Market Dateline PP 7767/09/2011(028730)

RHB Research Institute

RHB Equity 360°

14 October 2010 (Mah Sing; Technical: Inch Kenneth)

Top Story : Mah Sing – Quick turnaround model to add more value Outperform
Visit Note
- Mah Sing has three projects that are strategically positioned to benefit from the Government’s MRT
network. These are Star Avenue (Sg Buloh station), Icon Mont’ Kiara (Matrade station) and M Suites (Great
Eastern mall station). Take-up rate for Icon MK (Block 1) and M Suites is impressive at around 70-75%.
- We believe Mah Sing is likely to acquire at least another piece of land before the end of this year. Besides
that, the larger piece of >100-acre is still pending, and Mah Sing has proposed the issuance of RM325m
convertible bond to fund its acquisitions.
- Mah Sing is on track to meet its revised sates target of >RM1.5bn for this year. A few projects were
launched in 3Q – Kinrara Residence, Icon Mk, M Suites and One Lagenda, and the strong sales from these
projects will continue to top up its unbilled sales of RM1.17bn as at Jun 2010.
- Mah Sing’s shares have performed as expected, and we still see values given the company’s aggressive
landbanking effort and strong property sales. The property sector as a whole will also continue to benefit
under the Government’s ETP. Mah Sing’s quick turnaround model has worked well, successfully generated
record high sales, but yet valuations are not at its record high – current FY11 P/B 1.6x vs. 1.9x P/B or +2
std dev above the mean. We believe a premium over its RNAV is justifiable now, as landbank value is
being realised faster. We hence impute a 10% premium on our RNAV/share estimate to derive our revised
fair value of RM2.33, upped from RM2.06. We maintain our Outperform call on the stock.

Technical Highlights

Daily Trading Strategy : Removing 1,500 by the end of this week…

- Impressively, the FBM KLCI shrugged off the pullback risk and made a strong turnaround yesterday to
resume its bullish short-term rally.
- With a strong closing at a 33-month high and the upbeat technical indicators, we believe the FBM KLCI will
break above the 1,500 psychological level by the end of this week.
- In fact, we expect the current upbeat sentiment to persist on regional markets’ strength, especially with
some Asian markets hitting a new record high or a fresh year high on continuous foreign capital inflows
recently.
- Moreover, ahead of the 2011 Budget announcement on Friday, speculations are bound to increase in the
near term on selective sectors like the construction, services and property sectors, in our view.
- Coupled with a robust daily volume at above the 1.0bn shares mark of late, more investors are expected to
return to the trading floors due to the increased risk appetite following the recent gains.
- Technically, upon the removal of 1,500, the benchmark will likely accelerate its upward momentum and
head towards the all-time high level of 1,524.69 or higher soon.

Daily Technical Watch: Inch Kenneth Kajang Rubber – Violating RM0.80 will trigger an extension rally …
- 10-day SMA: RM0.6785
- 40-day SMA: RM0.6311
- Support: IS = RM0.65 S1 = RM0.555 S2 = RM0.465
- Resistance: IR = RM0.80 R1 = RM0.98 R2 = RM1.10

Bulletin Board

Co/Sector News Impact Recom

Consumer The government has postponed the Positive. The GST would make selling prices for Neutral
implementation of the goods and servies tax consumer products higher, which we believe
(GST) to provide more breathing space for would slow down consumer spending.
Malaysians. The MOF in a brief statement
yesterday said the decision was to allow for a
more inclusive engagement with all segments of
rakyat pertaining to the GST. (Business Times)
 Consumer – Retail sales growth forecast for 2010 has been
Retail revised upwards to 6.1%, from an earlier
projection of 5.5%, following a good a showing in
the first half. Retail sales numbers are prepared
by Retail Group Malaysia, after interviewing
members of the Malaysia Retailers Association
(MRA). For the 3Q 2010, the group forecasts an
overall growth of 6.8%, with department stores
cum supermarkets growing at 2.8% and
department stores growing at 9.6%. (Financial
Daily)
Carlsberg Guinness Anchor Berhad (GAB) argued that an
excise duty hike was unlikely as it would lead to
higher prices of beer and stout, and this would
make black market products more attractive to
consumers, resulting in the government losing
out on potential revenue. (Business Times)
Kencana Kencana announced it won another contract
yesterday from Petronas Carigali (PCSB) valued
at approximately RM16.4m for the provision of
single buoy mooring overhaul for PCSB’s
Sarawak operations. The contract is for a one-off
period and is expected to commence in Jan
2011. (Bursa Malaysia)
JCY JCY is expecting revenue of around RM2.0bn for
FY10. Also, it expects to spend another RM110m
for capacity expansion for its plant in Malaysia
and China i.e. Suzhou and Guangzhou.
(Financial Times).
Positive. This augurs well for our retail players as N
the increased growth forecast indicates that the
retailers are now more confident on their outlook. AEON;
We maintain our SSS growth targets for the retail MP, FV =
players under our coverage at 2.5-5% for 2010 RM5.72
and 3-5% for 2011. We project AEON’s SSS
growth to be at 2.5%, which is in line with the Parkson,
group’s projection for department store cum OP, FV =
supermarket. Parkson is guiding for 5% growth in RM7.72
the 2H 2010, although in the 1H, the company
achieved SSS for Malaysia of 15%.
Neutral. This would be positive for brewers OP, FV =
Carlsberg and GAB, if it were true, but we believe RM6.03
it could be wishful thinking on GAB’s part. We
maintain our belief an excise duty hike in the
region of 10-15% is still likely this year as it is
long due, after 4 years of no hikes.
Positive. This is Kencana’s eleventh win thus far, MP, FV =
and lifts cumulative contract wins to around RM1.80
RM716.4m. Assuming 10% margins for the
project, net profit for FY11, will be RM1.6m. As
bottom-line impact is minimal, no change to
earnings estimates.
No impact to our forecast as we have forecast a OP, FV =
revenue of RM2,021.7m for FY10. Similarly, we RM1.32
have already forecast a capex of RM110m for
FY11.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Lingui Developments First and final dividend of 2% less tax 8-Dec-10 20-Dec-10

Going “ex” on 15 Oct

Concrete Engineering Interim dividend of 3% less 25% tax 15-Oct-10 1-Nov-10

...For more details, see individual reports attached

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