PP 7767/09/2010(025354)

23 August 2010

Malaysia Corporate Highlights

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

R e su l ts / Bri e fi ng No t e
23 August 2010
MARKET DATELINE

Malayan Banking Share Price

Fair Value
:
:
RM8.13
RM9.86
Dishing Out Dividends Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (MAYBANK; Code: 1155) Bloomberg: MAY MK

Net EPS Net Net
FYE PBT Profit EPS Gwth PER BVPS P/Book C.EPS* DPS Div Yld ROE
June (RMm) (RMm) (sen) (%) (x) (RM/s) (x) (sen) (sen) (%) (%)
2010 5,370.4 3,818.2 53.9 42.6 15.1 3.94 2.1 - 41.3 5.1 14.5
2011f 6,112.0 4,381.0 61.9 14.7 13.1 4.29 1.9 58.5 26.3 3.2 15.0
2012f 6,871.4 4,925.3 69.6 12.4 11.7 4.70 1.7 67.4 29.3 3.6 15.5
2013f 7,434.0 5,328.6 75.3 8.2 10.8 5.15 1.6 79.0 30.0 3.7 15.3
Main Market Listing / Trustee Stock / Non-Syariah-Approved Stock By The SC * Consensus Based On IBES Estimates

RHBRI Vs. Consensus

♦ 4QFY06/10 results within expectations ... Maybank’s 4Q results were
Above
within our (upper-end) and consensus estimates with FY10 net profit of
In Line
RM3.8bn (+75% yoy, core basis) accounting for 105% of our and 102.5% Below
of consensus full-year forecasts. Note that Maybank made some pre-
emptive provisioning in the tune of RM334m during the quarter, excluding Issued Capital (m shares) 7,078.0
which, the results would have been even stronger. Market Cap (RMm) 57,544.0
Daily Trading Vol (m shs) 7.9
♦ … with net profit down 11% qoq but up 49% yoy (core basis). 52wk Price Range (RM) 6.31 – 8.16
QoQ, net profit fell 11% due to lower non-interest income (-9.6% qoq due Major Shareholders: (%)
to lumpy items recognised in 3Q10) and higher LLP (+44.4% qoq due to Amanah Saham B’putra 47.6
pre-emptive provisioning), cushioned by stronger net interest income EPF 10.7
(+7% qoq). YoY, net profit surged 49% (based on core profits) thanks PNB 5.4
mainly to lower LLP (-60.2% yoy). This was despite the pre-emptive
provisioning, which was offset by higher recoveries and lower provision FYE Jun FY11 FY12 FY13
for other debts. EPS chg (%) 2.1 2.1 new
Var to Cons (%) 5.8 3.2 (4.7)
♦ Results highlights. Loan growth picked up momentum with qoq and yoy
growth of 4.4% and 10.3% respectively (3Q10: 0.7% qoq; 5.9% yoy). PE Band Chart
Domestically, gross loans expanded by 4.2% qoq (+11% yoy) mainly due
to an expansion in corporate loans while overseas loans grew by 4.8% PER = 15x
PER = 12x
qoq (+8.8% yoy), largely driven by strong growth over at BII (+16.5% PER = 9x
qoq; +37.7% yoy). Unadjusted NIM expanded by 16bps qoq (+14bps
yoy) while credit cost was roughly stable qoq at 11bps (3Q10: 10bps;
4Q09: 22bps). CIR was also broadly stable qoq at 49.7% (3Q10: 49.1%)
but higher as compared to 47.8% in 4Q09.

♦ Asset quality improved. Gross and net NPL as well as LLC ratios
improved (see Table 4). Relative Performance To FBM KLCI

♦ Dividend. Maybank declared a higher-than-expected final gross DPS of

44 sen (4QFY09: 8 sen gross), as compared to our expected gross DPS of Malayan Banking
18 sen. This comprises an electable portion of 40 sen (gross), which can
be elected to be reinvested in new Maybank shares. For the full-year,
FBM KLCI
total gross DPS was 55 sen (FY09: 8 sen), which translates to a net
payout ratio of 76.5%.

♦ Forecasts. We have fine-tuned and updated our FY11-12 earnings

forecasts post the full-year results. We introduce our FY13 numbers.

♦ Investment case. Our fair value has been raised by 2% to RM9.86

based on unchanged 15x (benchmark) CY11 EPS. In our view, valuations
remain decent with strong organic growth expected from the domestic David Chong, CFA
operations as well as BII. Hence, the negative impact from the expensive (603) 9280 2186
acquisitions (of BII and MCB) would be more than nullified with FY11 EPS david.chong@rhb.com.my
expected to exceed pre-acquisition levels. Maintain Outperform.

Please read important disclosures at the end of this report.

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 23 August 2010

Highlights From Analyst Briefing/Conference Call

♦ FY11 targets. Headline KPIs for FY11 are: 1) ROE of 14%, which takes into account the DRP; and 2) loan and
debt securities growth of 12%. Other targets include: 1) loan growth of 12%/5%/24% for Malaysia/Singapore/BII
respectively; 2) stable NIMs; and 3) dividend payout ratio of 40-60%. Our revised earnings forecasts assumes
loan growth of 10% and we project FY11 ROE of 15% (14.5% ROE if all shareholders elect to receive new shares
for the DRP portion).

♦ OPR hike to help cushion competitive pressures leaving NIMs stable. Management’s target of stable NIMs
above is consistent with their guidance in the previous teleconference where management expects the hikes in
OPR to help cushion competitive pressures on loan yields, leaving NIMs stable. Similarly, management expects
margins in Singapore to remain stable. For BII, margins are expected to trend downwards but generally should
range between 5.5% and 6%.

♦ BII. BII’s NIM was broadly stable qoq (5.9% vs. 5.91% in the previous quarter). Net NPL ratio declined slightly
qoq to 1.87% (from 1.92%) but gross NPL ratio rose 9bps to 2.88%. Management did not appear overly
concerned the gross NPL trend and said that BII was still trying to clean up some of the legacy corporate
accounts. Focus going forward is to grow higher yielding assets such as mortgages, auto and motorcycle financing
faster.

♦ Regulatory changes. For the adoption of FRS139, management expects to see a rise in the gross impaired
loans ratio, as experienced by its peers, but did not provide any guidance. However, management believes that
adequate provisions have been made in the balance sheet and the adoption of FRS139 is unlikely to give rise to
significantly higher provision requirements from that of current levels. Further clarity on credit charge based on
FRS139 would only be provided in the next quarterly results. As for the adoption of Basel II IRB approach, there
was not much new here, i.e. while there could be a slight decline in capital ratios, the impact is not expected to
be significant.

♦ DRP. According to management, Maybank was allowed to declare a higher dividend payout this year (FY10:
76.5% vs. FY09: 61.4%, based on reported net profit) given its DRP that it has in place. Specifically, the discount
(of up to 10% to the volume weighted average market price) for the new shares could make it more attractive for
shareholders to opt for the reinvestment plan, mitigating the impact of the higher payout on shareholders’ equity.

As mentioned previously, we think shareholders’ decision on whether to elect for the DRP would depend on their
view on Maybank’s share price outlook as well as the discount to VWAMP. Assuming current market conditions
hold, a higher discount would increase the attractiveness of the DRP as compared to the net DPS of 30 sen
(electable portion), if shareholders opt to receive cash. Assuming the entire electable portion of the dividend is
converted into shares, we estimate this could enlarge Maybank’s share capital base by 4%.

Risks

♦ Risks to our view. The risks include: 1) lower-than-expected loan growth; 2) sharp deterioration in asset
quality; 3) changes in credit spread that may significantly impair investment portfolio (including its non-RM
interest swap); 4) exchange rates fluctuation resulting in forex translation losses; 5) lower-than-expected growth
in the economies of Indonesia and Pakistan; and 6) impact from Basel III.

Forecasts And Assumptions

♦ Forecasts. We have fine-tuned and updated our FY11-12 earnings forecasts post the full-year results. We
introduce our FY13 numbers.

Valuations And Recommendation

♦ Outperform call reiterated. Our fair value has been raised by 2% to RM9.86 based on unchanged 15x
(benchmark) CY11 EPS. In our view, valuations remain decent with strong organic growth expected from the
domestic operations as well as BII. Hence, the negative impact from the expensive acquisitions (of BII and MCB)
would be more than nullified with FY11 EPS expected to exceed pre-acquisition levels. Maintain Outperform.

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 23 August 2010

Table 2. Quarterly Results

QoQ YoY
FYE Jun (RMm) 4Q09 3Q10 4Q10 (%) (%) Comments
Net Interest Income 1,880.7 2,009.5 2,148.0 6.9 14.2 Higher qoq and yoy mainly due to +4.4% qoq and
(+ Islamic Banking) +10.3% yoy loan growth (domestic: +4.2% qoq,
+11% yoy; Singapore: +0.7% qoq, +3.4%% yoy; and
BII: +16.5% qoq, +37.5% yoy) (see Table 5) and NIM
expansion of 16bps qoq and 14bps yoy.

Non-interest Income 1,309.2 1,221.3 1,103.7 (9.6) (15.7) Lower qoq due to unrealised losses on derivatives of
RM47.9m (3Q10: gain of RM175.8m).

Weaker yoy due to MTM losses on on securities and

derivatives of RM39.2m (4Q09: gain of RM74.6m) and
lower forex gains RM129.1m vs. 4Q09: RM283.2m.
Operating Income 3,189.9 3,230.8 3,251.7 0.6 1.9

Less: Overheads (1,524.4) (1,586.1) (1,616.4) 1.9 6.0 Flattish qoq with higher admin expenses (+30% qoq)
offset by lower marketing costs (-64.3% qoq).

Higher yoy due to higher personnel (+9.4% yoy) and

admin (+42.7% yoy) costs.
Pre-provision 1,665.5 1,644.6 1,635.2 (0.6) (1.8)
Profit

Less: Loan Loss (782.5) (215.5) (311.2) 44.4 (60.2) 1. SP stood at RM557.8m, which includes pre-
Provisions emptive provisioning of RM334m (3Q10:
RM434m; 4Q09: RM538m);
2. GP was RM84.8m (3Q10: RM21m; 4Q09:
RM356m);
3. Higher recoveries of RM241.8m (3Q10:
RM132.9m; 4Q09: RM151.7m);
4. Other provisions in 4Q10 and 3Q10 were
negligible (4Q09: RM177.5m).

Credit charge was 11bps vs. 10bps in 3Q10 and 22bps

in 4Q09.

Slight uptick in annualised net NPL formation to

125bps vs. 107bps in 3Q10 (4Q09: 45bps).
Operating Profit 883.0 1,429.1 1,324.1 (7.4) 49.9

Associates 25.9 26.0 35.0 34.6 35.4 Mainly relates to MCB.

Impairment (1,730.6) 0.0 0.0 nm (100.0) Impairment test done for MCB and BII in FY10, but no
provision required.
Pretax Profit (821.7) 1,455.1 1,359.1 (6.6) >100

Less: Tax (241.9) (391.9) (384.1) (2.0) 58.7

Effective Tax Rate (29.4) 26.9 28.3 4.9 >100
(%)
Profit After Tax (1,063.6) 1,063.3 975.0 (8.3) >100
Minorities (54.5) (32.9) (62.6) 90.2 14.7 Mainly from BII.
Net Profit (1,118.1) 1,030.4 912.5 (11.4) >100
Source: Company, RHBRI

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Table 3 : Cumulative Results

YoY
FYE Jun (RMm) FY09 FY10 (%) Comments
Net Interest Income 7,150.5 8,205.6 14.8 Skewed by inclusion of BII since 2QFY09.
(+ Islamic Banking)
Higher yoy mainly due to 10.3% yoy loan growth (domestic: +11% yoy;
Singapore: +3.4% yoy; and BII: +37.7% yoy) (see Table 5) and higher
Islamic income.

Non-interest Income 3,177.7 4,643.0 46.1 Higher yoy mainly due to:
1. Higher fee income of RM2.6bn vs. RM2.1bn;
2. MTM gain of RM311m vs. loss of RM172m; and
3. Absence of impairment loss of RM198m in FY09.
Operating Income 10,328.2 12,848.6 24.4

Less: Overheads (5,563.7) (6,412.1) 15.2 Except for marketing expenses (stable yoy), generally higher across the
board and skewed by inclusion of BII.
Pre-provision 4,764.5 6,436.6 35.1
Profit

Less: Loan Loss (1,700.9) (1,188.0) (30.2) Lower due to:

Provisions 1. Lower GP of RM145.7m vs. RM317.2m;
2. Higher recoveries of RM624.7m vs. RM526.3m; and
3. Lower provisioning for other debts of RM3.1m (FY09: RM224m);

Charge off rate of 51bps vs. 102bps.

Net NPL formation of 119bps vs. 145bps.

BII Deposit 483.8 0.0 (100.0)
Operating Profit 3,547.4 5,248.6 48.0

Associates 99.5 121.8 22.4 Mainly relates to MCB.

Impairment (1,972.6) 0.0 (100.0) No impairment provision required for MCB or BII this year.
Pretax Profit 1,674.3 5,370.4 >100

Less: Tax (923.6) (1,402.0) 51.8

Effective Tax Rate 55.2 26.1 (52.7) Includes RM25m tax credit from BII in 1Q10.
(%)
Profit After Tax 750.7 3,968.5 >100
Minorities (58.8) (150.3) >100 Mainly from BII.
Net Profit 691.9 3,818.2 >100
Source: Company, RHBRI

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Table 4 : Ratio Analysis

FYE Jun 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Asset Quality (%)
Gross NPL Ratio 3.59 3.55 3.46 3.50 3.27 3.09 2.89
Net NPL Ratio* 1.73 1.67 1.51 1.46 1.30 1.24 1.11
SP / NPL 52.7 53.9 57.4 59.0 61.1 60.7 62.5
GP / Net Loans 1.79 1.77 1.96 1.93 1.89 1.88 1.83
Loan Loss Coverage 101.6 102.9 112.9 113.2 117.8 120.5 124.5
Core Capital Ratio 8.1 8.3 11.0 10.4 11.0 10.7 11.1
RWCAR 13.5 12.1 15.0 14.3 14.9 14.5 14.7

Margins (%)
Yields On Earning Assets 4.81 4.81 4.09 3.94 3.82 3.71 3.78
Avg. Cost of Funds 2.59 2.63 1.92 1.73 1.60 1.56 1.47
Interest Spread 2.22 2.18 2.17 2.21 2.22 2.16 2.31
Net Interest Margins (ex-Islamic Inc) 2.35 2.32 2.30 2.35 2.35 2.28 2.44
Adjusted Net Interest Margins (+ Islamic Inc) 2.81 2.81 2.77 2.90 2.85 2.75 2.92

Profitability (%)
ROE 14.6 9.9 (19.7) 13.9 15.0 15.3 13.3
ROA 0.97 0.66 (1.45) 1.13 1.23 1.25 1.10
Cost / Income Ratio 52.7 57.6 47.8 50.4 50.5 49.1 49.7
Expenses / Avg. Assets 1.85 1.85 1.97 2.00 2.02 1.92 1.94
Provisions / Avg. Net Loans 0.70 0.89 1.68 0.89 0.50 0.44 0.62

Liquidity (%)
Loan Deposit Ratio 88.4 87.8 87.4 87.3 84.5 84.8 86.8
Net Loan Growth (qoq) (1.0) 1.8 0.3 2.8 2.1 0.7 4.4
Deposit Growth (qoq) 0.8 2.5 0.4 2.9 5.5 0.5 2.1
Source: Company, RHBRI * Including SP on performing loans

Table 5. Gross Loan Book Breakdown

FYE Jun 4Q09 1Q10 2Q10 3Q10 4Q10 qoq (%) yoy (%)
Domestic Operations
Purchase of securities 11,437.5 11,835.7 12,471.6 13,775.1 14,705.4 6.8 28.6
Purchase of transport vehicles 19,576.0 20,135.3 20,330.9 20,741.2 21,319.7 2.8 8.9
Purchase of landed properties
Residential 24,334.4 24,948.6 25,414.5 25,874.0 26,284.4 1.6 8.0
Non-residential 6,493.3 6,610.5 6,818.3 7,116.0 7,308.9 2.7 12.6
Purchase of fixed assets 3.3 3.3 3.3 3.3 2.3 (30.2) (30.4)
Personal use 3,782.8 4,000.2 4,296.8 4,424.9 4,585.4 3.6 21.2
Credit Card 3,556.9 3,651.6 3,857.1 3,879.8 4,124.7 6.3 16.0
Purchase of consumer durables 15.7 17.0 8.5 8.7 7.1 (17.6) (54.5)
Construction 6,300.2 6,456.8 6,740.6 6,681.1 6,707.3 0.4 6.5
Working capital 51,005.7 52,011.9 52,570.4 53,553.9 56,857.2 6.2 11.5
Others 3,438.5 3,439.8 3,152.0 2,402.2 2,369.4 (1.4) (31.1)
Sub total 129,944.3 133,110.5 135,663.9 138,460.0 144,271.8 4.2 11.0

Overseas Operations
Singapore 39,269.7 40,854.1 41,599.9 40,313.2 40,589.0 0.7 3.4
HK 2,892.4 2,856.5 2,819.4 2,973.4 3,068.9 3.2 6.1
US 1,339.1 1,279.7 964.1 825.8 753.2 (8.8) (43.8)
China 969.3 855.9 893.7 893.2 1,017.9 14.0 5.0
Vietnam 548.0 585.5 513.9 469.3 480.6 2.4 (12.3)
UK 1,281.0 1,244.7 1,228.4 1,119.1 994.8 (11.1) (22.3)
Brunei 130.7 147.4 148.1 162.7 158.4 (2.7) 21.2
Cambodia 302.5 266.7 256.2 231.4 270.9 17.1 (10.4)
Bahrain 280.6 268.9 261.4 239.7 236.6 (1.3) (15.7)
Labuan offshore 3,127.6 3,204.1 3,122.6 3,012.3 3,268.8 8.5 4.5
Philippines 793.5 771.9 855.1 864.9 969.5 12.1 22.2
Indonesia 12,417.7 13,270.8 14,590.9 14,680.1 17,102.5 16.5 37.7
PNG 66.4 66.5 63.0 71.6 75.7 5.7 14.1
Sub total 63,418.5 65,672.6 67,316.6 65,856.6 68,986.7 4.8 8.8

TOTAL 193,362.8 198,783.2 202,980.5 204,316.6 213,258.4 4.4 10.3

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Source: Company, RHBRI

Table 6. NPLs By Sector

FYE Jun Gross NPLs (RMm) Gross NPL Ratio (%)
Sep 09 Dec 09 Mar 10 Jun 10 Sep 09 Dec 09 Mar 10 Jun 10
Domestic Operations
Purchase of securities 119.3 112.5 99.1 46.7 1.0 0.9 0.7 0.3
Purchase of transport vehicles 153.8 150.6 150.2 123.6 0.8 0.7 0.7 0.6
Purchase of landed properties
Residential 1,931.2 1,825.7 1,724.1 1,726.2 7.7 7.2 6.7 6.6
Non-residential 378.0 358.2 347.3 313.6 5.7 5.3 4.9 4.3
Purchase of fixed assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Personal use 209.7 192.2 184.1 160.2 5.2 4.5 4.2 3.5
Credit Card 53.1 52.5 55.8 46.9 1.5 1.4 1.4 1.1
Purchase of consumer durables 1.6 1.7 1.6 1.6 9.2 20.5 19.0 22.9
Construction 542.0 529.5 497.9 483.6 8.4 7.9 7.5 7.2
Working capital 2,458.9 2,447.7 2,194.0 2,204.6 4.7 4.7 4.1 3.9
Others 24.4 24.7 24.7 22.1 0.7 0.8 1.0 0.9
Sub total 5,872.0 5,695.3 5,278.8 5,129.1 4.4 4.2 3.8 3.5

Overseas Operations
Singapore 289.9 236.6 218.1 209.6 0.7 0.6 0.5 0.5
HK 79.5 95.2 115.7 114.1 2.8 3.4 3.9 3.7
US 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
China 21.8 21.6 20.6 20.3 2.5 2.4 2.3 2.0
Vietnam 20.5 19.1 17.6 17.5 3.5 3.7 3.8 3.6
UK 42.8 75.8 71.0 68.5 3.4 6.2 6.3 6.9
Brunei 2.4 2.4 2.8 2.1 1.7 1.6 1.7 1.3
Cambodia 13.5 13.4 23.7 24.0 5.1 5.2 10.2 8.9
Bahrain 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Labuan offshore 126.0 124.5 118.7 79.9 3.9 4.0 3.9 2.4
Philippines 30.4 37.3 38.9 35.9 3.9 4.4 4.5 3.7
Indonesia 456.1 346.0 400.7 483.4 3.4 2.4 2.7 2.8
PNG 2.1 2.1 1.9 1.9 3.1 3.3 2.7 2.5
Sub total 1,085.0 973.8 1,029.7 1,057.2 1.7 1.4 1.6 1.5

TOTAL 6,957.0 6,669.1 6,308.5 6,186.3 3.5 3.3 3.1 2.9

Source: Company, RHBRI

Table 7. Earnings Forecasts Table 8. Ratio Analysis & Forecast Assumptions

FYE Jun (RMm) FY10a FY11F FY12F FY13F FYE Jun FY11F FY12F FY13F

Net Interest Income 8,205.6 8,936.0 9,692.6 10,396.9 Asset Quality (%)
(+ Islamic Banking) Gross NPL 2.90 2.70 2.50
Non-interest Income 4,643.0 4,899.3 5,144.3 5,401.5 Net NPL 1.3 1.2 1.1
Operating Income 12,848.6 13,835.4 14,836.9 15,798.4 SP / NPL 57.0 56.0 56.0
GP / Net Loans 1.8 1.8 1.8
Less: Overhead Loan Loss Coverage 118.9 122.5 127.8
Expenses (6,412.1) (6,796.8) (7,204.6) (7,636.9) Core Capital Ratio 11.4 11.5 11.7
Pre-provision RWCAR 14.9 15.0 15.2
Profit 6,436.6 7,038.6 7,632.3 8,161.5
Margins (%)
Less: Loan Loss Yields On Earnings Assets 3.85 3.85 3.85
Provisions (1,188.0) (1,079.4) (929.0) (912.4) Avg. Cost Of Funds 1.60 1.62 1.64
BII Deposit 0.0 0.0 0.0 0.0 Interest Spread 2.25 2.23 2.21
Operating Profit 5,248.6 5,959.1 6,703.3 7,249.1 Un-adj NIM (ex-Islamic Inc) 2.36 2.35 2.34
Adjusted NIM (+Islamic Inc) 2.86 2.86 2.87
Associates 121.8 152.8 168.1 184.9
Impairment on MCB 0.0 0.0 0.0 0.0 Profitability (%)
Pretax Profit 5,370.4 6,112.0 6,871.4 7,434.0 ROE 15.0 15.5 15.3
ROA 1.2 1.3 1.3
Less: Tax (1,402.0) (1,558.6) (1,752.2) (1,895.7) Cost / Income Ratio 49.1 48.6 48.3
Effective Tax Rate 26.1 25.5 25.5 25.5 Expenses / Avg. Assets 1.93 1.88 1.87
(%) Provisions / Avg. Net Loans 0.50 0.39 0.36
Profit After Tax 3,968.5 4,553.4 5,119.2 5,538.4
Liquidity (%)
Minorities (150.3) (172.4) (193.9) (209.735) Loan Deposit Ratio 86.9 87.9 88.0
Net Profit 3,818.2 4,381.0 4,925.3 5,328.6 Net / Gross Loan Growth 10.0 8.0 7.0
Source: Company data, RHBRI estimates Deposit Growth 10.0 7.0 7.0
Source: RHBRI estimates

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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 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 KLCI benchmark (+/- five percentage points) over the next 6-12 months.

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

Industry/Sector Ratings

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

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

Underweight = Industry expected to underperform the 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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