RHB Report Malaysia SCB 2021 Final Version 5761314132631766460914b1c68aef - 1620279950

INVESTMENT BANKING
Top Malaysia Small Cap Companies
MA
LAY
SIA
MA
LAY
SIA
Market Dateline / PP19489/05/2019 (035080)

TOP MALAYSIA
SMALL CAP COMPANIES
20 JEWELS
2021 EDITION
MALAYSIA
Alexander Chia, ACA alexander.chia@rhbgroup.com (603) 9280 8889
Hoe Lee Leng, CPA hoe.lee.leng@rhbgroup.com (603) 9280 8860
Alan Lim Seong Chun, CFA alan.lim@rhbgroup.com (603) 9280 8890
Eddy Do Wey Qing wey.qing.do@rhbgroup.com (603) 9280 8856
Jeffrey Tan Jing Keat jeffrey.tan@rhbgroup.com (603) 9280 8863
Lee Meng Horng lee.meng.horng@rhbgroup.com (603) 9280 8866
Lester Siew Wai Kit, CFA lester.siew@rhbgroup.com (603) 9280 2181
Liew Wai Hoong liew.wai.hoong@rhbgroup.com (603) 9280 8859
Lim Jia Yi lim.jia.yi@rhbgroup.com (603) 9280 8873
Loo Tungwye loo.tungwye@rhbgroup.com (603) 9280 8683
Loong Kok Wen, CFA loong.kok.wen@rhbgroup.com (603) 9280 8861
Muhammad Danial bin Abd Razak muhammad.danial.abd@rhbgroup.com (603) 9280 8682
Sean Lim Ooi Leong sean.lim@rhbgroup.com (603) 9280 8867
Soong Wei Siang soong.wei.siang@rhbgroup.com (603) 9280 8865

<See important disclaimer and disclosures at the end of this report>
CONTENTS
List Of Companies By Alphabetical Order
Aemulus Holdings……..………..………………………………………………………………………..………………… 1
Carimin Petroleum…...........…………………………………………………………….……………..………………….. 3
ES Ceramics Technology ...…...……………………………………………………….……………..………………….. 5
GDB Holdings………………...…...…………………………………………………………………..……………………. 7
Hiap Teck Venture.……………………………………………………………………….…………………….................. 9
HPP Holdings………...………………………………………………….………………….…..……………….…………. 11
HSS Engineers….…………………………………..……………………………………………..……………………….. 13
InNature…………... ...…………………….………………………………………………….…….……………………… 15
JAG……...………………………………….………………………………………………….…….……………………… 17
KESM Industries…………………………………..……….…………………………………….…………………………. 19
KKB Engineering…...…………………………..…………..………………………………………………………………. 21
Malayan Flour Mills….....…………………………..……….……………………………………………………………... 23
N2N Connect……………....………………………………….……………………………………………………………. 25
Pantech Group……………...………………………………….…..………………………………………………………. 27
Perak Transit…………...……………………………………….…….………………………….………………………… 29
Solution Group……..……………………………………………..……………………………….……………………….. 31
Spritzer……………….………………………………………………...……………………………………………………. 33
Star Media Group…….…………………………………..………………………………………………………………… 35
Tek Seng Holdings…......………………………………………..………………………………………………………… 37
Uzma……………………..………………………………..………………………………………………………………… 39
List Of Companies By Industry Classification
Construction
GDB Holdings ……..……….…………………………………………………………………………………………... 7
HSS Engineers ……………………………………………………………………………..…..……………………… 13
KKB Engineering …………………………………………………………………………………...…..……………… 21
Consumer
InNature ……………...………………..…………………………………………………..…………………............... 15
Malayan Flour Mills ……………......……………………………………………………..…………………............... 23
Spritzer ………………...…………………………………………………………………..…………………............... 33
Tek Seng Holdings …...…………………………………………………………………..…………………............... 37
Healthcare
Solution Group………...…………………………………………………………………..…………………............... 31
Industrial Products & Services

ES Ceramics Technology ………………………………………………………………………………...…………… 5
Hiap Teck Venture …………………………………………………………………………………………...………… 9
HPP Holdings …………………………………………………………………………………..………………………. 11
JAG……………………………………………………………………………..…..…………………………….……… 17
Pantech Group…………. …………………………………………………………………………..…..……………… 27
Perak Transit ………………………………………………………………………………………..…..……………… 29
Media
Star Media Group…...…………………………………………………..….………………...………………………… 35
Oil & Gas

Carimin Petroleum ….…………………………………………………….…………..…………………………….…. 3
Uzma ……………………………………………………………………….…………..…………………………….…. 39
Technology
Aemulus Holdings ………………………………………………….……………………………….…………. 1
KESM Industries ………………..……………………………………….……………………………..…..……. 19
N2N Connect ………………………………………………………………………………………………..………. 25
Foreword
Top Malaysia 20 Jewels 2021 is the 17 th edition of the instrumental compendium of small-cap investment ideas.
Over the years, our unwavering emphasis on small-cap research has produced countless multi-bagger stock ideas
that have benefitted the investment community and shone a spotlight on undiscovered small-cap gems. This product
has become an RHB trademark, which has garnered a strong following. Despite the challenging market, we
continue to believe in the value of such a product and intend to remain at the forefront of small-cap research, not
only in Malaysia, but the region as well. As usual, our Top Malaysia 20 Jewels is part of a regional compendium that
includes Indonesia, Singapore, and Thailand editions, which contain 80 small-cap ideas in total.
Early last year, the world was hit by the COVID-19 pandemic. This was compounded by the oil price collapse.
Malaysia also reeled from political upheavals. Fast forward to the present day and, while we are still adapting to the
impact of the pandemic, equity markets have recovered well – economic activities have rebounded strongly on
ample liquidity amid a low interest rate environment and the promise of effective vaccines to come. Small cap
valuations have also crept back to above the mean, narrowing the discount to the big caps. The strong
outperformance on the small cap index has made it tougher to unearth new gems. However, we continue to see
persistent investor interest in new small-cap ideas to generate alpha for their portfolios. Stock selection remains
paramount, as investors should focus on fundamentally strong companies that have the potential to deliver above-
industry growth, as well as turnaround candidates.
Notably, our Top Malaysia 20 Jewels 2020 Edition last year outperformed the broad market with a holding period
return of 100.1%, beating the FBMSC’s returns of 49.4%. None of the 20 companies featured in this year’s book are
within RHB Research’s existing coverage, as we strive to deliver under-researched gems to match last year’s feat.
After extensive screening and research, as well as countless meetings and rigorous corporate governance
screenings, we have selected companies from 7 different sectors with an average market cap of MYR437m. This
year, consumer and industrial products & services feature prominently, making up 50% of our picks. All but six –
which are Ace Market listed – of the 20 names are on the Main Market.
RHB Research wishes to express our gratitude to the management teams of the featured firms for their generous
time in helping us understand their business models and outlooks. Credit is also due to my fellow dedicated
colleagues who have invested much time leading up to the publication of this compendium.
Our team is grateful and humbled by the continued interest and support from investors. Rest assured, we will
continue to strive to seek out high-quality research ideas. We hope this book will help keep your portfolio returns
positive while you stay safe.
Lee Meng Horng Alexander Chia

Head of RHB Malaysia Small Cap Research Head of RHB Regional Research
5 May 2021
Top Malaysia Small Cap Companies 2021

20 Jewels – at a glance
Company name FV Mkt Cap P/E (x) P/BV (x) Div Yield (%) ROE (%)
(MYR) (MYRm) FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20
Aemulus Holdings 1.16 - 1.44 533.2 nm nm 7.2 5.2 0.0 0.0 (4.5) (4.1)
Carimin Petroleum 0.85 - 1.03 160.2 5.8 10.3 1.0 1.0 4.7 1.8 19.0 9.6
ES Ceramics Technology 1.40 - 1.65 414.4 449.6 119.2 7.0 6.7 0.3 0.3 1.6 4.4
GDB Holdings 1.28 559.4 19.2 21.8 4.6 4.2 2.2 2.2 25.9 20.2
Hiap Teck Venture 0.85 - 1.05 887.5 33.6 198.4 1.0 1.0 0.8 0.5 3.0 0.5
HPP Holdings 0.77 - 0.87 238.9 18.1 29.3 4.0 3.4 0.0 0.0 24.0 13.0
HSS Engineers 0.75 307.4 310.0 29.5 0.7 0.7 0.0 0.0 0.5 4.8
InNature 0.88 - 0.98 490.6 14.5 23.2 5.6 3.5 3.5 2.9 37.0 17.9
JAG 0.64 - 0.70 260.0 nm 38.3 1.8 1.6 0.0 0.0 (7.8) 5.8
KESM Industries 16.10 - 18.00 520.5 71.9 nm 1.4 1.5 0.7 0.6 1.8 0.0
KKB Engineering 2.00 386.7 7.9 21.9 1.0 1.0 4.0 4.0 15.6 4.6
Malayan Flour Mills 1.10 - 1.25 958.3 25.3 nm 0.9 0.9 3.2 1.1 4.1 0.4
N2N Connect 1.00 – 1.12 481.2 32.0 24.5 1.8 1.7 1.2 4.3 5.6 7.1
Pantech Group Holdings 0.66 - 0.80 403.3 14.0 17.6 0.6 0.6 2.8 2.4 5.8 4.1
Perak Transit 1.13 - 1.22 479.2 9.1 9.9 3.2 2.6 1.3 1.3 13.0 10.5
Solution Group 1.50 - 1.77 462.6 nm nm 9.4 5.9 0.0 0.0 (0.5) (0.8)
Spritzer 2.50 - 2.75 464.0 14.0 16.0 1.1 1.0 2.1 2.0 7.5 8.0
Star Media Group 0.55 - 0.62 282.7 32.7 nm 0.4 0.4 5.1 0.0 0.7 (2.5)
Tek Seng Holdings 1.06 - 1.16 229.0 nm 8.3 1.2 1.1 0.0 0.0 (8.3) 13.6
Uzma 0.94 - 1.12 220.8 112.1 81.2 0.4 0.5 0.0 0.0 0.4 0.6
Note: All prices as at 30 April 2021
Note 2: na = not available
Source: Bloomberg, RHB

Market capitalisation (MYRm) FY20 ROE (%)
Malayan Flour Mills GDB Holdings
Hiap Teck Venture InNature
GDB Holdings Tek Seng Holdings
Aemulus Holdings HPP Holdings
KESM Industries Perak Transit
InNature Carimin Petroleum
N2N Connect Spritzer
Perak Transit N2N Connect
Spritzer JAG
Solution Group HSS Engineers
ES Ceramics Technology KKB Engineering
Pantech Group Holdings ES Ceramics Technology
KKB Engineering Pantech Group Holdings
HSS Engineers Uzma
Star Media Group Hiap Teck Venture
JAG Malayan Flour Mills
HPP Holdings KESM Industries
Tek Seng Holdings Solution Group
Uzma Star Media Group
Carimin Petroleum Aemulus Holdings
0 200 400 600 800 1,000 0% 5% 10% 15% 20% 25%
Source: Bloomberg, RHB Source: Bloomberg, RHB

FY20 P/E (x) FY20 dividend yield (%)
Hiap Teck Venture N2N Connect
ES Ceramics Technology KKB Engineering
Uzma InNature
JAG Pantech Group Holdings
GDB Holdings
HSS Engineers
Spritzer
HPP Holdings
Carimin Petroleum
N2N Connect
Perak Transit
InNature
Malayan Flour Mills
KKB Engineering
KESM Industries
GDB Holdings
Hiap Teck Venture
Pantech Group Holdings
ES Ceramics Technology
Spritzer
Uzma
Carimin Petroleum
Tek Seng Holdings
Perak Transit
Star Media Group
Tek Seng Holdings
Solution Group
Star Media Group
JAG
KESM Industries
HSS Engineers
Solution Group
HPP Holdings
Malayan Flour Mills
Aemulus Holdings
Aemulus Holdings
-1% 1% 3% 5%
0 20 40 60 80 100 120 140 160 180 200
Source: Bloomberg, RHB Source: Bloomberg, RHB

Fair Value: MYR1.16-1.44
Aemulus Holdings Price: MYR0.88
Journey To The East

Aemulus (AMLS MK)
Price Close
Investment Merits
 5G tester gaining prominence
1.20
1.00
0.80  Synergistic benefits from the China venture

0.60
 Successful turnaround with massive growth prospects
 Solid orderbook and trading at below peers’ P/E
0.40
0.20
0.00
Company Profile
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
Aemulus Holdings is principally involved in the design and development

Source: Bloomberg of automated test equipment (ATE), test & measurement instruments,
and provision of design consultancy and test-related services. Since
Stock Profile 2005, the ATE unit has targeted the semiconductor industry. It focuses
Bloomberg Ticker AMLS MK on radio frequency (RF) and mixed-signal semiconductor test markets,
Avg Turnover (MYR/USD) 11.64m/2.86m followed by the automotive and lighting industries.
Net Gearing (%) Net Cash
Market Cap (MYRm) 533m Highlights
Beta (x) 1.8
5G technology a paradigm shift. 5G technologies, alongside
BVPS (MYR) 0.17 advancements in smart devices, automotive electronics, and the
52-wk Price low/high (MYR) 0.18 - 1.04 Internet of Things, are expected to proliferate over the next few years.
Free float (%) 56 These create exponential demand for 5G-related components, from
filters, power amplifiers, transceivers, and switches to devices and
chipsets, all of which require some form of signal testing to ensure
consistent performance and operational excellence. By boosting testers
Major Shareholders (%)
in both RF (AMB7600-S) and RF surface acoustic wave or SAW
Ng Sang Beng 13.7 (AMB7300) filters, Aemulus is expected to benefit from the high growth
Yeoh Chee Keong 9.9 in 5G content, higher adoption, and increased complexity.
Aemulus Venture 6.8 Made in China 2025. There is an abundance of opportunity in China’s
self-sustaining semiconductor ecosystem, given the target of localising
70% of the USD300bn worth of semiconductor goods imported pa by
Share Performance (%) 2025. Aemulus – via 40%-owned TMSS Technology (TMSS), a JV with
1m 3m 6m 12m Tangren Microintelligence, which is very much within China’s
Absolute 9.3 25.7 35.4 363.2
semiconductor sector supply chain – has an edge in the 5G tester
Relative 9.9 23.5 28.3 347.1
space, which is dominated by US firms. Note: The local authority of
Jiashan County has given TMSS’ parent company a large piece of land
to set up a factory for free. The expected capacity of this facility (to be
ready by end 2021) will be 3x that of Aemulus’ current base. This facility
Lee Meng Horng +603 9280 8866 will cater solely for the Chinese market.
Lee.meng.horng@rhbgroup.com
Product localisation and diversification. With a 140k sq ft base in
Bayan Lepas, Penang, the production floor has expanded by 3-4x to
cater for the exponential growth in tester demand. Other than test
capabilities, speed, and low testing costs, a 100% localised ATE and
instruments for RF filter is slated for launch in 3QFY22 (Sep). This
should help gain market share among Chinese customers, thanks to the
Made in China 2025 policy. Other than testers for 5G and 5G filters,
Aemulus also customises its AMB5600 to cater for the demand in the
1
complementary metal-oxide semiconductor image sensor testing
Profit & Loss Sep-18 Sep-19 Sep-20
market, which is widely used in surveillance, 3D sensing, and cameras. 37 29 19
Total turnover (MYRm)
Reported net profit (MYRm) 5 (3) (4)
Company Report Card Recurring net profit (MYRm)

Recurring net profit growth (%)
5
(29.9)
(3)
nm
(4)
nm
Latest results. Aemulus booked 1QFY21 revenue of MYR11.5m Recurring EPS (MYR) 0.01 (0.01) (0.01)
(+60% QoQ, +160% YoY) with growth from all segments. China topline DPS (MYR) 0.00 0.00 0.00
increased 130% QoQ (+1,100% YoY) to MYR3.7m, bearing fruit from its Dividend Yield (%) 0.2 0.0 0.0
Recurring P/E (x) 36.8 n.m. nm
strategy to tie up with a Chinese partner. Consequently, core profit
Return on average equity (%) 7.0 (4.5) (4.1)
turned profitable from a year ago and grew 45% QoQ.
P/B (x) 2.5 7.2 5.2
Balance sheet/cash flow. As of 1QFY21, Aemulus is in a net cash P/CF (x) 75.3 (21.3) (343.9)
position, or MYR0.08 per share. The negative cash flow from operations Source: Company data, RHB
were temporary in our view, largely due to the increase in inventory in
anticipation of strong orders and rise in receivables post revenue jump. Balance Sheet (MYRm) Sep-18 Sep-19 Sep-20
Total current assets 64 47 72
ROE. ROE is expected to trend higher and reach the high teens in
Total assets 87 90 129
FY22, as the group returns to profitability, boosted by margins Total current liabilities 7 11 14
expansion and higher asset turnovers thanks to the robust orderbook. Total non-current liabilities 2 4 13
Dividend. There is no dividend policy, but we can expect a modest Total liabilities 8 16 27
Shareholder's equity 79 74 102
payout in FY22 and FY23 with the expectation of better profitability.
Minority interest 0 0 0
Management. Aemulus is headed by Executive Director/CEO Ng Sang Other equity 0 0 0
Beng. Ng is supported by Executive Director/COO Yeoh Chee Keong, Total liabilities & equity 87 90 129
Executive Director/CTO Wong Shee Kian, and Executive Director/CFO Total debt 2 7 17
Ng Chin Wah. They share extensive professional experience in the Net debt (5) 4 (15)
semiconductor sector and hold substantial stakes in the group. ED/CEO Source: Company data, RHB
Ng is the single-largest shareholder.
Cash Flow (MYRm) Sep-18 Sep-19 Sep-20
Cash flow from operations 2 (5) (1)
Investment Case Cash flow from investing activities (3) (12) (39)
Cash flow from financing activities (3) (12) (39)
5G and China play. Building on the successful turnaround in recent 24 23 9
Cash at beginning of period
quarters, FY21 will be the start of multi-year exponential growth with Net change in cash (1) (14) 2
greater demand for Aemulus’ testers – spurred by higher adoption of 5G Ending balance cash 23 9 11
technology and the Made in China 2025 policy. A robust orderbook of Source: Company data, RHB
>1x cover and abundance of pipeline orders should propel Aemulus
towards achieving a remarkable year. New product launch and the
TMSS JV should add to the growth momentum from 2H21 onwards.
Upward earnings trajectory. Earnings are expected to trend higher
from here onwards, tracking the higher orders on hand and
contributions from the JV. Additionally, the economies of scale mean we
can expect margins upticks, as overheads are better absorbed. A
weakening MYR against the USD is another catalyst for earnings
growth. Trading at a forward 20x P/E, we believe Aemulus remains a
potential multi-bagger in the years to come, with its tester gaining
prominence in China and Taiwan amid proliferation of 5G technology.
Fair value. Pegged to a target 32-40x P/E on FY22F earnings, fair
value could range between MYR1.16 and MYR1.44. The target P/E is
still at a discount to the largest local equipment players (at 40-50x). We
believe Aemulus will re-rate once it shows a steady growth in earnings
base and TMSS starts to gain more traction in the multi-year growth
story. We believe the group deserves the high valuation in the ATE
space, given its primary business in tester solutions vs handler as the
technical know-how in developing a tester is more in-depth and as a key
beneficiary of 5G tech.
Key risks include obsolete of technology, slower market expansion in
China, weaker-than-expected sales, unfavourable FX.
2
Fair value: MYR0.85-1.03
Carimin Petroleum Price: MYR0.685
Recovery Play
Carimin Petroleum (CARIP MK) Investment Merits

Price Close
0.85
 Experienced oil & gas services player within the upstream
0.80
0.75
maintenance space;
0.70
 Earnings recovery backed by a pick-up in work orders and better
0.65
0.60
marine vessel contributions;
0.55
0.50
 Strong balance sheet allowing for further fleet expansion.
0.45
0.40
Company Profile
Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
Source: Bloomberg Established in 1989, Carimin Petroleum (Carimin) is an oil & gas
services contractor in integrated maintenance, rejuvenation, hook-up
Stock Profile and commissioning (HUC) of onshore/offshore and the provision of sub-
Bloomberg Ticker CARIP MK sea underwater inspections, repair, maintenance works and services
Avg Turnover (MYR/USD) 2.46m/0.61m (IRM). The company fully owns an anchor-handling tug supply vessel
(AHTS) and one accommodation work boat vessel (AWB), coupled with
Net Gearing (%) 5.1
a 15% stake in another AWB.
Market Cap (MYRm) 160m
Beta (x) 1.8
Highlights
BVPS (MYR) 0.69
52-wk Price low/high (MYR) 0.435 - 0.845 Expecting a pick-up in work orders. The level of activities under both
Free float (%) 55 maintenance, construction and modification (MCM) and HUC has been
slashed in the latest Petronas Activity Outlook 2021-2023, suggesting a
decline in overall work scope in 2021F. However, we were guided that
work orders have been on a decent recovery trend in 2H21. Work
Major Shareholders (%) orders arising from the 4-year Integrated-HUC (i-HUC) contracts, in our
Mokhtar bin Hashim 24.7 view, are sustainable until FY22 – as these works are performed for gas
assets, which have been less affected by the downturn in activity.
Cipta Pantas 17.1
Meanwhile, projections in the national oil company’s outlook report
Platinum Castle 5.3
could be established at a lower crude oil price assumption of
USD40.00/bbl. We could expect upward revisions ahead, if oil prices
firm up solidly above USD50.00/bbl.
Share Performance (%)
1m 3m 6m 12m Further boost from marine vessels. Typically, both the AHTS and
Absolute 1.5 18.1 48.9 4.6 AWB are used for Carimin’s internal consumption for offshore HUC,
Relative 2.1 15.9 41.8 (11.5) production platform system maintenance, upgrading services, as well
marine support services. With Petronas calling for more marine vessels,
Carimin’s vessels would be able to be chartered out separately to
clients – leveraging on better daily charter rates, while hiring lower-
Sean Lim Oooi Leong +603 9280 8867
specification vessels to perform their works.
sean.lim@rhbgroup.com
Eye on fleet expansion. Carimin is currently bidding for over 10
projects. We believe that the company is interested to participate in the
OSV newbuild tender by Petronas. To protect the OSV players and
enhance the possibility of securing loans, Petronas is offering long-term
contracts (via a 7+3+3+2-year structure) before any vessels are built.
Carimin’s net gearing is at 0.05x as of 2Q21, and we believe the
company is capable of growing its fleet by at least 1-2 vessels.
3
Profit & Loss Jun-18 Jun-19 Jun-20
Any new OSV charter contract win will be positive for Carimin, and 137 441 374
would allow it to generate stable recurring income in the medium term. (25) 27 11
Reported net profit (MYRm)
On the other hand, its board of directors has approved the extension of Recurring net profit (MYRm) (9) 28 15
time for the utilisation of IPO proceeds which have been allocated Recurring net profit growth (%) nm nm (44)
(since 2014) for the development of a minor fabrication yard, for an Recurring EPS (MYR) (0.04) 0.12 0.07
additional 18 months to 21 Aug 2021. If it is not being delayed further, DPS (MYR) 0.00 0.03 0.01
this would require a capex of c.MYR10-15m, and 18 months to Dividend Yield (%) 0.0 4.7 1.8
complete. Recurring P/E (x) (18.3) 5.8 10.3
Return on average equity (%) (6.5) 19.0 9.6
P/B (x) 1.2 1.0 1.0
P/CF (x) (22.3) 4.5 2.3

Company Report Card Source: Company data, RHB
Results review. FY20 core earnings declined by 44% to MYR15m after
stripping off impairments. The weaker performance was mainly due to a Balance Sheet (MYRm) Jun-18 Jun-19 Jun-20
119 244 207
slowdown in construction, HUC, and topside major maintenance Total current assets
activities, particularly during the MCO in 2H20. In 1H20, core earnings
Total current liabilities 55 165 127
declined by 56% to MYR11m, in tandem with the revenue decline (-61% 51 39 29
Total non-current liabilities
YoY) which stemmed from clients cutting down on their spending when 106 204 156
Total liabilities
oil prices headed south. Shareholder's equity 134 158 163
1 1 (0)
Management. Carimin is helmed by its managing director, Mokhtar Minority interest
Other equity 0 0 0
Hashim, who has over 30 years of experience in the oil & gas business. 240 362 319
Total liabilities & equity
Its executive directors Shatar Abdul Hamid and Lim Yew Hoe oversee 65 54 42
Total debt
project management, and corporate and finance operations. Net debt 56 38 27
Source: Company data, RHB
Investment Case Cash Flow (MYRm) Jun-18 Jun-19 Jun-20

Cash flow from operations (7) 35 68
We like this experienced oil & gas service provider, which operates Cash flow from investing activities 2 (1) (0)
within the upstream maintenance space. Overall earnings recovery is Cash flow from financing activities (13) (18) (18)
likely to be backed by a pick-up in HUC and MCM work orders. Its light- Cash at beginning of period 53 35 51
asset business model should also allow it to further grow the marine Net change in cash (18) 16 50
vessel chartering business in a more competitive way. Ending balance cash 35 51 101
Based on an ascribed P/E range of 10-12x on 2022F earnings, we Source: Company data, RHB
derive a fair value range of MYR0.85-1.03 for the stock. Our ascribed
valuations are in line with FBMSC valuations.
Key risks: i) Lower-than-expected work orders from clients, ii)

significantly softer-than-expected oil prices, which could limit clients’
spending, and (iii) higher-than-expected operating costs.
4
ES Ceramics Technology Price: MYR0.86
Upstream Supplier For Rubber Gloves Manufacturers

ES Ceramics Technology (ESC MK)
Price Close
Investment Merits
 Producer of ceramic formers for major rubber glove makers
1.05
0.95
 Elevated demand, capacity expansion to sustain earnings growth

0.85
0.75
 Expanding clientele base amid entry of new industry customers

0.65
0.55
0.45
0.35
0.25
0.15 Company Profile
Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
Established in 1998, ES Ceramics Technology has grown into a major

supplier of ceramic hand formers for rubber glove manufacturers. Since
Source: Bloomberg its humble beginnings as a producer of formers for examination gloves,
ESC’s product range has expanded to also encompass surgical,
Stock Profile household, industrial, balloons, and speciality formers with the support
Bloomberg Ticker ESC MK of French technology partner COQUET. The company’s production
Avg Turnover (MYR/USD) 21.76m/5.32m facilities have been awarded quality certificates by Intertek, and is
Net Gearing (%) Net Cash currently the only notable producer of hand formers listed on Bursa
Malaysia.
Beta (x) 1.4 With over 30m formers produced since its inception, ESC is now a key
BVPS (MYR) 0.13 supplier for the fast-growing rubber gloves industry, serving most of the
region’s major glove makers.
52-wk Price low/high (MYR) 0.165 - 1.035
Free float (%) 63
Highlights
A leading hand former producer in Malaysia and Thailand. ESC’s
ceramic formers are used in the dipping process to provide the gloves
Wong Fook Lin 12.7 their requisite shape. On average, one former can be used to dip
Rosli Bin Hamat 5.9 10,000 gloves (or 10 boxes of 1,000-piece gloves per former). With its
Tan San Kwang 5.2 current production capacity of 450,000 formers per month (or 5.4m pa)
and estimated global glove demand of 360bn pieces in 2020, ESC is
implied to command a market share of 15%. Other privately held
Share Performance (%) players in the market include CeramTec Innovative Ceramic
Engineering (Malaysia), MediCeram, and FormTech Engineering (M).
1m 3m 6m 12m
Absolute 0.6 36.5 53.6 384.5 Capacity expansions to serve the booming demand for gloves.
Relative 1.2 34.3 46.5 368.5 ESC’s production capacity is slated to expand by 33% to 600k formers
per month beginning May, while global glove production is expected to
rise to 420bn pieces in 2021 from 360bn pieces on elevated demand
amid COVID-19 – this is alongside expanded manufacturing facilities by
Lester Siew, CFA +603 9280 2181 the incumbents, as well as upstart glove manufacturers. We understand
lester.siew@rhbgroup.com that management is working towards hitting 10m formers pa (c.830k per
month) by end 2021.
Tapping into a larger customer base. ESC is well positioned to
capture the entry of new upstart glove producers in the market, thereby
expanding its clientele base and enhancing its pricing ability at the
same time. The company is expected to operate at maximum utilisation
over the coming years, due to the strong growth in demand by glove
makers in the market.
5
Sustainable earnings growth. With a stronger customer base going
Profit & Loss May-18 May-19 May-20
forward, particularly from foreign markets such as China, we also see 25 32 35
ample room for ASP adjustments to persist post COVID-19, as the Reported net profit (MYRm) 0 1 2
company moves beyond its anchor local customers. We understand Recurring net profit (MYRm) 0 1 3
that hand formers account for merely 1-1.5% of rubber glove selling Recurring net profit growth (%) (96.3) 236.3 277.3
prices on a pro rata basis. As such, we expect better margins and Recurring EPS (MYR) 0.00 0.00 0.01
capacity expansions to drive ESC’s earnings growth over the next few DPS (MYR) 0.00 0.00 0.00
years. Following the enlarged capacity of 10m formers per year by end Dividend Yield (%) 0.3 0.3 0.3
1512.2 449.6 119.2
2021, we understand that 60% of its landbank still remains unutilised, Recurring P/E (x)
0.5 1.6 4.4
implying further expansion opportunities down the road. Return on average equity (%)
P/B (x) 7.2 7.0 6.7
Transfer to the Main Market and shariah-compliant status to act as P/CF (x) (452.1) (74.7) 924.7
catalysts. We believe the company’s transfer to Bursa main board, as Source: Company data, RHB
well as its subsequent reclassification as a shariah stock, will elevate
ESC’s investability amongst institutional investors, who currently under- Balance Sheet (MYRm) May-18 May-19 May-20
own this stock. Total current assets 34 33 35

Company Report Card Total non-current liabilities 0 0 1
Total liabilities 5 5 7
Latest results. 3QFY21 (May) net profit surged 1,200% YoY to
MYR8.5m on stronger revenue (+153% YoY) alongside margins 0 0 0
Minority interest
expansion stemming from higher ASPs and sales volumes. We Other equity 0 0 0
understand the latest results only reflect a c.50% increase in ASPs YoY, Total liabilities & equity 53 56 60
as compared to glove selling prices, which are up over four-fold. Total debt 0 0 0
Net debt (23) (19) (20)

Balance sheet and ROE. ESC retains a strong net cash position of
MYR59.2m as at end 3QFY21, accounting for 54% of its total assets. Source: Company data, RHB
For 9MFY21, ROE came up to 32% on an annualised basis.

Cash Flow (MYRm) May-18 May-19 May-20
Dividend. While ESC has no fixed policy, management has historically Cash flow from operations 3 (0) 5
paid out dividends once a year, with a payout ratio of 54% recorded in Cash flow from investing activities (3) (4) (3)
FY20. Cash flow from financing activities (1) (1) (1)
Cash at beginning of period 24 23 19

Management. ESC is helmed by longstanding Group CEO/Executive (1) (4) 1
Net change in cash
Director Wong Fook Lin, who has served on the board since 2005. He is Ending balance cash 23 19 20
a substantial shareholder, with an approximately 16% stake in the
company.
Investment Case
We believe ESC’s strong earnings growth is sustainable, owing to the
surging demand for hand formers from the booming gloves sector. This
is in addition to capacity expansion, whereby production is set to double
by end 2021. As such, we expect its ASPs (and margins) to maintain
over the coming years, with its hand formers constituting a critical part
of the gloves production process while accounting for only 1-2% of
glove selling prices post pandemic.
Given the sustainable earnings, we therefore think the company
deserves to trade at a P/E of 10-12x (in line with the FBMSC’s forward
multiple) to FY22F EPS. This implies a FV range of MYR1.40-1.65 for
the stock.
6
Fair Value: MYR1.28
GDB Holdings Price: MYR0.895
Quality Contractor For Quality Developers

GDB (GDB MK)
Price Close
Investment Merits
1.05  A quality contractor with strong track record
 Solid balance sheet reflects healthy payment from developers
0.95
0.85
0.75  Recent contract win to boost FY21F earnings

0.65
0.55

Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
GDB was founded in 2013, listed on the ACE Market on 27 Mar 2018,
and subsequently transferred to the Main Market on 24 Apr 2020. It has
Source: Bloomberg a proven track record in building high-rise developments ahead of
schedule. Its two subsidiaries – GDB S/B and GDB Geotechnics – are
Stock Profile registered with the Construction Industry Development Board as a
Bloomberg Ticker GDB MK Grade G7 contractors, which allows the company to tender for projects
Avg Turnover (MYR/USD) 1.64m/0.4m with unlimited value. GDB uses Building Information Modelling or BIM to
Net Gearing (%) Net Cash streamline work processes, reduce time wastage, and enhance
collaboration, along with Industrialised Building System or IBS practices
to increase productivity and quality. Over the past years, GDB has
Beta (x) 1.2
completed various projects, including Etiqa Office Tower and Menara
BVPS (MYR) 0.21 Hap Seng 3.
52-wk Price low/high (MYR) 0.5 – 1.08
Free float (%) 23
Highlights
A quality contractor with strong track record. GDB specialises in the
Major Shareholders (%) construction of high-rise residential and commercial developments. In
CHC Holdings Sdn Bhd 48.9 recent years, the company has completed a few high-profile projects,
Alexander Lo Tzone Leong 21.1 including Menara Hap Seng 3, Etiqa Office Tower, One Central Park,
and Westside III at Desa ParkCity. Perdana ParkCity (the developer for
the renowned Desa ParkCity township) and Hap Seng are amongst
GDB’s main clients. Many of these projects were completed ahead of
schedule. Currently, the key ongoing construction projects are Park
Share Performance (%) Regent in Desa ParkCity and 8 Conlay and the company has just
1m 3m 6m 12m recently completed AIRA Residence by Selangor Properties.
Absolute 6.5 (2.2) 45.5 40.9 Solid balance sheet reflects healthy payments from developers.
Relative 7.1 (4.4) 38.4 24.9 GDB has a net cash position, which is rather rare among construction
players. The healthy balance sheet largely reflects the punctual
payments by its clients, as the company has been selective in tendering
Loong Kok Wen, CFA +603 9280 8861 for construction jobs. Its current clients are largely developers that are
loong.kok.wen@rhbgroup.com
cash rich and/or with respective strong balance sheets that can ensure
on-time payment for billings.
Recent contract win to boost FY21-22 earnings. In Nov 2020, GDB
was successfully awarded a MYR1.25bn contract from KSK Land to
complete the remaining building works for 8 Conlay. With this latest
contract, its current outstanding orderbook stands at MYR2.06bn and
earnings are expected to see a quantum leap in FY21, given the boost
in the construction orderbook. We expect GDB to achieve a combined
revenue of MYR2bn for FY21-22, and net profit could possibly reach the
7
MYR100m mark in FY22. Going forward, management plans to slow
Profit & Loss Dec-18 Dec-19 Dec-20
down its bidding exercise, given the amount of works in hand, and will 275 323 363
step up tender bidding efforts again towards mid-2021. Reported net profit (MYRm) 28 29 26
28 29 26
Bonus issue and free warrants. In April, GDB has announced its Recurring net profit (MYRm)
Recurring net profit growth (%) 23.9 4.5 (11.8)
proposed bonus issue on the basis of one bonus share for every two
Recurring EPS (MYR) 0.04 0.05 0.04
existing GDB shares, as well as free 5-year warrants on the basis of two 0.02 0.02 0.02
DPS (MYR)
warrants for every five existing shares. We expect the stock’s liquidity to 2.2 2.2 2.2
Dividend Yield (%)
improve upon the completion of bonus issue in 3Q21 given the larger Recurring P/E (x) 20.1 19.2 21.8
share base (from 625m to 937.5m post bonus issue). Return on average equity (%) 38.7 25.9 20.2
P/B (x) 5.4 4.6 4.2
P/CF (x) 34.9 89.8 37.9
Latest results. 4Q20 revenue and earnings increased 33.6% and

Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
11.7% QoQ, mainly due to the maiden contribution from the 8 Conlay 202 202 238
Total current assets
project, as well as ongoing construction projects. Overall, FY20 Total assets 213 231 265
earnings were negatively affected by the MCO, which was imposed Total current liabilities 109 106 128
between 18 Mar 2020 and the first week of May 2020. A 1 sen second Total non-current liabilities 0 2 1
interim dividend was declared, with full-year DPS amounting to 2 sen – Total liabilities 109 107 129
flat from FY19. Shareholder's equity 104 121 134
Balance sheet/cash flow. GDB is in a net cash position. As at end Other equity 0 0 0
FY20, the company has a net cash of MYR82m cash and cash Total liabilities & equity 213 231 265
equivalents. Total debt 0 0 0
Net debt (18) (24) (18)

ROE. GDB has high ROEs. Over the past three years, its ROE ranged
between 20% and 39%. With the expected boost in earnings in FY21- Source: Company data, RHB
23, we expect the company’s ROE to stay within this range.

Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
Dividend. GDB has a dividend policy of up to 30%, but it has paid out Cash flow from operations 19 17 19
43-49% of its profits as dividends in FY19-20. Based on a payout Cash flow from investing activities (5) (17) 1
assumption of 40% and our earnings projection, our DPS forecast is Cash flow from financing activities 36 (11) (12)
around 5.5 sen for FY21, which translates into a yield of 6%. Cash at beginning of period 68 18 24
Net change in cash 50 6 (6)

Management. Both Cheah Ham Cheia and Alexander Lo Tzone Leong Ending balance cash 18 24 18
are the founders of GDB. Prior to setting up the firm, Cheah was Group
CEO of Putrajaya Perdana. Lo, meanwhile, was the COO at Putra
Perdana Construction – a subsidiary of Putrajaya Perdana. Cheah and
Lo have over 38 and 25 years of experience in the construction
business. Cheah is currently GDB’s Managing Director, responsible for
the overall guidance and business directions. Lo is the ED, assisting
Cheah in the overall management and operations, as well as
overseeing the operations of all construction projects.
Investment Case
Our indicative fair value for GDB is MYR1.28, based on 10x FY21F P/E.
The stock is currently trading at an undemanding 7x P/E, below Kerjaya
Prospek’s 9x and big-cap construction stocks’ 14-15x. We think 10x is
justifiable for GDB, given its strong earnings momentum and growth
prospects. Its ROE is also the highest amongst the construction stocks
under our coverage.
Key risks to our valuations include an unexpected and/or prolonged halt
in construction work progress, as well as failure to secure new contracts
in 2H21.
8
Hiap Teck Venture Berhad Price: MYR0.635
Leveraged To The Steel Sector’s Upcycle

Hiap Teck Venture (HTVB MK)
Price Close
Investment Merits
 Integrated steel player with upstream and downstream businesses
0.60
0.50
 Benefitting from recovering industrial activities, alongside steel pricing
0.40
tailwinds amidst favourable supply-demand dynamics
0.30
 Sharp turnaround in Eastern Steel JV contributions to underpin future
0.20
earnings growth
0.10
 Trading inexpensively at below NTA of MYR0.65 per share and
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
trailing quarter annualised P/E of 7x
Source: Bloomberg
Company Profile
Stock Profile
Hiap Teck Venture is primarily involved in the downstream
Bloomberg Ticker HTVB MK
manufacturing of steel pipes, hollow sections, and scaffolding
Avg Turnover (MYR/USD) 21.96m/5.37m equipment. It also trades in a wide range of steel products that serve
Net Gearing (%) 41.9 various sectors, including construction, engineering, manufacturing, and
Market Cap (MYRm) 888m oil & gas. The group is engaged in upstream steel production of slabs
Beta (x) 1.9 and billets too via a 35%-owned JV with Chinese steel major Shanxi
BVPS (MYR) 0.64
Jianlong Industry called Eastern Steel. The latter operates a fully
integrated blast furnace steel mill with rated annual production capacity
of 700,000 tonnes. It is currently Malaysia’s sole producer of steel
Free float (%) 68 slabs.
Major Shareholders (%) Highlights

Ts Law Investments 11.5
A leading integrated steel player. Hiap Teck is one of Malaysia’s
Standard Chartered 11.3 largest steel players with annual revenues of >MYR1bn. It is both a
Credit Suisse Singapore 10.3 regional market leader for electric resistance welded steel pipes and
hollow sections, as well as domestic market leader for scaffolding
products. Hiap Teck’s steel trading business is also amongst Malaysia’s
largest. The group’s internal business requirements are further
supported by its transportation, ore mining, and property holding
1m 3m 6m 12m
divisions. Notably, Hiap Teck’s downstream business has been
Absolute 42.7 74.0 243.2 284.8 consistently profitable throughout various market cycles over the years,
Relative 43.3 71.7 236.1 268.8 notwithstanding previous start-up losses from the Eastern Steel JV.
Riding on the broad economic recovery and bullish steel outlook.
Hiap Teck is poised to capitalise on strong demand and ASP uptrend
Lester Siew, CFA +603 9280 2181 for the steel sector on the back of a recovering global economy.
lester.siew@rhbgroup.com Moreover, this is underpinned by robust industrial consumption coupled
with environmental-driven supply controls in China, the world’s largest
steel consumer and exporter. Consequently, these factors should
translate into high volume growth potential (both domestic and exports)
for Hiap Teck and strong operating margins expansion in 2021.
Significant cost-savings offer another kicker for Eastern Steel. This
steel mill, which has been running above nameplate production capacity
since FY20 (Jul) (c.800k tonnes), will also benefit strongly from the
sustained uptrend in steel prices, which have outpaced raw material
9
cost inflation YTD. Beyond that, Eastern Steel is also set to enjoy
Profit & Loss Jul-18 Jul-19 Jul-20
immense production cost-savings from the commencement of its new Total turnover (MYRm) 1128 1187 933
coke oven plant (400k pa capacity) over two phases in mid-2021 and Reported net profit (MYRm) 28 25 4
early 2022. This is expected to translate into annual cost savings of Recurring net profit (MYRm) 28 25 4
nm (9.5) (83.1)
c.MYR160m thereafter, which should feed directly into Eastern Steel’s Recurring net profit growth (%)
net earnings, as it is tax exempted until 2023 under the Government’s DPS (MYR) 0.01 0.01 0.00
pioneer status grant. Dividend Yield (%) 0.8 0.8 0.5
Recurring P/E (x) 30.0 33.6 198.4
Return on average equity (%) 3.3 3.0 0.5
P/B (x) 1.0 1.0 1.0
Company Report Card P/CF (x) (38.9) 7.5 (25.9)
Latest results. 2QFY21 PATAMI surged 331% QoQ (+492% YoY), as Source: Company data, RHB
quarterly revenue leapt to a more than a decade high of MYR356m.

This was attributable to both the manufacturing and trading segments Balance Sheet (MYRm) Jul-18 Jul-19 Jul-20
amid strong recoveries in volume sales and ASPs. Hiap Teck’s Eastern Total current assets 825 888 731
Steel JV also posted profits for the fourth consecutive quarter, owing to
the aforementioned reasons and substantial energy cost savings since
Total non-current liabilities 58 57 37
end 2019 – arising from its newly built power plant. Total liabilities 702 728 573
Balance sheet and dividends. As at end 2QFY21, group net gearing Shareholder's equity 837 863 862
stood at 0.39x, albeit with the bulk of borrowings tied to working capital Minority interest (1) (1) (1)
Other equity 0 0 0
with no long-term borrowings taken up. Hiap Teck does not have an
Total liabilities & equity 1538 1589 1435
official dividend policy, but has paid out 0.3-0.5 sen per share over the
Total debt 612 626 507
past three years (payout ratio: 24-94%). Net debt 552 447 362
Management. The group is helmed by Executive Directors Foo Kok Source: Company data, RHB
Siew, Tan Shau Ming, and Law Wai Cheong, with the latter being the
son of major shareholder and Executive Deputy Chairman Tan Sri Dato’ Cash Flow (MYRm) Jul-18 Jul-19 Jul-20
Law Tien Seng. They are backed by a team of seasoned C-suite Cash flow from operations (99) 56 121
executives that oversee Hiap Teck’s operations and financial matters. Cash flow from investing activities (87) 51 (34)
Cash flow from financing activities 163 11 (122)
Net change in cash (23) 119 (34)
Investment Case Ending balance cash 60 178 145
Fair value. We derive a fair value range of MYR0.85-1.05, which is Source: Company data, RHB
pegged to 8-10x P/E on FY22F fully-diluted EPS. We believe our target
multiple – at a c.20-30% discount to its 10-year historical trailing P/E
and FBMSC’s forward P/E – is reasonable, in view of earnings
potentially peaking next year. Our fair value range implies potential
upsides of 34-65%.
Key risks include fluctuations in steel prices, shifts in the market
supply-demand dynamics, and competitive pressures in the industry.
10
HPP Holdings Price: MYR0.615
To Deliver a Growth Package

HPP (HPPHB MK)
Price Close
Investment Merits
 High quality printing packaging provider;
0.75
0.70
 Riding on the growth in the consumer E&E market;
0.65
0.60
 Timely capacity expansion to meet the increase in demand;
0.55
 Potential margin expansion and strong earnings growth of c.30%
Apr-21
Jan-21
Feb-21
Mar-21
The group’s history began in 1996 when the current group Managing
Director, Kok Hon Seng founded Hayan Prints together with two other
Source: Bloomberg
partners to print and produce paper-based packaging in Melaka. Over
the years, the group has built on its experience – it currently provides
Stock Profile total packaging services ranging from pre-press, press and post-press.
Bloomberg Ticker HPPHB MK HPP specialises in printing and packaging of both corrugated and non-
Avg Turnover (MYR/USD) 2.2m/0.54m corrugated packaging, together with the trading and production of rigid
Net Gearing (%) Net Cash boxes. While the overall business is pre-dominantly local, the group has
expanded its customer base overseas to Singapore, Thailand, the
Philippines, the US, Myanmar and Germany.
Beta (x) N/A
BVPS (MYR) 0.18 Highlights
An accredited printing packaging provider. The group’s customers
Free float (%) 28 are manufacturers covering various end-user industries such as
consumer electrical and electronics (E&E), sheath contraceptive, food
and beverages (F&B), and pharmaceuticals. It has been able to
Major Shareholders (%) maintain long-term relationships with its customers (some in excess of
51.7
10 years) due to the superior quality of services provided. Evidently,
Aurora Meadow SB
HPP is accredited by various global standards and has attained notable
Ang Poh Geok 6.7
certifications such as the G7 Master Facility Colourspace. We note that
Seng Kok Hon 5.9 the group is the only printing packaging company in Malaysia with this
certification and it is a criteria for some MNCs in selecting their
preferred printing packaging provider. Despite the nature of the
Share Performance (%) business where customers would only order on an as-needed basis,
1m 3m 6m 12m
HPP’s superior quality should continue to see sustained orders moving
forward.
Absolute 3.4 (14.0) N/A N/A
Relative 4.0 (16.2) N/A N/A Indirect proxy to the growing consumer E&E market. The consumer
E&E customers form HPP’s major revenue contributor, with its major
customer – Group of Companies D (products include vacuums, fans,
hairdryer) contributing c.50% of total revenue historically. With the
Loo Tungwye +603 9280 8683 advancement in design of electronic products, together with the
loo.tungwye@rhbgroup.com convergence of electronic devices into consumer lifestyles, the global
consumer electronic market is forecasted to grow at a CAGR of c.5%
from 2020-2027 and this would benefit HPP. The group also aims to
widen its customer base in an effort to reduce over-dependency risk.
This will be done via participation in trade shows and exhibitions to
boost its market presence and pitch to potential clients. We understand
that the group is constantly in talks with other potential E&E customers
and this could lead to higher sales order going forward.
11
New machines to cater for the demand. To meet its customers’ needs
Profit & Loss May-18 May-19 May-20
in a timely manner, the group intends to increase its printing capacity Total turnover (MYRm) 64 83 101
via the purchase of new machines. Currently, the group has five Reported net profit (MYRm) 15 13 8
standard format printing machines (3QFY21 utilisation: c.83%) for non- Recurring net profit (MYRm) 15 13 8
corrugated packages and two large format printing machines (3QFY21 Recurring net profit growth (%) N/A (11.0) (38.1)
utilisation: c.82%) for corrugated packages. HPP recently (Mar 2021) Recurring EPS (MYR) 0.04 0.03 0.02
purchased a standard format machine with advanced features to DPS (MYR) 0.00 0.00 0.00
replace an existing one. The group intends to purchase another printing Dividend Yield (%) 0.0 0.0 0.0
16.1 18.1 29.3
machine (possibly in 2H2021) and this could increase its capacity by Recurring P/E (x)
57.6 24.0 13.0
another c.10-20%. Return on average equity (%)
P/B (x) 4.6 4.0 3.4
Higher margin from rigid box production. Apart from the corrugated P/CF (x) 16.1 15.4 4.0
and non-corrugated packaging, the group also intends to expand its Source: Company data, RHB
rigid box business as the group foresees an increase in demand for
high-end consumer E&E products. HPP will add another rigid box Balance Sheet (MYRm) May-18 May-19 May-20
production line and this will double the existing production capacity. We Total current assets 41 51 52
note that GPM for production of the rigid box is higher than corrugated Total assets 80 96 106
and non-corrugated packages, at c.40% vs 30-33%. Total current liabilities 10 15 13
Company Report Card Shareholder's equity 52 59 67
0 1 2
9MFY21 (May) earnings already higher than FY20. FY20 earnings Minority interest
Other equity 0 1 2
were affected by the COVID-19 pandemic with profit declining 38%
YoY. Moving into FY21F, 9MFY21 core profit of MYR11.7m is already 18 20 22
Total debt
higher than FY20. QoQ, 3QFY21 profit was down 9.8% due to the lower Net debt 2 0 (3)
sales, which was partially offset by lower effective tax rate. While
revenue was down 24.4% QoQ, we note this was due to some of its
customers having to temporarily shut their factories due to COVID-19.
Cash Flow (MYRm) May-18 May-19 May-20
Healthy balance sheet and cash flow. The group is in a net cash Cash flow from operations 15 15 14
position of MYR5.9m as at 9MFY21. Historically, operating cash flow Cash flow from investing activities (2) (2) (5)
(10) (9) (4)
has also been positive with FY18-20 operating cash flow at MYR14- Cash flow from financing activities
12 15 20
15m. It intends to distribute a dividend of at least 20% of annual Cash at beginning of period
Net change in cash 3 5 5
PATAMI.
Ending balance cash 15 20 25
Management. Kok Hon Seng is the founder and Managing Director. He Source: Company data, RHB
has 30 years of experience in the packaging printing industry. Ng Soh
Hoon is the Executive Director and she is responsible for liaising with
suppliers and managing procurement activities.
Investment Case
We like HPP as a recognised printing packaging provider that is bound
to benefit from the growing global consumer electronics market. The
capacity expansion should be timely to capture the increase in demand.
Moreover, its rigid box production venture, which generally garners
better margins, will further support earnings growth. Based on an
ascribed P/E range of 15-17x on FY22F earnings, we derive a fair value
range of MYR0.77-0.87. Our ascribed valuation is in line with FBMSC’s
2022F P/E of 15x, but higher than the historical 5-year peer average of
12x. We believe the stock deserves to trade at premium valuation given
its exposure to consumer electronic market together with a strong
FY22F earnings growth of c.29% vs peer average of c.11%. The stock
is currently under-owned by institutional investors, at c.2%.
Key risks include loss of its major customer, competition risks, and an
increase in raw material prices.
12
Fair Value: MYR0.75
HSS Engineers Price: MYR0.62
Capturing The Sector Recovery Wave
HSS Engineers (HSS MK) Investment Merits

Price Close
0.70
 Healthy prospects from potential pump-priming;
0.65
0.60
 Expecting to achieve higher new contracts in FY21;
0.55  Potential re-rating in the period leading to the mega projects revival.
0.50
0.45
0.40
Company Profile
0.35 HSS Engineers is a leading engineering consultancy with deep
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
expertise in infrastructure & water resources works. It gained a spot at

Source: Bloomberg the Main Board in 2017, despite being listed in the Ace Market a year
earlier. It is involved in the provision of engineering and project
Stock Profile management services including engineering design, project
Bloomberg Ticker HSS MK management, construction supervision, and building information
Avg Turnover (MYR/USD) 0.77m/0.19m
modeling (BIM) services. Major projects undertaken include railway and
infrastructure projects namely the East Coast Rail Link (ECRL), Mass
Net Gearing (%) 3.0
Rapid Transit 2 (MRT2), West Coast Expressway (WCE), Sungai Besi-
Market Cap (MYRm) 307m Ulu Kelang Elevated Expressway (SUKE), Langat 2, and Kwasa
Beta (x) 1.8 Damansara township development.
BVPS (MYR) 0.45
0.37 – 0.70
52-wk Price low/high (MYR)
Highlights
Free float (%) 53
We believe the group will be able to sustain its income in the next
2-3 years, with the remaining orderbook of MYR443m as at Dec 2020.
Its balance was expanded in FY20, by new orders for construction
design works for Section A of the ECRL. Its optimism should be
Shantamalar 21.8 enhanced in the recovery year of FY21, as it competes for new
Tan Sri Kunasingam Sittampalam 18.6 opportunities from MYR300m worth of new bids. In our view, HSS has a
Datuk Ir Teo Chok Boo 10.2 high chance of securing a sizeable amount from its tenders based on its
historical win rate of 50%.
HSS is also seen to benefit from public infrastructure projects,

given its extensive working relationship with the Government. We
1m 3m 6m 12m understand that tender outcomes from its Westport Expansion Phase 2
Absolute 8.1 (3.2) 26.3 60.0 and Pan Borneo Highway (additional works) are expected in 2Q21. In
Relative 9.0 (1.8) 21.5 40.9 the next six months, it is also optimistic on the big rollout of
infrastructure jobs. Some of the projects mentioned include MRT3 and
the Penang Light Rapid Transit (LRT). Its optimism extends to Sarawak,
whereby huge opportunities related to water infrastructure are expected
Muhammad Danial Abd Razak +603 9280 8682
to be available. Note that several water projects have already been
muhammad.danial.abd@rhbgroup.com identified; prospects stay bright for further opportunities.
Future job prospects look encouraging. HSS has placed high

emphasis on Sarawak – one of the key catalysts being Indonesia’s
decision to build its new capital city in Kalimantan. While the project’s
timeline remains unclear due to COVID-19, management expects
further development to be known by Jun 2021. The Sarawak
Government has decided to increase the allocation for water supply
projects from the original MYR2.8bn to MYR4bn. This is driven by the
13
State’s commitment to further enhance its water supply system within
Sarawak. HSS will continue to bid for the additional MYR1.2bn jobs 190 149 170
available, taking advantage of its long track record as one of the state’s Reported net profit (MYRm) (103) 1 11
local contractors. Recurring net profit (MYRm) 21 1 11
Recurring net profit growth (%) (6.4) (94.6) 863.6
Company Report Card Recurring EPS (MYR) 0.04 0.00 0.02
DPS (MYR) 0.01 0.00 0.00

Latest results. HSS’s 2020 overall revenue was 15% YoY higher at Dividend Yield (%) 1.2 0.0 0.0
MYR170m, despite going through a pandemic year. This was Recurring P/E (x) 14.1 310.0 29.5
attributable to higher progress billings from the ECRL and Iskandar Return on average equity (%) 9.6 0.5 4.8
0.8 0.7 0.7
Malaysia Bus Rapid Transit (IMBRT) projects. At operating level, EBIT P/B (x)
17.0 29.1 20.8
increased substantially by 59% YoY to MYR27.8m, driven by higher P/CF (x)
margin design works. On that note, margin has improved to 16.4% in Source: Company data, RHB
FY20, +4.6ppts from the corresponding period last year. This has
resulted in a net profit jump by 9x YoY to MYR10.6m. Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
Healthy balance sheet and improving ROE. HSS has a healthy Total assets 377 347 358
balance sheet with net gearing of only 3% as of December 2020. This Total current liabilities 85 67 67
will give HSS better flexibility in securing contract of sizeable value in Total non-current liabilities 79 67 67
the future. ROE has significantly improved to 4.8% in FY20, compared Total liabilities 164 133 134
213 214 224
to 0.5% in the previous year. We expect that the ROE can further Shareholder's equity
0 0 0
improved based on our positive expectation of earnings growth. Minority interest
Other equity 0 0 0

Dividend. HSS does not have a formal dividend policy. Based on 78 67 58
Total debt
historical numbers, we observe that the payout rate was between 13% Net debt 20 17 7
and 17%. We do not discount the possibility of the group starting to
distribute dividends again on expectations that its key operations deliver
strong earnings growth.
Cash flow from operations 9 6 8
Management. The group is led by four Executive Directors – Tan Sri Ir Cash flow from investing activities (153) 1 (1)
Kunasingam Sittampalam, Datuk Ir Teo Chok Boo, Ir Sharifah Azlina Cash flow from financing activities 169 19 (11)
and Ir Prem Kumar M.Vasudevan. All four bring with them experience Cash at beginning of period 13 34 22
from different backgrounds. Tan Sri Ir Kunasingam has accumulated Net change in cash 21 (12) (0)
over 40 years of experience within the engineering and project Ending balance cash 34 22 22
management services market. Datuk Ir Teo has accumulated 42 years Source: Company data, RHB
of experience in various sectors of engineering, particularly in dam and
water-related projects, having been the project director for several mega
water supply projects in Malaysia.
Investment Case
We believe HSS is a potential beneficiary of the revival of mega
infrastructure projects due to its strong track record in undertaking
transportation and water projects. We believe 17x FY21F P/E is not
justified, and offers an attractive entry point. This is considering our
expectation that earnings could grow at approximately 25-30% YoY in
the next two years. In deriving our FV of 75 sen, we peg our estimates
of FY21F to P/E of 25x (5-year mean).
Key risks: High dependency on its key management and engineering
expertise; highly reliant on infrastructure projects awarded by the
Government, which accounts for 71% of its total projects; orderbook
replenishment risk.
14
InNature Price: MYR0.695
Nurturing Nature And Sustainable Growth

InNature (INNATURE MK)
Price Close
Investment Merits

0.80
0.75 Entrenched Malaysia operations and resilient business dynamics to
0.70
0.65
anchor the earnings base

0.60
0.55 Regional expansion in Vietnam and Cambodia to capitalise on
0.50
0.45
robust consumer spending and drive exciting growth

0.40
0.35 Fast-growing online sales should capture change in consumer
0.30
behaviour and aid margins expansion
Jul-20
Nov-20
May-20
Jan-21
Mar-21
Sep-20
 Outstanding ESG credentials could propel a valuation re-rating as

ESG investing proliferates worldwide
Source: Bloomberg
Stock Profile Company Profile

Bloomberg Ticker INNATURE MK
InNature is principally involved in the retailing and distribution of The
Avg Turnover (MYR/USD) 1.17m/0.29m Body Shop (TBS) products in West Malaysia, Sabah, and Labuan, as
Net Gearing (%) Net Cash well as Vietnam, and Cambodia. In 2019, it expanded the brand
Market Cap (MYRm) 490m portfolio by introducing the Natura beauty brand in Malaysia, with one
Beta (x) N/A outlet as of FY20. As of last year, Innature operates 84 TBS stores in
BVPS (MYR) 0.20
Malaysia, 37 in Vietnam, and two in Cambodia.
Free float (%) 18
Highlights
On firm ground despite the pandemic and lockdowns. InNature has
remained profitable throughout FY20 – even during 2Q20, when all
outlets in Malaysia and Vietnam had to be closed under lockdown
Etheco SB 51.0 enforcements. We believe the members-oriented customer base (77%
Bluplanet SB 17.9 of FY20 sales) and relatively high contributions from the online sales
Pelagos SB 3.0 channel (8% of FY20 sales) have underpinned the resiliency. In
addition, its customer profile is affluent and discerning, hence, less
likely to cut down their spending – notwithstanding the pandemic-led
economic downturn.
1m 3m 6m 12m Leading the pack in online sales. We highlight that InNature’s online
Absolute 16.8 40.4 58.0 75.9
sales contributions were at the forefront of other consumer peers after it
booked a 3-year CAGR of 57% in FY20. This was thanks to enhanced
Relative 17.4 38.2 50.8 59.9
efforts in digitalisation and omni-channel (retail and online) initiatives.
We understand online sales command higher operating margins vs
retail sales and, hence, the positive growth momentum in such sales
Soong Wei Siang+603 9280 8865 going forward should drive benign margin expansions. This is assuming
soong.wei.siang@rhbgroup.com the higher relevance of online shopping post COVID-19, as well as
continuous marketing efforts.
Regional expansion to drive growth. Whilst we foresee the
entrenched Malaysia operations anchoring the earnings base, we
expect the regional wings to deliver more exciting earnings growth
moving forward. Management is planning to open five new stores in
Vietnam and one in Cambodia in 2021 – aiming to capture the robust
domestic demand on growing disposable income and favourable
competition landscape. Worth highlighting: The internationally
15
recognised TBS brand name and omni-channel strategy have facilitated
the new market penetration and shortened the gestation period – the 184 192 155
Vietnam operations contributed c.18% to group FY20 net profit after 11 Reported net profit (MYRm) 46 30 20
years of operation, whereas the Cambodia wing is already profitable Recurring net profit (MYRm) 36 34 21
despite only starting in 2019. Recurring net profit growth (%) 18.1 (6.5) (37.3)

ESG responsible to both consumers and investors. The sustainable 0.23 0.02 0.02
DPS (MYR)
sourcing of raw materials, and campaigns against animal testing and for 33.6 3.5 2.9
Dividend Yield (%)
the empowerment of women resonate with the growing socially Recurring P/E (x) 13.6 14.5 23.2
conscious consumer base. It also differentiates InNature from other Return on average equity (%) 33.7 37.0 17.9
competitors. Meanwhile, Group MD Datin Mina Cheah has received P/B (x) 6.5 5.6 3.5
several recognitions and accolades from local and international bodies P/CF (x) 9.7 10.8 12.9
for her efforts in promoting the environment, as well as human and Source: Company data, RHB
women’s rights. Additionally, governance strength is evidenced by the
strong representation of female directors on the board of directors and Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
transparent disclosure of relevant information. Such ESG credentials 57 57 94
could potentially propel a valuation re-rating as ESG investing 144 155 188
Total assets
proliferates worldwide.
Company Report Card Total liabilities 69 68 50

Latest results. FY20 core net profit fell 37.3% to MYR21.1m on a 144 155 188
18.9% decline in full-year revenue to MYR155.5m. This was largely due
Total debt 45 42 23
to the business disruptions that arose due to COVID-19. During the
18 24 (31)
year, InNature’s store network in Vietnam expanded to 37 stores (+3 Net debt
stores) while one new store was established in Cambodia, bringing total Source: Company data, RHB
store count in the country to two. In Malaysia, the number of stores
stood at 84 after a net closure of five outlets. Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
Balance sheet/cash flow. FY20 balance sheet is sturdy with a net Cash flow from investing activities 12 (11) (35)
cash of MYR53.2m, or 7.5 sen per share. Operating cash flow has Cash flow from financing activities (50) (41) 3
remained healthy despite the challenging business environment – Cash at beginning of period 11 24 17
thanks to prudent cost-controls and high profitability. Net change in cash 13 (6) 7

ROE. ROE slipped to 17.9% in FY20 from 37% in FY19 –
corresponding with the decline in net profit and enlarged equity base
post listing.
Dividend. InNature has adopted a policy of paying a minimum 30% of
net profit as dividends. In FY20, it declared DPS of 2 sen, which
translated into a payout ratio of c.70% and implies a yield of 2.9%.
Management. InNature is helmed by the founding family. Datin Mina is
the MD and has more than 30 years of experience in retail and
cosmetics & toiletries industries. Group CEO Molly Fong is responsible
for the overall strategic direction and management of InNature’s
business operations.
Investment Case
Trading at c.30% to the Kuala Lumpur Consumer Product Index
(KLCSU), we believe the valuation is attractive for investors seeking
exposure in the consumer sector or positioning for a cyclical recovery –
this is given the abovementioned catalysts. We estimate InNature’s fair
value at between MYR0.88 and MYR0.98 by ascribing a P/E range of
18-20x to FY22F EPS of 4.9 sen. The valuation range is in line with the
average of its peers under our coverage, as well as the KLCSU’s
FY22F P/E.
16
JAG Price: MYR0.505
Double Proxies
JAG (JAG MK)
Price Close
Investment Merits
 A fully licensed e-waste recycling company in Malaysia;
0.55
0.50
 Benefitting from the growth in the E&E industry;

0.45
0.40
 Riding on the uptrend in metal commodity prices;

0.35
0.30
0.25
0.20  Timely capacity expansion to meet the increase in demand;
0.15
0.10  Expecting all-time high earnings in FY21.
Jul-20
Nov-20
May-20
Jan-21
Mar-21
Sep-20
Source: Bloomberg
Company Profile
JAG is principally involved in total waste management (TWM) (>95% of
Stock Profile total revenue) – the group is one of the 13 recycling companies in
Bloomberg Ticker JAG MK Malaysia with a full recovery license awarded by the Department of
Environment. This license allows it to carry out the full process of
collection, segregation, treatment, smelting and refining of schedule
Net Gearing (%) 6.4
wastes. The group procures e-waste via an open tender from electrical
Market Cap (MYRm) 260m and electronics (E&E) multi-national corporations (MNCs), mainly
Beta (x) 1.9 semiconductor companies. After extracting and processing both the
BVPS (MYR) 0.33 ferrous and non-metal from e-waste, the final product (ie copper flakes,
52-wk Price low/high (MYR) 0.14 – 0.51 tin alloy ingots, silver granules, nickel concentrate, aluminum ingots,
Free float (%) 48
gold bars) is sold to smelters. Historically, c.80-90% of revenue is
derived from the export market.
Highlights
More e-waste to come from the E&E industry. The E&E industry in
Ng Aik Kee 13.7 Malaysia has shown sturdy growth throughout the years, with export
Ng Meow Giak 8.6 value posting a strong CAGR of 7% from 2015 to 2020. As JAG
Nkk Capital SB 7.4 procures e-waste from E&E MNCs in Malaysia, its production volume
has been growing. Evidently, FY17-19 saw output growth of c.9-66%.
With the advancement in design of electronic products, together with
the convergence of electronic devices into consumer lifestyles, the
global consumer E&E market is forecasted to grow at a CAGR of 5%
1m 3m 6m 12m from 2020-2027. Growth in the E&E market will lead to higher e-waste
Absolute 34.7 146.3 225.8 215.6 generated by MNCs, and this will benefit JAG.
Relative 35.3 144.1 218.7 199.6
Capacity expansion to cater for increase in e-waste. In May 2020,
JAG invested MYR3.6m in a customised carbonator, which is more
efficient than its existing machines and has higher capacity. The group
Loo Tungwye +603 9280 8683 has also recently purchased a new factory in anticipation of the growing
loo.tungwye@rhbgroup.com e-waste to be collected. Going forward, we understand that the group
has allocated MYR2-5m each year for capex on new machinery. The
increase in capacity will be timely to cater for the expected increase in
e-waste from the E&E industry. Furthermore, we note that the current
focus is only on industrial e-waste – it has yet to venture into residential
household e-waste. Residential household e-waste market in Malaysia
is still untapped and unregulated. Should the Government regulate the
collection of household e-waste and award it to a licensed e-waste
management company, JAG would be able to capture this opportunity
17
given its increased capacity.
Total turnover (MYRm) 9 140 159
Uptrend in copper prices to further boost earnings. The finished Reported net profit (MYRm) 2 (12) 10
goods after extracting and processing the ferrous and non-ferrous metal Recurring net profit (MYRm) 1 (3) 7
from the e-waste are sold to smelters globally. In terms of finished Recurring net profit growth (%) (82.0) nm nm
goods breakdown, copper contributes the highest output at c.60% Recurring EPS (MYR) 0.00 (0.00) 0.01
0.00 0.00 0.00
historically. Recently, copper prices have risen more than 110% since DPS (MYR)
0.0 0.0 0.0
Mar 2020. This was attributable to global economic recovery as well as Dividend Yield (%)
Recurring P/E (x) 193.5 (106.4) 38.3
the increase in demand coming from the renewable energy and electric
Return on average equity (%) 1.1 (7.8) 5.8
vehicle sectors. JAG is set to benefit from the uptrend in copper prices 1.8 1.8 1.6
P/B (x)
through higher ASP. As seen in the 2017 copper price rally, the group P/CF (x) 40.7 (29.8) 49.9
registered core profit of MYR7.9m, which is its best financial year to-
date. We believe 2021 would be another record earnings year due to
current high copper prices, which is further supported by the increase e-
waste volume from the E&E industry. As seen in the previous copper 106 83 103
price super cycle back in 2003-2006 and 2009-2011, it lasted for around Total assets 189 202 229
36 months and 24 months. In comparison, the current copper price rally Total current liabilities 21 24 28
is just at its 13th month. Copper inventory is still low (close to 2004- Total non-current liabilities 14 25 25
2006 levels), which may be a sign that copper prices have yet to peak. Total liabilities 35 50 52
Company Report Card Other equity 0 0 0

TWM segment improved YoY. 4Q20 TWM segment profit increased Total debt 17 23 22
by 62% YoY. This was due to the increased in sales volume and strong Net debt 1 9 11
upward movement of commodity prices, which led to better margins Source: Company data, RHB
(+2.1ppts). Nevertheless, core profit was lower by 32% YoY due to
higher tax paid as the preceding quarter have some business losses Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
allowance carried forward. Cash flow from operations 7 (9) 6
Cash flow from investing activities (8) (6) (14)

Healthy balance sheet. FY20 net gearing level was only 0.07x, which 4 15 6
Cash flow from financing activities
we deem as still healthy. While the group has recorded negative 13 15 14
Cash at beginning of period
operating cash flow historically, we believe that it should be back in the Net change in cash 3 0 (3)
black going forward on strong sales volume and favourable commodity Ending balance cash 15 14 11
prices. Source: Company data, RHB
Management. Datin Stacey Tan Siew Ching is the current Chairman
and Executive Director while Dato Ng Meow Giak is also an Executive
Director. Dato Ng has more than 18 years of experience in recycling
and e-waste recycling industry. He is responsible for the overall
business development activities.
Investment Case
We like JAG as a proxy to the booming E&E sector, where there will be
increasing e-waste, which should benefit JAG. Coupled with the
increase in capacity and current uptrend of copper prices, we expect the
group to register record earnings in FY21F. Based on an ascribed P/E
of 25-27x on FY21F earnings, we derive a fair value range of MYR0.64-
0.70. Our target valuation is fair given that it is still at a discount
compared to the 2017’s average trading P/E of 33x, when copper prices
were on an upcycle. Moreover, the E&E industry now is more robust
compared to in 2017. Our ascribed valuation is lower than the historical
5-year regional peer average P/E of 32x.
Key risk include prolonged downturn in copper prices, changes in E&E
manufacturing activities.
18
KESM Industries Price: MYR12.10
Engines Of Growth
KESM Industries (KESM MK)
Price Close
Investment Merits
17.00  Superior independent burn-in testing quality;
15.00
 Beneficiary of longer-term trend of increasing semiconductor content;
 Riding on global automotive market recovery
13.00
11.00
9.00
 New capacity to cater for future growth.
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
KESM Industries is the largest independent burn-in and test service

provider in Malaysia, serving some of the world’s top semiconductor
Source: Bloomberg
manufacturers. Burn-in is a semiconductor manufacturing process used
to weed out potentially weak devices, and detect any early failures due
Stock Profile to defects in design, materials, and manufacturing processes. After the
Bloomberg Ticker KESM MK burn-in process, the semiconductor device is tested to determine
Avg Turnover (MYR/USD) 1.32m/0.32m whether it operates as intended, and graded for its quality through the
Net Gearing (%) Net Cash testing of electrical characteristics.
Highlights
Beta (x) 1.0
Reputable clients are testament to its superior service quality. The
BVPS (MYR) 8.28
bulk of KESM’s earnings come from its burn-in and testing services. Its
clients are mostly from the automotive semiconductor sector, which
Free float (%) 31 historically represents c.80% of its revenue. The group serves five of
the world’s top 10 automotive semiconductor manufacturers. Barriers to
entry are high, due to stringent qualification requirements. Customers
Major Shareholders (%) are usually sticky, as the changing process is lengthy – especially for
Sunright Ltd 48.4
independent service providers like KESM, which are considered
indispensable to their customers, who look to outsource these services
Tan Kong Hong Alex 4.8
to a reputable service provider with over 30 years of experience.
Longer-term trend of increasing semiconductor content still intact.
The automotive semiconductor chip shortages started around end-
2020. While this is expected to disrupt the entire supply chain, the
Share Performance (%) impact should be rather short-term, as steps are currently being taken
1m 3m 6m 12m globally to resolve it. Due to the supply constraints, we understand that
Absolute 0.8 (26.3) 35.0 49.6 automotive semiconductor manufacturers are willing to fork out higher
Relative 1.4 (28.6) 27.9 33.5 prices for semiconductor-related products and services. The longer-
term trend towards digitalising vehicles, and the rise of EVs and
autonomous vehicles remain intact, and should continue to spur
demand for semiconductors. For instance, it is expected that
Lee Meng Horng +603 9280 8866 semiconductor content will double when switching from traditional
lee.meng.horng@rhbgroup.com internal combustion engines or ICE to battery EVs or BEVs. As for
autonomous vehicles, the semiconductor content per vehicle would be
much higher, due to the additional safety features required. The
increasing semiconductor content per vehicle will benefit KESM through
higher demand for burn-in tests.
New capacity to cater for future growth. KESM recently purchased a
new factory in Melaka, with over 100,000sqf space, in anticipation of a
business recovery. The factory is currently undergoing renovations and
19
is expected to be commissioned by mid-2021. We believe the new
Profit & Loss Jul-18 Jul-19 Jul-20
factory will boost its current capacity by an additional 10-15%. While the Total turnover (MYRm) 350 307 241
current automotive semiconductor supply shortage is likely to hinder Reported net profit (MYRm) 39 6 0
near-term volume growth, the longer-term trends of electrification, Recurring net profit (MYRm) 38 7 (7)
infotainment, and advancing driving features should eventually see Recurring net profit growth (%) (10.5) (81.1) nm
volume returning, and KESM is prepared to capture this growth with the Recurring EPS (MYR) 0.89 0.17 (0.17)
additional capacity. DPS (MYR) 0.19 0.09 0.08
Dividend Yield (%) 1.5 0.7 0.6
Recurring P/E (x) 13.6 71.9 nm

Company Report Card Return on average equity (%) 11.5 1.8 0.0
1.5 1.4 1.5
Results highlight. 2QFY21 revenue increased 11% QoQ on higher P/B (x)
P/CF (x) 6.7 5.9 6.0
volume loadings. Nevertheless, core profit was down 41.9% on lower
EBITDA margin (-1.7ppts). While the automotive chip shortage situation Source: Company data, RHB
is expected to impact KESM, we anticipate that the situation will

eventually be resolved, and the longer-term trend of increasing Balance Sheet (MYRm) Jul-18 Jul-19 Jul-20
semiconductor content per vehicle will prevail. We expect a meaningful
earnings recovery in FY22.
Strong net cash position. The group has a healthy balance sheet with Total non-current liabilities 53 23 10
net cash of MYR194m, as at 2QFY21. KESM should be able to capture Total liabilities 138 93 58
357 359 356
the automotive semiconductor upcycle and meet higher demand for its Shareholder's equity
0 0 0
services, without much delay. Minority interest
Other equity 0 0 0
Dividends. While it does not have a dividend policy, KESM has a track Total liabilities & equity 495 453 414
record of paying dividends. From FY15-19, dividends per share ranged Total debt 95 61 26
from 6.0 sen to 18.5 sen. Despite the weak earnings in FY20, the group Net debt (83) (139) (205)
declared a DPS of 7.5 sen, reflecting its strong balance sheet. Source: Company data, RHB
Management. Samuel Lim Syn Soo is the co-founder of the company,

Cash Flow (MYRm) Jul-18 Jul-19 Jul-20
and currently the CEO. He has been on the board since 1986, and was 78 88 87
Cash flow from operations
re-elected in 2018. Kenneth Tan Teoh Khoon is the executive director. (99) (42) (28)
Cash flow from investing activities
He was first appointed to the board in 1992, and was last re-elected in Cash flow from financing activities 15 (44) (50)
2019. He is responsible for KESM’s strategic direction, corporate affairs, Cash at beginning of period 81 75 76
investor relations, and oversees the company’s financial management. Net change in cash (5) 2 8

Investment Case Source: Company data, RHB
We like the stock for its unique exposure to the automotive
semiconductor industry, which is poised to rebound on the imminent
digitalisation of vehicles. The longer-term trend of increasing
semiconductor content per vehicle outweighs the short-term negative
impact from the automotive semiconductor chip shortage. Based on an
ascribed P/E of 25-28x on 2022 earnings, we derive a fair value range
of MYR16.10-18.00. We believe 2022 will better reflect the growing
automotive semiconductor market, especially once the supply shortage
issue is resolved. We believe that our target valuation is fair, given that
it is still at a discount to KLTEC’s 2021-22 trading P/E of 37-32x. Our
ascribed P/E of 25-28x is also below the 28-40x range given to the
OSATs under our coverage.
Key risks include its dependence on the automotive market, changes in
government policies regarding EV and autonomous vehicles, and
developments on the trade war.
20
Fair Value: MYR2.00
KKB Engineering Price: MYR1.50
Healthy Opportunities In East Malaysia
KKB Engineering (KKB MK)

Price Close
Investment Merits
 Specialised engineer in steel fabrication with growing prospects
1.85
1.80
1.75
1.70  Pre-election projects likely on the cards to fuel rural projects
1.65
1.60
1.55
 Potential exposure to growing power sector in Sarawak
1.50
1.45
1.40
1.35
Company Profile
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
KKB Engineering is based in Sarawak, with principle exposure in steel

fabrication, civil construction as well as oil and gas. About 58 years ago,
Source: Bloomberg it started with a small engineering workshop to undertake modest steel
fabrication works. Over time, its service offerings expanded to include
Stock Profile manufacturing of steel pipes, special pipes and LPG cylinders. The
Bloomberg Ticker KKB MK group, through its subsidiary OceanMight SB, continues to find
opportunities in the oil and gas sector in order to build a robust and
diversified income base.
Net Gearing (%) Net Cash
Market Cap (MYRm) 387m It currently offers full project engineering services including engineering,
Beta (x) 1.0
procurement, construction, installation and commissioning (EPCIC) to
cater to industry demand. A higher allocation to domestic investments
BVPS (MYR) 1.46
by Petronas will benefit local services players amidst a gradual recovery
52-wk Price low/high (MYR) 1.4 - 1.91 within the upstream space. Under OceanMight, its product range
Free float (%) 18 includes substructures, inter-platform bridges, topsides (wellhead
platform, central processing platforms and compression platforms,
modules, decks, living quarters), jackets, process skids and modular
compression skids. Its business profile is mainly concentrated in Sabah
and Sarawak, having completed more than 120 major projects.
Kho Kak Beng Holding 43.0
Cahya Mata Sarawak 20.1
Laman Satria SB 5.6
Highlights
In a sweet spot to capture economic recovery. KKB has active
tenders of MYR435m, which will likely see further expansion as the
Share Performance (%) economy recovers. Positive outcome from its bidding should enhance
its orderbook – as at Dec 2020, it stood at MYR780m. Opportunities
1m 3m 6m 12m
remain healthy in Sarawak, with more rural-centric projects being given
Absolute 1.4 (3.2) 5.6 (7.4) attention by the State Government. Such projects comprise the building
Relative 1.9 (5.5) (1.5) (23.4) and upgrading of roads, basic facilities, as well as water and electricity
infrastructures. We understand that several packages have been rolled
out gradually, with total contract duration spanning more than 10 years.
Muhammad Danial Abd Razak +603 9280 8682 Having clinched major state projects recently, the group is seen having
muhammad.danial.abd@rhbgroup.com
good momentum to compete for more, aided by its advantage of being
an established local player. Its specific niche comprises fabrication
works for wellhead platforms, which will play well in the period leading
up to fuel price recovery.
Potential power play to turbo charge growth. Further expansion may
come from its growing exposure in the power sector. We note that KKB
continues to partake in power-related projects. In addition, we observe
growing interest from the group for the development of energy projects,
with a strategic partnership formed with Sarawak Energy Berhad (SEB).
21
Future job prospects look encouraging. The State Government has
decided to increase the allocation for water supply projects from the 413 559 408
original MYR2.8bn to MYR4bn. This is driven by its commitment to Reported net profit (MYRm) 18 50 18
further enhance water supply system within Sarawak. KKB will continue Recurring net profit (MYRm) 16 43 17
to bid for the additional MYR1.2bn jobs available, taking advantage of Recurring net profit growth (%) 717.7 167.1 (60.6)
its long track record as one of the Sarawak’s local contractor. Recurring EPS (MYR) 0.07 0.19 0.07
DPS (MYR) 0.04 0.06 0.06

Company Report Card Recurring P/E (x) 22.1 7.9 21.9

Latest results. KKB recorded MYR4.5m core net loss in 4Q20. (vs P/B (x) 1.2 1.0 1.0
MYR20.3m core net profit in 4Q19). Looking beyond, we believe FY21F P/CF (x) 6.6 na 6.6
earnings are set to be resilient on expectation of a more favourable Source: Company data, RHB
operating environment. This is likely driven by i) its current orders on
hand and ongoing construction works for water-related projects Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
including the supply, laying and commissioning of water pipes; ii) other Total current assets 368 391 381
related infrastructure works implemented under the Sarawak Water Total assets 509 548 548
Supply Grid Programme; iii) the ongoing major onshore fabrication jobs Total current liabilities 185 168 166
for the Oil & Gas facilities; and iv) the Pan Borneo Highway project in Total non-current liabilities 5 11 6
the State of Sarawak (Phase 1 Works Package Contract – WPC-09). Total liabilities 190 178 166
Balance sheet and ROE. KKB is in a net cash position, with a Minority interest 20 33 37
0 0 0
combined total of RM127m of cash and short-term funds as of Other equity
December 2020. This provides a good buffer, should the COVID-19
Total debt 1 11 1
pandemic continue to disrupt core operations. Positively, its current (73) (62) (37)
Net debt
balance sheet capacity may allow the group to gear up for more major
jobs ahead. ROE as of FY20 stood at 4.6%. This is expected to improve
in-line with the improving operational conditions post-pandemic. Its net
cash position allows KKB to gear up for future jobs, to support earnings
Cash flow from operations 59 (15) 59
growth. 8 16 (68)
Cash flow from investing activities
Cash flow from financing activities (10) (2) (26)
Dividend. Despite the challenging FY20 business environment, KKB Cash at beginning of period 18 74 73
announced DPS of 4 sen. This implies a payout ratio of 58% for its Net change in cash 57 (1) (35)
shareholders. Ending balance cash 74 73 38
Management. Group Managing Director Dato Kho Kak Beng helms Source: Company data, RHB
KKB. He is the founder of KKB Engineering, starting the business in

1962, which focused on welding works. He has since ventured into
other related businesses, which include engineering and construction.
Helping him is Group Executive Director Mr Kho Pok Tong, who has
extensive experience in the steel industry.
Investment Case
Fair value of MYR2.00 based on 13x FY21F P/E. The multiple
represents -1SD from its 5-year mean, partly to reflect the challenging
environment posed by COVID-19. While recovery is expected, we
believe challenges from the pandemic are not entirely over. Although it
is still slightly higher by 8% from its peers, we believe this is justified,
given KKB’s i) niche expertise in steel fabrication; ii) potential of
clinching more water-related projects; iii) status as one of Sarawak’s
local player with a good track record; iv) potential exposure to the power
sector; and v) higher ROE compared to listed peers.
22
Malayan Flour Mills Price: MYR0.94
Hatching Into An ASEAN Consumer Play
Malayan Flour Mills (MFL MK)

Price Close
Investment Merits
1.05  Benefitting from the recovery in consumption due to its dominant
0.95 position in the flour market;
 Recent proposed disposal of its 49% stake in a poultry business to
0.85
0.75
0.65
US-based Tyson Foods is a boon for the poultry division;
0.55
 Undervalued stock trading below 14x 2021F P/E (-1SD from the 5-
0.45
year mean), which is on the low end of its peer range of 12-19x.
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
Company Profile
Source: Bloomberg Malayan Flour Mills (MFM) is involved in two main businesses:
i) Flour milling and grain trading, and ii) poultry farming and processing.
Stock Profile The flour division contributed the largest chunk of revenue in FY20, at
Bloomberg Ticker MFL MK 75%, while the rest came from the poultry segment. MFM’s flour-milling
division has operations in Malaysia, Vietnam and Indonesia (through its
30%-held JV). It sells mostly non-general purpose flour products, with
Net Gearing (%) 71.0
general purpose flour only making up less than 5% of sales volume. Its
Market Cap (MYRm) 958m integrated poultry division consists of feed milling, breeder and broiler
Beta (x) 0.9 farming, and poultry processing. It produces 60m chicks a year. MFM’s
BVPS (MYR) 1.06 new poultry processing plant, which commenced operations in Feb
52-wk Price low/high (MYR) 0.495 - 1.06 2020, has a capacity of 280,000 birds per day (100m a year, indicating
Free float (%) 55
a threefold expansion) and services customers like McDonald’s, Texas
Chicken and KFC, amongst others.
Highlights
Flour business is capitalising on the recovery in consumption, with
Teh Wee Chye 18.3 the advent of the vaccine, and the hotel, restaurant and café sector
Tun Arshad bin Ayub 7.0 being reopened. MFM’s expansions over the last few years have been
in Vietnam and Indonesia, where consumption of flour per capita is on
the rise. In Vietnam, flour consumption per capita is at 15kg, while in
Indonesia, it is at 18-20kg and Malaysia, 37-40kg. This shows the
growth potential in Vietnam is huge, and MFM’s dominant position will
enable it to benefit. In Indonesia, MFM’s JV company has also been
1m 3m 6m 12m expanding rapidly, doubling its capacity over the last two years to
Absolute 4.4 4.4 63.5 67.9 expand its reach to other provinces. This should enable MFM to also
Relative 5.0 2.2 56.4 51.8 benefit from the growing urbanisation trend in Indonesia.
Vietnam and Indonesia are deregulated markets when it comes to
flour prices. This would imply that MFM is able to pass on rising costs to
Hoe Lee Leng +603 9280 8860 customers via selling price hikes, if the need arises. Wheat prices have
Hoe.lee.leng@rhbgroup.com been on the rise of late, up 40% over the last six months. As raw
materials like wheat account for 90% of costs, this is likely to crimp
margins – especially as it is unlikely that MFM will be able to pass on all
its costs to customers immediately. MFM does however practice
hedging on a 6-month average rolling basis, to mitigate risks.
Turnaround of poultry division the biggest catalyst. MFM’s poultry
division has been in the red over the last three years, with the largest
loss booked in FY20. This was on falling live chicken prices, which were
down 25% over Jun-Dec 2020. While live chicken prices have since
23
recovered by 8% at end-February, this volatility should no longer have a
significant impact on MFM’s profits – given the recent expansion of its 2,424 2,682 2,681
processed poultry products plant. In 2019, live bird sales accounted for Reported net profit (MYRm) 18 43 5
50% of poultry revenue, vs 10% currently. Selling prices of processed Recurring net profit (MYRm) 35 36 -2
poultry products are not controlled, and are market-dependent. The Recurring net profit growth (%) (49.3) 2.4 (105.5)
turnaround of this business is the biggest catalyst for MFM’s earnings. Recurring EPS (MYR) 0.06 0.04 (0.00)
DPS (MYR) 0.03 0.03 0.01

Disposal of 49% stake to Tyson Foods. This turnaround is likely to 2.8 3.2 1.1
Dividend Yield (%)
come on the back of the recent proposed disposal of a 49% stake in its Recurring P/E (x) 14.9 25.3 nm
poultry business to Tyson Foods. While MFM will no longer be able to Return on average equity (%) 2.7 4.1 0.4
consolidate this division’s earnings, the benefits from collaboration – in P/B (x) 0.8 0.9 0.9
the form of producing more value-added Tyson-branded products via P/CF (x) 6.5 6.5 4.6
offtake agreements with Tyson’s entities like Mac Food (a McDonald’s Source: Company data, RHB
Malaysia supplier), and opportunities for new export markets given the
plant’s halal status – far outweigh the costs. The MYR420m Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
consideration is to be paid in stages, with MYR140m initially, followed Total current assets 1115 1312 1268
by the next MYR140m if EBITDA is at MYR141m in FY22, and the last Total assets 2177 2582 2582
MYR140m if EBITDA is at MYR173m in FY23. FY21’s profit guarantee Total current liabilities 1122 1154 1169
is MYR54m. After five years, Tyson Foods has a call option to buy Total non-current liabilities 161 248 249
1282 1401 1417
another 11% stake. With profit guarantees and penalties in place, MFM Total liabilities
820 1094 1071
will be incentivised to achieve these targets. If achieved, MFM will see a Shareholder's equity
significant turnaround of the poultry division from FY21 onwards. 0 0 0
Other equity
MFM has no official dividend policy but has been rewarding investors Total liabilities & equity 2177 2582 2582
at a payout ratio of 50-120% over the last few years. Total debt 1126 1194 1179
Net debt 958 845 761
Latest results. MFM recorded a core net loss in FY20 of MYR2m, from Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
losses incurred at its poultry division (EBIT loss of MYR70m). This was Cash flow from operations 79 139 205
offset by a higher EBIT contribution from the flour business (+7% YoY), Cash flow from investing activities (299) (267) (89)
which was achieved despite the hike in raw material prices. Cash flow from financing activities 130 291 (37)

Balance sheet/cash flow. As at end-FY20, net gearing was at 71%, vs (89) 164 79
Net change in cash
77% in FY19. This should improve further, as MYR126m of the initial Ending balance cash 169 331 405
proceeds of the disposal will be used to repay debt. Operating cash flow
is strong, at MYR100-200m per year.
Management. MFM is helmed by Teh Wee Chye, its major shareholder
and managing director. The other major shareholder is non-
Independent Non-Executive Chairman Tan Sri Dato’ Seri Utama Arshad
Ayub, whose son, Azhari Arshad, is an executive director of the firm.
Azhari is also in charge of business development and corporate affairs.
Together, they hold around 30.2% of the company.
Investment Case
Fair value of MYR1.10-1.25. We believe MFM is on the cusp of a re-
rating, especially once it proves its ability to achieve the EBITDA targets
for the poultry business. Our fair value of MYR1.10-1.25 is based on a
SOP calculation that includes a target P/E of 12-15x for the flour
division, and book value based on the disposal price for the poultry
division. This implies a P/E target range of 17-19x for 2021F and 9-11x
for 2022F. Peers are trading at historical P/Es of 12-22x. Its dividend
yields, based on a 50% payout ratio, will likely to rise to 4-7% in 2021-
2022F.
Risks include continued losses at the poultry division (should MFM be
unable to improve sales volumes and margins), and the inability to pass
on the increase in the prices of raw materials like wheat and grains.
24
N2N Connect Price: MYR0.805
Attractive Valuation And Ambitious Plan
N2N Connect (N2N MK)

Price Close
Investment Merits
0.95  Leader in capital market solution providers
 Attractive valuation against expected buoyant trading scene
0.90
0.85
 Ambitious growth plan

0.80
0.75
0.70
0.65
Company Profile
0.60
0.55
N2N Connect is one of the largest capital market solution providers
Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
across the Asian region. The group provides a range of services that
cover every aspect of the capital market, such as settlement, order
management, market data, etc. Revenue consists of the application
Source: Bloomberg
solutions (comprising both front and back offices over a managed
services model) and network & infrastructure segments – the latter
Stock Profile
involves services that range from server hosting to server & storage
Bloomberg Ticker N2N MK management, data centre services, etc. N2N’s reach stretches across
Avg Turnover (MYR/USD) 2.06m/0.5m seven counties, including Malaysia, Hong Kong Special Administrative
Net Gearing (%) Net Cash Region (Hong Kong SAR), Singapore, Vietnam, the Philippines,
Market Cap (MYRm) 481m Indonesia, and Thailand.
Beta (x) 1.4 Based on 2019’s annual report – the latest available data – 76% and
BVPS (MYR) 0.47 24% of revenue was contributed by the application solutions and
52-wk Price low/high (MYR) 0.595 - 0.995 network & infrastructure segments. Geographically, N2N derived more
Free float (%) 56
than 80% of its revenue from Hong Kong SAR and Malaysia.
Highlights
A leading trading solutions provider in Malaysia... N2N is one of
the two trading solution providers in Malaysia. We gathered that it
Hundsun Holdings Ltd 22.1 processes c.50-70% of the daily trading value on Bursa Malaysia. A
CIMB Group Holdings 17.5 few major local brokerage houses use N2N’s system as well.
N2N Connect Holdings 15.3 …and a “Tier-2” player in Hong Kong SAR. Hong Kong SAR is
another key market apart from Malaysia. N2N mostly partners with
local security firms (“Tier-2”) in Hong Kong SAR and does not have
Share Performance (%) exposure to investment bank clients, or Tier-1.
1m 3m 6m 12m
Near-term support: Buoyant trading activities in key markets. We
Absolute 13.4 13.4 16.7 27.8 expect the trading scene in both Malaysia and Hong Kong SAR to
Relative 14.0 11.1 9.5 11.7 remain buoyant in 2021. This should benefit N2N, given its
dependency on market activities. For Malaysia, trading will be
supported by sustained retail interest in the stock market, as well as
sector rotation to cyclicals from COVID-19-positive sectors. For Hong
Liew Wai Hoong +603 9280 8859
Kong SAR, the IPO pipeline remains robust, supported by new listings
liew.wai.hoong@rhbgroup.com
like WeDoctor, Angelalign, etc, as well as the re-listing of Chinese
companies currently listed in the US, ie political risk.
Long-term driver: Asia Trading Hub. Looking beyond the pandemic,
N2N will proceed with its expansion plan, especially the Asia Trading
Hub or The Hub initiative. The Hub will be a consortium network of
brokers from across the region that are inter-connected through a
unified trading platform. The broker members can offer their clients the
benefit of trading locally and globally with a single trading account. The
Hub also helps brokers avoid costly capex investments whilst boosting
25
inbound and outbound opportunities.
Attractive valuation. N2N is currently trading 20x FY20 P/E, which is Total turnover (MYRm) 108 105 112
-1SD from its 5-year mean. We deem the low valuation attractive, Reported net profit (MYRm) 13 16 27
18 14 18
given our expectations on the near-term trading activities in its key Recurring net profit (MYRm)
markets. More importantly, we believe N2N’s long-term growth driver, Recurring net profit growth (%) 47.6 (21.7) 31.0

ie The Hub, has yet to be priced in by investors. 0.04 0.01 0.04
DPS (MYR)
Company Report Card Dividend Yield (%) 5.0

24.1
1.2
32.0
4.3
24.5
Recurring P/E (x)
Latest results. FY20 core PAT – adjusted for gains from changes in Return on average equity (%) 8.2 5.6 7.1
ownership interest of an associate and reversals of tax provisions of P/B (x) 1.7 1.8 1.7
previous periods – jumped 31% YoY to MYR18.4m, although reported P/CF (x) 24.8 38.2 12.9
PAT grew at a higher 75% YoY. The higher profits were mainly lifted Source: Company data, RHB
by higher transaction-based revenue arising from the buoyant trading
activities in Bursa Malaysia. Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
Balance sheet/cash flow. N2N is in a net-cash position as at end Total assets 306 304 295
2020. Despite having c.MYR11m in bank borrowings, it has more than Total current liabilities 34 29 25
MYR70m in cash and equivalents. Operating cash flow matches that Total non-current liabilities 24 19 7
of the bottomline, while capex is mostly on software development. Total liabilities 58 48 32

Dividend. The group does not have any dividend policy. The payout Minority interest (0) (1) (1)
range for the past three years is from 36% to 163%. Other equity 0 0 0
306 304 295
Management. N2N is helmed by Managing Director Andrew Tiang. Total liabilities & equity
Total debt 30 20 11
Tiang was also the founder of the company along with spouse Jovelyn (72) (34) (64)
Net debt
Lai, who currently serves as a Non-Independent Executive Director.
Investment Case Cash Flow (MYRm) Dec-18 Dec-19 Dec-20

17 12 35
We believe N2N’s current valuation of -1SD is unjustified, given the Cash flow from operations
Cash flow from investing activities (23) (41) 17
near-term expectation on buoyant equity markets as well as the 54 (18) (30)
Cash flow from financing activities
group’s long-term expansion plan. We derive a FV range of MYR1.00- Cash at beginning of period 53 102 55
1.12 by conservatively pegging the stock to 35-39x FY21 P/E (mean to Net change in cash 48 (47) 21
+0.5x SD) – based on core profit – while also factoring in the Ending balance cash 102 55 75
normalisation of trading activities in 2021F, which would still be higher Source: Company data, RHB
than pre-pandemic levels.
26
Pantech Group Price: MYR0.535
Riding The Oil & Gas Recovery Boom
Pantech Group (PGHB MK)

Price Close
Investment Merits
 One-stop centre for pipes, valves, and fittings
0.60
0.55
0.50  Commanding margins through niche offerings

0.45
 Oil majors continuing to spend on capex amid favourable oil prices
0.40
0.35

Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
Established in 1987, Pantech Group manufactures and sells steel

pipes, fittings, flanges, valves, structural products, and exotic materials
Source: Bloomberg in Malaysia, Singapore, and the UK. The group operates through three
segments: Trading, manufacturing, and investment holding. Pantech’s
Stock Profile client base comprises mostly leading oil & gas companies in Malaysia
Bloomberg Ticker PGHB MK and it is on Petroliam Nasional’s (Petronas) list of international vendors
Avg Turnover (MYR/USD) 1.43m/0.35m for specified items.
Net Gearing (%) 6.7
Beta (x) 1.2
Highlights
BVPS (MYR) 0.90 Unique value proposition. Pantech has established itself as the
52-wk Price low/high (MYR) 0.34 - 0.575 industry’s one-stop provider of pipes, valves, and fitting (PVF). Its
Free float (%) 51 products cater to industries dealing with flowing liquid or gas, including
the oil & gas, chemicals, and palm oil sectors. On top of PVF, the group
also manufactures and trades other components for the oil & gas
industry, augmented by project management consultancy for fluid
Major Shareholders (%) transmission solutions. This unique value proposition and robust track
CTL Capital Holding 18.0 record in execution has enabled Pantech to obtain better gross
GL Management Agency 13.0 margins, which can go as high as 40%.
Employees Provident Fund 4.9 Increased upstream oil & gas activities a catalyst for growth.
Against a backdrop of rising crude oil prices – which returned to over
USD60.00 per bbl from USD40.00 six months ago – we think more
Share Performance (%) upstream projects can come online. Pantech is in the right position to
capitalise from the capex cycle, with 60-70% of revenue contributed
1m 3m 6m 12m
from this sector. Additionally, on the local front, we think the group will
Absolute 10.3 24.4 52.9 40.4 benefit from the ramp-up in Petronas’ local upstream capex, with the
Relative 10.9 22.2 45.7 24.3 group being one of the seven and only local exclusive suppliers under
the Petronas Framework Agreement. The national petroleum company
is expecting to spend between MYR40bn and MYR45bn in annual
Eddy Do Wey Qing +603 9280 8856 capex over the next five years, implying a 20-35% jump YoY. Orders on
wey.qing.do@rhbgroup.com
hand of approximately MYR360m are unprecedented.
Current expansion offers niche service. Pantech has achieved 80%
utilisation of its 48,000 tonnes galvanising factory since
commercialisation in 4Q17. Following that, the group is in the midst of
expanding factory capacity by an additional 10,000 tonnes, with the
target of venturing into the galvanisation of small piece items to
complement its current offerings. The new line is currently undergoing
trial runs and is expected to be operational by mid-May. We understand
that additional capacity could be fully taken up as early as 3Q22.
27
Company Report Card Profit & Loss Feb-19 Feb-20 Feb-21
Latest results. FY21 (Feb) core earnings declined 22% YoY to 47 36 27
MYR28.3m amidst the pandemic, which had led Pantech to record its 47 36 27
Recurring net profit (MYRm)
first ever quarterly losses in 1QFY21. Recurring net profit growth (%) 0.7 (24.1) (40.8)
0.05 0.04 0.03
Balance sheet/cash flow. FY21 gearing improved to 0.26x from 0.28x Recurring EPS (MYR)
0.02 0.02 0.01
as of FY20 and 0.42x in FY19. FY21 net tangible asset stands at DPS (MYR)
MYR675m, which translates into a NTA per share of MYR0.90. 10.6 14.0 17.6
Recurring P/E (x)
ROE. The group’s ROE has fallen in recent years due to lower margins Return on average equity (%) 8.3 5.8 4.1
and asset turnovers, the adverse effects of COVID-19, and a larger cost P/B (x) 0.7 0.6 0.6
(15.0) 2.9 4.1
base that stemmed from its expansion. Moving forward, we forecast P/CF (x)
FY23 ROE to improve to 7.4% from 4.1% in FY21, supported by higher Source: Company data, RHB
revenue and improvements in EBIT margins.
Balance Sheet (MYRm) Feb-19 Feb-20 Feb-21
Dividend. While Pantech has no official dividend policy, the group had 603 555 553
paid 30-40% of earnings as dividends over the last few years. Assuming Total assets 892 909 903
the payout ratio remains at c.40% for the next few years, this translates Total current liabilities 252 176 163
to an admirable net yield of 5% for FY22F-23F. Total non-current liabilities 54 74 66

Management. The group is led by an experienced management team 586 659 675
Shareholder's equity
comprising Chairman & Group MD Dato’ Chew Ting Leng and Deputy 0 0 0
Minority interest
MD Dato’ Goh Teoh Kean. They are the co-founders have more than 30 Other equity 0 0 0
years of experience in the PVF solutions industries. Together with Total liabilities & equity 892 909 903
Executive Director Adrian Tan, who is also the MD of multiple Total debt 244 192 176
subsidiaries – eg Pantech Steel Industries, Pantech Stainless & Alloy Net debt 179 97 39
Industries, and Nautic Steels – the trio are collectively formidable driving Source: Company data, RHB
force behind the group’s success.
Cash Flow (MYRm) Feb-19 Feb-20 Feb-21
Cash flow from operations (26) 136 97
Investment Case Cash flow from investing activities (33) (13) (14)
Cash flow from financing activities 39 (84) (36)

Solid foundation and attractive growth potential. We think Pantech Cash at beginning of period 68 49 86
can trade at 10-12x (between mean and +1SD of its 5-year mean) to Net change in cash (21) 40 49
FY23F P/E. We believe our target multiple is justified by the stock’s Ending balance cash 49 86 135
strong prospective earnings recovery, backed by the increase in Source: Company data, RHB
upstream oil & gas activities. Note: Almost 60-70% of Pantech’s
earnings come from this sector, and its oil & gas customers are global
majors such as Petronas, Royal Dutch Shell, and BP. As such, we
value the stock at a FV range of MYR0.66-0.80, which we think
provides cheap exposure to the oil & gas play.
Key risks: Low utilisation of its manufacturing plant, slower-than-
expected contract flows, and weaker-than-expected margins.
28
Perak Transit Price: MYR0.755
On The Path To a Higher Earnings Base
Perak Transit (PERAK MK) Investment Merits

Price Close
0.95
 Higher earnings base through full commencement of KPS
0.90
0.85  More terminals via construction of Bidor and Tronoh terminals
0.80
0.75  Terminal management services to be the next focus in FY21
0.70
0.65
0.60
0.50
0.45
Perak Transit is involved in the operations of integrated public
Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
transportation terminals (IPTTs), – Terminal Meru Raya (TMR) and

Source: Bloomberg Kampar Putra Sentral (KPS) – and provides stage and express bus
services, as well as petrol station operations. The IPTT wing contributed
Stock Profile 60% of FY20 revenue, followed by bus services (21%) and petrol
Bloomberg Ticker PERAK MK stations (19%). As the group operates in a highly regulated and asset-
Avg Turnover (MYR/USD) 2.69m/0.66m heavy industry, these are high entry barriers for newcomers.
Market Cap (MYRm) 479m Highlights
Beta (x) 1.0
Full commencement of KPS. KPS was granted a full Certificate of
BVPS (MYR) 0.30
Completion & Compliance on 7 Aug 2020. Its secured and interested
52-wk Price low/high (MYR) 0.505 - 0.981 occupancy rate is c.50%, which is anticipated to rack up annual
Free float (%) 62 revenues and profit after taxes of MYR16-17m and MYR9-10m. The
take-up rate is expected to grow to 70% in FY21, which should help
build a stronger footing for KPS as a one-stop convenience public bus
terminal. We believe KPS’ full commencement, rental from leasing of
advertising & promotional (A&P) spaces, and progressive recovery in
Dato’ Sri Cheong Kong Fitt 13.7
domestic travel should lift the IPTT unit’s revenue and earnings to a
CBS Link Sdn Bhd 11.0 higher base ahead.
Datin Sri Lim Sow Keng 5.8
Recurring earnings from IPTT, with increasing focus on digital
A&P content. The commencement of rental collections from leasing of
A&P spaces at KPS from Sep 2020 onwards is expected to contribute
Share Performance (%) to a higher recurring earnings base. This is because the A&P rental
1m 3m 6m 12m shares the same A&P vendor that has been managing for TMR prior to
Absolute (4.4) (6.8) 2.7 37.3 Perak Transit’s listing. Unlike MCO 1.0, the rental of A&P spaces for
Relative (3.8) (9.0) (4.4) 21.3 both TMR and KPS were secured for early renewals in 2021. The group
is also looking to increase digital A&P content with potentially higher
margins, which could expand its customer outreach via digital channels.
Lim Jia Yi +603 9280 8873 Expanding the Bidor and Tronoh terminals. The construction of
lim.jia.yi@rhbgroup.com
Bidor Sentral is expected to start in 2H21 and is slated for completion in
in two years’ time. Its construction cost is estimated at MYR115m, with
an expected payback period of more than eight years. While smaller
than KPS, it is expected to serve students, factory workers, and local
residents in its vicinity. Meanwhile, the construction of the Tronoh
terminal should take place after Bidor Sentral. The land size of these
two terminals is at c.5.8x of KPS’, and they could be the next earnings
drivers in the mid-to-long term.
29
Terminal management services (TMS) to be the next focus in FY21.
On 14 Jan, Perak Transit ventured into first TMS with Energetic Point to 36 40 42
manage Terminal Sentral Kuantan – an important IPTT and hub that Recurring net profit (MYRm) 30 37 42
serves the east coast of West Malaysia. Subsequently, it announced the Recurring net profit growth (%) 5.7 22.5 14.0
collaboration with NSS IT Solution on 23 Feb to operate Terminal Bas Recurring EPS (MYR) 0.02 0.03 0.03
Shahab Perdana – the IPTT for Alor Setar, Kedah – to serve the DPS (MYR) 0.01 0.01 0.01
northern region. Collectively, we estimate this segment to contribute Dividend Yield (%) 1.2 1.3 1.3
MYR1.2-2.4m for FY21-22 revenue. In view of demand to upgrade Recurring P/E (x) 11.2 9.1 9.9
11.9 13.0 10.5
terminals, we anticipate this helping to cover a new customer base, as Return on average equity (%)
1.2 3.2 2.6
well as providing a recurring revenue stream as these terminals P/B (x)
P/CF (x) 17.1 6.5 9.9
eventually grow.
Company Report Card Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20

76 108 73
Latest results. In FY20, Perak Transit’s revenue was 4.1% YoY lower, Total current assets
as it was mainly impacted by the MCO, which dragged contributions 64 34 54
Total current liabilities
from bus (-24% YoY) and petrol station (-34.7% YoY) operations. That Total non-current liabilities 171 294 206
said, PAT improved 5.2% YoY on higher contributions from the IPTT Total liabilities 235 328 260
operations. On a QoQ basis, 4Q20 PAT rose 10.3% despite flattish Shareholder's equity 282 331 469
revenue, mainly attributable to rental from the leasing of A&P spaces at Minority interest 1 2 0
KPS, which commenced in Sep 2020. Other equity 0 0 0

Balance sheet. Perak Transit’s net gearing was reduced to 0.43x in Total debt 207 301 226
4Q20 vs 4Q19’s 0.68x. This was mainly due to a partial repayment of Net debt 183 226 204
sukuk via cash received from conversion of warrants.
ROAE. Its ROAE stood at 10.5% in FY20 – lower than FY19’s 13%.
Moving forward, we expect a FY20-22 earnings CAGR of 11%. Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
Dividend. The group has been paying c.35% of PAT in dividends since Cash flow from investing activities (81) (77) (119)
FY18 – higher than its dividend policy of up to 25% of PAT. Assuming a Cash flow from financing activities 50 70 8
similar payout, we expect a FY21-22 DPS of MYR0.03, or c.4% yield. Cash at beginning of period 13 10 66
Net change in cash (3) 56 (54)

Management. Dato’ Sri Cheong Kong Fitt is the founder and Managing Ending balance cash 10 66 12
Director. Under his management, Perak Transit was listed and TMR
was built. Dato’ Sri Cheong is responsible for the day-to-day
management, planning, and implementation of strategic business plans.
His brother, Executive Director Dato’ Cheong Peak Sooi, is responsible
for the supervision and monitoring of the construction and subsequent
day-to-day operations of TMR. Jennifer Chin Yi Teng is Chief Financial
Officer. She is responsible for the group’s finance, accounting, and
reporting functions.
Investment Case
Fair value. Our DCF-derived fair value range of MYR1.13-1.22 implies
14-15x FY22F P/E. We think our valuation is justifiable, premised on the
full commencement of KPS, growing focus on digital A&P content, new
terminals, and its venture into terminal management services. As the
sole listed bus terminal operator with a FY20-22F earnings CAGR of
11%, our valuation is undemanding vis-à-vis its logistics and
transportation peers’ 19x.
Key risks. Non-renewal or revocation of vehicle and bus route permits,
loss of income from project facilitation fees, and concentration risk on
A&P customers.
30
Solution Group Price: MYR1.15
Charting New Frontiers Via Diversification
Solution Group (SOLE MK)

Price Close
Investment Merits
1.85  Expect earnings turnaround in FY21 from diversification initiatives
1.65
1.45
1.25
 Exclusive 10 years partnership with CanSino for a regional supply of
1.05 COVID-19 vaccines
0.85
0.65  Attractive valuation of 8.4x FY22F P/E, amid strong earnings
0.45
0.25 expansion potential
0.05
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
Company Profile
Source: Bloomberg Established back in 1988, Solution Group began by designing and
developing teaching equipment for engineering education, as well as
Stock Profile providing industrial automation solutions. While focused initially on its
Bloomberg Ticker SOLE MK domestic clientele, the group’s market presence has now expanded
Avg Turnover (MYR/USD) 23.63m/5.78m globally. Additionally, its core business also encompasses provision of
Net Gearing (%) Net Cash industrial automation, water works specialisation, and fabrication for
pressurised vessels and storage tanks. Most recently, Solution made
new ventures into the pharmaceutical – via a partnership with CanSino
Beta (x) 0.8
Biologics (CanSino) – and solar industries after securing several major
BVPS (MYR) 0.19 engineering, procurement, construction & commissioning (EPCC)
52-wk Price low/high (MYR) 0.07 – 2.00 projects this year. These diversification initiatives are expected to lift the
Free float (%) 65 group from its rather lacklustre performances of the past few years.

Highlights
Lim Yong Hew 21.1 Appointed ASEAN regional partner. Solution has a 10-year exclusive
Leonard Lim Peng Kua 2.5 license from CanSino to undertake fill & finish manufacturing and
distribution processes of the latter’s single-dose COVID-19 vaccine.
Lim Hai Guan 1.6
Contingent on the National Pharmaceutical Regulatory Agency’s
approval, the group has signed an agreement with the Government to
supply 3.5m doses of this vaccine, covering 11% of the population. The
Share Performance (%) Government has also expressed its interest in procuring more doses,
1m 3m 6m 12m given the vaccine’s convenience for rural usage, appeal for foreign
Absolute (10.2) (11.5) 82.5 1433.3 migrants, and scarcity of single-dose formulated vaccines. Additionally,
Relative (9.6) (13.8) 75.4 1417.3 Solution is also looking to supply the vaccine to regional markets by
partnering with local pharmaceutical companies, namely in the
Philippines, Thailand, Vietnam, Myanmar, and Brunei.
Alan Lim, CFA +603 9280 8890 Vaccine contributions likely to stay. Given that COVID-19 is likely to
alan.lim@rhbgroup.com
be endemic, a combination of acquired immunity and recurring booster
shots will be needed to maintain an adequate level of resistance against
this virus. Hence, additional government or private sector contracts may
present themselves over the next few years. We believe CanSino’s
COVID-19 vaccine is preferred due to its single-dose regimen, safety
profile, and completion of clinical trials for those aged 6-18. Moreover,
Solution may stand to benefit from additional projects for other vaccines
in CanSino’s pipeline, eg a meningococcal vaccine set to launch this
year.
31
Solar contributions to kick in. Solution has been building its
capabilities in this space for the past two years. As of 1Q21, the group’s 13 19 18
EPCC orderbook stands at MYR20m – mainly commercial-/industrial- Reported net profit (MYRm) (3) (1) (1)
sized projects – and it targets to clinch MYR30-40m in contract values Recurring net profit (MYRm) (2) (0) (0)
this year. We believe Solution’s long-term prospects in this space will be Recurring net profit growth (%) (214.3) 92.1 (135.0)
supported by the rise in solar photovoltaic installation and various Recurring EPS (sen) (0.80) (0.06) (0.12)
government incentive programmes, and supplemented by its continuing DPS (MYR) 0.00 0.00 0.00
partnership with Risen Energy and LONGi Solar. Dividend Yield (%) 0.0 0.0 0.0
Recurring P/E (x) n.m n.m n.m
Return on average equity (%) (6.1) (0.5) (0.8)
Company Report Card P/B (x) 9.1

67.3
9.4
n.m
5.9
n.m
P/CF (x)
Latest results. In FY20, Solution recorded a core loss of MYR0.5m. Source: Company data, RHB
The weak performance was attributed to the progress billing slowdown
during the imposition of MCO 1.0, as evident from its 4% decline YoY in Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
revenue. However, we expect FY21-22 earnings to stage a strong Total current assets 34 34 69
rebound to MYR59.1m-73.0m. Total assets 50 49 83
4 4 5
Balance sheet. Solution’s balance sheet is sturdy, with a net cash of Total current liabilities
6 7 6
Total non-current liabilities
MYR43m as of end FY20, although this was attributed to the group’s Total liabilities 10 11 11
recent private placement to build its fill & finish plant. Post adjustment Shareholder's equity 39 38 71
for its utilisation, Solution remains at MYR15m net cash. Minority interest 1 1 1
Other equity 0 0 0
Dividend. The group is adopting a dividend payout policy of not less
than 0.5 sen, contingent upon a yearly PAT of not less than MYR4.8m. 7 7 7
Total debt
In light of the imminent profit contributions from its vaccine venture, we Net debt (15) (12) (43)
believe shareholders will be proportionally rewarded.
Management. Solution is helmed by Managing Director Lim Yong Hew
and Deputy Managing Director Dato’ Dr Mohd Nazlee Kamal. The Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
former has extensive business experience and is the group’s main Cash flow from operations 5 (3) (4)
driving force. The latter has over 30 years of diverse industry Cash flow from investing activities (7) 2 (29)
3 0 35
background in strategy, biotechnology, and life sciences. Cash flow from financing activities
Net change in cash 1 (0) 2

Investment Case Source: Company data, RHB
Prospects for a turnaround. We believe FY21 will mark the reversal of
Solution’s prospects from its nadir. The group’s core business was
facing headwinds in the form of dampened demand. Nonetheless, it has
made in-roads in its diversification efforts, as exemplified by its current
solar segment’s orderbook and latest agreement with the Health
Ministry with regards to COVID-19 vaccine supply. The urgency to end
the pandemic has led to a willingness from governments around the
world to loosen the purse strings to procure vaccine supplies. We
believe Solution’s fill & finish facility at Technology Park Malaysia
stands to benefit from regional demand, as many neighbouring
countries have yet to secure enough supplies to vaccinate their
populations. On a longer-term horizon, this new facility will serve as a
regional supply hub, riding on the increasing need for biologics and
contract manufacturing operations.
Fair value. Based on an ascribed P/E range of 11-13x on FY22
earnings, we derive a fair value range of MYR1.50-1.77 after accounting
for Solution’s fully diluted share base. Our ascribed valuation is in line
with the average of FBMSC’s P/E of 12x for FY22.
Key risks. The following factors could yield downside risks: i) unable to
obtain necessary approvals for vaccine registration, ii) failure in
securing regional contracts, and iii) unexpected adverse effects arising
from CanSino’s vaccine.
32
Spritzer Price: MYR2.21
Cash Flows Like Water
Spritzer (SPZ MK)

Price Close
Investment Merits
2.25  Pioneer and industry leader in Malaysia’s bottled water industry;
2.15
 FY21F earnings expected to exceed pre-COVID-19 level;
 Undervalued company trading at FY21 P/E of 13.8x (-0.6 SD of its 5-
2.05
1.95
year mean and 35% below peers average).
1.85

Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
Established 32 years ago, Spritzer is the pioneer and industry leader in

Malaysia’s bottled water industry. The company is the largest
Source: Bloomberg mineral/drinking water producer, with 40% estimated market share.
92% of its revenue is derived locally, while exports comprise the
Stock Profile remaining 8%. Spritzer has a production capacity of 800m litres of
Bloomberg Ticker SPZ MK bottled water pa, with three bottled water plants in Taiping, Yong Peng
and Shah Alam.
Net Gearing (%) Net Cash Highlights
Consistent profitability track record since listing. Spritzer has been
Beta (x) 0.6
profitable for 21 consecutive years since its listing in 2000. Historically,
BVPS (MYR) 2.11
earnings have expanded at a 20-year CAGR of 7.3% to reach
52-wk Price low/high (MYR) 1.76 - 2.25 MYR24.2m in FY18. In addition, it has been paying dividends every
Free float (%) 24 year since its IPO. We believe the stable earnings growth trajectory is
supported by steady demand for mineral/drinking water, and its good
product quality.
Major Shareholders (%) FY21F earnings to exceed pre-COVID-19 levels. We expect the
Yee Lee Corporation 30.8 company to register a 16% core earnings growth in FY21 to MYR34m
Tasik Puncak 13.0
on FY20’s low base effect. We gather that sales volumes were affected
during MCO, as consumers bought less mineral water, due to reduced
Yee Lee Holdings Sdn 10.9
outdoor activities. As the vaccination effect becomes prevalent in 2021,
we expect earnings to improve and exceed FY19’s MYR33m core
earnings.
FY21 focus is to boost utilisation rate. Spritzer aims to focus on its
1m 3m 6m 12m
core brands and further automate its production lines. It is also
Absolute 10.5 19.5 18.2 12.2 exploring sustainable packaging alternatives for its bottled water
Relative 11.1 17.2 11.1 (3.9) products. Overall, we expect the company to improve its utilisation rate
to 70-75% in FY21 from 65% in FY20.
Net cash exceeding MYR100m. As at 31 Dec 2020, Spritzer has cash
Alan Lim, CFA +603 9280 8890 equivalents of MYR105.1m, with total debts of MYR4.4m. Overall, the
alan.lim@rhbgroup.com company’s balance sheet is strong, with net cash of MYR100.7m.
Strong track record of dividend payment; Shariah-compliant. While
Spritzer does not have a dividend policy, it has consistently paid
dividends every year since its IPO. In the past three years, its dividend
payout ratio ranged from 28-33%. It is also a Shariah-compliant
company.
33
Company Report Card Profit & Loss Dec-18 Dec-19 Dec-20
Latest results. FY20 core earnings declined 12% YoY to MYR29.1m, 24 31 36
in line with lower revenue. We gather that sales volumes and ASP were 26 33 29
Recurring net profit (MYRm)
affected in FY20. For 4QFY20, the company’s PBT dropped 16% YoY Recurring net profit growth (%) 2.6 26.9 (12.4)
to MYR34.6m due to the same reasons. In our core earnings estimates, Recurring EPS (MYR) 0.12 0.16 0.14
we have excluded the recognition of deferred tax assets due to the DPS (MYR) 0.04 0.05 0.05
Special Reinvestment Allowance or SRA, under the National Economic Dividend Yield (%) 1.6 2.1 2.0
Revival Plan or PENJANA, and multiple write offs. Recurring P/E (x) 17.8 14.0 16.0

Balance sheet. As at end-FY20, Spritzer was in a net cash position. P/B (x) 1.2 1.1 1.0
We expect the company to stay in a net cash position for FY21-23F. P/CF (x) 13.5 14.3 6.6
ROE. The company’s ROE improved from 6.2% in FY18 to 8% in FY20. Source: Company data, RHB
This was on better margins from increased operational efficiency.
Dividend. The company paid 28-33% of its earnings from FY18-20. Our 227 190 191
FY21F-23F DPS of 5-7sen is based on a payout ratio assumption of Total assets 476 499 517
30%, which is within the historical 3-year range. This translates into Total current liabilities 63 60 55
yields of 2.4-3.6%. Total non-current liabilities 24 23 18
87 84 73
Management. The company’s managing director is Dato’ Lim Kok Total liabilities
389 415 444
Shareholder's equity
Boon. He has been involved in the sales and distribution of biscuits, 0 0 0
Minority interest
confectionery and bottled drinks since 1979. His brother Dato’ Lim Kok Other equity 0 0 0
Cheong and sister-in-law Datin Chua Siok Hoon are major shareholders Total liabilities & equity 476 499 517
of the company. His sons Lim Seng Lee and Lim Hock Lai are the group Total debt 9 6 4
CEO and sales & operations director respectively. Net debt (102) (65) (102)
Investment Case
We believe Spritzer is an overlooked recovery play. The company Cash flow from operations 34 33 71
should benefit from the expected economic recovery in 2H21 as the Cash flow from investing activities (17) (23) (53)
effect of vaccines becomes prevalent. We expect more outdoor Cash flow from financing activities (16) (11) (12)
activities in 2H21. Another catalyst is the opening of borders (possibly in Cash at beginning of period 17 18 17
2H21 or 2022), which will result in a surge of tourists. Both these factors Net change in cash 1 (2) 6
18 17 23
bode well for mineral water consumption. We think the company could Ending balance cash
trade at a P/E of 15.5x (its 5-year mean) to FY21F-22F P/E. We believe Source: Company data, RHB
the stock is worth MYR2.50-MYR2.75.
34
Star Media Group Price: MYR0.39
50 Years And Counting
Star Media Group (STAR MK)

Price Close
Investment Merits
 The leading English newspaper publisher with a dominant share of
0.50
0.45
English newspaper advertising expenditure (adex) and circulation
 The first media group to introduce an online edition
0.40
0.35
 Strong debt-free balance sheet with share price below cash per share
0.30
of 48 sen
0.25
 Losses are expected to narrow going forward, from cost cuts and the
Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
restructuring of its businesses
Source: Bloomberg
Company Profile
Stock Profile
Star Media Group (SMG) publishes Malaysia’s leading English
Bloomberg Ticker STAR MK
newspaper, The Star, with a long history that dates back to 1961. ‘The
Avg Turnover (MYR/USD) 1.58m/0.38m People’s Paper’, as it is fondly known, had its humble beginnings in
Net Gearing (%) Net Cash Penang. Previously known as Star Publications, SMG was the country’s
Market Cap (MYRm) 283m first print media group to introduce an online version of its print edition
Beta (x) 1.2 (www.thestar.com.my) in 1995. Today, the website remains the
BVPS (MYR) 1.05
country’s leading source of round-the-clock local and international
news, with the largest number of online page hits and views. The
Malaysian Chinese Association or MCA is SMG’s largest shareholder
Free float (%) 35 with a 43% stake.
Major Shareholders (%) Highlights

Malaysian Chinese Association 43.0 A household name that has stood the test of time. SMG has evolved
Amanah Saham Bumiputra 9.6 from a single-product company into a multi-channel media group, with
Tan Sri Chua Ma Yu 3.4 businesses in print and digital, radio broadcasting, subscription video on
demand (SVOD), and event management. Some of its key brands and
intellectual properties include R.AGE, dimsum, iBilik.com, Kuali,
Kuntum, 988 and Suria. The group’s English newspaper, The Star has
been delivering news for over five decades, and remains the country’s
1m 3m 6m 12m most widely read English daily. The Star Online (launched in Jun 1995)
Absolute (6.0) 18.2 25.8 0.0 has transformed from a replica of the print edition to a thriving digital
Relative (5.4) 15.9 18.7 (16.0) platform, and is Malaysia’s No. 1 news portal based on unique visitors.
Revenue from print and digital make up the lion’s share of group
revenue, at >90% in FY20, with the remainder from event services.
Jeffrey Tan +603 9280 8863 Digital transformation. Like its media contemporaries, SMG has not
jeffrey.tan@rhbgroup.com been spared the digital onslaught. While the group has embarked on a
series of transformation initiatives in recent years, the track record has
been patchy. SMG’s streaming SVOD service, dimsum, which caters to
the Chinese-speaking segment, is mired in heavy losses, more than
four years after it was launched– reflecting the stiff competition in the
over-the-top (OTT) segment. To better monetise its online platform and
digital offerings, the group unveiled a paywall in Mar 2020, coinciding
with the onset of the COVID-19 pandemic. More recently, management
announced that it will shut-down the OTT business by end- Sept, a
35
move viewed positively by the market. The expectations are for the new
leadership (led by Alex Yeow Wai Siaw) to re-position SMG on a 393 316 196
stronger recovery path. Yeow is the first CEO of the group with no prior Reported net profit (MYRm) 5 6 (20)
media industry experience, but has led many successful transformation Recurring net profit (MYRm) 19 9 (58)
initiatives in the past, and could be SMG’s antidote to reverse its Recurring net profit growth (%) 0.0 (53.4) nm
sagging fortunes. According to media reports, SMG would look to form Recurring EPS (MYR) 0.03 0.01 (0.08)
partnerships with property developers on the development of real estate DPS (MYR) 0.03 0.02 0.00
projects and to unlock the value of its land and building assets through Dividend Yield (%) 7.7 5.1 0.0
15.2 32.7 nm
tenancy, including listing them on Airbnb. Recurring P/E (x)
Return on average equity (%) 0.6 0.7 (2.5)
Painful but necessary cost cuts. SMG undertook a series of P/B (x) 0.3 0.4 0.4
headcount reductions over the past four years, the latest being in 4Q20 P/CF (x) (11.4) 2.9 (31.9)
when it laid off about 100 staff. The cost cuts were inevitable to further Source: Company data, RHB
align the group/business with the new revenue models pursued in light
of the protracted topline pressure. For FY20, group opex (inclusive of Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
severance costs but excluding impairment charges) narrowed 11% Total current assets 435 481 477
YoY. The full impact from staff cost savings will likely be felt in Total assets 947 974 928
FY21/22F, and should see group losses mitigated. Total current liabilities 86 112 109

Company Report Card Shareholder's equity 830 817 778
2 2 2
Latest results. SMG posted a headline loss of MYR19.8m in FY20 Minority interest
Other equity 0 0 0
(FY19: MYR5.7m PAT) on the back of a sharp 38% YoY revenue
decline, as adex sales were severely impacted by lockdowns and the 0 0 0
Total debt
economic slowdown. 4Q20 core LAT (excluding asset impairment and Net debt (300) (386) (353)
FX losses) narrowed QoQ to MYR3.8m vs a MYR23m loss in 3Q20.
Balance sheet/cashflow. The group has a sound balance sheet with
zero debt and a cash balance of >MYR300m (4Q20), which translates Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
into 48sen/share. This offers good headroom for potential M&As when Cash flow from operations (25) 100 (9)
the opportunity arises. The strong financial standing should also allow Cash flow from investing activities (7) 29 (0)
the company to weather the industry’s structural changes. Cash flow from financing activities (149) (26) (23)

ROE. SMG’s ROE has been on a decline due to the weak industry Net change in cash (181) 103 (33)
fundamentals (shift to online media consumption), further exacerbated Ending balance cash 282 385 353
by the pandemic. We expect ROEs to remain under pressure going Source: Company data, RHB
forward, albeit with some restraint from cost-cutting measures and the
ongoing restructuring of various business units.
Dividend. SMG’s DPS has trended down from 3 sen in FY18 to 2 sen
in FY19, with no dividend declared for FY20 as it fell into the red. We
expect nominal DPS to be paid out going forward (upon the return to
profitability), supported by its strong cash hoard, and taking into
account potentially opportunistic M&A activities.
Management. The company appointed Yeow as the new Group CEO
(GCEO) on 1 Mar. The leadership position was left vacant after the
resignation of Andreas Vogiatzakis (SMG’s first expatriate CEO) in
May 2020 after serving less than a year. Yeow was previously the
GCEO of Tropicana Corporation, and has held senior management
positions in Malayan Cement, Hong Leong Group, and Hap Seng
Consolidated. More recently, the Board also appointed Tan Sri Chor
Chee Heung as the new Group Chairman, replacing Dato’ Fu Ah Kiow
who tendered his resignation.
Investment Case
SMG’s cash per share of 48 sen is higher than the equity value/market
capitalisation of the stock. Based on a target P/BV of 0.6x (-1SD of
historical mean) on FY22F BVPS, the stock is worth MYR0.55-0.62.
36
Tek Seng Holdings Price: MYR0.635
Opportunities In Uncertain Times
Tek Seng (TEKS MK)

Price Close
Investment Merits
1.40
 Increasing growth in PVC demand
1.20
1.00
 Timely capacity expansion to ride on growing demand for non-woven
0.80
products
0.60  Opportunity to capture new markets with changes in demographic
0.40
and consumer demand
0.20
Nov-20
Jul-20
May-20
Jan-21
Mar-21
Sep-20
Company Profile
Source: Bloomberg Tek Seng is involved in the manufacturing and trading of polyvinyl
chloride (PVC) sheeting, polypropylene (PP) non-woven and cast PP. It
Stock Profile exports to over 50 countries (c.53% of FY19 sales). PVC products can
Bloomberg Ticker TEKS MK be applied across various segments – eg households, medical,
Avg Turnover (MYR/USD) 0.78m/0.19m stationery, automotive, and bedding & mattresses – while PP non-
Net Gearing (%) Net Cash woven products can be used in producing personal protective
equipment (PPE), such as face masks, shoe and head covers, and
gowns.
Beta (x) 1.5
BVPS (MYR) 0.60
52-wk Price low/high (MYR) 0.235 - 1.44 Highlights
Free float (%) 45
Growing PVC demand. The US-China trade war and COVID-19 have
resulted in the increasing need for household products, and office and
home furniture. This causes PVC products demand to surge. We gather
Major Shareholders (%) that, as of early April, Tek Seng’s PVC orders are fully booked till at
Loh Kok Beng 20.6 least end June – in line with the robust demand from the furniture
Loh Kok Cheng 20.5 sector, schools reopening, and a recovery across various sectors.
Historically, the group is affected by seasonality, whereby the second
Soon Seok Choo 3.6
and fourth quarters of a financial year tend to be the better-performing
ones. This is as orders for PVC-related products tend to be higher in
preparation for festive seasons and re-opening of schools.
Timely capacity expansion. Effective mid-Nov 2020, total monthly
1m 3m 6m 12m
capacity for non-woven products has increased to 820 tonnes with the
Absolute 13.4 (9.9) (22.6) 159.2 commissioning of a third production line. Notably, all three lines are
Relative 14.0 (12.2) (29.7) 143.1 currently running at full capacity and likely to remain busy, given Tek
Seng’s PP non-woven orders on hand, which are filled up to end May.
We estimate PP non-woven segment’s FY21 revenue at MYR118m, as
Lim Jia Yi +603 9280 8873 we believe demand for PPEs will remain elevated while the market
lim.jia.yi@rhbgroup.com
heads towards normalisation following the expectation of having
vaccines widely available from 2H21 onwards.
Opportunity in a new market with changes in demographic and
consumer behaviour. Beyond FY21, assuming PPE demand is not as
robust vs FY20, we gather that the existing PP non-woven capacity can
also be used to produce other types of hygienic products, eg baby and
adult diapers. Based on research by ResearchAndMarkets.com, the
global adult diapers market is expected to grow at a CAGR of 12.6%
during the 2019-2027 forecast period, with Asia-Pacific holding the
37
largest share of the global adult diaper market. Given the aging
population and better health awareness in this region, demand for adult 184 173 191
diapers is also expected to grow. Reported net profit (MYRm) (49) (16) 27
Recurring net profit (MYRm) (49) (16) 27
Recurring net profit growth (%) (22.7) 66.9 268.7

Company Report Card Recurring EPS (MYR) (0.14) (0.05) 0.08
DPS (MYR) 0.00 0.00 0.00

Latest results. FY20 revenue grew 10.7% YoY, mainly from higher 0.0 0.0 0.0
Dividend Yield (%)
topline contributions from the PVC segment. This was attributed to the Recurring P/E (x) n.m. n.m. 8.3
increase in demand for PP non-woven products to be used for PPEs Return on average equity (%) (21.3) (8.3) 13.6
and the furniture industry, higher demand for PVC products for P/B (x) 1.1 1.2 1.1
household and furniture use, and elevated ASPs – mainly from PP non- P/CF (x) (2.6) 28.3 7.5
woven products. Consequently, FY20 earnings returned to the black Source: Company data, RHB
with PAT of MYR27.4m. QoQ wise, there was slight decrease in 4Q20
revenue by 1.6%, mainly from the PVC segment. This was largely Balance Sheet (MYRm) Dec-18 Dec-19 Dec-20
affected by the unprecedented increase in shipping prices and shortage Total current assets 70 94 125
of containers, which led to slight delay in deliveries to export clients. Total assets 309 280 308
That said, 4Q20’s earnings inched up 0.8%, which we believe was due Total current liabilities 26 25 27
to a lower effective tax rate. Total non-current liabilities 5 25 25
Balance sheet/cash flow. The group has been in a net cash position Shareholder's equity 204 187 215
since FY17, with an increasing cash pile over the years. Its FY20 net Minority interest 74 44 41
cash per share was 12 sen vs 4.5 sen in FY19. Other equity 0 0 0
309 280 308
ROAE. Tek Seng’s ROAE surged to 13.6% in FY20, as its business Total liabilities & equity
0 20 20
Total debt
turned around and achieved earnings improvements. We expect this to Net debt (4) (16) (43)
grow progressively on anticipated better performance ahead.
Dividend. There were no dividends declared in FY18-20. Given that it
has achieved four consecutive profitable quarters with a positive outlook Cash Flow (MYRm) Dec-18 Dec-19 Dec-20
ahead, we expect the group to resume its dividend payment in FY21-22 Cash flow from operations (0) 22 34
yielding c.5%, based on a historical DPR of 30% of PAT. For FY21F, it Cash flow from investing activities (2) (9) (9)
(3) 20 2
has declared interim dividend of 1 sen so far. Cash flow from financing activities
Management. Executive Chairman Loh Kok Beng took over the Net change in cash (6) 32 27
managing of the business from the original founder in 1989. Managing Ending balance cash 4 36 63
Director Loh Kok Cheng is a co-founder with over 30 years in the PVC Source: Company data, RHB
industry. Kok Cheng is responsible in overseeing the overall operations
and management of the group. Both Lohs hold a combined 41.1% stake
in the group.
Investment Case
Fair value. Our estimated FV range of MYR1.06-1.16 is based on 11-
12x FY22F P/E, at 1-year forward +2SD and +2.5SD levels. With a 2-
year earnings CAGR of 13%, we think the valuation is undemanding vs
perceived COVID-19-related small-mid-cap peers’ 20x. In our view, the
capacity expansion is timely to meet growing demand for PP non-woven
products. Also, the potential diversification into new markets could
contribute to earnings growth. Given the wide application of PVC
products, the recovery in the global economy could bode well for Tek
Seng. Financially, it is backed by a sturdy balance sheet and net cash
position of 12 sen per share.
Key risks. Sharp fluctuation in raw material prices, slowdown in global
demand, and heightened competition.
38
Uzma Price: MYR0.69
Riding on Stronger Work Orders
Uzma (UZMA MK) Investment Merits

Price Close
0.85
 Experienced oil & gas service provider offering innovative and
multiple solutions;
0.75
 Earnings recovery backed by the resumption of work orders and
0.65
new contracts;

0.55
Medium-term prospects depend on diversification into renewable
0.45
energy (RE) and digitalisation.
0.35
Nov-20
May-20
Jul-20
Jan-21
Mar-21
Sep-20
Source: Bloomberg
Company Profile
Uzma, established in 2000, is an oil & gas service and equipment
Stock Profile company in South-East Asia. It offers various cost-effective integrated
Bloomberg Ticker UZMA MK solutions across the exploration, development and production phase
Avg Turnover (MYR/USD) 6.25m/1.53m within the oil & gas industry. In recent years, the company has started
to diversify away from non-oil & gas businesses, and moved into RE
(solar- and geothermal-related works), digitalisation, and aerospace
ventures.
Beta (x) 1.5
BVPS (MYR) 1.42 Highlights
Work orders to pick up. Revenue is expected to strengthen in
Free float (%) 40 2HFY21 (Jun), largely driven by the resumption of deferred jobs
including a portable water injection module project, plug &
abandonment works, and coil tubing. These jobs were put on hold,
Major Shareholders (%) mainly due to the sharp decline in oil prices amid the COVID-19
Tenggiri Tuan 34.5
pandemic outbreak in Mar 2020. The company’s revenue will also be
supported by recent new contracts awarded domestically and overseas.
Employees Provident Fund 4.9
Uzma aims to generate 30% of revenue from overseas projects, while
Urusharta Jamaah 4.7 strengthening recurring income to account for up to 60% of net profit
within the next five years.
Its orderbook was at a steady MYR1.38bn as of Dec 2020, providing
revenue visibility of 2-3 years. Additionally, Uzma has won over 40
1m 3m 6m 12m umbrella contracts for local jobs, which could generate more work
Absolute (5.5) 42.3 79.2 21.1 orders depending on client requirements. Despite downward revisions
Relative (4.9) 40.0 72.1 5.0 in the decommissioning outlook in the latest Petronas Activity Outlook
2021-2023, Uzma guided that tenders for well decommissioning remain
robust, and the pace is likely to be sustained – given the need to
proceed with decommissioning works by Petronas. Its tenderbook is
Sean Lim Ooi Leong +603 9280 8867
fairly healthy, at MYR1.78bn, of which c.75% are production solutions-
sean.lim@rhbgroup.com related. Uzma was recently invited by Petronas to explore potential
brownfield projects, and does not discount the possibility of pursuing
another one subsequent to the Tanjung Baram small field risk service
contract (SFRSC) termination.
Diversification into non-oil & gas businesses. Uzma has set a 5-
year target to grow its non-oil & gas revenue to account for 40% of total
revenue by 2025. To meet this, it has ventured into sustainable energy
and digitalisation.
39
Profit & Loss Jun-18 Jun-19 Jun-20
The teams in the Philippines and Indonesia have secured various 542 446 552
contracts for geothermal project works. In Malaysia, Uzma is one of the 26 23 (23)
shortlisted bidders for the large-scale solar programme, LSS4 P2 Recurring net profit (MYRm) 38 2 3
Package (50MW), and has also secured its first net energy metering Recurring net profit growth (%) (2.4) (94.9) 38.1
project. The recent acquisition of a 49% equity stake in Suria Infiniti and Recurring EPS (MYR) 0.12 0.01 0.01
100% equity interest in Mahendran Surya Innovations (MSI) will also DPS (MYR) 0.00 0.00 0.00
strengthen its engineering, procurement, construction and Dividend Yield (%) 0.0 0.0 0.0
commissioning capability in the RE space. Recurring P/E (x) 5.8 112.1 81.2

Net gearing has declined to 0.87x as of 2QFY21, from 0.94x as of P/B (x) 0.5 0.4 0.5
4QFY20 after settling debts related to the Tanjung Baram SFRSC. P/CF (x) 1.5 19.1 1.4
Uzma is setting a perpetual sukuk musharakah programme, which Source: Company data, RHB
could raise up to MYR300m for its future expansion.
Balance Sheet (MYRm) Jun-18 Jun-19 Jun-20
Company Report Card Total assets 1018

275
1239
255
1317
405
Total current liabilities
FY20 results review. Uzma’s FY20 revenue increased by 24% YoY to Total non-current liabilities 249 428 422
524 684 827
MYR552m, due to the execution of new contracts by the integrated well Total liabilities
474 502 457
solutions division, as well as on stable contributions from the water Shareholder's equity
injection facility project and its oilfield chemical businesses. Core
Other equity 0 0 0
earnings strengthened by 23% YoY to MYR2.7m, after stripping off a 1018 1239 1317
MYR22m PPE impairment and MYR3m in the additional amortisation of 385 528 575
Total debt
intangibles. For 1HFY21, revenue declined 32% YoY to MYR192m, due Net debt 325 464 431
to a deceleration in activities amid the COVID-19 pandemic. As such,
core earnings also declined 25% YoY to MYR12m.
Management. Uzma is helmed by its founder and managing director Cash Flow (MYRm) Jun-18 Jun-19 Jun-20
Dato Kamarul Redzuan Muhamed, and executive directors Dato’ Che Cash flow from operations 150 12 161
Nazahatuhisamudin Che Haron (who has over 20 years of experience Cash flow from investing activities (55) (75) (136)
(117) 83 16
in offshore engineering) and Ahmad Yunus Abdul Talib (who has more Cash flow from financing activities
than 25 years of experience in the oil & gas industry).
Net change in cash (22) 20 40

Investment Case
We like Uzma for being an experienced and innovative oil & gas service
provider that offers a range of services across the value chain. Overall
earnings recovery is likely to be backed by the resumption of deferred
activities, and the continuous expansion of its orderbook amid a
sustainable environment of higher oil prices – which may boost clients’
spending.
Based on an ascribed P/E range of 10-12x on 2022F earnings, we
derive a fair value range of MYR0.94-1.12. Our ascribed valuations are
at its 5-year mean and +1SD valuations.
Key risks: i) Weaker-than-expected work orders from clients; ii)

significantly lower-than-expected oil prices that could limit client
spending, and (iii) higher-than-expected operating costs.
40
RHB Guide to Investment Ratings securities or any other financial instruments referenced in this report. Holders
of depositary receipts backed by the securities discussed in this report
assume currency risk. Past performance is not a guide to future performance.
Buy: Share price may exceed 10% over the next 12 months
Income from investments may fluctuate. The price or value of the investments
Trading Buy: Share price may exceed 15% over the next 3 months,
to which this report relates, either directly or indirectly, may fall or rise against
however longer-term outlook remains uncertain
the interest of investors.
Neutral: Share price may fall within the range of +/- 10% over the next
12 months This report may contain comments, estimates, projections, forecasts and
Take Profit: Target price has been attained. Look to accumulate at lower expressions of opinion relating to macroeconomic research published by
levels
RHB economists of which should not be considered as investment
Sell: Share price may fall by more than 10% over the next 12
ratings/advice and/or a recommendation by such economists on any
months
securities discussed in this report.
Not Rated: Stock is not within regular research coverage
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Market Dateline / PP 19489/05/2019 (035080)

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related to the specific recommendations or views expressed in this report.

KUALA LUMPUR JAKARTA
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INVESTMENT BANKING

Top Malaysia Small Cap Companies

Market Dateline / PP19489/05/2019 (035080)

Alexander Chia, ACA alexander.chia@rhbgroup.com (603) 9280 8889

Hoe Lee Leng, CPA hoe.lee.leng@rhbgroup.com (603) 9280 8860

Alan Lim Seong Chun, CFA alan.lim@rhbgroup.com (603) 9280 8890

Eddy Do Wey Qing wey.qing.do@rhbgroup.com (603) 9280 8856

Jeffrey Tan Jing Keat jeffrey.tan@rhbgroup.com (603) 9280 8863

Lee Meng Horng lee.meng.horng@rhbgroup.com (603) 9280 8866

Lester Siew Wai Kit, CFA lester.siew@rhbgroup.com (603) 9280 2181

Liew Wai Hoong liew.wai.hoong@rhbgroup.com (603) 9280 8859

Lim Jia Yi lim.jia.yi@rhbgroup.com (603) 9280 8873

Loo Tungwye loo.tungwye@rhbgroup.com (603) 9280 8683

Loong Kok Wen, CFA loong.kok.wen@rhbgroup.com (603) 9280 8861

Muhammad Danial bin Abd Razak muhammad.danial.abd@rhbgroup.com (603) 9280 8682

Sean Lim Ooi Leong sean.lim@rhbgroup.com (603) 9280 8867

Soong Wei Siang soong.wei.siang@rhbgroup.com (603) 9280 8865

ES Ceramics Technology ...…...……………………………………………………….……………..………………….. 5

Hiap Teck Venture.……………………………………………………………………….…………………….................. 9

Malayan Flour Mills….....…………………………..……….……………………………………………………………... 23

Star Media Group…….…………………………………..………………………………………………………………… 35

Tek Seng Holdings…......………………………………………..………………………………………………………… 37

Industrial Products & Services

Oil & Gas

Lee Meng Horng Alexander Chia

Top Malaysia Small Cap Companies 2021

Top Malaysia Small Cap Companies 2021

Malayan Flour Mills GDB Holdings

Hiap Teck Venture InNature

GDB Holdings Tek Seng Holdings

Aemulus Holdings HPP Holdings

KESM Industries Perak Transit

InNature Carimin Petroleum

N2N Connect Spritzer

Perak Transit N2N Connect

Solution Group HSS Engineers

ES Ceramics Technology KKB Engineering

Pantech Group Holdings ES Ceramics Technology

KKB Engineering Pantech Group Holdings

HSS Engineers Uzma

Star Media Group Hiap Teck Venture

JAG Malayan Flour Mills

HPP Holdings KESM Industries

Tek Seng Holdings Solution Group

Uzma Star Media Group

Carimin Petroleum Aemulus Holdings

0 200 400 600 800 1,000 0% 5% 10% 15% 20% 25%

Source: Bloomberg, RHB Source: Bloomberg, RHB

Top Malaysia Small Cap Companies 2021

Hiap Teck Venture N2N Connect

ES Ceramics Technology KKB Engineering

JAG Pantech Group Holdings

Source: Bloomberg, RHB Source: Bloomberg, RHB

Top Malaysia Small Cap Companies 2021

Journey To The East

0.80  Synergistic benefits from the China venture

Aemulus Holdings is principally involved in the design and development

Company Report Card Recurring net profit (MYRm)

Carimin Petroleum (CARIP MK) Investment Merits

complete. Recurring P/E (x) (18.3) 5.8 10.3

Return on average equity (%) (6.5) 19.0 9.6

P/B (x) 1.2 1.0 1.0

P/CF (x) (22.3) 4.5 2.3