6 July 2010

PP 7767/09/2010(025354)
Malaysia Corporate Highlights
RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

New s Upda te
6 July 2010
MARKET DATELINE

Faber Group Berhad Share Price

Fair Value
:
:
RM2.64
RM3.54
Award Of Contract By Abu Dhabi Health Services Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (FAB; Code: 9008) Bloomberg: FAB MK

Pre-tax Net EPS Net
FYE Turnover Profit Profit EPS Growth PER C.EPS P/NTA Gearing ROE GDY
Dec (RMm) (RMm) (RMm) (sen) (%) (x) (sen) (x) (%) (%) (%)
2009 805.3 82.7 22.8 22.8 35.3 11.6 - 2.7 net cash 23.4 2.3
2010f 923.1 96.3 26.5 26.5 16.5 9.9 27.0 2.2 net cash 22.5 2.7
2011f 839.2 87.8 24.2 24.2 -8.8 10.9 24.0 1.9 net cash 17.6 3.0
2012f 1343.0 157.5 43.4 43.4 79.3 6.1 43.0 1.5 net cash 26.3 3.2
Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC #Excluding EI * Consensus Based On IBES Estimates

♦ Award of contract by Abu Dhabi Health Services. Faber announced Issued Capital (m shares) 363.0
yesterday that its 49%-subsidiary Faber Limited Liability Company (“Faber Market Cap(RMm) 958.3
LLC”) has met the conditions stipulated in the Award of Contract by Abu Daily Trading Vol (m shs) 1.2
52wk Price Range (RM) 0.91-3.00
Dhabi Health Services Company, Emirate of Abu Dhabi on 5 May. The
Major Shareholders: (%)
contract relates to the initial repair, maintenance and operation works for all
UEM Group 34.0
mechanical systems and equipment, and various electrical installations and Universal Trustee 23.4
fittings at Sheikh Khalifa Medical City (Main Campus) and affiliated buildings
in the region of Abu Dhabi. The project is worth approximately RM20.4m for
a three-year completion period. FYE Dec FY10F FY11F FY12F
EPS chg (%) - - -
♦ Positive to Faber. We believe the latest development is positive as Faber Var to Cons (%) (1.7) 0.8 0.9
would be able to further expand its non-concession IFM business in non-
PE Band Chart
healthcare segments overseas and reduce earnings dependency on
concessions. Faber would also gain a stronger foothold in UAE and this
PER = 12x
could facilitate further expansion in the country. Assuming a 13% EBIT PER = 7x
margin, this project provides 6% of Faber’s total FY10 earnings. PER = 2x

♦ Risks to our view. 1) Failure to secure an extension to the concession

agreement with the Government; and 2) Further delays in property
launches and approvals, which could affect revenues from the property
segment.
Relative Performance To FBM KLCI

♦ Forecasts. We are maintaining our FY10-12 forecasts for now, which

assume Faber will register non-concession IFM business turnover and EBIT Faber
of RM241.2-304.5m and RM43.4-54.8m respectively, driven by growth in
both local and overseas IFM ventures.

♦ Investment case. We continue to like Faber for its resilient earnings

FBM KLCI
derived from the concession business in IFM segments, together with its
ongoing expansion plans for its non-concession business both locally and
overseas. It was recently reported that UEM Group is looking to dispose of
its 34% stake in Faber as part of its on-going asset disposal programme.
Although the potential buyer is still not known, we expect this would Yap Huey Chiang
provide a potential trading opportunity for the stock. Indicative fair value of (603) 92802179
RM3.54, which is based on SOP valuation (see table 2) is maintained. We yap.huey.chiang@rhb.com.my
reiterate our Outperform call on the stock.

Please read important disclosures at the end of this report.

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Table 2. Sum Of Parts Calculation

Valuation basis FV (RMm) Per share (RM)
Concession IFM DCF 658.9 1.82
Non-Concession IFM 14x FY11 earnings 378.0 1.04
Property DCF 85.9 0.24

Add : Net cash (End-1QFY10) 162.4 0.44

SOP 1,285.2 3.54
Shares (m) 363.0

Source: Company data, RHBRI estimates

Table 3. Earnings Forecasts Table 4. Forecasts Assumptions

FYE Dec (RMm) FY09 FY10f FY11f FY12f FYE Dec (RM) FY10f FY11f FY12f
Turnover 805.3 923.1 839.2 1,343.0 Revenue:
Turnover growth (%) 20.2 14.6 (9.1) 60.0 Concession 544.1 562.2 543.5
EBITDA 169.0 195.4 175.8 295.4 Non-concession 241.2 276.9 304.5
EBITDA margin (%) 21.0 21.2 20.9 22.0 Property 137.8 0.0 495.0
Dep & Amort (21.0) (23.0) (24.7) (26.4)
EBIT 148.0 172.4 151.1 269.0
EBIT margin (%) 18.4 18.7 18.0 20.0 EBIT:
Net interest expense (6.7) (6.7) (6.7) (6.7) Concession 97.9 101.2 97.8
Associates (0.3) 0.0 0.0 0.0 Non-concession 43.4 49.8 54.8
Pretax Profit 140.9 165.7 144.4 262.3 Property 31.0 0.0 116.3
Tax (34.8) (41.4) (30.3) (55.1)
Minorities (23.4) (28.0) (26.2) (49.7)
Net Profit 82.7 96.3 87.8 157.5
Growth (%) 82.7 96.3 87.8 157.5
Source: Company Data, RHBRI estimates Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

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The recommendation framework for stocks and sectors are as follows : -

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 strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

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Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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