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

RHB Research Institute

RHB Equity 360°

18 August 2010 (Axiata, UMW, Gent Msia, AMMB, MAHB, MBM, Star, Hunza; Technical: Gent Msia,
Gamuda)

Top Story : Axiata – Strong performance to sustain into 2Q10 Outperform

Results Preview
- We believe 2Q10 results are likely to come in stronger on a yoy basis, underpinned by: (1) The strong
performances at XL and Dialog; and (2) Low base effect. Recall Axiata’s overall 2Q09 performance was
dragged down by the still-weak performance from its regional cellcos.
- We expect 2Q10 revenue to grow by mid to high-teens yoy, driven largely by: (1) Strong revenue growth at
XL and Dialog; (2) Celcom (~+12%, underpinned by larger mobile and broadband subscriber base.
- We expect 2Q10 EBITDA margin to hover at 47-49%, underpinned by a higher EBITDA margin at XL that
is likely to be partly offset by lower EBITDA margin at Celcom on the back of higher marketing expenses.
- No change to our SOP-derived fair value of RM4.75 and Outperform call on the stock.

Corporate Highlights

UMW : Letter of award for Naga 2 Outperform

News Update
- Naga Two has won an LOA valued at US$183.12m (RM578.5m) for an estimated period of 3.7years from
HESS for the Indonesia Pangkah project. The contract is expected to commence in Sep.
- Per day charter rates of US$136k is lower then US$155.7k per day rates fetched from the cancelled
PCPPOP contract back in Aug 2008.
- Although we are positive on the win, we believe it will do little for UMW’s oil and gas division in the near
term, which should continue to chart losses even in 2QFY10.
- Naga 3 has not been chartered out as yet, however they look to finalized discussions with clients soon.
- We maintain our forecasts for UMW at this juncture pending the results announcement expected to be on
20 August which would shed light on the outlook for the oil and gas division.
- Reiterate Outperform call based on unchanged SOP derived fair value of RM7.50.

Genting Malaysia – Gets outstanding approvals for US racino Market Perform

News Update
- Genting Malaysia’s (GM) subsidiary, Genting New York has obtained the approvals of the Governor of New
York, temporary President of the Senate, and Speaker of the Assembly, followed by Attorney General and
Comptroller for the operation of the Aqueduct racino in New York. Besides this, there is still one other
decision which has to be made by a state judge in an outstanding court case which Aqueduct is appealing.
In the proposal released on the New York lottery website, GM also mentions its capex budget of US$350m
for the racino facility, which will bring initial investment cost of this project to US$730m (RM2.31bn).
- Based on the increased investment cost and assuming the capex is to be spent immediately, we estimate
that this project would only add approximately 3-5% (from our original estimates of 7-9%) to GM’s
bottomline on a full year basis. Given the phased development, we now expect this to add only about 1-3%
(from 4-5% previously) to net profit in the first year of operations (presumably in FY11), before rising to 3-
5% by FY12/13. IRR for the project would reduce to about 6% (from 10% previously).
- Forecasts are unchanged for now, pending the court case decision and more details from management.
We maintain our SOP-based fair value for GM at RM3.00 and our Market Perform recommendation.

AMMB : Off to a strong start Outperform

1QFY11 Results/Briefing Note
- 1QFY03/11 results beat our and consensus expectations with net profit of RM368.3m (+42.6% yoy;
+52.3% qoq) accounting for 30-30.7% of our and consensus full-year estimates. The main variances were
stronger-than-expected non-interest income and lower-than-expected allowances for impairment on loans.
- Qoq loan growth picked up to +1.7% vs. +0.5% in 4QFY10 with the increase coming from both individuals
(residential properties) and SMEs (education and health). Unadjusted NIM was broadly stable qoq (+32bps
yoy). Non-interest income remained healthy, supported by transactional fee income while CIR improved to
44.3% (4Q10: 51.2%; 1Q10: 48%) as overheads were kept well in check.
- Following the adoption of FRS139, AMMB’s gross impaired loans ratio stood at 3.6% as at end-Jun, a
slight improvement as compared to the restated ratio of 3.8% as at 1 Apr 2010 (2.8% based on former
GP3). LLC, meanwhile, fell to 93.7% as at end-1QFY11 (4Q10: 99.5%) due to the upward adjustment for
gross impaired loans.
- Core capital ratio at end-1QFY11 was 10% (4Q10: 10.3%; 1Q10: 9.4%).
- We have raised our FY11-13 net profit projections by 4.4-5.2% following the better-than-expected numbers.
- Fair value raised to RM6.95 (from RM6.60) based on unchanged target CY11 PER of 15x.

MAHB : 1HFY12/10 hit by associate losses Outperform

2QFY10 Results/Briefing Note
- 1HFY12/10 net profit of RM132.0m came in below expectations, accounting for 35.2% of our and 34.6% of
consensus full-year estimates. We believe the key variance came largely from associate losses.
- Despite revenue increasing by 10%, 1HFY12/10 net profit declined by 16.2% yoy, mainly due to: 1) Higher
operating expenses; 2) Higher finance costs; 3) Higher associate losses; and 4) Higher tax expense.
- In addition, 2QFY12/10 net profit declined by 18.0% qoq mainly due to higher operating expenses.
- Therefore, we are cutting our FY10-11 net profit forecasts by 12.2% and 4.5% respectively, largely to
account for associate losses, which in turn come largely from its airport operations in Sabiha-Gokcen
International Airport, Istanbul.
- Nevertheless, management appears optimistic that losses at this overseas venture would gradually narrow
over the next three years (and turn profitable by FY13), as: 1) Passenger traffic at this airport has been
increasing; and 2) Capacity bottleneck at Atatürk International Airport, the major airport in Istanbul.
- Accordingly, our fair value has been reduced from RM6.24 to RM5.96 based on 16x revised FY12/11 EPS.

MBM : An even better 2QFY10 Outperform

2QFY10 Results
- 1H10 results were above expectations, achieving 67.2% and 68.8% of our and consensus full-year
estimates, underpinned by the strong growth in all models and the positive contribution from new
dealerships with Volkswagen, Mitsubishi and Hino.
- 2H10 sales growth is guided to be positive albeit at a more moderate pace. Plans to upgrade their existing
network into 3S and expansion of their distribution and dealership with Volkswagon, Hino and Mitsubishi
are also progressing as scheduled.
- No changes to forecasts for now as although we are very positive on earnings growth, we look to Aug’s TIV
numbers (to be released in Sep) to gauge the industry’s outlook.
- Forward earnings should remain positive on the back of: 1) sustained favourable exchange rates; 2)
improved consumer sentiment and business conditions; and 3) strong contribution the new dealerships
they have negotiated for. Given the positive view we have on the stock we maintain our fair value of
RM5.30/share based on 11x FY11 EPS. Reiterate Outperform

Star : Stronger-than-expected ad revenue Outperform (up from MP)

2QFY10 Results
- 2QFY09/10 net profit of RM50.1m came slightly above our and consensus expectations with 6MFY10 net
profit of RM89.7m accounting for 53% and 52% of our and consensus full-year estimates respectively. The
key variance was stronger-than-expected ad revenue in 1HFY10.
- Qoq, revenue rose 28.3%, as a result of stronger advertising revenue as well as stronger numbers
recorded by Cityneon. With that, this led to the 32.4% qoq net profit growth.
- In view with the stronger advertising revenue achieved by Star thus far, we have revised up our FY10-12
ad revenue growth to 3.5-9.6% respectively and as a result, our FY10-12 earnings forecasts have been
raised by 7.2-8.0% respectively.
- Our fair value has been raised to RM4.20 (from RM3.86) based on unchanged FY11 target PER of 15x.
Consequently, we have upgraded our call on the stock to Outperform from market perform previously.

Hunza Properties : Above expectations again … Trading Buy (up from MP)
2QFY10 Results
- FY06/10 net profit of RM50.9m came in above our and consensus estimates by 6-10%. Sequential turnover
and net profit improved, mainly due to faster pace in the construction of Gurney Paragon residential blocks.
- Full year turnover and net profit jumped 171.1% and 84.6%, respectively, as property sales were hit by the
 global financial crisis last year.
- A 5.6 sen final dividend was declared. Including the 2.5 sen special interim in 3QFY10, full year dividend
amounted to 8.1 sen, translating into a yield of 5.8%.
- Gurney Paragon and Infiniti take-up rates achieved 63% and 87%. The minimal improvement in Gurney
Paragon’s sales may reflect the lack of confidence of potential buyers on the project, given its stop work
order previously.
- We raise our FY11-12 forecasts by 4.6% and 5.5% respectively, in view of the stronger-than-expected
margins achieved in FY10. We estimate a flattish growth for FY13, mainly underpinned by the upcoming
project Alila II that will be launched in 3Q2011.
- After we update the latest FY10 balance sheet, our fair value on Hunza is revised up to RM1.58, based on
an unchanged 50% discount to RNAV. Upgrade the stock to Trading Buy.

Technical Highlights

Daily Trading Strategy : 1,390 And 1,400 targets within reach…

- Despite the constant profit-taking pressure throughout the day due to recent sharp gains, the FBM KLCI
still managed to chalk up gains with a possible bullish “three white soldiers” candle on the chart.
- Coupled with the robust daily volume at above the 1.0bn shares mark, and the positive overall technical
readings, the FBM KLCI is due to rechallenge the upside target at 1,390, nearer the 1,400 psychological
level soon.
- Though we do not discount the possibility of profit-taking pressure today due to short-term “overbought”
momentum readings, we remain bullish on FBM KLCI’s short-, medium- and long-term outlook.
- This view will only be threatened, if the index surprises us with a negative turn to below the 10-day SMA of
1,362 and the key breakout point at 1,350 in the near term.
- Overall, we expect index-linked heavyweights and mid-cap stocks to lead buying interests in the short run.

Daily Technical Watch: Genting M’sia – Fresh bullish breakout from the RM2.68–2.96 sideways range …
- 10-day SMA: RM2.832
- 40-day SMA: RM2.747
- Support: IS = RM2.96 S1 = RM2.68 S2 = RM2.44
- Resistance: IR = RM3.20 R1 = RM3.60

Short-term Trading Idea : Gamuda – Further upside towards RM3.64-4.10 region… Bargain Buy
- Strategy: Bargain buy at above RM3.33 for further rally ahead.
- Target: IR = RM3.50 R1 = RM3.64 R2 = RM4.10
- Support: IS = RM3.33 S1 = RM3.06 S2 = RM2.59
- Exit: Cut loss if the stock falls to below the 40-day SMA of RM3.30.

Bulletin Board

Co/Sector News Impact Recom

Eon Cap Eon Cap will postpone its EGM tomorrow that
was meant for shareholders to decide on HL
Bank’s RM5.06bn takeover offer. This followed
HL Bank on the back of a court hearing yesterday, where
a minority shareholder had sought to block the
EGM due to, among others, insufficient notice
period given for the EGM. (Business Times)
According to the daily, a fresh EGM may be MP, FV =
convened in about a month’s time. This means RM8.33;
that EON Cap is unlikely to meet the deadline set
by HL Bank that the EGM shall be held by 20 MP, FV =
Aug. Nevertheless, we believe HL Bank is RM9.20
unlikely to walk away from the deal and instead,
is likely to extend the deadline further (as it had
done in the past).

Important Dates

Company Quarter Expected Results Date

EON Capital 2QFY12/10 Week beginning 16-Aug
AFG 1QFY03/11 Week beginning 16-Aug
 HL Bank 4QFY06/10 Week beginning 16-Aug
IOI Corp (tentative) 4QFY6/10 17-Aug
AirAsia 2QFY12/10 18-Aug
Carlsberg 2Q FY12/10 18-Aug
KLK 3QFY09/10 18-Aug
Tan Chong 1QFY12/10 18-Aug
MISC 1QFY03/11 19-Aug
PLUS Expressways 2QFY12/10 19-Aug
WCT 2QFY12/10 19-Aug

Company Entitlement details Ex-date Payment date

New entitlements
LPI Capital Renounceable rights issue on the basis of 1-for-10 27-Aug-10 -
LPI Capital Bonus issue on the basis of 1-for-2 27-Aug-10 -
MBM Resources First interim single tier dividend of 5 sen 27-Aug-10 22-Sep-10
Yee Lee Corp Bonus issue on the basis of 2-for-5 2-Sep-10 -
Yee Lee Corp Share split on the basis of 1-into-2 2-Sep-10 -
Warisan TC Holdings Interim dividend of 6% less tax 7-Sep-10 29-Sep-10
Southern Steel Interim dividend of 5% tax exempt 14-Sep-10 30-Sep-10
Star Publications First interim div of 7.5 sen + special tax exempt div of 3 sen 28-Sep-10 18-Aug-10

Going “ex” on 20 Aug

Huat Lai Resources Interim tax exempt dividend of 3 sen 20-Aug-10 15-Sep-10
Sunway City Final dividend of 5% less 25% income tax 20-Aug-10 22-Sep-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

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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