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

RHB Research Institute

RHB Equity 360°

15 April 2010 (Mah Sing, IJM, KNM; Technical: Top Glove)

Top Story : Mah Sing – 1QFY12/10 sales more than tripled Outperform
Visit Note
- Mah Sing recorded strong sales of RM516m in 1Q10, from RM170.2m a year ago, thanks to good
responses to its new projects. With sales expected to sustain in the coming quarters underpinned by new
launches, FY12/10 sales target of RM1bn now appears within reach. Among the new projects we are
particularly excited over Southbay City, Garden Residence & Garden Plaza and Icon Residence @ Mont
Kiara due to excellent locations and products.
- While not generally perceived by the market as one of the front runners for federal land parcels earmarked
for development, we feel that investors should not write off Mah Sing entirely as: a) it boasts a decent list of
government-linked shareholders; b) it has strong balance sheet with net cash of RM176.5m or 27.9 sen as
at 31 Dec 09; and 3) it has good track record in delivering various types of properties.
- No change to our net profit forecasts. However, we have adjusted our FY10-12 EPS forecasts for the 1-for-
5 bonus issue that was completed in Apr, resulting in our estimates being lowered by 16.7% p.a..
- We have thus also lowered our RNAV based FV from RM2.45 to RM2.04. Maintain Outperform.

Corporate Highlights

IJM Corp : Secures two work packages of Murum Access Road worth RM247m Market Perform
News Update
- IJM has secured two work packages of the Murum Access Road worth a total of RM246.7m.
- The contract is significant to IJM as it is the first major construction contract IJM has secured in Sarawak.
- Also, this is the first job IJM has secured in FY03/11, boosting its outstanding construction orderbook by
5% to an estimated RM4.6bn.
- Assuming an EBIT margin of 8%, the contract will fetch a total EBIT of RM19.7m.
- We are positive on the latest development, but no change in our forecasts that assume IJM to secure
RM2bn worth of new jobs in FY03/11.
- Fair value is RM4.88. Maintain Market Perform.

KNM : Takeover offer lapsed Underperform (down from MP)

News Update
- The company announced that the proposed acquisition by BlueFire Capital Group (Bidco) has lapsed given
that both parties were unable to reach an agreement on the offer price. Recall on 4 Feb 2010, Bidco
proposed a general offer to acquire the remaining stake of 76.3% for RM2.7bn cash.
- We believe the withdrawal of the offer was largely due to KNM’s poor 4QFY09 results as well as
restrictions that the IRB had imposed on the tax incentive arising from the €350m acquisition of Borsig.
- Notwithstanding the failure of the management buyout, we highlight that demand for higher-end process
equipment would likely pick up on account of stronger investments in the non-conventional oil sand projects
in Canada stemming from the recovery of oil price above US$80 per barrel.
- Nevertheless, we highlight the potential downward pressure on KNM’s share price in the near-term due to
the fall-out of the proposed acquisition. Accordingly, we have revised down our fair value to RM0.75 (from
RM0.90 previously), based on 13x FY10 PER. Hence, we have downgraded the stock to Underperform
(from market perform previously).

Technical Highlights

Daily Trading Strategy : More consolidation if sentiment fails to improve today…

- Despite yesterday’s mild rebound, the FBM KLCI has yet to recover to above the 10-day SMA near 1,337.
- Given the poorer turnover at below 1.0bn shares mark, the market’s short-term trading momentum may
continue to deteriorate if the index sustains at below the supportive SMA in the next few sessions.
- Therefore, further consolidation may be underway in the near term if the market lacks fresh leads.
 - This also means the T+3 and T+4 selling forces from recent high trading volume may continue to dampen
sentiment ahead.
- Investors should thus anticipate a revisit to the 40-day SMA of 1,306, 2.6-pts technical gap near 1,305 and
1,300 psychological level soon, if there is no positive change in the lacklustre trading sentiment today..

Daily Technical Watch: Top Glove – Must sustain above the 40-day SMA of RM12.57 to trigger a rebound …
- 10-day SMA: RM13.606
- 40-day SMA: RM12.573
- Support: IS = RM12.00 S1 = RM10.60 S2 = RM9.70
- Resistance: IR = RM14.00

Bulletin Board

Co/Sector News Impact Recom

Building According to Malaysia Steel Works, Malaysian
Materials – steel millers are likely to raise prices of billets by
Steel another US$70-80/tonne from current level of
US$640/tonne to reflect the sharp increase in
input costs, in particular, iron ore and coke.
(Business Times)
Media Media Specialist Association (MSA) expects
double-digit growth of approximately 10% in
advertising expenditure (adex) this year.
(StarBiz)
Wah Seong The company announced that it had entered into
an agreement with Pipe Coaters Nigeria (PCN),
whereby Wah Seong will provide commercial
assistance and technical support to PCN for the
provision of 3-layer and concrete pipe-coating
services. (Bursa)
Pos Pos Malaysia is currently exploring ways to Positive, this will diversify and boost Pos NR, FV =
Malaysia unlock the value of the land on which its post Malaysia's earnings.
offices and operations are located, including
conversion ofits use and ownership transfer to
the postal company. (Starbiz)
Positive. Higher steel prices will boost domestic OW
steel producers' profitability in the near term,
price increases are currently outpacing cost and
most producers managed to stock up inventory at
low prices when steel prices fell on seasonal
factors in 4Q09.
Neutral. Based on our projected 2010 GDP N
growth of 4.5% and the average GDP multiplier
of 2.1x (between 1989 and 2008), 2010 gross
adex could see growth of 9.5% as the economy
recovers. Apart from that, adex growth in 2010
would also be supported by “ad-friendly” events
such as 2010 FIFA world Cup, Thomas/Uber Cup
and the Commonwealth Games.
Positive. We believe this is the prelude to the OP, FV =
potential acquisition of pipe-coating assets in RM3.09
West Africa. Recall that Wah Seong has been
approached by Socotherm’s West Africa partners
to acquire a 60% stake in the Nigeria and Angola
pipe-coating assets.
RM3.63

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Zhulian Corporation First interim single tier dividend of 3 sen 6-May-10 27-May-10
Mamee-Double Decker Final dividend of 5 sen plus special dividend of 2 sen tax exempt 27-May-10 25-Jun-10

Going “ex” on 16 Apr

Opcom Holdings Single tier interim dividend of 1.5 sen 16-Apr-10 28-Apr-10
Malaysian Bulk Carriers Final single tier dividend of 15 sen 16-Apr-10 30-Apr-10
V.S. Industry Single tier interim dividend of 1.5 sen 16-Apr-10 30-Apr-10
Guinness Anchor Interim dividend of 10 sen tax exempt 16-Apr-10 6-May-10

...For more details, see individual reports attached

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