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

RHB Research Institute

RHB Equity 360°

9 June 2010 (TNB, AirAsia; Technical: Berjaya Corp)

Top Story : TNB – Back to basics – Focus on demand Outperform

Visit Note
- With respect to the recent subsidy restructuring proposal by Pemandu, management stressed that the
impact is expected to be earnings neutral, although this would depend on the level of demand.
- Based on the gas allocation of 1,250mmscfd to the power sector, we estimate the initial hike in gas price
could see gas cost increase by RM5.93m/day. This increase, however, would be roughly matched by the
incremental revenue of RM5.85m/day from the electricity tariff hike of 2.4 sen/kWh. With gas allocation
capped at 1,250mmscfd, thus, the main variable would now be demand.
- Meanwhile, demand continues to remain firm. Apr unit sales surged 18.3% yoy (Mar ’10: +11.7% yoy) while
YTD (Sep ’09 - Apr ’10) unit sales growth stood at 9.7% yoy. Going forward, while we expect electricity
demand to remain healthy, the growth rate would likely moderate as demand would now be coming from a
higher base.
- With plans to import electricity from Sarawak and the undersea cable project unlikely to materialise,
capacity expansion at Manjung (by another 2,000MW) is set to take off. If all goes well, tenders for the
project could start to go out next year.
- No change to forecasts. Fair value of RM10.40 is based on unchanged target CY10 PER of 14x. Maintain
Outperform.

Commodity Corner

Crude Oil : Outlook for crude oil price turns cautious

- The US EIA forecast that WTI spot prices would average US$78.75/barrel for 2010, compared to its
projection of US$82.18 last month, according to its monthly Short-Term Energy Outlook report. The US EIA
also cut its outlook for global oil consumption in 2010 to 85.51m barrels/day from 85.55m b/d last month,
although this is still 1.8% higher vs. 2009’s 84.01m b/d.
- In addition, renowned industry analyst Fesharaki stated at the 2010 Asia Oil & Gas Conference in Malaysia
yesterday that given OPEC's spare capacity, it is impossible to predict a price of US$95/barrel anytime
before 2012, when excess supply will disappear.
- The outlook for crude oil price appears to be turning negative. We are currently reviewing our current price
assumption of US$80-100/barrel for this year and next. We note however that Petronas’ shift in focus back
to domestic waters and enhanced oil recovery for existing production fields will continue to sustain a base
level of activity for the support services players. In any case, we are reviewing our Overweight stance on
the sector.

Corporate Highlights

AirAsia : No merger between AirAsia and AirAsia X Outperform

News Update
- AirAsia said that there will be no merger between AirAsia and AirAsia X, and AirAsia X is eyeing a separate
public listing in 2H2011.
- We believe the market’s knee-jerk reaction may be on the negative side as there has been expectation on
M&A news flow from AirAsia.
- Nonetheless, we believe this is the right move over the longer term. We remain skeptical on the long-haul
low-cost model (that is used by AirAsia X) as it goes against some of the very basic tenets of the low-cost
model.
- A separate listing of AirAsia X (and not a merger between the two) limits the exposure of AirAsia’s
shareholders to a high-risk (but arguably also the potential for high return) long-haul low-cost model.
- Fair value is RM2.20. Maintain Outperform.
 Technical Highlights

Daily Trading Strategy : Investors should continue to sell into strength…

- Chart wise, the closing with a small positive candle suggests that the FBM KLCI could repeat its attempt to
stage another rebound in the near term.
- But yesterday’s small rebound was not convincing enough, in our view, especially with the poor trading
volume as well as the sluggish technical signals on the momentum indicators.
- Even if a rebound really takes place, its upside should be limited to the previous technical gap at 1,290.51
– 1,300.44 and the 1,300 heavy psychological level.
- Therefore, we are of the view that, investors should continue to “sell into strength” on expectation that the
strong resistance at 1,300 will hold.
- On the other hand, upon resumption of fresh selling momentum, the index would turn south immediately to
the 10-day SMA of 1.278. Falling below the SMA will refresh the previous corrective wave and lead the
index towards 1,250 and the recent low of 1,243.86 in the short term.

Daily Technical Watch: Berjaya Corporation – Losing RM1.33 will confirm an uptrend derailment …
- 10-day SMA: RM1.476
- 40-day SMA: RM1.609
- Support: IS = RM1.33 S1 = RM1.20 S2 = RM1.06
- Resistance: IR = RM1.55 R1 = RM1.78

Bulletin Board

Co/Sector News Impact Recom

O&G It is learnt that Petronas is looking at expanding
its Malacca refinery capacity by another 20,000
barrels per day. The feasibility study is expected
to be completed by end-2010. (Starbiz)
Proton Proton has no plans to sell their stake in Lotus for We believe Proton should consider selling their OP, FV =
now and plans to keep the unit as a strategic
entity. (Financial Daily)
This is not unexpected given the gradual OW
increase in energy/gasoline demand driven by
higher industrial activities as well as increasing
number of vehicles on the road. We highlight key
beneficiaries would include Dialog, Kencana and
KNM.
stake in Lotus should it receive an attractive offer RM5.50
as Lotus currently does not provide the
synergistic benefits to its current product
platforms which are mainly on the lower-end
segment.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Integrax Final dividend of 3 sen less 25% tax (payment date amended) 28-Jun-10 15-Jul-10
Thong Guan industries First and final tax exempt dividend of 4 sen 26-Jul-10 18-Aug-10

Going “ex” on 10 Jun

Jobstreet Corporation Tax exempt final dividend of 1.5 sen 10-Jun-10 28-Jun-10
Malaysia Airports Final dividend of 14.9 sen less tax 10-Jun-10 28-Jun-10
AEON First & final dividend of 12 sen less 25% tax 10-Jun-10 7-Jul-10
Lafarge Malayan Cement First interim single-tier dividend of 8 sen 10-Jun-10 8-Jul-10
Pharmaniaga Final gross div of 27 sen + special div of 10 sen, less 25% tax 10-Jun-10 15-Jul-10

...For more details, see individual reports attached

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