malaysia company guide rm relative index uem sunrise

ed: JS / sa:BC, PY, CS

HOLD Last Traded Price ( 21 Mar 2018): RM0.99 (KLCI : 1,865.80)

Price Target 12-mth: RM1.05 (7% upside) (Prev RM1.10)

Analyst QUAH He Wei, CFA +603 2604 3966 [email protected]

What’s New Expect weak 1H18 results due to the absence of

overseas contribution pursuant to adoption of MFRS15

Cut FY18-19F earnings by 20%/3%

No imminent turnaround in Iskandar Malaysia property

market

Maintain Hold with lower TP of RM1.05

Price Relative

Forecasts and Valuation FY Dec (RMm) 2017A 2018F 2019F 2020F

Revenue 2,903 2,706 3,023 1,104 EBITDA 350 292 373 221 Pre-tax Profit 439 386 284 144 Net Profit 280 268 197 98.5 Net Pft (Pre Ex.) 106 121 197 98.5 Net Pft Gth (Pre-ex) (%) (28.9) 14.7 62.8 (50.0) EPS (sen) 6.17 5.91 4.34 2.17 EPS Pre Ex. (sen) 2.33 2.67 4.34 2.17 EPS Gth Pre Ex (%) (29) 15 63 (50) Diluted EPS (sen) 2.33 2.67 4.34 2.17 Net DPS (sen) 1.54 1.48 1.08 0.54 BV Per Share (sen) 156 160 163 164 PE (X) 16.0 16.7 22.7 45.4 PE Pre Ex. (X) 42.4 37.0 22.7 45.4 P/Cash Flow (X) nm 5.8 6.7 2.6 EV/EBITDA (X) 23.2 25.9 19.1 25.1 Net Div Yield (%) 1.6 1.5 1.1 0.6 P/Book Value (X) 0.6 0.6 0.6 0.6 Net Debt/Equity (X) 0.4 0.4 0.3 0.1 ROAE (%) 4.0 3.7 2.7 1.3 Earnings Rev (%): (20) (3) N/A Consensus EPS (sen): 5.60 6.10 4.80 Other Broker Recs: B: 3 S: 2 H: 11

Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P

Headwinds ahead

Weak sentiment in Iskandar Malaysia. UEM Sunrise (UEMS)

continues to be severely affected by the weak sentiment

towards Iskandar Malaysia’s properties with its Johor sales

plunging from RM1.9bn in FY13 to

RM290m/RM690m/RM408m in FY15-FY17. Also, the market

has started to grapple with increasing property supply,

especially high-end condos, which have been exacerbated by

the aggressive entry of Chinese developers with their condo

projects being completed progressively. Maintain HOLD as we

do not foresee any recovery in Iskandar Malaysia property

market in the near term.

Where we differ? Our earnings forecast is much lower than

consensus, probably due to our more conservative stance on the

property market in Iskandar Malaysia. Strong sales

replenishment is critical to sustain UEMS’ earnings momentum.

Potential catalyst? As 75% of UEMS’ land bank is located in

Iskandar Malaysia due to its role as the master developer, a

recovery in the sentiment towards the property market in the

area will be the much-needed catalyst for the company. We

believe the commencement of works for Malaysia-Singapore

High Speed Rail and Rapid Transit System will be the next re-

rating catalyst. Valuation:

We maintain our HOLD call for UEMS with a lower TP of

RM1.05, based on unchanged 70% discount to our RNAV.

UEMS may not be able to monetise the deep value of its Johor

land bank anytime soon given the weak sentiment towards

Iskandar Malaysia properties.

Key Risks to Our View:

Potential oversupply of high-end condos in Iskandar Malaysia.

Property prices there are also comparable to more matured

areas (KL and Penang), which may not be sustainable. At A Glance

Issued Capital (m shrs) 4,537

Mkt. Cap (RMm/US$m) 4,469 / 1,141

Major Shareholders (%)

UEM Group 66.1

Lembaga Tabung Haji 6.9

Free Float (%) 23.6

3m Avg. Daily Val (US$m) 0.88

ICB Industry : Financials / Real Estate

DBS Group Research . Equity

22 Mar 2018

Malaysia Company Guide

UEM Sunrise Version 7 | Bloomberg: UEMS MK | Reuters: UEMS.MK Refer to important disclosures at the end of this report

36

56

76

96

116

136

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Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Relative IndexRM

UEM Sunrise (LHS) Relative KLCI (RHS)

Company Guide

UEM Sunrise

WHAT’S NEW

No imminent turnaround

Is the worst over? We believe UEMS’ 1H18 results will remain

weak in view of the absence of profit contribution from its

Australian projects. Effective Jan 2018, UEMS has adopted

the Malaysian Financial Reporting Standards (MFRS) 15 which

will only allow revenue recognition for its international

projects upon completion of the projects. This is in contrast to

UEMS’ prior practice of progressive recognition for both its

local and overseas development projects.

Therefore, both its on-going Australian projects, namely

Aurora Melbourne Central, Melbourne (RM2.4bn GDV) and

Conservatory, Melbourne (RM991m GDV) which have

attained construction progress of ~60% as at Jan 2018 will

only contribute from 2H18 onwards as per its completion

schedule. Note that overseas projects contributed RM1.34bn

revenue in FY17, which is 46% of FY17 revenue of RM2.9bn.

This is expected to result in a much weaker 1H18 financial

performance given the smaller revenue recognition merely

from Malaysian projects which may not commensurate with

the operating expenses to be incurred.

This led us to revise down our FY18-19F earnings by 20%/3%

respectively as we incorporate the impact of MFRS 15 in our

forecast.

Dependent on overseas market: UEMS’ unbilled sales stood at

RM4.8bn as at Dec 2017, of which only 29% or RM1.37bn

came from its Malaysian projects. While the remaining 71%

or RM3.4bn unbilled sales from Australia will provide lumpy

profit recognition upon completion of the respective projects,

sales replenishment from its local market remains a key

concern as >99% of its land bank is located in Malaysia.

Breakdown of unbilled sales

Source: Company, AllianceDBS

RM1.2bn sales target in FY18. UEMS has set its FY18 sales

target at RM1.2bn (FY17: RM1.5bn) while launch pipeline

stands at RM1bn. It is also actively working on selling its

completed inventory which stood at RM610m as at Dec

2017. Nevertheless, we believe that the uncertainty arising

from the upcoming general election which has to be held by

Aug 2018 will continue to be a drag for property sales as

potential buyers will likely defer their purchase decision until

election is over.

Johor market remains lacklustre. We believe the overall

market conditions in Iskandar Malaysia remains subdued as

the concern of oversupply in high-rise projects continues to

dampen market sentiment. Supply-demand dynamics remains

the worst in Johor relative to other states in Malaysia due to

the large incoming supply, no thanks to the frenzied launches

in Iskandar Malaysia prior to 2014. We are of the view that it

may take several years for the market to absorb the excess

supply in Johor, hence UEMS may find it challenging to

develop its massive landbank despite being the master

developer of Iskandar Puteri. Also, it is set to launch only

RM275m worth of new projects in Johor in 2018, out of its

launch pipeline of RM1bn.

UEMS’ property sales in Johor


UEMS’ overall property sales


Johor12%

Klang Valley17%

Australia71%

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Company Guide

UEM Sunrise

Huge incoming supply in Johor (units)

*Includes data from serviced apartments which is classified under commercial properties


Maintain Hold. We reiterate our HOLD recommendation with

a lower TP of RM1.05 after incorporating our earnings

revision. This is based on 70% discount to our RNAV as a

stiffer competition amid a challenging property market in

Malaysia may affect its property sales replenishment.

2016 KL Selangor Johor Penang Melaka Others Malaysia

Existing Stock 460,296 1,419,474 744,256 408,732 173,445 1,831,734 5,037,937

% of Msia 9% 28% 15% 8% 3% 36% 100%

Incoming supply 80,941 203,248 200,330 95,843 32,123 367,963 980,448

% of stock 18% 14% 27% 23% 19% 20% 19%

Planned supply 92,914 107,513 188,818 50,968 14,780 253,512 708,505

% of stock 20% 8% 25% 12% 9% 14% 14%

Company Guide

UEM Sunrise

RNAV

Stake Land Value Value Eff Value

Acres RMpsf RMm RMm

Puteri Harbour 100% 68 350 1,043 1,043

CS-3, Puteri Harbour 50% 7 350 102 51

SILC 100% 207 80 721 721

East Ledang 100% 129 65 365 365

Horizon Hills 50% 566 80 1,971 986

Afiat Healthpark 100% 43 50 94 94

Nusa Idaman 100% 27 60 69 69

Nusa Bayu 100% 66 50 145 145

Residential North 40% 100 110 479 192

Bio Xcell 40% 61 80 213 85

Lifestyle Retail Mall & Residences 55% 30 150 196 108

Residential South 80% 208 90 814 651

Gerbang Nusajaya - Motorsports City 30% 300 45 588 176

Gerbang Nusajaya - Eco-Industrial Park 40% 519 45 1,017 407

Gerbang Nusajaya 40% 500 45 980 392

Gerbang Nusajaya 100% 3,232 40 5,631 5,631

Nusajaya remaining landbank 100% 531 65 1,503 1,503

6,593 55 15,932 12,619

Reserves area 1,081 - -

Total Nusajaya 7,674 55 15,932 12,619

Desaru 51% 679 18 532 271

Frasers Metropolis 60% 2,500 8 871 523

Symphony Hills @ Cyberjaya 100% 24 50 52 52

Bangi Land, Selangor 100% 449 16 313 313

Seremban Forest Heights 50% 241 10 105 52

Sinaran Hills, Kajang 100% 65 30 85 85

Angkasa Raya, KLCC 100% 2 3,300 230 230

Floresta Solaris 3 62% 19 300 244 152

Jelutong Commercial Center 50% 19 150 127 63

Undeveloped landbank 2,884 715 715

Klang Valley 100% 44 45 87 87

Mersing 100% 431 5 94 94

Tapah 100% 2,405 5 524 524

Canada 100% 4 60 10 10

Total Outside Nusajaya 4,381 2,403 1,934

Grand Total 12,055 18,335 14,553

NTA ex-land & JV/associates 1,198

NPV of unbilled sales (10% WACC) 238

UEML RNAV 15,989

No of shares 4,537

RNAV/share 3.52

Company Guide

UEM Sunrise

CRITICAL DATA POINTS TO WATCH

Critical Factors

Weak sales momentum in Iskandar Puteri. UEMS is predominantly

the master developer of Iskandar Puteri, one of the flagship zones

within Iskandar Malaysia. Its properties in Iskandar Puteri were

selling like hot cakes a few years ago but the trend has reversed

since three years ago when Iskandar Puteri property sales in FY15-

17 dipped to RM290m/RM690m/RM408m from RM1.9bn in FY13.

The weak sentiment in the property market in Iskandar Malaysia,

brought about by a deluge of competing property launches by

other developers, coupled with the tightening measures

implemented by the government, has resulted in much slower sales

for UEMS’ property projects in Iskandar Puteri.

RM1.2bn sales target in FY18. UEMS achieved FY17 sales of

RM1.49bn, exceeding its sales target of RM1.2bn, thanks to the

overwhelming response from its sales in Solaris Parq due to the

strategic location. Nevertheless, at Iskandar Puteri, we remain

cautious given the weak market sentiment and oversupply

situation.

Good product offerings are critical to kick off sales. Given the

challenging outlook for Iskandar Malaysia’s property market, UEMS

may have to review its product offerings and be strategic and

discerning in the timing of future launches to beat the competition.

We believe that luxury high-rise buildings in Iskandar Malaysia will

face a much tougher time in view of the current supply glut and

high prices, which are unsustainable.

RM4.8bn unrecognised revenue. This will offer near-term earnings

visibility, from progress billing for several projects that have been

sold. Nevertheless, UEMS will need to achieve its sales target in

order to sustain its growth momentum going forward.

Potential land sales to boost earnings. Given UEMS’ large land bank

in Iskandar Puteri, there could be strategic land sales to third

parties, which would help to expedite the overall development and

de-risk its exposure progressively. We have not included any

potential strategic land sales in our earnings forecast, although we

understand management is talking to some parties, which may

present upside surprises to our numbers.

Property sales

property revenue

EBIT margin

pretax margin


1369

1492

843

1057966

0.0

215.2

430.5

645.7

860.9

1076.2

1291.4

1506.6

2016A 2017A 2018F 2019F 2020F

1602

2249 2214

2863

944

0.0

584.1

1168.1

1752.2

2336.3

2920.4

2016A 2017A 2018F 2019F 2020F

10.3 10.3

8.58

10.1

13.2

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5.41

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10.81

13.51

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11.8

15.114.3

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13

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6.1

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12.2

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Company Guide

UEM Sunrise

Appendix 1: A look at Company's listed history – what drives its share price?

Share price vs FBM KLCI

Source: Bloomberg L.P., AllianceDBS

Remarks

A – Iskandar Malaysia was the property hotspot in Malaysia as the government poured in massive investments and introduced various incentives to make it the destination of choice for locals and investors. UEMS benefited as it is the master developer of Iskandar Puteri – one of the flagship zones of Iskandar Malaysia B – Concern on property oversupply in Iskandar Malaysia affected the sentiment, and the entry of aggressive developers from China exacerbated the situation C – Share price remains undervalued given the absence of potential recovery in Johor property market

Share price vs property sales

Source: Bloomberg L.P., AllianceDBS

Remarks

There is little correlation between share price performance and property sales. UEMS’ property sales have been coming under pressure due to the challenging property market in Johor though it has started to diversify into the Australian property market.

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IndexRM

UEMS (LHS) FBM KLCI (RHS)

A

B

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UEMS (LHS) Property sales (RHS)

Company Guide

UEM Sunrise

Balance Sheet:

Healthy gearing enables the group to land bank strategically.

UEMS’ balance sheet remains healthy with 44% net gearing as

at end-Dec 2017. The group has embarked on cash

consolidation exercise to divest its non-core assets and land to

strengthen its balance sheet.

Share Price Drivers:

Improved property sales at Iskandar Puteri could re-rate stock.

Given the challenging outlook for Iskandar Malaysia properties

because of excess supply, UEMS would have to come up with

innovative and differentiated products to boost demand, which

remains weak. Strong property sales in Iskandar Malaysia will be

a key catalyst for UEMS as this will underline buyers’ confidence

in its products. This will also bode well for its growth prospects

as the bulk of its land bank is located within Iskandar Puteri.

Key Risks:

Oversupply of high-end condos. There could be a potential

oversupply of high-end condos in Iskandar Malaysia with a

slew of launches over the past three years. Property prices are

now comparable to more matured areas (KL and Penang),

which may not be sustainable.

Iskandar Malaysia lacks critical mass. While the infrastructure is

in place, more economic drivers and crowd-pulling aspects are

required to improve vibrancy.

Company Background

UEMS is the largest landowner in Iskandar Malaysia and Mont

Kiara. It also has land bank in other parts of Greater KL (Bangi

and Cyberjaya) and Melbourne.

Leverage & Asset Turnover (x)

Capital Expenditure

ROE (%)

Forward PE Band (x)

PB Band (x)


0.0

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2016A 2017A 2018F 2019F 2020F

Gross Debt to Equity (LHS) Asset Turnover (RHS)

0.0

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60.0

70.0

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90.0

100.0

2016A 2017A 2018F 2019F 2020F

Capital Expenditure (-)

RMm

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2016A 2017A 2018F 2019F 2020F

Avg: 38.4x

+1sd: 46.1x

+2sd: 53.7x

-1sd: 30.8x

-2sd: 23.2x

18.1

23.1

28.1

33.1

38.1

43.1

48.1

53.1

58.1


(x)

Avg: 0.89x

+1sd: 1.19x

+2sd: 1.48x

-1sd: 0.59x

-2sd: 0.3x0.2

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(x)

Company Guide

UEM Sunrise

Key Assumptions

FY Dec 2016A 2017A 2018F 2019F 2020F

Property sales 1,369 1,492 843 1,057 966

property revenue 1,602 2,249 2,214 2,863 944

EBIT margin 10.3 10.3 8.58 10.1 13.3

pretax margin 11.8 15.1 14.3 9.40 13.0

Income Statement (RMm)

FY Dec 2016A 2017A 2018F 2019F 2020F

Revenue 1,841 2,903 2,706 3,023 1,104

Cost of Goods Sold (1,629) (2,580) (2,443) (2,683) (919)

Gross Profit 213 323 262 340 185

Other Opng (Exp)/Inc (24.0) (25.3) (30.2) (34.8) (39.0)

Operating Profit 189 298 232 305 146

Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0

Associates & JV Inc 75.8 27.0 29.7 32.7 36.0

Net Interest (Exp)/Inc (46.9) (60.7) (72.3) (53.7) (38.7)

Exceptional Gain/(Loss) 0.0 175 196 0.0 0.0

Pre-tax Profit 218 439 386 284 144

Tax (69.3) (157) (116) (85.2) (43.1)

Minority Interest 0.0 (1.5) (2.0) (2.0) (2.0)

Preference Dividend 0.0 0.0 0.0 0.0 0.0

Net Profit 148 280 268 197 98.5

Net Profit before Except. 148 106 121 197 98.5

EBITDA 289 350 292 373 221

Growth

Revenue Gth (%) 5.2 57.7 (6.8) 11.7 (63.5)

EBITDA Gth (%) (18.0) 21.3 (16.6) 27.5 (40.6)

Opg Profit Gth (%) (29.4) 57.7 (22.0) 31.4 (52.1)

Net Profit Gth (Pre-ex) (%) (32.3) (28.9) 14.7 62.8 (50.0)

Margins & Ratio

Gross Margins (%) 11.6 11.1 9.7 11.2 16.8

Opg Profit Margin (%) 10.3 10.3 8.6 10.1 13.2

Net Profit Margin (%) 8.1 9.6 9.9 6.5 8.9

ROAE (%) 2.2 4.0 3.7 2.7 1.3

ROA (%) 1.1 1.9 1.9 1.4 0.7

ROCE (%) 1.1 1.5 1.2 1.7 0.8

Div Payout Ratio (%) 0.0 25.0 25.0 25.0 25.0

Net Interest Cover (x) 4.0 4.9 3.2 5.7 3.8


Expect low earnings due to weak property sales replenishment

Lower than management’s target

Company Guide

UEM Sunrise

Quarterly / Interim Income Statement (RMm)

FY Dec 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017

Revenue 625 542 898 716 748

Cost of Goods Sold (569) (454) (834) (612) (692)

Gross Profit 55.2 88.1 63.4 104 55.8

Other Oper. (Exp)/Inc (4.6) 0.0 0.0 (6.2) (7.5)

Operating Profit 50.6 88.1 63.4 98.0 48.3

Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0

Associates & JV Inc 39.2 11.5 5.92 7.33 2.24

Net Interest (Exp)/Inc (7.0) (16.7) (16.6) (15.2) (12.2)

Exceptional Gain/(Loss) 0.0 6.87 86.7 36.9 44.1

Pre-tax Profit 82.8 89.7 139 127 82.5

Tax (29.6) (27.9) (44.3) (40.1) (44.8)

Minority Interest 0.07 (0.6) (0.5) (0.4) 0.0

Net Profit 53.3 61.3 94.6 86.6 37.7

Net profit bef Except. 53.3 54.4 7.86 49.7 (6.5)

EBITDA 94.4 99.6 69.3 112 58.0

Growth

Revenue Gth (%) 48.3 (13.3) 65.7 (20.3) 4.5

EBITDA Gth (%) 25.5 5.4 (30.4) 61.0 (48.0)

Opg Profit Gth (%) (17.1) 74.0 (28.1) 54.8 (50.7)

Net Profit Gth (Pre-ex) (%) 46.7 2.1 (85.6) 532.2 (113.0)

Margins

Gross Margins (%) 8.8 16.3 7.1 14.6 7.5

Opg Profit Margins (%) 8.1 16.3 7.1 13.7 6.5

Net Profit Margins (%) 8.5 11.3 10.5 12.1 5.0

Balance Sheet (RMm)

FY Dec 2016A 2017A 2018F 2019F 2020F Net Fixed Assets 300 377 435 487 536

Invts in Associates & JVs 1,614 1,553 1,583 1,616 1,652

Other LT Assets 5,665 5,109 5,355 5,405 5,455

Cash & ST Invts 789 933 1,291 1,554 2,909

Inventory 585 610 627 700 256

Debtors 1,731 2,640 2,255 2,159 789

Other Current Assets 2,866 3,175 2,766 2,400 1,997

Total Assets 13,550 14,397 14,310 14,321 13,593

ST Debt

1,310 1,486 1,486 1,486 1,486

Creditor 804 889 801 880 301

Other Current Liab 497 496 496 496 496

LT Debt 2,404 2,734 2,534 2,334 2,134

Other LT Liabilities 1,342 1,361 1,361 1,361 1,361

Shareholder’s Equity 6,832 7,069 7,267 7,397 7,446

Minority Interests 362 363 365 367 369

Total Cap. & Liab. 13,550 14,397 14,310 14,321 13,593

Non-Cash Wkg. Capital 3,882 5,041 4,350 3,884 2,245

Net Cash/(Debt) (2,926) (3,287) (2,729) (2,266) (711)

Debtors Turn (avg days) 343.2 331.9 304.2 260.7 260.7

Creditors Turn (avg days) 166.1 120.9 127.8 115.8 245.0

Inventory Turn (avg days) 112.4 85.3 93.5 91.4 198.2

Asset Turnover (x) 0.1 0.2 0.2 0.2 0.1

Current Ratio (x) 2.3 2.6 2.5 2.4 2.6

Quick Ratio (x) 1.0 1.2 1.3 1.3 1.6

Net Debt/Equity (X) 0.4 0.4 0.4 0.3 0.1

Net Debt/Equity ex MI (X) 0.4 0.5 0.4 0.3 0.1

Capex to Debt (%) 0.7 2.1 2.2 2.3 2.4

Z-Score (X) 1.1 1.3 1.3 1.3 1.3


Mainly from land sales

Thin margin

Healthy gearing

Company Guide

UEM Sunrise

Cash Flow Statement (RMm)

FY Dec 2016A 2017A 2018F 2019F 2020F

Pre-Tax Profit 218 439 386 284 144

Dep. & Amort. 24.0 25.3 30.2 34.8 39.0

Tax Paid (69.3) (157) (116) (85.2) (43.1)

Assoc. & JV Inc/(loss) (75.8) (27.0) (29.7) (32.7) (36.0)

Chg in Wkg.Cap. (994) (1,280) 691 467 1,639

Other Operating CF 187 849 (196) 0.0 0.0

Net Operating CF (710) (150) 765 668 1,742

Capital Exp.(net) (25.2) (87.6) (87.6) (87.6) (87.6)

Other Invts.(net) 0.0 (125) 0.0 0.0 0.0

Invts in Assoc. & JV 0.0 50.0 0.0 0.0 0.0

Div from Assoc & JV (248) 0.0 (50.0) (50.0) (50.0)

Other Investing CF 62.2 (15.2) 0.0 0.0 0.0

Net Investing CF (211) (178) (138) (138) (138)

Div Paid (85.3) 0.0 (70.0) (67.0) (49.2)

Chg in Gross Debt 946 541 (200) (200) (200)

Capital Issues 0.0 0.0 0.0 0.0 0.0

Other Financing CF (151) (175) 0.0 0.0 0.0

Net Financing CF 710 367 (270) (267) (249)

Currency Adjustments (5.0) (19.2) 0.0 0.0 0.0

Chg in Cash (217) 19.5 357 263 1,355

Opg CFPS (sen) 6.26 24.9 1.64 4.43 2.28

Free CFPS (sen) (16.2) (5.2) 14.9 12.8 36.5


Target Price & Ratings History

Source: AllianceDBS

Analyst: QUAH He Wei, CFA

S.No.Date of

Report

Closing

Price

12-mth

Target

Price

Rating

1: 18 May 17 1.29 1.25 HOLD

2: 13 Jun 17 1.27 1.25 HOLD

3: 24 Aug 17 1.16 1.25 HOLD

4: 31 Oct 17 1.11 1.25 HOLD

5: 01 Nov 17 1.12 1.25 HOLD

6: 21 Nov 17 1.06 1.10 HOLD

7: 13 Dec 17 1.04 1.10 HOLD

8: 03 Jan 18 1.17 1.10 HOLD

9: 28 Feb 18 1.09 1.10 HOLD

Note : Share price and Target price are adjusted for corporate actions.

1

2

34

5 6

7

8

9

0.92

0.97

1.02

1.07

1.12

1.17

1.22

1.27

1.32

1.37

Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18

RM

Company Guide

UEM Sunrise

AllianceDBS recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

Completed Date: 22 Mar 2018 01:40:28 (MYT) Dissemination Date: 22 Mar 2018 14:37:09 (MYT)

Sources for all charts and tables are AllianceDBS unless otherwise specified.

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). This report is solely intended for the clients of DBS Bank Ltd, its

respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in

any form or by any means or (ii) redistributed without the prior written consent of AllianceDBS Research Sdn Bhd (''AllianceDBS'').

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS

Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,

the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other

factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or

warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without

notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific

investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees

only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial

advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit)

arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not

to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons

associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have

positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and

other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can

be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.

The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may

not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to

update the information in this report.

This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned

schedule or frequency for updating research publication relating to any issuer.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and

assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on

which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual

results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED

UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:

(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and

(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk

assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)

mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the

commodity referred to in this report.

Company Guide

UEM Sunrise

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public

offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage

in market-making.

ANALYST CERTIFICATION

The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the

companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her

compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s)

primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the

issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real

estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the

management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or

his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has

procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of

research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment

banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment

banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the

DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates do not

have a proprietary position in the securities recommended in this report as of 28 Feb 2018.

2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research

Report.

Compensation for investment banking services:

3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a

manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further

information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document

should contact DBSVUSA exclusively.

Disclosure of previous investment recommendation produced:

4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other

investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12

months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by

DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.

1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of

which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

Company Guide

UEM Sunrise

RESTRICTIONS ON DISTRIBUTION

General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or

located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be

contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd

(“DBSVS”). DBS holds Australian Financial Services Licence no. 475946.

DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001

(“CA”) in respect of financial services provided to the recipients. DBSVS is regulated by the Monetary Authority of Singapore

under the laws of Singapore, which differ from Australian laws.

Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report has been prepared by an entity(ies) which is not licensed by the Hong Kong Securities and Futures Commission

to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of

the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong

Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated

activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at [email protected].

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from

ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this

report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised

that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected

and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any

of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek

to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also

have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and

other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.

198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the

Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign

entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial

Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert

Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons

only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,

or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.

Company Guide

UEM Sunrise

United

Kingdom

This report is produced by AllianceDBS Research Sdn Bhd which is regulated by the Securities Commission Malaysia.

This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised

and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and

associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any

form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at

persons having professional experience in matters relating to investments. Any investment activity following from this

communication will only be engaged in with such persons. Persons who do not have professional experience in matters

relating to investments should not rely on this communication.

Dubai

International

Financial

Centre

This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor,

Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank

Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for

professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United Arab

Emirates

This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined

in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes

only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell

any financial product. It does not constitute a personal recommendation or take into account the particular investment

objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment

adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the

information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This

report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

United States This report was prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). DBSVUSA did not participate in its preparation.

The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated

persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation,

communications with a subject company, public appearances and trading securities held by a research analyst. This report is

being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be

distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and

qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any

securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other

jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,

professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

Company Guide

UEM Sunrise

DBS Regional Research Offices

HONG KONG DBS Vickers (Hong Kong) Ltd Contact: Paul Yong 18th Floor Man Yee Building 68 Des Voeux Road Central Central, Hong Kong Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Participant of the Stock Exchange of Hong Kong

MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek (128540 U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia. Tel.: 603 2604 3333 Fax: 603 2604 3921 e-mail: [email protected]

SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Company Regn. No. 196800306E

INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: [email protected]

THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand 10330 Tel. 66 2 857 7831 Fax: 66 2 658 1269 e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand

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