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

RHB Research Institute

RHB Equity 360°

12 August 2010 (AirAsia, CBIP, BAT; Technical: Supermax)

Top Story : AirAsia – 2QFY12/10 results to beat our expectation Outperform

Results Preview
- We expect 2QFY10 core PBT to come in at RM125-135m, up 13-22% vis-à-vis RM111m recorded in 1Q.
- Cumulatively, 1H core PBT of RM236-246m will have accounted for 55-57% of our full-year forecast of
RM432.1m, exceeding our expectation.
- The qoq growth in 2QFY12/10 core PBT will have been driven largely by 6% more passengers, partially
offset by a higher fuel cost.
- We are raising FY10-12 net profit forecasts by 7-16% p.a., largely to reflect higher yields and traffic,
partially offset by a higher fuel cost.
- Fair value is raised by 11% from RM1.88 to RM2.08. Maintain Outperform.

Commodities Corner

Crude oil : IEA raises 2010 crude oil demand forecast … after reducing its forecast in Jul
- Reflecting the uneven global economic data, the International Energy Agency’s (IEA) forecast for global
crude oil consumption has been equally volatile. In its latest monthly oil market report, the Paris-based
agency is now projecting world crude oil demand to grow by 2.2% or 1.8m barrels per day for 2010 and to
slow to 1.5% (or 1.3m barrels per day) for 2011. In Jul, the IEA forecast 2010-2011 growth of 2.1% and
1.6% respectively.
- Nevertheless, the underlying trend is the same, i.e. a slowdown in consumption for 2011, driven by a 0.4%
contraction in projected demand from OECD countries. As it stands, Jul average global production stood at
87.2m barrels/day, vs. the average of 86.6m barrels projected for this year, suggesting ample supplies.
- Notwithstanding spikes driven by weather or geopolitical concerns (and recent USD weakness), we thus
maintain our assumption that crude oil price for 2010 will hover at around US$75/barrel. We remain more
positive about 2011 offshore E&P activity however on longer-term positive outlook for global consumption.

Corporate Highlights

CBIP : Picking up the pace Outperform

Visit Note
- As at end-June, year-end, CBIP’s unbilled orderbook was about RM300-350m, of which approximately
RM83m were contracts obtained in YTD2010. We expect CBIP to recognise its unbilled orderbook over the
next one and a half years, bringing revenue from its mill engineering division to RM300-330m p.a. in FY10-
11, which is an annual growth of 10-15% from FY09.
- In Indonesia, CBIP’s planting programme is progressing well. CBIP has, to-date, planted up about 1,200ha
of land already in its Central Kalimantan estate and is targeting to plant up a total of 2,500ha of this land in
FY10, and the remaining 3,500ha in FY11, at a planting cost of approximately RM11,000/ha over 3 years.
- We have revised our forecasts downwards slightly by -1.9-2.7% for FY10-12. Despite this, our SOP-based
target price is raised to RM4.05 (from RM3.70), after removing the 10% dilution effect from the proposed
private placement, which we have assumed will be aborted. Maintain Outperform.

BAT : Another tax on top of excise duty? Underperform

Company Update
- It was recently reported in the media that cigarette makers will have to pay half a sen for every stick sold as
cess to the National Kenaf and Tobacco Board starting from next month.
- BAT informed us that they have not received any official letter with regards to the cess tax as yet. However,
we estimate that assuming the cess tax is implemented, and BAT does not increase its selling price, FY10-
12 earnings will be lower by 1.7-5.6%.
- Maintain forecasts and fair value of RM40.25 pending further confirmation. Maintain Underperform.

Technical Highlights
 Daily Trading Strategy : Losing 1,350 will confirm a bearish breakdown…
- Yesterday’s decline to below the 10-day SMA of 1,361 indicates a decisive breakdown of the short-term
technical picture.
- Although the FBM KLCI managed to close at above the 1,350, off the day low of 1,349.50 yesterday, the
technical readings remained weak overall.
- Closing with a bearish candle below the SMA suggests a negative short-term performance is likely today.
- Plus the poorer daily turnover, and the overnight Wall Street’s plunge, the risk is high for the index to lose
the critical 1,350 level in the immediate term.
- If this occurs, it will mean a confirmation of a bearish breakdown from the recent uptrend.
- That will lead the index towards the 40-day SMA of 1,336, followed by the psychological support of 1,300.

Daily Technical Watch: Supermax Corporation – Prepare to turn bearish on the stock’s technical outlook…
- 10-day SMA: RM6.11
- 40-day SMA: RM6.03
- Support: IS = RM5.96 S1 = RM4.97 S2 = RM3.90
- Resistance: IR = RM6.60

Bulletin Board

Co/Sector News Impact Recom

Consumer : The total sales from the direct selling industry in
MLM the country are expected to increase by more
than 33% to hit RM4.5bn this year, compared to
RM3.32bn in 2009. (Star)
Rubber After climbing to all-time highs in the middle of
Gloves last month, the share prices of Malaysian listed
glovemakers have been on a steady downtrend.
The is due to the headwinds that the glove
makers are currently facing with regards to over
capacity, record high latex prices, weakening
US$ against RM and a cut in gas subsidies. In an
interview with four of Malaysia’s glove
manufacturers – Top Glove, Kossan, Hartalega
and Latexx Partners, the companies are
generally still positive on the demand outlook
moving forward and the headwinds facing the
industry are just short term (Financial Daily).
IOIC The EPF has sold 33.7m (0.5% stake) IOIC
shares over the past seven trading days,
reducing its stake to 12.77%. IOIC’s shares were
trading at between RM5.10-5.13 during the 7
days. (Financial Daily)
Positive. The strong growth projected for the Neutral
overall DSA industry is positive for Amway and
Hai-O, although our forecasted sales growth for
FY10 for Amway and Hai-O is a lot more
conservative at 5.1% and 3.5% respectively.
As we highlighted earlier, we expect the near- OW
term picture for the rubber glove manufacturers
would be negative due to the time lag in passing
on the higher latex cost and weakening US$.
That said, we believe the long-term outlook for
the sector remains positive given the rising
awareness for health safety, as well as in
response to disease outbreaks.
Negative, although we believe the sale of shares OP, FV =
was not likely to be done solely by EPF, but by RM6.65
various external funds who manage EPF’s
money. We are not too worried about this given
the immaterial amount in terms of % of IOIC’s
total issued capital, as well as the fact that this
does not seem like a strategic decision by EPF to
dispose of its stake in IOIC, but part of its normal
trading activity.

Important Dates

Company Quarter Expected Results Date

AMMB 1QFY03/11 Week beginning 9-Aug
EON Capital 2QFY12/10 Week beginning 9-Aug
Genting Singapore 2QFY12/10 12-Aug
 RCE 1QFY03/11 13-Aug
Wellcall 3QFY10/09 13-Aug
AFG 1QFY03/11 16-Aug
HL Bank 4QFY06/10 16-Aug
MAS 2QFY12/10 16-Aug
IOI Corp (tentative) 4QFY6/10 17-Aug
Star 2QFY10/12 17-Aug

Company Entitlement details Ex-date Payment date

New entitlements
Excel Force MSC Bonus issue on the basis of 1-for-2 23-Aug-10 -
NTPM Holdings Single tier final dividend of 14.5% 13-Sep-10 30-Sep-10

Going “ex” on 13 Aug

Opcom Holdings Single tier interim dividend of 1.5 sen 13-Aug-10 26-Aug-10
Astino First interim dividend of 1.25 sen less 25% tax 13-Aug-10 30-Aug-10
Chin Teck Plantations 2nd interim dividend of 24 sen less 25% tax 13-Aug-10 30-Aug-10
Pelikan International Final single tier dividend of 2 sen 13-Aug-10 15-Sep-10

...For more details, see individual reports attached

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