MayBank Bringing ASEAN ToYou

T H E D O O R TO
ASEANPROPERTY
Which countries offer the Should an investor buy What if the cost of
best potential to play real property equities or physical capital rises?
estate? assets?
THIS REPORT HAS BEEN PREPARED BY MAYBANK KIM ENG RESEARCH. SEE PAGE 137 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Co. Reg No: 198700034E MICA (P) : 099/03/2012 March 2018
This page is intentionally left blank
THE DOOR
TO ASEAN
PROPERTY
ASEAN’s current economic stage, marked by growth We think Vietnam has the most compelling On the flip side, e-commerce is already exacting a
Sadiq Currimbhoy with contained inflation, would ordinarily warrant investment proposition. Owning a better home toll on retailers, even though online sales are
Regional Head of bullishness on the property sector. But this doesn’t remains a core ASEAN aspiration. Listed developers nascent in ASEAN. Mall rentals are fast softening and
Research
necessarily apply to all countries. service only the top deciles of households in vacancy rates are rising.
Indonesia, the Philippines and Vietnam. This
In “The Door to ASEAN Property”, we evaluate suggests to us that upgrade demand is set to persist Finally, a key risk is the rise in the cost of capital.
property as a creator of wealth. Our property for some time. In Vietnam, Trung points to better From a debt-servicing and affordability perspective,
analysts assess the risks and returns of property- affordability but also, some price dispersion. As a the team estimates that a 100bp rise in interest
based assets and offer their best ideas. result, price anomalies can be capitalised on to rates may be absorbed. Romel estimates that every
enhance returns from physical assets or even the 100 bps rise in interest rates will increase
Broadly, property equities are preferred over stocks of small-medium sized listed developers. Philippine’s mortgage payments by 4.5-6%. Maria’s
physical assets. This is largely due to constraints in ASEAN’s diversity means it’s not all about a young calculations show more stress for Thailand; debt-
accessing the right physical-market segments, demographic. In Thailand, Maria considers the service ratio would increase to 33% for Bangkok and
restrictions imposed on foreign purchases and proposition of managed-care homes in an ageing 43% nationwide. However, cap rates are also at
transaction costs. Derrick demonstrates how buyers’ society, where IRRs can potentially exceed 13% historical lows for most property investment assets.
stamp duties have changed the economics in against the benchmark policy rate of 1.5%. Residential cap rates in Makati CBD are 5%. But the
Singapore to favour property equities over Philippine 10-year bond yield has risen from 4.6% in
ownership or the development of physical assets. Within commercial, industrial properties are September last year to over 6% currently. As we
The shift is rather momentous, since physical assets favoured by Indonesia, Malaysia and Singapore. enter a period of higher cost of capital and QE
are illiquid, have higher barriers to entry and should Demand is increasingly springing from a new source, unwinding, there is likely to be pressure on returns.
theoretically generate higher returns. Though namely technology-related investments. Su Tye While not forecast (see Appendix), a big risk would
returns from equities are more volatile, valuation highlights that this includes demand for data be a major global bond sell-off that drives up the
expansion should lift returns in the current cyclical centres - which are only in their infancy in cost of capital.
recovery. Singapore – and warehousing & logistics facilities to
support e-commerce.
March 2018
THE DOOR TO ASEAN PROPERTY 1

CONTENTS
1 FOREWORD 41 PHILIPPINES 79 THAILAND
42 INDIRECT ACCESS TO LOW END 80 EQUITIES THE SAFEST BET, WITH
HOUSING VIA EQUITIES PROMISING RETURNS
47 LOCATION, LOCATION, LOCATION – 85 MANAGED CARE: A GROWING
5 SINGAPORE 54
MANILA BAY
MIXED-USE PROPOSAL 89
AREA OF INTEREST
NEW TOURISM INITIATIVE IN THE
SOUTH
6 RISK-RETURN OF SINGAPORE
ASSETS
7 EQUITY OVER PHYSICAL
20 INDUSTRIAL REITS ARE
ALTERNATIVES TO LARGE SCALE
INVESTMENTS
27 DATA CENTRES AN EMERGING
32
INVESTMENT PROPOSITION
E-COMMERCE THREAT? 93 INDONESIA
94 LOW-END MASS HOUSING OPPORTUNITIES
102 RISING DEMAND FOR INDUSTRIAL LAND
104 SOFT CAP RATES FOR COMMERCIAL
59 VIETNAM
60 RESIDENTIAL VIA LISTED EQUITIES
70 RESIDENTIAL DEVELOPMENT IN DISTRICT 2
72 OFFICE DEVELOPMENT IN DISTRICT 2
2
109 MALAYSIA 127 APPENDIX
110 BUYERS’ MARKET? 127 PERFORMANCE & VALUATION TABLE
116 SILVER LINING, DIVERSIFICATION 129 ASEAN FORECAST TABLES
119 REITS AS AN ALTERNATIVE
3

SINGAPORE
Chua Su Tye (65) 6231 5842 chuasutye@maybank-ke.com.sg,
Derrick Heng (65) 6231 5843 derrickheng@maybank-ke.com.sg
EQUITIES OVER PHYSICAL

Positive on residential market. Low
prospective returns when investing in physical
THE DOOR TO
properties due to stamp duties and leverage ASEAN PROPERTY
limits. Switch from physical investments to
equities.
INDUSTRIAL REITS ARE ALTERNATIVES TO LARGE

SCALE INVESTMENTS
Invest in large-cap and liquid industrial REITs,
with strong track records, clear growth
attributes and substantial debt headroom to
support acquisitions. We like AREIT for its
quality, yields and growth prospects.
DATA CENTRES AN EMERGING INVESTMENT

PROPOSITION
Data centres are a compelling concept,
supported by strong demand and asset-
conversion opportunities. REITs can also be
proxies into this structural growth theme.
March 2018 5
RISK-RETURN OF SINGAPORE ASSETS
SINGAPORE
Investment ideas:
Comparing risk-return of property investments 1. Positive on residential market. Stamp duties and leverage
limits could shave 11ppt of returns when investing in physical
properties. Switch from physical investments to equities.
(5-year IRR, %)
15
2. Positive on industrial sector. Past peak supply with demand
tilted towards business parks & high-specs. BUY AREIT.
BS
3. Strong demand for data centres should support further

AREIT conversions. The Tai Seng cluster, with its valuation
10
disparities, offers selective opportunities. REITs are available
proxies.
100bp interest-rate hike will lower
AREIT’s returns to 4%
Cash, Industrial
Bonds property
5
Residential development
projects
TAKEAWAY
Completed
residential
BUY developer stocks and industrial REITs for
0 better returns than physical properties.
Opportunities in data-centre clusters.
0 5 10 15
(COE, %)
Source: Maybank Kim Eng estimates

POSITIVE ON SINGAPORE’S RESIDENTIAL MARKET
SINGAPORE
Singapore’s Property Clock Slowing

Economy, Singapore’s residential market is in a favourable quadrant with
Falling healthy demand-supply dynamics, a strengthening economy and
Interest rates still-low interest rates.
Rise Decline
We forecast low net supply for 2018-19E. With demand outpacing
slowing accelerating
Demand supply, we expect home prices and rents to rise.
> Supply Supply
> Demand While interest rates are rising, they remain fairly low vs history.
Home buyers are already stress-tested to a normalised rate of
Rise Decline SG (retail) 3.5%, under Singapore’s Total Debt Servicing Ratio framework.
accelerating slowing
We expect home prices to be resilient to a 100bp rate hike.
Strengthening
Economy,
Rising
Interest rates
SG (resi) ● SG (hotel)
SG (office) ● SG (industrial)
Demand & supply of private residential market

(000)
Net supply Net absorption
25
Low net supply
in 2018-19E
20
15
TAKEAWAY
10
Singapore’s residential market is in a favourable
5
quadrant in the Property Clock. Home prices to
0 rise.
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018E
2019E
2020E
2021E
Source: Maybank Kim Eng

UPSIDE FOR HOME PRICES
SINGAPORE
URA’s PPI
Private home prices are in the early stages of a recovery. Prices
(Index)
URA PPI
only started to pick up from 3Q17.
160
Long-term prices should rise along with GDP and wage growth.
140
120 Residential cap rates are low vs history. But yields could improve
as rents recover from a low base.
100
80
60
Dec-00
Dec-02
Dec-04
Dec-06
Dec-08
Dec-10
Dec-12
Dec-14
Dec-16
Dec-18
Dec-20
Source: URA, Maybank Kim Eng
Residential Cap Rates

(%)
4.0
3.5 Prime residential cap rate
3.5
3.0
TAKEAWAY
2.5
2.3
2.0 More upside for residential property prices.
1.5
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
Jun-18
Dec-18
Source: CBRE, Maybank Kim Eng

ENBLOC HOUSEHOLDS TO DRIVE INCREMENTAL DEMAND
SINGAPORE
Residential enbloc deals

We expect new-home sales to exceed 2017’s 10,700 this year.
(000 units) Enbloc units New home sales
Some 5.3k households will be displaced after their enbloc sales.
They are a source of incremental demand.
25
20 2005-07 Singapore’s average household size has shrunk from 4 in 1995 to

2017-18
12.1k units, SGD21.5b 3.3 in 2017.
5.3k units, SGD14b
15
This supports household formation of 28k per year despite slow
10
population growth.
5
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
YTD18
Source: URA, Maybank Kim Eng
Household growth despite weak population expansion

(000) Household growth Resident Pop. growth Household size (RHS)
120 4.2
100
4.0
4.0
80
60 3.8 TAKEAWAY
40
3.6
20
0
Healthy demand for homes from enbloc
(20)
3.3 3.4
households.
(40) 3.2
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: Singstats, Maybank Kim Eng

HEALTHY AFFORDABILITY METRICS
SINGAPORE
Home price-to-income ratio

Home-price-to-income of 4.4x is low vs history. Affordable for
(x)
Mass-market private home price to income ratio 10Y average home occupiers.
6.5
6.0 Household income has increased almost 50% since 2009. With
property prices down in recent years, we estimate that a typical
5.5
household now spends only 12% of its monthly income on
5.0 housing, down from 16% five years ago.
4.5 4.4 Despite recent increases in interest rates, mortgage servicing
4.0 ratio remains low at 16.8%.
3.5
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Assumptions:
Source: URA, Singstats, Maybank Kim Eng estimates
1,000 sf private homes in Outside Central Region.
Mortgage servicing ratio 3rd decile of household income.
(%) 30 years of loan, 80% LTV and mortgage rate of 1% over 3M
Mass-market private mortgage servicing ratio 10Y average
30 SIBOR.
25
20 TAKEAWAY
16.8
15
Affordability metrics are healthy.
10
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Source: Bloomberg, URA, Singstats, Maybank Kim Eng estimates

RESILIENT TO A 100BP RATE HIKE
SINGAPORE
Home-price-to-income ratio
Assuming annual home-price increases of 5% and wage growth of
(x) Home price-to-income ratio 10 year average 2013 peak 2009 trough 3%, home-price-to-income ratio in the mass market is
6.0 comfortably below its long-term average.
5.6
5.5 Even after factoring in a 100bp increase in mortgage rates,
4.9 mortgage servicing is within historical range. Home buyers are
5.0 4.8
4.6
4.7 already stress-tested to a normalised rate of 3.5%.
4.5
4.4
4.5 We expect home prices to be resilient to a 100bp rate hike.
4.0 4.2
3.5
Current Y1 Y2 Y3 Y4 Y5
Mortgage servicing ratio

(%) Debt servicing ratio 10 year average 2006 peak 2009 trough
25
21.9
20
20.6 21.0
19.5
19.9 20.3
TAKEAWAY
15 16.8
14.3 Home prices should be resilient to a 100bp
10
increase in mortgage rates.
Assumes 100bp hike in Y1 – Y5


WAGE GROWTH SUPPORTS THE PROPERTY MARKET
SINGAPORE
Higher Household income, monthly 2009 2017 2017 vs 2009

household (SGD) (%) Household income has increased almost 50% since 2009.
income Median household income 6,006 9,023 3,017 50
10k more residents with annual taxable income of >SGD0.5m a
1st - 10th 1,361 1,937 576 42
year since 2009.
11th - 20th 2,696 3,930 1,234 46
21st - 30th 3,787 5,805 2,018 53
Wage growth should support higher property prices.
31st - 40th 4,978 7,420 2,442 49
41st - 50th 5,980 9,331 3,351 56
51st - 60th 7,319 10,973 3,654 50
61st - 70th 8,798 13,505 4,707 54
71st - 80th 10,694 15,976 5,282 49
81st - 90th 13,423 19,589 6,166 46
91st - 100th 22,909 31,806 8,897 39
Average household income 8,195 12,027 3,832 47
Refers to Resident households. Including CPF.

Source: Singstats, Maybank Kim Eng
Larger pool of Tax residents by income band 2009 2016 2016 vs 2009
high income (000) (000) (%)
earners
SGD20-50k 473 776 303 64
SGD50-100k 336 554 218 65
SGD100-200k 141 264 123 87
SGD200-500k 61 111 50 82 TAKEAWAY
SGD500k-1m 9.7 17.8 8.1 83
>SGD1m 3.6 5.5 1.9 53
Total 1,024 1,728 705 69 Wage growth supportive of higher property
Source: IRAS, Maybank Kim Eng prices.

STRONG CASH PILE ON HOUSEHOLD BALANCE SHEET
SINGAPORE
Cash on household balance sheet

Huge cash surpluses on Singapore’s household balance sheet.
Supportive of investment demand.
(SGD b) Cash % of GDP (%)
Investment demand weakened in recent years due to property-
450 100
cooling measures.
400 95 However, it remains sizeable at about half of total transactions.
350
90
300
85
250
80
200
75
150
70
100
50 65
0 60
TAKEAWAY
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Huge cash pile on the sidelines for potential
Source: Singstats, Bloomberg, Maybank Kim Eng
investments.

COOLING MEASURES WEIGH ON RETURNS
SINGAPORE
Additional Buyer’s Stamp Duty (ABSD)

On top of buyers’ stamp duties that were raised recently,
(%) Foreigners & Permanent Singapore property investors need to pay 7-15% of ABSD upfront.
corporate entities Residents Citizens
20
Property investors can only leverage to a maximum of 50%, down
15 15 15
from 80% previously.
15
10 10 10
10
High transaction costs and leverage limits will weigh on returns
7 for investors.
5
5
0
0
Source: IRAS, MAS, Maybank Kim Eng
Five-year IRR for residential property investors
(%)
20
15.5
15
6.1
10 9.4 TAKEAWAY
2.7 6.8
5 2.6 4.2
15% ABSD and 30% lower leverage will shave
0
11ppts off returns.
80% LTV, b4 ABSD 50% LTV, b4 ABSD 50% LTV, 7% ABSD 50% LTV, 15% ABSD
Assuming property price appreciation of 5% pa.


DEVELOPER STOCKS OUTPERFORM PHYSICAL IN UPCYCLES
SINGAPORE
Stock prices vs physical property prices

FSTREH URA PPI (RHS)
Trading opportunities as stock-price movements amplify physical-
(Index) (Index) market movements.
1,100 Trough-to-peak 160
Stocks +5.3x
Physical +1.6x
150 Exposure to physical prices without hefty stamp duties and
900 140 illiquidity.
130
700
120 LTV: stocks: 0-70%, second residential properties: 20-50%.
110
500
Trough-to-peak 100
Stocks +2.3x
300 Physical +1.6x 90
80
100 70
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Source: URA, Bloomberg, Maybank Kim Eng
Leverage for stocks vs physical properties

(%)
100
Stocks Residential property
80
60 TAKEAWAY
0-70
Developers’ stock movements amplify physical-
40
20-50
20 market price movements.

0
Stocks physical
Source: MAS, Maybank Kim Eng

LOWER TRANSACTION COST FOR STOCKS
SINGAPORE
Transaction costs for stocks vs physical property

Transaction costs: Stocks: 0.2%; Physical: 7-15% ABSD, 0-12% SSD
(%)
20
Stocks Residential Property
Yields: Stocks: 1-5.5%; Physical: 0-3%
16
Financing: Stocks: 2.88-6.5%; Physical: 1-2.5%
12 7-15
8
0-12
4
0.2
0
Stocks ABSD SSD
Yields and financing costs for stocks vs physical property

(%)
8
Stocks Residential Property
4
2.88-6.5
TAKEAWAY
1-5.5
2 1-2.5 Lower transaction costs & higher yields for

0-3 stocks, though financing costs are higher.
0
Yield Financing Yield Financing

STOCKS AT DISCOUNT TO PHYSICAL MARKET
SINGAPORE
Current prices, RNAV discounts and TPs for selected property developers
We are POSITIVE on Singapore property developers. We have BUY
ratings for all six covered stocks.
Current price TP RNAV discount (%)
(SGD) Singapore accounts for a big part of valuations for City
(7) (25) Developments (CDL), UOL, GuocoLand (GUOL) and Bukit
(33) (44) (44) (42)
18 Sembawang (BS).
16
14.20 BS is the most concentrated proxy for Singapore residential
14 13.25 market.
12
10.40
10 8.69 8.55
8
6.03
6
4.10
3.67
4 3.00 3.15
2.59
2.11
2
0
CAPL CDL UOL GUOL BS HOBEE
Source: Bloomberg, Maybank Kim Eng TAKEAWAY
Developer stocks currently trade at a discount to

the physical market.

BS IS A PURE SINGAPORE RESIDENTIAL DEVELOPER
SINGAPORE
Owns vast plots of legacy land worth one-third of stock value

Bukit Sembawang (BS) is a pure Singapore residential developer.
Condos Landed Legacy land Others

Owns vast plots of legacy land worth about 30% of its valuation.
Less exposed to escalating land prices in the market.
Others
1%
Condominiums and landed homes under development account for
nearly 70% of its valuation.
Legacy land
31%
Condos
49%
Landed
19%
TAKEAWAY
Source: Company, Maybank Kim Eng

BS provides pure exposure to a residential
rebound.

BS PROVIDES PROSPECTIVE RETURNS OF 12%
SINGAPORE
Return profile
With a strengthening property market, we see BS’ RNAV discount
(SGD) TP DPS Current price narrowing to 20% and expect over 40% upside to our SGD8.55 TP.
10.0 0.33
5-year IRR
12% total return Assuming our TP is reached over a 5-year period, we estimate
5.0
(7% price + 5% yield) total annualised returns of 12% on an unlevered basis.
8.55
(6.00)
0.33 0.33 0.33 0.33 Returns could be enhanced by 10.6ppts if an investor leverage
0.0 the stock by 60% (historical volatility = 14%).
(5.0)
(10.0)
Returns can be enhanced with leverage
(%)
25
20
10.6
15
TAKEAWAY
10
Higher potential returns from BS than physical
5
market.
0
Unlevered 60% LTV

INDUSTRIAL REITS ARE ALTERNATIVES TO LARGE SCALE INVESTMENTS
IMPROVING INDUSTRIAL-SECTOR FUNDAMENTALS
SINGAPORE
IGLS programme (1H03 to 1H18)

Modest government land sales since 1H15, with supply-side
(ha) policies aimed at SME end-users.
Confirmed List Reserve List Average
30
25 Private investment opportunities limited by shorter land tenures

of new Industrial Government Land Sales (IGLS) sites, stringent
20
Jurong Town Corporation (JTC) subletting and lease-assignment
15 rules.
10
Supply has peaked after 2014 surge. Demand growth led by ‘New
5 Economy’ industries, tilted to business parks & high-spec
properties.
0
1H11
2H11
1H03
2H03
1H04
2H04
1H05
2H05
1H06
2H06
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
1H12
2H12
1H13
2H13
1H14
2H14
1H15
2H15
1H16
2H16
1H17
2H17
1H18
Source: URA, JTC, Maybank Kim Eng
Industrial supply-demand outlook

Net Supply Net Demand Net Supply / Net Demand (RHS) Average (RHS)
(m sqm) (x)
3.0 2.5
2.5
2.0
2.0
TAKEAWAY
Avg = 1.1 1.5
1.5
Fundamentals are supported by better supply-
demand balance
1.0
1.0
0.5
0.5
0.0 0.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018E
2019E
2020E
2021E

GOVERNMENT INFLUENCES SECTOR ACTIVITY
SINGAPORE
Industrial supply breakdown (1987-2017)

Shift in ownership to private sector, whose contributions rose
from 64% of total industrial land in 1987 to 86% at end-2017.
Private Sector Public Sector
100% In 1998-2007, an average 24% of island-wide available industrial

land was held by public sector. This fell to 16% in the last
90% decade.
80% Reasons:
1. Asset divestments by JTC to private owners in 2008-2011;
70% and
60% 2. Increased land supply for private investments in 2010-2014

through IGLS
50%
40%
30%
20%
10%
0% TAKEAWAY
1991
2001
2011
1987
1988
1989
1990
1992
1993
1994
1995
1996
1997
1998
1999
2000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2012
2013
2014
2015
2016
2017
Singapore attempts to balance REIT market
vibrancy whilst keeping occupancy cost at
Source: URA, JTC
manageable levels.

JTC OVERSEES PRICES AND RENTALS
SINGAPORE
120
Jan 2013
Jan 2012 Successful bidders for selected industrial GLS
All land zoned Business sites sold from 1 Jan-13 required to build min.
1, 2 prohibited from number and size of large factory units.
110 SSD of 15%, 10% and 5% imposed on industrial
strata subdivision for
selected sites near MRT properties sold within 1, 2, and 3 years of
stations or as decided purchase on or after 12 Jan-13.
by govt. for 10 years Institutional investors no longer allowed
100 earlier option of monthly rental payment, but
from TOP, and min.
GFA of 150 m² on instead to incur upfront land premium for Oct 2014:
strata units in multi- remaining part of the lease. Max. allowable sublet
Jul 2001:
JTC offers rental user developments. quantum adjusted
90 rebates for 12 months from 50% to 30% of
May 2001: GFA, and JTC tenants
Industrial land sales to help businesses Apr 2013:
cope with slowdown, disallowed from
quantum for 2001 Subletting rules for subletting premises.
and extends this till third-party facility
80 reduced from 25 ha
end Jun-03. providers relaxed with
to 10 ha.
min. GFA for anchor Oct 2015:
tenant halved to 1,500 Min. GFA requirement
Rental Index m², but JTC lessees for anchor subtenants
70 wishing to sublet reduced from 1,500
required to sublet at m² to 1,000 m², and
least 50% of GFA to one MOP of 3 years/term
or more JTC-approved imposed on
60 Price Index anchor tenants. subsequent anchor
subtenants relaxed to
allow for greater
flexibility.
50
Nov 2013:
Restriction period for JTC lessees assigning premises after
Feb 2004: fulfilling investment period (~3 years) extended by 5 years,
Firms given full Jan 2017:
with restriction for sec. market purchasers from 3 years to 5 JTC gives 3-10%
40 discretion to sublet years (properties with ≤ 30 years of lease remaining) or 10
Mar 2009: rental rebates to all
with lessees/tenants Jan 2005: JTC provides 15% years (>30 years lease remaining).
allowed to sublet JTC reduces land its 250 O&M tenants
rental rebate as part MOP increased for approved anchor tenants in sale-and-
100% GFA from lease rents and prices by up and lessees for 2017,
of Budget Day leaseback arrangements, occupying at least 50% of the GFA
30 commencement/TOP, to a-third, aimed to the first for industrial
measures, and allows and min. 1,500 m², from 3 years to 5 years (on sites with ≤ 30 properties since GFC.
from previously ≤ 50% boost Singapore’s years lease remaining) or 10 years (>30 years remaining).
all tenants to sublet
of GFA in first 5 years global investment up to 100% of GFA Sales ban on owners of properties on JTC-leased sites with <5
of lease. competitiveness. years lease balance is applied to leases <3 years.
until Dec-11.
20
1Q99
3Q99
1Q00
3Q00
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
Source: URA, JTC, MTI, Maybank Kim Eng

SECTOR COULD BENEFIT FROM REDEVELOPMENT PLANS
SINGAPORE
Industrial S-REITs’ asset breakdown by land tenure

Sector could benefit from longer-term regeneration plans. Assets
are selectively re-purposed for new growth industries (e.g. data
Business Parks centres). About 50% of the assets held by REITs have land tenures
High-Specs of 40 years or less.
Light & General Industrial
Logistics
Integrated Development & Others
Selective re-development projects:
(SGD m)
8,000 1. Two flatted factories redeveloped for SGD250m into a build-

7,413 to-suit (BTS) building for HP at the Telok Blangah Cluster.
Resulted in SGD66m of development gains for MINT.
7,000
2. AAREIT completed four redevelopment projects since 2011,
adding 1.8m sf of space or 27% to its portfolio and SGD29m
6,000
of rental income.
5,093
5,000
4,428
4,000 3,805
3,000
2,000
1,385 TAKEAWAY
1,000
Supply-side measures target SMEs & support
0 landlords’ property redevelopment.
<30 years <40 years <50 years <60 years >60 years
Source: Companies, Maybank Kim Eng

REITS PROVIDE EXPOSURE TO UNDERLYING SECTOR RECOVERY
SINGAPORE
AREIT’s share price and business-park rents

(SGD)
Strong correlation with fundamentals. AREIT is a good proxy for
JTC business park rental index AREIT share price - RHS business parks.
110 3.00
108
2.50 Large-cap REITs’ occupancy has been 89% since 3Q16. Should
106
improve on weaker asset-conversion pressures.
104
2.00
102
100 1.50
S-REITs are required to distribute at least 90% of their taxable
98
income to unit holders for tax transparency.
1.00
96
94
0.50
92
90 0.00
1Q11
3Q11
1Q10
3Q10
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
Source: URA, JTC, Bloomberg
Occupancy (2Q07 to 4Q17)
AREIT MINT MLT JTC

(%)
100
96.2
95
90
91.1 TAKEAWAY
90.1
89.0
85 Large-cap, liquid REITs track sector fundamentals.
80 Tax transparency enhances their appeal.
2Q11
4Q11
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
2Q10
4Q10
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
4Q15
2Q16
4Q16
2Q17
4Q17

SYSTEM LIQUIDITY CONDUCIVE FOR REITS
SINGAPORE
Industrial-sector cap rates and cost of debt

Low rates relative to history support buoyant capital-market &
debt-funding.
(%) Cost of debt Cap rates (low) Cap rates (high)
8.00 Borrowing cost at 2.2-3.9% for REITs vs 5.5-7.5% industrial-sector

7.00 cap rates.
6.00
5.00 3.90 3.90 AREIT, MINT & KDCREIT are best-positioned to explore debt
3.55 3.56 3.60
4.00 2.90 2.90 3.20 funding, given their headroom at 10-14% of AUM.
3.00 2.20 2.30
2.00
1.00
0.00
KDCREIT MLT AREIT MINT Soilbuild ESR-REIT Cache AAREIT Viva Sabana
Source: Companies
Estimated debt headroom at 40% gearing and AUM comparison

Debt headroom % of AUM - RHS
(SGD m) (%)
900 16.0
800 14.0
700 12.0
600
500
10.0 TAKEAWAY
8.0
400
300
6.0
REITs have sufficient debt headroom to acquire for
200
100
4.0
2.0
DPU growth.
0 0.0
AREIT MINT KDCREIT AAREIT Soilbuild Sabana ESR-REIT Viva MLT Cache
Source: Companies

AREIT IS BEST PROXY
SINGAPORE
AREIT’s rental-reversion profile

Rental reversion for its Singapore business & science parks & hi-
(%) 4-year historical average Dec 2017 quarter 3-year forecast
20.0 spec industrial properties (57% of AUM) should improve along
15.3 15.0 with demand.
15.0
DPUs to grow an average of 3.7% pa over FY18-22E, as NPI rises
9.0 4.8% and borrowing costs increase 0.9%.
10.0 7.5
6.6
5.8 5.8 6.5
5.0 2.2 2.5
-2.3 0.0
0.0
-5.0
Business and science Hi-specs industrial Light industrial Logistics & Integrated Singapore weighted
parks distribution centres development average
Source: Company data, Maybank Kim Eng
AREIT’s revenue, NPI and DPU growth profile

(%) Revenue NPI Borrowing costs DPU
30.0
25.0
20.0
15.0
TAKEAWAY
10.0
AREIT’s portfolio is skewed towards business
5.0
parks & high-spec industrial space.
0.0
FY17 FY18E FY19E FY20E FY21E FY22E
-5.0

DATA CENTRES AN EMERGING INVESTMENT PROPOSITION
DATA CENTRES ARE A FAST-GROWING SEGMENT
SINGAPORE
Drivers for global data-centre growth

Growth led by:
Increased take-up of digital technologies.
Connected devices, which require large quantities of data to be

processed and analysed in real time.
Need for cost-effective, reliable & secure data-centre solutions.
Stringent regulations on data collection and protection. These

are prompting corporates to store their data locally.
TAKEAWAY
Singapore’s outsourced data-centre revenue is

projected to rise at a 12% CAGR from SGD1.3b in
2017 to SGD2.0b by 2021*.
Source: Companies, *Structure Research

NICHE ASSETS GEOGRAPHICALLY WELL-DISTRIBUTED
SINGAPORE
Singapore’s data-centre locations

Data centres occupied 2.3m sf in 2017 or 0.4% of industrial stock,
including 58 unique co-location facilities. Majority are located in
the east.
Co-location revenues is 30% of the market, with SingTel and

Equinix as market leaders, with a combined 46% market share.
Singapore represents an APAC hub for cloud providers. Amazon

Web Services, Microsoft and Google are all in the midst of
building their own data centres here.
TAKEAWAY
Singapore’s positive attributes include its

developed infrastructure, geography, business
environment and government policies.
Source: Structure Research

STRONG DEMAND COULD SUPPORT FURTHER CONVERSIONS
SINGAPORE
Transaction values for 7 Tai Seng Drive

Mapletree Logistics Trust (MLT) in Dec 2017 divested a warehouse
at 7 Tai Seng Drive for SGD68m to its sponsor Mapletree
Capital value Premium - RHS
(SGD psf) (%) Investments. For redevelopment into a data centre.
350.0 120.0
The 20-year old property, with GFA of 23,844 sqm, was acquired
in 2006 for SGD38.3m. It was valued as at end-Mar 2017 at
SGD31.8m.
300.0
100.0
Purchase price was above the SGD32-40m range assessed by two
independent valuers.
250.0
80.0
200.0
60.0
150.0
40.0
100.0
20.0
50.0 TAKEAWAY
0.0 0.0
Investors see value in data-centre redevelopment
FY07 FY17 Divestment in Dec 2017 projects.
Source: Companies

RETURNS, BUT CAVEATS ON REDEVELOPMENT OPTIONS
SINGAPORE
Valuations of data centres and light industrial/ warehouses in the past 12 months
Demand for data centres could hasten brownfield conversions
(SGD psf) (9-12 months) instead of greenfield developments (15-24
months).
800.0
High entry barriers from construction & fit-out costs, of
678.0 SGD1,200-1,400 psf.
700.0 662.9
Conversions are subject to JTC approval, on top of requirements

600.0 for:
525.0
A minimum 5-metre floor-to-ceiling height 120,000 sf of GFA and
500.0
30,000 sf of unused GFA for the installation of mechanical and
electrical equipment.
400.0
347.8
308.4
300.0 275.8
217.0
183.5
200.0
100.0
0.0
STT Tai Seng Kim Chuan 38A Kim Starhub (19 Datapulse 7 Tai Seng Natural Cool 11 Tai Seng TAKEAWAY
(35 Tai Seng Telecom Chuan Road Tai Seng Dr) (15A Tai Seng Drive (29 Tai Seng Link
St) Complex Dr) Ave)
Wide disparities in capital values among industrial
Source: Companies, URA properties.

REITS ARE POSSIBLE PROXIES
SINGAPORE
Singapore’s data-centre AUM contributions

AREIT and MINT together own seven data centres, at 5-6% of
their AUM.
(SGD m) AUM Singapore data centres (% of AUM) - RHS (%)
Keppel DC REIT ҁNot Rated) is the only pure data- centre S-REIT,
12000 50.0 with 45% of its AUMfrom three Singapore assets.
44.6
Consensus estimates FY18 DPUs of 5.6% for Keppel DC REIT vs our
forecast of 6.6% for AREIT and MINT.
10000
40.0
8000
30.0
6000
20.0
4000
10.0
2000 5.3
6.0
TAKEAWAY
REITs an option to gain exposure to this growth

0
AREIT MINT Keppel DC REIT
0.0
segment.
Source: Companies, Maybank Kim Eng

E-COMMERCE THREAT?
SALES EROSION ALREADY AT 7.5% SINCE 2013
SINGAPORE
Store-based retail sales and per-area growth in 2011-2020E

We expect sales efficiency to fall with increasing e-commerce
adoption.
Store-based retail sales Sales per area (RHS)
(SGD b) (SGD m psm)
Sales psm have already declined by 7.5% in last four years.
31.0 5.4
Retail-space consolidation may become even more imperative.
30.0 5.2
29.0 5.0
28.0 4.8
27.0 4.6
26.0 4.4
25.0 4.2
24.0 4.0
2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
Source: URA, Euromonitor
TAKEAWAY
We see further erosion in store-based sales.

E-COMMERCE THREAT?
ONLINE PENETRATION COULD JUMP TO 10-20%, FROM ABOUT 5%
SINGAPORE
Share of online retail sales in China, Korea and the US

Penetration in more mature markets like China (20% of total),
(%) Korea e-commerce (cyber shopping) Korea retail sales ex-stores US China Korea (14-20%) and the US (10%) suggests ASEAN’s e-commerce
25.0 industry is in its infancy.
20.0 Share of e-commerce sales in Singapore could double to 5-10% in

the next five years, according to AT Kearney.
15.0
Bricks-and-mortar retail channels in Singapore have yet to feel

10.0
the full brunt of online retailing.
5.0
0.0
Jan-11
Apr-11
Jul-11
Oct-11
Jul-10
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Oct-10
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-17
Jan-10
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Apr-10
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Source: CEIC
Online retail market shares in selected Asian countries

(%)
29.4 2017 2022E
30.0
25.0
20.4
20.0 TAKEAWAY
E-commerce could make up more than 10% of

15.0
10.3
10.0
5.4 6.3 6.6 6.1 retail sales by 2021*.
3.5 2.7
5.0 2.3 1.8 2.6
0.9 1.4
0.0
China S'pore HK M'sia Indonesia Thailand Phils
Source: Euromonitor

E-COMMERCE THREAT?
GROWTH LIKELY TO BE SUSTAINED AT 20+% OVER NEXT FIVE YEARS
SINGAPORE
Singapore’s store-based and online retail shares

In 2002, eBay first led Singapore into the e-commerce era. But
(SGD b) Store-based Non-store % of total retail (RHS) (%) online sales only picked up recently, from 2012.
40.0 12.0
35.0
10.0 Sales rose by a 15% CAGR over 2012-2017, supported by better
30.0 online-payment infrastructure, logistics and product availability.
8.0
25.0
20.0 6.0 Amazon’s launch of its Amazon Prime in Singapore in Jul 2017
15.0 was the latest salvo.
4.0
10.0
2.0
5.0
0.0 0.0
2011
2018-22E
2003
2004
2005
2006
2007
2008
2009
2010
2012
2013
2014
2015
2016
2017
Source: Euromonitor
Singapore’s store-based and online retail growth in 2010-2022E

(%)
20.0
15.0
Non-store avg.=11.7
10.0 TAKEAWAY
Store-based
5.0 avg. = 3.3
Online retailing to grow at the expense of in-store
0.0 retailing.
2011
2010
2012
2013
2014
2015
2016
2017
2018-22E
-5.0
Source: Euromonitor Store-based retail Non-store retail

E-COMMERCE THREAT?
NOT ALL PRODUCTS FACE SAME THREAT
SINGAPORE
Preference to buy online vs in-store

Consumers should continue to support physical stores for certain
products, based on a PWC Total Retail 2017 survey of shopping
Category Online (%) In-store (%)
behaviour and expectations of nearly 25,000 consumers in 29
Books, music, movies & video games 60 28 countries.
Consumer electronics & computers 43 51
They are more likely to purchase books, music, movies and video
Clothing & footwear 40 51
games online.
Toys 39 37
Health & beauty (cosmetics) 37 47

Brands like Home Depot appear more immune to the Amazon
threat. Consumers still need to browse paint colours or
Sports equipment/outdoor 36 44 appliances in store before making their purchases. Home Depot
Household appliances 33 56 believes that only 25% of its business is susceptible to online
competition.
Jewellery/watches 32 49
DIY/home improvements 30 52
Furniture & homeware 30 59
Groceries 23 70
Source: PWC
TAKEAWAY
Consumers still prefer to visit physical stores to

look and feel, for selected categories.

E-COMMERCE THREAT?
MCT MOST AT RISK
SINGAPORE
Proportion of defensive rental income to e-commerce

Thankfully, retail REITs’ portfolios are actively managed.
Occupancy is close to 100%. Should outperform physical retail-
property market.
(%) Latest FY 5-year prior Retail occupancy (as at end-Dec 2017)
MCT is more susceptible to e-commerce disruptions. This is due
110 to its tenant mix. VivoCity has a higher-than-peers’ mix of
fashion tenants.
100
Changi Airport and Orchard Road malls draw stronger traffic and
90
87.3 86.1 expenditure as they are better geared to tourist volumes.
80 75.2 73.7 72.7

69.7
67.6
70 64.7
59.5 58.7
60
50
40
30
20 TAKEAWAY
10
MCT’s main challenge is its higher concentration
0
of fashion tenants at VivoCity.
SPH REIT FCT CMT SGREIT MCT
Source: Companies

E-COMMERCE THREAT?
MALLS HAVE INTRODUCED F&B; SPECIALTY, DISCOUNT STORES
SINGAPORE
F&B contributions to gross rental income

Malls are introducing activity-based tenants & facilities. F&B
tenants yielding lower now contribute 11-37% to rental income,
(%) Latest FY 5-year prior
37.6 up from 10-33% five years ago.
40 35.4
32.6 33.4
35 31.0 31.2 30.0
27.9 27.3 Department stores, which led growth in mixed retailers’ sales in
30 25.6
the past, have stalled in recent years and should continue to
25 20.3
grow.
20 15.2
15 11.2 10.1
Variety stores and warehouse clubs could outpace the revenue
10
growth of mixed retailers.
5
0
FCT (Portfolio) SPH REIT Suntec REIT MCT (Vivocity) CMT (Portfolio) SGREIT (Wisma SPH REIT
(Clementi Mall) (Suntec City) Atria) (Paragon)
Source: CEIC
Singapore’s mixed retailer sales growth in 2003-2022E

(%) 2003-2010 2010-2017 2017-2022E
18.0 16.7
16.0
14.0 13.0
12.0 TAKEAWAY
10.0
8.0 7.1 7.5 A new wave of Asian food brands have set up shop
6.0 in Singapore. Their contributions are set to rise.
4.0
2.1 2.1 2.0
1.3
2.0 0.8 0.6
0.0
Overall mixed retailers Department stores Variety stores Warehouse clubs
Source: Euromonitor

FOREIGN OWNERSHIP RESTRICTIONS
SINGAPORE
Real estate asset class and considerations
Residential & commercial properties are accessible to foreign

investors.
Residential Commercial
Asset class Developer stocks REITs
properties properties
However, foreign buyers of residential properties need to pay
higher stamp duties.
Foreign Foreign ownership of No restriction. No restriction. No restriction.
investment land disallowed
except on Sentosa Listed REITs enjoy tax transparency on underlying property
Island. income.
Qualifying Certificate Listed developers are
(QC) rules require treated as foreign
foreign developers to developers.
complete projects
within five years and
sell all units within
two years of
completion; failing
which will lead to
extension charges at
8%/16%/24% for the
1st/2nd/3rd and
subsequent years,
prorated for number
of unsold units.
TAKEAWAY
Tax Additional Buyer’s No additional taxes. No additional taxes. Tax transparency on
treatment Stamp Duty (ABSD) of
15%.
property rental
income if at least 90%
Less restrictions on owning developer stocks than
of income distributed residential properties. Favourable tax treatment
to unitholders.
for REITs.



PHILIPPINES
Romel Libo-on (63) 2 849 8839 Romel_Libo-on@maybank-atrke.com
INDIRECT ACCESS TO LOW END HOUSING VIA

EQUITIES THE DOOR TO
Homes for masses especially in the provinces
ASEAN PROPERTY
should grow the fastest. Disposable income
for lowest decile households enjoy the fastest
growth. But access to such physical properties
is restricted for foreigners. The indirect entry
is via equities.
LOCATION, LOCATION, LOCATION - MANILA BAY

Manila Bay Area should enjoy steady capital
appreciation, supported by traffic from
casino tourism and offshore gaming. Land
value in that area has appreciated 20% over
the past 5 years, while condominium prices
have appreciated around 15% over the same
period.
MIXED-USE PROPOSAL
Acquire land or lease near New Clark City,
north of Metro Manila to enjoy value
enhancement through infrastructure
improvements. Clark is home to the Clark
International Airport, Tutuban-Clark railway,
and Clark-Subic railway.
March 2018 41
INDIRECT ACCESS TO LOW END HOUSING VIA EQUITIES
HOUSEHOLD INCOME GROWTH
PHILIPPINES
Historical average annual household income Household income at the lowest decile grew at the fastest
pace. With income growth, households tend to spend more
PHILIPPINES CAGR on improving living conditions.
Mean household
income 2003 2006 2009 2012 2015 2003-2015
(PHP '000) Upward mobility triggers an upgrade cycle in physical
First decile 25 32 44 69 86 10.8% property, possibly perpetuated by socialised/economic
Second decile 40 51 69 92 114 9.1% housing at the low end.
Third decile 51 65 88 108 133 8.3%
Fourth decile 64 81 107 130 156 7.7% Households in Metro Manila experience slower income
Fifth decile 80 100 131 153 182 7.1% growth than nationwide mean. This explains why demand
Sixth decile 101 124 159 182 218 6.6% for housing in the provinces is more robust.
Seventh decile 128 156 200 229 259 6.0%
Eighth decile 169 205 260 286 320 5.5% We expect that listed developers to enjoy an increasing
Ninth decile 237 292 364 381 415 4.8% percentage of sales from AONCR.
Tenth decile 556 622 788 715 786 2.9%
Average 145 173 221 235 267 5.2%
CAGR
METRO MANILA (NCR)
Mean household
income 2003 2006 2009 2012 2015 2003-2015
(PHP '000)
First decile 74 81 100 147 174 7.4%

Second decile 103 119 146 180 223 6.6%
Third decile 124 142 174 216 260 6.4%
TAKEAWAY
Fourth decile 146 170 207 256 281 5.6%
Fifth decile 171 202 243 286 330 5.6%
Sixth decile 200 242 286 332 362 5.1% Demand for mass housing underpinned by
Seventh decile 239 294 349 365 412 4.6% robust growth in lower-decile household
Eighth decile
Ninth decile
298
405
366
500
439
592
467
551
487
602
4.2%
3.4%
income.
Tenth decile 556 622 788 715 786 2.9%
Average 376 412 454 481 515 2.6%
Source: PSA, Maybank Kim Eng estimates

AFFORDABILITY METRICS
PHILIPPINES
Even then, listed developers mostly address the open

Mortgage scenarios per price segment
market, comprising 450k households or 1.7% of the
Mass Housing Open Market nationwide household population.
Socialized Economic Affordable Middle High-end
PHP450K PHP1.7m PHP3.2M We estimate minimum annual household income of PHP1.2m
< PHP450K <> <> <> > PHP6m
PHP1.7m PHP3.2m PHP6m as the entry level for this addressable market.
Typical value of property (PHP '000) 450 1,250 3,000 5,000 11,250
Size of lot (sqm) 22 25 30 50 75

At this level, price-to-income ratio is 2.6x, in the affordable
band.
Price/sqm (PHP'000/sqm) 20 50 100 120 150
Loan to value (%) 80 80 80 80 80

Assuming a 100bps increase in cost of capital, monthly
Equity (%) 20 20 20 20 20
amortisation payments will increase by 5.9%. Mortgage
Loanable amount (PHP '000) 360 1,000 2,400 4,000 9,000 servicing ratio will increase 1.5ppts to 26.5% of monthly
Mortgage rate (%) 8.6% 8.6% 9.0% 9.0% 9.0% household income.
Tenure (yrs) 15 15 15 15 15
Monthly Mortgage (PHP/month) (3,538) (9,827) (24,161) (40,269) (90,604)
Yearly Mortgage (PHP/year) (42,453) (117,924) (289,934) (483,224) (1,087,254)
Typical value of property (USD) 9,000 25,000 60,000 100,000 225,000
Monthly amortisation (USD) (71) (197) (483) (805) (1,812)

Monthly household income required (PHP/

month) 14,151 39,308 96,645 161,075 362,418
Annual household income required (PHP/
year) 169,810 471,695 1,159,737 1,932,895 4,349,014
TAKEAWAY
Mortgage servicing ratio (%) 25.0 25.0 25.0 25.0 25.0
Price-to-income ratio (x) 2.7 2.7 2.6 2.6 2.6 Healthy demand for socialised & economic housing
provides a positive feedback loop for higher-end
Estimated % of household population (2017F)
Total households (2017F)

45.2
2,916
4.7
1,271
1.7
444 homes which listed developers cater to.
Source: Bank Surveys, Pag-IBIG fund, Maybank Kim Eng estimates
* Excludes proportion of population that cannot afford socialised housing

HOUSING-RELATED SPENDING
PHILIPPINES
Housing-related expenditures in PHP terms have grown at a 5.7%

CAGR from 2002-2015. Total housing expenditures have grown at
Historical household related spending a faster rate at 6.9% annually over the same period.
(PHP b) (%) As a percentage of household expenditures, it has declined from

14% in 2000 to 12% in 2015, a decline of 2.1ppt but still at
6,000 16.0 double-digit rates.
596 14.0
5,000
12.0
520
4,000
10.0
415
3,000 8.0
325
267 6.0
2,000 258
4.0
1,000
2.0
- -
2000 2003 2006 2009 2012 2015
TAKEAWAY
Housing-related expenditures
Other HH expenditures Housing is still a major consumption item for
Housing % of total expenditures (rhs) households, at 12% of total expenditure.
Source: PSA, Maybank Kim Eng estimates

BALANCED TAKE-UP
PHILIPPINES
Demand drivers based on unit take-up estimates Real estate take-up appears balanced among the three core
groups of buyers. Assumptions are:
PHILIPPINES
1. New household formation rates of 1.7% and 2.4% for
100% Philippines and Metro Manila. Balance is for provinces.
80% 33% 36% 37% 36% 35% Upward mobility, prompted by income growth, is more
important for demand outside the national capital region
60% than inside.
37% 37% 38% 40% 42%
40%
20% 2. Overseas Filipino sales & foreign national sales

29% 27% 25% 25% 23% (international sales) 35-40% from 2013 to 2017.
0%
2013 2014 E 2015 E 2016 E 2017 E
3. Secondary purchases are purchases related to investment
NCR demand, multiple housing requirement and others.
100%
80% 48% 49% 48% 47% 45%
60%
40%
39% 39% 40% 42% 44%
20%
0% 13% 12% 12% 11% 11%
2013 2014 E 2015 E 2016 E 2017 E
AONCR
100% 9% 17%
TAKEAWAY
21% 21% 23%
34%
34%
50%
35% 37% 39%
Growing pool of foreign investors spurring
residential demand.
0%
2013 2014 E 2015 E 2016 E 2017 E
HH formation OF/Foreign National Secondary purchases

EQUITIES FOR EXPOSURE
PHILIPPINES
On a 5-year historical basis, the Philippine Property Index

Metro Manila capital values vs PPROP Index (2005-2019F) (PPROP Index) and capital values of condos in Metro
Manila have been growing at a similar pace of 11.5% and
11% CAGR, respectively.
PHP/sqm Index
The steady rise in capital values have been driven by

250,000 4,500
strong demand in a robust economy.
4,000 Positive consumer confidence levels, low unemployment

levels of around 5.7%, increasing household incomes of
200,000
3,500 around 5%, should sustain housing demand.
3,000 The PPROP Index has been driven by earnings growth in

150,000 the past 5-years of 11%, in line with index growth.
2,500
Stocks outperformed physical overtime. So it is better to
2,000 buy equities.
100,000
1,500
1,000
50,000
500
0 0
TAKEAWAY
1Q11
3Q11
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
Growth in property equities are in lock-step with

Residential capital values per sqm (Makati), lhs PPROP Index, rhs increases in capital values and sector earnings.
Source: Colliers, Maybank Kim Eng estimates

PHILIPPINES
RESIDENTIAL SUPPLY & DEMAND
Metro Manila’s condo market came back to life in 2016-2017,

with unit take-up up 27% pa on average.
Residential condo launches and take-ups
This was spurred by:
80
1. Pent-up demand after elections in 2015
70
70 67
64 2. Sustained economic growth under the new
60 61 administration
58
60
52
54 53 3. Demand from foreign nationals & speculators
50 47
43 43
40
40 37
34 35
33 33
30
20
10
- TAKEAWAY
2012 2013 2014 2015 2016 2017 2018F 2019F 2020F
Launches ('000 units) Take-up ('000 units) Resurgence in residential take-up sales has
absorbed excess supply.
Source: Developers, Colliers, Maybank Kim Eng estimates

LOW INVENTORY LEVELS
PHILIPPINES
Estimated residential inventory levels down to 12.5 months

Estimated residential inventory months from a peak of 16.9 months in 2015 as launches have slowed
from 2014 to 2016, while sales take-ups have recovered
starting 2016.
months
Developers are aware of declining inventory levels and are
18
16.9 now more likely to increase their launches to capitalise on
16.3 the recovering market.
15.5
16 15.0
14.4
Listed developers are dominant in the addressable market.
14 13.1 13.0 Hence, they can manage supply to sustain prices. This is
12.5 12.7
unique to the Philippines.
12
10
2
TAKEAWAY
0
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F
Developers, dominant in the
addressable market, are able to self
Source: Developers, Maybank Kim Eng estimates regulate.

INCREASING LAND VALUES
PHILIPPINES
5-year CAGR of land prices in Metro Manila was 15.5%. Listed

Land value appreciation in Metro Manila developers have eight years of land bank on average.
PHP/sqm Land prices in Manila Bay Area, BGC, Makati CBD, and Ortigas
CBD grew by 20%, 16%, 14%, and 12%, respectively in the past
700,000 five years.
600,000
Manila Bay Area appreciated the most due to a scarcity of raw
560,000 land combined with strong demand for future developments.
499,000
500,000
400,000
300,000
234,000
200,000 216,000
100,000
-
TAKEAWAY
Land prices continue to appreciate. Manila

Makati CBD Ortigas CBD Fort Bonifacio (BGC) Manila Bay Area
Bay Area land values growing the fastest in
the past 5 years.

SUPPLY FROM OUTSIDE CBDs
PHILIPPINES
Future condominium supply is mostly coming from satellite

Condominium supply based on completions per location cities outside Makati and Ortigas CBDs.
Units Aggregate supply of 18K and 16K units from 2017-2021 to come
14,000
from Manila Bay Area and Fort Bonifacio (BGC), respectively, a
large portion of which will come in 2018.
12,000
10,000
8,000
6,000
4,000
2,000
-
Manila Bay Area Fort Bonifacio Makati CBD Ortigas Center Others TAKEAWAY
2017F 2018F 2019F 2020F 2021F
Bulk of residential supply is from satellite
Source: Colliers developments.

DECLINING RESIDENTIAL CAP RATES
PHILIPPINES
Declining residential cap rates in Makati CBD due to increases

in cap values and flat rentals.
Residential cap rates (2005-2017)
Areas outside Makati CBD could provide better returns.
Makati residential cap rates
9.0%
We prefer Manila Bay Area to BGC due to higher expected
8.0% 8.0%
returns.
7.0% 6.6% There is strong demand for homes by office workers in the
area, including offshore gaming employees. Accessibility to the
6.0% airport, tourist destinations and casinos should support further
capital value appreciation.
5.0%
5.0%
4.0%
1Q11
3Q11
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
Residential cap rates (Makati) 12-year average cap rate
Estimated current cap rates for BGC and Manila Bay Area
6.0%
5.5%
TAKEAWAY
Falling residential cap rates in key CBDs.

Fort Bonifacio (BGC) Manila Bay Area
Source: Colliers

GAINS IN CONDOMINIUM PRICES
PHILIPPINES
Sample of condo developments across Metro Manila

Condo developments enjoy huge annual price
appreciation, especially in the Manila Bay Area,
Sold
Property`
Housing
Developer Location Launched
Units
% Sold units /
ASP/unit ASP/sqm of 40% from 2013 to present.
Segment launched (PHP m) (PHP '000)
month
We believe Manila Bay Area has potential for

Discovery Primea High End JTKC Land Makati Feb 2008 90 92% 1 24% 352 further capital gains with prices still much
Park Central High End Ayala Land Makati June 2016 281 90% 17 7% 269
below Makati CBD prices.
The Ellis Upscale Ayala Land Makati May 2016 237 93% 14 11% 177
The Travertine Tower 1 Upscale Ayala Land Pasig Mar 2017 588 81% 40 2% 118
Manila Bay
Shore Residences Bldg 4 Upscale SM Prime Oct 2013 1,817 98% 35 40% 164
Area
Shang Salcedo Place Upscale Shang Prop Makati May 2012 861 100% 13 16% 178
Avida Towers Centera

Middle Ayala Land Mandaluyong Feb 2013 683 95% 11 14% 106
Tower 4
Average
651 93% 19 16% 195
Selling prices of new launches (less than 12 months)
Sold
Housing Units ASP/unit ASP/sqm
Property Developer Location Launched % Sold units /
Segment launched (PHP m) (PHP '000)
month
TAKEAWAY
Park Central North Tower High End Ayala Land Makati Sep 2017 259 34% 29 68.0 332
The Connor Upscale OCLP Ortigas July 2017 970 78% 252 8.4 181 Prefer Manila Bay Area for upside in condo
Avida Towers Vireo Middle Ayala Land Taguig Aug 2017 474 82% 130 4.2 157 prices.
Arton Residences Upscale Rockwell Land Quezon City July 2017 400 41% 54 7.5 143
Kai Gardens Middle DMCI Mandaluyong Aug 2017 1028 46% 158 4.4 104
Source: Colliers

ESTIMATED INVESTMENT RETURNS
PHILIPPINES
5-year IRR assuming investment in Manila Bay Area vs Makati CBD and BGC Based on a 5-year investment horizon, base case assumes the
following:
18.6%
16.8% 1. Capital gains: based on residential price appreciation
12.5% 12.1% 2. Expenses deducted include insurance, real property tax, and
11.4%
10.3% miscellaneous fees
9.1%
8.1%
6.4% 3. Leverage is based on 80% LTV, 5.5% interest rate, 5-yr loan
5.6%
2.4%
Bear case assumes the following:
-0.2%
1. Capital gains: adjusted for higher cost of capital
Manila Bay Area Makati CBD BGC Manila Bay Area - Makati CBD - BGC - levered 2. Expenses: kept the same
levered levered
3. Leverage: same except for 100bps increase in interest rates
Base case Bear case Benchmark rate
Estimated residential price appreciation

TAKEAWAY

Higher expected returns in Manila Bay Area.

Manila Bay Area Makati CBD BGC Look for opportunities in this location.
Base Case Bear Case

MIXED-USE PROPOSAL
INFRASTRUCTURE BENEFICIARY
PHILIPPINES
List of infrastructure projects in Clark Priority infrastructure program of the government (Build
Build Build) to drive growth of capital values outside Metro
Manila.
Est. cost
Project Key Impacted Areas Schedule
(PHP b)
New Clark City, located 100kms north of Metro Manila, is a
Manila-Clark Railway Project Manila, Bulacan, Clark 4Q17-4Q21 255 key beneficiary with two rail connections, one international
Clark International Airport Expansion airport expansion, and government units transferring to its
Clark 2017-1Q20 12.55 premises.
Project
Subic-Clark Cargo Railway Clark, Subic 4Q16-2Q21 57.6
New Clark City Clark 1Q16-1Q22 8.3 (Ph 1)

New Clark City National Government Admin
Clark 1Q168-4Q20 13.16
Center
New Clark City Philippine Sports City Clark 1Q18-4Q21 97
Total cost 444
Developers with presence in Clark
Developer Project Size (hectares)
Ayala Land Inc Alviera, Marquee 1,125

Filinvest Inc Clark Mimosa, Clark Green City 522
Robinsons Land Corp Not yet launched 177 TAKEAWAY
Megaworld Corp Capital Town 36
Vista Land and Lifescapes Camella Pampanga 9 “Build Build Build” to support asset prices
SM Prime Holdings SM City Clark, SM Sky Ranch N/A outside Metro Manila.
Source: PPP Center

MIXED-USE PROPOSAL
ECONOMIC AND HOUSEHOLD GROWTH
PHILIPPINES
Historical GDP per capita of key growth regions (2009-2016) Per capita GDP growth in Central Luzon, where Clark is
located, averaged 7.4% in the last eight years, even before
PHP new infrastructure spending.
160,000
140,000 Pampanga has 479K households. Population growth was 3%
from 2000 to 2015.
120,000
100,000
80,000
60,000
40,000
20,000
-
2009 2010 2011 2012 2013 2014 2015 2016
Calabarzon Central Visayas Western Visayas

Central Luzon Southern Mindanao
Pampanga household growth (2000-2015)
Households
600,000
500,000
400,000 TAKEAWAY
300,000
200,000 Investments in the area are likely to bump

100,000 GDP growth above its 7.4% historical
- average.
2000 2007 2010 2015
Source: PSA

PHILIPPINES
Type Yes No Remarks Direct ownership of land is only allowed for Filipino citizens.
Only Filipino citizens are allowed to directly own or
Land ownership x Foreign ownership of real estate is typically limited to
acquire land
condominium purchases or partnerships.
Titles of land owned by Filipino spouse have to be under
Land titles x the citizen's name. Foreign spouse's name can only be
included in buying contracts. Larger domestic banks offer financing to foreign nationals but
Foreign nationals and/or corporations may enter into
limited to immigrant, retiree, or permanent residence visas.
lease agreements with Filipino landowners for an initial
Land leases x period of up to 50 years, renewable once for an
additional 25 years.
Partnerships with at least 60% of shares owned by
Filipinos are entitled to own or acquire land. Foreign
JV partnerships x board members of a landholding company are limited to
40% of seats.
Foreigner limit of 40% of total condo units or share in a

Condo units x
condo corporation
Ownership of structure is allowed as long as foreigner

Houses or buildings x
does not own the land on which it is built on
Second-hand
market
x Same restrictions as for condo units, houses & buildings TAKEAWAY
Bank financing x
Larger banks offer financing but this is limited to
immigrants, retirees, permanent residents or those
Foreign participation in real estate is limited
married to Filipino citizens to condominiums and partnerships.



VIETNAM
Thai Quang Trung (84 28) 44 555 888
trung.thai@maybank-kimeng.com.vn
RESIDENTIAL VIA LISTED EQUITIES

Listed equities provide earnings visibility &
land-bank scalability to cater to a burgeoning
residential market.
RESIDENTIAL DEVELOPMENT IN DISTRICT 2 THE DOOR TO

Less crowded space. Still possible to secure ASEAN PROPERTY
land in District 2 at reasonable prices for
high-rise development. “Free-ride”
improvements in amenities, which should
enhance returns.
OFFICE DEVELOPMENT IN DISTRICT 2

Expect HCMC’s service-oriented economy to
attract more corporates into setting up
headquarters in District 2.
March 2018
MODERATE GROWTH OF FOREIGN HOMEBUYERS
VIETNAM
No. of foreigners purchasing homes in Vietnam Before a new Housing Law came into effect in July 2014, the
overseas Vietnamese diaspora made up most of the
homebuyers in Vietnam.
800
Since then, foreigners are technically only required to have
valid entry visas to qualify for property purchases.
700
Even then, growth of foreign ownership since 2014 has been
moderate.
600 We think the main problem is the need for developers to
secure approval from the relevant authorities, including
Ministry of Public Defence, to certify that their projects are
500 eligible for sale to foreigners.
Because not all developers are willing to do so, effective
supply for foreigners is limited.
400
300
200
100 TAKEAWAY
0 Supply available to foreign buyers is limited to

Prior to 2014 From 2014 to 2016
developments that are open to foreigners such as
Source: Ho Chi Minh City Real Estate Association, Saigon Times, Aug 2017 by CapitaLand & Vingroup.

PROPERTY PRICE INDICES
VIETNAM
HCMC apartments – primary market
New launches, gross Net take-up Price index (2012 = 100)

Apartment prices have appreciated at a 5-6% CAGR since
(Units)
the market bottomed in late 2013.
(2012=100)
18,000 130 Vietnam’s local property consultants focus on reporting
16,000 125 launches and sales, less so on pricing.
14,000 120
12,000 115 JLL’s data remove pricing fluctuations caused by sudden
110
10,000
105
changes in supply. New supply entering the market can
8,000
100 temporarily skew average prices, as the supply base
6,000 95 remains small.
4,000 90
2,000 85 The Savills Property Price Index is available every quarter.
- 80 In quarters when mid/high-end supply enters the market,
their indices skew up.
Source: JLL, Maybank Kim Eng estimates
Hanoi apartments – primary market

New launches, gross Net take-up Price index (2012 = 100)
(Units) (2012=100)
12,000 110
10,000 105
8,000 100
TAKEAWAY
6,000 95
JLL and Savills provide fairly consistent pricing

4,000 90
2,000 85
- 80
data that are publicly available.
Source: JLL, Maybank Kim Eng estimates

INCOME GROWTH
VIETNAM
HCMC - monthly income per capita (quintile 1 = lowest, quintile 5 = highest) Income for the top 20% income earners in Ho Chi Minh
City grew the fastest, at a 15.6% CAGR, during 2004-14,
according to the World Bank.
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
Growth for the other quintiles was 13-16%.
VND ‘000
14,000
Property market currently appears to be mainly serving
the top quintile.
12,000
10,000
8,000
6,000
4,000
2,000
TAKEAWAY
- HCMC’s property market serves the top 20%
income earners, whose income grew at a CAGR of
2011
2004
2005
2006
2007
2008
2009
2010
2012
2013
2014
Source: “Vietnam - Affordable housing : a way forward” by the World Bank 15.6% during 2004-14.

AFFORDABILITY RATIOS
VIETNAM
Our calculations suggest that housing affordability is

Affordability profile of a typical HCMC homebuyers
reasonably good.
Household type 1 2 3 4 It is healthy for the affordable/social-housing segment.
Target housing segment High-end Mid-end Affordable

Social- Access to bank loans appears relatively easy for locals.
housing The exception is social housing, where much paperwork is
Household disposable income (VNDm/mth) 100 50 25 10
needed from both developers and homebuyers.
The 30% downpayment norm should be stable. Developers
Estimated addressable market (% of
<3% 3-5% 5-10% >50% are required to complete a building’s foundation -
population)
typically also about 30% of costs - before Sale & Purchase
Apartment size (sqm) 120.0 90.0 70.0 50.0
Agreements can be signed.
Apartment price (VNDb) 7.2 2.7 1.4 0.8 If rates were to increase by 100bps, we would expect
ASPs to drop 4-8%, for banks to maintain mortgage-to-
Unit price (VNDm/sqm) 60.0 30.0 20.0 15.0 income ratios.
Mortgage rate (%) 7.0% 7.0% 7.0% 5.0%
Loan to value (LTV) (%) 70% 70% 70% 70%
Downpayment (% of total value) 30% 30% 30% 30%
Tenure (years) 10 10 15 20
Mortgage to income ratio (%) 60% 45% 36% 35%

TAKEAWAY
Price to income ratio (x) 6.0 4.5 4.7 6.3
Housing affordability is reasonably good.

Particularly so for affordable / social housing.

AFFORDABILITY RATIOS
VIETNAM
Housing affordability: Home price to income ratio

Housing has become more affordable in Vietnam, as income
(x) 2009 2013 2017 catches up with property prices.
10 Compared with Singaporeans, the Vietnamese appear to enjoy
8
lower price to income ratios. But they face higher mortgage
servicing ratios as Vietnamese banks provide much shorter
6 loan tenures, of 10-15 years.
4 For Singapore, we use the 3rd highest decile in household
income against the price of a mass-market private
2 condominium. For Vietnam, we use the top quintile against
0
the price of an average apartment, excluding social housing.
SG VN
We believe the top quintile will remain the addressable
Source: Maybank Kim Eng estimates market in Vietnam for some years to come.
Housing affordability: Mortgage servicing ratio
(%) 2009 2013 2017

200
150
100
TAKEAWAY
50
The Vietnamese appear to enjoy low price to income

0
SG VN ratios, but face high mortgage servicing ratios as
banks provide short loan tenures.

RISKS & RETURNS FOR DIFFERENT ASSET CLASSES
VIETNAM
Assumptions:
30%
Investment profile: USD10m, 3-year horizon

20%
Location: District 2, HCMC (except listed equities)
10%
100% equity (unlevered)
0%
Returns are net of tax, applied liquidity haircuts* but before
transaction costs/ management fees
-10%
Base-case assumptions: - >6% GDP growth and 5% inflation.
-20%
Bear-case assumptions: lower GDP growth by 50-100bps and
100bps increase in interest rates.
-30%
Listed equities Private equity Private equity 3,000sqm land $200k $200k $1m villas
- 2ha - 1ha office site apartments apartments (primary, buy-
residential development (secondary, (primary, buy- to-sell)
development buy-to-let) to-sell)
Upside (3-yr CAGR) Downside (3-yr CAGR) - with liquidity haircuts

Avg upside Avg downside
* Liquidity haircuts at the end of investment horizon: 20% for land, 30% for private equity, 5-7% for apartments, TAKEAWAY
10% for villas and 0% for listed equities
Taking into account foreign-ownership

See page 75 for more details.
restrictions, buying listed equities and
investing in development SPVs seem best.

LISTED PLAYERS HAVE DOMINANT MARKET SHARE
VIETNAM
Money flows into real estate (2009-18 YTD)

Listed property developers have expanded from 80 in 2016 to
101, on all bourses. The top 15 largest have median ADTV of
FDI registration into real estate (L) close to USD1m. Most are still far from foreign-ownership limits
of 49%.
Foreign buying into listed real estate equities (gross) (L)
(USDb) (%)
Stock market cap (all bourses), % of GDP (R) Large listed developers such as Vingroup, Novaland and Dat
9.0 80 Xanh have estimated market shares in excess of 30% in their
market segments. As such, they are good proxies.
8.0 70
7.0
60
6.0
50
5.0
40
4.0
30
3.0
20
2.0
1.0 10
0.0 0
TAKEAWAY
2011
2018 YTD
2009
2010
2012
2013
2014
2015
2016
2017
Listed equities now provide fairly

Source: CEIC, FiinPro, Bloomberg, Maybank Kim Eng comprehensive exposure to real estate
in Vietnam, with high liquidity.

EXPOSURE TO VOLUME & PRICE GROWTH
VIETNAM
Total apartment transactions in primary market

Over 2013-17, property equities rose faster than physical
(Units)
HCMC Hanoi property prices.
100,000
Listed equities offer exposure to industry volume growth as
80,000
modern housing penetration in Vietnam remains low.
60,000
Apartment transactions in HCMC & HN grew at a 60% CAGR in
40,000 2013-14, although growth decelerated to 14% in 2017. Major
20,000 listed developers also offer RNAV-accretive land-bank growth.
0 3-year base-case scenario: expected annual returns: 21%
2013
2014
2015
2016
2017
(10% volume growth, 5% price growth, 5% land bank growth)
Source: JLL 3-year bear-case scenario: expected annual returns: -19%

(-15% volume growth or reverting to 2014-17 mean, -5% price
growth)
Apartment price indices vs listed equities (Top 15 stocks)
HCMC apartment prices Hanoi apartment prices Property stock price performance
80%
67%
70%
60%
50%
40%
30%
15% 17%
20% 9%
6% 6% 7% 6% 8%
10%
0%
-13% 3% 2% 3%
TAKEAWAY
-10% -2% -3%
-20%
2013 2014 2015 2016 2017
As modern housing penetration remains low, listed
Source: JLL, Bloomberg, Maybank Kim Eng equities offer exposure to market volume growth.

EQUITIES OFFER EARNINGS VISIBILITY & LAND-BANK SCALABILITY
VIETNAM
Dat Xanh (DXG): Residential brokerage a proxy for industry growth

We look for two main criteria:
(%) 1. Earnings visibility: market historically rewards property
20 stocks with low forward P/Es. Dat Xanh (DXG VN, Not
Rated), a participating corporate at IASG 2018, guides for
10 18% PATMI growth in FY18. Aside from property
developments, its residential brokerage unit is also a
0
proxy for industry growth.
2. Land-bank scalability: large scale land acquisitions can
-10 be difficult. Van Phu-Invest (VPI VN, Not Rated), also
FY12 FY13 FY14 FY15 FY16 FY17 participating in IASG 2018, appears to have a platform to
EVA spread WACC ROIC scale up its land bank via build-transfer (BT)
infrastructure work.
Source: Company data
Van Phu-Invest (VPI): Build-transfer infrastructure likely has good economics

Gross margins from property sales (exc. en-bloc project sales)
60%
50%
40%
TAKEAWAY
30%
55%
20%
36% 33% 37% 40%
45%
34%
Look for earnings visibility & land-bank
10% 20%
33% 30%
22%
30% 31% 31% 30% 33%
scalability, particularly in SMID property
0%
stocks.
2015 2016 2017 2015-17 overall
VPI NLG KDH DXG
Source: Company data

ATTRACTIVE VALUATIONS OF PROPERTY SMIDs
VIETNAM
Aggregate margins and leverage for top 20 real-estate SMID stocks

Despite pricing improvements, as reflected in operating
(%) (x) margins, and rapidly deleveraging balance sheets, property
Operating margin (L) Debt/EBITDA (R)
SMIDs have been overlooked by the market.
25 14.0
12.0 SMIDs’ P/Es are hovering around their 3-year averages.
20
10.0 Attractive in the current environment, with reasonable
15 8.0 housing affordability and a growing economy.
10 6.0
4.0
5
2.0
0 0.0
Jan-16
Jan-17
Jan-13
Jan-14
Jan-15
May-16
May-17
May-13
May-14
May-15
Nov-15
Nov-16
Nov-17
Nov-13
Nov-14
Mar-16
Mar-17
Mar-13
Mar-14
Mar-15
Jul-16
Jul-17
Jul-13
Jul-14
Jul-15
Sep-17
Sep-15
Sep-16
Sep-13
Sep-14
Source: Bloomberg, Maybank Kim Eng
Aggregate P/E for top 20 real-estate SMID stocks
Trailing PER Mean Mean+1SD Mean-1SD

30.0
25.0
20.0
15.0 TAKEAWAY
10.0
5.0
0.0 Overlooked, property SMIDs trade at attractive
multiples.
May 15
May 16
May 17
Nov 14
Nov 15
Nov 16
Nov 17
Mar 15
Mar 16
Mar 17
Jul 14
Jul 15
Jul 16
Jul 17
Sep 14
Sep 15
Sep 16
Sep 17
Jan 15
Jan 16
Jan 17
Jan 18

RESIDENTIAL DEVELOPMENT IN DISTRICT 2
LAND AT REASONABLE PRICES
VIETNAM
District 2 will provide the bulk of HCMC’s new apartment supply in 2018-19
District 2 in HCMC is adjacent to CBD (District 1), separated
by Saigon River. Its flagship township Thu Thiem (657ha) has
been positioned as HCMC’s “Pudong”.
District 2 should provide the bulk of new apartment supply in
HCMC in 2018-19. This will likely lead to further
improvements in amenities in the district.
46%
Divergent land prices in District 2. Much land remains vacant
54% due to unsynchronised urban planning.
We believe it is possible to purchase sizeable land at
reasonable prices, develop mid/high-end residential
apartments and “free-ride” improved amenities.
District 2 All other 23 districts combined
Source: Savills, 2017 Q4
Land prices in District 2 still vary widely

Asking price (USD/
sqm)
14,000
12,000
10,000
8,000
TAKEAWAY
6,000
4,000 Purchase land for development in District 2 &
2,000
-
“free-ride” expected improvements in amenities.
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Land area (ha)
Source: www.batdongsan.com.vn, March 2018

RESIDENTIAL DEVELOPMENT IN DISTRICT 2
IRR: 19%
VIETNAM
Assumptions underlying development of mid-end apartments:

Cash-flow estimates for a theoretical 2ha residential development in District 2
Land area: 2ha
(USDm) Cash inflows Cash outflows Net cashflows Plot ratio: 8.0
100 Land cost: USD1,100/sqm of land area
Construction cost: USD700/sqm of GFA
80
Selling price: USD1,400/sqm of NSA
Inflation: 5% pa
60
SG&A/revenue: 15%
40 Corporate income tax: 20%

Base-case IRR: 19%
20 Bear-case IRR: -6%, including a liquidity haircut equivalent to
a 30% RNAV discount at the end of the investment horizon
0
-20
-40
TAKEAWAY
-60
FY0 FY1 FY2 FY3 SPVs could offer more location-specific exposure
than listed equities.

OFFICES ARE UNDERBUILT
VIETNAM
Office supply growth has been below GDP growth in HCMC and
HCMC’s office market vs Economic growth Hanoi in past five years.
(%) Office stock growth Real GDP growth Vacancy
Despite strong supply in 2017, vacancy rates are at all-time lows:
12
4% in HCMC, 7% in Hanoi.
10
8 While some new supply could be frontloaded in 2018 in Hanoi,
5.1
6 HCMC’s 2018 supply growth seems low, at 5%.
4
2 JLL and Savills data indicate supply in HCMC and Hanoi will
0
probably only grow by 5-10% pa in next three years.
2013 2014 2015 2016 2017 2018F
CBD supply in HCMC in next 1-2 years will likely be limited. A
Source: JLL, CEIC, Maybank Kim Eng handful of projects under construction appear to be on hold
indefinitely, possibly due to financing issues.
Hanoi’s office market vs Economic growth

(%)
Office stock growth Real GDP growth Vacancy
25
18.8
20
15
TAKEAWAY
10
Vietnam has underbuilt offices in the past five
5
years.
0
2013 2014 2015 2016 2017 2018F
Source: JLL, CEIC, Maybank Kim Eng

ATTRACTIVE CAP RATES
VIETNAM
Cap rates vs Risk-free rates
Using data from Vingroup’s IFRS financial statements, cap rates

Spread (R)
for prime office and retail properties have been roughly equal in
Average prime commercial real estate cap rate (L) (*)
(%) (%) past five years.
5-yr government bond yield (L)
12 5.0 Even though cap rates have been compressed by an economic
10 4.0 upcycle and stable FX, their spread against risk-free rates
8 remains high.
3.0
6 HCMC’s strong economic growth has been and will likely
4
2.0 continue to be driven by services. With District 2 positioned as
1.0
HCMC’s new commercial hub, more corporates are likely to base
2
their headquarters here in the future.
0 0.0
2013 2014 2015 2016 2017 We think risks are on the upside. Cap rates may be compressed
further, given the supply/demand outlook.
(*)for office/retail properties in Vincom Center Dong Khoi in HCMC and Vincom Center Ba Trieu in Hanoi
Source: Vingroup, Cushman & Wakefield, Bloomberg, Maybank Kim Eng estimates
HCMC: Services as a % of GDP (nominal)
62%
60%
58%
56%
54%
52% TAKEAWAY
50%
48%
Cap rates have been compressed but spreads
46% remain high. Given the supply/demand outlook,
44%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
risks are on the upside.
Source: CEIC, Maybank Kim Eng

EXPECT RENTS TO BE STABLE
VIETNAM
Achieved net rents in HCMC (excluding service charge and VAT) Assumptions underlying office development in District 2:
Land area: 0.8ha
(USD/sqm/mth)
Grade A Grade B Plot ratio: 7.0
45.0
Land cost: USD4,400/sqm of land area
40.0 Construction cost: USD900/sqm of GFA

Base rent: USD25/sqm/mth (on NLA)
35.0
Pre-commitment at completion: 80%
30.0
Corporate income tax: 20%
Base-case IRR: 27%
25.0
Bear-case IRR: -29%, including a liquidity haircut equivalent to
a 30% RNAV discount at the end of the investment horizon
20.0
15.0
10.0
5.0
TAKEAWAY
-
2012
2013
2014
2015
2016
2017
SPVs could also offer exposure to offices.

Source: JLL

APPENDIX
RISK-RETURN SCATTER CHART
VIETNAM
Why choose District 2? Visible infrastructure support,

diverse investment universe, open to foreigners
Risk-return trade-offs for real-estate asset classes
Base case: GDP growth: >6% pa nationwide, 10% pa in tier-1
cities; real-estate transaction volume growth: 10% pa;
Private equity - interest rates: flat; inflation: 5% pa; ASP growth: 5% pa
30%
1ha office
development Bear case: 1) macro risks such as global trade declines,
geopolitical instability. GDP growth declines: 0.5-1.0% pa;
real-estate volume declines: 15% pa; 2) rate hikes: 100bps
25% Private equity -
pa; ASP declines: 4-8% pa
2ha residential
development Listed equities
3,000sqm land site Physical properties: total returns from capital appreciation
20%
and yields not too high, but least exposed to market risks.
Also, splitting USD10m into dozens of units can be
Upside (3-yr CAGR)
cumbersome.
15%
$200k apartments Listed equities: highly liquid and offer exposure to volume
(primary, buy-to- growth, but cannot provide exposure to particular up-and-
sell) coming districts such as District 2 in HCMC.
10% Private equity: can have exposure to a particular district, is
$200k apartments less exposed to market risks than listed equities, but local
$1m villas (secondary, buy-to-
let)
networks are needed to set up SPVs.
(primary, buy-to-
5% sell) Land: easier to find than private equity, potentially higher
returns than public equities, but legal ownership is
problematic. Also, small-scale land plots seem overpriced vs
0% some of the larger development sites.
0% -5% -10% -15% -20% -25% -30% -35%
Downside (3-yr CAGR) TAKEAWAY
Source: Maybank Kim Eng estimates Listed equities and residential & office development
in District 2 offer favourable risk-return trade-offs.

VIETNAM
Key restrictions on property investments in Vietnam
Foreign-ownership restrictions:
Asset class Ownership limit Restricted tenure Financing options
Listed equities: 49%. Most stocks are far from reaching
this limit.
Trades must be pre-
Listed equities 49% in each stock Not applicable
funded in Vietnam. Apartments: foreigners are allowed to own up to 30% of
the units in an apartment building. 50-year leases, which
Banks require borrowers can theoretically be extended, as long as owners are
30% of total units in a
to have income source in foreigners. Once a property is transferred to a local,
Apartments building
50-year leasehold Vietnam; may also
ownership will be converted to a freehold basis.
require a Vietnamese
spouse.
Low-rise housing: foreigners are allowed to own up to 250
Banks require borrowers low-rise units in one administrative ‘ward’. This is one
to have income source in level below ‘district’. The same tenure regulation applies.
250 of total units in an
Landed housing administrative ward.
50-year leasehold Vietnam; may also
require a Vietnamese
spouse.
Not allowed for foreign Not allowed for foreign Not allowed for foreign
Land plots individuals individuals individuals
Development land of
all types (residential, 50-year leasehold for Developers have access
commercial,
Not applicable
developers to capital markets TAKEAWAY
industrial)
Listed equities offer the easiest way to gain

exposure to Vietnam’s property.
Source: Land Law (2013), Housing Law (2014), Securities Law (2010, revised)



THAILAND
Maria Lapiz (66) 2257 0250 Maria.L@maybank-ke.co.th
THE DOOR TO
ASEAN PROPERTY
EQUITIES THE SAFEST BET, WITH PROMISING

RETURNS
Demand is generally sluggish. Only high-end
demand is robust, sustained by income growth.
Regulations limit foreigners’ participation. We
recommend listed developers with exposure to
high-end residential: LH, SPALI & PSH.
MANAGED CARE: A GROWING AREA OF INTEREST

With ageing and the nuclearisation of
families, demand for managed healthcare
facilities is expected to increase. Listed
hospitals BDMS, VIBHA & BCH; privately-
owned THG; and state-owned RAMA have
rolled out healthcare-related projects.
NEW TOURISM INITIATIVE IN THE SOUTH

Government plans to develop 200km of
coastline into a Thai Riviera for tourists,
spurring infrastructure development in the
south. First to be completed will be a train
from Bangkok to Hua Hin, cutting travel time
to 1.5 hours. ERW’s various hotel brands can
cater to a vast swathe of tourists.
March 2018 79
EQUITIES THE SAFEST BET, WITH PROMISING RETURNS
DETERIORATING DEMOGRAPHICS: LOW POPULATION GROWTH,
THAILAND
AGEING SOCIETY
Population enters low growth
Thailand’s population growth has decelerated in past two
decades, to less than 1%. Fertility rate is the lowest in ASEAN :
million persons %
Thailand 1.5, Indonesia 2.4, Vietnam 2, Philippines 3.
68.0 1.5
66.0 1.0
Those above 55 years formed 25% of 2016 population.
64.0 0.5
0.4 Affordability and wealth rest mainly with older generation.
62.0 0.0
Wealth and inheritance distribution should spur property
60.0 -0.5 purchases, at the high end.
58.0 -1.0
56.0 -1.5 General population’s disposable income has flattened amid high
58
59
59
60
61
61
62
62
62
63
63
62
62
63
63
63
64
64
64
64
65
65
66
66
66
54.0 -2.0 household debt.
1993
1996
1999
2002
2005
2008
2011
2014
2017
Population % growth
Source: Ministry of Interior
Gross disposable income and household debt
THBb
13,000
HH debt to GDP (3Q17) = 78.3%
11,000 HH debt to disposable income (2016) = 144.8%
TAKEAWAY
9,000
7,000 Slow population growth & weak income narrow the

5,000 pool of potential buyers.
10,548
11,103
11,486
11,763
5,260
4,693
5,630
5,089
5,629
5,590
6,142
6,406
6,516
7,484
7,058
8,870
7,219
9,893
7,478
7,555
7,932
3,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q17
Gross disposable income HH debt
Source: NESDB, BOT

WEAK HOUSEHOLD BALANCE SHEETS
THAILAND
Thailand statistics 2017

Increase in household income in 2017 was the result of
government stimulus programme for provincial areas & small
Greater BKK Nationwide
41,335 26,973
businesses. Cost THB1.3t or nearly 1% of nominal GDP.
Monthly household income (THB)
% growth from 2013* (4) 7
23% 21% Housing as percentage of consumption expenditure rose to 21%
Housing as % of consumption expenditure
6.4% 6.4% from 19.3% in 2013.
Mortgage rate (%)
Home price to income ratio (x) 5.1 6.6
30.6 39.3 A 100bps increase in interest cost raises debt servicing ratio to
Debt service ratio (%)
33% for Bangkok and 43% nationwide. These are too high.
Sensitivity +100bps**
8.0 7.6
Overall capital values have been muted. Prices have escalated
Home price to income ratio (x)
33.8 43.5
for high-end condos, especially near mass transit facilities and
Debt service ratio (%)
the CBD.
* the last previous survey
** in period of interest rate hike banks pre-emptively offer refinancing extension of tenure
Source: NSO, BOT
Residential price index
(Jan 09 = 100) Condominium SDH TH

200
TAKEAWAY
180
160
Households have limited room to absorb spikes in
140
interest costs. Banks will have to restructure
120
100
mortgages, essentially refinancing with loan
80
repayment extensions.
2009 2010 2011 2012 2013 2014 2015 2016 2017
Note: SDH – single detached house, TH – townhouse

Source: BOT

DETERIORATING DEMOGRAPHICS
THAILAND
Population ageing
Younger population of 26-44 years is a potential source of
demand, but formed only 31% of 2016 population. Also has
100% >65 uncertain income outlook & retrenchment prospects.
11%
90%
12% 55-64
80% Demand has been slowing since late 2000s, excluding a
70% 16% 45-54 temporary surge after the Great Floods of 2011 that lasted till
60% Affordability group mid-2012.
50% 16% 35-44
40%
14% 25-34
30%
20% 15-24
10%
0% 0-14
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Ministry of Interior
Growth in condos sales has been slowing
400% Impact of Great Flood

Urbanization
300%
200%
TAKEAWAY
100%
0%
Younger population has limited buying power. This
-100%
is reflected in slow buying of units.
-200%
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Nationwide BKK Other Provinces
Source: BOT

GO FOR BIG PLAYERS: LH, SPALI, PSH
THAILAND
Developers and their share prices Developers and their brands

%
50 40
37
40
26
30 22 20
20 12 14
9 11
7 4
10 4 4 4.3 3
0
-10 -5 -5 -3.1
-8 -5 -6
-20
-18 -15
-30 -24
AP LH LPN PSH QH SPALI ResProp SET
2016 2017 YTD
Launch plans of the big developers
THBm
+13%
80,000
70,000
+0.1%
60,000
+260% +28%
50,000
40,000 +10% +66%
TAKEAWAY
30,000
In residential property, the top six developers have

49,040
49,070
10,080
36,300
16,430
18,000
59,200
66,700
12,982
31,220
40,000
20,000
7,800
10,000
0 strong branding & long track records.
AP LH LPN PSH QH SPALI
2017 2018E
Source: Companies, Bloomberg

POTENTIAL FOR HIGH RETURNS
THAILAND
LH’s prospective returns SPALI’s prospective returns PS’ prospective returns
Investment Returns (LC) 1Y 3Y Investment Returns (LC) 1Y 3Y Investment Returns (LC) 1Y 3Y

Share price (THB) 10.9 Share price (THB) 22.2 Share price (THB) 22.7
SoTP Target Price (THB) 12.6 14.3 SoTP Target Price (THB) 26.8 30.7 SoTP Target Price (THB) 28.0 34.4
Capital gains 16% 31% Capital gains 21% 38% Capital gains 23% 51%
Dividend yield - pre tax 6% 20% Dividend yield - pre tax 6% 17% Dividend yield - pre tax 9% 26%
Expected Total Return - 12M 22% 51% Expected Total Return - 12M 27% 56% Expected Total Return - 12M 33% 78%
… dividend yield profiles … dividend yield profiles … dividend yield profiles
8% 17% 10%
12% 8%
6%
6%
4% 7% omit 4%
2%
2% 2%
0%
2011
2005
2006
2007
2008
2009
2010
2012
2013
2014
2015
2016
2017
2018 E
2019 E
2020 E
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 E
2019 E
2020 E
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 E
2019 E
2020 E
To launch THB36b worth of projects this year In 2017, SPALI issued 25% convertible In 2016, PSH restructured the group for
vs THB10b in 2017. warrants & waived dividends. Share price business diversification to enhance recurring
collapsed 20%. income. It waived dividends that year.
Its THB22.5b investment portfolio generates
31% of reported net profits in past five years. Then it acquired a 7.8 rai Australian Since then, PSH has yet to articulate its long -
Converted into cash dividends Embassy site that will be developed into a term strategy clearly, creating a share-price
mixed-use property worth THB17b. Project overhang.
Our forecasts suggest flat net profits but there should produce recurring income in the
could be upside from the sale of one of its next 15 years, at the minimum. We expect better clarity in mid-2018. 2018E
investment properties profits expected to grow 22% with high
High 48% revenue visibility for 2018E, presales & strong launch plan.
Weakness in share price due to overhang of strong pipeline of THB40b launches.
the awaited final sale of GIC stake in next two Failure to provide clarity could cap its share
months. price.

HIGH DEMAND FOR ELDERLY HOME CARE
THAILAND
Family size vs trend of those aged 60+ & above staying alone
The number of elderly staying alone is rising due to: i) ageing and
falling birth rates; ii) declining family sizes; and iii) population
6 migration to urban areas in search of work.
4.8
4.4
5
Ageing demographic is growing the fastest, increasing need
4 3.1
3.0 for elderly care.
3.8
3
2
1
0
1994 2002 2007 2011 2014
Family size (LHS) Trend of elderly aged 60+ staying alone (RHS)
Source: Department of Public Health, National Statistical Office of Thailand
Percentage of elderly needing daily assistance (2016)
100% 2% 1% 1% 2% 3%
95%
12% 13%
90% 19%
85%
20%
TAKEAWAY
80% 34%
75%
70% 80%
87% 86% Senior housing needs may grow big enough for
65%
79%
some developers to cater to.
64%
60%
Total 60-64 65-69 70-74 >75
Active Home bound Bed bound
Source: Department of Public Health, National Statistical Office of Thailand, Companies

ANTICIPATED DEMAND GROWTH
THAILAND
Announced managed-care propositions

As people age, more will become home- & bed- bound.
Developer Sector Investment (THBm) Demand for home care for the elderly should rise.
Thonburi Healthcare Group - THG Hospital 4,400
Vibhavadi - VIBHA Hospital not yet disclosed Developers have identified sites for elderly care facilities in
Bangkok Chain Hospital (BCH) Hospital 100-200 Bangkok, Phuket & Chiang Mai. These also happen to be the top
Bangkok Dusit Medical Service (BDMS) Hospital 2,000 tourist destinations. Chiang Mai, in the past 10 years, has evolved
Ramathibodi (State-owned) Hospital not yet disclosed into a retirement destination for foreigners.
Pruksa Holding (PSH) Residential developer not yet disclosed
LPN Development (LPN) Residential developer 8,200
Kamala (not listed) Resort operator 3,500
Developer Project Description

Thonburi Healthcare Group - THG Jin Well-being County: comprehensive residential complex for
retirees and families
Vibhavadi - VIBHA To invest in community malls & residences for elderly in Chiang Mai
Bangkok Chain Hospital (BCH) Studying senior care communities for both Thais and foreigners
Bangkok Dusit Medical Service (BDMS) Plans to open BDMS Wellness Clinics focusing on longevity and anti-
ageing remedies
Ramathibodi (State-owned) Negotiating with Treasury Department to develop senior complexes
Pruksa Holding (PSH) Adding features for elderly buyers in various projects TAKEAWAY
Plans to diversify into hospitals and managed-care projects
LPN Development (LPN) Launched two senior home-care low-rise projects in Bangkok and
Pattaya Senior housing needs may balloon to a space big
Kamala (not listed) Set up to develop an upscale lifestyle senior living village in Phuket
enough for developers to create viable solutions.
Source: Companies, MKE-ISR

BDMS OFFERS THE MOST VIABLE ACCESS
THAILAND
Direct investments
Still in rollout phase. Completion due in 2019/20. Potentially
attractive propositions are: THG, VIBHA and BDMS.
Jin Well-being County Project 1 – JV with THB4,400b
THG Thonghe Group (Chinese – Hospital Operator)
Jin Well-being County welcomes foreign buyers.
WEGO – (Chinese – Medical Device Producer)
Ga Mone Pwint (Real Estate)
THG welcomes partners for Jin Well-being County Phase 2 in the
Potential targeted IRR 8-10%
following areas of expertise: real-estate development,
Phase 2
equipment/technology and/or hospital operations
Residential for the elderly Not yet disclosed
Principal stakeholders of VIBHA (Viriyamethakul Family) acquired

Community Mall/Residential Ownership Structure 2,000 rai secured
land a long time ago cheaply. Also own 80% of Chiang Mai Ram
For the Elderly Welcomes JV partners 3.2m sq m
Hospital that operates nearly 2,000 beds, including for Social
VIBHA
Security patients. Given its market share of 19% in the north, its
Potential targeted IRR > 15%
IRR is very high, at no less than 15%.
THB12b; THB10b for We prefer BDMS in the managed-care business. Purchasing the
BDMS Wellness Clinics 100% owned by BDMS land
stock at this level offers 1Y/3Y estimated total returns of 7%/23%
BDMS Not Disclosed
and an option value in BDMS Wellness Clinics.
Potential targeted IRR > 13%
Via equities: BDMS provides the best access

• Low 1Y expected total returns TAKEAWAY
Investment Returns (LC) 1Y 3Y reflect BDMS’ nascent margin
Share price (THB) 22.8 recovery, from hospitals
Target price (THB) 24 27

opened 2-3 years ago.
BDMS offers the most viable access to managed
Capital gains 5% 18% • Wellness Clinics can bring 16% care.
Dividend yield - pre tax 1.4% 4.5% upside to our 2020 forecasts.
Expected total returns 7% 23% Not yet captured in our
valuation.
Source: Companies, MKE-ISR

SAMPLE PROJECTS
THAILAND
Jin Well-being County by THG: IRR 8-10% (Phase 1)
Active Living - 13 seven-storey residential 1,300 units.

First two clusters open for sale: 500 units (43-63 sqm size) at
THB3.6m.
Aged Care Centre for day care & nursing home services + rehab
centre.
Clubhouse & Wellness Centre: spa, fitness, pool, health &
services focus on prevention.
Close to Don Muang Airport & Red Line Mass Transit.
Wellness Clinic by BDMS: 13% IRR
378 hotel rooms.

Promenade Building 31,000 sqm.
Located in Bangkok’s CBD on Wireless Road.
Wholly-owned
Source: Companies

THAI RIVIERA
THAILAND
Thai Riviera The number of “main” destinations in Thailand has been

unchanged for 20 years.
In 2017, the government made a push into secondary

destinations. Not much results yet. 2M18 traffic flow was in fact
down in the south (-2.9%) and north (-0.6%).
New initiative is the Thai Riviera, on a 200km coastline in the

west. Straddles four provinces: Phetchaburi, Prachuab Kiri Khan,
Chumphon and Ranong.
Extension of
Hua hin route The east draws more tourists. Pattaya alone welcomed 10m
under study
tourists in 2017, mostly foreigners. The four western provinces
captured just 16.5m local and international tourists.
A fast train from Bangkok to Hua Hin should become operational

by 2022. Its extension to Ranong province is under study.
Secondary city airports’ traffic flow

Under AOT management
Under DOA management
South %Chg YoY Northeast %Chg YoY North %Chg YoY Central & West %Chg YoY
Feb-18 2M18 Feb-18 2M18 Feb-18 2M18 Feb-18 2M18
Chumphon 3.0% 1.4% Loei -5.8% -7.2% Mae Hong Sorn -5.5% -9.9% Phitsanulok 29.6% 30.6%
Ranong 53.5% 30.0% Udon Thani -4.1% -6.5% Lampang 4.7% 3.3% Tak (Mae Sot) 20.3% 21.8%
Surat Thani -2.7% -8.2% Nakhon Phanom 5.8% 5.8% Phrae 4.9% 5.1% Bangkok (Don Mueang) 9.5% 8.5%
Nakhon Si Thammarat -2.0% 11.0% Sakon Nakhon 4.0% 0.4% Nan -1.8% -2.8% Bangkok (Suvarnabhumi) 5.3% 4.7%
Krabi 1.8% -3.8% Khon Kaen 4.8% -3.4% Chiang Mai 9.1% 7.6%
Trang -7.6% -0.4% Roi Et 25.7% 21.6% Chiang Rai 15.4% 13.9%
Narathiwat -17.2% -25.1% Ubon Ratchathani 9.2% 7.3%
Phuket 22.8% 16.9% Buriram 34.2% 31.9%
Songkhla (Hat Yai) -2.1% -4.5%
Total 12.4% 8.0% Total 3.9% 0.5% Total 9.7% 8.2% Total 7.0% 6.2%
AOT's airports 18.3% 12.9% AOT's airports na na AOT's airports 10.3% 8.7% AOT's airports 6.9% 6.1%
DOA's airports -0.1% -2.9% DOA's airports 3.9% 0.5% DOA's airports 0.8% -0.6% DOA's airports 27.0% 28.3%
Source: Companies, MKE-ISR, AOT, DOA

ERW PROVIDES BEST EXPOSURE TO THAI RIVIERA
THAILAND
Thailand: 37-38m visitor target for 2018

Investing in land assets along the west coast would be the most
ERW’s return profile lucrative way to cash in but is cumbersome.
We expect a surge in hotel build-up in western provinces as

Investment Returns (LC) 1Y 3Y
private investors move ahead of the plan.
Share price (THB) 7.9
Target price (THB) 9 11 ERW’s hotels are in the right price range, including Hop Inn at
Capital gains 14% 39%
THB600/day. Its various hotels can cater to a wide variety of
tourists. Investment cost is only THB80-100m per Hop Inn. Low
Dividend yield - pre tax 0.9% 2.7% buildings and simple designs translate into faster construction.
Expected total returns 15% 42%
Listed hotels with properties in the Riviera
ERW Rooms CENTEL Rooms MINT Rooms

Centara Grand Hua
ibis Hua Hin 200 Hin 249 Anatara Hua Hin 187
Hop Inn
Chumphon 79 AVANI Hua Hin 196
Hop Inn Hua
Hin 79
% of hotel
inventories 5% 6% 4%
Source: Ministry of Tourism and Sports, Companies, MKE-ISR

THAILAND
Land ownership by foreigners is prohibited under Alien Business

Act.
Yes No Comments
Land ownership X Exception for juristic entities, investing in BOI- promoted
locations & specific industrial areas 49% is the guiding number for direct stakes & condos that are
JV partnerships for X Maximum 49%, but there are loopholes that can be registered as “open” to foreigners etc.
property-related ventures exploited
Foreign purchases of X For projects pre-registered to be opened to foreigners, Several regulatory pitfalls for land titles, land use &
condominiums limited to 49% of their total number of units
environmental requirements. Ad-hoc restrictions on density and
Second-hand market X Not visible. Sales can happen but take a long time and project types.
typically at low prices
Locals have natural preference for new units
Funding X Domestic banks do not provide loans to foreigners for
buying property
There is no rule against this but they prefer not to
A foreigner can seek funding but loan has to be
guaranteed by a Thai national
Guarantors will assume full liabilities if the loans turn
sour
Land titles There are many types of land titles and extreme care must
be exercised to ensure the title deeds are transferrable to
third parties. Also need to check the allowed purposes
Regulatory limitations X Some areas are restricted to high-rise development
Environmental laws X Projects must seek EIA. Bigger projects must seek H-EIA
approval. Rules are amended all the time
Limitations on density X New developments may not be allowed for areas identified TAKEAWAY
as dense. Rules are amended all the time
Be cautious when entering into property ventures

of any kind.


INDONESIA
Aurellia Setiabudi (62) 21 8066 8691 aurellia.setiabudi@maybank-ke.co.id
THE DOOR TO
ASEAN PROPERTY
LOW-END MASS HOUSING OPPORTUNITIES
Low-end mass housing near upcoming
transport infrastructure in high demand.
Exposure via Ciputra. Sell mid-high-end
houses from weak demand & large potential
supply of new apartment stock limit capital
upside.
RISING DEMAND FOR INDUSTRIAL LAND

Manufacturing capacity utilisation nears all-
time high. E-commerce to add to demand for
industrial land amid increasing scarcity of
supply.
SOFT CAP RATES FOR COMMERCIAL

Sluggish demand for office & retail space.
Office oversupply should persist until 2020.
Retail threatened by e-commerce.
March 2018 93
LOW-END SEGMENT UNDERSERVED
INDONESIA
Household income distribution in Greater Jakarta Over 80% of Greater Jakarta’s households, or around 6m, falls
into low- / low-mid-end segments. Home ownership is low in
(millions)
5.0
these segments, at below 50%.
4.1
4.0 3.4
Price affordability for low end homes is IDR650m (USD50k), low-
3.0 2.2 mid-end IDR1.15b (USD85k).
1.4 1.6
2.0
0.8 1.0 0.8 The segments are severely underserved as most developers
1.0 0.5 0.3 0.1 0.3 target the mid-high-end segments.
0.0
(IDR350m-
(IDR500m-900m)
(above IDR900m)
(IDR70m-IDR200m)
Low-mid end
Not addressable
(below IDR70m)
IDR500m)
(IDR200m-
Middle-Upper
Middle
IDR350m)
Low-end
Upper
2017 2022F
Source: Euromonitor, Maybank Kim Eng
Price demand curve
(IDRm per unit) Price and demand curve

2,500
2,000
1,500 TAKEAWAY
1,000
Large and underserved low-end home market.
500
Potentially huge volumes.
0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
(Million units)

SEVERELY UNAFFORDABLE MARKET
INDONESIA
Based on Canback’s C-GIDD estimates and Euromonitor data,

Affordability scale median household income per annum in Greater Jakarta is
IDR138m or USD10,200.
China: Hong Kong 18.1
A typical residential unit costs IDR800m in Greater Jakarta.
China: Mainland 12.8
Thailand 11.3
This implies a Greater Jakarta affordability ratio of 5.8x, which
Inner Jakarta 7.1
falls into Demographia’s “severely unaffordable” band.
Greater Jakarta 5.8
Malaysia 4.8
Singapore 4.5
Vietnam 4.3
0 2 4 6 8 10 12 14 16 18 20
Source: Demographia, Maybank Kim Eng
Demographia’s definition of affordability
Housing Affordability Rating Median Multiple

Affordable 3.0 & Under
Moderately Unaffordable 3.1 to 4.0
TAKEAWAY
Seriously Unaffordable 4.1 to 5.0
Severely Unaffordable 5.1 & Over Greater Jakarta’s property is severely unaffordable. A
Median multiple: Median house price divided by median household income
supply & demand mismatch also exists.
Source: Demographia

CITY WITH LOWEST HOUSE OWNERSHIP
INDONESIA
Home ownership in Inner Jakarta is 50%, the lowest in the

Housing stock and home ownership rate in Inner Jakarta country. Nationwide ownership is 80%. This is due to a supply &
demand mismatch in the city.
(units) We estimate a household formation rate of 1.6% in the next five

1,600,000 60% years, from urbanisation and marriages.
1,400,000
50%
1,200,000
40%
1,000,000
800,000 30%
600,000
20%
400,000
10%
200,000
0 0%
TAKEAWAY
2009 2010 2011 2012 2013 2014 2015 2016
Low home ownership & household formation
Housing stock in Inner Jakarta House ownership (RHS) provide natural sources of demand.
Source: BPS

BUT HEALTHY INCOME GROWTH
INDONESIA
Median household income in Greater Jakarta grew 110% in past

Median household income 10 years. Minimum wage leapt 308%.
(IDRm)
200 40% With household income growing faster than home prices, we
30% expect affordability to improve gradually.
150 20%
Indonesians are spending more on housing. Housing percentage of
10%
100 expenditure soared from 20% in 2000 to 29% in 2016. Housing
0% percentage of disposable income spiked from 6% to 13%.
50 -10%
-20%
0 -30%
2005 2008 2011 2014 2017 2020F
Median Household Income YoY Growth (RHS)
Household expenditure on housing
(IDRm)
20.0 35%
30%
15.0 25% TAKEAWAY
20%
10.0
15%
Minimum wage grow much faster than median
household income, sustaining low-end demand.
5.0 10%
5%
0.0 0%
2000 2003 2006 2009 2012 2015
Housing & Household facility % of disposable income (RHS)
% of total expenses (RHS)
Source: BPS

BUY LOW-END
INDONESIA
Mid-high-end prices are peaking and have become more volatile.

ASP of residential land in Greater Jakarta
Low-mid-end prices still climbing.
Alam Sutera Pasar Kemis Sentul City

New areas are being developed near Jakarta’s upcoming LRT and
Sentul Nirwana BSD City Grand Wisata MRT stations.
Kota Wisata Citra Raya Tangerang Summarecon Serpong
Summarecon Bekasi
These are mainly in the south and east, targeting low-mid-end
(IDRm/sqm) buyers.
18
16
14
12 Mid-high
10
4 Low-mid
2 TAKEAWAY
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Prices of low-end properties less volatile than
mid-high-end.
Source: BPS

SELL MID-HIGH
INDONESIA
Stock of apartment in Inner Jakarta There were 181,112 apartments in Inner Jakarta in 9M17. Supply
could spike in 2018E as many projects were delayed for several
(Units)
years. We expect surge of new stock in the next two years.
250,000 25%
Based on our channel checks, apartment rentals in Jakarta’s CBD
200,000 20% still yield the most vis-à-vis landed or shop houses.
150,000 15%
Returns of property investments are converging with alternative
100,000 10% investments. This implies even less demand for new properties in
Inner Jakarta.
50,000 5%
0 0%
1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18F 1Q19F
Total Apartment supply YoY growth (RHS)
Source: Colliers, Maybank Kim Eng
Yield comparison of different asset classes
13.0%
12.0%
11.0%
10.0%
9.0%
8.0%
7.0% TAKEAWAY
6.0%
5.0%
4.0%
3.0%
Investing in physical properties is not
1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 recommended, because of uncompetitive yields,
CBD Apartment rental
10-yr AAA Corp bond
South Jakarta yield rental
10-yr Govt bond
higher taxes & liquidity considerations.
12-m Time Deposit
Source: BPS

SENSITIVE WHEN RATES RISE
INDONESIA
When interest rates increase by 100bps, they could affect debt

Debt Servicing Ratio servicing ratio by 4%, assuming minimum wage growth of 8% pa.
This would affect affordability as banks are stringent in following

Low Low-Middle Middle Middle Upper a maximum debt servicing ratio of 30%.
Property price (IDRm) 650 1150 1600 3500
Mortgage rate 8% 8% 8% 8%
Debt service ratio 28% 28% 28% 28%
Mortgage rate 9% 9% 9% 9%
Debt service ratio 32% 33% 32% 36%
Source: BPS TAKEAWAY
A rate increase of 100bps could delay purchases

by at least one year, ceteris paribus.

INVESTMENT OPPORTUNITIES
INDONESIA
Ciputra Development (CTRA IJ) is our top BUY for its high
CTRA P/BV (1-year forward) exposure to low-mid-end housing in Greater Jakarta. It is
developing four townships in the city.
5.0
4.0 Unlike the typical Indonesian developer which buys and holds
3.0
land for liquidating at fat margins at a suitable time, it moves
SD +2 volume rapidly for lower-end homes of below IDR600m. These
2.0
SD +1 are in high demand.
1.0 Mean
SD -1
0.0 SD -2
Our calculations showed that CTRA’s high asset turnover should
2013 2014 2015 2016 2017 2018 generate higher returns than peers.
PBV Mean SD - 1 SD + 1 SD - 2 SD + 2
Valuation matrix
Upside Implied Disc.
RNAV/ share Price TP P/BV ROE Div yield
Company Ticker Rating
to TP to RNAV
TAKEAWAY
(local) (local) (local) (%) (%) FY18F FY18F FY18F
Alam Sutera Realty ASRI IJ Sell 1,131 390 300 -23% 66% 0.9 14% 2.3%
With foreign-ownership restrictions in low-end
Bumi Serpong Damai
Ciputra Development
BSDE IJ
CTRA IJ
Hold
Buy
3,618
2,902
1,760
1,145
2,000
1,600
5%
40%
51%
61%
1.3
1.4
12%
9%
1.1%
0.3%
housing, we advise exposure through CTRA IJ.
Lippo Karawaci LPKR IJ Buy 2,218 480 680 42% 78% 0.5 2% 1.5%
Pakuwon Jati PWON IJ Hold 1,335 620 670 8% 54% 2.5 16% 0.8%
Sentul City BKSL IJ Sell 936 200 100 -50% 79% 1.2 6% 0.0%
Summarecon Agung SMRA IJ Hold 2,928 925 900 -3% 68% 1.9 7% 0.6%
Average (ex-BKSL) 63% 1.4 10% 1%
Source: Bloomberg, Maybank Kim Eng (Prices as of 20 March 2018)

E-COMMERCE IS A KEY DRIVER
INDONESIA
Manufacturing capacity utilisation Utilisation of production facilities is near all-time high.
(%) Manufacturing production capacity Indonesia’s direct investments continue to climb, especially with
85 the rise of e-commerce.
80
75
Warehouses and distribution centres required by e-commerce
provide another source of demand for industrial land.
70
65
60
55
50
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17
Source: Bank Indonesia
FDI & DDI in Secondary and Tertiary sectors
(USDm)
35,000
30,000
25,000
20,000
TAKEAWAY
15,000
10,000
5,000 Rising industrial-land demand from existing
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
industries & e-commerce.
Secondary Sector Tertiary Sector
Source: BKPM

INVEST IN LISTED INDUSTRIAL - ESTATE DEVELOPERS
INDONESIA
Developers expect minimal risks from upcoming elections in

Bekasi Fajar financials
2018-2019.
(IDR b)
1,321 Supply of industrial land is tight. There are very few developers
1,400 1,217 1,224
1,200 with large industrial land banks.
1,006
1,000 840 824
710 695 745 Our top pick is Bekasi Fajar Industrial Estate (BEST IJ). It is one
800 687 599
472 520 561 of the very few to own a sizeable land bank, sufficient for more
396 483 528 515
600 391 336 than 10 years of development.
400 212
200
With its estates’ superior locations, BEST also has pricing power.
-
2014 2015 2016 2017 2018F 2019F 2020F
Revenue EBIT Net Profit
BEST P/BV band (1-year forward)
(x)
4.0
3.5
3.0
2.5
2.0
1.5
1.0 TAKEAWAY
0.5
0.0
Jan13 Jan14 Jan15 Jan16 Jan17 Jan18 BEST IJ is pure industrial-estate developer with a
PBV Mean SD - 1 SD + 1 SD - 2 SD + 2
land bank to cater to demand.

SUPPLY HITS CAP RATES
INDONESIA
Office oversupply in Jakarta. Strong influx of new supply while

Stock of office supply demand has been weakening from the commodity price plunge in
(million sqm) 2014-2016.
(%)
8.0 14%
7.0 12% Many foreign energy companies downsized their operations in
6.0 10%
Indonesia. Sub-6% GDP growth since 2012 also slowed down
5.0 demand for office space.
8%
4.0
6%
3.0 Around 250k sqm of existing stock remains unsold today. We are
4%
2.0 expecting 15% additional supply or about 1m sqm by 2020E.
1.0 2%
0.0 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F
Stock of Office space YoY growth (RHS)
Source: Colliers
Occupancy rates and cap rate
100% 16%
14%
80%
12%
60% 10%
8% TAKEAWAY
40% 6%
20%
4%
Oversupply will likely persist from high additional
0%
2%
0%
supply in next three years.
2010 2011 2012 2013 2014 2015 2016 2017
Occupancy rates Cap rate (RHS) Cost of Capital (RHS)
Source: Colliers

MORATORIUM 0N RETAIL SPACE SUPPORTING CAP RATES
INDONESIA
Jakarta’s retail market is reeling from weak discretionary

Stock of retail supply spending & e-commerce.
(million sqm) (%)
5.0 5%
In 2017, many department stores and major retailers closed
shop. Few foreign retailers were also looking to expand into
4.0 4% Indonesia.
3.0 3%
Occupancy in Jakarta’s malls has fallen to its lowest level in 10
2.0 2% years. Rental rates have been flat in past three years.
1.0 1%
Moratorium by Jakarta Government on new retail space is
0.0 0% indefinite.
2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F
Stock of Retail space YoY growth (RHS)
Source: Colliers
Occupancy rates and cap rate
100% 30%
95% 25%
20%
90%
15% TAKEAWAY
85%
10%
80% 5% Weak retail sales have forced several major stores
75% 0% to close. Demand for expansion is weak. Avoid
2010 2011 2012 2013 2014 2015 2016 2017
office.
Occupancy rates Cap rate (RHS) Cost of Capital (RHS)
Source: Colliers

INDONESIA
Regulations are complex and restrictive. There are many types of

Foreigners need Indonesian residential permits to own properties in Indonesia. property related titles. Foreigners typically use “right-to-build”,
“right-to-use” and “right-to-rent”. They are restricted from
“right-to-own”.
Foreigners may buy properties with leasehold titles.
Also, prohibited from buying low and middle segment properties.
Titles are for 30 years, extendable by another 50 years.

The lack of foreign participation is partly responsible for sluggish
high-end property prices in Jakarta.
There is a price floor for foreigners for residential properties. This floor reflects the
prices of luxury properties.
Foreigners must buy from primary market only.
Foreigners can apply for mortgages with maximum credit of IDR15b and tenures of 10
years.
Foreigners cannot buy commercial properties. Must be acquired by Indonesian

incorporated companies.
TAKEAWAY
With limited foreign interest and supply exceeding

demand for luxury property, softness in prices
persists.



MALAYSIA
Wong Chew Hann (603) 2297 8686 wchewh@maybank-ib.com,
Wong Wei Sum (603) 2297 8679 weisum@maybank-ib.com,
Kevin Wong (603) 2082 6824 kevin.wong@maybank-ib.com
THE DOOR TO
ASEAN PROPERTY
BUYERS’ MARKET?
The overall property sector remains in an
oversupply situation and we believe the
supply-demand imbalances will extend
beyond 2020. Investors looking to invest in
physical property can afford to be selective.
SILVER LINING, DIVERSIFICATION

That said, there is a silver lining in the
industrial property segment, thanks to
relatively higher barriers to entry. Some
property developers are also diversifying
overseas or into other business(es) including
hospitality - Sunway being a case in point.
REITS AS AN ALTERNATIVE
REITs offer an attractive investment
alternative due to widening of yield spreads
against the government bond yield. Our
preferred pick is IGB REIT due to its malls’
prominent location which can sustain near-
term earnings and DPU.
March 2018 109

BUYERS’ MARKET?
SUPPLY-DEMAND IMBALANCES TO EXTEND BEYOND 2020
MALAYSIA
Unsold residential units - overall

RESIDENTIAL:
No. of unsold units (LHS) % YoY (RHS)
Total residential unsold units hit an 11th year high averaging
110,000 60% 102,432 units in 1Q-3Q 2017 vs. the previous high of 105,681
100,000 50% units in 2006 (average 1Q-4Q 2006).
90,000 40%
80,000
30% By location, almost 59% of the unsold units in 3Q 2017 were
20% in Johor (17.8%), Selangor (14.7%), Penang (14.2%), Kuala
70,000
10% Lumpur (11.9%).
60,000
0%
50,000 (10%)
40,000 (20%)
30,000 (30%)
Mar-11
Sep-11
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Source: NAPIC, CEIC, Maybank Kim Eng
Unsold residential units – by location
35,000
Kuala Lumpur Selangor Johor Pulau Pinang TAKEAWAY
30,000
25,000 Unsold stock at all time high.
20,000
15,000
10,000
5,000
, 0
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17

BUYERS’ MARKET?
MALAYSIA
Unsold residential units – by type

RESIDENTIAL:
70,000 Low cost houses Low cost high-rise Landed properties High-rise
60,000 By type, almost 95% of the unsold units in 3Q 2017 comprised

50,000 landed properties (48.0%) & high-rise (46.8%), while low-cost
40,000 made up just 5.2%.
30,000
20,000 Unsold-to-existing stock ratio was highest in the high-rise
10,000
segment (at 5.7% in 3Q 2017), with unsold high-rise units
seeing the fastest rise since 2015.
, 0
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Unsold-to-existing
old to e st g stock
stoc ratio
at o
Low cost houses Low cost high-rise Landed properties High-rise

TAKEAWAY

Sizeable MYR39b* worth of unsold

residential units, which will take some
time to clear.
,

(* based on 97,004 unsold units and MYR404,835 average house price in 3Q 2017,
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
both sourced from NAPIC)

BUYERS’ MARKET?
MALAYSIA
Fig: Unsold residential units – by type
Source: BNM
Maximum Affordable House Prices, by Household Income
Household income % share of Maximum affordable house price (MYR)

(MYR/month) households
< 1,999 8.8 112,200 – 124,700
TAKEAWAY
2,000 – 3,999 26.1 72.1% 222,150 – 247,200 <MYR500k
Housing affordability is the issue, with
4,000 – 5,999 22.6 318,600 – 354,100
the bulk of households (e.72.1%) only
6,000 – 7,999 14.6 408,300 – 453,600
able to afford houses priced at less than
8,000 – 9,999
10,000 – 14,999
9.3
11.3
493,500 – 556,100
699,560 – 777,600
MYR500k, as per BNM.
(based on monthly housing repayment cost not exceeding 30% of household
income, prevailing interest rates and 35 year mortgage tenure)
Source: BNM , Maybank Kim Eng

BUYERS’ MARKET?
MALAYSIA
Residential property stock – incoming supply

RESIDENTIAL:
900,000 40
800,000 30
Positively, incoming supply has tapered down to 480,060
700,000 20 units in 3Q 2017 (-43% YoY).
600,000 10
500,000 0
400,000 (10)
300,000 (20)
200,000 (30)
100,000 (40)
0 (50)
Jun-01
Mar-11
Dec-11
Dec-02
Dec-05
Dec-08
Dec-14
Mar-02
Mar-05
Mar-08
Mar-14
Mar-17
Sep-03
Sep-06
Sep-09
Sep-12
Sep-15
Jun-04
Jun-07
Jun-10
Jun-13
Jun-16
Residential Property Stock (RPS): Incoming Supply (IS) % YoY (RHS)
Unsold-existing stock ratio
TAKEAWAY
The industry is adjusting to the oversupply,

shifting to affordable housing segment.
Source: www.housingwatch.my
BUYERS’ MARKET?
MALAYSIA
Office space – existing supply and occupancy rate

OFFICE:
100 25,000,000 Kuala Lumpur office space occupancy rate retraced to 77.9% in
2016 from 81.8% in 2006 as supply growth (2006-16: 3.9%
CAGR) outpaced demand (3.4% CAGR). At 77.9% in 2016, it was
95 4.4ppts below the national average of 82.3%.
20,000,000
BNM estimates 38m sq ft of incoming supply into the Klang
90 Valley. This 38m sq ft could add 24% to KL+Putrajaya+ Selangor
office space supply (of 156.1m sq ft in 2016), based on MKE
estimates.
85
15,000,000
BNM further estimates that this 38m sq ft of incoming supply
could lift office vacancy rate in the Klang Valley to an all-time
80
high of 32% by 2021 – this would mean that
1-in-3 offices in the Klang Valley could be vacant in 2021.
10,000,000
75
70
5,000,000
65
TAKEAWAY
60 -
1-in-3 offices in the Klang Valley could
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
be vacant in 2021, as per BNM

estimates.
MY supply (sq m) (RHS) KL supply (sq m) (RHS)
MY occupancy rate (%) (LHS) KL occupancy rate (%) (LHS)

BUYERS’ MARKET?
MALAYSIA
Retail space and occupancy rate

RETAIL:
100 16,000,000
95 14,000,000 There was 15.2m sq m of shopping complex retail space
90
86.3 12,000,000 nationwide in 3Q 2017, of which 81.2% was occupied.
83.6
81.3 80.6 81.8 81.4 10,000,000
85 78.9 79.4 79.9 79.1
80
8,000,000 Nationwide supply would increase by 17.8%, including
76.1 77.7 81.2
6,000,000 under construction and if all planned retail space is
75 75.6 4,000,000
74.3 constructed.
70 2,000,000
67.4
65 -
Total space (sq m) (RHS) Occupancy rate (%) (LHS)
Unsold-existing stock ratio TAKEAWAY

3Q17 (‘000 sq m) Malaysia K Lumpur Selangor Penang Johor As per MKE estimates, KL and Johor retail
Existing (1) 15,233 3,058 3,487 1,738 1,771
space would rise by 22% and 33%
Incoming 1,916 228 354 44 518
respectively when all space under
construction currently is completed and if
Sub-total (2) 17,149 3,286 3,841 1,782 2,289
Planned 801 435 - - 62
Total (3) 17,950 3,721 3,841 1,782 2,351 all planned retail space is constructed.
This could create significant oversupply.
Inc (%) = (2) / (1) 12.6% 7.4% 10.2% 2.5% 29.3%
Inc (%) = (3) / (1) 17.8% 21.7% 10.2% 2.5% 32.8%
Note:
“Incoming” comprises those under construction currently
“Planned” comprises those where building plan approvals have been received but construction has yet to start
Source: NAPIC , Maybank KE

SILVER LINING IN THE INDUSTRIAL PROPERTY SEGMENT
MALAYSIA
Existing and future supply of industrial properties in Greater KL

Industrial property supply is relatively stable compared to
the other property segments due to high entry barriers –
State
Type of
Property
Existing Supply Future Supply sizable land bank, government support, good location - and
we expect demand to pick up, driven by growing e-
Incoming
2015 2016 1H2017
Supply
Planned Supply commerce.
KL TOTAL 5,138 5,138 5,138 0 37
Selangor TOTAL 36,294 38,857 39,139 1,389 1,372
Land owners like Sime Property and UEMS with sizeable
landbank in strategic locations (near airports, future HSR
Greater KL Grand Total 41,432 43,995 44,277 1,389 1,409 stations or JB-SG second link) and industrial REITs such as
Axis REIT and Atrium REIT should benefit from the growing
Growth Rate
(%)
6.19% 0.64% 3.1% 3.1% demand for industrial properties.
Source: NAPIC, Savills Malaysia Research
Stable rental trend for industrial properties between 2015-2017
Asking monthly rents (RM per sq. ft.)

No Areas
2015 2016 2017
1 Petaling Jaya - Sections 13, 19, 51 and 51A 1.80-2.20 1.80-2.30 1.90-2.50
2 Shah Alam - Sections 15, 16, 21-27 1.10-2.10 1.30-2.20 1.30-2.30
3 Shah Alam - Glenmarie, Temasya, Bukit Jelutong 1.70-2.20 1.80-2.30 1.80-2.40
4 Klang - Northport, Westport 0.90-1.40 1.00-1.50 1.00-1.70

TAKEAWAY
5 Kajang 0.80-1.00 0.80-1.10 0.80-1.20
6 Bangi 0.80-1.00 0.90-1.20 1.00-1.30

Industrial property segment is a silver lining.
7 Sungai Besi - Chan Sow Lin 1.80-2.40 1.90-2.50 1.90-2.60
8 Kepong 1.20-1.60 1.30-1.80 1.50-2.00
9 Rawang 0.60-1.20 0.80-1.30 1.00-1.50
Source: Savills Malaysia Research

DEVELOPERS ARE MOVING BEYOND THEIR DOMESTIC MARKET
MALAYSIA
Sunway intends to list its healthcare unit by 2022

Sunway has reclassified its sector listing on the stock
exchange from Properties to Trading/Services and intends
Sunway: New medical centers in the pipeline to expand its other businesses given the challenging
Construction property market outlook.
New medical centre Location Total beds
completion date
SMC 3 Bandar Sunway 245 Completed in 2017 To reduce dependency on the domestic property market,
Malaysian developers - SP Setia, Sunway and UEM Sunrise
SMC Velocity Jalan Cochran, Kuala Lumpur 240 2019
- have been acquiring landbank in Australia and
SMC Seberang Jaya Penang mainland 180 2020 Singapore.
SMC Damansara Kota Damansara 250 2022
SMC Ipoh Perak 200 2023
Developers expanding overseas
Sime Darby
SP Setia UEM Sunrise Sunway
Prop
Battersea
London Battersea Power Station - -
Power Station
Marque Residences, Aurora Central Melbourne,

Wonderland Business
Australia Shangri-La Melbourne Conservatory Melbourne, -
Park
Hotel, UNO Melbourne Mayfair Melbourne
TAKEAWAY
Anchorvale Lane,
Singapore Daintree Residence - -
Brookvale Park
China: Sunway To diversify their income base, developers have

been expanding into other businesses and/or
Others: - Durban, South Africa Guanghao, Tianjin Eco
city
India: Sunway OPUS
Grand India, Sunway overseas.
MAK Signature
Residence
Internatio
nal/GDV 16% 1.5% 6%
(%)
Source: Companies
DEVELOPERS: SUNWAY IS OUR TOP PICK
MALAYSIA
PATAMI breakdown by businesses

Sunway has a more diversified earnings base with a 54.4%
stake in Sunway Construction (SCGB MK) and 37.3% in
SunREIT (SREIT MK).
Property
Property Investment Slower property development contribution would be

35% 30% partially cushioned by rising earnings contribution from
Hospitality and leisure
the construction business and steady dividend income
Construction from the REIT vehicle.
10% 20% Others (trading, building materials, Sunway intends to list its healthcare business by 2022.
healthcare)
Total beds are expected to grow to 1,488 (+140%) from
5%
618 beds now.
We value Sunway at MYR2.02 TP, on an unchanged 0.75x

P/RNAV.
Property sales track record (MYR m)
1,600
1,400
1,200
1,000
800
TAKEAWAY
Sunway is more than just a developer.

600
400
200
0
2013 2014 2015 2016 2017 2018F

WIDENING OF YIELD SPREAD
MALAYSIA
1-year forward REITs DPU yield vs.10-year MGS yield

Widening of yield spread (due to easing of share prices) in
(%) 2018 YTD provides favourable entry points into M-REITs.
6.50
6.00 Yield spread is currently above 200bps - which is
+1SD, 5.5 attractive, as the 3-year average was hovering around
5.50
Mean, 5.3 130bps.
5.00
-1SD, 5.1
4.50
4.00
3.50
3.00
Jul-15
Jul-16
Jul-17
Jan-15
Jan-16
Jan-17
Jan-18
Average M-REIT yield 10-year MGS yield
Note: Spread is based on average 1-year forward M-REITs net dividend yield (excluding 10% withholding tax)
vs. 10-year MGS yield
Yield spread between average REIT DPU yield and 10-year MGS yield
(bps)
240
200
160 +1SD, 158 TAKEAWAY
Mean, 133
120 -1SD, 109
80
Rising REIT yields and muted MGS bond yield
40
movements provide attractive investment entry
Jan-15
Jan-16
Jan-17
Jan-18
Jul-15
Jul-16
Jul-17
into REITs.
Yield spread
Note: Spread is based on average 1-year forward M-REITs net dividend yield (excluding 10% withholding tax)
vs.10-year MGS yield

VARIOUS CHOICES OF M-REITS WITH DISTINCT PORTFOLIO, SPREAD & RISK
MALAYSIA
Yield comparison (10-year MGS yield vs. M-REITs [within MKE’s coverage] CY18
net yields) Retail-focused M-REITs (IGB REIT, CMMT, Pavilion REIT, Sunway
REIT, Al-Salam)
(%) DPU growth supported by rental reversions which are

generally above office M-REITs
8
7.2 7.1 Our preferred pick is IGB REIT for its malls’ prime location
6.9
7
6.3 Office-focused M-REITs (KLCCP, MRCB-Quill)
5.9 5.9
6
5.4 Low DPU growth potential, but offset by lower occupancy
5.3
risks (from longer lease terms of tenants)
5
4.5
Our preferred pick is MRCB-Quill REIT for its higher DPU yield
3.9
4
Others
3
YTL REIT backed by steady, master leases of its M’sian hotels
2 Axis REIT for industrial asset exposure, but higher occupancy

risk from its multi-tenanted offices
1
0
IGB REIT
MRCB-Quill
Al-Salam
10-year MGS
Pavilion REIT
YTL REIT
Sunway REIT
CMMT
KLCCP
Axis REIT
TAKEAWAY
Wider choices of REITs to choose from – which

Note: M-REITs’ net DPU yields exclude 10% withholding tax mostly offer decent/attractive yield spread.

SOME REITS ARE ALSO COMPLEMENTED BY DECENT DPU GROWTHS
MALAYSIA
DPU growth of M-REITs within MKE’s coverage
(YoY %) CY16 CY17 CY18E CY19E CY20E
KLCCP Stapled 2.7 (0.5) 1.9 3.2 5.3
Sunway REIT 2.6 3.7 4.8 3.5 n.a.
IGB REIT 6.3 4.4 8.4 2.9 2.4
Pavilion REIT 0.5 0.0 (0.8) 8.4 2.7
CapitaLand M'sia (2.0) (4.1) (2.2) 0.2 1.9
Axis REIT (1.8) 0.1 8.5 12.8 2.3
YTL REIT 0.7 0.2 5.0 8.4 n.a.
MRCB-Quill REIT 8.8 0.1 2.8 (4.8) 0.3 TAKEAWAY

Al-Salam REIT n.a. 0.0 (1.3) 1.1 6.5
REITs with attractive yields are also backed by
solid fundamentals which sustain stable DPUs.
Source: Trust, Maybank Kim Eng

IGB REIT: RESILIENT EARNINGS BACKED BY TWO PRIME MALLS
MALAYSIA
Occupancy of retail malls owned by M-REITs (within MKE coverage) IGB REIT
Mid Valley Megamall and The Gardens Mall have

6 7 prominent locations – between Kuala Lumpur and Petaling
98.0 98.0 98.0 96.0 97.0
Jaya, Selangor
96.2 98.1 98.5 95.8 98.9
Strong traffic and footfall to sustain tenant sales and
- - 85.0 87.0 86.3
provide recurring demand for retail space at the malls
- - 74.0 76.5 90.0
The malls are also at comfortable distances from other
99.9 99.9 99.9 99.9 99.9

prime malls – i.e. KLCC, Pavilion
98.8 97.6 98.0 99.7 98.0

96.8 97.8 98.4 97.8 97.9

99.8 90.8 96.1 96.0 97.3

Putra
69.8 - 82.4 84.6 86.0
Mall
98.1 97.3 98.3 99.1 99.4
100.0 98.5 96.3 98.0 94.4
98.0 95.4 90.4 91.0 90.1
100.0 99.5 99.7 98.4 98.9

- - 91.5 92.5 92.6 TAKEAWAY

KOMTAR KBCC
Mall
ALSREIT - - 89.0 93.0 95.0
IGB REIT is our top retail REIT pick due to its
malls’ prime locations.
Source: Trusts, Maybank Kim Eng

PROMINENT LOCATION OF IGB REIT’S MALLS – AWAY FROM KEY
MALAYSIA
COMPETITORS
Suria KLCC (6km)
Pavilion KL (6km)
1Utama Shopping Centre (8km)
MidValley Megamall and

The Gardens Mall
Sunway Pyramid (9km)
Pavilion 2 (completion 2019; 7km)
Source: Google Maps, Maybank Kim Eng

IGB REIT: DPU GROWTH TO BE SUSTAINED
MALAYSIA
Our forward DPU growth forecasts are conservative.

Net DPU – steadily growing since IPO
IGBR REIT’s earnings and DPU could surprise on the upside if
(sen) tenant sales growth remains favourable.
(%)
Variable rent/turnover rent constitutes 12-13% of IGB REIT’s

10 12.0
9.3 total rental income p.a.
10.7 9.1
8.9
9
8.2
7.8 10.0
8 7.4
7.0
7
6.3 8.0
6
8.4
5 6.0
6.3
4
5.1
4.0
3 4.4
2
2.9 2.0
2.4
1 TAKEAWAY
0 0.0
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E Solid fundamentals are expected to be translated
Net DPU (LHS) YoY % (RHS) into DPU growth.
Note: Net DPUs exclude 10% withholding tax

Source: Trust, Maybank Kim Eng

MALAYSIA
Minimum Investment Select from a range of properties, as long as it is priced above MYR1m in Peninsular Malaysia
(and min price cap of MYR2m for foreigners) and MYR350,000 in Sabah/Sarawak. Both
residential and commercial properties can be purchased under a foreigner's name, or under a
company.
Consent Foreigners are required to obtain the State Authority's consent before gaining full ownership/
transfer of the property, which takes between 6 weeks and 6 months, depending on the
state.
Financing Malaysian banks and foreign banks in Malaysia provide loans to foreigners. They will typically
finance up to 70% or 80% of the property price. This is quite a bargain compared to other
countries.
Generally, Malaysian banks will only give loans to foreigners who are working in Malaysia and
have a valid work permit. However, there are some local and foreign banks who would be
willing to lend to non-resident foreigners or who have retired in Malaysia under the MM2H
programme. TAKEAWAY
It is usually easiest to get financing for new development as the developers will have Foreigners friendly policy with minimal
arranged with selected banks to offer loans to purchasers, including foreigners.
restrictions.
Properties that Malay Reserve Land, low-and medium-cost properties as determined by the State Authority,
foreigners cannot properties allocated to Bumiputera (Malay quota) as determined by the State Authority, land
own which is deemed agricultural land unless it is over 5 acres and is being used for commercial
purposes.

APPENDIX
PERFORMANCE & VALUATION TABLE
Mkt Cap 3mth ADTV TP PE (x) PB (x) DY (%) EV/EBITDA (x) RoE (%)
Name Ticker (USDm) (USDm) Price Rating (lcl crcy) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E
Indonesia
Alam Sutera Realty ASRI IJ 557 1.0 390 Sell 300 9.3 10.2 0.8 0.8 1.6 1.5 5.3 5.7 9.3 7.9
Bekasi Fajar BEST IJ 202 0.7 288 Buy 400 5.3 5.4 0.7 0.6 3.5 3.8 5.1 5.1 13.0 11.5
Bumi Serpong Damai BSDE IJ 2,463 2.6 1,760 Hold 2,000 11.3 10.5 1.2 1.1 1.5 0.9 2.4 2.6 11.3 11.0
Ciputra Development CTRA IJ 1,545 1.7 1,145 Buy 1,600 16.5 15.1 1.4 1.3 0.0 0.0 2.5 2.6 8.8 8.8
Lippo Cikarang LPCK IJ 164 0.3 3,230 Buy 6,800 8.0 5.5 0.5 0.4 0.0 0.0 1.6 na 8.0 10.0
Lippo Karawaci LPKR IJ 806 1.0 480 Buy 680 15.3 9.2 0.5 0.5 1.6 1.0 6.3 5.0 3.6 5.8
Pakuwon Jati PWON IJ 2,171 1.0 620 Hold 670 17.3 16.6 2.5 2.2 0.9 0.9 2.1 1.9 15.6 14.4
Sentul City BKSL IJ 804 5.4 200 Sell 100 25.5 38.1 1.2 1.1 0.0 0.0 2.4 2.7 4.7 3.0
Summarecon Agung SMRA IJ 970 1.7 925 Hold 900 26.8 23.0 1.9 1.8 0.5 0.8 2.4 2.0 7.4 8.1
Malaysia
Al-Salam REIT SALAM MK 133 0.0 0.9 Hold 1.0 14.4 14.3 0.8 0.8 5.9 6.0 15.9 16.1 5.8 5.9
Axis REIT AXRB MK 394 0.2 1.3 Hold 1.5 13.9 12.4 1.0 1.0 6.5 7.3 16.4 15.2 6.9 7.8
CapitaLand (M) Mall Trust CMMT MK 532 0.6 1.0 Buy 1.2 13.6 13.6 0.8 0.8 7.0 7.0 15.5 15.6 5.7 5.8
Eco World Development ECW MK 782 0.4 1.0 Buy 1.7 18.0 9.4 0.7 0.6 0.0 1.1 9.1 7.0 3.9 7.1
Eco World International ECWI MK 619 0.2 1.0 Hold 1.1 14.0 6.3 0.9 0.8 0.0 4.0 na na 6.6 13.5
Glomac GLMC MK 94 0.0 0.5 Hold 0.6 12.0 8.0 0.3 0.3 1.7 2.5 8.6 8.2 na na
IGB REIT IGBREIT MK 1,349 0.9 1.5 Buy 1.9 17.1 16.6 1.4 1.4 5.9 6.1 17.9 17.5 8.2 8.5
KLCCP Stapled Group KLCCSS MK 3,275 0.9 7.1 Hold 8.0 17.5 17.0 0.9 0.9 4.8 4.9 14.6 13.6 5.5 5.4
Mah Sing Group MSGB MK 651 0.8 1.1 Hold 1.3 8.0 8.0 0.8 0.8 5.0 5.0 2.3 2.1 na na
MRCB-Quill REIT MQREIT MK 281 0.1 1.0 Buy 1.4 12.1 11.9 0.8 0.8 7.5 7.2 14.7 14.5 6.6 6.8
Pavilion REIT PREIT MK 1,093 0.2 1.4 Hold 1.6 18.5 17.0 1.1 1.0 5.2 5.7 18.1 17.2 6.0 6.2
Sime Darby Property SDPR MK 2,467 2.4 1.4 Hold 1.6 11.5 13.8 1.0 1.0 3.5 2.9 10.7 12.9 10.5 7.1
SP Setia SPSB MK 3,042 3.2 3.2 Buy 3.8 23.7 13.3 1.1 1.8 2.3 4.4 22.6 20.2 na na
Sunway SWB MK 1,871 1.6 1.5 Buy 2.0 12.0 11.1 0.9 0.8 3.7 4.0 12.7 12.0 na na
Sunway REIT SREIT MK 1,219 0.8 1.6 Buy 1.9 16.4 16.0 1.1 1.1 5.5 5.6 19.0 18.2 6.9 7.2
Tambun Indah Land TILB MK 91 0.1 0.8 Hold 0.9 6.6 6.4 0.6 0.6 6.1 6.2 5.0 4.5 na na
UEM Sunrise UEMS MK 1,159 0.9 1.0 Hold 1.3 20.4 16.3 0.6 0.6 1.0 1.1 18.6 18.9 na na
Yong Tai Bhd YTB MK 183 0.7 1.5 Buy 1.8 18.0 6.0 1.2 1.0 0.0 0.0 14.7 4.8 11.1 25.7
YTL Hospitality REIT YTLREIT MK 475 0.3 1.1 Buy 1.4 14.0 12.5 0.7 0.8 6.5 7.3 16.3 14.6 1.8 1.9
Share prices as at 22 Mar, 2018 closing.

Source: Maybank Kim Eng, Bloomberg
March 2018 THE DOOR TO ASEAN PROPERTY 127

APPENDIX
PERFORMANCE & VALUATION TABLE
Mkt Cap 3mth ADTV TP PE (x) PB (x) DY (%) EV/EBITDA (x) RoE (%)
Name Ticker (USDm) (USDm) Price Rating (lcl crcy) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E
Singapore
Ascendas REIT AREIT SP 5,881 19.7 2.7 Buy 3.1 15.9 15.4 1.1 1.1 6.2 6.5 18.3 17.7 7.5 7.2
Bukit Sembawang BS SP 1,218 1.4 6.2 Buy 8.6 48.2 10.1 1.3 1.2 5.3 5.3 38.6 8.7 3.0 12.6
CapitaLand CAPL SP 11,697 28.5 3.6 Buy 4.1 11.8 14.8 0.8 0.8 3.6 3.8 18.7 16.2 7.8 5.9
City Developments CIT SP 9,114 17.6 13.2 Buy 14.2 19.0 17.6 1.2 1.2 1.4 1.4 13.7 13.0 7.1 7.3
GuocoLand GUOL SP 1,933 1.1 2.2 Buy 3.0 7.1 9.8 0.6 0.6 3.3 3.7 22.7 15.9 9.2 7.2
Ho Bee Land HOBEE SP 1,305 0.3 2.6 Buy 3.2 14.4 12.3 0.5 0.5 3.1 3.1 19.0 15.6 3.8 4.3
Mapletree Comm. Trust MCT SP 3,458 7.4 1.6 Sell 1.5 10.6 15.5 1.1 1.1 5.6 5.7 22.6 22.2 10.6 7.1
Mapletree Ind. Trust MINT SP 2,922 8.3 2.0 Buy 2.2 17.5 15.7 1.4 1.4 5.8 6.5 21.6 20.3 8.1 8.7
UOL Group Ltd UOL SP 5,541 10.5 8.7 Buy 10.4 18.3 15.7 0.8 0.7 2.0 2.0 12.0 11.8 4.2 4.7
Thailand
Amata Corp AMATA TB 737 15.4 21.6 Buy 18.8 12.2 12.0 1.7 1.5 3.3 3.3 13.5 12.6 14.4 13.3
AP (Thailand) AP TB 850 2.9 8.5 Buy 9.4 6.9 6.4 1.1 1.0 5.1 5.4 10.7 10.2 16.7 16.0
Central Pattana CPN TB 11,295 15.1 78.8 Hold 74.8 29.7 24.5 5.2 4.6 1.6 1.9 18.9 16.0 18.4 20.1
L.P.N. Development LPN TB 500 3.1 10.6 Sell 9.2 11.1 9.1 1.2 1.1 5.9 7.2 11.3 8.9 11.1 12.9
Land & Houses LH TB 4,048 15.6 10.6 Buy 12.6 13.7 12.9 2.5 2.4 6.2 6.6 18.7 17.6 18.2 18.9
Pruksa Holding PSH TB 1,525 2.1 21.8 Buy 28.0 7.1 6.0 1.2 1.1 11.2 13.4 7.1 6.7 17.2 19.4
Quality Houses QH TB 1,014 6.6 3.0 Buy 3.7 9.6 9.4 1.2 1.2 6.3 6.4 20.6 20.4 13.1 12.7
Supalai PCL SPALI TB 1,312 4.9 22.1 Buy 26.8 7.0 7.1 1.4 1.2 6.2 5.5 7.1 7.1 19.7 18.4
WHA Corporation WHA TB 1,831 16.2 4.0 Buy 4.1 16.9 16.1 2.3 2.2 5.0 5.1 21.3 21.8 13.4 13.9
Vietnam
Kinh Bac City KBC VN 277 2.2 13,450 Hold 13,100 14.1 12.1 0.7 0.7 0.0 0.0 14.7 13.2 5.3 5.8
Nam Long Inv't NLG VN 288 0.6 34,800 Buy 35,020 10.5 8.4 1.7 1.4 1.3 1.3 4.3 3.7 18.3 19.9
Novaland Inv't NVL VN 2,367 7.8 82,600 Hold 57,000 14.6 19.8 3.7 3.1 0.0 0.0 11.6 14.0 27.5 16.9
Vingroup JSC VIC VN 12,508 10.4 108,000 Buy 92,000 21.5 19.9 6.1 4.7 0.0 0.0 13.5 11.8 32.2 26.0
Share prices as at 22 Mar, 2018 closing.

Source: Maybank Kim Eng, Bloomberg

APPENDIX
ASEAN FORECAST TABLES
Policy Rate Year-end (%) FX Forecast

2015 2016 2017 2018F 2019F Spot End Q1-18 End Q2-18 End Q3-18 End Q4-18
Indonesia 6.25 4.75 4.25 4.50 5.00 USD/JPY 105.70 108.00 107.00 106.00 105.00
Malaysia 3.25 3.00 3.00 3.25 3.50 EUR/USD 1.24 1.24 1.25 1.28 1.30
Philippines 4.00 3.00* 3.00 3.50 3.75
GBP/USD 1.42 1.42 1.44 1.48 1.48
Singapore 1.19 0.97 1.50 1.55 1.75
AUD/USD 0.78 0.79 0.80 0.81 0.83
Thailand 1.50 1.50 1.50 1.75 2.00
NZD/USD 0.72 0.71 0.74 0.75 0.76
Vietnam 4.50 4.50 4.25 4.25 4.25
USD/CHF 0.95 0.96 0.96 0.95 0.95
EUR/AUD 1.60 1.58 1.56 1.58 1.57

Fed Fund Rates - Upper Bound 0.50 0.75 1.50 2.25 3.00
EUR/JPY 130.86 133.92 133.75 135.68 136.50
Bond Yield Forecast AUD/NZD 1.07 1.11 1.08 1.08 1.09
US 10Y bond yield (%) 2.27 2.44 2.41 3.00 3.25 AUD/JPY 81.92 84.78 85.60 85.86 87.15

APPENDIX
ASEAN-6 Key Macroeconomic Indicators
GDP Growth (%) Headline Inflation (%, average) Policy Rate (%, year-end)
2015 2016 2017 2018F 2019F 2015 2016 2017 2018F 2019F 2015 2016 2017 2018F 2019F
Indonesia 4.9 5.0 5.1 5.3 5.5 6.4 3.5 3.8 3.8 3.6 6.25 4.75 4.25 4.50 5.00
Malaysia 5.0 4.2 5.9 5.3 5.1 2.1 2.1 3.8 2.8 2.8 3.25 3.00 3.00 3.25 3.50
Philippines 6.1 6.9 6.7 7 6.8 1.4 1.8 3.2 3.6 3.4 4.00 3.00 3.00 3.50 3.75
Singapore 1.9 2.0 3.6 2.8 2.5 -0.5 -0.5 0.6 0.9 1.5 1.19 0.97 1.5 1.55 1.75
Thailand 2.9 3.2 3.9 4.1 3.5 -0.9 0.2 0.7 1.3 1.9 1.50 1.50 1.50 1.75 2.00
Vietnam 6.7 6.2 6.8 6.5 6.5 0.6 2.7 3.5 4.0 4.0 4.50 4.50 4.25 4.25 4.25
Indonesia: Key Macroeconomic Indicators

2014 2015 2016 2017 2018E 2019E
Real GDP (%) 5.0 4.9 5.0 5.1 5.3 5.5
Private Consumption (%) 5.1 5.0 5.0 4.9 5.1 5.2
Government Consumption (%) 1.2 5.3 (0.1) 2.1 7.6 0.1
Gross Fixed Capital Formation (%) 4.4 5.0 4.5 6.2 7.2 7.6
Exports of Goods & Services (%) 1.1 (2.1) (1.6) 9.1 4.4 6.2
Imports of Goods & Services (%) 2.1 (6.2) (2.4) 8.1 6.1 7.7
Current Account Balance (% of GDP) (3.1) (2.0) (1.8) (1.5) (2.2) (2.3)
Fiscal Balance (% of GDP) (2.2) (2.8) (2.5) (2.4) (2.5) (2.5)
Inflation Rate, in avg (%) 6.4 6.4 3.5 3.8 3.5 3.4
Unemployment Rate (%) 5.9 6.2 5.6 5.5 5.3 5.1
Exchange Rate (per USD, end-period) 12,440 13,795 13,436 13,548 12,800 12,750
Benchmark Interest Rate (% p.a., end of period) 5.86 6.25 4.75 4.25 4.50 5.00

APPENDIX
Malaysia: Key Macroeconomic Indicators
2014 2015 2016 2017 2018E 2019E
Real GDP (%) 6.0 5.0 4.2 5.9 5.3 5.1
Government Consumption (%) 4.4 4.4 0.9 5.4 5.8 5.6
Exports of Goods & Services (%) 5.0 0.3 1.1 9.6 4.9 4.0
Imports of Goods & Services (%) 4.0 0.8 1.1 11.0 5.7 5.2
Current Account Balance (% of GDP) 4.4 3.0 2.4 3.0 3.0 2.4
Inflation Rate (%) 3.1 2.1 2.1 3.8 2.8 2.3
Exchange Rate (per USD, end-period) 3.50 4.29 4.49 4.05 3.65 3.60
Benchmark Interest Rate (% p.a.) 3.25 3.25 3.00 3.00 3.25 3.50
Philippines: Key Macroeconomic Indicators

2014 2015 2016 2017 2018E 2019E
Real GDP (%) 6.1 6.1 6.9 6.7 7.0 6.8
Imports of Goods & Services (%) 9.9 14.6 18.5 17.6 11.2 9.8
Current Account Balance (% of GDP) 3.8 2.5 (0.0) (0.3) (0.5) (0.5)
Inflation Rate (%) 4.1 1.4 1.8 3.2 4.3 3.4

APPENDIX
Singapore: Key Macroeconomic Indicators
2014 2015 2016 2017 2018E 2019E
Real GDP (%) 3.9 2.2 2.4 3.6 2.8 2.5
Manufacturing (%) 2.7 -5.1 3.7 10.1 3.0 2.1
Construction (%) 7.6 5.8 1.9 -8.4 1.6 2.5
Services (%) 4.3 3.5 1.4 2.8 2.8 2.6
Wholesale & Retail Trade (%) 3.0 3.6 1.0 2.3 2.2 2.4
Finance & Insurance (%) 9.3 5.3 1.6 4.8 4.7 4.2
Business Services (%) 2.0 5.4 -0.3 0.6 2.6 2.0
Fiscal Balance (% of GDP) 0.1 -1.0 1.4 2.1 0.6 0.7
Inflation Rate (%, average) 1.0 -0.5 -0.5 0.6 0.9 1.5
3M SIBOR (% p.a., end-period) 0.46 1.19 0.97 1.50 1.55 1.75
Thailand: Key Macroeconomic Indicators

2014 2015 2016 2017 2018E 2019E
Real GDP (%) 1.0 3.0 3.3 3.9 4.1 3.7
Gross Fixed Capital Formation (%) (2.2) 4.3 2.8 0.9 3.8 4.1
Imports of Goods & Services (%) (5.3) 0.0 (1.0) 6.8 3.7 2.8
Inflation Rate (%) 1.9 (0.9) 0.2 0.7 1.3 1.9

RESEARCH OFFICES
Adrian WONG
REGIONAL FX MALAYSIA (603) 2297 8675 adrian.wkj@maybank-ib.com
Sadiq CURRIMBHOY Saktiandi SUPAAT WONG Chew Hann, CA Head of Research • Constructions • Healthcare
Regional Head, Research & Economics Head, FX Research (603) 2297 8686 wchewh@maybank-ib.com Jade TAM
(65) 6231 5836 (65) 6320 1379 • Strategy (603) 2297 8687 jade.tam@maybank-ib.com
sadiq@maybank-ke.com.sg saktiandi@maybank.com.sg Desmond CH’NG, ACA
• Media • Building Materials
WONG Chew Hann, CA Christopher WONG (603) 2297 8680 Mohd Hafiz Hassan
Regional Head of Institutional Research (65) 6320 1347 desmond.chng@maybank-ib.com (603) 2082 6819 mohdhafiz.ha@maybank-ib.com
(603) 2297 8686 wongkl@maybank.com.sg • Banking & Finance • Small & Mid Caps
wchewh@maybank-ib.com Leslie TANG LIAW Thong Jung
TEE Sze Chiah Head of Retail Research
ONG Seng Yeow (65) 6320 1378 (603) 2297 8688 tjliaw@maybank-ib.com (603) 2082 6858 szechiah.t@maybank-ib.com
Regional Head of Retail Research leslietang@maybank.com.sg • Oil & Gas Services- Regional Nik Ihsan Raja Abdullah, MSTA, CFTe
(65) 6231 5839 Fiona LIM ONG Chee Ting, CA (603) 2297 8694
ongsengyeow@maybank-ke.com.sg (65) 6320 1374 (603) 2297 8678 ct.ong@maybank-ib.com
nikmohdihsan.ra@maybank-ib.com
TAN Sin Mui fionalim@maybank.com.sg • Plantations - Regional
Director of Research Mohshin AZIZ
(65) 6231 5849 STRATEGY (603) 2297 8692 mohshin.aziz@maybank-ib.com SINGAPORE
sinmui@kimeng.com.hk • Aviation - Regional • Petrochem Neel SINHA Head of Research
Sadiq CURRIMBHOY
YIN Shao Yang, CPA (65) 6231 5838 neelsinha@maybank-ke.com.sg
Global Strategist
(603) 2297 8916 samuel.y@maybank-ib.com • Strategy
ECONOMICS (65) 6231 5836 • SMID Caps – Regional
sadiq@maybank-ke.com.sg • Gaming – Regional • Media
Suhaimi ILIAS TAN Chi Wei, CFA CHUA Su Tye
Willie CHAN (65) 6231 5842 chuasutye@maybank-ke.com.sg
Chief Economist (603) 2297 8690 chiwei.t@maybank-ib.com
Hong Kong / Regional • REITs
Malaysia | Philippines | China • Power • Telcos
(852) 2268 0631 Derrick HENG, CFA
(603) 2297 8682 WONG Wei Sum, CFA
williechan@kimeng.com.hk (65) 6231 5843 derrickheng@maybank-ke.com.sg
suhaimi_ilias@maybank-ib.com (603) 2297 8679 weisum@maybank-ib.com • Property • REITs (Office)
CHUA Hak Bin • Property Luis HILADO
Regional Thematic Macroeconomist FIXED INCOME LEE Yen Ling (65) 6231 5848 luishilado@maybank-ke.com.sg
(65) 6231 5830 (603) 2297 8691 lee.yl@maybank-ib.com • Telcos
Winson Phoon, ACA
chuahb@maybank-ke.com.sg • Building Materials • Glove • Ports • Shipping John CHEONG, CFA
(65) 6231 5831
LEE Ju Ye Ivan YAP (65) 6231 5845 johncheong@maybank-ke.com.sg
winsonphoon@maybank-ke.com.sg
Singapore • Small & Mid Caps • Healthcare • Transport
Se Tho Mun Yi (603) 2297 8612 ivan.yap@maybank-ib.com
(65) 6231 5844 NG Li Hiang
(603) 2074 7606 • Automotive • Semiconductor • Technology
leejuye@maybank-ke.com.sg (65) 6231 5840 nglihiang@maybank-ke.com.sg
munyi.st@maybank-ib.com Kevin WONG • Banks
Dr Zamros DZULKAFLI (603) 2082 6824 kevin.wong@maybank-ib.com LAI Gene Lih
(603) 2082 6818 • REITs • Consumer Discretionary (65) 6231 5832 laigenelih@maybank-ke.com.sg
zamros.d@maybank-ib.com LIEW Wei Han • Technology
Ramesh LANKANATHAN (603) 2297 8676 weihan.l@maybank-ib.com
(603) 2297 8685 • Consumer Staples
ramesh@maybank-ib.com

RESEARCH OFFICES
HONG KONG / CHINA INDONESIA Tanawat RUENBANTERNG VIETNAM

Christopher WONG Isnaputra ISKANDAR Head of Research (66) 2658 6300 ext 1394 LE Hong Lien, ACCA
(852) 2268 0652 christopherwong@kimeng.com.hk (62) 21 8066 8680 Tanawat.R@maybank-ke.co.th Head of Institutional Research
• HK & China Properties isnaputra.iskandar@maybank-ke.co.id • Banks & Diversified Financials (84 28) 44 555 888 x 8181
Jacqueline KO, CFA • Strategy • Metals & Mining • Cement Ornmongkol TANTITANATORN lien.le@maybank-kimeng.com.vn
(852) 2268 0633 jacquelineko@kimeng.com.hk Rahmi MARINA (66) 2658 6300 ext 1395 • Strategy • Consumer • Diversified
• Consumer Staples & Durables (62) 21 8066 8689 ornmongkol.t@maybank-ke.co.th THAI Quang Trung, CFA,
Ka Leong LO, CFA rahmi.marina@maybank-ke.co.id • Oil & Gas Deputy Head, Institutional Research
(852) 2268 0630 kllo@kimeng.com.hk • Banking & Finance Sukit UDOMSIRIKUL Head of Retail Research (84 28) 44 555 888 x 8180
• Consumer Discretionary & Auto Aurellia SETIABUDI (66) 2658 5000 ext 5090 trung.thai@maybank-kimeng.com.vn
Mitchell KIM (62) 21 8066 8691 Sukit.u@maybank-ke.co.th • Real Estate • Construction • Materials
(852) 2268 0634 mitchellkim@kimeng.com.hk aurellia.setiabudi@maybank-ke.co.id Ekachai TARAPORNTIP Deputy Head LE Nguyen Nhat Chuyen
• Internet & Telcos • Property 66) 2658 5000 ext 1530 (84 28) 44 555 888 x 8082
Ricky NG, CFA Janni ASMAN Ekachai.t@maybank-ke.co.th chuyen.le@maybank-kimeng.com.vn
(852) 2268 0689 rickyng@kimeng.com.hk (62) 21 8066 8687 Surachai PRAMUALCHAROENKIT • Oil & Gas
• Regional Renewables janni.asman@maybank-ke.co.id (66) 2658 5000 ext 1470 NGUYEN Thi Ngan Tuyen,
• HK & China Properties • Cigarette • Healthcare • Retail Surachai.p@maybank-ke.co.th Head of Retail Research
Sonija LI, CFA, FRM • Auto • Conmat • Contractor • Steel (84 28) 44 555 888 x 8081
(852) 2268 0641 sonijali@kimeng.com.hk Suttatip PEERASUB tuyen.nguyen@maybank-kimeng.com.vn
• Gaming PHILIPPINES (66) 2658 5000 ext 1430 • Food & Beverage • Oil&Gas • Banking
Stefan CHANG, CFA Minda OLONAN Head of Research suttatip.p@maybank-ke.co.th TRUONG Quang Binh,
(852) 2268 0675 stefanchang@kimeng.com.hk (63) 2 849 8840 • Media • Commerce Deputy Head, Retail Research
• Technology – Regional minda_olonan@maybank-atrke.com Sutthichai KUMWORACHAI (84 28) 44 555 888 x 8087
Tony REN, CFA • Strategy (66) 2658 5000 ext 1400 binh.truong@maybank-kimeng.com.vn
(852) 2268 0640 tonyren@kimeng.com.hk Katherine TAN sutthichai.k@maybank-ke.co.th • Rubber Plantation • Tyres & Tubes • Oil & Gas
• Healthcare & Pharmaceutical (63) 2 849 8843 • Energy • Petrochem TRINH Thi Ngoc Diep
kat_tan@maybank-atrke.com Termporn TANTIVIVAT (84 28) 44 555 888 x 8208
• Banks • Construction (66) 2658 5000 ext 1520 diep.trinh@maybank-kimeng.com.vn
INDIA Luis HILADO termporn.t@maybank-ke.co.th • Technology • Utilities • Construction
Jigar SHAH Head of Research (65) 6231 5848 luishilado@maybank-ke.com.sg • Property NGUYEN Thi Sony Tra Mi
(91) 22 6623 2632 jigar@maybank-ke.co.in • Telcos Jaroonpan WATTANAWONG (84 28) 44 555 888 x 8084
• Strategy • Oil & Gas • Automobile • Cement (66) 2658 5000 ext 1404 mi.nguyen@maybank-kimeng.com.vn
jaroonpan.w@maybank-ke.co.th • Port Operation • Pharmaceutical
Vishal MODI THAILAND • Transportation • Small cap
(91) 22 6623 2607 vishal@maybank-ke.co.in • Food & Beverage
Maria LAPIZ Head of Institutional Research
• Banking & Financials Sorrabhol VIRAMETEEKUL NGUYEN Thanh Lam
Dir (66) 2257 0250 | (66) 2658 6300 ext 1399
Neerav DALAL Head of Digital Research (84 28) 44 555 888 x 8086
Maria.L@maybank-ke.co.th (66) 2658 5000 ext 1550
(91) 22 6623 2606 neerav@maybank-ke.co.in thanhlam.nguyen@maybank-kimeng.com.vn
• Strategy • Consumer • Materials • Ind. Estates sorrabhol.V@maybank-ke.co.th
• Software Technology • Telcos • Technical Analysis
• Oil & Gas • Telcos
Vishal PERIWAL • Food, Transportation
Sittichai DUANGRATTANACHAYA
(91) 22 6623 2605 vishalperiwa@maybank-ke.co.in Wijit ARAYAPISIT
(66) 2658 6300 ext 1393
• Infrastructure (66) 2658 5000 ext 1450
Sittichai.D@maybank-ke.co.th wijit.a@maybank-ke.co.th
• Services Sector • Transport • Property • Telcos
• Strategist

TERMS FOR PROVISION OF REPORT, DISCLAIMERS & DISCLOSURES
DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities
referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical
ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from
the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is
not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report.
Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates
(collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates,
connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information,
opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and
“project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made
and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are
cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or
circumstances after the date of this publication or to reflect the occurrence of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions
with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or
options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. One or more directors, officers and/or employees of MKE may
be a director of the issuers of the securities mentioned in this report to the extent permitted by law.
This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior
express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication,
availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in
all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person
or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and
are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information
for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is
not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such
liability being limited to the extent (if any) as permitted by law.

Thailand
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Kim Eng Securities (Thailand) Public Company Limited.
Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) accepts no liability whatsoever for the actions of third parties in this respect.
Due to different characteristics, objectives and strategies of institutional and retail investors, the research reports of MBKET Institutional and Retail Research Department may differ in either recommendation or target
price, or both. MBKET Retail Research is intended for retail investors (http://kelive.maybank-ke.co.th) while Maybank Kim Eng Institutional Research is intended only for institutional investors based outside Thailand only.
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of
the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result,
therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed
Companies. As a result, the survey may be changed after that date. MBKET does not confirm nor certify the accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the policy and sustainable
development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the
form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company. The assessment result is
therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the
date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the accuracy and completeness
of the assessment result.
US
This third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng
Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank
KESUSA in the US shall be borne by Maybank KESUSA. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy
yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. All U.S. persons receiving and/or accessing this report and
wishing to effect transactions in any security mentioned within must do so with: Maybank Kim Eng Securities USA Inc. 777 Third Avenue 21st Floor New York, New York 1- (212) 688-8886 and not with, the issuer of this
report.
UK
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Conduct Authority and is for Informational Purposes only. This document
is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm
does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that
for accurate guidance recipients should consult with their own independent tax advisers.

TERMS FOR PROVISION OF REPORT, DISCLAIMERS & DISCLOSURES
DISCLOSURES
Legal Entities Disclosures
Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938- H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License
issued by the Securities Commission in Malaysia. Singapore: This report is distributed in Singapore by Maybank KERPL (Co. Reg No 198700034E) which is regulated by the Monetary Authority of Singapore. Indonesia: PT
Maybank Kim Eng Securities (“PTMKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the Financial Services Authority (Indonesia). Thailand: MBKET (Reg. No.0107545000314)
is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines
Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of Vietnam.
Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited
and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of India (“SEBI”) (Reg. No. INZ000010538). KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) and as
Research Analyst (Reg No: INH000000057) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the
Financial Conduct Authority.
Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting
commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies.
Singapore: As of 25 March 2018, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own
judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned
in this report.
Hong Kong: As of 25 March 2018, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.
India: As of 25 March 2018, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst or their associate / relative does not hold any financial interest or any
actual or beneficial ownership in any shares or having any conflict of interest in the subject companies except as otherwise disclosed in the research report.
In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or third party in connection with the research report on any account
what so ever except as otherwise disclosed in the research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or
may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services
provided from the companies covered in this report.

OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s
compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the
risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and
exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should
conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.
Definition of Ratings
Maybank Kim Eng Research uses the following rating system:
BUY Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
SELL Return is expected to be below -10% in the next 12 months (excluding dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe.
Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.



T H E D OOR T O
ASEANPROPERTY

MayBank Bringing ASEAN ToYou

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MayBank Bringing ASEAN ToYou

Uploaded by

Copyright:

Available Formats

T H E D O O R TO

THE DOOR TO ASEAN PROPERTY 1

THE DOOR TO ASEAN PROPERTY 4

EQUITIES OVER PHYSICAL

INDUSTRIAL REITS ARE ALTERNATIVES TO LARGE

DATA CENTRES AN EMERGING INVESTMENT

3. Strong demand for data centres should support further

Source: Maybank Kim Eng estimates

THE DOOR TO ASEAN PROPERTY 6

Singapore’s Property Clock Slowing

Demand & supply of private residential market

Source: Maybank Kim Eng

THE DOOR TO ASEAN PROPERTY 7

Residential Cap Rates

Source: CBRE, Maybank Kim Eng

THE DOOR TO ASEAN PROPERTY 8

Residential enbloc deals

20 2005-07 Singapore’s average household size has shrunk from 4 in 1995 to

Household growth despite weak population expansion

Source: Singstats, Maybank Kim Eng

THE DOOR TO ASEAN PROPERTY 9

Home price-to-income ratio

Source: Bloomberg, URA, Singstats, Maybank Kim Eng estimates

THE DOOR TO ASEAN PROPERTY 10

Source: Maybank Kim Eng estimates

Mortgage servicing ratio

Assumes 100bp hike in Y1 – Y5

THE DOOR TO ASEAN PROPERTY 11

Higher Household income, monthly 2009 2017 2017 vs 2009

Refers to Resident households. Including CPF.

THE DOOR TO ASEAN PROPERTY 12

Cash on household balance sheet

400 95 However, it remains sizeable at about half of total transactions.

THE DOOR TO ASEAN PROPERTY 13

Additional Buyer’s Stamp Duty (ABSD)

Source: IRAS, MAS, Maybank Kim Eng

Five-year IRR for residential property investors

Assuming property price appreciation of 5% pa.

THE DOOR TO ASEAN PROPERTY 14

Stock prices vs physical property prices

Leverage for stocks vs physical properties

20 market price movements.

THE DOOR TO ASEAN PROPERTY 15

Transaction costs for stocks vs physical property

Yields and financing costs for stocks vs physical property

2 1-2.5 Lower transaction costs & higher yields for

Source: Maybank Kim Eng

THE DOOR TO ASEAN PROPERTY 16

Source: Bloomberg, Maybank Kim Eng TAKEAWAY

Developer stocks currently trade at a discount to

THE DOOR TO ASEAN PROPERTY 17

Owns vast plots of legacy land worth one-third of stock value

Condos Landed Legacy land Others

Source: Company, Maybank Kim Eng

THE DOOR TO ASEAN PROPERTY 18

Source: Maybank Kim Eng

Returns can be enhanced with leverage

Source: Maybank Kim Eng

THE DOOR TO ASEAN PROPERTY 19

IGLS programme (1H03 to 1H18)

25 Private investment opportunities limited by shorter land tenures

Industrial supply-demand outlook

Source: Maybank Kim Eng