Astaka Holdings Limited

Company note 23 August 2017 Current Price Overweight S$0.092 Fair Value S$0.130 Up / (downside) 41.4% Stock Statistics Market cap S$172.0m 52-low S$0.092 52-high S$0.225 Avg daily vol 109,994 No of share 1,869.4m Free float 23.5% Key Indicators ROE 17F 18.0% P/BK 4.18x P/RNAV 0.31x Net gearing 20.4% Major Shareholders Horizon Sea 66.55% 0.3 0.2 0.2 0.1 0.1 1000 500 Source: Bloomberg Liu Jinshu Historical Chart 0 08/16 10/16 12/16 02/17 04/17 06/17 (+65) 6236-6887 jinshu.liu@nracapital.com www.nracapital.com Building Johor Bahru s new CBD RM 1.1 billion of revenue to be recognized. Astaka s reported zero revenue and gross profit in FY16 as its accounting policy then only allowed for revenue recognition on the completion of the project. The company has since started implementing FRS 115 and will be restating its financials retrospectively to account for revenue mainly using the percentage of completion method. Sales from Phase 1 of One Bukit Senyum and from the Johor Bahru City Council Headquarters building (also part of One Bukit Senyum) total about RM1.1 billion or approximately 20% of the entire project GDV. We expect the company to show both positive and growing revenue and profits following the change of accounting policy. One Bukit Senyum to be iconic development. Phase 1 has already topped off in June 2017 and is now undergoing works such as interior décor and mechanical and engineering. The two towers are touted to be Southeast Asia s tallest residential towers and will offer breath-taking views of Johor Bahru. Phase 1 is about 70% sold and we expect sales to pick up with the development of Phase 2. We estimate that the entire project has a GDV of RM5.65m and net development value of RM1.76 billion. Expanding into other projects. However, Astaka is not just a singleproject company. It has over the last 12 months or less acquired, launched and partially sold a 3,884 housing unit project located right at the mouth of Petronas integrated petroleum complex which has attracted investors such as Saudi Aramco. The petroleum complex is expected to provide jobs for 70,000 workers and is expected to start operations in 2019. Hence, we can expect Astaka s Bukit Pelali project to be well taken up. Key risks. The risk is that One Bukit Senyum is pitting its iconic status as the next CBD against competition from other developments in Johor. While we forecast Astaka to make revenue of RM263.7m in FY17 and RM411m in FY18, the company has to take further steps to fund the development of One Bukit Senyum Phase 2. Otherwise, construction progress risks lagging schedule in late FY18 or in FY19. That said, the company s net gearing remains low at 20.4%. Finally, the controlling shareholder have other real estate interests in Malaysia. Hence, interested party transactions may recur, such as in the acquisition of the Bukit Pelali project. Fair value of S$0.130. Our model values Astaka at S$0.130 or at a 56% discount from the estimated RNAV of S$0.296. A potential catalyst could be the proposed MRT rail link between Singapore and Johor. The increased traffic flow will benefit One Bukit Senyum which is located within walking distance from the current CIQ complex in Johor. On balance, we appreciate the business progress that Astaka has achieved since its listing in Nov 2015; albeit offset by broader market risks. Hence, we rate Astaka Overweight with a high-average return and high-risk qualification. Key Financial Data (RM m, FYE Jun) 2015E 2016E 2017F 2018F 2019F 2020F Sales 153.7 178.8 263.7 411.0 568.9 996.2 Gross Profit 28.7 33.4 51.6 102.6 178.4 312.1 Pretax Profit 15.5 22.9 35.7 68.1 135.3 247.0 Net Profit 11.8 17.4 27.1 61.3 122.4 205.6 EPS (cents) 0.629 0.932 1.450 3.277 6.545 10.996 EPS growth (%) NA 48.2 55.6 126.0 99.7 68.0 PER (x) 46.10 31.10 19.98 8.84 4.43 2.64 Addition to dev. Properties 84.2 183.6 311.6 639.5 1,019.4 1,133.8 Dev. Properties 259.4 297.6 397.1 728.3 1,357.2 1,806.9 Source: Company, NRA Capital forecasts

Background Building the tallest residential building in Southeast Asia. Astaka Holdings Limited is an integrated property developer in the Iskandar region of Johor, Malaysia. Its flagship project is the One Bukit Senyum. Phase 1 which comprises of two towers of service apartments known as The Astaka @ One Bukit Senyum. Phase 2 comprises of a shopping mall, grade A office tower, five star hotel, the Johor Bahru City Council headquarters, serviced apartments and residences. Phase 1 has topped off as of 6 Jun 2017, meaning that both towers have been structurally completed. With ongoing mechanical and engineering and interior décor works, full completion is expected in March 2018. Construction of Phase 2 has begun with the award of the construction contract for the City Council headquarters in May 2017. Full completion is expected by 2021. Other than One Bukit Senyum, Astaka is also developing the 363-acre strata township at Pengerang, where Saudi Aramco s US$7 billion Refinery and Petrochemical Integrated Development is also located. Figure 1: One Bukit Senyum (Tenure: Freehold) The Astaka has been structurally completed as of Jun 2017. Full completion is expected by Mar 2018. Construction of the Johor Bahru City Council Headquarters (Menara MBJB) has started and is due for completion in 2019. Phase 2 of One Bukit Senyum Astaka will develop, construct and sell the building to the city council or Majis Bandaraya Johor Bahru (MBJB) for RM308m. Source: Company website page 2

Figure 2: Location Map of One Bukit Senyum Tebrau Highway Jalan Lingkaran Dalam One Bukit Senyum 1 km from Johor Customs, Immigration and Quarantine Complex Johor Johor Causeway Singapore Source: Google Maps Short History and Key Shareholders. Astaka was listed on the SGX Catalist on 23 Nov 2015 via the reverse takeover of E2-Capital Holdings Limited. Under the transaction, E2-Capital acquired 99.99% of Astaka Padu Limited for a consideration of S$428m via the issue of 1,597.61m shares at an issue price of S$0.2679 to the vendors Dato Daing A Malek Bin Daing A Rahaman (Dato Malek), Abd Aziz Bin Daing Rahman (Aziz), Daing Abd Rahim Bin Daing A Rahman (Rahim), Luxus Holdings Limited and Classic Link Investments Limited. Luxus and Classic Link are owned by Andrea Chow and Tan Li-Ann respectively. These five parties owned 80.52% of Astaka as of 20 September 2016, as per the company FY16 annual report. Figure 3: Shareholding Structure as of 20 September 2016 Classic Link Investments Limited, 1.00% Luxus Holdings Limited, 2.99% Other public shareholders, 19.48% Horizon Sea Limited, Dato Malek's nominee, 66.55% Ace Point Holdings Limited, Aziz's nominee, 4.99% Glorybase Holdings Limited, Rahim's nominee, 4.99% Source: Company annual report page 3

Figure 4: Corporate Structure 99.99% 100% Formerly known as E2-Capital, RTO completed on 23 Nov 2015 Incorporated in July 2014. Dato Malek, Aziz and Rahim injected their shares in Astaka Padu Sdn Bhd into the BVI Co via a share swap exercise on 1 Sep 2014. Luxus and Classic Link became 3.57% and 1.19% shareholders of BVI Co on 17 Sep 2014 via the subscription of shares in cash of less than S$5.00. Owner of One Bukit Senyum project 51% Source: Company, NRA Capital Incorporated on 3 Oct 2016 to undertake the Pengerang Township project. The JV Co is 49% owned by Saling Syabas Sdn Bhd (SSSB) which is 95% owned by Dato Malek and 5% owned by Dato Zamani. Under the JV agreement, SSSB will own the land in relation to the Pengerang Township project, but grant the JV co the right to develop and market the project. In consideration, the JV co will pay SSSB 12% of the cash proceeds received from buyers, capped at a sum of RM165m. Figure 5: Key Milestones and Detailed History Jun 1993: Incorporation of Astaka Padu Sdn Bhd. Mar 1997 - Jan 2004: Engaged in the leasing of properties for rental income. (These properties have been disposed and excluded from the listco) May 2003: Made application to acquire part of the One Bukit Senyum site ("Land"). 2005: A) Entered into development agreement to construct a Sports Complex for the Johor government as consideration for the Land. B) Entered into JV with Malpakat Development Sdn Bhd to develop Land, but such plans were later put on hold due to market conditions. 2009: Hockey stadium component of Sports Complex was completed. Johor government later put on hold the development of the Indoor Stadium of the Sports Complex. May 2012: Recognized market for luxury high-rise service apartments. Engaged architect to design One Bukit Senyum. Mar 2013: Agreed to pay Johor government RM12.6m as balance consideration for Land, instead of constructing the indoor stadium. Apr 2013: Obtained land titles Jun 2013: Engaged contractors Jul 2013: Commenced marketing of Phase 1 Aug 2014: Terminated JV with Malpakat by paying compensation of RM45.81m. Sep 2014: Started restructuring for BVI Co to hold Astaka Padu Sdn Bhd Dec 2014: Engaged China State Construction Engineering (M) Sdn Bhd to commence superstructure works. May 2015: Issued title to additional land to expand One Bukit Senyum site. 23 Nov 2015: Completed RTO 2 Aug 2016: Signed MOU to construct, develop and sell to the Johor Bahru City Council a 14- storey Grade A office tower within One Bukit Senyum. Oct 2016: Proposed joint venture for Pengerang township. Nov 2016: Signed agreement to develop JB City Council new headquarters. May 2017: Launches second project Pengerang township Jun 2017: Tops off Phase 1 of One Bukit Senyum Jul 2017: One Bukit Senyum conferred Node Status 1Q CY2018: Completion of Phase 1 of One Bukit Senyum Source: Company page 4

Approximately RM780m of Sales to Be Recognized The Astaka is about 70% sold. Phase 1 of One Bukit Senyum comprises of serviced apartments The Astaka. The Astaka comprises of two towers of 65-storey and 70-storey respectively, with three levels of basement parkings and five levels of podium parking. As of 31 Mar 2017, 305 or 70% of a total of 438 units have been sold with an estimated sales value of RM782m. The company has previously reported sales of 310 units worth RM794.8m as of 30 Jun 2016. Our assumptions Figure 6: Analysis of Sales and Assumptions Type Saleable Area (sq. ft.) No of units Sales as of 7 Sep 2015 Area Sold (sq. ft.) Sales as of 30 Jun 2016 Area Sold (sq. ft.) Sales from 7 Sep to 30 Jun 16 Area Sold (sq. ft.) Unsold Units Area (sq. ft.) A1-3 BR 2,207 108 108 238,356 108 238,356 0 A2-3 BR 2,217 104 104 230,568 104 230,568 0 B - 4 BR 2,659 216 56 148,904 98 260,582 42 111,678 118 313,762 950 D - Duplex 5,554 10 0 0 0 0 10 55,540 900 438 268 617,828 310 729,506 42 111,678 128 369,302 Sales value (RM m) 679.6 (A) 794.8 (B) 115.2 348.06 (C) Price (RM psf) 1,100 1,090 1,032 942 Our Estimated GDV (A + B + C) As of 31 March 2015 (Page A-18 of circular) As of 7 Sep 2015 (Pg A-16 of circular) Gross development value (RM m) 1,143 1,117 1,280 Net Saleable Area (sq. ft.) 1,098,808 1,098,808 1,098,808 Price (RM psf) 1,040 1,016 1,165 Source: Company, E2-Capital Circular dated 18 Sep 2015, NRA Capital ASP (RM psf) We decided on ASP assumptions of RM900 psf and RM950 psf for the unsold units, taking into consideration the selling prices of RM1,090 psf for sold units and RM1,032 psf for the most recent sales and current market conditions. We did not apply a further discount for Bumiputera even though The Astaka has a 15% discount for Bumiputera as the computed average selling prices of RM1,032 psf to RM1,1000 psf already includes the 15% discount. Development of Phase 2 should attract buyers for Phase 1. During 9M FY17, the company sold four units, but received cancellations for nine units. The net pace of sales reflects the current challenging conditions. However, we expect sales to improve following the completion of the units and after the completion of Phase 2 of One Bukit Senyum. With Phase 2 comprising of malls, hotels, offices and the HQ of the Johor Bahru City Council, we expect demand to catch up over time. Realized ASP of RM1,032 to RM1,100 psf. The first 268 units sold as of 7 Sep 2015 fetched RM2.54m per unit on average. The next 42 units sold up to 30 Jun 2016 raised total sales by RM115.2m, suggesting that they were sold at RM2.74m per unit. By assuming that the smaller units sold the fastest, we deduced an ASP of RM1,100 psf for units sold up to 7 Sep 2015 and RM1,032 for the next 42 units. The difference could have been because larger units typically fetch larger quantum, but lower prices per square feet. Estimated Phase 1 GDV of RM1.14 billion. However, the number of units sold have peaked since 31 Mar 2016, suggesting that current realized ASPs are not the most competitive, at least until the property is more mature (e.g. after Phase 1 completion). Hence, we decided to be prudent and assume lower prices of RM900 psf for the Duplex units and RM950 for the remaining Type B units to yield an estimated GDV of RM1.14 billion. This also ensures that our GDV estimate reflects a realisable value. Our assumptions are relatively conservative as our implied quantum of each unsold Type B unit is about RM2.53m whereas the realized quantum for the 42 units sold from Sep 2015 to Jun 2016 was about RM2.74m. Online listings are also asking for higher prices of RM1,200 psf to RM1,300 psf. page 5

One Bukit Senyum Phase 1 to reap RM213m NDV. Estimated land and development cost of RM929m for Phase 1. As of 3Q FY17, Astaka has RM712.0m of development properties. From 1Q FY15 up to the end of 1Q FY17, Astaka has traditionally spent about RM50m per quarter on development properties which we can attribute to the development of One Bukit Senyum Phase 1. Subsequently, spending on development properties rose to about RM85m to RM90m per quarter, which could be due to the addition of the Pengerang township project (or otherwise known as the Bukit Pelali Project). Assuming that the company spends about RM70m per quarter from 2Q FY17 to 3Q FY18 on One Bukit Senyum Phase 1, the total development cost (excluding land) works out to about RM816.2m. Land cost is about RM29.11m, after apportioning the recorded land cost of RM142.34m by the respective site area of Phase 1 and 2. To test for reasonableness, we divided the estimated construction cost by gross floor area of 1.86m sq. ft. and derived an average cost of RM438, which is slightly lower than the previously estimated cost of RM480 psf for Phase 2 as per the shareholders circular dated Sep 2015. Being a serviced apartment development, the development cost should be lower than that of a hotel and mall. One Bukit Senyum Phase 1 19% gross margin. The implication of our assumptions is that One Bukit Senyum Phase 1 has an estimated net development value of RM213.4m, translating to a gross margin of 18.7%. We noted that Suntec Real Estate Consultants Pte Ltd has valued Phase 1 s development profits at a present value of RM242m as of 31 March 2015. Figure 7: One Bukit Senyum Phase 1 Land Cost and NDV Estimates Obtained from circular dated 18 Sep 2015 One Bukit Senyum Gross Site Area (sq. ft.) Land cost (RM m) Total 516,344 142.34 Phase 1 105,589 29.11 Phase 2 410,755 113.23 Obtained from FY16 annual report RM, millions Capitalised development cost as of 30 June 2016 341.5 Development cost capitalised in 1Q FY17 54.72 Estimated development cost per quarter 70 Estimated No of quarters to completion in 3Q FY18 6 Estimated total development cost 816.20 Gross Floor Area of Phase 1 (sq.ft.) 1,861,530 Construction cost per sq. ft. 438 Gross Development Value 1,143 Total land and development cost for Phase 1 929.43 Net Development Value (RM m) 213.4 Gross margin 18.7% As recorded on Balance Sheet 4Q FY15 2Q FY16 3Q FY16 4Q FY16 1Q FY17 2Q FY17 3Q FY17 Development properties 300.18 390.66 440.70 483.81 538.53 626.82 712.00 Change 90.48 50.04 43.11 54.72 88.29 85.17 Source: NRA Capital Slightly higher due to Bukit Pelali project page 6

Early adoption of new accounting standard to allow revenue recognition No revenue was recognized prior to FY17. In FY16, Astaka recognized zero revenue and gross profit on its income statement, even though the company was already in the midst of constructing Phase 1 of One Bukit Senyum. In fact, the two towers were topped off in early June this year. This was because Astaka has previously adopted the accounting policy where revenue is only recognized on completion of the project. New FRS 115 to facilitate percentage of completion method for revenue recognition. The company has announced on 11 Jul that it will be adopt FRS 115 early where revenue recognition can take place over time. Based on our cost assumptions, we can expect One Bukit Senyum to be approximately 42% completed as of FY16 and 74% completed by the end of FY17. Multiplying the construction progress by the estimated RM782 in sales value, we can estimate that the company will recognise RM248m of revenue and RM46.4m of gross profit from One Bukit Senyum Phase 1 in FY17. Figure 9B shows that the company has reported consecutive losses. In FY16, losses were enlarged by RM98.7m of RTO expenses. Excluding these expenses, net loss actually shrank from RM14.9m in FY15 to RM12.3m in FY16. With the adoption of FRS 115, the company should be restating the financials of these years to reflect contribution from One Bukit Senyum Phase 1. Source: NRA Capital Figure 8: Revenue and Gross Profit Projections for One Bukit Senyum Phase 1 FY15E FY16E FY17E FY18E FY19F FY20F FY21F Assumed No of Units Sold during period 10 30 50 43 Est. Floor Area 26,590 79,770 132,950 143,287 ASP 950 950 950 932 Sales value 25.26 75.78 126.30 133.53 Cumulative sales 794.8 782.0 807.2 883.0 1,009.3 1,142.9 Capitalised development cost 157.84 341.47 606.20 816.20 816.20 816.20 816.20 % of completion 19.3% 41.8% 74.3% 100.0% 100% 100% 100% Est. Revenue contribution by One Bukit Senyum Phase 1 153.7 178.8 248.3 226.5 75.8 126.3 133.5 Gross profit 28.7 33.4 46.4 42.3 14.2 23.6 24.9 Figure 9A: Projected gross profit contribution by One Bukit Senyum Phase 1 Figure 9B: Reported Net Loss Attributable to Shareholders (Before Restatement and Before Adoption of FRS 115) RM m 70.0 RM m 0.0 35.0 46.4 42.3 33.4 28.7 23.6 24.9 14.2-20.0-40.0-60.0-80.0-100.0-8.1-14.9 0.0 FY15 FY16 FY17E FY18E FY19F FY20F FY21F -120.0-111.0 FY15 FY16 9M FY17 Source: NRA Capital Source: NRA Capital page 7

Construction of Phase 2 started with RM308m City Council HQ Phase 2 will be three times the size of Phase 1. Finalized plans for Phase 2 were announced in August 2016. Based on the overall gross floor area of 6.3m sq. ft. for both Phases 1 and 2, Phase 2 shall comprise of a 445,848 sq. ft. gross floor area office building that has been sold to the Johor Bahru City Council and will serve as its headquarters, a shopping mall of 1.5m sq. ft. gross floor area and a hotel, serviced apartments and offices covering 4.0m.sq. ft. of gross floor. Phase 2 GDV of RM4.5 billion. Based on the assumptions are presented in Figure 10, we estimate that the entire One Bukit Senyum township will have a GDV of approximately RM5.66 billion, which is close to the RM5.4 billion as disclosed by the company. Phase 2 s GDV is estimated to be about RM4.5 billion. We assume the same ASP for the hotel, serviced apartment and residences component as that of Phase 1. For the shopping mall, we assume an ASP of 1.5x that of Phase 1, whereas we assume an ASP of 1.15x that of Phase 1 for the hotel, serviced apartment and other components of Phase 2. Retail properties tend to fetch higher prices and our assumption of RM922 psf of gross floor area works out to about RM1,843 psf of net saleable area if we assume an efficiency of 50%. For the other components of Phase 2, we recognize a higher ASP to factor in the premium enjoyed by hotels and to allow for some capital appreciation by the time the project is more mature (e.g. after some completion and occupancy). In our forecasts, we assume that some sales will still continue after completion. No of units Figure 10: Summary of One Bukit Senyum Phase 2 Gross Floor Area (m sq. ft.) GDV (RM m) RM psf GDV per GFA Completion The Astaka 438 1.9 1,143* 614.4 2018 70% sold Menara MBJB (JB City Council HQ) NA 0.4 308 690.8 2019 100% sold to Johor Bahru City Council Shopping Mall NA 1.5 1,382 921.7* 2021 Pending launch Hotel, serviced Hotel - 450 rooms 4.0 2,822 706.6* 2021 Pending launch apartments and others Residences - 1,012 units Serviced apts - 254 keys Total 6.3 5,656 897.7 Source: Company *Assumptions by NRA Capital Selling prices in Figure 10 is based on gross floor area. Figure 11: Net Development Value Estimates Status One Bukit Senyum Phase 2 GDV (RM m) 4,513 Figure 10 Gross floor area (sq. ft.) 5.9 Figure 10 Assumed construction cost per sq. ft. 480 Construction cost (RM m) 2,851 Land cost (RM m) 113.23 Figure 7 Net Development Value (RM m) 1,548.4 34.3% The circular dated 18 Sep 2015 initially indicated that Phase 2 would be 4.83m sq. ft. in gross floor area to be constructed at a cost of RM2.32 billion or RM480 psf. Hence, we decided to assume a construction cost of RM480 psf. Source: NRA Capital Phase 2 started revenue contribution in May with construction of City Council HQ. This 445,848 sq. ft. 15-storey building with 558 carparks was sold to Johor Bahru s City Council in Nov 2016 under an agreement where Astaka will construct, develop and sell the building to the City Council. Both parties also intend to enter into a supplemental agreement with a value of RM35m for the interior design of the building. Work started in May 2017 with the appointment of contractor JBB Kimlun Sdn Bhd. More importantly, the Nov 2016 agreement also implies that the total sales value of One Bukit Seyum is actually around RM1.1 billion. page 8

Embarked on Second Development Project Bukit Pelali Project. Astaka first proposed the development of the 363-acre Bukit Pelali project in Oct 2016. Subsequently, the project was launched on 22 May 2017. To be completed over eight to ten years, the gated township will comprise of 3,884 residential units, including 1,598 units under the Johor Affordable Housing Scheme, as well as shop offices and other amenities. Phase 1A comprising of 243 terraces and 19 shop offices was about 50% sold as of May and will be completed in 2018. Phase 1B which will feature 143 double storey terraces, 72 cluster houses and 10 semi-detached units, is slated for completion in 2019. Figure 12: Model of Bukit Pelali Project Source: Company s 22 May 2017 press release Located right next to US$27 billion industrial project. 1 The strength of Bukit Pelali is that it is located right next to the Pengerang Integrated Petroleum Complex (PIPC), where Saudi Aramco invested US$7 billion in February this year. The PPIC will contain facilities such as a 300,000 barrel per day oil refinery and a petrochemical complex with a production capacity of 7.7m tonnes. As of February, the PIPC was about 70% completed and is expected to start operations in 2019. Upon completion, the PIPC is expected to provide jobs for 70,000 workers. Therefore, demand for Bukit Pelali can be expected to be strong. Estimated project GDV of RM 2.3 billion The affordable housing units will be priced at RM90,000 each while the shop offices could cost more than RM1m each. 2 The project is expected to have a gross development value of RM2.3 billion. Implicitly, we are assuming that the rest of units (excl. affordable housing units) are priced at RM0.94m on average. Due to the absence of cost information, we assume that this project has an overall gross margin of 30% or net development value of RM690m. 1 http://www.reuters.com/article/us-saudi-asia-malaysia-petronas-iduskbn1670pl 2 https://www.nst.com.my/property/2017/05/241260/astaka-holdings-expects-20000-residents-bukit-pelali-township page 9

Figure 13: Location Map of Bukit Pelali Project Source: http://www.bukitpelali.com.my/location.html Figure 14: Simple GDV Assumptions No of units Quantum GDV (RM m) (RM) Affordable housing units 1,598 90,000 144 Other units 2,286 943,211 2,156 Total 2,300 Source: GDV of 2.3 billion is obtained from company press release Figure 15: Projected Stages of Completion (ALL PROJECTS) % of completion FY15E FY16E FY17E FY18F FY19F FY20F FY21F FY22F FY23F FY24F OBS Phase 1 - The Astaka 19.3% 41.8% 74.3% 100.0% Menara MBJB 5.0% 42.5% 97.0% 100.0% OBS P2 - Hotel, apts and others 10.0% 40.0% 75.0% 95.0% 100.0% OBS P2 - Shopping mall 10.0% 40.0% 75.0% 95.0% 100.0% Bukit Pelali 3.0% 8.0% 18.0% 33.0% 53.0% 78.0% 100.0% Source: NRA Capital assumptions Figure 16: Revenue and Gross Profit Projections Revenue FY15E FY16E FY17E FY18F FY19F FY20F FY21F FY22F FY23F FY24F GDV (RM m) OBS Phase 1 - The Astaka 153.7 178.8 248.3 226.5 75.8 126.3 133.5 0.0 1,143 Menara MBJB 15.4 115.5 167.9 9.2 308 OBS P2 - Hotel, apts and others 141.1 423.3 564.5 705.6 705.6 282.2 2,822 OBS P2 - Shopping mall 69.1 207.4 276.5 345.6 345.6 138.2 1,382 Bukit Pelali 69 115 230 345 460 575 506 2,300 Total 153.7 178.8 263.7 411.0 568.9 996.2 1,319.5 1,511.2 1,626.2 926.5 7,956 Gross Profit FY15E FY16E FY17E FY18F FY19F FY20F FY21F FY22F FY23F FY24F NDV OBS Phase 1 - The Astaka 28.7 33.4 46.4 42.3 14.2 23.6 24.9 0.0 213 Menara MBJB 5.3 39.6 57.6 3.2 106 OBS P2 - Hotel, apts and others 48.4 145.3 193.7 242.1 242.1 96.8 968 OBS P2 - Shopping mall 23.7 71.2 94.9 118.6 118.6 47.4 474 Bukit Pelali 20.7 34.5 69.0 103.5 138.0 172.5 151.8 690 Total 28.7 33.4 51.6 102.6 178.4 312.1 417.0 498.7 533.2 296.1 2,452 Source: NRA Capital assumptions page 10

Forecasts and Valuation In this report, we attempt to forecast mainly the income statement and the development properties line item in the balance sheet. As the company will likely restate its financials retrospectively, we will form full balance sheet and cash flow forecasts at a later stage. Key Assumptions have been disclosed as per above. Stages of completion assumptions are shown in Figure 15. Figure 17: Forecasts and Valuation RM milions FY15E FY16E FY17E FY18F FY19F FY20F FY21F FY22F FY23F FY24F GDV Revenue 153.7 178.8 263.7 411.0 568.9 996.2 1,319.5 1,511.2 1,626.2 926.5 7,956 Gross profit 28.7 33.4 51.6 102.6 178.4 312.1 417.0 498.7 533.2 296.1 2,452 Selling and distribution exp (@ 5% of rev aft. FY17) -0.8-0.7-2.6-20.5-28.4-49.8-66.0-75.6-81.3-46.3 Admin exp (+5% p.a. aft. FY17) -11.7-9.0-12.6-13.2-13.9-14.6-15.3-16.1-16.9-17.7 Other operating expenses -0.8-0.8-0.8-0.8-0.8-0.8-0.8-0.8-0.8-0.8 PBT 15.5 22.9 35.7 68.1 135.3 247.0 334.9 406.3 434.2 231.3 Tax (@ 24% of PBT, excl. OBS P2 Mall gross profit) -3.7-5.5-8.6-6.8-13.0-41.4-57.6-69.1-75.8-44.1 Est. net development profits 11.8 17.4 27.1 61.3 122.4 205.6 277.3 337.2 358.5 187.2 Capital Charge (@ 5% of invested capital) -15.0-13.0-14.9-19.9-36.4-67.9-90.3-84.9-57.3-22.8 Residual income -3.3 4.4 12.2 41.4 85.9 137.7 187.0 252.3 301.2 164.4 Discount factor (@15% pa) 1.00 1.00 1.00 1.15 1.32 1.52 1.75 2.01 2.31 2.66 PV of development surplus -3.3 4.4 12.2 36.0 65.0 90.5 106.9 125.5 130.2 61.8 Total (RM m) 629.3 Book value as of end FY16 137.4 Fair value of equity (RM m) 766.7 S$m (SGDMYR of 3.15) 243.4 No of shares (m) 1,869.4 Fair value per share (S$) 0.130 FY14E FY15E FY16E FY17E FY18F FY19F FY20F FY21F FY22F FY23F Development Properties 300.2 259.4 297.6 397.1 728.3 1,357.2 1,806.9 1,698.3 1,145.9 Addition 84.2 183.6 311.6 639.5 1,019.4 1,133.8 793.9 460.1 402.5 Transfer to cost of goods sold -125.0-145.4-212.0-308.3-390.5-684.1-902.5-1,013-1,093 Development Properties 300.2 259.4 297.6 397.1 728.3 1,357.2 1,806.9 1,698.3 1,145.9 455.4 Capital Charge -15.0-13.0-14.9-19.9-36.4-67.9-90.3-84.9-57.3-22.8 Book value as of end FY16 137.4 Net development profits 1,605.7 Total RNAV (RM m) 1,743.1 S$m (SGDMYR of 3.15) 553.35 RNAV per share (S$) 0.296 Fair value per share (S$) 0.130 Discount to RNAV 56.0% Our forecasts imply that Astaka has to be able to obtain bank borrowings or funding to develop Phase 2, especially in FY19 and FY20. We reckon that the company will be in a stronger position to negotiate with banks following the completion of Phase 1 in 3Q FY18. A second source of funding will be deposits and progress payments by buyers. Hence, the company can also strengthen its working capital position by conducting more launches and marketing exercises. As of 31 March 2017, the company has approximately RM54.8m of borrowings and cash of RM28.4m. Source: NRA Capital One Bukit Senyum Phase 2 was awarded node status. It is also worth noting that Phase 2 has been conferred node status by Malaysia s Ministry of Finance and the Iskandar Regional Development Authority. The node status accords full income tax exemption from proceeds from the sale and incoe derived from the leasing of all non-residential buildings. Hence, we excluded gross profit from the mall when computing the adjusted pre-tax profit for estimation of tax expense. Fair value of S$0.130. Based on our model, we derived a fair value of S$0.130 per share, representing upside of 41.4% from the previous close of S$0.092. RNAV per share is about S$0.296. page 11

Recommendation and Key Risks Key risk Oversupply concerns. We are concerned about the supply of residential properties in Johor which may drag on either sales volume or selling prices. That said, the Iskandar Regional Development Authority plans to raise the region s population from 1.8m in 2017 to 3m by 2025. With the expected increase in population, the Authority estimates that up to 500,000 housing units may be needed by 2025 or less than ten years. Therefore, the government s plans to raise the population has to be successfully executed to absorb supply in the market. We can see that Astaka s management is mitigating this risk by going ahead with the development of Bukit Pelali. Bukit Pelali will probably cater to the middle class and has set aside a number of units for the affordable housing scheme. Therefore, Bukit Pelali can tap on domestic demand while One Bukit Senyum taps the higher end more internationalised luxury market. Key risk Conflict of interest. The controlling shareholder Dato Malek, aged 61, is a businessman with interests/experience in real estate, property development, construction and material supplies. He is also the Executive Vice-Chairman and majority shareholder of Bursa listed Damansara Realty Berhad and Chairman and shareholder of SIPP Energy Sdn Bhd which has been awarded a contract by the Federal Government to construct, own, operate and maintain the 1,440MW electricity generating power plant in Pasir Gudang, Johor. Both Aziz and Rahim are brothers of Dato Malek. The group is professionally managed by Dato Zamani Bin Kasim Executive Director and Chief Executive Officer. Dato Zamani has more than 35 years experience in property development. Notable projects that Dato Zamani was involved in, include the Sebana Gold and Marina Resort, Seremban Hilton and Puteri Harbour. Dato Zamani was the Senior General Manager of UEM Land Bhd from 2006 to 2010. However, daily operations, liaisons with government authorities, etc are handled by the Chief Operating Officer Ms. Daeng Hamizah Binti Abd Aziz who is also the daughter of Aziz. Ms. Daeng first joined the group in June 2012 as Project Executive and held various positions, assisting in fundraising and the acquisition of development projects. Given that Dato Malek also has interest in other real estate ventures in Malaysia, there is the risk of conflict of interest even though measures have been put in place to manage such conflict of interest. For instance, Dato Malek has undertaken not to be a director of Astaka so long as he remains a director of Damansara. Our Recommendation. Astaka has progressed significantly since its listing with the One Bukit Senyum Phase 1 now nearing completion. Secondly, the compay progressed to its second development project Bukit Pelali signifying business continuity and longevity beyond a single project. The implementation of FRS 115 will provide more visibility over the company s financials and reduce revenue and income volatility. A potential catalyst is if plans to construct a MRT line between Johor and Singapore are firmed up further. If so, the increased traffic between Johor and Singapore will help to boost the attractiveness of One Bukit Senyum, especially with its proximity to the customs. On balance, we rate Astaka Overweight with a high-average return and high-risk qualification. page 12

NRA Capital Pte. Ltd ( NRA Capital ) has received compensation for this valuation report. This publication is confidential and general in nature. It was prepared from data which NRA Capital believes to be reliable, and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. No representation, express or implied, is made with respect to the accuracy, completeness or reliability of the information or opinions in this publication. Accordingly, neither we nor any of our affiliates nor persons related to us accept any liability whatsoever for any direct, indirect, special or consequential damages or economic loss that may arise from the use of information or opinions in this publication. Opinions expressed are subject to change without notice. NRA Capital and its related companies, their associates, directors, connected parties and/or employees may own or have positions in any securities mentioned herein or any securities related thereto and may from time to time add or dispose of or may be materially interested in any such securities. NRA Capital and its related companies may from time to time perform advisory, investment or other services for, or solicit such advisory, investment or other services from any entity mentioned in this report. The research professionals who were involved in the preparing of this material may participate in the solicitation of such business. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality, available on request. You acknowledge that the price of securities traded on the Singapore Exchange Securities Trading Limited ("SGX-ST") are subject to investment risks, can and does fluctuate, and any individual security may experience upwards or downwards movements, and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling securities traded on the SGX-ST. You are aware of the risk of exchange rate fluctuations which can cause a loss of the principal invested. You also acknowledge that these are risks that you are prepared to accept. You understand that you should make the decision to invest only after due and careful consideration. You agree that you will not make any orders in reliance on any representation/advice, view, opinion or other statement made by NRA Capital, and you will not hold NRA Capital either directly or indirectly liable for any loss suffered by you in the event you do so rely on them. You understand that you should seek independent professional advice if you are uncertain of or have not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of securities on the SGX-ST. page 13