• Diversified products and sound balance sheet to embrace headwinds ahead. KUB is organised into the following business segments: 1) ICT; 2) Energy (bottling and trading of liquefied petroleum gas ); 3) Agricultural Businesses (oil palm plantation and estate management); 4) Food Related (fast food service restaurants and hotelier); 5) Engineering and Construction (manufacturing and trading of precasted concrete slabs and elements ); 6) Properties (management of residential and commercial properties ); 7) Power/O&G (engineering and civil works in the power sectors ). In FY2015, over 95% of its revenue were derived from Energy (68%), Food (10%), Agro (9%) and ICT (8%) segments.

• KUB also has a 40% interest in KUB-Berjaya Enviro Sdn Bhd which is mainly involved in building, operate, maintain and manage the Bukit Tagar sanitary landfill over a 40-year concession period.

• Poised for further upside amid bullish flag and long term downtrend channel breakouts. At RM0.385, KUB is trading at 25% discount to its 1Q16 BVPS of RM0.51. Its netcash of RM42m or 7.5sen per share (about 20% of share price) could also provide sufficient margin of safety to cushion further sharp downside risks in share price.

Source: Hong Leong Investment Bank Research - 14 Jul 2016