PP 7767/09/2010(025354)

1 April 2010
Corporate Highlights
Malaysia RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
MARKET DATELINE Sector Upda te Company No: 233327 -M

1 April 2010
Plantation
Recom : Overweight
Smooth Or Bumpy Ride Ahead? (Maintained)

Table 1 : Plantation Sector Valuations

Fair EPS * EPS growth PER P/NTA P/CF GDY
FYE Price Value (sen) (%) (x) (x) (x) (%) Rec
(RM/s) (RM/s) FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
Sime Darby Jun 8.71 9.85 40.7 51.6 8.5 26.8 21.4 16.9 2.3 15.4 2.5 OP
KLK Sep 16.68 18.40 87.5 123.3 23.7 40.8 19.1 13.5 3.1 15.3 2.7 OP
IOI Corp Jun 5.39 6.65 27.9 31.5 -13.0 13.0 19.3 17.1 3.9 16.9 2.2 OP
CBIP Dec 2.92 3.60 41.2 49.7 37.5 20.6 7.1 5.9 1.4 5.6 4.8 OP
IJMP^ Mar 2.55 2.35 13.8 15.9 34.8 15.4 18.5 16.0 1.7 14.6 2.0 UP
Genting Plant# Dec 6.95 6.65 40.3 46.8 34.0 16.0 17.2 14.9 1.9 15.6 1.6 UP
Sector Avg 3.1 23.8 19.9 16.1
^ FY10-11 valuations refer to those of FY11-12 # Formerly known as Asiatic *Normalised

♦ Positive supply and demand fundamentals... We believe that the Chart 1. CPO vs soyoil and rapeseed
positive basic supply and demand fundamentals would help support CPO oil prices
US$/tonne

prices at a range of RM2,300-2,800/tonne over the short to medium

CPO Soy Oil Rapeseed Oil

1,700

term. Although based on our CPO price range expectations, there does 1,500

not seem to be that much more upside (possibly another 5-10%) to CPO 1,300

prices, we believe that in the current market environment, where 1,100

volatility in external factors is the norm, CPO prices could undershoot or

900

overshoot our projected price range. As such, although CPO prices could
700

500

potentially hit the RM3,000/tonne mark again, we believe this may not be 300

a sustainable price target in the medium term, due to the demand 100

reallocation which would occur in price-sensitive markets like China and

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Chart 2. CPO vs crude oil prices

India which would then “re-balance” prices. In the long term, we believe
CPO prices would stay above RM2,000/tonne due to structural changes.
160 1400

140 Correlation factor of 1200

0.9x in 2007

♦ …in
narrowed to 0.75x in

C P O s p o t p r i c e s (U S $ / to n n e )
C r u d e o i l p r i c e s (U S $ / b a r r e l )

the midst of volatile external factors. We believe the risk of

120
1H08, and rose again 1000
Correlation factor to 0.95x in 2H08.
100 started normalising to

external factors would continue to be the wild card affecting CPO and 80
0.7x from Dec-08, but
rose again from Sep-
800

09 onwards to close

vegetable oil prices in the future. Besides the volatilities of crude oil 60
to 1x 600

prices, exchange rates and financial commodity demand, weather 40

400

uncertainties and the potential impact of El Niño is the “hot” topic of late. 20 200

Based on current observations and dynamical model forecasts, El Niño is

0 0
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expected to continue at least through to May/June 2010. If this does

r

r
Ja

Crude Oil (US$/barrel) CPO (US$/tonne)

happen, we believe the likelihood of CPO supply being affected is higher,

and this impact would be seen from 3Q/4Q CY2010 onwards.

♦ Risks include: (1) a significant change in crude oil price trend; (2)
weather abnormalities; (3) change in emphasis on implementing global
biofuel mandates and trans-fat policies; (4) significant changes in trade
policies of vegetable oil importing or exporting countries; and (5) a faster
or slower-than-expected global economic recovery.

♦ Forecasts and Investment Case. We maintain our CPO price

assumptions at RM2,500/tonne for 2010, RM2,700/tonne for 2011 and
RM2,500/tonne for 2012. In view of the many external factors and
potential volatilities they bring, we continue to advise investors to keep to
Hoe Lee Leng
the more liquid stocks and to trade the volatilities. We maintain our
(603) 92802184
Outperform recommendations on IOIC, KLK, Sime Darby and CBIP, hoe.lee.leng@rhb.com.my
and Underperform recommendation on Genting Plantations and
IJMP, with higher target prices for the small and mid-cap stocks.

Please read important disclosures at the end of this report.

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♦ Positive supply and demand fundamentals in the midst of volatile external factors. We believe that the
basic supply and demand fundamentals of the 17 oils and fats and of CPO continue to be positive and would help
support CPO prices at a price range of RM2,300-2,800/tonne over the short to medium term. Although based on
our CPO price range expectations, there does not seem to be that much more upside (possibly another 5-10%) to
CPO prices, we believe that in the current market environment, where volatility in external factors like crude oil
prices, exchange rates and financial commodity demand is the norm, CPO prices could undershoot or overshoot
our projected price range. On a longer-term basis, we believe strong fundamentals due to structural changes
would continue to keep CPO prices above the RM2,000/tonne mark.

♦ Is RM3,000/tonne a possibility? While we believe that with the right combination of external factors and the
current positive fundamental factors, CPO prices could potentially hit the RM3,000/tonne mark again, we believe
this may not be a sustainable price target. This is due to the fact that price-sensitive markets like China and India
would then reallocate demand in order to “re-balance” prices. This has already happened recently with some
buyers in India recently announcing a plan to shift some of its import purchases from palm to soya oil owing to a
change in the price differential. We note that as a result of the recent run up in CPO prices and the weakness in
soyoil prices due to the upcoming South American bumper crop, the discounts between CPO and soyoil have
narrowed to as low as US$77/tonne currently (see Chart 3), below the historical average of US$100/tonne.
Despite this, we believe this switch would not necessarily have a significant or long-term impact on demand for
palm oil, given the projected supply deficiency of global soyoil exports in the market.

Chart 3 : Discount between CPO and Soyoil and CPO and Rapeseed Oil in US$
690

660

630

600
570

540

510

480

450

420

390
US$/tonne

360

330

300

270

240

210
180

150
120

90

60

30

0
Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan-
-30
03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10

CPO v soyoil CPO v rapeseed oil

Source: Bloomberg, RHBRI

♦ Soyoil exports to disappoint... We highlight that global soyoil exports are only projected to rise by 2.2% yoy in
Oct09/Sep10, while global soyoil demand is projected to grow by 4.8% yoy. We highlight that the discrepancy
between the small growth estimated for soyoil exports of 2.2% versus the large projected increase in global
soybean production of 19.6% in the same period is due to two main reasons: (1) low oil content of soybean (of
only 18-19%) versus that of sunflower seed and rapeseed (of about 40%); and (2) higher domestic consumption
of soyoil in soyoil producing countries for biofuel production under the various country-specific mandates. We
note that out of total soyoil production projected for 2010, about 15% is estimated to go to biodiesel production,
which is an increase from 12.5% in 2009, and this is going to be on a rising trend given the gradual rising biofuel
mandates (see Table 2).

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 1 April 2010

Table 2: Current Biofuel Targets

Location Current Policies Impact

EU 5.75% blend by 2010 Biofuel demand could reach 11-12m tonnes by 2010
7% blend by 2015 Biofuel demand could reach 20m tonnes by 2020
10% blend by 2020
Ireland 4% blend from 2010, 10% from 2020

US 2012 – 2% replacement of highway diesel 2009 – 500m gallons (1.6m tonnes),

fuel
2015 – 5% replacement of highway diesel 2012 – 1bn gallons (3.2m tonnes),
fuel
2015 – 2bn gallons (6.4m tonnes),
Total renewable fuel demand – 36bn gallons (1.2bn tonnes) by 2022
ie. – Ethanol (15bn gallons or 487m tonnes) and advanced biofuel (incl.
cellulostic biofuel and biomass diesel – 21bn gallons or 682m tonnes)

China 10% biofuels use by 2015 Biofuel demand could reach 14m tonnes by 2020

15% biofuels use by 2020

Japan 3% biofuels use by 2010 Demand by 2010 - 1.8m tonnes

Argentina 5% export tax on biodiesel (vs 32% tax Demand in 2008 - 1.4m tonnes
on soybean oil)
5% biofuel blend from Jan 2010

Brazil 2% biodiesel from Jan 2008 Demand in 2008 - 0.8m tonnes

5% biodiesel from 2010
20% from 2015
Thailand 2% biodiesel blend from Feb 2008
5% biodiesel blend from 2009 Demand by 2010 – 800m gallons (2.6m tonnes)
10% biodiesel blend by 2012
India 5% bioethanol blend by 2008 Demand could reach 12-14bn litres per year
10% bioethanol blend by 2020

South Increase biodiesel mandates by 0.5%

Korea every year from 1% in 2008 to 3% by
2012. Extended tax breaks until 2010.
Indonesia 2.5-3% biodiesel blend in 2010, rising to Approx. 1.5m tonnes by 2010
5-7% in 2015, 10% in 2020 and 20% in
2025. Biodiesel subsidy of US$120/tonne
Malaysia 5% biodiesel blend to be implemented in Approx. 0.5m tonnes by 2010
stages starting from 1 June 2011

WORLD 2010 - 22m tonnes

2012 – 32m tonnes
2015 – 45m tonnes

Source: Price Outlook 2008 Conference, Media, RHBRI estimates

♦ Long-term dependence on soybean oil to reduce. On the longer-term basis, land expansion for soybean
crops in the US is likely to be on a reducing trend, given the increasing demand for land to plant corn to satisfy
the demand from the bio-ethanol industry and this will also limit soybean oil supply going forward. From Charts 4
and 5, it can be seen that since 2008, the change in land area for soybean has been on a declining trend, while
the change in land area for corn has been on an increasing trend, and this is expected to continue going forward.
The USDA projects soybean land to decline by 0.7% p.a. over the next 10 years to 2018, as a result of switching
to corn.

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 1 April 2010
Chart 4 : Change in US Soybean Area vs Previous Year

Source: USDA

Chart 5 : Change in US Corn Area vs Previous Year

Source: USDA

♦ … while CPO supply is more promising, albeit still not enough to meet demand in the short term. As
such, in order to fulfill the projected global demand growth for the 17 oils and fats of 4% in 2010, we believe the
main vegetable oil which will be able to satisfy a major part of this demand growth would be palm oil. In 2010,
CPO supply is more promising than soyoil, projected to grow by 5.5% in 2010, with exports projected to grow by
4.4%, double that of soyoil exports. We note that dependence on CPO has risen over the years and demand for
CPO is expected to comprise a higher 28% of the global 17 oils and fats demand in 2010 (from 23% in 2005),
while soybean oil is expected to comprise 22% (from 25% in 2005) and rapeseed oil is expected to comprise
13.7% (from 11.5% in 2005) (see Chart 6). Despite the better CPO supply prospects, it is still not enough to
meet demand, given that demand for CPO alone is projected to grow by a larger 6% in 2010, versus the 5.5%
production growth, thus resulting in a lower stock/usage ratio of 13.3% (from 15.2% in 2009) (see Chart 7). As
for the 17 oils & fats, global stock/usage ratio is also projected to fall to 8.8% in 2010 (from 11.5% in 2009), on
the back of an increase in demand of 4% yoy, which outpaces the projected increase in production of 3.5% yoy
(see Chart 8).

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 1 April 2010

Chart 6: Share of Consumption of 17 Oils & Fats

2005
2010F
Palm Oil Palm Oil
Others 23% Others
28%
40% 36%

Soyoil
Soyoil Rapeseed Oil
22%
Rapeseed Oil 25% 14%
12%

Source: Oil World, RHBRI

Chart 7: CPO Production Vs Stock/Usage Ratio

48,000 28%
45,000 26%
42,000 24%
39,000
22%
36,000
Production('000tonnes)

20%

Stock/Usageratio(%)
33,000
30,000 18%

27,000 16%
24,000 14%
21,000 12%
18,000 10%
15,000
8%
12,000
6%
9,000
6,000 4%

3,000 2%
- 0%
F
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Production Stock/Usage Ratio Assuming Ave Demand Gth

Stock/Usage Ratio Assuming Oil World Demand Gth Stock/Usage Ratio Assuming Minimum Demand Gth
Stock/Usage Ratio Assuming Maximum Demand Gth

Source: Oil World, RHBRI

Chart 8: 17 Oils & Fats Production Vs Stock/Usage Ratio

180,000 17%

160,000 16%

140,000 15%
Stock/usageratio

120,000 14%
sage(tonnes)

100,000 13%

80,000 12%
U

60,000 11%

40,000 10%

20,000 9%

0 8%
F
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Disappearance Stocks/Usage ratio - Oil World

Source: Oil World, RHBRI

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♦ Land availability for new palm oil plantation mainly from Indonesia. In the longer term, we believe CPO
is likely to be the only vegetable oil with potential to continue growing its supply at a reliable rate due to
plantable land availability and yield improvement. The USDA predicts CPO production would grow at a 5-year
CAGR of 6-7% p.a. to 2015, which we expect to come mostly from Indonesia. In Malaysia, based on the
government’s decision to limit land cultivation for palm oil plantations to 5m ha, there is only another 300,000ha
left to be planted, which we expect would presumably be mostly in Sarawak. In Indonesia, however, there is
another estimated 10m ha of land available to be planted, based on the government’s previously stated
maximum palm oil land area of 18m ha. Although the government has also recently stated its intention of limiting
the land expansion per year at 200,000ha (from 300,000ha), this is still a significant area, and based on the 10m
ha of land available, would take Indonesia another 50 years to complete planting. Assuming an average oil yield
of 4t/ha, this could potentially result in 0.8m tonnes of new palm oil production per year, which would add an
additional 2% to global CPO production p.a.. Although this may not seem significant, added to an expectation of
improving oil yields as higher-yielding, better quality seedlings are planted and as the maturity profile of the
existing plantation land improves, we expect Indonesia’s CPO production to grow at a 5-year CAGR of 10% p.a.
over the next five years. Indonesia will therefore satisfy close to 60% of projected global demand in 5 years
(from about 50% currently), based on a projected average demand growth rate of 4-5% p.a.. We believe
Malaysian plantation players would therefore have no choice but to continue expanding via land acquisitions in
Indonesia, in order to benefit from the increasing reliance on palm oil to satisfy long-term food and fuel demand.

♦ The risk of external factors to be the wild card… While fundamental factors are supportive of a rising CPO
price trend, we believe the risk of external factors would continue to be the wild card affecting CPO and vegetable
oil prices in the future. Besides the volatilities of crude oil prices, exchange rates and financial commodity
demand mentioned above, another major uncertainty facing CPO supply currently is weather uncertainties and
the potential impact of El Niño. In Malaysia, although the seasonal pattern is such that weather in Feb and Mar is
generally hotter and drier in the northern states of the Peninsulas and Sabah compared with other months, this
situation has become more severe lately because of the El Niño phenomenon. Based on current observations and
dynamical model forecasts, El Niño is expected to continue at least through to May/June 2010, although in
Malaysia, the Malaysian Meteorological Department said the situation is expected to last until next month for
Peninsular Malaysia while Sabah is expected to experience dry weather until May. In Malaysia, several dams and
rivers have recorded low water levels in Johor and the northern states of Peninsular Malaysia as well as Sabah,
while the Meteorological Department said that for the first 10 days of March, 29 out of 34 main meteorological
stations recorded zero to 48mm of rain, which was between 0% and 66.3% of the average amount. From Table 3
below, it can also be seen that in Feb, rainfall in Malaysian palm growing areas was only 42% of normal, with the
worst hit area being in Sabah, at 7% of normal.

Table 3: Rainfall in Palm Growing Areas (in % of normal)

Production Feb Jan Dec Nov

States (stations) Share(a) 2010 2010 2009 2009
Johor (4) 17% 23% 66% 38% 98%
Pahang (3) 16% 14% 72% 171% 99%
Perak (4) 11% 16% 117% 87% 103%
Selangor (3) 4% 102% 136% 113% 117%
N.Sembilan (2) 3% 53% 95% 99% 122%
Other states (3) 7% 36% 94% 87% 186%
Peninsula 58% 51% 98% 102% 124%

Sabah (4) 31% 7% 107% 57% 76%

Sarawak 11% - - - -
Total Malaysia 100% 42% 100% 95% 96%

(a) Share of crude palm oil output in Jan/Dec 2009

Source: Oil World

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♦ … with El Niño being the most talked about one lately. As can be seen from the chart below (Chart 9) which
measures the Oceanic Nino Index (ONI), El Niño is characterised by a positive ONI greater than or equal to
+0.5°C, while La Niña is characterised by a negative ONI less than or equal to -0.5°C. To be classified as a full-
fledged El Niño or La Niña episode, these ONI thresholds must be exceeded for a period of at least 5 consecutive
overlapping 3-month seasons. This is already the case currently, as the ONI has been >0.5°C for 8 consecutive
3-month seasons since May 2009. However, computer models suggest that Pacific Ocean temperatures will cool
steadily over the coming months, returning to neutral levels during the southern autumn (May/June 2010), which
is the typical timing of the decay stage of an El Niño event.

Chart 9: Oceanic Nino Index ( ONI)

El Nino-
<--La Nina

Source: US National Oceanic and Atmospheric Administration

♦ Potential impact of El Niño on supply and prices. Extreme weather conditions like El Niño and La Nina would
generally impact production of CPO about six to nine months later, and this would in turn, affect CPO price
movements. Of course, the significance of the price movements would also depend largely on the fundamental
supply and demand factors of other vegetable oils at that point in time as well as other extenuating
circumstances like those mentioned earlier. We note that historically, the impact of prolonged (> three months)
extreme weather conditions has caused CPO prices to rise by at least 15% to as much as 80% (see Chart 10).
Based on the chart below which uses another climate model used by the Australian Bureau of Meteorology, the
Southern Oscillation Index (SOI), El Niño has been in place since Jan-10 (as defined by sustained negative values
of <-5 for three months or more). If these conditions continue for another three months or so, until May/June
2010, we believe the likelihood of CPO supply being affected is higher, and this impact would be seen from 3Q/4Q
CY2010 onwards. If this were to happen, we believe the upside risk of CPO prices reaching RM3,000/tonne and
above is higher.

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Chart 10: CPO Price vs SOI Index

4000 25

3800
20
3600

3400 La Nina: SOI > +5

15
3200

3000 10

2800
5
2600

S o u t h e r O s c illa t io n In d e x ( S O I)
2400
C P O P ric e ( R M /t o n n e )

0
2200

2000 -5

1800
-10
1600

1400
-15
1200

1000 -20
El Nino: SOI < -5
800
-25
600

400
-30
200

0 -35
Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan-
00 00 00 00 01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10

SOI CPO Price El Nino La Nina

Source: Australian Bureau of meteorology, RHBRI, Bloomberg

Forecasts

♦ CPO price forecasts maintained. Although we have not imputed the risk of any untoward external factors into
our price forecasts, we reiterate our view that fundamentals and price prospects for CPO in CY2010 remain
positive. We maintain our CPO price assumptions at RM2,500/tonne for 2010, RM2,700/tonne for 2011 and
RM2,500/tonne for 2012. In view of the many external factors and potential volatilities they bring, we continue to
advise investors to keep to the more liquid stocks and to trade the volatilities.

Risks

♦ Main risks include: (1) a significant change in crude oil price trend resulting in significant movement of CPO
and other vegetable oils prices; (2) weather abnormalities resulting in an over- or under-supply of vegetable
oils; (3) change in emphasis on implementing global biofuel mandates and trans-fat policies; (4) significant
changes in trade policies of vegetable oil importing or exporting countries; and (5) a faster or slower-than-
expected global economic recovery, resulting in a higher- or lower-than-expected growth in demand for
vegetable oils.

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Valuations and Recommendations

♦ Maintain Overweight on sector. We maintain our Overweight stance on the sector and continue to apply a
target PE of 18x CY10 for the plantation earnings of the big-cap plantation stocks. However, we raise our target
PE for the mid-cap plantation stocks to 16.5x (from 14.5x) CY10 and for the small-cap plantation stocks to 14x
(from 12x) CY10, to take into account the rising investor risk appetite for small and mid-cap stocks.
Nevertheless, we continue to believe that in the volatile market environment we are expecting for 2010, the
more liquid big-cap stocks will be favoured, especially since the gap between the big-cap and smaller-cap
stocks have narrowed recently. At current price levels, we note that valuations of some of the mid-cap
plantation stocks have almost caught up with the big-cap stocks, making the big-cap stocks seem inexpensive
in comparison.

♦ Top pick remains KLK. We maintain our Outperform recommendations on IOIC (FV unchanged = RM6.65),
KLK (FV unchanged = RM18.40), Sime Darby (FV unchanged = RM9.85) and CBIP (FV = RM3.60 (from
RM3.30)) and Underperform on Genting Plantation (FV = RM6.65 (from RM5.85)) and IJMP (FV = RM2.35 (from
RM2.05)). We continue to rate KLK as our top pick, due to its inexpensive valuations (as it remains the
cheapest amongst the big-cap plantation stocks currently) and for its strong management with a good track
record. Further catalysts could come from better-than-expected FFB production growth as well as potential
return to profitability of the retail division.

Table 4. Valuation Bases

Fair Value
Company (RM/share) Valuation Methodology

Genting 6.65 Target 16.5x PER CY10 earnings.

Plantations
CBIP 3.60 Target PER of 8x CY10 for the oil mill engineering division and 14x CY10 for the plantation division.

IJMP 2.35 Target 16.5x PER CY10 earnings

IOIC 6.65 Target PER of 18x CY10 for the plantation division, 12.5x CY10 for the manufacturing division and
13.5x CY10 for the property development and investment property divisions (on fully diluted basis).

KLK 18.40 Target PER of 18x CY10 for the plantation division, 12.5x CY10 for the manufacturing division, 13.5x
CY10 for the property division and zero value less potential provisions for the retail division.

Sime Darby 9.85 10% discount to SOP comprising: target PER of 18x CY10 for the plantation division, 15x CY10 for the
energy & utilities division, 13.5x CY10 for the heavy equipment and property divisions and 12x CY10
for the motor and other small divisions.
Source: RHBRI

Table 5: Impact of every RM100/tonne increase in CPO price

Genting Plantations +5-7%

KLK +4-6%
IJMP +5-7%
IOI Corp +3-5%
Sime Darby +4-6%
CBIP +2-4%

Source: RHBRI

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Table 6. Regional Peer Comparison

Company FYE Price * Currency PER (x) EV/EBITDA (x) P/NTA (x)
FY10f FY11f FY10f FY11f FY10f FY11f
WIL SP Equity Dec 6.70 SGD 16.6 14.6 9.4 8.4 2.4 2.1
IFAR SP Equity Dec 2.24 SGD 14.8 12.7 7.9 7.2 2.2 2.1
GGR SP Equity Dec 0.58 SGD 14.9 10.1 7.4 6.8 0.9 0.9
FR SP Equity Dec 1.16 SGD 11.7 9.7 9.0 7.9 2.1 1.8

Average (Singapore) 14.5 11.8 8.4 7.6 1.9 1.7

AALI IJ Equity Dec 24,600 IDR 15.8 14.3 11.0 10.1 5.1 4.3
LSIP IJ Equity Dec 9,800 IDR 14.6 13.5 10.1 9.8 2.9 2.5
SGRO IJ Equity Dec 2,625 IDR 13.4 10.8 8.8 8.1 2.4 2.0
UNSP IJ Equity Dec 495 IDR 5.6 4.9 4.7 4.5 0.5 0.5

Average (Indonesia – excl outliers) 14.6 12.9 10.0 9.3 3.5 2.9

Average (ex-Malaysia) 14.6 12.2 9.1 8.3 2.6 2.2

Malaysia Ave 19.9 16.1 12.5 10.3 2.7 2.5

Msia's % premium/(discount) over peers 36.7% 31.5% 37.3% 23.7% 4.4% 10.4%

* @ 31 Mar, in respective currencies

Source: Bloomberg, IBES Consensus & RHBRI

IMPORTANT DISCLOSURES

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

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or
more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take
on higher risks.

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

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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