Market Dateline PP 7767/09/2010(025354)

RHB Research Institute

RHB Equity 360°

1 March 2010 (Carlsberg, Sime, Genting, Genting Msia, Maxis, Ann Joo, AirAsia, Affin, IKML, Suncity,
KPJ, Faber, Kossan, MCIL, CBIP, HSL, Kinsteel, Perwaja, Sino, Emas Kiara, Bonia, YTLP, WTK, KLCC,
KNM, Puncak, Lafarge, IJM, Petra Perdana, IJMP; Technical: SP Setia, Kinsteel)

Top Story : Carlsberg – Hello Singapore! Outperform

Briefing Note
- In FY09, Carlsberg was hit with higher raw material costs, flattish industry volumes and an increase in off-
trade consumption due to value pressure, but gained +1% market share.
- Imported premium beer segment grew 56% in FY09 and has received favourable feedback from on-trade
consumers, which could translate to gaining more pub contracts in Klang Valley and reduce dominance of
Guinness and Heineken. Four new brands in imported premium beer segment to be introduced in FY10.
- Total TIV expected to recover by 2% in FY10 (vs. our assumption of 1%) driven by improving consumer
sentiment, later timing of CNY festive season and World Cup celebration. New contracts for raw material
prices locked in at lower prices in Jan and margins expected to return to more normal levels. Concerns
remain on value pressures from customers as they become more used to lower priced beer.
- No changes to our forecasts. Maintain fair value of RM5.90 based on unchanged WACC of 9.2%.

Commodities Corner

Copper : Chile earthquake caused temporary closure of copper mines

- The earthquake in Chile on Saturday resulted in temporary closure of up to 20% of the country’s copper
mine capacity (of around 1m tonnes p.a.) but at least two mines in the affected areas resumed operations
within 48 hours.
- However, there could still be some impact on supply as power and transport links have been affected.
- Chile is the world’s largest producer of copper, accounting for 35% of the world’s supply. Note that copper
is used in products ranging from electrical wiring, pipes, radiators, certain building materials.

Corporate Highlights

Sime Darby : In line, but cost overrun provision after all Outperform
2QFY10 Results/Briefing Note
- Darby’s 1HFY06/10 core net profit came in within our expectations but below consensus, at 50.6% of our
FY10 forecasts and 45.5% of consensus’ forecasts. In 2QFY10, Sime recorded a net EI loss of RM147m,
comprising: (1) forex loss of RM2.2m; (2) RM210m provision for cost overruns for Qatar Maersk Oil project;
offset by (3) RM37.5m gain on sale of property subsidiary; and (4) RM27.7m gain on sale of motor
subsidiary, bringing net EI loss for 1HFY10 to RM126.1m.
- Four key takeaways: 1) CPO price view more bullish, now selling forward at maximum level allowable
based on policy; 2) FFB production to be affected by weather and tree stress?; 3) 10% yoy fall in cost of
production sustainable?; and 4) more colour on Qatar oil and gas project provision.
- Maintain forecasts. Note however, that including the one-off cost overrun provision of RM210m would
reduce our FY10 forecasts by 8.6%.
- We reduce our SOP-based fair value for Sime to RM9.85 (from RM10.00), after imputing Sime’s end-
2QFY10 net debt of RM2.1bn (from RM1.38bn at end-1QFY10). Maintain Outperform.

Genting : Better years ahead Outperform

4QFY09 Results/Briefing Note
- FY09 normalised net profit was in line with our expectations, coming in at 95% of our FY09 forecasts, but
above consensus, comprising 126% of consensus forecasts. We believe the main discrepancy between the
actual numbers and our forecasts was the higher-than-expected effective tax rate in 4Q09 of 32.4% (from
23.7% in 3Q09), bringing FY09 effective tax rate to 29.5% (vs. our 25% projection).
- FY10-11 forecasts trimmed by 3.2-3.5% p.a., post-revision for Genting Malaysia. FY12 forecast introduced.
- Post-earnings revision and after updating our revised fair value for Genting Malaysia (to RM2.90 from
RM3.00), the latest market value of Landmarks, and the latest company net debt level for Genting (ex-GM
and GS), our SOP-based fair value for Genting is reduced to RM8.90 (from RM9.45). Maintain Outperform.
Genting Malaysia : Beating expectations Market Perform
4QFY09/Briefing Note
- Genting Malaysia’s (GM) FY09 core net profit came in above expectations, making up 110-111% of our
and consensus forecasts. We believe the main difference came from higher-than-expected investment
income from gain on sale of investments.
- Key briefing takeaways: 1) visitor arrivals are up 1.5% yoy in FY09; 2) luck factor weaker, but in line with
theoretical average; and 3) comments on impact of opening of Singaporean casino
- FY10-11 forecasts trimmed by 3.6-5.3%. FY12 forecast introduced. Post-earnings revision and after rolling
over our DCF period by one year, adjusting for the latest market value for Genting HK and updating for
GM’s end-FY09 net cash balance, we reduce our SOP-based fair value to RM2.90 (from RM3.00). We
continue to apply a 15% holding company discount to GM’s SOP, taking into account the weak investor
sentiment due to the perceived cannibalisation caused by the Singaporean IR’s, the corporate governance
risk and the lack of additional capital management from its abundant cash hoard. Maintain Market Perform.

Maxis : Results delivered while dividends beat expectations Outperform

4QFY09 Results/Briefing Note
- Excluding one-off IPO costs totaling RM103m, FY09 net profit met both our and consensus expectations.
- Maxis declared an interim single-tier DPS of 6 sen and a final single-tier DPS of 3 sen, which, collectively,
beat our expectations of a final net DPS of 6 sen.
- Maxis aims to maintain its market position and targets to grow above the industry growth rate (high single-
digit). Management also appeared confident that EBITDA margins would be maintained. Finally,
management also reiterated that they are prepared to gear up the balance sheet in order to achieve an
optimal capital structure.
- We have toned down our FY10-11 net profit projections by 3.6-3.8% for the full-year results and to bring
our margin projections in line with the results. DCF-derived fair value lowered to RM6.20 (from RM6.30) but
Outperform call remains unchanged.

Ann Joo : Anticipates bumper earnings in 1HFY12/10 Outperform

4QFY09 Results/Briefing Note
- FY12/09 net profit of RM31.6m came in below our as well as market expectations. The variance against
our forecast came largely from lower-than-expected sales volumes.
- AJR anticipates profit margins to accelerate in 1HFY12/10 on the back of the recent rise in global steel
prices, which outpace its production cost.
- Over the medium term, AJR remains upbeat on the outlook for both demand and price of long steel
products in the region, as China (the largest steel producer and consumer) will remain a net importer for
long steel products.
- Indicative fair value is RM3.53 based on 12x FY12/10 fully-diluted EPS of 29.4 sen.

AirAsia : Strong FY12/09 performance, more “disciplined” growth going forward Market Perform
2QFY10 Results/Briefing Note
- FY12/09 results came in above our forecast but below the market.
- AirAsia guided forward-year capacity growth of 11-14%, lower than 15-20% it guided in early last year. We
believe the writing is on the wall that the budget airline industry in the region is getting more crowded, with
supply growth seemingly going to outstrip demand growth.
- AirAsia has hedged forward 17% and 7% of its fuel requirements in 1Q and 2QFY12/10 at US$83.55/bbl
and US$81.70/bbl (Singapore Jet Kerosene).
- FY12/10-11 net profit forecasts are raised by 26% and 59%, fair value is raised by 6% from RM1.40 to
RM1.49. Maintain Market Perform.

Other Corporate Results

Company Quarter Result Results Comment And Changes To Forecasts Recom

Affin 4QFY09 In line 4QFY09 results in line. We have fine-tuned our FY10-11 forecasts OP, FV =
following the FY09 results. Fair value raised from RM3.00 to RM3.03 RM3.03
based on unchanged 11x CY10 EPS.
 IJM Land 3QFY10 In line No change to our FY10-12 earnings forecasts and fair value of RM3.19 OP, FV =
based on RNAV valuation method RM3.19
Suncity 6QFY09 In line No change to our earnings forecasts. However, we have raised our OP, FV =
RNAV per share from RM5.07 to RM6.27 to factor in the asset RM5.33
revaluation exercises. Our indicative fair value has been raised from
RM4.31 to RM5.33, based on 15% discount to its RNAV.
KPJ 4QFY09 In line FY10-11 earnings forecasts tweaked down by 1.2-1.8% p.a. after OP, FV =
results. FY12 earnings forecast introduced. RM3.20
Faber 4Q09FY09 Above We have left our FY10 and FY11 earnings forecasts unchanged OP, FV =
pending Faber’s analysts’ briefing on 3 Mar RM3.01
Kossan 4QFY09 Above We have raised our FY10 and FY11 earnings projections by 5.1% and OP, FV =
8.0% respectively. We introduced our FY12 numbers. RM10.74
MCIL 3QFY10 Above We have raised our FY10-12 earnings forecasts by 32.1-36.2% OP, FV =
respectively. RM0.92
CBIP 4QFY09 In line No change to our forecasts. Note our fair value reflects the dilution OP, FV =
from the 10% proposed private placement. RM3.30
HSL 4QFY09 In line FY12/09 net profit came in within our forecast but beat market OP, FV =
consensus. Forecasts maintained. RM1.56
Kinsteel 4QFY09 Below FY12/10-11 net profit forecasts cut by 2.9-4.6% to reflect OP, FV =
lower contributions from Perwaja and higher interest cost assumptions. RM1.22
Perwaja 4QFY09 Below FY12/10-11 net profit forecasts lowered by 3.1-9.0% to reflect higher OP, FV =
raw material cost assumptions. RM1.79
Sino Hua-An 4QFY09 Below FY12/10-11 net profit forecasts maintained. OP, FV =
RM0.71
Emas Kiara 4QFY09 In line Forecasts maintained. OP, FV =
RM1.31
Bonia 2QFY10 In line Forecasts maintained. Net dividend payout assumptions raised to 40% OP, FV =
in view of expanding net cash balance and higher dividend payout. RM1.33
YTLP 2QFY10 In line YTLP’s 2Q net profit rose 8% qoq mainly due to stronger contribution MP, FV =
from PowerSeraya and lower interest cost, partly offset by seasonally RM2.12
weaker contribution from Wessex. Maintain forecasts but SOP-derived
fair value raised to RM2.12 from RM2.10.
WTK 4QFY09 In line FY10-11 earnings forecasts tweaked by +0.3% and -0.2% after MP, FV =
adjusting for results. FY12 forecast introduced. RM1.18
KLCCP 3QFY10 In line No change to our FY10-12 earnings forecasts and indicative fair value MP, FV =
of RM3.64, or 10% discount to its RNAV/share of RM4.05. RM3.64
KNM 4QFY09 Below FY10-11 core EPS forecasts cut by 17% and 16.3% respectively. MP, FV =
However, with share price performance likely to be capped by the RM0.90
effective offer price of RM0.90/share from the asset buyout, we
downgrade the stock to Market Perform (from outperform previously).
Puncak Niaga 4QFY09 Below FY12/10-11 net profit forecasts lowered by 11.8-13.6% to reflect higher MP, FV =
depreication expenses. RM 2.95
Lafarge 4QFY09 In line FY12/10-11 net profit forecasts raised by 8.9-11.4% ti reflect a lower UP, FV =
effective tax rate and lower finance cost assumptions. RM6.18
IJM 3QFY10 In line 9MFY03/10 net profit came in within our forecast but missed market UP, FV =
expectation. Forecasts maintained. RM3.76
Petra Perdana 4QFY09 In line We have cut our FY10-11 core EPS forecasts by 3.6% and 3.3% UP, FV =
respectively after factoring in lower contribution from brownfield RM1.00
services. Our fair value is trimmed slightly to RM1.00 (from RM1.02).
IJMP 3QFY10 Above IJMP’s 9MFY03/10 core net profit was above our and consensus UP, FV =
estimates. We raise our forecasts by 10.2% for FY10, and by 3.7-4.2% RM2.05
for FY11-12.

Technical Highlights

Daily Trading Strategy : A likely retreat early this week…

 - If not due to the last-minute selling on selective blue chips, the FBM KLCI could have closed more
positively on last Thursday, at above the 40-day SMA of 1,275 to paint for more upside potential today.
- However, as the index registered a “shooting star doji” candle and a negative momentum reading on the
chart, it is due for a pullback today.
- We still see increasing risk of a resumption of the previous downswing momentum in the near term.
- To revoke our bearish view, the FBM KLCI must overcome the 40-day SMA with an average turnover of at
least 800m to 1.0bn shares in the near term, before it could refresh its chance for a retest of the
psychological barrier at 1,300.
- And until then, we will stick to our view for a likely retreat towards the 10-day SMA of 1,260 and the critical
stronghold of 1,250.
- Also, with an end to the fourth-quarter earnings reporting season, investors are likely to focus more on the
twist and turn of the external sentiment in the coming weeks, other than the speculations of a potential
interest rates hike by Bank Negara in early Mar 2010.

Daily Technical Watch: SP Setia – The mild consolidation expected ahead…

- 10-day SMA: RM3.979
- 40-day SMA: RM4.043
- Support: IS = RM3.90 S1 = RM3.40 S2 = RM2.87
- Resistance: IR = RM4.60 R1 = RM5.00

Weekly Trading Idea : Kinsteel – A successful rebound will retest RM1.08 and RM1.18… Bargain Buy
- Strategy: Bargain Buy near RM0.97.
- Target: IR = RM1.08 R1 = RM1.20 R2 = RM1.35
- Support: IS = RM0.97 S1 = RM0.86 S2 = RM0.73
- Exit: Cut loss if it falls to below the recent low of RM0.945

Commodities & Currencies – Positive on commodities amid volatilities in currencies markets …

- Light Sweet Crude Oil futures: It could continue surging towards the US$87-US$100 resistance zone.
- Crude Palm Oil futures (CPO): Remain positive as long as it sustains at above RM2,500.
- Ringgit (RM)/US$: A breach below 3.40 will accelerate the buying on ringgit.
- Japanese Yen (JPY)/US$: The pair is likely to head lower this week.
- Euro Dollar (EUR)/US$: Further struggling this week near the crucial chart resistance level of 0.73.
- US Dollar Index (DXY): We anticipate another negative candle this week.

Bulletin Board

Co/Sector News Impact Recom

AFG Datuk Bridget Lai has tendered her resignation This is not a surprise given the developments OP, FV =
as Group CEO with effect from 1 Apr 10. over the last 2-3 months. We reiterate that Datuk RM3.27
Bridget has set a solid foundation for the group to
execute its long-term growth strategy. Unless
the void in leadership is prolonged, we do not
expect any impact on operations.
AMMB AmBank has obtained approval for issuance of Since this is a programme, RM7bn will be issued OP, FV =
up to RM7bn Senior Notes Issuance Programme. over the tenor of up to 30 years. It will provide RM6.13
AmBank the flexibility in terms of funding sources
and to achieve optimal funding structure.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
DRB-Hicom Interim dividend of 1.5 sen less 25% tax 10-Mar-10 29-Mar-10
Genetec Technology Interim tax exempt dividend of 0.5 sen 11-Mar-10 29-Mar-10
Maxis Interim single-tier tax exempt dividend of 6 sen 11-Mar-10 30-Mar-10
 Bertam Alliance Interim dividend of 1.75 sen less 25% tax 11-Mar-10 31-Mar-10
IGB Corp Interim dividend of 2.5 sen less 25% tax 11-Mar-10 15-Apr-10
Tomypak Holdings Tax exempt interim dividend of 3 sen 11-Mar-10 2-Apr-10
Symphony House Share dividend on basis of 1 treasury share for 40 shares held 11-Mar-10 2-Apr-10
Symphony House Single tier interim dividend of 0.5 sen 11-Mar-10 2-Apr-10
Cocoaland Holdings Interim dividend of 2.5 sen less 25% tax 12-Mar-10 6-Apr-10
Oriental Food Industries Interim dividend of 2 sen tax exempt 15-Mar-10 29-Mar-10
YTL Cement Second interim dividend of 3.75 sen single tier 15-Mar-10 31-Mar-10
YTL Power Second interim dividend of 3.75 sen single tier 15-Mar-10 31-Mar-10
Lafarge Malayan Cement Second interim single-tier dividend of 23 sen 15-Mar-10 14-Apr-10
CNI Holdings Interim dividend of 0.8 sen less 25% tax 16-Mar-10 8-Apr-10
Xingquan International Tax exempt interim dividend of 2.5 sen 16-Mar-10 16-Apr-10
Dominant Enterprise 3rd interim dividend of 1 sen less 25% tax 17-Mar-10 29-Mar-10
Wellcall Holdings Single tier first interim tax exempt dividend of 3 sen 18-Mar-10 8-Apr-10
Esthetics International Interim dividend of 1 sen less 25% tax 6-Apr-10 30-Apr-10
My E.G. Services First interim tax-exempt dividend of 0.5 sen 21-Apr-10 21-May-10
Sime Darby Interim single tier dividend of 7 sen 26-Apr-10 10-May-10
Nestle (M) Final dividend of 100 sen single tier tax exempt 10-May-10 26-May-10
Bintulu Port Holdings Final single tier div of 7.5 sen + special single tier div of 7.5 sen 12-May-10 27-May-10
Progressive Impact Corp Final dividend of 0.41 sen less 25% tax 24-May-10 7-Jun-10
Tien Wah Press Final dividend of 12.05 sen less 25% tax 3-Jun-10 23-Jun-10
Metrod (M) First and final dividend of 12 sen tax exempt 28-Jun-10 16-Jul-10

Going “ex” on 2 Mar

Maybank Interim dividend of 11 sen less 25% tax 2-Mar-10 16-Mar-10

...For more details, see individual reports attached

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Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over a period of three months, but fundamentals are not
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Industry/Sector Ratings

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