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

RHB Research Institute

RHB Equity 360°

30 July 2010 (Faber, Fitters, Quill Capita; Technical: Landmarks)

Top Story : Faber – IFM business likely boost 2QFY10 earnings Outperform
Results Preview
- Faber is expected to announce its 2QFY10 results on 5 Aug. We believe 2Q net profit could be higher yoy
due to stronger contribution from both concession and non-concession businesses, while qoq, net profit is
expected to be better thanks to higher contribution from its overseas IFM business.
- Faber recently secured a new contract with Abu Dhabi Health Services Company and the project is worth
approximately RM20.4m for a three-year period starting from 16 Aug. We also note that an IFM contract in
Madinat Zayed, Abu Dhabi was renewed in May for another year with an annual value of RM57.8m, while a
second contract (likely to be >RM100m) also in Madinat Zayed is expected to be renewed by year-end.
- We expect stronger property earnings to come on stream in 2HFY10 following the recognition of earnings
from the launch of Taman Desa Phase 1A DBKL in May.
- Maintain forecasts and fair value of RM3.54, which is based SOP valuation. Reiterate Outperform.

Corporate Highlights

Fitters : “Foetus” of a green revolution Not Rated

Visit Note
- Fitters Diversified is predominantly engaged in fire prevention & protection business. Realising the need to
explore new growth areas to create new shareholder value, Fitters about 2-3 years ago identified green
energy as the way forward for the company. Since then, via 83%-owned unit Future NRG, it has identified
and secured rights to the biomass/plasma gasification technology.
- The bases of our investment case for Fitters are: 1) The gasification technology it possesses that has many
advantages over the conventional combustion and incineration; 2) The strong prospects of the renewable
energy sector in Malaysia and globally, underpinned by the aggressive renewable energy targets set and
favourable policies; and 3) The strong prospects of the waste-to-energy sector in Malaysia and globally,
driven by a combination of pull and push factors - pull being the energy generated and push being the
urgent need to deal with the ever rising volumes of waste produced.
- Our fair value of RM1.20 for Fitters, using SOP valuation, implies 38% upside from current levels.

Quill Capita : 1HFY12/10 gross revenue grows 3% yoy Outperform (up from MP)
2QFY10 Results
- Normalised 1HFY12/10 net profit of RM15.8m came in within expectations.
- Declared income distribution of 3.85sen for 1HFY10 that makes up 47% of our full-year forecast of 8.2sen.
- Fair value is raised from RM1.17 to RM1.23 as we roll forward the base year for valuation purpose from
FY12/10 to FY12/11.
- Value has emerged. Upgrade to Outperform from market perform.

Technical Highlights

Daily Trading Strategy : The bulls are ready to take the market higher…
- Clearly, the FBM KLCI’s medium-term view has turned more bullish following another positive candle
recorded yesterday, hence confirming the recent breakout of the 1,350 tough resistance level.
- Compounded with a fresh year-high on the back of robust daily turnover (800m-1.0bn shares), the bulls are
ready to take the market even higher in coming sessions, in our view.
- Encouragingly, yesterday’s gain spread evenly across the board, as both blue chips and lower liners
enjoyed strong rotational interests throughout the day. This also strongly indicates that the current uptrend
is sustainable.
- While we do not discount the possibility of mild profit-taking activities ahead of the weekend and the US 2Q
GDP report that is due later tonight, we believe any profit-taking pressure will be well-absorbed.
- And given the upbeat technical readings as well as the steady overseas performance of late, the FBM KLCI
could gear up for an extended rally to the next upside target at 1,390.
- On the downside, the major resistance-turned-support of 1,350 will continue to protect the current uptrend.
 Daily Technical Watch: Landmarks – Could launch a fresh uptrend ahead …
- 10-day SMA: RM1.162
- 40-day SMA: RM1.132
- Support: IS = RM1.15 S1 = RM0.78 S2 = RM0.535
- Resistance: IR = RM1.33 R1 = RM1.55 R2 = RM2.00

Bulletin Board

Co/Sector News Impact Recom

Plantations In response to another Greenpeace report that Negative. This new report from Greenpeace will N
accuses PT Smart, SGX-listed Golden Agri’s perpetuate the negative perception of the palm
subsidiary, of clearing primary forests and orang- oil industry as a whole, despite the clarification
utan habitats, PT Smart stated that the from PT Smart. We believe that even if PT Smart
photographs taken of the green areas within its manages to clear its name via an independent
estates are, in fact, areas with High Conservation verification exercise (which will be out on 10
Value (HCV). This means that these areas are Aug), the damage in terms of reputation will
actually preserved areas within the estate which already be done. We believe that this negative
will not be cleared and planted, in line with RSPO perception will mainly be felt for Indonesian
guidelines, and not remnants of primary forest planters and not Malaysian plantation
caused by its palm oil operations. (SGX) companies, which, so far, have not been
implicated in anything very serious, in terms of
environmental damage.
Consumer: GAB expects a low single-digit growth in the Neutral. GAB’s expectations are in line with our N
Brewery overall malt liquor market (MLM) for its current assumption of 1% total TIV growth in the malt
financial year, following the country’s economic liquor market for 2010.
recovery. (BT)
AFG AFG’s new CEO said that while there would be The areas identified for improvement are also OP, FV =
no major change to the group’s growth strategy, among the key areas identified to drive FY11 RM3.40
there is still room for improvement in areas such earnings growth, i.e. fee income, wealth
as productivity, cross-selling and fee income. Mr. management and “koop” loans. As for the ROE
Sng also said that the group is aiming for a ROE target, this appears in line with the 14-16% ROE
of 16% and this may take 12-18 months or target management had set earlier. However, the
beyond. (Business Times) time frame of 12-18 months appears more
aggressive as compared to the previous 3-5 year
period. In order to achieve the ROE earlier than
the 3-5 year period, we think earnings would
need to be aided by significant provision
writebacks (e.g. CLO).

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Quill Capita Trust Gross interim income distribution of 3.85 sen 10-Aug-10 30-Aug-10
Texchem Resources Interim dividend of 2% less 25% tax 11-Aug-10 1-Sep-10
Selangor Dredging First and final dividend of 4% less 25% tax 27-Aug-10 9-Sep-10
QL Resources Final dividend of 7.5 sen single tier tax exempt 6-Sep-10 30-Sep-10
Luxchem Corp Interim dividend of 3 sen single tier 6-Sep-10 30-Sep-10
MTD Capital Proposed first and final dividend of 10 sen less 25% tax 6-Oct-10 29-Oct-10

Going “ex” on 2 Aug

Keladi Maju First and final dividend of 1 sen less 25% tax 2-Aug-10 18-Aug-10
General Corporation First and final dividend of 3 sen less tax 2-Aug-10 19-Aug-10
Pharmaniaga Interim gross dividend of 10 sen less 25% tax 2-Aug-10 19-Aug-10
...For more details, see individual reports attached

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