PP 7767/09/2010(025354)

30 August 2010
Corporate Highlights RHB Research

Malaysia
Institute Sdn Bhd
. A member of the
RHB Banking Group
R e su lts N ot e Company No: 233327 -M

30 August 2010
MARKET DATELINE
KLCC Property Share Price : RM3.32
Fair Value : RM3.80
No Surprises Recom : Market Perform
(Maintained)

Table 1 : Investment Statistics (KLCCP; Code: 5089) Bloomberg: KLCC MK

Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/CF P/NTA ROE Gearing NDY
Mar (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (%) (%)
2010F# 1002.6 235.2 25.2 5.0 13.2 - 2.7 0.6 4.4 0.3 3.3
2011F 978.8 245.8 26.3 4.5 12.6 22.0 6.4 0.6 4.5 0.3 3.3
2012F 1057.3 255.2 27.3 3.8 12.2 23.5 5.6 0.6 4.6 0.3 3.3
2013F 1099.5 263.2 28.2 3.1 11.8 24.9 5.1 0.5 4.6 0.2 3.3
Main Market Listing /Trustee Stock/ Syariah Approved Stock By The SC # Normalised * Consensus Based On IBES Estimates
RHBRI Vs. Consensus
♦ Within expectations. KLCCP’s 1QFY11net profit of RM63.7m (+5.5% Above
yoy) came in within our and consensus estimates. Revenue grew 4.6% In Line
yoy, mainly attributed to: a) higher rentals of retail mall and office Below
buildings (+4.2% yoy) in particular Dayabumi, due to rental revisions; b)
Issued Capital (m shares) 934.1
higher revenue from hotel operations (+3.1% yoy). Meanwhile, the yoy Market Cap (RMm) 3,103.1
improvement in PBT was due to lower operating costs and finance cost Daily Trading Vol (m shs) 0.4
incurred during the quarter. As expected, no dividend was declared for the 52wk Price Range (RM) 2.74-3.57
quarter. Major Shareholders: (%)
PETRONAS 51.0
♦ Lot C is on schedule. Construction of Lot C is on track. The retail podium EPF 9.9
is expected to commence by end 2010, and tenants will start their
operations in early 2011. Occupancy rate is estimated at 80% for the first
year of operations. Hence, earnings from the retail properties segment are
FYE Mar FY11 FY12 FY13
expected to increase more substantially going into FY2012. Currently, EPS chg (%) - - -
KLCCP is in talks with a tenant, where lease agreement could be on long- Var to Cons (%) 19.6 16.3 13.1
term tenure, and at a rental rate that is on par with that of Maxis building
(around RM7+ psf). As for Lot D1, which will be a mixed development PE Band Chart

project, it is currently at planning stage.

♦ Risks. The risks include: a) slow pick-up in office demand; b) rising

PER = 16x
PER = 13x
competition from office space supply as well as decentralisation effect to PER = 10x

move to Bangsar/Damansara/PJ area; c) EPS dilution from the conversion

of RCULS by the major shareholder.

♦ Forecast. No change to our FY11-13 earnings forecasts.

♦ Investment case. Our fair value is kept at RM3.80, or 15% discount to its
Relative Performance To FBM KLCI
RNAV/share of RM4.47. We maintain our Market Perform rating on the
stock. FBM KLCI

KLCC Property

Joshua Ng
Please read important disclosures at the end of this report. (603) 92802237
joshuang@rhb.com.my

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Table 2. KLCCP Quarterly Results

QoQ YoY
FYE Mar (RMm) 1Q10 4Q10 1Q11 3MFY10 3MFY11 YoY (%) Comments
(%) (%)
Turnover 217.1 225.6 227.0 0.6 4.6 217.1 227.0 4.6 Better performance was due to
higher rentals of office buildings in
particular Dayabumi (rental
revision) and retail mall (higher
rental). Revenue from hotel
operations has also increased
slightly.
EBIT 162.3 163.3 166.8 2.1 2.8 162.3 166.8 2.8
Net int inc/(exp) (33.6) (30.3) (29.6) (2.1) (12.0) (33.6) (29.6) (12.0)
Associates 2.4 8.8 2.5 (71.3) 4.2 2.4 2.5 4.2
Fair value adjustment 0.0 758.0 0.0 n.m. n.m. 0.0 0.0 n.m.
Pre-tax profit 131.1 899.9 139.8 (84.5) 6.6 131.1 139.8 6.6 PBT was lower in 1Q11, due to a
revaluation surplus in 4Q10. 4Q10
normalised PBT was RM141.9m.
Taxation (34.3) (72.6) (36.2) (50.1) 5.6 (34.3) (36.2) 5.6
Minorities (36.4) (360.1) (39.8) (88.9) 9.4 (36.4) (39.8) 9.4
Net profit 60.4 467.2 63.7 (86.4) 5.5 60.4 63.7 5.5 Within our and consensus
estimates.
Net EPS (sen) 4.7 36.1 31.4 (13.0) 565.9 4.7 4.9 4.3
NDPS (sen) 0.0 6.0 0.0 n.m. n.m. 0.0 0.0 n.m.
NTA per share (RM) 4.4 5.0 6.1 4.4 6.1

Margins (%)
EBIT 74.8 72.4 73.5 74.8 73.5 Qoq drop due to higher utilities
incurred in Suria KLCC.
Pretax 60.4 398.9 61.6 60.4 61.6
Net profit 27.8 207.1 28.1 27.8 28.1
Tax rate (26.2) (8.1) (25.9) (26.2) (25.9)

Table 3. Earnings Forecasts

FYE Mar (RMm) FY10 FY11F FY12F FY13F
Revenue 1,002.6 978.8 1,057.3 1,099.5
Operating profit 646.9 713.3 784.0 831.5
Interest cost (129.9) (137.1) (137.5) (130.7)
Exceptional Gain 758.0 0.0 0.0 0.0
Associate 16.4 15.5 16.0 16.5
Pretax profit 1,291.5 591.7 662.5 717.3
Tax (173.4) (147.9) (165.6) (179.3)
Minority interest (470.5) (198.0) (241.7) (274.8)
Net profit 647.6 245.8 255.2 263.2
Normalised net profit 235.2 245.8 255.2 263.2
EPS (sen) 25.2 26.3 27.3 28.2
DPS (sen) 11.0 11.0 11.0 11.0
Source: Company data, RHBRI estimates

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Table 4 : Estimated RNAV per share for KLCCP

KLCC investment properties NLA psf Book cost Market value Stake Surplus
(RMm) (RMm) (%) (RMm)
PETRONAS Twin Towers*
3,195,544.0 5,500.0 5,500.0 50.5 0.0
Suria KLCC*
1,048,583.0 3,300.0 3,300.0 60.0 0.0
Mandarin Oriental*
643^^ 552.6 514.4 75.0 (28.6)
Menara Exxon Mobil*
379,930.0 425.0 425.0 100.0 0.0
Dayabumi*
678,974.0 400.0 400.0 100.0 0.0
Menara Maxis
528,000.0 650.0 650.0 33.0 0.0
Lot C #
980,000.0 803.2 980.0 100.0 176.8
Lot D #
1,000,000.0 667.6 1,000.0 100.0 332.4
Total
12,298.4 12,769.4 480.5
Shareholder Funds as at 31 Mar 09
5,312.2
Existing share cap (m shares)
934.1
RNAV/ share (RM)
6.20
plus RCULS
1,294.7
Fully diluted RNAV/ share (RM)
4.47
^^ total number of room

* revalued at 30 Jan 09
# development cost of RM665 psf for Lot C and assuming RM600 psf for Lot D

Source: KLCCP, RHBRI

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.

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