FY12, this potentially could bring stronger earnings to the company.

♦ Monitoring system as a platform for GST. Despite the Government’s move to delay the GST implementation
(initially targeted for 2011), we believe it is inevitable for the tax system to be adopted. Already, we are positive
on the Government’s allocation of RM222m as start-up cost for the implementation of the tax system of which
RM139m will be used for the computerisation system and RM83m for operating costs. The tax monitoring system
is likely to serve as a platform for the eventual implementation of GST. Therefore, we also see further earnings
growth under the tax monitoring system as the GST encompasses a broader range of taxable items.

Key Drivers For Adoption Of E-Government Services

♦ Growing demand for efficient government service. In our view, demand for online services will continue to
grow as the public seeks more convenient and efficient methods. This will continue to underpin MYEG’s earnings
growth as it expands to various other services.

o Increasing PC-savvy population. According to MCMC, households with access to PCs are still low in
several states like Kelantan, Terengganu and Perak vs. Selangor and Kuala Lumpur – see Chart 2. However,
fuelled by the support from the Government and telcos to increase broadband and PC penetration, we
highlight the upward trend of PC access amongst households, suggesting an increasingly IT-savvy population.

o Growing adoption of e-government services. Similarly, we note that that there has been a higher
adoption of e-government services by households – see Chart 3. 20% of households are said to be using e-
government services in 2008 vs. none reported in 2006. Going forward, we expect this to increase as the
public continues to adopt e-government services.

Chart 2. Percentage Of Household With Access To Personal Computers By State

Source: MCMC

Chart 3. Percentage of Household Use Of Internet By Main Use

Source: MCMC

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♦ Current e-government services; tip of the iceberg. As highlighted, MYEG currently provides e-services for
several government agencies. However, mandated under the E-Government Initiative, concessionaires are given
the liberty to provide services to any government agencies. With about 60 government agencies today, this gives
ample opportunity for the company’s service expansion. Already, MYEG is planning to provide services for the
Malaysian International Trade and Industry Department (MITI). Though the services provided are unknown at this
point, we believe this could be for the application for high transaction volumes i.e. Approved Permit (AP) and
Investment Tax Allowance (ITA). In our view, MYEG’s potential growth is huge as there are still abundant
untapped government agencies.

Financial Analysis

♦ Healthy balance sheet. As at Mar 2010, the company’s net cash significantly improved to RM10.1m from
RM2.1m in FY09. Furthermore, with a stable financial position as well as profitability, the company maintained the
dividend payout above its 30.0% target in FY08-09 while ROE remained high at 29.4% in FY09, vs. 34.9% in
FY08.

Table 5. Financial Analysis


FYE June FY08 FY09 FY10f FY11f FY12f
Net Cash (RMm) 0.1 2.1 7.9 10.0 9.6
Net free cashflow (RMm) 1.2 4.6 9.9 4.6 2.2
NTA (RM) 37.3 57.4 82.3 104.4 141.0
NTA/Share (RM) 0.1 0.1 0.1 0.2 0.2
DPS (sen) 2.0 0.9 1.0 1.5 2.4
Div payout (%) 33.7 31.3 26.9 29.0 29.7
ROE (%) 34.9 29.4 27.3 29.5 36.1
Source: Company data, RHBRI estimates

Risks And Mitigating Factors

♦ Risks. We believe MYEG’s risks include:

o Project delays. Given that it provides services to government agencies, the roll-out of projects heavily
depends on the approval by the authorities despite being mandated by the E-Government Initiative. Delays in
projects may result in cost overruns.

o Execution risk for the tax monitoring system. We understand that MYEG’s 40%-owned SPV will have to
bear a substantial amount of cost (RM40m) for the initial pilot project. Furthermore, earnings hinges on
effectiveness of the tax monitoring to raise the amount of service tax collected. In the event that the
incremental tax revenue is substantially lower than anticipated, this may result in heavy losses for the SPV.

o Increasing competition. In our view, the growing need for more efficient government agencies may
prompt other service suppliers to bid for government concessions. At the moment, MYEG is the sole provider
for these services and entrance of competitors may put future earnings at risk.

♦ Mitigating factors.

o Online services are well diverse. Management is looking to expand its services as well as to provide
services to various other government agencies. Hence, its diverse services will not cause the company to be
highly exposed to a project in the event of a delay.

o Healthy balance sheet. In the event the incremental tax revenue is much lower than expected, we believe
the company’s robust balance sheet will be able to cover the potential loss. Furthermore, regardless of the
amount of incremental tax revenue obtained, we believe the monitoring system will still be used as a
platform for the eventual implementation of GST.

o Leading provider. Note that MYEG is the remaining three companies appointed under the E-Government
Initiative in 2002. We believe the company has established itself in the industry given its proven track record
and capability. This may act as a barrier to potential competitors that seek the Government’s appointment.

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Sensitivity Analysis And Upside Potential

♦ We highlight the potential upside to our earnings forecasts in the event the company gains a stronger-than-
expect market share for each of the highlighted services i.e. Table 6, scenario 1 illustrates the effects to EPS for
FY11-13 given a +10%-pts market share of road tax renewal.

Table 6. Road Tax Renewal, Effects On EPS And DCF


Base case Base case Scenario 1 +10%-pts Scenario 2 +20%-pts
Market Share EPS (sen) EPS (sen) EPS (sen)
FY11 20% 5.2 5.3 6.0
FY12 30% 8.1 8.6 10.0
FY13 40% 9.4 10.2 12.3
DCF 0.96 1.02 1.06
Source: RHBRI

Table 7. Foreign Workers Permit Renewal, Effects On EPS And DCF


Base case Base case Scenario 1 +5%-pts Scenario 2 +10%-pts
Market Share EPS (sen) EPS (sen) EPS (sen)
FY11 2% 5.2 5.5 5.7
FY12 5% 8.1 8.4 8.7
FY13 5% 9.4 9.7 10.0
DCF 0.96 0.98 1.02
Source: RHBRI

Table 8. Custom Tax Monitoring


Base case Base case Scenario 1 +10%-pts Scenario 2 +20%-pts
Incremental collections EPS (sen) EPS (sen) EPS (sen)
FY12 40% 8.1 8.8 9.6
FY13 40% 9.4 10.1 10.8
FY14 40% 11.0 11.2 12.0
DCF 0.96 1.01 1.05
Source: RHBRI

Table 9. Cumulative Effects Of Scenario 1 For Road Tax Renewal, Foreign Workers Permit Renewal, And Custom Tax
Monitoring
Base Case
Base Case EPS (sen) Scenario 1 EPS (sen) PER (x)
FY11 5.2 6.1 12.9
FY12 8.1 11.3 6.9
FY13 9.4 12.9 6.1
DCF 0.96 1.08
Source: RHBRI

Table 10. Cumulative Effects Of Scenario 2 For Road Tax Renewal, Foreign Workers Permit Renewal, And Custom Tax
Monitoring
Base Case EPS (sen) Scenario 2 EPS (sen) PER (x)
FY11 5.2 8.0 9.8
FY12 8.1 13.9 5.6
FY13 9.4 14.1 5.6
DCF 0.96 1.12
Source: RHBRI

Forecasts And Valuations

♦ Earnings forecasts. We forecast FY09-12 CAGR net profit of 40.7% driven by: 1) growing adoption for e-
government services due to increasing awareness amongst the public as well as growing demand for more
efficient and convenient service; 2) higher market share for government services e.g. we expect MYEG to gain

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10%-pts market share p.a. for its road tax renewal for FY11-12; and 3) additional revenue stream stemming
from the roll-out of new services i.e. foreign worker permits. Furthermore, we highlight there could potentially be
upside to our FY11-12 forecasts driven by higher-than-expected market share gain for government services and
higher incremental tax revenue.

♦ Discounted cash flow. We have used the DCF methodology to value MYEG given its stable earnings as well as
its exposure to the growth in domestic demand. We have assumed a WACC of 14.8% and a terminal growth of
1.5%. Hence, we have derived a fair value of RM0.96/share.

Conclusion

♦ Conceptually, very strong growth potential. While FY10-11 PER valuations of 21.2x and 15.3x respectively
suggest that medium-term earnings growth has already been discounted by the market, our sensitivity analyses
suggest significant potential upside to earnings estimates and valuation. As illustrated in Tables 6-10 above, and
just based on roll-out of the new services that we know about, as well as more aggressive market share gains in
each respective service offered, we highlight that earnings could expand significantly from our base case FY11
EPS of 5.2 sen to as high as 8.0 sen implying upside to our forecast of more than 50%. On the same basis, our
DCF-based fair value would rise from RM0.96/share to RM1.12. However, the risks are also great. While the road
tax renewal service appears to be a proven success and the domestic maid permit renewal service appears to be
receiving positive feedback, the real test will be the launch of the Customs Tax Monitoring System, which remains
conceptual at this stage. The execution risk is high given the RM40m capex involved to set up the system. And
even if the monitoring system works, the risk is that the incremental service tax collections will be less than we
had forecast. Therefore, while we acknowledge the strong growth potential and our base case DCF fair value
suggests 21.5% further upside from the current share price, we reserve some caution on the company’s ability to
deliver better earnings in the next 12-18 months. On the flipside, the customs tax monitoring project accounts for
RM0.14 of our DCF, and this represents the downside risk to our fair value estimate.

Table 11. WACC Assumptions


Equity risk premium (%) 8.0
Risk free rate (%) 3.95 15 year MGS
Beta (x) 1.2 Average 1 year beta
Cost of equity (%) 16.4
Cost of debt (%) 4.5 Based on 4.5% interest rate
Debt / Total Capital (%) 10.0 Based on current ratio of total debt/total capital as at Mar 2010

WACC (%) 14.8


Source: Company data, RHBRI estimates

Table. 12 SPV Effects On DCF FV


RMm RMm
Existing Services 484.3 484.3
SPV (40%) 86.0 -
Add: Cash 7.9 7.9
Equity Value 578.2 492.2

Equity value/Share (RM) 0.96 0.82


Source: Company data, RHBRI estimates

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Table 13. Earnings Forecasts Table 14. Forecast Assumptions


FYE June (RMm) FY09 FY10F FY11F FY12F FYE June FY10F FY11F FY12F
Turnover 52.5 65.8 87.7 108.9 Turnover Breakdown (RMm)
Turnover growth (%) 19.8 25.4 33.2 24.2 JPJ 33.1 49.6 62.0
JMI 8.7 9.5 10.5
EBITDA 21.9 25.9 34.7 43.0 IMI 1.0 3.2 7.5
EBITDA margin (%) 41.8 39.4 39.5 39.5 PDRM 5.8 6.4 7.0
Others 17.3 19.1 21.9
Dep & Amort (4.1) (3.13) (3.4) (4.2)

EBIT 17.8 22.8 31.2 38.8


EBIT margin (%) 33.9 34.6 35.6 35.6

Net interest expense (0.2) 0.1 0.0 (0.0)


Associates 0.0 (0.4) 0.0 10.2
Pre-tax Profit 0.3 0.3 0.4 0.4
Tax (0.2) (0.1) (0.2) (0.3)

Net Profit 17.5 22.3 31.1 48.6


Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The
opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or
be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
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investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
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The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
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The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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