Malakoff - Bursa Market Place

7 July 2015
Positives priced in
Initiate Coverage
We initiate coverage on Malakoff, the largest independent power
producer in Malaysia with a HOLD rating and a DCF-based target
price of RM1.92. While we forecast a 2014-17 earnings CAGR of 17%,
we believe these positives are already priced in. Nonetheless, we see
Malakoff as a decent dividend yield play with management guidance
of at least 70% dividend payout.
Malakoff
MLK MK
Sector: Utilities
Reliable cash flows supported by long term PPAs
Malakoff exhibits stable and defensive earnings as its power generation
capacity is fully contracted for based on long term power purchase
agreements (PPAs) that feature fuel cost pass through and scheduled
escalations in relation to operating rates. TNB is the key offtaker for output
of power generation and contributes c.90% to Malakoff’s revenue.
RM1.79 @ 6 Jul 2015
Potential expansion from longer term opportunities
Management intends to grow Malakoff’s total effective power generation
capacity from 7,036MW in 2016 to 10,000MW by 2020. However, most of
the plant-ups for Peninsular Malaysia have already been awarded by the
EC and thus may present a challenge to Malakoff’s medium term growth
plans. Malakoff’s plan to export power also comes with regulatory and
political hurdles. Nonetheless, we do not rule out Malakoff pursuing M&A
as they have demonstrated in the past to achieve their targets.
Previous Target: New Coverage
Ample room to gear up for expansion and more foreign ventures
With a healthier balance sheet now, Malakoff is better positioned to
undertake new power projects as well as pursue M&A to grow. Malakoff
has established a good M&A track record since privatisation in 2006,
notably the Macarthur Wind Farm which is a key foreign earnings driver.
Tapping into electricity and water demand growth in foreign markets
Malakoff has an existing presence in foreign markets namely Saudi
Arabia, Algeria and Bahrain which are expected to show high growth in
electricity and water demand. While Malakoff has relatively small minority
stakes in many of its foreign ventures, it intends to consolidate and
increase market share in the MENA region.
Initiating coverage with HOLD and TP of RM1.92
We initiate coverage on Malakoff with a HOLD rating and 12-month TP of
RM1.92 based on DCF (WACC: 6.3%). While we like Malakoff for its
decent dividend yield of 3-4% and stable cash flows, we believe most of
the positives are already priced in.
Earnings & Valuation Summary
FYE 31 Dec
2013
Revenue (RMm)
4,717.4
EBITDA (RMm)
1,589.5
Pretax profit (RMm)
84.1
Net profit (RMm)
161.5
EPS (sen)
3.2
PER (x)
55.4
Core net profit (RMm)
161.5
Core EPS (sen)
3.2
Core EPS growth (%)
(65.5)
Core PER (x)
55.4
Net DPS (sen)
0.0
Dividend Yield (%)
0.0
EV/EBITDA (x)
15.2
2014
5,594.5
2,327.3
595.5
341.5
6.8
26.2
341.5
6.8
111.4
26.2
0.0
0.0
10.1
Chg in EPS (%)
Affin/Consensus (x)
2015E
5,713.4
2,438.1
658.1
434.3
8.7
20.6
434.3
8.7
27.2
20.6
6.1
3.4
9.0
2016E
6,196.6
2,512.5
824.4
544.1
10.9
16.4
544.1
10.9
25.3
16.4
7.6
4.2
8.2
2017E
6,211.1
2,492.6
827.2
545.9
10.9
16.4
545.9
10.9
0.3
16.4
7.6
4.2
7.8
1.0
0.9
1.0
HOLD
Upside 7%
Price Target: RM1.92
(RM)
1.90
1.85
1.80
1.75
1.70
1.65
1.60
May-15
Jun-15
Price Performance
Absolute
Rel to KLCI
1M
-4.3%
-2.7%
3M
NA
NA
12M
NA
NA
Stock Data
Issued shares (m)
5,000.0
Mkt cap (RMm)/(US$m)
8,950.0/2,374.8
Avg daily vol - 6mth (m)
24.0
52-wk range (RM)
1.63-1.91
Est free float
25%
BV per share (RM)
10.07
P/BV (x)
0.18
Net cash/(debt) (RMm) (1Q15)
(14,863.5)
ROE (2015E)
7.2%
Derivatives
Nil
Shariah Compliant
Yes
Key Shareholders
MMC Corp
EPF
LTH
37.6%
19.1%
10.0%
Source: Affin Hwang, Bloomberg
Lim Tee Yang, CFA
(603) 2145 9616
[email protected]
Source: Company, Affin Hwang estimates, Bloomberg
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 1 of 22
7 July 2015
Investment thesis
Reliable cash flows supported by long term PPAs
Malakoff exhibits stable and defensive earnings as its power generation
capacity is fully contracted for based on long term power purchase
agreements (PPAs) that feature fuel cost pass through and scheduled
escalations in relation to operating rates.
The offtakers for Malakoff’s power generation output consist of high credit
government or government-linked entities, which suggests that there is
minimal risk to earnings. The key offtaker for Malakoff is Tenaga Nasional
Berhad (TNB), which is a 30%-government-owned entity and is the sole
offtaker in Malaysia.
TNB contributes c.90% to Malakoff’s revenue, which mainly comprises of
capacity payments and energy payments. This is unsurprising, given that
the bulk of Malakoff’s existing 6,036MW effective power generation
capacity is derived domestically.
Malakoff derives the bulk of its gross profits from capacity payments,
which mainly cover the power plant’s fixed costs and capital costs. Note
that TNB is required to pay the available capacity payment to Malakoff
regardless of whether Malakoff despatches the power generated from the
power plant, provided that the power plant makes available a daily
available capacity (committed availability declared by Malakoff on a daily
basis) to TNB and meets certain performance targets specified in the
relevant PPA.
Fig 1: High credit quality offtakers
Country
Offtaker
Malaysia
Australia
Algeria
Bahrain
TNB
AGL Energy Ltd
L’Algerienne Des Eaux
Ministry of Electricity and Water
S&P Credit
Rating
BBB+
BBB
NA
BBB-
Saudi
Arabia
Water and Electricity Company
NA
Effective
Capacity
5,346MW
210MW
71,400 m 3/day
372MW
164,000 m3/day
108MW
123.450 m3/day
Source: Company data
There is minimal risk to Malakoff’s cash flows from fluctuations in fuel
costs due to the cost pass through mechanism, which is captured under
the energy payments. The energy payments generally cover the power
plant’s fuel costs as well as variable operation and maintenance (O&M)
costs that are incurred when TNB despatches the power generated from
the power plant.
Under the PPAs for Malakoff’s CCGT power plants, the cost of gas is
passed on to TNB pursuant to the formulas under the respective PPAs,
which has historically fully covered the cost of gas. Should Malakoff’s
CCGT power plants need to run on distillate oil upon direction from TNB,
the cost of distillate oil is passed on to TNB as well. The cost pass through
mechanism for fuel applies to Malakoff’s coal-fired power plants as well.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 2 of 22
7 July 2015
Malakoff has good earnings visibility given that it has the longest PPA term
remaining among the Malaysian independent power producers (IPPs), with
a weighted average PPA term of about 13 years. With the inclusion of
Tanjung Bin Energy’s PPA (due to start operation in March 2016)
Malakoff’s weighted average PPA term increases to about 15 years.
Fig 2: Longest remaining PPA term among Malaysian IPPs
Years
14
13
12
11
10
8
6
4
2
1
0
Malakoff
1MDB
YTL Power
Source: Company data
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 3 of 22
7 July 2015
Beneficiary of continuing
generation mix to coal
domestic
shift
in
Given Malakoff’s track record with the Tanjung Bin Power Plant, we
believe that Malakoff would be well positioned to capture any future
tenders for new power plants that use coal for fuel. While coal will remain
as the dominant source of fuel for generation mix in Peninsular Malaysia,
we note that the EC has largely planned out future plant-ups until 2024.
Fig 3: Outlook of generation mix for Peninsular Malaysia
Source: Energy Commission
Malakoff has established a track record with coal-fired power plants with
the successful development and operation of the 2,100MW Tanjung Bin
Power Plant, one of the largest coal-fired power plants in South East Asia.
According to management, Malakoff is on track to complete the 1,000MW
Tanjung Bin Energy Power Plant by Mar16.
Malakoff has ample room to expand its generation capacity with its
existing land bank estimated at 400 hectares in total and with remaining
leases of 47 years on average that have easy access to transmission
infrastructure. For example, the Tanjung Bin site has a remaining lease of
up to 33 years, which can be used to support further PPA extensions or
new capacity expansion.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 4 of 22
7 July 2015
Potential expansion from longer term opportunities
Management intends to grow Malakoff’s total effective power generation
capacity from 7,036MW in 2016 (with the addition of Tanjung Bin Energy
Power Plant) to 10,000MW by 2020. However, most of the plant-ups in
Peninsular Malaysia involving coal and gas have already been awarded by
the EC and thus may present a challenge to Malakoff’s medium term
growth plans. Nonetheless, we do not rule out Malakoff pursuing M&As as
they have demonstrated in the past to achieve their targets.
Fig 4: New generation projects in Peninsular Malaysia
Power Plant
Janamanjung Unit 4
CBPS Redevelopment
Hulu Terengganu
Awarded
Yes
Yes
Yes
Key Owner
TNB
TNB
TNB
Capacity (MW)
1,010
385
250
Type
Coal
Gas
Hydro
Ulu Jelai
Yes
TNB
372
Hydro
Prai
Tanjung Bin Energy
Hulu Terengganu (Tembat)
Yes
Yes
Yes
TNB
Malakoff
TNB
1,071
1,000
15
Gas
Coal
Hydro
Pengerang Co-Generation
Janamanjung Unit 5
Project 4A (Pasir Gudang)
Jimah East Power
Yes
Yes
Yes
Yes
Petronas
TNB
TNB-SIPP
1MDB
Gas
Coal
Gas
Coal
Additional Chenderoh
Tekai
New CCGT
Telom
New coal-fired power plant
Yes
Yes
NA
Yes
NA
TNB
TNB
NA
TNB
NA
400
1,000
1,000
1,000
1,000
12
156
2,000
132
1,000
Hydro
Hydro
Gas
Hydro
Coal
Commercial Operation Date
31 Mar 2015
1 Sep 2015
U1: 16 Sep 2015
U2: 17 Dec 2015
U1: 13 Dec 2015
U2: 14 Mar 2016
1 Jan 2016
1 Mar 2016
U1: 15 Nov 2016
U2: 15 Dec 2016
1 Jun 2017
1 Oct 2017
1 Jun 2018
U1: 15 Nov 2018
U2: 15 May 2019
Oct 2018
Dec 2020
Jan 2021
Dec 2022
2023
Source: Affin Hwang, Company data
Among the nearer term opportunities for Malakoff is the Pengerang cogeneration power plant. We understand from management that Malakoff is
still in discussions with PETRONAS for a role in the 1,300MW cogeneration power plant that forms part of PETRONAS’ Refinery and
Petrochemicals Integrated Development (RAPID) project in southern
Johor. At this stage, talks are still ongoing to work out the split in equity
ownership. While PETRONAS is not completely without experience in
terms of running gas-fired power plants, such as the RM1.5bn 400MW
gas-fired Kimanis Power Plant managed by subsidiary Petronas Gas, we
believe PETRONAS may benefit from Malakoff’s track record as well as inhouse operations & maintenance (O&M) expertise.
Between 2015 and 2019, coal is expected to be the main fuel for
generation as an additional 5,000MW of coal-fired capacity will be
commissioned. However, to ensure a balanced fuel mix while meeting
future demand, the EC is projecting an additional 3,000MW capacity
based on CCGT to be commissioned with the first 1,000MW by Jun18
followed by another 2,000MW by Jan21.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 5 of 22
7 July 2015
In the nearer term, we believe there is an opportunity for Malakoff to bid for
the 2,000MW CCGT. The tender process for the 2,000MW CCGT has yet
to be done and Malakoff would likely be keen given its extensive
background experience in CCGT.
According to the Energy Commission (EC), the power transfer from
Sarawak Interconnection has been further delayed to 2024, resulting in an
additional 1,000MW coal fired power plant to be built in 2023 as
compensation. We believe this is also an opportunity that Malakoff would
likely be keen on, although the tender may only take place in 2018
assuming a 5 year construction period.
Nonetheless, the projected steady growth of Malaysia’s GDP as well as
electricity demand underlines the long term potential for future plant-ups in
Peninsular Malaysia. We note however that compared to GDP, the
electricity growth rates are projected to be lower as we note that elasticity
of electricity demand to GDP has been hovering marginally below 1.0 for
the last several years.
Fig 5: Electricity demand growth for Peninsular Malaysia
MW
22,000
8%
7%
20,000
6%
18,000
5%
16,000
4%
3%
14,000
2%
12,000
1%
10,000
0%
2010A 2011A 2012A 2013A 2014A 2015F 2016F 2017F 2018F 2019F 2020F
Peak demand (LHS)
Peak demand growth (RHS)
GDP Growth (RHS)
Source: Affin Hwang, Company data, TNB
To meet its 10,000MW generation capacity target by 2020, Malakoff is
also undertaking feasibility studies to export power to Singapore and
Thailand. According to management, Malakoff is looking into the possibility
of a new 1,000MW coal-fired power plant at the Tanjung Bin site to export
power to Singapore. Based solely on cost alone, there is an argument to
be made for exporting power to Singapore, since the average energy cost
per kWh using coal is about 10 sen. In comparison, Singapore relies
mainly on natural gas imports which are more expensive and incurred an
average energy cost per kWh of 59 sen.
However, we believe there are regulatory and political hurdles to go
through before Malakoff is able to export power to Singapore, and that
further discussions would need to take place between the relevant
government agencies. We believe these issues may be applicable as well
for exporting power to Thailand. While management acknowledges that
Malakoff lacks a ready existing site to build a power plant for exporting
power to Thailand, Malakoff has identified a few potential suitable sites.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 6 of 22
7 July 2015
Ample room to gear up for expansion and more
foreign ventures
Malakoff has emerged with a healthier balance sheet post-IPO after
raising a gross proceed of RM1.8bn (based on 1bn new shares issued) to
fully redeem the RM1.8bn Junior Sukuk Musharakah. Note that the 30year sukuk bears a profit rate of 6.3% per annum until Sep15 and a profit
rate of 9.3% thereafter until maturity in 2042). Therefore, we view the
proceeds from the IPO as timely, due to the significant savings in finance
costs that Malakoff stands to gain.
As a result, we estimate that Malakoff’s gross debt of RM18.2bn as at
Mar15 would be reduced to RM16.4bn. This implies its gross debt/equity
ratio would improve from 4.6x to 2.7x, which is significantly below its debt
covenant level of 5.5x.
Fig 6: Gross debt/equity ratio to improve post-IPO (x)
4.6
2.7
Before IPO
After IPO
Source: Company data
The healthier balance sheet would help Malakoff undertake new power
projects as well as conduct M&As to grow. Malakoff has established a
good track record in M&A since privatisation in 2006, notably the
Macarthur Wind Farm which is a key foreign earnings driver.
Fig 7: Malakoff’s M&A track record since privatization
Year
Country
Target
2012
Bahrain
Hidd Power
2013
2014
Australia
Malaysia
Macarthur Wind Farm
Port Dickson Power
Equity
Stake
40.0%
50.0%
Increased from
25% to 100%
Plant
Type
Natural Gas /
Distillate Oil
Wind
OCGT
Generation
Capacity
929MW
410,000 m3/day
420MW
436.4MW
Effective
Capacity
372MW
164,000 m3/day
210MW
436.4MW
Source: Company data
We believe that with limited domestic opportunities available in the short to
medium term, management may adopt the M&A approach to meet its
effective power generation capacity target of 10,000MW by 2020.
Domestically, Malakoff had acquired the remaining 75% interest in Port
Dickson Power Plant in 2014. Meanwhile, the acquisition of a 50.0% stake
in Macarthur Wind Farm (effective renewable power capacity of 210MW)
in 2013 marks one of Malakoff’s more prominent foreign acquisitions.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 7 of 22
7 July 2015
Outside of Malaysia, Malakoff intends to explore opportunities in
developed markets where renewable energy and power generation are
given high importance and treated with priority, such as Australia and the
United Kingdom.
Fig 8: Growing electricity consumption in Australia
Year
2008 – 2009
2009 – 2010
2010 – 2011
2011 – 2012
2012 – 2013
2013 – 2014E
2014 – 2015F
2015 – 2016F
2016 – 2017F
2017 – 2018F
2018 – 2019F
2019 – 2020F
Electricity
Consumption (GWh)
249,531
252,133
252,620
249,884
249,075
256,325
263,997
272,126
280,749
289,905
299,639
310,000
Growth (%)
n/a
1.0
0.2
-1.3
-0.3
2.9
3.0
3.1
3.2
3.3
3.4
3.5
Source: Affin Hwang, Company data, Frost & Sullivan
These advanced markets are also attractive for their high growth
prospects in renewable energy output. According to Frost & Sullivan,
electricity production from renewable energy in Australia is expected to
expand to 63,000 GWh (2013-2020 CAGR of 9.9%), while the United
Kingdom is expected to see a 2013-2020 CAGR of 12.7% to 110,000
GWh.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 8 of 22
7 July 2015
Tapping into electricity and water demand growth in
foreign markets
Malakoff has an existing presence in foreign markets namely Saudi
Arabia, Algeria and Bahrain which are expected to show high growth in
electricity and water demand. Forecasts from Frost & Sullivan indicate that
power demand in Saudi Arabia, Algeria and Bahrain are expected to grow
at a 2014-2018 compounded annual growth rate (CAGR) of 6.3%, 7.5%
and 4.1% respectively, while water consumption for the Middle East and
North Africa (MENA) region is estimated to grow at a CAGR of 2.1%.
Malakoff currently has relatively small minority stakes in many of its foreign
ventures but intends to consolidate and increase market share in the
MENA region through its interests in existing projects, such as through
brownfield expansions, as well as through new opportunities, including
privatisations or acquisitions of existing power generation or water
production assets and new greenfield project developments.
Fig 9: Growing electricity consumption in Bahrain
Fig 10: Growing water consumption in Bahrain
GWh
17,000
%
25
mil m3/day
0.55
%
25
16,000
20
15,000
14,000
0.50
20
0.45
15
13,000
15
0.40
12,000
10
11,000
10
0.35
Source: Frost & Sullivan
2018F
2017F
2016F
2015F
2014F
2013
2012
0
2011
0.25
2008
2018F
2017F
2016F
2015F
2014F
2013
2012
2011
2010
2009
0
2008
8,000
5
0.30
2010
5
9,000
2009
10,000
Source: Frost & Sullivan
Fig 11: Growing electricity consumption in Saudi Arabia
GWh
400,000
Fig 12: Stagnant water consumption in Saudi Arabia
%
11
350,000
10
58
9
56
8
300,000
7
6
250,000
mil m3/day
60
%
2
0
54
-2
52
50
-4
48
Source: Frost & Sullivan
2018F
2017F
2016F
2015F
-10
2014F
40
2013
2
-8
2012
42
2011
2018F
2017F
2016F
2015F
2014F
2013
2012
2011
2010
2009
2008
150,000
44
3
2008
200,000
-6
46
2010
4
2009
5
Source: Frost & Sullivan
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 9 of 22
7 July 2015
Fig 13: Growing electricity consumption in Algeria
Fig 14: Growing electricity consumption in Oman
GWh
70,000
%
12
65,000
11
60,000
10
9
55,000
GWh
40,000
%
16
15
35,000
14
13
30,000
8
50,000
7
45,000
12
25,000
11
6
Source: Frost & Sullivan
9
8
15,000
7
2018F
2017F
2016F
2015F
2014F
2013
2012
6
2011
10,000
2010
2018F
2017F
2016F
2015F
2014F
2013
2
2012
25,000
2011
3
2010
30,000
2009
4
2008
35,000
10
20,000
2009
5
2008
40,000
Source: Frost & Sullivan
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 10 of 22
7 July 2015
Forecasts and assumptions
Earnings growth projection
We expect to see strong 2014-17E earnings CAGR of 17%, mainly driven
by savings from the redemption of the RM1.8bn sukuk, as well as the
commissioning of Tanjung Bin Energy in Mar16.
We forecast 2015 earnings to grow by 27.2% mainly driven by savings in
finance costs, as Malakoff had redeemed the sukuk in May15. The
combination of the full year impact from the savings in finance costs and
the commissioning of Tanjung Bin Energy in Mar16 would result in 2016
earnings growing further by 25.3%.
However, unless Malakoff acquires a new asset in the interim, we expect
earnings growth to be relatively flat in 2017 due to the expiry of Segari
Energy Ventures’ (SEV) existing PPA in Jun17. Malakoff will receive lower
capacity payments under the PPA extension from Jul17 to Jun27.
Fig 15: Net profit growth to moderate in 2017E
RM m
600
140%
120%
500
100%
80%
400
60%
40%
300
20%
0%
200
-20%
-40%
100
-60%
0
-80%
2012
2013
2014
2015E
Net Profit
2016E
2017E
Growth
Source: Affin Hwang, Company data
We expect Malakoff’s EBITDA margin to remain relatively stable going
forward so long as it does not experience major unscheduled outages in
its power plants. Recall that in 2013, Malakoff experienced a number of
unscheduled outages in its Tanjung Bin power plant, which resulted in
substantially lower capacity payments received. In addition, Malakoff had
to incur additional costs from remedial works while also incurring write-offs
on replaced plant equipment. As for fluctuations in fuel cost, these are
covered under the cost pass through mechanism.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 11 of 22
7 July 2015
Fig 16: Revenue growth to moderate in 2016E
Fig 17: EBITDA margin should remain stable
RM m
6,500
25%
20%
6,000
44.0%
42.0%
15%
5,500
10%
40.0%
5,000
5%
38.0%
4,500
0%
36.0%
-5%
4,000
34.0%
-10%
3,500
-15%
3,000
-20%
2012
2013
2014
2015E
Revenue
2016E
2017E
32.0%
30.0%
2012
2013
2014
2015E
2016E
2017E
Growth
Source: Affin Hwang, Company data
Source: Affin Hwang, Company data
Dividends
We expect Malakoff to deliver better dividends in 2016 upon the
commissioning of Tanjung Bin Energy. For 2015-17, we have assumed a
dividend payout of 70%, which we deem conservative based on
management’s guidance of at least a 70% payout.
We estimate 2015 DPS of 6.1 sen (3.4% net yield) before rising to 7.6 sen
(4.3% net yield) in 2016. Given flattish earnings growth expectations in
2017, we expect DPS to remain flat at 7.6 sen (4.3% net yield).
Malakoff declared a dividend of 3.0 sen following its 1Q15 results. We
forecast a final DPS of 3.1 sen, which implies a 70% payout from 2015
EPS of 8.7 sen.
Balance sheet
Malakoff has emerged with a healthier balance sheet by paring down its
existing debt using the IPO proceeds. We estimate Malakoff’s gross
debt/EBITDA ratio to improve from 7.8x in 2014 to 6.7x in 2015.
At such gearing levels, we believe the management would take a gradual
approach in raising the dividend payout ratio. Given that Malakoff has
outlined its plans to grow inorganically, we believe management would
likely try to conserve some cash to prepare itself for future M&A exercises.
Capex
As for capex, we have assumed a 3% capex/sales ratio, which imply 201517 capex plans of around RM200-RM220 per annum mostly comprising of
maintenance capex. We do not expect capex to change significantly in the
short term, as Malakoff is not embarking on new plant ups at this juncture
while Tanjung Bin Energy is already c.90% complete.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 12 of 22
7 July 2015
Valuation
Initiating coverage with HOLD rating and TP of RM1.92
We initiate coverage on Malakoff with a HOLD rating and TP of RM1.92
based on DCF. We believe DCF is an appropriate way to value Malakoff,
as it captures the company’s steady stream of cash flow. We assume a
WACC of 6.3%.
Fig 18: Assumptions for WACC
Beta
Risk free rate
Market risk premium
Cost of equity
Cost of debt (after tax)
Debt/Capital
Tax
WACC
1.0
4.5%
5.5%
10.0%
5.3%
80%
24%
6.3%
Source: Affin Hwang, Company data
Fig 19: Sensitivity to our target price (RM) to WACC assumptions
WACC
TP
5.1%
3.44
5.6%
2.82
6.1%
2.31
6.3%
1.92
7.1%
1.54
7.6%
1.24
8.1%
0.98
Source: Affin Hwang, Company data
Our TP translates to 9.5x 2016 EV/EBITDA, which is a 19% premium to its
domestic peers’ average EV/EBITDA of 8x. We believe the premium
stems from Malakoff’s position as the only listed major IPP in Malaysia
deriving almost of its revenue and earnings from domestic operations.
Malakoff’s 2016 ROE of 8.6% is within its domestic peers’ range of 8-13%.
While we like Malakoff for its decent dividend yield of 3-4%, stable cash
flows and long term growth plans, we believe most of the positives are
already priced in at this juncture. As outlined in the report, we are positive
on Malakoff’s plan to grow its generation capacity by 42% to 10,000MW by
2020 and would be in a better financial position to do so following the
deleveraging exercise via the IPO proceeds. However, we think Malakoff’s
growth path will not be smooth given the regulatory and political hurdles
involved in exporting power while new tenders for domestic power plants
may likely only come in 2018 at the earliest.
Malakoff’s share price has recovered following a rather lacklustre re-listing
on 15 May. The stock was re-listed at RM1.80 but subsequently fell to a
low of RM1.63 on 20 May before gradually recouping losses to close near
its IPO price now.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 13 of 22
7 July 2015
Fig 20: Regional peer comparison
Price
(local ccy)
Mkt Cap
(US$ mil)
Malaysia
TNB *
YTL Power *
Average
12.62
1.61
18,935
2,998
10.0
13.0
11.5
9.7
14.1
11.9
6.9
8.9
7.9
6.7
9.2
7.9
14.5
9.0
11.8
13.5
8.2
10.9
2.4
6.2
4.3
2.6
6.2
4.4
Thailand
Glow Energy
Ratchaburi Electricity
Electricity Generating
Average
83.50
56.25
152.00
3,618
2,416
2,370
13.7
12.7
10.6
12.3
13.7
10.7
9.6
11.3
9.2
10.7
22.3
14.1
9.4
10.6
18.5
12.8
18.8
10.4
10.1
13.1
17.5
11.6
10.5
13.2
4.3
4.1
4.1
4.2
5.0
4.5
4.2
4.6
Philippines
Aboitiz Power
Energy Dev Corp
First Philippine
Average
43.60
7.26
79.00
7,120
3,021
971
17.6
12.8
8.3
12.8
16.1
11.2
6.5
11.2
12.9
9.5
4.8
9.5
11.2
8.7
4.2
8.7
18.5
23.0
8.1
23.0
18.7
22.6
9.2
22.6
3.6
2.7
2.5
2.7
3.8
3.1
2.5
3.1
Hong Kong
HK & China Gas
CLP Holdings
Power Assets
Average
16.00
65.35
69.40
23,865
21,297
19,106
23.8
15.3
17.2
18.8
22.2
14.6
17.4
18.0
20.4
9.9
76.5
35.6
19.1
9.5
75.9
34.8
13.6
11.8
6.9
10.8
13.8
12.0
6.7
10.8
2.3
4.1
3.9
3.4
2.4
4.2
4.0
3.5
India
NTPC Ltd
Tata Power
Reliance Power
Average
137.95
74.20
45.25
17,950
3,165
2,002
11.4
Nm
12.3
11.8
11.8
15.4
9.7
12.3
9.5
7.1
8.5
8.4
8.3
6.8
7.8
7.6
11.1
9.0
6.3
8.8
11.8
10.3
7.8
10.0
3.4
1.9
0.3
1.9
3.6
2.0
0.7
2.1
China
Datang International
Huadian Power
Huaneng Power
Average
56.05
7.97
7.35
11,602
10,323
9,563
12.4
17.7
11.9
14.0
10.7
15.0
10.0
11.9
15.3
9.5
4.4
9.7
14.0
8.4
3.9
8.8
9.4
10.3
9.2
9.7
10.2
11.0
10.0
10.4
2.2
1.1
2.3
1.8
2.6
1.3
2.7
2.2
14.0
13.0
14.6
14.6
11.8
12.1
3.0
3.2
Company
Average - All
PER (x)
FY15
FY16
EV/EBITDA (x)
FY15
FY16
ROE (%)
FY15
FY16
Div Yield (%)
FY15
FY16
Source: Bloomberg, * Affin Hwang estimates
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 14 of 22
7 July 2015
Risks
Disruption to operations
Should Malakoff experience operational disruptions and hinder its ability to
deliver power, this could have negative consequences to revenues as a
result of lower capacity payments. Such disruptions may arise under
various circumstances including breakdown of power generation
equipment, failure of transmission systems or unscheduled outages.
For example, due to a shortage of natural gas supply in Malaysia, the
Tanjung Bin Power Plant experienced a number of unscheduled outages
in 2013 that negatively affected Malakoff’s capacity payments beginning in
1Q13.
Capacity payments received by Malakoff only normalised when remedial
works to the Tanjung Bin Power Plant were completed in 1Q14. Besides
the loss of capacity payments during the interim to undertake remedial
works, Malakoff had to write off a total of RM109.4m to replace the power
plant equipment.
Under a worst case scenario, if Malakoff is unable to deliver power for
prolonged periods such that there is a material breach of one or more of
the PPAs, TNB may terminate the PPA after the lapse of the applicable
cure period, which in turn may lead to a default.
Challenges in renewing existing PPAs
The likelihood of PPA extensions in the future for Malakoff’s gas-fired
power plants would be more challenging given the higher generation cost
of gas compared to coal. The importation of LNG into Malaysia since 2013
would lead to higher natural gas prices. Under the two-tier pricing
mechanism, the price of natural gas has been set at RM15.20 per mmbtu
for the first 1,000 mmscfd, and RM41.68 per mmbtu for quantities
exceeding 1,000 mmscfd.
Besides that, under a more competitive structure, the IPPs including
Malakoff would need to submit competitive bids when bidding for
extensions of PPAs. If Malakoff’s bids are not competitive enough, then
Malakoff would not be able to sell power using the relevant power plant at
that juncture. In that case, Malakoff may consider selling its power plant or
using the equipment in other power plants in or outside of Malaysia.
Deregulation of power sector
In the long term, there is a possibility that the Government may introduce a
market system, whereby the IPPs make competitive offers to supply
electricity in a wholesale market and derive revenue primarily based on the
quantities and prices at which their electricity is sold, based on supply and
demand in the market.
In our view, a market system rewards the most efficient IPPs and in return
offers consumers the cheapest form of electricity. However, in a market
system, the IPPs would not be able to enjoy a steady stream of capacity
payments due to the absence of a fixed tariff rate and cost pass through.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 15 of 22
7 July 2015
Foreign operations may carry greater risks than domestic assets
Overseas operations generally carry risks that are different from or greater
than those that Malakoff faces in its domestic operations. These risks can
include challenges in complying with multiple foreign laws and regulations,
less developed legal systems, political and economic instability and lack of
familiarity with local markets and competitive conditions.
Failure to effectively manage assets which only have minority stakes
Where Malakoff only has minority interests, this may limit the group’s
ability to manage their foreign operations due to lack of management
control. Disagreement with any of Malakoff’s partners may result in the
assets potentially experiencing operational issues due to inconsistent
business goals. Any serious disputes may also lead to Malakoff’s partners
taking action contrary to Malakoff’s instructions or Malakoff’s partners
being unwilling to fulfil their obligations.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 16 of 22
7 July 2015
Company background
Corporate profile
Malakoff Corporation Berhad (Malakoff) is the largest independent power
producer (IPP) in Malaysia and South East Asia (SEA) in terms of total
generation capacity. Outside of Malaysia, Malakoff also acts as an
independent water and power producer (IWPP) in the MENA region and a
renewable energy (RE) producer in Australia, with a combined effective
3
water production capacity of about 358,850 m per day and power
generation capacity of about 690MW.
The bulk of Malakoff’s earnings is derived from its domestic power plants,
in which Malakoff usually has the entire or majority equity stake with the
exception of the Kapar Power Plant (40% equity stake). For 2014, we
estimate that about 75% of Malakoff’s operating profit came from the
domestic power plants, while the remaining 25% was from its foreign
ventures in which the Macarthur Wind Farm was the primary contributor
(74% of total foreign operating profits).
Fig 21: Malakoff’s portfolio of assets
Plant Name
Location
Plant
Type
Generation
Capacity
Effective
Equity
Effective
Capacity
2131
2,100MW
90.00%
1,890MW
2027
2019/29
2022
2016
1,303MW
2,420MW
640MW
436.4MW
93.75%
40.00%
75.00%
100.00%
1,221.6MW
968MW
480MW
436.4MW
2024
350MW
100.00%
350MW
5,346.0MW
Coal
2041
1,000MW
100.00%
1,000MW
Water/Natural
Gas/Distillate Oil
Water/Oil
2027
40.00%
2030
Water
Water
2036
2029
410,000 m3/day
929MW
880,000 m 3/day
900MW
200,000 m 3/day
150,000 m 3/day
35.70%
11.90%
164,000 m3/day
372MW
105,600 m3/day
108 MW
71,400 m 3/day
17,850 m3/day
Wind
2038
420MW
50.00%
210MW
In Malaysia:
Tanjung Bin Power
Johor
Coal
Plant
SEV Power Plant
Perak
CCGT
Kapar Power Plant
Selangor
Multi-fuel
GB3 Power Plant
Perak
CCGT
Port Dickson Power
Negeri
OCGT
Plant
Sembilan
Prai Power Plant
Pulau Pinang
CCGT
Total effective power generation capacity in Malaysia
Under construction in Malaysia:
Tanjung Bin Energy
Johor
Power Plant
Outside Malaysia:
Hidd IWPP
Shuaibah Phase 3
IWPP
Suok Tleta IWP
Shuaibah Phase 3
Expansion IWP
Macarthur Wind
Farm
Bahrain
Kingdom of
Saudi Arabia
Algeria
Kingdom of
Saudi Arabia
Australia
PPA/WPA
/PWPA
Expiration
12.00%
358,850 m3/day
690 MW
Total effective water production capacity outside Malaysia
Total effective power production capacity outside Malaysia
Under construction
outside Malaysia:
Al Ghubrah IWP
Sultanate of
Oman
Water
2034
Total effective power generation capacity in and outside Malaysia
191,000 m 3/day
45.00%
85,950 m 3/day
6,036.0MW
Source: Company data
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 17 of 22
7 July 2015
Fig 22: Location of Malakoff’s assets
Source: Company data
Brief recap of privatization
In 2007, MMC had via its 51% subsidiary Malakoff Corporation Berhad
privatised Malakoff Berhad (MB) for RM7.2bn for the remaining 77.7%
stake it did not own then. The remaining 49% stake in Malakoff
Corporation Berhad was then held by the Employees Provident Fund
Board (30%), Kumpulan Wang Persaraan (10%) and foreign financial
institutions (9%).
MMC had privatised MB at RM10.35 per share, which represented a 5.1%
premium to MB’s last traded price of RM9.85 before the stock was
suspended from trading prior to the announcement of the privatisation in
May 2006.
The privatisation exercise valued MB at RM9.3bn. Based on reported
FY06 (FYE 31 Aug) earnings of RM442.4m, MB’s privatisation was valued
at PE of 21.0x. In FY06, MB had gross borrowings of RM10.2bn, gross
cash balance of RM2.2bn and an estimated EBITDA of RM1.2bn, which
implies EV/EBITDA privatisation ratio of 14.4x.
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 18 of 22
7 July 2015
Changes since privatization
One of the major changes in Malakoff since the privatisation is the
diversification of generation mix from gas towards coal and renewable
energy. In particular, Malakoff’s coal generation mix has risen to 31% in
2014, which is positive given that the Government would likely continue to
tender out new coal power plants in the future to reduce reliance on
natural gas as a source of fuel. Gas fired power plants would increasingly
become less competitive as the Government continues to reduce its gasfuel subsidy by raising the gas tariff for the power sector going forward.
The other notable major change in Malakoff is the expansion into
international water, power and renewable energy businesses. These
investments have been made either via forming or acquiring joint ventures
or associate stakes. The most significant acquisition made so far is the
50% stake acquisition in the Macarthur Wind Farm in Jun13, which
contributed 74% of Malakoff’s 2014 foreign operating profits.
Fig 23: Power generation mix (MW) upon privatisation
Fig 24: Current power generation mix (MW)
Australia
3%
Bahrain
6%
Saudi
Arabia
2%
Malaysia
100%
Malaysia
89%
Source: Affin Hwang, Company data
Source: Affin Hwang, Company data
Fig 25: Effective power generation capacity upon
Fig 26: Current effective power generation capacity
privatization (MW)
3,129
6,036
210
968
1,448
1,890
2,161
2,488
Gas
1
Multi-fuel
Source: Affin Hwang, Company data
Gas
Coal
1 Multi-fuel
Wind
Source: Affin Hwang, Company data
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 19 of 22
7 July 2015
Fig 27: Effective water production capacity (m3/day)
Fig 28: Effective water production capacity (m3/day)
Saudi
Arabia
34%
358,850
Algeria
20%
Bahrain
46%
Upon
privatisation
Current
Source: Affin Hwang, Company data
Source: Affin Hwang, Company data
Fig 29: Key developments in Malakoff
1998:
Acquired 100%
interest in
TJSB, owner of
an O&M
1975:
Malakoff Berhad
incorporated in
Malaysia
1995:
Port Dickson Power
Plant commenced
1993:
Shift in
operations
to power
1996-1997:
SEV Power
Plant
commenced
2004:
Acquired 40%
interest in Kapar
Power Plant
2001-2002:
GB3 Power Plant
commenced
2000:
Wirazone
commenced an
electricity and chilled
water distribution
2003:
Prai Power Plant
commenced
2006:
Acquired 20%
interest in Dhofar
Power Company
2007:
-> Taken private by MMC
-> Acquired 12.75%
interest in CEGCO,
multifuel power plant
in Jordan
-> Tanjung Bin Power
Plant commenced full
operations
2009-2010
-> Diposed 20% interest in
Dhofar Power Company
-> Shuaibah Phase 3
Expansion IWP &
Shuaibah Phase 3 IWPP
commenced operations
in Saudi Arabia
2011:
-> Souka Tleta IWP
commenced operations
-> Awarded concessions for
construction of Tanjung
Bin Energy Power Plant
2012:
-> Acquired 40% interest
in Hidd Power
-> Disposed 12.75%
interest in CEGCO
-> Acquisition from
HICOM Power
2013:
-> Secured extension to operate
SEV Power Plant for another 10
years until 2027
-> Selected to undertake the Al
Ghubrah IWP project in Oman
-> Acquired 50% interest in the
Macarthur Wind Farm
2014:
Acquired remaining 75%
interest in Port Dickson
Power Plant
Source: Affin Hwang, Company data
Shareholding structure
With the re-listing of Malakoff, MMC as the largest shareholder would see
its shareholding in Malakoff reduced from 51.0% to 37.8%. This is partly
due to a combination of the existing shareholders selling 521,740,000
existing shares and the dilutive effect of a public issue of 1,000,000,000
new shares.
Fig 30: Shareholding before IPO
Shareholder
No. of shares
MMC
2,040,000,000
EPF
1,200,000,000
KWAP
400,000,000
Others
360,000,000
Total
4,000,000,000
Source: Affin Hwang, Company data
Fig 31: Shareholding immediately after IPO
Stake (%)
51.0
30.0
10.0
9.0
100.0
Shareholder
MMC
EPF
KWAP
Others
Public
Total
No. of shares
1,890,434,000
972,138,000
324,046,000
291,642,000
1,521,740,000
5,000,000,000
Stake (%)
37.8
19.4
6.5
5.8
30.4
100.0
Source: Affin Hwang, Company data
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 20 of 22
7 July 2015
Malakoff – FINANCIAL SUMMARY
Profit & Loss Statement
FYE 31 Dec (RMm)
Revenue
Operating expenses
EBITDA
Depreciation
EBIT
Net int inc/(exp)
Associates' contribution
Exceptional items
Pretax profit
Tax
Minority interest
Net profit
2013
4,717.4
(3,127.9)
1,589.5
(887.3)
702.2
(679.3)
61.2
84.1
150.5
(73.1)
161.5
Balance Sheet Statement
FYE 31 Dec (RMm)
Fixed assets
Other long term assets
Total non-curr assets
2013
2014
2015E
2016E
2017E
13,061.0 14,324.0 15,319.9 16,301.9 17,240.8
9,409.4
9,020.5
8,458.1
7,895.8
7,333.4
22,470.4 23,344.5 23,778.1 24,197.7 24,574.2
2014
5,594.5
(3,267.2)
2,327.3
(994.9)
1,332.4
(778.6)
41.7
595.5
(182.6)
(71.3)
341.5
2015E
5,713.4
(3,275.3)
2,438.1
(1,125.8)
1,312.2
(695.8)
41.7
658.1
(144.8)
(79.0)
434.3
2016E
6,196.6
(3,684.1)
2,512.5
(1,125.8)
1,386.7
(604.0)
41.7
824.4
(181.4)
(98.9)
544.1
2017E
6,211.1
(3,718.5)
2,492.6
(1,125.8)
1,366.7
(581.3)
41.7
827.2
(182.0)
(99.3)
545.9
Cash and equivalents
Stocks
Debtors
Other current assets
Total current assets
2,375.8
479.1
1,266.3
1,476.8
5,597.9
3,574.9
518.4
1,304.3
594.0
5,991.6
4,291.1
529.5
1,332.0
676.3
6,828.8
4,605.9
574.2
1,444.7
803.9
7,428.6
5,885.5
575.6
1,448.0
977.0
8,886.1
Creditors
Short term borrowings
Other current liabilities
Total current liab
934.1
4.2
1,026.2
1,964.5
975.5
23.9
892.4
1,891.7
996.2
23.9
892.4
1,912.5
1,080.5
23.9
892.4
1,996.7
1,083.0
23.9
892.4
1,999.3
16,611.8
5,352.8
21,964.6
17,493.2
5,774.5
23,267.7
16,593.2
5,774.5
22,367.7
15,693.2
5,774.5
21,467.7
15,693.2
5,774.5
21,467.7
Shareholders' Funds + MI
4,139.1
4,176.6
6,326.7
8,161.9
9,993.3
Cash Flow Statement
FYE 31 Dec (RMm)
EBIT
Depreciation & amortisation
Working capital changes
Cash tax paid
Others
Cashflow from operation
Capex
Disposal/(purchases)
Others
Cash flow from investing
Debt raised/(repaid)
Equity raised/(repaid)
Interest paid
Dividends paid
Others
Cash flow from financing
2013
702.2
887.3
(262.6)
150.5
159.2
1,636.6
(2,535.0)
927.0
181.3
(1,426.7)
2,280.2
(923.5)
(381.0)
(1,508.3)
(532.5)
2014
1,332.4
994.9
(36.0)
(182.6)
593.3
2,702.0
(1,614.6)
654.1
104.2
(856.2)
684.1
(965.7)
(286.3)
(78.8)
(646.7)
2015E
1,312.2
1,125.8
(18.0)
(144.8)
2,275.3
(1,567.0)
160.9
(1,406.2)
(900.0)
1,758.7
(856.7)
(155.0)
(153.0)
2016E
1,386.7
1,125.8
(73.2)
(181.4)
2,258.0
(209.2)
193.1
(16.1)
(900.0)
(797.1)
(230.0)
(1,927.1)
2017E
1,366.7
1,125.8
(2.2)
(182.0)
2,308.4
(217.5)
207.3
(10.2)
(788.5)
(230.0)
(1,018.5)
(898.4)
1,087.4
708.3
2,048.8
2,090.9
Long term borrowings
Other long term liabilities
Total long term liab
Free Cash Flow
Key Financial Ratios and Margins
FYE 31 Dec (RMm)
Growth
Revenue (%)
EBITDA (%)
Core net profit (%)
2013
2014
2015E
2016E
2017E
(15.6)
(23.1)
(65.5)
18.6
46.4
111.4
2.1
4.8
27.2
8.5
3.1
25.3
0.2
(0.8)
0.3
Profitability
EBITDA margin (%)
PBT margin (%)
Net profit margin (%)
Effective tax rate (%)
ROA (%)
Core ROE (%)
ROCE (%)
Dividend payout ratio (%)
33.7
1.8
3.4
(178.9)
0.6
4.1
0.6
-
41.6
10.6
6.1
30.7
1.2
8.6
1.2
-
42.7
11.5
7.6
22.0
1.5
7.2
1.5
70.2
40.5
13.3
8.8
22.0
1.8
8.6
1.8
69.8
40.1
13.3
8.8
22.0
1.7
8.2
1.7
69.6
Liquidity
Current ratio (x)
Op. cash flow (RMm)
Free cashflow (RMm)
FCF/share (sen)
2.8
1,589.5
(898.4)
(18.0)
3.2
2,327.3
1,087.4
21.7
3.6
2,438.1
708.3
14.2
3.7
2,512.5
2,048.8
41.0
4.4
2,492.6
2,090.9
41.8
98.0
37.1
72.3
85.1
33.8
63.6
85.1
33.8
63.6
85.1
33.8
63.6
85.1
33.8
63.6
387.4
2.3
369.7
3.0
217.2
3.5
186.2
4.2
157.4
4.3
Asset management
Debtors turnover (days)
Stock turnover (days)
Creditors turnover (days)
Capital structure
Net gearing (%)
Interest cover (x)
Quarterly Profit & Loss
FYE 31 Dec (RMm)
Revenue
Operating expenses
EBIT
Int income
Int expense
Associates' contribution
Exceptional items
Pretax profit
Tax
Minority interest
Net profit
Core net profit
Margins (%)
EBIT
PBT
Core net profit
1Q15
1,346.6
(1,012.2)
334.5
45.3
(214.4)
10.1
0.0
175.5
(54.6)
(17.1)
103.9
103.9
24.8
13.0
7.7
Source: Affin Hwang forecasts, Company
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 21 of 22
7 July 2015
Disclaimer
Equity Rating Structure and Definitions
BUY
Total return is expected to exceed +10% over a 12-month period
HOLD
Total return is expected to be between -5% and +10% over a 12-month period
SELL
Total return is expected to be below -5% over a 12-month period
NOT RATED
Affin Hwang Investment Bank Berhad does not provide research coverage or rating for this company. Report is intended as information only and not as a
recommendation
The total expected return is defined as the percentage upside/downside to our target price plus the net dividend yield over the next 12 months.
OVERWEIGHT
Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months
NEUTRAL
Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months
UNDERWEIGHT
Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months
This report is intended for information purposes only and has been prepared by Affin Hwang Investment Bank Berhad (14389-U) (formerly known as HwangDBS Investment Bank
Berhad) (“the Company”) based on sources believed to be reliable. However, such sources have not been independently verified by the Company, and as such the Company does
not give any guarantee, representation or warranty (express or implied) as to the adequacy, accuracy, reliability or completeness of the information and/or opinion provided or
rendered in this report. Facts, information, views and/or opinion presented in this report have not been reviewed by, may not reflect information known to, and may present a differing
view expressed by other business units within the Company, including investment banking personnel. Reports issued by the Company, are prepared in accordance with the
Company’s policies for managing conflicts of interest arising as a result of publication and distribution of investment research reports. Under no circumstances shall the Company, its
associates and/or any person related to it be liable in any manner whatsoever for any consequences (including but are not limited to any direct, indirect or consequential losses, loss
of profit and damages) arising from the use of or reliance on the information and/or opinion provided or rendered in this report. Any opinions or estimates in this report are that of the
Company, as of this date and subject to change without prior notice. Under no circumstances shall this report be construed as an offer to sell or a solicitation of an offer to buy any
securities. The Company and/or any of its directors and/or employees may have an interest in the securities mentioned therein. The Company may also make investment decisions or
take proprietary positions that are inconsistent with the recommendations or views in this report.
Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial
status, risk and return preferences and hence an independent evaluation is essential. Investors are advised to independently evaluate particular investments and strategies and to
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This report is printed and published by:
Affin Hwang Investment Bank Berhad (14389-U)
(formerly known as HwangDBS Investment Bank Berhad)
A Participating Organisation of Bursa Malaysia Securities Bhd
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No 3, Jalan Conlay,
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www.affinhwang.com
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Fax : + 603 2145 3005
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 22 of 22