RHBRI's Monthly Stock Watch: Special Focus: Earnings Beat Our Expectation But Global Recovery Fears Persist - 03/09/2010

MARKET DATELINE
PP 7767/09/2010(025354)
3 September 2010
•
Malaysia
RHBRI’s Monthly Stock Watch
Special Focus :
Earnings Beat Our Expectation; But Global
Recovery Fears Persist (See page 18)
Stock Pick Of The Month :

Paramount (See page 27)
Changes In Recommendation And Forecast From

Last Stock Watch For August 2010
Recommendation Adjustment Reasons For Changes In
Company Current Previous Date Recommendation And Forecast
Adventa Outperform Outperform 13 Aug 2010 We have cut our target PER for
Adventa to 11x (from 13x), following
the cut in Top Glove’s target PER to
15x (from 17x). As a result, our
fair value has been lowered to
RM4.16 (from RM4.92).
AEON Market Perform Outperform 27 Aug 2010 We have revised down our earnings
forecasts for FY10, FY11 and FY12,
by 0.8%, 2.2% and 7.9%
respectively after: 1) revising our
SSS growth assumptions; and 2)
revising our number of new store
assumptions. After our earnings
revision, we have reduced our fair
value of AEON to RM5.28, from
RM6.30, based on a lower target of
12x FY12/11 EPS (previously 14x).
Our PE of 12x is the lower-end of
AEON’s historical PE range of 12-
15x. As such, we downgraded our
call on the stock to Market Perform
(from Outperform).
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Affin Outperform Outperform 23 Aug 2010 Following the release of the stronger-
than-expected 2QFY10 results, we
raised our FY10-12 net profit
forecasts by 12.5-17.7% mainly after
adjusting for lower credit cost
assumptions. Fair value raised to
RM4.10 from RM3.55 based on
unchanged target CY11 PER of 12x.
AFG Outperform Outperform 24 Aug 2010 Our FY11-12 net profit forecasts have
been raised by up to 2.9% following
a downward revision in credit cost
projections to 36bps p.a. from 47-
50bps p.a. previously, partly offset
by a downward revision in loan growth
assumption. Fair value raised to
RM3.50 (from RM3.40) based on
AirAsia Outperform Outperform 12 Aug 2010 FY12/10-12 net profit forecasts raised
by 7-16%, largely to reflect higher
yields and traffic, partially offset by
higher fuel cost.
AMMB Outperform Outperform 18 Aug 2010 We have raised our FY11-13 net
profit projections by 4.4-5.2% after
raising our non-interest income
forecasts by 1-1.7% while lowering
our allowance for impairment on
loans by 11-17.5%. Fair value raised
to RM6.95 (from RM6.60) based on
Ann Joo Outperform Market Perform 4 Aug 2010 FY12/10-12 net profit forecasts raised
Resources by 4.5-10.5%, largely to reflect
higher selling prices.
Correspondingly, indicative fair value
was raised by 3.6% from RM2.74 to
RM2.84 based on 9x revised FY12/
10 fully-diluted EPS of 31.6 sen.
APM Outperform Outperform 19 Aug 2010 Given the better-than-expected

Automotive earnings thus far, we raised our FY10-
Holdings 12 earnings estimates by 10.1%,
6.2% and 4.2% respectively and
upgraded our indicative fair value to
RM5.53 (vs. RM5.21) based on
unchanged 11x FY12/11 EPS.
RHBRI'S MONTHLY 2 STOCK WATCH

Axiata Outperform Outperform 3 Aug 2010 FY10-12 net profit forecasts raised
by 7.0-15.3%, largely to reflect an
upward revision in our forecasts for
both XL and Dialog post release of
their 2QFY10 results. SOP fair value
is raised by 4.9% from RM4.53 to
RM4.75 after: 1) updating our
valuation parameters (e.g. latest
market prices and exchange rates);
and 2) rolling forward the base year
from FY10 to FY11.
Axiata Outperform Outperform 26 Aug 2010 FY10-12 net profit forecasts tweaked
upward by 13.9-14.6%, largely to
reflect: 1) lower operating cost at
Celcom (which in turn results in
higher margins); and 2) a lower
effective tax rate assumption of 25%
(vs. 32% previously).
Axis REIT Outperform Outperform 25 Aug 2010 FY10-12 earnings forecasts are
raised by 1.4-7.1% as a result of
the acquisition of a new property –
Tesco in Taman Bukit Indah JB. Fair
value is hence increased to RM2.67,
based on MREIT target yield of 7%.
BP Plastics Outperform Outperform 16 Aug 2010 We lowered our FY10-12 gross

margin assumptions to 14-15% from
16% p.a. previously, to reflect the
higher raw material prices. As such,
we cut our FY10/11/12 EPS forecast
by 17%/8.3%/8.0% respectively.
Accordingly, we trimmed our fair
value slightly to RM0.80 (from
RM0.88) based on unchanged target
FY12/11 PER of 8x.
CBIP Outperform Outperform 12 Aug 2010 Post-visit, we revised our forecasts

downwards slightly by -1.9-2.7% for
FY10-12. Despite our slight downward
earnings revision, our SOP-based
target price is revised upward to
RM4.05 (from RM3.70), after
removing the 10% dilution effect
from the proposed private
placement, which we have assumed
will be aborted.

CIMB Outperform Outperform 27 Aug 2010 We fine-tune and adjust our

earnings forecasts for the recently
completed acquisition of 19.67%
stake in CIMB Niaga from Khazanah.
The overall impact, however, is
relatively insignificant to our net
profit forecasts.
Daibochi Outperform Outperform 11 Aug 2010 We have reduced our earnings

forecasts for FY10-12 by less than
1% p.a. to input the costs of forex
hedging. As such, our fair value is
reduced slightly to RM3.80 (from
RM3.83 previously). Maintain
Outperform.
EON Cap Market Perform Market Perform 13 Aug 2010 On the back of the stronger-than-
expected 2QFY10 results, we raised
our FY10-12 net profit forecasts by
12.2-13.9% largely after cutting our
FY10-12 projections for overheads by
6-7% p.a.. Fair value raised to
RM8.33 (from RM7.92) but Market
Perform call is unchanged.
Evergreen Outperform Outperform 17 Aug 2010 We have increased our earnings

forecasts by 7.6-21.6% for FY10-12
after raising our average selling price
and effective tax rate assumptions,
while lowering operating cost slightly
to be in line with 1H results. As a
result, our fair value has been
increased to RM2.67 (from RM2.30)
based on unchanged 10x FY11 EPS.
Faber Outperform Outperform 6 Aug 2010 We revised our FY10-12 revenue

projections slightly by 0.6-5.9% to
reflect the higher projected non-
concession IFM business. However,
we revised our FY10 property revenue
to RM79.6m (vs. RM137.8m
previously) but maintained our FY10-
12 revenue projections, in-line with
management’s expectations. As a
result, our FY10/FY11/FY12 net profit
forecasts were revised by -1.0%,
9.0% and 5.4% respectively.
Following the earnings revision and
after updating net cash position as
at Jun, our fair value for Faber has
been raised to RM3.82 from RM3.54
(based on SOP valuation).

Fajarbaru Outperform Outperform 4 Aug 2010 FY06/10 net profit forecast raised by
9%, having revised up progress
billings and margins in 4QFY06/10.
Fajarbaru Outperform Outperform 26 Aug 2010 FY06/11-12 net profit forecasts

trimmed by 2% each, having updated
cash balance as at end-FY06/10.
First Outperform Outperform 16 Aug 2010 Post-results, we revised down our

Resources FY10 forecasts by 14.5% and our
FY11-2 forecasts by 7-8% p.a.. We
uphold our view that FY10 is an
anomaly year for FR and continue to
project strong 3-yr earnings CAGR of
55.5% to FY12. Post earnings
revision, our fair value is reduced
slightly to S$1.30 (from S$1.35),
based on unchanged target PER of
10.5x CY11 earnings.
Genting Outperform Outperform 27 Aug 2010 After imputing our revised Genting
Singapore forecasts into Genting’s
model, we raise our net profit
forecasts by 51.9% for FY10 and by
35-40% for FY11-12. Post-earnings
revision and after updating for 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 raised to RM11.00 (from RM9.30).
Genting Market Perform Market Perform 27 Aug 2010 No change to our forecasts, post-
Malaysia results. However, after adjusting for
the latest market value for Genting
HK and updating for GM’s end-
2QFY10 net cash balance, our SOP-
based fair value is raised slightly to
RM3.25 (from RM3.20). Note that our
net cash balance has been adjusted
for GM’s investment cost for Genting
UK (RM2.1bn) and Aqueduct New
York (RM2.3bn).

Genting Outperform Outperform 13 Aug 2010 Due to better-than-expected results

Singapore in 2Q2010, we have more than
doubled our earnings forecasts, and
are now expecting GS to record a
net profit of S$1bn in FY10, rising to
S$1.2bn in FY11 and S$1.4bn in
FY12. Post-earnings revision, we
raise our fair value to S$2.40 (from
S$1.65), based on blended average
of EV/EBITDA (in line with 12x FY11
regional average) and DCF.
HL Bank Outperform Market Perform 20 Aug 2010 We have raised our FY06/11-12 net
profit forecasts by 11-14.8% largely
after: 1) lowering our credit cost
assumptions to around 20bps p.a.
(31-37bps previously); and 2) a
reduction in our effective tax rate
assumptions to 18-19% (from 25.7%
p.a.). Fair value raised to RM10.70
from RM9.20, based on unchanged
target CY11 PER of 15x, while
recommendation upgraded to
Outperform from Market Perform.
Hunza Trading Buy Market Perform 18 Aug 2010 FY11-12 earnings forecasts are
adjusted by 5-6% due to stronger
margins achieved. After we update
the latest FY10 balance sheet, fair
value is raised to RM1.58 from
RM1.43, based on an unchanged
50% discount to RNAV.
Hunza Trading Buy Trading Buy 19 Aug 2010 FY11-FY13 net profit forecasts are
revised up by 6-33%, due to earlier-
than-expected launch of Alila II. Fair
value is kept at RM1.58, based on a
IJM Land Outperform Outperform 26 Aug 2010 We adjust our FY11-12 forecasts
down by 9-36%, as we fine-tune our
assumptions for take-up rates and
launches of some projects. Our fair
value is lowered to RM3.00 from
RM3.11, based on RNAV valuation
method.

IOI Outperform Outperform 25 Aug 2010 Post-results, no change to our

Corporation forecasts for FY11-12 and we
introduce our FY06/13 forecast.
However, after adjusting for the
4QFY10 net debt position and fully
diluted share capital base, we reduce
our SOP-based target price slightly
to RM6.40 (from RM6.65).
Jaya Tiasa Outperform Outperform 20 Aug 2010 We revised our FY04/11-12 earnings
forecasts slightly by 1.2% and -2.2%
after adjusting for lower logs
production, lower plywood sales
volume, higher CPO production and
higher oil extraction rate. We also
introduce our FY04/13 forecast. As a
result, we have trimmed our target
price for Jaya Tiasa to RM4.90 (from
RM4.95) based on target PER of 12x
CY11 earnings for timber and
plantation divisions.
JCY Market Perform Outperform 3 Aug 2010 We cut our FY10-12 revenue growth
forecasts by 40-45% to reflect lower
HDD shipments i.e. lower sales of
antidisk. Consequently, our FY09/10-
12 EPS forecasts were reduced by -
0.2%, -0.3% and -0.3% respectively.
Also, we lowered our FY11 target PER
to 10x from 12x. Therefore, our fair
value was lowered to RM1.32/share
(from RM2.16) and downgrade our
call on the stock to Market Perform.
Kencana Market Perform Underperform 20 Aug 2010 We upgraded our FY11-12 EPS
forecasts by 22.7% and 24.1%
respectively after factoring in the
PCSB contract which is due to start
by mid-Sep. We thus upgraded our
call on the stock to Market Perform,
with an upgraded share price of
RM1.56 (vs RM1.27) based on an
unchanged 13x FY11 PER).

KFC Outperform Outperform 26 Aug 2010 Our FY10-12 earnings projection were
revised upwards by 0.3-1.1% after
taking into account: 1) the lesser
number of new outlets in India; 2)
higher number of drive-thru outlets
of 10 (from 5 previously) in Malaysia;
and 3) higher capex of RM200m per
year (from RM89-90m previously) for
FY11-12. Post earnings revision, we
have increased our fair value slightly
to RM13.07 (ex-all = RM3.27) from
RM12.97 previously. Maintain
Outperform.
Kossan Outperform Outperform 7 Aug 2010 We have cut our FY10-12 revenue
projections by 1.5-4.3% after pushing
expectations regarding contribution
from its 16 double-former lines from
its new factory to 4Q10 (previously
3Q10). At the same time, we have
also lowered our FY10-12 EBITDA
margins to 16.0-18.4% from 17.7-
19.2% largely to reflect the time lag
in passing on the higher latex cost
as well as weakening US$.
Consequently, our FY10-12 earnings
forecasts have been lowered by 10.1-
12.8%. Our indicative fair value has
been lowered to RM5.81 (from
RM6.70) based on unchanged target
FY11 PER of 13x.
Kossan Outperform Outperform 13 Aug 2010 We have cut our target PER for
Kossan to 12x (from 13x), following
the cut in Top Glove’s target PER to
15x (from 17x). As a result, our fair
value has been lowered to RM5.36
from RM5.81 previously.
KPJ Outperform Outperform 7 Aug 2010 We raised our indicative fair value
to RM4.51 (from RM4.25), based on
revised target FY11 PER of 17x, after
imputing a 10% discount to the
regional peers’ average of 18.5x.

Kurnia Market Perform Outperform 1 Sep 2010 Our FY10-12 earnings forecasts were
revised downwards by 24-43% p.a.
after we adjusted the following
assumptions: 1) 5% premium growth
for FY10 (from 8% previously); 2)
NEP/NWP for FY10-12 to 92% (from
106.5-107% previously); 3) higher
management expense ratios of 21%,
20% and 19% for FY10-12, from
17.5% previously; 4) commission
ratio of 11% for FY10-12 (from 10%
previously); and 5) a higher effective
tax rate of 35% for FY10 (from 25%
previously). After the earnings
revision, we reduced our fair value
to RM0.44 based on unchanged
target PER of 9x FY12/11 EPS. We
also downgraded our
recommendation on the stock to
Market Perform (from Outperform
previously).
LPI Capital Market Perform Outperform 1 Sep 2010 Our fair value was adjusted after LPI
completed its bonus issue and rights
issue, which increased its number of
shares outstanding to 222.0m. Our
new fair value is to RM12.01 (from
RM19.23 before adjusting for bonus
and rights issues). We downgraded
our call on the stock to Market
Perform as we believe there is
minimal upside to its share price.
Mah Sing Outperform Outperform 27 Aug 2010 We adjust our FY10-12 earnings
forecasts after fine-tuning our
assumptions for take-up rate and
timeline of property launches. The
net impact on earnings is -14% to
+7% change in net profit. Fair value
is lowered slightly to RM2.06 from
RM2.09.
MAS Underperform Underperform 17 Aug 2010 We now project MAS to report

RM141.1m net loss in FY12/10 (vis-
à-vis RM381.4m net profit previously)
while FY12/11-12 net profit forecasts
are trimmed by 4%, having reduced
our assumptions on yields.

Maxis Outperform Outperform 1 Sep 2010 FY10-12 net profit forecasts were
revised downwards by 5.6-6.3% to
account for: 1) lower ARPU
assumptions; and 2) higher
administrative expenses.
Correspondingly, DCF-derived fair
value has been lowered by 7.3%
from RM6.20 to RM5.75
(WACC=8.4%, TG=1.5%).
MCIL Outperform Outperform 26 Aug 2010 We have raised our FY11-13 EBIT
margin assumptions to 14.5-15.5%
largely to reflect the higher-than-
expected margin achieved by MCIL
thus far. As a result, our FY11-13
earnings forecasts have been raised
by 3.8-4.6% respectively. Our fair
value has been raised slightly to
RM1.21 (from RM1.16), which is
based on unchanged target CY11 PER
of 13x.
Media Prima Outperform Outperform 24 Aug 2010 We have lowered our FY10-12
earnings forecasts by 5.2-19.2%
largely to reflect lower EBITDA
margins and higher effective tax rate
assumptions. As such, we have
lowered our fair value to RM2.57
(from RM2.80), which is based on
unchanged target FY11 PER of 15x.
MNRB Market Perform Underperform 26 Aug 2010 We adjusted downwards the

reinsurance claims ratio in FY11 to
68% from 70% previously, in view of
better claims experience in 1Q FY03/
10. As a result, our earnings forecast
for FY11 was raised by 33.5% to
RM64.9m. We also introduced our
FY13 forecast. We maintained our
fair value of RM2.98 based on
unchanged 0.7x FY03/10 NTA.
However, as there is an upside of
15% to its current share price coupled
with the better-than-expected results,
we upgraded our call on the stock to
Market Perform (from underperform
previously).

MPI Market Perform Market Perform 25 Aug 2010 We cut our FY11-12 EPS forecasts
by -11.5% and -1.9% respectively,
mainly to reflect: 1) weaker chips
demand from its power supply chips
(PC segment); 2) higher operating
costs stemming from its capacity
expansion in Ipoh and Suzhou; and
3) lower margin assumptions due to
still higher product sales mix of lower
margin legacy packages.
Consequently, our fair value was
lowered to RM6.35/share (vs. RM6.80
previously) based on unchanged 11x
CY11 EPS.
MRCB Trading Buy Trading Buy 25 Aug 2010 FY12/10-12 net profit forecasts cut
by 12-14%, having reflected larger
losses from associates and a higher
effective tax rate.
Notion Vtec Underperform Outperform 3 Aug 2010 We cut our FY9/10-12 EPS forecasts
by 21.1%, 36.2% and 47.4%
respectively, after factoring in 25-
35% lower sales i.e. lower shipments
of the HDD components and lower
margins i.e. lower utilisation rates.
As a result, our fair value was cut to
RM2.07 based on our new forecasts
and a more conservative target of
8x FY9/11 PER (vs. 10x previously).
Notion Vtec Underperform Underperform 5 Aug 2010 We cut our FY10-12 earnings
projections by 22.2%, 25.4% and
28.4% respectively to reflect: 1) lower
sales from the HDD segment i.e.
lower contribution from the 2.5’’
baseplate; 2) lower margins due to
higher costs; and 3) lower utilisation
rate. Accordingly, we trimmed our fair
value to RM1.54/share (from
RM2.07) based on 8x FY9/11 FD EPS.
Paramount Outperform New coverage 25 Aug 2010 We initiate coverage with a fair value
of RM5.80, based on 35% discount
to RNAV.

Parkson Outperform Outperform 19 Aug 2010 Our FY10-12 earnings were increased
by 0.9-4.2% after accounting for the
changes in assumptions for
Malaysia’s SSS growth, Vietnam’s
SSS growth and new store
assumptions, and China’s new store
assumptions. Our SOP-derived fair
value for Parkson is thus increased
to RM7.72 (from RM7.45) after the
earnings revision. Maintain
Outperform.
Parkson Outperform Outperform 26 Aug 2010 Our forecasts are tweaked upwards
slightly by less than 1% for FY12-13
after incorporating the expected
rental yield from its mall opening.
Maintain Outperform with an
unchanged SOP- derived fair value
of RM7.72.
Petra Perdana Underperform Underperform 26 Aug 2010 We cut our FY10 EPS forecast
significantly to factor in the 2Q loss.
We reiterated our Underperform call
on the stock with a new fair value of
RM0.50 (vs. RM1.15 previously)
based on unchanged target FY11 PER
of 10x.
Quill Capita Outperform Market Perform 30 Jul 2010 Recommendation was upgraded as
value emerged after fair value
upgraded to RM1.23 from RM1.17
as we rolled forward the base year
for valuation purpose to FY12/11
from FY12/10.
Sapuracrest Market Perform Market Perform 2 Sep 2010 Given that the new drilling charter
rates are lower than our initial
assumptions, we lowered our FY01/
12-13 revenue forecasts slightly by
0.7-0.6% p.a.. Our changes are only
impacted in F12-13 as the contracts
will take effect late-CY10.
Consequently our FY12-13 EPS
forecasts were reduced by 1.9% and
1.8% respectively. Our fair value was
trimmed to RM2.41/share (vs.
RM2.46 previously) based on 13x
FY01/12 PER.

Sime Darby Underperform Underperform 5 Aug 2010 Post-visit, we revised our forecasts
down by 5.2% for FY10, 0.1% for
FY11 and 1.7% for FY12. Post-
earnings revision, we lowered our
SOP-based fair value to RM8.00
(from RM8.15).
Sime Darby Market Perform Underperform 27 Aug 2010 Post-results, we tweaked our forecasts
for FY11-12 downwards slightly by
around 2% and introduced our FY13
forecast. However, we raised our fair
value to RM8.35 (from RM8.00), after
updating for Sime’s latest net debt
balance and after reducing our
holding company discount to 20%
(from 25%). We believe the worst is
over for Sime and expect it to trade
in line with the market now. As such,
we upgrade our recommendation to
Market Perform (from Underperform).
Sime Darby Market Perform Market Perform 1 Sep 2010 We have lowered our holding
company discount further to 15%
(from 20%) to account for reduced
caution on Sime Darby’s corporate
governance issues, as the new CEO
continues to encourage improving
investor sentiment with positive
feedback from the media and
analysts. As a result, our fair value
has been raised to RM8.90 from
RM8.35 previously.
Sino Hua-An Underperform Underperform 25 Aug 2010 We are now projecting Sino Hua-An
to register a net profit of RM18.2m
(vs. a net loss of RM7.4m earlier) in
FY12/10 largely to reflect a wider
spread between metallurgical coal
and metallurgical coke prices. FY12/
11-12 net profit forecasts are also
raised by 21.9-25.8% to RM40.4m
and RM43.7m respectively to reflect
a wider spread between metallurgical
coal and metallurgical coke prices.
Indicative fair value was raised by
19.0% from RM0.27 to RM0.32
based on 9x revised FY12/11 EPS of
3.6 sen.

Star Outperform Market Perform 18 Aug 2010 We have revised up our FY10/FY11/
FY12 ad revenue growth to 9.6%/
4.6%/3.5% (vs. 6.5%/4.5%/3.3%
respectively) following the strong ad
revenue achieved by Star thus far.
As a result, our FY10-12 earnings
forecasts have been raised by 7.2-
8.0%. As a result, our indicative fair
value was raised to RM4.20 (from
RM3.86), based on unchanged target
FY11 PER of 15x. We have upgraded
our call on the stock to Outperform
from Market Perform previously.
Suncity Outperform Outperform 23 Aug 2010 FY10-12 net profit forecasts are
reduced by less than 1%, as we
adjust our balance sheet post REIT
listing, based on the proforma
provided by management. Fair value
is revised down to RM5.20 from
Suncity Outperform Outperform 1 Sept 2010 No change in earnings forecasts, but

we adjust our RNAV estimates to
include Sunway Giza and Sunway
Hotel Hanoi (acquisition completed
in June 2010) as investment
properties, and contribution from a
new Penang land and Tianjin Eco City
to projects DCF. As such, our fair
value is raised to RM5.45 from
15% discount to its RNAV of RM6.41/
share.
Sunrise Outperform Outperform 27 Aug 2010 Our FY11-12 earnings forecasts are
adjusted slightly by -1% to -5% as
we revise our assumptions for take-
up rate. Fair value is, however, raised
to RM2.88 from RM2.76, after we
update the latest FY10 balance
sheet.

Ta Ann Market Perform Outperform 30 Aug 2010 We reduced our earnings forecasts
by 14-42% for FY10-12 after
adjusting for plywood average selling
price and cost of production, log
production, log export quota and
updated RM/US$ exchange rate
assumptions. Following that, our
SOP-based fair value is reduced to
unchanged 12x FY11 EPS for timber
and plantation divisions.
Tanjong Trading Buy Market Perform 2 Aug 2010 We raised our fair value to Tanjong
Capital’s privatisation offer price of
RM21.80 and upgrade our
recommendation to Trading Buy from
Market Perform.
Tanjong Market Perform Trading Buy 3 Sep 2010 Due to the limited upside to the
privatisation offer price of RM21.80,
we downgrade our recommendation
to Market Perform from Trading Buy.
Top Glove Market Perform Outperform 7 Aug 2010 We have cut our FY10-12 earnings
projections by 0.2-8.1% largely to
reflect the lower FY10-12 EBITDA
margin assumptions of 17.7-18.2%
(vs. 17.8-19.9%) on the back of the
time lag in passing on higher latex
costs as well as weakening US$
against RM. At the same time, we
cut Top Glove’s target PER to 15x
from 17x previously, which is in-line
with our target market PER. As such,
our fair value has been lowered to
RM6.90 (from RM8.20) and thus,
downgraded our call to Market
Perform from Outperform previously.
UMW Outperform Outperform 23 Aug 2010 Our fair value is lowered to RM7.27
(previous RM7.50) as we decrease
the oil and gas division’s contribution
to FY11’s net profit to 10% and
reduce its PER assumptions to 10x
(versus previous 30% contribution
and PER of 14x); as we expect near-
term weakness to continue. We
increase the contribution from the
automotive and heavy equipment
divisions to 80% and 8% (previously
56% and 5%) given these divisions’
strong performance.

Unisem Market Perform Market Perform 3 Aug 2010 We increased our FY10 revenue
growth forecast to 47% (vs. 40%
previously) to reflect stronger-than-
expected demand for QFN and
module packages as near-term
visibility remains positive. However,
we are less optimistic about longer-
term earnings given negative
guidance from industry players which
also reflects our view that the global
economy is entering a period of
slower growth. Hence, we cut our
FY11-12 revenue forecasts to 5%
from 10%. Consequently, our FY11-
12 EPS forecast was trimmed by 1.9-
11.5% p.a.. Accordingly, our fair value
was lowered to RM2.31/share (from
RM2.36 based on unchanged 11x
FY11 EPS).
Wah Seong Underperform Market Perform 13 Aug 2010 We trimmed our FY10-12 net profit
forecasts by 18.5%, 14.4% and 6.9%
respectively, on the back of full-year
FY10 earnings looking soft and no
visible M&A deals in the near term.
As a result, we downgraded our call
on the stock to Underperform at a
revised fair value estimate of
RM2.04/share (based on an
unchanged 13x FY11 PER).
Wah Seong Underperform Underperform 26 Aug 2010 FY10-12 revenues and engineering
division’s PBT margin assumptions
were revised down due to the
sluggish outlook for new contract
awards. The cuts reduced FY10-12
EPS projections by 21.1%, 7.3% and
1.9% respectively. We downgraded
our fair value of the stock to RM1.89/
share (based on an unchanged 13x
PER).

Wellcall Underperform Market Perform 16 Aug 2010 We have revised our FY10 earnings
projection down to reflect the higher
effective tax rate that we now expect
the company to incur in 4QFY10. At
the same time, we have raised our
FY11 and FY12 effective tax rate
assumptions to 25% p.a. (vs. 7.5%
p.a. previously), resulting in a
downward revision of 18.9% p.a. for
FY11 and FY12. Consequently, our
fair value has been lowered to
unchanged FY11 target PER to 9x
while our recommendation on the
stock has been downgraded to
Underperform from Market Perform.
WTKH Outperform Market Perform 24 Aug 2010 We have cut our FY10 earnings
forecasts by 12.8% after adjusting
for lower log supply and revised RM/
US$ exchange rate assumptions,
although partly offset by higher
average selling price assumptions for
its log and plywood products. We
have also adjusted our FY11-12
forecasts by -5.3% and 4.5%
respectively. Indicative fair value was
raised to RM1.60 (from RM1.25)
after rolling forward our valuation
base year to FY11, based on 12x
target PER. Thus, we upgraded our
call on the stock to Outperform (from
Market Perform).
YTL Power Market Perform Market Perform 20 Aug 2010 We have raised our FY06/11-12 net
profit forecasts by 6.4% p.a. mainly
after we lowered our interest expense
projections. However, we have
lowered our FY11-12 net DPS
projections to 13.1 sen p.a. from 15
sen p.a., in line with the full-year
DPS declared for FY10. Our SOP-
derived fair value has been raised
slightly to RM2.20 from RM2.15 after
an update for the full-year results.

Earnings Beat Our Expectation; But Global
Recovery Fears Persist
2Q Earnings Slightly Above Expectations
The 2Q results report card was slightly better than our expectation. This was Although the bulk of
reflected primarily in the banking results, which were largely boosted by earnings was within
lower-than-expected allowances for impairment on loans. Overall, unlike the previous expectations, there were
quarter, there were more companies reporting results that exceeded our expectations more companies
during this results reporting season compared with those that were below forecasts. reported earnings that
Nonetheless, the bulk of the corporate results that we covered came in within our were above than below
as well as market expectations. Of the 105 companies that we covered, 63 of the
our forecasts
results (60% of the total) were within our expectations, 23 above projections (21.9%
of the total) and 19 below forecasts (18.1% of the total) (see Table 1). Against the
consensus numbers, 50.5% of the reported earnings were within expectations, 21.9%
above and 27.6% below projections (see Table 2).
The overall upgrade to downgrade ratio improved slightly to 0.9 time during The upgrade to
the current reporting season, from 0.8 time in the previous quarter. Despite the downgrade ratio
slightly better-than-expected 2Q results, we still see a risk of earnings disappointment improved slightly to 0.9
in the quarters ahead on account of : (i) A sharper-than-expected slowdown in time in the 2Q
external demand caused by the slowdown in the US and Chinese economies as well
as the debt crisis in Europe, and as effect of the global stimulus spending packages
dissipates; (ii) Impact from a stronger ringgit vis-a-vis the US dollar and the euro;
and (iii) Unforeseen write-downs of companies similar to Sime Darby’s cost overruns
for its engineering and utilities division.
Sequentially, net EPS for the FBM KLCI stocks under our coverage was Earnings growth might
sustained at +6.2% qoq in the 2Q (+6.4% in 1Q; see Chart 1). However, on a have peaked on a yoy
yoy comparison, net EPS for the FBM KLCI stocks under our coverage accelerated basis, although the
to +60.8% in the 2Q, from +31.7% in the 1Q. The sustained strong growth in EPS recovery momentum is
measured on a yoy basis, however, reflected partly a low base effect, although it sustained
points to sustained recovery in corporate earnings. Overall, the strong earnings
momentum in the just concluded results reporting season was consistent with the
recovery in the economy, where real GDP was sustained at a stronger-than-expected
growth of 8.9% yoy in the 2Q, compared with +10.1% in the 1Q.
Chart 1
Net EPS Changes On A Sequential And Yoy Comparisons
%
80
+60.8
60
+31.7
40
20 +6.4 +6.2
-2 0
-4 0 qoq y oy
-6 0
1QCY06
2QCY06
3QCY06
4QCY06
1QCY07
2QCY07
3QCY07
4QCY07
1QCY08
2QCY08
3QCY08
4QCY08
1QCY09
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
Note : Net EPS Changes For RHBRI Covered Stocks In FBM KLCI

Table 1
Comparison Of Actual Earnings Reported For 2QCY10 Against RHBRI’s Forecasts
Covered Stocks Covered In Line Above Below Total reported
Building Material 8 5 2 1 8
Semiconductor/ IT 4 1 2 1 4
Oil & Gas 7 2 1 4 7
Timber 4 2 1 1 4
Consumer 11 10 1 11
Gaming 3 1 1 1 3
Media 3 2 1 3
Motor 5 3 2 5
Construction 8 7 1 8
Infrastructure 2 2 2
Transportation 6 4 2 6
Telecommunication 4 2 1 1 4
Power 3 2 1 3
Banks & Finance 9 4 5 9
Insurance 4 1 1 2 4
Property 11 8 3 11
Plantation 6 5 1 6
Manufacturing 7 4 3 7
Total 105 63 23 19 105

% of total reported 60.0 21.9 18.1 100
Table 2
Comparison Of Actual Earnings Reported For 2QCY10 Against Market Consensus
Covered Stocks Covered In Line Above Below Total reported
Building Material 8 4 1 3 8
Semiconductor/ IT 4 1 1 2 4
Oil & Gas 7 3 1 3 7
Timber 4 2 1 1 4
Consumer 11 8 1 2 11
Gaming 3 1 1 1 3
Media 3 2 1 3
Motor 5 3 2 5
Construction 8 5 3 8
Infrastructure 2 1 1 2
Transportation 6 4 2 6
Telecommunication 4 1 1 2 4
Power 3 2 1 3
Banks & Finance 9 4 5 9
Insurance 4 2 2 4
Property 11 7 3 1 11
Plantation 6 3 1 2 6
Manufacturing 7 4 3 7
Total 105 53 23 29 105

% of total reported 50.5 21.9 27.6 100.0
Most of the bigger cap companies reported earnings that were within or Among the bigger cap
above (Genting Berhad, Sime Darby, Axiata, Petronas Gas and YTL Power) companies, results of
our expectations. In this results reporting season, the only big cap stock that Genting, Sime Darby,
reported disappointing earnings was Maxis on account of lower-than-expected
Axiata, PGas and YTL
revenue as well as higher-than-expected administrative and network operation
Power were above our
expenses. The better-than-expected earnings of Genting Berhad came mainly from
expectations
its leisure and hospitality division on account of stronger-than-expected contribution
from Resorts World Sentosa in Singapore. This was on the back of better luck in
the premium players business, which led to much higher EBITDA margins vis-a-vis
our forecast, as well as the positive effective tax rate in the 2Q (due to S$86.8m
deferred tax writeback). The key variances of Sime Darby’s earnings against our
forecast, on the other hand, came largely from higher turnover and improvement in
EBIT from higher margins in the plantation, property and energy & utilities divisions.

For Axiata, the key variance against our forecast was the lower-than-expected
effective tax rate, while higher transportation fees charged on a zoning basis under
the new Gas Processing and Transmission Agreement (which came into effect from
1 April 2010) and lower operating costs that led to higher EBIT margins lifted
earnings of Petronas Gas to above our expectation. The main deviation of YTL
Power’s results from our projection was the lower-than-expected interest expense.
Banks The Key Sector With Better-than-expected Earnings
In the just concluded results reporting season, banking was the key sector that The better-than-expected
reported better-than-expected earnings. Out of the eight banking stocks we covered banking results were
(excluding RCE Capital), five results were above our expectations (AMMB, EON largely on account of lower
Capital, HL Bank, Affin Holdings and AFG), while earning of the remaining three big impairment allowances on
cap banks (CIMB, Maybank and Public Bank) were generally in line with our projections.
loans
The common factor that caused earnings to exceed our expectations is the
lower-than-expected allowances for impairment on loans (AMMB, HL Bank,
Affin and AFG), although AMMB’s results were also lifted by stronger-than-expected
non-interest income and HL Bank by lower-than-expected effective tax rate. The
key variance of EON Capital’s earnings vis-a-vis our forecast, however, came mainly
from stronger-than-expected net income interest, while its absolute overhead and
impairment levels remained broadly stable.
Apart from the banks, the media, motor, property, steel manufacturers and Earnings of Star and MCIL
the power sector also reported earnings that were slightly above our in the media sector were
expectations. Within the media sector, both Star Publications and Media Chinese lifted by stronger ad
International reported results that were above our expectations, the former stemmed revenue and better
from stronger-than-expected advertising revenue while the latter was boosted by margins respectively,
better margins. Earnings of Media Prima, in contrast, came in below our forecast, while motor stocks
dragged down by weaker-than-expected EBITDA margins and higher-than-expected
enjoyed stronger sales
effective tax rate. In the motor sector, both MBM Resources and APM Automotive
and higher-than-expected
reported earnings that were above our expectations on account of stronger car sales
margins
and better-than-expected margins, while results of Proton, Tan Chong and UMW were
in line with our forecasts.
During the quarter under review, most property earnings were within our expectations, The property sector’s
except for IJM Land, Glomac and Hunza Properties which came in above forecasts. earnings were largely
Results of IJM Land were bolstered by more property launches and sales as well as lifted by better sales and
better margins on the back of the better product mix, while earnings of Glomac were margins, while results of
helped by better margins as input costs eased. Results of Hunza Properties, on the
the steel manufacturers
other hand, were boosted by a faster pace in the construction of Gurney Paragon
were bolstered by better
residential blocks. Within the building material sector, the steel manufacturers reported
product selling prices
earnings that were slightly above our expectations as earnings of two (Ann Joo
Resources and Sino Hua-An International) out of the six steel companies exceeded
our forecasts, while three results were within (CSC Steel, Hiap Teck and Perwaja)
and one below (Kinsteel) expectations. The variance against our forecast for Ann
Joo Resources came from better product selling prices and Sino Hua-An from the
wider-than-expected spread between metallurgical coal (input) and metallurgical coke
(output) prices. Earnings of Kinsteel, in contrast, were dragged down by lower-than-
expected sales volume from its downstream operations. The two cement companies
(Lafarge Malayan Cement and YTL Cement) reported earnings that were largely
within our expectations.
In the Power sector, YTL Power’s results were above our expectation largely on
account of lower-than-expected interest expense, while earnings of Tanjong and
Tenaga were in line with our forecasts.

In contrast, the oil & gas, transportation, manufacturing and insurance In contrast, higher costs
sectors reported earnings that were generally below our expectations. Of and the lack of contracts
the seven oil & gas companies we covered, four results came in below forecasts weighed down earnings of
(Kencana Petroleum, Wah Seong, Petra Perdana and KNM) and two within expectations the oil & gas companies
(SapuraCrest and Dialog) and one above forecast (Petronas Gas). Earnings of
Kencana Petroleum were dragged down by higher-than-expected operating expenses,
Wah Seong by lack of oil & gas contracts, Petra Perdana by higher costs (lease rental
charges, mobilisation cost for new vessels as well as repair and maintenance cost),
and KNM on continuing difficult operating conditions and low utilisation rates.
In the transportation sector, earnings of both Malaysia Airline System (MAS) and The variance of MAS
Malaysia Airports were below forecasts. The former was on account of slower-than- earnings in the
expected recovery in yields and the latter from the share of losses in an associate transportation sector
company (the adoption of FRS 139 that required MAHB to recognise concession came from slower-than-
payable by the associate company at fair value and subsequently at amortised cost). expected recovery in
The other transportation and logistics companies such as MISC, AirAsia, ILB and yields
Freight Management reported earnings that were generally within our expectations.
For the manufacturing sector, results of three (BP Plastics, Wellcall Holdings and The manufacturing
Adventa) out of the seven stocks we covered came in below our expectations and earnings were generally
the rest were within forecasts (Top Glove, Kossan Rubber, Hartalega and VS Industry). weighed down by higher
Earnings of BP Plastics were weighed down by higher-than-expected input costs and costs and effective tax
hence weaker margins, while that of Wellcall Holdings and Adventa by higher-than- rate
expected effective tax rate.
In the insurance sector, results of LPI Capital and Kurnia Asia were below forecasts. Two out of the four
The former was on account of lower-than-expected investment income at the group insurance results we
level and the latter on the back of slower-than-expected premium growth as well as covered were below our
higher-than-expected increases in unearned premium reserves, management expense forecasts
ratio and effective tax rate. The earnings of MNRB, however, were above our
expectation largely due to better reinsurance claims ratio, while results of Allinaze
were within our forecast.
Earnings Growth Revised Up
Following the better-than-expected 2Q earnings, our 2010’s net EPS growth for 2010’s net EPS for the FBM
the FBM KLCI stocks under our coverage has been revised up to +23.5% (see KLCI revised up to
Table 3), from +18.3% two months ago. This was largely on account of the upward +23.5%, but 2011’s net
revision in earnings in the banking, telecommunications and gaming sectors (see EPS growth was adjusted
Table 4). However, our 2011’s net EPS growth forecast was adjusted down down to +12.3%
to +12.3%, compared to +14.4% previously, largely on the back of a higher base
effect.
Table 3
Earnings Outlook And Valuations
FBM KLCI RHBRI’s Basket
COMPOSITE INDEX @ 1,431.96
2009a 2010f 2011f 2012f 2009a 2010f 2011f 2012f
1 Sept 2010
EBITDA Growth (%) -6.6 25.8 10.9 7.3 -2.2 22.5 11.0 7.3
Pre-Tax Earnings Growth (%) -10.0 37.9 17.3 9.2 -2.7 29.8 16.8 9.9
Normalised Earnings Growth (%)* -10.2 29.8 12.6 9.3 -6.5 28.1 13.4 9.9
Normalised EPS Growth (%)* -14.9 23.5 12.3 9.3 -10.1 21.6 13.3 9.9
Prospective PER (x)* 20.0 16.0 14.2 13.1 19.0 15.4 13.5 12.2
Price/EBITDA (x) 10.4 8.3 7.5 7.0 8.6 7.9 7.1 6.6
Price/Bk (x) 2.5 2.3 2.2 2.0 2.0 2.1 1.9 1.8
Price/NTA (x) 3.2 2.7 2.5 2.3 2.3 2.4 1.3 1.2
Net Interest Cover (x) 5.9 6.0 9.2 10.3 6.9 7.8 8.9 10.3
Net Gearing (%) 61.3 52.6 47.7 43.8 50.2 41.8 42.5 38.1
EV/EBITDA (x) 8.2 6.6 5.9 5.5 8.0 6.7 5.9 5.4
ROE (%) 12.4 14.7 15.2 15.5 11.7 13.7 14.2 15.0
* Exclude Mas earnings in 09-11

Table 4
Sector Weightings & Valuations
EPS Growth EPS Growth PER

(%) (%) (x)
Covered Stocks Mkt Cap Weight Before After Before After Recom
RMbn % FY10 FY10 FY11 FY11 FY10 FY11 FY12
Banks & Finance 206.3 26.0 19.7 24.0 14.4 13.4 14.9 13.1 11.8 Overweight
Telecommunications 110.5 13.9 16.8 23.2 11.3 11.5 17.2 15.4 14.2 Overweight
Power 63.7 8.0 29.6 14.6 10.2 11.0 13.3 11.9 10.8 Overweight
Construction 20.5 2.6 30.2 27.8 7.8 8.3 17.6 16.2 15.4 Overweight
Motor 19.6 2.5 61.4 58.9 10.4 10.2 10.3 9.3 8.0 Overweight
Property 17.6 2.2 20.1 10.4 17.8 14.7 13.6 11.7 10.8 Overweight
Media 14.3 1.8 39.6 35.4 7.0 11.4 13.1 11.7 10.7 Overweight
Plantation 110.7 14.0 0.3 5.4 24.2 17.9 19.2 16.1 15.3 Neutral
Gaming 58.1 7.3 21.1 52.8 6.0 0.2 12.6 12.5 11.4 Neutral
Transportation* 57.2 7.2 41.3 36.9 16.3 14.7 21.4 18.7 13.5 Neutral
Oil & Gas 30.9 3.9 8.0 10.6 12.9 15.9 16.1 13.9 12.7 Neutral
Consumer 30.5 3.8 7.9 7.9 6.7 11.9 15.9 14.9 13.0 Neutral
Infrastructure 22.3 2.8 -1.1 2.0 47.8 49.0 16.4 11.0 10.1 Neutral
Building Materials 11.5 1.4 11.0 14.6 23.2 18.5 11.3 9.9 9.7 Neutral
Manufacturing 7.6 1.0 31.4 23.8 19.0 20.0 11.8 9.9 8.9 Neutral
Semiconductors & IT 4.6 0.6 63.6 32.7 22.2 7.8 7.9 8.0 7.2 Neutral
Insurance 3.9 0.5 18.8 11.3 9.8 9.8 9.1 8.3 6.8 Neutral
Timber 3.4 0.4 87.6 75.4 39.8 41.8 11.3 8.0 7.1 Neutral
793.3 100.0
* Exclude MAS earnings in 2010-2011
Note : RHBRI’s basket
Based on the latest FactSet Asian and IBES consensus numbers, the local market is Valuations are comparable
trading at comparable valuations vis-a-vis the Singapore and Indonesian markets to Singapore and
(see Table 5). Whilst it is still trading at a premium vis-a-vis other regional peers, Indonesian markets,
this, in our view, is a reflection of high domestic liquidity and strong participation by although it is still a very
the Government-linked funds, and will unlikely change in the foreseeable future. It under-owned market by
is, however, still a very under-owned market by foreign investors although
foreign investors
the non-strategic foreign equity ownership of the Malaysian market has picked up
slightly to 20.8% at end-July 2010, form 20.4% at end-January after having fallen
sharply from a recent high of 27.5% at end-April 2007.
Table 5
Regional Comparisons
Malaysia Singapore Thailand Philippines Indonesia Hong Kong Taiwan Korea
FactSet Asian Consensus Trends report dated 28 July 2010

EPS growth (%)
2009a 5.0 -0.7 44.0 30.5 39.7 8.5 37.8 41.4
2010f 22.8 12.5 16.5 14.4 30.8 23.2 76.4 69.8
2011f 12.5 8.6 15.2 9.2 17.8 17.4 12.3 5.3
PER (X)
2009a 18.2 16.3 11.8 13.0 16.0 16.1 22.5 14.2
2010f 14.9 14.5 12.1 12.7 15.4 13.8 13.3 9.1
2011f 13.3 13.4 10.5 11.7 13.1 11.8 11.9 8.7
IBES Consensus dated 19 August 2010
EPS growth (%)
2009a -20.6 -11.6 28.3 20.4 5.2 17.8 73.0 -14.3
2010f 27.5 22.9 17.0 28.4 29.2 20.9 119.9 60.3
2011f 15.2 12.2 17.3 9.0 22.3 10.6 13.8 9.0
PER (X)
2009a 19.5 17.3 14.6 16.6 20.1 16.8 31.9 25.7
2010f 14.8 13.8 12.5 13.0 15.3 12.3 14.3 9.5
2011f 12.8 12.3 10.7 11.9 12.5 11.1 12.1 8.6
Performance (%)
2008 (yoy) -39.3 -49.2 -47.6 -48.3 -50.6 -48.3 -46.0 -40.7
2009 (yoy) 45.2 64.5 63.2 63.0 87.0 52.0 78.3 49.7
2010 (ytd)* 12.5 2.9 25.2 17.7 23.7 -5.7 -6.3 4.9
* as at 1 September 2010 closings

The gradual increase in foreign participation in the local markets was partly on Ringgit has hit near a 13-
account of a strengthening ringgit on the back of rising currency yields, improving year high of RM3.12/US$
macroeconomic fundamentals as well as the recent liberalisation moves by the recently
Central Bank to allow international trade to be settled in ringgit. Year-to-date, the
ringgit has strengthened by about 9.5% vis-a-vis the US dollar, and hit near a 13-
year high of RM3.12/US$ recently (see Chart 2). This has enticed foreign portfolio
inflows, particularly into the short-term debt market with foreigners owing over 25%
of Malaysian government securities.
Chart 2
Significant Appreciation Of The Ringgit Against The US Dollar
MYR/US$
2 .9
3 .0
3 .1 3.12
3 .2
3 .3
3 .4
3 .5
03/01/2010
17/01/2010
31/01/2010
14/02/2010
28/02/2010
14/03/2010
28/03/2010
11/04/2010
25/04/2010
09/05/2010
23/05/2010
06/06/2010
20/06/2010
04/07/2010
18/07/2010
01/08/2010
15/08/2010
29/08/2010
As international trade is now allowed to be settled in ringgit and the use of domestic Prospects of a relatively
currency in the settlement of trade with its major Asian trading partners is likely to firm to appreciating ringgit
increase over time, and as China has also allowed the ringgit to be traded vis-a- will induce greater foreign
vis the yuan in its interbank market, we expect the ringgit to be well supported participation
moving forward. In addition, the ringgit’s fundamentals are also underpinned by
sustained current account surplus in the balance of payments and rising foreign
exchange reserves of the country, and we expect the ringgit to remain relatively
firm and could trade at around RM3.10/US$ in 2011. Meanwhile, expectations of
a relatively firm to appreciating currency tend to be supportive of greater
foreign participation in the local capital markets (For an analysis of the
stronger ringgit and the equity market, refer to our Market Update on “Sensitivity
Analysis” dated 23 August 2010).
In addition, the country has been approved as an investment destination Foreign participation could
under the China’s Republic’s Qualified Domestic Institutional Investor (QDII) also increase gradually
scheme in June 2010. Malaysia is the first emerging market and the 11th member over time as it has been
of a small group of China’s QDII approved investment destinations which comprises
listed as China’s QDII
Australia, Canada, Hong Kong, Germany, Japan, Luxembourg, Singapore, South
destination
Korea, the UK and the US. In China, domestic funds are not allowed to invest
outside the country and only those approved under the QDII scheme can do portfolio
investments overseas, which is governed by a quota system. Currently, some
41.8% (US$20bn) of the quota (US$47.8bn) remains to be invested.
Global Recovery Fears Persist
Despite the sustained 8.9% yoy economic growth in the Malaysian economy in the Economic Worries re-
2Q, albeit more moderate than the record of +10.1% registered in the 1Q, worries emerged as US growth is
about the sustainability of the global economic recovery persist. Whilst industrial losing momentum
production and services activities have recovered globally from low levels in 2009,
the pace of recovery is fast losing momentum (see Charts 3-4). As it stands, the
US economic growth has slowed sharply from an annualised pace of 3.7%
in the 1Q to 1.6% in the 2Q (see Chart 5). The pace of deceleration is worrying
amid plunging home sales and the still weak labour market conditions. Added to
the pessimism was the most recent congressional testimony from Federal Reserve
Chairman Ben Bernanke that the outlook was “unusually uncertain”.

Chart 3 Chart 4
Global Manufacturing And Industrial Production In Major Economies
Services Activities Heading South Turning Down
Index % yoy
65 PMI 40
Manufacturing
30
60
20

55
10

50 0
-10
45
-20
40 US Eurozone
-30
Japan China
35 PMI
-40
Services
30 -50
05 06 07 08 09 10 05 06 07 08 09 10
Chart 5 Chart 6
US Economic Growth Japan’s Economic Recovery
Deccelerating Has Stalled
% yoy % yoy % yoy

10 6 50
8
40
4
30
6 2
20
4
0
10
2
-2 0
0
-10
-4
-2
GDP -20
-6
-4 Exports GDP (LHS) -30
consumer spending -8 Household spending (LHS)
-6 -40
Exports (RHS)
-8 -10 -50
05 06 07 08 09 10 05 06 07 08 09 10
At the same time, the economic recovery in Japan appears to have stalled Economic recovery in
with real GDP growth plunging from an annualised rate of 4.4% to 0.4% during the Japan has stalled
same period (see Chart 6). Apart from contractions in public investment and
investment in the housing sector, household spending decelerated to a mere 0.1%
in the 2Q, from +2.2% in the 1Q. This was made worse by a softer growth in
exports, which is further threatened by weakening external demand and a strong
yen that has hit a 15-year high of 84 yen vis-a-vis the US dollar.
Although the recovery in Euroland has accelerated from an annualised rate of 0.8% Tightening measures in the
in the 1Q to a 4-year high of 4.0% in the 2Q, powered by Germany with 9.0% growth highly-indebted European
in the 2Q on account of a surge in exports and consumer spending, conditions in countries are beginning to
the highly-indebted European countries are fast deteriorating. This was on be felt
the back of a combination of an austerity-induced slowdown and debts, public and
private, which threaten their banking systems, local governments and Treasuries.
A Sharper Economic Slowdown In The 2H
Whilst we believe the risk of a global “double-dip” recession is manageable, we see There is a real risk of a
a sharper slowdown in the global economy in the second half that could sharper-than-expected
persist into the first half of 2011 before the recovery starts to build momentum in global economic slowdown
this new global economic growth cycle. This is attributable mainly to the austerity in the 2H, although we
drive to reduce fiscal deficit in the highly-indebted European countries, credit tightening believe the risk of a
to cool down property prices in China, and as worldwide stimulus spending dissipates. “double-dip” recession is
Overall growth will, however, be supported by sustained growth in emerging and
manageable
developing countries, particularly in Asia and better business and consumer confidence
worldwide that has already spurred pockets of investments, leading to a gradual
improvement in labour market conditions.

Malaysia would not be spared as Europe accounts for about 10.7% of its total exports Malaysia will not be spared
directly, which have been growing robustly by 24.7% yoy in the first seven months and will also experience an
of this year. There would be indirect impact as well since Malaysia exports 12.7% economic slowdown in the
of its exports to China (+40.0% yoy growth in January-July 2010) and Europe is 2H
China’s largest export market (accounting for about one-fifth of its total exports). As
it stands, the Chinese economy is already showing signs of moderation after its
government implemented credit tightening measures to cool down the surge in asset
prices.
Even before taking into account these potential developments, one would expect the We expect real GDP to
sharp “V-shape” export recovery to normalise as the low base effect fizzles out. In slow down to 5.0% yoy in
effect, this has begun to be reflected in the latest sets of export and industrial the 2H, from +9.5% in the
production numbers (see Charts 7-8). Consequently, the country’s economic 1H
growth will likely slow down more significantly to around 5.0% yoy in 2H
2010, from +9.5% in the 1H. While the overall growth would still average a
commendable 7.3% in 2010, it will likely normalise to about 5.0% in 2011, in our
view.
Chart 7 Chart 8
Exports And Industrial Production In M’sia M’sia’s Exports To China And Europe Will
Showing Signs Of Easing Likely Slow Down More Significantly In 2H
% yoy % yoy Eurozone % yoy

50 Exports 160 (RHS) 40
40
140  30
120
30

20
100
20
80 10
10
60

0
0 40

-10 20 -10
-20 0
-20
-30 IPI -20
China -30
-40 -40 (LHS)
06 07 08 09 10 -60 -40
06 07 08 09 10
Market Volatility As Economic Worries Persist
Meanwhile, investors in emerging markets appear to have ignored the warning Expect the equity market
signals coming from the developed world. This was partly caused by inflows of to remain volatile in the
portfolio funds to the emerging markets as investors switched out of the developed
near term until a clearer
markets. As a result, equities in the emerging markets continued to trend up. In
picture emerges from the
our view, this may not be sustainable given that the slowing economic growth in the
global economy
developed world will eventually translate to weaker external demand for the export-
dependent developing countries and cause a sharper-than-expected slowdown in the
developing region as well. Consequently, we continue to believe that the equity
market may move into a phase of greater volatility in the months ahead until
a clearer picture emerges on the strength of the global economic recovery.
The market correction, if any, however, is not likely to be sharp given ample liquidity However, the longer-term
and sustainable economic and earnings growth, albeit at more moderate pace moving outlook remains positive
forward. Consequently, we see a potential for the FBM KLCI benchmark to and we expect the FBM
trade up to 1,450 by end-2010, based on unchaged 14.5x 2011 earnings. This KLCI to trade towards
is higher than our previous year-end FBM KLCI target of 1,400 on account of the 1,640 at end-2011
upward revision in earnings. As we head towards 2011, we believe there is still
room for the market to trend higher given our view that the global economic
recovery is more sustainable than feared. This would imply sustained corporate
earnings growth that will continue to create shareholders’ value for investors. On
this basis, a mid-cycle PER of 15x on 2012 earnings would translate into an
end-2011 FBM KLCI target of 1,640. This, however, will not be without volatility
given the uncertain global economic conditions and expectations of an uneven global
economic recovery.

Market Strategy : Top Slicing And Accumulate On Weakness
Whilst we acknowledge that the long-term economic picture remains positive for the Good time to do some top
equity market, the revival of a “double-dip” recession fear can have a disproportionate slicing, which would
impact on the market in the foreseeable future. Under such circumstances, it may provide more room for
be timely for investors to be vigilant and do some top slicing on stocks where investors to accumulate
valuations have become rich in the run-up of the market. This would then provide fundamentally-robust
more room for investors to accumulate fundamentally robust stocks on weakness. stocks on weakness
A list of our top picks is reflected in Table 6.
Table 6
RHBRI’s Top Picks
Fair Mkt EPS EPS GWTH PER P/BV P/CF GDY

FYE Price Value Cap (sen) (%) (x) (x) (x) (%)
1/9/2010 (RM/s) (RM/s) (RM Mil) FY11 FY12 FY11 FY12 FY11 FY12 FY11 FY11 FY11
Maybank Jun 8.49 9.86 60,092 61.9 69.6 14.7 12.4 13.7 12.2 2.0 n.a. 4.1
CIMB Dec 7.80 8.40 57,186 56.3 64.5 17.2 14.6 13.9 12.1 2.0 n.a. 1.6
Tenaga Aug 9.00 10.20 39,002 78.7 90.8 15.8 15.4 11.4 9.9 1.3 4.7 3.5
Gamuda Jul 3.55 3.85 7,207 16.1 16.3 17.9 1.5 22.1 21.7 1.9 55.7 3.4
MRCB Dec 1.69 1.94 2,301 6.4 6.7 23.5 4.9 26.5 25.3 1.7 16.5 0.0
Media Prima D e c 2.07 2.57 1,957 16.4 19.7 24.5 19.9 12.6 10.5 1.9 6.3 5.4
KPJ Dec 3.41 4.51 1,799 26.6 29.9 10.7 12.2 12.8 11.4 2.0 10.1 4.7
Mah Sing Dec 1.84 2.06 1,530 17.2 21.2 22.8 23.2 10.7 8.7 1.5 20.7 3.7
Faber Dec 2.68 3.82 973 26.4 45.7 0.5 73.5 10.2 5.9 1.8 6.2 3.0
HSL Dec 1.56 1.95 868 16.2 17.7 21.4 8.9 9.6 8.8 2.0 11.3 1.6

Paramount Corp
Share price : RM4.38

More Than Just A Pure Developer
Fair value : RM5.80
Executive Summary
 A property and education player. Apart from being a property developer mainly in the northern
Peninsular Malaysia region, Paramount also has education business under its KDU brandname, and strategic
investment in insurance business (Jerneh). In 2005, Paramount’s maiden project in the Klang Valley –
Kemuning Utama, has received overwhelming success. The company has won various FIABCI property
awards in the past. Paramount’s education division has also expanded considerably, with a PBT CAGR of
31% since 2005. New campus will be set up in Glenmarie in 3 years time.
 Investment case: a) The potential disposal of its 20% stake in Jerneh Insurance is likely to yield a cash
flow of about RM120m (assume at 2.2x book), translating into a cash flow of about RM1 per share. While
there is a likelihood for a special dividend for shareholders, part of the proceeds would allow Paramount
to embark on more aggressive landbank acquisitions plan; b) The soon-to-be-completed landbank
acquisition in Cyberjaya and Glenmarie will boost development GDV by RM1bn, apart from the launch of
Banyan Hills in Kedah in early 2011, with a GDV of RM885m; c) The education business is a crown jewel.
With increasingly generous valuations that the market attaches to the education sector, we reasonably
expect Paramount’s valuations to be re-rated similarly.
 Risks and concerns. The risks include: 1) hiccups in the acquisition of landbank in Cyberjaya and
Glenmarie; 2) disruption in the disposal of Jerneh; 3) delays in launches and approvals; 4) country risks;
and 5) stock illiquidity.
 Earnings outlook. We estimate a decent 3-year earnings CAGR of 15%, driven by: a) new property
launches that are worth RM1.9bn; and b) moderate growth in the education sector. While earnings growth
is decent, given Paramount’s strong cash position (net cash of RM175m) in addition to the proceeds from
the potential disposal of Jerneh, the company should have sufficient financial strength to replenish its
landbank, hence strengthen its property development in the future.
 Valuation. We value Paramount shares at RM5.80, based on a 35% discount to RNAV. We like Paramount
for its attractive valuations given its existing business units and investments. Given 70:30 contribution from
its property development and education, at current market PE for both sectors, the weighted average FY11
PE is estimated at 9.2x, vs 6.8x currently. In addition, valuations are well supported by an attractive gross
yield of 7%, with a potential surprise on special dividend from the disposal of Jerneh. With a potential 33%
upside to our indicative fair value, we reiterate our Outperform rating on the stock.
Table 1 : Investment Statistics (PARAMON; Code: 1724) Bloomberg : PAR MK
Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/CF P/NTA ROE Gearing GDY
Dec (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (%) (%)
2009 404.9 57.5 52.9 36.1 8.3 - 4.0 0.9 11.4 Net cash 6.4
2010f 440.9 69.6 58.3 10.3 7.5 - 7.7 1.0 12.8 Net cash 6.7
2011f 472.6 76.1 63.8 9.4 6.9 - 7.0 0.9 13.2 Net cash 7.3
2012f 518.8 86.6 72.6 13.8 6.0 - 6.3 0.8 14.0 Net cash 8.3
Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC

* Consensus Based On IBES Estimates

Table 2
Relative Performance To FBM KLCI
Paramount
FBM KLCI
 Potential disposal of Jerneh to yield RM1/share. Paramount’s entry into the insurance business can
be traced back to 1981, when Paramount acquired a 49% equity interest in Nanyang Insurance Company
Berhad (NIC), mainly involving in the underwriting of general insurance business. Subsequently, NIC
became a subsidiary of Paramount in 1983, and changed its name to Paramount Assurance Berhad (PAB).
In 1999, in line with Bank Negara Malaysia’s (BNM) directive on the merger of insurance companies, PAB’s
general insurance operation merged with that of Jerneh Insurance Berhad (JIB), resulting in PAB holding
a 20% stake in JIB. PAB then changed its name to Paramount Global Assets Sdn Bhd (PGA). The
remaining 80% stake in JIB is owned by Jerneh Asia Berhad (JAB), which is 37% owned by Kuok Brothers
currently.
To recap, in Dec last year, JAB announced that BNM has no objection in principle for JAB to commence
preliminary negotiations with the potential buyers of JIB. The potential disposal of JIB has made another
step forward. In May 2010, JAB and PGA have jointly submitted an application to BNM for the approval
of the Minister of Finance to enter into an agreement with a potential buyer for the proposed disposal of
JIB. Given the chronology of the events, we believe the deal will be sealed quite soon.
While pricing for the disposal is widely speculated by the market at this juncture, assuming the deal is
priced at 2.2x price to book, Paramount’s 20% stake in JIB would translate into a consideration of almost
RM120m, giving a cash flow per share of close to RM1. Below are the list of valuations for some
transactions of insurance business in the past (cited from some media reports):
(i) G Team Resources & Holding Sdn Bhd’s recent offer for Oriental Assurance Bhd stood at 1.35x price
to book;
(ii) Allianz acquired Commerce Assurance for a price of about 2.5x – 3x NTA in 2007; and
(iii) Sompo Japan Insurance bought Berjaya General for 2x NTA in 2006.
 Any cash repayment? While Paramount has yet to officially make plans for its sale proceeds, we
believe the company is likely to reward shareholders with some cash repayment or via special dividend.
Note that, Paramount currently offers a gross dividend yield of about 7%, with a gross dividend payout
of 54%. Assuming a payout ratio of 50% over the next three years, coupled with an estimated special
gross dividend of RM0.30 per share, this will translate into a gross yield of 14% in FY11.
 A need to replenish landbank. Compared to sector peers, Paramount is relatively less aggressive in
its property development. Historically, its property development is mainly in the northern region of
Peninsular Malaysia – Bandar Laguna Merbok Kedah, where property sales are relatively slower compared
to Klang Valley and Penang. In 2005, Paramount’s maiden township project – Kemuning Utama in Shah
Alam, has seen overwhelming response, and the project has received FIABCI-Malaysia Property Awards
in 2005. To date, minimal remaining development area as well as GDV is left for the two township projects
(Kemuning Utama is left with medium and low cost component). In Paramount’s existing portfolio, it is
left with a few tracts of landbank in Klang Valley, except for the 493-acre piece of land in Kedah, which
will be developed into Banyan Hills township with a GDV of RM885m, scheduled to be launched in early
2011. Given limited landbank in hand, we reasonably believe Paramount will embark on more aggressive
landbank acquisition plans going forward.

We expect Paramount to utilise part of the proceeds from the potential disposal of Jerneh for its landbank
acquisitions. The company has entered into conditional sale agreement (SA) to acquire 2 plots of land in
Cyberjaya (in June 2010) and Glenmarie (in Nov 2009), which cost RM78.4m and RM62.4m, respectively.
Even with the yet-to-be-completed landbank acquisitions, we still think the likelihood for a special dividend
is promising, considering Paramount’s current net cash position of RM175.4m.
The Cyberjaya land – This freehold land has a size of 50.01 acres. The purchase consideration of RM78.4m
translates into RM36 psf. It will be a quick turnaround project as the land is ready to be used for
development. The acquisition is currently pending i) State consent to transfer; ii) Layout plan approval; and
iii) Issuance of title, and will be completed tentatively in 1Q2011. The land has a direct frontage to the main
road, easily accessible by a network of highways – the North-South Expressway, the North South Central
Link, LDP and the toll free B15 highway. The northern boundary of the land abuts on the 98 acres
development by UEM Land – Symphony Hills. Paramount plans to develop its piece of land into a mixed
and exclusive mid-upper to high-class secured and guarded residential landed development, as well as a
high-rise condo with a total GDV of RM527m. The project will not have any low cost component. It is
targeted to be launched in 3Q2011, spanning over a development period of 6–8 years.
Chart 1
Location Of Cyberjaya Land
Source : Company
The Glenmarie land – The purchase consideration of RM62.4m translates into RM66 psf. The land has a
freehold tenure, with a size of 21.7 acres. The acquisition is currently pending sub-division of the land
approval from Pejabat Tanah Petaling, and is expected to be completed by end 2010. The land is sited close
to the Bukit Jelutong/Shah Alam interchange of the New Klang Valley Expressway (NKVE). Kuala Lumpur
city centre and Klang town centre are about 30km and 12km away. Paramount plans to allocate 10 acres
for the building of a new campus for KDU College, and the remaining part measuring 11.7 acres will be
designated for mixed development, comprises commercial development and condominiums. The condo will
serve as hostels for the students while the commercial development will provide convenience to the students
and surrounding offices and industrial workers. The project’s GDV is estimated at RM500m (for property
development). We believe the project will commence by mid-2011, and the new KDU campus is scheduled
to be set up in 2012.
Chart 2
Location Of Glenmarie Land
Source : Company

 KDU – a crown jewel. Paramount entered into the education business in 1983, with the setting up of the
first purpose-built campus in Petaling Jaya under KDU College Sdn Bhd (KDU). Due to the success of the
campus in PJ, the company expanded to Penang in 1991. In 1996, KDU opened a branch campus in Sibu,
East Malaysia. However, it exited in 2003 as the campus was not profitable. In 2001, KDU moved
downstream by setting up a private primary and secondary school, namely Sekolah Sri KDU under KDU
Smart School Sdn Bhd. The following year, Paramount also ventured into the provision of executive
education and professional development programmes, under KDU Management Development Centre Sdn
Bhd. In 2003, Paramount made its first entry into China to establish its language training school to offer
a range of English courses. Due to tough competition, Paramount is currently in talks to some potential
buyers to dispose of the loss-making language centre in China.
Paramount’s education business is a crown jewel. The division currently contributes about 30% to total PBT,
with a PBT margin of 20-25%. The property division makes up the remaining 70% contribution. Revenue
for the education segment experienced a CAGR of 13.5% while PBT dropped slightly to RM21.4m in FY09,
due to temporary hiccup in KDU College, arising from a change in twinning partners. Nevertheless, its PBT
in 1H10 has recovered yoy, grew 5% to RM13m (vs RM12.4m in 1H09). Note that, FY09 PBT of RM21.3m
recorded by KDU is comparable to that of Help International, which is currently trading at 15.5x FY11 PE.
In our opinion, given the increasing generous valuations that the market attaches to the education sector,
we hence reasonably expect valuations for Paramount, as a whole, to be re-rated similarly.
 Listing of KDU – a wild card. The potential listing of Paramount’s education business is always a wild
card. Although the listing may not materialise soon, we believe this is always in management’s plans, as
the investors community generally dislikes diversified business (for example, Kulim, which is planning to
carve out its food business or equity stake in QSR & KFC). As Paramount will relocate its KDU campus to
Glenmarie in 3 years time, we think the listing will be a long-term story. The campus will be constructed
in phases, as part of the effort to catch up with its peers which have just expanded. At a PE of 15.5x (similar
to Help International), Paramount’s KDU would worth about RM282m, slightly more than half of Paramount’s
current market cap of about RM520m.
Table 2
Valuations Comparison For The Education Sector
Company FYE Price Market Cap FY10 PE FY11 PE FY10 DY FY11 DY

(RM) (RM mil) (x) (x) (%) (%)
Help International Oct 4.00 355.1 18.2 15.5 0.8 0.8
SEG International # Dec 2.30 573.8 5.3 - - -
Masterskill Education Dec 4.00 1,639.6 13.8 11.5 3.7 3.7
Market cap weighted average 12.5 12.2
# Based on annualised EPS

Source: Bloomberg
 Construction division – big revenue, small margin. Apart from property development and education
divisions, Paramount is also involved in construction, which is mainly project-based. The division contributed
11% to total revenue but only 9% to PBT in FY09. Hence, profit margins are rather low for the division.
Indeed, the division sank into losses in FY08 (PBT at RM1.16m), mainly due to escalating building material
prices and hence eroded profit margins in a competitive bidding environment. In FY09, revenue for the
division fell 40% to RM43m, due to acute shortage of work because of the global financial crisis. New
building projects in the office, retail and leisure segments were scarce. However, PBT recovered to RM7.3m,
due to compensation received for an external project, recognition of project management fees from a joint
venture project and recovery of bad debts written off previously. Going forward, we expect the division to
improve further, on the back of improving economy and hence larger number of development projects
available in the market. Currently, about 60% of its construction contracts come from external sources.
Outstanding orderbook stood at RM236m, which has an earnings visibility of 2 years. Some current projects
include: (i) Structural works for basement car park, ground slab, 6-storey podium car park block for a
project by Wing Tai opposite KLCC; (ii) Construction project for another Wing Tai’s residential project at
U-Thant; (iii) Kenny Heights in Sri Hartamas; (iv) Ideal CEO in Penang; and (v) Ideal – Cygal Residences
in Penang.

Chart 3 Chart 4
Breakdown Of Revenue Contribution FY09 Breakdown of EBIT contribution FY09
RM m il RM m il
450 70
400
60
350
50
300
40
250
200 30
1 50 20
1 00 10
50
0
0 2005 2006 2007 2008 2009
FY 2005 2006 2007 2008 2009 - 1 0 FY
Property Development Cons truction Education Property Development Cons truction Education
Source: Company Source: Company
 Management background. Dato’ Teo Chiang Quan is currently the Excutive Deputy Chairman of
Paramount. He is instrumental for the company, driving the company’s core businesses in education and
property development. Dato’ Teo also played an important role in ensuring the success of the merger of
Paramount’s insurance operations with Jerneh Insurance Berhad (JIB) previously. Another top management
personnel is Mr Ong Keng Siew, who is the managing director and CEO of Paramount. Mr Ong spearheads
the company’s day-to-day operations. Dato’ Teo currently has about 30% stake in Paramount. Other major
shareholders include Southern Acids (M) Bhd – 16.5%, and foreign shareholding is about 10%. The stock
lacks institutional ownership.
INDUSTRY OUTLOOK
 Remain positive on the property sector. We maintain our positive stance on the property sector, and
we prefer high-end landed residential property sub-segment. Five key reasons to stay bullish: (i) The sector
could potentially be an asset reflation play. According to Bank Negara Malaysia’s sensitivity study, the
gradual removal of subsidies would push inflation to 4% in 2011-12, before easing to 3% in 2013. Therefore,
we believe the cost-push factors would make real estate a preferred inflationary hedge to preserve values,
given limited alternative choices; (ii) Interest rate is still low despite three rounds of 25bps OPR hikes.
Commercial banks continued to set home mortgage rate at a discount to BLR, in contrast to a premium
above BLR in 2000 – 2004. Intense competition among banks has also increased the discount to BLR,
supporting high affordability of potential home buyers; (iii) Higher demand from the increasing affluent
middle aged population group (baby boom born in 1970’s - 1980’s); (iv) Developers continue with their
attractive home ownership campaigns; and (v) Gradual appreciation in MYR has started to spur some
foreigners’ interest to participate in the Malaysian property market, judging from the recent acquisitions of
AEON mall in Melaka and One Mont’ Kiara by Hong Kong based Asia Dragon Fund (ADF).
Chart 5 Chart 6
Historical BLR And ALR Faster Rising Population Aged 15 - 64
% %
8.0 1.5 '000 RM
30,000
7.5 18,000
1.0
25,000
7.0 15,000
0.5
6.5 20,000
12,000
6.0 0.0
9,000 15,000
5.5
-0.5
5.0 6,000 10,000
-1.0
4.5 3,000 5,000
4.0 -1.5
0 0
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
1970
1975
1980
1985
1990
1995
2000
2005
Pop. aged 15-64 Pop. aged 0-14

BLR ALR Premium/(Discount) RHS
Pop. aged >64 GDP per capita
Source: BNM
Source: DOS

 New properties in Cyberjaya should do well. Given the general positive outlook for the property sector,
we believe the upcoming launch of Paramount’s project in Cyberjaya will do well. Property demand has
gradually spilt to Cyberjaya, from Kuala Lumpur city centre, Mont’ Kiara/Damansara, Cheras and Puchong.
Mah Sing’s launch of Garden Residence in Cyberjaya has received good take-up rates so far. Since its pre-
sale in Jan 2010, total sales have met 60% of the targeted sales of RM410m for FY10. A 2-storey superlink
house that costs RM689k initially is now selling for RM769k per unit. As Paramount’s project will be launched
only in 2011, we are less concerned with the competition from its peers, as UEM Land has also recently
launched its Symphony Hills project in Cyberjaya, which is next to Paramount’s site.
 Banyan Hills sales will be moderate. Paramount will launch its Banyan Hills project by end of 2010 or
early 2011. Total development area is 493 acres, comprises residential and commercial components. As the
project is located in Sungai Petani, Kedah, we believe take-up rate for this project will be rather slow,
compared to property sales in the hotter Klang Valley and Penang region. Nevertheless, given Paramount’s
established township – Bandar Laguna Merbok in the neighbourhood, sales for Banyan Hills will not be too
challenging. Furthermore, property prices are also catching up. A bungalow in Bandar Laguna Merbok which
costs RM500k in the past few years is now worth about RM1m. We think Banyan Hills will take over as a
bread and butter project after its close-to-completion Bandar Laguna Merbok as well as Kemuning Utama
township (which is left with only medium and low cost component).
Other projects. Paramount will develop some industrial properties on its Lot 7 & 9 land in Kota
Damansara, but timeline is still unknown at this juncture. Previously, Paramount launched its Surian
Industrial Park project in the same area in early 2009. It comprises 38 units of 2-storey semi-detached
showroom/office/cum warehouse industrial units. Sales were slow initially, but picked up sharply towards
the end of 2009 as the economy recovers. The project is now sold out. Average price per unit is roughly
RM3m, with a built-up area of 6,000 sqf, equipped with lift. Given the successful launch of this project, sales
for Lot 7 & 9 are expected to do well, as economic growth continues its momentum. As for the land in
Section 13, PJ, development will only be carried out beyond 2013, once the new KDU campus in Glenmarie
is up. Currently, part of the KDU campus has been relocated to Sec 13 temporarily.
Table 3
Paramount’s Landbank And Remaining GDV
Landbank Land cost Tenure Development area Total Remaining GDV

(RM psf) (acre) acreage (RM mil)
Current Future
Northern Region
Bandar Laguna Merbok n.a. Freehold 35.6 75.2 110.8 71
Bukit Banyan 1.55 Freehold 0 492.5 492.5 885
Klang Valley
Kemuning Utama 7 Freehold 68.7 206.2 274.9 310
Surian Industrial Park 80 Leasehold 13.2 0 13.2 123
Section 13, PJ 190 Leasehold 0 5.2 5.2 400
Lots 7&9, Kota Damansara 98 Leasehold 0 9.4 9.4 100
Glenmarie 66 Freehold 0 21.7 21.7 500
Cyberjaya 36 Freehold 0 50 50 527
Source: Company
FINANCIAL OUTLOOK
 In a net cash position. Paramount is one of the few developers with net cash position. As at 2Q10, net
cash stood at RM175.4m. It is important to note that, if the disposal of JIB materialises, the company’s cash
position will be further strengthened, potentially by another RM120m. Although part of the internal funds
will be used to finance its expansion for the education division, we strongly believe Paramount will still have
plenty of room to gear up, either for property projects or landbank replenishment.
 3-year earnings CAGR of 15%. Earnings growth going forward is expected to be decent, mainly
underpinned by: a) New property launches that are worth RM1.9bn–Banyan Hills (RM885m), Cyberjaya
(RM527m) and Glenmarie (RM500m); b) Moderate growth from the education sector; and c) Outstanding
orderbook of RM236m for the construction division, which can last for 2 years.

Chart 7 Chart 8
Breakdown Of Revenue Contribution FY09 Breakdown Of PBT Contribution FY09
In % In %
P rop.
Inv es tm ent,
Inv es tm ent, 5%
Educ ation,
9%
24%
P roperty
dev elopm ent,
E duc ation,
50%
C ons truc tion, 27%
11% Property
dev elopm ent,
65%
C ons truc tion,

9%
Source: Company Source: Company
 Generous dividend payout. Over the past years, Paramount has been gradually raising its gross dividend
payout, from 26% in 2006 to 54% in 2009. Payout ratio is likely to sustain at least at 50% going forward.
Based on our earnings forecast, 50% payout would translate into a DPS of 31.9 sen for FY11, representing
a yield of about 7%. The attractive yield is well supported by the potential divestment of its 20% stake in
JIB. A surprise would be a special dividend following the disposal, which may significantly boost its yield
to above 10%.
 Potential bonus issue / share split? As management recognises the concern on the stock’s liquidity,
which would affect investors’ interest on the stock, we believe bonus issue or perhaps share split could be
on the cards. In our opinion, the company will have the capability to undertake a bonus issue exercise,
as an effort to improve the stock’s liquidity. Based on Paramount’s latest 2Q2010 balance sheet, it has
retained earnings of about RM369m, which is sufficient to do a 3-for-1 bonus issue (at maximum level).
Certainly, management will still preserve part of the retained earnings for future dividend distribution, and
hence may not stretch the ratio.
 Risks and concerns. Key risks include: 1) hiccups in the potential divestment of Paramount’s 20% stake
in JIB; 2) termination of the acquisitions of new landbank; 3) delays in launches and approvals; 4) hike
in building material costs; and 5) stock iliiquidity.
VALUATION
 Attractive current valuations. Paramount is currently trading at a forward PE of 6.8x (FY11). Apart from
the strong catalyst from the disposal of JIB, its property development is picking up with the new landbank
acquisition, boosting development GDV to more than RM1bn over the next 3 years. We also strongly believe
its education business should warrant an overall re-rating for Paramount as a whole. To highlight, market
valuations are increasingly higher for the education sector with a market cap weighted average PE of about
12x for FY11. Assigning a FY11 PE of 8x for Paramount’s property development division (in line with its peers
of similar size), given its 70:30 contribution from property development and education segment, the
weighted average PE is estimated at 9.2x for FY11 (vs current FY11 PE of 6.8x), suggesting an upside of
35%. At 9.2x PE, the implied fair value for Paramount would be RM5.87.
 Reiterate Outperform rating, 33% upside to fair value. We value Paramount at RM5.80, based on
35% discount to RNAV (see Table 4). In addition to the consideration of the upcoming potential monetisation
of its stake in Jerneh, the discount is in line with our rate applied to other peers, according to their
respective size, market cap, location of landbank as well as at the current stage of property cycle. To
reiterate, we like Paramount for four key reasons: i) Potential disposal of Jerneh which may give a cash
flow of RM120-130m, or close to RM1 per share; ii) Stronger contribution from property development going
forward, underpinned by its projects in the pipeline which are worth RM1.9bn GDV, and unbilled sales
currently stood at RM251m, providing about one year of visibility; iii) The education business - KDU is
undervalued, in view of the current generous market valuations attached to the education sector; and iv)
attractive dividend yield of about 7%, plus potential surprise on special dividend following the disposal of
Jerneh. We reiterate our Outperform rating on the stock.

Table 4
Property Sector Valuations
EPS
Mkt EPS growth PER P/NTA P/CF GDY Discount
FYE Price cap (sen) (%) (x) (x) (x) (%) Rec. (%)
(RM/s) (RM mil) FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
SP Setia Oct 4.58 4657.0 18.6 21.7 15.7 16.7 24.7 21.1 2.11 19.9 2.0 MP 0
IJM Land Mar 2.23 2470.7 12.1 17.3 22.7 43.2 18.5 12.9 1.71 5.8 1.0 OP 0
Suncity Dec 3.92 1842.2 34.8 38.7 9.0 11.1 11.3 10.1 0.79 3.2 9.2 OP 15
Mah Sing Dec 1.84 1530.1 14.0 17.2 23.6 22.8 13.1 10.7 1.67 -56.5 3.1 OP 0
Sunrise Jun 2.00 990.8 29.9 33.2 10.6 11.1 6.7 6.0 0.81 9.6 2.1 OP 30
YNH Dec 1.70 689.0 16.1 20.8 25.2 28.8 10.5 8.2 0.92 16.9 2.4 MP 40
Paramount D e c 4.38 522.5 58.3 63.8 10.3 9.4 7.5 6.9 0.96 7.7 6.7 OP 35
Glomac Apr 1.37 407.1 13.9 15.4 22.1 10.4 9.8 8.9 0.72 8.5 6.2 OP 30
Hunza Jun 1.38 268.2 27.6 20.9 3.4 -24.2 5.0 6.6 0.58 4.8 4.1 TB 50
Simple average 11.9 10.2 1.1 2.2 4.1
Note: The negative EPS growth in FY10 for Suncity was due to change of FYE in FY09 (FY09 has 18 months period)
Source: RHBRI
Table 5
RNAV Breakdown
Property Development Tenure Remaining Remaining Equity NPV @ 9.1%

size (acres) GDV (RM mil) interest (RM mil)
Northern Region
Bandar Laguna Merbok Freehold 75.2 71 100% 12.3
Bukit Banyan Freehold 492.5 885 100% 54.0
Klang Valley
Kemuning Utama Freehold 206.2 310 100% 43.5
Surian Industrial Park Leasehold 0 123 100% 16.9
Section 13, PJ Leasehold 5.2 400 100% 38.4
Lots 7&9, Kota Damansara Leasehold 9.4 100 100% 12.2
Glenmarie Freehold 21.7 500 100% 48.5
Cyberjaya Freehold 50 527 100% 54.6
Total projects DCF 280.3

Land held for development (book value) & property dev. cost
Unbilled sales 22.6
Total value for property development 530.2
Education EPS PE target Equity value

(RM mil) (RM) (x) (RM mil)
FY11 net earnings 18.2 0.15 12.0 218.5

Investment assets / properties Tenure NBV Land area Market value
(RM mil) (sqf) (RM mil)
Jerneh* - 54.2 - 119.3
Sekolah Sri KDU campus Leasehold 64.0 520,579 86.0
KDU College SS22 Freehold 8.2 116,082 45.0
KDU Penang campus Freehold 29.5 86,046 49.0
Sub-total 299.3
Total value (RM mil) 1,048.0
Net current assets less property development (RM mil)
Long term liabilities (RM mil) (87.4)
Total RNAV (RM mil) 1,064.6
Shares base (mil) 119.3
RNAV per share (RM) 8.93
Discount 35%
Fair value per share (RM) 5.80

Table 6
Earnings Forecasts
FYE Dec (RMm) FY09a FY10F FY11F FY12F

Revenue 404.9 440.9 472.6 518.8
Operating profit 71.9 88.4 95.8 108.9
Interest expenses (2.4) (3.1) (3.2) (3.4)
PBT 79.3 97.7 106.8 121.6
Ta x (21.8) (28.1) (30.8) (35.0)
Minority interest 0.0 0.0 0.0 0.0
Net profit 57.5 69.6 76.1 86.6
EPS (sen) 52.9 58.3 63.8 72.6
DPS (sen) 28.0 29.2 31.9 36.3
Source: Company, RHBRI estimates
Table 7
Balance Sheet And Cashflow Forecasts
Balance Sheet (RMm) 2009 2010 2011 2012

Non-current assets 463.6 471.7 479.1 505.5
Current assets 376.4 414.1 453.0 495.3
Total assets 840.0 885.8 932.0 1000.8
Share capital & Share premium 182.7 182.7 182.7 182.7

Reserves 4.0 4.0 4.0 4.0
Retained earnings 337.8 372.6 410.6 453.9
Minority interest 0.0 0.0 0.0 0.0
Shareholders fund 524.5 559.3 597.3 640.6
Long term liabilities 99.4 96.7 98.6 111.4

Current liabilities 216.1 229.9 236.2 248.8
Cash Flow (RMm) 2009 2010 2011 2012

Operating cash flow 121.6 67.6 75.0 83.1
Investing cash flow (15.1) (12.6) (10.9) (29.2)
Financing cash flow (22.4) (27.6) (36.3) (27.7)
Source: Company, RHBRI estimates

Banking Overweight
Sector Rating : In our view, the banking sector represents the best proxy to the economic recovery and
we continue to believe that the sector can help take the lead in lifting the market to higher
grounds. We expect this to be underpinned by factors such as: 1) earnings growth gaining
momentum; 2) valuations remain decent relative to the market and historical levels; and
3) relatively low foreign shareholding levels.
Company
Short-Term/Long-Term Drivers Earnings Comment/Fair Value
Affin Consistency in earnings over the last six Fair value of RM4.10 is based on 12x CY11 EPS
quarters with improvements in underlying or 3x discount to sector benchmark of 15x to
Outperform trends (loan growth, NIM and asset account for lower ROE as well as low liquidity
quality). Furthermore, capital ratios and market capitalisation.
RM3.08 remain healthy.
AFG The key areas identified to drive growth Fair value of RM3.50 is based on 13x (2x
ahead are: 1) fee income; 2) synergizing discount to sector benchmark) CY11 EPS.
Outperform lines of business; 3) wealth management;
and 4) enhance cross-selling. Any
RM3.10 potential write back of provisioning from
CLOs and pre-emptive provisioning
earlier would provide an additional kicker
to earnings.
Other positive factors are robust capital
ratios, relatively cheap valuations (which
are not stretch vis-à-vis historical) and
low foreign shareholding.
AMMB Value proposition from ANZ is expected to Guiding for dividend payout of 35-40% for
improve competitiveness, augment ROE FY11 and at least 40% beyond FY11.
Outperform and raise cross-border opportunities over
Fair value of RM6.95 is based on sector
the longer term. While AMMB should
benchmark of 15x CY11 EPS.
RM5.80 benefit from the revival in capital market
activities, it would also be the worst hit
when interest rate rises. In mitigation,
AMMB has gradually changed its loan
portfolio to position for any eventual
interest rate hike.
Earnings sensitivity to rising NPLs is the
highest among mid-cap banks and high
percentage of HP loans means higher
delinquency risk. However, recent results
have shown that its much improved risk
management was able to contain NPLs,
mitigating earlier concerns about asset
quality.

FYE TURNOVER NET NET % NET EV/ P/ GROSS DIV % CHANGE
(RMm) PROFIT EPS GROWTH PER EBITDA BV DIV YIELD IN PRICE
(RMm) (SEN) (x) (x) (x) (SEN) (%) 1 MTH
3 MTHS
12 MTHS
Sector Average
2010 +24.0 14.9 2.1 3.8
2011 +13.4 13.1 1.9 3.2
2012 +10.5 11.8 1.9 3.5
31 December
2009(a) 1274.2 371.8 24.9 +27.0 12.4 n.a. 1.0 8.5 2.8 +1.3
2010(f) 1364.5 483.7 32.4 +30.1 9.5 n.a. 0.9 8.5 2.8 +5.8
2011(f) 1460.1 514.5 34.4 +6.4 8.9 n.a. 0.8 8.5 2.8 +68.0
2012(f) 1531.7 533.0 35.7 +3.6 8.6 n.a. 0.8 8.5 2.8
Issued capital of 1,494.6m ordinary shares of RM1.00 each

Average daily volume (000) : 1,673.0 shares
Market capitalisation (RMm) : 4,603
31 March
2010(a) 931.6 301.4 19.5 +30.6 15.9 n.a. 1.6 8.5 2.8 +5.8
2011(f) 1153.1 388.6 25.1 +28.9 12.4 n.a. 1.5 8.5 2.8 +11.5
2012(f) 1233.7 423.4 27.3 +9.0 11.3 n.a. 1.3 8.5 2.8 +29.2
2013(f) 1302.8 450.1 29.1 +6.3 10.7 n.a. 1.3 8.5 2.8
31 March (Fully Diluted)

2009(a) 3184.4 860.8 31.1 +28.7 16.0 n.a. 1.7 8.0 1.6 +2.1
Average daily volume (000) : 6,409.3 sharesMarket capitalisation (RMm) :

31 March
2010(a) 3893.4 1008.6 34.7 +11.7 16.7 n.a. 1.7 12.5 2.2 +13.9
2011(f) 4177.6 1263.8 41.9 +20.8 13.8 n.a. 1.6 19.7 3.4 +18.4
2012(f) 4478.8 1441.7 47.8 +14.1 12.1 n.a. 1.5 22.3 3.9 +42.2
2013(f) 4764.8 1561.4 51.8 +8.3 11.2 n.a. 1.6 24.3 4.2
fully diluted EPS (sen)

Note : Stock prices @ 1 Sept 2010

Banking (Cont'd)
Company Short-Term/Long-Term Drivers Earnings Comment/Fair Value
CIMB Post transformation of CIMB Niaga and CIMB Fair value of RM8.40 is based on sector
Thai, the group is now ready to further scale up benchmark of 15x CY11 EPS.
Outperform its regional platforms for the next phase of
earnings growth. Among the domestic banks,
RM7.80 CIMB is best placed to benefit from the move
by western banks to scale back their resources
in the region.
Other positive factors include lower earnings
volatility due to a smaller trading book,
consumer banking gaining traction and fast
growing contribution from CIMB Niaga. CIMB is
also the best proxy to the growth from non-
interest income as capital markets conditions
improve.
EON Cap Near-term focus, we think, would be on EON Fair value of RM8.33 is based on 13x CY11
Cap’s EGM for shareholders to decide on HL EPS or 2x discount to sector benchmark to
Market Perform Bank’s offer. This will be held on 27 Sep and reflect smaller market capitalisation and
approval from shareholders would put the deal liquidity.
RM6.98 one step closer to completion. The next
milestone would be the decision of the High
Court with respect to the petition filed by
Primus.
The above, however, does not change our view
that EON Cap’s fundamentals are improving.
Moreover, we see the potential of more active
capital management that would benefit
shareholders in terms of higher dividends and
enhancement in ROEs. Its internal restructuring
would also result in a more efficient corporate
structure and would be more efficient for tax
planning purposes.
HL Bank Near-term focus will be on the merger saga Fair value of RM10.70 is based on sector
with EON Cap and this could prevent any value benchmark of 15x CY11 EPS.
Outperform enhancing corporate exercises. HL Bank has
also announced two capital raising exercises to
RM8.84 strengthen its balance sheet in the event the
deal goes through, i.e.: 1) a renounceable
rights issue to raise up to RM1.6bn; and 2) the
issuance of up to RM1.8bn of capital qualifying
securities.
On its own, HL Bank has the highest capital
ratios and second strongest asset quality in our
universe. HL Bank has also now sustained its
qoq loan growth for two consecutive quarters,
suggesting that the group is looking to regain
market share following its conservative stance
during the recent economic downturn.

3 MTHS
12 MTHS
31 December
2009(a) 10592.7 2806.8 39.8 +37.5 19.6 n.a. 2.7 12.3 1.6 +4.6
2010(f) 11810.2 3519.9 48.0 +20.8 16.2 n.a. 2.2 12.3 1.6 +15.2
2011(f) 12845.0 4124.3 56.3 +17.2 13.9 n.a. 2.0 12.3 1.6 +52.3
2012(f) 14063.6 4726.8 64.5 +14.6 12.1 n.a. 1.8 12.3 1.6
31 December
2009(a) 1423.3 305.5 44.1 +>100.0 15.8 n.a. 1.4 n.a n.a +1.2
2010(f) 1582.7 421.2 60.8 +37.9 11.5 n.a. 1.2 13.3 1.9 (0.3)
2011(f) 1688.6 481.2 69.4 +14.3 10.1 n.a. 1.1 13.3 1.9 +40.7
2012(f) 1789.5 525.9 75.9 +9.3 9.2 n.a. 1.0 13.3 1.9
Issued capital of 693.2m ordinary shares of RM1.00 each

Average daily volume (000) : 331.1 shares
30 June
2010(a) 2063.9 987.9 68.1 +16.3 13.0 n.a. 2.0 24.0 2.7 (0.7)
2011(f) 2184.3 1026.8 70.8 +3.9 12.5 n.a. 1.8 24.0 2.7 +5.7
2012(f) 2278.9 1050.7 72.5 +2.3 12.2 n.a. 1.6 24.0 2.7 +47.3
2013(f) 2399.8 1098.0 75.7 +4.5 11.7 n.a. 1.5 24.0 2.7

Banking (Cont'd)
Maybank We expect its ROE to jump back to the Fair value of RM9.86 is based on sector
15% level (matching FY08 ROE), albeit benchmark of 15x CY11 EPS.
Outperform just a tad lower than the 16-17%
achieved during FY04-07. With strong
organic growth from domestic operations,
RM8.49 Singapore and, especially, BII, the
negative impact from the expensive
acquisitions (of BII and MCB) would be
more than nullified as FY11 EPS is
expected to exceed pre-acquisition levels.
Public Bank In our view, Public Bank is the best proxy Fair value of RM13.75 is based on sector
to the economic recovery in terms of loan benchmark of 15x CY11 EPS.
Outperform growth. Also expected to be one of the
main beneficiaries from the hike in
RM(F)12.24 interest rate. Management recently
provided some clarity regarding its
RM(L)12.14 funding needs and estimates another
RM3-3.5bn could be required in additional
capital if Basel III requires minimum core
equity capital ratio of 8%. This forms only
7-8% of its current market capitalisation
and could help ease concerns on capital
raising issues. Longer term, the group
appears well placed to penetrate the
China market through its Hong Kong arm.
RCE Earnings growth expected to be Fair value of RM1.12 is based on 10x CY11 EPS
underpinned by the strong expansion in or 5x discount to sector benchmark of 15x to
Outperform loan book. This is despite rising reflect its non-deposit taking status and small
competition from the commercial banks market capitalisation.
RM0.63 (with several of them already growing
their loans to civil servants via salary
deduction). RCE’s high margins would
also help cushion the rising competitive
pressure on profitability. Meanwhile,
delinquency risk remains low as almost all
its borrowers are civil servants (relatively
higher job security) and the company has
the first right to repayment (via salary
deduction scheme).

3 MTHS
12 MTHS
30 June
2010(a) 12848.6 3818.2 53.9 +42.6 15.7 n.a. 2.2 55.0 6.5 +9.7
2011(f) 13835.4 4381.0 61.9 +14.7 13.7 n.a. 2.0 35.0 4.1 +17.1
2012(f) 14836.9 4925.3 69.6 +12.4 12.2 n.a. 1.8 39.0 4.6 +32.7
2013(f) 15798.4 5328.6 75.3 +8.2 11.3 n.a. 1.6 40.0 4.7
31 December
F L F L F L
2009(a) 6109.9 2517.3 73.3 (4.7) 16.6 /16.7 n.a. 3.8 /4.8 55.0 4.5 +0.2 /(0.2)
F L F L F L
2010(f) 6701.9 2872.0 82.0 +11.8 14.8 /14.9 n.a. 3.3 /4.1 60.0 4.9 +6.6 /+6.1
F L F L F L
2011(f) 7250.3 3211.7 91.7 +11.8 13.2 /13.4 n.a. 3.0 /3.5 65.0 5.4 +25.2 /+24.2
F L F L
2012(f) 7786.6 3476.0 99.2 +8.2 12.2 /13.4 n.a. 2.7 /3.1 70.0 5.8

F L
Average daily volume (000) : 1,543.1 /2,629.5 shares
31 March
2010(a) 255.6 81.1 10.4 +10.8 6.1 8.1 1.2 2.0 3.2 (0.8)
2011(f) 262.0 84.6 10.8 +4.3 5.8 8.2 1.0 2.0 3.2 +5.0
2012(f) 271.2 88.5 11.3 +4.6 5.6 8.6 0.8 2.0 3.2 +1.6
2013(f) 286.2 90.9 11.6 +2.8 5.4 9.1 0.8 2.0 3.2

Market capitalisation (RMm) : 493

Building Materials Neutral
Sector Rating : Domestic cement consumption will likely improve from 2H10 onwards, underpinned by: (1)
The implementation of public construction projects; and (2) A pick-up in property development
activities (as evidenced in the surge in property launches since 2H09). Limited downside for
steel sub-sector, as steel product prices will likely stage a rebound in 4Q on the back of: 1)
seasonally stronger steel consumption in 4Q; 2) concerns on overcapacity that are likely to
ease in the near term; and 3) prices of iron ore (the key steel makng input) have bottomed.
Ann Joo ST: While earnings in 3Q are likely to weaken Fair value is RM2.84 based on 9x FY12/11
on qoq basis, we believe performance will fully-diluted EPS of 31.6 sen.
Outperform likely recover from 4Q onwards, as: 1) steel
consumption is seasonally stronger in 4Q on
RM2.56 the back of worldwide seasonal stock
replenishing activities; and 2) concerns on
overcapacity are likely to ease in the near
term.
LT: Diversification into the production of higher-
value steel products that will boost profitability.
CSC Steel ST: While earnings in 3Q are likely to weaken Fair value is RM2.10 based on 9x FY12/11
on qoq basis, we believe performance will EPS of 23.3 sen.
Outperform likely recover from 4Q onwards, as: 1) steel
term.
LT: Sustained economic growth that will boost
demand and prices of flat steel products.
Hiap Teck ST: Expecting slower FY07/11 on the back of: Fair value is RM1.38 based on 9x CY2011
Heightened risks of a sharper-than-expected EPS of 15.3 sen.
Market Perform slowdown in global economy; and (2) Falling
input prices (such as iron ore and scraps) that
RM1.20 will hurt both consumption and prices of steel
products.
LT: (1) Diversification into the production of API
pipes that command higher profit margin; and
(2) Potential supply contract with MITCO that
will boost demand for American Petroleum
Institute (API) certified electric resistance
welded (ERW) pipes.
Kinsteel ST: While earnings in 3Q are likely to weaken Fair value is RM0.78 based on 9x FY12/11
on qoq basis, we believe performance will fully-diluted EPS of 8.6 sen.
Underperform likely recover from 4Q onwards, as: 1) steel
term.
LT: Conversion of existing idle facilities to
production capacity that will boost scale of
operation.

3 MTHS
12 MTHS
Sector Average
2010 +14.6 11.3 6.9 1.4 5.7
2011 +18.5 9.9 6.0 1.1 5.0
2012 +2.7 11.8 5.4 1.1 5.0
31 December
2009(a) 1303.0 31.6 6.0 (77.3) 42.3 19.1 1.4 9.0 3.5 (0.4)
2010(f) 2240.4 176.1 33.7 +>100 7.6 6.1 1.1 24.0 9.4 +13.8
2011(f) 2813.0 204.5 39.1 +16.1 6.5 5.7 1.0 27.0 10.5 +17.4
2012(f) 2884.6 210.0 40.2 +2.7 6.4 5.4 1.0 27.0 10.5
31 December
2009(a) 971.9 91.2 24.0 +55.1 7.1 2.3 0.8 20.0 11.7 (2.3)
2010(f) 1271.6 83.4 21.9 (8.5) 7.8 1.6 0.8 14.0 8.2 (1.9)
2011(f) 1360.8 88.7 23.3 +6.4 7.3 0.5 0.8 15.0 8.8 +69.7
2012(f) 1461.4 93.9 24.7 +5.9 6.9 n.m 0.7 15.0 8.8
31 July
2009(a) 1159.3 17.4 5.3 (88.7) 22.6 10.9 0.7 1.0 0.8 (4.0)
2010(f) 1512.3 41.9 12.8 +>100 9.4 9.9 0.6 2.0 1.7 +1.7
2011(f) 1692.2 49.3 15.1 +17.7 8.0 8.8 0.6 2.5 2.1 +17.6
2012(f) 1793.9 51.1 15.6 +3.6 7.7 8.6 0.6 2.5 2.1
31 December
2009(a) 1928.1 (13.7) (1.3) (>100) n.m. 17.1 1.0 1.0 1.2 (8.2)
2010(f) 1847.5 51.3 4.9 +>100 17.3 5.6 0.9 1.0 1.2 +4.3
2011(f) 2206.8 90.8 8.6 +77.0 9.8 4.8 0.9 1.0 1.2 (4.5)
2012(f) 2441.0 96.5 9.2 +6.4 9.2 4.1 0.8 1.0 1.2

Building Materials (Cont'd)
Lafarge ST: (1) Higher domestic cement 2HFY12/10 performance to improve on: (1) Higher
consumption stemming from the domestic cement selling prices; and (2) Higher
Market Perform implementation of large scale public domestic cement consumption.
projects and an anticipated pick up in
Fair value is RM6.88 based on 14x FY12/11 EPS of
RM7.01 property development activities; and
44.8 sen.
(2) Lower energy prices, in
particularly, coal, diesel and
electricity.
LT: Sustained public spending in
Malaysia and the region.
Perwaja ST: While earnings in 3Q are likely to Fair value is RM1.24 based on 9x fully-diluted FY12/
weaken on qoq basis, we believe 11 EPS of 13.7sen.
Outperform performance will likely recover from
4Q onwards, as: 1) steel consumption
RM1.11 is seasonally stronger in 4Q on the
back of worldwide seasonal stock
replenishing activities; and 2)
concerns on overcapacity are likely to
ease in the near term.
LT: Conversion of existing idle
facilities to production capacity that
will boost scale of operation.
Sino Hua-Ann ST: Performance likely to improve Fair value is RM0.32 based on 9x FY12/11 3.6 sen.
over the next few quarters,
Underperform underpinned by the forced closure of
192 smaller and inefficient
RM0.34 metallurgical coke factories (targeted
by end-Sep), which would in turn
boost both prices and demand of
metallurgical coke in the near term.
LT: (1) Recovery in crude oil prices,
that will in turn boost prices of Sino
Hua-An’s by-products; and (2) A full-
steam recovery in steel consumption,
which will boost demand, and hence
prices of metallurgical coke.
YTL Cement ST: (1) Higher domestic cement CY2011 earnings to improve on the back of: (1)
consumption stemming from the The implementation of public construction projects;
implementation of large scale public and (2) Stronger property development activities
Outperform
projects and an anticipated pick up in that will boost domestic cement consumption.
RM4.00 property development activities; and Fair value is RM5.35 based on 11x CY2010 EPS of
(2) Lower energy prices, in particular, 50.1 sen.
coal, diesel and electricity.
LT: (1) Sustained public spending in
Malaysia and the region; and (2)
Elimination of excess capacity in
Zhejiang province, China, which will in
turn boost cement prices in that
region.

3 MTHS
12 MTHS
31 December
2009(a) 2483.1 412.2 48.5 12.1 14.4 9.3 1.9 38.0 5.4 +3.1
2010(f) 2955.2 361.1 42.5 (12.4) 16.5 10.9 1.8 30.0 4.3 +8.3
2011(f) 3040.7 418.2 49.2 +15.8 14.2 9.3 1.8 30.0 4.3 +13.1
2012(f) 3042.2 430.0 50.6 +2.8 13.9 8.5 1.7 30.0 4.3
31 December
2009(a) 1571.2 (115.5) (20.6) (>100) n.m. n.m 0.7 0.0 0.0 (10.5)
2010(f) 2164.7 64.8 11.6 +>100 9.6 7.8 0.6 0.0 0.0 (5.1)
2011(f) 2461.4 75.8 13.5 +16.9 8.2 7.3 0.6 0.0 0.0 (24.5)
2012(f) 2480.6 94.6 16.9 +24.8 6.6 6.3 0.5 0.0 0.0
31 December
2009(a) 1280.3 (20.6) (1.8) (>100) n.m. 20.6 0.5 0.0 0.0 (8.2)
2010(f) 1555.5 18.2 1.6 +>100 20.7 10.5 0.6 0.0 0.0 +1.5
2011(f) 1809.5 40.4 3.6 +>100 9.3 6.6 0.5 0.0 0.0 (33.0)
2012(f) 1923.8 34.7 3.9 +8.2 8.6 6.1 0.5 0.0 0.0
30 June
2010(a) 1843.1 246.5 50.1 +3.1 8.0 3.9 1.2 30.0 7.5 (0.2)
2011(f) 1914.9 268.1 54.5 +8.8 7.3 3.2 1.1 30.0 7.5 +3.1
2012(f) 1922.1 258.2 52.5 (3.7) 7.6 2.9 1.0 30.0 7.5 (3.4)

Construction Overweight
Sector Rating : We are upbeat on the construction sector as we foresee construction stocks to generally
outperform the market over the near term, buoyed by news flow, particularly, from: (1) The
RM36bn KL MRT project; (2) The RM7bn Ampang and Kelana Jaya LRT line extension
project; and (3) Federal land deals. Our top “tactical” pick is Gamuda as we believe its
share price will be buoyed by the sustained news flow from the RM36bn KL MRT project.
Our top “value” pick is Sunway due to its undemanding valuations, coupled with its strong
earnings visibility stemming from its firm construction margins and growing non-construction
profits.
Emas Kiara ST: Geosynthetics contracts for the new Sustained EPS growth in FY12/10-12 on
permanent LCCT. increased sales of geosynthetics.
Outperform LT: Sustained public spending in Malaysia, Fair value is RM1.52 based on 10x FY12/11
rising acceptance of geosynthetics and EPS, in line with our benchmark 1-year
RM0.58 awareness towards environment protection. forward target PER for the construction
sector of 10-16x.
Fajarbaru ST: Outstanding construction orderbook of EPS growth to resume in FY06/12 assuming
RM397m. RM250m worth of new jobs to be secured
Outperform LT: Sustained public spending in Malaysia per annum in FY06/11-12.
and its venture into property development. Fair value is RM1.37 based on 10x fully-
RM1.02
diluted CY11 EPS of 13.7sen, in line with our
benchmark 1-year forward target PER for
the construction sector of 10-16x.
Gamuda ST: Outstanding construction orderbook of EPS to recover in FY07/10 as cost pressure
RM6.5bn. eases.
Trading Buy
LT: Sustained public spending in Malaysia, Fair value is RM3.85 based “sum of parts”,
the proposed KL MRT project is to get off the valuing its existing businesses at 16x FY12/
RM3.55 ground, and the ability to win overseas 11 earnings, in line with our benchmark 1-
projects. year forward target PER for the construction
sector of 10-16x, and its property projects in
Vietnam and the KL MRT project by DCF.
Hock Seng Lee ST: Outstanding construction orderbook of Sustained growth in EPS in FY12/10-11 as
RM1.14bn. key contracts hit substantial billing
Outperform milestones.
LT: Sustained public spending in East
Malaysia. Fair value is RM1.95 based on 12x FY12/11
RM1.56
EPS, in line with our benchmark 1-year
forward target PER for the construction
sector of 10-16x.
IJM Corporation ST: Outstanding construction orderbook of EPS to resume growth in FY03/11 on
RM3.6bn. recognition of profits from higher-margin
Market Perform newer contracts, coupled with stronger
LT: Sustained public spending in Malaysia,
property and plantation profits.
ability to win overseas projects.
RM5.01 Fair value is RM5.01 based on 16x fully-
diluted FY03/12 EPS of 31.3sen, in line with
our 1-year forward target PER for the
construction sector of 10-16x.

3 MTHS
12 MTHS
Sector Average
2010 +27.8 17.6 12.6 1.6 2.3
2011 +8.3 16.2 11.8 1.5 2.3
2012 +5.1 15.4 11.3 1.4 2.4
31 December
2009(a) 137.5 9.8 11.4 (14.7) 5.1 4.5 0.6 1.5 2.6 +13.9
2010(f) 175.0 11.0 13.1 +15.0 4.4 3.6 0.6 1.5 2.6 +4.5
2011(f) 164.0 12.8 15.2 +16.7 3.8 3.0 0.5 1.5 2.6 +36.9
2012(f) 173.9 14.2 16.9 +11.1 3.4 2.5 0.4 1.5 2.6
30 June
2010(a) 165.9 24.7 16.2 +6.7 6.3 1.0 1.2 6.0 5.9 +5.2
2011(f) 233.0 25.1 14.4 (10.8) 7.1 1.3 1.2 6.0 5.9 +6.8
2012(f) 284.0 28.0 15.2 +5.5 6.7 1.0 1.1 6.0 5.9 (6.9)
2013(f) 315.0 30.2 16.4 +7.6 6.2 0.5 1.0 6.0 5.9
31 July
2009(a) 2727.3 193.7 9.7 (40.1) 36.5 37.9 2.4 8.0 2.3 +5.3
2010(f) 2958.5 277.0 13.6 +40.4 26.0 32.5 2.3 12.0 3.4 +25.0
2011(f) 3370.5 326.6 16.1 +17.9 22.1 25.1 2.2 12.0 3.4 +14.5
2012(f) 3194.9 331.3 16.3 +1.5 21.7 23.6 2.1 12.0 3.4

31 December
2009(a) 375.0 56.3 10.2 +35.3 15.2 9.8 3.0 2.4 1.5 +2.0
2010(f) 529.5 74.4 13.4 +30.8 11.7 7.1 2.4 2.5 1.6 +12.2
2011(f) 652.5 90.3 16.2 +21.4 9.6 5.4 2.0 2.5 1.6 +64.6
2012(f) 742.5 98.4 17.7 +8.9 8.8 6.6 1.7 2.5 1.6
31 March
2010(a) 4013.5 263.6 20.0 (14.8) 25.1 11.4 1.3 11.0 2.2 (0.4)
2011(f) 5984.4 428.6 31.7 +58.9 15.8 9.0 1.3 11.0 2.2 +5.5
2012(f) 5585.6 440.2 32.6 +2.7 15.4 8.5 1.2 11.0 2.2 +19.5
2013(f) 5483.3 462.2 34.2 +5.0 14.6 8.0 1.1 12.0 2.4

Construction (Cont'd)
MRCB ST: Outstanding construction orderbook of Stronger profitability in FY12/10 assuming

RM2bn. Ability to bag federal land. construction margins are to improve.
Trading Buy LT: Sustained public spending in Malaysia, Fair value is RM1.94 based on “sum of
profitable property development on federal parts”, valuing its construction business at
RM1.69 land. 10x FY12/11 earnings, in line with our
benchmark 1-year forward target PER for
the construction sector of 10-16x, and its
concession assets and existing/potential
property projects by DCF.
Sunway Holdings ST: Outstanding construction orderbook of EPS to jump 68% in FY12/10 underpinned by
RM2.1bn, property and trading profits. strong construction and property profits.
Outperform LT: Sustained public spending in Malaysia, Fair value is RM2.35 based on 12x fully-
ability to win overseas projects. Ability to diluted FY12/11 EPS of 19.5sen, in line with
RM1.58 secure new property projects in Malaysia our benchmark 1-year forward target PER
and Singapore. for the construction sector of 10-16x.
WCT ST: Outstanding construction orderbook of EPS to contract in FY12/10-11 on depleting

RM2.3bn. orderbook.
Underperform LT: Sustained public spending in Malaysia, Fair value is RM2.30 based on 14x fully-
ability to rebuild its reputation (after the diluted FY12/11 EPS of 16.4sen, in line with
RM2.84 high-profile dismissal as contractor for the our benchmark 1-year forward target PER of
Meydan Racecourse project in Dubai) and 10-16x for the construction sector.
win contracts in the Gulf states.

3 MTHS
12 MTHS
31 December
2009(a) 921.6 34.6 3.8 +>100 44.5 21.4 2.3 0.0 0.0 (2.3)
2010(f) 1138.7 70.2 5.2 +35.8 32.8 19.8 1.8 0.0 0.0 +14.2
2011(f) 1291.7 86.8 6.4 +23.5 26.5 17.2 1.7 0.0 0.0 +48.4
2012(f) 1339.8 91.0 6.7 +4.9 25.3 16.5 1.6 0.0 0.0
31 December
2009(a)** 2589.9 109.3 13.6 (27.0) 11.6 7.5 1.5 2.3 1.4 (2.5)
2010(f) 2519.8 137.1 22.8 +68.0 6.9 5.6 1.2 2.8 1.8 +12.9
2011(f) 2519.2 151.1 25.2 +10.2 6.3 5.8 1.0 2.8 1.8 +13.7
2012(f) 2960.0 170.1 28.3 +12.5 5.6 5.2 0.9 3.8 2.4
Annualised ** 18 M
31 December
2009(a) 4666.6 147.1 18.8 +43.6 15.1 9.9 1.7 10.0 3.5 +0.4
2010(f) 2436.2 140.6 18.2 (3.0) 15.6 13.5 1.6 6.0 2.1 +7.2
2011(f) 2020.9 130.7 16.9 (7.0) 16.8 14.2 1.5 6.0 2.1 +4.8
2012(f) 1747.5 134.2 17.4 +2.6 16.4 14.0 1.4 6.0 2.1

Consumer Neutral
Sector Rating : The country is experiencing rising consumerism as consumer confidence rises on the back
of improving employment prospects and pent-up demand. However, 2H10’s consumer
spending is expected to grow at a slower pace vis-à-vis 1H10 (4.6% vs. 5.4%), as the
positive effect from government stimulus spending fizzes out and export growth starts to slow
down. Furthermore, earnings might be affected by negative factors such as: 1) higher raw
material prices for the manufacturers and brewers which would put pressure on margins; and
2) potential increase in excise duties for both the tobacco manufacturers and brewers in the
upcoming budget.
AEON Near-term outlook does not seem very We have lowered our target PE to 12x
favourable for AEON as its 1HFY12/10 SSS of (from 14x) to reflect the weaker outlook
Market Perform just 2% is expected to be repeated in 2H10, caused by the erosion of AEON’s market
bringing FY10 SSS growth to 2-3%. For FY11-12, share given intensifying market
RM5.20 we anticipate AEON’s SSS growth to rise slightly competition. Our PE of 12x is the lower-
to 2.5-3.5%. end of AEON’s historical PE range of 12-
Furthermore, there will be no more new store 15x and places AEON’s fair value at
openings in FY10, bringing FY10 total new stores RM5.28.
to 2, while we expect 2 new stores to be opened
only by end FY11.
Longer-term growth would be underpinned by
recurring sales from its strong customer loyalty
programme, which now has 850,000 members
(60% active) and improving consumer and
business confidence.
Amway The strengthening of the ringgit against the US$ Our DCF-derived fair value remains
should be favourable for Amway as 88% of its unchanged at RM8.45, using a WACC of
Market Perform products are purchased in the US$. However, due 8.1%. Despite the lack of capital
to a hedging position it has taken and its normal appreciation in Amway’s share price, it
RM7.95 inventory position of 10-12 weeks, swings in the continues to be attractive as a dividend
USD-MYR will not impact margins for the play, which is expected to yield 6.7% for
remainder of the year. Although this will mean the full year.
Amway will not benefit from any further
depreciation of the US$, it also means that
should there be any reversal of trend resulting in
an appreciation of the US$ or even a price
increase implemented by Amway US, Amway’s
margins will not be affected for the rest of the
year.
Longer-term growth will be underpinned by
Amway’s success of attracting new distributors
into its MLM team as well as increasing its
revenue per distributor.
Short-term pressures include: 1) continued high 5.4% decline in earnings for FY10 driven
BAT
level of illicit cigarettes; 2) potential of another by declining TIV, one-off expenditure on
excise duty hike in the upcoming budget would the Reloc pack, increase in COGS from
Underperform
put pressure on demand; 3) Government’s the new packaging and less than 20s
persistent fight to reduce cigarette consumption pack ban.
RM45.50
(via pictorial health warning, floor price for DCF-derived fair value is RM40.25 based
cigarettes, removal of less than 20s packs etc); on BAT’s WACC of 7.9%. Projected net
and 4) 2010 AFTA-Cept, which we believe would dividend payout of 90-95% translates to
negatively affect TIV growth. In addition, the 5% net yield p.a..
Government could impose a ban on smoking in
public places. We expect TIV to fall by 5% in
2010.
Furthermore, recent news of a possible additional
cess to be paid to subsidise tobacco farmers
would increase pressure on BAT’s bottomline if it
is actually implemented. However, there has
been no confirmation on the cess at this point in
time.
3 MTHS
12 MTHS
Sector Average
2010 +7.9 15.9 7.9 4.1 3.7
2011 +11.9 14.9 6.8 3.9 3.7
2012 +14.0 13.0 5.7 3.4 3.9
31 December
2009(a) 2808.2 133.5 38.0 +10.7 13.7 5.5 1.9 12.0 2.3 0.0
2010(f) 2971.7 144.1 41.1 +7.9 12.7 5.3 1.7 12.0 2.3 +6.1
2011(f) 3192.0 154.6 44.0 +7.2 11.8 2.2 1.5 12.0 2.3 +13.0
2012(f) 3479.8 166.6 47.5 +7.8 11.0 2.1 1.3 12.0 2.3

31 December
2009(a) 663.0 72.5 44.1 (23.7) 18.0 10.9 5.5 48.0 6.0 (0.6)
2010(f) 697.9 89.6 54.5 +23.6 14.6 9.3 5.3 50.0 6.3 +5.3
2011(f) 722.5 92.8 56.5 +3.5 14.1 9.0 5.2 52.0 6.5 +9.7
2012(f) 748.0 96.1 58.4 +3.5 13.6 8.7 5.0 54.0 6.8
Net Dividend

31 December
2009(a) 3923.4 746.8 261.5 (8.0) 17.4 12.2 n.m 236.0 5.2 +2.3
2010(f) 3991.6 706.2 247.3 (5.4) 18.4 13.0 n.m 220.0 4.8 +3.9
2011(f) 3997.1 676.1 236.8 (4.3) 19.2 13.4 n.m 213.1 4.7 (0.7)
2012(f) 4060.4 677.0 237.1 +0.1 19.2 13.0 n.m 213.4 4.7
Net Dividend

Consumer (Cont'd)
Carlsberg Short-term growth will be driven by: 1) DCF-derived fair value is RM6.03 based on
improved economic conditions; 2) battle with Carlsberg’s WACC of 9.1%. Projected net
Outperform GAB to obtain a larger market share in the dividend payout of 60% translates to 5-6%
premium beer segment; and 3) positive impact net yield from FY10 onwards.
from Carlsberg Singapore acquisition. Potential
RM5.30
party poopers that would hamper growth
include: 1) an increase in excise duty in the
upcoming 2011 budget; and 2) rising raw
material prices, especially wheat as a result of
Russia’s unfavourable weather conditions which
are affecting crops.
Daibochi Short-term growth to come from current and Our target price of RM3.80 is based on
new clientele and expansion into other target 12x FY12/11 EPS, which is a 17%
Outperform overseas markets. Longer-term growth discount to the consumer sector PER of
underpinned by the company’s emphasis on
14.5x, attributed to its smaller market
RM3.00 product innovation and move into non-F&B
capitalisation.
sectors such as its electronic packaging, which
would yield higher margins. Continuous
innovation in both the F&B and non-F&B market
makes it an attractive growth company,
although its exciting revenue growth is slightly
neutralised by the risks posed by the volatile
operating cost environment as a result of rising
raw material costs which have been eating into
margins due to the lag factor in passing on
costs to customers.
Faber In the short term, Faber’s earnings would be Earnings outlook for Faber is expected to be
driven by the growth in its concession revenue driven by: 1) ongoing expansion plans in
Outperform business as well as its overseas expansion in IFM services to overseas markets in India
UAE and India. In the longer term, although and UAE; and 2) recovery in property
RM2.68 the current concession agreement will expire in development earnings on several new
Oct 2011, we believe there is a strong
launches in FY10 and FY11 onwards.
likelihood that it will be renewed given its
political links, as well as for its size and
geographical reach. Further expansion in its We use SOP to derive our RM3.82/share fair
non-concession IFM business in non-healthcare value for Faber. This is based on: 1) DCF
segments either overseas or locally would valuation, which uses a WACC discount rate
reduce the earnings dependence on the of 9.7% for its concession business and
concession. As for its property division, the property business; and 2) 14x target PER
current landbank is 40 acres with on estimated FY11 earnings for its non-
approximately RM800m in outstanding GDV, concession IFM business.
which should last for 3-4 years.
Hai-O FY04/11 MLM membership to contract due to Indicative fair value is RM3.63/share, based
the recent revised Direct Selling Act (DSA),
on 10x CY11 EPS (30% discount to CY10
Underperform which will deter front loading by members. Our
target PER of 14.5x for the consumer
view is that not only will this stagnate
sector).
RM2.98 membership growth, but it could also cause
drop-outs among current members who were
previously front loading to make quick profits.
However, we believe this will benefit Hai-O in
the long run given that their members would
be of higher quality and more focused on
growing the business in a proper way.Longer-
term growth will be driven by innovative new
products to drive MLM sales, successful
penetration into the Indonesian market and the
successful commercialisation of its energy
division. There is also potential in its new
energy division, which has drawn interest from
various parties with regards to its heat
transference technology.

3 MTHS
12 MTHS
31 December
2009(a) 1045.5 76.1 24.7 +0.03 21.4 12.9 3.2 17.3 3.3 +3.7
2010(f) 1462.7 125.5 40.7 +64.8 13.0 8.6 2.9 24.4 4.6 +10.4
2011(f) 1491.8 132.0 42.8 +5.2 12.4 7.8 2.6 25.7 4.9 +28.1
2012(f) 1505.7 146.3 47.5 +10.8 11.2 7.3 2.4 28.5 5.4
Net Dividend
31 December
2009(a) 221.8 22.8 30.0 +>100.0 10.0 6.7 3.8 19.4 6.5 (7.4)
2010(f) 250.6 22.1 29.2 (2.8) 10.3 6.2 3.3 18.8 6.3 +4.2
2011(f) 270.6 24.2 31.9 +9.3 9.4 5.5 2.9 20.0 6.7 +119.0
2012(f) 282.1 26.8 35.3 +10.9 8.5 4.7 2.4 21.3 7.1
31 December
2009(a) 805.3 82.7 22.8 +35.3 11.8 5.0 2.7 6.0 2.2 (6.6)
2010(f) 928.0 95.3 26.3 +15.3 10.2 4.0 2.3 7.0 2.6 +13.1
2011(f) 911.3 95.7 26.4 +0.5 10.2 3.6 1.9 8.0 3.0 +162.7
2012(f) 1422.3 166.1 45.7 +73.5 5.9 1.8 1.5 8.5 3.2
30 April
2010(a) 511.1 70.9 35.0 +35.4 8.5 5.5 1.3 24.1 8.1 (16.8)
2011(f) 529.8 69.5 34.3 (2.0) 8.7 5.4 1.1 22.8 7.7 (23.4)
2012(f) 569.3 75.7 37.3 +8.9 8.0 4.7 0.9 24.9 8.4 +41.1
2013(f) 629.3 84.1 41.5 +11.1 7.2 3.9 0.8 27.7 9.3
Note : Stock prices @ 28 October 2009

Consumer (Cont'd)
KFCH Improved consumer spending is expected to Indicative fair value is RM13.07 (ex-all =
boost demand for KFCH products. We expect RM3.27) based on unchanged target PER of
Outperform SSS growth of +7% p.a. in FY10-12 for its 14.5x FY12/11 EPS.
Malaysian restaurants. Aggressive
RM11.18 expansion strategy (to open 35-40 new
outlets p.a. for FY10-12) in Malaysia would
continue to strengthen its presence in the
country. Long-term earnings growth will be
driven by its its venture into India with its
1.3bn population. However, a hiccup in
opening of new stores due to unexpected
problems in renovation of the stores
combined with various red tape issues when
getting approvals, pose a risk to its growth.
Nonetheless, we believe India will continue
to be a strong earnings catalyst in the long
term due to its large population, as long as
KFC manages to keep its new outlet
strategy on track.
KPJ Healthcare Short-term earnings would be driven by the We estimate 17.7% yoy core earnings
growing number of patients and revenue/ growth for FY10 due to: 1) patient growth
Outperform inpatient from increasing take up of spurred by expansion of its hospital
insurance policies, as well as the turnaround network into smaller towns; and 2)
RM3.41 of previously loss-making hospitals. In the turnaround of loss-making hospitals.
longer term, growth momentum would be Indicative fair value of RM4.51, based on
underpinned by the hospital expansion 17x FY11 PER (10% discount to regional
strategy (two new hospitals p.a.) together peers’ average).
with growing national aging population,
which is about twice the national population
growth rate of 2.3% p.a..
Parkson’s longer-term growth would be Indicative fair value is RM7.72/share,
Parkson
driven by: 1) increase in consumer spending based on a SOP valuation comprising: 20%
in China from higher GDP per capita; 2) holding company discount to its Hong Kong
Outperform
increase in China / Vietnam’s living subsidiary, Parkson Retail Group’s fair
standards, as Parkson caters to the middle value of HK$11.95 (which is based on
RM5.53
to upper middle income group; 3) store average forward PER of China
expansion (China: 5 new stores p.a.; departmental stores of 22x); 14x CY11
Malaysia: 2-3 new stores p.a.; and Vietnam: earnings for its Malaysian operations; 11.5x
1-2 new stores p.a.); and 4) cost- CY11 for its Vietnamese operations; the
rationalisation activities. value of its 6 excluded stores in China,
assuming that the 6 stores would be
acquired at about 10x PE for retail sector
and assuming about RMB10m net profit per
store (based on previous transactions); and
net cash/(debt) balance.
QL Resources QL’s business of staple food based products Fair value is RM4.90/share based on 14.5x
will provide resilient earnings, and this is CY11 earnings which is in line with
Outperform enhanced with continuous expansions of its consumer target’s PER.
product base as well as geographical
reach.Commercialisation of its palm
RM4.62
biomass pellet technology in FY11 will
provide another earnings stream going
forward, while stronger earnings
contributions from the plantation division will
kick-in from 2012 onwards.QL’s recently
purchased a 23.29% stake in Lay Hong Bhd
for RM11.55m. This will increase QL’s FY11
earnings by 2-2.3%. As Lay Hong is also
involved in egg production, we expect the
purchase to provide a synergistic impact on
QL.
3 MTHS
12 MTHS
31 December
2009(a) 2297.4 130.4 65.8 +10.0 17.0 8.6 3.1 24.0 2.1 +3.5
2010(f) 2655.3 153.2 77.3 +17.5 14.5 7.3 2.6 26.0 2.3 +32.5
2011(f) 3026.8 178.7 90.1 +16.7 12.4 6.2 2.3 28.0 2.5 +53.2
2012(f) 3432.1 206.8 104.3 +15.7 10.7 5.2 1.9 30.0 2.7
31 December
2009(a) 1456.4 110.9 21.0 +29.2 16.3 9.8 1.6 12.0 3.5 (7.3)
2010(f) 1675.5 126.9 24.0 +14.6 14.2 8.4 1.6 14.0 4.1 +14.4
2011(f) 1861.3 140.5 26.6 +10.7 12.8 7.5 1.6 16.0 4.7 +150.7
2012(f) 2065.4 157.6 29.9 +12.2 11.4 6.9 1.6 18.0 5.3
30 June
2010(a) 2923.8 305.4 29.5 +16.0 18.8 4.9 2.9 7.0 1.3 (1.3)
2011(f) 3671.8 386.7 37.3 +26.6 14.8 3.4 2.5 8.0 1.4 +6.1
2012(f) 4507.0 496.9 47.9 +28.5 11.5 2.1 2.1 9.0 1.6 +9.3
2013(f) 5454.1 627.7 60.6 +26.3 9.1 1.6 1.8 10.0 1.8
31 March
2010(a) 1476.7 106.4 26.9 +19.4 17.2 7.4 3.9 10.0 2.2 +6.0
2011(f) 1671.7 121.3 30.7 +14.0 15.0 5.9 3.2 10.2 2.2 +25.5
2012(f) 1825.2 137.1 34.7 +13.0 13.3 5.4 2.7 11.6 2.5 +62.1
2013(f) 1965.9 162.3 41.1 +18.4 11.3 4.7 2.2 14.2 3.1
Note
Note :: Stock
Stockprices
prices@@28
1 October
Sept 2010
2009

Gaming Neutral
Sector Rating : We think that an additional risk has emerged for the Malaysian gaming sector as a whole,
as the recent move by the Government to increase pool betting duties for the NFOs by 2%-
pts to 8% from 1 June 2010, as well as the recent abortion of the sports betting licence deal,
could potentially signify a turnaround in policy with regards to the gaming sector and could
mean a further crackdown on industry players. This could also potentially spell an oncoming
hike in casino gaming duties (now at 25%) and a non-approval of Tanjong’s new lotto game
application which is still pending. We estimate every 1%-pt hike in casino gaming tax would
impact earnings of the Malaysian casino by 2-3% p.a.. On the Singaporean front, we believe
prospects continue to be positive, as the commencement of operations of Marina Bay Sands
has resulted in an enlargement of the gaming market, rather than a shrinkage of Resorts
World Sentosa’s market share.
Berjaya Sports Prospects look bleak for BToto after the Although earnings prospects are unexciting,
Toto pool betting duty hike implemented from 1 we believe BToto would not underperform the
June 2010, which would reduce its market given the still relatively attractive
Market Perform earnings by 12% p.a.. However, if the dividend yield of 6-7%, which would appeal to
Government approves the NFOs’ investors looking for stable returns. Our DCF-
RM4.15 application to reduce the prize pools, the based fair value is RM4.35 (WACC 9.8%).
impact of the duty hike would be more or
less negated. This does not, however,
take into account the potential decline in
revenue once the prize pools are reduced,
as punters may reduce betting volumes as
a result. We note that every 1%-pt decline
in sales/draw volume growth would affect
net earnings by -1% and our fair value by
-RM0.05/share, although we note that a
cumulative annual decline in sales/draw
volume would have a larger impact on
earnings.
Genting Bhd Genting’s earnings growth in 2010 would We expect earnings contribution from the
be mainly spearheaded by its Malaysian Singaporean IR’s to continue to be a kicker,
Outperform casino (Genting Malaysia – 30-35% while any slowdown in domestic casino
contribution); Singaporean casino earnings would be buffered by its plantations
RM9.39 (Genting Singapore – 50-55% and power divisions. Our fair value of
contribution); power and oil and gas RM11.00 is based on a SOP calculation
divisions (5-10% contribution); and comprising: our fair values for Genting
plantations and property divisions Malaysia, Genting Singapore and Genting
(Genting Plantations – 5-10% Plantations, our DCF value for management
contribution). fees (WACC 10.1%), an EV/MW value for the
power division; a 20% discount to sector
average PER of 13x CY11 for the oil & gas
division; Genting’s share of profit for Tangguh
concession; market price for stake in
Landmarks; and latest net cash/(debt) ex-
Genting Malaysia and Genting Singapore.

3 MTHS
12 MTHS
Sector Average
2010 +52.8 12.6 5.2 2.4 1.9
2011 +0.2 12.5 4.2 2.1 2.1
2012 +9.4 11.4 3.4 2.0 2.4
30 April
2010(a) 3392.3 381.7 28.9 (11.6) 14.4 9.7 n.m 27.0 6.5 (1.7)
2011(f) 3312.3 380.7 28.8 (0.3) 14.4 9.9 n.m 26.0 6.3 (2.1)
2012(f) 3254.5 391.4 29.0 +0.5 14.3 10.0 n.m 27.0 6.5 (4.8)
2013(f) 3352.5 403.2 29.8 +3.0 13.9 9.6 n.m 28.0 6.7
31 December
2009(a) 8893.6 1168.3 31.6 (31.3) 29.7 9.7 3.5 7.2 0.8 +17.4
2010(f) 16623.1 2996.3 81.1 +>100 11.6 4.5 2.7 9.5 1.0 +38.3
2011(f) 19297.0 2921.1 79.0 (2.5) 11.9 3.5 2.2 11.5 1.2 +45.6
2012(f) 21325.6 3279.0 88.7 12.3 10.6 2.7 2.3 14.0 1.5

Gaming (Cont'd)
Genting As fortunes of Genting Malaysia are still Our SOP-based fair value of RM3.25 includes
Malaysia very much domestic-centric, with tourists the DCF value of its gaming operations in
only making up about 15% of its 20m Malaysia and UK and market value of its stake
Market Perform visitors and with only 3.5-4% of total in Genting HK.
average household income (of Chinese
RM3.00 population) spent on gaming activities, we
do not expect earnings to be significantly
affected by weaker consumer spending,
although we do acknowledge there could
be a short-term impact from the opening
of the Singapore IRs. Nevertheless, we
believe our casino visitor arrival
projections of a 4% decline for 2010
followed by a 2% growth for 2011 and
2012 for Genting Malaysia is achievable.
Genting We are positive on Genting Singapore’s Our fair value of S$2.40 is based on the
Singapore (GS) prospects as we believe the strength blended average of EV/EBITDA (12x FY11
of the whole package that Resorts World based on regional average) and SOP
Outperform Sentosa (RWS) is offering will drive visitor methodologies.
numbers and casino patronage strongly at
S$1.80 least for the first year or two, especially in
view of it being a “family” destination and
the novelty factor, while riding on
Singapore’s anticipated tourism-led
economic recovery. In the longer term,
RWS would have to prove itself to be
innovative and to respond to the market’s
changing needs in order to maintain its
customer base, in view of the increasing
competition within the region, not only for
casinos but also for theme parks, although
operating in a guaranteed casino duopoly
market with a highly lucrative gaming tax
structure would give it a competitive
advantage.

3 MTHS
12 MTHS
31 December
2009(a) 4991.8 1383.2 22.7 +0.1 13.2 5.9 1.7 7.3 2.4 +4.2
2010(f) 4858.7 1294.0 21.0 (7.4) 14.3 6.7 1.6 6.8 2.3 +10.3
2011(f) 5051.7 1381.7 22.4 +6.8 13.4 5.8 1.5 7.4 2.5 +10.3
2012(f) 5252.8 1452.7 23.6 +5.1 12.7 5.0 1.3 8.0 2.7
31 December
2009(a) 491.2 (167.0) (1.4) (>100) n.m. n.m 7.7 0.0 0.0 +39.5
2010(f) 3692.5 1003.0 8.6 +>100 20.9 15.8 5.6 0.0 0.0 +74.8
2011(f) 4715.4 1135.4 9.7 +13.2 18.5 12.3 4.3 0.0 0.0 +75.8
2012(f) 5507.1 1384.4 11.9 +21.9 15.2 10.7 3.4 0.0 0.0
Issued capital of 11,690.1m ordinary shares of USD0.10 each

Market capitalisation (S$) : 21,042

Insurance Neutral
Sector Rating : The insurance industry sector will continue to grow in tandem with the recovering economy.
We envisage increased business activities as well as, recovering property market and motor
TIV, will drive further need for protection. We believe that another round of consolidation
could be sparked off by the sale of Jerneh Insurance, Pacific and Orient Insurance, and
Pacific Mas Insurance, to be completed by year end. These insurance companies with their
new international owners might bring stiffer competition to the general insurance industry
thus putting pressure on underwriting margins. As for life insurance, rising disposable
incomes and personal tax relief for annuity premiums will increase the awareness of life
insurance products as a savings-cum-protection tool. More product innovations are expected
to spur the market, especially to cater for retirement needs.
Allianz The stock is relatively undervalued due to its Above-industry premium growth, higher
ability to maintain above-industry premium retention rate, below-industry combined
Outperform growth but below-industry combined ratio. ratio, synergistic benefits and sustainable
In addition, its highly-productive agency life business profit transfer which was two
RM4.18 force, bancassurance tie-up, innovative new FYs ahead of guidance.
products and strong support from parent As motor insurance accounts for 46% of
would be able to meet consumer preference total portfolio, Allianz will benefit once
for products that provide protection cum motor tariff system is changed to a more
savings. risk-based regime. Ex-rights SOP fair value
Increase in motor claims ratio is mitigated is RM5.32.
by various measures and lower claims ratio
from other classes of business. Sustainable
low management expense should be able to
provide “comfortable” combined ratio.
Sustainable life insurance business profit
transfer due to change from solvency base
capital to risk-based capital as well as
achieving critical mass.
Continued rebalancing act with an increase Fair value is RM0.44 based on 9x FY12/11
Kurnia Asia
in exposure to non-motor and profitable EPS.
comprehensive motor policies as well as
Market Perform
reduction in third-party motor policies
exposure.
RM0.415
Short-term growth in earnings will be
hampered by higher Unearned Premium
Reserves and higher management ratio.
Also, the higher effective tax rate of 35%
due to the group’s corporate structure will
bring down earnings further.

3 MTHS
12 MTHS
Sector Average
2010 +11.3 9.1 n.m 1.2 3.4
2011 +9.8 8.3 n.m 1.1 4.2
2012 +22.2 6.8 n.m 1.2 4.9
31 December
2009(a) 2222.7 118.8 77.2 +68.0 5.4 n.m 1.3 2.0 0.5 +1.2
2010(f) 2460.8 110.6 71.9 (7.0) 5.8 n.m 1.1 2.0 0.5 (12.9)
2011(f) 2720.0 132.6 86.2 +19.9 4.9 n.m 0.9 2.0 0.5 (9.1)
2012(f) 2933.5 153.5 99.7 +15.8 4.2 2.9 2.2 2.0 0.5

30 June
2009(a)^ 1137.7 57.0 3.8 +>100 10.8 11.2 1.9 0.0 0.0 (19.4)
2010(f) 1097.7 56.7 3.8 (0.6) 10.9 6.9 1.8 0.0 0.0 (11.7)
2011(f) 1152.6 72.5 4.9 +27.8 8.5 5.9 1.5 1.0 2.3 (23.1)
2012(f) 1209.7 89.0 6.0 +22.8 6.9 5.0 1.2 1.2 2.9
^ FYE changed from June to Dec. Numbers are annualised

Insurance (Cont'd)
LPI Capital Even though other general insurers are Fair value is RM12.01 based on 15x FY12/
suffering from high claims ratio, its claims 11 EPS.
Market Perform ratio remained well contained given its
The anticipated change in tariff insurance
relatively higher exposure to the fire
market will benefit the motor segment
RM12.12 insurance business, which has low claims
(circa 25% of total portfolio) but may
ratio of 20.7%. This could be partly due to
potentially affect the fire portfolio (27%).
its ability to gain captive, high retention and
more profitable residential fire business from
Public Bank (sister company).
The stock does not only offer steady growth
on the back of healthy premium mix that
leads to a balanced expansion, but also
provides attractive dividend payout. Hence
despite being illiquid, the stock is attractive
for risk-adverse investors.
We remain cautious on its overseas Our fair value for the stock is RM2.98,
MNRB
expansion strategy given the volatile claims based on 0.7x FY03/10 NTA.
trend despite strong top line growth, which
Market Perform
may potentially hurt its bottom line.
RM2.72 Commencement of re-takaful business and

strong growth from Takaful Ikhlas will
diversify its earnings base and provide
growth.
Volatile claims ratio from its reinsurance
subsidiary causes earnings to swing
frequently thus causing doubts on dividend
payments.

3 MTHS
12 MTHS
31 December
2009(a) 738.3 126.1 90.9 +21.0 13.3 13.1 1.9 71.6 5.9 +4.9
2010(f) 894.7 154.5 69.6 (23.4) 17.4 11.1 1.8 68.7 5.7 +24.6
2011(f) 1070.7 177.8 80.1 +15.1 15.1 9.4 1.7 79.0 6.5 +63.7
2012(f) 1293.2 213.4 96.1 +20.0 12.6 7.6 1.6 94.8 7.8
31 March
2010(a) 1345.2 45.5 21.3 +72.9 12.7 n.m 0.6 0.0 0.0 (2.5)
2011(f) 1629.9 64.9 30.5 +42.7 8.9 n.m 0.6 10.0 3.7 +1.5
2012(f) 1864.4 41.6 19.5 (35.9) 13.9 n.m 0.6 10.0 3.7 (15.0)
2013(f) 2133.8 62.8 29.5 +51.0 9.2 n.m 0.6 10.0 3.7

Infrastructure Neutral
Sector Rating : We believe it would still take a while before the water sector restructuring could materialise,
as several uncertainties remain, which include: 1) pricing issue; and 2) ownership issue. On
the other hand, toll concessionaires will continue to offer defensive earnings quality and
decent dividend yield.
PLUS ST: Projecting FY12/10 traffic volume Indicative fair value is RM4.33, equivalent to
growth to slow down to 5%, from 7.1% PLUS’s DCF-derived NPV.
in FY12/09, on the back of: (1) The high
Outperform
base effect; and (2) Potentially higher
toll rates and petrol prices (which are
RM4.22
likely to have a negative impact on
PLUS’s traffic volume).
LT: Succeed in overseas expansion.
Puncak Niaga ST: 37% water tariff hike may not be FY12/10 earnings to decline on the back of
forth-coming. higher depreciation and amortisation expenses.
Market Perform LT: Restructuring of water/waste water Indicative fair value is RM3.01, at a 20%
sector that may result in the discount to its DCF-derived NPV of RM3.77/
RM2.88 Government buying out all water/waste share (based on WACC of 11.5%) to reflect
water concessionaires. Puncak’s high earnings and regulatory risks.

3 MTHS
12 MTHS
Sector Average
2010 +2.0 16.4 9.1 2.9 4.1
2011 +49.0 11.0 7.3 2.6 4.6
2012 +9.0 10.1 6.9 2.4 5.0
31 December
2009(a) 3179.0 1185.1 23.7 +9.8 17.8 11.2 3.5 16.5 3.9 +11.1
2010(f) 3346.4 1223.8 24.5 +3.3 17.2 11.2 3.4 18.0 4.3 +29.8
2011(f) 4332.9 1869.1 37.4 +52.7 11.3 8.4 3.0 20.0 4.7 +26.7
2012(f) 4465.5 1902.4 38.0 +1.8 11.1 8.3 2.7 22.0 5.2
31 December
2009(a) 1885.4 142.6 34.7 +>100 8.3 4.6 1.2 6.0 2.1 +3.2
2010(f) 2220.9 130.9 31.8 (8.2) 9.0 3.3 0.8 6.0 2.1 +16.1
2011(f) 2300.8 149.4 36.3 +14.1 7.9 3.2 0.8 6.0 2.1 (12.2)
2012(f) 2859.1 298.3 72.5 +99.7 4.0 2.7 0.8 6.0 2.1

Manufacturing Neutral
Sector Rating : The economy will likely slow down in 4QFY10 given the speed bumps from Europe and China,
and as the “V-shape” export recovery normalises. This would mean that the demand for the
country’s exports would eventually experience some slowdown in 4QFY10 after a strong pick-
up in the 1H.
Rubber Gloves
Adventa Short-term drivers include: a) resilient Future earnings growth hinges on successful
demand amidst the recovery in the global execution of capacity expansion plans.
Outperform economic situation as gloves have evolved Fair value of RM4.16/share is based on target
into a necessity and an essential medical FY11 PER of 11x.
RM2.40 product; and b) potential beneficiary from
the additional pick-up in demand from more
H1N1-type flu outbreaks in future.
Longer term, improvement in the capacity
utilisation rate of the Uruguay operations
(current utilisation is approximately 70%)
together with capacity expansion in Malaysia,
would help drive earnings.
Hartalega Short-term drivers include: a) resilient Continuous capacity expansion expected to

demand amidst the recovery in the global underpin Hartalega’s 3-year net profit CAGR
Outperform economic situation as gloves have evolved of 40.0%.
into a necessity and an essential medical Fair value of RM9.29/share is based on target
RM7.58 product; and b) potential beneficiary from FY11 PER of 13x.
Longer term, earnings growth would be
driven by continuous expansion in production
capacity whereby the company is embarking
on the construction of Plant 5. Apart from
that, the group also plans to replace ten old
lines in Plant 1 with six new high capacity
lines. In total, Plant 5 and the upgrade of
Plant 1 will raise total capacity to 10bn pieces
p.a., from 6.2bn pieces currently.
Kossan Short-term drivers include: a) resilient Healthy 3-year core net profit CAGR of 8.0%
demand amidst the recovery in the global mainly driven by capacity expansion in the
Outperform economic situation as gloves have evolved glove manufacturing business.
into a necessity and an essential medical Fair value of RM5.36/share after ascribing a
RM3.37 product; and b) potential beneficiary from target FY11 PER of 12x.
Longer-term earnings growth would be
driven by continuous expansion in production
capacity. In total, Kossan’s annual production
capacity would increase to 14.5bn pcs in
end-2010 and 15bn pcs by end-2011.
Top Glove Short-term drivers include: a) resilient Continuous capacity expansion expected to
demand amidst the current global economic underpin Top Glove’s 3-year net profit CAGR
Market Perform situation as gloves have evolved into a of 21.1%.
necessity and an essential medical product; Fair value of RM6.90/share is based on target
RM6.19 and b) potential beneficiary from the FY11 PER of 15x.
additional pick-up in demand from more
H1N1-type flu outbreaks in future.Longer
term, earnings growth would be driven by
continuous expansion in production capacity
at F21 by Jul’10 and additional eight new
lines at F18. This will increase Top Glove’s
annual production capacity to 35.3bn pcs by
end-FY10 from 33bn pcs currently.

3 MTHS
12 MTHS
Sector Average
2010 +23.8 11.8 7.4 2.8 3.5
2011 +20.0 9.9 6.0 2.3 4.1
2012 +10.8 8.9 5.1 1.9 4.5
31 October
2009(a) 282.9 31.9 22.0 +>100 10.9 8.5 1.9 9.3 3.9 (19.5)
2010(f) 406.3 39.7 27.4 +24.4 8.8 7.4 1.7 12.0 5.0 (21.3)
2011(f) 525.6 54.9 37.8 +38.1 6.3 5.8 1.4 14.7 6.1 +40.4
2012(f) 651.7 71.8 49.5 +30.8 4.9 4.6 1.16 17.3 7.2
31 March
2010(a) 571.9 143.1 59.1 +80.8 12.8 9.4 5.2 20.0 2.6 (7.4)
2011(f) 700.3 173.1 71.5 +21.0 10.6 7.6 3.7 24.0 3.2 (0.7)
2012(f) 897.4 202.5 83.6 +16.9 9.1 5.9 2.9 27.5 3.6 +53.1
2013(f) 1011.1 214.7 88.6 +6.0 8.6 5.1 2.3 30.5 4.0
31 December
2009(a) 837.0 119.8 37.5 +1.1 9.0 6.7 3.0 6.0 1.8 (14.0)
2010(f) 1035.9 118.8 37.2 (0.8) 9.1 6.1 2.3 5.3 1.6 (5.2)
2011(f) 1353.4 142.9 44.7 +20.3 7.5 4.9 1.8 6.3 1.9 +70.2
2012(f) 1485.1 150.9 47.2 +5.6 7.1 4.2 1.45 7.3 2.2
31 August
2009(a) 1529.1 169.1 28.7 +53.7 21.6 12.0 2.3 29.3 4.7 (5.5)
2010(f) 2062.3 241.5 40.9 +42.8 15.1 9.1 3.8 22.7 3.7 +2.0
2011(f) 2342.1 271.5 46.0 +12.4 13.5 7.7 3.1 25.3 4.1 +79.1
2012(f) 2648.1 299.9 50.8 +10.5 12.2 6.7 2.6 27.3 4.4

Note : Stock prices @ 28 October 2009

Manufacturing (Cont'd)
Other
manufacturers
Given that demand for stretch films that Our indicative fair value of RM0.80 is based on
BP Plastics
are supplied to overseas distributors for unchanged 8x FY12/11 EPS.
warehouse and logistics distribution
Outperform
centres are relatively inelastic, we believe
BPP is poised for resilient volumes going
RM0.58 forward.
VS Industry Given VS’s exposure to the consumer We expect FY07/10 core net profit to jump by
electrical and electronic sector, we believe 92.2% following a rebound in consumer
Outperform sales orders should improve on the back spending and demand for consumer electronics.
of the introduction of new products and Fair value is RM1.87/share after ascribing a
RM1.28 new customers. target FY11 PER of 7.5x.
Longer term, we believe Dyson’s shorter
timeframe to launch new products and
rising global market share in the vacuum
cleaner industry as well as demand from
recently secured customers should help
hold VS in good stead.
Wellcall In the short term, demand for industrial Decent 3-year net profit CAGR of 8.3% on the
hoses is expected to improve gradually back of higher capacity, new customers and
Underperform amidst the improving economic condition. taking market share from competitors.
Longer term, management remains Fair value of RM1.08/share is based on target
RM1.23 focused on leveraging on its extensive FY11 PER of 9x.
customer network, competitive products,
quality services and a wider range of
products to enhance its competitive edge.

3 MTHS
12 MTHS
31 December
2009(a) 175.2 15.6 8.7 +31.9 6.6 3.1 0.8 4.0 7.0 (5.7)
2010(f) 230.6 15.0 8.3 (4.0) 6.9 1.9 0.7 3.3 5.8 (9.4)
2011(f) 247.8 18.1 10.0 +20.3 5.7 1.1 0.7 4.0 7.0 +10.6
2012(f) 262.4 19.7 10.9 +9.0 5.3 0.6 0.6 4.4 7.6
31 July
2009(a) 724.8 11.8 6.6 (81.4) 19.3 4.7 0.8 1.7 1.4 +5.8
2010(f) 789.8 22.7 12.7 +92.2 10.1 4.0 0.8 5.0 3.9 +10.3
2011(f) 872.5 44.4 24.9 +95.5 5.1 2.9 0.7 10.7 8.3 +2.4
2012(f) 972.2 55.4 31.0 +24.6 4.1 2.1 0.6 12.7 9.9

30 September
2009(a) 79.0 13.3 10.3 (23.0) 11.9 6.6 2.0 14.7 11.9 (5.4)
2010(f) 96.9 14.6 11.1 +7.6 11.1 5.3 2.0 12.9 10.5 +1.7
2011(f) 114.8 15.5 12.0 +7.8 10.3 3.9 1.9 14.9 12.1 +8.5
2012(f) 132.9 18.3 14.1 +18.4 8.7 3.0 1.8 13.4 10.9
Note
Note :: Stock
Stockprices
prices@ @281 October 2009
Sept 2010

Media Overweight
Sector Rating : Following the strong start to the global economic recovery in 1HFY10, growth in 2H10 would
likely moderate, although we do not expect the global economy to fall into a double dip.
Nevertheless, adex growth should remain healthy, supported by sporting events like the
Commonwealth Games as well as the upcoming festivities. Meanwhile, newsprint prices have
reached US$700/tonne and we expect it to remain stable moving forward.
MCIL We see continued recovery in ad spending Earnings growth is expected to be driven by

in tandem with improving macroeconomic the Malaysian operations.
conditions and key sporting events taking
Fair value of RM1.21/share is based on
Outperform place this year. Lower newsprint cost and
target CY11 PER of 13x.
tight cost-control measures should help as
RM0.84 well.
Longer term, management plans to enlarge
the group’s footprint in Mainland China and
to expand into the digital/multimedia
business.
Media Prima We like Media Prima for its high leverage to We expect FY10 core EPS growth of 90.9%
ad spending as well as its fixed cost due to a combination of: 1) a recovery in
Outperform structure as this means that the bulk of the ad revenue for the TV division; 2) higher
stronger revenue would flow straight down contribution from NSTP due to strong
RM2.07 to bottomline. The take-over offer for NSTP earnings growth and a higher equity stake
has also been a success, in our view, and that Media Prima now has in NSTP; and 3)
would help the group plug earnings maiden contribution from the recent
leakages and give it control over NSTP’s outdoor acquisitions.
strong cash flow ahead. Fair value of RM2.57/share is based on
Other re-rating catalysts include adex target CY11 PER of 15x.
growth (especially the TV segment) turning
out stronger than expected, the realisation
of merger synergies and a potential re-
rating in valuations that the enlarged group
could command.
Star Star typically has the highest leverage to We expect a recovery in FY10 earnings (net
adex given that over 80% of its revenue profit +24.2% yoy) mainly stemming from
Outperform relates to ad revenue. While Star’s ad a recovery in ad revenue.
revenue growth in 2H10 could slow down
Fair value of RM4.20/share is based target
RM3.57 yoy, the company should benefit from
CY11 PER of 15x.
cheaper newsprint stock. Star’s circulation
figures have also been on the decline, and
in order to address this, Star has already
started a Sarawak Edition. Other longer-
term measures include widening its media
platform such as tapping the internet space
and introducing its new weekly Malay
newspaper.

3 MTHS
12 MTHS
Sector Average
2010 +35.4 13.1 6.6 2.1 6.0
2011 +11.4 11.7 5.8 1.9 6.3
2012 +9.5 10.7 5.1 1.8 6.5
31 March
2010(a) 1226.7 135.2 8.0 +80.1 10.4 5.7 1.6 5.5 6.5 (5.7)
2011(f) 1386.7 158.1 9.4 +16.9 8.9 4.3 1.5 6.0 7.2 +5.0
2012(f) 1417.3 152.4 9.0 (3.6) 9.2 4.1 1.4 6.0 7.2 (40.5)
2013(f) 1442.7 160.1 9.5 +5.1 8.8 3.5 1.3 6.3 7.5
Issued capital of 1,686.2m ordinary shares of HK0.10 each
31 December
2009(a) 744.0 73.8 6.9 (50.4) 30.0 22.5 3.5 7.5 3.6 (5.0)
2010(f) 1465.5 141.0 13.2 +90.9 15.7 8.0 3.0 10.0 4.8 (2.8)
2011(f) 1545.0 175.6 16.4 +24.5 12.6 6.9 2.6 11.3 5.4 +50.6
2012(f) 1607.3 210.5 19.7 +19.9 10.5 5.8 2.2 12.5 6.0
Average daily volume (000) : 999.9shares
31 December
2009(a) 973.9 144.7 19.6 (9.9) 18.2 9.9 2.2 23.0 6.4 +0.3
2010(f) 1025.9 179.8 24.3 +24.2 14.7 6.8 2.1 23.0 6.4 +8.2
2011(f) 1071.4 205.4 27.8 +14.2 12.8 5.9 2.0 23.0 6.4 +11.8
2012(f) 1108.8 213.5 28.9 +3.9 12.4 5.3 1.9 23.0 6.4

Motor Overweight
Sector Rating : We continue to favour the sector as it is currently into its second year of a new 3-year cycle
that started in 2009. Our 2010 earnings growth is expected to continue gaining traction on the
back of: 1) sustained industry TIV growth; 2) strengthening in RM against US$ and Yen that
would help to reduce costs of imported materials; and 3) positive consumer sentiment with
the greater stability of the economy. We reiterate our Overweight stance on the sector.
APM APM’s sales growth is expected to be Indicative fair value of RM5.53 is based on 11x
positive on its full year earnings, given the FY12/11 EPS. The autoparts manufacturers’
Outperform swift recovery of the auto sector since the growth is highly correlated to auto makers.
beginning of 2010.
RM4.39 Going into FY11, growth prospects will be
underpinned by: a) Tan Chong’s entry into
the small car segment and the Indochina
market; and b) consolidation of its Seri
Kembangan facilities to Port Klang that
would improve its operating efficiency.
MBM Prospects for 2H10 will still be favourable 1H10 results were above both our expectations
Resources albeit growing at a more moderate pace. and consensus achieving 67.2% and 68.8%
We expect sales growth to be in line with respectively this is mainly due to strong growth
Outperform the outlook the Malaysian Automotive in all models and the positive contribution from
Association (MAA) has for the whole new dealerships with Volkswagen, Mitsubishi and
RM3.17 industry. Hino.
The company’s plans to upgrade their Forward earnings should remain positive on the
existing network into 3S and expansion of back of: 1) sustained favourable exchange rates;
their distribution and dealership with 2) improved consumer sentiment and business
Volkswagon, Hino and Mitsubishi are conditions; and 3) strong contribution from the
progressing as scheduled and should cost new dealerships they have negotiated for.
them a total of RM100m capex in 2010-12. Fair value of RM5.30/share is based on 11x FY11
EPS. Reiterate Outperform
Proton With the news of Volkswagon tying up with 1QFY11 net profit of RM84.7m achieved 23% and
DRB-Hicom, it is unlikely that Proton will 27% of our and consensus full year estimates on
Outperform be able to secure external contract the back of stronger unit sales and better
manufacturing to optimise its plant product mix.
RM4.60 capacity utilisation. As such, the
Maintain our Outperform rating on the stock.
company’s next best option would be the
Fair value of RM5.50 is based on 1QFY11 assets
consolidation of its plants to Tanjung
position which is derived on the assumed
Malim. There is indeed a detailed study
stripped down book value.
being conducted at the moment, and the
exercise should be completed by early
FY11.
Besides this there are also plans to
restructure the company to four strategic
business units (SBUs) to make it easier for
the company to collaborate with partners.

3 MTHS
12 MTHS
Sector Average
2010 +58.9 10.3 6.6 1.2 2.6
2011 +10.2 9.3 6.2 1.1 2.7
2012 +17.2 8.0 4.2 1.0 2.9
31 December
2009(a) 918.5 72.7 36.0 +41.7 12.2 5.4 1.4 11.3 2.6 (6.6)
2010(f) 1077.1 94.7 47.0 +30.5 9.3 3.4 1.2 13.0 3.0 +4.8
2011(f) 1153.5 101.3 50.3 +7.0 8.7 2.6 1.1 13.0 3.0 +121.7
2012(f) 1316.8 115.3 57.2 +13.8 7.7 1.4 1.0 13.0 3.0

31 December
2009(a) 1187.2 68.3 28.2 (41.7) 11.2 29.6 0.9 9.0 2.8 +4.3
2010(f) 1404.9 110.9 45.8 +62.3 6.9 16.9 0.8 12.0 3.8 +12.4
2011(f) 1488.8 116.8 48.2 +5.3 6.6 14.3 0.7 12.0 3.8 +39.0
2012(f) 1618.7 122.7 50.7 +5.0 6.3 11.2 0.7 12.0 3.8
31 March
2010(a) 8232.9 248.1 45.2 +>100 10.2 n.m 0.5 0.0 0.0 (0.4)
2011(f) 8518.2 370.2 67.4 +49.2 6.8 7.4 0.5 0.0 0.0 (2.5)
2012(f) 8958.1 413.0 75.2 +11.6 6.1 7.0 0.4 0.0 0.0 +51.8
2013(f) 9329.5 441.3 80.3 +6.8 5.7 2.8 0.4 0.0 0.0

Motor (Cont'd)
Tan Chong TCM is expected to roll out a facelift 2QFY12/10 results met expectations and achieved
version of Nissan X-Trail and a CKD 49% and 50% of both our and consensus
Outperform version of the Teana in 3Q-4QFY10 estimates.
respectively to improve demand on
Re-rating catalysts are: 1) higher-than-expected
RM4.77 Nissan’s luxury model.
sales of its A and B segment cars; and 2) earlier-
There are also plans to launch more than-expected earnings contribution from its
cars in the under-represented regional expansion.
segments, i.e. segment A, B and D.
SOP-derived fair value is RM6.16 based on 14x
Ongoing launches to replace old
FY11 target motor division PER and surplus of
models are crucial to sustain and
Segambut land revaluation of RM400m.
create new demand.
UMW Automotive division: For the 6MFY10 net profit of RM344.6m achieved 55% of
division they plan to enhance our full year estimates and 63.5% of consensus
Outperform components localization to capture mainly due to the improved sales of the
greater cost efficiencies and raise automotive (+32.5%) and equipment (+29.9%)
RM6.75 overall capabilities of local vendors. divisions.
They are also looking to invest in
plants upgrade to increase assembly
quality, testing capabilities and
optimize future output capacity
O&G division: Despite Naga 2 being Our SOP-derived fair value of RM7.27 is based on
targeted for deployment in Sep and a target PERs on FY11 EPS of 14x for the motor
pick-up in output levels in several of its division, 10x for the oil and gas division, 8x for
Oil Country Tubular Goods (OCTG) the heavy division and 7x for the manufacturing
plants, the oil and gas division division.
continues to see weakness ahead as
antidumping and countervailing duties
imposed by the United States continue
to have an adverse effect on its
exports to North America.

3 MTHS
12 MTHS
31 December
2009(a) 2856.9 152.3 22.7 (24.9) 21.0 13.8 2.3 9.0 1.9 +0.4
2010(f) 3708.3 262.0 39.0 +72.0 12.2 9.0 2.0 11.4 2.4 +15.5
2011(f) 4114.7 304.5 45.3 +16.2 10.5 7.9 1.7 12.0 2.5 +140.9
2012(f) 5598.5 452.4 67.3 +48.6 7.1 5.5 1.4 13.0 2.7
31 December
2009(a) 10697.9 371.1 33.6 (35.8) 20.1 7.9 2.1 20.0 3.0 +7.5
2010(f) 10670.5 621.9 55.3 +64.4 12.2 5.6 1.9 23.5 3.5 +7.3
2011(f) 11062.4 672.1 59.2 +7.2 11.4 5.3 1.7 24.5 3.6 +9.2
2012(f) 11982.5 752.1 66.3 +11.9 10.2 4.6 1.5 25.5 3.8


Oil & Gas Neutral
Sector Rating : The impact of sluggish contract flows since FY09 was felt in the 2QFY10 results with three
of the companies under our coverage (Wah Seong, KNM and Petra Perdana) coming below
our expectations. We note that the Sabah Oil and Gas Terminal (SOGT) project was awarded
this month to Korean company Samsung Engineering and we expect the award of other
major contracts to gain momentum towards the end of FY10. While this bodes well for the
sector, we expect the new wins to impact companies’ earnings only in FY11. Thus, in the near
term, we maintain our view that the direction of crude oil prices remains unconvincing, while
trading sentiment may drive stocks. Our Neutral stance on the sector is maintained for now.
Our top pick is still Dialog (OP, FV = RM1.30).
Dialog Near-term news flow for the E&C division .

12MFY10 net earnings of RM116.1m came
may be driven by the potential tender for: within our and consensus full year FY10
Outperform 1) aluminium and urea plant in Kimanis; estimates largely due to the start-up of both
2) expansion of the Petronas’ Melaka Phase 1 and 2 of Langsat Terminal One (TLP1)
RM1.10 refinery; and 3) Petronas’ LNG in FY10.
regassification terminal in Melaka.
Stronger earnings growth in FY11-12 is
E&C division is driven by in-house expected due to the full year impact of Phase
contracts from the tank terminals division 1 and 2 of Langsat Terminal One (TL1). We also
including expansion of Tanjung Langsat understand the company has started off on
Port (TLP) facilities, as well as the new Phase 3 of the terminal.
Pengerang Deepwater Terminal, while the
Fair value of RM1.30 is based on SOP, and 15x
company’s wide service range (from
target PER on FY11 core operating earnings, at
upstream to downstream) will avail it to
a premium to the sector.
any oil and gas opportunities that might
arise.
Kencana
KM-1 is expected to commence operations 4QFY06/10 results could be better at RM41m,
Petroleum
in Sep, which will lift revenue by RM150m as management guides for a 15% yoy growth
p.a.. and net earnings by at least RM30m in net earnings for FY10. This would be in line
Market Perform p.a.. This is already factored into our with our RM131.4m FY10 forecasts.
forecasts.
RM1.53 While we remain wary on the slow pick-up in
In its bid to become a one-stop integrated offshore greenfield activity, we have turned
oil and gas support services company, positive on Kencana, on the back of; 1) the
Kencana is now focusing on their prospective earnings uplift from the start-up of
brownfield services (hook-up and KM-1; and 2) their focus in expanding its
commissioning (HUC) and offshore services range from the traditional fabrication
maintenance) and offshore support business.
vessels (OSV) chartering services.
Our fair value of RM1.56 is based on 13x FY11
PER, in line with the target for the sector.
KNM We expect a better 2HFY10 as contracts 2QFY12/10 results were weak and only
that were awarded in 2H09 move to the accounted for 32% and 31% of both our and
Underperform fabrication phase and garner better consensus full-year estimates respectively, as
margins. The company could also benefit operating conditions continued to be difficult
RM0.44 from its exposure to: 1) the downstream since late-FY09.
energy sector; and 2) investments in non-
Our FY10 core EPS forecast has factored in the
conventional oil sand projects in Canada
weaker-than-expected 1H earnings, but FY11-
which seem to be improving.
12 core EPS incorporates slight improvement in
Risks are the lack of visibility on the terms of capacity utilisation and EBIT margins.
capacity utilisation of the Malaysia plants,
Fair value of RM0.37 is based on target PER of
but to give the company the benefit of
10x on FY11 core EPS as we maintain our
doubt, we have assumed EBIT margin will
conservative stance on the company until we
continue to improve through 2HFY10.
see a sustained recovery in earnings.

3 MTHS
12 MTHS
Sector Average
2010 +10.6 16.1 8.2 3.2 5.5
2011 +15.9 13.9 7.0 3.0 5.8
2012 +9.6 12.7 6.3 2.7 6.0
30 June
2010(a) 1139.1 116.1 5.9 +10.8 18.8 15.8 4.4 3.2 2.9 +0.9
2011(f) 1373.1 174.4 8.8 +50.4 12.5 6.9 3.6 4.9 4.4 +6.8
2012(f) 1514.1 211.2 10.7 +21.1 10.3 4.7 3.0 5.9 5.3 +30.9
31 July
2009(a) 1140.8 118.2 7.2 +38.9 21.4 7.7 3.5 0.9 0.6 0.0
2010(f) 1188.8 131.4 8.0 +11.3 19.2 11.4 3.2 0.6 0.4 +13.3
2011(f) 1532.6 198.2 12.0 +50.9 12.7 7.1 2.6 0.8 0.6 +35.7
2012(f) 1700.0 226.9 13.8 +14.5 11.1 5.8 2.1 1.0 0.6
31 December
2009(a) 1821.7 150.8 3.8 (55.2) 11.7 11.0 9.0 2.0 4.5 (17.0)
2010(f) 1636.8 51.3 1.3 (66.0) 34.4 18.4 7.0 2.0 4.5 (10.2)
2011(f) 1883.6 149.5 3.7 +>100 11.8 9.0 4.6 2.0 4.5 (40.1)
2012(f) 2095.4 205.5 5.1 +37.4 8.6 7.0 3.0 2.0 4.5

Oil & Gas (Cont'd)
Petra Perdana The offshore support vessels (OSV) market 2QFY10 results were dismal and Petra
continues to be severely affected by the drop Perdana’s earnings turned to losses. In
Underperform in greenfield (i.e. exploration) activities, total, 10 out of 23 vessels in the fleet were
although this has been partly offset by not working, including six old and four new
RM1.20 sustained brownfield (i.e. production) jobs. vessels.
The weakness is expected to last throughout
We incorporate significant earnings
the rest of 2010.
recovery only in FY11, on the assumption
In the longer term, E&P activity is expected that market conditions for offshore support
to recover in line with global economic vessels will improve next year.
growth and the move to deep water projects,
Fair value of RM0.50 is based on target PER
this will replenish the contract flows going
of 10x on FY11 EPS.
forward.
Petronas Gas The 4th term GPTA came into effect in April, 1QFY3/11 net profit of RM382.8m was
and added a Capacity Reservation Charge above expectations on the back of 1) higher
Outperform (CRC) to Petronas Gas’s revenue formula transportation fees (Capacity Reservation
structure. It also prepares the company for Charge) ;and 2) lower operating costs (as
RM10.80 the additional business of providing gas internal gas consumption is now provided
transportation services to industrial by Petronas).
customers who are able to secure gas from
Given the new terms set a new base to
sources other than Petronas. However, the
Petronas Gas’s earnings capacity, we
infrastructure will not be ready until 2014 at
forecast better FY11-13 EPS based on
the earliest (i.e. after this agreement has
weighted average CRC assumption of
expired).
RM1.30.
Thus, longer-term outlook for Petronas Gas
Fair value of RM11.63 is based on DCF
is positive, in relation of its Peninsular Gas
(WACC of 9%).
(PGU) Utilisation pipeline, while the new
power business (currently with just the
300MW Kimanis IPP) will provide a new
source of earnings.
SapuraCrest Installation work for new deepwater fields SapuraCrest’s strong position with regards
offshore Sabah/Sarawak, including Malikai, to deepwater installation work, given its
Market Perform Kebabangan and Jangas, is likely to increase access to high- and mid-end pipelay
demand for the company’s vessels, thus barges, will buoy its earnings going forth.
RM2.34 supporting charter rates going forward.
Fair value of RM2.41 is based on 13x FY1/
Moreover, with the significant order book of
12 PER, in line with the target PER for the
around RM9bn earnings are secured for at
sector.
least the next 2 years.
Seadrill’s stance to maintain its 23.6% stake
in the company is also favourable, as it
suggests that the longer-term outlook for
drilling activity in Malaysia remains good.
Wah Seong Operations are expected to remain weak for 6M10 net profit of RM18.7m was way below
the rest of FY10, as order flows for the both our and consensus full-year estimates at
Underperform the engineering and pipe-coating divisions 15.4% and 14.2% respectively on the back
continue to be subdued. of sluggish oil and gas contract awards seen
RM2.04 since late FY09 that led to a dearth of
Going into FY11-13, we expect pipe-coating
services to pick up as several larger awards contracts for 1H10.
(eg. Queensland Santos Gladstone LNG, FY10-12 EPS assumptions impute a sluggish
Curtis LNG and Surat Gladstone LNG) are FY10 and improvement only in FY11-12 as
likely to emerge. LNG pipe-coating contracts return.
Fair value of RM1.89/share is based 13x
FY1/12 PER, in line with the target PER for
the sector.

3 MTHS
12 MTHS
31 December
2009(a) 605.7 30.1 10.1 (53.7) 11.8 4.8 0.6 2.0 1.7 (13.0)
2010(f) 222.2 (37.6) (11.5) (>100) n.m. 23.6 0.8 2.0 1.7 +6.2
2011(f) 286.6 17.2 5.3 +>100 22.8 8.5 0.8 2.0 1.7 (52.9)
2012(f) 321.1 37.1 11.3 +>100 10.6 6.8 0.7 2.0 1.7
31 March
2010(a) 3221.8 940.7 47.5 +1.4 22.7 10.9 3.3 50.7 4.7 +4.9
2011(f) 3525.0 1405.4 71.0 +49.4 15.2 8.1 3.4 75.8 7.0 +9.3
2012(f) 3568.6 1443.0 72.9 +2.7 14.8 7.8 3.4 77.8 7.2 +11.3
2013(f) 3635.4 1496.9 75.6 +3.7 14.3 7.4 3.5 80.7 7.5
31 January
2010(a) 3257.3 170.2 13.3 +37.5 17.5 6.2 2.8 6.0 2.6 +2.2
2011(f) 3824.8 215.3 16.9 +26.5 13.9 4.5 2.3 7.0 3.0 +20.0
2012(f) 4373.1 236.7 18.5 +10.0 12.6 3.6 2.0 7.0 3.0 +41.8
2013(f) 4653.1 249.1 19.5 +5.2 12.0 2.8 1.8 7.0 3.0
31 December
2009(a) 1950.3 121.3 14.2 +40.7 14.4 5.9 1.8 7.6 3.7 (17.1)
2010(f) 1795.6 90.7 10.3 (27.2) 19.8 7.5 1.7 3.8 1.9 (1.4)
2011(f) 2198.7 127.8 14.5 +40.6 14.0 5.7 1.6 5.4 2.6 (2.0)
2012(f) 2290.9 145.4 16.5 +13.7 12.4 5.5 1.4 6.1 3.0

Plantations Neutral
Sector Rating : A slew of external factors have been affecting prices of CPO in the last month, resulting in
CPO prices rising to as high of RM2,800/tonne in early-August, up 13% from July’s average
of RM2,480/tonne, before falling back to current levels. These factors include: (1)
skyrocketing wheat prices caused by the drought in Russia, which have resulted in speculative
buying for corn, soybean and other grain and oilseed products; (2) continued weakening of
the US$; (3) volatile crude oil prices; and (4) weather concerns, particularly the impact of
an impending La Niña. Based on our analysis, it would seem that the spike in CPO and other
vegetable oil prices was mainly due to external non-fundamental factors, and is likely to be
temporary in nature. While we remain cautious on the short-term outlook for CPO prices, we
maintain our CPO price forecasts at RM2,500/tonne for CY2010 and RM2,700/tonne for
CY2011, as we believe the medium- to long-term prospects for CPO remain relatively stable,
given the still positive stock/usage ratio trends for the global 17 vegetable oils and fats and
the still positive news flow which would support prices at above RM2,000/tonne for the long
term.
CBIP We believe CBIP has a large captive market in Our sum-of-parts (SOP) based target price
the domestic palm oil mill industry in Malaysia of RM4.05/share attributes a target PER of
Outperform and a growing international customer base for 6x CY11 for its oil mill manufacturing and
its repair and maintenance services and spare servicing division and a target PER of 12x
RM3.39 part products as well as for its mill building CY11 earnings for its plantation division,
capabilities. Higher CPO prices would also add given its small-cap status and landbank size.
to earnings, as earnings contribution from the
plantation division is expected to rise to close
to 35% of earnings in FY10 (from about 25%
in FY08).
First First Resources, being mainly a pure upstream We project FR to post a core net CAGR of
cost-efficient plantations player, will benefit 55.5% over the next three years to FY12.
Resources
from an upward trend in CPO prices, We estimate every 10% change in CPO
especially given its mostly spot CPO sales price would change FR’s earnings by about
Outperform
policy. In addition, it will benefit from its 15%, while every 5% depreciation in the
young plantation age profile, aggressive US$ vs. Rp will reduce FR’s earnings by
S$1.11
planting targets, below average cost of about 5-6% p.a..
production and downstream expansion. Our fair value of S$1.30/share is based on
Our CPO price assumptions are US$730/tonne FY11 PER of 10.5x, which is a 30% discount
for FY10, US$800/tonne for FY11 and US$750/ to our Malaysian target PER for the mid-cap
tonne for FY12. plantation stocks, given that traditionally,
the Singaporean and Indonesian-listed
plantation stocks trade at a 20-30% discount
to its Malaysian-listed peers.
Genting Genting Plantations, being mainly a pure We estimate every RM100/tonne change in
upstream cost-efficient plantations player, is CPO price would change Genting Plantations’
Plantations
very sensitive to a change in CPO price trend, earnings by 5-7% p.a.. Our fair value of
especially given its mostly spot CPO sales RM6.70/share is based on CY11 target PER
Underperform
policy. of 14.5x, which is at a 1.5x discount to
benchmark sector PER, given its mid-cap
RM7.29 Our CPO price assumptions are RM2,500/
status and landbank size. Valuations appear
tonne for FY12/10, RM2,700 for FY12/11 and
stretched at current levels.
RM2,500 for FY12/12.

3 MTHS
12 MTHS
Sector Average
2010 +5.4 19.2 11.8 2.7 2.1
2011 +17.9 16.1 10.3 2.6 3.5
2012 +4.7 15.3 9.8 2.4 3.8
31 December
2009(a) 331.5 40.4 29.4 (33.5) 11.5 8.8 1.9 10.0 2.9 +6.9
2010(f) 584.4 59.7 43.4 +47.8 7.8 7.2 1.6 14.0 4.1 +37.2
2011(f) 675.5 72.6 52.7 +21.6 6.4 6.4 1.3 17.0 5.0 +12.3
2012(f) 698.0 75.8 55.1 +4.4 6.2 5.8 1.1 18.0 5.3
31 December (US$m)
2009(a) 218.9 39.7 2.7 (61.5) 30.3 8.3 2.2 1.5 1.8 (2.6)
2010(f) 311.8 99.6 6.8 +>100 12.2 8.0 1.9 1.8 2.2 +12.7
2011(f) 392.4 129.6 8.8 +30.1 9.4 6.6 1.7 2.2 2.7 +26.1
2012(f) 438.5 149.2 10.2 +15.1 8.2 6.2 1.4 2.7 3.3
Issued capital of 1468.5m ordinary shares of USD0.20 each
Market capitalisation (S$) : 1,630
31 December
2009(a) 755.6 235.7 31.1 (37.0) 23.4 17.1 2.2 9.0 1.2 +4.1
2010(f) 873.4 298.5 39.4 +26.7 18.5 12.9 2.0 11.0 1.5 +13.9
2011(f) 976.0 350.9 46.3 +17.5 15.7 10.9 1.8 13.0 1.8 +24.6
2012(f) 1015.9 337.0 44.5 (4.0) 16.4 10.8 1.7 11.0 1.5

Plantations (Cont'd)
IJM Plantations IJMP, being a pure upstream cost- We estimate every RM100/tonne change in
efficient plantations player, is very CPO price would change IJMP’s earnings
Underperform sensitive to a change in CPO price by 5-7% p.a..Our fair value of RM2.30/
trend. share is based on CY11 target PER of
RM2.59 Our CPO price assumptions are 14.5x, which is at a 1.5x discount to
RM2,550/tonne for FY03/11, RM2,600 benchmark sector PER, given its mid-cap
for FY03/11 and RM2,500 for FY03/12. status and landbank size. Valuations
appear stretched at current levels.
However, earnings dilution of an
estimated 30-35% as a result of the 2-
for-8 rights issue with free warrants
would be a dampener for the medium
term, given that returns from the
utilisation of the rights proceeds (for
planting up of its Indonesian plantation
land) would only kick in from FY03/13-
14 onwards.
IOIC, being one of the most efficient We estimate every RM100/tonne change in
IOI Corporation
plantation players in Malaysia, will CPO price would change IOIC’s earnings
Outperform benefit from its efficient cost structure by 3-5% p.a..
in a flat CPO price environment, while We use SOP to arrive at our RM6.40 fair
the manufacturing and property value for IOIC. This is based on a target
RM5.30
divisions which contribute about 40% to PE of 16x CY11 earnings for the plantation
group earnings, will provide a good division (in line with benchmark sector
buffer for the company. PER), 12.0x CY11 for the property
Our CPO price assumptions are development and investment property
RM2,600 for FY06/11, RM2,500 for divisions and 10.5x CY11 for the
FY06/12 and RM2.500 for FY06/13. manufacturing division.
KL Kepong Although KLK’s plantations division still We estimate every RM100/tonne change in
contributes the majority (90-95%) of CPO price would change KLK’s earnings by
Outperform group earnings, this is expected to be 4-6% p.a..
on a reducing trend, coming from Our SOP-based fair value is RM20.70. This
RM16.98 expansions in its manufacturing is based on target PERs of 16x CY11
division, which will provide it with a earnings for the plantation division (in line
greater buffer in a flat CPO price with benchmark sector PER), 10.5x CY11
environment. for the manufacturing division, 12.0x CY11
Our CPO price assumptions are for the property division and a negative
RM2,500 for FY09/10, RM2,650 for asset value for the retail division (zero
FY09/11 and RM2,500 for FY09/12. asset value less potential asset write-down
value).
Sime Darby Although the plantations division still We estimate every RM100/tonne change in
contributes the majority (60-65%) of CPO price would change SD’s earnings by
Market Perform Sime Darby’s earnings, earnings are 4-6% p.a..
relatively diversified, which will provide
Our SOP-based RM8.90 fair value for Sime
a good buffer for the company in a flat
RM8.40 Darby is obtained after attributing an 16x
CPO price environment. While we
average CY11 PER for the plantation
believe prospects at the company have
earnings (in line with benchmark sector
changed for the better with the arrival
PER); 12x CY11 PER for the heavy
of the new CEO, we believe Sime would
equipment, motor, property, energy &
still need some time to regain investors
utilities and other small divisions; and
and stakeholders’ confidence before
after applying a 15% holding company
returning to its previous heavily-
and weak corporate governance discount
weighted status.
to its SOP.
Our CPO price assumptions are
RM2,600 for FY06/11, RM2,500 for
FY06/12 and RM2,500/tonne for FY06/
12.
3 MTHS
12 MTHS
31 March
2010(a) 406.7 90.0 11.2 (41.6) 23.1 11.1 1.9 5.0 1.9 +6.1
2011(f) 506.3 119.2 13.5 +20.5 19.1 11.2 1.8 5.5 2.1 +5.7
2012(f) 557.7 128.9 14.6 +8.2 17.7 10.7 1.7 6.0 2.3 (3.2)
2013(f) 533.3 118.3 13.4 (8.2) 19.3 11.4 1.6 5.5 2.1
Issued capital of 881.3m ordinary shares of RM0.50 each (fd for warrants conversion)
30 June
2010(a) 12543.0 1627.5 25.5 (20.4) 20.8 12.9 3.1 17.0 3.2 +3.5
2011(f) 16720.8 2108.8 33.0 +29.5 16.0 11.7 3.4 17.0 3.2 +7.9
2012(f) 18772.9 2223.5 34.8 +5.4 15.2 11.2 3.1 18.0 3.4 +8.1
2013(f) 18765.0 2259.5 35.4 +1.6 15.0 11.1 2.8 18.0 3.4
30 September
2009(a) 6658.3 753.8 70.8 (33.3) 24.0 15.3 3.2 40.0 2.4 +0.6
2010(f) 7646.7 934.7 87.6 +23.7 19.4 12.0 3.1 45.0 2.7 +6.9
2011(f) 9016.7 1328.3 124.4 +42.1 13.6 8.8 2.8 65.0 3.8 +29.4
2012(f) 9285.8 1402.2 131.4 +5.6 12.9 8.3 2.8 70.0 4.1
30 June
2010(a) 32951.6 2676.9 44.5 +18.7 18.9 11.2 2.5 10.0 1.2 +8.7
2011(f) 36282.9 2839.7 47.3 +6.1 17.8 10.1 2.3 31.0 3.7 +8.7
2012(f) 39991.8 2992.3 49.8 +5.4 16.9 9.5 2.2 36.0 4.3 +2.4
2013(f) 44616.1 3233.8 53.8 +8.1 15.6 8.9 2.0 37.0 4.4

Power Overweight
Sector Rating : With plans to import electricity from Sarawak (e.g. Bakun) unlikely to materialise given that
the state needs power to develop SCORE, alternative plans would now need to be
considered. TNB estimates around 2,000MW in additional capacity would be required by
2015-16, split into two 1,000MW blocks. Already, the first 1,000MW block has been awarded
to TNB while potential parties reportedly interested in the second block include Jimah and
Malakoff. In total, 6,000MW would be required by 2020. Apart from that, the Government
is currently initiating discussions with the 1st generation IPPs on the possible extension of
their services, subject to supply of natural gas from Petronas and pricing for the IPPs’
electricity.
Tanjong Near-term focus, we think, would be on Fair value of RM21.80/share is based on

Tanjong Capital’s offer to privatise Tanjong at Tanjong Capital’s privatisation offer price.
Market Perform RM21.80/share. In our view, the privatisation
is likely to go through, but not without some
RM21.32 resistance from investors who may want to
ride on Tanjong’s long-term prospects in
regional power projects.
Tenaga Nasional TNB recently received the nod from the We project TNB to post 3-year core net
Government to develop a 1,000MW coal-fired profit CAGR of 22%, driven by a recovery
Outperform power plant block at Manjung, Perak. We are in economic conditions.
positive on this as this would help keep future We estimate a fair value of RM10.20/share
RM9.00 capacity payments “in-house”. In addition, based on target FY11 PER of 13x.
funding the estimated cost of RM3.5-4bn
should not be a problem for TNB given that
the bulk of the cost would be financed via
project financing as well as TNB’s healthy
balance sheet.
The Government also has plans to reduce gas
subsidies, which could see gas price reach
parity with market price by 2015. TNB,
however, would be allowed to raise tariffs to
compensate for the higher gas cost.
Notwithstanding this mechanism, longer term,
TNB would still need a fuel cost pass-through
formula to help address the issue of
fluctuating fuel prices, in our view. While
positive, if approved, we highlight that it is not
likely to be viewed as an earnings catalyst as
an informal fuel cost pass-through mechanism
already appears to be in place.
YTL Power We think the market would be watching YTLP’s PowerSeraya and Wessex Water will
WiMAX rollout (expected 2H2010) and strategy continue to be the two largest contributors
Market Perform closely. A potential concern here is that YTLP to group earnings but earnings growth for
could decide to start a price war in order to Wessex could be tempered by the
RM2.29 win subscribers, especially given that it would depreciation of GBP vs. RM.
be coming into the market with a largely
Fair value of RM2.20/share based on SOP
unutilised network. For now, management’s
(EV/RCV of 1.1x for Wessex Water, WACC
reassurance regarding dividends means that a
of 6% for power and investment cost for
key investment thesis for the stock remains
PowerSeraya) further supported by gross
intact, i.e. attractive dividend yields.
dividend yields of around 7.6% p.a..
Longer-term growth will be dependent on the
company’s bids for overseas power and/or
water distribution projects.

3 MTHS
12 MTHS
Sector Average
2010 +14.6 13.3 8.2 1.5 4.4
2011 +11.0 11.9 7.7 1.5 4.7
2012 +10.7 10.8 7.1 1.3 5.1
31 January
2010(a) 5219.9 676.8 165.1 +26.4 12.9 8.1 2.3 100.0 4.7 +0.9
2011(f) 5325.4 649.9 161.2 (2.4) 13.2 8.2 2.1 102.0 4.8 +24.0
2012(f) 5403.7 674.3 167.2 +3.7 12.8 7.9 1.9 104.0 4.9 +35.8
2013(f) 5474.0 678.3 168.2 +0.6 12.7 7.6 1.8 106.0 5.0
Issued capital of 403.3m ordinary shares of 7.5 pence each
31 August
2009(a) 28785.6 2157.1 49.8 (7.4) 18.1 8.4 1.5 17.8 2.0 +4.8
2010(f) 30615.0 2947.0 68.0 +36.6 13.2 7.6 1.4 27.2 3.0 +8.6
2011(f) 31921.2 3412.1 78.7 +15.8 11.4 6.9 1.3 31.5 3.5 +12.1
2012(f) 33286.2 3936.3 90.8 +15.4 9.9 6.2 1.2 36.3 4.0
30 June (Fully Diluted)

2010(a) 13442.9 1212.1 17.2 +11.0 13.3 9.6 1.8 17.5 7.6 +0.9
2011(f) 14520.9 1251.8 17.8 +3.3 12.9 9.6 1.8 17.5 7.6 +4.1
2012(f) 14925.6 1293.3 18.3 +3.3 12.5 9.3 1.7 17.5 7.6 +4.6
2013(f) 15288.2 1339.0 19.0 +3.5 12.1 4.2 1.6 17.5 7.6

Property Overwieight
Sector Rating : We remain optimistic on the property sector. Our positive stance is underpinned by five key
reasons: (i) The sector could potentially be an asset reflation play. According to Bank Negara
Malaysia’s sensitivity study, the gradual removal of subsidies would push inflation to 4% in
2011-12, before easing to 3% in 2013. Therefore, we believe the cost-push factors would
make real estate a preferred inflationary hedge to preserve values, given limited alternative
choices; (ii) Interest rate is still low despite three rounds of 25bps OPR hikes. Commercial
banks continued to set home mortgage rate at a discount to BLR, in contrast to a premium
above BLR in 2000 – 2004. Intense competition among banks has also increased the discount
to BLR, supporting high affordability of potential home buyers; (iii) Higher demand from the
increasing affluent middle aged population group (baby boom born in 1970’s - 1980’s); (iv)
Developers continue with their attractive home ownership campaigns; and (v) Gradual
appreciation in MYR has started to spur some foreigners’ interest to participate in the
Malaysian property market, judging from the recent acquisitions of AEON mall in Melaka and
One Mont’ Kiara by Hong Kong based Asia Dragon Fund (ADF). However, we caution that, the
key risk for the sector is BNM’s imposition of a cap on loan-to-value ratios for home
mortgage. Pending further details and confirmation, we maintain our Overweight rating on the
sector.
Axis REIT Acquisition of new assets, to be funded with Fair value is RM2.67 based on our 1-year
equity from the placement of new units, the forward target yield of 7% for M-REITs.
Outperform latest being the acquisition of Axis PDI Centre
and Axis Technology Centre in Selangor for
RM2.12 RM134m, to be funded with the placement of
68.8m new units. Recently, Axis REIT has also
proposed an acquisition of Tesco in Taman Bukit
Indah JB for RM76m, to be funded by
borrowings.
Glomac Earnings growth will be underpinned by RM588m Fair value is RM1.56, at a 30% discount
unbilled sales as at 30 Apr 2010, as well as to estimated RNAV/share of RM2.23.
Outperform RM621m new launches in FY04/11 from four key
projects, i.e. Glomac Damansara (RM385m),
RM1.37 Glomac Cyberjaya (RM100m), Bandar Saujana
Utama (RM82m) and Saujana Rawang (RM54m).
Hunza Over the next 2-3 years, earnings growth will Fair value is RM1.58, at a 50% discount
Properties come from the Gurney Paragon as well as the to estimated RNAV/share of RM3.16.
earlier-than-expected launch of Alila II in
Trading Buy Penang. Over the longer term, a new project on
a 42-acre land in Bayan Baru will underpin
RM1.38 earnings.

3 MTHS
12 MTHS
Sector Average
2010 +10.4 13.6 9.0 1.0 3.6
2011 +14.7 11.7 8.1 0.1 3.2
2012 +8.8 10.8 7.5 0.1 3.5
31 December
2009(a) 71.9 42.9 15.8 +3.7 13.4 14.4 1.2 15.8 7.5 +1.4
2010(f) 87.4 51.2 16.7 +5.5 12.7 19.1 1.1 16.7 7.9 +5.0
2011(f) 111.8 70.4 18.7 +12.3 11.3 16.4 1.2 18.7 8.8 +19.1
2012(f) 112.5 70.9 18.9 +0.8 11.2 16.3 1.2 18.9 8.9
30 April
2010(a) 317.8 40.7 13.9 +11.2 9.9 6.6 0.7 9.0 6.6 (6.8)
2011(f) 441.8 45.7 15.4 +10.5 8.9 5.4 0.7 9.0 6.6 +8.7
2012(f) 487.2 57.7 19.4 +26.5 7.1 4.9 0.7 9.0 6.6 +37.8
2013(f) 462.4 66.2 22.3 +14.7 6.1 5.2 0.6 9.0 6.6
30 June
2010(a) 248.7 50.9 26.7 +40.3 5.2 4.3 0.6 8.1 5.9 +9.1
2011(f) 247.1 52.6 27.6 +3.4 5.0 4.7 0.6 5.6 4.1 +12.7
2012(f) 195.9 39.9 20.9 (24.2) 6.6 6.3 0.5 5.6 4.1
2013(f) 195.9 34.1 17.9 (14.4) 7.7 0.6 0.5 5.6 4.1
Note
Note :: Stock
Stockprices
prices@@28
1 August 2009
Sept 2010

Property (Cont'd)
IJM Land Earnings growth will be driven predominantly Fair value is RM3.00 that is in line with
by the RM5.5bn The Light Waterfront project in estimated RNAV/share.
Outperform Penang, as well as various smaller projects all
over Malaysia. The recently launched third
RM2.23 offering from The Light Waterfront, i.e. The
Light Collection 1 comprising 152 condominium
units and 24 water villas with a total GDV of
RM203m, is expected to be well received,
following the great success of the first two
offerings, i.e. Light Linear and Light Point.
FY03/11-12 earnings growth will be Fair value is RM3.80, at a 15% discount to

KLCCP
underpinned by: (1) the first full-year impact estimated RNAV/share of RM4.47.
Market Perform from the rental revision of Petronas Twin
Tower in end 09, from RM8.70 psf to RM9.10
psf; (2) Maiden contribution from Lot C’s retail
RM3.39
portion from January 2011; and (2) Better
occupancy rate for Mandarin Oriental on
improving economic outlook.
Long-term prospects will be supported by its
new projects at Lot C (retail cum office
building) and Lot D (service apartment and
office buildings), as well as higher rental rates
for existing properties.
Mah Sing Earnings growth will be driven by existing Fair value is RM2.06 that is in line with
projects, and over the medium to long term, estimated RNAV/share.
Outperform the new acquisitions, particularly, the recently
announced three land parcels in the Klang
RM1.84 Valley, i.e. residential in Kinrara, commercial in
Sungai Buloh and Industrial in Bukit Jelutong,
with a total area of 155 acres and GDV of
RM1.1bn.
Short-term earnings growth will mainly be Initiate coverage with a fair value of
Paramount underpinned by: (i) RM1.9bn GDV worth of RM5.80, based on 35% discount to RNAV/
new launches for this and next year; and (ii) share of RM8.93.
Outperform steady growth in its education division. The
key catalyst for the stock is the potential
RM4.38 liquidation of its 20% stake in Jerneh
Insurance Bhd.
Over the longer term, growth prospect will
come from landbank acquisitions, as well as
the relocation of campus for its KDU College,
with three times larger than its student
capacity in the PJ campus
Quill Capita Organic growth via higher rentals and Fair value is RM1.23 based on our 1-year
acquisitions of new assets, the latest target forward target yield of 7% for M-REITs.
Outperform being the HSBC HQ.
RM1.00

3 MTHS
12 MTHS
31 March
2010(a) 1101.1 108.7 9.1 +54.4 24.4 14.8 1.9 2.0 0.9 (7.1)
2011(f) 1256.8 133.9 12.1 +32.1 18.5 12.4 1.7 2.2 1.0 +1.4
2012(f) 1423.4 191.8 17.3 +43.2 12.9 9.1 1.5 3.0 1.3 +14.4
2013(f) 1513.7 215.9 19.5 +12.6 11.4 8.2 1.4 5.0 2.2
31 March
2010(a) 881.3 235.2 25.2 +5.0 13.5 5.8 0.7 11.0 3.2 +6.3
2011(f) 978.8 245.8 26.3 +4.5 12.9 5.5 0.6 11.0 3.2 +17.7
2012(f) 1057.3 255.2 27.3 +3.8 12.4 5.1 0.6 11.0 3.2 +4.3
2013(f) 1099.5 263.2 28.2 +3.1 12.0 4.6 0.6 11.0 3.2
31 December
2009(a) 701.6 94.3 11.3 (8.5) 16.2 6.8 1.8 6.5 3.5 (1.1)
2010(f) 1049.1 116.6 14.0 +23.6 13.1 8.5 1.7 5.6 3.0 +11.5
2011(f) 1171.5 143.1 17.2 +22.8 10.7 7.1 1.5 6.9 3.7 +9.3
2012(f) 1389.8 176.3 21.2 +23.2 8.7 5.7 1.4 8.5 4.6
31 December
2009(a) 404.9 57.5 52.9 +37.2 8.3 4.6 0.9 28.0 6.4 +11.2
2010(f) 440.9 69.6 58.3 +10.3 7.5 3.8 1.0 29.2 6.7 +25.5
2011(f) 472.6 76.1 63.8 +9.4 6.9 3.2 0.9 31.9 7.3 +78.2
2012(f) 518.8 86.6 72.6 +13.8 6.0 2.8 0.8 36.3 8.3
31 December
2009(a) 67.4 32.4 8.3 +10.2 12.0 12.9 0.8 7.7 7.7 (2.9)
2010(f) 69.0 34.8 8.9 +7.3 11.2 13.0 0.7 8.2 8.2 (1.0)
2011(f) 72.0 36.4 9.3 +4.7 10.7 12.6 0.7 8.6 8.6 (1.0)
2012(f) 73.9 37.6 9.6 +3.4 10.4 12.4 0.7 8.9 8.9
Stockprices
Note : Stock prices@@28
1 August
Sept 2010
2009

Property (Cont'd)
SP Setia Growing demand for properties in Malaysia, Fair value is RM4.66 that is in line with
underpinned by favourable structural attributes estimated RNAV/share.
Market Perform such as a young population, rapid urbanisation
and the continued shift to nuclear families from
RM4.58 extended families in Malaysia. Over the longer
term, growth will also come from overseas
markets, particularly, Vietnam and China.
Suncity Short- to medium-term earnings will be Fair value is RM5.45, at a 15% discount to
underpinned by unbilled sales and RM1.76bn estimated RNAV/share of RM6.41.
Outperform worth of property products lined up for
launching over the near term including Sunway
RM3.92 SPK 3 Harmoni (3-storey townhouses) in
Sunway SPK Damansara, A’Marine
(condominiums) in Sunway South Quay,
Sunway Rymba Hills (Zero-lot bungalows) in
Sunway Damansara and Sunway Velocity
(integrated commercial development) in KL.
Over the long term, earnings driver will come
from new landbank to be acquired.
Short-term earnings driver will come from the Fair value is RM2.88, at a 30% discount to
Sunrise
acceleration in progress billings from MK11, estimated RNAV/ share of RM4.12.
Outperform Dutamas and MK28 condominium project in
Mont Kiara. Unbilled sales stood at RM861m.
Over the longer term, earnings growth will be
RM2.00
underpinned by aggressive launches of new
projects worth a GDV of RM6.6bn,
progressively from 2H10 to 2011.
Earnings growth will be driven by the RM650m Fair value is RM1.86, at a 40% discount to
YNH Prop
Fraser Residence, a mixed development project estimated RNAV/ share of RM3.11.
in KL comprising serviced residences, office
Market Perform
suites and a retail mall, and the Kiara 163
service apartment project in the Mont Kiara
RM1.70
area with a GDV of RM550-600m.

3 MTHS
12 MTHS
31 October
2009(a) 1408.4 163.2 16.0 (13.7) 28.7 25.8 2.3 14.0 3.1 +8.5
2010(f) 1407.7 188.9 18.6 +16.4 24.7 29.7 2.1 9.3 2.0 +17.1
2011(f) 1532.8 220.4 21.7 +16.7 21.1 23.0 2.0 10.8 2.4 +4.1
2012(f) 1616.1 230.9 22.7 +4.7 20.2 22.2 1.9 11.4 2.5
31 December
2009(a) 1070.3 148.8 31.7 +15.3 12.4 6.9 0.8 13.0 3.3 +4.3
2010(f) 902.7 163.5 34.8 +9.9 11.3 7.6 0.8 36.0 9.2 +3.2
2011(f) 998.8 181.7 38.7 +11.1 10.1 7.2 0.7 8.5 2.2 +17.4
2012(f) 1110.9 203.8 43.4 +12.2 9.0 6.6 0.7 10.0 2.6
30 June
2010(a) 803.9 134.0 27.0 (3.2) 7.4 7.2 0.9 5.0 2.5 (3.4)
2011(f) 590.7 148.1 29.9 +10.6 6.7 6.8 0.8 4.1 2.1 +7.0
2012(f) 754.0 164.5 33.2 +11.1 6.0 6.8 0.7 4.6 2.3 (2.9)
2013(f) 888.0 188.9 38.1 +14.9 5.2 6.0 0.6 5.3 2.6
31 December
2009(a) 246.6 51.9 12.9 (41.1) 13.2 10.6 1.0 3.0 1.8 +2.3
2010(f) 292.8 63.6 15.8 +22.6 10.8 8.3 0.9 3.9 2.3 +14.6
2011(f) 360.8 71.0 17.6 +11.6 9.7 8.1 0.9 4.4 2.6 (5.5)
2012(f) 408.8 81.8 20.3 +15.2 8.4 7.2 0.8 5.1 3.0
Note
Note :: Stock
Stockprices
prices@@28
1 August 2009
Sept 2010

Semiconductor & IT Neutral
Sector Rating : Chip sales are expected to slowdown in the second half of 2010. As the sequential growth
over the past five quarters has been robust, chip revenue growth has been outpacing IT
system revenue growth which suggests a potential realignment or “correction” of chip sales
in the coming quarters. Already, Gartner has revised downward PC sales forecasts for the
second half of 2010 on the back of uncertain economic outlook in the U.S. and Europe.
Nonetheless, despite the potential slowdown, we believe chip sales are likely to show
continuous growth ahead, albeit moderately, mainly driven by demand for mobile phones,
automotive chips and innovative devices.
JCY JCY’s earnings will be driven mainly by: 1) Fair value of RM1.32/share is based on
strong demand for the 2.5’’ HDD fuelled by unchanged 10x FY11 EPS.
Market Perform stronger-than-expected demand for mobile
PCs and consumer electronics; 2) resilient
RM0.90 demand for the 3.5’’ HDD stemming from
resilient demand for desktops and gaming
consoles; and 3) improving corporate IT
spending in the adoption of Windows 7.
MPI Near-term earnings outlook remains Fair value of RM6.35/share is based on

positive given still-resilient chips demand unchanged 11x CY11 EPS.
Market Perform from China as well as its move to roll out
the higher-margin X3-MLP (approximately
RM5.80 50% of current MLP footprint). Going
forward, management expects FY06/11
revenue to register strong growth driven
by: 1) stronger contribution for its X3-MLP
and MLP packages given more qualification
from its customers; 2) stronger sales for
high-density packages as customers
migrate away from low-density packages;
and 3) higher contribution for its test
capacity.
Notion Vtec Notion’s near-term earnings will be mainly Medium-term potential weakness in earnings
driven by: 1) higher volume for its lens and margin squeeze if it incurs additional
Underperfom mounting components; and 2) stronger costs and lower-than-expected utilisation
contribution from the automotive segment rates. Fair value of RM1.54 is based on
RM1.54 for the electronic braking system (EBS). unchanged 8x target FY11 FD EPS.
The 2.5’’ baseplate project will still depend
on resolving the quality issues within the
next three quarters.
Unisem Going forward, we expect Unisem’s Fair value of RM2.31/share is based on

earnings to be driven by: 1) stronger-than- unchanged 11x FD EPS.
Market Perform expected demand for automotive chips
from Batam; 2) higher contribution from its
RM1.94 wafer bumping business; and 3) higher
contribution from Chengdu and Ipoh for its
higher-margin QFN packages.

3 MTHS
12 MTHS
Sector Average
2010 +32.7 7.9 5.1 1.9 5.2
2011 +7.8 8.0 3.9 1.5 3.9
2012 +10.4 7.2 3.4 1.4 6.1
31 September
2009(a) 1758.0 207.3 10.1 +2.2 8.8 6.0 2.3 5.1 5.7 (28.4)
2010(f) 2021.7 245.0 12.0 +18.2 7.5 5.6 2.0 7.0 7.8 (41.9)
2011(f) 2262.8 269.2 13.2 +9.9 6.8 5.0 1.9 9.0 10.1 n.a
2012(f) 2489.1 289.7 14.2 +7.6 6.3 4.7 1.7 10.0 11.2
30 June
2010(a) 1386.2 105.1 50.2 +>100 11.6 4.1 1.2 20.0 3.4 (4.0)
2011(f) 1594.2 112.9 53.8 +7.2 10.8 2.7 1.1 20.0 3.4 (8.8)
2012(f) 1753.6 129.4 61.6 +14.6 9.4 2.0 1.1 20.0 3.4 (1.0)
30 September
2009(a) 172.7 36.0 25.6 +6.6 6.0 4.3 1.3 5.0 3.2 (34.5)
2010(f) 205.8 31.4 20.3 (20.6) 7.6 4.5 1.3 6.5 4.2 (43.2)
2011(f) 250.6 32.4 21.0 +3.1 7.3 3.5 1.1 6.5 4.2 (15.6)
2012(f) 311.5 34.8 22.5 +7.4 6.8 3.4 1.0 6.5 4.2

31 December
2009(a) 1036.3 61.9 8.9 (24.2) 21.9 5.6 1.1 2.5 1.3 (13.4)
2010(f) 1523.0 151.6 20.0 +>100 9.7 4.5 1.5 5.0 2.6 (10.6)
2011(f) 1599.2 160.0 21.0 +4.9 9.2 3.9 1.4 5.0 2.6 +51.9
2012(f) 1679.1 180.2 23.4 +11.4 8.3 3.5 1.2 5.0 2.6

Telecommunications Overweight
Sector Rating : Despite continued mobile subscriber growth (we project Malaysia’s mobile penetration rate to
reach 120% by end-2012 from 106% as at end-2009), voice minutes are increasingly
becoming commoditised and we expect tariffs would continue to be under pressure. With
slowing voice revenue growth, mobile operators are expected to shift focus towards the
provision of non-voice services to support further topline growth. Two key drivers of non-
voice revenue we see ahead are wireless broadband and revenue from data value-added
services. In addition, while competition within the mobile and broadband space is expected
to remain intense, we do not expect irrational pricing to set in. Similarly, for TM, we believe
data and broadband revenue growth, coupled with the recent launch of High Speed
Broadband Service, would remain strong to help mitigate the weaker voice revenue.
Axiata Having addressed gearing concerns with a rights FY09-12 core net profit CAGR of 20.4%
issue last year, we believe the group is now on expected, anchored by Celcom as well as
Outperform firmer ground to move to the next level. We a recovery in earnings of overseas
continue to see Celcom and XL drive the group’s cellcos.
RM4.55 earnings growth in the near term. However,
competition remains steep in India, Sri Lanka and Fair value of RM4.75 is based on SOP,
Bangladesh, which means near-term contribution which comprises: a) DCF for Celcom
from this region would be muted. (WACC=9.9%); b) 6x EV/EBITDA for XL;
c) 8x EV/EBITDA for Robi; d) consensus
Over the longer term, we believe Axiata’s
portfolio of assets will offer investors a unique median target price for Idea; and e)
blend of mobile assets operating in maturing/ market price for remaining regional
matured markets and thus, have strong cash flow cellcos.
generative abilities as well as assets that are
located in high-growth markets within the region.
Digi The ongoing expansion of 3G coverage should FY09-12 net profit CAGR of 8% due to a
help Digi better compete and tap into the data recovery in usage and rising non-voice
Outperform revenue market. Nevertheless, despite the revenue contribution.
additional capex for the rollout of 3G, we think
capital management would still be on the cards as Fair value of RM25.70 is based on DCF
RM24.66 (WACC=8.3%).
management remains committed to move
towards a more efficient balance sheet.
Longer-term benefits from 3G include new
revenue streams (e.g. wireless broadband) and
enhanced product offerings (e.g. mobile
broadband) as well as helping Digi address
spectrum constraint issues.
Maxis We believe Maxis is well poised to capture the We project FY09-12 net profit CAGR of
rising popularity of mobile broadband and strong 8%, led by stronger non-voice revenue
Outperform data revenue growth ahead due to its customer (both broadband and advanced data
base, which is the largest in the country, are of services).
RM5.38 the high-end type and appear to be early
adopters of technology. Fair value of RM5.75 is based on DCF
(WACC=8.4%).
Despite having projected Maxis to pay a total
DPS of 35 sen p.a. over the next three years, we
believe there could still be further upside to our
projected dividends, given its strong balance
sheet.
TM We believe TM’s near-term focus would be on Going forward, we expect earnings would
expanding the rollout of HSBB services in more be driven by the broadband and data
Market Perform areas. However, management guided that topline segments, partly offset by weaker voice
contribution from HSBB would not be immediate. revenue and absence of interest income
Apart from that, TM remains principally a
RM3.54 from Axiata. We have assumed that TM
dividend play given its dividend policy of paying
will continue to meet its dividend
out at least RM700m in dividends.
commitment of paying out at least
Over the longer term, our main concerns on TM RM700m or 90% of normalised PAT,
have not changed, i.e. declining voice revenues,
whichever is higher.
operational inefficiencies as well as the risks
involved in the rollout of HSBB. However, we Fair value of RM3.55/share assumes a
believe data and internet revenue growth will minimum required net yield of 5.5% for
remain strong to help mitigate the weaker voice TM’s minimum RM700m dividend.
revenue.

3 MTHS
12 MTHS
Sector Average
2010 +23.2 17.2 7.7 6.2 5.1
2011 +8.9 15.4 6.9 5.5 7.7
2012 +8.9 14.2 6.4 4.9 7.7
31 December
2009(a) 13105.1 1413.7 18.4 +27.8 24.7 8.7 4.0 0.0 0.0 +7.3
2010(f) 14698.1 2559.1 30.3 +64.3 15.0 6.8 3.2 0.0 0.0 +23.6
2011(f) 16094.4 2959.5 35.0 +15.6 13.0 6.0 2.7 14.0 3.1 +47.2
2012(f) 17208.8 3242.7 38.4 +9.6 11.8 5.3 2.3 25.3 5.6
31 December
2009(a) 4909.6 1000.5 128.7 (13.4) 19.2 9.3 33.6 137.3^ 5.6^ 0.0
2010(f) 5271.9 1080.7 139.0 +8.0 17.7 8.7 26.9 148.3 6.0 +8.1
2011(f) 5627.8 1185.2 152.4 +9.7 16.2 8.0 17.4 162.7 6.6 +17.7
2012(f) 5947.8 1250.9 160.9 +5.5 15.3 7.5 12.8 171.6 7.0
^Excludes special dividends
31 December
2009(a) 8611.0 2335.0 31.1 (2.7) 17.3 10.2 n.m 20.0 3.7 +1.5
2010(f) 9396.2 2348.4 31.3 +0.6 17.2 9.6 n.m 46.7 8.7 +3.5
2011(f) 10171.7 2549.2 34.0 +8.5 15.8 8.8 n.m 50.7 9.4 n.a
2012(f) 10788.3 2754.0 36.7 +8.0 14.7 8.3 n.m 54.7 10.2
31 December
2009(a) 8608.0 468.5 13.3 (41.8) 26.7 5.2 1.9 26.3 7.4 +4.7
2010(f) 8811.7 441.6 12.5 (6.1) 28.4 5.9 2.0 26.3 7.4 +6.6
2011(f) 9132.2 478.0 13.5 +8.2 26.2 5.4 2.0 26.3 7.4 +13.1
2012(f) 9402.7 561.0 15.8 +17.4 22.4 5.2 2.1 26.3 7.4

Timber Neutral
Sector Rating : Latest July 10 Japan housing starts saw a better-than-expected improvement (+4.3% yoy),
which brings it to two consecutive months of growth (Jun 10 +0.6% yoy) and signifies that
Japan’s housing recovery may start gaining pace soon. We also understand from Japan Lumber
reports and timber players that plywood prices have been increasing gradually on the back of
steady demand from Japan. We think that the gradual and consistent increase in plywood price
is relatively sustainable, and fundamentals for the industry are improving. In addition, the
Sarawak Forestry Department has been more committed in helping timber businesses in
Sarawak by extending the increase in log export quota to 50% (from 40%) for another year.
We prefer timber players with exposure to the plantations sector, as this would give them some
buffer from the more volatile timber market.

Evergreen Currently, Evergreen is running at a high capacity FY10-11 earnings are expected to jump
utilisation rate of above 80% from rising demand 4-55% yoy following strong yoy rebound
Outperform due to supply shortages as competitors continue in capacity utilisation and average selling
to cut back capacity / close plants, while other prices. Margins will also remain healthy
RM1.58 major MDF exporting countries remain due to improved operational efficiency
uncompetitive in the export market due to high and cost-savings initiatives. Our fair
cost of production. value of RM2.67 is based on 10x CY11
Long-term drivers for Evergreen include: 1) earnings. The 10x target PE is a 2
further gain of market share in the region; 2) multiple discount to the timber sector PE
lower cost of production; and 3) acquisition of for its smaller market capitalisation.
existing MDF plants both in Malaysia and
overseas.
Jaya Tiasa Short-term outlook remains favourable yoy as we We expect earnings to jump >100% in
believe that average selling prices for its plywood FY04/11 due to low base effect from
Outperform division have been gaining momentum. The FY10; and higher earnings contribution
recent one-year extension to 50% for the log from the plantations division, due to the
RM3.50 export quota would also bode well for Jaya Tiasa, increase in mature hectarage together
as India’s demand for logs is still very strong. with higher CPO prices. Our indicative
Mid to longer-term earnings growth would be fair value of RM4.90 is based on target
supported by increasing mature hectarage from PE of 12x CY11 earnings for the timber
its plantations division together with our rising division and 12x CY11 earnings for the
CPO assumptions of RM2,700 in CY11 and plantation division.
RM2,500 in CY12 (from RM2,500 in CY10).
Ta Ann Despite improving average selling prices, Ta Ann We expect losses in its plywood division
is still recording losses for its plywood division to drag FY10 earnings down by 13% yoy.
Market Perform due to a product mix shift to more eco-plywood Nevertheless, higher earnings
for its Tasmanian operation. Prices achieved for contribution from its log division and
RM5.51 its eco-plywood products are still below its cost of plantation division would help to cushion
production as raw materials from Tasmania are the losses from plywood division and also
more costly. boost FY11 earnings by 87%. Our
Losses from this operation could hamper Ta Ann indicative fair value of RM5.80 is based
earnings growth in the short term. on target PE of 12x CY11 earnings for
Mid to longer-term earnings growth would be the timber division and 12x CY11
supported by increasing mature hectarage from earnings for the plantation division.
its plantations division together with our rising
CPO assumptions of RM2,700 in CY11 and
RM2,500 in CY12 (from RM2,500 in CY10).
WTK Short-term outlook remains favourable yoy as We expect earnings to return to the black
average selling prices of plywood have recovered in FY10 and grow by 49% yoy in FY11
Outperform from YTD-low by 15%. Plywood prices have also due to higher earnings contribution from
been creeping up for the past few months, and we the gradual recovery in log and plywood
RM1.06 expect 2H10 results to be stronger. Log price is prices. Our indicative fair value of
also expected to recover further after 1Q10’s low RM1.60 is based on target PER of 12x
due to more favourable weather conditions. WTK CY11 earnings.
would only benefit from significant contributions
from its plantation division from FY12 onwards, as
planting activities have been slow over the last
few years.

3 MTHS
12 MTHS
Sector Average
2010 +75.4 11.3 7.8 1.0 1.8
2011 +41.8 8.0 5.7 0.9 3.1
2012 +11.6 7.1 5.0 0.8 4.2
31 December
2009(a) 771.5 85.0 16.6 +5.9 9.5 8.3 1.2 4.0 2.5 (1.3)
2010(f) 968.2 131.2 25.6 +54.5 6.2 5.5 1.0 8.0 5.1 +10.5
2011(f) 1045.4 137.0 26.7 +4.4 5.9 4.8 0.9 10.0 6.3 +93.9
2012(f) 1101.4 137.5 26.8 +0.4 5.9 4.3 0.8 6.0 3.8
30 April
2010(a) 746.0 26.6 9.4 +91.4 37.2 13.9 1.0 2.0 0.6 (2.8)
2011(f) 860.1 79.1 28.0 +>100 12.5 8.5 0.9 0.0 0.0 +15.1
2012(f) 1086.5 133.0 47.1 +68.2 7.4 5.8 0.8 0.0 0.0 +42.9
2013(f) 1190.3 142.2 50.3 +6.9 7.0 5.2 0.7 0.0 0.0
31 December
2009(a) 666.6 63.8 29.7 (11.5) 18.5 9.6 1.8 5.0 0.9 +4.0
2010(f) 772.8 55.3 25.8 (13.4) 21.4 11.2 1.7 3.0 0.5 +9.8
2011(f) 913.9 103.8 48.4 +87.8 11.4 7.2 1.5 16.1 2.9 +17.7
2012(f) 983.8 129.0 60.1 +24.3 9.2 5.9 1.4 40.1 7.3
31 December
2009(a) 555.4 (1.3) (0.3) (>100) n.m. 16.5 0.6 6.0 5.7 (8.62)
2010(f) 679.7 39.7 9.1 +>100 11.7 6.1 0.6 3.3 3.1 (6.2)
2011(f) 751.1 59.2 13.5 +49.1 7.8 4.8 0.6 4.7 4.4 (6.2)
2012(f) 810.3 74.4 17.0 +25.6 6.2 4.0 0.5 6.0 5.7

Transportation & Logistics Neutral
Sector Rating : The airline sector is poised for better prospects over the near term on improved yields and
load factors thanks to rising demand for air travel on the back of the recovery in the global
economy. This augurs well for airport operators such as Malaysia Airports as well. However,
the shipping sector will continue to be weighed down by weak freight rates on the back of
just a mild recovery in volumes while new capacity continues to flood the market. One key
speed bump to the recovery of the transportation and logistics sector as a whole is rising
crude oil prices that could crimp margins.
AirAsia ST: Rising demand for air travel on the back EPS growth in FY12/11-12 driven by capacity
of the global economic recovery. expansion and improved efficiency.
Outperform LT: Rising affluence and propensity for air Fair value is RM2.08 based on 11x FY12/11
travel, particularly, in the region. EPS (in line with Ryanair), adjusted for
RM1.75 RM775m owed to AirAsia by 49%-owned
associates Thai AirAsia and Indonesia AirAsia
that translates to 28sen/AirAsia share.
Freight ST – Higher contribution from its warehouse Fair value of RM1.57/share is based on
and distribution division on account of the unchanged 10x CY11 EPS, in line with our
Outperform recently secured distribution rights from benchmark 1-year forward target PER for the
Sharp to distribute electrical appliances transport and logistics sector.
RM0.94 throughout Klang Valley.
LT – Sustained organic growth at its core
business, i.e. freight services through
expansion of: 1) customer base; 2) agents
base; and 3) new destinations; and 4)
securing additional distribution rights for its
warehouse business.
ILB ST: Recovery in China’s export sector. To turn around in FY12/10 on recovery of
China’s export sector.
LT: The bright prospects of the logistics
Outperform sector in China, sustained production Fair value is RM1.48 based on 13x FY12/11
volumes of Lenovo/IBM’s ThinkPad laptops EPS, at a premium to our benchmark 1-year
RM0.94 and IBM’s servers in three warehouses in forward target PER for the transport and
Futian FTZ, Shenzhen, managed by ILB with logistics sector of 10x to reflect ILB’s
“Vendor Managed Inventory” (VMI) supply superior earnings growth visibility with the
chain management system, and new good execution of its second wave of
overseas warehouse projects in the pipeline. investment/expansion in China.
MAHB ST – Air Asia’s continued aggressive Indicative fair value of RM5.96 is based on
expansion, improving regional travel market 16x PER, in line with our 1-year target
Outperform and increasing retail space at the airports. forward PER for the market.
LT – 1) Increased capacity with the new

RM5.45 LCCT (KLIA 2) under construction; 2)
development of land surrounding MAHB’s
airports particularly in Sepang; and 3) higher
contribution stemming from its expansion of
overseas airport management.

3 MTHS
12 MTHS
Sector Average
2009 -21.7 29.0 8.7 1.8 3.4
2010 +36.9 21.4 9.8 1.7 3.6
2011 +14.7 18.7 9.8 1.7 3.7
31 December
2009(a) 3178.9 449.1 18.3 +>100 9.6 9.0 1.6 0.0 0.0 +16.7
2010(f) 3534.0 500.4 18.0 (1.5) 9.7 10.1 1.5 0.0 0.0 +45.8
2011(f) 3882.0 595.0 21.4 +18.9 8.2 9.1 1.3 0.0 0.0 +28.7
2012(f) 4226.4 673.2 24.2 +13.1 7.2 8.3 1.1 0.0 0.0
30 June
2010(a) 265.5 16.4 13.5 +21.2 7.0 3.8 0.9 4.5 4.8 (7.8)
2011(f) 277.9 18.7 15.4 +13.8 6.1 3.3 0.8 4.5 4.8 +17.5
2012(f) 291.6 19.5 16.0 +4.2 5.9 3.1 0.8 4.5 4.8 +60.7
2013(f) 301.6 20.3 16.7 +4.0 5.6 3.1 0.8 4.5 4.8 +60.7
31 December
2009(a) 187.0 (17.7) (9.0) (>100) n.m. 10.6 0.5 3.0 3.2 +4.44
2010(f) 164.8 19.8 10.0 +>100 9.4 5.4 0.5 3.0 3.2 (1.3)
2011(f) 130.5 22.4 11.4 +13.2 8.3 5.5 0.4 3.0 3.2 +0.2
2012(f) 136.5 23.4 11.9 +4.5 7.9 4.8 0.4 3.0 3.2
31 December
2009(a) 1637.1 378.3 34.4 +23.9 15.8 9.7 3.7 14.9 2.7 +5.2
2010(f) 1822.7 329.4 29.9 (12.9) 18.2 9.3 3.3 14.9 2.7 +10.1
2011(f) 2001.4 409.8 37.3 +24.4 14.6 9.6 2.9 18.6 3.4 +58.9
2012(f) 2159.2 495.5 45.0 +20.9 12.1 10.0 2.5 22.5 4.1

Transportation & Logistics (Cont'd)
MAS ST: Rising demand for air travel on the back To only turn around in FY12/11 on improved
of the global economic recovery. yields and cost management.
Underperform
LT: Rising affluence and propensity for air Fair value is RM1.94 based on 14x FY12/11
travel, particularly, in the region. EPS, in line with peer Singapore Airlines Ltd.
RM2.11
MISC ST: Petroleum, chemical and container EPS to resume growth in FY03/11 as losses
segments will continue to be weighed down by from the container liner and chemical
Underperform weak freight rates and volumes on the back of segments narrow.
overcapacity.
Fair value is RM8.07 based on “sum of parts”.
RM8.74 LT: Steady income stream from its LNG
division and high growth at its offshore &
engineering businesses.

3 MTHS
12 MTHS
31 December
2009(a) 11309.9 (672.9) (40.3) (>100) n.m. (9.3) 5.7 0.0 0.0 (0.9)
2010(f) 11650.3 (141.1) (4.2) +89.5 n.m. 93.8 2.2 0.0 0.0 +8.2
2011(f) 12246.3 462.8 13.8 n.a. 15.2 10.8 1.9 0.0 0.0 (13.6)
2012(f) 12179.2 542.5 16.2 +17.2 13.0 10.3 1.7 0.0 0.0
31 March
2010(a) 13775.1 703.3 18.2 (51.7) 48.0 15.4 1.6 35.0 4.0 (0.6)
2011(f) 14474.2 1473.4 33.0 +81.2 26.5 13.7 1.7 36.0 4.1 +5.0
2012(f) 15118.8 1638.5 36.7 +11.2 23.8 12.8 1.6 37.0 4.2 +3.0
2013(f) 15749.8 1959.9 43.9 +19.6 19.9 11.7 1.6 38.0 4.3

Appendix
Valuations And Ratings Of Individual Stocks Under Coverage
Price Fair Value Sector

(RM/s) (RM/s)
1/9/2010
OUTPERFORM
Adventa 2.40 4.16 Manufacturing
AFG 3.10 3.50 Banking
Affin 3.08 4.10 Banking
AirAsia 1.75 2.08 Transportation & Logistics
Allianz Malaysia 4.18 5.32 Insurance
AMMB 5.80 6.95 Banking
Ann Joo Resources 2.56 2.84 Building Material
APM 4.39 5.53 Motor
Axiata 4.55 4.75 Telecommunication
Axis Reit 2.12 2.67 Property
CIMB 7.80 8.40 Banking
CSC Steel 1.71 2.10 Building Material
BP Plastics 0.58 0.80 Manufacturing
Carlsberg 5.30 6.03 Consumer
CBIP 3.39 4.05 Plantation
Dialog 1.10 1.30 Oil & Gas
Daibochi 3.00 3.80 Consumer
Digi.com 24.66 25.70 Telecommunication
Emas Kiara 0.58 1.52 Construction
Evergreen 1.58 2.67 Timber
Faber 2.68 3.82 Consumer
FajarBaru builder 1.02 1.37 Construction
First Resources (S$) 1.11 1.30 Plantation
Freight Mgmt 0.94 1.57 Transportation & Logistics
Genting 9.39 11.00 Gaming
Genting S’pore (S$) 1.80 2.40 Gaming
Glomac 1.37 1.56 Property
Hartalega 7.58 9.29 Manufacturing
HL Bank 8.84 10.70 Banking
HSL 1.56 1.95 Construction
IJM Land 2.23 3.00 Property
ILB 0.94 1.48 Transportation & Logistics
IOI Corp 5.30 6.40 Plantation
Jaya Tiasa 3.50 4.90 Timber
KFCH 11.18 13.07 Consumer
KL Kepong 16.98 20.70 Plantation
Kossan 3.37 5.36 Manufacturing
KPJ Health 3.41 4.51 Consumer
MAHB 5.45 5.96 Transportation & Logistics
Maybank 8.49 9.86 Banking
Mah Sing 1.84 2.06 Property
MAXIS 5.38 5.75 Telecommunication
MBM 3.17 5.30 Motor

Appendix

(RM/s) (RM/s)
1/9/2010
OUTPERFORM
Media Chinese 0.84 1.21 Media
Media Prima 2.07 2.57 Media
Paramount 4.38 5.80 Property
P Gas 10.80 11.63 Oil & Gas
Parkson 5.53 7.72 Consumer
Perwaja 1.11 1.24 Building Material
Plus 4.22 4.33 Infrastructure
Proton 4.60 5.50 Motor
Public Bank-F 12.24 13.75 Banking
Public Bank-L 12.14 13.75 Banking
QL Resources 4.62 4.90 Consumer
Quill Capita 1.00 1.23 Property
RCE Capital 0.63 1.12 Banking
Star 3.57 4.20 Media
Suncity 3.92 5.45 Property
Sunrise 2.00 2.88 Property
Sunway 1.58 2.35 Construction
Tan Chong 4.77 6.16 Motor
Te n a g a 9.00 10.20 Power
UMW 6.75 7.27 Motor
VS. Industry 1.28 1.87 Manufacturing
WTK 1.06 1.60 Timber
YTL Cement 4.00 5.35 Building Material
TRADING BUY
Gamuda 3.55 3.85 Construction

Hunza Prop 1.38 1.58 Property
MRCB 1.69 1.94 Construction

Appendix

(RM/s) (RM/s)
1/9/2010
MARKET PERFORM
AEON 5.20 5.28 Consumer
Amway 7.95 8.45 Consumer
B-Toto 4.15 4.35 Gaming
Eon Cap 6.98 8.33 Banking
Genting M’sia 3.00 3.25 Gaming
Hiap Teck 1.20 1.38 Building Material
IJM Corp 5.01 5.01 Construction
JCY Intl 0.90 1.32 Semiconductor & IT
Kencana 1.53 1.56 Oil & Gas
KLCCP 3.39 3.80 Property
Kurnia Asia 0.42 0.44 Insurance
Lafarge 7.01 6.88 Building Material
LPI Capital 12.12 12.01 Insurance
MNRB 2.72 2.98 Insurance
MPI 5.80 6.35 Semiconductor & IT
Puncak 2.88 3.01 Infrastructure
Sime Darby 8.40 8.90 Plantation
SP Setia 4.58 4.66 Property
SapuraCrest 2.34 2.41 Oil & Gas
Ta Ann 5.51 5.80 Timber
Tanjong 21.32 21.80 Power
TM 3.54 3.55 Telecommunication
Top Glove 6.19 6.90 Manufacturing
Unisem 1.94 2.31 Semiconductor & IT
YNH Property 1.70 1.86 Property
YTL Power 2.29 2.20 Power
UNDERPERFORM
BAT 45.50 40.25 Consumer
Genting Plantation 7.29 6.70 Plantation
Hai-O Ent 2.98 3.63 Consumer
IJM Plantations 2.59 2.30 Plantation
Kinsteel 0.85 0.78 Building Material
KNM 0.44 0.37 Oil & Gas
MAS 2.11 1.94 Transportation & Logistics
MISC 8.74 8.07 Transportation & Logistics
Notion Vtec 1.54 1.54 Semiconductor & IT
Petra Perdana 1.20 0.50 Oil & Gas
Sino Hua An 0.34 0.32 Building Material
Wah Seong 2.04 1.89 Oil & Gas
WCT Bhd 2.84 2.30 Construction
Wellcall 1.23 1.08 Manufacturing

IMPORTANT DISCLOSURES
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Investment Bank Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may
be permitted by applicable law. The opinions and information contained herein are based on generally available data believed to be reliable and
are subject to change without notice, and may differ or be contrary to opinions expressed by other business units within the RHB Group as a result
of using different assumptions and criteria. This report is not to be construed as an offer, invitation or solicitation to buy or sell the securities
covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement
by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an interest
in the securities mentioned by this report.
This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances
and objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that
investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The
appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB
Group nor any of its affiliates, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this
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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.
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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
Lim Chee Sing

Director
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RHBRI's Monthly Stock Watch: Special Focus: Earnings Beat Our Expectation But Global Recovery Fears Persist - 03/09/2010

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RHBRI's Monthly Stock Watch: Special Focus: Earnings Beat Our Expectation But Global Recovery Fears Persist - 03/09/2010

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MARKET DATELINE

RHBRI’s Monthly Stock Watch

Stock Pick Of The Month :

Changes In Recommendation And Forecast From

APM Outperform Outperform 19 Aug 2010 Given the better-than-expected

RHBRI'S MONTHLY 2 STOCK WATCH

BP Plastics Outperform Outperform 16 Aug 2010 We lowered our FY10-12 gross

CBIP Outperform Outperform 12 Aug 2010 Post-visit, we revised our forecasts

RHBRI'S MONTHLY 3 STOCK WATCH

CIMB Outperform Outperform 27 Aug 2010 We fine-tune and adjust our

Daibochi Outperform Outperform 11 Aug 2010 We have reduced our earnings

Evergreen Outperform Outperform 17 Aug 2010 We have increased our earnings

Faber Outperform Outperform 6 Aug 2010 We revised our FY10-12 revenue

RHBRI'S MONTHLY 4 STOCK WATCH

Fajarbaru Outperform Outperform 26 Aug 2010 FY06/11-12 net profit forecasts

First Outperform Outperform 16 Aug 2010 Post-results, we revised down our

RHBRI'S MONTHLY 5 STOCK WATCH

Genting Outperform Outperform 13 Aug 2010 Due to better-than-expected results

RHBRI'S MONTHLY 6 STOCK WATCH

IOI Outperform Outperform 25 Aug 2010 Post-results, no change to our

RHBRI'S MONTHLY 7 STOCK WATCH

RHBRI'S MONTHLY 8 STOCK WATCH

MAS Underperform Underperform 17 Aug 2010 We now project MAS to report

RHBRI'S MONTHLY 9 STOCK WATCH

MNRB Market Perform Underperform 26 Aug 2010 We adjusted downwards the

RHBRI'S MONTHLY 10 STOCK WATCH

RHBRI'S MONTHLY 11 STOCK WATCH

RHBRI'S MONTHLY 12 STOCK WATCH

RHBRI'S MONTHLY 13 STOCK WATCH

Suncity Outperform Outperform 1 Sept 2010 No change in earnings forecasts, but

RHBRI'S MONTHLY 14 STOCK WATCH

RHBRI'S MONTHLY 15 STOCK WATCH

RHBRI'S MONTHLY 16 STOCK WATCH

RHBRI'S MONTHLY 17 STOCK WATCH

2Q Earnings Slightly Above Expectations

RHBRI'S MONTHLY 18 STOCK WATCH

Covered Stocks Covered In Line Above Below Total reported

Total 105 63 23 19 105

Covered Stocks Covered In Line Above Below Total reported

Total 105 53 23 29 105

RHBRI'S MONTHLY 19 STOCK WATCH

Banks The Key Sector With Better-than-expected Earnings

RHBRI'S MONTHLY 20 STOCK WATCH

Earnings Growth Revised Up

RHBRI'S MONTHLY 21 STOCK WATCH

EPS Growth EPS Growth PER

FactSet Asian Consensus Trends report dated 28 July 2010

* as at 1 September 2010 closings

RHBRI'S MONTHLY 22 STOCK WATCH

Global Recovery Fears Persist

RHBRI'S MONTHLY 23 STOCK WATCH

% yoy % yoy % yoy

A Sharper Economic Slowdown In The 2H

RHBRI'S MONTHLY 24 STOCK WATCH

% yoy % yoy Eurozone % yoy

Market Volatility As Economic Worries Persist

RHBRI'S MONTHLY 25 STOCK WATCH

Fair Mkt EPS EPS GWTH PER P/BV P/CF GDY

RHBRI'S MONTHLY 26 STOCK WATCH

Share price : RM4.38

Table 1 : Investment Statistics (PARAMON; Code: 1724) Bloomberg : PAR MK

Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC

RHBRI'S MONTHLY 27 STOCK WATCH