On Our Portfolio

14 September 2015

PP7004/02/2013(031762) Page 1 of 8

On Our Portfolio

Will Fed Raise Interest Rate This Time? By the Kenanga Research Team l research@kenanga.com.my

With the Ringgit falling continuously in the past 12 weeks and still grappling to find a bottom and crude oil prices remaining lacklustre, t he FBMKLC is likely to consolidate further with downside bias within the range of 1,56 0-1,621. This week, the US FOMC’s meeting is in the main spotlight as consensus is lo oking for the first rate hike since the last financial crisis. However, there is another sc hool of thought that reckons a hike in interest rate is not necessary given the unfavourab le economic data and strong USD. In any case, this is going to affect the equity market globally. Portfolio-performance-wise, we had a mixed week with DIVIDEND YIELD Portfolio the only weekly outperformer. Nonetheless, all our portfolios continued to outpac e the benchmark index by 909-2,995 on YTD basis.

All eyes on US FOMC meeting. With the lack of positive catalysts and coupled with lingering macro issues like the weakening MYR which has fallen for the 12th continuous week and lacklustre crude oil prices, investors are putting their focus on the 2-day US FOMC meeting which will be held mid-week. Overall, the market consensus is expecting Fed to raise interest rate this time; the first rate hike since the last financial crisis. However, we see another school of thought that reckons a hike is not required as the unfavourable economic data and strong USD could work against the objective of an interest rate hike. Technically, the FBMKLCI is expected to

consolidate further with downside-bias within the range of 1,560-1,621.

A better week but… Last week, the local market had a slow start as both crude oil prices and Ringgit weakened, especially Ringgit, which hit a fresh low against the greenback, with uninspiring trading volume while technical indicators slid further towards oversold territory. Nonetheless, the FBMKLCI managed to recover mid-week before falling back before the end of the week. Despite being a better week in terms of index performance compared to the previous week, market sentiment remained fragile as investors stayed on the sidelines ahead of the US FOMC meeting. At last Friday’s closing bell, the FBMKLCI inched up 0.91% or 14.44pts to settle at 1,603.60, mainly led by DIGI (+3.70%), MISC (+4.52%) and TENAGA (+1.26%). On Wall Street, US stocks generally closed mixed as investors were getting more cautious while waiting for more guidance over the timing of the US Fed interest rate hike as the upcoming US FOMC meeting drew nearer. In addition, the weaker-than-expected Chinese and Japanese economic data also caused concerns among investors over the health of the global economy.

A mixed performance for our portfolios, with only DIVIDEND YIELD Portfolio (+2.24%) outperforming the barometer index (+0.91%) on a weekly basis as the two invested stocks namely DIGI and BJTOTO rebounded by 3.70% and 1.94% respectively. While GROWTH Portfolio (+0.86%) underperformed the benchmark index slightly, THEMATIC Portfolio posted a 0.40% weekly decline as HARTA (-1.07%) retreated from the previous week while PESTECH (+0.53%) posted a small gain. Nonetheless, on YTD basis, all our portfolios still outpaced the 30-stock index (-6.63%) with GROWTH Portfolio (+23.32%) remaining the top gainer followed by THEMATIC (+11.48%) and DIVIDEND YIELD Portfolio (+2.46%). Again, in view of the uncertainty in the current market, we are still looking for appropriate timing to re-enter the market as certain stocks appear to be deeply oversold with attractive valuations. Stay tuned.

Total Return (%) Key economic events to watch Date Consensus WoW YTD

FBMKLCI 0.91 -6.63 US CPI YoY – Aug 16-Sep 0.2% Thematic -0.40 11.48 US Initial Jobless Claim – Sep 12 17-Sep - Growth 0.86 23.32 UK CPI YoY – Aug 15-Sep 0.0% Dividend Yield 2.24 2.46 China Industrial Production YoY – Aug 13-Sep 6.5%

On Our Portfolio 14 September 2015

PP7004/02/2013(031762) Page 2 of 8

Figure 1: FBMKLCI Weekly Charting

Source: Kenanga Research

Cautious trading ahead of FOMC. As per our expectation, the FBMKLCI had traded relatively flattish over the week as it managed to inch marginally above the psychological 1,600 support level. Investors are generally on the tip of their toe, as they digest (i) a continued weakening of the Ringgit as well as volatile crude prices, (ii) China’s economic slowdown condition and (iii) anticipation of the upcoming FOMC meeting. Trading volume on the local bourse has also been relatively sluggish, which goes hand-in-hand with the lack of buying momentum as showcased by the lacklustre momentum indicators. All in, as we look forward towards the upcoming FOMC meeting for clearer indication on the interest rate hike timing while being kept at bay due to the growing uncertainty in the global economy, we view that the FBMKLCI could possibly trade sideways this week within 1,563-1,623.

Technical Ratings

Resistance 2 1650 MACD Neutral

Resistance 1 1623 Stochastic Neutral Current Level 1603.60 RSI Neutral Support 1 1600

Support 2 1563 Outlook Neutral

Figure 2 : USDMYR Weekly Chart ing

Source: Kenanga Research

On Our Portfolio 14 September 2015

PP7004/02/2013(031762) Page 3 of 8

Retail Model Portfolio – THEMATIC

No CATS Code Industry / Company

Last Buy/Sell

Date

No. of Shares

Average Cost

Avg Cost/ Share

Share Price

@ 11 Sep

15

Value Unrealised Profit / (Loss)

% Change YTD

Weighting (as % of

NAV)

Latest Dividend Ex-

Date

Gross Div

Consensus 12M Div

Yield

KNK’s/ Consensus’

TP

Potential Upside/

Downside

RM RM RM RM RM % % RM % RM % 1 5168 HARTALEGA HOLDINGS BHD 2-Jan-15 2,500 17,500 7.000 8.300 20,750 3,250 18.57% 17.5% 9/11/2015 0.04 1.57 9.50 14.5%

2 5219 PESTECH INTERNATIONAL BHD 2-Jan-15 3,500 12,250 3.500 5.670 19,845 7,595 62.00% 12.3% 4/14/2015 0.04 1.06 6.11 7.8%

29,750 40,595 10,845 36.45% 29.8% 0.40

Total Dividend Received YTD 600

Total Realised Return 30

Total Return (based on the total allocated amount ) 11,475 11.48%

KLCI FBMKLCI Index 1,752.77 1,603.60 (149.17) -8.51% 3.42

KLCI – TOTAL RETURN -6.63%

Total Realised Return No. CATS Code Industry / Company Last Buy/Sell Date No of Shares Cost @ Avg Cost/Share Share Price @ Value Realised % Change

RM RM RM RM RM % 1 1023 CIMB GROUP HOLDINGS BHD

13-Jan-15 2,000 11,840 5.920 5.50 11,000 (840) -7.09%

2 5115 ALAM MARITIM RESOURCES BHD

3-Mar-15 15,000 11,850 0.790 0.725 10,875 (975) -8.23% 3 5218 SAPURAKENCANA PETROLEUM BHD 13-Mar-15 3,000 7,050 2.350 2.340 7,020 (30) -0.43% 4 5347 TENAGA NASIONAL BHD 18-Jun-15 1,000 13,800 13.800 12.600 12,600 (1,200) -8.70% 5 5267 XIN HWA HOLDINGS BHD 16-Jul-15 5,000 13,425 0.895 1.190 17,850 4,425 32.96% 6 0032 REDTONE INTERNATIONAL BHD 30-Jan-15 30,000 22,200 0.740 0.720 21,600 (600) -2.70% 7 7174 CAB CAKARAN CORP BHD 2-Mar-15 5,000 4,650 0.930 0.985 4,925 275 5.91% 8 7117 CENTURY LOGISTICS HOLDINGS B 15-May-15 15,000 13,625 0.908 0.840 12,600 (1,025) -7.52% 30

Total Dividends Received No CATS Code Company No. of Shares Ex-Date Gross Div Div Rec 1 5218 SAPURAKENCANA PETROLEUM BHD 3,000 1/12/2015 0.02 60.00

2 5168 HARTALEGA HOLDINGS BHD 2,500 3-Mar-15 0.03 75.00

3 5219 PESTECH INTERNATIONAL BHD 3,500 14-Apr-15 0.04 140.00

4 5347 TENAGA NASIONAL BHD 1,000 18/5/2015 0.10 100.00

5 5168 HARTALEGA HOLDINGS BHD 2,500 19/5/2015 0.03 75.00

6 7117 CENTURY LOGISTICS HOLDINGS B 5,000 1-Jun-15 0.01 50.00

7 5168 HARTALEGA HOLDINGS BHD 2,500 11-Sep-15 0.04 100.00

TOTAL DIVIDEND RECEIVED 600.00

On Our Portfolio 14 September 2015

PP7004/02/2013(031762) Page 4 of 8

Retail Model Portfolio - GROWTH

No CATS Code Company

Last Buy/Sell

Date

No. of Shares

Average Cost

Avg Cost/ Share

Share Price

@ 11 Sep

15

Value Unrealised

Profit / (Loss)

% Change

YTD

Weighting (as % of

NAV)

Latest Dividend Ex-Date

Gross Div

Consensus 12M Div

Yield

KNK’s/ Consensus’

TP

Potential Upside/

Downside

RM RM RM RM RM % % RM % RM %

1 5219 PESTECH INTERNATIONAL BHD 2-Jan-15 5,000 17,500 3.500 5.670 28,350 10,850 62.00% 17.50% 4/14/2015 0.04 0.00 6.11 7.8%

17,500 28,350 10,850 62.00% 17.50% 0.00

Total Dividend Received YTD 830

Total Realised Return 11,640

Total Return (based on the total allocated amount ) 23,320 23.32%

KLCI FBMKLCI Index 1,752.77 1,603.60 (149.17) -8.51% 3.42

KLCI – TOTAL RETURN -6.63%

Total Realised Return No. CATS Code Industry / Company Last Buy/Sell Date No of Shares Cost @ Avg Cost/Share Share Price @ Value Realised % Change

RM RM RM RM RM % 1 5218 SAPURAKENCANA PETROLEUM BHD 13-Mar-15 3,000 7,050 2.350 2.340 7,020 (30) -0.43%

2 7081 PHARMANIAGA BERHAD 22-Apr-15 3,500 16,030 4.580 7.300 25,550 9,520 59.39%

3 5347 TENAGA NASIONAL BHD 18-Jun-15 1,000 13,800 13.800 12.600 12,600 (1,200) -8.70%

4 5267 XIN HWA HOLDINGS BHD 16-Jul-15 5,000 13,425 0.895 1.190 17,850 4,425 32.96%

5 0032 REDTONE INTERNATIONAL BHD 30-Jan-15 30,000 22,200 0.740 0.720 21,600 (600) -2.70%

6 7174 CAB CAKARAN CORP BHD 2-Mar-15 10,000 9,300 0.930 0.985 9,850 550 5.91%

7 7117 CENTURY LOGISTICS HOLDINGS B 15-May-15 15,000 13,625 0.908 0.840 12,600 (1,025) -7.52%

11,640

Total Dividends Received No CATS Code Company No. of Shares Ex-Date Gross Div Div Rec 1 5218 SAPURAKENCANA PETROLEUM BHD 3,000 12-Jan-15 0.02 60.00

2 7081 PHARMANIAGA BERHAD 3,500 9-Mar-15 0.12 420.00

3 5219 PESTECH INTERNATIONAL BHD 5,000 14-Apr-15 0.04 200.00

4 5347 TENAGA NASIONAL BHD 1,000 18-May-15 0.10 100.00

5 7117 CENTURY LOGISTICS HOLDINGS B 5,000 1-Jun-15 0.01 50.00

TOTAL DIVIDEND RECEIVED 830.00

On Our Portfolio 14 September 2015

PP7004/02/2013(031762) Page 5 of 8

Retail Model Portfolio – DIVIDEND YIELD

No CATS Code Industry / Company

Last Buy/Sell

Date

No. of Shares

Average Cost

Avg Cost/ Share

Share Price

@ 11 Sep

15

Value Unrealis ed Profit / (Loss)

% Change

YTD

Weighting (as % of

NAV)

Latest Dividend Ex-Date

Gross Div

Consensus 12M Div

Yield

KNK’s/ Consensus’

TP

Potential Upside/

Downside

RM RM RM RM RM % % RM % RM % 1 1562 BERJAYA SPORTS TOTO BHD 2-Jan-15 10,000 34,200 3.420 3.15 31,500 (2,700) -7.89% 34.2% 7/15/2015 0.05 6.83 4.25 34.9%

2 6947 DIGI.COM BHD 11-May-15 3,000 18,090 6.030 5.320 15,960 (2,130) -11.77% 18.1% 8/5/2015 0.06 4.77 6.87 29.1%

52,290 47,460 (4,830) -9.24% 52.3% 3.20

Total Dividend Received YTD 1,980

Total Realised Return 5,305

Total Return (based on the total allocated amount ) 2,455 2.46%

KLCI FBMKLCI Index 1,752.77 1,603.60 (149.17) -8.51% 3.42

KLCI – TOTAL RETURN -6.63%

Total Realised Return No. CATS Code Industry / Company Last Buy/Sell Date No of Shares Cost @ Avg Cost/Share Share Price @ Value Realised % Change

RM RM RM RM RM % 1 5218 SAPURAKENCANA PETROLEUM BHD 13-Mar-15 3,000 7,050 2.35 2.34 7,020 (30) -0.43% 2 7081 PHARMANIAGA BERHAD 22-Apr-15 3,000 13,740 4.58 7.300 21,900 8,160 59.39% 3 5347 TENAGA NASIONAL BHD 18-Jun-15 1,000 13,800 13.80 12.600 12,600 (1,200) -8.70% 4 0032 REDTONE INTERNATIONAL BHD 30-Jan-15 30,000 22,200 0.74 0.720 21,600 (600) -2.70% 5 7117 CENTURY LOGISTICS HOLDINGS B 15-May-15 15,000 13,625 0.91 0.840 12,600 (1,025) -7.52% 5,305

Total Dividends Received No CATS Code Company No. of Shares Ex-Date Gross Div Div Rec 1 5218 SAPURAKENCANA PETROLEUM BHD 3,000 1/12/2015 0.02 60.00

2 1562 BERJAYA SPORTS TOTO BHD 5,000 28-Jan-15 0.06 300.00

3 7081 PHARMANIAGA BERHAD 3,000 9-Mar-15 0.12 360.00

4 1562 BERJAYA SPORTS TOTO BHD 5,000 6-Apr-15 0.05 250.00

5 6947 DIGI.COM BHD 3,000 13-May-15 0.06 183.00

6 5347 TENAGA NASIONAL BHD 1,000 18-May-15 0.10 100.00

7 7117 CENTURY LOGISTICS HOLDINGS B 5,000 1-Jun-15 0.01 50.00

8 1562 BERJAYA SPORTS TOTO BHD 10,000 15-Jul-15 0.05 500.00

9 6947 DIGI.COM BHD 3,000 5-Aug-15 0.06 177.00

TOTAL DIVIDEND RECEIVED 1,980.00

On Our Portfolio 14 September 2015

PP7004/02/2013(031762) Page 6 of 8

Portfolios Total Return 2013 (based on the total al located amount) vs FBMKLCI Performance

Source: Bloomberg, Kenanga Research Portfolios To tal Return 2014 (based on the total allocated amoun t) vs FBMKLCI Performance

Source: Bloomberg, Kenanga Research Portfolios Total Return 2015 (based on the total al located amount) vs FBMKLCI Performance

Source: Bloomberg, Kenanga Research

On Our Portfolio 14 September 2015

PP7004/02/2013(031762) Page 7 of 8

Daily Charting: FBMKLCI Weekly Charting: FBMKLCI

Daily Charting: FBM70 Weekly Charting: FBM70

Daily Charting: FBMSC Weekly Charting: FBMSC

Daily Charting: DJIA Weekly Charting: DJIA

Source: Bloomberg

On Our Portfolio 14 September 2015

PP7004/02/2013(031762) Page 8 of 8

Stock Ratings are defined as follows: Stock Recommendations OUTPERFORM : A particular stock’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). MARKET PERFORM : A particular stock’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERPERFORM : A particular stock’s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). Sector Recommendations*** OVERWEIGHT : A particular sector’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). NEUTRAL : A particular sector’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERWEIGHT : A particular sector’s Expected Total Return is LESS than 3% (an approximation to the

12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). ***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage.

This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies.

Published and printed by: KENANGA INVESTMENT BANK BERHAD (15678-H) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Chan Ken Yew Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 Website: www.kenanga.com.my Head of Research