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

RHB Research Institute

RHB Equity 360°

19 May 2010 (HSL, Motor, MISC, Parkson, MRCB, AEON; Technical: SapuraCrest)

Top Story : HSL – Poised to top RM500m orderbook target in FY12/10 Market Perform
Visit Note
- HSL has secured RM310m worth of new jobs YTD and is poised to top its full-year target of RM500m.
- HSL is cool about dropping out of the race for the Murum access road work packages as it believes it could
always deploy its resources elsewhere for much higher returns.
- HSL plans to oursource more work to sub-contractors over time but will fully retain land reclamation work.
- We are raising FY12/10-12 net profit forecasts by 3-12% largely to reflect higher annual orderbook targets
of RM600m (from RM500m previously).
- Fair value is from RM1.56 to RM1.61. Maintain Market Perform.

Sector Call

Motor : Apr continues increased 16.8% TIV Overweight

Sector Update
Proton – Fair value is RM5.48 based on stripped down book value Outperform
Tan Chong – Fair value at RM5.26 Outperform
MBM – Fair value at RM5.04 Outperform
UMW – Fair value at RM7.52 Outperform
- Malaysian automotive industry TIV for Apr increased by 16.8% yoy (vs. +25.0% yoy in Mar 2010) with
48,706 units sold (vs. 56,139 units in Mar 2010). The yoy increase in sales was largely due to buyers
rushing to take delivery of their vehicles before the anticipated hike in interest rates as well as pent-up
demand stemming from car buyers postponing big-ticket purchases in 2009.
- Mom sales decreased by 13.2% (vs. +38.1% mom or 56.1k units in Mar 2010) due to production not being
able to meet the Apr delivery deadline.
- We have raised our 2010-12 TIV projections to 8.9% (vs. +8.5% previously) in 2010, 2.8% (vs. +2.5%) in
2011 and 2.3% (vs. +2.2%) in 2012 as we expect demand for passenger and commercial vehicles to
improve further due to: 1) rising positive sentiment; 2) higher economic activities; and 3) strengthening of
RM against US$ and Yen.
- We believe the 2010 automotive sector earnings growth will continue to gain traction on the back of: 1)
strong industry’s TIV growth ahead and 2) sustained strengthening of the RM against US$ and yen which
would help to reduce costs of imported materials. We reiterate our Overweight stance on the sector.

Corporate Highlights

MISC : VTTI does not come cheap Underperform

Briefing Note
- The 50% stake in VTTI does not come cheap at an estimated 1-year forward acquisition PER of 24x, vis-à-
vis 12-15x for listed tank terminal companies. Also, MISC is paying a US$185m or 25% premium over the
50% stake’s NTA of US$550m.
- MISC has other considerations including that synergy can be derived from engaging in both shipping and
tank terminal businesses and VTTI will provide MISC with an additional steady income stream.
- The acquisition will dilute MISC’s FY03/11 EPS by 1.4%. We are at best only neutral on the deal.
- Maintain Underperform. Fair value is RM8.02 based on sum of parts.

Parkson : PRG 1QFY12/10 results in line Outperform (up from MP)

News Update
- PRG’s 1Q10 core net profit of RMB310.1m (+19.9%) was within expectations. EI-item is a one-off
employee share-options expense totaling RMB40m.
- SSS growth in line with guidance. In 1Q10, PRG achieved SSS growth of 10.8%. Furthermore, on a qoq
basis, SSS growth has been gaining pace. We expect SSS growth to remain on track on the back of
improving consumer sentiment and retail sales growth.
- In 1Q10, PRG’s sales mix shifted to higher margin products. However, the recovery in margin was offset by
 higher operating expenses, which rose by 10.7% yoy.
- We maintain our forecasts for now, pending Parkson’s results on 24 May. We expect Parkson’s
3QFY06/10’s results to be within expectations. Our SOP-derived target price of RM6.40 implies a potential
total return of 18.3% vs. FBM KLCI’s total return of 5.3%. As such, we upgrade the stock to Outperform.

MRCB : Construction and property development activities gather momentum in 1QFY12/10 Trading Buy
1QFY10 Results
- 1QFY12/10 net profit came in at 10-16% of our full-year forecast and the full-year market consensus.
- However, we consider the results within expectations as we expect stronger quarters ahead as
construction and property development activities gather momentum further.
- MRCB has an appealing angle in its property business, i.e. the possibility of bagging prime Federal land
parcels in KL and Sungai Buloh. We estimate that the land parcels could enhance MRCB’s valuation by
RM1.2bn or 86sen per share.
- Maintain Trading Buy. Fair value is RM2.06.

AEON : Earnings impact from 1U contract well buffered Outperform

1QFY10 Results
- 1Q10 net profit of RM41.2m was within expectations. AEON adopted two new accounting policies i.e.
amendments to FRS 118 and IFRIC 13 affecting mainly revenue recognition from consignment sales and
the loyalty programme. While we estimate around 25% drop in our FY10-12 revenue forecasts, our net
profit forecasts would remain unchanged.
- SSS likely to be around 3-4% in FY10, which is above our expectations of 2.0% in FY10. As such, we now
adjust up our SSS growth to 3.5% in FY10.
- According to a recent news article, AEON will cease to manage the first phase of 1U, once its contract
expires in Aug. We are now taking a more conservative stance and have removed the 1U property
management income from our forecasts, resulting in RM6-7m lower net profit on a full-year basis.
Furthermore, AEON has hinted at a full-scale refurbishment of its 1U Jusco outlet, which we believe could
reduce FY10 earnings by another RM1-2m, which we have also taken into account.
- Our earnings forecasts are thus reduced by 0.8%-2.9% p.a. for FY10-12. Fair value reduced to RM5.80
(from RM5.85) based on unchanged 14x FY10 EPS. Maintain Outperform.

Technical Highlights

Daily Trading Strategy : Doomed to see more selling activities in the near term…
- Yesterday’s market performance was clearly weaker than we had anticipated. Instead of a mild rebound,
FBM KLCI lost hold of the key 40-day SMA. This indicates more bearish scenario is likely in the near-term.
- Without any swift recovery to above the 10-day and 40-day SMAs near 1,337 and 1,334, FBM KLCI is
doomed to see more selling activities in the near term, in our view.
- And, with the razor thin turnover each day amid recent volatilities in market sentiment, plus an increased
odds for a “dead cross” signal between the SMAs, we expect investors to continue trimming their position,
prior to further retreat ahead.
- The benchmark sees a support at the recent low of 1,315.63, before testing its major stronghold at the
1,300 psychological level.
- On the upside, immediate resistances are near the 10-day and 40-day SMAs.

Daily Technical Watch: SapuraCrest – The stock could see an extended selldown in the near term…
- 10-day SMA: RM2.203
- 40-day SMA: RM2.313
- Support: IS = RM1.90 S1 = RM1.70 S2 = RM1.40
- Resistance: IR = RM2.10 R1 = RM2.30 R2 = RM2.600

Bulletin Board

Co/Sector News Impact Recom

Faber Faber will continue to focus on its IFM business We believe this is positive to the company given OP, FV=
 in UAE and India, where its non-concession that the focus on expanding its IFM business RM3.40
business (mainly coming from UAE and India) overseas will reduce the company’s dependence
had shown a higher growth of contribution to its on the concession. We expect contribution from
revenue at 24% in FY09 as compared to 8% its IFM business from UAE and India in FY10 will
growth in FY08 (StarBiz). grow by 50% and 35% respectively.
Sino Hua- Sino Hua-An is conducting a feasibility study on Positive, as this will help diversify Sino Hua-An's MP, FV =
An setting up a coke manufacturing plant in earnings base geographically to Southeast Asia RM0.42
Malaysia. (Starbiz) (where demand potential is rising on the back of
the rising use of blast furnaces that rely heavily
on coke as the main source of energy), from
China where the government is increasingly
imposing restrictions on capacity expansion thus
capping the company’s ability to grow further.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Dutch Lady Special interim dividend of 30 sen less tax 1-Jun-10 1-Jul-10
Hup Seng Final dividend of 4 sen single tier 4-Jun-10 22-Jun-10

Going “ex” on 20 May

PPB Group Proposed final single tier dividend of 18 sen 20-May-10 8-Jun-10
RHB Capital Final dividend of 17.45 sen less 25% tax 20-May-10 18-Jun-10

...For more details, see individual reports attached

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 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 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.