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

RHB Research Institute

RHB Equity 360°

15 July 2010 (PLUS, TNB; Technical: IJM Corp)

Top Story : PLUS – FY12/10 traffic volume likely to grow higher than 3% Outperform
Company Update
- We believe there is a strong likelihood that core expressways’ traffic volume could come in higher than our
forecast, as: 1) FY12/10 traffic volume will be cushioned by the strong 9.8% growth registered in Jan-May
10; and 2) the strong 28.6% growth registered in passenger car sales in Jan-May 2010 will help boost
PLUS’s traffic volume growth in the remaining months. To pre-empt the higher-than-expected traffic
volume, we are raising our FY10 traffic volume growth assumption from 3% to 4%.
- While the new accounting guidelines from the MIA will likely require concessionaires (including PLUS) to
switch their amortisation method from “revenue method” to either “straight line” or “use of volume” method,
PLUS is still hopeful that it could continue to adopt “revenue method”.
- We are raising our FY12/10-12 net profit forecasts by 1.5-1.8% , to reflect a 1%-pt raise in our FY12/10
traffic volume growth assumption from 3% to 4%.
- Following the revision in our FY12/10 traffic volume forecast, our DCF-derived fair value for PLUS has
been revised upwards by 2.4% from RM4.13 to RM4.23 based on WACC of 7.7%.

Corporate Highlights

TNB : 3QFY10 results dampened by higher coal cost and provisions Outperform
3QFY10 Results/Briefing Note
- 3Q results were broadly in line with our and consensus estimates with 9MFY10 core net profit of RM2.1bn
(+21.8% yoy) accounting for 70-73% of our and consensus FY10 net profit forecasts. We expect 4Q results
to benefit from stronger demand (typically stronger in 4Q) as well as the absence of provision for vacated
accounts of RM63m booked in 3Q, partly offset by higher coal cost.
- YTD (Sep 09-Jun 10) unit sales growth stood at +9.9% yoy and with Jun electricity demand still up double
digit (+11% yoy), management raised their FY10 demand growth guidance to 10% from 7-8%. Pricing for
the bulk of FY10’s coal requirement has been locked-in and expected to average at an unchanged US$90.
- Implementation of Pemandu’s gas subsidy revision proposal is a matter of timing according to
management. However, in addition to the revision in electricity tariffs for the higher gas price, management
believes this could be accompanied by a base tariff review and fuel cost pass-through formula. Both these,
if materialised, would be a major rerating catalyst for TNB, in our view.
- We toned down our FY10-12 net profit forecasts by 1.6-3.8% p.a. largely after adjusting for: 1) demand
growth assumptions; 2) generation mix; and 3) provision for doubtful debts (FY10).
- Following the earnings revision above, our indicative fair value has been lowered to RM10.20 from
RM10.50, based on target FY11 PER of 13x. Outperform call on the stock, however, is unchanged.

Technical Highlights

Daily Trading Strategy : The FBM KLCI is due to rechallenge 1,350 soon…
- Due to the undisturbed rally and a successful penetration of June’s high of 1,335.31, the FBM KLCI is due
to rechallenge the solid overhead resistance at 1,350 soon.
- Moreover, the breakthrough from 1,335.31 yesterday was accompanied by a significant improvement on
the daily turnover.
- In our view, if trading volume can maintain at 800m-1.0bn shares mark, trading sentiment will turn robust.
- For the chart to turn even more bullish, the FBM KLCI must overcome the key resistance at 1,350.
- Beyond that level, the FBM KLCI will gear-up towards the 1,390 level and overthrown the previously
cautious medium-term outlook.
- On the downside, immediate support can be found near 10-day SMA of 1,318 and 40-day SMA of 1,303.

Daily Technical Watch: IJM Corp – Revisiting the RM5.30-5.76 region on follow-through buying momentum…
- 10-day SMA: RM4.962
 - 40-day SMA: RM4.824
- Support: IS = RM5.00 S1 = RM4.57 S2 = RM4.17
- Resistance: IR = RM5.30 R1 = RM5.76 R2 = RM6.16

Bulletin Board

Co/Sector News Impact Recom

UMW UMW will invest part of its RM170m capex for its Positive as Malaysia has a larger passenger OP, FV =
automotive division to produce Toyota market vs. Thailand. We believe the move to RM 7.50
Camry locally for the Malaysian market. localise the production as a CKD unit might bring
The move which is expected to roll out in two down the price of the Camry which is currently
years will help to free up capacity in its Thailand being sold at RM144k. Note that Toyota currently
facility for production of other models. (BT) has a 15% market share in Malaysia.
Sime Darby There are conflicting reports as to when Datuk Neutral, as we believe the “feel-good” effect of UP, FV =
Mohd Bakke Salleh is to start at Sime Darby Sime having appointed Datuk Mohd Bakke has RM8.15
(today according to The Star and Business Times worn off and investors are now looking for signs
and 15 Aug according to Financial Daily). Datuk that he will be able to do the job well and revamp
Azhar Abdul Hamid, currently the acting CEO of Sime’s operations, via a detailed audit of all the
Sime Darby, has reportedly asked for his contract divisions and operations.
not to be renewed when it expires in Nov.
Meanwhile, Felda Global Ventures is holding a
press conference today to announce its new
president and group CEO. (Various)

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Zhulian Corp Second interim single tier dividend of 3 sen 11-Aug-10 30-Aug-10

Going “ex” on 16 Jul

Top Glove Corporation Bonus issue on the basis of 1-for-1 16-Jul-10 -
Unisem Final dividend of 2.5 sen tax-exempt 16-Jul-10 30-Jul-10
Ewein First and final tax exempt dividend of 2.5 sen 16-Jul-10 20-Aug-10

...For more details, see individual reports attached

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Stock Ratings

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Industry/Sector Ratings

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