PP 7767/09/2010(025354)

1 April 2010

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Marke t Upda te
1 April 2010
MARKET DATELINE

Benchmarking
First Quarter Review

♦ 1Q performance dominated by banks, media and telecom. For the

Table 1. FBM KLCI Sector Weights
1Q10, the performance of the FBM KLCI by sector was dominated by the
Sector Current (%)
banks (+1.1%-pt increase in index weighting for the 1Q10), media
Finance 36.75
(+0.22%-pts) and telecom (+1.09%-pts), while the main losers were
Plantation 21.06
gaming (-0.74%-pts), plantations (-0.80%-pts) and power (-0.63%-pts).
Telecom 12.93
♦ Banks – biggest and best. The banks continued to rule with an overall Power 9.14
sector weighting of 36.75%, as five out of the six banks in the benchmark Gaming 7.68
index posted strong absolute YTD performance. AMMB was the only Transport 2.66
underperformer (YTD -3.6% relative to the FBM KLCI) despite strong Consumer 2.14
FY09 results (reported on 9 Feb), probably as investors concentrated on Oil & Gas 2.09
the big three (CIMB, Maybank and Public Bank) while Hong Leong Bank Construction 1.75
was boosted by M&A activity. We reiterate our view that the sector will be Infra 1.66
one of the key beneficiaries of the recovering economy. Motor 1.32
Media 0.81
♦ Media represented by Astro. Astro is the only media stock in the FBM As at 31 Mar
KLCI and due to the privatisation proposal, the stock rose by 42.7% YTD, Source: Bloomberg, RHBRI
and outperformed the benchmark index by 37.5% over the same period.
With the share price now close to the offer price of RM4.30, further upside
is capped. Minorities are expected to accept the privatisation offer which Table 2. Top Picks
closes on 28 Apr. The stock and the sector will then drop out of the FBM Price# (RM) FV (RM)
KLCI at the latest by mid-Aug. Nevertheless, with an index weighting of Maybank 7.47 8.96
just 0.81%, we see minimal impact to other sectors. CIMB 14.06 16.24
Maxis 5.34 6.20
♦ Telecom sector driven by Axiata and TM. Axiata and TM outperformed
Tenaga 8.02 9.50
the benchmark index for the YTD while the mobile players including Maxis
Genting 6.60 8.90
and Digi were relative underperformers.
KLK 16.68 18.40
o We attribute Axiata’s 21.7% outperformance vs. the FBM KLCI to its Top Glove 13.90 15.50
strong earnings underpinned by Celcom and XL while TM benefitted IJM Land 2.33 3.19
earlier from positive earnings expectations and subsequently from the Media Prima 2.15 2.23
launch of the HSBB. Going forward we expect potential upside to our Wah Seong 2.60 3.09
Axiata forecasts, but we believe upside for TM is already capped. Sunway City 3.31 5.33
Unisem 2.68 3.39
o The mobile players may face some near-term concerns of rising
Kossan 8.00 10.74
competition (as Digi launches its iPhone service today and STT
Evergreen 1.71 2.35
completes the acquisition of a 36% stake in unlisted U Mobile within
Faber 2.38 3.30
the next few weeks), but the long-term positive outlook for mobile
Notion Vtec 3.35 4.59
broadband and data is still intact in our view.
Daibochi 3.62 4.40

♦ The big losers, unjustified in our view. Some of the big losers were # As at 31 Mar

Genting (YTD -13.3% vs. FBM KLCI), Sime Darby (-6.4%), IOI (-5.0%) Source: Bloomberg, RHBRI

and TNB (-8.0%) on concerns that their price catalysts had become stale.
We still like Genting as we believe the full effects of the Singapore casino
and theme park have yet to be realised. As for plantation stocks (other
than PPB which rose due to a 50 sen special dividend), we believe CPO
prices remain on an uptrend and this should underpin the outlook for the
stocks. We remain positive on TNB as we expect a tariff adjustment soon
as the Government prepares to shrink or even end the subsidy system.
Yap Huey Chiang
♦ Conclusion. We reiterate our positive view on the market given the (603) 92802171
economic recovery, although fundamental stock-picking will remain yap.huey.chiang@rhb.com.my
important in the current volatile market. Our top picks are in Table 2.

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Table 3. Sector Weightings And Changes Since End-2009

Sector Weightings (%) Weighting Change (%-pts)
Current 28-Feb-10 31-Jan-10 31-Dec-09 1-month 2-month YTD
Construction 1.75 1.75 1.80 1.77 (0.00) (0.06) (0.02)
Consumer 2.14 2.14 2.15 2.15 (0.00) (0.01) (0.01)
Finance 36.75 35.96 36.21 35.65 0.79 0.54 1.10
Gaming 7.68 7.61 8.24 8.41 0.07 (0.56) (0.74)
Infra 1.66 1.76 1.71 1.66 (0.10) (0.05) (0.00)
Media 0.81 0.67 0.64 0.59 0.14 0.18 0.22
Motor 1.32 1.36 1.36 1.37 (0.03) (0.04) (0.05)
Oil & Gas 2.09 2.13 2.16 2.16 (0.04) (0.07) (0.06)
Plantation 21.06 21.30 21.18 21.86 (0.24) (0.12) (0.80)
Power 9.14 9.42 9.49 9.77 (0.28) (0.35) (0.63)
Telecom 12.93 13.22 12.36 11.84 (0.29) 0.57 1.09
Transport 2.66 2.69 2.70 2.77 (0.03) (0.04) (0.11)
Source: Bloomberg, RHBRI estimates

Table 4. FBM KLCI Component Stocks

Share Implied Full YTD YTD
Name Price Index Full Mkt Rel Perf Abs Perf
31 Mar Weight Cap vs. KLCI vs. KLCI
(RM) (%) (RMm) (%) (%)
1 CIMB Group 14.06 12.20 49,656.6 5.54 9.50
2 Public Bank 11.64 10.10 41,111.6 0.74 4.52
3 Malayan Banking 7.47 9.74 52,872.5 4.95 8.89
4 Sime Darby 8.71 9.62 52,342.4 (6.41) (2.90)
5 IOI Corp 5.39 6.63 35,981.0 (5.03) (1.46)
6 Tenaga Nasional 8.02 6.39 34,829.0 (7.98) (4.52)
7 Axiata Group 3.85 5.99 32,513.8 21.66 26.23
8 Genting 6.60 4.49 24,454.8 (13.34) (10.08)
9 Maxis 5.34 2.95 40,050.0 (4.16) (0.56)
10 AMMB Holdings 5.00 2.78 15,070.9 (3.62) -
11 MISC 8.10 2.66 36,156.7 (3.82) (0.21)
12 PPB Group 18.00 2.62 21,339.0 12.06 16.26
13 Telekom Malaysia 3.44 2.27 12,306.3 8.35 12.42
14 Kuala Lumpur Kepong 16.68 2.19 17,806.0 (2.57) 1.09
15 Genting Malaysia 2.87 2.07 16,949.6 (1.56) 2.14
16 YTL Corp 7.50 1.75 14,248.5 (0.98) 2.74
17 Digi.Com 22.58 1.72 17,556.0 (0.90) 2.82
18 PLUS Expressways 3.38 1.66 16,900.0 (0.07) 3.68
19 BAT 44.14 1.55 12,603.3 (0.60) 3.13
20 Petronas Gas 9.80 1.43 19,391.6 (4.30) (0.71)
21 Hong Leong Bank 8.64 1.34 13,652.1 2.43 6.27
22 UMW Holdings 6.35 1.32 7,171.4 (3.62) -
23 YTL Power International 2.19 1.13 15,384.0 (5.77) (2.23)
24 Berjaya Sports Toto 4.48 1.12 6,052.6 (0.74) 2.99
25 Tanjong Plc 17.94 0.89 7,234.4 2.68 6.53
26 Astro All Asia Networks PLC 4.28 0.81 8,279.1 37.50 42.67
27 MMC Corp 2.44 0.73 7,429.9 (3.22) 0.41
28 Petronas Dagangan 9.05 0.66 8,990.8 0.26 4.02
29 RHB Capital 5.64 0.60 12,145.6 2.56 6.42
30 Nestle (Malaysia) 34.14 0.59 8,005.8 (0.59) 3.14
Note: Implied index weights are calculated based on market cap adjusted for individual stock free float factors
Source: Bloomberg, RHBRI estimates

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Table 5. Top Picks

Price FV EPS EPS Growth PER PBV PCF GDY
FYE (RM/s) (RM/s) (sen) (%) (x) (x) (x) (%) Rec
31 Mar FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
Maybank Jun 7.47 8.96 51.3 60.7 35.7 18.1 14.5 12.3 2.0 n.a. 3.9 OP
CIMB Dec 14.06 16.24 95.5 112.6 20.2 17.9 14.7 12.5 2.3 n.a. 1.3 OP
Maxis Dec 5.34 6.20 33.2 36.2 6.6 9.1 16.1 14.8 4.0 10.4 6.2 OP
Tenaga Aug 8.02 9.50 64.9 73.6 30.4 13.4 12.4 10.9 1.2 4.2 3.2 OP
Genting Dec 6.60 8.90 45.8 56.1 38.9 22.5 14.4 11.8 1.5 5.8 1.4 OP
KLK Sep 16.68 18.40 87.5 123.3 23.7 40.8 19.1 13.5 2.9 15.3 2.7 OP
Top Glove Aug 13.90 15.50 89.0 96.2 55.3 8.1 15.6 14.4 4.1 12.8 3.3 OP
IJM Land Mar 2.33 3.19 18.4 34.4 88.5 87.2 12.7 6.8 1.4 4.7 0.9 OP
Media Prima Dec 2.15 2.23 14.8 15.8 +>100 6.7 14.5 13.6 2.2 7.0 4.7 OP
Wah Seong Dec 2.60 3.09 19.3 20.8 46.1 8.0 13.5 12.5 2.6 4.8 2.9 OP
Sunway City Dec 3.31 5.33 34.8 38.8 9.8 11.6 9.5 8.5 0.7 6.1 2.4 OP
Unisem Dec 2.68 3.39 20.5 31.0 77.6 51.5 13.1 8.6 1.6 5.0 1.9 OP
Kossan Dec 8.00 10.74 82.6 103.0 10.3 24.7 9.7 7.8 2.6 8.5 1.3 OP
Evergreen Dec 1.71 2.35 21.3 23.3 26.1 9.4 8.0 7.3 1.1 11.3 2.9 OP
Faber Dec 2.38 3.30 26.5 24.2 16.4 -8.8 9.0 9.8 1.9 5.6 2.9 OP
Notion Vtec Sep 3.35 4.59 33.4 45.9 30.4 37.5 10.0 7.3 2.5 7.1 2.0 OP
Daibochi Dec 3.62 4.40 36.7 39.9 22.4 8.8 9.9 9.1 2.0 8.4 6.6 OP
^ FY10-11 valuations refer to those of FY11-FY12 Source: RHBRI, Bloomberg

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
(previously known as RHB Sakura Merchant Bankers). 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 report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

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.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for
the actions of third parties in this respect.

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