PP 7767/09/2010(025354)

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

Marke t Upda te
1 June 2010
MARKET DATELINE

Benchmarking
Anticipating The Mid-Year Review

♦ Mid-year review. While the ongoing privatisation of Astro has already

Table 1. FBM KLCI Sector Weights
resulted in the stock being deleted from the FBM KLCI top 30 list and: 1)
Sector Current (%)
Hong Leong Financial Group (HLFG) and Supermax being promoted to the
Finance 38.60
FBM KLCI and FBM Mid-70 Index (which together make up the FBM100
Plantation 19.24
Index) respectively with effect from 26 May, we anticipate at least two
Telecom 12.89
more changes to the FBM Mid-70 to be announced after the mid-year
Power 9.59
review on the 3rd Friday of Jun (i.e. 18th), i.e. the inclusion of JCY and
Gaming 7.82
Unisem. We note that the review will be based on 31 May share prices.
Transport 2.81
♦ Rankings of top 30 remain intact. Despite the recent market Consumer 2.17
correction, we note that the top 30 stocks by full market cap remained Oil & Gas 2.13
within the inclusion zone (i.e. within the top 35). B-Toto was the only Construction 1.74
stock at risk of falling out of the top 30 as it had dropped to 34th position. Infra 1.66
Motor 1.35
♦ No more media, banks get heavier. As Astro was the only media stock As at 31 May
in the FBM KLCI, the media sector will no longer be represented in the Source: Bloomberg, RHBRI
benchmark index. However, we note that the banks have become even
more heavily represented with the addition of HLFG with an index weight
of 2.16%. In total, the banks now command an index weight of 38.60%. Table 2. Top Picks
Price# (RM) FV (RM)
♦ Main additions to FBM100 from the technology sector. As for the
Maybank 7.34 8.96
FBM100, we note that the key additions will likely be in the technology
CIMB 6.78 8.12
sector, i.e. JCY and Unisem. Currently, MPI is the only major technology
Maxis 5.22 6.20
stock in the index. As a result the technology sector weighting in the
Tenaga 8.35 10.40
FBM100 will rise from 0.11% currently, to 0.52%.
Genting Bhd 6.80 8.95
o JCY. Although JCY did not qualify for early inclusion to the FBM100 KLK 15.90 18.25
after its listing in Feb, we expect the stock to be added at the mid- Top Glove 12.28 15.50
year review given its full market cap of RM3.2bn, which places it at IJM Land 2.19 3.06
51st in the list of top 100 stocks. Assuming a free float factor of 0.3x, Media Prima 2.12 2.55
and based on the current share price of RM1.58, we estimate JCY Sunway City 3.83 5.33
would be added to the FBM100 with an index weighting of 0.19%. Unisem 2.79 4.06
Kossan 7.27 10.74
o Unisem. YTD, Unisem’s share price has risen by 70.1%. As a result
Faber 2.43 3.40
the stock is now placed 86th by full market cap, from well below 100th,
Evergreen 1.48 2.35
and will thus qualify for inclusion into the FBM100 Index at the mid-
Notion Vtec 2.73 4.68
year review. We estimate the stock would have an index weight of
Daibochi 2.94 4.20
0.22% in the FBM100.
# As at 31 May

♦ New major listings do not qualify, yet. None of the major new listings Source: Bloomberg, RHBRI

already announced will qualify for inclusion to the FBM KLCI or FBM 100
within the next six months as they will either be too small (full market
cap of at least 2% of the FBM EMAS stocks i.e. >RM18.4bn) or lack the
requirements (including minimum 20 days of trading, and turn over at
least 10% of free float-adjusted issued shares). However, we note the
potential listing of Petronas’ petrochemicals business may qualify for fast-
track inclusion if its full market cap is more than RM18.4bn.

♦ Conclusion. While the banks and planters remain key drivers for the FBM
KLCI, we expect the market to remain volatile as external factors
Yap Huey Chiang
continue to affect overall sentiment. For the longer term, we favour
(603) 92802171
stocks that are fundamentally sound and attractively valued (see Tables 2 yap.huey.chiang@rhb.com.my
and 6 for a list of our top picks).

Please read important disclosures at the end of this report.

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 1 June 2010

Table 3. FBM KLCI Sector Weightings And Changes Since End-2009

Sector Weightings (%) Weighting Change (%-pts)
Current 30-Apr-10 28-Feb-10 31-Dec-09 1-month 3-month YTD
Construction 1.74 1.69 1.75 1.77 0.04 (0.01) (0.03)
Consumer 2.17 2.11 2.14 2.15 0.07 0.03 0.02
Finance 38.60 36.76 35.96 35.65 1.84 2.64 2.95
Gaming 7.82 7.81 7.61 8.41 0.01 0.21 (0.60)
Infra 1.66 1.65 1.76 1.66 0.00 (0.11) (0.01)
Media - 0.79 0.67 0.59 (0.79) (0.67) (0.59)
Motor 1.35 1.29 1.36 1.37 0.06 (0.01) (0.02)
Oil & Gas 2.13 2.08 2.13 2.16 0.06 0.01 (0.02)
Plantation 19.24 20.75 21.30 21.86 (1.52) (2.07) (2.62)
Power 9.59 9.38 9.42 9.77 0.21 0.17 (0.18)
Telecom 12.89 12.79 13.22 11.84 0.10 (0.33) 1.05
Transport 2.81 2.88 2.69 2.77 (0.07) 0.12 0.04
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 May Weight Cap vs. KLCI vs. KLCI
(RM) (%) (RMm) (%) (%)
1 CIMB Group 6.78 11.94 47,890.7 4.60 5.61
2 Public Bank 11.44 10.07 40,405.2 1.75 2.73
3 Malayan Banking 7.34 9.71 51,952.4 5.98 7.00
4 Sime Darby 7.75 8.69 46,573.3 (14.42) (13.60)
5 Tenaga Nasional 8.35 6.75 36,275.0 (1.54) (0.60)
6 IOI Corp 4.91 6.13 32,776.8 (11.09) (10.24)
7 Axiata Group 3.77 5.95 31,838.2 22.43 23.61
8 Genting 6.80 4.70 25,196.0 (8.24) (7.36)
9 Maxis 5.22 2.93 39,150.0 (3.72) (2.79)
10 MISC 8.43 2.81 37,629.8 2.87 3.86
11 AMMB Holdings 4.89 2.76 14,739.4 (3.13) (2.20)
12 PPB Group 15.56 2.30 18,446.4 (0.45) 0.50
13 Telekom Malaysia 3.35 2.24 11,984.3 8.44 9.48
14 HL Financial Group 8.22 2.16 8,653.8 9.14 10.19
15 Kuala Lumpur Kepong 15.90 2.12 16,973.3 (4.55) (3.64)
16 Genting Malaysia 2.78 2.03 16,420.1 (2.01) (1.07)
17 Digi.Com 22.88 1.77 17,789.2 3.20 4.19
18 YTL Corp 7.34 1.74 13,946.2 (0.41) 0.55
19 PLUS Expressways 3.32 1.66 16,600.0 0.87 1.84
20 BAT 44.18 1.57 12,614.7 2.24 3.22
21 Petronas Gas 9.92 1.47 19,629.0 (0.45) 0.51
22 UMW Holdings 6.36 1.35 7,222.3 (0.80) 0.16
23 Hong Leong Bank 8.55 1.35 13,509.9 4.17 5.17
24 YTL Power International 2.22 1.19 15,959.0 (1.84) (0.89)
25 Berjaya Sports Toto 4.30 1.09 5,809.4 (2.09) (1.15)
26 Tanjong Plc 18.00 0.90 7,258.6 5.87 6.89
27 MMC Corp 2.45 0.74 7,460.4 (0.14) 0.82
28 Petronas Dagangan 8.95 0.66 8,891.4 1.89 2.87
29 RHB Capital 5.75 0.62 12,382.5 7.46 8.49
30 Nestle 34.30 0.60 8,043.4 2.64 3.63
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. FBM KLCI And FBM100 Constituents
FBM KLCI FBM100 FBM KLCI FBM100
Company Weights Weights Company Weights Weights
(%) (%) (%) (%)
1 CIMB Group 11.94 9.56 51 WCT - 0.31
2 Public Bank 10.07 8.07 52 Media Prima - 0.31
3 Maybank 9.71 7.78 53 Multi-Purpose Holdings - 0.30
4 Sime Darby 8.69 6.97 54 KNM Group - 0.30
5 Tenaga Nasional 6.75 5.43 55 Malaysian Resources Corp - 0.29
6 IOI Corp 6.13 4.91 56 Tan Chong - 0.27
7 Axiata Group 5.95 4.77 57 KLCC Property Holdings - 0.27
8 Genting Bhd 4.70 3.77 58 Proton Holdings - 0.26
9 Maxis 2.93 2.34 59 SapuraCrest Petroleum - 0.26
10 MISC 2.81 2.25 60 KFC Holdings (Malaysia) - 0.25
11 AMMB Holdings 2.76 2.21 61 Fraser & Neave Holdings - 0.24
12 PPB Group 2.30 1.84 62 Wah Seong Corp - 0.23
13 Telekom Malaysia 2.24 1.79 63 Kulim Malaysia - 0.23
14 Hong Leong Financial Group 2.16 1.73 64 Litrak - 0.23
15 Kuala Lumpur Kepong 2.12 1.69 65 Titan Chemicals Corp - 0.23
16 Genting Malaysia 2.03 1.64 66 Dialog Group - 0.22
17 Digi.Com 1.77 1.42 67 Guinness Anchor - 0.22
18 YTL Corp 1.74 1.39 68 Pos Malaysia - 0.21
19 Plus Expressways 1.66 1.33 69 Mah Sing Group - 0.21
20 BAT 1.57 1.26 70 Mudajaya - 0.21
21 Petronas Gas 1.47 1.18 71 UEM Land Holdings - 0.20
22 Umw Holdings 1.35 1.08 72 Boustead Holdings - 0.20
23 Hong Leong Bank 1.35 1.08 73 Malaysian Airline System - 0.20
24 YTL Power International 1.19 0.96 74 DRB-Hicom - 0.20
25 Berjaya Sports Toto 1.09 0.87 75 OSK Holdings - 0.19
26 Tanjong Plc 0.90 0.72 76 Malaysian Bulk Carriers - 0.18
27 MMC Corp 0.74 0.60 77 Aeon Co (M) - 0.17
28 Petronas Dagangan 0.66 0.53 78 Bintulu Port Holdings - 0.15
29 RHB Capital 0.62 0.49 79 Puncak Niaga Holdings - 0.15
30 Nestle 0.60 0.48 80 Carlsberg Brewery - 0.15
31 IJM Corp - 1.27 81 IJM Land - 0.14
32 Gamuda - 1.19 82 Sunway City - 0.14
33 SP Setia - 0.79 83 Hap Seng Plantations Hldgs - 0.14
34 Alliance Financial Group - 0.64 84 Hap Seng Consolidated - 0.14
35 Top Glove Corp - 0.57 85 Media Chinese International - 0.13
36 Bursa Malaysia - 0.56 86 IJM Plantations - 0.12
37 Lafarge Malayan Cement - 0.56 87 QL Resources - 0.12
38 Parkson Holdings - 0.55 88 YTL Cement - 0.11
39 AirAsia - 0.50 89 Malaysian Pacific Industries - 0.11
40 Berjaya Corp - 0.49 90 Ann Joo Resources - 0.10
41 Genting Plantations - 0.49 91 Kencana Petroleum - 0.10
42 Batu Kawan - 0.46 92 Starhill Real Estate Investm - 0.10
43 Affin Holdings - 0.43 93 KPJ Healthcare - 0.09
44 EON Capital - 0.39 94 TA Enterprise Berhad - 0.09
45 IGB Corporation - 0.37 95 JT International - 0.08
46 Hartalega - 0.37 96 BIMB - 0.08
47 Star Publications (M) - 0.36 97 Boustead Heavy Industries Co - 0.07
48 Supermax - 0.35 98 Amway (Malaysia) - 0.07
49 Malaysia Airports Hldgs - 0.33 99 UBG - 0.04
50 Shell Refining Co - 0.32 100 Tradewinds Plantation - 0.03
Note: Index weight rankings are based on full market cap multiplied by free float factor Source: Bloomberg, RHBRI estimates

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 Table 6. Top Picks
Price FV EPS EPS Growth PER PBV PCF GDY
FYE (RM/s) (RM/s) (sen) (%) (x) (x) (x) (%) Rec
31 May FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
Maybank Jun 7.34 8.96 51.3 60.7 35.7 18.1 14.3 12.1 1.9 n.a. 4.0 OP
CIMB Dec 6.78 8.12 47.8 56.3 20.2 17.9 14.2 12.0 2.2 n.a. 1.8 OP
Maxis Dec 5.22 6.20 33.2 36.2 6.6 9.1 15.7 14.4 3.9 10.2 6.4 OP
Tenaga Aug 8.35 10.40 70.7 80.9 42.0 14.4 11.8 10.3 1.3 4.6 3.4 OP
Genting Bhd Dec 6.80 8.95 84.5 56.4 >100 -33.3 8.0 12.1 1.6 13.6 1.4 OP
KLK Sep 15.90 18.25 87.5 123.3 23.7 40.8 18.2 12.9 2.8 14.6 2.8 OP
Top Glove Aug 12.28 15.50 89.0 96.2 55.3 8.1 13.8 12.8 3.6 11.3 3.7 OP
IJM Land^ Mar 2.19 3.06 18.4 34.4 88.5 87.2 11.9 6.4 1.3 4.5 0.9 OP
Media Prima Dec 2.12 2.55 16.3 18.0 >100 10.1 13.0 11.8 2.1 6.6 4.7 OP
Sunway City Dec 3.83 5.33 34.8 38.8 9.8 11.6 11.0 9.9 0.8 7.0 2.1 OP
Unisem Dec 2.79 4.06 27.1 36.1 >100 33.5 10.3 7.7 1.4 3.3 1.8 OP
Kossan Dec 7.27 10.74 82.6 103.0 10.3 24.7 8.8 7.1 2.4 7.7 1.4 OP
Faber Dec 2.43 3.40 26.5 24.2 16.4 -8.8 9.2 10.0 1.9 5.7 2.9 OP
Evergreen Dec 1.48 2.35 21.3 23.3 26.1 9.4 6.9 6.3 1.0 9.8 3.4 OP
Notion Vtec Sep 2.73 4.68 34.7 46.8 35.3 35.1 7.9 5.8 2.0 5.8 2.4 OP
Daibochi Dec 2.94 4.20 35.1 38.0 16.9 8.3 8.4 7.7 1.6 7.0 7.7 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 (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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