PP 7767/09/2010(025354)

5 August 2010

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

V is it Note
5 August 2010
MARKET DATELINE

Sime Darby Share Price

Fair Value
:
:
RM7.70
RM8.00
Is The Worst Over? Not Yet, In Our View Recom : Underperform
(Maintained)

Table 1 : Investment Statistics (SIME; Code: 4197) Bloomberg: SIME MK

Net Core EPS Cons. Net

FYE Turnover profit EPS gth PER EPS* P/NTA P/CF* ROE Gearing GDY
Jun (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (%) (%)
2009 31,013.9 2,255.2 37.5 (38.1) 20.5 - 2.4 15.1 10.6 10.7 2.9
2010f 32,949.3 2,328.9 38.8 3.3 19.9 28.0 2.4 13.9 6.3 23.7 2.9
2011f 36,399.5 2,900.4 48.3 24.5 16.0 52.0 2.2 11.6 12.7 23.3 3.8
2012f 40,124.5 3,004.3 50.0 3.6 15.4 56.0 2.1 11.0 12.4 25.3 4.4
Main Market Listing / Non-Trustee Stock / Syariah-Approved Stock By The SC * Consensus Based On IBES Estimates

♦ Key highlights from our visit include: (1) changes being made by new Issued Capital (m shares) 6,009.4
management; (2) update on oil & gas division and concerns of more Market Cap (RMm) 46,272.4
provisions; (3) updates and targets for other divisions – plantations, Daily Trading Vol (m shs) 11.7
property, heavy equipment and motor. 52wk Price Range (RM) 7.47-9.24
♦ Tough task for new CEO. In the first few weeks of his appointment, Major Shareholders: (%)
Skim Amanah Saham
Sime Darby’s new CEO, Dato’ Mohd Bakke Salleh, has visited all the Bumiputra 30.9
divisions, met with all the Heads of Departments, reviewed the Group’s Permodalan Nasional Bhd 17.0
long term 4-year plan and set out a strategic plan for all the divisions. On Employees Provident Fund 11.7
24 Aug, the Board will meet to review the plan and the results of the
FYE June FY10 FY11 FY12
forensic audit for the oil & gas division, after which the results for 4QFY10 EPS chg (%) (5.2) (0.1) (1.7)
will be released on 26 Aug. Any further provision required for the two Var to Cons (%) (18.9) (7.2) (10.7)
uncompleted projects, (ie. MOQ and Bakun, which are 96% complete),
PE Band Chart
would be done in the 4QFY10 results. Management maintains its plan to
do a portfolio review of the group in FY6/11, to decide if there should be PER = 22x
any changes made to the 5 core divisions. PER = 19x
PER = 16x
♦ Replenishment of O&G orderbook a positive? Not necessarily. PER = 13x

Going forward, management is hopeful of turning around the oil and gas
division within the next 1-2 years, and is trying to ensure a stable pipeline
of projects to strengthen its orderbook. While we are encouraged to note
that Sime’s oil & gas orderbook is now at RM2bn, we note that the bids
for these projects were put in under the previous management. Although
Relative Performance To FBM KLCI
management has targeted gross margins for these projects to be around
10%, we are skeptical of this target, as we are wary that the previous
FBM KLCI
management may have potentially underpriced its project costs in order
to win the contract. We understand that Sime’s bid for the second project
was quite a lot lower than the second lowest bid, which is worrying, to
Sime Darby
say the least. Should Sime not complete these projects within budget,
there could be a risk of more provisions in the future. Sime is aware of
this risk and is putting in place tighter management controls and detailed
documentation for these projects to try to alleviate the risk.
♦ Risks to our recommendation include: (1) a convincing reversal in crude
oil price trend resulting in reversal of CPO and other vegetable oils price
trend; (2) weather abnormalities; (3) increased emphasis on
implementing global biofuel mandates and trans-fat policies; and (4) a
slower-than-expected global economic recovery.
♦ Forecasts and recommendation. Post-earnings revision, we lower our
Hoe Lee Leng
SOP-based fair value to RM8.00 (from RM8.15) and maintain our
(603) 92802184
Underperform recommendation. hoe.lee.leng@rhb.com.my

Please read important disclosures at the end of this report.

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 5 August 2010

♦ Key highlights include: (1) changes being made by new management; (2) update on oil & gas division and
concerns of more provisions; (3) updates and targets for other divisions – plantations, property, heavy equipment
and motor.

♦ Tough task for new CEO. In the first few weeks of his appointment, Sime Darby’s new CEO, Dato’ Mohd Bakke
Salleh, has visited all the divisions, met with all the Heads of Departments, reviewed the Group’s long term 4-
year plan and set out a strategic plan for all the divisions, coming up with several items for each head of division
to focus on changing or reviewing. On 24 Aug, the Board will meet to review the plan and the results of the
forensic audit for the oil & gas division, after which the results for 4QFY10 will be released on 26 Aug.
Management maintains its plan to do a portfolio review of the entire group in FY6/11, to decide if there should be
any changes made to the 5 core divisions.

♦ Strategic changes targeted. Some of the strategic changes Dato’ Bakke wants to see happening include:

(i) Plantations division - an improvement in the operational efficiency of the plantations business and a
clearer strategy on its upstream and downstream businesses;

(ii) Property division - an improvement in margins and an examination of the rationale behind Sime’s joint
ventures with other property developers;

(iii) Heavy Equipment division – an improvement in margins by selling more higher margin products; and

(iv) Oil & gas division – to turn around the business and re-establish Sime Engineering’s reputation especially
with Petronas.

♦ Step in right direction for Sime. We believe this is a step in the right direction for Sime. The new CEO is
coming in with a fresh outlook on the company, questioning some of the strategic decisions made previously and
addressing the operational weaknesses in a hands-on manner. We thus believe Sime is on the way to making
some major changes, hopefully for the better.

♦ Details of forensic audit out on 24 Aug. In the oil & gas division, the forensic audit is still ongoing, with the
results to be out by 24 Aug. Recall that the forensic audit entails a complete review of the financial and legal
aspects of the four projects which Sime has made provision for. Once the review is done, Sime would know if
there is a need to provide further for the two uncompleted projects, ie. MOQ and Bakun, both of which are 96%
complete. Sime would also know if there is a basis for any legal action to be taken for any of the projects. If there
are any provisions to be made, this will be done in the 4QFY10 results.

Table 2. Breakdown of Provisions

Total
YTD Provisions
Project 3QFY06/10 9MFY06/10 To-Date Reasons for provisions
RMm RMm RMm
The inability to secure a suitable Transportation &
1 Qatar Petroleum 200 200 689 Installation (T&I) contractor on a timely manner.
Unprecedented weather conditions
Project already completed and handed over.

Design by front-end engineering design sub-contractors

2 Maersk Oil Qatar 159 526 300 needed rework.
Delay in locking in T&I contractor and vessels.
Project 96% completed – no change from end Feb-2010.

JV partners ran into financial difficulties resulting in non-

3 Marine 155 155 155
delivery of two tug boats and a Derrick lay barge.
Project was not completed, so written off completely.

Poor project management and poor controls on claims

4 Bakun dam 450 450 580 management.
Lack of reporting and visibility on project costs.
Based on Sime's 35.7% stake. Project 96% completed – no
change from beg-May 2010.

TOTAL 964 1,331 1,724

Source: Company, RHBRI

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♦ Poor project management led to more changes in management of O&G division. We understand that
most of the problems stem from poor project management and an absence of documentation of client design
changes and subsequent cost overruns. This was particularly the case for the Middle Eastern projects, as the
previous management had relied a lot on “word-of-mouth” and trust, that the clients would come through with
the VO payment. We understand that the oil & gas division has since made changes not only to its head of
division, but also to middle management, as the head of business development, CFO and GM of the division have
all left the company in the last month. Sime is in the midst of building up a new management team for the
division.

♦ Replenishment of orderbook a positive? Not necessarily. Going forward, management is hopeful of turning
around the oil and gas division within the next 1-2 years, and is trying to ensure a stable pipeline of projects to
strengthen its orderbook. While we are encouraged to note that Sime’s oil & gas orderbook is now at RM2bn
(from RM200m at end-2QFY10), we note that the bids for these projects were put in under the previous
management. The orderbook consists of two projects in India with ONGC India, the first being a well-head
platform for RM450m (1-year project, started in May 2010) and the second being a process platform for RM1.6bn
(2-year project, started 3-4 weeks ago). Although management has targeted gross margins for these projects to
be around 10%, we are skeptical of this target, as we are wary that the previous management may have
potentially underpriced its project costs in order to win the contract. We understand that Sime’s bid for the
second project was quite a lot lower than the second lowest bid, which is worrying, to say the least. Should Sime
not complete these projects within budget, there could be a risk of more provisions in the future. Sime is aware
of this risk and is putting in place tighter management controls and detailed documentation for these projects to
try to alleviate the risk.

♦ Hard to regain clients’ trust. While management has not set any further new contract targets for the oil & gas
division, there is an additional RM1-2bn worth of new tenders which are ongoing at the moment. However, we
note that the new CEO has said that Sime should not take on any more overseas contracts as the main
subcontractor, but that its role should be limited to that of fabrication and construction alone, which is its
expertise. Any approval for new EPCIC projects, both local and overseas, would have to go through the CEO first.
We note also, that Sime has yet to receive any new Petronas contracts this year, which may be a cause for worry,
as this could mean that Petronas no longer has the confidence to award new contracts to Sime. Sime would
therefore need some time to build up Petronas’ confidence again, before any new contracts are awarded. What
this means, is that Sime’s fabrication yard capacity (which has since been expanded by 190% to 105,000 tonnes
since the Ramunia acquisition was completed in Apr 2010), is likely to be running at very low utilisation rates in
the short to medium term. Fortunately for Sime, the acquisition of Ramunia was only for its assets, and did not
include taking over the staff, which means that recurrent overheads at Ramunia is likely to be minimal,
potentially at RM10-15m p.a., for depreciation charges.

♦ Rest of E&U division doing well. Notwithstanding the oil & gas sub-division, the rest of the operations included
in the Energy & Utilities division continue to do well. 9MFY10 EBIT recorded from the power, port and water
operations was RM149m, and is expected to close the year at RM200-220m (+ almost 40% yoy), slightly higher
than our EBIT projection of RM195m. Despite the slightly more bullish management EBIT target, we maintain our
projections for now, to be conservative. Going forward, in FY11, this is expected to grow further on the back of
expansion coming through on its port capacity expansion in Jining and its water treatment plant capacity
expansion in Weifang. We project earnings for the power, port and water operations to grow at a 4-year CAGR of
11% p.a. to FY2013. For the oil & gas sub-division, however, we revise our EBIT forecasts downwards, to reflect
an operational loss of RM58m in FY10 (from breakeven previously) and by 70-80% in FY11-12, to reflect lower
margins of 0.5-1% (versus norm of 2-3%).

♦ FFB production lower-than-expected in FY10. Sime’s FFB production for FY6/10 was -0.2% yoy, lower than
our 1.8% yoy growth projection and management’s 3% yoy growth guidance, due mainly to weather-affected FFB
yields in Malaysia and Indonesia in 4QFY10, which caused FFB production to fall 9.4% yoy. This was substantially
lower than its peers’ production growth during the quarter, which ranged from -3.6% to +13.3% yoy. Going
forward, management expects production to remain weak on a yoy basis in 1QFY11, but to pick up in subsequent
quarters, as yields from its Indonesian estates improve further. Production growth target for FY11 is at 5-6% yoy,
in line with our projections, on the back of targeted growth of 3-4% yoy from the Malaysian estates and 10-15%
yoy from the Indonesian estates. We have therefore reduced our FFB production forecasts for Sime by lowering
our FFB yield assumptions by 0.5-1t/ha, resulting in a -0.2% yoy decline in production for FY10 (from +1.8%
previously) and a +4-5% yoy growth for FY11-12 (from +5-6% previously). CPO price achieved for the FY10 is

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expected to be around RM2,300/tonne, lower than our projected RM2,400/tonne. As such, we have also lowered
our CPO price projection for FY10 to RM2,300/tonne, while maintaining our assumptions of RM2,600/tonne for
FY11 and RM2,500/tonne for FY12.

♦ Refinery completion target faster-than-expected. Sime’s 660,000-tonne capacity refinery in Northport is

due for completion at end-CY2010, while its 825,000-tonne capacity refinery in Kalimantan is expected to be
ready by end-CY2011. Upon completion of both these refineries, Sime is targeting to process about 60% of its
total CPO production in its own refineries, from about 40% currently. The larger scale of integration will help Sime
capture more margins from its downstream operations, as its downstream operations will be less vulnerable to
supply uncertainties. The targeted completion of the refineries in Malaysia and Indonesia are faster-than-
expected, as we had only projected for the Malaysian plant to be completed at end-FY06/11 and the Indonesian
plant to be completed by end-CY2012. We have conservatively maintained our expectations for the Malaysian
refinery to start contributions from FY06/11, while bringing forward our projected contributions from the
Indonesian refinery to start from FY06/13 (from FY06/14), assuming a six-month testing period.

♦ Property sales robust. Earnings from Sime’s property division is expected to continue to post substantial
growth of about 70-80% yoy in FY10, on the back of strong takeup rates for its property launches so far. In FY10,
Sime launched about 1,658 units, and this is expected to climb about 21% yoy to 2,021 units in FY11. Unbilled
sales as at end-3QFY06/10 stood at RM693m, while unsold stocks stood at RM623m. Margins for Sime’s property
division has also been improving on a yoy basis, with EBIT margins in YTD-9MFY10 at 26.3% (from 21% in
9MFY09). Sime expects margins to remain relatively stable at 25-30% in FY10-12. We have therefore raised our
property division projections to impute stronger sales for FY10-11, on the back of the 21% expected rise in
property launch value in FY11 and higher margins of 25-30% (from 20-25% previously) for FY10-12. Note that
we have not imputed the impact of IFRIC 15 in our forecasts, which, according to management, would reduce
profit in the division by as much as 40-45% in FY11.

Table 3. Sime Darby Property Launches

FY 2010 Launched FY 2011 Planned launches

Townships
(units) (units)

Bukit Jelutong 217 188

Putra Heights 78 269
USJ Heights 254 222
Bandar Bukit Raja 365 405
Denai Alam 171 442
Melawati 175 94
Ara Damansara 157 78
Nilai Impian / Saujana 113 119
KLGCC 120 0
Elmina 8 204
Total Units 1,658 2,021

Source: Company, RHBRI

♦ Heavy equipment orderbook rising, but delivery only in FY12. On the heavy equipment front, things have
been slightly more encouraging of late, with orderbook at end-June 2010 rising to about RM2bn (from RM1.37bn
at end-3QFY10), with about 50% of the contracts coming from Australia. Sime has not felt any impact in terms of
cancellations from its Australian clients yet, despite the proposal of a super tax implementation for mining
companies (which is in debate now, given the change in political leaders), although management is not ruling this
out in the future. However, we note that the bulk of the contracts are long term ones, with equipment delivery
only due in FY12. As such, we have reduced our earnings projections for the heavy equipment division for FY10-
11, to reflect the timeline of delivery. Management intends to revamp this division by focusing more effort on
growing its rental equipment market, which provides high margins of 15-20%, versus equipment sales margins of
just 8-10%. We believe this is a positive move, but would not impute any change to our margin assumptions until
there is some progress on this front.

♦ Motor sales very strong. As for the motor division, sales have been very strong in 4QFY06/10, and continue to
be impressive, particularly in China. Sime expects to almost double up its motor EBIT contributions on a yoy basis

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in FY10, although we caution that this may slow in FY11, if China manages to slow down the rapid pace of growth
in its economy. We have therefore raised our revenue and EBIT projections for the motor division for FY10 to
reflect the stronger-than-expected sales in China, but maintain our projections for FY11-12.

Risks

♦ Risks to our view. Main risks include: (1) a convincing reversal in crude oil price trend resulting in reversal of
CPO and other vegetable oils price trend; (2) weather abnormalities resulting in an over or under supply of
vegetable oils; 4) increased emphasis on implementing global biofuel mandates and trans-fat policies; and 5) a
slower-than-expected global economic recovery, resulting in lower-than-expected demand for vegetable oils.

Forecasts And Assumptions

♦ Forecasts. All in, we have revised our forecasts down by 5.2% for FY10, 0.1% for FY11 and 1.7% for FY12, after
taking into account our changes for:

1) the oil & gas sub-division – where we revised our EBIT forecasts down to reflect an operational loss of RM58m in
FY10 (from breakeven previously) and by 70-80% in FY11-12, to reflect lower margins of 0.5-1% (versus norm
of 2-3%);

2) the plantation division - where we reduced our FFB production forecasts by lowering our FFB yield assumptions by
0.5-1t/ha, resulting in a -0.2% yoy decline in production for FY10 (from +1.8% previously) and a +4-5% yoy
growth for FY11-12 (from +5-6% previously); reduced our CPO price projection for FY10 to RM2,300/tonne, while
maintaining our assumptions of RM2,600/tonne for FY11 and RM2,500/tonne for FY12; and brought forward our
projected contributions from the Indonesian refinery to start from FY06/13 (from FY06/14);

3) the property division - where we raised our projections to impute stronger sales for FY10-11, on the back of the
21% expected rise in property launch value in FY11 and higher margins of 25-30% (from 20-25% previously) for
FY10-12;

4) the heavy equipment division - where we reduced our earnings projections for FY10-11, to reflect the timeline of
delivery of the bulk of its RM2bn orderbook to be in FY12; and

5) the motor division - where we raised our revenue and EBIT projections for FY10 to reflect the stronger-than-
expected sales in China, but maintain our projections for FY11-12.

Valuations And Recommendation

♦ Maintain Underperform. Post-earnings revision, we lower our SOP-based fair value to RM8.00 (from RM8.15)
and maintain our Underperform recommendation for now. We believe things will be clearer after the 4QFY10
results are announced, as the uncertainty about further provisions would be known by then, and the new CEO
would make known his strategic plan and changes that are in store for the Group.

Table 4. Sum-Of-Parts Breakdown

Division Valuation method Value (RMm)
Plantations CY11 PE 16x 42,067.1
Property CY11 PE 12x 7,137.1
Motor CY11 PE 12x 3,530.6
Heavy Equipment CY11 PE 12x 10,189.1
Energy & Utilities CY11 PE 12x 2,701.2
Others CY11 PE 12x 237.8
Net Cash / (Debt) End 3QFY10 (1,730.8)
TOTAL 64,132.2

No. issued shares 6,009.4

SOP/share (RM) 10.67

Less: Holding co discount 25% (2.67)

Fair Value/share (RM) 8.00

Source: RHBRI

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Table 5. Earnings Forecasts Table 6. Forecast Assumptions

FYE Jun (RMm) FY09a FY10F FY11F FY12F FYE Jun FY10 FY11F FY12F

Turnover 31,013.9 32,949.3 36,399.5 40,124.5 CPO Price (RM/tonne) 2,300 2,600 2,500
Turnover growth (%) (8.9) 6.2 10.5 10.2 FFB Production Gth (%) (2.4) 1.1 1.7

Operating Costs (28,901.9) (30,670.6) (33,371.8) (37,042.2) Heavy Equipmt Op Profit Gth (16.9) 14.6 10.0
(%)
Operating Profit 3,126.1 3,356.1 4,217.9 4,394.3 Energy & Utilities Op Profit 152.5 57.9 7.9
Gth (%)
Property Op Profit Gth (%) 67.2 17.5 10.0
EBITDA 3,944.3 4,353.6 5,321.0 5,597.5 Motor Op Profit Gth (%) 69.9 (5.2) 5.0
EBITDA margin (%) 18.3 19.3 20.3 21.3

Depreciation (818.2) (997.5) (1,103.1) (1,203.2)

Net Interest (93.9) (188.0) (266.7) (307.1)
Associates 14.5 100.0 90.0 99.0
Exceptionals 24.9 (964.0) 0.0 0.0

Pretax Profit 3,071.6 2,304.1 4,070.7 4,216.5

Tax (730.8) (882.4) (1,017.7) (1,054.1)
PAT 2,340.8 1,421.7 3,053.1 3,162.4
Minorities (60.7) (56.9) (152.7) (158.1)
Discontinued ops 0.0 0.0 0.0 0.0
Net Profit 2,280.1 1,364.9 2,900.4 3,004.3
Core Net Profit 2,255.2 2,328.9 2,900.4 3,004.3

Source: Company data, RHBRI estimates

Chart 1: Sime Technical View Point

♦ The share price of Sime rolled into a correction
phase after failing to sustain at above the RM9.00
key resistance level in Jan 2010.

♦ As it retreated, the 10-day SMA also fell to below

the 40-day SMA, highlighting a possible bearish
medium-term outlook on the chart.

♦ The stock continued to trade under great selling

pressure, and lost a key support level of RM8.00 in
May 2010.

♦ Though it has attempted to recoup its lost ground,

it fell deeper to below the RM8.00 level in recent
week’s trading.

♦ Technically, as it failed even to retake the key 40-

day SMA resistance level in recent trading, and the
10-day SMA remains head-down, coupled with the
poorer momentum readings of late, further retreat
on the share price is almost imminent.

♦ Should it fall below the RM7.47 low registered in

early Jul, it will trigger a stiffer selling pressure,
heading towards the next support level at RM6.70
soon.

♦ Going forward, only if it can retake the RM8.00

critical level, then its outlook can be revived and its
chances of rechallenging the RM9.00 key resistance
can be refreshed.

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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
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
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
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

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
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

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.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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